FEDERAL COURT OF AUSTRALIA

Deputy Commissioner of Taxation v Chemical Trustee Limited (No 3) [2012] FCA 1069

THE COURT NOTES:

1.    the undertaking of the Applicant at Schedule A to Annexure A to these orders.

THE COURT ORDERS THAT:

2.    the Applicant be granted leave to file in Court an Amended Originating Application in the form annexed as Annexure AZ37 to the affidavit of Aris Zafiriou sworn 21 September 2012.

3.    an interim freezing order be made in the form of Annexure A to these orders until 4.15 pm on 25 September 2012 or earlier order.

4.    Costs be reserved.

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

ANNEXURE A

IN THE FEDERAL COURT OF AUSTRALIA

DISTRICT REGISTRY: NEW SOUTH WALES

Division: General    No NSD 1407 of 2012

DEPUTY COMMISSIONER OF TAXATION

Applicant

CHEMICAL TRUSTEE LIMITED

Respondent

PENAL NOTICE

TO:     CHEMICAL TRUSTEE LIMITED

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: CHEMICAL TRUSTEE LIMITED

This is a ‘freezing order’ made against you on 21 September 2012 by Buchanan J after the Court was given the undertakings set out in Schedule A to this order.

THE COURT ORDERS:

INTRODUCTION

1. This Order has effect from the date of entry of this Order by the Federal Court of Australia to 4.15pm on 25 September 2012 or earlier order.

2.    The Applicant has liberty to apply to extend the operation of these orders.

3.    In this order:

(a)    ‘applicant’, if there is more than one applicant, includes all the applicants;

(b)    ‘you’, where there is more than one of you, includes all of you and includes you if you are a corporation;

(c)    ‘third party’ means a person other than you and the applicant;

(d)    ‘unencumbered value’ means value free of mortgages, charges, liens or other encumbrances.

4.    (a)    If you are ordered to do something, you must do it by yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions.

(b)    If you are ordered not to do something, you must not do it yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions or with your encouragement or in any other way.

FREEZING OF ASSETS

5.    (a)    You must not remove from Australia or in any way dispose of, deal with or diminish the value of any of your assets in Australia (‘Australian Assets’) up to the unencumbered value of AUD $26,927,500.54 (‘the Relevant Amount’).

(b)    If the unencumbered value of your Australian assets exceeds the Relevant Amount, you may remove any of those assets from Australia or dispose of or deal with them or diminish their value, so long as the total unencumbered value of your Australian assets still exceeds the Relevant Amount.

6.    For the purposes of this order,

(1)    your assets include:

(a)     all your assets, whether or not they are in your name and whether they are solely or co-owned;

(b)     any asset which you have the power, directly or indirectly, to dispose of or deal with as if it were your own (you are to be regarded as having such power if a third party holds or controls the asset in accordance with your direct or indirect instructions); and

(c)     Any securities traded on the Australian Securities Exchange, including but not limited to securities issued by the following:

(i)    AAT Corporation Limited (formerly Autron Corporation Limited)

(ii)    Alumina Limited

(iii)    Amadeus Energy Limited

(iv)    AMP Limited

(v)    Australian Agricultural Company Limited

(vi)    Australian Education Trust

(vii)    Australand Property Group

(viii)    Capral Limited

(ix)    Cellnet Group Limited

(x)    Circadian Technologies Limited

(xi)    CVC Limited

(xii)    CVC Private Equity Limited

(xiii)    CVC Property Fund

(xiv)    CVC Sustainable Investments Limited

(xv)    Cyclopharm Limited

(xvi)    Devine Limited

(xvii)    Globe International Limited

(xviii)    Gunns Limited

(xix)    IMF (Australia) Limited

(xx)    Ion Limited

(xxi)    Mnet Group Limited

(xxii)    Pro-Pac Packaging Limited

(xxiii)    QBE Insurance Group Limited

(xxiv)    Resource Generation Limited

(xxv)    TriAusMin Limited

(xxvi)    Vita Life Sciences Limited

(xxvii)    Westfield Group

(xxviii)    Westfield Retail Trust

(xxix)    Woodside Petroleum Limited

(d)    Proceeds of the sale of shares in accordance with paragraph 11.

(2)    the value of your assets is the value of the interest you have individually in your assets.

