Deputy Commissioner of Taxation v Roche
[2013] WASC 302
•20 AUGUST 2013
DEPUTY COMMISSIONER OF TAXATION -v- ROCHE [2013] WASC 302
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2013] WASC 302 | |
| Case No: | CIV:1230/2012 | 27 MAY 2013 | |
| Coram: | MASTER SANDERSON | 20/08/13 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Judgment for the plaintiff | ||
| B | |||
| PDF Version |
| Parties: | DEPUTY COMMISSIONER OF TAXATION DESMOND JOHN ROCHE |
Catchwords: | Taxation law Application for summary judgment Requirement for valid notice under s 26925 of schedule to the Taxation Administration Act 1953 (Cth) |
Legislation: | Nil |
Case References: | Deputy Commissioner of Taxation (Cth) v Craddock [2006] VSC 408 Deputy Commissioner of Taxation v Meredith [2007] NSWCA 354 Soong v Deputy Commissioner of Taxation [2011] NSWCA 26 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
DESMOND JOHN ROCHE
Defendant
Catchwords:
Taxation law - Application for summary judgment - Requirement for valid notice under s 26925 of schedule to the Taxation Administration Act 1953 (Cth)
Legislation:
Nil
Result:
Judgment for the plaintiff
Category: B
Representation:
Counsel:
Plaintiff : Ms C H Thompson & Mr R A Blow
Defendant : Mr C S Williams
Solicitors:
Plaintiff : Gadens Lawyers
Defendant : Solomon Brothers
Case(s) referred to in judgment(s):
Deputy Commissioner of Taxation (Cth) v Craddock [2006] VSC 408
Deputy Commissioner of Taxation v Meredith [2007] NSWCA 354
Soong v Deputy Commissioner of Taxation [2011] NSWCA 26
1 MASTER SANDERSON: By chamber summons filed 17 January 2013 the plaintiff applied for summary judgment. The plaintiff seeks to recover from the defendant two penalties imposed due to the failure of Bremore Engineering (WA) Pty Ltd (Bremore) to remit pay as you go withholding amounts to the plaintiff. The defendant was the sole director of Bremore.
2 There are two separate penalties claimed by the plaintiff. First a penalty imposed pursuant to s 222AOC of the Income Tax Assessment Act 1936 (Cth) in an amount of $88,519.18. This is to be taken as a penalty imposed under subdivision 269-B of sch 1 to the Taxation Administration Act 1953 (Cth), pursuant to s 65(4) of pt 3 in sch 1 to the Tax Laws Amendment (Transfer of Provisions) Act 2010 (Cth). All of these matters are dealt with in pars 4 - 13 of the statement of claim. They are described as the 'First Penalty'.
3 Second, the plaintiff claims penalties totalling $758,449 imposed pursuant to s 269-20(1) of the schedule to the Taxation Administration Act. This is dealt with in pars 14 - 24 of the statement of claim. The amount claimed is described as the 'Second Penalty'.
4 The application for summary judgment was filed well out of time. In the defendant's written submissions issue was taken with the grant of an extension of time to bring the application. At the hearing this objection was not pursued. It is clear from the affidavit evidence the summary judgment application was not brought because the parties were negotiating a possible settlement. In the circumstances the delay in bringing the application is adequately explained and there should be a grant of leave to the plaintiff.
5 There was no disagreement between the parties as to the principles applicable on a summary judgment application. It is reserved for those cases where there are no matters of fact to be investigated and where the case of the respondent is so clearly untenable it could not possibly succeed. In any dispute of fact the version of events most favourable to the defendant must be assumed. The party opposing an application for summary judgment assumes an evidentiary burden to show that there is an issue or question in dispute which ought to be tried. But the overall legal burden of persuasion always remains with the applicant.
6 Certain evidentiary provisions relevant to this application are found in the Taxation Administration Act. Section 255-50(1) of the schedule provides that in a proceeding to recover an amount of a tax-related liability, a statement or an averment about a matter in the plaintiff's claim is prima facie evidence of the matter. Pursuant to s 255-50(2) the statement or averment is prima facie evidence of fact only even if it relates to a mixed question of law and fact.
7 Section 255-45 of the schedule provides that a certificate signed by a deputy commissioner stating that a person named in the certificate has a tax-related liability or that a sum in the certificate is a debt due and payable by a person to the Commonwealth is prima facie evidence of these matters. In support of this application the plaintiff relied on an affidavit of Grahame Wilson sworn 11 December 2012. Appearing as annexure GW17 to that affidavit is the necessary certificate. That means prima facie the plaintiff is indebted to the defendant. The evidentiary onus then shifts to the defendant to establish there is some reason why summary judgment ought not be granted.
