Mao v Golden Abacus & Associates Limited
[2024] NZHC 1048
•2 May 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-1061
[2024] NZHC 1048
BETWEEN JIAWEN MAO
Plaintiff
AND
GOLDEN ABACUS & ASSOCIATES LIMITED
First Defendant
COMMISSIONER OF INLAND REVENUE
Second Defendant (Discontinued)
Hearing: 7 November 2023
Followed by closing submissions filed by counsel for Plaintiff on 21 November 2023 and counsel for First Defendant on
13 December 2023Appearances:
A S Nair for Plaintiff
S A Keall for First Defendant
Judgment:
2 May 2024
JUDGMENT OF VAN BOHEMEN J
This judgment was delivered by me on 2 May 2024 at 10:30 am pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………..
Counsel/Solicitors:
A S Nair, Auckland
Patel Nand Legal, Auckland S A Keall, Auckland
Winston Wang & Associates, Auckland
MAO v GOLDEN ABACUS & ASSOCIATES LTD [2024] NZHC 1048 [2 May 2024]
[1] Jiawen Mao seeks damages of $1,500,000 for losses she says she suffered as a consequence of a breach by Golden Abacus & Associates Ltd (Golden Abacus) of obligations owed to her as her accountant.
[2] Ms Mao says that, because Golden Abacus did not inform her that, contrary to the position taken by the Inland Revenue Department (the IRD), Ms Mao had filed a Notice of Proposed Adjustment (NOPA) to the IRD’s assessments of her tax liability within the required timeframe:
(a)Ms Mao had judgment in the amount of $287,165.05, for unpaid tax and penalties, plus costs of $2,292.00, (the Tax Judgment) entered against her;
(b)as a consequence of the Tax Judgment, Ms Mao’s credit rating was negatively affected and loans secured against four properties1 were cancelled; and
(c)as a consequence of the cancellation of the loans, the four properties were sold by mortgagee sale which resulted in losses to Ms Mao of
$1,500,000.
[3] Golden Abacus denies any liability to Ms Mao and says Ms Mao’s claim is time-barred and without merit.
[4] Having heard the evidence of Ms Mao and Roy Xue, the Chief Officer of Golden Abacus, and the submissions of Mr Nair, counsel for Ms Mao, and of Mr Keall, counsel for Golden Abacus, I am satisfied that Golden Abacus owes no liability to Ms Mao.
[5] I record that, on occasions, when responding to questions in cross-examination, Ms Mao either did not answer the questions or said that relevant documents were not
1 The addresses of the four properties are:
Mount Albert Road, Royal Oak, Auckland Mount Albert Road, Royal Oak, Auckland
Lolim Place, Favona, Auckland
Pitt Avenue, Clendon Park, Auckland
in the Common Bundle or that she had communicated in writing or in person with people at Golden Abacus, or that she assumed that Golden Abacus had all the relevant information because Golden Abacus was preparing her tax returns and the assessments for the purposes of the NOPA. I am satisfied that, in a number of her answers, Ms Mao was unwilling to acknowledge the limited scope of her engagement with Golden Abacus when she was in discussions with the IRD over her tax liability.
Relevant background
[6] The following summary records my findings on what happened, based on documents produced at the hearing and the evidence given in Court by Ms Mao and Mr Xue.
[7] Ms Mao says she is a student. It is apparent from the evidence and from other proceedings in which Ms Mao has been involved before the courts that she is also a property investor and has been engaged in property development and management.
IRD advises Ms Mao of Default Assessments
[8] On 25 June 2014, Arvind Babu, an Investigator in the Property Compliance Programme of the IRD, wrote to Ms Mao advising that, because she had not filed income tax returns for the years ending 31 March 2008 and 31 March 2009, Ms Mao would shortly receive Notices of Assessment, known as Default Assessments, which had been calculated on the basis of four transactions involving the sale and purchase of properties in Kirikiri Drive, Papakura by Qing Ren.2 The letter advised that the IRD held information that indicated the transactions had been carried out by Ms Mao in Mr Ren’s name and that Mr Ren did not buy or sell the properties.
