Deputy Commissioner of Taxation v Gillis

[2003] NSWCA 340

Reported Decision: 59 NSWLR 153

Court of Appeal

CITATION:	Deputy Commissioner of Taxation v. Gillis [2003] NSWCA 340
HEARING DATE(S):	17 October 2003
JUDGMENT DATE:	24 November 2003
JUDGMENT OF:	Sheller JA at 1; Hodgson JA at 2; Davies AJA at 34
DECISION:	1. Appeal allowed with costs. 2. Respondent to have a certificate under the Suitors Fund Act if otherwise entitled.; 3. Judgment below set aside, in lieu thereof judgment for the appellant in the sum of $43,046.10 taking effect as at 23 April 2002. 4. Respondent to pay appellant's costs of the proceedings below.
CATCHWORDS:	TAXES AND DUTIES - Income tax - Collection and recovery of tax - Collection by instalments - Obligation of company directors - To remit deductions from wages of employees by due date - Alternative of making an agreement with the Commissioner - Requirements for such an agreement - Penalties.
LEGISLATION CITED:	Income Tax Assessment Act 1936 (Cth) ss.222AGA, 222AGB, 222ALA, 222AOA, 222AOB, 222AOC, 222AOE, 222AOG, 222AOJ.
CASES CITED:	Bond Corporation Holdings Ltd. v. Sulan (1990) 2 ACSR 435 Currency Brokers (Australia) Pty. Ltd v. Corporate Affairs Commissioner (NSW) (1986) 5 NSWLR 483 Deputy Commissioner of Taxation v. Clark (2003) 45 ACSR 332 Deputy Commissioner of Taxation v. George (2002) 55 NSWLR 511 Iso Lilodw' Aliphumeleli Pty. Ltd. v. Commissioner of Taxation (Cth) (2002) 42 ACSR 561 Kuper v. Keywest Constructions Pty. Ltd. (1990) 3 WAR 419 Leros Pty. Ltd. v. Terara Pty. Ltd. (1992) 174 CLR 407 Moss v. Deputy Commissioner of Taxation [2003] NSWCA 341
PARTIES :	Deputy Commissioner of Taxation - appellant Deborah Janet Gillis - respondent
FILE NUMBER(S):	CA 40389/02
COUNSEL:	Mr. M. Aldridge SC with Mr. P. Rodionoff for appellant Mr. S.W. Gibb SC for respondent
SOLICITORS:	ATO Solicitor, Sydney for appellant Julie A. Orsini, Lilyfield for respondent

LOWER COURTJURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	DC 3831/00
LOWER COURT JUDICIAL OFFICER :	Puckeridge DCJ

CA 40389/02
DC 3831/00


SHELLER JA
HODGSON JA
DAVIES AJA

Monday 24 November 2003

DEPUTY COMMISSIONER OF TAXATION V. GILLIS

Judgment

1 SHELLER JA: I agree with Hodgson JA.

2 HODGSON JA: On 23 April 2002, Puckeridge DCJ gave a verdict for the respondent in proceedings brought against her by the appellant. The appellant appeals to this Court from that decision.

3 The case turns on a number provisions of the Income Tax Assessment Act 1936 (the Act) as they were at relevant times, namely ss.222AGA, 222AGB, 222ALA, 222AOA, 222AOB, 222AOC, 222AOE, 222AOG and 222AOJ. Those sections were in the following terms:

222AGA. WHEN THE COMMISSIONER MAY MAKE ESTIMATE
(1) If the Commissioner has reason to suspect that:
(a) a person ("the person liable") has become liable under a remittance provision to pay to the Commissioner amounts equal to deductions by the person from payments made during a period; and
(b) the liability to pay those amounts remains undischarged after the due date of those deductions;
the Commissioner may make what he, or she thinks is a reasonable estimate of the unpaid amount of that liability.
(2) In making the estimate, the Commissioner may have regard to anything he or she thinks relevant, for example, information about amounts deducted by the person during earlier periods.

222AGB. NOTICE TO PERSON LIABLE
(1) If the Commissioner makes an estimate, he or she must send written notice of it to the person liable or to the person's trustee.
(2) The notice must:
(a) identify the liability to which the estimate relates; and
(b) specify the day as at which the estimate is made; and
(c) set out the amount of the estimate; and
(d) state that the amount of the estimate is due and payable; and
(e) state that:
(i) if the person or the person's trustee gives the Commissioner a statutory declaration substantiating the actual unpaid amount of the liability to which the estimate relates, the estimate will be reduced accordingly; and
(ii) the estimate will be revoked if the person or the person's trustee gives the Commissioner a statutory declaration to the effect that the person made no deductions for the purposes of Division 1AA, 2, 3A, 3B or 4, as the case requires, during the period concerned; and
(iii) the statutory declaration must comply with section 222AGF; and

(f) state the effect of section 222AGF.
(3) To avoid doubt, a single notice may relate to 2 or more estimates, but must comply with subsection (2) in relation to each of them.

