District Court New South Wales Medium Neutral Citation: Deputy Commissioner of Taxation v Shelton [2017] NSWDC 115 Hearing dates: 4 May 2017 Date of orders: 04 May 2017 Decision date: 04 May 2017 Jurisdiction: Civil Before: Gibson DCJ Decision: (1) Defendant called outside Court 13D three times at 10:45am – no appearance (note defendant also called outside Court 16A three times at 9:30am – no appearance). (2) Grant leave to the plaintiff to replace Annexure B to the Affidavit of Mr Stephen Bird with the correct document in 7 days. (3) Pursuant to r 17.7 Uniform Civil Procedure Rules 2005 (NSW), enter judgment for the plaintiff in the sum of $622,711.19, plus interest of $28,124.37, making a total of $650,835.56. (4) Defendant to pay the plaintiff's costs. (5) Exhibits retain for 28 days. (6) A copy of this judgment is to be taken out by the plaintiff and served on the defendant within 7 days of the judgment in final form being made available to the plaintiff. Catchwords: TAXATION – an application for judgment for a tax-related liability due to the Commonwealth payable to the Commissioner of Taxation – defendant fails to plead any substantive defence, file evidence or appear – application for summary judgment under r 17.7 Uniform Civil Procedure Rules 2005 (NSW) for judgment on admissions Legislation Cited: Civil Procedure Act 2005 (NSW), ss 56 – 62 Taxation Administration Act 1953 (Cth), ss 255-45, 255-50 and 269-20 Uniform Civil Procedure Rules 2005 (NSW), rr 17.7 and 29.7 Cases Cited: Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473 Deputy Commissioner of Taxation v Epov [2008] NSWSC 1085 Frinty v Landmax Developments Pty Ltd (2010) 272 ALR 412 Ghosh v NineMSN Pty Ltd [2015] NSWCA 334 Kolichis v Deputy Commissioner of Taxation [2014] WASCA 76 Moon v Mun [2013] NSWCA 217 Satz v ACN 069 808 957 Pty Ltd [2010] NSWSC 365 Category: Principal judgment Parties: Plaintiff: Deputy Commissioner of Taxation Defendant: Brett Shelton Representation: Counsel: Plaintiff: Mr J Mitchell Defendant: No appearance Solicitors: Plaintiff: ATO Legal Services Defendant: No appearance File Number(s): 2016/60948 Publication restriction: None Judgment 1. The plaintiff, by a statement of claim filed on 25 February 2016, as amended on 22 September 2016, seeks judgment against the defendant in relation to penalties due and payable pursuant to s 269-20 Taxation Administration Act 1953 (Cth) ("the TAA"). The sum originally claimed was $625,326.36 plus interest and costs. That sum has now been reduced by way of a credit to $622,711.19 and an interest schedule in relation to that amount has been filed (Exhibit G), bringing the total to $650,835.56. 2. Before turning to the evidence which is filed, I first note the following procedural issues. First, as order (1) set out below shows, the defendant is not present. He was called three times outside the List Judge's court (Court 16A) at 9:30am, as well as three times outside this Court (Court 13D) at 10:45am. On neither of those occasions did he appear. There is a Notice of Ceasing to Act in the file, indicating that at some stage he had some legal representation but, at all relevant times, he has appeared for himself and, more recently, he has requested Mr Cho, the solicitor with conduct of the matter on behalf of the plaintiff, to appear on his behalf. 3. Mr Cho was appearing on his behalf when the proceedings were first set down for hearing. It later transpired that the hearing date was not convenient to the plaintiff and, as is set out in Exhibits A and B, which are email exchange between Mr Cho and the defendant, those dates were changed. I note in Exhibit A, when informed of the proposed change, the defendant sent a message on his iPhone to Mr Cho stating, "All understood, first week of May is okay with me, please advise the date when known." 1. Mr Cho replied (Exhibit B) stating, "I have relisted the hearing to 4 May 2017." There was no reply from the defendant to this email but the subsequent history of correspondence between them shows that Mr Cho not only sent a reminder on Wednesday 1 March 2017 stating, "The matter is fixed for hearing on 4 May 2017", but outlining the following information of some importance, which may have something to do with the defendant's absence. 