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25 Nov 2008
Appeal Status
Not appealed

Taxpayers' second judicial review successful

2008 case note - Decision confirms that the CIR whenever possible must follow the directions given by the Court in judicial review proceedings.

Chesterfields Preschools Limited and Ors v the Commissioner of Inland Revenue


The Commissioner was found to have failed to apply the orders made in earlier judicial review proceedings and was ordered to comply with the earlier orders.

Impact of decision

The decision confirms that the Commissioner whenever possible must follow the directions given by the Court in judicial review proceedings


This judicial review was of the Commissioner's application of the taxpayers' earlier judicial review (reported at (2007) 23 NZTC 21,125).

In that decision the Judge ordered:

  1. Reconsider the application for re-registration of Anolbe, treating the application as having been made on 27 March 2000 (on the basis it would have been completed formally had there been an appropriate reaction from the Commissioner's staff on receipt of the letter).
  2. Consider the legitimacy of all the Anolbe GST returns, including those filed on 27 March 2000 and any other unresolved refund claims by other plaintiffs. The time ban provisions shall not apply.
  3. Apply such refunds as are upheld to best fiscal advantage to the plaintiffs.
  4. Make a decision under section 182 of the TAA, as preserved by Taxation (Remedial Provisions) Act, section 103, treating the historic correspondence and meetings from and with Mr Hampton as substantive requests for remission, in respect of all the plaintiffs, received before 23 September 1997, and in so doing recognise that Mr Hampton was led to believe that the GST input claims he was lodging would be considered and decisions made upon them and refunds lodged to the best advantage of the plaintiffs.
  5. Make a decision under section 183A, as to remission in respect of the period that has elapsed while this litigation has been proceeding.
  6. The Commissioner may, in the usual way, continue to exercise his general powers under section 6 and 6A of the TAA, without derogating from the benefits that would accrue to the taxpayers by reason of the reconsideration of the foregoing matters.

The Commissioner, in a decision to address the orders outlined above (the Budhia decision), addressed each of these orders in turn and made decisions under each heading. The taxpayers argued the Commissioner had failed to apply the orders and commenced a second judicial review. The Commissioner argued that he had fully complied with the orders made.


The Judge considered the Commissioner had failed in every particular to apply his earlier order saying:

[90] The Commissioner's officers were in breach of section 4(6) of the J[udicature] A[mendment] A[ct] by not having regard to the Court's reasons for giving the directions, and erroneously construing those directions. Non-compliance pervaded the analysis and decision making that went to the Commissioner's purported compliance with the directions.
[92] In respect of the December judgment paragraph [155] is intended to encapsulate the consequence of a large number of earlier findings but is not itself to be read as capturing all the reasons. To the extent that the IRD officers did use the reasoning in the December judgment, it was selective.

[93] Accordingly, the appropriate relief in this case is to redirect the Commissioner back to the December judgment. That judgment has not been qualified in any way by this judgment. This judgment is to be understood as identifying errors of the Commissioner purporting to carry out the directions of that judgment, and, as part of that exercise, it does contain further elaboration/interpretation of the December judgment. Accordingly, the reasons of this judgment also bind the Commissioner and must be taken into account in giving effect to the directions. The Commissioner is directed to begin again the task of discharging the duties imposed on him by the December judgment.

The Judge awarded costs against the Commissioner. Further submissions are to be made on this point.

Judicature Amendment Act 1972