The Commissioner of Inland Revenue and Others v Chesterfields Preschools Ltd and Others

JurisdictionNew Zealand
CourtCourt of Appeal
JudgeStevens J
Judgment Date18 March 2013
Neutral Citation[2013] NZCA 53
Date18 March 2013
Docket NumberCA556/2012

[2013] NZCA 53



Randerson, Stevens and Wild JJ


The Commissioner of Inland Revenue & Ors
Chesterfields Preschools Limited & Ors

J C Pike and S M Kinsler for Appellants

D J Hampton appearing for himself (as Second Respondent) and by leave for the corporate and other Respondents

Appeal by Attorney-General from High Court decision which held the respondent could claim for misfeasance in public office against the Attorney-General, Inland Revenue Department officers and a solicitor who acted for the department — respondent represented by its director — whether appellants could be liable for the tort of misfeasance in public office on a corporate basis — whether a private legal practitioner acting in a solicitor/client relationship for a public office holder might thereby hold public office himself — whether application of Mannix rule (company to be represented in Court by a barrister unless there were exceptional circumstances) meant director should not be allowed to continue to represent the corporate respondents — consideration of s7 Tax Administration Act 1994 (TAA) (delegation of powers by Commissioner) and s6 Crown Proceedings Act 1950 (liability of the Crown in tort) — whether claims should be struck out for non-compliance with High Court Rules as were overwhelmingly prolix — whether all of the elements of misfeasance had to be alleged against one individual.

Held: Mannix held that it was well settled that a company had no right to be represented in the conduct of a case in Court except by a barrister, or by a solicitor where they had the right of audience unless there were exceptional circumstances. In NZ it was implicit rather than explicit in the HCR that a company must be represented by a solicitor at all stages of the proceeding subject to the discretion of the Court. There were sound policy reasons why a solicitor, rather than a lay person such as an officer of a company, should act for the company in commencing and continuing civil litigation. A solicitor was ethically constrained to represent the company's interests, unlike an individual officer who sought to represent it. Moreover, if a solicitor was involved, the Court could generally be satisfied that careful attention had been given to the validity of the proceedings, and that the company's interests would be adequately presented and protected. Similarly, solicitors recognised the duties and responsibilities that were owed to the Court and to the defendant in the conduct of litigation.

The Mannix rule could only be departed from only in exceptional circumstances. The future conduct of the case required the Mannix rule to be applied. There were no exceptional circumstances to support its application. It was a difficult and complex case. The legal and procedural rules required an experienced solicitor to be engaged by the corporate plaintiffs as well as H personally. In the interests of justice, the corporate and partnership plaintiffs were to be represented by a solicitor and/or counsel.

There were two forms of liability under the tort of misfeasance in public office: targeted malice and non-targeted malice. Under both forms, the act complained of had to be done by a public officer and in the exercise of that officer's public functions. Targeted malice required the public officer to have specifically intended to injure a person, which involved bad faith in the sense that the officer was exercising the public power for an improper or ulterior motive.

The claim against the Commissioner was of a corporate nature, attempting to attribute to the holder of that office all the knowledge and actions of the officers. It was not arguable that the knowledge and acts of officers acting under delegated powers could be attributed to the Commissioner. At common law the acts of a delegate were their own acts, not those of the delegator. Therefore, it could not be said that the knowledge and acts of officers acting under delegated authority were effectively the knowledge and acts of the Commissioner. Section 7 Tax Administration Act 1994 (TAA) (delegation of powers by Commissioner) did not indicate that Parliament had intended to alter that general principle.

The law of agency did not have any relevance to the liability of the Commissioner. Senior public servants were not in an agency relationship with their subordinates. Senior Crown servants were not vicariously liable for the wrongful acts of their subordinates. There was no relationship of principal and agent between senior Crown officials and their subordinates. Therefore, the taxpayers had to argue that the acts and knowledge of officers acting under delegated powers were actually the acts and knowledge of the Commissioner. The proper route for the taxpayers was to pursue the A-G based on vicarious liability or individual officers for direct liability. The claims against the Commissioner were struck out.

S had acted as a private legal practitioner for the IRD and acting on instructions in a solicitor/client relationship. He did not thereby hold public office ( Leerdam v Noori adopted). Neither had he exercised any statutory power with which he was clothed by virtue of any public office. S's conduct related to the discharge of his professional responsibilities as a lawyer. Any concerns by the taxpayer about S's conduct as a lawyer could be dealt with in another forum. They did not give rise to a claim for misfeasance in public office.

The statement of claim was overwhelmingly lengthy and verbose. The narrative of facts was not straightforward and it was difficult, if not impossible, to understand. The statement of claim failed to comply with the HCR's. One fundamental defect was that it failed to comply with r5.27(2) HCR (statement of claim to specify relief sought the statement of claim). It failed to plead all elements of the tort of misfeasance in public office against a particular officer and included irrelevant material. The failure to state the exact defendants with certainty made it impossible for the individual defendants to respond. The statement of claim in its present form was an abuse of process and warranted an order striking it out under the HCR. It was prejudicial to the defendants and likely to cause delay.