…

222ALA. COMMISSIONER MAY MAKE AGREEMENT
(1) The Commissioner may make with a person a written agreement under which the person is to pay specified amounts, on specified days, for the purpose of discharging one or more specified liabilities of the person, each of which is:
(a) a liability under a remittance provision; or
(b) a liability to pay an estimate.
(2) An agreement may contain other provisions.
(3) An agreement may also provide that, if the person contravenes specified provisions of it, so much of the total of the specified amounts as remains unpaid becomes due and payable on the day of the contravention. If an agreement so provides, the specified provisions are called "special conditions".
(4) The amounts specified in an agreement are due and payable on the specified days.
(5) However, if:
(a) a specified amount is not paid on or before the specified day; or
(b) the person contravenes a special condition;
so much of the total of the specified amounts as remains unpaid:
(c) becomes due and payable on that day, or on the day of the contravention, as the case may be; and
(d) is called "the balance payable under the agreement."
(6) Subsections (4) and (5) have effect despite Divisions 1AAA, 3B and 4 and the other provisions of this Division, but are to be ignored:
(a) in calculating a penalty under any of those Divisions; and
(b) for the purposes of this Division (except this section) and Division 9.
(7) The Commissioner may make with a person a written agreement varying or terminating an agreement with the person that is in force under this section.
(8) Nothing in Division 9 obliges the Commissioner to enter into an agreement with a company.

…

222AOA. APPLICATION
(1) This Subdivision applies if a company incorporated under the Corporations Law of a State or Territory has made, for the purposes of Division 1AA, 2, 3A, 3B or 4, one or more deductions having a particular due date.
(2) The earliest day on which the company made for the purposes of that Division a deduction that has that 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
(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 Division 1AAA, 3B or 4, as the case may be, in relation to each deduction:
(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;

(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;
(c) appoint an administrator of the company under section 436A of the Corporations Law;
(d) begin to be wound up within the meaning of that Law.
(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 Law; or
(d) the company begins to be wound up within the meaning of that Law;
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
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:
(a) that the company has made for the purposes of Division 1AAA, 3B or 4, as the case may be; 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 section 222AOC; 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 Law; or
(iv) the company is being wound up.


…

222AOG. REMISSION OF PENALTY IF SECTION 222AOB COMPLIED WITH BEFORE NOTICE PERIOD ENDS
If:
(a) a penalty is payable by a person under this Subdivision; and
(b) section 222AOB 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.

…

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 manage-ment 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).
(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); 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.

4 The respondent became the sole director of Magic Kids Management Pty. Limited (which subsequently changed its name to Day Care Services Provider Pty. Limited) (the company) on 22 March 1999, and she remained a director of the company until it was wound up in September 2000.

5 On 13 January 2000, she was served with a notice under s.222AOE of the Act, which was in the following terms:

Income Tax Assessment Act 1930
NOTICE OF DIRECTOR'S LIABILITY TO PAY A PENALTY TO THE COMIMISSIONER OF TAXATION
TAX INSTALMENT DEDUCTIONS
T0: Deborah Janet Gillis
…
In exercise of the powers and functions conferred on me as a Deputy Commissioner of Taxation by a delegation from the Commissioner of Taxation under the provisions of the Taxation Administration Act 1953, I give you notice under section 222AOE of the Income Tax Assessment Act 1936 ("the Act") that you, as a director of the company, are liable to pay the Commissioner by way of penalty an amount equal to the unpaid amount of each liability of DAY CARE SERVICES PROVIDER PTY LTD. ACN 083 637 423, under section 220AAM of the Act in respect of deductions made by the company for the purposes of Division 2 of Part VI of the Act, details of which are Set out in the following table:-

