FEDERAL COURT OF AUSTRALIA

Deputy Commissioner of Taxation v Hartley [2025] FCA 322

ORDERS

THE COURT ORDERS THAT:

1.    Upon the Applicant by his counsel giving the undertakings set out in Schedule A to each of the following annexures:

(a)    makes orders against the First Respondent in the form of Annexure A to this Order; and

(b)    makes orders against the Second Respondent in the form of Annexure B to this Order.

2.    In respect of the Applicant's claim for interlocutory relief:

(a)    the Originating Application be made immediately; and

(b)    pursuant to r 7.32(1) of the Federal Court Rules 2011 (Cth) (FCR), the Applicant's claim for freezing orders, restraining orders and ancillary relief to have effect up to and including 8 April 2025 be heard without notice to the Respondents.

3.    Pursuant to FCR r 9.02(1)(c), the Applicant have leave to join the First Respondent and Second Respondent to this proceeding.

4.    Pursuant to r 10.24 of the FCR:

(a)    personal service on the First Respondent of the Originating Application, the Affidavit of Stefano Maurizio Cocuzza affirmed 27 March 2025 and its exhibits SMC-1 and SMC-2, the Affidavit of Jozef Tkac affirmed 28 March 2025 and its Exhibit JT-1, the Outline of Applicant's Submissions dated 27 March 2025 and a copy of this Order (Initiating Documents) be dispensed with;

(b)    the Initiating Documents be taken to be served on the First Respondent by the following steps:

(i)    by leaving a copy of the Initiating Documents with a person apparently over the age of sixteen years at Pitcher Partners SA Partnership Pty Ltd at Level 1/100 Hutt Street, Adelaide SA 5000 in an envelope marked to the attention of Andrew Charles Beitz on or before 9.30 am ACDT on 31 March 2025;

(ii)    by emailing a copy of the Initiating Documents to Andrew.beitz@pitcher-sa.com.au on or before 8.00 pm ACDT on 28 March 2025; and

(iii)    by emailing a copy of the Initiating Documents marked to the attention of the First Respondent at tarnish7@gmail.com on or before 8.00 pm ACDT on 28 March 2025.

5.    The envelope and emails to be delivered in accordance with order 4(b) shall be endorsed in the case of the envelope and shall have in the body of the emails the words 'The Federal Court of Australia has required these important documents to be delivered to you. They require urgent consideration'.

6.    In respect of Exhibit SMC-1:

(a)    personal service of Exhibit SMC-1 on the Respondents be dispensed with;

(b)    in lieu of personal service, service of Exhibit SMC-1 may be effected by delivering a copy of Exhibit SMC-1 on USB Drive or by web link.

7.    The proceedings be listed for further hearing at 2.00 pm ACST on 8 April 2025.

8.    Costs of the interlocutory application be reserved.

9.    Liberty to apply on 24 hours' notice.

10.    Until and including 8 April 2025, to facilitate the making of any application pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) and on the ground that it is necessary to prevent prejudice to the proper administration of justice under s 37AG(1)(a), all documents filed in these proceedings are confidential documents for the purposes of r 2.32 of the FCR.

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

ANNEXURE A

(KEITH ANDREW HARTLEY)

PENAL NOTICE

TO:     KEITH ANDREW HARTLEY

IF YOU (BEING THE PERSON BOUND BY THIS ORDER):

(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 NOT TO DO,

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:     KEITH ANDREW HARTLEY

This is a 'freezing order' made against you on 28 March 2025 by Justice Colvin 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 in accordance with orders 4 and 5 of the orders made on 28 March 2025 to which these orders are annexedhttps://url.avanan.click/v2/___https:/www.fedcourt.gov.au/law-and-practice/practice-documents/practice-notes/gpn-frzg___.YXAzOmNyYWRkb2NrOmE6bzo3NTQ1ZWJlMzFkZGNhNThkMzZiZDc1NThlYmY4YzYwNTo2OmIyM2M6NTgyODNjNmZhODE3YWEzMzc5NWQ2MmY2MjEzMzUzODEwN2M2ZDQ0MGZkMDk.

2.    Subject to the next paragraph, this order has effect up to and including 8 April 2025 (the Return Date). On the Return Date at 2.00 pm ACST there will be a further hearing in respect of this order before Justice Colvin.

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$3,096,160.48 ('the Relevant Amount') other than to make payment to the Commissioner of Taxation.

(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,

(a)    your assets include:

i.    all your assets, whether or not they are in your name and whether they are solely or co-owned;

ii.    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

iii.    the following assets in particular:

A.    any money held by you or on your behalf or for your benefit in the following bank accounts:

B.    the following shareholdings, or if they have been sold, the proceeds of the sale:

C.    the following real property, or if it has been sold, the net proceeds of the sale:

D.    the following motor vehicles:

E.    your interest as a member of the Slugwash Superannuation Fund.

(b)    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 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.

