Deputy Commissioner of Taxation for the Commonwealth of Australia v Uratoriu - [2003] WADC 148

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA -v- URATORIU [2003] WADC 148

CORAM: REGISTRAR KINGSLEY

HEARD: 29 MAY 2003

DELIVERED : 4 JULY 2003

FILE NO/S: CIV 3035 of 2001

BETWEEN: DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA
Plaintiff
AND
LUCIANO ALLESSANDRO URATORIU
Defendant

Catchwords:

Practice - Application pursuant to O 14 Rules of the Supreme Court Western Australia - Whether statement of claim sufficient - Necessity to plead the giving of notice

Legislation:

Acts Interpretation Act (1901) (Clth)

Evidence Act 1995 (Clth)
Income Tax Assessment Act 1936, s 222AOE, s 222AOF, s 222APB, s 222APC, s 222APE

Supreme Court Rules (Vic)

Result:

No necessity to plead the giving of notice as a condition precedent

Representation:

Counsel:

Plaintiff: Mr J M de Vaney
Defendant: Mr T M Retallack

Solicitors:

Plaintiff: Australian Taxation Office
Defendant: Norton & Smailes

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

Deputy Commissioner of Taxation for the Commonwealth of Australia v Dunn & Ors, unreported; County Court of Melbourne; April 1997
Deputy Commissioner of Taxation for the Commonwealth of Australia v Pavlinovich [2001] WADC 86
Scobie v Deputy Commissioner of Taxation (1995) 59 FCR 177

Case(s) also cited:

Bruce v Oldhams Press (1936) 1 KB 697
Commonwealth Bank of Australia v Friedrich (1991) 9 ACLC 946
Daniels v Anderson (1995) 16 ACSR 644
Eng Mee Yong v Letchumanan [1980] AC 331
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Fitzgerald v Deputy Federal Commissioner of Taxation [1195] 14 SR (WA) 356
Group Four Industries Pty Ltd v Brosnan (1992) 59 SASR 22
In Re City Equitable Fire Insurance Company Limited [1925] 1 Ch 407
Letang v Cooper (1994) 2 QB 53
Longmuir & Anor v Prosser, unreported; FCt SCt of WA; Library No 9141; 7 November 1991
Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 231
Webster v Lampard (1993) 177 CLR 598

REGISTRAR KINGSLEY:

