Federal Court of Australia

Commissioner of Taxation v Li (No 2) [2026] FCA 1424

ORDERS

THE COURT DECLARES THAT:

1.    On 4 March 2020 and on each day thereafter, the Respondent contravened (and continues to contravene) s 96(1) of the Foreign Acquisitions and Takeovers Act 1975 (Cth) in that the Respondent failed to construct one or more dwellings on 8 Rogers Close, Berwick VIC 3806 (certificate of title volume 11947 folio 868) within four years of the date of the no objection notification dated 3 March 2016, each day of continuing non-compliance constituting a separate contravention pursuant to s 93 of the Regulatory Powers (Standard Provisions) Act 2014 (Cth).

THE COURT ORDERS THAT:

2.    Pursuant to s 82(3) of the Regulatory Powers (Standard Provisions) Act 2014 (Cth), the Respondent pay to the Commonwealth a pecuniary penalty in the sum of $508,000 for her contraventions of s 96(1) of the Foreign Acquisitions and Takeovers Act 1975 (Cth) within 28 days of the date of this order.

3.    Order 1 of Annexure A to the orders of Dowling J made on 19 December 2025 be varied such that the freezing order has effect up to and including the day that is 28 days after the date of these orders.

4.    The Respondent pay the Commissioner’s costs of and incidental to the proceeding, to be awarded on a lump sum basis in the amount of $50,757.70.

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

REASONS FOR JUDGMENT

O’BRYAN J

Introduction

1    The Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA) regulates investment by foreign persons in certain Australian assets, including residential land.

2    The respondent, a national of the People’s Republic of China, entered into a contract on 25 January 2016 to purchase vacant residential land, being Lot 4030/Stage 4, 94-104 Homestead Road, Berwick, Victoria 3806, now known as 8 Rogers Close, Berwick, Victoria 3806 (property). On 11 February 2016, Ms Li submitted a Foreign Investment Review Board (FIRB) application seeking a no objection notification to acquire the Berwick Property. On 3 March 2016, the Treasurer gave the respondent a no objection notification pursuant to s 74(2) of the FATA (no objection notification). The no objection notification imposed conditions that the respondent purchase the property for a maximum price of $1,000,000 and build a dwelling on the land within four years after the date of the no objection notification.

3    The condition period expired on 4 March 2020. The respondent has never built a dwelling on the property. The respondent is not resident in Australia, having departed on 5 August 2016 and not returned. The Australian Taxation Office (ATO) made numerous attempts between July 2021 and December 2025 to make contact with the respondent and obtain an explanation for her non-compliance. The respondent spoke with an ATO officer by telephone, through an interpreter, on three occasions in early 2023. During those conversations, the respondent said she lacked the funds to build a dwelling on the land or apply for a variation to the no objection notification and intended to sell the property without developing it. The respondent also told the ATO officer to contact Sun Lawyers in relation to the property, but refused to provide authorisation for the ATO to deal with Sun Lawyers. The respondent has not otherwise responded to the ATO’s communications.

4    Section 96(1) of the FATA relevantly stipulates that a person who is given a no objection notification under s 74 of the FATA relating to a residential land acquisition must not contravene a condition specified in the notification. Section 96(3) stipulates that a person who contravenes subsection (1) is liable to a civil penalty. Section 99(1) stipulates that each civil penalty provision of the FATA is enforceable under Part 4 of the Regulatory Powers (Standard Provisions) Act 2014 (Cth) (Regulatory Powers Act).

5    By originating application dated 15 December 2025, the Commissioner of Taxation sought:

(a)    pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) (FCA Act), a declaration that on 4 March 2020 the respondent contravened section 96(1) of the FATA in that the respondent failed to construct one or more dwellings on the property within the 4 years of the date of the no objection notification dated 3 March 2016;

(b)    pursuant to s 82(3) of the Regulatory Powers Act, an order that the respondent pay the Commissioner such pecuniary penalty as the Court determines to be appropriate in respect of the contravention; and

(c)    an order that the respondent pay the Commissioner’s costs pursuant to s 43 of the FCA Act.

6    By its originating application, the Commissioner also sought urgent interlocutory relief in the form of:

(a)    a freezing order, to prevent the respondent from disposing of the property prior to the determination of the substantive application; and

(b)    substituted service orders, to avoid the need for the Commissioner to make a determination under s 135A of the FATA each time a document needs to be served on the respondent outside Australia.

7    The proceeding first came before Justice Dowling, as duty judge, on 19 December 2025, at which time the Commissioner sought the freezing order and substituted service orders. The respondent was given notice of the listing on 17 December 2025 by service of the relevant documents in accordance with s 135A of the FATA. The respondent did not appear at the interlocutory hearing. Justice Dowling made those orders on 19 December 2025 (19 December orders) with reasons published in Commissioner of Taxation v Li (Freezing Order) [2025] FCA 1692. The freezing order has effect “up to and including the hearing of the originating application”.

8    Following the making of the 19 December orders, the Commissioner caused a “notice of action” relating to the freezing order to be recorded on the title of the property.

9    On 23 December 2025, the respondent was served with a copy of the 19 December orders.

10    The proceeding was listed for case management on 6 February 2026. The respondent did not appear at the case management hearing. At that hearing, I made orders for, inter alia, the respondent to file a concise statement in response by 6 March 2026. The respondent has not done so.

11    By interlocutory application dated 2 April 2026, the Commissioner sought leave to amend the originating application and concise statement, and for default judgment against the respondent under r 5.23(2)(c) of the Federal Court Rules 2011 (Cth) (FC Rules) on the basis that the respondent had not filed an appearance and had taken no step in the proceeding. On 8 April 2026, the respondent was served with copies of that interlocutory application and supporting materials, in accordance with the substituted service orders.

12    The Court granted leave to amend on 10 April 2026. On the same date, I made the following orders with respect to the Commissioner’s application for default judgment:

3.     By 1 May 2026, the Respondent file and serve a notice of address for service, in accordance with Form 10, and a concise statement in response.

