YOUR NOT FUKING BAD ARE YOU
http://www.taxmatrix.com.au/pdfs/MTUN%20-%202006-04%20-%20Website%20Copy.pdf
Source (743679) Deputy Commissioner of Taxation (Cth) v Luckhardt & Anor [2006] QCA 53 (3 March 2006)
McMurdo P and Williams and Keane JJA
http://www.austlii.edu.au/au/cases/qld/QCA/2006/53.html
What was the issue?
Was Mr Luckhardt entitled to an indemnity from Mr Lawrence Pickering, for whom he acted as a director, for the
amount of a director’s penalty paid to the Commissioner?
What were the facts?
Mr Luckhardt was appointed the sole director of Hamlyn Crest Corporation Pty Ltd ("Hamlyn Crest") on 14 December
1999.
On 15 November 2002, liquidators were appointed following a special resolution that the company be voluntarily
wound up.
The Commissioner ("the DCT") recovered a judgment by consent from Mr Luckhardt in respect of director's penalties
payable by him because Hamlyn Crest had not met its obligations in respect of the remittance of group tax payments.
Mr Luckhardt brought proceedings against Mr Pickering seeking an indemnity in respect of the sum for which Mr
Luckhardt was liable to the DCT.
Mr Luckhardt's claim was that in late 1999 he had agreed to become a director of Hamlyn Crest at the request of
Mr Pickering, who wanted to conceal the fact of his association with the company, in return for Mr Pickering's promise
to indemnify him for any liability incurred by him as a result of being a director of the company. The agreement was
said to have been made orally.
The only issue before the learned trial judge was whether the oral agreement for which Mr Luckhardt contended had
been made. The learned trial judge preferred the evidence of Mr Luckhardt to that of Mr Pickering, and concluded that
the agreement had been made. Accordingly, judgment was given in favour of Mr Luckhardt.
The Present Proceeding
Mr Lawrence Pickering has sought to overturn the judgment on a number of grounds which may be summarised as
follows:
(a) Mr Lawrence Pickering's promise was unenforceable because it was a guarantee of which there was no note or
memorandum in writing as required by s 56 of the Property Law Act 1974 (Qld) ("the PLA");
(b) the learned trial judge erred in considering inadmissible evidence as to the credibility of Mr Lawrence
Pickering.
(c) the learned trial judge erred in finding in favour of Mr Luckhardt on the agreement issue when that finding was
against the weight of the evidence.
What was the decision?
[8] The business of Hamlyn Crest was the promotion and sale of a computer program which, it was claimed, was
able to predict the result of horse races. The business employed up to 50 people engaged in marketing the
program.
[9] [Mr Luckhardt’s] case was that [Mr Lawrence Pickering], who had been living in a de facto relation with [Mr Luckhardt’s] daughter since 1992, asked [Mr Luckhardt] to become a director of one of [Mr Lawrence Pickering’s] companies. [Mr Luckhardt] said that this conversation occurred in 1999, by telephone, at a time
when [Mr Lawrence Pickering] and [Mr Luckhardt’s] daughter were living in Vanuatu. [Mr Luckhardt] said
that [Mr Lawrence Pickering] said that he would have to do nothing. [Mr Luckhardt] said that he asked [Mr Lawrence Pickering]: "What if something goes wrong?" to which [Mr Lawrence Pickering] replied: "Well, you
can resign at any time. If anything goes wrong, you know, I'll completely indemnify you." [Mr Luckhardt]
asked: "What does that mean?" and [Mr Lawrence Pickering] replied: "Any liabilities, anything you could cut
short on I will - I will pick up the tab on that", and [Mr Lawrence Pickering] repeated: "You could resign at
any time." [Mr Luckhardt’s] evidence was that he did not immediately agree to [Mr Lawrence Pickering’s]
request, but had several discussions with his daughter over time, and agreed to become a director of the
company which turned out to be Hamlyn Crest.
[10] The documents required for this purpose were brought to [Mr Luckhardt] by Wayne Evans who was known to
[Mr Luckhardt] as [Mr Lawrence Pickering’s] business manager. Mr Evans was called as a witness by [Mr Lawrence Pickering]. In cross-examination he acknowledged that it was possible that he took the necessary
documents to [Mr Luckhardt] for his signature, but then asserted that the documents he recalled taking to [Mr Luckhardt] may have related to the lease of premises at Creek Street by Hamlyn Crest rather than the
documents relating to the formation of the company.
[19] After [Mr Luckhardt’s] daughter and [Mr Lawrence Pickering] separated, [Mr Lawrence Pickering] married
another woman. [Mr Lawrence Pickering’s] wife, from whom he is separated, gave evidence by telephone
from England. She said that [Mr Lawrence Pickering] had told her that Hamlyn Crest was his company and
that he owned it. [Mr Lawrence Pickering] denied that he had said this.
[26] I do not accept [Mr Lawrence Pickering’s] submission that his Honour must be taken to have erred in this
regard. Experience suggests that misunderstandings between lawyers and clients occur not infrequently. …
An oral guarantee
[29] [Mr Lawrence Pickering] contended in written submissions that the promise found by the learned trial judge
was a guarantee, and was, therefore, unenforceable because there was no written note or memorandum of the
promise as required by s 56 of the PLA.
[30] There are two answers to this contention which was, in any event, not pressed on the hearing on the appeal.
First, the absence of a written memorandum of [Mr Lawrence Pickering’s] promise was not pleaded in his
defence. It has long been established that, notwithstanding the language of s 56 of the PLA, an action may be
brought on an oral guarantee, and that the absence of written evidence of the guarantee is a defence which must
be pleaded if the absence of written evidence is to defeat the claim on the guarantee.[5] Thus, the absence of a
written note or memorandum of [Mr Lawrence Pickering’s] promise was simply not an issue in the case.[6]
[31] The second answer to [Mr Lawrence Pickering’s] contention is that the promise found by the learned trial
judge was not a guarantee: it was not a promise to answer for the debts of another. The promise found by his
Honour was not that [Mr Lawrence Pickering] would pay any debts owed by Hamlyn Crest to [Mr Luckhardt],
but that [Mr Lawrence Pickering] would pay "any liabilities" incurred by [Mr Luckhardt] as a result of
becoming a director of Hamlyn Crest. [Mr Luckhardt’s] debt to the DCT is a liability of [Mr Luckhardt], and
no less so because it arose by reason of the failure of Hamlyn Crest to comply with its obligations as an
employer in respect of the remittance of group tax payments to the DCT.
[32] At the hearing of the appeal, the guarantee point was relied upon only as a "straw in the wind" pointing to the
incompetence of counsel who had failed to plead by way of defence the absence of a written note or memorandum of [Mr Lawrence Pickering’s] promise. As is apparent, however, this is not a case where the
relevant promise sought to be enforced could have been categorised as a guarantee. [Mr Lawrence Pickering’s]
counsel at trial cannot be criticised for failing to plead this ground of defence.
[41] It may also be that the multiplication of credibility issues might have been thought to be likely to enure to the
disadvantage of [Mr Luckhardt] as the party who bore the onus of proof at trial. Especially is this so where, as
the learned trial judge said, whether or not the activities in which Hamlyn Crest was involved were illegal, they
brought no credit upon any of the individuals involved.
[42] Finally, it might also have been that [Mr Lawrence Pickering’s] counsel was keen to present [Mr Lawrence Pickering] as a person with nothing to hide. Experienced advocates often adopt a tactic of insouciance
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