Court of Appeal holds doctrine of estoppel per rem judicatum applies and dismisses appeal

Summary

The Court of Appeal dismissed the appellant's appeal on the basis that the question for determination on appeal, namely, whether the Taxation Review Authority (“TRA”) erred in granting the Commissioner of Inland Revenue ("the Commissioner") an extension of time to file cases stated had been previously determined by the Court of Appeal.  

Facts

In 2000, the TRA granted leave to the Commissioner to file cases stated against 28 taxpayers in the TRA out of time on the basis of there being exceptional circumstances.

In 2002, the Court of Appeal upheld the TRA's decision, dismissing the objectors' application for judicial review and a subsequent application for conditional leave to appeal to the Privy Council.

The TRA then heard and dismissed the objections to the Commissioner's assessments.   Numerous challenges to the TRA's decision by way of applications for judicial review and appeal were unsuccessful.  The appellants asked the TRA to state a case for the High Court’s determination under s 26 of the Taxation Review Authorities Act 1994.  The TRA posed 13 discrete questions to the High Court.  On 13 November 2013, Ellis J decided all questions in the Commissioner's favour.

The appellant appealed Ellis J's finding on the first question, namely whether the objections of the Webster Group should be allowed because the Commissioner should not have been granted an extension of time to file the cases in the TRA.  In relation to this question, Ellis J found that the Commissioner did not did not need an extension of time because the date on which Webster was bound to serve its points of objection notice was never formally triggered and so the time limit for the Commissioner to state cases in the TRA never started to run.  The objections should not therefore have been allowed on that ground.

In the Court of Appeal, the appellants sought to challenge the TRA's original decision granting an extension of time to the Commissioner to file a case stated on a recently new ground of challenge that the Commissioner had failed to follow the correct procedural requirements.  The appellants invoked this new argument based upon the Taxation Review Authority Regulations 1994 ("TRAR") reg 4(3), that the Commissioner was out of time in filing a case stated in the TRA from 12 August 1996, being three months after the appellants served its points of objection.

The appellant’s proposition was that the whole hearing process was a nullity because the Commissioner filed his originating pleading in one forum, the High Court, instead of in the TRA.

Decision

The Court of Appeal considered that the TRA should not have stated in 2013 the same question which had been finally determined in 2002 in the Wetherill (M & J Wetherill Co Ltd v Taxation Review Authority [2003] 1 NZLR 577 (CA)) judicial review, namely whether the TRA erred in granting the Commissioner an extension of time to file cases stated.  The High Court should have declined to answer the same question on the basis that the doctrine of estoppel per rem judicatum applies.

In any event, the Court of Appeal considered that even if the Commissioner was out of time in stating cases, exceptional circumstances exist which would justify granting an extension under TRAR reg 8.

The appeal was dismissed.