Yandina Investments Limited v Commissioner of Inland Revenue HC Wellington Civ-2006-485-1228

[2010] NZHC 2369

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2006-485-1228

UNDER  the Tax Administration Act 1994 and the

Income Tax Act 1994

BETWEEN  YANDINA INVESTMENTS LIMITED Plaintiff

ANDTHE COMMISSIONER OF INLAND REVENE

Defendant

Hearing:         29 November 2010

Appearances: C.R. Carruthers QC & R.J. Cullen - Counsel for Plaintiff

M. Deligiannis & M. Palmer - Counsel for Defendant

Reasons for Decision:            1 December 2010 at 3.15 pm

REASONS FOR DECISION OF ASSOCIATE JUDGE D.I. GENDALL

This judgment was delivered by Associate Judge Gendall on 1 December 2010 at

3.15 pm under r 11.5 of the High Court Rules.

Solicitors:           Thomas Dewar Sziranyi Letts, Solicitors, PO Box 31240, Lower Hutt 5040

Crown Law, PO Box 2858, Wellington

YANDINA INVESTMENTS LIMITED V THE COMMISSIONER OF INLAND REVENE HC WN CIV-2006-

485-1228  1 December 2010

[1]      On 10 November 2010 the plaintiff applied to this Court for an order to add Westpac  Banking  Corporation,  ANZ  National  Limited  and  BNZ  Investments Limited as defendants to this proceeding.

[2]      This matter was then the subject of a telephone conference between counsel for the parties on 16 November 2010.  Ms Deligiannis appeared for the defendant, Commissioner of Inland Revenue at that telephone conference and indicated that the defendant’s position on the joinder application was not at that stage known but that the Commissioner’s view would be clear by 24 November 2010 at the latest.

[3]      Subsequently, on 24 November 2010, the defendant, Commissioner of Inland Revenue, filed a Notice of Opposition to the plaintiff’s 16 November 2010 application.

[4]      In addition, on 24 November 2010, counsel for the defendant Commissioner filed a memorandum in this Court requesting an urgent telephone conference of the parties.  The reason for that request was said to be because the defendant had at para [11] of his Notice of Opposition requested the Court to revisit an earlier direction made in a Minute issued for the 16 November 2010 telephone conference whereby a direction was made that the plaintiff’s joinder application need not be served on the banks as the parties sought to be joined.

[5]      On this, para [5] of my Minute of 16 November 2010 stated specifically:

As to the procedure to be adopted for the present joinder application, Mr Carruthers QC advises that discussions have taken place between the plaintiff and the banks who are the intended defendants here and the banks have been advised that the application for joinder was to be made by the plaintiff.  That said, I am satisfied that the established procedure whereby existing parties to  this proceeding are to be served with this joinder application but not the parties sought to be joined is to apply here – see McGechan on Procedure HR4.56.02. (There is to be no direction that the present joinder application be served on the banks as the parties sought to be joined).

[6]      Given that, on 16 November 2010 the plaintiff’s joinder application was also set down for hearing before a Judge at 10.00 am on 15 December 2010, an urgent telephone conference to deal with the defendant’s request noted in paragraph [4] above was convened and took place at 2.15 pm on 29 November 2010.

[7]      At that telephone conference hearing, submissions on this service issue were made by Mr Palmer for the defendant and Mr Carruthers QC for the plaintiff.

[8]      The grounds advanced by the defendant, in support of its application that the banks as parties proposed to be joined to these proceedings should be served with the application and related documents, were broadly speaking as follows:

(a)The proposed defendants need to be heard at the joinder application hearing so that in terms of the principles of natural justice they have the opportunity to oppose or take part in the hearing of that application.

(b)The present situation in this case is not akin to the normal situation applying on most joinder applications where service on proposed defendants is not required.

(c)The defendant Commissioner is concerned that these proceedings are fair  to  all  parties  including  the  banks  intended  to  be  joined  and further, service on the banks is likely to minimise costs and delay (for example if a subsequent strike-out application is needed) if the banks are given the opportunity to participate in the joinder hearing.

[9]      In response, Mr Carruthers QC for the plaintiffs contended that the defendant Commissioner’s argument is misconceived as the plaintiff in any event could commence separate proceedings against the banks without reference to them.

[10]     In addition, in any event, Mr Carruthers has confirmed to the Court that the plaintiffs have advised  the banks concerned that an application to join them as defendants to this proceeding has been made and Mr Carruthers confirms that none of the banks concerned have asked to be served with the joinder application and supporting  documents.    Further,  Mr  Carruthers  QC  confirms  that  nothing  has emerged in the correspondence between the plaintiffs and the banks proposed to be joined to suggest that if the banks are joined to this proceeding they would wish to bring a strike-out or summary judgment application against the plaintiffs.

[11]     In my minute of 16 November 2010 I noted from McGechan on Procedure at para HR4.56.02 that the learned authors confirm:

Established practice (for joinder applications) is to serve existing parties but not the person sought to be joined.

[12]     In my view, given particularly the further confirmation to the Court provided by  Mr  Carruthers  QC  that  the  banks  are  all  aware  of  the  plaintiff’s  joinder application and none have asked to be served with the application itself, the present case is one where the established practice that the person sought to be joined need not be served should apply.

[13]     As occurred in Westgate Transport Ltd v Methanex NZ Ltd (No. 2) High Court Auckland, 27 August 1999, Nicholson J, CP93/98, if subsequently orders for joinder of the banks are made here, then an opportunity for the banks as new parties to file either a statement of defence or strike-out application can be appropriately timetabled.

[14]    For these reasons, and noting also that the hearing date for the joinder application is fast approaching, the direction made at para [5] of my minute of 16

November 2010 is to remain.   There is to be no direction that the present joinder application be served on the banks as the parties sought to be joined.

‘Associate Judge D.I. Gendall’