HANSON v COMMISSIONER OF INLAND REVENUE [2019] NZHC 2052

HANSON v COMMISSIONER OF INLAND REVENUE [2019] NZHC 2052 [21 August 2019]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2019-404-40[2019] NZHC 2052UNDER THE Income Tax Act 2007 and the TaxAdministration Act 1994IN THE MATTER OF An appeal against the decision of theTaxation Review AuthorityBETWEEN CAROLYN ANDREA HANSONAppellantAND COMMISSIONER OF INLANDREVENUERespondentHearing: 20 August 2019Appearances: M L Blum as advocate for the AppellantJ Cheng and L Worthing for the RespondentJudgment: 21 August 2019JUDGMENT OF POWELL J[Application to set aside consent order for paymentof Security for Costs/Application for Stay]This judgment was delivered by me on 21 August 2019 at 3.30 pm pursuant toR 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:[1] The appellant, Caroline Hanson, has appealed a decision of the TaxationReview Authority, dated 12 December 2018. Her appeal is due to be heard on17 September 2019. Her appeal is currently in jeopardy because she has not paidsecurity for costs on the appeal. Security has not been paid notwithstanding that thesum was agreed by the parties ($2,230) and formed part of a consent order issued byHinton J on 12 March 2019, and notwithstanding a number of extensions grantedeither by consent or by this Court.[2] Ms Hanson has now filed an application to set aside the consent order requiringsecurity to be paid or, in the alternative, to stay the appeal pending payment of security,and it is this application that stands for determination today.Preliminary issue – representation of Ms Hanson[3] As a preliminary matter, it is noted that Ms Hanson sought to be representedtoday by her husband, Marcus Blum. Mr Blum represented Ms Hanson at the TaxationReview Authority hearing and appeared at the last call of this matter when he wasadvised that he was not allowed to represent Ms Hanson in this Court. As mattershave turned out, since that last appearance, Mr Blum has not only continuedrepresenting Ms Hanson but has sworn and filed an affidavit in support of herapplication which makes his ongoing attempts to represent Ms Hanson even lessappropriate. Despite this, and notwithstanding the objections by Ms Cheng toMr Blum representing Ms Hanson this morning, it is important to resolve the presentissue expeditiously given the close proximity of the substantive fixture, and so I haveallowed Mr Blum to represent Ms Hanson on the application. To avoid any furtherdoubt, however, Mr Blum will not be permitted to represent Ms Hanson at any furthercall of this appeal or at the substantive appeal hearing itself.The basis for the application[4] The primary basis for Ms Hanson seeking to set aside the order for security forcosts is that she is unable to pay the security. Ms Hanson's position is that she andMr Blum do not have the resources to pay the security. In affidavit evidence filed,Ms Hanson and Mr Blum point to a number of joint financial obligations and Mr Blumhas advised from the bar this morning that they are likely to be evicted from theirrental accommodation within a week. Mr Blum submitted, on behalf of Ms Hanson,that it was important for the appeal to proceed, noting in particular that the appealraised questions with regard to the quality of the Commissioner's investigation intothe matters that were the subject of the Taxation Review Authority's decision. If thepresent order requiring security to be paid is not set aside then Mr Blum seeks a stayof the appeal to give Ms Hanson more time to raise the security, noting that furthercommissions are expected in the next four to five weeks.Discussion[5] Rule 20.13(2) of the High Court Rules 2016 requires security for costs on anappeal to the High Court to be fixed "unless the Judge considers that in the interestsof justice no security is required". Rule 20.13 goes on to set out a formula forcalculation of security which is to apply unless the Court otherwise orders. Theamount ordered in this case has been calculated according to the formula in r 20.13based on a one-day fixture for the substantive appeal.