Commissioner of Taxation v Sims

The Commissioner of Taxation appealed to the Court of Appeal of New South Wales against an order made by the primary judge concerning indemnity for costs. The dispute arose after the Commissioner obtained orders against Mr and Mrs Sims (the liquidators) under section 588FF of the *Corporations Act 2001* (Cth). The Commissioner then sought an indemnity from Mr and Mrs Maine under section 588FGA(2) of the *Corporations Act 2001* for the costs she was obliged to pay the liquidators.

The central legal issue before the Court of Appeal was whether the indemnity available to the Commissioner under section 588FGA(2) for "any loss or damages" extended to recovering money paid under a costs order made in favour of the liquidators. This required the Court to interpret the scope of the indemnity provision in the context of a costs order arising from proceedings under section 588FF.

The Court of Appeal held that the indemnity under section 588FGA(2) was not limited to the Commissioner's direct losses but also encompassed liabilities incurred, including costs ordered to be paid to third parties. The Court reasoned that the purpose of section 588FGA(2) was to protect the Commissioner from financial detriment arising from the exercise of her powers under section 588FF, and this included liabilities for costs. The Court therefore allowed the Commissioner's appeal in part.

The Court ordered that Mr and Mrs Maine indemnify the Commissioner against the costs she was obliged to pay the liquidators. The Court also made orders regarding the costs of the appeal itself, with Mr and Mrs Maine to pay the Commissioner's costs of the appeal, and the Commissioner to pay the liquidators' costs of the appeal. Mr and Mrs Maine were also granted a certificate under the *Suitors' Fund Act 1951* if otherwise qualified.