Federal Court of Australia Gumm v Commissioner of Taxation (No 2) [2024] FCA 72 File number: QUD 428 of 2022 Judgment of: DERRINGTON J Date of judgment: 14 February 2024 Catchwords: PRACTICE AND PROCEDURE – costs – application for costs thrown away by amendment of appeal statement in tax appeal – scope of recoverable costs – whether costs claimed were shown to have been wasted Legislation: Federal Court of Australia Act 1976 (Cth) Income Tax Assessment Act 1936 (Cth) Taxation Administration Act 1953 (Cth) Federal Court Rules 2011 (Cth) Cases cited: Cassimatis v Australian Securities and Investments Commission (2016) 334 ALR 350 McKellar v Container Terminal Management Services Ltd [1999] FCA 1639 Stanley v Layne Christensen Company [2006] WASCA 56 Watson v Kriticos (Costs Payable Forthwith) [2022] FCA 4 Zircon Australia Pty Ltd v BCC Trade Credit Pty Ltd trading as Bond and Credit Co [2023] FCA 636 Quick on Costs (Westlaw, online, 2023) Division: General Division Registry: Queensland National Practice Area: Taxation Number of paragraphs: 56 Date of last submissions: 4 October 2023 Date of hearing: 5 and 18 September 2023 Counsel for the Applicant: Mr J Hyde Page Solicitor for the Applicant: HPJ Lawyers & Tax Specialists Counsel for the Respondent: Dr J Jacques KC with Ms C Ensor Solicitor for the Respondent: Australian Government Solicitor ORDERS QUD 428 of 2022 BETWEEN: DARRYL STUART GUMM Applicant AND: COMMISSIONER OF TAXATION Respondent order made by: DERRINGTON J DATE OF ORDER: 14 FEBRUARY 2024 THE COURT ORDERS THAT: 1. The respondent pay the applicant's costs thrown away by reason of the filing of his amended appeal statement on 26 May 2023, with those costs to be taxed on a party-party basis. 2. The costs thrown away referenced in Order 1 are to comprise the applicant's costs which have been thrown away in relation to: (a) preparing the applicant's first appeal statement; (b) dealing with the respondent's request to file the respondent's amended appeal statement; and (c) investigating and preparing evidence on the abandoned issues concerning foreign tax residency and undeclared salary entitlements, to the extent that work was undertaken between 17 February 2023 and 14 April 2023. 3. The respondent bear the costs of preparing his first appeal statement filed on 17 February 2023 and of his application for leave to file his amended appeal statement filed on 26 May 2023. 4. The costs of this application be each party's costs in the cause. 5. The parties have liberty to apply. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT DERRINGTON J: Introduction 1 This is an application by which Mr Gumm, the applicant in a taxation appeal under Part IVC of the Taxation Administration Act 1953 (Cth) (TAA53), seeks an order that the Commissioner pay his costs thrown away consequent upon certain amendments made by the Commissioner to his first appeal statement (the First Appeal Statement). This application was raised as an adjunct to the Commissioner's application for security for costs, and Mr Gumm sought a related order that any amount ordered to be paid by him as security should be reduced by the amount which the Commissioner is ordered to pay him as a consequence of this application. This latter suggestion was dealt with and rejected in the security for costs application, the reasons of which are contained in a separate judgment. They are also referred to below. Nevertheless, his application for an order that he be entitled to his costs thrown away remains to be determined. 2 It is regrettable that the parties' submissions on this application were less than clear. They were advanced at a high level of abstraction and with only a limited attempt to assist the Court to understand the issues involved. Moreover, the precise nature of the costs sought by Mr Gumm was unclear and altered across the various submissions provided, with the result being that the parties' respective written submissions failed to join issue in several respects. At the hearing where the question of costs was to be ventilated, being the hearing in relation to the security for costs application, the parties largely referred to their respective written submissions on the issue without any great elaboration or explanation. Importantly, the question of how or why an order for costs thrown away should be made and, if made, in what amount, required a consideration of the substantial appeal statements filed in the action and the nature and effect of the Commissioner's amendments. The Court was not favoured with any real explanation of the nature or extent of the amendments, nor was it given any direction as to how any amendments had been causative of wasted costs. The basis on which Mr Gumm sought an order for costs was also unclear. In part, it appeared to be on the basis that certain issues were raised in the proceedings which were not raised in the antecedent administrative processes and, in other instances, the complaint appeared to be that the issues raised in the earlier administrative processes were not persisted with in the Part IVC appeal. The latter ground seemed to be pressed more substantially, but it was far from clear that this was the real basis of that claim for costs. In substance, the parties merely threw up a number of issues to the Court for it to resolve for itself. Critically, neither of the parties directly addressed the key issue that arose on this application. That is, whether the costs sought by Mr Gumm (totalling some $189,000) were thrown away or wasted by reason of the Commissioner's amendments to his First Appeal Statement. The issues (as best as they can be ascertained) 3 Mr Gumm sought the following costs, which he said were wasted by reason of the Commissioner's amendments to his First Appeal Statement: the costs of preparing his first appeal statement, dealing with the Commissioner's request to file his amended appeal statement, and investigating and preparing evidence in relation to two issues which were abandoned by the amendments. 