Ben Nevis Forestry Ventures Limited v Attorney-General [2015] NZHC 121 (10 February 2015)

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BETWEEN	BEN NEVIS FORESTRY VENTURES LIMITED, BRISTOL FORESTRY VENTURE LIMITED, GREGORY ALAN PEEBLES AND CLIVE RICHARD BRADBURY Plaintiffs
AND	ATTORNEY-GENERAL First Defendant COMMISSIONER OF INLAND REVENUE _{Second Defendant}

Hearing:	7 February 2014 (decision deferred to 2 December 2014 awaiting final determination of related decision)
Counsel:	G Judd QC for Plaintiffs P Gunn and R Roff for Defendants
_Judgment:	_{10 February 2015}

This judgment was delivered by me on Tuesday, 10 February 2015 at 3pm pursuant to r 11.5 of the High Court Rules.

BEN NEVIS FORESTRY VENTURES LTD v ATTORNEY-GENERAL [2014] NZHC 121 [10 February 2015]

[1] In this proceeding the plaintiffs (together Ben Nevis) seek orders setting aside the 2004 judgment of Venning J in Accent Management Ltd v Commissioner of Inland Revenue (the 2004 judgment).¹Venning J found the forestry scheme in which the Ben Nevis plaintiffs had invested to be an unlawful tax avoidance scheme. Ben Nevis seeks to set aside the judgment on the basis that the judgment and hearing leading up to it were acts of the judicial branch of the government of New Zealand, and that they were in breach of the New Zealand Bill of Rights Act 1990. Damages are sought in the alternative.

[2] The Attorney-General and Commissioner of Inland Revenue (the Commissioner) apply to strike out the proceeding, first on the basis that it is an abuse of process, second that this Court does not have jurisdiction, and third that there is no reasonably arguable case.

[3] The original proceeding concerned the factually complex Trinity scheme, which was a widely marketed forestry investment which involved significant tax deductions for investors. The Commissioner issued assessments disallowing the claimed deductions and imposing penalties. The 2004 judgment of Venning J in that original proceeding upheld those assessments. The correctness of the assessments and the judgment of Venning J was upheld ultimately by the Court of Appeal and then the Supreme Court in Ben Nevis Forestry Ventures Ltd v Commissioner of

[4] There have been various proceedings that have involved challenges to the original proceeding in addition to the appeals. Three of these have involved the allegation that Venning J was biased and could not adjudicate impartially on the Trinity tax dispute. They were heard and rejected. The allegation was made in a

_{proceeding heard by Venning J}³_{and by the Court
of Appeal.}⁴_{It was heard by
the}

¹_{Accent Management Ltd v Commissioner of Inland Revenue
(2005) 22 NZTC 19,027 (HC).}

²Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2008] NZSC 115, [2009]

³_{Accent Management Ltd v Commissioner of Inland Revenue
[2006] NZHC 59; (2006) 22 NZTC 19,758 (HC).}

[5] More recently, Katz J rejected an application to set aside Venning J’s original decision in Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue,⁶and struck the proceeding out on the basis that the original decision had been appealed, and the hierarchy of courts meant that there was no jurisdiction for the High Court to reconsider it.

[6] The principles that govern the determination of a strike out application are well established and do not need to be set out in detail.⁷In summary:

• Before the court may strike out proceedings the causes of action must be so clearly untenable that they cannot possibly succeed.

• The jurisdiction is one to be exercised sparingly, and only in a clear case where the court is satisfied it has sufficient material to safely make a decision.

• The fact that applications to strike out raise difficult questions of law and require extensive argument does not exclude jurisdiction.

• The courts should be very slow to rule on novel categories of duty at the strike out stage. This is particularly so where the possible permutations of facts cover a range of possibilities. In that context, deciding wide public policy questions may lead to an unfocussed approach because the inquiry is then set against too broad a factual

⁵_{Muir v Judicial Conduct Commissioner [2013] NZHC
989, (2013) 26 NZTC 21-019 (HC).}

⁶Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2013] NZHC 2361, (2013)

[7] It has been held recently by the Court of Appeal that, at least in the context of determining whether there is a duty of care, it is enough if the cause of action is arguable.⁸In Couch v Attorney-General it was also observed by Elias CJ and Anderson J that particular care is required in areas where the law is confused or developing.⁹

[8] The Crown submits that this proceeding is part of the continuing attempt on the part of the plaintiffs to re-litigate matters that have already been decided by courts of competent jurisdiction in previous proceedings. It raises other grounds as well but given that this argument has now been considered by the Court of Appeal and Supreme Court, I focus on it.

[9] This proceeding had its genesis in the proceedings that have already been heard in Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue and struck out by Katz J.¹⁰In that proceeding the plaintiffs had alleged that Venning J’s decision in the original proceeding was voidable on the ground that the Judge was or may have been seen to be biased, by virtue of him being beholden in respect of an alleged stamp duty debt to the Commissioner. I note that the Court of Appeal has previously found this to be a “startling” assertion lacking in any evidential foundation.¹¹

[10] The essential allegation was (and is) that the Judge, amongst others, is jointly and severally liable to pay stamp duty of not less than $4,250 to the Commissioner on a transaction carried out in relation to a forestry partnership, together with interest. It was alleged the existence of this debt meant that the judgment was voidable because of bias. An order was sought setting aside the judgment.

