Tauber … Ors v The Commissioner of Inland Revenue Coa CA

JurisdictionNew Zealand
CourtCourt of Appeal
JudgeStevens J
Judgment Date07 September 2012
Neutral Citation[2012] NZCA 411
Date07 September 2012
Docket NumberCA564/2011

[2012] NZCA 411

IN THE COURT OF APPEAL OF NEW ZEALAND

Court

Stevens, Miller and Simon France JJ

CA564/2011

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
Counsel

M T Lennard for Appellants

P H Courtney and E J Norris for Respondent

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).

The issues were: whether the CA could consider the full unredacted version of the affidavit filed in support of the warrant applications; whether it had been reasonable for the Commissioner to have invoked s16 TA; and whether the warrants were too widely drawn and lacked specificity under s16(5)(b) TA.

Held: It had been proper for CA to have had access to and to have considered the full unredacted application for the warrants. The decision in Davis v Commissioner of Inland Revenue did not provide a decisive basis for declining to read the whole of the application. That case concerned an application pursuant to the inherent jurisdiction of the Court to obtain a copy of a search warrant application or have a Judge review its content to determine whether it disclosed a sufficient and appropriate basis for the issue of the warrant. But when the request for access to the application was made there was no bona fide challenge to the lawfulness of the warrant advanced. The application was more in the nature of a “fishing request”. That was not the case here.

A warrant issued under s16(4) was not a warrant to search premises for particular information or documents. Rather, it gave authority for access to enter a private dwelling. Once entry was made pursuant to the warrant, the authorised officer(s) then had under s16(1) “full and free access to all lands, buildings, and places, and to all documents … for the purpose of inspecting any documents. In other words, s16(4) did not alone provide a full code for access to a private dwelling and the information it might contain. It was a part of a broader statutory scheme to enable the Commissioner to obtain access to information, but with the added protection of the requirement of a warrant where the place was a private dwelling.

Section 21 NZBORA applied to the provisions of s16(4) TA and s16C TA and required the provisions to be read subject to an overall test of reasonableness. Section 16(4) had to be read as the Commissioner reasonably requiring physical access to a private dwelling. It could not be read as allowing the Commissioner to enter a dwelling where entry could “potentially” further the investigation in some way. Individuals were entitled to a high expectation of privacy in relation to residential property. Further, a warrant had to be in the form specified under Schedule 2 Tax Administration (Form of Warrant) Regulations 2003. Clause 2 of this form required the issuer to satisfied that there were reasonable grounds for the Commissioner requiring physical access.

Therefore a search would not be “required” for the purposes of s16(4) unless it could be shown to be reasonably required in the circumstances. Relevant factors for assessing an application under s16(4) included:

  • (a) the Commissioner's “tax interest”; i.e the nature of the investigation;

  • (b) what, if any, steps to obtain information had already been taken and with what results;

  • (c) why the Commissioner considered it is appropriate to use s16 powers;

  • (d) the proposed search locations;

  • (e) why relevant information was likely to be found in those locations;

  • (f) the nature of the information likely to be found;

  • (g) why other mechanisms were not suitable; and

  • (h) whether there as any element of urgency.

It was not correct that a search of a private dwelling would not be reasonable until the Commissioner could demonstrate that all other options available under the TA had been exhausted. Whether or not other options had been pursued was one of the factors to be taken into consideration by the judicial officer when making an assessment of whether the access warrant was reasonably required. There was no requirement for the Commissioner to exhaust all options.

Like the access warrant, every warrant issued under s16C(2) TA (issue of warrant for removal of documents) had to meet the requirements of s16(5) TA (Warrant being in form prescribed by Schedule 2 Tax Administration (Form of Warrant) Regulations 2003). Clause 2 of the warrant, like the access warrant equivalent, required that there be “reasonable grounds for believing” that the exercise of the Commissioner's inspection functions required the removal of documents from a place. The factors that were relevant to an application under s16(4) also applied here with but additional factors included:

  • (a) why the Commissioner considered removal and retention might be required; and

  • (b) what was it about the investigation and/or the documents sought that may require retention for a longer period than contemplated by s16B.

Such an approach achieved consistency between the two types of warrant, as well as being an interpretation that complied with s21 NZBORA. When the judicial officer was considering an application for a warrant under s16C(2), the level of satisfaction to be met was that in all the circumstances there were reasonable grounds for believing that the exercise by the Commissioner of his functions might require removing documents.

There was no dispute between the parties that when the Commissioner was applying for a warrant under either s16(4) or s16C(2), an obligation of candour and completeness applied to the content of the application. The appellants alleged that aspects of the information put before the DC Judge were erroneous and misleading to a material degree that rendered the warrants unreliable. This included that the application did not reveal that it was intended to search the whole of B's house and not just her home office.

The scope of any intended search did not need to be signalled. The submission to the contrary misunderstood the fact that the s16(4) warrant merely granted access to a private dwelling. The Commissioner's general access rights was spelled out in s16(1). Moreover documents and other information of the type sought could easily be stored in various parts of a private dwelling. This was illustrated by the fact that relevant information was found hidden in a ceiling cavity of B's residence. It was not the purpose of an application for an access warrant to deal with what might or might not occur once entry to the private dwelling was gained. That was governed by s16(1) and s16(2).

The appellants said that the Commissioner intended, once the warrants were issued, to search for and seize documents relating to these two cases which were already being litigated. There was evidence that the Commissioner had taken steps to separate documents relating to these cases. Evidence of the litigations’ existence had been given in an affidavit. There was no basis for the complaint of non-disclosure of the fact cases were before the TRA. None of the specific challenges arising from alleged errors or omissions could be sustained.

Section 16(5)(b) required that the warrants must specify “an authorised officer of the Department, whether by name or in general, who may act under the warrant”. Here the warrants referred to “every officer of the Inland Revenue Department authorised by the Commissioner of Inland Revenue under s16 Tax Administration Act 1994”. The appellants contended that this was too broad to meet the requirements of s16(5)(b). Section 16(5)(b) TA only required that the warrant issued specify a class of persons who may have physical access to a private dwelling under a warrant. A class comprising every officer authorised by the Commissioner met that test. The warrants had not been expressed too broadly.

In terms of specificity of the warrant, the statutory code, dealing with a civil tax-recovery scheme, was quite different to those dealing with applications for warrants under the Commerce Act 1986 and the Serious Fraud Office Act 1990. The wording of s16 TA and the statutory scheme was decisive. There was a material difference between the powers to access premises to obtain information under s16(1) and the quite different legislative provisions underlying search warrants in the cases relied on by T. An access warrant under s16(4) was of an entirely different kind from a search warrant under the criminal law and in legislation such as the Commerce Act and the Serious Fraud Office Act. The warrants in this case were not expressed too broadly.

The application by the Commissioner for the access warrants for the private dwellings of T and W and the related removal and retention warrants had been lawful and reasonable. The affidavit filed in support...

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