| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : DEPUTY COMMISSIONER OF TAXATION -v- DI FLORIO [2011] WADC 192 CORAM : DEPUTY REGISTRAR HEWITT HEARD : 26 OCTOBER 2011 DELIVERED : 4 NOVEMBER 2011 FILE NO/S : CIV 1025 of 2011 BETWEEN : DEPUTY COMMISSIONER OF TAXATION Plaintiff
AND
LUCIANIO DI FLORIO
Defendant
Catchwords: Practice and Procedure - Summary judgment - Taxation Administration Act 1953 (Cth) - Sufficiency of notice under s 269 - 25 Legislation: Taxation Administration Act 1953 (Cth)
Tax Law Amendment (Transfer of Provisions) Act 2010 (Cth) Result: Summary judgment granted
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Representation: Counsel:
Plaintiff : Mr L Tsaknis (appeared on behalf of Deputy Commissioner of Taxation)
Defendant : Mr P Rodionoff (appeared on behalf of Mr L Di Florio)
Solicitors:
Plaintiff : In person
Defendant : In person
Case(s) referred to in judgment(s):
Deputy Commissioner of Taxation v Woodhams (2000) 199 CLR 370
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
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1 DEPUTY REGISTRAR HEWITT: By chamber summons filed 8 September 2011 the plaintiff sought a summary judgment against the defendant and that is the application which is before me for determination.
2 The plaintiff to these proceedings is the Deputy Commissioner of Taxation and he seeks to enforce a pecuniary penalty said to be due from the defendant in relation to the failure by a company called Tida Investments Pty Ltd to remit to the commissioner amounts withheld from payments made to employees under the provisions of the Taxation Administration Act 1953. The relevant legislation imposing liability upon a director is s 222OAC which is as follows: 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: (1A) If section 222AOBAA is not complied with before the end of the payment day, each person who is a director of the company on the payment day is liable to pay to the Commissioner, by way of penalty, an amount equal to the unpaid amount or amounts that the company is required to pay under section 13-5 in Schedule 1 to the Taxation Administration Act 1953 in respect of the payment or payments relating to the payment day. (2) If section 222AOBA is not complied with before the end of the benefit day, each person who is a director of the company on the benefit day is liable to pay to the Commissioner, by way of penalty, an amount equal to the unpaid amount or amounts that the company is required to pay under Subdivision 16-B in Schedule 1 to the Taxation Administration Act 1953 in respect of the benefit or benefits provided on the benefit day. (Page 4)
3 The section makes reference to s 222AOB and that section is in the following terms: 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); (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): (Page 5)
(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. 4 Effective from 1 July 2010 the provisions under which the penalties were imposed were repealed by the Tax Laws Amendment (Transfer of Provisions) Act 2010 (Cth) which in effect made any penalties which fell due under the old regime recoverable under the new. Relevant to that issue is s 269-25 of the Act in its present configuration which is in the following terms: (Page 6)
5 The defendant concedes all the necessary components of the cause of action which is brought against him save for the question of the validity of the notice. It is the defendant's contention that the notice is invalid or at least it is arguably invalid and that he should be given leave to defend the action which has been brought against him. There have been many cases setting out the basis upon which the power to order a summary judgment should be exercised and of the various formulations I rely on that in Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 which sets the appropriate standard to be a determination that there is no real issue to be tried. 6 Other formulations have been made by other courts at other times but in my view they are all to the same effect. 7 The arguments supporting the contention that the notice is invalid are conveniently set out in par 14 of the submissions which have been filed by the defendant which I reproduce below. (Page 7)
8 Before analysing those propositions I think it useful to briefly refer to 'dicta' in the case Deputy Commissioner of Taxation v Woodhams (2000) 199 CLR 370, 384. The relevant passage is reproduced below [33] - [37]: It is the legislative purpose to be served by the giving of a s 222AOE notice that determines the nature and extent of the information necessary to satisfy the requirement to set out details of the unpaid amount of the company's liability under a remittance provision in respect of deductions. At this stage of the argument, the concern is with absence of information, rather than erroneous or misleading information. Absence of information will involve a failure to provide necessary details if, without such information, the notice will not fulfil the purpose for which it is required to be given. The primary source of guidance as to the statutory purpose of the notice before action required by s 222AOE is to be found in s 222ANA. Division 9 seeks to achieve the object that either the deducted amounts are remitted or paid to the Commissioner or the company is promptly taken out of the control of the directors and dealt with under the insolvency laws. The notice in question is addressed to a director of the company. Such a person, will ordinarily have access to information concerning the company's liabilities. The notice does not create a liability to pay a penalty, and if there is to be action to recover the penalty under s 221R it will be taken in the appropriate civil jurisdiction. In that event, the rules of court will require the elements of the cause of action to be pleaded and particularised in the ordinary way. A notice before action is not intended to serve the purpose of a statement of claim. (Page 8)