TABLE

Column 1 Column 2 Column 3 Column 4
Particular deduction Due date Amount of Unpaid amount of
Period deductions company’s Liability
$ $
1 September 1998 to 30 September 1998 7 October 1998 17,999.18 325.95
1 October 1998 to 31 October 1998 7 November 1998 17,165.37 17,165.37
1 November 1998 to 30 November 1998 7 December 1998 19,808.60 19,808.60
1 December 1998 to 31 December 1998 7 January 1999 27,380.04 27,380.04
1 January 1999 to 31 January 1999 7 February 1999 7,922.59 7,922.59
1 February 1999 to 28 February 1999 7 March 1999 15,086.52 15,086.52
1 March 1999 to 31 March 1999 7 April 1999 9,426.58 9,426.58
1 April 1999 to 30 April 1999 7 May 1999 20,147.94 20,147.94
1 May 1999 to 31 May 1999 7 June 1999 20,132.70 20,132.70
1 June 1999 to 30 June 1999 7 July 1999 21,491.84 21,491.84
1 July 1999 to 31 July 1999 21 August 1999 21,114.32 21,114.32
1 August 1999 to 31 August 1999 21 September 1999 21,931.78 21,931.78
Total amount you will become liable to pay by way of penalty $201,934.23

The penalty in respect of any unpaid amount will be remitted if, at the end of 14 days after this notice is given to you:-
(a) the company's liability in respect of that unpaid amount has been discharged, or
(b) an agreement relating to the liability is in force under section 222ALA of the Act; or
(c) the company is under administration within the meaning of the Corporations Law; or
(d) the company is being wound up.
Dated this Thirteenth day of January 2000.

6 There is no dispute that, in respect of each of the amounts in this notice, and each of the due dates, the company had made deductions for group tax from its employees’ wages which it was liable to remit under the remittance provisions, and that the unpaid liability as at 13 January 2000 was as set out in the notice.

7 It appears that no payments were made thereafter, except possibly the $325.95 allocated to September 1998 and a further $7,624.05; and in these proceedings, the appellant sued the respondent for $201,608.28 (the total in the notice less $325.95) less a payment of $7,624.05, giving a net figure of $193,984.23.

8 The proceedings were relevantly defended on three grounds: first, a defence under s.222AOJ(2), second, a defence under s.222AOJ(3), and third, a defence under ss.222AOG and 222AOB(1)(b). The primary judge found that the first of those defences was made out, and did not rule on either the second or third of them.

9 The appellant appeals to this Court on the following grounds:

1. His Honour erred in failing to give any, or any sufficient reasons, for entering a verdict for the defendant.
2. His Honour erred in not identifying the “good reason" he found that the respondent had for not taking part in the management of Day Care Service Provider Pty Limited, within the meaning of section 222AOJ(2) of the Income Tax Assessment Act 1936 and in not giving reasons as to why the facts found by him constituted a "good reason".
3. His Honour erred in finding that the respondent had established that she had not taken part in the management of Day Care Service Provider Pty Limited for a "good reason" within the meaning of section 222AOJ(2) of the Income Tax Assessment Act 1936.
4. To the extent His Honour found that the respondent had satisfied the provisions of section 222AOJ(3) of the Income Tax Assessment Act 1936 he erred: -
(a) in finding that the respondent had taken all reasonable steps to comply with section 222AOB(1) or 222AOE of the Income Tax Assessment Act 1936; and
(b) in considering the steps taken by the respondent after service of the notice under section 222AOE of the Income Tax Assessment Act 1936 and not at the time the unpaid deductions were due to be remitted to the appellant.
5. His Honour erred in entering a verdict for the respondent.

10 The respondent has put on a Notice of Contention, relying on the following grounds:

1. The document issued by the appellant dated 9 August 1999 constitutes a written agreement pursuant to section 222ALA(1) of the Income Tax Assessment Act 1936 (the “ITAA").
2. At the time when the Commissioner issued the director penalty notice to the respondent section 222AOB(1)(b) of the ITAA had been complied with in that an agreement had been made with the respondent under section 222ALA of the ITAA.
3. Section 222AOB(1)(b) of the ITAA was complied with pursuant to section 222AOB(2), even if the respondent did not cause the section 222ALA agreement to be made.
4. By section 222AOG of the ITAA the penalty imposed on the appellant under the director penalty notice is fully remitted if section 222AOB(1)(b) of the ITAA is complied with.

11 When the appeal came on for hearing, Mr. Gibb SC for the respondent conceded that the primary judge’s decision could not be upheld on the ground relied on by the primary judge or on the basis of s.222AOJ(3), by reason of two cases decided by the Court of Appeal after the primary judge had given his decision, namely Deputy Commissioner of Taxation v. George (2002) 55 NSWLR 511, decided on 14 October 2002, and Deputy Commissioner of Taxation v. Clark (2003) 45 ACSR 332, decided on 1 May 2003.