4 Although Mr Gumm referred in his submissions to several issues which were raised and subsequently abandoned by the Commissioner, he only sought his costs of investigating and preparing evidence in relation to the following two issues: (a) whether certain entities associated with Mr Gumm were foreign tax residents; and (b) whether Mr Gumm failed to declare his potential entitlement to certain salary payments which arose under a joint venture agreement. 5 The Commissioner accepted that Mr Gumm's costs of preparing his first appeal statement and dealing with the Commissioner's request to file his amended appeal statement were wasted by reason of the amendments. He also accepted that the Court should order that he bear his own costs of preparing his First Appeal Statement and those incurred in preparing the application for leave to amend it. 6 The Commissioner also appeared to accept that an order can, and should, be made that he be responsible for any wasted costs incurred by Mr Gumm by reason of the amendments made to his First Appeal Statement. He submitted, however, that Mr Gumm's costs of investigating and preparing evidence in relation to the foreign tax residency issue were only wasted to the extent that those costs were for work undertaken between 17 February 2023 and 14 April 2023. He otherwise contended that he should not be liable for any of Mr Gumm's costs of investigating and preparing evidence in relation to the undeclared salary entitlements issue. 7 Originally, Mr Gumm sought an order that any costs which the Commissioner is required to pay, be paid on an indemnity basis. That, however, was not persisted with at the hearing and, indeed, no basis was established for the making of an order for costs on that basis. The Commissioner accepted that any costs should be paid on a party-party basis. 8 A further issue, and one in respect of which some attention was paid, was whether any costs which the Commissioner is ordered to pay should, pro tanto, reduce the amount which Mr Gumm is required to pay as security for costs. The period between 17 February 2023 and 14 April 2023 9 In substance, the Commissioner's submissions were that the only costs which Mr Gumm might have wasted in reliance on the issues raised by the Commissioner in his First Appeal Statement are those which were incurred in the period between 17 February 2023 and 14 April 2023. The first date is that on which the Commissioner's First Appeal Statement was delivered, and the second is the date on which notice was given to Mr Gumm's solicitors that the Commissioner intended to amend the First Appeal Statement. 10 In the First Appeal Statement, issues were raised as to the tax residency of certain companies and trusts associated with Mr Gumm. In broad terms, the Commissioner asserted that these companies and trusts were Australian residents for taxation purposes and, particularly, that Part X of the Income Tax Assessment Act 1936 (Cth) (ITAA36) applied in relation to them. Allegations about Mr Gumm's tax return disclosures were also made in the First Appeal Statement. Relevantly, the Commissioner asserted that Mr Gumm was potentially entitled to an annual salary of approximately USD360,000 under a joint venture agreement entered into by an entity allegedly associated with him, which he failed to declare his entitlement to in the 2013 to 2015 income years. Other issues, which were subsequently abandoned, were also relied upon by Mr Gumm though, for the purposes of these reasons, it is only necessary to refer specifically to the tax residency issue and the undeclared salary entitlements issue. 11 In an affidavit of Mr Gumm's solicitor, Mr Benjamin Jones, affirmed 8 September 2023, it was deposed that the Commissioner's allegations about the tax residency of the companies and the trusts required substantial investigation and work to be undertaken. Mr Jones claimed, inter alia, that interviews were undertaken with the directors and managers of the relevant companies in an attempt to understand whether they were controlled from Australia, that investigations were undertaken to determine whether Mr Gumm exerted control or influence over those companies, and that evidence was obtained and analysed to determine whether, if any of the entities were "controlled foreign companies" or "non-resident trusts" under the ITAA36, the income derived from them could be attributed to Mr Gumm. 12 In relation to the undeclared salary allegations, Mr Jones deposed that Mr Gumm's legal representatives were required to gather evidence about his contractual relationships with the company he was asserted to have an entitlement to receive a salary from, and any possible income earned by him from that company. 