CHATFIELD & CO LIMITED v THE COMMISSIONER OF INLAND REVENUE [2017] NZHC 3289

CHATFIELD & CO LIMITED v THE COMMISSIONER OF INLAND REVENUE [2017] NZHC 3289 [22December 2017]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2015-404-001013[2017] NZHC 3289UNDER the Judicature Amendment Act 1972IN THE MATTER OF a decision under the Tax Administration Act1994BETWEEN CHATFIELD & CO LIMITEDFirst ApplicantCHATFIELD & COSecond ApplicantAND THE COMMISSIONER OF INLANDREVENUERespondentHearing: 28 September, 26-27 October and 1 December 2017Appearances: R A Rose and L M Zwi for ApplicantsP H Courtney and M J Bryant for RespondentJudgment: 22 December 2017JUDGMENT OF WYLIE JThis judgment was delivered by Justice WylieOn 22 December 2017 at 10.30amPursuant to r 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Solicitors/counsel:Bell Gully, AucklandCrown Law, WellingtonIntroduction[1] The applicants, Chatfield & Co Limited and Chatfield & Co (jointly"Chatfield"), seek to review a decision made by the respondent, the Commissioner ofInland Revenue (the "Commissioner"), in October 2014 to issue 15 notices under s 17of the Tax Administration Act 1994 (the "2014 notices"), requiring them to furnishinformation about 15 companies.[2] The information is sought by the Commissioner pursuant to a request made bythe Korean National Tax Service (the "NTS") under art 25 of the Double TaxationRelief (Republic of Korea) Order 1983 (the "DTA"). The NTS has requested theCommissioner to exchange the information once it is obtained in this country.Background – the 2014 notices[3] The NTS made the request to the Commissioner under the DTA in May 2014.The information requested related to 21 New Zealand taxpayers. Some of theinformation sought was able to be obtained from the Commissioner's existing records.Some of it could be obtained from the Companies Office and Land Information NewZealand, as well as other publicly available sources. By these means, informationrequested by the NTS about five of the taxpayers was able to be provided and it wasthen exchanged. However, to fully respond, it was thought necessary to take furthersteps.[4] To this end, on 7 October 2014, the Commissioner exercised her discretion toissue the 2014 notices to Chatfield. They seek information about a company calledKNC Construction Ltd and 14 affiliated companies. They were issued by Ms Forrest,an Investigation Team Leader, and they require Chatfield to produce variousdocuments and records that it holds on behalf of the target companies. Some of the2014 notices are relatively confined — for example, one seeks KNC ConstructionLtd's 2013 financial statements. Others are more wide-ranging — for example onenotice seeks the financial statements of KNC Construction and Engineering Ltd forthe years 2003 – 2013, as well as copies of agreements for sale and purchase andsettlement statements in relation to various properties. Documents sought from othertarget companies include share documents, bank remittance certificates for share andproperty sales, and reasons for changes in the ownership of various properties.[5] Each of the companies has its registered office in New Zealand. Chatfield isregistered under s 34B of the Tax Administration Act as the tax agent for each of them.[6] The Commissioner's sole purpose in issuing the 2014 notices was to obtaininformation requested by the NTS for possible exchange under art 25 of the DTA. NoNew Zealand tax revenue is in issue.[7] The NTS has commenced a tax investigation in Korea into the affairs of MrJae Ho Huh. Mr Huh is the substantial owner of, and is associated with, the 15companies the subject of the 2014 notices. He is a Korean national but he also hasNew Zealand residency. He has lived this country since approximately 2004.Proceedings to date[8] Chatfield had concerns about the legality of the 2014 notices. It discussedthese concerns with its advisors and with the Commissioner, but was unable to reacha satisfactory resolution.[9] As a result, in May 2015, Chatfield commenced these proceedings challengingthe Commissioner's decision to issue the 2014 notices. The proceedings were issuedon two broad grounds:(a) it was alleged that the Commissioner's decision to issue the noticesbreached Chatfield's legitimate expectations arising from anoperational statement known as OS 13/021 dealing, inter alia, with theissuance of s 17 notices; and(b) it was further alleged that, in issuing the notices, the Commissionerfailed to take into account three relevant considerations:1 Graham Tubb Operational Statement 13/02: Section 17 notices (Inland Revenue, OS 13/02, 14August 2013).(i) OS 13/02;(ii) the limited nature of information held by tax agents in NewZealand; and(iii) the terms of the DTA.[10] Chatfield also sought an order under s 10(2) of the Judicature Amendment Act1972 seeking that the Commissioner should disclose and produce all relevantdocuments that had not at that point been produced. In particular, it sought the requestmade under the DTA by the NTS to the Commissioner and any and all exchangesbetween the Commissioner and the NTS relating to the request.[11] The Commissioner refused to supply these documents. Rather, she sought anorder under s 70 of the Evidence Act 2006 precluding disclosure on the ground thatthe documents relate to "matters of state".[12] On 1 September 2015, Ellis J held that it is, in principle, possible to obtaindisclosure of material exchanged between the Commissioner and the NTS, but thatsuch disclosure is governed by s 81 of the Tax Administration Act.2 She considered,however, that there was an evidential vacuum in the materials before her, and that theappropriate course was for the Commissioner to make enquiry of the NTS as to itsviews on disclosure of the documents sought. She indicated that if secrecy was soughtto be maintained by the NTS, then the matter would need to be referred back to her.She directed the Commissioner to file and serve a memorandum advising the outcomeof the enquiry to the NTS.[13] The Commissioner made the appropriate enquiry, and then filed both an openand a closed memorandum. The open memorandum asserted as follows:(a) NTS's request, and the information sought, was necessary for carryingout the provisions of the DTA and the domestic laws of Korea.2 Chatfield & Co Ltd v Commissioner of Inland Revenue [2015] NZHC 2099, (2015) 27 NZTC 22-024.(b) NTS's request was for information that is not obtainable in the normalcourse of tax administration in Korea.(c) Korean legislation gives a taxpayer the right to request informationnecessary for the exercise of his, her or its rights, but tax officials arenot required to provide information where an investigation is inprogress, a decision on the appropriate tax assessment has not beenmade, and disclosure of information might affect the tax investigation.When the tax investigation is completed, tax officials must notify thetaxpayer of the result. However, material obtained during theinvestigation is still not disclosed, unless a request is made. Thetaxpayer has various options to dispute the outcome of theinvestigation.(d) The closed memorandum being filed contemporaneously wasconfidential to the Court. It had attached to it the response receivedfrom the NTS to the enquiry directed by the Court. The NTS wasclaiming confidentiality in respect of each document requested and ithad given brief reasons for its claim to confidentiality.I have not seen the closed memorandum.[14] After calling for submissions, in June 2016 Ellis J issued a further judgment asan addendum to her earlier judgment. She held that the Commissioner was notrequired to disclose the requested documents pursuant to s 81 of the TaxAdministration Act.3[15] In early July 2016, Chatfield both appealed Ellis J's decision and filed anamended statement of claim. The Commissioner promptly filed a strike-outapplication.3 Chatfield & Co Ltd v Commissioner of Inland Revenue [2016] NZHC 1234, (2016) 27 NZTC 22-053.[16] The strike-out application came before Lang J on 21 September 2016, and heissued his decision on 27 September 2016.4 He struck out Chatfield's legitimateexpectations claim, but held that Chatfield's allegation that the Commissioner haddecided to issue the 2014 notices without taking into account the terms of art 25, andin particular the exceptions contained in art 25(2), was reasonably arguable. He heldthat this part of the cause of action could remain on foot.