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28 Mar 2017
Appeal Status

A question of standing

2017 case note – standing of taxpayer bringing proceeding on behalf of incorporated society - strike out, liquidation, incorporated and unincorporated societies.

Rhys Michael Cullen v The Commissioner of Inland Revenue [2017] NZHC 578


Mr Cullen brought a proceeding in relation to a goods and services tax return on behalf of Tamaki Rugby League Incorporated against the Commissioner of Inland Revenue (“the Commissioner”). The Commissioner applied to strike out this proceeding on the basis that, as Tamaki Rugby League Incorporated was struck off the register of incorporated societies at the time of the return and in liquidation at the time the proceedings were brought, Mr Cullen did not have standing. The High Court declined the Commissioner’s strike out application, considering it tenable that the proceeding related to the unincorporated version of Tamaki Rugby League Incorporated, and that Mr Cullen could therefore have standing.

This judgment is under appeal.


There are concerns over the wider impact of this decision. Her Honour seems to suggest that the Commissioner is obligated to enter the disputes process and treat tax returns and dispute documents as valid even when they have not been filed on behalf of, or with the authority of, the taxpayer stated on the documents.  This decision appears to broaden the ambit of Commissioner of Inland Revenue v Alam [2009] NZCA 273. 


On 24 July 2006, the Tamaki Rugby League (“the Club”) was registered on the Register of Incorporated Societies (“the Register”) as an incorporated society (“the Society”). On 20 August 2010, the Society was placed into liquidation and the Society was removed from the Register on 19 November 2012.

The Society was restored to the Register as of 17 June 2016 following an application by Mr Rhys Cullen as he believed the Society was due a tax refund from Inland Revenue. The Society came back into existence as an incorporated society from that date forward. The Judge hearing the application to restore the Society to the Register refused to make “relate back” orders.

In the interim, it seems that Mr Cullen, as Chairman of the Club, had been taking steps to prepare and file various tax returns, including a goods and services tax (“GST”) return for the period ended 31 May 2016 (“the Return”). The Return was in the name of the Society. The GST registration number used on the Return was the Society’s. The Return sought a GST refund of approximately $14,000.

On 3 August 2016, the Commissioner issued a notice of assessment (“the Assessment”). The Assessment was also in the name of the Society and used the Society’s GST registration number. The Assessment recorded that, rather than a refund of approximately $14,000, a refund of only approximately $100 was due. Mr Cullen says that there was a data entry error when Inland Revenue Department staff processed the Return.

On 26 August 2016, Mr Cullen issued a Notice of Proposed Adjustment (“the NOPA”) in relation to the Assessment. Again, the NOPA was in the name of the Society, and it used the Society’s GST registration number. In the NOPA, Mr Cullen challenged the validity of the Assessment.

Pursuant to ss 89G and 89AB(2) of the Tax Administration Act 1994 (“the TAA”), the Commissioner’s Notice of Response (“the NOR”) was due on 26 October 2016.  On 5 September 2016, Mr Cullen commenced these proceedings, seeking a declaration that the Return is valid and a declaration that the Assessment is invalid.

On 7 September 2016, the Commissioner wrote to Mr Cullen acknowledging receipt of the NOPA and noting that the Commissioner intended to issue a NOR. On 14 October 2016, the Commissioner wrote again to Mr Cullen, stating that the Commissioner had confirmed that the Society was in liquidation and that the Commissioner would be directing further communications to the Official Assignee. No NOR was issued by the Commissioner prior to 26 October 2016.

On 19 September 2016, the Commissioner filed her application to strike out these proceedings.


Her Honour found that it was tenable that the Return, the NOPA and these proceedings were issued and/or brought for and on behalf of the Club as an unincorporated body, rather than the Society. There was no doubt that the Return was issued in the name of the Society and used the Society’s GST registration number. However, her Honour’s view was that did not mean that the taxpayer to whom the Return actually related could not be the Club. Her Honour considered it tenable that the Return could not in fact relate to the Society, because the Society did not exist during the period to which the Return relates.

Her Honour reached a similar conclusion in relation to the Assessment, finding that it was arguable that the Assessment was an assessment of the tax activities of the Club and not the Society.

Her Honour also found that if the Commissioner considered that a NOPA does not meet the requirements of s 89D, or is otherwise invalid and has not triggered the statutory disputes process, the appropriate course was to issue a NOR to that effect, so that that issue can be resolved through the disputes process and challenge proceedings. This enables the question of validity to be determined through the correct procedural route.

Accordingly, for these reasons her Honour considered it was arguable that Mr Cullen did not need the Official Assignee’s consent to commence these proceedings and, as Chairman of the Club, had the necessary standing to bring them.

It was also found tenable that the Assessment was not deemed to be correct under s 109 of the TAA.  This was because the premise underlying s 109, namely that the taxpayer could challenge the Assessment in challenge proceedings, did not exist.

Her Honour found that while it was an abuse of process for Mr Cullen to have commenced these proceedings prior to the disputes process running its course, as the Commissioner did not continue to engage in the disputes process she did not propose to exercise her discretion to strike out the proceedings as an abuse of process.


Section 26 Incorporated Societies Act 1908, ss 248, 260, sch 6 Companies Act 193, ss 89AB, 89D, 109, 113, 138B Tax Administration Act 1994, ss 51, 57 Goods and Services Tax Act 1985, r 15.1 High Court Rules 2016