Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Practice and procedure - Summary judgment - Whether affidavit in support was admissible - whether affidavit hearsay - whether affidavit adequately provided sources and grounds - Evidence of business records

Corporations Act 2001 (Cth), s 1274B

Evidence Act 1906 (WA), s 79C, s 79C(2a),s 79C(3)(a), s 79C(3)(b), s 79F(1)

Evidence Act 1995 (Cth), s 5, s 48(1)(b), s 48(1)(e), s 69(1), s 69(2), s 69(4), s 182(1)

Income Tax Assessment Act 1997 (Cth), s 995­1

Rules of the Supreme Court 1971 (WA), O 14, O 20 r 8(4)

Taxation Administration Act 1953 (Cth), div 12 sch 1, s 16-B in sch 1, s 255­1 in sch 1, s 255­5 in sch 1, s 255­45 in sch 1, s 255­50 in sch 1, s 269­15 in sch 1, s 269­20(1) in sch 1, s 269­20(2) in sch 1, s 269­25 in sch 1

Birch Investments Pty Ltd v Lim (Unreported, WASC, Library No 7396, 1988)

Lewkowski v Bergalin Pty Ltd (Unreported, Full Court, Library No 7675, 1989)

Phillips v Mineral Resources Developments Pty Ltd [1983] 2 Qd R 138

1 REASONS OF THE COURT: The court has before it two appeals against orders for summary judgment made by Master Sanderson in favour of the Deputy Commissioner of Taxation (the Commissioner). The appeals in all material respects are identical. Although in each case there are seven enumerated grounds of appeal, they raise, in substance, only one contention. It is contended by the appellants that the learned master erred in law in failing to find that the affidavit in support of the application for summary judgment was inadmissible and thereby was not an affidavit in compliance with O 14 r 2 of the Rules of the Supreme Court 1971 (WA) (the Rules).

2 Order 14 r 1 makes provision for an application for summary judgment.

(1) An application under rule 1 shall be made by summons supported by an affidavit verifying the facts on which the claim ... is based, and stating that in the deponent's belief there is no defence to that claim ...

(2) Unless the Court otherwise directs, an affidavit for the purposes of this rule may contain statements of information or belief with the sources and grounds thereof.

(3) The summons and a copy of the affidavit in support and of any exhibits therein referred to shall be served on the defendant not less than 7 days before the return day of the summons.

4 By the statement of claim, the Commissioner pleaded, in effect, that:

(a) the appellants were directors of NK Contractors (1997) Pty Ltd (the Company);

(b) the Company withheld certain specified amounts under div 12 in sch 1 to the Taxation Administration Act 1953 (Cth) (TAA) in relation to the period 1 December 2010 - 30 November 2011, but failed to meet its obligations under subdivision 16-B in sch 1 to pay such amounts withheld to the Commissioner;

(c) pursuant to s 269-15 in sch 1 to the TAA, the appellants were under an obligation as directors to cause the company to pay such amounts;

(d) the appellants became liable to pay such amounts by way of penalty to the Commissioner pursuant to s 269-20(1) in sch 1 to the TAA and the amounts were due and payable pursuant to s 269-20(2); and

(e) the unpaid amount of each penalty was a 'tax-related liability' and was a debt due to the Commonwealth and payable to the Commissioner pursuant to s 255-5 in sch 1 to the TAA.

5 The affidavit in support in each case was sworn by Mr Robert Dillon, an officer of the Australian Taxation Office (ATO), employed in the Debt Business Line of the ATO. Mr Dillon was authorised by the Commissioner to make the affidavit.

6 In his affidavits in each matter, Mr Dillon referred to and annexed the following copy documents:

(a) an Australian and Securities Investment Commission (ASIC) search of the Company pursuant to s 1274B of the Corporations Act 2001 (Cth) showing, amongst other things, its incorporation, its Australian Business Number, its directors and the address of its directors;

(b) business activity statements lodged by the Company showing amounts withheld in respect of PAYG tax in relation to the period 1 December 2010 - 30 November 2011 (Activity Statements);

(c) a copy of a 'Notice of director's liability to pay a penalty to the Commissioner of Taxation' (Notice) addressed to each appellant at the address shown on the company search;

(d) a copy of a covering letter addressed to each of the appellants at such address attaching the relevant Notice;

(e) a copy of the Commissioner's record of service of each Notice;

(f) a copy of the envelope addressed to each appellant at the address shown in the company search, which was said to enclose the covering letter and the relevant Notice; and

(g) a copy of an evidentiary certificate pursuant to s 255-45 of sch 1 to the TAA.

