CHRISTIESON V COMMISSIONER OF INLAND REVENUE HC HAM CIV 2007-419-913

CHRISTIESON V COMMISSIONER OF INLAND REVENUE HC HAM CIV 2007-419-913 27 February 2008IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY CIV 2007-419-913UNDER the Judicature Amendment Act 1972 IN THE MATTER OF the Tax Administration Act 1994 BETWEEN GARY JAMES CHRISTIESON Plaintiff AND COMMISSIONER OF INLAND REVENUE Defendant Hearing: 27 February 2008 Appearances: David Hayes for Plaintiff Cathryn Curran-Tietjens and Natasha Breedon for Defendant Judgment: 27 February 2008JUDGMENT OF HARRISON J_________________________________________________________________________________ SOLICITORS Brook Law (Hamilton) for Plaintiff Crown Law Office (Wellington) for Defendant COUNSEL David Hayes[1] Mr Gary Christieson has applied to judicially review a decision of the Commissioner of Inland Revenue. In reality his claim did no more than dispute facts but without seeking leave to cross-examine the Commissioner's deponent whose unchallenged evidence answered Mr Christieson's case. Within 30 minutes of opening, and after taking instructions, Mr David Hayes for Mr Christieson advised that the claim was abandoned. Judgment is accordingly entered for the Commissioner. He is also entitled to costs. [2] I am satisfied that the truly exceptional circumstances of this case justify an indemnity award. Mr Christieson either acted improperly or unnecessarily in issuing this proceeding. Alternatively, the case falls into the frivolous category, given the apparent gross lack of care exercised before filing the statement of claim. [3] Some brief background is necessary. Mr Christieson and his wife failed to file income tax and GST returns for at least three income years. The Commissioner conducted an investigation and as a result issued default assessments. The Commissioner contemporaneously advised Mr Christieson of the nature and extent of his right to invoke dispute procedures. He emphasised the importance of filing within four months both returns of income for the years involved and Notices of Proposed Adjustment (NOPA) which would set out the reasons why receipts are not gross income: s 89D Tax Administration Act 1994. [4] The nature and effect of the Notices, with express provision for the dates when income tax returns should have been filed, the dates default assessments were issued, the dates the NOPAs and returns were due if the assessments were to be disputed, the dates of receipt of the NOPAs, and the dates of receipt of returns are set out in a table helpfully filed by Ms Curran-Tietjens and Ms Breedon for the Commissioner as follows:Income taxYear Ended Date income tax return should have been filed Date default assessment issued Date NOPA & return due if assessments to be disputed Date NOPA received Date returns received31 March 2003 7 July 03 21 Sept 06 20 Jan 07 25 Jan 07 - 31 March 2005 7 July 05 6 Nov 06 5 March 07 25 Jan 07 23 March 07 31 March 2006 7 July 06 19 Sept 06 18 Jan 07 25 Jan 07 23 March 07GSTPeriods Ended Date default assessment issued Date NOPA & return due if assessments to be disputed Date NOPA received Date returns received31 March 2002 to 31 March 2006 (inclusive) 20 Sept 06 19 Jan 07 25 Jan 07 (although CIR considers it invalid for GST purposes) 10 April 07[5] When his attention was drawn to its existence this morning, Mr Hayes advised that he could not dispute counsel's tabulation. Even on Mr Christieson's own affidavit, he failed to comply with the statutory time limits. To the extent that it contains admissible evidence, Mr Christieson's affidavit admits that returns were not filed at the earliest until one month out of time. The Commissioner denies receipt of returns for one of the years. [6] Counsel for the taxpayer must have been aware of the requirement for strict compliance with statutory timeframes in this area: Allen v CIR [2006] 3 NZLR 1 (CA). Mr Christieson's failure to exercise his statutory right ended his entitlement to invoke the dispute procedure unless the Commissioner invoked his discretionary power to further extend time. He can, of course, only do so in exceptional circumstances. There is no evidential basis for suggesting that he should have done so here. [7] It is plain that this proceeding should never have been bought. It was without any hope from the outset. The first and elementary step to be undertaken by Mr Christieson's advisors was to calculate when in fact the time limits expired. This was a uniquely simple exercise. The relevant statutory provisions are unambiguous. [8] Today, however, Mr Hayes said he originally believed that the expiry dates were later than those which applied. I need say nothing more than that this explanation is unsatisfactory from counsel appearing in the High Court for a party seeking to pursue the important remedy of judicial review of a statutory decision made by the Commissioner. This proceeding has wasted significant resources, bothby the Court and the Commissioner, which should have been more fairly and efficiently committed elsewhere. [9] Moreover, some of the contents of Mr Christieson's affidavits verge on the scurrilous. For example he says:I have tried to make sense of what has happened. I have spoken to several people and it appears to me from the knowledge I have gained that the [Commissioner's] employees are more motivated to increasing the amount of debt located than accurately assessing this. I say this because the [Commissioner's] staff are encouraged to locate what are known as 'discrepancies'. The greater the discrepancy the easier it is for the staff to reach their key performance indicators. I understand that if they exceed the targets the next year's salary is increased by some formula as recognition of the 'good' performance. This in my opinion explains why my company and myself are being tax for the same income, and why the [Commissioner] does not want to alter the tax assessments even though he must know on any honest approach it is wrong.[10] Mr Christieson is a witness of fact. His gratuitous and unsubstantiated denigration of the motives of the Commissioner's employees is of no assistance whatsoever in determining an application for judicial review. It had no place here. Other parts of his affidavit offer expressions of opinion or submission. All are similarly inadmissible. [11] I repeat my satisfaction that an award of indemnity costs is appropriate. Ms Curran-Tietjens advises that the Commissioner's actual solicitor/client costs are $13,785 together with disbursements of $1,639. While Mr Hayes does not challenge the amount, and it is unquestionably reasonable, I am satisfied that a fair and appropriate award, which reflects the nature of Mr Christieson's application, should be for costs of $10,000 together with disbursements of $1,639. Judgment is entered for the Commissioner accordingly. ______________________________________ Rhys Harrison J