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[2012] FCA 1158
Federal Court of Australia
2012-10-23
Siopis J
Original judgment source is linked above.
PENAL NOTICE TO: Gary Denham Seabrooke IF YOU: (A) REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS ORDER FOR THE DOING OF THE ACT; OR (B) DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU TO ABSTAIN FROM DOING, YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT. ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHED. TO: Gary Denham Seabrooke This is a "freezing order" made against you on 18 October 2012 by Justice Siopis at a hearing without notice to you after the Court was given the undertakings set out in Schedule A to this order and after the Court read the affidavits listed in Schedule B to this order.
THE COURT ORDERS: INTRODUCTION
AFFIDAVITS RELIED ON Name of deponent Date affidavit made (1) Aris Zafiriou 17 October 2012 (2) Timothy Burrows 18 October 2012 (3) Jeffrey Crouch 18 October 2012
NAME AND ADDRESS OF APPLICANT'S LAWYERS The applicant's lawyers are: Australian Government Solicitor Level 19, Exchange Plaza 2 The Esplanade PERTH WA 6000 Reference: 11101456/TPB Telephone: (08) 9268 1116 Facsimile: (08) 9268 1772 Email: timothy.burrows@ags.gov.au
PENAL NOTICE TO: DEIRDRE SHAUNA Seabrooke IF YOU: (A) REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS ORDER FOR THE DOING OF THE ACT; OR (B) DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU TO ABSTAIN FROM DOING, YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT. ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHED. TO: DEIRDRE SHAUNA Seabrooke This is a "freezing order" made against you on 18 October 2012 by Justice Siopis at a hearing without notice to you after the Court was given the undertakings set out in Schedule A to this order and after the Court read the affidavits listed in Schedule B to this order.
THE COURT ORDERS: INTRODUCTION
AFFIDAVITS RELIED ON Name of deponent Date affidavit made (1) Aris Zafiriou 17 October 2012 (2) Timothy Burrows 18 October 2012 (3) Jeffrey Crouch 18 October 2012
NAME AND ADDRESS OF APPLICANT'S LAWYERS The applicant's lawyers are: Australian Government Solicitor Level 19, Exchange Plaza 2 The Esplanade PERTH WA 6000 Reference: 11101456/TPB Telephone: (08) 9268 1116 Facsimile: (08) 9268 1772 Email: timothy.burrows@ags.gov.au Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 280 of 2012
JUDGE: SIOPIS J DATE: 23 OCTOBER 2012 PLACE: PERTH
REASONS FOR JUDGMENT 1 On 18 October 2012, I made freezing orders in respect of assets of Mr Gary Denham Seabrooke and his wife, Mrs Deirdre Shauna Seabrooke on the urgent ex parte application of the Deputy Commissioner of Taxation (the Commissioner). I also made orders for service out of the jurisdiction of the originating and interlocutory applications and the Court's order (referred to in the order as "the documents") on Mr Seabrooke and substituted service in respect of the documents on Mr Seabrooke. I said that I would give my reasons later and these are the reasons. 2 Each of the respondents was born in Western Australia. The first respondent, Mr Gary Denham Seabrooke was born Gary Denham Strange and the second respondent, Mrs Deirdre Shauna Seabrooke was born Deirdre Shauna Wyvern-Pye. They married in Claremont, Western Australia in March 1982. On 8 June 1987, the first respondent changed his name to Gary Denham Seabrooke and the second respondent changed her name to Deirdre Shauna Seabrooke. The last tax return that each of the respondents has filed was for the tax year ending 30 June 1987. 3 Since 1987, Mr Seabrooke has spent a considerable period of time conducting business overseas, particularly in countries in Africa. Mr Seabrooke has interests in a number of companies related to the provision of mining services. Further, Mr Seabrooke controls bank accounts in Jersey, Liechtenstein and Mauritius. 4 The Commissioner has conducted an audit into the tax related affairs of the respondents. The audit examined Austrac records which track payments made by persons between foreign countries and Australia. These records show that during the period 5 December 2007 to 15 April 2011, $16,864,862 was transferred from the Liechtenstein bank account controlled by Mr Seabrooke, to various bank accounts in Australia and that those monies were used by one or both of the respondents to purchase, among other things, a Porsche Cayenne motor vehicle, shares, a Sunseeker launch and tender, a property in Yallingup, and to pay for extensions to the first and second respondents' residence in Peppermint Grove, a suburb of Perth. The records also show that between the period 29 December 2007 to 10 November 2010, a total of $24,270,985 was transferred by Hartleys, stockbrokers, from Australia into the same Liechtenstein bank account. 5 The evidence also shows that the first and second respondents jointly own a house in Peppermint Grove and one in Claremont, and that Mrs Seabrooke is the owner in her own right of properties in Margaret River, Cottesloe and Yallingup, as well as the Porsche Cayenne motor vehicle and the Sunseeker launch. 6 On 16 October 2012, the applicant issued assessments for income tax and administrative penalties to each of Mr and Mrs Seabrooke. The assessments issued to Mr Seabrooke were for each of the income years ended 30 June 1988 to 30 June 2011 and totalled $30,342,074.65. The assessments issued to Mrs Seabrooke totalled $21,531,511.90. The assessments issued to Mrs Seabrooke are, save for a small amount, alternative assessments to the assessments issued to Mr Seabrooke. 7 On 17 October 2012, the Commissioner filed an originating application wherein he sought declarations and judgment in respect of each of the first and second respondents' liability for income tax and administrative penalties as well as interest. At the same time, the Commissioner also filed an application for a freezing order in respect of the assets of each of Mr and Mrs Seabrooke up to the total amount in respect of the assessments issued to each of them. The Commissioner also sought an order that the originating application and the application for the freezing orders be served out of the jurisdiction on Mr Seabrooke; and for substituted service of that process on Mr Seabrooke. The Commissioner proposed that substituted service be effected by emailing the applications and affidavits in support of the interlocutory application to Mr Seabrooke's email address, and by delivering the applications and supporting affidavits to Mrs Seabrooke's residential address in Western Australia. The evidence is that Mr Seabrooke is currently thought to be in Mozambique and Mrs Seabrooke is residing at their Peppermint Grove property in Western Australia.
