Koueider and Commissioner of Taxation [2003] AATA 101; (2003) 51 ATR 1236; 2003 ATC 2032 (4 February 2003)

Last Updated: 30 September 2009

Administrative

Appeals

Tribunal

DECISION AND REASONS FOR DECISION [2003] AATA 101

ADMINISTRATIVE APPEALS TRIBUNAL )

) No NT2002/229

TAXATION APPEALS DIVISION		)
	Re		FAROUK KOUEIDER

Applicant

And

COMMISSIONER OF TAXATION

Respondent

DECISION

Tribunal

Hon. R N J Purvis Q.C Deputy President

Date 4 February 2003

Place Sydney

Decision

The Tribunal affirms the decision under review.

[SGD] The Hon. R N J Purvis, Q.C Deputy President

CATCHWORDS

TAXATION-Taxation Administration-Departure Prohibition Order made by Respondent- Respondent’s refusal to issue a Departure Authorisation Certificate-Whether Departure Authorisation Certificate should be granted-Whether Applicant’s tax liability is completely irrecoverable-Whether humanitarian grounds exist.

Taxation Administration Act 1953 - ss14S, 14R, 14T, 14U

Income Tax Assessment Act 1936

REASONS FOR DECISION

4 February 2003

Hon. R N J Purvis Q.C Deputy President

THE APPLICATION

1. This is an application made by Mr Farouk Koueider ("the Applicant") seeking review of a decision of a delegate of the Commissioner of Taxation ("the Respondent") not to issue a certificate authorising the Applicant to depart from Australia for Lebanon. On 12 August 1997 a Departure Prohibition Order was made pursuant to section 14S of the Taxation Administration Act 1953 ("the Act") with reference to the Applicant the same remaining in force.
2. Under date 16 September 2002 the Respondent wrote to the Applicant's solicitor a letter inter alia stating (T4/13):

"...
Reference is made to your written request, dated 29 August 2002, for the issue of a Departure Authorisation Certificate to enable Mr Farouk Koueider to travel overseas. Consideration has been given to your request and I regret to inform you that a decision has been reached to refuse your request.
The application was refused as it failed to satisfy the Commissioner on the grounds set out in subsection 14U(1) of the Taxation Administration Act 1953.
..."

3. As "background" to the reasons for the above mentioned decision of the Respondent it was stated:

" The Applicant was involved in a scheme to defraud the NSW State Government of tax in respect of tobacco licensing fees. In the process, the Applicant failed to declare income received for income tax purposes. Consequently, assessments were raised for the years ended 30 June 1995 and 1996. Money seized from the boot of the Applicant’s car by the NSW State Police was transferred to the Respondent pursuant to a garnishee notice issued under section 218 of the Income Tax Assessment Act 1936. This resulted in full payment of tax for the year ended 30 June 1995 and partial payment of tax for the year ended 30 June 1996.
The Respondent made a Departure Prohibition Order. The Applicant requested a Departure Authorisation Certificate in 1998 for the purpose of visiting his sick mother in Lebanon. His application was refused and the Applicant requested a review of this decision by the Administrative Appeals Tribunal. During these proceedings, the Applicant left Australia illegally. The Applicant is believed to have left in January 1999. The Applicant returned to Australia in April 2001 and has since been prosecuted for breaching the Departure Prohibition Order (sentencing occurred in July 2002)."

4. In his evidence before the Tribunal the Applicant said that he left Australia in February 2001 not January 1999.

THE HEARING

5. At the hearing of this application the Applicant was represented by Mr James Jordan solicitor, the Respondent by Ms R M Henderson of Counsel. The documents lodged by the Respondent pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 were admitted into evidence and marked T1-T25. Further written material was tendered by the parties as exhibits and marked accordingly:

Exhibit	Description	Date
A	Medical Certificate from Dr Ali El Jaam	1 February 2002
B	Applicant’s Passenger Entry Card	10 April 2001
1	Letter from Australian Taxation Office (ATO) to Mr James Jordan, solicitor	17 December 2002
2	Letter from ATO solicitor L Hardiman	18 December 2002
3	Facsimile from Department of Immigration and Multicultural and Indigenous Affairs (DIMA) to Fiona Andrew	17 December 2002

6. Oral evidence was given by the Applicant upon which he was cross-examined.

RELEVANT LEGISLATION

7. The provisions of the Act relevant to this application are sections 14R, 14T(1), 14U(1). Such sections provide as follows:

Section 14R(1)
A person in respect of whom a departure prohibition order is in force, and who knows that such an order is in force in respect of him or her shall not depart from Australia for a foreign country.
14R(2)(1) Subsection (1) does not apply if the departure is authorised by a departure authorisation certificate.
14T(1) [revocation in certain circumstances]
Where a departure prohibition order is in force in respect of a person and:
(a) the tax liabilities to which the person is subject have been wholly discharged and the Commissioner is satisfied that it is likely that the tax liabilities to which the person may become subject in respect of or arising out of matters that have occurred will be
(i) wholly discharged; or
(ii) completely irrecoverable; or
(b) the Commissioner is satisfied that the tax liabilities to which the person is subject are completely irrecoverable;
the Commissioner shall, on application being made to the Commissioner by the person to do so or on the Commissioner's own motion, revoke or vary the departure prohibition order.
...
Section 14U(1) [Issue of authorisation]
Where, on application made by a person and in respect of whom a departure prohibition order is in force:
(a) the Commissioner is satisfied,
(i) that if a departure authorisation 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 authorisation certificate should be issued in respect of the person on humanitarian grounds; or
(B) a refusal to issue a departure authorisation certificate in respect of the person would be detrimental to the interests of Australia;
the Commissioner shall issue a certificate authorising 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...."

FACTS PERTINENT TO THE DECISION

8. As at 16 September 2002 the Applicant had a tax liability to the Respondent in the amount of $5,807,550.90. He has not lodged income tax returns for the years 30 June 1998 to 30 June 2002.
9. The Applicant is presently residing in rented premises with his "estranged" wife and their five children. Up until recently he was living with his "de facto" wife and their two very young children. The de facto wife is now residing with her parents, the Applicant stating that he has returned to live under the same roof as his wife on account of her medical condition, a guarded prognosis, and the need for her to have chemotherapy. The ages of the wife's children range from nine years to 22 years and those of the de facto wife three months and two years.
10. The Applicant has been involved in various commercial and business enterprises. It is maintained by the Respondent that in respect to the years ending 30 June 1995 and 30 June 1996 the Applicant's share of the net profits of the business then being carried on by him and others was $491,097 and $3,952,321 respectively (T6/20). It is further maintained by the Respondent that the "schemes" in which the Applicant was involved sought to defraud the New South Wales Office of State Revenue of tobacco licence fees in excess of $19 million dollars and that "most of the profits have been shifted off shore". The Applicant also conducted his own business as a service station proprietor and owned his own home. He said in evidence before the Tribunal that the service station business was closed down in 1998 and the house sold in 1999. The sale of the stock and other items remaining from the business resulted in the Applicant receiving $32/34,000, the house sale returning $400,000. The Applicant says that he gave $300,000 of the house proceeds to his wife, which she used and expended in ways and for purposes unknown to him, retaining $100,000 for himself. He used the said balance and the proceeds from the sale of the business for his own purposes. He says that at the present time he has no assets and is in receipt of $200.00 per week from casual work.
11. The Respondent is not satisfied that the financial position of the Applicant is as he professes it to be more particularly as he was not able, except in the most general way, to account for the use to which the monies received by him were put.
12. The Applicant was born in The Lebanon on 10 June 1956 and first entered Australia in 1977. He became an Australian citizen in 1980.
13. His occupation as previously indicated was that of a businessman either on his own behalf or with others. In 1996 the allegations of conspiracy to defraud the Office of State Revenue were made against him by the Crimes Commission and as a consequence of investigations then conducted the taxation liability arose. Other than for the receipt of money discovered in the Applicant's Mercedes Benz motor vehicle in April 1996 in the amount of $780,000 no payments have since been made in reduction of the taxation liability.
14. Publicity associated with his initial arrest at the behest of the Commission and the allegation of conspiracy led to his marital break up and his wife leaving Australia with the five children and travelling to The Lebanon where she remained with the children for about three and half years. Although he maintained that relations between the two were "not good" it was at this time that the Applicant said he remitted to her the above mentioned $300,000. He did not know, he said, what she spent it on.
15. The Applicant was in April 1996 charged with conspiracy to defraud, the same being withdrawn in August 1997. During this period of time he was granted bail to travel by the Supreme Court of NSW. He departed Australia on 18 December 1996 and returned on 7 January 1997.
16. A Departure Prohibition Order was made against the Applicant on 12 August 1997. Pursuant to a Departure Authorisation Certificate the Applicant departed Australia on 1 October 1997, returning on 20 October 1997. In 1998 he again applied to the Respondent for a Departure Authorisation Certificate which was refused. The Applicant applied to the Administrative Appeals Tribunal for a review of the refusal decision. The Applicant did not appear before the Tribunal, but according to him in February 2001 (the Respondent maintains that the relevant year is 1999) he left Australia in breach of the Prohibition Order returning on 10 April 2001. The Applicant says that he so left Australia with a ticket issued in his own name, yet there is no record of such departure in the material maintained by the Department of Immigration, Multicultural and Indigenous Affairs. The Applicant was unable to produce to the Tribunal his then current passport, his current Australian and/or Lebanese passport, his airline ticket - said to have been with the Sri Lankan Airways- or any other written evidence of payment having been made for a ticket or of him having so travelled. He said that the ticket was issued by a travel agent in Bankstown Square, yet he did not produce any documentation as may have been maintained by that travel agent.
17. The Respondent alleges that the Applicant left Australia other than as he contends, his experience working at one time as a travel agent assisting him in this regard. Whilst on the basis of the limited evidence before it the Tribunal is unable to make a definitive decision on this issue, it does hold reservations as to the truthfulness of the Applicant and the accuracy of the events as narrated by him. It is for the Applicant to establish that the decision under review was not the correct or preferable decision. In relation to his departure from Australia in breach of the Prohibition Order the Applicant has not adduced evidence such as to satisfy the Tribunal as to the circumstances of the departure as being alleged by him. The Applicant was in due course prosecuted for his breach of the Departure Order. He pleaded guilty and had a fine imposed.
18. In July 2000 $5,086 was remitted from The Lebanon to the Applicant's de facto wife. It was stated in evidence by him that this money was to repay her for funds made available to him in Australia and was provided by his brother who was then living in The Lebanon. The Applicant's evidence before the Tribunal was to the effect that the $100,000 part of the proceeds of sale of his house "did not run out until seven or eight months ago” that is until about May or June 2002. It may be thought, on the basis of this evidence, that borrowing from his de facto wife would not have been necessary. The Respondent maintains that this money came from funds of the Applicant held overseas and the Tribunal is not persuaded that this may not have been so.
19. The Applicant says that he now seeks to travel to Lebanon to visit his father who is not in good health. He is 75 years of age. The Applicant tendered a document dated 8 August 2002 said to be under the hand of a Dr Ahmad Amin Kadi which reads:

"I, the undersigned, hereby state that Mr Elsayed Abdulrahim Koueider suffers from arteriosclerosis [sic] and failure of heart muscle.
He had an open heart operation sometime ago and is now confined to bed because he suffers repeated heart attacks following minimum physical effort.
He needs daily intensive medical supervision and continuous treatment and tests."(T3/12)

20. There is no current written evidence as to the father's condition. The Tribunal was informed that the Applicant's brother had recently been to The Lebanon although now back in Australia, but the brother was not called to give evidence of the current situation.
21. The Applicant says that if granted a certificate he will be able to borrow enough money in order to pay for the airline tickets and will return to Australia. Whilst his de facto wife has a Lebanese background she is also an Australian citizen. He does not offer any security other than saying that his children and de facto wife will hand over their passports to the Respondent pending his return. As further guarantee of his return he said that he wished to accompany his "estranged" wife when she next visits her medical specialist in "a few months time".

DISCUSSION AND DECISION

22. The Respondent maintained in the reasons for refusing the Applicant's application and still maintains that inter alia:
    • it is not satisfied the Applicant would return to Australia within the stipulated period if he be allow to leave;
    • it is not satisfied that the Applicant's debt would be fully discharged or become irrecoverable;
    • no security has been offered;
    • it is not satisfied that on the basis of the information as to the father's illness available to it the same is genuine or serious enough to override the protection of the revenue.
23. The Applicant contends:
    • that he should be issued with a certificate enabling him to travel to The Lebanon in order to visit his father and return within four weeks;
    • he satisfies the provisions of section 14U(1)(b)(ii)(A) and should be granted the certificate for humane and compassionate reasons;
    • his travel history whilst on bail and on previous travels pursuant to Departure Authorisation Certificate and on the one unauthorised travel should be sufficient to satisfy the Respondent that he will return to Australia within the stipulated period;
    • the Respondent and/or the Tribunal should be satisfied that the tax debt has become completely irrecoverable.
24. On behalf of the Applicant, it was submitted by Mr Jordan, that the Applicant has left Australia and returned on three occasions since he was first charged with conspiracy to defraud. The Tribunal should be satisfied that he will return if granted a certificate and that such a certificate should be afforded to him on humanitarian and/or compassionate grounds. He has seven children living in Sydney and this alone should guarantee his return.
25. It is further maintained on behalf of the Applicant that the state of health of his "estranged wife" and his desire to accompany her on the next visit to the specialist should also ensure his return. It was further maintained that there is not any evidence before the Tribunal of the Applicant seeking to travel out of Australia in order to obtain the use of funds held overseas. The Tribunal should be satisfied it is said on the basis of evidence before it that the tax liability is now irrecoverable and should so find.
26. On behalf of the Respondent the Tribunal’s attention was directed to the audit report (T6/20,T6/21) and it was submitted that it should be mindful of the matters contained in it. The Respondent has been seeking to recover the indebtedness from the Applicant and has commenced proceedings in the Supreme Court of New South Wales but up until recent date had not been able to locate him in order to effect service of process. The Tribunal should also be minded, it was submitted, of the fact that the Applicant disposed of assets amounting to not less than $432,000 without being able to account, other than a very general way, for the use to which the monies were put. It is not satisfactory it is said for the Applicant to contend or maintain that the tax debt is irrecoverable in a situation where funds were at one time available but the Applicant refuses or is unable to disclose their whereabouts or the use to which they were put. It is unlikely that the Applicant's wife spent $300,000 in The Lebanon and that it is more likely than not the Applicant was in The Lebanon at the time the proceeds of sale of the home were remitted to that country from Australia.
27. The Tribunal was further pressed not to accept the evidence of the Applicant as to monies being made available to his de facto wife by his brother it been more likely than not these monies had their origin in funds maintained on behalf of the Applicant out of Australia.
