Deputy Commissioner of Taxation v Ho

Catchwords: CIVIL PROCEDURE — application for a stay of tax recovery proceedings — where Part IVC appeals and judicial review proceedings are pending in the Federal Court and Administrative Review Tribunal — whether the defendant taxpayer would suffer extreme personal hardship — clear legislative policy that Commissioner be free to pursue recovery proceedings despite outstanding appeals and reviews — whether granting the stay would facilitate the just, quick and cheap resolution of the real issues in dispute

Legislation Cited: Civil Procedure Act 2005 (NSW), s 56
Evidence Act 2005 (NSW), s 75
Taxation Administration Act 1953 (Cth), pt IVC, s 14ZZM

Cases Cited: Deputy Commissioner of Taxation v Australian Machinery & Investment Co Pty Ltd (1945) 8 ATD 133
Deputy Commissioner of Taxation v Denlay (2010) 80 ATR 109; [2010] QCA 217
Scanlon v American Cigarette Co (Overseas) Pty Ltd (No 1) [1987] VR 261
Southgate Investment Funds Ltd v Deputy Commissioner of Taxation (2013) 211 FCR 274; [2013] FCAFC 10
Trade World Enterprise Pty Ltd v Deputy Commissioner of Taxation (Cth) (2006) 64 ATR 316; [2006] VSCA 191

Category: Procedural rulings

Parties: Deputy Commissioner of Taxation (Plaintiff)
Ricky Ho (Defendant)

Representation: Counsel:
S Lloyd SC, E Chan (Plaintiff)
C Ensor, J Nixon (Defendant)
Solicitors:
Australian Government Solicitor (Plaintiff)
GWH & Associates (Defendant)

File Number(s): 2025/246276

Publication restriction: No

JUDGMENT

Introduction

1. There are two notices of motion before the court. The first in time was filed by the defendant on 7 August 2025. It is supported by an affidavit of the defendant’s solicitor, Mr Jeffrey Wang, dated 7 August 2025. Mr Wang also filed affidavits dated 18 September 2025, 17 November 2025 and 11 March 2026, respectively.

2. The defendant’s motion seeks a stay of the whole of the proceedings pending the completion of related proceedings in the Federal Court and in the Administrative Review Tribunal (the ART). These are mostly Part IVC and judicial review proceedings, the former under the Taxation Administration Act 1953 (Cth).

3. The second motion was filed by the plaintiff on 10 March 2026 and is supported by an affidavit of Mr Cameron Morrison dated 9 March 2026. Mr Morrison is a solicitor working for the Australian Government Solicitor. The plaintiff also relied on four affidavits of Mr Drew Hodgetts, dated 14 October 2025, 15 October 2025, 16 of October 2025 and 24 February 2026, respectively. Mr Hodgetts is employed by the Australian Taxation Office (the ATO).

4. The plaintiff’s notice of motion, primarily, seeks the determination of a separate question, and then, if a separate question is allowed, that it be stayed until after the determination of the disputes in the Federal Court relating to Easy Pay Pty Ltd (Easy Pay) and the defendant’s director penalty liability.

5. The separate question is:

“Whether the Defendant owes a debt to the Commonwealth of Australia and payable to the Commissioner of Taxation for tax-related liability comprised of director penalties totalling $58,940,147.23 (as at 27 June 2025) as pleaded in paragraphs 1 to 11 of the Statement of Claim filed on 27 June 2025.”

6. It was made clear that the separate question was effectively a device to allow for the stay of the Easy Pay dispute. As an alternative to the ordering of a separate question, the plaintiff’s motion seeks the amendment of the statement of claim, effectively to not pursue the claim arising from the allegations against Easy Pay, which in turn have allegedly created a liability on the part of the defendant.

7. The plaintiff said that the two motions should be heard together because of the significant overlap in the matters they covered. Further, the plaintiff’s motion actually included a concession to the defendant as to the staying of a significant part of the plaintiff’s claim.

