FEDERAL COURT OF AUSTRALIA

Deputy Commissioner of Taxation v A & S Services Australia Pty Ltd [2017] FCA 437

ORDERS

THE COURT ORDERS THAT:

1.    Andrew Reginald Yeo and Giuseppe Michele Rambaldi, also known as Gess Michael Rambaldi, official liquidators, are jointly and severally appointed provisional liquidators of A & S SERVICES AUSTRALIA PTY LTD ACN 165 857 321, until the making of a winding up order or until further order.

2.    The provisional liquidators shall have the power to exercise all or any of the following powers:

(a)    to take possession of, collect and protect any assets of the defendants;

(b)    to carry on the business of any of the defendants;

(c)    to exercise so far as may be lawful and necessary all or any of the functions and powers which may be performed and exercised by a liquidator of the defendants under paragraph 477(1)(d), subsection 477(2) (except paragraph 477(2)(m)) and subsection 477(3) of the Act, if the defendants were being wound up in insolvency or by the Court.

3.    The nature and description of the property of which the provisional liquidator is to take into their custody is as follows:

(a)    all books of account and general records of the defendants;

(b)    all real and personal estate whatsoever owned by the defendants;

(c)    all cash in possession of the defendants, all items of mail and postage addressed to the defendants or their directors, secretaries or managers, and all bank accounts in the name of the defendants;

(d)    all motor vehicles, trade equipment and stock in trade in possession of the defendants or belonging to the defendants.

4.    The proceeding be listed for a directions hearing on 13 April 2017 at 11.30 am.

5.    The costs of this application are reserved.

6.    Reserve liberty to apply.

THE COURT NOTES THAT:

7.    The plaintiff 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.

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

ORDERS

THE COURT ORDERS THAT:

1.    Andrew Reginald Yeo and Giuseppe Michele Rambaldi, also known as Gess Michael Rambaldi, official liquidators, are jointly and severally appointed provisional liquidators of A.C.N. 147 341 991 PTY LTD ACN 147 341 991, until the making of a winding up order or until further order.

2.    The provisional liquidators shall have the power to exercise all or any of the following powers:

(a)    to take possession of, collect and protect any assets of the defendants;

(b)    to carry on the business of any of the defendants;

(c)    to exercise so far as may be lawful and necessary all or any of the functions and powers which may be performed and exercised by a liquidator of the defendants under paragraph 477(1)(d), subsection 477(2) (except paragraph 477(2)(m)) and subsection 477(3) of the Act, if the defendants were being wound up in insolvency or by the Court.

3.    The nature and description of the property of which the provisional liquidator is to take into their custody is as follows:

(a)    all books of account and general records of the defendants;

(b)    all real and personal estate whatsoever owned by the defendants;

(c)    all cash in possession of the defendants, all items of mail and postage addressed to the defendants or their directors, secretaries or managers, and all bank accounts in the name of the defendants;

(d)    all motor vehicles, trade equipment and stock in trade in possession of the defendants or belonging to the defendants.

4.    The proceeding be listed for a directions hearing on 13 April 2017 at 11.30 am.

5.    The costs of this application are reserved.

6.    Reserve liberty to apply.

THE COURT NOTES THAT:

7.    The plaintiff 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.

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

ORDERS

THE COURT ORDERS THAT:

1.    Andrew Reginald Yeo and Giuseppe Michele Rambaldi, also known as Gess Michael Rambaldi, official liquidators, are jointly and severally appointed provisional liquidators of BOLTON & SWAN PTY LTD ACN 153 647 360, until the making of a winding up order or until further order.

2.    The provisional liquidators shall have the power to exercise all or any of the following powers:

(a)    to take possession of, collect and protect any assets of the defendants;

(b)    to carry on the business of any of the defendants;

(c)    to exercise so far as may be lawful and necessary all or any of the functions and powers which may be performed and exercised by a liquidator of the defendants under paragraph 477(1)(d), subsection 477(2) (except paragraph 477(2)(m)) and subsection 477(3) of the Act, if the defendants were being wound up in insolvency or by the Court.

3.    The nature and description of the property of which the provisional liquidator is to take into their custody is as follows:

(a)    all books of account and general records of the defendants;

(b)    all real and personal estate whatsoever owned by the defendants;

(c)    all cash in possession of the defendants, all items of mail and postage addressed to the defendants or their directors, secretaries or managers, and all bank accounts in the name of the defendants;

(d)    all motor vehicles, trade equipment and stock in trade in possession of the defendants or belonging to the defendants.

