Deputy Commissioner of Taxation v Leaver

1. Pursuant to r 39.05(f) of the Federal Court Rules 2011, the judgment given on 14 October 2015 be set aside.
2. The undertakings given to the Federal Court on 11 June 2015 by the first, third, fourth, fifth, sixth, seventh, eighth, ninth, tenth, eleventh and twelfth respondents be released and that the Court notes their release.
3. The proceedings as against the first, third, fourth, fifth, sixth, seventh, eighth, ninth, tenth, eleventh, twelfth and thirteenth respondents be dismissed with no order as to costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

(Delivered ex tempore, revised from transcript) WIGNEY J: 1 On 14 October 2015, the Court made the following orders in this matter: (a) Judgment for the applicant against the first respondent, John Leaver, in the sum of $25,875,657.91; and (b) As between the applicant and the first respondent, each party to pay his own costs. 2 That judgment was entered by consent. The judgment debt represented amounts owing under amended assessments issued to Mr Leaver by the Deputy Commissioner of Taxation. The Deputy Commissioner had also sought freezing orders in the proceeding against a number of persons and entities related to Mr Leaver. A number of those persons and entities gave undertakings to the Court, with the result that the Deputy Commissioner did not press for the making of freezing orders against them. 3 Following the entry of judgment, the Deputy Commissioner and Mr Leaver engaged in settlement negotiations in relation to Mr Leaver's indebtedness. It was somewhat unusual that those negotiations occurred only after the entry of judgment. In any event, for whatever reason, that is what occurred. 4 The negotiations between the Deputy Commissioner and Mr Leaver were fruitful. They entered into a settlement agreement. Pursuant to the terms of that agreement, Mr Leaver agreed to pay the Deputy Commissioner a settlement sum by instalments. Upon receipt of the final instalment, the Deputy Commissioner agreed not to oppose Mr Leaver's application to have the judgment against him set aside. The parties who had given undertakings to the Court in lieu of freezing orders were also to be released, by consent, from those undertakings. 5 Mr Leaver has paid the final instalment of the settlement sum. He now applies for the judgment against him to be set aside pursuant to r 39.05(f) of the Federal Court Rules 2011. The Deputy Commissioner consents to the setting aside of the judgment. The Deputy Commissioner also consents to the release of those parties who gave undertakings from those undertakings. 6 Rule 39.05(f) provides as follows The Court may vary or set aside a judgment or order after it has been entered if: ….. (f) the party in whose favour it was made consents 7 At the hearing of the application, both the Deputy Commissioner and Mr Leaver appeared to proceed on the assumption that the setting aside of the judgment was justified simply by the fact that they had agreed, between themselves, that the judgment debt had effectively been discharged and that the Deputy Commissioner consented to the setting aside. Nothing more need be demonstrated. That assumption was not necessarily correct. 8 In Perre v Apand Pty Ltd [2004] FCA 1220, Selway J was called upon to consider whether a sealed final should be set aside under the equivalent rule in the former Federal Court Rules (O 35 r 7(2)(f)). His Honour observed (at [11]) that, even if the party affected consents to a final sealed order being set aside, the order should only be set aside "where it is just and appropriate to do so by reason of the 'exceptional circumstances of the case'". His Honour cited, in support of that proposition, the judgment of the High Court in De L v Director-General, New South Wales Department of Community Services (No 2) (1997) 190 CLR 207 at 215. 9 De L, did not concern the setting aside of a final judgment or order by consent. It concerned an application to reopen a final order that had been made in relation to costs. That application was opposed. The plurality (Toohey, Gaudron, McHugh, Gummow and Kirby JJ) said (at 215) The power of this Court to reopen its judgments or orders is not in doubt. The Court may do so if it is convinced that, in its earlier consideration of the point, it has proceeded "on a misapprehension as to the facts or the law", where "there is some matter calling for review" or where "the interests of justice so require". It has been said repeatedly that a heavy burden is cast upon the applicant for reopening to show that such an exceptional course is required "without fault on his part", ie without the attribution of neglect or default to the party seeking reopening. By such expressions of the power to reopen final orders, courts seek to recognise competing objectives of the law. On the one hand, there is the principle of finality of litigation which reinforces the respect that should be shown to orders, final on their face, addressed to the world at large and upon which conduct may be ordered reliant upon their binding authority. On the other hand, courts recognise that accidents and oversights can sometimes occur which, unrepaired, will occasion an injustice. In the case of a final court of appeal, such as this Court, that injustice may be irremediable, unless the Court itself, acting promptly, is persuaded to reopen its orders so as to afford relief in the exceptional circumstances of the case. Footnotes omitted 10 It may readily be accepted that the principle of finality of litigation is an important principle and objective of the law. It may also readily be accepted that, in many cases, a court would be unwilling to set aside a final judgment or order unless there were exceptional circumstances. In my view, however, it does not necessarily follow that exceptional circumstances are required in every case before a final order or judgment can be set aside. That is particularly the case where the party in whose favour the order or judgment was made consents. Much will depend on the particular facts and circumstances of the case. Equally, however, it should not simply be assumed that the Court will necessarily set aside a final judgment simply because it is by consent. The Court retains a discretion not to set aside the judgment. There might well be cases where the Court would refuse to set aside a final judgment even though it was by consent. 11 This, however, is not such a case. There are sound reasons why, having regard to the particular facts and circumstances of the case, the judgment should be set aside. It may reasonably be inferred that the setting aside of the judgment was an important consideration for Mr Leaver in his entering into an agreement with the Deputy Commissioner in relation to the payment of the judgment debt. One can readily understand why that would be so. The agreement was no doubt facilitated by the willingness of the Deputy Commissioner to consent to the setting aside of the judgment. Perhaps more importantly, the setting aside of the judgment in this matter does not in any way conflict with the important objective of finality in litigation. That is because the orders sought by the parties include an order that, upon the judgment being set aside, the proceeding be dismissed. There will, therefore, be finality. Had an agreement not been reached between the parties, there may well have been ongoing litigation in relation to the enforcement of the judgment. 12 In all the circumstances, it is in the interests of justice that the judgment be set aside. As there is no judgment debt, and Mr Leaver has, by agreement with the Deputy Commissioner, discharged his indebtedness in respect of the assessments that were the subject of the proceeding, it is also appropriate to release the parties who gave undertakings from those undertakings. 13 The orders of the Court are as follows: