WENDY GOODRICKE and PETER GOODRICKE s AND THE COMMISSIONER OF INLAND REVENUE
[2024] NZHC 3639
•2 December 2024
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2024-485-000252
[2024] NZHC 3639
UNDER Part 20 of the High Court Rules 2016 IN THE MATTER OF
an appeal against a decision of the Taxation Review Authority
BETWEEN
WENDY GOODRICKE and PETER GOODRICKE
Appellants
AND
THE COMMISSIONER OF INLAND REVENUE
Respondent
Hearing: 11 November 2024 Counsel:
Appellants in person
A Goosen for Respondent
Judgment:
2 December 2024
JUDGMENT OF GRAU J
An appeal against a decision of the Taxation Review Authority
[1] Wendy and Peter Goodricke seek to appeal a decision of the Taxation Review Authority (the Authority) in which the Authority found their proceedings were a nullity because the requisite information was not included in their notice of claim and their failure to attend a directions hearing resulted in the end of the proceedings.1
1 Safety Beacons Ltd v Commissioner of Inland Revenue [2024] NZTRA 003 [Decision on appeal].
GOODRICKE v THE COMMISSIONER OF INLAND REVENUE [2024] NZHC 3639 [2 December 2024]
[2] The respondent, the Commissioner of Inland Revenue (the Commissioner), argues that the Authority’s decision cannot be appealed to this Court. Even if it could, the Commissioner says the appeal should be dismissed.
[3]The issues in this case are:
(a)whether there is a decision by the Authority capable of appeal to the High Court under s 36A of the Taxation Review Authorities Act 1996 (the TRAA);
(b)if so, whether the Authority erred in finding that the proceedings were a nullity; and
(c)whether the Authority erred in finding that, if a challenge proceeding had been commenced, it was deemed to have been withdrawn such that the Goodricke’s could not proceed with their claim.
[4] Mr and Mrs Goodricke also argue that the Authority has breached s 27 of the New Zealand Bill of Rights Act 1990 (the NZBORA) and s 116 of the Crimes Act 1961. I observe here that the claim under Crimes Act, alleging criminal conduct by the Authority, is not a matter that can be advanced in this appeal. Even if there was any basis for such a claim (which there is not), this Court in its civil jurisdiction cannot deal with allegations of criminal liability.
Background
[5] Safety Beacons Ltd (SBL) is a company that imports and sells personal locator beacons. Mrs Goodricke was the sole shareholder and director of SBL from its incorporation until 22 May 2021, when Mr Goodricke also became a director. Since May 2017, Mr Goodricke has also been SBS’ nominated person for tax purposes.2
[6] In 2022, SBS began a disputes process under pt 4A of the Tax Administration Act 1994 (the TAA) in relation to the imposition of use of money interest on certain
2 As a nominated person he can contact the Inland Revenue Department (IRD) and act on behalf of SBS, as well as completing and signing tax returns and other forms.
PAYE return periods during the year ended 31 March 2019. An adjudication report was issued on 13 May 2022 (the First Adjudication Report). The adjudicator determined that SBL could not dispute the imposition of use of money interest because a challenge to the imposition of such interest is expressly prohibited by s 120I of the TAA.
[7] On 17 June 2022, the Goodrickes (and SBS) filed proceedings by way of a notice of claim in the Authority (the First Claim). It complained about the First Adjudication Report’s finding that they could not dispute the imposition of use of money interest. It also took issue with the issue of attribution of income, and an audit by the Inland Revenue Department (IRD) that was described as a “deliberate intimidation and fishing expedition”. It said the Commissioner had refused to make a reviewable decision about attribution of income and IRD had resorted to bullying to force them into insolvency, so it did not have to deal with them. Criminal offending by IRD was also alleged.3
[8] On 5 July 2022, the Goodrickes filed a statement of claim naming the Commissioner, IRD officers, the Attorney-General, and the Ombudsman as defendants. They complained about the Commissioner’s treatment of attribution rules for income from personal services. They disputed IRD’s claim it was entitled to charge interest. They alleged that IRD’s reliance on s 120I of the TAA was said to have the “hallmarks of the offences of false accounting leading to demanding with intent” as well as breaching s 27 of the NZBORA. They asserted SBL’s return was correct and there was no entitlement to charge interest. They sought a declaration that s 120I was invalid and sought $100,000 in damages for pain and suffering or penalties to be paid to them for tax evasion and misfeasance in a public office by the Commissioner. The Authority issued a minute the following day advising that the statement of claim did not appear to advance any process within the jurisdiction of the Authority and so was rejected.4 The Authority invited the Goodrickes to present an appropriate document.