[9] The letter went on to advise that, because the properties had been bought and on-sold within short periods, it was considered that they had been acquired with the intention of being resold at a profit and that, accordingly, the profits made from the sales were taxable. The letter advised that, according to the IRD’s calculations, Ms Mao’s tax shortfall was $23,423.16 for the 2008 income year and $118,897.58 for
2 Qing Ren is Ms Mao’s step-brother.
the 2009 income year, resulting in a total shortfall for the two years of $142,320.74. In addition, Ms Mao was liable for a shortfall penalty of $28,464.15.
[10]The third to last paragraph of Mr Babu’s letter read:
If you wish to dispute the Assessment you must file a Notice of Proposed Adjustment along with your tax return within four months of the Assessment issue date shown on the Notice of Assessment. Enclosed is our publication Disputing an Assessment (IR 776) which gives you further information on how to prepare a Notice of Proposed Adjustment.
[11] The final paragraph advised that if Ms Mao wished to discuss these matters further, she should contact Mr Babu.
[12] I am satisfied that Ms Mao did not send a copy of the letter to Golden Abacus or discuss it with Golden Abacus following its receipt.
Ms Mao makes Official Information Act request
[13] On 23 July 2014, Ms Mao emailed Mr Babu a request for information under the Official Information Act 1982 (the OIA request). Mr Babu replied the same day advising that the OIA request was too general and asking what she was after. On 28 July 2014, Ms Mao replied to Mr Babu advising that she wanted to know on what documents the IRD had based its assessment.
[14] On 21 August 2014, Mr Babu advised Ms Mao by email that he had compiled the necessary information for her. He also advised that, because of the sensitive and confidential nature of the information, he was sending it to the IRD’s Manukau office for Ms Mao to collect. The email also advised Ms Mao that if she wished to dispute the Default Assessments, she would be required to file a NOPA along with her tax returns as he had previously advised.
[15] Ms Mao did not include Golden Abacus in her email exchanges with Mr Babu. I am satisfied that Ms Mao did not send or inform Golden Abacus of the exchanges.
Notices of Assessment
[16] On 28 August 2014, the IRD issued Ms Mao a Notice of Assessment for the income year ending 31 March 2008. The Notice assessed Ms Mao’s tax liability on her taxable income as being $23,423.16. It also advised that Ms Mao had an overdue tax liability of $39,558.59 which she was to pay immediately. Information provided with the Notice advised that the four-month period for disputing the assessment began from the issue date of the Notice.
[17] It is not in dispute that the IRD must have issued, and Ms Mao must have received, a Notice of Assessment for the income year ending 31 March 2009 for the amount advised in the letter of 25 June 2014. That Notice was not in evidence. However, given that the two income years were being considered together by the IRD when assessing the tax payable in relation to the four properties, I consider it likely that the Notice of Assessment for the income year ending 31 March 2009 was issued on or close to the same date as the Notice for the income year ending 31 March 2008. That is, the two Notices of Assessment were issued on or close to 28 August 2014.
[18] I am satisfied that Ms Mao did not send the Notices of Assessment for the income years ending 31 March 2008 and 31 March 2009 to Golden Abacus or discuss them with Golden Abacus following their receipt.
Ms Mao explains position to IRD
[19] On 19 September 2014, Ms Mao emailed Mr Babu advising that she had received the documents, that she had shifted address and that she was finding the documents from her previous address. Ms Mao explained her involvement in the purchase of the four properties and said the profits from the purchases had gone to Set Law, an aunt of her former partner with whom Ms Mao had entered into a joint venture.
[20] On the same day, Mr Babu replied to Ms Mao confirming receipt of her explanation and reiterating that, in order to dispute the Default Assessments, Ms Mao was required to file a Notice of Proposed Adjustment along with her tax returns. Ms Mao responded asking Mr Babu to email her the NOPA form (IR770), which Mr Babu did, later the same day.
Ms Mao engages with Golden Abacus
[21] On 26 September 2014, Ms Mao forwarded Mr Babu’s email to Golden Abacus’s email address. Ms Mao’s email included no instructions or commentary.
[22] It is common ground that, at about the same time, Ms Mao went to Golden Abacus’s offices and met with Mr Xue. Although the evidence of Ms Mao and Mr Xue differed as to how much was said, having heard the evidence and having regard to relevant contemporaneous documents, I am satisfied that Ms Mao gave Mr Xue a copy of her email to Mr Babu dated 19 September 2014 and instructed Golden Abacus to prepare a NOPA. She may also have given Mr Xue some or all of the documents provided to her by Mr Babu, although there is no direct evidence of Golden Abacus having received those documents.