(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 $5,000.00 a week on your ordinary living expenses;

(b)    paying up to $25,000.00 on 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, provided that you do not remove any of your Australian assets from Australia unless the unencumbered value of your Australian assets would, after the removal, exceed the Relevant Amount; and

(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, 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 AUD$3,096,160.48, 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 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 (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 s 260-5 of Schedule 1 to the Taxation Administration Act 1953 (Cth)

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 section 260-5 of 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 you.

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:

    c/- Craddock Murray Neumann Lawyers

    Level 21, 227 Elizabeth Street

    Sydney NSW 2000

    Telephone:    (02) 8268 4000

            Attention:    Khaled Metlej & Dennis Olthof

Email:        kmetlej@craddock.com.au; dolthof@craddock.com.au

ANNEXURE B

(SLUGWASH PTY LTD ACN 625 122 303)

PENAL NOTICE

TO:     SLUGWASH PTY LTD ACN 625 122 303

IF YOU (BEING THE PERSON BOUND BY THIS ORDER):

(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 NOT TO DO,

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:     SLUGWASH PTY LTD ACN 625 122 303

This is a 'freezing order' and a restraining order made against you on 28 March 2025 by Justice Colvin 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 8.00 pm ACDT on 28 March 2025https://url.avanan.click/v2/___https:/www.fedcourt.gov.au/law-and-practice/practice-documents/practice-notes/gpn-frzg___.YXAzOmNyYWRkb2NrOmE6bzo3NTQ1ZWJlMzFkZGNhNThkMzZiZDc1NThlYmY4YzYwNTo2OmIyM2M6NTgyODNjNmZhODE3YWEzMzc5NWQ2MmY2MjEzMzUzODEwN2M2ZDQ0MGZkMDk.

2.    Subject to the next paragraph, this order has effect up to and including 8 April 2025 (the Return Date). On the Return Date at 2.00 pm ACST there will be a further hearing in respect of this order before Justice Colvin.

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.

RESTRAINING ORDERS

6.    

(a)    You must not pay any ‘Lump Sum Benefit’, as defined in the trust deed for the Slugwash Superannuation Fund dated 2 April 2018, to the First Respondent, except to make a payment or payments to the applicant in respect of the First Respondent’s tax-related liabilities.

(b)    You must not retire as trustee of the Slugwash Superannuation Fund or arrange with another person to act as replacement trustee.

FREEZING OF ASSETS

7.    

(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$4,187,930.71 ('the Relevant Amount') other than to make payment to the Commissioner of Taxation.

(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.

8.    For the purposes of this order,

(a)    your assets include:

i.    all your assets, whether or not they are in your name and whether they are solely or co-owned;

ii.    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

iii.    the following assets in particular:

A.    any money held by you or on your behalf or for your benefit in the following bank accounts:

B.    1kg solid gold bar.

C.    all assets held by you, or on your behalf, in your capacity as trustee of the Slugwash Superannuation Fund.

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

Provision of information

9.    Subject to paragraph 10, 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 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.

10.    

(a)    This paragraph (10) applies if you are not a corporation and you wish to object to complying with paragraph 9 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 (10) also applies if you are a corporation and all of the persons who are able to comply with paragraph 9 on your behalf and with whom you have been able to communicate, wish to object to your complying with paragraph 9 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

11.    This order does not prohibit you from:

(a)    paying up to $25,000.00 on your reasonable legal expenses;

(b)    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, provided that you do not remove any of your Australian assets from Australia unless the unencumbered value of your Australian assets would, after the removal, exceed the Relevant Amount; and

(c)    in relation to matters not falling within (a) or (b), dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so you give the applicant, if possible, at least two working days written notice of the particulars of the obligation.

12.    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.

13.    

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

i.    pay the sum of AUD$4,187,930.71 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 13(a) above, you must as soon as practicable file with the Court and serve on the applicant notice of that fact.

Costs

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

Persons other than the applicant and respondent

15.     Set off by banks

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

16.    Bank withdrawals by the respondent

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

17.    Persons outside Australia

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

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

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

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

A.    is subject to the jurisdiction of this Court; and

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

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

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

18.    Assets located outside Australia

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

19.    Notices under s 260-5 of Schedule 1 to the Taxation Administration Act 1953 (Cth)

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 section 260-5 of 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 you.

