LUPTON V COMMISSIONER OF INLAND REVENUE COA CA798/2012

LUPTON V COMMISSIONER OF INLAND REVENUE COA CA798/2012 [26 March 2013]IN THE COURT OF APPEAL OF NEW ZEALANDCA798/2012[2013] NZCA 82BETWEEN GRAEME JOHN LUPTONApplicantAND COMMISSIONER OF INLANDREVENUERespondentHearing: 18 March 2013Court: Ellen France, Harrison and White JJCounsel: Applicant in PersonP H Courtney for RespondentJudgment: 26 March 2013 at 2.15pmJUDGMENT OF THE COURTA The application for an extension of time to appeal is dismissed.B The applicant is ordered to pay the respondent costs as for a standard application on a band A basis together with usual disbursements.REASONS OF THE COURT(Given by Harrison J)[1] The applicant, Graeme Lupton, has applied to this Court for an order granting an extension of time to file a notice of appeal against a judgment delivered by Ronald Young J in the High Court in Wellington in favour of the Commissioner of Inland Revenue for assessed tax of $2,103,350.47 and shortfall penalties to be calculated.11 Lupton v The Commissioner of Inland Revenue Department HC Wellington CIV-2008-485-2460,24 March 2011.[2] The Court of Appeal (Civil) Rules 20052 allowed Mr Lupton 20 working days from the date of the High Court judgment to file an appeal. That period expired on 21 April 2011. However, Mr Lupton did not file an appeal until 3 December 2012. As a result of his failure to satisfy the statutory requirements, Mr Lupton must obtain an order granting an extension of time to appeal.3[3] In deciding whether to grant Mr Lupton leave, the ultimate question for this Court is to determine where the interests of justice lie. Four factors are particularly relevant to that inquiry, namely: (a) the length of and reasons for the delay; (b) the conduct of the parties; (c) the extent of prejudice caused by the delay; and (d) the prospective merits of the appeal.4 We will consider each of those factors in the same order.[4] First, when assessed objectively and compared with similar cases,5Mr Lupton's delay is extreme. It is also largely unexplained. While we accept thatMr Lupton intended from the outset to file an appeal, he failed to file the necessary documents in accordance with the rules. Some confusion arose initially between Mr Lupton and the Registry of this Court. However, by 21 June 2011 Mr Lupton was on unequivocal notice of the statutory requirements. He failed to take any further steps, or to explain the reason for his delay, until 3 December 2012. On its own this factor counts heavily against Mr Lupton's application.[5] Second, the conduct of the parties is neutral. Mrs Courtney for the Commissioner rightly points out that Mr Lupton failed to act diligently. But this factor is subsumed by the first factor – namely the length of and reasons for the delay.[6] Third, we accept Mrs Courtney's submission that the Commissioner has beencaused a degree of prejudice by the delay, to the extent that she has been unable to pursue an application to adjudicate Mr Lupton bankrupt until this application was2 Court of Appeal (Civil) Rules 2005, r 29(1).3 Rule 29A.4 Robertson v Gilbert [2010] NZCA 429; My Noodle Ltd v Queenstown-Lakes District Council[2009] NZCA 224, (2009) 19 PRNZ 518; and Barber v Cottle [2010] NZCA 31.5 Barber v Cottle, above n 4 and Williams v Allott (2001) 15 PRNZ 684 (CA).determined and has also incurred costs. However, this factor does not weigh heavily against Mr Lupton.[7] Fourth, and decisively, we are satisfied that the appeal has no prospect of success. The issue for determination in the High Court was, as the Judge identified, whether Mr Lupton was able to prove on the balance of probabilities that theCommissioner's assessment of income of $2,331,813 for the income tax yearsbetween 2001 and 2006 together with imposition of an evasion shortfall penalty of $465,319.79 was wrong and by how much.6 The Judge was required to conduct a largely factual enquiry. In the event, he found that Mr Lupton had failed to discharge his statutory onus, although he did accept that the assessment of income should be reduced by $228,465.34 together with a share of the shortfall penalty.7[8] Mr Lupton gave evidence in the High Court in support of his challenge to theCommissioner's assessment. He was carefully cross-examined on his claim that he did not earn income of the amount assessed or at all. After comprehensively reviewing all the relevant transactions, Ronald Young J noted Mr Lupton's counsel'sacceptance that if the Judge rejected his evidence as either not credible or unreliable on important points then except for one transaction he could not successfullychallenge the Commissioner's assessment.8[9] The Judge, having had the benefit of seeing and hearing Mr Lupton, found that his evidence was neither credible nor reliable on any of the important issues in the case.9 He then gave a sustained explanation of his reasons for this finding, before concluding that:[97] Mr Lupton's evidence was when taken together, wholly unlikely. His attempt to answer the Commissioner's conclusions about the various bank accounts through his spreadsheet was undermined by inaccuracies and its unjustified editorial claims. There were erroneous entries and a failure to include relevant entries. The editorial claims relating to the source of payments could not be substantiated by Mr Lupton by any independent evidence.6 At [1]–[4].7 At [120]–[123].8 At [64].9 At [65].[98] Mr Lupton's evidence on many specific points was inaccurate and at times, untrue. The overwhelming impression of Mr Lupton's businessdealings during this time was an attempt to hide, disguise and obfuscate, through a variety of bank accounts run by a variety of entities, so that the real nature of the money he received was unclear. To do this, false trusts, false acknowledgements of debts and shell companies (which consisted of no more than a bank account) were used. Given these conclusions as to Mr Lupton's credibility and reliability, save for the HonShu Pty transaction,the plaintiff accepted its case must fail. In accepting that, the plaintiff recognised the inevitable.[10] Mr Lupton sought to challenge these findings on two primary grounds. First,he submitted a lengthy document purporting to identify errors in the Judge's analysisand reasoning. However, this document does not approach the threshold necessary to throw into question the trial Judge's assessment of the evidence or of Mr Lupton'scredibility.10 His findings were certainly open and there is no basis upon which they might be challenged on appeal.[11] Second, Mr Lupton asserts that evidence given at trial by an investigator employed by the Department of Inland Revenue was perjured. This allegation waswithout any factual foundation whatsoever. The witness' evidence was largelyuncontroversial. She was called to prove the relevant factual narrative and produce relevant documents. Her evidence was not seriously challenged, except on the one point on which Ronald Young J found in Mr Lupton's favour in reducing the Commissioner's assessment and shortfall penalties. In that respect, her credibilitywas not in issue.[12] An allegation of perjury amounts to an allegation of criminality and should only be made where it has sound factual foundation. Mr Lupton's counsel did not atany stage in cross-examination challenge the witness on the basis that she was guilty of any misconduct. Without such a challenge and the benefit of the witness'evidence in answer, this Court would be unable to make findings upon Mr Lupton'sallegations of perjury.1110 Rae v International Insurance Brokers (Nelson Marlborough) Ltd [1998] 3 NZLR 190 (CA).11 Evidence Act 2006, s 92.[13] In our judgment, Mr Lupton's lengthy and unexplained delay and thehopeless nature of his argument on appeal are fatal to his application. We are not satisfied that the interests of justice require that leave be granted.[14] The application for an extension of time to appeal is dismissed. Mr Lupton is ordered to pay the Commissioner costs as for a standard application on a band A basis together with usual disbursements.Solicitors:Crown Law Office, Wellington for Respondent