District Court New South Wales Medium Neutral Citation: Deputy Commissioner of Taxation v Ferreira [2018] NSWDC 338 Hearing dates: 1 November 2018 Date of orders: 01 November 2018 Decision date: 01 November 2018 Jurisdiction: Civil Before: P Taylor SC DCJ Decision: (1) Judgment for the plaintiff in the sum of $131,513.65. (2) Defendant to pay the plaintiff's costs in the fixed sum of $4,658. Catchwords: TAXES AND DUTIES – PAYG tax – non-payment by company – director – penalty – remission - liquidator appointed - evidence – affidavit evidence - hearsay – inferences – burden of proof – statutory reversal of onus – proof by certificate – proof by averment Legislation Cited: Evidence Act 1995, s 69 Taxation Administration Act 1953, sch 1, s 255-45, s 255-50, s 269-20, s 269-30 Category: Principal judgment Parties: Deputy Commissioner of Taxation – plaintiff Rui Ferreira - defendant Representation: Counsel: Solicitors: Hunt & Hunt – plaintiff Paul Bard Lawyers - defendant File Number(s): 2017/280717 Publication restriction: None Judgment 1. The Deputy Commissioner of Taxation seeks judgment from Rui (or Paul) Ferreira in the sum of $131,513.65 plus interest and costs. The claim is based upon the non‑payment of PAYG tax withheld by a company of which Mr Ferreira was at all relevant times a director. 2. By his defence, Mr Ferreira denied liability generally, and also on the particular bases of: 1. that a liquidator had been appointed to the company and therefore any penalty imposed on the director was remitted; [1] and 2. that no director penalty notice had been served. [2] 1. The amended statement of claim asserted that penalties owed by Mr Ferreira in respect of unpaid PAYG tax withheld by the company in the sum of $131,513.65 ("the taxation debt") remained due and payable. [3] This averment in the claim is, by s 255‑50(1) of sch 1 to the Taxation Administration Act 1953, prima facie evidence of this debt. 2. In addition, the evidence included a certificate under s 255‑45 of sch 1 to the Act in the following terms: "CERTIFICATE UNDER SECTION 255-45 OF SCHEDULE 1 TO THE TAXATION ADMINISTRATION ACT 1953 Pursuant to Section 255-45 of Schedule 1 to the Taxation Administration Act 1953 I hereby certify that in respect of Paul Da Silva Ferreira: 1. Paul Da Silva Ferreira has a tax related liability, namely penalties arising under section 269-20 of Schedule 1 to the Taxation Administration Act 1953 ("TAA 1953"). 2. Notice required to be served on Paul Da Silva Ferreira under section 269-25 of Schedule 1 to the TAA 1953 was served on him on 3 October 2014 in relation to that tax related liability in accordance with section 269-50 of Schedule 1 to the TAA 1953. 3. The amount of $131,513.65 is a debt due and payable by Paul Da Silva Ferreira to the Commonwealth of Australia in respect of the tax related liability referred to in this certificate. DATED: 03 July 2018 [signature] Deputy Commission of Taxation of the Commonwealth of Australia". [4] 1. The certificate was signed by the Deputy Commissioner and certified that Mr Ferreira had a tax related liability, had been served with a notice, and that the taxation debt was due and payable to the Commonwealth. This certificate is prima facie evidence of these matters by virtue of s 255‑45(1) of sch 1 to the Act. 2. In addition to these two formal forms of evidence, there was affidavit evidence proving: 1. the service of the director penalty notices on 3 October 2014; [5] 2. the taxation accounts of Mr Ferreira, which showed that the taxation debt remained current; [6] and 3. that Mr Ferreira was the director of the company at all relevant times. [7] 1. Mr Ferreira objected to paragraph 20 of the affidavit of Anita Tiku dated 3 July 2018, which dealt with the date the company reported the PAYG withheld debt to the Deputy Commissioner. The paragraph was in the following terms: "In respect of the amounts detailed in the tables below, relative to the claim for director penalty liabilities, the Plaintiff's records show that the Company did not within the period of three months following the due date of the amount withheld, notify the Plaintiff in accordance with section 16-150 of Schedule 1 to the TAA 1953 of the amount the Company was obliged to pay the Plaintiff. The Amount Withheld Period of Withholding (the first deduction day was a day falling within this period) Due Date Date reported First 1 July 2013 to 30 September 2013 25 November 2013 25 August 2014 Second 1 October 2013 to 31 December 2013 28 February 2013 25 August 2014". [8] 1. The date the company reported the PAYG withheld debt is important. 2. A director becomes liable for a penalty equal to the debt remaining unpaid by the company on the due date. [9] However, in some cases, the penalty for which the director is liable is remitted if, among other circumstances, a liquidator is appointed to the company within three weeks of service of the director penalty notices. In this case, the liquidator was appointed on the 20th day after service of the director penalty notices. 