Intervest Corporation Pty Ltd v Commissioner of Taxation

27 -7

CATCHWORDS

Income Tax - Offences - Company registered as a group

employer - Wages paid to employees after making

tax

instalment deductions therefrom

- Company failed to

remit amounts deducted to Commissioner

of Taxation -

Whether para.252(l)(j)

of Income Tax Assessment Act 193

authorises the taking

of criminal proceedings against a

director or officer of	the company in respect of the
company's default.

DAVID MALCOLM REYNOLDS

v. DEPUTY COMMISSIONER OF TAXATION

DEPUTY COMMISSIONER

OF TAXATION v. DAVID MALCOLM REYNOLDS

Blackburn, Lockhart and Neaves	JJ.
Canberra
26 September 1984

I N THE FEDERAL COURT OF AUSTRALIA )

)

AUSTRALIAN CAPITAL	TERRITORY	) No.	ACT G15 of 1984
)

DISTRICT REGISTRY	)	NOS. ACT G42-49 of 1984
)

GENERAL

D I V I S I O N

)

ON APPEAL FROM THE SUPREME COURT OF

THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN :

DAVID MALCOLM REYNOLDS

Appellant

-	AND :	THE DEPVTY COMMISSIONER
OF TAXATION

Respondent

JUDGES MAKING ORDER:

Blackburn,

Lockhart

and

Neaves JJ.

DATE OF ORDER:	26 September 1984
WHERE MADE:	Canberra

O R D E R

THE COURT ORDERS THAT -

The appeals by David Malcolm Reynolds

allowed.

2 .

So much of the

orders

the

Supreme Court of the

Australian Capital

Terri

tory as dismissed the appeals

t o t h a t

Court and confirmed

the

convictions

recorded

against the appel lant

and

the pena l t ies

imposed

i n

respect thereof

se t a s ide

and

i n l i e u t h e r e o f

orders that the appeals to the

Supreme

Court of

the

2 .

Austral ian Capi ta l Terr i tory

allowed, the convictions

recorded against

the appellant

be quashed and

the

pena l t ies

imposed

in respec t thereof

se t a s ide .

3 .

The

p a r t i e s have

l iber ty

apply

: .

.	IN THE FEDERAL COURT OF AUSTRALIA	)
)

AUSTRALIAN

CAPITAL

TERRITORY

Nos.ACT G16-24 of 1 9 8 4

DISTRICT REGISTRY	)
\

DIVISION

GENERAL

)

ON APPEAL FROM TIE

SUPREME COURT OF

THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN

THE DEPUTY COMMISSIONER

OF TAXATION

Appellant

AND :

REYNOLDS

MALCOLM

DAVID

Respondent

JUDGES MAKING ORDER: Blackburn, Lockhart and Neaves JJ.

DATE OF ORDER:	26 September 1984
WHERE MADE:	Canberra
O R D E R

THE COURT ORDERS THAT

1.	The appeals by the Deputy Commissioner	of Taxation
be dismissed.
2 .	The parties have liberty to apply.

IN TAE FEDERAL COURT

OF AUSTRALIA)

AUSTRALIAN CAPITAL TERRITORY

No. ACT G15 of 1984

1 NO. ACT G42-49 Of 1984

DISTRICT REGISTRY

NO. ACT G16-24 of 1984

GENERAL DIVISION

ON APPEAL FROM THE SUPREME COURT OF THE

AUSTRALIAN CAPITAL TERRITORY

BETWEEN: DAVID

MALCOLM

REYNOLDS

Appellant

AND :

DEPUTY

COMMISSIONER OF TAXATION

Respondent

BETWEEN :

DEPUTY COMMISSIONER OF TAXATION

Appellant

AND :

DAVID

MALCOLM

REYNOLDS

Respondent

CORAM:

Blackburn, Lockhart and Neaves JJ.

REASONS FOR JUDGMENT

Blackburn J.

26 September 1984

Part VI Of

the Income Tax Assessment Act 1936 ("the

Act')

is entitled "Collection and Recovery of Tax".

Division

2 of that Part is entitled

.Collection by Instalments of Tax

on Persons other than Companies".

The scheme of this Division

is that employers are required

to deduct, from payments

salary or wages to their employees, amounts representing the

income tax

for which those employees may

be liable,

and to

pay to the Commissioner the amounts

so deducted.

A "group

employer" (one who has ordinarily

had in his employment ten or

more employees from whose salary or wages he has been required

to make deductions) is required by subs. 221F(5) to pay to the

Commissioner the amount of the deductions he has so made not

later than the seventh day

the month next succeeding the

month in which he has made them.

Failure to comply with any

of the provisions of s.221F

is an offence (subs.11).

Sub-section

252(1) of the

Act

makes

provisions

relating to the public officer

of a company which carries on

business in Australia or derives

in Australia income from

property. Every

such company must appoint a public officer.

The liability of the public officer is prescribed In paragraph

252(l)(f), as follows

"The public officer shall

answerable for the

doing of all such things as are required to be done

by the company under this

Act or the Regulations,

and in case of default shall be liable to the same

penalties."

Paragraph

(j) of the same subsection, however, goes far beyond

the scope of the rest of the subsection.

This paragraph,

which had its origin in an amendment	to s.88 of the Act of
1922, is as follows:

altering or transferring the liability

of the

public

officer

company,

every

notice,

process or proceeding which under this Act

the regulations thereunder

may be

given to,

served upon or taken against the company or its public officer may, if the Commissioner thinks fit, be given to, served upon or taken against any director, secretary or other officer of the

company or any attorney or agent of the company

and that director, secretary, officer, attorney

or agent shall have the same liability in

respect of that notice, process

or proceeding

as the company or public officer would have

had

if it had been given to, served upon or taken

against the company

or public officer."

The proper construction

of this paragraph is the

principal matter for determination in these appeals.

The Court has before it nine appeals by Mr Reynolds,

which by agreement were

heard together. The appellant was

convicted

in the Court of Petty Sessions of the Australian

Capital Territory of nine offences of failing

to comply with

paragraph 221F( 5) (a) of the Act,

that paragraph being, as

mentioned above, the provision which requires a group employer

to pay to the Commissioner the amount of deductions made from

employees'wages. In each case, the information, as amended,

was in this form: the one quoted

being the first, and the

others differing only in respect of dates and amounts.

