TAUBER V THE COMMISSIONER OF INLAND REVENUE HC AK CIV-2011-404-002036

TAUBER V THE COMMISSIONER OF INLAND REVENUE HC AK CIV-2011-404-002036 12 August 2011IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2011-404-002036IN THE MATTER OF the Judicature Amendment Act 1972, theDeclaratory Judgments Act 1908, the NewZealand Bill of Rights Act 1990 and theTax Administration Act 1994BETWEEN DAVID ANDREW TAUBERFirst ApplicantAND LISA MAREE TAUBERSecond ApplicantAND PAUL NIGEL WEBBThird ApplicantAND ROSEMARY WEBBFourth ApplicantAND MAREE ANNE BOCKETTFifth ApplicantAND SCORE TRUSTEES LIMITEDSixth ApplicantAND WESTPARK MARINA LIMITEDSeventh ApplicantAND HONK BERTHS LIMITEDEighth ApplicantAND HONK LAND TRUSTEES LIMITED ASTRUSTEE OF THE HONK LANDTRUSTNinth ApplicantAND AIRPORT TRUSTEES LIMITED ASTRUSTEE OF THE HONK AIRPORTTRUSTTenth ApplicantAND THE COMMISSIONER OF INLANDREVENUERespondentHearing: 1 August 2011Appearances: M T Lennard and H P Holland for ApplicantsP H Courtney and E J Norris for RespondentJudgment: 12 August 2011 at 2:00 PMJUDGMENT OF VENNING JThis judgment was delivered by me on 12 August 2011 at 2 pm, pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDateThis judgment still dated 12 August 2011 supersedes the recalled judgmentand was delivered by me on 15 August 2011.Registrar/Deputy RegistrarDateSolicitors: Holland & Holland, PO Box 128-224, Remuera, Auckland 1050Crown Law, PO Box 2858, Wellington 6140Copy to: M T Lennard, PO Box 117, WellingtonIntroduction[1] On 16 March 2011 the Commissioner of Inland Revenue (the Commissioner) carried out search and seizure operations at a number of sites in Auckland (including the three homes and three other premises in issue). The search operations were partof the Commissioner's investigation into the tax affairs of the first and third applicants and a number of entities associated with them.[2] On 8 April 2011 the applicants filed these judicial review proceedings challenging the lawfulness and reasonableness of the search and seizure operations.Issues[3] The searches were conducted under s 16 of the Tax Administration Act 1994 (the Act). The application for review raises the following issues:Were the s 16(4) and s 16C(2) warrants too widely drawn, general and lacking in specificity?Were the s 16(1) searches necessary for carrying out the Commissioner'sfunctions; and were the s 16(4) and s 16C(2) warrants required to enable the Commissioner to exercise his functions?Were the searches carried out in an unreasonable manner, including:– were the applicants arbitrarily detained in the course of the searches;– was the seizure of books and documents unreasonable?Was the application for the warrants deficient?[4] The applicants seek declarations in their favour in relation to the above issues together with orders directing the Commissioner not to inspect the seized books and documents and to return the said books and documents. In addition the applicants seek an order directing the Commissioner to destroy or deliver up all photographic, video, electronic and other records of the searches and seizures.[5] The last issue, whether the application for warrants was defective, was only raised in the amended statement of claim filed on 15 July after redacted copies of MsFleming's warrant affidavit and the memorandum of Mr Ridling in support of the application for the warrants were disclosed to the applicants. The challenge is to the accuracy and adequacy of the information disclosed in those redacted documents. Mrs Courtney submitted that to respond to that challenge it was unnecessary to provide full copies of the warrant affidavit and supporting material to the Court. I reserved my position and indicated that, if necessary, I would call for an unredacted copy of the application.Background[6] The first applicant, Mr Tauber, is an accountant who was previously (until 2003) a tax partner at Ernst & Young. He owns or controls a large number of companies referred to as the Honk Entities. He and his wife, the second applicant, reside at 53 Portland Road, Remuera. Mr Tauber has been under investigation by the Commissioner for:income suppression;claiming deductions which are not allowed under tax law;facilitation of and involvement in tax avoidance arrangements and/or evasion involving entities.[7] Mr Webb is currently a shareholder and/or director of a number of the Honk Entities. He was adjudicated bankrupt in July 2000 and discharged in July 2003. MrWebb and his wife, the fourth applicant, reside at 73A Arney Road, Remuera, Auckland.[8] Ms Bockett, the fifth applicant, is a director of MB Accountants Limited (MB). MB has provided accounting services for a number of the Honk entities. The registered office of MB, 1041 Peak Road, RD2, Helensville is also Ms Bockett'shome.[9] The Portland Road, Arney Road, Helensville properties and a boat shed were all searched by the Commissioner's officers. The officers entered the properties relying on warrants issued under s 16(4).[10] In addition searches were also conducted at Level 5, 35 High Street, a business premise and registered office of a number of the Honk Entities; and 18 Clearwater Cove, Hobsonville, the registered office, address for service and physical location for the day to day business activities of a number of other Honk Entities under investigation.[11] The sixth applicant, Score Trustees Limited, owns the boat shed. The seventh applicant, Westpark Marina Limited, operates the boat harbour at Hobsonville. The eighth applicant, Honk Berths, is a company at Auckland. The ninth applicant, Honk Land Trustees Limited, is the sole trustee of the Honk Land Trust (HLT). The 10thapplicant, Airport Trustees Limited is sole trustee of the Honk Airport Trust (HAT). Both HLT and HAT are in dispute with the Commissioner, and presently have proceedings before the Taxation Review Authority (TRA).[12] A team of officers and accompanying persons executed the search warrants and conducted the search and seizure operations at the various premises.The Commissioner's powers to obtain information[13] To address the issues that arise in this case it is necessary to briefly consider the statutory provisions authorising the Commissioner to search and obtaininformation. The Commissioner's powers to obtain information from taxpayers areprovided for in Part 3 of the Act, in particular ss 16 to 19.