Deputy Commissioner of Taxation v Aitken - [2015] WADC 18

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: DEPUTY COMMISSIONER OF TAXATION -v- AITKEN [2015] WADC 18

CORAM: BOWDEN DCJ

HEARD: 16 & 17 FEBRUARY 2015

DELIVERED : 25 FEBRUARY 2015

FILE NO/S: CIV 1198 of 2013

BETWEEN: DEPUTY COMMISSIONER OF TAXATION
Plaintiff
AND
PETER DAVID AITKEN
Defendant

Catchwords:

Director's liability for unpaid penalty as a result of the failure of a company to remit withholding tax - Defences - Statutory defences - Illness - Other good reason - All reasonable steps - No reasonable steps - Claim that debt extinguished by the Bills of Exchange Act 1909

Legislation:

Bills of Exchange Act 1909 (Cth)
Corporations Act 2001 (Cth)
Income Tax Assessment Act 1936 (Cth)
Taxation Administration Act 1953 (Cth)
Tax Laws Amendment (2012 Measure No 2) Act 2012
Tax Laws Amendment (Transfer of Provisions) Act 2010

Result:

Judgment for the plaintiff in the amount claimed

Representation:

Counsel:

Plaintiff: Ms C H Thompson
Defendant: In person

Solicitors:

Plaintiff: Deputy Commissioner of Taxation
Defendant: Not applicable

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

Atkinson v Federal Commissioner of Taxation [2014] FCA 1217
Bell v Cribb [2012] WASCA 234
Belo Nominees Pty Ltd v Barrellan Nominees Pty Ltd (1986) 3 SR (WA) 140
Bertola v Australia and New Zealand Banking Group Corporation [2014] FCA 609
Deputy Commissioner of Taxation v Coco (2003) 179 FLR 362
Deputy Commissioner of Taxation v George (2002) 55 NSWLR 511
Deputy Commissioner of Taxation v Sproule [2012] FMCA 1188
Deputy Commissioner of Taxation v Woodhams (2000) 199 CLR 370; [2000] HCA 10
Glew Technologies Pty Ltd v Department of Planning and Infrastructure [2007] WASCA 289
Glew v City of Greater Geraldton [2012] WASCA 94
Glew v Frank Jasper Pty Ltd [2010] WASCA 87
Glew v Frank Jasper Pty Ltd [2012] WASCA 93
Glew v Shire of Greenough [2006] WASCA 260
Glew v Shire of Greenough [2007] HCATrans 520
Glew v The Governor of Western Australia [2009] WASC 14
Hedley v Spivey [2011] WASC 325
Hedley v Spivey [2012] WASCA 116
Helljay Investments Pty Ltd v Deputy Commissioner of Taxation [1999] HCA 56
Joosse v Australian Securities and Investment Commission [1998] HCA 77; (1998) 159 ALR 260
Kolichis v Deputy Commissioner of Taxation [2014] WASCA 76
Krysiak v Hodgson [2009] WASCA 114
Mathieson v Burton (1971) 124 CLR 1
McKewin's Hairdressing and Beauty Supplies Pty Ltd v Deputy Commissioner of Taxation [2000] HCA 27; (2000) 171 ALR 335
Meads v Meads [2012] ABQB 571
O'Connell v The State of Western Australia [2012] WASCA 96
Re Scobie; Ex parte Commissioner of Taxation [1995] 59 FCR 177
Roche v Deputy Commissioner of Taxation [2014] WASCA 194
Shaw v Jim McGinty in his capacity as Attorney General [2006] WASCA 231
Walker v New South Wales (1994) 182 CLR 45
Wilmink as Trustee for the Bangarra Trust v Westpac Banking Corporation [2014] FCA 872

BOWDEN DCJ:

A brief overview of the plaintiff's case

The plaintiff's case is that the defendant was a director of Dark Horse Developments Pty Ltd (Dark Horse) which company failed to meet its obligations to remit withholding tax to the Commissioner of Taxation over a seven‑month period between 1 July 2009 and 31 March 2011.
The plaintiff says that pursuant to s 269-15 of sch 1 of the Taxation Administration Act (Cth) (TAA) the defendant, as a director of Dark Horse, was under an obligation to ensure the company paid the withheld tax (an amount of $212,626) and as a result of that not being done became personally liable to pay those amounts. Such unpaid amounts, they say, become a tax‑related liability within the TAA and a debt due to the Commonwealth, payable to the commissioner and recoverable by this action.
To establish its case the plaintiff tendered four exhibits but did not call any witnesses.

A brief overview of the defendant's case

The defendant elected not to give or call any evidence and submitted that he is not liable to pay the amounts sought by the plaintiff because:
(1)The court lacked jurisdiction on a number of constitutional bases;
(2)He had statutory defences to the claim in that:
(i)he had good reason to not participate and did not participate in the management of Dark Horse due to an oral agreement with another director whereby that other director would be solely responsible for the management of the company and he relied on that other director and an employee to manage the company;
(ii)due to illness it would be unreasonable to expect him to participate and he did not participate in the management of the company;
(iii)he took all reasonable steps to ensure the companies compliance with its obligations in respect to the withheld tax;
(iv)there were no reasonable steps he could have taken to ensure compliance because of the agreement he had with the other director; and
(3)the debt he owes has been extinguished by reason of the issue by him of a promissory note, payable to the Deputy Commissioner of Taxation, pursuant to the Bills of Exchange Act 1909 (Cth).

