Deputy Commissioner of Taxation v Miraki

Federal Court of Australia|2021-11-04|Before: Mr P, Wigney J, Thawley J

The parties confer within 3 days with a view to agreeing orders to give effect to these reasons and as to costs.
The proceedings are listed at 9am on 10 November 2021 for argument in respect of any outstanding dispute as to appropriate orders to give effect to these reasons and in relation to any dispute as to costs.
Reserve liberty to the parties to apply on 24 hours' notice. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

INTRODUCTION 1 These reasons for judgment deal with the second of two interlocutory applications heard consecutively on 28 October 2021. The first interlocutory application was the applicant's (the Deputy Commissioner of Taxation's) application for summary judgment against the respondent (Ms Miraki) under r 26.01(1) of the Federal Court Rules 2011 (Cth). Summary judgment was granted: Deputy Commissioner of Taxation v Miraki (Summary Judgment) [2021] FCA 1361. 2 The second interlocutory application was Ms Miraki's interlocutory application dated 10 August 2021. At the beginning of the hearing of that interlocutory application, Ms Miraki sought leave to amend the interlocutory application as had been foreshadowed in her written submissions filed before the hearing. The Commissioner opposed leave to amend the interlocutory application. During the course of argument about whether leave should be granted the parties reached agreement in relation to some of the matters proposed to be the subject of the amendments. I granted leave to Ms Miraki to file and rely upon the proposed amended interlocutory application in a form reflecting, amongst other things, the fact that agreement had been reached in relation to some of the issues: Deputy Commissioner of Taxation v Miraki (Application to Amend) [2021] FCA 1362. 3 These reasons for judgment address Ms Miraki's amended interlocutory application. In opening, Ms Miraki put the case intended to be advanced by what was then the proposed amended interlocutory application in the following way: (1) The first issue was said to be whether the Court should accept an undertaking in the form proposed by Ms Miraki rather than that she be subject to the freezing orders made by Wigney J on 22 March 2021 as subsequently extended and varied. It should be noted at this point that the form of undertakings proposed by Ms Miraki departed from the form of the freezing orders (as varied). Accordingly, the issue was not whether the freezing orders should be replaced by an undertaking in the same form, but whether the freezing orders should be replaced by an undertaking in a different form. (2) The second issue was said to be whether, in the alternative, the freezing orders should be discharged on the basis that there was no danger of dissipation of assets. (3) The third issue was whether, if the freezing orders were not to be discharged, the following variations should be made: (a) an order requiring the Commissioner to take steps to seek to remove certain notifications or "notations" recorded by the Registrar General on folios relating to real property owned by Ms Miraki and forming part of the Register; (b) an order for payment to Ms Miraki of an amount of $48,000 on account of Ms Miraki's (past) reasonable living expenses out of monies which had been paid into Court; (c) an order for payment of an amount of $265,306 (plus further interest) to Mr Taylor out of moneys paid into court by Ms Miraki in relation to loans totalling $200,000 said to have been made by Mr Taylor before the freezing orders had been made; (d) an order which would have the effect of permitting Ms Miraki to pay reasonable legal expenses, if any, which might be incurred: (i) should she bring proceedings against the Registrar General for removal of the notifications on title (referred to at (a) above); (ii) in the event Mr Taylor commenced proceedings against Ms Miraki for repayment of the alleged loans and interest. 4 It was in the context of the issues having been identified in this way that leave was granted to Ms Miraki to rely upon the amended interlocutory application.

