Mr Huang had lived in Australia for some years. In 2018, he absconded to China when audited by the ATO. It was later found that he had significantly understated his income, and thus owed the government a significant tax debt of over $140 million17
the proceedings not yet having been commenced; it is enough that the court be satisfied with a sufficient degree of certainty that a right to bring proceedings will arise and that proceedings will be brought.
Comment on Broad Idea Before turning the High Court’s decision in Deputy Commissioner of Taxation v Huang [2021] HCA 43 (Huang), it is worth noting a few matters of principle relevant to the Australian legal landscape prior to Huang. First, whilst the judgment in Broad Idea is a sensible, pragmatic legal development, its transposition to an Australian court had the potential to be thwarted by recent High Court judgments. For example, decisions such as Glencore International AG v Commissioner of Taxation (2019) 265 CLR 646 and Smethurst v Commissioner of Police (2020) 94 ALJR 502 have emphasised the need to show an actionable legal right, or a sufficient equity to give rise to an obligation of conscience, in order to obtain injunctive relief in equity’s auxiliary or exclusive jurisdictions. English courts consider freezing orders as a type of “injunction”, whereas since Cardile, Australian courts consider them to be a different kind of “order”. Secondly, the transplant of Broad Idea into Australian doctrine also had the potential to be thwarted by the text of rules of superior courts which focus on protection of the domestic court’s own legal process. Alternatively, it could have been argued that every prospective foreign judgment following a foreign
proceeding could be recognised or enforced in Australia at general law, even if the foreign judgment were not registrable under statute.16 Accordingly, any foreign proceeding could crystallise into a proceeding in the domestic jurisdiction, which may be protected by an order issued in light of the text of the rules and the authority of PT Bayan. If that is not right, it would nonetheless be possible for an Australian court to follow the Privy Council by drawing on the deep well of inherent and implied powers of Australia’s superior courts. As litigation evolves with globalisation, so too should the exercise of powers of Australian courts in order to achieve material justice for parties to global disputes.
The worldwide freezing order in Deputy Commissioner of Taxation v Huang [2021] HCA 43 In December 2021 the High Court delivered judgment on a case that considered the effect of r 7.32 of the Federal Court Rules extracted above. Could the Federal Court issue a freezing order that affected the worldwide assets of the respondent, even though there was no realistic possibility the relevant Australian judgment would be recognised or enforced in the foreign jurisdictions in which the respondent’s assets were located? Mr Huang had lived in Australia for some years. In 2018, he absconded to China when audited by the ATO. It was later found that he had significantly understated his income, and thus owed the government a significant tax debt of over $140 million.17
Before the Federal Court delivered judgment to that effect, in September 2019 the Court issued an ex parte interim worldwide freezing order, substantially in the terms of Annexure A to the Federal Court’s Freezing Orders Practice Note (GPN-FRZG).18 At that time, Katzmann J found that there was a danger that a prospective judgment against Mr Huang would be partly or wholly unsatisfied by Huang moving or diminishing his assets. After summary judgment was ordered against Huang with respect to his tax debt,19 the worldwide freezing order was continued in inter parte proceedings in which Huang had submitted to the Federal Court’s jurisdiction.20 This was the case even though Huang had assets in Hong Kong and China, and it was unlikely that the judgment for a tax debt would be enforceable against Huang in Hong Kong or China—jurisdictions in which Huang had assets that were purportedly “frozen”. In the Full Court, Besanko, Thawley and Stewart JJ allowed Huang’s appeal, holding that in order to extend a freezing order extra-territorially, there must be a realistic possibility that any judgment obtained by an applicant could be enforced against assets of the respondent in the place to which the proposed order relates.21 A High Court majority overturned the Full Court’s judgment. Gageler, Keane, Gordon and Gleeson JJ found in favour of the Deputy Commissioner after construing the Federal Court Rules, and considering the policy implications of the contrary position:
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