MacPherson v Commissioner of Taxation
[1998] QDC 95
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- MacPherson v Commissioner of Taxation[1998] QDC 95
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MacPherson v Commissioner of Taxation[1998] QDC 95
MacPherson v Commissioner of Taxation[1998] QDC 95
IN THE DISTRICT COURT HELD AT SOUTHPORT QUEENSLAND | Appeal No. 22 of 1997 |
[Before Robin QC DCJ]
[GJ MacPherson v Comm. of Taxation by LD Evans and KM Thompson]
BETWEEN:
GRAHAM JOHN MACPHERSON | Appellant (Defendant) |
AND:
COMMISSIONER OF TAXATION
by
LEIGHTON DAVID EVANS
Appeal No. 23 of 1997
BETWEEN:
GRAHAM JOHN MACPHERSON | Applicant (Defendant) |
AND:
COMMISSIONER OF TAXATION
by
KEVIN MARK THOMPSON | Complainant (Respondent) |
JUDGMENT
Judgment delivered: 22nd April 1998
Catchwords: | Appeal from Magistrate to District Court – Appellant refused costs orders by Magistrate on dismissal of summary charges against him – breaches charged of s. 8P(a) Taxation Administration Act 1953 (Cth) – s. 8ZN of Taxation Administration Act considered – Appellant allegedly failed to include in income tax returns benefits received from employer, contended they were fringe benefits in respect of which tax liability fell on his employer – s. 158A Justices Act (Qld) Latoudis v. Casey (1990) 170 CLR 534 considered – s. 68(2) Judiciary Act (Cth) and its application to the Justices Act considered – s. 68(1), s. 79 and s. 80 Judiciary Act (Cth) – both appeals dismissed |
Counsel: | Mr J Jerrard QC with him Mr Conrick for the appellants Mr Adsett for the respondents |
Solicitors: | McDonald Brown for the appellants Commonwealth DPP for the respondents |
Hearing Date(s): | 2 March 1998 |
IN THE DISTRICT COURT HELD AT BRISBANE QUEENSLAND | Appeal No. 22 of 1997 |
BETWEEN:
GRAHAM JOHN MACPHERSON | Appellant (Defendant) |
AND:
COMMISSIONER OF TAXATION
by
LEIGHTON DAVID EVANS
Appeal No. 23 of 1997
BETWEEN:
GRAHAM JOHN MACPHERSON | Applicant (Defendant) |
AND:
COMMISSIONER OF TAXATION
by
KEVIN MARK THOMPSON | Complainant (Respondent) |
REASONS FOR JUDGMENT - ROBIN D.C.J.
Delivered the 22nd day of April 1998
These two appeals are brought by Mr Macpherson from the refusal of a Magistrate to make orders for costs in his favour on the dismissal of complaints of breaches of s. 8P(a) of the (Cth) Taxation Administration Act 1953, separate offences being charged in respect of the taxation years to 30 June 1989, 30 June 1990 and 30 June 1991. The explanation of there being two files is that the decision was made at some point that the complaint ought to be made by Mr Evans rather than Mr Thompson; a new complaint and summons incorporating additional detail of 30 April 1997 replaced an original one of 7 October 1996.
Essentially, Mr Macpherson was alleged to have failed to include in the income he reported from his employer, Simuse Pty Ltd trading as City Meats Lutwyche benefits received from the employer by way of specified payments which would appear to relate to private consumption of his. Typically, the benefits were paid for by cheques drawn on the account of Simuse Pty Ltd. Its principals were a couple named McCurrie. Mr Macpherson, not disputing that he enjoyed the benefits, took the line that they did not represent income reportable by him, but, rather, “fringe benefits” such that it was the employer's obligation to make appropriate reports to taxation authorities and pay the appropriate fringe benefits tax. Mr Macpherson appears to have been left in control of the cheque book. He had the management of the butcher shop, the McCurries being out of the State. They gave evidence of lack of awareness of the benefits Mr Macpherson was taking over a number of years. Of those benefits, the Magistrate, who had rejected a submission of no case to answer at the end of the prosecution case, said:
“At the end of the day I am not satisfied beyond reasonable doubt that the employers were unaware. I am not satisfied beyond reasonable doubt that they do or did form income. I believe that they were paid as a result of arrangements between the McCurries and the defendant to be a benefit and that in the scheme of things they more readily fit the definition of fringe benefits than they do income...the benefit of that doubt, then, must go to the defendant. I find the defendant not guilty.”
The reasons given began with the observation “what a lovely milking cow the butcher shop at Lutwyche has proved to be”. Of the McCurries, whose evidence he did not accept, his Worship said:
“At the end of the day they'd lodged tax returns, it would seem, and they claimed the full benefit of some of the disguised payments that the defendant had set up in the cheque book and whilst we are on the acceptance of evidence, I don't really accept the evidence of the defendant where he says that everything he did was for the good of the company. I believe that he knew full well what he was doing and that what he was doing was done in connivance with the McCurries.”
The Taxation Administration Act contains in s. 8ZN a relevant provision respecting costs:
“In a prosecution for a prescribed taxation offence, the court may award costs against any party.”
Mr Macpherson's complaint is that the Magistrate declined to award costs against the respondents. It was submitted that the Magistrate was not justified in relying upon s. 158A of the Justices Act 1886 (Q), which is, in part:
- “158A.(1)Despite section 158(1), justices who dismiss a complaint may make an order for costs in favour of a defendant against a complainant who is a police officer or public officer only if the justices are satisfied that it is proper that the order for costs should be made.
