Bilquip Pty Ltd, Illmat Pty Ltd, Holibass Pty Ltd v Chief Commissioner of State Revenue [2013] NSWADTAP 36

Date of judgement 30 July 2013 Proceeding No. 129028
Judge(s) RL Seiden, Deputy President
GD Walker, Judicial Member
C Bennett, Non Judicial Member
Court or Tribunal Administrative Decisions Tribunal Appeals Panel
Legislation cited Administrative Decisions Tribunal Act 1997 (NSW)

Corporations Act 2001 (Cth)

Taxation Administration Act 1996 (NSW)
Catchwords Payroll tax - grouping provisions - companies with common controlling interest - ASIC certificates - whether individuals were validly appointed directors - de facto directors - errors of law - leave to extend appeal to the merits - unfair or unorthodox treatment of evidence
Cases cited Building Professionals Board v Hans (GD) [2008] NSWADTAP 13

Carpathian Resources Ltd v Hendriks [2012] FCA 496

Cornish Investments Pty Ltd v Chief Commissioner of State Revenue [2013] NSWADTAP 25

Forkserve Pty Ltd v Jack (2001) 19 ACLC 299; [2000] NSWSC 1064

Hope v Bathurst City Council (1980) 144 CLR 1

IS v Public Guardian & Ors [2009] NSWADTAP 24

Jones v Dunkel (1959) 101 CLR 298

JT v Protective Commissioner [2004] NSWADTAP 13

K v K [2000] NSWSC 1052

Laycock v Commissioner of Police, NSW Police [2007] NSWADTAP 34

Lloyd v Veterinary Surgeons Investigating Committee [2005] NSWCA 456; (2005) 65 NSWLR 245

Lo v Chief Commissioner of State Revenue [2012] NSWADTAP 12

Lo v Chief Commissioner of State Revenue [2013] NSWCA 180

McGuirk v Director General, Attorney General's Department (GD) [2007] NSWADTAP 38

McGuirk (GD) v University of New South Wales [2007] NSWADTAP 65

Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259

Norrie v NSW Registrar of Births, Deaths and Marriages [2013] NSWCA 145

The Australian Gas Light Company v Valuer-General (1940) 40 SR (NSW) 126

TNT Skypak v FCT (1988) 82 ALR 175

World Best Holdings Limited v Sarker & Anor [2004] NSWSC 935

Summary

The Taxpayers appealed to the Appeal Panel against an Administrative Decisions Tribunal decision that “the Taxpayers” were correctly grouped for payroll tax purposes, due to the common controlling interests of the directors and shareholders.

The Appeal Panel rejected the Taxpayers’ arguments that the Tribunal made errors of law in interpreting provisions of the Corporations Act when it determined that evidence referred to by the Chief Commissioner was sufficient to rebut the presumption that ASIC certificates certifying that a person was director at a particular time is proof of the matters stated, and in applying the test for determining whether a person is a de facto director. 

The Appeal Panel also concluded that the fact that the Tribunal’s decision did not refer to particular matters raised in the Taxpayers’ evidence was not sufficient to grant leave to extend the appeal to a review of the merits of the matter.

Background

On 2 August 2012, Judicial Member Verick dismissed an application by the Taxpayers for review of payroll tax grouping decisions of the Chief Commissioner of State Revenue. Judicial Member Verick held that at the relevant times Mr F and Mrs F were not directors of Bilquip, and Mrs F was not a director of Holibass, therefore the companies were grouped correctly by the Chief Commissioner, and the assessment was correct.

The Taxpayers appealed to the Appeal Panel against the Tribunal’s decision on 30 July 2013.  The underlying issue was whether the Taxpayers were correctly grouped for payroll tax purposes, due to the common controlling interests of the directors.

The first question to be considered was whether Illmat Pty Ltd (“Illmat”) and Bilquip Pty Ltd (“Bilquip”) should be grouped for the period 1 July 2004 to 30 July 2008. This turned on whether both Mr F and Mrs F were directors of Bilquip for this period.

The second question to be considered was whether Illmat, Bilquip and Holibass Pty Ltd (Holibass) should be grouped for the period 22 August 2005 to 30 June 2008. This turned on whether Mrs F was a director of Holibass for the period 22 August 2005 to 30 June 2008.

