Deputy Commissioner of Taxation v Panayi

[2016] NSWDC 113

District Court

New South Wales

Medium Neutral Citation:	Deputy Commissioner of Taxation v Panayi [2016] NSWDC 113
Hearing dates:	18 and 19 February 2016; 5 April 2016; 4 May 2016
Date of orders:	24 June 2016
Decision date:	24 June 2016
Jurisdiction:	Civil
Before:	Gibson DCJ
Decision:	(1) Judgment for the plaintiff for $369,904.86. (2) Liberty to bring in Short Minutes of Order reflecting the mathematically agreed sum of interest on the judgment. (3) Defendant pay plaintiff’s costs. (4) Liberty to apply in relation to costs.
Catchwords:	TAXATION – PAYG deductions from wages and salaries of employees of company – withholdings not remitted to the ATO – liability of defendant as director to statutory penalty – whether defendant the sole director of the company and thus liable for penalty – whether defendant unable to take part in management because of illness or other good reason – whether defendant knew he was a director – credit issues arising from company documentation referring to the defendant as a director – whether any penalty payable should be regarded as remitted under s 269-30(1) on the basis that amendments to s 269-30 of the TAA did not affect penalties imposed prior to that date
Legislation Cited:	Corporations Act 2001 (Cth), ss 9, 206F, 248E and 1274B(2) Evidence Act 1995 (NSW), ss 91 and 178 Taxation Administration Act 1953 (Cth), ss 222AOJ, 269-20, 269-30 and 269-35(1) Tax Laws Amendment Act (2012 Measure Act No. 2) 2012 (Cth)
Cases Cited:	Ainsworth v Burden [2005] NSWCA 174 Canty v Deputy Commissioner of Taxation (2005) 63 NSWLR 152 Clark v Perkins and LVS Meat Company Pty Ltd (in liq) (2002) 84 SASR 330 De Gioia v Darling Island Stevedoring & Lighterage Co Ltd (1941) 42 SR (NSW) 1 Deputy Commissioner of Taxation v Austin (1998) 28 ACSR 565 Deputy Commissioner of Taxation v George (2002) 55 NSWLR 510 Deputy Commissioner of Taxation v Rablin [2016] QSC 68 Deputy Commissioner of Taxation v Roche [2014] WASC 222 Deputy Commissioner of Taxation v Saunig (2002) 55 NSWLR 722 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 Hamod v NSW [2011] NSWCA 375 Jones v Dunkel (1959) 101 CLR 298 Kocic v Deputy Commissioner of Taxation [2011] NSWCA 322 M & E M Holt Pty Ltd v Thompson [2001] NSWCA 359 McGlen-McLeod v Galloway [2012] NSWCA 368 Miller v Deputy Commissioner of Taxation (1997) 26 ACSR 533; (1998) 98 ATC 4059 Roche v Deputy Commissioner of Taxation [2015] WASCA 196 Rusu v National Australia Bank [1999] NSWSC 539 Strong v Woolworths Ltd t/as Big W (2012) 246 CLR 182 Syddall v National Mutual Life Association of Australasia Ltd [2011] QSC 389 Thornton v Telegraph Media Group Ltd [2011] EWHC 1884 (QB) Uratoriu v Commissioner of Taxation [2010] FCA 1157
Category:	Principal judgment
Parties:	Plaintiff: Deputy Commissioner of Taxation Defendant: Peter Panayi
Representation:	Counsel: Plaintiff: Mr J Mitchell / Mr T Cleary Defendant: Mr D Pritchard SC / Mr A Macauley   Solicitors: Plaintiff: ATO Legal Services Branch Defendant: McKells Solicitors
File Number(s):	2014/125985
Publication restriction:	None

Judgment

Introduction

1. The plaintiff by statement of claim filed on 28 April 2014 seeks judgment against the defendant, whom the plaintiff asserts had been a director of a company AAMAC Transport (NSW) Pty Ltd (ACN 110 080 307) (“the company”) since 1 January 2011, in circumstances where the defendant is liable for penalties due and payable to the plaintiff pursuant to s 269-20 Taxation Administration Act 1953 (Cth) (“the TAA”). Those penalties total $369,904.86 plus interest.

The basis of the plaintiff’s claim

2. The plaintiff’s claim arises by reason of the defendant being recorded by the Australian Securities and Investments Commission (“ASIC”) as a director of the company. As the company withheld amounts from payments made pursuant to Division 12 of Schedule 1 to the TAA, it was therefore obliged to remit that amount to the Deputy Commissioner of Taxation (“DCT”) (pursuant to subdivision 16-B of Schedule 1) by the relevant due date. That did not occur.

3. Where a director of a company fails to cause this payment to be made by the relevant due date, then that director may become personally liable to pay the DCT by way of penalty an amount equal to the non-remitted withholdings: s 269-20(1), (2) of Schedule 1 to the TAA. Liability for payment of the penalty will arise for any person who is designated as a director of the company on the date of the withholding, or who has become a director of the company for one or more days after that day, in circumstances where the company has not remitted the relevant withheld amounts.

4. The due dates for remittal of the amounts withheld by the company are as follows:

IAS/BAS	Amount withheld by the company	Due date for remittal of amount withheld	Date of when IAS/BAS lodged on behalf of the company
IAS for 1 May to 31 May 2011	$79,771	21 June 2011	14 February 2012
BAS for 1 April to 30 June 2011	$72,421	25 August 2011	8 March 2012
IAS for 1 July to 31 July 2011	$89,501	22 August 2011	14 February 2012
IAS for 1 August to 31 August 2011	$85,005	21 September 2011	14 February 2012
BAS for 1 July to 30 September 2011	$106,249	25 November 2011	8 March 2012

The defence to the claim

5. The defendant relies upon three defences:

1. He was unable to take part in management because of illness or other good reason: the defendant says he was unable at all relevant times to take part in the management of the company “because of illness” (Amended Defence, paragraph 2.2), as well as for other good reason, namely his asserted lack of knowledge of his position as director.

2. He was not a director: the defendant denies being a director of the company at any time, including during the relevant period from 1 May to 25 November 2011. An alternative argument was raised in closing submissions (for which Mr Macauley said he had no authority – T 150, but a somewhat similar argument was rejected in Deputy Commissioner of Taxation v Austin (1998) 28 ACSR 565 at 572), namely that the defendant had to be established to be a director at all relevant times and that, if not, he was only liable for those periods when he was held to be carrying out those duties in accordance with the definition of “director” in s 9 Corporations Act 2001 (Cth).

3. The monies should be deemed to be remitted: Alternatively, any penalty payable should be regarded as remitted by operation of s 269-30(1) of schedule 1 of the TAA, as the amendments to s 269-30 of the TAA (commencing on 29 June 2012) do not affect penalties imposed prior to that date.

6. I should briefly note that, due to challenges to evidence raised in the course of the hearing and to late service of affidavit material, issues asserted not to be identified beforehand were the subject of further submissions after the hearing concluded. The parties provided a series of further written submissions up until 5 April 2016. On 4 May 2016, the court was told judgment could be reserved as no further submissions would be made. Where references are made to the parties’ written submissions, they have been identified by the title given to each of those submissions, rather than by the date.

An overview of the facts behind the defence

7. The defendant says that at all relevant times he was employed in the company’s truck repair centre, and that he believed that his brother, Terry Panayi, who died in February 2013 (T 89), was the sole director of the company, which his brother ran from separate premises at Matraville. Where the defendant did take any part in the running of the business, he relied on the knowledge and expertise of the in-house accountant of the company, Graham Conn, who died from cancer in or around October 2011 (see paragraph 10 of the Amended Defence). Mr Conn did not work in the company office, but “largely worked from home making access to the company records difficult for the defendant” (paragraph 10.2(d)).

8. The defendant lived with his adult son, Christopher Panayi, who also worked for the defendant’s brother in the Matraville office. On occasion Christopher Panayi would bring home documents for the defendant to sign, which he did without reading them or querying this practice until about mid-2012.

9. The defendant was in poor health. He “was suffering high blood pressure, high sugar levels and high cholesterol”, was taking tablets regularly for these conditions and has recently suffered “a major heart attack” (paragraph 10.2(h)). During most of the time that the company was in operation, Terry Panayi was also in poor health, receiving dialysis treatment which required him to attend numerous medical appointments on a very regular basis. He was then diagnosed in late 2010 or early 2011 with cancer.

10. In addition to the denial of knowledge of being a director and ill-health claims, the defendant raises a defence that the penalty is remitted as a consequence of the defendant placing the company into liquidation on a date prior to the commencement of amendments to the TAA on 29 June 2012 which cannot apply retrospectively. That plea is novel, so I set out the relevant paragraph from the defence in full:

“12. In further answer to the whole of the Statement of Claim, the Defendant relies upon S.269-30 of Schedule 1 to the Taxation Administration Act 1953 (Cth) and says:

12.1. On or about 6 November 2012, the Plaintiff gave the Defendant the director penalty notice.

12.2. On 26 November 2012, within 21 days of the date of the giving of the director penalty notice, the Company commenced being wound up under external administration and/or controller appointed.

12.3. By reason of the matters pleaded in sub-paragraphs 12.1 and 12.2 above, if any of the penalties were imposed upon the Defendant pursuant to S.269-20 of Schedule 1 of the Taxation Administration Act 1953 (Cth) (which is denied), those penalties were remitted.

Particulars

(a) the penalties arose prior to 29 June 2012;

(b) the amendments to S.269-30 of Schedule 1 to the Taxation Administration Act 1953 (Cth), which came into force on 29 June 2012, do not apply to penalties that had been imposed prior to that date.”

11. As is set out in more detail below, a similar argument was raised, unsuccessfully, in Deputy Commissioner of Taxation v Roche [2014] WASC 222; Roche v Deputy Commissioner of Taxation [2015] WASCA 196.

The business relationship between the defendant and his brother

12. As is evident from the surnames of other directors, shareholders and employees, this was effectively a family business. Not only were the defendant and Terry Panayi brothers, but their sons also worked for the company.

13. When the company was registered as an Australian proprietary company on 16 July 2004, the shareholders were as follows:

1. Terry Panayi (the defendant’s brother – 100 ordinary shares);

2. Thomas Panayi (the defendant’s son – 50 ordinary shares); and,

3. Patricia Panayi (Terry Panayi’s wife – 50 ordinary shares).

14. The company, according to ASIC registers, has had three different directors throughout its existence. The first of these was Terry Panayi, who was a director from 16 July 2004 to 30 November 2005. Following disqualification procedures, Thomas Panayi became a director on 25 November 2005 and remained a director until 2 December 2009. According to the ASIC register, Terry Panayi reassumed being a director on 2 December 2009 but ceased on 1 January 2011. The defendant then became the director on 1 January 2011 and remained a director till 3 February 2014.

15. The defendant and his brother, Terry Panayi, had a long history of holding company directorships in business either together or successively. To give several examples, both the defendant and Terry Panayi were appointed directors of NAP Trading Pty Ltd on 18 December 1996 and ceased on 1 October 1998 (Exhibit E, Tab 3), and were appointed as directors of Kemps Creek Distributors Pty Ltd on 9 October 1995 and of Drisha Pty Ltd on 3 April 1995 until these companies went into liquidation (Exhibit E, tab 4).

