SOVEREIGN BOOKS LIMITED AND CREATION PRODUCTIONS LTD v COMMISSIONER OF INLAND REVENUE [2016] NZHC 1313

SOVEREIGN BOOKS LIMITED AND CREATION PRODUCTIONS LTD v COMMISSIONER OF INLAND REVENUE [2016] NZHC 1313 [16 June 2016]IN THE HIGH COURT OF NEW ZEALANDHAMILTON REGISTRYCIV-2015-419-000345CIV-2015-419-000346[2016] NZHC 1313BETWEEN SOVEREIGN BOOKS LIMITED ANDCREATION PRODUCTIONS LTDApplicantsAND COMMISSIONER OF INLANDREVENUERespondentHearing: 8 June 2016Counsel: PR Young for ApplicantsP Ieong and J Mara for RespondentJudgment: 16 June 2016JUDGMENT OF ASHER JThis judgment was delivered by me on 16 June 2016 at 4 pmpursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors:Crown Law, Wellington.Copy to:Progressive Accountants Ltd, Hamilton.Introduction[1] The applicants, Sovereign Books Ltd and Creation Productions Ltd, havebrought proceedings called "Leave to make application of a statutory review ofTaxation Review Authority and to join Crown Law as third party and to make astatement of claim against IRD Crown Law in High Court", and also for leave toappeal the decisions made by the Authority. They effectively seek to challenge adecision of Judge P F Barber striking out the applicants' challenge before theAuthority.1[2] Two preliminary issues arise. Mr Philip Young is a director of the twoapplicants. He is not a barrister or solicitor of the High Court of New Zealand. Heseeks leave to represent the applicants in the High Court. He also seeks namesuppression for the applicants. Both applications are opposed by the respondent, theCommissioner of Inland Revenue.Mr Young's application for leave to appear[3] Mr Young submits that he should be granted leave to appear for the two applicants. Section 57(2) of the District Courts Act 1947 provides that a corporation may appear by an officer, attorney or agent of the corporation.2 There is no equivalent provision in the Judicature Act 1908 or High Court Rules.[4] It is well settled in New Zealand that a company has no right to be represented in the conduct of a case in the High Court except by a barrister or solicitor. The leading case standing for this proposition is Re G J Mannix Ltd. Having referred to the fact that counsel should appear for companies, Cooke J observed:3There is a cognate rule that, apart from statutory exceptions, a corporation has no right to bring or carry on proceedings in a Court except by a solicitor.1 Sovereign Books Ltd & Creation Productions Ltd v Commissioner of Inland Revenue [2015]NZTRA 142 District Courts Act 1947, s 57(2).3 Re G J Mannix Ltd [1984] 1 NZLR 309 (CA) at 311.[5] This principle has been affirmed by the Court of Appeal in a number of recent decisions.4 However, the Court has the discretion to allow non-lawyers to appear on behalf of companies where appropriate. As Cooke J stated in Re G J Mannix Ltd:5In general, and without attempting to work out hard-and-fast rules, discretionary audience should be regarded, in my opinion, as a reserve or occasional expedient, for use primarily in emergency situations when counsel is not available or in straightforward matters where the assistance of counsel is not needed by the Court or where it would be unduly technical or burdensome to insist on counsel. Especially in minor matters, cost-savingcould also be a relevant factor. A "one-man" company might be allowed to be represented by its owner if the Judge saw fit in a particular case. But it could not be right, for instance, to issue some sort of tacit continuing or general licence to an unqualified agent to appear in winding up or any other class of proceedings.[6] The exception is thus primarily to be used in emergencies when counsel is not available, or in straightforward matters where the assistance of counsel is not needed by the Court, or it would be unduly technical or burdensome to insist on counsel.[7] Mr Young in his primary submissions did not appear to argue he falls within the exception. His submission asserts that Re Mannix does not sensibly apply in the modern world, particularly to a situation such as the applicants, where they just want to have their day in court. He said that the reliance on Re Mannix was a strategy by the Commissioner to get rid of him as the party representing the applicants, and also in part a strategy by the Taxation Review Authority to the same end. He stated that companies are much more commonplace than they were in the day of Re Mannix and that the same person is often a director and shareholder. Given that individuals have a right to represent themselves, so should companies through a director. Forcing a company to appoint a lawyer could cause unnecessary hardship, given the very significant fees that would be involved. It is particularly unfair to require such representation when this was only an appeal from a strike out in the Taxation Review Authority, rather than a substantive hearing.4 New Zealand Cards Ltd v Ramsay [2012] NZCA 285 and Dreamtech Designs & Productions Pty Ltd v Clownfish Entertainment Ltd [2015] NZCA 491 at [7].5 Re G J Mannix Ltd, above n 3, at 314.[8] Finally he asserted that the applicants: refuse to be told how or who will conduct their case in the TRA, especially when they regard any lawyer a liability and because their tax agent has a full understanding of the case and has been excellent to date.That tax agent is Mr Young.