Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue
[2014] NZCA 350
•5 August 2014 at 12 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA632/2013 [2014] NZCA 350 |
| BETWEEN | BEN NEVIS FORESTRY VENTURES LIMITED BRISTOL FORESTRY VENTURE LIMITED CLIVE RICHARD BRADBURY GREGORY ALAN PEEBLES |
| AND | COMMISSIONER OF INLAND REVENUE |
| Hearing: | 18, 19 and 20 March 2014 (further submissions received 15 April 2014) |
Court: | O’Regan P, Stevens and Wild JJ |
Counsel: | G J Judd QC for Appellants |
Judgment: | 5 August 2014 at 12 pm |
JUDGMENT OF THE COURT
AThe appeal is dismissed.
BThe appellants must pay the costs of the respondent for a complex appeal on a band B basis and usual disbursements. We certify for second counsel.
____________________________________________________________________
REASONS OF THE COURT
(Given by O’Regan P)
Introduction
This is an appeal against a judgment of Katz J in which she upheld a protest to jurisdiction by the respondent, the Commissioner of Inland Revenue (the Commissioner), and therefore dismissed an application made by the appellants.[1] In a later judgment, she awarded costs to the Commissioner on an indemnity basis.[2] With the Commissioner’s agreement, we gave leave to the appellants to amend their notice of appeal to include a challenge to the costs judgment. By agreement, the costs aspect of the appeal was dealt with on the papers.
[1]Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2013] NZHC 2361, (2013) 26 NZTC 21–032.
[2]Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2014] NZHC 441.
We heard the appeal along with four other appeals involving the appellants or parties associated with them: CA541/2013, CA633/2013, CA791/2013 and CA23/2014. The present panel has also dealt with two associated appeals on the papers: CA51/2014 and CA55/2014.
The appellants’ High Court application
In the High Court, the appellants sought an order setting aside an earlier decision of the High Court, in which the Court ruled that an arrangement to which the appellants and a number of other taxpayers were parties, known as the Trinity scheme, was a tax avoidance arrangement.[3] (We will call the decision that the appellants sought to have set aside Accent 2004). In Accent 2004, the High Court upheld assessments made by the Commissioner and dismissed the taxpayers’ challenge to those assessments. Accent 2004 was upheld on appeal to this Court[4] and to the Supreme Court.[5] The present proceeding is one of a long line of cases by parties to the Trinity scheme seeking to challenge the decisions of the High Court, Court of Appeal and Supreme Court in the tax avoidance proceedings described above.
[3]Accent Management Ltd v Commissioner of Inland Revenue (2004) 22 NZTC 19,027 (HC) [Accent 2004].
[4]Accent Management Ltd v Commissioner of Inland Revenue [2007] NZCA 230, (2007) 23 NZTC 21,323.
[5]Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2008] NZSC 115, [2009] 2 NZLR 289 [Ben Nevis 2008].
The Commissioner not only filed an appearance under protest to jurisdiction in the High Court in accordance with r 5.49 of the High Court Rules, but also an application to strike out the proceeding under r 15.1 of the High Court Rules on the basis that the application was an abuse of the High Court’s process. The strike-out application was necessarily a fallback position, because it would have involved a submission to the Court’s jurisdiction. As it transpired, the Commissioner did not pursue the strike-out application and the matter was dealt with solely on the basis of jurisdiction.
The appellants’ statement of claim in the present proceedings pleaded that the judgment in Accent 2004 is voidable on the ground that the trial Judge, Venning J, “was or may be seen to be biased”. As the present appeal deals only with the question of jurisdiction, we will say nothing more about the bias allegation, other than noting that it has been made in other forums and has been rejected.
In particular, such allegations were rejected by this Court in Muir v Commissioner of Inland Revenue (we will refer to this decision as Muir 2007)[6] and a complaint to the Judicial Conduct Commissioner was dismissed.
[6]Muir v Commissioner of Inland Revenue [2007] NZCA 334, [2007] 3 NZLR 495 [Muir 2007].
Two of the present appellants, Mr Bradbury and Mr Peebles, challenged the decision of the Judicial Conduct Commissioner in judicial review proceedings. The application for judicial review was dismissed by the High Court.[7] In dismissing the judicial review proceeding, Goddard J found that no error had been made by the Judicial Conduct Commissioner and also found that the complaints about Venning J were a collateral attack on the judgment in Accent 2004 and an abuse of both the judicial complaints procedure and the High Court’s supervisory jurisdiction.[8] An appeal against the decision of Goddard J has been filed in this Court and was heard on 1 July 2014.[9] Judgment is reserved.
