MUSUKU v THE COMMISSIONER OF INLAND REVENUE [2015] NZHC 1584

MUSUKU v THE COMMISSIONER OF INLAND REVENUE [2015] NZHC 1584 [7 July 2015]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2014-404-1903[2015] NZHC 1584UNDER the Judicature Amendment Act 1972, Part30 of the High Court Rules and the TaxAdministration Act 1994IN THE MATTER of an application for judicial review of theCommissioner of Inland Revenueprocedural failures, breaching time-barperiod and abuse of processBETWEEN JAWAHAR BHASKAR MUSUKUPlaintiffAND THE COMMISSIONER OF INLANDREVENUEDefendantHearing: 7 July 2015Appearances: G J Thwaite for applicantP leong for respondentJudgment: 7 July 2015(ORAL) JUDGMENT OF WOODHOUSE JSolicitors/Counsel:G J Thwaite, AucklandCrown Law, Wellington[1] The applicant seeks an order that a judgment not be published, or that his name,other identifying information, and some information in the judgment not be published.[2] In discussions with Mr Thwaite, for the applicant, he accepted that the reliefsought could appropriately be met by narrowing the application to suppression ofname and any other information that would clearly identify the applicant.Background[3] This application arises from a judgment on an application for judicial reviewbrought by the applicant.1 It related to steps taken by the respondent in proposingadjustments to the applicant's income tax returns for the tax years 2001–2005.[4] The respondent applied to strike-out the judicial review proceeding and wassuccessful. The Court held:(a) Two matters challenged as decisions were not decisions and thereforenot amenable to judicial review on any basis;(b) The Supreme Court's decision in Tannadyce v Commissioner of InlandRevenue precluded judicial review in this tax case2.(c) A time-bar which the applicant said applied did not apply as a matter oflaw. As Mr Thwaite noted, that particular conclusion may be obiter, butit is unnecessary to reach any conclusion on the point.[5] The Judge's conclusion refers to matters of relevance on this application, oneof which was noted and given some emphasis by Mr Thwaite:[36] I am of the view that judicial review of steps in a process isunavailable. Mr Musuku's claim is premature. Although Mr Musuku and hiscounsel are well-intentioned in their desire to right perceived wrongs, the1 M v Commissioner of Inland Revenue [2015] NZHC 678.2 Tannadyce Investments Ltd v Commissioner of Inland Revenue [2011] NZSC 158, [2012] 2 NZLR153.statement of claim is an abuse of process and likely to cause prejudice and/ordelay, as it amounts to a collateral attack on the validity of tax assessmentsoutside of the mandatory statutory disputes and challenge processes in Part 4Aand 8A of the Act.[37] Mr Musuku will get his day in court in either the Taxation ReviewAuthority or the High Court if the Commissioner issues an amendedassessment. He does, however, have to wait until then to challenge both theprocess and the Commissioner's substantive position.Matters of concern in the judgment[6] Mr Thwaite noted seven matters recorded in the judgment which are of concernto the applicant. In summary, these are: the applicant's name; his occupation as apharmacist; the respondent's investigation of "possible tax evasion"; the applicant'sreturn of income; the respondent's proposed assessment of income; the respondent'sformation of a "provisional" opinion in terms of s 108(2) of the Tax AdministrationAct 1994; and the respondents suspicion of fraudulent or wilfully misleadingbehaviour.The applicant's privacy concerns[7] The matters the applicant seeks to keep confidential were summarised in thesubmissions as follows: his profession; family circumstances; his business reputation;his medical condition; and the sensitivity of his tax position.[8] The evidential basis for the submission was pages in documents which hadbeen put in evidence on the strike out application. The information is of a very generalnature in respect of some matters. The submission referring to business reputationrefers, in turn, to page 32 of the bundle of documents. That is a page from a letterfrom accountants acting for the applicant writing to the Inland Revenue investigator.At page 32 of the bundle (page 4 of the letter) there is simply reference to, for example,"Mission Bay Pharmacy (2005) Limited's financial statements for the year ended 31March 2006." The business is clearly identified, but it does not go beyond that. Thechronologically most recent reference to the business interests of the applicant is 2007.There is no evidence relating to relevant circumstances since then, other than in respectof the applicant's health.Principles[9] Mr Thwaite, in his written submissions, said:The present test establishes the prime public policy as being the principle ofopen justice, which will be subordinate to privacy concerns in exceptionalcases.He referred to Rogers v Television New Zealand Ltd,3 Muir v Commissioner of InlandRevenue4 and Madsen-Ries v Just.5[10] The test was stated by the Court of Appeal in Clark v Attorney-General asfollows:6[36] We are not persuaded that there was any error in MacKenzie J'sapproach to this matter. Indeed, we consider that he was correct to refuse namesuppression in this case and we agree with his reasons for that refusal. Inparticular, we agree with the emphasis he placed on the principle of openjustice, including (absent exceptional circumstances) the public identificationof all involved in proceedings.