Filing of amended statement of claim an abuse of process when proceeding was previously struck out

Summary

The taxpayers Dr Muir (“Dr Muir”) and Hillvale Holdings Limited (“Hillvale”) are parties to the Trinity litigation. This proceeding concerns amended statements of claim being filed or sought to be filed in proceedings (CIV-2011-404-1132) which were struck out by the High Court (Faire J) on 22 April 2015. The Court held that the proceedings were at an end when Faire J struck them out and the amended statements of claim were an abuse of the Court’s process.

Impact

1. A proceeding which is struck out is struck out in its entirety and it is an abuse of the Court’s processes to attempt to file an amended statement of claim.


2. A summary judgment or strike out application is not required where the filing of a document is a nullity and it is appropriate for a party to file a memorandum drawing the Court’s attention to the registry’s error in accepting the document for filing.


3. The Court has an inherent jurisdiction to prevent abuses of its processes and to direct removal of the document which should not have been accepted for filing.

Facts

On 22 April 2015 the High Court (Faire J) struck out the tax challenges and dismissed the appeals brought by Dr Muir, Hillvale and other taxpayers. Dr Muir appealed Faire J’s decision but Hillvale did not. The Court of Appeal subsequently dismissed the appeal. Leave was granted by the Supreme Court and, after Dr Muir attempted to argue new grounds, the leave granted was revoked.

The High Court Registrar accepted Dr Muir’s amended statement of claim dated 29 August 2016 (three days after the Supreme Court revoked leave) for filing and the Commissioner of Inland Revenue (“the Commissioner”), at the request of the registry, filed a memo setting out the procedural history.

On 13 September 2016 Faire J issued a minute noting that no application under rule 2.11 of the High Court Rules 2016 (“HCR”) had been filed seeking to review the registry’s acceptance of the document for filing. Faire J directed that any challenge would presumably have to be made as either an application for summary judgment under Part 12 of the HCR or strike out under Part 15. The Commissioner filed an application under r 2.11 of the HCR for review of the Registrar’s decision to accept Dr Muir’s amended statement of claim for filing.

Hillvale did not appeal the 22 April 2015 strike out decision, was not a party of Faire J’s minute of 13 September 2016 and took no further action until it attempted to file an amended statement of claim on 22 March 2017. This was initially accepted by the registry but then later rejected and the filing fee returned. Hillvale filed an application under r 2.11 of the HCR to review the decision to reject its amended statement of claim for filing.

Decision

The Court canvassed the general principles relating to rr 2.11 and 15.1 of the HCR and the Court’s inherent jurisdiction to review the acceptance of a document for filing.

Toogood J concluded that Dr Muir’s amended statement of claim was an abuse of process and the filing was a nullity considering the proceeding had been struck out. For the same reasons, Hillvale’s tendering of its amended statement of claim was an abuse of the Court’s process.

The status of the proceeding

Toogood J was satisfied that the tax challenge proceedings were brought to an end when Faire J struck them out on 22 April 2015. His Honour reiterated that Dr Muir was initially granted leave to the Supreme Court but after he attempted to argue new grounds, leave was revoked with the Supreme Court stating that the “appellant’s proceedings will remain struck out in their entirety” (Muir v Commissioner of Inland Revenue [2016] NZSC 113, (2016) 27 NZTC 22-067 at [11).

Associate Judge Bell considered the same issue in relation to the same struck out proceedings in a decision granting the Commissioner summary judgment against Dr Muir where his Honour stated (Commissioner of Inland Revenue v Muir [2017] NZHC 1413 [44]):

“…once a proceeding is at an end it is not possible to file fresh pleadings in the same proceeding to resume the litigation. That applies to both a judgment on the merits and to a decision to terminate on other grounds.”

Is a decision to accept a document for filing reviewable under HCR 2.11?

Toogood J agreed that a decision to accept a document for filing was not reviewable under r 2.11 of the HCR. A decision to accept a document for filing does not amount to a Registrar’s exercise of jurisdiction in terms of r 2.11(1)(a). The term “exercise of jurisdiction” takes its meaning from rr 2.5 – 2.10 immediately preceding it and refers to the jurisdiction of the Registrar to make certain decisions that would otherwise be made by a Judge or Associate Judge.

Toogood J noted that accepting a document for filing is routinely the task for front-line staff members under the supervision and guidance of Deputy Registrars and does not fall within the jurisdiction referred to in r 2.11(1)(a) of the HCR.

Is the Court’s inherent jurisdiction available to review the acceptance of a document for filing?

The Commissioner’s primary submission was that there was no longer any proceeding in existence in which an amended statement of claim could have been filed and therefore the Registrar should have rejected the document. No particular application (such as strike out or judicial review) is required because an error by registry staff is not capable of creating jurisdiction to accept a document for filing. The Court can rectify such an error by invoking its inherent jurisdiction to prevent abuses of its process.

Toogood J noticed that it was not clear that Faire J turned his mind to the Court’s inherent jurisdiction and he respectfully disagreed with Faire J’s view that it was necessary for the Commissioner to apply for summary judgment or a strike out order.

Citing Re Rafiq ([2014] NZHC 2291 at [11]), Toogood J confirmed that the Court retains an inherent jurisdiction pursuant to which it has a duty to strike out pleadings that are an abuse of process. If a registry officer accepts a document for filing after the proceeding has been concluded, the acceptance is a nullity. It is also clear that filing a document which purported, misleadingly, to amend a pleading in a proceeding which had been brought to an end constitutes a collateral attack on the decisions of the High Court, Court of Appeal and Supreme Court and was an abuse of the Court process. The Court has an independent duty to prevent abuse of process and a broad inherent procedural power to strike out proceedings where litigation amounts to an abuse of process.

Toogood J considered the Commissioner adopted the appropriate course of filing a memorandum drawing the Court’s attention to the registry officer’s error and that it was not in the interests of justice to require a formal summary judgment or strike-out application.

Hillvale's arguments

The Court accepted that Dr Muir and Hillvale were separate parties and that not every decision or judgment against Dr Muir would bind Hillvale. However Hillvale was a party to the Trinity litigation which was struck out by Faire J on 22 April 2015 and Hillvale chose not to appeal that strike out decision. The Registrar was right to reject the document, notwithstanding the earlier decision by a registry officer that it should be accepted, because the filing was a nullity and an abuse of the Court’s procedure.

The High Court directed that Dr Muir’s statement of claim be removed from the Court file and any filing fee returned and dismissed Hillvale’s application to review the Registrar’s refusal to file its document.