Introduction

The action by the plaintiff against the defendant relates to the recovery of penalties owing by the defendant pursuant to Division 9 Part VI of the Income Tax Assessment Act 1936 ("the Act"). Division 9 imposes penalties for directors of companies where the company has failed to remit the Commissioner's estimates of tax instalment deductions ("TID") and the Commissioner's estimates of prescribed payment system ("PPS") deductions or has failed to make or comply with an agreement with the Commissioner.
The defendant was at all material times the sole Director of Kingsline Pty Ltd ("Kingsline"). The defendant had been a Director of Kingsline since his appointment on 25 October 1996. For the period 1 July 1999 to 30 September 1999 Kingsline failed to remit TID's for that period. On 16 November 1999 a notice of estimates of liability totalling $25,962.12 was sent to Kingsline. By virtue of s 222APB of the Act within 14 days of the Commissioner sending the TID's to Kingsline the Directors of Kingsline were obliged to cause the company to do one of four things:
(a)pay to the Commissioner the amount of the estimates;
(b)make an agreement with the Commissioner under s 222ALA of the Act;
(c)appoint an administrator of the company under s 436 of the Corporations Act 2001; or
(d)begin to be wound up within the meaning of the Corporations Act 200.
The evidence is that the defendant did not cause Kingsline to do any of those things as stated above.
In addition on 16 November 1999 a notice of estimates of PPS liability totalling $48,790.80 was sent to Kingsline. Again pursuant to s 222APB of the Act within 14 days of the Commissioner sending the estimates to Kingsline, the Directors of Kingsline were obliged to cause the company to do one of the four things as stated in par 2 above. The evidence again suggests the defendant did not cause Kingsline to do any of those acts.
On 26 November 1999 pursuant to s 222AOE of the Act a Director Penalty Notice was sent to the defendant's last known address. Having regard to the legal requirements for service of the Director Penalty Notice (s 222AOF of the Act, s 28A and s 29 Acts Interpretation Act 1901 (Clth), s 160 Evidence Act 1995 (Clth)) I am of the opinion that those legal requirements for service have been satisfied.
That being the case each person who is a director is liable to pay to the Commissioner by way of penalty an amount equal to the unpaid amount of the estimate (s 222APC of the Act).
The plaintiff's application is pursuant to O 14, Rules of the Supreme Court. The defendant opposes the application on the basis that the statement of claim contains a substantial defect. The defendant's counsel argues that the plaintiff's pleaded cause of action arises under s 222APC of the Act. As argued by the defendant's counsel, s 222APE requires, as a precondition to liability under s 222APC, that the defendant be served with a notice under s 222APE setting out details of:
·The amount of tax allegedly paid.
·The penalty amounts.
·Options for action by the defendant within 14 days of service.
The defendant's counsel argues that service of this notice is part of the plaintiff's cause of action; it is a precondition to its entitlement to sue and therefore must be pleaded. The defendant's counsel argues that service of the notice is a material fact.
In support of his submission the defendant's counsel cites Scobie v Deputy Commissioner of Taxation (1995) 59 FCR 177. Cooper J at p 4530 states that for the Commissioner to be in a position to recover a penalty as a debt six circumstances must exist. One of those circumstances is that the Commissioner has given a notice in accordance with s 222AOE. Cooper J goes on to say that if the six circumstances exist the Commissioner is entitled to recover the penalty as a debt due to the Commonwealth in a court of competent jurisdiction. The defendant's counsel argues that these comments by Justice Cooper show that the giving of notice in accordance with s 222AOE is a material fact.
In Deputy Commissioner of Taxation for the Commonwealth of Australia v Dunn & Ors, unreported; County Court of Melbourne; April 1997 there was a challenge to the sufficiency of the statement of claim on the basis that the substance of the notice under s 222AOE was not pleaded. Eckhardt J had to consider whether the statutory requirement is a condition precedent and whether the pleadings must specifically include the fact of the Commissioner's actions pursuant to s 222AOE. In his reasons Eckhardt J considered the intent of O 13.05 Supreme Court Rules (Vic).
In my opinion there is no relevant distinction between O 13.05 Supreme Court Rules (Vic) and O 20 r 8(4) Supreme Court Rules (WA). Both O 13.05 Supreme Court Rules (Vic) and O 20 r 8(4) Supreme Court Rules (WA) imply an averment of the fulfilment of all conditions precedent. It is unnecessary for the plaintiff to allege the performance of a condition precedent and a defendant cannot defeat a claim by asserting that the performance of condition precedent is not alleged in the statement of claim. Eckhardt J concluded that the cause of action does not arise from the giving of notice pursuant to s 222AOE but rather from the failure to satisfy the statutory obligations.
In Deputy Commissioner of Taxation for the Commonwealth of Australia v Pavlinovich [2001] WADC 86. Deputy Registrar Hewitt had to consider this very point. Deputy Registrar Hewitt concluded that the fact the notice under s 222AOE was not pleaded did not give rise to a defect in the pleading.
Certainly there are cases where what may appear as a condition precedent is so closely related to the cause of action that it must be alleged as a material fact. An allegation which is of the essence of the cause of action is not a condition within the meaning of O 20 r 8. However the distinction between the condition of precedent and an essential fact is at times difficult to follow.
In my opinion Justice Cooper does not go so far as to say that the giving of notice in accordance with s 222AOE is a material fact in a cause of action. The obvious purpose of Division 9 Part VI of the Act is to force directors to address the issue of compliance before the due date and take whatever action is appropriate to bring about compliance. That duty is enforced by penalty which arises if there is non‑compliance on the due date. It is the non‑compliance which commences the pleading narrative.
Accordingly I am of the opinion that notice in accordance with s 222AOE of the Act is not a condition precedent and that there is no defect in the statement of claim. I will hear counsel further on the application.