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Sands v Deputy Commissioner of Taxation

 

[2011] QCA 292

 

SUPREME COURT OF QUEENSLAND

PARTIES:

FILE NO/S:

SC No 9887 of 2005

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

DELIVERED ON:

18 October 2011

DELIVERED AT:

Brisbane

HEARING DATE:

11 October 2011

JUDGES:

Muir and Fraser JJA and Margaret Wilson AJA

Separate reasons for judgment of each member of the Court, each concurring as to the order made

ORDER:

Appeal dismissed with costs

CATCHWORDS:

TAXES AND DUTIES – INCOME TAX AND RELATED LEGISLATION – PENAL PROVISIONS AND PROSECUTIONS – PENALTIES GENERALLY AND THEIR ENFORCEMENT – where the respondent obtained a judgment in the trial division for recovery of a director’s penalty from the appellant pursuant to s 222AOC of the Income Tax Assessment Act 1936 (Cth) – where the evidence supporting the claim consisted of two affidavits and an evidentiary certificate – where the appellant declined to cross-examine the deponents and did not adduce evidence – where the appellant argued that the respondent’s letter enclosing the penalty notice did not comply with legislation – where the appellant contended he did not receive the penalty notice – where the appellant argued that the respondent did not believe in the validity of the claim, did not adequately respond to correspondence, and withheld monies from him – where the appellant argued that there was a failure to determine his English language capacity, that he was not given adequate notice of the respondent’s case at trial, and that he was given no advice about his rights or provided with legal assistance – whether the appeal should be allowed

Income Tax Assessment Act 1936 (Cth), s 222AOC, s 222AOE, s 222AOF

Taxation Administration Act 1953 (Cth), s 255-45 (Sch 1)

Soong v Deputy Commissioner of Taxation (2011) 278 ALR 538; [2011] NSWCA 26, cited

COUNSEL:

The appellant appeared on his own behalf

P A Looney for the respondent

SOLICITORS:

The appellant appeared on his own behalf

Australian Taxation Office Legal for the respondent

[1] MUIR JA: I agree that the appeal should be dismissed with costs for the reasons given by Fraser JA.

[2]  FRASER JA: The appellant has appealed against a judgment given in the trial division upon the respondent’s claim pursuant to s 222AOC of the Income Tax Assessment Act 1936 (Cth) for the recovery of a director’s penalty in relation to tax withheld but not remitted to the Commissioner by Sands Security International Pty Ltd, a company of which the appellant was a director.

[3] The appellant represented himself.  The respondent’s evidence was contained in affidavits by two officers employed in the Australian Tax Office (Sharon Elyward and Helena Irvine) and in an evidentiary certificate under s 255-45 of Sch 1 of the Taxation Administration Act 1953 (Cth).  The appellant did not cross-examine either witness, despite the trial judge having repeatedly informed the appellant of his right to do so.  When the trial judge asked the appellant for a third time whether he wished to cross-examine, the appellant responded that it would be a waste of time.  The appellant also did not take advantage of the opportunity afforded to him of adducing evidence.

[4] As the trial judge held, the evidentiary certificate tendered by the respondent provided prima facie evidence of the facts stated in it.  The certificate was dated 9 May 2011 (the day of the trial).  It stated that the appellant had a tax related liability by way of penalty under s 222AOC of the Income Tax Assessment Act 1936 and that a notice under s 222AOE of the Income Tax Assessment Act 1936, which issued on 26 July 2002, was served on the appellant under s 222AOF of the Income Tax Assessment Act 1936 by sending it on 26 July 2002 as a letter by ordinary post to his residential address (which was stated in the certificate).  The certificate described the appellant’s liability as “[a]n amount equal to the unpaid amount of each liability of Sands Security International Pty Ltd ACN 073 896 278 (‘the company’) pursuant to subsection 16-70(1) of Schedule 1 of the Taxation Administration Act 1953 (Cth) (‘TAA53’) in respect of amounts withheld by the company for the purposes of Division 12 of Schedule 1 of the TAA53”.  Details of those amounts (14 in all, in relation to withholding periods between 1 March 2001 and 30 April 2002) were set out in a table.  The certificate identified the total unpaid amount of the company’s liability as $261,588.51.  It stated that $241,181.61 remained unpaid and was at 9 May 2011 due and payable by the appellant to the Commonwealth of Australia.

[5] The trial judge analysed the evidence and the applicable statutory provisions and concluded that the respondent had proved the claim against the appellant.  The appellant did not attempt to identify any error in that analysis.  The grounds of appeal stated in the appellant’s notice of appeal were instead put in the following vague terms:

“The DCT was in error and misrepresented it’s original claim as well as failing to respond to written demands and illegally withheld monies owed to me.

Additionally my rights under 3 acts,

Australian Human Rights Commission Act 1986

Bill of Exchange Act 1909

Commonwealth of Australia Constitution Act were unable to be admissible evidence due to some gravely concerning events involving a Commonwealth officer and JP which heavily prejudiced my case, especially in preparation and final lodgement and was further exacerbated by serious ill health that did not allow me to have legal representation.”

[6] It is not easy to ascertain what the appellant intended to convey by that statement, but I will discuss each of the points which he developed in his written and oral submissions.

