Section 1318(1) of the Corporations Act 2001 provides as follows:
“If, in any civil proceeding against a person to whom this section applies for negligence, default, breach of trust or breach of duty in a capacity as such a person, it appears to the court before which the proceedings are taken that the person is or may be liable in respect of negligence, default or breach but that person has acted honestly, and that having regard to all the circumstances of the case, including those connected with the person’s appointment, the person ought fairly to be excused for the negligence, default or breach, the court may relieve the person either wholly or partly from liability on such terms as the court thinks fit…” [The section applies to a director of a corporation: s 1318(4) and (5).]
Santow and Basten JJA held that the specific statutory scheme contained in the ITAA 1936 in relation to unpaid PAYG was inconsistent with an intention to allow a Court to exercise a broad discretionary power to grant relief to a director under s 1318(1) of the Corporations Act 1936. The ITAA 1936 provided its own regime of defences, none of which were available to the defendant. Spigelman CJ held that s1318(1) has no application to any obligation imposed by statute upon a company director, employee, etc. as such, other than obligations imposed by the Corporations Act 2001.
Judgment was entered for the Commissioner in the sum of $141,259.19: FCT v Dick  NSWCA 190 (New South Wales Court of Appeal; Spigelman CJ, Santow and Basten JJA; 3 August 2007).
For a copy of the decision, go here