[9] I am bound by Re Mannix and the cases that have followed it. In my respectful view there is a good reason for the rule in Re Mannix. A company is not a natural person. It has shareholders, officers and directors who have individual duties and interests. Incorporation of a company gives great benefits to the shareholders. In particular, while they may profit from the actions of the company, they are not personally liable for those actions. This arises because of the different nature of a company to that of a person. However, it follows from the separateness of a company from those who own its shares and run it, that there will always be a concern if a director acts for a company in court that it is the director's perspectivethat is presented and not that of the company. The Court should not have to make an inquiry to see whether indeed the person representing the company does have the support of all relevant parties.[10] Because of the particular nature of a company, it is important that aprofessional person who is ethically constrained to represent the company's interestsrepresents it. An individual officer will not have that objectivity. The Court can never be sure if an officer appears that there has been the appropriate attention givento the authority to issue the proceedings, and that the company's interests areadequately presented and protected. There is a particular need for independent representation. Further, as was pointed out in Commissioner of Inland Revenue v Chesterfield Preschools Ltd the Court must also have a solicitor on the record as it cannot exercise its disciplinary powers over a company.6[11] The problem of a director acting is demonstrated in this case. Its history shows a lack of objectivity and competence in the conduct of proceedings by Mr Young. If there is a case that demonstrates the wisdom of the rule requiring6 Commissioner of Inland Revenue v Chesterfield Preschools Ltd [2013] NZCA 53, [2013] 2NZLR 679 at [34].companies to be represented by counsel, this is a good example. The many meritless applications and failures to comply with Court orders were summarised by Ms Ieong in her submissions:6.1 failure to comply with the discovery orders of 11 September 2012;6.2 unsuccessful application to stay or strike out their own proceedings on 10 May 2013;6.3 appeal to the High Court against the TRA's refusal to stay or strike out the applicants' proceedings, despite there being no right of appeal, on 15 May 2014;6.4 withdrawal of the High Court appeal on 20 October 2014;6.5 request for a recusal of Judge Sinclair on 19 February 2015 (this was granted on 20 February 2015, though the Judge did not consider the grounds for recusal were made out, to avoid further delay);6.6 applications/requests for adjournment on 21 February 2013, 15 November 2013, 23 January 2015, 12 March 2015, 13 April 2015, 1 May 2015, 7 May 2015;6.7 unsuccessful applications for recusal of Judge Barber on 13 April 2015/1 May 2015, 7 May 2015 and 8 September 2015;6.8 failure to provide briefs of evidence on 30 April 2015;6.9 failure to comply with the TRA's unless orders of 18 May 2015; and6.10 failure to comply with the TRA's "proviso", which gave theapplicants a further chance to appoint counsel and file and serve briefs of evidence and opening submissions by 27 August 2015.[12] On my analysis of the documents, this summary is correct. These examples show that if there was any merit in the applicants' case, that merit has not been competently and objectively advanced.[13] It is my reading of the minutes and decisions of the Taxation Review Authority that every opportunity was given to the applicants to comply with standard timetable directions. In particular, I note that Judge Barber in his 27 July 2015 ruling on the application for strike out, after setting out the history of the proceedings including seven adjournment requests, and two applications for recusal, and failures to comply with unless orders, gave the applicants yet a further chance to appointcounsel and attend to the various timetable matters within a month.7 It was only after that month had expired that in a ruling on 16 September 2015, Judge Barber finally struck out the applicants challenge.8[14] I do not find that there are any exceptional circumstances warranting a departure from the rule that non-lawyer shareholders cannot appear for the company. The proceeding is not urgent. It is certainly not straightforward. The procedural tangles, on my assessment, are the fault of the applicants and Mr Young.[15] For these reasons I decline Mr Young's request that he be able to representthe applicants.Suppression[16] The applicants seek suppression of their names. I allowed Mr Young to present argument on this matter. There was no objection from the Commissioner.[17] He submitted that it would be unfair for there to be publicity. His primary consideration appeared to be unfairness to himself. He stated that he was an accountant and should not be subjected to the burden of publicity in challenging proceedings that he claimed had proceeded in a grossly unfair manner.[18] There is no specific provision in the High Court Rules relating to suppression of name or anonymisation of parties. The principle of open justice works for publication. The starting position is that the public of New Zealand are entitled to know what matters are proceeding in their courts. There is a legitimate public interest in the public knowing who is litigating and in general terms what the case is about. That position is to be distinguished from knowledge of the details of the case, where the access to court documents rules do provide for more limited access prior to and after a court hearing.9 There is no such restriction on the publication of theparties' names.7 Sovereign Books Ltd & Creation Productions Ltd v Commissioner of Inland Revenue [2015]NZTRA 11 at [1]–[6].8 Sovereign Books Ltd & Creation Productions Ltd v Commissioner of Inland Revenue [2015]NZTRA 14.9 High Court Rules, Part 3, subpart 2, rr 3.5–3.16.