4.     If the respondent fails to comply with order 3:

(a)     pursuant to r 5.23(2)(c) and (e) of the Federal Court Rules 2011 (Cth), judgment be given against the Respondent for the relief claimed in the amended originating application;

(b)     by 8 May 2026, the Applicant file any further submissions and affidavit evidence in support of:

(i)     its application for the imposition of a pecuniary penalty on the Respondent, and specifically the quantum of penalty; and

(ii)     its application for costs, and specifically the quantum of costs; and

(c)     the form of relief, including costs, will be determined on the papers.

13    The Commissioner filed the amended originating application and concise statement on 14 April 2026. By the amended originating application, the Commissioner seeks relief in respect of the respondent’s continuing contravention of s 96(1) of the FATA on and from 4 March 2020, each day of the non-compliance constituting a separate contravention pursuant to s 93 of the Regulatory Powers Act.

14    On 15 April 2026, the respondent was served with copies of the amended originating application and concise statement and a copy of the Court’s orders dated 10 April 2026, in accordance with the substituted service orders.

15    By interlocutory application dated 20 May 2026, the Commissioner also seeks an extension to the freezing order so that it has effect “up to and including the day that is 28 days after judgment is delivered” in this proceeding. On 22 May 2026, the respondent was served with the interlocutory application and supporting materials, in accordance with the substituted service orders.

16    The respondent has taken no step in the proceeding.

17    In support of the foregoing applications, the Commissioner relies on the following materials:

(a)    in relation to default judgment, declaratory relief and penalty:

(i)    an affidavit of Christopher Frith, a Manager in the Litigation and Review team at the ATO, dated 15 December 2025 (first Frith affidavit);

(ii)    an affidavit of Jade Rapson, an Australian Government Solicitor lawyer and one of the Commissioner’s legal representatives, dated 2 April 2026 (Rapson affidavit);

(iii)    an affidavit made by Adam Takacs, the Principal of Melbourne Property Valuation, dated 5 May 2026, exhibiting a valuation report for the property (valuation report); and

(iv)    written submissions dated 8 April and 8 May 2026.

(b)    in relation to the freezing order extension application, an affidavit of Mr Frith dated 19 May 2026 (second Frith affidavit) and written submissions dated 20 May 2026

(c)    in relation to costs, an affidavit of Jane Healy, an Australian Government Solicitor lawyer and one of the Commissioner’s legal representatives, dated 7 May 2026 (Healy affidavit) and written submissions dated 8 May 2026.

18    The Commissioner also relies on five affidavits of service made by Ms Rapson on 19 December 2025, 9 April 2026, 16 April 2026, 25 May 2026 and 19 June 2026, deposing that the respondent has been served with relevant documents related to this proceeding. Service of the first bundle of documents was effected in accordance with s 135A of the FATA. Service of the latter four bundles of documents was effected in accordance with the substituted service orders made on 19 December 2025.

19    The applications were determined on the papers.

20    For the reasons explained below, default judgment will be given against the respondent for the relief claimed in the amended originating application. I consider that a pecuniary penalty of $508,000 ought to be imposed in respect of the respondent’s contraventions of s 96 of the FATA. I will also make orders that:

(a)    the respondent pay the Commissioner’s costs of and incidental to the proceeding, to be fixed in the sum of $50,757.70; and

(b)    varying the freezing order made on 19 December 2025 such that it has effect up to and including the day that is 28 days after judgment is delivered in this proceeding.

Relevant statutory provisions

Acquisitions of residential land by foreign persons under the FATA

21    The FATA regulates investment by foreign persons in certain Australian assets, including acquiring an interest in Australian land. Foreign persons must give a notice to the Treasurer before taking certain investment action (referred to in the FATA as a ‘significant action’). The Treasurer then decides whether to allow the action, impose conditions on the action, prohibit the action or, where the action has already been taken, to require the action to be undone.

22    When considering an application to acquire an interest in residential land, it was contemplated by Parliament that an important consideration for the Treasurer was whether the proposed acquisition would increase the supply of new housing in Australia. One aspect of the policy with respect to foreign investment in Australian residential real estate appears to have been that such investment should not be speculative in nature: Commissioner of Taxation v Balasubramaniyan [2022] FCA 374 (Balasubramaniyan) at [74], [85] (Beach J).

23    Section 74(2) of the FATA relevantly provides that the Treasurer may decide that the Commonwealth has no objection to an acquisition if one or more conditions are imposed. The Treasurer must be satisfied that the condition is necessary to ensure the acquisition is not contrary to the national interest.

24    During the relevant period, s 76(1) of the FATA prescribed the content of a no objection notification as follows:

76    Content of notification

(1)     A no objection notification given to a person under section 74 or 75 must specify the following:

(a)    the one or more actions to which the notification relates;

(b)     the one or more foreign persons to which the notification relates;

(c)     a requirement that the actions to which the notification relates, if taken, must be taken before the end of a specified period after the day the notification is given.

25    This proceeding concerns an acquisition of residential land by a foreign person, in respect of which the Treasurer gave a no objection notification subject to conditions. Section 96(1) governs compliance with the conditions, and provides as follows:

96     Contravening conditions in relation to residential land

Conditions in no objection notifications

(1)     A person who is given a no objection notification under section 74 (no objection notification imposing conditions) relating to a residential land acquisition must not contravene a condition (except a condition mentioned in section 97) specified in the notification.

Note:    Examples of conditions that may be included in a no objection notification under section 74 are:

(a)    a condition requiring a temporary resident to sell an established dwelling when the dwelling ceases to be the temporary resident's principal place of residence; and

(b)    a condition prohibiting a temporary resident from leasing an established dwelling; and

(c)    a condition requiring a purchaser of vacant land to begin to build a dwelling before a particular time.

…

Civil penalty provisions

(3)     A person who contravenes subsection (1) or (2) is liable to a civil penalty.

(4)     The maximum penalty for the contravention is the greatest of the following:

(a)     the amount of the capital gain that was made or would be made on the disposal of the interest in the relevant residential land;

(b)     25% of the consideration for the acquisition of that interest;

(c)     25% of the market value of that interest.

