FEDERAL COURT OF AUSTRALIA

Deputy Commissioner of Taxation v Ziolkowski [2017] FCA 1151

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to Rule 10.43(2) of the Federal Court Rules 2011 (Cth), the applicant has leave to serve copies of the following documents on the respondent, Mr Thomas Ziolkowski, in the United States of America, in accordance with the Hague Convention:

(a)    the originating application filed 10 August 2017;

(b)    the statement of claim filed 10 August 2017;

(c)    the affidavit of Mr Vladimir Klendo sworn 22 September 2017; and

(d)    these orders,

by personally serving the same on Mr Ziolkowski, in accordance with the processes described in the website http://www.hcch.net/en/states/authorities/details3/?aid=279.

2.    The matter be listed for a case management hearing at 9.30am on Tuesday 5 December 2017.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

GRIFFITHS J:

1    The applicant seeks leave pursuant to r 10.43 of the Federal Court Rules 2011 (Cth) (the FCRs) to serve the originating application dated 10 August 2017 and statement of claim dated 10 August 2017 on the respondent outside of Australia.

2    In support of the claim for interlocutory relief, the applicant relies upon the affidavit of one of its officers, Mr Vladimir Klendo sworn on 22 September 2017.

3    In the originating application, the applicant seeks judgment for the sum of $1,502,765.23 plus General Interest Charges (GICs) and costs comprised as follows:

(a)    $606,889.99 in income tax liabilities and related General Interest Charges (GIC) for the income years ended 30 June 2006 and 30 June 2007;

(b)    $511,613.19 in Shortfall Interest Charges (SIC) and related GIC for the income years ended 30 June 2006 and 30 June 2007; and

(c)    $384,262.05 in penalties and related GIC for the periods 1 July 2005 to 30 June 2006 and 1 July 2006 to 30 June 2007.

4    The above liabilities of the respondent arise from the issue of assessments and amended assessments under the taxation laws of the Commonwealth, including the Income Tax Assessment Act 1936 (1936 Act), the Taxation Administration Act 1953 (1953 Act) and the Income Tax Assessment Act 1997 (1997 Act). There is no doubt that the cause of action arose in Australia.

Relevant considerations – service outside of Australia

5    There are three matters upon which the Court must be satisfied before granting leave to serve outside of Australia. These are set out in r 10.43(4) of the FCRs:

(a)    first, that the Court has jurisdiction in the proceeding;

(b)    secondly, that the Court has power to order service outside Australia, that is, that the proceedings are of a kind mentioned in r 10.42 of the FCRs; and

(c)    thirdly, that the applicant has a prima facie case for all or any of the relief claimed in the proceedings.

6    These matters were discussed by me in Warner v Hung in the matter of Bellpac Pty Ltd (Receivers and Managers Appointed) (In Liquidation) [2013] FCA 120. As to the first of those matters, that relates to jurisdiction, it is clear that this Court has original jurisdiction to hear and give judgment in a matter for the recovery of taxation liabilities under section 39B(1A)(c) of the Judiciary Act 1903 (Cth) (see also Deputy Commissioner of Taxation v Vasiliades [2015] FCA 412 at [3]).

7    As to the second matter, the FCRs require that the proceeding be of a type identified in r 10.42. This includes a “proceeding based on a cause of action arising in Australia”. As indicated above, there is no doubt that this is a proceeding which is based on a cause of action arising in Australia.

8    The third matter requires the Court to be satisfied that the applicant has a prima facie case. There is no doubt that the applicant has a prima facie case here, when regard is had to the provisions in the taxation legislation which have the effect of making notices of assessment and amended assessments conclusive evidence of certain matters. Under s 350-10(1) of Schedule 1 to the TAA 1953, the notices of assessment and amended assessment produced by the applicant in respect of income tax liabilities are conclusive evidence in these proceedings, that:

(a)    first, the assessments were properly made;

(b)    secondly, the notices were properly given to the defendant; and

(c)    thirdly, except in proceedings under Part IVC of the TAA 1953 on a review or appeal relating to the assessment, the amounts and particulars of the assessment, declaration or notice are correct.

9    There are authorities which indicate that these matters satisfy the prima facie case requirement, including Commissioner of Taxation v Ornelas [2016] FCA 457 at [7] and Deputy Commissioner of Taxation v Ghaly [2016] FCA 707 at [25].

Service under the Hague Convention

10    In Mr Klendo’s affidavit, it is stated that the respondent currently resides in the United States of America. The respondent’s immigration travel records reveal that he left Australia for the United States on 22 January 2014 and has not returned.

11    The respondent lodged an objection to the relevant assessments, in which he notified his address as being in New York in the United States, and requested the applicant send all correspondence to him directly. He also confirmed his email address and as indicated above, the applicant’s belief that the respondent currently resides in the United States.

12    The United States is a signatory to the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters opened for signature 15 November 1965, 658 UNTS 163 (entered into force 10 February 1969) (Hague Service Convention) and accordingly it is open to the Court to grant leave to serve documents in accordance with the Hague Service Convention, pursuant to Div 10.6 of the FCRs.

13    In his affidavit, Mr Klendo refers to the website http://www.hcch.net/en/states/ authorities/details3/?aid=279 which is apparently authorised by the United States and which provides practical information as to how service of overseas process in the USA can be made in accordance with the Hague Service Convention. The website stipulates that personal service is the preferred method to execute requests, and that is the process which the applicant proposes to follow in this case.

14    For these reasons, it is appropriate to make the orders sought by the applicant, save that I will also direct that the originating application and statement of claim, together with some other material, be served upon the respondent in accordance with the processes outlined in the website.

Associate:

Dated:    28 September 2017