Commissioner of Inland Revenue v Muir

[2015] NZHC 1573

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-1132 [2015] NZHC 1573

BETWEEN

THE COMMISSIONER OF INLAND

REVENUE Applicant

AND

GARRY ALBERT MUIR Respondent

CIV-2011-404-4197

BETWEEN  THE COMMISSIONER OF INLAND REVENUE DEPARTMENT

Applicant

ANDACCENT MANAGEMENT LIMITED First Respondent

ANDBEN NEVIS FORESTRY VENTURES LIMITED

Second Respondent

Continued overleaf …

On the papers

Appearances:

RL Roff and RA Herne for Commissioner of Inland Revenue GA Muir in Person and for First and Seventh to Eleventh Respondents in CIV-2011-404-1132

GJ Judd QC for Second, Third, Fourth and Sixth Respondents in CIV-2011-404-4731

Judgment:

7 July 2015

COSTS JUDGMENT OF TOOGOOD J

This judgment was delivered by me on 7 July 2015 at 3:00 pm

Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

THE COMMISSIONER OF INLAND REVENUE v MUIR [2015] NZHC 1573 [7 July 2015]

AND

BRISTOL FORESTRY VENTURE

LIMITED
Third Respondent

AND

CLIVE RICHARD BRADBURY Fourth Respondent

AND

GARRY ALBERT MUIR Fifth Respondent

AND

GREGORY ALAN PEEBLES Sixth Respondent

AND

HILLVALE HOLDINGS LIMITED Seventh Respondent

AND

LEXINGTON RESOURCES LIMITED Eighth Respondent

AND

PETER ARNOLD MAUDE Ninth Respondent

AND

REDCLIFFE FORESTRY VENTURE LIMITED

Tenth Respondent

AND

WAIKATO RESIDENTIAL PROPETIES LIMITED

Eleventh Respondent

Introduction

[1]      This judgment addresses a submission by unsuccessful respondents that the Court should make a costs order which departs from the usual rule that the liability of each of two or more parties ordered to pay costs is joint and several.1

[2]      In a judgment dated 31 October 2013,2 the Commissioner of Inland Revenue was granted leave to bring an application for transfer and consolidation of proceedings by way of originating application under Part 19 of the High Court Rules.  It was ordered that challenge proceedings under the Tax Administration Act

1994 (“TAA”) should be transferred from the Taxation Review Authority to this Court and consolidated with each other and with proceedings already before the Court.  Consequential directions included providing a timetable for the exchange of costs memoranda to be completed by 12 December 2013.

[3]      The Commissioner filed a costs memorandum on 21 November 2013 seeking an order for costs in a sum which had been agreed.  Counsel for the Commissioner disclosed, however, that the parties had been unable to agree that the liability of the unsuccessful respondents for costs should be on a joint and several bases.

[4]      In a memorandum dated 4 December 2013, Mr Judd QC argued for the second, third, sixth and fourth respondents in CIV-2011-404-4731 (“the –4731 proceeding”)   that   the   costs   burden   should   be  apportioned   equally   between

13 responding parties.

[5]      The  costs  memoranda  were  not  referred  to  me  for  consideration  until

29 May 2015 when it appeared to Justice Faire, while he was dealing with other matters related to the proceeding, that no costs orders had been made in respect of the transfer and consolidation application.  I am unable to explain the delay but it is, of course, greatly regretted.

[6]      The short point at issue is whether a single costs award should be made against all respondents jointly and severally or whether costs should be apportioned

1      High Court Rules, r 14.14.

2      Commissioner of Inland Revenue v Muir [2013] NZHC 2881.

severally  between  each  of  the  respondents  to  the  Commissioner’s  originating

application.

[7]      Dr Muir has not filed a costs memorandum on behalf of the other respondents or himself.

Relevant background

[8]      Rule 14.14 of the High Court Rules provides that the liability of each of two or more parties ordered to pay costs is joint and several, unless the Court otherwise directs.   The –4731 proceeding was an originating application to transfer 66 tax assessment challenges by 11 challengers from the Taxation Review Authority to this Court and to consolidate those proceedings and other proceedings which had already been transferred to this Court.   The applicant also sought consolidation with proceedings  concerning  appeals  by  Dr Muir,  the  fifth  respondent  in  the  –4731 proceeding and the appellant in CIV-2011-404-1132 and CIV-2011-404-4197 (“the appeals”).

[9]      Significantly, the solicitor for all of the responding parties filed a single notice of opposition to the Commissioner’s application in the –4731 proceeding. Dr Muir filed a notice of opposition as appellant in the appeals when directed to do so by the Court.  The respondents opposed the originating application on identical grounds.  Although the second, third, fourth and sixth respondents were separately represented at the beginning of the hearing by Mr Gedye, they adopted Dr Muir’s written submissions on behalf of the first and seventh to eleventh respondents, and Mr Gedye was excused from further participation in the hearing.