13 On 24 March 2023, Mr Gumm filed his first appeal statement in response to the Commissioner's and, necessarily, its formulation encapsulated the work which had been undertaken in response to the allegations raised by the Commissioner. 14 On 14 April 2023, the Commissioner's solicitors wrote to Mr Gumm's solicitors indicating that the Commissioner intended to make substantial amendments to the First Appeal Statement which would, effectively, necessitate the filing of a completely new document. Consent was sought for the making of orders by the Court to permit the amendment to be made and for Mr Gumm to file a new appeal statement in response. 15 By a letter of 17 April 2023, Mr Gumm's solicitors indicated that their client agreed to the provision of consent orders to the Court, with the proviso that Mr Gumm was to be entitled to make any application he saw fit for orders that he be paid his costs thrown away by reason of the amendments. 16 As foreshadowed by the Commissioner's solicitors, on 26 May 2023, an amended appeal statement (the Second Appeal Statement) was filed. It made several not insignificant changes and, in particular, the Commissioner removed allegations concerning the tax residency of the companies which were associated with Mr Gumm and the allegation that Mr Gumm did not declare his salary entitlements. A full list of the alterations is set out as an appendix to Mr Gumm's written submissions filed in relation to this issue and they need not be repeated. 17 It was submitted by Mr Gumm that these alterations required his representatives to completely re-write his appeal statement. There is some force in that submission, save for the fact that the need for Mr Gumm to reformulate his appeal statement largely arose from the re-writing of the Commissioner's appeal statement, rather than from the substantive changes made to it. 18 Mr Gumm filed his amended appeal statement in response to the Commissioner's Second Appeal Statement on 27 June 2023. Principles concerning costs thrown away 19 The question of costs is within the wide discretion of the Court which is to be exercised in a principled manner in the context of the circumstances of the particular case: s 43(2) Federal Court of Australia Act 1976 (Cth) (Federal Court Act); see Zircon Australia Pty Ltd v BCC Trade Credit Pty Ltd trading as Bond and Credit Co [2023] FCA 636 [18]. 20 The parties were in agreement as to the principles applicable to the present application. One of the recognised principles is that, where a party seeks the indulgence of the Court to amend a document which alters the issues between the parties, the opposing party is usually entitled to an order that they recover the costs "thrown away" by the making of the amendment. There is a natural justification for the making of such an order. Where a party has raised an issue to be litigated but then abandons it, it is appropriate that the opposing party, who has expended costs in investigating and considering it, should recover the wasted expenses of doing so. The expenses are wasted because any work undertaken for the purposes of meeting the issue will have been rendered redundant. This was articulated by Edelman J in Cassimatis v Australian Securities and Investments Commission (2016) 334 ALR 350, 360 – 361 [56] – [57] (Cassimatis) in the following passages: It is well established that "costs thrown away" are those costs that "have been reasonably incurred that relate to work done and wasted": Sobey v Commissioner of Taxation [2008] FCA 1621 at [21] (Kenny J). See also Fashion Warehouse Pty Ltd v Pola [1984] 1 Qd R 251 at 254 (G N Williams J "work done which has become wasted in the circumstances"). The question of whether costs are thrown away involves a causal enquiry. It is necessary to ask whether costs that were incurred would not have been incurred but for the relevant event (in this case, the amendment). In Ziliotto v Hakim (No 2) [2012] NSWSC 1079 at [47], Davies J expressed it in this way: The enquiry must be directed to what costs were expended which would not have been expended had it not been for the adjournment and what prompted the need for the adjournment. I agree with Mukhtar AsJ's analysis that "costs thrown away" is looking to past costs — compensation for work already done and wasted because of the adjournment, or amendment or error. It does not refer to costs which have not yet been incurred even though they would not have been incurred but for the adjournment. 21 In what is perhaps the most authoritative commentary on the law of costs in Australia, Quick on Costs (Westlaw, online, 2023), the learned author makes the following statement about the meaning and scope of the expression, "costs thrown away", at [20.540]: The costs thrown away are such costs as the taxing officer determines have in the circumstances of the case been reasonably incurred and relate to work done which has been wasted as a result of the event or action/proceeding giving rise to the order or entitlement to costs thrown away. Costs attributable to work useful for the ongoing conduct of the principal action/proceeding are not costs thrown away. An order for costs thrown away looks to past costs, as it relates to work already performed, and therefore costs already incurred, which are now wasted. … In some instances, such as an amendment of a statement of claim abandoning a head of claim, the work is wasted due to the withdrawal of the claim and will not have to be undertaken again. It is wasted because it is no longer of use in the proceedings. (Footnotes omitted). 