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Technical tax area Ngā tūmomo whakataunga me ngā aratohu

Appeal struck out for failure to pay security for costs

Decision date: 6 December 2013

Case: Wayne Thomas Patterson v Commissioner of Inland Revenue

Act(s): Rule 37(1) of the Court of Appeal (Civil) Rules 2005

Keywords: Security for costs, strike out

Summary

Mr Patterson filed an appeal for a High Court decision adjudicating him bankrupt. He did not, however, pay security for costs as ordered by the Court of Appeal. The Commissioner of Inland Revenue ("the Commissioner") therefore applied to have Mr Patterson's appeal struck out. The Court of Appeal granted the Commissioner's application and struck out Mr Patterson's appeal because of his failure to pay security for costs and because the appeal itself had no realistic prospect of success.

Impact of decision

The decision confirms the effect of section 109 of the Tax Administration Act 1994 ("TAA") and the principle that a respondent should not be put to the expense of responding to an unmeritorious appeal where there is no prospect of costs being recovered from the appellant.

Facts

This decision relates to Wayne Thomas Patterson's appeal of a High Court decision adjudicating him bankrupt at the Commissioner's application. To progress the appeal, the Court of Appeal ordered Mr Patterson to pay security for costs of $5,800 by 11 June 2013. Mr Patterson failed to do so and the Commissioner applied to have the appeal struck out pursuant to rule 37(1) of the Court of Appeal (Civil) Rules 2005 ("the Rules").

Decision

The Court of Appeal granted the Commissioner's application and struck out Mr Patterson's appeal. The Court stated that it was well established that a strike out under rule 37(1) of the Rules would be granted where an appellant had failed to pay security for costs and the appeal itself had no realistic prospect of success.

The Court concluded that Mr Patterson's appeal was essentially asking the Court to reconsider the correctness of default assessments that were not challenged in time and were now deemed to be correct. Such reconsideration was expressly prohibited by section 109 of the TAA. Accordingly, the Court of Appeal held that Mr Patterson's appeal had no realistic prospect of success.

In opposing the strike-out, Mr Patterson submitted that, among other things, the Court should not be allowed to use the security for costs requirement as an indirect means of avoiding public law scrutiny by exploiting Mr Patterson's impecuniosity. Mr Patterson also submitted that a strike-out would be unjust on the basis that he had been denied his fundamental right to defend the original bankruptcy proceeding due to counsel error in an earlier District Court proceeding.

No costs were sought by the Commissioner, and hence none were awarded.

 

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