Issued
2014
Decision
05 Aug 2014
Appeal Status
Appealed

Appeal by Trinity investors to set aside a High Court decision

2014 case note - Court confirmed that once a decision considered on appeal the lower court has no jurisdiction - Trinity, nullity, indemnity costs, functus officio.

Case
Accent Management Limited v Attorney General, the Commissioner of Inland Revenue
Legal terms
Trinity, nullity, indemnity costs, functus officio, hearing authority

Summary

The Court of Appeal dismissed the appellants' appeal from the High Court judgment of Priestly J (Accent Management Ltd v Attorney-General [2013] NZHC 1447, (2013) 26 NZTC 21,020) where he upheld a protest to jurisdiction by the Commissioner of Inland Revenue ("the Commissioner") and the Attorney-General. The original judgment addressed an attempt by the appellants to set aside Accent Management Ltd v Commissioner of Inland Revenue (2004) 22 NZTC 19,027 (HC) on the basis that Venning J, the first instance judge, failed to apply a purportedly mandatory provision of the Income Tax Act 1994 ("ITA") being subpart EH.

Impact of decision

The Court of Appeal confirmed that once a decision has been considered on appeal, the lower court is functus officio and has no jurisdiction. It further found the fact the High Court is a hearing authority in terms of section 3 of the Tax Administration Act 1994 ("TAA") does not affect the status of the High Court or of the High Court judge hearing the challenge proceeding.

Facts

This judgment relates to an appeal against a High Court judgment of Priestly J (Accent Management Ltd v Attorney-General [2013] NZHC 1447, (2013) 26 NZTC 21,020) ("Priestly J judgment") where he upheld a protest to jurisdiction by the Commissioner and the Attorney-General (the respondents will be jointly referred to as "the Commissioner") and dismissed the application made by the appellant to set aside an earlier decision Accent Management Ltd v Commissioner of Inland Revenue (2004) 22 NZTC 19,027 (HC) ("Accent 2004"). His Honour also awarded indemnity costs to the Commissioner.

Accent 2004 ruled that an arrangement to which the appellant and a number of other taxpayers were party was a tax avoidance arrangement. This was confirmed by the Supreme Court in Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2008] NZSC 115, [2009] 2 NZLR 289 ("Ben Nevis 2008").

The appellant was seeking to set aside Accent 2004 as anullity on the basis that Venning J, the first instance judge, failed to apply, as claimed by the appellant, a mandatory provision of the ITA - being subpart EH.

The Commissioner submitted the principle of finality applies and the High Court is functus officio and therefore has no jurisdiction to consider the appellant's claim because the appellant is essentially re-running the arguments that failed in Accent Management Ltd v Commissioner of Inland Revenue (2010) 24 NZTC 24,126 (HC) ("Accent 2010") and in the Supreme Court in the Redcliffe proceedings (Redcliffe Forestry Venture Ltd v Commissioner of Inland Revenue [2011] 1 NZLR 336 (HC); Redcliffe Forestry Venture Ltd v Commissioner of Inland Revenue [2011] NZCA 638, [2012] 2 NZLR 823; Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd [2012] NZSC 94, [2013] 1 NZLR 804 ("Redcliffe SC").

Decision

The Court of Appeal found for the Commissioner and dismissed the appeal.

The Court of Appeal stated in relation to the issue of jurisdiction that the appellant's arguments were materially the same as those it already considered and by the Supreme Court, and therefore the High Court was functus officio and did not have jurisdiction to deal with an application. It stated at [40]:

  • We conclude that there is no material distinction between the present case and Redcliffe SC. Applying Redcliffe SC leads to the inevitable conclusion that the High Court does not have jurisdiction to deal with Accent's claim.

The Court found the issue of whether the High Court being a hearing authority makes it amenable to reviewing its own decisions, a red herring. It stated at [30]:

  • There is nothing to suggest that the fact the High Court is a hearing authority in terms of section 3 of the TAA affects the status of the High Court or of the High Court Judge hearing the challenge proceeding. The TAA does not reconstitute the High Court as an inferior tribunal, subject to the jurisdiction of the High Court on judicial review.

The Court went on to uphold the indemnity costs awarded to the Commissioner in the Priestly J judgment and awarded indemnity costs to the Commissioner in this case stating at [45]:

  • As we have noted earlier the question of the applicability of section EH(1) has become something of a refrain. There comes a time when the appellant must accept that the decision of the Court went against it in the Supreme Court in Ben Nevis 2008 and must face up to the consequences of that finding.

Tax Administration Act 1994, Income Tax Act 1994