- (2)In deciding whether it is proper to make the order for costs, the justices must take into account all relevant circumstances, including, for example -
- (a)whether the proceeding was brought and continued in good faith; and
- (b)whether there was a failure to take appropriate steps to investigate a matter coming to, or within, the knowledge of a person responsible for bringing or continuing the proceedings; and
- (c)whether the investigation into the offence was conducted in an appropriate way; and
- (d)whether the order of dismissal was made on technical grounds and not on a finding that there was insufficient evidence to convict or make an order against the defendant; and
- (e)whether the defendant brought suspicion on himself or herself by conduct engaged in after the events constituting the commission of the offence; and
- (f)whether the defendant unreasonably declined an opportunity before a charge was laid -
- (i)to explain the defendant's version of the events; or
- (ii)to produce evidence likely to exonerate the defendant; and the explanation or evidence could have avoided a prosecution; and
- (g)whether the defendant conducted the defence in a way that prolonged the proceedings unreasonably; and
- (h)whether the defendant was acquitted on a charge, but convicted on another.”
The definition of a “public officer” in s. 4 establishes that Commonwealth officers, such as the present respondents, are included. Sections 158A(3) to (6) are there to ensure that this State legislation does not have the effect of rendering the Commonwealth exchequer liable to meet costs shown in a certificate signed by the Clerk of the Court given to a defendant awarded costs. Section 158(1) used to be the sole source of a Magistrate's power to order costs against an unsuccessful complainant:
“158.(1) When justices instead of convicting or making an order dismiss the complaint, they may by their order of dismissal order that the complainant shall pay to the defendant such costs as to them seem just and reasonable.”
There can be no doubt that the enactment of s. 158A indicates Parliament's disagreement with the High Court decision, by a three two majority, in Latoudis v. Casey (1990) 170 CLR 534 which arose out of the Victorian equivalent of s. 158(1). The head note is:
“Section 97(b) of the Magistrates (Summary Proceedings) Act 1975 (Vict.) authorized the court, when it dismissed an information, to order the informant to pay to the defendant such costs as it thought just and reasonable.
A person was charged with theft of a motor car, receiving stolen goods, namely car accessories, and unlawful possession of the same goods. The first charge was dismissed when the prosecution led no evidence. The second was dismissed after a submission that the defendant had no case to answer was upheld. The third was dismissed at the close of the defendant's case. The magistrate refused the defendant's application for costs on the ground that the informant had acted reasonably in instituting the proceedings and that the defendant had caused suspicion to fall on him by failing to seek proof of ownership of the goods when he acquired them.
Held, by Mason CJ., Toohey and McHugh JJ., Brennan and Dawson JJ. dissenting, that the magistrate's exercise of discretion had miscarried, and the defendant was entitled to his costs.
Per Mason C.J. and Toohey J. In ordinary circumstances an order for costs should be made in favour of a defendant against whom a prosecution has failed. The reasonableness of the informant's conduct in instituting the proceedings is not a basis for refusing an order. But the conduct of a successful defendant before the charge is laid or in defending the prosecution may justify a refusal of costs.
Per McHugh J. A successful defendant in summary proceedings has a reasonable expectation of obtaining an order for costs against the informant, and the discretion to refuse to make the order should not be exercised against him except for a reason directly connected with the charge or the conduct of the proceedings.”
The dissenting judgment of Dawson J indicates that the majority approach instituted a new prescription at variance with existing practice in summary jurisdictions, which had persisted in the face of some judicial disapproval. It is worth setting out the last couple of pages of Dawson J's reasons (from 559ff) as indicating the approach the legislature desired taken:
“In Victoria, little assistance upon the question of costs is to be gained from a comparison of summary prosecutions with civil proceedings. The more obvious comparison is with prosecutions for indictable offences where, in the absence of some special statutory provision, costs are awarded to neither side. True it is that upon summary conviction a defendant may be ordered to pay the informant's costs, but, in the case of a police informant, these do not ordinarily include professional costs. A police informant brings summary proceedings in his own name but he does so in the performance of a public duty in the same manner as the Crown prosecutes indictable offences. Nevertheless, if costs are awarded against him he is liable to pay them. Normally costs awarded against a police informant are met out of the public purse but in Victoria any such payment is made ex gratia and an informant may not be indemnified if those in authority consider that he has misconducted himself in relation to the prosecution.
It was as long ago as 1935 that Mann J. observed in Anstee v. Jennings (94) that “the order for costs in a Court of Petty Sessions ... should have nothing to do with the reasonableness of the informant's action. It is a matter of giving proper indemnity to a successful defendant for costs to which he has been put without lawful justification” (95). Nevertheless, the cases referred to by Carter J. in Lewis v. Utting (96) and, indeed, the decision of the magistrate in this case would suggest that Mann J.'s observation and similar remarks in other jurisdictions have not significantly weakened a long-established practice on the part of magistrates in Victoria not to award costs against police informants who have acted reasonably. Plainly, an important justification for that practice is the fact that a police informant is performing a public duty. And it seems to me to be a quite legitimate consideration in determining whether costs should be awarded to a successful defendant that a police informant might be deterred from doing his duty by the prospect of costs being awarded against him, indemnification being a matter of discretion and not of right. It may not, as Carter J. observed in Lewis v. Utting, be a decisive consideration, but it is certainly not without significance. It may be noted that the legislation in Western Australia, in making provision for the payment of costs to successful defendants, avoids even the making of an order for costs against a police informant, even though any costs awarded to a successful defendant are paid from public funds.