Note: For how to work out the capital gain, see section 98.

26    The maximum penalty prescribed by s 96(4) of the FATA was amended with effect from 1 January 2023 as follows:

(4)    The maximum penalty for the contravention is the greatest of the following:

(a)    double the amount of the capital gain that was made or would be made on the disposal of the interest in the relevant residential land;

(b)    50% of the consideration for the acquisition of that interest;

(c)    50% of the market value of that interest.

27    The amendments to s 96(4) apply to contraventions of s 96(1) committed on or after 1 January 2023: Treasury Laws Amendment (2022 Measures No. 3) Act 2022 (Cth) sch 1 item 12.

28    The Explanatory Memorandum to the Treasury Laws Amendment (2022 Measures No. 3) Bill 2022 stated (at [1.5]):

The FATA contains specific penalties for contraventions of residential land provisions. The amendments double the maximum financial penalties in the FATA for contraventions of residential land provisions. The purpose of this increase to financial penalties is to ensure that these penalties effectively deter foreign persons from contravening the residential land provisions in the FATA. Non-compliance with the residential land provisions in the FATA may have a significant impact on Australia’s housing stock and housing affordability, and foreign persons can make a significant financial gain by obtaining an interest in Australian residential land.

29    The Explanatory Memorandum further stated (at [1.17]):

The maximum civil penalties for contraventions of provisions in the FATA that relate only to residential land are being doubled to ensure that the penalties provide a meaningful deterrent to non-compliance as the impact of non-compliance can cause serious harm to Australia’s national interest. Failure to comply with the residential land provisions in the FATA can impact Australia’s housing stock and the affordability of Australian residential property. It may also create community distrust in the foreign investment framework.

30    Section 98 specifies the means of calculating the capital gain for the purposes of s 96(4). Where no agreement had been entered into in relation to disposing of the interest in the relevant residential land, the capital gain is the difference between the market value of the interest and the amount for which the offender purchased the interest.

31    The civil penalty provisions of the FATA are enforceable under Pt 4 of the Regulatory Powers Act: s 99(1). For the purposes of Pt 4 of the Regulatory Powers Act:

(a)    each of the Treasurer and the Commissioner of Taxation is an ‘authorised applicant’ in relation to the civil penalty provisions of the FATA: s 99(2); and

(b)    this Court is a ‘relevant court’: s 99(3).

32    However, s 82(5) of the Regulatory Powers Act, which ordinarily specifies the maximum pecuniary penalty that may be imposed for a contravention of a civil penalty provision, does not apply in relation to s 94 of the FATA (acquisition of interests in residential land): s 99(4). In other words, s 94(4) governs the maximum penalty that may be imposed for a contravention of s 94.

Imposition of a civil penalty under Pt 4 of the Regulatory Powers Act

33    Div 2 of Pt 4 of the Regulatory Powers Act governs the imposition of civil penalties. Sections 82 to 85 of the Regulatory Powers Act relevantly provide as follows:

82     Civil penalty orders

Application for order

(1)    An authorised applicant may apply to a relevant court for an order that a person, who is alleged to have contravened a civil penalty provision, pay the Commonwealth a pecuniary penalty.

(2)    The authorised applicant must make the application within 6 years of the alleged contravention.

Court may order person to pay pecuniary penalty

(3)    If the relevant court is satisfied that the person has contravened the civil penalty provision, the court may order the person to pay to the Commonwealth such pecuniary penalty for the contravention as the court determines to be appropriate.

(4)    An order under subsection (3) is a civil penalty order.

    Determining pecuniary penalty    

…

(6)    In determining the pecuniary penalty, the court must take into account all relevant matters, including:

(a)    the nature and extent of the contravention; and

(b)    the nature and extent of any loss or damage suffered because of the contravention; and

(c)    the circumstances in which the contravention took place; and

(d)    whether the person has previously been found by a court (including a court in a foreign country) to have engaged in any similar conduct.

83     Civil enforcement of penalty

(1)     A pecuniary penalty is a debt payable to the Commonwealth.

(2)    The Commonwealth may enforce a civil penalty order as if it were an order made in civil proceedings against the person to recover a debt due by the person. The debt arising from the order is taken to be a judgement debt.

84     Conduct contravening more than one civil penalty provision

(1)    If conduct constitutes a contravention of 2 or more civil penalty provisions, proceedings may be instituted under this Part against a person in relation to the contravention of any one or more of those provisions.

(2)    However, the person is not liable to more than one pecuniary penalty under this Part in relation to the same conduct.

85     Multiple contraventions

(1)    A relevant court may make a single civil penalty order against a person for multiple contraventions of a civil penalty provision if proceedings for the contraventions are founded on the same facts, or if the contraventions form, or are part of, a series of contraventions of the same or a similar character.

Note:     For continuing contraventions of civil penalty provisions, see section 93.

(2)    However, the penalty must not exceed the sum of the maximum penalties that could be ordered if a separate penalty were ordered for each of the contraventions.

34    Section 93 of the Regulatory Powers Act concerns continuing contraventions of a civil penalty provision. It provides as follows:

93     Continuing contraventions of civil penalty provisions

(1)     If an act or thing is required under a civil penalty provision to be done:

(a)     within a particular period; or

(b)     before a particular time;

then the obligation to do that act or thing continues until the act or thing is done (even if the period has expired or the time has passed).

(2)     A person who contravenes a civil penalty provision that requires an act or thing to be done:

(a)     within a particular period; or

(b)     before a particular time;

commits a separate contravention of that provision in respect of each day during which the contravention occurs (including the day the relevant civil penalty order is made or any later day).

Recovering unpaid penalties

35    Subdivision C of Pt 5 of the FATA deals with the recovery of unpaid civil penalties. Section 104 prescribes the circumstances in which a statutory charge will be created over land to secure the payment of the penalty. Section 104 relevantly provides as follows:

104    Creation of charge on land

(1)     This section applies in relation to land if:

(a)     a court finds that a person has contravened Division 3 of this Part (civil penalties); and

(b)     a pecuniary penalty is imposed on the person in relation to the contravention; and

(c)     the person has an interest in Australian land covered by subsection (2) that can be registered on a land register; and

(d)     either:

(i)     the contravention relates to the acquisition of the interest in the land; or

(ii)     the Treasurer makes a declaration under section 105 that this section applies in relation to the land.

