The Victorian Court of Appeal has affirmed a decision that a notice, requiring the taxpayer to lodge his 2010 – 2013 income tax returns, was properly served on him, and that he was, therefore, guilty of an offence (under s8C of the TAA) for failing to lodge those returns.
On the facts this was ‘common sense’ result, but the legal requirements for service, and how the Commissioner met the case, is informative.
The Appellant Taxpayer sought to defend these charges, at the hearing before a Magistrate, on the basis that there was no evidence that positively established that his particular Final Notice had made it into the mail – notwithstanding the evidence that all the ATO’s normal systems had been followed. The Commissioner lead the evidence of three of his officers, who had personally carried out the key parts of these normal systems in issuing and posting the Final Notice. However, after these processes lost track of the individual Notice, once it hit the outgoing mail tray, as there were multiple envelopes in the tray, at later stages, before various bundles of envelopes were posted.
The Commissioner pleaded the charges, relying on his averment advantage in s8ZL of the TAA, which says that the averments are prima facie evidence of the facts pleaded. The provision goes on to say that the Court must consider any evidence, in support of, or rebutting, the prima facie averments, on it’s merits (without being affected by the presumption in s8ZL). Offences under s8C offences are ‘strict liability’ meaning that the defendant will be guilty unless there is reasonable doubt that one or more of the elements have not been made out.
I would have thought that this theoretical risk (that an individual envelope could be lost amongst others), could have been dealt with, by the Commissioner relying on his averment advantage, especially after leading witness evidence that the ATO followed all its usual practices.
However, the Magistrate found that there was ‘service’ on the basis of the evidence of the three ATO officers (without relying on the Commissioner’s averment advantage in s8ZL).
The Taxpayer, then appealed the offence finding to the Victorian Supreme Court ([2017] VSC 396), which found that the Magistrate had not erred in this factual finding (that there was service). Dissatisfied with this decision, the unrepresented Taxpayer appealed to the Court of Appeal, and got the same result.
The Appellant Taxpayer did not lead any evidence that he never received the Notice. It is not like other cases, where the taxpayer showed that the relevant document did not arrive in the post.
Rather, the Appellant relied on authorities that seemed to require a higher standard of proof, than just a system had been followed, when that system involved bundling with other mail. Paragraph 16 of the Court of Appeal’s reasons gives some sense of this.
16 In particular, reliance was placed on a statement by Brereton J in Northumbrian Ice Cream Co Ltd v Breakaway Vending Pty Ltd [2006] NSWSC 1216, that:
Proof of service by post requires, at least:
- proof that the envelope bore the correct name and address;
- proof that the envelope contained the relevant document to be served;
- proof that the envelope bore the correct cost of postage; and
- proof that the envelope was placed in the post.
However, all of the Magistrate, the trial judge and the Court of Appeal held that there was such evidence, from the three ATO officers, saying what their individual roles were, in issuing and mailing the Final Notice. Indeed, the Court of Appeal held that the Appellant’s authorities were of no assistance to him. [para 19]
The Court of Appeal went further, in para 20, set out below.
20 In addition, the cases upon which reliance was placed all reveal significant gaps in the attempt of proof which are not revealed in the present case. So, in Northumbrian Ice Cream, there was no evidence of the address on the envelope. Nor was there evidence of posting beyond a bald statement that the envelope was ‘caused … to be placed with [the] outgoing mail’. [paras 6 & 14] In Brown v Bluestone there was, similarly, evidence only of an ‘outgoing mail register’; there was no evidence of an envelope or anything being placed in it, nothing about how it was addressed or about any stamp or franking, and nothing about it being handed over at a post office or deposited into a post box ([2010] NSWSC 869 [9], [14]). In Dwyer, there was evidence as to a system for posting letters but no evidence from the assistant whose responsibility it was to do the actual posting and therefore no evidence that the letter in question had actually been posted; nor was there any record to prove postage — merely stating that office procedures were followed was insufficient ([2007] SASC 100 [17]–[19]). Again, in Pearlburst, the evidence was of a solicitor having caused the letter to be sent; there was no evidence of an envelope or its contents, or of any stamping or franking of an envelope, and no evidence that anyone lodged any envelope at any post office or in any post box ([2007] NSWSC 1126 [24]). The same position applied in Grant Thornton [2009] QSC 262.[13]
In para 5, the Court of Appeal eschewed reliance on the Commissioner’s averment advantage. However, I still think it was relevant, in getting the Commissioner home, in filling any theoretical gaps in the evidence, that remained after the witnesses gave their evidence (rather than having to take a ‘leap of faith’ in bridging the theoretical gaps).
(Guss v Storace (Australian Taxation Office) [2018] VSCA 121, Victorian Court of Appeal, McLeish and Hargrave JJA, 14 May 2018.)
15.5.18
[FJM; LTN 91, 15/5/18; Tax Month May 2018]
Study questions (answers available)
- Was service of a ‘Final Notice’ (to lodge returns) a necessary element in a s8C offence for failing to lodge?
- Did the Taxpayer lead any of his own evidence that he did not receive the Notice in the mail?
- Did the Commissioner plead that he was served with the Final Notice, and did that constitute ‘prima-facie’ evidence that there was service (under s8ZL)?
- Did this mean that the Taxpayer would have had to lead his own evidence, to displace the averred fact of service?
- Did the Commissioner rely on his averment advantage alone?
- Was ‘service’ found by the Magistrate and upheld twice, on appeal, in the Victorian Supreme Court?
