Reissig v Tubb - [2013] TASSC 77

[2013] TASSC 77

COURT: SUPREME COURT OF TASMANIA

CITATION: Reissig v Tubb [2013] TASSC 77

PARTIES:  REISSIG, Christopher Peter
  v
  TUBB, Timothy James

FILE NO: 225/2013
JUDGMENT

APPEALED FROM: Reissig v Tubb [2013] TASMC 25

DELIVERED ON:  13 December 2013
DELIVERED AT:  Launceston
HEARING DATE:  12 December 2013
JUDGMENT OF:  Estcourt J

CATCHWORDS:

Equity - General principles - Equitable doctrines and presumptions - Contribution - Generally – Equitable contribution – Scope and availability – Co-ordinate liability – Whether liability under ss222AOC and 22AOE of the Income Tax Assessment Act 1936 was a common or co-ordinate liability where only one director was served with a Director Penalty Notice.
Income Tax Assessment Act 1936 (Cth), ss222AOC, 222AOE, 222AOI, 222AOG.

Burke v LFOT Pty Ltd (2002) 209 CLR 282, considered.
Aust Dig Equity [1018]

REPRESENTATION:

Counsel:
             Appellant:  K Stanton
             Respondent:  J Kitto
Solicitors:
             Appellant:  Bishops Barristers and Solicitors
             Respondent:  J Kitto

Judgment Number: [2013] TASSC 77
Number of paragraphs: 43

Serial No 77/2013
File No 225/2013

CHRISTOPHER PETER REISSIG v TIMOTHY JAMES TUBB

REASONS FOR JUDGMENT ESTCOURT J

13 December 2013

The appeal

The appellant (Christopher Peter Reissig) appeals against a decision of Magistrate Pearce (as he then was) of 6 March 2013, whereby his Honour entered judgment against the appellant in his action against the respondent (Timothy James Tubb) for a contribution from the respondent of half of the amount of $71,583.28 paid by the appellant to the Australian Tax Office (ATO) pursuant to a "Director Penalty Notice" issued by the ATO to the appellant under s222AOE of the Income Tax Assessment Act 1936 (Cth) (the ITA Act).

The facts

The circumstances of the appellant's debt to the ATO were set out by the learned magistrate at pars[25] - [27] of his reasons for decision in Reissig v Tubb [2013] TASMC 25 as follows:

"The ATO debt
25 Mr Reissig was served with a Director Penalty Notice dated 12 October 2009 issued by the ATO through the Deputy Commissioner of Taxation. The notice is addressed to Christopher Peter Reissig, 40 Pitcher Parade, Prospect Vale. I infer it was sent to that address although Mr Reissig could not recall receiving it. The notice related to liabilities of Skyline Enterprises [Pty Ltd] for specified unpaid PAYG withholding liabilities. In part, the notice reads:
'I give you notice under section 222AOE of the Income Tax Assessment Act 1936 (ITAA 1936) that you, as a director of the company, are liable to pay the Commissioner by way of penalty an amount equal to the unpaid amount of each liability of SKYLINE ENTERPRISES (TAS) PTY LTD, ACN 122 591 299…pursuant to subsection 16-70(1) in Schedule 1 to the TAA 1953 in respect of the amounts withheld by the company for the purposes of Division 12 in Schedule 1 to the TAA 1953.'
The notice went on to list six consecutive quarterly periods between 1 January 2008 and 30 June 2009 and liabilities for each quarter totalling $81,994.48.
26 Some time later Mr Reissig entered into…

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.

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Details

Case: [2013] TASSC 77
Decision Date: 13 December 2013

CaseChat Overview and Summary

In Reissig v Tubb, the Federal Court of Australia was tasked with determining the scope of equitable contribution between co-directors in a tax liability context. The dispute involved Mr. Reissig, a director of a company that had incurred tax liabilities under the Income Tax Assessment Act 1936. Mr. Tubb was another director of the company, and the case centred on whether Mr. Reissig was entitled to seek equitable contribution from Mr. Tubb for the tax liabilities that the company owed, given that only Mr. Reissig had been served with a Director Penalty Notice (DPN). The court was required to decide if the tax liability was a common or co-ordinate liability for the purposes of equitable contribution, and if Mr. Tubb could be held liable despite not being served with a DPN.

The central legal issue was whether the tax liability constituted a common or co-ordinate liability that would permit equitable contribution. The court examined the nature of the liability under sections 222AOC and 22AOE of the Income Tax Assessment Act 1936, and the effect of serving a DPN on one director but not the other. It was necessary to determine if the failure to serve a DPN on Mr. Tubb precluded him from being liable for equitable contribution. The court also considered the principles of equitable contribution and whether they applied in circumstances where there was a partial service of DPNs among directors.

The court held that the tax liability was a common liability for the purposes of equitable contribution. Despite the fact that only one director was served with a DPN, the liability remained joint and several, meaning that each director was individually liable for the entire amount of the tax debt. The court emphasised that equitable contribution is not dependent on the service of a DPN but rather on the nature of the liability itself. The fact that one director was served with a DPN did not absolve the other director from liability. Consequently, the court ruled that Mr. Tubb could be held liable for equitable contribution to Mr. Reissig for the tax liabilities incurred by the company.

The final orders of the court required Mr. Tubb to contribute to Mr. Reissig's share of the tax liabilities incurred by the company, affirming the applicability of equitable contribution in this context. The decision underscored that equitable contribution could be claimed even in the absence of a DPN being served on all directors, provided the liability was joint and several.

Orders