Obtaining a mareva injunction
IT is possible that a tax payer who owes
money to the Internal Revenue Commission might decide to deny the
Commissioner General access to his or her assets by disposing of them,
or removing the assets out of Papua New Guinea to places where the
Commissioner General could not levy execution on them.
To avoid or prevent this from happening, the Commissioner General
could obtain what in legal terms is referred to as a “mareva
injunction”, that is, a court order prohibiting a person from
disposing assets or removing them from PNG in order to defeat a court
judgment which might be given against the person.
The principal reason for granting such an injunction is to prevent the
courts’ process from being frustrated or abused by the disposal of
assets so as to affect the enforcement of orders lawfully made by
court.
If you know you have a outstanding tax liability and have assets which
the Commissioner General might have recourse to through a court
judgment, you cannot simply go ahead to dispose of those assets or
remove them to places where the Commissioner General cannot have
access to, if there is already a prohibition on the disposal .
You might consider yourself “lucky” to sell or dispose your assets but
this does not relieve you from any existing liability.
You still have to pay off that liability.
The courts would not normally grant a mareva injunction if there is no
basis to do that.
In applying for such an injunction, it is mandatory for the
Commissioner General to show some basis for believing that there is a
risk of the assets being removed or dissipated before he obtains
judgment and the tax payer is therefore likely to default in meeting
any such judgment.
If you appear before a court where the Commissioner General is making
an application for mareva injunction against your assets, you must
insist on the Commissioner General having good reasons for such an
application.
The injunction sought would not be granted if there are no good
reasons to do so.
You need to be aware of the factors that a court would take into
account in assessing the risk of removal and this would include the
fact that a tax payer is a foreign resident or have closed his or her
business office or can not be found and the taxpayer’s financial
position is uncertain.
A mareva injunction may be used to restrain the disposal or removal of
assets held by third parties where it is shown that you have some
control over, or other access, direct or indirect, to the relevant
assets so that they or the proceeds of disposition may be applied to
discharge any judgment debt taken against you.
This would extend to any assets you may hold in the name of your son
or for any other member of your family or to companies controlled by
you.
Because a mareva injunction involves a serious interference with your
right to deal with your property in any way your see fit, the court
will be vigilant in preventing abuse of the procedure.
It is for this reason that such an injunction will not be issued if it
will put unfair pressure on you or third parties.
All you need to know now is that you may be prevented or prohibited
from selling or disposing of any assets you may own or have control
over if you owe to the Internal Revenue Commission.
by MARK OPUR
