Hua v Commissioner of Inland Revenue

[2012] NZHC 1234

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-007442 [2012] NZHC 1234

UNDER  the District Courts Act 1947 and the

Judicature Act 1908

IN THE MATTER OF     an appeal against a decision of the District Court at Manukau striking out appellants' notice of claim

BETWEEN  JIAO HI HUA, HUAN HSUEH WU AND SHOU-CHEN CHIAO AS TRUSTEES OF THE HARSONO FAMILY TRUST Appellants

ANDTHE COMMISSIONER OF INLAND REVENUE

Respondent

Hearing:         (on the papers) Judgment:        1 June 2012

COSTS JUDGMENT OF VENNING J

This judgment was delivered by me on 1 June 2012 at 5 pm, pursuant to Rule 11.5 of the High Court

Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Crown Law, PO Box 2858, Wellington 6140

Copy to:            Harsono Family Trust, PO Box 64219, Botany Downs, Manukau 2142

HUA & ORS AS TRUSTEES OF HARSONO FAMILY TRUST V CIR HC AK CIV-2011-404-007442 [1 June

2012]

[1]      The judgment of 22 May 2012 refers.  In that judgment the Court upheld the

District Court’s decision to strike out the appellants’ claim as an abuse of process.

[2]      The Commissioner sought indemnity costs. As the appellants did not address that issue in their submissions I gave the appellants the opportunity to make written submissions on the issue of costs.  I have now received the appellants’ submissions.

[3]      The appellants submit that no more than scale costs should be awarded. [4]   The appellants make the following points:

(a)      the appeal was justifiable;

(b)      the cases the respondent relies on to seek increased costs do not apply; (c)     in preparation for the hearing Wylie J had directed costs be fixed

according to scale;  and

(d)at least one ground relied on by the respondent in opposition to the appellants’ claim in the District Court i.e. s 109 of the Tax Administration Act 1994 was found by this Court not to assist the Commissioner.

[5]      In the present case scale costs amount to $4,136 calculated as follows:

2 conferences  0.4

2 memoranda in preparation for the conferences      0.8 half a day allowance for the hearing  0.5 half a day preparation  0.5

Total:  2.2 x $1,880 = $4,136

[6]      The respondent submits that there should be indemnity costs because the

appellants’ proceedings were an abuse of process:  r 14.6(4).  The issue of indemnity

costs   has   been   considered   by  this   Court   in   Bradbury   v  Westpac   Banking Corporation.[1]     In that judgment the Court outlined a number of circumstances in which the Court could depart from the normal costs regime, and award indemnity costs.   They include  commencing  or  continuing  a proceeding  for  some ulterior motive and pursuing proceedings in wilful disregard of clearly established law or by pursuing a hopeless case.

[1] Bradbury v Westpac Banking Corporation [2009] 3 NZLR 400.

[7]      Prima facie there is jurisdiction for indemnity costs in the present case.  The inference is available that by pursuing these proceedings the appellants have sought to avoid their obligations to repay the debt they owe the Commissioner of Inland Revenue.    More  importantly,  however,  the  proceedings  were  struck  out  by  the District Court as, inter alia, an abuse of process.   This Court’s judgment confirms that the proceedings were an abuse of process and an attempt to revisit issues that have been determined against the appellants in the past:  r 14.6(4)(a).

[8]      None of the matters that the appellants reply on to resist other than scale costs are convincing.   For the reasons I have found the appeal should not have been brought.     The  appeal  was  dismissed  primarily  because  this  Court  found  the appellants’ claim in the District Court to be an abuse of process and frivolous and vexatious.   The authorities  the respondent  relies  on  to  seek  increased  costs  are examples of the application of general principle.  Those general principles do apply to this case.

[9]      The appellants reliance on the order for security fixing the quantum for costs on the appeal is also misguided.  The fixing of security for costs for the appeal in accordance with r 20.13 is a quite different issue to the ultimate award of costs following the appeal under r 14.   While the appellants rely on this Court’s observations regarding s 109 of the Tax Administration Act 1994, for the reasons outlined by this Court in the judgment it was unnecessary for the Court to go on and deal with that matter.   The short point is that  the appellants’ proceedings were

properly struck out as an abuse of process and/or frivolous and vexatious.

[10]     The respondent seeks indemnity costs in the region of $10,000 to $11,000. Although there are grounds for an award of indemnity costs, costs are always at the discretion of the Court.  I take into account that the appellants represent themselves and may not have had the benefit of proper legal advice whether to pursue the appeal.

[11]     In  all the circumstances  I consider the appropriate award is for costs  of

$7,500.  The respondent is to have costs against the appellants in the sum of $7,500 together with disbursements as fixed by the Registrar.

Venning J