CENTRAL EQUIPMENT COMPANY LIMITED V THE COMMISSIONER OF INLAND REVENUE CA CA233/06

CENTRAL EQUIPMENT COMPANY LIMITED V THE COMMISSIONER OF INLAND REVENUE CA CA233/06 3 March 2008IN THE COURT OF APPEAL OF NEW ZEALAND CA233/06 [2008] NZCA 42BETWEEN CENTRAL EQUIPMENT COMPANY LIMITED Applicant AND THE COMMISSIONER OF INLAND REVENUE Respondent Hearing: 18 February 2008 Court: Chambers, O'Regan and Arnold JJ Counsel: J A L Oliver and N Breedon for Respondent Judgment: 3 March 2008 at 11 amJUDGMENT OF THE COURT A The application for special leave to appeal is dismissed. B Clarence Faloon must pay to the respondent costs of $3,000 and usual disbursements. REASONS OF THE COURT(Given by O'Regan J)[1] This matter was listed for a directions hearing in the Miscellaneous Motions list of 17 September 2007. It arises out of the decision made by Associate Judge Faire in the High Court of Hamilton on 2 October 2006 to put Central Equipment Company Limited (Central Equipment) into liquidation. That order had been sought by the Commissioner of Inland Revenue because Central Equipment had failed to pay outstanding GST. [2] The proceeding which was filed in this Court was called an application by Central Equipment for special leave to appeal against the Associate Judge's decision. However, it was initiated by Clarence Faloon, who is a holder of shares in Central Equipment (in various capacities) and has a long association with that company. Mr Faloon appeared before us, purportedly as representative of Central Equipment. [3] When the matter was considered by the Court on 17 September 2007, Mr Faloon argued that, although the application was made in the name of Central Equipment, his intention was that he would personally pursue an appeal against the Associate Judge's decision to place Central Equipment into liquidation. [4] In its judgment of 29 October 2007 ([2007] NZCA 468), the Court determined that Mr Faloon had no authority to advance the application as his own application. The question which remained for consideration was whether he could initiate and pursue the application on behalf of Central Equipment, which, as a result of the Associate Judge's decision, is now in liquidation. [5] The Court considered there was an outside possibility that, through lack of appreciation on Mr Faloon's part, everything which should be before the Court had not been put before it. The Court therefore adjourned the issue of whether special leave to appeal should be granted to a further Miscellaneous Motions list to be allocated by the Registrar. The Court made directions that Mr Faloon should file and serve an affidavit supporting the position that he was authorised to act for the company.[6] Mr Faloon filed an affidavit in compliance with the Court's direction on 8 November 2007. In that affidavit he deposed that he was entitled to initiate and pursue the application for special leave to appeal on two separate bases. These were: (a) He had conducted the taxation affairs of Central Equipment since 1966; (b) There is a lis between himself as patentee, Central Equipment as his agent and the Commissioner of Inland Revenue dating back to 1984. [7] Mr Faloon filed a further affidavit with this Court on 14 February 2008 which also dealt extensively with historical disputes between himself and the Commissioner in which he deposed that it was his legal duty under s 13F of the Trustee Act 1956 to represent his co-trustee, Central Equipment, in relation to the appeal. The co-trusteeship is said to arise from disputed arrangements involving land adjacent to Palmerston North Airport which has been the subject of a long running dispute between Mr Faloon, members of his family, companies associated with him and his father's estate on the one hand and the Crown on the other. [8] One of the exhibits to this affidavit is a copy of resolutions of shareholders of Central Equipment dated 23 April 2005, including a resolution to continue certain High Court proceedings "upon the representations of C J Faloon allowed by leave". This document is signed by Mr Faloon in three different capacities, his personal capacity, his capacity as trustee of his father's estate and in his capacity as trustee for Anthony Morris Piesse. This document does not deal with the present application and Mr Faloon did not rely on it as the basis for his argument that he is authorised to pursue the present application on behalf of Central Equipment. [9] In oral argument, Mr Faloon raised a new argument. He said his authority to act for Central Equipment arose under ss 146 and 170A of the Town and Country Planning Act 1977. He pointed to an appeal filed in the Wellington Registry of the (then) Planning Tribunal in 1987, which he said had not been finally determined. Section 146 of the 1977 Act (which was repealed by the Resource Management Act 1991) provided that appeals to the Planning Tribunal were deemed to be brought onbehalf of the personal representatives of the person bringing the appeal, and on behalf of successors entitled to land affected by an appeal. Section 170A provided that applications made, and consents given, under the 1977 Act were deemed to have been made or given for the benefit of the owner and occupier of the land to which the application related or the objector and his or her respective successor in title. [10] None of Mr Faloon's arguments address the fundamental point raised by the Court in its minute of 29 October 2007, which was directed to his authority to pursue the application before the Court on behalf of Central Equipment which is now in liquidation and subject to the control of the liquidators. The liquidators do not support the present application being made in Central Equipment's name. [11] The starting point is that companies are normally required to be represented in Court by a lawyer. That position is outlined in the decision of this Court in Re G J Mannix Ltd [1984] 1 NZLR 309 at 311, where Cooke J said:It is well settled in this country, and in England, Australia and Ireland, that a company has no right to be represented in the conduct of a case in Court except by a barrister; or by a solicitor in Court or proceedings where solicitors have the right of audience – as they usually have in Courts which are not superior Courts.