"David H. Reynolds of 36 Knox

Street

Weston

director of Fairlin Pty. Limited and a person who

was a director of that company within the meaning of

s.252(l)(j)

of the Income Tax Assessment Act 1936

failed to comply with the provision of

s.221F(5)(a)

of	the Income Tax Assessment Act as made applicable

to him by virtue of	s.252( 1 ) (j) in that Fairlin
Pty. Limited being a	group employer in accordance

with Division 2

of Part VI of the said Act

during

the month

of October 1981 failed to pay to the

Commissioner of Taxation on or before 7 November 1981 deductions of income tax from the wages of its employees during the month of October 1981 such deduction being in the sum of $1383.60."

The appellant appealed unsuccessfully to the Supreme Court

3 .

the

Australian

Capital

Territory,

which

affirmed

the

conviction in each case.

For the hearing of the appeals there

was an agreed	statement	of facts	which, as ‘amended. read as
follows:

“1 .	Fairlin Pty. Limited is a	company	duly
incorporated in the A.C.T.

David Malcolm Reynolds (the Appellant) was

all

material

times

director

of the said

Fairlin Pty. Limited.

3 . FaiKlin Pty. Limited was at all material times a properly registered group employer within the

meaning of s.221A(1) of

the

Income

Tax

Assessment Act and an

employer of various

persons during the relevant period.

4 . Fairlin Pty. Limited paid salary and wages to its employees in each of the months of October 1981 to June 1982 inclusive and made deductions therefrom on account of income tax pursuant to s.221C(1) and (1A).

5. In each of the said months Fairlin Pty. Limited failed to ‘pay to the Commissioner the amount

of tax

deductions’

made

from wages of its

employees on or before the 7th day of the month

following the month which deductions were

made.

6 .

The company wages were

paid

weekly from the

company bank account and no further cheque was drawn each week from the company account and no

separate fund created to hold tax

deducted

amounts, pending remission to the Commissioner.

7. Wages were calculated and a cheque for nett

wages

(gross

wages

less

tax deducted)

was

drawn, cashed and only these moneys

paid to

employees.

8. Fairlin Pty. Limited has ceased trading and has not paid the deductions to the Commissioner.

The

amount of tax

deductions

which

Fairlin

Pty.

Limited failed to pay

to the Commissioner

for

each

month

(being

the

monthly

total

deductions made from employees’ wages)

is set

out in the information in each instance.

10. The Appellant in his personal capacity was not, in relation to any matter which is material to

these proceedings, an employer who paid salary

or wages to person

who were his own employees.

11.

Deputy

Commissioner

Taxation

in the

exercise of powers

functions

validly

delegated to him by the

Commissioner

Taxation under s.8(1)

of the Administration Act

1953 saw fit to institute proceedings against

the

Appellant as

director

Pairlin

Pty.

Limited pursuant to s,252(l)(j):

The appellant appeals to this Court against each order of the

Supreme Court affirming his conviction. The question in the

appeals is whether paragraph 252( 1 ) (j) renders the appellant liable for the commission of the offence committed

by the

company,

failing to pay to the Commissioner the amounts

deducted from its employees' wages.

Paragraph 252(1)(j) is

certainly

remarkable

provision; so far as I have been able to discover, it appears

only in Australian taxation statutes.

Counsel referred the

Court to the passage in Aansard which records the debate in the House of Representatives when the legislative predecessor

of this paragraph was

introduced.

It was inserted into

s.88

of the Income Tax Assessment Act 1922 by Act No. 50 of 1930.

The authority for thus referring the Court

to Aansard was

s.15AB of the Acts Interpretation

Act 1901. The essential

words of this section are

in subs.(l)-

.. if any material not forming part of the Act is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material ... to determine the meaning of the	provision when ... the provision is ambiguous or	I
obscure ...

Subs.(2) provides a list of material which may be considered in accordance with subs.(l), and the list includes

"(h)

Any relevant

material

... any

officlal

record of debates in the Parliament or either House

of the Parliament."

In	the case before us, I found the reference to

Hansard totally unhelpful. In my opinion, the passage in question is not "capable of assisting in the ascertainment of

the meaning

of the provision".

The only thing that clearly

appears from it is that the Minister responsible

for the Bill

did

not

himself

understand

the

provision

question.

Apparently the second reading speech

does not

assist in the

construction of this

particular

paragraph,

which

was

introduced in Committee.

It seems to me that an attempt

to construe paragraph

(j) must begin with an examination of paragraph (f). This paragraph appears to me to impose on the public officer of a company the same criminal liability as falls upon the company itself, in case of any default in the doing of anything which

is required to be done by the company under the Act. I do not

see how it could possibly be argued that paragraph ( f ) does

not impose criminal liability

on the public officer; the words

"and in case of default shall be liable to the same

penalties"

are impossible to construe otherwise than

as imposing criminal

liability.

If,

then,

company

would be liable

under

subs.221F(ll) for failing to comply with paragraph 221F(5)(a), the public officer of the company would be subject to the same criminal liability.

In Lean v. Brady ( 1 9 3 7 ) 58 C.L.R.

328, the appellant

was the

public

officer

of a company,

having

been

duly

appointed in accordance with

provision

the Income Tax

(Management) Act 1928 (NSW).

By the Special Income and Wages

Tax (Management) Act

1933-1934,

every employer was obliged to

collect from his employees by deduction the amount

of a tax

called the wages tax, and

to pay the tax so collected in the

manner prescribed. Subsection	16(8) of the latter Act was	as
follows

"Any employer who fails to carry out or

observe any

provision of this section shall be liable

to account

for and pay to the Commissioner any tax which

by OK

employer shall upon summary conviction be liable to	because of his failure remains unpaid . .. such
a penalty

Subsection

15(1)

the

latter

Act

provided

that

certain

sections of the Income Tax (Management) Act 1928

"shall be applicable to the tax

(i.e.

the wages tax)

such taxes were the income tax under the

principal Act. (i.e.	the Income Tax (Management) Act
1928).

Those

sections

the

principal

Act included one

which

provided that the public officer should

liable for the

doing of all such things as were required to be done by or on behalf the company under the Act and in case of default in

doing

any

such

things

should

be liable for all

penalties

imposed for any breach of the provisions of the

Act.

The appellant

in Lean v. Erady was convicted of

having failed to pay

the Commissioner the wages tax which

the company

had collected from its employees, but

had failed

to pay to

the

Commissioner.

The

High

Court

quashed

the

conviction. The essence of the Court's decision was in the

effect given

to the words of subs.l5(1) quoted above, which

made the liability

of the public officer in respect of wages

tax depend

upon the notional assimilation

of wages tax to

income tax.

Under the Income Tax (Management) Act there was

provision for certain criminal liability

a company (and

consequently of its public officer)

but there was no provision

for Criminal liability for

non-payment of income tax.