The decision of Tribunal Member Verick

This matter was an appeal from Bilquip Pty Ltd v Chief Commissioner of State Revenue [2012] NSWADT 151 (“the decision”) in which Judicial Member Verick held that the then-Taxpayers were correctly grouped by the Chief Commissioner.

The Taxpayers’ case before the tribunal involved two contentions.

The first contention was that the certificates from the Australian Securities and Investment Commission (ASIC) provided prima facie evidence that Mr and Mrs F were directors at the relevant times. Section 1274C of the Corporations Act 2001 (“the Act”) provides that in the absence of evidence to the contrary, an ASIC certificate certifying that a person was director at a particular time is proof of the matters stated in it.

The ASIC certificates on which the Taxpayers relied had been created by ASIC retrospectively. On this basis, the Tribunal held that the presumption created by the ASIC certificates was rebutted and that the ASIC certificates were not probative evidence that Mr and Mrs F were validly appointed directors.

The second contention was that the whole of the evidence demonstrated that Mr and Mrs F were de facto directors as contemplated by the definition of ‘director’ in s 9 of the Act. Sub-paragraph (b) of the definition relevantly provides that unless the contrary intention appears, a person who is not validly appointed as a director is a director if they act in the position of a director or if the directors of the company are accustomed to act in accordance with that person’s instructions or wishes. Consideration of that issue is found at paragraphs 43 to 63 of the decision. The Tribunal was not satisfied that Mr and Mrs F were de facto directors.

The Appeal

This Appeal was on questions of law and also included an application for leave to extend the appeal to the merits.

Questions of law

The five grounds of appeal on questions of law were:

  1. The Tribunal Member erred in his interpretation of s.1274B of the Act;

  2. The Tribunal Member erred in his interpretation of s.1274C of the Act;

  3. The Tribunal Member erred in his interpretation of s.9 of the Act and Austin’s Case (DCT v Austin (1998) 16 ACLC 1555) concerning duties of a de facto director;

  4. The Tribunal Member erred in his interpretation of the above sections of the Act in accepting the Chief Commissioner’s submission that the evidence to the contrary to the prima facie record in the register, is the fact that the “ASIC database for Bilquip was only amended retrospectively on 18 August 2008”. This fact does not rebut the presumption [t]hat Mr and Mrs F were directors at the relevant time and lodged documents with ASIC noting they were directors contemporaneously with their disputed directorship; and

  5. The Tribunal Member erred in his application of the evidence to the test of a de facto director in that he has created a distinction on what duties of a director would fall [within] the test as stipulated by Austin.

The Chief Commissioner highlighted that ground one concerned the interpretation of s 1274B of the Act which concerns evidence in a court. Because the Act’s definition of “court” does not include the Administrative Decision Tribunal, ground one could not be a question of law arising in the appeal. This was not contested by the Appellants and was accepted by the Tribunal.

There was no debate between the parties as to whether grounds two and four involved issues of law.

The Appellants accepted that the Tribunal had applied the correct test for determining a de facto director under s.9 of the Act. It was not contended that the facts as found must inescapably lead to the conclusion that Mr and Mrs F were de facto directors, therefore ground three was held to be a mixed question of fact and law.

It was not contended that the facts as found are necessarily within the definition of de facto director, therefore ground five was also at best a mixed question of fact and law.

Submissions on errors of law

The Chief Commissioner submitted that all that was necessary was to point to some evidence that was contrary to the ASIC certificates relied on by the Appellants. Contrary evidence included: ASIC records existed showing the Mr and Mrs F were not directors at the relevant times; and the evidence of backdating the certificates.

The Appellant argued that if the Chief Commissioner argument was to be accepted then no ASIC record could ever be evidence of the time when a director was appointed because the ASIC register is always updated sometime after appointment (referring to processing time).

The Appellants submitted that it was necessary for the Tribunal to view the contradictory evidence in the context of the case as a whole. Findings should have been made about when the documents were executed and why. The Chief Commissioner submitted that in any event the explanations of the Applicant were rejected by the Tribunal in the first instance.

Considerations of errors law

The Tribunal held that evidence to the contrary of an ASIC certificate will render that certificate obsolete. This will not necessarily bring an end to the enquiry regarding the facts stated in the certificate. Thus, once the presumption is rebutted, the litigant may proceed to prove the relevant facts in the ordinary fashion.

In this case the rebuttal of the presumption did result in the end of the factual enquiry, but only because the Taxpayers did not seek to establish by other evidence that Mr and Mrs F had been validly appointed directors.

It was not necessary for the Judicial Member to weigh the rebuttal evidence against the ASIC certificate in order to determine whether the evidence was in fact contradictory, as submitted by the Taxpayers. It was sufficient that the evidence, on its face, was contradictory.

The Appellant’s submission that delay could not constitute contrary evidence does not hold when the delay is as extreme as it was in this case (eight years).

The Tribunal nevertheless considered whether the Applicant’s explanation for the apparent contradiction were to be accepted and determined they were not. With regard to Mr F, the judicial Member rejected the Applicant’s explanation that the form removing Mr F as director was erroneously sent to ASIC. With regard to the delay in notifying ASIC of Mrs F’s appointment as director, the only explanation for this could come from Mr McGilvray (the individual who sent the form notifying ASIC of her appointment as director). As such, the Tribunal drew an adverse inference from the fact that the Applicant did not call on him to give evidence.

Conclusions on errors of law

The evidence that was contrary to the ASIC certificates referred to by the Chief Commissioner was capable of constituting evidence to the contrary of the matters stated in the ASIC certificates. The presumption arising out of those certificates was therefore rebutted. Even if the Tribunal were wrong in this, and it were necessary to make findings about the reasons for the delay, the Tribunal rejected the Applicant’s explanations for the delay. Thus, there was no error of law.

Whether the Appeal ought to be extended to the merits

The substance of the Appellant’s submissions was that it could be discerned from the Tribunal’s reasons that there had been unfair treatment of the evidence which had led to an injustice. The injustice was discerned, inter alia, from the Tribunal Member ascribing too much weight to the Chief Commissioner’s corroborative evidence, together with a failure to refer to the Taxpayers' corroborative evidence. 

The Appellants case involved 12 grounds to extend the Appeal to the merits. In summary, it was contended that there was unfair treatment of the evidence based on the absence of reference in the Tribunal’s decision to the Commissioner’s view after the 2001 audit expressed in the Compliance Investigation Report; the apparent absence of weight given to the Bilquip documents;  the absence of reference to the fact that valuable consideration was paid for Bilquip by Mrs F;  the absence of reference to the fact that ASIC failed to process certain documents it received;  and the evidence that attempts were made to correct the register from as early as 2001. It was submitted that this showed a systematic dismissal by the Tribunal of all material that was in the Taxpayers’ favour.

Conclusions on leave to extend the appeal to the merits

The Appeal Panel concluded that it would have been preferable had the Tribunal referred to the matters raised in the Appellant’s evidence; however this alone does not merit an Appeal on the merits. The fact that the Tribunal did not justify its conclusions in light of that evidence is not sufficient to warrant to granting of leave.

It was not submitted that the Tribunal ignored the Taxpayers’ evidence, nor was it submitted that the Taxpayers were not given an adequate opportunity to put their case. A systematic dismissal of evidence that would assist the Taxpayers’ case would justify leave being given, however the Tribunal dismissed this submission.

The Appeal Panel noted that the Judicial Member’s failure to refer to evidence that contradicts his findings was “curious” and took him close to the line in terms of whether leave should be granted.

Even were leave to be granted the Appeal Panel held that the Appellant’s grounds do not reflect unfair or unorthodox treatment of the evidence by the Judicial Member. Thus, even if leave were to be granted the Appeal would not have led to an interference with the Tribunal’s decision at first instance.

Decision

The decision of Tribunal Member Verick was affirmed and the appeal was dismissed.

Link to decision

Bilquip Pty Ltd, Illmat Pty Ltd, Holibass Pty Ltd v Chief Commissioner of State Revenue [2013] NSWADTAP 36

Last updated: 19 May 2016