Muir v Commissioner of Inland Revenue
[2017] NZHC 2082
•29 August 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2011-404-1132 [2017] NZHC 2082
UNDER the Tax Administration Act 1994 IN THE MATTER
of an application to strike out for all proceedings transferred and consolidated in the High Court
BETWEEN
GARRY ALBERT MUIR First Plaintiff
AND
HILLVALE HOLDINGS LIMITED Eighth Plaintiff
AND
COMMISSIONER OF INLAND REVENUE
Defendant
Hearing: 3 July 2017 Appearances:
S Carey for First Plaintiff
JP Nolen for Eighth Plaintiff
SJ Leslie and C Hollingsworth for DefendantJudgment:
29 August 2017
JUDGMENT OF TOOGOOD J
This judgment was delivered by me on 29 August 2017 at 3.30 pm
Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Muir & Anor v Commissioner of Inland Revenue [2017] NZHC 2082 [29 August 2017]
[1] Dr Muir and Hillvale Holdings Limited (“Hillvale”) were the first and eighth plaintiffs respectively in a proceeding that was the subject of a strike-out order made by Faire J in this Court on 22 April 2015.1 The Court is required to determine interlocutory applications regarding two decisions by the Registrar about the filing of amended statements of claim in the proceeding, namely:
(a) an application by the Commissioner of Inland Revenue for review of the Registrar’s acceptance for filing of Dr Muir’s amended statement of claim dated 29 August 2016; and
(b) an application by Hillvale for review of the Registrar’s refusal to file
its amended statement of claim dated 22 March 2017.
Procedural background
[2] Dr Muir appealed Faire J’s 2015 strike-out decision; Hillvale did not. The Court of Appeal dismissed the appeal.2 The Supreme Court granted,3 and then revoked,4 leave to appeal. Dr Muir then attempted to file an amended statement of claim on or about 29 August 2016. The document was accepted for filing by the registry. The Commissioner filed a memorandum at the registry officer’s request detailing the procedural history of the case.
[3] Faire J noted in a Minute dated 13 September 2016 that no application under r 2.11 of the High Court Rules had been filed seeking to review the registry’s acceptance of the document for filing. Faire J stated that any challenge would “presumably” to have to be made either as an application for summary judgment under Part 12 of the Rules or for strike-out under Part 15. He directed that, if the
Commissioner wanted to proceed, she should file the appropriate application. The
1 Muir v Commissioner of Inland Revenue [2015] NZHC 792, (2015) 27 NZTC 22-004.
2 Muir v Commissioner of Inland Revenue [2015] NZCA 591, (2015) 27 NZTC 22-034.
3 Muir v Commissioner of Inland Revenue [2016] NZSC 90.
4 Muir v Commissioner of Inland Revenue [2016] NZSC 113, (2016) 27 NZTC 22-067.
Commissioner filed an application on 14 September 2016 to review the Registrar’s
acceptance under r 2.11. Dr Muir opposes that application.
[4] Hillvale did not appeal the 22 April 2015 strike-out decision. It was not party to Faire J’s Minute of 13 September 2016 and it took no further action until it attempted to file an amended statement of claim on 22 March 2017. The document was initially accepted by registry but it was later rejected and returned on 30 March
2017. Hillvale filed an application under r 2.11 seeking to review the decision to reject the amended claim after it had been accepted for filing and, alternatively if it was held the document had not been accepted, the decision to refuse to accept it for filing. The Commissioner opposes that application.
The status of the proceeding
[5] The primary issue arising from the submissions of the parties is whether the proceeding remains on foot. Ms Leslie, Mr Nolen, and Mr Carey agree that everything flows from a determination of that point.
[6] I am satisfied that the proceeding was brought to an end when Faire J struck it out on 22 April 2015. The Judge said:5
[39] I conclude that the current plaintiffs are estopped from disputing the determinations of the Supreme Court judgments as binding on them as if they were parties to those proceedings. They therefore are estopped from raising arguments concerning the treatment of the Trinity Scheme and appropriate assessments.
[40] This is a clear case of an abuse of process which must not be allowed to continue. It may also be viewed as a collateral attack on the final decisions of the Supreme Court and is equally an abuse of process on that ground.
Orders
[41] For the above reasons, I conclude that the Commissioner is entitled to an order striking out the current proceedings and also an order dismissing the appeal against the 1 February 2011 decision. I also dismiss the appeal against the 16 June 2011 decision.
