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08 May 2009
Appeal Status

Commissioner allowed to continue investigation

2009 case note – application for stay of High Court judgment pending resolution of appeal denied – CIR able to progress investigation and pass information to ATO.

Avowal Administrative Attorneys Ltd & Ors v The District Court at North Shore & The Commissioner of Inland Revenue


The applicants’ application for a stay of the High Court judgment pending resolution of their appeal was denied.

Impact of decision

The Commissioner is able to progress his investigation and is also able to pass on information to the Australian Tax Office notwithstanding the appeal of the substantive judgment to the Court of Appeal.


On 8 November 2006 the Commissioner of Inland Revenue (the Commissioner) and the Australian Tax Office (ATO) conducted simultaneous access operations on both sides of the Tasman. The operations followed a request by the ATO to the Commissioner in 2004 under Article 26 of the Australia-New Zealand Double Tax Agreement (DTA). The ATO provided background information which indicated that a number of entities based in or operating in New Zealand were promoting, marketing and implementing a wide range of tax avoidance schemes.

Using his powers under section 16 of the Tax Administration Act 1994, the Commissioner entered seven premises, both private and commercial, and removed hardcopy documents and hard drives for copying. Seven applicants commenced judicial review proceedings against the Commissioner, and another applicant later joined the proceedings.

On 22 December 2008, the High Court delivered a judgment upholding the Commissioner’s actions and dismissing the judicial review. The High Court ordered the return of three hard drives where the Commissioner had not followed his own processes; otherwise the Commissioner was successful on all bases. The applicants have appealed the High Court decision and sought a stay, from the High Court, of the High Court judgment pending resolution of the appeal. The Commissioner opposed the application for a stay.


Venning J held that the applicants had failed to make out the case for a stay and dismissed the application.

The applicants’ main concern was that if a stay was not granted, then a successful appeal would be worthless, because even though the Commissioner could turn an institutional blind eye to the information, individual officers would not be able to remove the information from their minds, and would make decisions affecting the applicants, and other entities associated with them, on the basis of that information.

The applicants were also particularly concerned at the prospect of information being passed to the ATO on the basis that once the information was out of the country, the IRD and the New Zealand courts would have no control over the information and could not insist on the use of it being unwound. The applicants also cited the difficult relationship that they, particularly Mr Petroulias, have had with the ATO in recent years as a factor that increased their concern.

The Court found that failure to grant a stay would not render a successful appeal nugatory, because the Commissioner would destroy or return the hard drives to the appellants and neither the Commissioner nor the ATO would be able to use the information contained on those hard drives. All information would have to be deleted from IRD records and any assessments based on that information would have to be unwound.

The Court also relied on the role and responsibility of the Commissioner, and the fact that he is a public officer subject to the Official Information Act 1982 and Parliamentary enquiries. The Commissioner and his officers are also subject to secrecy provisions in the legislation.


The High Court held that the Commissioner was entitled to review the electronic information.

The Court also held that the Commissioner was entitled to pass any such information to the ATO once the ATO has provided an affidavit to the Court confirming that the ATO will put in place a process to ensure that any information it receives will be identified so that it can unwind any steps or actions taken on the basis of such information, and also confirming that such an unwind would be at the ATO’s cost.

Tax Administration Act 1994