8 Pursuant to s 269-25(1) of the schedule the plaintiff was prohibited from commencing proceedings to recover the First Penalty until the end of 21 days after the plaintiff gave the defendant written notice under s 269-25. This notice is referred to as a 'DPN'. The plaintiff asserts that such a notice was given on 3 September 2010. It is the defendant's position there was no valid DPN given. To support this submission the defendant raises a number of issues.
9 First it is said under s 269-25(1) of the schedule it is for 'the Commissioner' to give written notice. A copy of the DPN upon which the plaintiff relies appears as annexure JEW2 to the affidavit of Joanne Emma Wooler sworn 8 January 2013 and filed in support of the application. The document provides for it to be signed by a 'deputy commissioner of taxation' who was a 'delegate of the commissioner of taxation'. The DPN is not so signed.
10 The defendant points out Ms Wooler deposes to annexure JEW2 being 'a copy of the DPN sent to the defendant dated 3 September 2010' (see par 6 of Ms Wooler's affidavit). The defendant says while s 269-25(2) of the schedule does not specifically require a DPN to be signed it must still be given by 'the Commissioner'. In the absence of the DPN being signed by a person who could give a DPN for the commissioner there is no evidence capable of establishing the alleged DPN was given by the commissioner. Consequently, so it was submitted on behalf of the defendant, there has been no compliance with the schedule in relation to the First Penalty.
11 In response the plaintiff relies on reg 45 in pt 6 of the Taxation Administration Regulations 1976 (Cth). That regulation is in the following terms:
Presumption as to signatures
(1) Judicial notice must be taken of the names and signatures of the persons who are, or were at any time, the Commissioner, a Second Commissioner, a Deputy Commissioner or a delegate of the Commissioner.
(2) A certificate, notice or other document bearing the written, printed or stamped name (including a facsimile of the signature) of a person who is, or was at any time, the Commissioner, a Second Commissioner, a Deputy Commissioner or a delegate of the Commissioner in the place of the person's signature is taken to have been duly signed by the person, unless it is proved that the document was issued without authority.
12 An examination of the exhibit shows there is printed at the foot the following:
Paul Duffus
Deputy Commissioner of Taxation and
Delegate of the Commissioner of Taxation
Per
13 It appears from the way the document was framed it was intended to be signed by someone - whether that be Deputy Commissioner Duffus or someone else. But it was not so signed. However, in my view, that does not preclude there being a valid certificate. There is a printed name of a person who is a deputy commissioner. That complies with the requirements of reg 45(2). Therefore there is a valid notice and the defendant's argument must fail.
14 The defendant's second argument relates to the service of the DPN. In an affidavit sworn in opposition to the application the defendant denies he ever received the DPN (see pars 12 - 13 of the defendant's affidavit sworn 20 March 2013). Counsel for the defendant submitted, and I accept, for the purposes of this application it must be assumed the defendant did not receive the DPN. His evidence on this point is not inherently incredible and the fact situation most favourable to the defendant must be assumed.
15 The plaintiff relies on s 269-25(4) of the schedule. It was submitted this provision conclusively deemed a DPN to have been given pursuant to s 269-25(1) upon it being left or posted by the plaintiff. It was submitted this provision excludes the operation of s 29(1) of the Acts Interpretation Act 1901 (Cth). The defendant denies the provision in the schedule has that effect.
16 Counsel for the defendant pointed out div 269 of the schedule in which s 269-25 is contained was introduced by an Amending Act which repealed div 9 of pt VI of the Income Tax Assessment Act. Prior to that change s 222A of the Income Tax Assessment Act dealt with the giving by post of notices to directors pursuant to s 222AOE of the Income Tax Assessment Act. The relationship between s 222AOF of the Income Tax Assessment Act and s 29(1) of the Acts Interpretation Act was the subject of some controversy. At the time the Amendment Act was passed the law prevailing was represented by the decision of the majority of the New South Wales Court of Appeal in Deputy Commissioner of Taxation v Meredith [2007] NSWCA 354. It was there held s 222AOF of the Income Tax Assessment Act excluded the operation of s 29 of the Acts Interpretation Act. However, Meredith was subsequently found to be 'plainly wrong' and not followed: see Soong v Deputy Commissioner of Taxation [2011] NSWCA 26. Consequently, s 29(1) of the Acts Interpretation Act applied to s 222AOF of the Income Tax Assessment Act.
17 The explanatory memorandum for the Amending Act stated that s 269-25(4) was intended to clearly exclude the operation of s 29 of the Acts Interpretation Act and reflect the current state of the law as set out in the Meredith decision. It was submitted on the part of the defendant that whether s 269-25(4) has this effect has to be considered by reference to the text of s 29(1) and s 269-25(4). It was submitted on behalf of the defendant once that analysis was undertaken it was clear the operation of s 29 was not excluded. The argument was put in this way.