5 Above n 1.
[43] In our judgment it would be an abuse of the Court’s process to allow Mr Muir to continue his claim. It would commit judicial resources for no purpose and bring the administration of justice into disrepute. It would also be unfair to require the Commissioner to expend further costs in defending a position on taxation liability which has been unequivocally and authoritatively answered in the Commissioner’s favour.
[44] This claim must fail.
[8] Dr Muir was granted leave to appeal to the Supreme Court. After he attempted to argue new grounds, he accepted his leave application should be revoked. At that point the Supreme Court said:7
[11] In oral argument, the appellant accepted that, given the nature of the new argument foreshadowed by his amendment application, the leave to appeal granted by this Court should be revoked, a concession which was correctly made. The consequence is that the decision of the Court of Appeal will stand, and the appellant’s proceedings will remain struck out in their entirety.
[9] Nothing in the final sentence of that paragraph leaves open any prospect that the proceeding, like Lazarus of Bethany, might have new life breathed into it.
[10] The argument that Faire J did not deal the proceeding a mortal blow is founded on his statement that the Commissioner was entitled to an order “striking out” the proceeding, and on the distinction in r 15.1 between the striking out of a pleading under r 15.1(1) and the making of a further order under r 15.1(2) “dismissing” the proceeding:
15.1 Dismissing or staying all or part of proceeding
(1) The court may strike out all or part of a pleading if it—
(a) discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or
(b) is likely to cause prejudice or delay; or
(c) is frivolous or vexatious; or
6 Above n 2.
7 Above n 4.
(d) is otherwise an abuse of the process of the court.
(2) If the court strikes out a statement of claim or a counterclaim under subclause (1), it may by the same or a subsequent order dismiss the proceeding or the counterclaim.
(3) Instead of striking out all or part of a pleading under subclause (1), the court may stay all or part of the proceeding on such conditions as are considered just.
(Emphasis added)
[11] There is nothing in the point. It was answered succinctly in June 2017 by Bell AJ in a decision on a summary judgment application by the Commissioner for unpaid tax owed by Dr Muir.8 The Associate Judge found that Dr Muir’s tax challenge under Part 8A of the Tax Administration Act 1994 – that is, this proceeding
– had been finally determined. He said:
[44] ... The decisions of the Taxation Review Authority, the High Court and the Court of Appeal are clear that the decisions went to the proceedings
– not just to pleadings. The sealed orders reflect that. The Supreme Court said so too. Once a proceeding is at an end it is not possible to file fresh pleadings in the same proceeding to resume the litigation. That applies both
to a judgment on the merits and to a decision to terminate on other grounds.
[12] I agree. Notwithstanding that Faire J referred to striking out rather than dismissing the proceeding, there is no doubt he intended to bring to an end a proceeding which he had held was an abuse of the Court’s process. The judgments of the appellate courts confirm unequivocally that the proceeding itself is at an end.
[13] Having determined that there is no proceeding on foot in which an amended statement of claim could be filed, the next issue is what jurisdiction the Court has to review the decisions of the Registrar to allow the filing of a purported amended claim in one instance and to refuse it in another.
Is a decision to accept a document for filing reviewable under rule 2.11?
[14] I accept Mr Carey’s primary submission for Dr Muir that a decision to accept a document for filing is not reviewable under r 2.11. Rule 2.11, so far as is relevant,
reads:
8 Commissioner of Inland Revenue v Muir [2017] NZHC 1413.
2.11 Review of Registrar’s decision
(1) An affected party to a proceeding or an intended proceeding may apply to a Judge by interlocutory application for a review of any of the following:
(a) a Registrar’s exercise of jurisdiction:
(b) a Registrar’s refusal to file a document tendered for filing:
(c) a Registrar’s refusal to perform a duty placed on him or her
under these rules.
(2) The Judge may, on review, make any orders he or she thinks just.
(3) It is not necessary to apply for an order for an extraordinary remedy under Part 30 or to make an application for review under the Judicial Review Procedure Act 2016 when seeking a review under subclause (1)(b) or (c).
