Deputy Commissioner of Taxation v Seabrooke [2012] FCA 1158

FEDERAL COURT OF AUSTRALIA

Citation:		Deputy Commissioner of Taxation v Seabrooke [2012] FCA 1158

Parties:		DEPUTY COMMISSIONER OF TAXATION v GARY DENHAM SEABROOKE, DEIRDRE SHAUNA SEABROOKE and REGISTRAR OF TITLES

File number:		WAD 280 of 2012

Judge:		SIOPIS J

Date of judgment:		23 October 2012

Catchwords:		PRACTICE AND PROCEDURE – freezing orders – taxpayers had not filed tax returns in Australian since 1987 – taxpayers changed their names – one taxpayer has overseas business interests and has moved money in and out of Australia through a foreign bank account – whether there was a danger that a prospective judgment would be unsatisfied – whether substituted service could be effected by emailing the legal process to an email address.

Legislation:		Income Tax Assessment Act 1936 (Cth) s 177 Taxation Administration Act 1953 (Cth) Sch 1 s 298-30(3) Federal Court Rules 2011 rr 7.32(1), 7.35, 7.37, 10.24, 10.42, 10.43(2)

Cases cited:		Deputy Commissioner of Taxation v Sharp (1988) 91 FLR 70 State of Western Australia v Vetter Trittler Pty Ltd (In liq) (Receiver and Manager Appointed) (1991) 30 FCR 102 Rohalo Pharmaceutical Pty Ltd v RP Scherer SpA (1994) 15 ACSR 347

Date of hearing:	18 October 2012

Date of orders:	18 October 2012

Place:	Perth

Division:	GENERAL DIVISION

Category:	Catchwords

Number of paragraphs:	26

Counsel for the Applicant:	Mr S Vandongen SC with Ms LB Black

Solicitor for the Applicant:	Australian Government Solicitor

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION	WAD 280 of 2012

BETWEEN:

DEPUTY COMMISSIONER OF TAXATION

Applicant

AND:

GARY DENHAM SEABROOKE

First Respondent

DEIRDRE SHAUNA SEABROOKE

Second Respondent

REGISTRAR OF TITLES

Third Respondent

JUDGE:	SIOPIS J
DATE OF ORDER:	18 OCTOBER 2012
WHERE MADE:	PERTH

THE COURT ORDERS THAT:

1. This Interlocutory Application be returnable immediately.

2. A freezing order be made against the First Respondent in the terms specified in Annexure “A” up to and including 5.00 pm on 24 October 2012.

3. A freezing order be made against the Second Respondent in the terms specified in Annexure “B” up to and including 5.00 pm on 24 October 2012.

4. The Registrar of Titles in Western Australia must not register any dealing which affects the following properties:

(a) the property known as 21 Walter Street, Claremont, being Lot 14 on Plan 2448 comprised in Certificate of Title Volume 488 Folio 156A;

(b) the property known as 27 Leake Street, Peppermint Grove, being Lot 65 on Diagram 44124 comprised in Certificate of Title Volume 1350 Folio 981;

until either:

4.1 the freezing orders made against each of the First Respondent and the Second Respondent in these proceedings on 18 October 2012 are discharged; or

4.2 further order.

5. The Registrar of Titles in Western Australia must not register any dealing which affects the following properties:

(a) the property known as Lot 5 Caves Road, Burnside, Margaret River, being Lot 5 on Diagram 71262 comprised in Certificate of Title 1791 Folio 164;

(b) the property known as Unit 2, Ground Floor, 4 Warnham Road, Cottesloe, being Lot 2 on Strata Plan 14245 comprised in Certificate of Title Volume 1760 Folio 666;

(c) the property known as 37 Hammond Road, Yallingup, being Lot 83 on Plan 8037 comprised in Certificate of Title Volume 511 Folio 22A;

until either:

5.1 the freezing order made against the Second Respondent in these proceedings on 18 October 2012 is discharged; or

5.2 further order.

6. The Applicant have leave to serve the Documents * on the First Respondent:

6.1 pursuant to Rule 10.24 of the Federal Court Rules by delivery of the Documents * by 6.00 pm on 19 October 2012 to 27 Leake Street, Peppermint Grove, Western Australia; in addition, or in the alternative

6.2 pursuant to the bilateral service convention which exists between Australia and Mozambique.

7. Service in accordance with these orders be deemed good and sufficient service of the Documents* upon the First Respondent.