High Court judgment
[7]Muir v Judicial Conduct Commissioner [2013] NZHC 989, (2013) 26 NZTC 21–019. The intituling of this report implies that Mr Muir was an active party in the judicial review proceeding, but we were told by counsel that only Mr Bradbury and Mr Peebles took an active role in that proceeding. The appellants in the present case criticised Katz J for referring to this case as a collateral attack on Accent 2004.
[8]At [189].
[9]Bradbury v Judicial Conduct Commissioner (CA357/2013).
Katz J identified the issues to be determined in the High Court as follows:[10]
(a)Is it arguable that Accent 2004 is a nullity, which the appellants would have been entitled (prior to any appeals) to have set aside ex debito justitiae (as of right) by the High Court in the exercise of its inherent jurisdiction?
(b)If Accent 2004 is arguably a nullity, does the High Court still have jurisdiction to set it aside once any appeals from the judgment have been heard and determined?
[10]At [6].
Katz J noted that allegations of bias arising after a trial are usually dealt with by way of appeal. She accepted that a judgment obtained in breach of the rules of natural justice may be able to be set aside ex debito justitiae, but pointed out that most cases involving a breach of natural justice are cases involving a breach of the right to be heard, rather than bias cases. She saw bias cases as more difficult because of the likely complexity of determining whether the Judge involved was, in fact, biased. She therefore queried whether bias cases were appropriately dealt with as cases amenable to being set aside ex debito justitiae, other than in the clearest of cases.[11] But, following the decision of this Court in R v Smith, she accepted it was at least arguable that, prior to being appealed, Accent 2004 could have been challenged as a nullity, making it amenable to being set aside.[12]
[11]Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue, above n 1 at [26]–[30].
[12]R v Smith [2003] 3 NZLR 617 (CA).
In relation to the second issue, Katz J considered that the fact that Accent 2004 had been appealed both to this Court and the Supreme Court meant that the High Court did not have jurisdiction to set aside the judgment.[13] She said that once an appeal from the first instance decision had been pursued it was no longer possible for the original judgment to be recalled or set aside in the trial court.[14]
[13]At [32].
[14]At [41].
Katz J also observed that a further impediment to the appellants’ application was the fact that this Court had already rejected the claims of bias against Venning J.[15] She considered that the proceedings before her had the potential to require the High Court to not only, in effect, declare the decisions of this Court and the Supreme Court on appeal from Accent 2004 to be nullities, but also potentially to reopen aspects of Muir 2007. She considered that also to be beyond the jurisdiction of the High Court.[16]
Issues for determination
[15]See [5]–[6] above.
[16]At [47].
The notice of appeal identifies no fewer than 25 specific grounds of appeal and counsel did not file a list of issues as required by r 42A of the Court of Appeal (Civil) Rules 2005. This led to unfocused argument but we will do our best to distil the issues that the Court needs to resolve in order to determine the appeal.[17]
[17]The appellants took issue with a number of minor aspects of Katz J’s decision. For example, they said describing the present proceeding as a collateral attack on Accent 2004 was wrong: it was a direct attack. We note but do not consider it necessary to engage with this point.
We see the first issue as involving a determination as to whether an allegation of bias regarding a High Court judge can found a separate proceeding in the High Court seeking to have a decision already made by that judge set aside ex debito justitiae, if the issue is raised before any appeal is determined. That is essentially the same as the first issue identified by Katz J.
If the answer to the first issue is “yes”, then the next issue to be resolved in relation to Accent 2004 is whether the fact that appeals against that decision have been heard and determined means that the jurisdiction to deal with any application to set aside the High Court judgment must be dealt with by an appellate court, rather than the High Court. Again, that is similar to the second issue identified by Katz J in her judgment.
The third issue is whether the fact that this Court has already determined that there was no bias, actual or presumptive, on the part of Venning J in relation to Accent 2004 affects the analysis.
