Citation: R v Pratten (No 9) [2012] NSWSC 1672
Court: Supreme Court of New South Wales
Date: 28 May 2012
Judge(s): Rothman J
Background
The accused faced multiple counts of dishonestly obtaining a financial advantage by deception from the Commonwealth, contrary to section 134.2 of the Criminal Code Act 1995 (Cth). The Crown alleged that the accused filed tax returns that he knew to be false, because they did not declare all income earned during the relevant years. The case did not involve false invoices or fabricated deductions; it concerned the straightforward non-declaration of income that, on the Crown's case, the accused knew was assessable.
Before closing addresses, the defence brought an application for a directed verdict. The accused argued that, as a matter of law, the conduct alleged by the Crown could not constitute the obtaining of a "financial advantage" under section 134.2, and therefore the charge could not be made out regardless of the factual findings a jury might reach.
Legal Issues
- Whether the defence could bring a no case to answer application after the accused had already given evidence and the defence case had closed.
- Whether any financial advantage obtained by filing a false tax return is merely temporary, and therefore cannot satisfy the "financial advantage" element of section 134.2.
- Whether, because tax liability is determined by statute based on objectively ascertained income rather than by what a taxpayer declares, a false return is legally incapable of conferring a financial advantage on the taxpayer.
Decision
Issue 1: Timing of the no case application
Rothman J held that the defence is entitled to bring a no case to answer application at any stage of proceedings, including after the accused has given evidence and the defence case has closed (at [16]-[23]). Relying on his own reasoning in R v Philip Wan Por Leung (No 3) and the approach taken by Hunt J in R v Haas, his Honour concluded that where a pure question of law arises that would render a charge incapable of being proved, fairness requires that the application be available at any point (at [22]-[23]). Evidence adduced by the accused could, however, only be used to support the Crown case, not to contradict it (at [20]).
Issue 2: Temporary nature of any financial advantage
The accused contended that any advantage from a false return was temporary, because the Australian Taxation Office could issue a default assessment with interest and penalties. Rothman J rejected this argument. A temporary financial advantage remains a financial advantage for the period it remains uncorrected, and the fact that it is eventually corrected does not deprive the conduct of its character (at [27]). The capacity of the Commonwealth to remedy the position is irrelevant to whether an advantage was obtained in the first place.
Issue 3: Whether the statute, not the return, determines liability
This was the more substantial submission. The defence argued that because income tax is levied on objectively ascertained income under statute, a false return cannot truly alter tax liability or confer an advantage. Rothman J rejected this analysis (at [32]-[39]). The finalisation of an assessment is what renders a tax debt payable, and a reduction in what is payable, achieved through deception, constitutes a financial advantage (at [35]). His Honour drew on Matthews v Fountain [1982] VR 1045 and observed that the same logic, if accepted, would make it impossible to obtain a financial advantage from any Commonwealth statutory scheme, including pensions or grants, an outcome that could not be correct (at [32], [38]). Rothman J held that filing a tax return that dishonestly understates assessable income, particularly under a self-assessment regime, is capable of constituting the obtaining of a financial advantage by deception (at [39]).
Orders Made
- The application for a directed verdict is rejected.
Key Takeaways
- A directed verdict of acquittal must be given only where evidence could not sustain a guilty verdict as a matter of law; the test is not discretionary once satisfied, and any evidence, even tenuous or weak evidence, that a jury could accept to support conviction means the matter must go to the jury (at [5], [9]).
- Under section 134.2 of the Criminal Code Act 1995 (Cth), a financial advantage need not be permanent. A temporary advantage remains a financial advantage for the time it goes uncorrected, and the Commonwealth's capacity to issue a corrective assessment does not extinguish the advantage that was obtained (at [27], [33]).
- Dishonest deception that misleads the Australian Taxation Office about the objective facts underlying an assessment is capable of giving rise to a "financial advantage," because it is the finalisation of the assessment that creates the payable debt, not the statute alone (at [35], [37]).
- Filing a self-assessed tax return that knowingly understates assessable income constitutes obtaining a financial advantage by deception within the meaning of section 134.2, even though tax liability ultimately derives from statute rather than from the return itself (at [39]).
- A no case to answer application may be brought at any stage of a criminal trial, including after the accused has given evidence and closed their case, provided the application raises a pure question of law going to whether an element of the offence can be established (at [22]-[23]).
Legislation and Cases Referenced
Legislation
- Criminal Code Act 1995 (Cth)
Cases
- Director of Public Prosecutions (NSW) v JMR (1991) 57 A Crim R 39
- Doney v The Queen [1990] HCA 51; (1990) 171 CLR 207
- Matthews v Fountain [1982] VR 1045
- R v Haas (1986) 22 A Crim R 299
- R v Philip Wan Por Leung (No 3) [2009] NSWSC 450
- R v R (1989) 18 NSWLR 74
- Re Mendonca; Ex parte Commissioner of Taxation (1969) 15 FLR 256