8. The Applicant serve the Documents* on the Second Respondent and the Third Respondent by 6.00 pm on 19 October 2012 the making of these orders.

9. The matter be listed for directions hearing at 10.15 am on 24 October 2012.

10. Liberty to apply be granted on 24 hours notice.

* In this Minute of Proposed Orders, “Documents” means:

(i) the Originating Application filed in these proceedings on 17 October 2012;

(ii) The Interlocutory Application dated 17 October 2012;

(iii) the Affidavit of Aris Zafiriou sworn 17 October 2012 and the annexures to that affidavit;

(iv) the Orders of the Court made upon the Interlocutory Application,

(v) the Affidavit of Timothy Burrows sworn 18 October 2012;

(vi) the Affidavit of Jeffrey Crouch sworn 18 October 2012 and the annexures to that affidavit.

ANNEXURE A

PENAL NOTICE

TO: Gary Denham Seabrooke

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: Gary Denham Seabrooke

This is a “freezing order” made against you on 18 October 2012 by Justice Siopis at a hearing without notice to you after the Court was given the undertakings set out in Schedule A to this order and after the Court read the affidavits listed in Schedule B to this order.

_____________________________________________________________________________

THE COURT ORDERS:

INTRODUCTION

1. (a) The application for this order is made returnable immediately.

(b) The time for service of the application, supporting affidavits and originating process is abridged and service is to be effected by 6.00 pm on 19 October 2012.

2. Subject to the next paragraph, this order has effect up to and including 5.00 pm on 24 October 2012 (“the Return Date”). On the Return Date at 10.15 am there will be a further hearing in respect of this order before Justice Siopis.

3. Anyone served with or notified of this order, including you, may apply to the Court at any time to vary or discharge this order or so much of it as affects the person served or notified.

4. 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;

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

5. (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

6. (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$30,342,074.65 (“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.

(i) you must not dispose of, deal with or diminish the value of any of your Australian assets and ex-Australian assets up to the unencumbered value of your Australian and ex-Australian assets of the Relevant Amount; and

(ii) you may dispose of, deal with or diminish the value of any of your ex-Australian assets, so long as the unencumbered value of your Australian assets and ex-Australian assets still exceeds the Relevant Amount.

7. 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

(i) the property known as 21 Walter Street, Claremont being Lot 14 on Plan 2448 comprised in Certificate of Title Volume 488 Folio 156A or, if it has been sold, the net proceeds of the sale;

(ii) the property known as 27 Leake Street, Peppermint Grove being Lot 65 on Diagram 44124 comprised in Certificate of Title Volume 1350 Folio 981.

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

PROVISION OF INFORMATION

8. Subject to paragraph 9, you must:

(a) at or before the further hearing on the Return Date (or within such further time as the Court may allow) 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 10 working days after being served with this order, swear and serve on the applicant an affidavit setting out the above information.

9. (a) This paragraph (9) applies if you are not a corporation and you wish to object to complying with paragraph 8 on the grounds that some or all of the information required to be disclosed may tend to prove that you:

(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) This paragraph (9) also applies if you are a corporation and all of the persons who are able to comply with paragraph 8 on your behalf and with whom you have been able to communicate, wish to object to your complying with paragraph 8 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.

(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

10. This order does not prohibit you from:

(a) paying your ordinary living expenses;

(b) paying your reasonable legal expenses;

(c) dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred;

(d) paying amounts to the applicant in respect of your taxation liabilities; and

(e) in relation to matters not falling within (a), (b), (c) or (d), 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 before doing so you give the applicant, if possible, at least two working days written notice of the particulars of the obligation.

11. 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.

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

(i) pay the sum of $30,342,074.65 into Court; or

(ii) pay that sum into a joint bank account in the name of your lawyer and the lawyer 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

13. The costs of this application are reserved to the Court hearing the application on the Return Date.

PERSONS OTHER THAN THE APPLICANT AND FIRST RESPONDENT

14. 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.

15. Bank withdrawals by the first 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.

16. 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.

17. 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.

18. Notices under s260-5 of Schedule 1 to the Taxation Administration Act

Nothing in this order shall prevent any third party complying with the terms of a notice issued by the Commissioner of Taxation to the third party pursuant to s260-5 of Schedule 1 to the Taxation Administration Act 1953 in respect of any money which the third party may owe or may later owe to either the first respondent or the second respondent.

