//
[2010] FCA 1247
General information, not legal advice.
Federal Court of Australia
2010-11-16
McKerracher J
Original judgment source is linked above.
Zoe will write a short plain-English summary of this judgment and email it to you for free: what it was about, what the court decided and why. It can take up to a minute.
General information, not legal advice.
Or create a free account to save it and ask Zoe follow-up questions.
IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 324 of 2010
JUDGE: MCKERRACHER J DATE: 16 November 2010 PLACE: PERTH
INTRODUCTION 1 By notice of motion heard ex parte on 3 November 2010, the Commissioner of Taxation (the Commissioner) sought orders freezing the Australian assets of Resource Capital Fund III LP (RCF III) pursuant to O 25A of the Federal Court Rules (FCR). 2 With liberty to apply on short notice being granted together with certain confidentiality orders, I made the orders sought. I now provide reasons for doing so. 3 RCF III is a limited partnership established in the Cayman Islands. The evidence shows that its business involves the making of investments in development and growth stage mining companies, including mining companies in Australia. The corporate structure of RCF III and its related entities is complex. It involves at least the following companies and partnerships: Jarrah LLC, Resource Capital Fund Management LLC (RCF Management), Resource Capital Fund Management Pty Ltd (RCF Management PL), Resource Capital Associates II GP Limited (RCA II GP Limited) and Resource Capital Fund II Limited Partnership (RCA II LP), Resource Capital Associates III GP LLC (RCA III GP LLC) and Resource Capital Associates III LP (RCA III LP). 4 The Commissioner asserts that the company has derived income in Australia in the 2006 and 2008 income years of $70,948,000. He has brought an application in this Court for orders for payment of income tax for those years as well as declaratory relief in respect of penalties incurred. Those matters await another day. The freezing orders were sought to minimise the potential risk of dissipation of assets located in Australia that might be used to meet those tax liabilities. RCF III's main Australian assets are in the form of shares in companies listed on the Australian Stock Exchange (ASX) and are therefore reasonably liquid. The Commissioner asserted there was a real risk that RCF III would deal with or dispose of the assets it holds in Australia, such that a potential judgment in favour of the Commissioner would be left unsatisfied.
BACKGROUND 5 On 1 November 2010, the Commissioner issued Notices of Default Assessment and Notices of Assessment and Liability to Pay Penalty and sent those notices to RCF III's registered address in the Cayman Islands. The calculation of tax was summarised to RCF III in a letter covering the notices in the following terms: 4. Calculation of Tax Payable Pursuant to section 23 of the Income Tax Rates Act 1986 the tax payable is: 2006 Income Year $12,698,000 x 30% = $3,809,400 2008 Income Year $58,250,000 x 30% = $17,475,000 5. Calculation of Statement Penalty Pursuant to subsection 284-90(1) of Schedule 1, to the TAA the penalty applied is: 2006 Income Year $3,809,400 x 75% = $2,857,050 2008 Income Year $17,475,000 x 75% = $13,106,250 6 The tax assessed for the 2006 tax year was said to be due for payment on 1 December 2006 and the tax assessed for the 2008 year on 1 December 2008. The penalties issued are said to be due for payment on 30 November 2010. Counsel for the Commissioner advised interest was running on that debt. The total debt as at the date of the hearing was said to be $43,805,523.92 although there did not appear to be specific evidence of computation of this amount.
CONFIDENTIALITY 7 At the commencement of the hearing, the Commissioner sought an order that the hearing be conducted in private, pursuant to s 17(4) of the Federal Court of Australia Act 1976 (Cth). It was noted that, by reason of the location of RCF III, any order made at the conclusion of the hearing may not, at least theoretically, reach RCF III for some days. The Commissioner expressed his concern that if the matters dealt with at the hearing were public the media may become aware of the details of the assessment of the taxpayer prior to the taxpayer becoming aware of them. In those circumstances, the presence in the courtroom of any persons other than the parties and Court officials and Court reporter would arguably be 'contrary to the interests of justice' from the absent taxpayer's perspective as well as potentially jeopardising the effectiveness of the relief sought. With that in mind (and as the courtroom was empty save for the persons mentioned above), I made the order sought. 8 The Commissioner also sought a second order pursuant to O 46 r 6 FCR that documents filed in the matter would remain confidential until the next return date. That order was also made for the reasons above. 9 Similarly, in the interests of the taxpayer respondent, these reasons will also remain confidential until the next return date.