These matters are not the only justification for what appears to be the present practice in Victoria. In summary proceedings no less than in other criminal proceedings, the prosecution must prove its case beyond reasonable doubt. In many cases defendants quite properly escape conviction without having positively established their innocence. However, to differentiate cases of that kind from those in which a defendant has established his innocence, and not merely raised a doubt, by making an order for costs against the informant in the one case but not the other, would be invidious and inconsistent with the presumption of innocence. Moreover, to award costs to a defendant against whom a charge has been proved on the balance of probabilities (but not beyond reasonable doubt) does not seem to be an appropriate exercise of discretion. Such a practice might subtly erode the standard of proof in criminal cases in order to avoid the granting of costs to a defendant who is probably guilty.
Clearly, where there is statutory provision for costs awarded to a successful defendant to be met out of public funds, it is a matter to be taken into account and may, depending upon the nature of the provision, be a determinative factor in the exercise of the discretion. But there is no such provision in Victoria, merely a practice which, although ordinarily followed, is not binding. It is because a police informant remains personally liable as a matter of law to pay any costs awarded against him that an order for costs may be, and commonly is, regarded as a means of penalizing or discouraging any improper or unreasonable behaviour on an informant's part in the conduct of the proceedings. Matters such as the failure properly to investigate a matter, lack of good faith in bringing the proceedings, or the failure to prosecute the proceedings in a proper manner may warrant the making of an order for costs against the police informant.
For all of these reasons, a successful defendant in summary proceedings for an offence can, in my view, have no expectation as a general rule, unlike a successful party in civil proceedings, that costs will be awarded in his favour. The discretion conferred by s. 97(b) of the Magistrates (Summary Proceedings) Act was unfettered, but the considerations which a magistrate ought to take into account in criminal proceedings require a particular approach. All other things being equal, the mere acquittal of a defendant ought not to result in an order for costs being made in his favour against a police informant. Thus, the magistrate in this case was entitled, in the exercise of his discretion, to refuse to award costs in favour of the appellant. The appeal should be dismissed.
(93) ( 1986 161 C.L.R., at p. 520). | (95) [1935] V.L.R. at p. 148. |
(94) [1935] V.L.R. 144 | (96) [1985] 1 Qd R. 423.” |
Some of the language of s. 158A appears to be taken from the judgments in Latoudis v. Casey.
Mr Jerrard QC, who appeared with Mr Conrick for Mr Macpherson, was plainly correct in his submission that nothing in s. 158A(2)(e) to (h) inclusive tended in any way to weaken Mr Macpherson's claim to the costs order he sought against the respondents to the appeals. The thrust of his case, however, was that s. 158A ought not to have been consulted by the Magistrate at all, the field having been covered by s. 8ZN. As it happens, it is Mr Macpherson himself who has been responsible for producing the authority principally relied on, R v. Macpherson (1996) 1 Qd R 656. Mr Macpherson successfully appealed to the Court of Appeal against convictions on 24 counts of fraudulent false accounting contrary to s. 441(b) of the Criminal Code of Queensland, the charges alleging false entries in cheque books belonging to his employer with intent to defraud. (It might be noted that the 24 cheques in issue there were quite separate from the 33 cheques involved in the charges before the Magistrate, who has noted that there still remained another 34 cheques “that haven't been the subject of any litigation of any type” - so that there is no question of double jeopardy here.) The jury who heard evidence from the McCurries made a special finding under s. 624 of the Criminal Code that the false entries were made with intent to defraud the Commissioner of Taxation, but not with intent to defraud the employer. At 660, Fitzgerald P and Davies JA said:
“A broad description has been given above of Part III, especially Division 2, of the Taxation Administration Act. Its plain intention is to provide common rules, operating throughout Australia, which it considers appropriate to proscribe and punish conduct inimical to the implementation and enforcement of the tax legislation.
It is an exhaustive statement on such matters, to or from which “the legislation of a State can neither add or subtract” - Blacklock at 342.
In our opinion, 441(b) of the Code therefore had no valid operation in relation to the appellant's conduct.
The appeals should be allowed.”
Mr Macpherson's argument in the present appeals is that, by parity of reasoning, s. 8ZN leaves no room for State legislation to “add or subtract”. The Magistrate's refusal to award costs to Mr Macpherson was based on s. 158A of the Justices Act. If there was no room in the case for the application of s. 158A, the principles established by Latoudis must be consulted instead; in accordance with those, there was effectively an onus on the present respondents to demonstrate that Mr Macpherson ought not to get costs, whereas under s. 158A, it is for the successful defendant to discharge the onus of satisfying the Court that it is proper that an order for costs should be made in his favour. Mr Adsett is correct that the Court of Appeal did not find the Taxation Administration Act an “exhaustive code on procedure”, but rather an “exhaustive code in relation to conduct inimical to the implementation and enforcement of the taxation legislation”. The present appeals themselves are not warranted by anything in the Taxation Administration Act, but are authorised by the combination of s. 68 of the Judiciary Act (Cth) and s. 222 of the Justices Act.
The question remains whether s. 8ZN is a code in respect of costs (albeit leaving room for application of the Latoudis principles) or “covers the field” in respect of costs, so that in that regard State law may have no application.