[23] I am also satisfied that Mr Xue suggested to Ms Mao that she should consult a named person, whom Mr Xue described as a tax professional, but that Ms Mao declined that suggestion. I am also satisfied that Mr Xue told Ms Mao that Golden Abacus was very busy because of its volume of work in preparing GST returns and would be unable to do anything for her for some weeks.
[24] Shortly after midday on 26 September 2014, Ms Mao emailed Mr Babu and told him that she had forwarded “the documents” to her accountant who required three weeks to look at the case. By email sent just after 6 pm on the same day, Mr Babu thanked Ms Mao for the update and asked her to note that the NOPA and the tax return would be due by 26 October 2014.
Golden Abacus asks IRD for extension of time
[25] On or about 22 October 2014, Ms Mao contacted Jasmine Chen, an employee at Golden Abacus. Ms Chen then emailed Mr Babu and said she had been authorised by Ms Mao to contact him with regard to the proposed NOPA. Ms Chen asked for a four-week extension because she had just taken over Ms Mao’s case and needed time to go through all the documents. The following day, Mr Babu telephoned and emailed Ms Chen to advise that she needed to complete a consent form to enable him to
communicate with Ms Chen via email regarding Ms Mao. Mr Babu also told Ms Chen that the request for an extension of time was declined.
[26] By letter dated 24 October 2014, Mr Babu replied to Ms Chen’s request for an extension of time. The letter stated that, as advised in his telephone conversation with her on 23 October 2014, the request for an extension of time to file Ms Mao’s NOPA was declined. The letter recorded that Ms Mao had been reminded on 25 June 2014, 26 September 2014 and 10 October 2014 that the NOPA and her tax returns were due by 26 October 2014 and that Ms Mao was well- informed and was kept well-informed of the due date of actions required to dispute the Commissioner’s assessments. The letter said that the reason given for seeking an extension of time (workload in preparing GST returns) was not an exceptional circumstance for the purposes of s 89K of the Tax Administration Act 1994.
[27] The letter reiterated that if Ms Mao wished to dispute the Commissioner’s assessments, the NOPA and tax returns had to be filed no later than 28 October 2014, because 26 October 2014 was a Sunday and 27 October 2014 was a public holiday.
[28]Ms Chen received Mr Babu’s letter on 29 October 2014.
IRD advise that request for late consideration is possible
[29] On 29 October 2014, Ms Chen emailed Mr Babu attaching a letter signed by Ms Mao authorising Golden Abacus to act on Ma Mao’s behalf and to handle her NOPA and income tax. The email said Golden Abacus had just got Mr Babu’s letter of 24 October 2014 that day and that, because Ms Mao had not told it about the due date, it did not realise its importance. The email advised that Golden Abacus would finish “it” that day and would email all the information requested.
[30] Mr Babu replied the same day advising that the response period for filing a NOPA had expired on 28 October 2014 and the reasons why that was so under the Tax Administration Act. Mr Babu recalled his advice to Ms Chen on 23 October 2014 that an extension of time would not be granted and said that the fact Ms Mao did not tell Ms Chen about the due date was not considered to be an exceptional circumstance. The email also advised that if Ms Chen wished to request the Commissioner to
consider any dispute documents past the due date, she was required to make a formal submission for such a request under s 89K of the Tax Administration Act and that the NOPA should accompany the submission. The email said the Commissioner would give consideration to any late filing request and advise the outcome.
IRD advises Ms Mao that Default Assessments are final
[31] Between 15 and 18 November 2014, there were further email exchanges between Ms Mao and Mr Babu but no submission or NOPA were submitted.
[32] By letter to Ms Mao dated 19 November 2014 and headed “AUDIT FINALISATION LETTER”, Mr Babu recalled his letter of 25 June 2014 and subsequent correspondence with Ms Mao and Ms Chen in which he had advised that the date for filing a NOPA and the tax returns was four months from the date the Default Assessments were issued and that “[b]ased on this”, the NOPA and tax returns were due by 28 October 2014. The letter advised that, as Ms Mao had not provided her NOPA and tax returns within the specified response period, the Default Assessments were final and deemed accepted by Ms Mao.
