The Defendant, the ATO satisfies the Court that no reasonable person in a position of its office, sees with the material which quite clearly it had available to it, could come to the view that the company was insolvent and the Defendants succeeds on the statutory defence to the action brought by the Plaintiff and there would be a verdict in favour of the Defendant." [my emphasis added]
18 In relation to the objective test, in Cussen v Commissioner of Taxation (2004) 51 ACSR 530; [2004] NSWCA 383 Spigelman CJ (with whom Handley and Tobias JJA agreed) held that the words "a reasonable person in the person's circumstances" in s 588FG(b)(ii) require an objective "reasonable business person" test to be applied and do not require the court to take into account the acumen, perspicacity and resources of the particular creditor. Where the defendant is the ATO, the objective test requires the court to consider not only what the plaintiff's circumstances might have prompted the reasonable business person to suspect but also requires the court to consider what those circumstances would have prompted a reasonable business person with the knowledge and qualifications of a person within the ATO to suspect.
19 The meaning of the word "suspicion" is well settled. In Queensland Bacon Pty Limited v Rees (1966) 115 CLR 266 at 303 Kitto J stated:
"A suspicion that something exists is more than a mere idle wondering whether it exists or not; it is a positive feeling of actual apprehension or mistrust, amounting to "a slight opinion, but without sufficient evidence", as Chambers's Dictionary expresses it. Consequently, a reason to suspect that a fact exists is more than a reason to consider or look into the possibility of its existence. The notion which "reason to suspect" expresses … is, I think, of something which in all the circumstances would create in the mind of a reasonable person in the position of the payee an actual apprehension or fear that the situation of the payer is in actual fact that which the subsection describes - a mistrust of the payer's ability to pay his debts as they become due and of the effect which acceptance of the payment would have as between the payee and the other creditors."
20 The Magistrate referred to Rees. At the beginning of his judgment the Magistrate and later in the judgment to the correct objective test. However, later the Magistrate referred to the objective test as being the reasonable person in the person' circumstances would have had no such grounds for so concluding instead of "no such grounds for suspecting". The Magistrate found that the major debt was an unprogrammed or unexpected payment, namely the workers compensation payments which arose and was discharged by instalments and that stated resource available to the company was to secure funds on terms in the market place. It is my view that, when the whole passage quoted is considered, the Magistrate's addressed his mind and applied the correct objective test even though he inadvertently referred to the word "conclude" when he meant to say "suspect". He specifically says "the ATO satisfies the court that no reasonable person in a position of its office, sees (sic) with the material which quite clearly it had available to it, could come to the view that the Company was insolvent" used the correct objective test and correctly applies it to the facts. It is my view that there is no error of law.
21 Hamilton submitted that the objective test required the court to consider whether the service of a DPN, which is a matter peculiar to the business of tax collecting, evidences a suspicion of insolvency. It is my view, that the service of a DPN is a factor which may be considered in determining whether the objective test applies.
22 In the Local Court Hamilton pleaded nor argued that Harmonious Landscapes became insolvent as a result of paying the ATO the argument raised in D'Aloia & Anor v Federal Commissioner of Taxation (2003) 203 ALR 609; (2003) 48 ACSR 204. This argument cannot be raised now.