Commissioner of Taxation v Warner (No 2)

In the case of Commissioner of Taxation v Warner (No 2), the dispute involved the liquidators of respondent companies who refused to comply with a notice issued by the Commissioner of Taxation under the Income Tax Assessment Act 1936 and the Taxation Administration Act 1953. The liquidators argued that these Acts were in conflict with the Corporations Act 2001 and that they would not comply with the notice unless a court order was obtained. The Commissioner had no choice but to initiate proceedings. The liquidators filed a submitting appearance except as to costs, reserving their right to argue on the matter of costs. The court had to decide whether to exercise its discretion to deprive the Commissioner of his prima facie entitlement to costs and whether to award costs against the liquidators personally.

The court examined the legal principles governing the award of costs, noting that the general rule is that a successful party is entitled to its costs. The court considered the unusual circumstances of the case, where the liquidators filed a submitting appearance but did not immunise themselves against an adverse costs order. The court also noted that the liquidators' position was more akin to that of liquidators who had instituted proceedings, and thus they should assume the risk. The court concluded that the interests of justice, including the interests of creditors, were best served by awarding costs against the liquidators personally. Consequently, the court ordered the liquidators to pay the Commissioner's costs and the costs incurred by the Commissioner in arranging for counsel to appear as amicus curiae.