BACKGROUND 5 By an originating application dated 18 March 2021, the Commissioner applied to the Court on 22 March 2021 to freeze Ms Miraki's assets pursuant to r 7.32 and 7.35 of the Rules. The Commissioner's application was made in the absence of Ms Miraki. The Commissioner relied on an affidavit of Ms Olena Newman, an employee of the Australian Taxation Office (ATO), affirmed on 18 March 2021. The Commissioner also relied on written submissions dated 19 March 2021. That material was also relied upon in respect of the amended interlocutory application the subject of these reasons for judgment. 6 As explained in Ms Newman's affidavit, the ATO commenced a review of the taxation affairs of Ms Miraki on 18 April 2018. The review covered the activities of Ms Miraki's husband, Mr Miraki-Ardestani, and a number of entities controlled by him (Operating Entities). The Operating Entities were engaged in the business of painting and decorating commercial property. 7 At the conclusion of the ATO's review, the ATO commenced an audit into Ms Miraki's income tax affairs for the years 30 June 2014 to 30 June 2017. The audit commenced on 18 April 2019. The results of the audit were outlined in a document entitled "Reasons for Decision". That document set out the reasons why the Commissioner had formed the view that Ms Miraki was liable to income tax, penalties and interest totalling a little under $6 million. Assessments were issued to give effect to this view and later served on Ms Miraki. 8 Ms Newman described her understanding of the content of the Reasons for Decision in a way which both parties accepted was accurate in the following way: (a) as part of the ATO's investigation, it obtained records from the database of the Australian Transaction Reports and Analysis Centre (AUSTRAC) ([48] and [49] of page 819). (b) officers from the ATO undertook an analysis of the AUSTRAC records referred to in the preceding paragraph and found that the analysis indicates that funds totalling about $4,302,587 were withdrawn and / or transferred from accounts held by Finish Corp Commercial Painters and Barton Contractors Australia, of which the Respondent was a signatory, during the period 1 July 2014 to 30 June 2017. The results of that analysis have been summarised at [48] and [49] of page 819. (c) as part of the ATO's investigation, it obtained records from the Commonwealth Bank of Australia (CBA) (pages 817 and 818). A schedule of CBA accounts of which records were obtained are at Annexure A. The records obtained from CBA between pages 582 and 772 are in spreadsheet form. From my review of the spreadsheets at pages 582 to 772, the ATO has interspersed comments throughout as part of its investigation and analysis. I have been advised by an ATO officer involved in the investigation, that the information produced by CBA in the spreadsheets at pages 582 to 772 remains and is unchanged. In the spreadsheets at pages 582 to 772, the CBA had produced information in columns from 'Date' to 'Balance' and in columns from 'Status' to 'Trace Acct No'. Any colouring or insertion of columns other than the columns referred to in the preceding sentence into the spreadsheet has been undertaken by the ATO as part of its analysis of the records produced by CBA. (d) officers from the ATO undertook an analysis of the CBA records referred to in the preceding paragraph and found that it indicates that funds: (i) totalling about $6,855,605 were transferred into accounts in the name of the Respondent during the period 1 July 2013 to 30 June 2017 (page 820). (ii) totalling about $1,242,537 were transferred out from accounts in the name of the Respondent during the period 1 July 2013 to 30 June 2017 (page 820). (iii) totalling about $1,768,189 were transacted as private expenditure by the Respondent in relation to accounts in her name during the period 1 July 2013 to 30 June 2017 (page 820). (iv) totalling about $2,519,240 were transferred into credit card accounts in the name of the Respondent from accounts held by Finish Corp Commercial Painters and Barton Contractors Australia during the period 1 July 2013 to 30 June 2017 (page 820). (v) totalling about $857,971 were transferred out from credit card accounts in the name of the Respondent during the period 1 July 2013 to 30 June 2017 (page 820). (vi) totalling about $1,417,972 were transacted as private expenditure by the Respondent in relation to credit card accounts in her named [sic] during the period 1 July 2013 to 30 Jun [sic] 2017 (page 820). (e) the results of the analysis referred to in paragraphs 39(d)(d)(i) to 39(d)(d)(iii) has been summarised at page 820. (f) the results of the analysis referred to in paragraphs 39(d)(iv) to 39(d)(vi) has been summarised at page 820. (g) in a meeting with ATO Officers on 16 October 2018, Mr Miraki and / or his legal representative provided the following information: (i) any records of Barton Contractors Australia on a computer were taken and possibly destroyed (page 823). There were no internal accounting records to record transactions (page 823). (ii) there was some record keeping regarding the affairs of Barton Contractors Australia (page 823). However, the management of those records was poor (page 823). (iii) funds in the accounts of Finish Corp Commercial Painters and / or Barton Contractors Australia have been used to pay for personal expenses (page 823). It was acknowledged that tax is payable on the money used for personal expenses (page 823). (iv) large payments from the accounts of Finish Corp Commercial Painters and/ or Barton Contractors Australia were made to third parties, including the CFMEU, as inducements or requisite payments to procure work (page 823). Outside of the CFMEU, the identity of third parties have not been disclosed (page 823). (h) as at the date the RFD was issued, and as at the date of this affidavit, the Respondent or Mr Miraki have not provided the ATO with any financial statement or other accounting records of Finish Corp Commercial Painters or Barton Contractors Australia (page 822). 9 The Commissioner's written submissions in support of the application for freezing orders, heard and determined by Wigney J on 22 March 2021, included (footnotes referencing the evidence in support of the submissions have been omitted): [7] At various times, [Ms Miraki] was a director of at least one of the Operating Entities. Two of them have since been in liquidation and are now deregistered. [Ms Miraki] and her husband were variously signatories to accounts in the name of the Operating Entities from time to time. [8] During the financial years ending 30 June 2014 to 20 June 2017 (Relevant Years), significant amounts of money were withdrawn or transferred by [Ms Miraki] or her husband from the bank accounts of the Operating Entities. For example, in the financial year ending 30 June 2017, $2,066,917 was withdrawn from accounts of Finish Corp Commercial Painters Australia Pty Ltd and Barton Contractors Australia Pty Ltd. [9] An audit was ultimately conducted by the Commissioner. As part of the audit, the Commissioner obtained bank statements and transaction records for the bank accounts of [Ms Miraki], her husband and the Operating Entities. However, neither [Ms Miraki] nor her husband has provided the Commissioner accounting records or any other financial documents concerning the operations of the Operating Entities. [10] The bank records, records of expenditures and cash withdrawals demonstrate that the monies received by the Operating Entities were used by [Ms Miraki] and her husband for personal expenditure, but were not returned as income. The amounts that were returned over the Relevant Years were minimal when compared with the amounts of money withdrawn or transferred from the bank accounts of the Operating Entities and used by [Ms Miraki] and her husband. 