Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Snell v Deputy Commissioner of Taxation [2020] NSWCA 29 Hearing dates: 1 November 2019 Date of orders: 04 March 2020 Decision date: 04 March 2020 Before: Gleeson JA at [1] Brereton JA at [2] Barrett AJA at [102] Decision: Appeal dismissed, with costs Catchwords: TAXES AND DUTIES – Penalty proceedings under (CTH) Taxation Administration Act 1953 – Obligation to remit amounts withheld from wages and salaries paid to employee – Requirements of director penalty notice – Where amount claimed by Commissioner changed after giving director penalty notice – No requirement to give further notice before commencing recovery proceedings - No requirement to commence proceedings within a reasonable time after expiry of notice TAXES AND DUTIES – Penalty proceedings under (CTH) Taxation Administration Act 1953 s 269-20 –Defence of justifiable non-participation in management under (CTH) Taxation Administration Act 1953 s 269-35 – What constitutes participation in management for the purposes of the defence – The defence must be established for the entire period from the "due day" until at least the expiry of the director penalty notice Legislation Cited: (CTH) Corporations Act 2001, s 588FGB(5) (CTH) Income Tax Assessment Act, s 222AOB(1) (CTH) Superannuation Guarantee (Administration Act) 1992, s 36 (CTH) Taxation Administration Act 1953, Sch 1, ss 16-70(1), 269-15, 269-20, 269-25, 269-30, 269-35 Cases Cited: AJ Roberts Removals & Storage Pty Limited, In the matter of [2017] NSWSC 1054 Australian Securities and Investments Commission v Reid [2005] FCA 1275 Canty v Deputy Commissioner of Taxation (2005) 63 NSWLR 152; [2005] NSWCA 84 Commissioner for Corporate Affairs v Bracht [1989] VR 821 Cullen v Corporate Affairs Commission (NSW) (1988) 14 ACLR 789 Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113; [2003] NSWCA 91 Deputy Commissioner of Taxation v George (2002) 55 NSWLR 511; [2002] NSWCA 336 Deputy Commissioner of Taxation v Holton [2016] VCC 516 Deputy Commissioner of Taxation v Lawson [2017] VSC 789 Deputy Commissioner of Taxation v Lister [2002] QCA 270 Deputy Commissioner of Taxation v McArdle [2004] 2 Qd R 495; [2003] QCA 282 Deputy Commissioner of Taxation v Robertson (2009) 234 FLR 35; [2009] NSWSC 597 Roche v Deputy Commissioner of Taxation (2014) 290 FLR 268; [2014] WASCA 194 Deputy Commissioner of Taxation v Stenner (2003) 53 ATR 316; [2003] QDC 053 Deputy Federal Commissioner of Taxation v Woodhams (2000) 199 CLR 370; [2000] HCA 10 Forsyth v Deputy Commissioner of Taxation (2004) 62 NSWLR 132; [2004] NSWCA 474 Griggs v Australian Securities Commission (1999) 75 SASR 307; [1999] SASC 405 Holpitt Pty Limited v Swaab (1992) 33 FCR 474 Jolly v District Council of Yorketown (1968) 119 CLR 347; [1968] HCA 55 New World Alliance Pty Limited, In the matter of; Sycotex Pty Limited v Baseler (No 2) (1994) 51 FCR 425; [1994] FCA 332 Power v Deputy Commissioner of Taxation (2013) 284 FLR 42; [2013] NSWCA 428 Power v Deputy Commissioner of Taxation (No 2) (2014) 98 ATR 75; [2014] NSWCA 77 Roche v Deputy Commissioner of Taxation [2015] WASCA 196 City of Sandringham v Rayment (1928) 40 CLR 510; [1928] HCA 13 Shaw v Deputy Commissioner of Taxation (2016) 104 ATR 1; [2016] QCA 275 Category: Principal judgment Parties: Keith Eddy Snell (appellant) Deputy Commissioner of Taxation (respondent) Representation: Counsel: D B McGovern SC w S Ipp (appellant) LT Livingston w JP Gatland (respondent) Solicitors: Macpherson Kelley Richard Brierley File Number(s): 2019/169321 Decision under appeal Court or tribunal: District Court of New South Wales Jurisdiction: Civil Citation: [2019] NSWDC 159 Date of Decision: 02 May 2019 Before: Weber SC DCJ File Number(s): 2017/131270 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This headnote is not to be read as part of the judgment] The appellant was one of two directors of a company which operated a restaurant. As between them, the other director was solely responsible for the day-to-day management and operation of the business, although the appellant actively participated in management at least until 2012 from when the relationship between the directors deteriorated, and the appellant experienced ill-health. The company was obliged to withhold money from employees' remuneration in respect of Pay As You Go Withholding ("PAYG") and remit the amounts withheld to the Commissioner, and also to pay amounts of Superannuation Guarantee Charge ("SGC"). These obligations were to be performed on the relevant "due day". In the period from June 2013 to April 2014, the company did not comply with either those obligations, by the relevant due day or at all. The Commissioner gave the appellant director penalty notices ("DPNs") under (CTH) Taxation Administration Act 1953 s 269-25, one in respect of the unpaid PAYG amounts and the other in respect of the unpaid SGC amounts. The Commissioner subsequently issued notices of amended assessment for most of the relevant periods of SGC. The Commissioner commenced proceedings to recover the unpaid amounts from the appellant as one of its directors at each of the relevant due days. The proceedings were commenced by a statement of claim which claimed the amount of unpaid SGC referred to in the relevant DPN, but the statement of claim was later amended to reflect the amended assessments. The appellant propounded defences, first, that the proceedings were not validly commenced because the DPN in respect of the unpaid SGC amounts was said not to accord with what the Commissioner thought the Company's unpaid liability was when proceedings were commenced; and secondly, that because of illness or some other good reason, he did not at any relevant time take part in the management of the Company and it would have been unreasonable to expect him to do so. Both were rejected by the primary judge, who gave judgment for the Commissioner. Held, dismissing the appeal (per Brereton JA; Gleeson JA and Barrett AJA agreeing): 1. A DPN is required to state what the Commissioner thinks is the unpaid amount of the company's liability, as at the date of the notice; however, the actual amount of the penalty recoverable is not dependent on nor controlled by what the Commissioner "thinks" it is at the time when the DPN is given. The only temporal requirement with respect to the DPN is that proceedings must not be commenced until the end of 21 days after the Commissioner gives the notice; there is no requirement that proceedings be commenced within any specific, or a reasonable, time after the notice is given: at [38]-[41]. 2. To establish the defence provided by s 269-35(1), a director must satisfy its requirements for the entire period from the "due day" for the relevant period until at least expiry of the DPN, if not until compliance, administration or winding-up: at [96]. Judgment 1. GLEESON JA: I agree with Brereton JA. 2. BRERETON JA: The appellant Mr Snell appeals to this Court from a judgment of the District Court in favour of the respondent Deputy Commissioner of Taxation ("the Commissioner") for $33,811.76, plus interest and costs, being penalties in respect of unpaid tax liabilities of The CAT CLUB Pty Ltd ("the Company"), which is now in liquidation, for which he was held liable as a director pursuant to s 269-20 of Sch 1 of the (CTH) Taxation Administration Act 1953 ("TAA"). [1] The relevant tax liabilities of the Company comprised unremitted Pay As You Go Withholding ("PAYGW") amounts in respect of the months June 2013 to February 2014 (except July 2013), and Superannuation Guarantee Charge ("SGC") amounts for the quarters ending June 2012 to September 2013 (other than the quarter ending March 2013). Despite the amount of the judgment, leave to appeal is not required because, as recorded by the District Court judge, the proceedings were conducted on the basis that if Mr Snell succeeded, not only would the amount claimed by the Commissioner not be payable, but also an amount of about $182,000 which had been applied by the Commissioner, from credits arising from Mr Snell's income tax assessments, against the sum of $216,447.12 which had been sued for by the Commissioner, would be repayable to Mr Snell. [2] Background 1. In about August 2001, the Company – of which the then directors were Mr Ireland and Mr Dutton – commenced a restaurant business in Richmond, Melbourne. Mr Snell, a Queanbeyan resident who was engaged, through a number of corporate entities, in a defence procurement business based in Canberra, had met Mr Ireland in the 1990s. Commencing from 1996, Mr Snell and Mr Ireland established and conducted some joint business enterprises. Mr Snell agreed to join Mr Ireland in the restaurant business, and for that purpose acquired a 50% shareholding in the Company, and became a director, on 5 April 2002. Mr Dutton ceased to be a director on 9 December 2003, and thenceforth Mr Ireland and Mr Snell were the Company's only directors and shareholders. 2. As between him and Mr Snell, Mr Ireland, who resided in Melbourne, and had had some experience in operating a restaurant, was solely responsible for the day-to-day management and operation of the restaurant business. Nonetheless, at least until 2012, Mr Snell actively participated in the management of the Company: he travelled regularly to Melbourne to meet Mr Ireland and be briefed on the financial performance of the restaurant; he received and reviewed financial statements provided to him by the Company's accountants; and he signed solvency resolutions for the years from 2004 to 2012. It appears that from 2012 onwards, Mr Snell's relationship with Mr Ireland deteriorated, and during that period Mr Snell was affected by ill-health. It was Mr Snell's case that from 2012 until the Company went into liquidation on 6 October 2015, he was "excluded" from the management of the Company. As will appear, however, His Honour was not satisfied that Mr Snell no longer participated in management of the Company. 3. The Company lodged business activity statements for the months from June 2013 to February 2014, by which it notified the Commissioner that it had withheld money from employees' remuneration in respect of PAYGW obligations, which it was obliged to remit to the Commissioner, on the "due day", as summarised in the following table: [3] Period Due Day $ withheld 1 June 2013 to 30 June 2013 26 August 2013 12,971 1 August 2013 to 31 August 2013 23 September 2013 12,006 1 September 2013 to 30 September 2013 25 November 2013 8,833 1 October 2013 to 31 October 2013 21 November 2013 8,614 1 November 2013 to 30 November 2013 23 December 2013 13,237 1 December 2013 to 31 December 2013 28 February 2014 11,412 1 January 2014 to 31 January 2014 21 February 2014 10,527 1 February 2014 to 28 February 2014 21 March 2014 9,154 Total 86,754 1. The Company did not, however, remit the amounts withheld, by the relevant due day or at all. 2. Between 19 June 2013 and 16 April 2014, the Commissioner issued the Company with default assessments of SGC in respect of the quarters ending June 2012 to September 2013, [4] and the Company was obliged to pay the assessed amounts to the Commissioner, on the "due day", as summarised in the following table: Quarter Due Day $ Amount 1 April 2012 to 30 June 2012 28 August 2012 22,453.47 1 July 2012 to 30 September 2012 28 November 2012 24,925.43 1 October 2012 to 31 December 2012 28 February 2013 23,345.96 1 January 2013 to 31 March 2013 [5] 28 May 2013 23,349.96 1 April 2013 to 30 June 2013 28 August 2013 19,651.36 1 July 2013 to 30 September 2013 28 November 2013 1,258.30 Total 114,984.48 1. The Company did not comply with its obligations to pay the assessed SGC, by the relevant due day or at all. 2. On 28 April 2014, the Commissioner gave Mr Snell a director penalty notice ("DPN") under TAA s 269-25 in respect of the unpaid SGC amounts for those six quarters. The DPN corresponds with the default assessments. On 12 August 2014, the Commissioner gave Mr Snell two further DPNs under s 269-25, in respect of the unpaid PAYGW amounts. 