3 A second unsigned notice of claim also appears to have been filed on 17 June 2022. It also included a claim of serious criminal offending by IRD.
4 Safety Beacons Ltd v Commissioner of Inland Revenue TRA 7/22, 6 July 2022 (Minute of the Authority).
[9] On 19 September 2022, the Commissioner filed an appearance under protest to jurisdiction and an on notice interlocutory application to dismiss or strike out the First Claim. The Goodrickes did not file a notice of opposition.
[10] In the meantime, a second adjudication process under the TAA had also occurred in relation to a dispute about income tax for the year ended 31 March 2019.
[11] During the year ended 31 March 2019, SBL had entered into a contract with Beyond Services Ltd for the provision of contracting services of a telecommunications consultant (Mrs Goodricke) to Fire and Emergency New Zealand (FENZ). Early in March 2021, SBS had amended its PAYE returns for two periods to record PAYE deductions from additional amounts purportedly earned by both Wendy and Peter Goodricke from SBS. At that time they had already filed personal income tax returns, but there were no corresponding amendments in those personal returns reflecting the additional amounts recorded by SBS. IRD had investigated SBS’ 2019 tax return and claimed it should be adjusted.
[12] The Second Adjudication Report was released on 1 December 2022. The adjudicator determined that all of SBL’s contracting income should be included in its 2019 return and its income and deductions adjusted in accordance with IRD’s proposed reconstruction. The “attribution rule” applied to the contract income, which was to be attributed to Mrs Goodricke, with SBL being entitled to a deduction for the attributed amount. The Commissioner accepts that the Second Adjudication Report made “disputable decisions” resulting in assessments that were capable of being challenged by commencing a challenge proceeding under s 138B of the TAA.
[13] The Goodrickes did not file a separate challenge proceeding in relation to the second adjudication. Instead, on 21 January 2023 (although dated 21 January 2021), they filed a notice of claim (the Second Claim) purportedly in relation to the proceedings initiated by the First Claim. But it did not relate to the First Claim; instead, it related to the decision in the Second Adjudication Report (although there was some reference to the earlier dispute that was said to be part of the same dispute). The Commissioner filed a notice of defence to the Second Claim on 24 February 2023, with an amended notice of defence filed on 9 March 2023.
[14] On 2 August 2023, the Commissioner filed two memoranda seeking a directions hearing for the First and Second Claims, suggesting the two matters could be dealt with at the same time.
[15] On 3 August 2023, the Authority case manager advised the parties via email that the Authority would convene a directions hearing on 11 August 2023 at 10:00 am. The case manager did not receive any response from Mr Goodricke and followed up with him via email on 10 August. In this email the case manager set out reg 30(2) of the Taxation Review Authorities Regulations 1998 (the Regulations), stating that if a disputant fails to attend a directions hearing, the challenge is deemed to be withdrawn, and the disputant may not proceed with the challenge without the consent of the Authority. There was no response. The directions hearing then proceeded on 11 August 2023, in the absence of the Goodrickes.
[16] On 12 August 2023, Mr Goodricke emailed the Authority stating that he had been out of the country since 2 August, had only just seen their emails, and requested that the directions hearing be rescheduled. On 23 August 2023, Mr Goodricke sent another email to the Authority asking whether the directions hearing was rescheduled and suggesting that the case manager at the Authority had deliberately excluded him from attending the telephone conference by hanging up the telephone.
