Deputy Commissioner of Taxation v Meredith
Document type: Decision Impact Statement
Venue: Supreme Court (CA 40251 of 2007)
Judgment date: 10 December 2007
Date published: 9 May 2008
Decision outcome: Favourable

Summary of decision:
Outlines the Tax Office's response to this case which concerned whether the giving of a Director Penalty Notice (DPN) by post under s222AOF of the Income Tax Assessment Act 1936 (Cth) could be rebutted by evidence of non-receipt or non-delivery.

Overview of facts:
1. A company of which the taxpayer was a director withheld amounts on account of tax from the salary entitlements of its employees, but failed to remit those amounts to the Commissioner of Taxation ("the Commissioner"). Upon the company failing to make such payments, the taxpayer, as a director, became automatically liable to a penalty equal to the amount which the company had failed to remit: s 222AOC of the Income Tax Assessment Act 1936 (Cth) ('ITAA 36') | 2. On 27 July 2004, the Commissioner gave notice by way of director penalty notice ("DPN") to the taxpayer of her liability and setting out ways in which it might be remitted. The Commissioner was required to take this step at least 14 days before commencing proceedings to recover the amount of the penalty: s222AOE of the ITAA 36. By way of defence, the taxpayer stated that she had not received the notice and was therefore not liable. | 3. At the hearing of the matter in the District Court of NSW, it was accepted by the Deputy Commissioner that the defence could succeed (if at all) only on the basis that the taxpayer proved non-delivery of the notice. In a judgment delivered on 27 October 2006, Quirk DCJ of the District Court found on the balance of probabilities that the DPN had not been delivered and dismissed the Commissioner's claim. The Deputy Commissioner appealed to the NSW Court of Appeal. | Issues decided by the court or tribunal | The New South Wales Court of Appeal decision: | In a judgment delivered on 10 December 2007, the NSW Court of Appeal, by majority (Basten JA with whom Ipp JA agreed, Giles J dissenting), held as follows: 1. Section 222AOF provides for a method of service of a DPN such that, if the procedure set out by the provisions is followed, service is deemed to have been effected and this deemed service may not be rebutted by any evidence of non-receipt or non-delivery. 2. Section 222AOF reveals a clear intention that the Commissioner will satisfy the precondition to the entitlement to recover the penalty if a DPN is sent by post to the director's address as found in Australian Securities & Investments Commission (ASIC) records. Section 222AOF provides a self-contained means of satisfying the precondition to recovery specified in s 222AOE, and is not subject to the operation of s 29 of the Acts Interpretation Act . If it had applied, the effect of s29 would be that the DPN would be taken to be served when it would have been delivered in the ordinary course of post. 3. As the statutory precondition to recovery under s222AOE was satisfied by sending the DPN by post to the relevant address and there was no challenge to the Commissioner's evidence that the notice had been sent, s222AOE was satisfied in this case. | 1. Section 222AOF provides for a method of service of a DPN such that, if the procedure set out by the provisions is followed, service is deemed to have been effected and this deemed service may not be rebutted by any evidence of non-receipt or non-delivery. 2. Section 222AOF reveals a clear intention that the Commissioner will satisfy the precondition to the entitlement to recover the penalty if a DPN is sent by post to the director's address as found in Australian Securities & Investments Commission (ASIC) records. Section 222AOF provides a self-contained means of satisfying the precondition to recovery specified in s 222AOE, and is not subject to the operation of s 29 of the Acts Interpretation Act . If it had applied, the effect of s29 would be that the DPN would be taken to be served when it would have been delivered in the ordinary course of post. 3. As the statutory precondition to recovery under s222AOE was satisfied by sending the DPN by post to the relevant address and there was no challenge to the Commissioner's evidence that the notice had been sent, s222AOE was satisfied in this case.

Issues decided:
The New South Wales Court of Appeal decision:: In a judgment delivered on 10 December 2007, the NSW Court of Appeal, by majority (Basten JA with whom Ipp JA agreed, Giles J dissenting), held as follows: 1. Section 222AOF provides for a method of service of a DPN such that, if the procedure set out by the provisions is followed, service is deemed to have been effected and this deemed service may not be rebutted by any evidence of non-receipt or non-delivery. 2. Section 222AOF reveals a clear intention that the Commissioner will satisfy the precondition to the entitlement to recover the penalty if a DPN is sent by post to the director's address as found in Australian Securities & Investments Commission (ASIC) records. Section 222AOF provides a self-contained means of satisfying the precondition to recovery specified in s 222AOE, and is not subject to the operation of s 29 of the Acts Interpretation Act . If it had applied, the effect of s29 would be that the DPN would be taken to be served when it would have been delivered in the ordinary course of post. 3. As the statutory precondition to recovery under s222AOE was satisfied by sending the DPN by post to the relevant address and there was no challenge to the Commissioner's evidence that the notice had been sent, s222AOE was satisfied in this case. 1. Section 222AOF provides for a method of service of a DPN such that, if the procedure set out by the provisions is followed, service is deemed to have been effected and this deemed service may not be rebutted by any evidence of non-receipt or non-delivery. 2. Section 222AOF reveals a clear intention that the Commissioner will satisfy the precondition to the entitlement to recover the penalty if a DPN is sent by post to the director's address as found in Australian Securities & Investments Commission (ASIC) records. Section 222AOF provides a self-contained means of satisfying the precondition to recovery specified in s 222AOE, and is not subject to the operation of s 29 of the Acts Interpretation Act . If it had applied, the effect of s29 would be that the DPN would be taken to be served when it would have been delivered in the ordinary course of post. 3. As the statutory precondition to recovery under s222AOE was satisfied by sending the DPN by post to the relevant address and there was no challenge to the Commissioner's evidence that the notice had been sent, s222AOE was satisfied in this case.

