Deputy Commissioner of Taxation v Zou
[2022] FCA 1018
•15 August 2022
FEDERAL COURT OF AUSTRALIA
Deputy Commissioner of Taxation v Zou [2022] FCA 1018
File number: VID 40 of 2022 Judgment of: HESPE J Date of judgment: 15 August 2022 Date of publication of reasons: 1 September 2022 Catchwords: PRACTICE AND PROCEDURE – application for summary judgment under r 26.01 of the Federal Court Rules 2011 (Cth) – no reasonable defence to Applicant’s claim Legislation: Federal Court of Australia Act 1976 (Cth), s 31A
Federal Court Rules 2011 (Cth), r 26.01
Income Tax Assessment Act 1997 (Cth), ss 5-5, 5-10, 5-15, 293-15, 293-65, 293‐75
Taxation Administration Act1953 (Cth), ss s 8AAE, 255‐1, 255-5, 280‐100, 280-110, 284‐75, 298-15, 298-25, 350-10
Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, opened for signature 15 November 1965, 658 UNTS 163 (entered into force 10 February 1969)
Division: General Division Registry: Victoria National Practice Area: Taxation Number of paragraphs: 21 Date of hearing: 15 August 2022 Counsel for the Applicant: Dr P Bender Solicitor for the Applicant: Holding Redlich ORDERS
VID 40 of 2022 BETWEEN: DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA
Applicant
AND: SHUMING ZOU
Respondent
ORDER MADE BY:
HESPE J
DATE OF ORDER:
15 AUGUST 2022
THE COURT ORDERS THAT:
1.Pursuant to rule 26.01 of the Federal Court Rules 2011 (Cth), summary judgment be entered for the Applicant against the Respondent in the sum of $26,972,229.13.
2.The Respondent pay the Applicant’s costs of the proceeding, to be taxed if not agreed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
HESPE J:
BACKGROUND
On 15 August 2022, I heard an application by the Deputy Commissioner of Taxation (DCT) for summary judgment against the Respondent under s 31A(1) of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) and r 26.01 of the Federal Court Rules 2011 (Cth) (Federal CourtRules), for the sum of $26,972,229.13 comprising:
(a)unpaid income tax for the income years ended 30 June 2016, 30 June 2017 and 30 June 2018;
(b)shortfall interest charge imposed pursuant to s 280‐100 of Sch 1 to the Taxation Administration Act1953 (Cth) (TAA);
(c)administrative penalties imposed pursuant to s 284‐75 of Sch 1 to the TAA for the 30 June 2016 to 2018 income years (Administrative Penalties);
(d)tax payable under Div 293 of the Income Tax Assessment Act 1997 (Cth) (ITAA97) for the income year ended 30 June 2017 (Division 293 tax); and
(e)general interest charges pursuant to Pt IIA of the TAA in relation to the outstanding income tax and shortfall interest charges described at (a)–(d) above.
At the conclusion of the hearing, I made orders granting the application for summary judgment, with costs. I indicated that I would provide my reasons later. These are my reasons for making those orders.
SERVICE
Movement records adduced by the DCT suggest that the Respondent departed Australia on 3 November 2019 and currently resides in China.
By Order of this Court dated 16 May 2022:
(1)the DCT was granted leave pursuant to rr 10.43(2) and 10.44(1) of the Federal Court Rules to serve certain relevant documents on the Respondent in the People’s Republic of China in accordance with the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, opened for signature 15 November 1965, 658 UNTS 163 (entered into force 10 February 1969) (Hague Convention); and
(2)personal service and service in accordance with the Hague Convention was dispensed with and the DCT was granted leave pursuant to r 10.24 of the Federal Court Rules to effect substituted service on the Respondent by:
(a)leaving a copy of the relevant documents at the address of a property registered in the name of the Respondent’s spouse (and which was recorded as the Respondent’s postal address on his income tax return for the 30 June 2019 income year);
(b)emailing a copy of the documents to an email address nominated by the Respondent; and
(c)emailing a copy of the documents to an email address provided by the Respondent’s tax agent.
By affidavit dated 12 August 2022, Kim Thanh Nguyen, a lawyer acting for the DCT, affirmed that:
(a)on 18 May 2022, a copy of the documents was sent to the email address for the Respondent’s tax agent and the email address for the Respondent provided for in the Order of 16 May 2022;
(b)on 19 May 2022, a copy of the documents was delivered by courier to the address provided for in the Order of 16 May 2022;
(c)on 28 June 2022, an email was sent to the email address for the Respondent’s tax agent and the email address for the Respondent, provided for in the Order of 16 May 2022, attaching an email from the Court dated 7 June 2022 (advising of a change in the hearing date) and a copy of the DCT’s submissions in relation to this application filed on 28 June 2022;
(d)on 28 June 2022, a copy of an email from the Court dated 7 June 2022 (advising of a change in the hearing date) and a copy of the DCT’s submissions in relation to this application filed on 28 June 2022 were delivered by courier to the address provided for in the Order of 16 May 2022;
(e)on 11 August 2022, an email was sent to the email address for the Respondent’s tax agent and the email address for the Respondent provided for in the Order of 16 May 2022, attaching an affidavit sworn on 11 August 2022 by an officer authorised by the DCT; and
(f)on 12 August 2022, a copy of the affidavit sworn on 11 August 2022 was delivered by courier to the address provided for in the Order of 16 May 2022.
