Issued
2007
Decision
26 Apr 2007
Appeal Status
Appealed

Breach of solicitor's undertaking to the Commissioner

2007 case note – Supreme Court refused leave to appeal the Court of Appeal's judgment holding that the solicitor had breached the undertaking given to the CIR.

Case
Manu Chhotubhai Bhanabhai & Ors v The Commissioner of Inland Revenue
Legal terms
Solicitor's undertaking

Summary

The Supreme Court refused leave to appeal the Court of Appeal's Judgment holding that the solicitor had breached the undertaking given to the Commissioner. The Court of Appeal did not make an error in principle.

Facts

The taxpayers sought leave to appeal against a decision of the Court of Appeal, that they were liable to the Commissioner, on the settlement of units in a development undertaken by Golden Gate Holdings Limited. The taxpayers gave an undertaking that they would "forthwith" pay to the Commissioner the GST component of sale consideration".

The GST output tax on the settlement of the units subject to the solicitor's undertaking was payable on the settlement of the units. The Commissioner sought payment under the undertaking. The High Court and the Court of Appeal both held that the taxpayers were liable albeit for different reasons.

Decision

The Supreme Court dismissed the taxpayer's application. The decision dismissing the appeal stated that the undertaking was a "one-off" and therefore did not satisfy the criteria needed for 13(2)(a) or (c).

The Supreme Court agreed with the Commissioner in that the Court of Appeal did not make an error of principle of approach and the taxpayers were simply seeking a different conclusion based on the application of a correct approach to the interpretation of the undertaking.

The Supreme Court stated that there was no miscarriage of justice:

The applicants seek also to invoke section 13(2)(b) of the Supreme Court Act 2003. They claim that a serious miscarriage of justice may have occurred. In order to come within the section 13(2)(b) ground for leave it is necessary to point to a sufficiently apparent error of such a substantial character that it would be repugnant to justice to allow it to go uncorrected. The circumstance that the Court of Appeal has reached its conclusion on a different basis than the High Court does not of itself suggest such error. No error of principle in approach appears from the Court of Appeal decision. There is no apparent error such as would give rise to a miscarriage of justice."


GST Act 1985, Supreme Court Act 2003