16. The defendant and his brother also shared a history of disqualification as a director by the ASIC. In the case of the defendant, according to the ASIC registers, he was the director of the following entities which were either deregistered or put into liquidation:

Company	Date commenced as Director	Date resigned as Director	Fate of company
AAMAC Transport (NSW) Pty Ltd	1 January 2011	3 February 2014	Deregistered following strike-off action
AAMAC Warehousing & Transport Pty Limited	8 October 2002	30 November 2005	Liquidation
Kemps Creek Distributors Pty Limited	24 April 1990 9 October 1995	6 September 1991 30 September 2000	Liquidation
Drisha Pty Ltd	3 April 1995	3 July 2000	Liquidation
Kalicain Pty Ltd	13 January 1997	30 April 1999	Liquidation
Pan Express Pty Ltd	9 April 2001	30 June 2003	Liquidation
NAP Trading Pty Ltd	5 December 2000	30 September 2002	Liquidation
Ranana Pty Limited	23 June 1983	26 April 1994	Deregistered due to non-payment of annual returns
Berogold Pty Limited	7 June 1988	26 April 1994	Deregistered due to non-payment of annual returns
Atlas Satellite Pty Limited	27 July 1977	8 April 2000	Deregistered due to non-payment of annual returns
Teakdock Pty Ltd	19 September 1990	24 June 1993	Deregistered due to non-payment of annual returns
Rent-A-Skel Pty Limited	13 July 1988	24 June 1993	Deregistered due to non-payment of annual returns
Valdox Pty Limited	13 September 1988	13 June 1996	Deregistered due to non-payment of annual returns
Transport Logistics Pty Ltd	16 November 2012	16 November 2012	Liquidation
Magnetic East Holdings Pty Ltd	10 May 2011	Registered
Warehouse Solutions International Pty Ltd	1 January 2011	20 May 2013	Registered

17. The defendant was disqualified as a director by the ASIC for 4 years dating from 30 November 2005. He was a director of at least five companies which had been wound up in the preceding seven years, none of which paid any distribution to unsecured creditors (affidavit of Prateek Das sworn 17 February 2016, Annexure A).

18. The relevance and admissibility of this evidence were both challenged by the defendant both during the hearing and in subsequent submissions, as is set out in more detail below.

The company’s business activities

19. The company’s method of doing business was as follows. The company was a freight and logistics business which collected freight containers from Botany Bay and delivered them to customers (affidavit of Peter Panayi sworn 17 February 2016, paragraphs 6-9 and 17). The company occupied two premises. These were a depot in Matraville which contained the administration office where the defendant’s brother and sons worked, and a workshop in Enfield where the defendant worked.

20. The defendant’s role in this business was, he said, only to oversee the maintenance of the fleet of trucks and to supervise the mechanics working at the Enfield workshop, and not to participate in the administrative part of the business. Thomas Panayi and Christopher Panayi have both sworn short affidavits, the contents of which are set out in more detail below. Mr Conn’s role in the company is set out in the affidavit of the defendant sworn 15 October 2014 at paragraphs 11-13.

21. On 14 September 2010, the defendant’s brother and son opened a bank account with the ANZ Banking Group Ltd for the company for which each of them was an authorised signatory (affidavit of Selvije Lika sworn 14 May 2015, Exhibit SL-1). The defendant says he was a signatory from about the time of incorporation, but solely for the purpose of signing cheques in relation to workshop expenses.

The appointment of the defendant as a director

22. As set out in Annexure A to the affidavit of Prateek Das sworn 10 September 2014, ASIC was notified of the appointment of the defendant as director of the company from 1 January 2011 by way of lodgement of a Form 484 on 7 February 2011. That form was electronically lodged by Accountax Pty Limited (Annexure B to the Affidavit of Peter Panayi sworn 15 October 2014). By reason of the earlier cessation of Terry Panayi as director of the company on 1 January 2011 the defendant was the sole director of the company from this time onwards. He remained a director until 3 February 2014.

23. The defendant has not tendered any contemporaneous documentation to rebut the presumption that he was a director during this period. There are no minutes of general meetings of members appointing directors, directors’ consents, correspondence or other documents referring either to his appointment or to the cessation of Terry Panayi as director. The company’s liquidator gave evidence of having sought such documents unsuccessfully from the defendant and the company, and the plaintiff has similarly been unsuccessful in obtaining these documents under subpoena.

24. There are, however, some documents in existence which do refer to the defendant as being the chairperson and sole director at a meeting of directors of the company. The timing of the ASIC notification coincided with significant developments in the company’s management. On the same date as the ASIC notification (7 February 2011), the company resolved to acquire trucks, equipment and other items from the defendant personally, for use in the company’s operations at an agreed price of $2,274,800, on the terms of a written agreement (the “Agreement”, which is set out in full below). The defendant signed minutes of that meeting in his capacity as chairperson of the company (Affidavit of Bruce Gleeson sworn 13 May 2015 at pages 11-12).

25. In cross-examination, the defendant claimed that he has only signed this document because he was the owner of these assets which were being transferred to the company. The defendant said it was a coincidence he executed the Agreement as director of the company, committing the company to payment of $2,274,800, to himself on demand, on the same day as the Form 484 was lodged with the ASIC:

“Q. I suggest to you that the form 484 that was filed with ASIC on 7 February 2011 was done so as to give legal effect to the agreement of the same day between you and AMAC New South Wales for your trucks to be sold to AMAC--

A. That’s not correct.

Q. --New South Wales?

A. No. No. I, I, I don’t know why it fell on the same day but that’s not correct.

Q. You don’t know. It’s just pure coincidence is it?

A. Sorry?

Q. Is it a pure coincidence?

A. Well that’s right.

Q. I suggest to you that the agreement on 7 February 2011 was formalised so that you could call on $2.274 million from AMAC New South Wales at any time?

A. That’s not right. It’s because I had equipment which was owned, owed, I owned and, and the companies were using it.

Q. Yes?

A. And I’ve still got the equipment in a different, I’ve got another company that I am a director of, and I’ve got that equipment still there.

Q. On what basis did you form the view when you signed for AMAC New South Wales that it was in the best interests of AMAC New South Wales that you could demand $2.274 million from the company without any title passing in that property, in those trucks to AMAC New South Wales?

A. I wasn’t demanding the money at all. I was protecting the trucks, the equipment that, that was owned by me.

Q. And how was that in AMAC New South Wales’ best interests when you signed for them?

A. But, what do you mean?

Q. How was it in AMAC New South Wales best interests to sign a commitment to pay you $2.274 million on demand?

A. If they took the equipment. I wasn’t getting the money for nothing.

Q. The property didn’t pass?

A. Sorry?

Q. The property didn’t pass?

A. No, that’s right. That’s why I didn’t receive the money.

Q. But you at any time could’ve called on that money without property passing. How was that in the interest of AMAC New South Wales?

A. How, how could I, how could I call on it if they didn’t have the money?

Q. It was payable on demand.

A. Sorry.

Q. It was payable on demand.

A. It, it, you’ve got to have the money to pay it and the money wasn’t there so I could not--

Q. Is it true to say that you didn’t--

A. In here I was only protecting the equipment that I owned.

Q. Is it true to say that you never considered the interests of AMAC New South Wales when you entered into that agreement?

A. No.

Q. Well what were the interests of AMAC New South Wales?

A. The defendant--

Q. And entering that agreement?

A. That agreement was only for to protect the equipment.

Q. Isn’t the truth that you were the sole director of AMAC New South Wales from the 1 January 2011 when your brother fell ill?

A. Only that I saw it on the ASIC but I didn’t know until just recently.” (T 75-76)

26. Subsequent to that date, the defendant also performed a series of tasks which the plaintiff submits show that the defendant not only took an active role in directing the affairs of the company, in that he performed functions reasonably expected to be performed by a director, but held himself out (as did the company held him out) to be a director.

27. These included a range of activities on the company’s behalf, such as:

1. Participation in the meeting of directors on 7 February 2011;

2. Signing correspondence to the liquidator of a related company as a “director”;

3. Preparation of a Directors Report;

4. Payments of money for various company purposes between 2 June 2011 and 14 September 2012;

5. Lodgement of Business Activity Statements and Instalment Activity Statements;

28. He also made representations to third parties about his status as a director, such as:

1. Lodging tax returns in which he described his occupation as “Director – Managing”;

2. Statements on behalf of the company to the ATO in relation to superannuation (describing himself as an “employer”) and GST and to the bank (which placed his specimen signature in a box as “director”).

The plaintiff’s evidence

29. The evidence of the plaintiff’s witnesses may briefly be summarised as follows:

1. Mr Prateek Das, an employee of the defendant, provided evidence the ASIC register showed the defendant was appointed as sole director of the company on 1 January 2011. On that same day the previous director (the defendant’s brother Terry) resigned. Mr Das’s affidavit also attached an ASIC decision dated 23 November 2005 setting out the reasons why the defendant was disqualified for a period of four years (the admissibility of this document was challenged both during and after the hearing, and those challenges are set out in more detail below). Mr Das’s affidavit also sets out that the amounts withheld by the company between May and September 2011 were debts owed by the company and thus penalties owed by the defendant, the director penalty notice (“DPN”) having been served on 6 November 2012 (see the affidavits sworn on 10 September and 27 November 2014 and 17 February 2016).

2. The evidence of Mr Paul Weston, the liquidator of AAMAC Warehousing, which was to the effect that the defendant sent him a letter dated 22 June 2011 stating that the defendant was a director of the company as at that date. This letter went on to state that the defendant had entered into an agreement as director of the company in December 2010 that was reduced to writing signed by the Defendant as director of the company some time on or prior to the date of the letter (see Mr Weston’s affidavit of 21 December 2015).

3. The evidence of Mr Bruce Gleeson (on information and belief) setting out that, according to the scant company documents in his possession, there were no directors’ consents, and no members’ or directors’ minutes kept by the company, except those produced on subpoena and annexed to his affidavit. These included a document showing that the Defendant was the chairperson (and therefore a director) at a board meeting held on 7 February 2011, where he was the sole director. The documents annexed also demonstrate that the Defendant attended annual board meetings (see Mr Gleeson’s affidavits sworn on 13 May and 17 December 2015).

4. The evidence of an ANZ Bank employee, Ms Lika, providing bank statements and signatures, which confirmed that the defendant was a signatory to the company bank account (see her affidavit sworn on 14 May 2015).

The defendant’s evidence

30. The defendant gave evidence and was cross-examined; his evidence is set out in more detail below. In addition, affidavits were provided by his sons. The affidavits sworn by the defendant and his two sons may be summarised as follows:

1. The defendant provided two affidavits sworn on 15 October 2014 and 15 February 2016. In the first of these, he set out his role in the company and, at paragraphs 21 – 34, the basis upon which he says there was no consent given to being a director. At paragraphs 35 – 37 he sets out his blood pressure and cholesterol problems and that in 2014 after a heart attack he was given a pacemaker. The only document attached is an ASIC search showing his appointment as a director. His second affidavit sets out more detailed information about the how he became a signatory for the company bank account, how his tax returns have set out his occupation as “Director – managing” without his knowledge or permission, how he came to fill out company superannuation returns and the circumstances in which he signed two documents dated 7 February 2011 and 22 June 2011 as a director. A three-sentence medical report from his general practitioner notes that the defendant has been a diabetic for nine years and his current eyesight problems, which include needing glasses to read and cataract surgery.

2. The defendant’s son Thomas, in a one-page affidavit sworn on 22 December 2014, set out evidence that he was an employee in the accounts division of the company and that this included superannuation, payroll and other administrative tasks. He was “not aware of the circumstances as to why or when” his uncle ceased being a director and his father was “purportedly appointed", and recalls the defendant’s surprise when he received the DPN notice. From his observation, his uncle was the person who supervised the business day to day operations while his father’s role was restricted to maintenance. He was not required for cross-examination.

3. The defendant’s son Christopher, in a one-page affidavit sworn on 17 February 2016, set out that he lives with the defendant and used to take home documents from his uncle Terry Panayi and the company accountant for the defendant to sign. He says that some time in 2012 the defendant asked him why he was bringing these home to him, when they could be signed “internally”. Christopher Panayi never read any of these documents himself. He was not required for cross-examination.