Factual context: serial challenges to the tax avoidance ruling
The present application must be seen in its context. The taxpayers who contested the Commissioner’s assessments in the High Court, and who were unsuccessful in Accent 2004 (and in the appellate decisions upholding Accent 2004) have embarked on a series of challenges to the ruling, all of which have been unsuccessful and most of which have led to awards of indemnity costs against them. In our judgment in Accent Management Ltd v Attorney-General, we have set out a summary of these various proceedings.[18] We will not repeat the summary in this judgment.
First issue: jurisdiction to set aside
[18]Accent Management Ltd v Attorney-General [2014] NZCA 351 at [11]-[23].
Counsel for the appellants, Mr Judd QC, placed particular reliance on the decision of this Court in R v Smith and quoted extensively from it.[19] It is, therefore, instructive to begin by considering what this Court determined in R v Smith, before turning to its impact on the facts of the present case.
R v Smith
[19]R v Smith, above n 12.
R v Smith followed the decision of the Privy Council in R v Taito, which held that the determinations of this Court in a number of criminal appeals were invalid.[20] The essence of the decision in R v Taito was that the ex parte procedures adopted by this Court in relation to some criminal appeals did not meet the procedural requirements for criminal appeals and also failed to meet the requirements of natural justice. Accordingly, the determinations of this Court were invalid and the Privy Council remitted the appeals before it to this Court for hearing.
[20]R v Taito [2003] UKPC 15, [2003] 3 NZLR 577.
Mr Smith’s appeal had been dealt with in this Court on the same basis as the appeals of the Taito appellants. The Crown accepted that the determination of Mr Smith’s appeal was invalid. The practical question before the Court in R v Smith was how to deal with Mr Smith’s appeal, and those of many others in the same situation.
In delivering the judgment of this Court, Elias CJ, having reviewed authorities in the United Kingdom and Australia, said:
[36] … [This] Court has inherent power to revisit its decisions in exceptional circumstances when required by the interests of justice. Such power is part of the implied powers necessary for the Court to “maintain its character as a court of justice”. Recourse to the power to reopen must not undermine the general principle of finality. It is available only where a substantial miscarriage of justice would result if fundamental error in procedure is not corrected and where there is no alternative effective remedy reasonably available. Without such response, public confidence in the administration of justice would be undermined.
The Chief Justice made it clear, however, that a decision tainted by failings of the kind arising in Taito is binding until set aside. She said:
[46] Unless a judgment of a Court is set aside on further appeal or otherwise set aside or amended according to law, it is conclusive as to the legal consequences it decides. If it were not so, the principle of legality would be undermined. The record of the Court of Appeal dismissing the appellant’s appeal is accordingly conclusive as to disposition of the appeal until set aside or amended. The suggestions that the determination can be ignored without being formally set aside and that the appeal can be heard despite the record of its dismissal are contrary to principle.
[47] Thus, in Kofi Forfir v Seifah, the Privy Council rejected the “curious” argument that the Court had power to correct only judgments made with jurisdiction and that it lacked power to set aside and rehear a judgment made without jurisdiction, which was a “nullity”:
“To say that a judgment is a nullity is not to say that the judgment is not a judgment for any purpose, and, in particular, that it is not a judgment within the meaning of the term in Ord 41.” (p 65)
[48]The need for finality is based upon the policies identified by Lord Wilberforce in The Ampthill Peerage [1977] AC 547 at p 569 as “the interests of peace, certainty and security”:
“For a policy of closure to be compatible with justice, it must be attended with safeguards: so the law allows appeals: so the law, exceptionally, allows appeals out of time: so the law still more exceptionally allows judgments to be attacked on the ground of fraud: so limitation periods may, exceptionally, be extended. But these are exceptions to a general rule of high public importance, and as all the cases show, they are reserved for rare and limited cases, where the facts justifying them can be strictly proved.”
Lord Simon of Glaisdale at p 576 made the same point:
“But the fundamental principle that it is in society’s interest that there should be some end to litigation is seen most characteristically in the recognition by our law – by every system of law – of the finality of a judgment. If the judgment has been obtained by fraud or collusion it is considered as a nullity and the law provides machinery whereby its nullity can be so established. If the judgment has been obtained in consequence of some procedural irregularity, it may sometimes be set aside. But such exceptional cases apart, the judgment must be allowed to conclude the matter.”