Kinds of interests covered by this subsection

(2)     The interest in Australian land is either:

(a)     an interest under a long term lease; or

(b)     any other legal or equitable interest (within the ordinary meaning of the term) in Australian land …

Creation of charge

(3)     A charge is created on land to which this section applies to secure the payment of the penalty.

36    Section 96(1) is a civil penalty provision under Div 3 of Pt 5 of the FATA for the purposes of s 104(1)(a).

Service of documents on persons outside Australia

37    Section 135A of the FATA concerns the service of documents, including legal process, for the purposes of the FATA on persons who are outside Australia. It provides as follows:

135A     Service of notices and other documents on persons who cannot be found, or who are not in Australia

(1)     This section applies if:

(a)     a notice or other document, including (without limitation) a document in respect of a proceeding to recover an amount of a fee or penalty, needs to be served on a person for the purposes of this Act; and

(b)     the Secretary, the Treasurer or the Commissioner of Taxation, after making reasonable enquiries, is unable to find the person, or is satisfied that the person is not in Australia.

(2)     The Secretary, the Treasurer or the Commissioner of Taxation, may, without the leave of a court, serve the document by posting it, or a sealed copy of it, in a letter addressed to the person at any address of the person in Australia or in a foreign country (including the person’s place of business or residence), or any electronic address of the person (including a personal or business electronic address of the person), that is last known to the Secretary, Treasurer or Commissioner.

Factual findings

38    The respondent is a national of the People’s Republic of China. On 13 July 2016, she was granted a subclass 600 tourist visa to enter Australia. The respondent entered Australia on 19 July 2016 and was permitted to remain in Australia until her visa expired on 19 October 2016. The respondent departed Australia on 5 August 2016, prior to the expiry of her visa, and has not returned.

39    On 25 January 2016, the respondent entered into a binding contract of sale to acquire the property, which at the time of sale was a vacant parcel of land of approximately 401m². The purchase price was $296,000. On 11 February 2016, the respondent lodged an application with the FIRB seeking a no objection notification to acquire the property. Settlement took place on 5 February 2018 and the respondent became registered as the sole proprietor of the unencumbered property on 14 February 2018 and remains so.

40    The respondent’s acquisition of the property was subject to conditions imposed under a “no objection notification” issued on 3 March 2016 by the Commissioner as delegate of the Treasurer under s 74 of the FATA. The notification imposed a condition that construction of one or more dwellings be completed within four years after the date of the approval notice, and a further condition that the property be acquired for a maximum price of $1,000,000.

41    The four-year condition period expired on 4 March 2020. No dwelling had been constructed on the property by that date. The respondent has not applied to vary the condition, and has not taken steps to build a dwelling on the land. To date, no building permit, planning permit, or construction activity has been recorded against the property in any ATO, FIRB or publicly available Victorian land information system.

42    The last residential address, email address and telephone number of the respondent known to the Commissioner are, respectively:

(a)    3/1706 Xing Ye Jia Yuan/San Tan Road, Nan Kai District, Tianjin 300000, China;

(b)    1815837678@QQ.com; and

(c)    (86) 185 2278 9666.

43    On 12 July 2021, the ATO issued a “Review Letter” to the respondent by email requesting details of her compliance with the condition to construct a dwelling. No response was received. On 24 November 2021, the ATO emailed the respondent again, attaching the Review Letter and extending the time for a response to 29 November 2021. No response was received.

44    Between 28 February 2022 and 2 November 2022, the ATO made six further attempts to contact the respondent regarding her non-compliance, by letter sent to her last known address in China and by email. Mr Frith deposed that the address used for the correspondence sent via letter was incorrect, the locality having been misspelt as “Lanjin” rather than “Tianjin”.

45    The ATO also sought to reach the respondent through Sun Lawyers, the firm that had acted on the purchase. The ATO emailed Sun Lawyers on 17 August 2021 and spoke with a representative of that firm on 19 August 2021, who advised that she had forwarded the ATO’s email to the respondent and to the respondent’s agent. The ATO made two further attempts to contact Sun Lawyers, on 3 September 2021 and 14 October 2021. No response was received.

46    The respondent spoke with an ATO officer by telephone, with the assistance of an interpreter, on 30 January 2023, 31 January 2023 and 9 February 2023. In the course of those conversations the respondent said that:

(a)    she did not check her emails and had lost the password to the email address held by the ATO;

(b)    the email address recorded by the ATO was correct and that she had received a test email sent during the call;

(c)    she intended to sell the property without developing it because she lacked the funds to build;

(d)    she understood the terms of the contract of sale prohibited her from selling until the development was completed.

47    The respondent declined to authorise the ATO to deal with Sun Lawyers. When informed that a variation would be required and that a fee applied, she said that she had no funds.

48    On 10 February 2023, the ATO emailed the respondent an outline of the remedial action required for the breach in relation to the property.

49    On 9 March 2023, the ATO issued an Infringement Notice in relation to the alleged breach of the FATA in relation to the property and imposed a penalty of $3,300. On 17 April 2023, an ATO officer spoke with the respondent by telephone without an interpreter and advised that a final reminder to pay the Infringement Notice would be emailed and that the respondent would be emailed and contacted on the phone with an interpreter on 18 April 2023. The respondent said that she could not use her email account. A Final Reminder Notice was emailed to her on 17 April 2023. Further attempted calls from the ATO to the respondent on 19 April 2023, 26 April 2023 and in December 2023 were not answered.

50    On 9 December 2025, the Commissioner’s solicitors sent a letter to the respondent, by email and by post, notifying her that the Commissioner intended to commence civil penalty proceedings in this Court in relation to her non-compliance with the no objection notification. No response was received.