22 In the usual case, the issues raised between the parties crystallise by the filing of documents outlining the respective party's allegations in relation to their dispute. An allegation which is raised in a pleading or other such statement and then withdrawn usually has the required causative effect that results in wasted costs. This was appropriately recognised by the Commissioner by his acknowledgement that he should pay some of the wasted costs occasioned by the withdrawal of the issues raised in his First Appeal Statement, including those concerning the tax residency of the companies and trusts associated with Mr Gumm. 23 Whilst it was not entirely clear, Mr Gumm seemed to advance the proposition that the scope of his wasted costs extended to costs incurred in dealing with the issues raised by the Commissioner during the audit process and, subsequently, in the objection process. It was there that the Commissioner first alleged and maintained that companies and trusts associated with Mr Gumm were Australian residents for taxation purposes. It seems natural that Mr Gumm's legal representatives would have been required to investigate those issues for those antecedent processes and, one might expect that they would have reached substantive conclusions about them at that time. Should there be a temporal limitation on the costs sought by Mr Gumm? 24 Mr Gumm submitted that the tax residency of the companies associated with him, and several other issues, had been raised by the Commissioner in the audit process and during the objection process. As such, it was said that question became a central underlying issue in the Commissioner's First Appeal Statement and, from the time that document was received by Mr Gumm's solicitors, it was necessary for them to seek to respond to it. 25 Mr Gumm said that the substantial work undertaken in relation to that issue became unnecessary once the Commissioner abandoned it by the filing of his Second Appeal Statement. He claimed that he should be entitled to the costs incurred in the appeal relating to that issue, and further asserted that he should be entitled to all his costs of considering that issue, regardless of whether they were incurred prior to the filing of the Commissioner's First Appeal Statement. Costs wasted by the filing of the Second Appeal Statement 26 From the above observations in Cassimatis, it is axiomatic that the costs which the Commissioner might be ordered to pay in this case are those costs in relation to work that has been made redundant by the withdrawing of issues previously raised. Prima facie, the wasted costs are those which were expended on undertaking legal work for meeting the claims in the First Appeal Statement, where the fruits of that work are no longer relevant to the issues in the Second Appeal Statement. In this respect, it appeared to be common ground that Mr Gumm was entitled to, at least, an order in general terms that the Commissioner pay his costs thrown away by the filing and serving of the Second Appeal Statement. 27 Despite that consensus, the issue between the parties was the extent of the costs which were "thrown away" and each sought orders delineating the scope of costs which were to be within the order. As mentioned, Mr Gumm claimed that he was entitled to recover all the costs expended by him in investigating and considering the allegations concerning the tax residency of the companies and trusts and the undeclared salary entitlements which were abandoned in the Second Appeal Statement, regardless of whether they were incurred before or after the issues were raised in the First Appeal Statement. He said that the recoverable costs were $189,100. On first blush, that appears to be an unusually large amount for a party to spend on responding to the Commissioner's First Appeal Statement which largely reflected the issues which the parties had been disputing for some years. Nevertheless, it seems that Mr Gumm's lawyers anticipated that the Commissioner's First Appeal Statement would raise those issues given that they had been raised in the audit and objection process, and engaged in much work on them prior to the Commissioner filing and serving the First Appeal Statement. That raises the issue of whether such costs were thrown away "as a result of" the abandonment of those issues by the Second Appeal Statement. 28 The Commissioner's position was that the costs which can be described as "thrown away" were those which were induced to be incurred by the issues raised in the First Appeal Statement but rendered nugatory by reason of their abandonment in the Second Appeal Statement. He, therefore, sought a temporal limitation on any costs order to the effect that Mr Gumm would only be entitled to recover only those costs relating to work that was undertaken between 17 February 2023 and 14 April 2023. 