[14] Section 16(1) authorises the Commissioner to access premises to obtain information. The Commissioner (or any officer authorised by him) is granted free access to premises for the purposes of inspecting any books and documents and any property, process, or matter which he considers necessary or relevant for the purpose of collecting any tax or duty or for the purpose of carrying out any other function lawfully conferred on him or that he considers likely to provide any information otherwise required for the purposes of the Tax Acts or any of those functions. It also provides for the Commissioner to make extracts from or copies of such books or documents.[15] Section 16(3) provides that, notwithstanding the general power of access provided for in s 16(1) a private dwelling may only be entered with the consent of the occupier or pursuant to a warrant issued under s 16(4). Section 16(4) provides a judicial officer may issue a warrant to the Commissioner to enter a private dwelling if "satisfied that the exercise by the Commissioner ... of his functions under the section requires physical access to a private dwelling". Section 16(5) sets out the requirements of the warrant. Section 16(6) provides for production of the warrant.[16] Section 16B provides the Commissioner with power to remove books or documents accessed under s 16 to make copies.[17] Section 16C provides the Commissioner with power to remove and retain books or documents for a full and complete inspection, either by consent of the occupier or pursuant to a warrant under s 16C(2). Section 16C(2) provides that a judicial officer may issue a warrant for the purpose of removing books or documents and retaining them for a full and complete inspection if "satisfied that the exercise by the Commissioner ... of his functions under s 16 may require removing books ordocuments ... and retaining them for a full and complete inspection".[18] Although under s 16(4) the judicial officer must be satisfied access is required the test under s 16C(2) is whether the judicial officer is satisfied theremoval may be required. The lower threshold is explainable on two grounds. First, the issue of whether books or documents may need to be removed may be difficult to address until the Commissioner is on site and the exact nature of the books or documents and the volume of them can be ascertained, whereas when applying for the warrant under s 16(4) the Commissioner should be in a position to provide information to satisfy the judicial officer that access is required to the particular private premises for the purposes of s 16(1). Second, the warrant under s 16C may be used in relation to searches of businesses under the general search provisions 16(1). It will not always be used in conjunction with a warrant under s 16(4).[19] Section 17 provides for the provision of information to be furnished to the Commissioner on request. Section 17A(2) enables the Commissioner to apply to the District Court for an order requiring the production of information or for the provision of a tax return.[20] Section 18 provides for the Commissioner to apply for an inquiry before a District Court Judge. Section 19 provides for the Commissioner to require a person to attend and give evidence before him and to produce all books and documents in his or her custody or control.[21] The Commissioner commenced the investigation into Messrs Tauber and Webb and entities associated with them in 2008. A number of issues of concern were identified, some relating to black letter law arguments, others to tax avoidance and possible evasion. Some concerns have been addressed during the course of the investigation, but a number of others remain outstanding and are still being investigated.[22] In the course of the investigation the Commissioner has made requests under s 17. The Commissioner considers they have not been fully complied with.[23] The Commissioner decided to invoke his powers of search under s 16. He also sought and obtained warrants under s 16(4) authorising access to the homes of the first to fifth applicants and the boat shed owned by the sixth applicant. Inaddition he sought and obtained warrants under s 16C(2) authorising the removal of books or documents from those premises and the business premises.Were the s 16(4) and s 16C(2) warrants too widely drawn, general and lacking in specificity?[24] The warrants were issued under ss 16(4) and 16C(2) of the Act and in the form provided by Tax Administration (Form of Warrant) Regulations 2003.[25] Mr Lennard submitted that the warrants were defective because they failed to specify an authorised officer of the Department and were simply addressed to "everyofficer of the Inland Revenue Department authorised by the Commissioner of Inland Revenue under s 16 of the Tax Administration Act 1994". He submitted that theintention of s 16(5)(b) is that a degree of specificity is required, and the warrant must either be directed to a named person or to a general class of authorised officers.[26] Section 16(5)(b) reads:[(b) shall specify an authorised officer of the Department, whether by name or in general, who may act under the warrant; and] ...[27] An argument that the warrants were expressed too broadly was raised inAvowal Administrative Attorneys Ltd v District Court at North Shore,1 a case alsoinvolving a challenge to the Commissioner's search powers under s 16. Baragwanath J dealt with it shortly. He noted a similar issue had been raised in R v Inland Revenue ex parte Rossminster Ltd2 where the House of Lords confirmed the statutory form of warrant was sufficient. The challenge in Rossminster was of a different type, but the principle is the same. Responding to criticism the warrants were expressed in general terms and lacked particularity, Viscount Dilhorne and Lord Diplock both noted that the express requirements of the empowering section were complied with. Both considered that was sufficient.