FEDERAL COURT OF AUSTRALIA

Ostwald v Commissioner of Taxation [2026] FCA 868

ORDERS

THE COURT ORDERS THAT:

1.    The application be dismissed.

2.    The applicant pay the respondent’s costs of the application, including costs which were incurred after the hearing.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to rule 1.34 Federal Court Rules 2011 (Cth), compliance by the respondent with rule 31.05 is dispensed with.

2.    The respondent has leave nunc pro tunc to file the Notice of Objection to Competency on 13 May 2026.

3.    The application be dismissed.

4.    The applicant pay the respondent’s costs of the application after the hearing on 28 May 2026.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to rule 1.34 Federal Court Rules 2011 (Cth), compliance by the respondent with rule 31.05 is dispensed with.

2.    The respondent has leave nunc pro tunc to file the Notice of Objection to Competency on 13 May 2026.

3.    The application be dismissed.

4.    The applicant pay the respondent’s costs of the application after the hearing on 28 May 2026.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

REASONS FOR JUDGMENT

DOWNES J:

SYNOPSIS

1    The three proceedings concern applications for judicial review filed by each of Mr Brendan Ostwald, Mr Matthew Ostwald and Mr Daniel Ostwald (the applicants), pursuant to s 5(1) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act). Each of the applicants will be identified by their first name in these reasons.

2    The applicants seek review of a decision of the respondent (the Commissioner) made on 22 May 2025 in respect of Brendan and the decisions of the Commissioner said to have been made on the same day in respect of each of Matthew and Daniel (the Decisions).

3    The Decisions concern whether the Commissioner was satisfied under s 269-35(4A)(b) of Sch 1 to the Taxation Administration Act 1953 (Cth) (TAA) of the matters mentioned in s 269-35(2) of Sch 1 to the TAA, namely whether any of the applicants are liable for director penalties (pertaining to superannuation guarantee charge (SGC) payable by Ostwald Bros. Pty Ltd (Ostwald)) by reason of satisfying the “all reasonable steps” defence (which defence is explained in further detail below).

4    The SGC related to the quarters ending 30 September 2016, 31 December 2016 and 31 March 2017, and was required to be paid by Ostwald in accordance with the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGAA) (in conjunction with the Superannuation Guarantee Charge Act 1992 (Cth) (SGCA)).

5    By their respective Originating Applications, the applicants each allege that:

(1)    the Commissioner failed to take into account relevant considerations (Ground 1);

(2)    the Commissioner took into account irrelevant considerations (Ground 2);

(3)    the Commissioner exercised a discretionary power in accordance with policy without regard to the merits of the particular case (Ground 3); and

(4)    the exercise of power was so unreasonable that no reasonable person could have so exercised the power (Ground 4).

6    The Commissioner contends that:

(1)    the applications of Matthew and Daniel are not competent;

(2)    even if Matthew and Daniel’s applications were competent, none of the errors which is the subject of the four grounds of review has occurred; and

(3)    even if one or more of the errors have occurred, the Court ought not exercise its discretion to grant relief under s 16 of the ADJR Act.

7    As required, each of the Originating Applications included details of the claim made by each applicant, and the grounds of the application (including the facts relied upon), which spanned more than four pages. In particular, the Originating Applications identified a list of matters which it is alleged that the Commissioner failed to take into account (Ground 1), irrelevant matters which were taken into account (Ground 2) and two matters which were said to be relevant to Grounds 3 and 4. The parties filed and exchanged written opening submissions which addressed these matters. At the hearing, counsel for the applicants handed up a further lengthy outline entitled “Closing Submissions” which raised additional matters not referred to in the Originating Applications (but submitted orally that nothing new had been raised by these submissions). The Commissioner’s counsel, who had not seen these submissions before, was given the opportunity to respond to these submissions and did so in writing after the hearing (by submissions dated 12 June 2026), which (a) objected to the introduction of new matters and the change of case by the applicants and (b) dealt with the new matters substantively to demonstrate that leave should not be given to the applicants to advance them (should such leave be sought) as they lacked merit.

8    After the hearing, Matthew and Daniel each sought leave to file and serve an affidavit, which leave was consented to by the Commissioner on the basis that the Commissioner could make submissions about those affidavits, and the applicants could file submissions in reply to the Commissioner’s submissions dated 12 June 2026. An order was made in these terms on 15 June 2026.

9    For the following reasons, I have concluded that:

(1)    the applications of Matthew and Daniel are not competent;

(2)    even if Matthew and Daniel’s applications were competent, none of the errors which is the subject of the four grounds of review has occurred;

(3)    it is unnecessary to consider the issue of relief;

(4)    Brendan will be ordered to pay costs, with Matthew and Daniel only paying the Commissioner’s costs of the application which were incurred after the hearing.

LEGISLATIVE FRAMEWORK

10    Division 269 of Sch 1 to the TAA is headed “Penalties for directors of non-complying companies”. Section 269-1 (headed “What this Division is about”) provides the following:

This Division deals with obligations of a company:

…

(c)     under Part 3 of the Superannuation Guarantee (Administration) Act 1992 (obligation to pay superannuation guarantee charge); and

…

The directors of a company have a duty to ensure that the company either:

(a)    meets those obligations; or

(b)     goes promptly into voluntary administration or restructuring under the Corporations Act 2001 or into liquidation.

The directors’ duties are enforced by penalties.

…

11    The object of Div 269 is set out in s 269-5. This section relevantly provides that the object of the Division is to ensure that a company “meets its obligations under:… (iii) Part 3 of the Superannuation Guarantee (Administration) Act 1992 (obligation to pay superannuation guarantee charge) …”.

12    Section 269-10 relevantly provides:

Scope of Division

(1)     This Division applies as set out in the following table:

…

Superannuation guarantee charge

(3)     For the purposes of this Division, the company’s superannuation guarantee charge for a *quarter under the Superannuation Guarantee (Administration) Act 1992 is treated as being payable on the day by which the company must lodge a superannuation guarantee statement for the quarter under section 33 of that Act, even if the charge is not assessed under that Act on or before that day.

…

13    Section 269-15 relevantly provides:

Directors’ obligations

(1)     The directors (within the meaning of the Corporations Act 2001) of the company (from time to time) on or after the initial day must cause the company to comply with its obligation.

(2)     The directors of the company (from time to time) continue to be under their obligation until:

(a)     the company complies with its obligation; or

(b)     an administrator of the company is appointed under section 436A, 436B or 436C of the Corporations Act 2001; or

(ba)     a small business restructuring practitioner for the company is appointed under section 453B of that Act; or

(c)     the company begins to be wound up (within the meaning of that Act).

…

14    The effect of the combination of ss 269-10 and 269-15 is that the directors of a company must cause that company to comply with its obligation to pay SGC for a quarter in accordance with the SGAA (in conjunction with the SGCA), on or before a particular day (being the due day).

15    Where an employer does not provide a minimum level of superannuation contribution for its eligible employees by the prescribed dates, the employer becomes liable to be assessed for SGC. The obligation of a company to pay SGC arises in the following circumstances:

(1)    An employer has the obligation to pay to its employees the superannuation guarantee.

(2)    If an employer fails to meet their superannuation guarantee obligations (i.e. an employee has not received the superannuation guarantee in their complying superannuation fund) by the 28th day after the end of a quarter (s 23(6) of the SGAA), the employer has an individual superannuation guarantee shortfall in respect of that employee for that quarter (as calculated under s 19 of the SGAA).

(3)    Where an employer has one or more individual superannuation guarantee shortfalls for a quarter, the employer has a superannuation guarantee shortfall for that quarter calculated in accordance with s 17, as the aggregate of: (i) the total of the employer’s individual superannuation guarantee shortfalls for the quarter; (ii) the employer’s nominal interest component for the quarter (which is calculated under s 31 SGAA); and (iii) the employer’s administration component for the quarter (which is calculated under s 32 SGAA).

