Hyder v Commissioner of Taxation [2025] FCA 337

Federal Court of Australia|2025-04-10|Before: Goodman J

For the reasons set out above, I am far from persuaded that the primary judgment is attended by sufficient doubt.

I turn now to consider whether, if leave were refused, and the primary judge's decisions were wrong, the applicants would suffer substantial injustice.
In QUD 389, Mr Hyder submitted there would be substantial injustice by reason of the fact that he would be denied the benefit of a significant costs order to which he would otherwise be entitled. In this regard, in his affidavit in support of the application for leave to appeal in QUD 389, the solicitor for Mr Hyder deposed that: the costs incurred by Mr Hyder amount to approximately $500,000; and based upon his experience, he would expect Mr Hyder to recover approximately one-half of $500,000 on taxation of a bill of costs in the event that a costs order were made in Mr Hyder's favour.
In QUD 390, EMH IV submitted that there would be substantial injustice because the applicants would not be properly compensated for being unreasonably forced to commence or continue with the litigation. In his affidavit in support of the application for leave to appeal in QUD 390, the solicitor for EMH IV deposed that based upon his experience, he would expect EMH IV to recover: $250,000 under the existing order; and a further $250,000 if the costs order were framed as an order for costs on an indemnity basis. In other words, the substantial injustice is contended to be the deprivation of costs of $250,000.

In each proceeding there should be an extension of time to file the application for leave to appeal, and each application should be dismissed. Costs should follow the event. I will make orders accordingly.

I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Goodman.

Tax Assessment Act 1997

Tax Assessment Act 1936

Administration Act 1953

These reasons for judgment address applications for an extension of time and leave to appeal from costs orders made by a judge of this Court in two proceedings on 18 June 2024. His Honour's reasons for making those orders are set out in Hyder v Commissioner of Taxation [2024] FCA 654 (J).
In the first proceeding, QUD 389 of 2024, the applicant, Mr Hyder, is dissatisfied with the primary judge's order in proceeding QUD 558 of 2023 that there be no order as to costs.
In the second proceeding, QUD 390 of 2024, the applicant, EMH IV Pty Ltd, is dissatisfied with the primary judge's order in proceeding QUD 559 of 2023 that the respondent Commissioner pay EMH IV's costs on the usual basis, rather than on an indemnity basis.
For the reasons developed below, each applicant should be granted an extension of time; and each application for leave to appeal should be dismissed.

These events ultimately resulted in various proceedings in this Court and in the Administrative Appeals Tribunal. There was a judicial review proceeding determined by Greenwood J which was also the subject of an appeal: Hyder v Commissioner of Taxation [2022] FCA 264 and Hyder v Commissioner of Taxation [2023] FCAFC 29; 297 FCR 124. An application for special leave to appeal was dismissed: [2023] HCASL 99.
There were also five proceedings in this Court and two in the Tribunal each of which was listed for hearing for two weeks at the end of April and early May this year.
The first proceeding was Elton Matthew Hyder IV v Commissioner of Taxation (QUD 40 of 2021). This was Mr Hyder's appeal from the Commissioner's objection decision concerning the 2015 and 2016 years. The first issue in this proceeding concerned whether Div 7A of the Income Tax Assessment Act 1997 (Cth) applied to deem Mr Hyder to have received unfranked dividends from SEPL:

(1) at J[32] his Honour noted the reliance placed by the applicants upon Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd (No 5) [2021] FCA 246; (2021) 151 ACSR 26 at 28 to 29 [10] (Wigney J) but then noted at J[33] the following further passage from that judgment:

[11] Two things should perhaps be noted about these descriptions of the types of cases in which an indemnity costs order may be warranted. First, they use expressions which suggest a high degree of certainty concerning the deficiencies in the losing party's case. It would appear not to be enough that the losing party's case was simply weak or tenuous. Second, and relatedly, the deficiencies must be sufficiently manifest and clear such that it can be inferred that the losing party would or should have appreciated them when the action was commenced or continued, at least if they had given proper consideration to, or been properly advised about, the merits of their case.

[12] In assessing whether a case can be said to "have no chance of success", or to be "hopeless" or "foredoomed to fail", and that the losing party should have known that to be the case, it is also necessary to be wary of reasoning with the benefit of hindsight. As Goldberg J said in Re Kingsheath Club of the Clubs Ltd (in liq) [2003] FCA 1589 at [5] (Kingsheath Club), it is "easy with hindsight to make an observation that an action has no chance of success, after the matter has been fully argued and has enjoyed considered attention of experienced solicitors and senior and junior counsel". ;

The principles relevant to an application for leave to appeal are well-established and not in dispute on this application. Each applicant must demonstrate that the decision in respect of which leave to appeal is sought is attended with sufficient doubt to warrant reconsideration and that if leave were to be refused in circumstances where the decision is wrong there would be substantial injustice to that applicant: Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 844; (1991) 33 FCR 397 at 398 (Sheppard, Burchett and Heerey JJ).
A matter informing the exercise of the discretion to grant leave in the present case is that the orders in respect of which leave to appeal is sought are the product of the exercise of the Court's discretion with respect to costs. The caution to be exercised in review of such decisions is also well‑established: see, e.g., Waters v Commonwealth of Australia (Australian Taxation Office) [2015] FCAFC 46; (2015) 108 ACSR 445 at 446 to 448 ([8] to [10]) (Flick J, North and Katzmann JJ agreeing); Construction, Forestry, Mining and Energy Union v Australian Competition and Consumer Commission [2016] FCAFC 97; (2016) 242 FCR 153 at 158 [14] (Dowsett, Tracey and Bromberg JJ); Snowside Pty Ltd as trustee for the Snowside Trust, in the matter Boart Longyear Ltd [2019] FCA 2159 at [56] to [58] (Gleeson J); Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v MB [2021] FCAFC 194 at (Griffiths J, Thomas and Stewart JJ agreeing); at to [6] (Perram, Downes and O'Sullivan JJ).

It is convenient to address proposed grounds (1)(a) to (c) by reference to the particulars thereto and to then consider proposed ground (1)(d).
As is apparent from the proposed grounds of appeal set out at [13] above, proposed grounds (1)(a) to (c) seek to challenge the primary judge's exercise of the costs discretion based upon the principles described in House v The King [1936] HCA 40; (1936) 55 CLR 499 at 505 to 506 (Dixon, Evatt and McTiernan JJ).

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