3. The Commissioner issued notices of amended assessment for SGC on 30 July 2014 [6] and on 25 August 2014. [7] The amended assessments were as follows: Quarter Due Day Amount 1 April 2012 to 30 June 2012 28 August 2012 25,943.37 1 July 2012 to 30 September 2012 28 November 2012 30,328.26 1 October 2012 to 31 December 2012 28 February 2014 31,465.66 1 April 2013 to 30 June 2013 28 August 2013 22,145.82 1 July 2013 to 30 September 2013 28 November 2013 19,810.01 Total 129,693.12 1. The proceedings were commenced by statement of claim filed on 2 May 2017, by which the Commissioner originally sought to recover from Mr Snell director penalties in the amount of $201,738.48, of which $86,754 was in respect of unremitted PAYGW amounts and $114,984.14 was in respect of unpaid SGC amounts. Insofar as it concerns SGC, the original statement of claim reflected the original default assessments and the DPN. 2. On 22 January 2018, the statement of claim was amended to claim the sum of $216,447.12. As in the original pleading, $86,754 was claimed in respect of unremitted PAYGW amounts; but $129,693.12 was now claimed in respect of unpaid SGC amounts. In respect of SGC, the amended statement of claim thus reflected the amended assessments, and differed to that extent from the DPN. The amended statement of claim omitted any claim in respect of the quarter 1 January 2013 to 31 March 2013, for which there was no amended assessment. 3. By a further amended statement of claim filed on 16 October 2018, the amount of the claim was reduced to $33,811.76. The components of the claim were unchanged, but the net amount claimed was reduced by the credit allowed in respect of refunds to which Mr Snell was entitled as a result of assessments of his income tax for the financial year ended 30 June 2016. 4. The Commissioner's case was that, by reason of the Company failing to remit the PAYGW and SGC amounts, Mr Snell, who was one of its directors as at each of the relevant due days, became liable to a penalty equal to the amount that the Company had failed to remit, by operation of s 269-20 of Sch 1 of the TAA. Mr Snell propounded two defences: the first was that the proceedings were not validly commenced, essentially because the DPN in respect of the unpaid SGC amounts was said not to accord with what the Commissioner thought the Company's unpaid liability was when proceedings were commenced, and thus was not an effective statutory notice before action under s 269-25 for the purpose of the proceedings; and the second was that for the purposes of s 269-35, because of illness or some other good reason, he did not at any relevant time take part in the management of the Company and it would have been unreasonable to expect him to do so. In a judgment delivered on 2 May 2019, Weber SC DCJ rejected Mr Snell's defences and gave judgment for the Commissioner. [8] 5. In this appeal, the main issues are: 1. whether the Commissioner was entitled to commence and maintain the proceedings to claim the amount ultimately claimed in respect of SGC, when the only relevant DPN given was that of 28 April 2014; and 2. whether, because of illness or for some other good reason, it would have been unreasonable to expect Mr Snell to take part, and he did not take part, in the management of the Company at any time when he was a director and the directors were under the relevant obligations under subsection 269‑15(1). The statutory scheme 1. Under TAA, Sch 1, Divs 12 and 16, an entity is required to withhold an amount from payments made to employees or office holders and to remit those payments to the Commissioner, in accordance with TAA, Sch 1, s 16-70(1). Under (CTH) Superannuation Guarantee (Administration) Act 1992 ("SGAA"), an employer is required to pay an amount of SGC each quarter. 2. TAA, Sch 1, s 269-15, imposes an obligation on a director of a company to cause a company to comply with its PAYGW and SGC obligations. Section 269-15(1) provides that the directors of a company from time to time, on or after the initial day on which the obligation arises, must cause the company to comply with its obligations. Section 269-15(2) provides that, if s 269-15(1) is not complied with on or before the due day, the directors of the company from time to time after the due day, continue to be under their obligation, until the company complies with its obligation, or an administrator is appointed to the company, or the company begins to be wound up. 3. TAA, Sch 1, s 269-20 provides that a director is liable to pay a penalty if the obligations of that director pursuant to s 269-15 are not complied with by the due day, the amount of the penalty being equal to the amount of PAYGW and/or SGC that the company has failed to remit. [9] However, by s 269-25, before commencing proceedings against a director to recover a penalty, the Commissioner must give at least 21 days' notice (colloquially referred to as a director penalty notice) to the director. [10] By s 269-30, the penalty is remitted if, within that 21-day period, the director complies with the DPN by taking action to ensure that the company's liability has been discharged; or an administrator is appointed to the company; or the company begins to be wound up. 4. Section 269-35 provides a number of defences for directors. [11] 5. As was explained by the High Court in Deputy Commissioner of Taxation v Woodhams, [12] the purpose of these provisions is to protect the revenue, by making directors of non-remitting corporate employers liable to penalties equivalent to the amounts which the corporation fails to remit. Were the proceedings maintainable? 1. The issue is whether the Commissioner was entitled to commence and maintain the proceedings to claim the amount ultimately claimed, when the only relevant DPN given was that of 28 April 2014. [13] 2. Liability for a penalty is created by s 269-20, which is as follows: 269-20 Penalty Penalty for director on or before due day (1) You are liable to pay to the Commissioner a penalty if: (a) at the end of the due day, the directors of the company are still under an obligation under section 269‑15; and (b) you were under that obligation at or before that time (because you were a director). Note: Paragraph (1)(b) applies even if you stopped being a director before the end of the due day: see subsection 269‑15(2). (2) The penalty is due and payable at the end of the due day. Note: The Commissioner must not commence proceedings to recover the penalty until the end of 21 days after the Commissioner gives you notice of the penalty under section 269‑25. Penalty for new director (3) You are also liable to pay to the Commissioner a penalty if: (a) after the due day, you became a director of the company and began to be under an obligation under section 269‑15; and (b) 30 days later, you are still under that obligation. (4) The penalty is due and payable at the end of that 30th day. Note: The Commissioner must not commence proceedings to recover the penalty until the end of 21 days after the Commissioner gives you notice of the penalty under section 269‑25. Amount of penalty (5) The amount of a penalty under this section is equal to the unpaid amount of the company's liability under its obligation. Note 1: See section 269‑40 for the effect on your penalty of the company discharging its obligation, or of another director paying his or her penalty. Note 2: See section 269‑45 for your rights of indemnity and contribution. 1. The requirement for a DPN is imposed by s 269-25, which is as follows: 269-25 Notice Commissioner must give notice of penalty (1) The Commissioner must not commence proceedings to recover from you a penalty payable under this Subdivision until the end of 21 days after the Commissioner gives you a written notice under this section. Content of notice (2) The notice must: (a) set out what the Commissioner thinks is the unpaid amount of the company's liability under its obligation; and (b) state that you are liable to pay to the Commissioner, by way of penalty, an amount equal to that unpaid amount because of an obligation you have or had under this Division; and (c) explain the main circumstances in which the penalty will be remitted. (3) To avoid doubt, a single notice may relate to 2 or more penalties, but must comply with subsection (2) in relation to each of them. When notice is given (4) Despite section 29 of the Acts Interpretation Act 1901, a notice under subsection (1) is taken to be given at the time the Commissioner leaves or posts it. Note 1: Section 28A of the Acts Interpretation Act 1901 may be relevant to giving a notice under subsection (1). Note 2: Section 269‑50 of this Act is also relevant to giving a notice under subsection (1). 1. The appellant submitted that the proceedings were invalid, by reason that notice as required by s 269-30(1) had not been given. The appellant did not dispute the validity of the 28 April 2014 notice, but argued that it did not authorise the proceedings that were instituted, because while it accurately stated what the Commissioner thought was the relevant liability when it was given, the Commissioner's "thinking" had changed before the proceedings were commenced – with the consequence that a new notice would be required before proceedings could be commenced. 2. The facts essential to an understanding of this argument are: 1. as at 16 April 2014, the Commissioner had issued default assessments for SGC, in respect of the six quarters covering the period 1 April 2012 to 30 September 2013, totalling $114,984.48; 2. on 28 April 2014, the Commissioner gave Mr Snell a DPN in respect of those six quarters referring to amounts totalling $114,984.48. As has been noted, this corresponds with the original default assessments; 3. by 25 August 2014, notices of amended assessment in respect of SGC had been issued to the Company in respect of five of the six quarters covering the period 1 April 2012 to 30 September 2013, totalling $129,693.12; [14] 4. by the original statement of claim filed on 2 May 2017, the Commissioner claimed $114,984.48 in respect of SGC, which reflects the total of the original (as distinct from the amended) assessments, and corresponds with the 28 April 2014 DPN; 5. on 22 January 2018, the statement of claim was amended to claim $129,693.12 in respect of SGC, which reflects the total of the Amended Assessments, and differed to that extent from what was referred to in the 28 April 2014 DPN. [15] 1. For Mr Snell it was submitted that: 1. the DPN of 28 April 2014 represented what the Commissioner thought (for the purposes of TAA, s 269–25) was the amount payable in respect of SGC at that date, corresponding as it did with the assessments as they then stood; 2. however, what the Commissioner thought was the amount payable had changed, after the DPN was issued, by August 2014, when the amended assessments were issued (which, while notified to the Company, were not notified to Mr Snell); 3. as, when proceedings were commenced, the Commissioner's "thinking" no longer accorded with the only relevant DPN, he was precluded from commencing proceedings until a further DPN, reflecting what the Commissioner currently "thinks", was given to Mr Snell; 4. as this did not occur prior to the commencement of the proceedings, the statutory precondition prescribed by s 269-25 to the commencement of proceedings to recover a penalty from a director was not satisfied, and the proceedings were invalid. 1. The primary judge rejected this argument. His Honour said: 47 The purpose of a DPN pursuant to section 269 – 25 is simply to put the taxpayer on notice of the Commissioner's assertion of the taxpayer's liability. The notice does not impose this liability, nor does it create a cause of action (DCT v Woodhams (2000) 199 CLR 370 at [19]). It is a statutorily mandated form of notice before action. … 52 In my view therefore, the fact that the Commissioner's opinion as to the extent of the liability of the defendant with respect to SGC changed after the service of the DPN on 28 April 2014, does not invalidate the proceedings. Notice having been given in respect of SGC, the only manner in which the defendant could address the notice was by paying the outstanding sum sought in the DPN. This did not occur, and any time after 21 days from the giving of the DPN, the Commissioner was entitled to commence proceedings. Those proceedings, once commenced, were capable of encompassing the full extent of the debt alleged to be owed by the taxpayer at the date of commencement of the proceedings, and was capable of amendment subject to the rules of the relevant Court. 