MICHAEL HILL FINANCE (NZ) LIMITED v THE COMMISSIONER OF INLAND REVENUE [2015] NZHC 3144

MICHAEL HILL FINANCE (NZ) LIMITED v THE COMMISSIONER OF INLAND REVENUE [2015] NZHC 3144 [10 December 2015]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2014-404-2423[2015] NZHC 3144BETWEEN MICHAEL HILL FINANCE (NZ)LIMITEDPlaintiffAND THE COMMISSIONER OF INLANDREVENUEDefendantHearing: 16 November 2015Appearances: SE Fitzgerald and MF Mabbett for the plaintiffM Heron QC and H Ebersohn for the defendantJudgment: 10 December 2015JUDGMENT OF TOOGOOD JThis judgment was delivered by me on 10 December 2015 at 4.00 pmPursuant to Rule 11.5 High Court RulesRegistrar/Deputy RegistrarTable of Contents ParagraphNumberIntroduction and summary of findings [1]Background [5]The inconsistency challenge [10]Strike-out principles [11]The evidential basis for the inconsistency challenge [12]The parties' positions [17]Issues [20]Is there an arguable case that the Commissioner has anenforceable duty to act consistently?[21]The duty to act consistently in administrative law [45]The Commissioner's argument [46]Section 6 of the TAA [25]The Court of Appeal's decision in Reckitt & Coleman [52]Observations in Westpac Banking Corporation vCommissioner of Inland Revenue (High Court)[38]The primacy of correctness [40]Do the facts of the proceeding make it untenable thatMichael Hill could succeed in enforcing any such duty?Do ss 109 and 114 of the TAA prevent a taxpayer fromraising administrative law grounds in challengeproceedings except in "exceptional circumstances"?[44][45]Sections 109 and 114 of the TAA [46]The decision in Tannadyce Investments Ltd v Commissioner ofInland Revenue[49]The parties' positions on the effect of Tannadyce on the presentproceedings[52]The Commissioner's argument [55]Discussion [58]In challenge proceedings, does a finding that theCommissioner's decision was correct trump any invaliditywhich might otherwise result from a breach of the duty ofconsistency?[67]Table of Contents ParagraphNumberShould the inconsistency challenge be struck out? [81]Decision and costs [83]Introduction and summary of findings[1] In this proceeding, the plaintiff, Michael Hill Finance (NZ) Limited("Michael Hill"), challenges a tax assessment by the Commissioner of Inland Revenue ("the Commissioner") under Part 8A of the Tax Administration Act ("TAA"). This judgment concerns an application by the Commissioner for an orderstriking out that part of Michael Hill's challenge which alleges that the Commissioner has breached a duty to treat taxpayers consistently ("the inconsistency challenge").[2] In this judgment I dismiss the Commissioner's strike-out application.[3] For the reasons which follow, I do not think it is plain and obvious that the inconsistency challenge cannot succeed:(a) There is an arguable case for the existence of an enforceable obligation on the Commissioner to act consistently when dealing with two or more taxpayers who utilise materially similar tax structures (see [21]–[43]).(b) Such an obligation is likely to be breached only where the Commissioner treats two taxpayers differently in circumstances wherethe facts the taxpayers' cases are identical for all material purposessuch that the Commissioner's rulings cannot be reconciled and wherethe discrepancy in taxpayer treatment is not explicable, and thus is unfair (see [40]–[42]).(c) The present pleadings do not make it untenable that Michael Hill could succeed in its argument that the Commissioner has acted inconsistently in her treatment of its tax structure and her treatment of the structures used by other taxpayers. Nor is it untenable that a remedy should be provided (see [44]).(d) In proceedings brought under Part 8A of the TAA challenging a tax assessment, ss 109 and 114 of the Act do not restrict a taxpayer toraising administrative law arguments challenging the validity of taxassessments only where "exceptional circumstances" exist or wherewhat purports to be a decision is not (see [45]–[66]).(e) It is arguable that the decision of the Supreme Court in TannadyceInvestments Ltd v Commissioner of Inland Revenue places no limitations on the types of administrative law challenges that may be brought within the Part 8A procedure (see [61]–[66]).(f) Furthermore, it is arguable that a taxpayer is not prevented from raising administrative law grounds in challenge proceedings even where correctness review of the decision would remedy any invalidity resulting from the decision-making process (see [67]–[80]).[4] I now turn to set out in full detail my reasons for reaching these conclusions.Background[5] In December 2008, the Michael Hill group of companies entered into a transaction in which it transferred its intellectual property and franchising operationswithin the group from New Zealand to Australia ("the Michael Hill transaction"). An Australian Limited Partnership ("ALP"), established under Queensland law, wasused as part of the finance structure. Michael Hill owns 99.95 per cent of the ALP. The ALP was used to create asymmetric tax treatment in the relevant years. The effect of this was that in both Australia and New Zealand there were deductions, and that the Australian deduction was not assessable income in New Zealand.[6] Michael Hill applied for a binding ruling from the Commissioner on theapplication of sections of the Income Tax Act 2007 ("ITA"), including s BG 1 (thetax avoidance provision), to the transaction. A binding ruling was provided inrelation to the "black letter" tax treatment of the structure, but the Commissioner formed the view that s BG 1 applied; that is, that the transfer of the intellectual property and/or the financing of its acquisition was a tax avoidance arrangement.[7] Michael Hill amended its application for a binding ruling to exclude consideration of s BG 1. Michael Hill then self-assessed the tax liability on the basis that s BG 1 did apply, but subsequently proposed an adjustment to its self- assessments. The Commissioner rejected the proposed adjustment by issuing a notice of response. Accordingly, Michael Hill initiated the challenge proceeding.[8] The proceeding comprises two grounds of challenge:(a) An inconsistency challenge: Michael Hill alleges that the Commissioner has taken an inconsistent approach in her treatment of Michael Hill and other taxpayers who have used the same, or materially the same, ALP structures in breach of her duty to treat all similarly placed taxpayers alike.(b) A correctness challenge: Michael Hill says that the Commissioner'streatment of Michael Hill's transaction is wrong in law in that it is nota tax avoidance arrangement.[9] The Commissioner accepts that the correctness challenge is an orthodox ground of challenge, but she applies to strike out the inconsistency challenge on the basis that it cannot stand alone as a valid ground for challenge. In short, the Commissioner argues that a finding by the Court that her decision is correct trumps any other challenge based on alleged procedural unfairness, such as inconsistency of treatment.The inconsistency challenge[10] The inconsistency challenge is pleaded in the amended statement of claim dated 12 September 2014. I set out the relevant paragraphs of the pleading:Inconsistent treatment of Restructuring Transactions and other substantially similar structures142. Other taxpayers have entered into transactions or arrangements which have all of the following features (such transactions andarrangements entered into by other taxpayers referred to as "IRDApproved Structures"):(a) An Australian limited partnership is established within a wholly owned corporate group.(b) A New Zealand company is the limited partner of theAustralian limited partnership ("NZCo").(c) NZCo owns substantially all of the limited partnership interest in the relevant Australian limited partnership.(d) An Australian company is the general partner in the Australian limited partnership.