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:

c/- Craddock Murray Neumann Lawyers

Level 21, 227 Elizabeth Street

Sydney NSW 2000

Telephone:    (02) 8268 4000

Attention:    Khaled Metlej & Dennis Olthof

Email:        kmetlej@craddock.com.au; dolthof@craddock.com.au

REASONS FOR JUDGMENT

COLVIN J:

1    On 28 March 2025, the Deputy Commissioner of Taxation sent audit finalisation letters, reasons for decision and notices of amended assessment to Mr Keith Andrew Hartley and Slugwash Pty Ltd. In the case of Mr Hartley, the amended assessments related to the period 1 July 2014 to 30 June 2023. In the case of Slugwash, the amended assessments related to the period 1 July 2021 to 30 June 2024. Mr Hartley and Slugwash were each also sent a notice of administrative penalty.

2    On the afternoon of 28 March 2025, as duty judge, I heard an urgent ex parte application by the Commissioner for freezing orders and ancillary orders against Mr Hartley and Slugwash. The Commissioner relied upon affidavits from two employees of the Australian Taxation Office and detailed written submissions. Having considered those materials I was satisfied that it was appropriate to grant relief substantially in the terms sought. At the oral hearing on the day, counsel for the Commissioner indicated that there were no further matters that the Commissioner wished to raise. Accordingly, I made freezing and ancillary orders and indicated that I would provide short written reasons for doing so as soon as I was able. These are those reasons.

Relevant principles concerning freezing order applications

3    The relevant principles to be applied in considering an application for a freezing order were recently summarised by Feutrill J in UFC Enterprise Morley Pty Ltd v UFC Enterprise Northbridge Pty Ltd [2024] FCA 1396 at [11] in terms that I gratefully adopt.

4    It is necessary for the Court to evaluate whether there is a good arguable case for final relief and whether there is degree of danger or risk that any judgment obtained will not be met due to dissipation of assets. The Court must also form the view that the balance of convenience favours the making of the orders sought.

5    As to the risk or danger of an unsatisfied judgment, as Perram J explained in Deputy Commissioner of Taxation v Chemical Trustee Limited (No 4) [2012] FCA 1064 at [23]: 'this does not mean that the Court need be satisfied that the risk of dissipation is more probable than not; and there does not necessarily need to be evidence of any intention to dissipate'. Evidence of a positive intention to dissipate is not required.

Good arguable case?

6    The assessments having been issued and sent, there was a good prospective cause of action: Deputy Commissioner of Taxation v Binetter [2013] FCA 670 at [6]-[7]. Although the relevant debts were not due at the time of the application, steps had been taken which would in due course enable the Commissioner to establish claims against the two taxpayers on the basis of the assessments and rely upon statutory provisions as to proof: Commissioner of Taxation v Resource Capital Fund III LP [2010] FCA 1247 at [20]-[21].

Danger or risk that prospective judgment will be unsatisfied?

7    On the affidavit evidence and submissions, I was satisfied that the Commissioner had demonstrated that there was sufficient danger or risk of dissipation by Mr Hartley of personal assets to support the making of the interim orders sought.

8    In particular, I was persuaded to that conclusion for the purposes of the interim application by evidence and submissions to the following effect:

(1)    Mr Hartley, an Australian tax resident, had received salary income into an overseas bank but had not declared that income;

(2)    over a number of years Mr Hartley had taken elaborate steps by establishing various overseas structures to receive monies earned from the provision of his services as a test pilot and trainer, with the consequence that income from the provision of his personal services as a test pilot was not accounted for as his personal income;

(3)    working with those structures, Mr Hartley had bought two properties in the United Kingdom, three cars and had assisted in the purchase of two aircraft and two properties through the provision of loans;

(4)    Mr Hartley had participated in arrangements by which there would be a 'quiet' contract and a 'risky' contract for the training of a Chinese pilot and air traffic controller;

(5)    Mr Hartley left Australia on 21 February 2023 in circumstances where there was reason to believe he feared prosecution for illegal activity and he has not returned since (even though his wife has returned to Australia four times after that date);

(6)    in early December 2023, an amount of nearly $4 million was received into the Australian bank account of an Australian company of which Mr Hartley and his step-son are directors, with outgoing international payments from that account of nearly $3.8 million being made over the next six months;

(7)    Mr Hartley has the capacity and understanding to arrange the international movement of funds;

(8)    the assessments gave rise to Mr Hartley owing personal tax liabilities of over $3 million;

(9)    Mr Hartley had been involved in dealings with shares held by Slugwash as trustee of a superannuation fund in circumstances which suggested his purpose had been to move assets out of reach of Australian authorities;

(10)    in an email dated 20 November 2022 to his colleague in business dealings with a procurement entity for the People's Republic of China, Mr Hartley said:

I'm expecting to get tapped on arrival by the Aussie security guys and possibly the federal police as well … If they get hard, one potential outcome is a freezing of any assets that they deem have come from 'illegal activity'. Of course, to do that they need to prosecute me successfully, which might be difficult, but I'd be prudent to mitigate any resulting risk to my assets.

