IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE	
CIV-2020-404-1715
[2021] NZHC 272	

IN THE MATTER OF	An appeal under Part 20 of the High Court Rules 2016	
BETWEEN	JOHN ALFRED DOWDEN
Appellant	
AND	COMMISSIONER OF INLAND REVENUE
Respondent	

Hearing:	3 February 2021	
Appearances:	The Appellant in person
K I S Naik-Leong and J B P Miranda for the Respondent	
Judgment:	24 February 2021	

JUDGMENT OF HINTON J

This judgment was delivered by me on 24 February 2021 at 4:00 pm pursuant to Rule 11.5 of the High Court Rules

…………………………………………………………………… Registrar/Deputy Registrar

Solicitors/Counsel:
Crown Law, Wellington

Party:
The Appellant

DOWDEN v COMMISSIONER OF INLAND REVENUE [2021] NZHC 272 [24 February 2021]

[1]	This is an application for leave to extend time for Mr Dowden to appeal a decision of Judge Harrison dated 15 July 2020 in the District Court at North Shore in which the Judge dismissed Mr Dowden’s application to set aside judgment by default entered earlier in favour of the Commissioner of Inland Revenue.1 The judgment by default was for a total sum of $244,380.21.

[2]	Any appeal to this Court of Judge Harrison’s refusal to set aside, was required to be filed by 12 August 2020. 2 Mr Dowden did not file his appeal until 18 September 2020. On the advice of the registry, he then filed this leave application.

[3]	I note at the outset Mr Dowden’s health issues, exacerbated by the death of his son in May 2020, which have impacted on his ability to bring an appeal in time. I accept, as did the Court of Appeal in related proceedings which I refer to further shortly, that those issues may have at least partly caused the delay.3 The important point on this leave application is that even if the delay can be excused, a court will generally not grant leave where an appeal is hopeless, for example where the claim is untenable or where the court lacks jurisdiction.4

Background

This proceeding

[4]	On 26 July 2017, the Taxation Review Authority (the Authority), with the consent of the Inland Revenue and Mr Dowden, confirmed the Commissioner's assessments in respect of certain GST, PAYE and income tax periods. These assessments totalled $173,908.45 (the agreed outstanding amount).5 Mr Dowden was represented by Mr Bhanabhai at the July 2017 hearing before the Authority and (not surprisingly) did not appeal that decision.

[5]	To enforce payment of the agreed outstanding amount, in April 2018 the Commissioner filed proceedings in the District Court seeking judgment for that

1	Commissioner of Inland Revenue v Dowden [2020] NZDC 13548.
2	High Court Rules 2016, r 20.4(2)(b).
3	Dowden v Commissioner of Inland Revenue [2020] NZCA 630, at [6] [Court of Appeal decision].
4	Almond v Read [2017] NZSC 80, [2017] 1 NZLR 801, at 802.
5	Disputant v Commissioner of Inland Revenue [2017] NZTRA 05 [2017 Authority decision].

amount plus penalties and interest which followed according to law.6 Mr Dowden filed a statement of defence. In the course of the proceeding the Commissioner elected not to pursue the income tax portion of the agreed outstanding amount and sought judgment in the sum of $244,380.21 against Mr Dowden being for:

(a)	the GST ($129,742.92) and PAYE ($29,055.46) portions of the agreed outstanding amount that had been confirmed by the Authority by consent in the July 2017 decision (i.e about $14,000 less than the total agreed outstanding amount);

(b)	self-assessed GST of $3,058.26 which Mr Dowden did not challenge within the relevant statutory timeframes; and

(c)	penalties and interest applicable to the GST and PAYE conceded amounts ($82,523.57).

[6]	In Mr Dowden’s absence, on 16 April 2019, Judge Harrison struck out his statement of defence and entered judgment by default for the sum of $244,380.21, plus costs and disbursements of $1,399.25. He did so because he said that Mr Dowden had no defence because of the application of s 109 of the Tax Administration Act 1994 (the Act).7

[7]	On 1 May 2019, Mr Dowden applied under r 15.10 of the District Court Rules 2014 to set aside the default judgment.

[8]	As noted at the outset, on 15 July 2020 Judge Harrison declined to set aside the default judgment.

[9]	On 12 August 2020, the 20 working day period to file an appeal against the 15 July 2020 judgment expired. As noted earlier Mr Dowden did not file that appeal until 18 September 2020.

6	Tax Administration Act 1994, s 156.
7	Above n 1, at [12].

[10]	On 21 September 2020, Mr Dowden filed this application for leave, without supporting affidavit evidence, on the same grounds as in the notice of appeal.

Related proceeding

[11]	Alongside the proceeding over the agreed outstanding sum, at a hearing in July 2018 the Authority heard Mr Dowden's challenge to other PAYE, GST and income tax assessments and on  30  August  2018,  the  Authority  dismissed  that  challenge.8  Mr Bhanabhai  again  appeared  for  Mr Dowden  in  the  July  2018  hearing  and  Mr Dowden gave evidence and was cross-examined.