[49]As both judgments make clear, the safeguards for fallibility in judgment require the use of the machinery provided by law: appeal or application to set aside the judgment which must be on grounds strictly made out even where a decision can be characterised as a “nullity”. Such defeasibility is an exception to the policy of finality and certainty. It is not self-achieving. It must be formally accomplished by a Court with the power to set aside or amend. That is the approach adopted in the cases cited above at paras [47]–[48] where the inherent power to revisit an invalid determination has been exercised.
In the judgment under appeal, the Judge recorded a submission made on behalf of Ben Nevis that the High Court, in the exercise of its inherent jurisdiction, was able to set aside Accent 2004 on the basis that it is a nullity, due to the presumptive bias of the Judge.[21] In this Court, Mr Judd said that this did not accurately record the submission he made. He said that his submission was that Accent 2004 was amenable to being set aside, and that only if it were set aside would it be a nullity. We think it is clear from the comments of the Chief Justice in R v Smith that a judgment, even a judgment obtained in breach of basic standards of natural justice, is still a judgment and must be treated as such until it has been set aside by a Court with the jurisdiction to do so.[22]
[21]At [7].
[22]R v Smith, above n 12, at [46], quoted at [21] above. See also Attorney-General v Howard [2010] NZCA 58, [2011] 1 NZLR 58 at [114] per Glazebrook J.
Later in R v Smith, the Chief Justice said that the deficiencies in procedure that had been exhibited in relation to Mr Smith’s appeal and those of others in the same position were breaches of the right to justice contained in s 27(1) of the New Zealand Bill of Rights Act 1990.[23] She continued, “they are not mere irregularities. They are breaches of an irreducible minimum standard of justice”.[24]
[23]At [58].
[24]At [58].
The Chief Justice said that the Court’s response to such breaches requires determinations earlier reached to be set aside:[25]
“ex debito justitiae” … and for the appeals to be properly considered, with no qualifying hurdle to be overcome. That result can be achieved in application of the inherent jurisdiction. The power (as its description as “inherent” or “implied” suggests) is a necessary incident of a Court if it is “to maintain its character as a court of justice”.
[25]At [59] quoting Lord Diplock in Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corp [1981] AC 909 (HL) at 977.
Mr Judd relied on R v Smith as authority for the proposition that a trial court must have jurisdiction to deal with an application to set aside a judgment on the basis of a breach of natural justice (including presumptive bias). He said it was important that this right not be limited by the availability of an appeal, because a party who establishes that a judgment was obtained in breach of the rules of natural justice is entitled to have it set aside as of right, not as a matter of discretion as may be the case in relation to an appeal. He drew a distinction between a decision that was “regular”, and could be set aside only by an appellate court upon appeal, and a decision that was “irregular” and could be set aside by the Court that made it upon application to that Court. He relied for that proposition on the discussion by Lord Diplock in Isaacs v Robertson.[26]
[26]Isaacs v Robertson [1985] 1 AC 97 (PC) at 103.
Mr Judd emphasised in particular Lord Diplock’s observation that the distinction between regular and irregular orders has not been the subject of comprehensive definition, but that an irregular order that attracts the right to have it set aside ex debito justitiae includes an order that has been obtained in breach of the rules of natural justice.[27] That, he argued, included an order obtained in circumstances where the judge making the order was presumptively biased, which is a breach of the rules of natural justice.
[27]At 103.
Counsel for the Commissioner, Ms Clark QC, accepted that an order obtained in breach of the rules of natural justice must be remedied. She did not dispute the possibility that the High Court had jurisdiction to remedy such a defect itself in its inherent jurisdiction in circumstances where no appeal had been determined. We took it that she did not, therefore, take issue with the High Court Judge’s finding that it would not have been appropriate to dismiss the proceedings on the grounds of lack of jurisdiction if this had been a case where no appeals had been determined.[28]
[28]Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue, above n 1, at [31].
The High Court Judge noted that the jurisdiction to set aside a proceeding ex debito justitiae was a jurisdiction that was exercised rarely and only in clear-cut cases, and that the present case was far from clear-cut. But the Judge did not consider that that was an issue of the existence of jurisdiction, but rather an issue as to whether the jurisdiction should be exercised. That distinction was also emphasised by Mr Judd. We agree with the High Court Judge’s analysis in that regard.
Second issue: impact of appeals
Ms Clark submitted that in a case where the decision that is said to be tainted by bias has been the subject of appeals, the appropriate forum for remedying the position is the appellate court that last dealt with the matter.[29]
[29]The appearance under protest to jurisdiction filed in the High Court said that the matter needed to be determined by this Court, but Ms Clark confirmed that the Commissioner’s position was that the appeal court that last dealt with the matter is the appropriate forum, which in this case is the Supreme Court.
