Patterson v Commissioner of Inland Revenue

[2013] NZCA 619

IN THE COURT OF APPEAL OF NEW ZEALAND

CA870/2011
[2013] NZCA 619

BETWEEN	WAYNE THOMAS PATTERSON Appellant
AND	COMMISSIONER OF INLAND REVENUE Respondent

Court:

Wild, French and Miller JJ

Counsel:

Appellant in person
P H Courtney for Respondent

Judgment:

(On the papers)

6 December 2013 at 2.00 pm

JUDGMENT OF THE COURT

AThe application by the respondent for an order striking out the appeal for failure to comply with requirement to pay security for costs is granted.  The appeal is struck out.

BThere will be no order as to costs.

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REASONS OF THE COURT

(Given by French J)

1. Mr Patterson filed an appeal against a decision of Associate Judge Gendall adjudicating him bankrupt at the application of the Commissioner of Inland Revenue.[1]  He was ordered to pay security for costs on the appeal in the sum of $5,800 by 11 June 2013.[2]  He has failed to make any payment and accordingly the Commissioner now applies under r 37(1) of the Court of Appeal (Civil) Rules 2005 for the appeal to be struck out.

   [1]Commissioner of Inland Revenue v Patterson HC Wanganui CIV-2011-483-191, 1 December 2011.

   [2]Patterson v Commissioner of Inland Revenue [2013] NZCA 153, (2013) 26 NZTC 21-015. In this decision, Stevens J upheld on review the Registrar’s decision refusing to dispense with security for costs.

2. Mr Patterson opposes the application.  He is in prison and says that he is having difficulty raising the money.  He submits it would be unjust to strike out the appeal because of the significant personal consequences to him and because he was denied his fundamental right to defend the bankruptcy proceeding due to counsel error in the District Court.  Mr Patterson further submits this Court should not be allowed to use security for costs as an indirect means of avoiding public law scrutiny by exploiting a party’s impecuniosity.

3. By consent, the matter has been dealt with on the papers.

4. It is well established that an application to strike out under r 37(1) will be granted where the appellant has failed to pay security for costs within the allotted time and the appeal has no realistic prospect of success.[3]

   [3]Riccarton Construction Ltd v Coljon Ltd [2010] NZCA 430 at [8].

5. We are satisfied that Mr Patterson’s appeal is in that category.  The tax debt on which the bankruptcy adjudication is founded is derived from default assessments.  Mr Patterson failed to file a notice of proposed adjustment disputing the default assessments within the time period specified under the Tax Administration Act 1994.  As a result, the default assessments were deemed to be correct.  In now seeking to overturn the bankruptcy adjudication, Mr Patterson is effectively asking the Court to reconsider the correctness of the default assessments.  However that is the very thing which s 109 of the Tax Administration Act expressly prohibits.

6. In short, because Mr Patterson did not challenge the default assessments in accordance with the statutory procedures under the Tax Administration Act, he cannot challenge them in this Court. 

7. The appeal does not have any realistic prospect of success.  The Commissioner should not be put to the expense of responding to an unmeritorious appeal if there is no hope of being able to recover any costs.  For completeness, we record that although Mr Patterson has filed an application for an extension of time under r 43, that does not preclude an order striking the appeal out for want of security. 

8. The Commissioner’s application is accordingly granted and the appeal is struck out.  The Commissioner did not seek costs on the application and accordingly no order is made.

Solicitors:
Crown Law Office, Wellington for Respondent