Lean v Brady - [1937] HCA 75

RESPONDENT. INFORMANT,

ON APPEAL FROM THE SUPREME COURT OF

NEW SOUTH WALES. Wages Tax-Company-Failure to pay-Public officer-Personal liability-Incon -

Tax (Management) Act 1928 (N.S.W.) (No. 35 of 1928), sec. 78-Special Income and Wages Tax (Management) Act 1933-1934 (N.S.W.) (No. 13 of 1933- SYDNEY,

No. 17 of 1934), secs. 15 (1), 16. Dec. 1, 15.

Under the Special Income and Wages Tax (Management) Act 1933-1934 (N.S.W.), the public officer of a company which is in default in paying to the Commissioner of Taxation wages tax collected by it from its employees is under neither a liability to fine or imprisonment for non-payment of the wages tax owing by the company, nor a civil liability enforceable against him person- ally for the amount owing.

Decision of the Supreme Court of New South Wales (Full Court): Ex parte Lean Re Brady, (1937) 54 W.N. (N.S.W.) 114, reversed.

APPEAL from the Supreme Court of New South Wales.

George Beattie Lean was the public officer of a company, having been duly appointed in accordance with sec. 78 of the Income Tax (Management) Act 1928 (N.S.W.). The company collected wages tax from its employees under sec. 16 (1) of the Special Income and Wages Tax (Management) Act 1933-1934 (N.S.W.), but did not pay the amount of such tax to the commissioner as required by sec.

58 CLR 329

16 1 (b) (ii). Lean was prosecuted summarily, on an information laid by William Malachy Brady, for having failed to pay such amount himself. He was convicted, and his conviction was upheld by the Supreme Court: Ex parte Lean: Re Brady (1).

He appealed, by special leave, to the High Court from this decision.

Snelling (with him Redapple), for the appellant. The question is whether, where a company fails to pay to the Commissioner of Taxation the wages tax collected by it from its employees, the public officer of the company is personally bound to pay the amount thereof under penalty of conviction. Sec. 15 (1) of the Special Income and Wages Tax (Management) Act 1933-1934 does not mean that the machinery provisions of the Income Tax (Management) Act 1928 apply to the special machinery provided by the 1933 Act. The latter machinery is alternative to and not cumulative upon the former. The marginal note to sec. 15 of the 1933 Act is misleading and is not part of the Act (In re Charles Baldwin 2 ). The employee is the person liable to the wages tax (secs. 16 (1) (b) (ii) and (iii), 16 (1) (c) of the 1933 Act) and the employer, who is responsible whether or not he collects the tax, is the collector (secs. 2 (3), 14, 16 (1) (a), 17 (4) ). The words "shall be applicable to the tax as if such taxes were the income tax under the principal Act" in sec. 15 (1) confer upon the commissioner rights only against non-employees (in the case of special income tax) and employees (in the case of wages tax).…

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 Lean v Brady

Details

AGLC: Lean v Brady [1937] HCA 75
Case: [1937] HCA 75
Decision Date: 15 December 1937

CaseChat Overview and Summary

The appellant, George Beattie Lean, was the public officer of a company that had collected wages tax from its employees but failed to pay it to the Commissioner of Taxation. Lean was prosecuted and convicted for this failure, a decision upheld by the Supreme Court of New South Wales. The appeal to the High Court concerned whether the public officer of a company could be held personally liable for the company's failure to pay wages tax.

The central legal issue before the High Court was the interpretation of sections 15 and 78 of the relevant New South Wales tax legislation. Specifically, the court had to determine whether the provisions of the Income Tax (Management) Act 1928, including those relating to the personal liability of a public officer, were intended to apply to the collection and payment of wages tax under the Special Income and Wages Tax (Management) Act 1933-1934. The question was whether the public officer could be subjected to penalties or civil liability for the company's default in paying the collected wages tax.

The High Court, in allowing the appeal, reasoned that the Special Income and Wages Tax (Management) Act 1933-1934 did not impose a personal liability on the public officer for the company's failure to pay wages tax. While section 15(1) of the 1933 Act incorporated provisions of the 1928 Act, it did so only to the extent that they were applicable and could be applied to the wages tax as if it were income tax. The court found that section 78(e) of the 1928 Act, which made public officers liable for "all such things as are required to be done by or on behalf of the company," did not extend to imposing a personal obligation to pay the company's tax debt or expose the public officer to penalties for non-payment. The judges emphasised that any such personal liability would require clearer legislative intent.

Consequently, the High Court ordered that the appeal be allowed, the decision of the Supreme Court be discharged, and the rule nisi for statutory prohibition be made absolute. This meant the conviction of the appellant was quashed, and he was not personally liable for the company's unpaid wages tax.

Orders