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[2015] FCA 1465
Federal Court of Australia
2015-12-23
Gleeson J
Original judgment source is linked above.
REASONS FOR JUDGMENT 1 By interlocutory application dated 6 November 2015, the applicant ("DCT") applied for default judgment against the respondent ("Mr Sibai"), pursuant to rule 5.23(2)(b) of the Federal Court Rules 2011 (Cth). 2 The default judgment is in respect of the originating application and statement of claim filed on 8 September 2015, in which the applicant seeks to recover: (a) an amount of $10,499,914.90 (comprising income tax liabilities, shortfall penalties and shortfall interest charges and general interest charges ("GIC")); (b) any further GIC accruing on that amount pursuant to s 5-15 of the Income Tax Assessment Act 1997 (Cth), s 298-25 of Schedule 1 of the Taxation Administration Act 1953 (Cth) ("TAA") and Part IIA of the TAA at the rates prescribed in the TAA between the date of filing and the date of judgment; and (c) costs. 3 Rule 5.23(2)(b) provides: (2) If a respondent is in default, an applicant may apply to the Court for: … (b) if the claim against the respondent is for a debt or liquidated damages - an order giving judgment against the respondent for: (i) the debt or liquidated damages; and (ii) if appropriate, interest and costs in a sum fixed by the Court or to be taxed; … 4 By rule 5.22, a party is in default if the party fails to: (a) do an act required to be done, or to do an act in the time required, by these Rules; or (b) comply with an order of the Court; or (c) attend a hearing in the proceeding; or (d) prosecute or defend the proceeding with due diligence. 5 In support of the application, the DCT relied upon the following affidavits: (1) Affidavit of Jessica Rogers affirmed 21 October 2015; (2) Affidavit of Jessica Rogers affirmed 6 November 2015; (3) Affidavit of Jessica Rogers affirmed 2 December 2015; (4) Affidavit of Aris Zafiriou sworn 2 December 2015; (5) Affidavit of Aris Zafiriou sworn 8 December 2015; (6) Affidavit of Stephanie Kate Byrnes affirmed 11 November 2015; and (7) Affidavit of Frank Hoare sworn 25 November 2015. 6 Mr Sibai did not appear before the Court on the DCT's application for default judgment.
Relevant legal principles 7 In Speedo Holdings BV v Evans (No 2) [2011] FCA 1227, the Court outlined a number of principles relevant to the discretion to enter default judgment, including the following (at [20]-[25]): First, the power … remains discretionary. … Just as the discretion must be exercised [cautiously] where it is the applicant that is in default … the same caution must be exercised where it is the applicant who is seeking orders as against a defaulting respondent. Second, the discretionary power to enter a default judgment is enlivened when (as in the present case) an applicant applies to the Court for an order. Rule 5.23(2) provides that where a respondent is in default "an applicant may apply to the Court". … Third, there is a difference in the terms in which the ambit of the power conferred by the former r 3(2)(c) ("the relief… that the applicant appears entitled to on the statement of claim") and the wording of the current r 5.23(2)(c) ("the relief claimed in the statement of claim to which the Court is satisfied that the applicant is entitled"). Notwithstanding that difference in language, the requirement imposed is not that an applicant prove by way of evidence the claim sought to be advanced; the requirement is that the Court needs to be "satisfied" on the face of the statement of claim that the applicant is entitled to the "relief" claimed…. The facts as alleged in the statement of claim are deemed to have been admitted by a respondent: Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd [2007] FCAFC 146 at [42], 161 FCR 513 at 523 per Moore, Dowsett and Greenwood JJ. … Fourth, to be satisfied that an applicant "is entitled" to the relief claimed in the statement of claim, the Court needs to be satisfied that "each element of the relevant civil wrong involved is properly and discretely pleaded in the statement of claim": Macquarie Bank Ltd v Seagle [2005] FCA 1239 at [24], 146 FCR 400 at 406 to 407 per Conti J …. Fifth, in addition to the facts alleged in a statement of claim, the Court may permit recourse to limited further evidence. But it may not admit evidence which would alter the case as pleaded. 8 The above approach was followed in Placitum Pty Ltd v Andreotta [2014] FCA 726 at [12] and Electrolux Home Products Pty Ltd v Delap Impex KFT [2015] FCA 62; (2015) 110 IPR 164 at [24].
