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01 Jun 2005
01 Jun 2005
Appeal Status

Application for leave to appeal to Supreme Court dismissed

2005 case note – leave to appeal to Supreme Court dismissed - change to tax law, questions of general or public importance, miscarriage of justice.

Motorcorp Holdings Ltd & Ors v CIR


The prospective appellants wished to argue the decision of the Full Court of the Court of Appeal in Suzuki (New Zealand) Ltd v CIR (2001) 20 NZTC 17,096 was wrongly decided. The Court observed the proposed appeal had no precedential effect for two reasons. Firstly, the law had been changed since the Suzuki decision and only affected transactions before 1 August 2002. Secondly, the contractual arrangements adopted by the parties were determinative, and it could not be assumed those arrangements had significance to other parties. For both reasons, no question of general or public importance was involved and the application for leave to appeal was dismissed.


The applicants are importers and distributors in New Zealand of new motor vehicles. Their contractual arrangements provide for reimbursement by the overseas manufacturers of the vehicles for all or part of the costs of labour and replacement parts incurred in meeting warranty obligations in respect of the vehicles. They sought leave to appeal against a decision of the Court of Appeal determining that GST is payable in respect of the manufacturer's reimbursement payments as being in consideration for the supply of services.

The same issue was before the Court of Appeal in Suzuki New Zealand Ltd v CIR (2001) 20 NZTC 17,096 where the Court decided the payments were subject to tax. After that decision, the legislation was amended with effect from 1 August 2002 to provide that services provided under warranty for consideration given by a warrantor outside New Zealand and not GST-registered are zero-rated. The Court noted that would seem to constitute legislative adoption of the reasoning in Suzuki that under section 11 of the Act the supply is charged with tax, but at the rate of 0%.

The applicants sought leave to advance an argument not considered in Suzuki - that the reimbursement payments are payments under contracts of insurance as defined in the Act and so exempt from tax. This argument succeeded before Venning J, but was reversed by a majority in the Court of Appeal. The applicants also wished to argue Suzuki was wrongly decided and should be overruled. They also wished to present further arguments which were put to the Court of Appeal by way of cross appeal but rejected on the basis of the Suzuki decision.


The Court held the criteria for leave to appeal were not met in this case. The issues cannot be said to be of general public or commercial importance. The law had been changed, so the proposed appeal could only affect transactions before 1 August 2002. Any decision would have no precedential effect, because the issue involves the tax implications for particular contractual structures which cannot be assumed to have been adopted beyond the parties.

The Court noted that both a Full Court of the Court of Appeal in Suzuki and the Court of Appeal in this case had extensively reviewed the issues so the Court was not persuaded there was any miscarriage of justice warranting a second appeal. Accordingly, the application for leave to appeal was dismissed.

Supreme Court Act 2003