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31 Oct 2013
Appeal Status
Not appealed

Case transfer and consolidation

2013 case note – CIR successful in application to have cases relating to the Trinity Scheme transferred to the High Court and consolidated with other cases.

Commissioner of Inland Revenue v Garry Albert Muir and others

Tax Administration Act 1994


The Commissioner of Inland Revenue ("the Commissioner") was successful in her application to have a number of cases originally filed in the Taxation Review Authority ("TRA") transferred to the High Court and consolidated with other High Court cases concerning the same dispute.

Impact of decision

The transfer and consolidation will allow the court to deal with matters in a comprehensive, efficient and relatively inexpensive manner. In agreeing to the transfer and consolidation, the court considered and applied the same considerations set out in Commissioner of Inland Revenue v Deepsea Seafoods (No 1) Limited (2004) 21 NZTC 18,469 (HC) ("Deepsea Seafoods").

The litigation history, especially since 2002, was one of the strong reasons for awarding the orders.


This application relates to the ongoing challenges filed by the respondents, disputing the finding that the Trinity Scheme was a tax avoidance scheme.

The Commissioner applied for the transfer of 66 proceedings (brought by 11 challengers) from the TRA to the High Court and consolidation of those proceedings with some related appeals and proceedings already in the High Court.


Before considering the issues, the Court first had to determine whether the Commissioner could bring this application by way of an originating application under Part 19 of the High Court Rules. The Court granted leave to the Commissioner with reference to Randerson J's judgment in Commissioner of Inland Revenue v McIlraith (2003) 21 NZTC 18,112 (HC).

In relation to the transfer of proceedings, Toogood J referred to the case of Deepsea Seafoods where the relevant considerations for transfer of proceedings from the TRA to the High Court were considered, the main ones being:

  • the magnitude of the tax in dispute, public importance or complexity of the matter;
  • the likelihood of the matter arising again in the future assessments; and
  • the likelihood of appeals from the TRA.

The respondent objected to the transfer on the basis that:

  • the Commissioner is merely seeking to strike out the challenges;
  • the substantive issue is not complex;
  • not all Trinity challenges would be dealt with in the High Court if the Commissioner is successful in its present application; and
  • high litigation costs are asserted by the Commissioner and this is prejudicial to the challengers in circumstances where costs awards are not available in the TRA.

In response, Toogood J considered that:

  • as the issue is already before this Court in the appeal proceedings, no injustice to the challengers arises if the proceedings are transferred;
  • the issue is a complex one and even if it was not, it would not be an end to the matter;
  • the High Court is capable of addressing discrete issues even if proceedings are transferred, and there is a substantive similarity in the issues;
  • potential liability of respondents to costs in the High Court is not influential, and there is a public interest element in transferring the proceedings to eliminate a tier of appeals.

Toogood J also criticised the attitude the Trinity investors adopted, particularly those who did not settle their challenges after the Ben Nevis Forestry Ventures Limited v Commissioner of Inland Revenue [2008] NZSC 115, [2009] 2 NZLR 289. He stated at [25]:

  • More compelling, in favour of transfer, is the attitude which has been adopted by the Trinity investors who did not settle their challenges after the Ben Nevis decision of the Supreme Court. That has been to continue to seek avenues to relitigate the issues decided against them. I accept the Commissioner's proposition that little confidence can be placed in the challengers accepting any precedent-setting judgment or judgments which might be issued in the proceedings currently before this Court or in any one proceeding which might, as suggested by Dr Muir, be transferred as if it were, in effect, a test case. The prospect that notwithstanding an unfavourable outcome for the appeal proceedings currently before the Court, the other challengers will continue to argue their respective cases is not fanciful given the litigation history.

Toogood J referred to Commissioner of Inland Revenue v A Taxpayer (2003) 21 NZTC 18,001 (HC),where O'Regan J determinedthat transfer of Trinity litigation underlying the Ben Nevis decision was appropriate given the complexity of the issues and the amount of tax at stake. Toogood J stated at [27]:

  • … transfer will bring the resolution closer to finality. All relevant factors weigh heavily in favour of transfer.

In relation to the consolidation of the proceedings, Toogood J again referred to Deepsea Seafoods where consolidation was ordered. He applied the same considerations, and ordered consolidation, noting that consolidation was desirable to save time and cost for the parties and the Court.

In addition, the Court made ancillary orders requiring the respondents to file and serve on the Commissioner amended statements of claim in all of the transferred proceedings on or before 5 December 2013, with the Commissioner to file and serve statements of defence by 20 February 2014.

Costs were awarded to the Commissioner.