DFC of T v KEELING

Judges:
Beach J

Court:
Supreme Court of Victoria

Judgment date: Judgment handed down 8 December 1993

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Beach J

On 17 November, 1993, the Deputy Commissioner of Taxation issued an assessment in respect of tax payable by the defendant Nelson C. Keeling for the year ended 30 June, 1993, in the sum of $34,571.31. The assessment required payment of the tax that same day.

On 18 November, 1993, an ex parte application was made to me on behalf of the Deputy Commissioner for a Mareva injunction restraining the defendant from dealing with his assets. The matter was one of some urgency having regard to the legitimate fears the Deputy Commissioner had that the defendant and others with whom he was then associated and who had also been served with Notices of Assessment, may dispose of their assets and leave the country.

Being satisfied, as I was, that it was appropriate to make the order sought, I thereupon ordered that until 4.15 p.m. on 25 November, 1993, or further order the defendant, whether by himself, his servants or agents or howsoever otherwise, be restrained from disposing of, charging, diminishing or dealing in any way with any of his assets whatsoever within or without the jurisdiction save to the extent that the value of such assets exceeds $34,571.31, except for the sum of $100 per week for living expenses.

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At approximately 9.45 p.m. that same evening, a copy of the order was served personally upon the defendant by a taxation auditor employed in the Audit Section of the Australian Taxation Office at the Main Beach Caravan Park, Main Beach in the State of Queensland.

At the time of service, the officer explained to the defendant that it was a Mareva injunction and that that was an injunction which prevented him from transferring his assets or selling them. The officer also swore that, when referring to the defendant's assets, he made specific reference to a white Holden utility truck registered number SUU-920 (the utility truck) which was owned by the defendant and which was parked nearby at the time the officer effected service of the copy of the order on the defendant.

In the early hours of the following morning, that is 19 November, the defendant drove the utility truck from Main Beach to Newcastle and at about 10.30 a.m. that morning sold it to Gamer's Motor Auctions for $25,500.

It is clear from the evidence before me that shortly after the defendant received the cheque he cashed it. Between that date and the present time the defendant has disposed of the bulk of that sum. I shall refer to that aspect of the matter shortly.

On 25 November, 1993, the Deputy Commissioner filed a summons in the proceeding seeking a declaration that the defendant had breached my order of 18 November and seeking an order that the defendant be adjudged to be guilty of contempt of court.

I also have an application on behalf of the Deputy Commissioner that the Deputy Commissioner be given leave to enter summary judgment against the defendant. It is convenient to deal first with the application for summary judgment.

Counsel for the defendant resisted the Deputy Commissioner's application to enter summary judgment against the defendant on two bases. In the first place, he contended that, as the Notice of Assessment relied upon by the Deputy Commissioner was not signed by the Deputy Commissioner, as distinct from having the appropriate Deputy Commissioner's name typed on it, the Notice of Assessment could not be relied upon as evidence pursuant to the provisions of s. 177 of the Income Tax Assessment Act 1936. In the second place, he contended that the Notice of Assessment did not comply with the provisions of s. 204 of the Act and in that event was a nullity.

Section 177(1) of the Act reads:

``The production of a Notice of Assessment or of a document under the hand of the Commissioner, a second Commissioner or a Deputy Commissioner, purporting to be a copy of a Notice of Assessment shall be conclusive evidence of the due making of the assessment and, except in proceedings on appeal against the assessment, that the amount and all the particulars of the assessment are correct.''

In the present case what has been tendered in evidence is a Notice of Assessment, not a document under the hand of the Commissioner, a second Commissioner or a Deputy Commissioner. In that situation there is no requirement that it be signed by a Deputy Commissioner or any other delegate of the Commissioner. Mere production of a Notice of Assessment purporting to be a copy of a Notice of Assessment, as is the situation in the present case, is all that is required to enable the Deputy Commissioner to establish his case.

Section 204(1) of the Act reads:

``Subject to the provisions of this part, any income tax assessed shall be due and payable by the person liable to pay the tax on the date specified in the notice as the date upon which tax is due and payable not being less than 30 days after the service of the notice, or, if no date is so specified, on the 30th day after the service of the notice.''

As I have already pointed out, the Notice of Assessment required payment of the tax in question on the very same day it was issued. On the face of it, therefore, the Notice of Assessment did not comply with the provisions of s. 204(1).