[19] In Clark v Attorney-General (No 1), and Brown v Attorney-General, it was stated that exceptional or extraordinary circumstances compelling the displacement of the principle are required before suppression orders, including for anonymisation, are granted.10 In JX MX v Dartford & Gravesham NHS Trust, the English Court of Appeal said:11[17] The identities of the parties are an integral part of civil proceedings and the principle of open justice requires that they be available to anyone who may wish to attend the proceedings or who wishes to provide or receive a report of them. Inevitably, therefore, any order which prevents or restrictspublication of a party's name or other information which may enable him to be identified involves a derogation from the principle of open justice and the right to freedom of expression. Whenever the court is asked to make an order of that kind, therefore, it is necessary to consider carefully whether a derogation of any kind is strictly necessary, and if so what is the minimum required for that purpose.[20] The requirement to establish exceptional circumstances before there isanonymisation may be questioned in light of the recent Court of Appeal judgment inJay v Jay,12 where it was stated that exceptional circumstances were not required, butdid not refer to Clark or Brown.13 It was stated in Clark that the basis for theexceptional circumstances test was that "the principles of open justice and the relatedfreedom of expression create a presumption in favour of disclosure of all aspects ofcourt proceedings ",14 and "the right to freedom of expression is better served byplacing as few restrictions as possible on it ".15[21] It is clear that a high standard for displacing the presumption in civil claims isenvisaged as appropriate. This has been the approach of High Court Judges in recent10 Clark v Attorney-General (No 1) [2005] NZAR 481 (CA); Brown v Attorney-General [2006]NZAR 450 (CA).11 JX MX v Dartford & Gravesham NHS Trust [2015] EWCA Civ 96, [2015] WLR 3647, cited with approval in Fisk v Name Suppressed [2015] NZHC 827 at [12].12 Jay v Jay [2014] NZCA 445, [2015] NZAR 861 at [118].13 Clark v Attorney-General, above n 10, and Brown v Attorney-General, above n 10. See thediscussion in Musuku v Commissioner of Inland Revenue [2015] NZHC 1584, (2015) 27 NZTC22-015 and Y v Attorney-General [2015] NZHC 844 on the Jay v Jay approach.14 Clark v Attorney-General, above n 10, at [42].15 At [43].decisions.16 Last year in McIntosh v Fisk the Court of Appeal did not refer toexceptional circumstances, but emphasised the principle of open justice and statedthat a party seeking name suppression must show the interests of justice displace thepresumption favouring publication:17The threshold is high because any suppression order necessarily derogatesfrom the principle of open justice and the right to freedom of expression".[22] Whether it is worded as exceptional circumstances or a high threshold, Mr Young has to show why there should be a departure from what Chambers J described in Brown v Attorney-General as "the starting point" of open justiceprinciples.18[23] Mr Young has not pointed to any particular factor warranting displacing thepresumption by a suppression order in this case. His general objection to the adverseaffects of publicity as an interference with his privacy is not enough. His suggestionthat it could cause embarrassment is also not enough. He has not put forward anygrounds to displace the principle of open justice. Indeed, he has not shown anyadverse consequences that might flow from publication.[24] Tax cases are not in a special category requiring a departure from theordinary principles.19 As Venning J noted in C v Commissioner of Inland Revenuethere can be a legitimate public interest in arguments involving tax matters " bothin relation to the details of the arrangement, its creators and those who choose tocontinue to support their investment in it".20[25] Thus, no case is made out for suppression and I decline to make the orders sought.16 Y v Attorney-General, above n 13. See also the earlier cases of Cross v Attorney-General HC Wellington CIV-2006-485-1173, 7 November 2006; Peters v Birnie HC Auckland CIV-2009- 404-8119, 19 March 2010; P v Attorney-General HC Wellington CIV-2006-485-874, 22 July 2010 at [2]; and Y v Z [2015] NZHC 844 at [35]. See also H v S [2016] NZHC 433, [2016] NZAR 405. I note also the discussion of these cases in Andrew Beck "Privacy Rights in the Courts" [2016] NZLJ 179 at 182 – 183.17 McIntosh v Fisk [2015] NZCA 247, [2015] NZAR 1189 at [1].18 Brown v Attorney-General, above n 10, at [14].19 Muir v Commissioner of Inland Revenue (2004) 21 NZTC 18,894, (2004) 17 PRNZ 365 (CA) at[43].20 C v Commissioner of Inland Revenue (2004) 21 NZTC 18,887 (HC) at [15].Result[26] The application to give Mr Young leave to appear for the applicants is declined.[27] The application to suppress the names of the parties is declined.Costs[28] The Commissioner of Inland Revenue seeks costs on a 2B basis. Costs should follow the event.[29] The applicants are to pay costs on a 2B basis to the Commissioner of Inland Revenue...Asher J