[17] On 12 October 2023, the Authority issued a minute about the Goodrickes’ failure to attend the directions hearing.5 The Authority noted that, pursuant to reg 30(2), a failure to appear meant that the challenge had been withdrawn. The Authority treated Mr Goodricke’s 12 August email as an application under reg 32 to resume the proceeding, and also treated Mr Goodricke’s allegation that the case manager had deliberately excluded his participation as a ground on which that application was advanced.6 The Authority stated that the Goodrickes “should proceed on the basis that the grounds advanced at this point do not demonstrate a good reason for failing to attend the directions hearing, or exceptional circumstance” that would enable the matter to proceed.7 The Authority gave the Goodrickes an opportunity to
5 Safety Beacons Ltd v Commissioner of Inland Revenue TRA 007/22, 12 October 2023 (Minute of the Authority).
6 At [4]–[5].
7 At [6].
provide further grounds that might establish a good reason, including any explanations relating to keeping a current contact address, monitoring communications and any other reason that prevented them attending the directions hearing.8 Those reasons (which could be provided via email) were to be provided by 5 pm on 20 October 2023.9 The Goodrickes did not file any response.
[18] Mr Goodricke told me at the appeal hearing that he had given the Authority copies of visas, airfares and accommodation details in relation to their trip to Bali which had prevented their attendance at the directions hearing. Mr Goodricke had also (in 2024) made a statutory declaration to prove that he was out of the country at the time of the hearing. He said he had also asked the High Court registry to “subpoena” Mr Carl Crafar (the Chief Operating Officer of the Ministry of Justice) to obtain the telephone records of the Authority for the day of the directions hearing, but they refused to do so. Mr Goodricke showed me the material attached to his statutory declaration, which included details of the Goodrickes’ flights to and from Indonesia (on 2 August 2023 returning on 12 August 2023) and evidence of payment to a hotel.
[19] Mr Godricke said at the hearing that they had travelled overseas to take a break, he did not have access to his emails on his phone, and his phone rang three or four times early in the morning during which he could hear voices but the call was terminated. He maintains this was deliberate conduct by the Authority. He also said he would provide me with further email correspondence he had sent to the Authority explaining his position. He did not do so. I also note Mr Goodricke’s statutory declarations were dated 6 June 2024 and 11 July 2024. They were not made at the time the Authority was seeking an explanation. Mr Goosen, who appeared for the Commissioner, was not aware of any other correspondence between Mr Goodricke and the Authority. Accordingly, I proceed on the basis that Mr Goodricke did not provide the Authority with any information to explain their absence from the directions hearing, nor do I have any explanation why Mr Goodricke had not (when he easily could have) provided that information to the Authority at the time the Authority was seeking an explanation for non-attendance.
8 At [7].
9 At [8].
[20] On 30 October 2023, the Commissioner filed a memorandum asking the Authority to declare the proceedings were at an end because the Goodrickes had not demonstrated a good reason for their non-attendance at the directions hearing, nor any exceptional circumstances.
[21] On 17 and 18 December 2023, Mr Goodricke sent emails to the Authority repeating his allegation that the case manager hung up the telephone to prevent him from attending the directions hearing and threatening to bring a private prosecution against the Authority and the case manager under s 116 of the Crimes Act.10
[22] On 19 April 2024, the Authority issued the decision that is the subject of this appeal, declining leave for the Goodrickes to proceed with their challenge proceeding under reg 32.
The decision on appeal
[23] The Authority determined that it had no jurisdiction to hear the First Claim because it related to use of money interest.11
[24] As to the Second Claim, that concerned the correct treatment of income tax as between SBS and the Goodrickes and could potentially raise issues within the Authority’s jurisdiction. However, the failure of the Goodrickes to attend the directions hearing meant that the Authority could only allow the proceedings to continue if there was a good reason for non-attendance or other exceptional circumstances. Neither of these circumstances were made out in this case.12 The Authority rejected the explanation that the Authority had “hung up” on Mr Goodricke when Mr Pearson (who wrote the decision) was involved in the directions hearing which he delayed to allow repeated attempts to contact Mr Goodricke.13 While Mr Goodricke’s earlier explanation of being outside New Zealand may or may not have been true, the Authority could only speculate whether that was a barrier to communication, but the later explanation was inconsistent with the earlier one, as
10 Section 116 of the Crimes Act 1961 creates an offence of conspiring to obstruct, prevent, pervert or defeat the course of justice, with a maximum penalty of seven years’ imprisonment.