[12] Later, at 314, His Honour noted that the Courts have a discretion to allow others to represent companies in some situations. He described the discretion in these terms: as a reserve or occasional expedient, for use primarily in emergency situations when counsel is not available or in straightforward matters where the assistance of counsel is not needed by the Court or where it would be unduly technical or burdensome to insist on counsel. Especially in minor matters, cost-saving could also be a relevant factor. A "one-man" company might be allowed to be represented by its owner if the Judge saw fit in a particular case. But it could not be right, for instance, to issue some sort of tacit continuing or general licence to an unqualified agent to appear in winding up or any other class of proceedings.[13] McMullin J described this possibility at 316 as "likely to be the exception rather than the rule".[14] The real issue before us, which was not squarely addressed by Mr Faloon in his argument, is whether the Court should exercise its discretion to allow Mr Faloon to pursue the application before the Court. Counsel for the respondent, Mr Oliver, put forward a number of reasons against granting such an indulgence. These included: (a) The considerable difficulties with the form of the application, which were pointed out in this Court's judgment of 29 October 2007 at [28] – [29]; (b) The fact that the arguments put to the Court by Mr Faloon indicate an intention on his part to relitigate matters that have been the subject of numerous decisions of both the High Court and this Court which have rejected Mr Faloon's arguments. He referred us in particular toFaloon v Attorney-General HC WN CP 310/99 5 October 2000 (and the nine cases referred to at [5] of that decision), Faloon v Commissioner of Inland Revenue (2002) 20 NZTC 17,618, Faloon v Commissioner of Inland Revenue (2005) 22 NZTC 19,653 and Faloon v Commissioner of Inland Revenue (2006) 22 NZTC 19,832. [15] Mr Faloon was allowed to appear in the High Court hearings before Associate Judge Faire which ultimately resulted in the decision which is the subject of the present application. That indulgence was granted in circumstances where counsel for Central Equipment had been granted leave to withdraw and counsel for the Commissioner raised no objection. The Associate Judge emphasised, however, that Mr Faloon was not, himself, a party to the High Court proceedings. [16] There is nothing in the affidavits filed by Mr Faloon or in the arguments he made to us both orally and in writing that leads us to conclude that he should be permitted to represent Central Equipment in this Court. In particular: (a) His conduct of Central Equipment's tax affairs does not provide any basis for finding he should represent Central Equipment in liquidation proceedings;(b) Whatever interest he has as "patentee" cannot provide a proper basis for him to represent Central Equipment in liquidation proceedings; (c) Sections 146 and 170A of the Town and Country Planning Act applied only to proceedings under that Act, and have no bearing on liquidation proceedings in this Court. [17] It is clear from the material placed before us that Mr Faloon wishes to relitigate issues which have been dealt with in earlier cases. As this Court noted in its 29 October 2007 judgment, there are a number of difficulties with the approach he wishes to take in pursuing the application. In addition, it is not clear what "special leave" he is seeking on Central Equipment's behalf. This is not a situation of emergency of the kind referred to in G J Mannix. We are not satisfied that Mr Faloon should be permitted to represent Central Equipment. We decline permission for him to do so. [18] Mr Faloon did not have authority to initiate the current application on behalf of Central Equipment. This Court has already found he was not entitled to do so on his own account. In those circumstances, we formally dismiss the application. [19] Mr Faloon's sister, Ms Jilian Piesse, attended the hearing before us, having filed an application to be joined or heard as a witness to the present application. We read her application, but there was no proper basis for us to accede to it. [20] The Commissioner seeks costs. We are satisfied that he is entitled to costs having been put to the expense of two hearings in this Court and the need for his lawyers to consider the voluminous material filed by Mr Faloon. Central Equipment should not have to pay such costs as it took no part in the proceedings. In those circumstances, we order Mr Faloon to pay to the Commissioner costs of $3,000 and usual disbursements.Solicitors: Crown Law Office, Wellington