Ross Forsyth v Deputy Commissioner of Taxation

LOWER COURT District Court JURISDICTION : LOWER COURT 8729/2001 FILE NUMBER(S) : LOWER COURT Colin DCJ JUDICIAL OFFICER :

• 19 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40940/03

SPIGELMAN CJ GILES JA GZELL J

Monday 20 December 2004 Ross FORSYTH v DEPUTY COMMISSIONER OF TAXATION

The Appellant was the director of a company which failed to remit group tax deductions at various times over a 2 year period. The Appellant became personally liable to pay a penalty equal to the unpaid amount of the company's liability under s222AOC of the Income Tax Assessment Act . The Commissioner issued three notices under s222AOE of the Act of his intention to commence proceedings to enforce the penalty. Each notice was in respect of a discrete period. The Appellant failed to comply with the notices and the Commissioner commenced recovery proceedings against the Appellant in the District Court of New South Wales. Judgment was entered in favour of the DCT. The Appellant appeals, claiming the District Court had no jurisdiction to determine the proceedings or alternatively, that the notices were invalid.

HELD A. (per Spigelman CJ, Giles JA and Gzell J agreeing)

The jurisdiction of the District Court under s44(1)(a) of the District Court Act is fixed at the date the District Court Amendment Act 1997 came into effect. It is not subject to amendment by reassignment by the Supreme Court Rules of jurisdiction from the Common Law Division to the Equity Division. [33] - [35], [68], [69]

Deputy Commissioner v Harrington (New South Wales District Court, Unreported, 9 October 2003); Vale v TMH Haulage Pty Ltd (1993) 31 NSWLR 702; Promenade Investments Pty Ltd v New South Wales (1991) 26 NSWLR 203; Commissioner for Government Transport (NSW) v Deacon (1957) 97 CLR 535 considered.

It is doubtful whether proceedings in relation to a legislative provision imposing a penalty are assigned to the Equity Division. [70] - [75]

Woodhams v Deputy Commissioner of Taxation [1988] 4 VR 309; Allders International Pty Ltd v Commissioner of State Revenue (Vict) 1996 186 CLR 630 distinguished.

C. (per Spigelman CJ, Giles JA and Gzell J agreeing)

The failure of the first 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. [44]- [53], [68], [69].

Deputy Commissioner of Taxation v Woodhams (2000) HCA 10; (2000) 199 CLR 370; Deputy Commissioner of Taxation v McArdle [2003] QCA 282 applied; Deputy Commissioner of Taxation v Gruber (1998) 43 NSWLR 271 distinguished.

The second and third notices were not invalid on either the basis that they were tainted by the first notice or that there was insufficient evidence of postage. [55], [61] - [62], [68], [69].

Commissioner of Taxation v Gruber (1998) 43 NSWLR 271 distinguished.

There was no abuse of process. [64] - [65], [68], [69].

Appeal dismissed with costs. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40940/03

SPIGELMAN CJ GILES JA GZELL J

Monday 20 December 2004 Ross FORSYTH v DEPUTY COMMISSIONER OF TAXATION Judgment 1 SPIGELMAN CJ: The Appellant was a director of Premium Technology Pty Limited ("Premium"). Between 1 August 1997 and 31 May 1999, Premium deducted certain amounts from employee salary and wages pursuant to the provisions of Div 2 of Pt VI of the Income Tax Assessment Act 1936 (Cth) ("the Act"). Under Div 1AAA of Pt VI Premium was required to remit the amounts deducted to the Commissioner of Taxation. It failed to remit an amount of $414,326.45. 2 These proceedings concern notices under Div 9 of Pt VI, the purpose of which is said, in s222ANA, to be to ensure that a company either meets its obligations to remit a deduction or that it goes promptly into administration or liquidation.

3 Directors of a company are required to ensure that the company either meets its obligation to remit deductions by the due date or conclude an agreement as to payment or cause the company to enter administration or be wound up. The failure of a director to comply with the statutory duty so imposed has the consequence, pursuant to s222AOC of the Act, of imposing a liability on the director to "pay to the Commissioner, by way of penalty, an amount equal to the unpaid amount of the company's liability". 4 By force of s222AOE of the Act the Commissioner is not entitled to recover that penalty without giving written notice to the director setting out "details of the unpaid amount of the liability" and of the options available, being the same options referred to above. Pursuant to s222AOG, the penalty is automatically remitted if the company meets its obligations or takes one of the other options within 14 days of the notice. If not paid, the amount of the penalty becomes a debt due to the Commonwealth, payable to the Commissioner and that amount may be recovered at the suit of a Deputy Commissioner in a court of competent jurisdiction. 5 In the present case the Deputy Commissioner gave the Appellant three separate notices with respect to three discrete periods. The Commissioner commenced recovery proceedings against the Appellant in the District Court of New South Wales by Statement of Liquidated Claim filed on 29 August 2001. On 26 September 2003 O'Connor DCJ entered judgment for the Deputy Commissioner in the sum of $414,326.45.