1. The relevant grounds of appeal were to the effect that the primary judge: [16] 1. erred in finding that the Commissioner commenced proceedings validly for the purposes of s 269-25 (ground 1); 2. should have held that the Commissioner was not entitled to commence proceedings by reason of failure to give a DPN which identified and quantified the penalty by reference to what the Commissioner thought was the unpaid amount of the liability of the Company (ground 2); 3. erred in concluding that that the purpose of a DPN pursuant to s 269-25 is simply to put the taxpayer on notice of the Commissioner's assertion of the taxpayer's liability, and should have held that the penalty is quantified by operation of the notice requirement in s 269-25(2), and that the purpose of the notice is to inform the taxpayer of the quantum and identify the penalty and to explain the main circumstances in which it will be remitted (ground 3); and 4. erred in concluding that the fact that the Commissioner's opinion had changed after service of the DPN did not invalidate the proceedings, and should have held that the proceedings were invalidly commenced because there was no antecedent notice answering the requirements of s 269-25(1) (ground 4). 1. The appellant also submitted that there was not a "reasonable proximity between the giving of the notice and the commencement of proceedings", and that "what the Commissioner thinks at the time he or she commences proceedings is the unpaid amount of the company's liability is what must be notified to a director". 2. The essential question is whether s 269-25 has the effect that if what the Commissioner thinks is the unpaid amount of the company's liability (and thus the amount of the director's penalty) changes after a DPN is given, then the Commissioner is precluded from commencing proceedings for recovery of the penalty from the director unless a further DPN, specifying what the Commissioner now thinks is the amount of that liability at the time of commencing proceedings, is first given. 3. Although giving a DPN is not an element of liability, it is a precondition to commencing proceedings against a director to recover the penalty. [17] Being a notice before action, strict compliance with its requirements is required. [18] Nonetheless, while absence of a notice is a bar to proceedings, the giving of notice is not a material fact in the cause of action: all the requisite elements of director's liability to pay a penalty are stated in s 269-20(1), which creates the liability, and they do not include the giving of a DPN. The DPN merely lifts the prohibition on commencing proceedings. 4. The requirements of a DPN, as prescribed by s 269-25(2), are that it (a) set out what the Commissioner thinks is the unpaid amount of the company's liability; and (b) state that the director is liable to pay to the Commissioner, by way of penalty, an amount equal to that unpaid amount; and (c) explain the main circumstances in which the penalty will be remitted. 5. By s 269-20(5), the amount of the penalty recoverable is equal to "the unpaid amount of the company's liability under its obligation". Under s 269-25(2), the DPN is not required to state the amount of penalty with objective accuracy, but to state what the Commissioner "thinks" is the amount. Use of the word "thinks" allows that the Commissioner may not, and may not be in a position to, know with certainty, the amount of that liability; for example, what the Commissioner "thinks" for the purposes of s 269-25(2) may be based on incomplete information. Because s 269-25 applies to liabilities that are not assessment-based (such as remittal of PAYGW deductions) as well as to liabilities that are assessment-based, what the Commissioner "thinks" cannot depend upon there being an assessment, or the amount of an assessment. 6. In requiring that the notice set out what the Commissioner thinks is the unpaid amount of the company's liability, the provision speaks in the present tense; on its face, that must be what the Commissioner thinks is that amount when the notice is given. One reason for that is that, although the penalty is always equivalent to the company's unpaid liability, it may change – due to payment, in part or in whole, or due to the accrual of interest. And what the Commissioner thinks is the amount of that liability may also change from time to time, due, for example, to receipt of new information. A further reason is that proceedings are necessarily instituted some time (at the least, 21 days) after a notice is given, and the unpaid amount of the liability – and/or the Commissioner's understanding of it – may change in the interim, by reason of part payment, or the accrual of interest, or the receipt of further information. The Commissioner cannot know, in advance, what he or she will think is the amount of the liability at a later time. 7. The notice serves two purposes: the first is to inform the recipient of the unpaid amount of the company's liability, as understood by the Commissioner at the date of the DPN; and the second is to inform the recipient of the courses open to result in remission of the penalty, with the object of encouraging the recipient to cause one of those courses to be adopted. [19] In Deputy Federal Commissioner of Taxation v McArdle, Davies JA (with whom Williams and Jerrard JJA agreed) said (emphasis added): [20] [14] Section 222AOE 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 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 these courses is followed. [15] I have taken this statement of the purposes of s 222AOE 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 s 220AAOA; 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. 1. The appellant submitted that a DPN has a third purpose, said to be of more significance than either of the others, namely to warn a director that the Commissioner may commence proceedings to recover a penalty, and that the quantum of the unpaid amount is crucial to that purpose. The authorities referred to above do not support that submission, as they identify only the two purposes mentioned. Moreover, the only purpose of warning a recipient of the prospect of proceedings is to afford the recipient an opportunity to avoid them; and the only way in which they could be avoided is by taking one of the available steps, namely by taking action within the 21-day period to ensure that the company's liability has been discharged; or an administrator is appointed to the company; or the company begins to be wound up. Notably, the notice does not require the director to pay the penalty. I do not accept that it is a purpose of the notice requirement to enable a director to make a fully informed tactical choice as to whether or not to take any and if so what action, or to inform the director of the actual amount of the penalty: it informs the director of his or her exposure to the penalty, and what the Commissioner at that time thinks is its amount, so as to encourage the director to take one of the courses of action that will result in its remission. 2. Section 269-25(2)(a), in referring to "the unpaid amount of the company's liability under its obligation", describes the identical concept as is referred to in s 269-20(5). The reference in s 269-25(2)(b) to "that unpaid amount" refers back to s 269-25(2)(a), namely to "the unpaid amount of the company's liability under its obligation"; it does not refer to the amount stated in the notice as what the Commissioner thinks that amount to be: use of the phrase "that unpaid amount", rather than "that amount" or "the amount set out" favours that view. Accordingly, the effect of the notice is to inform the director that the director is liable to pay to the Commissioner, by way of penalty, an amount equal to the unpaid amount of the company's liability under its obligation, which the Commissioner thinks is the stated amount; not that the director is liable to pay the stated amount. 3. Thus a DPN is required to state what the Commissioner thinks is the unpaid amount of the company's liability, as at the date of the notice. Neither the plain words of s 269-25, nor its context, nor the authorities that have considered its predecessors, nor the purpose of the notice, suggest that it must state the amount thought to be the unpaid liability as at the date of commencement of proceedings. It is the Commissioner's thinking at the date of the notice – not at the subsequent commencement of proceedings – that informs the content, and determines the validity, of the DPN. 4. However, the actual amount of the penalty recoverable is not dependent on nor controlled by what the Commissioner "thinks" it is at the time when the DPN is given. Regardless of what is stated in the notice, by s 269-20(5), the amount of the penalty recoverable is equal to the company's unpaid liability, whatever the Commissioner "thinks" it is; the true amount of the liability is for the Court to determine (subject to any conclusive evidence provisions). 5. The notice, once the 21-day period after it has been given has expired, lifts the bar on commencing proceedings to recover the penalty for which the director became liable on the "due day" to which the notice relates. [21] The appellant submitted that it ought to be implied that proceedings had to be commenced within a reasonable time after notice was given. However, the legislation imposes no time limit for commencing proceedings after the notice is given. The only temporal requirement, which is to be found in s 269-25(1), is that proceedings must not be commenced until the end of 21 days after the Commissioner gives the notice. Once a valid notice is given and expired, the bar is lifted, and short of a statute of limitation, there is no reason to imply a requirement to commence proceedings within any particular time after the 21-day period has expired. 6. Accordingly, after the 21-day period of the notice has expired, the bar on commencement of proceedings to recover the penalty for the period to which the notice relates is lifted. Once the bar is lifted, it does not matter if, before or after commencing proceedings, the unpaid amount of the company's liability – or what the Commissioner thinks it is – changes. There is no requirement that proceedings be commenced within any specific, or a reasonable, time after the notice is given. 7. The appellant rightly accepted that the April 2014 DPN was valid when given, because it stated what the Commissioner thought was the company's unpaid liability when it was given. The primary judge was correct in rejecting Mr Snell's contention that the proceedings were invalid. Defence of justifiable non-participation in management 1. The ultimate issue is whether, because of illness or for some other good reason, it would have been unreasonable to expect Mr Snell to take part, and he did not take part, in the management of the company at any of the relevant times. This is one of the defences afforded by s 269-35, which is as follows: 269-35 Defences Illness (1) You are not liable to a penalty under this Division if, because of illness or for some other good reason, it would have been unreasonable to expect you to take part, and you did not take part, in the management of the company at any time when: (a) you were a director of the company; and (b) the directors were under the relevant obligations under subsection 269‑15(1). All reasonable steps (2) You are not liable to a penalty under this Division if: (a) you took all reasonable steps to ensure that one of the following happened: (i) the directors caused the company to comply with its obligation; (ii) the directors caused an administrator of the company to be appointed under section 436A, 436B or 436C of the Corporations Act 2001; (iii) the directors caused the company to begin to be wound up (within the meaning of that Act); or (b) there were no reasonable steps you could have taken to ensure that any of those things happened. (3) In determining what are reasonable steps for the purposes of subsection (2), have regard to: (a) when, and for how long, you were a director and took part in the management of the company; and (b) all other relevant circumstances. Superannuation guarantee charge—reasonably arguable position (3A) You are not liable to a penalty under this Division to the extent that the penalty resulted from the company treating the Superannuation Guarantee (Administration) Act 1992 as applying to a matter or identical matters in a particular way that was *reasonably arguable, if the company took reasonable care in connection with applying that Act to the matter or matters. When you can rely on this section (4) For the purposes of: (a) proceedings in a court to recover from you a penalty payable under this Division; or (b) proceedings in a court against you in relation to a right referred to in paragraph 269‑45(2)(b) (directors jointly and severally liable as guarantors); subsection (1) or (2) of this section does not apply unless you prove the matters mentioned in that subsection. (4A) For the purpose of the Commissioner recovering from you a penalty payable under this Division (other than as mentioned in subsection (4)), subsection (1) or (2) does not apply unless: (a) you provide information to the Commissioner during the period of 60 days starting on the day the Commissioner: (i) in the case of the Commissioner recovering the penalty under section 260‑5 (Commissioner may collect amounts from third party)—gives you a notice under subsection 260‑5(6) in relation to the penalty; or (ii) otherwise—notifies you in writing that he or she has recovered any of the penalty; and (b) the Commissioner is satisfied of the matters mentioned in subsection (1) or (2) of this section on the basis of that information. Power of courts to grant relief (5) Section 1318 of the Corporations Act 2001 does not apply to an obligation or liability of a director under this Division. 