The

liability of the public officer was

not expressly provided for

in the Special Income

and Wages Tax (Management) Act, but only

by reference to the principal

Act, as if the wages tax were

income tax. Once one assumed, therefore, that wages tax collected under the Special Income and Wages Tax (Management) Act was "income tax under the principal Act", it followed that

the public officer could

not be

criminally liable for

not

paying

it:

and

this was notwithstanding the fact that

the

company itself could

be criminally liable

for not paying it,

under the Special Income and Wages Tax (Management) Act.

But in the case before this Court there

is nothing

comparable to this notional treatment of one kind of tax

another kind of tax, as a determinant of the liability of the

public officer. Section 221P requires the employer to collect

money from his employees,

and makes it an offence not to pay

to the Commissioner money so collected.

Paragraph 252(1)(f)

makes the public officer of a company

liable, in

case of

default

the company, to the same penalties as those

which the company

is liable.

In my opinion it is clear that

Lean v. Brady is no answer to the proposition that the public officer of a company which commits the offence

of not paying

money to the

Commissioner

in accordance

with

paragraph

221F(5)(a) is liable to the same penalties as the

company.

One now has

to turn to paragraph

2 5 2 ( 1 ) ( j ) .

Its

words may, for	the purposes of this case,	be reduced to the
following

... every ... proceeding which under this Act

...

may be . . .. taken against the company or its public

officer may, if the Commissioner thinks fit, be ...

taken against any director ... of the company . . .

and that director

... shall have the same liability

public officer would have had if it had been ...	in respect of that . . . proceeding as the company or
taken against the company	or public officer..

This provision seems

to me quite explicit. I

see no escape

from the conclusion that the effect of this section, for the purposes of these appeals, is exactly the same as if paragraph

(f) had read

"The public officer, and, if the Commissioner thinks fit, any director, shall be answerable for the doing of all such things ... etc."

Paragraph (j) imposes criminal liability on a director, in the

circumstances

set out,

no less certainly than paragraph (f)

imposes criminal liability on the public officer.

In the case

of a director, the elements of the crime are the following

(a) default by the

company

in the

doing

something which is required to be done	by the
company under the Act;

(b) the

fact that

the defendant was

a director of

the company; and

(c)	a decision by the Commissioner that proceedings in respect of such default be taken against the defendant.

(Incidentally, this last element should, I consider, have been alleged in the information in the Court of Petty Sessions; it

was however proved, and included

in the statement of agreed

facts).

There is no necessary element of fault, either by way

of act or of omission, on the part of the defendant, any more than there is in the case of criminal liability of a public

officer

under

paragraph

(f).

Indeed,

the

liability

under

paragraph (j) is one step further removed from the normal

constitution of a criminal offence, in that

a decision to

prosecute the director is expressed

as an element

of the

offence; it is not merely

(as it is normally) an unexpressed

but necessary step	in the subjection of the accused to the
criminal process.	It is not for the Court to speculate why

the

legislature

chose

this

drastic

method

of applying

criminal sanction

for the protection

of the revenue. One

would have been much less surprised to see a provision which enabled the Commissioner, in the event of default on the part of the company, to serve an appropriately worded notice on a public offitpr or director, and created the offence of failing

comply with the notice. Such

provision would be much

less potentially harsh.

But the fact that the Parliament has

not seen fit to adopt such a procedure, but has preferred one

which appears

t o be paralleled only in other Australian tax

legislation, does not

enable

this

Court

to reject

the

Parliament's plainly expressed intention.

I can see no way

of construing either paragraph (f)

or paragraph

(j) as excluding criminal liability altogether.

There might well be

room for such an argument if paragraph (f)

were not there;

it would then be possible

to argue that

paragraph (j) does not expressly refer to criminal liability

10.

at all. That, in my opinion, is the answer to an alternative argument put to the Court on behalf of the respondent in this

case,

that the respondent's case could be established without

reliance on paragraph

(f).

As I have already said, paragraph

(f), using as it does the words

"default. and "penalties",

must impose criminal

liablity. The words of paragraph

(j),

in turn, do

not permit the conclusion

that the liability

imposed is limited to civil liability, since paragraph	(f) is
clearly not so limited.

Counsel for the appellant

tried to convince us that

if paragraph (j) does import criminal liability, there can

a distinction between liability

for some kinds of default,

and

liability for other kinds.

His argument was that paragraph

(j) imposes criminal liability only

for non-compliance with

machinery provisions, such as the timely submission of returns, or the truthfulness of the facts stated in returns,

and not

for

the

non-payment of tax.

Counsel

drew

some

comfort in this respect from some of the words of Dixon	J. in
Lean v. Brad1 at p.336, e.g.

"The

discharge

the

various

responsibilities

placed upon the

taxpayers

in relation

the

administration of the

income

tax

law

which,

perhaps,

the best

example, because the most common

place, is making annual returns of income

... The

'things required to be done' do not refer to payment

of tax but

to the active responsibility falling on

taxpayers

connection with returns, assessments

and ancillary matters."

These are two answers to this valiant attempt to cut down the scope of paragraph ( j ) . One is that Dixon J. was referring to a New South Wales Act in which non-payment of tax was not an offence, whereas in the Act, non-payment of deductions from

. .

11.

wages is an offence.

The other is that the default alleged

against the company is, precisely, default in a matter

machinery - an "ancillary matter" - the payment over to the Commissioner of money collected as tax from those who may be liable to pay the tax. It is to be remembered that s . 2 2 1 ~

forms part of Part VI of

the Act, entitled "Collection and

Recovery of Tax.. To my mind, the impossibility of making a rational distinction between an ancillary matter such as the submission of a truthful return, and an ancillary matter such as the payment over of deductions from wages, is ample

manifestation of the unsoundness of attempting to distinguish

between kinds of 'default" in

construing paragraph 2 5 2 ( 1 ) ( j ) .

Stress was placed by counsel for the appellant

the fact that paragraph

(j) does not stop at imposing criminal

liability on directors, but extends

to secretaries, other

officers of the company, or any attorney or agent of the company. As an argument against the desirability of the

legislation, this seems to

me very weighty, but I find it

impossible

as an argument

against

the

construction of the paragraph as imposing criminal liability

on this appellant. The Court's task is to apply

the

legislation in accordance with its clear purpose, however much

it may regret the result.

I would dismiss Mr Reynold's appeals.

The	Court also has before it nine appeals by the

Deputy Commissioner. In the proceedings in the Court of Petty Sessions, the learned magistrate ordered, on each information, that the defendant pay the amount which had not been paid to

12.

the Commissioner

by the company.