The DCT did not receive any non-delivery notifications in relation to the email correspondence. None of the documents delivered to the physical address described in para 3(2)(a) were returned to the DCT.
I am satisfied that the documents provided for in the Order of 16 May 2022, and in particular the summary judgment application and supporting affidavits, were served on the Respondent in accordance with the terms of that Order.
SUMMARY JUDGMENT APPLICATION
Pursuant to s 31A(1) of the Federal Court Act and r 26.01 of the Federal Court Rules, the Court may grant summary judgment against a party where the party has no reasonable prospect of successfully defending the proceeding. Section 31A(3) of the Federal Court Act relevantly provides that a defence to a proceeding need not be hopeless or bound to fail for it to have no reasonable prospect of success.
By Order dated 2 June 2022, the Respondent was to file and serve any defence and any affidavit material in opposition to the present application on or before 4.00 pm on 14 June 2022. The Respondent has not filed an appearance or defence. There was no attendance by the Respondent in Court for the hearing of this application.
The DCT submitted that the Respondent has no reasonable prospects of successfully defending the claim.
Each of the amounts claimed by the DCT is a tax-related liability under s 255‐1 of Sch 1 to the TAA. Each of the amounts became due and payable as follows:
Liability Due and payable Legislative reference Income tax
29 March 2021 ITAA97 s 5-5 Division 293 tax
6 April 2021 ITAA97 ss 293-15, 293-65 Shortfall interest charge
29 March 2021 ITAA97 s 5-10 Administrative Penalty Notices issued 5 March 2022: 22 March 2021 TAA Sch 1 ss 284-75, 298-15 Notices issued 12 March 2022: 1 April 2021
Because the amounts remained unpaid after the time by which they were due to be paid, the Respondent became liable to pay the general interest charge in relation to each amount pursuant to ITAA 97 ss 5-15 (income tax and shortfall interest charge) and 293‑75 (Division 293 tax) and s 298-25 of Sch 1 to the TAA (Administrative Penalties). The general interest charge is due and payable at the end of each day: TAA s 8AAE.
As each of the amounts (including the general interest charge) is due and payable, each amount is a debt to the Commonwealth of Australia and payable to the Commissioner of Taxation: s 255-5 of Sch 1 to the TAA.
Notices of Assessment
The DCT has produced copies of the following notices issued to the Respondent:
(a)notices of amended assessment of income tax and shortfall interest charge for the income years ended 30 June 2016, 2017, and 2018 dated 5 March 2021;
(b)a notice of assessment for Division 293 tax for the income year ended 30 June 2017 dated 12 March 2021; and
(c)notices of assessment of Administrative Penalties dated 5 March 2021 and 12 March 2021.
Item 2 of the table in s 350-10(1) of Sch 1 to the TAA provides that the production of a notice of assessment under a taxation law is conclusive evidence that:
(a)the assessment was properly made; and
(b)except in proceedings under Part IVC of [the TAA] on a review or appeal relating to the assessment—the amounts and particulars of the assessment are correct.
The effect of s 350-10 is that the Respondent cannot, in this proceeding, challenge the liabilities imposed by the assessments.
Evidentiary Certificates
The DCT has also produced evidentiary certificates pursuant to s 350-10(3) of Sch 1 to the TAA. That subsection provides:
(3) The production of a certificate that:
(a)is signed by … a Deputy Commissioner … ; and
(b)states that, from the time specified in the certificate, an amount was payable under a taxation law (whether to or by the Commissioner);
is prima facie evidence that:
(c)the amount is payable from that time; and
(d)the particulars stated in the certificate are correct.
The evidentiary certificates state the amount of the income tax, Administrative Penalties, Division 293 tax, shortfall interest charge, and general interest charge as at the date of the certificates and that those amounts were due and payable (including general interest charge calculated to 10 August 2022).
Notices of Shortfall interest charge
The DCT also produced notices of shortfall interest charge issued to the Respondent on 5 March 2021, under s 280‐110 of Sch 1 to the TAA, for the income years ended 30 June 2016, 2017, and 2018. The notices of shortfall interest charge are prima facie evidence (as at 10 August 2022) of the matters stated in the notices including that the amounts are due and payable: s 280-110(3) of Sch 1 to the TAA.
DISPOSITION
The DCT has established that the Respondent has no reasonable prospect of defending this proceeding. The DCT is entitled to judgment on her claim and to her costs.
It was for the above reasons that I made the orders granting the application for summary judgment, with costs.
I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hespe. Associate:
Dated: 1 September 2022
0
5