Deputy Commissioner of Taxation v Slowey [2025] VCC 817

(a) Affidavit of Michael Slowey dated 14 May 2025;

(b) Supplementary affidavit of Michael Slowey dated 22 May 2025.

1. The test to be applied in a summary judgment application was settled by the Court of Appeal in Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd,[3] being whether the respondent to the application for summary judgment has a 'real' as opposed to a 'fanciful' chance of success.
2. In Lysaght Building Solutions, Warren CJ and Nettle JA stated at [35]:[4]

(a) The test for summary judgment under s 63 of the Civil Procedure Act 2010 is whether the respondent to the application for summary judgment has a "real" as opposed to "fanciful" chance of success;

(b) The test is to be applied by reference to its own language and without paraphrase or comparison with the "hopeless" or "bound to fail test" essayed in General Steel;

(c) It should be understood, however, that the test is to some degree a more liberal test than the "hopeless" or "bound to fail" test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent's case is not hopeless or bound to fail, it does not have a real prospect of success;

(d) at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.

1. The 'no real prospect of success' test was re-affirmed by the Court of Appeal in Mandie v Memart Nominees Pty Ltd.[5] Kyrou, Ferguson and McLeish JJA observed (omitting citations):

[42] The CP Act has changed the litigation landscape. One of the main purposes of that legislation is to reform practice and procedure in civil proceedings, including by reforming the law relating to summary judgment. More than ever, the focus is now pointedly on efficiency and cost-effectiveness, albeit that they are not the only, nor the predominant, considerations. . . .

[45] According to Lysaght: a prospect which is not 'real' is 'fanciful'; although the 'no real prospect of success' test in s 63(1) of the CP Act is more liberal than the common law test of 'hopeless' or 'bound to fail', there may not be much difference between them in practice; and, properly understood, a real question to be tried is one which realistically might result in the respondent to an application for summary judgment succeeding in the proceeding.

1. The discretion of the Court to grant summary judgment under the Civil Procedure Act is subject to s 64 which provides that the Court may order that a civil proceeding proceed to trial if the court is satisfied that, despite there being no real prospect of success, the dispute is of such a nature that only a full hearing on the merits is appropriate.

1. I will first deal with whether the Deputy Commissioner has established liability on the evidence of its claims against the defendant. I will then deal with the defences.
2. Under s 255-5(1), a tax-related liability that is due and payable is a debt due to the Commonwealth and payable to the Deputy Commissioner. Pursuant to s 255-5(2), the Deputy Commissioner may sue to recover an unpaid tax-related liability in a court of competent jurisdiction, and the evidentiary provisions of Division 350 apply.

1. It is not in dispute that Mr Slowey was at all material times a director of each of the Custom Clad Entities. The plaintiff's claim arises from the Custom Clad Entities' failure to meet their PAYGW obligations under Division 12 and Division 16.
2. Division 12 obliges companies to withhold certain amounts from payments they make, including withholding an amount from salary, wages, commission, bonuses or allowances it pays to an individual as an employee.[6] Division 16-A imposes various other obligations on a company which, pursuant to Division 12, is obliged to withhold an amount from a payment. Division 16 operates to set the time when the company must withhold the payment, namely at the time of making the payment of salary, wages and other payments (s 16-5), to discharge the company from liability to the recipient for the amount withheld (s 16-20) and creates an offence and imposes penalties on the company for failure to withhold as required (ss 16-25 and 16-30).
3. The director penalty regime under Division 269 provides for the imposition of penalties on directors of companies which fail to comply with the provisions of Divisions 12 and 16. The principles were summarised by the Deputy Commissioner in their written submissions in support of this application as follows. Mr Miller, Counsel for Mr Slowey, expressed no disagreement with these principles. I have added some commentary to the summary.

(a) Division 269 relevantly applies if, on a particular day (initial day), the company withholds an amount under Division 12 and the company is obliged to pay that amount to the Commissioner in accordance with Subdivision 16-B on or before a particular day (due day) (PAYGW Obligation): s 269-10(1) item 1.

(b) The directors of the company (from time to time) on or after the initial day must cause the company to comply with its obligation: s 269-15(1). They continue to be under that obligation until one of the events set out in s 269-15(2) occurs.

(i) This is the section that imposes a continuing statutory obligation on a director to cause the company to remit amounts withheld to the Deputy Commissioner.

(c) A director is liable to pay a penalty if, at the end of the due day, their obligation under s 269-15 continues: s 269-20(1).

(i) In other words, should the director not satisfy their obligation to cause the company to have remitted the PAYGW amounts to the ATO by the due day, they become liable to pay a penalty.

(d) The Deputy Commissioner must not commence proceedings to recover a director penalty until 21 days after giving the director a written notice (DPN) under s 269-25. A DPN does not itself impose a liability or create a right of action. Rather, it is a temporal precondition to the Deputy Commissioner's power to commence proceedings to recover the penalty.[7] The director's obligations do not commence with the DPN, but arise by operation of s 269-15.[8]

(i) No issue arises on this application as to service of the DPNs.

(e) Pursuant to s 269-30(1), a director penalty is remitted (meaning discharged or released) if, before the DPN is given or within 21 days after it is given, the director stops being under the s 269-15 obligation. Section 269-30(1) is subject to s 269-30(2), which prescribes circumstances in which the penalty will not be remitted, despite the appointment of an administrator or the commencement of a winding up - these are known as the "lockdown provisions".

(i) Mr Miller placed no reliance on any alleged remission of penalties in this application.