[28] The prescribed form of warrant provides for alternatives. The warrant may identify the officer to whom it is addressed by his or her full name or, in the1 Avowal Administrative Attorneys Ltd v District Court at North Shore [2010] 2 NZLR 794.2 R v Inland Revenue ex parte Rossminster Ltd [1980] AC 952.alternative, it may be directed to every officer "authorised by the Commissioner of Inland Revenue under s 16 of the Tax Administration Act 1994". Under the alternative, the only requirement is that the officer executing the warrant be authorised by the Commissioner under s 16. The form is consistent with the requirement of s 16(5)(b) that the authorised officer be generally identified. The warrants were directed to those officers specifically authorised by the Commissioner to act under s 16. There is no suggestion in this case that the officers leading the searches and executing the warrants were not duly authorised by the Commissioner under s 16 to act under the warrant. The warrants comply with the statutory requirement and the prescribed form.[29] Mr Lennard next submitted that the scope of the warrants was too wide and the warrants lacked specificity. He relied upon the comments of the Court of Appeal in Tranz Rail Ltd v Wellington District Court;3 R v Williams4 and Gill v Attorney- General,5 to the effect that warrants must not be drawn too widely and must have as much specificity as circumstances allow.6 He emphasised the warrants in the present case were drawn very broadly. However, the answer to that submission lies in s 16 itself and the underlying difference between the nature of the searches authorised without warrant under s 16 of the Act and the quite different legislative provisions underlying the search warrants in the cases relied on by Mr Lennard. Again this argument was raised and rejected by Baragwanath J in Avowal. Baragwanath J accepted the Crown submission that an entry warrant under s 16(4) is different in kind from a search warrant under the criminal law and, unlike the warrants in Tranz Rail Ltd v Wellington District Court and A Firm of Solicitors v District Court at Auckland,7 the warrants in Avowal (which were similar to the present ones) were not expressed too broadly.[30] The only statutory criteria for access to information generally under s 16 is that the Commissioner must consider it necessary or relevant for his statutory purposes. The warrant to access private dwellings under s 16(4) must be considered3 Tranz Rail Ltd v Wellington District Court [2002] 3 NZLR 780 (CA).4 R v Williams [2007] 3 NZLR 207 (CA).5 Gill v Attorney-General [2011] 1 NZLR 433 (CA).6 Tranz Rail at [38] and [42].7 A Firm of Solicitors v District Court at Auckland [2006] 1 NZLR 586 (CA).in that context. The Judge need only be satisfied that the exercise of theCommissioner's functions requires access to private dwellings, and that the proposed search does not otherwise breach s 21 of the New Zealand Bill of Rights on the grounds of unreasonableness.[31] The Court of Appeal did not suggest Baragwanath J was wrong in the approach he took. In fact at [22] of the Court of Appeal decision in Avowal the Court acknowledged the broad powers under s 16:8[22] The access and inspection power under s 16(1) is expressed in broad terms. It is not analogous to the search and seizure power in provisions like s 198 of the Summary Proceedings Act 1957. That means that cases ruling against unspecific search warrants like A Firm of Solicitors and Tranz Rail Ltd v Wellington District Court [[2002] 3 NZLR 780 (CA)] are not directly on point. The circumstances in which tax investigations occur differ from criminal investigations and the Commissioner's powers under s 16 are necessarily broad given the complexity that is often inherent in tax investigations. We see no need to read down the plain words of s 16. But, despite the initial words of s 16(1), the Commissioner's powers are subject to s 21 of the New Zealand Bill of Rights Act, as Mr Pike accepted. Like all public officials with intrusive powers of this type, he must exercise the power in a manner that conforms with the reasonableness requirement of s 21.[32] Mr Lennard submitted that in that passage, the Court was only considering s 16(1) and was not addressing the issue of a warrant under s 16(4). However, as I read it, the Court was referring generally to the Commissioner's powers to access premises under s 16 which includes, if necessary, access to private dwellings by warrant under s 16(4). Clearly, warrants were not required to exercise the powers of access under s 16(1) but despite that, the Court specifically directed itself to cases dealing with and ruling against unspecific search warrants, concluding they were not directly on point in the general context of access under s 16.[33] Mr Lennard then submitted that in Director of the Serious Fraud Office (SFO) v A Firm of Solicitors & Anor9 the Court of Appeal had noted that conditions could be attached to address the complaint of a lack of specificity. In particular at [77] of that decision the Court said:8 Avowal Administrative Attorneys Ltd v District Court at North Shore [2010] 3 NZLR 661.9 Director of the Serious Fraud Office (SFO) v A Firm of Solicitors & Anor [2006] 1 NZLR 586,(2005) 22 CRNZ 94.We agree with Mr Harrison that the wording of the prescribed form is, on its face, broader than it ought to be. But we do not think that makes the prescribed form ultra vires, because the form is capable of being adapted to provide for the necessary degree of specificity by the inclusion of special conditions to that effect in para 4 of the prescribed form. Those conditions could be specific as to the documents and/or things sought, or to the nature of the suspected fraudulent activity. ...[34] Mr Lennard submitted there had been no attempt to prescribe conditions on the warrants in this case. However, again the answer lies in the particular prescribed form. The form of search warrant in the Serious Fraud Office (Prescribed Forms) Regulations 1990 provided at para 4 for conditions:4. This warrant is subject to the following conditions: [Specify any conditions imposed].The form of warrant in that case contemplated that conditions could be imposed. In the present case, however, the prescribed form does not have any like provision. The warrants in the present case cannot be criticised because they follow and comply with the prescribed form. I note that in the case of the s 16C(2) warrants provision was made to deal with legal professional and tax advice privilege.[35] The challenge to the warrants issued under s 16(4) and s 16C(2) on the basis they are too widely drawn, general and lack specificity must fail.Were the s 16(1) searches necessary and were the s 16(4) and s 16C(2) warrants required to enable the exercise of the Commissioner's functions?