10 The written submissions contained the following summary of argument in favour of making the freezing orders: [23] For the following reasons, the Court would be satisfied that there is a danger that [Ms Miraki] would dissipate or diminish the value of her assets to defeat any judgment in favour of the Commissioner: 23.1. [Ms Miraki] has both "the means and the motive" (Chemical Trustee No 4 at [24]) to dissipate her assets. The starting point, in terms of the relevant motive, is the size of the debt, which, in this case, is substantial, especially when measured against the known assets of [Ms Miraki]. 23.2. Furthermore, [Ms Miraki's] practice and knowledge of using multiple bank accounts for regular transfers underlies the concern that she has the experience to dissipate assets. 23.3. Moreover, it is not known to the Commissioner whether she has access to other bank accounts, through which funds, which are highly liquid, may be dissipated. There is also a risk that [Ms Miraki] may seek to transfer her interest in real property in Australia or to encumber it further. Her proven ability to borrow against real property and her relationships heighten the risk of dissipation through further encumbrance of her real property. 23.4. [Ms Miraki] has received large sums from the bank accounts of the Operating Entities, on which she has paid no tax for a number of years. The Court would accept that the aforementioned matters support a submission that [Ms Miraki] has engaged in behaviour that may be described as tax mischief over a lengthy period. That behaviour supports an inference that [Ms Miraki] would not hesitate to protect her assets from any judgment in the Commissioner's assets by dissipating them if she is not restrained. 11 On 22 March 2021, after the ex parte hearing, Wigney J made various orders, including an order pursuant to rules 7.32 and 7.33 of the Rules against Ms Miraki in the terms set out in Annexure "A" to the orders. Annexure "A" (the freezing orders) was in the following form: THE COURT ORDERS: Introduction 1. Subject to the next paragraph, this order has effect up to and including 30 March 2021 (the Return Date). On the Return Date at 9.30am there will be a further hearing in respect of this order before the Duty Judge. 2. Anyone served with or notified of this order, including you, may apply to the Court at any time to vary or discharge this order or so much of it as affects the person served or notified. 3. In this order: (e) 'applicant', if there is more than one applicant, includes all the applicants; (f) 'you', where there is more than one of you, includes all of you and includes you if you are a corporation; (g) 'third party' means a person other than you and the applicant; (h) 'unencumbered value' means value free of mortgages, charges, liens or other encumbrances. 4. If: (a) you are ordered to do something, you must do it by yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions. (b) you are ordered not to do something, you must not do it yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions or with your encouragement or in any other way. Freezing Of Assets 5. (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$5,844,558.03 (the Relevant Amount). (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. 6. For the purposes of this order, (i) your assets include: (i) all your assets, whether or not they are in your name and whether they are solely or co-owned; (ii) 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 (iii) the following assets in particular: (A) the property identified in Schedule C to these Orders or, if it has been sold, the net proceeds of the sale; and (B) any money in the bank accounts identified in Schedule D to these Orders. (j) the value of your assets is the value of the interest you have individually in your assets. Provision of Information 7. Subject to paragraph 8, you must: (a) at or before the further hearing on the Return Date (or within such further time as the Court may allow) to the best of your ability inform the applicant in writing of all your assets in Australia, 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) within 7 working days after being served with this order, swear and serve on the applicant an affidavit setting out the above information. 8. (a) This paragraph (8) applies if you are not a corporation and you wish to object to complying with paragraph 7 on the grounds that some or all of the information required to be disclosed may tend to prove that you: (i) have committed an offence against or arising under an Australian law or a law of a foreign country; or (ii) are liable to a civil penalty. (b) This paragraph (8) also applies if you are a corporation and all of the persons who are able to comply with paragraph 7 on your behalf and with whom you have been able to communicate, wish to object to your complying with paragraph 7 on the grounds that some or all of the information required to be disclosed may tend to prove that they respectively: (i) have committed an offence against or arising under an Australian law or a law of a foreign country; or (ii) are liable to a civil penalty. (c) You must: (i) disclose so much of the information required to be disclosed to which no objection is taken; and (ii) prepare an affidavit containing so much of the information required to be disclosed to which objection is taken, and deliver it to the Court in a sealed envelope; and (iii) file and serve on each other party a separate affidavit setting out the basis of the objection. Exceptions To This Order 9. This order does not prohibit you from: (k)[a] paying up to $2000 per week on your ordinary living expenses; (l)[b] paying your reasonable legal expenses in connection with the application; (m)[c] dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred; (n)[d] in relation to matters not falling within (k)[a], (l)[b] or (m)[c] above 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; and (o)[e] paying the Deputy Commissioner of Taxation. 10. 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. 11. (a) This order will cease to have effect if you: (i) pay the sum of $5,844,558.03 into Court; or (ii) pay the sum of $5,844,558.03 into a joint bank account in the name of your lawyer and the lawyer 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 [to] 11(a) above, you must as soon as practicable file with the Court and serve on the applicant notice of that fact. Costs 12. The costs of this application are reserved to the Court hearing the application on the Return Date. Persons Other Than the Applicant And Respondent 13. 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. 14. 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. 12 By consent of the parties, the operation of the freezing orders made by Wigney J was extended by Perry J on 29 March 2021. The orders have been subsequently varied by consent by orders made on 16 April 2021, 26 April 2021, 14 May 2021, 24 May 2021 and 9 September 2021. 13 The operation of the freezing orders, as varied, was extended until further order on conclusion of the application for summary judgment, having regard to the fact that the granting of summary judgment might otherwise have been seen to bring the freezing orders to an end - see: Fatimi Pty Ltd v Bryant [2002] NSWSC 750 at [226] to [234] (Campbell J).