Before Latoudis, as the judgments therein demonstrate, variations from State to State in judicial formulation of the costs principles applicable might have led to inequality of operation just as much as legislation peculiar to one State or another such as s. 158A. The appellant relied on Cheatle's Case (1993) 177 CLR 541 for the proposition that even without a prohibition of discrimination among States as found in s. 51(ii) of the Constitution, there may be objections to idiosyncratic State provisions. Cheatle concerns a South Australian provision permitting a jury unable to reach a unanimous verdict to return a verdict by a defined majority. All seven members of the High Court considered it was “a matter for the people of Australia”, presumably consulted in a referendum, to decide whether the traditional requirement of unanimity should be abandoned. It is difficult to see what Cheatle has to say in the present context.
As to unequal operation not amounting to discrimination for purposes of s. 51(ii), in Conroy v. Carter (1968) 118 CLR 90, 101, Taylor J, in a passage attracting the agreement of other judges said:
“...... a law with respect to taxation cannot, in general, be said so to discriminate if its operation is general throughout the Commonwealth even though, by reason of circumstances existing in one or other States, it may not operate uniformly. Such a law is s. 72(1.) of the Income Tax Assessment Act 1936-1966 (Cth) which provides, inter alia, that sums for which the taxpayer is personally liable and which are paid in Australia by him in the year of income for land tax imposed under any law of the State shall be allowable deductions. This is a provision which operates generally throughout the Commonwealth and the fact that in some States there may be no legislation imposing land tax does not mean that it discriminates between States.”
Mr Adsett's submissions, noting that the High Court left open in Deputy Commissioner of Taxation v. Moorebank Pty Ltd (1988) 165 CLR at 65 whether it was acceptable that the Commissioner's ability to sue for tax might vary from State to State according to limitations legislation, suggested that the preferred view is as expressed by Higgins J in James v. The Commonwealth (1928) 41 CLR 442, 462:
“Where the rule laid down is general, applicable to all States alike, but is found to operate unequally in the several States not from anything done by the Commonwealth Parliament but from the inequality of the conditions existing in, or the law imposed by, the States themselves, the Commonwealth has not been guilty of discrimination or preference between States.”
referring to PJ Hanks Australian Constitutional Law Materials & Commentary (5th) 499, also Leeth v. The Commonwealth (1992) 174 CLR 455, 467-469, especially at 469, where Mason CJ, Dawson J and McHugh J said:
“In investing State courts with federal jurisdiction, the Commonwealth must take the Courts as it finds them, notwithstanding the differences which exist from State to State.”
The provisions of the Judiciary Act which may bring in s. 158A of the Justices Act are:
- “68. (1)The laws of the State or Territory respecting the arrest and custody of offenders or persons charged with offences, and the procedure for:
- (a)their summary conviction; and
- (b)their examination and commitment for trial on indictment; and
- (c)their trial and conviction on indictment; and
- (d)the hearing and determination of appeals arising out of any such trial or conviction or out of any proceedings connected therewith;
and for holding accused persons to bail, shall, subject to this section, apply and be applied so far as they are applicable to persons who are charged with offences against the laws of the Commonwealth in respect of whom jurisdiction is conferred on the several courts of that State or Territory by this section.
- (2)The several Courts of a State or Territory exercising jurisdiction with respect to:
- (a)the summary conviction; or
- (b)the examination and commitment for trial on indictment; or
- (c)the trial and conviction on indictment;
of offenders or persons charged with offences against the laws of the State or Territory, and with respect to the hearing and determination of appeals arising out of any such trial or conviction or out of any proceedings connected therewith, shall, subject to this section and to s. 80 of the Constitution, have the like jurisdiction with respect to persons who are charged with offences against the laws of the Commonwealth.”
.....
“79. The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.”
“80. So far as the laws of the Commonwealth are not applicable, or so far as their provisions are insufficient to carry them into effect, or to provide adequate remedies or punishment, the common law in Australia as modified by the Constitution and by the statute law in force in the State or Territory in which the Court in which the jurisdiction is exercised is held shall, so for as it is applicable and not inconsistent with the Constitution and the laws of the Commonwealth, govern all Courts exercising federal jurisdiction in the exercise of their jurisdiction in civil and criminal matters.”
(At my request, the parties made supplementary submissions regarding s. 68(2), which neither had raised at the hearing, and s. 68(5A.) The latter, both sides submitted, may have had potential application, in that Mr Macpherson resided at places in Queensland when he submitted the three relevant returns to the South Sydney office of the Commissioner. Although the Magistrate at Southport might have declined the “jurisdiction” referred to, he was never asked to do so. Section 68(5A) was, I think appropriately, regarded by the parties as concerned with the geographical aspect of jurisdiction rather than the kinds of orders a Court may have jurisdiction to make in a matter properly entertained by the Court. (Compare Tsorvas v. Vanvelsen (1983) 53 ALR 191).)
Mr Jerrard for Mr Macpherson relied much on R v. Kinal (1978) Tas. SR 91; 21 ALR 261. Tasmanian legislation expressed to bind the Crown provided that in defined circumstances a defendant discharged from prosecution proceedings might recover his costs from the Crown or the complainant. Where a prosecution under the Customs Act (Cth) 1901 failed, the defendant's application for costs failed on the basis that the Crown in right of the Commonwealth was not bound by State provisions. Green CJ went further, holding that s. 68(1) of the Judiciary Act did not bring in the Tasmanian provision because the latter:
“is not a law relating to procedure: it is a law which confers rights upon defendants to recover moneys from the Crown and it thus forms part of the substantive if, as opposed to the merely adjectival, law of Tasmania.”
