REILLY v BAKER
Supreme Court of the Northern Territory of Australia Kearney J.
14 September; 1 December 1989, at Darwin.
!	APPEAL - Justices -	whether permissible to institute appeal
l		against sentences	in two Complaints	heard together,	by one composite Notice of Appeal.
APPEAL - Justices - application to amend Notices of Appeal by substitution of respondent - power to allow amendment - no prejudice to respondent.
APPEAL - Justices - appeal against sentence - whether order for payment of costs is part of sentence - application of principle of totality.
INCOME TAX - Sentencing - two Complaints heard concurrently - failure to remit taxation instalment deductions - failure to remit prescribed payments deductions - whether permissible to impose one penalty in respect of all offences - Income Tax Assessment Act 1936 (Cth) s. 221F(5)(a), 221YHD(l)(b)(v)(A), 221W(4).
SENTENCING - Income Tax - failure to remit tax deductions - statutory default penalties to provide "starting	point" for assessment of fine - factors relevant to assessment of penalty - defendant's financial circumstances at time of fixing penalty to be considered - need for an element of general deterrence -
Income Tax Assessment Act 1936 (Cth) ss. 221F(l2) and (14).
Cases followed:
Ambrose v Sandford Pty Ltd 89 ATC 4707 Budget Nursery Pty Ltd v F.C.T. 89 ATC 4801
F.C.T. v Manos Breeder Farms Pty Ltd & Ors 88 ATC 4946 McMillan v Bierwirth (1987) 31 A Crim R 1
stebbings v Pryce (unreported decision, Supreme Court of N.T.,
10 May 1989)
Webb v O'Sullivan (1952) SASR 65
Cases distinguished:
F.C.T. v Arnhem Aircraft Engineering Pty Ltd (1987) 47 NTR 8 Lawrie v Stokes (1951) NTJ 66
Cases referred to:
Bierwirth v McMillan 87 ATC 4184

Elliot v Harris (No 2) (1976) 13
Mason v Pryce (1988) 53 NTR 1

SASR 516

Okmasich v Evans (1980) 25 SASR
Samuels v Leech (1970) SASR 60
Counsel for the appellant Solicitor for the appellant
Counsel for the respondent Solicitor for the respondent

481

A.G. Rogerson Loftus and Cameron
P.J.B. Tiffin Australian Government Solicitor

kea890215

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'	IN THE SUPREME COURT
OF THE NORTHERN TERRITORY OF AUSTRALIA

Nos. 415 and 416 of 1989

IN THE MATTER OF the Justices Act

AND IN THE MATTER of an appeal from a sentence imposed by the Court of Summary Jurisdiction at Darwin

BETWEEN:
RAYMOND THOMAS REILLY
Appellant AND:
JOHN MERVYN BAKER
Respondent

CORAM:	Kearney J.

REASONS FOR DECISION
(delivered 1 December 1989)

These are appeals from a sentence imposed by the Court of Summary Jurisdiction on 25 May 1989 by which the appellant was fined $20,000 and ordered to pay prosecution costs in the sum of $6,416. In his Notices of Appeal of
19 June the appellant contends that the fine was manifestly excessive, and the award of costs of $6,416 involved an error of law; further grounds were relied on at the hearing of the appeal, by leave.

At	the	outset	Mr Rogerson	of	counsel	for	the

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appellant		sought leave to amend the Notices of Appeal so as I		to substitute the respondent named above for the "Australian Taxation	Office".	I consider that there is power to allow
such an amendment and it is appropriate to do so; no prejudice to the respondent was suggested. Mr Tiffin of counsel for the respondent submitted that separate Notices of Appeal should have been lodged, one in respect of the fine and the other in respect of the costs. I do not think that that is necessary. In Lawrie v Stokes (1951) NTJ 66 Kriewaldt J held that there should be a separate Notice of Appeal in respect of each conviction sought to be appealed, but that is a different point with which I will deal later.