SHOULD THE FREEZING ORDER BE DISCHARGED? 14 In circumstances where Ms Miraki contended that there was no sufficient danger of dissipation of assets to warrant a freezing order being made (or continued), it is appropriate to deal first with the question of whether the freezing orders should be discharged, notwithstanding that Ms Miraki only raised the issue in the alternative to the Court accepting her undertaking in place of the freezing orders. 15 I approach the issue on the basis that the Commissioner bears the onus of establishing that a freezing order is appropriate. That issue is to be determined on the basis of the evidence now before the Court and recognising that the Commissioner now has judgment against Ms Miraki. 16 Ms Miraki submitted that there was insufficient danger of dissipation of assets to warrant a freezing order. Ms Miraki referred to the decision of Foster J in Bayley & Associates Pty Ltd v DBR Australia Pty Ltd [2012] FCA 746 at [31]-[34] where his Honour observed, amongst other things, that the grant of freezing orders is an exceptional interlocutory remedy and is to be granted only when the circumstances of the case justify such a significant interference in the personal affairs of a citizen. Foster J stated at [33] and [34]: [33] In New South Wales, the leading case in which the principles upon which this extraordinary remedy will be granted were explained, is Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319. In that case, Gleeson CJ (when he was Chief Justice of New South Wales) at 321-322 said: 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. [34] At 323, the Chief Justice went on to explain what was meant by the element requiring a risk to the assets. In that passage, his Honour referred to a number of cases where different expressions such as "a 'real risk'", "a 'risk demonstrated by solid evidence'" and "a real cause to apprehend" were used to describe the necessary degree of risk. The phrases chosen by the Chief Justice suggest that the risk must be palpable and demonstrated by evidence, not reside, only as a suspicion, in the mind of an overly anxious plaintiff. 17 Ms Miraki submitted that there was no relevant danger of dissipation of assets. It was submitted that there was no evidence of any dissipation of assets during the period of the ATO review of her taxation affairs or during the audit period. It was submitted that, if dissipation of assets were likely, it would have occurred during these times. It was also submitted that there was no evidence of dissipation of assets after the audit period had concluded. 18 Ms Miraki's submissions focussed primarily on Ms Miraki's dealings with real property held in her name. The various sales and attempted sales of property owned by Ms Miraki were in aid of her purchase of a property in Hunters Hill due for completion on 12 December 2021. 19 Ms Miraki's submissions did not address the substantial cash transactions which had been paid from the accounts of the Operating Entities, referred to in the Commissioner's Reasons for Decision, or the underlying factual background referred to in those reasons. As noted at [8] above, the ATO analysis of CBA records indicated that funds: totalling about $6,855,605 were transferred into accounts in the name of Ms Miraki during the period 1 July 2013 to 30 June 2017; totalling about $1,242,537 were transferred out from accounts in the name of Ms Miraki during the period 1 July 2013 to 30 June 2017; totalling about $1,768,189 were transacted as private expenditure by Ms Miraki in relation to accounts in her name during the period 1 July 2013 to 30 June 2017; totalling about $2,519,240 were transferred into credit card accounts in the name of Ms Miraki from accounts held by Finish Corp Commercial Painters and Barton Contractors Australia during the period 1 July 2013 to 30 June 2017; totalling about $857,971 were transferred out from credit card accounts in the name of Ms Miraki during the period 1 July 2013 to 30 June 2017; totalling about $1,417,972 were transacted as private expenditure by Ms Miraki in relation to credit card accounts in her name during the period 1 July 2013 to 30 June 2017. 20 No reliable or persuasive evidence was given by way of explanation, or to contradict the occurrence, of the various transactions referred to, or by way of explanation as to the underlying events as recorded by the Commissioner in his Reasons for Decision. 21 Ms Miraki gave evidence to the effect that the information which had been recorded on the relevant folios of the Register in respect of properties owned by her had caused her difficulties in respect of potential sales. These were referred to in the parties' submissions as "notations" made to the Register, although that description is potentially misleading for reasons I will come to. This issue is relevant to whether the Commissioner should be ordered to take steps to remove the notifications recorded on the Register and to whether the freezing orders should be varied. I address those issues later. On the Commissioner's case, the issue was also said to be relevant to the danger of dissipation of assets in light of the focus in Ms Miraki's submissions on her dealings with respect to her real property. 22 Title searches in relation to two of the three properties still owned by Ms Miraki were in evidence. The "First Schedule" of both title searches contains the particulars of the registered proprietor (Ms Miraki) and the dealing number of the registered dealing creating the change of ownership. 23 The "Second Schedule" in the two title searches refers to the number of "notifications" in the schedule and then sets out various interests or encumbrances affecting the title, usually by reference to a distinctive number. The two title searches contained, in the Second Schedule of each, the following "notification" as the last notification: AQ898651 ORDER OF COURT 24 Also in evidence was a Form 11R "Request", bearing the number AQ898651R, which included the following: Pursuant to order 5(a) made by Justice Wigney (Federal Court of Australia Proceedings NSD 4000/2021) on 22 March 2021 (copy attached) the registered proprietor of the lands at 605/856358, 20/SP92709, 21/SP92709, 50/SP82892, 200/1225049, being Sepideh Miraki, must not in any way dispose of, deal with or diminish the value of her assets in Australia up to the unencumbered value of $5,844,558.03. The assets include the lands at 605/856358, 20/SP92709, 21/SP92709, 50/SP82892, 200/1225049. Pursuant to the Court's orders, any person who knows of the orders and does anything which helps or permits the registered proprietor, Sepideh Miraki, to breach the terms of the orders may be subject to punishment. 25 The two title searches contained a third heading providing for "Notations". No "notations" had been recorded as made in either title search. It is for this reason that the parties' use of the word "notations" to refer to the "notifications" in the Second Schedule of the title searches is potentially misleading in describing what the Registrar General has done or, by inference, what the Commissioner had requested. 26 Ms Miraki's evidence was that purchasers (and, where relevant, their financiers) were hesitant to exchange or complete because of the "notifications" in the Second Schedule of the existence of the "order of court". 27 It is necessary to refer to a few additional facts. As at the date the freezing orders were made, Ms Miraki was the registered proprietor of the following properties: 6 Hampshire Avenue, West Pennant Hills, purchased on 29 March 2011 Unit 303/5 Belmont Avenue, Wollstonecraft, purchased on 26 August 2016 Unit 305/5 Belmont Avenue, Wollstonecraft, purchased on 9 January 2017 50/5 Gladstone Road, Castle Hill, purchased on 18 August 2016 71 Worrigee Road, Worrigee, purchased on 30 July 2014 28 On 16 April 2021, orders were made by consent, permitting the sale of Units 303 and 305. The orders contained a notation the parties had agreed that the "dealing" recorded by the Registrar General was to remain on title until completion. The notation was: The Parties agree that dealing registered number AQ898651 recorded against title of each of the Properties [Units 303 and 305] is to remain on title until the completion of the sale of the Properties as approved by the [Commissioner]. 29 Unit 303 was subsequently sold. The parties had agreed to various payments being made from the proceeds of sale. The net proceeds of sale were paid into Court. 30 On 14 May 2021, orders were made by consent, permitting the sale of the Castle Hill property. It was noted, by consent, that the parties had agreed that the "dealing" AQ898651 was to remain on title until completion. The Castle Hill property was sold. The parties had agreed to various payments first being made from the proceeds of sale. The net proceeds were paid into Court. 31 On 7 June 2021, Ms Miraki's solicitor sent an email to the Commissioner's solicitor seeking consent to further vary the freezing orders to permit the sale of 6 Hampshire Avenue (the family home) and 71 Worrigee Road on the same basis as the varied orders permitted the sale of Units 303 and 305. 32 On 8 June 2021, the Commissioner's solicitor responded by email, agreeing to vary the freezing orders so as expressly to permit the sale of those properties. The Commissioner agreed to do so in terms which reflected the previous agreement which had been reached in relation to the Castle Hill property and Units 303 and 305, including that the "dealing" AQ898651 was to be removed on completion of any sale. The Commissioner provided to Ms Miraki's solicitor a form of consent order which was evidently based on the equivalent orders which had been made on 16 April 2021 and 14 May 2021. 33 Ms Miraki's solicitor did not respond to the Commissioner's email of 8 June 2021. 34 A contract for sale of 71 Worrigee Road was exchanged. The purchaser, however, did not proceed. An email sent on 31 August 2021 from Ms Miraki's real estate agent to Ms Miraki's solicitor indicated that the purchaser still wished to purchase the property "if the current restrictions of the court order are able to be released [being a reference to the 'dealing' on the Register]". There was no evidence to indicate that the purchaser was told by Ms Miraki or her solicitor that the Commissioner had agreed to the "dealing" being removed on completion of the sale. 35 The Commissioner submitted that the Court should conclude that Ms Miraki did not inform the prospective purchaser of 71 Worrigee Road about the Commissioner's offer because she did not want to sell the property in a way which would lead to the net proceeds being paid into Court and that she wanted to obtain the proceeds for her own use. Ms Miraki denied these purposes in a limited cross-examination permitted (notwithstanding the proceedings were interlocutory) principally on the basis that the proposed cross-examination was to be of a scope confined to two issues which had been raised by the amendments to the interlocutory application which had been opposed by the Commissioner but allowed. 36 It is unusual that, on the evidence, the prospective purchaser was not told that the Commissioner had agreed to removal of the "dealing" on settlement, particularly when the prospective purchaser of 71 Worrigee Road had exchanged and paid a deposit. This information might have substantially, if not entirely, eliminated the purchaser's perception of risk and any concern about potential delay. 37 However, irrespective of why the prospective purchaser was not informed that the Commissioner had agreed to removal of the "dealing" on settlement, I am satisfied that there is a danger of dissipation of assets sufficient to warrant the making (or continuation) of freezing orders. The danger is not speculative. It is not appropriate to focus solely on the dealings with respect to the real property. I note in this respect that, assuming the real property valuations in evidence are correct, the current net value of the real estate assets (valued at $15.4 million with liabilities of $9 million) exceeds the judgment amount in favour of the Commissioner. Nor does the fact that no dissipation of assets has in fact been established on the evidence have the necessary consequence that there is no danger of dissipation of assets. As to the fact that no dissipation of assets was shown to have occurred during the ATO's review and later audit, it should be observed that - at the time of the review and audit - no conclusion had been reached that any assessments should be issued. The circumstances after review and audit were different. At the time of making the freezing orders, substantial assessments had been issued. The Commissioner now has judgment against Ms Miraki in the amount of those assessments together with interest. 38 The evidence concerning payments of cash, and the underlying events giving rise to the issue of the various assessments, is probative of the level of danger that assets might be dissipated. 39 The submissions advanced by the Commissioner before Wigney J, which were repeated as remaining applicable in the circumstances as they now exist and set out earlier, should be accepted. Those submissions are supported by the evidentiary material to which they refer. The danger is at a level sufficient to warrant the continuation (or making) of freezing orders. This is not a conclusion that Ms Miraki would, more likely than not, dissipate assets in the absence of a freezing order; it is a conclusion that the danger has been demonstrated at a level which is sufficient to warrant the granting of the exceptional remedy.