1. In a proceeding to recover a tax-related liability, a statement made by the Deputy Commissioner in their claim is prima facie evidence of the matter.[9] Evidence may be given by affidavit.[10]
2. A certificate signed by the Commissioner is prima facie evidence that the amount of a tax related liability is payable from that time and that the particulars stated in the certificate are correct.[11] Such certificates and prima facie evidence provisions are commonly used and relied upon in court proceedings.[12]
3. A certificate under s350-10(3) is not conclusive evidence of liability for the amount claimed and it does not alter the burden of proof, although it may be determinative where the taxpayer does not go into evidence.[13]
4. To displace prima facie evidence, a defendant must do more than simply plead that the quantum of the tax debt is incorrect.[14]
5. The affidavit of Sayeda Islam affirmed 28 November 2024 filed in support of this application exhibited three Certificates under s 350-10(3) for the Custom Clad Entities signed by Julian Nicholas Roberts, Deputy Commissioner. There is nothing in the defendant's materials which displaces the evidence established prima facie by the Deputy Commissioner. I accept that these certificates have the evidentiary effect under s 350-10(3).
6. Further, Mr Miller properly conceded that Mr Slowey was served with each of the DPNs. He also accepted that, other than the matters he relies on in his submissions as to defences that I will deal with below, the amounts in the DPNs are correct.
7. I am therefore satisfied that, save for the defences discussed below, the Deputy Commissioner has made out the formal proofs to establish that the defendant is liable on each of the DPNs issued.

1. In its Statement of Claim, the Deputy Commissioner originally sought to recover from Mr Slowey:

(a) $673,528.21 for director penalties;[15] and

(b) interest pursuant to s 60 of the Supreme Court Act 1986; and

(c) costs.

1. In summary, the Deputy Commissioner claims that:

(a) each of the Custom Clad Entities withheld amounts under Division 12, but failed to pay on the Due Day the withheld amounts to the Deputy Commissioner for the following periods:

(i) for Custom Clad, for periods between 1 December 2016 to 31 May 2018;

(ii) for Custom Clad Services, for periods between 1 March 2017 to 30 April 2018;

(iii) for Custom Clad Projects, periods between 1 October 2017 to 30 June 2018;

(b) by reason of failing to remit the PAYGW amounts, Mr Slowey as director of the Custom Clad Entities:

(i) became liable to pay the Deputy Commissioner a penalty under s 269-20(1);

(ii) that each penalty became due and payable pursuant to s 269-20(2) at the end of the Due Day; and

(iii) the amount of each penalty was pursuant to s 269-20(5) equal to the amount that the Custom Clad Entities fail to remit.

1. The defendant's defence dated 6 September 2023, raised 4 defences to the plaintiff's claims:

(a) that he was not served with the DPNs. This was ultimately conceded by Mr Miller at the hearing on 22 May 2025, and will not be addressed;

(b) that he took all reasonable steps as director to cause administrators to be appointed to the companies, or caused them to begin being wound up (all reasonable steps defence);

(c) that the Deputy Commissioner is estopped from bringing the claims because the defendant paid money to the Custom Clad and Custom Clad Project liquidators (pursuant to deeds of settlement of insolvent trading claims) and paid into a DOCA fund pursuant to a Deed of Company Arrangement entered into in respect of Custom Clad Services. Mr Slowey says that the conduct of the ATO in voting in favour of the settlements and the DOCA leads to an estoppel so as to prevent the Deputy Commissioner from proceeding with this claim (estoppel defence); and

(d) that if the Deputy Commissioner has received, or is entitled to receive, payment from the liquidators of the Custom Clad and Custom Clad Project liquidators or payment from the administrator of Custom Clad Services, his liability to pay penalties is discharged to that extent (payment defence).

1. I will now consider each of the defences in turn to establish whether the defendant has a real, meaning other than fanciful, prospect of success in defending the plaintiff's claim.

1. The defendant claims he has a valid defence under s 269-35(2)(a), in that he took all reasonable steps to ensure that he caused administrators and/or liquidators to be appointed to each of the Custom Clad Entities, and that he actually achieved that outcome.
2. Section 269-35(2) provides that:

(2) You are not liable to a penalty under this Division if:

(a) you took all reasonable steps to ensure that one of the following happened:

(i) the directors caused the company to comply with its obligation;

(ii) the directors caused an administrator of the company to be appointed under section 436A, 436B or 436C of the Corporations Act 2001;

(iia) the directors caused a small business restructuring practitioner for the company to be appointed under section 453B of that Act;[16]

(iii) the directors caused the company to begin to be wound up (within the meaning of that Act); or

(b) there were no reasonable steps you could have taken to ensure that any of those things happened.

(3) In determining what are reasonable steps for the purposes of subsection (2), have regard to:

(a) when, and for how long, you were a director and took part in the management of the company; and

(b) all other relevant circumstances.

1. Section 269-35(4)(a) relevantly provides that the defence of reasonable steps can be relied upon for the purposes of "proceedings in a court to recover from you a penalty payable under this Division".
2. In determining whether a director has taken all reasonable steps, the test is an objective one.[17] A defendant must prove that he or she took all steps which were reasonable, having regard to the circumstances of which the defendant, acting reasonably knew, or ought to have known.[18] Alternatively, a director must show that no reasonable steps could have been taken in relation to all three[19] options available under s 269-35(2).[20]
3. A final opportunity is given to a director within 21 days after written notice of the penalty is given to cause the company's liability to be discharged, an administrator to be appointed, or the company to commence winding up.[21]
4. In Roche, the Western Australian Court of Appeal followed and applied Miller v Deputy Commissioner of Taxation (1997) 98 ATC 4059 and Canty. The Court said (at [35]):

So, compliance with s 269-35(2)(a) requires the director to have taken all reasonable steps to ensure that one of the three alternative events specified happened. The taking by the director of 'all reasonable steps to ensure', within s 269-35(2)(a), requires that each of the alternative events be addressed, either on the basis of taking reasonable steps to ensure the event happened or declining to do anything about that particular event on the basis that there were no reasonable steps that the director could have taken to ensure that the event happened. See, generally, Miller v Deputy Commissioner (1997) 98 ATC 4059, 4063 - 4064 (Mason P, Beazley JA agreeing).

