Freezing orders
13 The Deputy Commissioner applied for freezing and ancillary orders under Division 7.4 of the Federal Court Rules 2011 (Cth). Under that division the applicant must establish, relevantly here:
(a) that it has a good arguable case on an accrued cause of action that is justiciable in this Court (r 7.35(1)(b)); and
(b) having regard to all the circumstances, that there is a danger that a prospective judgment will be wholly or partly unsatisfied because the assets of the prospective judgment debtor are removed from Australia or from a place inside or outside Australia, or disposed of, dealt with or diminished in value (r 7.35(4)).
14 I was satisfied as to each of those requirements. The first is straightforward. Under s 350-10(1), item 2 of Schedule 1 of the Taxation Administration Act 1953 (Cth), the production of a notice of assessment under a taxation law is conclusive evidence that the assessment was properly made and that the amounts and particulars of the assessment are correct (save in relevant proceedings for review or appeal of the assessment). So the issue of the notices of assessment here mean that the Deputy Commissioner has at least a good arguable case that each of the respondents is liable to him in the amounts shown on the notice. Since those liabilities arise under taxation legislation made by the Commonwealth Parliament, they fall within the jurisdiction of this Court, at least because of s 39B(1A)(c) of the Judiciary Act 1903 (Cth).
15 The second of the above requirements will be met if the applicant establishes a danger that a prospective judgment will be unsatisfied because of removal or diminution of assets as described in r 7.35(4): Duro Felguera Australia Pty Ltd v Trans Global Projects Pty Ltd (in liq) [2018] WASCA 174; (2018) 53 WAR 201 at [40]-[41] (Buss P, Murphy and Mitchell JJA). The risk or danger must be real or substantial, as opposed to a remote, speculative or theoretical possibility. The applicant must prove on the balance of probabilities facts from which the court can infer a risk or danger of that kind, but it is not necessary to prove that it is more probable than not that the assets will be dealt with in such a way that a judgment will be unsatisfied: Duro Felguera at [43]. At [44] the Court of Appeal said (footnotes removed):
Ultimately, it is a question for evaluation by the issuing court as to whether the degree of the danger or risk is sufficient to justify an order in the terms which the court is asked to make. In making that evaluative assessment, the court will bear in mind that a freezing order is a drastic remedy which imposes a severe restriction on a respondent's right to deal with its assets, and that the purpose of the order is not to provide security for a judgment which the applicant hopes to obtain and fears might not be satisfied.
16 With those principles in mind, on the facts summarised above, and others I will mention shortly, I was satisfied in relation to each respondent that there was a real and substantial risk that if freezing orders were not made, any judgment the Deputy Commissioner might obtain against the respondent would go unsatisfied, at least in part, because the respondent had removed assets from Australia. The facts that led me to that conclusion were the following.
(1) Each respondent is domiciled overseas, in the case of Ranguta in the British Virgin Islands and Hong Kong, and in the case of Golden Dawn in Hong Kong. So, apparently, are their shareholders and sole director, both of whom appear to live in Hong Kong.
(2) Neither respondent has any other substantial connection with Australia, other than the activity of trading and holding Australian securities. There is no reason to think that Mr Wall's apparent historical connection with the country is of any moment now.
(3) The only known property of the respondents located in Australia is in the form of securities traded on the ASX, which are, presumably, easily convertible into money.
(4) The respondents already have a long standing practice of transferring out of Australia to Hong Kong substantial sums, including proceeds from the sale of securities and, perhaps, money from other sources. It appears that there are standing instructions to their broker to transfer sale proceeds to Hong Kong.
(5) The taxation debts claimed from each respondent are substantial. Receiving the notices of assessment and a claim from the Deputy Commissioner in those substantial sums will provide a strong incentive to realise the remaining securities and transfer the proceeds offshore.
(6) The fact that each respondent appears to have made no effort to submit itself to the taxation laws of Australia increases the likelihood that it will act in that way.
(7) If assets are transferred offshore, leaving less assets by value than the amounts claimed, any judgment may well be unsatisfied in whole or in part.
17 That last point should be elaborated. There was no evidence of the law that applies in the places of incorporation and apparent domicile of the respondents, British Virgin Islands or Hong Kong. In general, where foreign law is not proved it will be presumed to be the same as the law of Australia: Damberg v Damberg [2001] NSWCA 87; (2001) 52 NSWLR 492 at [119] (Heydon JA, Spigelman CJ and Sheller JA agreeing). The law of Australia is that foreign revenue debts will not be enforced in Australia: Ayres v Evans (1981) 39 ALR 129 at 130-131, 139-141. I therefore proceed on the basis that the Deputy Commissioner would find it difficult, at least, to enforce any judgment of this Court in any of the jurisdictions in which the respondents were incorporated or are domiciled. So if assets the respondents hold in Australia are removed or diminished in value, that will give rise to a real risk that the judgment will go unsatisfied because of difficulty in enforcing it in other relevant jurisdictions.
18 In my view, the matters just outlined gave rise to sufficient danger so as to justify freezing orders. Each of the freezing orders sought and made were in the terms of the example form of orders annexed to the Court's Freezing Orders Practice Note (GPN-FRZG), although there was one potentially material departure discussed further below. The freezing orders are limited in time, being returnable on 19 January 2023 and expiring at the end of that day. Given the time of year, that is as early as is practicable. The nature of the respondents' trading activities and the nature of the known assets in Australia give no cause to think that they, or any person, will suffer significant prejudice if they are unable to sell those assets and transfer the money overseas within that time. If that is wrong, there is liberty to apply on 48 hours' notice. The orders are limited to the amounts notified in the notices of assessment; the respondents will be able to sell assets and transfer them outside Australia as long as that does not cause the value of the remaining assets to drop below those amounts. They provide for exceptions to pay legal expenses, to discharge bona fide existing obligations, and to deal with or dispose of assets in the ordinary course of business.
19 The potentially material departure from the usual form related to that last point. Since it is arguably in the ordinary course of the business of the respondents to sell securities and transfer the proceeds to Hong Kong, it would potentially undermine the orders to leave the wording of the exception in general terms. I therefore determined that it was appropriate to stipulate that the proceeds could not be removed from Australia unless the unencumbered value of the Australian assets would, after the removal, exceed the total amounts shown in the relevant notices of assessment (plus calculated interest). Once again, if that causes hardship, there will be liberty to apply.