[6] The authorities are clear that simply because an appellant is impecunious thatby itself is insufficient to provide a basis for security not to be paid.1 Instead othermatters must be taken into account, including the merits of the appeal.2[7] It is, however, by no means clear on the evidence that Ms Hanson and Mr Blumhave filed, that Ms Hanson is in fact impecunious. By Mr Blum's own calculations,Ms Hanson is receiving $4,145 per month and Mr Blum $1,850, making a total incomeof $5,995 or a household income of approximately $72,000 per year. These figuresare based on an average over the last 17 months but in the current financial year from1 April 2019, Ms Hanson has already earned $53,869 gross from which a variety ofpayments including GST and income tax must be deducted. As Ms Cheng has noted,this is in fact a relatively high-income figure and indeed, on the face of it, would makeMs Hanson ineligible for legal aid.1 RIG v Chief Executive of the Ministry of Social Development [2010] NZCA 370 at [4].2 For example see Chatha v Wanganui Gas Ltd (2004) 17 PRNZ 736.[8] Likewise, it is also not clear exactly what the repayment situation is.Mr Blum's figures suggest that $1,100 is repayable monthly. While $600 of thatmonthly repayment is to a finance company, the remaining $500 appear to relate to"family loan repayments" with no documentation having been supplied as to whetherthis is in fact a legal requirement, or the result of an informal agreement with familymembers.[9] The information provided by Ms Hanson and Mr Blum also shows thatMs Hanson continues to own a Jaguar XF vehicle worth between $20,000 to $30,000and ,although the vehicle appears to secure the finance company debt of $16,000, thereis no evidence as to why a cheaper vehicle could not have been obtained to enable thesecurity to be paid.[10] Ultimately, it is not necessary to determine whether Ms Hanson is impecuniousone way or another. Looking at the decision of the Taxation Review Authority, theappeal does not appear to raise any significant issues of public interest and it otherwiseappears weak. First, the fact that the Taxation Review Authority proceeded de novomeans that any issues with regard to the respondent's initial investigation were entirelyirrelevant and will not be relevant before this Court. Secondly, it is clear that theAuthority reached its conclusion substantially upholding the respondent's position asa result of the lack of evidence adduced by Ms Hanson and Mr Blum to support MsHanson's case. As an appeal from the Taxation Review Authority to this Court is byway of re-hearing3 and there has been no application to adduce further evidence, itfollows that the appeal must be decided on the same evidence as was considered in theTaxation Review Authority. There is therefore unlikely to be any basis for anyalternative conclusion.[11] In the circumstances, no substantive basis has been identified for opening upthe consent order requiring payment of security.[12] Finally, I also agree with Ms Cheng that there is no basis for ordering a stay ofthe appeal to give Ms Hanson more time to pay security. In addition to dragging the3 Jiao, Huang & Chiao v The Commissioner of Inland Revenue CIV-2009-404-005397 and HighCourt Rules 2016, r 20.18.appeal out, and almost certainly losing the current substantive fixture, with new appealdates not being available until February/March 2020, it is by no means clear thatsecurity would in any event be paid even if Ms Hanson receives further commissionpayments. In particular, it is clear that Ms Hanson did receive commissions on at leasttwo occasions (in March and May 2019) immediately prior to when payment of thesecurity was due, and she nonetheless chose not to make a payment of security withthe funds received. In those circumstances, I therefore see no utility in any furtherdelay.Decision[13] The application to set aside the consent order requiring payment of the securityfor costs or to otherwise stay the appeal pending payment of that security is dismissed.[14] Security for costs in the sum of $2,230 is to be paid by Ms Hanson on or before5 p.m. on 27 August 2019. In the event that security is not paid as directed, thesubstantive appeal against the decision of the Taxation Review Authority dated 12December 2018 will, without any further notice to Ms Hanson or mention in Court,stand dismissed.[15] The respondent is entitled to costs on this application which I fix on a 2B basis.In the event that there is any dispute with regard to the amounts claimed I willdetermine the issue following the filing of memoranda._______________________________Powell J