Deputy Commissioner of Taxation v Westmeat Development Pty Ltd

By Amended Notice of Motion and Amended Statement of Charge dated 1 May 2025, the First Plaintiff, the Deputy Commissioner of Taxation (“DCT”), sought orders that, relevantly, the Tenth Defendant, Mr Nahi Gazal (“Mr Gazal”) was guilty of contempt of court.

By way of background, Mr Gazal was the sole director of the three companies in issue, Belfield Development Pty Ltd (“Belfield”), NNG Holdings Pty Ltd (“NNG”) and NG Sydney Corporation Pty Ltd (“NG Sydney”). Mr Gazal was also the sole shareholder of NNG and NG Sydney, and NNG was the sole shareholder of Belfield. Belfield was trustee for the Belfield Development Unit Trust; NNG was trustee for NNG Family Trust; and each of Belfield, NNG and NG Sydney were not registered for GST. The evidence establishes that Mr Gazal controlled each of the company’s bank accounts.

On 24 December 2020, the Court made an order including the Penal Notice in Annexure A to the order (“Freezing Order”) (which applied, inter alia, to Belfield, NNG and Mr Gazal) which, relevantly, restrained Belfield, NNG and Mr Gazal from taking any steps to pay, transfer, dispose of or otherwise diminish their assets as set out in the Freezing Order including, but not limited to, the Belfield bank account and the NNG bank account. On 26 March 2021, the Court made a further freezing order including the Penal Notice at Annexure B extending, inter alia, to NG Sydney. There were several exceptions to those orders. The DCT contended that the relevant companies and Mr Gazal relied on one of those exceptions (the ordinary course of business exception) dishonestly to withdraw very large sums of money in repeated contraventions of the orders.

By my judgment delivered on 24 June 2025 in Deputy Commissioner of Taxation v Westmeat Development Pty Ltd [2025] NSWSC 655 (“Liability Judgment”), I held that the DCT had established the large part of the charge against Mr Gazal. I summarised the position at [160] and [164] of the Liability Judgment as follows:

On 11 July 2025, I made orders to give effect to the Liability Judgment, relevantly that:

I also then made orders directed to bringing the second stage of the contempt proceedings against Mr Gazal, in respect of penalty, to a hearing. Mr Gazal subsequently sought to defer the hearing of the penalty stage of the contempt application; and I addressed that application in several judgments, including my judgment in Deputy Commissioner of Taxation v Westmeat Development Pty Ltd as trustee for Westmeat Development Trust [2025] NSWSC 1571. I there held that Mr Gazal had not established any lack of capacity that would prevent him, or a tutor he had appointed, defending the balance of the contempt proceedings. The Court of Appeal subsequently undertook a detailed review of the history of the proceedings and dismissed a Notice of Appeal filed 9 October 2025 by Mr Gazal and a summons seeking leave to appeal filed 20 November 2025 in respect of my orders, for the reasons set out in its judgment in Gazal by his Tutor Samadi v Deputy Commissioner of Taxation [2026] NSWCA 16. The Court of Appeal there left open the possibility that Mr Gazal could bring a further application seeking to establish a lack of capacity, but he did not subsequently do so.

On 9 February 2026, I listed the penalty application for hearing on 31 March 2026 and extended the time for Mr Gazal to file and serve all further evidence on which he relied as to penalty and his submissions. Mr Gazal did not subsequently file evidence or make submissions as to penalty. On 12 February 2026, the solicitors acting for Mr Gazal filed a Notice of Ceasing to Act in these proceedings, although they then continued to act for Mr Gazal in the appeal.

On 30 March 2026, the day before the penalty hearing, Mr Gazal’s wife and then tutor, Ms Samadi, sent an email dated 30 March 2026 to the Court as follows:

By a further email dated 31 March 2026, Ms Samadi advised the Court that:

At my request, my Associate then advised Ms Samadi that the Court would deal with any application to adjourn the hearing when the matter was listed that morning. No such application was brought by Mr Gazal.

At the penalty hearing on 31 March 2026, the DCT read the affidavit dated 9 September 2024 of its solicitor, Mr Chambers, which had previously been read at the liability stage of the proceedings, which referred to the circumstances in which the freezing orders were made. The DCT also read the affidavit of service of Mr Zaineddine dated 26 September 2024. The DCT also tendered a bundle of bank statements (Ex P1) which recorded withdrawals which had been procured by Mr Gazal in the manner set out in the Liability Judgment.