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 file and serve upon the respondent copies of:

(a) this order;

(b) the application for this order for hearing on the return date;

(i) affidavits (or draft affidavits);

(ii) exhibits capable of being copied;

(iii) any written submission; and

(iv) any other document that was provided to the Court.

(d) a transcript, or, if none is available, a note, of any exclusively oral allegation of fact that was made and of any exclusively oral submission that was put, to the Court;

(e) the originating process, or, if none was filed, any draft originating process produced to the Court.

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

(4) The applicant will pay the reasonable costs of anyone other than the first 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.

(5) If this order ceases to have effect 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.

(6) 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.

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

SCHEDULE B

AFFIDAVITS RELIED ON

Name of deponent	Date affidavit made
(1) Aris Zafiriou	17 October 2012
(2) Timothy Burrows	18 October 2012
(3) Jeffrey Crouch	18 October 2012

NAME AND ADDRESS OF APPLICANT’S LAWYERS

The applicant’s lawyers are:

Australian Government Solicitor

Level 19, Exchange Plaza

2 The Esplanade

PERTH WA 6000

Reference: 11101456/TPB

Telephone: (08) 9268 1116

Facsimile: (08) 9268 1772

Email: timothy.burrows@ags.gov.au

ANNEXURE B

PENAL NOTICE

TO: DEIRDRE SHAUNA Seabrooke

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: DEIRDRE SHAUNA Seabrooke

_____________________________________________________________________________

THE COURT ORDERS:

INTRODUCTION

1. (a) The application for this order is made returnable immediately.

(b) The time for service of the application, supporting affidavits and originating process is abridged and service is to be effected by 6.00 pm on 19 October 2012.

3. Anyone served with or notified of this order, including you, may apply to the Court at any time to vary or discharge this order or so much of it as affects the person served or notified.

4. 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;

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

5. (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.

FREEZING OF ASSETS

7. 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;

(i) the property known as 21 Walter Street, Claremont being Lot 14 on Plan 2448 comprised in Certificate of Title Volume 488 Folio 156A or, if it has been sold, the net proceeds of the sale;

(ii) the property known as 27 Leake Street, Peppermint Grove being Lot 65 on Diagram 44124 comprised in Certificate of Title Volume 1350 Folio 981;

(iii) the property known as Lot 5, Caves Road, Burnside, Margaret River being Lot 5 on Diagram 71262 comprised in Certificate of Title Volume 1791 Folio 164;

(iv) the property known as Unit 2, Ground Floor, 4 Warnham Road, Cottesloe being Lot 2 on Strata Plan 14245 comprised in Certificate of Title Volume 1760 Folio 666;

(v) the property known as 37 Hammond Road, Yallingup being Lot 83 on Plan 8037 comprised in Certificate of Title Volume 511 Folio 22A;

(vi) the 2007 Porsche Cayenne sedan licence number 1CRJ720; and

(vii) the Sunseeker launch registration number DK335.

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

PROVISION OF INFORMATION

8. Subject to paragraph 9, you must:

(b) within 10 working days after being served with this order, swear and serve on the applicant an affidavit setting out the above information.

(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.

(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.

(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

10. This order does not prohibit you from:

(a) paying your ordinary living expenses;

(b) paying your reasonable legal expenses;

(c) dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred;

(d) paying amounts to the applicant in respect of your taxation liabilities; and

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

(i) pay the sum of $21,531,511.90 into Court; or

(ii) pay that sum into a joint bank account in the name of your lawyer and the lawyer 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

13. The costs of this application are reserved to the Court hearing the application on the Return Date.

PERSONS OTHER THAN THE APPLICANT AND SECOND RESPONDENT

14. 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.

15. Bank withdrawals by the second 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.

16. 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

17. Assets located outside Australia

18. Notices under s260-5 of Schedule 1 to the Taxation Administration Act

SCHEDULE A

UNDERTAKINGS GIVEN TO THE COURT BY THE APPLICANT

(2) As soon as practicable, the applicant will file and serve upon the respondent copies of:

(a) this order;

(b) the application for this order for hearing on the return date;

(i) affidavits (or draft affidavits);

(ii) exhibits capable of being copied;

(iii) any written submission; and

(iv) any other document that was provided to the Court.

(d) a transcript, or, if none is available, a note, of any exclusively oral allegation of fact that was made and of any exclusively oral submission that was put, to the Court;

(e) the originating process, or, if none was filed, any draft originating process produced to the Court.

