HOEBERECHTS v THE COMMISSIONER OF INLAND REVENUE [2022] NZHC 651

HOEBERECHTS v THE COMMISSIONER OF INLAND REVENUE [2022] NZHC 651 [1 April 2022]IN THE HIGH COURT OF NEW ZEALANDHAMILTON REGISTRYI TE KŌTI MATUA O AOTEAROAKIRIKIRIROA ROHECIV-2021-419-000288[2022] NZHC 651UNDER the Income Tax Act 2007, the TaxAdministration Act 1994 and section 20.9High Court Rules 2016BETWEEN VERONICA ANNE HOEBERECHTSAppellantAND THE COMMISSIONER OF INLANDREVENUERespondentHearing: On the papersCounsel: Appellant in personJudgment: 1 April 2022JUDGMENT OF GORDON JThis judgment is delivered by me on 1 April 2022 at 2 pmpursuant to r 11.5 of the High Court Rules......................................................Registrar / Deputy RegistrarTo: The Appellant[1] Veronica Hoeberechts has filed an appeal against a decision of the TaxationReview Authority (TRA).1 She is self-represented. She submitted an application tothe Court Registry for waiver (or refund) of her filing fee of $540.00 for the appeal(fee waiver application).[2] The application was declined by a Deputy Registrar. Ms Hoeberechts seeks areview of the Deputy Registrar's decision (review application).Relevant law[3] Section 157(1) of the Senior Courts Act 2016 (the Act), empowers theGovernor-General to make regulations authorising a Registrar (or Deputy Registrar)of a senior court to waive (or refund), in whole or part, fees associated with aproceeding or intended proceeding. The underlying purpose of the provision is to"promote access to justice".[4] Under s 157(2) the regulations made must provide that a Registrar or DeputyRegistrar may only exercise a power under the regulations if they are satisfied, on thebasis of prescribed criteria, that:(a) the person responsible for payment of the fee is unable to pay orabsorb the fee in whole or in part; or(b) unless 1 or more of those powers are exercised in respect of aproceeding that concerns a matter of genuine public interest, theproceeding is unlikely to be commenced or continued.[5] Section 157(3) of the Act provides that regulations may set criteria:(a) for assessing a person's ability to pay a fee; and(b) for identifying proceedings that concern matters of genuine publicinterest.[6] The High Court Fees Regulations 2013 (the Regulations) duly provide:1 Disputant v Commissioner of Inland Revenue [2021] NZTRA 3 (TRA 015/2020).18 Power to waive fees(1) A person otherwise responsible for the payment of a fee required inconnection with a proceeding or an intended proceeding may apply to aRegistrar for a waiver of the fee.(2) The Registrar may waive the fee payable by the person if satisfied,—(a) on the basis of one of the criteria specified in regulation 19, thatthe person is unable to pay the fee; or(b) that the proceeding,—(i) on the basis of one of the criteria specified in regulation 20,concerns a matter of genuine public interest; and(ii) is unlikely to be commenced or continued unless the feeis waived....[7] Regulation 19 provides that a person is unable to pay the fee sought if theyhave been granted legal aid, are a beneficiary, a superannuitant, on a veteran's pension,or "would otherwise suffer undue hardship if he or she paid the fee".[8] Regulation 20 sets out the criteria for determining when a proceeding concernsa matter of genuine public interest:(a) a proceeding that has been or is intended to be commenced to determine aquestion of law that is of significant interest to the public or to a substantialsection of the public; or(b) a proceeding that—(i) raises issues of significant interest to the public or to a substantialsection of the public; and(ii) has been or is intended to be commenced by an organisation that,by its governing enactment, constitution, or rules, is expressly or bynecessary implication required to promote matters in the publicinterest.[9] In short, an application for a fee waiver by an individual may be granted if:(a) The person is unable to pay the fee; or(b) (i) The proceeding concerns a matter of public interest; and(ii) The proceeding is unlikely to be commenced or continued unless thefee is waived.Review of decision[10] The right to seek a review of a Registrar's decision concerning fees is governedby s 160 of the Act, which provides that a person who disagrees with a decision of aRegistrar or Deputy Registrar may apply to a Judge or Associate Judge of the relevantcourt to review the decision.2 The application may be made informally.3 The reviewis to be conducted by way of rehearing of the matter in respect of which the Registraror Deputy Registrar made the decision, and dealt with on the papers.4 The Judge orAssociate Judge may confirm, modify, or reverse the decision of the Registrar orDeputy Registrar.5DiscussionIs Ms Hoeberechts unable to pay the fee?[11] In the review application Ms Hoeberechts states that although she has now paidthe $540 filing fee, she could "ill-afford" it. However, her fee waiver application wasclearly based on public interest grounds. She did not rely on an inability to pay. Thisissue does therefore not need to be addressed further.Public interest[12] The fee waiver application states that the question of law at issue in theproceeding is:... how the Commissioner of Inland Revenue assesses the late payment ofweekly compensation entitlement in the year of receipt and not in the years ofwhen the entitlement accrued. This issue has been in contention for nearlyforty years, and I have attached some supporting documentation.2 Section 160(1).3 Section 160(3).4 Section 160(4).5 Section 160(5).[13] The fee waiver decision letter from the Deputy Registrar appears to be astandard form response. The wording of the letter reflects the wording of regs 18and 20. It states:The applicant's request for the waiver of a fee of $540.00 is refused on thebasis that I am not satisfied the application fulfilled the following criteria, asapplied for:o The proceeding to which the fee relates is unlikely to becommenced or continued unless the fee is waived/reduced, andconcerns a matter of genuine public interest on the basis that it:o Seeks to determine a question of law that is of significant interestto the public or to a significant section of the public.[14] The reason for the decision is then recorded as: "Not a matter of genuine publicinterest – Appeal continued".[15] The substantive appeal to this Court is against a decision of the TRA in whichMs Hoeberechts challenged the basis upon which the Commissioner of InlandRevenue treats lump sum payments made by the Accident Compensation Corporation(ACC) for weekly compensation in arrears. Ms Hoeberechts had disputed herentitlement to weekly compensation she was due from the ACC. After some years shesucceeded in an appeal to the District Court. After the District Court decision, theACC paid a lump sum in arrears. In the TRA Ms Hoeberechts contended that thepayment from the ACC should be treated for tax purposes as having been derived onan accruals basis and spread over the income years to which the payment related, ratherthan on a cash basis as assessed by the Commissioner. The TRA dismissedMs Hoeberechts' challenge and confirmed that the tax assessments had been madecorrectly.[16] The appeal is filed by Ms Hoeberechts as an individual, and on her own behalf.In that regard she seeks relief for herself including a re-assessment of the relevant taxyears and a 'refund' of the tax she believes she has overpaid. However, she also assertsthat the issue she seeks to address affects numerous persons other than herself saying:I would also seek relief for other long-term claimants who have been, are, orwill be in the same position as I am and ask that either the Minister of Revenuechanges the legislation in urgency (with retrospective application) or theCommissioner writes a Public Ruling that allows the one-sum partial or fullpayments of weekly compensation, paid late by the Corporation, to be spreadover the years from the date of the claimant's incapacitating injury, which isusually the date that the weekly compensation entitlement begins to accrue.[17] In the review application, Ms Hoeberechts provides information to support herassertion that the appeal is of significant and genuine public interest. She refers to anOfficial Information request to the ACC, made by an independent journalist in early2021, which disclosed that the number of claimants receiving a retrospective one-sumpayment of back-dated weekly compensation entitlement each year is in the region of1,200 to 1,500 persons. On this basis, Ms Hoeberechts says that the outcome of hercurrent appeal could be of immense interest to other claimants. She also refers to anumber of other news articles which appear to criticise the taxation regime governingback-dated lump sum ACC payments. One such article suggests that:... all that is required is a small amendment to the tax code allowing a specialtax category where the tax is deducted at a rate no different to if the weeklycompensation was paid on time. Tax could then be deducted based on whenit was owed rather than when it was paid.[18] Various supporting documents are also attached to the fee waiver application,including a decision of the TRA dated 23 February 1988 and an excerpt from the2009/2010 Report of the Ombudsman.[19] Of particular relevance is the following statement in the Report of theOmbudsman:It seems unfair that recipients of lump sum payments have to pay tax on thosepayments in the year of receipt, when the lump sums relate to back paymentsextending over two or more years. This means they are taxed at the highestmarginal tax rate, whereas if they could spread the lump sum over the tax yearsto which the payments relate, then in most cases the incidence of tax wouldbe lower. The unfortunate tax consequences for a claimant in thosecircumstances have been acknowledged by the Tax Review Authority and theAccident Compensation Corporation. We understand that ACC has raised thisissue with its Minister and await with interest his consideration of the matter.[20] I am satisfied that Ms Hoeberechts' proceeding concerns a matter of publicinterest which is of significant interest to a significant section of the public. I acceptthat a significant number of people are affected by the tax treatment of lump sumpayments by the ACC.[21] However, as long as the tax treatment of ACC lump sum payments is consistentwith current legislation, the courts cannot intervene. Only Parliament may changelegislation. As the journalist Ms Hoeberechts cites in her review application pointsout, the remedy affected persons seek is a change to the legislation. For this reason, Ido not consider that Ms Hoeberechts' current proceeding is properly in the publicinterest for the purposes of the Regulations.[22] The Registrar was correct to refuse the request on the basis that therequirements of reg 18(2)(b)(i) had not been met.Is the proceeding unlikely to proceed if the fee is not refunded?[23] The application form requires the applicant to tick a number of boxes toconfirm their understanding of the application process. At step 5, the applicant mustanswer the following question, using the tick boxes provided:If this application for the fee to be waived is refused, would you move forwardwith the proceeding?o Yes. I would start or continue with the proceeding anyway.o No. If this application is refused, I would stop or discontinue with thisproceeding.[24] If an applicant ticks 'No', they are then asked to "List the reasons why [they]would not move forward with the proceeding if the fee is not waived".[25] Ms Hoeberechts ticked the 'Yes' box.[26] At step 6, the applicant is required to check a box to confirm the followingstatement:If this application is declined then I understand I must pay the fee immediately.[27] Immediately below this tick box, the form states as follows:If you don't pay the fee immediately, the proceeding will stop and the courtmay recover the fee as a 'debt'.However, you can apply to have the 'declined' decision reviewed.[28] Ms Hoeberechts duly ticked the box. She also paid the fee within the requisitetimeframe. She then applied to have the 'declined' decision reviewed in accordancewith the information provided on the back page of the fee waiver application.[29] In Environmental Defence Society Incorporated v Otago Regional Council,6Associate Judge Lester found that, although the issue raised met the public interestcriteria, the applicant was unable to meet this limb of the test on the basis that theyhad ticked the 'Yes' box on the form, indicating that they would continue with theproceeding regardless of whether or not the fee was waived.7 The application forreview was accordingly declined.[30] The position in this case is that Ms Hoeberechts has similarly ticked the 'Yes'box. In addition, Ms Hoeberechts' persistence in pursuing her case is evident in thedocuments she has provided and her notice of appeal which runs to 67 paragraphs. Allof this separately indicates she will continue this proceeding even if the filing fee isnot waived.[31] The requirements of reg 18(2)(b)(ii) have not been met. This is an additionalreason for dismissing the review application.Result[32] The application for review is dismissed. I confirm the decision of the DeputyRegistrar to decline Ms Hoeberechts' application for a fee waiver._____________________________Gordon J6 Environmental Defence Society Incorporated v Otago Regional Council [2019] NZHC 189 [18February 2019]. See also Chen v Auckland Weihao Investment Ltd Inc [2021] NZHC 3196 andRe Gifford (a review of the Registrar's decision) [2021] NZHC 1773.7 At [17].