In our respectful view, the Master was correct to find that the appellant had no arguable defence to the claim. To establish a defence under s 269-35(2), the appellant was required to prove that from the time he came under the obligation in s 269-15 he took all reasonable steps to ensure that one of the s 269-35(2)(a) events occurred or that there were no reasonable steps that he could have taken to ensure that any of those events happened.

1. Mr Miller highlighted the following passage in Canty at [40].

Thus a person under the duty, who acted reasonably in choosing one of the possible events and took all reasonable steps to bring it about would, to that extent, make out the par (a) defence although no attempt was made at that stage to achieve compliance in any other way. A person who acted reasonably in choosing between the alternatives but failed to take all reasonable steps to bring about the selected event would fail, as would a person who acted unreasonably in choosing the option to be pursued.

1. Mr Miller submitted that that passage means that Mr Slowey is only required to establish that he took all reasonable steps to ensure that one of the three permitted outcomes were achieved and that otherwise his client is relieved of having to address the other options. He says that this is so because his client did in fact achieve the outcome of causing Custom Clad (on 19 December 2018) and Custom Clad Services (on 10 April 2019) to enter into Voluntary Administration and Custom Clad Projects to enter into liquidation (on 10 April 2019).
2. This submission oversimplifies what is a complicated regime.
3. The need to take "all reasonable steps" to make out the defence must be read in light of the Object of the Division which is:

The object of this Division is to ensure that a company either:

(ii) Division 268 (estimates of PAYG withholding liabilities and superannuation guarantee charge); and

(b) goes promptly into voluntary administration or restructuring under the Corporations Act 2001 or into liquidation.

1. It can be seen that Parliament's intention is to ensure that a company remits to the Deputy Commissioner the amounts of PAYGW withheld, or if it cannot do so, (meaning is unable to make the relevant remission by reason of insolvency), to promptly enter into voluntary administration, restructuring or liquidation.
2. One of the means employed by the Division to achieve this objective is the imposition of duties on directors to cause these things to occur: s 269-15(1) and (2).
3. This object gives colour to the meaning of the words "take all reasonable steps" in the defence available to directors under s 269-35(2). It seems to mean that in order for a director to avail themselves of the defence, they must either remit the withheld monies to the Deputy Commissioner or take "all" reasonable steps to appoint an administrator or begin the winding up process "promptly" or within a short space of time.
4. Therefore, in order to take the defence, it is not enough for a director to have taken no steps for a period of months and then to take steps to appoint an administrator or begin the winding up process. This would fail to engage the defence on two bases. First, because the director would not have taken relevant steps promptly. Secondly, unless there were no steps that the director could have reasonably taken (which they would need to prove under s 269-35(2)(b)) they will have failed to have taken "all" reasonable steps. So, it is also insufficient to have taken "some" reasonable steps. The plain words of the section are exacting and require the director to have taken "all" reasonable steps.
5. The passage that Mr Miller relies on in Canty at [40] may assist some directors in making out the defence in some circumstances.
6. Obviously, if the director causes the company to enter into voluntary administration promptly, it will be unnecessary for them to also address by evidence that they had also taken all reasonable steps to commence winding up.
7. It seems to me that the passage in Roche at [40] better captures what a director needs to prove in order to make out the defence. That is "from the time he came under the obligation in s 269-15 [the director] took all reasonable steps to ensure that one of the s 269-35(2)(a) events occurred or that there were no reasonable steps that he could have taken to ensure that any of those events happened"
8. Although Mr Miller relied upon the passage he highlighted in Canty, he did accept that his client had to demonstrate by evidence that he had taken all reasonable steps to cause the company to take one of the three courses, from the due date for the PAYGW payments until the date that the relevant company entered into voluntary administration or the commencement of winding up.

1. Mr Miller submits that the question of whether Mr Slowey took all reasonable steps to achieve the outcome of appointing administrators and liquidators is a question for trial. That is, that the issues should not be disposed of summarily in the plaintiff's application.
2. It is necessary to consider the evidence in support of Mr Slowey's reasonable steps argument.
3. Mr Slowey deposed to the circumstances that led the three companies to be unable to remit the PAYGW amounts to the Deputy Commissioner. Much of his evidence was in the most general and conclusionary form. He provided no supporting documents to make good many of the propositions he deposed to, particularly in respect of his second affidavit. Nevertheless, for the purposes of this application, I will approach this evidence at its highest, as though Mr Slowey would be able to lead this evidence at trial.
4. He said that in early 2016 Custom Clad was engaged as a sub-contractor by an unrelated company, Custom Facades Pty Ltd, as Head Contractor, to supply and install cladding on a number of building projects. Custom Clad completed work on various projects for Custom Facades and was paid for that work until about August 2017.
5. Mr Slowey says from late 2017 Custom Clad continued to work and submit payment claims. In February 2018 he was advised that Custom Facades had gone into liquidation. He was also told that Custom Clad was contractually obliged to continue providing its work but that the "Head Contractor" would pay for past and future works provided by Custom Clad at the completion of the projects.
6. He says that Custom Clad therefore continued to provide its services until July 2018 by which time it had unpaid claims of approximately $2.0 million. He says that he was relying on the payment of these claims by either the liquidators of Custom Facades or the Head Contractor or the developer to be able to pay Custom Clad's debts to the Deputy Commissioner.
7. In about September 2018 he says that the CFMEU became involved in attempting to facilitate the payment of all sub-contractors. He says that he reasonably believed that this would result in some or all of the amounts owed to Custom Clad being paid, in which case he would be able to pay the Deputy Commissioner.
8. He says that by about late November 2018 it was apparent to him that no such payments would be made. He says that at this stage Custom Clad was unable to pay its debts and wages. He also says that it was at this time that he became aware that the Deputy Commissioner had issued a creditor's statutory demand.
9. On 19 December 2018, Mr Slowey appointed a voluntary administrator to Custom Clad.
10. On 5 February 2019, the creditors resolved to appoint liquidators to Custom Clad.
11. Further, in late November 2018, when it became apparent that Custom Clad would not be paid, he determined that Custom Clad Services and Custom Clad Projects would have to enter external administration as well.
12. To that end:

