Commissioner of Inland Revenue v John Curtis Developments Limited

[2015] NZHC 335

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2013-485-9686 [2015] NZHC 335

BETWEEN

COMMISSIONER OF INLAND REVENUE

Appellant

AND

JOHN CURTIS DEVELOPMENTS LIMITED

Respondent

In Chambers:           On papers

Judgment:                3 March 2015

JUDGMENT OF THE HON JUSTICE KÓS (Costs)

[1]      The taxpayer persuaded the Taxation Review Authority that development payments received from the purchaser of its retail shopping centre were capital sums, and not taxable.  Before me, however, the Commissioner succeeded in its appeal.1   I held that the payments were revenue, and therefore taxable.

[2]      Now the question of costs falls to be determined.  The Commissioner seeks costs of $14,527, and disbursements of $1,207.26, based on scale 2B.  There is no argument about the calculation. But the unsuccessful taxpayer says that costs should lie where they fall here.  That is because this is an appeal from an Authority which has a no costs rule, and the parties had mixed results before me (the appellant’s

appeal on shortfall penalties having failed).

1      Commissioner  of  Inland  Revenue  v  John  Curtis  Developments  Ltd  [2014]  NZHC  3034,

28 November 2014.

[3]      In Auckland Gas Co Ltd v Commissioner of Inland Revenue2  the Court of

Appeal said:3

It is difficult to justify drawing on a no-costs rule, for what in most Taxation Review Authority cases are relatively small-sum tax disputes, in determining the proper approach to costs in the dozen or so first instance cases heard in the High Court each year where inevitably the stakes tend to be much higher.

[4]      Although that case was not an appeal from the Authority, I see no principled basis for extending the no costs regime in the Authority to appeals in this Court.  No statutory or judicial authority in support of that approach was cited.   Neither necessary implication nor substantial procedural policy reasons command such variation from orthodoxy.   Had the Commissioner failed before me, the taxpayer would have been the first to have sought costs.  And it would then have deserved them.

[5]      In this case the appeal succeeded, and costs should follow the event in the ordinary way in this Court.  Although the Commissioner failed on the shortfall penalties argument, that was very much a secondary issue in the case.  Little time was spent on it.

Result

[6]      The Commissioner will have costs of $14,527, together with disbursements of $1,207.26.

Stephen Kós J

Solicitors:

Crown Law, Wellington for Appellant

Duncan Cotterill, Wellington for Respondent

2      Auckland Gas Co Ltd v Commissioner of Inland Revenue [1999] 2 NZLR 409 (CA).

3      At 416.