(4)    SGC is imposed on an employer’s superannuation guarantee shortfall for a quarter: s 16 SGAA; s 5 SGCA. SGC comprises three components: the superannuation guarantee shortfall, the nominal interest component, and the administration component. Therefore, even if (subsequent to the 28th day after the end of a quarter) an employee receives superannuation guarantee in their superannuation fund by reason of payment by the employer, this payment does not result in the reduction of SGC and nor is it a payment of SGC. SGC is an amount that is distinct to the superannuation guarantee.

(5)    If an employer fails to meet their superannuation obligations by the 28th day after the end of a quarter and therefore there is a superannuation guarantee shortfall, the employer is liable to be assessed for SGC by the Commissioner at and from that point in time. In that event, the employer must lodge a superannuation guarantee statement for that quarter on or before the relevant due day set out in s 33 of the SGAA. A superannuation guarantee statement that is lodged for the first time in relation to a quarter has effect as an assessment of the superannuation guarantee shortfall for that quarter and of the SGC payable on the shortfall: s 35(1) SGAA. The effect of lodging a superannuation guarantee statement is to notify the Commissioner of the amount of the SGC liability.

(6)    If an employer has not lodged a superannuation guarantee statement under s 33 and the Commissioner is of the opinion that the employer is liable to pay SGC for a quarter, the Commissioner may make a default assessment of the employer’s superannuation guarantee shortfall for the quarter and of the SGC payable on the shortfall: s 36(1) SGAA. The SGC is payable on the day on which the assessment is made: s 36(3) SGAA.

16    Section 269-20 of Sch 1 to the TAA relevantly provides:

Penalty

Penalty for director on or before due day

(1)     You are liable to pay to the Commissioner a penalty if:

(a)     at the end of the due day, the directors of the company are still under an obligation under section 269‑15; and

(b)     you were under that obligation at or before that time (because you were a director).

Note: Paragraph (1)(b) applies even if you stopped being a director before the end of the due day: see subsection 269‑15(2).

(2)     The penalty is due and payable at the end of the due day.

Note: The Commissioner must not commence proceedings to recover the penalty until the end of 21 days after the Commissioner gives you notice of the penalty under section 269‑25.

…

Amount of penalty

(5)     The amount of a penalty under this section is equal to the unpaid amount of the company’s liability under its obligation.

Note 1: See section 269‑40 for the effect on your penalty of the company discharging its obligation, or of another director paying his or her penalty.

Note 2: See section 269‑45 for your rights of indemnity and contribution.

17    Section 269-35 provides:

Defences

Illness

(1)     You are not liable to a penalty under this Division if, because of illness or for some other good reason, it would have been unreasonable to expect you to take part, and you did not take part, in the management of the company at any time when:

(a)     you were a director of the company; and

(b)     the directors were under the relevant obligations under subsection 269‑15(1).

All reasonable steps

(2)     You are not liable to a penalty under this Division if:

(a)     you took all reasonable steps to ensure that one of the following happened:

(i)     the directors caused the company to comply with its obligation;

(ii)     the directors caused an administrator of the company to be appointed under section 436A, 436B or 436C of the Corporations Act 2001;

(iia)     the directors caused a small business restructuring practitioner for the company to be appointed under section 453B of that Act;

(iii)     the directors caused the company to begin to be wound up (within the meaning of that Act); or

(b)     there were no reasonable steps you could have taken to ensure that any of those things happened.

(3)     In determining what are reasonable steps for the purposes of subsection (2), have regard to:

(a)     when, and for how long, you were a director and took part in the management of the company; and

(b)     all other relevant circumstances.

…

(4A)     For the purpose of the Commissioner recovering from you a penalty payable under this Division (other than as mentioned in subsection (4)), subsection (1) or (2) does not apply unless:

(a)     you provide information to the Commissioner during the period of 60 days starting on the day the Commissioner:

(i)     in the case of the Commissioner recovering the penalty under section 260‑5 (Commissioner may collect amounts from third party)—gives you a notice under subsection 260‑5(6) in relation to the penalty; or

(ii)     otherwise—notifies you in writing that he or she has recovered any of the penalty; and

(b)     the Commissioner is satisfied of the matters mentioned in subsection (1) or (2) of this section on the basis of that information.

18    Subdivision 269-C is entitled “Discharging liabilities”.

19    Within that division, s 269-40 relevantly provides the following:

Effect of director paying penalty or company discharging liability

Liabilities

(1)     This section applies to the following liabilities:

(a)     the liability of the company under its obligation referred to in section 269‑10;

(b)     the liability of each director (or former director) to pay a penalty under this Division in relation to the liability of the company referred to in paragraph (a);

(c)     a liability under a judgment, to the extent that it is based on a liability referred to in paragraph (a) or (b).

Discharging one liability discharges other liabilities

(2)     If an amount is paid or applied at a particular time towards discharging one of the liabilities, each of the other liabilities in existence at that time is discharged to the extent of the same amount.

…

(4)     This section does not discharge a liability to a greater extent than the amount of the liability.

20    Section 269-45 provides:

Directors’ rights of indemnity and contribution

(1)     This section applies if you pay a penalty under this Division in relation to a liability of the company under an obligation referred to in section 269‑10.

(2)     You have the same rights (whether by way of indemnity, subrogation, contribution or otherwise) against the company or anyone else as if:

(a)     you made the payment under a guarantee of the liability of the company; and

(b)     under the guarantee you and every other person who has paid, or from whom the Commissioner is entitled to recover, a penalty under this Division in relation to the company’s obligation were jointly and severally liable as guarantors.

FACTUAL BACKGROUND

21    The following facts were not in dispute.

22    On 28 October 2016, Ostwald’s superannuation guarantee for the quarter ending 30 September 2016 (September 2016 quarter) was due. On that day, an amount of $680,099.43 was debited from the bank account of Ostwald. The payment was made to a clearing house. The superannuation guarantee was received by the employees’ superannuation fund on 31 October 2016.

23    Ostwald failed to lodge its superannuation guarantee statement by 28 November 2016, as was required under s 33 of the SGAA.

24    On 28 January 2017, Ostwald’s superannuation guarantee for the quarter ending 31 December 2016 (December 2016 quarter) was due.

25    Ostwald paid the superannuation guarantee for the December 2016 quarter late. On 3 February 2017, an amount of $917,353 was debited from the bank account of Ostwald. The amount was paid to a clearing house, and the superannuation guarantee was received by the employees’ superannuation fund on 6 February 2017.

26    Ostwald failed to lodge its superannuation guarantee statement by 28 February 2017, as was required under s 33 of the SGAA.

27    On 28 April 2017, Ostwald’s superannuation guarantee for the quarter ending 31 March 2017 (March 2017 quarter) was due.

28    Ostwald paid the superannuation guarantee for the March 2017 quarter late. On 16 May 2017, an amount of $773,876.87 was debited from the bank account of Ostwald. The amount was paid to a clearing house and the superannuation guarantee was received by the employees’ superannuation fund on 17 May 2017.

29    Ostwald failed to lodge its superannuation guarantee statement by 28 May 2017, as was required under s 33 of the SGAA.