Mr Judd relied on the observations of Lord Diplock in Isaacs v Robertson for the proposition that a judgment that was “irregular” in the terms described by Lord Diplock could be set aside by the court that made it, regardless of whether there had been further appeals. When pressed as to the status of the appeal judgments in the event that the first instance judgment were set aside, he said that the appeal judgments themselves would effectively become nullities because they were appeals from a non-existent judgment. In his notice of appeal he said such a setting aside would not “be saying anything at all about the rightness or wrongness of the appellate decisions”. Appeal decisions may be relevant to the exercise of the jurisdiction to set aside, but not to the prior question of whether the jurisdiction exists.
The question of the appropriate venue for dealing with a potentially tainted judgment that has been the subject of successive appeals is not a matter that is clear from the authorities. Ms Clark relied on a number of authorities such as Re St Nazaire Co, Hikuwai v Sanford Ltd, UDC Finance Ltd v Madden and Collier v Creighton for the proposition that a trial court could not set aside or recall its judgment in circumstances where the judgment had been the subject of an appeal that had been resolved in a higher court.[30] She referred in particular to the following observation of Jessel MR in Re St Nazaire Co, which was cited by the Supreme Court in its decision in Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd:[31]
[The application to rehear a case that has been the subject of appeal] is a petition presented to a Judge of the High Court to rehear a decision of the Appeal Court, I should have thought that the mere statement of that would be sufficient to shew that the Judge below had no jurisdiction. It would be a wonderful result indeed if the Judicature Act empowered a Judge of an inferior Court to rehear a decision of the Appeal Court which perhaps had reversed the decision. Upon that theory, how long is the thing to go on? If the Judge below has this power, he may exercise it by reversing the decision of the Appeal Court where the Appeal Court has reversed his decision.
[30]Re St NazaireCo (1879) 12 Ch D 88 (CA); Hikuwai v Sanford Ltd (1996) 9 PRNZ 587 (HC); UDC Finance Ltd v Madden [2000] 1 NZLR 504 (HC); Collier v Creighton (1997) 10 PRNZ 645 (HC).
[31]Re St Nazaire Co, above n 30, at 96–97; Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd [2012] NZSC 94, [2013] 1 NZLR 804 at [24].
Thorp J reached a similar conclusion in Hikuwai, in which Mr Hikuwai had sought a new trial on the grounds that fresh evidence had been discovered after both the High Court and Court of Appeal had issued their decisions and leave had been granted to appeal to the Privy Council. Thorp J considered that if he were to recall the judgment of the High Court, this would effectively mean he was recalling a judgment of the Court of Appeal, which he did not consider was consistent with the hierarchical structure of the courts. Hikuwai was followed in Collier v Creighton, in which Robertson J observed:[32]
It is not competent as a matter of jurisdiction for [the High Court] to order a new trial in respect of a process which began [in the High Court], but the dispute which was the subject of the hearing in [the High Court] is now determined by judgment in another place.
[32]At 647.
UDC Finance was also a new evidence case, and John Hansen J reached the same conclusion as had been reached in both Hikuwai and Collier.
Katz J took the view that these authorities clearly ruled out the notion that the High Court could recall or set aside a judgment that had been the subject of decisions by one or more appellate courts. Mr Judd disputed that conclusion on the basis that all of the cases cited above were not cases involving a judgment that was amenable to recall ex debito justitiae, but rather were cases in which a party sought a new trial on the basis that fresh evidence had become available. He argued, therefore, that none of these authorities could be taken as establishing the proposition that the High Court did not have jurisdiction to consider an application to set aside Accent 2004 in the present case.
We accept there is a distinction between setting aside a judgment ex debito justitiae and granting a new trial because of the coming to light of new evidence. So, while we take note of the cases cited above as indicators of the difficulties arising when a trial court is asked to recall its judgment after an appeal has been dealt with, we accept they are not determinative in this case. They do, however, highlight that a trial court recalling a decision that has been subject to a concluded appeal is inconsistent with the hierarchical nature of the court system. And evidence of the alleged bias will need to be adduced, so there is some similarity between cases like the present and new evidence cases.
