CLARENCE JOHN FALOON V THE COMMISSIONER OF INLAND REVENUE HC TAU CIV 2010-470-000922

CLARENCE JOHN FALOON V THE COMMISSIONER OF INLAND REVENUE HC TAU CIV 2010-470- 000922 8 November 2011IN THE HIGH COURT OF NEW ZEALANDTAURANGA REGISTRYCIV 2010-470-000922UNDER Tax Administration Act 1994BETWEEN CLARENCE JOHN FALOONPlaintiffAND THE COMMISSIONER OF INLANDREVENUEDefendantHearing: 3 November 2011Appearances: Mr C J Faloon in person the PlaintiffJAL Oliver and K Ross for the DefendantJudgment: 8 November 2011JUDGMENT OFASSOCIATE JUDGE CHRISTIANSENThis judgment was delivered by me on08.11.11 at 4:30pm, pursuant toRule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDateSolicitors:J Oliver, Inland Revenue, Wellington - John.Oliver@crownlaw.govt.nzCopy to: C J Faloon, 43B Twentieth Avenue, Tauranga SouthProcedural Background[1] This judgment deals with the Commissioner‟s application to strike out andgenerally dismiss Mr Faloon‟s proceeding.[2] This hearing was originally scheduled in timetable orders made by Associate Judge Doogue on 8 December 2010. At that time the fixture was allocated for May 2011. Mr Faloon then sought a review of Associate Judge Doogue‟s timetableorders. That review application went before Brewer J. Mr Faloon then sought areview of Brewer J‟s decision. Eventually today‟s hearing was scheduled.[3] Then, on 20 October 2011 Mr Faloon filed another proceeding in this Court under CIV 2011-470-878. By it he applied for an „Order of Prohibition‟ under Part30 of the High Court Rules. Essentially the new proceeding was another attempt to adjourn the strike out application. The new proceeding pleaded that the Commissioner had not filed a statement of defence to the statement of claim filed in this proceeding. Then on 8 August 2011 Mr Faloon filed an amended statement of claim in this proceeding.[4] The new proceeding pleads that no statement of defence was filed to the amended statement of claim in breach of Rule 7.77(6) of the High Court Rules. Mr Faloon also asserts the amended statement of claim filed on 8 August 2011 pleaded a fresh cause of action which the Commissioner was obliged to respond to.[5] Essentially then it is because the Commissioner has not filed a statement of defence upon the original and as well upon the amended statement of claim, that Mr Faloon by his new proceeding seeks orders:(a) „Prohibiting‟ any further hearing of this proceeding until a defence to the amended statement of claim is filed.(b) That the strike out application be adjourned meanwhile.[6] In essence Mr Faloon was endeavouring to delay the hearing before me of theCommissioner‟s strike out application.[7] When the matter was brought to my attention I issued a minute on 25 October 2011 in which I invited Mr Faloon to present his application for an adjournment on the morning the strike out application was to be heard. I informed him that in the event the adjournment application failed, he should be prepared to respond to submissions upon the strike out application.[8] When the strike out application was called before me I invited Mr Faloon to pursue his adjournment application. Before then he had delivered to the Court his written submissions and bundle of authorities for consideration upon the strike out application. Mr Faloon did not renew his adjournment application before me. I informed him then that the strike out application would not be adjourned. It seems to me therefore that the new proceeding serves no further purpose and I would have struck it out except:(a) Mr Faloon purported to bring his new proceeding under Part 30 of the Rules where Associate Judges have limited authority to act.(b) I was informed that the new proceeding has a first case management conference scheduled before Asher J on 29 November 2011.Background[9] Mr Oliver, counsel for the Commissioner advises that this proceeding is, he thinks, the twenty eighth filed by Mr Faloon in connection with events which first occurred more than 40 years ago concerning land owned by Trade Lines Limited (Trade Lines), a Faloon family company then in the control of Mr Faloon‟s father.Mr Faloon has prosecuted claims in the names of corporate entities and himself in person or as a trustee of a trust which he says owned shares in those corporate entities. It is through the trust that Mr Faloon purports to obtain authority to pursuehis claims as a "related entity" even though those corporate entities have long sinceceased to exist, they having many years ago been placed into liquidation.[10] The Faloon claims have been against the Bank of New Zealand, the District Land Registrar; the Palmerston North Airport Limited; the Liquidators of the Faloon family corporate entities; a lawyer who acted for those corporate entities; the Comptroller of Customers; the Attorney-General; and of course against the Commissioner of Inland Revenue.[11] In recent times Mr Faloon has endeavoured to file accounts with the Inland Revenue Department wherein he has claimed income receivable upon that sum he considers was payable by way of compensation at the time land was compulsorily acquired from Trade Lines for the purpose of an extension to the Palmerston North Airport. He considers that the sum actually paid at that time neglected to take into account other factors for which compensation ought to have been paid including asum of $432,554 for „noise pollution‟. The ultimate purpose of this exercise is unclear. I assume if Mr Faloon can obtain the Commissioner‟s acceptance of a claim that income, in the form of accumulated unpaid interest, has continued to accrue to the sum of more than $11,000,000 now identified by Mr Faloon, then that may form some basis upon which he can pursue a new claim for further compensation.