Background
Soroush Safarimaznabi brought proceedings that included claims for whistleblower protection under the Taxation Administration Act 1953 (Cth), as well as claims under the Corporations Act 2001 (Cth) and the Fair Work Act 2009 (Cth). The respondents sought to strike out parts of his consolidated statement of claim. They were largely successful, although Mr Safarimaznabi received leave to replead most claims.
In Safarimaznabi v Commissioner of Taxation (No 2), the Court ordered Mr Safarimaznabi to pay the respondents’ costs of the strike-out applications, finding that the applications could have been avoided had he responded appropriately to correspondence about deficiencies in his pleading. He then sought to vary that order.
The Court’s Holding
Justice Derrington set aside the earlier costs order because neither the parties nor the Court had addressed s 14ZZZC of the Taxation Administration Act. That provision generally prevents a claimant seeking a tax-whistleblower remedy from being ordered to pay another party’s costs unless the proceeding was instituted vexatiously or without reasonable cause, or the claimant’s unreasonable act or omission caused the costs.
After reconsidering the issue under s 14ZZZC, the Court again ordered Mr Safarimaznabi to pay the respondents’ costs of the strike-out applications. His manner of responding to requests to correct the pleading—including incorporating voluminous evidence and submissions into purported particulars—was unreasonable and caused unnecessary costs. The respondents had made repeated efforts to assist him, including providing a tailored pleading template and warning that a strike-out application would follow. There was no order as to the costs of the variation application.
Key Takeaways
- A costs order may be set aside and remade where a statutory costs limitation was overlooked.
- Section 14ZZZC permits costs against a tax-whistleblower claimant where an unreasonable act or omission causes the other party to incur costs.
- Self-representation does not excuse an unreasonable failure to produce a comprehensible pleading after assistance and warnings.
Why It Matters
The decision applies the protective costs regime for tax-whistleblower proceedings while confirming that it does not shield claimants from costs caused by unreasonable conduct. It also illustrates that leave to replead does not break the causal link between defective pleading conduct and the costs of a necessary strike-out application.