In the Supreme Court the

appellant also appealed against these orders,

and

this

respect the appeals were upheld by

the learned judge. It

was

contended that the order

of the learned magistrate was

valid

as an exercise of power	under s.2lB	of the Crimes Act	1914,
which reads as follows:

"218.

Where -

(a) a person

is convicted of an offence against

law of the Commonwealth: or

(b) an order is made under section

19B in relation

to an offence against a law	of the Commonwealth
committed by a person,

the Court may,

in addition to the penalty, if any,

imposed upon the person, order the offender 1.

(c)	to make reparation to the Commonwealth or to a

public authority under the Commonwealth, by way

of money payment or otherwise, in respect of

any loss suffered,

or any expense incurred, by

the Commonwealth or

the authority, as the case

may be, by reason of the offence: or

(d) to make reparation to

any person,

by way of

money payment or otherwise, in respect of any loss suffered by the person as a direct result

of the offence."

The learned judge rejected this argument, holding that the

non-payment of the moneys deducted from the

employees' wages

was not a .loss suffered", or an "expense incurred"

by the

Commonwealth.

therefore

set

aside

this

part

of the

magistrate's order in each case.

The nine appeals

by the

Deputy Commissioner are against these orders	of	the learned
judge.

my opinion

the

learned

judge

was

correct

setting aside these orders

of the Court of Petty Sessions, but

I would prefer to express the reason for doing

so somewhat

13.

differently.

I have already said that

in my opinion the

criminal liability resting

on the appellant

(as I continue,

for the sake of clarity, to call him) had no element in it of fault on his part, and that the elements of the offence were first, the non-payment by the company to the Commissioner of

the

amounts

deducted

from the wages of the employees;

secondly, the directorship of the defendant in the company;

and thirdly, the decision

of the Commissioner to prosecute the

defendant. Obviously, the third

these elements did not

exist

when the Commonwealth

"suffered

the

loss" by

the

non-payment of the moneys, nor was tht "loss" affected by the

coming

into

existence

of that

third

element.

cannot,

therefore, be said that the	loss was suffered "by reason of
the offence".

I would dismiss the Deputy Commissioner's appeals.

IN THE FEDERAL COURT OF AUSTRALIA

)

No. ACT G.

1 5 of

1 9 8 4

AUSTRALIAN

CAPITAL

TERRITORY

)

)	NOS. ACT G. 42 - 49 of 1 9 8 4

REGISTRY

DISTRICT

)	NOS. ACT G. 16 - 2 4 of 1 9 8 4

DIVISION

GENERAL

)

ON APPEAL FROM

THE SUPREME COURT

OF THE

AUSTRALIAN CAPITAL TERRITORY

BETWEEN :

DAVID MALCOLM REYNOLDS

Appellant

AND :

DEPUTY COMMISSIONER OF TAXATION

Respondent

BETWEEN :

DEPUTY COMMISSIONER OF TAXATION

Applicant

AND :

DAVID MELCOLM REYNOLDS

Respondent

Coram:

Blackburn, Lockhart and Neaves JJ.

26 September

1 9 8 4

REASONS FOR JUDGMENT

LOCKHART J.

These appeals from the Supreme Court

of the Australian

Capital Territory (Gallop

J.) raise two important questions.

The first question is whether para. 2 5 2 ( 1 ) ( j ) of the Income

Tax Assessment Act 1 9 3 6 ("the Act") authorises the taking of criminal

proceedings against a director or officer of a company in respect

acts of defaults of the company or its public officer

which would have

rendered them or either

of them liable to criminal prosecution.

The second

suestion is whether.

upon

conviction

tor

offence

auainst sub-s. 221F(ll).

the

director

or officer

may be

Dersonallv liable to Day the amount of tax instalment deductions

which

the comDanv had deducted from the

waues of its emolovees but failed to

remit to the Commissioner of Taxation.

The facts are affreed and may be brieflv stated. Fairlin Ftv.

Limited ("Fairlin")

was reuistered as a uroup emplover within the

meaninu of sub-s. 221A(1) of the

k t . It Paid waffes to its emDlovees

from October 1981 to

June 1982 and made tax Instalment deductions

therefrom Pursuant to sub-ss. 221C(1) and (1A). Fairlin failed to

remit to the Commissioner the amount

of those deductions. It ceased

tradinu.

The appellant. David Mclcolm Revnolds ("thc appellant"), was

a dlrector of Fairlin.

Froceedinus

were

instituted

auainst

the

aDpellant

Dursuant

para.

252(l)(i) (to which I shall for

convenience rcter as "Parauraph ( i)")

of the Act.

On 2 3 March 1983 the appellant was convicted in the Court

Pettv Sessions. Canberra

of nine offences auainst

sub-s. 221F(ll) of

the Act.

He was fined a total of $675 ($75 for each of the nine

offences); ordered

to pay

the Commissioner

the

full

amount

outstandinu tax instalment deductions namelv. $14.113.25: and ordered

to Dav costs totallinu $225

($25 for each offence).

3 .

@n appcal to the Supreme Court of the Australian Capital Territorv the appeals were dismissed and the convictions and penalties

confirmed. His Honour held. however, that there was no provision in the Act conferrlnu power on a court of competent iurisdlction to order

a person convicted of an offence under sub-s. 221F(ll) to pav to the

Comrnissioncr the amount of unpaid tax instalment deductions which oave

rise to the offence.

His Honour also held that

S. 21B of the Crimes

A&	1914 is not a source of that power.

The appellant appealed from the Supreme Court's iudament

except that part which upheld his appeal

aoainst the order requirino

him to pay the outstandinu tax deductions.

The Commissioner appealed

from that last mentioned Dart of the ludoment. Althouoh It is the Dcout-r Commissioner of Taxation who is tcchnicallv an appellant. I

shall for convcnience refcr to him

as "the Commissioner".

It is

necessarv to refer

to the relevant provisions of the

Act to understand the questions

which arise in the appeals. An

"emDlover" means "a person who pays

or I s liable to Day anv salary

waaes" (sub-s. 221A( 1)

) . A "oroup emplover" mcans "a person who is

reulstered as a aroup emplover under S .

221F"

(sub-s. 2 2 1 A ( 1 ) ) .

Where

an emplover pavs salarv or

wacres to an emplovee. thc emplover

I s

requircd. at the

time of oayino. to make a

deduction from the salary

or w n m s at such a ratc.

if anv. as 13 prescribed (sub-3. 221C(lr.

oroup emplover.

not

later

than

the

7th dav of the month next

succeedins a month in which he made deductions. shall

pav to the

Commissioner the amount of the deductions

so made (para. 221F(S)(a,).