The Jurisdiction Issue 6 The Appellant challenges the jurisdiction of the District Court to determine the proceedings. The Deputy Commissioner is a person suing on behalf of the Commonwealth. The jurisdiction of the District Court of New South Wales to hear and determine the proceedings is conferred by s39(2) of the Judiciary Act (1903) (Commonwealth) which provides that: "[T]he several Courts of the States shall within the limits of their several jurisdictions, whether such limits are as to locality, subject matter, or otherwise, be invested with federal jurisdiction, in all matters in which the High Court has original jurisdiction or in which original jurisdiction can be conferred upon it …" 7 Proceedings to recover a debt to the Commonwealth created by a Commonwealth statute are within the original jurisdiction of the High Court under s75(iii) of the Constitution or within the jurisdiction able to be conferred on that Court under s76(ii) of the Constitution. 8 The limits of the federal jurisdiction conferred by s39(2) of the Judiciary Act on the District Court requires an analysis of the jurisdictional limits of that Court. The relevant limit is found in s44(1)(a) of the District Court Act (1973) which provides: "44(1) Subject to this Act, the Court has jurisdiction to hear and dispose of the following actions: (a) any action of a kind: (i) which, if brought in the Supreme Court, would be assigned to the Common Law Division of that Court, and (ii) in which the amount claimed does not exceed $750,000, whether on a balance of account or after an admitted set-off or otherwise …" 9 Section 44(1)(a) in its present form was inserted by the Courts Legislation Further Amendment Act 1997. When that Act came into force on 2 February 1998, taxation proceedings were assigned to the Common Law Division of the Supreme Court by s53 of the Supreme Court Act (1970) which provided: "53(4) Subject to the Rules, there shall be assigned to the Common Law Division all proceedings not assigned to another Division by sub section 1 or sub section 3 of this section." 10 At that time tax proceedings were commonly heard in the Common Law Division. 11 The Courts Legislation Further Amendment Act 1998, which abolished a number of Divisions in the Supreme Court, amended s53 of the Supreme Court Act to read, relevantly: "53 Assignment of business (1) Subject to the rules, there are assigned to the Common Law Division all proceedings: (a) that, immediately before the commencement of this section, were assigned to the Division by or under any Act, or (b) that are required by or under any Act from time to time in force to be commenced, heard or determined in that Division, or (c) that are assigned to the Division by operation of Part 8 of the Fourth Schedule, or (d) that are not assigned to the Equity Division by or under this Act." 12 Section 53(1)(d) had, at the time of its enactment, the effect that tax proceedings were assigned to the Common Law Division. 13 The rule making power in s124 was amended at the same time as s53, by the addition of subs(3) as follows: "(3) The rules may make provision for or with respect to the assignment of proceedings to the Court of Appeal or a Division. The assignment by the rules of any proceedings to the Court of Appeal or any Division has effect despite any contrary provision of this or any other Act or law." 14 Prior to this amendment there was no express provision in s124 conferring a power to make rules which had the effect of moving jurisdiction from one Division to another. Nor was s124 expressed in the form often found in statutory powers to make regulations "required or permitted" by the Act. Section 124 relevantly authorised rules "for the purpose of carrying this Act into effect". It is by no means clear that the words "subject to the rules" in s53 of the Act prior to 1998, authorised the reassignment of matters from one Division to another. An alternative meaning could be that the Rules could provide that certain matters assigned by the Act required additional prerequisites before proceedings were instituted, e.g. leave. 15 This Court received no submissions on this matter and it is not appropriate to determine the case on this basis. 16 On 30 June 2000 Pt 12 r 5 of the Supreme Court Rules was amended by the addition of r5(b)(vi). This changed the situation by providing:- "There shall be assigned to the Equity Division … (b) Proceedings in the Court … (vi) In relation to any provision in any Act or Commonwealth Act by which a tax, fee, duty, or other impost is levied, collected or administered by or on behalf of the State or the Commonwealth."