THE APPLICATION FOR THE FREEZING ORDERs 8 The Commissioner relies upon r 7.35 of the Federal Court Rules 2011 to apply for the freezing orders in respect of the assets of each of the respondents. The Commissioner contends that he has a good arguable case on an accrued or prospective cause of action which is justiciable in this Court. 9 The evidence discloses that in respect of the assessments which have been issued to each of Mr and Mrs Seabrooke, the date for the payment of the tax assessed for about half of the tax years in question has already passed. However, the date for the payment of the assessed tax for the other tax years, and the date for payment of the administrative penalties, is 19 November 2012 and 9 November 2012 respectively. 10 In my view, the evidence comprising the issue of the assessments shows that the Commissioner has an accrued or prospective cause of action in respect of the tax assessed and the administrative penalties which is justiciable in this Court. I am also satisfied that the Commissioner has a good arguable case that the amounts set out in the assessments are due and payable in respect of those amounts for which the due date has already passed, and that the amounts which are payable in November 2012, have been correctly assessed. Section 177 of the Income Tax Assessment Act 1936 (Cth) and s 298-30(3) in Sch 1 of the Taxation Administration Act 1953 (Cth) provide that the production of a notice of assessment or copy thereof is conclusive evidence in the making of the assessment and that the amount and all the particulars of the assessment are correct. This is a sufficient basis to conclude that the Commissioner has a good arguable case sufficient to support the making of freezing orders. I note, however, in passing, that one of the issues with which the audit was concerned was whether Mr Seabrooke was resident in Australia for tax purposes in the years ended 30 June 1998 to 30 June 2011 inclusive. There is considerable discussion in the audit on this question. The issue of whether Mr Seabrooke was resident in Australia during that period for tax purposes remains for another day. However, based, of course, only on the evidence referred to in the audit the Commissioner has shown a good arguable case on this issue. 11 The fact that the time for payment of some amounts of the tax and the administrative penalties has not yet elapsed, does not preclude the freezing orders from being made (Deputy Commissioner of Taxation v Sharp (1988) 91 FLR 70 at 74). 12 Further, before making a freezing order, the Court must be satisfied that there is a danger that the assets may be dissipated so that a prospective judgment would be wholly or partly unsatisfied (r 7.32(1) of the Rules). I am satisfied that such a danger exists on the evidence before me. In this regard, I take into account the following factors. First, the large amount of the tax debt in question. The assessment issued to Mr Seabrooke is for an amount in excess of $30 million. Secondly, the evidence demonstrated that Mr Seabrooke has over a number of years been able to move very large sums of money in and out of Australia through a foreign bank account. Thirdly, Mr Seabrooke has shown over a considerable period of time a distinct disinclination to pay tax in Australia. Fourthly, Mr Seabrooke has a number of business interests overseas. 13 I observe that the Commissioner also sought to rely upon the proximity in time between Mr and Mrs Seabrooke changing their names, in June 1987, and their ceasing to file tax returns in Australia. There may, however, be explanations for why Mr and Mrs Seabrooke changed their names, other than in furtherance of an intention to avoid paying tax in Australia. I, therefore, do not place much weight upon this circumstance at this time. More relevant, in my view, in assessing the danger of Mr and Mrs Seabrooke disposing of their assets so as to render any judgment wholly or partly unsatisfied, is the extent of Mr Seabrooke's business interests overseas, the structures he has in place for the transfer of funds overseas, and the fact that he has over a considerable period of time shown a propensity to move money in and out of Australia by the use of these structures and Mr and Mrs Seabrooke's demonstrable disinclination to pay tax in Australia. 14 I am also satisfied that the balance of convenience favours the granting of the freezing order. The freezing order is primarily directed at preventing the disposal of real property. In the short term, at least, this is unlikely to cause hardship to Mr and Mrs Seabrooke. Further, the freezing order makes provision for the use by Mr and Mrs Seabrooke of their assets for ordinary living expenses, reasonable legal costs and for payments made in the ordinary course of business. Also, Mr and Mrs Seabrooke have the benefit of the Commissioner's undertaking as to damages. On the other hand, for the Commissioner the risk is not being able to satisfy a judgment for a very considerable sum of money if he is successful at trial. 15 I am also satisfied that the Court may make an order for the service of the application for the freezing order upon Mr Seabrooke, notwithstanding that Mr Seabrooke is outside Australia. Rule 7.37 of the Rules provides that: An application for a freezing order or an ancillary order may be served on a person who is outside Australia (whether or not the person is domiciled or resident in Australia) if any of the assets to which the order relates are within the jurisdiction of the Court. 16 The evidence discloses that assets to which the freezing order relates are located within Australia.
