Federal Court of Australia

Obeid v Commissioner of Taxation (No 2) [2026] FCA 1192

ORDERS

THE COURT ORDERS THAT:

1.    The proceeding be dismissed.

2.    The applicant pay the respondent’s costs of the proceeding as agreed or assessed.

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

REASONS FOR JUDGMENT

(Delivered ex tempore, revised for publication)

KENNETT J:

1    Pursuant to orders that I made on 25 November 2025, orders made in this proceeding are taken to have also been made in 11 related proceedings in this Court. I will refer to all of the proceedings (including the present one) as the Court proceedings.

2    The Court proceedings were commenced in 2014 and involve tax assessments issued to several members of the Obeid family and entities related to them. They raise issues concerning the tax treatment of money received by way of trust distributions. On 22 September 2017 the Court proceedings were stayed because of pending criminal proceedings against Edward and Moses Obeid. They began to move forward again in late 2024.

3    26 review proceedings, arising out of the same events, were commenced in the Administrative Appeals Tribunal (now the Administrative Review Tribunal (ART)) in 2023 (the Tribunal proceedings). They have been allocated to me in my capacity as a Deputy President of the Tribunal and managed concurrently with the Court proceedings. The orders that are the subject of these reasons will also be made in each of the Tribunal proceedings, and these reasons will also be published as the reasons of the ART. I will refer to the Court proceedings and the Tribunal proceedings compendiously as the proceedings. All of the proceedings are listed in the annexure to these reasons.

4    On 11 July 2025, I listed the proceedings for hearing commencing on 31 August 2026 with an estimate of 10 days. I also made timetabling orders for the filing of an electronic court book, written submissions, lists of objections to evidence and a hearing timetable, and for parties to give notice to each other of any witnesses required for cross-examination. The applicants were to file their submissions by 22 June 2026 and the respondent by 20 July 2026.

5    Aspects of this timetable have been amended or replaced by later orders. Most recently, on 4 August 2026, I made orders amending the timetable so that the applicants were to file their submissions by 12 August 2026 and the respondent by 20 August 2026. As with the dates fixed by earlier iterations of the timetable, the date of 12 August 2026 came and went with the applicants filing no submissions.

6    On 8 July 2026, the applicants’ solicitor notified the Court that, as of 13 July 2026, he was ceasing to act in the proceedings. On 15 July 2026, a notice of acting was filed in the proceedings by Mr Michael Bowe, a solicitor who had acted in criminal proceedings for certain of the applicants but informed the Court that he had no experience in tax law or familiarity with these proceedings.

7    At the case management hearing on 4 August 2026, Mr Bowe foreshadowed an application to vacate the trial dates. In addition to varying the timetabling orders as outlined earlier (so that submissions and other material could be filed in time for the hearing date to be maintained), I made orders for any adjournment application and evidence in support to be filed by 4 pm on 6 August 2026 and for any such application to be heard on 13 August 2026. No interlocutory application was filed.

8    On 17 August 2026 my chambers received a request from the respondent’s solicitors for the proceedings to be listed urgently so that an application could be made for the proceedings to be dismissed on the ground of the applicants’ default. The proceedings were listed on 20 August 2026. Then, on 19 August 2026, the applicants filed an interlocutory application seeking that the hearing dates be vacated, together with a supporting affidavit sworn by Mr Bowe. That evening, the respondent’s solicitors filed an interlocutory application seeking the dismissal of the proceedings and a supporting affidavit of the respondent’s solicitor, Mr Jeremy Geale.

9    Logically, the first issue that I should deal with is whether the proceedings should be dismissed as proposed by the respondent. The question whether the trial should be adjourned only arises if I am not persuaded that the time has already come when the proceedings should be dismissed.