CONDITIONS FOR A FREEZING ORDER 10 O 25A r 5 is relevantly in the following terms: 5 Order against judgment debtor or prospective judgment debtor or third party (1) This rule applies if: (a) judgment has been given in favour of an applicant by: (i) the Court; or (ii) in the case of a judgment to which subrule (2) applies - another court; or (b) an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in: (i) the Court; or (ii) in the case of a cause of action to which subrule (3) applies - another court. (2) This subrule applies to a judgment if there is a sufficient prospect that the judgment will be registered in or enforced by the Court. (3) This subrule applies to a cause of action if: (a) there is a sufficient prospect that the other court will give judgment in favour of the applicant; and (b) there is a sufficient prospect that the judgment will be registered in or enforced by the Court. (4) The Court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the Court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because any of the following might occur: (a) the judgment debtor, prospective judgment debtor or another person absconds; or (b) the assets of the judgment debtor, prospective judgment debtor or another person are: (i) removed from Australia or from a place inside or outside Australia; or (ii) disposed of, dealt with or diminished in value. (5) The Court may make a freezing order or an ancillary order or both against a person other than a judgment debtor or prospective judgment debtor (a third party) if the Court is satisfied, having regard to all the circumstances, that: (a) there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because: (i) the third party holds or is using, or has exercised or is exercising, a power of disposition over assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor; or (ii) the third party is in possession of, or in a position of control or influence concerning, assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor; or (b) a process in the Court is or may ultimately be available to the applicant as a result of a judgment or prospective judgment, under which process the third party may be obliged to disgorge assets or contribute toward satisfying the judgment or prospective judgment. (6) Nothing in this rule affects the power of the Court to make a freezing order or ancillary order if the Court considers it is in the interests of justice to do so. 11 The rule reflects the formulation of the legal test expressed by Gleeson CJ in Patterson v BTR Engineering (Aust) Ltd (1980) 18 NSWLR 319 at 321-322 prior to the introduction of O 25: The remedy is discretionary, but it has been held that, in addition to any other considerations that may be relevant in the circumstances of a particular case, as a general rule a plaintiff will need to establish, first a prima facie cause of action against the defendant, and secondly, a danger that, by reason of the defendant's absconding, or of assets being removed out of the jurisdiction or disposed of within the jurisdiction or otherwise dealt with in some fashion, the plaintiff, if he succeeds will not be able to have his judgment satisfied. 12 In addition, Federal Court of Australia Practice Note CM 9, issued on 1 January 2010, supplements O 25A. It addresses the court's usual practice relating to the making of a freezing order. In particular, the Practice Note outlines, amongst other things, that, inter alia: the purpose of a freezing order is to prevent frustration or abuse of the process of the Court, not to provide security in respect of a judgment or order (para 5); a freezing order should be viewed as an extraordinary interim remedy because it can restrict the right to deal with assets even before judgment, and is commonly granted ex parte (para 6); the duration of an ex parte freezing order should be limited to a period terminating on the return date of the motion, which should be as early as practical (usually not more than a day or two) after the order is made, when the respondent will have the opportunity to be heard. The applicant will then bear the onus of satisfying the Court that the order should be continued or renewed (para 9); the order should exclude dealings by the respondent with its assets for legitimate purposes, in particular payment of reasonable legal expenses (para 12); as a condition of making a freezing order, the Court will normally require appropriate undertakings by the applicant to the Court, including the usual undertaking as to damages. If it is demonstrated that the applicant has or may have insufficient assets within the jurisdiction of the Court to provide substance for the usual undertaking as to damages, the applicant may be required to support the undertaking by providing security (para 16 and para 17); the applicant for a freezing order should, inter alia, provide information about the cause of action including the basis of the claim for substantive relief, the amount of the claim, and, if the application is made without notice to the respondent, the applicant's knowledge of any possible defence. 13 By O 25A r 5(4) the Court may make a freezing order and ancillary orders against a prospective judgment debtor if, relevantly: (a) The applicant has a 'good arguable case' on an accrued or prospective cause of action that is justiciable in the Court; and (b) The Court is satisfied, having regard to all the circumstances, that there is a danger that a prospective judgment will be wholly or partially unsatisfied because the assets of the prospective judgment debtor might be: (i) Removed from Australia; or (ii) Disposed of, dealt with or diminished in value. 14 The power conferred by O 25 FCR is discretionary and the usual balance of convenience considerations that arise on any application for interim restraint will apply.
