Deputy Commissioner of Taxation v Issa

Catchwords: MONEY CLAIM – Penalty under s 269-20 of the Taxation Administration Act 1953 – proceedings not to be commenced until Commissioner gives written notice – where posting of notice proved by evidence of system for bulk postage – where notice posted not by the Commissioner personally, nor by his delegate, nor by an officer of the ATO but by a private provider of bulk printing and posting services – notice found to have been posted by the Commissioner

Legislation Cited: A New Tax System (Goods and Services Tax) Act 1999 (Cth)
Acts Interpretation Act 1901 (Cth), s 29
Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law, s 18
Evidence Act 1995 (NSW), s 191
Income Tax Assessment Act 1936 (Cth)
Public Service Act 1999 (Cth)
Taxation Administration Act 1953 (Cth), Sch 1 Div 269, ss 4A, 269-10, 269-15, 269-20, 269-25, 269-30, 269-50, 269-52

Cases Cited: Guss v Australian Taxation Office (2017) 53 VR 180; [2017] VSC 396
Joosse v Deputy Commissioner of Taxation [2002] VSCA 48
O'Reilly v State Bank of Victoria Commissioners (1983) 153 CLR 1; [1983] HCA 47
Pascoe v The Minister for Land Information [2024] NZCA 557
Pattenden v Federal Commission of Taxation (2008) 175 FCR 1; [2008] FCA 1590

Category: Principal judgment

Parties: Deputy Commissioner of Taxation (Plaintiff/Applicant)
Elie Issa (Defendant/Respondent)

Representation: Counsel:
S Lloyd SC / K Josifoski (Plaintiff/Applicant)
T Brennan SC / B Kasep (Defendant/Respondent)
Solicitors:
Craddock Murray Neumann (Plaintiff/Applicant)
Brander Smith McKnight (Defendant/Respondent)

File Number(s): 2024/00145499

JUDGMENT Ex Tempore (Revised)

1. This case involves two narrow questions about the Tax**ation Administration Act 1953 (Cth) and whether the Commissioner of Taxation posted three notices to the Defendant.

2. The first question that is raised is a factual question about whether the Commissioner has proved that the notices were posted. Assuming proof of posting, the second question is whether the notices were posted by the Commissioner in circumstances where a third party service provider was involved in the process without a formal delegation from the Commissioner and where there is a general authorisation to public servants that does not include the posting of notices under the relevant provision of the Statute.

3. The background context may be stated briefly. Division 269 of Sch 1 of the Taxation Administration Act 1953 provides for the imposition of penalties on directors of non-complying companies. The purpose of Div 269 is to ensure that a company either meets its payment obligations, in this case to pay assessed net amounts in accordance with A New Tax System (Goods and Services Tax) Act 1999 (Cth), or goes promptly into external administration of one or other of three forms specified in the statute.

4. Under ss 269-10(1) and 269-15(1), on the day a tax period ends, a director comes under an obligation to cause the company to comply with its obligation to pay the net amounts by the due date. Section 269-20 provides that the director is liable to pay a penalty if the company does not comply with its obligations. The amount of the penalty is equal to the unpaid amount of the company's liability under its own obligations.

5. The Commissioner may sue for the penalty but there is a temporal precondition to doing so. Section 269-25 provides as follows:

Notice

Commissioner must give notice of penalty

(1) The Commissioner must not commence proceedings to recover from you a penalty payable under this Subdivision until the end of 21 days after the Commissioner gives you a written notice under this section.

Content of notice

(2) The notice must:

(a) set out what the Commissioner thinks is the unpaid amount of the company's liability under its obligation; and

(b) state that you are liable to pay to the Commissioner, by way of penalty, an amount equal to that unpaid amount because of an obligation you have or had under this Division; and

(c) explain the main circumstances in which the penalty will be remitted.

(3) To avoid doubt, a single notice may relate to 2 or more penalties, but must comply with subsection (2) in relation to each of them.

When notice is given

(4) Despite section 29 of the Acts Interpretation Act 1901, a notice under subsection (1) is taken to be given at the time the Commissioner leaves or posts it.

Note 1: Section 28A of the Acts Interpretation Act 1901 may be relevant to giving a notice under subsection (1).

Note 2: Section 269-50 of this Act is also relevant to giving a notice under subsection (1).