3. Section 269‑30 to schedule 1 of the Act limits the circumstances where the penalty is remitted by reason of the timely appointment of a liquidator. Relevantly and effectively, if the company has not given notice of the amount the company is obliged to pay within three months of the due date, then the appointment of a liquidator does not operate to remit the penalty. 4. Accordingly, the date when the company reported its obligation to pay the PAYG tax withheld, in particular if that date was within three months of the due date, would in the present circumstances be relevant to determine whether the director's liability was remitted. 5. I accept that the objection to paragraph 20 of Ms Tiku's affidavit is well-founded. The assertion of what the "Plaintiff's records show" is hearsay. As the affidavit is created for the purpose of the proceedings, the evidence is inadmissible for a hearsay purpose pursuant to s 69(3) of the Evidence Act 1995. 6. The relevant records, which would be admissible, are not identified in the affidavit. The Deputy Commissioner submitted that the relevant records were annexed. The tax accounts of Mr Ferreira held by the Deputy Commissioner were in evidence and showed that 25 August 2014 was the "process date" of the "self-assessed amount". [10] 7. Further, Ms Tiku's 3 July 2018 affidavit stated that "when [Instalment Activity Statements and Business Activity Statements] are received by the Plaintiff, they may be processed" either by scanning, electronic transmission, or being manually keyed in. [11] This evidence raises the possibility of the process date being the reporting date, but does not persuade me of this on the balance of probabilities. It requires me to draw an inference in favour of the Deputy Commissioner when it would have been an easy thing for express evidence to be given of this by the Deputy Commissioner if it were the case. 8. Accordingly, there is no direct evidence sufficient to persuade me that the reporting required under s 269‑30 was done outside the three months after the due date so as to avoid the remission of the penalty, which would occur by reason of the appointment of a liquidator to the company within 21 days of the service of the director penalty notice. 9. However, the formal evidence, that is, the certificate and the averment in the statement of claim by reason of s 255‑45 and s 255‑50 respectively, prove the debt to a prima facie level. As the certificate and the amended statement of claim are both dated well after the date of the appointment of the liquidator, they are sufficient to establish to a prima facie level that the penalty was not remitted. 10. It would be open to rebut this prima facie evidence about the remission of the penalty by, for example, evidence of timely reporting of the PAYG debt, but the defendant called no evidence. In the result, the prima facie evidence of the debt is sufficient. This illustrates that the effect of ss 255‑45 and 255‑50, together with the appropriate averment and certificate, are effective to reverse the burden of proof. Mr Ferreira's reliance upon the absence of direct evidence by the Deputy Commissioner as to the reporting date is ineffective as he needs to prove that the reporting date was within the relevant period in order to displace the prima facie evidence of the debt. I note that these propositions were not resisted by Mr Ferreira with any force. 11. Accordingly, the Deputy Commissioner is entitled to judgment in the sum of $131,513.65 plus interest. 12. Before me the Deputy Commissioner specifically and expressly abandoned any claim for interest so the judgment sum should be $131,513.65. 13. As to costs, the Deputy Commissioner seeks a fixed sum for costs in the sum of $4,658, which Mr Ferreira did not oppose if I were persuaded that the Deputy Commissioner was entitled to costs. In the present case, costs must follow the event and so this entitlement is established. 14. Accordingly, the orders are: 1. Judgment for the plaintiff in the sum of $131,513.65. 2. Defendant to pay the plaintiff's costs in the fixed sum of $4,658. ********** Endnotes 1. Defence at [7]. 2. Defence at [8]. 3. Amended statement of claim at [8]-[11]. 4. Anita Tiku affidavit, 3/7/18, Annexure F. 5. Anna-Marie Cooper affidavit, 3/7/18 at [7]-[17]. 6. Anita Tiku affidavit, 31/10/18 at [3], Annexures A and B, see also Anita Tiku affidavit, 3/7/18. 7. See Anita Tiku affidavit, 3/7/18 at Annexure E, defence at [1], amended statement of claim at [3]. 8. AnitaTiku affidavit, 3/7/18 at [20]. 9. S 269-20 of sch 1 to the Taxation Administration Act 1953. 10. Anita Tiku affidavit, 3/7/18, Annexure C. 11. At [9]. 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: 19 November 2018