4.    The proceeding be listed for a directions hearing on 13 April 2017 at 11.30 am.

5.    The costs of this application are reserved.

6.    Reserve liberty to apply.

THE COURT NOTES THAT:

7.    The plaintiff 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.

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

ORDERS

THE COURT ORDERS THAT:

1.    Andrew Reginald Yeo and Giuseppe Michele Rambaldi, also known as Gess Michael Rambaldi, official liquidators, are jointly and severally appointed provisional liquidators of AINSLIE HARDING & WOOD SOLICITORS PTY LTD ACN 607 552 741, until the making of a winding up order or until further order.

2.    The provisional liquidators shall have the power to exercise all or any of the following powers:

(a)    to take possession of, collect and protect any assets of the defendants;

(b)    to carry on the business of any of the defendants;

(c)    to exercise so far as may be lawful and necessary all or any of the functions and powers which may be performed and exercised by a liquidator of the defendants under paragraph 477(1)(d), subsection 477(2) (except paragraph 477(2)(m)) and subsection 477(3) of the Act, if the defendants were being wound up in insolvency or by the Court.

3.    The nature and description of the property of which the provisional liquidator is to take into their custody is as follows:

(a)    all books of account and general records of the defendants;

(b)    all real and personal estate whatsoever owned by the defendants;

(c)    all cash in possession of the defendants, all items of mail and postage addressed to the defendants or their directors, secretaries or managers, and all bank accounts in the name of the defendants;

(d)    all motor vehicles, trade equipment and stock in trade in possession of the defendants or belonging to the defendants.

4.    The proceeding be listed for a directions hearing on 13 April 2017 at 11.30 am.

5.    The costs of this application are reserved.

6.    Reserve liberty to apply.

THE COURT NOTES THAT:

7.    The plaintiff 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.

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

ORDERS

PENAL NOTICE

TO:    PHILIP WHITEMAN, the first respondent

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:    Philip Whiteman, the first respondent

This is a ‘freezing order’ made against you on 3 April 2017 by Justice Davies 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 and supporting affidavit and originating process is abridged and service is to be effected by 4 April 2017.

(c)    The above documents be served by serving a copy of the documents on first respondent personally and in the event the applicant is unable to serve him personally the applicant may effect service on him as follows:

(i)    sending a copy of the documents by express post to c/- Deloitte Private Pty Ltd GPO Box 78 Melbourne 3001; and

(ii)    by delivering a copy of the documents to a person over the age of 16 years at 3 Page Avenue, Port Melbourne, Victoria, 3207;

(iii)    by delivering a copy of the documents to a person over the age of 16 years at 317/87 High Street, Prahran, Victoria, 3181;

(d)    Service in accordance with order 1(c) be deemed good and sufficient service of the application and supporting affidavit upon the first respondent.

2.    Subject to the next paragraph, this order has effect up to and including 13 April 2017 (the Return Date). On the Return Date at 11.30 am there will be a further hearing in respect of this order before Justice Davies.

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;

(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.

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$7,725,265.45 (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.

(c)    If the unencumbered value of your Australian assets is less than the Relevant Amount and you have assets outside Australia (ex-Australian assets):

(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

(c)    the following assets in particular:

(i)    the following properties or, if any of them have been sold, the net proceeds of the sale;

(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 Australia, 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.

(c)    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

10.    This order does not prohibit you from:

(a)    paying up to $750 a week on your ordinary living expenses

(b)    paying your reasonable legal expenses;

(c)    paying amounts to the Commissioner in respect of your taxation liabilities;

(d)    in relation to matters not falling within (a), (b), or (c), 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 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 $7,725,265.45 into Court or to the Commissioner; 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 to 12(a) above, 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 16(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.    Notices under section 260-5 of Schedule 1 to the Taxation Administration Act 1953 (Cth)

Nothing in this order shall prevent any third party from complying with the terms of a notice issued by the Commissioner of Taxation to the third party pursuant to section 260-5 of the Schedule 1 to the Taxation Administration Act 1953 (Cth) in respect of any money which the third party may owe or may later owe to the first respondent.

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 file and serve upon the first respondent copies of:

(a)    this order;

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

(c)    the following material in so far as it was relied on by the applicant at the hearing when the order was made:

(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 first 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 first respondent’s assets.

SCHEDULE B

AFFIDAVITS RELIED ON

NAME AND ADDRESS OF APPLICANT'S LAWYERS

The applicant’s lawyers are:

Carmen McElwain

Minter Ellison

Rialto Towers

525 Collins Street

Melbourne Victoria 3000

Tel: 03 8608 2355

Fax: 03 8608 1000

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

PENAL NOTICE

TO:    WYNDHAM LOCK PTY LTD, the second respondent

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:    WYNDHAM LOCK PTY LTD

This is a ‘freezing order’ made against you on 3 April 2017 by Justice Davies 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 and supporting affidavit and originating process is abridged and service is to be effected by 4 April 2017.