Accrued/Prospective Cause of Action 15 The application seeks orders for payment of monies in respect of income tax assessed for the 2006 and 2008 tax years as well as declaratory relief in respect of administrative penalties. The Commissioner has treated RCF III, correctly, as a company for tax purposes, pursuant to Div 5 of the Income Tax Assessment Act 1936 (Cth) (the ITAA 1936). 16 The tax assessments were issued by the Commissioner on 1 November 2010 and Notices of Assessment were sent by ordinary prepaid post to RCF III on the same day. 17 A notice of assessment or a copy of it is conclusive evidence of the due making of the assessment and that the amount and all the particulars in the assessment are correct (FJ Bloemen Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 360 at 376; Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146). 18 Pursuant to s 255-1 and s 255-5(1) of Sch 1 to the Taxation Administration Act 1953 (Cth) (TAA 1953) and s 204(1) of the ITAA 1936, the assessments create a statutory debt from when the liabilities assessed became 'due and payable'. Once the time for payment set out in the Notices of Assessment has elapsed, the Commissioner is entitled to judgment against the taxpayers for the amount of the tax assessed. 19 The Commissioner submits that his claim is sufficient to found a freezing order where he has made an assessment and issued a notice of assessment, even though the tax is not due and payable until the date specified on the notice of assessment has elapsed. Income tax is 'due' and is a debt presently in existence when it is assessed and notice is served of the assessment, although it not payable before the date fixed by the ITAA 1936: Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1. 20 A freezing order may also be obtained when there is no primary proceeding before it because the period allowed for payment of the assessment has not elapsed. In Deputy Commissioner of Taxation (ACT) v Sharp (1988) 82 ACTR 1, Kelly J said: It seems to me that special circumstances obtain when the Commissioner of Taxation seeks a Mareva injunction in respect of an assessment which has issued but is not immediately payable because the time which must be allowed for the payment of the assessment has not elapsed. Such a debt has peculiar characteristics attaching to it because of the legislation which gives rise to it… All that the Commissioner need do to establish conclusively the existence of the debt is to produce the appropriate notice or copy of the notice of assessment. The debt is not payable in presenti but is a debt in existence-debitum in resenti, solvendum in futuro. In these circumstances it seems to me that the Commissioner is entitled to pray in aid the injunctive power of the court when he establishes that prima facie there is a real risk that the taxpayer will so deal with his assets as to render useless in whole or in part the judgment to which the Commissioner would be conclusively entitled upon the mere passage of time…. Nevertheless it seems to me that, where, as in this case, there is undoubtedly a debt owing even if it cannot immediately be the subject of an action and where the granting of the injunction would work no injustice, particularly where the debt may in any event be sued for within a very short time…, a Mareva injunction may be granted. Such an injunction should, of course, be returnable at the shortest possible notice…. 21 I am satisfied that as at the date of the motion the Commissioner has a good arguable case on a prospective cause of action within the meaning of O 25A r 5(1)(b) FCR. The Commissioner's claim is within the original jurisdiction of the Court by reason of s 39B(1A)(c) of the Judiciary Act 1903 (Cth).