31. Both parties submitted that findings of credit were central to my findings of fact.

The role of credit in the findings of fact

32. As Gzell J noted in Kocicv Deputy Commissioner of Taxation [2011] NSWCA 322 (“Kocic”) at [41], s 1274B(2) Corporations Act 2001 (Cth) creates the presumption that information drawn by ASIC from the national database is a proven fact in the absence of evidence to the contrary. In court proceedings, a record that purports to have been prepared by ASIC is admissible as prima facie evidence of the matters stated, in so much of the writing as sets out what purports to be information obtained by ASIC, by using a data processor, from the national database. In other words, the register is proof of such a matter in the absence of evidence to the contrary.

33. It is accepted by the parties that, as was the case in Kocic (at [42]), in the absence of evidence to the contrary, the recording on the ASIC register is evidence of the appointment of the defendant as a director of the company.

34. The defendant denies ever consenting to be a director, or even knowing he was a director until he received the DPNs. In such cases, credit may be a significant factor in relation to the fact-finding process. As is set out in the analysis of the factual issues below, the defendant asks the court to accept him as a witness of credit that he had no knowledge that he was appointed as a director.

35. The role that credit plays in the findings of fact where a defendant denies any knowledge of being a director (Kocic being but one of many examples) is similar to that in any proceedings where credit is an issue. As to credit findings generally, in McGlen-McLeod v Galloway [2012] NSWCA 368 at [87], proceedings where a finding as to credit in personal injury proceedings were essential where these were contradicted by all contemporaneous medical records, Tobias AJA noted the applicability of the observations as Tugendhat J in Thornton v Telegraph Media Group Ltd [2011] EWHC 1884 (QB) at [73]–[74], the relevant parts of which he recorded as follows:

“[73] There is great assistance to be obtained from extra-judicial writing of Lord Bingham in a chapter headed “The Judge as Juror: The Judicial Determination of Factual Issues” … Lord Bingham cited Sir Richard Eggleston QC Evidence, Proof and Probability (1978), 155 who set out the main tests to be used by a judge to determine whether a witness is lying or not.

(1) the consistency of the witness’s evidence with what is agreed, or clearly shown by other evidence, to have occurred;

(2) the internal consistency of the witness’s evidence;

(3) consistency with what the witness has said or deposed on other occasions;

(4) the credit of the witness in relation to matters not germane to the litigation;

(5) the demeanour of the witness.

[74] Lord Bingham then added these observations:

In choosing between witnesses on the basis of probability, a judge must of course bear in mind that the improbable account may nonetheless be the true one. The improbable is, by definition, as I think Lord Devlin once observed, that which may happen, and obvious injustice could result if a story told in evidence were too readily rejected simply because it was bizarre, surprising or unprecedented … so long as there is any realistic chance of a witness being honestly mistaken rather than deliberately dishonest a judge will no doubt hold him to be so, not so much out of charity as out of a cautious reluctance to brand anyone a liar (and perjurer) unless he is plainly shown to be such.”

36. The reasons set out in the defendant’s oral and written submissions for accepting the defendant as a witness of credit are largely demeanour-based, or reliant upon asserted gaps in the evidence of the plaintiff:

1. The defendant “was subject to (appropriately) rigorous cross-examination by experienced counsel” and “performed well under cross-examination, as best he could in the circumstances and in light of some of the questions posed to him” (written submissions, paragraph 38). Counsel for the defendant submits that the defendant “answered questions directly”, “did not seek to evade questions”, “did not attempt to force evidence” and did not attempt to “argue with his cross-examiner” (closing submissions, paragraph 38).

2. The defendant’s evidence is “materially undisputed by any other person who gave evidence” and much of it was “unchallenged” (closing submissions, paragraph 39).

3. The defendant’s evidence was “inherently credible” in that his “steadfastly maintained position” was “not implausible” given his largely unchallenged and uncontradicted evidence of his activities for the company and “the paucity of direct documentary evidence” (closing submissions, paragraph 40, emphasis given by counsel).

4. The defendant was not afraid to make “possible admissions against perceived self-interests [sic]” (closing submissions, paragraph 41) such as acknowledging that after his brother Terry was diagnosed with cancer he assisted with administrative matters in the company, even writing out cheques for expenses related to the workshop. He was, however, “definite and precise” about his non-involvement in the payment of other company expenses such as wages, rent and fuel and was “adamant” that he did not have access to the company’s online bank accounts as he did not have the password.

5. The defendant’s responses under cross-examination on “many issues peripheral to these proceedings”, nominated as his answers to questions concerning “phoenix” conduct in 2005, the sending of the agreement to Pitcher Partners, signing a document “for and on behalf of AAMAC Transport”, Exhibit 3 and a letter from Constantinidis Accountants (closing submissions, paragraph 42).

6. The defendant’s evidence as to his education and the role of the defendant and other family members in the company and the ill-health of his brother is asserted to be “unchallenged”. Nor was he challenged as to his evidence about when and how he came to put the company into liquidation, ceased to sign quarterly superannuation statements after querying his son Christopher or did not tell anyone at the ANZ that he was a director of AAMAC Transport (closing submissions, paragraph 43). In those circumstances, such evidence not being inherently defective, illogical or unreliable, it should be accepted: M & E M Holt Pty Ltd v Thompson [2001] NSWCA 359 at [21]; Hamod v NSW [2011] NSWCA 375 at [338] – [339].

7. The evidence of the defendant’s sons was unchallenged, in that they were not required for cross-examination. This is discussed in more detail below.

37. The plaintiff’s submissions on the defendant’s credit focused on the first three of the categories set out by Tugendhat J:

1. The inconsistency of the defendant’s evidence with contemporaneous documentation (in particular documents the defendant had written and/or signed), absence of statutorily required company records (and unconvincing explanations for their whereabouts) and the defendant’s implausible claim of ill-health preventing him from carrying out his duties.

2. The defendant’s uncorroborated claims of illness and failure to explain why he could not have ensured that the company met its obligations were not only inconsistent with his performing work of a directorial nature during that period (plaintiff’s outline, paragraph 63) but relevant to his credit generally.

3. The inconsistencies between the defendant’s testimony and a series of contemporaneously created documents of the company, including the answers certified as true by the defendant in the liquidator’s questionnaire.

4. The failure to provide books and records of the company to the liquidator or to the court, which were contrary to his earlier certifications as to the completeness of the books and records of the company (supplementary submissions, paragraph 6), and the implausibility of his testimony concerning the continued absence of these records, such as his allegations that the accountant’s widow may have destroyed them (T 71-74, supplementary submissions, paragraph 6(j) – (k)).

5. The defendant’s failure to challenge the provenance of the ASIC extract or claim that the Form 484 was vitiated by fraud, and the inadequacies of the affidavits of the defendant’s sons on this issue .

6. The inconsistency between the evidence of the defendant and the credible and reliable evidence of the liquidator and the plaintiff’s witnesses (supplementary submissions, paragraphs 2- 5).

7. The limited and vague contents of the affidavits sworn by the defendant’s two sons, which rendered any cross-examination of them unnecessary.

38. Both parties also asked me to make Jones v Dunkel findings (Jones v Dunkel (1959) 101 CLR 298) in relation to the asserted failure to call certain witnesses.

39. Findings as to credit are only part of the issue; careful attention must also be paid to the document trail of asserted inconsistent documentary evidence. The relationship between findings of credit and the contemporaneous document trail relied upon to make the findings of credit are explained by Gzell J in Kocic at [6] ff. The appeal brought in Kocic did not challenge the credit findings (at [6]), but contended that the document trail rebutted the credit findings. I have been guided by Gzell J’s analysis of the document trail and of the relationship between the document trail and credit findings generally.

40. When considering the submissions of the defendant as to the asserted weakness and lack of documentary evidence from the plaintiff, it is helpful to consider the line of authority on “very slight” evidence (De Gioia v Darling Island Stevedoring & Lighterage Co Ltd (1941) 42 SR (NSW) 1), as explained most recently in Strong v Woolworths Ltd t/as Big W (2012) 246 CLR 182 at [65]. While the defendant may say that, due to the company’s liquidation, he has little power to produce evidence which is in the hands of others, the plaintiff equally has little power to contradict it. In those circumstances, steps taken by the parties to obtain those documents (such as issuing subpoenae, calling evidence from persons seeking such documents and making proper inquiries of persons who might be thought to have such documents) are of importance.

41. A good example of these issues is the defendant’s claim that he was unable, at various times during the relevant period, to take part in the management of the company because of illness (Amended Defence, paragraphs 2.2, 10.2, particulars (e)-(i)).

The defendant’s evidence of ill-health

42. According to the notations in the orders of the Registrar, the defendant’s health was so poor that he was unable to attend the mediation listed on 22 July 2015. A picture was painted for me, both in the opening of the case (opening submissions, at paragraphs 5 and 6) and at the commencement of the defendant’s cross-examination, of the defendant as a person in very poor health. Paragraph 6(ii) of the defendant’s outline states:

“(ii) The defendant suffered from an illness at all material time, namely, cataracts, which limited the defendant’s ability to read and therefore be able to discharge the natural and inherent duties attendant to the management and administration of the company. In addition, the defendant also suffered at the time from high blood pressure, sugar levels and cholesterol, which ailments placed restraints on the defendant’s working ability. These illnesses are good reasons why the defendant did not take part in the management of the company and why it would be unreasonable to have expected him to have taken part in the management of the company.”

43. The statutory defence set out in s 269-35(1) of Sch 1 of the Act is as follows:

“Illness

(1) You are not liable to a penalty under this Division if, because of illness or for some other good reason, it would have been unreasonable to expect you to take part, and you did not take part, in the management of the company at any time when:

(a) you were a director of the company; and

(b) the directors were under the relevant obligations under subsection 269- 15(1).”

44. The defendant accordingly must establish the following:

1. That he had an illness while he was a director and at all times when the company was obliged to remit the amounts withheld that caused him not take part in the management of the company; and,

2. That it would have been unreasonable for him to take part in the management of the company.

45. The defendant’s health information as set out in his affidavit of 15 October 2014 was of the most general kind, unsupported by any medical evidence:

“35. For the last 10 years I have suffered from high blood pressure, high sugar levels and high cholesterol and have been taking medication regularly including Diamacron, Lipertol and Olmetec.

36. I now regularly see doctors for my heart condition and on 6 May 2014 I was admitted to Concord Hospital after a heart attack and given a pacemaker but my condition is yet to be stabilised.

37. I continue to be involved in the day to day operations of the Company but my ill-health placed considerable restraints upon me and now prevent me from working the hours I previously worked.”

46. This was somewhat enlarged in the defendant’s affidavit of 17 February 2016 (served the evening before the hearing commenced) as follows:

“5. I have set out in my Previous Affidavit some of the illness from which I suffer. I also suffer, and I have suffered for many years now, from poor eyesight due to cataracts. This condition makes it very difficult for me to read documents, even with the use of a magnifying-glass, which I have been forced to use for many years now in order to be able to even read the text on documents. Annexed and marked “A” is a copy of a medical report by Dr Singh dated 17 February 2016.”

47. Dr Singh’s medical report (as attached in the defendant’s affidavit of 17 February 2016) is as follows:

“17th February 2016

Dear Sir/Madam

This is to certify that I have today examined:

Peter Panayi,

In my opinion, he is Diabetic for the last nine years and has mild optic atropy right eye. Autosomal Recessive optic Neuropathy since 1997, diagnosed in Price of wales [sic] hospital [sic]. He needs glasses to read and is getting his cataract surgery done on 15/3/2016. Currently his vision is only borderline for driving and is fit for daytime driving only.

