Amies and Commissioner of Taxation (Taxation)

[2015] AATA 777

Amies and Commissioner of Taxation (Taxation) [2015] AATA 777 (2 October 2015)

Division	TAXATION & COMMERCIAL DIVISION
File Number	2015/4708
Re	Gabrielle Amies
APPLICANT
And	Commissioner of Taxation
RESPONDENT

DECISION

Tribunal	Deputy President PE Hack SC
Date	2 October 2015
Date of written reasons	7 October 2015
Place	Brisbane

The decision under review is set aside and a decision substituted that a departure authorisation certificate pursuant to section 14U of the Taxation Administration Act 1953 (Cth) be issued to the applicant authorising her to depart from Australia for a foreign country on or before the seventh day after 8 October 2015 and return to Australia no later than 3 November 2015 UPON CONDITION that:

(a)     the applicant gives security to the respondent in the amount of $200,000 by way of:

(i)       a bank guarantee in that amount payable to the Commonwealth of Australia and delivered to the solicitors for the respondent and to be held by those solicitors pending the return of the applicant to Australia no later than 3 November 2015 and on the undertaking of the respondent (a) not to call on that amount unless and until the applicant fails to return to Australia as required and (b) if the applicant does return as required, to return the guarantee to the applicant’s solicitors; or

(ii)      an amount of $200,000 deposited into the trust account of Irish Bentley Solicitors to be held to the account of the Commonwealth of Australia pending the return of the applicant to Australia no later than 3 November 2015, on the undertaking of the respondent (a) not to call on that amount unless and until the applicant fails to return to Australia as required, and (b) upon the applicant’s return as required, to direct Irish Bentley Solicitors to release the said sum to the applicant’s account.

(b)     the applicant consents to the freezing orders made by Daubney J in the Supreme Court of Queensland on 16 July 2015 continuing to have effect until the hearing and determination of the applicant’s application to the Tribunal in 2013/3941.

 Liberty to both parties to apply.

.....................[Sgd]...................................................

Deputy President PE Hack SC

CATCHWORDS

TAXATION – taxation administration – departure prohibition order – request for departure authorisation certificate – interim freezing orders in place – whether applicant is able to give satisfactory security for return to Australia – risk that applicant may not return is slight – considerable family ties, new business, considerable real property – highly unlikely applicant will fail to return – decision under review set aside and substituted.

LEGISLATION

Taxation Administration Act 1953 (Cth), ss 14S, 14U

REASONS FOR DECISION

Deputy President PE Hack SC

7 October 2015

1. In February 2015 the Commissioner of Taxation made assessments and amended assessments of the taxable income of Ms Gabrielle Amies for the 2003 to 2007 income tax years and gave notice of those assessments to Ms Amies. With penalties and the general interest charge, the Commissioner says that Ms Amies owes the Commonwealth an amount in excess of $3 million. He has commenced proceedings in the Supreme Court of Queensland to recover the claimed debt.

2. The Commissioner contends that Ms Amies has been involved with a cross-jurisdictional network of companies and trusts located in tax havens, a network adopted, so Commissioner says, to disguise the interests of Ms Amies in funds obtained from the mortgage or sale of real property. These funds, on the Commissioner's case, were invested in Australian financial assets which yielded taxable income. Ms Amies has objected to the various assessments but their objections have been disallowed. She has commenced proceedings in this Tribunal to review the Commissioner's objection decisions. Whether Ms Amies can demonstrate that the assessments are excessive will be determined at the hearing of those proceedings, presently listed for 12 days in February and March 2016.

3. The matter before me relates to a decision made by the Commissioner on 1 June 2015 to make, and serve on Ms Amies, a departure prohibition order, that is, an order, made in reliance on section 14S of the Taxation Administration Act 1953 (Cth), prohibiting Ms Amies’ departure from Australia for a foreign country. Subsequently Ms Amies, by her solicitors, requested the Commissioner to issue a departure authorisation certificate to allow her to travel to Italy in October 2015 to attend the wedding of a close friend. On 4 September 2015 a delegate of the Commissioner made a decision refusing to grant the departure authorisation certificate.

4. Ms Amies seeks a review of that decision.

5. Section 14S(1) of the Taxation Administration Act allows the Commissioner to make a departure prohibition order against a person where the person is subject to a tax liability and where,

   (b)the Commissioner believes on reasonable grounds that it is desirable to do so for the purpose of ensuring that the person does not depart from Australia for a foreign country without:

   (i) wholly discharging the tax liability; or

   (ii) making arrangements satisfactory to the Commissioner for the tax liability to be wholly discharged;

   Application may be made to the Commissioner to revoke the order, or to a court to set it aside. The Commissioner must revoke the order when satisfied that existing and known future liabilities have been, or will be, wholly discharged or completely irrecoverable. There is otherwise a wide discretion in the Commissioner to revoke or vary a departure prohibition order. The order remains in force unless revoked or set aside.