SHOULD MS MIRAKI'S UNDERTAKING BE ACCEPTED? 40 Ms Miraki contended that the Court should accept her undertaking, in the form she proposed, in place of the freezing orders. It was submitted that the undertaking she proposed is "reasonably related to the orderly procedure of the Court", that it is precise and unambiguous and that it provides "an equivalent degree of protection" to the Commissioner as is provided by the freezing order. 41 The Commissioner had stated at earlier case management hearings, and repeated in his written submissions, that he would not oppose acceptance by the Court of an undertaking in the same terms as the freezing orders. The Commissioner's opposition to what Ms Miraki proposed was to the form of the undertaking put forward which, on his submission, departed substantially from the freezing orders in materially undesirable ways and, in some respects, gave rise to ambiguities. 42 In argument, Senior Counsel for Ms Miraki spent some time comparing Ms Miraki's form of undertaking with a form of undertaking which the Commissioner had proposed during negotiations between the parties. When counsel for Ms Miraki were asked what issues arose from the freezing orders as presently framed, the only substantial issue initially was that paragraph 9(c) of the freezing orders was said to prevent Ms Miraki from refinancing. This was said to be the first of "twin vices". The second vice was, it was submitted, that the Commissioner would, in substance, not permit a refinance. 43 As to the first vice, no explanation was given as to how paragraph 9(c) prevented a refinance. The order which directly "freezes" assets is paragraph 5 (which must be read with paragraph 6). For convenience, paragraph 5 is repeated here: Freezing Of Assets 5. (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$5,844,558.03 (the Relevant Amount). (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. 44 Paragraph 5(a) "freezes" assets according to its terms, which include preventing Ms Miraki from doing the identified things in relation to her assets "up to the unencumbered value of AUD$5,844,558.03". 45 Paragraph 5(b) makes it clear that the order is not absolute in that assets can be dealt with in the ways identified in the subparagraph "[if] the unencumbered value of your Australian assets exceeds the Relevant Amount". 46 Paragraph 9 provides exceptions to what would otherwise be a breach of paragraph 5. Paragraph 9(c) does not prevent a refinancing. 47 As to the second "vice", when asked to identify the evidentiary basis for the submission that the Commissioner would prevent a refinance or treat a refinance as a potential breach of the freezing order, the submission was withdrawn. 48 There is no reason to think that, to the extent any refinance might require a variation to the freezing orders made on 22 March 2021 (as varied), such a variation could not be obtained by consent (as is contemplated by paragraph 10 of the freezing orders) or otherwise. The course of negotiations between the Commissioner and Ms Miraki show that the Commissioner has been prepared to facilitate sales of properties. The Commissioner's position on this application, stated to have been his position since obtaining the freezing orders (consistently with the inference I would draw from the evidence), was to facilitate any necessary or desirable variations to the freezing orders to facilitate the sale of properties or a refinance so long as equity sufficient to meet the Commissioner's claim (now judgment) was maintained. 49 Ms Miraki gave evidence that "she may be able to refinance" her properties to complete the purchase of the Hunters Hill property and, indeed, that she had received a letter of offer of a loan in the amount of $5 million (in fact, a little over) to purchase that property. 50 Ms Miraki gave evidence that, as at 26 October 2021, she did not have sufficient funds in cash to complete the purchase and that she required approximately $1.5 million more. The evidence indicates that she is, more likely than not, able to obtain a loan for that amount. 51 Ms Miraki gave evidence of a conversation with a potential financier who apparently stated that no person would provide a loan if they saw the notifications on title. This was the principal evidence relied upon to suggest a difficulty in obtaining a refinance. This hearsay opinion evidence is unpersuasive, even in the present interlocutory context. The direct evidence is that Ms Miraki was able to secure a loan of over $5 million. 52 The present form of the freezing orders does not prevent Ms Miraki in any absolute way from refinancing - see: paragraph 5 of the freezing orders. 53 If it were the case that a particular issue arose in the context of a refinance that required some variation to the freezing orders there is no good basis to infer that the Commissioner would not engage appropriately with Ms Miraki to seek to reach an appropriate consent position if that were necessary or desirable. The evidence indicates that the Commissioner has promptly agreed to various reasonable requests for variations to the freezing orders. There is no reason why an application could not be made if that became necessary including because no consent was forthcoming. 54 Senior Counsel submitted that the form of undertaking proposed by Ms Miraki would leave her with "some flexibility" in organising finance or selling properties. I am not satisfied that the imprecisely identified additional flexibility is necessary or desirable. 55 I do not accept that the form of undertaking proffered by Ms Miraki is an undertaking which provides equivalent or similar protection to the freezing orders as varied. More significantly, leaving aside the specific variations which were sought and which are dealt with below, it was not made clear how the form proposed by Ms Miraki was preferable to the form of the freezing orders as made on 22 March 2021 (as varied). It is not an appropriate use of legal resources or Court resources to embark on extensive argument as to different ways to reframe orders in the absence of the existing form of orders being shown to be deficient in some way or the alternative being shown to be preferable in some material way. 56 There was no submission made that the freezing orders in their present form should be provided by way of undertaking rather than by way of order. The parties' submissions recognised that this might be done in appropriate cases and, as mentioned, the Commissioner has consistently stated he would not oppose the freezing orders, in their present form, being given by way of undertaking. Ms Miraki has not asked for that, only ever proposing an undertaking which does not reflect the freezing orders. Ms Miraki did not submit that there was any specific prejudice to her caused by the freezing orders being in the form of orders as opposed to those same orders being in the form of an undertaking.