[17] Chatfield appealed both Ellis J's discovery decision and parts of Lang J'sstrike-out decision to the Court of Appeal. The Commissioner did not appeal eitherdecision.[18] The Court of Appeal dismissed both of Chatfield's appeals following separatehearings. Relevantly, it:(a) held that the undisclosed documents were not relevant to Chatfield'samended statement of claim;5(b) upheld Lang J's decision that OS 13/02 did not give rise to anylegitimate expectation as contended for by Chatfield and that it was notreasonably arguable that, when exercising her s 17 power, theCommissioner was required to take OS 13/02 into account, or thelimited relationship tax agents characteristically have with theirclients.6[19] Chatfield applied for leave to appeal both decisions to the Supreme Court. Italso filed a second amended statement of claim on 8 June 20177 and the Commissionerfiled an amended statement of defence in response on 22 June 2017.4 Chatfield & Co Ltd v Commissioner of Inland Revenue [2016] NZHC 2289, (2016) 27 NZTC 22-072.5 Chatfield & Co Ltd v Commissioner of Inland Revenue [2016] NZCA 614, (2016) 27 NZTC 22-084.6 Chatfield & Co Ltd v Commissioner of Inland Revenue [2017] NZCA 148, (2017) 28 NZTC 23-015.7 Although the Court of Appeal left it open to it to do so – Chatfield & Co Ltd v Commissioner ofInland Revenue, above n 5, at [31] – insofar as I am aware Chatfield has not sought discovery inrespect of its second amended statement of claim.[20] The Supreme Court subsequently declined leave to appeal either decision madeby the Court of Appeal.8[21] In the course of the hearing before me, Mrs Courtney for the Commissionersought to argue justiciability as an affirmative defence. That defence had not beenpleaded and Ms Rose for Chatfield asserted that it was not open to the Court toconsider the matter. After discussions in Court, Mrs Courtney sought leave to file anamended statement of defence. I granted her leave to do so, but delayed hearingChatfield's submissions in reply, to give Ms Rose the opportunity to fully consider thematter, and so as to avoid any prejudice to her client.The pleadings[22] Chatfield's second amended statement of claim now contains only one causeof action — although the pleading still runs to some 86 paragraphs. No doubt becauseit has not seen the documents relevant to the decision it seeks to challenge, the pleadingadopts what can best be described as a scatter-gun approach. Chatfield alleges that theCommissioner erred in law in issuing the 2014 notices, and broadly, that she:(a) failed to fully and/or accurately evaluate the NTS's request and itsconsequences;(b) had insufficient information to accurately assess the lawfulness of therequest;(c) purported to make an exchange of information decision where therelevant decision-maker was not a competent authority as defined in art3(1)(i) of the DTA;(d) did not take into account the terms of the DTA, and in particular, arts 2and 25, various provisions in the Tax Administration Act, and thelimitation period for tax investigations in Korea;8 Chatfield & Co Ltd v Commissioner of Inland Revenue [2017] NZSC 48, (2017) 28 NZTC 23-010; Chatfield & Co Ltd v Commissioner of Inland Revenue [2017] NZSC 118.(e) failed to take into account that some of the information sought isavailable in the ordinary course of administration in Korea;(f) failed to take into account the need for the NTS to exhaust all localremedies; and(g) failed to appreciate that some of the taxes in respect of whichinformation is sought, may not be covered by the DTA.Chatfield alleges that the notices were issued pursuant to mistakes of fact, that theCommissioner failed to apply independent judgment or independently exercise herdiscretion in issuing the notices, and that the decision to issue the notices was one thatno reasonable Commissioner could properly make.[23] The Commissioner's amended statement of defence denies that theCommissioner has erred in law in any of the respects alleged and contends thatChatfield has failed to establish that she exercised her statutory powers and dutiesunlawfully. She also advances the affirmative defence of justiciability. In oralargument, she asserted that the appropriate intensity of review only requires the Courtto determine that the decision to issue the 2014 notices was valid on its face.Section 17[24] The 2014 notices were issued under s 17 of the Tax Administration Act.Relevantly it states:17 Information to be furnished on request of Commissioner(1) Every person (including any officer employed in or in connection withany department of the government or by any public authority, and anyother public officer) shall, when required by the Commissioner,furnish any information in a manner acceptable to the Commissioner,and produce for inspection any documents which the Commissionerconsiders necessary or relevant for any purpose relating to theadministration or enforcement of any of the Inland Revenue Acts orfor any purpose relating to the administration or enforcement of anymatter arising from or connected with any other function lawfullyconferred on the Commissioner.[25] The discretionary power vested in the Commissioner pursuant to s 17 is one ofconsiderable potency. It is, however, necessary in the public interest. The Courts haverecognised that extensive powers of inquiry are a fundamental feature of revenuelegislation, as information is generally in the hands of taxpayers, who may have anincentive to act secretively.9 The Commissioner can seek information and documentsthat alert her to lines of inquiry.10 It has been recognised that the rationale of taxationwould break down, and that the burden of taxation would fall only on diligent andhonest taxpayers, if the Commissioner could not obtain information about taxpayerswho may be negligent or dishonest in respect of their tax obligations.11[26] Here, the 2014 notices each advised that the information was requestedpursuant to art 25 of the DTA.DTAs – a brief overview[27] The DTA is one of a number of tax treaties to which New Zealand is a party.The broad objective of these tax treaties is to avoid the double taxation of income andto prevent fiscal evasion. With globalisation making it increasingly easy to dobusiness anywhere in the world, and with pressure on states to sustain the revenue theyraise through taxes, states have cooperated to maintain the integrity of their respectivetax systems. When taxpayers operate in multiple jurisdictions, not all of theinformation required to enable tax authorities to monitor any particular taxpayer'scompliance with his, her or its tax obligations will necessarily be available in any onestate. As a result, the tax treaties also seek to facilitate the exchange of informationbetween states.[28] New Zealand enters into international treaties — including tax treaties —through the executive branch of government, in the exercise of its prerogative power.The act of entering into a treaty, or of becoming a signatory to an internationalconvention, involves relationships between states.9 New Zealand Stock Exchange v Commissioner of Inland Revenue [1990] 3 NZLR 333 (CA) at336-337; approved by Privy Council in New Zealand Stock Exchange v Commissioner of InlandRevenue [1992] 3 NZLR 1 (PC) at 3 - 4.10 Smorgon v Federal Commissioner of Taxation (1979) 23 ALR 480 (HCA).11 New Zealand Stock Exchange v Commissioner of Inland Revenue, above n 9, at 4.[29] DTAs are unusual amongst New Zealand's international treaties, because theyhave direct effect in New Zealand's domestic law, once they are given effect in thiscountry by order in council.12 Relevantly, s BH 1 of the Income Tax Act 2007 statesas follows:BH 1 Double tax agreementsMeaning(1) Double tax agreement means an agreement that—(a) has been negotiated for 1 or more of the purposes set out insubsection (2); and(b) has been agreed between—(i) 1 or more governments of territories outside NewZealand and the government of New Zealand; or(ii) (c) has entered into force as a result of a declaration by theGovernor-General by Order in Council under subsection (3).Purposes(2) The following are the purposes for which a double tax agreement maybe negotiated:(a) to provide relief from double taxation:(f) to prevent fiscal evasion:(g) to facilitate the exchange of information:Entry into force(3) An agreement to which subsection (1)(a) and (b) apply comes intoforce as declared by the Governor-General by Order in Council andon the date determined under the agreement.Overriding effect(4) Despite anything in this Act, a double tax agreement has effect inrelation to—12 And see Lin v Commissioner of Inland Revenue [2017] NZHC 969, (2017) 28 NZTC 23-016 at[24]; An appeal has been filed by the Commissioner. I am advised from the bar that it does nottouch on this issue.