The appellant was convicted of 7 offences charged in a Complaint dated 22 May in that as an eligible paying authority he failed to pay to the Commissioner of Taxation sums deducted from prescribed payments, contrary to s.221YHD(l)(b)(v)(A) of the Income Tax Assessment Act 1936 (herein the Assessment Act). He was also convicted 0£ 3 offences charged in a separate Complaint also dated 22 May in that as a group employer he failed to pay to the Commissioner amounts deducted from employees' salaries by way of tax, as required by s.221F(5)(a) of the Assessment Act. The deductions were in fact made by the employing company Avilon Pty Ltd; as a director of that company the appellant was deemed to have committed the offences,

pursuant	to	s.BY	of the Taxation Administration Act 1953.

The	total

sum-s

deducted

but	not	paid	over	to	the

i	Commissioner	were $31,017.67.	The maximum penalty for each
offence is a fine of $5,000 or imprisonment for	12	months, or both; see s.221F(14) of the Assessment Act.

By consent, the 2 Complaints containing the 10 charges were heard together. A single fine of $20,000 was imposed in respect of all 10 offences, pursuant to s.221W(4) of the Assessment Act; it has not been suggested that  the use of s.221W(4) was not open.

On 19 June the appellant filed 2 Notices of Appeal; although they are, understandably, in identical terms, I consider that it is clear that one relates to the Complaint of 22 May relating to 7 offences, while the other relates to the Complaint of the same date relating to 3 offences. I note that the appellant entered into separate Recognizances to prosecute each of these 2 appeals.

Mr Tiffin submitted that  in fact only one appeal had been instituted, purportedly in relation to the sentence on the 10 charges contained in the 2 Complaints;  he submitted that this was not permissible since there had  to be a separate Notice of Appeal for each conviction appealed. He relied on what was said by Kriewaldt Jin Lawrie v Stokes (supra) at p.80, followed by Asche J (as he then was) in

F.C.T. v Arnhem Aircraft Engineering Pty Ltd (1987) 47 NTR 8
.		at	p.12.	It	is	unnecessary	for	me	to	rule upon this I		submission since I consider that in fact 2 Notices of Appeal were	lodged.		In my view, where appeals are lodged against
convictions or sentences imposed in respect of several counts in a Complaint which are heard together, there should only be one Notice of Appeal; see Samuels v Leech (1970] SASR 60, where the question is discussed by Hogarth J at pp.61-62. I note that there is authority in South Australia on broadly similar legislation to the Justices Act for the proposition that it is permissible to have one Notice of Appeal when appealing from convictions on counts in separate Complaints: see the views of the majority of the Full Court in Elliott v Harris (No.2) (1976] 13 SASR 516 at pp.518-520 (per Bray CJ), p.528 (per Bright J), with Zelling J dubitante at pp.529-532; and Okmasich v Evans (1980) 25 SASR 481.

The judgment under appeal

As noted earlier, the Chief Stipendiary Magistrate fined the appellant a total sum of $20,000 (apportioned on the basis of $2,000 for each of the 10 offences);  the default term of imprisonment was a total of 400 days, on the basis of 40 days per qf:!;e.nce. The appellant was allowed a total of 3 years to pay the fine; he was to pay by a

graduated system of	regular	payments.	Her	Worship	also
.	ordered the appellant to pay witness' expenses of $4,646, in
I	default 97 days	imprisonment,	and	the	prosecution	legal costs of $1,500, with 30 days imprisonment in default.

Her Worship's judgment proceeded as follows:-
"... I accept the principle that the starting point for the sentencing tribunal is the administrative penalty, and that I then take into account a number of other factors in deciding whether to increase or reduce the amount of the administrative penalty ..• What I propose to do is to look at the total of the
10 offences and fix an overall penalty and that that would then be divided equally between each of the offences.