(a) On 10 April 2019 he placed Custom Clad Services into voluntary administration; and

(b) On 10 April 2019, he placed Custom Clad Projects into voluntary liquidation.

1. On 16 May 2019, the creditors of Custom Clad Services resolved to enter into a Deed of Company Arrangement (DOCA), under which a deed fund of $55,000 was paid and distributed in accordance with that DOCA.
2. Mr Slowey also deposed that there were no other reasonable steps he could have taken to ensure that the Custom Clad Entities paid their tax liabilities due to reliance on a debt to be paid from a separate company (Custom Facade) other than working with that company or the CMFEU to obtain payment of that debt.
3. Mr Miller submitted that for each of Mr Slowey's Custom Clad Entities, he achieved one of the outcomes listed in s 269-35(2)(a).
4. He also submitted that the evidence provided by Mr Slowey was sufficient to establish that he had a real prospect of succeeding on this defence for each of the Custom Clad entities.

1. The Deputy Commissioner submits that Mr Slowey's "all reasonable steps defence" has no real prospect of success.
2. The Deputy Commissioner submits that this defence can only succeed if the director establishes by evidence that he took all reasonable steps, throughout the whole period that the director's obligation to remit the PAYGW amounts to the Deputy Commissioner subsisted, to cause one of the three outcomes mandated by the section to occur.
3. Mr Lum (counsel for the Deputy Commissioner) submitted that Mr Slowey's evidence on this point fails to address the steps taken by Mr Slowey in the periods 1 March 2017 to 1 November 2018.

(a) In respect of Custom Clad - the due dates for the 12 PAYGW amounts that are sued upon to have been remitted to the ATO commenced on 1 December 2016 and continued until 19 December 2018 (the date that the company was placed into Voluntary Administration).

(i) The first affidavit of Mr Slowey deposes only that in mid-November 2018 he became aware of a creditor's statutory demand having been served and thereafter resolved to put the company into Voluntary Administration.

(ii) Mr Lum says that Mr Slowey's failure to have deposed to having taken all reasonable steps during the period from 1 December 2016 until mid-November 2018 means that he cannot make good the "all reasonable steps defence".

(b) In respect of Custom Clad Services - the due dates for the 8 PAYGW amounts that are sued upon to have been remitted to the Deputy Commissioner commenced on 1 March 2017 and continued until 9 April 2019 (the date that company was placed into Voluntary Administration).

(i) Mr Slowey deposed that after receiving the DPN in respect of Custom Clad Services on 1 November 2018, he took steps to place the company into Voluntary Administration on 10 April 2019.

(ii) Mr Lum submitted that, even taken at its highest, this evidence fails to account for the steps taken by Mr Slowey during the period 1 March 2017 to 1 November 2018 such that the "all reasonable steps" defence must fail.

(c) In respect of Custom Clad Projects - the due dates for the 2 PAYGW amounts that are sued upon to have been remitted to the Deputy Commissioner commenced on 28 February 2018 and 27 August 2018 respectively and continued until 10 April 2019 (the date that company was placed into Voluntary Administration).

(i) Mr Slowey's evidence simply deposes to having placed this company into Voluntary Administration on 10 April 2019.

(ii) Mr Lum submitted that there is no evidence at all advanced to explain what Mr Slowey did in this regard in the period prior to 10 April 2019, such that the "all reasonable steps" defence must fail.