Signed: [Signature]

Dr. Amrit Pal Singh”

48. A health summary sheet which is attached to this document sets out medication that the defendant was taking and gives the following medical history:

“Current active problems:

Date – Condition – Comment

2013 – Renal Impairment

2014 – Hyperlipidaemia

2014 – Hypertension

2014 – NIDDM

2014 – Pacemaker

2015 – Cataract (Bilateral)

2015 – GOUTY TOPHII (Right)”

49. The defendant’s son, Christopher Panayi, who has lived with his father all his life, provided the court with an affidavit sworn on 17 February 2015. That affidavit makes no reference to any difficulties the defendant had with his health, which is surprising, since Christopher Panayi says that he took home “numerous documents” over an unspecified period of time, without observing any difficulty by the defendant in dealing with them beyond saying, at an unspecified time in 2012, ““why are you bringing me these home when these documents can be signed internally” or words to that effect”.

50. The affidavit of Thomas Panayi, who did not live with the defendant but who worked in the accounts division of the company makes no reference to his father’s health problems, and similarly can cast no light upon these matters.

51. The defendant’s oral evidence on these issues was that he had eyesight problems and had trouble reading. He said, at the commencement of cross-examination:

“A. I, I’m slow but I can, and I brought some magnifying glasses too cause I, I’ve got problems with my reading.” (T 38)

52. The defendant also relied on the alternative to illness in s 222AOJ of the TAA (“or for other good reason”), principally on the basis that he was unaware he was a director (closing submissions, paragraphs 77-83), although the defendant’s submissions conflate these alternate bases by use of the word “and” in paragraph 81 and “equally” in paragraph 83. It would be fair to characterise the illness plea as a significant plank in the defence based on s 222AOJ. The submission at paragraph 83 is:

“Equally, the defendant’s illness, and in particular his poor eyesight, merit his excusal from the management of the company. The court observed first-hand the defendant’s difficulty in reading documents and unchallenged [sic] in his evidence that he needed (and had needed for many years) a magnifying glass in order to read documents. It is in no doubt that such poor eyesight precluded and reasonably justified the defendant from not taking part in the management of the company.”

53. At the commencement of the defendant’s cross-examination, in response to a question as to whether he had read his affidavit carefully, he replied:

“Q. And so you were able to read the document?

A. I, I’m slow but I can, and I brought some magnifying glasses too cause I, I’ve got problems with my reading.

Q. But you read it carefully I take it before you swore it?

A. Yes.” (T 38)

54. The only other reference to the defendant’s eyesight problems during cross-examination was as follows:

“Q. Turn to that page. I think I might have the wrong page there. Question 10, so if you go back a couple of pages, sorry.

HER HONOUR: Listen, this gentleman has already told us he has got bad eyesight. I’d like you to leave the bar table and go and stand over him, both of you, and make sure he’s got the right document.

WITNESS: Can I say something, your Honour?

HER HONOUR Q. Yes. What’s the problem?

A. It’s just we might be able to shortcut it. I appointed Bruce Gleeson, Jones Partners after I got the notice from the—

Q. Don’t worry about that. We understand, but, look—

A. And that’s why—

Q. --the barristers are going to come and make sure you’re on the right page because I’m worried that, if you don’t have good eyesight, you could be looking at the wrong page and you might not give the right answer. So you’re both going to look over his shoulder and make sure we’re all on the same page.

PRITCHARD: Literally and metaphorically.

MITCHELL Q. If you turn question number 10, a couple of pages before.

A. 10, yeah.

Q. Do you see that the question is, and maybe if you read it with me - get your magnifying glass - “How often were directors’ meetings held in the three years prior to my appointment”, and the answer written is “Annually.” Do you see that?

A. Yes.

Q. How do you know that directors’ meetings were held annually?

A. As I said earlier, I didn’t - I didn’t write this. This is not my writing. I did sign it. Somebody else put it together and I - and these are the answers. I didn’t answer it.” (T 50-51)

55. Shortly afterwards, I repeated my offer to take appropriate steps if any further problems arose:

“MITCHELL: Yes, that's correct. Your Honour, there’s no further questions on that document. I might return to the bar table.

HER HONOUR: All right, but if we have this problem again, I’ll get you to come forward.

MITCHELL: I will do so.

HER HONOUR: This gentleman is entitled to consideration because of his eyesight problem.” (T 53)

56. This is not evidence of my having “first-hand” observation of the defendant’s eyesight problems, but of my ensuring that the defendant, who had deposed to having such serious eyesight problems as to be entitled to the benefit of a defence under s 222AOJ, should be able to call upon assistance if he needed help in reading the many documents which were put to him in cross-examination.

57. In response to what was effectively the next question, the defendant said (T 53) he was not able to read a document even with the help of his magnifying glass, and I again asked counsel to approach.

58. Thereafter, however, the defendant had no difficulty finding the right page, reading documents he was shown, agreeing he read documents before signing them and responding to questions concerning those documents. To my observation of his demeanour in the witness box, and upon analysis of the questions he was being asked his eyesight problems appeared not to be related to an inability to see but to answer questions about the documents he was looking at. I have identified several examples of such answers in the excerpts from transcript set out below.

59. I do not accept, therefore, that I had “first-hand” opportunity to observe the defendant having difficulties in the witness box. To the contrary, I am satisfied, from his demeanour in the witness box that, despite my giving him ample opportunity to let the court know if he was having difficulties, he did not need any such assistance.

60. Counsel for the defendant did not submit that any eyesight problem prevented the defendant from carrying out truck repairs; it merely affected his ability to read documents (T 109). However, the medical certificate tendered, while referring to eyesight problems, merely states that he needs glasses to read; and no that he cannot read documents, or reads them with difficulty. The defendant’s cataract problem was not diagnosed until 2015 and, even allowing for several years of onset prior to diagnosis, is not stated by his general practitioner to be a condition relevant to his ability to read documents during 2011 – 2012.

61. The plaintiff submits (written submissions, paragraphs 60-64) that there is no evidence to support the defendant’s claim that he suffered from any illness preventing him from carrying out the duties of a director and, in particular, no evidence of ill-health for the relevant period. Counsel for the defendant asks me to draw upon my first-hand observation of the defendant in the witness box and to accept the defendant as a witness of truth in relation to his evidence on this issue.

62. In personal injury actions, courts are commonly called upon to determine issues of credit in relation to a claim of injuries and/or ongoing disabilities. Where a plaintiff claims, for example, that as a result of his injuries he is unable to perform his pre-injury duties efficiently or at all, that is generally the subject of medical evidence, usually in the form of a report from a medical practitioner with the appropriate skills and expertise, as well as an acknowledgement of the Code of Conduct.

63. None of that evidence is present in this case. There is no evidence of illness during the relevant period beyond a bare reference, in his general practitioner’s letter, to diabetes and atropy in one eye. Nor is there corroborating evidence from company records (such as sick leave), or from the defendant’s family members as to his ongoing difficulties. To the contrary, all of the evidence suggests that the defendant was working full time on truck repairs and other related tasks, which I infer must have required some degree of physical wellbeing as well as ability to see what he was doing. He held a full driver’s licence until comparatively recently (although his general practitioner now considers that he should be restricted to a daytime licence).

64. There is no evidence that the defendant was at any time, let alone at all times (Deputy Commissioner of Taxation v George (2002) 55 NSWLR 510), so ill that it would have been “unreasonable” (Deputy Commissioner of Taxation v Saunig (2002) 55 NSWLR 722) for him to take part in the management of the company. This defence, insofar as it is based on an assertion of illness, cannot be made out.

65. In rejecting the defendant’s claim of being so ill that he could not attend to the duties of a director, despite his statement on oath to the contrary, I am making a finding of some substance in relation to the defendant’s credit. I am satisfied that the defendant has grossly exaggerated his health problems, and that his references to his eyesight problems at the commencement of his cross-examination, which dropped away as the cross-examination continued, were largely fanciful.

66. Two aspects of this finding are relevant to the determination of other disputed issues in this case. The first is what I should make of the four-sentence affidavit of Christopher Panayi sworn on 17 February 2015, which counsel for the defendant describes as “unchallenged”, in that he was not required for cross-examination.

67. Although Christopher Panayi lived with the defendant “all my life”, according to his affidavit, he does not provide any observations or other information about the defendant having reading problems, or health problems, of any kind. All that Christopher Panayi says is that he “used to take home numerous documents” given to him by his uncle and “various other employees” to give to his father to sign (which Christopher Panayi “never read” himself) until his father asked him “why” at “some time in 2012” (the affidavit is so generally worded that the fact of Christopher Panayi’s own employment in the company’s Matraville office (which would mean regular contact with his uncle and his brother during working hours) is not specifically stated). The absence of this evidence from his affidavit is a gap in the defendant’s evidence, rather than in the plaintiff’s evidence.

68. The second is that an exaggerated or misleading statements by a party to litigation about his or her health may be difficult for the opposing party to investigate, particularly where, as here, the medical evidence is an unsatisfactory and brief annexure to a late and unexpected affidavit of the defendant, served the night before the hearing (T 12). It is not to the defendant’s credit that he gave evidence which I am satisfied was greatly exaggerated and intended to mislead the court.

“Or for other good reason”:

69. The defendant alternatively contends that he had “good reason” not to take part in the management of the company, but a closer examination of this ground of defence demonstrates that this amounts to a restatement of the assertion that he did not know he was a director and believed his brother, Terry Panayi, to be holding that role. Alternatively, the defendant relied on the expertise and experience of the in-house accountant, Graham Conn.

70. As this defence requires me to examine the same evidence as the evidence the subject of the second of the three defences (“the director issue”), I propose to take into account the relevant findings made below in relation to what the parties called “the director issue” (essentially what to make of the contemporaneous documents signed and/or authored by the defendant) in relation to both these defences.

71. As to this defence, I adopt and follow the approach to issues of reasonableness set out in Roche v Deputy Commissioner of Taxation at [29] (which in turn followed the approach taken in Canty v Deputy Commissioner of Taxation (2005) 63 NSWLR 152 to an earlier version of s 269-35). What is “reasonable” for the purposes of s 269-35(2) is not merely the knowledge of the director but an objective test. The director must prove that he/she took all steps which were reasonable, having regard to the circumstances of which the director, acting reasonably, knew or ought to have known (Deputy Commissioner of Taxation v Saunig at [25]).

72. Although the statutory provision considered in Canty v Deputy Commissioner of Taxation was not in identical terms to s 269-35(2)(a), Handley JA’s reasoning is equally applicable to s 269-35(2)(a). Compliance with s 269-35(2)(a) therefore requires a director to address each of the alternative events set out therein (Miller v Deputy Commissioner of Taxation (1997) 26 ACSR 533; (1998) 98 ATC 4059).

73. The next issue for determination is what the parties called “the director issue”, as the defendant must explain how he did not know he was a director despite not only the ASIC register contents, but the existence of a series of contemporaneous documents indicating he described himself as a director and was carrying out directorial duties.

“The director issue”

74. As noted above, the Form 484 lodgement made on 7 February 2011 showing the defendant as a director of the company from 1 January 2011 (until 3 February 2014) is prima facie evidence of the correctness of that evidence unless the defendant can prove otherwise.

75. The defendant does not tender any contemporaneous documentation to rebut this presumption. Such material could have included (to list some of the documents referred to in the plaintiff’s outline of submissions and oral argument):

1. Minutes of meetings of members appointing directors, or directors’ consents. To the contrary, the company’s liquidator’s evidence was that he had unsuccessfully sought such documents. The plaintiff has issued subpoenae for such documents, with no result.

