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[2003] WADC 242
appellant. Appeal allowed; summary judgment set aside; matter remitted for further consideration/trial; court to hear parties as to orders (para 25).
The Commissioner sued a director under the director penalty regime. A DPN was posted to the director's ASIC-record address but was returned 'return to sender'. The Deputy Registrar granted summary judgment for the Commissioner. The District Court allowed the director's appeal, holding that the returned mail raised a real triable issue about whether service had been effected under the statutory postal-deeming; summary judgment was therefore inappropriate and was set aside.
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1,898 words · generated 29/06/2026
The Deputy Commissioner of Taxation commenced proceedings against Paul Stanley Clarke, the sole director of PSC Corporation Pty Ltd, seeking recovery of unpaid tax liabilities by relying on the director penalty regime in the Income Tax Assessment Act 1936 (ITAA). The claim was founded on a Director Penalty Notice (DPN) said to have been given to Clarke on 21 November 2001. The plaintiff issued a writ on 6 December 2002 seeking $73,642 (para 1). The plaintiff applied for summary judgment on 18 March 2003; the Deputy Registrar granted summary judgment on 9 June 2003 (para 2). Clarke appealed that decision.
2 cited instruments linked from this judgment.
The material facts common to both sides were straightforward. The DPN was sent to the residential address shown on ASIC records on 21 November 2001 (para 3(b)). The posted letter was returned to the plaintiff on 3 December 2001 with the marking "return to sender, no longer at this address" (para 3(c)). The defendant received a later DPN in April 2002 for a different amount, paid that liability and liquidated the company (para 3(d)). There was no dispute about these facts (para 3).
The central procedural question on appeal was whether summary judgment was appropriate, given the returned mail. The District Court (WILLIAMS DCJ) allowed the appeal and set aside the summary judgment, concluding that the returned DPN raised a triable issue as to whether the statutory deeming of postal service had been rebutted and that it was therefore inappropriate to decide the matter summarily (paras 22–25).
Three analytical strands drove the court's decision.
Principles governing summary judgment: The judge restated established authorities that summary judgment is an exceptional remedy only permissible where there is "no real question to be tried" and where the plaintiff's right to judgment is clear beyond reasonable doubt. The court cited Jones v Stone and Fancourt v Mercantile Credits to that effect and emphasised that the power should be exercised with great care (paras 7–9). The judge also recited the procedural requirements for Order 14 applications: the plaintiff's supporting affidavit must verify material facts and state that there is no defence; once the plaintiff has made out a prima facie case the burden shifts to the defendant to show a triable issue with particularised facts (paras 4–6, 10–13).
Statutory framework for service: The court identified the relevant statutory provisions. Service of DPNs is governed by s 222AOF of the ITAA which permits the Commissioner to give a notice by leaving it at, or sending it by post to, an address appearing on ASIC documents (para 17). The court also noted the deeming provision in s 29 of the Acts Interpretation Act 1901 (AI Act): service by post is deemed to be effected if properly addressed, prepaid and posted, "unless the contrary is proved" (para 18).
Application of those principles to the return of the DPN: The defendant relied on authorities saying that a return marked "return to sender" can constitute proof of non-delivery and so may rebut the s 29 deeming (para 19). The plaintiff relied on cases (including a Deputy Commissioner of Taxation decision) to the contrary (para 21). Williams DCJ observed that there was no direct binding authority on the precise point for this court (para 23). Given that absence, and the returned DPN itself, the judge concluded the defendant had put forward facts which, if true, raised a reasonable likelihood of success at trial and therefore summary judgment should not have been granted (paras 22–25).
In short, the court applied summary judgment principles strictly and found that the returned DPN created a triable issue about service that could not be resolved on the papers.
Before this decision (and as recorded in the judgment), two legal propositions were clear:
The ITAA regime contemplates service of DPNs by posting to addresses shown on ASIC records (s 222AOF) and the AI Act deems postal service to be effective unless the contrary is proved (paras 15–18).