The authority most similar to the present case is the decision of the Court of Appeal of England and Wales in Taylor v Lawrence.[33] That case concerned a proceeding that had been heard in the County Court and had been the subject of an unsuccessful appeal to the Court of Appeal. One of the grounds of the appeal was that there was an appearance of bias on the part of the trial Judge. The appeal was rejected. Further evidence then emerged that the unsuccessful appellants argued added further strength to their argument that the trial Judge had been biased. They applied to the Court of Appeal for permission to reopen their appeal so as to allow them to argue the new ground alleging bias by the trial Judge.
[33]Taylor v Lawrence [2002] EWCA Civ 90, [2003] QB 528.
Lord Woolf CJ delivered the judgment of the Court. He noted that the application involved the making of an associated application to adduce fresh evidence that was said to have established the new grounds for finding that the trial Judge was biased. He did a full review of the authorities. He noted that a right of appeal to the House of Lords was not a practical remedy, given the limitations on appeals to that institution.[34] His conclusions were as follows:
[54] Earlier judgments referring to limits on the jurisdiction of this court must be read subject to this qualification. It is very easy to confuse questions as to what is the jurisdiction of a court and how that jurisdiction should be exercised. The residual jurisdiction which we are satisfied is vested in a court of appeal to avoid real injustice in exceptional circumstances is linked to a discretion which enables the court to confine the use of that jurisdiction to the cases in which it is appropriate for it to be exercised. There is a tension between a court having a residual jurisdiction of the type to which we are here referring and the need to have finality in litigation. The ability to reopen proceedings after the ordinary appeal process has been concluded can also create injustice. There therefore needs to be a procedure which will ensure that proceedings will only be reopened when there is a real requirement for this to happen.
[55] One situation where this can occur is a situation where it is alleged, as here, that a decision is invalid because the court which made it was biased. If bias is established, there has been a breach of natural justice. The need to maintain confidence in the administration of justice makes it imperative that there should be a remedy. The need for an effective remedy in such a case may justify this court in taking the exceptional course of reopening proceedings which it has already heard and determined. What will be of the greatest importance is that it should be clearly established that a significant injustice has probably occurred and that there is no alternative effective remedy. The effect of reopening the appeal on others and the extent to which the complaining party is the author of his own misfortune will also be important considerations. Where the alternative remedy would be an appeal to the House of Lords this court will only give permission to reopen an appeal which it has already determined if it is satisfied that an appeal from this court is one for which the House of Lords would not give leave.
[56] Today, except in a few special cases, there is no right of appeal without permission. The residual jurisdiction which we have been considering, is one which should only be exercised with the permission of this court. Accordingly a party seeking to reopen a decision of this court, whether refusing permission to appeal or dismissing a substantive appeal, must apply in writing for permission to do so. The application will then be considered on paper and only allowed to proceed if after the paper application is considered this court so directs. Unless the court so directs, there will be no right to an oral hearing of the application. The court should exercise strong control over any such application, so as to protect those who are entitled reasonably to believe that the litigation is already at an end.
[34]At [45].
In regard to the appropriate forum, Mr Judd relied on R v Smith as illustrating that the Court in which the breach of natural justice has taken place is the Court that ought to deal with putting the matter right. We disagree.
We see R v Smith as entirely different from the present case. As we noted earlier, the R v Smith proceeding arose only after the Privy Council had determined in R v Taito that the procedures of this Court in relation to certain criminal appeals had failed to meet the requirements of natural justice. The finding was made by the Privy Council on appeal from this Court. Once the finding was made, Mr Smith and others in a similar situation then had to be dealt with, and this Court determined that it should take responsibility for doing that rather than requiring all of the appellants to petition the Privy Council.
While it is true, therefore, that this Court asserted the jurisdiction to set aside its own decisions, it did so in circumstances where there had been no appeal in the case before it, but there had been a ruling in a higher court that incontrovertibly established a breach of natural justice in the case before this Court. That can be contrasted to the present case where Accent 2004 has been the subject of concluded appeals and there has been no ruling from a superior court that there was a breach of natural justice. The only judicial consideration of such an allegation was in Muir 2007 and was to the opposite effect.
