Deputy Commissioner of Taxation v Gleeson [2010] QSC 260

1-1 SUPREME COURT OF QUEENSLAND CITATION: Deputy Commissioner of Taxation v Gleeson [2010] QSC 260 PARTIES: DEPUTY COMMISSIONER OF TAXATION (Plaintiff) v ADAM BERNARD GLEESON (Defendant) FILE NO/S: BS 2492 of 2009 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 21 May 2010 DELIVERED AT: Brisbane HEARING DATE: 21 May 2010 JUDGE: McMurdo J ORDER: 1. There will be judgment for the plaintiff against the defendant in the sum of $289,978.48. 2. The defendant is to pay the plaintiff’s costs of and incidental to the proceedings. CATCHWORDS: PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – SUMMARY JUDGMENT – where the defendant is a director of a company which has outstanding liabilities in respect of PAYG tax and superannuation contributions – where a person who is a director of a company at a time corresponding with the non-remission of group tax is liable under s 222AOC of the Income Tax Assessment Act 1936 (Cth) to pay to the plaintiff an amount equal to the unpaid amount of the company’s liability – whether the plaintiff is entitled to summary judgment against the defendant for the amount of the company’s outstanding liabilities. EVIDENCE – BURDEN OF PROOF, PRESUMPTIONS, AND WEIGHT AND SUFFICIENTY OF EVIDENCE – STATUTORY PROVISIONS AS TO PRIMA FACIE EVIDENCE – OTHER PROVISIONS – where the plaintiff brought proceedings against the defendant in his capacity as a director of a company which has outstanding liabilities in respect of PAYG tax and superannuation contributions – where the plaintiff produced a certificate made under s 255- -- 1 of 9 -- 1-2 ORDER 1 10 20 30 40 50 60 45 of Schedule 1 of the Taxation Administration Act 1953 (Cth) which is prima facie evidence of the plaintiff’s claim – where the defendant has the onus to prove that he is not liable as alleged by the plaintiff but has not attempted to discharge that onus – whether there should be a trial to determine the amount of the unremitted tax and contributions, if any. PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – SUMMARY JUDGMENT – where the plaintiff applied for summary judgment against the defendant – where the defendant argues that it is an essential pre-requisite of such an application that it be made promptly – where more than 12 months have elapsed since the first opportunity to make this application – whether the application is precluded by the alleged serious delay by the plaintiff. ESTOPPEL – FORMER ADJUDICATION AND MATTERS OF RECORD OR QUASI OF RECORD – FORMER ADJUDICATION – JUDMENT INTER PARTES – RES JUDICATA – GENERAL MATTERS – where the plaintiff brought proceedings against the defendant in his capacity as a director of a company which has outstanding liabilities in respect of PAYG tax and superannuation contributions – where there were previously proceedings between the plaintiff and the company under which the company successfully applied to set aside a statutory demand in respect of this unremitted tax – whether some res judicata resulted from the order in those former proceedings. EQUITY – GENERAL PRINCIPLES – REMEDIES AND PROCEDURE – RATIFICATION, AFFIRMATION AND WAIVER – where the plaintiff applied for summary judgment against the defendant – where more than 12 months have elapsed since the first opportunity to make this application – whether the alleged delay by the plaintiff was so serious as to constitute an effective waiver by the plaintiff of her cause of action. Corporations Act 2001 (Cth) ss 459H, 459J Income Tax Assessment Act 1936 (Cth) s 222AOC Tax Administration Act 1953 (Cth) Sch 1, s 255-45 Uniform Civil Procedure Rules 1999 (Qld) r 292 Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473 COUNSEL: N Haskic (sol) for the plaintiff T Somers for the defendant SOLICITORS: Australian Taxation Office for the plaintiff Griffiths Parry Lawyers for the defendant -- 2 of 9 -- 1-3 ORDER 1 10 20 30 40 50 60 HIS HONOUR: The plaintiff applies for summary judgment under Rule 292 of the UCPR. The plaintiff's case is that the defendant is liable as a director of a company which has outstanding liabilities in respect of PAYG tax and superannuation contributions. By section 222AOC of the Income Tax Assessment Act 1936 (Cth) each person who is a director of a company at a time corresponding with the non-remission of group tax is liable to pay to the Commissioner by way of penalty an amount equal to the unpaid amount of the company's liability. The Commissioner has brought the proceedings upon the evidentiary basis of Business Activity Statements lodged by the company and in particular upon the relevant amounts for group tax and superannuation which were disclosed by those documents. The defendant argues that there should be a trial to determine what in truth was the amount, if any, of the unremitted tax and contributions. In that respect there is evidence that during the relevant period the company's premises were damaged by a fire and for some time there was some cessation or reduction of the company's business which affected the extent of the wages paid and which would have affected the extent of the company's liability to remit group tax. In effect the defendant wishes to argue that the business activity statements lodged by the company, of which he was a -- 3 of 9 -- 1-4 ORDER 1 10 20 30 40 50 60 director, were in error due to errors by the company's accounting staff. The evidence for the applicant includes a certificate made under section 255-45 of Schedule 1 of the Taxation Administration Act 1953 (Cth). According to that certificate there is prima facie evidence of the plaintiff's claim. This means that there is an onus which moves to the defendant to prove that he is not liable as the plaintiff has alleged. The defendant has not attempted to discharge that onus by evidence of, for example, the actual wages paid during the relevant period. The explanation for the defendant's failure to do that, so it was argued for the defendant, was that the plaintiff had failed to properly particularise her case and had failed to formally disclose documents. By that counsel for the defendant referred to the fact that although, as he ultimately conceded, all of the relevant wages records for the company had been provided by the plaintiff to the defendant's solicitors last October, they had not been provided within a formal list of documents. For present purposes