Deputy Commissioner of Taxation v Vasiliades

REASONS FOR JUDGMENT (Revised from Transcript) 1 The Commissioner seeks a declaration that the second respondent, Mrs Vasiliades, neglected or refused to comply with orders made by this Court in May and July of 2015. The Commissioner also seeks a consequential order for substituted performance of the order which had been made against Mrs Vasiliades. 2 Mrs Vasiliades has not participated in the hearings of these proceedings in which judgment was given on 5 May 2015 and orders were made on 10 July 2015, and there has been no legal practitioner on record acting for her for some time. On 18 February 2015 her then solicitor filed a notice of his ceasing to act and there has been no solicitor on record acting for her since then. On the hearing of the Commissioner's application for orders for substituted performance, however, counsel, instructed by a solicitor, appeared on behalf of Mrs Vasiliades, without notice, and made an oral application that the Commissioner's application set to be heard that day be adjourned. The solicitor acting for Mrs Vasiliades who instructed counsel on that occasion was not on record and no materials had been filed or were produced in support of the oral application. The basis upon which counsel sought the adjournment for Mrs Vasiliades was that her counsel and solicitor had only recently been instructed to apply to have set aside the judgment delivered on 5 May 2015 and the orders which had been made on 10 July 2015, but had not had sufficient time to make that application before, or on, the day on which they appeared. The oral explanation of that by counsel was that they had only recently been retained and that there was some difficulty in obtaining detailed instructions from Mrs Vasiliades because she was not in Australia. The Commissioner opposed the oral application to adjourn the hearing. 3 I declined to grant the adjournment in those circumstances after hearing from the parties about whether there would be any irreparable prejudice to the parties of adopting the course of hearing the Commissioner's application but deferring for a period of time the effect of any order if the Commissioner's application for substituted performance were successful. The Commissioner also indicated that he would not rely upon any orders made upon the hearing of his application as an additional ground to defend any application that may be made by Mrs Vasiliades to have set aside the orders which had previously been made by the Court. That course would enable the Commissioner's application to proceed and at the same time preserve the ability, if any, of Mrs Vasiliades to make such application as she sought to make to have set aside the orders which had previously been made. 4 The Commissioner's application was, as previously mentioned, for a declaration that Mrs Vasiliades had failed or neglected to comply with an order, and for substituted performance by another of that which Mrs Vasiliades had been ordered to do. Judgment was given for the Commissioner on 5 May 2015 against Mr Vasiliades in the amount of $30,315,876.58 together with further general interest charge. The orders made on 5 May 2015 included declarations that Mr Vasiliades had an equitable interest in the net proceeds of the sale of a property to the extent of $2,710,196.68 in the Macquarie Bank account in the name of Mrs Vasiliades. A declaration was also made on that day that Mrs Vasiliades held that amount in the Macquarie Bank account (together with any interest accrued on that amount) for or on account of Mr Vasiliades. It was subsequently ordered on 10 July 2015 that Mrs Vasiliades instruct Macquarie Bank Limited within seven days to pay to the Commissioner by way of enforcement of the judgment the amount of $2,710,196.68 in the Macquarie Bank account. Mrs Vasiliades has not given such an instruction to Macquarie Bank. 5 The Commissioner relies upon two affidavits made by Ms Zoe Harwood dated 27 July 2015 and 6 August 2015, respectively, in support of his application. The affidavits set out the steps taken to serve and notify Mrs Vasiliades of the orders made on 10 July 2015 requiring her to instruct Macquarie Bank to pay the amount in its account in her name to the Commissioner, of service of the current application upon her, and of the communications between Macquarie Bank and Mr John Paolacci (who had been acting on behalf of Mrs Vasiliades in some capacity) concerning the Commissioner's application. The affidavits deposed also to the fact that Macquarie Bank has not paid the amount in question to the Commissioner and that the bank had informed the Commissioner that no instruction from Mrs Vasiliades has been received to pay the amount. The affidavit of 6 August 2015 also stated that the Commissioner had been informed by the bank that Mrs Vasiliades had informed the bank that she did not release the funds "as they were hers and not those of her husband". On 23 July 2015 an email had also been sent on behalf of the Commissioner to Mr Paolacci requesting confirmation about whether Mrs Vasiliades had provided instructions to Macquarie Bank pursuant to the order that she instruct Macquarie Bank to pay an amount to the Commissioner. Mr Paolacci had also been served with a copy of the orders of 10 July 2015 in his capacity as a professional acting on behalf of Mrs Vasiliades. On 24 July 2015 Mr Paolacci informed Ms Harwood that he was not aware that Mrs Vasiliades had provided instructions to Macquarie Bank. On 6 August 2015 Mr Paolacci was informed that it was his understanding that Mrs Vasiliades was looking at engaging someone