The legislative scheme

The relevant taxation legislation includes sections of the Income Tax Assessment Act 1946 (Cth) (ITAA) and the Taxation Administration Act 1953 (Cth) (TAA) which are reproduced in the schedule attached to this judgment.
Division 12 of sch 1 to the TAA (div 12) required Dark Horse to withhold income tax from the salary and wages of its employees and directors (div 12-B; s 12-35, s 12-40,) and to report to the Commissioner for Taxation the amount of tax withheld (div 16; s16-150) and pay those amounts to the commissioner (div 16; s 16-70 and s 16-75).
For the period prior to 1 July 2010, div 9 of pt VI of the ITAA, s 222ANA imposed a duty on the directors of a company to cause that company to comply with their obligation to remit to the commissioner the withheld income tax and s 222AOB provided that the director fulfilled his duty if he caused the company to either pay the amount withheld, make an agreement with the commissioner under s 222ALA in relation to the amount withheld; appoint an administrator under the Corporations Act2001 (Cth) or begin to wind up the company under the Corporations Act on or before the due date for the amount withheld to be remitted to the commissioner.
Section 222AOC provided that if s 222AOB was not complied with on or before the due date, a director of the company at any time in the period beginning on the first deduction day and ending on the due date was liable to pay the commissioner by way of penalty an amount equal to the unpaid amount of the company's liability.
From 1 July 2010 Tax Laws Amendment (Transfer of Provisions) Act 2010 (Cth) (Amending Act) took effect. This Act repealed some provisions of the ITAA and replaced them with comparable provisions in the TAA.
Pursuant to s 65(4) of pt 3 in sch 1 of the Amending Act, div 269 of sch I of the TAA applied to penalties under the ITAA as if they were penalties payable under div 269-B in sch 1 of the TAA. This means that penalties under the old ITAA sections are enforceable under the TAA.
The amendments to the TAA generally incorporated with very minor changes the 'old' ITAA provisions into the TAA. Section 269‑5 and s 269-15 of sch 1 TAA (effective from 1 July 2010) imposed on directors a duty to ensure that a company met its obligations to pay withheld amounts to the commissioner or went promptly into voluntary administration or liquidation.
Section 269‑20 provided that if a director does not comply with the obligations imposed upon him, a penalty equal to the unpaid tax is imposed on him.
Both the ITAA and the TAA required the commissioner to give written notice of its intention to enforce any penalties imposed on the director (s 222AOE ITAA (14 days' notice) and s 269-25 TAA (21 days' notice)), which penalty was automatically remitted if the company meets its obligations, that is it paid the withheld tax, went into voluntary administration or liquidation within the time limit specified (s 222AOG of the ITAA and s 269-30 TAA).
The requirement on the commissioner to give notice does not create the liability on the director to pay the tax. The liability arises pursuant to other sections even though the law provides that until the penalty notice is issued the penalty it is not recoverable: Deputy Commissioner of Taxation v Woodhams (2000) 199 CLR 370; [2000] HCA 10; Re Scobie; Ex parte Commissioner of Taxation [1995] 59 FCR 177, 182. Thus the giving of notice is as a condition precedent before the commissioner can recover the penalties.
Both the ITAA and the TAA provide that if a company pays the withheld tax to the commissioner it reduces both the company's and director's liability by that amount and similar provisions apply to the payment by the director: s 222AOH ITAA and s 269‑40 TAA.
Section 255‑5 of the TAA provides that the unpaid amount of each penalty imposed is a tax‑related liability and a debt due to the Commonwealth and payable to the Commissioner for which the Deputy Commissioner can sue to recover.
Statutory defences are available to a director under s 269‑35 of the TAA as they were under s 222AOJ of the ITAA.
Relevantly, s 269- 35 provides a defence if it is proven that because of illness or some other good reason it would have been unreasonable to expect the defendant to take part, and he did not take part, in the management of the company or if it is proven that the defendant took all reasonable steps to ensure that the directors complied with their relevant obligations under s 269-15 or there were no such steps that he could have taken.
Although there is a slight difference in the wording of s 222AOJ ITAA and s 269.35 TAA, those differences do not affect the substance of those defences.

The condition precedent to the plaintiff's right to recovery – the notice provisions

The content of the penalty notice must comply with s 269-25 TAA which mandates that it must set out what the commissioner thinks is the unpaid amount of the company's liability, state that the director is liable to pay the commissioner by way of a penalty an amount equal to that unpaid amount because of his obligation under div 269 and explain the main circumstances in which the penalty will be remitted: s 269-25(2) TAA.
The penalty notice in this case consist of two parts. The first part is exhibit 4.1 and the second is exhibit 4.2. Taken individually each part cannot constitute a valid penalty notice because exhibit 4.1 does not set out the unpaid amount although it states the defendants' liability and explains the main circumstances in which the penalty will be remitted and exhibit 4.2, which states the liability and sets out the amount, does not explain the main circumstances in which the penalty will be remitted. There is no difficulty with a penalty notice being constituted by two parts. Clearly exhibit 4.1 refers to and incorporates exhibit 4.2 so that they are in reality two parts of the one document, however service of both parts must be proved.
Section 269–50 TAA provides that notice under s 269–25 may be given to a director by 'leaving it at, or posting it to, an address that appears, from information held by the Australian Securities Investment Commission (ASIC), to be or to have been within the last seven days (his or her) place of residence or business'. Thus the act of leaving or posting the notice constitutes the giving of the notice to the intended recipient for the purposes of s 269–25(1): Roche v Deputy Commissioner of Taxation [2014] WASCA 194. Proof of delivery is not required.
There is no requirement for the deputy commission to sign each page of the notice. The penalty notice in this case bears the printed name of the Deputy Commissioner of Taxation, rather than a signature on the first part however reg 45, pt 6 of the Taxation Administration Regulations (TAR) means it is taken to have been duly signed by the Deputy Commissioner: Roche v Deputy Commissioner of Taxation [2014] WASCA 194 [39] ‑ [41].
To prove service of the notice the plaintiff must prove that both parts of the notice were placed in a properly addressed envelope, pre-paid as to the correct postage and that the letter so addressed and stamped was physically deposited in the post either at a post office or by being dropped into a post box for mail articles: Deputy Commissioner of Taxation v Clear Blue Developments Pty Ltd [2010] FCA 1223 [9] ‑ [21].
The plaintiff relies on exhibit 4.3, being a photocopy of the envelope, and exhibits 3.1 and 3.2, being ASIC searches of the company showing the defendant as a director of Dark Horse and his address as at the date of the search which search was conducted on the day the envelope was posted.
An ASIC search is admissible under s 1274B of the Corporations Act 2001 (Cth) as prima facie evidence of the matters contained in that certificate insofar as what is contained purports to be information attained by ASIC by using a data processor from the national database: Kolichis v Deputy Commissioner of Taxation [2014] WASCA 76 [16], and pursuant to s 1274C a certificate that a person was a director of a company at a particular time is absent evidence to the contrary proof of the matters stated therein.
The envelope is in my opinion admissible as a Commonwealth record pursuant to s 5 and s 182(1) when read with s 48(1)(b), s 48(1)(e), s 69(1), s 69(2), s 69(4), s 70 of the Evidence Act1995 (Cth) and s 79C(2)(a) of the Evidence Act 1906 (WA): Kolichis v Deputy Commissioner of Taxation [14] ‑ [15]. Exhibits 4.1- 4.4 are also admissible on that basis.
I am satisfied that exhibits 3.1, 3.2 and 4.4 establish the envelope was addressed to the defendant at the address shown on ASIC records as required by s 269‑50 TAA.
I am satisfied by exhibits 4.3 and 4.4 that the envelope had a 60 cent prepaid postage stamp attached. Sixty cents was the correct cost of posting that envelope: Trade Practices Act 1974 (Cth) s 95Z, s 95X, Australian Postal Corporations Act 1989 (Cth), ASIC, final decision letter pricing 2010, 28 May 2010.
I am satisfied by exhibit 4.4 that envelope was placed in a mailbox at the Australia Post shop in Townsville, Queensland.
I am satisfied that it is reasonable to infer that the envelope contained both parts of the director's notice (exhibit 4.1 and exhibit 4.2) as exhibit 4.4's sole purpose appears to be to record the posting of the director's notice, and it refers to unique material from both parts of the director's notice. It specifically refers to the date of 21/07/2011 which only appears on exhibit 4.1 and it contains material word for word and figure for figure (the material appearing under columns 1, 2 and 3) which appears only on exhibit 4.2. Further, exhibit 4.1 explicitly states that exhibit 4.2 is enclosed with it.
I am satisfied that the condition precedent of serving the director's notice has been complied with and that both parts of the director's notice were in a correctly addressed envelope which was posted at 3.35 pm on 21/07/2011. I am satisfied that the prepaid envelope bore a 60 cent stamp being the correct postage, at that time, for that envelope.
Twenty‑one days' notice, as required was given. The 21 days expired on 12 August 2011 and these proceedings were commenced on 17 April 2013.

