Hardie v Commissioner of Inland Revenue

[2010] NZCA 389

IN THE COURT OF APPEAL OF NEW ZEALAND

CA325/2010
CA326/2010
[2010] NZCA 389

BETWEENJOHN DAVID HARDIE
Applicant

ANDCOMMISSIONER OF INLAND REVENUE
Respondent

Hearing:17 August 2010

Court:O'Regan  P, Arnold and Ellen France JJ

Counsel:Appellant in person
C K Wood and T Gillbanks for Respondent

Judgment:23 August 2010 at 11.30 am 

JUDGMENT OF THE COURT

AThe application for special leave to appeal in CA325/2010 is declined.  Accordingly, the application to amend the grounds of appeal and the application for a stay (CA326/2010) are also declined.

BThe applicant must pay the respondent costs for a standard application on a band B basis and usual disbursements.

REASONS OF THE COURT

(Given by Arnold J)

Introduction

[1]       The applicant, Mr Hardie, makes three associated applications in relation to two decisions of Stevens J.  In the first decision, Stevens J entered judgment against Mr Hardie for unpaid taxes and penalties amounting to $10,335,160.32.[1]  In the second, Stevens J refused him leave to appeal from that decision and refused to grant a stay so that he could pursue an appeal to this Court.

[1]Hardie v Commissioner of Inland Revenue HC Auckland CIV-2009-404-1785, 19 March 2010.

[2]       Mr Hardie applies for:

(a)Special leave to appeal against Stevens J’s decision entering judgment against him for the outstanding tax (CA325/2010);

(b)       Leave to amend his grounds of appeal in CA325/2010; and

(c)A stay of execution until the appeal and an associated judicial review application are determined (CA326/2010). 

Background

[3]       Mr Hardie did not file tax returns between 31 March 1992 – 30 April 2006.  The Commissioner of Inland Revenue (the Commissioner) issued default tax assessments under s 106 of the Tax Administration Act 1994 (the Act), with the result that Mr Hardie was assessed as owing unpaid tax and penalties amounting to $10,341,410.32.  Mr Hardie did not challenge the assessments either through statutory dispute resolution procedures or before the Taxation Review Authority.  

[4]       The Commissioner brought proceedings in the District Court to recover the debt.  The proceedings were served on Mr Hardie on 14 August 2006 but he took no steps to defend them.  Accordingly Judge Taumaunu entered judgment by default for the Commissioner.  After the judgment was sealed, Mr Hardie was successful in having the decision set aside.  There was then a defended hearing before Judge Recordon on 21 May 2007, at which Mr Hardie appeared in person.  The Judge reserved his decision.

[5]       Soon after the May 2007 hearing, Mr Hardie advised the District Court he was preparing judicial review proceedings.  On 17 April 2007 Judge Recordon stayed the proceedings in the District Court pending the outcome of the judicial review proceedings.  On 11 June 2007 Mr Hardie filed those proceedings, alleging the Commissioner had made the default tax assessments unreasonably.  He sought a confidentiality order in connection with those proceedings, which was declined.[2]  In July 2008, over a year after the judicial review proceedings were instituted, Mr Hardie discontinued them.  Judge Recordon advised in a minute dated 3 November 2008 that the stay was rescinded and a decision would be issued in respect of the defended hearing in due course.

[2]      Hardie v Commissioner of Inland Revenue HC Auckland CIV-2007-404-3354, 28 June 2007.

[6]       Mr Hardie then wrote to the District Court, advising that he intended to apply for a further stay of proceedings while he initiated another set of judicial review proceedings in the High Court. He did not, however, file any such proceedings. 

[7]     On 4 March 2009 Judge Recordon delivered judgment in favour of the Commissioner.[3]  He held that Mr Hardie’s failure to supply the Commissioner with the information required or to use proper challenge procedures meant the Commissioner was entitled to make the default assessments.  There had to be provision for the assessment of tax in the absence of voluntary compliance by the taxpayer, even though the assessment would necessarily involve informed estimates.[4]

[3]      Commissioner of Inland Revenue v Hardie DC Waitakere CIV-2006-090-1540, 4 March 2009.

4 At [24].

[8]       Mr Hardie appealed Judge Recordon’s decision to the High Court.  At the hearing on 9 March 2010, Mr Hardie claimed that the Commissioner had made an error in his calculations because he did not employ anyone from March 2004.  The Commissioner accepted that PAYE of $6,250 should be deducted from the total sum owing.  Mr Hardie also submitted that he was exempt from paying tax due to his status as tangata whenua; alleged various breaches of the New Zealand Bill of Rights Act 1990; and said the Judge should not have relied upon the Commissioner’s assessments. In a judgment delivered on 19 March 2010 Stevens J dismissed the appeal save for the small PAYE deduction.[5]  Judgment was entered for the debt of $10,335,160.32.

[5]      Hardie v Commissioner of Inland Revenue HC Auckland CIV-2009-404-1785, 19 March 2010.

[9]       Meanwhile, on 11 March 2010 Mr Hardie filed judicial review proceedings against the Commissioner in the High Court. We understand that this proceeding is still on foot.

[10]     On 23 April 2010 Stevens J heard three applications:

(a)       the Commissioner’s application for costs;

(b)Mr Hardie’s application for leave to appeal to the Court of Appeal; and

(c)Mr Hardie’s application for a stay of execution pending final disposition of the appeal. 