7 Mr Dillon in par 2 of his affidavit, also deposed, in considerable detail, to the records maintained by the ATO. They comprised records in electronic form and in a file maintained by the Debt Business Line of the ATO concerning debt collection material. Mr Dillon deposed that he had reviewed both the electronic records and the hard copy file to which he had referred. He deposed to his belief that there was no defence.

8 The appellants' contention that Mr Dillon's affidavit was not admissible appeared to rest, essentially, on two propositions. First it was said, in effect, that in every paragraph of the affidavit the deponent was required to depose, in terms:

I have been informed by X and verily believe that Y is the fact. The grounds for my belief are as follows.

9 The appellants contended that the adoption of this formula is required by the decision of the Full Court in Lewkowski v Bergalin Pty Ltd (Unreported, Full Court, Library No 7675, 1989), and Mr Dillon failed to express his evidence precisely in those terms. Secondly, it was said that the Commissioner was required to put on direct primary evidence where it was available and that he had failed to do so. Reliance in this regard was placed on Birch Investments Pty Ltd v Lim (Unreported, WASC, Library No 7396, 1988). The appellants observed that Mr Dillon had disclosed that the company search had been obtained by another ATO employee, Ms Graham, and had stated that from his review of the records, Ms Graham had sent the Notice and covering letter to the appellants. They contended that by not filing an affidavit by Ms Graham, the Commissioner had failed to adduce relevant primary evidence.

10 There are three principal reasons why the appellants' contentions are seriously misconceived.

11 First, in Lewkowski, the court said that it was 'desirable' to adopt the verbal formula referred to in [8] above, not that it was mandatory. As the court there expressly recognised, an affidavit may in substance contain the sources and grounds of statements of information and belief without the express use of that formula. An affidavit in support of an application for summary judgment, like any other document, must be read as a whole. If authority for that were required, see Phillips v Mineral Resources Developments Pty Ltd [1983] 2 Qd R 138, 144.

12 The affidavit, properly construed, identified the relevant sources and grounds of any statements of information and belief. In this regard, and turning to the particular paragraphs of Mr Dillon's affidavit of which complaint is made, par 2 in the context of par 1, is direct evidence of the deponent's knowledge of the ATO's database. It is not a statement of information and belief. Insofar as pars 4, 6, 12, 13, 15 (in part), 27 and 28(b) and (c) are or contain statements of information and belief, the source and grounds for them are or include the annexed company search. Insofar as pars 7, 9 and 10 contain statements of information and belief, the source and the grounds are the annexed Activity Statements referred to in par 8, to which there is no objection. Paragraphs 11, 12, 15, 25, 28(a) and 35, read with par 2, contain evidence to the effect that the events referred to did not occur because there was no record kept, in accordance with the ATO's system, of the occurrence of that event. Paragraphs 13, 14, 29 and 31 all contain statements of legal conclusion. Whether or not they may be objected to on that basis, they are not objectionable on the grounds of inadmissible hearsay. As to par 16, its source and grounds are in par 17 read with par 2, and the document in par 17 is annexed. The source and the grounds for pars 21 and 22 are pars 2, 20, 23 and 24, and each of pars 20, 23 and 24 annexes the document to which it refers. Paragraph 26, read with par 2, effectively states the source and the grounds of the statements in par 26. In any event, par 26 deals with a sum credited to the appellants. If that paragraph was inadmissible, the judgment debt should be increased. Paragraph 30 evidently depends upon pars 1 - 29.

13 Secondly, where documents are adduced in evidence which are admissible as to the statements contained in them by force of statute, the document itself, through the operation of the statute, is the relevant source of the evidence. The admissibility of the statements in such documents is not dependent upon the deponent deposing to the truth of them by way of information or belief. The requirement in O 14 r 2(1) that the affidavit verify the facts on which the claim is based can be satisfied by an affidavit that simply annexes documents which are themselves admissible evidence of the facts on which the claim is based.

14 Thus, for example, statements in a 'business record' (as defined) may be admitted under s 79C(2a) of the Evidence Act 1906 (WA). Section 79C makes such statements admissible notwithstanding the rule against hearsay (s 79C(3)(a)) or the rule against secondary evidence of the contents of a document (s 79C(3)(b)). Also, by s 79F(1) of that Act, in the circumstances therein specified, the absence of a record of an event in the context of a system for recording events of that description, is admissible to prove that the event did not happen. The Evidence Act 1995 (Cth) contains, generally speaking, provisions giving effect to a similar legislative intention: see s 48(1)(b) and s 48(1)(e) read with s 69(1), s 69(2), and s 69(4). Those provisions applied in the proceedings below insofar as they applied to documents that were or formed part of 'Commonwealth records' (as defined): s 5 and s 182(1) of the Commonwealth Evidence Act.

