Richard Grant Simpson and Timothy Wilson Downes as Receivers v Commissioner of Inland Revenue
[2012] NZSC 62
•25 July 2012
| IN THE SUPREME COURT OF NEW ZEALAND |
| SC 30/2012 [2012] NZSC 62 |
| BETWEEN RICHARD GRANT SIMPSON AND TIMOTHY WILSON DOWNES AS RECEIVERS OF CAPITAL + MERCHANT INVESTMENTS LIMITED (IN RECEIVERSHIP) |
| AND COMMISSIONER OF INLAND REVENUE |
| Court: Elias CJ, McGrath and William Young JJ |
| Counsel: G J Toebes for Appellants |
| Judgment: 25 July 2012 |
JUDGMENT OF THE COURT
A We grant leave to appeal.
BThe approved question is:
Were the applicants required to pay the GST on the sales to the Commissioner of Inland Revenue?
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REASONS
With our decision not to grant leave to appeal in respect of the contractual argument (which we are about to discuss), there is no need to address the proposed cross-appeal. We record, however, that the Commissioner is not confined to reliance on the judgment of the Court of Appeal but may also rely on the other possible bases for liability canvassed in the judgment of Dobson J[1] or advanced by the Commissioner in the Court of Appeal.[2]
[1] Simpson v Commissioner of Inland Revenue [2011] 3 NZLR 533 (HC).
[2] Simpson v Commissioner of Inland Revenue [2012] NZCA 126.
The GST in question was paid to the Commissioner by the applicants pursuant to an interim agreement which was arguably premised on a distinction between a “personal liability” of the applicants to pay the GST and any obligations to do so which they may otherwise have. The agreed question which was put to the Court was in these terms:
Do Messrs Simpson and Downes as receivers of Capital + Merchant Investments Ltd (In Receivership) (“CMI”) have personal liability for payment to the Commissioner of Inland Revenue (“The Commissioner”) of the Goods and Services Tax (“GST”) payable by CMI, but not paid, in relation to five specified mortgagee sales undertaken by CMI?
Under the interim agreement, a negative answer to this question would have resulted in the Commissioner being required to repay the GST.
The applicants have taken the position that this question referred only to their possible liability under ss 5(2) and 17 (and presumably ss 58 and 51B as well) of the Goods and Services Tax Act 1985 and that their “non-personal” liability, if any, associated with s 185 of the Property Law Act 2007 (and related arguments) is irrelevant. They say that the Court of Appeal’s rejection of the Commissioner’s arguments under ss 5(2), 17, 58 and 51B should have resulted in a negative answer, thus requiring the Commissioner to refund the GST. That Court did not consider that it was restricted to answering the particular question posed by the parties as interpreted by the applicants.
Although the applicants wish to challenge this aspect of the Court of Appeal’s judgment, we consider that this point does not warrant leave to appeal. In the first place, and despite the assertions of counsel for the applicants to the contrary, it does not raise a point of general or public importance. Instead it turns on a very particular set of facts and the interpretation of a one-off agreement which will plainly not be used as a template for future agreements. Secondly, there is no appearance of a miscarriage of justice. The conclusion and reasons of the Court of Appeal are unassailable. The applicants are individuals and any obligations they have arise out of their actions as receivers. In this context, the supposed distinction between a “personal liability” and other liability (for instance as receivers) is meaningless. There is also the additional and overlapping consideration that while parties to litigation can invite the Court to answer a particular question, it is always open to the Court to decline to do so if it considers that the question was wrongly put.
Solicitors:
JTLaw, Wellington for Applicants
Crown Law Office, Wellington for Respondent