2. No evidence was called, and no document tendered, from Accountax Pty Ltd, the company which lodged the Form 484.

3. No allegation of fraud or misconduct is made in relation to any other person. As for the allegations about the accountant’s widow, these were made from the witness box in circumstances where, had such suspicions been held, subpoenae could have been issued to her, or the problem raised with the company liquidator (who was called to give evidence in these proceedings, and not cross-examined about the alleged withholding of documents by Mrs Conn).

76. Counsel for the plaintiff submits that, in those circumstances, and taking into account the unchallenged evidence of absence of the relevant company records, I may more easily accept the proven facts that arise from the ASIC extract and Form 484 and infer that any evidence Accountax Pty Ltd may have given, or provided under subpoena, would not have been favourable to the defendant: Jones v Dunkel.

77. The Jones v Dunkel inference is discretionary: Uratoriu v Commissioner of Taxation [2010] FCA 1157 at [154] and I have had regard to the evidence of the defendant on this issue generally. The defendant’s evidence was as follows:

“Q. He ceased his management role though when he was sick in 2011 didn’t he?

A. He ceased when he died. He worked until he died. He - right till the end, but he - as I understand he ceased as a director because I saw it on the ASIC search but I didn’t know that he had ceased as a director. I thought he was still the director, and I don’t know who pulled him out and put me in at the time.

Q. I suggest to you that’s a convenient fabrication on your part isn’t it?

A. Why is that? Q. Do you really suggest that Mr Conn, your accountant, or whoever lodged the ASIC form on 7 February 2011 would have done so without your instructions?

A. Why didn’t he get me to sign?

Q. It’s an electronic form?

A. He would have had in-house paperwork as one resigning and that’s how we do it.

Q. Is it?

A. If we change directorship now, a director resigns, another comes on.

Q. That’s how you do it is it?

A. Accepts, yes.

Q. How that’s you’ve always done it is it?

A. And there’s no documentation there that I know of.

Q. No, but that’s how you do it is it, someone resigns and there’s paperwork for that?

A. That’s how it’s supposed to be done.

Q. Has it ever been done like that in this company?

A. Yes.

Q. Where is the evidence of that Mr Panayi?

A. Well I don’t have it. ASIC should have it. My son became a director. Someone has put him in there. So—” (T 69-70)

78. This was followed up by an accusation that after Mr Conn’s death, Mrs Conn, his widow, refused to hand over company documents:

“Q. It’s all Mrs Conn’s fault. She won’t give you the documents, is that right?

A. She wouldn’t give us any but--

Q. How did you contact her to get the documents?

A. But can I just, I just want to answer--

…

Q. Well, in the two years that this case has been on foot have you ever tried to get the documents from Mrs Conn?

A. I did but she refused to talk, talk to us. She wouldn’t talk to us and I, I don’t know where she is.

Q. Who’s us?

A. My family, she didn’t like our family and didn’t, didn’t like Graham working for us, even though Graham Conn worked it nearly 20 years.” (T 74-75)

79. The defendant referred to the role his son played during this period:

“HER HONOUR

Q. So your son. Which son was that?

A. Thomas Panayi.

Q. When was that?

A. When, when the brother and I were banned as directors, the company had to keep going so my son became a director, and when we were allowed to become directors again he came off and my brother went back on. I’m not sure whether, what year it was.

MITCHELL

Q. And you say that there was paperwork that--

A. Yes.

Q. --supported that?

A. Well Graham Conn was always particular with his paperwork.

80. It was in this context that the defendant sought to blame Mrs Conn, his widow:

“Q. Well, in the two years that this case has been on foot have you ever tried to get the documents from Mrs Conn?

A. I did but she refused to talk, talk to us. She wouldn’t talk to us and I, I don’t know where she is.

Q. Who’s us?

A. My family, she didn’t like our family and didn’t, didn’t like Graham working for us, even though Graham Conn worked it nearly 20 years.

Q. I suggest to you that you instructed or your brother instructed Graham Conn to file the form 484 indicating that Terry ceased to be a director and that you commenced to be a director on 1 January 2011?

A. I didn’t, no. And I’m not aware if my brother instructed him but.

Q. I suggest to you that the form 484 that was filed with ASIC on 7 February 2011 was done so as to give legal effect to the agreement of the same day between you and AMAC New South Wales for your trucks to be sold to AMAC—

A. That’s not correct.

Q. --New South Wales?

A. No. No. I, I, I don’t know why it fell on the same day but that’s not correct.

Q. You don’t know. It’s just pure coincidence is it?

A. Sorry?

Q. Is it a pure coincidence?

A. Well that’s right.” (T 75)

81. There is no evidence that “we” (namely the defendant and other family members, whom I infer are his sons Thomas and Christopher) made any attempt to recover these documents from Mrs Conn. The inconsistency between stating that she had refused to return documentation and that the defendant did not know where she could be located is clear. The likelihood that she nurtured this grudge over a twenty year period is implausible.

82. The circumstances in which the defendant sought, from the witness box, to blame his accountant’s widow is of significance, particularly in circumstances where the liquidator of the company, who had already given evidence, had neither given evidence to this effect nor been cross-examined about Mrs Conn having the documents he said had not been produced.

83. The persons who held these documents were the company and the persons who had access to them were the defendant and his family, including his two adult sons, neither of whom set out any of this information in their respective affidavits, despite Thomas Panayi filling in as a director between 2005 and 2009 while the defendant and his brother were disqualified from being company directors. Those documents were prepared and lodged by the company acting on their behalf. Those documents are missing and no witness has been called to give evidence as to their whereabouts, or any searches for the documents.

84. The inference to be drawn in such circumstances is explained in Jones v Dunkel as follows:

“As Wigmore points out (Evidence 3rd ed (1940) Vol 2, ss 289, 290, pp 171–180), exactly the same principles apply when a party, who is capable of testifying, fails to give evidence as in a case where any other available witness is not called. Unless a party's failure to give evidence be explained, it may lead rationally to an inference that his evidence would not help his case. These considerations have been discussed or applied in the following among other cases in Australian Courts: Morgan v Babcock & Wilcox Ltd (1929) 43 CLR 163, at p 178, per Isaacs J (1929) 43 CLR 163, at p 178; Insurance Commissioner v Joyce (1948) 77 CLR 39; per Rich J (1948) 77 CLR, at p 49 and per Dixon J (1948) 77 CLR, at p 61; May v O'Sullivan (1955) 92 CLR 654; Black v Tung (1953) VLR, at p 634; Waddell v Ware (1957) VLR 43 and Ex parte Jones; Re Macreadie (1957) 75 WN (NSW) 136.”

85. Taking all of the above into account, I am satisfied that I should draw a Jones v Dunkel inference from the failure to call any person from Accountax Pty Ltd to give evidence as to the circumstances in which the Form 484 was lodged. I reject the defendant’s submission that these persons or other persons responsible for the missing records should have been called by the plaintiff. They are witnesses in the defendant’s camp.

86. Both the defendant’s sons professed ignorance of any role played by their father in the company, and do not refer to the circumstances of lodgement of the Form 484 or the preparation of documents, in the office in which they worked, which identified the defendant as a director. In addition, the conversation the defendant says he had with his son Thomas Panayi about the Pitcher Partners correspondence (paragraph 29) is not referred to in Thomas Panayi’s affidavit, as is noted in more detail below. The implausibility of Thomas Panayi asking the defendant to answer the correspondence Pitcher Partners sent when Thomas Panayi had been a director of the company for four years (2005 – 2009) himself was never explained. Although I have refrained from drawing any inferences from this, it is an interesting question as to whether, where a witness has sworn an affidavit containing information of peripheral relevance but omitting significant issues such as these, the failure to cover such essential topics amounts to conduct from which a Jones v Dunkel inference may be drawn.

87. The plaintiff relies upon a series of documents which are claimed to be corroborative of the defendant being a director by reason of their contents and/or the use of the word “director” by the defendant.

88. By way of general observation, the defendant’s response in cross-examination to questions concerning most of these documents was to the effect that he did not read them closely, or at all, and/or that he relied upon his brother Terry and signed without further inquiry for this reason. This response should be compared to a pertinent question that counsel for the plaintiff asked the defendant at the commencement of cross-examination:

“Q. But you read it [the affidavit] carefully I take it before you swore it?

A. Yes.

Q. And it is an important document and I take it that you understand that it’s an important document?

A. Yes.

Q. From those answers I would expect then that when you were provided with important documents you would read them before signing them? A. Right. Q. Is that correct?

A. That’s correct. Are we still talking about my affidavits?

HER HONOUR: Well all documents, all important documents.

MITCHELL Q. No, I’m talking about documents, important documents you would read them before signing them?

A. Yes. That’s right, yes.” (T 38)

89. It is not to the defendant’s credit that, contrary to these statements about reading important documents carefully, he seeks to avoid responsibility for signing documents which clearly required not only careful reading but a real understanding of company affairs. His demeanour in the witness box when he realised that his confident statements about checking the contents of important documents was not restricted to the affidavit he had been endorsing as factually correct was also taken into account by me when considering his explanation of the circumstances in which he authored and/or signed documents which described him as a director.

90. The documents relied upon by the plaintiff are set out below.

(a) Conduct of the meeting of directors on 7 February 2011

91. At a board meeting on 7 February 2011, the defendant, on behalf of the company, executed an agreement with himself in his personal capacity to purchase trucks and other equipment for a sale price of $2,274,800 (affidavit of Bruce Gleeson sworn 14 May 2014 at pages 11-12). By his actions, he bound the company to purchase a large number of trucks. This was the single largest transaction entered into by the company.

92. The defendant, noted as the only person present, then signed minutes of that board meeting as “chairperson”. The plaintiff argues that, applying s 248E Corporations Act 2001 (Cth), there being no constitution for the company, the only person eligible to be elected as a chairperson for such a meeting is a director, and as such, in holding himself out as chairperson, the defendant was effectively holding himself out as director.

93. The defendant acknowledges in his affidavit that the signature is his, and says he recalls this agreement “specifically” because:

“I recall being concerned at the time about the purchase price for the trucks and equipment, and the condition, which appears in the sale agreement, that I could claim back the trucks as my own property if the purchase price was not paid in full. This document was important to me as the Company, at that stage, already owed me a significant amount of money and was the focus of my attention in reading the document.

When I signed both documents, I did not understand that I was doing so, in any capacity, as a director of the Company. Rather, the documents were prepared by someone else (and I cannot recall specifically who now) and I signed where I was told to, being content with the price payable for the trucks and the conditions of sale, and that it was necessary to document the transaction.”

94. The defendant’s closing submissions argue that the defendant was only present at the meeting because he was selling truck and equipment belonging to him to the company, and that, although there is no notation to this effect and no signature by him, his brother, Terry Panayi, was also present. It is also submitted that the defendant signed only “on behalf of” the company, and not as director, and that the word “director” does not appear below his signature in the minutes, which also record the defendant’s presence as chairperson, not as director. Counsel for the defendant challenges the plaintiff’s submission that signing as chairman means that the defendant must be a director, arguing that this simply was a meeting of directors being chaired by a non-director (which is unusual but permissible: Clark v Perkins and LVS Meat Company Pty Ltd (in liq) (2002) 84 SASR 330 at [49]-[50]).

95. There is no evidence, from the text of the minutes (attached to the affidavit of Mr Bruce Gleeson of 13 May 2015) that Mr Terry Panayi was present. The text of those minutes is as follows:

“[Company name]

MINUTES OF MEETING OF DIRECTORS

HELD AT 11 BUMBORAH POINT ROAD, MATRAVILLE

ON 7 FEBRUARY 2011

PRESENT: Peter PANAYI (CHAIRPERSON)

PREVIOUS MEETING: The minutes of the previous meeting were accepted as a true record of that meeting.

PURCHASE OF EQUIPMENT: IT WAS RESOLVED that the company acquire trucks, equipment and other sundry equipment from Peter Panayi for use in the company’s operations at an agreed price of $2,274,800, payable to Peter Panayi on terms specified in the attached agreement.