[36] Mr Lennard submitted that the reasonableness or otherwise of the search depended on whether less intrusive alternatives existed and argued that there waslittle information by way of the Commissioner's consideration of the use of other, less intrusive, powers than the search of the private dwellings. He suggested it would, for instance, have been open to the Commissioner to:ask for the information that he considered had not been supplied (by perhaps a telephone call);apply to the District Court under s 17A for orders requiring information be produced;seek an interview under the process outlined in s 19; orhold a targeted inquiry before a District Court Judge involving an obligation to bring and produce relevant books and documents – s 18.[37] Mr Lennard also submitted that there was no apparent urgency in the need to conduct the searches and that a number of the matters that Mr Nabi, (one of theCommissioner's officers) identified in his answer to interrogatories suggested that the information considered to be outstanding was detail of oral agreements and thewitnesses' understanding of those. In summary, Mr Lennard submitted that the Commissioner did not require access to the private premises to carry out his functions under the Act. More than convenience was required. The warrants should not have issued.[38] There may have been alternative methods available to the Commissioner to obtain information, but there is no requirement for the Commissioner to exercise all or any of his other powers in Part 3 before choosing to use the access provisions in s 16.10 As Baragwanath J observed in Avowal:11[84] It is the Commissioner, with his officers, and not the court who is charged with the recovery obligation. When deciding whether to use s 16 the Commissioner may well make a decision which a judge would not have made. But the court may not intervene unless the decision is unreasonable: the test of s 21. As was shown in Secretary of State for Education and Science v Tameside Metropolitan Borough Council [1977] AC 1014 (CA & HL), polar opposite views (there, whether comprehensive or grammar school education was preferable) may each be reasonable. One mind may prefer to use s 17 to start, another may not.[39] I understood Mr Lennard to accept that proposition. Rather his argument was that the reasonableness of the search (and whether the warrants should have been granted) depends on whether less obtrusive alternatives existed in this case.10 Above n 1 at [82]-[84].11 Above n 1.[40] Where, as here, the Commissioner considers there is serious and substantial income suppression, tax avoidance and/or evasion the suggestion of a telephone call as being adequate to clarify matters is unrealistic. In the present case the Commissioner had previously issued s 17 notices. There is an issue, which cannot be resolved on the basis of the affidavits before the Court, whether the notices had been adequately complied with. If the Commissioner considered further information relevant to his inquiry might be obtained by a search under s 16 then the Commissioner was not constrained by the fact he had issued a s 17 notice before searching under s 16 and, if necessary, seeking warrants under s 16(4).[41] The Commissioner sought to invoke s 16(4) and access the particular sites because he believed that, given their connection to Messrs Tauber and Webb, relevant information would be located at the sites.[42] Ms Fleming deposed that the investigation into Messrs Tauber and Webb and entities associated with them was incomplete and ongoing and that various difficulties had been encountered in obtaining information. For those reasons it was decided the most effective and reliable way to obtain information was to utilise the access powers under s 16 and conduct simultaneous searches, including of dwellings. The benefits of that approach were considered to be:It enabled the collection of a wide range of information that the Commissioner needed in order to be able to progress his investigation and to analyse activities undertaken and information provided by taxpayers.The Commissioner would be able to verify that all relevant and necessary information was obtained by comparing information from different sources and media.Associated parties were not pre-warned so the risk of destruction/removal of relevant documents was reduced.The validation of creation dates and/or modification dates of documents created on electronic media was able to be ascertained.[43] The issue of whether a warrant to search private dwelling(s) under s 16(4) is required and reasonable in the circumstances must be considered in the context of the purpose of the Act, the Commissioner's powers under s 16(1) and the need to balance the applicants' rights under s 21 to be secure against unreasonable search or seizure. The question for the judicial officer considering whether to issue the warrant is whether the exercise of the Commissioner's functions under s 16 requires access to a private dwelling. It is not for the judicial officer to second-guess or review the decision of the Commissioner to invoke his powers to obtain information under s 16.[44] This point was made by Baragwanath J in Avowal. At [97] His Honour said:... The s 16(4) warrant is not a warrant for search of the premises, for which s 16(1) gives authority, but is for access from which the s 16(1) search may follow. Section 16(4) does not establish a stand-alone code for access by the Commissioner to dwellings and information they contain; it forms part of the s 16(1) scheme with the added protection of judicial intervention. ...[45] Mr Lennard submitted that the distinction made by the Judge was wrong at law. He submitted it was illusory to suggest there was a difference between the two concepts, as a right to search without a concomitant right to access was useless and vice versa. But the point is that s 16(1) provides broad powers for the search of premises other than private dwellings and for the Commissioner to obtain information. While the judicial officer must be satisfied the exercise of theCommissioner's powers under s 16 requires access to the private dwellings and thataccess by a warrant is reasonable in the circumstances, he or she is not entitled to review the Commissioner's decision to obtain information under s 16.