6. Section 14U of the Taxation Administration Act permits the Commissioner to issue a certificate authorising the person's departure from Australia. It provides:

   (1) Where, on application made by a person in respect of whom a departure prohibition order is in force:

   (a) the Commissioner is satisfied:

   (i) that, if a departure authorization certificate is issued in respect of the person, it is likely that:

   (A) the person will depart from Australia and will return to Australia within such period as the Commissioner considers to be appropriate in relation to the person; and

   (B) circumstances of the kind referred to in paragraph 14T(1)(a) will come into existence within such period as the Commissioner considers to be appropriate in relation to the person; and

   (ii) that it is not necessary or desirable for the person to give security under subsection (2) for the person’s return to Australia; or

   (b) in a case where the Commissioner is not satisfied with respect to the matters referred to in paragraph (a):

   (i) the person has given security under subsection (2) to the satisfaction of the Commissioner for the person’s return to Australia; or

   (ii) if the person is unable to give such security, the Commissioner is satisfied that:

   (A) a departure authorization certificate should be issued in respect of the person on humanitarian grounds; or

   (B) a refusal to issue a departure authorization certificate in respect of the person would be detrimental to the interests of Australia;

   the Commissioner shall issue a certificate authorizing the person to depart from Australia for a foreign country on or before the seventh day after a day (being a day later than, but not more than 7 days later than, the day on which the certificate is issued) specified in the certificate.

   (2)     For the purposes of this section:

   (a) a person may give security, by bond, deposit or any other means, for the person's return to Australia by such day as is agreed between the person and the Commissioner;

   (b)the Commissioner may, in the Commissioner's discretion and on application by the person or on the Commissioner's own motion, substitute a later day for the day so agreed (including a day substituted by virtue of a previous application of this paragraph); and

   (c)the Commissioner may refuse to substitute such a later day unless the person:

   (i)     increases, to the satisfaction of the Commissioner, the value of the security given by the person under this subsection; or

   (ii)    gives a further security, to the satisfaction of the Commissioner, by bond, deposit or any other means, for the person's return to Australia by that later day.

   There are then three circumstances under which a person subject to a departure prohibition order may be authorised to leave Australia and, having regard to the structure of s 14U(1) of the Act, they need be considered successively.

7. Mr Bickford, counsel for Ms Amies, did not seek to argue a case under s 14U(1)(a) of the Act, he focussed on s 14U(1)(b)(i) and on s 14U(1)(b)(ii).

8. Some further matters of background need be noticed before dealing with the arguments of the parties. The Commissioner has commenced recovery proceedings against Ms Amies in the Supreme Court of Queensland. In connection with those proceedings, on 16 July 2015 a judge of that Court made interim freezing orders that prevent Ms Amies (and related parties) from dealing with or disposing of assets in Australia or overseas. She has indicated willingness to that order being extended until after the hearing and determination of the substantive proceedings in the Tribunal. One of the requirements of that order was that Ms Amies provide under oath a list of all assets, giving their value, their location and encumbrances, and the extent of her interest in them. Ms Amies has sworn the affidavit required.

9. Additionally, it is relevant to note, but unnecessary to particularise, that there have been extensive negotiations between the parties, however they were not productive of a resolution; hence this hearing.

10. As I indicated to Mr Looney, QC, who leads Ms Allen for the Commissioner, it seems to me the proper way to approach section 14U is to deal successively with the three circumstances. Given that section 14U(1)(a) is not pressed, I propose to deal with section 14U(1)(b)(i) and make a decision requiring the giving of a security to my satisfaction for Ms Amies’ return. I will then propose to deal with the argument under section 14U(1)(b)(ii) against the possibility that Ms Amies is unable to give security in the amount and manner that I am proposing.

11. The first question that arises is whether Ms Amies has given (or is able to give) security to the satisfaction of the Tribunal, standing in the shoes of the Commissioner, for her return to Australia.

12. In the dealings between the parties to date, the Commissioner appears to have required security for the whole of the tax in dispute. That to me seems unrealistic – what is required is not security for the debt but security for Ms Amies’ return to Australia. So much is accepted in the Commissioner’s policy document, Practice Statement Law Administration 2011/18 at paragraph 157 to which Mr Bickford’s submissions make reference. That being so, it is not only a relevant consideration, but to me, it is a consideration of great significance to have regard to the evidence that deals with the likelihood of Ms Amies’ returning in accordance with the terms of any departure authorisation certificate. I accept, as Mr Looney pointed out, that I am not deciding the question that is posed under section 14U(1)(a) but I am deciding, in connection with the question of what would satisfy me for her return, the likelihood of a failure or refusal to do so.

