Faloon v Commissioner of Inland Revenue no.4 HC Tauranga CIV-2010-470-922

[2011] NZHC 657

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV-2010-470-922

UNDER  the Tax Administration Act 1994

BETWEEN  CLARENCE JOHN FALOON Plaintiff

ANDTHE COMMISSIONER OF INLAND REVENUE

Defendant

Hearing:         (On the papers) Judgment:       5 July 2011

JUDGMENT OF BREWER J

This judgment was delivered by me on 5 July 2011 at 2:30 pm pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

SOLICITORS

Crown Law (Wellington) for Defendant

(copy to Plaintiff in person)

COUNSEL JAL Oliver

FALOON V CIR (No.4)HC TAU CIV-2010-470-922 5 July 2011

[1]      On 7 March 2011 I delivered a judgment dismissing three interlocutory applications filed by the plaintiff.  In accordance with r 14.8(1) I ordered indemnity costs to the defendant.  I did so because I believed:1

... something must be done to bring home to Mr Faloon that a litigant who files multiple applications that have no chance of succeeding because they have no basis in law will be held accountable for wasting the Court’s time and putting the other party to trouble and expense.

[2]      On  18  April  2011,  following  a  representation  by  the  plaintiff,  I  gave Mr Faloon the opportunity, through r 14.8(2), to revisit the matter.  I directed that he could, no later than 13 May 2011, file and serve submissions:2

[a]       Giving  reasons  why  my  order  for  indemnity  costs  should  be reversed, discharged or varied; and/or

[b]       Why the amount of $3,126.08 claimed by the defendant is excessive.

[3]      I further ordered that in the absence of submissions filed by 13 May 2011 the plaintiff is to pay indemnity costs of $3,126.08 to the defendant.3

[4]      Mr Faloon did not file submissions by 13 May 2011.   Instead, on 27 May

2011, he filed a memorandum. This commences:

1.I am suing as plaintiff and as trustee of 2 Trusts described below.  I claim indemnity by section 23 of the Trustee Act 1956.  I believe the Court should not impose indemnity costs on me before the matters at issue in this proceeding have been decided under Tax law.  I have a duty  under Tax  Law,  and  as  a  trustee,  to  challenge  “Disputable decisions” made by the defendant adverse to the rights of the 2

Trusts, and adverse to the 13 beneficiaries of those 2 trusts.  The 3 interlocutory applications dismissed in judgment 3 March 2011 were

Interlocutory applications made by a trustee of 2 trusts in the manner

required by section 3 of the Tax Administration Act 1994...

[5]      If Mr Faloon believes that a trustee has a statutory indemnity against costs being awarded against him in civil proceedings then he is mistaken. A trustee, acting properly in bringing or defending civil proceedings, can often claim indemnity for

costs from the assets of his trust.  But that is all.

1      Faloon v CIR HC Tauranga CIV-2010-470-922, 7 March 2011 at [15].

2      Faloon v CIR (Minute) HC Tauranga CIV-2010-470-922, 18 April 2011, at [7].

3 Ibid, at [8].

[6]      As to the timing of the award of costs, r 14.8 requires costs to be fixed on opposed interlocutory applications as they are determined.   Special reasons must exist if they are not to be fixed.  Even if Mr Faloon is a trustee, and even if he has “a duty under Tax Law”, these factors would not amount to special reasons in this case. The three interlocutory applications he made (to try to prevent the defendant’s strike out application from being heard by challenging the Associate Judge’s right to make a timetable order setting the hearing date) were without foundation or merit.

[7]      At paragraph 4 of the memorandum Mr Faloon says:

I am unable to complete my submissions by 13 May 2011 for the reason that I have found it necessary to make a complaint dated 13 May 2011 to the Ombudsman in relation to Maria Deligiannis, the solicitor on the record in this proceeding, for the reason of letter dated 4th  May 2011 denying me access to “Official Information” held by Crown Law Office and held by the Commissioner of Inland Revenue.   Letter 4th May 2011, written in the proceeding with Crown Law File Reference IRD 035/2815, has not to date been filed in the proceeding.

[8]      Mr Faloon goes on to submit that Ms Deligiannis should file an affidavit in reply to affidavits of his requesting access to official information.  He submits that no award of costs should be made against him unless access to requested official information is provided.  He does not say why this should be so but does submit that

his complaint to the Ombudsman is a “special circumstance” in this proceeding.4

[9]      At paragraph 10 of his memorandum Mr Faloon submits:

In the circumstances that the solicitor on the record of this proceeding has allegedly failed to supply a legitimate request for access to Official Information held by Crown Law Office and by the Commissioner of Inland Revenue, I submit that the costs applied for by Crown Law Office should not be awarded under Part 14 of the High Court Rules.  Extra difficulty has been created to the plaintiff by the solicitor on the record for the defendant by letter dated 4th May 2011.

[10]     At paragraph 16 of his memorandum Mr Faloon applies for more time to make a fuller submission on this issue.

[11]     At paragraph 17 Mr Faloon submits that he was not aware that the three

interlocutory applications “were wholly unmeritorious and hopeless in their claim”.

4      Memorandum re costs dated 27 May 2011, at para 6.

[12]     I take paragraph 4 of the memorandum as being an application to extend, retrospectively,  the  deadline  of  13 May  2011  directed  by  me  in  my  Minute  of

18 April  2011.    I would  certainly not  do  so  if Mr Faloon  were represented by counsel.  The complaint to the Ombudsman has nothing to do with my costs order following the dismissal of Mr Faloon’s three interlocutory applications.  However, because Mr Faloon is representing himself and because he is clearly obsessed by the matters of history which underlie his repeated attempts to re-litigate the Courts’ findings in respect of them, I will allow him a latitude which would not otherwise be available.  I have, therefore, considered the matters he sets out in his memorandum.

[13]     However, nothing in the memorandum causes me to reconsider the order for indemnity costs.   The awarding of indemnity costs was not to punish Mr Faloon. They were asked for by the defendant against a long history of meritless litigation. In that context my view was that the defendant should not be out of pocket as a result of these further interlocutory applications.   I hoped that this award would bring Mr Faloon to a new realisation as to his responsibilities.  It would seem that this has not occurred.

[14]     At paragraph 19 of his memorandum he says:

For the above reasons I respectfully submit that the Award of Indemnity

costs should be reversed in my favour as an award of “increased costs” of

$3,126.08, under rule 14.6(3)(c) and rule 14.8(2) of the High Court Rules.

[15]     I take this to mean that because of the defendant’s counsel’s letter to him dated 4 May 2011 replying to an official information request, the defendant should pay Mr Faloon $3,126.08. That submission verges on the vexatious.

[16]     Accordingly, I decline to reverse, discharge or vary my order that the plaintiff pay to the defendant indemnity costs in the sum of $3,126.08.

Brewer J