Danger of Dissipation 22 The Commissioner claimed there was a real and not fanciful risk that RCF III would deal with or dispose of the shares held in Australia. 23 The evidence at this preliminary stage appears to point to the following matters in ([23] to [29]). Investigations undertaken by the Commissioner disclosed that RCF III has made significant investments in several different countries, often as a top ten shareholder. The investigation identified that RCF III had derived income in Australia from the assignment of what is described as a royalty to a company incorporated in Canada, in the period 1 July 2005 to 30 June 2005 (Royalty Transaction) and the disposal of 100 million ordinary shares held in St Barbara Mines Limited in the period 1 July 2007 to 30 June 2008 (St Barbara Transaction). 24 The Royalty Transaction involved RCF III procuring financial support for St Barbara, in exchange for St Barbara granting RCF III a royalty on its future gold production, which royalty, RCF III then sold. As a result of the Royalty Transaction RCF III realised assessable income for the 2006 income year of $12,968,000 and as a result of the St Barbara Transaction RCF III realised assessable income for the 2008 income year of approximately $58,000,000. 25 RCF III has not applied to be registered for a tax file number and has not lodged a tax return for any year of income in Australia. 26 The only assets of significant value held by RCF III in Australia that the Commissioner has been able to identify are shares in an unlisted Australian public company and listed shares traded on the ASX. Based on the Commissioner's investigations a view was formed of RCF III's holdings in companies quoted on the ASX. These are summarised by the Commissioner as follows: Company Number of Shares ASX Quoted price Value at Holding as at 29 October 2010 ($) Murchison Metals Ltd 18,450,000 1,550 28,597,500 Metallica Minerals Limited 1,473,290 0.305 449,353,45 Cape Alumina Limited 17,740,126 0.320 5,676,840.30 Kasbah Resources Limited 18,000,000 0.315 5,670,000 Alkane Resources Ltd 2,440,000 0.775 1,891,000 Total 42,284,693.75
27 The Commissioner's investigations also revealed that RCF III previously held 53,994,004 shares in Allied Gold Limited (Allied) which made an off market takeover of Australian Solomons Gold Limited (Solomons) in September and October 2009. As part of the transaction, RCF III accepted the offer to receive 0.85 ordinary shares in Allied in exchange for each 1 ordinary share in Solomons, thereby converting its shares in Solomons to shares in Allied, which subsequently and as part of the transaction, listed on the Toronto Stack Exchange. 28 RCF III also previously held shares in Australia Magnesium Corporation Ltd (Magnesium) and currently holds, according to the Commissioner, an estimated 98.6% interest in QMAG Pty Ltd, the value of which was not readily ascertainable by the Commissioner. 29 Over the relevant period and up until as recently as February 2010, RCF III has also been involved in the transfer of large sums of money into and out of Australia. 30 In summary, the Commissioner argued that there was a real capacity and therefore a real risk that RCF III would deal with or dispose of the shares held in Australia so that a potential judgment in favour of the Commissioner would be partly or wholly unsatisfied because of the following circumstances: (a) The highly liquid nature of the assets being traded on the ASX; (b) RCF III has not registered for a tax file number and has not returned the profits made from the St Barbara or Royalty Transactions or otherwise notified the Commissioner that it made them; (c) RCF III's affairs are managed by its general partner, RCA III LP in which Mr James McClement has a substantial shareholding. (d) Without knowledge of the Australian broker being used or the bank accounts to which the proceeds from the sale of assets will be deposited, the Commissioner has no other ability to collect the tax liability owed; (e) RCF III is resident in the Cayman Islands; (f) Cayman Islands does not have a bilateral collection policy or process with Australia; (g) Cayman Islands is not a member of or signatory to the UNCITRAL laws which facilitate the recognition of foreign revenue debts; and (h) Cayman Islands laws do not recognise foreign revenue debts. 31 The Commissioner also relies on the legal structure of RCF III and its related entities, the type of business in which RCF III is engaged, together with the tax mischief and argues that in all the circumstances there is an inference that there is a real risk of asset dissipation unless RCF III is restrained.
Balance of Convenience 32 I am satisfied for the reasons above that there is a risk of RCF III's Australian assets being dissipated or otherwise dealt with in frustration of a prospective judgment in favour of the Commissioner. In all the circumstances, I find that the balance of convenience favours the granting of orders as: (a) In the absence of a freezing order there is a real risk of asset dissipation. At the same time, RCF III's position is protected by the Commissioner's undertaking as to damages. (b) The Commissioner has a prima facie case as revealed in the documents filed supporting the application. (c) Because the nature of RCF III's assets, (so far as is known to the Commissioner), is mostly shares in listed companies, those assets are unlikely to be adversely affected by a freezing order, particularly given the terms of the freezing orders sought.
