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22 Jun 2012
Appeal Status

Application for Crown Law to cease to act for Commissioner on trinity matters

2012 case note - Application for Crown Law to cease to act for CIR in proceedings related to the Trinity scheme dismissed - debar solicitors, abuse of process.

Commissioner of Inland Revenue v Accent Management Limited (and others) and Garry Albert Muir

Income Tax Act 1994, Lawyers and Conveyancers Act 2006


An application by various taxpayers to prevent Crown Law from acting for the Commissioner of Inland Revenue in certain proceedings related to the Trinity scheme was dismissed. The High Court considered that the application had no relevance to the proceedings and no arguable factual foundation.

Impact of decision

This judgment is precedent for the remaining challenges in the on-going Trinity litigation.


In a Trinity-related matter, an application was made by the taxpayers seeking orders that Crown Law cease acting as the solicitors for the Commissioner of Inland Revenue and that no Crown counsel appear as counsel in certain proceedings for the Commissioner.

The application, which is the subject of this judgment, was made with respect to three proceedings. Two of the proceedings are appeals by Dr Muir against decisions of the Taxation Review Authority ("TRA") on 1 February 2011 and 16 June 2011. Dr Muir had, in his challenge proceedings, raised a preliminary issue to the effect that the assessments he challenged were invalid and the TRA had no power to consider whether the assessments were correct. The Commissioner responded by arguing that Dr Muir's challenge could not be advanced having regard to the Supreme Court's decision in Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2008] NZSC 115; [2009] 2 NZLR 289. Dr Muir's application was dismissed and the Commissioner's application was granted. In the later decision of 16 June 2011, the TRA dismissed an application by Dr Muir to recall the decision of 1 February 2011.

The third proceeding is in respect of a transfer and consolidation application by the Commissioner to transfer from the TRA to the High Court, 66 challenge proceedings and have them consolidated with two challenge proceedings in the High Court and the two Dr Muir appeals.


Justice Woodhouse dismissed the application for two reasons. Firstly, he held that the allegations had no relevance to the proceedings in question. Secondly, he held that from looking at the history of past Trinity litigation, in which most of the taxpayers have been involved, including final determinations of fact in the High Court, the taxpayers cannot establish an arguable factual foundation to support the applications.

Justice Woodhouse reviewed the litigation history starting with the original challenge proceedings, which culminated in the Ben Nevis proceeding where the Supreme Court upheld the Commissioner's assessments. He also reviewed the judicial review proceeding Accent Management Limited v Commissioner of Inland Revenue (2010) 24 NZTC 24,126 (HC) and quoted at length from Keane J's strike-out judgment. Finally, he reviewed the setting-aside proceeding Redcliffe Forestry Venture Ltd v Commissioner of Inland Revenue [2011] 1 NZLR 336 and subsequent appeals from that decision.

Justice Woodhouse noted the legal principles from the case Clear Communications Ltd v Telecom Corporation of New Zealand Ltd (1999) 14 PRNZ 477 (HC) at 482-483, that "there must be something truly extraordinary before removal could be contemplated" and that the courts need to be alert to applications to debar being used as a tactical weapon or gaming the system.

Justice Woodhouse stated that the remaining challenges may give rise to material questions of fact and will give rise to material questions of law. With regard to the questions of fact, he reasoned that in the challenges, the hearing authority will decide as a matter of law that certain questions of fact were conclusively determined in the Ben Nevis proceeding. Accordingly, the taxpayers' allegations of fact relating to the conduct of Crown Law, and the conduct of the Commissioner, are irrelevant.

The Judge went further to state that, with regard to the questions of law that will be before the hearing authority, the taxpayer's allegations against Crown Law are also irrelevant because they are allegations of fact which cannot assist in answering the questions of law which will arise in the challenges. In particular at [42]:

  • The hearing authority's determination as to what the law is, in respect of the challenged assessments, cannot be advanced in any way by determining whether or not the Commissioner acted in a particular way in the past and whether or not Crown Law promoted the particular conduct or in some way participated in it.

Justice Woodhouse noted that the heart of the taxpayers' argument was in relation to the applicability of subpart EH of the Income Tax Act 1994 to the assessments. In this regard, he stated (at [45]) that ... [t]he obligation of counsel to ensure that the court has all the relevant law before it cannot be converted into an obligation for counsel on one side to concede the legal argument that is being advanced on the other side".

Justice Woodhouse referred to the majority decision in Tannadyce Investments Ltd v Commissioner of Inland Revenue [2011] NZSC 158; [2012] 2 NZLR 153 and the principle that "[t]here is ... no potential for separation of matters of legality from matters of correctness" when holding that the past conduct of Crown Law, and the past conduct of the Commissioner, in respect of the 1997 and 1998 assessments dealt with in Ben Nevis, do not have any relevance to the current challenges.

Justice Woodhouse referenced the comments of Tipping J in Tannadyce about "gaming the system" and was satisfied that this application was an attempt to game the system. He found (at [53]) that:

  • ... it is an attempt to game the system within the statutory procedures. I am satisfied that the taxpayers have not brought this application because of a sincere and well-founded concern that their tax affairs will not be properly adjudicated on, but in an endeavour to cause unjustified difficulties for the Commissioner and to delay resolution of the tax disputes. The attempt to game the system, through the present applications, may be seen from the litigation history.

Justice Woodhouse went on to state that the allegations of the taxpayers were essentially the same as those in their judicial review proceeding and in that context, Keane J made findings of fact which were sufficient for the purposes of these applications to conclude that the taxpayers do not have a reasonably arguable factual foundation to advance the applications to debar. He was "satisfied that these applications are an abuse of process" (see [54]).