Redmond v Deputy Commissioner of Taxation
[2015] QCA 172
•18 September 2015
SUPREME COURT OF QUEENSLAND
CITATION:
Redmond v Deputy Commissioner of Taxation [2015] QCA 172
PARTIES:
WILLIAM HANRON REDMOND
(applicant)
v
DEPUTY COMMISSIONER OF TAXATION
(respondent)FILE NO/S:
Appeal No 12119 of 2014
DC No 1270 of 2014DIVISION:
Court of Appeal
PROCEEDING:
Application for Extension of Time/General Civil Appeal
ORIGINATING COURT:
District Court at Brisbane – Unreported, 19 November 2014DELIVERED ON:
18 September 2015
DELIVERED AT:
Brisbane
HEARING DATE:
15 June 2015
JUDGES:
Holmes CJ and Philippides JA and Burns J
Separate reasons for judgment of each member of the Court, each concurring as to the orders madeORDERS:
1. The application for leave to appeal is refused.
2. The applicant is to pay the respondent’s costs of the application.
CATCHWORDS:
TAXES AND DUTIES – ADMINISTRATION OF FEDERAL TAX LEGISLATION – PENALTIES, OFFENCES AND PROSECUTIONS – PARTICULAR PENALTIES AND OFFENCES – FAILURE TO COMPLY WITH REQUIREMENT UNDER TAXATION LAW – where the respondent was granted summary judgment against the applicant, the director of a company, on claims for the payment of director’s penalties owing under the Taxation Administration Act 1953 – where the applicant argued that the primary judge erred in finding that the director penalty notice sent to him conformed with the requirements of s 269-25 of Schedule 1 to the Taxation Administration Act 1953 – whether the primary judge erred – whether leave to appeal should be granted
EVIDENCE – PROOF – FACILITATING PROOF – MATTERS RELATING TO POST AND COMMUNICATIONS – where the applicant argued that the primary judge erred in finding that the director penalty notice was given on the date it bore – where an employee of the respondent deposed as to the postage of the director penalty notice on that date, as well as the general system of posting notices – where the primary judge found that the employee’s evidence gave rise to an inference that the notice was collected by the courier and posted on that date – whether the primary judge erred – whether leave to appeal should be granted
Income Tax Assessment Act 1936 (Cth), s 222AOE
Taxation Administration Act 1953 (Cth), Schedule 1 Division 269
Uniform Civil Procedure Rules 1999 (Qld), s 292Deputy Commissioner of Taxation v Gruber (1998) 43 NSWLR 271; [1998] NSWSC 64, cited
Deputy Commissioner of Taxation v Woodhams (2000) 199 CLR 370; [2000] HCA 10, cited
Elliott v The Queen (2007) 234 CLR 38; [2007] HCA 51, applied
Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71; [1988] HCA 34, citedCOUNSEL:
C D Coulsen for the applicant
V G Brennan for the respondentSOLICITORS:
Redmond & Redmond for the applicant
ATO Dispute Resolution for the respondent
HOLMES CJ: The applicant seeks leave to appeal from the decision of a District Court judge granting summary judgment on claims by the respondent Deputy Commissioner of Taxation for director penalties under Division 269 of Schedule 1 to the Taxation Administration Act 1953. The applicant was the director of a company, Trading Co Pty Ltd, which between 1 January 2010 and 31 December 2011 failed to remit deductions withheld from employee wages. The learned judge had concluded, for the purposes of r 292 of the Uniform Civil Procedure Rules 1999, that the applicant had no real prospect of success in defending the respondent’s claim and that there was no need for a trial.
The applicant’s proposed grounds of appeal are, first, that the primary judge erred in finding that the director penalty notice sent to him conformed with the requirements of s 269-25 of Schedule 1 to the Taxation Administration Act and, second, that his Honour erred in finding that the notice was given on the date that it bore. The applicant contends that the proposed appeal raises points of public importance justifying the grant of leave because it may be expected that the Commissioner commonly gives director penalty notices in the form used in this case and seeks to prove the giving of the notice by way of a standard form affidavit.
