Issued
2011
Decision
20 Dec 2011
Appeal Status
Not appealed

Judicial review struck out

2011 case note - Supreme Court held that only in exceptional cases can a judicial review be permitted to reverse tax assessments – s 109 Tax Administration Act.

Case
Tannadyce Investments Limited v Commissioner of Inland Revenue
Legal terms
Judicial review, section 109 of the Tax Administration Act 1994

Summary

The Supreme Court held that only in exceptional cases can a judicial review be permitted to reverse tax assessments.

Impact of decision

This is an important judgment for the Commissioner. It defines and narrows the circumstances in which judicial review of disputable decisions may be available to taxpayers.

Facts

Tannadyce Investments Limited ("T") appealed against a Court of Appeal judgment striking out, as an abuse of process, its judicial review proceeding seeking review of certain of its income tax assessments.

T alleged that it could not file various returns (and follow the disputes procedure) because the Commissioner was in possession of, and withheld from it, the documents necessary for it to do so.

T alleged that as a result of the aforesaid, the Commissioner's assessments were invalid.

At issue was whether the Court of Appeal was correct to strike out T's application for judicial review as an abuse of process.

Decision

  1. The Court was unanimous in concluding that the Court of Appeal had been correct to strike out T's judicial review proceeding. T was obliged to establish a sufficient factual foundation for its contention that it was practically not possible to follow the statutory procedures. It failed to do that.
  2. However, the Court was split (3:2) on the issue of when a taxpayer may use judicial review to challenge assessments and other disputable decisions.
  3. For the majority, the crucial question was whether, and if so how, the remedy of judicial review can stand with section 109 of the Tax Administration Act 1994. The majority held that disputable decisions may not be challenged by judicial review unless the taxpayer cannot practically invoke the relevant statutory procedure. Cases of that kind are likely to be extremely rare.
  4. The majority narrowed the circumstances in which judicial review of disputable decisions may be available and in doing so overruled the Court of Appeal in Westpac Banking Corp v CIR [2009] NZCA 24. It held that assessments that are challenged as legal nullities fall within section 109 and therefore cannot be subject to judicial review. Section 109 clearly states that, except in a challenge proceeding, "no disputable decision may be disputed in a court or in any proceedings on any ground whatsoever". It should not be construed so as to create an exception for where the circumstances are "exceptional".
  5. The minority preferred not to frame a definitive rule as to when judicial review is available. It preferred to recognise that in general the right to challenge a disputable decision in a court or Review Authority (ie, the TRA), that is required to act judicially, is able to provide superior remedies to judicial review, while also recognising that there will be exceptional cases where judicial review should be permitted.

Tax Administration Act 1994, Inland Revenue Act 1974, Income Tax Act 1976