(e) The Australian limited partnership is funded by way of capital and contributions from the limited partner and general partner and by way of borrowings.(f) The borrowings are sourced from lenders who are not resident in New Zealand and who are not lending from a branch operation conducted in New Zealand.(g) The Australian limited partnership incorporates and uses all of the capital contributions and borrowings to subscribe for shares in a wholly owned Australian subsidiary.(h) The wholly owned Australian subsidiary acquires an income producing asset, income from which is used to fund dividends payable to the Australian limited partnership.ParticularsFurther particulars will be provided following discovery143. The form of the IRD Approved Structures as set out at paragraphs 142 (a) to (h) above is materially the same as the Restructuring Transactions.144. In the absence of the alleged application of section BG 1, the tax effects of the IRD Approved Structures and the Restructuring Transactions are the same in the following respects:(a) Dividends derived through MHFLP and Australian limited partnership (in the IRD Approved Structures) are exempt under section CW 9 and, in the 2009 income year, not subject to FDP [foreign dividend payment] as a full UFTC [underlying foreign tax credit] arises by virtue of the grey list exemption applying.(b) Interest paid by MHFLP and Australian limited partnership (in the IRD approved Structures) is deductible for Australian tax purposes and also deductible for New Zealand tax purposes for the plaintiff and NZCo (in the IRD Approved Structures).145. The defendant has treated the IRD Approved Structures in the following ways:(a) providing binding rulings that section BG 1 does not apply to certain IRD Approved Structures;(b) made a decision not to investigate certain IRD Approved Structures; and(c) investigated certain IRD Approved Structures, and formed the view that section BG 1 does not have application to those IRD Approved Structures.ParticularsFurther particulars will be provided following discovery146. The defendant has taken an inconsistent approach in respect of similarly placed taxpayers in asserting that section BG 1 had application to the Restructuring Transactions while taking the positions described at paragraph 145, above, in respect of the IRD Approved Structures.147. There is no rational or reasonable basis for the inconsistency referred to at paragraph 146 above.Challenge to validity of Assessment164. The defendant's rejection of the adjustments proposed by theplaintiff in relation to each of the Quarter 3 Assessment, the Quarter 4 Assessment, the 2011 Assessment and the 2012 Assessment is unlawful and ultra vires in light of the position taken by the Commissioner in relation to the IRD Approved Structures.Strike-out principles[11] I summarise the relevant strike-out principles, which are not in dispute:(a) The Court may strike out all or part of a pleading if it discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading.1(b) The jurisdiction to strike out is exercisable only in plain and obvious cases. In all other cases, the respondent to a strike out application is not to be deprived of having the causes pleaded considered and dealt with in the ordinary way at the trial of the action.21 High Court Rules, r 15.1(1)(a).2 Miller v Commissioner of Inland Revenue [1995] 3 NZLR 664 (CA) at 668.(c) There is a need for caution in disposing of cases involving a developing area of the law but, also, defendants should not be subjected to substantial costs, often only partially recoverable in defending untenable claims.3(d) Pleaded facts, whether or not admitted, are assumed to be true but do not extend to pleaded allegations which are entirely speculative and without foundation.4The evidential basis for the inconsistency challenge[12] To identify the assumed facts for the purposes of this strike-out application, it is necessary to consider the evidential basis for the inconsistency challenge.[13] Michael Hill's advisers raised the inconsistency of treatment between the Michael Hill transaction and other "IRD Approved Structures" with theCommissioner on several occasions. The Commissioner initially indicated that she was reviewing other ALP arrangements and, if there were no materially distinguishing features, she would act consistently. Following further submissionsfrom Michael Hill's advisers, the Commissioner suggested that the question ofconsistency be removed from the agenda for future discussions. She has since declined to discuss the matter further.[14] The similarity between the Michael Hill transaction and other transactions is said by the plaintiff to be demonstrated by an inadvertent disclosure by the InlandRevenue Department ("IRD") of another taxpayer's identity to Michael Hill whendrafting the Michael Hill binding ruling. The Commissioner has since said that thereare "significant differences" between the transactions entered into by the othertaxpayer and those entered into by Michael Hill, but the Commissioner has notprovided any further explanation of the claimed "significant differences". Thesimilarity between the Michael Hill transaction and the other transactions is said to have been observed by a member of the Commissioner's staff who, in a file note3 Queenstown Lakes District Council v Charterhall Trustees Ltd [2009] 3 NZLR 786 (CA) at [16].4 Attorney-General v Prince v Gardner [1998] 1 NZLR 262 (CA) at 267–268, endorsed by the Supreme Court in Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].about the inadvertent disclosure, noted that "it could be deduced from the text that [redacted] had entered into a similar arrangement".[15] I am satisfied that this is a case where the pleaded factual allegations are not entirely speculative nor without foundation. Accordingly, for the purpose of addressing the strike-out application, I have assumed that the following facts can be proved:(a) There are a number of transactions by other taxpayers that are materially the same as the Michael Hill transaction.(b) Those other transactions have the same tax effects.(c) The Commissioner has, in relation to those other transactions:(i) provided binding rulings that s BG 1 does not apply to certain of them; or(ii) made a decision not to investigate certain of them; or(iii) investigated certain of the other transactions and formed the view that s BG 1 does not have application to them.[16] Finally, I acknowledge that the application is to be decided against the backdrop of the Commissioner having done nothing more than plead a bare denial of the relevant allegations. The Commissioner has not given her reasons for taking different positions between Michael Hill and other taxpayers. The Commissioner has not pleaded, for example, that she has changed her mind; that the position she took in respect of the other transactions was in error; or that there are materialdifferences between the transactions. Whether the plaintiff's inconsistency challengeis sufficiently arguable to survive the present strike-out application must be determined on the current pleadings.The parties' positions[17] Michael Hill's case is that, whether or not the treatment of the plaintiff iscorrect in tax law, the inconsistency in treatment should lead to the following relief being granted to it:(a) A declaration that the Commissioner has acted unlawfully in rejecting the adjustments proposed by the plaintiff in relation to each of the assessments in issue, and as a consequence the assessments are unlawful; and(b) Pursuant to section 138P of the TAA, a determination that each of the assessments be cancelled, reduced or modified or otherwise varied; or a direction that the Commissioner alter each assessment in a way thatconforms with the Court's determination.