Director liability for unmet company obligations
Division 269 of Schedule 1 of the Taxation Administration Act is concerned with the duties of company directors to ensure that the relevant company meets its obligation to pay withheld amounts to the Commissioner or is promptly placed into voluntary administration or liquidation; those duties are enforced by penalties.[1] Section 269-15(1) requires a director to cause the company to comply with its obligation, while s 269-15(2) sets out circumstances which will end the director’s obligation:
[1]Section 269-1.
“(2)The directors of the company (from time to time) continue to be under their obligation until:
(a)the company complies with its obligation; or
(b)an administrator of the company is appointed under section 436A, 436B or 436C of the Corporations Act2001; or
(c)the company begins to be wound up (within the meaning of that Act).”
Section 269-20(1) renders a director remaining under such an obligation at the end of the “due day” (the day on which the company is obliged to make payment) liable to pay a penalty equal to the amount unpaid by the company. Section 269-30(1) provides for a remission of the penalty:
“(1)Subject to subsection (2), a penalty of yours under this Division is remitted if the directors of the company stop being under the relevant obligation under section 269-15:
(a)before the Commissioner gives you notice of the penalty under section 269-25; or
(b)within 21 days after the Commissioner gives you notice of the penalty under that section.”
but the following sub-section makes remission inapplicable in certain circumstances:
“(2)The following table has effect:
When appointing administrator or winding up company does not affect penalty
Item Column 1 Column 2 Column 3 If the Company’s obligation is to pay to the Commissioner, on or before the due day… and because of paragraph 269-15(2)(b) or (c) (an administrator is appointed or the company begins to be wound up), the directors stop being under the relevant obligation after the last day of the 3 months after… subsection(1) does not apply… 1 An amount in accordance with Subdivision 16-B (obligation to pay withheld amounts to the Commissioner), the due day, to the extent the company does not, on or before the last day mentioned in column 2, notify the Commissioner under section 16-150 of the amount the company is obliged to pay.
The director penalty notice provision
Before bringing proceedings to recover a director penalty, the Commissioner must give a director penalty notice under s 269-25 of Schedule 1. Sub-sections (2) and (4) of that provision deal, respectively, with what must be in the notice and when it is taken to have been given:
“Content of notice
(2)The notice must:
(a)set out what the Commissioner thinks is the unpaid amount of the company’s liability under its obligation; and
(b)state that you are liable to pay to the Commissioner, by way of penalty, an amount equal to that unpaid amount because of an obligation you have or had under this Division; and
(c)explain the main circumstances in which the penalty will be remitted.
….
When notice is given
(4)Despite section 29 of the Acts Interpretation Act1901, a notice under subsection (1) is taken to be given at the time the Commissioner leaves or posts it.”
The respondent’s letter and notice
The respondent Deputy Commissioner of Taxation relied on a notice dated 20 March 2013. It was sent with an accompanying letter which made this point about remission of penalty, resulting from the application of s 269-30(2):
“Please note, as these liabilities remained unreported for three months from the due date, you are unable to achieve remission of these penalties through the company entering into (or having entered into) voluntary administration or liquidation.”
It was conceded here that the statement was correct: the company had not notified the Commissioner of the amount it was obliged to pay within the three months of the “due day”, so that voluntary administration or liquidation would not result in remission of penalties.
The notice itself included the following statement:
“The penalty in respect of each unpaid amount of the company’s liability as detailed in the above table will be remitted if, at the end of 21 days after the date on this notice the company’s liability in respect of that unpaid amount has been discharged.”
The giving of the notice
At the hearing, the respondent had relied on the affidavit of an employee about the system of posting director penalty notices. After describing the placing of the director penalty notice and covering letter in a sealed and stamped envelope, the deponent set out the following steps:
“2.