I do have regard firstly to the circumstances of the offence; those circumstances were perhaps not unusual •.• that is, of course, that deductions were in fact made, but because of the liquidity problems that were being suffered by the company, Avilon Proprietary Limited at that time, those deductions were never in fact paid to the Commissioner of Taxation.
I also have regard to the principle that the penalties should not be disproportionate to the offender's overall conduct, and to the principle that the penalty should not be beyond his means and ability to pay. This I find an extremely difficult exercise in view of Mr Reilly's evidence, which I accept, that he's presently receiving $150 gross per week, and that is his only source of income.
He himself stated that he had an ability to earn considerably more than this, and could in fact earn over $1,000 a week in hi own trade; and he's given evidence to the effect that he feels a moral obligation to continue in his present position, at the remuneration that he now receives, and, as I understand from his evidence, he's most anxious to do what he can to salvage the position of the companies.

The total amount which would be the starting point in accordance with the principle [in McMillan v

Bierwirth (1987) 31 A Crim R 1] is a total of

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$29,309.77, and quite obviously this is an amount of money far in excess of Mr Reilly's present ability to pay. I do accept that Mr Reilly himself may feel that for moral reasons he should continue as he is at present on a very low income of $150 a week. I've really got to balance his feelings in this regard as against his own stated ability wherein he has a capacity to earn over $1,000 a week at his own trade. Were he to do that, of course, he'd be in a much better position to meet his other obligations which include the obligation which still stands in respect of monies that are owing to the Commissioner of Taxation, and in respect of the penalties that this court must impose.

Nevertheless, in trying to balance those factors I think I've got to accept that the reality for the moment is that Mr Reilly is only earning $150 a week. What he states in relation to his capacity to earn may well be correct, but it is still at this stage speculative and there are many things that could affect his future earning capacity.

For all of those reasons I fix a total penalty of
$20,000, and I intend to make an order for witnesses costs as sought by the prosecution in the sum of $4,646 ·and make an order for legal costs in the sum of $1,500."

Her Worship also said that she had taken into account the general sentencing rule enunciated by Napier J (as he then was) in Webb v O'Sullivan [1952] SASR 65 at p.67:-

"The courts should endeavour to make the punishment fit the crime, and the circumstances of the offender, as nearly as may be. Our first concern is the protection of the public, but, subject to that, the court .should lean towards mercy. We ought not to award the maximum which the offe_nce
will	warrant,	!;,ut	rather	the	minimum	which is
consistent	with	a	due	regard	for	the	public interest."

Her	Worship also accepted that the appellant was a

man of	good	character	who	had	"unfortunately
I	brought to ..• financial ruin".

been

The submissions on the appeals

Mr Rogerson submitted that an order for costs is part of a sentence. He relied on Stebbings v Pryce (unreported decision, Rice J, 10 May 1989). I accept that submission since default in the payment of the costs awarded carries imprisonment under the Justices Act, and this "attracts the operation of the principle of totality in the sentencing process" as Rice J put it.

Mr Rogerson submitted in  effect that her Worship was correct in approaching the calculation of the penalty in the manner laid down in McMillan v Bierwirth (supra).  In that case the general approach taken by von Doussa J in Bierwirth v McMillan 87 ATC 4184 was approved, provided that an element for general deterrence was also provided for in the penalty. That approach has also been accepted in the Territory; see Ambrose v Sandford Pty Ltd 89 ATC 4707.

In an appeal such as this, it is necessary for the appellant to show that the magistrate's exercise of the sentencing discretion miscarried; see Mason v Pryce (1988)
53 NTR 1 at pp.5-7.

As to the amount of the fine, Mr Rogerson submitted that Her Worship had failed to give  proper  weight  to  the
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appellant's	low	income,	and had therefore erred in law in
imposing a fine which was beyond his ability to pay, a fine which amounted  to a sentence of imprisonment and which was in all the circumstances manifestly  excessive.  The appellant relied on  similar grounds in his appeal against the award of costs and against the quantum of those  costs. In a further ground of appeal, applicable to both the fine and costs, the appellant contended that his situation  had now changed, in that he was in the course of entering into a scheme of arrangement under Part X of the Bankruptcy Act (Cth).

