Commissioner of Inland Revenue v Chesterfields Preschools Limited

IN THE COURT OF APPEAL OF NEW ZEALAND
CA607/2008
CA800/2008
CA271/2009
[2009] NZCA 253
BETWEENTHE COMMISSIONER OF INLAND REVENUE

Applicant

ANDCHESTERFIELDS PRESCHOOLS LIMITED

First Respondent
ANDD J HAMPTON

Second Respondent
ANDCHESTERFIELDS PARTNERSHIP

Third Respondent
ANDCHESTERFIELD PRESCHOOLS PARTNERSHIP

Fourth Respondent
ANDANOLBE ENTERPRISES LIMITED

Fifth Respondent

Hearing:16 June 2009
Appearances: E Aspey for Applicant

D J Hampton in person

Judgment:16 June 2009

JUDGMENT OF THE COURT

AInterim orders for stay of execution in terms of the application until 18 August 2009.
BApplication for permanent stay to be listed in the Miscellaneous Motions list for 18 August 2009.
CCosts reserved.

REASONS OF THE COURT
(Given by Hammond J)
[1]       We have before us an application for an interim order for a stay of execution in relation to three consolidated tax appeals, CA607/2008, CA800/2008 and CA271/2009. Certain orders as set out in paragraph 1 of the application were made by Fogarty J in the underlying proceedings in the High Court
[2]       The application is made because, absent such a stay, it is said that the appeals will be rendered nugatory in that the Commissioner would be required to give irreversible effect to those directions and orders; the respondents are probably insolvent and there is no security for possible repayment of the costs to be paid; and third parties are not prejudiced.
[3]       We are satisfied that the appeals raise arguable and important issues of principle as to taxation law; and that the orders are necessary to preserve the status quo and to protect the public revenue, pending determination of the principal stay application.
[4]       Mr Hampton appeared in person before us today and in the particular circumstances, and having regard to the practicalities of the matter, he did not object to an interim order being made today although, of course, he reserves his or counsel’s position in opposing a permanent stay in due course.
[5]       There will therefore be interim orders in terms of the application until 18 August 2009. The application for a permanent stay is to be listed in the Miscellaneous Motions list for that day. For the benefit of the Registrar, no more than one hour should be required for that matter. Costs are reserved on today’s application.
[6]       I add that the panel has indicated to Mr Hampton today that consideration needs to be given to whether he can represent the companies on that occasion. The normal rule would be that counsel should be instructed.
Solicitors:
Crown Law Office, Wellington

CaseChat Overview and Summary

The Court of Appeal of New Zealand heard an application from the Commissioner of Inland Revenue for an interim order to stay the execution of certain orders made in three consolidated tax appeals against Chesterfields Preschools Limited and related entities. The appeals related to disputes over tax assessments and penalties. The Commissioner sought a stay of execution of the orders pending the determination of an application for a permanent stay, arguing that without such a stay, the appeals would be rendered ineffective as the Commissioner would be required to give irreversible effect to the orders, the respondents were likely insolvent, and there was no security for possible repayment of the costs. The court considered the arguable and important issues of principle involved in the appeals and the necessity of preserving the status quo and protecting the public revenue pending the determination of the principal stay application.

The court found that the application raised arguable and important issues of principle as to taxation law and that the orders were necessary to preserve the status quo and to protect the public revenue, pending determination of the principal stay application. The court also noted that the respondent, D J Hampton, did not object to an interim order being made in the particular circumstances, although he reserved his position in opposing a permanent stay in due course. The court made interim orders in terms of the application until 18 August 2009 and listed the application for a permanent stay in the Miscellaneous Motions list for that day. The court also indicated that consideration needed to be given to whether Mr Hampton could represent the companies on the occasion of the permanent stay application, with the normal rule being that counsel should be instructed.

The court reserved costs on the application for an interim order. The court's decision to grant an interim stay of execution of the orders was based on the arguable and important issues of principle involved in the appeals and the necessity of preserving the status quo and protecting the public revenue pending the determination of the principal stay application. The court's decision also took into account the particular circumstances of the case and the fact that the respondent did not object to an interim order being made. The court's decision to list the application for a permanent stay in the Miscellaneous Motions list for a specific date provided the parties with a clear timeline for the resolution of the stay application.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established