Sisson v Commissioner of Inland Revenue

[2017] NZHC 550

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2016-409-000304 [2017] NZHC 550

BETWEEN

THERESE ANNE SISSON

Plaintiff

AND

THE COMMISSIONER OF INLAND REVENUE

First Respondent

RAYMOND DONNELLY Christchurch

Hearing:	17 March 2017
Appearances:	Applicant T A Sisson Appears In Person S Kinsler and P J Shamy for First and Second Respondents
Judgment:	24 March 2017

JUDGMENT OF GENDALL J [As to Costs]

[1]      This judgment relates to costs on this proceeding CIV-2016-409-304.

[2]      This particular proceeding was brought by the applicant Therese Anne Sisson (Ms Sisson) in an initial statement of claim dated 13 April 2016 in which she sought certain declarations in relation to what she said were taxation issues.

[3]      On  12  August  2016  the  first  respondent,  the  Commissioner  of  Inland Revenue (the Commissioner) filed a Notice of Protest to Jurisdiction on the basis that it was alleged the subject matter of Ms Sisson’s claim was not properly a matter for the declarations she sought.   The Commissioner alleged that the controversy disclosed related to disputes adjudicated in parallel litigation and/or in respect of

which s 109 Tax Administration Act 1994 applied.

SISSON v COMMISSIONER OF INLAND REVENUE [2017] NZHC 550 [24 March 2017]

[4]      Then, on 29 August 2016, the Commissioner applied to strike out this proceeding.   This was advanced on the basis that there was no live tax challenge proceeding in which Ms Sisson could advance her allegations, that Ms Sisson had no standing and that the proceeding disclosed no reasonably arguable cause of action, it was vexatious and otherwise it was an abuse of process.

[5]      This proceeding was the subject of a call in this Court during the hearing of substantive matters involving these parties which, it is suggested, were in some way related.    That  hearing  commenced  on  13  February  2017  and  continued  until

16 February 2017 (the fourth day of the hearing).  On that date all matters before the Court, including the present proceeding were concluded either by Ms Sisson discontinuing the proceeding, consenting to orders being made against her or, in one case, by a judgment of the Court being entered against her.

[6]      So  far  as  this  proceeding  -304  was  concerned,  on  16  February  2017

Ms Sisson gave formal written notice discontinuing the proceeding.

[7]      Then,  in  an  oral  judgment  I  gave  on  16  February  2017  relating  to  this proceeding -304, I granted leave to Ms Sisson to discontinue the proceeding.   In doing so I addressed costs as follows:

(a)      Counsel for the second respondent indicated that Raymond Donnelly did   not   seek   costs   with   respect   to   this   proceeding   or   the discontinuance.  No order as to costs in favour of Raymond Donnelly therefore is to follow.

(b)As to the first respondent Commissioner, her counsel indicated that the Commissioner did seek costs relating to the proceeding and the discontinuance.  Ms Sisson opposed these.

[8]      A timetable was then directed for the provision of these costs submissions and a hearing allocated on the basis that this was required.  That costs hearing took place on 17 March 2017.  Detailed written and oral submissions were advanced by Ms  Sisson  and  by her  “McKenzie  Friend”  Mr  Hampton,  and  on  behalf  of  the

Commissioner, and where relevant I have considered these.  I now give my decision on the Commissioner’s application for costs on this proceeding and make the costs orders that follow.

[9]      A proper starting point in the Commissioner’s costs claim against Ms Sisson must be the fact that, given Ms Sisson as applicant discontinued this proceeding, r 15.23  High  Court  Rules  applies.    This  rule  provides  that,  unless  a  defendant otherwise agrees or the Court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.

[10]     The principles relating to this rule are well settled.   They are set out in

McGechan on Procedure at para HR15.23.01 as follows:

HR15.23.01     Principles

The following emerge from Kroma Colour Prints Ltd v Tridonicatco NZ Ltd [2008] NZCA 150, (2008) 18 PRNZ 973, FM Custodians Ltd v Pati [2012] NZHC 1902 at [10]–[12] and Opus International Consultants Ltd v Colac Bay Vision Ltd [2015] NZHC 1782 at [20]–[24]:

(a)       The r 15.23 presumption obviates any requirement for the defendant to demonstrate that the plaintiff acted unreasonably in commencing and then discontinuing the proceeding. The defendant has the advantage of the presumption even where there has not been such unreasonableness.

(b)       Although the r 15.23 presumption is designed to give a certain and predictable outcome upon discontinuance, it may be displaced if the court finds there are circumstances which make it just and equitable that it should not apply.

(c)       Although the court is not limited in the factors it may take into account when considering whether the presumption is displaced, generally:

(i)        The  court  will  not  consider  the  merits  of  the  respective cases, unless they are so obvious that they should influence the costs outcome.