Mr Tiffin of counsel for the respondent made the following submissions. Her Worship's approach to sentencing was correct. The starting point for the calculation of the fine was admittedly correct, and all other factors relevant to sentence had been considered.  It was permissible to impose one penalty in respect of all the offences, under s.221W(4) of the Assessment Act. The fact that a defendant has liquidity problems does not normally justify a reduction of the fine below the level of the administrative penalty, nor does the absence of actual dishonesty; see  F.C.T. v Manos Breeder Farms Pty Ltd ;Uld Ors 88 ATC 4946 at p.4956-7.

As	to	the last point I note that in Manos Breeder
'	Farms Pty Ltd	(supra),	von	Doussa J,	speaking	of	the
I	defendant's difficult financial position, said at p.4956:-

"The defendants must so order the affairs of the business that priority is given to the payment of deductions. Although the deductions are not impressed with a trust, they are moneys deducted from payments that would otherwise be made each month to employees and sub-contractors. The Act makes it clear that Parliament regards the failure to pay the deductions to the Commissioner as a serious matter. The defendants had received warnings from taxation officers, and I do not think the defendants' liquidity difficulties justify reduction in the fine below the statutory penalties."

At	p.4957	his	Honour observed that "had there been actual

dishonesty,	that	would	have	provided significantly		increasing		the		amount

a	reason	for of	the	fines".

Mr Tiffin noted that the aggregate fine imposed amounted	to some two-thirds of the statutory administrative penalty.

Mr Tiffin also referred to the recent decision in Budget Nursery Pty Ltd v F.C.T. 89 ATC 4801. That involved a case stated to the NSW Court of Criminal Appeal, and dealt with the factors to be taken into account when determining the amount of penalties for failing to remit PAYE deductions under s.221F(5) of the Assessment Act. The Court expressed the following views. The appellant's financial circumstances at the time the offences were committed provided no excuse for its failure to remit the PAYE

.,

deductions to the Commissioner.	On	the	other	hand,	its
financial	circumstances	at	the	time	the	penalties were
I	imposed, were clearly relevant, since the means of a defendant are always relevant to the extent of punishment to be imposed. The Court considered that granting time to pay
"would give to the Judge a much wider range of penalties which could be imposed". The penalties ought to have some relativity to the amount of tax outstanding and the period of time over which that tax remained unpaid. In that case the PAYE deductions amounted to $8,691. The Magistrate had imposed penalties totalling $82,000 together with costs. The District Court Judge, on appeal, had proposed to reduce these penalties to a single penalty of $41,000. The Court of Criminal Appeal considered that the penalty to be imposed was a matter for the Judge in the exercise of his own discretion. The late payment penalties imposed by s.221F(12) provided the starting point for assessing the penalty   under  s.221F(14).   General  deterrence  is  an

important factor in fixing	penalties.
with these observations.

I	agree	generally

Mr Tiffin submitted that the appellant by his own account was remaining in his present low-paid employment by choice, in the hope and expectation that he would eventually obtain a 50% interest in the business. Further, his income was supplemented by bonuses which in the preceding 12 months had amounted to some $7,000. Mr Tiffin submitted that if

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the	appellant	could	not	meet the instalment payments, he could apply to the Clerk of Court for further time to pay.
I

Conclusions

upheld.

I consider that	Mr Tiffin's	submissions	must	be Her	Worship's	approach to the calculation of the

penalty was correct. All relevant sentencing factors were taken into consideration. The penalty comprising the fine plus costs is not manifestly excessive and does not involve any erroneous application of the proper principles of assessment. I do not consider that the fact that the appellant has since entered into Part X arrangements affects the matter.

Accordingly, I dismiss both appeals and affirm	the fine imposed and the award of costs which was made.

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