(a) income tax:(b) any other tax imposed by this Act:(c) the exchange of information that relates to a tax, as defined inparagraphs (a)(i) to (v) of the definition of tax in section 3 ofthe Tax Administration Act 1994.[30] As can be seen from the opening words of subs (4), if a DTA is inconsistentwith the Inland Revenue Acts, the DTA prevails.[31] DTAs have but rarely been required to be interpreted by New Zealand Courts,13and aspects of how they fall to be interpreted are still controversial.14 Moreover asDTAs are instruments of international law, principles governing their interpretationare also found in the Vienna Convention on the Law of Treaties.15 A further source ofinterpretation, unique to the DTA context, is the Organisation for EconomicCooperation and Development's ("OECD's") model commentary. The OECDcommentary is regularly updated, whereas DTAs are not. More recent commentarymay be used to interpret a DTA concluded earlier in time where the commentary canbe "viewed not as recording an agreement about a new meaning but as reflecting acommon view as to what the meaning is and always has been".16 Otherwise relyingupon more recent commentary risks retrospectivity.The DTA at issue in this case[32] The New Zealand-Korea DTA was incorporated into New Zealand law by theDouble Taxation Relief (Republic of Korea) Order 1983. The DTA largely followsthe OECD's model convention as it stood at the time.[33] The first relevant article is art 2. Relevantly, it provides as follows:13 See, eg Commissioner of Inland Revenue v United Dominions Trust Ltd [1973] 2 NZLR 555 (CA);Commissioner of Inland Revenue v JFP Energy Inc [1990] 3 NZLR 536 (CA); Chatfield & Co Ltdv Commissioner of Inland Revenue, above n 2.14 See Craig Elliffe International and Cross-Border Taxation in New Zealand (Thomson Reuters,Wellington, 2015) at 6.5-6.7.15 Vienna Convention on the Law of Treaties (concluded 23 May 1969, entered into force 27 January1980) 1155 UNTS 331. See in particular pt III.16 Chatfield & Co Ltd v Commissioner of Inland Revenue, above n 2, at [62].Article 2Taxes covered1. The taxes to which this Convention shall apply are:(a) In the case of Korea:(i) the income tax;(ii) the corporation tax; and(iii) the inhabitant tax (hereinafter referred to as "Koreantax");[34] The other article at issue in this case is art 25. Relevantly, it provides asfollows:Article 25Exchange of information1. The competent authorities of the Contracting States shall exchangesuch information as is necessary for carrying out the provisions of thisConvention or of the domestic laws of the Contracting Statesconcerning taxes covered by the Convention insofar as the taxationthereunder is not contrary to the Convention, as well as to preventfiscal evasion. The exchange of information is not restricted by Article1. Any information received by a Contracting State shall be treated assecret in the same manner as information obtained under the domesticlaws of that State and shall be disclosed only to persons or authorities(including courts and administrative bodies) involved in theassessment or collection of, the enforcement or prosecution in respectof, or the determination of appeals in relation to, the taxes covered bythe Convention. Such persons or authorities shall use the informationonly for such purposes. They may disclose the information in publiccourt proceedings or in judicial decisions.2. In no case shall the provisions of paragraph 1 be construed so as toimpose on a Contracting State the obligation:(a) (b) to supply information which is not obtainable under the lawsor in the normal course of the administration of that or of theother Contracting State;(c) [35] The term "competent authority", used in the plural in art 25, is defined in art3(1)(i). It means, in the case of New Zealand, the Commissioner or her authorisedrepresentative. The authorised representative holding the position is Mr John Nash.Mr Nash holds the position of Manager (International Review Strategy) at the InlandRevenue Department. He has held the position as competent authority for NewZealand since 1 March 1994. As competent authority, he is responsible for exchangesof information with New Zealand's tax treaty partners.Issues for determination[36] The submissions for both parties were wide-ranging and they tended to focuson the legislative framework, rather than on the cause of action pleaded. For thereasons which follow, I do not consider it necessary to consider all of the very manymatters traversed in the lengthy submissions advanced by counsel. I consider that theprincipal issues are as follows:(a) Justiciability — is the Commissioner's decision to issue the 2014notices susceptible to judicial review?(b) Did Mr Nash as the competent authority for New Zealand under theDTA act lawfully? In particular, did he take steps to satisfy himselfthat:(i) the request was made in respect of taxes covered by art 2 of theDTA?;(ii) the information sought for exchange was "necessary" under art25(1) of the DTA?; and(iii) the exception set out in art 25(2)(b) of the DTA did not apply?(c) Did Mr Nash make the impugned decision to issue the 2014 notices,and was he required to do so?(d) If judicial review is available and one or other of the above grounds aremade out, what is the appropriate intensity of review?Justiciability[37] Mrs Courtney contended that it is "simply not in the public interest for judicialreview to be available in the circumstances of this case. She argued that the institutionof the proceedings by Chatfield has undermined New Zealand's reputationinternationally by delaying the provision of the requested information, contrary to theexchange of information provisions in the DTA. She further submitted that the subjectmatter of the Commissioner's decision to issue the 2014 notices, and the context inwhich that decision was made, involve relations between sovereign states, and occurthrough senior public servants designated as competent authorities. Such decisionsare, in the Commissioner's submission, at the "apex of executive responsibility", andare inherently unsuitable for resolution by the Courts. She argued that collateralchallenges which disrupt the process are undesirable, and that other safeguards are inplace, including an international peer review system administered by the OECD.[38] Ms Rose argued that non-justiciability is a narrowing concept, and that theCourts should not lightly accept that there are "Alsatias" where the executive can actfree of judicial review.17 She argued that judicial review operates as an importantsafeguard for taxpayers, and that the primary function of judicial review is to upholdthe rule of law by ensuring that the public authorities, including the Commissioner, actin accordance with their statutory powers.[39] I am not persuaded by the Commissioner's arguments. In my judgment, theCommissioner's decision to issue the 2014 notices is justiciable.[40] There are a number of reasons for this conclusion:(a) Chatfield's challenge does not call into question the executive'sdecision to enter into the DTA. It does not raise any comity issuebetween New Zealand and Korea, and it does not challenge any act ofKorea as a foreign state. Rather, it puts in issue the exercise by the17 A reference to an observation by Scrutton LJ that "there must be no Alsatia where the king'swrit does not run" — in Czarnikow v Roth, Schmidt & Co [1922] 2 KB 478 (CA) at 488.Commissioner of the power available under domestic law to issuenotices under s 17 of the Tax Administration Act.(b) To the extent that Chatfield's application for review involves theinterpretation of arts 2 and 25 of the DTA, the DTA is now part of NewZealand law. Interpretation of the Tax Administration Act, and of theDTA as part of New Zealand law, is within this Court's constitutionalcompetence. The Courts in this country are responsible for determiningquestions of domestic law. In exercising this jurisdiction, the Courts donot unacceptably tread on or overstep any foreign state boundary.(c) The matters at issue in this case are not matters of high policy. Nor arethey politically fraught. All that is required is an assessment as towhether or not statutory requirements contained in domestic legislationhave been met on the facts of this particular case.