2.    Subject to the next paragraph, this order has effect up to and including 13 April 2017 (the Return Date). On the Return Date at 11.30 am there will be a further hearing in respect of this order before Justice Davies.

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;

(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.

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.    Wyndham Lock Pty Ltd must not in any way dispose of, deal with or diminish the value of the property at 3 Page Avenue, Port Melbourne, Victoria, 3207, more particularly described in certificate of title Volume 6873 Folio 542 (Port Melbourne Property).

EXCEPTIONS TO THIS ORDER

7.    This order does not prohibit Wyndham Lock Pty Ltd from dealing with or disposing of any of its assets other than the Port Melbourne Property.

8.    Wyndham Lock Pty Ltd and the applicant may agree in writing that the exceptions in the preceding paragraph are to be varied. In that case the applicant or Wyndham Lock Pty Ltd 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 Wyndham Lock Pty Ltd, and the Court may order that the exceptions are varied accordingly.

9.    

(a)    This order will cease to have effect if Philip Whiteman:

(i)    pays the sum of $7,725,265.45 into Court or to the Commissioner; or

(ii)    provides 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 Philip Whiteman’s other creditors in the event of Philip Whiteman’s insolvency.

(c)    If this order ceases to have effect pursuant to 12(a) above, Wyndham Lock Pty Ltd must as soon as practicable file with the Court and serve on the applicant notice of that fact.

COSTS

10.    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

11.    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.

12.    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.

13.    Persons outside Australia

(a)    Except as provided in subparagraph 16(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.

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 second respondent copies of:

(a)    this order;

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

(c)    the following material in so far as it was relied on by the applicant at the hearing when the order was made:

(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 second 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 second respondent or the second respondent’s assets.

SCHEDULE B

AFFIDAVITS RELIED ON

NAME AND ADDRESS OF APPLICANT'S LAWYERS

The applicant’s lawyers are:

Carmen McElwain

Minter Ellison

Rialto Towers

525 Collins Street

Melbourne Victoria 3000

Tel: 03 8608 2355

Fax: 03 8608 1000

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

ORDERS

PENAL NOTICE

TO:    TIMOTHY LOUIS BATCHELOR, the respondent

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:    Timothy Louis Batchelor, the respondent

This is a ‘freezing order’ made against you on 3 April 2017 by Justice Davies 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 THAT:

INTRODUCTION

1.    

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

(b)    The time for service of the application and supporting affidavit and originating process is abridged and service is to be effected by 4 April 2017.

(c)    The above documents be served by serving a copy of the documents on respondent personally and in the event the applicant is unable to serve him personally the applicant may effect service on him as follows:

(i)    sending a copy of the documents by express post to c/- Deloitte Private Pty Ltd GPO Box 78 Melbourne, Victoria, 3001; and

(ii)    by delivering a copy of the documents to a person over the age of 16 years at 268 Hutchinsons Road, Quantong, Victoria, 3401;

(d)    Service in accordance with order 1(c) be deemed good and sufficient service of the application and supporting affidavit upon the respondent.

2.    Subject to the next paragraph, this order has effect up to and including 13 April 2017 (the Return Date). On the Return Date at 11.30 am there will be a further hearing in respect of this order before Justice Davies.

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;

(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.

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$262,101.57 (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.

(c)    If the unencumbered value of your Australian assets is less than the Relevant Amount and you have assets outside Australia (ex-Australian assets):

(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

(c)    the following assets in particular:

(i)    the following properties or, if any of them have been sold, the net proceeds of the sale;

(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 Australia, 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.

(c)    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

10.    This order does not prohibit you from:

(a)    paying up to $750 a week on 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 Commissioner in respect of your taxation liabilities;

(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 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 $262,101.57 into Court or to the Commissioner; 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 to 12(a) above, 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 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 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 16(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.    Notices under section 260-5 of Schedule 1 to the Taxation Administration Act 1953 (Cth)

Nothing in this order shall prevent any third party from complying with the terms of a notice issued by the Commissioner of Taxation to the third party pursuant to section 260-5 of the Schedule 1 to the Taxation Administration Act 1953 (Cth) in respect of any money which the third party may owe or may later owe to the respondent.

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 file and serve upon the respondent copies of:

(a)    this order;

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

(c)    the following material in so far as it was relied on by the applicant at the hearing when the order was made:

(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 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 respondent or the respondent’s assets.