to act on her behalf. The evidence thus established that Mrs Vasiliades has not complied with the orders directed to her and, in the circumstances, it is appropriate for a declaration to be made that Mrs Vasiliades had neglected and refused to do an act that she was bound by a court order to do. 6 The Commissioner's application for substituted performance is sought under r 41.09 of the Federal Court Rules 2011 (Cth). Rule 41.04(1) provides that a person who is ordered by the Court to do something must comply with the order. Rule 41.09 permits a party to apply to the Court for an order that another person do the act which the other person was required to do. The rule provides: (1) If a person (the first person) is bound, but neglects or refuses, to do an act, a party may apply to the Court for an order: (a) that the act be done by another person, appointed by the Court; and (b) that the first person pay the costs and expenses incurred by the making of the order. (2) Subrule (1) does not limit: (a) the power of the Court to punish for contempt; or (b) any other mode of enforcement of the judgment or order available to the party. In this case the Commissioner seeks an order that the Registrar of this Court do that which Mrs Vasiliades had been ordered to do, namely, to execute an instruction in the name of Mrs Vasiliades to Macquarie Bank to pay to the Commissioner's bank account the amount of $2,710,196.68 from the account in her name with Macquarie Bank. 7 In Speedo Holdings BV v Evans (No 2) [2011] FCA 1227 Flick J ordered the transfer of domain names in the event of a failure on the part of the respondent to transfer those names saying at [34]: Rule 41.09 of the Federal Court Rules 2011, it should be expressly noted, provides that an application may be made for an order for "substituted performance" where a party "is bound, but neglects or refuses, to do an act". Rule 41.09 has its forbears in Order 37 r 3 of the now repealed Federal Court Rules. Order 37 r 3 was invoked in CSR Ltd v Resource Capital Australia Pty Ltd [2003] FCA 279, 128 FCR 408 where an order was made that in the event of default the Registrar "sign all necessary documents to transfer the domain name 'csrsugar.com' to the applicant or as the applicant directs". The present rule, and its predecessor, assume particular importance where a party does not cooperate in the transfer of a domain name. An applicant who is otherwise entitled to relief is not to be thwarted by an uncooperative opponent. Another instance of an order being made pursuant to the former Order 37 r 3 is provided by Australian Competition and Consumer Commission v Purple Harmony Plates Pty Ltd (No 3) [2002] FCA 1487, 196 ALR 576. […] There is some difference in language between the current r 41.09 and the former Order 37 r 3. Rule 41.09(1)(a), for example, refers to a person who "is bound, but neglects or refuses, to do an act"; Order 37 r 3 previously referred to a "person bound to do an act" and who "does not do the act". Whether the addition of the words "neglects or refuses" may at some stage be construed as requiring the proof of some additional element - in addition to proof of the simple fact that a person has not done a specified act - may be left for future consideration. Rule 41.09 is also now expressed in terms of a person applying to the Court whereas the former Order 37 r 3 was expressed in terms of itself conferring the discretionary power upon the Court to make an order. The power, however expressed, is an essential power - especially in those circumstances where one party is refusing or unwilling to cooperate or assist the Court in the resolution of claims being made. In Sumitomo Mitsui Banking Corporation v Sumitomo Mitsui Financial Group Pty Ltd (No 2) [2009] FCA 496 Drummond J appointed a solicitor to sign all necessary documents under the former Order 37, rule 3: see also Australian Competition and Consumer Commission v Purple Harmony Plates Pty Ltd (No 3) (2002) 196 ALR 576, [43]; Leach v Leach [1965] VR 599, 604-5. 8 Mrs Vasiliades not having done that which she was required to do there will be an order for that act she was to do to be authorised to be done by a registrar of this Court. The order will be that a registrar be appointed not before 21 August 2015 to execute an instruction in the name of Mrs Vasiliades to Macquarie Bank to pay the amount of $2,710,196.68 from the account in Mrs Vasiliades' name to the Commissioner. That will give Mrs Vasiliades an opportunity to make an application within 14 days to challenge the orders made in May and July 2015 upon which the orders for substituted performance depend. Those acting for her will also need to formalise their position and were informed that any application be made by 21 August 2015 and made returnable for directions at 9:30am on 25 August 2015. The orders will also provide that the date of 21 August 2015, as the date upon which a registrar of this Court may be appointed to instruct Macquarie Bank to pay the amount to the Commissioner, will be substituted with 4:00pm on 25 August 2015 if an application by Mrs Vasiliades to have set aside the judgment given on 5 May 2015 and the orders made on 10 July 2015 is made by 21 August 2015 that is made returnable for directions at 9:30am on 25 August 2015. That will enable the parties to appear on the morning of 25 August 2015 to seek any directions that may be appropriate but will otherwise enable the Commissioner to pursue the course contemplated by the orders successfully obtained on the application for substituted performance. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Pagone.