Bradbury and Another v Judicial Conduct Commissioner

• Jurisdiction: New Zealand
• Judge: Ellen France,Stevens,Wild JJ
• Judgment Date: 08 September 2014
• Neutral Citation: [2014] NZCA 441
• Docket Number: CA357/2013
• Court: Court of Appeal
• Date: 08 September 2014

BETWEEN

Clive Richard Bradbury And Gregory Alan Peebles

Appellants

and

Judicial Conduct Commissioner

First Respondent

Garry Albert Muir

Second Respondent

[2014] NZCA 441

Court:

Ellen France, Stevens and Wild JJ

CA357/2013

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal from a High Court (“HC”) decision which dismissed the appellants' application for judicial review (on the grounds of abuse of process) of a decision of the first respondent Judicial Conduct Commissioner — Commissioner declined to take further action on the appellant's complaint against a HC Judge — the appellants had been involved in a forestry investment scheme known as the Trinity scheme — in 2004 the Judge found that the Trinity scheme comprised tax avoidance — appellants complained that the Judge had made inadequate disclosure in the context of the Trinity litigation about the circumstances surrounding the establishment in 1992 of a forestry investment trust of which the Judge was a director and shareholder — whether the Commissioner had conducted his preliminary examination on the correct basis and in an adequate and proper manner — whether the HC had erred in dismissing the appellants' application for judicial review.

Counsel:

G J Judd QC for Appellants

D J Goddard QC and L Theron for First Respondent

L J Taylor QC for Justice Venning

JUDGMENT OF THE COURT

• A The appeal is dismissed.

• B The costs award made in the High Court stands.

• C The appellants must pay the first respondent and counsel for Venning J indemnity costs (their actual costs incurred in relation to the appeal) and usual disbursements. We certify for second counsel for the first respondent

REASONS OF THE COURT

(Given by Ellen France J)

Table of Contents

	Para No
Introduction	[1]
Factual background	[5]
The Trinity litigation	[6]
The Tahakopa investment	[12]
The complaints	[22]
The Judicial Conduct Commissioner's decision	[36]
The statutory scheme	[43]
The High Court judgment	[53]
The appellants' case on appeal	[60]
Our analysis	[64]
An implausible complaint?	[65]
Relevance of the Judge's knowledge	[71]
The need for inquiry?	[89]
Abuse of process	[99]
Costs in the High Court	[109]
Costs in this Court	[113]
Result	[114]

Introduction

1 The appellants and the second respondent 1 had an involvement with a forestry investment scheme known as the Trinity scheme. In 2004 Venning J presided over a lengthy trial in the High Court and found that the Trinity scheme comprised tax avoidance. 2 That decision led to a series of cases challenging in various ways the tax avoidance finding. One of the challenges was that Venning J should have recused himself from hearing the Trinity case because he was a shareholder and director in a forestry investment, the Tahakopa Forest Trust Ltd (Tahakopa). That challenge was unsuccessful. 3

2 In late May 2010, the appellants complained to the Judicial Conduct Commissioner (the Commissioner) about Venning J. They alleged, among other things, that the Judge made inadequate disclosure in the context of the Trinity litigation about the circumstances surrounding the establishment in 1992 of Tahakopa. The Commissioner undertook a preliminary examination and decided to

take no further action on the complaints under s 15A of the Judicial Conduct Commissioner and Judicial Conduct Panel Act 2004 (the Act). The appellants sought judicial review of the Commissioner's decision in the High Court. It is from Goddard J's dismissal of that application 4 that the appellants appeal

3 The appeal raises issues about the proper scope of the Commissioner's preliminary examination. In particular, the first issue is whether the Commissioner conducted his preliminary examination on the correct basis and in an adequate and proper manner and as to whether the Commissioner approached the complaints in the right way. The second issue is whether Goddard J erred in dismissing, at her own instance, the appellants' application for judicial review as an abuse of the process of the High Court. Finally, the appellants challenge aspects of the costs award made in the High Court.

4 For the reasons set out below we consider Goddard J was right to dismiss the application for judicial review. The Judge correctly concluded the Commissioner acted within his powers, considered all relevant matters and that his decision was reasonable. The Judge also correctly dismissed the proceeding as an abuse of process. Before explaining our reasons we first set out the factual background and then summarise the legislative scheme and the approach taken in the High Court.