It was common ground that this rule applied to the proceedings before the Court. 17 The Appellant submits that the combined effect of s44(1)(a)(i) of the District Court Act and the reference to "subject to the rules" in the opening words of s53(4) of the Supreme Court Act, subsequently re-enacted in substance as s53(1)(d) of that Act, was such as to deprive the District Court of the jurisdiction upon the coming into force of Pt 12 r5(b)(vi) of the Supreme Court Rules. 18 The jurisdictional issue turns on whether the conferral of jurisdiction on the District Court is to be fixed, relevantly, at the date of the coming into effect of the District Court Amendment Act 1997, or whether that jurisdiction is subject to amendment by reassignment by the Supreme Court Rules of jurisdiction from the Common Law Division to the Equity Division, at any time after that Act came into force. Walmsley DCJ has held that the former interpretation should be preferred. (Deputy Commission of Taxation v Harrington (unreported, New South Wales District Court, 9 October 2003).) 19 From the time of its enactment in 1973, s44(1)(a) conferred jurisdiction on the District Court in the form: "any personal action at law in which the amount claimed does not exceed …". In early 1997 the District Court Amendment Act 1997 which increased the jurisdiction to $750,000, and removed any limit in the case of motor accident claims, repeated the formulation of "any personal action at law". 20 The Court of Appeal had considered this formulation a few years before in Vale v TMH Haulage Pty Ltd (1993) 31 NSWLR 702. The Court gave a broad construction to the formulation but excluded "proceedings in equity" and certain other matters. The issue in that case arose under the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic) with respect to a claim under s556 of the Companies (Victoria) Code, being one of the insolvent trading provisions of the Corporations Law as it was at the time. 21 Priestley JA, with whom Meagher and Sheller JJA agreed, rejected a submission on behalf of the directors that the words "personal action at law" in s44(1)(a) should be given a restricted historical meaning. His Honour said at 707: "In my view, Parliament must have intended in legislating in 1973 in regard to the District Court, whose jurisdiction had become steadily more important throughout the century, to describe its jurisdiction in the legal language of the present day …" 22 His Honour went on to indicate the breadth of the contemporary usage of that formulation and added at 707: "Put another way, I see no reason for reading the words 'at law' in section 44(1) of the District Court Act 1973 in a particular sense in which they were sometimes used in the Courts of Westminster immediately before the commencement of the Supreme Court of Judicature Act 1873 (UK)." 23 His Honour went on to note that a different conclusion had been reached by the Full Court of the Supreme Court of South Australia in Churcher v Edwardstown Carpets (Reg) (1993) 60 SASR 503 with respect to the succeeding legislation, i.e. s592 of the Corporations Law 1990. (See also Sky Channel Pty Ltd v Gray (1992) 39 FCR 62.) 24 It was in this context that the Parliament enacted the new form of s44(1)(a) by the Courts Legislation Further Amendment Act 1997. The Explanatory Memorandum that accompanied that Bill identified the new s44(1)(a) as serving the following purpose: "To remove any doubt as to the kinds of action with respect to which the District Court has jurisdiction." 25 For present purposes this is not a particularly helpful statement of purpose. Such "doubt" as may have existed at the relevant time is, at least in theory, removed equally if the jurisdiction of the District Court is defined in terms of the jurisdiction of the Common Law Division on 2 February 1998 or as defined from time to time. As a practical matter, however, an issue of statutory interpretation may arise as to whether a particular change is intended to apply to pending proceedings. A higher level of certainty is, therefore, achieved if the jurisdiction is fixed at 2 February 1998. 