Service 33 The Commissioner sought leave for the freezing orders and the originating process to be served on RCF III out of the jurisdiction, and for the freezing orders to also be served on Mr McClements, described as an officer of the company based in Perth, Western Australia. The connection between Mr McClements and RCF III was described as follows: (a) Mr McClements and his wife own 100% of Jarrah LLC; (b) Jarrah LLC owns 33.3% of RCF Management LLC; (c) RCF Management LLC owns all of the shared in RCF Management Pty Ltd; (d) Mr McClements is a director of RCF Management Pty Ltd and is described as the Managing Partner of Resource Capital Funds; (e) Mr McClements, through Jarrah LLC, owns 25% of RCA II GP Limited; (f) RCA II GP Limited is the General Partner of RCA II LP; (g) Mr McClements owns 30% of RCA III GP LLC; (h) RCA III LLC is the general partner of RCA III LP; and (i) RCA III LP is the general partner of the respondent, RCF III. 34 I consider it appropriate in all the circumstances that the freezing orders are served on Mr McClements. It is in the best interests of the RCF III that its officers are aware of the case made against them as soon as possible.
Service Out of the Jurisdiction 35 Leave to serve the originating process outside the jurisdiction is required pursuant to O 8 r 3 FCR. Leave to serve any freezing order out of the jurisdiction is required pursuant to O 25A r 7 FCR. Those provisions are in the following terms: Order 8 … 3 Application for leave to serve originating process outside Australia (1) Service of an originating process on a person in a foreign country is effective for the purpose of a proceeding only if: (a) the Court has given leave under subrule (2) before the application is served; or (b) the Court confirms the service under subrule (5); or (c) the person served waives any objection to the service by entering an appearance in the proceeding. (2) The Court may give leave to a party to serve an originating process on a person in a foreign country in accordance with a convention or the law of the foreign country, on such terms and conditions as it considers appropriate, if the Court is satisfied that: (a) the Court has jurisdiction in the proceeding; and (b) the proceeding is of a kind mentioned in rule 2; and (c) the person seeking leave has a prima facie case for the relief claimed by the person in the proceeding. Note The law of a foreign country may permit service through the diplomatic channel or service by a private agent. (3) The evidence on an application for leave under subrule (2) must include the following: (a) the name of the foreign country where the person to be served is or is likely to be; (b) the proposed method of service; (c) a statement that the proposed method of service is permitted by: (i) if a convention applies - the convention; or (ii) in any other case - the law of the foreign country. (4) Nothing in this rule prevents the Court from giving leave to a person to give notice, in a foreign country, of a proceeding in the Court on the basis that giving the notice takes the place of serving the originating process in the proceeding. (5) If an originating process was served on a person in a foreign country without the leave of the Court, the Court may, by order, confirm the service if the Court is satisfied that: (a) paragraphs (2) (a), (b) and (c) apply to the proceeding; and (b) the service was permitted by: (i) if a convention applies - the convention; or (ii) in any other case - the law of the foreign country; and (c) the failure to apply for leave is sufficiently explained. Order 25A … 7 Service outside Australia of application for freezing order or ancillary order An application for a freezing order or an ancillary order may be served on a person who is outside Australia (whether or not the person is domiciled or resident in Australia) if any of the assets to which the order relates are within the jurisdiction of the Court. 36 The Commissioner submits that leave should be granted under O 8 r 3 because: (a) The Court has jurisdiction; (b) The proceeding falls within the lists of proceedings under O 8 r 2; and (c) The Commissioner has a good prima facie case. 37 It is argued that leave to serve any freezing order out of the jurisdiction should be granted because although the assets and subject of the order are within Australia, RCF III is normally resident outside of Australia. 38 I accept that this is an appropriate case for the originating process and freezing order to be served on RCF III in the Cayman Islands. Accordingly, the following orders were made:
Associate: Dated: 16 November 2010 ANNEXURE A PENAL NOTICE TO: RESOURCE CAPITAL FUND III LP IF YOU: (A) REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS ORDER FOR THE DOING OF THE ACT; OR (B) DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU TO ABSTAIN FROM DOING, YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT. ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHED. TO: RESOURCE CAPITAL FUND III LP This is a 'freezing order' made against you on 3 November 2010 by Justice McKerracher at a hearing without notice to you after the Court was given the undertakings set out in Schedule A to this order and after the Court read the affidavit listed in Schedule B to this order. THE COURT ORDERS: INTRODUCTION 1A. Pursuant to O 46 r 6(1) any documents lodged in the Registry are confidential until further order of the Court save as to judges of this Court.
