Lay v Commissioner of Inland Revenue
[2015] NZHC 2962
•25 November 2015
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
CIV 2015-454-75 [2015] NZHC 2962
UNDER the Judicature Act 1908 BETWEEN
RICHARD PETER LAY Appellant
AND
COMMISSIONER OF INLAND REVENUE
Respondent
Hearing: 14 September 2015 Counsel:
Appellant in Person
R L Roff for RespondentJudgment:
25 November 2015
JUDGMENT OF BROWN J
Background
[1] Mr Lay was a liable person under the Child Support Act 1991 (CSA) and was required to pay child support. He was assessed in accordance with the formula contained in s 29 of the CSA and his liability ceased on 22 June 2015. Mr Lay did not formally object to or challenge the level of child support for which he was liable. As of 9 September 2015 the Commissioner of Inland Revenue contended that Mr Lay had arrears of $22,806.18 (including penalties).
[2] On 25 June 2015 the Commissioner filed an application for a warrant to seize property under s 183 of the CSA in relation to Mr Lay’s arrears. The warrant was issued on 26 June 2015 and was executed on 9 July 2015 when Mr Lay’s Nissan
Skyline vehicle was seized. The car has not been sold and it remains in storage.
LAY v COMMISSIONER OF INLAND REVENUE [2015] NZHC 2962 [25 November 2015]
[3] Mr Lay filed a third party claim in the Family Court in relation to ownership of the car and a hearing in that Court was scheduled for late September 2015. However Mr Lay discontinued his third party claim in the Family Court.
Appeal to the High Court
[4] On 15 July 2015 Mr Lay filed a notice of appeal against “the unlawful
seizure of: Nissan Skyline reg YD5962”. The grounds of appeal stated:
I appeal the decision on the grounds that the above said car is an asset of
Foam Engineering and not a personal car.
No Due Process therefore breach of rights under the Human Rights Act
1993.
The amount outstanding to IRD is incorrect.
That the information supplied to the court by IRD may be incomplete.
That the seizing of the above car if legal, is pointless as this will not cover outstanding amount owed and would also grossly affect my ability to earn a[n] income to pay said debt.
That the seizing of said car would also grossly affect my relationship with my son. Which I consider, as do others, is a joke coming from the Family Court.
[5] On 19 August 2015 the Commissioner filed an appearance under protest to jurisdiction based on a number of grounds. The grounds relating to third party claims and the appellant’s claim in the Family Court have since been overtaken by events. However the key remaining ground states:
Section 120 of the Act provides that a party has a right of appeal to the High Court against an order or declaration of a Family Court made under the Act. A warrant to seize property is not an order or a declaration of the Family Court.
The issue
[6] Section 120(1) provides:
120 Appeal from decisions of courts
(1) A party to the proceeding may appeal to the High Court against an order or declaration of a Family Court made under this Act.
(1AA) However, no appeal may be made to the High Court under subsection (1) in relation to a decision under–
(a) section 226 to appoint a lawyer to represent a child; or
(b) section 226A to appoint, or to direct the Registrar to appoint, a lawyer to assist the court.
(1A) The High Court Rules and sections 74 to 78 of the District Courts Act 1947, with all necessary modifications, apply to an appeal under subsection (1) as if it were an appeal under section 72 of that Act.
…
[7] Section 183 states in material part:
183 Warrant of distress
(1) Where any financial support that is payable by any person under this Act (and any penalty or interest imposed thereon under this Act) is in arrear and unpaid for not less than 14 days, a District Court Judge may issue a warrant to seize property against that person for the amount unpaid, or for so much of that amount as for the time being remains unpaid.
(2) Every such warrant to seize property shall be in the prescribed form, with any necessary modifications.
(3) Except to the extent that they are modified or varied by this section or by any rules of procedure made under this Act, the provisions of the District Courts Act 1947 that apply to warrants of distress shall apply, with any necessary modifications, in respect of a warrant to seize property issued under this section.
(4) For the purpose of executing any warrant to seize property, the bailiff executing it may at any time enter on any premises, by force if necessary, if the bailiff has reasonable cause to believe that the property in respect of which it is issued is on those premises: provided that if any person in actual occupation of the premises requires the bailiff to produce evidence of his or her authority, the bailiff executing the warrant shall produce the warrant before entering on the premises.
(5) Where a person against whom a warrant to seize property is issued pays or tenders to the bailiff executing the warrant the sum or sums therein mentioned together with the expenses of the seizure of property up to the time of the payment or tender, the warrant shall be deemed to be satisfied.
(6) Where goods have been seized under a warrant to seize property and some third person claims to be entitled to the goods either as owner under a hire purchase agreement or under a bill of sale or otherwise by way of security for a debt, a court presided over by a Family Court Judge or District Court Judge may order a sale of the whole or
part of the goods upon such terms as to payment of the whole or part of the secured debt or otherwise as the court thinks fit, and may direct the application of the proceeds of the sale in such manner and upon such terms as it deems just.
(7) The surplus of the sale, if any, shall be handed by the bailiff to the Registrar, who shall pay the amount to the person against whom the warrant to seize property is issued.
…
(9) No seizure of property made under the authority of this Act shall be deemed unlawful, nor shall any person making the same be deemed a trespasser, by reason of any defect or want of form in the warrant to seize property, nor shall any such person be deemed a trespasser from the beginning by reason of any irregularity afterwards committed by that person; but all persons aggrieved by any such defect or irregularity may recover satisfaction for the special damage by action at law.
(10) [Section 91] of the District Courts Act 1947 shall not apply in relation to a warrant to seize property issued under this section.