29 One difficulty in dealing with this issue in the present matter is the opaqueness of the material on which Mr Gumm relied. In an affidavit of Mr Jones affirmed 18 August 2023, it was deposed that: In order to prepare the Applicant's first Appeal Statement it was necessary for the Gumm Legal Team to do a great deal of work I had not anticipated when this proceeding was commenced. The reason was the additional issues raised by the Respondent's Appeal Statement that was filed on 17 February 2023. 30 The work which Mr Gumm's legal team reasonably needed to do in relation to the issues raised in the First Appeal Statement, including the additional issues which were not anticipated, are within the scope of costs which are thrown away to the extent that the work done is no longer useful for the ongoing conduct of the proceedings. The work referred to in the cited paragraph from Mr Jones' affidavit suggests that the work in respect of which costs are claimed was performed because it was undertaken in response to the issues raised in the First Appeal Statement. Necessarily, he refers to the work performed after 17 February 2023. 31 However, Mr Gumm seeks orders that he be entitled to costs which he expended in the preparation of evidence in relation to issues in the proceedings prior to the receipt of the Commissioner's First Appeal Statement. In a subsequent affidavit of Mr Jones affirmed 8 September 2023, it was deposed that prior to the receipt of the First Appeal Statement, Mr Gumm incurred around $100,000 in costs in the preparation of evidence. Unfortunately, there is little identification of the precise nature of the work which was done in that period, but it seems that some or all of it is sought to be recovered by this application. 32 In relation to the amount of $189,100, claimed as the amount of the costs thrown away, Mr Jones said the following at paragraph 29 of his affidavit affirmed 8 September 2023: At Annexure BLJ-3 an email I sent that refers to the Gumm Legal Team having incurred costs of $189,100. I am informed by other members of the Gumm Legal Team the figure of $189,100 was calculated by looking at the billing records from this proceeding and adding up amounts charged to Darryl Gumm in this proceeding. I participated in this process of adding up amounts charged by the Gumm Legal Team to Darryl Gumm. (Error in original). 33 The email which is the exhibit referred to by Mr Jones relevantly read as follows: Our costs of preparing the First Applicant Appeal Statement and evidence on the abandoned issues was $189,100, of which $183,100 was solicitor and barrister fees and $6,000 were disbursements. Our client is not an Australian resident so we do not charge GST. That figure does not include GST. 34 The difficulty here is that it is not particularly clear how that sum was calculated, save in the broadest and most general terms. The documents referred to are not produced and there is no identification of the work referable to the charges made. Moreover, there is little evidence establishing that the work done is no longer relevant to the remaining issues, either in whole or in part and that is a significant omission from the evidence. In addition, there is nothing which identifies that the costs were incurred in the period after the serving of the First Appeal Statement and before the giving of notice by the Commissioner of his intention to amend. In short, the evidence is bereft of any relevant substance. 35 During the hearing, Mr Hyde Page, counsel for Mr Gumm, tentatively agreed with the proposition that the $189,100 claimed as the wasted costs were only those costs which were reasonably incurred in relation to the issues abandoned by the Second Appeal Statement in that period between the serving of the First Appeal Statement and the Commissioner's subsequent indication of an intention to amend. That said, he also suggested that costs which were incurred at an earlier point in time could be included because, during the earlier audit and objection process, the Commissioner had raised the issues which were subsequently abandoned. The proposition appeared to be that it was reasonable for Mr Gumm to assume what issues would be raised in the First Appeal Statement and to commence work on them before its receipt. If then, the issues were not subsequently pursued, those costs would also be wasted. 36 There is, with respect, difficulty with this approach. Whilst it may be reasonable in some cases for solicitors to anticipate what issues will be raised in pleadings and the like, there is a real danger in accepting that the other party should pay the legal costs of investigating such issues in cases such as the present. It would open the door to litigants engaging in unproductive and irrelevant work, the cost of which is then sought to be recovered from the other party, merely on the basis that the issues which were investigated had been mentioned before the litigation commenced. 