6. Both parties refer to a notice under section 269-25(1) as a “Director's Penalty Notice”.

7. The Director's Penalty Notice does not itself impose the penalty on the director. The penalty is imposed by s 269-20. The Director's Penalty Notice lifts the bar to the Commissioner commencing proceedings against the director to recover the penalty.

8. Amongst other things, the Director's Penalty Notice must explain the main circumstances in which the penalty will be remitted: s 269-25(2)(c). Those circumstances are set out in s 269-30 and are essentially that, within 21 days, the company's liabilities are discharged or specified steps are taken to have the company wound up, restructured or placed in administration. There are qualifications.

9. Given its prescribed contents and the time limits that operate by reference to it, it may be accepted that the giving of the Director's Penalty Notice is an important matter.

10. The precondition to commencing proceedings in s 269-25(1) is that the Commissioner "give" the Director's Penalty Notice.

11. Under s 269-25(4) the Director's Penalty Notice is taken to be given "at the time the Commissioner leaves or posts it".

12. Section 269-25(4) is specified to be "despite section 29 of the Acts Interpretation Act 1901”. Section 29 provides:

Meaning of service by post

(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 the service shall be deemed to be effected by properly addressing, prepaying and posting the document as a letter and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.

(2) This section does not affect the operation of section 160 of the Evidence Act 1995.

13. Section 29 addresses two matters, namely, how a document is to be served by post and when the document is taken to be served. In its terms, s 269-25(4) is confined to the second matter. The fact that s 269-25(4) applies “despite section 29” does not exclude the application of s 29 to the first matter. By virtue of s 29(1) the Commissioner will be taken to have effected the posting of a Director's Penalty Notice under s 269-25(1) by properly addressing, prepaying and posting it. As will be seen, this is consistent with the common law position.

14. As for the address to which the Commissioner must post the Director's Penalty Notice, at the time relevant to this case s 269-50 provided:

How notice may be given

The Commissioner may give you a notice under section 269‑25 by leaving it at, or posting it to, an address that appears, from information held by ASIC, to be, or to have been within the last 7 days, your place of residence or business.

15. Section 269-52 provides for multiple copies of a Director’s Penalty Notice to be given where the director has a registered tax agent.

16. Within that context there is no dispute about the essential facts in this case other than in relation to posting.

17. At times relevant to this case the Defendant was the director of three companies: SEEKY IP PTY LTD, GO CHECK ID PTY LTD and SPORTS FOYER IP PTY LTD. Each company was assessed by the Commissioner to pay a net amount which when combined total around $2 million. The details of which are not currently relevant. There is no dispute that by reason of the assessment of the net amounts the Defendant was obliged to cause the relevant company to pay by the due date, he did not, that he subsequently became liable for penalties for the same amounts and that that liability has not been discharged by the director.

18. The Commissioner commenced these proceedings on 18 April 2024 by filing a Statement of Claim in which the Commissioner alleges the matters necessary to establish the underlying liability of the three companies. He further pleads the obligations imposed on the Defendant under s 269-15, non-compliance with those obligations and the resultant liability for penalties under s 269-20.

19. The Commissioner does not expressly plead the giving of the Director's Penalty Notices to the Defendant. However, on 2 June 2025 the Defendant filed an Amended Defence in which he denies liability by reference to positive allegations that he did not receive any Director Penalty Notices and does not admit that the Commissioner “gave” them to him.

20. He further says that if Director Penalty Notices were posted to him, they were not posted by the Commissioner but by a third-party service provider called Computershare Communication Services Pty Ltd, which I will refer to as CCS.

21. The first question is whether the Director Penalty Notices were posted. It is a question of fact. The relevant word used in s 269-25(4) is "post". I have set out above s 29 of the Acts Interpretation Act 1901 (Cth) which refers to properly addressing, prepaying and "posting the document as a letter". In this respect s 29 conforms to the common law about what is required to establish service by post. Justice Digby in Guss v Australian Tax Office (2017) 53 VR 180; [2017] VSC 396 said at 193; [75]:

“In my view to establish service of a document by post there must be evidence that—

(a) the envelope containing the document had been correctly addressed, including to the correct person;

(b) the envelope had been stamped or franked or there was some other basis upon which to conclude that it had been paid in respect of its postage had been paid; and

(c) the envelope was placed into the custody of Australia Post for the purposes of delivery as a letter.”

