Stallion (NSW) Pty Ltd v Commissioner of Taxation

• Jurisdiction: Australia Federal only
• Court: Federal Court (Australia)
• Judgment Date: 07 April 2020
• Neutral Citation: [2020] FCA 554
• Date: 07 April 2020

FEDERAL COURT OF AUSTRALIA

Stallion (NSW) Pty Ltd v Commissioner of Taxation [2020] FCA 554

File number(s):	NSD 1451 of 2019
Judge(s):	JAGOT J
Date of judgment:	7 April 2020
Catchwords:	PRACTICE AND PROCEDURE – application for security for costs of appeal– whether reasonable prospects of success on appeal – whether appellant’s impecuniosity arises out of respondent’s conduct – whether the appeals will be stifled or stultified if order for security made
Legislation:	A New Tax System (Goods and Services Tax) Act 1999 (Cth) A New Tax System (Luxury Car Tax) Act 1999 (Cth) Federal Court Rules 2011 (Cth)
Cases cited:	Angas Securities Limited v Savills (SA) Pty Ltd [2017] FCA 868 Elston v Commonwealth of Australia [2014] FCA 704 Capital Webworks Pty Ltd v Adultshop.com Ltd [2008] FCA 40 Cooper v Universal Music Australia Pty Ltd [2006] FCA 642 Cowell v Taylor (1885) 31 Ch D 34 Dye v Commonwealth Securities Limited [2012] FCA 992 J & M O’Brien Enterprises Pty Limited v The Shell Co of Australia Limited (No. 2) [1983] FCA 92; (1983) 70 FLR 261 Madgwick v Kelly [2013] FCAFC 61; (2009) 181 FCR 152 Mecrus Pty Ltd v Industrial Energy Pty Ltd [2015] FCA 103 Stallion (NSW) Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia [2019] FCA 1306
Date of hearing:	7 April 2020
Registry:	New South Wales
Division:	General Division
National Practice Area:	Taxation
Category:	Catchwords
Number of paragraphs:	39
Counsel for the Appellant:	J Hyde Page
Solicitor for the Appellant:	Rostron Carlyle Rojas Lawyers
Counsel for the Respondent:	M Hirschhorn with T Arnold
Solicitor for the Respondent:	Review and Dispute Resolution, Australian Taxation Office

Table of Corrections
28 April 2020	In the Appearances on the cover page in the field Counsel for the Respondent the words “M Hirschhorn” have replaced “M Hirschorn”.
28 April 2020	In the Appearances on the cover page in the field Counsel for the Respondent the words “with T Arnold” after “M Hirschhorn” have been added.

ORDERS

		NSD 1451 of 2019
BETWEEN:	STALLION (NSW) PTY LTD Appellant
AND:	COMMISSIONER OF TAXATION Respondent

JUDGE:	JAGOT J
DATE OF ORDER:	7 APril 2020

THE COURT ORDERS THAT:

1. The appellant in proceeding NSD 1451 of 2019 give security for costs to the respondent (the Commissioner) in respect of the costs of and incidental to, the proceeding incurred by the Commissioner from 24 December 2019.

2. The security for costs be provided within 21 days of the making of order 1 by either:

   1. The amount of $37,136.00 being paid into Court as ordered, or

   2. Alternatively, a bank guarantee from an Australian trading bank for the amount of $37,136.00 be lodged with the court in a form satisfactory to the Registrar and a copy of which is to be served on the Commissioner.

3. If the appellant fails to comply with the order to provide security within the timeframe specified in order 2, the proceeding NSD 1451 of 2019 be stayed until order 2 is complied with.

4. The appellant pay the Commissioner’s costs of the interlocutory application, as agreed or assessed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

JAGOT J:

The proceedings

1. This is an interlocutory application by the respondent that the appellant give security for costs to the respondent in respect of the costs of, and incidental to, the appeal.

2. Security is sought in respect of costs incurred by the Commissioner from 24 December 2019 in the sum of $37,136.

3. The appeal is from the decision in Stallion (NSW) Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia [2019] FCA 1306 (the First Instance Decision), in which the primary judge dismissed the appellant’s application appealing against objection decisions by the respondent. The respondent’s objection decisions disallowed objections to amended assessments and assessments of shortfall penalties for the tax periods November 2016, December 2016 and January 2016. The amended assessments disallowed input tax credits under the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act) and luxury car tax (LCT) adjustments under the A New Tax System (Luxury Car Tax) Act 1999 (Cth) (LCT Act).

Principles Court’s power to order security for costs

4. There was no dispute between the parties in relation to the relevant principles.

5. The Court has power to order the payment of security for costs in appeal proceedings (see r 36.09 of the Federal Court Rules 2011 (Cth)).

6. As set out in the respondent’s written submissions, the primary purpose of an order for security for costs is to ensure that a successful party has protection for costs incurred in defending a proceeding: Capital Webworks Pty Ltd v Adultshop.com Ltd [2008] FCA 40 at [13].

7. The matter which lies at the heart of the discretion is one of fairness, both in terms of whether security should be granted, and if so, in what amount: Madgwick v Kelly [2013] FCAFC 61; (2009) 181 FCR 152 at [92].

8. It has been said that the Court’s power to make an order is broad and unconstrained except for the requirement that the power must be exercised judicially: Elston v Commonwealth of Australia [2014] FCA 704 at [32].

9. In Cooper v Universal Music Australia Pty Ltd [2006] FCA 642 at [11], it was said, citing Cowell v Taylor (1885) 31 Ch D 34 at [38], that:

Courts have given weight to the injustice that might be caused to a successful litigant if the litigant is compelled to contest the matter a second time without the probability of obtaining the costs if ultimately successful.

10. In Dye v Commonwealth Securities Limited [2012] FCA 992 at [26], relevant considerations were identified, including:

1. the prospects of success of the appeal;

2. the risk that a costs order will not be satisfied;

3. whether the making of an order for security would be oppressive insofar as it would stifle a reasonably arguable claim;

4. whether impecuniosity of the appellant arises out of the conduct that is the subject of complaint in the relevant matter;

5. whether there any aspects of public interest that weigh in the balance against granting security; and

6. whether there are any other particular discretionary matters peculiar to the circumstances of the case.

Discussion

11. Having considered the competing submissions of the parties in this matter, I am satisfied that when all relevant considerations are taken into account the discretion should be exercised by making an order that the appellant provide to the respondent the security in the amount sought in the interlocutory application. In so deciding, I have taken into account the following matters.

12. First, in this case, the appellant effectively admits that it cannot pay the respondent’s costs if the respondent is successful in the appeal.

13. Second, the appellant has already had the...