1. I am satisfied that Mr Slowey has no real prospect of succeeding on the "all reasonable steps defence" under s 269-35(2)(a) in respect of any of the Custom Clad Entities. This is because, as was conceded by Mr Miller, it was necessary for him to have shown that "all reasonable steps" were taken throughout the whole period that the director's obligation to cause the companies to remit the relevant amounts subsisted. He did not do this.
2. Conspicuously, he did not provide any evidence to show that from the time that he came under the obligation to cause the companies to remit the PAYGW amounts, he took all reasonable steps to either remit the amounts or put the companies into voluntary administration or commence winding up promptly.
3. In respect of Custom Clad, the due date to remit commenced on 1 December 2016 and continued until December 2018 (when he placed the company into voluntary administration). Mr Slowey's evidence is that Custom Clad commenced doing work for Custom Facades in early 2016. His evidence is that Custom Clad did work for Custom Facades "in late 2016" and "Custom Facades made payment to Custom Clad for the works it had completed on the Project until August 2017."
4. Between 1 December 2016 and 31 August 2017, 7 PAYGW amounts were withheld by Custom Clad. Mr Slowey's duty to cause the company to remit or enter into voluntary administration or commence winding up continued throughout this time.
5. Given that the company seems to have been paid for its work up until the end of August 2017, it is difficult to understand why the relevant amounts were not remitted.
6. Mr Slowey's evidence is silent as to what steps he took to ensure that Custom Clad either remitted the PAYGW amounts in the period "late 2016" to "August 2017" or entered voluntary administration or commenced winding up.
7. That is enough to mean that Mr Slowey's reliance on the "all reasonable steps" defence in respect of Custom Clad has no reasonable prospects of success.
8. The fact that Mr Slowey belatedly put Custom Clad into voluntary administration on 19 December 2018 does not acquit the necessity to show that, in the prior period from 1 December 2016 to the entry into voluntary administration, he had taken "all reasonable steps" to cause one of the possible outcomes.
9. Mr Slowey relies on the fact that he could not remit the payments because he needed to be paid the outstanding claims by one or other of the parties who might have paid them.
10. This does not answer the legislative choice that was open to him. The legislature does not permit a director to simply wait for events to occur at some time in the future that might release funds to enable the company to remit its PAYGW amounts. If a point in time comes when this cannot be done, in order to avail themselves of the defence, the director must take all reasonable steps to cause the company to enter voluntary administration or commence winding up "promptly".
11. It is not enough to show that some steps that failed were taken at some time. It is also not sufficient to show that one of the outcomes was achieved at a particular time without having demonstrated that all reasonable steps were taken in the period preceding that outcome.
12. In respect of both Custom Clad Services and Custom Clad Projects, I note that they were each obliged to remit PAYGW amounts from 26 May 2017 and 28 February 2018 respectively until 10 April 2019 (the date that they were placed into voluntary administration or liquidation). Mr Slowey was under an obligation to ensure that they did so from those dates.
13. I can only infer from Mr Slowey's evidence that these companies' financial fate was intimately bound up with the financial fate of Custom Clad. This is apparent from his evidence that when it was apparent in November 2018 that Custom Clad would not be paid, he then considered what that meant for his other companies. The next evidence he gives is that Custom Clad went into liquidation "in February 2019". Then he says that he placed Custom Clad Services into voluntary administration and Custom Clad Projects into liquidation on 10 April 2019.
14. He gives no evidence at all as to what reasonable steps these companies took to either remit the amounts or take either of the other permitted courses promptly between 26 May 2017 and 28 February 2018 respectively.
15. He gives no evidence as to the reasonable steps he took in respect of each of those companies from the time that he became aware that Custom Clad would not be paid in mid-November 2018 until 10 April 2019.
16. Given this lack of evidence, I conclude that Mr Slowey has no real prospect of successfully making out the all reasonable steps defence in respect of Custom Clad Services and Custom Clad Projects.

1. Mr Slowey's defence is that the Deputy Commissioner's conduct in approving settlements of insolvent trading claims in the winding up of Custom Clad and Custom Clad Projects, and in approving the Custom Clad Services DOCA operates to estop the Deputy Commissioner from pursing the DPNs. Mr Miller submitted that on this basis, there was a real prospect that Mr Slowey's defence would succeed at trial.

1. First, Mr Miller submitted that in the Custom Clad winding up, the liquidator made an insolvent trading claim against Mr Slowey, including for an amount comprising the underlying debt owed by Custom Clad to the Deputy Commissioner. The insolvent trading claim was settled by agreement with the liquidator, which was then approved by creditors which would have included the Deputy Commissioner.
2. Secondly, Mr Miller submitted that the creditors of the Custom Clad Services DOCA, which would have included the Deputy Commissioner, voted on 16 May 2019 to accept the DOCA, and the deed fund of $55,000. The effect of the DOCA, binding all creditors under s 444D of the Corporations Act 2001 (Cth), was to release Custom Clad Services from all debts (including the underlying debt owed by Custom Clad Services to the Deputy Commissioner which is the subject of the Custom Clad Services DPN).
3. Thirdly, Mr Miller submitted that in the Custom Clad Projects winding up, the liquidator made an insolvent trading claim against Mr Slowey, including for an amount comprising the underlying debt owed by Custom Clad Projects to the Deputy Commissioner (which is the subject of the Custom Clad Projects DPN). The insolvent trading claim was settled by agreement with the liquidator, which was then approved by the creditors, which would have included the Deputy Commissioner.
4. Mr Miller submitted that these matters give rise to a course of conduct by the Deputy Commissioner which induced Mr Slowey to form the belief that he was not liable for any further amount to the Deputy Commissioner. He says that Mr Slowey acted to his detriment (by making payment under the agreements) in reliance on that belief, and that it is, in all the circumstances, unconscionable for the Deputy Commissioner to now pursue Mr Slowey under the DPNs.
5. Mr Miller candidly accepted that courts have generally concluded that estoppel does not lie against a fiscal authority on the basis that it cannot be prevented from pursuing a statutory duty to assess and collect tax in accordance with law.[22] He did however rely on a few isolated authorities in which courts have declined to grant summary judgment and allowed estoppel defences against fiscal authorities to proceed to trial.[23]
6. Mr Miller cited the following statement of Gyles J in Remuneration Planning Corporation Pty Ltd v Federal Commissioner of Taxation (in which his Honour refused a summary judgment application):[24]

"...It seems to me to be that there is a strong probability that both a first instance judge and a full court will apply the "accepted" view and dismiss any claim made for estoppel regardless of the particular facts that are proved. It is therefore arguably a waste of time and resources to hear a case on the off-chance that the High Court might take a different view of the law. On the other hand, it is a large step to shut out a case the like of which has never received full consideration in a developing area of the law without considering and finding the facts."