ATO view of decision:
Before the Court of Appeal's decision in the Meredith matter, the Commissioner accepted that a DPN under s222AOE or s222APE sent to a director by ordinary pre-paid post was 'given' to the intended recipient at the time the DPN would have been delivered in the ordinary course of post and that the director had 14 days after the day of delivery in the ordinary course of post to cause the company to comply with s222AOB and achieve remission of the penalties. | The Commissioner now accepts the decision of the Court of Appeal that a DPN under s222AOE or s222APE sent to a director by ordinary pre-paid post will be 'given' to the intended recipient at the time the DPN is posted.

Administrative treatment:
Implications on current Public Rulings & Determinations | The decision is limited to the giving of a s222AOE or s222APE DPN pursuant to s222AOF. Section 222AOF prescribes a method for giving such a DPN to a director who is registered with the ASIC as a current director. | In the case of DPNs given by the Commissioner pursuant to s222AOF, the Commissioner will calculate the time for compliance with the DPN from the date on which the DPN was posted, irrespective of whether or when the DPN was received or delivered. Accordingly, where compliance with the DPN does not occur within 14 days after the DPN is posted to the current director, the Commissioner will regard the relevant s222AOC or s222APC penalties as being recoverable from that director.

Legislative references: Acts Interpretation Act 1901 (Cth) 2 28A 29 40 Acts Interpretation Act 1956 (Qld) 13 39 Corporations Law 109Y Civil Procedure Act 2005 (NSW) 100 District Court Act 1973 (NSW) 127 Evidence Act 1995 (Cth) 4 5 160 163 182 Income Tax Assessment Act 1936 (Cth) 222ANA 222AOC 222AOE 222AOF Division 9 Pt 6 Income Assessment Act 1997 (Cth) 950-100 Insolvency (Tax Priorities) Legislation Amendment Act 1993 (Cth) 16 Interpretation Act 1987 (NSW) 76 Hire-Purchase Act 1959 (Qld) 42 Justices Act 1886 (Qld) 56 Local Government Act 1919 (NSW) 628 Local Government Act 1993 (NSW) 710 Migration Act 1958 (Cth) 494A 494B Supreme Court Act 1970 (NSW) 75A Supreme Court Rules 1970 (NSW) Pt 51 r 4
Case references: Alexander v Stocks & Holdings (Sales) Pty Ltd [1975] VR 843 Buresti v Beveridge [1998] 1136 FCA (1998) 88 FCR 399 Cheong v Webster (1986) 20 A Crim R 107 Cousins v Gosford Shire Council (1970) 92 WN(NSW) 263 Deputy Commissioner of Taxation v Coco [2003] QSC 119 52 ATR 700 Deputy Commissioner of Taxation v Dick [2007] NSWCA 190 2007 ATC 4816 67 ATR 762 Deputy Commissioner of Taxation v George (2002) 55 NSWLR 511 2002 ATC 4930 51 ATR 130 Deputy Commissioner of Taxation v Gruber (1998) 43 NSWLR 271 98 ATC 4317 38 ATR 434 Deputy Commissioner of Taxation v Mutton (1988) 12 NSWLR 104 88 ATC 4153 19 ATR 890 Deputy Commissioner of Taxation v Nercessian (2006) 67 NSWLR 215 2006 ATC 4693 64 ATR 360 Deputy Commissioner of Taxation v Saunig (2002) 55 NSWLR 722 2002 ATC 5135 51 ATR 435 Deputy Commissioner of Taxation v Taylor [1983] 2 NSWLR 139 83 ATC 4539 14 ATR 567 Deputy Commissioner of Taxation v Trio Site Services Pty Ltd [2007] FCA 776 Deputy Commissioner of Taxation v Woodhams (2000) 199 CLR 370 2000 ATC 4141 43 ATR 757 Deputy Commissioner of Taxation (Cth) v Woodhams (1998) 148 FLR 230 99 ATC 4062 41 ATR 204 Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 Forsyth v Deputy Commissioner of Taxation (2004) 62 NSWLR 132 2005 ATC 4025 58 ATR 179 In re 88 Berkeley Road, NW9; Rickwood v Turnsek [1971] Ch 648 [1971] All ER 254 Kyogle Shire Council v Muli Muli Local Aboriginal Land Council (2005) 62 NSWLR 361 McCallum v Purvis [1906] VLR 578 McClelland v Amcil Industries Pty Ltd [1983] 1 NSWLR 615 Murphy v Teakbridge [1999] NSWSC 1231 R v Westminster Unions Assessment Committee [1917] 1 KB 832 Repatriation Commission v Gordon (1991) 100 ALR 255 Scope Data Systems Pty Ltd v Goman [2007] NSWSC 278 Skalkos v T & S Recoveries Pty Ltd [2004] FCAFC 321 (2004) 141 FCR 107
Subject references: EVIDENCE presumption of delivery in course of post relationship of Evidence Act 1995 (Cth) to other Acts Evidence Act 1995 (Cth), ss 160 and 163 NOTICE service by post letter from Commonwealth agency evidence of non-delivery or non-receipt Acts Interpretation Act 1901 (Cth) s 29 Income Tax Assessment Act 1936 (Cth) s 222AOF Evidence Act 1995 (Cth) ss 160 and 163 TAXATION liability for failure to remit tax withheld from salary entitlements Income Tax Assessment Act 1936 (Cth) s 222AOE "contrary intention" in statute "give", "serve", "send" a notice "sending it by post"
Other references: Pearce and Geddes, Statutory Interpretation in Australia (6th ed, 2006) at [6.1]