That costs concern substance rather than procedure is a proposition that would appeal to any litigant entitled to or required to pay costs. For present purposes, Kinal may be accepted. The High Court has determined (without identifying the appropriate subsection) that s. 68 and/or s. 79 bring in the costs provisions of the Justices Act in summary prosecutions of offences against Commonwealth laws. See R v. Archdall & Roskruge; ex parte Carrigan (1928) 41 CLR 128. See in particular 143 (per Higgins J) and 147 (per Starke J). Archdall does not help on the substance/procedure question, if there be one; although s. 79 refers to procedure, that is simply giving an example by way of illustration (or perhaps expansion) of what is made applicable by the reference to “the laws of each State”.
There is authority that s. 68(2) brings in State provisions similar to those dealing with costs in the Queensland Justices Act in Tsorvas v. Vanvelsen (1983) 53 ALR 191, 201-02 where Johnston J considered the matter, concluding:
“Section 68(2) of the Judiciary Act says that State courts exercising various jurisdictions in relation to State offences - and including summary jurisdiction - shall have the like jurisdiction in relation to offences against Commonwealth law. That is, where, by Commonwealth legislation, an offence can be dealt with summarily, the courts of a State exercising summary jurisdiction in State matters shall have the like jurisdiction over persons charged with a Commonwealth offence as over persons charged with State offences. And this includes, in relation to South Australia, the right to order costs against a convicted defendant.”
With this view, I respectfully agree. Notwithstanding Mr Adsett's lack of enthusiasm, I consider that s. 68(2) of the Judiciary Act brings in, along with other provisions, Part 6, Division 8 of the Justices Act, including s. 158A.
(Tsorvas v. Van Velsen, also reported at 35 S.A.S.R. 321 was reversed on appeal at (1984) 37 S.A.S.R. 490, but not in a way casting doubt on the primary Judge's ruling in respect of s. 68(2), which was quite deliberately made, in the apprehension that the situation was “one which must arise quite frequently in the Courts of Summary Jurisdiction”.)
The authorities just mentioned involved no counterpart of s. 8ZN. The question arises whether its existence excludes the operation of Division 8. The purpose of s. 158A is to identify guidelines which must be consulted, along with “all relevant circumstances” of much of the same kinds as judges have formulated over the years, the judges' work now being subsumed in Latoudis, which indicates the way in which an unfettered discretion like that in s. 158 is now to be approached. Section 80 of the Judiciary Act is an express acknowledgment that the common law, now to be found in Latoudis, may be modified by statute law enacted in accordance with the views of the various State legislatures. This is what Queensland's legislature has attempted to do. The whole notion of the Judiciary Act is that within a State litigation is to proceed in the same way whether the parties' rights and obligation are derived from Commonwealth law or State law. It is accepted that outcomes in Commonwealth matters which would appear indistinguishable may vary from State to State according to local circumstances.
Although it is not necessary to decide it, I express the view that s. 79 is effective to bring in s. 158A. I have misgivings about reaching the same conclusion in respect of s. 80, which Mr Adsett also relied upon. I have difficulty in detecting any non-applicability or insufficiency of the laws of the Commonwealth in the present situation.
Just as s. 80 does not bring in anything “inconsistent with the Constitution and the laws of the Commonwealth” so s. 79 does not apply if it is “otherwise provided by the Constitution or the laws of the Commonwealth”. Section 79 may leave standing more of State laws than might s. 80 which invokes the notion of inconsistency and the associated notion of Commonwealth legislation covering the field. The Commonwealth legislature here has said no more than that the court of summary jurisdiction “may award costs against any party”. In my opinion, such a provision not only leaves a scope for, but envisages the application of State laws as to quantum and/or mode of assessment of costs and the procedures in accordance with which orders for costs may be sought or enforced. Pertinently, State law may, in my opinion, be referred to, indeed, must be referred to, where it sets out the principles in accordance with which costs may be ordered against certain categories of unsuccessful complainant. The present respondents are in one of those categories.
In my view, the Magistrate was right in determining that he should “utilize the provisions of s. 158A(2) of the Queensland Justices Act which appropriately and conveniently sets out a number of matters which Justices must take into account in all the relevant circumstances...”. The Magistrate was also right in saying by reference to authority, that all relevant circumstances including those set out in s. 158A(2)(a) to (h) (but not limited to them) must be considered; he appreciated that (a) to (h) are not exhaustive.
The reasonableness of a complainant's performance is dealt with in (a) to (d) inclusive. In the Magistrate's view, with which I agree, nothing could be said against the present complainants. What Mr Jerrard advanced was a two-fold argument, the first proposition being that the income or benefits not disclosed by Mr Macpherson were “fringe benefits” which he was under no obligation to report, the second proposition being that the McCurries' evidence was discredited, given the District Court jury's special verdict. The first proposition depended crucially on the Magistrate's resolving conflicts between the McCurries' evidence that they did not know he was taking the benefits, and his evidence that they did, so that their company was “providing” them. I am not prepared to say the jury's answer means the McCurries were so discredited that their evidence was never going to be accepted. The jury heard evidence regarding certain cheques, the matters before the Magistrate concerned other cheques written for different expenditures. The considerations were not necessarily the same. Mr Adsett submitted it could not even be said the jury had disbelieved the McCurries.