22. I find that the Commissioner has adduced evidence which proves that the three Director's Penalty Notices which concern the Defendant were correctly addressed, pre-paid and lodged with Australia Post on 29 August 2023.

23. As would be expected for a large organisation like the Australian Tax Office, its postal system is highly automated. Proof of postage has been achieved by relevant officers of the ATO and the external service provider (CCS) who are familiar with the ATO's and CCS’s systems describing the process applicable to the issues in this case.

24. There is the evidence of an Officer of the ATO who is employed in the Bulk Print Management team of the ATO. His duties include overseeing the bulk personalised mail for the ATO. He states in his affidavit that he is familiar with the systems and processes employed by the ATO to print and post bulk personalised mail through external contractors. His evidence demonstrates, and ultimately there was no dispute about this, that at about 6pm each day the ATO's Digital Outbound Team batch up numerous letters to be posted by creating a print-ready correspondence file which is emailed to CCS. I will refer to the print-ready correspondence file as the PS File to be consistent with the evidence in the Officer’s affidavit.

25. Having regard to the final submissions and the evidence in the Officer's affidavit, there is no residual controversy that on 28 August 2023 the Bulk Print Management team emailed to CCS a PS File which contained, amongst other letters, the three Director's Penalty Notices upon which the Deputy Tax Commissioner sues in these proceedings. It is not therefore necessary to go through the detail. The Officer gives evidence of the receipt of an acknowledgement from CCS and the other documents which would in the ordinary course be generated were the ATO's automated system properly to have been implemented on 28 and 29 August 2023.

26. The other side of the system-coin relates to the systems used by CCS upon receipt from the ATO. The Commissioner adduced evidence from a Client Delivery Consultant who has been employed by CCS for the last 11 years. The witness described how CCS is an Australia Post-accredited mail house under an Australia Post Bulk Mail Partnership Program and that CCS has held that accreditation with Australia Post since 2005. The witness further explained that CCS is a provider of bulk printing services for the Australian Taxation Office. Those services include printing and posting Director Penalty Notices issued by the ATO. Other bulk printing and mailing services provided by CCS to the ATO include printing and mailing other items of correspondence and activity statement forms.

27. The Client Delivery Consultant is the day-to-day operational contact for the ATO for CCS. The witness described the systems used by CCS first for the receipt of the PS File from the ATO, the issuing of an acknowledgement, the printing of the contents of the PS File and the processing of that printed material by the Mailing Machine. Again, the evidence addresses the automation of the system and includes evidence about what reports would be generated in circumstances where the system had not been implemented regularly in any particular case, including the case which concerns these proceedings. The witness said that there is no evidence that the process was not undertaken regularly on 28 and 29 August 2023. The witness' evidence was explored in cross-examination.

28. The focused submission finally made by the Defendant is that the Court cannot be satisfied on the balance of probabilities that the two-page Director Penalty Notices were correctly processed by the Mailing Machine so that the Australia Post barcode and the address block were visible through the envelope window with the consequence that it is doubtful they were properly dispatched by Australia Post to the Defendant.

29. It does not really matter whether the Director Penalty Notices were dispatched or not because both under s 29 of the Acts Interpretation Act 1901 and at common law, in order for a letter to be posted it must be properly addressed. If the Defendant's contention is accepted, a deficiency in the alignment of the address block and the absence of the Australia Post barcode through the window of the envelope would mean that the three Director’s Penalty Notices were not properly addressed. Hence, the Commissioner has not proved that they were posted even if they were physically dispatched.

30. I accept the Defendant's submission that the witness from CCS gave varying responses to questions in cross-examination about the relevance of a particular barcode in the left hand margin of the Director's Penalty Notice to the proper performance of the function of the Mailing Machine. The Defendant points out that on some copies of the Director's Penalty Notices which are in evidence the barcode is accompanied by two letters of the alphabet, "L" in one case, and "M" in another, which may suggest that the pages were inserted into the envelope by the Mailing Machine in the wrong order, giving rise to the doubt for which the Defendant contends.

