Supreme Court strikes out Trinity tax appeal

Friday 26th August 2016

The Supreme Court has dismissed the latest appeal in the long-running Trinity tax case after architect Garry Muir gave up his argument during the hearing.

Chief Justice Sian Elias and Justices William Young, Terrence Arnold, Mark O'Regan and Ellen France today dismissed Muir's application to amend the grounds of appeal and revoked his leave.

Muir's arguments were tossed out in the Court of Appeal in a December ruling, which said his attempts to re-litigate findings on the 1997 and 1998 tax years were "no more than another collateral attack" on the original Ben Nevis court judgment, "continuing what has become an extended pattern or course of conduct" while the claim for the 1999 and subsequent tax years were also an abuse of process and "would commit judicial resources for no purpose and bring the administration of justice into disrepute".

The Supreme Court upheld the decision on the 1997 and 1998 tax years, but did grant him leave to question whether the Court of Appeal was right in saying he couldn't pursue an argument that earlier rulings didn't block him from claiming deductions under accrual rules in financial arrangements provisions.

Today's judgment said Muir no longer wanted to pursue his argument, and wanted to raise another one that hadn't been raised earlier at any stage of the proceedings.

"In oral argument, the appellant accepted that, given the nature of the new argument foreshadowed by his amendment application, the leave to appeal granted by this court should be revoked, a concession which was correctly made," the judgment said. "The consequence is that the decision of the Court of Appeal will stand, and the appellant’s proceedings will remain struck out in their entirety."

The judges said they granted leave to appeal "because the issue raised by the appeal is an important one, namely the operation of the doctrines of issue estoppel and abuse of process in the context of tax proceedings", and didn't consider the Inland Revenue Department's application for costs on an indemnity basis was appropriate.

The bench ordered Muir to pay costs of $6,000 plus reasonable disbursements.

In 2013, the Supreme Court ordered companies associated with the Trinity scheme to pay $2.43 million in 15-year-old back-taxes and penalties . The debts arose from tax deductions claimed by the companies in the 1997 and 1998 tax years, which were then attributed to their shareholders.

The Inland Revenue Department reassessed the shareholders and imposed tax and penalties on them in relation to the 1998 tax year, leading to a series of landmark decisions that have gone on to see tax avoidance redefined by the New Zealand courts over the last decade.

In 2012, the Supreme Court turned down a claim the tax department fraudulently won its tax case in the Trinity scheme in a last-ditch bid to set aside the landmark 2004 ruling, which has been the benchmark for IRD’s successful run of tax avoidance cases. The tax department claimed the Trinity scheme would have cost taxpayers up to $3.7 billion over the 50-year lifespan of the investment.

BusinessDesk.co.nz

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