Courtney Ensor appeared for the successful Commissioner of Taxation, led by Julianne Jaques KC, in the recently decided Gumm v Commissioner of Taxation [2024] FCA 71.
In the context of underlying Part IVC tax proceedings concerning over $23 million in dispute, the Commissioner applied for security for costs against the foreign resident taxpayer.
In ordering a substantial quantum of security for costs (and staying the proceeding until payment), Justice Roger Derrington concluded that there is no rule that a court will not order security for costs against a party bringing a proceeding if that person is in substance a defendant. His Honour concluded that although there were some defensive elements to the taxpayer’s claim, Mr Gumm remained, by and large, the aggressor in the action.
The decision is an important outcome on security for costs applications in the context of Part IVC tax appeals, particularly where the taxpayer is a foreign resident Australian citizen who holds their assets offshore. It is now beyond doubt that it is no longer “unprecedented in the conduct of taxation appeals in this country” (Fletcher v Commissioner of Taxation (Cth) (1992) 37 FCR 288 at 289 per Hill J) for security for costs applications to be brought, and for security to be ordered, in the specific context of Part IVC appeals.
A copy of the Court’s reasons can be found here.