…
(c)The officer then puts the letter into a locked box at the 9th floor mail station at 235 Stanley Street, Townsville;
(d)The officer then completes an electronic log (“e-log") recording the name and address of the recipient of the DPN and the time at which the envelope was put into the locked box;
(e)A contractor who is employed in the 9th floor mail station collects the letters from the locked box each afternoon and completes an entry for each envelope on the corresponding e-log, recording the time at which it was taken from the locked box, and e-mails a copy of the completed e-log to the officer who placed the envelope in the locked box;
(f)The contractor then places the envelopes from the locked box into a tub with other outgoing mail for collection by Australia Post, and places a sign on top of the locked box to indicate that the mail has been cleared for the day;
(g)Each afternoon after the locked box has been emptied, a courier employed by Australia Post collects all the mail from the tub and delivers the mail to an Australia Post mail centre, at which time the mail enters the normal Australia Post mail process and is delivered to the address on the envelope.”
The deponent went on to say that on 20 March 2013, she had placed a sealed and stamped envelope containing the director penalty notice in this case in the locked box, and completed the “e-log” with the relevant details including the date and time (10.08 am) at which it was placed in the box. She deposed as to what happened thereafter:
“7.At 10.49am on 20 March 2013 an Australia Post contractor took the envelope from the locked box and completed the e-log I had commenced, on which the contractor recorded having cleared the envelope, from the locked box at 10.49am on 20 March 2013. That contractor e-mailed me a copy of the completed e-log.”
She concluded on the subject by saying:
“To the best of my knowledge, the mail was collected by an Australia Post courier on the afternoon of 20 March 2013, and that courier delivered the mail to an Australia Post mail processing centre, where the DPN was delivered to the Defendant by ordinary pre-paid post.”
The trial judge found that while there was no direct evidence of the envelope’s collection by Australia Post, the evidence of its being placed in the locked box and the entry in the electronic log, which was admissible as a business record, gave rise to an inference that the notice and its accompanying letter were, in accordance with the usual system, removed from the locked box, placed in the Australia Post tub and collected by the Australia Post courier on the same day. Once the courier collected the mail from the tub, it was posted.
The proposed ground as to the validity of the notice
The applicant relied on the decision of the High Court in Deputy Commissioner of Taxation v Woodhams[2] for the proposition that a notice will be invalid unless it satisfies the statutory requirements to set out information, the content of those requirements being determined by what information is necessary to fulfil the statutory purpose to be served by the notice.[3] The notice will also be invalid if it could reasonably mislead its recipient as to what is necessary to comply with it.[4]
[2](2000) 199 CLR 370.
[3]Deputy Commissioner of Taxation v Gruber (1998) 43 NSWLR 271 at 276; Woodhams at 384.
[4]Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 at 79; Woodhams at 385.
The applicant argued that the notice was invalid because of two defects in the statement it made as to remission of penalty. His first contention was that the reference to remission of penalty in the event of the company’s discharge of its liability within 21 days after the date on the notice (20 March 2013) was wrong, because the time limit for remission set by s 269-30(1)(b) was one of 21 days after notice was given, not the date of the notice itself. Even if the notice in this case had been given on 20 March 2013, it did not meet the requirements of the Act, because it was necessary to frame the relevant period in the terms of s 269-30(1)(b). A notice in the form given was capable of misleading its recipient; it was essential to validity that the director be told that the relevant period was 21 days from the giving of the notice.
The applicant’s second, related point was not taken below; it was that the notice did not refer to s 269-15(2), which sets out the main circumstances in which penalty will be remitted. Instead, it referred to discharge of the company’s liability, an expression not used in the Act, and contained no reference to the company’s compliance with its obligation, appointment of an administrator or winding up. The particular circumstances of the director to whom the notice was addressed were irrelevant; even if some of the three options were not applicable, any notice which failed to identify them was a nullity.
The proposed ground as to the giving of the notice
The applicant’s second proposed ground of appeal was that the primary judge had erred in finding that the notice was given on the date that it bore. The applicant said that the evidence was not sufficient to permit an inference of collection by Australia Post, nor was there any evidence of how regularly Australia Post collected the contents of the tub. If the letter containing the notice had not been posted on 20 March 2013, the explanation that the penalty would be remitted if the company’s directors ceased being under the relevant s 269-15 obligations within 21 days of the notice’s date would not be accurate.
