Muir v Taxation Review Authority

[2017] NZHC 2932

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2016-404-002908 [2017] NZHC 2932

UNDER

the Judicial Review Procedure Act 2016

IN THE MATTER

of an application for review pursuant to
Part 1, Judicature Amendment Act 1972

BETWEEN

GARRY ALBERT MUIR Applicant

AND

THE TAXATION REVIEW AUTHORITY

First Respondent

THE COMMISSIONER OF INLAND REVENUE

Second Respondent

Hearing:	27 November 2017
Appearances:	S R Carey for Applicant No appearance for or on behalf of First Respondent S Leslie and J Mara for Second Respondent
Judgment:	29 November 2017

JUDGMENT OF JAGOSE J

This judgment is delivered by me on 29 November 2017 at 2.45  pm pursuant to r 11.5 of the High Court Rules.

..................................................... Registrar / Deputy Registrar

Counsel/Solicitors:

S Carey, Barrister, Auckland

Crown Law, Wellington

MUIR v THE TAXATION REVIEW AUTHORITY & ANOR [2017] NZHC 2932 [29 November 2017]

Introduction

[1]      The applicant, Dr Muir, brings this proceeding for judicial review of the Taxation Review Authority’s (the “Authority”) refusal to accept his “Second Amended Notice of Claim” for filing in a dismissed proceeding.

[2]      The  second  respondent  (the  “Commissioner”)  objects  to  this  Court’s jurisdiction to hear and determine the proceeding,1 and applies on the present application for its dismissal also.2 Alternatively, she applies for the proceeding to be dismissed as an abuse of process.3

Background

[3]      The background to the proceeding lies in the Trinity tax scheme, designed by Dr Muir. This Court held the dominant purpose of the scheme was tax avoidance,4 which decision was affirmed by the Court of Appeal,5 and the Supreme Court.6

[4]      Dr Muir’s challenges to his income tax assessments for the 1997 to 2010 tax years in both the Authority and this Court, stayed pending final determination of the Trinity tax scheme’s legitimacy, were subsequently struck out by the Authority and this Court (both in its original jurisdiction, and on appeal from the Authority).7 This was affirmed again by the Court of Appeal.8 Although granted leave to appeal to the Supreme Court, Dr Muir there accepted (in oral argument of new grounds) his leave

application should be revoked. The Supreme Court said “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

1      HCR 5.49(1).

2      HCR 5.49(3).

3      HCR 15.1(1) and (2).

4      Accent Management Ltd v Commissioner of Inland Revenue (2005) 22 NZTC 19,027.

5      Accent    Management    Ltd     v    Commissioner    of    Inland     Revenue    [2007] NZCA 230, (2007) 23 NZTC 21,323.

6      Ben  Nevis  Forestry  Ventures  Ltd  v  Commissioner  of  Inland  Revenue  [2008] NZSC 115,

[2009] 2 NZLR 289.

7      Muir v Commissioner of Inland Revenue [2011] NZTRA 2, (2011) 25 NZTC 1-006; Muir v

Commissioner of Inland Revenue [2015] NZHC 792, (2015) 27 NZTC 22-004.

8      Muir v Commissioner of Inland Revenue [2015] NZCA 591, (2015) 27 NZTC 22-034.

9      Muir v Commissioner of Inland Revenue [2016] NZSC 113, (2016) 27 NZTC 22-067 at [11].

[5]      Dr Muir then sought to file an ‘amended’ pleading in each the Authority and Court.  As  said  above,  the  Authority  refused  to  accept  the  pleading  for  filing, expressly on grounds the proceeding had been struck out, confirmed by minute of Judge Sinclair dated 21 September 2016. The High Court inadvertently accepted the amended pleading for filing.

[6]      In   granting   the   Commissioner’s   subsequent   application   for   summary judgment on Dr Muir’s unpaid tax liabilities, this Court confirmed the Authority proceeding was “at an end”.10  Separately, on the Commissioner’s successful application to review the Registrar’s acceptance of the amended High Court pleading for filing, this Court also confirmed that proceeding was “at an end”.11

Discussion

[7]      Counsel for Dr Muir, Mr Carey, raises a number of contentions against the

Commissioner’s application.

[8]      First, Mr Carey disputes the Commissioner can pursue the alternative ground for  the  proceeding’s  dismissal,  fundamentally because  this  alternative  ground  is founded in an acceptance of the Court’s jurisdiction (the objection to which underwrites the Commissioner’s primary ground for dismissal). He says the Commissioner should elect one course or the other.

[9]      That cannot be right. If the Court lacks jurisdiction, the proceeding must be dismissed.12  Otherwise, the Court must set aside the Commissioner’s appearance.13

The alternative illustrates the course is not a matter for election, but of consequence: if the Commissioner’s appearance is set aside, she continues to have the proceeding’s prospective summary dismissal at her disposal.

[10]    Next, Mr Carey relies on another interlocutory judgment in the present proceeding,  joining  the  Commissioner  as  a  party,  as  establishing  at  least  Judge

10     Commissioner of Inland Revenue v Muir [2017] NZHC 1413, (2017) NZTC 23-019 at [44].

11     Muir v Commissioner of Inland Revenue [2017] NZHC 2082, (2017) 28 NZTC 23-029 at [12].

12     HCR 5.49(6)(a).

13     HCR 5.49(6)(b).

Sinclair’s minute was a reviewable decision.14 But the judgment was expressly addressing Dr Muir’s application for judicial review, which “proceeds on the basis that the Second Amended Notice of Claim was a proceeding”.15  Dr Muir cannot confer jurisdiction on the Court by so (mis)characterising his Authority pleading.

