Israel Discount Bank Limited v ACN 078 272 867 Pty Ltd (in liq) (formerly Advance Finances Pty Ltd)

The case of Israel Discount Bank Limited v ACN 078 272 867 Pty Ltd (in liq) (formerly Advance Finances Pty Ltd) concerns the application for leave to appeal against the orders of the Federal Court of Australia, which allowed two plaintiffs to serve originating process and associated documents on two overseas defendants. The plaintiffs, Advance and Civic, were companies formerly associated with Emil Binetter and were involved in an alleged scheme to evade Australian tax by using offshore deposits as security for loans from Israeli banks. The defendants, the Israeli banks, applied to have the orders discharged or to set aside service, but the primary judge dismissed their application. The defendants sought leave to appeal, arguing that the primary judge erred in finding that the plaintiffs had established a prima facie case for relief against them. The court dismissed the application for leave to appeal, finding that the proposed grounds for appeal did not provide a sufficient basis for granting leave. The court held that the primary judge correctly applied the principles applicable to establishing a prima facie case for the purposes of r 10.43(4) of the Federal Court Rules 2011 and that there were no apparent reasons why costs should not follow the event.

The court considered the proposed appeal grounds relating to the Corporations Act claim and the Conveyancing Act claim. In relation to the Corporations Act claim, the court found that the primary judge did not apply the wrong test in determining that a prima facie case existed and that there was a basis for the finding that the purpose of the plaintiffs' directors in implementing the arrangements was to assist the plaintiffs to evade Australian tax. The court held that the material before the primary judge did not justify drawing an inference, even at the prima facie level, that the Banks had actual knowledge of Emil and Gary Binetter implementing arrangements to evade Australian tax by concealing overseas deposits. The court found that there were no positive facts from which it may be inferred that some officer, whose knowledge can relevantly be imputed to the Banks, must have appreciated that the plaintiffs were evading tax. In relation to the Conveyancing Act claim, the court found that the primary judge's conclusion that the plaintiffs had a prima facie case for the relief sought was not challenged on appeal. The court held that the primary judge correctly found that the plaintiffs had established a prima facie case for relief against the defendants and that there was no basis for setting aside service of the originating process.