Has the plaintiff proven its case?

Exhibit 1 is a certificate dated 6 February 2015 under s 255-45 sch 1 TAA. That section provides relevantly that a certificate by a Deputy Commissioner stating that the person named in the certificate has a tax‑related liability and that the sum therein specified is a debt due and payable to the Commonwealth, is prima facie evidence of such matters in any proceedings to recover the amount of a tax-related liability. A 'tax ‑related liability' is a pecuniary liability to the Commonwealth arising directly under the taxation laws: s 255‑1 sch 1 TAA; Kolichis v Deputy Commissioner of Taxation.
I am satisfied that the defendant has a tax related liability for director's penalties in the amount of $212,626 as stated in Exhibit 1 and as pleaded by the plaintiff.

The defence

The onus of proving the defences, on the balance of probabilities, is on the defendant.

Jurisdiction

The defendant in written submissions dated 15February (with attachments) and 19February 2015 and in oral submissions through his McKenzie friend, Mr Piccinin made a number of submissions to the court that the court either lacked jurisdiction or the taxation legislation upon which the plaintiff bases its case were not constitutionally valid. Although the defendant submitted that these were just 'enquiries' that the court should answer, they were in reality submissions going to the court's jurisdiction.
In the defendant's letter of 15 and 19 February 2015 and submissions on 16and 17February a number of matters were raised including, but not limited to, allegations that the plaintiff was prosecuting provisions of law that are not recognised by the Commonwealth Constitution, and was making fraudulent misrepresentations of their nature and standing, that there are no acts or provisions made recognised by the Constitution from a time in 1973 upon using the Queen of Australia for Royal Assent, that the action was a departure from the constitutional law, that the Queen of Australia is not a legal personality and that name cannot be placed on court documents, and that, effectively, laws passed since the Royal Style and Titles Act 1973 are invalid and, judges and magistrates in Western Australia have taken an alternate or extra jurisdictional oath in contempt of the Commonwealth of Australian Constitution Act, and such office bearers have not been lawfully installed by a deputy governor or administrator commissioned under the Queen of Australia.
Further, the defendant submitted that he was a British (UK) subject and that laws purportedly passed by the Australian Federal Parliament do not apply to him and that s 45 of the Criminal Code and s 24F of the Crimes Act mean it is lawful to point out that a mistake, error or contempt has been done against the Constitution of the United Kingdom or of the Commonwealth of Australia.
These or similar submissions, in relation to both State and Commonwealth Acts, using the same grounds or variants thereof have been made in a large number of cases and characterised over a period of almost 17 years as having no basis in law by Commonwealth courts: Joosse & Anor v Australian Securities and Investment Commission [1998] HCA 77; (1998) 159 ALR 260; Helljay Investments Pty Ltd v Deputy Commissioner of Taxation [1999] HCA 56; McKewin's Hairdressing and Beauty Supplies Pty Ltd v Deputy Commissioner of Taxation [2000] HCA 27; (2000) 171 ALR 335; and State courts: Hedley v Spivey [2011] WASC 325 [19]; Shaw v Jim McGinty in his capacity as Attorney General & Anor [2006] WASCA 231; Glew & Anor v Shire of Greenough [2006] WASCA 260 (special leave refused: Glew v Shire of Greenough [2007] HCATrans 520); Glew Technologies Pty Ltd v Department of Planning and Infrastructure [2007] WASCA 289; Glew v City of Greater Geraldton [2012] WASCA 94; Glew v Frank Jasper Pty Ltd [2012] WASCA 93; Krysiak v Hodgson [2009] WASCA 114; Glew v The Governor of Western Australia [2009] WASC 14; Glew v Frank Jasper Pty Ltd [2010] WASCA 87; O'Connell v The State of Western Australia [2012] WASCA 96 [92]; Hedley v Spivey [2012] WASCA 116; Bell v Cribb [2012] WASCA 234; and also by courts in other jurisdictions: Meads v Meads [2012] ABQB 571.
Some of these cases dealt with submissions relating to the alleged constitution invalidity, particularly since the Royal Style and Titles Act 1973 (Cth) of, inter alia, the ITAA, the TAA and various state courts. In each case the points sought to be agitated were found not to be arguable, as are the defendant's submissions in this case.
Accordingly, I reject the submission that the ITAA or the TAA are invalid on Constitutional grounds and that the writ is in some way invalid because it refers to the Queen of Australia. This court is properly constituted pursuant to the District Court Act (WA).

Insofar as the standing of the plaintiff is concerned the plaintiff can sue to recover a tax liability payable to the Commissioner for Taxation.
The suggestion that laws do not apply to the defendant because he is a UK citizen, even if it was established that he was a UK citizen, is absurd. All persons in the country enjoy the benefits of domestic laws from which they are not expressly excluded. So also must they accept the burden those laws impose: Walker v New South Wales (1994) 182 CLR 45.
Certainly it is lawful to point out that a mistake, error or contempt has been done against the Constitution of the United Kingdom or of the Commonwealth of Australia however the plaintiff has committed no contempt. Section 45 of the Criminal Code (WA) and s 24F of the Crimes Act (Cth) have no application to this case.