30    On 25 August 2017, Ostwald was put into external administration.

31    On 30 November 2017, Ostwald was placed into liquidation.

32    On 29 June 2018, different liquidators were appointed.

33    Applying the legislation as extracted above to the facts of the present matter:

(1)    Ostwald was liable to be assessed for SGC for each of the relevant quarters (being the September 2016 quarter, December 2016 quarter and March 2017 quarter) by reason that there was a superannuation guarantee shortfall for each of the quarters;

(2)    Ostwald did not lodge a superannuation guarantee statement for any of the quarters by the due days set out in s 33 of the SGAA. It can reasonably be inferred (and I do infer) that, by that failure, the applicants were either not aware of the obligation to lodge a superannuation guarantee statement for any of the quarters or they were so aware but either overlooked or ignored that obligation. As they failed to comply with this obligation, the Commissioner made a default (original) assessment of SGC under s 36 of the SGAA on 29 July 2021, 4 October 2021 and 5 October 2021 for the September 2016 quarter, December 2016 quarter and March 2017 quarter respectively. The Commissioner amended the assessments on 7 February 2025 and again on 6 and 7 March 2025;

(3)    under s 269-10(1), on the last day of each of the quarters (being the “initial day” under s 269-10(1), item 5, column 1), Ostwald was obliged to pay SGC to the Commissioner for each of the quarters by the relevant “due day”. By reason of s 269-10(3), the “due day” of the SGC for each of the quarters was determined by s 33 of the SGAA, as follows:

(a)    for the September 2016 quarter – 28 November 2016;

(b)    for the December 2016 quarter – 28 February 2017; and

(c)    for the March 2017 quarter – 28 May 2017;

(4)    under s 269-15(1), each of the applicants, from time to time, on or after the “initial day” (being the last day of each of the quarters) was under an obligation to cause Ostwald to comply with the obligation referred to above. The applicants continued to be under that obligation until any of the events in s 269-15(2) occurred. As Ostwald was put into external administration on 25 August 2017, the obligation of the applicants ceased on that day under s 269-15(2)(b).

34    The Commissioner made a (default) original assessment of SGC under s 36 of the SGAA on 29 July 2021, 4 October 2021 and 5 October 2021 for the September 2016 quarter, December 2016 quarter and March 2017 quarter respectively.

35    On 22 February 2024, the Commissioner gave each of the applicants a “director penalty notice for superannuation guarantee charge amounts” (collectively, the First DPNs). These notices were given under s 269-25 of Sch 1 to the TAA, and set out the unpaid amount of SGC as follows:

(1)    September 2016 quarter – $1,329,153.97; and

(2)    December 2016 quarter – $1,513,382.89.

36    On 8 March 2024, the Commissioner gave each of the applicants another “director penalty notice for superannuation guarantee charge amounts” (collectively, the Second DPNs) under s 269-25 of Sch 1 to the TAA, which set out the unpaid amount of SGC for the March 2017 quarter in the amount of $1,478,021.33.

37    On 2 May 2024, Grant Thornton on behalf of (the liquidators for) Ostwald, lodged an objection against the (default) original assessments of SGC (Objection). In support of the Objection, Ostwald lodged a “Superannuation Guarantee Charge Statement” reporting the following amounts of SGC as being payable: (a) $70,011.59 for the September 2016 quarter, (b) $161,478.36 for the December 2016 quarter, and (c) $41,595.58 for the March 2017 quarter.

38    On 3 May 2024, by way of letter, Hall & Wilcox on behalf of each of the applicants provided the Commissioner with a “Defence to Director Penalty Notices” to the First DPNs and Second DPNs, relying on the defences in ss 269-35(2)(a)(i) and 269-35(2)(b) of Sch 1 to the TAA (3 May 2024 Letters).

39    On 22 October 2024, by way of letter, the Commissioner informed the applicants that each of them was not liable for a director penalty for the periods ended 30 June 2017 and 30 September 2017 (which periods are not the subject of these proceedings) but were “still liable for the other director penalty liability periods”. The letter also stated the following:

As the Commissioner has not issued a garnishee notice in relation to your client’s liability; or notified them in writing that they have recovered any of your client's director penalty liabilities, during the period of 60 days prior to your correspondence, the statutory timeframe to provide information about a defence to a director penalty liability has not been enlivened. Without this, the Commissioner cannot formally determine your client's defence to the director penalty liability at this time.

40    On 20 December 2024, the Commissioner allowed the Objection resulting in a reduced superannuation guarantee shortfall of $795,446, $377,551 and $97,945 for the September 2016 quarter, December 2016 quarter and March 2017 quarter respectively.

41    On 7 February 2025, the Commissioner issued notices of amended assessments for SGC for each of the quarters that gave effect to the Commissioner’s decision on the Objection, pursuant to s 37 of the SGAA. The notices recorded the following amounts of SGC as being payable: (a) $1,201,021.63 for the September 2016 quarter, (b) $573,485.54 for the December 2016 quarter, and (c) $151,170.68 for the March 2017 quarter.

42    On 6 and 7 March 2025, the Commissioner issued notices of (further) amended assessment for SGC for each of the quarters, pursuant to s 37 of the SGAA. The notices recorded the following amounts of SGC as being payable: (a) $468,060.04 for the September 2016 quarter, (b) $348,609.84 for the December 2016 quarter, and (c) $87,687.50 for the March 2017 quarter.

43    On 8 May 2025, Hall & Wilcox on behalf of each of the applicants wrote to the Commissioner requesting that he “consider the defences in light of the favourable outcome of the objection to the SGC assessments” and the additional material enclosed (8 May 2025 Letters).

44    In relation to the December 2016 quarter, the 8 May 2025 Letters referred to [28] of the 3 May 2024 Letters. In relation to the March 2017 quarter, the 8 May 2025 Letters referred to [28] and [41] of the 3 May 2024 Letters. However, in relation to the September 2016 quarter, the 8 May 2025 Letters did not refer to the 3 May 2024 Letters in terms, other than to note that they referred to the fact that the Company had made a contribution to the clearing house on 28 October 2016.

45    The Commissioner was not satisfied of the matters mentioned in s 269-35(2) of Sch 1 to the TAA in relation to each of the applicants for the purposes of s 269-35(4A) – that is, the “all reasonable steps defence” in s 269-35(2) was not available to each of the applicants such that they remained liable for their respective director penalties for the quarters.

THE DECISIONS

46    In letters dated 22 May 2025 from the Commissioner to each of the applicants, the Commissioner set out the reasons why he was not so satisfied of the matters, which reasons are (in substance) the same across the three applicants (reasons).

47    The reasons at [1]-[7] set out the background to the matter and specifically identify the First DPNs and Second DPNs.

48    The reasons at [8]-[11] summarise the outcome of the decision concerning the Objection, as well as the application of the Late Payment Offset (LPO) in respect of SGC for the September 2016 quarter. Paragraphs [12]-[17] and [18]-[23] similarly summarise the outcome of the decision on Objection and the application of the LPO in respect of SGC for the December 2016 quarter and the March 2017 quarter respectively.

49    The reasons at [24]-[26] evidence the Commissioner’s consideration of the issue of nominal interest, which was a matter raised by the applicants in the 8 May 2025 Letters.

50    At [24]-[25] of the reasons, the Commissioner stated that the nominal interest “relates to periods prior to the appointment of the administrator and liquidator and relates directly to the amounts which remain unpaid” (which reflects the operation of s 31 of the SGAA), as opposed to accruing “following the appointment of external administrators and liquidators” (as the applicants contended).

51    The reasons at [29]-[42] are contained under the heading “Previous DPN Defence outcome 22 October 2024 relating to director taking all reasonable steps”. Although these paragraphs concern the applicants’ earlier “defence” submission of 3 May 2024 and the Commissioner’s letter of 22 October 2024, [29]-[42] of the reasons also contains the reasoning that explain the Decisions of 22 May 2025. This is made clear at [54] of the reasons where the Commissioner stated:

I have reviewed the information provided in your previous DPN defence dated 3 May 2024, my DPN defence reply dated 22 October 2024, and the further information provided with this DPN defence dated 8 May 2025 and consider that the decision made on 22 October 2024 to refuse your DPN defence is correct.

52    Contrary to the applicants’ submissions, the reasons for the Decisions are not confined to [46]-[55] of the reasons, or only [50] as was submitted orally.