It is an

offcnce for an emolovrr to fail to complv with an-?

Drovision ot S. 221F (sub-s. 221Ffll)). Fenalties are provided bv sub-s. 221F(13) for failurc to comol-? with para. 221F(S)(a).

If the cmDlover has made thc

deduction and failed to

deal

with it in the manner rcquircd

bv the Act. the emplover is made liable

to pav that amount to

the Commissioncr (sub-s. 221F(1)).

Sub-S. 252(1

)

of the Act should be set out

full but the

most relevant paracrraphs are parauraph (f) and Parauraph (I).	The
sub-section provides:

“?52(1) Every company carrvinu on business in

Australia. or dcrivinu in hstralia income from propertv. shall at all timcs. unless exempted hv the Commissioner. be represented for the purposes

of this Act bv

a public officer heinu J. person

resldina in Australia and dulv

appointed bv the

comDanv or by its duly authorizcd aucnt

attornev. With rcspcct to cverv such conman:? and

public officer the

followlna Provisions shall

app17

( a )

The cornpan-?. if it has not appointed

a public

officer bcfore thc commencement

of this Act.

shall appoint

J. public officer

within three

months after the commencement

of this Act or

after the company commences to carrv on business or derivc Income in Australia.

(b)	The companv shall kcep thc office of thc public officer constantlv filled.

deemed to be dulv made until after notlce

thereof in writins.

specifvino the name of

the officer and

an address for service upon

him has been criven to the Commissioner.

Id) If the companv fails to dul:I

appoint a public

officer when and a s oftcn as such appointment

becomes necessary, it shall bc uuilt-., of an

off cnce.

Fenaltv: $ 4 for everv dav

durinu which

the failure continues.

( e ) Service of anv document

at the addrcss for

ser-Jice. or on the public officer of the

companv. shall bc sufficient service upon the

companv for all the purposes of this Act

the reaulations. and if at anv timc there is

no public officer then service

upon any

person actino or appearinu to act in the

busincss of the companv shall

be sufflcient.

(f)

The public officcr shall be answerablc

for

the doino of all such thinos a3 are required

to be done by the companv under this

Act or

the reuulations. and in case of default shall

be liable to the same Pcnaltlcs.

( U ) EverJthinu done by the public otficer

which

he is required to do In

his representstivc

capacitv shall be deemed

to h a m been done

b - J

the companv. The absence or non--aDpointmcnt

of a public officer shall not excuse

thc

companv from the necessitv of complcino with anv of the provisions of this Act or the reoulations, or from anv pcnaltv for failure to complv therewlth. but the compano shall be

llablc to the provisions of this Act as If

there were no requirement to appoint a public

officer

(h) Anv notice sivcn to or reauisition made uDon

the public officer shall be dcemed	t o be
ulvcn to or made upon the companv.

ti) Anv proceedinas under this Act takcn

actainst

the public officer shall be deemed to have been taken asainst the companv. and the companv shall bc liablc iointlv with the

nub1 ic off iccr	fo anv pcnaltv imposed upon
hlm.

11) Notwlthstandina anvthina contained in this

scction. and without

in anv wav limitina.

alterina or transferrlna the liabilitv of the

publlc offlcer of a companv. everv notlce.

process or oroceedina which under this Act or

the reaulations thereunder mav bc

a i x n to,

sewed uoon or taken aaainst the companv

its uublic offlcer

may. if the Commissioner

thinks fit. be aiven to. served upon or taken

aaainst any director, secretarv or othcr

officer of the comoan-r or any attornev or

aaent of the comoanv and that dircctor.

secretarv. officer. attornev or aaent shall

have the same liabllitv In respect of that

notice. proccss or proceedinu as the comoanv

or oublic officer would

have had if it had

been alven to. scrved uoon. or taken aaalnst

the comoanv

or publlc officer.

Section 21B of the Crimes Act 1914 ("the C-rimes Act")

provides

"218 Where -

(a)	a oerson 13 convicted of an offence aaalnst a

law of the Commonwealth

(b)

an order is made under section 19B in relation

offencc

aaainst

* a

law of

the

Commonwealth committed b-!

a person,

the Court mav.

in addition to the oenalt-7. if anv.

imposed upon the person. ordcr the offender

(c)

to make reparation to thc

Commonwealth or to a

public authorit-J under the Commonwcalth, bv

wav of moncv pavment or otherwise. in respect

of anv loss suffered. or an-? expense incurred,

b.?	the Commonwealth or the authorit-?. a s the

case mav bc. bv reason of the offcncc: or

(d)

to makc reparation to anv person, bv wav of

moncv pavmcnt or

otherwise, in respect of any7

loss suffcred

bv the person

as a direct result

of the offence.

It 1s

common around that Fairlin fallcd to complo with the

provisions of para. 221F(S)(a) of the Act and therefore committed an

offencc and was liable to the oenoltics imuosed

bv sub-s. 221F(123.

It vas submitted bv thc

Commissioner

that

proccedlnus

Pursuant to sub-s. 221F(ll) are proceedinus "under the Act" within the

meanina of parauraph (i)

and, bv virtue of that parauraph. mav be

taken auainst

anv dircctor of

Fairlin selectcd bp the Commissioner.

The Cornmissioner disavowcd

anv suuacstlon that parauraph

( i ) operated

to Impose a personal liability upon

a director or officer of a companv

pav tax pavable bv the companv

to pay the amount of tax

deductions from the salaries or waucs of

emplovees which the companv

(bcinu an empLovcr) failed to deduct or, if dcducted, failed to remit to the Commissioner. The concession was made In vlcw of the iudument of the Hiuh Court in L= v. B a d e (1937) 58 C.L.R. 328 to which 1

shall refer latcr.

Thc Commissioner aruucd. howevcr. that the learned

Nauistrate correctlv ordered thc

appellant to

pav the amount

which

Fairlin deducted bv wav

of tax ln3talment dcductions but fnllcd

remit and that the source of

such order was S. 21B of thc CrLm_eeS Act.

The appellant submitted

that.

the

Commissioner's

submissions wcre correct, parauraph C i l would bc a	vchiclc for
enablinu the Commissioner to Prosecute anv director	or officer he

chose to prosecute for

anv offence committed bv the companv or its

public officer under the Act. The consequcnces of this construction of oarauraph ( j ) werc said to be so extreme and ovpressive that it must be vresumed that thc Leuislature intended parauraph ( 1 ) to have a

much narrower operation.