SCHEDULE B

AFFIDAVITS RELIED ON

NAME AND ADDRESS OF APPLICANT'S LAWYERS

The applicant’s lawyers are:

Carmen McElwain

Minter Ellison

Rialto Towers

525 Collins Street

Melbourne Victoria 3000

Tel: 03 8608 2355

Fax: 03 8608 1000

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

REASONS FOR JUDGMENT

DAVIES J:

1    In an ex parte hearing on 3 April 2017, I made orders:

(a)    pursuant to s 472(2) of the Corporations Act 2001 (Cth) (“the Act”), appointing provisional liquidators to A & S Services Australia Pty Ltd (“A & S Services”), A.C.N. 147 341 991 Pty Ltd (trading as DNV Accountants & Business Advisors) (“DNV”), Bolton & Swan Pty Ltd (“Bolton & Swan”) and Ainslie Harding & Wood Solicitors Pty Ltd (“AHW Solicitors”); and

(b)    pursuant to r 7.32 and r 7.35 of the Federal Court Rules 2011 (Cth) (“the Rules”), restraining Philip Whiteman (“Mr Whiteman”), Timothy Louis Batchelor (“Mr Batchelor”) and Wyndham Lock Pty Ltd (“Wyndham”) from removing, disposing of, dealing with, or diminishing the value of, assets (“the freezing orders”).

2    The orders were made on the application of the Deputy Commissioner of Taxation (“the DCT”) and supported in each application by an affidavit sworn by George Khouri, a taxation officer. These are my reasons for making the orders.

Appointment of provisional liquidators

3    Section 472(2) of the Act empowers the Court to appoint a liquidator to a corporation provisionally “any time after the filing of the winding up application and before the making of a winding up order…”. On 3 April 2017, the DCT, who has standing under s 462(2)(b) of the Act as a creditor of each of the corporate defendants in respect of various tax liabilities, filed applications to wind up A & S Services, DNV, Bolton & Swan and AHW Solicitors (“the corporate defendants”) under s 461(1)(k) of the Act on the just and equitable ground.

4    The principles for the appointment of a provisional liquidator are well established and were recently summarised by this Court in Australian Securities and Investments Commission v Uglii Corporation Ltd [2016] FCA 1099; (2016) 116 ACSR 389 at [72] as follows:

The Court’s power is wide and the Court may appoint a provisional liquidator on any ground but as the appointment of a provisional liquidator is a drastic intrusion into the affairs of the company, a provisional liquidator will generally not be appointed unless the Court is satisfied that there is a reasonable prospect that a winding up order will be made on the application to wind up and some good reason is shown for placing the affairs of the company under the external control of a provisional liquidator prior to the hearing of the winding up application, such as public interest considerations, to preserve the status quo, or to protect the company’s assets or affairs: Australian Securities and Investments Commission v Solomon (1996) 19 ACSR 73, 80 (per Tamberlin J) (“Solomon”); Australian Securities and Investments Commission v Weerappah (No 2) [2009] FCA 249 at [8]-[9]; Australian Securities and Investments Commission v Tax Returns Australia Dot Com Pty Ltd [2010] FCA 715 at [73]-[77]. Public interest considerations may include, for example, the need for an independent examination of the state of accounts of the corporation by someone other than the directors, or where the affairs of the company have been carried on without due regard to legal requirements so as to leave the Court with no confidence that the company’s affairs are being properly conducted with due regard for the interests of shareholders: Solomon at 80.

Thus, whilst the power to appoint a provisional liquidator is not circumscribed, and there is a wide discretion, an applicant for the appointment of a provisional liquidator generally needs to satisfy the Court that there is a reasonable prospect, or it is reasonably likely, that a winding up order will be made on the application (see also Allstate Explorations NL v Batepro Australia Pty Ltd [2004] NSWSC 261 (“Allstate Explorations”) at [27]) and the applicant can point to some good reason for intervention prior to the final hearing and show that the appointment is needed in the public interest, or to preserve the status quo in relation to the affairs of the company, or to protect the company’s assets (Allstate Explorations at [30]). On an ex parte application, there should be cogent evidence that the delay involved in effecting service, or at least in giving notice of the application, or the very fact of notice itself is likely to be such as to defeat the purpose of appointing a provisional liquidator: South Downs Packers Pty Ltd v Beaver [1984] 2 Qd R 559; (1984) 8 ACLR 990 at 994 (McPherson J). In Carr v Darren Berry International Marine Pty Ltd (No 1) [2013] FCA 1150, Perram J ordered the appointment of provisional liquidators on an ex parte basis. His Honour considered that the potentially fraudulent nature of what was taking place combined with the inherent mobility of the company’s property made it impracticable for the application to be heard on notice in the ordinary way.