13. First, I regard the risk that Ms Amies might not return to Australia as required as very slight. The material shows that she has considerable family and emotional ties in Brisbane as well as a new business and considerable real property. They are set out at length in the material. Ms Amies has no family ties overseas. The ties in this country strongly suggest that she is likely to return to Australia as and when required. But that is not the end of it; a failure or refusal to return would likely cause Ms Amies considerable prejudice in the proceedings in the Supreme Court and the Tribunal. As Mr Bickford’s submissions point out, she has everything to lose and nothing to gain by not returning to Australia.

14. There are Part IVC proceedings on foot in the Tribunal. It is not possible in a hearing such as this to do more than gain an impression of the apparent strength or apparent weakness of that case. On what is presently known about the case, and I am conscious that the respondent has not yet filed a Statement of Facts, Issues and Contentions in the proceedings, it is not possible to say more than that Ms Amies advances a case that is apparently arguable. So much is conceded by Mr Looney. It is, as well, being prosecuted in accordance with the directions of the Tribunal. There is no reason to suppose that the proceedings are not intended to be taken to their logical conclusion.

15. It is, I think, relevant but not determinative, that the amount of the debt is in excess of $3 million. Various figures have been put before me that suggest Ms Amies has real estate in this country to a considerable value although encumbered significantly and encumbered apparently by a mortgage to a related trust. There is considerable concern on the Commissioner’s side as to the genuineness of that Trust and that apparently is to be an issue in the Part IVC proceedings. Necessarily, I make no comment about that.

16. Ms Amies is the registered proprietor of properties at Manning Street, South Brisbane, Tank Street, Brisbane, and Admiral Place, Noosaville. Of the latter two, on the material available, she has equity in excess of $330,000. Whilst the claimed debt is $3.2 million, I am satisfied that it is highly unlikely to that she will fail to return. I propose, in considering the section 14U(1)(b)(i) question, to require her to give security in the amount of $200,000. I will discuss with the parties the precise form of that but my present inclination is to require that security be given by way of a bank deposit, a bank guarantee or a mortgage in registrable form over the properties at North Quay and Noosaville.

17. Against the possibility that Ms Amies is unable to give security in the form that I ultimately conclude, she then seeks to argue that a departure authorisation certificate should be issued on humanitarian grounds. She seeks to attend the wedding in Italy of a very dear friend. I do not, for a moment, question the depth of her friendship and the personal relationship between her and the friend or the importance that both she and the friend place on her being able to attend the wedding, but it appears to me to be counterintuitive to regard such a purpose as humanitarian. It is not necessary, for present purposes, to determine the metes and bounds of what might be considered to come within the rubric of humanitarian. The cases to which the Commissioner’s submissions point suggest that my intuitive response is at least supported by decisions considerably more authoritative than mine, so that in the event Ms Amies is not able to give security in the terms that I am proposing, I would not have been satisfied with a departure certificate being issued on humanitarian grounds. No suggestion is made that the refusal to issue it would be detrimental to the interests of Australia.

18. The departure authorisation certificate will also be conditional upon the applicant giving an unqualified consent to the freezing order of 16 July 2015 remaining in force until the hearing and determination of the Part IVC proceedings in the Tribunal.

19. Following discussions with the parties, the form of decision is that the decision under review is set aside and a decision substituted that a departure authorisation certificate pursuant to section 14U of the Taxation Administration Act 1953 (Cth) be issued to the applicant authorising her to depart from Australia for a foreign country on or before the seventh day after 8 October 2015 and return to Australia no later than 3 November 2015 UPON CONDITION that:

    (a)the applicant gives security to the respondent in the amount of $200,000 by way of:

    (i)a bank guarantee in that amount payable to the Commonwealth of Australia and delivered to the solicitors for the respondent and to be held by those solicitors pending the return of the applicant to Australia no later than 3 November 2015 and on the undertaking of the respondent (a) not to call on that amount unless and until the applicant fails to return to Australia as required and (b) if the applicant does return as required, to return the guarantee to the applicant’s solicitors; or

    (ii)an amount of $200,000 deposited into the trust account of Irish Bentley Solicitors to be held to the account of the Commonwealth of Australia pending the return of the applicant to Australia no later than 3 November 2015, on the undertaking of the respondent (a) not to call on that amount unless and until the applicant fails to return to Australia as required, and (b) upon the applicant’s return as required, to direct Irish Bentley Solicitors to release the said sum to the applicant’s account.

    (b)the applicant consents to the freezing orders made by Daubney J in the Supreme Court of Queensland on 16 July 2015 continuing to have effect until the hearing and determination of the applicant’s application to the Tribunal in 2013/3941.

    Liberty to both parties to apply.

I certify that the preceding 19 (nineteen) paragraphs are a true copy of the reasons for the decision herein of Deputy President PE Hack SC

.........................[Sgd]...............................................

Associate

Dated 7 October 2015

Date of hearing

2 October 2015

Counsel for the Applicant

Solicitors for the Applicant

Mr P G Bickford

Irish Bentley Solicitors

Counsel for the Respondent

Mr P A Looney QC & Ms L J Allen

Solicitors for the Respondent

Australian Government Solicitor