11 Decision on appeal, above n 1, at [6.1].
12 At [6.2].
13 At [41].
Mr Goodricke had also said he received a call and the case manager terminated the call to exclude him from participating.14 Mr Goodricke had been given an opportunity to explain the non-attendance, but he did not do so.15 Instead he had repeated the claim that the case manager hung up the phone, accompanied with threats of prosecution under s 116 of the Crimes Act. More recently he had also copied the Authority into an email which said he proposed a private criminal prosecution against all Crown parties involved.16
[25] The Authority also found that the Goodrickes had not provided a valid notice of claim regarding the Second Claim. The Authority described it as a “complaint narrative” which did not address the reasons set out in the Second Adjudication Report. Apart from that narrative, it contained points that were described as frivolous. The purported notice of claim was not compliant and did not demonstrate a basis for a reasonably arguable case to show any disputable decision made by the Commissioner was wrong. There was not even a “poorly articulated expression of understandable concern that the Commissioner incorrectly applied the law”. Although noting that parties without legal assistance understandably may not articulate technical reasons for their perception of unfairness, the Authority commented that they can usually identify why they consider the outcome is unfair. But the Goodrickes’ documents showed dissatisfaction with the law that on its face applies to them, and that was not a justiciable issue. Therefore, the challenge was defective, with no “evident path to rectification”.17
[26] The Authority concluded by finding that the proceedings were a nullity. The Goodrickes had failed to commence a challenge proceeding as the information required to be in a notice of claim was not before the Authority. If a challenge proceeding was commenced, under reg 30(2), the challenge was deemed withdrawn and the proceedings were at an end.18
14 At [40]–[42].
15 At [43].
16 At [46].
17 At [6.3] and [26]-[27].
18 At [54]–[56].
The procedure for taxpayer disputes with the Commissioner
[27] Part 4A of the TAA sets out a statutory dispute resolution procedure with various time limits. The procedure can result in the Commissioner issuing a “disputable decision”. Under pt 8A of the TAA, a person may challenge a “disputable decision” issued by the Commissioner. A “disputable decision” is defined in s 3 of the TAA as follows:
disputable decision means—
(a)an assessment:
(b)a decision of the Commissioner under a tax law, except for a decision—
(i)to decline to issue a binding ruling under Part 5A; or
(ii)that cannot be the subject of an objection under Part 8; or
(iii)that cannot be challenged under Part 8A; or
(iv)to issue a Commissioner’s notice of proposed adjustment under section 89B, a Commissioner’s disclosure notice or statement of position under section 89M, or a challenge notice; or
…
[28] Accordingly, under s 138B of the TAA, a person may be entitled to challenge an “assessment” of the Commissioner. This provision allows a disputant to challenge an assessment by commencing proceedings in a “hearing authority” (either the Authority or the High Court).19 Challenge proceedings are commenced in the Authority in accordance with the Regulations. A challenge must be commenced within the statutory “response periods” in s 89AB of the TAA. A challenge proceeding must be commenced by way of notice of claim which, pursuant to s 138B and regs 7 and 8 of the Regulations, must be in the prescribed form. That form requires a disputant to identify a disputable decision made by the Commissioner and set out the grounds on which the disputant challenges the disputable decision.