(d) The legality of the Commissioner's actions in issuing notices under s17 of the Tax Administration Act and its related provision, s 16, can bethe subject of judicial review proceedings, for example, if theCommissioner exceeds or abuses her powers.18 Prior authority in theDTA context is to the same effect.19(e) Other checks and balances which apply to DTAs, and in particular theOECD's peer review regime, do not involve curial oversight. They donot focus on individual cases and they do not give remedies toindividual taxpayers.[41] I cite the observations of Lord Scarman in the Fleet Street Casuals case.2018 New Zealand Stock Exchange v Commissioner of Inland Revenue (PC), above n 9, at 6-7; Luptonv Commissioner of Inland Revenue (2007) 23 NZTC 21,204 (HC) at [21]; Mason v Commissionerof Inland Revenue (2006) 22 NZTC 19,775 (HC) at [17]; Green v Housden [1993] 2 NZLR 273(CA) at 283-284; Tauber v Commissioner of Inland Revenue (2011) 25 NZTC 20-071 (HC);upheld on appeal in Tauber v Commissioner of Inland Revenue [2012] NZCA 411, [2012] 3 NZLR549.19 See, Avowal Administrative Attorneys Ltd v District Court at North Shore [2008] 1 NZLR 675(HC) at [24], dealing with s 16 of the Tax Administration Act.20 R v Inland Revenue Commissioners v National Federation of Self-Employed and Small BusinessesLtd [1982] AC 617 (HL) at 652.The courts have a role, long established, in the public law. They are availableto the citizen who has a genuine grievance if he can show that it is one inrespect of which prerogative relief is appropriate. I would not be a party tothe retreat of the courts from this field of public law merely because the dutiesimposed upon the revenue are complex and call for management decisions inwhich discretion must play a significant role.In my judgment, these comments are apposite to the present case and I adopt them.[42] Given this conclusion, I do not need to go on to consider Chatfield's alternativesubmission that justiciability has already been decided in these proceedings, and thatit is res judicata as between the parties.[43] I reject the Commissioner's argument that the Commissioner's decision toissue the 2014 notices in this case is not justiciable.Did the Commissioner's officer designated as the competent authority under theDTA act lawfully?(i) Common ground[44] Section 17 is set out above at [24]. It permits the Commissioner to require theproduction of any information she considers necessary or relevant for any purposerelating to the administration of the Inland Revenue Acts or for any purpose relatingto the administration of any matter arising from or connected with any other functionlawfully conferred on her.[45] Given that the DTA is part of New Zealand's revenue Acts,21 it is clear that theCommissioner may exercise the powers available under s 17 for the purposes ofgathering information for exchange with a foreign state pursuant to a DTA, andChatfield did not assert to the contrary.[46] Article 25 is also set out above at [34]. It provides for the exchange bycompetent authorities of the contracting states of such information as is "necessary"for carrying out the provisions of the DTA or of the domestic laws of the contractingstates concerning taxes covered by the DTA, as well as to prevent fiscal evasion.21 See [29] above and Income Tax Act 2007, s BH 1(4).[47] Chatfield asserted, and the Commissioner accepted, that Mr Nash, as thecompetent authority for New Zealand, faced with the request for the exchange ofinformation from the NTS, needed to satisfy himself that the information sought camewithin the terms of the DTA and this country's tax laws, that the nature of theinformation sought was (or at the least appeared to be) consistent with the grounds forthe request, and that the type of information sought was broadly what would beexpected to be necessary for or relevant to any inquiry of the nature indicated.[48] In its terms, art 25 deals with the exchange of information, but it is clear fromthe affidavits filed that obtaining information — in this case from Chatfield — is aprelude to its exchange. Once obtained, exchange is not, however, inevitable. Thecompetent authority, Mr Nash, has deposed that he is still to make the decision aboutwhat further information the Commissioner will exchange with the NTS in this case,but clearly he can only make that decision after the Commissioner has received theinformation sought in the 2014 notices. Both parties proceeded, at least implicitly, onthe basis that Mr Nash had to be satisfied that the information sought could beexchanged once it is obtained under the 2014 notices. This seems to me a sensibleway to approach the matter, and I follow the same course.(ii) Chatfield's arguments[49] Shorn of irrelevancies and repetition, Chatfield asserts that Mr Nash, as thecompetent authority, can only exchange (and therefore request) such information as is"necessary" for the purposes set out in art 25. Chatfield argues that the word"necessary" used in art 25(1) is a jurisdictional gateway which Mr Nash must besatisfied of before the Commissioner can respond to a request under the DTA.22Chatfield submits that it was incumbent on Mr Nash to be satisfied, by clear andspecific evidence, that all of the information requested by the NTS was necessary foran investigation, or other action, being undertaken by the NTS against a Koreantaxpayer regarding one or more of the taxes covered by the DTA, namely, income tax,corporation tax or inhabitant tax, or to prevent fiscal evasion in relation to the sametaxes.22 Relying on Comptroller of Income Tax v AZP [2012] SGHC 112, (2012) 14 ITLR 1155 at [10]; EReimer and A Rust (eds) Klaus Vogel on Double Taxation Conventions (4th ed, Kluwer LawInternational, Alphen aan den Rijn, 2015) at 1406.[50] Chatfield says that there is no evidence that Mr Nash sought or obtainedconfirmation from Korea that each item of information sought relates to a tax coveredby the DTA. Chatfield further says that there is no evidence that Mr Nash has checkedthat the information sought, once exchanged, will only be used for the purpose ofrecovering one or other of these taxes.[51] It was submitted that, if the 2014 notices seek material that is outside theparameters of the taxes stipulated in art 2 of the DTA, then the 2014 notices arenecessarily invalid and unlawful. In this regard, it points to an affidavit filed by MrSeo, who is a director of Chatfield & Co Ltd and a partner in Chatfield & Co, whichsuggests that the NTS is investigating a Korean company called Dae Ju ConstructionsCo Ltd in relation to alleged exchange control breaches involving KNC Constructionand Engineering Co Ltd and Christie Property Holdings Ltd — both New Zealandcompanies, and both target companies under two of the 2014 notices. Chatfield arguesthat possible exchange control breaches are not covered by the DTA, and theCommissioner has no jurisdiction to seek information under s 17 in respect of thesealleged breaches.[52] Chatfield also argues — relying on art 25(2)(b) — that there is no obligationon New Zealand to exchange information obtained under a s 17 notice if Korea couldhave obtained the information under its own laws in the normal course of theadministration of those laws. It notes that Mr Seo has filed an affidavit advising thatMr Huh's ex-partner, Mrs Sewon Hwang, has received an information productionrequest from the NTS in Korea. Mrs Hwang is a Korean citizen and tax resident, andMr Seo deposes that the information request sent to her sought material the NTS hasalso sought from Chatfield via the 2014 notices.23 Chatfield asserts that there is noevidence suggesting that Mr Nash sought or obtained confirmation from the NTS thatit had exhausted all local remedies before making the DTA request.[53] Mr Seo has also deposed that Mr Huh received a notice from the NTS in Seoul.The notice has been exhibited. It is under the subject line "Notification of Suspension23 Strictly Mr Seo's assertions in this regard are hearsay. The Commissioner did not, however, takethis point. I was also told from the bar that Mrs Hwang is a director of six of the target companies,a shareholder in five of those six, and a shareholder in three of the other target companies. Thisinformation was not set out in any of the supporting affidavits however.of Tax Investigation" and it inter alia records that the original planned period ofinvestigation was 3 April 2014 to 2 January 2017, that the investigation is suspendedfrom 31 December 2016 to 31 December 2017, and that the adjusted period ofinvestigation is now from 3 April 2014 to 2 January 2018. The reason for suspensionis recorded as follows: "to collect information from overseas sources". The noticerecords that after the suspension period is over, the NTS will resume the taxinvestigation.