The first purpose of the notice is to inform the recipient of the unpaid amount of the company's liability under the remittance provisions, and of the recipient's liability to a penalty in the same amount. The second purpose, consistently with s 222ANA, is to inform the recipient of the alternative courses available, as set out in s 222AOE(b), which will result in remission of the penalty, the object being to encourage the recipient to take such steps as are necessary to bring about the result that one or other of those course is followed. In a number of respects, the due date for remittance of a deducted amount is relevant to a director's liability to pay a penalty, but that is not the liability to which s 222AOE is referring. The section does not require that the notice state details of the facts relevant to the director's liability. That is a function to be served by the pleadings and particulars, if and when action is taken to recover the penalty. Nor does the section require details of all facts relevant to the company's liability. It requires details of the unpaid amount of the company's liability. Once again, if there is an issue as to that liability, it will be litigated in the recovery action. 9 The court in that case was comprised of Gleeson CJ and McHugh, Gummow, Kirby and Callinan JJ. The judgment was a joint decision of the court and in my view, because of its unanimous nature, should be regarded as a proper reflection of the view which the court took of the then relevant provisions which I consider to be equally applicable to the current provisions. 10 I now turn to the individual aspects of the matters raised by the defence. It is said in the first of the grounds that it is mandatory for a notice to state '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'. One immediate difficulty is that in the absence of any further words of explanation the reference to this 'division' is meaningless. 11 Adopting the words in Woolard's case (opcit) the purpose of the notice is to convey information to its recipient such that he is properly informed of the claim against him and the courses which are available to him which will result in remission of the penalty. There is no prescribed form for the notice and I can see no sensible mandate for a requirement that a notice, in order to be valid must slavishly reproduce the quoted words in s 269-25(2)(b) which will have the effect of failing to convey any useful information and will in fact, if anything, detract from the clarity of the notice. In my view it is clear that it is sufficient for the notice to give information as to the nature of the claim which is being levelled against the party to whom it is addressed sufficient for him to understand what it is that is being claimed. (Page 9)
12 The next basis of challenge is that the notice is in breach of s 269-25(2)(c). That section requires the notice to 'explain the main circumstances in which the penalty will be remitted'. Again no form of words is prescribed. The words which were adopted in the formation of the notice appear to have been adopted from the earlier legislation of the words used were 'the company is being wound up'. In fact the penalty will be remitted under the provisions of s 269-15(2)(c) if 'the company begins to be wound up (within the meaning of that Act)' the reference being for the Corporation Act 2001. 13 Again no form of words is required and indeed the requirement is simply to explain the main circumstances in which the penalty will be remitted suggestive of the fact that precision is not a prerequisite. 14 I consider that the defendant's argument creates a distinction without a difference. If a company begins to be wound up within the meaning of the Corporations Act it is in my view being wound up. The addition of the words within the meaning of the Corporations Act add nothing to the information which is imparted to the recipient of the notice and in my view the words used in the notice are sufficient to inform the defendant of the steps which he might undertake to remit the penalty which was levied against him. 15 The final matter which is raised in argument by the defendant is that it is said that the notice does not comply with s 269-25(1). That section is in the following terms: The Commissioner must not commence proceedings to recover from you a penalty payable under this division until the end of 21 days after the Commissioner gives you a written notice under this section. 16 The notice in fact stated that it was necessary for the defendant to achieve one of the three options within 21 days of the date of the notice. It is contended that that is not what the legislation says. That is quite true, in fact however, the evidence which is before me establishes that the notice was posted to the defendant on the date it bears namely 17 November 2010, once again referring to Woolard the objective of a notice is to inform the defendant of his options. A defendant receiving such a notice would presumably not be aware of the statutory provisions as to when a notice is said to have been given for the purposes of s 269-25(4). What the notice does is provide useful information to its recipient which would allow him to calculate with accuracy the time which was available for him to undertake any of the actions which might relieve him of the penalty being pursued. Were the notice to refer to (Page 10)
21 days from the date the notice was given the respondent would be in the dark. He would not know, unless he was conversant with the relevant legislation, which is unlikely, what acts by the commissioner constituted giving notice nor, unless he had been sufficiently far sighted to retain the envelope in which the notice was contained would he have any idea when it was posted. The argument advanced by the defendant therefore is that although the manner in which the notice was framed in fact was effective to give more and better information to its recipient it should nonetheless be regarded as invalid for that very reason. 17 In my view, that argument is not sustainable. Having reviewed all the aspects of the case which were put into issue by the defendant I see no arguable basis upon which the defendant can contend that the notice which was a prerequisite to the commissioner commencing the proceedings would be held to be invalid. As a consequence I am of the view that the plaintiff should receive the judgment which it seeks in its application. 18 These reasons for decision will be delivered to the parties who will then be at liberty to apply for the matter to be listed to move for a judgment or such other orders as may be deemed appropriate. |