Summary judgment under Order 14 should be used sparingly; a defendant who raises an arguable defence supported by affidavit particulars is ordinarily entitled to have the matter tried (paras 7–13).
What Clarke adds, on the facts of this case, is an application of those propositions to a returned letter. The court did not purport to lay down a final rule that return mail always rebuts the s 29 deeming. Instead Williams DCJ held that a returned, marked "return to sender" letter may amount to proof of non-delivery sufficient to raise a triable issue and defeat a summary judgment application when the whole of the material is considered (paras 19, 22–25). The decision therefore confirms that evidence of non-delivery (such as returned mail) requires careful consideration and may preclude summary disposal where the statutory regime otherwise supports deemed service.
The judgment explicitly notes the absence of direct binding authority on whether deemed service of a DPN can stand in the face of proof of non-delivery (para 23). The court therefore stopped short of pronouncing a conclusive rule, leaving the question to be resolved at trial or by higher authority.
Para 7: "Summary judgment procedure 'is a peculiar proceeding intended only to apply to cases where there can be no reasonable doubt that a plaintiff is entitled to judgment'." Plain English: Summary judgment is an exceptional remedy; only use it when the plaintiff's entitlement is absolutely clear.
Para 8: "The power to order summary or final judgment ... should never be exercised unless it is clear that there is no real question to be tried." Plain English: If any real dispute exists, the case should go to trial.
Para 18 (s 29 AI Act): The statutory deeming: "a service shall be deemed to be effected by properly addressing, pre-paying and posting the document ... unless the contrary is proved." Plain English: Generally, if you post a document correctly, the law treats it as having been delivered, unless someone proves otherwise.
Para 19: The defendant's submission that a return marked 'return to sender' constitutes proof of non-delivery. Plain English: If the post is returned to the sender marked 'return to sender', that can be strong evidence the addressee never got it and can defeat the usual presumption that posting equals delivery.
Para 24: "In my view the defendant has a reasonable likelihood of success at trial. ... it is not appropriate to dispose of the matter by way of summary judgment." Plain English: The return of the DPN gives the defendant a real chance of winning at trial, so it would be wrong to decide the case now without a full hearing.
This decision is engaged where:
A claim is founded upon a statutory notice or instrument where service by post is authorised and a statutory deeming provision (like s 29 AI Act) operates (see paras 15–18).
The party claiming service can show only that the document was posted to an address derived from official records (e.g., ASIC), and there is objective evidence (for example, the post being physically returned marked 'return to sender' or similar postal indicators) suggesting non-delivery (paras 3(b)-(c), 19).
The defendant advances an affidavit or other evidence that particularises how the facts, if true, would amount to a defence to the claim (paras 11–13, 19).
The plaintiff seeks summary judgment. Under those circumstances, if the returned mail can be said to rebut the postal-deeming, then summary disposal will typically be inappropriate (paras 22–25).
Practically, the decision warns practitioners that reliance on statutory addresses to establish service can be vulnerable to postal-return evidence and that such disputes generally require trial rather than summary dismissal.
This judgment itself notes an absence of direct binding authority on whether service of a DPN can be deemed notwithstanding proof of non-delivery (para 23). The decision therefore occupies an interlocutory space: it is an appellate ruling within the District Court of Western Australia applying established summary judgment principles to the particular factual mix of postal return.
The judgment cites authorities supportive of both sides: cases supporting that returned mail can constitute proof of non-delivery (CGU Workers' Compensation v Carousel Bar Pty Ltd; Lane Cove Council v Geebung Polo Club) and decisions where service by post was treated as sufficient (the plaintiff's citation of Deputy Commissioner of Taxation v Barry H Finney & Ors) (paras 19–21). Williams DCJ did not purport to resolve all conflicting authority; the court emphasised the need for trial when the material does not admit summary determination (para 23).
