At the conclusion of the Commissioner's submissions and before commencing reply submissions, Ms Bateman of counsel sought a short adjournment to obtain instructions. Upon resumption Ms Bateman applied under Uniform Civil Procedure Rules 2005 ("UCPR"), r 12.1(1) to discontinue the proceedings by filing a Notice of Discontinuance. UCPR, r 12.1 provides as follows:
"12.1 Discontinuance of proceedings
(1) The plaintiff in any proceedings may, by filing a notice of discontinuance, discontinue the proceedings, either as to all claims for relief or as to all claims for relief so far as they concern a particular defendant--
(a) with the consent of each other active party in the proceedings, or
(b) with the leave of the court.
…"
Unless the Court otherwise orders, when proceedings are discontinued by a plaintiff, the result is that the plaintiff shall pay such of the defendant's costs as have been incurred at the date on which the Notice of Discontinuance was filed: UCPR, r 42.19.
The only other active party in the proceedings, the Commissioner, did not consent to the discontinuance. Ms Bateman therefore applied for leave from the Court to discontinue the proceedings. The Commissioner opposed the grant of leave.
The principles governing the grant of leave to discontinue are well established. The Court will normally allow a plaintiff to discontinue proceedings provided no injustice will be caused to the defendant, as it is not desirable that a plaintiff should be compelled to litigate against his or her will. The Court considers whether the defendant will be deprived of any forensic advantage already gained in the litigation in considering whether to grant leave and may impose terms to protect a forensic advantage that has already been gained by the defendants: Covell Mathews v French Walls Limited (1977) 1 WLR 876 at 879 and Visy Board Pty Ltd v Attorney General (Cth) (1984) 2 FCR 113, per Sweeney J at 142-143, per Lockhart J at 161 and per Shephard J at 185.
The rules preserve the Court's discretion as to the appropriate costs outcome. This residual discretion means that the rules do not give rise to a formal presumption that the mere fact of discontinuance itself justify a costs order against the discontinuing party: Fordyce v Fordham (2006) 67 NSWLR 497; [2006] NSWCA 274. The effect of discontinuance of proceedings does not, subject to the terms of any discontinuance, prevent the plaintiff from claiming the same relief in fresh proceedings: UCPR, r 12.3 which provides as follows:
"12.3 Effect of discontinuance
(1) A discontinuance of proceedings with respect to a plaintiff's claim for relief does not prevent the plaintiff from claiming the same relief in fresh proceedings.
(2) Subrule (1) is subject to the terms of any consent to the discontinuance or of any leave to discontinue."
If a plaintiff is not permitted to discontinue and the proceedings conclude after a determination on the merits, the plaintiff is not entitled to claim relief in respect of the same cause of action in subsequent proceedings: Civil Procedure Act ("CPA") 2005, s 91 and see Newmont Pty Ltd v Lavington Nickel NL (No.2) (1981) 1 NSWLR 221.
Ms Bateman's application for leave was not supported by any fresh evidence. But Ms Bateman submitted that Mr Gazal's medical situation may have permitted greater flexibility than had at first appeared and the application may be able to be brought later, as circumstances developed. Her argument was not elaborated much except to submit discontinuance would free up the Court's limited resources in the vacation duty period to deal with other matters and there was little additional benefit in the Court making a decision on the merits rather than allowing a discontinuance partly because re-agitation of the proceedings is unlikely.
The Court is not persuaded it should give Mr Gazal leave to discontinue. The Court indicated that view to Ms Bateman after the application was made and requested that she put her submissions in reply, which she did. The Court indicated it would include in its final reasons its reasons for declining to grant leave to discontinue. This section of these reasons deals with that issue.
It is not necessary for the Court to set out the Commissioner's arguments against granting leave to discontinue. Some of those submissions have been adopted as part of the Court's reasons for declining leave. The reasons for so declining are the following.
First, this application comes very late in the proceedings. The case commenced with the reading of evidence and preliminary argument on the afternoon of 2 January. As the Court was sitting in both Equity and Common Law to administer the vacation list, these proceedings were interrupted on a number of occasions. They resumed on 3 January 2024, but did not commence in an uninterrupted fashion until shortly before lunchtime that day. By the time the application to discontinue was made it was a little after 4pm. The only procedural act then remaining to be performed was for Ms Bateman to reply to Ms Scott's submissions and for the Court to reserve judgment. When the Court declined leave Ms Bateman's submissions in reply took less than 5 minutes and the Court reserved judgment. There is no cost saving or financial efficiency or advantage that would be served by discontinuance at such a late stage. There would be virtually no difference between a costs order following a discontinuance against Mr Gazal and any costs order that would flow from him failing in the proceedings. Costs efficiencies therefore do not favour a grant of leave.