The assets at risk are the TGT and TTL shares that are held in my super fund. I think the TGT shares are less serious given that the contract finishes in about 6 months' time so with a bit of juggling with interim and final dividends we can minimise that. The main problem is the TTL shares, with the contract lasting a lot longer, as well as the TTL work being the bigger target of the USA. I've discussed with … [who] came up with a neat idea that I'd like to follow up. TTL should (subject, of course, to the little buggers paying when due) be able to make a first interim dividend, say, of value $X. [Person A] suggests instead of receiving that dividend my super sells the shares back to you/Roche for the same value: that makes no difference to the dividend value you receive from TTL but also means that you/Roche would receive 100% of any subsequent dividends. I'm happy to forgo any future dividends in exchange for removing the Aussie risks. I've also bounced the idea off my Aussie accountant who agrees it creates no problems with the tax man …

(11)    the assessment gave rise to liabilities for Slugwash as trustee of the superannuation fund of almost $2.6 million; and

(12)    it appeared that Mr Hartley may now be located in the United Kingdom or South Africa and particular complexities would arise for the Commissioner in enforcing tax liabilities in either of those jurisdictions.

Evidence of assets

9    There was evidence of assets in Australia being held by Mr Hartley and Slugwash as trustee of the superannuation fund. A property in South Australia was registered in the name of Mr Hartley. There appeared to be substantial equity in the home. It was mortgaged and there was evidence to suggest that funds could be re-drawn under the loan facility. Bank accounts were maintained in the name of Mr Hartley. There was some evidence of ownership of an amateur-built aircraft kit and two motor vehicles. The available assets did not appear to have a value that might be said to exceed the Commissioner's claim.

10    The accounts of Slugwash indicated that there was a closing account balance for Mr Hartley as a member of the superannuation fund of just over $3.3 million with assets being held in cash, shares and managed investments. Taking account of the third party order that was sought (see below) these assets were within the amounts claimed by the Commissioner.

Balance of convenience?

11    The order sought was for a short period with a return date for a further hearing on notice to Mr Hartley and Slugwash.

12    For reasons that have been given, it had been demonstrated that there was a danger or risk of assets being dissipated. The assets were passive and there was no material to suggest immediate prejudice to Mr Hartley and Slugwash if the orders were made.

13    The protections provided for by orders in the form usually issued were proposed.

14    The assessments are based on audits that have been conducted and in respect of which reasons have been issued. On the other hand, the audits have been conducted by the Commissioner without notice to Mr Hartley and Slugwash so there has been no opportunity for them to put forward any countervailing contentions concerning the matters on which the assessments have been based.

15    The Court's attention was drawn to a contention that had been raised by a tax agent to the effect that one of the entities involved had been conducting a personal services business. If that were so, then that may provide a basis for disputing some aspects of the Commissioner's case. However, the Commissioner had not received any supporting evidence or reasoning to support that position.

Third party order

16    The Commissioner also sought orders against Slugwash as trustee for the superannuation fund as a third party in respect of the claims made as to the liabilities of Mr Hartley. On the evidence, Mr Hartley is entitled to benefits in the superannuation fund and there are provisions in the deed for the superannuation fund which give rise to the possibility that benefits held by Slugwash may be able to be realised and funds made available to Mr Hartley.

17    The Commissioner proposed to exercise the statutory powers to issue a garnishee notice to Slugwash in respect of amounts that might be due by the superannuation fund to Mr Hartley. I was satisfied that this was a matter that may be advanced to support the third party claim: Deputy Commissioner of Taxation v Wang [2019] FCA 1759 at [21].

Form of orders

18    I was persuaded that to the extent that the orders sought departed from the example form of orders that was annexed to the Court's Practice Note (GPN-FRZG), those departures had been adequately explained in the Commissioner's written submissions.

Substituted service

19    Finally, application was made for orders to enable substituted service. For the reasons stated in the written submissions I was satisfied on the evidence that it was 'not practicable' for service to be effected in the manner that would otherwise be required, particularly having regard to the nature of the orders and the need for the orders to be brought to the attention of the parties as soon as possible. For those reasons, I was satisfied that orders as to service should be made substantially in the terms sought, but requiring a further endorsement on the envelope and emails to be delivered that stated: 'The Federal Court of Australia has required these important documents to be delivered to you. They require urgent consideration'.

Associate:

Dated:    7 April 2025