10    The respondent’s interlocutory application was originally framed in reliance on r 33.32(1)(a) of the Federal Court Rules 2011 (Cth) (the Rules), but it was accepted that that rule only applies in the appellate jurisdiction. Counsel instead invoked the inherent power (more accurately the implied power) of the Court. It was not ultimately disputed that the Court has power to dismiss a proceeding in response to non-compliance with orders by an applicant. Such a power is provided expressly by r 5.23(1)(b) of the Rules and s 37P(5) of the Federal Court of Australia Act 1976 (Cth) (the Act). So far as the Tribunal proceedings are concerned, a similar power is conferred by s 100(b) of the Administrative Review Tribunal Act 2024 (Cth).

11    In his affidavit filed in support of the applicants’ adjournment application (which was also relied on in resisting the respondent’s application for dismissal), Mr Bowe deposed on information and belief that the applicants did not have sufficient resources to retain counsel for the trial of the proceedings. He did not provide any details or any objective evidence of this position. He did not address, for example, whether any efforts had been made to engage counsel on a speculative basis (noting that if the applicants are successful they stand to obtain significant refunds of tax).

12    Mr Bowe did refer to proceedings in the Supreme Court of New South Wales, commenced by the New South Wales Crime Commission against Obeid Corporation Pty Ltd (the Supreme Court proceedings), in which Elkaim AJ made interim restraining orders on 6 March 2026. The final orders sought in that proceeding, under the Criminal Assets Recovery Act 1990 (NSW), include an order under s 27 of that Act that the defendant pay to the Treasurer an amount assessed by the Court as the value of the proceeds derived by the defendant from certain illegal activities. The restraining orders prevent dealings with certain assets and, it may be assumed, have had an adverse impact on the financial position of at least some of the applicants. However, Mr Bowe does not draw any express link between these orders and his clients’ asserted inability to retain counsel. This matter should have been raised with the Court months ago if it jeopardised the applicants’ ability to comply with orders for the preparation of the proceedings for trial.

13    Instead of bringing any difficulty to the Court’s attention promptly, the applicants have effectively ignored their duty to comply with the Court’s orders.

(a)    My associates sought an update on the progress of the applicants’ submissions by email on 26 June, 1 July and 8 July 2026. The only response to any of these requests was the email from the applicants’ former solicitor on 8 July 2026 to the effect that he would no longer be acting.

(b)    At a case management hearing on 16 July 2026 (listed at the Court’s initiative), the relevant timetabling orders were vacated on the basis that the parties were engaged in settlement discussions and there was an existing listing on 4 August 2026. Replacement timetabling orders were made, as noted earlier, on 4 August 2026.

(c)    Mr Geale inquired after the applicants’ submissions by email to Mr Bowe on 14 August 2026 and again on 17 August 2026 and received no reply.

(d)    Mr Geale gives uncontradicted evidence of a telephone conversation on 17 August 2026 in which Mr Bowe told him “that the [a]pplicants would not be filing submissions today, that the [a]pplicants were not preparing for hearing and if we were to proceed with having the matter listed for directions, he would file a notice ceasing to act”.

(e)    Nothing has been filed by the applicants other than their application (filed on 18 August 2026) to adjourn the trial.

14    Senior counsel who appeared (pro bono) for the applicants suggested that all the evidence in the proceedings had been filed a long time ago and, if necessary, the trial could commence on 31 August 2026 without written opening submissions, notice of objections to evidence or prior notice of which affidavits were relied upon or which witnesses were required for cross-examination. Technically this is correct. However, it is not a proper approach to complex litigation in the light of the overarching purpose expressed in s 37M of the Act; and for a party to put the Court in the position of having to proceed in such a way would be a breach of the party’s obligation under s 37N of the Act.

15    On the evidence before me, the applicants have been calculated and recalcitrant in their non-compliance with orders of the Court. They have not sought extensions of time or alerted the Court to any impediment to compliance (other than by way of Mr Bowe’s affidavit, discussed above, which was filed on 19 August 2026). Before making any application to adjourn the trial, they informed the respondent through their solicitor that they would not be filing submissions and were not preparing for the hearing.

16    For these reasons I have come to the view that the draconian step of dismissing the proceedings is warranted. There will be orders accordingly.

Associate:

Dated:    21 August 2026

annexure

Federal Court Proceedings

Administrative Review Tribunal Proceedings