[12]	Mr Dowden filed an appeal against the August 2018 decision of the Authority in the High Court.

[13]	On 24 October 2019, the High Court dismissed Mr Dowden 's appeal of the July 2018 Authority decision (i.e. regarding the disputed tax).9 On 29 November 2019, Mr Dowden filed a notice of appeal in the Court of Appeal in respect of that decision. The time for appealing had expired but the Deputy Registrar extended the time. On 14 July 2020, after receiving several extensions and not having applied for a hearing date or filed the case on appeal, Mr Dowden’s appeal to the Court of Appeal was deemed abandoned.10

[14]	On 8 December 2020, the Court of Appeal dismissed Mr Dowden’s application for an extension of time for allocation of a hearing date and to file the case on appeal.11

Legal Principles

[15]	Under r 20.4(2)(b) of the High Court Rules 2016 (HCR), Mr Dowden was required to bring an appeal from the  15 July 2020 District Court judgment within  20 working days after that judgment was issued.12

8	Disputant v Commission of Inland Revenue [2018] NZTRA 07.
9	Dowden v Commissioner of Inland Revenue [2019] NZHC 2729.
10	Court of Appeal decision, above n 3, at [5] where the Court of Appeal notes the appeal was deemed abandoned when no further steps were taken by Mr Dowden.
11	Court of Appeal decision, above n 3.
12	Namely, filing of a notice of appeal in the High Court and service on the respondent within 20 working days pursuant to r 20.6 of the High Court Rules 2016.

[16]	An intending  appellant  that  fails  to  bring  an  appeal  in  time  pursuant  to r 20.4(2)(b) of the HCR, may apply to this Court for special leave to extend time under r 20.4(3) and (4).

[17]	The overarching consideration in determining whether to extend time for bringing an appeal is “whether granting an extension would meet the overall interests of justice”.13 Factors that may influence that determination include the length of and reasons for the delay, the parties' conduct, any prejudice caused by the delay, the prospective merits of the appeal and whether the appeal raises any issue of public importance.14

[18]	A decision to refuse an extension of time can be based substantially on a lack of merit where the proposed appeal is clearly hopeless and the lack of merit is readily apparent.15

Decision

Debt not disputable in this proceeding

[19]	First, I have already said that I proceed on the basis that the delay here may be partly or wholly excusable and so I would not decline Mr Dowden leave on that basis. He receives the benefit of the doubt in that regard.

[20]	However, I agree with the Commissioner that the proposed appeal is without merit,  in  particular  because  the  debt  underlying  the  default   judgment  which Mr Dowden sought to set aside in the District Court cannot now be disputed, or at least not in the Courts.

[21]	Section 156 of the Act empowers the Commissioner to recover unpaid tax, such as the agreed outstanding amount, in the District Court. The Commissioner is also

13 My Noodle Ltd v Queenstown Lakes Council [2009] NZCA 224, (2009) 19 PRNZ 518, at [19] (citing Havanaco Ltd v Stewart CA67 /05, (2005) 17 PRNZ 622).
14 My Noodle Ltd, above n 13, at [19] (citing New Plymouth District Council v Waitara Leaseholders Association Incorporate [2007] NZCA 80 at [22]) and [22] (citing Ngati Tahinga & Ngati Karewa Trust v Attorney-General CA73/02, 27 June 2002). Also summarised in Almond v Read [2017], above n 4, at [38].
15 Almond v Read, above n 4, at [39].

empowered to recover interest and civil penalties.16 However, the Commissioner's assessments underlying the agreed outstanding amount can only be challenged under Parts 4A and 8A of the Act.

[22]	Mr Dowden did appropriately challenge the assessments but the Authority confirmed these assessments in its July 2017 decision.17

[23]	Mr Dowden did not appeal the 2017 decision of the Authority determining his liability to the agreed outstanding amount, which includes the GST and PAYE conceded amounts. He also did not challenge the self-assessed GST sum of $3,058.26 within the statutory timeframes.

[24]	Section 109 of the Act therefore applies to the assessments underlying the agreed outstanding amount.18 It provides:

Except in ... a challenge under Part 8A,-

(a)	no disputable decision may be disputed in a court or in any proceedings on any ground whatsoever; and

(b)	every disputable decision and, where relevant, all of its particulars are deemed to be, and are to be taken as being, correct in all respects.

[25]	The effect of the application of s 109 (as recognised in Judge Harrison’s July 2020 judgment)19 is that the assessments confirmed by the Authority in the July 2017 decision of the Authority (which was not appealed) cannot be challenged in this proceeding.20 Mr Dowden's self-assessed GST of $3,058.26 cannot be challenged. Further, he is not able to challenge interest,21 or the civil penalties imposed for the late provision of a tax return,22 or the late payment of tax that form part of the default judgment.