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

(4) The applicant will pay the reasonable costs of anyone other than the second 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.

SCHEDULE B

AFFIDAVITS RELIED ON

Name of deponent	Date affidavit made
(1) Aris Zafiriou	17 October 2012
(2) Timothy Burrows	18 October 2012
(3) Jeffrey Crouch	18 October 2012

NAME AND ADDRESS OF APPLICANT’S LAWYERS

The applicant’s lawyers are:

Australian Government Solicitor

Level 19, Exchange Plaza

2 The Esplanade

PERTH WA 6000

Reference: 11101456/TPB

Telephone: (08) 9268 1116

Facsimile: (08) 9268 1772

Email: timothy.burrows@ags.gov.au

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

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION	WAD 280 of 2012

BETWEEN:

DEPUTY COMMISSIONER OF TAXATION

Applicant

AND:

GARY DENHAM SEABROOKE

First Respondent

DEIRDRE SHAUNA SEABROOKE

Second Respondent

REGISTRAR OF TITLES

Third Respondent

JUDGE:	SIOPIS J
DATE:	23 OCTOBER 2012
PLACE:	PERTH

REASONS FOR JUDGMENT

1 On 18 October 2012, I made freezing orders in respect of assets of Mr Gary Denham Seabrooke and his wife, Mrs Deirdre Shauna Seabrooke on the urgent ex parte application of the Deputy Commissioner of Taxation (the Commissioner). I also made orders for service out of the jurisdiction of the originating and interlocutory applications and the Court’s order (referred to in the order as “the documents”) on Mr Seabrooke and substituted service in respect of the documents on Mr Seabrooke. I said that I would give my reasons later and these are the reasons.

2 Each of the respondents was born in Western Australia. The first respondent, Mr Gary Denham Seabrooke was born Gary Denham Strange and the second respondent, Mrs Deirdre Shauna Seabrooke was born Deirdre Shauna Wyvern-Pye. They married in Claremont, Western Australia in March 1982. On 8 June 1987, the first respondent changed his name to Gary Denham Seabrooke and the second respondent changed her name to Deirdre Shauna Seabrooke. The last tax return that each of the respondents has filed was for the tax year ending 30 June 1987.

3 Since 1987, Mr Seabrooke has spent a considerable period of time conducting business overseas, particularly in countries in Africa. Mr Seabrooke has interests in a number of companies related to the provision of mining services. Further, Mr Seabrooke controls bank accounts in Jersey, Liechtenstein and Mauritius.

4 The Commissioner has conducted an audit into the tax related affairs of the respondents. The audit examined Austrac records which track payments made by persons between foreign countries and Australia. These records show that during the period 5 December 2007 to 15 April 2011, $16,864,862 was transferred from the Liechtenstein bank account controlled by Mr Seabrooke, to various bank accounts in Australia and that those monies were used by one or both of the respondents to purchase, among other things, a Porsche Cayenne motor vehicle, shares, a Sunseeker launch and tender, a property in Yallingup, and to pay for extensions to the first and second respondents’ residence in Peppermint Grove, a suburb of Perth. The records also show that between the period 29 December 2007 to 10 November 2010, a total of $24,270,985 was transferred by Hartleys, stockbrokers, from Australia into the same Liechtenstein bank account.

5 The evidence also shows that the first and second respondents jointly own a house in Peppermint Grove and one in Claremont, and that Mrs Seabrooke is the owner in her own right of properties in Margaret River, Cottesloe and Yallingup, as well as the Porsche Cayenne motor vehicle and the Sunseeker launch.

6 On 16 October 2012, the applicant issued assessments for income tax and administrative penalties to each of Mr and Mrs Seabrooke. The assessments issued to Mr Seabrooke were for each of the income years ended 30 June 1988 to 30 June 2011 and totalled $30,342,074.65. The assessments issued to Mrs Seabrooke totalled $21,531,511.90. The assessments issued to Mrs Seabrooke are, save for a small amount, alternative assessments to the assessments issued to Mr Seabrooke.

