SIMPSON AND DOWNES AS RECEIVERS OF CAPITAL + MERCHANT INVESTMENTS LIMITED (IN RECEIVERSHIP) v COMMISSIONER OF INLAND REVENUE SC 30/2012

SIMPSON AND DOWNES AS RECEIVERS OF CAPITAL + MERCHANT INVESTMENTS LIMITED (IN RECEIVERSHIP) v COMMISSIONER OF INLAND REVENUE SC 30/2012 [25 July 2012]IN THE SUPREME COURT OF NEW ZEALANDSC 30/2012[2012] NZSC 62BETWEEN RICHARD GRANT SIMPSON ANDTIMOTHY WILSON DOWNES ASRECEIVERS OF CAPITAL +MERCHANT INVESTMENTS LIMITED(IN RECEIVERSHIP)AppellantsAND COMMISSIONER OF INLANDREVENUERespondentCourt: Elias CJ, McGrath and William Young JJCounsel: G J Toebes for AppellantsH W Ebersohn and P W O'Regan for RespondentJudgment: 25 July 2012JUDGMENT OF THE COURTA We grant leave to appeal.B The approved question is:Were the applicants required to pay the GST on the sales to the Commissioner of Inland Revenue?____________________________________________________________________REASONS[1] With our decision not to grant leave to appeal in respect of the contractual argument (which we are about to discuss), there is no need to address the proposed cross-appeal. We record, however, that the Commissioner is not confined to reliance on the judgment of the Court of Appeal but may also rely on the other possible basesfor liability canvassed in the judgment of Dobson J1 or advanced by the Commissioner in the Court of Appeal.2[2] The GST in question was paid to the Commissioner by the applicants pursuant to an interim agreement which was arguably premised on a distinctionbetween a "personal liability" of the applicants to pay the GST and any obligationsto do so which they may otherwise have. The agreed question which was put to the Court was in these terms:Do Messrs Simpson and Downes as receivers of Capital + Merchant Investments Ltd (In Receivership) ("CMI") have personal liability for payment to the Commissioner of Inland Revenue ("The Commissioner") of the Goods and Services Tax ("GST") payable by CMI, but not paid, inrelation to five specified mortgagee sales undertaken by CMI?Under the interim agreement, a negative answer to this question would have resulted in the Commissioner being required to repay the GST.[3] The applicants have taken the position that this question referred only to their possible liability under ss 5(2) and 17 (and presumably ss 58 and 51B as well) of theGoods and Services Tax Act 1985 and that their "non-personal" liability, if any,associated with s 185 of the Property Law Act 2007 (and related arguments) isirrelevant. They say that the Court of Appeal's rejection of the Commissioner'sarguments under ss 5(2), 17, 58 and 51B should have resulted in a negative answer, thus requiring the Commissioner to refund the GST. That Court did not consider that it was restricted to answering the particular question posed by the parties as interpreted by the applicants.[4] Although the applicants wish to challenge this aspect of the Court of Appeal'sjudgment, we consider that this point does not warrant leave to appeal. In the first place, and despite the assertions of counsel for the applicants to the contrary, it does not raise a point of general or public importance. Instead it turns on a very particular set of facts and the interpretation of a one-off agreement which will plainly not be used as a template for future agreements. Secondly, there is no appearance of a miscarriage of justice. The conclusion and reasons of the Court of Appeal are1 Simpson v Commissioner of Inland Revenue [2011] 3 NZLR 533 (HC).2 Simpson v Commissioner of Inland Revenue [2012] NZCA 126.unassailable. The applicants are individuals and any obligations they have arise out of their actions as receivers. In this context, the supposed distinction between a"personal liability" and other liability (for instance as receivers) is meaningless.There is also the additional and overlapping consideration that while parties to litigation can invite the Court to answer a particular question, it is always open to the Court to decline to do so if it considers that the question was wrongly put.Solicitors:JTLaw, Wellington for ApplicantsCrown Law Office, Wellington for Respondent