BEN NEVIS FORESTRY VENTURES LTD V COMMISSIONER OF INLAND REVENUE COA CA231/2013

BEN NEVIS FORESTRY VENTURES LTD V COMMISSIONER OF INLAND REVENUE COA CA231/2013 [9 May 2013]IN THE COURT OF APPEAL OF NEW ZEALANDCA231/2013[2013] NZCA 164BETWEEN BEN NEVIS FORESTRY VENTURESLIMITEDFirst AppellantAND BRISTOL FORESTRY VENTURELIMITEDSecond AppellantAND CLIVE RICHARD BRADBURYThird AppellantAND GREGORY ALAN PEEBLESFourth AppellantAND COMMISSIONER OF INLANDREVENUERespondentHearing (by telephone conference): 9 May 2013Court: Ellen France, Wild and Ronald Young JJCounsel: G J Judd QC for AppellantsB W F Brown QC and R L Roff for RespondentJudgment: 9 May 2013Reasons: 22 May 2013 at 11 amJUDGMENT OF THE COURTA We decline to hear the appeal in advance of the hearing in the High Court on the respondent's application for strike out or dismissaland associated appearance under protest to jurisdiction. The fixture on 22 May 2013 is accordingly vacated.B We make no order as to costs.____________________________________________________________________REASONS OF THE COURT(Given by Ellen France J)Introduction[1] This judgment concerns the appellants' appeal to this Court against a decision about the order in which various interlocutory applications are to be heard in the High Court. We issued a results judgment deferring the hearing of the appeal on 9 May 2013. These are our reasons for that decision.Background[2] The appellants have applied to the High Court for an order that the judgment of the High Court in Accent Management Ltd v Commissioner of Inland Revenue1 be set aside. Venning J in that case found that the Trinity scheme (in which the appellants are investors) was a tax avoidance arrangement. The finding of tax avoidance was upheld in this Court2 and in the Supreme Court.3[3] The appellants' claim in the High Court is that the decision in Accent Management is voidable on the ground that the Judge was or may be seen to be biased because he was beholden to the Commissioner of Inland Revenue, the respondent, in respect of an alleged stamp duty debt. The appellants also filed an interlocutory application to join the Attorney-General to the proceeding. A draft amended claim for compensation under the New Zealand Bill of Rights Act 1990 was attached to that application.[4] The Commissioner's response to the challenge to Venning J's judgment wasto file an appearance under protest to jurisdiction and an interlocutory application for dismissal or strike out. The Commissioner says that the High Court has no jurisdiction to consider the claim in relation to the Accent Management judgment.1 Accent Management Ltd v Commissioner of Inland Revenue (2004) 22 NZTC 19,027 (HC).2 Accent Management Ltd v Commissioner of Inland Revenue [2007] NZCA 230, (2007)23 NZTC 21,323.3 Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2008] NZSC 115, [2009]2 NZLR 289.If it is properly considered in any court, that consideration would necessarily have to occur in this Court.[5] Katz J was asked to decide whether these outstanding interlocutoryapplications should be set down for hearing together, or whether the Commissioner'sapplication for dismissal or strike out and the associated appearance under protest to jurisdiction should be resolved first. Katz J decided that the Commissioner'sapplication should be heard first. That was because, the Judge said:4It is premature to consider joining additional defendants or adding new causes of action to the proceedings until the Commissioner's objection tojurisdiction and strike out application are determined.[6] The Judge made various orders timetabling the hearing of theCommissioner's application for strike out and dismissal.[7] The appellants also asked the High Court for their application and the associated interlocutory applications to be heard by a Full Court of the High Court. Katz J referred this matter to the Chief High Court Judge, Winkelmann J. Winkelmann J in a minute dated 17 April 2013 said there were no grounds which would justify constituting a Full Court in respect of the interlocutory applications or the substantive proceeding.5[8] The appellants' appeal against the decision as to the order in which theinterlocutory applications were to be heard and as to whether a Full Court should have been constituted was given a fixture date in this Court of 22 May 2013.Deferral of hearing of appeal?[9] We decided it was necessary to determine as a preliminary question whether we should hear the appeal or defer it relying on the discretion to take the latter course recognised by the Supreme Court in Siemer v Heron.64 Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue HC Auckland CIV-2012-404-7682, 10 April 2013 at [6] (Minute).5 Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue HC Auckland CIV-2012-404-7682, 17 April 2013.6 Siemer v Heron [2011] NZSC 133, [2012] 1 NZLR 309 at [32].[10] In Siemer v Heron, the Supreme Court said there was a right of appeal to this Court against interlocutory decisions. However, as this Court explained in Reid v Attorney-General, the Supreme Court recognised that there is a discretion to decline to hear an interlocutory appeal in advance of the substantive hearing in the lower court.7 The discretion can be exercised if this Court decides the issues on appeal may be overtaken by the substantive hearing or that the appellant is unlikely to be prejudiced by postponement. The Court in Reid continued:8The [Supreme] Court made it clear, however, that where the interlocutory decision which is the subject of the appeal would be dispositive of the case either in law or as a practical matter, then this Court would ordinarily proceed to hear and determine it before the substantive issue was addressed in the High Court.