7 On 17 October 2012, the Commissioner filed an originating application wherein he sought declarations and judgment in respect of each of the first and second respondents’ liability for income tax and administrative penalties as well as interest. At the same time, the Commissioner also filed an application for a freezing order in respect of the assets of each of Mr and Mrs Seabrooke up to the total amount in respect of the assessments issued to each of them. The Commissioner also sought an order that the originating application and the application for the freezing orders be served out of the jurisdiction on Mr Seabrooke; and for substituted service of that process on Mr Seabrooke. The Commissioner proposed that substituted service be effected by emailing the applications and affidavits in support of the interlocutory application to Mr Seabrooke’s email address, and by delivering the applications and supporting affidavits to Mrs Seabrooke’s residential address in Western Australia. The evidence is that Mr Seabrooke is currently thought to be in Mozambique and Mrs Seabrooke is residing at their Peppermint Grove property in Western Australia.

THE APPLICATION FOR THE FREEZING ORDERs

8 The Commissioner relies upon r 7.35 of the Federal Court Rules 2011 to apply for the freezing orders in respect of the assets of each of the respondents. The Commissioner contends that he has a good arguable case on an accrued or prospective cause of action which is justiciable in this Court.

9 The evidence discloses that in respect of the assessments which have been issued to each of Mr and Mrs Seabrooke, the date for the payment of the tax assessed for about half of the tax years in question has already passed. However, the date for the payment of the assessed tax for the other tax years, and the date for payment of the administrative penalties, is 19 November 2012 and 9 November 2012 respectively.

10 In my view, the evidence comprising the issue of the assessments shows that the Commissioner has an accrued or prospective cause of action in respect of the tax assessed and the administrative penalties which is justiciable in this Court. I am also satisfied that the Commissioner has a good arguable case that the amounts set out in the assessments are due and payable in respect of those amounts for which the due date has already passed, and that the amounts which are payable in November 2012, have been correctly assessed. Section 177 of the Income Tax Assessment Act 1936 (Cth) and s 298-30(3) in Sch 1 of the Taxation Administration Act 1953 (Cth) provide that the production of a notice of assessment or copy thereof is conclusive evidence in the making of the assessment and that the amount and all the particulars of the assessment are correct. This is a sufficient basis to conclude that the Commissioner has a good arguable case sufficient to support the making of freezing orders. I note, however, in passing, that one of the issues with which the audit was concerned was whether Mr Seabrooke was resident in Australia for tax purposes in the years ended 30 June 1998 to 30 June 2011 inclusive. There is considerable discussion in the audit on this question. The issue of whether Mr Seabrooke was resident in Australia during that period for tax purposes remains for another day. However, based, of course, only on the evidence referred to in the audit the Commissioner has shown a good arguable case on this issue.

11 The fact that the time for payment of some amounts of the tax and the administrative penalties has not yet elapsed, does not preclude the freezing orders from being made (Deputy Commissioner of Taxation v Sharp (1988) 91 FLR 70 at 74).

12 Further, before making a freezing order, the Court must be satisfied that there is a danger that the assets may be dissipated so that a prospective judgment would be wholly or partly unsatisfied (r 7.32(1) of the Rules). I am satisfied that such a danger exists on the evidence before me. In this regard, I take into account the following factors. First, the large amount of the tax debt in question. The assessment issued to Mr Seabrooke is for an amount in excess of $30 million. Secondly, the evidence demonstrated that Mr Seabrooke has over a number of years been able to move very large sums of money in and out of Australia through a foreign bank account. Thirdly, Mr Seabrooke has shown over a considerable period of time a distinct disinclination to pay tax in Australia. Fourthly, Mr Seabrooke has a number of business interests overseas.

13 I observe that the Commissioner also sought to rely upon the proximity in time between Mr and Mrs Seabrooke changing their names, in June 1987, and their ceasing to file tax returns in Australia. There may, however, be explanations for why Mr and Mrs Seabrooke changed their names, other than in furtherance of an intention to avoid paying tax in Australia. I, therefore, do not place much weight upon this circumstance at this time. More relevant, in my view, in assessing the danger of Mr and Mrs Seabrooke disposing of their assets so as to render any judgment wholly or partly unsatisfied, is the extent of Mr Seabrooke’s business interests overseas, the structures he has in place for the transfer of funds overseas, and the fact that he has over a considerable period of time shown a propensity to move money in and out of Australia by the use of these structures and Mr and Mrs Seabrooke’s demonstrable disinclination to pay tax in Australia.