2. First of all, after pointing out that the Commissioner's evidence in reply was about to be filed and served on that same day, namely, 1 March 2017, Mr Cho noted that the defendant had not filed or served any evidence and that the Commissioner's evidence would not, therefore, include any evidence in reply. He went on to state: "In our view, based on the absence of any evidence in your defence, which admits nearly all of the pleadings in the statement of claim, you have little prospect of succeeding at the hearing. We therefore invite you to consent to judgment in this matter. This would help avoid incurring the time and costs associated with preparing for and running the hearing. If you do consent to judgment, the Commissioner will commit to not executing the judgment for three months from the date the judgment is entered. Otherwise we will continue to prepare for hearing and seek an order for costs. Would you please respond by 8 March 2017 indicating whether you will consent to judgment? Please do not hesitate to contact me if you have any queries." 1. There was no such offer to consent and, on 2 May 2017 when serving a final affidavit of Mr Bird correcting an error in an earlier affidavit, Mr Cho again stated in paragraph 1, "We refer to the above matter which is listed for hearing on 4 May 2017", and asking for his consent to the filing of the affidavit of Mr Bird out of time by reason of it being a correcting affidavit. Mr Cho also stated: "We also note that we have not received your response to our email dated 1 March 2017. If you have any queries please contact the writer." 1. I note that this was sent by letter to an address on the file of the Australian Taxation Office, as opposed to the address for service given in these proceedings. Additionally, an email was also sent to that effect. I note that the correct address for Mr Shelton on the Notice of Ceasing to Act is, in fact, 22 Astoria Park Road, Baulkham Hills, New South Wales, which is the address to which the letter was sent. I can assume from the correctness of the street and email addresses that it is more likely than not that the defendant received the letter as well as the email. 2. It is clear to me, looking at these documents, that the defendant has had more than adequate notice in relation to the hearing date in these proceedings. The question is whether there is any reason for these proceedings to continue in his absence. 3. What is the role of the trial judge when a party to proceedings fails to appear? Rule 29.7 Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") provides: "29.7 Procedure to be followed if party is absent (1) This rule applies when a trial is called on. (2) If any party is absent, the court: (a) may proceed with the trial generally or so far as concerns any claim for relief in the proceedings, or (b) may adjourn the trial. (3) If, in relation to a liquidated claim, the plaintiff appears, but a defendant does not appear, the court may, without proceeding to trial, give judgment against that defendant on evidence of: (a) the amount then due to the plaintiff in respect of the cause of action for which the proceedings were commenced, and (b) any payments made or credits accrued since the commencement of the proceedings in reduction of the amount of the plaintiff's claim or costs. (4) If, in relation to any proceedings, the defendant appears, but the plaintiff does not appear, the court may dismiss the proceedings. (5) Subrules (3) and (4) do not limit the court's powers under subrule (2)." 1. In Satz v ACN 069 808 957 Pty Ltd [2010] NSWSC 365, Barrett J considered the role that the Court should take when dealing with proceedings where a party has not attended. The Court's obligations to that missing party require the Court to ensure that the missing party has had full and proper notice of the hearing date and to ensure a level playing field and that the relevant issues are considered in a manner that is fair to the missing party. 2. I will not set out the many cases and principles set out by Barrett J, beyond noting that they have guided me in my conduct of this hearing but that, ultimately, as Barrett J noted, proceedings in this Court are adversarial in nature and a party who does not appear cannot expect that the judge will run the case for him. 3. This brings me to a consideration of the evidence in support of the plaintiff's case which is as follows: 1. The affidavit of Kerry Blackburn dated 5 August 2016; 2. The affidavit of Stephen Bird dated 22 August 2016; 3. The affidavit of Anita Tiku dated 24 August 2016; and 4. The affidavit of Stephen Bird dated 3 May 2017. 1. As is set out in the Amended Statement of Claim, which was filed by consent on 15 September 2016, this is an application for judgment for a tax-related liability due to the Commonwealth payable to the Commissioner of Taxation and recoverable by the plaintiff (ss 255-45(1) and 255‑45(2), Sch 1 TAA). As is noted in s 255-50(1), Sch 1 TAA, a statement or averment in a statement of claim filed by the Deputy Commissioner of Taxation is prima facie evidence of the sum claimed (Kolichis v Deputy Commissioner of Taxation [2014] WASCA 76 at [22]-[23]). 