51    The respondent holds a second Australian residential property. On 30 April 2018, she lodged an application for foreign investment approval for a new dwelling at Lot 25, A212/256–280 Coward Street, Mascot, New South Wales 2020 (Coward Street property), which disclosed a property value of $1,040,250. Approval was granted on 25 May 2018 and settlement occurred on 17 January 2020. The respondent has failed to lodge vacancy returns for the Coward Street property for each of the five vacancy years from 17 January 2020 to 16 January 2025, attracting deemed vacancy fees of $11,100 for each year, a total of $55,500. Written notices issued by the ATO on 14 July 2022 and 16 October 2025 have gone unanswered and the fees remain unpaid.

52    On 24 November 2025, the ATO wrote to the respondent advising that the Commissioner would declare a charge over land in respect of the outstanding vacancy fees of $55,500, and setting out the reasons for that decision. No response or payment was received. The Commissioner has since declared a charge over the property under the Foreign Acquisitions and Takeovers (Recovery of Unpaid Vacancy Fee) Charge Over Land Declaration (No. 1) 2025, and notification of that charge has been lodged with the Registrar of the Victorian land register.

53    No declaration or other relief is sought in this proceeding in respect of the Coward Street property. As discussed below, however, the failure to pay vacancy charges has some relevance to the imposition of a civil penalty in respect of the contraventions of the FATA relating to the Berwick property.

54    The valuation report prepared by Mr Takacs, which I accept, assesses the fair market value of the Berwick property as $550,000 as at 5 March 2026. The valuer inspected the property on that date and issued his report on 7 April 2026. Mr Takacs records the property as a vacant residential allotment of approximately 400.6m², legally described as Lot 4030 on Plan of Subdivision 735749P, Volume 11947 Folio 868, with no improvements constructed upon it other than timber paling side and rear boundary fencing.

Default judgment

55    The Commissioner seeks an order pursuant to r 5.23(2)(c) of the FC Rules giving judgment against the respondent for the relief claimed in the amended pleadings in respect of contraventions of s 96(1) of the FATA, being a declaration of contravention, a pecuniary penalty and an order that the respondent pay the Commissioner’s costs.

Applicable legal principles

56    Under r 5.23(2)(c), if a respondent to a proceeding is “in default”, and the proceeding was commenced by an originating application supported by a concise statement, an applicant may apply to the Court for an order giving judgment against the respondent for the relief sought in the concise statement to which the Court is satisfied that the applicant is entitled. Under r 5.22, a party is “in default” if the party, relevantly, fails to do an act required to be done by the FC Rules, fails to comply with an order of the Court, or fails to attend a hearing in the proceeding.

57    The principles relevant to the exercise of discretion under r 5.23 of the FC Rules were helpfully summarised by Burley J in EV20 Consulting Group Pty Ltd v Paperless Warehousing Pty Ltd [2025] FCA 328 at [14] as follows:

(1)    the power invoked by the Applicants is discretionary, it should be exercised cautiously;

(2)    the discretion to enter a default judgment is enlivened when an applicant or cross-claimant applies to the Court for such an order and where a respondent is in default;

(3)    the rule must be administered sensibly and with an appreciation both of the fact that some delays are unavoidable, and unpredictable, by even the most conscientious parties and their lawyers, and of the likely serious consequences to an applicant of staying or dismissing a claim;

(4)    cases in which the history of non-compliance by an applicant is such as to indicate an inability or unwillingness to cooperate with the Court and the other party or parties in having the matter ready for trial within an acceptable period provide an example where the exercise of the discretion may be appropriate;

(5)    the requirement imposed by FCR r 5.23 is not that an applicant prove by way of evidence the claim sought to be advanced; the requirement is that the Court needs to be satisfied on the face of the statement of claim that the applicant is entitled to the relief claimed. In this regard, FCR r 5.23 will be met upon the Court being satisfied that relief could be granted on the face of the pleading;

(6)    in addition to the facts alleged in the statement of claim, the Court may permit recourse to further limited evidence but may not admit evidence that would alter the case as pleaded[.]

58    For the purposes of an application under r 5.23(2)(c), the facts as alleged in the amended concise statement are deemed to have been admitted by the respondent: Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 at [23] (Flick J); Hugo Boss AG v Hardge [2024] FCA 1325 at [20] (Neskovcin J).

Consideration

59    The procedural history of the proceeding has been set out in the introduction to these reasons. I am satisfied that the respondent has been duly served with all relevant documents pertaining to the proceeding including the relevant orders of the Court. The respondent has failed to take any step in the proceeding.

60    I am satisfied that the respondent is “in default” within the meaning of r 5.22 and that the history of non-compliance by the respondent is such as to indicate an inability or unwillingness to cooperate with the Court and the Commissioner in having the matter ready for trial within an acceptable period. For the reasons stated below, I am satisfied that the Commissioner is entitled to the relief sought in the amended originating application on the basis of the facts alleged in the amended concise statement and that the Court should enter judgment awarding the relief sought against the respondent.

61    To establish liability under s 96(1), the Commissioner must demonstrate that:

(a)    there is a valid no objection notification in respect of the property under s 74 imposing a condition;

(b)    the relevant property was residential land; and

(c)    the condition of the no objection notification was not complied with.

62    I am satisfied that the no objection notification issued to the respondent on 3 March 2016 is valid. The no objection notification was given to the respondent, who is not ordinarily resident in Australia and is therefore a “foreign person” within the meaning of s 4 of the FATA. In compliance with paras (a) and (c) of s 76(1) of the FATA (extracted earlier in these reasons), the no objection notification expressly states that the approval relates to the acquisition of the vacant property, is for the respondent, and is subject to the following conditions of approval:

This approval is subject to the conditions that:

•    you purchase the property for a maximum price of $1,000,000

•    construction of dwelling/s must be completed within 4 years of the date of this notice.

63    I am satisfied that the property is “residential land” within the meaning of s 4 of the FATA. The property is an approximately 400.6m² parcel of land on which the number of dwellings that could reasonably be built is less than 10: see reg 19 of the Foreign Acquisitions and Takeovers Regulation 2015 (Cth).