1. Before the primary judge, Mr Snell contended that: 1. he was excluded from management from 2012 onwards; 2. it would have been unreasonable to expect him to take part in the management of the Company at any relevant time because of illness; and 3. it would have been unreasonable to expect him to take part in the management of the Company at any relevant time because of some other good reason, namely an arrangement between him and Mr Ireland for separation of their interests and responsibilities. 1. The primary judge rejected these arguments. His Honour found that Mr Snell continued to take part in management of the Company: 56 I am prepared to accept that the defendant found Mr Ireland decreasingly helpful in his dealing with him from 2012. I also accept that Mr Snell found it increasingly difficult to make contact with Mr Ireland in order to discuss the Company's affairs. Nevertheless, he did succeed in contacting Mr Ireland, and he did discuss the Company's affairs with him. 57 To give but two examples, Mr Snell came to know that on two occasions the Company owed substantial amounts to the Commissioner, and made arrangements to make payments clearing the tax liabilities (Affidavit of Mr Snell, dated 18 February 2019, paragraphs 78 and 100). In so doing, he dealt with the Company's accountants, and with officers of the Commissioner on the Company's behalf, in which process he sought to ascertain the correct position in relation to the Company's fiscal obligations before he made payments. 1. Although that was sufficient for the defences to fail, his Honour nonetheless considered whether it would have been unreasonable to expect Mr Snell to take part in the management of the Company at any relevant time because of illness or some other good reason. As to illness, his Honour said: 69 A cursory analysis of section 269–35 will show that it is difficult for a director to afford him or herself of its protection. To establish the defence, it must be established that, because of illness: (1) during the entire relevant period; (2) the director did not take part in the management of the company; and (3) it was unreasonable to expect the director to take such part. 70 While the evidence of Mr Snell's illness is clear and uncontradicted, it cannot be said that at all times since 30 June 2012, he did not take part in the management of the Company. Earlier in these Reasons, I have dealt with instances of Mr Snell's clear involvement in the management of the Company in the relevant period. 71 It will be recalled that Mr Snell did not choose to cease his involvement in the affairs of the Company. While he took steps, in an attempt to separate certain of his business interests from Mr Ireland's, with a view to no longer being involved in the Restaurant business, he did not resign as a director of the Company. This, as I have indicated, was a considered commercial decision on his part. 72 Mr Snell also continued to stoically operate his other business during this time, albeit with some practical alterations to his business lifestyle, which would better accommodate his fluctuating health. 73 Thus, I do not see that it is arguable that he did not take part in the management of the Company during the relevant period; and in any event, his involvement in his other businesses over the period demonstrates that, to the extent to which it could be said that he did not take part in the management of the Company, it would not be unreasonable to expect him to do so. 1. As to "some other good reason", his Honour concluded: 82 As I previously indicated, I do not accept that Mr Snell was in any relevant sense excluded from the business. As to the Separation Agreement, on the authorities to which I have referred, the Separation Agreement could not afford a "good reason". Holton is but one example demonstrating this conclusion. In any event, as I have indicated, the proposition that the Separation Agreement resulted in Mr Snell, by arrangement, taking no further part in the management of the Company's affairs, misstates its effect. The Separation Agreement, far from providing a "good reason" for non-participation in the Company's affairs, was in fact an act which was inconsistent with Mr Snell no longer taking part in the management of the Company. As I have indicated, the manner in which the Separation Agreement was carried into effect, had precisely the opposite effect – Mr Snell decided to stay on as a director of the Company, and be involved in its management. 1. The notion of taking part in the management of a company generally comprehends management activity by a person, such as a director, having a decision-making role in the company as a whole. In this context, "management" means the type of managerial role that a director performs; it does not necessarily involve the day-to-day supervision of the business. It is through participation in management that a director is able to ensure that a company meets its obligations. [22] 2. The defence provided by s 269-35(1) requires that the director did not participate in management of the company at the relevant time because of illness or some other good reason on account of which it was unreasonable to expect the director to participate in management. Although it is sometimes not unhelpful to break down the situation described by s 269-35(1) into its various component phrases, this should not detract from consideration of the provision as a whole. As a whole, the provision contemplates the circumstance that the director does not, and could not reasonably have been expected to, participate in management, because of illness or some other good reason. Essentially, this envisages a situation in which, though nominally remaining in office as a director, the relevant director does not participate in management because of illness or another good reason. In short, it involves justifiable non-participation in management, against the backdrop that it is the obligation of a director to participate in management of the company, and a director is not entitled to choose not to participate. [23] It is unsurprising that, against that backdrop, the defence is not easily established. [24] The defence means that a director who justifiably does not participate in management is not responsible for the Company's default. Broadly it has two components: first, that the director does not participate in management at any relevant time, and secondly, that it would have been unreasonable to expect him to do so either because of illness or for some other good reason. Thus if, despite even serious illness, the director continues to participate in management, the defence is not available. The period to which the defence applies (grounds 12, 13 and 14) 1. The primary judge said: The Relevant Period 66 Mr Ipp submits that the relevant period for the statutory defences is between the Due Date in each case (as defined in the TAA) and the expiry of the DPNs issued by the Commissioner. The closing date for the period was said to arise from the decision of Handley JA in Canty v Deputy Commissioner of Taxation (2005) 63 NSWLR 152. This led to the submission that the relevant period in respect of both PAYG and SGC instalments, was the period of 30 June 2012 to 2 September 2014. 67 Ms Gatland, who appeared for the Commissioner, suggested that the range of dates was 30 June 2012 but ongoing. 68 The parties were in agreement that nothing turns on the differences between their views of the relevant period, a proposition with which I agree. I therefore proceed on the basis of the plaintiff's formulation of the relevant period, as it is the most beneficial to him. 1. The appellant contended that the primary judged erred in: 1. finding that in order to establish the statutory defences, Mr Snell had the obligation of demonstrating them for the entire relevant period (ground 12); 2. failing to consider and determine the separate argument of Mr Snell that the defence under s 269-35(1) required the ascertainment of the period defined by reference to each discrete penalty for which he was liable, which in turn required consideration of the time when he was under the relevant obligation under s 269-35(1)(b) (ground 13); and 3. alternatively, in failing to consider the statutory defences in relation to each distinct period (five for the SGC amounts and eight for the PAYGW amounts) ending on the expiry of the relevant DPN (ground 14). 1. Although the appellant submitted that his Honour found that the relevant period was "30 June 2012 but ongoing" in conformity with what was said in the judgment at [67], the reference to "plaintiff" in [68] was a slip, and was intended to be to "defendant", and his Honour was adopting the position most favourable to the defendant, in circumstances where all agreed that it made no difference. That is supported by the conventional approach of assuming the position most favourable to a party against whom a point is decided, and by the authority referred to by His Honour, Canty v Deputy Commissioner of Taxation "(Canty)", [25] in which Handley JA, with whom Beazley and Santow JJA agreed, said, in respect of an equivalent section, [26] that the obligation of a director was a continuing one that applies throughout the period commencing on the breach of the director's obligation on the due day and continuing until the expiry of the DPN, with the consequence that the defence must cover the whole of that period. [27] It is not to be supposed that his Honour intended to assume the position most adverse to Mr Snell, and to depart from Canty. But in any event, as was common ground before his Honour, it made no difference, as will appear below. 