[11] Mr Thwaite's written submissions in broad measure reflected the test in thoseterms.[12] For the respondent, Ms Ieong responsibly drew my attention to another Courtof Appeal decision indicating that the test may be more evenly balanced. In Jay v Jaythe Court said:7[118] It is true the starting point is generally based on the principle of openjustice of proceedings. The desirability of open justice must be weighedagainst competing considerations arising in particular cases and each casemust be addressed on its merits. Unlike in the criminal context, "extraordinarycircumstances" are not required to justify suppression in a civil case. ThisCourt's judgment in Muir v Commissioner of Inland Revenue made noreference to the need for "extraordinary" or "exceptional" circumstances. Inrefusing leave in that case the Supreme Court observed that situationswarranting confidentiality are "likely to differ between the [civil and criminal]categories", and also "within them". Ultimately, bearing in mind therequirements for open justice in a civil context the court must exercise adiscretion as to whether to make a suppression order in the particularcircumstances of the case.3 Rogers v Television New Zealand Ltd [2007] NZSC 91, [2008] 2 NZLR 277.4 Muir v Commissioner of Inland Revenue (2004) 21 NZTC 18,894 (CA).5 Madsen-Ries v Just [2013] NZHC 2346.6 Clark v Attorney-General [Name suppression] 17 PRNZ 554 (CA).7 Jay v Jay [2014] NZCA 445, [2015] NZAR 861. (Footnotes omitted).[13] The Court in Jay did not refer to Clark. Clark, like Muir – referred to in thesubmissions of both counsel as well as in Jay – was a case concerned solely with thequestion of name suppression. In Clark the Court of Appeal approved the detaileddiscussion of the issue and, in particular, the matters of principle, in the High Courtjudgment. In Jay the matter arose at the end of a judgment primarily concerned withan appeal against the substantive decision, and after the parties had agreed to interimname suppression throughout.[14] The Court in Jay clearly did not conclude that Clark should not be followedfor the reason noted – it was not referred to. In any event, I do not need to determinewhich decision is to be followed to the extent there is a material difference.Notwithstanding some submissions from Mr Thwaite, it is clear that the Court doesnot start on the basis that there is a right to privacy which stands equally with theprinciple of open justice. The starting point is the principle of open justice. This ismade clear in Muir, which is the leading authority on name suppression in tax cases(although the principles in civil proceedings apply generally).[15] More is required than to point to adverse consequences of publicity in respectof the matters of concern, and whether they are unproven allegations or not. The factsof Muir make that clear, as do High Court cases including R&M v Commissioner ofInland Revenue;8 Madsen-Ries v Just,9 Peters v Birnie10 and Hardie v Commissionerof Inland Revenue.11This case[16] The applicant's strongest point, in terms of adverse consequences, is that thejudgment refers to the Commissioner's opinion that s 108(2) of the Tax AdministrationAct 1994 applies. Section 108(2) provides:(2) If the Commissioner is of the opinion that a tax return provided by ataxpayer—(a) is fraudulent or wilfully misleading; or8 R & M v Commissioner of Inland Revenue (2003) 21 NZTC 18, 189 at [6].9 Madsen-Ries v Just, above n 5, at [7].10 Peters v Birnie [2010] NZAR 494 (HC) at [25].11 Haride v Commissioner of Inland Revenue, HC Auckland, CIV 2007-404-003354, 28 June 2007at [5], [15]-[17].(b) does not mention income which is of a particular nature orwas derived from a particular source, and in respect of whicha tax return is required to be provided,—the Commissioner may amend the assessment at any time so as toincrease its amount.[17] Fraud is a serious allegation. Numerous cases over a long period haveemphasised the need for solid evidence before counsel plead fraud in an ordinary civilaction. I am satisfied that the considerations that underpin that apply in a broad wayto the matter of concern here to the applicant. Against that, what the judgment refersto, although perhaps not always precisely in terms of s 108(2), is an opinion of theCommissioner, not a finding.