(a) You must not remove from Australia or in any way dispose of, deal with or diminish the value of any of your assets in Australia ('Australian Assets') up to the unencumbered value of AUD$37,247,700.00 ('the Relevant Amount') other than to make payment to the Commissioner of Taxation. (b) If the unencumbered value of your Australian assets exceeds the Relevant Amount, you may remove any of those assets from Australia or dispose of or deal with them or diminish their value, so long as the total unencumbered value of your Australian assets still exceeds the Relevant Amount. (c) If the unencumbered value of your Australian assets is less than the Relevant Amount, and you have assets outside Australia ('ex-Australian assets'): (i) You must not dispose of, deal with or diminish the value of any of your Australian assets and ex-Australian assets up to the unencumbered value of your Australian and ex-Australian assets of the Relevant Amount; and (ii) You may dispose of, deal with or diminish the value of any of your ex-Australian assets, so long as the unencumbered value of your Australian assets and ex-Australian assets still exceeds the Relevant Amount. 7. For the purposes of this order, (1) your assets include: (a) all your assets, whether or not they are in your name and whether they are solely or co-owned; (b) any asset which you have the power, directly or indirectly, to dispose of or deal with as if it were your own (you are to be regarded as having such power if a third party holds or controls the asset in accordance with your direct or indirect instructions); and (c) the following shareholdings: Company Units Murchison Metals Ltd 18,450,000 Metallica Minerals Limited 1,473,290 Cape Alumina Limited 17,740,126 Kasbah Resources Limited 18,000,000
(2) the value of your assets is the value of the interest you have individually in your assets. PROVISION OF INFORMATION 8. Subject to paragraph 9, you must: (a) no later than 2 business days before the further hearing on the Return Date (or within such other time as the Court may allow) to the best of your ability inform the applicant in writing of all your assets world-wide, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of your interest in the assets; (b) no later than 2 business days before the further hearing on the Return Date (or within such other time as the Court may allow) to the best of your ability inform the applicant in writing of the name, address, fax number and email address of each of your Limited Partners as at 30 June 2006 and 30 June 2008. (c) within 7 working days after being served with this order, swear and serve on the applicant an affidavit setting out the above information. 9. (a) This paragraph 9 applies if you are not a corporation and you wish to object that compliance with paragraph 8 may tend to incriminate you or make you liable to a civil penalty; (b) This paragraph 9 also applies if you are a corporation and all of the persons who are able to comply with paragraph 8 on your behalf and with whom you have been able to communicate, wish to object that compliance may tend to incriminate them respectively or make them respectively liable to a civil penalty; (c) You must, at or before the further hearing on the return date (or within such further time as the Court may allow), notify the applicant in writing that you or all the persons referred to in (b) wish to take such objection and identify the extent of the objection; (d) If you give such notice, you need comply with paragraph 8 only to the extent, if any, that it is possible to do so without disclosure of the material in respect of which the objection is taken; and (e) If you give such notice, the Court may give directions as to the filing and service of affidavits setting out such matters as you or the persons referred to in (b) wish to place before the Court in support of the objection. EXCEPTIONS TO THIS ORDER 10. This order does not prohibit you from: (a) paying your reasonable legal expenses; (b) dealing with or disposing of any of your assets in the ordinary and proper course of your business for the purposes of paying business expenses bona fide and properly incurred; and (c) in relation to matters not falling within (a) or (b), dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so you give the applicant, if possible, at least two working days written notice of the particulars of the obligation. 11. You and the applicant may agree in writing that the exceptions in the preceding paragraph are to be varied. In that case the applicant or you must as soon as practicable file with the Court and serve on the other a minute of a proposed consent order recording the variation signed by or on behalf of the applicant and you, and the Court may order that the exceptions are varied accordingly. 