Decision date: 31 October 2013
Case: Commissioner of Inland Revenue v Garry Albert Muir and others
Act(s): Tax Administration Act 1994
Keywords: Transfer of proceedings, consolidation
The Commissioner of Inland Revenue ("the Commissioner") was successful in her application to have a number of cases originally filed in the Taxation Review Authority ("TRA") transferred to the High Court and consolidated with other High Court cases concerning the same dispute.
The transfer and consolidation will allow the court to deal with matters in a comprehensive, efficient and relatively inexpensive manner. In agreeing to the transfer and consolidation, the court considered and applied the same considerations set out in Commissioner of Inland Revenue v Deepsea Seafoods (No 1) Limited (2004) 21 NZTC 18,469 (HC) ("Deepsea Seafoods").
The litigation history, especially since 2002, was one of the strong reasons for awarding the orders.
This application relates to the ongoing challenges filed by the respondents, disputing the finding that the Trinity Scheme was a tax avoidance scheme.
The Commissioner applied for the transfer of 66 proceedings (brought by 11 challengers) from the TRA to the High Court and consolidation of those proceedings with some related appeals and proceedings already in the High Court.
Before considering the issues, the Court first had to determine whether the Commissioner could bring this application by way of an originating application under Part 19 of the High Court Rules. The Court granted leave to the Commissioner with reference to Randerson J's judgment in Commissioner of Inland Revenue v McIlraith (2003) 21 NZTC 18,112 (HC).
In relation to the transfer of proceedings, Toogood J referred to the case of Deepsea Seafoods where the relevant considerations for transfer of proceedings from the TRA to the High Court were considered, the main ones being:
The respondent objected to the transfer on the basis that:
In response, Toogood J considered that:
Toogood J also criticised the attitude the Trinity investors adopted, particularly those who did not settle their challenges after the Ben Nevis Forestry Ventures Limited v Commissioner of Inland Revenue  NZSC 115,  2 NZLR 289. He stated at :
Toogood J referred to Commissioner of Inland Revenue v A Taxpayer (2003) 21 NZTC 18,001 (HC),where O'Regan J determinedthat transfer of Trinity litigation underlying the Ben Nevis decision was appropriate given the complexity of the issues and the amount of tax at stake. Toogood J stated at :
In relation to the consolidation of the proceedings, Toogood J again referred to Deepsea Seafoods where consolidation was ordered. He applied the same considerations, and ordered consolidation, noting that consolidation was desirable to save time and cost for the parties and the Court.
In addition, the Court made ancillary orders requiring the respondents to file and serve on the Commissioner amended statements of claim in all of the transferred proceedings on or before 5 December 2013, with the Commissioner to file and serve statements of defence by 20 February 2014.
Costs were awarded to the Commissioner.