[18] The Commissioner's case is that the inconsistency challenge is a collateralattack on assessments which is untenable and unarguable because:(a) there is no basis in law to adjust an otherwise correct assessment on the grounds of inconsistent treatment as between taxpayers;(b) the Court will determine the correctness of the assessments in issue by way of a de novo hearing that is curative of any defect in theCommissioner's process; and(c) the inconsistency challenge does not fall within the narrow category of cases that would not turn on correctness.[19] For these reasons, the Commissioner submits that the inconsistency challenge should be struck out of the amended statement of claim.Issues[20] The issues for determination are these:(a) Is there an arguable case that the Commissioner has an enforceable duty to act consistently?(b) If so, do the facts of the proceeding make it untenable that Michael Hill could succeed in enforcing any such duty?(c) Do ss 109 and 114 of the TAA prevent a taxpayer from raising administrative law grounds in challenge proceedings other than in"exceptional circumstances"?(d) In challenge proceedings, does a finding that the Commissioner'sdecision was correct trump any invalidity which might otherwise result from a breach of the duty of consistency?(e) Should the inconsistency challenge be struck out?Is there an arguable case that the Commissioner has an enforceable duty to act consistently?[21] Michael Hill says that the Commissioner is under a duty to act impartially, rationally and to treat all similarly placed taxpayers alike. The plaintiff's case is thatan assessment made in breach of this duty means that the assessment is invalid and unlawful, regardless of the correctness of the assessment.[22] The Commissioner submits, however, that there is no basis in law for the cause of action based on such a duty. The Commissioner does not argue that a principle of consistency does not exist; her point is that it is not an enforceable cause of action in this context.The duty to act consistently in administrative law[23] In a useful overview of the administrative law duty to act consistently, Professor Phillip Joseph makes the following observations:5The need for equality of treatment embraces the duty to act consistently. It is an axiom of the common law that, all things being equal, like cases shouldbe decided alike: "Treating like cases alike and unlike cases differently is a general axiom of rational behaviour". In administrative law terms, afailure to act consistently may overlap the grounds of Wednesburyunreasonableness, error of law for misinterpretation of relevant criteria, taking into account irrelevant considerations, substantive unfairness, legitimate expectation or acting beyond a decision-maker's delegatedpowers. In constitutional terms, the duty to act consistently identifies withDicey's second meaning of the rule of law – that all are subject equally to the law and to the equal application of the laws. The duty is both procedural and substantive. Equality before the law means that decision-makers must be consistent in the procedures and criteria they apply (procedural consistency), and that like cases ought to be decided alike (substantive consistency).(footnotes omitted)The Commissioner's argument[24] In support of the Commissioner's argument that there is no basis in law for an enforceable duty to act consistently as claimed by the plaintiff, Mr Heron QC made the following arguments:(a) Section 6 of the TAA provides no basis for an enforceable duty to act consistently;(b) The decision in Reckitt v Coleman also provides no basis for the duty;(c) The existence of the duty was expressly rejected by Harrison J inWestpac Banking Corporation v Commissioner of Inland Revenue.6(d) The existence of the duty is inconsistent with the primacy of correctness.5 Phillip A. Joseph Constitutional and Administrative Law in New Zealand (4th ed, Thompson Reuters, Wellington, 2014) at 956.6 Westpac Banking Corporation v Commissioner of Inland Revenue (2008) 23 NZTC 21,694 (HC).Section 6 of the TAA[25] In support of its submission that a duty exists, Michael Hill relies on s 6 of the TAA, which provides that those with responsibilities under the revenue acts are to use their best endeavours to protect the integrity of the tax system. In subsection (2), the integrity of the tax system is defined to include:(a) Taxpayer perception of that integrity;(b) The rights of taxpayers to have their liability determined fairly, impartially and according to law;(c) The rights of taxpayers to have their individual affairs kept confidential and treated with no greater or lesser favour than the tax affairs of the other taxpayers;(f) The responsibilities of those administering the law to do so fairly, impartially, and according to law.[26] Mr Heron submitted that s 6(2) of the TAA "is a statutory expression of long- settled principles of the common law which impose strict standards of conduct upon those exercising public powers conferred for performance of their functions ofserving the community".7 But he argues that s 6 does not create a set of rights enforceable by taxpayers, such as those found in the New Zealand Bill of Rights Act 1990;8 the only right that is enforceable is for the taxpayer to be objectively assessed for tax according to statute.9[27] Mr Heron seeks support for this proposition in Accent Management v Commissioner of Inland Revenue10 where the Court of Appeal reinforced the proposition that taxpayers can only expect to be taxed in accordance with the7 Miller v Commissioner of Inland Revenue (2003) 21 NZTC 18,243 (HC) at [47].8 Russell & Ors v Taxation Review Authority & Anor (2003) 21 NZTC 18,255 (CA) at [34].9 Brierley Investments v Bouzaid [1993] 3 NZLR 655 (CA) at 669 citing with approval BinghamLJ's judgment in R v Board of IR ex parte MFK Underwriting Agencies Ltd [1990] 1 WLR 1545 at 1569.10 Accent Management v Commissioner of Inland Revenue (2007) 23 NZTC 21,366 (CA).revenue statutes, regardless of what has occurred with other taxpayers in similarpositions. In that case, a group of investors challenged the Commissioner'sassessments. Some of the investors settled; the appellants did not. The appellants contended that the Commissioner must be consistent and is not entitled to discriminate between taxpayers depending on their wiliness to settle in litigation. The complaint was that the Commissioner took a stronger line against the appellants than he did against otherwise similarly placed taxpayers who were prepared to settle. It was submitted that the inconsistency between assessments affecting the appellants and other taxpayers should have been corrected by treating the appellants on the same basis as those who had settled. In response to this argument, the Court said:11We have some difficulty with the logic of this. In the end the correctness or otherwise of the assessments affecting the appellants depends on judgments made by the courts and not the opinion of the Commissioner. The correctness of the assessments against the appellants was upheld by Venning J and, in the judgment which we are delivering simultaneously, wedismiss the appeal against that judgment. On this basis, the appellant'scomplaints do not go to the merits of the dispute between them and the Commissioner but rather to the appropriateness of the Commissioner'ssettlements with the other taxpayers. If it were the case that the Commissioner under-taxed the other taxpayers, why would this justify the courts requiring the Commissioner to under-tax the appellants? Indeed we conclude that the whole issue is collateral to the merits of the dispute between the appellants and the Commissioner.