CONCLUSION: There being no further business the meeting concluded.

………….[signature]

Peter Panayi”

96. Attached to the minutes is the agreement to purchase. Mr Panayi has signed as the seller as well as “on behalf of AAMAC Transport (NSW) Pty Ltd”.

97. The previous minutes which the defendant approved have not been provided either to the liquidator or to the court in answer to subpoena.

98. How the defendant could have approved those minutes as a non-director if his brother was not present, the reason why his brother did not sign on the company’s behalf if he was present, why the defendant’s brother’s presence is not noted in the minutes and the whereabouts of the previous (and any subsequent) minutes, are unexplained.

99. I would not accept the defendant’s evidence on such matters unless corroborated. I do not accept his evidence that his brother was present. The minutes of this directors’ meeting are consistent with the ASIC documentation showing that the defendant was the sole director of the company.

100. This was a very significant transaction, not only for the defendant, but for the company. The defendant’s submissions are dismissive (although without pointing to other transactions) of the contention by the plaintiff that this agreement was the single largest transaction the company ever entered into. Whether it was the largest or not, its importance to the defendant and to the company was high. His explanation of being unaware of the basis upon which he signed both as buyer and seller of the goods the subject of the proposed transfer is implausible and I reject it.

101. The defendant’s submissions are also dismissive of the significance of the 7 February 2011 date, this being the date the Form 484 was lodged with the ASIC. It is argued that if such an agreement had been made on the day, it would have been included in the minutes.

102. However, the Form 484 was not the result of an agreement entered into on 7 February 2011; it backdated the defendant’s directorship to 1 January 2011. The lodgement of the Form 484 on 7 February 2011 was, in my view, designed to ensure that the sale agreement, which was so important to both the defendant and the company, would be effective. That is the nature of the connection between these documents.

103. I am satisfied that the circumstances in which the defendant signed this document and participated at a meeting at the Matraville office (an office he claimed he did not visit) indicate his true role in the company, namely that of a director.

(b) The Pitcher and Partners correspondence

104. According to the plaintiff’s submissions (paragraph 10), on 25 March 2011 the defendant executed an agreement as director of the company with AAMAC Warehousing & Transport Pty Ltd to acquire its customer database and the rights to provide transport, storage and other services to those customers (the plaintiff’s submissions footnote a reference to the affidavit of Paul Weston sworn 21 December 2015 at 362ff).

105. Whatever role the defendant played in relation to the March 2011 documents, there can be no doubt about the terms of the letter defendant sent to the liquidator of AAMAC Warehousing on 22 June 2011.

106. Pitcher Partners wrote to Mr Tom Panayi on 16 June 2011 as follows:

“16 June 2011

Mr Tom Panayi

AAMAC Transport (NSW) Pty Ltd

11 Bumborah Point Road

MATRAVILLE NSW 2036

Dear Sir,

AAMAC WAREHOUSING & TRANSPORT PTY LIMITED (IN LIQUIDATION)ACN: 100 947 091 (“the Company”)

I refer to your conversation with Mr Umang Lakhani of this office in respect of your request to transfer the Telstra telephone lines in the name of the Company to AAMAC Transport (NSW) Pty Ltd (“AAMACTN”).

Based on my investigations, I have formed the view that the business of the Company including operations, assets, telephone lines, etc were transferred to AAMACTN for no valuable consideration and is a voidable uncommercial and director-related transaction pursuant to sections 588FB and 588FD of the Corporations Act.

Accordingly, I will not consider the transfer of the telephone lines until you submit to me a market value offer to compensate the Company for the transfer of the business and assets of the Company to AAMACTN.

You are requested to submit this offer at the earliest possible time and in any event no later than seven (7) days from the date of this letter.

Yours sincerely

[Signature]

PAUL G WESTON

Official Liquidator

AAMAC Warehousing & Transport Pty Limited (in Liquidation)”

107. The defendant replied as follows:

“Attention: Paul Weston

Dear Paul,

RE: AAMAC WAREHOUSING & TRANSPORT PTY LTD (IN LIQUIDATION)

ACN 100 947 091 (“the company”)

I, Peter Panayi, of 55 Merley Rd, Strathfield, NSW, 2135 am the director of AAMAC Transport (NSW) Pty Ltd ACN 110 080 307.

I refer to your letter dated 16 June 2011 addressed to Mr Tom Panayi, AAMAC Transport (NSW) Pty Ltd requesting that he provide certain information by a certain date. Address all future correspondence of this sensitive nature to me the director, and not the office manager, who has no authority to provide the information.

In relation to your statement that AAMAC (NSW) Pty Ltd (“AAMACNSW”) in your view acquired the business the company including operations, assets telephone line etc for no valuable consideration I enclose [sic]

A copy of an agreement between the company and AAMACNSW.

The document is incomplete. The only amount quantified is set out in Appendix A relating to specific liabilities in the books of the company and transferred to AAMACNSW circa March 25, 2011. This amount to $744,662.08.

What is missing from this document is the quantum “payment of charges from the wharf and following” The reason for this is that it is a moving figure because of the time delay of the wharf, shipping companies billing our clients and our clients billing us. Attached as Appendix B is an extract of the detention account of AAMACNSW. This shows that $346,760.80 has been paid to date via way of deduction from AAMACNSW invoices or direct payment for liability incurred by “the company”.

The $346,760.80 is in the region of 25-30% lower than originally billed because I hired a fully time person to negotiate rates when they were billed. It will rise as further claims are processed. I have requested the accounting department to get a handle on this unprocessed detention.

In as far as the phone numbers are concerned

- the only numbers for the company were those commencing with 9748xxxx which related to the Hill Road depot.

- the 9700xxxx number were installed at Bumborah Point Road in circa July 2011 by the company as it was their intention to set up a sub office to improve operational efficiencies.

- these plans were abandoned by the company. The 9700xxxx was not distributed to any clients, nor used.

- in January 2011 AAMACNSW started moving into the vacate premises at Bumborah Point Road, and found live lines. These 9700xxxx lines reactivated by having arrears paid.

- the company initially rediverted the 9748xxxx to the 9700xxxx to AAMACNSW

- this diversion was cancelled by the company and the 9748xxxx disconnected.

- considerable time and effort was spent by AAMACNSW on educating clients of the new 9700xxxx [sic] the phone lines

- in contention are the 9700xxxx, phones which were not used by the company, and had no commercial value to the company

I am of the view that that AAMAC (NSW) Pty Ltd acquired the business the company including operations, assets telephone lines etc of the company for valuable consideration.

At this juncture I request that review the documentation and reconsider your view that AAMAC (NSW) Pty Ltd acquired the business the company including operations, assets telephone lines etc for no valuable consideration.

Please contact me if you require further information.

Regards

[Signature]

Peter Panayi

Director”

108. It should be noted that this letter not only refers to the defendant as a director of the company twice, but he had signed the letter next to the word “director” and offered to be contacted if further information was required.

109. The defendant claimed not to have read this letter carefully or indeed at all. Nor could he remember who had drafted it:

“Q. If you turn the page over, do you see your signature on the bottom left-hand corner?

A. Yes.

Q. It says, “Regards, Peter Panayi, director.” Do you see that?

A. Yes.

Q. You did read this carefully before signing this, I take it?

A. Can I just familiarise myself with this?

Q. Yes, you may.

A. Yes.

Q. Sorry, just to make sure that answer is responsive. You did read this carefully before signing it, didn’t you?

A. No, I didn’t.

…

Q. Who drew the letter up?

A. I don’t know who drew it up.” (T 55)

110. The agreement between these two companies (AAMAC Warehousing and AAMAC Transport) was signed by the defendant as the director of AAMAC Transport (NSW) Pty Ltd, the company in liquidation. Terry Panayi signed as the director of AAMAC Transport, the buyer. Its terms were:

“Agreement Between

A) AAMAC Warehousing & Transport Pty Ltd (ACN 100 947 901) (“The seller”)

and

B) AAMAC Transport (NSW) Pty Ltd (ACN 110 080 307) (“The buyer”)

Prelude

This written document is to formalize the Intent of verbal discussions between Peter and Terry Panayi during December 2010.

It was agreed that

The Buyer shall purchase from the Seller

- the customer data base of AAMAC Warehousing & Transport Pty Ltd. The data base specifically excludes “the Schenker account” as the buyer is contracted to “the Schenker Group” to provide services to them and had used the seller only as subcontractor to fulfil these obligations.

- Have the irrevocable right to provide transport, storage and other services currently provided by the seller to this customer data base and

- The seller shall notify (if applicable) the customers on the data base of such change in service providers (including change of address and phone number)

- Assign to buyer licenses and other intangibles required to service the data base.

The consideration the sale of the above to the buyer on the completion date

- Employ the employees of the seller.

- Take responsibilities for payment, out of its cash flow, liabilities incurred by the seller as specified in appendix A,

- Take responsibility for payment of charges from the wharf, shipping companies and other container supplies to customers or their clients for detention or demurrage incurred by the seller for failure to de-hire containers in terms of contact. It is understood that payment of this liability will be made directly by the buyer to or by way of accepting deductions from customer remittances for services rendered by the buyer. However the buyer reserves the right to accept remittances into its account from customers invoiced by the seller to partially recompense for these costs.

[Signature]

Terry Panayi

Director AAMAC Warehousing & Transport Pty Ltd

[Signature]

Peter Panayi

Director AAMAC Transport (NSW) Pty Ltd”

111. The defendant could not recall this agreement either:

“Q. You’ll see that there’s a copy of an agreement attached. Do you see that? Approximately halfway down the page of the letter it says, “A copy of an agreement between the company and AMAC NSW is attached.” Do you see that? Halfway down the page.

A. Yes.

Q. Can you turn over the page. You’ll see the last page of the letter and the next document is an agreement. Again, you’ve signed this in the bottom right hand corner. Do you see that? The first page of the agreement. Do you see that?

A. Yes.

Q. That’s your signature?

A. Yes.

Q. This was an important document, wasn’t it?

A. Yes.

Q. So you would have read this carefully before signing it?

A. I’m trying to work out what date it was. Sorry, can you see a date on there? I can’t.

Q. You read this carefully before signing it, didn’t you?

A. Yeah, I didn’t know that I was signing as a director.

Q. Did you read the document carefully before signing it?

A. I, well, I did so, because ..(not transcribable).. problem.” (T 56)

112. This was a letter from a liquidator which required a prompt and frank answer. The defendant’s statement in his affidavit that his son Thomas said “Pitcher Partners keep calling me about AAMAC Warehousing. They keep harassing me for more documents” (paragraph 29) is inconsistent with both the timing and the documents in question. The 22 June reply is a carefully drafted document from a person familiar with the relevant events and, at its conclusion, the defendant invites Pitcher Partners to “contact me if you require further information”.

113. Whether or not the defendant’s brother had “just been diagnosed with cancer”, it is clear, from the extended nature of these discussions, that the defendant had played an active role in this transaction for several months and that he not only held himself out as a company director but was capable of, and was, fulfilling that role.

114. I find the defendant’s evidence evasive and implausible, and consider that the defendant signed these documents as a director because he was in fact a director of the company.

(d) Preparation of a Directors Report and other documents for the ASIC

115. On or about 30 June 2012 a Directors Report was prepared for the company for the financial year ending 30 June 2012 (Affidavit of Bruce Gleeson sworn 13 May 2015 at pages 13-16). That report states that the defendant was a director of the company during that financial year. The report has a signature block for the defendant titled “director”.

116. The defendant’s closing submissions rely on the fact that both the names of the defendant and his brother appear, and that they do not bear the defendant’s actual signature, or that of the accountants who prepared them (closing submissions, paragraph 56(vii)).