[29] In the event that a disputant does not comply with the requirements of the TAA, they have no right to challenge a disputable decision of the Commissioner. The
19 Tax Administration Act 1994 (TAA), s 3(1) definition of “hearing authority”.
Commissioner may apply to the hearing authority to strike out a challenge if it considers the disputant has failed to comply with the requirements regarding disclosure notices or has failed to comply with s 138B.20 In these circumstances, there is no jurisdiction to hear the challenge, and the hearing authority must strike it out.21
[30] If a disputant fails to commence challenge proceedings within the applicable statutory response period they can, under s 138D of the TAA, apply to a hearing authority to allow the challenge out of time where the hearing authority considers there are exceptional circumstances. An exceptional circumstance does not include the act or omission of an agent of the disputant.22
[31] If a disputant commences a challenge in the Authority, a directions hearing must occur.23 Regulation 30(2) provides that, if a disputant fails to attend the directions hearing, the challenge is “deemed to be withdrawn” and may not proceed without the consent of the Authority under reg 32. Regulation 32 provides in turn that leave to proceed will be granted where there is good reason for failing to attend or if the disputant satisfies the Authority that exceptional circumstances apply.24
[32] The onus of proof in a pt 8A challenge of the kind currently advanced by the Goodrickes rests with them as the disputants.25 A taxpayer who objects to, or challenges, an assessment must demonstrate, on the balance of probabilities, that the assessment is wrong and, if so, by how much.26
[33] Taxpayers who commence a challenge in the Authority have limited rights of appeal. In respect of challenges commenced under pt 8A of the TAA (as in this case), pursuant to s 26A of the TRAA, a person may appeal a “determination by [the] Authority of a challenge” in certain circumstances:
26A Challenges appealed to High Court
20 TAA, s 138H.
21 Commissioner of Inland Revenue v Taxation Review Authority (2004) 21 NZTC 18,707 (HC) at [48].
22 Section 138D(2).
23 The Regulations, reg 27.
24 In a case where the “good reason” ground is advanced, the application for leave to proceed must be filed within 20 working days of the date fixed for the directions hearing (reg 32(2)(a)).
25 TAA, s 149A(2).
26 Buckley & Young Ltd v Commissioner of Inland Revenue [1978] 2 NZLR 485 (CA) at 498.
(1)Unless subsection (2) applies, the determination by an Authority of a challenge may be appealed to the High Court if—
(a)the amount of tax involved in the appeal is $2,000 or more; or
(b)the amount of net loss involved in the appeal is $4,000 or more.
(2)The determination by an Authority of a challenge may not be appealed to the High Court if the determination was made by the Authority under a tax law that provides for the Authority’s determination to be final.
(3)This section applies only to challenges commenced under Part 8A of the Tax Administration Act 1994.
[34] At issue in this appeal is the meaning of the words “the determination by an Authority of a challenge”. The definition of “challenge” in the TAA includes “to commence proceedings under Part 8A challenging a disputable decision”.27 It follows that a determination of a challenge under pt 8A requires determination of a “disputable decision”.
Discussion
Is there a right of appeal?
[35] I agree with the Authority and the Commissioner that there can be no further challenge in relation to the First Claim which concerns use of money interest. As the Authority rightly held, s 120I of the TAA is a statutory bar to any objection or challenge to the imposition of interest payable. There is, accordingly, no jurisdiction for the Authority or this Court to consider the First Claim again in any way. I note here that the Goodrickes do not appear to be maintaining any challenge to that issue.
[36] Turning to the Second Claim, the submission for the Commissioner is that the Authority’s decision did not determine a challenge to the Commissioner’s amended assessments. Instead, it was a decision declaring the proceedings to be a nullity and declining leave to proceed under reg 32 of the Regulations, after the failure to attend the mandatory directions hearing, and the lack of provision a good reason for that
27 TAA, s 3(1) definition of “challenge”.
failure, or any exceptional circumstances. According to the Commissioner, there is no jurisdiction under s 26A for an appeal to this Court.