53    The reasons at [43]-[45] are contained under the heading “The Review of the “Reasonable Steps” defence has not been made out”. These paragraphs summarise the matters that the Directors contended for in the 8 May 2025 Letters. By way of example, these matters included:

(1)    Grant Thornton’s engagement (see [43(c)], [44(c)] and [44(e)-(f)]). This included a detailed summary of the supporting information that the Directors provided with the 8 May 2025 Letters (see [45]);

(2)    reference to Allegiant FS (see [43(c)] and [44(c)]); and

(3)    funding from ANZ (see [44(e)-(g)]).

54    The reasons at [46]-[55] are contained under the heading “Review Decision”. Various paragraphs are extracted below:

…

49)    While it is not necessary that you prove all reasonable steps were taken to do each of the three options at all times, the reasonableness of steps taken is considered in light of the length of time the obligations remained outstanding. For example, while spending a week or more seeking finance, negotiating payment arrangements, or making other attempts to ensure the company meets its obligations may be reasonable, steps to appoint an administrator or liquidator need to be taken promptly once those attempts to ensure payment have been unsuccessful.

50)     The Company did not pay all of its SG obligations. The remaining balance for each period is for the SG obligations that were not paid by the Company.

51)     I recognise that the Group received a loan from the ANZ Bank on 26 July 2017 and that some of the monies from that loan were used to pay some of the outstanding SG obligations, however, not all of the Company SG obligations were paid, and the loan amount was for $2.5M.

52)     There is a discrepancy in the information about when Grant Thornton provided the Company with restructuring advice. In the previous DPN defence you did not provide a signed copy of the agreement between the Company and Grant Thornton, but you have now provided a copy signed by you dated 28 June 2016.

53)     You have not provided any evidence that shows that this signed agreement was provided to Grant Thornton to engage their services and Grant Thornton's letters refer to their engagement date as 19 June 2017.

54)     I have reviewed the information provided in your previous DPN defence dated 3 May 2024, my DPN defence reply dated 22 October 2024, and the further information provided with this DPN defence dated 8 May 2025 and consider that the decision made on 22 October 2024 to refuse your DPN defence is correct.

55)     [Brendan/Matthew/Daniel] has not demonstrated they took all reasonable steps to ensure the company complied with its obligations over the whole period between the due date and the expiry of the notice.

COMPETENCY OF MATTHEW AND DANIEL’S APPLICATIONS

Leave to file Notices of Objection to Competency

55    The Commissioner filed Notices of Objection to Competency on 13 May 2026 in relation to each of Matthew and Daniel. These notices should have been filed by 14 July 2025: r 31.05 Federal Court Rules 2011 (Cth). Although the Commissioner advised the solicitors acting for Matthew and Daniel in early November last year that he considered that the applications were incompetent, no steps were taken by the Commissioner until 13 May 2026 to formalise that position. It appears that the issue was overlooked.

56    Matthew and Daniel filed written submissions on the issue of competency on 27 May 2026, and were in a position to address the issue of competency at the hearing. For that reason, the leave sought by the Commissioner will be granted.

Ruling on competency of applications

57    The Commissioner contends that only Brendan’s application for review is competent, whereas Matthew and Daniel’s applications for review are not competent because there is no “decision to which [the ADJR Act] applies” (as defined in s 3(1)) for the purposes of s 5(1) of the ADJR Act.

58    Matthew and Daniel bear the onus of proving that their applications are competent: r 31.05(2).

59    The effect of s 269-35(4A) of Div 269 of Sch 1 of the TAA (set out above) is that Matthew and Daniel cannot rely on the defence under s 269-35(2) (being the defence which they sought to invoke before the Commissioner) unless 269-35(4A) is satisfied.

60    Under s 269-35(4A), the 60 day period within which information could be provided to the Commissioner by Matthew and Daniel commences only on the happening of either of the events set out in s 269-35(4A)(a)(i) or (ii), namely:

(1)    where the Commissioner gives a director a notice under s 260-5(6) of Sch 1 to the TAA in relation to the penalty that the Commissioner is recovering under s 260-5 (s 269-35(4A)(a)(i)); or

(2)    otherwise, where the Commissioner “notifies you in writing that he or she has recovered any of the penalty” (s 269-35(4A)(ii)).

61    Based on the information provided to the Commissioner during the 60 day period, the Commissioner must determine whether he is satisfied of the matters mentioned in, relevantly, s 269-35(2) – that is, whether the Commissioner is satisfied that there is a defence under s 269-35(2). Thus, where neither of the events set out in s 269-35(4A)(i) or (ii) has occurred, then it follows that there cannot be any state of satisfaction (or decision) reached by the Commissioner under s 269-35(4A)(b) which is capable of being the subject of an application for judicial review: see, generally, Brown v Commissioner of Taxation (2020) 170 ALD 339; [2020] FCA 817 (Kerr J) at [38]–[40].

62    It was common ground that s 269-35(4A)(a)(i) does not apply. The question therefore turned on whether there had been notification by the Commissioner to each of Matthew and Daniel in writing that he has recovered any of the penalty.

63    On 5 May 2025, an income tax credit of $16,437.24 and $4,551.48 (totalling $20,988.72) was applied by the Commissioner against the director penalties payable by Brendan. The credit of $20,988.72 was sourced from a credit referrable to Brendan’s income tax return for the 2024 income year. This recovery was recorded in an “Income Tax Account Statement of Account” dated and issued to Brendan on 8 May 2025. No such document was issued to Matthew and Daniel. Instead, an entry in certain ledger accounts for Matthew and Daniel entitled “SG Director Penalty O4” recorded a credit of $20,988.72 next to the words “Change to your director penalty”. While these accounts were able to be accessed by the tax agent for Matthew and Daniel, the earliest date on which it appears that these accounts were accessed by anyone was in November 2025.

64    The question then is whether the recording in the ledger account for Matthew and Daniel of the credit was notification that the Commissioner had recovered any of the penalty.

65    Having regard to the statutory text, s 269-40(2) is concerned with the discharge of “each of the other liabilities”. Further, s 269-40(2) falls within Subdiv 269-C which is entitled and deals with discharging liabilities, and it does not provide that the consequence of such payment or application is that there is recovery of “each of the other liabilities”. No express reference is made to any recovery.

66    By contrast, s 269-35(4A), which is contained in Subdiv 269-B (entitled “Obligations and penalties”), commences with the words “For the purpose of the Commissioner recovering from you a penalty…” (emphasis added) and then refers to the period of 60 days commencing when either the Commissioner recovers the penalty under s 260-5 (being from third parties) (s 269-35(4A)(a)(i)) or “otherwise” notifies you that he has recovered any of the penalty (s 269-35(4A)(a)(ii)).

67    Matthew and Daniel press a construction of the word “recovered” in s 269-35(4A)(a)(ii) which accords with the ordinary dictionary meaning of the word and, on that basis, submit that it encompasses the application of any amount towards the discharge of a liability within the meaning of s 269-40(2), regardless of the source of that amount.

68    However, their construction fails to take account of the statutory context. These provisions (ss 269-35(4A) and 269-40(2)) are found in different subdivisions of Div 269 which each deal with contrasting subject matter (and expressly so). Further, different terminology is used in each provision. In particular, s 269-35(4A)(a)(ii) speaks of the penalty being “recovered” with the chapeau referring expressly to recovering from you a penalty, which supports a construction that the reference to “recovered” in s 269-35(4A)(a)(ii) means recovered from you (only), being the recipient of the notification referred to in that section. That is especially because, when the provision intends to refer to recovery from a third party under s 260-5, that is stated expressly in s 269-35(4A)(a)(i).