PROVISION OF INFORMATION

7.     Subject to paragraph 8, you must:

(a)     on or before 25 September 2012 to the best of your ability inform the applicant in writing of all your assets in world-wide, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of your interest in the assets;

(b)    within 5 working days after being served with this order, swear and serve on the applicant an affidavit setting out the above information.

8.     (a)    This paragraph (8) applies if you are a corporation and all of the persons who are able to comply with paragraph 7 on your behalf and with whom you have been able to communicate, wish to object to your complying with paragraph 7 on the grounds that some or all of the information required to be disclosed may tend to prove that they respectively:

(i)    have committed an offence against or arising under an Australian law or a law of a foreign country; or

(ii)    are liable to a civil penalty.

    (b)    You must:

(i)    disclose so much of the information required to be disclosed to which no objection is taken; and

(ii)    prepare an affidavit containing so much of the information required to be disclosed to which objection is taken, and deliver it to the Court in a sealed envelope; and

(iii)    file and serve on each other party a separate affidavit setting out the basis of the objection.

EXCEPTIONS TO THIS ORDER

9.     This order does not prohibit you from:

(a)     paying your reasonable legal expenses;

(b)    dealing with or disposing of any of your assets in the ordinary and proper course of your business for the purposes of paying Australian business and legal expenses bona fide and properly incurred or for making payment to the Commission of Taxation; and

(c)    in relation to matters not falling within (a) or (b), dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made,

provided that:

(d)    before doing so, you give the applicant written notice containing full particulars of any proposed dealing, disposition and/or payment; and

(e)    the applicant has consented to the proposed dealing, disposition and/or payment, in writing served on your registered address.

10.     You and the applicant may agree in writing that the exceptions in the preceding paragraph are to be varied. In that case the applicant or you must as soon as practicable file with the Court and serve on the other a minute of a proposed consent order recording the variation signed by or on behalf of the applicant and you, and the Court may order that the exceptions are varied accordingly.

11.    This order does not prohibit you from giving or causing to be given instructions to either:

    (a)    WilsonHTM Investment Group - account number 800605; or

    (b)    Bell Potter Securities Limited - account number 65990 and 303321; or

    (c)    Shaw Stockbroking - account number 181371; or

    (d)    Bridges Financial Services Pty Ltd - account number 30103228

    to sell any of the shares mentioned in paragraph 6 above and/or to buy or sell shares out of the proceeds thereof, such shares if bought to be acquired through and held in the share trading account numbers listed above in the name of Chemical Trustee Ltd and to be subject to Order 5 and to be deemed to be incorporated in the list of shares contained in order 6(1)(c).

12.    Proceeds from the sale of any shares under paragraph 11 which are not used to buy shares must remain in share trading account numbers provided in paragraph 11 above. Such proceeds are included in your assets pursuant to order 6(1)(d).

13.     (a)      This order will cease to have effect if you:

(i)         pay the sum of AUD $26,927,500.54 into Court; or

(ii)     pay that sum into a joint bank account in the name of your solicitor and the solicitor for the applicant as agreed in writing between them; or

(iii)     provide security in that sum by a method agreed in writing with the applicant to be held subject to the order of the Court.

(b)     Any such payment and any such security will not provide the applicant with any priority over your other creditors in the event of your insolvency.

(c)     If this order ceases to have effect pursuant (a), you must as soon as practicable file with the Court and serve on the applicant notice of that fact.

COSTS

14.    The costs of this application are reserved to the judge hearing the application.

PERSONS OTHER THAN THE APPLICANT AND RESPONDENT

15.    Set off by banks

This order does not prevent any bank from exercising any right of set off it has in respect of any facility which it gave you before it was notified of this order.

16.     Bank withdrawals by the respondent

No bank need inquire as to the application or proposed application of any money withdrawn by you if the withdrawal appears to be permitted by this order.

17.    Persons outside Australia

(a)     Except as provided in subparagraph (b) below, the terms of this order do not affect or concern anyone outside Australia.

(b)      The terms of this order will affect the following persons outside Australia:

(i)     you and your directors, officers, employees and agents (except banks and financial institutions);

(ii)     any person (including a bank or financial institution) who:

(A)     is subject to the jurisdiction of this Court; and

(B)     has been given written notice of this order, or has actual knowledge of the substance of the order and of its requirements; and

(C)     is able to prevent or impede acts or omissions outside Australia which constitute or assist in a disobedience of the terms of this order; and

(iii)     any other person (including a bank of financial institution), only to the extent that this order is declared enforceable by or is enforced by a court in a country or state that has jurisdiction over that person or over any of that person’s assets.