Background facts 9 On 8 September 2015, the DCT filed an originating application seeking the orders set out in paragraph 2 above. 10 From the DCT's statement of claim, also filed on 8 September 2015, it appears that the amount of $10,499,914.91 comprises: (a) $5,824,420 in income tax liabilities and related GIC for the income years ended 30 June 2011 to 30 June 2014 ("relevant period"); (b) $4,172,722.60 in administrative penalties and GIC for the income years ended 30 June 2011, 2012 and 2013; and (c) $502,772.15 in shortfall interest charge as at 27 August 2015. 11 The evidence includes the notices of amended assessment for the years ended 30 June 2011, 30 June 2012, 30 June 2013 and 30 June 2014 issued on 13 May 2015, by which the income tax liabilities referred to in paragraph 10(a) became due. 12 The evidence also includes statement penalty notices in respect of the administrative penalties referred to in paragraph 10(b). 13 The evidence also includes notices of shortfall interest charge in respect of the shortfall interest charge referred to in paragraph 10(c). 14 The affidavit of Aris Zafiriou sworn 2 December 2015 provides evidence that the further GIC referred to at paragraph 2(b) above amounts to $434,751.54 as at 2 December 2015, such that the total amount the DCT seeks to recover is $10,757,407.49. 15 That evidence includes a certificate under s 255-45 of Schedule 1 of the TAA, certifying that as at 1 December 2015, the sum of $10,757,407.43 was a debt due and payable to the Commonwealth by Mr Sibai in relation to the tax related liability referred to in the certificate. 16 The originating application and statement of claim were served on the applicant's legal representatives on 24 September 2015. 17 By rule 16.32 of the Federal Court Rules 2011 (Cth), a respondent must file a defence, in accordance with Form 33, within 28 days after service of the statement of claim. Having been served on 24 September 2015, the defence was required to be filed by 22 October 2015. 18 Mr Sibai did not file a defence in accordance with rule 16.32, and has not sought to file any defence in the proceeding. 19 On 26 October 2015, the applicant's solicitors wrote to Mr Sibai. In that letter, it was stated, inter alia, that "if you do not file a defence by close of business on Wednesday, 28 October 2015, our client will apply for default judgment without any further notice being given". A copy of that letter was sent by express post to: Mr Sibai's residential address, a PO Box which is an address for service listed in orders made by Rares J against Mr Sibai in the Federal Court proceedings number 544 of 2015 on 14 May 2015, and the address of Sibai Partners Pty Ltd, a business carried on by Mr Sibai. It was also sent by email to Streeton Lawyers, who acted for Mr Sibai in Federal Court proceedings number 544 of 2015. 20 On 29 October 2015, the proceeding was listed before the Court for case management. Mr Sibai did not appear on that occasion. 21 On 10 November 2015, the interlocutory application and supporting affidavit were sent by express post to the addresses referred to at paragraph 19 above. 22 On 19 November 2015, Mr Sibai was personally served with the interlocutory application and supporting affidavit of Jessica Rogers affirmed 6 November 2015.
Consideration 23 Mr Sibai is in default within the meaning of rule 5.22 by reason of his failure to file a defence by 22 October 2015. 24 I accept the submission on behalf of the DCT that Mr Sibai is also in default by reason of his failure to attend the directions hearing in the proceeding on 29 October 2015. 25 The circumstances and evidence set out above justify the order for judgment in the amount sought by the DCT. In further support of the judgment sum, I note that by s 177(1) of the Income Tax Assessment Act 1936 (Cth), the production of a notice of assessment is conclusive evidence of the due making of the assessment and, except in proceedings under Part IVC of the TAA on a review or appeal relating to the assessment, that the amount and all the particulars of the assessment are correct.
Conclusion 26 I will order default judgment against Mr Sibai in the sum of $10,757,407.49 plus costs. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.
Deputy Commissioner of Taxation
Sibai