The Federal Court has allowed a taxpayer’s application to stay proceedings of her appeal, against amended assessments, until determination of committal criminal proceedings against her husband which were related to the transactions that gave rise to the amended assessments.
In doing so, the Court found that she would otherwise suffer “real prejudice” in her appeal as her husband had decided he would not give evidence as it could incriminate him in the criminal matter. This was despite the potential availability of a suppression order or a certificate under s128 of the Evidence Act 2005 to protect him from self-incrimination if he were to give evidence in the tax appeal (s128 gives the Court the power to issue a witness a certificate protecting them from the later use of evidence which might tend to incriminate them).
The taxpayer had been issued with amended assessments to include in her assessable income profits from the sale of shares in mining companies as ordinary income, and not capital gains on the basis that the shares had been acquired (“procured”) on her behalf by her husband with the intention of reselling them at a profit.
The taxpayer’s husband had applied for an exploration licence with the NSW Department of Primary Industry through a mining company for exploration of coal mining tenements. He also provided information to the Department that his intention was to establish and operate a “training mine”. Subsequently, he was charged, under s178BB of the Crimes Act 1900 (NSW), with publishing a statement with the intent of gaining a financial advantage.
In granting the taxpayer’s application for a stay, the Court emphasised that “real prejudice” had to be shown and that the mere existence of criminal proceedings was insufficient. It then stated that, despite the availability of a suppression order or a certificate, under s128 of the Evidence Act 2005, to protect the taxpayer’s husband from self-incrimination, it did not consider that these matters outweighed the prejudice to which the taxpayer would be exposed without her husband’s evidence or to which he himself would be exposed if he was compelled to give evidence – especially as the Commissioner had refused to give an undertaking not to cross-examine the husband on matters that may also be relevant to the criminal proceedings.
Accordingly, the Court found that while “unnecessary delay” in a trial should be avoided, in this case, more weight was required to be given to the value of protecting the husband’s right to silence in the pending criminal case. It also noted that as the husband’s evidence would be critical to the taxpayer’s appeal, and as the onus of proof would be on her to prove that the assessments were excessive, it would seem inevitable that her case would fail without a stay.
(Ransley v FCT [2016] FCA 778, Federal Court, Jagot J, 5 July 2016).
[LTN 129, 7/7/16]
Enacting and repeal of s187BB of the Crimes Act
In 1979 offences of obtaining money etc by deception or by false or misleading statements (ss 178BA (rep) and 178BB (rep)) were enacted in the NSW Crimes Act 1900. Sections 178BA, 187BB and 178C were repealed by the Crimes Amendment (Fraud, Identity and Forgery Offences) Act 2009.
Replacement provisions in the Crimes Act 1900 (NSW)
This Act (repealing s178BB) inserted replacement provisions in the NSW Crimes Act 1900: ‘Part 4AA – Fraud’, including the provision closest to s178BB: new section 192G: ‘Intention to defraud by false or misleading statement’.
‘Bench book’ on the now repealed s178BB of the NSW Crimes Act 1900
As to s 178BB (rep) Crimes Act 1900, the section may be compared with s 176 (rep) which is, however, limited in its scope to corporate officers. Like s 178BA (rep), s 178BB extends to the obtaining of any “money or valuable thing or any financial advantage of any kind whatsoever” — as to which, see the notes in relation to s 178BA.
No element of dishonesty is, however, required to be proved by the Crown under s 178BB, although the jury should not be so directed: R v Stolpe (unrep, 30/10/96 NSWCCA).
Intent as to the obtaining must be proved, as must knowledge of the false or misleading nature of the statement relied on by the Crown, or “reckless disregard” as to whether the material particular in the statement is false or misleading.
The phrase “reckless disregard” in s 178BB may be compared with the phrase “whether deliberate or reckless” in the definition of “deception” in s 178BA(2). Although there is considerable discussion in the authorities as to the meaning of “reckless” and “reckless disregard” in various statutory contexts, it appears that a jury should be directed in terms that both expression import a subjective state of mind in the accused in relation to the deception (s 178BA(2)) or making of a false statement (s 178BB) in that, whilst foreseeing the possibility that it may be false, he or she made the statement not caring whether it was true or false, and without any honest belief as to its truth. See the discussion of authorities in Pollard v Commonwealth DPP (1992) 28 NSWLR 659.
It should be noted, however, that the Crown may only rely on “reckless disregard” on a charge of making a false or misleading statement and that, in relation to the publication or the concurrence in making or publishing a statement, the Crown is restricted to actual knowledge of the false or misleading character of the statement: R v Rinaldi & Kessey (1993) 30 NSWLR 605.
To “publish” means to convey the offending statement to the mind of another: Webb v Bloch (1928) 41 CLR 331, 363; R v Rinaldi & Kessey(1993) 30 NSWLR 605, 609. To “concur” in a publication involves no more than doing an act which, together with the acts of others (who may be behaving quite lawfully), brings about publication. The word is not coextensive with the concept of aiding, abetting, counselling or procuring in s 351 Crimes Act 1900: R v Lee (unrep, 19/06/97, NSWCCA).
A statement may be rendered false or misleading by material omission even though otherwise factually accurate: R v Bishirgian (1936) 1 ALR 586; R v M (1980) 2 NSWLR 195. A statement is false or misleading in a material particular if, of moment or significance, it is capable of influencing the mind of the person to whom it is directed, and is not merely trivial or inconsequential: R v Clogher [1999] NSWCCA 397, and the authorities cited.