[12] The claim in this proceeding concerns a Notice of Proposed Adjustment (NOPA) filed by Mr Faloon with the Commissioner on 16 July 2009 pursuant to s89D(3) of the Tax Administration Act 1994 (the Act). The Commissioner‟s Notice ofResponse (NOR) dated 11 September 2009 rejected Mr Faloon‟s NOPA.[13] On 1 October 2009 Mr Faloon filed proceeding CIV 2009-470-885 purportedly challenging that rejection of the Commissioner. He did that claiming that the Commissioner‟s decision was a „disputable decision‟.[14] On 29 October 2009 the Commissioner applied to strike out that proceeding. I heard that application on 15 April 2010. My judgment issued on 29 April 2010. It confirmed the Commissioner was correct to reject the NOPA dated 16 July 2009. I struck the proceeding out because I considered it to be an attempt to re litigate matters that had already been determined.[15] On 17 October 2009 Mr Faloon met with two officers of the Inland Revenue Department at the Department‟s Tauranga branch office. Mr Faloon pleads it was a two hour meeting that "did not resolve the dispute". He said he provided evidenceof two copies of titles to land issued to the Crown on 7 January 1994. The land in question was that formerly owned by Trade Lines. Mr Faloon pleads that the twoofficers "promised to consider the documents of title to land and promised... furthercommunications following the conference".[16] A little more than two months after my judgment issued Mr Faloon on 9 July 2010 contacted the Department‟s Complaints Management Service and enquiredwhether a disclosure notice was to issue in connection with the 16 July 2009 NOPA. Mr Rodgers of the Department responded by letter dated 16 August 2010. He wrote:...I note that you have referred to your Notice of Proposed Adjustment (NOPA) filed on 17 July 2009. The NOPA was the basis of proceedings consideredby the High Court, as recorded in Associate Judge Christiansen‟s judgmentof 29 April 2010. Associate Judge Christiansen considered the matter of accepting the NOPA of 17 July 2009, and found in favour of the Commission of Inland Revenue. All causes of action were struck out and generally dismissed.As the NOPA has been considered by the High Court, and Associate JudgeChristiansen found in the Commissioner‟s favour, Inland Revenue will notbe taking any further action regarding this matter....The pleadings[17] In this proceeding Mr Faloon has pleaded that Mr Rodgers‟ letter contained three "disputable decisions". He says it was incorrect that the 16 July 2009 NOPAwas the basis of the proceeding considered by me; that I did not consider the matter of accepting that NOPA. He also pleads that by the letter of 16 August 2010 the Commissioner stated he would not be taking any further action in relation to the NOPA of 16 July 2009. Mr Faloon says it is implicit by this advice that theCommissioner indicated that he would not issue a "disclosure notice" as he says isrequired by s 89M(1) of the Act. By that provision the Commissioner must issue a disclosure notice in respect of any NOPA filed by a taxpayer. Mr Faloon refers to s89G of the Act which requires that any rejection of a NOPA must state concisely the reasons why the facts or legal arguments contained in the NOPA are incorrect.[18] In his original statement of claim Mr Faloon pleaded the point that the letter of 16 August 2010 contained disputable decisions because in his perception of things Mr Rodgers was wrong in as much as it could be inferred my decision had dealt withthe NOPA and the Commissioner‟s rejection of it. Also and for reasons I have referred to he considers the letter did not comply with the provisions of 89G and or 89M because it referred only to the fact of my judgment and was not in the form that the Act required.[19] In his amended statement of claim Mr Faloon focuses upon the fact that, he asserts, the Commissioner has never filed a disclosure notice in relation to his NOPA. He says the letter of 16 August 2010 was not a disclosure notice because of its lack of appropriate form. But, the amended statement of claim goes much further.It recasts yet again Mr Faloon‟s long running dispute with the Commissioner andwith other authorities.[20] It is implicit from the statements of claim that Mr Faloon is not persuaded that my judgment should affect the obligations of the Commissioner to follow due process as prescribed by the Act. This brings into focus his pleading of a two hour conference with two members of the Department on 17 October 2009. He states he gave to those officers two titles to land i.e. the land that had formerly been owned by Trade Lines and which was subsequently taken for public works. He states the officers had promised to consider those documents and to respond; that in spite of those promises there has not been a response; that he is entitled to that response.[21] I enquired of Mr Faloon about the purpose he had when providing the two title copies. He responded that the officers had an obligation to consider whether any taxable gains had accrued from the disposition of the land to the Crown. He said because no response was received in that regard the Commissioner had not made a decision in relation to it. He said it was an event that post-dated the Commissioner‟sNOR dated 11 September 2009 and therefore one upon which a properly constructedNOR was due. Mr Rodgers‟ letter of 16 August 2010 did not, he claims, achieve that purpose.