8. The defendant objected to the hearing of the plaintiff’s motion, stating that it had only recently been filed, the defendant was not in a position to meet the motion, and that the plaintiff’s motion was listed only for directions.

9. I was somewhat surprised by the defendant’s attitude, bearing in mind the close relationship between the motions and the fact that the plaintiff’s motion included allowing a stay of the majority of the plaintiff’s claim. Nevertheless, I did not feel in a position to force the defendant to deal with the recently served motion, and so proceeded to hear only the defendant’s motion. I will return below to appropriate orders that should be made in respect of the plaintiff’s motion.

The primary proceedings

10. I think it necessary to first of all give a description of the constitution of the statement of claim, which had been filed on 27 June 2025.

11. The proceedings seek judgment for alleged tax related debts owed by the defendant in the amount of $66,508,209.66 plus costs. The allegations against the defendant may be split into five distinct categories, each of which I will briefly summarise:

12. Easy Pay has been assessed to pay almost $60 million in outstanding tax obligations. The company has not met these obligations so that its director (the defendant) has become liable for the debt. This is called a director’s penalty liability. The amount owed under this category is 89% of the whole of the amount being claimed by the plaintiff from the defendant in these proceedings.

13. The defendant has personal tax debts which he has partially successfully reduced by way of objection. As at 14 October 2025 the income tax liability was $2,482,140.66.

14. The plaintiff is claiming a shortfall interest charge which is derived from the defendant allegedly underestimating his tax debt. The liability, again as at 14 October 2025, was $174,432.98.

15. Next there is an administrative penalty liability of $2,167,485.64, also as at 14 October 2025.

16. Finally, there is a Division 293 tax liability (derived from superannuation levies imposed upon high income earners). The claim here is $3,237.50.

17. The total of categories (2) to (5) is $4,827,296.78. These may be described as the defendant’s personal tax liabilities. The assessments giving rise to these liabilities are the subject of review in the ART. The ART proceedings seem to be at a relatively early stage. No evidence has been put on by either party.

18. The director’s penalty liability (category 1, above) is the subject of proceedings in the Federal Court. Similarly, this proceeding has not yet seen the filing of evidence.

The defendant’s application for a stay

14. Because of the possibility of success in one or both of the ART and the Federal Court, the defendant, by his notice of motion, seeks a stay of the proceedings in this court pending the outcome of the review and appeals.

15. The defendant submitted that there were five reasons why he should be granted a stay. Before setting them out it is important to remember that under the tax legislation current assessments are treated as conclusive evidence of the debts, and the Commissioner is not required to wait for the resolution of any challenges. For example, s 14ZZM of the Taxation Administration Act 1953 (Cth) states:

Pending review not to affect implementation of taxation decisions

(1) The fact that a review is pending in relation to a taxation decision does not in the meantime interfere with, or affect, the decision and any tax, additional tax or other amount may be recovered as if no review were pending.

(2) However, the application of subsection (1) in relation to a small business taxation assessment decision is subject to any order made under subsection 32(2) of the ART Act.

16. The five reasons for a stay, put forward by the defendant, were:

17. The extreme hardship that would be suffered by the defendant if a stay was not granted.

18. There was no legislative policy that said proceedings could not be stayed.

19. A stay would ensure the efficient disposal of the proceedings, as required by s 56 of the Civil Procedure Act 2005 (NSW).

20. The defendant had an arguable case in its ART and Federal Court litigations.

21. The plaintiff had conceded the stay in respect of the largest tax obligation (the directors’ penalties of almost $60 million) so that it was appropriate for the whole of the proceedings to be stayed so as to avoid piecemeal litigation. A holistic approach was suggested.

22. The plaintiff rejected each of the above five reasons as justifying a stay. I will deal with each in turn, although reasons (3) and (5) will be dealt with together.