5    The principles for winding up a company on the just and equitable ground under s 461(1)(k) of the Act are also well established. These principles were helpfully summarised by Gordon J in Australian Securities and Investments Commission v ActiveSuper Pty Ltd (ACN 125 423 574) and Others (No 2) [2013] FCA 234; (2013) 93 ACSR 189. At [20]–[24], her Honour stated:

It has long been established that a company may be wound up where there is “a justifiable lack of confidence in the conduct and management of the company’s affairs” and thus a risk to the public interest that warrants protection: Loch v John Blackwood Ltd [1924] AC 783 at 788. In Australian Securities and Investments Commission v ABC Fund Managers (2001) 39 ACSR 443; [2001] VSC 383 at [119] (ABC Fund Managers), Warren J (as her Honour then was) set out three “general fundamental principles”:

[119] First, there needs to be a lack of confidence in the conduct and management of the affairs of the company … Second, in these types of circumstances it needs to be demonstrated that there is a risk to the public interest that warrants protection. Third, there is a reluctance on the part of the courts to wind up a solvent company. [Citation omitted.]

In relation to the first, a lack of confidence may arise where, “after examining the entire conduct of the affairs of the company” the Court cannot have confidence in “the propensity of the controllers to comply with obligations, including the keeping of books, records and documents, and looking after the affairs of the company”: Galanopoulos v Moustafa [2010] VSC 380 at [32]; see also Australian Securities Commission v AS Nominees Limited (1995) 62 FCR 504 at 532-3; 133 ALR 1 at 61-2; 18 ACSR 459 at 518-9 (AS Nominees); ABC Fund Managers at [117]-[118]; Australian Securities and Investments Commission v International Unity Insurance Pty Ltd (2004) 22 ACLC 1416; [2004] FCA 1059 at [135]-[139] (International Unity Insurance).

There is thus a significant overlap between the matters relevant to the just and equitable ground and the matters which weigh in favour of the exercise of the Court’s discretion to appoint a provisional liquidator. For example, matters which indicate “the propensity of the controllers to comply with obligations, including the keeping of books, records and documents, and looking after the affairs of the company” might also demonstrate that “the company’s affairs have been conducted in a manner without regard to legal requirements or accepted principles of corporate management”.

In relation to the second, a risk to the public interest may take several forms. For example, a winding up order may be necessary to ensure investor protection or where a company has not carried on its business candidly and in a straightforward manner with the public: International Unity Insurance at [138]; see also Australian Securities and Investments Commission v Finchley Central Funds Management Ltd [2009] FCA 1110 at [3]. Alternatively, it might be justified in order to prevent and condemn repeated breaches of the law: Kingsley Brown Properties at [96]; see also AS Nominees at FCR 527; ALR 56-7; ACSR 513-4; Australian Securities and Investments Commission v Chase Capital Management Pty Ltd (2001) 36 ACSR 778; [2001] WASC 27 at [75]-[77]. Again, there is an overlap between matters which would pose a risk to the public interest for the purpose of s 461(1)(k) and which are relevant to the appointment of a provisional liquidator.

In relation to the third, it has been said that “a stronger case might be required where the company was prosperous, or at least solvent”: Kingsley Brown Properties at [96]. Solvency, however, is not a bar to the appointment of a liquidator on the just and equitable ground, particularly where there have been serious and ongoing breaches of the Act: ABC Fund Managers at [124]-[130].

As the authorities show, fraud or misconduct are significant factors relevant to the exercise of the Court’s discretion to wind up on the just and equitable ground: Hipages Group Pty Ltd v Reach Aussie Pty Ltd [2017] FCA 112 at [47]; Royal v El Ali (No 2) [2016] FCA 1156 at [17]; International Hospitality Concepts Pty Ltd v National Marketing Concepts Inc (No 2) (1994) 13 ACSR 368.

Submissions

6    The DCT’s case was that there is a justifiable lack of confidence in the conduct and management of the corporate defendants’ affairs because the evidence discloses a strong prima facie case that:

(a)    the corporate defendants are systematically avoiding compliance with their taxation obligations, including failing to file income tax returns, pay income tax, report their goods and services tax (“GST”) and PAYG withholding amounts and pay their GST and PAYG withholding amounts;

(b)    the corporate defendants are collectively operating a business of defrauding creditors involving “phoenix” activities for their clients;

(c)    the corporate defendants are controlled by Mr Whiteman, who is the de facto director of all of them;

(d)    the persons registered as the directors are “puppets”; and

(e)    two of the corporate defendants, A & S Services and AHW Solicitors, are phoenix companies themselves.