31. It is correct that, in cross-examination, the witness from CCS did say that the Defendant's interpretation of the barcodes was correct so far as it went, but when questioned about the interaction between that barcode and the Mailing Machine, the witness from CCS was consistent in her evidence that the Mailing Machine responded not to that particular barcode, but to another barcode which appeared above the Australia Post barcode above the address block. The witness referred to this particular barcode as the "T bar barcode”. The T bar barcode may not actually be a conventional barcode. It has two bars which, together, depict a T on its side followed by a string of numerals. In any event, the witness said clearly that it was the T bar barcode which communicated with the Mailing Machine about the sequence in which pages were to be placed in envelopes, and in the evidence before the Court the front page of the Director Penalty Notices contains the numeral 1 in the T bar code.

32. I accept that the witness' evidence on this issue was inconsistent. However, this is not a case where the witness was not giving honest evidence. To my observation, she listened carefully to the questions and answered them to the best of her ability and I accept her evidence concerning what information on the pages of the Director Penalty Notices communicated with the Mailing Machine.

33. Further having regard to the evidence as a whole, the best guide to the operation of the Mailing Machine is the clear evidence the witness gave that, if the pages were placed incorrectly into the envelope so that neither the address block nor the Australia Post barcode was visible through the window, the machine would "stop". The witness said it twice and was emphatic. She also made clear that, had that happened, a record would have been made and, having reviewed the relevant records, there is no record of that occurring at any time relevant to this case.

34. This is a question that needs to be resolved on the balance of probabilities. Having regard to the evidence as a whole, including the regularity of the submission of the PS File to CCS on 28 August 2023, the generation of all the usual acknowledgements and receipts, CCS issuing the Supply Acceptance Certificate and the approval thereof by the ATO, including the payment contemplated by that document by the ATO to CCS and the subsequent interrogation of the Australia Post E-LMS system by reference to the relevant job production number, I am satisfied on the balance of probabilities that the three Director's Penalty Notices were posted to the Defendant in properly addressed envelopes on 29 August 2023.

35. In reaching that conclusion, I do not consider it necessary to decide whether an inference to that effect may more comfortably be drawn in circumstances where the Defendant has not adduced evidence that the three Director's Penalty Notices were not actually received by him. Receipt of the Director's Penalty Notices is not relevant in the sense that the bar to commencing proceedings is raised merely by the posting of the Director’s Penalty Notices, not whether they are subsequently received: s 269-25(1). In those circumstances, I do not express a view about whether an adverse inference is available from the fact the Defendant did not give that evidence.

36. In any event, as I have said, I am satisfied on the balance of probabilities that, as a matter of fact, the three Director's Penalty Notices were posted on 29 August 2023 to the Defendant.

37. The next question that then arises is whether the Director’s Penalty Notices were posted by the Commissioner. Subsections 269-25(1) and (4) both refer to the Commissioner giving the Director's Penalty Notice. Section 296-50 provides that the Commissioner may give the notice by posting it. As will be apparent from the description above of the evidence about the posting of the three Director's Penalty Notices to the Defendant on 29 August 2025, the physical steps of printing the Director's Penalty Notices, placing them in envelopes and putting the envelopes in Australia Post Unit Loading Devices located on the premises of CCS for collection by Australia Post were performed by CCS. Indeed, when the Australia Post truck arrived it was a CCS forklift which lifted up the Unit Loading Device and placed it on the truck.

38. For the purposes of considering the role played by CCS, the following further facts have been agreed by the parties under s 191(1) of the Evidence Act 1995 (NSW):

“1. The Commissioner of Taxation has not delegated to Computershare Communication Services Pty Ltd (CCS) any power or function contained in Schedule 1 to the Taxation Administration Act 1953 (Cth).

2. The Australian Taxation Office (ATO) procures bulk printing services from CCS pursuant to a contract arising from a Work Order issued to CCS which commenced on October 2019 and remained in force at all relevant times (Contract).

3. The Contract (which defines the ATO as the Customer and CCS as the Contractor) contains the following express term:

35.12 Relationship

(a) The Customer and the Contractor must not represent themselves, and must ensure that their officers, employees, agents and subcontractors do not represent themselves, as being an officer, employee, partner or agent of the other party, or as otherwise able to bind or represent the other party.

