Penny v Commissioner of Inland Revenue

In the matter of Penny v Commissioner of Inland Revenue, the taxpayer, Mr Penny, objected to evidence presented by the Commissioner regarding loans made to him by his trust, arguing that it was precluded by section 138G of the Tax Administration Act. The court was tasked with determining the admissibility of this evidence and whether the Commissioner was justified in referencing the loans in response to statements made by Mr Penny regarding asset restructuring. Additionally, the Commissioner objected to certain legal opinions expressed by Mr Shewan, the expert witness, arguing that such views should not have been included in his evidence. The court had to decide whether these opinions were appropriately excluded and if their inclusion had any practical consequences.

The court found that the Commissioner was justified in referencing the loans in response to Mr Penny's statements about asset restructuring, as the Commissioner's argument centred on the diversion of earnings through the company structure and salary levels. Furthermore, the court agreed with the Court of Appeal's decision to exclude Mr Shewan's legal opinions from his evidence, stating that such opinions should be presented by counsel rather than an expert witness. However, the court noted that the inclusion of these opinions did not have practical consequences as the same arguments were presented by Mr Harley in his submissions.

In conclusion, the court upheld the Commissioner's right to present evidence of the loans and the exclusion of Mr Shewan's legal opinions from his evidence. While the practice of including such opinions in expert briefs was discouraged, the court acknowledged that it did not result in any practical consequences in this case. It was emphasised that courts should require amended briefs if this practice persists.