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Technical tax area Ngā tūmomo whakataunga me ngā aratohu

Interlocutory appeal in advance of substantive hearing

Decision date: 9 May 2013

Case: Ben Nevis Forestry Ventures Ltd & Others v Commissioner of Inland Revenue

Act(s): High Court Rules rule 1.2, Judicature Act 1908

Keywords: Interlocutory appeal, postponement, judicial discretion, Trinity, tax avoidance

Summary

This was an appeal of a High Court decision that the Commissioner's interlocutory application should be heard before the appellant's interlocutory application. The Court of Appeal did not disturb the High Court's decision and exercised their discretion not to hear this interlocutory appeal matter before the substantive hearing in the High Court.

Impact of decision

The Court of Appeal has the discretion to decline to hear an interlocutory appeal in advance of a substantive hearing in a lower court if the Court decides that the issues on appeal may be overtaken by the substantive hearing or that the appellant is unlikely to be prejudiced by postponement (Reid v Attorney-General [2012] NZCA 174).

Facts

The appellants in this case were investors in the Trinity tax avoidance scheme. The appellants have applied to the High Court for an order that the judgment of the High Court in Accent Management Ltd v Commissioner of Inland Revenue [2004] 22 NZTC 19,027 (HC) ("Accent Management") be set aside. Venning J found that the Trinity scheme (in which the appellants are investors) was a tax avoidance arrangement. This decision was also upheld in the Court of Appeal (Accent Management Ltd v Commissioner of Inland Revenue [2007] NZCA 230, (2007) 23 NZTC 21,323) and in the Supreme Court (Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2008] NZSC 115, [2009] 2 NZLR 289).

The appellants claim that the decision in Accent Management is voidable on the ground that Venning J was or may have been seen to be biased because he was beholden to the Commissioner, in respect of an alleged stamp duty debt.

An interlocutory application to join the Attorney-General to the proceeding was also filed by the appellants. A draft amended claim for compensation under the New Zealand Bill of Rights Act 1990 was attached to that application.

In response to the challenge of Venning J's judgment, the Commissioner filed an appearance under protest to jurisdiction and an interlocutory application for dismissal or strike out. The Commissioner argued that if the claim had to be properly considered in any court, that consideration would have to occur in the Court of Appeal.

Katz J in the High Court was asked to determine which interlocutory application should be heard first. The Judge determined it was premature to consider adding additional defendants or causes of actions before the Commissioner's protest to jurisdiction application was determined. The second issue for the High Court was the appellants' application that this matter be heard by a Full Court of the High Court. This issue was referred to the Chief High Court Judge, Winkelmann J, who decided that there were no grounds which would justify constituting a Full Court in respect of the interlocutory applications or the substantive proceeding (Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue HC Auckland CIV-2012-404-7682, 17 April 2013).

Decision

The Court of Appeal decided to defer the appeal. The Court recognised that Siemer v Heron ([2011] NZSC 133, [2012] 1 NZLR 309 at [32]) allowed an appeal as of right to the Court of Appeal against interlocutory decisions. However, it was also recognised that there is discretion to decline to hear an interlocutory appeal in advance of the substantive hearing in a lower court. This discretion can be exercised if the issues on appeal may be overtaken by the substantive hearing or if the appellant is unlikely to be prejudiced by postponement.

Mr Judd QC argued for the appellants that the Court of Appeal should hear the appeal prior to the Commissioner's protest to jurisdiction, because otherwise the appeal would be rendered nugatory. The Court of Appeal concluded that the decision as to the order in which these interlocutory matters are heard is not dispositive in any substantive or practical way and that the appellants are not prejudiced by deferral of the appeal.

Mr Judd QC indicated that the appeal against Winkelmann J's refusal to constitute a Full Court was not a focus of the appellants' concern. The Court of Appeal decided it was therefore not necessary to decide that matter.

The Court of Appeal made no order as to costs and the fixture to deal with the appeal was vacated.

 

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