CONSIDERATION
62 Director AZ was an impressive and credible witness. I accepted his testimony. His credibility was accepted by Mr Bosanac.
63 There appears to be no dispute as to the technical lawfulness of the decision. The Commissioner is entitled to give notice to a third party if a third party owes, or may later owe, money to a person who is liable to pay the Commonwealth an amount of a 'tax related liability' by virtue of s 260-5(1) and s 260-5(2) of Sch 1 of the TAA. By virtue of s 255-1 Sch 1 of the TAA, the expression 'tax related liability' means a 'pecuniary liability to the Commonwealth arising directly under a taxation law (including a liability the amount of which is not yet due and payable)'. Mr Bosanac does not contend the prescribed conditions for issuing a garnishee notice were not met, namely:
(1) there is an amount of a tax related liability owed by Mr Bosanac;
(2) MyFiziq owes or may later owe money to Mr Bosanac; and
(3) the amount required is the lesser of the tax debt or the available money.
64 The reasons themselves make clear that the matters Mr Bosanac alleges ought to have been taken into account in making the decision, were in fact taken into account in the following way:
(1) the existence of the stay (reasons (at [10(p)]);
(2) the amount of the judgment in the stayed proceeding WAD 291 of 2015 (reasons (at [10(a)]));
(3) the reasons for ordering the stay (reasons (at [10(q)]));
(4) the ambit of the stay (reasons (at [10(s)]));
(5) the ability of Mr Bosanac to meet his debts (reasons (at [10(z)]));
(6) the Pt IVC appeal and Mr Bosanac's ability to pursue the Pt IVC appeal (reasons (at [10(v)] and [10(y)]);
(7) the existence of the freezing order (reasons (at [10(r)]) and [15]); and
(8) the contents of practice statement PS LA 2011/18 (reasons (at [10(k)])).
65 It is not apparent that there were other matters required to be taken into account, having regard to the statutory scheme. The main complaint seems to be how those matters were weighed.
66 The Commissioner rejects the contention that the decision maker was required to take into account the following matters, which the Commissioner contends (and I agree), were not relevant to the consideration of whether the variation should be issued:
(1) the 'distraction' of Mr Bosanac's lawyers from preparation for the hearing on 20 March 2017;
(2) whether the Court 'needed to be informed' prior to issuing the variation. The Commissioner says no such obligation could arise independently of a requirement to seek leave and is therefore not a matter the decision maker was required to take into account; and
(3) MyFiziq withholding PAYG from Mr Bosanac's salary. The Commissioner says employers are obliged to pay PAYG withholding pursuant to s 12-35 of Sch 1 of the TAA. The amount of PAYG withholding is calculated according to a formula set out in Schedules imposed under s 15-25 Sch 1 of the TAA. What Mr Bosanac's likely tax obligations in the years after the income years in the Pt IVC appeal will be, and whether the PAYG withholding paid by MyFiziq exceeds that amount, is a matter of speculation.
67 There is no doubt in my view, and it does not appear to be in issue, that the the Commissioner was bound to take into account what he knew about Mr Bosanac's circumstances in deciding whether to issue the variation. It lies at the heart of Mr Bosanac's argument that the issuing of the notice in these circumstances is precisely what was firmly criticised by the Court in Denlay.
68 In my view, this is not so. That is for two reasons. The first reason is that in Denlay, the amount claimed in the garnishee notice referred to precisely the same judgment debt that was subject to an order staying execution of judgment. This is clear from [43] and [44] of his Honour's reasons, where the following appeared:
43 Judgment was entered for the Commissioner against Mr Denlay in the amount of $1,040,527.63 and against Mrs Denlay in the amount of $2,024,412.32. By the time when the s 260-5 notices were issued on 30 September 2011, their debts were, according to the recitation in those notices, $3,049,459.96 and $4,392,281.72 respectively. It is no part of the present proceedings to determine whether these specified liabilities were excessive or how the liabilities had incrementally increased in the time after entry of judgment.
44 On 14 December 2009, the Queensland Supreme Court (Ann Lyons J) made orders staying the enforcement of the judgments entered for the Commissioner against Mr and Mrs Denlay, initially until February 2010.
