IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2015-419-000345
CIV-2015-419-000346 [2016] NZHC 1313

BETWEEN	SOVEREIGN BOOKS LIMITED AND
CREATION PRODUCTIONS LTD Applicants	

AND	
COMMISSIONER OF INLAND REVENUE
Respondent	

Hearing:	8 June 2016	

Counsel:	
PR Young for Applicants
P Ieong and J Mara for Respondent	

Judgment:	
16 June 2016	

JUDGMENT OF ASHER J

This judgment was delivered by me on 16 June 2016 at 4 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:
Crown Law, Wellington.

Copy to:
Progressive Accountants Ltd, Hamilton.

SOVEREIGN BOOKS LIMITED AND CREATION PRODUCTIONS LTD v COMMISSIONER OF INLAND REVENUE [2016] NZHC 1313 [16 June 2016]

Introduction

[1]       The applicants, Sovereign Books Ltd and Creation Productions Ltd, have brought proceedings called “Leave to make application of a statutory review of Taxation Review Authority and to join Crown Law as third party and to make a statement of claim against IRD Crown Law in High Court”, and also for leave to appeal the decisions made by the Authority.   They effectively seek to challenge a decision  of  Judge P F Barber  striking  out  the  applicants’  challenge  before  the
Authority.1

[2]       Two preliminary issues arise.   Mr Philip Young is a director of the two applicants.  He is not a barrister or solicitor of the High Court of New Zealand.  He seeks leave to represent the applicants in the High Court.   He also seeks name suppression for the applicants.  Both applications are opposed by the respondent, the Commissioner of Inland Revenue.

Mr Young’s application for leave to appear

[3]       Mr Young submits that he should be granted leave to appear for the two applicants.  Section 57(2) of the District Courts Act 1947 provides that a corporation may appear by an officer, attorney or agent of the corporation.2    There is no equivalent provision in the Judicature Act 1908 or High Court Rules.

[4]       It  is  well  settled  in  New  Zealand  that  a  company  has  no  right  to  be represented in the conduct of a case in the High Court except by a barrister or solicitor.   The leading case standing for this proposition is Re G J Mannix Ltd. Having referred  to  the fact  that  counsel  should  appear for companies,  Cooke J observed:3

There is a cognate rule that, apart from statutory exceptions, a corporation has no right to bring or carry on proceedings in a Court except by a solicitor.

1	Sovereign Books Ltd & Creation Productions Ltd v Commissioner of Inland Revenue [2015] NZTRA 14
2	District Courts Act 1947, s 57(2).
3	Re G J Mannix Ltd [1984] 1 NZLR 309 (CA) at 311.

[5]       This principle has been affirmed by the Court of Appeal in a number of recent decisions.4   However, the Court has the discretion to allow non-lawyers to appear on behalf of companies where appropriate. As Cooke J stated in Re G J Mannix Ltd:5

In general, and without attempting to work out hard-and-fast rules, discretionary audience should be regarded, in my opinion, as a reserve or occasional  expedient,  for  use  primarily  in  emergency  situations  when counsel is not available or in straightforward matters where the assistance of counsel is not needed by the Court or where it would be unduly technical or burdensome to insist on counsel.   Especially in minor matters, cost-saving could also be a relevant factor.  A “one-man” company might be allowed to be represented by its owner if the Judge saw fit in a particular case.  But it could not be right, for instance, to issue some sort of tacit continuing or general licence to an unqualified agent to appear in winding up or any other class of proceedings.

[6]       The exception is thus primarily to be used in emergencies when counsel is not available, or in straightforward matters where the assistance of counsel is not needed by the Court, or it would be unduly technical or burdensome to insist on counsel.

[7]       Mr Young in his primary submissions did not appear to argue he falls within the exception.  His submission asserts that Re Mannix does not sensibly apply in the modern world, particularly to a situation such as the applicants, where they just want to have their day in court.  He said that the reliance on Re Mannix was a strategy by the Commissioner to get rid of him as the party representing the applicants, and also in part a strategy by the Taxation Review Authority to the same end.  He stated that companies are much more commonplace than they were in the day of Re Mannix and that the same person is often a director and shareholder.  Given that individuals have a right to represent themselves, so should companies through a director.  Forcing a company to appoint a lawyer could cause unnecessary hardship, given the very significant fees that would be involved.   It is particularly unfair to require such representation when this was only an appeal from a strike out in the Taxation Review
Authority, rather than a substantive hearing.

4	New Zealand Cards Ltd v Ramsay [2012] NZCA 285 and Dreamtech Designs & Productions Pty
Ltd v Clownfish Entertainment Ltd [2015] NZCA 491 at [7].
5	Re G J Mannix Ltd, above n 3, at 314.

[8]       Finally he asserted that the applicants:

…  refuse  to  be  told  how  or  who  will  conduct  their  case  in  the  TRA, especially when they regard any lawyer a liability and because their tax agent has a full understanding of the case and has been excellent to date.

That tax agent is Mr Young.

