A Deputy Commissioner has been successful in her application to be indemnified by husband and wife taxpayers in respect of costs sought by liquidators in their successful application to have declared “voidable” various payments of tax made to the Deputy Commissioner by a company of which the taxpayers were directors.
The Deputy Commissioner had previously been successful seeking an indemnity from the taxpayers in respect of the payments she was ordered to make to the liquidators. However, she was unsuccessful in obtaining an indemnity from them in respect of her liability for the costs of the liquidators.
However, on appeal, the Court of Appeal of the Supreme Court of NSW allowed the Deputy Commissioner’s claim for indemnification for the liquidator’s costs.
It did so on the grounds that a Deputy Commissioner was entitled to be indemnified “in respect of any loss or damage resulting from” a voidable transaction order – and that in terms of s 588FF of the Corporations Act 2001, this included any legal costs and interest that a Deputy Commissioner may be ordered to pay a liquidator in unsuccessfully defending a claim.
FCT v Sims  NSWCA 298, Court of Appeal, NSW Supreme Court, Beazley JA, Ipp JA, Macfarlan JA, 26 November 2008.