12 As regards the decision in George, the respondent in the present case was a director of the company from 22 March 1999 until September 2000, and it was only between late April 1999 and late January 2000 that the respondent claimed to have any significant reason not to participate in the management. The respondent’s obligation to comply with s.222AOB(1) continued until September 2000, and the decision in George established that s.222AOJ(2) could only give a defence if, because of illness or other good reason, the respondent did not take part in the management of the company at any time when the directors had an obligation under s.222AOB(1) in relation to the relevant liabilities (that is, right up to September 2000).

13 Although this seems clearly to be the position, it does raise a question in relation to a director who for a time does not participate in the management of the company because of illness or good reason, but who then receives a notice under s.222AOE and becomes able to participate again in the management of the company a little over fourteen days after receipt of the notice. It would appear that this fourteen day limit runs and can expire during the period of illness or good reason, so that even if that director then acts quickly to arrange for the winding up of the company, this will be outside the fourteen days allowed by s.222AOG, and there will be a period in respect of which the director does not have the defence under s.222AOJ(2). Thus it would seem that the director would be personally liable for the whole of the amount covered by the s.222AOE notice. This seems a harsh result, but it does seem to follow from the wording of the sections and the decision in George.

14 In any event, in this case, the respondent did not satisfy the requirements for being excused from participation in the management of the company because of illness or for some other good reason, as those requirements are interpreted in Clark; and furthermore, the respondent did not act promptly to have the company wound up or in some other way satisfy the requirements of s.222AOB at any time between February 2000 and September 2000.

15 In the result, but for the Notice of Contention, the appeal would wholly succeed. The substantial argument on the appeal has concerned the Notice of Contention. The basis for the allegation of an agreement under s.222ALA arises from an exchange of correspondence.

16 First, there was letter from the company to the Australian Taxation Office dated 5 August 1999, in the following terms:

Following the telephone discussion with you yesterday we wish to confirm the following:

We confirm the outstanding amount of $190,815.28 is to be repaid:-September 15, 1999 7,950
October 15, 1999 7,950
November 15,1999 7,950
December 15, 1999 7,950
January 15, 2000 7,950
February 15, 2000 7,950
March 15, 2000 7,950
April 15, 2000 7,950
May 15, 2000 7,950
June 15, 2000 7,950
July 15, 2000 7,950
August 15, 2000 7,950
September 15, 2000 7,950
October 15, 2000 7,950
November 15, 2000 7,950
December 15, 2000 7,950
January 15, 2000 7,950
February 15, 2000 7,950
March 15, 2000 7,950
April 15, 2000 7,950
May 15, 2000 7,950
June 15, 2000 7,950
July 15, 2000 7,950
August 3, 2000 7,965.28
190,815.28

We understand as part of this arrangement that the current group tax will be paid by the due date each month, being the 21st. And shall commence in August, 1999.

17 The Australian Taxation Office responded with a letter dated 9 August 1999, in the following terms:

We refer to our phone conversation on 04 AUG 99 and will accept payment as follows:

Pyt Date Amount Pyt Date Amount
No. No.
1. 15 SEP 99 $7,950.00 16. 15 DEC 00 $7,950.90
2. 15 OCT 99 $7,950.00 17. 15 JAN01 $7,950.00
3. 15 NOV 99 $7,950.00 18. 15 FEB01 $7,950.00
4. 15 DEC 99 $7,950.00 19. 15 MAR 01 $7,950.00
5. 15 JAN 00 $7,950.00 20. 5 APR 01 $7,950.00
6. 15 FEB 00 $7,950.00 21. 15 MAY 01 $7,950.00
7. 15 MAR 00 $7,950.00 22. 15 JUN 01 $7,950.00
8. 15 APR 00 $7,950.00 23. 15 JUL 01 $7,950.00
9. 15 MAY 00 $7,949.92 24. 03 AUG 01 $7,965.28
10 15 JUN 00 $7,950.00
11. 15 JUL 00 $7,950.00
12. 15 AUG 00 $7,950.00
13. 15 SEP 00 $7,950.00
14. 15 OCT 00 $7,950.00
15. 15 NOV 00 $7,950.00

You should pay using the enclosed Payment Advice(s) at any Post Office/Agency or to a Tax Office by the agreed date(s). All payment advices with the same payment number should be sent for each payment date. Payment information is included on the back of this letter.

