Commissioner Of Inland Revenue HC Auckland CRI 2007-404-000374
[2008] NZHC 2561
•5 September 2008
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CRI 2007-404-000374
COMMISSIONER OF INLAND REVENUE
Appellant
v
NEIL EVANS
Respondent
Hearing: 5 September 2008
Appearances: M Ruffin for the Appellant
J Katz QC and J D Turner for the Respondent
Judgment: 5 September 2008 at 4.30pm
JUDGMENT OF WYLIE J
[Leave to appeal to the Court of Appeal]
This judgment was delivered by Justice Wylie on 5 September 2008 at 4.30pm pursuant to
r 540(4) of the High Court Rules
Registrar/Deputy Registrar
Date:
Solicitors/Counsel:
McVeagh Fleming, P O Box 300 844, Albany 0752
Crown Solicitor, P O Box 2213, Auckland
J Katz QC, Bankside Chambers, P O Box 1900, Shortland Street, Auckland 1140
COMMISSIONER OF INLAND REVENUE V N EVANS HC AK CRI 2007-404-000374 5 September 2008
[1] The respondent seeks leave to appeal to the Court of Appeal from my judgment which was delivered on 2 July 2008.
[2] The application is made pursuant to s 144 of the Summary Proceedings Act
1957. That section provides as follows:
144 Appeal to Court of Appeal
(1) Either party may, with the leave of the [High Court], appeal to the Court of Appeal against any determination of the [High Court] on any case stated for the opinion of the [High Court] under section 107 of this Act or against any determination of the [High Court] on a question of law arising in any general appeal:
Provided that, if the [High Court] refuses to grant leave to appeal to the Court of Appeal, the Court of Appeal may grant special leave to appeal.
(2) A party desiring to appeal to the Court of Appeal under this section shall, within 21 days after the determination of the [High Court], or within such further time as that Court may allow, give notice of his application for leave to appeal in such manner as may be directed by the rules of that Court, and the [High Court] may grant leave accordingly if in the opinion of that Court the question of law involved in the appeal is one which, by reason of its general or public importance or for any other reason, ought to be submitted to the Court of Appeal for decision.
(3) Where the [High Court] refuses leave to any party to appeal to the Court of Appeal under this section, that party may, within 21 days after the refusal of the [High Court] or within such further time as the Court of Appeal may allow, apply to the Court of Appeal, in such manner as may be directed by the rules of that Court, for special leave to appeal to that Court, and the Court of Appeal may grant leave accordingly if in the opinion of that Court the question of law involved in the appeal is one which, by reason of its general or public importance or for any other reason, ought to be submitted to the Court of Appeal for decision.
[3] It was common ground between counsel that the leading authority on the application of s 144 is the decision of the Court of Appeal in R v Slater [1997] 1
NZLR 211. That case concerned an application for special leave pursuant to s
144(3), the High Court having earlier refused leave, however the Court of Appeal set out the criteria that must be satisfied if leave to appeal under s 144(2) is to be granted. The Court noted at 215 as follows:
Thus, there must be:
(i) a question of law;
(ii) the question must be one which, by reason of its general and public importance or for any other reason, ought to be submitted to the Court of Appeal; and
(iii) the Court must be of the opinion that it ought to be so submitted. It is probably neither necessary nor desirable, however, to break the requirements of the subsection down in this way. Such an analysis merely serves to highlight the essential elements which must be present before leave to appeal can be granted. It is sufficient to pose the statutory question: is there a question of law which, by reason of its general or public importance or for any other reason, ought to be submitted to this Court for decision.
[4] The notice of application lodged by the respondent sought leave to appeal in respect of two questions. In the submissions filed prior to the hearing, the respondent sought leave to appeal three questions. At the hearing and following discussion with counsel, these were refined to one question, namely:
Can a director who is a sole director of a company and by whose conduct the company is convicted of an offence under s 143A(1)(d) of the Tax Administration Act 1994 (“the Act”) also be convicted of an offence under s
148(1) of the Act in circumstances where the conduct is helping or assisting, or is it a necessary requirement that the individual charged deliberately assisted the primary offender, and where no charge is brought against him/her under s 147(1) of the Act?
[5] For the respondent, Mr Katz QC noted that my judgment overturned the judgment of the District Court, and the case did not involve concurrent findings at first instance and on appeal. While this fact of itself could not justify the grant of leave to appeal, he went on to note that issues of aiding and abetting in the tax context have received limited attention from the Courts. He pointed out that there are a limited number of High Court authorities, and only one decision of the Court of Appeal – R v Gill (1999) 19 NTC 15, 526 – which deal with the issue in the tax context. He noted that Gill dealt with a husband/wife situation, and not the company/sole director situation which is in issue here.
[6] Mr Katz accepted that the second question posed in the case stated, and answered in my judgment at paragraphs [38] to [44] was dependent upon the facts found by the District Court Judge. However, he referred to the findings in paragraph [42] of my judgment, and specifically my finding that the respondent had helped or assisted the company, ACE Toolmakers Limited, in committing the offences, because he made the decisions each month not to pay the PAYE to the appellant.
Mr Katz submitted that this threw up a question of law – does help and assistance alone suffice for a conviction under s 148(1) – or is it necessary that the respondent should have deliberately assisted the company as the primary offender. He referred to paragraph [22] in Gill.
[7] Mr Ruffin asserted that read in context, it was clear from the case stated and from my judgment that the respondent had deliberately assisted the company in committing the offences. He submitted that any appeal would be futile.
[8] Having considered the matter, I accept Mr Katz’s submission that there is a question of law involved – namely whether it is a necessary requirement that the sole director of a company have deliberately assisted the primary offender.
[9] This question is in my view one of general and public importance. One- person companies are common in this country. Decisions in such companies are usually made and implemented by the sole director. If the company breaches relevant tax laws through the actions of its sole director, can the director also be convicted of aiding and abetting the company in the commission of the primary offence and, if so, in what circumstances? There are no other High Court decisions which have directly considered the application of s 148 of the Tax Administration Act 1994. There are a limited number of earlier decisions of this Court. However they were considering an earlier provision – s 416(1)(e) of the Income Tax Act 1976. While that subsection was in substantially similar terms, it may be arguable that the new statutory regime can be construed as a code and that the effect is to preclude separate liability on the part of a director of a one-person company. The Court of Appeal has not directly considered s 148 in the company context, where the alleged aider and abetter is the sole director of a company in circumstances where that company is the primary offender.
[10] In my view, the question posed is one of law, it is of general and public importance, and it ought to be submitted to the Court of Appeal for consideration.
[11] Leave to appeal to the Court of Appeal is granted. The question of law for the Court of Appeal is that detailed in paragraph [4] above. Costs are reserved.
Wylie J
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