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9
Court of Criminal Appeal 7 September 2001

COMMISSIONER OF TAXATION v BAFFSKY

[2001] NSWCCA 332

Also reported as (2001) 122 A Crim R 568
Fraud & dishonesty
CRIMINAL LAW SENTENCING REVENUE OFFENCE AGAINST COMMONWEALTH CRIMES ACT 1914 (CTH), S16A AND S19B.

Citation: Commissioner of Taxation v Baffsky [2001] NSWCCA 332
Court: New South Wales Court of Criminal Appeal
Date: 7 September 2001
Judge(s): Spigelman CJ, Simpson J, Einfeld AJ

Background

The respondent, a barrister, pleaded guilty in the Local Court to two charges of failing to furnish income tax returns for the financial years ending 30 June 1998 and 30 June 1999. Both failures arose from a single notice requiring lodgement by 2 May 2000. He was convicted and fined $800 for both offences combined.

On appeal to the District Court, the respondent argued that the circumstances warranted the application of section 19B of the Crimes Act 1914 (Cth), which allows a court to dismiss charges without proceeding to conviction where punishment is inexpedient. Judge Backhouse DCJ agreed, quashed the convictions, and applied section 19B.

The Commissioner of Taxation then sought a stated case, and Judge Backhouse referred several questions of law to the Court of Criminal Appeal for determination under section 5B of the Criminal Appeal Act 1912 (NSW).

  • Whether the District Court took irrelevant matters into account in exercising the section 19B discretion
  • Whether the District Court failed to take relevant matters into account, including general deterrence, delay, and the amounts of tax owing
  • Whether section 19B is unavailable in revenue offences unless "exceptional circumstances" are established
  • Whether section 16A(2) of the Crimes Act 1914 (Cth) governs the second stage of the section 19B discretion
  • Whether the District Court erred in treating both charges together rather than exercising the discretion separately for each

Decision

The Court of Criminal Appeal confirmed that applying section 19B involves two distinct stages. The first requires identifying one or more of the factors listed in section 19B(1)(b), such as the offender's character, antecedents, age, health, or mental condition. The second requires determining whether, having regard to those factors, it is inexpedient to inflict any punishment. Section 16A(2) governs the matters that must be considered at that second stage.

On the question of which matters were relevant, the Court found that the respondent's professional status as a barrister fell within "antecedents" for both provisions. The effect of a conviction on the respondent was relevant to personal deterrence, adequacy of punishment, and the inexpediency test. Reduced motivation caused by financial or personal circumstances fell within "health or mental condition" and "antecedents." The respondent's relationship with his son was captured by "character." The Court found no error in the District Court's treatment of most of these matters.

The Court firmly rejected the Commissioner's submission that section 19B is unavailable in revenue matters unless "exceptional circumstances" exist. The provision formulates only a test of inexpediency, and no authority supported imposing a higher threshold for tax offences.

The Court identified one error: Judge Backhouse had addressed the issue of delay by reference to considerations that were not relevant to that question. However, on other contested matters, including whether general deterrence was taken into account, the Court found that references in the judgment to the inappropriateness of section 19B for this type of offence and to the non-trivial nature of the conduct were sufficient to indicate that general deterrence had been considered. On the treatment of both offences together, the Court held that it was open to the District Court to consider them jointly, given that both were triggered by a single notice requiring lodgement on the same day.

Orders Made

The Court answered the stated case questions as follows:

  • Question 4(I)(a): No
  • Question 4(I)(b): Yes
  • Question 4(II)(a): No
  • Question 4(II)(b): Declined to answer
  • Question 4(II)(c): No
  • Question 4(II)(d): No
  • Question 4(III)(a): Yes
  • Question 4(III)(b): No
  • Question 4(III)(c): No
  • Question 4(IV): Declined to answer
  • Question 4(V): No

Key Takeaways

  • The section 19B discretion under the Crimes Act 1914 (Cth) operates in two stages: first, identifying a qualifying factor under section 19B(1)(b); second, applying the inexpediency test with reference to the mandatory sentencing considerations in section 16A(2).
  • No requirement of "exceptional circumstances" applies when section 19B is invoked in revenue offence matters. The provision's text sets the only relevant standard.
  • A broad range of personal circumstances, including professional status, financial hardship, health, family relationships, and reduced motivation, can qualify as relevant factors under both section 19B(1)(b) and section 16A(2), depending on which element of each provision they most naturally engage.
  • General deterrence, though not expressly listed in section 16A(2), remains a relevant sentencing consideration for Commonwealth offences and must be addressed in section 19B applications.
  • Where multiple charges arise from a single notice requiring identical conduct on the same day, it was open to the sentencing court to consider both offences together when exercising the section 19B discretion rather than treating each charge in isolation.

Legislation and Cases Referenced

Legislation
- Crimes Act 1914 (Cth), ss 16A, 19B
- Taxation Administration Act 1953 (Cth), s 8C(1)(a)
- Income Tax Assessment Act 1936 (Cth), s 162
- Criminal Appeal Act 1912 (NSW), s 5B
- Crimes Act 1900 (NSW)
- Crimes (Sentencing Procedure) Act 1999 (NSW)
- Companies (Tasmania) Code
- Quarantine Act 1908 (Cth)

Cases
- Cobiac v Liddy (1969) 119 CLR 257
- Jones v Morley (1981) 29 SASR 57
- Aikman v Bourne (1992) 63 ACrimR 467
- McQuestin v Australian Securities Commission (1993) 2 TasR 30
- Federal Commissioner of Taxation v Wormald International Australia Pty Ltd (1985) 17 ATR 129
- Kelton v Uren (1981) 27 SASR 92
- O'Brien v Norton-Smith (MR) Pty Ltd (1995) 83 ACrimR 41
- R v Paull (1990) 20 NSWLR 427
- DPP v El Karhani (1990) 21 NSWLR 370
- R v Sinclair (1990) 51 ACrimR 418
- Morrison v Peers (1995) 87 LGERA 39
- Thorneloe v Filipowski [2001] NSWCCA 213
- House v The Queen (1936) 55 CLR 499
- Patterson v Fenwick (1994) 115 FLR 462
- Kowald v Hoile (No 2) (1976) 14 SASR 314
- Lanham v Brake (1983) 34 SASR 578
- R v Ingrassia (1997) 41 NSWLR 447
- Attorney General (NSW) v X (2000) 49 NSWLR 653