Elias v Smidt (No 2) - [2025] NSWSC 1008

Supreme Court

New South Wales

Medium Neutral Citation: Elias v Smidt (No 2) [2025] NSWSC 1008
Hearing dates: 1 September 2025
Decision date: 01 September 2025
Jurisdiction: Equity
Before: Leeming JA
Decision:
1. Dismiss paras 1-4 of the notice of motion filed 13 August 2025.
2. Note that by 4pm on Wednesday, 3 September 2025 I will notify the parties of any decisions concerning the recoverability of costs by legal practitioners employed in law practices owned and controlled by them with a view to Mr Elias providing any response by 4pm Friday, 5 September 2025.
3. Otherwise, reserve determination on Mr Elias’ application for a gross sum costs order.

Catchwords:
PRACTICE – indemnities – plaintiff entitled to indemnity from former director in respect of company’s tax liabilities – plaintiff disputed liability – ATO not presently seeking to enforce its claim – whether plaintiff entitled to enforce against former director on terms that money recovered be used to pay tax debt

Legislation Cited:
Australian Consumer Law ss 236, 237
Corporations Act 2001 (Cth) ss 436A, 436B, 436C, 453, 453B
Legal Profession Uniform Law Application Regulation 2015 reg 60
Taxation Administration Act1953 (Cth) sch 1 s 269-35

Cases Cited:
Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29
Calderbank v Calderbank [1975] 3 All ER 333
Cassaniti v Katavic(No 2) [2023] NSWCA 107
Crystal Auburn Pty Ltd v I L Wollerman Pty Ltd [2001] FCA 735
Elias v Smidt [2025] NSWSC 762
Firma C-Trade SA v Newcastle Protection and Indemnity Association [1991] 2 AC 1
Jonval Builders Pty Ltd v Commissioner for Fair Trading (2020) 104 NSWLR 1; [2020] NSWCA 233
Nadinic v Drinkwater (2017) 94 NSWLR 518; [2017] NSWCA 114
S&A Law Pty LtdvPasquini [2025] NSWSC 728
Spencer v Coshott (2021) 106 NSWLR 84; [2021] NSWCA 235
Travers v Richardson (1920) 20 SR (NSW) 367
Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520; [2001] HCA 53

Category: Consequential orders
Parties: Charbel Elias (Plaintiff)
Lee Smidt (First Defendant)
Just Law Group Pty Ltd (Second Defendant)
Representation:
Counsel:
MJ Jones (Plaintiff)
Solicitors:
Saile Law Pty Ltd (Plaintiff)

File Number(s): 2025/00144117
Publication restriction: Nil

ex tempore JUDGMENT

LEEMING JA: By notice of motion filed on 13 August 2025, the plaintiff, Mr Charbel Elias, seeks the following orders consequent upon orders earlier made in his favour on 14 July 2025 in the nature of a default judgment: Elias v Smidt [2025] NSWSC 762. The orders made on that occasion were as follows:

1. Judgment in favour of the plaintiff against the first and second defendants in the amount of $225,161.29.
2. The judgments in order 1 are in the nature of default judgments and in substance reflect an entitlement to indemnity by the first and second defendants in respect of the unpaid liability of the plaintiff for Director’s Penalty Notices issued in respect of the second defendant.
3. Consistently with order 2 above, the plaintiff may take…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2025] NSWSC 1008
Decision Date: 01 September 2025

CaseChat Overview and Summary

The Elias v Smidt (No 2) case involved the plaintiff, who was seeking to enforce an indemnity from a former director of a company against the tax liabilities of the company. The dispute arose because the plaintiff had previously been granted leave to seek such an indemnity, but the application was dismissed on the basis that the plaintiff had not yet disputed the liability. The Australian Taxation Office (ATO) was not currently seeking to enforce its claim against the plaintiff. The plaintiff sought to enforce the indemnity against the former director on the condition that any money recovered be used to pay off the tax debt. The court was required to determine whether the plaintiff was entitled to enforce the indemnity under these circumstances.

The court held that the plaintiff was not entitled to enforce the indemnity against the former director. The court reasoned that the plaintiff had not yet disputed the liability and the ATO was not presently seeking to enforce its claim. The court found that the plaintiff's application was an attempt to enforce an indemnity for a tax debt that had not yet been disputed. The court held that the plaintiff was not entitled to enforce the indemnity on terms that any money recovered be used to pay off the tax debt. The court found that the plaintiff's application was an abuse of process and an attempt to circumvent the requirement that the plaintiff dispute the liability before seeking to enforce the indemnity. The court dismissed the application and ordered the plaintiff to pay the defendant's costs.

Orders