18 Section 29(1) of the Acts Interpretation Act has two limbs. In Soong Gzell J explained the position this way:
The first limb specifies the conduct that will constitute postal service in the absence of a contrary intention. The second limb will determine the date of that service unless the contrary is proved [49].
19 Counsel for the defendant pointed out that the opening words of s 269-25(4) of the schedule are 'Despite section 29 of the Acts Interpretation Act 1901 ... '. Consequently s 269-25(4) has effect notwithstanding anything to the contrary in s 29(1). Counsel then posed the question as to what the effect of s 269-25(4) might be. He answered that question by submitting the section modifies the effect of s 29(1) of the Acts Interpretation Act so that upon a DPN being properly addressed pre-paid and posted as a letter the DPN is taken to be given at the moment it is posted - not when it would have been delivered in the ordinary course of post as s 29(1) would otherwise provide. This alters the time at which service is deemed to have been effected.
20 However, so it was submitted, there is nothing in the text of s 269-25(4) which provides that the effect of the second limb of s 29(1) of the Acts Interpretation Act is otherwise excluded or modified. Neither s 269-25(4) nor any other provision of the schedule expressly or by necessary implication provides that s 29(1) will not otherwise operate. Consequently, s 29(1) continues to operate but for the modification to the time at which service is deemed to be effected. Accordingly it was said a DPN that is posted will deemed to be given at the time of posting if it is properly addressed pre-paid and posted, and this is subject to the contrary being proved.
21 It was submitted there is an open question as to whether proof of non-receipt can equate to proof of non-delivery or non-sending. It was said that question is not suited to determination on a summary judgment application. Further, on behalf of the defendant, it was submitted the defendant's evidence of not having received the DPN was sufficient to raise a triable issue as to whether he was given a DPN. Counsel went on to detail the reasons why it was reasonable to assume the defendant had not received the DPN. For instance it was pointed out the DPN was sent to the defendant's residential address. It was conceivable the DPN could have gone astray. Really counsel did not have to develop this point. I have already indicated for the purposes of this argument it can be accepted the DPN was never received.
22 What is clear, however, is the DPN was posted by the plaintiff. Ms Wooler in her affidavit explains the process in some detail. She says she prepared a covering letter and the DPN and ensured both documents were in an envelope addressed to the defendant at his residential address. She sealed the envelope, affixed a postage stamp and then posted the envelope in an Australia Post Box in Townsville. She subsequently returned to the office and completed a 'service for'. A copy of the correctly addressed envelope appears as annexure JEW4 to Ms Wooler's affidavit.
23 Despite the ingenuity of the argument put by counsel for the defendant I am satisfied s 269-25(4) does what it was intended to do and ousts s 29 of the Acts Interpretation Act. Consequently, once the plaintiff proves it posted the notice it is 'given'. That is precisely what has happened here. In my view there is no substance to the defendant's argument on this point. There is then no answer to the plaintiff's claim in relation to the First Penalty.
24 In relation to the Second Penalty the defendant makes two submissions. First it is said the plaintiff failed to give a DPN that complied with s 269-25 of the schedule. Second, it is said the plaintiff is estopped from denying an arrangement was in force with the company pursuant to s 255-15 of the schedule and/or from denying that any penalty to which the defendant was subject pursuant to s 269-20 of the schedule was remitted pursuant to s 269-30(1)(b) of the schedule.
25 In relation to the first of these submissions it is not disputed that on or about 4 January 2011 the plaintiff gave to the defendant a document that purported to be a DPN (see pars 14 - 15 of the defendant's affidavit and annexure GW14 to the affidavit sworn by Grahame Wilson on 11 December 2012). The plaintiff submits this purported DPN did not constitute a DPN complying with the requirements of s 269-25(2) of the schedule. It was submitted the schedule required the DPN to do three things. First, to set out what the plaintiff thinks is the unpaid amount of the company's liability. Second, to state that the director who receives the notice is liable to pay the plaintiff, by way of penalty, an amount equal to that unpaid amount. Finally, explain the circumstances in which the penalty will be remitted. The liability of the company which founds the Second Penalty is a liability to pay an estimate of the pay as you go withholding amount pursuant to div 268 of the schedule. The amount of an estimate can be reduced pursuant to s 268-35, s 268-40, s 268-45 and s 268-50 of the schedule. The purported DPN was based on the company having a liability based on estimates made pursuant to s 268-10 of the schedule in a total amount of $826,965. On two occasions, both after 21 days had elapsed since the giving of the purported DPN, the estimates were reduced pursuant to s 268-35 of the schedule. As a result of these reductions the liability of the company was reduced to $758,449.
