Commissioner of State Revenue v Errichetti Nominees Pty Ltd - [2007] WADC 104

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: COMMISSIONER OF STATE REVENUE -v- ERRICHETTI NOMINEES PTY LTD [2007] WADC 104

CORAM: DEPUTY REGISTRAR HEWITT

HEARD: 12 JUNE 2007

DELIVERED : 12 JUNE 2007

FILE NO/S: CIV 389 of 2007

BETWEEN: COMMISSIONER OF STATE REVENUE
Plaintiff
AND
ERRICHETTI NOMINEES PTY LTD (ACN 008 792 916)
Defendant

Catchwords:

Practice and procedure - Summary judgment - Assessment of stamp duty on alleged forged instrument - Whether a defence - Whether assessment served

Legislation:

Stamp Act 1921
Supreme Court Rules
Taxation Administration Act 2003

Result:

Application dismissed

Representation:

Counsel:

Plaintiff: Mr M A G Tjhung
Defendant: Mr R Gillon

Solicitors:

Plaintiff: State Solicitor for Western Australia
Defendant: Lawton Gillon

Case(s) referred to in judgment(s):

Nil

DEPUTY REGISTRAR HEWITT: The application before me for determination this morning has been brought by the plaintiff seeking a judgment against the defendants pursuant to r 14 of the Supreme Court Rules. The plaintiff's claim arises by virtue of the Stamp Act 1921 and it is for the unpaid duty on an option agreement which was dated in October 2002, ultimately lodged for assessment in 2005 and the assessment remains unpaid.
The plaintiff's case is that upon the issue of the assessment the defendant became liable to pay the duty so assessed and its only recourse would have been through the objection process. From information provided to me from the bar table, which was received too late to be contained in affidavit evidence, it appears that the Commissioner of State Revenue has ruled that the review process is not available to the defendant in this case and that an earlier extension of time apparently granted to it within which to bring an objection was outside power and therefore withdrawn. That leaves the defendant with no avenue for redress.
The defendant contends that the instrument upon which the duty has been assessed is a forgery and has put forward fairly convincing evidence to indicate that to be the case. Amongst that evidence is the evidence of a handwriting expert who concludes that the relevant signatures purporting to be those of the director and secretary are not in fact true signatures and there is other evidence to suggest that a substantial fraud has been perpetrated on the defendant company evidenced by the falsification of bank accounts which indicate something in the vicinity of $1.3 million has been taken that the defendant's bank accounts without proper authority.
The plaintiff contends that once the Commissioner issued an assessment the duty became payable by the defendant and that proposition remains, notwithstanding the fact that the instrument upon which the assessment is based might be a nullity and ineffective to confer any right upon the defendant to this action.
It also appears that the Commissioner takes the view that it is simply unfortunate for the defendant that they are now liable for the duty on a forged instrument of option and that their time for any redress against that state of affairs has now lapsed and they are simply obliged to pay the State the amount which it has assessed as due and owing.
The defendant, not surprisingly, cavils at such an argument and conclusion. The first proposition advanced is that the Court is entitled to look to some extent at this transaction and acknowledge the fact that it is based on a fraud and a forgery and an instrument of which the defendant company had no knowledge and had no involvement.
My personal view is that in the circumstances of this case the Court is entitled to look at such fundamental matters. Stamp duty is payable upon an instrument. The allegation is that there is no instrument. A forgery is not effective to convey anything. I consider that this Court is entitled to look at such a fundamental proposition. As to the nuts and bolts of assessment and technical arguments as to whether the assessment is correct or not or within power or not, those are matters which I readily concede are not reviewable by this Court and the process which is set out in what is now the Taxation and Administration Act 2003 governs the way in which such matters are to be determined.
I do, however, think that in the circumstances of this case where there is no other redress or remedy open to the defendants, the Court is entitled to look at the fundamental proposition, namely, was there an instrument which attracted duty. On that ground, I consider that the defendants have raised a triable issue and ought to be given leave to defend.
Another matter arises and that is intimately tied with the fact that there is every probability that the instrument upon which the duty has been raised is a forgery, namely, that the defendant company was never served with the assessment. That would hardly come as a surprise if, indeed, the affairs of the company were being manipulated by a fraudster to his own ends.
It would be natural that he would avoid the assessment coming to the attention of the defendant. It would be in his interests to do so and, therefore, it would create a means by which he could avoid scrutiny of that document which would, no doubt, lead to scrutiny of other matters relevant to the involvement of the fraudster in the conduct of the affairs of the company.
The document appears to have been lodged by a firm called O'Brien Business Systems, if I recall correctly. The exact name is not important. There is no evidence that such an entity even exists. It may be that there is one. Given the circumstances of this case, I would have thought it reasonably likely that there was not.
Given the probable existence of a substantial fraud, it is hardly surprising that the assessment did not come to the notice of the defendant. The issue is: has the assessment ever been served. The Commissioner contends that it has because service on the lodging party, apparently O'Brien Business Systems, is sufficient service on the taxpayer, namely, the defendant company in this case.
I find this proposition extraordinary. If a fraud is being perpetrated, it is plain that the person being defrauded will not receive notice of the assessment. It is against the fraudster's interest to permit that to happen, therefore, the Commissioner takes the view, apparently, that it is his task to perpetuate and enhance frauds rather than assist those who are defrauded to resist the effects of that fraud.
He does so by insisting that service on the lodging party is in fact service on the taxpayer and, therefore, the time for objection and payment of the amount of the assessment runs from that date. In this case, the Commissioner also takes the view that it is too late for the taxpayer to object because too much time has passed and he has no interest in examining whether or not the documents with which he has been presented are in fact fraudulent and a nullity.
I reject that argument. It seems to me that it is implicit in the provisions of the act that there must be in fact actual authority existing with the lodging party and that they must in truth be some kind of a representative of the taxpayer rather than a person simply assuming some bogus authority on its behalf.
In those circumstances, I also find that the defendant has an arguable defence on the basis that the assessment upon which the Commissioner sues was never served on them in a manner which would comply with the provisions of the Taxation and Administration Act. On that score, might I say, that it is not altogether clear what statutory regime does exist for the service of notices, but I accept that the transitional provisions which came subsequent to the enactment of the Taxation and Administration Act would appear at first blush, at least, to incorporate the pre‑existing Stamp Act into the new administrative regime.
In truth, I am not entirely sure if there is a difference between the new regime and the old regime on this point, but it does seem tolerably clear that the new regime is the appropriate one for the purposes of this exercise. For those reasons, I take the view that the defendant has shown a triable issue and should be given unconditional leave to defend and the action should proceed. The only matter requiring attention in my view is case flow management which has necessarily fallen behind by virtue of the present application. The order will therefore be that the application is dismissed