2. Section 269-35(1) refers to the period when (a) the director was a director of the company; and (b) the directors were under the relevant obligations under s 269‑15(1). It is true, as is emphasised for Mr Snell, that s 269-15(1) provides that the directors of the company from time to time, on or after the initial day, must cause the company to comply with its obligations to pay amounts of PAYGW and SGC owing by the company. The "initial day" in the case of PAYGW amounts is the date on which the amount is withheld, and in the case of SGC amounts is the last day of the relevant quarter; whereas the "due day" (upon the expiration of which the penalty arises if the company has not paid the amount due) is, in the case of PAYGW amounts, generally 21 days after the end of the month in which the withholding is made, and in the case of SGC amounts, generally the 28th day of the second month following the end of the relevant quarter. As has been observed, each period having a "due day" for a tax-related liability gives rise to a separate liability and, if unpaid, a separate penalty, which becomes due and payable at the end of the due day for the period to which it relates. [28] 3. If that was all there was to s 269-15(1), then there might be some force in the submission made on behalf of Mr Snell to the effect that s 269-15(2) provides that the period during which "the directors were under the relevant obligations under subsection 269‑15(1)" referred to in s 269-35(1)(b) is the period from the initial day to the due date. However, while the phrase "on or after the initial day" in s 269-15(1) describes the commencement date of the obligation, s 269-15(2) provides that if section 269-15(1) is not complied with on or before the due day, the directors of the company continue to be under the obligation, until the company complies with its obligation, or an administrator is appointed to the company, or the company begins to be wound up. This means that the obligation in s 269-15(1) does not come to an end on the due date, unless it is complied with, but continues until compliance, administration or winding up. It follows that the directors are under the relevant obligation under subsection 269‑15(1), for the purposes of s 269-35(1), from the initial day (or from when they subsequently become a director), until the company complies with its obligation, or an administrator is appointed to the company, or the company begins to be wound up. 4. On that construction, the defence must be established in respect of the whole of that period, because it must be shown that the director did not, and could not reasonably have been expected to, participate in management at any time during that period. That accords with the decision of this Court in Canty, [29] in which Handley JA, with whom Beazley and Santow JJA agreed, said, in respect of the predecessor section: [45] Under s 222AOJ(3) it is a defence if the defendant proves that he or she "took all reasonable steps to ensure that the directors complied with" the obligation, or that "there were no such steps that the person could have taken" (emphasis added). The natural meaning is that the combined defences must cover the whole of the period between the breach of the obligation on the due date and the expiry of the notice. [46] Proof that nothing could have been done at various times during this period would not establish that nothing could have been done at other times. Proof that the person took all reasonable steps at various times would not establish that he or she took all reasonable steps. [47] Subsection (2), which creates another defence, provides: "Defences … It is a defence if it is proved that, because of illness or for some other good reason, the person did not take part in the management of the company at any time when: (a) the person was a director; and (b) the directors were under the obligation to comply with subsection 222AOB(1)." (Emphasis added.) [48] This defence can only succeed if the illness or other good reason continued for the whole of the time the director was in office and the obligation to comply with s 222AOB(1) continued. This Court acted on that view in Deputy Commissioner of Taxation v George (2002) 55 NSWLR 511 at 517 [21]-[26]. 1. As that passage indicates, in Deputy Commissioner of Taxation v George, [30] the Court held that the defences had to be established for the entire period from the "due day" to the expiry of the DPN. Gzell J (with whom Handley and Giles JJA agreed) said: [21] It follows from this construction that a defence under s 222AOJ(2) was effective only if the director established a good reason for a failure to take part in the management of a company for the entirety of the period of the directorship during which the obligation under s 222AOB(1) existed. Since any good reason the respondent may have had for not taking part in the management of Netcom ceased while he remained a director and when the obligation under s 222AOB(1) continued to apply to him by operation of s 222AOB(3) there was, after that cessation, no defence under s222AOJ to the penalty to which he was subjected by s 222AOC. … [27] The words "at any time" in s 222AOJ(2) related to the period when a person was a director and the directors were under an obligation to comply with s 222AOB(1). That means, in my view, that the director had to establish good reason for non-participation in the management of the company throughout the period the person was a director and the directors were under a s 222AOB(1) obligation. The defence was not enlivened if merely because on one or more discrete occasions during that entire period the director had good reason not to participate in the management of the company. The requirement was that a director did not take part in management at any time. That requirement was not satisfied if there was participation on one or more occasions. No participation at any time meant non-participation at all times. The submission of the respondent does not give weight to the negative requirement… 1. The view expressed in Canty – which in my respectful view is plainly correct, given the terms of s 269-15(2) – has been referred to, without disapproval, in other intermediate appellate courts. In Shaw v Deputy Commissioner of Taxation, [31] Gotterson JA, with whom P McMurdo JA and Atkinson J agreed, said (citations omitted): [36] I mention at this point, that Handley JA then proceeded to consider whether the defence need be established for the whole of the period between the due dates and the expiry of a compliance notice served on a director. He answered that question in the affirmative and then observed that proof that nothing could have been done at various times during the period would not establish that nothing could have been done at other times, and that proof that the person took all reasonable steps at various times would not establish that he or she took all reasonable steps. 1. Accordingly, both construction of the terms of s 269-35(1) and s 269-15(1) in the light of s 269-15(2), and a well-established line of authority, require rejection of the appellant's contention that the non-participation defences are to be judged by reference to the periods between the initial date and the due date for each penalty. There is room for argument whether they run from the initial date until expiry of the DPN, or continues thereafter until compliance, administration or winding up – an issue which was not considered in Canty and the cases which follow it – but it was common ground that that made no difference in the circumstances of the case, and his Honour proceeded on the basis most favourable to Mr Snell. 2. The appellant submitted that the primary judge did not examine the illness defence by reference to each relevant period, and thereby failed to consider a valid submission worthy of serious consideration. However, in circumstances where, although each relevant period had a separate commencement date, all extended until the expiry of the relevant DPN and thus largely overlapped, discrete consideration of each penalty period would not have made the slightest difference, and was unnecessary. Once the defence was not made out in respect of the whole of the period common to all the due days, between the due day of the last period and expiry of the relevant DPN (in the case of the SGC amounts, 28 November 2013 to 19 May 2014; and in the case of the PAYGW amounts, 21 March 2014 to 2 September 2014), it necessarily failed in respect of all the other periods, because they included those periods. 3. All these grounds therefore fail. Participation in management (grounds 7, 8, 9, and 10) 1. The primary judge's conclusion that Mr Snell did participate in management was founded on findings that Mr Snell: 1. although finding it increasingly difficult to make contact with Mr Ireland, nevertheless did succeed in contacting him, and did discuss the Company's affairs with him; [32] 2. on two occasions learned that the Company owed substantial amounts to the Commissioner, and made arrangements for payments to clear those liabilities; [33] 3. in so doing, dealt on the Company's behalf with the Company's accountants, and with officers of the Commissioner; [34] 4. negotiated an oral agreement with Mr Ireland to cease to do business together ("the Separation Agreement"), to the intent that Mr Ireland would take over the management of the restaurant and thereafter be solely responsible for the discharge of its liabilities (including its liabilities to the Commissioner), while Mr Snell would do the same with respect to their jointly operated boat business, but certain valuable land in Queensland ("the Garners Beach Land") would remain an asset of the Company; [35] and 5. did not cease his involvement in the affairs of the company, but deliberately determined to remain a director of the Company, in order to safeguard his interest in the Garners Beach Land. [36] 1. The appellant submitted that, in the context of s 269-35(1) and having regard to the objects of Div 269, the notion of taking part in the management of the company should be confined to those aspects of a company's affairs that cause the company to incur an obligation to the Commissioner, and that steps taken by a director to bring about the discharge of taxation obligations should not count as taking part in management. On that basis, it was submitted that the matters relied on by his Honour as evidencing participation in management ought to have been excluded from consideration. 2. That submission is misconceived, for two reasons. The first is that the focus is participation in the "management of the company", a concept which connotes policy and decision-making relating to the business affairs of the corporation as a whole, [37] and the plain words of which refer to the company, not any particular business it might operate. At the core of the concept is participation in governance of the company, whether formally (at meetings of directors) or informally. The various matters relied on by the primary judge are essentially indicia of participation in management from which that conclusion was ultimately drawn. The second is that there is no basis for distinguishing between "acts of management" that are within the concept of "taking part in management" and acts of management which are not. In particular, there is no reason to disregard the steps taken by Mr Snell to procure payment of the Company's taxation liabilities in considering whether Mr Snell was not taking part in management. The act of engaging with the Australian Taxation Office on behalf of a company was considered to evidence participation in management of the company in Deputy Commissioner of Taxation v Lister, [38] in which Williams JA (with whom Davies and Jerrard JJA agreed), said: [14] But it is equally clear that during the earlier time that the other amounts became due he also took part in the management of the company. During the course of argument in this court the male appellant's attention was drawn to material exhibited to affidavits filed on behalf of the respondent which showed that on at least 21 October 1998, 2 December 1998, 3 December 1998, 23 June 1999, 27 July 1999 and 27 August 1999 he was in contact with officers of the Australian [Taxation] Office with respect to the company's obligations pursuant to the ITAA. Ultimately the male appellant conceded that during the period he was in Brisbane he was the director of the company responsible for dealings with the Australian [Taxation] Office. In those circumstances it is not arguable that he "did not take part in the management of the company" during that material time and it is also not arguable that he "took all reasonable steps to ensure that the directors complied with" their obligations, particularly the obligation pursuant to s 222AOB. 1. The appellant submitted that the primary judge erred in having regard to his participation in the boat business, and erroneously assumed that it was an asset of the Company (ground 8). However, his Honour made no such assumption, observing that – in distinction to the Garners Beach Land – its ownership was "opaque". The relevance of the boat business was twofold: first, that the act of negotiating the Separation Agreement, which included provision as to the future conduct of the Company's affairs, was evidence of participation in management; and secondly, that ongoing participation in the boat business was inconsistent with illness precluding participation in business activity and thus weighed against it being unreasonable to expect Mr Snell to attend to his directorial duties notwithstanding his illness. 