| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA -v- CLARKE [2003] WADC 242 CORAM : WILLIAMS DCJ HEARD : 3 OCTOBER 2003 DELIVERED : 7 NOVEMBER 2003 FILE NO/S : CIV 3266 of 2002 BETWEEN : DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA Plaintiff
AND
PAUL STANLEY CLARKE
Defendant
Catchwords: Practice - Supreme Court practice - Appeal from decision of Registrar granting summary judgment to plaintiff - Service deemed to have occurred by post "unless the contrary is proved"
Legislation: Acts Interpretation Act 1901, s 29
Income Tax Assessment Act 1936, s 222AOF
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Result:
Appeal allowed Representation:
Counsel:
Plaintiff : Mr J M De Vaney
Defendant : Mr D Darbyshire
Solicitors:
Plaintiff : Deputy Commissioner of Taxation
Defendant : Kott Gunning
Case(s) referred to in judgment(s):
CGU Workers' Compensation v Carousel Bar Pty Ltd (1999) 17 ACLC 1213
Deputy Commissioner of Taxation v Barry H Finney & Ors [2002] DCt of NSW; No 10742 of 2001
Fancourt v Mercantile Credits Limited (1983) 154 CLR 87
Jones v Stone (1894) AC 122
Lane Cove Council v Geebung Polo Club Pty Ltd and Others (No 2) (2002) 41 ACSR 15
Miles v Bull (1969) 1 QB 258
Moscow Narodny Bank Ltd v Mosbert Finance (Australia) Pty Ltd & Ors (1976) WAR 109
Case(s) also cited:
Bull v Attorney-General (NSW) (1913) 17 CLR 370
Commonwealth Bank of Australia v Friedrich (1991) 9 ACLC 946
Daniels v Anderson (1995) 16 ACSR 607
Deputy Commissioner of Taxation v Gruber (1998) 43 NSWLR 271
Deputy Commissioner of Taxation v Coco [2003] QSC 119
Fitzgerald v Deputy Federal Commissioner of Taxation [1995] ATC 4587
Group Four Industries Pty Ltd v Brosnan (1992) 59 SASR 22
In Re City Equitable Fire Insurance Company Ltd [1925] 1 Ch 407
Mackwell v Petkovic (1999) 20 WAR 367
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Permanent Building Society (In liq) v Wheeler (1994) 11 WAR 187
Scobie; Ex parte Commissioner of Taxation (1995) 59 FCR 177; (1995) 95 ATC 4525
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Introduction 1 By writ dated 6 December 2002 the plaintiff claimed the sum of $73,642 from the defendant pursuant to s 220AOC of the Income Tax Assessment Act 1936 ("ITAA"). The amount was the equivalent of unpaid tax liabilities of PSC Corporation Pty Ltd ("PSC"), a company of which the defendant was at that time a director. The claim was based on the defendant's failure to comply with a Director Penalty Notice ("DPN") issued on and dated 21 November 2001. 2 By application dated 18 March 2003 the plaintiff sought summary judgment against the defendant. Summary judgment was granted by Deputy Registrar Harman on 9 June 2003.
Summary of facts 3 There is no significant dispute about the facts of this case which can be relevantly summarised as follows: (a) The defendant was at all material times the sole director of PSC. (b) On 21 November 2001 the plaintiff sent a letter to the defendant enclosing the DPN at an address shown on ASIC records to be the residential address of the defendant. (c) On 3 December 2001 the letter enclosing the DPN was returned to the plaintiff marked "return to sender, no longer at this address". (d) In April 2002 the defendant was served with another DPN seeking penalties of approximately $8,900. That DPN is not the subject of these proceedings. Upon receipt of that DPN the defendant paid the amount owing to the plaintiff and took the necessary steps to wind up the company.
Principles applicable to Order 14 applications 4 By reason of the summary nature of O 14 proceedings, strict compliance with the Rules of the Supreme Court 1971 is required before the application will be entertained.
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5 A defendant may show cause against a plaintiff's application:
(i) by preliminary or technical objection, for example, statement of claim or affidavit in support is defective. No affidavit is required in support of such an objection; (ii) on the merits, for example, that he has a good defence to the claim on the merits, or that a difficult point of law is involved or a dispute as to the facts which ought to be tried or a real dispute as to the amount due which requires the taking of an account to determine, or any other circumstances showing reasonable grounds of a bona fide defence: Supreme Court Practice (1988) Vol 1 paras 14/3 - 4/3 at p 140. 6 The supporting affidavit must: 7 Summary judgment procedure "is a peculiar proceeding intended only to apply to cases where there can be no reasonable doubt that a plaintiff is entitled to judgment": Jones v Stone (1894) AC 122 at p 124. 8 The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried: Fancourt v Mercantile Credits Limited (1983) 154 CLR 87 at p 99 per Mason, Murphy, Wilson, Deane and Dawson JJ. 9 Where there are circumstances which are required to be closely investigated there ought to be a trial and judgment ought not to be given under O 14: Miles v Bull (1969) 1 QB 258.
