Trinity avoidance scheme
2013 case note – Trinity avoidance scheme - strike out, judicial bias, presumptive bias, nullity, functus officio, finality principle, jurisdiction.
High Court Rules
The Judgment upheld the application by the Commissioner of Inland Revenue ("the Commissioner") to dismiss or strike out the claim of judicial bias against Venning J in regard to his 2004 Judgment where he held the Trinity scheme was tax avoidance.
Impact of decision
This decision confirms that where an appellate court has determined an appeal, the trial court does not have jurisdiction to set aside its original judgment on the grounds of bias - it is a matter that needs to be appealed.
The Judgment relates to an application by the Commissioner to dismiss/strike out the taxpayers' (Ben Nevis Forestry Ventures Limited and others, "Ben Nevis") claim of judicial bias against Venning J ("the Judge") for his 2004 decision regarding the Trinity scheme ("the 2004 Judgment"). The bias being alleged is that (at ):
- … when the Judge delivered the 2004 Judgment he was liable to the Commissioner in respect of certain duties arising out of his own investment in a forestry investment trust. Ben Nevis says that the Judge was, as a result, "beholden" to the Commissioner.
It was further submitted that the result of the alleged bias is that the 2004 Judgment is a nullity.
The Commissioner filed a protest under rule 5.49 of the High Court Rules on the basis that the High Court is now functus officio and therefore has no jurisdiction to set aside the 2004 Judgment. The Commissioner also applied to dismiss or strike out the proceedings on jurisdictional grounds, submitting any challenge to the 2004 Judgment can only be heard by an appellate court.
The Court was required to determine whether the 2004 Judgment was a nullity that Ben Nevis would have been entitled (prior to any appeals) to have set aside in the exercise of its inherent jurisdiction.
Katz J stated that she had "real reservations as to whether allegations of bias (as opposed to breaches of the right to be heard) are appropriately dealt with as 'nullities', other than in the clearest of cases" at .
Katz J further stated that it must be at least arguable that the 2004 Judgment could have been challenged as a nullity prior to the decision being appealed.
The Court (at ) found the allegation that the 2004 Judgment was a nullity because the Judge was presumptively biased due to an alleged tax obligation that resulted in him being "beholden" to the Commissioner was:
- … (an allegation which the Court of Appeal has previously suggested was "startling" and lacking in any evidential foundation). The rule against bias is an aspect of natural justice. However, the allegations of presumptive bias in this case are far removed from the facts of any previous case where a judgment or order has been found to be a "nullity". The nullity exception is usually applied where a procedural breach is both obvious and egregious.
The Court was then required to decide whether it had jurisdiction to set aside the 2004 Judgment following its appeals.
It stated that to declare the 2004 Judgment a nullity it would have to declare the subsequent appeals of the 2007 Court of Appeal and 2008 Supreme Court decisions to be nullities. Further, a re-hearing could not take place unless the High Court set aside the decisions of both the Court of Appeal and the Supreme Court.
Katz J stated (at ) that:
- Once a final judgment has been delivered a court is functus officio, consistent with the principle that litigation must have a defined end point (the finality principle). In the interest of justice, however, courts have recognised some limited exceptions to the finality principle. These include where a judgment is a "nullity" because, for example, it was delivered without one party having been heard (a breach of natural justice). If a judgment is a nullity, the Court which delivered it can generally set it aside, without the need for an appeal.
The Court went on to state that had this case not been previously appealed, it would have been reluctant to dismiss the proceedings solely on jurisdictional grounds. The reasoning being (at ) that "[i]f there is room for reasonable doubt as to whether jurisdiction exists, it will rarely (if ever) be appropriate to dismiss proceedings on the basis of lack of jurisdiction".
However, the Court noted (at ) that the case is different if a decision has already been appealed, stating:
- … it is not, in my view, even remotely arguable that this Court now has jurisdiction to set aside the 2004 Judgment. To hear determine [the bias] proceedings would require the High Court to disregard the hierarchical nature of our court system and, in effect, declare the decisions of the superior courts to be nullities. The relief sought by Ben Nevis is indisputably beyond the jurisdiction of this Court.
The Court dismissed the proceedings.