Deputy Commissioner of Taxation v Bollands
[2012] WASC 143
•26 APRIL 2012
DEPUTY COMMISSIONER OF TAXATION -v- BOLLANDS [2012] WASC 143
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2012] WASC 143 | |
| 26/04/2012 | |||
| Case No: | CIV:1410/2012 | 10 & 18 APRIL 2012 | |
| Coram: | EM HEENAN J | 18/04/12 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Proceedings discontinued Freezing orders discharged but with liberty to apply with respect to any claim for damages in consequence of plaintiff's undertaking Plaintiff since commenced proceedings in Federal Court of Australia | ||
| A | |||
| PDF Version |
| Parties: | DEPUTY COMMISSIONER OF TAXATION DAVID BOLLANDS JOYCE BOLLANDS JODACORP PTY LTD RESIDENCE RIVERSIDE PTY LTD as the D & J Discretionary Trust |
Catchwords: | Private International Law Practice and procedure Service of writ outside jurisdiction Jurisdiction of State Supreme Court governed by rules of court or other applicable legislation Whether action for Federal income tax liability falls within O 10 r (1)(i) |
Legislation: | Rules of the Supreme Court 1971 (WA), O 10 r 1(1)(i) |
Case References: | Attorney-General v Prossor [1938] 2 KB 531 BP Exploration Co (Libya) Ltd v Hunt [1980] 1 NSWLR 496 Kent v Lechmere Financial Corp [2002] WASC 75 Laurie v Carroll (1958) 98 CLR 310 McColl v Peacock [1924] VLR 102 Ward v Interag Pty Ltd [1985] 2 Qd R 552 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
DAVID BOLLANDS
First Defendant
JOYCE BOLLANDS
Second Defendant
JODACORP PTY LTD
Third Defendant
RESIDENCE RIVERSIDE PTY LTD as the D & J Discretionary Trust
Fourth Defendant
- Plaintiff
DAVID BOLLANDS
Defendant
Catchwords:
Private International Law - Practice and procedure - Service of writ outside jurisdiction - Jurisdiction of State Supreme Court governed by rules of court or other applicable legislation - Whether action for Federal income tax liability falls within O 10 r (1)(i)
Legislation:
Rules of the Supreme Court 1971 (WA), O 10 r 1(1)(i)
Result:
Proceedings discontinued
Freezing orders discharged but with liberty to apply with respect to any claim for damages in consequence of plaintiff's undertaking
Plaintiff since commenced proceedings in Federal Court of Australia
Category: A
(Page 3)
Representation:
CIV 1410 of 2012
Counsel:
Plaintiff : Ms R J Lee on 10 & 18 April 2012
First Defendant : Mr J G Young on 10 & 18 April 2012
Second Defendant : Mr J G Young on 10 & 18 April 2012
Third Defendant : Mr J G Young on 10 & 18 April 2012
Fourth Defendant : Mr J G Young on 10 & 18 April 2012
Solicitors:
Plaintiff : Australian Government Solicitor
First Defendant : Kim Wilson & Co
Second Defendant : Kim Wilson & Co
Third Defendant : Kim Wilson & Co
Fourth Defendant : Kim Wilson & Co
CIV 1585 of 2012
Counsel:
Plaintiff : Ms R J Lee on 10 & 18 April 2012
Defendant : Mr J G Young on 10 & 18 April 2012
Solicitors:
Plaintiff : Australian Government Solicitor
Defendant : Kim Wilson & Co
Case(s) referred to in judgment(s):
Attorney-General v Prossor [1938] 2 KB 531
BP Exploration Co (Libya) Ltd v Hunt [1980] 1 NSWLR 496
Kent v Lechmere Financial Corp [2002] WASC 75
Laurie v Carroll (1958) 98 CLR 310
McColl v Peacock [1924] VLR 102
Ward v Interag Pty Ltd [1985] 2 Qd R 552
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1 EM HEENAN J: Now before the court are two adjourned applications brought by the Deputy Commissioner of Taxation in two actions, CIV 1585 of 2012, in which the Deputy Commissioner is seeking to recover an income tax liability against the sole defendant, David Bollands, and CIV 1410 of 2012, in which the Deputy Commissioner of Taxation is seeking relief against Mr Bollands, his former wife Jocelyn Bollands and two corporations, Jodacorp Pty Ltd and Residence Riverside Pty Ltd, in the nature of freezing orders against certain assets located in Western Australia, in order to preserve the efficacy of any judgment ultimately to be obtained by the Commissioner against Mr Bollands for income tax which has been assessed.
2 CIV 1410 of 2012 came on as an urgent matter before Beech J on an ex parte application by the plaintiff. Beech J made freezing orders as sought upon the usual undertaking as to damages given by the Deputy Commissioner and upon a further undertaking that the Deputy Commissioner apply to this court by 10 April 2012 for leave to commence an action against Mr Bollands and to serve the originating process or notice of it out of the State of Western Australia against the defendant in Hong Kong, pursuant to O 10 r 1 of the Rules of the Supreme Court. Beech J, on that ex parte application and in accordance with directions sought by the applicant, also gave directions that notice of the freezing order and of the other orders made by his Honour which I have just described be served by electronic means upon Mr Bollands at an address in Hong Kong.
