DCT v Sibai: no stay of tax recovery during judicial review of interest remission

On 11 November 2026, Justice Chen of the Supreme Court of New South Wales decided two applications in Deputy Commissioner of Taxation v Sibai [2026] NSWSC 1435. The Court refused to strike out the Deputy Commissioner's tax recovery claim, or to pause the proceedings during a Federal Court judicial review about interest remission, but ordered a more detailed claim. This is an interlocutory decision, made before any final hearing, so the claim itself has not been decided.

What happened

The defendant asked the Deputy Commissioner to remit all the shortfall interest charge (SIC) and general interest charge (GIC) charged to the defendant's running balance account (RBA). A decision dated 11 September 2025 appears to have remitted part of each.

On 28 November 2025, the Deputy Commissioner started recovery proceedings. The amended statement of claim claims $1,677,241.54 as an RBA deficit debt under the Taxation Administration Act 1953 (TAA), s 8AAZH. An RBA deficit debt is the balance of the account in the Deputy Commissioner's favour after payments and credits. The pleading did not identify the primary tax debts allocated to the RBA, how or when they arose, or how much of the total was GIC.

On 3 July 2026, the defendant filed two motions, one to strike out the amended claim and one for a temporary stay. On 7 July 2026, the Deputy Commissioner refused a request for further remission. On 7 September 2026, the defendant applied to the Federal Court for judicial review relating to the remission request.

What the court decided

Strike-out. The Deputy Commissioner argued that an RBA deficit debt is a single debt that needs no further particulars, meaning the details of the debts behind it (at [19]). The Court did not accept that. Pleading principles require particulars of the primary tax debts said to be due and allocated to the RBA. Giving them does not affect the existence of the statutory debt under s 8AAZH (at [24]).

Even so, strike-out was not the appropriate order (at [25]). Instead, under the Uniform Civil Procedure Rules 2005 (NSW), r 15.1, the Deputy Commissioner must file a further amended statement of claim by 25 November 2026. It must set out the primary tax debts, the dates they arose and when they were allocated to the RBA (at [25]). The defendant must file a defence by 11 December 2026 (at [52]).

Stay. The Court was not persuaded to grant a temporary stay (at [51]). Its reasons included:

• The judicial review is not unarguable, but the claim that success there would most likely give the defendant a better outcome was speculation (at [41]).
• The Federal Court proceedings concern the legality of the remission decisions, not their merits. They relate to a confined part of the claim, the SIC and GIC (at [47]).
• Finishing the judicial review first gave some support to a stay, but the recovery of revenue is itself an important consideration (at [45]).
• At a minimum, security would be required before the Court could assess whether a stay would compromise recovery. The defendant's submissions and evidence did not address it (at [49]).
• The strength of the Deputy Commissioner's case on its face (prima facie), informed in part by the TAA, Sch 1 s 350-20(1), and uncertainty about the defendant's financial position told against a stay (at [50]).

Why it matters

• A review of a remission decision did not pause recovery. The Court gave weight to the recovery of revenue (at [45]). The Federal Court review concerns only the legality of the interest decisions (at [47]). See our guide to GIC remission refused.
• A stay application needs evidence. The Court treated security as an important consideration, and the defendant had not addressed it (at [49]). Uncertainty about the defendant's financial position also counted against a stay (at [50]). Anyone seeking a similar stay should be ready to address both.
• An RBA deficit debt claim may have to be broken down. The Deputy Commissioner was ordered to give particulars of the primary tax debts behind the single figure (at [25]). The remedy was a better pleading, not a strike-out. Compare DCT v Kafer, decided three weeks earlier, where the District Court gave judgment on an RBA deficit debt on the Commissioner's certificate after no evidence was led against it.
• Statutory demands are a different context. The Court treated a case about a statutory demand for an RBA deficit debt as not relevant to this pleading dispute (at [21]). So the decision does not say a statutory demand must give the same detail.

Read the decision

Deputy Commissioner of Taxation v Sibai [2026] NSWSC 1435

Next step

If the ATO has started court proceedings to recover a tax debt, send us the statement of claim and any remission or objection decisions. In a first call we'll tell you what can still be challenged, what a stay application would need and the dates that matter.