MUIR v TAXATION REVIEW AUTHORITY [2017] NZHC 846

MUIR v TAXATION REVIEW AUTHORITY [2017] NZHC 846 [2 May 2017]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2016-404-2908[2017] NZHC 846IN THE MATTER of an application for review pursuant toPart 1 Judicature Amendment Act 1972BETWEEN GARRY ALBERT MUIRApplicantAND THE TAXATION REVIEWAUTHORITYRespondentHearing: 24 April 2017Appearances: M Hinde for the ApplicantNo appearance for RespondentS Leslie and C Hollingsworth for the Commissioner of InlandRevenueJudgment: 2 May 2017JUDGMENT OF GORDON JSolicitors: Crown Law, WellingtonEdmonds Judd, Te AwamutuCounsel: M Hinde, AucklandIntroduction[1] The applicant, Dr Muir, has been engaged in a long-running and unsuccessful legal battle with the Commissioner of Inland Revenue.[2] In 2016, Dr Muir filed a Second Amended Notice of Claim for challenges to his income tax years 31 March 1998 to 31 March 2006 in the Taxation Review Authority (TRA), which was rejected for filing by the Registrar. On review, Judge Sinclair issued a minute dated 21 September 2016 upholding the Registrar'sdecision.1 Dr Muir has now filed proceedings in the High Court seeking to judiciallyreview Judge Sinclair's decision. The TRA is named as a respondent2 in the judicial review proceedings, but the Commissioner is not.[3] Two issues require determination:(a) Whether the Commissioner should be joined as a party; and(b) Whether the Court should appoint counsel assisting.[4] I will deal with each of these issues in turn but first set out the background to the proceedings.Background[5] The minute of Judge Sinclair sets out a succinct summary of the history of proceedings between the applicant and the Commissioner. The relevant paragraphs are set out below:3[2] These challenge proceedings relate to the Trinity Scheme described by the Supreme Court in Ben Nevis Forestry Ventures Limited and Ors v Commissioner of Inland Revenue and Accent Management Limited v Commissioner of Inland Revenue.[3] Judge Barber delivered a decision in these proceedings dated 1 February 2011 in which he held:1 Muir v Commissioner of Inland Revenue TRA Auckland, 21 September 2016, TRA Nos 042/03, 105/04, 23/05, 54/05 and 38/07 (Minute of Judge AA Sinclair as Taxation Review Authority).2 The TRA adopts the conventional position and abides the decision of the Court.3 Footnotes omitted.[92] While the hearing before me has focused on a preliminary issue raised by the disputant that the challenged assessments are prohibited and I have no statutory power to hear challenges to them, there was also a succinct application for the defendant that these challenge proceedings of the disputant be struck out. I find that the assessments are not prohibited and that I have power to consider whether or not they are correct in the usual way. For reasons I have set out above I must regard the assessments as correct. Accordingly these challenge proceedings are hereby struck out.I reserve leave to apply should there be any consequential matters.(Emphasis added)The disputant subsequently applied to recall this decision but Judge Barber refused the application.[4] The disputant appealed these decisions and in the recent Supreme Court decision Arnold J (delivering the decision of the Court) succinctly described the course of these proceedings through the High Court and the Court of Appeal in the following terms:[7] The appellant then appealed to the High Court against JudgeBarber's substantive decision and his recall decision. The appeals were heard in conjunction with the respondent's application to strikeout other challenges brought by the appellant and others to assessments for the 1997 and 2007 to 2010 tax years. Faire J grantedthe respondent's application to strike out the proceedings anddismissed the appeals.[8] Faire J described the appellant's "major contention" inopposition to the strike out and in support of his substantive appealas being that "the Trinity Scheme required analysis under subpart EH of [the Act] and not under subpart EG ". Faire J consideredthat the appellant was a privy to the earlier decisions of the courts relating to the Trinity scheme, so that the principle of issue estoppel applied, and that in any event the challenges and substantive appeal were an abuse of process.[9] The appellant then appealed to the Court of Appeal. The appellant submitted that he was, arguably, not a privy to the decision of this Court in Ben Nevis for the 1997 and 1998 tax years and that he could, arguably, pursue claims for deductions from 1999 onwards by relying on sub-pt EH. Accordingly, his various challenges should not have been struck out. The Court of Appeal rejected these contentions and dismissed the appeal.[5] The Supreme Court granted leave to appeal the decision of the Court of Appeal on two questions namely whether the Court of Appeal was right:(a) to find that the appellant [disputant] could not arguably pursue claims for the 1999 and following tax years in reliance on sub-pt EH of the Income Tax Act 1994; and(b) to award costs on an indemnity basis against the appellant.The disputant applied to amend these grounds of appeal on the basis that he no longer wished to pursue the sub-pt EH argument. Leave to appeal wasthen revoked. The Supreme Court held that as a consequence "the decision of the Court of Appeal will stand and the appellant's proceedings will remainstruck out in their entirety."