[28] These observations may be contrasted with comments about ss 6, 6A and 6B made by Elias CJ and McGrath J in the Supreme Court, expressing their minority views in Tannadyce Investments Ltd v Commissioner of Inland Revenue("Tannadyce"). Their Honours said:12[the] proper exercise of the administrative functions of assessment of taxby the Commissioner is crucial to the effectiveness of the statutory scheme. This was reinforced in the 1995 amendment to the 1994 Act by the emphasis which ss 6 , 6A and 6B placed on the requirement that the Commissioner and departmental officers use their best endeavours to protect the integrity of the tax system, and the Commissioner's particular responsibility for its care and management. The latter duty requires the Commissioner to have regard to the importance of promoting compliance, especially voluntary compliance, with the Inland Revenue Acts by all taxpayers.13 Protection of the integrity of the tax system includes both taxpayers' perceptions of that11 At [19].12 Tannadyce Investments Ltd v Commissioner of Inland Revenue [2011] NZSC 158, [2012] 2 NZLR 153 at [32].13 Tax Administration Act, s 6A(3)(b).integrity, and the determination of liability fairly and impartially and according to law.14[29] And:15In this context, defective administration in the exercise of what can be highly intrusive statutory powers can give rise to departures from the statutory purposes of such significance that resulting assessments, or other decisions affecting taxpayers, should be invalidated. That may be the case if fresh appellate determination of the correct tax liability is not adequate to uphold Parliament's requirements in tax administration.[30] Since the majority of the Supreme Court in Tannadyce did not comment on these expressions of opinion by the minority, they should be regarded as persuasive rather than binding on this Court. If these views are adopted, it would seem to be arguable at this stage of the proceeding that a significant departure by the Commissioner from her duty under s 6 of the Act to protect the integrity of the tax system may well provide grounds to invalidate the decision.[31] That duty exists separately from a duty of correctness,16 a point made by a full bench of the England and Wales High Court in R v Inland Revenue Commissioners, ex parte MFK Underwriting Agents Ltd & ors. Justice Judge (as he then was) said:17I accept without hesitation that (a) the revenue has no dispensing power and (b) no question of abuse of power merely because the revenue is performing its duty to collect taxes when they are properly due. However neither principle is called into question by recognising that the duty of the revenue to collect taxes cannot be isolated from the functions of administration and management of the taxation system for which it is responsible.If the argument for the Inland Revenue were correct any application for judicial review on the ground of unfair abuse of power would be bound to fail if the revenue were able to show that its actions were dictated by its statutory obligation to collect taxes.14 Section 6(2)(a)–(b).15 Tannadyce Investments Ltd v Commissioner of Inland Revenue, above n 12, at [35].16 I deal below with the Commissioner's related submission that, if an independent duty to act consistently exists, any breach of such a duty in a case such as this is trumped by the correctness of the decision.17 R v Inland Revenue Commissioners, ex parte MFK Underwriting Agents Ltd & Ors, above n 9, at 1574.[32] These observations were accepted and endorsed by Casey J in Brierley Investments v Bouzaid:18Judge J referred at p 1573 to cases in which legitimate expectation had been considered, noting that the approach in any particular field of public law depends on the relevant legislation. Accepting that the revenue had no dispensing power, and that it cannot be an abuse of power for it to collect taxes when they are properly due, he held that nevertheless that duty cannot be isolated from the functions of administration and management of the taxation system for which it is responsible. I consider those comments are equally applicable to the New Zealand situation, in which the commissioner is charged with the administration of the Inland Revenue Acts (s 4 of the Inland Revenue Department Act), and I see no essential distinction between his obligations and those of the United Kingdom commissioners who arecharged with the "care management and collection" of tax. Administeringrevenue Acts must require similar duties and administrative discretions in each country in the assessment and collection of tax, calling for the exercise of similar standards of fairness. Indeed, if one can take judicial notice of current media publicity, I note that our Inland Revenue Departmentannounces that "It is our job to be fair".[33] Furthermore, I do not regard the facts underlying the Court of Appeal'sdecision in Accent Management to be sufficiently analogous to those of present case to provide reasonable support for the Solicitor-General's submission about theapproach which the Court must take in this case. In Accent Management, the Court of Appeal was not considering a situation in which the Commissioner, faced with a settlement offer made at the same time by two taxpayers in similar circumstances and who were participants in a template tax scheme, chose to offer favourable settlement terms to one taxpayer but refused to settle with the other. The taxpayers were not in the same position: some taxpayers had chosen to settle early; others, having gone through litigation in which they took every point and failed, then sought to take advantage of the terms of the earlier settlements. It is arguable that Accent Management does not extend to being authority for the proposition that taxpayers may be assessed or treated on a particular basis regardless of what has occurred with other taxpayers in materially identical positions, and without explanation.18 Brierley Investments v Bouzaid, above n 9, at 670.The Court of Appeal's decision in Reckitt and Coleman[34] The plaintiff cites the following passage from Turner J's judgment in Reckitt and Coleman (New Zealand) Limited v Taxation Review Board19 in support of the existence of a separate duty as pleaded:It is of the highest public importance that in the administration of such statutes every taxpayer shall be treated exactly alike, no concession being made to one which another is not equally entitled. This is not to say that in cases where the statute has so expressly provided the Commissioner has not a discretion to differentiate between cases – but this is in my opinion only to be done when provision for it is expressly, or it may be impliedly, made in the legislation. Where there is no express provision for discretion, however, and none can properly be implied from the tenor of the statute, the Commissioner can have none; he must with Olympian impartiality hold the scales between taxpayer and Crown giving to no one any latitude not given to others.[35] Mr Heron QC submits that the particular "latitude" in issue in Reckitt and Coleman was the Commissioner's waiver of a taxpayer's compliance with a statutoryappeal period, in other words the administration of a tax statute. He argues that the case does not stand for a proposition of uniform assessment of taxpayers in respect of their substantive tax obligations, irrespective of correctness. Rather, Mr Heron says that what the Court held in that case was that the Commissioner must act and tax in accordance with the law. The Commissioner has no power to waive the provisions of the legislation in respect of the time within which a notice of appeal from a determination of the Taxation Board of Review must be given.