[10]     On the facts and on questions of law there is considerable overlap between each respondent’s challenge and there is nothing in the conduct of the –4731 proceeding by any respondent which differentiates that respondent’s position from that of any other or from that of Dr Muir as appellant.

[11]     It is not insignificant that, in other related proceedings, Dr Muir made an application, acting in person, for an order that the Crown Law Office should cease

acting for the Commission in the proceedings.  The other respondents adopted the same position and actively supported the application in written and oral submissions. The application was dismissed by Woodhouse J,3 who awarded indemnity costs on a joint  and  several  basis  against  all  respondents.4      Dr Muir  and  all  of  the  other respondents were parties to an unsuccessful appeal against the judgments of Woodhouse J.5    The Court of Appeal also awarded indemnity costs, for which all parties were jointly and severally liable.

The submissions

[12]     On these facts, Ms Roff argues that there is no reason for the Court to direct that the default position in r 14.14, of joint and several liability for costs, should not apply.

[13]     For the second, third, fourth and sixth respondents, Mr Judd QC argues first that, although the Commissioner sought consolidation of the  proceedings in the application  which  was  considered  by the Court,  the interlocutory proceeding in which the application to transfer and consolidate the multiplicity of proceedings in the Taxation Review Authority was made should not have been brought as a single application.  Mr Judd seeks to persuade the Court, at this stage, that by reference to the former s 138N(2)(a)(ii) of the TAA, under which the transfer was sought, the Commissioner was not entitled to file a single application without the leave of the Court and that a separate application should have been made in respect of each of the challenges to the assessments at the heart of the cases.   Such leave was never obtained.

[14]     Mr Judd says that, at the time of the filing of the application and its hearing, the  respondents  acquiesced  in  the  Commissioner’s  approach  “because  it  didn’t matter and was the approach that was convenient for everyone”.  Mr Judd submits,

however, that now that the Commissioner is asking that the costs liability be joint

3      Accent Management Limited v Commissioner of Inland Revenue [2012] NZHC 1430.

4      Commissioner of Inland Revenue v Accent Management Limited [2012] NZHC 2389.

5      Accent Management Limited v Commissioner of Inland Revenue [2013] NZCA 155, [2013] 3

NZLR 374.

and several, it does matter because, as is of concern to the respondents for whom he appears, those respondents could be made to pay the whole of the costs.

Discussion

[15]     I am not persuaded that the respondents’ highly technical afterthought has any merit and it is far too late to raise it now, in any event.   The respondents acquiesced in what was a sensible, practical approach to getting before the Court the identical  arguments  for  the  transfer  and  consolidation  of  a  multitude  of  tax assessment challenges, which have a common origin and history and which raise identical points of law.

[16]     The single application was administratively efficient for the Court, which operates under rules intended to secure the just, speedy, and inexpensive determination of any proceeding.6     It also provided a convenient and cost-saving approach for the parties.   In particular, it saved the 11 challengers, who were represented by one solicitor, the additional expense and inconvenience of having to file  and  argue  separate  notices  of  opposition  to  separate  applications  which,

inevitably, would have duplicated the grounds.  I do not doubt that, had the technical argument now advanced been made when the originating application was first put before the Court, the Court would have granted such leave for a single application as might have been required.

[17]     The   proceeding   was   commenced   as   a   single   application   against   11 respondents.  The respondents must be taken to have known at the time they were served with the transfer application that the effect of r 14.14 would be that any liability of the respondents to pay costs would be joint and several unless the Court considered that would  be unjust.   I adopt, with respect, the following  pertinent observations of Lord Neuberger, President of the UK Supreme Court:7

… by becoming a party to legal proceedings in this jurisdiction, a person is brought within a system governed by rules of court, which carry with them the potential for being rendered legally liable for costs, subject of course to the discretion of the court.

6      High Court Rules, r 1.2.

7      Re Nortel GmbH [2013] UKSC 52, [2014] AC 209 at [89].

[18]     The Commissioner is not seeking any unusual order as to costs and she is entitled to rely on the rule; it is for the respondents to persuade the Court that it should direct otherwise.

[19] Given the background to the application, and the unified opposition efficiently presented by all of the respondents, there is no arguable basis for departing from the default principle under the rule. That view reflects the position taken in other, related proceedings in this Court and the Court of Appeal, referred to above at [11].

Order

[20]     Accordingly, I order that Dr Muir and the other respondents in the CIV-2011-

404-4731 proceeding shall pay to the Commissioner, in respect of the application to transfer and consolidate the proceedings, costs on a category 2B basis in the sum of

$17,492.50 and disbursements of $7,257.11.

………………………………

Toogood J