64    I am satisfied that the respondent has failed to comply with the condition of the no objection notification. The four-year period in which the respondent was required to build a dwelling on the property expired on 4 March 2020. The evidence demonstrates that the land remains vacant. There is no evidence that any construction has taken place, nor that any permit applications have been made. There is no evidence that the respondent has applied to vary the condition under s 74(4) of the FATA.

65    For the foregoing reasons, I am satisfied that the respondent has contravened s 96(1) of the FATA and is liable to a civil penalty.

Declaratory relief

66    The Commissioner seeks a declaration of contravention in the following form:

On 4 March 2020 and on each day thereafter, the Respondent contravened (and continues to contravene) section 96(1) of the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA) in that the Respondent failed to construct one or more dwellings on 8 Rogers Close, Berwick Victoria 3806 (certificate of title Volume 11947 Folio 868) within the 4 years of the date of the no objection notification dated 3 March 2016, each day of continuing non-compliance constituting a separate contravention pursuant to s 93 of the Regulatory Powers (Standard Provisions) Act 2014 (Cth) (Regulatory Powers Act).

67    I am satisfied that the Commissioner, as an “authorised applicant” for the purposes of s 80 of the Regulatory Powers Act, has a real interest in seeking declaratory relief. Declaratory relief serves to record the Court’s disapproval of the contravening conduct, vindicate the Commissioner’s claim that the respondent contravened the relevant statutory provision and deter other persons from contravening that provision.

68    The Court is not bound by the form of the declaration proposed by the Commissioner and must determine for itself whether the form is appropriate. As the High Court stated in Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 at [89] (Gummow, Hayne and Heydon JJ), a declaration that a person has contravened a statutory prohibition should indicate the gist of the findings that identify the contravention. Declarations must be “informative as to the basis on which the Court declares that a contravention has occurred” and “should contain appropriate and adequate particulars of how and why the impugned conduct is a contravention of the Act”: Australian Competition and Consumer Commission v EnergyAustralia Pty Ltd [2015] FCA 274 at [83] (Gordon J). The declaration should accurately reflect the contravening conduct in a concise way: Australian Competition and Consumer Commission v Danoz Direct Pty Ltd [2003] FCA 881; 60 IPR 296 at [260] (Dowsett J).

69    In my view, the form of declaration proposed by the Commissioner is appropriate.

Civil penalty

70    The Commissioner has applied under s 82(1) of the Regulatory Powers Act for the imposition of a civil penalty on the respondent in respect of the respondent’s ongoing contraventions of s 96(1) of the FATA on and from 4 March 2020, each day of the non-compliance constituting a separate contravention pursuant to s 93 of the Regulatory Powers Act. The Commissioner submits that an aggregate penalty in the amount of $508,000 is appropriate in all the circumstances.

71    By s 82(3) of the Regulatory Powers Act, the Court is empowered to impose a pecuniary penalty for “the contravention”, which means each contravention. The respondent first contravened s 96(1) on 4 March 2020 by failing to comply with the condition imposed by the no objection notification to construct a dwelling on the property within four years of the date of the notification. By s 93(1) of the Regulatory Powers Act, the obligation imposed on the respondent by s 96(1) of the FATA to comply with the condition continues until the condition has been complied with, which has not occurred to date. Further, by s 93(2) of the Regulatory Powers Act, the respondent is taken to have committed a separate contravention of s 96(1) of the FATA in respect of each day on and after 4 March 2020 that the respondent has not complied with the condition. It follows that the period of contraventions is some six and a half years and involves more than 2,300 separate contraventions.

72    The maximum penalty for each contravention of s 96(1) of the FATA is governed by s 96(4) of the FATA, and not by s 82(5) of the Regulatory Powers Act: s 99(4) of the FATA. As noted earlier, prior to 1 January 2023 the maximum penalty was the greatest of the following:

(a)    the amount of the capital gain that was made or would be made on the disposal of the interest in the relevant residential land;

(b)    25% of the consideration for the acquisition of that interest;

(c)    25% of the market value of that interest.

73    From 1 January 2023, the maximum penalty was calculated in the same manner, but the figures were doubled.

74    As the property has not been disposed of, the capital gain is calculated at the time of fixing the penalty: Balasubramaniyan at [19]-[24]. The property was acquired for $296,000, its current market value is assessed at $550,000 and the gross capital gain that would be made on the disposal of the property is therefore $254,000. It follows that, in the period before 1 January 2023, the maximum penalty is $254,000 per contravention and, in the period on and after 1 January 2023, the maximum penalty is $508,000 per contravention. Having regard to the number of contraventions (more than 2,300), the maximum penalty is very large, being an amount in the hundreds of millions of dollars.

75    Section 85 of the Regulatory Powers Act stipulates that the court may make a single civil penalty order against a person for multiple contraventions of a civil penalty provision if proceedings for the contraventions are founded on the same facts, or if the contraventions form, or are part of, a series of contraventions of the same or a similar character. The Commissioner accepts that, in the circumstances of this case, it is appropriate to treat the respondent’s ongoing contraventions as a series of contraventions of the same or a similar character, and to impose a single penalty on the respondent in respect of her multiple contraventions. That does not mean, however, that the maximum penalty that may be imposed on the respondent is limited to the maximum penalty for a single contravention. Nevertheless, in determining the appropriate penalty for a large number of contraventions, the Court will seek to ensure that the cumulative total of the penalty is just and appropriate having regard to the contravening conduct as a whole.

76    Section 82(6) of the Regulatory Powers Act stipulates that, in determining the pecuniary penalty, the Court must take into account all relevant matters, including:

(a)    the nature and extent of the contravention;

(b)    the nature and extent of any loss or damage suffered because of the contravention;

(c)    the circumstances in which the contravention took place; and

(d)    whether the person has previously been found by a court (including a court in a foreign country) to have engaged in any similar conduct.

