In a 2:1 majority decision, the Court of Appeal of the Supreme Court of Queensland has dismissed an appeal by 2 directors from the decision of the court at first instance to grant summary judgment against them for amounts of $297,000 each for directors’ penalties imposed pursuant to s 222AOC of the ITAA 1936, and in particular for their failure to take the prescribed steps within 14 days after the notices were posted.
The directors argued that they had not received the notices, that there had been inadequate scrutiny of the tax officer who claimed to send them, and that the Commissioner had not met the requirements under the new regime for DPNs as set out in the TAA to give them 21 days for compliance.
However, in dismissing the directors’ appeal, the majority found that transitional and other legislation subsequently enacted after the introduction of the new regime (and in the light of the decision in Soong v DCT [2011] NSWCA 26 (2011) 82 ATR 455) meant that liabilities arising under DPNs sent between 10 December 2007 and 1 July 2010 (as in this case) were deemed to have been “given” when sent by pre-paid post. Further, the majority also found these provisions also meant that compliance was required within 14 days of the date of the notice, thereby giving the Commissioner the right to recover penalties at the end of the 14 days.
The majority also found that the directors had not been denied procedural fairness by the Court’s decision at first instance to limit the cross-examination of the tax officer who sent the DPNs and that the tax officer was entitled to rely on ASIC records for the directors’ postal addresses notwithstanding they contained minor errors. In addition, the majority noted that the tax officer had kept appropriate records of the sending of the notice.
(Reardon & Anor v DCT [2013] QCA 46, Court of Appeal of the Supreme Court of Queensland, Holmes JA, Philip McMurdo and McMeekin JJ, 15 March 2013.)
[LTN 53, 19/3/13]