3 The next step was that was that in fulfilment of the undertaking given to Beech J, the Deputy Commissioner applied on 10 April 2012 for leave to issue and serve against Mr Bollands in Hong Kong a writ claiming the income tax liability which had been assessed. That came before me that day and I raised with counsel certain apparent difficulties relating to the jurisdiction of this court to grant leave to serve originating process out of jurisdiction in the case of a claim for a Federal income tax liability.
4 As a result of those matters being raised, counsel obtained an adjournment of the application and I extended the period for complying with the undertaking given to Beech J to apply for leave to commence proceedings until 18 April 2012. Both matters have now been brought on again and on this occasion, counsel has appeared for the second, third and fourth respondents in the freezing order proceedings CIV 1410 of 2012.
5 A further step taken in the interim is that in view of the potential difficulties to which I alluded concerning the jurisdiction of this court to
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- grant leave to serve out of the jurisdiction originating process in respect of a Commonwealth income tax liability under O 10 r 10(1)(i), the Deputy Commissioner has decided to apply to discontinue these proceedings and instead commence one set of corresponding proceedings in the Federal Court of Australia, seeking both recovery of the taxation liability and associated freezing orders against Mr Bollands and the existing three other respondents to CIV 1410 of 2012 and two other parties, the Registrar of Titles and a certain bank, which hold assets within the jurisdiction.
6 It is to be noted that under O 10 r 42 of the Federal Court Rules and the following rules, more extensive jurisdiction is possessed by the Federal Court with respect to the claims for leave to serve originating process out of the jurisdiction and that that more extensive jurisdiction extends to claims based under any Act, or regulation or law of the Commonwealth such as in this case the Income Tax Assessment Act. I have been informed that the proceedings in the Federal Court are presently still pending, awaiting a decision of this court to determine whether or not these proceedings should be discontinued or otherwise determined. That restraint exercised out of comity between courts is obviously due to a desire to avoid duplicity of proceedings in two jurisdictions in respect of the same matter. Disposal of these proceedings in the manner proposed by the parties would allow the Federal Court proceedings to proceed unhindered. I am satisfied that that is an acceptable and correct course to follow.
7 The parties have sought by consent orders as follows: firstly, in CIV 1585 of 2012, an order that the action be discontinued and that there be no order as to costs. I am content to make orders in those terms. In CIV 1410 of 2012, the parties seeks an order, first, that the proceedings be discontinued; second, that the freezing orders made by Beech J on 27 March 2012 against the first, third and fourth respondents be discharged; third, that the Deputy Commissioner of Taxation be released from its undertaking in par 8 of schedule A to that freezing order of 27 March 2012 against the first respondent; fourth, that the plaintiff pay the costs of the second, third and fourth respondents, to be taxed if not agreed; and fifth and finally, that otherwise there be no order as to costs.
8 It has also been stated on behalf of the Deputy Commissioner, and expressly by counsel for the second, third and respondents in CIV 1410 of 2012, that the agreement to these terms by those respondents is conditional upon an assurance by the Deputy Commissioner that should there be any claim made by those respondents for damages or
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- compensation as a result of the undertaking as to damages given by counsel for the Deputy Commissioner on 27 March 2012, then any such claim may be pursued in the Federal Court proceedings and no point will be taken that damages which may have accrued from 27 March 2012 on the commencement of those proceedings are outside the jurisdiction of the Federal Court; in other words, that any corresponding undertaking as to damages given in the Federal Court would effectively cover any entitlement to compensation or damages arising from 27 March 2012 onwards for the second, third and fourth respondents.
9 The claim for the income tax liability in this action is a large one. Assessments have been issued by the Deputy Commissioner against Mr Bollands totalling $11,436,889.05. Under the provisions of the Income Tax Assessment Act and corresponding legislation, that is a debt due and payable by Mr Bollands to the Deputy Commissioner regardless of any objections or appeals which might be brought against the assessments. It is also clear that the Deputy Commissioner of Taxation is entitled to sue in this court for the recovery of any income tax liability and frequently does.
10 The question which arises is whether or not, the Deputy Commissioner having indicated the desire to commence proceedings in this court, the court has jurisdiction to grant leave to do so when service of the proceedings is intended to be effected outside the State and in another country, Hong Kong. The Deputy Commissioner has sought to rely on O 10 r 1(1)(i) of the Rules of the Supreme Court, which authorises the court to grant leave to serve originating process out of the jurisdiction in cases 'where the action is for the recovery of taxes or duty (with or without interest or fines for default in payment thereof) which have been imposed or become due on or in respect of property situate within the jurisdiction'. Counsel have been unable to identify any authority dealing expressly with the question of whether or not that subrule covers a claim of the type contemplated here. My researches have not been able to discover any authority on point either. Nevertheless, respected commentators, including the late Professor Nygh in his work Conflict of Laws in Australia, say that in the Western Australian Rules of Court O 10 r 1(i), provision is made for service out of the jurisdiction in respect of taxes 'due to the Crown in right of that State'. The provision is expressly limited to taxes imposed on or in respect of property situate within the jurisdiction.