[7] It is convenient to commence with the “compliance argument” which the appellant stressed in his oral submissions.  The appellant ultimately acknowledged that this argument was not within his notice of appeal or his written outline of submissions.  Nor was it pleaded or advanced at the trial.  This new argument was based upon a misconstruction of the letter to the appellant which enclosed the penalty notice.  In conformity with the legislation, the letter advised the appellant that he had become liable to pay a penalty equal to the amount unpaid by the company when the company failed to remit the amounts set out in the notice.  The letter continued as follows:

“Action to recover the penalty from you will be taken without further notice unless, after fourteen days from the date the enclosed notice is given to you:-

(a)the company’s liability has been discharged; or

(b)an agreement under section 222ALA of the ITAA 1936 to pay the liability is in force; or

(c)the company is under administration within the meaning of the Corporations Act 2001; or

(d)the company is being wound up.

The penalty will be remitted if any one of these options is adopted within 14 days from the date the notice was given to you.

You should keep in mind that you will continue to be liable to a penalty if any one of the options has not been adopted at the end of 14 days after you are given the notice (that is, any agreement would need to be signed before the expiration of the 14 days).”

[8] That letter accurately summarised the effect of s222AOE of the Income Tax Assessment Act 1936.  The appellant argued, however, that the first paragraph conveyed that the penalty would be remitted if (with reference to subparagraph (d)) the company was wound up at any time “after” the expiry of 14 days from the date of the enclosed penalty notice.  In addition to the consideration that this would defeat the purpose of the statutory scheme, the argument was flawed because it construed the word “after” in isolation from its immediate context.  The second and third quoted paragraphs of the letter put its meaning beyond doubt.  The penalty for which the appellant was liable would only be remitted as a result of the company being wound up if (in the terms used in the letter and in s222AOE of the Income Tax Assessment Act 1936) the company “is” being wound up at a specified point of time, namely, “at the end of 14 days” after the notice was given.  In short, the penalty was not remitted because the company was not being wound up at the end of the 14 day period and nor was there then any other event of the kind described in subparagraph (a), (b), or (c).

[9] There was no evidence to support the appellant’s further contention that he did not receive the penalty notice.  As the trial judge observed, diary notes exhibited to Ms Irvine’s affidavit indicated that, within days after the despatch by ordinary post of the penalty notice to the appellant’s address, the accountant acting for both the company and the appellant was orally advised of the fact that the penalty notice had been despatched to the appellant.  In any event, s 222AOF of the Income Tax Assessment Act 1936 permitted the respondent to serve the penalty notice by post.[1]  The evidence proved that the penalty notice was duly served in accordance with that provision.  The appellant did not submit to the contrary. 

[10]  The appellant’s contention that the respondent did not believe in the validity of the claim was inconsistent with the evidence the respondent adduced in support of the claim.  There was no evidence to support the appellant’s contention that the respondent did not adequately respond to correspondence.  The appellant’s contention that the respondent failed to prove the case was put only in those general terms and was inconsistent with the effect given by s 255-45 of Sch 1 of the Taxation Administration Act 1953 to the certificate in evidence at the trial.

[11]  The appellant also contended that there was a failure to determine his English language capacity, but at the hearing of the appeal and (as the transcript suggests) at the trial, the appellant appeared to understand English and to speak it fluently.  The appellant’s contention that he was not given adequate notice of the respondent’s case at the trial was inconsistent with the facts that the respondent’s claim and statement of claim were filed on 22 November 2005, the respondent’s affidavits were filed on 21 March 2011, and the trial was conducted on 9 May 2011.

[12]  As to the appellant’s contention that he was given no advice about his rights or provided with legal assistance, when the trial came on for hearing on 25 February 2011, the trial judge suggested to the appellant that he should seek legal advice and obtain legal representation for the adjourned hearing.  It is unfortunate if the appellant attempted to and was unable to obtain that assistance (as to which there was no evidence), but there is no ground for thinking that the result of the trial would have been different if the appellant had been legally represented. 

[13]  The appellant contended that the respondent withheld monies from him.  The relevant money was not identified, but the respondent submitted that this contention must concern a sum of $43,266.01 paid on account of the company’s superannuation liability.  As to that money, Ms Irvine deposed that: whilst the company at one time had a credit balance in that amount in its superannuation account, at that time the company’s 2001 superannuation return had not been lodged; there was subsequently a shortfall in that account for the 2001 year; and none of the $43,266.01 remained available as a credit against the penalty for which judgment was given against the appellant. 

[14]  The respondent’s claim was made pursuant to Commonwealth legislation by which the appellant was legally bound.  There was no arguable merit in the appellant’s arguments based upon what he contended were “[i]nfluential precedents on human rights over the last 5000 years”.

[15]  Finally, I should mention that the appellant told the Court that he suffered from Alzheimer’s disease and dementia.  If he does have that misfortune, it was not apparent that the diseases rendered the appellant incapable of prosecuting his appeal.

Proposed Order

[16]  The appeal should be dismissed with costs.

[17]  MARGARET WILSON AJA: I agree with the order proposed by Fraser JA and with his Honour's reasons for judgment.

Footnotes

[1] See Soong v Deputy Commissioner of Taxation (2011) 278 ALR 538.

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Editorial Notes

  • Published Case Name:

    Sands v Deputy Commissioner of Taxation

  • Shortened Case Name:

    Sands v Deputy Commissioner of Taxation

  • MNC:

    [2011] QCA 292

  • Court:

    QCA

  • Judge(s):

    Muir JA, Fraser JA, M Wilson AJA

  • Date:

    18 Oct 2011

  • White Star Case:

    Yes

Litigation History

Event Citation or File Date Notes
Primary Judgment - - -
Appeal Determined (QCA) [2011] QCA 292 18 Oct 2011 -

Appeal Status

{solid} Appeal Determined (QCA)