Application for extension of time dismissed

Summary

The Court of Appeal dismissed the trustee of the Forest Trust's application for an extension of time to appeal a decision of Cooper J on an application for judicial review.

Impact of decision

If the trustee of the Forest Trust does not seek to appeal this decision, the Court of Appeal has confirmed that the appropriate forum for the substantive issues to be heard is the statutory disputes and challenge procedures.

Facts

This was an application for an extension of time brought by Peter William Mawhinney as trustee of the Forest Trust ("the Trust") under rule 29A of the Court of Appeal (Civil) Rules 2005 to appeal a decision of Cooper J on an application for judicial review (Mawhinney v Commissioner of Inland Revenue (No 2) [2013] NZHC 3564, (2013) 26 NZTC 21-079).

The Forest Trust filed a goods and services tax ("GST") return claiming a refund of $67,011.65 for the GST period ended 31 July 2009. The Commissioner of Inland Revenue ("the Commissioner") reassessed the refund to nil pursuant to s 89C(eb) of the Tax Administration Act 1994 ("TAA"), as the Commissioner believed the Trust was involved in fraudulent activity.

The Commissioner issued her assessment on 20 June 2012 and the Trust responded by issuing a Notice of Proposed Adjustment thus engaging the statutory dispute process. Prior to the Commissioner issuing a Challenge Notice (or amended assessment), the Trust filed a Notice of Claim with the Taxation Review Authority. Following a number of interactions between the parties, the Trust filed an application for judicial review relying on the following five causes of action:

1. The Commissioner's adjustment of GST was unlawful and not authorised by s 89C(eb) of the TAA as nothing in the Goods and Services Tax Act 1985 excludes GST from being applied to fraudulent activity.
2. The decision to adjust the GST was in breach of natural justice because of the failure to undertake "naturally just" investigations before making the determination.
3. The failure to reassess the corresponding output tax in the relevant GST period was unreasonable.
4. The Commissioner did not issue her Notice of Response within the two-month response period.
5. There were allegations of breach of statutory duty.

In response, the Commissioner filed an objection to jurisdiction, applying for the proceeding to be dismissed.

On 23 December 2013, Justice Cooper issued his decision in favour of the Commissioner, dismissing Mr Mawhinney's application for Judicial Review (Mawhinney v Commissioner of Inland Revenue (No 2) [2013] NZHC 3564, (2013) 26 NZTC 21-079). Justice Cooper held that each of the causes of action could be dealt with in the statutory disputes and challenge procedures and, therefore, applying Tannadyce Investments Limited v Commissioner of Inland Revenue [2011] NZSC 158, [2012] 2 NZLR 153, the High Court had no jurisdiction. The judge said that although various bases were argued "the end point in each case involves consideration of the correct GST position" over the period (Mawhinney v Commissioner of Inland Revenue (No 2) as aboveat [45]).

The Trust attempted to appeal this decision to the Court of Appeal but its notice of appeal was rejected for filing by the Deputy Registrar due to a number of procedural defects. Miller J reviewed and upheld the Deputy Registrar's decision to reject the notice of appeal (Mawhinney v Commissioner of Inland Revenue [2014] NZCA 69). Accordingly, on 19 March 2014, the Trust filed the application for extension of time, which the Commissioner opposed.

Decision

The Court of Appeal determined that, despite the delay being minimal, it was not in the interests of justice to extend the time for the Trust to "pursue a meritless appeal" (at [19]).

The Court dismissed the application for an extension of time to appeal confirming the High Court's view that there is another statutory remedy available and stating that the "proposed appeal is hopeless" (at [19]).