69 The second significant distinction, in my view, is that, in Denlay, there had been no material change in the facts since the stay judgment. This is also evident from the reasons where his Honour said (at [72]):
This is not to say that the provenance of the stay of enforcement of the judgment bound the Commissioner not to issue the s 260-5 notices, only that he was bound to take the consideration into account. Of course, had the decision-maker taken into account that provenance he would, on the material before him, immediately have been confronted with an absence of anything which was not a logical consequence of what was under contemplation when the Queensland Supreme Court made that value judgment. In that sense, the Commissioner had no fresh information before him. Given this and the singular importance in this case of understanding why the stay had originally been granted, I am also prepared to conclude, exacting though the test is on the authorities which I have mentioned, that the decision to issue the notice was so unreasonable that no decision-maker, acting reasonably, could have so decided. I put matters this way because, given that the relevant consideration mentioned was not taken into account, that is reason enough in itself to quash the decision.
(emphasis added)
70 It was in these circumstances that Logan J held that the same considerations that led the Court to order the stay, applied to the decision to issue the garnishee notice.
71 These factors may be contrasted with the present case as:
(a) the debt pursued under the variation, if not the notice, contrary to the assertions for Mr Bosanac, is a separate debt from the judgment debt which is the subject of the stay. It now relates to further tax liabilities arising from the amended assessments issued on 8 June 2016, albeit as a consequence of the objection decision that is the subject of review in the Pt IVC appeal. This is specifically addressed in the reasons (at [13] and [26]) where Director AZ records:
13. Further tax liabilities, pursuant to the amended Notices of Assessment issued on 8 June 2016 for the years ended 30 June 2006 to 30 June 2013, together with tax shortfall penalties, shortfall interest charges and general interest charges calculated to 7 February 2017 total the sum of $2,112,421.36 (Further Tax Liabilities). The Further Tax Liabilities are not disputed and do not form part of the Part IVC Proceedings.
…
26. [Mr Bosanac] has significant liabilities that are not subject to any dispute. These liabilities amount to $2,112,421.36 (refer to paragraph 13 above). [Mr Bosanac] has not disputed and has not made any attempt to dispute his liability to this amount. However, [Mr Bosanac] has not made any payments to the Commissioner in respect of the undisputed liability. In dealing with objections and managing the associated revenue risks, the Commissioner is required to assess the risk based on [Mr Bosanac's] conduct, behaviour, and compliance with the tax law in accordance with PS LA 2011/4.
The additional assessments, which were issued as a result of concessions made by Mr Bosanac in the objection process concerning amounts that the Commissioner had previously allocated as being income of Ms Bosanac, were now attributed, at his request, to income of Mr Bosanac. No application has ever been made to review the decision to issue those assessments. Ms Bosanac succeeded in reducing her assessment by the amount in respect of the garnishee notice by establishing, at Mr Bosanac's request, that the income previously attributed to her was in fact Mr Bosanac's income. This amount is quite independent of the initial freezing orders and the stay application;
(b) it is not correct to say, as Mr Bosanac does in his submissions, that the objection decision is wholly under appeal, if that is intended to suggest that his entire tax liability is in dispute. Even if Mr Bosanac were entirely successful on the Pt IVC appeal, he will continue to have a substantial tax liability, leaving aside any additional assessments issued on 8 June 2016. That liability is not under appeal at all; and
(c) the further consideration is that, unlike Denlay, the facts known to the Commissioner through Director AZ at the time of the decision were not the same facts that were considered by the Court in ordering the stay. In particular, the decision maker took into account quite detailed information that had been obtained after the stay that indicated Mr Bosanac was in receipt of potentially significant income and had undisclosed assets not previously known to the Commissioner. Specifically, that information was set out in [16]-[20] inclusive and [28] and [31] of the reasons as set out above, including receipts of:
(i) on 14 January 2016, an amount of $9,375.00 from Activistic described as 'Director Fees';
(ii) on 15 January 2016, an amount of $11,672.44 from MyFiziq Limited described as 'MYQ Salary';