LEAVE TO SERVE OUT OF THE JURISDICTION 17 As I have mentioned, the evidence is that the first respondent is likely to be living and working in Mozambique. 18 The Commissioner has sought leave to serve the originating application on Mr Seabrooke in Mozambique under r 10.43(2) of the Rules by transmission to a foreign government in accordance with a convention. 19 First, I am satisfied that a proceeding to recover a tax debt, is a proceeding of the kind mentioned in r 10.42 of the Rules. 20 Secondly, for the reasons which I have already set out, I am satisfied that the Commissioner has a prima facie case for the purposes of service out of the jurisdiction (State of Western Australia v Vetter Trittler Pty Ltd (In liq) (Receiver and Manager Appointed) (1991) 30 FCR 102 at 109-110). 21 Thirdly, Mr Burrows, a legal practitioner acting for the Commissioner, has deposed that he has obtained advice as to the proposed mode of service on Mr Seabrooke in Mozambique. The advice is that a letter of request, together with the documents to be served, is to be forwarded to the Department of the Commonwealth Attorney General which will then transmit the documents to the designated foreign authority requesting service in accordance with its domestic laws.
SUBSTITUTED SERVICE ON MR SEABROOKE 22 The Commissioner relied upon r 10.24 of the Rules for an order for substituted service upon Mr Seabrooke of the originating application and the application and supporting affidavits for the freezing order, and the freezing order (which, as I have mentioned, are referred to in the orders as "the documents"). The Commissioner sought substituted service by way of sending the documents to a private email address which was nominated by Mr Seabrooke in a recent immigration arrival card, and also by delivery of the documents to Mrs Seabrooke's residential address in Peppermint Grove - being the property jointly owned by Mr and Mrs Seabrooke. 23 Rule 10.24 permits the Court to order substituted service where "it is not practicable to serve a document on a person in a way required by these Rules". The question of whether it is not practicable to serve a document in this manner, must be assessed by reference to all the circumstances of the case. Thus, for example, in the case of Rohalo Pharmaceutical Pty Ltd v RP Scherer SpA (1994) 15 ACSR 347 at 366, Lindgren J permitted substituted service on an Italian company by service on solicitors in Australia, in a case where that company had served a statutory demand and the circumstances of that case made it desirable that the litigation progressed quickly and efficiently. 24 In my view, similar circumstances apply in this case. The circumstances of urgency associated with the making of the freezing orders and the need to give Mr and Mrs Seabrooke an opportunity, at the earliest time, to contest the continuance of the freezing orders, means that it is appropriate in this case to make an order for substituted service of the documents on Mr Seabrooke. 25 The evidence shows that Mrs Seabrooke is married to Mr Seabrooke and is in communication with him and that Mr Seabrooke continues to maintain a residence at the Peppermint Grove property where his wife resides. Further, Mr Seabrooke named Mrs Seabrooke as his emergency contact on his most recent immigration arrival card when entering Australia. I am persuaded that service of the documents on Mrs Seabrooke will almost certainly bring to Mr Seabrooke's attention the existence of this proceeding and the orders made by the Court. 26 I will, therefore, order that there be service of the documents on Mr Seabrooke by delivery of the documents to Mrs Seabrooke's residential premises in Peppermint Grove. I am not, however, prepared to order substituted service by the Commissioner transmitting the documents to the nominated private email address. The documents are particularly voluminous. Mr Zafiriou's affidavit, for example, runs to 761 pages. In my view, it would be oppressive on Mr Seabrooke to receive service in a way which would entail him having to print such a voluminous document. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.
Deputy Commissioner of Taxation
Seabrooke
(1988) 91 FLR 70
(1991) 30 FCR 102