Tauber … Ors v The Commissioner of Inland Revenue Coa CA

• Jurisdiction: New Zealand
• Judge: Stevens J
• Judgment Date: 07 September 2012
• Neutral Citation: [2012] NZCA 411
• Docket Number: CA564/2011
• Court: Court of Appeal
• Date: 07 September 2012

BETWEEN

David Andrew Tauber

First Appellant

Lisa Marie Tauber

Second Appellant

Paul Nigel Webb

Third Appellant

Rosemary Webb

Fourth Appellant

Maree Anne Bockett

Fifth Appellant

Score Trustees Limited

Sixth Appellant

Westpark Marina Limited

Seventh Appellant

Honk Berths Limited

Eighth Appellant

Honk Land Trustees Limited As Trustee of The Honk Land Trust

Ninth Appellant

Airport Trustees Limited As Trustee of Honk Airport Trust

Tenth Appellant

and

The Commissioner of Inland Revenue

Respondent

[2012] NZCA 411

Court

Stevens, Miller and Simon France JJ

CA564/2011

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal from High Court decision dismissing appellant's application for judicial review of the issue of search warrants under s16(4) Tax Administration Act 1994 (“TA”) (Commissioner may access premises to obtain information) and removal of documents under s16C TA (power to remove and retain documents for inspection) — Commissioner was investigating appellants and associated entities — whether it had been reasonable for the Commissioner to have invoked s16 TA — whether the warrants were too widely drawn and lacked specificity — whether Court could consider the full unredacted version of affidavit filed in support of warrant applications — meaning of “requires” under s16(4) TA (exercise of Commissioner of functions requires physical access to private dwelling) — effect of s21 New Zealand Bill of Rights Act 1990 (freedom from unreasonable search and seizure).

Counsel

M T Lennard for Appellants

P H Courtney and E J Norris for Respondent

• A The appeal is dismissed.

• B The appellants, jointly and severally, must pay the respondent one set of costs for a standard appeal on a band A basis and usual disbursements.

JUDGMENT OF THE COURT

REASONS OF THE COURT

(Given by Stevens J)

Table of Contents

	Para No
The Commissioner seeks access to documents	[1]
Some further background	[4]
The statutory scheme	[9]
Appropriateness of judicial review	[20]
Consideration of the unredacted affidavit	[23]
Was the Commissioner's reliance on s 16 powers reasonable?	[26]
Interpretation of s 16(4)	[27]
Interpretation of s 16C	[41]
Obligation of candour and completeness	[49]
Alleged errors and omissions in affidavit	[51]
Intention to search the whole of Ms Bockett's dwelling	[53]
Imputation credits	[57]
Litigation before the Taxation Review Authority	[60]
Withholding of information by Mr Webb	[64]
Compliance with s 17 notices	[67]
Nature of Mr Webb's assets	[70]
Overall evaluation	[74]
The form of the warrants	[77]
Overall conclusions – were the warrants reasonably required?	[82]
Access warrants for private dwellings of Messrs Tauber and
Webb and removal and retention of warrants	[84]
Access warrant for private dwelling of Ms Bockett and
removal and retention warrant	[86]
Result	[93]

The Commissioner seeks access to documents

1 In March 2011 agents of the Commissioner of Inland Revenue, acting pursuant to warrants issued under ss 16(4) (the access warrants) and 16C(2) (the warrants to remove and retain documents) of the Tax Administration Act 1994 (the Act), entered six premises in Auckland seeking access to documents relevant to the Commissioner's investigation into the tax affairs of the first and third appellants and associated entities. The appellants brought judicial review proceedings in the High Court challenging the issuing and execution of the warrants and seeking orders directing the Commissioner not to inspect the seized documents and to return them to the appellants. Venning J dismissed the application. 1 The appellants have appealed against that decision.

2 The appellants contend that Venning J made three errors. First, in finding that it was not unreasonable for the Commissioner to have invoked his powers under's 16 of the Act. Second, in finding that the over-emphasis of some aspects of the material and under-emphasis of others in the affidavit put forward to support the application for the warrants was not material and could not possibly have affected the District Court Judge's decision to issue the warrants. Third, in finding that the warrants were not invalid as being too widely drawn, general and lacking specificity.

3 The appeal also gives rise to an ancillary point. This involves the ability of this Court to consider the full unredacted version of the affidavit filed in support of the applications for the access warrants and the warrants to remove and retain documents.

Some further background

4 The first appellant, Mr Tauber, is an accountant. He controls a number of companies known collectively as the Honk entities. The third appellant, Mr Webb, is a shareholder and/or director of several of the Honk entities. The Commissioner commenced investigations into the tax affairs of Messrs Tauber and Webb in 2008.

Those investigations centered on income suppression, claiming deductions to which there was no entitlement and tax avoidance. In the course of that investigation the Commissioner encountered problems in obtaining information. He considered that requests to provide information pursuant to s 17 of the Act had not been fully complied with or were not complied with in a timely manner. In response to those difficulties, the Commissioner decided that the most timely and effective way to obtain the information would be to use s 16 of the Act

5 An application for warrants pursuant to ss 16(4) and 16C(2) of the Act, together with a supporting affidavit and an accompanying memorandum of counsel, was filed in the District Court in Auckland on 9 March 2011. On the following day Judge Field issued four warrants to enter private dwellings and eight warrants to remove and retain documents from places to be accessed under's 16.

6 A week later authorised officers acting on behalf of the Commissioner entered a number of sites in Auckland and removed a large volume of information considered to be necessary to the ongoing investigations. Six sites are relevant to this appeal. The first two were the private homes of Messrs Tauber and Webb. The third site was the registered address (as well as the home address) of the accountant for the Honk entities, Ms Bockett. These sites were entered pursuant to the access warrants issued under's 16(4). The fourth site was a boat shed located in Hobsonville. The fifth and sixth sites were business premises of the Honk entities. 2

7 The second appellant, Mrs Tauber, is the wife of Mr Tauber. Similarly the fourth appellant, Mrs Webb, is the wife of Mr Webb. Score Trustees Ltd (the sixth appellant) owns the boat shed, and Westpark Marina Ltd (the seventh appellant) operates the boat harbour at Hobsonville. Honk Berths Ltd (the eight appellant) is a company in Auckland. Honk Land Trustees Ltd (the ninth appellant) and Airport Trustees Ltd (the tenth appellant) are the trustees of Honk Land Trust and Honk Airport Trust respectively. Honk Land Trust and Honk Airport Trust are engaged in separate disputes with the Commissioner.

8 On 8 April 2011 the appellants filed applications for judicial review, interim relief, and discovery seeking disclosure of the material placed before the District Court in support of the access and removal warrants. Interim relief was granted by consent and a redacted version of the affidavit supporting the application for the warrants, together with the application itself, was voluntarily made available to the appellants. Following the hearing in the High Court, the appellants failed to make out any grounds for review. As noted, the judicial review application was dismissed.

The statutory scheme

9 The Act provides for a broad range of investigatory powers designed to counteract “taxpayer frailty” 3 and enable the Commissioner to seek out the information required to make an assessment of a taxpayer's liabilities. The fact that such powers are available even before any issue of fact arises between the Commissioner and the taxpayer distinguishes the Act from other similar legislation.

Alongside such powers, however, the Act provides for the protection of the public interest in privacy. Examples of such protection are found in the imposition of stringent secrecy obligations on the Commissioner and his officers, 4 the protection of privileged information 5 and the non-disclosure of tax advice. 6 Thus, viewed as a whole, the Act carefully seeks to balance the public interest in privacy against the public interest in the ascertaining of liability for tax.

10 This case concerns the provisions of the Act dealing with the Commissioner's powers to obtain information. Those provisions are found in Part 3 of the Act, which deals with information, record-keeping, and returns.

11 The Commissioner's powers to access premises to obtain information are provided for in s 16 of the Act. The Commissioner also has power, under's 16C, to remove documents from a place accessed under's 16 and to retain such documents for a full and complete inspection.

12 Section 16(1) sets out the Commissioner's general rights of access. It provides for the Commissioner (or an authorised officer) to have full and free access to all lands, buildings and places, and to all documents, for the purpose of inspecting any documents and any property, process, or matter which the Commissioner considers necessary or relevant for the purpose of collecting any tax or duty under any of the Inland Revenue Acts or for the purpose of carrying out any other function lawfully conferred on the Commissioner. This general power is limited by s 16(3), which provides that notwithstanding s 16(1), the Commissioner (or any authorised officer) shall not enter any private dwelling except with the consent of an occupier or pursuant to a warrant issued under's 16(4).

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