[9]       I am bound  by Re Mannix and the cases that  have followed it.    In  my respectful view there is a good reason for the rule in Re Mannix. A company is not a natural person.  It has shareholders, officers and directors who have individual duties and interests.  Incorporation of a company gives great benefits to the shareholders. In particular, while they may profit from the actions of the company, they are not personally liable for those actions.  This arises because of the different nature of a company to  that  of  a  person.    However,  it  follows  from  the  separateness  of  a company from those who own its shares and run it, that there will always be a concern if a director acts for a company in court that it is the director’s perspective that is presented and not that of the company.  The Court should not have to make an inquiry to see whether indeed the person representing the company does have the support of all relevant parties.

[10]     Because  of  the  particular  nature  of  a  company,  it  is  important  that  a professional person who is ethically constrained to represent the company’s interests represents it.  An individual officer will not have that objectivity.   The Court can never be sure if an officer appears that there has been the appropriate attention given to the authority to issue the proceedings, and that the company’s interests are adequately presented and protected.   There is  a particular need for independent representation.   Further, as was pointed out in Commissioner of Inland Revenue v Chesterfield Preschools Ltd the Court must also have a solicitor on the record as it
cannot exercise its disciplinary powers over a company.6

[11]     The problem of a director acting is demonstrated in this case.   Its history shows  a  lack  of  objectivity  and  competence  in  the  conduct  of  proceedings  by
Mr Young.   If there is a case that demonstrates the wisdom of the rule requiring

6	Commissioner of Inland Revenue v Chesterfield Preschools Ltd [2013] NZCA 53, [2013] 2
NZLR 679 at [34].

companies to be represented by counsel, this is a good example.  The many meritless applications and failures to comply with Court orders were summarised by Ms Ieong in her submissions:

6.1	failure to comply with the discovery orders of 11 September 2012;

6.2       unsuccessful application to stay or strike out their own proceedings on 10 May 2013;

6.3       appeal to the High Court against the TRA’s refusal to stay or strike out  the  applicants’ proceedings,  despite  there  being  no  right  of appeal, on 15 May 2014;

6.4	withdrawal of the High Court appeal on 20 October 2014;

6.5       request for a recusal of Judge Sinclair on 19 February 2015 (this was granted on 20 February 2015, though the Judge did not consider the grounds for recusal were made out, to avoid further delay);

6.6	applications/requests   for   adjournment   on   21   February   2013,
15 November  2013,  23  January  2015,  12  March  2015,  13 April
2015, 1 May 2015, 7 May 2015;

6.7	unsuccessful applications for recusal of Judge Barber on 13 April
2015/1 May 2015, 7 May 2015 and 8 September 2015;

6.8	failure to provide briefs of evidence on 30 April 2015;

6.9	failure to comply with the TRA’s unless orders of 18 May 2015; and

6.10     failure  to  comply  with  the  TRA’s  “proviso”,  which  gave  the applicants a further chance to appoint counsel and file and serve briefs of evidence and opening submissions by 27 August 2015.

[12]     On my analysis of the documents, this summary is correct.  These examples show that if there was any merit in the applicants’ case, that merit has not been competently and objectively advanced.

[13]     It  is  my  reading  of  the  minutes  and  decisions  of  the  Taxation  Review Authority that every opportunity was given to the applicants to comply with standard timetable directions.  In particular, I note that Judge Barber in his 27 July 2015 ruling on the application for strike out, after setting out the history of the proceedings including seven adjournment requests, and two applications for recusal, and failures to comply with unless orders, gave the applicants yet a further chance to appoint

counsel and attend to the various timetable matters within a month.7    It was only after that month had expired that in a ruling on 16 September 2015, Judge Barber finally struck out the applicants challenge.8

[14]     I  do  not  find  that  there  are  any  exceptional  circumstances  warranting  a departure from the rule that non-lawyer shareholders cannot appear for the company. The proceeding is not urgent.   It is certainly not straightforward.   The procedural tangles, on my assessment, are the fault of the applicants and Mr Young.

[15]     For these reasons I decline Mr Young’s request that he be able to represent

the applicants.

Suppression

[16]     The applicants seek suppression of their names.   I allowed Mr Young to present argument on this matter. There was no objection from the Commissioner.

[17]     He submitted that it would be unfair for there to be publicity.  His primary consideration appeared to be unfairness to himself.   He stated that he was an accountant and should not be subjected to the burden of publicity in challenging proceedings that he claimed had proceeded in a grossly unfair manner.

[18]     There is no specific provision in the High Court Rules relating to suppression of name or anonymisation of parties.  The principle of open justice works for publication.  The starting position is that the public of New Zealand are entitled to know what matters are proceeding in their courts.   There is a legitimate public interest in the public knowing who is litigating and in general terms what the case is about.  That position is to be distinguished from knowledge of the details of the case, where the access to court documents rules do provide for more limited access prior
to and after a court hearing.9    There is no such restriction on the publication of the

parties’ names.

7	Sovereign Books Ltd & Creation Productions Ltd v Commissioner of Inland Revenue [2015] NZTRA 11 at [1]–[6].
8	Sovereign Books Ltd & Creation Productions Ltd v Commissioner of Inland Revenue [2015] NZTRA 14.
9	High Court Rules, Part 3, subpart 2, rr 3.5–3.16.