[11]     Mr Carey also says the Authority’s decision is reviewable as a commission of inquiry,16 and in any event under Part 30 of the High Court Rules. In both cases, the submission puts the cart before the horse. The Authority is only a commission of inquiry “within the scope of the Authority’s jurisdiction”.17 And, even at its broadest, judicial review is still concerned with exercises of power, which are not engaged when their subject is an impossibility.18

[12]     Last,  in  connection  with  Dr  Muir’s  opposition  to  the  Commissioner’s alternative application, Mr Carey cites well-established principle in support of permitting Dr Muir his day in court.19 Given the background to the proceeding, there is  some  irony in  the plea.  If the Court  lacks  jurisdiction,  there is  no  utility in determining that only in conjunction with Dr Muir’s judicial review proceeding. The “just, speedy, and inexpensive determination” of the proceeding is better secured by addressing the Commissioner’s primary application first.20

[13]     I had wondered whether Dr Muir’s ‘amended’ pleading might in function, if not form, have been considered an originating pleading. Dr Muir would have been thoroughly out of time, as challenges are required to be made within two months of the impugned assessment.21 Exceptional circumstances would have been required to

permit such late filing,22 and none are indicated. And this Court additionally held Dr

Muir cannot now issue new proceedings in relation to his 1997-2010 income tax

14     Muir v Taxation Review Authority [2017] NZHC 846 at [17].

15 At [18].

16     Taxation Review Authorities Act 1994, s 15.

17     Section 15(1).

18     Attorney-General v Waikato Regional Airport Ltd [2002] 3 NZLR 433 (CA) at [136]; Mahli v

Auckland Co-Operative Taxi Society Ltd [2014] NZHC 2814 at [122].

19     Attorney-General v Prince and Gardner [1998] 1 NZLR 262 at 267; Couch v Attorney-General

[2008] NZSC 45, [2008] 3 NZLR 725 at [33].

20     HCR 1.2.

21     Tax Administration Act 1994, s 138B.

22     Tax Administration Act 1994, s 138D.

assessments.23  Ultimately, it is not possible to see Dr Muir’s attempted filing as

anything other than re-enlivenment of his struck out tax challenges.

Decision

[14]     This Court earlier held of Dr Muir’s ‘amended’ pleadings, respectively in the Authority and this Court, “Once a proceeding is at an end it is not possible to file fresh pleadings in the same proceeding to resume the litigation”,24 and:25

… 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 processes. In Lai v Chamberlains,26 the Supreme Court referred to the Court’s independent duty  to  prevent  abuse,27   noting  that  principles  of  finality  underlie  the exercise of the broad inherent procedural power to strike proceedings out where further litigation amounts to an abuse of process.28

[15]     As the Authority proceeding is at an end, there is nothing in which any

‘amended’ pleading may be filed. It follows the Authority exercises no power in refusing to accept such a pleading for filing, and I am satisfied this Court has no jurisdiction to review such a refusal. In accordance with HCR 5.49(6)(a), I therefore dismiss the proceeding.

[16] Given that decision, I do not need to decide, and therefore dismiss, the Commissioner’s alternative application. Had I been required to decide the application, I would have granted it, essentially for the reasons set out at [14] above.

Costs

[17]     The Commissioner seeks indemnity costs on her success. At least from the

time of this Court’s decisions on 23 June 2017,29  and 29 August 2017,30  it can be

said Dr Muir “has acted vexatiously, frivolously, improperly, or unnecessarily in…

23     Commissioner of Inland Revenue v Muir (above n 10) at [46]-[50].

24     Muir v Commissioner of Inland Revenue (above n 10) at [44].

25     Muir v Commissioner of Inland Revenue (above n 11) at [22].

26     Chamberlains v Lai [2006] NZSC 70, [2007] 2 NZLR 7.

27 At [63].

28     At [59] and [62].

29     Commissioner of Inland Revenue v Muir (above n 10).

30     Muir v Commissioner of Inland Revenue (above n 11).

continuing” the proceeding,31  justifying indemnity costs from that time. I am less sure that is an easy characterisation of Dr Muir’s commencement of the proceeding.

[18]     The pleadings in the present proceeding were complete before 23 June 2017,

Dr Muir’s notice of opposition to the Commissioner’s application being filed on

22 June  2017.  I  apprehend  the  only  steps  in  the  proceeding  thereafter  are

Schedule 3’s steps 24-26.

[19]     My preliminary view is the Commissioner should be entitled to 2B costs for all steps in the proceeding before 23 June 2017, and actual and reasonable indemnity costs thereafter. If that is not accepted by the parties, costs are reserved for determination on short memoranda of no more than five pages – annexing a single- page table setting out any contended allowable steps, time allocation, and daily recovery rate – to be filed and served by the Commissioner within ten working days of the date of this judgment, and by Dr Muir within five working days of service of the Commissioner’s memorandum, and by the Commissioner strictly in reply within five working days of service of Dr Muir’s memorandum.

—Jagose J

31     HCR 14.6(4)(a).