37 In this matter, where the appeal is made under s 14ZZ of the TAA53, it is the Commissioner who files the first document identifying the issues which he seeks to pursue in the litigation: see r 33.03 of the Federal Court Rules 2011 (Cth) (the Rules). It is his appeal statement which initiates the crystallisation of the issues which will be in contest. Whilst a taxpayer who has lodged an appeal might generally expect that the issues which were the subject of any audit or objection process will be reflected in the Commissioner's appeal statement, that is not necessarily the case, and a new and different case might emerge. Save for in unusual circumstances, a taxpayer should rely upon the appeal statement served under r 33.03 as the starting point for incurring expenses in relation to the contest of issues in Part IVC proceedings. Costs incurred in anticipation of what might emerge as an issue should not generally be regarded as having been incurred as part of the litigation merely because those anticipated issues had been previously raised by the Commissioner. 38 Mr Gumm is entitled to orders that he recover those costs which can properly be described as having been "thrown away". Such costs are those which were reasonably incurred for the work done in relation to issues which the Commissioner raised in the First Appeal Statement, which have since been wasted as a result of the Commissioner's abandonment of those issues in the Second Appeal Statement. It is apparent that not all of the work done in the period from 17 February 2023 will be wasted, but only that which related to the abandoned issues. 39 Ultimately, there did not appear to be any doubt as to the second temporal limit, being that Mr Gumm should not be entitled to costs after notice was given of the intention to amend the appeal statement. Once the Commissioner had given such notice, the expenditure of costs by Mr Gumm in pursuing issues which were subsequently abandoned should be at his expense. The obligations of the parties arising under ss 37M and 37N of the Federal Court Act are to ensure that the litigation is conducted "as quickly, inexpensively and efficiently as possible". It is not consistent with that obligation for a party who has been informed that amendments are to be made to the other party's case to continue to expend costs pursing issues which might become redundant. Of course, the obligation of a party to pause whilst another reformulates their case is, itself, temporally limited. It does not mean that a party is required to wait for any extended period of time to allow the other, at their leisure, to reconsider their case. A party who has indicated their intention to amend must do so within a reasonable time. If not, they cannot expect the other, particularly if the other is the plaintiff, not to prosecute their action on the issues which are then alive on the pleadings. It was not suggested in this case that there was any unreasonable delay between the Commissioner indicating an intention to amend the First Appeal Statement on 14 April 2023, and filing the amended document on 26 May 2023. 40 Given the foregoing, the temporal restrictions suggested by the Commissioner are an appropriate part of the order for costs as they provide legitimate limitations on the scope of the costs which ought to be reimbursed. Should the Commissioner pay the costs in relation to the undeclared salary entitlements issue? 41 Although the Commissioner appropriately admitted that he was liable to pay the costs thrown away as a result of his abandonment of the tax residency issue, he denied that any costs incurred by Mr Gumm relation to the undeclared salary entitlements issue should be paid by him. 42 His submissions did not appear to deny that any work undertaken in relation to the salary entitlements issue would have been wasted. Rather, he suggested that the circumstances of the case justified the Court to exercise its discretion to not require him to pay Mr Gumm's wasted costs in relation to that issue. This was advanced primarily on the basis that the amendment was an "early abandonment of a reasonable contention" done in the interests of refining the issues before the Court. He submitted that, in a complex fact scenario where the full facts can only be known to Mr Gumm, the Commissioner should not be liable for the costs of such an abandonment. 43 In support, the Commissioner referred to the following observations of Wheeler JA in Stanley v Layne Christensen Company [2006] WASCA 56 [55]: … Where amendments are not substantial, or where they serve simply to further clarify an otherwise broadly satisfactory pleading, it may be appropriate simply to order costs in the cause. Such a course may also be appropriate where an amendment adds a substantial, different, but apparently arguable cause of action, on the basis that it is always possible for a trial Judge to make a special order in relation to the costs of such an issue, if it should ultimately be found that the party is unsuccessful in relation to that new cause. It is appropriate that the discretion in such cases should remain unfettered in the interests of efficient case management. 44 There is much force in the above observations and there is no doubt that, in determining whether a party should pay costs thrown away, there may be a number of factors to be considered beyond the fact that the party is seeking an indulgence of the court. However, as the above passage emphasises, whether costs should be ordered is ultimately in the unfettered discretion of the Court. 