23. Extreme hardship: The defendant submitted that he had assets worth $9,270,197 but liabilities of $6,128,258. The bulk of the assets was made up of two properties, in one of which the defendant resided. The defendant’s net worth was $3,141,939. Because the personal tax liabilities were (about) $4.8 million, judgment obtained for this amount would render the defendant ‘out of home’ and unable to fund the various legal proceedings in which he was engaged. These consequences amounted to extreme financial hardship.

24. The defendant relied upon a statutory declaration made on 15 July 2025, together with a Statement of Financial Position as at 9 July 2025, to describe his financial position. The plaintiff said these documents could not be relied upon as accurate indicators of the defendant’s finances because:

25. The defendant had not put on an affidavit about his finances and therefore could not be cross-examined.

26. The evidence was in hearsay form.

27. The calculation of assets was deficient in that it ignored the defendant’s interest in two companies (Easy Pay Group Pty Ltd and Peirson Partners Pty Ltd) in both of which he held 100% of their shareholding and the companies had a respective net asset value of $3 million and $373,613. If these amounts were added to the defendant’asserted net worth, the total would exceed the personal tax liabilities.

28. The Statement of Financial Position was deficient in that it did not disclose any income being earned by the defendant. This was against the background of his income tax returns showing a taxable income in the 2024 tax year of $700,026, and a taxable income in the 2025 tax year of $502,902.

29. The defendant responded to the four points made in the previous paragraph in this way. The stay motion was an interlocutory proceeding which did not require the filing of an affidavit by the defendant and, in any event, cross-examination in interlocutory proceedings is only sparingly allowed. This point is illustrated by Scanlon v American Cigarette Co (Overseas) Pty Ltd (No 1) [1987] VR 261 at 272. Further, s 75 of the Evidence Act 2005 (NSW) states:

In an interlocutory proceeding, the hearsay rule does not apply to evidence if the party who adduces it also adduces evidence of its source.

21. As to the two companies, the defendant pointed out that the registration of Peirson Partners Pty Ltd as a tax agent had been terminated by the Tax Practitioners Board so that the defendant’s income has been “severely impacted”. As to Easy Pay Group Pty Ltd, it had a 100% interest in Easy Pay which, presumably because of the tax debt, had no value at all. Easy Pay Group Pty Ltd also had an interest in Topay Fintech Pty Ltd, but this was only a 25% interest, and this company’s net asset value was $50,000.

22. In my view the matters raised by the plaintiff did not dislodge the conclusion that the defendant’s net assets were well below his personal tax debts to the plaintiff so that if judgements for these debts were enforced against him, the defendant would have no assets nor any ability to fund his assorted litigation. In D**eputy Commissioner of Taxation v Denlay (2010) 80 ATR 109; [2010] QCA 217, Chesterman JA, in the Queensland Court of Appeal, said, at [50]:

“This leads to the appellant’s third point, that the loss of their property and consequent inability to prosecute their appeals does not constitute extreme personal hardship. The point may be answered shortly. It is preposterous to contend that the loss of the respondents’ entire estate, and with it any chance of demonstrating that the basis for the assessments was wrong so that they should not have lost their property, could not be a hardship rightly called extreme. It is not easy to imagine a greater hardship in this context. Certainly the primary judge cannot be criticised for so regarding it.”

23. The plaintiff responded by referring to one of the general principles for the granting of a stay in taxation matters, as set out in Southgate Investment Funds Ltd v Deputy Commissioner of Taxation (2013) 211 FCR 274; [2013] FCAFC 10, a decision of the Full Court of the Federal Court of Australia. The Court listed the general principles at [77], one of which is:

“(i) due acknowledgment should be given to the asperity with which provisions such as ss 14ZZM and 14ZZR may operate, but in appropriate circumstances a court might consider that a stay is warranted in cases of extreme hardship to a taxpayer, noting however that:

(i) the mere obligation to pay income tax of itself does not impose extreme hardship; and

(ii) the possibility that the taxpayer may be bankrupted is generally not of itself an extreme hardship, however, different considerations may arise if, for example, it is demonstrated that the execution of a judgment debt would deprive the taxpayer of the financial resources needed to prosecute extant Part IVC proceedings;”

24. The plaintiff submitted that the descent into extreme hardship of this defendant would be a product of his obligation to pay income tax. Accordingly, he could not rely on his financial position.