Considerable reliance was placed bv counsel

for the appellant

upon Lean_ v. Brgdx (supra) and upon thc history of

paraurnph ( I ) .

Counsel said that

Parauraph ( 1 ) and its predecessor

(paracrraph (h) of S. 88 of the

Innme Tax Assessment Act

1922 which

was inserted bv Act MO. 50

of 1930) had been a part of the income

tax

leaislation of

this country for over 50 vcilrs and that, until this

case, had

never

been invoked

for

the

purpose

for

which the

Commissioner now souaht to invoke it.

Counsel for the appellant referred

us to the

debate in the

House of Representatives in 1330. a3 recorded in Hansard, when the

predecessor of Paraaraph ( 1 ) was

Introduced. Thc source

this

Court's power to

refer to Hansard was said to be S. lSAB of the Arts

Interpretation

Act 1901. Whatever bcnefit or enliahtenment

mav be

aalncd by

the

reader

the Hansard

report of

t.his debate.

certamlv docs not includc anv auide to the mcmina of the relevant

statutorv provision. Indeed.

as one peruses the report. pcrplexitv

turns to

astonishment and finallv to utter confusion and despair.

cvmpathise with the vicwo. expressed towards

the end of the debate. by

Mr.

Mest.

thc

mcmber

for

East

Svdnev.

which Hansard records a3

follows:-

"I feel somewhat embarrassed.

Two former

Attornev-Generals (sic) of thc Commonwealth. a former Attornev-General for New South Wales, and thc honourable member for Corangamite (Mr. Crouch). who also is a lawvcr. disarrree as to the meaninu of the provision now bcfore the Committee. Whcn

lawvers differ.

how is a lavman to decide?

Apparcntlv. I have no alternative but to vote with

the Government. and let it bear

the

responsibilitv.

If the construction for which the Cornmissioner contcnds is

correct. paraaraph ( 1 ) is indeed far-reachina.

It would mean that the

Commissloncr is

empowered to decide whether

anv and, if

so, which,

9 .

directors or officers (also attornevs or aacnts) of the companv should

be prosecuted for an act or default of the comDanv or

Its publlc

officer. The director or officer selcctcd rnav in fact havc little. if Commissioner. Manv offences under the Act which mav be committcd bv a companv or its public officer are either absolutc or have available

anvthinrx,

to do

wlth

the conduct of the companv impuaned bv the

onlv verv llmitcd dcfenccs. For cxamDlc. the

failure of an cmplover

to make deductions in thc prescribed manner

(sub-s.

221C(lOa));

failure to remit to the Commissioner instalment deductions deducted

the

mployer

from thc

salaries

waaes of employees (oara.

221F(5)(a)) - the

relevant

offence

for present

purposes:

the

unauthorized sale or disposition of tax stamps (sub-ss. 221T(23 and ( 3 ) ) : and forains stamDs or dvcs for makina tax stamps (sub-s.

221Y(1)).

Yet

a director or

fficer.

selected

the

Commissioner RS

the pcrson to

be DrOSeCUted. will be liable for the

conduct of thc comDanv or its public officer over	which	hc rnav have
been able to exerclsc little, if any. control.

It is

true, as the Commissioner conceded in araument. that

the person selectcd

for prosecution would

have available thc same

defences as mav be raised bv the companv or its public officer.

as thc

casc mav be. But

where the offencc is absolute this would be of

little comfort to him. He

would be in

a worse position than a

director or officer who aided and abetted thc commission

of an offence

or was

knowinalv concerned in its commission. For

a person to be

convictcd as

an aidcr and abettor or as

beina knowinalv concerned in

the commission of the offence bv another under

S. 5 of thc Crimes Act

10.

the requisite clements must be establlshcd

bv the prosecution aqainst

him. includina knowledue of the material facts suDportinu the offence.

But a director or officer charued with an offence under the Act

pursuant to the powers vested in the Commissioner under parauraph

( 1 )

would be bereft

of even this protection.

The Commissioner souaht to ameliorate

the obvious harshness

of the construction

of paraqraph ( 1 ) for which he contcndcd bv

assertinu that the

Commissioner’s Dower under the parauraph

to select

dircctors or officers of the

companv must be exercised reasonablv and

in accordance with

the well establlshcd rules concerninu thc excrc13e

of administrative powers. This 1s true 90 far as It uoes. But

parauraph (i)

contains no criterla uoverninu the circumstanccs in

which the power mav be exercised.

The

Commissioner would obviouslv

have considerable latitude

in decidinu whether to call the

Paraqraph

in aid auainst the particular

directors or officers concerned.

Another

consideration

telllnu

auainst

the Cornmissioner’s

araumcnt is that. where Parliament has souuht to render directors or officers of companics liable for offences committed by the comoanv or

its DUbliC officer under the Act. it has said so in plain terms. For

example S. 230 ~rovldc3 that anv person who. or anv companv on whose

behalf the public officcr.

or TI director. servant or aucnt of the

comDanv in anv return knowinulv

and wilfullv understates thc amount of

anv income

or makes anv misstatemcnt affectinq the liabilitv

of anv

person to tax or

the amount of tax shall be quiltv of an offence.

11.

Also S.

231 providcs that any person who.

m v company on whose

behalf the public

officer, or a director. servant or auent of the

companv. bv anv

wilful act. default or neulect. or bv anv fraud. act

or contrivance whatsoever, avoids or attempts

to avoid assessment or

taxation shall be uuiltv

of an offcncc.

If thc Commissioner is correct. parauraph (1) is a formidable

instrument of

authority vested in the Revenue.

Thc Commissioner mav

in effect procced in the courts against a widc class

of Dersons who

mav have had little or no involvement in the relevant conduct of the company or Its public officcr. Furthermore. parauraph

( 1 ) provides no

time limit within which

the Comminsioncr may dccidc to commence those

proceedinus. I would not be prcparcd to cndorse this construction of Paranraph ( 1 ) unless compelled to do so bv clcar and uncquivocal lanuuane. The words of Lord Loreburn L.C. in AtEnev-General v. Tu C19103 A.C. 50 (at pp. 51 and 5 2 ) arc apposite:

"I attach urcat importance to the rule that unless

penalties are imDoscd in clear terms they are not

cnforceable. Also. where

various interpretations

of J. section are admissible. it is a otronu reason

auainst adODtinU a particular interpretation

if it

shall aDpear that the result

would be unreasonable

or oopressivc.

It would be oppressive and uniust if the Commissioner's

aruument were to succeed. especiallv in relation to a statutory

provision that has lain dormant in the income tax leuislation of this

countrv €or over half a

ccntury and has, curiously enouuh. raised its

head onlv now. Yet it is an aruument that rests for its acceptance essentiallv on a close and literal construction at a timc when

12.