NOPA and tax returns filed
[33] In an email dated 26 November 2014 to Mr Babu, Ms Chen requested the Commissioner of Inland Revenue to consider dispute documents past the due date and said the exceptional circumstance relied on was that the critical information had been found on 29 October 2014. That information included a joint venture agreement between Mr Ren and Ms Law (the Joint Venture Agreement). The email said that, based on this information, Golden Abacus had been able to finalise the NOPA and the tax returns for the years ending 31 March 2008 and 31 March 2009. The email stated:
As requested, we write to submit the following documents under section 89K of the Tax Administration Act 1994:
1.Notice of Proposes [sic] Adjustment
2.Joint Venture Agreement between Set Kien law and Qing Ren
3.Income Tax Return for the year ended 31 Mar 2008 and 31 Mar 2009
[34] It is not clear whether the NOPA, the Joint Venture Agreement and the tax returns were attached to the email or sent separately. It is not in dispute that they were received by the IRD by 27 November 2014.
IRD rejects NOPA
[35] By letter dated 5 December 2014 to Ms Mao, Deborah Graham, an Investigator in the Property Compliance Programme of the IRD, advised Ms Mao that, because the NOPA had been sent to the IRD outside the required timeframe, the NOPA could only be accepted under “exceptional circumstances”. The letter referred to an IRD statement setting out the factors to be considered in exercising the discretion under s 89K of the Tax Administration Act and then asked Ms Mao to supply answers by 12 December 2014 to a series of questions about Ms Mao’s possession of the Joint Venture Agreement.
[36] On 13 December 2014, Ms Mao replied to Ms Graham and copied her email to Golden Abacus. Ms Mao’s email said she had moved to a new address in October 2013 and had given birth to a baby in January 2014 and she had not had time to unpack boxes containing documents related to her step-brother. Ms Mao also said it had taken her days to locate the document which is why she had asked Mr Babu for an extension of time.
[37] By email dated 15 December 2014, Ms Chen asked Ms Mao to forward Ms Graham’s letter dated 5 December 2014.
[38] By letter dated 23 December 2014, Ms Graham advised Ms Mao that the Commissioner of Inland Revenue had rejected in full the adjustments requested in her NOPA. The letter advised that the explanation for the late filing did not meet the provisions for exceptional circumstances under s 89K.
[39] In emails sent to the IRD, and copied to Golden Abacus, in January and April 2015, Ms Mao attempted unsuccessfully to persuade the IRD to reconsider its position.
[40] In an email dated 13 April 2015, Kevin McMorran, Team Leader of the Property Compliance Team of the IRD, advised Ms Mao that the position set out in
the letter of 23 December 2014 was final and that the Default Assessments issued by the Commissioner were her deemed tax position. The email advised than an officer from the IRD’s National Collections Enforcement Unit would liaise with Ms Mao in due course regarding collection of the debt.
[41]In the event, Ms Mao did not pay the debt.
IRD brings proceedings against Ms Mao
[42] On 4 March 2016, the IRD filed proceedings against Ms Mao claiming payment of the tax assessed of Ms Mao and tax penalties.3
[43] On 28 March 2017, Ms Mao’s defence to the IRD’s claim was struck out and the Tax Judgment entered against Ms Mao.
[44]Ms Mao did not pay the sums ordered under the Tax Judgment.
Effect of Tax Judgment on Ms Mao’s credit rating
[45] In an email sent to Ms Mao on 24 October 2017, John Ahn of the Auckland Branch of Kookmin Bank said that, while preparing Ms Mao’s loan extension, the Bank had found that the IRD had put a judgment order for about $200,000 on Ms Mao’s credit. He noted that this could be treated as a default event and asked Ms Mao urgently to call or email him.
[46] There is no documentary evidence of any further interaction between Ms Mao and Kookmin Bank but I accept that it is likely that, following this email, Ms Mao’s loan with Kookmin Bank was cancelled.
[47] Apart from documents prepared by Ms Mao herself for the purpose of this proceeding, there is also no documentary evidence of the losses that Ms Mao says were the consequence of the cancellation of the loan.