25. The defendant responded that his Part IVC proceedings would be impacted because he would be deprived of the “financial resources needed to prosecute” the future proceedings.

26. Legislative policy. The defendant conceded that the relevant legislation did not require the collection of tax to await any objections or appeals. The defendant also conceded that the legislation disclosed an intent to permit collection of tax notwithstanding any appeals.

27. The plaintiff again referred to Southgate*,* and in particular to this principle, also listed at [77]:

“(b) great weight must be given to the clear legislative policy manifested in provisions such as ss 14ZZM and 14ZZR of the TAA which give priority to the recovery of taxation revenue notwithstanding that a taxpayer has a Part IVC proceeding on foot. The Commissioner is placed by the legislation in a position of special advantage and is generally free to pursue recovery proceedings despite the pendency of Part IVC proceedings;”

28. The defendant said that whether there be a policy or an intent, a stay was not always excluded, especially against a background of established extreme hardship.

29. The defendant relied upon D**eputy Commissioner of Taxation v Australian Machinery & Investment Co Pty Ltd (1945) 8 ATD 133, at p 135. The plaintiff referred to this passage from Trade World Enterprise Pty Ltd v Deputy Commissioner of Taxation (Cth) (2006) 64 ATR 316; 2006] VSCA 191, at [19]-[20]:

“19. As the High Court stated in Clyne v. Deputy Commissioner of Taxation (N.S.W.), the legislative scheme established in relation to tax recovery, as manifested in provisions like s.14ZZM of the Taxation Administration Act 1953, reflects a clear policy in favour of the Revenue against the taxpayer. The Commissioner is placed by the legislature in a position of special advantage and thus in general is free to pursue recovery proceedings, despite outstanding appeals and reviews against the disallowance of objections.

20. So to say is not to deny that this court has jurisdiction to stay recovery proceedings pending review of a disallowance of objection against assessments. It is clear that it does. But high authority makes plain that the policy of the legislation, as stated in provisions like s.14ZZM, is a matter to which great weight must be attached.”

30. I think the defendant may have overstated the extent of a Court’s capacity to override the legislative policy, but I do accept there is a discretion to do so and one factor which is of relevance is extreme hardship and its consequences.

31. Efficient disposal of the proceedings and a holistic approach. The point here is quite simple. The plaintiff has accepted that there should be a stay in respect of the director’s penalty tax claim so that if the other (personal tax) claims were not joined into the stay, then progress of the litigation will necessarily involve two separate hearings and consequently much more time and expense than a single hearing.

32. I think there is merit in the defendant’s submission, but I also think a point made by the plaintiff is relevant. The plaintiff submitted that if all claims were the subject of a stay, then there could be an unjust delay if the Federal Court hearing was completed well before the ART hearing, or vice versa, so that one set of claims would need to lie in abeyance, perhaps for a very long time, until the other claims were resolved.

33. In addition, if for example one side or other appealed against the findings in either the Federal Court or the ART, the delay for the other claims could be substantial.

34. Arguable case. Evidence has not yet been filed in either of the Federal Court or ART proceedings. The defendant had some success in an earlier objection, but this cannot be seen as a predictor of future success. I was informed that success in the ART might extinguish the whole of the defendant’s personal taxation debts. The most I can take from this fact is that success in the ART could have a profound result.

35. There is however no way to gauge whether the case to be put on behalf of the defendant in the ART has any merit or is even arguable.

