The NSW Court of Appeal has unanimously dismissed the Commissioner’s appeal and held that he should pay a liquidator’s costs in relation to a matter where a claim was made by the liquidator of the company against Commissioner pursuant to s 588FF under the Corporations Act 2001 for the repayment of id=”mce_marker”.3m in tax paid to the Commissioner as an “unfair preference”.

Broadly, the liquidator claimed it was entitled to its costs against the Commissioner in terms of the Uniform Civil Procedure Rules 2005 (NSW) on the basis that the Commissioner had the joined the company’s director to seek indemnity pursuant to s 588FGA of the Corporations Act, but the Commissioner had withdrawn his defence to the liquidator’s claim (as had the director).

In upholding the decision at first instance, the Court emphasised, among other things, that the liquidator’s only remedy was against the Commissioner, even though the Commissioner had dual interests – namely, to resist the claim as against the liquidator and, in the event that was unsuccessful, to recover from the director and that the Commissioner’s action was not an as “inter-pleader” (ie the Commissioner could not be said to be in the position of a stakeholder claiming no interest in the outcome of the dispute).

The Court also noted that the fact the Commissioner must bear the liquidator’s costs of the proceedings subsequent to the date of withdrawing his defence does not have the effect of the Commissioner giving security for costs on behalf of the director.

Accordingly, the Court of Appeal concluded that the judge at first instance had not erred in his analysis of the responsibility between the liquidator and the Commissioner for the costs the liquidator incurred.

(FCT v Moodie [2014] NSWCA 59, NSW Supreme Court, Court of Appeal, McColl, Meagher, Barrett JJA, 14 March 2014.)

[LTN 52, 18/3/14]