1. Mr Lum submitted that the defendant's estoppel argument has no real prospect of success. He relied on Deputy Commissioner of Taxation v Miller (No.2),[25] and the cases cited therein. He submitted that estoppel cannot limit the Deputy Commissioner's duty to recover tax-related liabilities.
2. Mr Lum also submitted that, regardless of whether estoppel is available as a matter of law, no estoppel could arise where:

(a) it is not alleged that the Deputy Commissioner made any representation that he would not seek to recover the director penalties for which the defendant is liable;

(b) any assumptions the defendant may have had about whether he remained liable to pay the director penalties were unreasonable because they were contrary to the operation of Division 269; and

(c) any compromise of the companies' obligations to the Deputy Commissioner could not and did not compromise the defendant's personal liability to pay the director penalties, which are separate, parallel liabilities. These could be remitted only by actual payment to the Commissioner by the defendant or the companies (s 269-40(2)), which has occurred only to the extent set out in the Second Islam Affidavit and the Prasad Affidavit.

1. As explained by Russell DCJ in Miller, even if the elements of estoppel are satisfied, an authority cannot be prevented from carrying out its public duties passed to it by legislation:[26]

No conduct on the part of the Deputy Commissioner could operate as an estoppel against the operation of the TAA. Specifically, any conduct of or representation made by the Deputy Commissioner cannot give rise to any estoppel, election or waiver, or analogous doctrine, which would conflict with the operation of the TAA and her statutory duties relating to the collection and recovery of unpaid tax-related liabilities due and payable under the TAA.

1. Mr Miller emphasised two authorities to support his proposition regarding the estoppel defence: Federal Commissioner of Taxation v Winters (1997) 97 ATC 4967 and Deputy Commissioner v Roget (No 2) [2014] WADC 25.
2. Winters was considered by Mukhtar AsJ in Deputy Commissioner v De Simone:[27]

It is convenient but not impressive for the defendant in this case to instil Winters and assert the presence of an available estoppel in the face of a statute. That case is very much confined to its peculiar facts, as estoppels are.

The Commissioner is the person charged to administer that law, and bound to do so in accordance the statute. In that situation, an argument that there is nevertheless room for the operation of any doctrine of estoppel has no real prospects of success.

1. In Roget, Davis DCJ found that in spite of the general principle that estoppel cannot prevent the exercise of a statutory obligation, "a taxpayer may raise an estoppel on a limited basis in relation to the alleged conduct of the Commissioner after the issue of a DPN".[28] Roget however concerned positive statements made by an Australian Taxation Office officer that the ATO would not pursue the defendant further, which was seen to give rise to an arguable case of equitable promissory estoppel. That is not the case in the proceeding before me.
2. Further, I repeat my comments at paragraph below in relation to the test for summary judgment applied in Remuneration Planning. In Roget the test for summary judgment applied was different to that which applies before me.
3. In the end, on this question of law, the balance of the authorities that I am bound to apply including the dicta of Kitto J in Wade[29] in which his Honour said "No conduct on the part of the commissioner could operate as an estoppel against the operation of the Act" are against the proposition that an estoppel lies against the Deputy Commissioner.
4. To the extent that Mr Miller relies on the passage in Remuneration Planning set out at paragraph above, that decision applied the standard applicable at that time for determining applications for summa[30] judgment.30 As I have set out at paragraphs to above, the test for summary judgment is now different. On that basis, the decision of Remuneration Planning is of no real assistance.
5. Even if that were not the case, there is not sufficient evidence of any representation made by the Deputy Commissioner to Mr Slowey. Further, there is a paucity of evidence concerning any detrimental reliance by Mr Slowey based on the alleged conduct of the Deputy Commissioner.
6. Given those matters, Mr Slowey's defence of estoppel has no real prospects of success.

1. Mr Slowey relies on a defence under s 269-20(5)[31] and s 269-40 that certain other payments were made by the Custom Clad Entities which should reduce his liability.
2. Section 269-40 provides as follows:

Effect of director paying penalty or company discharging liability

(1) This section applies to the following liabilities:

(a) the liability of the company under its obligation referred to in section 269-10;

(b) the liability of each director (or former director) to pay a penalty under this Division in relation to the liability of the company referred to in paragraph (a);

(c) a liability under a judgment, to the extent that it is based on a liability referred to in paragraph (a) or (b).

Discharging one liability discharges other liabilities

(2) If an amount is paid or applied at a particular time towards discharging one of the liabilities, each of the other liabilities in existence at that time is discharged to the extent of the same amount.

(3) If, because of section 268-20 (Nature of liability to pay estimate), one of the liabilities is discharged at a particular time to the extent of a particular amount, each of the other liabilities in existence at that time is discharged to the extent of the same amount.

(4) This section does not discharge a liability to a greater extent than the amount of the liability.

1. Mr Miller submitted that in the winding up of Custom Clad and Custom Clad Projects, and in the administration of Custom Clad Services, certain sums were paid to the Deputy Commissioner, which should reduce Mr Slowey's debt to the Deputy Commissioner. Taking each of the Custom Clad Entities in turn:

(a) Mr Miller submitted that as the liquidator declared a dividend of 13.99 cents in the dollar, calculated as a return of $48,143.55 to the Deputy Commissioner,[32] Mr Slowey's penalty should be reduced accordingly.

(b) Mr Miller submitted that under the Custom Clad Services DOCA, the entire debt owing to the Deputy Commissioner was released or discharged, and the Deputy Commissioner is bound by s 444D of the Corporations Act 2001 (that all creditors are bound by the DOCA in respect of claims that they had against the company arising before the date of the document). He says that Custom Clad Services is therefore released from the Deputy Commissioner's claim against it.

(c) Mr Miller also submitted that it is arguable that the operation of the DOCA also constitutes payment of the underlying debt for the purposes of s 269-40, notwithstanding the decision in Eaton v Deputy Commissioner of Taxation which he says can be distinguished from the current application (and which I will address further below).[33]

(d) Mr Miller says that if I am not satisfied that this constitutes payment under that provision, then it should affect the amount of penalty payable under s 269-20(5), given that the entire debt has been released or discharged.