2. This brings me to a consideration of the Defence which, together with the affidavits listed above, is included in Exhibit C. The Defence which has been filed consists of admissions to all portions of the statement of claim bar paragraph 18. However, paragraph 18 merely recites a formal matter, namely: "The plaintiff claims the sum of $625,326.36 which is due and unpaid together with: (a) interest pursuant to section 100 of the Civil Procedure Act 2005 (NSW); and (b) costs." 1. All that the defendant has done is to object to the summary clause at the end stating the amount, in circumstances where he has admitted the previous 17 paragraphs, which consist of the statements of the director penalty notices imposed in respect of actual liabilities and the relevant particulars, including the director penalties imposed in respect of the superannuation guarantee charge by way of amended assessments. The admission of all of those matters, in my view, cannot be circumvented by the defendant's pleading that he "denies the allegations at paragraph 18". 2. There is, however, a further attempt at pleading that: "… in answer to the claim as a whole, the defendant says that the total amount of penalties claimed by the plaintiff is inaccurate as a result of the defendant being a director of Australian Fleet Accident Services Pty Ltd ACN 100 162 212." 1. This appears to be some form of challenge to the quantum but, as already noted, the statement by the Deputy Commissioner of Taxation in the statement of claim is prima facie evidence of the matter and a claim that a figure is "inaccurate", not merely by reason of this global pleading but also as a matter of law, cannot amount to a defence. 2. I further note that the defendant has not served any evidence, which would also be a problem of some significance. Whatever this inaccuracy is asserted to be is not the subject of any evidence. 3. In his helpful submissions, counsel for the plaintiff has set out the company's withholding liabilities and superannuation guarantee charge liabilities as well as the nature of the director penalty regime and the issue of the director penalty notice. The contents of those portions of his submissions from paragraphs 7 to 23 are effectively, by reason of the pleadings, not contested by the defendant, and need not be set out further here. 4. This brings me to the effect of the defendant's admissions of the existence of the two debts, namely, $337,555.95 (referrable to withholding liabilities of the company) and $287,770.41 (referrable to director penalties imposed in respect of superannuation guarantee charge), in his defence. 5. The plaintiff applies for judgment on these admissions in accordance with UCPR r 17.7, which provides: "17.7 Judgment on admissions (1) If admissions are made by a party, whether by his or her pleadings or otherwise, the court may, on the application of any other party, give any judgment or make any order to which the other party is entitled on the admissions. (2) The court may exercise its powers under this rule even if the other questions in the proceedings have not been determined." 1. As indicated above, I am satisfied that, on the general principles applicable in claims of this nature brought by the Deputy Commissioner of Taxation, the Deputy Commissioner of Taxation would be entitled to judgment in any event but I state, in the alternative, that the Deputy Commissioner of Taxation would also be entitled to judgment on admissions pursuant to UCPR r 17.7 for the following reasons. 2. Firstly, it is clear from the Defence that the existence of these debts is admitted. In Moon v Mun [2013] NSWCA 217, Barrett J stated (at [40]-[44]) that, where admissions were clear and unambiguous, the Court had power to order judgment on admissions, although such power is discretionary. The first of these requirements is that there should be a clear admission and I note his Honour's statements at [41]-[42]: "[41] As to the first matter, it was said in Ellis v Allen [1914] 1 Ch 904 at 909 that judgment on admissions is permissible where "there is a clear admission of facts in the face of which it is impossible for the party making it to succeed". The matter was put thus in Ash v Hutchinson & Co (Publishers) Ltd [1936] Ch 489 at 503: "A plaintiff who relies for the proof of a substantial part of his case upon admissions in the defence must, in my judgment, show that the matters in question are clearly pleaded and as clearly admitted; he is not entitled to ask the Court to read meanings into his pleading which upon a fair construction do not clearly appear in order to fix the defendants with an admission." [42] The discretionary nature of the power was referred to by this Court in Termijtelen v Van Arkel [1974] 1 NSWLR 525 and is consistent with the purpose of the power as explained by Barwick CJ in Re the Trade Marks Act 1955-1958 and the Registered Trade Marks "Certina" and "Certina DS" (1970) 44 ALJR 191 at 192: "The power which the rule gives to a Justice in chambers must be exercised with great caution. . . . But in a clear case a proper exercise of the power will obviate the delay involved in a hearing and will save unnecessary expense."" 