(iv) The company is wound up.
39 The Appellant submits that he was induced to support the company pursuing an agreement under s222ALA whereas, if he had known of the full liability, he would have supported one of the other options, either administration or winding up.
40 Plainly, the choice between the four options for which the Act provides may be determined by the financial position of the company including, perhaps most relevantly, the liabilities for which a director may become personally liable. This does not, however, determine the question of whether the notice ought contain such additional information of this character as is known to the Commissioner in order to be valid. Whether that is so depends on the words of the section understood in their context and, particularly, the purpose of the particular legislative scheme of which it forms part.
41 Part VI Div 9 of the Act was considered by the High Court in Deputy Commissioner of Taxation v Woodhams (2000) HCA 10; (2000) 199 CLR 370. The Court determined that a notice under s222AOE was not invalid on the basis that it failed to set out the date on which the unremitted deductions referred to in the notice had been due. The joint judgment said:
"[33] It is the legislative purpose to be served by the giving of a s222AOE notice that determines the nature and extent of the information necessary to satisfy the requirement to set out details of the unpaid amount of the company's liability under a remittance provision in respect of deductions. At this stage of the argument, the concern is with absence of information, rather than erroneous or misleading information. Absence of information will involve a failure to provide necessary details if, without such information, the notice will not fulfil the purpose for which it is required to be given.
[34] The primary source of guidance as to the statutory purpose of the notice before action required by s222AOE is to be found in s 222ANA. Division 9 seeks to achieve the object that either the deducted amounts are remitted or paid to the Commissioner or the company is promptly taken out of the control of the directors and dealt with under the insolvency laws.
[35] The notice in question is addressed to a director of the company. Such a person will ordinarily have access to information concerning the company's liabilities. The notice does not create a liability to pay a penalty, and if there is to be action to recover the penalty under s221R it will be taken in the appropriate civil jurisdiction. In that event, the rules of court will require the elements of the cause of action to be pleaded and particularised in the ordinary way. A notice before action is not intended to serve the purpose of a statement of claim.
[36] The first purpose of the notice is to inform the recipient of the unpaid amount of the company's liability under the remittance provisions, and of the recipient's liability to a penalty in the same amount. The second purpose, consistently with s 222ANA, is to inform the recipient of the alternative courses available, as set out in s 222AOE(b), which will result in remission of the penalty, the object being to encourage the recipient to take such steps as are necessary to bring about the result that one or other of those courses is followed.
[37] In a number of respects, the due date for remittance of a deducted amount is relevant to a director's liability to pay a penalty, but that is not the liability to which s 222AOE is referring. The section does not require that the notice state details of the facts relevant to the director's liability. That is a function to be served by the pleadings and particulars, if and when action is taken to recover the penalty. Nor does the section require details of all facts relevant to the company's liability. It requires details of the unpaid amount of the company's liability. Once again, if there is an issue as to that liability, it will be litigated in the recovery action.
[38] The notice in the present case contained all the information that was necessary to fulfil the statutory purpose to be served by the notice. It informed the recipient, in detail, of the unpaid amounts of the company's liability, and of the liability by way of penalty which the revenue authorities were asserting attached to him. It also informed him of the steps available to bring about a remission of that penalty. The statute fixed the due dates in respect of each deduction. Fulfilment of the purpose to be served by the notice before action did not necessitate informing the recipient of the operation of the statute in that respect."
42 The purpose of the notice has been elaborated slightly in the judgment of the Queensland Court of Appeal in Deputy Commissioner of Taxation v McArdle [2003] QCA 282 where Davies JA, with whom Williams and Jerrard JJA agreed, said:
"[14] S222AOE is a notice before action provision. It has two purposes. The first is to inform the recipient of the unpaid amount of the company's liability under the remittance provision, as then known to the Commissioner. And the second is to inform the recipient of the alternative courses available, as set out in s222AOE(b), which will result in remission of the penalty, the object being to encourage the recipient to take such steps as are necessary to bring about the result that one or other of these courses is followed.
[15] I have taken this statement of the purposes of s222AOE from the judgment of the High Court in Deputy Federal Commissioner of Taxation v Woodhams , adding to the first of those purposes the words 'as then known to the Commissioner'. I think that is a permissible addition given that the Commissioner's only or, at least, usual source of this information is the notification which the company is obliged to give pursuant to s220AAOA; that this purpose may also be accurately described as to adequately inform the recipient about the amount which, at the date of the notice, the Commissioner asserts is the recipient's liability; and that the validity of the notice must be determined as at the time it was given."
