D Thomas & Co Pty Ltd v Deputy Commissioner of Taxation [1999] QSC 367

Reporting Bureau TRANSCRIPT OF PROCEEDINGS Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau. SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION WILLIAMS J . No 9895 of 1999 D THOMAS & CO PTY LTD and DEPUTY COMMISSIONER OF .. TAXATION BRISBANE .. DATE 10/12/99 JUDGMENT 1 I Rt:ViSED CO?IES iSSUED 1 State Reporting 8~ireau I DatJ,v / {lJ q j Applicant Respondent ....•..... I V ·1111 Floor. The Law Courts. George Street. Brishanc. Q. 4000 Telephone: (07) .1247 4JliO fax: (07) J247 55J2 -- 1 of 9 -- ·,- " I r 101299 T1/ST5 M/T 6437/99 (Williams J) HIS HONOUR: I have prepared reasons for judgment which I publish. For those reasons the application will be dismissed and the applicant ordered to pay the respondent's costs to be assessed. 10 HIS HONOUR: The order in the matter of D Thomas & Company will be as I have indicated. c 30 c 40~ 50 60 2 JUDGMENT -- 2 of 9 -- ) ) ) SUPREME COURT OF QUEENSLAND CITATION: PARTIES: FILE NO/S: D Thomas & Company Pty Ltd (ACN 074688369) v Deputy Commissioner of Taxation D THOMAS & COMPANY PTY LTD (ACN 074 688 369) (applicant) v DEPUTY COMMISSIONER OF TAXATION (respondent) No. S9895 of1999 DELIVERED ON: 10 December 1999 DELIVERED AT: Brisbane HEARING DATE: 6 December 1999 JUDGE: Williams J ORDER: Application dismissed. Applicant to pay respondent's costs to be assessed. CATCHWORDS: CONSTITUTIONAL LAW - OPERATION AND EFFECT OF COMMONWEALTH CONSTlTUTlON- FREEDOM OF INTERSTATE TRADE, COMMERCE AND INTERCOURSE - Corporations Law (Q) not contrary to s S1(xx) of the Commonwealth Constitution. New South Wales v Commollwealth of Australia (1990) 169 CLR482; Joosse v Australiall Securities alld Illvestmellt Commissioll (1998) 73 ALJR 32, applied. CONSTITUTIONAL LAW - IMPERIAL, STATE AND COMMONWEALTH CONSTITUTIONAL RELATIONSHIPS - whether Corporations Law (Cth) is void because not properly assented to - anthority of Governor-General derived from Constitution - no impermissible involvement of United Kingdom - Governor-General is empowered to assent to Commonwealth legislation. Sue v Hill (1999) 73 ALJR 1016, distinguished. CONSTITUTIONAL LAW - IMPERIAL, COLONIAL, STATE AND COMMONWEALTH CONSTITUTIONAL RELATIONSHIPS - whether the appointment of the Commissioner of Taxation was defective because -- 3 of 9 -- ) ) ) COUNSEL: SOLICITORS: 2 appointed by Governor-General- authority of Governor- General derived from Constitution - no impermissible involvement of United Kingdom in the appointment. Sue v Hill (1999) 73 ALJR 1016, distinguished. TAXES AND DUTIES - INCOME TAX AND RELATED LEGISLATION - STATUTORY DEMAND - Statutory demand issued by Deputy Commissioner in his official name - debt is alleged to be owed to the Commonwealth - standing of the Australian Tax Office is irrelevant to validity of demand - no assessment notice required as s 166A Income Tax Assessment Act applies - no improper delegation of power. Income Tax Assessment Act, s 166A, s 208 and s209. CONSTITUTIONAL LAW - IMPERIAL, COLONIAL, STATE AND COMMONWEALTH CONSTITUTIONAL RELATIONSHIPS - whether Income Tax Assessment Act void because not properly assented to - for the purposes of the Constitution position of Governor-General not affected by death of the monarch - significant amendments to Act since 1936 mean that the relevant sections are valid in any case. Constitution, s 2, 4, 58 and 63 Commonwealth ofAustralia Constitution Act, s 2 Demise of the Crown Act 1901 (UK), s 1(1) Mr I F Galton (not of counsel) for the applicant Mr C 0 Coulsen for the respondent Galton Solicitors & Attorneys, town agents for Peter Brooke & Company for the applicant Australian Government Solicitors for the respondent [I] On 12 October 1999 the signature of Steve Chapman, the Deputy Commissioner of Taxation, Small Business, was placed on a Creditor's Statutory Demand for Payment of Debt complying with the provisions of s 459E of the Corporations Law. That demand was directed to the applicant, D Thomas & Company Ply Ltd, and was for $10,549.31. It was served on 15 October 1999. [2] By application filed 5 November 1999 the applicant seeks an order that the statutory demand be set aside. In support it relies on an affidavit of David Thomas filed on 5 November 1999. [3] The applicant raises a number of points in seeking to establish that there is a genuine dispute justifying the setting aside of that demand. The principal grounds relied on are as follows: -- 4 of 9 -- ) ) ) ) 3 (a) The Corporations Law (Qld) is unconstitutional and void as the Commonwealth Parliament has exclusive power to make such laws under Section 51 (xx) of the Constitution; (b) The Corporations Law (Commonwealth) is void as not being properly enacted; (c) The establishment