Deputy Commissioner of Taxation v Marcelli

[2018] WADC 150

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CHAMBERS

LOCATION:   PERTH

CITATION:   DEPUTY COMMISSIONER OF TAXATION -v- MARCELLI [2018] WADC 150

CORAM:   DEPUTY REGISTRAR HEWITT

HEARD:   31 OCTOBER 2018

DELIVERED          :   15 NOVEMBER 2018

FILE NO/S:   CIV 3229 of 2016

BETWEEN:   DEPUTY COMMISSIONER OF TAXATION

Plaintiff

AND

LUCIANO MARCELLI

Defendant

Catchwords:

Practice and procedure - Application for summary judgment - Applicant relying on certificate constituting prima facie evidence of moneys due - Certificate unable to be reconciled with proof of debt - Turns on its own facts

Legislation:

Nil

Result:

Application dismissed

Representation:

Counsel:

Plaintiff	:	Mr K Chu
Defendant	:	In person

Solicitors:

Plaintiff	:	Minter Ellison Melbourne
Defendant	:	Rowe Bristol Lawyers

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

Nil

DEPUTY REGISTRAR HEWITT:

1. The defendant to this action was for the period from July 2009 to February 2013 a director of a company called Avon Realty Pty Ltd.  In the course of running its business that company employed a number of employees as a consequence of which, the company was required to remit to the Australian Taxation Office amounts withheld by way of PAYG income tax deductions and contributions in respect of superannuation.  It is alleged that the company failed to remit the monies required to the Australian Taxation Office and as a consequence of that failure, the defendant became liable to pay director's penalties in an amount equivalent to the monies withheld by the company and not remitted to the Australian Taxation Office.  As a necessary step prior to commencing litigation, the Australian Taxation Office issued director penalty notices calling upon the defendant to either pay the monies claimed or take certain steps which would relieve him of the obligation to pay the amounts specified in the notice.  It is common ground that the defendant did not satisfy the requirements of the notices, as a consequence of which the present proceedings issued.

2. It is alleged by the defendant and it is not contested that he made substantial payments in reduction of the monies claimed by the plaintiff and receipt of those monies is acknowledged.  The plaintiff seeks to recover what it alleges to be the balance of the monies due by the defendant to the plaintiff.

3. In an affidavit in support of the application an employee of the plaintiff gave the following description of the manner in which the plaintiff maintains records of monies due, payable and paid in carrying out its task of collection of taxation:

   4.The AIS contains a record of credit and debit accounting postings for taxpayers including payments on Income Tax accounts that were posted to the account up to and including 14 January 2010.  From 15 January 2010 all liabilities, payments and credits for Income Tax accounts are recorded on ICP.  The information recorded on ICP is input into the system either manually by employees of the ATO based on information furnished to the ATO by the taxpayer through their tax returns or automatically if the taxpayer lodges their returns electronically.  ICP records liabilities, payments and credits in chronological order and does not show how individual payments and credits have been allocated between different liabilities on the same account.

   5.The RMS is a case management system which assists the ATO in the collection of outstanding debts.  The Receivables Management System has a note function which enables ATO officers to enter and keep notes on the conduct of cases.

   6.For the purposes of affirming this affidavit, I have perused the records held on the ATO computer database (Records).

   7.The plaintiff is a Deputy Commissioner of Taxation (Deputy Commissioner) and in his official name is entitled to sue to recover debts to the Commonwealth of Australia and payable to the Commissioner of Taxation (Commissioner). 

   8.Save where otherwise indicated I make this affidavit from my own knowledge and from perusal of the Records relating to the defendant. 

4. In pursuing the defendant the plaintiff has the advantage of a number of evidentiary provisions upon which it relies.  Principal amongst the provisions upon which the plaintiff relies is an evidentiary certificate exhibit AT9 appearing at page 61 of the affidavit of Ms Tiku.  That certificate records the sum owing by the defendant to the Australian Taxation Office as being $126,845.  The relevant legislation under which such a certificate is issued provides that it constitutes prima facie evidence of the matters certified.  The position therefore is that the plaintiff has produced prima facie evidence that the defendant is indebted to the Australian Taxation Office in the amount of the certificate.  The defendant has filed an affidavit in opposition to the application and a summary of argument upon which he relied at the hearing of the application.  In large measure the affidavit contains no evidentiary basis upon which the prima face presumption created by the certificate would be displaced.  There is however exhibited to the summary a letter produced by the liquidator of the company, Avon Realty.  Although that letter was not in evidence I considered it of great significance and as a consequence allowed the defendant to go into the witness box and testify in a manner which constituted that letter as part of the evidentiary material which the defendant produced in opposition to the application.  The letter was written by Ian Francis, the liquidator of the company, and on the second paragraph of the second page of the letter, the liquidator stated:

   Apart from CFAL, the only other creditor of the Company known to me is the Australian Taxation Office ('ATO').  I have received a proof of debt from the ATO for the total amount of $885,189.29 of which $582,733.75 relates to outstanding GST and PAYG and $302,455.543 relates to outstanding superannuation.  I understand that the Company had a number of outstanding lodgements at the time of my appointment.  The Director has advised that he disputes the quantum of debt owed to the ATO however, he has not provided evidence of same. 

5. It therefore appears that the Australian Taxation Office lodged a formal proof of debt for a total amount of $885,189.29 of which $582,733.75 related to outstanding GST and PAYG matters and the balance of $302,455.54 related to outstanding superannuation.  The lodging of a proof of debt is a serious step and I think I am justified in assuming that before such a proof would be submitted, there would be a scrupulous examination of the records of the Australian Taxation Office to ensure that the information on the proof was correct and the amount claimed was appropriate.  I know through the information provided in the hearing of this application that the amount outstanding for the PAYG component has been paid, or at least substantially paid.  That totals something over $120,000.  When I add that amount to the amount which the liquidator records as being the claim for outstanding superannuation, I finish up with a figure approximately $420,000.  I have information before me as to the manner in which the Australian Taxation Office maintains its records and by simple arithmetic if I add the amount of the claim in the present action to that which has been paid, I finish up with a figure of approximately $240,000.  Notwithstanding that, the Australian Taxation Office has lodged a proof of debt which in so far as it relates to the matters the subject of the present action, adds up to something approximately $420,000.  How can that be?

6. I have examined the spreadsheets and information which has been provided to me and there is no explanation whatsoever which yields any insight into the manner in which proof of debt was calculated and what has happened to the missing $200,000. 

7. I think it open to me to conclude that the records maintained by the Australian Taxation Office in regard to this matter are potentially unreliable.  If those records are unreliable it seems to me but a small step to conclude that the certificate is likely to be unreliable.  In my view, that evidence of lack of reliability must erode the prima facie evidential status of the certificate.  There is no evidence before me to offer the slightest explanation as to why these figures vary so radically and as a consequence I am not prepared to accept the certificate as discharging the onus on the plaintiff in the present summary judgment application and thereby pave the way to a judgment in the favour of the plaintiff.

8. Relying on this analysis, I dismiss the application for summary judgment.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.

AC
COURT OFFICER

13 NOVEMBER 2018