The statutory defences

Several statutory defences are pleaded in the defendant's amended defence of 24 February 2014. The statutory defences for the period before 1 July 2010 were contained in s 222AOJ ITAA and from 1 July 2010 to 30 June 2012 are found in s 269-35 sch 1 TAA, s 269-35. The latter section was amended from 1 July 2012. All three sections are in the attached schedule.
The defence applicable is that which applied 21 days from the posting of the director's notice which occurred on 21 July 2011, i.e., 12 August 2011: Mathieson v Burton (1971) 124 CLR 1, 22 – 23. There are no substantial differences between the s 269‑35 defences following the amendment of 1 July 2012.
The defendant pleads a statutory defence that because of illness it would have been unreasonable to expect him to take part and he did not take part in management of the company. For the defence to succeed the defendant would need to prove, inter alia, that due to illness it would be unreasonable to expect him to take part in management of the company for the entirety of the period of the directorship during which the obligation under s 222AOB(1) ITAA and s 269-15 TAA existed and that he did not take part in management of the company for the entirety of the period referred to: Deputy Commissioner of Taxation v George (2002) 55 NSWLR 511.
There is simply no evidence to support that defence. Whilst the plaintiff concedes that the defendant suffered from an illness, the defendant has called no evidence and there is no evidence to establish that he did not take part in the management of the company, nor the extent of the illness or that it would be unreasonable to expect him to take part in the management of the company due to that illness. The defence is not made out.
Another of the pleaded statutory defences is that it was unreasonable to expect the defendant to take part in the management of the company, as he entered an agreement with another of the company's directors that he would be the project manager and the other director would effectively manage the company.
If the defendant proved that he took all steps which were reasonable, having regard to the circumstances which the defendant, acting reasonably, knew or ought to have known, to ensure that the directors complied with their obligations under s 222AOB(1) ITAA and s 295-15 TAA the defence would be made out: Deputy Commissioner of Taxation v Coco (2003) 179 FLR 362.
However, there is no evidentiary basis to establish that there was an agreement with the other director nor to establish the terms of that agreement, nor is there is any evidence to establish that the defendant did not take part in the management of the company. The defendant admits he was a director during the entire period that this case is concerned with. The defence is not made out.
As to the pleaded statutory defences that the defendant took all reasonable steps to ensure the directors complied with their obligations under s 295‑15 of the TAA, there is no evidence to establish that the defendant took any steps, let alone any reasonable steps, to ensure the company complied with its obligations in respect to the withheld tax and the defence is not made out.
As to the pleaded statutory defences that there were no reasonable steps that the defendant could have taken to ensure the directors complied with their obligations due to the factual matters pleaded in the defence, there is no evidence of any of the factual matters pleaded occurring and no evidence upon which the court could find that due to those matters having occurred there were no reasonable steps that the defendant could have taken to ensure compliance. The defence is not made out.
If the statutory defences under s 222AOJ ITAA applied then there are some differences as the 'illness' or 'other good reason' defence does not refer to the question of whether it would be 'unreasonable to expect the defendant to take part in the management of the company', however the defence would still fail as the defendant has failed to show that due to illness or some other good reason he did not take part in the management of the company at any time when he was director and the directors were under an obligation to comply with their obligations to forward withholding tax. As to the 'all reasonable steps' and 'no such steps' defence they would fail as the defendant has failed to prove that he took all reasonable steps to ensure that the directors complied with that obligation and that there were no such steps that he could have taken.

The defence under the Bills of Exchange Act 1909 (Cth)

The defendant's submissions filed 10 October 2014 was treated as pleading a further defence that went along the lines that the defendant was willing to pay the plaintiff and delivered to him a non-negotiable promissory note to discharge his debt and as that promissory note has not been presented for payment by the plaintiff nor dishonoured the debt is discharged and matter settled.
Leaving aside the obvious question of why would the defendant provide a promissory note for a debt which he says is based on an invalid act and for which the plaintiff has no standing to enforce and for which he has pleaded a number of statutory defences, the 'defence' pleaded under the Bills of Exchange Act defence cannot succeed.
Firstly, there is no evidence that the promissory note has been signed and delivered to the plaintiff or of its terms. It remains just an annexure to a document treated as amending the defence.
Even if everything in that 'pleading' was established by evidence the 'defence' would still fail.
Varieties of this defence have been raised previously. In Deputy Commissioner of Taxation v Sproule [2012] FMCA 1188 Mr Sproule served on the Australian Taxation Office (ATO) two 'bills of exchange' with a face value of $1 in payment for his liability of approximately $436,000 seeking its acceptance as settlement of the outstanding debt. The federal magistrate described the submission as 'very novel and a misguided use of this negotiable instruction' saying there had been a total 'misunderstanding or misconception about the basis concept and mechanism of a bill of exchange' and described it as a 'complete misunderstanding of the use of the instrument or some cynical ploy to avoid the debt in the absence of any logical explanation of how Mr Sproule intended to resolve his indebtedness to the ATO, this whole approach for this form of settlement is misconceived' and dismissed the claim: [22] ‑ [24].
In Bertola v Australia and New Zealand Banking Group Corporation [2014] FCA 609 Mr Bertola argued that the delivery of so‑called 'bills of exchange' resulted in some contract between the bank and himself and the bank were obliged to respond to the delivery of the 'bills' and if they did not respond they were taken as having accepted the 'bills' in accord and satisfaction of all monies due to them Barker J described the arguments as making 'little sense', and 'not only hopeless but nonsense' and said they 'should not be allowed to take up any further time of the court': [11] ‑ [16].
In Wilmink as Trustee for the Bangarra Trust v Westpac Banking Corporation [2014] FCA 872 Mr Wilmink claimed he had paid a debt of approximately $313,000 by presenting a 'bill of exchange' which directed himself to pay the financial institution $1, and provided that in the event of default by the institution they would pay him $1.3 million. They did nothing and Mr Wilmink sought damages of $1.3 million from the financial institution for their default. The judge described Mr Wilmink's submissions as not only 'hopeless but nonsense'.
In Atkinson v Federal Commissioner of Taxation [2014] FCA 1217, Mr Atkinson completed a bill of exchanging incorporating a statement of his debt from the ATO and within the bill limited his own liability then delivered the 'bill' to the ATO. He claimed that as the ATO did not respond or object, and defaulted in respect of some obligation said to arise from the bill they became liable to Mr Atkinson in the amount specified in the bill. Jagot J opined:
The notion that a person who owes the ATO money for non‑payment of tax can transform the ATO's statement of account into a bill of exchange and then deliver the statement of account back to the ATO and, in doing so, discharge the person's own indebtedness for some nominal amount and render the ATO liable to pay the original amount owed … is some form of fantasy unconnected to the operation of the Act: [44] – [47]
Whilst there are significant factual differences between these cases and Mr Aitken's, the basic proposition remains the same, that is, that the indebted party is able to present a bill of exchange or, as in this case, a promissory note, whereby he promises to pay a sum to the Deputy Commissioner of Taxation and then delivers that 'bill' or 'note' to the ATO and when the ATO do not present it or respond the Bills of Exchange Act is said to result in their debt being extinguished. As we have seen in Wilmink and Atkinson often the 'bills are worded in such a manner (although not in this case) that it is then claimed the ATO owe them money.
The whole scenario is a complete nonsense. The Bills of Exchange Act applies to promissory notes (s 95) and s 5 state that the rules of common law, including the law merchant, save insofar as they are inconsistent with the express provisions of the Act, continue to apply to promissory notes. At common law the holder of a promissory note (in this case specified as the Deputy Commissioner of Taxation) must take the bill 'for value'. Value is defined as valuable consideration by s 4 and s 32(1) of the Bills of Exchange Act and may be constituted by any consideration which is sufficient to support a simple contract. However, in this case there is absolutely no consideration given by the Deputy Commissioner for the note. The Deputy Commissioner has not agreed to accept the promissory note in payment of the debt or forbear from suing for the debt: Belo Nominees Pty Ltd v Barrellan Nominees Pty Ltd (1986) 3 SR (WA) 140.
The valuable consideration referred to in the promissory note for which the drawer (the Defendant) acknowledges the 'receipt and sufficiency' is said to be 'ATO Statement of Account 76 620 549725' (as adjusted).
There is simply no consideration from the plaintiff or any party for the issue of the promissory note. The idea that a promissory note can simply be prepared by a taxpayer who promises to pay the Deputy Commissioner a sum of money, and then delivered to the ATO thereby extinguishing the debt when the ATO fails to either present the note or respond to it is nonsense. The suggestion that the valuable consideration moving from the ATO is an account sent by them to the taxpayer is fanciful.
The defence relating to the Bills of Exchange Act has no evidentiary basis and even if it was established that the promissory note was forwarded to the plaintiff, it was a unilateral act by the defendant unsupported by any consideration from the plaintiff and would not provide a defence as a matter of law.

