Fitzgerald v Deputy Commissioner of Taxation

[2017] NSWCA 158

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	Fitzgerald v Deputy Commissioner of Taxation [2017] NSWCA 158
Hearing dates:	27 June 2017
Decision date:	27 June 2017
Before:	Ward JA; Gleeson JA; Sackville AJA
Decision:	1. Appeal dismissed. 2. Appellant to pay the costs of the respondent of the appeal.
Catchwords:	TAXATION – PAYG withholding amounts – director penalty – whether director penalty notice served on appellant
Legislation Cited:	Taxation Administration Act 1953 (Cth), Sch 1 ss 255-1, 255-5, 255-45, 269-15, 269-20, 269-25, 269-50, Subdiv 16B
Cases Cited:	Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473; [2008] HCA 41 Deputy Commissioner of Taxation v Fitzgerald [2016] NSWSC 971
Category:	Principal judgment
Parties:	Kevin Michael Fitzgerald (Appellant) Deputy Commissioner of Taxation (Respondent)
Representation:	Counsel: In person (Appellant) Mr J Mitchell (Respondent)   Solicitors: N/A (Appellant) ATO Review and Dispute Resolution (Respondent)
File Number(s):	2016/242034
Decision under appeal	Court or tribunal: Supreme Court of New South Wales Jurisdiction: Common Law Citation: [2016] NSWSC 971 Date of Decision: 14 July 2016 Before: Harrison AsJ File Number(s): 2015/177914

EX TEMPORE Judgment

1. THE COURT: The only issue in this appeal is whether the primary Judge (Harrison AsJ) erred in finding that the respondent (Commissioner) validly gave written notice of penalties to the appellant in conformity with the requirements of Schedule 1 to the Taxation Administration Act 1953 (Cth) (TA Act). [1] The appellant’s contention that the Commissioner failed to give the notice in the manner permitted by s 269-50 of the TA Act is without merit and must be rejected.

   1. Deputy Commissioner of Taxation v Fitzgerald [2016] NSWSC 971 (Primary Judgment). All references in this judgment to provisions of the TA Act are to sections in Schedule 1 to the TA Act. Schedule 1 is headed “Collection and Recovery of Income Tax and Other Liabilities” and has effect by virtue of TA Act, s 3AA(1).

2. The Commissioner commenced proceedings in the Common Law Division claiming penalties said to be due by the appellant pursuant to s 269-15 of the TA Act. The Commissioner’s statement of claim alleged the following:

• at all relevant times the appellant was a director of HBO EMTB Employment Services Pty Ltd (Company) for the purposes of s 269-15(1) of the TA Act;

• the Company withheld amounts totalling $1,965,485.00 under the Pay as you go (PAYG) system but failed to meet its obligations under Subdivision 16B of Part 2-5 of the TA Act to pay each of the amounts withheld to the Commissioner; [2]

• the appellant as a director of the Company was obliged by s 269-15 of the TA Act to cause the Company to comply with its obligations under Subdivision 16B;

• the appellant was liable by virtue of s 269-20 of the TA Act to pay the Commissioner a penalty in respect of each amount withheld by the Company equal to the amount withheld; and

• the unpaid amount of each penalty constituted a tax-related liability within the meaning of s 255-1 of the TA Act and was a debt due to the Commissioner by virtue of s 255-5 of the TA Act.

2.    The statement of claim alleged that the Company had withheld a total of $2,408,511.00 in PAYG instalments, but the Commissioner limited the claim at the trial to amounts totalling $1,965,485.00.

Legislation

3. The TA Act relevantly provides as follows:

“269-25 Notice

Commissioner must give notice of penalty

(1)   The Commissioner must not commence proceedings to recover from you a penalty payable under this Subdivision until the end of 21 days after the Commissioner gives you a written notice under this section.

…

When notice is given

(4) Despite section 29 of the Acts Interpretation Act 1901, a notice under subsection (1) is taken to be given at the time the Commissioner leaves or posts it.

…

269-50 How notice may be given

The Commissioner may give you a notice under section 269-25 by leaving it at, or posting it to, an address that appears, from information held by ASIC, to be, or to have been within the last 7 days, your place of residence or business.”

The Primary Judgment

4. The appellant was self-represented at the trial. In substance the only defence he raised was that the notice required by s 269-25 of the TA Act (DPN Notice) as a precondition to the Commissioner commencing proceedings had not been given in conformity with s 269-50 of the TA Act. The appellant admitted that he had received the DPN about seven weeks after the Commissioner alleged that it had been posted. However, the appellant claimed that he had been prejudiced by the delay and that the evidence did not establish that notice had been given in the manner required by s 269-50.