(iii) on 15 February 2016, an amount of $9,375.00 from Activistic described as 'Deposit FPC';
(iv) on 15 February 2016, an amount of $11,672.44 from MyFiziq Limited described as 'MYQ Salary';
(v) on 15 July 2016, an amount of $10,000 from Activistic described as 'Director Fees';
(vi) on 15 July 2016, an amount of $12,975.02 from MyFiziq Limited described as 'MYQ Salary';
(vii) on 15 August 2016, an amount of $13,771.28 from MyFiziq Limited described as 'MYQ Salary';
(viii) on 1September 2016, an amount of $4,000 described as 'Transfer deposit 0000000 at Private Bank Sydney NSW';
(ix) on 15 September 2016, an amount of $27,500.00 described as 'RTGS High Value Payment Ref No 0369232 Open DNA Limited';
(x) on 15 September 2016, an amount of $89,760.00 described as 'RTGS High Value Payment Ref No 0369235 Open DNA Limited';
(xi) on 16 September 2016, two amounts of $11,000.00 described as 'Deposit FPC Activistic';
(xii) on 19 September 2016, an amount of $13,9 75.02 from MyFiziq Limited described as 'MYQ Salary'; and
(xiii) on 21September 2016, an amount of $132,000.00 described as 'Deposit South Perth, Sth Shore CTR WA'.
72 Director AZ was certainly entitled to take into account this information so as to conclude, rightly or wrongly, but not irrationally, that the issue of the variation would not stultify the Pt IVC appeal.
73 I must accept the Commissioner's submissions that Mr Bosanac has not by any admissible evidence challenged the conclusion appearing in [31] of the reasons to the effect that Mr Bosanac has undisclosed assets and income.
74 The question for examination is the information that the decision maker had at the time of making the decision. In my view, there were quite significant differences between that information and that known by the Commissioner at the time of the stay. This is in contrast to Denlay.
75 It is, of course, possible that an inference of legal unreasonableness may be drawn where the basis for the decision is not evident or the decision is unintelligible. It is well recognised that a decision does not meet these descriptions simply because someone else may have reached a different conclusion or a court would have exercised its discretion differently. In my view, it is clear that the effect of the stay and the freezing orders were taken into account in the decision-making process as they needed to be. The existence of the stay and the freezing orders did not operate, either as a matter of law or as a matter of rationality and reasonableness in the circumstances of this decision, to prohibit the issue of the variation.
76 In a post hearing exchange of submissions and an affidavit disclosing further email exchanges, Mr Bosanac took objection to the Commissioner relying on an assertion made in evidence by Director AZ that, relevantly to his stated belief that Mr Bosanac had not disclosed the full extent of his worldwide assets, clarification had been sought but not supplied by Mr Bosanac. It was conventional to rely on this answer in submissions unless of course the answer was patently incorrect. Mr Bosanac says it was so as no such request and refusal took place prior to the decision. I do not recall this being put to Director AZ in cross-examination. I should say first that in the context of the explanation given by Director AZ, he did not say that the refusal did pre-date the decision. But rather and, without time limitation, there has been no response to requests for clarification. I accept that the relevant information is that known at the time of the decision. Despite a heated exchange in correspondence, this factual point has not been illuminated further but it seems to me that in the context of this entire significant dispute, even if Director AZ's belief was not, prior to the decision, fortified by or even based upon a failure to respond to requests for clarification, he has nonetheless given ample rational basis in his reasons for forming such a belief, even if the belief is mistaken.
77 There is, in my view, abundant information in the reasons (at [16]-[20], [28] and [31]) in relation to income and assets of Mr Bosanac which were relied upon by Director AZ. On the basis of that information, Director AZ expressed the view that the Commissioner does not believe that Mr Bosanac had disclosed all his assets. No evidence was put forward by Mr Bosanac in any admissible format as to the true facts which might render this belief incorrect. Even if the information was put forward, it was not before the decision maker at the time of making the decision. The suggestion by Mr Bosanac, both before and after the evidence, that he was living 'hand to mouth' is not supported by any evidence. Mr Bosanac has not deposed to his financial circumstances at the time the decision was made. In the absence of sound support for those assertions, the Commissioner, in the face of the factors identified in the reasons (at [16]-[20], [28] and [31]), was not bound to accept them.