[11] Following the Commissioner filing an application to strike out, the plaintiffs sought to file an amended pleading making public law claims to compensation in

_{respect of alleged breaches by Venning J of s 27 of the New Zealand Bill
of Rights}

¹⁰_{Ben Nevis Forestry Ventures Ltd v Commissioner of
Inland Revenue, above n 6.}

Act 1990 (NZBORA). Katz J had to determine whether the application to file the amended statement of claim be heard with the Commissioner’s protest of jurisdiction and application to strike out, and determined that the latter application should be resolved first.¹²Her decision was affirmed on appeal.¹³Katz J then proceeded to hear the application to strike out and struck out the proceeding.¹⁴

[12] This present proceeding relies on the same facts relating to the stamp duty. The opening factual allegations are the same as in the statement of claim considered by Katz J. However, the claim is couched in a different way, alleging breach of the NZBORA and seeking damages.

[13] When this matter was heard before me on 7 February 2014, there had been an appeal against the decision of Katz J to the Court of Appeal and a hearing was awaited. The determination of this proceeding was put off awaiting the outcome of that appeal.

[14] A decision was delivered by the Court of Appeal on 5 August 2014. It upheld the decision of Katz J.¹⁵There was then an application for leave to appeal to the Supreme Court. The Supreme Court’s decision was delivered on 2 December 2014. Leave to appeal was declined.¹⁶

[15] The Court of Appeal in upholding Katz J’s decision determined that the appropriate forum for remedying claims relating to the original 2004 decision was the appellate court that last dealt with the matter, the Supreme Court.¹⁷It regarded the Supreme Court decision of Commissioner of Inland Revenue v Redcliffe Forestry

_{Venture Ltd}¹⁸_{as an indicator that a
challenge to a concluded judgment that had been}

¹²Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue HC Auckland CIV-2012-

¹³Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2013] NZCA 164, (2013)

¹⁴_{Ben Nevis Forestry Ventures Ltd v Commissioner of
Inland Revenue, above n 6.}

¹⁵Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2014] NZCA 350, (2014)

¹⁶_{Bradbury v Commissioner of Inland Revenue [2014]
NZSC 174, (2014) 26 NZTC 21-112.}

¹⁷_{Ben Nevis Forestry Ventures Ltd v Commissioner of
Inland Revenue, above n 15 at [29]-[48].}

¹⁸Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd [2012] NZSC 94, [2013]

the subject of an appellate judgment should not be mounted in the trial court except in the case of a judgment obtained by fraud.¹⁹The Court of Appeal held:²⁰

[46] Mr Judd said the right to have a judgment that had been obtained in breach of the rules of natural justice set aside ex debito justitiae would be compromised if it was necessary to seek this remedy from an appellate court. He said an appellate court would have a discretion to consider such an application but would not be bound to do so. That undermined the “as of right” nature of the remedy.

[47] We do not see this as a matter of concern. The appellate court would be asked to recall its judgment or to entertain a new appeal or application for leave to appeal and would deal with the application in accordance with its normal procedure. If grounds for setting aside the judgment of the lower court are established, the appellate court could reopen the appeal or grant leave to appeal and deal with the point. Its powers would include setting aside the lower court’s judgment. We do not think there is any serious risk an appellate court would refuse to deal with a meritorious application for recall in these circumstances. But, just as the High Court would, it will dismiss any abusive applications. Unlike the High Court, it will not then be subject to further challenge on appeal.

[48] This approach also has the benefit that allegations of bias are dealt with by the appellate court rather than by a fellow trial judge of the judge against whom the allegation is made.

[10] It should be borne in mind that the appeals to both the Court of Appeal and Supreme Court [of the original decision of Venning J] were by way of rehearing. The position of the applicants is that if the High Court judgment is set aside, the judgments of the Court of Appeal and Supreme Court would fall away, as nullities, a position which indicates that the proceedings are a collateral attack on this Court’s decision in Ben Nevis. The drift of the judgment in Redcliffe is very much against the applicants on this point. Leaving aside the special case of judgments obtained by fraud, there is no authority supporting the position taken by the applicants.

[17] I am bound by these decisions. They stand for the clear proposition that in the absence of an allegation of fraud, a challenge to the 2004 judgment can only be heard in the Supreme Court, and there is no jurisdiction to determine an application

_{filed in the High Court. To do so would be for a Judge of the High
Court to in effect}

¹⁹_{Ben Nevis Forestry Ventures Ltd v Commissioner of
Inland Revenue, above n 15 at [43].}

²¹Bradbury v Commissioner of Inland Revenue, above n 16 (footnotes omitted).

re-hear and possibly set aside judgments of the Court of Appeal and Supreme Court. In the absence of fraud this is not permissible.

[18] The point being clear, it is not necessary to consider the other grounds put forward in support of the strike out application. This Court has no jurisdiction to hear the claim.

[20] The Commissioner is entitled to costs in respect of the application. I have not heard argument on the appropriate quantum, and leave is reserved to the parties to file memoranda on costs, if they cannot be agreed.

High Court of New Zealand Decisions

Ben Nevis Forestry Ventures Limited v Attorney-General [2015] NZHC 121 (10 February 2015)