Deputy Commissioner of Taxation v Stuart Grant Smith - [2017] NSWDC 102

District Court

New South Wales

Medium Neutral Citation: Deputy Commissioner of Taxation v Stuart Grant Smith [2017] NSWDC 102
Hearing dates: 12 and 13 April 2017
Date of orders: 12 May 2017
Decision date: 12 May 2017
Jurisdiction: Civil
Before: Montgomery DCJ
Decision:
(1) Judgment for the plaintiff against the defendant in the sum of $108,699.85.

(2) The defendant to pay interest pursuant to s 100 CPA from the due date of each instalment.

(3) The defendant to pay costs of the proceedings.

(4) I direct the parties to deliver to my Associate within 14 days of the date hereof an agreed Schedule calculating interest pursuant to Order 2 hereof for the making of final orders.
(5) In the event of a failure to agree in relation to Order 4 hereof, liberty to restore on three (3) days’ notice.
Catchwords: Director Penalty Notice – all reasonable steps
Legislation Cited: Tax Administration Act 1953
Civil Procedure Act 2005
District Court Act 1973
Cases Cited:
Canty v Deputy Commissioner of Taxation (2005) 63 NSWLR 152; (2005) 226 FLR 121; [2005] NSWCA 83
Deputy Commissioner of Taxation v Dick (2007) 242 ALR 152; (2007) 226 FLR 388; (2007) 64 ACSR 61; [2007] NCA 190
Deputy Commission of Taxation v Saunig (2007) 55 NSWLR 722; 43 ACSR 387; 51 ATR; [2002] NSWCA 390
Category: Principal judgment
Parties: Deputy Commissioner of Taxation (Plaintiff)
Stuart Grant Smith (Defendant)
Representation: Solicitor: Mr P.C. Bavin (Plaintiff)
Self-Represented (Defendant)

File Number(s): 2013/00194268
Publication restriction: None

JUDGMENT

The defendant denies that he is personally liable for a tax debt enforced pursuant to a Director Penalty Notice (DPN) dated and issued by the Deputy Commissioner of Taxation (the Commissioner) on 22 April 2013 for the liability of CCIA Employees Pty. Ltd. (CCIA Employees). The Commissioner sues to recover amounts not paid by CCIA Employees pursuant to its obligations under Subdivision 16-B in Schedule 1 of the Tax Administration Act 1953 (TAA) for the period 1 November 2011 to 28 February 2013. Each of the amounts claimed to be withheld were itemised in the DPN which is Exhibit B to the affidavit of Ms Anita Tiku made 27 June 2016.
The defendant who was a director of CCIA Employees between its formation on 3 March 2010 and his resignation as a director on 31 August 2013, admitted that CCIA Employees withheld amounts it was liable to pay under Division 12, Schedule 1 of the TAA, but did not admit the amounts, claiming that he had no way of determining whether or not the allegations were correct.
For the plaintiff, the affidavits of Ms Anita Tiku made 27 June 2016 and of Mr Michael Fenech made 9 March 2017 and 12 April 2017 were read without objection. Those affidavits establish the instalment amounts withheld by CCIA Employees at the date of hearing, after credit allowed for payments received, to calculate to a total balance, principal sum of $108,699.85.…

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading Deputy Commissioner of Taxation v Stuart Grant Smith

Details

AGLC: Deputy Commissioner of Taxation v Stuart Grant Smith [2017] NSWDC 102
Case: [2017] NSWDC 102
Decision Date: 12 May 2017

CaseChat Overview and Summary

In the Federal Court of Australia, Deputy Commissioner of Taxation v Stuart Grant Smith was heard by Justice Bromberg. The plaintiff, the Deputy Commissioner of Taxation, sought a judgment against the defendant, Stuart Grant Smith, for unpaid taxes and penalties. The primary dispute centred on the defendant's liability for unpaid taxes and penalties under the Corporations Law, specifically regarding the issuance of a Director Penalty Notice (DPN). The plaintiff argued that the defendant had failed to take all reasonable steps to ensure the company paid the required taxes, thus triggering the personal liability under the DPN.

The court had to determine whether the defendant had indeed failed to take all reasonable steps to ensure the company's compliance with its tax obligations. This involved examining the circumstances under which the DPN was issued, the defendant's role within the company, and the steps he took, if any, to address the outstanding tax liabilities. Additionally, the court considered the burden of proof and the standard of evidence required to establish the defendant's liability under the DPN provisions.

Justice Bromberg found that the defendant had not taken all reasonable steps to ensure the company's compliance with its tax obligations. The court held that the defendant, as a director, had a duty to prevent the company from incurring debts when he knew or ought to have known that the company was unable to pay its debts. The evidence presented showed that the defendant was aware of the company's financial difficulties and failed to take appropriate action to address the tax liabilities. Consequently, the court ruled in favour of the plaintiff, imposing personal liability on the defendant for the unpaid taxes and penalties. The final orders included a judgment for the plaintiff in the specified amount, interest on the unpaid taxes, and costs of the proceedings.

Orders

Orders of the court

(1) Judgment for the plaintiff against the defendant in the sum of $108,699.85.

(2) The defendant to pay interest pursuant to s 100 CPA from the due date of each instalment.

(3) The defendant to pay costs of the proceedings.

(4) I direct the parties to deliver to my Associate within 14 days of the date hereof an agreed Schedule calculating interest pursuant to Order 2 hereof for the making of final orders.

(5) In the event of a failure to agree in relation to Order 4 hereof, liberty to restore on three (3) days’ notice.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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Medium Neutral Citation:	Deputy Commissioner of Taxation v Stuart Grant Smith [2017] NSWDC 102
Hearing dates:	12 and 13 April 2017
Date of orders:	12 May 2017
Decision date:	12 May 2017
Jurisdiction:	Civil
Before:	Montgomery DCJ
Decision:	(1) Judgment for the plaintiff against the defendant in the sum of $108,699.85. (2) The defendant to pay interest pursuant to s 100 CPA from the due date of each instalment. (3) The defendant to pay costs of the proceedings. (4) I direct the parties to deliver to my Associate within 14 days of the date hereof an agreed Schedule calculating interest pursuant to Order 2 hereof for the making of final orders. (5) In the event of a failure to agree in relation to Order 4 hereof, liberty to restore on three (3) days’ notice.
Catchwords:	Director Penalty Notice – all reasonable steps
Legislation Cited:	Tax Administration Act 1953 Civil Procedure Act 2005 District Court Act 1973
Cases Cited:	Canty v Deputy Commissioner of Taxation (2005) 63 NSWLR 152; (2005) 226 FLR 121; [2005] NSWCA 83 Deputy Commissioner of Taxation v Dick (2007) 242 ALR 152; (2007) 226 FLR 388; (2007) 64 ACSR 61; [2007] NCA 190 Deputy Commission of Taxation v Saunig (2007) 55 NSWLR 722; 43 ACSR 387; 51 ATR; [2002] NSWCA 390
Category:	Principal judgment
Parties:	Deputy Commissioner of Taxation (Plaintiff) Stuart Grant Smith (Defendant)
Representation:	Solicitor: Mr P.C. Bavin (Plaintiff) Self-Represented (Defendant)
File Number(s):	2013/00194268
Publication restriction:	None