The issue we have to confront is a contest between authorities establishing that a decision obtained in breach of the rules of natural justice can be set aside ex debito justitiae, and the reality that in a hierarchical court system it would be an oddity if a trial court could set aside its own decision and thereby effectively nullify decisions of appellate courts. We accept that this is a real possibility in the case of a judgment obtained by fraud. This was confirmed in the decision of the Supreme Court in Redcliffe:[35]
[31] It is also established that the appropriate procedural course, where a party against whom a judgment has been entered, alleges that it has been obtained by fraud, is to commence a separate proceeding seeking to have the judgment set aside. This is because cases invoking the fraud exception allege there has been dishonesty, usually involving perjury, in the evidence given at trial which has deceived the trial court into making erroneous determinations of fact. It is because the challenge is directed at the integrity of the determinations of fact in the litigation that the party alleging fraud brings a fresh proceeding in the trial court, even where the impugned judgment has already been subject of appeal. In such a case the plaintiff does not seek a review of the legal principles that were applied, being rather concerned with the consequence of their application to tainted evidence.
[35]Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd, above n 31 (footnotes omitted).
However, the Supreme Court later observed:[36]
[41] As we have said, the High Court is best placed to determine any subsequent issue of whether the evidence on which a final judgment in the case was based is tainted by fraud, so that the judgment must be set aside and a new trial ordered. That is not, however, the position where the error allegedly induced by fraud is one of law. It is well-established that the High Court has no power to recall or set aside judgments on questions of law which have been the subject of appellate decision. As Mr Brown submitted for the Commissioner, echoing the words of Jessel MR already cited [from St Nazaire], were the position otherwise, the High Court would be able to overturn the decision of a court on appeal from its judgment on the content of the law.
[36]Footnotes omitted.
In our view, the decision in Redcliffe is an indicator that a challenge to a concluded judgment that has been the subject of an appellate judgment should not be mounted in the trial court except in the case of a judgment obtained by fraud, which is recognised as a special exception. We see practical merit in confining the role of the High Court in such circumstances solely to cases involving allegations of fraud.
While we accept Mr Judd’s submission that a judgment obtained in breach of natural justice may be set aside ex debito justitiae, as the Chief Justice confirmed in R v Smith, we do not see that as necessarily indicating that the appropriate venue for an application for the judgment to be set aside is the trial court. It may be so if there were no other alternative available, but we do not consider that there is any doubt that there is another venue available, being the Court that finally determined the matter, in this case the Supreme Court.[37]
[37]Ben Nevis 2008, above n 5.
We see that conclusion as consistent with the way the Court of Appeal of England and Wales dealt with the similar situation that arose in Taylor v Lawrence. The Court of Appeal was clear that it had jurisdiction to deal with the bias allegation, and did not even refer to the possibility that the allegation ought to have been raised in the County Court, where the original decision had been made by the Judge in respect of whom the bias allegation was made. Applying the logic of Taylor v Lawrence to the present situation, we consider that the application to set aside the judgment ought to be made by way of an application for the reopening of the Supreme Court appeal, so that the Supreme Court can determine the appropriate mode of dealing with the matter if it considers that there is any substance to the bias claim. We therefore reach the same conclusion as Katz J on this issue.
Mr Judd said the right to have a judgment that had been obtained in breach of the rules of natural justice set aside ex debito justitiae would be compromised if it was necessary to seek this remedy from an appellate court. He said an appellate court would have a discretion to consider such an application but would not be bound to do so. That undermined the “as of right” nature of the remedy.
We do not see this as a matter of concern. The appellate court would be asked to recall its judgment or to entertain a new appeal or application for leave to appeal and would deal with the application in accordance with its normal procedure. If grounds for setting aside the judgment of the lower court are established, the appellate court could reopen the appeal or grant leave to appeal and deal with the point. Its powers would include setting aside the lower court’s judgment.[38] We do not think there is any serious risk an appellate court would refuse to deal with a meritorious application for recall in these circumstances. But, just as the High Court would, it will dismiss any abusive applications. Unlike the High Court, it will not then be subject to further challenge on appeal.
[38]As the Supreme Court did in Saxmere Company Ltd v Wool Board Disestablishment Company Ltd (No 2) [2009] NZSC 122, [2010] 1 NZLR 76.
This approach also has the benefit that allegations of bias are dealt with by the appellate court rather than by a fellow trial judge of the judge against whom the allegation is made.