that is immaterial. The point is that the wages records have now been in the possession of the defendant and available for his inspection for more than six months. Remarkably, as I was told by the defendant's counsel, those records are yet to be perused and analysed on the defendant's side. The explanation for that is said to be that it is up to the plaintiff first to -- 4 of 9 -- 1-5 ORDER 1 10 20 30 40 50 60 particularise her case. Now, within the statement of claim the plaintiff has particularised the unremitted amounts, month by month, commencing in July 2003 going through to February 2006. In my view, the case is not deficient in respect of its particulars. The defendant's point is that it is incumbent upon the plaintiff to particularise her case by reference to the wages records, for example, to state the names of relevant employees and the amounts of unremitted tax attributable to each. In my view, they are matters for evidence. Overall there is no satisfactory explanation for why the defendant, or those assisting him with his case, have not analysed the documents which were provided last October and, in particular, why they have not investigated whether the wages records of the company correspond with the amounts disclosed by the Business Activity Statements lodged by the company. It is not a satisfactory answer for the defendant to say that he may be able to discharge the onus which is upon him, having regard to the operation of section 255-45, once he has made further inquiries if he has failed to make those inquiries. The application for judgment is resisted not only upon that basis but upon several other bases which must now be discussed. The first of them is that there is said to be a fundamental flaw in the application by its having been made relatively late. It is said that it is an essential pre- requisite of such an application that it be made promptly and -- 5 of 9 -- 1-6 ORDER 1 10 20 30 40 50 60 that, in circumstances where the notice of intention to defend was filed in May last year such that more than 12 months have elapsed since there was the first opportunity to make this application, that essential pre-requisite is not satisfied. I accept that any delay would be relevant in the exercise of the discretion under rule 292. I do not accept that there is some serious delay on the plaintiff's side in making this application. Nor do I accept that, as a matter of law, the discretion under rule 292 is confined in the way that the defendant's argument suggests. I should note in relation to the time that has passed since May 2009 that the plaintiff has, within that period, provided, amongst other things, the wages records to which I have referred. It could hardly be said that there was an unreasonable delay in applying for judgment whilst relevant documents were provided by the plaintiff to the defendant for his consideration and assessment with the benefit of advice of whether he has some prospects of defending the case. The defendant's argument also referred to proceedings between the Deputy Commissioner and the company under which the company successfully applied to set aside a statutory demand in respect of this unremitted tax. What occurred was that the Commissioner agreed to that order: that is, there was no argument for a determination by the Court in respect of the application. The Commissioner so agreed at a time prior to the decision of the High Court in Deputy Commissioner of -- 6 of 9 -- 1-7 ORDER 1 10 20 30 40 50 60 Taxation v. Broadbeach Properties Proprietary Limited. The circumstances were that there was an outstanding objection which had been lodged by the company and the Commissioner's approach was no doubt affected by a number of decisions in this Court and in Courts in other States, suggesting that there was a discretion to set aside a demand in those circumstances under section 459J of the Corporations Act. The argument for the defendant goes as far as suggesting that there is some res judicata that resulted from that consent order. That argument cannot be accepted, at least for these reasons. The first is that the proceedings were between the company and the Commissioner, not between the defendant and the Commissioner. Secondly, the application or the resolution of an application under section 459J ordinarily, at least, would not involve any adjudication of the question of the indebtedness upon which the statutory demand is made. Indeed, section 459J is an alternative to section 459H under which a statutory demand may be set aside in the event that the debt is genuinely disputed. Next it was argued for the defendant that there was such a delay on the part of the plaintiff that there was a defence of laches. This is not an equitable claim and such a defence is not available. A related submission is that the alleged delay by the plaintiff was so serious as to constitute an effective waiver by the plaintiff of her cause of action, such that, "it is inequitable and unjust to grant the plaintiff the alleged or any relief". -- 7 of 9 -- 1-8 ORDER 1 10 20 30 40 50 60 From what I have said already it should be plain that I am not persuaded that the plaintiff has been guilty of any significant delay and it cannot be said that she has unequivocally waived any entitlement to claim these funds. The argument in that respect was not limited to the period from the commencement of these proceedings but addressed the period since the alleged non-remission by the company in the period from 2003 to 2006. Nevertheless I am not satisfied that there has been any unreasonable delay overall by the Deputy Commissioner let alone one which would constitute, if it could, the alleged waiver. There was also a submission that the plaintiff had breached its own model litigant guidelines rule in relation to the conduct of litigation. That would not be a bar to summary judgment but I should observe that there is no such breach which is made out by the defendant. In my conclusion the defendant has no real prospect of defending the plaintiff's claim and there is no need for a trial of the claim or a part of the claim. There will be judgment for the plaintiff against the defendant according to the application. ... There will be judgment in the sum of $289,978.48. The -- 8 of 9 -- 1-9 ORDER 1 10 20 30 40 50 60 defendant will pay the costs of the plaintiff of and incidental to the proceedings. ----- -- 9 of 9 --