3 The IRD’s claim is not in evidence.
Ms Mao files the current proceeding
[48] On 4 June 2021, Ms Mao filed the present proceeding against Golden Abacus. Originally, the IRD was named as second defendant but in August 2021, Ms Mao discontinued her claim against the IRD
Tax Judgment set aside
[49] On 2 June 2022, the Tax Judgment was set aside by consent and the IRD took no further action against Ms Mao with respect to her tax position for the income years ending 31 March 2008 and 31 March 2009.
Reasons why the Tax Judgment was set aside
[50] The terms of the consent order and the reasons for setting aside the Tax Judgment are not in evidence. It is common ground, however, that the Tax Judgment debt was set aside following an investigation by the IRD into Ms Mao’s affairs in 2021. As a result of that investigation, the IRD came to appreciate that Ms Mao had filed her NOPA and tax returns within the response period provided for in the Tax Administration Act and that the position it had taken when refusing to accept the NOPA had been in error. But, because the Commissioner had failed to reject the adjustment of Ms Mao’s tax assessment as set out in the NOPA within the response period provided for in the Tax Administration Act, the Commissioner was deemed to have accepted the adjustment in accordance with s 89H.
[51] In other words, Ms Mao’s tax liability for the 2008 and 2009 income years, and the associated tax penalties, as set out in the Notices of Assessment were wiped because of a mistake by the IRD. Neither counsel articulated how the IRD came to its new position in 2021. Nor was there any direct evidence on that question. I infer, however, that the IRD realised, some eight years down the track, that the position it had taken in its correspondence with Ms Mao and Ms Chen had been incorrect as a matter of law.
[52] Under s 89AB(4)(b) of the Tax Administration Act, the response period for filing a NOPA is a four-month period starting on the date of issue of the initiating
notice. That position was articulated correctly in some of the 2014 correspondence, including Mr Babu’s letter of 25 June 2014. However, from the email Mr Babu sent Ms Mao on 26 September 2014 until the rejection of the NOPA on 23 December 2014, the IRD’s position was that the deadline for filing the NOPA was 26 and then 28 October 2014. It is apparent that those dates were based on an assumption that the response period started from the date of Mr Babu’s letter of 25 June 2014. That was wrong. The start date was the issue date of the Notices of Assessment; that is 28 August 2014 for the Notice of Assessment for the income year ending 31 March 2008 and, as I have held, a similar date for the Notice of Assessment for the income year ending 31 March 2009. Accordingly, the deadline for filing the NOPA and tax returns was on or around 29 December 2014, which Ms Mao had met.
Is Golden Abacus responsible for not realising that the IRD had made a mistake?
[53] Ms Mao’s case is based on negligence — that Golden Abacus failed in its duty to Ms Mao as her professional advisers in relation to her tax dispute with the IRD.4
[54] In order to succeed with that claim, Ms Mao must prove, on the balance of probabilities, that:5
(a)Golden Abacus owed a duty of care to Ms Mao;
(b)Golden Abacus breached that duty of care by not informing Ms Mao that the NOPA had been filed within the response period provided for in the Tax Administration Act;
(c)as a result of that breach, Ms Mao suffered the claimed losses; and
(d)the losses were the reasonably foreseeable consequence of that breach.
4 Although Ms Mao’s fourth statement of claim also pleaded breach of fiduciary duty, Mr Nair’s opening and closing submissions began with the statement, “This is a professional negligence case”, and his submissions did not address the separate head of liability of breach of fiduciary duty. Given my findings of fact, I am satisfied that the outcome of the proceeding was not affected by the focus on professional negligence.
5 Taylor v Roper [2020] NZCA 268, [2021] 3 NZLR 37 at [78]; Stephen Todd (ed) Todd on Torts (9th ed, Thomson Reuters, Wellington, 2023) at [4.1].
[55]There are serious questions about the last two of those steps.
[56] First, it is strongly arguable that, if Golden Abacus or Ms Mao had pointed out the IRD mistake in the period from 29 October to 23 December 2014 when they were attempting to persuade the IRD to accept the NOPA, the IRD would have appreciated its error and would have taken one of the steps provided for in the Tax Administration Act. One of those steps is rejection of the NOPA6 — in which case, Ms Mao’s tax position would have been as it was under the Notices of Assessment. In other words, it does not follow that Ms Mao’s position would have been any different if there had been no breach of the alleged duty.