77    As discussed in the many cases imposing civil penalties under other Commonwealth statutes such as the Competition and Consumer Act 2010 (Cth), the Australian Securities and Investments Commission Act 2001 (Cth) and the Corporations Act 2001 (Cth), the following additional factors are also relevant to the assessment of the appropriate civil penalty to be imposed:

(a)    the deliberateness of the contravention;

(b)    the number of contraventions and the period over which it extended;

(c)    the financial position of the respondent;

(d)    the extent of any profit or benefit derived as a result of the contravention;

(e)    the maximum penalty for the contravention; and

(f)    whether the contravener has shown a disposition to cooperate with the authorities responsible for the enforcement of the statute in relation to the contravention and taken steps to remediate.

78    The primary objective of imposing a civil penalty is deterrence, both specific and general: Building and Construction Commissioner v Pattinson (2022) 274 CLR 450 (at [44]). The Court aims to fix a penalty that is sufficient, but no more than is necessary, to deter future contraventions of the relevant prohibition by the respondent and by others.

79    In determining the appropriate penalty in the present case, I have taken into account the following matters.

80    First, the breach of s 96(1) has continued for a lengthy period of time (about six and a half years) and is ongoing.

81    Second, the contravening conduct undermines the economic and social objectives embodied in the FATA, including the objective of developing residential land to increase Australia’s housing stock. The respondent’s failure to comply with the condition imposed under the no objection notification undermines the effectiveness of Australia’s foreign investment framework in ensuring foreign investment in the housing sector directly increases the supply of new housing.

82    Third, the contraventions took place in the context of a generally rising market for residential land in Victoria. As Beach J observed in Balasubramaniyan (at [90]), the conduct is explicable by an objective of seeking to profit from passive speculation in a rising property market, being conduct that is precisely what the conditions in no objection notifications are designed to prevent.

83    Fourth, the contravention was not the product of inadvertence. The respondent applied for and was granted the no objection notification and was on notice of the condition. From at least January 2023 she was aware that she was in breach.

84    Fifth, there is no evidence that the respondent has previously been found by a court (including a court in a foreign country) to have engaged in any similar conduct. The evidence does, however, disclose a broader pattern of non-compliance with obligations under Australia’s foreign investment framework. The respondent has also failed to lodge vacancy returns in respect of the Coward Street property for each of five vacancy years, attracting deemed vacancy fees of $55,500 which remain unpaid, and has not responded to the notices issued in relation to those fees. I take those matters into account as bearing on the need for specific deterrence.

85    Sixth, the ATO has made numerous attempts since July 2021 to contact the respondent in relation to the property via email, post and telephone. The respondent engaged with the ATO on three occasions by telephone in early 2023, but did so only to assert a lack of funds and an intention to sell the property rather than develop it. She has not responded to the ATO’s written communications, has not taken any remedial step, and has not participated in this proceeding. She has shown no disposition to cooperate with the Commissioner in remedying the contravention.

86    Seventh, there is little evidence about the respondent’s financial position, other than that the property has a market value of $550,000 and that, by her contravening conduct, the respondent would make a capital gain of $254,000 on the disposal of the property (as calculated under s 98 of the FATA). The respondent asserted to ATO officers that she lacked the funds to build, but no evidence of her financial circumstances has been adduced, and the assertion is untested. It is also relevant that she acquired a second Australian residential property in 2020 for a purchase price (as disclosed to FIRB) in excess of $1 million.

87    Taking into account all of the considerations referred to above, I consider it appropriate to impose a single penalty of $508,000 in respect of the contraventions, as sought by the Commissioner, which reflects the current maximum penalty for a single contravention of s 96 (being double the amount of the capital gain that would be made on the disposal of the property).

Extension to freezing order

88    The current freezing order has effect “up to and including the hearing of the originating application”. In accordance with Order 4(c) of the Orders made on 10 April 2026, as the respondent has not filed a notice of address for service or a concise statement in response, default judgment will be given against the respondent and the form of relief has otherwise been determined on the papers.

89    In the circumstances, the freezing order should be construed as ceasing to have effect upon delivery of these reasons. When the freezing order ceases to have effect, the Commissioner will be obliged to take reasonable steps to remove the recording on the certificate of title relating to the freezing order.

90    Upon delivery of these reasons, a charge over the property will be created pursuant to s 104(3) of the FATA to secure the payment of the penalty. The creation of the statutory charge over the property will coincide with the expiry of the freezing order.

91    While the charge under s 104(3) will be created upon the making of the relevant orders, there may be a practical delay of between 2 and 10 days before the charge is registered, recorded or otherwise reflected on the land register. During that interval, if the freezing order has ceased to operate and the existing recording on title has been removed, there is a risk that the property may be dealt with before the Commissioner has taken the necessary steps to protect the statutory charge on title.

92    To avoid any gap in protection following judgment and pending the registration or practical effectiveness of the statutory charge, the Commissioner seeks a brief extension to the freezing order, pursuant to rr 7.32 and 7.35 of the FC Rules, such that the freezing order has effect up to and including the day that is 28 days after judgment is delivered in this proceeding. The Commissioner submits that the proposed extension is no more than is reasonably necessary to allow the Commissioner to take steps to register or otherwise give practical effect to the statutory charge.

93    I am satisfied that the order sought by the Commissioner should be made. Absent the extension to the freezing order, there is a real risk that for a short period after delivery of judgment the property may be unprotected by either the freezing order or a registered charge created under s 104(3) of the FATA. This creates the risk that the property may be disposed of and the proceeds (or the substantial majority of those proceeds) removed from the jurisdiction, with the consequence that any pecuniary penalty imposed by the Court would be rendered wholly or partly unsatisfied.

Costs

94    The Commissioner seeks a lump sum costs order on a party-party basis in the sum of $50,757.70, in respect of the costs incurred for the period 28 February 2025 to 15 April 2026 in relation to the Commissioner’s proceeding against the respondent.