Conclusion

The evidence establishes that the defendant has a tax‑related liability in the sum of $212,626.
The defendant's defences are without merit and, accordingly, I make the following orders:
1.The defendant pay to the plaintiff the sum of $212,626.21 and interest on that sum pursuant to s 32 of the Supreme Court Act 1935 from 12 August 2011.
2.The defendant pay the plaintiff's costs to be taxed or agreed.

Schedule

Income Tax Assessment Act 1936 (as at 1 July 2010 prior to commencement of the Tax Laws Amendment (Transfer of Provisions) Act 2010 )
222AOA Application
(1)This Subdivision applies if a company incorporated under the Corporations Act 2001 has:
(a)made one or more deductions having a particular due date, for the purposes of Division 1AA, 2, 3A, 3B or 4; or
(b) withheld one or more amounts having a particular due date, for the purposes of Division 12 in Schedule 1 to the Taxation Administration Act 1953; or
…

(2)The earliest day on which the company, for the purposes of one of those Divisions (other than Division 13 or 14 in Schedule 1 to the Taxation Administration Act 1953):
(a)made a deduction that has that particular due date; or
(b)withheld an amount that has that particular due date;

is called the first deduction day.
(3) That due date is called the due date.
…

222AOB Directors to cause company to remit or to go into voluntary administration or liquidation—deductions and amounts withheld
(1)The persons who are directors of the company from time to time on or after the first deduction day must cause the company to do at least one of the following on or before the due date:
(a)comply with its obligations in relation to deductions (if any) and amounts withheld (if any) whose due date is the same as the due date;
(b)make an agreement with the Commissioner under section 222ALA in relation to the company’s liability under a remittance provision in respect of such deductions (if any) and amounts withheld (if any);
(c)appoint an administrator of the company under section 436A of the Corporations Act 2001;
(d)begin to be wound up within the meaning of that Act.

(1A)For the purposes of paragraph (1)(a), the obligations are:
(a)to comply with Division 1AAA, 3B or 4, as the case may be, in relation to each deduction (if any):
(i)that the company has made for the purposes of Division 1AAA, 3B or 4; and
(ii)whose due date is the same as the due date; and

(b)to comply with Subdivision 16-B in Schedule 1 to the Taxation Administration Act 1953 in relation to each amount that the company has withheld (if any):
(i)for the purposes of Division 12 of that Schedule; and
(ii)whose due date is the same as the due date.

(2)This section is complied with when:
(a) the company complies as mentioned in paragraph (1)(a); or
(b) the company makes an agreement as mentioned in paragraph (1)(b); or
(c) an administrator of the company is appointed under section 436A, 436B or 436C of the Corporations Act 2001; or
(d)the company begins to be wound up within the meaning of that Act;

whichever first happens, even if the directors did not cause the event to happen.
(3)If this section is not complied with on or before the due date, the persons who are directors of the company from time to time after the due date continue to be under the obligation imposed by subsection (1) until this section is complied with.

222AOC Penalty for directors in office on or before due date
(1)If section 222AOB is not complied with on or before the due date, each person who was a director of the company at any time during the period beginning on the first deduction day and ending on the due date is liable to pay to the Commissioner, by way of penalty, an amount equal to the unpaid amount of the company’s liability under a remittance provision in respect of deductions or amounts withheld:
(a)that the company has deducted for the purposes of Division 1AAA, 3B or 4 of this Act, or withheld for the purposes of Division 12 in Schedule 1 to the Taxation Administration Act 1953 (as the case requires); and
(b)whose due date is the same as the due date.
…

222AOE Commissioner must give 14 days’ notice before recovering penalty
The Commissioner is not entitled to recover from a person a penalty payable under this Subdivision until the end of 14 days after the Commissioner gives to the person a notice that:
(a)sets out details of the unpaid amount of the liability referred to in subsection 222AOC(1), (1A) or (2) (whichever relates to the penalty); and
(b)states that the person is liable to pay to the Commissioner, by way of penalty, an amount equal to that unpaid amount, but that the penalty will be remitted if, at the end of 14 days after the notice is given:
(i)the liability has been discharged; or
(ii)an agreement relating to the liability is in force under section 222ALA; or
(iii) the company is under administration within the meaning of the Corporations Act 2001; or
(iv) the company is being wound up.