(e) Mr Miller submits that the evidence shows, that as a creditor of Custom Clad Projects, the Deputy Commissioner is expected to receive a dividend from the liquidator, but that the amount is yet to be determined.[34] He submits that any liability owing to the Deputy Commissioner should be reduced by any payments expected to be made.

1. Mr Miller also relied on s 269-15(3), which he submitted prevents the Deputy Commissioner from recovering the liabilities from Mr Slowey.
2. Section 269-15(3) provides:

(3) The Commissioner must not commence, or take a procedural step as a party to, proceedings to enforce an obligation, or to recover a penalty, of a director under this Division if an *arrangement that covers the company's obligation is in force under section 255-15 (Commissioner's power to permit payments by instalments).

Note 1: The arrangement may also cover other obligations of the company.

Note 2: Subsection (3) does not prevent the Commissioner from giving a director a notice about a penalty under section 269-25.

1. Mr Miller also submitted that the DOCA constitutes an "arrangement" under s 255-15 to permit the company to pay by instalments - which by s 269-15(3) prevents recovery of penalty and releases claims by the Deputy Commissioner against the company.
2. Section 255-15 provides:

(1) The Commissioner may, having regard to the circumstances of your particular case, permit you to pay an amount of a *tax-related liability by instalments under an *arrangement between you and the Commissioner (whether or not the liability has already arisen).

(2) The *arrangement does not vary the time at which the amount is due and payable.

Note: Despite an arrangement under this section, any general interest charge or other relevant penalty, if applicable for any unpaid amount of the liability, begins to accrue when the liability is due and payable under the relevant taxation law, or at that time as varied under section 255-10 or 255-20.

1. Mr Lum submitted that Mr Slowey's argument that liability in relation to Custom Clad Services was discharged by a DOCA executed between him and the company's administrator has no reasonable prospect of success. He submits that the DOCA only relates to Custom Clad Services' liabilities and only binds the Deputy Commissioner in respect of the Commissioner's claim against that company. He says that this has no effect on what is an independent statutory liability owed by Mr Slowey as director of the company to the Deputy Commissioner.[35]
2. Mr Lum says further that Mr Slowey's liability cannot be discharged from any payments that the Commissioner is "entitled to receive" from the liquidation of Custom Clad and Custom Clad Projects or the administration of Custom Clad Services. Mr Lum submitted that the director penalties can only be discharged to the extent that an amount is actually "paid or applied" to the Deputy Commissioner under s 269-40. Mr Lum cited the following passages of Santow JA's judgment in Eaton (Handley JA and Hodgson JA in agreement):[36]

[37] There are several difficulties with this contention [that the DOCA discharged director penalties in equivalent amount]. The first is that the expression "paid or applied" in s222AOH(2)(a) must necessarily refer to a payment or application of money to the Commissioner. Otherwise it could hardly go towards "discharging" one of the parallel liabilities, being a parallel liability to the Commissioner in each case. Here the $51,000 is paid under the Deed of Company Arrangement to the Company itself thence to be applied in accordance with the Deed. There is no evidence that any amount is payable pursuant to the Deed to the Commissioner. One could not assume that the whole or indeed any part of the $51,000 would be paid to the Commissioner. But even if one could, this would only mean that the discharge would be so much of $51,000 as was actually paid to the Commissioner. As I have said, there is simply no evidence that any amount was or would be paid to the Commissioner pursuant to the Deed of Company Arrangement.

[38] Nor do the difficulties stop there. The natural meaning of the word "discharging" and the corresponding term "discharge" in a context such as this, must mean discharging not by release or extinction by operation of law pursuant to the deed of company arrangement. Rather, it must mean release or extinction by the "fulfilment, performance, execution (of an obligation, duty, function, etc)" in accordance with the sixth sense of that term in the Oxford English Dictionary, 2nd ed (1989). "Discharge", may likewise extend to "the act of clearing off a pecuniary liability; payment", where "clearing off" has the sense of payment. The High Court in Commissioner of Taxation v Orica Limited [1998] 94 CLR 500 at 539, in the context of the capital gains tax provisions of s160M(3) of the ITAA took up these meanings of "discharge" at [94] (omitting footnotes):

[94] There is no basis for confining "discharge" or "satisfaction" in this way. First, as a matter of ordinary language, "discharge" can be used in the sense of "[t]he act of clearing off a pecuniary liability; payment" or "[f]ulfilment, performance, execution (of an obligation, duty, function, etc)".

1. The passages in Eaton reproduced above are clear. The effect of the DOCA having been entered into by Mr Slowey cannot have the effect of discharging his parallel and independent DPN penalties.
2. According to the Court in Eaton, in order to operate as a discharge of a company liability, actual payment must be made to the Deputy Commissioner. Any amounts which the Deputy Commissioner may expect to receive under the DOCA or in a winding up of one of the companies are irrelevant.
3. That the plaintiff voted in favour of a DOCA cannot in any way be considered an "arrangement" for payment of instalments under s 255-15. The operation of a DOCA is quite different to that of an arrangement to pay tax-related liabilities by instalments.
4. Under a DOCA, creditor's debts are released to the extent provided for by the DOCA and by operation of s 444D of the Corporations Act.
5. This is to be contrasted with an instalment arrangement under s 255-15 which expressly provides in subsection (2) that the entry into such an arrangement "does not vary the time at which the amount is due and payable." In other words, the tax-related liability is expressly not released by reason of the entry into the arrangement.
6. The different legal effect of a DOCA compared to an instalment arrangement under s 255-15 means that the effect of the DOCA cannot be an instalment arrangement under s 255-15.
7. Mr Miller's submission that the contrary meaning is arguable is not supported by any authority or reasoned argument.
8. To the extent that Mr Miller accepted that amounts stated in the DPNs were correct,[37] any payments that were actually received by the Deputy Commissioner have been brought into account, or were otherwise not pressed.
9. It is my view that Mr Slowey has no real prospect of succeeding on these defences.

