Skip to main content
23 Dec 2010
Appeal Status

Successful strike-out of a judicial review

2010 case note – application for judicial review as an abuse of process struck out - strike-out, default assessments, challenge proceedings.

JD Hardie v Commissioner of Inland Revenue

Tax Administration Act 1994


The Court decided in the Commissioner's favour, striking out Mr Hardie's application for judicial review as an abuse of process.

Impact of decision

This decision applies the decisions of Westpac Banking Corporation v CIR [2009] NZCA 24 and Tannadyce Investments Limited v CIR [2010] NZCA 233. Judicial review of an assessment in law is only available in exceptional cases where either there has been no assessment or there has been conscious maladministration fatally tainting the assessment.

The Court also found that the issue whether an assessment is so arbitrary that the officer who made it could not honestly believe it to be accurate is to be tested through the challenge procedure and is not capable of being assessed on an application for judicial review.


Mr Hardie failed to file his income tax returns for the years ended 31 March 1999 to 2005 and goods and services tax (GST) returns for the monthly periods ended 31 March 2003 to 30 April 2006. The Commissioner made default assessments. Mr Hardie did not, and has not, filed returns or issued notices of proposed adjustments.

Mr Hardie commenced then discontinued his first application for judicial review claiming that the Commissioner in making the default assessments was culpable of conscious maladministration. He applied again for judicial review of the default assessments, requesting orders for discovery.

The Commissioner applied to strike out Mr Hardie's judicial review application on the grounds that it was vexatious and an abuse of process.


The Court noted that "the statutory objection process [Parts 8 and 8A of the Tax Administration Act 1994 ("TAA")] has primacy and only exceptionally does judicial review have a place". The "statutory objection procedure" is not just primary, but is also curative.

The Court referred to the presently definitive decision of the Court of Appeal in Westpac Banking Corporation v CIR [2009] NZCA 24 where the:

Court held that judicial review of a tax assessment will only be justified where (i) what purports to be an assessment is not; or (ii) in exceptional cases, such as where there has been conscious maladministration; and that, as the Court said, is ‘a particularly inauspicious statutory context for judicial review' [15].

The Court also considered the recent (and similar) case of Tannadyce Investments Limited v CIR [2010] NZCA 233 where the Court of Appeal was even more emphatic than in Westpac Banking Corporation v CIR that an inquiry by discovery could cut across the sections 109 and 114 TAA presumptions.

Mr Hardie contended that the default assessments were arbitrary and that he was precluded from using the statutory disputes and challenge procedures as he is required to furnish returns which he is unable to do as his financial records are neither complete nor accurate.

The Court held at paragraph [34] that:

The issues Mr Hardie raises in his application for review go, I accept, not merely to the accuracy of the default assessments made by the Commissioner but to whether they are arbitrary. That is not enough, however, to warrant his application proceeding. Those issues, could, had Mr Hardie elected, have been readily resolved within the statutory challenge process, which extends to issues of validity as well as correctness.

The very issue Mr Hardie sought to have tested - that the default assessments are so arbitrary and that the officer who made them could not have honestly believed they could begin to be accurate - would have been tested in the statutory challenge procedure and is not capable of being set aside on judicial review.

The Court struck out Mr Hardie's application for judicial review because this was not one of those exceptional cases where plainly there is either no assessment or where there had been conscious maladministration tainting the assessment made. Mr Hardie's application therefore constituted an abuse of process.