222AOF How notice may be given
(1)If it appears from ASIC 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 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 are also relevant to giving a notice under section 222AOE.

(2)In this section:
ASIC document means a return:
(a)lodged with the Australian Securities and Investments Commission under section 205A, 205B or 346C of the Corporations Act 2001; or
(b)lodged with a person under a law that, for the purposes of the Corporations Act 2001, is a previous law corresponding to section 205A, 205B or 346C of that Act.

222AOG Remission of penalty if section 222AOB, 222AOBAA or 222AOBA complied with before notice period ends
If:
(a)a penalty is payable by a person under this Subdivision; and
(b) section 222AOB, 222AOBAA or 222AOBA (whichever relates to the penalty) is complied with at a time when the Commissioner has not yet given the person a notice under section 222AOE, or within 14 days after the Commissioner gives the person such a notice;
the penalty is remitted because of this section.

222AOH Effect of director paying penalty or company discharging underlying liability
(1)If one or more persons are liable to a penalty under this Subdivision, the following are parallel liabilities:
(a)the liability of that person, or of each of those persons, to the penalty;
(b)the liability referred to in subsection 222AOC(1), (1A) or (2) (whichever relates to the penalty);
(c) liability under a judgment, so far as it is based on a liability referred to in paragraph (a) or (b).

(2)This means that if, at a particular time:
(a) an amount is paid or applied towards discharging one of the parallel liabilities; or
(b) because of section 222AHA, one of the parallel liabilities is discharged to the extent of a particular amount;

each of the others that is in existence at that time is discharged to the extent of the same amount. However, this subsection does not discharge a liability to a greater extent than the amount of the liability.

222AOJ Defences
(1)This section has effect for the purposes of:
(a)proceedings to recover from a person a penalty payable under this Subdivision; or
(b) proceedings under section 222AOI against a person of the kind referred to in paragraph 222AOI(d).

(2)It is a defence if it is proved that, because of illness or for some other good reason, the person did not take part in the management of the company at any time when:

(a) the person was a director; and
(b) the directors were under the obligation to comply with subsection 222AOB(1) or 222AOBAA(1).

(3)It is also a defence if it is proved that:
(a) the person took all reasonable steps to ensure that the directors complied with subsection 222AOB(1), 222AOBAA(1) or 222AOBA(1) (whichever is relevant); or
(b) there were no such steps that the person could have taken.

(4)In subsection (3):
reasonable means reasonable having regard to:
(a) when, and for how long, the person was a director and took part in the management of the company; and
(b) all other relevant circumstances.

Tax Laws Amendment (Transfer of Provisions) Act 2010
Division 5—Directors' obligations
64Application—Division 269 in Schedule 1 to the Taxation Administration Act 1953

Subject to item 65, Division 269 in Schedule 1 to the Taxation Administration Act 1953, as added by this Schedule, applies in relation to an amount payable by a company to the Commissioner before, on or after the commencement time.
65Transitional—penalties
No doubling-up of penalties
…
New provisions apply to existing penalties
(3)Subitem (4) applies in relation to a penalty that, just before the commencement time, was payable under Division 9 of Part VI of the Income Tax Assessment Act 1936.
(4)Division 269 in Schedule 1 to the Taxation Administration Act 1953 (other than section 269-20) has effect, from the commencement time, as if the penalty were payable under Subdivision 269-B in that Schedule.
Penalties remitted because of payment agreement
…
(6)Division 269 in Schedule 1 to the Taxation Administration Act 1953 (other than section 269‑20) has effect, from the commencement time, as if the penalty:
(a)had not been remitted; and
(b)were payable under Subdivision 269-B in that Schedule.

Tax Laws Amendment (2011 Measures No. 7) Act 2011
Schedule 7—Penalty notice validation
1Validation of notices
(1)This item applies if the Commissioner gave (or purported to give) a notice under former section 222AOE on or after 10 December 2007 by sending it by pre-paid post in accordance with section 28A of the Acts Interpretation Act 1901.
(2)For the purpose of former section 222AOE, treat the notice as having been given at the time the Commissioner sent it by pre-paid post in accordance with section 28A of the Acts Interpretation Act 1901.
(3)This item applies despite section 29 of the Acts Interpretation Act 1901.
(4)This item does not affect rights or liabilities arising between parties to proceedings heard and finally determined by a court on or before the commencement of this item, to the extent that those rights or liabilities arose from, or were affected by, a notice referred to in subitem (1).
(5)In this item:
former section 222AOE means former section 222AOE of the Income Tax Assessment Act 1936 (as that section was in force before the commencement of Schedule 1 to the Tax Laws Amendment (Transfer of Provisions) Act 2010)

Taxation Administration Act 1953
Schedule 1
Division 12 – Payments from which amounts must be withheld
Subdivision 12-B – Payments for work and services
12-35 Payment to employee
An entity must withhold an amount from salary, wages, commission, bonuses or allowances it pays to an individual as an employee (whether of that or another entity).
For exceptions, see section 12-1.
12-40 Payment to company director
A company must withhold an amount from a payment of remuneration it makes to an individual:
(a)if the company is incorporated—as a director of the company, or as a person who performs the duties of a director of the company; or
(b) if the company is not incorporated—as a member of the committee of management of the company, or as a person who performs the duties of such a member.
For exceptions, see section 12-1.

Division 16 Payer's Obligations and Rights
16-5 When to withhold an amount
If Division 12 requires an entity to withhold an amount from a payment, the entity must do so when making the payment.
Note 1: An entity is required to withhold an amount under section 12-145 when an investor becomes presently entitled to income of a unit trust.
Note 1A: A trustee of a closely held trust is required to withhold an amount under section 12-180 when a beneficiary is presently entitled to unpaid income of the trust.
Note 2: If section 12-215, 12-250 or 12-285, or subsection 12-390(4), requires an entity to withhold an amount from a payment received by the entity, the entity must do so at the time required by that provision.
16-20 Payer discharged from liability to recipient for amount withheld
An entity that:
(a)withholds an amount as required by Division 12; or
(b)pays to the Commissioner an amount as required by Division 13 or 14;

is discharged from all liability to pay or account for that amount to any entity except the Commissioner.
Note: The entity may be required to refund the amount in some circumstances. See Subdivision 18-B.
Penalties for not withholding
16-25 Failure to withhold: offence
(1)An entity must not fail to withhold an amount as required by Division 12.