69    If, as Matthew and Daniel contend, “recovery” in s 269-35(4A)(a)(ii) encompasses payment in reduction of a penalty of any kind, including from another director or a third party, there would be no need to refer to “recovery” under s 260-5 from third parties in s 269-35(4A)(a)(i) as this would be encompassed by “recovery” under s 269-35(4A)(a)(ii). Section 269-35(4A)(a)(i) would be rendered otiose for this reason. This tells against the construction advanced by Matthew and Daniel: see Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 at [71] (McHugh, Gummow, Kirby and Hayne JJ). This supports a construction that s 269-35(4A)(a)(ii) is confined to recovery from the recipient of the notice only (i.e. recovery from you, even though the words “from you” are not used, as they are in the chapeau).

70    Such a construction is also supported by the examples given in the Explanatory Memorandum to the Tax Laws Amendment (2011 Measures No 8) Bill 2011; Pay As You Go Withholding Non-compliance Tax Bill 2011 (Cth) (EM) in the section entitled “Timing of defences”, which refers to either recovery from the recipient of the notification from the Commissioner (Example 3.3) or recovery from a third party under s 260-5(2) (Example 3.4). No other example is given.

71    In the section of the EM which follows, the heading is “Recovery processes for director penalties”. The EM states at [3.57] that:

Regardless of the character of the director penalty (that is, whether it relates to unpaid PAYG withholding liability, superannuation guarantee charge or an estimate of either of those liabilities), the Commissioner has two processes available to recover a director penalty from a director, depending on the circumstances. These processes apply to all methods of recovery, for example, commencing court proceedings, statutory offsetting or collection under garnishee notices.

72    Further, the EM refers to “Recovery processes for director penalties” in these terms:

(1)    the first process (described as the “first recovery process”) allows the Commissioner to issue a director penalty notice and wait until the end of 21 days after issuing that notice before commencing proceedings to recover a director penalty: [3.58];

(2)    the second process (described as the “second recovery process”) allows the Commissioner to commence proceedings to recover a director penalty, without issuing a director penalty notice. This process is only available to the Commissioner where the liability remains unpaid and unreported three months after the due day: [3.60].

73    For these reasons and contrary to the submissions advanced on behalf of Matthew and Daniel, s 269-35(4A)(ii) does not apply to the partial discharge of the penalty of the kind that occurred of this case.

74    Given that there was no recovery of any of the director penalties referrable to Matthew and Daniel within the meaning of s 269-35(4A)(ii), the Commissioner could not make any “decision” (or form any state of satisfaction) under s 269-35(4A)(b) on 22 May 2025 in relation to them.

75    It follows that there is no “decision to which [the ADJR Act] applies” such that their applications for review are not competent, and must be dismissed for that reason.

GROUNDS OF APPLICATIONS

76    It is convenient to address the applications brought by the three applicants on the basis that, contrary to my conclusion, the applications by Matthew and Daniel are competent.

Ground 1 – failure to take into account relevant considerations

Overview

77    The starting point is that, under s 269-45(4A), the Commissioner must determine whether he is satisfied of the matters mentioned in s 269-35(2) on the basis of the information provided to him during the 60 day period: s 269-45(4A)(b). The Commissioner could not in making the Decisions for the purposes of s 269-35(4A)(b) and, in turn, the Court cannot in reviewing the Decisions, have regard to information that was not provided to the Commissioner during the 60 day period. For that reason, I have placed no weight on the evidence adduced by the applicants which was not provided to the Commissioner within that time frame.

78    Section 269-35(3) expressly provides for mandatory considerations that the Commissioner is required to have regard to “in determining what are the reasonable steps for the purposes of [s 269-35(2)]”. Those considerations are:

(1)    “when, and for how long, you were a director and took part in the management of the company” (s 269-35(3)(a)); and

(2)    “all other relevant circumstances” (s 269-35(3)(b)).

79    Section 269-35 does not prescribe the “other relevant circumstances”. In the absence of such a prescription, “it is largely for the decision-maker, in the light of matters placed before him by the parties, to determine which matters he regards as relevant and the comparative importance to be accorded to matters which he so regards”: see Sean Investments Pty Ltd v MacKellar (1981) 38 ALR 363 at 375 (Deane J).

80    Further, “all other relevant circumstances” as used in s 269-35(3)(b) only encompasses those circumstances that (if accepted) could rationally affect the assessment of the probability that a director took all reasonable steps to ensure that the applicants caused Ostwald to comply with its obligation as prescribed under ss 269-10 and 269-15, being an obligation to cause Ostwald to pay SGC to the Commissioner. As such, only considerations or matters that are probative of whether the applicants took all reasonable steps to cause Ostwald to comply with its obligation to pay SGC are a “relevant circumstance” for the purpose of s 269-35(3)(b).

81    It follows that any consideration or matter that is probative of whether the applicants took all reasonable steps to cause Ostwald to pay the superannuation guarantee – which is not SGC – is not a “relevant circumstance” for the purpose of s 269-35(3)(b). Nor would it be a consideration that the Commissioner was bound to take into account for the purposes of s 269-35(4A).

Grounds in Originating Application

Relevant considerations not taken into account

82    The Originating Applications allege that the Commissioner failed to take into account the following relevant considerations:

(1)    The payments which the applicants caused to be paid to discharge Ostwald’s liability to pay SG by the 28th day after the end of the September 2016 quarter;

(2)    The fact that the applicants were not aware of any SGC liability in relation to the September 2016 quarter as the SG liability had been paid on time;

(3)    The fact that in relation to the December 2016 quarter and March 2017 quarter the SG was paid albeit after the due date;

(4)    The steps taken by the applicants in the period from 28 January 2017 to 25 August 2017 to ensure Ostwald paid its liability for SG or SGC including:

(a)    engaging Grant Thornton to provide restructuring advice;

(b)    engaging Allegiant FS to advise on financing opportunities and to liaise with banks on Ostwald’s behalf;

(c)    renegotiating Ostwald’s debt with ANZ bank;

(d)    securing additional debt from ANZ part of which was used for the payment of the SG on 3 February 2017; and

(e)    securing further additional funding from ANZ in July 2017 solely for the purpose of the payment of Ostwald’s SG liabilities;

(5)    The fact that in relation to the March 2017 quarter, between the due dates of 28 April 2017 and the payment of the SG on 16 May 2017, the applicants had been taking and continued to take various steps to ensure Ostwald had the funds to pay the SG including:

(a)    The matters identified in (4) above; and

(b)    The sale of Ostwald’s assets in March 2017; and

(6)    In July 2017, the applicants borrowed further amounts from the ANZ specifically to meet the SG liabilities of Ostwald for the June 2017 quarter.

83    Each allegation will be addressed in turn.

84    The first allegation is that the applicants caused Ostwald to discharge “its liability to pay [superannuation guarantee] by the 28th day after the end of the September 2016 qtr” and the third allegation is that the “[superannuation guarantee] was paid albeit after the due date” for the “December 2016 qtr and March 2017 qtr”. However, these are not relevant considerations that the Commissioner was bound to take into account. This is because they concern the steps taken by the applicants to cause Ostwald to pay the superannuation guarantee, and are not probative of whether the applicants took all reasonable steps to cause Ostwald to comply with its obligation to pay SGC.

85    The second allegation is that none of the applicants was “aware of any SGC liability in relation to the September 2016 qtr as the [superannuation guarantee] liability had been paid on time”. However, this fact was not articulated by the applicants in either the 8 May 2025 Letters or the 3 May 2024 Letters.

86    In any event, the applicant’s subjective state of mind is not probative of whether the applicants took all reasonable steps to cause Ostwald to comply with its obligation to pay SGC. As observed in Deputy Commissioner of Taxation v Saunig (2002) 55 NSWLR 722; [2002] NSWCA 390 at [25] (Heydon JA, with whom Sheller JA and Gzell J agreed) (by reference to the predecessor section), the test is an objective one by reference to what the director, acting reasonably, knew or ought to have known. That the director’s conduct is evaluated on an objective basis by reference to what the director ought to have known is referred to in the reasons at [38] and [48].

