Citation: R v ST JAMES [2016] NSWDC 431
Court: District Court of New South Wales
Date: 12 December 2016
Judge: Judge S Norrish QC
Background
The offender, Phillip St James, worked as an unregistered accountant and tax preparer operating through two businesses in Sydney. He was neither a registered accountant nor a licensed tax agent, though he had previously been employed by the Australian Taxation Office (ATO) some years earlier. He held himself out to clients as a former ATO employee who could obtain larger refunds through his knowledge of legitimate deductions.
Between November 2005 and February 2009, St James prepared and lodged income tax returns for ten clients, all of whom were PAYG (pay-as-you-go) employees deriving income from employment. Without their knowledge or consent, he inserted false claims into their returns, creating fictitious businesses, obtaining Australian Business Numbers (ABNs) in their names, and claiming significant losses from those non-existent businesses. This produced inflated tax refunds that were directed to accounts or a post office box controlled by St James. He paid each client a portion of the refund and retained the remainder as undisclosed "fees."
The offending extended across 23 income tax returns on the indictment count and a further 13 matters taken into account on a Form (under s 16BA of the Crimes Act 1914 (Cth)), covering a total of 15 taxpayers over the relevant period. St James pleaded guilty to a single rolled-up count of dishonestly obtaining a financial advantage from a Commonwealth entity by deception, contrary to Commonwealth law.
Legal Issues
- The appropriate sentence for a single rolled-up count of dishonestly obtaining a financial advantage from the ATO by lodging false income tax returns, with 13 further like offences taken into account on a Form under s 16BA of the Crimes Act 1914 (Cth)
- The weight to be given to general and specific deterrence in the context of systematic fraud on a Commonwealth entity
- The relevance of personal and mitigating circumstances, including the offender's family responsibilities and any special hardship
- The significance of a guilty plea entered on arraignment, and the appropriate discount to apply
Decision
Judge Norrish QC took a dim view of the seriousness of the offending. The conduct spanned more than three years, involved a large number of victims, and was characterised by calculated dishonesty. St James exploited his clients' trust and his former employment background at the ATO to perpetrate the fraud. The forging of signatures on some returns, and the routing of refunds through accounts he controlled without his clients' knowledge, were treated as aggravating features.
The Court noted that some taxpayers received refunds six or seven times larger than they were legitimately entitled to. Victim impact statements were received and considered, reflecting real financial and personal harm caused to clients who later faced dealings with the ATO as a consequence of the offender's conduct.
His Honour declined to use the phrase "plea bargain" to describe the negotiated resolution, emphasising that the Crown's own participation in the negotiation made that characterisation inappropriate. The guilty plea on arraignment was nonetheless a relevant mitigating factor. The Court also considered the offender's personal circumstances, including family responsibilities relating to a child with a disability, in determining the timing of the commencement of the custodial sentence.
The sentencing hearing was not completed in full on 12 December 2016. The matter was adjourned to 24 February 2017 for the finalisation of sentence, with bail continued on strict conditions including reporting requirements, restrictions on passport applications, and a prohibition on approaching international departure points.
Orders Made
• Matter adjourned to Friday 24 February 2017 at 9.30am
• Bail conditions varied:
- Not to change address without 48 hours prior notice to Ms Cathy Bullock of the ATO Sydney office
- Not to apply for an Australian, Fijian or other passport
- Not to go within 500 metres of a point of international departure
- Report to the officer-in-charge Granville Police Station each Monday and Friday between 6am and 6pm, commencing Friday 16 December 2016
• Bail will be revoked and warrant issued for arrest if conditions are breached
Key Takeaways
- A rolled-up count capturing 23 separate fraudulent lodgements, together with 13 further like offences on a Form, was treated as reflecting sustained and systematic criminal conduct warranting a custodial sentence.
- Under s 16BA of the Crimes Act 1914 (Cth), additional offences of the same character may be taken into account on sentencing even where they are not the subject of the principal charge, and the court considered those 13 further matters as part of the overall criminality.
- The District Court firmly rejected use of the term "plea bargain" to describe a negotiated resolution, noting that the Crown's own involvement in that process made the phrase inappropriate and that it carries an unsavoury connotation in the sentencing context.
- Forging client signatures, obtaining ABNs without client consent, and directing inflated refunds to offender-controlled accounts were identified as features that aggravated the seriousness of the offending beyond simple deception.
- Personal hardship and family circumstances, while relevant to the timing and administration of a sentence, did not displace the court's assessment that a custodial sentence was warranted for sustained fraud against a Commonwealth entity.
Legislation and Cases Referenced
Legislation
- Crimes Act 1914 (Cth), including s 16BA (taking into account additional offences on a Form)
- Income Tax Assessment Act 1936 (Cth)
Cases
- Bugmy v R (1990) 169 CLR 525
- DPP (Cth) v De La Rosa [2010] NSWCCA 194
- Hili v R and Jones v R [2010] HCA 45
- Power v The Queen (1974) 131 CLR 623