Paragraphs (e) to (h) inclusive in s. 158(2) focus on conduct of a defendant whereby he or she may be deprived of costs although successfully defending a prosecution. I agree with Mr Jerrard that nothing was done or omitted to be done by Mr Macpherson that enlivens any of those four considerations tending to weaken his claim to costs. The Magistrate certainly had regard to the conduct of Mr Macpherson, but it was to conduct contemporaneous with or preceding the events constituting the alleged commission of offences by him. This is immaterial if the conduct comes within the general expression “all relevant circumstances” in ss. (2). I do not take Latoudis to decide in a binding way what may be relevant circumstances. At page 26 of the decision, the Magistrate described himself as particularly interested in (a), (b) and (e). The reference to (e) is a problem. The Magistrate's discussion, however, returned to (a); he found there was nothing to be said against the complainants. See page 28. Saying, “then I want to have something to say about the defendant”, he expressed disapproval of Mr Macpherson's conduct in various ways. He noted (although it is not clear that he gave any effect to) the jury determination (which did not survive Court of Appeal) that Mr Macpherson had meant to defraud the Taxation Department. He came to the view “that there was some - if not collusion, then at least knowledge - common knowledge between...the McCurries...and the defendant as to what was happening with respect the income of...the butcher shop at Lutwyche”. He went on:
“I believe that both the McCurries and Macpherson had formed this common intent to retain as much of the income of this business as they could, and in so doing, to keep the Taxation Department from collecting income tax in whatever shape or form the income tax department might have been able to do...whether it might have been by way of personal tax, or whether it be by way of a fringe benefit tax, or...companies tax...”.
Warming to this theme, the Magistrate concluded his examination of what he thought “relevant circumstances” and announced his decision on Mr Macpherson's applications for costs at page 30 of the decision:
“But the defendant comes to this Court with dirty hands, he comes before the Court with - in my view - tainted evidence, he comes to this Court purely to avoid, again, paying tax on the moneys that he has received from this business. And there is no question that - in my view - that he has received benefits from this business, and that - at this point in time at least - no person has been required to pay tax on those moneys and they are clearly income which has been derived from the running of this butcher's shop. Now that is for the taxation department to consider down the line, but it is my view that I can, in the exercise of my discretion, take into consideration the bona fides of the defendant here.
And, as I say, he comes to me with dirty hands, he comes to me with tainted evidence, and in the exercise of my discretion I am not going to award him an order of costs as against the taxation department, when they seek to recover in the best way they can taxation which is not unreasonably due to them. He - in my view - should not be allowed to benefit to the extent that the cost of his defending his actions is awarded against the very people that are seeking to obtain what they are rightfully entitled to, and that is a tax dividend on the income of this business.
This is colourful language, and in some respects, wide of the mark, as Mr Jerrard submitted. Each paragraph contains an inaccurate description of what Mr Macpherson was up to. He had not come to the Court at all in one sense, being brought there, presumably unwillingly, to face prosecutions. The purpose of the prosecutions was to get Mr Macpherson convicted if they succeeded, rather than to recover tax. It is not appropriate to characterize as a “benefit” to a defendant who defeats a prosecution an order reimbursing him for the costs he has necessarily expended in doing so. It seems to me unsound for a court to exercise a discretion in respect of costs as a means of penalizing in that way a person thought to be avoiding or evading tax or complicit in others' avoiding or evading tax, unless, of course, such a feature of the person's conduct is a “relevant circumstance”.
Costs being a creature of statute, the statute is a source of the rules and guidelines in accordance with which the costs discretion is exercised. Section 158A(2)(e) has no part to play; however, the subsection as a whole does not limit the “circumstances” of conduct by a defendant which are “relevant” and must be taken into account.
I note the appellant's submission that the relevant “conduct” on his part excludes his conduct, the subject of the charge. I am grateful to be able to set out written supplementary submissions based on Latoudis:
“The conduct referred to is clearly conduct in the course of the investigation, the subsequent litigation. This is apparent from the observations of McHugh J at 569.6:
“Generally, before a court deprives a successful defendant in summary proceedings of his or her costs, it will be necessary for the informant to establish that the defendant unreasonably induced the informant to think that a charge could be successfully brought against the Defendant or that the conduct of the Defendant occasioned unnecessary expense in the institution or conduct of the proceedings...thus non-disclosure to investigating police of a tape...A successful defendant cannot be deprived of his or her costs, however, because the charge is brought in the public interest or by a public official, because the charge is serious or because the informant acted reasonably in instituting the proceedings or might be deterred from laying charges in the future if he or she was ordered to pay costs. Nor can the successful defendant be deprived of his or her costs because the conduct of the defendant gave rise to a suspicion or probability that he or she was guilty of the offence the subject of the prosecution”.
See also 571.8
“The claim that the appellant should be deprived of his costs really depends, however, upon the proposition...because his or her conduct has caused suspicion to fall upon him or her. If that is a ground for refusing a costs order in summary proceedings most successful defendants would not obtain a costs order. The mere fact that a successful defendant's conduct has given rise to a suspicion that he or she was guilty of the offence charged is not a reason for depriving that person of his or her costs.”