11 The first thing that can be said is that the tax liability asserted in this case does not arise on or in respect of property situate within the
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- jurisdiction. It is certainly not a liability due to the Crown in right in the State of Western Australia. The question is whether the observations by the commentators suggesting that the power under O 10 r 1(i) is limited are correct. In the events which have happened, it is unnecessary for me to decide finally that important question, but it appears to me to be one upon which the commentary is very likely to be correct, because the very purpose of O 10 is to identify a certain nexus or connection between the subject matter of the intended claim and this geographical jurisdiction.
12 The jurisdiction of the courts of this State certainly covers claims arising from ownership of property within the State. That is one long recognised connection or nexus. So a tax arising from the ownership of, or in respect of, property situate within the State would have an associated nexus. The nexus must be with this State and not the Commonwealth of Australia. There is nothing, it would seem, to provide that nexus in the present case. All I need do at the moment is to flag this point, which may have to be decided authoritatively in the future, and to indicate the trend of the authorities on the subject.
13 I should say a little about the circumstances in which leave to serve out of the jurisdiction may be given. At common law, a writ of summons or any other originating process issued by a State Supreme Court is in respect of jurisdiction which did not run beyond limits of the State. The regime for service out of the jurisdiction is contained in O 10, as I have already stated. That gives jurisdiction to the court to grant leave to effect service out of the court's jurisdiction of a writ or notice of a writ outside Australia in distinctly defined circumstances.
14 That is discussed in Laurie v Carroll (1958) 98 CLR 310 at 322, in BP Exploration Co (Libya) Ltd v Hunt [1980] 1 NSWLR 496, McColl v Peacock [1924] VLR 102, Ward v Interag Pty Ltd [1985] 2 Qd R 552 and Kent v Lechmere Financial Corp [2002] WASC 75. The decision of Attorney-General v Prossor [1938] 2 KB 531 should also be noted for the point that service out of the jurisdiction is governed by the codes and rules of court and also by any applicable statutory authority.
15 It follows from these decisions that for leave to be granted to serve a writ of summons out of jurisdiction of this court, it is necessary that the court have jurisdiction and that the action falls within one of the various types of class referred to in the rules or under some other applicable legislation. The principles and authorities were explained by Pullin J in Kent v Lechmere Financial Corporation [5]. There his Honour said:
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- These important provisions are not mere procedural provisions which govern proceedings after they have been properly instituted. These are provisions which confer jurisdiction on the court. The common law doctrine is that the writ does not run beyond the limits of the State. The foundation of the jurisdiction of the Court is physical power and where a writ cannot legally be served upon a defendant, the Court can exercise no jurisdiction over him. In an action in personam and wherever a defendant can be legally served with a writ, the court, on service being effected, has jurisdiction to entertain an action against him. Hence, in an action in personam, the rules as to the legal service of a writ define the limits of the Court's jurisdiction: see Laurie v Carroll at 323. The rules made pursuant to section 167(1)(i) of the Supreme Court Act, namely O 10 r 1(i), permit service on a defendant outside the jurisdiction. This is called 'long arm' jurisdiction: Australian Securities & Investments Commission v Edensor Nominees Pty Ltd [2001] HCA 1 at [2]. The Court, by these rules, has decided to supervise the extension of its jurisdiction and to ensure that only in appropriate cases will a writ issue for service outside the jurisdiction. Thus, O 5 r 9 requires an application to be made to the court for leave to issue a writ which is to be served out of the jurisdiction. The court has to grant leave before the proper officer seals the writ, whereby the writ 'issues' (see O 5 r 6). Order 5 r 9 does not permit an order nunc pro tunc. Then, before service is effected, it is necessary to obtain the leave of the court to serve out of the jurisdiction, by showing that the subject-matter of the action falls within the description of one of the subparagraphs of O 10 r 1(1).
16 In this matter, the contention for the Deputy Commissioner was that the claim fell within O 10 r 1(1)(i) as a matter relating to the claim in relation to the recovery of taxes which had been imposed or become due on or respect of property situate within the jurisdiction. For reasons which I have already given, I consider that that proposition is examinable and that the indications are that the power does not extend to Commonwealth income tax liabilities but, as I say, in view of the position taken by the Deputy Commissioner, no final decision on that point need now be made, although obviously it must now be regarded as having been flagged.
17 No other provision enabling an order for leave to serve the originating process out of the jurisdiction was relied upon by the Deputy Commissioner. In particular, the Deputy Commissioner did not attempt to rely on O 10 r 1(c), which provides for an action in which relief was sought against a person domiciled or ordinarily resident within the jurisdiction. This is because, so I was informed, the evidence that Mr Bollands may be domiciled in Western Australia or ordinarily resident here is tenuous and not presently available. That being the case, there was no other basis to allow service and hence my order for adjournment
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- pending further investigation. In view of the resolution proposed, it is not necessary for this matter to be taken any further.
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