[6] Dr Muir then attempted to file his Second Amended Notice of Claim.Application to join the Commissioner of Inland Revenue[7] The Commissioner applies to be joined to this proceeding as respondent. The application is opposed by Dr Muir.[8] The Senior Courts Act 2016 and Judicial Review Procedure Act 2016 cameinto force on 1 March 2017. However, Dr Muir's application for judicial review wascommenced under the Judicature Act 1908 and accordingly falls to be determined in accordance with that Act and the relevant Judicature Amendment Acts.4[9] Section 9(4) of the Judicature Amendment Act 1972 (JAA) provides:The person whose act or omission is the subject-matter of the application for review, and, subject to any direction given by a Judge under section 10 of this Act, every party to the proceedings (if any) in which any decision to which the application relates was made, shall be cited as a respondent.[10] The Commissioner submits that Judge Sinclair's minute was delivered in aproceeding where the Commissioner was the defendant,5 and accordingly, that theCommissioner must be cited as a respondent to Dr Muir's application.[11] Mrs Hinde, who appears on behalf of Dr Muir, does not accept that JudgeSinclair's minute is a "decision" for the purpose of s 9(4). Nor does she accept thatJudge Sinclair's minute was given in a proceeding. Accordingly, Mrs Hinde argues,s 9(4) does not apply in the present case.[12] In support of her submission, Mrs Hinde refers to [7] and [8] of JudgeSinclair's minute:64 Senior Courts Act 2016, sch 5, cl 10(1).5 The Commissioner was named as the defendant in the TRA documents.6 (Footnote omitted).[7] It is clear from the above review of these proceedings that the decision of Judge Barber has not been overturned and therefore the challenge proceedings remain struck out.[8] A strike out application, if successful, has the effect of determining the whole proceeding. Consequently, there are no challenge proceedings extant before this Authority and the Authority therefore has no jurisdiction to hear any application in relation to these proceedings.[13] Mrs Hinde emphasises the words "in which" in s 9(4) and says that having regard to [8] of the minute, it cannot be said that the minute was given in a proceeding, the challenge proceedings having previously been struck out.[14] Mrs Hinde also draws support from the decision of Fogarty J in Air New Zealand Ltd v Queenstown Lakes District Council.7 The relevant paragraphs are set out below:[5] Mr Latimour's submission principally was that the Court had nochoice but was required by s 9(4) of the Judicature Amendment Act 1972 to join the members of the Board. Section 9(4) provides:9 Procedure(4) The person whose act or omission is the subject-matter of the application for review, and, subject to any direction given by a Judge under section 10 of this Act, every party to the proceedings (if any) in which any decision to which the application relates was made, shall be cited as a respondent.[6] Mr Weston QC argued that s 9(4) does not need to be read in anymandatory fashion, "shall" is not always interpreted in that way, and that ss 9and 10 must be read together in order to facilitate the proper operation of s 4 of the Act. I am reluctant to read down s 9(4).[7] The person whose act or omission is the subject matter of judicial review is the person or agency exercising a Government power, normally a"statutory power", as is referred to in s 4(1) of the Act.[8] The qualification in subs (4) referring to s 10 applies to the second limb of subs (4) rather than the first limb. It is a mandatory requirement that persons whose conduct is the subject matter of an application for review to be named as a party [sic]. This is, of course, the status quo. For example, the Environment Court is regularly reviewed for procedural decisions. The Environment Court is always stated as the first respondent. The second respondent is the party favoured by the ruling. The litigation usually7 Air New Zealand Ltd v Queenstown Lakes District Council HC Christchurch CIV-2010-425-395, 7 April 2011.proceeds with the Environment Court abiding and the party favoured by theruling defending the Environment Court's conduct.[15] Mrs Hinde submits that the Commissioner was not 'favoured' by the minute as her statutory rights are unaffected. Dr Muir is simply seeking to have his challenges reinstated and the Commissioner retains all her rights under Part 8A of the Tax Administration Act 1994 (TAA) in the event that the application for review were to succeed.[16] Mrs Hinde did not provide any supporting reasons as to why she does notaccept that the minute is not a 'decision' for the purpose of s 9(4). Indeed, the reliefsought8 refers to the "the Decision".