Third issue: Relevance of lack of cogency in bias argument
The last issue relates to Katz J’s comments about this Court’s decision in Muir 2007.[39] In that case, the allegations of presumptive bias made against Venning J were rejected on the facts.[40] Katz J considered that the present proceedings had the potential to re-open aspects of this Court’s decision in Muir 2007.
[39]Muir 2007, above n 6.
[40]At [81]-[83].
Mr Judd argued that Katz J ought not to have taken into account Muir 2007. The Commissioner had not argued that it was an impediment to the success of the appellant’s application. In any event, it was a matter going to the appropriateness of exercising the jurisdiction to set aside Accent 2004, not to the prior question of whether or not the jurisdiction existed. He argued that the allegations of presumptive bias on which the application in the present case were based were not on all fours with those considered in Muir 2007.
Ms Clark said the observation made by the Judge about Muir 2007 was not necessary to the decision the Judge had already reached that the Court did not have jurisdiction to set aside Accent 2004. She noted the “Summary and conclusion” at the end of the judgment made no reference to this issue.[41] Ms Clark provided a summary of the “unfolding” bias allegations that ran to eight pages. She pointed out that there was considerable overlap between the allegations in Muir 2007 and the present case.
[41]At [48]–[51]: although at [49] there is a reference to this Court’s finding in Muir 2007 that the allegations were “startling” and lacking in any evidential foundation. However, it appeared to be a passing reference.
We do not think it is productive to engage with this point in any detail. It was clearly not essential to the Judge’s finding and we do not consider it assists the Commissioner’s argument on jurisdiction. It may have been relevant to the exercise of the jurisdiction to set aside ex debito justitiae if it had been found to exist or to the application to strike out on the basis of abuse of process if that aspect of the Commissioner’s case in the High Court had been pursued.
Appeal against indemnity costs award
We now turn to the appeal against the costs judgment of Katz J.[42]
[42]Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue, above n 2.
We have summarised the principles applying to costs awards in our judgment dealing with costs in the Redcliffe proceedings, which is being issued at the same time as this judgment.[43] We will not repeat that summary here.
[43]Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2014] NZCA 348 at [10]–[17].
The Commissioner argued that the conduct of the appellants fell within four of the categories identified in Bradbury v Westpac Banking Corp.[44] These were:
(a)misconduct causing loss of time to the Court and other parties;
(b)commencing or continuing proceedings for an ulterior motive;
(c)doing so in wilful disregard of known facts or clearly established law; and
(d)pursuing a “hopeless case”.
[44]Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [29](b)–(e).
Katz J dealt only with the last of these. She found that it was not even remotely arguable that the Court had jurisdiction to hear and determine the proceeding: the relief it sought was indisputably beyond the jurisdiction of the High Court. Having reached that conclusion she did not need to address the other grounds.[45]
[45]At [23].
Mr Judd argued that the jurisdictional point was not clear-cut, and the argument before us on the jurisdictional issues gives credence to that submission. We accept Mr Judd’s submission that the jurisdictional issues are ones on which there is no clear precedent and that the fact that the appellants ultimately lost in the High Court, and have now lost in this Court, does not mean that the jurisdictional argument was hopeless.
However, we do not think that alters the fact that the underlying claim meets a number of the Bradbury tests. First, it is a continuation of repeated proceedings alleging bias on the part of Venning J, in circumstances where all scrutiny of the position of Venning J has found the allegations to be unsubstantiated. Second, it is for an ulterior motive of preventing the Commissioner from obtaining the fruits of the judgment of the Supreme Court in Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue.[46] It is, as we mentioned earlier, part of a series of challenges. These have been repetitious in nature and have reached the point where they are improperly brought. In the circumstances, therefore, we consider that Katz J was right to award indemnity costs and we dismiss the appeal against the costs judgment.
Result
[46]Ben Nevis 2008, above n 5.
We dismiss the appeal.
Costs in this court
The reasons justifying the award of indemnity costs in the High Court could equally justify indemnity costs on this appeal. However, as noted earlier we accept that the jurisdictional arguments that were the focus of submissions in this Court were at least arguable. We also accept that counsel for the appellants conducted the appeals responsibly and cooperated in ensuring that the present appeal and others were dealt with efficiently. In the circumstances we believe justice would be done if costs were awarded in this court for a complex appeal on a band B basis plus usual disbursements. We certify for two counsel.
Solicitors:
Wynyard Wood, Auckland for Appellants
Crown Law Office, Wellington for Respondent
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