THE COMMISSIONER OF INLAND REVENUE v MUIR [2015] NZHC 1573

THE COMMISSIONER OF INLAND REVENUE v MUIR [2015] NZHC 1573 [7 July 2015]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2011-404-1132[2015] NZHC 1573BETWEEN THE COMMISSIONER OF INLANDREVENUEApplicantAND GARRY ALBERT MUIRRespondentCIV-2011-404-4197BETWEEN THE COMMISSIONER OF INLANDREVENUE DEPARTMENTApplicantAND ACCENT MANAGEMENT LIMITEDFirst RespondentAND BEN NEVIS FORESTRY VENTURESLIMITEDSecond RespondentContinued overleaf On the papersAppearances: RL Roff and RA Herne for Commissioner of Inland RevenueGA Muir in Person and for First and Seventh to EleventhRespondents in CIV-2011-404-1132GJ Judd QC for Second, Third, Fourth and Sixth Respondentsin CIV-2011-404-4731Judgment: 7 July 2015COSTS JUDGMENT OF TOOGOOD JThis judgment was delivered by me on 7 July 2015 at 3:00 pmPursuant to Rule 11.5 High Court RulesRegistrar/Deputy RegistrarAND BRISTOL FORESTRY VENTURELIMITEDThird RespondentAND CLIVE RICHARD BRADBURYFourth RespondentAND GARRY ALBERT MUIRFifth RespondentAND GREGORY ALAN PEEBLESSixth RespondentAND HILLVALE HOLDINGS LIMITEDSeventh RespondentAND LEXINGTON RESOURCES LIMITEDEighth RespondentAND PETER ARNOLD MAUDENinth RespondentAND REDCLIFFE FORESTRY VENTURELIMITEDTenth RespondentAND WAIKATO RESIDENTIAL PROPETIESLIMITEDEleventh RespondentIntroduction[1] This judgment addresses a submission by unsuccessful respondents that the Court should make a costs order which departs from the usual rule that the liability of each of two or more parties ordered to pay costs is joint and several.1[2] In a judgment dated 31 October 2013,2 the Commissioner of Inland Revenue was granted leave to bring an application for transfer and consolidation of proceedings by way of originating application under Part 19 of the High Court Rules. It was ordered that challenge proceedings under the Tax Administration Act1994 ("TAA") should be transferred from the Taxation Review Authority to this Court and consolidated with each other and with proceedings already before the Court. Consequential directions included providing a timetable for the exchange of costs memoranda to be completed by 12 December 2013.[3] The Commissioner filed a costs memorandum on 21 November 2013 seeking an order for costs in a sum which had been agreed. Counsel for the Commissioner disclosed, however, that the parties had been unable to agree that the liability of the unsuccessful respondents for costs should be on a joint and several bases.[4] In a memorandum dated 4 December 2013, Mr Judd QC argued for the second, third, sixth and fourth respondents in CIV-2011-404-4731 ("the –4731proceeding") that the costs burden should be apportioned equally between 13 responding parties.[5] The costs memoranda were not referred to me for consideration until 29 May 2015 when it appeared to Justice Faire, while he was dealing with other matters related to the proceeding, that no costs orders had been made in respect of the transfer and consolidation application. I am unable to explain the delay but it is, of course, greatly regretted.[6] The short point at issue is whether a single costs award should be made against all respondents jointly and severally or whether costs should be apportioned1 High Court Rules, r 14.14.2 Commissioner of Inland Revenue v Muir [2013] NZHC 2881.severally between each of the respondents to the Commissioner's originatingapplication.[7] Dr Muir has not filed a costs memorandum on behalf of the other respondents or himself.Relevant background[8] Rule 14.14 of the High Court Rules provides that the liability of each of two or more parties ordered to pay costs is joint and several, unless the Court otherwise directs. The –4731 proceeding was an originating application to transfer 66 tax assessment challenges by 11 challengers from the Taxation Review Authority to this Court and to consolidate those proceedings and other proceedings which had already been transferred to this Court. The applicant also sought consolidation with proceedings concerning appeals by Dr Muir, the fifth respondent in the –4731 proceeding and the appellant in CIV-2011-404-1132 and CIV-2011-404-4197 ("the appeals").[9] Significantly, the solicitor for all of the responding parties filed a singlenotice of opposition to the Commissioner's application in the –4731 proceeding. Dr Muir filed a notice of opposition as appellant in the appeals when directed to do so by the Court. The respondents opposed the originating application on identical grounds. Although the second, third, fourth and sixth respondents were separately represented at the beginning of the hearing by Mr Gedye, they adopted Dr Muir'swritten submissions on behalf of the first and seventh to eleventh respondents, and Mr Gedye was excused from further participation in the hearing.[10] On the facts and on questions of law there is considerable overlap betweeneach respondent's challenge and there is nothing in the conduct of the –4731 proceeding by any respondent which differentiates that respondent's position fromthat of any other or from that of Dr Muir as appellant.