JUDGE:	CROFT J
WHERE HELD:	Melbourne
DATE OF HEARING:	14 November 2017 and 5 December 2017
DATE OF JUDGMENT:	21 December 2017
CASE MAY BE CITED AS:	Deputy Commissioner of Taxation v Lawson
MEDIUM NEUTRAL CITATION:	[2017] VSC 789

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TAXATION – Director penalty liabilities – Superannuation guarantee charge – Division 269 of Schedule 1 to the Taxation Administration Act 1953 – Director penalty notice – Director’s liability for penalty amounts – Defence to claim for indemnity if good reason or illness exists for non-participation in management of company – Superannuation Guarantee Act 1992 (Cth) – Corporations Act 2001 – Taxation Administration Regulations 1976 (Cth) – Service of director penalty notice – Acts Interpretation Act 1901 (Cth) - Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr T Connard	Minter Ellison
For the Defendant	In person

HIS HONOUR:

Introduction

By Writ and Statement of Claim filed 27 June 2016, the Deputy Commissioner of Taxation (“the Plaintiff”) initially claimed that the Defendant, Mr Samuel Peregrine Lawson (“the Defendant”) was indebted to the Commonwealth of Australia for the sum of $2,572,246.78 plus interest and costs. As a result of amendments to the pleadings, the Plaintiff now only seeks to recover the amount of $554,168.28 plus interest and costs from the Defendant in the proceeding (“the Debt”).[1]
[1]Further Amended Statement of Claim (11 September 2017).

The Debt represents director penalty liabilities owed by the Defendant under Division 269 of Schedule 1 to the Taxation Administration Act 1953 (“the TAA”) referable to the Superannuation Guarantee Charge (“the SGC”) liabilities of Regent Personnel Pty Ltd (ACN 006 715 402) (in liq) as trustee of the Regent Personnel Unit Trust (“the Company”) that were not remitted to the Plaintiff for the period 2012 to 2015 (“Relevant Period”).

Records of the Australian Securities and Investments Commission (“ASIC”) demonstrate that the Defendant was a director of the Company at all relevant times—particularly, during the Relevant Period—thus being under the relevant obligations that a director would usually be under during the Relevant Period.

The Defendant submits the three following points in defence of the Plaintiff’:

(a) That the amounts and dates pleaded in the Plaintiff’s claim are incorrect;[2]

(b) That there has been an incomplete satisfaction of the conditions precedent required by s 269–20 (1) of Schedule 1 of the TAA;[3] and

(c) That due to illness and/or for other good reason, the Defendant could not and/or did not take part in the management of the Company as he did not believe he was able to do so.

[2]Amended Defence (2 December 2017), [2], [3], [5], [7], [8], [9], [10].

[3]Amended Defence (2 December 2017), [4].

It was only during the trial of the proceeding, that the Defendant’s claims were particularised in any way.

Statutory Framework

Division 269…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Deputy Commissioner of Taxation v Lawson

Details

AGLC: Deputy Commissioner of Taxation v Lawson [2017] VSC 789
Case: [2017] VSC 789
Decision Date: 21 December 2017

CaseChat Overview and Summary

The case between the Deputy Commissioner of Taxation and Mr. Lawson was heard in the Federal Court of Australia. The dispute centred around Mr. Lawson’s liability for superannuation guarantee charges incurred by his company, pursuant to Division 269 of Schedule 1 to the Taxation Administration Act 1953. The Commissioner sought to hold Mr. Lawson liable for these charges, arguing that he was a director of the company and thus responsible under the Superannuation Guarantee Act 1992 (Cth). Mr. Lawson contended that he had not participated in the management of the company and thus could not be held liable, citing his illness as a reason for his non-participation. The court was required to determine the validity of Mr. Lawson’s defence and whether the Commissioner’s claim was justified.

The court considered the interpretation of "participation in the management" of a company, as defined under the Corporations Act 2001, and whether Mr. Lawson’s illness provided a sufficient reason for his non-participation. The court also examined the statutory framework provided by the Taxation Administration Regulations 1976 (Cth) and the Acts Interpretation Act 1901 (Cth). The case referenced Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113, which provided guidance on the service of director penalty notices and the criteria for director liability. The court had to ascertain whether Mr. Lawson’s absence from management due to illness constituted a good reason and if it relieved him of his liability for the superannuation guarantee charges.

The court concluded that Mr. Lawson’s illness did not sufficiently excuse his non-participation in the company’s management, as it did not prevent him from engaging in the company’s affairs. The court found that Mr. Lawson had the capacity to participate in the management of the company but chose not to do so. Consequently, the court upheld the Commissioner’s claim, holding Mr. Lawson liable for the superannuation guarantee charges. The court emphasised the importance of active participation in the management of a company, even when a director has legitimate reasons for their absence.

The final orders of the court were that Mr. Lawson was liable for the superannuation guarantee charges incurred by his company. The court directed the Commissioner to pursue the collection of these charges from Mr. Lawson. Additionally, the court ruled that Mr. Lawson’s illness did not constitute a good reason for his non-participation, thus not providing a defence against the Commissioner’s claim.

Orders