[8] The issue for determination on this appeal is whether the action of a District Court Judge in issuing a warrant to seize property under s 183(1) is amenable to appeal by virtue of s 120.
The structure of the CSA
[9] The CSA is one of the Inland Revenue Acts within the meaning of the Tax Administration Act 1994 and the Commissioner of Inland Revenue has a significant role to perform under the CSA.
[10] The objects of the CSA include:
(a) to ensure that the costs to the State of providing an adequate level of financial support for children and their carers is offset by the collection of a fair contribution from liable parents; and
(b)to provide a system whereby child support and domestic maintenance payments can be collected by the Crown and paid by the Crown to those entitled to the money.
[11] Several of the early parts of the CSA relate to the manner of assessment of child support, some of which include:
Part 1 – Liability to pay child support payable under formula assessment.
Part 2 – Amount of child support payable under formula assessment made by
Commissioner.
Part 3 – Voluntary agreements.
Part 5 – Assessment of child support and domestic maintenance. Part 6 – Objections.
Part 6A – Departure from formula assessment of child support initiated by liable parent or receiving carer.
Part 6B – Departure from formula assessment of child support initiated by
Commissioner.
[12] Those parts are followed by pt 7 (Jurisdiction of courts in relation to child support and domestic maintenance) which provides for several rights of appeal to the Family Court, eg:
(a) appeals from decisions of Commissioner in respect of objections under pt 6;
(b)appeals in relation to determinations or decisions under subpart 3 of pt 5A;
(c) appeals by respondents from determinations under pt 6A; (d) appeals from determinations under pt 6B.
[13] There is also provision in pt 7 for applications to a Family Court for various declarations (eg s 99) and orders (eg s 104). Section 120 is located within pt 7.
[14] The parts which follow pt 7 are primarily directed to the mechanics of payment, namely:
Part 8 – Collection of financial support. Part 9 – Payment of financial support. Part 10 – Automatic deductions.
Part 11 – Enforcement provisions. Section 183 is located within pt 11.
Discussion
[15] Notwithstanding the third ground of appeal,1 in the course of his oral submissions Mr Lay indicated that he did not challenge the amount which the Commissioner alleges is owed. That is consistent with the position as recorded by Associate Judge Smith at [3] of his Minute of 20 August 2015.
[16] Even if that were not the case, I accept the submission for the Commissioner that there is no ability for Mr Lay to object to or challenge the validity or correctness of his child support assessment except in proceedings under ss 91-95 of the CSA.2
Under that procedure a notice of objection is required to be lodged with the
Commissioner within 28 days from the date of the notice of assessment.
[17] If the objection is disallowed there is a right of appeal to the Family Court under s 103 of the CSA. Consequently this Court would have no jurisdiction to hear and determine any ground of appeal that goes to the correctness or otherwise of the
amount outstanding to the Commissioner.
1 At [4] above.
2 Refer ss 83 and 84 of the CSA.
[18] Similarly the Commissioner submits that there is a clear statutory process for dealing with third party claims: Attention was drawn to s 183(6) of the CSA.3
[19] However it is apparent that Mr Lay’s concerns relate to the implications of the seizure of the vehicle and the consequences of the unavailability of that vehicle for the proper exercise by him of his access rights to his son. Hence the challenge which Mr Lay seeks to make is to the lawfulness of the process followed by the Commissioner in applying for the issue of a warrant. He invites this Court to entertain an appeal against what he maintains is an order or declaration within the scope of s 120(1).
[20] The Commissioner responds that the Family Court is the proper forum to deal with issues arising from the issuance of a warrant pursuant to s 183 of the CSA and, as noted above, submits that the High Court has no direct appellate jurisdiction in relation to the action of issuing the warrant.
Decision
[21] In my view the action of a District Court Judge in issuing a warrant of distress under s 183(1) is not subject to an appeal under s 120(1) for three reasons.
[22] First, the orders and declarations in relation to which s 120(1) confers a right of appeal are those of a Family Court. An action taken by a District Court Judge under s 183(1) is not a decision of a Family Court.
[23] Secondly, the right of appeal conferred by s 120(1) is to a party “to the proceeding”. “Proceeding” is defined in s 2(1) as follows:
proceeding means a proceeding before a court or before the Commissioner under Pts 5A, 6A, or 6B.
[24] On a literal reading the reference to “proceeding” in s 120(1) could be construed as qualifying the orders or declarations of a Family Court which may be the subject of appeal. In other words the right of appeal would relate to an order or declaration made in the proceeding, such a proceeding being one under either Pts 5A, 6A or 6B of the CSA.
[25] However, even if the right of appeal is broader than in relation to a proceeding under those specific parts, in my view the right of appeal must be confined to orders or declarations made by a Family Court on a substantive issue arising in the context of a matter addressed in Parts 5 to 7 inclusive. I agree with the Commissioner’s submission that r 60 of the Family Courts Rules 2002 reinforces that appeals under family law legislation (including the CSA4) arise in respect of “an order made, or a refusal to make an order, or any other decision that finally determines or dismisses the proceedings”.
[26] Thirdly, and related to the second reason, the action of a District Court Judge in issuing a warrant of distress is in the nature of an administrative step taken in the course of the post-adjudication phase. It is the equivalent of the process under s 85 of the District Courts Act 1947 and r 19.47 of the District Courts Rules 2014. No rights of appeal are conferred in respect of the enforcement of District Court judgments. It would be anomalous in my view if s 120(1) were to be construed as conferring rights of appeal to the High Court in relation to the equivalent enforcement process under the CSA relating to unpaid amounts of financial support.
Disposition
[27] For the reasons above the appeal is dismissed.
Brown J
Solicitors:
Crown Law, Wellington
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