(ii)      The court will consider the reasonableness of the stance of both parties up to the point of discontinuance: whether it was reasonable for the plaintiff to bring and continue the proceeding; and for the defendant to oppose the proceeding. The plaintiff will not be able to avoid the presumption by showing that at one point it had reasonable grounds for believing it would be successful in the proceeding.

(iii)      Conduct prior to the commencement of the proceeding may be relevant, for example, conduct by the defendant that precipitated the litigation.

(iv) The reason for discontinuing may be relevant, for example a change of circumstances rendering the proceeding unnecessary. However, it must be clear that the plaintiff would have succeeded had the circumstances (in this case new legislation) not changed: The Star Trust v Hamilton City Council [2016] NZHC 821 at [10].

(d)      The court’s general discretion in r 14.1 as to costs can also override

the general principles relating to discontinuance.

[11]     Whilst it is also true too that there is no implication from “the presumption of unreasonableness  following  a  discontinuance”  that  an  award  of  increased  or indemnity costs will necessarily follow (Arnold v Fairfax New Zealand Ltd),1 in the circumstances prevailing in the present case, as I outline more fully below, I have no doubt that this is an appropriate case for an award of increased costs to be made.

[12]     In  considering  r  15.23  there  is  no  question  as  I  see  it  that,  in  the circumstances of this particular case, the presumption in the rules applies.  There are no circumstances here which make it just and equitable that this should not be the case.  I am satisfied this proceeding disclosed no reasonably arguable cause of action available to Ms Sisson, it was meritless and it could be said it was also bordering on being an abuse of process.  No grounds exist, as I see it, for Ms Sisson to argue that the r 15.23 presumption should not apply here.   As the discontinuing applicant, Ms Sisson must pay costs to the Commissioner relating to this proceeding -304 up to and including the discontinuance.

[13]     I address now the Commissioner’s costs claim itself.  This seeks an award of costs on a category 2B scale basis plus an uplift of 50 per cent.  Details of these costs are outlined at Schedule 3 of the written costs submissions advanced before me by counsel for the Commissioner.  These category 2B costs total $4,014 and with a 50 per cent uplift of $2007, final costs of $6021 are sought.  Disbursements representing a Court filing fee and a sealing order fee totalling $467.50 are also claimed.  This

makes an overall total claim for costs and disbursements of $6488.50.

1      Arnold v Fairfax New Zealand Ltd [2016] NZHC 1078 at [19].

[14]     Turning now to the issue in the High Court Rules of the claim here for increased costs, this is provided for in r 14.6(3) which states:

(3)      The court may order a party to pay increased costs if—

(a)       the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or

(b)       the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—

(i)        failing to comply with these rules or with a direction of the court; or

(ii)      taking  or  pursuing  an  unnecessary  step  or  an argument that lacks merit; or

(iii)      failing,  without  reasonable  justification,  to  admit facts, evidence, documents, or accept a legal argument; or

(iv)      failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or

(v)        failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule  14.10  or  some  other  offer  to settle  or dispose of the proceeding; or

(c)       the proceeding is of general importance to persons other than just the parties and it was reasonably necessary for the party claiming costs to bring it or participate in it in the interests of those affected; or

(d)       some other reason exists which justifies the court making an order for increased costs despite the principle that the determination  of  costs  should  be  predictable  and expeditious.

[15]     As to this aspect, I am satisfied in terms of r 14.6(3)(b)(ii) that in bringing and pursuing the present proceeding -304 Ms Sisson acted unreasonably in that her entire claim here lacked merit.  Thus, the Commissioner was put to time and expense to a considerable degree to defend a claim which was hopeless, a fact that Ms Sisson herself has acknowledged effectively by discontinuing it.  That she had taken claims in this proceeding that  lacked merit  meaning this proceeding had no  chance of success,  as  she  ultimately  acknowledged  with  her  discontinuance,  in  my  view,

entitled the Commissioner to the 50 per cent uplift of category 2B costs sought.  An order to this effect is to follow.

[16]     Turning  lastly  to  the  quantum  of  those  costs  and  disbursements  to  be awarded, the Schedule amounts sought as noted at para [13] above have not been the subject of any comment or question on the part of Ms Sisson or indeed Mr Hampton here. Their respective submissions simply ignore quantum.

[17]    But, in any event, in my judgment the costs sought are reasonable and appropriate for the work done under the circumstances prevailing in this case.  An award of costs and disbursements as sought is to follow.

Result

[18]     The Commissioner’s costs application on this proceeding -304 succeeds.

[19]     An order is made that Ms Sisson is to pay to the Commissioner costs on this discontinued proceeding CIV-2016-409-304 on a category 2B basis with a 50 per cent uplift totalling $6021 together with disbursements totalling $467.50.

...................................................

Gendall J

Solicitors:

Lane Neave, Christchurch

Phillip Shamy, Christchurch

Meredith Connell, Christchurch

Copies to: Ms Sisson

Mr Hampton