[57] Secondly, there is no evidence to indicate whether the IRD would or would not have accepted Ms Mao’s position as set out in the NOPA. The best that can be said is that, in missing out on the opportunity to raise the IRD mistake, Ms Mao lost the chance to have her proposed adjusted tax position considered by the IRD. Without any evidence as to the strength of the case advanced in the NOPA, the value of that lost chance is difficult to assess. I very much doubt, however, that the provision of the Joint Venture Agreement of itself would have been sufficient to persuade the IRD to accept Ms Mao’s assessment of her tax liability. It follows that I doubt that the claimed losses were the reasonably foreseeable consequence of the loss of that chance.
[58] Thirdly, it is arguable that the losses claimed by Ms Mao were not the result of the IRD’s non-acceptance of the NOPA. Rather, they were the consequence of Ms Mao refusing to pay the tax and penalties assessed against her and then refusing to pay the sums ordered in the Tax Judgment. It was those actions, which I doubt were reasonably foreseeable, rather than any omission by Golden Abacus, that led to Ms Mao’s negative credit rating.
[59] Fourthly, as already noted, Ms Mao produced no independent evidence to show that she suffered the losses claimed or that any such losses, if suffered, were the consequence of the Tax Judgment. As demonstrated in the judgments of the Environment Court and High Court that were included in the Common Bundle, Ms Mao was in significant difficulty, financial and personal, for her role in relation to
6 Tax Administration Act, s 89G(1).
the development of other properties in which she and her associates were involved.7 Given that history, and in the absence of any independent evidence linking the claimed losses to the Tax Judgment, it is doubtful that I could be satisfied, on the balance of probabilities, that any breach of duty owed by Golden Abacus to Ms Mao caused those losses.
[60] However, it is not necessary to resolve those difficulties. It is apparent that Ms Mao’s claim fails at the second step — breach of duty of care.
Did Golden Abacus owe Ms Mao a duty of care?
[61] For the purposes of this judgment, I assume Golden Abacus owed Ms Mao a duty of care in relation to the work she commissioned them to undertake. However, I do not accept Ms Mao’s assertion that Golden Abacus was Ms Mao’s accountant generally or in relation to all aspects of her tax dispute with the IRD. It is clear, even from the limited evidence produced in this proceeding, that Ms Mao did not instruct or rely on Golden Abacus to provide advice on all tax issues she was facing. Her instruction was simply to prepare the NOPA and the tax returns.
[62] Moreover, by suggesting to Ms Mao that she should instruct a tax professional, Mr Xue put Ms Mao on notice that he was not an expert in this area. While that may not amount to a disclaimer of responsibility sufficient to negate any duty of care arising (as discussed by Lord Reid in Hedley Byrne & Co Ltd v Heller & Partners Ltd),8 I consider that it limited the scope of the duty to preparation of the NOPA and the tax returns.
[63] My finding on this point is reinforced by the fact that Ms Mao had dealt personally with the IRD since receipt of the letter of 25 June 2014 and had engaged Golden Abacus three months later after she had received the documents provided by Mr Babu following her OIA request. In these circumstances, I am satisfied that a reasonable professional accounting firm in the position of Golden Abacus would have
7 Auckland Council v Mao [2016] NZEnvC 251; R v Lau [2018] NZHC 2935.
8 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 (HL) at 486.
considered that it was being instructed to perform the limited task of preparing the NOPA and the tax returns.
Did Golden Abacus breach its duty of care to Ms Mao?
[64] Golden Abacus prepared the NOPA and the tax returns as instructed by Ms Mao. It was late in doing so. Golden Abacus should have ascertained from Ms Mao when she first instructed the firm in September 2014 when the NOPA and tax returns had to be filed. Moreover, despite the delayed arrival of Mr Babu’s letter dated 24 October 2014, Ms Chen should have known from her telephone conversation with Mr Babu on 23 October 2014 that the deadline (as it was then understood to be) was fast approaching. However, Ms Mao’s claim is not based on Golden Abacus being late. It is based on Golden Abacus not knowing that Ms Mao was not late in filing the NOPA.