117. In closing submissions, counsel for the defendant points to the absence of any records appointing the defendant as director (written submissions, paragraph 59). The existence of any person’s name on a financial statement prepared for ASIC purposes is itself a matter of significance and the more so, in the present case, given the absence of so many company documents and the defendant’s implausible explanation that Mrs Conn destroyed these documents out of spite or personal dislike. I do not accept the defendant’s evidence that he “cannot explain” (closing submissions, paragraph 64) who lodged the Form 484.

118. Nor do I accept the affidavit evidence of Thomas Panayi, which fails to refer to this issue at all, as being corroborative. Thomas Panayi was a director for four years, and his work in the administrative section of the company meant that he had access to the company books and records. That is a gap in the defendant’s evidence, rather than being unchallenged affidavit evidence.

119. The defendant also lodged documents with the ASIC which resulted in the company going into liquidation on 26 November 2012, including minutes of meeting of directors on 26 November 2012 which were signed by the defendant. I am satisfied that the defendant signed those documents because he not only knew that he was a director, but knew that he had been appointed a director at all relevant times.

(e) Payments of money between 2 June 2011 and 14 September 2012

120. Between 2 June 2011 and 14 September 2012, a period when the defendant was sole director of the company, significant sums of money were paid to the defendant ($148,707), Patricia Panayi ($79,708) and the Panayi Family Trust ($146,148) by the company from its ANZ bank accounts (affidavit of Selvije Lika sworn 14 May 2015 at Exhibit SL-1 and ANZ subpoenaed material). The defendant was recorded as a signatory of that company account, and was recorded as a director of the company in ANZ records (affidavit of Selvije Lika sworn 14 May 2015 at page 25).

121. I first note that there was an objection as to the relevance of this evidence. Documents from the bank were produced to the court under cover of a letter dated 18 March 2015 in response to an earlier subpoena from the plaintiff (Exhibit B). They were recorded as packet number 1 by the subpoena registry and access to both parties was given. The relevant documents were, therefore, known to the defendant at an early stage of the proceedings. However, the defendant’s counsel complained to the court that the affidavit of Ms Lika was one of “a series of late affidavits and the affidavit deposed to last night deals with the bulk of the evidence” (T 13) and challenged the admissibility of Exhibit B as to relevance. I admitted the documents provisionally under s 57 Evidence Act 1995 (NSW). No further challenge was brought to the admissibility of these records, nor was there any further challenge to the alleged lateness of the affidavit. However, as such matters may be held in reserve for determination by an appellate court, I formally note my reasons for being satisfied as to the relevance of this material.

122. The fact that the bank had recorded the defendant was a director of the company is a small but significant piece of evidence that the defendant was holding himself out to others as a director. In Deputy Commissioner of Taxation v Austin a director who had resigned continued to countersign cheques, one of a series of activities which Madgwick J considered “suggests that he had the authority and a sufficient degree of control to determine how much of the business’ debts should be treated as the company's debts, which of the latter would be paid, and when and how they would be paid” (at 568). The evidence in these proceedings is stronger, in that the ANZ staff, presumably acting on information received from some authorised person in the company, also made a notation to the effect that he was a director.

123. The defendant’s evidence in the affidavit sworn on 17 February 2016 (which I note was the day before the hearing) is that he became a signatory because “from time to time, it was necessary for me to write cheques in order to pay suppliers connected with the Company’s business and the maintenance of its fleet. I do not recall informing anyone at the ANZ, when the account was set up or later, that I was a director of the Company”.

124. I note, from Exhibit B, that his brother Terry signed the necessary bank forms for authorisation to sign, giving his position as director, on 14 September 2010 and that Thomas Panayi signed on the same date, as “Manager”. This form appears to have been changed to provide for signatures from Christopher Panayi (described as “Third Party Signatory”, Peter Panayi (described as “director”) and Terry Panayi (also described as “director”), in the box for their specimen signatures (see the final page of annexures to the affidavit of Ms Lika).

125. Counsel for the defendant refers to the defendant’s evidence that he made himself an authorised signatory of the account “back in 2004/5”, describing this evidence as “unchallenged” (closing submissions, paragraph 69(iv)). However, the defendant has merely made a general statement about being a signatory some time since the account was set up in 2004 – 2005, and I am not prepared to accept his evidence on this point unless it is corroborated.

126. Counsel for the defendant submits that his client’s explanation of having to sign cheques in relation to creditors associated with the Enfield workshop should be accepted, but no evidence to support this contention was put before me.

127. I do not accept the defendant’s explanation for his specimen signature appearing under the word “director”. I am satisfied that his name appears under that title because the bank was given information to that effect, and the defendant was not only aware of this but the most likely source, on the balance of probabilities, for that information.

(f) Lodgement of Business Activity Statements and Instalment Activity Statements

128. Business Activity Statements (“BAS”) and Instalment Activity Statements (“IAS”) were electronically lodged on behalf of the company for the monthly periods May, July and August 2011. BAS and IAS forms were electronically lodged for the quarterly periods ending 30 June 2011 and 30 September 2011. It was around this period that Mr Conn, the in-house company accountant, died from cancer and, in November 2011, Constantinidis Accountants commenced as accountants for the company. BAS and IAS were lodged on 8 March 2012 for the period 30 June and 30 September 2011.

129. As these were lodged electronically, there is no signature affixed to them. Subpoenae to Constantinidis Accountants to seek production of the corresponding signed BAS and IAS for those periods have not resulted in the production of any documents.

130. On or about 28 March 2012, Constantinidis Accountants lodged Superannuation Guarantee Charge Statements (“SGC statements”) for the company for the periods ending 31 March, 30 June, 30 September and 31 December 2011. It is a requirement for these statements that the employer make a declaration as to the truth and correctness of the documents. Each of those documents was signed by the defendant on behalf of the company.

131. This is more evidence of the defendant’s true activities in the company and is consistent with his performing a role as director.

(g) Completing and signing the Report as to Affairs and Directors – Questionnaire and other ASIC documents (26 November 2012)

132. As noted above, in the course of putting the company into liquidation, several documents were signed by the defendant on 26 November 2012 indicating that he was the director of the company, including giving notice of a directors meeting, minutes of that meeting passing a resolution to wind up the company and an ASIC Form 205 notifying ASIC of that resolution (Affidavit of Paul Weston at pages 4-10).

133. Also signed on that day by the defendant as director was the Report as to Affairs and Directors Questionnaire. In signing these documents he represented that he was director of the company and it was conduct reasonably expected of a director of the company. Not only was the decision to wind up the company one of the most important decisions of the company, affecting shareholders and creditors in the company, but these forms had to be filled in by a person with accurate and high-level information about the company.

134. The defendant’s explanation of his reasons for completing these documents as a director are as follows:

“32. After I received the Director Penalty Notice from the plaintiff in November 2012, I made inquiries with my son Tom as to why I had received that notice. In undertaking these inquiries, I asked Tom to obtain a current updated company search which showed I was a director. This was the first time that I was aware that I was listed as a director of the Company with ASIC.

33. Upon learning this, I inquired with Tom again as to whether the Company was able to meet its outstanding tax obligations. Tom told me, in words to the effect “The Company can’t pay this – we can’t pay our creditors”. Upon hearing this, I resolved that the Company needed to be wound up.

34. At this time, my brother Terry was very ill, and he died only a few months later in February 2013. I, therefore, decided that someone needed to wind the company up and, since I was recorded as a director of the Company with ASIC, I took it upon myself to do this. It was in this context that I called a meeting of the directors of the Company on 26 November 2012 (being just myself according to the records of ASIC) and moved that the Company be wound up and that Mr Gleeson be appointed as liquidator. That is why I signed and filed those documents appearing at pages 4 to 10 of annexure BG1 to Mr Gleeson’s affidavit of 13 May 2015 believing as the Company was likely to be immediately wound up it was pointless altering the ASIC records as they then appeared.”

135. In cross-examination, the defendant was unable to say from where the information necessary to compile for completion of this questionnaire had come, even suggesting that Mr Gleeson may have filled it in himself:

“Q. Do you see that the question is, and maybe if you read it with me - get your magnifying glass - “How often were directors’ meetings held in the three years prior to my appointment”, and the answer written is “Annually.” Do you see that?

A. Yes.

Q. How do you know that directors’ meetings were held annually?

A. As I said earlier, I didn’t - I didn’t write this. This is not my writing. I did sign it. Somebody else put it together and I - and these are the answers. I didn’t answer it.

Q. Can you say who answered it?

A. No. If you’re saying it came from Bruce Gleeson, I’d say he’s done it.

Q. How would Bruce Gleeson know that directors’ meetings were held annually?

A. I don't know.

Q. Do you think it may have been in his discussions with you?

A. No. After I appointed him I didn’t have much to do with him. I didn’t see him much after that. I - when I got the notice from the tax I immediately looked for a liquidator because I could tell the company wasn’t able to meet its commitments.

Q. I accept that. You will see that where your signature is on the last page-- A. Yeah.

Q. It may not be the last page.

A. It’s not the last page.

Q. No. It’s the answer to question 58.

A. Is that where the tag is?

Q. Do you want me to assist you?

A. Yes, please.

Q. Do you want me to just find it for you?

A. Yeah.

Q. I’ll read it out for you. It’s the further page down. It says, “Certificate by directors and officers” it says, “I/we certify that the answers furnished to the foregoing questions are true and complete to the best of my/our knowledge and belief”, and then you’ve indicated already that you’ve signed it.

A. Yes.

Q. So you must have checked it and been satisfied as to its correctness because you gave that certificate. Do you agree with that?

A. Yeah. I can't remember this document, even though that’s my signature.

Q. But you must have known that that was a true and correct statement because you gave the certificate. Is that not the case?

A. Well, it was documented by somebody else.

Q. I understand that.

A. And I trusted him as the liquidator to do the right thing and I just did what he asked me, which was to sign it.

Q. Someone has written in the answer to the next question, question 10, if you go back to question 10. Mr Panayi?

A. Yeah.

Q. Yes, you do. It says the directors’ meetings were held annually and the next question is, “Were minutes kept”, and you can see there that the answer is, “No.”

A. Yeah.

Q. Is that consistent with your recollection?

A. No. I keep saying I can't remember reading this document, even though I did sign it. I trusted the man I was with that he was liquidating the company and I signed where he told me to.

Q. When it asks the question, “Were minutes kept”, is it the case then that meetings were had between yourself and your brother Terry, who at one point was a director, but there were no minutes of those meetings?

A. I - we had an in-house accountant too, so there would have been minutes kept, but I don't know. They would have had meetings without me as well, meetings.

Q. Is that a true statement then as to whether minutes were kept in directors’ meetings or not or is that a false statement?

A. I don't know. I don't know if the minutes were kept or not. I know I signed I did, that I knew, but I was asked to sign there and I didn’t fill this in. Actually this is the first time I’ve—

Q. You’ve certified that the answers are true and complete?

A. I did.

Q. And you’ve given evidence that you read this document before signing it? A. Yes.

Q. Are you now saying that the answers to that question 10 are not true and complete?

A. No, I’m not saying that at all. I’m saying I don't know whether the minutes were kept annually because I didn’t attend all of them and I - I probably - I had an in-house accountant and my brother was the director. So they would have kept all the records.

Q. If I follow your answer, I understand that you attended some directors’ meetings, but not all?

A. That's right.” (T 50 – 52)

136. The defendant in his answer was unable to explain how he was able to provide such detailed information about the company without playing an active role in its affairs. His answers that he did not recall and his attempts to assert that others, such as Mr Gleeson, had provided this information are unpersuasive. He acknowledged the company accountant was known to him as he was also his own accountant (T 53) and, although at first he said he could not recall, he eventually acknowledged (when shown the bills) that this accountant’s invoices for the company tax returns were sent to his own home address (T 53).