[46] Mr Lennard also submitted that if warrants were issued to search private dwellings in these circumstances then lawyers and accountants with home offices who give tax advice could be subjected to having their private homes searched. That does not necessarily follow. The issue will always be whether access to the private homes is required and whether the search of them in the circumstances of the case was reasonable. For example, in the case of accountant representing a taxpayer under investigation, the Commissioner might search the accountant's offices under s 16(1) but, unless there was good reason to consider relevant documents may beheld at the accountant's home, such a search would not be justified. As Baragwanath J acknowledged in Avowal:12That is not to say that warrants may be issued as of course or of right. Section 16(4) recognises the privacy interest of the householder and good cause must be shown why that should be overridden. If the information may reasonably be secured in another way in a timely fashion it may be expected that the applications will fail.[47] In the present case the warrants were primarily directed at the homes of the two main parties under investigation. It was entirely reasonable to expect relevant documentation would be found at their homes. Similarly in the case of Ms Bockett. The search of Ms Bockett's home was justified on the basis that it was the registered office of her business. She operated her business from home. Access was not required because it was her home, rather it was required because she chose to operate her business practice from her home and relevant books and documents would be found there. There was little discussion about the boat shed.[48] Given the factors referred to above it cannot be said, in the particular circumstances of this case, it was unreasonable for the Commissioner to have invoked his powers under s 16, including the power of access to private dwellings under warrant s 16(4).[49] I also find that it was not unreasonable for the Judge to have concluded thatthe exercise of the Commissioner's functions might have required the removal of books and documents for a full and complete inspection. The application identified that the investigation related to a number of years and a substantial number of entities. Further, the removal of relevant books and documents for later inspection and assessment can be less intrusive than carrying out that exercise on site. It may also be necessary to have recourse to original books and documents. Provision was made for dealing with privilege/tax advice non-disclosure claims of the books and documents inspected and removed.12 At [104].[50] Finally I note that while Mr Lennard submitted there was no urgency, Ms Fleming confirmed that the Commissioner was concerned the four year statutory time bar period was fast approaching.[51] I am satisfied that the searches were necessary and the s 16(4) and s 16C(2) warrants were required and justified in this case.Were the searches carried out in an unreasonable manner?[52] The applicants next submit that the nature of the searches and seizures, particularly of the operations carried out at the homes of the Tauber and Webb families and Ms Bockett were unreasonable in terms of s 21 of the New Zealand Bill of Rights Act 1991.[53] Mr Lennard referred to:the excessive number of persons engaged in the search of the premises;the duration of the searches;the search of areas that were wholly irrelevant and roof spaces;the perusal of intimate, personal and obviously irrelevant records;the parking of vehicles on private property;the officers remaining on the property during lunch times;damage to personal items; andsearches of records relevant to the HLT and HAT Taxation Review Authority (TRA) cases.[54] Mr Lennard properly acknowledged the difficulty with determining a number of these issues in the context of judicial review but submitted the search must still becarried out in a manner which conforms with s 21 of the New Zealand Bill of Rights Act 1990.[55] In Gill v Attorney-General the Court of Appeal recently confirmed,13 after referring to Tranz Rail Ltd and A Firm of Solicitors, (where search warrants had successfully been challenged in judicial review proceedings on the basis of invalidity):14We therefore consider that the use of the rather blunt instrument of judicial review should rarely be permitted to be used to challenge the issue, validity and execution of a search warrant, particularly in the course of an investigation into alleged criminal offending. ...And later:15The applicable legal principles may be succinctly stated. We agree with the submission by counsel for the Ministry that issues of excessive seizure are usually fact-intensive and wholly unsuited to judicial review. ...[56] The present complaints about the reasonableness of the search and the actions of the officers conducting the search suffers from the same difficulty. The evidence is contradictory in part. It is not possible to resolve the details and nuances of the factual issues concerning the searches on a judicial review application such as this. However, even on the basis of the evidence not in dispute, the applicants do not make out their principal complaints under this head.[57] The first complaint is directed at the number of officers involved in the search. The process of searching by employing a team of officers and accompanying persons at each site was considered and approved in Avowal. The form of warrant contemplates that the officer executing it may be accompanied by other person(s). The only requirement is that the authorised officer considers the accompanying person(s) presence necessary for the effective exercise of the search and inspection powers.13 Above n 6.14 At [29].15 At [92].[58] For example, at the Tauber residence the search was led by Mr McLeod. He was accompanied by a number of other officers and accompanying persons: Patel, Nixon, Duncan, Menezes, Nabi, Sadler, Walton, Murray, and Wood. Each had a role to play. Mr Patel is a solicitor and provided the Bill of Rights advice to the occupants, and dealt with privilege claims. Mr Nixon was an evidence officer. Mr Duncan is a computer forensic expert. He dealt with electronic media and data. Ms Menezes, Mr Nabi, Ms Sadler, Messrs Wood and Walton were all reviewers. Mr Murray was a compliance support officer.