26 The Appellant primarily relies on s68(1) of the Interpretation Act 1987 which provides: "68(1) In any Act or Instrument, a reference to some other Act or instrument extends to the other Act or instrument, as in force for the time being. (2) Subsection (1) applies to a reference to an Act or instrument: (a) whether or not the reference includes a reference to subsequent amendments of the Act or instrument …" 27 This section reverses the common law presumption that any such reference was taken to be to the legislation or instrument in the form it took at the date the referring legislation was enacted. An ambulatory approach it is now the preferred interpretation of such provisions. 28 In Promenade Investments Pty Ltd v New South Wales (1991) 26 NSWLR 203 at 223-224, Sheller JA adopted a passage from par 6.19 of Pearce & Geddes Statutory Interpretation in Australia (5th ed) that a contrary intention "will need to be spelled out". I do not, however, understand his Honour to say that a contrary intention must always be express. Pursuant to s5(2) of the Interpretation Act, s68 applies unless "the contrary intention appears … in the Act or instrument concerned". Such a contrary intention may appear from the scope nature and subject matter of legislation. It does not necessarily require express words. 29 Nevertheless, s68 serves an important function in an era in which legislative change is frequent and interconnection between Acts is not always the subject of express consideration by drafters of legislation, not least by reason of the almost exponential growth in the quantity of legislation over the course of the last century. The courts should be slow to find a contrary intention with respect to this particular section of the Interpretation Act 1987. 30 There is no express reference to the Supreme Court Act in s44(1)(a) of the District Court Act. Nevertheless no other Act can constitute the source of the jurisdiction of the Common Law Division and, accordingly, the connection may be sufficiently close to satisfy the word "reference" in s68(1). 31 In Commissioner for Government Transport (NSW) v Deacon (1957) 97 CLR 535, the High Court considered the effect of the predecessor of s68, being s25 of the Interpretation Act 1897 (which at the time was concerned only with repeal and replacement not amendment) on legislation in the form: "Subsections (2) to (7) of s10 of the Workers Compensation Act 1926-1994 shall, mutatis mutandis, apply to and in respect of such medical or hospital treatment or ambulance service." 32 The Court said at 546: "S25 … is concerned with 'references'. Here we have more than a reference: we have a referential adoption as law equivalent to a positive independent enactment. Nor do we think it possible to construe that referential adoption as itself conveying what may be called an ambulatory intention to incorporate the provisions in whatever shape they may afterwards be thrown by amendment." 33 In this case also, s44(1)(a) is more properly characterised as "a referential adoption as law equivalent to a positive independent enactment" rather than as a mere 'reference'. The applicability of s68(1) is by no means clear. Assuming, without deciding, that the section does apply, the proper construction of s44(1)(a) provides a contrary intention for purposes of s5(2) of the Interpretation Act. 34 In my opinion, the issue is determined by the scope, nature and purpose of the statutory provision under consideration. It is most unlikely that Parliament intended that the jurisdiction of the District Court was able to be modified by the Supreme Court Rule Committee. This conclusion is reinforced by the fact that Parliament itself paid close attention to the civil jurisdiction of the Court during the 1990s: · Courts Legislation (Civil Procedure) Amendment Act 1991. (Increasing the civil jurisdictional limit from $100,000 to $250,000.) · District Court Amendment Act 1997. (Increasing the common law jurisdictional limit to $250,000, providing for no limit in the case of motor accident claims, conferring jurisdiction under the De Facto Relations Act 1984, conferring jurisdiction in equitable claims up to $750,000 and increasing jurisdiction under the Family Provisions Act to $250,000.) · Courts Legislation Further Amendment Act 1997. (Providing for unlimited jurisdiction for cases transferred by the Supreme Court.) 35 These amendments reveal a continuing intention on the part of the Parliament to determine the scope of the District Court's jurisdiction. That intention is not consistent with the construction for which the Appellant contends. Accordingly, in my opinion, the District Court had jurisdiction to entertain the proceedings, because such matters were assigned to the Common Law Division on 2 February 1998.