2. The appellant submitted that negotiation of the Separation Agreement, with a view to disengaging from the Company's business, was not evidence of participation in management, as it was "a commercial step taken by him to divest his interest in the sole Company asset that was the cause of the Company incurring obligations to the Commissioner", and that as he "ensured it was a term of the Separation Agreement that a company controlled by Mr Ireland would purchase the Restaurant Business from the Company and the new company would take steps to discharge the Company's unpaid liabilities to the Commissioner", the ultimate object of the Separation Agreement was to cause the Company to discharge its obligations to the Commissioner (ground 9). However, while it contemplated that the Company would divest itself of the restaurant business, the Separation Agreement did not involve Mr Snell disengaging from management of the Company; to the contrary, it involved him remaining not only a shareholder but also a director of the Company, and the issue is participation in management of the Company, not of any particular aspect of its business. The Separation Agreement was evidence of ongoing participation by Mr Snell in management of the Company, because by it, he participated in making arrangements in respect of the ongoing conduct of the Company's affairs. 3. The appellant submitted that Mr Snell's decision to remain a director in order to safeguard his interest in the Garners Beach Land was not evidence of participation in management (ground 10). This submission was founded on the notion that in the absence of evidence that the Garners Beach Land formed part of any income earing business of the Company, or that its ownership involved decision-making related to the "real business affairs" of the Company, it did not evidence participation in the management of the Company. To the contrary, however, a deliberate decision to remain a director, in order to retain influence over the Company in respect of a valuable asset, evidences ongoing participation in management. The issue is participation in management of the Company, not of its restaurant business. That ownership of the land may have had no PAYGW or SGC consequences does not mean that decisions about it were not an aspect of management of the Company. 4. The appellant submitted that it was erroneous to rely on Mr Snell's decision to remain a director, because otherwise the only option available to a director to avoid liability would be to resign, which is not what the section requires. However, it is not the mere circumstance that Mr Snell did not resign that was significant; it is that in the context of negotiating the Separation Agreement, he made a deliberate decision, for sound commercial reasons, to remain a director – and thus to remain involved in management. That, with the other matters to which reference has been made, contributed to the conclusion that he had not ceased to participate in management. This is manifest from the following excerpt from Mr Snell's evidence, which was cited by his Honour: [39] [136] By September 2013, I had lost complete confidence in Jim Ireland's ability to manage the affairs of the Company. Therefore, to avoid leaving Jim Ireland in control of the Company's assets without any oversight from me, I entered into the Separation Agreement rather than resign as a director of the Company. I did not consider that winding up the Company was an appropriate course of action. [137] As discussed above, part of the Separation Agreement involved Jim Ireland transferring the assets of the Restaurant Business into a separate company. Therefore, by remaining a director, I believed that this would ensure that Jim Ireland would consult with me, particularly given that I would be required to sign all necessary sale documentation. [138] Further, I could use my position as a director to encourage Jim Ireland to honour the obligations to the ATO and other creditors otherwise he would have had total management responsibility but without the absolute intent to meet his responsibilities. [139] Since April 2008, the Company had owned a part interest in land at address, Lots 1 and 3 The Esplanade, Garners Beach, Queensland (Garners Beach). Garners Beach was bought for a purchase price of approximately $4.5 million. … [141] I considered that if I resigned as a director of the Company, I would lose the ability to have a say in the management of Garners Beach, a significant asset of the Company. Further, my resignation could leave Jim Ireland in control of the Garners Beach asset. This, in my mind was untenable given my loss of confidence in his ability to manage the affairs of the Company. 1. Significantly, the appellant did not challenge his Honour's conclusion that although he found it increasingly difficult to make contact with Mr Ireland, Mr Snell nevertheless did succeed in contacting him, and did discuss the Company's affairs with him. This was sufficient of itself to support the conclusion that Mr Snell continued to participate in management; it is not only through formal meetings of directors, but also through informal discussions between directors, that management is conducted. 2. Accordingly, in my view, there was no error in the primary judge's conclusion that Mr Snell continued to participate in management of the Company during the period between 2013 and its ultimate winding-up. That conclusion was of itself fatal to the "illness" and "other good reason" defences. Illness (ground 16) 1. His Honour's rejection of the proposition that it would have been unreasonable to expect Mr Snell to participate in management because of illness was founded on the conclusion that not only did he participate, but that his illness, while serious, was not such as to incapacitate him from participation – except, perhaps, for short periods, as was demonstrated by his actual participation, and his participation in management of other entities. The appellant contended that the primary judge erred in concluding that it would not have been unreasonable to expect the appellant to take part in management. The appellant also submitted that although the primary judge canvassed the medical evidence, his Honour did not consider how the "illness" defence was to be applied in the light of that evidence. 2. Evidence of illness alone, however serious and prolonged, is insufficient to establish a defence under s 269-35(1). In the application of s 269-35(1), the question is whether by reason of the illness the director could not reasonably have been expected to take part in management. Although this does not require that the illness necessary be incapacitating, it must – given the fundamental responsibility of a director to participate in management – necessarily involve that the illness have a significant adverse impact on the director's ability to participate. 3. Prior to 2012, Mr Snell travelled from Canberra to Melbourne at least monthly and met with Mr Ireland to discuss the restaurant business and its affairs. From 2012, as his Honour accepted, Mr Ireland became increasingly difficult, but Mr Snell persevered. Mr Snell contended that his medical conditions meant that his efforts to maintain contact with Mr Ireland were limited. The primary judge accepted that in the period from 2012, Mr Snell suffered from very significant bouts of ill-health, and in particular, during 2012 and 2013, angina, basal creps, ankle swelling, cardiac failure, paroxysmal nocturnal dyspnoea, sleep apnoea, gout, diabetes, severe osteoarthritis, hypertension, chronic kidney disease, peripheral oedema/fluid build-up, and heart-burn. On about 20 March 2013, while on a business trip in China, he had a heart attack, for which a coronary angiography and stent procedure were performed at a Hong Kong hospital; he was hospitalised in Hong Kong until 31 March, and was convalescing until 10 May 2013. Between 24 June and 8 July 2014, he was hospitalised in Canberra, with oedema and ascites. 4. However, although it may be accepted that it would have been unreasonable to expect him to participate in management while he was hospitalised, or while he was convalescing, that falls far short of showing that, by reason of illness, it was unreasonable to expect him to participate in management for the entire relevant period, and in particular during the common period between 28 November 2013 (the due day of the last relevant SGC period) and 2 September 2014 (the expiry of the PAYGW DPN). The medical evidence adduced on behalf of Mr Snell, viewed as whole, does not establish that it was medically impossible or imprudent for him to do so during the entirety of the period. And that is confirmed by the fact that he did continue to participate in management of his other businesses. 5. Dr Anthony Stevenson, general practitioner in Queanbeyan, was Mr Snell's general practitioner from June 2008; he last saw him on 10 May 2013. Of Mr Snell's condition in 2012, he reported: ● Mr Snell's competence and cognitive capacity was not a subject of his consultations during 2012, thus I cannot provide an opinion with respect to his capacity. ● However, ordinarily, I would not expect chronic kidney disease stage 3a, nor microscopic haematuria, nor borderline iron deficiency, nor microalbuminuria to have any impact upon cognitive functioning nor mobility, as all of these conditions are usually asymptomatic conditions diagnosed by laboratory testing only. 1. Dr Stevenson also described Mr Snell's condition following his heart attack, suffered in China in March 2013: ● The first occasion of attendance by Mr Snell to see me after this event was on 10/05/2013, at which time I recorded that Mr Snell had "felt extremely well" after the stenting procedure and had suffered no recurrence of his previously frequent symptoms of angina. ● In my opinion, it is likely that Mr Snell was limited in his ability to carry out normal functions or activities from the onset of his symptoms of [Acute Coronary Syndrome], then throughout his admission to hospital and until definitive treatment by stenting of the coronary arteries, then discharge form hospital. ● Mr Snell's competence and cognitive capacity was not a subject of his consultations on 10/05/2012, thus I cannot provide an opinion with respect to his capacity. My notes do not indicate any concerns in this regard, and that he had recovered well. 1. In response to a request from Mr Snell's solicitors for "any additional information, which I consider to be of note, regarding Mr Snell's functioning and capacity during the relevant period", Dr Stevenson reported: ● I note that Mr Snell suffered with frequent stable angina due to his ischaemic heart disease from January 2010 until the coronary stenting procedure in March 2013. ○ In my opinion, it is reasonable to assume that during moments of symptomatic angina, the pain is likely to have distracted him transiently from being able to apply full concentration to other duties and tasks, i.e. during the transitory period of pain. ○ The angina and associated shortness of breath would very likely have limited his ability [to] undertake significant exercise. ○ This opinion is based upon my review of the clinical record and my recollections of Mr Snell and my acquired experience of managing patients with angina during the course of my professional work. ● Mr Snell was also significantly afflicted by osteoarthritis and gout to the extent that it impaired his ability to exercise regularly, but not to the extent that he was unable to travel frequently about the country. ● Despite these conditions and symptoms, my notes indicate and I recall that Mr Snell remained at work and travelled frequently. ● My notes indicate and I recall that Mr Snell was at times an irregular attendee for management of his many medical conditions, and that this issue was at least in part due to the nature of his work and associated travel. ● I recall that I struggled to engage Mr Snell in the necessary actions to improve his health and well-being and that referrals and recommendations were frequently not actioned, or were delayed due to the loss of continuity associated with his frequent movement between Melbourne, and Queanbeyan and other locations. ● Mr Snell's competence and cognitive capacity was not a subject of his consultations during the relevant period. ● I do not recall any clinical concern regarding Mr Snell's capacity nor cognitive functioning during the relevant period, and my clinical notes do not indicate any concern regarding his cognitive functioning. 1. The effect of Dr Stevenson's evidence is that while it would have been unreasonable to expect Mr Snell to participate in management when he was hospitalised or recuperating, that was only for limited periods; moreover, Mr Snell continued to travel frequently and to engage in his business affairs. Dr Stevenson does not refer to any impediment to his participation in management during the common period, although admittedly he last saw Mr Snell on 10 May 2013. 