Reefdale Investments Limited v Commissioner of Inland Revenue HC Wellington CP114/01, CP147/01

Reefdale Investments Limited and Vanya Holdings Limited, both insolvent companies, sought to challenge tax assessments made by the Commissioner of Inland Revenue. They brought the action in the High Court of New Zealand, Wellington Registry. The Commissioner applied for security for costs against the plaintiffs, arguing that there was reason to believe they would be unable to pay the Commissioner's costs if they were unsuccessful in their claims. The plaintiffs argued that requiring security for costs would be unconstitutional, contrary to the New Zealand Bill of Rights Act 1990, and would prevent indigent taxpayers from having access to the courts to challenge tax assessments.

The court considered the plaintiffs' arguments and concluded that Rule 60 of the High Court Rules did not conflict with the New Zealand Bill of Rights Act 1990. The court found that once the threshold test for ordering security was met, the decision to order security rested on the court's discretion, taking into account all the circumstances of the case. The court considered various factors, including the merits of the case, the impecuniosity of the plaintiffs, and the possibility of others contributing to the security for costs. The court found that the plaintiffs' prospects of success were not strong, and that there were likely other sources of funds available to contribute to the security for costs. Therefore, the court ordered security for costs in the sum of $150,000 and stayed both proceedings until security was provided. Costs were reserved.