Background
The Deputy Commissioner of Taxation brought proceedings to recover monetary penalties allegedly incurred by Orazio Salvatore D’Arro in his capacity as a company director under the Taxation Administration Act 1953 (Cth). The Deputy Commissioner sought summary judgment on the narrow question whether the facts relied upon by D’Arro could support the statutory defence in s 269-35 of Schedule 1.
On 8 June 2026, the Court dismissed the summary-judgment application and invited written submissions on costs. Each party sought its costs on the standard basis. The Deputy Commissioner argued that D’Arro’s success depended on indulgences concerning unpleaded matters and a late affidavit, while D’Arro argued that costs should follow the event because he had successfully resisted the application.
The Court’s Holding
McCafferty J declined to award costs immediately to either party. The Court ordered that each party’s costs of the summary-judgment application be its costs in the proceeding, meaning responsibility for those costs will depend on the ultimate outcome of the litigation.
The Court rejected the Deputy Commissioner’s contention that summary judgment had been refused because D’Arro received two costs-justifying indulgences. The Court had not granted assumed leave to amend the defence, because unpleaded facts could be considered when determining whether summary judgment should be refused and D’Arro did not require leave to amend. Although the affidavit was served late, the Deputy Commissioner neither opposed its use nor sought an adjournment, and the late material was not the sole basis for refusing summary judgment.
The Court also refused D’Arro’s request for costs. The ordinary costs approach following a failed summary-judgment application is not simply that costs follow the immediate event. Nothing showed that the Deputy Commissioner acted unreasonably in bringing or maintaining the application, particularly because the late evidence likely left insufficient time to assess its effect and questions concerning the strength and reliability of D’Arro’s evidence remained for trial.
Key Takeaways
- When summary judgment is refused, the usual order may be that the application’s costs follow the result of the principal proceeding rather than being awarded immediately to the successful respondent.
- A court may consider facts outside the existing pleadings when deciding whether a defendant has a real prospect of defending the claim; doing so does not necessarily amount to granting an indulgence.
- A party arguing that late evidence warrants a favorable costs order may be disadvantaged if it did not object to the evidence or seek an adjournment when the material was tendered.
Why It Matters
The decision illustrates the distinct costs principles governing unsuccessful summary-judgment applications in Queensland. Refusal of summary judgment does not determine the ultimate merits, so the respondent’s interlocutory success will not automatically produce an immediate costs award.
For litigators, the ruling also emphasizes the practical importance of responding promptly to late evidence. A party that proceeds without objection or an adjournment request may struggle to characterize the opposing party’s reliance on that evidence as an indulgence warranting costs.