No merit in "slip rule" appeal

Summary

The Court of Appeal considered the appeal by the appellants from the High Court decision not to invoke rule 11.10 of the High Court rules had no merit and accordingly dismissed the appeal.

Facts

This was an appeal against a judgment of Courtney J, which was delivered on 8 July 2011. In that judgment Courtney J had declined the appellants' application to invoke rule 11.10 of the High Court Rules to set aside judgments that had been sealed by the High Court against the appellants.

The parties in this proceeding have been engaged in litigation in a number of different courts and over a number of years. The litigation has concerned the validity of assessments made in respect of people who had participated in tax arrangements known as the Russell Template organised by their tax agent, Mr Russell. The Russell Template has been held by the Privy Council to be tax avoidance.

In a February 2009 judgment, Courtney J dealt with issues that remained following an earlier judicial review decision, her interim decisions on a number of appeals by way of cases stated from the Taxation Review Authority (TRA), and the unsuccessful appeals from those decisions (February 2009 judgment).

Courtney J rejected the appellants' submission that the matter ought to be remitted back to the TRA for consideration of further evidence and/or further issues and instead, with the exception of deductions permitted to corporate taxpayers for a consultancy fee charged by Mr Russell, confirmed the amended assessments that had been the subject of the original cases stated to the TRA.

Her Honour made a number of orders to give effect to that decision, including the order that "Judgment made against any of the individual taxpayers may only be sealed upon the filing and service of an affidavit annexing the case stated to the TRA for that taxpayer …".

The affidavits were sworn on various dates from January 2010 but were not filed and served until 14 September 2010.

The Registry sealed the orders on the same day, 14 September 2010, and before service of the affidavits was effected.

The appellants applied to the Court by memorandum of counsel, supported by an affidavit from Mr Russell, seeking orders that the existing judgments were not validly sealed and must not be acted upon by any party.

In a decision dated 8 July 2011, Courtney J accepted that the slip rule could be invoked to amend a Court order to give effect to the intention of the Court. However, her Honour rejected the appellants' submission that in the February 2009 judgment she intended the appellants would have the opportunity to respond to the affidavits filed by the Commissioner. Courtney J held it was perfectly clear from that decision, read as a whole, that there was no intention the appellants would have the right to respond and challenge the affidavits filed by the Commissioner for the purposes of obtaining the sealed judgments. As stated above, her Honour declined to make the orders sought.

Decision

It was noted by the Court of Appeal that the issue in the appeal was the objective interpretation of the February 2009 judgment. The Court of Appeal considered that when the February 2009 judgment is considered as a whole and in context, its intent is clear, as is the purpose for requiring the respondent to file and serve the affidavits annexing the individual taxpayer's amended assessments.

The Court of Appeal was satisfied that it is clear there was no intention that the appellants would have the right to respond (and the Commissioner then reply) and that there would then be a further hearing to settle the judgment.

The clear intent of the February 2009 judgment was to finalise the long, drawn-out process of litigation. The Court of Appeal considered that it was for that purpose and to enable the sealed judgment to reflect the amended assessments, that the Commissioner was required to file and serve the affidavits annexing the full cases stated to the TRA.

The Court of Appeal considered that the requirement for service of the affidavits was effectively a courtesy and for the information of the appellants only.

The Court of Appeal found that Courtney J was also right to find failure to serve the affidavits prior to sealing the judgment could have made no difference to the appellants' position.

The appellants submitted the argument that the purpose of requiring the Commissioner to file the affidavits was to enable the appellants to consider their position and, as such, was a substitute process for referring the matter back to the TRA. The Court of Appeal considered that this argument ignored and was inconsistent with Courtney J's rejection of the appellants' request for the cases to be remitted back to the TRA.

Similarly, the Court of Appeal considered that the appellants' purported reliance on the fact the TRA reserved leave for the parties to apply with regard to any issues "not covered or consequential" did not assist them. The Court of Appeal considered that Courtney J must have been correct when her Honour noted in the February 2009 judgment that, despite that reservation, no matters had been raised by the appellants pursuant to it and that once the appellants had required the TRA to state a case for the High Court, the reservation of leave was superseded by the appeal.

The Court of Appeal rejected the submission that the appellants had in some way been prejudiced as a consequence of their inability to reply to the affidavits. The Court of Appeal said that if the appellants considered they would have a right to raise the matter again, they were wrong. The Court of Appeal reiterated that it was never intended that the appellants would have the opportunity to reply and concluded that there could be no prejudice.

The Court of Appeal dismissed the appeal.