87    The fourth allegation concerns the “steps taken in the period from 28 January 2017 to 25 August 2017” so as to ensure Ostwald “paid its liability [for] SG or SGC”. Although there is reference to both “SG or SGC”, the listed matters are not directed to causing Ostwald to comply with its obligation to pay SGC and, therefore, were not considerations that the Commissioner was bound to take into account. That is for the following reasons.

88    First, Ostwald’s engagement of Grant Thornton in June or July 2017 was to “[assist] the Group (including [Ostwald]) with funding strategies”, including “negotiating with existing financiers for extensions to cover operational expenses of the Group”.

89    The letter from Grant Thornton dated 19 June 2017 describes the scope of the proposed engagement as: “Report to Ostwald [which was defined in the letter as “Ostwald Bros Group”] on its financial position, available restructuring options, and recommend an overall restructuring plan and strategy for execution”, and “[a]ssist management with stakeholder engagement in relation to the restructure”. The letter from Grant Thornton dated 20 July 2017 (headed “Terms of Engagement”) concerned the possible share sale of Ostwald and transfer of assets to support the various divisions of Ostwald. Grant Thornton’s letter addressed to Casey Alexander dated 23 April 2025 also confirms that it was “engaged by the “Ostwald Bros Group” (the Group) to provide restructuring advice and assistance pursuant to an engagement letter dated 19 June 2017”. Matthew’s evidence is that this engagement related to “assist[ing] us with selling some of the Company’s shares and assets in an attempt to secure some further funds for the continued operations of the Group”.

90    For these reasons and based on the evidence, the work which Grant Thornton was engaged to perform was directed to operational matters of the Ostwald Brothers Group (being the group of companies of which Ostwald was a member) and was not directed to causing Ostwald to comply with its obligations to pay SGC. It was therefore not a relevant consideration that the Commissioner was bound to take into account.

91    Second, Ostwald’s engagement of Allegiant FS was not directed to causing Ostwald to comply with its obligation to pay SGC and therefore was not a relevant consideration that the Commissioner was bound to take into account.

92    This conclusion is supported by the letter from Allegiant FS dated 16 December 2016 (headed “Retainer Agreement – Ostwald Bros Group “OBG””) which summarised the proposed engagement as to “review the current financing arrangements and to assist Ostwald Bros Group with the potential restructure and resizing of banking arrangements going forward”. Further, Brendan’s evidence is that the “Ostwald Group Advisory Board agreed to engage Allegiant FS to assist with the financing opportunities and banking relationships of the Group”, “manag[e] our ongoing and positive relationship with ANZ”, and “[provide] us with advice regarding our options to acquire more debt”.

93    Third, that each applicant was renegotiating Ostwald’s debt with ANZ; the securing, in early February 2017, of “additional debt from ANZ part of which was used for the payment of the [superannuation guarantee] on 3 February 2017; and the securing of “further additional funding from ANZ in July 2017 solely for the purpose of the payment of the Company’s [superannuation guarantee] liabilities” (emphasis added) are not considerations that the Commissioner was bound to take into account as they were not directed to causing Ostwald to comply with its obligation to pay SGC.

94    This conclusion is supported by the letter from ANZ dated 26 July 2017 (headed “Variation Letter – Ostwald Bros Group”) provided that a purpose of the additional funding of AUD$2,500,000 to “Ostwald Bros Group” was to “allow you to make payment of: … Quarterly employee superannuation payments of: AUD983,158.30”. This is confirmed in Grant Thornton’s letter dated 29 April 2025 addressed to the applicants. In that letter, Grant Thornton stated that the “advance of funds or facilities by ANZ Bank to the Ostwald Bros Group in July 2017” was to “meet its trading obligations and specifically wages and superannuation”, especially “to enable the payment of superannuation totalling $880,912.28 on behalf of the employees” of Ostwald.

95    The fifth allegation is that, in relation to the March 2017 quarter, between the due dates of 28 April 2017 and the payment of the superannuation guarantee on 16 May 2017, each applicant had been taking and continued to take various steps to ensure that Ostwald had the funds to pay the superannuation guarantee. However, this is not a consideration that the Commissioner was bound to take into account because it was directed to causing Ostwald to pay the superannuation guarantee, not the SGC.

96    Further, it is claimed that there was a sale of Ostwald’s assets in March 2017. However, the only asset which was sold by Ostwald (being an asset of which it was the owner) occurred on 17 May 2017, not March 2017, and the sale proceeds were not directed to causing Ostwald to comply with its obligation to pay SGC for any of the quarters, but were directed to the running of the business.

97    Finally, it is alleged that in July 2017, each applicant, in concert with the other directors of Ostwald, borrowed further amounts from the ANZ specifically to meet the superannuation guarantee liabilities of Ostwald for the quarter ending in June 2017. However, this is not a consideration that the Commissioner was bound to take into account because it does not relate to any of the three relevant quarters.

98    For these reasons, Ground 1 must fail.

Whether considerations were taken into account

99    Other than the second consideration, the other considerations which are the subject of complaint are referred to in the Decisions, and were taken into account:

100    Further, at [54] of the reasons, the Decisions each stated:

I have reviewed the information provided in your previous DPN defence dated 3 May 2024, my DPN defence reply dated 22 October 2024, and the further information provided with this DPN defence dated 8 May 2025 and consider that the decision made on 22 October 2024 to refuse your DPN defence is correct.

101    To resist the contention that the Commissioner took these matters into account, the applicants submit that the reasons at [46]-[49] contain “vague statement [sic] of principles of law”. However, those paragraphs correctly summarise, in a succinct manner, the legal principles with references to the relevant cases.

102    The applicants also submit that there is a “paucity of analysis as to how the legal principles…applied to the steps taken by the [a]pplicants” and that the reasons “then proceed to the statement at [50] …”. In substance, this appears to be an attack on the adequacy of the reasoning, but it ignores the fact that, apart from what is stated at [46]-[50] of the reasons, the Commissioner set out his reasoning in earlier parts of the reasons, which articulate, and in some respects, analyse the various factual matters which were taken into account.

103    For these reasons and in conclusion, when the reasons for each Decision are viewed as a whole, the Commissioner did review and take into account the information in the 3 May 2024 Letters and 8 May 2025 Letters, but concluded that the applicants had not demonstrated that they each took all reasonable steps to ensure that Ostwald had complied with its obligations.

104    This provides a further reason that Ground 1 must fail.

Materiality

105    For the reasons given above, none of the considerations referred to in the Originating Application was directed to causing Ostwald to comply with its obligation to pay SGC for any of the quarters. Accordingly, any failure of the Commissioner to take into account those considerations could not have materially affected the Decisions. The Commissioner would still not have been satisfied of the matters mentioned in s 269-35(2) – that is, he would still not have been satisfied that the applicants had a defence under s 269-35(2).

106    For this additional reason, Ground 1 fails.

Grounds in submissions

Opening submissions

107    The applicants submit that the Commissioner failed to consider that: (i) superannuation guarantee was in fact paid by Ostwald for all of the quarters; and (ii) superannuation guarantee was paid by Ostwald by the due date for the September 2016 quarter “meaning no SGC liability should have arisen for that quarter”. However, this submission misunderstands the legislation because:

(1)    although an amount of $680,099.43 was debited from the bank account of Ostwald to be paid to the clearing house in respect of the September 2016 quarter, the employees’ superannuation fund did not receive their superannuation contribution until 31 October 2016 (i.e. 3 days after the due day). As such, Ostwald was liable to be assessed for SGC when the superannuation guarantee shortfall arose immediately after 28 October 2016;

(2)    although amounts of $917,353 and $773,876.87 were debited from the bank account of Ostwald in relation to the December 2016 quarter and March 2017 quarter respectively, Ostwald was liable to be assessed for SGC when the superannuation guarantee shortfall arose immediately after 28 January 2017 and 28 April 2017;

(3)    as a matter of fact, the Commissioner assessed SGC liability for each of the quarters and issued notices of assessment and amended assessment accordingly. For the purposes of Div 269, the SGC is deemed to be payable by the due days set out in s 33 of the SGAA. The production of a notice of assessment (such as an assessment of SGC) is conclusive evidence that the assessment was properly made and that, except in a proceeding under Pt IVC of the TAA, the amounts and particulars of the assessment are correct: Sch 1 s 350-10(1) (item 2) TAA.

