Canberra Cleaners Pty Ltd v Commissioner for ACT Revenue
Citation:
[2018] ACTSC 208
Hearing Dates:
11, 14 December 2017
Last Submissions Received:
7 March 2018
DecisionDate:
3 August 2018
Before:
McWilliam AsJ
Decision:
See [120]
Catchwords:
ADMINISTRATIVE LAW – TAXATION AND REVENUE – judicial review – whether garnishee notices issued to debtors of plaintiffs ought be set aside – whether director’s compliance notices invalid – where notices issued required total income of the businesses to be paid to the Commissioner for ACT Revenue – whether hardship a relevant consideration – whether decisions unreasonable – whether amount of unpaid tax liability stated to be payable on some notices was ambiguous, confusing, incorrect or uncertain – effect of previous declaration of invalidity – those notices ought be set aside
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Canberra Cleaners Pty Ltd v Commissioner for Act Revenue [2018] ACTSC 208
Case
[2018] ACTSC 208
Decision Date
CaseChat Overview and Summary
The case of Canberra Cleaners Pty Ltd v Commissioner for ACT Revenue involved the plaintiffs, Canberra Cleaners Pty Ltd, contesting the validity of certain compliance notices and garnishee notices issued by the Commissioner for ACT Revenue. The plaintiffs sought to have these notices set aside, arguing they were unreasonable and ambiguous. The court was tasked with determining whether the garnishee notices requiring the debtors of the plaintiffs to pay the total income of the businesses to the Commissioner were valid, and whether the compliance notices issued to the directors of the plaintiffs were lawful and reasonable.
The legal issues before the court included whether the compliance notices were inconsistent with the Corporations Act, whether the Commissioner took into account irrelevant considerations or failed to take into account relevant ones in issuing the notices, and whether the notices were ambiguous or confusing regarding the amount of unpaid tax liability. Additionally, the court had to consider the effect of previous declarations of invalidity on the notices in question.
In its reasoning, the court found that the compliance notices were inconsistent with the Corporations Act, placing the directors in conflict with the interests of the companies. The court also determined that the notices were issued immediately after a court order suspending the operation of the garnishee notices, effectively subverting the earlier judicial review proceedings. The court held that the decisions to issue the notices were unreasonable and amounted to an improper exercise of power by the Commissioner. As a result, the garnishee notices and compliance notices were set aside.
The final orders of the court were to set aside the garnishee notices and compliance notices issued by the Commissioner for ACT Revenue to Canberra Cleaners Pty Ltd, finding them to be invalid and unreasonable.
Orders
Orders of the court
See [120]
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
The second complaint made is that the issuing of the compliance notices was inconsistent with a Commonwealth law, namely ss 181 or 182 of the Corporations Act (Cth) (the Corporations Act) (Issue 8). The essence of this complaint is that the director compliance notices put each director into a conflict with the interests of the companies of which they were directors, in that it was in the companies’ interests to remain a going concern in order to pursue the separate litigation disputing the underlying assessments, but once the director compliance notices were issued, it was in the Directors’ interests to wind up the companies so as to avoid becoming personally responsible for any debt owed by the group. The Directors characterise the decision to issue the compliance notices as either (a) exceeding the power of s 56B of the Act; (b) involving an error of law; or (c) an improper exercise of the power, through taking an irrelevant consideration into account, or failing to take a relevant consideration into account. The third ground of complaint is that the director compliance notices were issued immediately after the Court had made orders suspending the operation of the garnishee notices in proceedings SC 424 of 2017. The stay on the operation of the garnishee notices was expressly to preserve the ability of the plaintiffs in proceedings SC 424 of 2017 to pursue judicial review. Absent any stay, the effect of issuing the compliance notices was to force the Directors to commence winding up the companies and thus subverted the stay obtained in the earlier proceeding. The Directors characterise this conduct as taking into account an irrelevant consideration, or failing to take into account a relevant consideration, or as a decision so unreasonable that no reasonable decision-maker could have made it (Issue 9). The scheme for the recovery of taxation revenue from taxpayers is important to the construction of the provisions. Section 52 permits the Commissioner to agree to an arrangement for the payment of tax: The Commissioner may collect an outstanding tax amount from people other than the taxpayer. One of the empowering provisions applicable to this case is s 54, located in pt 7 of the Act, concerning the collection of tax. It is relevantly as follows (emphasis added): Several points are to be made from the emphasised words in this section. First, where the debtor who receives a garnishee notice is paying money to the taxpayer in instalments, s 54(4) of the Act permits the Commissioner to collect out of every instalment only a part of the total amount owed by the taxpayer. Otherwise, if the amount payable to the taxpayer by the receiver of the notice is less than the amount the taxpayer owes to the revenue, all the money is to be paid to the Commissioner in accordance with s 54(6) of the Act. That is, the Act expressly permits the Commissioner to divert and collect every cent that might become payable to the taxpayer by a debtor, in order to pay the tax debt.