Leave given to determine appeal

Summary

The Commissioner sought leave to appeal to the Supreme Court following the Court of Appeal decision that the taxpayers should now be able to amend their pleadings, put forward what they allege as probative evidence of fraud and argue their repleaded case.

Impact of decision

This decision confirms the view that the proposed appeal involves a matter of public importance and is necessary to be determined by the Supreme Court

Facts

In September 2009 the taxpayers filed a proceeding in the High Court seeking an order to set aside a December 2004 High Court Judgment. ¹ The Commissioner responded to this setting-aside proceeding by filing a protest to jurisdiction and an application under rule 5.49 of the High Court Rules for an order dismissing the proceeding.

The Commissioner asserted that the High Court was functus officio and thus lacked jurisdiction to hear and determine the proceedings and that any application to set aside the 2004 judgment must be made to the Supreme Court.

The taxpayers conversely asserted that the High Court had jurisdiction to entertain their setting-aside proceeding and that there was no restraint on their bringing that proceeding to the High Court.

The High Court ² found for the Commissioner and dismissed the taxpayer's application. The taxpayers then appealed to the Court of Appeal.

The Court of Appeal ³ found in favour of the taxpayers and reversed the High Court judgement. Consequently, the Commissioner sought leave to appeal the Court of Appeal judgment on the following issues:

1. whether the proposed appeal involves matters of general or public importance and general commercial significance; subsections 13(2)(a) and (c) Supreme Court Act 2003
2. whether it is necessary in the interests of justice for the Supreme Court to hear and determine the proposed (interlocutory) appeal before the proceeding concludes in the High Court; section 13(4) Supreme Court Act 2003.

Decision

The Supreme Court granted leave to appeal and approved the questions:

1. whether the Commissioner's challenge to the claim was appropriately brought under rule 5.49 of the High Court Rules; and
2. whether the judgment of the High Court should in any event have been upheld.

¹ Accent Management Ltd v Commissioner of Inland Revenue (2004) 22 NZTC 19,027 (HC). This was the original High Court judgment (upheld by the Court of Appeal and the Supreme Court) finding that the Trinity scheme was a tax avoidance arrangement.

² Redcliffe Forestry Venture Ltd v Commissioner of Inland Revenue [2011] 1 NZLR 336; (2010) 24 NZTC 24,079 (HC).

³ Redcliffe Forestry Venture Ltd v Commissioner of Inland Revenue [2011] NZCA 638 (CA).