[59] While it was a large team, there will always be a balance or trade-off between the number of people involved in the search and the length of time the search will take with the resultant inconvenience to the home owner. The number of persons involved does not make the search unreasonable.[60] As to the complaint that irrelevant areas were searched, including roof spaces, the search of ceiling spaces led to the discovery of relevant material at MsBockett's home. Ms Heppleston confirms that Ms Bockett stored archived files in a ceiling cavity. Some of the records located in the ceiling cavity were relevant to the investigation. Ms Bockett had not identified those documents at the outset. It is not possible to rule out any particular areas of a dwelling as irrelevant as documents or books can be hidden or stored anywhere. As one of the officers deposed, documents have been found in bedroom drawers in the past.[61] The searches were focussed. Prior to entry, key words involving entities and persons of interest had been compiled to assist with the identification of relevant information. On entering the premises the occupiers were advised of their rights and were offered an opportunity to consult with their solicitor. It was also explained how they could make privilege/tax advice non-disclosure claims. To the extent that privileged or unnecessary documents may have been seized, the Act provides a process for dealing with privilege of documents.[62] The complaint that personal and irrelevant items were unnecessarily searched and inspected cannot be resolved in these judicial review proceedings. However, as Mrs Courtney submitted, the evidence discloses that the searches of privatebedrooms and living areas took 43 minutes of a total of eight hours and 14 minutes at the Tauber residence and that approximately 15 minutes of a total of five hours and 45 minutes on site was spent reviewing the children's bedrooms at the Webbhouse. While a photograph was taken of an open clothes/underwear drawer that was because a Blackberry cell phone was located there. The photograph was to record the state of the Blackberry.[63] Next it is said the officers should not have parked cars on private property. The cars were used to store and load files for removal. Section 16(2) of the Act requires occupants to provide the Commissioner or his officers with all reasonable facilities and assistance for the effective exercise of his powers under the section. The provision of reasonable facilities could extend to the provision of temporary parking facilities to enable the collection of books and documents (or copies thereof). It is not difficult to imagine a situation where, with a long driveway and bad weather, books and documents (including electronic media) could be damaged if they had to be carried to the road. There is already a complaint in this case of damage to equipment. A similar response, namely that s 16(2) requires provision of reasonable facilities applies to the complaint the officers stayed on the premises to each their lunch rather than leaving.[64] Next, Mr Tauber says that after he had parked his car an Inland Revenue officer parked in front of it which prevented him from leaving. He complains he was arbitrarily detained. Mr Tauber was not arbitrarily detained. He was free to leave the property. The issue was his ability to shift his car. The officer's evidence was that:To the extent any vehicle blocked Mr Tauber's vehicle all reasonable assistance was provided. The only restriction on this assistance was that a search of his vehicle was undertaken as we are entitled to do under the access warrant.Ms Menezes, the reviewer, confirmed that she went with a Mr Walton to remove a car that had been blocking a driveway so that Mr Tauber could leave following the completion of the search of his car.[65] Next, it is said personal property was damaged in the course of the search. The complaint is acknowledged. However, in context, no substantive concern arises out of this issue. It can be addressed by the parties outside these proceedings.[66] The last main complaint about the conduct of the search is that theCommissioner's officers seized material relating to HLT and HAT's cases with theTRA. Mr Lennard submitted that the officers acted unreasonably in taking that material, which the applicants required to conduct their TRA cases. It is said to be a breach of s 27(3) of the New Zealand Bill of Rights. The issue has been considered in Vinelight Nominees Ltd & Anor v Commissioner of Inland Revenue;16Chesterfield Preschools Ltd v Commissioner of Inland Revenue (No. 2);17 andMason, Re v Commissioner of Inland Revenue.18 In Vinelight Simon France J stated:19Each case will require its own analysis of whether in the circumstances the Notices are breaching the principle of litigation on an even basis. It is, I consider, reasonably clear that Notices could not be issued for the sole purpose of extracting information for the Court proceedings, and this is so, in my view, regardless of whether the Commissioner thinks the Court would be assisted by the collection of such information. If that is the motivation, then the Court's own processes available to both the parties must be allowed to take their normal course. ...[67] In Chesterfield Fogarty J doubted that approach but Priestley J approved it inMason v CIR. The issue was recently referred to by the Court of Appeal in the decision of Commerce Commission v Air New Zealand Ltd.20 In the context of considering a non-disclosure order and the impact of s 27(3) on the information gathering powers of the Commission in that case the Court approved Simon France J's comments. The Court rejected the suggestion there was an absolute bar or that the Commissioner's statutory authority must generally be read down so the power was not available when the intended subject matter of the Notices was also the subject of concurrent proceedings.2116 Vinelight Nominees Ltd & Anor v Commissioner of Inland Revenue (2005) 22 NZTC 19,298.17 Chesterfield Preschools Ltd v Commissioner of Inland Revenue (No. 2) (2005) 22 NZTC 19,500.18 Mason, Re v Commissioner of Inland Revenue (2006) 22 NZTC 19,775 (HC).19 At [55].20 Commerce Commission v Air New Zealand Ltd [2011] 2 NZLR 194.21 At [114].As to s 27(3), it was noted in the White Paper that the underlying aim of s 27(3) of the Bill of Rights is that the Crown is not to enjoy any procedural or jurisdictional privileges in litigation. Contrary to the findings of Andrews J, fulfilment of this objective does not require that a State litigant is to refrain from exercising its statutory powers related to s 100 once proceedings have been issued, although any such powers will be exercised with restraint and be subject to the supervisory jurisdiction of the Court. As noted above, the Commission must keep the imposition of s 100 orders under review and the High Court has the power to vary any s 100 orders that may result in any unfairness in the proceedings.