1. For the reasons outlined above, I am satisfied that the defendant has no real prospects of success in defending the proceeding.
2. By the conclusion of the hearing I understood Mr Miller to have accepted that the amounts sought by the plaintiff on this application were correct. Should that not be so, he should address the matter with Mr Lum and then revert to my chambers.
3. Absent any such issue, I will enter judgment in favour of the Deputy Commissioner of Taxation in the sum of $604,046.21, together with interest. The parties should forward to my chambers a calculation of the relevant interest figure.
4. Subject to any matters that the parties bring to my attention on the question of costs, I propose to order that the Mr Slowey pay the plaintiff's costs of the proceeding (including reserved costs) on the standard basis, to be assessed in default of agreement.
5. Counsel should otherwise forward to my chambers a minute of orders reflecting these reasons within 7 days.

I certify that these 31 pages are a true copy of the judgment of His Honour Judge Wise delivered on 20 June 2025.

[1] Unless otherwise expressly stated, all sections of the TAA cited relate to Schedule 1.

[2] A fourth defence based on service was expressly abandoned at the hearing.

[3] [2013] VSCA 158; 42 VR 27.

[5] [2016] VSCA 4.

[6] s 12-35.

[7] Deputy Commissioner v Woodhams (2000) 199 CLR 370; [2000] HCA 10 at [19]; Snell v Deputy Commissioner [2020] NSWCA 29 at [40]

[8] Re Scobie; Ex parte Commissioner of Taxation (1995) 59 FCR 177 at 182-183

[9] s 255-2(2).

[10] s350-25(a).

[11] s350-10(3) and s 350-12.

[12] Deputy Commissioner v Broadbeach Properties Pty Ltd (2008) 237 CLR 473; [2008] HCA 41 at [38]; Kolichis v Deputy Commissioner [2014] WASCA 76 at [23]; Deputy Commissioner v Lawson (2017) ATC 20-644; [2017] VSC 789 at [19] and authorities cited therein. See, more recently, Lee v Deputy Commissioner; Silverbrook v Deputy Commissioner [2020] NSWCA 95 at [75]- [79].

[13] Naumcevski v Deputy Commissioner [2019] NSWCA 72 at [69] and the authorities cited therein; Deputy Commissioner v Hooper (2005) 58 ATR 522; [2005] VSC 69 at [7].

[14] Deputy Commissioner v Epov [2008] NSWSC 1085 at [32]; See, also Deputy Commissioner v Raskovic (2009) 75 ATR 359; [2009] NSWSC 281 at [22].

[15] The sum sought was reduced to $604,046.21 in the plaintiff's current application.

[16] Relevantly, the TAA was amended after the issue date of the DPNs in this proceeding by the Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (No. 130) to add small business restructuring as a further step, which need not be considered in the current application.

[17] Roche v Deputy Commissioner [2015] WASCA 196 at [29] (Roche).

[18] Roche at [29] citing Deputy Commissioner v Saunig [2002] NSWCA 390; (2002) 55 NSWLR 722; (2002) 43 ACSR 387 at [25].

[19] As were available to the defendant under s 269-35 at the relevant time.

[20] See Canty v Deputy Commissioner (2005) 63 NSWLR 152; [2005] NSWCA 84 at [40]-[41].

[22] Citing Federal Commissioner of Taxation v Australia & New Zealand Savings Bank Ltd (1994) 181

CLR 466, 479; Bellinz v Federal Commissioner of Taxation [1998] FCA 615; (1998) 84 FCR 154.

[23] Deputy Commissioner v Winters (1997) 37 ATR 209; Remuneration Planning

Corporation Pty Ltd v Commissioner of Taxation [2001] FCA 255; (2001) 46 ATR 400; Deputy Commissioner

of Taxation v Roget (No 2) [2014] WADC 25; BBLT Pty Ltd v Chief Commissioner of the

Office of State Revenue [2003] NSWSC 1003; (2003) 54 ATR 323.

[24] [2001] FCA 255; (2001) 46 ATR 400 at [16].

[25] [2021] WADC 65 at [98] - [100].

[26] Miller at [99] citing Federal Commissioner of Taxation v Wade [1951] HCA 66; (1951) 84 CLR 105, 117 (Kitto J); AGC (Investments) Ltd v Federal Commissioner of Taxation (1991) 91 ATC 4180, [4194] - [4195] and the authorities there referred to.

[27] [2019] VSC 346 at [79].

[29] [1951] HCA 66; (1951) 84 CLR 105, 117.

[30] [2001] FCA 255; (2001) 46 ATR 400 at [13] where his Honour said "It is therefore appropriate to be disposed of summarily provided that the test in General Steel Industries Inc v Commissioner for Railways (NSW) (1964)112 CLR 125 is met. In my opinion it is."

[31] It is unclear precisely which provision Mr Slowey intended to rely on here. His written submission said "s269-15(5)". There is no such provision. I think it likely that he intended to refer to the amount of the penalty to which a director is subject - hence s 269-20(5).

[32] First Affidavit of M Slowey [40] - [41].

[33] (2006) 67 NSWLR 205, [37].

[34] First Affidavit of M Slowey [96].

[35] Citing Eaton at 212 [32]- [39], cited with approval in Deputy Commissioner of Taxation v De Simone [2019] VSC 346 at [59]- [63]. See also Lehman Brothers Holdings Inc v City of Swan (2010) 240 CLR 509; [2010] HCA 11 at [53] (French CJ, Gummow, Hayne and Kiefel JJ).

[37] See paragraph above.