Penalty: 10 penalty units.
Note 1: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.
Note 2: See sections 16-30, 16-35, 16-40 and 16-43 for an alternative administrative penalty.
(2)An entity must not fail to pay to the Commissioner an amount as required by Division 13 or 14.
Penalty: 10 penalty units.

Note 1: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.
Note 2: See sections 16-30, 16-35, 16-40 and 16-43 for an alternative administrative penalty.
(3)An offence against subsection (1) or (2) is a strict liability offence.

Note: For strict liability, see section 6.1 of the Criminal Code.
(4)If a person is convicted of an offence in relation to:
(a)a failure by that person or someone else to withhold an amount as required by Division 12; or
(b)a failure by that person or someone else to pay to the Commissioner an amount as required by Division 13 or 14;

the court may order the convicted person to pay to the Commissioner an amount up to the *amount required to be withheld. The court may so order in addition to imposing a penalty on the convicted person.

Subdivision 16-B – To pay withheld amounts to the Commissioner
When and how to pay amounts to the Commissioner
16-70 Entity to pay amounts to Commissioner
(1)An entity that withholds an amount under Division 12 must pay the amount to the Commissioner in accordance with this Subdivision.
(2)An entity that must pay an amount to the Commissioner under Division 13 or Subdivision 14-A must do so in accordance with section 16-85.
(3)An entity that must pay an amount to the Commissioner under Subdivision 14-B must do so in accordance with sections 16-80 and 16-85.
(4)An entity that must pay an amount to the Commissioner under Subdivision 14-C must do so in accordance with sections 16-80 and 16-85.

Note: For provisions about collection and recovery of amounts payable to the Commissioner under this Part, see Part 4-15.
Subdivision 16-C – To provide information
To the Commissioner
16-150 Commissioner must be notified of amounts
An entity that must pay an amount (even if it is a nil amount) to the Commissioner under:
(a)subsection 16-70(1) (about amounts withheld under Division 12); or
…

must notify the Commissioner of the amount on or before the day on which the amount is due to be paid (regardless of whether it is paid). The notification must be in the *approved form and lodged with the Commissioner.
Division 255 – General rules about collection and recovery
Subdivision 255-A—Tax-related liabilities
255-1 Meaning of tax-related liability
(1)A tax-related liability is a pecuniary liability to the Commonwealth arising directly under a *taxation law (including a liability the amount of which is not yet due and payable).
Note 1:See section 250-10 for an index of tax-related liabilities.
Note 2:A taxation law, or a provision of it, may be excluded from being applied to this Part. See section 265-65.

(2)A civil penalty under Division 290 of this Schedule or Part 5 of the Tax Agent Services Act 2009 is not a tax-related liability.

255-5 Recovering a tax-related liability that is due and payable
(1)An amount of a *tax-related liability that is due and payable:
(a)is a debt due to the Commonwealth; and
(b)is payable to the Commissioner.

(2)The Commissioner, a *Second Commissioner or a *Deputy Commissioner may sue in his or her official name in a court of competent jurisdiction to recover an amount of a *tax-related liability that remains unpaid after it has become due and payable.
Note:The tables in section 250-10 set out each provision that specifies when an amount of a tax-related liability becomes due and payable. The Commissioner may vary that time under Subdivision 255-B.

255-45 Evidentiary certificate
(1)A certificate:
(a)stating one or more of the matters covered by subsection (2) or (3); and
(b)signed by the Commissioner, a *Second Commissioner or a *Deputy Commissioner;

is prima facie evidence of the matter or matters in a proceeding to recover an amount of a *tax-related liability.
(2)A certificate may state:
(a)that a person named in the certificate has a *tax-related liability; or
(b)that an *assessment relating to a tax-related liability has been made, or is taken to have been made, under a *taxation law; or
(c)that notice of an assessment, or any other notice required to be served on a person in respect of an amount of a tax‑related liability, was, or is taken to have been, served on the person under a *taxation law; or
(d)that the particulars of a notice covered by paragraph (c) are as stated in the certificate; or
(e)that a sum specified in the certificate is, as at the date specified in the certificate, a debt due and payable by a person to the Commonwealth.

…

255-50 Certain statements or averments
(1)In a proceeding to recover an amount of a *tax-related liability, a statement or averment about a matter in the plaintiff’s complaint, claim or declaration is prima facie evidence of the matter.
(2)This section applies even if the matter is a mixed question of law and fact. However, the statement or averment is prima facie evidence of the fact only.
(3)This section applies even if evidence is given in support or rebuttal of the matter or of any other matter.
(4)Any evidence given in support or rebuttal of the matter stated or averred must be considered on its merits. This section does not increase or diminish the credibility or probative value of the evidence.
…

Division 269 – Penalties for directors of non-complying companies
269-1 What this Division is about
The directors of a company have a duty to ensure that the company either:
(a)meets its obligations under Subdivision 16-B (obligation to pay withheld amounts to the Commissioner) and Division 268 in this Schedule and Part 3 of the Superannuation Guarantee (Administration) Act 1992 (obligation to pay superannuation guarantee charge); or
(b)goes promptly into voluntary administration under the Corporations Act 2001 or into liquidation.

The directors’ duties are enforced by penalties.
Note: The duties this Division imposes on the directors of the company are in addition to the similar duties imposed on the public officer of the company. See subsection 252(1) of the Income Tax Assessment Act 1936.
Subdivision 269-A—Object and scope
(Interpolate – section commenced on 1 July 2010 pursuant to the Tax Laws Amendment (Transfer of Provisions) Act 2010)
269-5 Object of Division
The object of this Division is to ensure that a company either:
(a)meets its obligations under:
(i)Subdivision 16-B (obligation to pay withheld amounts to the Commissioner); and
… or

(b)goes promptly into voluntary administration under the Corporations Act 2001 or into liquidation.

Note: The directors' duties are enforced by penalties on the directors. A penalty recovered under this Division is applied towards meeting the company's obligation.
269-10 Scope of Division
(1)This Division applies as set out in the following table:
(Table not re-produced)

Note: In a case covered by item 2, 3 or 4 of the table, the due day is the same as the initial day.
…

Subdivision 269-B—Obligations and penalties
Interpolate – section commenced on 1 July 2010 pursuant to the Tax Laws Amendment (Transfer of Provisions) Act 2010
269-15 Directors' obligations
Directors' obligations
(1)The directors (within the meaning of the Corporations Act 2001) of the company (from time to time) on or after the initial day must cause the company to comply with its obligation.
(2)The directors of the company (from time to time) continue to be under their obligation until:
(a)the company complies with its obligation; or
(b)an administrator of the company is appointed under section 436A, 436B or 436C of the Corporations Act 2001; or
(c)the company begins to be wound up (within the meaning of that Act).