26 Section 268-55 of the schedule provides that the reductions in the estimates took effect and were taken always to have had effect as if the original amounts of the estimates had been their reduced amounts. Consequently it was submitted as at 4 January 2011 (the date of the purported DPN) the plaintiff estimated the company had a liability of $758,449. Accordingly the plaintiff must have thought that the unpaid amount of the company's liability for pay as you go withholding amounts was $758,449. However the purported DPN stated the commissioner thought the unpaid amount of the company's liability was $826,965. Consequently it was submitted the purported DPN was not a DPN and the requirements of s 269-25(1) of the schedule were not satisfied.
27 Yet again this was an ingenious argument. The plaintiff relied on the Victorian Supreme Court decision in Deputy Commissioner of Taxation (Cth) v Craddock [2006] VSC 408. It was there held that a reduction of an estimate made pursuant to s 222AGA of the Income Tax Assessment Act did not invalidate a notice that had been given under s 222APE. Notwithstanding a deeming provision contained in s 222AKA of the Income Tax Assessment Act. In response counsel for the defendant submitted Craddock did not apply to the provisions of div 268 and div 269 of the schedule.
28 Counsel submitted whilst div 268 and div 269 of the schedule contain provisions similar to those that were previously contained in div 8 and div 9 of pt VI of the Income Tax Assessment Act and the explanatory memorandum for the Amending Act provided it did not reflect any policy changes there were in fact numerous changes made to the provisions that were previously contained in div 8 and div 9 of pt VI of the Income Tax Assessment Act. The decision in Craddock interpreted the provisions then in question in the context of div 8 and div 9 of pt VI of the Income Tax Assessment Act as a whole. The provisions in div 268 and div 269 of the schedule are different to the particular provisions considered in Craddock. It cannot be presumed the detailed analysis undertaken by Craddockwill lead to the same conclusion in the context of div 268 and div 269 of the schedule.
29 With respect to counsel in my view there is nothing in that argument. The reasoning in Craddock is compelling and there is no reason to think it would not apply to div 268 and div 269 of the schedule. Apart from what was said in the explanatory memorandum the logic for the same effect is compelling. In my view the defendant's submissions are without merit.
30 The estoppel argument was put in this way. A year before the DPN was given to the defendant the plaintiff gave another DPN to the defendant which related to a different liability of Bremore. The defendant immediately wrote to the plaintiff (both on behalf of the company and in his own right) proposing the company enter into an arrangement for payment of its liability in instalments. The plaintiff did not respond to the company's or the defendant's correspondence before the expiration of the 14 day period within which the defendant had to take certain steps in order to cause the remission of the penalty to which he would otherwise be subject. However, after the expiry of that 14 day period, the plaintiff took no steps to enforce the company's liability or the defendant's penalty and then sent the company payment slips which provided for the company to make payments corresponding with those required by the payment arrangement that had been proposed by the company. That, it was submitted, was a clear indication the plaintiff agreed to the arrangement that had been proposed by the company albeit after the expiration of the 14 day period. When the defendant received the purported DPN he again wrote to the plaintiff and proposed the company enter into a payment arrangement. As with the letters that had been sent to the plaintiff following the giving of the earlier DPN the plaintiff did not respond to the defendant's letter within 21 days. The defendant assumed the plaintiff's failure to reject the proposal for a payment arrangement within 21 days of giving the DPN meant that the plaintiff had or would accept the payment arrangement. Had the defendant not held that assumption he would have caused the company to enter a voluntary administration or be wound up within the 21 days of the giving of the DPN. Thus he would have avoided being personally responsible for the $826,965 liability.
31 To state the defendant's position is to point up its obvious flaws. As the plaintiff submitted the elements of an estoppel by representation cannot be made out in this case. The 'assumption' identified by the defendant is not an assumption that could reasonably be held and is not credible. The earlier conduct of the plaintiff in not rejecting the payment proposal made by the defendant on 29 January 2010 cannot be regarded as conduct by the plaintiff which induced the defendant to act as he did. That is so, the plaintiff submits, for two reasons. First, the defendant's proposal sent in response to the 2010 DPN was not received by the plaintiff until after the statutory 14 day period had elapsed, in the absence of any prior conduct by the plaintiff to cause the defendant to believe that he could fail to respond within the stated deadline. Second, the plaintiff's conduct in respect of the two DPNs was not the same. The defendant's January 2011 proposal was expressly rejected and the plaintiff wrote to the defendant in terms which made it clear that legal action was being contemplated. In this context the plaintiff relied upon an affidavit of Gregory Phillips sworn 22 April 2013 and in particular annexures GP1 - GP 3.
32 On that basis then I am not satisfied there is any defence available to the defendant in relation to the Second Penalty notice. There should be judgment for the plaintiff.
33 Accordingly there will be judgment for the plaintiff in the full amount of the claim together with interest and costs. I will hear the parties as to the precise form of the orders.
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