15 The appellants conceded in written submissions 'that pursuant to s 79C(2a) of the Evidence Act 1906 (WA) and s 48(1)(b) and (e) and s 69(2) of the Evidence Act 1995 (Cth) the contents of the ATO's business records [were] admissible evidence'. They also, in effect, accepted in oral submissions that Mr Dillon's affidavit annexed 'business records' under either the State or Commonwealth evidence statutes. The statements contained in those business records thereby became admissible notwithstanding the hearsay rule. Order 14 r 2(2) expands the scope of admissible evidence in an application for summary judgment. It does not, and could not, operate to restrict the operation of these statutes.

16 Also, s 1274B of the Corporations Act provides, in effect, that in a proceeding in a court, a writing that purports to have been prepared by ASIC is admissible as prima facie evidence of the matter stated in so much of the writing as sets out what purports to be information obtained by ASIC, by using a data processor, from the national database.

17 Furthermore, of particular relevance to these matters, is s 255-45 of sch 1 to the TAA. That section provides, in effect, relevantly, that a certificate by a Deputy Commissioner stating that the person named in the certificate has a tax-related liability, and that the sum therein specified is a debt due and payable to the Commonwealth, is prima facie evidence of such matters in any proceedings to recover the amount of a tax related liability. A 'tax-related liability' is a pecuniary liability to the Commonwealth arising directly under a taxation law: s 255-1 of sch 1 to the TAA and s 995-1 Income Tax Assessment Act 1997 (Cth). In this case, Mr Dillon annexed a copy of the relevant s 255-45 certificate with respect to each appellant, and no objection is or was taken to that paragraph of his affidavit.

18 Thirdly, the appellants' reliance on Birch is misplaced. That was a case in which a defendant, in opposition to a summary judgment application, relied on two affidavits, one sworn by himself and the other by his 'attorney'. In his affidavit he gave hearsay evidence of communications between the plaintiff and his attorney. The attorney's affidavit omitted evidence of any such communications. Master White (as his Honour then was) said that it was 'most undesirable' for the defendant to rely on such hearsay evidence when the attorney himself had not deposed to those matters. Master White said that where 'any primary evidence is available, it should be placed before the court'.

19 As general observations, those statements, which go to weight rather than admissibility in this context, are plainly correct. However, they have no application to this case. The absence of an additional affidavit by Ms Graham who had obtained the company search, and sent the Notice, is immaterial when Mr Dillon had deposed to his examination of the ATO records and had annexed the relevant documents, including a business record containing evidence of the service of the Notice. Moreover, as the observations in Birch go to weight rather than admissibility, they are irrelevant to the appellants' case in these appeals.

20 Mr Dillon's affidavit was plainly admissible having regard to the matters to which he deposed and the nature of the documents he annexed. The company search and the certificate under s 255-45 contained statements admissible by force of statute. Also, the relevant 'business records' included, at least, the Activity Statements and the Commissioner's record of service of each Notice.

21 For these reasons, the appeals must be dismissed. There is no need to determine the notice of contention.

22 One final point should be mentioned. In written submissions, the Commissioner contended, in effect, that the certificate under s 255-45 of sch 1 to the TAA was itself sufficient verification of the facts alleged in the statement of claim, and that nothing further in the affidavit was required to support the summary judgment application.

23 As part of his submission, the Commissioner contended that he was not required to prove that the Notice had been given. Section 269-25 of sch 1 to the TAA provides that 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'. The Commissioner contended that the requirement in s 269-25 is a procedural precondition on the Commissioner's right to commence the action, and its fulfilment is to be implied in the statement of claim, pursuant to O 20 r 8(4) of the Rules. Determination of that point should be reserved for an occasion upon which its determination is essential to the proper disposition of the appeal. Subject to that reservation, we would accept that for the purposes of O 14 r 2(1), the Commissioner's claim was sufficiently verified by deposing to and annexing a true copy of the s 255-45 certificate, particularly in light of s 255-50 of sch 1 to the TAA. Section 255-50 of sch 1 to the TAA provides, relevantly, in effect, that in proceedings to recover an amount of a tax-related liability, a statement about a matter of fact in the plaintiff's claim is prima facie evidence of that fact, although evidence may be given in support, or rebuttal, of that matter or any other matter in such proceedings.