This judgment is therefore best read as reinforcing a procedural principle: when there is evidence that could rebut postal deeming, courts should be reluctant to grant final relief without a trial. It is not a definitive pronouncement on the ultimate legal question whether a returned DPN always or usually rebuts s 29; that question remains open for trial or higher court determination (para 23).
The judgment identifies and leaves unresolved several issues:
The ultimate legal effect of a returned DPN on s 29 AI Act and s 222AOF ITAA: Williams DCJ accepted that a returned letter can found a triable issue, but did not decide whether, as a matter of law, a return marked "return to sender" conclusively rebuts the statutory deeming in all cases (para 23). That is unresolved.
The evidential threshold required to rebut s 29: The decision implies that evidence of non-delivery such as return markings may suffice to raise a triable issue, but it does not fix a standard of proof or catalogue the types of postal evidence that will be adequate. Different factual matrices (for example postal tracking, signature records, proof of forwarding arrangements) may lead to different outcomes.
Interaction with agency or actual knowledge: The court did not explore whether other modes of proof (for example, that the addressee actually received the contents by other means, or that the Commissioner had other evidence of delivery) would tilt the balance in favour of the deeming despite a postal return. The judgment confines itself to the single returned mail fact and its procedural consequences (paras 3(b)-(c), 22–25).
Consequences for tax administration: The decision highlights potential practical difficulties for revenue authorities relying on ASIC-record addresses for DPN service. The case suggests the Commissioner should ensure robust proof of delivery (for example, registered post, personal service, or additional evidence) where possible. The judgment does not prescribe the steps required; rather it signals a cautionary approach.
Scope of summary determination where statutory deadlines or penalties are involved: The case leaves open how courts should balance procedural fairness with statutory schemes designed to impose strict deadlines and penalties (the DPN regime) when deciding whether to allow summary judgment versus insisting on a full trial.
In short, Deputy Commissioner of Taxation v Clarke is procedurally significant: it confirms that returned postal items can carry decisive weight in defeating summary judgment where the statutory regime otherwise supports a postal-deeming of service. It does not, however, finally resolve all legal questions about the substantive effect of postal returns on the operation of s 29 of the AI Act or ss 222AOF/222AOE of the ITAA. Those remain questions for fuller litigation or authoritative appellate decision.
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
CITATION : DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA -v- CLARKE [2003] WADC 242
BETWEEN : DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA
Practice - Supreme Court practice - Appeal from decision of Registrar granting summary judgment to plaintiff - Service deemed to have occurred by post "unless the contrary is proved"
Income Tax Assessment Act 1936, s 222AOF
CGU Workers' Compensation v Carousel Bar Pty Ltd [1999] VSC 227; (1999) 17 ACLC 1213
Deputy Commissioner of Taxation v Barry H Finney & Ors [2002] DCt of NSW; No 10742 of 2001
Fancourt v Mercantile Credits Limited [1983] HCA 25; (1983) 154 CLR 87
Jones v Stone (1894) AC 122
Lane Cove Council v Geebung Polo Club Pty Ltd and Others (No 2) [2002] NSWSC 118; (2002) 41 ACSR 15
Miles v Bull (1969) 1 QB 258
Moscow Narodny Bank Ltd v Mosbert Finance (Australia) Pty Ltd & Ors (1976) WAR 109
Bull v Attorney-General (NSW) [1913] HCA 60; (1913) 17 CLR 370
Commonwealth Bank of Australia v Friedrich (1991) 9 ACLC 946
Daniels v Anderson (1995) 16 ACSR 607
Deputy Commissioner of Taxation v Gruber [1998] NSWSC 64; (1998) 43 NSWLR 271
Deputy Commissioner of Taxation v Coco [2003] QSC 119
Fitzgerald v Deputy Federal Commissioner of Taxation [1995] ATC 4587
Group Four Industries Pty Ltd v Brosnan (1992) 59 SASR 22
In Re City Equitable Fire Insurance Company Ltd [1925] 1 Ch 407
Mackwell v Petkovic (1999) 20 WAR 367
Permanent Building Society (In liq) v Wheeler (1994) 11 WAR 187
Scobie; Ex parte Commissioner of Taxation (1995) 59 FCR 177; (1995) 95 ATC 4525
1 By writ dated 6 December 2002 the plaintiff claimed the sum of $73,642 from the defendant pursuant to s 220AOC of the Income Tax Assessment Act 1936 ("ITAA"). The amount was the equivalent of unpaid tax liabilities of PSC Corporation Pty Ltd ("PSC"), a company of which the defendant was at that time a director. The claim was based on the defendant's failure to comply with a Director Penalty Notice ("DPN") issued on and dated 21 November 2001.