THE DEALINGS OR NOTIFICATIONS ON THE REGISTER 57 Ms Miraki submitted that the effect of the notifications recorded on the Register was to give the Commissioner "a quasi-caveat against dealing on title to Mrs Miraki's land". It was submitted by Ms Miraki, and accepted by the Commissioner, that the Commissioner had no equitable interest in Ms Miraki's land and that the freezing orders operated in personam and did not create any proprietary interest in Ms Miraki's land. 58 It was observed that the practical result of the notifications was that Ms Miraki could only transfer title to the land by securing the Commissioner's agreement to remove the notifications before or on settlement because transferees required this and the Registrar General would not register a transfer on title whilst the notification remained. It was submitted that the notifications of the freezing orders recorded on title had caused impediment and delay to Ms Miraki in the sale of her properties and consequent loss or damage. It was submitted that there was no law which permitted the notifications to have been recorded on the Register. 59 Section 31B of the Real Property Act 1900 (NSW) (RPA), being the first provision of Part 6, "The Register and Registration", provides: 31B THE REGISTER (1) The Registrar-General shall cause a Register to be maintained for the purposes of this Act. (2) The Register shall be comprised of - (a) folios, (b) dealings registered therein under this or any other Act, (c) the record required to be kept pursuant to section 32 (7), (d) instruments of a prescribed class, and (e) records required by the regulations to be kept as part of the Register. (3) The Register may be maintained in or upon any medium or combination of mediums capable of having information recorded in or upon it or them. (4) The Registrar-General may, from time to time, vary the manner or form in which the whole or any part of the Register is maintained. 60 Section 32 of the RPA includes: 32 FOLIOS OF THE REGISTER (1) The Registrar-General creates a folio of the Register for land by making a record of - (a) a description of the land and of the estate or interest therein for which it is created, (b) a description of the proprietor for the time being of the estate or interest and the fact that any such proprietor is a minor if the Registrar-General knows that to be the case, and (c) such particulars, as the Registrar-General thinks fit, of - (i) other estates or interests, if any, affecting the land, and (ii) other information, if any, that relates to the land or any estate or interest therein and is included in that record pursuant to this or any other Act (including an Act of the Parliament of the Commonwealth) or an instrument made under any such Act, and by allocating a distinctive reference to the record so made. … (6) The Registrar-General shall have, and shall be deemed always to have had, power to cancel in such manner as the Registrar-General considers proper any recording in the Register that the Registrar-General is satisfied does not affect the land to which the recording purports to relate. (7) The Registrar-General shall maintain a record of all dealings recorded in, or action taken in respect of, a computer folio and such other information, if any, relating to the folio as the Registrar-General thinks fit. 61 The only provision relied upon by the Commissioner as entitling the Registrar General to record on the Register the existence of the freezing orders was s 32(1)(c)(ii). Accepting for the purposes of argument that the existence of the freezing orders is "information" and that the information "relates to the land" and Ms Miraki's legal interest in the land, no argument was advanced, either in written submissions or in argument, as to how the information "is included in that record pursuant to [the RPA] or any other Act (including an Act of the Parliament of the Commonwealth) or an instrument made under any such Act". 62 The Commissioner did not rely on s 32(1)(c)(i). The parties have approached the proceedings on the basis that the Registrar General has registered the freezing orders in respect of each of Ms Miraki's properties as a "dealing registered… under [the RPA] or any other Act" - see: s 31B(2)(b). This is reflected in the parties' agreed notations to consent orders and is consistent with the notifications appearing on the title searches in the Second Schedule. It is also consistent with the terms of the form of document (being a "Request") to which the relevant reference number in the title searches refers. 63 The word "dealing" is defined in s 3(1)(a) of the RPA in the following way (the word "dealing" is also defined for the purposes of Part 7A of the RPA in s 74A(1)): "Dealing" - Any instrument other than a grant, caveat or priority notice, including an electronic form of that instrument, being an instrument - (a) that is registrable or capable of being made registrable under the provisions of this Act, or (b) in respect of which any recording in the Register is by this or any other Act or any Act of the Commonwealth required or permitted to be made. 64 Part 7 of the RPA is entitled "Dealings" and is divided into three divisions entitled "Transfers", "Leases" and "Mortgages, Charges and Covenant Charges". No submissions were advanced by the Commissioner as to how the freezing orders were a "dealing" or what, if any, Act permitted or required them to be registered under the provisions of the RPA. 65 As mentioned, there was no dispute between the parties that the freezing orders did not create any proprietary interest in the Commissioner and it was not suggested that the Commissioner had any legal or equitable interest in any of Ms Miraki's land. It should also be observed that the Commissioner accepted that the freezing orders did not, and do not, necessarily prevent Ms Miraki from disposing of, or encumbering, her real property in all circumstances. The Commissioner accepted that Ms Miraki was (and is) entitled to dispose of, or encumber, real property under paragraph 5 provided she did so in a way which complied with that order. 66 The practical effect of the recording on the Register of the existence of the freezing orders in relation to each of the properties owned by Ms Miraki (initially 5 properties), was that she was required to ask the Commissioner to agree to remove the "notification" or dealing in order to sell the property, even though she may not in fact have been prevented by the freezing orders from disposing of the property and notwithstanding that the Commissioner had no proprietary interest in the land. 67 The Commissioner should be ordered to take all necessary or reasonable steps within a reasonable time to remove the "dealing" numbered AQ898651 which is recorded on the Register in relation to the three properties still owned by Ms Miraki. There is no evidence before the Court as to what a reasonable time would be, although it is difficult to imagine a request for removal could not be made within a very short period of time if not almost immediately. The parties will be provided a short period to agree orders to give effect to the Court's conclusion in this regard and I will reserve liberty to apply generally.

