Commissioner of Taxation v Moodie

The appeal concerned a dispute arising from the winding up of a company. The liquidator of the company sought to recover an alleged unfair preference from the Commissioner of Taxation under section 588FF of the *Corporations Act 2001* (Cth). The Commissioner, in turn, joined the company's director to the proceedings, seeking an indemnity under section 588FGA of the *Corporations Act 2001* (Cth). The proceedings were before the Court of Appeal of New South Wales, with McColl, Meagher and Barrett JJA presiding.

The central legal issue before the Court of Appeal was whether the primary judge had erred in ordering the Commissioner to pay the liquidator's costs, particularly after the Commissioner had withdrawn its defence to the liquidator's claim. The director had initially raised the issue of insolvency but subsequently withdrew their defence.

The Court of Appeal considered the implications of the Commissioner's withdrawal of its defence. The Court reasoned that the Commissioner's withdrawal of its defence to the liquidator's claim, while not admitting liability, significantly altered the landscape of the proceedings. The Court applied principles relating to the award of costs, noting that costs generally follow the event, but that a court has discretion to depart from this principle. In this instance, the Court found no error in the primary judge's decision to order the Commissioner to pay the liquidator's costs, given the Commissioner's conduct in the litigation.

The Court of Appeal granted leave to appeal, but ultimately dismissed the appeal, ordering the appellant (the Commissioner) to pay the respondents' costs.