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20 Apr 2009
Appeal Status
Not appealed

Interlocutory application for stay of liquidation proceedings pending judicial review dismissal

2009 case note – High Court confirmed that judicial review proceedings cannot be used except in exceptional circumstances.

Berrytime Land Limited and Berrytime Limited v Commissioner of Inland Revenue


The High Court dismissed the application for a stay on the basis that the taxpayer's case for establishing "exceptional circumstances" required for judicial review was not strong.

Impact of decision

The High Court confirmed that judicial review proceedings cannot be used except in exceptional circumstances.


  1. Berrytime and Berrytime Land filed GST self-assessments totalling $3,365,134.54 (for Berrytime) and $808,924.32 (for Berrytime Land). Apart from one payment of $246,914.63 on behalf of Berrytime Land, none of the assessed GST has been paid resulting in penalties and interest being added to the liability.
  2. By a letter dated 16 June 2008, Berrytime claimed it had made errors in the GST returns. Berrytime proposed amendments be made to reduce their liability by $1,883,169.11. The letter requested new assessments be issued. The Commissioner treated this letter as a request for the exercise of the Commissioner's discretion under section 113 of the Tax Administration Act 1994 (TAA) as Berrytime was out of time to file a NOPA. However, the request was ultimately declined on 11 September 2008 due to a lack of documentary support.
  3. The Commissioner filed proceedings to wind up both companies on 22 September 2008, on the grounds of persistent and/or serious failures to comply with the Companies Act, and that winding up was just and equitable. Amended statements of claim were filed on 10 October 2008. Liquidation was sought on the basis of the companies' inability to pay their debts, in addition to the grounds set out in the original statement of claim.
  4. A second request for amendment of the GST assessments was made by the companies' in a letter dated 23 January 2009. Amendments were sought pursuant to section 113 for both Berrytime and for Berrytime Land. No supporting documentation was attached.
  5. In a meeting held on 4 February 2009 between the Commissioner and the representatives for the companies, the Commissioner requested the companies provide information to support their position. In a follow-up letter dated 13 February 2009, the Commissioner requested this be provided by 27 February 2009 and advised that if significant progress could not be made over the following few weeks, the Commissioner would not seek an adjournment of the liquidation proceedings.
  6. Nothing was received by 27 February 2009 and the Commissioner requested an update on 2 March 2009. On 3 March 2009, the companies advised that an update was forthcoming. On 10 March 2009, the Commissioner advised that if the information was not received by 13 March 2009, he would have no option but to decline the application.
  7. On 13 March 2009, the Commissioner was provided with a number of documents. However, he considered that they did not support their position as set out in the letter dated 23 January 2009. Accordingly, the application was declined on 18 March 2009.
  8. On 25 March 2009, the day before the liquidation hearing was due to proceed, the companies' filed an application for judicial review and an interlocutory application for interim orders staying the liquidation proceedings pending the outcome of the judicial review application.
  9. The liquidation proceedings were heard the following day and the companies argued that the Commissioner should have amended the self-assessments. In his reserved judgment, issued on 3 April 2009, Doogue AJ concluded that both companies are insolvent. However, rather than make orders placing the companies in liquidation, he adjourned the proceedings until 7 April 2009, noting that if the companies had not made payment, then certificates of unpaid debt would be required. On 7 April 2009 the liquidation proceedings were further adjourned until 22 April 2009, pending the outcome of the interlocutory application.
  10. In this interlocutory application, the companies argued that the decision of the Commissioner was communicated with insufficient notice and without providing opportunity to comment prior to the liquidation proceedings. The companies also argued that the Commissioner had made a mistake of fact in considering that the self-assessments were correct and had not taken relevant considerations into account. Further, it was made in breach of the Commissioner's duties and obligations under the TAA and SPS 07/03 and that the decision was unreasonable in light of the large amount of information requested and provided, that the information raised questions about the correctness of the self-assessments, and that the Commissioner was unreasonable in not taking account of evidence provided.


Are interim orders necessary to preserve the taxpayers' position?

  1. The companies submitted that orders were necessary because if the companies were placed in liquidation, they would not have the opportunity to pursue the judicial review proceedings. The Commissioner disagreed on the basis that judicial review proceedings could be continued by a liquidator.
  2. Andrews J accepted that it would be the companies' preference to pursue the judicial review proceedings themselves, rather than leave them in the hands of a liquidator and accepted there was some force in the argument that once in place, liquidation would be difficult to "unwind" should the outcome of judicial review lead to a reduction of the liability. Accordingly, her Honour concluded that interim orders may be necessary to preserve the companies' position.

Are interim orders justified taking into account all relevant factors?

  1. It was accepted by the parties that the correctness of a tax assessment can only be challenged by way of the procedures set out in the TAA and that challenge by way of judicial review will be available only in "exceptional circumstances".
  2. Andrews J held, after considering these factors, that the applications by the companies should be dismissed
  3. In particular, her Honour held that the fact that the companies "were committed" to ensuring that the correct tax position was represented, and that "extraordinary efforts" had been taken to meet requests were not relevant in the light of a taxpayer's obligations under section 15B of the TAA as the companies were required to provide information and to cooperate.
  4. The companies also submitted that there had been a "conscious mal-administration" in that the Commissioner had allowed himself only two hours to review the material provided on 13 March 2009 before determining that there was insufficient evidence to support the request for amendment.
  5. However, evidence showed that the material was reviewed over three days. In any event, the history of contact between the parties, the failure of the companies to provide supporting documentation with their two requests for assessment, and the repeated requests by the Commissioner for information supporting the requests showed that considerable opportunity had been given to the companies to provide information. This evidenced that the Commissioner had acted lawfully and properly in dealing with the companies, and was not in breach of any of its obligations and duties under the TAA.
  6. The companies also alleged that there had been an abuse of power by the Commissioner on the basis that the section 113 amendment request was rushed through so as to progress the liquidation proceedings, enabling the Commissioner to access a wealthy shareholder. Her Honour could find no grounds for establishing such a motive.
  7. Andrews J concluded that the case for establishing exceptional circumstances required for establishing judicial review proceedings was not strong but rather could "only be described as weak".
  8. With regard to the public interest, Andrews J accepted that in light of her finding above regarding the weakness of the case, the balance of requiring the public interest in the Commissioner being able to carry out his statutory duties against the likelihood of the companies' succeeding in their judicial review proceedings fell on the side of not preventing the Commissioner from carrying out his statutory duties and obligations or from continuing the liquidation proceedings.
  9. As for the public and private repercussions of granting orders, while the Commissioner alleged that the court has no jurisdiction to stay itself, Andrews J accepted that section 8 of the Judicature Amendment Act 1972 gives clear statutory authority to stay any proceedings that are in connection with any matter to which the application for review relates. However, her Honour noted that this does not assist in considering whether an application for interim orders should be granted.

Judicature Amendment Act 1972, Tax Administration Act 1994