[11]     Mr Hardie did not appear at the hearing.  After various unsuccessful attempts to contact Mr Hardie, counsel for the Commissioner asked the Judge whether he had received from Mr Hardie a “notice of application for enquiry and adjournment”, such document having been delivered to counsel that morning.  The document was not filed with the Court prior to the hearing but was received later that day. It was contradictory in parts and indicated an intention to withdraw the application for leave to appeal.

[12]     Having obtained the document after the hearing, Stevens J noted that insofar as it requested an adjournment, that request was declined.[6]  Having regard to Mr Hardie’s very limited success in obtaining a reduction of the debt, the Judge held the Commissioner was entitled to the full amount of costs sought.[7]  Stevens J then considered Mr Hardie’s application for leave to appeal. He found no question of fact or law capable of serious argument, and no interests which outweighed the costs and delays of further appeal.[8]  The application for leave was declined. The application for a stay of proceedings was declined as a consequence.[9] 

Discussion

[6]Hardie v Commissioner of Inland Revenue HC Auckland CIV-2009-404-1785, 23 April 2010 at [12]. 

[7] At [19].

[8] At [32].

[9] At [34].

[13]     Mr Hardie applies for special leave to appeal the decision of Stevens J dated 19 March 2010 on the grounds that the appeal is arguable and raises issues of general importance, in particular whether Māori have an obligation to pay tax.  Mr Hardie also applies for leave to amend his application for special leave to dispute the quantum of the default assessments for the period March 2003.  The Commissioner opposes both the application for special leave and the application for amendment on the grounds that neither discloses grounds justifying special leave to appeal.

[14]     In his written submissions Mr Hardie argued that the proposed appeal raises issues concerning all Māori, and so is a matter of public importance.  He said a substantial miscarriage of justice will result if the appeal is not heard, given the large sum of money involved. Mr Hardie also referred to the judicial review proceedings and alleged that the Commissioner’s actions were illegal and dishonest. 

[15]     However, in his oral submissions Mr Hardie indicated that he did not wish to pursue his argument that Māori are not liable to tax unless that argument could be advanced and dealt with on a confidential basis.  He focussed rather on the ground foreshadowed in his application for leave to amend his grounds of appeal, which was that there were further errors of calculation in the Commissioner’s figures which formed the basis for the entry of judgment against him.  As a result of these errors, Mr Hardie argued, the Commissioner could not have assessed his tax liability honestly.  Mr Hardie filed an affidavit illustrating the claimed errors, which totalled about $70,000.

[16]     Mr Wood for the Commissioner submitted that there is no legal authority supporting Mr Hardie’s position that Māori are exempt from paying tax. Rather, authority supports the position that Māori are obliged to pay tax along with other taxpayers.[10] The Treaty of Waitangi does not have priority over income tax legislation.[11]  Mr Hardie is not entitled to put himself outside the jurisdiction of the laws of New Zealand.[12]  Income tax and GST are imposed by statute and all taxpayers are liable to pay tax unless they fit within a specific exemption.[13]  Mr Wood also submitted that there was no obligation on the Judge to consider whether there was a case for judicial review and disputed the claimed errors.

[10]      Kaihau v Inland Revenue Department [1990] 3 NZLR 344 (HC).

[11]      Hoani Te Heuheu Tukino v Aotea District Māori Land Board [1941] AC 308 (PC).

[12]      R v Mitchell CA68/04, 23 August 2004 at [14].

[13]      Guy v Commissioner of Inland Revenue (2003) 21 NZTC 18,269 (HC).

[17]     We agree with the Commissioner that Mr Hardie’s argument that Māori are not liable to pay tax cannot succeed in light of the authorities cited.  It is without merit.  Further, Mr Hardie’s allegation, based on his affidavit, that there are further errors in the Commissioner’s calculations is not something that we could address in the proposed appeal.  That is something that Mr Hardie should have raised by means of the dispute resolution mechanisms provided in the Act.  Further, he did not raise this particular point before Stevens J and, in any event, we understand that he will attempt to raise it in his judicial review proceedings.

[18]     Mr Hardie complained that Stevens J did not take the existence of the judicial review proceedings into account in making his decisions.  The Judge did, however, consider the possibility of such proceedings.  On the basis of what Mr Hardie told him, the Judge understood that he did not propose to issue further judicial review proceedings.[14]  In light of this, the Judge considered there was no need for him to give directions to the Registry not to accept further judicial review applications from Mr Hardie.[15]  However, contrary to this, Mr Hardie did file judicial review proceedings on 11 March 2010.  Had he attended the hearing on 23 April 2010, he could have drawn this to the Judge’s attention if he thought it relevant.

[14] At [33].

[15] At [36].

[19]     While the proposed appeal involves a substantial amount of money, it is clear that there are no issues of general or public importance to justify further consideration by this Court.  In cases where the proposed appeal has little or no chance of success, leave should not be granted.[16]  Accordingly we decline Mr Hardie’s application for special leave to appeal and, as a consequence, his application to amend the grounds of appeal.

[16]      Waller v Hider [1998] 1 NZLR 412 (CA) at 413.

[20]     Having declined Mr Hardie’s application for leave to appeal, there is no basis on which we can enter a stay.  In particular, we cannot enter a stay in order to allow the judicial review proceedings to be determined.  If Mr Hardie considers that he needs interim relief to preserve his position in respect of those proceedings, he will have to apply to the High Court under s 8 of the Judicature Amendment Act 1972.

Decision

[21]     The application for special leave to appeal in CA325/2010 is declined.  Accordingly, the application to amend the grounds of appeal and the application for a stay (CA326/2010) are also declined.  The applicant must pay the respondent costs for a standard application on a band B basis and usual disbursements.

Solicitors:
Meredith Connell, Auckland for the Respondent