Deputy Commissioner of Taxation v Alexander

[2014] VCC 53

IN THE COUNTY COURT OF VICTORIA Revised
(Not) Restricted

AT MELBOURNE

COMMERCIAL LIST

GENERAL CASES DIVISION

Case No. CI-10-02635

DEPUTY COMMISSIONER OF TAXATION	Plaintiff
v.
BRETT ALEXANDER	Defendant

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	6 February 2014
DATE OF JUDGMENT:	6 February 2014 (revised 7 February 2014)
CASE MAY BE CITED AS:	Deputy Commissioner of Taxation v. Alexander
MEDIUM NEUTRAL CITATION:	[2014] VCC 53

REASONS FOR JUDGMENT

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Catchwords: Taxation – Summary judgment application – Director’s Penalty Notice – Notice posted to address noted on ASIC records as the defendant’s residence – Address in rural Victoria – Evidence that Australia Post does not deliver to the address – Envelope containing notice not delivered – Whether fact that notice undeliverable a basis for matter proceeding to trial – s.269-50 of Schedule 1 to the Taxation Administration Act 1953 (Cth) – Reardan & Anor  v. Deputy Commissioner of Taxation [2013] QCA 46 followed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms W.Y. Tai	Australian Taxation Office
For the Defendant	Mr B. Alexander in person

HIS HONOUR:

1The Deputy Commissioner of Taxation seeks summary judgment against Mr Alexander. Mr Alexander was the director of a company that had an unpaid taxation liability. He is sued following the giving of a Director’s Penalty Notice on 13 April 2010. It is alleged that during the prescribed period following service of the notice, Mr Alexander failed to pay the tax liability, or to take any other step which may have avoided liability for the tax. The amount claimed is $207,058 for the period 1 July  - 31 December 2008. A liquidator was appointed to the company by Court order in July 2010.

2Mr Alexander says in answer to the application:

a.the address to which the Director’s Penalty Notice was posted is not serviced by Australia Post and he did not receive the notice;

b.insofar as the address to which the notice was posted was noted on the ASIC records of the company as his address as a director, that address was only available for the service of documents on the company by ASIC;

c.the notice was served prior to the passing of amendments to the relevant taxation legislation and, as no further notice was served, the notice purportedly given in April 2010 is invalid for the purposes of the amending legislation;

d.the Director’s Penalty Notice claimed an additional amount of $45,381.25 for the period 1 April to 30 June 2008 and the notice was therefore not a proper foundation for the present claim;

e.the Director’s Penalty Notice is inapplicable as, prior to the issue of the notice, the company was “under administration within the meaning of the Corporations Act 2001”. Accordingly, Mr Alexander had no personal liability;

f.the company did not have the opportunity to revise the BAS statements upon which the tax liability was based. The amounts claimed were not accurate.

3       The short answers to the above paragraphs are as follows:

a.the legislation requires a Director’s Penalty Notice to be “given”. The plaintiff does not need to establish that the notice was actually received, but simply that it was appropriately served (see Reardon v Deputy Commissioner of Taxation [2013] QCA 46, a decision of the Court of Appeal of the Supreme Court of Queensland);

b.the address of Mr Alexander in the ASIC records as a director of the company was available for use by the plaintiff, by reason of the provisions of s269-50 of Schedule 1 to the Taxation Administration Act 1953;

c.the plaintiff can rely upon a notice served prior to the amending statutory provisions (see Reardon v Deputy Commissioner of Taxation);

d.the inclusion of an amount in the Director’s Penalty Notice which is not claimed in the proceeding does not affect the validity of the notice or the proceeding;

e.there is no evidence that the company appointed an administrator within the meaning of the Corporations Act 2001 either before or after the Director’s Penalty Notice was given;

f.no evidence was produced of any error in the calculation of tax or the BAS statements upon which it was based.

Notice

4Before a claim may be brought against a director of the company in respect of the company’s taxation liability, the commissioner must give a notice of a penalty pursuant to s269-25 in Schedule 1 to the Taxation Administration Act 1953 and a proceeding cannot be commenced until that step is taken. It is not necessary for the plaintiff to establish that the notice was received by the defendant. The plaintiff must satisfy the Court that the notice has been given.

5It is apparent from the submissions made by Mr Alexander that he feels aggrieved that a proceeding can be taken against him in circumstances where he says not only that he did not receive the Director’s Penalty Notice but also that Australia Post could not have delivered the notice because the address was not one to which it delivers.

6An employee of the Australian Taxation Office has sworn an affidavit stating that the notice was posted to the address set out in the ASIC report on the company, as Mr Alexander’s address as a director. Documents exhibited to the affidavit record both electronically and in hand writing on a form that the notice was given appropriately in accordance with the statutory obligations. I am also satisfied from the statement in the affidavit that the notice was not returned to sender by Australia Post.

7The notice was sent to Mr Alexander’s residential address as noted on the ASIC records because an earlier notice sent to a different address had been returned to the Taxation Office. In Mr Alexander’s most recent affidavit he stated that it would have been more appropriate for the plaintiff to have served the Director’s Penalty Notice at the registered business office and principal place of business of the company being unit 9/752 North Lake Road, South Lake, Western Australia, 6164. The Australian Taxation Office employee who sent the later notice, also sent an earlier Director’s Penalty Notice to the South Lake address on 11 March 2010. That notice was returned as “unclaimed mail”.

Alleged administration of the company

8Mr Alexander has exhibited documents to an affidavit he swore on 20 November 2013 which he submits evidences the appointment of an administrator to the company pursuant to the Corporations Act 2001 in late 2009. The documents consist of an email from John Holland to the defendant dated 18 November 2009, an undated notice signed by Mr Alexander as director of the company, apparently sent to creditors of the company informing them of a meeting of the company on 10 December 2009, and minutes of the meeting on 10 December 2009. Mr Alexander informed me that Mr Holland was a solicitor. The email from Mr Holland purports to give advice about the course of action Mr Alexander should take because of the financial position of the company. The letter does not suggest that Mr Holland could or should be appointed an administrator of the company or that he had the necessary qualifications as a registered liquidator.

9The procedure in the Corporations Act 2001 for the appointment of an administrator anticipates that an administrator, once appointed by the company, may give notice to the creditors of a meeting at which creditors representatives may be appointed. The notice of the meeting of creditors was given by Mr Alexander and not by an administrator. There is nothing in the minutes of meeting of creditors that suggest an administrator had been appointed. There is a statement under the heading, “options going forward”, that the company “with a majority agreement from its creditors intends to self administrate the liquidation” and the two “creditor representatives [were] to assist by overseeing the process to confirm transparency”.

10In the circumstances, I consider that Mr Alexander has not demonstrated that there are matters of defence which should disentitle the plaintiff to summary judgment or which would be appropriate to be determined at trial.

11Accordingly, I propose to order as follows:

1.     Judgment for the plaintiff against the defendant that the defendant pay to the plaintiff the sum of $207,058.

2.     The defendant must pay the plaintiff’s costs of the proceeding including any reserved costs and the costs of the plaintiff’s summons filed 10 September 2013, including the costs of the hearing today, to be assessed by the Costs Court in default of agreement.

3.     Stay execution on the judgment and the order for costs for a period of 21 days.

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Certificate

I certify that these 4 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 6 February 2014 and revised on 7 February 2014.

Dated:      7 February 2014

Philippa Gilkes

Associate to His Honour Judge Anderson