Factual background

5 We start by saying a little more about the litigation relating to the Trinity scheme.

The Trinity litigation

6 As Goddard J noted, Dr Garry Muir, a taxation expert, was the architect of the Trinity investment scheme. 5 In 1996 he and one of the appellants, Clive Bradbury (his legal partner), set up the scheme. Mr Bradbury and Gregory Peebles, the other appellant, along with others, were investors in the scheme and claimed various expenses associated with their investments in the scheme as

deductions against other income. The Commissioner of Inland Revenue disallowed the deductions and the taxpayers objected. After the trial in 2004, as we have foreshadowed, Venning J found that the Trinity scheme comprised tax avoidance. Venning J's judgment in Accent Management Ltd v Commissioner of Inland Revenue ( Accent 2004) was delivered on 20 December 2004. 6 Dr Muir gave evidence at the trial and in his judgment Venning J criticised Dr Muir's approach to the litigation, the manner in which he undertook his discovery obligations and his lack of candour in giving evidence

7 Before trial and during the pre-trial management conference the possibility of a site visit to view the subject forest was raised by one counsel. In this context, Venning J indicated that he did not consider a site visit would be particularly helpful or necessary as “he knew a little bit about forests”. 7 He said he “had had an interest in a forest for fifteen years”. 8

8 After the judgment in Accent 2004 was delivered, the Commissioner of Inland Revenue sought costs against the plaintiffs and indemnity non-party costs against Dr Muir personally. In response to this application, Dr Muir applied for Venning J to recuse himself from dealing with the issue of costs. The following grounds were advanced: first, the adverse comments the Judge had made about Dr Muir in the judgment; secondly, Dr Muir and his colleagues had apparently fallen out with two forestry consultants, Messrs Hedges and Janett, who were co-directors in Tahakopa; and, finally, a “small suspicion” that because of his involvement in a private forestry investment, Venning J may have been exposed to income tax/gift duty or conveyance duty risks at the time the scheme was set up and this would be known to the Commissioner of Inland Revenue. 9 We return later to the detail of the submissions made in January 2006 by Mr Judd QC on behalf of Dr Muir.

9 Venning J issued a minute on 30 September 2005 responding to the application for recusal. 10 The Judge dealt with the various matters raised in the application. For present purposes we need only note that Venning J stated that his investment was a “modest” one and that Tahakopa “is a non trading entity which holds the land on which the forest is planted on trust for all investors”. 11 The Judge said that he did not propose to recuse himself from dealing with the application for costs and that if the recusal request was pursued there would need to be a formal hearing. The matter proceeded to a formal hearing. Venning J declined to recuse himself. 12 The Judge also declined an application by the plaintiffs to have the judgment in Accent 2004 recalled.

10 The recusal and the recall decisions were appealed and the appeals heard separately. Both appeals were dismissed by this Court. 13 Venning J's substantive judgment in Accent 2004 was upheld by this Court 14 and the Supreme Court. 15

11 There have been numerous attempts subsequently by some of the Trinity investors, including the appellants, to relitigate these issues. We set out in Appendix 1 those which have a particular focus on Venning J. 16

The Tahakopa investment

12 To put the complaints of inadequate disclosure in context, it is helpful to first discuss some of the details of the Tahakopa investment.

13 As Venning J told the Commissioner, the forest investment was promoted by Messrs Hedges and Janett. Venning J was introduced to the investment and to the promoters through a Mr Derm Martin, a friend and another proposed investor. Venning J was, at that time, in practice in litigation in Christchurch. The Judge

initially held 16 out of the total of 100 shares in Tahakopa. His shareholding increased to 25 per cent of the company in 1999. The information before us suggests there were initially six principal shareholders each holding 16 shares and that by 1 February 1999 there were four shareholders, each holding 25 per cent

14 Messrs Hedges and Janett, as promoters, took responsibility for giving instructions to White Fox and Jones, an independent firm of solicitors, in relation to the preparation of documents to complete the purchase of the land and establishment of the investment structure.

15 Tahakopa entered into an agreement for sale and purchase of the forestry block (some 220 ha in Southland) from the then owners of the land, Mr and Mrs Flight, in June 1992. The June date was subsequently amended to 6 July 1992.

16 Tahakopa was incorporated as a private company on 21 July 1992. At that point in time, as Goddard J explained, the Land Settlement Promotion and Land Acquisition Act 1952 (LSP Act) required that, in order to acquire land, a company either had to make an...