Gumm v Commissioner of Taxation

In the Federal Court of Australia, the Commissioner of Taxation has applied for an order requiring Mr Gumm to provide security for costs in the amount of $608,692.52 in relation to a taxation appeal brought under section 14ZZ of the Taxation Administration Act 1953 (Cth). The Commissioner seeks to have the proceedings stayed or dismissed if any security ordered is not provided within 14 days. Mr Gumm opposes the application. The primary issue the court must determine is whether an order for security for costs should be made in these circumstances.

The court considered whether there exists a risk that Mr Gumm will not satisfy any order for costs if he fails in the proceedings. It was common ground that Mr Gumm is pursuing litigation in Australia but resides in another country and has few assets here against which a costs order could be enforced, but substantial assets in overseas locations. The court found that the fact that Mr Gumm is a foreign resident and has no assets within Australia is a circumstance of great weight in determining whether an order for security for costs should be made. Although this factor is not decisive, it was not displaced by any countervailing circumstances in these proceedings.

The court found that the Commissioner is entitled to an order that Mr Gumm provide security for costs in the amount of $450,000. The security may be provided by payment into Court or by an irrevocable bank guarantee in the sum of $450,000 from one of the four major Australian banks. The proceedings are to be stayed pending the provision of the security. Mr Gumm is to pay the Commissioner’s costs of the application.

The orders of the court are that Mr Gumm provide security for the Commissioner’s costs in the amount of $450,000 within 14 days of the date of this order, the security to be provided by payment into Court or by an irrevocable bank guarantee in the sum of $450,000 from one of the four major Australian banks, that the proceedings be stayed pending the provision of the security, and that Mr Gumm pay the Commissioner’s costs of the application.