[36] It is at least arguable, however, that Reckitt and Coleman is not limited in the manner Mr Heron suggests. First, as Ms Fitzgerald points out for the plaintiff, thephrase "administration of such statutes" is a reference to the entirety of the Commissioner's statutory functions, at the time pursuant to s 4(1) of the InlandRevenue Department Act 1952. That provision appointed the Commissioner "to becharged with the administration of the Inland Revenue Acts and such other functionsas may be from time to time lawfully conferred on him". The administration of thetax legislation clearly includes making decisions as to substantive tax obligations, aswell as all other "procedural" decisions pursuant to statutory authority.19 Reckitt and Coleman (New Zealand) Limited v Taxation Review Board [1966] NZLR 1032 (CA) at 1042.[37] Second, the passage in Turner J's judgment just quoted is preceded by thisstatement:20I have come to the firm conclusion that the public has an interest in the due compliance with every requirement of a revenue statute — and if there can be any distinction between revenue statutes I would think that this conclusion is peculiarly applicable to income tax provisions.The reference to "every requirement of a revenue statute" makes it hard to accept the proposition that Turner J was restricting the statement of principle which follows to purely administrative matters.Observations in Westpac Banking Corporation v Commissioner of Inland Revenue(High Court)[38] Mr Heron directed me to Westpac Banking Corporation in which Harrison J (at first instance) discussed the inconsistency principle. The Judge questioned the extent to which the inconsistency ground survives as a stand-alone ground of judicialreview, because of "its conceptual difference from orthodox grounds of administrative or public law review which focus on the process and logic of decisionmaking."21 Justice Harrison also considered that inconsistency in decision-making is not unfair by itself; the unfairness occurs where a change of view by a public authority is incorrect.22 A change of mind by the Commissioner on the correct interpretation of the tax avoidance provisions of the ITA cannot be constitutionally proscribed.23 The Judge concluded that the principle of inconsistency has no place where the Commissioner has issued an amended assessment to tax under a statute which vests rights in the taxpayer, first, to obtain an unconditional assurance on the taxation treatment of a transaction — a private binding ruling — and, second, to dispute an assessment where a ruling is not obtained.24[39] I do not read this judgment as supporting the proposition that the Commissioner can never be held to an obligation to act consistently in tax matters. If that is what Harrison J held then I respectfully disagree with him; such a finding20 Above.21 Westpac Banking Corporation v Commissioner of Inland Revenue, above n 6, at [73].22 At [75], citing Scarman LJ in HTV Ltd v Price Commission [1976] ICR 170 at 185-186 (EWCA).23 At [77].24 At [81].would be contrary to the authoritative views in the judgments discussed above. It is arguable that it is also contrary to the approach taken in HTV Ltd v Price Commission,25 a case discussed by Harrison J. There, the England and Wales Court of Appeal acknowledged that inconsistency existed as a ground of challenge independently of correctness review. I discuss this decision below at [72]–[78].The primacy of correctness[40] The Commissioner submits that the primacy of correctness renders it untenable for the plaintiff to argue for the existence of an enforceable duty to act consistently:(a) The Commissioner cannot contract out of her obligation to assess every taxpayer as against the revenue acts.26(b) A legitimate expectation cannot be claimed against the Commissioner.27(c) The Commissioner is not bound by previous positions she has taken in applying the law.28(d) The Commissioner, who is entitled to change her mind, is obliged to abandon an earlier, incorrect view of the law.29[41] But Ms Fitzgerald submits for the plaintiff that these cases merely set out the limitations on the consistency duty; they do not render it inert. I am not persuadedthat the plaintiff's position is inarguable; it is consistent with the treatment of theconsistency principle in New Zealand case law,30 and also academic opinion.3125 HTV Ltd v Price Commission, above n 22.26 Brierley Investments Ltd v Bouzaid, above n 9, at 661.27 Westpac Banking Corporation v Commissioner of Inland Revenue (HC), above n 6, at [77].28 Commissioner of Inland Revenue v BNZ Investments Limited [2008] NZCA 141, (2008) 23 NZTC 21,992 at [30].29 Miller v Commissioner of Inland Revenue (1993) 15 NZTC 10,187 (HC) at 10,203–10,204.30 See Lemmington Holdings (No 2) v Commissioner of Inland Revenue [1984] 2 NZLR 214 (HC).31 Joseph, above n 5, at 957.[42] As I read the cases, including the Supreme Court's decision in Tannadyce32which I address more fully below, there are essentially two questions to be answered when a claim of inconsistency is made against the Commissioner:(a) First, are the facts or circumstances of the cases at issue identical for all material purposes, such that there is a true inconsistency because the assessments or rulings at issue cannot be reconciled as a matter of law?(b) Second, if there appears to have been inconsistent treatment of like cases, is the discrepancy explicable and not unfair?[43] I conclude, therefore, that there is an arguable case that the Commissioner is subject to an enforceable duty to act consistently.Do the facts of the proceeding make it untenable that Michael Hill could succeed in enforcing any such duty?[44] The question in the present case is whether the limitations on the duty of consistency apply. As discussed above,33 the Commissioner has not pleaded that the facts in this case bring it within any of the recognised limitations on the duty of consistency as between taxpayers. All that can be said, on the current pleadings, is that the Commissioner appears to have adopted two fundamentally inconsistent approaches, with no rational or logical explanation. The pleaded facts of theplaintiff's case, which for present purposes I assume to be provable, do not renderthe inconsistency claim untenable.Do ss 109 and 114 of the TAA prevent a taxpayer from raising administrativelaw grounds in challenge proceedings other than in "exceptional circumstances"?[45] The Commissioner argues that the effect of ss 109 and 114, and the decision of the Supreme Court in Tannadyce, is to limit the ability of a taxpayer to raise32 Tannadyce Investments Ltd v Commissioner of Inland Revenue, above n 12, at [35].33 At [40]–[43].administrative law grounds in challenge proceedings otherwise than in "exceptional circumstances".Sections 109 and 114 of the TAA[46] Sections 109 and 114 of the TAA provide:109 Disputable decisions deemed correct except in proceedingsExcept in objection proceedings under Part 8 or a challenge under Part 8A,—(a) no disputable decision may be disputed in a court or in any proceedings on any ground whatsoever; and(b) every disputable decision and, where relevant, all of its particulars are deemed to be, and are to be taken as being, correct in all respects.114 Validity of assessmentsAn assessment made by the Commissioner is not invalidated—(a) through a failure to comply with a provision of this Act or another Inland Revenue Act; or(b) because the assessment is made wholly or partially in compliance with—(i) a direction or recommendation made by an authorised officer on matters relating to the assessment:(ii) a current policy or practice approved by the Commissioner that is applicable to matters relating to the assessment.[47] The Supreme Court has explained the effect of these sections:34The protective purpose of s 114 is of general application; no assessment is invalidated by any of the circumstances set out in the section. The definition of a disputable decision includes an assessment, so the effect of s 109 is that no assessment or other disputable decision, as defined, may be disputed in any court or in any proceedings on any ground whatsoever, except in proceedings taken under the Act. It is clear that by means of s 109 Parliament was concerned to ensure that disputes and challenges capable of being brought under the statutory procedures were brought in that way and were not made the subject of any other form of proceeding in a court or otherwise.34 Tannadyce Investments Ltd v Commissioner of Inland Revenue, above n 12, at [53] (footnotes omitted).