Legal fees in respect of these and other proceedings and objections 68 The issue concerning Ms Miraki paying legal fees with respect to these proceedings and objections to the various amended assessments was resolved between the parties before commencement of the hearing of the interlocutory application and does not need to be addressed. The issue of Ms Miraki paying legal fees in respect of various other proceedings in which she was involved was settled during the course of argument on Ms Miraki's application for leave to amend the interlocutory application and does not need to be addressed.

Asserted loans from Mr Taylor 69 Ms Miraki says she entered into a loan agreement with Mr Brian Taylor on 15 January 2018 pursuant to which he is said to have lent her $100,000 on 17 January 2018 and a further $100,000 on 7 July 2020. Substantial interest is said to have accrued. 70 Mr Taylor's evidence was that he caused the payment of $100,000 on 17 January 2018 to be made from a corporate entity which he controlled called SCS Audit & Corporate Services Pty Ltd. The evidence indicates that Mr Taylor no longer holds shares in, and is no longer a director of, SCS Audit & Corporate Services Pty Ltd. There is no evidence from that company as to its position with respect to the loan. 71 Mr Taylor's evidence was that he made the payment of $100,000 on 7 July 2020 "by directing my corporate entity, SCS Superannuation and Taxation Services Pty Ltd". There is no evidence from that company as to its position. 72 As noted earlier, the parties reached a consent position that an amount of $265,306 be paid into Court from the settlement of the Castle Hill property. Ms Miraki's position is, and at all material times has been, that she was authorised to pay Mr Taylor that amount by reason of paragraphs 9(c) and (d) of the freezing orders. 73 During argument, the Commissioner stated he did not oppose the monies being paid out of Court to Ms Miraki or her solicitor, whereupon she could make the payment to Mr Taylor in the event she took the position that she was permitted to make the payments without breaching the freezing orders. Indeed, the Commissioner did not oppose the monies being paid directly to Mr Taylor, but observed that the Court had not heard from SCS Audit & Corporate Services Pty Ltd. 74 In light of the Commissioner's concession, an order should be made paying the amount of $265,306 from the moneys held in Court to Ms Miraki's solicitor to be held on trust (and subject to the proper operation of the freezing orders), upon an appropriate undertaking only to pay that amount to, or as directed by, Mr Taylor or otherwise to be held on trust until further order. 75 It is not necessary for the Court to make any finding as to whether payment by Ms Miraki to Mr Taylor would breach the freezing orders or to reach a conclusion as to the correct identity of the lender.

