Musuku v Commissioner of Inland Revenue
[2015] NZHC 1454
•26 June 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-0006 [2015] NZHC 1454
UNDER Section 72 of the District Courts Act 1947 BETWEEN
JAWAHAR BHASKAR MUSUKU Appellant
AND
THE COMMISSIONER OF INLAND REVENUE
Respondent
Hearing: 16 June 2015 Appearances:
G J Thwaite for the Appellant
M Deligiannis and C Walmsley for the RespondentJudgment:
26 June 2015
JUDGMENT OF THOMAS J
This judgment was delivered by me on 26 June 2015 at 11.00 am pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date:………………………….
Solicitors:
G J Thwaite, Auckland.
Crown Law, Wellington.
MUSUKU v THE COMMISSIONER OF INLAND REVENUE [2015] NZHC 1454 [26 June 2015]
Introduction
[1] The appellant, Jawahar Musuku, appeals against the decision of Judge Harrison in the District Court granting the application of the respondent, the Commissioner of Inland Revenue, for summary judgment against the appellant.
Background
[2] On 3 November 2009, the appellant filed his income tax return for the year ending 31 March 2007. He assessed his income tax to pay as $8,400. On
23 December 2009, the appellant filed his income tax return for the year ending
31 March 2008. He assessed his income tax to pay as $1,950.
[3] In December 2013 the Commissioner filed a notice of claim in relation to the non-payment of the appellant’s 2007 and 2008 income tax assessments (the Liability). The Commissioner also claimed use of money interest and late payment penalties which accrue by operation of law, due to the non-payment of a tax assessment.
[4] Representing himself, the appellant filed a response in which he admitted the
Liability but claimed it was satisfied, in that:
(a) he had a right to a transfer of credits from his spouse’s account;
(b)he had a right to a transfer of credits from a GST account (being that of a company with which he was associated); and
(c) the litigation was unnecessary and a waste of the Court’s time.
[5] The appellant counterclaimed relying on tax credits due from his spouse’s
account and GST refunds.
[6] The Commissioner filed an application for summary judgment based on the
appellant’s acceptance of the Liability.
[7] The Commissioner also filed a response to the counterclaim, stating that the appellant was prevented by r 3.39 of the District Court Rules 2009 from raising a counterclaim in relation to the Commissioner’s claim for unpaid taxes.
[8] The Judge was satisfied that the Commissioner proved the Liability had not been paid, nor had any credit been applied to the Liability because the Commissioner was not instructed to do so. There was therefore no defence to the Commissioner’s application and judgment was entered in respect of the Liability of $10,350 plus interest and penalties of approximately $26,000.
Summary judgment principles
[9] The principles of summary judgment are well settled. The Court of Appeal summarised the principles in Krukziener v Hanover Finance Ltd as follows:1
… The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA).The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
Issues
[10] In submitting that the Judge erred in concluding the appellant had no defence to the claim, the appellant identified three issues:
(a) Did the Judge err in failing to consider whether tax credits were available to the appellant?
1 Krukziener v Hanover Finance Ltd [2008] NZCA 187 at [26].
(b) Did the Judge err in deciding that a cheque for $13,654 (the Cheque)
should not have been applied to the Liability?
(c) In any event, did the Judge err in exercising his discretion to grant summary judgment in light of issues surrounding the Commissioner’s conduct?
Did the Judge err in failing to consider whether tax credits were available to the appellant?
[11] The appellant claims he has a defence to the claim in that:
(a) the Commissioner should have transferred Working for Family tax credits payable to his wife to satisfy the Liability; and/or
(b)GST refunds were owed to an associated company, which were to be transferred to satisfy the Liability.
[12] The appellant did not pursue this defence at the summary judgment hearing. The appellant had represented himself in the District Court. In Mr Thwaite’s submission, that was important background to consider.
[13] The Commissioner says that, in any event, no such credits were available to be transferred to satisfy the Liability.