[18] The applicant points to the fact that the dispute is now before the TaxationReview Authority and he may, in the end, be vindicated. If he is, he can point to thatresult.[19] In my judgment the fact that the matter is before the Taxation ReviewAuthority, and there has not yet been a final determination, is not sufficientjustification for name suppression. The applicant chose to bring the application forjudicial review. In his claim he pleaded the Commissioner's opinions. And in thatregard I note that the primary opinion of the Commissioner was not in respect of s108(2)(a) – referring to an opinion that a tax return is fraudulent – but s 108(2)(b).[20] One of the consequences of a civil proceeding in the High Court is that thegeneral anonymity of a proceeding before the Taxation Review Authority does notapply. Muir is authority for that proposition. The applicant chose the forum in whichthe general rule is that there is no annonymity. He is not justified, having received theadverse decision, in now complaining and pointing to the Taxation Review Authorityalternative.[21] There are further considerations. One is that there is a lack of any substantiveevidence. As earlier noted, there is no evidence in respect of any relevant businessactivity of the applicant since 2007. There is not even an affidavit from the applicantdirectly in support of the suppression application and recording his presentcircumstances in respect of matters of concern. Possible adverse consequences forfamily members would be regrettable, but they are certainly not exceptional. In anyevent, again, there is no up-to-date evidence pointing to any matters of particularconsequence other than broad inferences one might draw in respect of any familymembers.[22] A further point concerns a submission by Mr Thwaite that publication of theapplicant's name is unnecessary; that it is not something which the open justiceprinciple requires. The essence of the submission is that the relevance of the decisionis the application of the Tannadyce principle to the facts of this particular case, andwith those facts being adequately recorded without reference to the applicants name,or to the particular opinions of the Commissioner, or the actual details of tax returnsand re-estimates of the Commissioner. This submission is contrary to observations inClark, as follows:12[42] With regard to Mr Ellis' comment that there is no public interest inthe publication of Mr Clark's name, we remark that the principles of openjustice and the related freedom of expression create a presumption in favourof disclosure of all aspects of court proceedings which can be overcome onlyin exceptional circumstances. We refer here to the case of Re Victim X [2003]3 NZLR 220 (HC and CA) in which this Court upheld the setting aside of asuppression order in favour of the intended victim of a failed kidnapping plot.The Court was mindful of "the sense of anguish" the result would cause theintended victim and his family but held that the victim's private interest didnot outweigh the fundamental principles of open justice and freedom ofexpression.[43] No exceptional circumstances have been pointed to in this casejustifying departure from the open justice principle. We apprehend that MrEllis' main concern is that publicity will focus on what he sees as irrelevantmatters, viz Mr Clark's crimes, rather than his alleged treatment at the handsof prison officers. It is not for the courts, however, to grade public interestfactors into matters that can or should be reported and those that should not.The right to freedom of expression is better served by placing as fewrestrictions as possible on it and certainly by avoiding value judgments by thecourts as to the relative worth of matters the press chooses to publish.[23] The remaining point involves the comparison of the circumstances presentedin this case and those in Muir. In Muir there was substantially more evidence ofprejudice, but the Court of Appeal upheld the High Court's refusal of namesuppression. An application for leave to appeal to the Supreme Court was dismissed.And it is reasonably significant, as a point of factual comparison, that in Muir the tax12 Clark v Attorney-General [Name suppression], above n 6.issues were transferred from the Taxation Review Authority on an application by theCommissioner that has been opposed by the taxpayers; that is to say the taxpayers hadnot voluntarily chosen to bring their tax case before the High Court.[24] For these reasons, I am satisfied that it would be contrary to authority bindingon me, when that is applied to the facts of this case, to grant name suppression. Theapplication is accordingly dismissed..Woodhouse J