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30 Apr 2018
Appeal Status

Dr Muir’s summary judgment appeal dismissed in long-standing 'trinity' dispute

The appellant in these proceedings, Dr Garry Albert Muir appealed the High Court decision of Associate Judge Bell granting summary judgment in favour of the respondent, the CIR.

Garry Albert Muir v Commissioner of Inland Revenue [2018] NZCA 129

Tax Administration Act 1994 ss 3, 109, 138D, 138P, 138I and 142F; High Court Rules 2016 r 15.1


The appellant in these proceedings, Dr Garry Albert Muir (“Dr Muir”) appealed the High Court decision of Associate Judge Bell (in Commissioner of Inland Revenue v Muir [2017] NZHC 1413, (2017) 28 NZTC 23-019) granting summary judgment in favour of the respondent, the Commissioner of Inland Revenue (“the Commissioner”). The summary judgment application consisted of unpaid income taxes, interest and penalties for the years ended 31 March 1997 to 31 March 2010 totalling $8,179,830.94. The Court dismissed Dr Muir’s appeal.


It is a decision for the Court, where there are collateral proceedings seeking to challenge an assessment, whether to proceed with summary judgment or adjourn until the collateral proceedings are resolved.


The tax assessments arise out of a scheme (more commonly known as the 'trinity scheme') devised by Dr Muir. Under the scheme, Dr Muir invested in a loss-attributing qualifying company Redcliffe Forestry Venture Ltd ("Redcliffe"). Redcliffe claimed substantial deductions under subpart EG of the Income Tax Act 1994 ("ITA"), that it passed onto Dr Muir. Dr Muir offset these deductions against his taxable income which were subsequently disallowed by the Commissioner.

Dr Muir had previously challenged the Commissioner';s assessments with the courts on the whole, upholding the Commissioner';s position. On the basis he had exhausted his challenge rights, the Commissioner sought summary judgment for unpaid taxes, interest and penalties. Summary judgment was subsequently granted on 23 June 2017 and the subject of this appeal.

Dr Muir contended that AJ Bell exceeded his jurisdiction on the summary judgment application. He argued:

Only a hearing authority as defined in the Tax Administration Act 1994 ("TAA") can determine if there are extant challenge proceedings under Part 8A (the challenge provisions) of the TAA.

If the Court of Appeal found the amended claims could be filed, then the effect of AJ Bell's decision is to find payable tax which the hearing authority is charged with determining de novo.

Dr Muir further contended that the earlier courts proceeded on the mistaken basis that the trinity scheme continued in existence after 2009 when it had not.


Did the Associate Judge exceed his jurisdiction by entering summary judgment for Dr Muir?

The Court (reasons given by Mallon J) did not accept that Associate Judge Bell exceeded his jurisdiction. The Court noted that the arguable defence Dr Muir raised to the summary judgment was that his challenge proceedings had not been finally determined. The Court noted that AJ Bell was considering whether it was reasonably arguable that Dr Muir's challenge proceedings were at an end following the Supreme Court's decision of 26 August 2016 (Muir v Commissioner of Inland Revenue [2016] NZSC 113, (2016) 27 NZTC 22-067 at [11]).

The Court did not accept Dr Muir's arguments regarding challenge proceedings and his reliance on Tannadyce Investment Ltd v Commissioner of Inland Revenue [2011] NZSC 158, [2012] 2 NZLR 153 ("Tannadyce"). Mallon J noted that Tannadyce was about bringing and determining challenge proceedings, and further about what a taxpayer must do if he or she wishes to challenge an assessment.

Mallon J noted that AJ Bell's decision did not determine any challenge proceeding or make any procedural or preliminary decisions ahead of a determination on challenge proceedings. AJ Bell found that the challenge proceedings had been finally determined by the courts (that had jurisdiction). AJ Bell, therefore found, in his summary judgment jurisdiction on the Commissioner's debt recovery proceeding, that the due date for payment of the tax had passed and the tax remained unpaid.

Timing issues

Mallon J noted at [34] that there could be 'potential timing difficulty' because summary judgment had been heard in advance of the decisions of Toogood and Jagose JJ and any appeal from those decisions.

Despite this, Mallon J went on to state that the Court would have dismissed Dr Muir's appeal from the Associate Judge's decision on the basis that an Associate Judge can decide whether challenge proceedings have been finally determined by a hearing authority.

Mallon J further stated at [36] that it was 'ultimately a matter of judgment' for the Associate Judge on whether to grant an adjournment of the summary judgment application and Associate

Judge Bell was entitled to make an assessment of the prospects of the outstanding proceedings in the High Court when deciding to refuse an adjournment.

"He was not required to grant an adjournment if his assessment was that a final determination had been made and further proceedings were not permitted."