(b) This contract does not create a relationship of employment, agency or partnership between the Customer and the Contractor

4. The Contract (which defines the ATO as the customer and CCS as the Contractor) contains the following express term:

4.13 APS Values

(a) In this clause 4.13, APS Values and Code of Conduct have the meaning given in the Public Service Act 1999 (Cth).

(b) The Contractor must:

(i) ensure that Personnel engaged in the provision of Services are aware of, and comply with, the APS Values and Code of Conduct while at the Customer’s premises and while liaising with the Customer’s Personnel or members of the public in connection with the provision of the Services.

(ii) provide all reasonable assistance to the Customer with ay investigation of a report of a breach of the APS Code of Conduct.”

39. The Defendant submits that by virtue of the role played by CCS, the three Director's Penalty Notices were posted by CCS and not by the Commissioner.

40. The Defendant’s submission is developed first by a detailed description of the statutory office of the Commissioner of Taxation and the Australian Taxation Office as a statutory agency for the purpose of the Public Service Act 1999 (Cth). Section 4A(1) of the Taxation Administration Act 1953 provides:

Statutory Agency etc. for purposes of Public Service Act

(1) The staff necessary to assist the Commissioner are to be persons engaged under the Public Service Act 1999.

41. The Defendant points out that persons engaged under the Public Service Act 1999 must uphold Australian Public Service (APS) values, which include openness, trustworthiness and acting with integrity, compliance with Australian law and not engaging in false and misleading conduct. It also includes an obligation to avoid conflicts of interest. The submission is made in support of the proposition that the statute intends posting to be performed by the Commissioner personally, by his formal delegates or by ATO staff.

42. However, the Defendant was not able to point to any aspect of the APS Values, or the APS Code of Conduct, which were particularly pertinent to the performance of the function of printing the Director's Penalty Notices, placing them in envelopes and posting those envelopes. Compliance with all Australian law and not engaging in false and misleading conduct are matters which must be adhered to, not just by Australian public servants. Two matters only were suggested. First, the prospect that CCS would not be prohibited from engaging in misleading and deceptive conduct when communicating with a taxpayer about whether a notice had been posted because such conduct would not properly be characterised as being engaged in in trade or commerce and thereby outside the prohibition in s 18 of the Australian Consumer Law. I think that doubtful. The second matter was that the Australian public service commitment to “openness” might mean an officer of the department might respond differently in response to an inquiry by a taxpayer about whether a Director's Penalty Notice had been posted.

43. I do not consider that these examples in the specifics or the provisions of the Code of Conduct or the APS values generally demonstrate that there is some particular attribute of Officers of the ATO which renders them particularly equipped to perform the functions of printing Director's Penalty Notices, placing them in envelopes and posting them. I consider that any necessary requirements for the efficacy of those functions to be formed by a third-party contractor are readily capable of being achieved by contractual obligation. Nor do I consider that the fact that Officers of the ATO would be liable for termination of their employment if they departed from the APS values or the APS Code of Conduct means that they are peculiarly placed to perform the postal function.

44. Against that background, the Defendant points out that ss 269-25 and s 269-50 refer to posting by the Commissioner. The Defendant submits that it is a question of statutory construction as to whether those provisions require the Commissioner personally to carry out that function or by an authorised delegate under s 8 and, if the Commissioner is able to authorise someone else to carry out that function, whether that person must be an officer of the Australian Tax Office.

45. It is to be observed that ss 269-25 and 269-50, when referring to a function being performed by the Commissioner, are the same as almost all the other provisions in Sch 1 of the Taxation Administration Act 1953 by which a multitude of powers and functions are given to the Commissioner. The Defendant accepts that it would be impossible for the Commissioner personally to exercise all the powers and functions in Sch 1. The Defendant further accepts that the Commissioner may authorise an Officer of the ATO to perform administrative functions on his behalf, and that is so even though s 8 gives the Commissioner a broad power formally to delegate his functions and power, which delegation has in fact occurred. The Defendant is right to accept these matters as they are consistent with the majority judgment of the High Court in O'Reilly v State Bank of Victoria Commissioners (1983) 153 CLR 1; [1983] HCA 47, where Gibbs CJ said 11-13; [6]-[7]:

“The answer to the question whether the statute requires the power to be exercised personally by the person designated depends on the nature of the power and all the other circumstances of the case: cf. Re Reference under Ombudsman Act. s. 11 (45), per Brennan J. However, I should mention the line of authorities which commenced with Carltona Ltd. v. Commissioners of Works (46) and which are discussed in In re Golden Chemical Products Ltd. (47). Those authorities established that when a Minister is entrusted with administrative functions he may, in general, act through a duly authorized officer of his department. This result depended in part on the special position of constitutional responsibility which Ministers occupy, and in that respect these authorities are distinguishable from cases such as the present. However, they also rest on the recognition that the functions of a Minister are so multifarious that the business of government could not be carried on if he were required to exercise all his powers personally. Ministers are not alone in that position. This has been judicially recognized. In Commissioners of Customs and Excise v. Cure & Deeley Ltd. (48), it was said that the Commissioners in that case were in a position parallel to that of Ministers, and in Ex parte Forster; Re University of Sydney (49), the Senate of a University was regarded as being in a similar situation. I can see no reason why, in construing sections of the Act which confer powers on the Commissioner, it should not be proper to consider the undoubted fact that the Commissioner could not possibly exercise all those powers personally.

Section 264 confers on the Commissioner a power whose exercise will be likely adversely to affect rights of individuals. This is a reason for inclining in favour of the view that it must be exercised personally. On the other hand, that section, and a number of other sections of the Act, confer on the Commissioner powers which may be expected to be exercised in myriads of cases. Those other sections include ss. 166-169, 170 and 174, which give power to make and amend assessments and to serve notice of assessments. Since there are literally millions of taxpayers (according to Year Book Australia 1982, p. 577, there were over 5.6 million individual taxpayers in the year 1979-80) it would reduce the administration of the taxation laws to chaos if the powers conferred by those sections could be exercised only by the Commissioner or a Deputy Commissioner personally. It can not be supposed that the Parliament intended such a result. By s. 13 of the Act any reference in the Act to the Commissioner is deemed to include, in respect of matters as to which a Deputy Commissioner has exercised any power or function conferred upon him by delegation, a reference to that Deputy Commissioner. The power of delegation conferred by s. 8(1) of the Taxation Administration Act 1953 (Cth), as amended, enables the Commissioner to make a delegation “to a Deputy Commissioner of Taxation or other person”. In Re Reference Under Ombudsman Act, s. 1150, Brennan J. said that “The practical administrative necessity which warrants an authority's exercising his power by the acts of another disappears when the authority is empowered to delegate all of his powers and functions to that other.” The existence of a power to delegate is of course an important consideration in deciding whether the designated authority may act through an authorized agent. However, the fact that the Act itself contemplates that the delegation will be to a Deputy Commissioner only (notwithstanding that s. 8(1) of the Taxation Administration Act confers a wider power of delegation) suggests that it was not intended that there should be a wholesale delegation of powers to comparatively minor officials. But in any case it would hardly be practicable to make a delegation of that kind, and it seems to me that there exists, as the Parliament must have known, a practical necessity that the powers conferred on the Commissioner by the Act should be exercised by the officers of his Department who were acting as his authorized agents. On the whole I have reached the conclusion that the powers conferred by s. 264 were not intended to be exercised only by the Commissioner or his delegate personally but may be exercised through a properly authorized officer.”

46. Justice Wilson in the same case said at 30; [6]:

“It seems to me that a clear distinction is to be drawn between the delegation of a power and the exercise of that power through servants or agents: see the informative discussion by Brennan J. in Re Reference under Ombudsman Act, s. 11 (82).”

47. Notwithstanding these concessions, the Defendant submits that the printing, enveloping and posting of the Director's Penalty Notices by CCS was not posting by the Commissioner. The essential proposition is that the Commissioner may not authorise a person other than an Officer of the Australian Public Service to perform this administrative function.

48. Whilst the statements in O'Reilly, uttered as they were in 1983, were expressed in terms of administrative assistance from Officers of the department (cf Wilson J: “servants or agents”), the worker’s employment within the public service is not particularly pertinent to the reasoning beyond the importance of the accountability of a minister (cf the Commissioner). The reasoning in O’Reilly more pertinently reflects the modern reality of service provision by a big organisation like the ATO.