14 I am also satisfied that the balance of convenience favours the granting of the freezing order. The freezing order is primarily directed at preventing the disposal of real property. In the short term, at least, this is unlikely to cause hardship to Mr and Mrs Seabrooke. Further, the freezing order makes provision for the use by Mr and Mrs Seabrooke of their assets for ordinary living expenses, reasonable legal costs and for payments made in the ordinary course of business. Also, Mr and Mrs Seabrooke have the benefit of the Commissioner’s undertaking as to damages. On the other hand, for the Commissioner the risk is not being able to satisfy a judgment for a very considerable sum of money if he is successful at trial.

15 I am also satisfied that the Court may make an order for the service of the application for the freezing order upon Mr Seabrooke, notwithstanding that Mr Seabrooke is outside Australia. Rule 7.37 of the Rules provides that:

An application for a freezing order or an ancillary order may be served on a person who is outside Australia (whether or not the person is domiciled or resident in Australia) if any of the assets to which the order relates are within the jurisdiction of the Court.

16 The evidence discloses that assets to which the freezing order relates are located within Australia.

LEAVE TO SERVE OUT OF THE JURISDICTION

17 As I have mentioned, the evidence is that the first respondent is likely to be living and working in Mozambique.

18 The Commissioner has sought leave to serve the originating application on Mr Seabrooke in Mozambique under r 10.43(2) of the Rules by transmission to a foreign government in accordance with a convention.

19 First, I am satisfied that a proceeding to recover a tax debt, is a proceeding of the kind mentioned in r 10.42 of the Rules.

20 Secondly, for the reasons which I have already set out, I am satisfied that the Commissioner has a prima facie case for the purposes of service out of the jurisdiction (State of Western Australia v Vetter Trittler Pty Ltd (In liq) (Receiver and Manager Appointed) (1991) 30 FCR 102 at 109-110).

21 Thirdly, Mr Burrows, a legal practitioner acting for the Commissioner, has deposed that he has obtained advice as to the proposed mode of service on Mr Seabrooke in Mozambique. The advice is that a letter of request, together with the documents to be served, is to be forwarded to the Department of the Commonwealth Attorney General which will then transmit the documents to the designated foreign authority requesting service in accordance with its domestic laws.

SUBSTITUTED SERVICE ON MR SEABROOKE

22 The Commissioner relied upon r 10.24 of the Rules for an order for substituted service upon Mr Seabrooke of the originating application and the application and supporting affidavits for the freezing order, and the freezing order (which, as I have mentioned, are referred to in the orders as “the documents”). The Commissioner sought substituted service by way of sending the documents to a private email address which was nominated by Mr Seabrooke in a recent immigration arrival card, and also by delivery of the documents to Mrs Seabrooke’s residential address in Peppermint Grove – being the property jointly owned by Mr and Mrs Seabrooke.

23 Rule 10.24 permits the Court to order substituted service where “it is not practicable to serve a document on a person in a way required by these Rules”. The question of whether it is not practicable to serve a document in this manner, must be assessed by reference to all the circumstances of the case. Thus, for example, in the case of Rohalo Pharmaceutical Pty Ltd v RP Scherer SpA (1994) 15 ACSR 347 at 366, Lindgren J permitted substituted service on an Italian company by service on solicitors in Australia, in a case where that company had served a statutory demand and the circumstances of that case made it desirable that the litigation progressed quickly and efficiently.

24 In my view, similar circumstances apply in this case. The circumstances of urgency associated with the making of the freezing orders and the need to give Mr and Mrs Seabrooke an opportunity, at the earliest time, to contest the continuance of the freezing orders, means that it is appropriate in this case to make an order for substituted service of the documents on Mr Seabrooke.

25 The evidence shows that Mrs Seabrooke is married to Mr Seabrooke and is in communication with him and that Mr Seabrooke continues to maintain a residence at the Peppermint Grove property where his wife resides. Further, Mr Seabrooke named Mrs Seabrooke as his emergency contact on his most recent immigration arrival card when entering Australia. I am persuaded that service of the documents on Mrs Seabrooke will almost certainly bring to Mr Seabrooke’s attention the existence of this proceeding and the orders made by the Court.

26 I will, therefore, order that there be service of the documents on Mr Seabrooke by delivery of the documents to Mrs Seabrooke’s residential premises in Peppermint Grove. I am not, however, prepared to order substituted service by the Commissioner transmitting the documents to the nominated private email address. The documents are particularly voluminous. Mr Zafiriou’s affidavit, for example, runs to 761 pages. In my view, it would be oppressive on Mr Seabrooke to receive service in a way which would entail him having to print such a voluminous document.

I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.

Associate:

Dated: 23 October 2012

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