[37] In M & J Wetherill Company v Taxation Review Authority (M & J),28 the Court of Appeal considered the application of s 26(1) of the TRAA. Section 26(1) is the analogous provision to s 26A, but relates to objections under the TRAA. The two provisions are considered as having no material difference in wording.29 In M & J, the circumstances before the Court were that the appellants had sought to appeal an interlocutory decision by the Authority which granted the Commissioner an extension of time to file a case. The Court determined that there is no right of appeal on interlocutory matters under s 26(1).30 The key point was the opening words of s 26(1), referring to the “determination of the authority on any objection”. The factors referred to in subs (1)(a) and (c) (the equivalent of ss 26A(1)(a) and (b)) also could not be said to be qualifiers to an interlocutory appeal.31 Taken at face value, the provision referred to the determination of the objection itself. The scheme of the TRAA was such that, where the word “determination” appeared, it consistently referred to final resolution of an objection on its merits.32
[38] I accept the Commissioner’s submission that, on its face, the reasoning in M & J should also apply to s 26A(1). This is because materially similar words are used—“the determination by an Authority of a challenge”—as are equivalent factors in s 26A(1)(a) and (b) that cannot be said to be qualifiers to an interlocutory appeal. I agree with the Commissioner that the wider scheme of the TRAA applies both to objection and challenge proceedings equally, and refers to “determinations” as final resolutions of a challenge.
[39] The reasoning in M & J was applied in Jiao v Commissioner of Inland Revenue, where Venning J held there was no right of appeal against the Authority’s refusal to recall a substantive decision under s 26A(1).33
28 M & J Wetherill Company Ltd v Taxation Review Authority (2004) 21 NZTC 18,924 (CA) [M & J].
29 Jiao v Commissioner of Inland Revenue (2009) 24 NZTC 23,763 (HC) at [10].
30 M & J, above n 28, at [60].
31 At [61].
32 At [64].
33 Jiao v Commissioner of Inland Revenue, above n 29, at [19].
[40] More recently, however, in Kaur v the Taxation Review Authority, McQueen J held that there was a right of appeal in respect of a strike out decision by the Authority for a failure to comply with an “unless” order.34 Her Honour found that the Authority’s decision to strike out the proceeding amounted to a substantive determination of the disputant’s challenge, and therefore M & J and Jiao could be distinguished on their facts.35 Her Honour drew an analogy to s 56(4) of the Senior Courts Act 2016, which provides a right of appeal from a decision of the High Court striking out or dismissing a proceeding.36 I note that the Commissioner has appealed against McQueen J’s decision and is awaiting a decision from the Court of Appeal.
[41] Unsurprisingly, given the Commissioner’s appeal of the Kaur decision, the Commissioner submits the Judge in that case erred in relying on s 56(4) of the Senior Courts Act. The Commissioner says the Senior Courts Act is not the relevant statutory context for construing the rights of appeal under the TRAA. Parliament only intended appeal rights for determinations of disputable decisions by the Authority to be subject to appeal, and Kaur should not be followed.
[42] The Commissioner argues that in this case there has been no hearing on the merits of the challenge as contemplated by the applicable legislation. The Authority has not had to use its powers under s 138P of the TAA and s 16(2) of the TRAA to determine a challenge because there was no valid notice of claim before it. In the alternative, the failure to file a compliant notice of claim resulted in it being dismissed automatically, meaning that the Authority could not exercise its powers to determine a challenge.
[43] I acknowledge there is force in the Commissioner’s argument, but I prefer McQueen J’s approach. Although the Senior Courts Act does provide a different statutory context, her Honour’s reasoning is based on the fact that, in general, the senior courts view strike out applications as having the effect of finally determining proceedings. No good reason to take a different approach is apparent in the context of
34 Kaur v Taxation Review Authority & Commissioner of Inland Revenue [2023] NZHC 2748, (2023) 31 NZTC 26-011.
35 At [47].
36 At [43].
tax disputes, when a determination that a challenge under the TAA cannot proceed has the same effect as a strike out. Both result in a final determination of the proceeding.
[44] It is also relevant, as the Authority’s decision makes clear, that the merits (or lack thereof) of the purported notices of claim were considered by the Authority; that is the basis upon which the Authority ultimately held that the notices of claim were invalid, and the proceedings were a nullity, because they disclosed no reasonably arguable basis for the claims. I agree with McQueen J that, where there has been engagement with the merits of a taxpayer’s challenge application, and the decision of the Authority has the effect of finally determining proceedings, there is a right of appeal under s 26A, and Jiao and M & J can be distinguished on their facts.