The DCT also read a second affidavit dated 30 March 2026 of Mr Chambers, which referred to communications with the solicitor previously acting for Mr Gazal and with Mr Gazal and his tutor, Ms Samadi, since the last directions hearing in respect of the penalty application on 9 February 2026. That affidavit noted that Mr Chambers had not received correspondence from Mr Gazal’s solicitors advising him that the contempts previously found against Mr Gazal had been purged, or correspondence from Mr Gazal or any other person indicating that the money that was the subject of the contempt findings had been returned to the bank accounts from which the money was originally withdrawn. The DCT also relied on a schedule of withdrawals from the relevant accounts (MFI 3), which reflects findings that were made in the Liability Judgment.

Part 55, rule 13 of the Supreme Court Rules 1970 (NSW) (“SCR”) provides that, where a contemnor is not a corporation, the Court may punish contempt by committal to a correctional centre or fine or both; and the Court may make an order for punishment on terms, including a suspension of punishment or a suspension of punishment in case the contemnor gives security in such manner and in such sum as the Court may approve for good behaviour and performs the terms of the security. That rule is declaratory of the Court’s power of punishment and does not exhaust that power: Registrar of the Court of Appeal v Maniam (No 2) (1992) 26 NSWLR 309 at 314 (“Maniam”); Menzies v Paccar Financial Pty Ltd (2016) 93 NSWLR 88; [2016] NSWCA 280 at [14]; Admark Property Group Pty Ltd (in liq) v GJ Building and Contracting Pty Ltd (2017) 94 NSWLR 777; [2017] NSWSC 118 at [30]. Proceedings for contempt in respect of a breach of an order or undertaking have the effect of vindicating the Court’s authority and also have a remedial or coercive effect; and the purposes of punishment for contempt include deterring the contemnor and others in the future from committing similar contempts and denunciation of the conduct: Witham v Holloway (1995) 183 CLR 525 at 533; [1995] HCA 3 (“Witham”).

In Australian Consolidated Press v Morgan (1965) 112 CLR 483 at 498–499 (in a passage cited by the plurality in Witham at 532), Windeyer J observed that:

In Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 114–115; [1986] HCA 46, the majority of the High Court in turn observed that:

In Paccar Financial Pty Ltd v Menzies & Menzies (No 2) [2015] NSWSC 1622 at [8], Rothman J noted the historical distinction between civil and criminal contempt, and that civil contempt involves a breach of a court order or undertaking and criminal contempt relates to conduct that obstructs the administration of justice. In NHB Enterprises Pty Ltd v Corry (No 8) [2022] NSWSC 97 at [26]ff, Bell P summarised the applicable principles in a manner that I should set out in full, omitting citations of authority, and ordered that the first respondent be sentenced to a term of imprisonment of 3 months commencing from the date of his arrest in the relevant circumstances:

The DCT also drew attention to my summary of the applicable principles, in a case in which imprisonment for contempt for a fixed term was sought, in Huang v Liao [2022] NSWSC 526 at [31]ff on which I have drawn for part of the summary of principles which appears above.

The DCT also referred to R v T (2022) 58 WAR 77; [2022] WASCA 34, where the applicable principles were considered by the Court of Appeal of the Supreme Court of Western Australia in relation to the appellant’s breach of orders made in the primary proceedings in that case. The Court there observed at [70]–[74] that:

The DCT also drew attention to the observations of Darke J in BCEG International (Australia) Pty Ltd v Xiao (No 3) [2023] NSWSC 554 (“Xiao”). That decision has similarities with this case, where it involved the breach of freezing orders and undertakings to the Court, including by disbursing monies from a bank account, and that contempt there had not been purged by the date of the hearing. Orders for contempt were there sought in aid of compliance with the Court’s previous orders. Darke J summarised the applicable principles at [13]ff of his judgment, to which I have had regard, and observed at [17]–[18] that:

His Honour noted (at [20]) that:

His Honour also observed (at [38]) that it was not necessary, in order to justify a penalty of imprisonment, that a civil contempt by breach of a Court order or undertaking to the Court be found to be contumacious.