Secondly, the late application also means that the usual consideration that a plaintiff should not be forced to litigate against his will, does not favour a grant of leave. Mr Gazal has already litigated to the practical end of the hearing. The only steps that he would be required to take against his will at this point would be to put submissions in reply, which imposed no further practical burden upon him.
Thirdly, the forensic landscape of the proceedings has now been established. The available evidence has been led and submissions put on both sides. As these reasons show Mr Gazal brought these proceedings urgently gathering such evidence as he could. Some of this evidence is adequate but some of it is of doubtful integrity. The strength or weakness of his case depends in part upon the quality of the evidence that has been available. The Commissioner perceives, correctly, as it turns out, this has resulted in the gaining through the course of argument of various forensic advantages that the Commissioner does not wish to abandon by reason of a discontinuance and a potential re-litigation of the proceedings.
Fourthly, if the Court gives a determination rather than disposing of the proceedings by allowing a discontinuance, the Court will be eliminating the opportunity to re-litigate issues about the DPO on a future occasion. That too is consistent with the objectives of CPA, Part 6. Ms Bateman submits re-agitation is unlikely. But it is possible and cannot be ruled out in a case with the zig-zag course of this one.
Finally, there is a public interest in the taxation laws of the Commonwealth being administered with efficiency and certainty. Mr Gazal has other avenues of challenge to the effect of the DPO, notably through TAA, s 14U, in the Administrative Review Tribunal. He may wish to pursue his existing application for a departure authorisation certificate. Determining the validity of the DPO now will reduce the scope for collateral issues to be argued in future s 14U applications and will create greater certainty for future administrative decision makers who may be required to assume the validity of the DPO.
[2]
Conclusion and Orders
The parties agreed at the conclusion of oral submissions that the party which was successful would be entitled to an order for costs on the ordinary basis. Neither party indicated that any other costs issues would arise. Therefore, it is not necessary for the Court to allow any further time for submissions in relation to costs. The Commissioner has been successful, and costs should follow the event. The Court will order Mr Gazal to pay the Commissioner's costs of these proceedings.
Mr Gazal has few assets in his own name. The Court's jurisdiction under Civil Procedure Act 2005 s98(4)(c) is therefore attracted. The Court can make an order fixing a specified gross sum instead of requiring the Commissioner to expend resources on a full costs assessment, costs which are unlikely to be recovered: Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 at [21] (per Giles JA). The Commissioner will be given liberty to apply in chambers and should do so after the law term commences on 29 January 2024 but by no later than Friday, 9 February 2024.
For these reasons the Court makes the following orders and directions:
1. The Plaintiff's Amended Summons dated 1 January 2024 is dismissed.
2. Order the Plaintiff to pay the Defendant's costs of the proceedings.
3. Grant leave to the Defendant to apply in chambers for the making of a specified gross sum order instead of assessed costs pursuant to Civil Procedure Act 2005, s 98(4)(c).
[3]
Amendments
09 January 2024 - [46] second last sentence, "George fit" to "George Ghazal".
29 January 2024 - [111] ( 3)- typographical amendment "Plaintiff" to "Defendant"
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 29 January 2024
Departure Prohibition Orders - The Legal Framework
TAA, s 14S empowers the Commissioner by order in accordance with the prescribed form to prohibit the departure of a person from Australia for a foreign country under certain conditions. Section 14S provides as follows:
"Departure prohibition orders
(1) Where:
(a) a person is subject to a tax liability; and
(b) the Commissioner believes on reasonable grounds that it is desirable to do so for the purpose of ensuring that the person does not depart from Australia for a foreign country without:
(i) wholly discharging the tax liability; or
(ii) making arrangements satisfactory to the Commissioner for the tax liability to be wholly discharged;
the Commissioner may, by order in accordance with the prescribed form, prohibit the departure of the person from Australia for a foreign country.
(2) Subject to subsection (3), a departure prohibition order remains in force unless and until revoked under section 14T or set aside by a court.
(3) A departure prohibition order made in respect of a person shall be taken, by virtue of this subsection, not to be in force in respect of the person during any period during which an order is in force under the Migration Act 1958 for the deportation of the person.
(4) Where a departure prohibition order is made in respect of a person, the Commissioner shall forthwith:
(a) cause the person to be informed, as prescribed, of the making of the order; and
(b) subject to subsection (5), cause a copy of the order, and such information as the Commissioner considers is likely to facilitate the identification of the person, to be given to:
(i) the Immigration Secretary; and
(ii) such other persons as the Commissioner considers appropriate, being persons prescribed, or included in a class of persons prescribed, for the purposes of this paragraph.
(5) Where a departure prohibition order is made in respect of a person whom the Commissioner is satisfied is an Australian citizen, the Commissioner shall not cause a copy of the order, or any information likely to facilitate the identification of the person, to be given to the Immigration Secretary unless the Commissioner is of the opinion that it is desirable to do so."
The expression "tax liability" where it occurs in s 14S is defined by TAA, s 2 as meaning "a liability to the Commonwealth arising under, or by virtue of, a taxation law".
The Courts have periodically considered the function and purpose of s 14S since its enactment in cases that include Dalco v FCT (1987) ATR 443 ("Dalco"), Edelsten v FCT (1989) 85 ALR 226 ("Edlesten"), Skase v FCT (1991) 32 FCR 206 ("Skase"), Thai v DCT (1994) 123 ALR 570 ("Thai"), Poletti v Commissioner of Taxation (1994) 52 FCR 154 ("Poletti"), and more recently in Pattenden v Commissioner of Taxation [2008] FCA 1590 ("Pattenden"), Troughton v Deputy Commissioner of Taxation (2008) 166 FCR 9; [2008] FCA 18 ("Troughton") and Bakri v Deputy Commissioner of Taxation [2017] FCA 20 ("Bakri").
The operation of s 14 and the approach to its interpretation have been settled since Dalco. Drawing upon Dalco, Jessup J set out in Troughton (ay [21] - [23]) a concise summary of the interpretation and legal effect of this section:
"21. However, there is authority which I should follow that suggests that the purposive dimension of s 14S should not be ascertained from such a literal reading of the words of the section. In Dalco v Federal Commissioner of Taxation (1987) 19 ATR 443, 447-448, Young J said of s 14S:
I am of the view that that is the way that one approaches the section. The Commissioner is to believe on reasonable grounds that it is desirable to stop a person leaving Australia because it is necessary to collect the tax that is owed to the government and that that discharging of the tax liability will be affected by the person going overseas.
His Honour's view was endorsed in this court in Edelsten v Federal Commissioner of Taxation (1989) 85 ALR 226, 230 and in Skase v Commissioner of Taxation (1991) 32 FCR 206, 209 and 210-211. In the latter case, Pincus J said that "there must be … the circumstance that recoverability will be affected by the departure of the taxpayer from Australia." (32 FCR at 211)
22. It follows that s 14S(1)(b) should be read not literally, but as though it referred to a belief by the Commissioner (on reasonable grounds) that it was desirable that the person not leave Australia without discharging the tax liability or making the arrangements there referred to. Thus it is not to be taken as a given that, in every case, the departure of the person from Australia will make it unlikely, or at least less likely, that the tax liability will be discharged, or that the ability of the Commissioner to recover the tax will be impaired. These are things which must be considered by the Commissioner in every case. The purpose of s 14S, and accordingly a central purpose of Part IVA, is not the prevention of persons (owing tax) from leaving Australia simpliciter: it is the prevention of such persons from leaving Australia where, in the Commissioner's belief reasonably arrived at, the recovery of tax would or might thereby be impaired.
23. In that result, at least so far as revealed by s 14S, the general scope and objects of Part IVA of the Administration Act are as contended for by both sides in the present case. As contended for by the Commissioner, they are the protection of the revenue. As contended for by the applicant, they are the prevention of persons (owing tax) from leaving Australia where that would affect the recoverability thereof."
A party aggrieved by the making of the DPO, such as Mr Gazal, has a right of appeal under TAA, s 14V, which provides as follow:
"Appeals to courts against making of departure prohibition orders
(1) A person aggrieved by the making of a departure prohibition order may appeal to the Federal Court of Australia or the Supreme Court of a State or Territory against the making of the departure prohibition order.
(2) This section has effect:
(a) subject to chapter III of the Constitution; and
(b) notwithstanding anything contained in section 9 of the Administrative Decisions (Judicial Review) Act 1977 ."