1. I am satisfied that this is a clear case where admissions have been made because that is in fact the very word used by the defendant. 2. The power to award judgment on admissions is, however, properly exercisable only where the Court can see that what Barrett J calls "a clear and unanswerable case is advanced on the pleadings, with the position so decisively depicted and the correct outcome so unambiguously obvious that there is simply no need for any issue to go to trial" (at [43]). 3. In the present case, the defendant was offered the opportunity to consent to judgment but did not do so and, in a sense, an application could have been brought at that stage as opposed to being brought at the trial, but, where an application of this nature is brought at the trial, I consider it to be just as amenable to the making of such orders. 4. This is not a case where issues of any kind are in dispute other than, it would appear, some attempted challenge at the quantum for a reason that has no basis in law. I am satisfied that, notwithstanding the contents of paragraph 18, there are in fact no issues in dispute and it would be appropriate to exercise my discretion in the manner explained by Barrett J and to regard these admissions as being sufficient to allow the entry of judgment. In this regard, I note the use of evidentiary certificates and other prima facie provisions in Commonwealth taxation legislation which has been widely accepted by the courts. 5. Counsel for the plaintiff has helpfully set out a series of decisions, including the decision of the High Court in Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473. The certificate (set out at Annexure K of the affidavit of Anita Tiku sworn 24 August 2016) is prima facie evidence of the matter stated within it, notwithstanding the fact that a minor adjustment has been made to the sum due as at 24 August 2016. The certificate sets out that not only does the defendant has a tax-related liability but that notices were served upon him and that, therefore, the sum now sought is due and payable. 6. Thus, as was the case in Deputy Commissioner of Taxation v Epov [2008] NSWSC 1085 (at [32] per Harrison AsJ), even if I were to accept that the defendant was correct in his assertion that there was some problem with the quantum, the certificate issued is prima facie evidence and a mere pleading that the quantum is, in some way, incorrect is insufficient to displace that prima facie evidence, as something more is needed from the defendant to raise doubt. In circumstances where the defendant has filed no evidence, the evidentiary effect of the certificate has not been, and cannot be, displaced. 7. Finally, this is one of a series of cases where courts have increasingly come to have regard to the principles of "just, quick and cheap" (ss 56 – 62 Civil Procedure Act 2005 (NSW)) in relation to the conduct of proceedings. The concepts of proportionality in litigation have been noted in a number of recent decisions and, while the New South Wales Court of Appeal is yet to pronounce decisively upon this issue (see, for example, Ghosh v NineMSN Pty Ltd [2015] NSWCA 334), I note the helpful remarks of Ball J in Frinty v Landmax Developments Pty Ltd (2010) 272 ALR 412 at [9]ff where his Honour notes the impact of s 56 Civil Procedure Act 2005 (NSW). His Honour went on to exercise his discretion pursuant to UCPR r 17.7 to enter judgment on the basis that the admission was "sufficient to establish that the debt is due and payable now" (at [14]). 8. Accordingly, pursuant to UCPR r 17.7, I enter judgment for the plaintiff in the sum of $622,711.19 plus interest of $28,124.37, making a total of $650,835.56, and make orders as follows: Orders 1. Defendant called outside Court 13D three times at 10:45am – no appearance (note defendant also called outside Court 16A three times at 9:30am – no appearance). 2. Grant leave to the plaintiff to replace Annexure B to the Affidavit of Mr Stephen Bird with the correct document in 7 days. 3. Pursuant to r 17.7 Uniform Civil Procedure Rules 2005 (NSW), enter judgment for the plaintiff in the sum of $622,711.19, plus interest of $28,124.37, making a total of $650,835.56. 4. Defendant to pay the plaintiff's costs. 5. Exhibits retain for 28 days. 6. A copy of this judgment is to be taken out by the plaintiff and served on the defendant within 7 days of the judgment in final form being made available to the plaintiff. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 May 2017