16	Tax Administration Act 1994, ss 120D and 156A.
17	2017 Authority decision, above n 5, at [4].
18	An assessment is a “disputable decision” under s 3 of the Tax Administration Act 1994.
19	Above n 1, at [20] and [22].
20	See Tannadyce Investments Ltd v Commissioner of Inland Revenue [2011] NZSC 158, (2012) 2 NZLR 153, at [53] and [55] regarding the application of s 109 of the Tax Administration Act 1994.
21	Tax Administration Act 1994, s 120I.
22	Tax Administration Act 1994, s 138L.

[26]	Therefore, the entirety of the amount of the judgment of $244,380.2128 is unable to be disputed in the Courts by virtue of s 109 of the Act. That was the basis of Judge Harrison’s decision when he entered judgment by default.23 That same conclusion would have been reached by Judge Harrison whether Mr Dowden did or did not have notice of the 16 April 2019 hearing before the Judge or have legal representation.

Proposed appeal otherwise lacks merit

[27]	The above point would be determinative of Mr Dowden’s appeal, but for other reasons his appeal clearly lacks merit.

[28]	Mr Dowden says he has a “counterclaim” which he says is “a huge part of this case”. The "counterclaim" is that his former partner, Maureen Jackson, is responsible for the tax that the Commissioner assessed to him including the agreed outstanding amount confirmed by the Authority in its July 2017 decision. He says that by entering judgment he has been denied this opportunity.

[29]	For the same reason recorded above, namely the effect of s 109, this counterclaim cannot be raised on an appeal of Judge Harrison’s July 2020 judgment. The 2017 decision of the Authority recorded that the agreed amount was “... agreed between the parties as no longer being in dispute”.24 If Mr Dowden wished to subsequently contest that, he needed to appeal the 2017 Authority decision. He did not.

[30]	It is also incorrect for Mr Dowden to say there has been a miscarriage of justice (or similar) because he has not had the opportunity to argue before the Authority his point regarding his partner’s liability. He argued that very point in connection with the disputed tax proceeding and the Authority found him not credible in its August 2018 decision. Both the High Court and the Court of Appeal also considered the merits of this argument in respectively dismissing an appeal against the August 2018 decision of the Authority and in declining leave to extend time.

23	Above n 1, at [20]-[21].
24	2017 Authority decision, above n 5, at [4].

[31]	The Court of Appeal recorded that the liability related to business activities, particularly a security business that traded as Safeguard Security. The Court observed, among other things, that Mr Dowden “maintained he had transferred his interest in the business to his former partner, Ms Jackson, or her company, Hibiscus Security Ltd, in 2003” and “... maintained that Ms Jackson was liable for the tax that was the subject of the challenged assessment”.25 The Court also noted that having heard Mr Dowden give evidence and be cross-examined, the Authority did not find him reliable or credible and considered his explanations of the operation of the Safeguard business implausible.26 The Authority considered that contemporaneous evidence showed that Mr Dowden had continued to trade as Safeguard after January 2004. The Court considered there was no apparent error in the decision of Peters J dismissing Mr Dowden’s appeal, given the Authority's credibility findings and reliance on contemporaneous documents.27 While recognising it is usual to allow some latitude to an unrepresented litigant, the Court held that the “obvious lack of any merit in this appeal [of the High Court decision] means that the exercise of the discretion to extend time is not justified”.28

[32]	Clearly therefore the arguments supporting the “counterclaim” proposed by Mr Dowden have already been raised in the Authority and also in the appeal to the High Court in  the  proceeding  over  the  disputed  tax,  and  they  were  rejected.  Mr Dowden therefore has had more than one opportunity, despite the default judgment being granted in his absence, to argue the merits of the correctness of his argument against the tax liability in the Commissioner's assessments confirmed by the 2017 July decision of the Authority.

[33]	The other grounds listed in the notice of appeal and leave application do not disclose any new or novel argument and are materially similar to grounds already raised before the District Court as to why the judgment by default should be set aside, not why the Judgment refusing to set it aside is wrong. As the Commissioner says, the intended appeal appears to be an attempt to re-argue Mr Dowden’s application to set aside the judgment by default whereas Mr Dowden can only appeal the refusal to set

25	Court of Appeal decision, above n 3, at [7].
26	At [8].
27	At [9].
28	At [10].

that judgment aside. That cannot be overturned unless in refusing to set aside, Judge Harrison overlooked relevant matters or took into account irrelevant matters. Ultimately, the conclusion is a matter for the fact-finding court, unless it is clearly insupportable.29

[34]	I agree with the Commissioner that the conclusion of the District Court Judge in refusing to set-aside the default judgment was clearly supportable.

Conclusion

[35]	For the above reasons and in particular because I consider the debt is not disputable in the Courts and the proposed appeal is hopeless, the leave application is dismissed.

[36]	If the Commissioner is seeking costs a memorandum is to be filed within two weeks and Mr Dowden is to file any reply within two further weeks.

Hinton J

29	Bryson v Three Foot Six Ltd [2005] NZSC 34, [2005] 3 NZLR 721, at [25].