49. Joosse v Deputy Commissioner of Taxation [2002] VSCA 48 was a case which involved service of a Director's Penalty Notice, albeit under the provisions of the Income Tax Assessment Act 1936 (Cth). The County Court of Victoria had rejected the director's application to set aside a default judgment. On an application for leave to appeal, the director argued that the person who placed the notice in his letter box was not a delegate of the Commission and therefore service had not occurred. The argument was rejected by Batt and Buchanan JJA at [14]:

“But it was said that Mr Johnston was not shown to be a delegate of the Commissioner under s.8 of the Taxation Administration Act and so was not authorised to give the notices. The answer to that submission is to be found in the decision of the majority in O'Reilly v. State Bank of Victoria Commissioners[7], which is not affected on this point by Baker v. Campbell[8].

50. The Defendant submitted that the Joosse case is distinguishable because the person who placed the notice in the letter box was an officer of tax office.

51. Pattenden v Federal Commission of Taxation (2008) 175 FCR 1; [2008] FCA 1590 was a case where a departure prohibition order was made by the appropriate delegate of the Commissioner and then served on the taxpayer. The taxpayer brought proceedings to challenge the making of the order but not there service of it on him. Justice Logan nonetheless said at 11; [44]:

“It was, rightly, no part of that submission that it was impermissible for an authorised person such as Mr Benson, having made a decision to make a DPO, to consign to a subordinate consequential, wholly procedural, clerical or “ministerial” tasks such as the affixing of a facsimile of the Deputy Commissioner's signature to the DPO or the communication to Mr Pattenden of the making of the DPO.”

52. Pascoe v Minister for Land Information [2024] NZCA 557 was a case where the Public Works Act 1981 specified a number of preconditions to the Minister acquiring private land for public works. Amongst other things, the Minister was required first to serve the landowner with a notice, to lodge a notice with the Registrar-General and to “make every endeavour to negotiate in good faith with the owner in an attempt to reach an agreement for the acquisition of the land”. The Court of Appeal held that the Minister was permitted to appoint a private service provider to perform each of these functions, including to negotiate on the Minister's behalf so long as the Minister retained ultimate responsibility for the negotiation. At [108]-[111] the Court said:

“The Pascoes argue that because these are all elements in the Minister’s “functions”, and the Minister has power to delegate functions, a delegation is necessary before any other person can perform them. However that does not follow as a matter of logic, or as a matter of legal principle. The powers conferred on the Minister by the PWA and by the State Sector Act/Public Service Act to delegate functions do not mean that only persons with formally delegated powers can perform each and every task involved in performing the Minister’s functions. It is still necessary to ask whether the particular task is of a kind that can only be carried out by a person with statutory authority to do so, having regard to relevant public law principles and to the specific statutory context. Put another way, it is necessary to ask whether engaging someone to perform the particular task amounts to a delegation of the statutory function. As Ms Gepp submitted, that depends on the nature of the task.

As a matter of public law principle, where a Minister’s statutory functions encompass matters such as gathering information, or administrative tasks, the Minister (or their officials) can engage any appropriate person to perform those tasks. Likewise, where a Minister’s functions include delivery of services or carrying out works, and those services/works do not themselves involve the exercise of any statutory power, the Minister or their officials can retain any appropriate person to carry out those tasks. The person who is allocated the task may be an employee of a public sector entity who does not hold any delegated powers. Or they may be an external private sector provider. Public law principles do not preclude, for example, the use of external lawyers to give effect to instructions to enter into a transaction, or to take steps to implement a transaction. They do not preclude the use of real estate agents to market a property. They do not preclude the use of private security firms to protect Crown properties. They do not preclude engaging private engineering firms to carry out geotechnical investigations, or engaging private construction firms to carry out construction work. The Minister (or a person with delegated authority to do so) must exercise any statutory powers and make any statutory decisions that affect a person’s rights or interests. But the Minister (or delegate) is not required to do themselves something that does not require specific statutory authority, for example because it could be done by an individual or a private entity with no statutory powers, unless an applicable statute requires this expressly or by implication.