By initial submissions in respect of the penalty hearing, made on 24 September 2025, Mr Kelly, with whom Ms Scott then appeared for the DCT, referred to the Liability Judgment and submitted that:

Mr Kelly and Ms Scott also there submitted, and I accept, that:

Mr Kelly and Ms Scott also there referred to the evidence as to dealings with the relevant monies, which were addressed in the evidence read at the primary proceedings and in the Liability Judgment. I must also address one additional issue, which I had left open in the Liability Judgment. I there observed at [162]–[163] that:

I am satisfied that, as Mr Kelly and Ms Scott point out in submissions in this application, in excess of $1.6 million paid out of the relevant bank accounts in breach of the freezing orders was transferred to Mr Yigit, who then made transfers of funds to Mr Gazal, to Mr Gazal’s legal representatives and to his sons and companies associated with him. It is sufficient to support the orders that are sought by the DCT against Mr Gazal that the DCT has established at least $189,436 was transferred to Mr Gazal directly, and substantially larger amounts were transferred to his associates and dealt with in cash. Mr Gazal did not lead evidence or make submissions to the contrary at either the liability or the penalty hearings.

Mr Kelly and Ms Scott also submitted that:

There is substantial force in these submissions, having regard to the findings that I reached in the Liability Judgment and the additional findings that I have reached above as to the payments received by Mr Gazal and his associates as a result of the impugned conduct.

By further submissions made on 17 March 2025, Mr Barnett, with whom Ms Scott then appeared for the DCT, emphasised the nature of the relief that the DCT seeks against Mr Gazal as follows:

Mr Barnett and Ms Scott in turn fairly recognised that:

I have had regard to the principles set out above, including in a similar context in Xiao, and to the matters identified in Matthews, although those matters have a less direct application here than if a fixed penalty was sought by way of punishment for contempt. Here, the Court can readily be satisfied that an order made against Mr Gazal would have utility in bringing about compliance with the Court’s previous orders or reversing the previous non-compliance, at least in part. There is no reason to think that Mr Gazal would be incapable of repaying the funds that he had personally received, in a substantial amount, so as to purge or mitigate his contempt. That inference is readily drawn where, as I have found above, a substantial amount of funds was transferred from the relevant accounts to corporate accounts, then to Mr Yigit, then to Mr Gazal directly; and Mr Gazal has led no evidence to explain where those funds have gone, although he (and his wife in the correspondence noted above) has repeatedly asserted impecuniosity. There is no reason to infer, in Mr Gazal’s favour, that he does not have access to the funds that were transferred at least to him, and possibly to associated entities, where he leads no evidence to seek to establish that matter.

It seems to me that such an order for the imprisonment of Mr Gazal for an indefinite term is necessary to advance the remedial and coercive purpose of securing compliance with the Court’s previous orders, by seeking to reverse the effects of Mr Gazal’s deliberate breach of those orders. As Darke J held in a similar situation in Xiao at [46], the incentive towards compliance that is inherent in an indefinite term that is terminable upon the purging of the outstanding contempts renders such a term, rather than a fixed term, appropriate in the case of Mr Gazal. As in that case, if it became apparent in future that Mr Gazal lacked the ability to purge the outstanding contempts, so that there was no longer any purpose in keeping him in prison, it would be open to him to seek to have the order for committal discharged pursuant to SCR Pt 55 r 14. The orders I will make reserve that possibility. For all the reasons set out above, I accept that the orders sought by the DCT are necessary to uphold and protect the effective administration of justice, and that Mr Gazal should be committed to a correctional centre for an indefinite term until he purges the contempts.

The DCT proposes, and I accept, that the order for Mr Gazal’s committal to a correctional centre should be suspended for a period of 21 days. That order should be made, first, because it allows an opportunity for Mr Gazal to purge his contempt before his imprisonment commences. The suspension of the order is consistent with the approach adopted by Darke J in Xiao at [47], where his Honour noted that it recognised the principle that imprisonment is a punishment of last resort, by allowing “a further opportunity for the contempts [to] be purged within that period and thereby avoid imprisonment.” Second, as appears to have been contemplated in Mr Gazal’s earlier and unsuccessful appeal, it allows an opportunity for Mr Gazal to appeal from this judgment, if so advised.

The DCT seeks an order for indemnity costs against Mr Gazal and the corporate defendants to the liability hearing, to compensate the DCT for the substantial expenditure to which it has been put by the approach taken by Mr Gazal and those companies in that aspect of the proceedings. In NCR Australia Pty Ltd v Credit Connection Pty Ltd [2005] NSWSC 1118, Campbell J observed at [102] that:

There is also no reason to depart from the usual order here, and there is further reason to make it where Mr Gazal and the companies put the DCT to the costs of proving the facts of multiple individual transactions in the liability hearing, where there was plainly no proper basis for those transactions. I accept that an order for costs of the liability hearing should be made against Mr Gazal and the companies on an indemnity basis. An order for costs should be made on the same basis against Mr Gazal for the costs of the several adjournment applications and the penalty hearing, which proceeded only against him.

For these reasons, I make the following orders: