Faloon v Commissioner of Inland Revenue [2010] NZCA 223; (2010) 24 NZTC 24,325 (31 May 2010)

Last Updated: 16 January 2012

IN THE COURT OF APPEAL OF NEW ZEALAND

CA680/2009

[2010] NZCA 223

BETWEEN CLARENCE JOHN FALOON
First Applicant

AND RUTH ENID FALOON
Second Applicant

AND COMMISSIONER OF INLAND REVENUE
Respondent

Counsel: Applicants in person
JAL Oliver for Respondent

Judgment: 31 May 2010 at 10.30 am

JUDGMENT OF ARNOLD J

The application for review of the Registrar’s decision declining to waive the payment of security for costs is dismissed.

REASONS

Introduction

[1] The applicants, Mr and Mrs Faloon, have filed an appeal and applied to the Registrar for a waiver of security for costs. The Registrar declined the application and fixed security at $4740. This is an application for review of that decision.

Background

[2] It is unnecessary to traverse the complicated background to the present appeal in detail. It is sufficient to say that it concerns long-running disputes between the Mr Faloon and first, the Palmerston North City Council, concerning the diversion of a stream running across land owned by a company in which Mr Faloon had an interest, and second, the Crown, concerning land taken for the purposes of Palmerston North Airport.[1] The Commissioner of Inland Revenue has since become entangled in the disputes through matters relating to income tax.
[3] On 1 April 2009, the Commissioner provided Mr Faloon with a disclosure notice in respect of a notice of proposed adjustment of income tax to be paid. The notice contained the Commissioner’s statement of position and required Mr Faloon to furnish his statement of position by 1 June 2009. Mr and Mrs Faloon jointly applied to the High Court for an extension of time to reply to the Commissioner’s statement of position[2] (although the statement related only to Mr Faloon’s tax affairs). They applied on the basis that the issues in dispute had not previously been discussed between the Commissioner and Mr Faloon.
[4] On 21 August 2009 the High Court declined the application for an extension of time.[3] Asher J considered that Mr Faloon’s failure to file his reply within the two month timeframe was unreasonable.[4] The Judge considered that Mr Faloon was taking a tactical position in order to re-litigate the long-standing disputes referred to above.[5] The Judge also considered it improper for Mrs Faloon to be joined as an applicant.
[5] The Faloons applied for a recall of the 21 August 2009 decision.[6] Asher J declined the application on 9 September 2009. The Judge held that the application had not satisfied the requirements for recall, as set out in Horowhenua County v Nash (No 2):[7]

Generally speaking, a judgment once delivered must stand for better or worse subject, of course, to appeal. Were it otherwise there would be great inconvenience and uncertainty. There are, I think, three categories of cases in which a judgment not perfected may be recalled — first, where since the hearing there has been an amendment to a relevant statute or regulation or a new judicial decision of relevance and high authority; secondly, where counsel have failed to direct the Court's attention to a legislative provision or authoritative decision of plain relevance; and thirdly, where for some other very special reason justice requires that the judgment be recalled.

[6] The Judge held that the applicants were attempting to re-litigate issues raised in earlier proceedings.[8]
[7] The Faloons then applied for a recall of the decision of 9 September 2009. On 12 October 2009 Asher J declined the application on the papers, considering that the proceedings were determined by the judgment of 21 August 2009 and the application was without merit.[9] The Faloons now seek a “rehearing” of the decision for recall of the 9 September 2009 decision.

Security for costs

[8] In the normal course, appellants in civil proceedings in this Court are required to pay security for costs.[10] If an appellant wishes to apply to the Registrar for a waiver of security, he or she must do so within 20 days of filing the appeal.[11] The Registrar may vary or waive security “if satisfied that the circumstances warrant it”.[12]
[9] In the present case, the Registrar declined the application because the Faloons had been unsuccessful in previous proceedings and had failed to pay the costs awarded against them.
[10] Security for costs will be waived where it is in the interests of justice to do so. Given that the normal rule is that security must be provided, there will need to be some exceptional circumstance to justify waiver.[13] The circumstances of the appeal are relevant, in the sense that the appellant must honestly intend to pursue it and it must be arguable – respondents should not face the threat of hopeless appeals without provision for security. The novelty or importance of the issues raised in the appeal will be particularly significant, as will the question whether there is any the public interest in having them determined.[14] Impecuniosity alone is not usually sufficient to justify a waiver, but may be reason to reduce the quantum of security.[15]

Discussion

[11] While the Faloons have applied for a review of the Registrar’s decision not to waive costs, they have not pointed to any grounds in support of waiver. The Faloons seek a “rehearing” of the application to recall the judgment dated 9 September 2009. The application traverses the perceived merits of the disputes mentioned above[16] and objects to Asher J’s 12 October decision being made on the papers, on the ground that it contravened the right to be heard under s 27(3) of the New Zealand Bill of Rights Act 1990.
[12] There are good reasons to require security in this case. First, it is unclear whether the applicants are impecunious. Second, it is not clear that the proceeding will be rendered nugatory if security is ordered. Third, previous costs orders imposed on the applicants have not been paid. Fourth, the appeal is not genuinely arguable. The Faloons, in seeking a “rehearing” of the application to recall the 9 September 2009 decision, are in effect asking this Court to disregard Asher J’s decision of 12 October 2009. This Court does not have jurisdiction to “re-hear” applications – it determines appeals.[17] Assuming that the Faloons intended such a course of action, their objection to the hearing on the papers lacks merit. Asher J set out appropriate reasons for deciding the application in that way. The application did not raise new arguments, no attempt was made to meet the principles set out in Horowhenua County v Nash (No 2) and the application was without merit.
[13] Finally, the purpose of the application appears to be to re-litigate Mr Faloon’s disputes with the Council and the Crown. This Court provided guidelines for recall of judgments in civil proceedings in Erwood v Maxted (as trustees of the estate of Erwood).[18] Those guidelines contain the following:

(b) Applications to recall judgments not falling within r 8

(i) Where a party seeks to recall a judgment not falling within r 8,[19] the criteria set out in Horowhenua County v Nash (No 2) [1968] NZLR 632 at p 633 (as confirmed by this Court in Unison Networks Ltd v Commerce Commission [2007] NZCA 49) are to be followed and will be strictly applied.

(ii) Applications which merely seek to relitigate matters already considered, or to challenge substantive findings of fact and law, will not be entertained. Reference may usefully be made to Ngahuia Reihana Whanau Trust v Flight CA23/02 26 July 2004; and Faloon v Commissioner of Inland Revenue (2006) 22 NZTC 19,832.

[14] It is to be noted that Mr Faloon features in one of the cases cited as involving an applicant attempting improperly to re-litigate a dispute. In that case, Asher J held:[20]

No proper basis has been put forward by Mr Faloon for the recall of this judgment, which is yet another attempt in a different form to litigate the same issues that he has been pursuing since 1996. The application is dismissed.

In light of that, not only is the present application not in the public interest, it borders on an abuse of process.

[15] In the result, I consider that the Registrar was right to require the applicants to pay $4,740 by way of security for costs.

Decision

[16] The application for review of the Registrar’s decision declining to waive the payment of security for costs is dismissed.

Solicitors:
Crown Law Office, Wellington for Respondent

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[1] A history of the litigation is set out in Faloon v Commissioner of Inland Revenue HC Rotorua CIV-2009-470-319, 21 August 2009 at [8].

[2] Pursuant to the Tax Administration Act 1994, s 89M(11)(b).

[3] Faloon v Commissioner of Inland Revenue HC Rotorua CIV-2009-470-319, 21 August 2009.

[4] At [18].

[5] At [2].

[6] Pursuant to High Court Rules, r 11.9.

[7] Horowhenua County v Nash (No 2) [1968] NZLR 632 (SC) at 633.

[8] Faloon v Commissioner of Inland Revenue HC Rotorua CIV-2009-470-319, 9 September 2009 at [6].

[9] Faloon v Commissioner of Inland Revenue HC Rotorua CIV-2009-470-319, 12 October 2009.

[10] Court of Appeal (Civil) Rules 2005, r 35(2).

[11] Ibid, r 35(3) and (6).

[12] Ibid, r 35(6).

[13] Fava v Zaghloul [2007] NZCA 498 at [9].

[14] Creser v Official Assignee CA196/05, 12 June 2006 at [29].

[15] Fava v Zaghloul [2007] NZCA 498 at [9]; Easton v Broadcasting Commission [2009] NZCA 252 at [5].

[16] At [2].

[17] Judicature Act 1908, s 66.

[18] Erwood v Maxted (as trustees of the estate of Erwood) [2010] NZCA 93 at [23].

[19] Court of Appeal (Civil) Rules 2005, r 8 allows accidental slips and omissions in judgments to be corrected.

[20] Faloon v Commissioner of Inland Revenue (2006) 22 NZTC 19,832 (HC) at [16].