[65] The only information that Golden Abacus had about the deadline for filing was from Mr Babu. On the basis of the evidence before me, I have found that Ms Mao did not send Golden Abacus Mr Babu’s letter of 25 June 2014 or the Notices of Assessment issued on or close to 28 August 2014. Accordingly, Golden Abacus had no basis for calculating the response period, even if it had thought to do so. A prudent accountant might have asked to see the Notices of Assessment when preparing the NOPA and the tax returns. However, if a prudent accountant considered they had sufficient information to complete the tasks on which Golden Abacus had been instructed by Ms Mao without seeing the Notices of Assessment, I do not consider that not asking to see the Notices of Assessment would amount to a breach of its duty of care to Ms Mao.
[66] In addition, as far as the deadline date was concerned, Golden Abacus had direct and consistent advice from the IRD that the deadline date was 26 and then 28 October 2014. I consider that it was entitled to accept that advice as legally correct, particularly when Ms Mao had not provided them the base documents — the Notices of Assessment — that might have put it on notice to question the IRD advice.
[67] For these reasons, I am satisfied that Golden Abacus did not breach its duty of care to Ms Mao. It follows that Golden Abacus has no liability for the losses claimed by Ms Mao.
Claim is time barred
[68] Even if Golden Abacus had breached its duty of care towards Ms Mao, and even if Ms Mao could prove that she had suffered the losses she claims and that the losses were the reasonably foreseeable consequence of the breach of duty, it is clear that Ms Mao’s claim is time-barred by the Limitation Act 2010.
[69] In accordance with s 12(1) of that Act, Ms Mao’s claim is a “money claim” — a claim for monetary relief at common law.
[70] Under s 11(1) of the Limitation Act, it is a defence to a money claim if the defendant proves that the date on which the claim is filed is at least six years after the date of the act or omission on which the claim is based. This is called “the primary period” in s 11(1).
[71] The omission alleged by Ms Mao — that Golden Abacus did not know that the NOPA had been filed within the response period provided for in the Tax Administration Act and failed to inform Ms Mao of the IRD’s failure to respond to the NOPA — arose in December 2014. Ms Mao filed the current proceeding in June 2021, some six months after the primary period expired.
[72] However, under s 11(2) and (3) of the Limitation Act, if a claimant has late knowledge of the claim, it is a defence to a money claim if the defendant proves that the date on which the claim is filed is at least three years after the late knowledge date (the late knowledge period) or 15 years after the date of the omission on which the claim is based (the longstop period).
[73] Mr Nair says that Ms Mao can claim the benefit of the late knowledge period because her claim was filed within three years of the IRD informing her in 2021 that her NOPA had been filed in time. However, as Mr Keall says, under s 14 of the
Limitation Act, a claimant does not have late knowledge unless they prove that, at the close of the start date of the primary period, the claimant neither knew, nor ought reasonably to have known, all of the facts set out at s 14(1).
[74] Section 14(1)(a) provides:
(a)the fact that the act or omission on which the claim is based had occurred.
[75] The correct deadline was set by the Tax Administration Act. Everyone is presumed to have knowledge of the law. In addition, Ms Mao was told by Mr Babu in his letter of 25 June 2014 that the deadline for filing the NOPA was four months after receiving a Notice of Assessment. So, Ms Mao was personally on notice as to the correct position, despite the later incorrect advice from Mr Babu. Moreover, because Ms Mao did not provide the letter of 25 June 2014 or the Notices of Assessment to Golden Abacus, she cannot reasonably say that she was relying on her professional advisers to take care of things.
[76] I appreciate that Ms Mao had young children and other challenging circumstances to deal with. The reality, however, is that Ms Mao was involved in a range of property transactions about this time. As she acknowledged in response to questions from the bench, she tried to deal with a lot of matters herself, especially when money was tight. In these circumstances, Ms Mao cannot avoid responsibility by saying she was relying on others. She had the primary contact with the IRD. She had the information that would have enabled her to know the correct position. I am satisfied, therefore, that Ms Mao ought reasonably to have known that the NOPA had been filed in time despite any omission by Golden Abacus in relation to that issue.
Result
[77]For all the above reasons, I dismiss Ms Mao’s claim.
Costs
[78] Mr Keall has asked to address me on costs. He may do so by memorandum of no more than five pages, filed by 23 May 2024.
[79] Counsel for or Ms Mao personally may reply by memorandum of no more than five pages, filed by 7 June 2024.
G J van Bohemen J
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