of the Australian Taxation Office has not been perfected in law; (d) The Income Tax Assessment Act 1936 is invalid due to the defective appointment of Lord Gowrie as Governor-General at the time he gave the Royal Assent to that legislation; (e) Notices of Assessments purportedly issued by the Deputy Commissioner of Taxation were not issued pursuant to a valid delegation; (f) The serving ofthe statutory demand was an abuse of process. [4] In the alternative to an order setting aside the statutory demand the applicant sought an order that the matter be adjourned pending adjudication upon "the key issues by the High Court". [5] In New South Wales v Commonwealth of Australia (1990) 169 CLR 482 the High Court held that s 5 I (xx) ofthe Constitution did not empower the Commonwealth to legislate for the incorporation of trading and financial corporations. It is clearly established by that decision that the States have power to legislate for the incorporation of companies. Further, in so far as the Commonwealth has power to legislate in this field it is a concurrent power. [6] It is sufficient to say that that decision is binding on me. This court cannot operate on the principle that a decision of the High Court should not be immediately followed on the ground that it may be reviewed at some time in the future. [7] There is no substance in the contention that the Queensland legislation was passed contrary to s 51(xx) of the Constitution. [8] The challenge to the validity of the Corporations Law (Cwth) is based at least in part on submissions as to sovereignty and the like; these are issues similar to, if not identical with, arguments rej ected by Hayne J in Joosse v Australian Securities and Investment Commission (1998) 73 AUR 232. [9] There is no basis for my taking a different approach to that of Hayne J. There is in consequence no substance in those submissions advanced by the applicant. [10] The validity of the Commonwealth legislation was also attacked relying on the decision of the High Court in Sue v Hill (1999) 73 AUR 1016, and specifically the statement in the reasons for judgment of Gleeson CJ, Gummow and Hayne JJ at 1036: "Nor, as we have sought to demonstrate in Section ill, does the United Kingdom exercise any function with respect to the governmental structures of the Commonwealth or the States." That observation was taken to be an indication that the Queen of Australia, and therefore the Governor-General, could play no role in the legislation making process, including the giving of Royal Assent in accordance with s 58 of the Constitution. -- 5 of 9 -- ) ) ) ) 4 [11) In my view there is no substance in that contention. The position of the Governor- General is provided for by, relevantly, ss 2, 4, 58 and 63 of the Constitution. The power of the Queen of Australia to disallow legislation or give her assent is specified in ss 59 and 60 of the Constitution. The powers and functions of the Governor-General are derived from the Constitution itself and the exercise by the Governor-General of a power conferred on him by the Constitution does not constitute an exercise by the United Kingdom of some function with respect to the governmental structures of the Commonwealth. It is significant, as stated in applicant's written submissions that the applicant "does not submit that the constitution is invalid per se." (12) That submission must also be rejected as having no substance. (13) Section 4 of the Taxation Administration Act 1953 provides for the appointment of a Commissioner of Taxation, and s 7 thereof provides that there shall be "such Deputy Commissioners of Taxation as are required". Section 8 provides that the Commissioner of Taxation may delegate to a Deputy Commissioner of Taxation "all or any of his powers or functions under an Act". (14) Section 25(4) of the Public Service Act 1922 provides that the Commissioner of Taxation "shall severally have all the powers of, or exercisable by, a Secretary under this Act". [15) Mr Michael Joseph Carmody was appointed Commissioner of Taxation by the Governor-General in Council on and from 23 January 1993 for a term of 7 years. That appointment appears in the Commonwealth of Australia Gazette No GN 4, dated 3 February 1993, at page 361. It was submitted on behalf of the applicant that such appointment was defective or a nullity because it "automatically involves the authority of the United Kingdom Parliament" in a governmental decision contrary to the observation in Sue v Hill quoted above. (16) Again in my view the submission is entirely misconceived. As already noted the authority of the Governor-General and Governor-General in Council is derived from the constitution itself and there was no impermissible involvement of the United