However, s. 205(1) of the Act provides that:

``Where the Commissioner has reason to believe that a person liable to pay tax may leave Australia before the date on which the tax is due and payable, the tax shall be due and payable on such date as the Commissioner notifies to that person.''

Under that section it is open to the Commissioner to specify any date he chooses for payment of the tax, including the date of

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issue of the Notice of Assessment itself, if he has reason to believe that a person liable to pay tax may leave Australia before the date on which the tax is due and payable.

In the present case the Commissioner had every reason to believe that the defendant was likely to leave Australia as soon as he could. I refer in that regard to the content of the affidavit of Peter Maxwell, sworn 25 November, 1993. The Commissioner was fully justified, therefore, in specifying as the date for payment of the tax the date of issue of the Notice of Assessment. But what is argued in that regard is that in the present case the date was not specified by the Commissioner but by a Deputy Commissioner and in that situation there has been a non-compliance with the provisions of s. 205(1) and the Notice of Assessment is still a nullity.

Once again, in my view, that argument cannot be sustained. Section 8 of the Taxation Administration Act 1953, so far as is relevant, reads:

``(1) The Commissioner of Taxation may, in relation to a matter or class of matters, or in relation to a State or part of the Commonwealth, by writing under his hand, delegate to a Deputy Commissioner of Taxation or other person all or any of his powers or functions under an Act which is an Act with respect to taxation (except this power of delegation).

(2) A power or function so delegated may be exercised or performed by the delegate with respect to the matter or to the matters included in the class of matters, or with respect to the State or part of the Commonwealth, specified in the instrument of delegation.

(3) Where, under any Act, the exercise of a power or function by the Commissioner of Taxation is dependent upon the opinion, belief or state of mind of the Commissioner of Taxation in relation to a matter and that power or function has been delegated in pursuance of this Act, that power or function may be exercised by the delegate upon the opinion, belief or state of mind of the delegate in relation to that matter.''

On 28 June 1993, the Commissioner of Taxation delegated to all Deputy Commissioners of Taxation, including the Deputy Commissioner of Taxation at the Dandenong office of the Australian Tax Office, his powers under the Income Tax Assessment Act 1936, with the exception of his powers under three or four sections of that Act which are not relevant for present purposes.

In my opinion, the Deputy Commissioner is entitled to enter final judgment against the defendant in respect of the sum specified in the assessment, and I now propose to enter judgment in his favour in that regard.

There will be judgment for the plaintiff in the sum of $34,571.31.

There is a further application before me on behalf of the Deputy Commissioner in relation to the entry of judgment, and that is that I should also appoint a receiver of the assets of the defendant. It is said that having regard to the defendant's behaviour to date - in particular, his blatant disregard of the order of 18 November and the fact that he has already disposed of most of the moneys he received from the sale of the utility truck - there is every reason to believe that unless a receiver of the assets of the defendant is appointed, he will dispose of those assets still in his possession or under his control.

The court's power to appoint a receiver in circumstances such as the present is to be found in Rule 74.01, which reads:

``An application for the appointment of a receiver by way of equitable execution may be made in accordance with Order 39 and that Order shall apply to such a receiver as it applies to a receiver appointed for any other purpose.''

In the circumstances, I propose to appoint an officer of the Australian Taxation Office as receiver and to dispense with the requirements of Rules 39.04 and 39.05 of the Rules of the Court.

Mrs Richards, which officer of the Australian Taxation Office do you seek to have appointed receiver?

Mrs Richards : Mr Gordon Edward Longhouse. We shall file a consent to so act.

His Honour : I have dispensed with the necessity for the filing of a consent.

The officer I appoint is Gordon Edward Longhouse. I order that the receiver submit appropriate accounts to the Court on or before Monday 10 January 1994.

I return now to the contempt proceedings.

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When this matter first came before the Court on Friday last, counsel for the defendant stated, in substance, that the defendant denied that he had been guilty of any contempt and would defend the Deputy Commissioner's application. However, on Monday morning, counsel for the defendant entered a plea of guilty on behalf of his client and thereafter the matter proceeded as a plea.

The following was the explanation given on behalf of the defendant for his failure to comply with the order of 18 November:

The defendant is unable to read and write, although he can print his name. Although the officer who served the order upon him told him that it was a Mareva injunction and that it prevented him transferring his assets or selling them, he did not fully understand the effect of the injunction. His wife, who was with him at the caravan park at the time he was served with the order, could not read it to him as she had misplaced her contact lenses.

