Dowden v Commissioner of Inland Revenue
[2020] NZCA 152
•8 May 2020 at 9.30 am
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA624/2019 [2020] NZCA 152 |
| BETWEEN | JOHN ALFRED DOWDEN |
| AND | COMMISSIONER OF INLAND REVENUE |
| Counsel: | Appellant in person |
Judgment: | 8 May 2020 at 9.30 am |
JUDGMENT OF GILBERT J
AThe application for review of the Deputy Registrar’s decision is declined.
BSecurity for costs in the sum of $9,560 is to be paid no later than 29 May 2020.
____________________________________________________________________
REASONS
The Commissioner of Inland Revenue (the Commissioner) assessed Mr Dowden for substantial sums of unpaid PAYE, GST and income tax in the period from April 2003 to November 2011 in respect of two business said to have been conducted by him. Mr Dowden challenged the assessments claiming he was not involved in either business in the relevant tax periods.
The challenge was heard over five days in July 2018 before the Taxation Review Authority. Mr Dowden was represented by counsel. In a reserved judgment delivered by Judge A A Sinclair on 30 August 2018, Mr Dowden’s challenge was dismissed and the Commissioner’s assessments were confirmed.[1] The Judge found Mr Dowden not to be a reliable or credible witness and she rejected his explanation of the arrangements for the operation of the principal business as being implausible.[2] For example, employees’ wages were paid from bank accounts held in Mr Dowden’s name or under his control. Invoices were issued under his GST number and included a direction to customers to make payments into his accounts. He also continued to apply as employer for certificates of approval for the employees of the business and held himself out as the employer.[3] The Judge was satisfied that during the relevant period, Mr Dowden carried on the business as its sole trader.[4] The Judge noted that Mr Dowden did not produce any contemporaneous documentation or call any witnesses to support his claims to the contrary.[5]
[1]XXX v Commissioner of Inland Revenue [2018] NZTRA 7.
[2]At [24].
[3]At [36]–[37].
[4]At [46].
[5]At [32].
Mr Dowden appealed to the High Court. He was again represented by counsel. His appeal was dismissed by Peters J in a judgment delivered on 24 October 2019.[6]
[6]Dowden v Commissioner of Inland Revenue [2019] NZHC 2729.
Mr Dowden, who is no longer legally represented, filed a notice of appeal against the High Court decision on 29 November 2019. No grounds of appeal are identified. Mr Dowden simply asserts that the High Court judgment resulted in a serious miscarriage of justice.
Security for costs was fixed at $7,060 in terms of r 35 of the Court of Appeal (Civil) Rules 2005. Mr Dowden then applied, on 23 December 2019, for an order dispensing with security for costs. On 22 January 2020, the Commissioner cross‑applied for an order increasing security for costs by $2,500 to $9,560.
After carefully reviewing all material filed, the Deputy Registrar declined Mr Dowden’s application to dispense with security for costs and granted the Commissioner’s cross-application for increased security for costs.
Mr Dowden now applies for a review of the Deputy Registrar’s decision.
Should security for costs have been dispensed with?
Mr Dowden has not applied for legal aid and it appears he would not qualify for it even if his appeal had merit. He has substantial equity in his property in Auckland. This has an estimated value of $1.662 million against which there are outstanding bank loans together totalling approximately $244,000. Mr Dowden receives a benefit of just over $400 per week and he earns another $500 per week from part-time work.
Mr Dowden asserts that apart from the disputed debt to the Commissioner, he has other liabilities totalling $1.3 million described as “mortgage, debts, matrimonial claim”. However, he provides no other details or evidence to substantiate these liabilities other than bank statements showing the outstanding bank loans referred to above.
I agree with the Deputy Registrar that Mr Dowden has not demonstrated that he is impecunious and cannot afford to pay security for costs.
While it is generally not possible to assess the merits of an appeal at such a preliminary stage, Mr Dowden is likely to face formidable obstacles in seeking to overturn the concurrent factual findings made in the courts below which appear to be amply justified by the evidence detailed in the judgments. The evident weakness of Mr Dowden’s appeal is underscored by the fact he has not even attempted to point to any error in the judgment under appeal. Given the strong credibility findings, the evidence supporting the Commissioner’s position as detailed in the judgments and the lack of any contrary documentary evidence adduced by Mr Dowden at the hearing before the Taxation Review Authority, it appears that his appeal has very little prospect of succeeding.
In the circumstances, I do not consider it would be right to require the Commissioner to defend the judgment under appeal without the usual protection of security for costs. I consider the Deputy Registrar was correct to decline Mr Dowden’s application to dispense with security for costs.
Should security for costs have been increased?
The Deputy Registrar concluded that increased security was warranted of Mr Dowden’s past procedural misconduct:
[21] The affidavit filed by the Commissioner in support of this application show three separate instances of Mr Dowden failing to pay the Commissioner agreed or unchallenged debts. Mr Dowden has not paid the costs and disbursements that the parties agreed upon following the High Court decision under appeal. He also has not paid costs arising from a default debt judgment in April 2019. That default judgment arose from Mr Dowden’s failure to pay anything towards the amount of tax that the parties agreed in April 2017 was owing. Mr Dowden has still made no payments towards that default judgment debt.
There is clearly a high risk that Mr Dowden will not meet any award of costs made against him if his appeal fails. For the reasons already given, I consider the appeal is also without merit. In these circumstances, I agree that the increased amount set as security for costs was justified.
Result
The application for review of the Deputy Registrar’s decision is declined.
Security for costs in the sum of $9,560 is to be paid not later than 29 May 2020.
Solicitors:
Crown Law Office, Wellington for Respondent
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