Kingdom in the appointment of the Commissioner. (17) That argument is also rejected. (18) As noted above the Statutory Demand was signed by Chapman, a Deputy Commissioner of Taxation. Material filed on behalf of the respondent establishes that on 1 March 1999 Carmody, the Commissioner of Taxation, directed Chapman to perform the duties of Deputy Commissioner of Taxation Small Business from 1 March 1999 to 31 December 1999. That material also discloses that Chapman, as Deputy Commissioner of Taxation, has authorised officers under him to perform certain functions. (19) Regulation 172 of the Income Tax Regulations 1936 relevantly provides that a certificate, notice or other document bearing the written, printed or stamped name (including a facsimile of the signature) of a person who is, inter alia, a Deputy Commissioner in lieu of that person's signature shall, unless it is proved that the document was issued without authority, be deemed to have been duly signed by that -- 6 of 9 -- ) ) ) ) 5 person. The Regulation expressly applies to documents such as a statutory demand. In this case the signature of Chapman is in fact a facsimile signature affixed to the demand by Mrs Margaret Key who asserts that she was a duly authorised agent of the Deputy Commissioner of Taxation for that purpose. [20] The material filed by the applicant does not prove that the document was issued without authority in the sense in which that expression is used in Regulation 172. [21] On the material I am satisfied that the Statutory Demand was effectively signed by a Deputy Commissioner of Taxation. [22] It does appear to be the case that no executive instrument formally constituting the Australian Taxation Office as an independent department can be located. But the legal status of the Australian Taxation Office is not of critical importance for present purposes. [23] In the affidavit verifying by Mrs Margaret Key she does say that she is employed as a Taxation Officer in the Australian Taxation Office but that of itself could not have any impact on the validity of the statutory demand. [24] Section 208 of the Income Tax Assessment Act provides that income tax when it becomes due and payable shall be a debt due to the Commonwealth, and payable to the Commissioner in the manner and at the place prescribed. Then s 209 provides that any tax unpaid may be sued for and recovered in any court of competent jurisdiction by the Commissioner or a Deputy Commissioner suing in his official name. [25] Those provisions have been utilised in this case. The Statutory Demand has been issued by the Deputy Commissioner in his official name and the debt is alleged to be due to the Commonwealth. The standing of the Australian Tax Office is irrelevant to the validity of the demand. The Australian Tax Office as such has made no demand (it is not mentioned in the Statutory Demand) and there is no allegation that money is owing to it. [26] I can see no basis for concluding that, even if the Australian Tax Office is not an entity recognised by law, such circumstances could invalidate the Statutory Demand served on the applicant. [27] The point was taken by the applicant that no Assessment Notice was issued in this case, but none was necessary because s 166A of the Income Tax Assessment Act 1936 applied and there was a deemed assessment. There is no substance in the contention that because there was no notice of assessment there is no debt owing. [28] The applicant also contended that there was some improper delegation involved in the procedure followed in this case. I cannot discern that at any critical stage in these proceedings something has been done by a person who was not properly authorised to do what was in fact done. The applicant has not clearly articulated the step or steps said to be taken by a person not appropriately authorised. [29] There is in this regard an important distinction between a delegation of power pursuant to s 8 of the Taxation Administration Act and the authorisation of an officer to exercise a power vested in the Deputy Comrriissioner. This was discussed -- 7 of 9 -- ) ) [30] [31] 6 by Wilson J in O'Reilly v State Bank of Victoria Commissioners (1983) 153 CLR 1 at 32. In this area of administrative law the well known statement by Lord Greene MR in Carltona Ltd v Commissioners of Works (1943) 2 All ER 560 at 536 is of relevance. I am not satisfied on the material that the applicant has shown that there is a genuine dispute with respect to the authority of any public servant who participated in the decision making process leading up to the serving of the statutory demand. The final contention of the applicant is that the Income Tax Assessment Act 1936 is "invalid ab initio" because it was not properly