GPL Limited v Commissioner of Inland Revenue [2016] NZHC 180 (12 February 2016)

Last Updated: 3 March 2016

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-0094 [2016] NZHC 180

BETWEEN	GPL LIMITED Applicant
AND	COMMISSIONER OF INLAND REVENUE Respondent

Hearing:	12 February 2016
Appearances:	Mr J B Hardie for Applicant Mr Van der Merwe for Respondent
Judgment:	12 February 2016

_{ORAL JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE}

GPL LIMITED v COMMISSIONER OF INLAND REVENUE [2016] NZHC 180 [12 February 2016]

[1] The Commissioner served a statutory demand on the applicant on 13 January

2016. The statutory demand was said to be justified by default assessments which had been made. I do not propose to review in detail the arguments that Mr Hardie addressed to me about the detailed statutory provisions which govern the making of assessments and the filing of NOPA’s in regard to assessments. The short position is, though, that the Commissioner on 10 February 2016 notified of her election to withdraw the statutory demand:

On the basis that the four month time frame within which you have the right to file a notice of proposed adjustment is not yet expired. This timeframe will expire on 15 April 2016 for the income tax year ended March 2008 and

9 April 2016 for the income tax years ending 2009-2014.

[2] Mr Hardie was critical of the way in which the Commissioner had carried out her statutory duties in this case. He objected to the Commissioner now being able to simply withdraw the statutory demand. He told me, in effect, that the applicant expectation was that the Court should do what it could to ensure that the flawed processes which were followed were reviewed in discussions between the tax payer, the applicant, and the Commissioner and in the meantime the present application should stay on foot.

[3] Mr Hardie also addressed the Court on the commercial damage that could potentially be done to the applicant by its having to institute the present proceedings to set aside the statutory demand.

[4] Mr Van der Merwe for the Commissioner told me that the respondent did have the right to proceed as it did but that the statutory demand had been issued and served prematurely. That was the reason why the Commissioner sent the letter that she did on 10 February 2016.

[5] I consider that this matter should be disposed of. This is a Companies’ Court. The propriety of the actions of the Inland Revenue cannot be supervised on a continuing basis by this Court. The taxpayer has statutory remedies. If the Commissioner does not properly address its statutory rights if it is to seek compensation for failures to follow correct procedures in the past it will have to

explore that possibility in some Court other than this, if indeed Court proceedings are apt for that purpose.

[6] However in my view, given that the company was driven to bringing the present application and given that the Commissioner has implicitly accepted that the statutory demand ought not to have been served this is an appropriate case for an award of costs, despite Mr Van der Merwe’s opposition to the making of the same. There will be an order that costs on a 2B basis together with disbursements as fixed by the Registrar are to be paid by the Commissioner to the applicant.

[7] I address next Mr Hardie’s expressed concerns about the effect on his clients’

reputation by being involved in this proceeding.

[8] I do not consider that there is any practical salve or remedy which the Court could offer to the applicant even if it was as a matter of principle open to it to do so. In fact, the guiding principle about the openness of court proceedings which point against making suppression orders or orders of that kind are well understood and they are to be found in the judgment of the Court of Appeal in Clark v Attorney-

General¹and in particular the references in that case to Broadcasting Corporation of

New Zealand v Attorney-General.² In the Clark case the following principle in

Broadcasting Corporation was adopted at approval:

[10] MacKenzie J took as his starting point the general principle, as discussed in Broadcasting Corporation of New Zealand v Attorney-General [1982] 1 NZLR 120,that proceedings should be conducted in public with any exception justified only if necessary in the interests of the proper administration of justice. He quoted the following passage from Woodhouse P (at 122-123) on the reasons for the principle of open justice, its fundamental importance in our system of justice and the limited nature of the exceptions to that principle:

Some of the descriptions applied by the English Court of Appeal and the House of Lords to the concept of open justice are worth recalling. “So precious a characteristic of English law”; “the salt of the Constitution”; “one of the surest guarantees of our liberties”; “our true security for justice under the Constitution”: Scott v Scott [1912] P 241 at 260 and 287; and [1913] AC 417 at 476 and 482. Those spacious phrases may not precisely capture basic aspects of the New Zealand idiom in 1982 but there is no doubting their

¹ _{Clark v Attorney-General CA 213/04, 2 December 2004.}

² Broadcasting Corporation of New Zealand v Attorney-General [1982] 1 NZLR 120.

message. It is simply that the principle of public access to the Courts is an essential element in our system. Nor are the reasons in the slightest degree difficult to find. The Judges speak and act on behalf of the community. They necessarily exercise great powers in order to discharge heavy responsibilities. The fact that they do it under the eyes of their fellow citizens means that they must provide daily and public assurance that so far as they can manage it what they do is done efficiently if possible, with human understanding it may be hoped, but certainly by a fair and balanced application of the law to facts as they really appear to be. Nor is it simply a matter of providing just answers for individual cases, important though that always will be. It is a matter as well of maintaining a system of justice which requires that the judiciary will be seen day by day attempting to grapple in the same even fashion with the whole generality of cases. To the extent that public confidence is then given in return so may the process be regarded as fulfilling its purposes.

Despite the importance attached to these basic concepts there have been occasional situations of a particularly pressing kind which have led to a Court sitting in camera. Sometimes there has been statutory authority for that happening but otherwise the Judge concerned has drawn upon an inherent jurisdiction of the Court to adopt measures that are needed to protect the long term interests of justice. If an open hearing would prevent the due administration of justice in that wide and general sense then on rare occasions it has been accepted that the quite exceptional step could be taken of closing the Court. The matter is discussed in Scott v Scott where there is some reference to strictly limited reasons which might require some action of that kind. But that case demonstrates how jealous the Judges have always been to preserve the fundamental principle that justice is to be administered openly and publicly; and that any departure from that principle must depend not on judicial discretion but the demands of justice itself.

[9] I consider that in the light of those authorities it is not open to the applicant to seek orders suppressing publication of details about the service of the statutory demand, the tax assessments underlying that demand or the reasons for the respondent withdrawing it.

[10] The other possibility of harm to the company that Mr Hardie has referred to is the possibility that a third party could obtain information about the company by reviewing the contents of the Court file. In my view if and when any potential problem in that regard arises the Court will be able to consider the matter and make appropriate directions after considering the contents of r 3.16 of the High Court Rules.

[11] Standing back and looking at matters overall, what should not be lost sight of is that in fact in this case the applicant company has been vindicated in its Court

proceedings and I would surprised if there is any real or practical possibility of harm being caused to its commercial interests.

_{[12] The application for order setting aside the statutory demand is dismissed.}

J.P. Doogue

Associate Judge