Parliamcnt is uruinu the courts to	adopt. what is callcd bv some. a
purposive constructlon.

If therc was no work for parauraph ( 1 ) to do except the work

which the Commissioner would have it do. there would be force in the Commissioner's aruument. althouuh it mav raise a serious question

about the validitv of the parauraph.

But in mv opinion parauraph ( 1 )

1s open to a construction which is mercifullv

free of the harshness of

the laws	of Draco and uives It some sensible and	lcuitimate work to
do.

Parauraah (i)

appears in Part VI11 of

thc

Act

titlcd

"Miscellaneous" and in a section (S. 252) which relatcs to Dublic

officers of companies.

is followed bv various

provisions.

includinu sections concerninu public officers of trust cstates (S. 252A): aucnts and trustees (S. 2 5 4 ) : and persons receivinu or

controllinu monev for non-residents ( 9 .

2 5 5 ) .

By S. 252 everv companv carrvinu on busincss in Australia

dcrivinu in Australia income from propertv is reuuired to be represented bv a public officer unless an exemption is uranted bv the Commissioner (sub-s. 252(1)). "he Dublic officer must be a person

residinu In Australia (sub-S. 252(1)).

Havinu made an amointmcnt,

the officc must bc constantlv fillcd

(para. 252(l)(b)). If

a companv

fails t o make the

amointment within the time allowed.

fails to

keeD the office constantlv fillcd.

it is liablc to

a penaltv for cverv

dav durinu which the failure continues (para. 252(1)(d)).

13.

The public officer is answerable for the

doinu

of all such

thinus as are required to be

done bv the companv under the Act or the

reuulations and, in case of default. is liable to the same penalties (para. 252(1)(f) ) . The public officer is thus placed in a special

position

under

thc

Act.

Parauraph (f) is a recounition of

Parliament's perception

of the importance

of protectinu the Revenue

imposinu upon natural persons the performance of duties owed bv

companies. In this wav the

observance

companies

of their

responsibilities under the Act is more likelv

to be achicved.

An act

done bv the public officer of

a companv in his

representative capacitv

is reuarded as havinu been done bv the company

itself (para. 252(1)(u)).

A companv is not relieved from carrvinu out

the requirements

of the Act should thc public officer be absent. or

should there. for anv reason. bc

no public officer.

It is still

liable for penalties

for

non-compliance with thc

Act

(para.

252(1)(u)).

A notice sivcn to or

requisition made upon

the public

officer shall be deemed

to be qivcn to or made upon the companv (para.

252(1)(h)).

A companv is

iointl-z liable with

its public officcr in

respect of penalties imposcd upon him (para. 252(1)(1)).

A Public officer

is not. however. pcrsonallv liable for tax

payable bv

the companv.

Lean v. Br&

(supra) concerned the public

officer of a companv and

his duties undcr the Inmm-tTax (Mnnasement)

Act 1928

( N . S . W . ) and the Spscial Incomc

and

Waues Tax (Manaqement)

1933 (N.S.W.).

The relevant sections of those Acts (e. 78 of the

14.

former Act and 3ub-3.

15tl)

of the

latter Act)

assist in construinu

para. 252(1)(f) of thc

Act; but are of little.

if anv. assistance in

relation to parauraph ( I ) .

Notwithstandinu that it does not directlv

concern para. 252( 1) (f) of the

Act, Lc-a-c

v. B r a provides stronu

support

for the

view that that parauraph cannot be relied upon to

establish anv liability

of the public officcr for

pavment of tax for

which the company is itself liablc.

It was not suuuested bv the

Commissioner

in the present case that anv

such liabilitv could be

attracted under parauraph ( 1 ) .	In Lean v. B-.	Dixon J. said at pp.
336-337:

' I . . .

The imposition upon a servant or auent of a

companv of a pcrsonal linbilitv for

the tax owinu

bv the companv

is a thinu to bc accomplished onlv

bv a vcry clear expression

of lculslative

intention. The ucncral words 'doinu all such

thinus as are required to be done' ouuht not to

receive such a construction and. in

mv opinion.

were never intended to bear it.

Dcfault in doinu

such thinus is visited bv the same penalties

as are

imposed on the commnv and non pavment of incomc

tax is not an offence. This confirms the view that

the thinus required to be

done do not refer to

payment of tax but to thc activc responsibilitv

fallinu on taxpavers in connection with returns,

assessments and ancillarv matters."

The last Darauraph of sub-s. 252(1) is parauraph ( l ) .

It is

desiuned to cnsure the observancc bv companies and their public

officers of duties which the Act imposes upon them.

Thc comDanv mav

fail to appoint a public officcr or a public officer may? in some cases have little to do with thc dav-to-dav affairs of the comoany (for example. he may be a mcmbcr of an independent firm of accountants). The Commissloncr is uiven the powcr to sclect in a particular case. a director or an officer of the companv as the person who is more likely

15.

than the public officer

fulfil an obliuation which the Act imposes

upon the DUbllC officer or

who, because of

his position in or

association with

the companv. will probablv ensurc observance bv the

comDanv of its duties undcr the Act.

The Commissioner mav therefore

select that dircctor or officer

as the Derson to whom he should direct

a notice

to fulfil

some obliuation imposed upon the company or its

Dublic offlcer under the Act: tor example.

notice of

the kind

mentioncd in

para. 252(1)(h).

In that case the director or officer

upon whom the notice has been served becomes liable in resDect of

the

notice to the

same extent as the companv or

its public officer would

have been if the notice had

been served upon it or him as the case mav

be.

The fact that the director or officer

has

been served with the

notice does not in anv wav relleve the companv or its public officer

from the relevant liabilitv.

Farauraph ( 1 ) is not conflncd

to the uivinu of

notices to

directors or

officcrs of companies. It provides also

for scrvice of

process and takino proceedinus auainst

such Pcrsons. This enables the

Act to have real force and effect.

A statutorv provision that

notice mav be served

on a director or officer of a companv and that

h a s the

same lisbilitv

in resDect

of the notice

as thc company or

public officer would

have had if the notlce had been scrved

upon it or

him. mav not. bv

itself, be sufficient warrant for thc service of

process upon the director

or officer. or the takinu of proccedinus.

especiallv criminal proceedinus. auainst him

he fails

to comply

with its reauirements. The service of the notice upon the director or

officer ulves rlse to an obliuation on his part to complv with it.