Payment of $48,000 out of Court 76 The freezing orders have always furnished an exception to the freezing of assets up to the relevant amount (paragraph 5) by providing that the freezing orders do not in any event prohibit Ms Miraki from paying up to $2,000 per week on her ordinary living expenses: paragraph 9(a). 77 Ms Miraki deposed to various difficulties in withdrawing funds by reason of the attitude taken by her banks in relation to the freezing orders. Notwithstanding these difficulties, Ms Miraki was able to withdraw $16,000 on 14 May 2021 and $2,000 on 25 May 2021. Ms Miraki gave evidence that, in light of the difficulties she had experienced, she has been relying on her husband to pay her expenses. 78 The parties had earlier sought consent orders which were evidently directed at removing obstacles to Ms Miraki withdrawing amounts on account of living expenses. On 26 April 2021, the Court made the following order by consent: 4. The respondent is permitted to withdraw funds in accordance with order 9 of the Freezing Orders made on 22 March 2021 from the bank account held with the Australia and New Zealand Banking Group Limited (ANZ) with the following details BSB XXXX29 Account No. XXXX-XXX01, except that any withdrawal of funds from the aforementioned account and any other account of the respondent does not exceed the amounts set out in order 9 of the Freezing Orders in aggregate. 79 On 14 May 2021, the Court made the following order by consent: 5. The respondent is permitted to withdraw funds in accordance with order 9 of the Freezing Orders from the bank accounts maintained with the Commonwealth Bank of Australia Limited with the following details: a. BSB XXXX01 Account No. XXXXXX63; and b. BSB XXXX01 Account No. XXXXXX71; except that any withdrawal of funds from the aforementioned accounts and any other account of the respondent does not exceed the amounts set out in order 9 of the Freezing Orders in aggregate. 80 The Commissioner submitted, correctly, that there was no evidence that these orders had been notified to the relevant banks. 81 Ms Miraki did not give evidence of any particular outstanding amount that she needed to meet by way of ordinary living expense to which the amount of $48,000 might be applied, although she identified general categories of expenditure. As I have said, she is entitled to withdraw funds for ordinary living expenses on an ongoing basis in accordance with the freezing orders as varied. 82 The evidence indicated that Ms Miraki probably has net assets sufficient to satisfy the judgment in favour of the Commissioner as things presently stand, although that assessment is made on the basis of untested valuations put into evidence on this application. An amount of a little over $1.4 million has been paid into Court. Consent orders have been made from time to time releasing various amounts such that an amount of about $670,000 remains. After payment of the amount of $265,306 (relating to Mr Taylor), approximately $405,000 would remain. 83 In the absence of any particular identified need for the amount of $48,000, and taking into account the evidence that Ms Miraki wishes to complete the purchase of the Hunters Hill property, and having regard to the size of the judgment in the Commissioner's favour and the inherently uncertain nature of valuations, the amount of $48,000 should not be paid out on account of past living expenses.

Payment of balance of money out of Court 84 Although not addressed in Ms Miraki's opening submissions or in closing submissions, but acknowledging that the relief was sought in the amended interlocutory application, Ms Miraki raised for the first time in submissions in reply that she sought an order for all of the funds presently paid into Court to be paid to her. This order was said to be appropriate because the Commissioner had conceded that those funds belonged to Ms Miraki. 85 Given the matter had not been addressed by the Commissioner in his submissions (it not having been addressed by counsel for Ms Miraki in submissions in chief), the Court invited the Commissioner to respond and provided an opportunity to Ms Miraki's counsel to reply. 86 There is no dispute that the funds paid into Court belong to Ms Miraki. That fact alone does not make it appropriate to pay the amount out of Court. The question is whether the funds should now be paid out of Court in light of the present circumstances, including the conclusion that there is a danger of dissipation of assets sufficient to warrant freezing orders. 87 Counsel submitted that Ms Miraki could use the funds to pay for her living expenses or to make payments in respect of bona fide obligations incurred before the making of the freezing orders. As to living expenses, Ms Miraki can withdraw funds on account of ordinary living expenses in accordance with the freezing orders. As to bona fide obligations made before the freezing orders were made, no such extant obligation requiring attention was identified (apart from the loans associated with Mr Taylor). It was not put that the funds were to be applied to settlement of the Hunters Hill property. No specific transactions were identified to which the moneys would be applied. 88 Ms Miraki's evidence was that her purpose in selling the properties the source of the funds paid into Court was to make funds available to ensure completion of the Hunters Hill property. That property is due for completion on 12 December 2021. 89 The Commissioner, by his counsel, indicated that he would not oppose an order for the funds in Court to be paid to Ms Miraki's solicitor's trust account to be held on condition that the funds be applied to settlement of the Hunters Hill property. That was not the stated purpose, on this application, of seeking the funds be paid out and no such application was adopted by Ms Miraki in submissions in response. 90 I decline to make an order for payment out of Court of the balance of the amounts paid into Court after payment out of amounts in relation to Mr Taylor ($265,306). The balance should remain in Court until further order.

CONCLUSION 91 The parties should confer with a view to agreeing orders to give effect to these reasons and as to costs. I certify that the preceding ninety-one (91) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Thawley.

Real Property Act 1900(NSW)ss 3(1), 31B, 32, 74A

Federal Court Rules 2011(Cth)rr 7.32, 7.33, 7.35, 26.01(1)

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