[14] Although the tax years at issue were those ending in 2007 and 2008, in Mr Thwaite’s submission, a key background error in the decision was a misunderstanding as to the status of the appellant’s income tax liability for the years ending 31 March 2001 to 31 March 2005. That background was important, he said, because it went to the issue of whether the appellant might have been entitled to tax credits to off-set the Liability.
[15] The Commissioner had commenced an audit of the appellant in August 2006, after he failed to file income tax returns for the tax years ending 31 March 2001 to
31 March 2006. In February 2007 the appellant filed his income tax returns for the
years 2001 to 2005, showing his annual income ranging from between just over
$10,000 to just over $20,000. The Commissioner was not satisfied with the returns and proposed a substantial increase, ranging from just under $330,000 to just over
$808,000. The appellant contends that the Commissioner’s assessments were outside of the time period under s 108 of the Tax Administration Act 1994 (the Act), even taking into account the waiver of time bar signed by the appellant in 2010.
[16] The Commissioner relies on s 108 of the Act, which permits the Commissioner to undertake an assessment if a tax return is fraudulent, wilfully misleading or omits income which should not have been omitted.2
[17] The appellant sought judicial review of the Commissioner’s actions. The application was struck out on the basis that the issue should properly be dealt with through the Taxation Review Authority (or the High Court, if elected). The Judge who dealt with the judicial review application said:3
I am of the view, however, that as a matter of strict statutory interpretation there is no time bar in cases where the Commissioner has formed such an opinion. Section 108(2) provides that the Commissioner may amend the assessment “at any time”. No time bar is specified.
[18] Mr Thwaite submitted that, even assuming that the Commissioner’s actions were lawful, it was premature for the Court to accept the Commissioner’s claim in respect of the Liability as correct. He said that, until the adjustment proceedings are completed, it is not possible to determine:
(a) the taxable income of the appellant for the tax years 2001 to 2005;
(b)the amount of credit that can be transferred to the appellant by his spouse or by a company;
(c) the quantum (if any) of the remaining core liability for the tax years
2007 and 2008; and/or
2 Section 108(2).
3 Musuku v Commissioner of Inland Revenue [2015] NZHC 678 at [34].
(d)the interest and penalties which might accrue on any remaining core liability.
[19] In Mr Thwaite’s submission, the Judge should not have made a determination on the Liability until the issue surrounding the waiver and validity of the Commissioner’s assessment for the prior tax years had been dealt with.
[20] If the appellant is right, then the income as returned by him for the 2001 to
2005 tax years becomes the assessments for each year. That being the case, potentially, he would then qualify for a tax credit as a result of the Government’s Working for Families (WFF) package, if his wife’s income was also sufficiently low during those years. That means that the Liability could be reduced by the amount of that credit.
[21] Mr Thwaite accepted that this submission might not have been put to the Judge in this way or in this detail. In his submission, however, the general issue before the District Court was the appellant’s ground of opposition to the effect that he was entitled to tax credits as a result of income in the previous years. It was also a point relevant to the exercise of discretion, in Mr Thwaite’s submission.
[22] As Ms Deligiannis, for the Commissioner, pointed out, even on the appellant’s own assessments for the years 2001 to 2005, he owes the Commissioner income tax.
[23] The tax credits referred to were not credits to which the appellant himself was entitled. The only potential for the WFF credit related to the appellant’s wife’s low income in certain tax years. However, as Ms Deligiannis noted, the appellant’s own income must be taken into account. The appellant’s income, based on self- assessment, was extremely low. Ms Deligiannis conceded that, if that income were accepted, the combined income of the appellant and his wife might entitle them to WFF credit. However, the appellant was certainly not entitled to the WFF credit on the basis of the Commissioner’s assessment.
[24] The appellant’s affidavit evidence was to the effect that he had requested his wife’s credit to be transferred against his Liability. The only documentary evidence to support this is an email from Reddy Taxation Services Ltd to the appellant dated
23 August 2010 stating that when the tax returns for the appellant’s wife were e-filed
Reddy Taxation Services Ltd:
Clearly mentioned Terminal Tax refund amounts (due to Family Assistance calculations) has been transferred to her husband (appellant’s name and IRD number) tax liabilities.
[25] However, the appellant has produced no reliable evidence to prove that any such credits are actually available. There is no evidence of income for the relevant years or whether Mrs Musuku had applied for the WFF. I am satisfied that there is nothing to substantiate the appellant’s claimed WFF credit and there was nothing before the Judge to support this issue as a valid defence.
[26] Mr Thwaite then noted that, in May 2008, the Commissioner was actually refunding GST payments to companies owned and operated by the appellant and suggested the Commissioner could instead have off-set the amount of any refunds against the Liability. The difficulty with that proposition is that the IRD could not take such action without being instructed to do so because the refund was due to a different entity from the appellant. I note that in January 2010, a request that a tax credit of $4,000 due to Mission Bay Pharmacy (2005) Ltd (the Pharmacy) be transferred to Mission Bay Holdings 2005 Ltd (the Holding Company) was declined.
[27] In any event, as a matter of law, in a proceeding by the Crown for the recovery of taxes, duties or penalties, a defendant is not entitled to advance any set- off or counterclaim.4
[28] The appellant’s argument is essentially that he is entitled to a set-off or counterclaim. These matters could have been raised by the appellant in another forum, for example, in challenge proceedings under the Act. They cannot be raised
in these proceedings.5
4 District Court Rules 2014, r 5.63 (or its predecessor, District Court Rules 2009, r 3.39. See also
High Court Rules, 5.61).
5 See Attorney-General v Bell-Booth Group Ltd (1991) 3 PRNZ 416 (HC); Commissioner of
Did the Judge err in deciding that the Cheque should not have been applied to the Liability?
[29] The appellant claims that the Liability was paid by the Cheque which was issued by the Holding Company and sent to the Commissioner by his tax agent, KPMG, on 24 September 2009.
[30] The appellant’s defence relating to the Cheque was not referred to in the documentation filed with the District Court but arose during the hearing. The Judge adjourned the proceedings part-heard to enable the Commissioner to respond to the allegation.
[31] On 24 September 2009, KPMG wrote two letters to the Commissioner. The first referred to the appellant and one of his associated companies, the Holding Company. The letter discussed the progress of the appellant’s outstanding 2007 and
2008 tax returns, noting an intention to file the 2007 return by 31 October 2009 and the 2008 return by 15 December 2009. The second letter referred to the Holding Company and to the appellant and the 2006 tax year.
[32] The Commissioner’s case note dated 25 September 2009 shows that the two letters accompanied a bundle of documents and two cheques: one for $5,984, which was in respect of the 2006 year as noted on the back of the cheque, and the other, the Cheque. The Cheque had a note on the back: “Mission Bay Pharmacy (2005) Limited IRD number 91337053 GST”.
[33] The issue is whether the Cheque was in respect of a GST payment for the Pharmacy or whether it was in respect of a provisional assessment of the appellant’s tax liability for the tax years of 2007 and 2008.
[34] An employee of the Commissioner contacted the appellant to ask how the Cheque was to be allocated. The appellant wrote a letter dated 30 September 2009 which was emailed to the Commissioner on 6 October 2009. The relevant parts of
the letter are:
Inland Revenue v Wright [2013] NZHC 476; and Commissioner of Inland Revenue v Wire by
Design Ltd [2012] NZHC 857.
Sorry for the delay in replying to your telephone call. The chque [sic] for
$13,654.00 is towards Mission Bay Pharmacy (2005) GST. We have submitted NOPA two weeks ago along with that we have enclosed two
chques [sic]:
1) $13,654.000 GST
2) $5,984.46 towards my personal tax income.
…
A payment of $10,000 has been made on 28th September as per the instalment arrangement.
[35] In Mr Thwaite’s submission, the first portion of the letter was clearly inserted into an existing draft of the letter after a telephone conversation between the appellant and an employee of the Commissioner. He said that because, after the first part of the letter, the appellant then says:
I am writing in response to the letter dated 7 September …
[36] The amount of $13,654 was credited to the Pharmacy account for the period ended 30 September 2008.
[37] The appellant, however, says that he wrote to the Commissioner on
1 October 2009 (the October Letter), saying:
Further to your telephone call with regards to your query about the two cheques you received from us, which were sent to you by KPMG along with the documentation. My Tax agents KPMG confirmed that they have filed my income tax return for 2006 on 24 September. Please apply the amount
$5984.46 to my income tax return, the second one is for Income Tax years
2007/2008 which KPMG is filing the returns electronically tomorrow for the
2007 and for 2008 in the next few weeks. As they have completed the work for my personal tax and other entities and have advised me to send the
cheques in order not to incur any penalties.
1) $5984.46 Chno 113914
2) $13,654.00 Ch No 113915
I confirmed with my accountants today there is no GST outstanding for Mission Bay Pharmacy 2005 Ltd, in fact we received the credit cheques (please find enclosed) hence do not apply the amounts to Mission Bay Pharmacy 2005 as discussed with you, please correct my earlier mail, sorry for the confusion.
…
I would be grateful if you could confirm once you have applied these amounts to my income tax and credits to my entities.
[38] The Commissioner says that the October Letter was never received by her
Office.
[39] In the appellant’s submission, the October Letter reflected the correct position. The cheque was in respect of the Liability. It would not have been for the Pharmacy’s GST because there was at that time no outstanding GST. The Commissioner’s position is that there was an outstanding GST return for the Pharmacy at that time.
[40] On 18 October 2009, the Commissioner sent a statement of account to the Pharmacy showing the receipt of $13,654 on 7 October 2009 for the GST period ended 30 September 2008. Around 19 November 2009, an employee of the Commissioner rang the appellant. During the conversation the appellant referred to the letter dated 30 September 2009. On 18 December 2009, the appellant rang the Commissioner’s call centre and requested that $10,000 be transferred from the Pharmacy’s account to that of the Holding Company. The credit was a result of the amount of $13,654 which had been credited to the Pharmacy. The balance of the credit from the Cheque was used when the Pharmacy filed its GST return for the period ended 30 September 2008.
[41] The Judge concluded that the Commissioner never received the October Letter.6 The Judge found that the IRD acted in accordance with the appellant’s instruction of 30 September 2009 to credit the Pharmacy’s GST account. That this was always the appellant’s understanding was demonstrated, the Judge found, by his email of 31 December 2009 confirming the telephone instruction about the transfer of $10,000 to the Holding Company’s account. The Judge noted the email would contradict the appellant’s instruction in the October Letter that the cheque be credited to his personal tax. The Judge observed that, had the appellant believed the instruction had or should have been complied with, then surely he would not have
instructed the call centre to credit $10,000 to the Holding Company. In the Judge’s
6 At [28].
assessment, that request confirmed the appellant’s belief that the Cheque was always held to the credit of the Pharmacy.
[42] Mr Thwaite submitted that the conclusion should properly have been tested on the evidence, as issues of credibility were involved. He pointed out that the appellant had a standing instruction for regular payments of $10,000 to be made relating to arrears of the Holding Company.
[43] The appellant submitted that there was “no sufficient certainty as to essential facts”, relating to the Cheque and how it was to be applied, relying on the following:
(a) the evidence on behalf of the Commissioner was hearsay;
(b)the Commissioner’s evidence as to other tax liabilities of the appellant was incomplete and thus misleading;
(c) the Commissioner’s records were not sufficiently reliable;
(d) a genuine dispute exists as to the proper allocation of the Cheque;
(e) the Cheque solely concerned the liability of the appellant for the following reasons:
(i) the context of its delivery;
(ii)there is no evidence as to who wrote, and when, the direction on the Cheque that it be applied to GST; so there was no proof of authorisation by the appellant;
(iii)in a phone conversation on or about 1 October 2009 and/or correspondence, the IRD was advised that the funds were to be allocated to the appellant’s personal tax liability;
(iv)the correspondence of 30 September 2009 as to the allocation of the Cheque could not reasonably be relied upon by the
Commissioner, given inconsistencies and/or anachronisms therein;
(v)the appellant’s subsequent reference to $10,000 may refer to periodic instalments of that sum then being paid by the appellant.
[44] The deponents of the affidavits on behalf of the Commissioner have no personal recollection of the matters in question and their statements are made in light of the Commissioner’s records. For the majority of the statements, there are source documents to support them. In some instances the appellant’s documents support the evidence.
[45] Other than the statement that the October Letter had never been received by the Commissioner (made by three separate officers of the Commissioner all of whom independently searched the Commissioner’s database system for the October Letter), all of the Commissioner’s evidence in reply was documentary evidence obtained, or notes recorded, at the time. There is no evidence to suggest that these records were incorrect.
[46] The appellant’s assertion that he sent the October Letter is inconsistent with
the following evidence which I consider compelling:
(a) The appellant claims he told an employee of the Commissioner on the telephone that the two cheques were to be applied to personal income tax for the years 2006, 2007 and 2008. However, according to an IRD case note on 6 October 2006, the appellant told the employee he would advise by letter how the Cheque was to be allocated. This note indicates that the IRD was not told verbally how the Cheque was to be allocated.
(b)The appellant claims he sent the October Letter. He makes no mention of the letter dated 30 September 2009 which he emailed to
the Commissioner. However, according to the IRD case notes, the appellant complained he had not received a response to that letter.
(c) The appellant claims that the Cheque was in payment of the Liability.
However, he requested $10,000 be transferred from the Pharmacy’s GST account for the period ended 30 September 2008 to the Holding Company. On 31 December 2009 the appellant sent an email reiterating that request. In the email he acknowledged the credit of
$13,000 in the Pharmacy account.
[47] I am satisfied that the Commissioner dealt with the Cheque, and the credit arising from the deposit of those funds, in accordance with appellant’s instructions to the Commissioner.
[48] The following facts support the inference that the October Letter was not sent:
(a) The appellant did not raise the defence relating to the Cheque or the existence of the October Letter until just prior to the summary judgment hearing.
(b)The October Letter was dated before the appellant’s 2006 and 2007 income tax returns were filed. The October Letter says that the returns will be filed the following day. However, KPMG was managing those returns and had indicated by their letter a few days earlier that the returns would not be sent until a later date. It would therefore seem surprising for the appellant to send an amount which he claims represents the tax provisionally assessed if, indeed, the returns were to be filed the following day for some $3,000 less than the Cheque.
(c) The appellant’s tax liability for the 2007 year was $8,400 and for the
2008 year was $1,950. Together these total $10,350, not $13,000, which is the amount of the Cheque.
(d)In April 2014 the appellant claimed that KPMG had paid the assessments at the time the returns were filed. If this was correct payment would have been made on 3 November 2009 and
23 December 2009, being the dates the returns were filed. He now claims payment was made by way of the Cheque on about
26 September 2009.
(e) The appellant’s email to the Commissioner on 6 October 2009 clearly stated the Cheque was to be credited to the GST account of the Pharmacy.
(f) The appellant’s company was sent a copy of the statement of account showing the credit from the Cheque.
(g) The appellant referred to the letter dated 30 September 2009 on
18 November 2009.
(h)The appellant specifically asked for $10,000 to be transferred from the account of the Pharmacy to the Holding Company.
(i)The appellant regularly received personal income statements of account showing that the Liability remained unsatisfied.
[49] As Ms Deligiannis pointed out, there is no reason why the IRD would not have actioned the October Letter if indeed it had been sent.
[50] The shifting sands of the appellant’s position as to alleged payment of the Liability does not assist the analysis of whether he has any defence. In his statement of defence, the appellant claimed that the 2007 and 2008 assessments had been paid by KPMG when the income tax returns were submitted. He swore an affidavit to that effect. Just prior to the summary judgment hearing, the appellant swore another affidavit where he alleged that he had paid the income tax assessments by way of the Cheque.
[51] I concur entirely with the decision of the Judge. He, rightly in the circumstances, took a robust and realistic approach to the facts. The Cheque was remitted to the Commissioner. The Commissioner acted in accordance with the appellant’s instructions and applied the Cheque against the GST liability of the Pharmacy. The Commissioner subsequently complied with the appellant’s instruction to transfer $10,000 of that sum to the Holding Company’s account. The documentary evidence satisfies me entirely that the appellant gave those instructions and was fully aware of them while at the same time being aware that the Liability remained outstanding.
In any event, did the Judge err in exercising his discretion to grant summary judgment in light of issues surrounding the Commissioner’s conduct?
[52] The court retains a discretion as to whether to grant summary judgment, after it has been satisfied by a plaintiff that the defendant has no defence.7
[53] In the Court of Appeal case of Pemberton v Chappell, Casey J noted that:8
While the word “may” suggests a general discretion, I agree with the views
of Robert Goff LJ in European Asian Bank AG v Punjab & Sing Bank [1983]
2 All ER 508, 515, on the corresponding provisions of Ord 14 r 3(1) – once the plaintiff has complied with the requisite formalities and has satisfied the Court there is no defence, “it is very difficult indeed to conceive of circumstances where the Court should not give judgment for the plaintiff … it can only be a discretion of the most residual kind”.
[54] In Jowada Holdings Ltd v Cullen Investments Ltd, the Court of Appeal held that:9
Once the Court has been satisfied there is no defence Rule 136 confers a discretion to refuse summary judgment. The general purpose of the Rules however is the just, speedy, and inexpensive determination of proceedings, and if there are no circumstances suggesting summary judgment might cause injustice, the application will invariably be granted.
7 See generally Andrew Beck and others McGechan on Procedure (online looseleaf ed, Brookers)
at [HR12.2.11].
8 Pemberton v Chappell [1987] 1 NZLR 1 at 5 (CA).
9 Jowada Holdings Ltd v Cullen Investments Ltd CA248/02, 5 June 2003 at [28]. See also
Sudfeldt v UDC Finance Ltd (1987) 1 PRNZ 205 (CA) at 209.
[55] The discretion not to grant summary judgment, even where it is apparent there is no defence, may be exercised where some injustice may be caused or the procedure is being used (intentionally or not) as an instrument of oppression.10
[56] Mr Thwaite submitted that the Court should have exercised its discretion either not to enter judgment at all or to enter it for only the Liability, in light of:
(a) the appellant’s innocence in the circumstances, arising from his trust
in KPMG;
(b)the appellant’s ill health, attributable to the Commissioner’s pressure; the Commissioner’s failure to provide documents as requested, which required judicial intervention;
(c) the Commissioner’s failure to honour the agreement as to an independent review. The appellant and the Commissioner agreed that the files relating to the appellant and his associated companies would be reviewed. In Mr Thwaite’s submission, the Commissioner had agreed to an independent review by an accountant but there was only an internal consideration of the files which concluded that there was no reason to doubt the calculations on behalf of the Commissioner were anything other than correct;
(d) the Commissioner’s failure to honour the time bar waiver of
1 October 2010 or disclose that the Commissioner’s assessment was after the effective waiver date;
(e) the misconception engendered by the Commissioner’s incomplete evidence as to other tax liabilities of the appellant. Mr Thwaite referred to an affidavit on behalf of the Commissioner indicating that the appellant was outside the time for disputing the proposed adjustment for the 2001 to 2005 tax years. However, the appellant
had issued a notice of response and statement of position in
10 See Herring v Herring [2011] 2 NZLR 433 (CA) at [29]; discretion exercised where case was part of a larger dispute.
accordance with an order of the High Court. The order had not been brought to the attention of the Judge;
(f) the pressure exerted upon the appellant by the Commissioner through actual or threatened litigation;
(g)the failure of the Commissioner to follow up on the Commissioner’s letter of 30 September 2009, which contained one or more obvious errors;
(h) the use the Commissioner made of the appellant’s funds in the
Cheque, which remained in a GST account until 29 January 2010;
(i)the unjustifiable delay acknowledged by the Commissioner in her general assessment of the appellant’s position; and/or
(j)the Commissioner’s undue delay in commencing the action, which led to increased interest and default charges.
[57] In Mr Thwaite’s submission, summary judgment should have been refused as the application was part of a pattern of injustice in which the appellant is entangled, which impacts adversely upon the integrity of the tax system. Furthermore, the application was oppressive when the appellant had endeavoured to reach a resolution of all issues and is now having to dispute tax disputes through the Taxation Review Authority procedure.
[58] Mr Thwaite acknowledged that the appellant, acting for himself, did not specifically invoke the power of the Court to decline summary judgment. However, he did claim misuse of a discretion by the Commissioner and assert that the action was a waste of the Court’s time. He thereby gave sufficient notice that his objection went beyond matters of evidence, to include the propriety of the litigation, Mr Thwaite said.
[59] The Commissioner rejects these allegations. She disputes there was ever any intention for the independent review to be carried out by an entity outside of the
department. Documentation included in the affidavits refers to an internal review. Indeed, in Ms Deligiannis’ submission, the review was evidence of the Commissioner’s good faith towards the appellant by undertaking a review in light of difficulties which apparently arose between the appellant and the assigned investigator.
[60] The Commissioner denies that she is responsible for the appellant’s ill health. Ms Deligiannis pointed out that all taxpayers have a responsibility to comply with the law and meet their tax obligations.11 The Commissioner is under no duty to commence debt recovery litigation within a certain period of time. It is the taxpayer’s responsibility to file returns and pay any tax owing within the statutory timeframes.
[61] There is no evidence to suggest that summary judgment might cause injustice to the appellant. I note the comments by Woolford J in the judicial review proceeding, to the effect that the Commissioner followed a comprehensive disputes process.12
[62] An appeal against the exercise of a discretion can only succeed if the appellant shows an error of law or principle; the taking account of irrelevant considerations; failure to take account of a relevant consideration; or where the decision was “plainly wrong”.13 I am satisfied none of those grounds are present in this case.
[63] The appellant’s tax liability for the tax years ending 2007 and 2008 was not in dispute. The amount owing is based on the appellant’s own assessments. There are no credits available to off-set the Liability and a set-off cannot be raised in these proceedings. The Commissioner allocated the funds from the Cheque as directed by
the appellant or as entitled by law. The Liability remains outstanding.
11 Tax Administration Act 1994, s 15B.
12 Above n 3, at [12].
13 K v B [2010] NZSC 112 at [32], citing May v May (1982) 1 NZFLR 165 (CA), compared with
Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.
[64] The appellant is entirely responsible, as a result of his non-payment, for the use of money interest and late payment penalties which have accumulated by operation of the various provisions of the Act.
[65] There is no defence to the claim and summary judgment was properly granted. This is not one of those rare cases where the Court should have exercised its discretion not to enter judgment.
Conclusion
[66] The appeal is dismissed.
[67] The Commissioner is entitled to costs. I see no reason why these should not be on a 2B basis. If the appellant disagrees, a memorandum is to be filed with 21 days of the date of this decision, with any response from the Commissioner 14 days
thereafter.
Thomas J
5
1