16.

authorisinu the service of process and the takinu

of proceedinus

auainst the director or officer, the Act establishes

an effective

sanction to

ensure compliance bv that person

with

the notice bv

rendermu him liable

to Dunishment upon non-compliance. Where the

director or

officer is visited with a personal liabilitv to comDlv

with a notice authorised bv parauraph C l ) .

the question of Proceedinus

auainst him for breach of that liabilitv can arise. But parauraph (i) could not have been intended to render such a person criminallv liable for an act which it was never within his power to do, or, if within

hls DOWCK, he was not obliued to do.

There ID no inconsistency between parauraDhs (f) and (I).

said earlier that

the Dublic officer of a comDanv is in a soecial

position under the Act.

is Dlain from the lanuuaue

of paraUraDh

(f) and other DarauraphS of sub-D. 252(1) that Parliament Intended the

public officer to

be as liable for the companv’s acts or defaults as

the companv itself. The same intent cannot be discerned from parauraph ( i ) except where thc Act 1mDoses a liability upon a director

or officer to do somethinu which otherwise would be the resDonslbllity

of the company or the public officer. Generally.

if not always, that

liability will be created bv the service upon the director or officer of a notice rcquirinu performance of a particular duty. Farauraph ( 1 ) mav then operate to cnsure compliance bv the director or officer wlth

the obliuation thus cast upon

him bv renderinu him liable

to the

servlce of Drocess and thc institution	of proccedinus. lncludinu
criminal proceedinus.

17.

Paraaraph ( 1 ) thus construed fulfils

a useful role

In thc

Act, addina a

sensible and leaitimate weapon

the Commissioner's

armourv

ensure that companies and public officers observe their

statutory obliaations. Those who control or superintend the companv's

affairs know that

an obliaation imposed upon the companv bv the Act

mav be imposed upon them Dersonallv.

This mav act as a SDUK for them

to ensure that the companv itself carries out its dutics under the Act. This is, as I discern it, the purpose of parauraph (i).

Paraaravh ( 3 ) did not authorize the takinu

of proceedinus

auainst the appellant in this case. It was Fairlln's failure to remlt

to the Cornmissloner the

amount of tax Instalment deductions that

aave

rise to an offence

by Fairlin (sub-s. 221F(ll)). If the

appellant had

aided or abetted the commission	of the offence by Fairlin he would
have been liable to prosecution	as an aider and abettor pursuant to

S. 5

of the

Crimes

Act.

But the Act did not impose anv obliaation

upon the appellant to remit the tax instalment deductions to the

Commissioner.

Paraaraph

( 3 ) is not a source of any liabilitv of the

appellant for Fairlin's default.

It follows that the

appellant's mpcals must succeed and the

Commissioner's appeals must fail. The Commlssioner relled solelv on

S. 21B of the Crimes Act as the source of the liabilitv of the

appellant for pavment

the outstanding tax instalment deductions.

18.

Liabilitv under S . 21B is based on the antccedcnt conviction of the person concerned of an offence asainst a law of the Commonwealth (para. 21B(a)). As the appellant was not lawfullv convicted of anv

such offence he cannot be liable to make reparation under

S .

21B.

The appeals bp the

appellant

should

allowed, the

convictions recorded auainst him quashed and the penalties imposed in respect thereof set aside. The appeals bp the Commissioner should be dismissed.

I N T I i E

F Z 3 Z R A L

C O U R T

A U S T R A L I A

)

A U S T R A L I A N

C A P I T A L

T E R R I T O R Y

No.

ACT G 1 5 o f

1 9 8 4

D I S T R I C T	R E G I S T R Y	)
1

GENERAL

DIVISION

N O S .

ACT

GU-49

Q+

1 9 8 4

)

O N

A P P E A L

FROM

T H E

S U P R E M E

C O U R T

T H E

A U S T R A L I A N

C A P I T A L

T E R R I T O R Y

BETWEEN :

MALCOLM

DAVID

REYNOLDS

A p p e l l a n t

AND:

T H E

D E P U T Y

C O M M I S S I O N E R

OF	T A X A T I O N

R e s p o n d e n t

I N T H E

F E D E R A L

C O U R T

O F

A U S T R A L I A

J 1

A U S T R A L I A N

C A P I T A L

T E R R I T O R Y

Nos.

A C T

1 6 - 2 4

Of 1 9 8 4

R E G I S T R Y	D I S T R I C T	1
J

G E N E R A L

D I V I S I O N

A P P E A L

F R O M

T H E

S U P R E M E

C O U R T

O F

T H E

A U S T R A L I A N

C A P I T A L

T E R R I T O R Y

B E T W E E N :

T H E

D E P U T Y

C O M M I S S I O N E R

OF	T A X A T I O N

A p p e l l a n t

AND:

DAVID

MALCOLM

REYNOLDS

R e s p o n d e n t

CORAM:

B l a c k b u r n , L o c k h a r t

a n d

Neaves

J J .

D A T E :

S e p t e m b e r

1 9 8 4

REASONS

FOR

J U D G M E N T

Neaves J .

I n my

o p l n l o n

p a r a g r a p h

2 5 2 ( 1 ) ( ~ )

t h e

I n c o m e

T a x Assessment

Act

1 9 3 6 ,

l t s p r o p e r

c o n s t r u c t l o n ,

d l d

n o t

o p e r a t e

t o m a k e

D a v l d

Malcolm

R e y n o l d s ,

d l r e c t o r of

F a l r l l n

P t y .

L i m i t e d ,

c r l m l n a l l y

l i a b l e

f o r

t h e

d e f a u l t s

t h e c o m p a n y

f a l l l n g t o remlt

t o t h e C o m m l s s l o n e r

T a x a t i o n

a m o u n t s

d e d u c t e d

b y

w a y

t a x

l n s t a l m e n t

d e d u c t l o n s

f r o m

t h e

s a l a r y

a n d

wages

p a l d

t o ~ t s

e m p l o y e e s .

I am I n

a g r e e m e n t

w l t h

t h e

r e a s o n s

f o r r e a c h l n g t h a t

c o n c l u s l o n

t h a t

have

b e e n

g l v e n

b y

b r o t h e r

L o c k h a r t .

T h e

a p p e a l s

b y

D a v i d

Malcolm

R e y n o l d s

s h o u l d ,

t h e r e f o r e ,

b e

a l l o w e d

a n d

t h e

c o n v l c t l o n s

r e c o r d e d

a g a l n s t

h l m

a n d

t h e p e n a l t l e s

l m p o s e d

I n

r e s p e c t

t h e r e o f

s h o u l d

b e

s e t

a s l d e .

[1984] FCA 297

26 Sep 1984