Elias v Smidt (No 2)

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.