10 Where a plaintiff has satisfied all the requirements of O 14 to give it prima facie the right to an order in the terms asked the burden shifts to the defendant to satisfy the court why judgment should not be given against it: Moscow Narodny Bank Ltd v Mosbert Finance (Australia) Pty Ltd & Ors (1976) WAR 109 per Brinsden J at p 110.
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11 The defendant must show by affidavit or otherwise that there is some triable issue either of fact or law, in that it has an arguable defence or a defence on the merits: Moscow Narodny Bank Ltd v Mosbert Finance (Australia) Pty Ltd (supra) at pp 110-111.
12 The defendant's affidavit must condescend upon particulars by giving such an extent of definite facts pointing to the basis on which the defendant alleges its right to defend arises: Moscow Narodny Bank Ltd v Mosbert Finance (Australia) Pty Ltd (supra) at p 113.
13 Leave to defend ought to be given if a defendant shows facts which if true would constitute a defence. A defendant merely needs to depose to facts which raise an arguable defence. The court should not, for the purposes of a summary judgment application, attempt in any way to assess the respective parties' chances of success or strength of their cases but should grant unconditional leave to defend if the defendant raised an arguable defence: Supreme Court Practice (1988) Vol 1 pars 14/3-4/8 at p 142.
14 With those authorities in mind I now turn to the appeal.
Relevant law
15 The plaintiff's power to impose a penalty on the defendant equivalent to PAYG deductions which PSC failed to remit to the plaintiff arises from Pt IV Div 9 of the ITAA, specifically s 222AOB and s 222AOC.
16 Section 222AOE of the Act provides that a director's liability does not arise until the expiration of 14 days after the Commissioner has given the person a DPN setting out the prescribed information.
17 Section 222AOF of the Act sets out how the above DPN may be served. It provides as follows:
"(1) If it appears from ASC documents that a person is, or has been within the last 7 days, a director of the company, the Commissioner may give the person a notice under Section 222AOE by leaving it at, or sending it by post to, an address that appears from such documents to be, or to
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have been within the last 7 days, the person's place of residence or business. Note: Sections 28A and 29 of the Acts Interpretation Act 1901 is also relevant to giving a notice under Section 222AOE." 18 Section 29 of the Acts Interpretation Act 1901 ("AI Act") entitled "Meaning of Service by Post" provides as follows: "(1) Where an Act authorises or requires any document to be served by post, whether the expression 'serve' or the expression 'give' or 'send' or any other expression is used, then unless the contrary intention appears a service shall be deemed to be effected by properly addressing, pre-paying and posting the document as a letter, and unless the contrary is proved to have been effected at the time which the letter would be delivered in the ordinary course of post."
Submissions of counsel for the defendant 19 It is the defendant's submission that s 29 of the AI Actsets out the circumstances in which service will be deemed to have occurred by post "unless the contrary is proved". Proof of non-receipt is not sufficient to overcome this deeming provision. However proof of non-delivery does overcome the deeming provisions: Fancourt v Mercantile Credits Limited (supra). 20 The return of a document marked "return to sender" constitutes proof of non-delivery in the absence of evidence that the notice came to the knowledge of the addressee: CGU Workers' Compensation v Carousel Bar Pty Ltd (1999) 17 ACLC 1213 (dealing with s 109Y of the Corporations Law): Lane Cove Council v Geebung Polo Club Pty Ltdand Others (No 2) (2002) 41 ACSR 15 (s 29, AI Act).
Submissions of counsel for the plaintiff 21 It is the submission of counsel for the plaintiff that the legal requirements for service of the DPN as set out in s 222AOF of the Act, have been satisfied notwithstanding that the defendant may never have received the DPN. Counsel for the plaintiff refers to the decision in
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Deputy Commissioner of Taxation v Barry H Finney & Ors [2002] DCt of NSW; No 10742 of 2001 as authority for that proposition.
Summary and conclusion 22 The plaintiff was entitled to summary judgment only if it could show that without doubt on the whole of the material there was no question to be tried: Fancourt v Mercantile Credits Limited (supra). 23 In this case there is, at this stage, no relevant dispute on the facts. There appears to be no direct authority binding on this Court on the question of whether there can be deemed service of a DPN where the Deputy Commissioner for Taxation has proof of non-delivery. 24 In my view on the authorities referred to above the defendant has a reasonable likelihood of success at trial. Even if this is not accepted however it is not appropriate to dispose of the matter by way of summary judgment. 25 In my view the appeal should be allowed and I will hear the parties as to the orders to be made.
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