Discussion
It is convenient to deal with the question of leave by reference to the prospects of success of the proposed appeal and, in that regard, to consider, first, the ground which concerns the alleged error in the trial judge’s finding about when the notice was given. The affidavit from the Tax Office deponent explaining the posting system is not as clear as it might be regarding the point at which mail leaves the Commissioner’s possession and passes into Australia Post’s, principally because the status of the “9th floor mail station” and the locked box which it contains is unexplained. Reading paragraph 2(e) of the affidavit in combination with paragraph 7, one infers that since the “contractor…employed in the 9th floor mail station” is an Australia Post contractor, the mail station is one operated by Australia Post. If that is the case, the notice is properly to be regarded as posted when it was placed in the locked box.
If that is not the case, then it seems to me the notice was posted when it was placed, on the Commissioner’s behalf, in the tub for collection by Australia Post. At that stage, nothing more was required of the Commissioner, and the item had entered the Australia Post delivery system by being moved by one Australia Post contractor from the locked box to the tub for collection by another Australia Post employee. That being so, it was not really necessary that any inference be drawn, because both of those points of transition were documented in the Commissioner’s e-log. If it were necessary to draw any inference, that could properly be done on the basis of the system described by the Taxation Office deponent. In Elliott v The Queen,[5] the High Court accepted as correct this proposition from Cross on Evidence:
“To prove an act has been done, it is admissible to prove any general course of business or office, whether public or private, according to which it would ordinarily have been done, there being a probability that the general course will be followed in the particular case.”[6]
The trial judge did not err in finding that the notice had been posted on 20 March.
[5](2007) 234 CLR 38 at 47.
[6]Heydon, J D, Cross on Evidence, 10th ed, LexisNexis, 2014 at [1130].
The complaint concerning the notice’s reference to the company’s discharge of its liability without allusion to other avenues of compliance raised in s 269-15(2) – administration or winding up – is, in my view, without substance. Section 269-25 does not in terms require any reference to s 269-15(2), but mandates the explanation of the circumstances in which the penalty will be remitted. Plainly enough, the purpose of the notice is to inform the director of the courses available to him or her to achieve remission of the penalty. In the present case, that purpose would not have been achieved by raising illusory possibilities; which, as was conceded, winding up and administration were, by virtue of the effect of s 269-30(2). It does not seem to me that referring to the discharge of the company’s liability was misleading; that was, in fact, the only way in which the company could comply with its obligation to remit the amounts withheld.
It is of some significance that, unlike s 222AOE of the Income Tax Assessment Act 1936 (Cth), with which the decision in Woodhams was concerned, s 269-25 does not require the notice to refer to the timeframe within which steps must be taken in order to achieve remission of penalty. Section 222AOE required that the notice state that the penalty would be remitted if various things were done “at the end of 14 days after the notice is given”; s 269-25 does not contain any equivalent requirement that the Commissioner make any statement about remission of penalty if the company’s liability is discharged within 21 days of the giving of notice.
However, it may be accepted that in order to “explain the main circumstances in which the penalty will be remitted” some reference to the time period within which steps need to be taken is appropriate. It is not, however, necessary, in order to achieve the statutory purpose of explaining to a director how remission of penalty can be achieved, to recite the terms of s 269-30(1)(b). To tell the director that he or she had 21 days after being given notice of the penalty to take necessary steps would be of singularly little use unless the date on which notice was given could be identified. Accepting that the notice was given on 20 March, the statement in the Deputy Commissioner’s notice was accurate as to the relevant period for remission of penalty, being 21 days from the date of the notice. It correctly informed the director of the period within which he had to act. It was not misleading, nor did it lack necessary information in this regard.
Conclusion
The applicant has not established that he has any compelling argument as to the validity of the notice or any real prospect of showing that the trial judge erred in his finding as to its posting. Nor correspondingly, can he demonstrate error in the decision to grant summary judgment. I would refuse leave to appeal. The applicant should pay the respondent’s costs of the application.
PHILIPPIDES JA: I agree with the reasons for judgment of Holmes CJ and the orders proposed.
BURNS J: I have had the considerable advantage of reading the reasons of the Chief Justice, with which I agree. I also agree that leave to appeal should be refused.
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