Oswal v Commissioner of Taxation (No 2)

The case of Oswal v Commissioner of Taxation (No 2) involved Radhika Pankaj Oswal and Pankaj Oswal, who were challenging tax assessments by the Commissioner of Taxation. The applicants had entered into litigation funding agreements and mortgaged or assigned assets to the funder. The Commissioner sought an order for the applicants to provide security for his costs in the proceedings, arguing that the applicants' financial position did not provide a real prospect of being able to pay his costs if they were unsuccessful. The applicants argued that they had sufficient assets in Australia to cover the Commissioner's costs, and that the tax debts should not be considered in assessing the real prospect of being able to pay costs.

The court was required to decide whether the applicants should be required to provide security for the Commissioner's costs, and if so, what amount should be ordered. The court considered the applicants' financial position, including the assets that were mortgaged or assigned to the funder, and the tax debts that were the subject of challenges in the proceedings. The court found that the applicants' only assets of any real value were either mortgaged to the funder or were the subject of assignments to the funder. The court also found that the tax debts, although arguably made in error, were a matter of considerable significance on the present application.

The court ordered that the applicants provide security for the Commissioner's costs in the amount of $1,200,000, to be provided within 28 days by paying the sum into Court or lodging a bank guarantee. The court also gave the Commissioner liberty to apply for a stay or dismissal of the proceedings if the security was not provided within the specified time. The court noted that the relevant sum represented the total amount of security to be provided by the applicants in respect of the Commissioner's costs in the proceedings. The applicants were also ordered to pay the Commissioner's costs of the interlocutory application seeking security for costs.