Closing submissions

108    By their closing submissions, the applicants advance new complaints which were not previously notified to the Commissioner and were not referred to in the Originating Application. No application for leave to amend the Originating Application was made, and nor has there been a clear articulation of these additional matters. Thus, the vice in the applicants’ approach is twofold: first, there is a lack of clarity as to the applicants’ precise contentions and second, the Commissioner must go to the additional expense of addressing the additional grounds in circumstances where the hearing is over, the opportunity to make oral submissions has passed, there is a risk that a new argument will be missed or misunderstood (including by the Court), and such an approach by the applicants falls foul of s 37N of the Federal Court of Australia Act 1976 (Cth).

109    The applicants submit that there are no new grounds, that the Originating Application is not a pleading and that the arguments advanced by them fall within the one of the Grounds. This submission is rejected. The Originating Application articulated the facts relied upon by the applicants in support of the Grounds, and the applicants did not give notice to the Commissioner of the additional facts and matters relied upon by them to support those Grounds.

110    That a party must give reasonable and proper notice to the other party of the case to be advanced by it is a fundamental tenet of procedural fairness. As leave to amend the Originating Application was not sought by the applicants, the additional arguments advanced by them are rejected.

111    Had leave been sought, it would have not been granted in any event, as the new arguments advanced in the Closing Submissions have no merit. That is for the following reasons.

112    By their closing submissions and oral submissions at the hearing (T64), the applicants submit that the decision-maker was bound to take into account whether the defence was made out during the relevant period. They submit that the decision-maker failed to identify what period of time she was considering the steps that were taken, and that consideration should have been given to whether the defence was made out “in light of the actual facts as disclosed on the material in his [her] possession” in May 2025 including facts which had subsequently occurred between August 2017 (when Ostwald was placed into administration) and May 2025, such facts including:

(1)    the significant passage of time before the Commissioner issued the SGC assessments to the Company;

(2)    the further passage of time before issuing the DPNs to the directors; and

(3)    that it was the directors’ organisation of the Objection on behalf of the Company.

113    However, the “significant passage of time” prior to SGC assessments being issued, the “further passage of time” prior to issuing the DPNs, and the “director’s organisation of the Objection” are not considerations that the Commissioner was bound to consider. This is because they have no bearing on whether the directors took reasonable steps to comply with their obligations under s 269-35(2). Further, the directors were required to take all reasonable steps for the purposes of the defence until 25 August 2017 only, as following then Ostwald was in external administration, meaning their obligation had ceased under s 269-15(2)(b).

114    The applicants then submit that that they took a number of steps with the intention that those steps would allow Ostwald to raise the funds to meet its obligations, and that they need not have considered administration or liquidation while they were taking all reasonable steps to ensure the Company could pay its debts via restructuring and refinancing. They submit that the fact that the applicants were entitled to pursue that option before considering other options was a relevant consideration which the decision-maker was bound to take into account, but failed to do so.

115    However, an argument in these terms was not raised in either the 8 May 2025 Letters or 3 May 2024 Letters, and thus was not part of information that was provided to the Commissioner during the 60 day period for the purposes of s 269-35(4A)(a): Brown at [40]. Further and in any event, the decision-maker did consider that the directors had the option of attempting restructuring and refinancing prior to administration or liquidation: see reasons at [46] and [49].

116    The applicants next submit that the decision-maker was bound to take into account, but failed to consider whether, once the first option had been explored, the directors took all reasonable steps to “promptly” place Ostwald into external administration on 25 August 2017.

117    Again, the contention that the directors now argue was not articulated in either the 8 May 2025 Letters or 3 May 2024 Letters and thus was not part of information that was provided to the Commissioner during the 60 day period for the purposes of s 269-35(4A)(a): Brown at [40]. Further, the Decisions correctly identify the fact that Ostwald was put into external administration on 25 August 2017 at [1], [27(b)] and [29(k)].

118    Finally, the applicants submit:

Further, the decision-maker stated [at [34]] that “any monies provided by you or other members of the Ostwald families [to the Company] is not something the Commissioner can consider as a defence to the DPNs”. There is no legal basis for this statement given the wide scope of factors permitted to be taken into account under s269-35(3)(b). In attempting to ensure the Company complied with its obligations i.e. the contribution of the director’s own money to the Company is a consideration which the decision-maker was bound to consider in deciding whether the directors took all reasonable steps to cause the Company to comply with its obligations.

(Emphasis omitted).

119    However, these contributions were not directed to causing Ostwald to pay SGC for the relevant quarters and were therefore not a consideration that needed to be taken into account. Further, the decision-maker did consider the fact of these contributions at [34] of the reasons.

120    For these additional reasons, Ground 1 fails.

Ground 2 – taking into account irrelevant considerations

Grounds in Originating Application

121    The Originating Applications allege that the Commissioner took into account the following irrelevant considerations:

(1)    the timing of Grant Thornton’s signature on an engagement letter;

(2)    the fact that not all of the amounts borrowed from ANZ in February 2017 were used to pay the superannuation guarantee liabilities.

122    However, the applicants failed to demonstrate that, in relation to each of the considerations which they contend were irrelevant considerations:

(1)    the consideration was irrelevant, in the sense that under the applicable statutory provisions the taking into account of the consideration was impermissible; and

(2)    that the applicable statutory provisions have the effect that taking the consideration into account will result in invalidity.

123    Further, even assuming that these considerations were irrelevant considerations (which I do not accept), there is nonetheless no error committed by the Commissioner by reason that his taking into account of those considerations was not material. That is because:

(1)    even if Grant Thornton was engaged to perform work (despite the timing of when the engagement letter was signed by Grant Thornton), that work was directed to operational matters of the Ostwald Brothers Group. It was not directed to causing Ostwald to comply with its obligations to pay SGC for the relevant quarters;

(2)    even though the superannuation guarantee was paid by Ostwald on 28 October 2016 for the September 2016 quarter, the employees’ superannuation fund did not receive the payment until 31 October 2016. As such, Ostwald was liable to be assessed for SGC when the superannuation guarantee shortfall arose immediately after 28 October 2016 (as explained above). Similarly, by reason that the superannuation guarantee was paid late for the December 2016 quarter and March 2017 quarter, Ostwald was also liable to be assessed for SGC when the superannuation guarantee shortfall arose immediately after 28 January 2017 and 28 April 2017 (as explained above); and

(3)    the loan from ANZ in July 2017 was not used to meet Ostwald’s obligation to pay SGC for any of the quarters.

124    For these reasons, Ground 2 must fail.

Grounds in submissions

125    Leave to amend the Originating Application was not sought by the applicants to add the additional matters raised in the Closing Submissions. Had leave been sought, it would have not been granted in any event, as the new arguments sought to be raised by their submissions have no merit. That is for the following reasons.

126    The additional irrelevant considerations which were taken into account are said to be as follows.

127    First, the apparent conclusion in [50] of the reasons that, “because there was a debt owing by the Company, ipso facto, the directors could not have taken all reasonable steps”. However, this mischaracterises [50] of the reasons, and the reasons as a whole. No such finding was made, and no such apparent conclusion was reached. In placing undue reliance on [50], the applicants fail to have regard to the reasons as a whole. When [50] is fairly read in context, it is clear that the conclusion (at [55]) that the applicants failed to demonstrate that they took all reasonable steps is based not only on [50] but also on [51]-[54] and the other paragraphs of the reasons.