[11] Mr Judd QC for the appellants said that we should hear the appeal on 22 May2013 because otherwise the appeal would be rendered nugatory. The respondent'sapplication will be heard first and that is the direction appealed against. Mr Juddsays that the respondent's approach is designed to force the appellants to issue a separate Bill of Rights proceeding and deferral of the hearing of the appeal will mean the respondent obtains that tactical advantage. That result would also be contrary to the objective in the High Court Rules to deal with matters in a just and speedy manner especially as the respondent has indicated it will challenge the jurisdiction to file the Bill of Rights claim as well.9 That jurisdictional issue will then have to be dealt with at a later time when the two jurisdictional issues could be dealt with together.[12] Mr Brown QC for the respondent explained that the Commissioner's protest to the High Court's jurisdiction to hear the claim that the Accent Managementdecision should be set aside has a different basis from the objection she will take to the Bill of Rights claim foreshadowed by the appellants. The Commissioner will say that if this claim is to proceed, it will have to be dealt with in this Court, not in7 Reid v Attorney-General [2012] NZCA 174.8 At [5] (footnote omitted).9 High Court Rules, r 1.2.the High Court.10 By contrast, the jurisdictional challenge to the foreshadowed Bill of Rights claim will focus on amenability to jurisdiction more generally.[13] We are satisfied that the decision as to the order in which these interlocutory matters are heard is not dispositive in any substantive or practical way. Nor are the appellants prejudiced by deferral. The reality is that if the appellants successfullyresist the respondent's application they can then apply for joinder of the Bill ofRights claim. They will have lost nothing. If the appellants are not successful, then there will be no proceeding in the High Court to join. Moreover, the appellants can, now or later, file a separate proceeding making their Bill of Rights claim.[14] Mr Judd relied on observations made by this Court in Attorney-General in respect of the Government Communications Security Bureau v Dotcom about theprocedural tangle that had arisen in that case and the Court's refusal to defer adecision on an appeal relating to one claim pending a decision in the High Court on another claim.11 However, in that case the Court found that decisions had been made about joinder and leave granted to amend the relevant claim. In other words, matters had moved on from the position we are addressing where the decision in issue involves a step prior to the hearing of the substantive interlocutory issue.[15] As to the decision of Winkelmann J refusing to constitute a Full Court to hear either the interlocutory applications or the substantive matter, the appellants do not challenge that decision insofar as it concerns the hearing of the interlocutory applications. The appeal related to Winkelmann J's conclusion in relation to the substantive hearing. However, in the course of the hearing before us, Mr Judd indicated that this aspect was not a focus of the appellants' concern. Rather it wasmore a case of convenience. If this Court was hearing the other appeal, that is, against the decision as to the order in which the applications are heard then, he said, this Court could usefully hear the appeal against Winkelmann J's decision at the same time.10 See the discussion of the procedural history of the related proceedings in Commissioner ofInland Revenue v Redcliffe Forestry Venture Ltd [2012] NZSC 94, [2013] 1 NZLR 804 at [6];and Accent Management Ltd v Commissioner of Inland Revenue [2013] NZCA 155 at [12]–[19];see also Muir v Judicial Conduct Commissioner [2013] NZHC 989.11 Attorney-General in respect of the Government Communications Security Bureau v Dotcom[2013] NZCA 43 at [28].[16] We did not hear argument about whether Winkelmann J's decision is amenable to appeal.12 Because of the approach taken by Mr Judd, it is not necessary to decide that matter now. In any event, the decision as to whether or not a Full Court is constituted can be revisited depending on the outcome of the interlocutory matters.Result[17] For these reasons, we declined to hear the appeal in advance of the hearing in the High Court on the respondent's application for strike out or dismissal and associated appearance under protest to jurisdiction. The fixture on 22 May 2013 was accordingly vacated.[18] Whether to deal with the appeal has been dealt with as a preliminary matter. We did not receive any written submissions from the respondent and the matter was dealt with at fairly short notice by convening a telephone conference. In these circumstances, we made no order as to costs.Solicitors:Wynyard Wood, Auckland for AppellantsCrown Law Office, Wellington for Respondent12 See the discussion in Fay Richwhite v Davison (1997) 11 PRNZ 190 (HC) at 191–192.