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18 Sep 2009
Appeal Status
Not appealed

Judicial Review action against Commissioner struck out because disputes process not followed

2009 case note - High Court struck out the proceedings because taxpayer did not follow disputes process in first instance - bankruptcy proceedings, judicial review.

Raureti Reginald Ruka KORAKO v Commissioner of Inland Revenue


The Commissioner took bankruptcy proceedings against the taxpayer, who then took Judicial Review proceedings against the Commissioner claiming abuse of process with assessments. The High Court struck out the proceedings because the taxpayer did not follow the disputes process in the first instance.

Impact of decision

The case follows similar strike out cases which confirm that the courts are unlikely to consider a judicial review of the Commissioner's actions in relation to the disputes process unless the Plaintiff has correctly followed the statutory process set down for disputing assessments.


The Plaintiff was the subject of amended income tax assessments and default income tax assessments for the years ending 31 March 2003, 2004 and 2005. He did not challenge the assessments within the time periods prescribed in the Tax Administration Act 1994. A default judgment was obtained by the Commissioner and bankruptcy proceedings were commenced.

On 5 March 2009, the Plaintiff's tax agent filed tax returns for the years ending 31 March 2003, 2004 and 2005. The returns contained no supporting material. Although contact was made with the investigator to establish that the returns had been received nothing further occurred. In particular no Notice of Proposed Adjustment ("NOPA") or other response notice was made in relation to the assessments.

The Plaintiff commenced judicial review proceedings seeking:

  1. an order staying the bankruptcy proceedings, and
  2. an order that the Commissioner allow the plaintiff to dispute the tax assessments through the disputes process provided for in the Act.

The Commissioner applied to strike out the proceedings on the grounds that they were clearly untenable and that the proceedings amounted to an abuse of process.

The Plaintiff then applied for an interim order under section 8 of the Judicature Amendment Act 1972, staying the bankruptcy proceedings until the determination of the judicial review proceedings.


On the facts of the case Allan J found that the Plaintiff's ignorance of the assessments stemmed from his decision to entrust the conduct of his business and tax affairs to others and his failure to pay proper attention to the conduct of his affairs. There was no evidence to say that the Plaintiff had no knowledge of the assessments. The evidence of the investigator that the Plaintiff failed to attend several meetings was also undisputed. Even now the Plaintiff has not formally responded to the Commissioner or engaged in the disputes process.

The affidavit evidence of the Plaintiff argued more about the derivation of the income which was assessed. The argument was irrelevant for judicial review purposes.

Allan J agreed that there was no breach of natural justice under the Bill of Rights Act (Daganayasi v Minister of Immigration [1980] 2 NZLR 130) and that it cannot be argued that the Commissioner was bound to accept excessively late filing of self-assessment on behalf of the Plaintiff. Nor was there any foundation for a pleading that the Commissioner's refusal to accept the recent tax returns (which contained no supporting evidence or explanation) amounted to an abuse of process.

The remaining cause of action (directing Commissioner to engage in disputes process) was seen as premature as the Plaintiff could still engage the disputes process.

The strike out action succeeds and the Commissioner is entitled to costs.

Tax Administration Act 1994, section 8 of the Judicature Amendment Act 1972