[15] Only r 2.11(1)(a) might apply in the present case, but I agree with Mr Carey that a decision to accept a document for filing does not amount to a Registrar’s exercise of jurisdiction in terms of r 2.11(1)(a). The term “exercise of jurisdiction” must take its meaning from the rules immediately preceding it:
·Rule 2.5 confers on the Registrar non-delegable jurisdiction and powers relating to interlocutory applications. These are powers which would otherwise be exercised by a Judge or Associate Judge of the Court.
· Rule 2.6. confers additional jurisdiction on certain Registrars.
·Rule 2.7 imposes limits on the exercise of the jurisdiction conferred by rr 2.5 and 2.6.
· Rule 2.8 confers powers ancillary to the jurisdiction conferred by rr
2.5 and 2.6.
· Rule 2.9 extends the jurisdiction under rr 2.5 and 2.6.
· Rule 2.10 provides the form of an order made by a Registrar under rr
2.5 and 2.6.
[16] It is clear from the wording of r 2.11 that, where the Registrar refuses to act, an application for a review of a Registrar’s decision is available to an affected party to any proceeding or intended proceeding, not merely to interlocutory applications (r 2.5) or procedural steps (r 2.6).9 But the expression “exercise of jurisdiction” in r 2.11(1)(a) must, in my view, refer to the jurisdiction, expressly conferred by the rules on the person holding the office of Registrar for the registry, to make certain
decisions that would otherwise be made by a Judge or Associate Judge. Accepting a document for filing in a registry office is routinely the task of front-line staff, under the supervision and guidance of Deputy Registrars, that does not fall within the jurisdiction referred to in r 2.11(1)(a).
[17] It is not necessary, therefore, for me to rule on Mr Carey’s further submission that the authorities show that a Registrar’s power to reject a document is narrow and heavily circumscribed, limited to filtering for deficiencies in form. But I doubt that it is correct. The Registrar must be entitled to examine the substance of a document to see, for example, whether it is plainly an abuse of the Court’s process10 or whether the filing of the document is contrary to an earlier direction of the Court.
Is the Court’s inherent jurisdiction available to review the acceptance of a
document for filing?
[18] The Commissioner’s primary submission is that there is no longer any proceeding in existence in which an amended statement of claim could have been filed and that the Registrar should have rejected the document. No particular application was required to remedy the situation, because any error by registry staff is not capable of creating jurisdiction to accept a document where there was none. The Court can rectify such an error in the exercise of its inherent jurisdiction to prevent abuses of its process. The Registrar has no power to accept a document purporting to be an amended statement of claim where there is no underlying
proceeding on foot to be amended.
9 High Court Rules 2016, r 2.11(1)(b) and (c).
10 See, for example, Te Toki v Pratt (2002) 16 PRNZ 160 (HC) at [181], followed in Ward v ANZ National Bank Ltd [2012] NZHC 2347 at [12].
[19] Mr Carey submits that Faire J’s decision not to exercise an inherent
jurisdiction disposes of that argument.
[20] It is not clear that Faire J turned his mind to exercising the Court’s inherent jurisdiction to address the Commissioner’s objection to the acceptance of the amended claim for filing; the Judge merely indicated in his Minute of 13 September
2016 that he was not prepared to deal with it based on the memoranda filed by the parties. Having held that r 2.11 does not provide a basis for reviewing the decision to accept a document for filing, I respectfully disagree with Faire J’s view that it was necessary for the Commissioner to apply for summary judgment or a strike-out order under Part 15 of the Rules.
[21] In Re Rafiq, Venning J held that while documents tendered for filing could satisfy the requirements in relation to form, the Court retains an inherent jurisdiction pursuant to which it has a duty to strike out pleadings that are an abuse of process.11
Moreover, a Judge has jurisdiction both under the Rules and the inherent jurisdiction to direct that a document should not be accepted for filing, and the inherent jurisdiction of the Court to control its processes in the interests of justice by, if necessary, refusing to accept documents for filing is not constrained by r 5.2.12
[22] Where, as I have held is the case here, a registry officer accepts a document for filing in a proceeding after it has been concluded, the acceptance is a nullity. There was no proceeding in existence in respect of which an amended statement of claim could be filed. It is clear also that filing a document which purported, misleadingly, to amend a pleading in a proceeding which had been brought to an end by an order of the Court constitutes a collateral attack on the decisions of this Court, the Court of Appeal, and the Supreme Court. It was an abuse of the Court’s process.