Evidence

7    A prima facie case of each of these claims was made out on the evidence.

8    There is cogent evidence of systemic non-compliance by all the corporate defendants with respect to their taxation obligations.

9    A & S Services was incorporated on 17 September 2013 and acts as trustee of the A & S Services Australia Unit Trust (“A & S Trust”). The A & S Trust registered for an Australian Business Number (“ABN”) on 17 September 2013 and is also registered for GST pursuant to Division 23 of A New Tax System (Goods and Services Tax) Act 1999 (Cth) (“the GST Act”). A & S Services is an accounting firm providing “business advisory” services, but A & S Services has never lodged an income tax return, either in its own right or as trustee for the A & S Trust, or paid any income tax; it has never lodged any business activity statements (“BAS”) as trustee for the A & S Trust, and has not complied with requests from the Australian Taxation Office (“ATO”) for lodgement of BAS. Following investigations, the Commissioner of Taxation (“the Commissioner”) issued default assessments to A & S Services for income tax payable for the income years ended 30 June 2014, 30 June 2015 and 30 June 2016 in the total amount of $1,785,680.30, and assessments of the net amount of GST to the trustee of the A & S Trust payable for the tax periods from 1 October 2013 to 30 June 2016 in the total amount of $810,778.00. Penalties were also imposed.

10    DNV was incorporated on 12 November 2010 and is the trustee of the DNV Accountants and Business Advisors Unit Trust (“the DNV Trust”). The DNV Trust was registered for an ABN on 26 October 2011 and is also registered for GST. The evidence is that DNV was registered as a tax agent with the Tax Practitioners Board from 7 August 2013. On 4 January 2016, the Tax Practitioners Board issued a letter to DNV advising that it had terminated DNV’s registration on the finding that DNV had failed to comply with the code of professional conduct in the Tax Agent Services Act 2009 (Cth), in particular, failing to act with honesty and integrity. Notwithstanding its business activity, DNV has never lodged an income tax return or paid income tax; or lodged any BAS as trustee for the DNV Trust; and it has not complied with the requests from the ATO for the lodgement of BAS. Following investigations, the Commissioner issued assessments to DNV for income tax payable for the income years ended 30 June 2013, 30 June 2014, 30 June 2015 and 30 June 2016 in the total amount of $233,855.40, and assessments and amended assessments for the net amount of GST payable for the tax periods 1 July 2012 to 31 March 2016 to the trustee of the DNV Trust in the total amount of $149, 217.00. Penalties were also imposed.

11    Bolton & Swan was incorporated on 10 October 2011 and traded as Bolton & Swan Lawyers carrying on a legal practice. Bolton & Swan was the trustee of the Bolton & Swan Unit Trust and was registered for an ABN on 10 October 2011 and also registered for GST. Bolton & Swan likewise has never lodged an income tax return or paid income tax. It did lodge BAS for the tax periods 1 July 2012 to 31 March 2015 but none of the BAS recorded a GST net amount payable. Bolton & Swan failed to lodge BAS for three tax periods, 1 April 2015 to 30 June 2015, 1 July 2015 to 30 September 2015 and 1 October 2015 to 31 December 2015 and did not comply with requests for lodgement of the BAS. Following investigations, the Commissioner made assessments of income tax payable for the income years ended 30 June 2014 and 30 June 2015 in the total amount of $67,568.70, and assessments, amended assessments and further amended assessments for the net amount of GST payable for the tax periods 1 July 2012 to 31 December 2015 in the total amount of $167,500.00. Penalties were also imposed. Bolton & Swan ceased operations on or about 2 September 2015.

12    AHW Solicitors was incorporated on 10 August 2015 and registered for an ABN on that date. It also registered for GST. AHW Solicitors took over the legal practice of Bolton & Swan in the financial year 30 June 2016 but it too did not lodge an income tax return for that income year. Following investigations, the Commissioner issued an assessment of income tax payable for that income year in the amount of $102,848.70. AHW Solicitors lodged BAS for the tax periods from 1 July 2015 to 30 June 2016 reporting total GST net amounts of $32,058.00. On 31 March 2017, the Commissioner issued amended assessments of net GST amounts for the tax periods 1 October 2015 to 31 December 2015; 1 January 2016 to 31 March 2016; and 1 April 2016 to 30 June 2016 in the amount of $51,008.00 and assessments of net GST amounts for the tax periods from 1 July 2016 to 31 December 2016 in the amount of $43,064.00. Penalties were also imposed.