[48] Michael Hill's challenge proceedings have been brought in accordance withPart 8A of the TAA, and are therefore proceedings taken under the statutory procedures.The decision in Tannadyce Investments Ltd v Commissioner of Inland Revenue[49] Tannadyce is the leading decision on ss 109 and 114. The facts of the casecan be briefly summarised. A taxpayer filed "global returns" covering its taxliability for the tax years from 1993 to 1998. It claimed that it could not file annual returns because it needed to have access to financial records which were in the possession of the IRD. The IRD denied holding those records. Subsequently, however, the IRD accepted that it continued to hold documents of the appellant. The global returns claimed losses of $1,539,733. The Commissioner issued default assessments, however, which allowed a carried forward loss of only $209,373. The taxpayer did not initiate the disputes procedure and the IRD took action to collect the debts, including issuing a statutory demand. The taxpayer sought to set aside the statutory demand and also applied for judicial review of the assessments. Thetaxpayer argued that the Commissioner's default assessments were acts of consciousmaladministration involving abuse of powers and breach of nature justice; that they were not, as a result, true assessments as contemplated by the TAA; and that they were accordingly not protected by ss 109 and 114 of the TAA. The Commissioner applied for the statement of claim in the judicial review action to be struck out.[50] The question for the Supreme Court was whether the arguments could have, and should have, appropriately been made in a challenge proceeding under Part 8A rather than in judicial review. The majority of the Court (Blanchard, Tipping and Gault JJ) held that:35It is important to be clear that the fact that judicial review is largely excluded in favour of the statutory process by s 109 does not in any way diminish the general importance and availability of judicial review for examining the legality of conduct and decisions that fall within its compass. The exclusion of judicial review is a product of the text and purpose of s 109 in its particular statutory setting.In summary therefore we would hold that disputable decisions (which include assessments) may not be challenged by way of judicial review unless35 At [60]–[61].the taxpayer cannot practically invoke the relevant statutory procedure. Cases of that kind are likely to be extremely rare.[51] In the present proceeding, Michael Hill's inconsistency challenge is brought under Part 8A of the TAA, not in judicial review proceedings.The parties' positions on the effect of Tannadyce on the present proceedings[52] The Supreme Court in Tannadyce made a number of comments about the ability of taxpayers to make administrative law arguments in challenge proceedings brought under Part 8A. In particular, the majority said:36[54] The words [in s 109 TAA] "on any ground whatsoever" must havebeen designed to emphasise the comprehensive nature of the embargo on bringing proceedings outside the statutory framework. Conversely, Parliament must have contemplated, by the use of those words, that disputable decisions could and should be contested and challenged under the statutory procedures on any ground whatsoever, including the ground that what the Commissioner claimed to be a decision or assessment was not a decision or assessment at all. If that could be established, the hearing authority's power to cancel on any ground whatsoever would appropriately be invoked.[55] The advantage Parliament saw in this approach must have been that, whatever the claimed ground of error, illegality or invalidity, a hearing authority, which will be the High Court if the taxpayer so elects, is empowered to adjudicate upon it. Furthermore, the hearing authority can go on in the same proceeding, as far as necessary or appropriate, to determine whether the Commissioner's assessment is correct and, if not, what the correct assessment ought to be. There is thereby no potential for separation of matters of legality from matters of correctness. This leads to a much more efficient and satisfactory process overall, particularly when regard is had to the various time limits that apply throughout the tax administration processes.(footnotes omitted)[53] It is not disputed that this passage supports the proposition that administrative law arguments may, and should, be brought in challenge proceedings rather than through separate judicial review proceedings. An allegation that the Authority was biased is an example of the exception to the general rule.3736 At [54]–[55].37 At [59].[54] The parties disagree, however, as to the nature of the administrative law arguments that can be brought.The Commissioner's argument[55] The Solicitor-General submits that the scheme of the statute makes it clear that challenge proceedings concern the determination of the correct tax liability. This, he submits, is reflected in s 109, as well as s 113, which authorises theCommissioner to make adjustments to a taxpayer's liability and provides that the Commissioner can only amend an assessment to ensure correctness. It is also reflected, he says, in s 138P(1B) which provides that a hearing authority, on hearing any challenge brought in a situation such as this, must reduce the amount of an assessment where the taxpayer can show, on the balance of probabilities, the amount assessed is excessive. With this statutory background in mind, Mr Heron argues that, in the passage quoted above at [52], the majority in Tannadyce held that the ability for a taxpayer to raise administrative law grounds in challenge proceedings is limited to circumstances where a de novo hearing on correctness would not be curative. Such occasions would be where what purports to be an assessment is not an assessment, or where there has been conscious maladministration.[56] Mr Heron says that, in this respect, the Supreme Court cannot be said to have expanded the Court of Appeal decision in Westpac Banking Corp v Commissioner of Inland Revenue ("Westpac"), which held that the only circumstances where a de novo hearing on correctness would not be curative would be where what purports to be an assessment is not; or in exceptional cases, such as where there has been conscious maladministration.38[57] In further support of that submission, Mr Heron identifies that the majority inTannadyce quotes the passage of Westpac addressing the circumstances where a de novo hearing on correctness would not be curative.39 Mr Heron then directed me to a passage in the minority judgment where Elias CJ and McGrath J identify the impact of the majority judgment in Tannadyce as "being even more restrictive of the38 Westpac Banking Corporation v Commissioner of Inland Revenue [2009] NZCA 24, [2009] 2 NZLR 99 at [59].39 Tannadyce Investments Ltd v Commissioner of Inland Revenue, above n 12, at [59].availability of judicial review" than the decision in Westpac.40 Mr Heron concludes that Tannadyce affirms the position taken in Westpac.Discussion[58] I conclude, however, that it is distinctly arguable that the test in Westpac is not the test that determines whether an invalidity challenge is properly brought within Part 8A of the TAA.