Deputy Commissioner of Taxation v Hawach

1. Judgment be entered in favour of the applicant pursuant to r 26.01 of the Federal Court Rules 2011 (Cth) against the first respondent in the amount of $2,267,487.83.
2. The first respondent pay the costs of the application. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

PAGONE J: 1 The Deputy Commissioner of Taxation seeks summary judgment against Ms Victoria Hawach pursuant to r 26.01 of the Federal Court Rules 2011 (Cth) ("the Rules") or alternatively default judgment against her pursuant to r 5.23 of the Rules. The Commissioner contends that Ms Hawach owes the Commissioner $2,267,487.83 as at 14 May 2017. 2 The proceeding was commenced by originating application in which the Commissioner sought an interim freezing order and substituted service. The Court made an interim freezing order on 12 October 2016 and made orders for substituted service. Ms Hawach was served with the originating application on 13 October 2016 pursuant to orders made on 12 October 2016 as varied on 14 October 2016 in respect of the time for compliance with the orders which had been made on 12 October 2016. Interlocutory process was served upon Ms Hawach on 1 December 2016 pursuant to sub-paragraph (a) of Article 5 of the Hague Convention on service. There is also evidence before the Court of Ms Hawach having notice of these proceedings by her having provided instructions to a legal practitioner, Ms Jana Whitby, to execute a consent order giving effect to a settlement between the Commissioner and the second and third respondents in the proceeding. There is also evidence of Ms Hawach having sent an email from one of the email addresses to which documents were served upon her on 24 October 2016. That email was sent to Mr Louis Wehbe who provided it to Mr Vorreiter who is a solicitor employed by the solicitor on the record for the Commissioner. 3 The Court may give default judgment against a party who is in default within the meaning of Division 5.2 of the Rules. Rule 5.22 provides for when a party is in default. Ms Hawach was required, but has failed, to file a notice of address for service in accordance with rr 5.02 and 11.06 of the Rules and was required, but has failed, to attend at court on any of the return dates as required by rr 5.01 and 5.04(2). Each of these constitutes a default within the meaning of r 5.22 and permits the court to order default judgment pursuant to r 5.23(2)(b) in respect of a claim by the Commissioner for a debt or liquidated damages. 4 The Commissioner seeks in the alternative summary judgment pursuant to r 26.01 of the Rules and s 31A of the Federal Court of Australia Act 1976 (Cth). Rule 26.01 permits the Court to grant summary judgment against a party which has no reasonable prospects of successfully defending a proceeding. Section 31A of the Federal Court of Australia Act provides that the Court may give judgment for one party against another in relation to the whole or any part of the proceeding if the first party is prosecuting the proceeding and the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding in respect of which summary judgment is sought. 5 The Commissioner submits that Ms Hawach has no reasonable prospects of successfully defending the claim for $2,249,562.47: see Deputy Commissioner of Taxation v Vasiliades [2015] FCA 412; Commissioner of Taxation v Ornelas [2016] FCA 457. The Commissioner relies in that regard on certificates issued pursuant to s 255-45 of Schedule 1 of the Taxation Administration Act 1953 (Cth) ("the Administration Act") as prima facie evidence of the matters the Commissioner needs to establish to obtain judgment, and in respect of which there is no contrary evidence. The provisions in the schedule to the Administration Act facilitates the recovery by the Commissioner of amount arising under tax legislation. Section 255-5 provides that an amount of a "tax-related liability" that is due and payable is a debt due to the Commonwealth and is payable to the Commissioner. Section 255-1 identifies a tax-related liability as a pecuniary liability to the Commonwealth arising directly under a taxation law. Section 255-10 contains a table of tax-related liabilities which includes liabilities for income tax (Item 37), general interest charge (Item 70), shortfall interest charge on income tax (Item 37AA) and administrative penalties (Item 140). 6 The certificates issued pursuant to s 255-45 of Schedule 1 of the Administration Act may be relied upon by the Commissioner as prima facie evidence "in a proceeding to recover an amount of a tax-related liability". The certificates in this case identify the amounts comprising the claims made by the Commissioner in the proceedings as including $1,284,963.85 for income tax liabilities for the income year ended 30 June 2012, $285,001.21 for shortfall interest charges for the income year ended 30 June 2012, $642,481.90 in penalties for the period 1 July 2011 to 30 June 2012 and in respect of each of these accounts, general interest charge to 14 May 2017 of, respectively, $97,457.15, $22,233.44, and $50,121.14. The aggregate of those amounts was reduced to the amount claimed by credits totalling $114,770.86 received by the Commissioner including $100,000 received in settlement of these proceedings with others who had been respondents. Section 255-45(2)(e) provides that the certificate may state the sums specified in the certificates as being debts due and payable by a person. 7 The material before the Court is sufficient to establish that Ms Hawach has no reasonable prospects of defending the Commissioner's proceedings for recovery of the amounts due as pecuniary liabilities. Accordingly, there will be an order in favour of the Commissioner in the amount claimed. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Pagone.