5. The primary Judge rejected the appellant’s argument. Her Honour accepted unchallenged evidence adduced by the Commissioner that an officer of the Australian Taxation Office (ATO) had posted the DPN on 20 March 2015 to an address which, according to records maintained by the Australian Securities and Investments Commission (ASIC), was the appellant’s place of residence or business. It followed that the DPN had been given to the appellant in accordance with s 269-50 of the TA Act. Section 269-25(4) of the TA Act had the effect that the DPN was taken to have been given to the appellant on 20 March 2015, the date it was posted.

6. Since the Commissioner had given notice to the appellant as required by s 269-25 of the TA Act and the Commissioner had established that the appellant was liable to pay the penalties, her Honour entered judgment in favour of the Commissioner in the sum of $1,965,485.00. Her Honour observed that the appellant’s claim that he had been prejudiced by the delay in the actual receipt of the DPN (assuming his evidence to be correct) was without foundation. [3]

   3. Primary Judgment at [40].

The appeal

7. The appellant was self-represented on the hearing of the appeal but relied on written submissions prepared by a solicitor on his behalf. The written submissions contended that the evidence was insufficient to support the primary Judge’s finding that the DPN had been posted to the appellant’s address.

8. At the trial, the Commissioner relied on the affidavit of Ms Mederos, an officer employed by the ATOin Melbourne. Ms Mederos, who was not required for cross-examination, gave detailed evidence based on the ATO’s records that established the appellant’s liability to pay penalties by reason of the Company’s failure to remit PAYG instalments withheld.

9. Ms Mederos stated that she prepared the DPN, and a covering letter, copies of which were annexed to her affidavit. She then addressed the posting of the DPN as follows:

“I made a copy of the documents referred to in paragraphs 16 and 17 above [the ASIC search of the Company, the DPN and covering letter], and placed the original notice and letter into a postage envelope to which was affixed a 70 cents postage addressed to the [appellant] at XXX BEATTIE STREET, BALMAIN NSW 2041 being the address of the [appellant] which appeared on the [ASIC search of the Company]. I then sealed the said envelope and posted the said envelope in a locked Australia Post mailbox located in the corner of Kororolt Creek Road and Victoria Street, Williamstown in the State of Victoria.”

10. Ms Mederos annexed to her affidavit a copy of the envelope prior to posting. The copy showed the stamp that had been affixed.

11. The appellant submitted that the evidence was insufficient to establish compliance with s 269-50 of the TA Act. The defect was said to be that Ms Mederos did not state specifically that she personally attended the Australia Post mail box and placed the envelope in the locked box. However, the ordinary meaning of the paragraph from Ms Mederos’ affidavit extracted above is that she personally posted the envelope in the mailbox identified in the paragraph. The evidence was clearly sufficient to establish that the envelope was posted to the appellant’s address derived from a search of the Company in ASIC’s records.

12. Three other matters should be noted. First, the appellant admitted receiving the DPN, although he claimed that it was given to him by a neighbour on 7 May 2015 and that he had not received it in the post.

13. Secondly, as the primary Judge pointed out,[4] the Commissioner tendered a certificate pursuant to s 255-45 of the TA Act. This certified, among other things, that:

“a Notice of Director’s Liability to Pay a Penalty to the Commissioner of Taxation PAYG Withholding Amounts was served on [the appellant] on 20 March 2015 in accordance with section 269-50 of Schedule 1 to the Taxation Administration Act 1953 …”

The certificate was prima facie evidence that a notice required to be served on the appellant in respect of an amount of tax-related liability was, or must be taken to have been, served on the appellant under the TA Act. [5]

4. Primary Judgment at [23].

5. TA Act, s 255-45(1), (2)(c). See Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473; [2008] HCA 41 at [38] (Gummow ACJ, Heydon, Crennan and Kiefel JJ).

14. Thirdly, Ms Mederos prepared a contemporaneous note retained in the records of the ATO which confirmed that the envelope had been posted to the appellant’s address on 20 March 2015, as Ms Mederos stated in her affidavit.

Conclusion

15. The primary Judge correctly found that the DPN had been served in the manner required by s 269-50 of the TA Act. The appeal must therefore be dismissed. The appellant must pay the Commissioner’s costs.

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Endnotes

Decision last updated: 29 June 2017