[54] There was also a concern raised about limitation periods. The Commissionerhas advised the Court that the limitation period for the recovery of taxes in Korea isfive years for income tax and corporate tax, but that there is a 10-year limitation periodwhere evasion or fraud is suspected. Concern is expressed that some of the materialsought in the 2014 notices appears to fall outside either the five or 10-year window,and that there is no information supplied to determine which limitation applies to eachof the 2014 notices.(iii) The Commissioner's Response[55] The Commissioner relies primarily on Mr Nash's affidavits. Mr Nash hasconfirmed that the request at issue in this case was made under art 25 of the DTA. Heacknowledges that it is his responsibility to ensure that requests contain sufficientparticularity and specificity to ensure that an effective and efficient response can bemade. He says that whenever he considers a request under a DTA, including makinga decision to exchange information the Commissioner considers is relevant, he doesso within the framework of art 26 of the OECD model DTA and the equivalentprovision in the relevant DTA.[56] Mr Nash says that each request is considered on an individual basis, and thatrequests should include relevant background context to enable the treaty partner tounderstand that the information sought concerns a tax covered by the DTA, the natureof the underlying audit/inquiry, and to establish that the request is in good faith.[57] Mr Nash sets out his understanding of the principles relevant to requests andthe subsequent exchange of information as follows:(a) There is a mandatory requirement for exchange, because of the use ofthe word "shall" in art 25, provided the competent authority is satisfiedabout the scope of the request and the availability of the informationsought.(b) Information exchanged is to be treated as secret in the receiving statein the same manner as information obtained under the domestic laws ofthat state.(c) The requested state is not obliged to carry out measures in obtaininginformation requested that are at variance with the laws andadministrative practices of either contracting state. The Commissionerhas an operational discretion to decide what information she considersnecessary or relevant, and how it is to be obtained. In the absence ofanything to the contrary, the competent authority can rely on theaccuracy of the content of the request, and is not obliged to secondguess the competent state of another country.(d) The requested state may refuse to provide information where therequesting state would be precluded by law from obtaining andproviding the information or where the requesting state's administrativepractices result in the lack of reciprocity. Reciprocity should beinterpreted in a broad and pragmatic manner.(e) The requested state is not obliged to supply information that is notobtainable under the laws, or in the normal course of administration ofeither contracting state.[58] Mr Nash then goes on to discuss the process which he generally follows whenan information request is received by the Commissioner. He states as follows:34. When a Request comes in I perform a control check to determinewhether the Request conforms with the relevant DTA and whether theinformation requested can be retrieved without the assistance ofInland Revenue investigating officers.35. I assess the source of the request. I consider whether the requestingState is one that is a trusted partner; or is it a State that we need to bemore cautious of in our dealings. In that case, any such request wouldlikely require more intense scrutiny, including as to its context anddetails.36. However, as Korea does not come within that category, it is notnecessary to discuss that any further.37. Korea is a trusted partner, both in terms of the requests they make andthe processes they use in making those requests. They have a goodrecord internationally in relation to the carrying out of theirobligations in relation to requests they make and requests made ofthem. I have had the opportunity to form this assessment from myexperience of dealing with them; and through reading the peer reviewevaluation for which they received a rating of compliant.38. On occasion, it has been necessary to ask for additional details toclarify issues raised, but in general their requests are to the requiredquality by international standards.39. Consequently, when we receive a request from Korea there is noreason to believe that the request has been made in an unorthodoxmanner (ie, outside the international framework for the exchange ofinformation and/or outside NTS internal processes).40. If we are satisfied that the request is one which falls under the relevantDTA, the next step is to consider the issue of equivalence of laws andreciprocity.41. The Commentary to Article 26 of the OECD Model DTA highlightsthat the goal is exchange of information to the widest possible extent.From previous case law and the Commentary to the OECD ModelDTA we do not understand that it is necessary for the tax laws oradministrative practices of each State to match exactly – as long as theinformation comes within the DTA (in this case Articles 1 and 2 of theNZ-Korea DTA), and is obtainable under the law of the other Statethrough a broadly analogous process, that is sufficient.42. We satisfy ourselves that the requesting State is not gaming thesystem, eg, attempting to get information from New Zealand that itcannot usually get at home.45. It is not possible for every Competent Authority and their staff to beexperts in all other tax systems. The mutual assistance treaties aretherefore formulated and operate in good faith.46. If I have a concern about the veracity of any request, or the use of anyinformation provided pursuant to a request, I would pursue thatthrough requiring further details to satisfy myself as to the bona fidesof the request. If a response was not satisfactory, then a serious matterof this nature may be elevated to respective Commissioners of IRDand the NTS. If the NTS asked for information it was not entitled to,or used such information improperly, potentially that could put theNZ-Korea DTA at risk. [59] Mr Nash then goes on to discuss his involvement in this case specifically. Hestates:49. The NTS initiated the exchange of information process in May 2014.In my role I had ultimate responsibility for accepting the request andwhat information was exchanged, and maintained oversight of thecase. I discussed the Request and the actions we considered werenecessary to comply with it, provided instructions as required, andsupervised as appropriate, my exchange of information staff(principally Michael Nugent and Margaret Wallace) who hadcompetent authority delegations. They in turn worked with other IRDinvestigators who had previously been involved in an audit involvingone of the parties related to the Request in making the specificrequests for information.50. Article 170 of the Republic of Korea's Income Tax Act allows anypublic official engaged in business concerning income tax toinvestigate including ordering them to present relevant books,documents and things. That provision is broadly analogous to s 17 ofthe Tax Administration Act 1994. 