2. The high point of Mr Snell's case was the opinion of Dr Eccleston, cardiologist, who saw Mr Snell on seven occasions over the period 2008 to 2014. In respect of the period 2013 to 2014, he reported that he understood Mr Snell to have suffered from a myocardial infarction in March 2013 while overseas, but had no record of any consultation with him that year; he next reviewed him on 30 September 2014, when he had had a recent hospitalisation "with biventricular cardiac failure". However, at the review on 30 September 2014: He appeared euvolemic, blood pressure was 132/84 mmHg, he was in sinus rhythm at 53 bpm and a stress myocardial perfusion scan performed as part of assessment for possible knee surgery revealed normal coronary flow reserve, however again a dilated left ventricle with mild global systolic dysfunction and an estimated ejection fraction of 45% … 1. That does not describe a person who could not possibly or prudently participate in management. More generally, he reported: In regard to Mr Snell's fitness to work as a company director during the period of 1st July, 2012 and 2nd September 2014, he was severely limited in physical capability and also ability to concentrate and function as a company director by a combination of reduced cardiac function, recurrent symptoms of angina and subsequent episodes of cardiac failure. With these conditions it would not be possible for Mr Snell in act in full capacity in any high level role such as a company director due to fatigue, poor concentration, recurrent cardiac symptoms and also a large burden of medication and the need to maintain a fluid restriction and appropriate physical activity. This would also limit his ability to travel to a place of work or indeed interstate or internationally if this was part of the requirement of his position as a company director. 1. However, in cross-examination it emerged that Dr Eccleston's assessment of the impairment to Mr Snell's cognitive capacities was not so much observed by him, as based on what medical literature suggested were the common effects of the illnesses affecting Mr Snell and his medications, although he recalled that on one or more consultations, Mr Snell did not recall certain details of both his hospitalisations, and his medication. Dr Eccleston's speculation in this respect was not consistent with the observations of other treating medical practitioners of Mr Snell's actual condition. As the primary judge observed, none of the other medical reports, or notes of other treating doctors, expressed in terms an opinion that Mr Snell's medical conditions made him unable to discharge his duties as a director, and some tended to suggest otherwise. [40] 2. Mr Snell was in the care of Dr Gavin Carney, nephrologist, between 27 February 2014 and 23 January 2015. Dr Carney reported that when first referred, he had no cognitive impairment and was "stable of diabetic nephropathy". In June 2014, he was physically incapacitated with peripheral oedema with swollen legs, and he was hospitalised between 25 June and 8 July 2014 during which period he was physically disabled and unable to attend to business matters; but when reviewed in February 2015, he was "in good health" and "stable of his cardiac failure", he was "no longer physically incapacitated" and "there was no cognitive impairment". The effect of that evidence is that it would have been unreasonable to expect him to participate in management between 25 June and 8 July 2014, but it goes no further. 3. In 2015, Mr Snell came under the care of Dr Farshid, cardiologist. Asked to express an opinion about his capacities following the heart attack in 2013, and having observed that he did not look after him during or following that episode, he said: I can comment in general from my experience with heart attack patients that a heart attack is a significant medical diagnosis and associated with a high level of stress and anxiety. Patients are generally advised not to work for a period of at least four weeks following a heart attack and to concentrate on their recovery and to avoid any heavy physical exertion or stressful situations. 1. That evidence could support a view that it was unreasonable to expect him to participate in management for a period of four weeks following the heart attack on 20 May 2013, but again it does not tend to show that that extended to the common period at all, let alone the whole of it. 2. And that is consistent with the circumstance that, as Dr Stevenson observed in the passage extracted above, Mr Snell continued to work. As the primary judge said, in a finding which is not challenged, "Mr Snell also continued to stoically operate his other business during this time, albeit with some practical alterations to his business lifestyle, which would better accommodate his fluctuating health". [41] Nor did illness prevent Mr Snell travelling to Melbourne to see Dr Eccleston, cardiologist, on seven occasions over the period 2008 to 2014. Moreover, illness did not prevent Mr Snell from travelling to China on business in May 2013 (during which trip he had the heart attack). 3. By ground 16, the appellant contended that the primary judge erred in concluding that Mr Snell's involvement in other businesses meant that, to the extent he did not take part in the management of the Company, it would not be unreasonable to expect him to do so. The only submission developed in support of this was to the effect that his Honour's conclusion departed from the statutory language, which was it would have been unreasonable to expect. [42] His Honour's conclusion was plainly directed to the test expressed in the statute, and amounts to a conclusion that it was not satisfied, because it would not have been unreasonable to expect Mr Snell to participate in management, notwithstanding his illness. If illness, however serious, did not prevent Mr Snell from participating in management of his other businesses, it is not unreasonable to expect him to participate in management of the Company. To the contrary, Mr Snell's ongoing involvement in management of his other businesses, however stoic, was compelling evidence that his illness was not such as to render it unreasonable to expect him to participate in management of the Company. 4. There is no doubt, as the primary judge accepted, that Mr Snell had significant and serious episodes of ill-health. It may well be that there were days, or even weeks (when he was hospitalised), on which it was reasonable for him not to participate in management. But the evidence falls far short from establishing that he was physically or cognitively unable to participate, nor that there were medical reasons why he should not participate, for the entirety of the relevant periods. His Honour was right to conclude that his involvement in his other businesses over the period demonstrates that it would not have been unreasonable to expect him to do so, notwithstanding his illnesses. Some other good reason (grounds 11 and 15) 1. The primary judge rejected Mr Snell's "some other good reason" defence on the basis that the Separation Agreement could not afford a "good reason", as it amounted to no more than a choice not to participate in (certain) affairs of the Company. The appellant submitted that that conclusion was erroneous, as the effect of the Separation Agreement was not to divide responsibilities between directors, but was intended to result in the sale of the restaurant business to a new company controlled by Mr Ireland, with the result that the taxation liabilities would become the responsibility of that new company. The appellant also contended that in rejecting the "some other good reason" defence, the primary judge did not consider the appellant's exclusion from management, his remoteness from Melbourne, the existence of the Separation Agreement, and Mr Snell's serious ill-health. 2. Because the test is an objective one, it is not sufficient if the director had a genuine view that he or she had good reason for not participating: a reason for non-participation in the management of the company is "good" if, viewed objectively, it is not only adequate but "valid" and "sound". [43] As Harrison J has explained: [44] The reason advanced must objectively be a good reason. For example, a total failure to participate for whatever reason should not be regarded as a "good reason": [citing Deputy Commissioner of Taxation v Clark, referred to below]. In determining what may be a good reason for not participating in the management of a company, regard must be had to the high standards of care and skill now required of directors. The plaintiff submitted that a director who by a course of conduct is inattentive to the affairs of the company is unlikely to have the benefit of this defence. For example, it would not be sufficient if the director held a genuine view that he or she had good reason for not participating unless it were a "good reason" when viewed objectively. 1. As has already been observed, it is a fundamental obligation of a director to participate in management. An agreement between directors cannot operate to override the statutory duties and obligations of a director. A deliberate decision not to participate in management while remaining a director is not a good reason. [45] In Deputy Commissioner of Taxation v Clark, [46] in which one director pleaded that she relied on and left management to the other (her husband), the Court held that total reliance on a fellow director in the management of a company was not a "good reason" for non-participation in the management of the company. Spigelman CJ, with whom Handley and Hodgson JJA agreed, said that "it is a basal structural feature of corporations legislation in Australia that directors are expected to participate in the management of the corporation", [47] and: [48] … there is no justification for a doctrine which would hold sleeping directors to be "de facto non-directors" who should be relieved of their liabilities … the conduct of such directors may never meet the requisite standard of participation in management, such conduct should not be excused as a "good reason" in law. 1. Likewise, a choice not to participate in the affairs of the company has been held not to be a "good reason" for the purposes of s 269-35(1). In Deputy Commissioner of Taxation v Holton, [49] the defendant pleaded that he had agreed to divide responsibilities with another director and had been excluded from the company after a certain date; neither reason was accepted to be a "good reason" for the purposes of the defence. 2. At its highest, Mr Snell and Mr Ireland had negotiated in principle an agreement under which they would cease to be engaged in certain businesses together, which would involve Mr Snell assuming responsibility for the boat business and its liabilities, and Mr Ireland assuming responsibility for the restaurant business and its liabilities; but would remain shareholders in and directors of the Company, which would continue to hold the Garners Beach Land. The agreement had not been documented, and it had not been carried into effect. Assuming that there was a binding and enforceable Separation Agreement (which may be open to question), it could not relieve the Company of its taxation obligations, at least unless and until the new company actually discharged them. Nor could it relieve Mr Snell of his responsibilities. Until discharged, the taxation liabilities would remain liabilities of the Company, of which Mr Snell was to remain a director. Agreement that the Company would sell one of its assets – albeit the income-generating one – to another entity in no way relieves or excuses a director from the obligation to participate in management of the Company – as distinct from its restaurant business – and does not afford a "good reason" for not doing so. 3. For similar reasons, geographical remoteness of a director from a business conducted by a company is not, at least in the present factual context, a good reason for not participating in management. It is not as if Mr Snell was suddenly required to be absent overseas and dislocated from the Company's affairs for a sustained period. From the outset he had been resident in Queanbeyan while the restaurant was in Melbourne, and that did not change. That does not excuse him from the responsibility of a director to participate in management – as he did, including by frequently travelling to Melbourne. As this limb of the defence under s 269-35 refers to "some other good reason", it means other than illness; his Honour having considered the "illness" defence did not err in not considering it a second time under "some other good reason". In any event, as Dr Stevenson observed, while Mr Snell was afflicted by ill-health to the extent that it impaired his ability to exercise regularly, this was "not to the extent that he was unable to travel frequently about the country". Nor did his Honour fail to consider the argument that it would have been reasonable to expect him to participate because he was "excluded from management"; the argument that he was excluded was rejected, it being found that Mr Snell continued to participate in management, although with greater difficulty than in the past. Conclusion 1. My conclusions may be summarised as follows: 2. A DPN is required to state what the Commissioner thinks is the unpaid amount of the company's liability, as at the date of the notice, not the true amount of the liability, which is for the Court to determine (subject to any conclusive evidence provisions), and is not dependent on nor controlled by what the Commissioner "thinks" it is at the time when the DPN is given. The notice, once given, lifts the bar on commencing proceedings to recover the penalty which arose on the "due day" to which the notice relates after 21 days, and it does not affect this if, before commencing proceedings, the unpaid amount of the company's liability – or what the Commissioner thinks it is – changes. Short of a statute of limitation, there is no reason to imply a requirement to commence proceedings within any particular time after the 21-day period has expired. The primary judge was correct in rejecting Mr Snell's contention that the proceedings were invalid. 