The fact that the essence of the tort involved actions conducted in bad faith raised the question whether there could be any form of aggregate liability. While it was possible under general principles of agency to aggregate the knowledge of multiple agents, the nature of the tort of misfeasance meant that the mental and physical elements of the tort ought to coalesce in one individual. The nature of the tort was such that the subjective mental element coloured the act or omission complained of. Only a particular person who had knowledge of, or was subjectively reckless as to, the loss the plaintiff would probably suffer should be guilty of misfeasance. Thus a claim of misfeasance could not be an aggregated one, where the state of mind of one or more persons was combined with the actions of another or others.

Section 6(1) Crown Proceedings Act 1950 (liability of the Crown in tort) prevented the Crown from being held directly liable. However Couch v Attorney-General left open the possibility of a finding of institutional liability where the alleged wrongdoing contained an element of subjective recklessness.

Despite the many shortcomings of the statement of claim it should not be struck out in its entirety. It was unclear whether a claim against individual officers for the tort of misfeasance was able to be properly pleaded. With respect to a claim against the A-G for possible institutional liability, it was unclear whether evidence might exist to support a claim of that nature sufficient to survive a strike out application. The statement of claim, however, required substantial amendment, including removing the claims against the Commissioner and S. If, following legal advice, the respondents were able to allege that all the elements of the tort of misfeasance coalesced in individual officers, then the pleadings should clearly say so. It was appropriate to order a stay of the proceedings against the IRD officers and A-G pending compliance by the taxpayer parties with directions issued.

The appeal was allowed in part. The claims against the Commissioner and S were struck out. The proceeding against the A-G and the IRD officers were stayed as above.


A The appeal is allowed in part.

B The claims against the Commissioner of Inland Revenue and Philip John Shamy are struck out.

C The proceeding against the Attorney-General and the remaining 20 named officers of the Department of Inland Revenue (remaining defendants) is stayed on terms described in D below.

D The proceeding against the Attorney-General and the remaining defendants may only proceed with the leave of a High Court Judge. Such leave shall not be granted except upon application by the respondents for leave and subject to compliance with the directions set out in [119] below.

E The respondent must pay the appellants one set of costs for a complex appeal on a band A basis and usual disbursements. We certify for two counsel.


(Given by Stevens J)

Table of Contents

Para No

A strike out application


Issues on appeal


Factual background


The second amended statement of claim


Decision under appeal


Issue 1: representation by Mr Hampton


The law


Application of law to this case


Issue 2: Should the claims against the Commissioner be struck out?


Policy considerations


Elements of the tort of misfeasance in public office


Liability of the Commissioner


The pleading in context: the...

To continue reading

Request your trial
148 cases
  • Currie v Clayton
    • New Zealand
    • Court of Appeal
    • 5 November 2014
    ...above n 22, at [99]–[111]. 28 We have drawn these elements from this Court's judgments in Commissioner of Inland Revenue v Chesterfields [2013] NZCA 53, [2013] 2 NZLR 679 at [40]–[44]; Minister of Fisheries v Pranfield Holdings Ltd [2008] NZCA 216, [2008] 3 NZLR 649 at [104]–[108]; Hartnell......
  • Craig v Stringer
    • New Zealand
    • High Court
    • 17 June 2019
    ...on the Law of Defamation (December 1977) at ch 14. 19 At [320]. 20 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2013] NZCA 53, [2013] 2 NZLR 679 at [89] (citations 21 Goldsmith v Sperrings [1977] 2 All ER 566 (EWCA) at 582. 22 Williams v Spautz (1992) 174 CLR 509 (HCA) a......
  • Siemer and Others v Spartan News Ltd and Others
    • New Zealand
    • High Court
    • 11 December 2014
    ...v Registrar of the District Court [1986] 2 NZLR 246 (CA) at 255. 41 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2013] NZCA 53 , [2013] 2 NZLR 679 at 42 Baigent's Case, above n 37, at 695 per Hardie Boys J and at 674 per Cooke P. 43 Attorney-General v Chapman [2011] NZSC ......
  • David Cullen Bain v Minister of Justice
    • New Zealand
    • High Court
    • 21 August 2013
    ...A Joseph on behalf of Mr Bain, who was to appear but proved unable to. 53 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2013] NZCA 53 at 54 Bushell v Secretary of State for the Environment [1980] 2 All ER 608 . 55 At 613. 56 Air Nelson v Minister of Transport [2008] NZC......
  • Request a trial to view additional results
1 firm's commentaries
  • Is self-representation in court a good idea?
    • New Zealand
    • Mondaq New Zealand
    • 8 June 2017
    ...5 Ibid 6 Ibid 7 High Court Rules 2016, Rule 15.1 8 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2013] NZCA 53 at [90], [95] 9L v W [2003] NZFLR 961 10 Spiller, "Butterworth's New Zealand Law Dictionary" (7th ed, 2011) at 124 11 Senior Courts Act 2016, s The content of this......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT