Tannadyce Investments Ltd v Commissioner of Inland Revenue

JurisdictionNew Zealand
CourtSupreme Court
JudgeElias CJ,McGrath J,Tipping J
Judgment Date20 December 2011
Neutral Citation[2011] NZSC 158
Date20 December 2011
Docket NumberSC 63/2010

[2011] NZSC 158



Elias CJ, Blanchard, Tipping, McGrath and Gault JJ

SC 63/2010

Tannadyce Investments Limited
Commissioner of Inland Revenue

A J Forbes QC and A J F Wilding for Appellant

K L Clark QC and P H Courtney for Respondent

Appeal from a Court of Appeal decision which struck out, as an abuse of process, an application for judicial review of income tax assessments — appellant sought judicial review on the basis the respondent withheld information it needed to challenge its assessment in accordance with the procedure under the Tax Administration Act 1994 — appellant failed to challenge assessment under s109 (disputable decisions deemed correct except in proceedings) and s114 (validity of assessments) — consideration of constitutional role of judicial review — whether judicial review available to challenge a tax assessment.

The issue on appeal was whether judicial review was available to challenge a tax assessment.

Held (per majority): Section 109 TRA provided that “no disputable decisions may be disputed in a court or in any proceedings on any ground whatsoever” and s114 TRA provided a protective purpose that no assessment was invalidated by any of the circumstances set out in the section. The definition of disputable decision included an assessment under s3 TRA (interpretation). The words “on any ground whatsoever” must have been designed to emphasise the comprehensive nature of the embargo on bringing proceedings outside the statutory framework. By using those words, Parliament must have contemplated that disputable decisions could and should be contested and challenged under the statutory procedures on any ground whatsoever, including the ground that what the Commissioner claimed to be a decision or assessment was not a decision or assessment at all.

Judges should be slow to conclude that a statutory provision ousting or limiting access to the courts was intended to preclude judicial review for unlawfulness of any kind ( Bulk Gas Users Group v Attorney-General). However s109 could be reconciled with the general availability of judicial review as the challenge procedure had a built–in right for the taxpayer to take matter to the High Court if necessary or desirable. There was no question of it preventing access to the High Court and giving effect to its terms did not have that consequence.

Despite the comprehensive nature of the challenge procedure, it was necessary to recognise the possibility that there could be rare cases where it was not practically possible for a taxpayer to challenge an assessment under Part 8A TRA (challenges). If that was so, then judicial review proceedings were not precluded by s109 TRA, because the premise on which s109 TRA was framed (the ability of hearing authorities to consider any challenge) was not present. Judicial review was also available when what was in issue was not the legality, correctness or validity of an assessment, but a flaw in the statutory process that had to be addressed outside the statutory regime because it was not provided for within that regime. Disputable decisions (including assessments) could not be challenged by way of judicial review unless the taxpayer could not practically invoke the relevant statutory procedure.

Litigants who sought to invoke judicial review and who were challenged by way of a strike out application had to persuade the court that there was a valid basis for invoking judicial review. Tannadyce had not established that it was not practically possible for it to follow the statutory procedures. There was a lack of specificity in Tannadyce's allegations and it had not shown that if it had been in possession of the documents, it would have been able to invoke the challenge procedure. It was plain that it had sufficient material to file a global return that was able to claim a loss for the years in question to the last dollar. It would not have been difficult to apportion the global return between the various tax years in issue. Tannadyce had not shown a valid basis for its contention of inability to comply with the statutory requirements.

The minority (Elias CJ and McGrath J) decision's view was that judicial review was available where what purported to be an assessment was not an assessment and also in exceptional cases, which could include cases of conscious maladministration. However, notwithstanding the constitutional importance of judicial review, it was also important that the terms in which Parliament enacted legislation such as s109 should be respected. The words in the section should not be construed to create an exception where the circumstances were “exceptional” or where there were “proper grounds” for judicial review. There was no constitutional disadvantage in giving effect to what Parliament had enacted. Allowing for unwritten grounds to escape s109 would not be consistent with Parliament's purpose in enacting it. The best interpretation of s109 was that it precluded judicial review, save where the statutory processes could never be invoked.

Appeal dismissed.

  • A The appeal is dismissed.

  • B The appellant is to pay the respondent costs in the sum of $15,000 plus disbursements to be fixed if necessary by the Registrar.


Para No

Elias CJ and McGrath J


Blanchard, Tipping and Gault JJ


Elias CJ AND McGrath J

(Given by McGrath J)


Tannadyce Investments Ltd appeals against a judgment of the Court of Appeal 1 striking out, as an abuse of process, a proceeding seeking judicial review of assessments of its liability to income tax made by the Commissioner of Inland Revenue.


Under the Tax Administration Act 1994, taxpayers may challenge tax assessments in accordance with a prescribed disputes and challenge procedure. Its focus is on ascertaining the correct liability for tax and substituting an assessment for that sum where it differs from what the Commissioner determined. The 1994 Act also includes provisions that seek to shield assessments, and other decisions made under tax law, from challenge by means other than those provided by the statute. Legislation that is enacted to restrict access by a citizen to judicial review of governmental decision-making often gives rise to questions of a constitutional kind concerning the true scope and meaning of the exclusionary provisions. The present appeal is an instance. The appellant has brought its challenge in a judicial review proceeding and has not invoked the statutory regime for challenging tax assessments.

The constitutional dimension

Our constitutional arrangements recognise that the Parliament of New Zealand is the supreme law maker and has “full power to make laws”. 2 The courts of higher jurisdiction, however, have constitutional responsibility for upholding the values which constitute the rule of law. A central aspect of that role is to ensure that when public officials exercise the powers conferred on them by

Parliament, they act within them. Judicial review is the common law means by which the courts hold such officials to account. 3 It provides the public with assurance that public officials are acting within the law in exercising their powers, and are accountable if they depart from doing so. Statutes limiting recourse to judicial review to challenge statutory decisions accordingly raise issues of constitutional concern. This concern is reflected in the presumption of the courts, when interpreting such legislation, that it was not Parliament's purpose to allow decision-makers power conclusively to determine any question of law. 4 Furthermore, in the present context, tax legislation will not readily be read as enabling imposition of a liability for tax without also allowing the opportunity of access to a judicial process to show that, in law, the tax should not have been imposed or imposed in the amount assessed.

Legislation which does not on its terms prohibit judicial review, but restricts its availability, can nevertheless interfere with full supervision by the courts of the conformity of activities of government with the rule of law. The courts are reluctant to read legislation in a manner that impairs their ability to hold public officials to account in this way.


These constitutional concerns over access to justice and accountability are also served by the general statutory principle in relation to judicial review that the existence of a right of appeal does not exclude the courts' jurisdiction in judicial review proceedings in relation to the same subject matter. 5


The courts nevertheless recognise that statutory challenge and appellate processes can provide a better means of judicial supervision of government decision-making than judicial review. In the context of rights of appeal and their effect on claims of breach of rights to natural justice, as an Australian leading text on judicial review argues: 6

If there is an appeal on the merits by way of de novo hearing, to a person who is unlikely to be influenced by what occurred at first instance, the appeal may be able to provide all that procedural fairness requires. If so, it is a far superior remedy for breach of natural justice than judicial review, since it will not only redress the initial unfairness more effectively and quickly than judicial review can, but also, replace the initial decision with a fresh decision on the merits. This provides a strong justification for courts allowing such appeals to cure defects and requiring those complaining of breach of natural justice to exercise their rights of appeal instead of seeking judicial review. (citations omitted)


At times, however, litigants, including taxpayers, contend that the statutory process is not adequate or effective in the circumstances which give rise to their challenge, and seek to pursue...

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