The nature of an appeal under TAA, s 14V was comprehensively analysed and explained in Poletti. The Court gratefully adopts the concise summary of the effect of Poletti set out in Logan J's judgment in Pattenden at [7] - [9], which is reproduced below:
"7. Though termed an 'appeal', a proceeding under s 14V of the TAA either in this Court or a State or Territory Supreme Court, each of which is concurrently invested with Federal jurisdiction for this purpose, is a proceeding in the original jurisdiction. Features of such an appeal were considered by the Full Court in Poletti v Commissioner of Taxation (1994) 52 FCR 154 (Poletti's Case). Poletti's Case remains the only appellate authority in relation to such appeals. Not all of the decisions in the exercise of original jurisdiction which preceded Poletti's Case are readily reconcilable with that case or each other in relation to the nature of an appeal under s 14V.
8. The following propositions emerge from Poletti's Case in relation to this type of 'appeal':
(a) the appeal is not a hearing de novo, which means that there is no retrial of all the issues and what the Commissioner considered and did in making the DPO decision is not irrelevant (at 160);
(b) neither is an appeal against the making of a DPO confined to a question of law in the way in which is an appeal under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (at 160);
(c) nor is the appeal one confined to administrative law error grounds in a way in which would be a challenge under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (at 160);
(d) administrative law error grounds or a question of law may nonetheless permissibly be advanced on an appeal which, to this extent, overlaps with a judicial review proceeding (at 160);
(e) it is for an appellant to make good the challenge; no onus of proof lies on the Commissioner (at 160-161);
(f) the documentary material before the Commissioner at the time when the decision was made should be produced by him to the Court (at 161);
(g) other material then in existence, be it on the Commissioner's files or otherwise, is relevant and can be produced to the Court to enable the Court to decide whether the belief of the Commissioner was held on reasonable grounds (at 162);
(h) material which comes to light after the making of the DPO decision and which did not exist at that time is of doubtful relevance (at 162).
9. In Poletti's Case at 160, the Full Court considered that an appeal against the making of a DPO involves the determination by the Court of three principal questions (or such one or more of them as are in issue in the appeal):
(a) whether the person is subject to a tax liability;
(b) whether the Commissioner held the belief of which s 14S(1)(b) speaks; and
(c) whether reasonable grounds existed for the formation by the Commissioner of the requisite belief?
There questions provide a convenient framework within which to commence consideration of the merits of this appeal."
Knowing contravention of a departure prohibition order renders a person liable potentially to 12 months imprisonment: TAA, s 14R. The Commissioner shall, upon application, revoke a departure prohibition order in certain circumstances but may otherwise exercise a discretion to revoke the order pursuant to TAA, s 14T, which relevantly provides as follows:
"Revocation and variation of departure prohibition orders
(1) Where a departure prohibition order is in force in respect of a person and:
(a) the tax liabilities to which the person is subject have been wholly discharged and the Commissioner is satisfied that it is likely that the tax liabilities to which the person may become subject in respect of, or arising out of, matters that have occurred will be:
(i) wholly discharged; or
(ii) completely irrecoverable; or
(b) the Commissioner is satisfied that the tax liabilities to which the person is subject are completely irrecoverable;
the Commissioner shall, on application being made to the Commissioner by the person to do so or on the Commissioner's own motion, revoke the departure prohibition order.
(2) Where a departure prohibition order is in force in respect of a person, the Commissioner may, in the Commissioner's discretion and on application being made to the Commissioner to do so or on the Commissioner's own motion, revoke or vary the departure prohibition order.
…"
The Commissioner may, upon application, by a person in respect of whom a departure prohibition order is in force, issue a certificate, known as a "departure authorisation certificate", authorising the person to depart from Australia for a foreign country. The Commissioner may only issue a departure authorisation certificate in limited circumstances. These are essentially: if the Commissioner is satisfied that the person will depart from Australia and return to Australia within such period as the Commissioner considers appropriate and upon such conditions including security as the Commissioner may impose, or if security is not available, on humanitarian grounds or on the basis that refusal to issue a departure authorisation certificate would be detrimental to the interests of Australia: TAA, s 14U.
On an appeal under TAA, s 14V a Court hearing the appeal may make an order setting aside the departure prohibition order or dismiss the appeal: TAA, s 14X. As Poletti and Pattenden explain, though termed an "appeal", an application under s 14V is a proceeding in the original jurisdiction of the Court.
Decisions of the Commissioner made under TAA, ss 14T or 14U are reviewable by the Administrative Review Tribunal by a process distinct from the appeal mechanism in s 14V for appeals from decisions under s 14S.