36. Returning to the principles stated in Southgate, the following are relevant at [77]:

“(c) the merits of pending Part IVC proceedings may be a relevant consideration to be taken into account in the exercise of the discretion, but the court should not attempt to determine the merits unless it has sufficient material before it to do so and it should avoid speculation;

(d) in cases where a judge is unable to form even a tentative view of the strength of Part IVC proceedings, it is unlikely that the judge’s discretion in refusing a stay will miscarry by reason only of the judge being unable on the material before him or her to reach a view as to the taxpayer’s prospects of success in having the assessment overturned;”

37. Perhaps the inability to establish whether the defendant has an arguable case in the Part IVC appeals (but especially to the ART because the stay in respect of the Federal Court proceedings is conceded) should be treated as a neutral factor not favouring either party. However, the first two principles in Southgate probably mitigate against neutrality and favour the plaintiff because the defendant has not established an arguable case. The first two principles at [77] state:

“(a) the power to grant a stay should be exercised sparingly and the taxpayer bears the onus of persuading the Court that a stay ought to be granted in the particular circumstances;

(b) great weight must be given to the clear legislative policy manifested in provisions such as ss 14ZZM and 14ZZR of the TAA which give priority to the recovery of taxation revenue notwithstanding that a taxpayer has a Part IVC proceeding on foot. The Commissioner is placed by the legislation in a position of special advantage and is generally free to pursue recovery proceedings despite the pendency of Part IVC proceedings;”

The plaintiff’s notice of motion

38. As already mentioned, the plaintiff’s notice of motion significantly overlaps with the defendant’s motion and includes a major concession to the defendant, namely that the question of the defendant’s tax liabilities comprised of director penalties should be stayed until the completion of the Federal Court proceedings.

39. After discussion with learned senior counsel for the plaintiff it was agreed that the only logical approach to take to the plaintiff’s notice of motion was to dismiss the motion with no order as to costs. The defendant did not demur.

Conclusion

40. Summarising the various factors that might influence my discretion as to whether or not to grant a stay, the rendering of extreme hardship upon the defendant emerges as the strongest factor in his favour. Were it the only factor I do not think it would surpass the “clear legislative policy” to give “priority to the recovery of taxation revenue notwithstanding that a taxpayer has a Part IVC proceeding on foot” (Southgate at [77]).

41. I do however think that the defendant, on delicate balance, should get the stay requested because of the combination of extreme hardship with the need to progress the litigation in a “just, quick and cheap” manner.

42. In granting the stay, I also think the plaintiff’s point about unnecessary delay if one avenue of appeal is completed well before the other should be taken into account. I will do so through the orders, although I recognise that this approach might necessitate the defendant having to return to court with another motion to extend the stay. That is however preferable to sanctioning two separate hearings.

43. For clarity, the intent of Orders (1)(a) and 1(b) below, is that upon the stay approaching its end date, the defendant will have ample time to approach the Court for an extension of the stay either generally or limited to either of that part of the proceedings connected to the director's penalty assessment (the Federal Court matters) or to the personal assessments (the ART matters).

44. In relation to costs, the defendant said that he should be awarded costs of his notice of motion if he succeeded. The plaintiff submitted that costs should be reserved. The defendant was successful in obtaining a stay, but it was not, in respect of duration, to the extent that had been sought.

45. In endeavouring to reach a just result on costs, the defendant needed to approach the court to obtain the stay and in doing so, seemingly rejected the plaintiff’s offer to at least stay the penalty proceedings.

46. I think costs of the defendant’s motion should be costs in the cause.

Orders

47. I make the following orders:

48. In the defendant’s notice of motion filed on 7 August 2025 and pursuant to s 67 of the Civil Procedure Act 2005 (NSW) the proceedings are stayed until the earlier of 9am on the 21st day after:

(a) The determination of the disputes in the Federal Court bearing proceeding numbers NSD 415 and NSD 417, or (b) The determination of the proceedings filed by the defendant in the Administrative Review Tribunal in connection with the plaintiff’s objection decision dated 25 July 2025 in respect of the defendant. (c) The costs of the notice of motion are to be costs in the cause.

2. In the plaintiff’s notice of motion filed on 10 March 2026:

(a) The notice of motion is dismissed. (b) No order is made as to the costs of the notice of motion.

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