Hanson v Commissioner of Inland Revenue [2019] NZHC 2052 (21 August 2019)

Last Updated: 2 September 2019

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-40 [2019] NZHC 2052

UNDER THE	Income Tax Act 2007 and the Tax Administration Act 1994
IN THE MATTER OF	An appeal against the decision of the Taxation Review Authority
BETWEEN	CAROLYN ANDREA HANSON Appellant
AND	COMMISSIONER OF INLAND REVENUE Respondent

Hearing:	20 August 2019
Appearances:	M L Blum as advocate for the Appellant J Cheng and L Worthing for the Respondent
Judgment:	21 August 2019

JUDGMENT OF POWELL J

[Application to set aside consent order for payment of Security for Costs/Application for Stay]

This judgment was delivered by me on 21 August 2019 at 3.30 pm pursuant to R 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

HANSON v COMMISSIONER OF INLAND REVENUE [2019] NZHC 2052 [21 August 2019]

[1] The appellant, Caroline Hanson, has appealed a decision of the Taxation Review Authority, dated 12 December 2018. Her appeal is due to be heard on 17 September 2019. Her appeal is currently in jeopardy because she has not paid security for costs on the appeal. Security has not been paid notwithstanding that the sum was agreed by the parties ($2,230) and formed part of a consent order issued by Hinton J on 12 March 2019, and notwithstanding a number of extensions granted either by consent or by this Court.

[2] Ms Hanson has now filed an application to set aside the consent order requiring security to be paid or, in the alternative, to stay the appeal pending payment of security, and it is this application that stands for determination today.

Preliminary issue – representation of Ms Hanson

[3] As a preliminary matter, it is noted that Ms Hanson sought to be represented today by her husband, Marcus Blum. Mr Blum represented Ms Hanson at the Taxation Review Authority hearing and appeared at the last call of this matter when he was advised that he was not allowed to represent Ms Hanson in this Court. As matters have turned out, since that last appearance, Mr Blum has not only continued representing Ms Hanson but has sworn and filed an affidavit in support of her application which makes his ongoing attempts to represent Ms Hanson even less appropriate. Despite this, and notwithstanding the objections by Ms Cheng to Mr Blum representing Ms Hanson this morning, it is important to resolve the present issue expeditiously given the close proximity of the substantive fixture, and so I have allowed Mr Blum to represent Ms Hanson on the application. To avoid any further doubt, however, Mr Blum will not be permitted to represent Ms Hanson at any further call of this appeal or at the substantive appeal hearing itself.

The basis for the application

[4] The primary basis for Ms Hanson seeking to set aside the order for security for costs is that she is unable to pay the security. Ms Hanson’s position is that she and Mr Blum do not have the resources to pay the security. In affidavit evidence filed, Ms Hanson and Mr Blum point to a number of joint financial obligations and Mr Blum has advised from the bar this morning that they are likely to be evicted from their
rental accommodation within a week. Mr Blum submitted, on behalf of Ms Hanson, that it was important for the appeal to proceed, noting in particular that the appeal raised questions with regard to the quality of the Commissioner’s investigation into the matters that were the subject of the Taxation Review Authority’s decision. If the present order requiring security to be paid is not set aside then Mr Blum seeks a stay of the appeal to give Ms Hanson more time to raise the security, noting that further commissions are expected in the next four to five weeks.

Discussion

[5] Rule 20.13(2) of the High Court Rules 2016 requires security for costs on an appeal to the High Court to be fixed “unless the Judge considers that in the interests of justice no security is required”. Rule 20.13 goes on to set out a formula for calculation of security which is to apply unless the Court otherwise orders. The amount ordered in this case has been calculated according to the formula in r 20.13 based on a one-day fixture for the substantive appeal.

[6] The authorities are clear that simply because an appellant is impecunious that by itself is insufficient to provide a basis for security not to be paid.¹ Instead other matters must be taken into account, including the merits of the appeal.²

[7] It is, however, by no means clear on the evidence that Ms Hanson and Mr Blum have filed, that Ms Hanson is in fact impecunious. By Mr Blum’s own calculations, Ms Hanson is receiving $4,145 per month and Mr Blum $1,850, making a total income of $5,995 or a household income of approximately $72,000 per year. These figures are based on an average over the last 17 months but in the current financial year from 1 April 2019, Ms Hanson has already earned $53,869 gross from which a variety of payments including GST and income tax must be deducted. As Ms Cheng has noted, this is in fact a relatively high-income figure and indeed, on the face of it, would make Ms Hanson ineligible for legal aid.

¹ RIG v Chief Executive of the Ministry of Social Development [2010] NZCA 370 at [4].

² For example see Chatha v Wanganui Gas Ltd (2004) 17 PRNZ 736.

[8] Likewise, it is also not clear exactly what the repayment situation is. Mr Blum’s figures suggest that $1,100 is repayable monthly. While $600 of that monthly repayment is to a finance company, the remaining $500 appear to relate to “family loan repayments” with no documentation having been supplied as to whether this is in fact a legal requirement, or the result of an informal agreement with family members.

[9] The information provided by Ms Hanson and Mr Blum also shows that Ms Hanson continues to own a Jaguar XF vehicle worth between $20,000 to $30,000 and ,although the vehicle appears to secure the finance company debt of $16,000, there is no evidence as to why a cheaper vehicle could not have been obtained to enable the security to be paid.

[10] Ultimately, it is not necessary to determine whether Ms Hanson is impecunious one way or another. Looking at the decision of the Taxation Review Authority, the appeal does not appear to raise any significant issues of public interest and it otherwise appears weak. First, the fact that the Taxation Review Authority proceeded de novo means that any issues with regard to the respondent’s initial investigation were entirely irrelevant and will not be relevant before this Court. Secondly, it is clear that the Authority reached its conclusion substantially upholding the respondent’s position as a result of the lack of evidence adduced by Ms Hanson and Mr Blum to support Ms Hanson’s case. As an appeal from the Taxation Review Authority to this Court is by way of re-hearing³ and there has been no application to adduce further evidence, it follows that the appeal must be decided on the same evidence as was considered in the Taxation Review Authority. There is therefore unlikely to be any basis for any alternative conclusion.

[11] In the circumstances, no substantive basis has been identified for opening up the consent order requiring payment of security.

[12] Finally, I also agree with Ms Cheng that there is no basis for ordering a stay of the appeal to give Ms Hanson more time to pay security. In addition to dragging the

3. Jiao, Huang & Chiao v The Commissioner of Inland Revenue CIV-2009-404-005397 and High Court Rules 2016, r 20.18.

appeal out, and almost certainly losing the current substantive fixture, with new appeal dates not being available until February/March 2020, it is by no means clear that security would in any event be paid even if Ms Hanson receives further commission payments. In particular, it is clear that Ms Hanson did receive commissions on at least two occasions (in March and May 2019) immediately prior to when payment of the security was due, and she nonetheless chose not to make a payment of security with the funds received. In those circumstances, I therefore see no utility in any further delay.

Decision

[13] The application to set aside the consent order requiring payment of the security for costs or to otherwise stay the appeal pending payment of that security is dismissed.

[14] Security for costs in the sum of $2,230 is to be paid by Ms Hanson on or before 5 p.m. on 27 August 2019. In the event that security is not paid as directed, the substantive appeal against the decision of the Taxation Review Authority dated 12 December 2018 will, without any further notice to Ms Hanson or mention in Court, stand dismissed.

[15] The respondent is entitled to costs on this application which I fix on a 2B basis. In the event that there is any dispute with regard to the amounts claimed I will determine the issue following the filing of memoranda.








Powell J