13    Documents obtained by the Commissioner from the companies indicated that each corporate defendant has employees but no company has ever notified the Commissioner of any PAYG amounts withheld as an employer as required by s 16-150 of Schedule 1 to the Taxation Administration Act 1953 (Cth) (“TA Act”) or remitted any such amounts to the Commissioner as required by subsection 16-70(1) of Schedule 1 to the TA Act.

Consideration

14    The systemic non-compliance with taxation obligations in itself provided a substantial basis for the view that it is reasonably likely that a winding up order will be made against the corporate defendants on the just and equitable ground. I also considered that it can be inferred readily on the evidence that the disregard of taxation obligations must have been deliberate. Having regard to the nature of the business activities conducted by the companies, the systemic non-compliance makes it improbable that failures were other than intentional, justifying in my view an urgent need for the appointment of provisional liquidators on an ex parte basis.

15    The evidence also raised serious questions about the control of the corporate defendants. Documents obtained by the Commissioner from the companies evidence Mr Whiteman directing the affairs of the corporate defendants. The evidence strongly indicated that the directors of these companies were installed by Mr Whiteman, acting under and at his direction, including during the two and a half year period from August 2011 that Mr Whiteman was disqualified by the Australian Securities and Investments Commission (“ASIC”) from managing corporations and whilst Mr Whiteman was an undischarged bankrupt (from 14 January 2010 to 15 January 2013).

16    Documents obtained by the Commissioner from the companies also evidenced Mr Whiteman controlling the affairs of another company Armstrong and Shaw Pty Ltd (“Armstrong and Shaw”), including when he was an undischarged bankrupt and disqualified from managing corporations. Armstrong and Shaw went into liquidation on 8 February 2017 on the application of the DCT in respect of various unpaid tax liabilities. The evidence showed that Armstrong and Strong was an accountancy firm providing advisory business services either in its own right or in its capacity as trustee of the Armstrong and Shaw No 1 Trust (“A & S No 1 Trust”), and had also never lodged any income tax returns or paid income tax. Whilst the A & S No 1 Trust had lodged BAS for some tax periods, none of the BAS recorded a GST net amount payable. The Commissioner issued default assessments for income tax totalling $2,915,516.35 for the income years ended 30 June 2010 to 30 June 2015 inclusive. Assessments of GST net amounts and amended assessments were also issued to the trustee of the A & S No 1 Trust for the tax periods from 1 May 2009 to 31 August 2014 totalling $752,210.00. Penalties were also imposed. None of these tax debts were paid.

17    The DCT’s case that A & S Services is a “phoenix” operation of Armstrong and Shaw is based in part on Mr Khouri’s review of an affidavit sworn by Lyn Williams on 29 March 2017, which was not filed. Ms Williams was employed as an office manager for Armstrong and Shaw from 5 September 2012 and she was said to have deposed that she was told by Mr Whiteman that Armstrong and Shaw was going to be wound up and “they were going to move the business to A & S Services”. That evidence had negligible, if any, evidentiary value for the claim and I could not form a view based on the available evidence that the DCT’s claim has a solid foundation in fact. There is cogent evidence, however, that both Armstrong and Shaw and Bolton & Swan through Mr Whiteman were involved in facilitating a phoenix operation for another company, A.G.B.C. Pty Ltd (Deregistered) ACN 111 524 826 (“AGBC Pty Ltd”). Their involvement is detailed in a report lodged with ASIC by the liquidator of AGBC Pty Ltd pursuant to s 533(2) of the Act, which also identified numerous possible contraventions of the Act by Mr Whiteman in relation to his involvement in knowingly participating in the facilitation of a phoenix operation.

18    Further, there is evidence to support the DCT’s case that AHW Solicitors is a “phoenix” operation of Bolton & Swan, and that Mr Whiteman was involved in facilitating the operation. AHW Solicitors was incorporated after an investigation by the Legal Services Commissioner into Bolton & Swan in 2015 which then ceased trading in September 2015. Documents obtained by the Commissioner from the companies evidence that AHW Solicitors has taken over and conducts the same business that was carried on by Bolton & Swan before it ceased to trade with the only change being made to the identity of the legal provider. Those documents also evidence Mr Whiteman deciding the structure of the new legal firm, directing the preparation of a budget and approving a promotional letter for AHW Solicitors.