[59] The test in Westpac is not grounded in the threshold for review itself, but in the existence of review outside the statutory challenge procedure. It is drawn from the decision of the Privy Council in O'Neill v Commissioner of Inland Revenue,41where the Board held that applications for judicial review of tax assessments brought outside the statutory challenge procedure should succeed only where the grounds for challenging the assessment cannot be addressed through the challenge procedure itself.42 Such circumstances were said to be "exceptional cases". The test does notappear to be appropriate for determining whether an invalidity challenge is properlybrought within Part 8A. This is because circumstances can only be "exceptional"under the test where they are not appropriate for resolution through the challenge procedure.[60] In any event, the majority in Tannadyce appears to have overruled the test inWestpac by holding that s 109 "should not be construed so as to create an exception where the circumstances are 'exceptional'".43[61] It is at least arguable, in my view, that the Supreme Court's judgment inTannadyce allows the plaintiff to bring a challenge under Part 8A on inconsistency grounds.[62] For ease of reference, I set out again a part of the passage at [54] of the majority judgment:40 At [39].41 O'Neill v Commissioner of Inland Revenue [2001] 3 NZLR 316 (PC) at [18].42 At [18]. See also Accent Management Ltd v Commissioner of Inland Revenue (2006) 22 NZTC 19,758 (HC) at [46]–[47] & [57] and Commissioner of Inland Revenue v Abbattis Properties(2002) 20 NZTC 17,805 (CA) at [24].43 Tannadyce Investments Ltd v Commissioner of Inland Revenue, above n 12, at [70].Conversely, Parliament must have contemplated, by the use of those words, that disputable decisions could and should be contested and challenged under the statutory procedures on any ground whatsoever, including the ground that what the Commissioner claimed to be a decision or assessment was not a decision or assessment at all. If that could be established, the hearing authority's power to cancel on any ground whatsoever would appropriately be invoked.[63] The footnote to this passage reads:A hearing authority may address issues otherwise apt to be raised on judicial review.[64] The footnote makes reference to a passage from Golden Bay Clement Co Ltd v Commissioner of Inland Revenue44 in which a full bench of the Court of Appeal rejected the argument that a challenge to the validity of an assessment, as distinct from its correctness, could be made only by seeking judicial review. Instead, the Court held that the challenge procedure (which was then contained in the Income Tax Act 1976) allows a taxpayer to challenge either the correctness or the validity of an assessment or apparent assessment.45[65] The advantage of that position is explained by the Court in these terms:46The advantage Parliament saw in this approach must have been that, whatever the claimed ground of error, illegality or invalidity, a hearing authority, which will be the High Court if the taxpayer so elects, is empowered to adjudicate upon it.[66] For these reasons, I consider it to be arguable that the view of theCommissioner, that a taxpayer must demonstrate "exceptional circumstances" inorder to mount an administrative law challenge through the Part 8A procedure, isincorrect. It is arguable, based on the majority's comments in Tannadyce, that there are no limitations on the types of administrative law challenges that may be brought within the Part 8A procedure.44 Golden Bay Cement Co Ltd v Commissioner of Inland Revenue [1996] 2 NZLR 665 (CA).45 At 671—672.46 Tannadyce Investments Ltd v Commissioner of Inland Revenue, above n 12, at [54].In challenge proceedings, does a finding that the Commissioner's decision wascorrect trump any invalidity which might otherwise result from a breach of the duty of consistency?[67] Mr Heron QC submits that it is appropriate to strike out an administrative law claim where the alleged mischief would be cured by a decision on the correctness of the assessment or tax treatment. In support of this proposition, the Commissioner relies on the High Court decision in Accent Management Ltd where Keane J held:47Where, then, the validity of a decision turns on whether it is correct in law validity and correctness coincide essentially if not entirely. Where the challenge is to the reasonableness of the decision that must equally first turn on whether it is correct. Both grounds of invalidity are susceptible in principle to remedy within the statutory objection or challenge process. Even where a breach of natural justice is alleged, that can be cured by the very fact of the hearing before the Authority or this Court in which the rules of natural justice apply and taxpayer and Commissioner enjoy equality of arms. In all three instances the Authority and this Court may well be able to exercise the power of reassessment.[68] But I note that, in the preceding paragraph, Keane J said:48The grounds on which a decision can be invalid, can I accept, differ in kind from those that arise on an objection [i.e. correctness]. But they can also be identical, as is apparent immediately [when] one considers what those grounds are.[69] And in the subsequent paragraph, Keane J acknowledged that the statutoryprocedure "does embrace validity as well as correctness" and that the Court through the statutory procedure sets out to resolve "all issues of correctness and validitywithin the confines of a single hearing".49 Michael Hill's point is that the decision inAccent Management Ltd does not go so far as to prevent a plaintiff from bringing a statutory challenge which impugns the validity of the decision if the matter would be resolved upon a correctness review. Rather, the decision merely acknowledges that often the grounds will overlap to the extent that the resolution of the correctness issue also resolves the invalidity issue. Whether the correctness of the assessment will render any validity argument moot is likely to depend on the nature of the invalidity. If, for example, the invalidity is alleged to be an unexplained or otherwise47 Accent Management Ltd v Commissioner of Inland Revenue (2010) 24 NZTC 24,126 (HC) at [56].48 At [55].49 At [57].unfair difference in the treatment of materially identical cases, a proved breach of a duty to uphold the integrity of the tax system by acting consistently may not be curedby the correctness of the Commissioner's decision.[70] The Commissioner relies also on the following statement of the Court of Appeal in Westpac:50An assessment should reflect the correct tax position and a taxpayer's liability to pay tax exists independently of the assessment. If the assessment is correct, it is hard to see why complaints about process should result in the taxpayer not paying tax on a correct basis. Where there are very large sums of tax at stake (as there are here), this raises fairness considerations in relation to other taxpayers who have met their liabilities for the tax year concerned. If the assessment is wrong, it can be corrected in later challenge proceedings. If it is correct, the tax should be paid. It is frankly difficult to see what is unfair in this approach.[71] But whether this view holds true will depend on whether the Court ofAppeal's decision is held to have survived the Supreme Court's decision inTannadyce, as noted at [60], above).[72] Ms Fitzgerald referred me to HTV Ltd v Price Commission, a decision in which the England and Wales Court of Appeal upheld an inconsistency argument before going on to reach the same conclusion on the basis that the challenged decision was incorrect.[73] The facts of the case can be briefly stated. The Price Commission reached the view that between 1968 and 1974 it had misconstrued the counter inflation price code for which it was responsible for administering, and so changed its mind as to the treatment of exchequer levy as an item in the costs of television companies allowable for the purpose of increasing their advertising charges within the limitsprescribed by the code. The effect of the Price Commission's change of mind was to deprive television companies of an increase in their advertising charges which they badly needed in order to remain financially viable.