51. It is the responsibility of the Competent Authority to determine whatinformation is to be exchanged with the requesting state. Even thoughinformation is collected it is not inevitable that an exchange ofinformation will occur. I make the final decision on that, taking intoaccount what I understand to be New Zealand's obligation under therelevant DTA, having regard to the terms of the Request, and thenature of the information collected.54. In respect of each Request, in my role as the Competent Authority, Isatisfy myself that there are good grounds for the request; and thenature of the information sought to be exchanged is broadly whatwould be expected to be necessary or relevant to an inquiry of thenature indicated. Beyond that, I understand that the CompetentAuthority is entitled to accept at face value the factual assertionsunderlying the Request, and that the requesting State is entitled underits own law to make the Request, based on a broad understanding thatthe information sought comes within the DTA and about theequivalent law in each State.79. The Commissioner does not blindly accept exchange of informationrequests. The Competent Authority needs to be satisfied that theRequest is in accordance with the DTA; and does seek clarificationwhere that is considered necessary and also rejects requests. A requestmust proceed through a central gateway and be accepted by a seniorofficer with appropriate delegation (ie, the Competent Authority).Furthermore, nothing has come to the Commissioner's attention tosuggest that the NTS has poor or inadequate exchange practices. Tothe contrary, the Global Forum has given Korea a rating of"compliant" which is the highest rating possible.80. I am satisfied that both the information requested and exchanged, andthe additional information sought under the 2014 Notices, are inaccordance with the NZ-Korea DTA and the taxation laws of NewZealand.[60] Mr Nash states that he was unaware that exchange control breaches had beenidentified as a matter of potential concern in Korea until that issue was raised byChatfield. In relation to the limitation period point, he asserts that just becauseinformation relates to a year in respect of which an assessment can no longer be madeor amended, it does not mean information cannot be exchanged; information relatingto earlier years may assist in understanding the position in later years that are still openfor assessment or amendment. He says that earlier information can assist in puttingtogether a complete picture of a taxpayer's financial and taxation affairs.[61] An affidavit has also been filed by Ms Forrest. She is an Investigations TeamLeader with the Commissioner. She has held that position since approximately 2002.She records her team's involvement in collating the information sought by the NTSthat was available from public sources, and then her involvement in discussions withthe Commissioner's delegates as to how the balance of the information requested bythe NTS could be obtained. She says that it was decided that the information soughtshould be requested from Chatfield as the tax agent of the targeted taxpayers. Shesays that it was decided that notices under s 17 should be issued, and that accordinglyshe issued the 2014 notices on 7 October 2014. She records that she holds thedelegated authority to issue such notices. She notes that the notices state that theinformation is required under s 17, and that they are issued pursuant to art 25 of theDTA. She refers to correspondence she had with Chatfield and their legal advisors,and to a letter she sent to Chatfield on 3 December 2014. In that letter, she assertedthat the notices were validly issued under s 17, and that the information requested inthe notices was necessary while enforcing the Inland Revenue Acts. She also statedthat the information requested was sought as a result of sch 1, art 25, of the DTA.[62] As can be seen, the affidavits filed by the Commissioner are long ongeneralities but short on specifics. Nevertheless, it was the Commissioner's case thatI should confine myself to Mr Nash's affidavits, and ask myself simply whether thereare any errors of a material or substantive nature evident from them. Mrs Courtneyput it to me that I am entitled to rely on Mr Nash's assurances and to infer that heconsidered all that he was required to consider in relation to the request from the NTS.(iv) Documents before the Court[63] The difficulty in dealing with this case is exacerbated by the fact that therelevant background papers, in particular the request from the NTS, file notes that MrNash may have made, and any correspondence that may have passed between Mr Nashand the NTS regarding the request, have not been disclosed to the Court.[64] I have already summarised above Chatfield's unsuccessful attempts to obtaincopies of the background documents.24[65] When the hearing before me commenced, Mrs Courtney advised that sheproposed that she would make available to me the relevant background documents,but on a confidential basis, and that she would ask me to clear the Court (includingChatfield's representatives and its counsel), so that she could address me directly inrelation to them.[66] I indicated to Mrs Courtney that this proposal was not satisfactory to me.Because Chatfield and its counsel would not be present, Chatfield would not have theopportunity to respond, and there would be no-one to test such arguments as theCommissioner might advance based on the background documents. I indicated thatin my view, the Commissioner's proposal was contrary to the rules of natural justice,and that it would place the Court in a difficult position when giving a reasonedjudgment.[67] I asked Mrs Courtney whether the Commissioner was prepared to agree to thebackground documents being made available to the applicants' counsel, on the basis24 See above at [10] to [20].of appropriate undertakings as to confidentiality. Mrs Courtney advised that she wouldseek instructions. Subsequently she advised that this proposal was not acceptable tothe Commissioner.[68] I then explored with counsel whether an amicus could be appointed, who couldacquaint himself or herself with the applicants' arguments, inspect the relevantbackground documents, and then address me in relation to them. The Commissionerinitially agreed to this proposal, and there were discussions about the appointment ofan appropriate amicus. Subsequently, the Commissioner resiled from this position andMrs Courtney advised me that the Commissioner was happy that the case shouldproceed without me seeing the relevant background documents at all.[69] I expressly queried this stance with Mrs Courtney. It seemed to me that itpotentially placed the Court in a difficult position, requiring it to make a decision whenit did not have all relevant materials before it. I asked Mrs Courtney to take furtheradvice from the NTS as to whether it was prepared to agree to the documents beingreleased to an amicus, on the basis that the amicus would be subject to appropriateundertakings.[70] When the hearing resumed before me on 1 December 2017, Mrs Courtneyadvised me that the NTS had advised that it was not prepared to have the documentsreleased to an amicus, and that the Commissioner was still happy to proceed withoutme seeing, or being given access to, the relevant background documents. I expresslydiscussed with Mrs Courtney the risks that course involved for the Commissioner. Shenevertheless elected to proceed on this basis.[71] I record my surprise at the Commissioner's stance. It is clear from the closingsentence of art 25(1) of the DTA, that documents exchanged may be disclosed byofficials in the contracting states in public Court proceedings or in judicial decisions.Strictly that provision does not extend to the request made, or to documents generatedas a result of a request. Nevertheless, it was Mr Nash's view, by reference to theOECD commentary on the equivalent provisions the current model DTA, that, if Courtproceedings under the domestic law of the requested state necessitate the disclosureof the letter of request to the competent authority, the competent authority of therequested state can disclose that letter, unless the requesting state otherwise specifies.He states that it was for this reason that copies of the request letter and documentsexchanged were provided confidentially to Ellis J when the matter was before her, toallow her to satisfy herself about the confidentiality orders sought by theCommissioner.25[72] The appointment of an amicus to advise the Court in relation to confidentialmaterial received is a not uncommon step, and is designed to ensure that the Court isproperly informed and that the rules of natural justice are observed. Such an approachwas proposed in an earlier tax case dealing with similar issues.26 There is precedentfor the appointment of amici in cases involving matters of state.27 In other complextax cases, amici have been appointed without issue.28 Why the Commissioner was notprepared to agree to such appointment in this case is not clear — at least to me.