2 By application dated 18 March 2003 the plaintiff sought summary judgment against the defendant. Summary judgment was granted by Deputy Registrar Harman on 9 June 2003.
3 There is no significant dispute about the facts of this case which can be relevantly summarised as follows:
(a) The defendant was at all material times the sole director of PSC.
(b) On 21 November 2001 the plaintiff sent a letter to the defendant enclosing the DPN at an address shown on ASIC records to be the residential address of the defendant.
(c) On 3 December 2001 the letter enclosing the DPN was returned to the plaintiff marked "return to sender, no longer at this address".
(d) In April 2002 the defendant was served with another DPN seeking penalties of approximately $8,900. That DPN is not the subject of these proceedings. Upon receipt of that DPN the defendant paid the amount owing to the plaintiff and took the necessary steps to wind up the company.
4 By reason of the summary nature of O 14 proceedings, strict compliance with the Rules of the Supreme Court 1971 is required before the application will be entertained.
5 A defendant may show cause against a plaintiff's application:
(i) by preliminary or technical objection, for example, statement of claim or affidavit in support is defective. No affidavit is required in support of such an objection;
(ii) on the merits, for example, that he has a good defence to the claim on the merits, or that a difficult point of law is involved or a dispute as to the facts which ought to be tried or a real dispute as to the amount due which requires the taking of an account to determine, or any other circumstances showing reasonable grounds of a bona fide defence: Supreme Court Practice (1988) Vol 1 paras 14/3 - 4/3 at p 140.
(1) verify all material facts essential to the success of the claim;
(2) state the deponent's belief that there is no defence: Order 14 Rule 2(1).
7 Summary judgment procedure "is a peculiar proceeding intended only to apply to cases where there can be no reasonable doubt that a plaintiff is entitled to judgment": Jones v Stone (1894) AC 122 at p 124.
8 The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried: Fancourt v Mercantile Credits Limited [1983] HCA 25; (1983) 154 CLR 87 at p 99 per Mason, Murphy, Wilson, Deane and Dawson JJ.
9 Where there are circumstances which are required to be closely investigated there ought to be a trial and judgment ought not to be given under O 14: Miles v Bull (1969) 1 QB 258.
10 Where a plaintiff has satisfied all the requirements of O 14 to give it prima facie the right to an order in the terms asked the burden shifts to the defendant to satisfy the court why judgment should not be given against it: Moscow Narodny Bank Ltd v Mosbert Finance (Australia) Pty Ltd & Ors (1976) WAR 109 per Brinsden J at p 110.
11 The defendant must show by affidavit or otherwise that there is some triable issue either of fact or law, in that it has an arguable defence or a defence on the merits: Moscow Narodny Bank Ltd v Mosbert Finance (Australia) Pty Ltd (supra) at pp 110-111.
12 The defendant's affidavit must condescend upon particulars by giving such an extent of definite facts pointing to the basis on which the defendant alleges its right to defend arises: ( at p 113.
15 The plaintiff's power to impose a penalty on the defendant equivalent to PAYG deductions which PSC failed to remit to the plaintiff arises from Pt IV Div 9 of the ITAA, specifically s 222AOB and s 222AOC.