The defendant left the caravan park at Main Beach in the early hours of the following morning to drive to Newcastle in the utility truck to seek employment. His wife was to follow him later that morning in another vehicle towing their caravan.

After the defendant arrived in Newcastle, he received a telephone call on his mobile phone from his father, who was then in Sydney. His father told him that his wife had had an accident whilst driving to Newcastle, that the caravan and the vehicle towing it had overturned, and that she had been taken to hospital.

As a consequence of what he was told by his father, the defendant immediately sold the utility truck to obtain money to enable the caravan and the vehicle which had been towing it to be repaired. The defendant's father gave the following evidence in relation to the matter:

``Q. If I could just interrupt you, the car has been repaired?

A. Yes.

Q. Who paid for the repairs?

A. He had to pay out of the money he sold the ute for.

Q. My client paid for the repairs?

A. Yes.

Q. Do you know how much the repairs cost?

A. Roughly the repairs was $5,000 just for the caravan and I think the van, it was $3,500 altogether for the van to get it done, plus running up and down, jumping on planes.

Q. The van was the vehicle pulling the caravan?

A. Yes.

Q. You were proceeding to give His Honour some sort of an explanation as to what has happened to the money which my client obtained for selling the utility?

A. Yes.

Q. As I understand it, he obtained some $25,500?

A. Yes.

Q. Now, how much of that money do you say was spent fixing the caravan?

A. Buying the van off me brother-in-law - me son-in-law, his brother-in-law.

Q. How much was that?

A. He give him $10,000 for the van because the van was worth $10,000. If I smash your things, I will pay for it. It was his van he borrowed to pull the caravan.

Q. So he has to pay his brother-in-law $10,000 for the caravan?

A. For the van - no, for the van because it is his van she was towing the caravan with.

Q. And a further $3,500?

A. For the repairs plus $5,000 for the caravan to be repaired plus $2,000 for transport backwards and forwards, plus I spent a thousand dollars going up to Coolangatta with taxis and aeroplane fares with another client of mine, a friend of mine.

Q. All right.

A. So the money is more or less - And Friday we come down here and it cost another $1100 or $1200 and today it cost another $1600 before we come out of here, it has all got to come out of his pocket.''

The first matter to be noted so far as the plea is concerned is that although the defendant tendered to the court from the floor of the court an apology for his behaviour, the defendant gave no evidence in the matter but relied upon the evidence of his wife and father. I found that

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a most unsatisfactory state of affairs, to say the least of it. By declining to give evidence in the matter, the defendant deprived the Court of any real opportunity of examining the explanation proffered to the Court on his behalf.

The second matter to be noted is that no documentary evidence was tendered to the court in relation to the repairs carried out to the caravan and the vehicle which had been towing it. If $5,000 was paid to Regal Caravans in respect of the repairs to the caravan, at the least one would expect the defendant to be in possession of a receipt issued by Regal Caravans for that amount. A similar observation can be made about the cost of repairs to the vehicle which had been towing the caravan.

Whilst I accept the fact that the defendant's wife was involved in some sort of accident on the morning of 19 November and that following the accident she was taken to Mullumbimby Hospital for observation, I am not prepared to accept that some $18,500 was spent on the caravan and the vehicle towing it in the manner deposed to by the defendant's father. There was no necessity for the defendant to dispose of the utility truck immediately after he was told of his wife's accident. One would have thought that his first response upon learning of the accident would have been to drive the utility truck back to Mullumbimby to see his wife. To my mind, this whole story has an air of unreality about it.

I declare that the defendant did breach the order of this Court made on 18 November 1993.

I order that the defendant be adjudged to be in contempt of this Court in that, contrary to that order on 19 November 1993, the defendant disposed of a motor vehicle owned by him, namely, Holden utility registered number SUU-920, by selling the vehicle to Gamer's Motor Auctions for $25,500.

As to the appropriate penalty to impose, whilst I am mindful of the distress which will be caused to the defendant's wife in the event that the defendant is sentenced to a term of imprisonment, it would seem to me that the circumstances of this case are such that that is the course I must adopt. The defendant must realise that orders of this Court cannot be flouted with impunity, as I consider was the situation in the present case.

The defendant is sentenced to a period of 28 days' imprisonment.

I order that the plaintiff's costs of the proceedings, including the contempt application and any reserved costs, be taxed and when taxed paid by the defendant.

Would you hand the committal warrants to the sheriff's officers, please.