Validity of the First Notice 36 On 27 October 1998 the Respondent issued a Director's Penalty Notice pursuant to s222AOE of the Act with respect to unpaid PAYE deductions for August and September 1998 showing an unpaid amount of liability of $104,175.90 ("DPN1"). At the time that this notice was issued, Premium had also failed to remit PAYE deductions for the months of August to November 1997 and, in part, for the months January to March 1998. 37 The Appellant submits that DPN1 is invalid on the basis that it materially understated the amounts unpaid by the company at that time by reason of the omission of any reference to any liability other than that for August/September 1998. 38 As noted above the contents of the notice under s222AOE include a statement to the effect that the penalty will be remitted if any one of the following four steps is taken within 14 days:

(ii) The company enters into an agreement with the Commissioner under s222ALA setting out a timetable for the discharge of the company's liabilities.

(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.

The Validity of the Second and Third Notices 55 The second and third notices were both dated 15 June 1999. DPN2 related to the period August to November 1997 and January to March 1998 in the amount of $244,051.89. DPN3 related to the period October to November 1998 and February, March and May 1999 in the amount of $101,022.68. 56 It was first submitted that these two notices were "tainted" by the invalidity of DPN1. Even if I had found that DPN1 was in some manner invalid I can see no reason why the invalidity should infect DPN2 and 3. This is not a case, as occurred in Gruber, in which there were two notices each of which showed a different amount owing with respect to the same liability. The absence of linkage is emphasised by the fact that the sole basis on which it was submitted that DPN1 was invalid was by reason of the fact that it did not contain the information set out in DPN2. It is difficult to see how, if the Court had found that DPN1 were invalid, that that could in some way infect DPN2. 57 The other basis upon which it was said that DPN2 and 3 were invalid was that there was insufficient evidence of postage. It was submitted that in view of the serious consequence of the imposition of personal liability under the legislative scheme, a high standard of proof should be required on the part of the Commissioner that he has complied with obligations of service of the notice. 58 Section 222AOF relevantly provides: "222AOF(1) If it appears from ASC documents that a person is or has been within the last seven days, a director of the company, the Commissioner may give the person a notice under section 222AOE by leaving it at, or sending it by post to, an address that appears from such documents to be, or to have been within the last seven days, the person's place of residence or business." 59 As can be seen from s222AOF the Commissioner is not obliged to prove receipt but, relevantly, "sending by post". 60 With respect to the service of these notices O'Conner DCJ made the following findings of fact: "[107] It is not disputed that the address on the Notice was in fact the Defendant's residential address. The Defendant submitted that on the evidence I would not be satisfied that the DPN's had been in fact served. [108] In this respect Annexure A to the Affidavit of Ms Sreevharan on 21 November 2002 sets out the record of the steps taken in relation to service of the DPN's. Entry 26 on 16 June, 1999 records that the Notices were mailed to the Defendant at 69 Darley Road, Randwick. It further records that the addresses were obtained from an ASIC extract dated 15 June, 1999 and that the Notices were mailed personally on 16 June, 1999 at 1.40pm at the Market Street Post Office. [109] In support of the Defendant's submission reference was made to entry No. 22 on 11 May, 1999 wherein it was stated that the document was placed in an envelope which was sealed and which the officer affixed a postage stamp and then addressed the envelope to the company at its registered office as per ASIC extract dated 10 May, 1999. It was then stated that he served the demand by placing it in a mail box at Pitt Street on 11 May, 1999 at 4pm. [110] The Defendant's [sic] submitted that when one compares the latter entry with the earlier entry there is more detail and accordingly it was submitted that in the absence of such detail I could not be satisfied that the DPN was posted as said. [111] In my view it is not necessary to break down the postage process into each step and I am satisfied on the record that the DPN's were posted as deposed to in the Affidavit of Ms Sreevharan. Accordingly, I reject this submission." 61 The Appellant repeated the same approach in this Court, submitting that there was no proof of each of the specific steps involved in an act of postage, i.e. positive evidence that each DPN was placed in an envelope, sealed properly, addressed and had a stamp affixed to it. In my opinion, O'Connor DCJ was correct in the finding of fact that he made. 62 An officer of the Australian Taxation Office gave evidence that all tax officers were required to follow a set procedure with respect to the issue of Director's Penalty Notices, including obtaining extracts from the records of the Australian Securities and Investments Commission to determine the addresses of directors and then placing the DPN in an envelope addressed to that address and affixing a stamp, whereupon the envelope is personally placed by that tax officer in a public mailbox. She gave evidence that the officers in the debt collection area, including the particular officer who was concerned with the group tax file in relation to Premium, "followed the prescribed procedure". She annexed an extract of the narrative of the Australian Tax Office, plainly prepared by the relevant officer, which stated: "DPNs have been issued to the directors Ross Forsyth … Ross Forsyth - August 97, September 97, October 97, November 97, January 98, February 98, March 98 amount $244,051.89. October 98, November 98, February 99, March 99, May 99 amount $101,022.68. Mailed to: 69 Darley Road Randwick NSW 2031 … These addresses were obtained from ASC extract dated 15/6/99 and notices were mailed personally today at 1:40pm at the Market Street PO Box." 63 This is clear evidence of postage satisfying the requirements of s222AOF.

Abuse of Process 64 The Appellant invoked the inherent jurisdiction of the Court to ensure that its own processes were not abused. He submitted that it would be unfair to proceed upon each of the DPNs because of the misleading nature of DPN1 and the action of the Commissioner in failing to correctly advise the Appellant of the total amount of the liabilities. The Appellant also referred to the delay on the part of the Commissioner noting that DPN2 was issued in the middle of 1999 with respect to obligations which at that stage were up to 20 months old and that proceedings in the District Court were not instituted until 2001. The Appellant submitted that the delay had caused prejudice, including increasing the difficulty of exercising his right to obtain contribution from his fellow directors. 65 In my opinion there is no relevant abuse. The notices were issued in accordance with the Act. The Commissioner was under no obligation to identify in the first notice the whole of the liabilities to which the director may then have been liable by reason of the company's failure to remit group tax deductions. In any event, the very matter the absence of which is complained of with respect to the first notice was the subject of the second notice. At that stage the Appellant had all the information he said would have led him to choose the administration or liquidation option. He did not. 66 Furthermore, no issue of abuse of process was raised before the trial judge. This is quintessentially a matter on which additional evidence, both on the explanation for delay and the degree of prejudice involved, could have been called. It is not a matter that can be raised for the first time on appeal. In the event the submission was only faintly pressed. This basis of appeal, in effect seeking a stay of proceedings for the first time in this Court, should be rejected.