28. The Tribunal is unable to say on the basis of the evidence before it that the submissions so made on behalf of the Respondent are without foundation. There is the obligation resting on the Applicant to establish that the decision under review should be set aside. In order for this to be achieved the Applicant needs to satisfy the Tribunal as to each of the statutory prerequisites. One of such prerequisites relates to the standing of the tax liability. The Tribunal is not satisfied that the liability has been wholly discharged or that the amount presently outstanding is completely irrecoverable.
29. The Applicant seeks to rely upon section 14U(1)(b) namely that the Tribunal be satisfied that a certificate should be issued on humanitarian grounds, this where the Applicant is unable to give security. Dr Kadi does not claim in his certificate to be the treating practitioner of the Applicant's father or indeed to have seen him. The certificate does not recite a serious risk referable to the father's health at the time it was issued in August 2002. Even be it the Applicant's brother was said to have recently been in The Lebanon he was not called, on behalf of the Applicant, to give evidence as to the father's current state of health. The Tribunal can not be satisfied that the health of the father is such as to warrant a certificate being granted to the Applicant on humanitarian grounds. The word “humanitarian” encompasses such concepts as “compassionate”, “affected with or expressing compassion”, or "a feeling of sorrow or pity for the sufferings or misfortunes of another; sympathy" (the Macquarie Essential Dictionary). On the basis of the evidence before the Tribunal a case has not been made out for a certificate to be issued in respect of the Applicant on humanitarian grounds.
30. It is further maintained on behalf of the Respondent that the likelihood of the Applicant returning to Australia if a certificate being granted cannot be assured. There is a substantial sum of money outstanding. A previous application to the Tribunal was not pursued by the Applicant. The Respondent maintains that the Applicant found a way to leave Australia whether in 1999 or February 2001. The fact that no indication of departure appears in the records of the Department and that the Applicant was unable to adduce any independent evidence of his departure is supportive of the contention maintained on behalf of the Respondent. It is said that the Applicant could settle in any place outside Australia he more likely than not having money there situate which he could use for the purpose of relocating himself and in the fullness of time members of his family. He has no employment in Australia calling him back to this country.
31. The Applicant has not sought to provide security for his return other than the proffered retention by the Respondent of the passports of his de facto wife and children.
32. The Tribunal is to be satisfied as to each of the prerequisites contained in the legislation. The Tribunal cannot be so satisfied on the basis of the evidence before it that if a certificate be issued the Applicant will return to Australia within an appropriate time limit or that the circumstances referred to in section 14T(1)(a) will come into existence within the relevant period. The Tribunal is not minded to the view that it is not necessary or desirable for the Applicant to give security. In the alternative the Tribunal is not satisfied in the absence of security being available that a certificate should be issued on humanitarian grounds. The question of a refusal of a certificate being detrimental to the interests of Australia does not arise in the present application.
33. As earlier indicated it is for the Applicant to satisfy the Tribunal that the correct or preferable decision should be the granting of a certificate. It is for the Applicant to place before the Tribunal evidentiary material or other material that is such as to satisfy the Tribunal that a decision should be made as sought by the Applicant. In the present application the Applicant has not satisfied the Tribunal that:
    • the tax liability is completely irrecoverable as to the amount now outstanding;
    • in the event of a certificate being issued the Applicant will return to Australia within the relevant period;
    • it is not necessary or desirable to for the person to give security;
    • humanitarian grounds exist.
34. For these reasons the Tribunal is satisfied that it is appropriate for the decision under review to be affirmed. The Tribunal accordingly affirms the decision under review.
    

I certify that the 34 preceding paragraphs are a true copy of the reasons for the decision herein of The Hon R N J Purvis QC, Deputy President

Signed: .......................................................................................

Associate

Date of Hearing 19 December 2002

Date of Decision 4 February 2003
Solicitor for the Applicant Mr James Jordan
Solicitor for the Respondent Mr Adrian Mow
Counsel for the Respondent Ms R M Henderson