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26 Aug 2011
Appeal Status

Taxpayer's application for leave to appeal to the Supreme Court declined

2011 case note – tests for bias and the circumstances in which exercise of appeal rights will cure any apparent bias in a lower Court.

J G Russell v TRA & Commissioner of Inland Revenue


The taxpayer was declined leave to appeal to the Supreme Court as any potential bias had been cured - on these facts - by the taxpayer's exercise of appeal rights from the allegedly biased judicial officer at the Taxation Review Authority (TRA).

Impact of decision

The case at the Court of Appeal is a useful guide to both the tests for bias and the circumstances in which exercise of appeal rights will cure any apparent bias in a lower Court. The Supreme Court decision confirms the correctness of the Court of Appeal's approach.


Mr Russell is the architect of the "Russell template", an avoidance arrangement marketed to his clients. This case is about his personal tax affairs which have been reassessed on the basis that Mr Russell was personally involved in a separate tax avoidance arrangement (differing from, but similar to, the Russell template).

Mr Russell challenged his tax assessments in the TRA. However, before the tax case commenced, he sought that Judge Barber disqualify himself from hearing Mr Russell's personal tax case on the basis that the Judge could be perceived as being biased against Mr Russell (as a result of the Judge consistently finding against Mr Russell in the template cases).

The Judge declined to do this (reported as Case Z3 (2009) 24 NZTC 14,027). Mr Russell sought to judicially review the TRA's decision. The High Court considered there was no risk that the judge was either actually biased or that a layperson familiar with the case and the role of a judge would see a risk of bias (reported at (2009) 24 NZTC 23,284). Mr Russell appealed to the Court of Appeal.

While this was occurring, the tax case proceeded. The TRA upheld the Commissioner's assessments (reported as Case Z19 (2009) 24 NZTC 14,217) and the matter went on appeal to the High Court on the basis that the facts were agreed between the parties. The High Court dismissed the taxpayer's appeal (Russell v Commissioner of Inland Revenue (No 2) (2010) 24 NZTC 24,463).

With regard to the Judicial Review appeal, the Court of Appeal dismissed the appeal by Mr Russell. It accepted there was a potential risk that apparent (but not actual) bias may be present but the Court of Appeal concluded it did not need to decide this as the TRA decision had been appealed to the High Court and there was no risk of bias by the High Court judge (reported as Russell v Taxation Review Authority & Anor (2011) 25 NZTC 20-044).

Mr Russell sought leave to appeal to the Supreme Court.


The Supreme Court declined to grant leave for Mr Russell to appeal further.

It considered that the Court of Appeal was correct to regard any taint of bias at the TRA "as having been overtaken by the substantive appeal". Decisive was the fact that the appeal of the tax case was on agreed facts.

The Supreme Court considered that the Court of Appeal had correctly applied the principles governing bias as set out in Saxmere Company Ltd v Wool Board Disestablishment Company Ltd [2010] 1 NZLR 35.

Supreme Court Act 2003