General Interest Charge (GIC) will continue to accrue on all outstanding amounts from the original due date(s). The GIC is calculated as a daily compounding interest, and is imposed at the government prescribed rate.

If you do not comply with this arrangement, or fail to pay future liabilities on time, we will proceed to recovery of all amounts outstanding including amounts of GIC without further notice to you.

For income tax purposes, amounts of GIC incurred are tax deductible in the year in which they are incurred.
S Chapman
Deputy Commissioner of Taxation

IMPORTANT NOTICE

All the terms of the arrangement you have been granted must be adhered to as, specified.

If you do not pay the repayment instalments on or before the due date, or current remittances are not paid on or before the relevant due date, the arrangement will be considered to be in default.

Once the arrangement has defaulted legal action will commence for recovery of all amounts outstanding including additional amounts for late payment, unless the amounts owing are paid in full.

Further arrangements will not be granted.

Failure to pay the full amount outstanding on a defaulted arrangement will cause legal action to be initiated.

18 Mr. Gibb SC for the respondent submitted that the letter of 9 August 1999, read in its context, satisfied the requirements of s.222ALA(1): it was an agreement in writing, under it the company was to pay specified amounts on specified days, and this was for the purpose of discharging a liability or liabilities amounting to $190,815.28, which was a liability under a remittance provision: see Iso Lilodw’ Aliphumeleli Pty. Limited v. Commissioner of Taxation (Cth) (2002) 42 ACSR 561 (“ILA”) at [38]-[45]. Accordingly, he submitted, the requirements of s.222AOB were satisfied in relation to the company’s liability to remit group tax for all months up to and including June 1999, so that the appellant was entitled to judgment against the respondent only in respect of the group tax referable to the months of July 1999 and August 1999, that is, the sum of $43,046.10.

19 Mr. Aldridge SC for the appellant submitted that the letter of 9 August 1999 was not an agreement satisfying s.222ALA because s.222ALA required that the agreement specify separately each liability for each single remittance period, and this document did not do so; and also because the section required the agreement to state to which such separately stated liability each specified payment was to be applied.

20 Mr. Aldridge submitted that s.222AOB provided for a distinct liability to arise in relation to each remittance period, each such distinct liability having its own distinct due date. It was that distinct liability that was referred to in s.222ALA(1)(a).

21 Mr. Aldridge submitted that this was confirmed by considering s.222ALA(1)(b). Section 222AGA of the Act provided for the making of a distinct estimate in relation to each remittance period, and ss.222AGB and 222AHA confirmed that there was just one estimate separately made for each remittance period. Under s.222ALA(1), it was clear that the liability to pay an estimate referred to in par.(b) had to be a liability in relation to just one remittance period; so that if an agreement conforming to s.222ALA is to be made for the purpose of discharging an aggregate of such estimates, then each separate estimate had to be a specified liability within s.222ALA(1). An aggregate of estimates could not be a specified liability, because it was not a liability to pay “an estimate”.

22 Mr. Aldridge submitted that the same applied to a liability under a remittance provision. Even if those words were capable of referring to an aggregate of liabilities under a remittance provision, par.(a) should be read consistently with par.(b). Accordingly, he submitted, the decision in ILA, was wrong.

23 Furthermore, because of the drastic consequences of a s.222ALA agreement, namely the substitution of a new regime of amounts and due dates, one should not readily construe informal arrangements as amounting to a s.222ALA agreement. Indeed, one should not construe an arrangement to be such an agreement unless it stated to which liability each specified payment was to apply.

24 Finally, Mr. Aldridge submitted that the terms of this document suggested it was not a s.222ALA agreement. It contained no reference to s.222ALA; and in stating that, in the event of non-compliance, the Australian Taxation Office would proceed to recovery of “all amounts outstanding” suggested that what would be sought to be recovered was all amounts of tax outstanding, not all amounts payable according to the regime set up by the arrangement.

25 Initially, I was inclined to the view that a specified liability within s.222ALA(1) could be an aggregate of liabilities under a remittance provision for individual months: the fact that it must be a liability under a remittance provision is not inconsistent with it being an aggregate liability in respect of a number of remittance periods. Furthermore, plainly it did not have to be the original amount of a liability under a remittance period: if some of the liability had been paid, it could be the net amount owing. However, I think there is force in Mr. Aldridge’s argument that, in the case of estimates, there had to be a separate specification of each liability in respect of each remittance period, and that specification of an aggregate would not directly satisfy the requirements. (I say directly, because of what I say later). The similarity of language between par.(a) and par.(b) of s.222ALA(1) suggests that a similar approach should be taken to par.(a).