The Public Service Act sets out a framework for delegation by public service chief executives of statutory functions or powers, including functions or powers delegated to the chief executive. Specific provision is made for delegation to a person outside the public service, subject to various safeguards.29 But it could not sensibly be suggested that this process must be followed where a department engages, for the purpose of carrying out its functions, a private sector supplier of administrative services or supporting services of the kinds referred to above. So for example the Ministry of Justice has, as one of its functions, the construction and maintenance of court buildings. But when the Chief Executive of that Ministry (or their delegate) enters into a contract on behalf of the Crown with a construction company to build a new courthouse, or to do maintenance work on an existing courthouse, the Chief Executive is not delegating that function. Rather, the Chief Executive is performing that function by making the relevant decisions about what is to be constructed, and engaging the construction company to provide a relevant input to give effect to that decision. The Chief Executive does not need to follow the delegation process set out in the Public Service Act in order to engage the construction company, because no delegation of a function or power is involved.”

53. In relation to service of a notice on the landowner, the Court said at [106]:

“The same applies in relation to service on the landowner of the Minister’s notice of desire to acquire the land, as required by s 18(1)(a). The Minister or a delegate must, as noted above, decide to give the notice under s 18. But physical service of the notice on the landowner can be carried out by any person authorised to do so.”

54. In this case, there can be no question that printing, enveloping and posting are administrative functions. They do not involve any exercise of discretion, and they do not call for the exercise of any judgment.

55. I accept the Defendant's submission that this is ultimately a question of construction. However, there is no basis to conclude that the performance of the Commissioner's powers or functions to post Director's Penalty Notices under s 269-25(1) is intended to be undertaken in the narrow way for which the Defendant contends. I have addressed above the question of the statute reflecting a policy requiring certain matters to be performed by public servants. Posting a Director's Penalty Notice may give rise to a controversy as to the fact and as to the date. It is important that the Commissioner is able to adduce evidence about those matters, which may be facilitated by Director’s Penalty Notices being posted by an Officer of the department with access to departmental records. However, as this case itself demonstrates, there is no reason why the adequate generation and retention of records cannot be achieved when a third‑party service provider is used.

56. As a further contention, the Defendant submits that the fact that there is a general authorisation of the Commissioners functions to public servants indicates that there is no authorisation to CCS to perform the particular functions it has undertaken in this case. I do not accept that submission. The evidence establishes that the ATO has for 15 years transmitted soft copies of bulk communications to be printed and posted by CCS. I draw the inference, in the absence of any evidence to the contrary, that there is no complaint on the part of the Commissioner about CCS carrying out such functions at any time. The officer called from CCS has made apparent how important it is to CCS to ensure that it performs its obligations to the ATO. Its own commercial interests demand it. The contention that CCS was somehow unauthorised to post the Director Penalty Notices to the Defendant lacks reality.

57. Further, the Commissioner has chosen to bring these proceedings in which he sues upon the three Directors' Penalty Notices in question and, in the face of that factual reality, it cannot be gainsaid that the Commissioner regards CCS as properly authorised to do exactly what the evidence shows it did in this case.

58. The Defendant further relies on cl 35.12 in the contract between the ATO and CCS, which addresses the question of agency. That provision has no application to the issues before the Court in these proceedings. The first part of that clause is directed to CCS holding itself out to third parties as an agent of the ATO. The second part says that there is no relationship of agency. The clause is directed to CCS seeking to bind the ATO to any obligation to a third party and vice versa. It does not undermine or detract in any way from the specific provisions of a service provision contract under which certain services are to be provided by the service provider.

59. I do not consider that the conclusion I have reached is proscribed by s 4A, which is set out above. Section 4A is directed to “[t]he staff necessary to assist the Commissioner”. That reference does not apply to the Commissioner being assisted by the acquisition of services from an external service provider where the services are of the nature of printing documents, placing them in envelopes and posting them.

60. Having found that the Director's Penalty Notices were posted on 29 August 2025, I am satisfied that they were posted by the Commissioner for the purposes of s 269-25(1). Having regard to the terms of s 269-25(4), it does not matter that they were not actually received by the Defendant.

61. In those circumstances, I will grant the relief sought by the Plaintiff in the Statement of Claim and make the following orders:

62. Judgment for the Plaintiff against the Defendant in the sum of $2,370,067.18 (inclusive of pre-judgment interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) in the amount of $454,844.18 to 18 November 2025).

63. The Defendant pay the Plaintiff’s costs as agreed or assessed.

**********