assented to. The contention can best be understood by quoting from the applicant's written submissions: "Additionally the Applicant draws the attention of the Court to the circumstances surrounding the Income Tax Assessment Act 1936. Royal Assent was given to this Act on 2 June 1936 by the then Governor-General Lord Gowrie. Lord Gowrie was appointed Governor General by King George V in June 1934 by Letters Patent. The King died in January 1936 and under the provisions of the Bill of Rights 1689 and other Imperial Law new Letters Patent were required to be issued appointing the Governor-General as a representative of the King. An interregnum followed because Edward VIlI although first in line of succession to the throne abdicated before coronation and therefore was never endowed with the authority to issue Letters Patent vesting the executive power contain in s 61 of the Constitution. King George VI ascended the throne on 12 December 1936 and new Letters Patent were issued to Lord Gowrie on 10 January 1938 following the coronation of King George VI. It is therefore submitted that on 2 June 1936 the Governor-General could not give Royal Assent as required under terms of s 58 of the Constitution "in the name of the Queen", or in this case the name of the King is provided for in Covering Clause 2 of the Act. The Income Tax Assessment Act 1936 is therefore invalid ab initio on constitutional grounds." [32] King George V appointed Lord Gowrie as Governor-General by Commission passed under the Royal Sign Manual and Signet dated 20 December 1935. That Commission was gazetted on 23 January 1936 (see Commonwealth Government Gazette 23 January 1936, page 161). On that day a Proclamation was gazetted indicating that Lord Gowrie had that day taken the prescribed oaths and assumed the office of Governor-General (the following page, page 162, in that Gazette). King George VI had died on 20 January 1936. The Commission signed in December 1935 recited Letters Patent dated 29 October 1900 issued by Queen Victoria constituting the office of Governor-General. That Commission also recited amendments to those Letters Patent dated 29 March 1911 and 15 December 1920. -- 8 of 9 -- 7 [33] In my view it is clear from the provisions ofthe Constitution referred to previously, s 2 of the Commonwealth of Australia Constitution Act, the Letters Patent just referred to, and the Commission appointing Lord Gowrie that for purposes of the Constitution the position of the Governor-General is not affected by the death of the Monarch. Once an appointment is duly made the nominee holds office as Governor-General for the period specified in the Commission. The perSC)ll so appointed may exercise all the powers of the Governor-General during that period regardless ofthe death of the Monarch. [34] If that process of reasoning is not correct, then it seems to me that the same conclusion is reached by application of the Demise of the Crown Act 1901 (UK). Section 1(1) of that Act provides that "the holding of any office under the Crown, whether within or without His Majesty's Dominions, shall not be affected, nor shall any fresh appointment thereto be rendered necessary, by the demise of the Crown". That statute operated in Australia by paramount force in 1936 at the time of the death of King George V. By virtue of that statute the appointment of Lord Gowrie as Governor-General was not affected by the subsequent demise of the Monarch. [35] Finally on this point I should say that there appears to me to be much force in the alternative contention of counsel for the respondent that the significant amendments to the Income Tax Assessment Act since 1936 have had the effect that the relevant sections thereof have the force of law even if there was some defect in the assent given to the 1936 Act. [36] It is also submitted by the applicant that the issue of solvency of the company is not raised by the Deputy Commissioner of Taxation and that in consequence the Statutory Demand is an abuse of process. I cannot follow the logic of that submission. It is true that in the context of disputed debts judges have frequently said that the winding up procedure ought not be resorted to as a means of debt collection, but that does not mean that a statutory demand cannot be issued before judgment has been obtained in civil proceedings. There is, in my view, no abuse of process evident in these proceedings. [37] It follows that the applicant has not established any genuine dispute or other good reason justifying setting aside the Statutory Demand or adjourning the application to await a decision from the High Court. [38] The application should be dismissed and the applicant ordered to pay the respondent's costs to be assessed. -- 9 of 9 --