19    The appointment of a provisional liquidator ex parte is an extreme measure only to be countenanced where no other solution is available but the systemic disregard of taxation obligations, the evidence of the involvement of Mr Whiteman in each of the companies, the evidence of Mr Whiteman’s prior involvement in a phoenix operation and the evidence suggesting fraudulent phoenixing activity in establishing AHW Solicitors raised very serious questions about the corporate governance and operations of the corporate defendants and justified the appointment of provisional liquidators on an urgent basis to protect the assets of the companies.

the freezing orders

20    Rule 7.35(4) of the Rules empowers the Court to make a freezing order against a judgment debtor or prospective judgment debtor if the Court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied by reason of the person removing assets from the jurisdiction or disposing of, dealing with or diminishing the value of the assets, so that if the applicant succeeds the applicant will not be able to have the judgment satisfied.

21    Mr Whiteman is liable to the DCT in respect of income tax, administrative penalties for the income years ending 30 June 2013 to and including 30 June 2016 and general interest charges. On 3 April 2017, the DCT commenced proceedings against Mr Whiteman pursuant to subsection 255-5(2) of Schedule 1 of the TA Act to recover the tax liabilities. Mr Khouri exhibited to his affidavit filed in proceeding no. VID 326 of 2017 copies of the relevant notices of assessment and penalty notices. The production of the copies of the notices of assessment is conclusive evidence that the assessments were properly made and (except in proceedings under Part IVC of the TA Act) that the amount and all particulars of the assessments are correct: section 350-10 of Schedule 1 to the TA Act. I was therefore satisfied that the DCT had shown an extremely strong prima facie case that Mr Whiteman is indebted to the DCT in the amounts as assessed.

22    I was also satisfied that there is a real and not fanciful risk that Mr Whiteman will dispose of, deal with, or diminish the value of his assets so that a prospective judgment in favour of the DCT would be wholly or partly unsatisfied. The facts and circumstances justifying the appointment of provisional liquidators to the corporate defendants also supported, in my opinion, an inference that Mr Whiteman will take steps to avoid discharging his personal tax liabilities given the systemic non-compliance and disregard of the corporate defendants’ taxation obligations.

23    I was also satisfied that the balance of convenience favoured the granting of the freezing order as no facts are presently known to the Court which would weigh heavily against the making of a freezing order.

24    Mr Batchelor is personally liable to the DCT for unpaid income tax totalling $287,197.53 for the income years ended 30 June 2013, 30 June 2014 and 30 June 2015 and penalties totalling $244,603.15 plus shortfall interest and general interest charges. On 3 April 2017, the DCT commenced recovery proceedings against Mr Batchelor in respect of those tax debts. Mr Khouri’s affidavit filed in proceeding no. VID 327 of 2017 exhibited the notices of assessment which are conclusive evidence of the proper making of the assessments and (except in proceedings under Part IVC of the TA Act) that the amounts and particulars of the assessments are correct: section 350-10 of Schedule 1 to the TA Act. In the circumstances, I was satisfied that the DCT had demonstrated an extremely strong prima facie case that Mr Batchelor is indebted to the DCT in the amounts as assessed.

25    Further, the evidence strongly indicated that two properties of which Mr Batchelor is the registered proprietor, namely 6 Vautier Street, Elwood and 2/47 Blenheim Street, Balaclava, are beneficially owned by Mr Whiteman. I was prepared to infer from the fact that Mr Batchelor has substantial unpaid tax liabilities and his apparent connection with Mr Whiteman that there is a risk that he will dissipate his assets in order to frustrate any judgment of the DCT against him in respect of his personal tax debts. I was also satisfied that the balance of convenience favoured the making of a freezing order against him with respect to his assets generally as no facts are known to the Court which would weigh heavily against the making of that order.

26    A freezing order was also made against Wyndham, a third party. By r 7.35(5) of the Rules, the Court may make a freezing order against a third party if the Court is satisfied, having regard to all the circumstances that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because the third party holds or is using, or has exercised or is exercising, a power of disposition over assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor or the third party is in possession of, or in a position of control or influence concerning, assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor. The evidence strongly indicated that Mr Whiteman beneficially owns the property at 3 Page Avenue, Port Melbourne, of which Wyndham is the registered proprietor. In the circumstances, a freezing order against Wyndham in respect of dealings with respect to that particular asset was also justified.

conclusion

27    In those circumstances, each of the orders sought by the DCT was made.

28    For the sake of completeness I should add that in reaching my view that the orders sought by the DCT should be made, I did not give weight to the evidence in the form of Mr Khouri’s review of affidavits sworn by Lyn Williams on 29 March 2017, Marisa Sampieri on 30 March 2017 and Patricia Anne Stanton on 29 March 2017. The evidence of each of those witnesses as presented by Mr Khouri (if admissible in that form) amounted in large part to unsupported assertion and lacked sufficient detail to be corroborative evidence of the claims made by the DCT.

Associate:

Dated:    27 April 2017