Instalment arrangements
(3) The Commissioner must not commence, or take a procedural step as a party to, proceedings to enforce an obligation, or to recover a penalty, of a director under this Division if an *arrangement that covers the company's obligation is in force under section 255-15 (Commissioner's power to permit payments by instalments).

Note 1: The arrangement may also cover other obligations of the company.
Note 2: Subsection (3) does not prevent the Commissioner from giving a director a notice about a penalty under section 269-25.
269-20 Penalty
(Interpolate – section commenced on 1 July 2010 pursuant to the Tax Laws Amendment (Transfer of Provisions) Act 2010)
Penalty for director on or before due day
(1)You are liable to pay to the Commissioner a penalty if:
(a)at the end of the due day, the directors of the company are still under an obligation under section 269-15; and
(b)you were under that obligation at or before that time (because you were a director).

Note: Paragraph (1)(b) applies even if you stopped being a director before the end of the due day: see subsection 269-15(2).
(2)The penalty is due and payable at the end of the due day.

Note: The Commissioner must not commence proceedings to recover the penalty until the end of 21 days after the Commissioner gives you notice of the penalty under section 269-25.
Penalty for new director
…
Amount of penalty
(5)The amount of a penalty under this section is equal to the unpaid amount of the company's liability under its obligation.

Note 1: See section 269-40 for the effect on your penalty of the company discharging its obligation, or of another director paying his or her penalty.
Note 2: See section 269-45 for your rights of indemnity and contribution.
269-25 Notice
(Interpolate – section commenced on 1 July 2010 pursuant to the Tax Laws Amendment (Transfer of Provisions) Act 2010)
Commissioner must give notice of penalty
(1)The Commissioner must not commence proceedings to recover from you a penalty payable under this Subdivision until the end of 21 days after the Commissioner gives you a written notice under this section.
Content of notice
(2)The notice must:
(a)set out what the Commissioner thinks is the unpaid amount of the company's liability under its obligation; and
(b)state that you are liable to pay to the Commissioner, by way of penalty, an amount equal to that unpaid amount because of an obligation you have or had under this Division; and
(c)explain the main circumstances in which the penalty will be remitted.

(3)To avoid doubt, a single notice may relate to 2 or more penalties, but must comply with subsection (2) in relation to each of them.
When notice is given
(4)Despite section 29 of the Acts Interpretation Act 1901, a notice under subsection (1) is taken to be given at the time the Commissioner leaves or posts it.

Note 1: Section 28A of the Acts Interpretation Act 1901 may be relevant to giving a notice under subsection (1).
Note 2: Section 269-50 of this Act is also relevant to giving a notice under subsection (1).
269-30 Effect on penalty of directors' obligation ending before end of notice period
(Interpolate – section commenced on 1 July 2010 pursuant to the Tax Laws Amendment (Transfer of Provisions) Act 2010)
(1)Subject to subsection (2), a penalty of yours under this Division is remitted if the directors of the company stop being under the relevant obligation under section 269-15:
(a)before the Commissioner gives you notice of the penalty under section 269-25; or
(b)within 21 days after the Commissioner gives you notice of the penalty under that section.

(2)The following table has effect:
(Table not re-produced)

269-35 Defences
(Interpolate – section 269-35 as it was from 1 July 2010 until 30 June 2012, pursuant to the Tax Laws Amendment (Transfer of Provisions) Act 2010)
269-35 Defences
Scope
(1)This section applies in relation to:
(a)proceedings to recover from you a penalty payable under this Division; or
(b)proceedings against you in relation to a right referred to in paragraph 269-45(2)(b) (directors jointly and severally liable as guarantors).

Illness
(2)It is a defence in the proceedings if it is proved that, because of illness or for some other good reason, it would have been unreasonable to expect you to take part, and you did not take part, in the management of the company at any time when:
(a)you were a director of the company; and
(b)the directors were under the relevant obligations under section 269-15.

All reasonable steps
(3)It is a defence in the proceedings if it is proved that:
(a)you took all reasonable steps to ensure that the directors complied with their relevant obligations under section 269-15; or
(b)there were no such steps that you could have taken.

(4)In determining what are reasonable steps for the purposes of subsection (3), have regard to:
(a)when, and for how long, you were a director and took part in the management of the company; and
(b)all other relevant circumstances.

(Interpolate – section 269-35 as it was following amendments, effective from 1 July 2012 pursuant to the Tax)
269-35 Defences
Illness
(1)You are not liable to a penalty under this Division if, because of illness or for some other good reason, it would have been unreasonable to expect you to take part, and you did not take part, in the management of the company at any time when:
(a)you were a director of the company; and
(b)the directors were under the relevant obligations under subsection 269-15(1).
All reasonable steps

(2)You are not liable to a penalty under this Division if:
(a)you took all reasonable steps to ensure that one of the following happened:
(i)the directors caused the company to comply with its obligation;
(ii)the directors caused an administrator of the company to be appointed under section 436A, 436B or 436C of the Corporations Act 2001;
(iii)the directors caused the company to begin to be wound up (within the meaning of that Act); or

(b)there were no reasonable steps you could have taken to ensure that any of those things happened.

(3)In determining what are reasonable steps for the purposes of subsection (2), have regard to:
(a)when, and for how long, you were a director and took part in the management of the company; and
(b)all other relevant circumstances.

…

Subdivision 269-C—Discharging liabilities
269-40 Effect of director paying penalty or company discharging liability
Liabilities
(1)This section applies to the following liabilities:
(a)the liability of the company under its obligation referred to in section 269-10;
(b)the liability of each director (or former director) to pay a penalty under this Division in relation to the liability of the company referred to in paragraph (a);
(c)a liability under a judgment, to the extent that it is based on a liability referred to in paragraph (a) or (b).

Discharging one liability discharges other liabilities
(2)If an amount is paid or applied at a particular time towards discharging one of the liabilities, each of the other liabilities in existence at that time is discharged to the extent of the same amount.
(3)If, because of section 268-20 (Nature of liability to pay estimate), one of the liabilities is discharged at a particular time to the extent of a particular amount, each of the other liabilities in existence at that time is discharged to the extent of the same amount.
(4)This section does not discharge a liability to a greater extent than the amount of the liability.

Subdivision 269-D—Miscellaneous
269-50 How notice may be given
The Commissioner may give you a notice under section 269-25 by leaving it at, or posting it to, an address that appears, from information held by the Australian Securities and Investments Commission, to be, or to have been within the last 7 days, your place of residence or *business.