[45] Having said that, I do consider that the circumstances in this case differ significantly from those in Kaur. There, the taxpayer’s non-compliance with procedure was entirely the fault of her lawyer, who failed to file relevant evidence (although he did serve it in time) and neglected to prepare a common bundle index, believing it was unnecessary. The failure to file the evidence was an error. The failure to prepare the common bundle (although inadequately explained) could not be regarded as resulting in serious delay for the progression of the case. The taxpayer herself had not been personally responsible for delay or non-compliance and she had also engaged in settlement discussions. By a fine margin, the High Court found the interests of justice required that the lawyer’s failures were not visited on Ms Kaur to prevent her from challenging the Commissioner’s assessment of her tax liability.37
[46] In contrast, in this case, the Goodrickes can be considered as the authors of their own misfortune when they had filed an unintelligible claim and then failed to attend a mandatory hearing to progress it, without providing any proper or timely explanation. However, given that the Goodrickes are unrepresented, and in the absence of a decision by the Court of Appeal on this issue, I prefer to proceed on the basis that there is a right of appeal.
37 Kaur v Taxation Review Authority, above, n 34, at [82]–[87].
Were the proceedings a nullity?
[47] The Commissioner has submitted that the Authority did not err in finding that the proceedings were a nullity. The reasons for that finding, in respect of the First Claim, have already been explained above. I agree that the issue of use of money interest could not be challenged in the Authority.
[48] In respect of the Second Claim, the Commissioner observes that a challenge to an assessment under s 138B of the TAA must be commenced in a hearing authority. A disputant is not entitled to commence a challenge by filing a notice of claim in relation to a different existing proceeding (which itself was not commenced by way of a valid notice of claim) as happened in this case. Further, the Second Claim failed to comply with the requirements of the form of a notice of claim because it did not identify a disputable decision and failed to set out the grounds on which such a decision would be challenged. While the Commissioner accepts that the Second Adjudication Report contains matters capable of being the subject of a valid challenge, he also says it is not possible to discern from the Second Claim a reasonably arguable basis on which such a challenge could have been mounted. It would have, in any event, been open to the Authority to strike out the Second Claim on the basis that it did not comply with the notice of claim requirements or otherwise disclosed no reasonably arguable cause of action.38
[49] I accept the Commissioner’s submission on this point. The appellants’ notice of claim in respect of the Second Claim does not follow the prescribed form. It is difficult to follow. It does not make clear why, or by how much, the Commissioner’s adjustment to the income tax assessments was incorrect. There are no specific references to any parts of the Second Adjudication Report or reasoning contained within it that are said to be incorrect. Rather, I agree the notice of claim presents as a complaint narrative of the Goodrickes’ version of events without any relation to the purportedly challenged decision of the adjudicator. The notice of claim also poses a number of questions, the relevance of which is not at all clear, such as whether the relationship between Peter, Wendy and/or SBL constitutes a partnership under the Partnership Act 2019.
38 Pursuant to s 138B of the TAA or s 21A of the TRAA, as the case may be.
[50] Further, the notice of claim puts forward baseless claims that the Commissioner has engaged in a variety of underhanded conduct. For example, the notice of claim alleges that the Commissioner’s adjusted income tax assessment has “all the hallmarks to a slight of hand trick in order to gain financial advantage to apply interest and penalties and take advantage of section 120I”. Leaving aside that this allegation relates to the First Claim, not the Second, it is an allegation made without any evidence beyond its author’s disagreement with the Commissioner’s position. The notice of claim also suggests that a letter IRD sent to the Goodrickes—stating that there are overdue payments which might result in IRD taking money from any income source or the appellants’ bank account—constitutes an “offence under sections 238– 240 and 260 of the Crimes Act” being “blackmail, [d]emanding with intent to steal, [o]btaining by deception or causing loss by deception and false accounting” and amounts to IRD making “demands with menace”. It does not. It only sets out the Commissioner’s position that there are overdue payments and the applicable law that imposes a consequence. A challenge to a disputable decision is available in the Authority. An allegation of criminal conduct is not.