45 In the present case, the Commissioner made a number of amendments between his First and Second Appeal Statements. Mr Gumm acted reasonably by consenting to those amendments being made, thereby removing the need for the Commissioner to make an application to amend. Mr Gumm now seeks to recover the costs he has wasted in relation to only two issues that were withdrawn by those amendments. That the Commissioner removed the salary allegation in an apparent effort to confine the issues before the Court is not a sufficient reason, of itself, to require Mr Gumm to bear the costs wasted as a result. It is incumbent on all parties in litigation to facilitate the quick, inexpensive and efficient resolution of disputes. Further, the argument raised by the Commissioner to the effect that an amendment by deletion is "not truly comparable" to the "indulgence" said to be involved in the grant of amendments cannot be sustained. The deletion of that allegation was an amendment which altered the issues between the parties, and caused certain work already done to be wasted. The fact that it was a minor allegation in the scheme of the First Appeal Statement, and that it was made in the alternative to other allegations, does not change the fact that Mr Gumm was required to incur costs to effectively respond to it. 46 The Commissioner has failed to demonstrate that it is appropriate to exercise the discretion in his favour. An order should be made that he pay the costs wasted in investigating and preparing evidence in relation to the salary entitlements issue. Further, for the reasons given above, a temporal limit should be imposed, such that the Commissioner is only liable for costs incurred between 17 February 2023 and 14 April 2023. Are the costs in question assessable to any degree? 47 A significant part of Mr Gumm's submissions suggested that the Court was able to tax the costs thrown away immediately at the amount identified by Mr Jones, and that it should then deduct a discounted amount from any amount to be ordered to be paid as security for costs. 48 Generally, if an order for costs is made on an interlocutory application, the party in whose favour it has been made must not tax the costs until the conclusion of the proceedings: see r 40.13 of the Rules. Whilst r 40.13 can be dispensed with as the occasion requires: Watson v Kriticos (Costs Payable Forthwith) [2022] FCA 4 [5] – [7]: there was no substantial attempt to establish that the present case fell within the scope of any of the recognised categories, or that the demands of justice required a departure from the ordinary rule. It was obliquely suggested that the present was a case where the Commissioner caused significant costs to be incurred because of an ill-considered pleading, and effectively advanced a new proceeding by the amendments: see McKellar v Container Terminal Management Services Ltd [1999] FCA 1639 [19], [40]: but that cannot be sustained. The Commissioner has assessed Mr Gumm at a particular amount of tax and, although there was a substantial change to the basis on which the Commissioner refuted Mr Gumm's claim that no amount of tax was owing, his claim to the assessed amount remains. Further, the trusts and corporate structure surrounding Mr Gumm's affairs remain relevant to the proceedings, even though the Commissioner now advances the proposition that they are a façade to the true position. It is difficult to see how, putting aside the issue of control, the details of the trusts and corporate structure related to Mr Gumm's affairs will not be relevant to the issues that remain to be resolved. At the least, it was not shown that they would not be relevant. It was also vaguely suggested that Mr Gumm might suffer some prejudice if an order is not made that the costs be payable forthwith. However, nothing was advanced in support of that suggestion, and there is nothing to indicate that Mr Gumm will be put to disadvantage if such an order is not made. In any event, the potential for offsetting costs orders being made in Mr Gumm's favour has been taken into account as a general reduction to the quantum of security for costs ordered in the Commissioner's separate application. It follows that Mr Gumm has not established any entitlement to have the costs of the amendment taxed immediately. 49 A further impediment is that, whilst Mr Jones has identified the costs which have been incurred by Mr Gumm, it is not immediately apparent that the costs in question can properly be described as having been "thrown away". There is great difficulty in ascertaining the extent to which the composite issue of the foreign tax residency of the companies and trusts associated with Mr Gumm or, more importantly, the factual underpinning of those issues, is separate and discrete from the issues which are now presently alive between the parties. Necessarily, the general background concerning Mr Gumm's business dealings and his relationship with the companies associated with him, remain relevant to the issues on the appeal, as does that of the nature and extent to which the companies are truly independent of him. It