[74] There were a number of issues before the Court of Appeal including whether or not the levy was properly accounted for in assessing the counter inflation price50 Westpac Banking Corporation v Commissioner of Inland Revenue, above n 38, at [61].code. An additional issue was whether the Price Commission's decision to changeits mind was invalid because it had previously taken the levy into account in the formula applied under the price code, and so had acted inconsistently.[75] Addressing the consistency issue, Lord Denning MR held:51It is, in my opinion, the duty of the Price Commission to act with fairness and consistency in their dealings with manufacturers and traders. Allowing that it is primarily for them to interpret and apply the code, nevertheless if they regularly interpret the words of the code in a particular sense – or regularly apply the code in a particular way – they should continue to interpret it and apply it in the same way thereafter unless there is good cause from departing from it. At any rate they should not depart from it in any case where they have, by their conduct, led the manufacturer or trader to believe that he can safely act on that interpretation of the code or on that method of applying it, and he does so act on it. It is not permissible for them to depart from their previous interpretation and application where it would not be fair or just to do so. It has been often said, I know, that a public body, which is entrusted by Parliament with the exercise of powers for the public good, cannot fetter itself in the exercise of them. It cannot be estopped from doing its public duty. But that is subject to the qualification that it must not misuse its powers; and it is a misuse of power for it to act unfairly or unjustly towards a private citizen when there is no overriding public interestto warrant it.[76] Having found, then, that the Price Commission was required to act consistently with its previous conduct, the Master of the Rolls also went on to consider the correctness of the decision:52In these circumstances I do not think it is necessary to decide whether or notthe "Exchequer levy" is properly included in "total costs". All I need say isthat the Price Commission in the past have regularly treated it as proper to be included: and it would not be fair or just for it now to be treated differently. But I go further. I think that their interpretation in the past was correct: and their new interpretation is erroneous. In making this new interpretation I think the Price Commission made an error in point of law such that the court can correct it under the principles stated in General Electric Co Ltd v Price Commission [1975] ICR 1, 12.51 HTV Ltd v Price Commission, above n 22, at 185–186.52 At 186.[77] The point made by Ms Fitzgerald is that Lord Denning MR made a separate finding on each point even though both challenges resulted in his reaching the same conclusion. The same approach was taken by Goff LJ in a separate, concurring judgment, although he treated the issues in the reverse order. Significantly, Goff LJ said:53If, however, I am wrong in considering this to be a question of law, and it is, or was, a question of fact for the commission, then in my judgment, having regard to their past conduct, which I have described, they cannot now be allowed to say, even if it would otherwise be right, which I do not think it is,that the new levy is not part of the "total costs per unit of output."It is of the upmost importance that statutory tribunals should be consistent, and this is a very clear instance on which the facts call for the exercise of that supervisory jurisdiction which this court was careful to reserve inGeneral Electric Co Ltd v Price Commission [1975] 1 ICR 1, 12, 14.[Emphasis added][78] A regulatory body such as the Price Commission is required to undertake an evaluative exercise in carrying out its functions. It may be that there is a difference between the duty of consistency imposed on such a body and the duty imposed on the Commissioner in undertaking the less evaluative, and more interpretive, role of gathering tax in accordance with the tax laws prescribed by Parliament. But whether that is so, I think, must be reserved for fuller consideration at trial. In the context of a strike-out application, I am not willing to say that the plaintiff's reliance on thedecision in HTV is wholly misplaced. The Supreme Court in Tannadyce appears to have adopted a similar approach to that taken by the England and Wales Court of Appeal in suggesting that the correctness of the Commissioner's view in law may notpreclude a taxpayer from bringing a validity challenge.54 The Supreme Court acknowledged that, in practice, the validity challenge would normally be determined first, and then the Court may go on to consider substantive correctness, insofar as that is necessary or appropriate.[79] This approach is consistent with the powers of the hearing authority upon hearing a challenge. Section 138P(1) of the TAA provides that, on hearing a challenge, the hearing authority may confirm or cancel or vary an assessment, or53 At 194-195.54 Tannadyce Investments Ltd v Commissioner of Inland Revenue, above n 12, at [55].reduce the amount of an assessment. The hearing authority may also make an assessment itself or direct the Commissioner to re-assess the taxpayer. The discretion conferred in s 138P of the TAA gives the hearing authority flexibility in determining the remedies to be awarded, if any, in the event that conflicting outcomes may result from hearing a correctness challenge and a validity challenge together.55[80] It follows that, in challenge proceedings, it is arguable that a taxpayer is not prevented from raising administrative law grounds of challenge despite a claim by the Commissioner that the correctness of the decision remedies any invalidity resulting from the decision-making process.Should the inconsistency challenge be struck out?[81] In this judgment I have expressed the following conclusions:(a) There is an arguable case for the existence of an enforceable obligation on the Commissioner to act consistently.(b) While such a duty may be subject to limitations, the present pleadings do not make it untenable that Michael Hill could succeed in its argument that the Commissioner has acted inconsistently in the present case and that a remedy should be provided.(c) In challenge proceedings brought under Part 8A of the TAA, ss 109 and 114 do not restrict a taxpayer to raising administrative lawchallenges to assessments only where "exceptional circumstances"exist.(d) Further, it is arguable that a taxpayer is not prevented from raising administrative law grounds in challenge proceedings even where55 The one instance where there is no discretion is where the taxpayer brings a correctness challenge and proves, on the balance of probabilities, that the amount of an assessment isexcessive by a specific amount, a hearing authority must reduce the taxpayer's assessment by thespecific amount: Tax Administration Act 1994, s 138(1B). This instance does not arise in the present proceeding.correctness review of the decision would remedy any invalidity resulting from the decision-making process.[82] Applying the strike-out principles summarised at [11], and considering the respective cases as currently pleaded, I do not consider it to be plain and obvious thatthe plaintiff's inconsistency ground for challenge cannot succeed.Decision and costs[83] I dismiss the Commissioner's application to strike out the plaintiff'sinconsistency challenge.[84] The plaintiff is entitled to costs on a category 2B basis, with disbursements as fixed by the Registrar.[85] I record my appreciation to counsel for their careful and helpful submissions..Toogood J