[73] I record that the Commissioner was not even prepared to make available to methe response from the NTS advising why it was opposed to the documents beingdisclosed to an amicus, unless I was prepared to receive that letter in confidence,without disclosing it to the applicants. I, for my part, was not prepared toaccommodate this request. The end result is that the Commissioner has elected to runher case without reference to the background documents. I proceed accordingly.(v) Analysis – lawfulness of Mr Nash's actions[74] As I have noted,29 it was common ground that Mr Nash, as the competentauthority, needed to satisfy himself that the information sought by the NTS camewithin the terms of the DTA, and his country's tax laws.[75] Article 25 of the DTA requires that the information requested is "necessary"for carrying out the provisions of the DTA, or of the domestic laws of the contractingstates concerning taxes, as well as to prevent fiscal evasion. The word "necessary" is25 See above at [13].26 Avowal Administrative Attorneys Ltd v District Court at North Shore, above n 19.27 Dotcom v Attorney-General [2013] NZHC 695 at [2]. See also Dotcom v Attorney-General [2017]NZHC 1621 at [7].28 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2009] NZCA 373, (2009) 24NZTC 23,750.29 See above at [48].not defined in the DTA, nor in the OECD's model convention or in the commentaries.It is an ordinary English word, the meaning of which is well understood. Somethingis necessary if it is required or needed. Necessity requires more than simpleexpediency or desirability.[76] One tax commentator suggests that information is necessary if:30(a) it is "relevant in law to taxation by the contracting state requestingit, ie relevant to carrying out the provisions of the DTA or relevantto carrying out the provisions of its domestic law"; and(b) the relevant contracting state is "unable to procure such information bymeans of inquiries of its own within its own territory".[77] Counsel advised that in 2005, the OECD model convention replaced the word"necessary" with the words "foreseeably relevant". That change has not been carriedthrough in the DTA at issue in this case.[78] I am satisfied that the word "necessary" used in art 25 required Mr Nash asNew Zealand's competent authority to satisfy himself, by clear and specific evidence,that all of the information requested by the NTS was needed or required in relation toan investigation into, or other action being taken by the NTS against a Koreantaxpayer, and that the information was in regard to income tax, corporation tax, orinhabitant tax, or fiscal evasion. Mr Nash also had to be satisfied that any informationexchanged under the DTA would only be used in relation to those taxes, and that theNTS had been unable to obtain the information in Korea.[79] As I have noted, some concerns have been raised by Chatfield. I note thoseconcerns as follows:(a) Did the NTS exhaust its domestic options – could it have sought at leastsome of the information from Mrs Hwang?30 E Reimer and A Rust (eds) Klaus Vogel on Double Taxation Conventions, above n 22, at 1406.(b) What relevance does the exchange control investigation into two of thetarget companies have? Is the information sought to advance thatinvestigation?(c) What effect does the limitation period in Korea have? Is moreinformation being sought than is needed?(d) What effect does the suspension of the investigation by the NTS have?[80] Understandably, given that it has not seen the background documents,Chatfield cannot comment on what Mr Nash did or did not do. There are, however,further concerns arising from both Ms Forrest's and Mr Nash's affidavits:(a) Ms Forrest says that the 2014 notices were issued because the requestedinformation "could not be obtained from the Commissioner's recordsor was not otherwise publicly available". This of itself is not ajustification for a finding of necessity under art 25.(b) Mr Nash's account of the reasons for issuing the 2014 notices lacksparticularity, and he does not say what he thinks "necessary" in art 25means. I agree with Ms Rose's submission that the closest Mr Nashgets to explaining why the Commissioner has issued the notices is asfollows:(i) The information requested in the 2014 notices was "required toobtain the full picture of offshore dealings such as details ofinvestments in New Zealand companies and properties. Muchwill be unknown and subject to further inquiry at the time arequest is made".(ii) The information sought would "assist with filling in any gaps toenable the [NTS] to obtain a more accurate picture".(iii) The information "could also provide negative assuranceregarding any lack of activity in respect of those assets and/orincome".With respect to Mr Nash, this is all relatively vague and it suggests there has been nohard inquiry into the necessity for any exchange, and therefore the need to request thedocuments in the first place.[81] The Commissioner filed a memorandum with the Court dated 14 October 2015,which asserted that the information requested is "information which is not obtainablein the normal course of the administration of Korea". However, there is nothing in theaffidavits filed to back up that assertion. Indeed such evidence as there is points to adifferent conclusion. Mrs Hwang, as Mr Huh's former partner, and as a director ofsome of the target companies, would presumably either have, or be entitled to obtainaccess to, at least some of the documents sought. She is a Korean resident.[82] There was one particular assertion made by Mr Nash in his affidavits whichtroubled me — namely his assertion that the NTS, and the revenue authorities inKorea, have trusted partner status and a good reputation, with the result that when theCommissioner receives a request under the DTA from Korea, there is generally noreason to believe that the request has been made in an unorthodox manner.[83] With respect to Mr Nash, I query this assumption. It depends on a very largenumber of matters, for example, that there has been no change of policy in Korea, oreven that the individuals requesting the information on each occasion are the same.There is no evidence of this. Further, there is no warrant at law for the "hands off"approach applied to Korea in either the DTA or in the Tax Administration Act, and inmy judgment, it was unwarranted. Any request made under a DTA, from whatevercountry, should receive the same high level of scrutiny.[84] I am left with nothing more than Mr Nash's say-so that he satisfied himself thatthe request was in terms of the DTA and this country's tax laws, that the nature of theinformation sought by the NTS was consistent with the grounds for the request, andthat the information is of a sort which would broadly be expected to be necessary orrelevant to any inquiry of the nature indicated in the request.[85] The days when a Court will accept an official's simple assertion that a powerhad been exercised lawfully are long over. They reached their peak in the well-knowndecision of Liversidge v Anderson.31 In that case, the statutory provisions in issuegave the Secretary of State power to make various orders if he had "reasonable causeto believe". The majority — through Viscount Maughan — held that, despite theprima facia meaning of these words, they might have a different subjective meaningif the thing to be believed was essentially something within the knowledge of theSecretary of State and a matter for his exclusive discretion. In a powerful dissent, LordAtkin asserted that the words had only one meaning, and that they had never been usedin the sense imputed to them by the majority. He protested against the strainedconstruction put on the words which had the effect of giving an uncontrolled power tothe Secretary of State, and denied that the words "if a man has" could ever mean "if aman thinks he has".