12. (a) This order will cease to have effect if you: (i) pay the sum of AUD$37,247,700.00 into Court; or (ii) pay that sum into a joint bank account in the name of your solicitor and the solicitor for the applicant as agreed in writing between them; or (iii) provide security in that sum by a method agreed in writing with the applicant to be held subject to the order of the Court. (b) Any such payment and any such security will not provide the applicant with any priority over your other creditors in the event of your insolvency. (c) If this order ceases to have effect pursuant (a), you must as soon as practicable file with the Court and serve on the applicant notice of that fact. COSTS 13. The costs of this application are reserved to the judge hearing the application on the Return Date. PERSONS OTHER THAN THE APPLICANT AND RESPONDENT 14. Set off by banks This order does not prevent any bank from exercising any right of set off it has in respect of any facility which it gave you before it was notified of this order. 15. Bank withdrawals by the respondent No bank need inquire as to the application or proposed application of any money withdrawn by you if the withdrawal appears to be permitted by this order. 16. Persons outside Australia (a) Except as provided in subparagraph (b) below, the terms of this order do not affect or concern anyone outside Australia. (b) The terms of this order will affect the following persons outside Australia: (i) you and your directors, officers, employees and agents (except banks and financial institutions); (ii) any person (including a bank or financial institution) who: (a) is subject to the jurisdiction of this Court; and (b) has been given written notice of this order, or has actual knowledge of the substance of the order and of its requirements; and (c) is able to prevent or impede acts or omissions outside Australia which constitute or assist in a disobedience of the terms of this order; and (iii) any other person (including a bank of financial institution), only to the extent that this order is declared enforceable by or is enforced by a court in a country or state that has jurisdiction over that person or over any of that person's assets. 17 Assets located outside Australia Nothing in this order shall, in respect of assets located outside Australia, prevent any third party from complying or acting in conformity with what it reasonably believes to be its bona fide and properly incurred legal obligations, whether contractual or pursuant to a court order or otherwise, under the law of the country or state in which those assets are situated or under the proper law of any contract between a third party and you, provided that in the case of any future order of a court of that country or state made on your or the third party's application, reasonable written notice of the making of the application is given to the applicant. SCHEDULE A UNDERTAKINGS GIVEN TO THE COURT BY THE APPLICANT (1) The applicant undertakes to submit to such order (if any) as the Court may consider to be just for the payment of compensation (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the order. (2) As soon as practicable, the applicant will file and serve upon the respondent copies of: (a) this order; (b) the application for this order for hearing on the return date; (c) the following material in so far as it was relied on by the applicant at the hearing when the order was made: (i) affidavits (or draft affidavits); (ii) exhibits capable of being copied; (iii) any written submission; and (iv) any other document that was provided to the Court. (d) a transcript, or, if none is available, a note, of any exclusively oral allegation of fact that was made and of any exclusively oral submission that was put, to the Court; (e) the originating process, or, if none was filed, any draft originating process produced to the Court. (3) As soon as practicable, the applicant will cause anyone notified of this order to be given a copy of it. (4) The applicant will pay the reasonable costs of anyone other than the respondent which have been incurred as a result of this order, including the costs of finding out whether that person holds any of the respondent's assets. (5) If this order ceases to have effect1 the applicant will promptly take all reasonable steps to inform in writing anyone to who has been notified of this order, or who he has reasonable grounds for supposing may act upon this order, that it has ceased to have effect. (6) The applicant will not, without leave of the Court, use any information obtained as a result of this order for the purpose of any civil or criminal proceedings, either in or outside Australia, other than this proceeding. (7) The applicant will not, without leave of the Court, seek to enforce this order in any country outside Australia or an order conferring a charge or other security against the respondent or the respondent's assets. SCHEDULE B AFFIDAVITS RELIED ON Name of Deponent Date affidavit made Aris Zafiriou 1 November 2010 NAME AND ADDRESS OF APPLICANT'S LEGAL REPRESENTATIVES The applicant's legal representatives are: Australian Government Solicitor Level 19 Exchange Plaza 2 The Esplanade Perth WA 6000 Reference: 10060757 Fax: 08 9268 1735 Tele: 08 9268 1105 Email: jonathan.jacobson@ags.gov.au
Commissioner of Taxation
Resource Capital Fund III LP
(1981) 150 CLR 1
(2008) 237 CLR 146
(1981) 147 CLR 360
(1980) 18 NSWLR 319