128    Second, the consideration in [50] of the reasons that “i.e. the fact that the directors were unsuccessful in causing the Company to comply with its obligations, is the reason a DPN was issued in 2024”. Again, this mischaracterises [50] of the reasons, and the reasons as a whole.

129    Further, the applicants do not explain why the “fact that the directors were unsuccessful in causing the Company to comply with its obligations” was an irrelevant consideration in the sense that it was a matter that the Commissioner was, expressly or impliedly by statute, forbidden, prohibited or precluded from taking into account. No error has been shown on this basis.

130    Third, the applicants complain that consideration was given to a draft version of the Grant Thornton engagement letter and the unsigned engagement letter with Allegiant FS at [32] of the reasons. However, the applicants do not explain why the fact that the engagement letters with Grant Thornton and Allegiant were unsigned were considerations that the Commissioner was forbidden, prohibited or precluded from taking into account. This argument also fails.

131    For these additional reasons, Ground 2 must fail.

Ground 3 – exercise of discretionary power in accordance with policy

132    In the Originating Application, the applicants contend that the Decisions involved an exercise of a discretionary power “in accordance with policy without regard to the merits of the particular case”, and they cite s 5(2)(f) of the ADJR Act.

133    The Originating Application does not identify the policy that the Commissioner allegedly followed in making the Decisions. Nor was it identified in the applicants’ opening submissions.

134    By their closing submissions, the applicants:

(1)    complain that the Commissioner “failed to have regard to his own policies” by not issuing the DPNs until 2024 (emphasis added). Those policies are identified as “PSLA 2011/18, PSLA 2007/1 (GA) and PSLA 2007/10”;

(2)    complain that “[i]f the decision-maker had considered PSLA 2011/18 and the merits of the case, they would have concluded that no DPNs should ever have been issued to the [a]pplicants and that [the] all reasonable steps defence was made out”;

(3)    complain that if the decision-maker “had regard to the merits of the defences in accordance with PSLA 2007/10”, they would have identified (inter alia):

(a)    the SG liabilities for the September 2016 quarter, December 2016 quarter and March 2017 quarter were in fact paid;

(b)    the applicants took steps to pay the employees’ superannuation; and

(c)    as Ostwald had been under external administration, it may no longer have books and records.

135    However, these allegations fall outside the scope of the Originating Application, and no leave has been sought to amend. Further, “PSLA 2007/1 (GA)” and “PSLA 2007/10” were never put to the Commissioner as part of the information provided to him during the 60 day period under s 269-35(4A)(a): Brown at [40]. For both of these reasons, Ground 3 must fail.

136    In any event, these complaints are misconceived as they do not fall within the scope of s 5(2)(f) of the ADJR Act, which is not directed to a failure to act in accordance with a policy.

137    The new complaints by the applicants are directed to anterior decisions made by the Commissioner relating to the making of default assessments and issuing the First DPNs and Second DPNs. However:

(1)    the present proceedings concern a review of the Decisions made on 22 May 2025, not any of the antecedent decisions and conduct of the Commissioner; and

(2)    it was not open for the Commissioner – in reaching a state of satisfaction for the purposes of s 269-35(4A)(b) about whether the defence in s 269-35(2) was satisfied – to go behind the assessments of SGC and the decisions to raise the assessments and give the First DPNs and Second DPNs.

138    For these reasons, Ground 3 must fail.

Ground 4 – unreasonableness

139    The applicants submit that “if the decision-maker did have regard to the evidence before them of the steps taken by the [a]pplicants throughout the Relevant Period, then the Decisions are so unreasonable…” and “[i]n the premises of the actions taken by the [a]pplicants during the Relevant Period… the conclusion reached in the Decisions is so unreasonable that no reasonable person would have made it”.

140    By their closing submissions, the applicants submit that the Decisions exceeded the decision-maker’s discretion because:

(1)    the Decision is irrational and illogical such that it was made outside the authority conferred upon the decision-maker; or

(2)    even if the decision remains in the four corners of the decision-maker’s authority, no reasonable person in the position of the decision-maker would have reached the Decision.

141    In support of these overarching submissions, the applicants refer in their submissions to a director “raising a defence to the DPN” and submit that:

The purpose of a DPN is to ensure a director takes all reasonable steps to avoid the company trading while insolvent, and increasing debts (including debts with the Respondent) which it cannot meet. That purpose could never have been achieved in this case, given the DPNs were issued after the Company had been in external administration for 7 years.

The Company had not received either an SGC assessment or amended assessment whilst under the control of the directors. Therefore, if the purpose of a DPN was to ensure the Company complied with its obligations to pay SGC or was placed into external administration, it was not, until 2021, four years after the Company had been placed under external administration that the SGC assessments were made and posted to the liquidators, by which time the Directors could no longer cause the Company to comply with those obligations.

Due to the steps taken by the directors, the Company’s SG had been paid in the Relevant Quarters. Once the late payment offsets were applied, the balance of the amount owing on the DPNs is for amounts created under the SGAA including administration fees, nominal interest and the difference between salaries and wages and ordinary time earnings.

The Respondent did not issue a proof of debt in relation any of the SGC assessments relating to these DPNs. As SGC assessments would have enjoyed priority in the winding up, had the SGC assessments been issued in a timely manner, either by the Commissioner or if SGC statements were prepared by the Liquidator, some of the SGC owed may have been recovered from the Company.

In the premises, the Decisions, that the directors did not make out the reasonable steps defence should be set aside for unreasonableness.

142    However, these submissions conflate the purpose of a DPN with the purpose of the director penalty regime set out in Div 269. It also amounts to a collateral attack on the decisions and conduct of the Commissioner in relation to the giving of the First DPNs and Second DPNs and in making the assessments and amended assessments of SGC.

143    Critically, there is no explanation given as to how or why what is described in these submissions would lead to, or have the consequence that, the Decisions were legally unreasonable. For example, there is no explanation concerning what the Commissioner specifically did or did not do in arriving at the Decisions. Nor is there any assertion, for example, that the Decisions lacked an “evident and intelligible justification” and, if so, how or why.

144    None of the submissions made by the applicants persuade me that the Decisions are “so lacking a rational or logical foundation that the decision (or relevant state of satisfaction) was one that no rational or logical decision-maker could reach”: see Djokovic v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2022) 289 FCR 21; [2022] FCAFC 3 at [34] (Allsop CJ, Besanko and O’Callaghan JJ).

145    Rather, in my view, the Decisions fall “within a range of possible, acceptable outcomes which are defensible in respect of the facts and law”: Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18 at [105] (Gageler J, as his Honour then was). Each Decision was one that was “rationally open to the decision-maker”: see Li at [30] (French CJ).

146    For these reasons, Ground 4 must fail.

CONCLUSION AND DISPOSITION

147    The applications will be dismissed, with costs to follow the event in the case of Brendan.

148    In the case of costs concerning Matthew and Daniel, the three applicants have shared common legal representation, and relied on the same written submissions. As the applications of Matthew and Daniel were not competent, and they would have lost even if those applications had been competent for the reasons explained above, I will not award them indemnity costs, being the costs order sought by their counsel.

149    Nor would I award Matthew and Daniel costs in any event having regard to the manner in which they expanded upon their case through the written submissions provided at the hearing, which conduct delayed the determination of this matter and increased the costs burden to the Commissioner. Further, their respective affidavits filed after the hearing did not state that they would have abandoned their applications had the objection to competency been raised within time, and those affidavits (which were the subject of further submissions by the Commissioner) did not have any bearing on the issues in their applications.

150    For these reasons, I will dispense with compliance by the Commissioner with r 31.05 of the Federal Court Rules under r 1.34, and order that Matthew and Daniel pay the Commissioner’s costs of their respective applications, being costs incurred after the hearing, on the basis that the Commissioner was put to additional expense dealing with an expanded case and late affidavits.

Associate:

Dated:    3 July 2026