43 The Appellant referred to some observations of this Court in Deputy Commissioner of Taxation v Gruber (1998) 43 NSWLR 271 at 276 where the Court said:
"While a notice does not have to be absolutely correct (and one can well imagine some de minimis mistakes) the notice must fulfil its statutory purpose. That purpose is not merely to give the recipient the opportunity to check the accuracy of the penalty sought to be imposed by the notice. Rather it is to accurately set forth the amount of the penalty the recipient is to pay within 14 days or be sued by the Commissioner for that civil penalty. It seems to me that to any recipient the amount of the liability for the penalty is the most important aspect of the notice. It needs to be correct."
44 In my opinion, the reliance on this passage in Gruber is misplaced. That case was concerned with actual mathematical errors which appeared on the face of the notice itself. In this case there was no "inaccuracy" in the notice. What DPN1 covered was entirely correct. It accurately quantified the two unpaid instalments of August and September 1998 for which, alone, the notice asserted that the Appellant would be liable to pay a penalty to the Commissioner. Gruber bears no relationship to this case.
45 The Appellant relied on the addition in McArdle of the words "as then known to the Commissioner" to the legislative purpose. Davies JA was not referring to the Commissioner's knowledge of the company's entire liability. His Honour was referring to the Commissioner's knowledge of the liability for the period covered by the notice, the amount of the liability depending on the information received from the company. He was confining, not expanding, the scope of the notice. The reliance on this passage is also misplaced.
46 This case is to be determined in accordance with the statement of legislative purpose identified in the joint judgment of the High Court in Woodhams as set out above. In my opinion, applying the formulation of the High Court in par [33], the "absence" of the information as to other unpaid instalments does not "involve a failure to provide necessary details" of a character without which "the notice will not fulfil the purpose for which it is required to be given". As the High Court went on to note in par [35], a director "will ordinarily have access to information concerning the company's liabilities". Furthermore, as the High Court said at [37]: "The section does not require that the notice state details of the facts relevant to the director's liability". Similarly, in my opinion, the section does not require that the notice state details of facts and matters relevant to the second purpose to be served by the notice (as identified at [36]) namely, "to inform the recipient of the alternative courses available … which will result in remission of the penalty".
47 The notice, as the High Court pointed out at par [35] is a "notice before action". The notice does not create the liability to pay the penalty. That liability is created by s222AOC. It is significant that the notice under s222AOE does not create the penalty but simply removes a prohibition on taking proceedings for its recovery. No section requires the Commissioner to remove that prohibition in relation to all outstanding penalties at the same time.
48 Section 222AOE(a) requires that the notice "sets out details of the unpaid amount of the liability referred to in s222AOC". That liability is a liability imposed by force of the section upon a director by way of penalty in "an amount equal to the unpaid amount of the company's liability under a remittance provision in respect of deductions", relevantly s221C(1A) of the Act. That section provides that where an employer pays salary or wages: "The employer shall, at the time of paying the salary or wages, make a deduction from the salary or wages …". Prior to its amendment in 1999, s220AAM(1) required the remitter to pay the amount of any deductions by the end of the seventh day after the end of the month.
49 The statutory duty to pay arises anew each month with respect to the total of the deductions made in the previous month. Each such liability is discrete and can be the subject of a separate notice or, as in the present case, a notice for more than one month.
50 Recognition of the fact that each monthly period is discrete is found in the terms of s222AOC itself which provides:
"222AOC. If s222AOB is not complied with on or before the due date, each person who was a director of the company at any time during the period beginning on the first deduction day and ending on the due date is liable to pay tp the Commissioner, by way of penalty, an amount equal to the unpaid amount of the company's liability under a remittance provision in respect of deductions:
(a) that the company has made for the purposes of Division 1AAA … and
(b) its due date is the same as the due date."
51 All of the relevant sections are within the subdivision referred to in s222AOA which provides:
"222AOA(1) This Subdivision applies if a company incorporated under the Corporations Law of a State or Territory has made for the purposes of Division 1AAA … one or more deductions having a particular due date.
(2) The earliest day on which the company made for the purposes of that Division a deduction that has that due date is called the first deduction day.
(3) That due date is called the due date."
52 The reference to "one or more deductions" culminating in a single due date in s222AOA identifies each monthly amount as discrete. Pursuant to s222AOC, a director is liable if s/he was a director at any time beginning on the first day on which such a deduction was made and ending on the due date. That discrete period refers and refers only to relevantly, the amount that becomes due on the seventh day of each month. Accordingly, s222AOC, in its terms, imposes liability separately with respect to each month.
53 I note that, by s222AOC(b), the due date of the director's liability is the same as the due date of the company's liability. In my opinion, the reference to "details of the unpaid amount of the liability" in s222AOE(a) applies to each month's liability of the company which remains unpaid.
54 Accordingly, the failure of the notice to inform the Appellant of unpaid instalments for months other than for two months for which the Commissioner proposed to proceed, in the absence of compliance with the notice, did not affect the validity of the notice.