137. I am satisfied that the defendant took these steps because he had been a director beforehand and not because of any sudden decision to take on this role. I also note his ability to perform this task despite his asserted health problems.

(h) Letter to Mr Gleeson dated 17 December 2012

138. On 17 December 2012 the defendant wrote to Mr Bruce Gleeson, a liquidator of related entities to the company, and explained the failure of the company to him. The letter suggests that the defendant was involved in the management and high level decision making process of the company. The explanation for his knowledge is he commenced these activities, consistent with contemporaneous records, including the Form 484, on or before 7 February 2011.

(i) Statements by the defendant to the ATO as to his occupation

139. For the income tax years ended 30 June 2011 and 30 June 2012 (Annexed at PD1 to the affidavit of Prateek Das sworn 5 May 2015) the defendant listed his occupation as “Director-managing”. He also reported receiving income from the company in the sum of $12,357 in 2011, and $32,747 in 2012. For the 2012 year there was no other source of income other than from the company, meaning his only income was as a “Director-managing” of the company. The defendant also executed the superannuation statements as an “employer”.

140. The defendant’s submission is that the tax returns in question (for the financial years 30 June 2011 and 30 June 2012) were both filed on 10 September 2011, which is outside the relevant period.

141. Counsel for the defendant initially made a Rusu objection (Rusu v National Australia Bank [1999] NSWSC 539) in relation to the tender of portions of the defendant’s tax returns (at T 29-30) and a call made for his tax returns (T 30) resulted, after a telephone call to the defendant’s accountant in their production as Exhibit D.

142. The fact that these documents were prepared outside the relevant period is insufficient. The defendant was obliged to state occupation for the relevant period accurately, and I am satisfied that he was representing his occupation as being “Director – managing”.

143. The defendant said, and counsel for the defendant repeated, that the defendant did not prepare the tax return (T 30). The accurate completion of tax returns in relation to employment is axiomatic. Failure to give correct details of occupation may be significant in relation to issues of credit: Syddall v National Mutual Life Association of Australasia Ltd [2011] QSC 389. However, the weight to give to such statements is much less than that accorded to the more significant documentation signed by the defendant which is set out above.

(j) Contents of earlier ASIC and liquidators’ reports

144. Counsel for the defendant stated in his closing submissions that his client’s evidence of being a simple repair workshop manager and a person of limited education were unchallenged. That was not the case. The plaintiff led evidence of a long prior history of the defendant being a fellow director with his brother in a series of companies, demonstrating that he had the knowledge and ability to perform company director tasks. This evidence, which was the subject of challenged, included:

1. An ASIC decision dated 23 November 2005 setting out the reasons why ASIC disqualified the defendant from being a director for a period of 4 years. This report was annexed to the affidavit of Mr Das and was the subject of cross-examination (T 58- 62), but subject to my granting leave to reopen his objection to relevance and to seek the exclusion of that material in later submissions (T 62, 122-123).

2. Liquidator’s reports (Exhibit E) which form part of the ASIC registers and are thus the proven facts upon which the ASIC decision was made.

145. I will first set out my reasons for admitting this evidence. The plaintiff’s submission is that these documents are relevant because they demonstrate that the defendant is a sophisticated businessman who has been a director of a series of companies. They go to show that the defendant, despite his claim of limited education and of being confined to truck maintenance for the company, was an experienced company director well able to understand the intricacies of “Phoenix” activities constituted in selling business assets, the statutory requirements for keeping business records (a requirement he breached) and the ability to deny creditors while staying in business by using corporate structures.

146. As to s 91 Evidence Act 1995 (NSW), the defendant submits that “by parity of reasoning”, if such facts were contained in a published judgment, s 91 would render inadmissible a judgment for proving the existence of a fact in issue in these proceedings: Ainsworth v Burden [2005] NSWCA 174 at [109]:

“109 It is clear that s 91 does not prevent the tender of judgments which contain findings as to the existence of facts relevant to the issues in the trial in which they are tendered. It merely prevents the judgments from being tendered for the purpose of proving the existence of those facts. If they are admissible for some other purpose — as they are in the present case, in order to demonstrate that they would have persuaded any honest-minded person that the defendant’s allegations were false — they may not then be used to prove the existence of those facts, a consequence which would otherwise have flowed from s 60 of the Evidence Act. In any event, the facts which the coversheets would have established were that a company associated with the plaintiff had made an application for a gaming licence, the police had objected to the grant of that licence, the terms of the grounds of objection, the rejection of the objection and the grant of the licence. None of those facts was “a fact that was in issue” in the Licensing Court proceedings, and s 91 did not exclude the coversheets stating those facts.”

147. While proof of convictions, acquittals, sentences and orders arising from curial decisions fall within s 178 Evidence Act 1995 (NSW), ASIC rulings (and the liquidators’ reports based upon them) do not do so.

148. As to s 91, the plaintiff submits:

1. Section 91 Evidence Act 1995 (NSW) does not apply to the ASIC ruling because it is administrative (having been made under s 206F Corporations Act 2001 (Cth));

2. Even if the ruling is regarded as constituting court proceedings, s 91 would not render the decision inadmissible, for the reasons explained by McColl JA in Ainsworth v Burden at [109], including that these documents are admissible for some other purpose, namely answering the defendant’s claim that he is a poorly-educated, unsophisticated workshop employee who relied upon his brother to run the company, a claim central to the defendant’s factual case (and which the defendant claims, in submissions, not to have been traversed: see the defendant’s closing submission at paragraph 43 and supplementary submissions at paragraph 11).

149. I am satisfied that these documents are admissible for these reasons.

150. This brings me to the question of relevance. Counsel for the defendant, in closing submissions, submitted that the defendant had not been cross-examined about understanding the responsibilities of being a director (T 81), although acknowledging that the defendant had admitted in his evidence being a director of other companies (T 82) and, by inference, that such prior experience would be relevant to the issues of fact in dispute in this case.

151. I am satisfied that these documents demonstrate that the defendant is capable of, and did, perform tasks as a company director over a long period of time. I am also satisfied that the manner in which he performed those tasks, and the penalty imposed by the ASIC, are matters going adversely to his credit.

152. No submission was made that this was tendency evidence under s 97 of the kind which required being the subject of notice.

A director for part of the period?

153. I am satisfied that the defendant was a director of the company for the whole of the period from 1 January 2011 and have not accepted his explanations for any of the specific transactions and documents set out above. In the event that I have erred in relation to any of my findings, I set out my reasons for rejecting the defendant’s alternate submission that, if the defendant was not found to be a director for the whole of the period, the corresponding part of the penalty should be remitted.

154. The defendant submits that s 1274B(2) Corporations Act 2001 (Cth) creates a rebuttable presumption regarding the defendant’s appointment as a director given that he appeared as such on the register maintained by the ASIC. The defendant may rebut this presumption not only by absence of consent, which would render any such purported appointment invalid, but also if he could demonstrate that he cannot satisfy the definition of director in s 9(b)(i) and/or s 9(b)(ii) Corporations Act 2001 (Cth). This focuses attention on whether the director acted as a director, as opposed to a mere appointment to the role.

155. Counsel for the defendant relies upon Deputy Commissioner of Taxation v Austin, where the defendant had resigned from the position of director (in circumstances where the ASIC register had not been rectified) but continued to act on the company’s behalf, performing tasks similar to those performed by the defendant in these proceedings, such as signing cheques and carrying out negotiations on the company’s behalf. Madgwick J set out a series of relevant factors as to whether a person was in fact acting as a director, noting that such issues are often a matter of degree and require a consideration of the relevant duties. Madgwick J was satisfied that the defendant had in fact played such a role, and in those circumstances, despite his resignation, Mr Austin was occupying or acting in the position of a director.

156. Cases of this nature tend to turn on their facts. The factual situation in these proceedings is much stronger. Individually any of the above-listed activities of the defendant would be sufficient to prevent him successfully rebutting the presumption, and the defendant in these proceedings does not have the compelling argument of genuinely believing he had resigned and was helping out in an emergency.

Conclusions concerning “the director issue”

157. The defendant’s explanation for signing the letter to Pitcher Partners as a director was as follows:

“Q. I suggest to you that when you signed this letter and provided this agreement that you knew full well what this agreement amounted to, that you entered into the agreement as director of AMAC Transport (NSW) and you notified the liquidator of the arrangement as director of AMAC (NSW), do you accept that?

A. No. I didn’t know I was a director at the time. I just signed - I thought I was signing as manager.

Q. On the face of the document where does it say you’re a manager?

A. Yeah, no.

Q. Does it say you’re a manager?

A. No.

Q. Does it say you’re a manager on the agreement between AMAC (NSW) and AMAC Warehousing?

A. Is that still on page - no it doesn’t.

Q. No, so you’re just making that up aren’t you?

A. No I’m not, no.

Q. You just made up your evidence this afternoon in respect of these documents haven’t you?

A. No I’m not, no.” (T 66)

158. I am comfortably satisfied that the defendant was making up his evidence in relation to this particular document, and that his evidence was knowingly false, in that he knew he was a director, and that he had signed that letter as a director on that basis. I am satisfied that this is the case in relation to each of the documents relied upon by the plaintiff as evidence that the defendant

159. Individually, as well as in a group, the existence of these documents confirms the defendant’s true role in the company, which was to act as a director and to hold himself out to others as a director. I am satisfied that, at all relevant times, he knew he had been appointed a director of the company. The defence based on “the director issue” therefore fails.

160. I next consider the s 269-30 defence, as set out in paragraph 12 of the defence (see the text of paragraph 12 as set out at the commencement of this judgment).

The monies should be deemed to be remitted

161. As is set out above, paragraph 12 of the defence sets out a third basis for defence of this claim, namely that the amendments to s 269-30 of Schedule 1 to the TAA, which came into force on 29 June 2012, do not apply to penalties that had been imposed prior to that date. As the process to put the company into liquidation was commenced on 26 November 2012, within 21 days of the date of the giving of the director penalty notice, the penalty is accordingly deemed to be remitted. The defendant’s submissions to this effect are set out at paragraphs 18-22.

162. The short answer to any submission to this effect is that, as counsel for the plaintiff points out in his written submissions, the same argument failed both at first instance and appeal in Deputy Commissioner of Taxation v Roche and Roche v Deputy Commissioner of Taxation. The decision in Deputy Commissioner of Taxation v Roche has also been followed in Queensland: Deputy Commissioner of Taxation v Rablin [2016] QSC 68. In accordance with the direction of the High Court in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89, I am bound to follow it. It would be difficult to do otherwise, as the defendant’s submissions do not seek to argue that this decision is wrongly decided, or indeed to discuss the reasoning at all.

163. I accept the plaintiff’s submissions (outline of submissions, paragraphs 70-76) that these amendments merely remove the availability of remission on that basis and have no impact on pre-existing liability. As these submissions note, as a result of the Tax Laws Amendment Act (2012 Measure Act No. 2) 2012 (Cth), which amends the TAA accordingly, the defendant’s liability for penalties arising prior to 29 June 2012 which were reported more than three months after their due dates cannot be defeated by putting the company into liquidation.

164. This defence accordingly also fails.

Costs and other orders

165. The defences pleaded are not made out and judgment should be entered for the plaintiff. Costs should follow the event. I have granted liberty to apply in relation to costs as well as interest calculations.

Orders

1. Judgment for the plaintiff for $369,904.86.

2. Liberty to bring in Short Minutes of Order reflecting the mathematically agreed sum of interest on the judgment.

3. Defendant pay plaintiff’s costs.

4. Liberty to apply in relation to costs.

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Decision last updated: 29 June 2016