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[2013] FCA 670
Federal Court of Australia
2013-06-25
Kitto J, Rares J
Original judgment source is linked above.
REASONS FOR JUDGMENT (REVISED FROM THE TRANSCRIPT) 1 This is an application to discharge freezing orders made ex parte by a judge of the Court on 20 June 2013 in proceedings that the Deputy Commissioner of Taxation then commenced on that day against Gary and Debbie Binetter. The application is made on the basis that his Honour was not fully informed of the consequence that the notices of assessment had not matured by the time of the hearing into a formal notice of assessment in the sense discussed by Kitto J in Batagol v Federal Commissioner of Taxation (1963) 109 CLR 243 at 251-252. That was because, Mr and Ms Binetter asserted, the notices had been posted the previous day, but were unlikely to have been delivered in the ordinary course of post at the time his Honour was dealing with the matter.
Background 2 His Honour stated at the commencement of the ex parte hearing that began at about 2:30 pm on 20 June 2013, that he had had an opportunity to read the affidavit relied on by the Commissioner and had looked at the draft orders. The transcript appears to reveal that his Honour had been referring to the text of the affidavit but not its very bulky exhibit consisting of a lever arch folder with 81 tabs. The text of the affidavit, among other matters, dealt with the amended assessments on which the Commissioner was seeking to proceed. It stated that some were due on 15 July 2013 and others on 8 July 2013. During the course of discussion between counsel then appearing for the Commissioner, counsel formally read the affidavit and tendered the exhibit. She told his Honour that she had prepared a two page document outlining the relevant legislative provisions and that "there was a debt currently payable to the Commissioner". The exchange continued: "HIS HONOUR: Well, there's a debt because you have issued a notice of assessment. MS MORGAN: Well, then I might not - your Honour might not need that. HIS HONOUR: Is that not right? MS MORGAN: That's exactly right, your Honour. It's just an unusual - as your Honour would be aware, it's an unusual application for a freezing order when the usual words that people use are due or payable but it's a unique case where it's - a debt is due in this case. HIS HONOUR: All right. Perhaps, I'm --- MS MORGAN: But, yes, that's what --- HIS HONOUR: Perhaps I'm missing something. Perhaps my appreciation is too simplistic. MS MORGAN: No, your Honour, is not missing anything." 3 His Honour asked counsel to identify what was the principle in the bundle of authorities she had prepared. She said that they addressed the issue where there was a "prospective judgment" that fitted within the application that the Commissioner was making under r 7.35(1)(b) of the Federal Court Rules 2011 (Cth). She said that there were cases that held that the fact that amended assessments had issued was sufficient to establish an arguable case for the purpose of the Rules. His Honour said that he could see from the affidavit that in the period since early January 2013, shortly before Mr Binetter resigned his employment: "… there has been a systematic movement of money including moneys held in accounts by the first and second respondents out of Australia to the point where, so far as the evidence before me shows at the moment, there is no money left in the relevant account in Australia." The evidence showed that last week Mr Binetter was apparently in Israel.
Submissions 4 Mr Binetter and Ms Binetter argued that the Commissioner had failed to explain, fully or properly, the inchoate nature of the unserved assessments at the time of the hearing on 20 June 2013, in the sense that until they were served, nothing was due and payable. They contended that this failure was a breach of the Commissioner's duty of full and frank disclosure that is required on a ex parte application.
Consideration 5 There is no doubt that the duty of full and frank disclosure is of fundamental significance in the administration of justice, as has been explained in many authorities, including: Thomas A Edison Limited v Bullock (1912) 15 CLR 679 at 681-682 per Isaacs J and Garrard v Email Furniture Pty Ltd (1993) 32 NSWLR 662 at 676-677 per Mahoney AP with whom Clarke JA agreed; see also Walter Rau Neusser Oel Und Fett AG v Cross Pacific Trading Ltd [2005] FCA 955 at [38], [47] and [49] per Allsop J. 6 It is not realistic, in my opinion, to read the transcript of the argument before his Honour divorced from the text of the affidavit which his Honour had clearly read. A freezing order can be made under r 7.35(1)(b) where an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in the Court. There can be no doubt that the claims on the amended notices of assessment that had been issued, for which his Honour made the freezing order to preserve assets of not less than $1,269,539.07, were justiciable in the Court and that they constituted a good prospective cause of action even though they may not have been served as at the time of the hearing of the application. 7 I am not satisfied that it would have made any difference at all to his Honour, in the circumstances, for the debate to have made clearer to his Honour (to the extent that it may not have been clear) that the notices of assessment were not likely to have been effective at that time or until they were deemed to have been served in the ordinary course of post under the Acts Interpretation Act 1901 (Cth) or the Evidence Act 1995 (Cth). That deemed service would have occurred within a day or two of the hearing last week. His Honour understood that the Commissioner was seeking to persuade him that the evidence established that he had a case sufficient to support a prospective cause of action that would have been justiciable in this Court. In my opinion, in the circumstances before his Honour, the likelihood of the assessments becoming due and payable on day or days shortly after the application was a matter of no material relevance (if his Honour was not fully aware of that matter) to the situation in which his Honour was asked to make the freezing order. 8 For this reason I am not satisfied the Commissioner failed to discharge his duty of full and frank disclosure. I dismiss the interlocutory application. I order the respondents, applicants on the interlocutory application, to pay the Commissioner's costs. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.
Deputy Commissioner of Taxation
Binetter