In our submission, his Worship was clearly holding that although there may be reasonable grounds for the prosecution to consider:—
- (a)that some serious breach has occurred;
- (b)that the defendant has committed the breach;
that is not enough to deprive the defendant of his or her costs.
See also Toohey J at 564.3:—
“views may differ as to the conduct of the appellant in buying car parts from someone known only his call sign of ‘Peter’, his address was apparently neither sought nor given, and in not seeking a receipt or evidence of ownership. But that was conduct which had necessarily taken place before any question of a prosecution arose. It was not conduct in the course of the police investigation.”
It is only conduct in relation to the investigation and litigation that may be examined. No such factors are present in the instant case.”
Mason CJ agreed with McHugh J on this aspect, so that there is a majority view in the High Court.
Mr Jerrard's submission would be correct if Latoudis set out the guidelines relevant to the Magistrate's task, or if s. 158A(2)(e) was one of a complete list of circumstances to be considered - neither is the situation, the Magistrate being obliged to take into account “all relevant circumstances”, which may (and he thought did) go beyond those itemised.
It seems to me that Latoudis now governs where a Magistrate's power to order costs as part of dismissal of a summary charge is derived from a provision such as s. 158(1). McHugh J (at 566) referred to the defendant's reasonable expectation of being awarded costs. The Chief Justice (at 543) said the court “should look at the matter primarily from the perspective of the defendant”. Toohey J at 565 said that “ordinarily it would be just and reasonable that the defendant against whom a prosecution has failed should not be out of pocket”. Section 158A(1) makes it clear that the successful defendant is not to be treated so tenderly - rather, has no expectation of being awarded costs, to be eligible for which he or she must show that an award of costs against the complainant is “proper”. In my opinion, circumstances of the kinds that courts have considered sufficiently connected with the case to be accorded weight, in deciding whether a successful defendant should get costs, may qualify as “relevant circumstances” within s. 158A(2) and, if they are relevant circumstances, must be taken into account.
Notwithstanding the Magistrate's somewhat emotive and highly judgmental language, I think the gravamen of what he said is that Mr Macpherson colluded with the McCurries in a systematic way with a view to depriving the taxation authorities, and so their fellow citizens, of contributions to the revenue which would have been exacted if the truth had been recorded and disclosed. The evidence shows that this happened in at least three successive years of income. The present prosecutions of Mr Macpherson failed because the McCurries' evidence at the end of the day did not impress the Magistrate and left him unable to find beyond reasonable doubt that the benefits in question, which Mr Macpherson undoubtedly enjoyed, were “not” provided (in the sense of provided knowingly) by their company. I think it is absurd to imagine that as between Mr Macpherson and the McCurries (or in the minds of either side) there was an understanding that Mr Macpherson would not declare the income or that the McCurries would report the relevant items as fringe benefits, or anything of that nature. It is a close matter, but in the end, I am of the view that in the context of this case, Mr Macpherson's conduct forming the background of the events concerning the commission of the offences alleged did form part of the relevant circumstances. It was the Magistrate's prerogative to decide what circumstances were relevant to the exercise of his judgment. Donald Campbell & Co v Pollak (1927) AC 732, in particular the judgment of Viscount Cave L.C. at 810-812, shows that appeal courts are well advised to act circumspectly in overturning a primary tribunal's views of what circumstances are “sufficiently connected” with matters in dispute (or relevant) to be given weight in adjudicating upon costs in proceedings which fail.
Some guidance as to what may amount to relevant circumstances emerges from local appellate decisions upon s. 158 of the Justices Act which confers on a magistrate a discretion to award costs against an unsuccessful complainant. These decisions emphasised that the discretion was unfettered and that magistrates must not follow any purported general rule such as that a complainant who is a public officer is protected from an adverse costs order if proceeding in good faith: Smith v. Robinson, ex parte Robinson (1980) QdR 372; cf R v. Whelan (1895) 6 QLJ 165, 166. It was held equally wrong to proceed on the basis that costs follow the event, or follow it in the absence of disqualifying factors to do with the defendant; Savage v. Bozier, ex parte Savage (1987) 1 Qd.R 468 - and see the condemnation of rulings by District Court judges sitting on s. 222 appeals in Lewis v. Utting, ex parte Utting (1985) 1 QdR 423, 442. In that case the appeal failed, the magistrate not having had regard to “matters which were not connected with the case” - per Campbell CJ at 429. At 444 Carter J (with whom the Chief Justice and Matthews J agreed) said:
“...the feet that proceedings before justices are instituted by a police officer in the course of performing a public duty and that as a matter of obligation alleged breaches of the peace or of a statute are brought by him before a court is not an irrelevant or extraneous consideration in determining whether costs ought to be awarded against him if the prosecution fails. Again, I repeat that that is not to say that it is the decisive consideration but I am firmly of the view that it is one which may properly be considered in determining upon the proper exercise of the judicial discretion pursuant to s. 158 of the Justices Act.”
(It is doubtful whether this passage, adverted to in Latoudis (by Mason CJ at 539) has survived the High Court's decision.)
That the discretion must not be fettered, and that a magistrate should give attention to the circumstances of each case and act according to the result arrived at was emphasised in Turner v. Randall; ex parte Randall (1988) 1 Qd.R 726 (following both Smith and Lewis). The headnote records:
“That the magistrate's discretion as to costs had miscarried in that he failed to give due weight to the admission by the prosecutor that he could not prove an element of the offence, which inadequacy of proof did not depend on questions of credibility or the fine balancing of issues, but lay at the heart of the charge.”
