Commissioner's strike-out application partially successful

Summary

The Commissioner was only successful in part in attempting to strike out the taxpayer's claim of misfeasance in public office by the Commissioner.

Impact of decision

As this was a strike-out application, the Court assumes the correctness of the allegations found in the taxpayer's pleadings. This result does not ensure the taxpayer will be successful at the substantive hearing at which assumptions made for the purposes of considering a striking-out application are not made and the taxpayers must prove their case.

Facts

The parties have been involved in a long-running judicial review. The taxpayers are one individual (Mr Hampton) together with two partnerships involving that individual (in partnership with his then wife) and two companies of which Mr Hampton is the director.

The taxpayers have made a claim that the Commissioner was liable under the tort of misfeasance in public office and another claim, of malicious prosecution. Essentially seven alleged causes of action were disclosed by the taxpayers:

1. Failure by the Commissioner to make a decision on the GST returns filed by one of the plaintiffs for a number of years;
2. Failure by the Commissioner to abide by various alleged payment arrangements;
3. Failure by the Commissioner to remit penalties;
4. Non-disclosure of the Aronsen file notes - these notes allegedly prove the existence of instalment arrangements;
5. Failure to disclose the Aronsen file notes when using section 157 powers - also alleged against the Commissioner's counsel;
6. Failure to disclose the Aronsen file notes in discovery - also alleged against the Commissioner's counsel; and
7. Failure to comply with the New Zealand Bill of Rights Act 1990 ("NZ BoRA") - also alleged against the Attorney General.

The Commissioner sought to strike out the claims on the basis the claims could not possibly succeed.

Decision

The Court struck out the sixth and seventh causes of action as untenable but did not strike out the others.

The sixth cause of action was struck out because witness immunity applies to the affidavit of discovery made in the course of the earlier litigation. The principle applicable is that those involved in the judicial process are immune from liability for anything said, written or done in the course of proceedings or immediately preparatory to those proceedings.

The seventh cause of action was struck out as the impugned conduct by the Commissioner (which the taxpayers argued the Attorney General had responsibility for under the NZ BoRA) was not an adjudication of the kind a tribunal was expected to make.

However, the first five causes were not struck out. In a complex decision, Associate Judge Osborne took guidance from Reid v CIR (2007) 23 NZTC 21,194 and [2007] NZCA 576.

In summary, Associate Judge Osborne concluded the following:

1. While the five causes did not specify any breach of a statutory duty, there was sufficient ground to raise the tort of misfeasance, but these causes may need to be rephrased to do so clearly.
2. It was possible the Commissioner could be held directly liable for the actions taken in his name.
3. While no particular decision leading to malicious conduct was identified by the taxpayers, the plaintiff's were looking that the Commissioner's conduct generally and the Commissioner was arguably directly responsible for the impugned conduct.
4. The Commissioner is arguably vicariously liable for the conduct of his employees but the taxpayers must establish whether or how this arises.
5. Failure to make a decision may well become wrongful over time.
6. Whether or not there was an improper motive or intention was a matter of evidence at the substantive trial.

He also concluded that Commissioner's counsel could be attached with liability in the circumstances. He rejected the Commissioner's submission that counsel was not a public officer, citing NZDF v Berryman [2008] NZCA 392 and accepted that it was at least arguable that counsel was in public office.