Hii v Federal Commissioner of Taxation (No 3)

In the matter of Hii v Federal Commissioner of Taxation, the Federal Court considered an application for security for costs under section 56 of the Federal Court of Australia Act 1976. The applicant, Mr Yii Ann Hii, opposed claims made by the Federal Commissioner of Taxation, who sought security for costs due to concerns over Mr Hii’s ability to pay any costs awarded against him. Mr Hii argued that his case was reasonably arguable and essentially defensive, and he had offered arrangements to provide access to his assets in Australia. The Commissioner, however, maintained that Mr Hii’s foreign residency and limited assets in the jurisdiction warranted an order for security.

The court addressed several key legal issues, including the nature of Mr Hii’s case as essentially defensive and the relevance of his foreign residency to the application for security. The court also considered whether Mr Hii’s conduct warranted an order for security. In exercising its discretion, the court referred to established principles, noting that the discretion to order security for costs is broad and must be exercised judicially. The court examined the particular circumstances of the case, including the strength of the applicant’s case, the availability of assets within the jurisdiction, and the likelihood of enforcing a judgment abroad.

After careful consideration, the court determined that the applicant’s case was reasonably arguable and that he had provided adequate arrangements to cover potential costs. However, the court found that the applicant’s foreign residency and limited assets in Australia warranted an order for security. The court ordered Mr Hii to pay $400,000 by way of security for costs by a specified date, with the proceedings to be stayed until the security was provided. The court also ordered Mr Hii to pay the Commissioner’s costs of the interlocutory application on a party-party basis and stipulated that the proceedings would be dismissed if Mr Hii failed to comply with the order for security.