26 I am inclined to the view that “a liability under a remittance provision” within s.222ALA(1)(a) does mean a liability in respect of a single remittance period; so that, if the document of 9 August 1999 is to be an agreement within s.222ALA, it must provide for payments for the purpose of discharging a number of “specified liabilities”, namely those for a number of months up to and including June 1999. This in turn would require that the identification in the document of a total sum of $190,815.28 be sufficient to make the individual liabilities which total that sum “specified liabilities” within s.222ALA(1).

27 The Shorter Oxford Dictionary gives the meaning of “specify” as “to mention, speak of, or name (something) definitely or explicitly, to set down, to state categorically or particularly, to relate in detail”: cf. Kuper v. Keywest Constructions Pty. Limited (1990) 3 WAR 419 at 429, Leros Pty. Limited v. Terara Pty. Limited (1992) 174 CLR 407 at 423. Although the precise meaning of “specify” (and correspondingly “specified”) varies with context, in a context such as the present I think it means something like “indicate with unambiguous clarity”: cf. Currency Brokers (Australia) Pty. Limited v. Corporate Affairs Commission (NSW) (1986) 5 NSWLR 483 at 489, Bond Corporation Holdings Limited v. Sulan (1990) 2 ACSR 435 at 448. On this approach, a list or separate mention of each individual liability would not be required, so long as what is mentioned identifies each and every liability with unambiguous clarity.

28 Thus, for example, if an agreement stated “$X being the aggregate of estimates for the months of January, February and March 2000”, and if $X was in fact the aggregate of those estimates, in my opinion there would be specified liabilities in relation to each of those months. If the agreement stated “$X being the aggregate of estimates now due”, and those estimates now due were for those months and did add up to $X, in my opinion that also would be sufficient. So long as what is stated identifies each liability with unambiguous clarity, in my opinion each liability is specified.

29 In the present case, it seems to be common ground that $190,815.28 was the correct total of all liabilities outstanding for monthly remittances, up to and including June 1999. Certainly there was no evidence to the contrary, and one would have expected that, if there was any uncertainty as to what liabilities were included in that figure, this would have been drawn to the Court’s attention. In those circumstances, in my opinion the document does specify, in the sense of making unambiguously clear, the liabilities to which it applies and which are to be discharged by payment of the sums specified in the agreement. I would add that, in my opinion, there is no substance in the submission that the agreement must state to which individual liability each specified payment is to be applied.

30 It was not suggested by the Commissioner that there was not in this case an agreement in writing. There are minor discrepancies between the two documents which conceivably might have prevented them constituting an offer and acceptance. The later document corrects an error in the former by identifying the last eight months in which instalments are to be paid as being in 2001 rather than 2000, and introduces an error of its own of eight cents in relation to the May 2000 instalment. The former merely corrects an obvious mistake, and the latter is in my opinion de minimis and can be disregarded. In my opinion, on the evidence there was a consensus as to terms and an intention to create a binding contract, so that the document of 9 August 2000 can be considered an agreement in writing: cf. Moss v. Deputy Commissioner of Taxation [2003] NSWCA 341.

31 So in my opinion, all requirements of s.222ALA were satisfied, so that by force of s.222AOB and s.222AOG, the respondent is relieved of liability under s.222AOC, for all but the last two months. In relation to the liability in respect of the other months, the respondent may be liable under other provisions of the Act, in particular s.222AQA; but that was not claimed in the proceedings, and there is no application to amend to claim it now.

32 The result is that there should be judgment for the appellant for $43,046.10, taking effect as at 23 April 2002. This is well short of the sum of about $200,000.00 sought by the appellant, but it is in my opinion sufficient to carry the costs of the proceedings below and the costs of the successful appeal. It is true that the respondent succeeded on the only point actually argued at the oral hearing; but the respondent did not, before the day when the hearing was first called on, notify the appellant that it conceded the appeal and relied only on the Notice of Contention.

33 I propose the following orders:

1. Appeal allowed with costs.
2. Respondent to have a certificate under the Suitors Fund Act if otherwise entitled.
3. Judgment below set aside, in lieu thereof judgment for the appellant in the sum of $43,046.10 taking effect as at 23 April 2002.
4. Respondent to pay appellant’s costs of the proceedings below.

34 DAVIES AJA: I agree with Hodgson JA.

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Last Modified: 11/24/2003