3. The defence provided by s 269-35(1) requires that the director did not participate in management of the company at the relevant time because of illness or some other good reason by reason of which it was unreasonable to expect the director to participate in management. In short, it involves justifiable non-participation in management, against the backdrop that it is the obligation of a director to participate in management of the company, and a director is not entitled to choose not to participate. 4. To establish the defence provided by s 269-35(1), a director must satisfy its requirements for the entire period from the "due day" for the relevant period until at least expiry of the DPN, if not until compliance, administration or winding-up. In circumstances where although each relevant period had a separate commencement date, all extended until the expiry of the relevant DPN and thus largely overlapped, discrete consideration of the period referable to each due day would not have made the slightest difference, and was unnecessary. 5. There was no error in the primary judge's conclusion that Mr Snell continued to participate in management of the Company during the period between 2013 and its ultimate winding-up. That conclusion was of itself fatal to the "illness" and "other good reason" defences. 6. There is no doubt, as the primary judge accepted, that Mr Snell had significant and serious episodes of ill-health. But the evidence falls far short from establishing that he was physically or cognitively unable to participate, or that there were medical reasons why he should not participate, for the entirety of the relevant periods. His Honour was right to conclude that Mr Snell's involvement in his other businesses over the period demonstrates that it would not have been unreasonable to expect him to do so, notwithstanding his illnesses. 7. A deliberate decision not to participate in management while remaining a director is not a good reason for the purposes of the defence provided by s 269-35. Assuming that there was a binding and enforceable Separation Agreement (which may be open to question), it could not relieve Mr Snell of his responsibilities. Until discharged, the taxation liabilities would remain liabilities of the Company, of which Mr Snell was to remain a director. 8. One cannot but feel sympathy for Mr Snell, not only because of his health but particularly because he had already taken significant steps to meet, from his personal resources, the Company's tax obligations, when they came to his notice. However, the obligations of directorship are stringent, and the grounds for relief from them correspondingly narrow. It cannot be said that, throughout the period from each relevant due date until expiry of the DPNs, he justifiably did not participate in management, or more precisely, that he did not, and could not reasonably have been expected to, take part in management of the Company, because of illness or some other good reason. 9. In my opinion, the appeal must be dismissed, with costs. 10. BARRETT AJA: As Brereton JA suggests, Mr Snell's predicament warrants some sympathy. But the legislature has imposed stringent obligations upon company directors who find themselves in the position that Mr Snell came to occupy. For the reasons stated by Brereton JA (with which I respectfully agree), the appeal should be dismissed with costs. ********** Endnotes 1. Deputy Commissioner of Taxation v Snell [2019] NSWDC 159. 2. Deputy Commissioner of Taxation v Snell [2019] NSWDC 159 at [4], [13]. 3. The "due day" shown in the table is as pleaded in the Further Amended Statement of Claim. Although it appears to contain anomalies, and cannot be completely reconciled with TAA, Sch 1, s 16-75(2) and (2A), no issue was taken with it. 4. See (CTH) Superannuation Guarantee (Administration Act) 1992, s 36. 5. As will appear, a penalty in respect of this period was not ultimately claimed against the appellant in the Amended Statement of Claim. 6. For the quarters ending June, September and December 2012 and June 2013. 7. For the quarter ending September 2013. There was no amended assessment for the quarter 1 January 2013 to 31 March 2013. 8. Before the primary judge, Mr Snell also relied on the "all reasonable steps" defence under s 269-35(2). His Honour also rejected that defence, and the grounds of appeal which challenged that rejection (grounds 17 and 18) were not pressed. 9. See at [22] below. 10. See at [23] below. 11. See at [43] below. 12. (2000) 199 CLR 370 at 376; [2000] HCA 10 at [13] (Gleeson CJ, McHugh, Gummow, Kirby and Callinan JJ), considering the equivalent predecessor provisions in (CTH) Income Tax Assessment Act 1936, Div 9. 13. The argument relates to the SGC amounts; sufficiency of the notices in respect of the PAYGW amounts claimed was not disputed. 14. No amended assessment was issued in respect of the quarter 1 January 2013 to 31 March 2013. 15. The amended statement of claim omitted any claim in respect of the quarter 1 January 2013 to 31 March 2013, for which there was no amended assessment. 16. Ground 5 (which contended that the Commissioner was precluded from relying on the DPN given more than three years before proceedings were commenced by estoppel, laches, delay and/or waiver), and ground 6 (which contended that the DPN was defective and invalid) were abandoned. 17. Deputy Federal Commissioner of Taxation v Woodhams (2000) 199 CLR 370; [2000] HCA 10 at [19]; Forsyth v Deputy Commissioner of Taxation (2004) 62 NSWLR 132; [2004] NSWCA 474 at [47]; Power v Deputy Commissioner of Taxation (2013) 284 FLR 42; [2013] NSWCA 428 at [33]-[35]. 18. Power v Deputy Commissioner of Taxation (No 2) (2014) 98 ATR 75; [2014] NSWCA 77; cf City of Sandringham v Rayment (1928) 40 CLR 510; [1928] HCA 13; Jolly v The District Council of Yorketown (1968) 119 CLR 347; [1968] HCA 55. 19. Deputy Federal Commissioner of Taxation v Woodhams (2000) 199 CLR 370; [2000] HCA 10; Deputy Commissioner of Taxation v McArdle [2004] 2 Qd R 495; [2003] QCA 282; Forsyth v Deputy Commissioner of Taxation (2004) 62 NSWLR 132; [2004] NSWCA 474 at [45]-[46]. Although these cases considered the predecessor provisions to s 269-25, they were not materially different: Power v Deputy Commissioner of Taxation (2013) 284 FLR 42; [2013] NSWCA 428 at [28]. 20. Spigelman CJ referred with approval to McArdle in Forsyth v Deputy Commissioner of Taxation (2004) 62 NSWLR 132; [2004] NSWCA 474 at [42], [45]-[46]. The same view was adopted in Roche v Deputy Commissioner of Taxation (2014) 290 FLR 268; [2014] WASCA 194 at [75] (Newnes JA, with whom McLure P and Murphy JA agreed). 21. Each period having a "due day" for a tax-related liability gives rise to a separate liability and, if unpaid, a separate penalty, which becomes due and payable at the end of the due day for the period to which it relates: s 269-20(2). In this case, the DPN took advantage of s 269-25(3), which provides that a single notice may relate to 2 or more penalties, but must comply with subsection (2) in relation to each of them. The Commissioner rightly accepts that the penalty must be referable to a particular period and due day, and that it is not open to commence proceedings in respect of a period in respect of which a notice has not been served. 22. See, for example, Cullen v Corporate Affairs Commission (NSW) (1988) 14 ACLR 789 at 794 (Young J); Commissioner for Corporate Affairs v Bracht [1989] VR 821; Griggs v Australian Securities Commission (1999) 75 SASR 307; [1999] SASC 405; Australian Securities and Investments Commission v Reid [2005] FCA 1275 at [133]-[139]; In the matter of AJ Roberts Removals & Storage Pty Limited [2017] NSWSC 1054 at [50] (Black J). 23. Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113; [2003] NSWCA 91 at [121], [174]; Deputy Commissioner of Taxation v Robertson (2009) 234 FLR 35; [2009] NSWSC 597 at [102]-[103] (appeal dismissed 239 FCR 29); Deputy Commissioner of Taxation v Stenner (2003) 53 ATR 316; [2003] QDC 053 at [32]; Deputy Commissioner of Taxation v Holton [2016] VCC 516 at [48]-[50]; Deputy Commissioner of Taxation v Lawson [2017] VSC 789 at [41]-[53]. 24. Cf Deputy Commissioner of Taxation v Stenner (2003) 53 ATR 316; [2003] QDC 053 at [32] (Brabazon J). 25. (2005) 63 NSWLR 152; [2005] NSWCA 84. 26. (CTH) Income Tax Assessment Act, s 222AOB(1). 27. Canty v Deputy Commissioner of Taxation (2005) 63 NSWLR 152; [2005] NSWCA 84 at [45]; see also Deputy Commissioner of Taxation v George (2002) 55 NSWLR 511; [2002] NSWCA 336 at [27]. 28. See footnote 21 above. 29. (2005) 63 NSWLR 152 at 160-161; [2005] NSWCA 84. 30. (2002) 55 NSWLR 511; [2002] NSWCA 336. 31. (2016) 104 ATR 1; [2016] QCA 275; see also Roche v Deputy Commissioner of Taxation [2015] WASCA 196 at [40] (Buss, Newnes and Murphy JJA). 32. Deputy Commissioner of Taxation v Snell [2019] NSWDC 159 at [56]. 33. Deputy Commissioner of Taxation v Snell [2019] NSWDC 159 at [57]. 34. Deputy Commissioner of Taxation v Snell [2019] NSWDC 159 at [57]. 35. Deputy Commissioner of Taxation v Snell [2019] NSWDC 159 at [58]-[60]. 36. Deputy Commissioner of Taxation v Snell [2019] NSWDC 159 at [60]. 37. Commissioner for Corporate Affairs v Bracht [1989] VR 821 at 830; Cullen v Corporate Affairs Commission (NSW) (1988) 14 ACLR 789 at 793; Holpitt Pty Limited v Swaab (1992) 33 FCR 474 at 476; In the matter of New World Alliance Pty Limited; Sycotex Pty Limited v Baseler (No 2) (1994) 51 FCR 425; [1994] FCA 332; In the matter of AJ Roberts Removals & Storage Pty Limited [2017] NSWSC 1054 at [50]. 38. [2002] QCA 270 at [14]. 39. [2019] NSWDC 159 at [60]. 40. Deputy Commissioner of Taxation v Snell [2019] NSWDC 159 at [33]. 41. Deputy Commissioner of Taxation v Snell [2019] NSWDC 159 at [72]. 42. See TAA, Sch 1, s 269-35(1). 43. Deputy Commissioner of Taxation v Robertson (2009) 234 FLR 35; [2009] NSWSC 597 at [102] (Harrison J). 44. Deputy Commissioner of Taxation v Robertson (2009) 234 FLR 35; [2009] NSWSC 597 at [102] (Harrison J). 45. Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113; [2003] NSWCA 91 at [108], [121], [124], [133] (which, in the context of directors' obligations under the (CTH) Corporations Act 2001, dealt with a defence, in identical terms, under Corporations Act, s 588FGB(5). 46. (2003) 57 NSWLR 113; [2003] NSWCA 91. 47. Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113; [2003] NSWCA 91 at [116]. 48. Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113; [2003] NSWCA 91 at [167]. 49. [2016] VCC 516 at [50]; see also Deputy Commissioner of Taxation v Lawson [2017] VSC 789 at [41]-[53] 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: 04 March 2020