78 Many of the arguments advanced for Mr Bosanac appear to challenge the fairness of the decision, but these are not factors that go to jurisdictional error.
79 In the absence of any more detailed submission from Mr Bosanac to the the contrary, I am unable to accept that the amended assessments issued on 8 June 2016 (the 2016 assessments) have been objected to and form part of the appeal in the current Pt IVC appeal, which are to be listed before another judge. As the Commissioner observes, by s 14ZL of the TAA, a taxation objection includes, relevantly, in this case, an objection by a person who is dissatisfied by an assessment. Section 14ZY provides, in effect, that the objection decision is the decision to allow the taxation objection either wholly or in part, or to disallow the objection. By s 14ZZ(1) of the TAA, a person who is dissatisfied with an objection decision may appeal to this Court. Under s 173 of the 1936 Act, an amended assessment is an assessment for all the purposes of the 1936 Act, including the right of objection if dissatisfied with an assessment under s 175A of the 1936 Act.
80 In the present situation, the facts are that after the Commissioner issued assessments to Mr Bosanac's wife, Ms Bosanac, on the basis that monies paid into jointly held accounts were properly assessable as income equally between Mr Bosanac and Ms Bosanac, Ms Bosanac objected to those assessments on the basis that those amounts were solely the applicable to her husband, Mr Bosanac. The Commissioner accepted Mr Bosanac's concession to that effect and amended Ms Bosanac's assessments accordingly. Subsequently to that, the Commissioner issued the 2016 assessments as a consequence of the reallocation of the income. The evidence in support of this is referred to by Mr Bosanac himself. Given his concessions, it is difficult to conceive of the basis on which he might have objected to the 2016 assessments under s 175A of the TAA. I accept the Commissioner's position that no such objection has been made at this stage. There has been no attempt to raise the inclusion of the additional income as an issue in the current Pt IVC appeal. It was that income, to which no objection has been raised, to which the decision (as varied) related. That additional income assessment is supplemented by the penalty and interest decision components, all of which were part of the 2016 assessments.
81 I am satisfied from the content of the reasons (at [29], [32] and [34]) and the affidavit of Director AZ (at p 28), that the effect of the stay was undoubtedly considered. Mr Bosanac does not appear to suggest otherwise. His primary submission is that, having considered the stay, the making of the decision was clearly unreasonable.
82 But the position is that the stay order I made in proceedings WAD 291 of 2015, stayed the execution of the judgment against Mr Bosanac in those proceedings. The tax liability arising under the 2016 amended assessments did not form part of the judgment comprised in the stay judgment in WAD 291 of 2015.
83 Furthermore, not only did Director AZ take into account the existence of the stay, but expressly took into account the effect of the decision in Denlay. Indeed, his cross-examination made it clear that Denlay was at the forefront of his mind when issuing a garnishee notice when a stay was in place. He was, as Mr Bosanac concedes, an extremely senior, experienced and capable officer within the ATO. I have no doubt that Director AZ did take into account Denlay, in reaching his decision. He considered the facts to be distinguishable from Denlay, the specific facts are explained above and were also explained in the Commissioner's decision. As noted, I consider that Denlay is distinguishable from this decision.
84 Despite reference by Mr Bosanac to a 'controlled fund', no arguments beyond those addressed above were raised as to a 'controlled fund'. But it should also be noted that the freezing orders themselves expressly contemplated the possibility of a garnishee notice. Paragraph 18 of annexure A to the freezing orders, dated 17 June 2015, as varied by order 3 and order 6 of the orders dated 22 October 2015, provides that nothing in the orders prevents a third party complying with the terms of a notice issued pursuant to s 260-5 of Sch 1 of the TAA. I infer that there would be good reason for the Commissioner to require such an acceptance to cater for the circumstance in which there was a belief that additional sources of income and assets may be available to the judgment debtor. That, indeed, was the basis of the making of the decision in this instance.