[11] It is not insignificant that, in other related proceedings, Dr Muir made an application, acting in person, for an order that the Crown Law Office should ceaseacting for the Commission in the proceedings. The other respondents adopted the same position and actively supported the application in written and oral submissions. The application was dismissed by Woodhouse J,3 who awarded indemnity costs on a joint and several basis against all respondents.4 Dr Muir and all of the other respondents were parties to an unsuccessful appeal against the judgments of Woodhouse J.5 The Court of Appeal also awarded indemnity costs, for which all parties were jointly and severally liable.The submissions[12] On these facts, Ms Roff argues that there is no reason for the Court to direct that the default position in r 14.14, of joint and several liability for costs, should not apply.[13] For the second, third, fourth and sixth respondents, Mr Judd QC argues first that, although the Commissioner sought consolidation of the proceedings in the application which was considered by the Court, the interlocutory proceeding in which the application to transfer and consolidate the multiplicity of proceedings in the Taxation Review Authority was made should not have been brought as a single application. Mr Judd seeks to persuade the Court, at this stage, that by reference to the former s 138N(2)(a)(ii) of the TAA, under which the transfer was sought, the Commissioner was not entitled to file a single application without the leave of the Court and that a separate application should have been made in respect of each of the challenges to the assessments at the heart of the cases. Such leave was never obtained.[14] Mr Judd says that, at the time of the filing of the application and its hearing,the respondents acquiesced in the Commissioner's approach "because it didn'tmatter and was the approach that was convenient for everyone". Mr Judd submits, however, that now that the Commissioner is asking that the costs liability be joint3 Accent Management Limited v Commissioner of Inland Revenue [2012] NZHC 1430.4 Commissioner of Inland Revenue v Accent Management Limited [2012] NZHC 2389.5 Accent Management Limited v Commissioner of Inland Revenue [2013] NZCA 155, [2013] 3 NZLR 374.and several, it does matter because, as is of concern to the respondents for whom he appears, those respondents could be made to pay the whole of the costs.Discussion[15] I am not persuaded that the respondents' highly technical afterthought hasany merit and it is far too late to raise it now, in any event. The respondents acquiesced in what was a sensible, practical approach to getting before the Court the identical arguments for the transfer and consolidation of a multitude of tax assessment challenges, which have a common origin and history and which raise identical points of law.[16] The single application was administratively efficient for the Court, which operates under rules intended to secure the just, speedy, and inexpensive determination of any proceeding.6 It also provided a convenient and cost-saving approach for the parties. In particular, it saved the 11 challengers, who were represented by one solicitor, the additional expense and inconvenience of having to file and argue separate notices of opposition to separate applications which, inevitably, would have duplicated the grounds. I do not doubt that, had the technical argument now advanced been made when the originating application was first put before the Court, the Court would have granted such leave for a single application as might have been required.[17] The proceeding was commenced as a single application against 11 respondents. The respondents must be taken to have known at the time they were served with the transfer application that the effect of r 14.14 would be that any liability of the respondents to pay costs would be joint and several unless the Court considered that would be unjust. I adopt, with respect, the following pertinent observations of Lord Neuberger, President of the UK Supreme Court:7 by becoming a party to legal proceedings in this jurisdiction, a person isbrought within a system governed by rules of court, which carry with them the potential for being rendered legally liable for costs, subject of course to the discretion of the court.6 High Court Rules, r 1.2.7 Re Nortel GmbH [2013] UKSC 52, [2014] AC 209 at [89].[18] The Commissioner is not seeking any unusual order as to costs and she is entitled to rely on the rule; it is for the respondents to persuade the Court that it should direct otherwise.[19] Given the background to the application, and the unified opposition efficiently presented by all of the respondents, there is no arguable basis for departing from the default principle under the rule. That view reflects the position taken in other, related proceedings in this Court and the Court of Appeal, referred to above at [11].Order[20] Accordingly, I order that Dr Muir and the other respondents in the CIV-2011- 404-4731 proceeding shall pay to the Commissioner, in respect of the application to transfer and consolidate the proceedings, costs on a category 2B basis in the sum of $17,492.50 and disbursements of $7,257.11.Toogood J