In Lai v Chamberlains,13 the Supreme Court referred to the Court’s independent duty
to prevent abuse,14 noting that principles of finality underlie the exercise of the broad
11 Re Rafiq [2014] NZHC 2291 at [11].
12 Ward v ANZ National Bank Ltd, above n 10, at [12].
13 Lai v Chamberlains [2006] NZSC 70, [2007] 2 NZLR 7.
14 At [63].
inherent procedural power to strike proceedings out where further litigation amounts to an abuse of process.15
[23] I consider the Commissioner adopted the appropriate course of filing a memorandum drawing the Court’s attention to the registry officer’s error. Given that the acceptance of the document was clearly a nullity, it would not be in the interests of justice and other genuine litigants seeking access to the Court’s resources to require a responding party, in such circumstances, to make a formal summary judgment or strike-out application. A similar approach is appropriate to remedy an
abuse which is obvious on the face of the papers.16
[24] For completeness, I address Mr Carey’s submission that, if r 2.11 does not allow review of the particular decision in issue, it is not appropriate to use the inherent jurisdiction to review and vary it. The argument relies on an observation by Tipping J in Robert Jones Investments Ltd v Gardner that where the power to review and vary a Registrar’s decision fixing security for costs could not be found in the relevant rule, it is inappropriate to invoke the inherent jurisdiction.17 It is necessary to consider the observation in context. Tipping J was addressing the point that, where there is a rule related to an issue, it is inappropriate to use the inherent jurisdiction to expand or obviate the rule. That is not to say that the Court’s inherent jurisdiction is circumscribed where there is no applicable rule.18
Hillvale’s arguments
[25] I accept the points made by Mr Nolen that Dr Muir and Hillvale are distinct and that not every action taken by, or judgment delivered against, Dr Muir will bind Hillvale. Hillvale was a party to the proceeding struck out by Faire J. It chose not to challenge that order but any appeal would have inevitably suffered the same fate as
Dr Muir’s appeal.
15 At [59] and [62].
16 Re Rafiq, above n 11, at [21].
17 Robert Jones Investments Ltd v Gardner [1994] 3 NZLR 241 (HC) at 244.
18 I note also that a broader approach may be possible. In ANZ Banking Group (NZ) Ltd v Hawkins (1991) 5 PRNZ 581 at 582, where a Registrar refused the plaintiff ’s request to demand payment on the mortgage, Smellie J held that although the equivalent to r 2.11 may not have been applicable, he did not have to finally decide that point because, undoubtedly, “a Judge of this Court has inherent jurisdiction to review a decision of a Registrar”.
[26] It follows necessarily from my decisions about Dr Muir’s attempt to continue his challenge to the Commissioner’s decisions by filing an amended claim that Hillvale’s similar attempt must also fail. The Registrar was right to reject the document, notwithstanding an earlier decision by a registry officer that it should be accepted, because the filing was a nullity and an abuse of the Court’s procedure.
[27] Hillvale is not assisted by its argument that the tax challenge to the statutory demand in its amended statement of claim bears no connection to the Trinity scheme litigation ultimately struck out by this Court on 22 April 2015.19 It is the entire proceeding which has been brought to end, not merely a cause of action.
Decisions and orders
[28] I grant the Commissioner’s application against Dr Muir for review of the
Registrar’s decision to file Dr Muir’s amended statement of claim dated 29 August
2016. I declare that the tendering of the amended statement of claim was an abuse of the Court’s process and that the filing is a nullity. I direct the Registrar to remove the document from the file and return it to Dr Muir with any filing fee.
[29] Hillvale’s tendering of an amended statement of claim dated 22 March 2017 was also an abuse of the Court’s process. I dismiss its application under r 2.11(1)(b) for review of the Registrar’s refusal to file the document.
Ancillary direction?
[30] The Commissioner suggested it may be appropriate to direct that the Registrar is not to accept any further proceedings from Dr Muir or Hillvale without first referring them to a Judge of this Court. That should not be necessary: this judgment is sufficient to make the position clear to the parties, their advisers and the
registry.
19 Above n 1.
Costs
[31] The Commissioner is entitled to costs on both applications on a category 2B basis, plus disbursements. If there is no agreement, the Commissioner shall apply by memorandum filed and served no later than 22 September 2017. Any memorandum in reply shall be filed and served by 13 October 2017. Costs shall then be dealt with on the papers unless the Court directs otherwise.
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Toogood J
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