18.     Assets located outside Australia

Nothing in this order shall, in respect of assets located outside Australia, prevent any third party from complying or acting in conformity with what it reasonably believes to be its bona fide and properly incurred legal obligations, whether contractual or pursuant to a court order or otherwise, under the law of the country or state in which those assets are situated or under the proper law of any contract between a third party and you, provided that in the case of any future order of a court of that country or state made on your or the third party’s application, reasonable written notice of the making of the application is given to the applicant.

SCHEDULE A

UNDERTAKINGS GIVEN TO THE COURT BY THE APPLICANT

(1)    The applicant undertakes to submit to such order (if any) as the Court may consider to be just for the payment of compensation (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the order.

(2)     As soon as practicable, the applicant will cause anyone notified of this order to be given a copy of it.

(3)     The applicant will pay the reasonable costs of anyone other than the respondent which have been incurred as a result of this order, including the costs of finding out whether that person holds any of the respondent’s assets.

(4)    If this order ceases to have effect1 the applicant will promptly take all reasonable steps to inform in writing anyone to who has been notified of this order, or who he has reasonable grounds for supposing may act upon this order, that it has ceased to have effect.

(5)     The applicant will not, without leave of the Court, use any information obtained as a result of this order for the purpose of any civil or criminal proceedings, either in or outside Australia, other than this proceeding.

(6)     The applicant will not, without leave of the Court, seek to enforce this order in any country outside Australia or an order conferring a charge or other security against the respondent or the respondent’s assets.

For example, if the respondent pays money into Court or provides security, as provided for in paragraph 13 of this Order.

REASONS FOR JUDGMENT

1    The application with which I am dealing today is supported by affidavits from Aris Zafiriou sworn on 17 September 2012, 18 September 2012 and 21 September 2012. In addition, a large volume of material has been tendered as an exhibit to the affidavit of 17 September 2012. The applicant has issued notices of assessment to the respondent on 9 July 2012 in the sum of $1,413,219.76, and 20 September 2012 for an amount which results in a total, when added to the earlier assessment, of $26,927,500.54. Those notices of assessment are not open to present challenge.

2    On 18 September 2012, the applicant brought an application seeking judgment pursuant to the assessments issued on 9 July 2012. An order is now sought permitting the filing of an amended application that seeks judgment pursuant to the assessment dated 20 September 2012. I can see no reason why leave to amend should not be granted and I will so order. The applicant has also sought a freezing order arising from its assessment of 20 September 2012 and the proceedings which it has brought in consequence. In separate proceedings, freezing orders were made against the present respondent by Kenny J (see Deputy Commissioner of Taxation v Hua Wang Bank Berhad [2010] FCA 1014). An appeal against that judgment was dismissed (Hua Wang Bank Berhad v Deputy Commissioner of Taxation [2010] FCAFC 140).

3    The judgment which was granted in the proceedings in which those freezing orders were made (for a sum of approximately $4.8 million, which was later reduced to approximately $3.6 million) has now been paid. An application was accordingly made to the docket judge dealing with proceedings under Part IVC of the Taxation Administration Act 1953 (Cth) arising from the earlier assessment to discharge the earlier freezing orders. That application was made on 18 September 2012. Perram J has indicated that he is disposed to discharge those earlier freezing orders and will give further attention to an order to that effect on Tuesday, 25 September 2012. The application for freezing orders which is now made is for a considerably higher sum than the sum secured by the earlier freezing orders. However, that does not raise any different question of principle.

4    In the proceedings today, Mr Hyde Page has been at pains to urge upon me that there is no evidence that there is any real danger of funds being transferred from Australia if a freezing order is not made. It follows from that that there is no discernible prejudice in making an interim order for a very short period to allow the matter to receive further consideration by the docket judge who is in a much better position than I am to assess whether it is necessary or desirable for a freezing order to remain in place. In those circumstances, I am satisfied that a case has been made out for freezing orders for the period sought, namely, until 25 September 2012. I make orders in the form of the orders sought by the applicant, to remain in force until 4.15 pm on 25 September 2012.

Associate:

Dated:    27 September 2012