Blackman v Plant & Platform Consultants Limited HC NWP CIV-2008-443-167

[2008] NZHC 2288

IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY

CIV-2008-443-167

BETWEEN  STEPHEN HUGH BLACKMAN Applicant

ANDPLANT & PLATFORM CONSULTANTS LIMITED

First Respondent

ANDCOMMISSIONER OF INLAND REVENUE

Second Respondent

Hearing:         30 April 2008

Appearances: Applicant (together with McKenzie Friend G Israel) in Person

L P Wallace for the First Respondent
J S Gurnick for the Second Respondent

Judgment:      30 April 2008

JUDGMENT OF DUFFY J

This judgment was delivered by Justice Duffy on 30 April 2008 at 5.30 pm, pursuant to

r 540(4) of the High Court Rules

Registrar/Deputy Registrar
Date:

To:            S H Blackman C/- 22A Holsworthy Road Vogeltown New Plymouth, Applicant

Solicitors:   Govett Quilliam Private Bag 2013 New Plymouth for the First Respondent

Auld Brewer Mazengarb and McEwen P O Box 738 New Plymouth 4340 for the Second Respondent

BLACKMAN V PLANT & PLATFORM CONSULTANTS LTD AND ANOR HC NWP CIV-2008-443-167 30

April 2008

[1]      The  applicant  Mr  Blackman  appears  for  himself  with  the  assistance  of Gordon Israel as a McKenzie friend.  Mr Blackman seeks an interim injunction to prevent the first respondent from directing to the Commissioner of Inland Revenue (Commissioner)  funds  that  the  first  respondent  would  otherwise  be  paying  to Mr Blackman.    The  Commissioner  has  invoked  his  powers  under  s  157  of  the Tax Administration Act and required the direction to be made.  The Commissioner contends that the directed funds are deductions that arise from tax defaults on the part of Mr Blackman.

[2]      Mr Blackman contends that the assessments on which the Commissioner relies to establish the tax defaults for deduction are invalid.  He accepts that under s 157 the Commissioner is entitled to require deductions based on valid assessments. The reasons Mr Blackman gives for the assessments in his case being invalid relate to the want of form of the assessments and the Commissioner’s failure on receipt of a notice of response from Mr Blackman to advise him that the notice  was not accepted.

[3]      The challenge to  the validity of  the  assessments  is  made  as  a  collateral challenge in the context of the injunction application.   I have determined that the application will be treated as both a full application for injunction pursuant to an originating application as well as an interim injunction.

[4]      The deduction is to take effect from tomorrow.   The Commissioner is not treating Mr Blackman as an employee of the first respondent.  This means that the deduction will be for the entire amount of funds the first respondent was to pay to Mr Blackman and not for the more limited amount s 157(3) allows to be deducted from the wages/salaries of employed persons.  The proposed deduction is the sole source of funding Mr Blackman receives from the first respondent.  There was no argument before me as to whether or not Mr Blackman was in fact an employee of the first respondent.  If he was this would restrict the Commissioner to deducting the amount permitted in s 157(3).

[5]      The  accepted  framework  for  determining  an  application  for  an  interim injunction is the test enunciated by the House of Lords in American Cyanamid Co v Ethicon Ltd [1975] AC 396:

i)        Is there a serious question to be tried in the proceeding; and ii)          Where does the balance of convenience lie?

[6]      The test is an aid to determining where overall justice lies.  In every case the Judge has finally to stand back and ask himself or herself that question.   If the balance of convenience overwhelmingly or very clearly favours one party, it will usually be right to be guided accordingly.  However, if the rival considerations are still fairly evenly poised, regard to the relative strengths of the cases of the parties will usually be appropriate: Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 140 (CA).

Is there a serious question to be tried?

[7]      Because of the urgent nature of the hearing, s 114 of the Act was not drawn to my attention in the course of the hearing.   None of the parties have had an opportunity to address its effect.

[8]      Section 114 affects the jurisdiction of this Court to deal with complaints that the Commissioner has failed to follow proper process and for that reason his assessments are invalid.  Section 114 reads:

114     Validity of assessments

An assessment made by the Commissioner is not invalidated—

(a)       through a failure to comply with a provision of this Act or another

Inland Revenue Act; or

(b)      because the assessment is made wholly or partially in compliance with—

(i)       a  direction  or  recommendation  made  by  an  authorised officer on matters relating to the assessment:

(ii)      a current policy or practice approved by the Commissioner that is applicable to matters relating to the assessment.

[9]      In PLM Software Ltd v Commissioner of Inland Revenue HC WN CP124/00

10 August 2001, Heron J held at [13] that s 114 “would seem to cut the ground completely from under the Plaintiff” where the plaintiffs claimed that the Commissioner’s failure to follow the statutory dispute resolution procedure as provided by Part 1VA of the Act.  Heron J further held at [16] that s 114 reinforced the “Somewhat inviolable nature of an assessment, or the ability to make it”.  To like effect   is   the   judgment   in   Sweetline   Distributors   Limited   and   Ors   v   The Commissioner   of   Inland   Revenue   HC   WN   CIV-2001-485-712,   CP107/01, Goddard J.

[10]     The entire thrust of Mr Blackman’s arguments were that the assessments were invalid as they did not follow the proper form for assessment and issuing notice of notice.  Therefore, they could not form a proper basis for the Commissioner to commence  deductions  through  use  of  the  s  157  power.    Section  114  and  the judgment in PLM Software Ltd v Commissioner of Inland Revenue seem to me to provide a complete answer to Mr Blackman’s argument.  Since I have found he is precluded from challenging the validity of the assessments and s 109 precludes any challenge to correctness of the assessments save under the provision provided in Part 8 or Part 8A, it follows that there is no serious question for this Court to try.

Balance of convenience

[11]     Whilst I understand from the evidence that the refusal to grant an interim injunction will result in loss of the source of Mr Blackman’s income and whilst in terms of the balance of convenience test I would have been of a mind to grant some form of interim relief, the very clear barrier that s 114 presents to this Court intervening on the basis of a challenge to the validity of the Commissioner’s assessments and consequential effect on the authority to deduct under s 157 leave me no basis for interfering with the Commissioner’s exercise of his statutory powers.

[12]     It follows that the application for an interim injunction must be declined. However, this judgment has been issued under urgency.  The legal findings I have

made for the purposes of determining the interim injunction should not be seen as binding or in any way affecting the substantive hearing, at which time the parties and the Court will have more time to reach a considered position.

Duffy J