[19]     In Clark v Attorney-General (No 1), and Brown v Attorney-General, it was stated that exceptional or extraordinary circumstances compelling the displacement of the principle are required before suppression orders, including for anonymisation, are granted.10    In JX MX v Dartford & Gravesham NHS Trust, the English Court of Appeal said:11

[17]  The identities of the parties are an integral part of civil proceedings and the principle of open justice requires that they be available to anyone who may wish to attend the proceedings or who wishes to provide or receive a report of them.  Inevitably, therefore, any order which prevents or restricts publication of a party’s name or other information which may enable him to be identified involves a derogation from the principle of open justice and the right to freedom of expression.   Whenever the court is asked to make an order of that kind, therefore, it is necessary to consider carefully whether a derogation of any kind is strictly necessary, and if so what is the minimum required for that purpose.

[20]   The requirement to establish exceptional circumstances before there is anonymisation may be questioned in light of the recent Court of Appeal judgment in Jay v Jay,12 where it was stated that exceptional circumstances were not required, but did not refer to Clark or Brown.13     It was stated in Clark that the basis for the exceptional circumstances test was that “the principles of open justice and the related freedom of expression create a presumption in favour of disclosure of all aspects of court proceedings …”,14 and “the right to freedom of expression is better served by placing as few restrictions as possible on it …”.15

[21]     It is clear that a high standard for displacing the presumption in civil claims is envisaged as appropriate.  This has been the approach of High Court Judges in recent

10	Clark v Attorney-General (No 1) [2005] NZAR 481 (CA); Brown v Attorney-General [2006] NZAR 450 (CA).
11	JX MX v Dartford & Gravesham NHS Trust [2015] EWCA Civ 96, [2015] WLR 3647, cited with approval in Fisk v Name Suppressed [2015] NZHC 827 at [12].
12	Jay v Jay [2014] NZCA 445, [2015] NZAR 861 at [118].
13	Clark v Attorney-General, above n 10, and Brown v Attorney-General, above n 10.   See the discussion in Musuku v Commissioner of Inland Revenue [2015] NZHC 1584, (2015) 27 NZTC
22-015 and Y v Attorney-General [2015] NZHC 844 on the Jay v Jay approach.
14	Clark v Attorney-General, above n 10, at [42].
15	At [43].

decisions.16     Last year in McIntosh v Fisk the Court of Appeal did not refer to exceptional circumstances, but emphasised the principle of open justice and stated that a party seeking name suppression must show the interests of justice displace the presumption favouring publication:17

The threshold is high because any suppression order necessarily derogates
from the principle of open justice and the right to freedom of expression”.

[22]     Whether  it  is  worded  as  exceptional  circumstances  or  a  high  threshold, Mr Young has to show why there should be a departure from what Chambers J described in Brown v Attorney-General as “the starting point” of open justice principles.18

[23]     Mr Young has not pointed to any particular factor warranting displacing the presumption by a suppression order in this case.  His general objection to the adverse affects of publicity as an interference with his privacy is not enough.  His suggestion that it could cause embarrassment is also not enough.  He has not put forward any grounds to displace the principle of open justice.   Indeed, he has not shown any adverse consequences that might flow from publication.

[24]     Tax  cases  are  not  in  a  special  category  requiring  a  departure  from  the ordinary principles.19   As Venning J noted in C v Commissioner of Inland Revenue there can be a legitimate public interest in arguments involving tax matters “… both in relation to the details of the arrangement, its creators and those who choose to continue to support their investment in it”.20

[25]     Thus, no case is made out for suppression and I decline to make the orders sought.

16	Y v Attorney-General, above n 13.  See also the earlier cases of Cross v Attorney-General HC Wellington CIV-2006-485-1173, 7 November 2006; Peters v Birnie HC Auckland CIV-2009-
404-8119, 19 March 2010; P v Attorney-General HC Wellington CIV-2006-485-874, 22 July
2010 at [2]; and Y v Z [2015] NZHC 844 at [35].  See also H v S [2016] NZHC 433, [2016] NZAR 405.  I note also the discussion of these cases in Andrew Beck “Privacy Rights in the Courts” [2016] NZLJ 179 at 182 – 183.
17	McIntosh v Fisk [2015] NZCA 247, [2015] NZAR 1189 at [1].
18	Brown v Attorney-General, above n 10, at [14].
19	Muir v Commissioner of Inland Revenue (2004) 21 NZTC 18,894, (2004) 17 PRNZ 365 (CA) at
[43].
20	C v Commissioner of Inland Revenue (2004) 21 NZTC 18,887 (HC) at [15].

Result

[26]	The  application  to  give  Mr Young  leave  to  appear  for  the  applicants  is declined.

[27]	The application to suppress the names of the parties is declined.

Costs

[28]	The Commissioner of Inland Revenue seeks costs on a 2B basis.	Costs should follow the event.

[29]	The applicants are to pay costs on a 2B basis to the Commissioner of Inland

Revenue.

……………………………..

Asher J