[68] Similarly, the fact there were TRA proceedings on foot did not constrain the Commissioner from exercising his search powers under s 16 in the present case. There is no evidence that the dominant or indeed a principal purpose of the search was to obtain information relating to the HLT or HAT cases in the TRA proceedings. The information sought from HLT and HAT was sought in relation to the Commissioner's general investigation into the affairs of Messrs Tauber and Webb and their associated entities. The motivation for the search was not to obtain information regarding HAT and HLT for the purposes of the TRA hearing.[69] I conclude the searches and seizures were not unreasonable in terms of s 21 of the New Zealand Bill of Rights Act 1990.Was the application for the warrants deficient?[70] Mr Lennard submitted that much of what was put before Judge Field to justify the warrant application was erroneous and that the cumulative effect of it was that the affidavit as a whole was misleading to a material degree.[71] This aspect of the argument proceeded on the basis of the redacted copies of the affidavit and Mr Ridling's memorandum. I was advised during the course of the hearing that there was a substantial amount of further material referred to in the affidavit which the Commissioner did not wish to disclose. Of course, if required to do so, the Commissioner would disclose the information to the Court, but Mrs Courtney submitted it was unnecessary for it to be disclosed on the basis that, even on the information before the Court, the applicants' complaints of erroneous or misleading material could not be made out. As noted, I reserved my position on that.[72] First, Mr Lennard submitted that, as admitted in the pleadings, the officersintended to search the whole of Ms Bockett's house, not just her home office, and that this should have been disclosed to the Judge. He relied on passages of Baragwanath J in Chief Executive of the Ministry of Fisheries v United Fisheries Ltd22 citing from Descôteaux v Mierzwinski that:23One does not search the premises of a third party who is not alleged to have participated in the commission of a crime in the same way as those of someone who is the subject of such an allegation a comment that was approved in the later Supreme Court of Canada decision ofBaron v Canada.24[73] But here, the search was directed at books and documents. As the accountant to a number of the Honk entities Ms Bockett could be expected to be just as likely as Messrs Tauber and Webb to have such relevant books and documents in her possession.[74] Ms Fleming's affidavit identified Ms Bockett as the director and shareholderof MB, which provided accounting services for a number of the relevant Honk entities or entities associated with Messrs Tauber and Webb and that the registeredoffice of MB was also Ms Bockett's private residence. The application for the warrant sought access to Ms Bockett's private residence as a whole. The application was not misleading. There was no suggestion the search was to be restricted to a home office. Clearly the premises of MB were likely to contain information relevant to the Commissioner's inquiry and search under s 16(1). Books and documents can be stored in a variety of places, as the search revealed.[75] Next, Mr Lennard submitted the affidavit was erroneous in that it indicated Mr Tauber had agreed to the Commissioner's position in relation to two disallowedimputation credits and that a number of Honk entities had reached agreement in relation to disallowed imputation credits. He submitted the correct position,disclosed in correspondence attached to Mr Tauber's affidavit, was that Mr Tauber22 Chief Executive of the Ministry of Fisheries v United Fisheries Ltd [2010] NZCA 356 at [35].23 Descôteaux v Mierzwinski [1982] 1 SCR 860 at [60].24 Baron v Canada (1993) 99 DLR (4th) 350 (SCC) at [34].and the Honk entities had in fact relied on advice received from the Inland Revenue officers in relation to the claims for imputation credits and that the Commissioner accepted the applicants had taken the care expected of a reasonable person in their circumstances in deciding not to impose penalties. Mr Lennard submitted the District Court Judge should have been advised of those facts.[76] In response Mrs Courtney submitted that the correctness of any assessment could only be dealt with in challenge proceedings and s 109 of the Tax Administration Act did not allow issues of correctness to be raised in other proceedings. As I understand it, however, Mr Lennard's point is a different one. It is that the affidavit was misleading in failing to state that at least in relation to some of the imputation credits that were disallowed the applicants had relied on the Commissioner's advice.[77] However, in my view Mr Lennard overstates the point. The correspondence discloses the Commissioner agreed not to impose shortfall penalties on Mr Tauber in relation to the imputation credits. This was against the background that the treatment of the imputation credits had given rise to an apparent tax shortfall. That was on its face, a discrepancy. It was resolved. In context, this aspect of the affidavit was not misleading. The important point is that the investigation into other issues was ongoing. The Judge was advised that while there may no longer have been any issues in relation to certain of the imputation credits and other expenses claimed there were still issues in relation to the balance which supported the investigation and the application for the access warrants. That was correct.[78] Mr Lennard then referred again to the HAT and HLT disputes with the TRA. He submitted that the fact the Commissioner intended to search for information relating to those cases should have been disclosed to the Judge.[79] The fact that there were cases before the TRA was disclosed to the Judge. Ms Fleming identified in her affidavit that there were: "... two cases with the [TRA] forhearing". There is no basis for the complaint of non-disclosure of the fact cases were before the TRA. The evidence does not support the submission the purpose of the search was to obtain information for the TRA hearing.[80] Next, Mr Lennard criticised the following passage in the affidavit referring to Mr Webb:Mr Webb has advised the Commissioner in an interview that he deliberately hid assets from the Official Assignee.[81] Mr Lennard submitted Mr Webb had not said he deliberately hid assets from the Official Assignee. The relevant part of the transcript of Mr Webb's interview with the officer is as follows:Webb: I'd put a figure of 50 grand on it, most .. when I say I have, didn't have a .. when I went broke uh rightly or wronglywhether it's legal or illegal, I did have a houselot of furniture in a container and the predominant furniture in our house originated from back thenMcLeod: okayWebb: naughty or not naughty it is what it isMcLeod: no I understand uh yeah ... scenario so we're basically sortof immediate household effects seem to carry over.Webb: oh do they oh then they do yeahMcLeod: I'm not sure exactly how it works but uh s- – typicallythey're ... the bed you sleep on ... underneath you and the clothes out of the wardrobe ...Webb: well at the time they were in a container and they stayed in a container they followed me to Sydney and then up to Brisbane they never left the container, came back to Auckland, that was another disaster[82] The passage is somewhat ambiguous. At most from the Commissioner'spoint of view it could be said that Mr Webb accepted that he had kept assets of a household nature to a value of $50,000 in the container and that he had not disclosed the fact to the Official Assignee when bankrupt. The bald statement that Mr Webb advised the Commissioner that he had deliberately hidden assets from the Official Assignee gives a more serious impression than that. However, even in the context of the redacted affidavit and the purpose and reason for the searches the point is not a material one. I accept Mrs Courtney's submission that in making that statement Ms Fleming relied on the impression conveyed to her by the officer who had interviewed Mr Webb and that it was not made in bad faith.[83] Mr Lennard next referred to the reference to the two notices under s 17 of the Tax Administration Act issued to Mr Webb and his response to that. He submitted that the Judge should have been advised of the ongoing discussions between theparties regarding Mr Webb's compliance with those matters. But the information in the affidavit is strictly correct. The affidavit records that Mr Webb had complied in part with the second notice. The important feature of that aspect of the information provided to the Judge is that the Commissioner had issued s 17 notices and he did not accept they had been satisfactorily complied with. The Judge was made aware that the Commissioner had tried other means to obtain the information, but that he did not consider the applicants had complied. That information supported the application for warrant. Ms Fleming was entitled to make that point in the affidavit.[84] Mr Lennard also submitted that in the course of his interview Mr Webb denied he had substantial assets and also denied the accuracy of media reports which were referred to and relied on by the Commissioner which should have been disclosed. Again, the matter was fairly outlined to the Judge. It is unlikely the Judge would have placed much, if any, weight on the reference to the media article (which was only referred to in passing). More significance might have been placed on the HSBC diary note that suggested Mr Webb had net worth of $40,360,000. It was unnecessary to record Mr Webb denied that.[85] The errors or failings which are contained in the affidavit, such as they are, are primarily in relation to emphasis. In the context of a lengthy affidavit (even in its redacted form) they are not material.[86] In the Tranz Rail decision the Court said:[25] Hammond J was inclined to the view that even if some non- disclosure was involved it was not material because fuller disclosure could not have led to any different outcome. Mr Pike pressed the same argument again in this Court. We cannot accept it. A failure to observe the duty to make full and candid disclosure should not be excused too readily on the basis of immateriality. To do so would tend to undermine the duty to put the judicial officer in possession of all the potentially relevant facts, so that it is the judicial officer who decides what is relevant at the margins, rather than the applicant.[26] Certainly there will be cases when it can be said that although something relevant has not been disclosed the non-disclosure can have madeno difference. We do not consider this to be one of those cases. The information which the Commission failed to disclose was clearly relevant to whether the issue of a warrant was necessary. It was also relevant to thejudicial officer's ultimate discretion whether to issue a warrant in thecircumstances and, if so, whether conditions of execution should be imposed. We do not consider it right to say that the non-disclosure could not possibly have made any difference. For this reason we consider that there was material non-disclosure. We will leave, until after we have discussed the other grounds, consideration of what the effect of that non-disclosure should be.(Emphasis added)In the present situation, the over emphasis of some aspects of the material and under emphasis of others was not done in bad faith, was not material, and could not possibly have affected Judge Field's decision to issue the access warrants under s 16(4) and the warrants under s 16C(2).Result[87] For the foregoing reasons the challenges to the issue of the warrants and search by the applicants are not made out. The application is dismissed.Costs[88] Costs to the Commissioner on a 2B basis.__________________________ Venning J