Conclusion 67 The appeal should be dismissed with costs. 68 GILES JA: I agree with Spigelman CJ. 69 GZELL J: I agree with Spigelman CJ. 70 I would add that I am not satisfied that the proceedings were assigned to the Equity Division under the Supreme Court Rules 1970, Pt 12 r 5(b)(vi). That rule assigned proceedings with respect to legislative provisions by which "a tax, fee, duty or other impost" was levied, collected or administered. I would have thought it unlikely that the proceedings here in question for a penalty were included in that collocation. 71 A penalty is not a tax, fee or duty and in the above context I would have thought that "impost" bore the meaning of a tax, duty, imposition or tribute. Traditionally it was thought, specifically, to refer to a customs duty levied on merchandise (Oxford English Dictionary, 2nd ed, Clarendon Press, Oxford, 1989, vol vii at 733). Dr Samuel Johnson's, A Dictionary of the English Language of 1755 refers to an impost as a tax; a toll; custom paid. He gives an example from Bacon's Essays: "Taxes and imposts upon merchants do seldom good to the King's revenue; for that that he wins in the hundred, he loseth in the shire." 72 Reference was made in argument to the use of the word by Phillips JA in Woodhams v Deputy Commissioner of Taxation [1998] 4 VR 309. The decision of the Court of Appeal was reversed on appeal, but on a different issue (Deputy Commissioner of Taxation v Woodhams (2000) 199 CLR 370). In that case it was argued that the Income Tax Assessment Act 1936 (Cth), s 222AOC and s 222APC imposed a tax in contravention of s 55 of the Constitution which, under its second limb, limits a Commonwealth Act to one subject of taxation only. The argument failed because the provisions were held to impose a penalty and not a tax. At 320 his Honour referred to what was said in MacCormick v Federal Commissioner of Taxation (1984) 158 CLR 622 at 639: the exactions under the Taxation (Unpaid Company Tax) Assessment Act 1982 (Cth) and the Taxation (Unpaid Company Tax-Vendors) Act 1982 (Cth) had all the hallmarks of a tax and not a penalty because the liability to pay did not arise from any failure to discharge antecedent obligations on the part of the persons on whom the exactions fell. His Honour went on to say: "Counsel for the appellant relied upon this passage as indicating relevant criteria to determine what is a tax, although to my mind it reveals one of the major distinctions between that case and this. In that case the court could say that "liability to pay the exactions does not arise from any failure to discharge antecedent obligations on the part of the persons upon whom the exactions fall"; yet it is the opposite here. It is true that in both that case and this default by the company is the occasion for the impost and, if we leave aside for the moment the distinction that there it was a failure to pay tax imposed on the company itself and here it is the failure to remit deductions made by the company on account of tax imposed on others, that is a similarity. But there the similarity ends. In this case unlike MacCormick , the exactions imposed by s 222AOC are imposed in terms for breach of antecedent obligations on the part of those upon whom those exactions fall, something which the 14 day notice required by s 222AOE reinforces." 73 His Honour used the word "impost" in the sense of an imposition. He was not dealing with the collocation in the Supreme Court Rules 1970. 74 Reference was also made to Allders International Pty Ltd v Commissioner of State Revenue (Vict) (1996) 186 CLR 630. It was there held that stamp duty imposed by the Stamps Act 1958 (Vict) on a lease of land held on behalf of the Commonwealth was invalid because s 52(i) of the Constitution gave the Commonwealth exclusive legislative power with respect to Commonwealth places. At 643, Brennan CJ described the duty as an impost. And so it was. But here we are concerned with a penalty. The same may be said of his Honour's use of the word "impost" in MacCormick at 651,652, 654 and 655. 75 It is unnecessary to decide the question in this case. In my view, there is a significant doubt that proceedings in relation to a legislative provision imposing a penalty are assigned to the Equity Division. **********

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