16 Section 222AOE of the Act provides that a director's liability does not arise until the expiration of 14 days after the Commissioner has given the person a DPN setting out the prescribed information.
17 Section 222AOF of the Act sets out how the above DPN may be served. It provides as follows:
"(1) If it appears from ASC documents that a person is, or has been within the last 7 days, a director of the company, the Commissioner may give the person a notice under Section 222AOE by leaving it at, or sending it by post to, an address that appears from such documents to be, or to have been within the last 7 days, the person's place of residence or business.
Note: Sections 28A and 29 of the Acts Interpretation Act 1901 is also relevant to giving a notice under Section 222AOE."
18 Section 29 of the Acts Interpretation Act 1901 ("AI Act") entitled "Meaning of Service by Post" provides as follows:
"(1) Where an Act authorises or requires any document to be served by post, whether the expression 'serve' or the expression 'give' or 'send' or any other expression is used, then unless the contrary intention appears a service shall be deemed to be effected by properly addressing, pre-paying and posting the document as a letter, and unless the contrary is proved to have been effected at the time which the letter would be delivered in the ordinary course of post."
19 It is the defendant's submission that s 29 of the AI Act sets out the circumstances in which service will be deemed to have occurred by post "unless the contrary is proved". Proof of non-receipt is not sufficient to overcome this deeming provision. However proof of non-delivery does overcome the deeming provisions: Fancourt v Mercantile Credits Limited (supra).
20 The return of a document marked "return to sender" constitutes proof of non-delivery in the absence of evidence that the notice came to the knowledge of the addressee: CGU Workers' Compensation v Carousel Bar Pty Ltd [1999] VSC 227; (1999) 17 ACLC 1213 (dealing with s 109Y of the Corporations Law): Lane Cove Council v Geebung Polo Club Pty Ltd and Others (No 2) [2002] NSWSC 118; (2002) 41 ACSR 15 (s 29, AI Act).
21 It is the submission of counsel for the plaintiff that the legal requirements for service of the DPN as set out in s 222AOF of the Act, have been satisfied notwithstanding that the defendant may never have received the DPN. Counsel for the plaintiff refers to the decision in Deputy Commissioner of Taxation v Barry H Finney & Ors [2002] DCt of NSW; No 10742 of 2001 as authority for that proposition.
22 The plaintiff was entitled to summary judgment only if it could show that without doubt on the whole of the material there was no question to be tried: Fancourt v Mercantile Credits Limited (supra).
23 In this case there is, at this stage, no relevant dispute on the facts. There appears to be no direct authority binding on this Court on the question of whether there can be deemed service of a DPN where the Deputy Commissioner for Taxation has proof of non-delivery.
24 In my view on the authorities referred to above the defendant has a reasonable likelihood of success at trial. Even if this is not accepted however it is not appropriate to dispose of the matter by way of summary judgment.
25 In my view the appeal should be allowed and I will hear the parties as to the orders to be made.
Deputy Commissioner of Taxation for The Commonwealth of Australia
Clarke [2003] WADC 242
(1983) 154 CLR 87
(1913) 17 CLR 370
(1998) 43 NSWLR 271
(1992) 59 SASR 22
(1999) 20 WAR 367
(1994) 11 WAR 187
(1995) 59 FCR 177
Appeal allowed; summary judgment set aside; matter remitted for further consideration/trial; court to hear parties as to orders (para 25).
13 Leave to defend ought to be given if a defendant shows facts which if true would constitute a defence. A defendant merely needs to depose to facts which raise an arguable defence. The court should not, for the purposes of a summary judgment application, attempt in any way to assess the respective parties' chances of success or strength of their cases but should grant unconditional leave to defend if the defendant raised an arguable defence: Supreme Court Practice (1988) Vol 1 pars 14/3-4/8 at p 142.
14 With those authorities in mind I now turn to the appeal.