95    The Court may make a lump sum costs order pursuant to s 43(3)(d) of the FCA Act and r 40.02(b) of the FC Rules. The relevant principles for the award of a lump sum costs order on a party-party basis were recently summarised by Feutrill J in Frigger v Professional Services of Australia Pty Ltd (No 7) [2025] FCA 1639 at [6]:

(1)     As costs were awarded without any further description, the costs are to be as between party and party: r 40.01 of the Rules. The dictionary to the Rules defines those costs as ‘only the costs that have been fairly and reasonably incurred by the party in the conduct of the litigation’. See, also, Hislop v Paltar Petroleum Ltd (No 4) [2017] FCA 1632 at [6] (Gleeson J).

(2)     Determination of a lump-sum is not the result of a process of taxation or assessment of costs. The lump-sum can only be fixed broadly having regard to the information before the Court: Harrison v Schipp [2002] NSWCA 213; 54 NSWLR 738 at [22] (Giles JA); Beach Petroleum NL v Johnson (No 2) [1995] FCA 350; 57 FCR 119 at 124 (von Doussa J); Hadid v Lenfest Communications Inc [2000] FCA 628 at [35] (Lehane J). That is, the Court is not required to undertake a detailed examination of the kind that would be appropriate to a taxation or formal costs assessment as to do so would defeat the purpose of making a lump-sum order: Bitek Pty Ltd v IConnect Pty Ltd [2012] FCA 506; 290 ALR 288 at [23] (Kenny J).

(3)     Determination of the lump-sum involves estimation and not arithmetic: Bayley & Associates Pty Ltd v DBR Australia Pty Ltd [2014] FCA 346 at [17(e)] (Foster J). The sum of costs fixed should be proportionate to the nature, including the complexity, of the case: Bitek at [18]. See, also, Hislop at [7].

(4)     The starting point for the determination is the charges rendered or estimated by the solicitors for the party entitled to costs. There may be an impressionistic discount of those costs in order to take into account the contingencies that would be relevant in any formal costs assessment. But, the approach taken to determining the lump-sum must be logical, fair and reasonable: Beach Petroleum at 124; Hamod v New South Wales [2011] NSWCA 375 at [820] (Beazley JA, Giles JA and Whealy JA agreeing); Bitek at [18]; Innes v AAL Aviation Ltd (No 2) [2018] FCAFC 130 at [17] (Tracey, Bromberg and White JJ).

(5)     While it is the usual practice of the Court to apply a discount when determining a lump-sum, ‘that does not mean that the Court must apply a percentage discount to the sum sought by the successful party and the Court “must be astute not to cause an injustice to the successful party” by applying “an arbitrary ‘fail safe’ discount on the costs estimate submitted to the court”. Thus, if the court can be confident that there is little risk that the sum includes costs that might be disallowed on assessment, the case for a discount is seriously undermined.’: Hancock v Rinehart (Lump sum costs) [2015] NSWSC 1640 at [56]-[57] (Brereton J).

(6)     In determining the lump-sum the Court is entitled to take into account the evidence that is before it, its own observations of the proceeding and the judge’s own experience. The Court may have regard to any applicable scale of costs which regulates the recoverable amount on party and party basis: AAL Aviation at [18]; Fewin Pty Ltd v Burke (No 3) [2017] FCA 693 at [61] (Markovic J); Hislop at [12]. Although scales may provide assistance and will usually be influential, the Court is not bound to apply strictly any applicable scale of costs: Geneva Laboratories Ltd v Prestige Premium Deals Pty Ltd (No 5) [2017] FCA 63; 122 IPR 279 at [86(8)] (Bromwich J).

96    The Commissioner was successful in the proceeding. The respondent was given many opportunities to participate in the proceeding to defend her interests, and declined those opportunities. The respondent should be required to pay the Commissioner’s costs.

97    I am satisfied that a lump sum costs order on a party-party basis is appropriate in the circumstances of this case. A lump sum costs order will obviate the need for the parties to incur the further time and expense of a taxation, and is consistent with the overarching purpose in s 37M of the FCA Act of the just resolution of disputes as quickly, inexpensively and efficiently as possible.

98    The amount claimed by the Commissioner is $50,757.70 (exclusive of GST), which includes solicitor fees of $34,298.40 (being a discount of 20% to the fees charged), counsel fees of $11,116.66 (being a discount of 20% to the fees charged), valuation expert fees of $1,400 and other disbursements of $3,942.64 (of which $3,210 constitutes court filing fees).

99    This proceeding and VID 1648 of 2025 were conducted in parallel and almost all of the work was undertaken on a shared basis by the same team at the Australian Government Solicitor, including the drafting of pleadings and written submissions, the instructions to the expert valuer and the application for default judgment. Ms Healy deposed that, where work was undertaken on a shared basis, the time of the relevant practitioner and counsel’s fees were recorded and apportioned equally between the two matters, and that the figures claimed reflect that apportionment. That apportionment is appropriate and I accept it.

100    I consider that the rates charged by the Commissioner’s legal representatives are reasonable, and counsel’s rates are within the range provided for in the Federal Court’s National Guide to Counsel Fees. As noted above, the amount claimed on account of solicitors and counsel fees reflects a 20% discount on the fees incurred by the Commissioner. The sum reflects the costs that the Commissioner would be entitled to receive on a party-party basis.

101    The costs claimed include recovery of the costs of the freezing order application and the application to amend and obtain default judgment and exclude recovery of the costs of the application for costs. I consider that the costs would be allowed on a formal assessment.

102    For those reasons, I consider that the sum sought by the Commissioner is logical, fair and reasonable. There should be an order fixing the legal costs payable by the respondent to the Commissioner in the sum of $50,757.70.

Conclusion

103    In conclusion, default judgment will be given against the respondent for the relief claimed in the amended originating application. I will make a declaration of contravention and an order that the respondent pay to the Commonwealth a single pecuniary penalty of $508,000. I will also make an order that the respondent pay the Commissioner’s costs of and incidental to the proceeding, to be fixed in the sum of $50,757.70. Finally, an order will be made varying the freezing order made on 19 December 2025 such that it has effect up to and including the day that is 28 days after judgment is delivered in this proceeding.

Associate:

Dated:    28 September 2026