[22] Therefore Mr Faloon submits that the matters he brings to the attention of this Court by this proceeding have not been decided before.Considerations[23] I earlier referred to the approach adopted by Mr Faloon in his attempts todelay or avoid the hearing upon the Commissioner‟s strike out application in thisproceeding. I have also referred to the efforts Mr Faloon has undertaken over many years to litigate his claim which is one essentially concerned with revisiting rights to claim compensation in connection with land taken from a family company.[24] On this occasion he has dressed his claim in the clothing of a challenge to formal process. He says that the response to his NOPA of 16 July 2009 did not comply because it wrongly referred to my judgment addressing the NOPA and that it did not in any event meet the requirements of s 89G and s 89M(1) of the Act. Further and despite my judgment there is nothing that should relieve the Commissioner of his obligations to respond appropriately in relation to any new matter raised with respect to the 16 July NOPA, subsequent to my judgment. Hence, his reference to the occasion involving the two officers following which he expected a response to their consideration of two titles in circumstances where he says those officers were bound to address the issues of gains which flowed from the disposition of the land referred to in those titles. The letter of 16 August 2010 did not do this he said and otherwise by its form that letter was not statute compliant.Conclusions[25] This proceeding like the many others Mr Faloon has prosecuted is mischievous, it is frivolous and vexatious and is an abuse of Court process.[26] By my earlier judgment I upheld the Commissioner‟s rejection of Mr Faloon‟s 16 July 2009 NOPA. That rejection was not a discursive document. It wasa 10 page response which set out precisely what the Commissioner contended for inresponse to Mr Faloon‟s NOPA. It referred to the question of a financial arrangement in the outcome of the compulsory acquisition of land, and it referred to accruals. At its end the document advised Mr Faloon what he could do in relation to the rejection. Unquestionably the letter was statute compliant, and in reality that is the end of any challenge to the 16 July 2009 NOPA.[27] The letter of 16 August 2010 is not a disputable decision. A disputable decision is one defined in s 3(1) of the Act as being:(a) An assessment;(b) A decision of the Commissioner under a tax law...[28] The letter of 16 August 2010 does not fall into either of these categories. Rather, and as Mr Oliver submits, it is a simple statement of the conclusion that Mr Rodgers reached after reading and considering my earlier judgment.[29] The statement that no further action would be taken is not a disputable decision because it is clear from the letter that Mr Rodgers was of the view that the NOPA had already been considered and rejected and rightly rejected by the Commissioner, and that the rejection had been upheld. As I earlier noted the NOPA and the rejection were clearly before me on the occasion that I struck out the earlier proceeding.[30] I accept the submission that given the matter had already been adjudicated upon by me when Mr Faloon made his complaint in July 2010 it would have been pointless for the Commissioner to issue a disclosure notice under s 89M(1) and there probably would have been no power to do so.[31] This proceeding is an attempt at re litigation of previous decisions. I do not propose to review those in detail, I having done so in my earlier judgment. Suffice to say that the decided cases make it quite clear that:1. The land in question was owned by Trade Lines and not by Mr Faloon personally.2. The proclamation taking a portion of the Trade Lines‟ land was valid.3. The balance of the land has been sold by the liquidators of Trade Lines.4. Neither Mr Faloon nor members of his family or trusts associated with him have any claim to compensation.[32] All attempts by Mr Faloon to appeal or review these judgments have failed, as indeed was his attempt to review my judgment.[33] It is in that background of matters that the present proceeding represents an attempt to get around the affect of those decisions. Mr Oliver submits I should not entertain those attempts. Indeed I will not.[34] This proceeding falls clearly within Rule 15.1(1)(d) as being "otherwise an abuse of the process of the Court".[35] What Mr Faloon is attempting by this proceeding is to compel the Commissioner to accept various assessments of income based on claims which have previously been conclusively rejected by the High Court and Court of Appeal. Iagree with Mr Oliver when he says that Mr Faloon is conscientiously rejecting eachand every decision which is not in his favour by steadfastly clinging to the slightestglimmer of hope which might be in his favour.[36] Mr Faloon is confused in his belief that he or the trusts he represents arerelated parties or retain a right of suit in connection with any right of claim hisfamily companies may have had in the outcome of the taking of certain land inwhich process compensation was ordered to be paid. Mr Faloon believes thatbecause, as he claims, those trusts held shares in the companies that rights of claimpersist even though those shares do not now exist because the companies in question have long since been placed into liquidation.Decision[37] Mr Faloon‟s proceeding is struck out and it is generally dismissed.[38] This is an appropriate case to consider the Commissioner‟s application forcosts to be fixed on an indemnity basis. For that purpose the Commissioner is to file brief submissions in support and to serve same upon Mr Faloon, who following receipt has 10 working days within which to respond. Costs will be fixed in the outcome.Associate Judge Christiansen