is true that the Commissioner's characterisation of the several companies and their related trusts as being foreign residents for tax purposes created an issue in the litigation and the abandonment of that characterisation is likely to have resulted in wasted costs. However, it does not follow that all the work involved in investigating the background of the companies and the trusts is of no value to the issues which now remain. On the Commissioner's present case, the purported ownership of the companies and the nature of their control and management will remain relevant to the question of whether the corporate and trust structure of the companies and trusts associated with Mr Gumm were shams and were put in place to conceal Mr Gumm's absolute entitlement to the businesses and their income. Conversely, Mr Gumm, who claims that the corporate and trust structure which had been created for him reflected the actuality of the relationships, will necessarily rely upon the evidence which has been discovered to date to establish that. 50 Similar considerations must be applied to the other issues which were raised and abandoned. It may be that whilst the alleged legal consequences of established facts will no longer be pursued, the amassing of facts and evidence may still be relevant to the issues on which the rights of the parties will be determined. 51 Mr Gumm's written submissions asserted, in effect, that all of the work undertaken in relation to the issues raised and later abandoned by the Commissioner has been wasted. However, this was a mere contention and very little attempt was made to justify it. As indicated above, the evidence of Mr Jones was severely lacking as to the precise nature of the work undertaken, its extent, and when it was done. 52 On an application of the present nature, where a substantive order is sought and the court is asked to undertake some form of assessment such that the resulting amount might be offset against an amount which the court might order for security, much more is required than a mere assertion that work previously undertaken has been rendered redundant. What is required is a detailed analysis of the remaining issues in dispute, a precise identification of the work undertaken in relation to what are asserted to be abandoned issues, and a proper articulation of why it is that the work which has been performed is now inutile. These are, in effect, the types of matters which are addressed in any taxation of costs where an appropriate order is made. It is not presently possible for this Court to ascertain whether the work relied upon as justifying the amount of costs claimed as having been thrown away, has been rendered redundant for the purposes of the future hearing. Whilst it is likely that some has been, the extent of it remains elusive. 53 It follows that whilst general orders can be made concerning Mr Gumm's entitlement to recover the costs wasted by reason of the abandonment of issues by the Commissioner, it is impossible to make any assessment of the quantum and apply it against the amount ordered to be paid as security for costs. As appears in the reasons for judgment on the application for security for costs, a general reduction is made to take into account that Mr Gumm has a costs order and may obtain a further order in the future. On the basis of the information available on this application, it is not, however, possible to make a deduction of a specific amount. For that reason the orders sought by Mr Gumm are not available. The appropriate orders 54 The following orders, adapted from those proposed by the Commissioner, generally take into account the matters referred to above: (1) The respondent pay the applicant's costs thrown away by reason of the filing of his amended appeal statement on 26 May 2023, with those costs to be taxed on a party-party basis. (2) The costs thrown away referenced in Order 1 are to comprise the applicant's costs which have been thrown away in relation to: (a) preparing the applicant's first appeal statement; (b) dealing with the respondent's request to file the respondent's amended appeal statement; and (c) investigating and preparing evidence on the abandoned issues concerning foreign tax residency and undeclared salary entitlements, to the extent that work was undertaken between 17 February 2023 and 14 April 2023. 55 An order should also be made requiring the Commissioner to bear his own costs of preparing the First Appeal Statement and making the application for leave to amend as, regardless of the outcome of these proceedings, it would be unfair for Mr Gumm to be responsible for those wasted costs. 56 The parties should each bear their own costs of this application for costs. The application was necessary given the Commissioner's amendments and, even though it appears that the Commissioner was willing to accept most of what the Court has ordered, it was not necessarily unreasonable in the circumstances for Mr Gumm to seek the relief which he did. Therefore, an order that the costs of the application be each party's costs in the cause will enable the successful party in the appeal to recover their costs. I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Derrington. Associate: Dated: 14 February 2024