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28 Feb 2006
Appeal Status
Not appealed

Appeal filed out of time deemed abandoned

2006 case note – Court of Appeal accepted that appeal deemed abandoned by Court of Appeal Rules was not dismissed.

J G Russell v The Commissioner of Inland Revenue

Court of Appeal Rules


The Court of Appeal accepted that an appeal deemed abandoned by the Court of Appeal Rules was not dismissed. It declined to use its resources accepting an appeal by the taxpayer where that appeal was filed out of time and the substantive dispute was not a real controversy


This decision was an appeal by the taxpayer against the Commissioner's partial success in an application to strike out a Judicial Review that the taxpayer had commenced in the High Court. That appeal was filed out of time and thus deemed abandoned. This application was to get the Court of Appeal to use its discretion to accept the late appeal.

In the TRA (Case W8) the Commissioner successfully argued there was no valid case before the TRA, as the assessments to which the taxpayer sought to object (made in 1996) were superseded by later assessments in 2002. Further the taxpayer had, in an NOR to the later proposed adjustments accepted, in part, the changes to the 1996 assessment.

The taxpayer appealed this (which is not procedurally possible: M & J Wetherill Co Ltd (2002) 20 NZTC 17,624 at p 17,634.) and sought Judicial Review. In the Judicial Review the Commissioner successfully stayed one cause of action before the High Court and the taxpayer sought to appeal this decision but the appeal was filed out of time.


Neither the 1997 nor the Court of Appeal (Civil) Rules 2005 Rules provide that an appeal which has been abandoned is deemed to be dismissed. The taxpayer's lawyer argued there can be no objection in principle to an appellant whose appeal has been subject to a deemed abandonment under r 43 seeking and obtaining leave to appeal against the original decision out of time.

The Court accepted that there was jurisdiction to grant leave to appeal notwithstanding the deemed abandonment of the first appeal.

It would appear that the non-compliance to r 43 was due to an oversight on the part of the taxpayer's lawyer; he had been endeavouring to have his appeal determined but it got overlooked.

The taxpayer's lawyer was asked to identify the substantive point of the proposed appeal.

His response was that he wanted to argue that the January 2003 assessments were arrived at by the Commissioner in breach of the "BASF principle" (BASF New Zealand Ltd v Commissioner of Inland Revenue (1995) 17 NZTC 12,136 (HC). While explaining that this particular argument would work in the circumstances of this case he finally accepted that the taxpayer could not prosecute the challenge proceedings and his reliance on the BASF principle would not be advanced by establishing in the High Court that the 1996 assessments were invalid, but he did submit that the taxpayer's entitlement to challenge the 1996 assessments was justified by access to justice considerations.

The Court took a different view and said that the resources of the legal system should be addressed to the determination of real controversies; the taxpayer's issue of the validity of the 1996 assessment did not give rise to such controversy.

The Commissioner and the taxpayer had, in January 2001 reached a limited consensus that the 1996 assessment should be reversed,which raises the issue that there is no point in the claim for the declaration that the 1996 assessments are invalid and the provision of section 27 of the Income Tax Act mean that the prosecution of that claim is an abuse of process. The Court said that there was no practical point to be served by allowing it to be argued and therefore refused the leave for appeal on that basis.

The application for leave to appeal out of time made necessary by the deemed abandonment under r 43 of the Court of Appeal (Civil) Rules 2005 of a timely appeal was dismissed.

The taxpayer was ordered to pay the Commissioner costs of $3,000 together with the usual disbursements.