The West Australian Court of Appeal has held that a company director was properly served with a director penalty notice (DPN) under s 222AOE and s 222AOF of the Income Tax Assessment Act 1936 although the director claimed not to have received the DPN in the mail.
Division 9 of Pt VI of the ITAA 1936 dealt with penalties for a director of a company where the company failed to remit to the Commissioner an amount of income tax withheld from employees or officeholders. Relevantly, s 222AOB provided, in substance, that on or before the due date for deduction of the income tax the directors of the company must cause the company to take one or more of following steps: pay the amount withheld to the Commissioner, make an agreement with the Commissioner for it to be paid, appoint an administrator, or commence winding up.
If the company failed to take any of those steps, each of the directors was personally liable to pay the Commissioner, by way of penalty, an amount equal to the unpaid amount of the company’s liability: s 222AOC(1). However, the Commissioner was not entitled to recover the penalty from a director until 14 days after the Commissioner gave that person a DPN in accordance with s 222AOE. If within that 14 day period certain steps were taken, relevantly in this case an administrator was appointed to the company, the penalty was automatically remitted: s 222AOG.
In this case, on 23 August 2006, a DPN was sent to the director in respect of an amount withheld from employees’ salaries. An employee of the ATO deposed that he prepared and posted the DPN to the director on 23 August 2006, having addressed it to the director at his last known residential address as shown in ASIC documents, in accordance with s 222AOF. The director claimed that he did not receive the DPN by post and first became aware of it on 1 September 2006 when an ATO representative sent him a copy by facsimile.
An administrator was appointed to the company on 12 September 2006. It followed that if the DPN was given to the director on or after 29 August 2006, the penalty was automatically remitted pursuant to s 222AOG. If it was given before that date the penalty was not remitted and the director was liable for the amount of it.
The Court of Appeal held, unanimously, that the evidence before the primary judge proved, on the balance of probabilities, that the letter containing the penalty notice would have been delivered, in the ordinary course of post, to the appellant’s residential on or before Monday, 28 August 2006 (that is, on or before the third business or working day after having been posted), in accordance with the combined effect of s 29(1) of the Acts Interpretation Act 1901 (Cth) and s 160 of the Evidence Act 1995 (Cth). The administrator was therefore appointed more than 14 days after the DPN was given to the appellant. Accordingly, the penalty was not remitted and the amount of it remained a debt due and owing to the Commissioner.
On the application of s 222AOE and s 222AOF, Buss JA said:
“75 In my opinion, s 222AOE, read with s 222AOF, of the ITAA does not require that a penalty notice be actually received by the person to whom it is sent. My reasons are as follows.
76 First, s 222AOF(1) states, relevantly, that the Commissioner may give a person a penalty notice under s 222AOE by ‘leaving it at, or sending it by post to, ... an address that appears from [ASIC] documents to be, or to have been within the last 7 days, the person’s place of residence or business’. The focus of s 222AOF(1) is upon a place, namely the relevant address. Section 222AOF(1) authorises the Commissioner to leave a penalty notice at, or send a penalty notice by post to, an address that appears from ASIC documents ‘to have been’, within the last seven days, the person’s place of residence or business, even though that address may not actually be the person’s place of residence or business at the time when the penalty notice is left or posted. Section 222AOE, read with s 222AOF, therefore contemplates the possibility that a penalty notice may not actually be received by the person named as the addressee.
77 Secondly, the note to s 222AOF(1) states, relevantly and in effect, that s 29 of the Acts Interpretation Act is also relevant to giving a penalty notice. By s 13(1) of the Acts Interpretation Act, Parliament has made notes, in the statutory text, part of the Act. Section 29(1) is relevant to the giving of a penalty notice under s 222AOE, read with s 222AOF, in that the ITAA authorises a penalty notice to be given by being sent by post and the expression ‘serve’ in s 29(1) includes, in effect, the expression ‘give’ used in s 222AOE and s 222AOF.
78 Thirdly, where the conditions prescribed by s 29(1) in relation to the posting of a document as a letter are satisfied, the first limb of s 29(1) deems the document to have been served (including given or sent), and the second limb of s 29(1) deems the document to have been served (including given) at the time at which the letter would have been delivered, in the ordinary course of post, unless the contrary is proved. Section 29(1) is concerned with the delivery of the document as a letter to the place specified on the letter as the address, as distinct from the delivery of the document as a letter to the person named as the addressee. Proof to the contrary, within the second limb of s 29(1), involves proof of non-delivery to the specified address, not proof of non-receipt by the person to whom the letter is addressed. The fact of non-receipt by the person named as the addressee does not displace the deeming provision in the second limb of s 29(1).”
Healy v DCT  WASCA 44 (Buss, Newnes and Murphy JJA, 6 March 2015).