The s. 158 requirement is replaced for present purposes by S. 158A, which does fetter the magistrate's discretion. To this there can be no objection because it is the legislature's will. The first aspect to note is that an onus is placed on the successful defendant to show that a costs order ought to be made. The second aspect to note is that the magistrate must consider eight listed factors (which may or may not apply in a particular matter), and not only those: the magistrate must consider all relevant circumstances. I am no more able to say that irrelevant circumstances were taken into account than was the Full Court in Lewis.
The Magistrate's decision may seem harsh, but I am unable to say that it fell outside the scope of the sound exercise of the discretion, or that the Magistrate acted on any erroneous principle.
Notwithstanding some difference in the wording of the charges, the Thompson and Evans complaints were essentially regarding the same matters; the particulars were the same. The Magistrate took the view that his determination as to costs on the charges which went to trial ought to determine what happened in respect of the set of charges on which no evidence was offered. That was a reasonable and appropriate approach.
The result is that the appeals must be dismissed in each case, and, presumably, with costs, although I should give the parties an opportunity to submit for a different outcome.
A matter ventilated at the hearing of the appeal was the appropriateness or otherwise of costs orders offering only a partial indemnity to the party entitled to them. The simple idea of costs as an indemnity can lead to problems in summary prosecutions, for instance when those convicted defendants have to pay are inappropriately high, as I thought the case in two Mt Isa appeals, reasons for judgment dated 30.9.97: D L Grimshaw v. Last (4 of 97); and R J Kum Sing v. D V Crosby (9 of 97). See, more generally, the article by Aberdeen, “Quantum of Costs in Criminal Proceedings in the Magistrates Court” (1993) 14 Queensland Lawyer 49. It is not brown what Mr Macpherson's costs have been or will be. The material available shows what his solicitors are charging him, which may or may not represent what he pays in the end. There is nothing to show that the components in the solicitors' account are in accordance with any scale; they have not been vetted by any taxing officer or costs assessor.
Both sides accepted that if Mr Macpherson were adjudged entitled to costs, it would be open to the Court to award less than a full indemnity, although Mr Jerrard submitted that that ought only to be done in special circumstances. He submitted, further, that there being no relevant scale, although the Magistrate did mention to his practice of referring to Magistrates Court Scale (D), and no other basis available on which Mr Macpherson's claim to a full indemnity could be cut back, costs should be awarded in the full amount of the Solicitors' account. Mr Adsett referred to me to Emanuele v. Dau (1996) 87 A.Crim.R. 417, in which a successful defendant's costs were reduced by reference to time-wasting tactics adopted at the trial, and, more pertinently, to Shaftenaar v. Samuels (1975) 11 S.A.S.R. 266, which was mentioned in Latoudis. I'm content to adopt Mr Adsett's summary from his supplementary written submissions supplied 6 March 1998:
“In that case the defendant successfully defended three counts of assault of a police officer in the execution of his duty. The Magistrate refused to order costs and the defendant appealed. On appeal Wells J, like McHugh J in Latoudis v. Casey, held (at 274) that ‘a successful party has, in the absence of special circumstances a reasonable expectation of obtaining an order for payment of costs by the complainant’. Wells J also held, again like McHugh J, that a court should not exercise the discretion against a successful party except for some reason connected with case. In explaining what matters a court may have regard to in determining if a defendant should be deprived of his costs Wells J said (at 275):
“...the court may have regard to the several issues of substance that were really contested; whether and, if so, how, unmeritorious conduct of a party, both in and out of court, bears on those issues; who (having regard to the legal onus - on the prosecution, and, where applicable, on the defendant) has succeeded on those issues; whether those issues (or some of them) were, in consequence of the conduct of one party, unjustifiably or needlessly contested, or contested at undue length”.
In finally determining whether the successful defendant should have his costs Wells J took into account the fact that the defendant had ‘acted in a highly arrogant and provocative manner, which must have created, immediately before the violence that ensued, a tense and angry situation - a fact, not only connected with, but clearly central to, the circumstances of the prosecution’. (At 276) In light of this his Honour ordered that the complainant should pay less than a full indemnity - one half of the assessed costs and out of pocket expenses of the defendant.”
What occurred is precedent not only for the making of a rough and ready or impressionistic division of costs, but also for the taking into consideration of conduct of a successful defendant closely connected with the subject matter of the unsuccessful charge. Another example of a Court apparently taking into account circumstances forming part of an alleged offence is an unreported decision of White J in South Australia, Jones v. Linnane, 27.5.83, referred to in Lewis v. Utting, ex parte Utting (1985) 1 Qd.R 423, 437, where his Honour said:
“The analysis of Wells J in Schaftenaar's Case demonstrates most forcibly that there is no such entitlement as of right in a civil case, let alone in a court of summary jurisdiction. The court has a very wide discretion to refuse costs to a successful defendant, by taking into account not only what occurred in court during the course of litigation but also what led up to the prosecution being brought in the first place. That is to say, the court can look at the substance of the case against the defendant in awarding or refusing costs as part of its assessment that the defendant ought to be deprived of costs.”
(The case is No. 6967 of 1983 - the copy of the reasons in the Law Society Judgment Scheme is at 107 LSJS 92, the passage quoted at p. 96-7.)
Both appeals should be dismissed, and (it appears) with costs to be taxed.