[86] The majority's view in Liversidge v Anderson has now been held to be a "verypeculiar decision".32 Lord Diplock has more recently acknowledged that the decisionof the majority was wrong, and that Lord Atkin, in his dissent, was right.33 As the lawnow stands, if language is objective, the public authority whose decision is impugnedwill have to be prepared to show that the condition is fulfilled in a way which satisfiesthe Court.34[87] An applicant for judicial review bears the burden of proof, on the balance ofprobabilities, but the evidential burden is relatively low where the facts are within theknowledge of the other party,35 and particularly where the Court has to determine31 Liversidge v Anderson [1942] AC 206 (HL) – but see dissenting judgment of Lord Atkin.32 Ridge & Baldwin [1964] AC 40 (HL) at 73.33 Inland Revenue Commissioners v Rossminster Ltd [1980] AC 952 (HL) at 1011.34 HWR Wade and CF Forsyth Administrative Law (5th ed, Oxford University Press, Oxford, 2014)at 365.35 T v Jones [2007] 2 NZLR 192 (CA) at [77]; Tindall v Far North District Council HC AucklandCIV-2003-488-135, 20 October 2006 at [138]; Brady v Northland Regional Council [2008] NZAR505 (HC) at [41].whether the relevant facts on which the exercise of the power in issue turn, did or didnot exist.36[88] When the actions of public authorities are in issue, there is an expectation thatpublic authority defendants will explain themselves, and disclose all relevantdocuments. The defendant authority can be expected to satisfy the Court, and if itdoes not do so, the claimant can, in appropriate cases, get the benefit of any doubt.37Similarly, where facts lie peculiarly within the knowledge of one party, very slightevidence can be sufficient to discharge the burden of proof resting on the opposingparty.38[89] In my judgment, this is one such case. Chatfield has been able to raiserelatively little, but the little it has raised rings alarm bells, albeit quietly. Those bellsring a little louder given the vague affidavits of Ms Forrest and Mr Nash. There is ahigh duty on public authority respondents to assist the Court with full and accurateexplanations and to give the Court all the facts relevant to the matter in issue.39 Here,the relevant facts and the supporting documents are in the possession of theCommissioner. It should have been a relatively straightforward matter for theCommissioner to produce them but they have not been produced. Rather, I am leftwith the non-specific evidence of the officer responsible for undertaking the necessaryinquiries.40 In my view, the Commissioner has not been as candid in her conduct ofthis case as might have been expected.[90] On the very limited materials available to me, I am not satisfied that theappropriate inquiries were undertaken by Mr Nash.36 Graham Taylor Judicial Review – A New Zealand Perspective (3rd ed, Lexis Nexis, Wellington,2014) at [10.30].37 Michael Fordham Judicial Review Handbook (6th ed, Hart Publishing, Oxford, 2012) at [42.2].38 CREEDNZ Inc v Governor General [1981] 1 NZLR 172 (CA) at 183 and 209; Reid v Rowley[1977] 2 NZLR 472 (CA) at 478; Huata v Prebble [2004] 3 NZLR 359 (CA) at [136].39 R (on the application of Quark Fishing Ltd) v Secretary of State for Foreign and CommonwealthAffairs (No 1) [2002] EWCA Civ 1409 at [50].40 CREEDNZ Inc v Governor General, above n 38, at [82].Delegation[91] As noted, the 2014 notices were signed by Ms Forrest, and it seems from heraffidavit that she was involved in the decision to try to obtain the additionalinformation using s 17 notices.[92] Chatfield asserts that Ms Forrest is not a competent authority, as that term isdefined in the DTA, and that she does not have authority to make a decision under art25 of the DTA. It accepts that some delegation by Mr Nash may be permissible, butonly if it is in accordance with s 41 of the State Services Act 1998, and that there is noevidence in this case that such further delegation took place.[93] The Commissioner points to the fact that Ms Forrest deposes that she hasdelegated authority to issue notices under s 17, and that the DTA does not require MrNash as competent authority to take all steps necessary to obtain the requestedinformation. It argues that it is Mr Nash's role to ensure compliance by theCommissioner with requests made under the DTA, including the taking of steps toobtain the requested information, but that it is not necessary for all actions relating torequests for information to be undertaken by Mr Nash personally.[94] In my judgment, Chatfield's arguments are misconceived in regard to thisissue. It is Mr Nash's task, as the designated competent authority, to make decisionson exchange, once the information has been acquired. Mr Nash accepts in his affidavitthat he is responsible for making that decision. There is nothing, however, in the DTA,or in the Tax Administration Act, which requires that Mr Nash personally take thenecessary administrative steps to procure the information. Ms Forrest's role in issuingthe 2014 notices was taken under delegated authority and under supervision fromothers, including by Mr Nash. She was simply undertaking what was, in the contextof this case, an essentially administrative task — to assist in obtaining information MrNash considered was necessary to respond to the request, so that he could laterconsider, under art 25, whether or not to exchange it with the NTS.[95] This aspect of the cause of action is not made out.Intensity of review[96] As a fall-back to its justiciability argument, the Commissioner argued that theCourt should only intervene if it determines that the nature of the information soughtin the 2014 notices is such that it could not potentially be necessary to an investigationin respect of one or more of the taxes which comes within art 2 of the DTA. It arguedthat the Court, and indeed Mr Nash as the competent authority, cannot be expected toinquire into the factual assertions underlying the request, nor as to what is requiredunder the law in South Korea. Mrs Courtney suggested that there is a real risk that theCourt would be asked to conduct a mini trial, involving witnesses and thedetermination of potentially difficult questions of foreign law, and that the Courtwould be stepping into the shoes of the executive which has responsibility for enteringinto and enforcing international agreements, including tax treaties.[97] Chatfield argued that arguments as to the intensity of review are notconsistently regarded as particularly helpful, and that the issue is closely related tojusticiability. Ms Rose noted the Commissioner's acceptance that Mr Nash as thecompetent authority had to satisfy himself that the information sought came within theterms of the DTA and New Zealand tax laws, and that that is essentially a domesticissue. She submitted that there is no proper basis for constrained review in this case.[98] I agree with Chatfield's submissions. Administrative decisions, includingdecisions made by the Commissioner or her delegates, must be made in accordancewith the law. As I have already noted, this case involves a relatively straightforwardanalysis of the provisions of the DTA — which is part of domestic law — and s 17 ofthe Tax Administration Act. The power to make the decision to invoke the s 17 poweris conferred by the legislation onto the Commissioner, and the Commissioner, whenexercising that power, must exercise it properly, and in accordance with the law. Thereis no need for deference to the Commissioner as the decision-maker when inquiringwhat either the Tax Administration Act, or the DTA, require. Review in this contextcan and should be hard-edged, and a "correctness standard" should apply. Thequestion is simply whether or not the Court can be satisfied that Mr Nash — as thedecision-maker — did what he was required to do by law. There is, in my judgment,nothing in the facts of the present case which compels the conclusion that a light touch,or a deferential review, is either required or appropriate. If the Court is not satisfiedthat Mr Nash correctly interpreted or applied either art 2 or art 25 of the DTA, or thathe properly scrutinised the NTS's request as required by law, then it is appropriate togrant judicial review, and there is no warrant for a less intensive standard of reviewthan would otherwise be the case.Result[99] In my judgment, Chatfield is entitled to the relief it seeks. I grant a declarationthat the Commissioner's decision to issue the 2014 notices against Chatfield is invalid,and make an order quashing the 2014 notices.Costs[100] Chatfield is entitled to its costs and reasonable disbursements incidental to thisproceeding. I would request counsel to liaise to see whether agreement can be reached.If not, then I make the following directions:(a) Chatfield is to file a memorandum claiming costs, and its reasonabledisbursements, within 15 working days of the date of this decision;(b) the Commissioner is to respond within a further 15 working days;(c) memoranda as to costs are not to exceed 5 pages.I will then deal with the issue of costs on the papers, unless I require the assistance ofcounsel.______________________________Wylie J