[51] Accordingly, I agree that the Authority did not err in finding that the notice of claim was not capable of commencing a challenge proceeding and therefore the purported challenges to the First and Second Claim were a nullity. It follows I agree with the submission that it was open to the Authority to say that the challenge could no longer proceed.
Could the challenge be deemed to have been withdrawn?
[52] The Commissioner also argues the Authority was not wrong to find that, even if a valid challenge proceeding had been commenced, under reg 30(2) it was deemed to have been withdrawn. The Commissioner agrees with the Authority’s finding that the Goodrickes provided an explanation for their non-attendance at the directions hearing that was implausible and false. Multiple attempts had been made to connect Mr Goodricke, and the emails suggesting they were overseas contradicted the subsequent allegation that the case manager simply hung up the phone on Mr Goodricke. The Commissioner also argues that the Authority applied a generous
interpretation to Mr Goodricke’s 23 August email by treating it as an application under reg 32 for leave to proceed in the first place.
[53] I agree with the Commissioner that, at the point where Mr Goodricke was given an opportunity to provide further information to the Authority to explain why they missed the directions hearing, but they did not do so, the Authority was entitled to deem the challenge to have been withdrawn under reg 30(2). There was no good reason nor any other exceptional circumstances in respect of which the Authority could or should have granted leave to proceed. The suggestion that the case manager deliberately hung up on Mr Goodricke is untenable, given the decision-maker’s own knowledge that did not happen. Mr Goodricke himself contradicted this explanation through his emails saying he was overseas, and this was the reason why he could not attend. Further, no reasons were provided as to why, when the Goodrickes were overseas, they could not access their emails or attend a directions conference.
[54] As I have set out earlier in this decision, Mr Goodricke maintained he has provided evidence to the Authority, as set out in his statutory declaration. But he has not provided anything to this Court to substantiate his claim. The Authority’s decision made no reference to what was in Mr Goodricke’s statutory declaration, which is unsurprising given it was only filed this year in this Court and not last year in the Authority when it could have been. I do not accept Mr Goodricke engaged with the Authority in any constructive way to explain the non-attendance at the directions hearing. The only evidence that I have seen suggests otherwise. Nor I am prepared to find that the Authority has deliberately left out any information Mr Goodricke provided to it. Rather, it appears to me that the Authority did its very best to provide Mr Goodricke with an opportunity to put forward reasons why the proceeding should continue. He was unable or unwilling to do so at the time he needed to. The Authority cannot therefore be criticised for deeming the proceeding to have been withdrawn.
[55] Turning to the allegation that the Authority has breached the Goodrickes’ right to natural justice conferred by s 27 of the NZBORA, I accept the Commissioner’s position that the procedural prerequisites to a challenge proceeding do not deprive a
taxpayer of access to the Authority or the Courts. As Wild J said in Commissioner of Inland Revenue v Taxation Review Authority:39
More broadly, I accept that the procedural prerequisites to a challenge proceeding do not deprive a taxpayer of access to the [Tribunal] or the Courts. It is only a taxpayer’s failure to comply with the requirements of the [TAA] which will deprive him of the right to bring a challenge. As the [Commissioner] submitted, all litigation is and must be subject to such procedural requirements and limits.
In this case it is only the Goodrickes’ failure to comply with the provisions of the TAA and the Regulations that has deprived them of their ability to bring a challenge.
Conclusion
[56] For the reasons set out above, I dismiss the appeal. The Court has no jurisdiction to hear a challenge in relation to the First Claim that concerns interest payable. In respect of the Second Claim, the purported notice of claim was non- compliant and did not disclose any arguable case. In any event, the Second Claim and the proceedings as a whole could be deemed abandoned at the point when the Goodrickes failed to attend the directions hearing and failed to provide good reasons for not attending.
[57] As the successful party, the Commissioner is entitled to costs. If the parties are unable to agree on costs, they may file memoranda (no more than five pages) within 10 working days of this decision. I will then determine costs on the papers.
Grau J
Solicitors:
Crown Law, Wellington
39 Commissioner of Inland Revenue v Taxation Review Authority, above n 21, at [67].
2