[17] I am satisfied that a minute which is issued by a Judge in review of aRegistrar's decision is a "decision" for the purposes of the JAA. Section 3 of the JAA provides that a decision "includes a determination or order". That definition is sufficiently broad to capture Judge Sinclair's minute. Furthermore, there are numerous decisions of this Court in judicial review applications concerning a minute issued by a Judge of a lower court.9[18] I do not accept Mrs Hinde's submission that [8] of Judge Sinclair's minutemeans that there was no proceeding for the purposes of s 9(4). The application for judicial review proceeds on the basis that the Second Amended Notice of Claim was a proceeding; the minute of Judge Sinclair has intituling on the first page with file numbers and parties; Dr Muir and the Commissioner are named as parties.[19] Nor do I accept Mrs Hinde's submission that Air New Zealand Limited v Queenstown Lakes District Council provides support for her argument. I join with Fogarty J in not reading down s 9(4). Further the Commissioner has been favouredby Judge Sinclair's decision. It prevented Dr Muir from resurrecting the proceedingagainst the Commissioner.8 See [21] below.9 See, for example Walker v The Coroners Court at Wellington [2014] NZHC 2645; W v Family Court at North Shore [2014] NZHC 2483; Kern v The District Court at North Shore [2014] NZHC 896; Lowe v Auckland Family Court [2017] NZHC 758.[20] I am satisfied that s 9(4) of the JAA applies in respect of Dr Muir'sapplication for judicial review and accordingly order under s 10(2)(b) of the JAA that the Commissioner be joined as a respondent.[21] For completeness, I note that even if s 9(4) did not apply, I would have exercised my discretion to order that the Commissioner be cited as a respondent to the application for review on the basis that the Commissioner will be affected by the outcome of the decision.10 The proceeding seeks the following relief:(a) A declaration that the TRA had no power to make the Decision or in the alternative that the Decision is unreasonable in that the Judge erred in fact and in law; and(b) An order quashing the Decision and ordering the Challenges be heard by the TRA.[22] Mrs Hinde submitted that s 10(2)(b) of the JAA indicates that there is a threshold to be met and that the applicant must demonstrate an underlying need that they be cited. She says that the Commissioner has not demonstrated that she is affected in any relevant sense. She says this is a dispute between Dr Muir and the TRA. Mrs Hinde referred to McClintock v Attorney-General in support of her submission.11 In particular, she emphasised that to allow the Commissioner to intervene in circumstances where both the TRA and the Commissioner are represented by (different) counsel from Crown Law, would create an impression of partiality.12[23] I do not accept Mrs Hinde's submission that the Commissioner will be unaffected. For example, if Dr Muir is successful in overturning Judge Sinclair'sminute and is permitted to file his Second Amended Notice of Claim, the Commissioner will be required to respond to further litigation. She will also be unable to collect the tax owed by Dr Muir, as unpaid tax may only be collected after10 See Wilson v Attorney-General [2010] NZAR 509 (HC) at [20].11 McClintock v Attorney-General [2015] NZHC 1280.12 At [44](d).all Part 8A challenges are finally determined.13 In that regard, following thedetermination of Dr Muir's Part 8A challenges, the Commissioner has sought tocollect the outstanding tax debt owed by Dr Muir. In opposing the Commissioner's application for summary judgment, Dr Muir's Notice of Opposition records, inreliance on this proceeding, that the Commissioner cannot establish, or swear to the fact, that the due date for payment of deferrable tax has arrived.[24] Nor do I accept Mrs Hinde's submission that an impression of partiality, ifsuch an impression exists, is relevant to the question of whether the Commissioner should be joined as a party. The Commissioner has an interest in the outcome of DrMuir's judicial review application. That is the basis for joinder. The Commissioner's choice of legal representation does not alter that fact.Application to appoint counsel assisting[25] Dr Muir makes application under s 10 of the JAA for appointment of counsel to assist. The application is opposed by the Commissioner.[26] Both counsel are agreed that if the Commissioner is joined there is no need for the appointment of counsel to assist. I agree that this is the correct approach. Having regard to my decision joining the Commissioner as a party, I dismiss Dr Muir's application for appointment of counsel to assist.Result[27] The Commissioner of Inland Revenue is to be joined as a respondent in this proceeding.[28] The application for appointment of counsel assisting is dismissed.13 See Tax Administration Act 1994, s 3, definitions of "deferrable tax" and "day of determination of final liability"; and the due date for payment of tax subject to challenge under Part 8A in s142F.Costs[29] If the parties are able to agree on costs a joint memorandum should be filed by 16 May 2017. If there is no agreement, the Commissioner is to file her memorandum by 22 May 2017 and Dr Muir by 29 May 2017. Memoranda are not to exceed five pages.___________________________________Gordon J