[Scoop copy of judgment: SC_8_2012__CIR_v_Redcliffe__Ors.pdf]
Supreme Court of New Zealand
9 November 2012
MEDIA RELEASE – FOR IMMEDIATE PUBLICATION
COMMISSIONER OF INLAND REVENUE v REDCLIFFE FORESTRY VENTURE LTD
(SC 8/2012) [2012] NZSC 94
PRESS SUMMARY
This summary is provided to assist in the understanding of the Court’s judgment. It does not comprise part of the
reasons for that judgment. The full judgment with reasons is the only authoritative document. The full text of the
judgment and reasons can be found at www.courtsofnz.govt.nz.
On 15 September 2009, Redcliffe Forestry Venture Ltd and others applied to the High Court to set aside a High Court
judgment, which had concluded that the Trinity scheme that they were involved in was a tax avoidance arrangement. The
judgment had eventually been upheld on appeal by the Supreme Court. Redcliffe alleged that the Commissioner had
knowingly and wrongly applied a depreciation allowance to expenditure incurred by the Trinity investors under certain
provisions of the Income Tax Act 2004, when others should have been used. Redcliffe asserted that this was fraud, which
is an exception to the principle that court judgments are final and conclusive as to what they decide, so that the
Commissioner was not able to rely on the Supreme Court’s judgment. The Commissioner responded to the 2009 proceeding by
filing an objection to the jurisdiction of the High Court under r 5.49 of the High Court Rules and applying for orders
to dismiss Redcliffe’s proceeding on the ground that the High Court’s decision is final and cannot be reopened.
The High Court dismissed Redcliffe’s proceeding. The Judge held that only fraud in the strict legal sense came within
the fraud exception to the principle of finality. The allegations of fraud in Redcliffe’s statement of claim were not of
this kind. The High Court was also not able to declare its earlier judgment a nullity.
Redcliffe successfully appealed to the Court of Appeal. The focus in that Court was on a procedural issue of whether the
Commissioner was entitled to object to the High Court’s jurisdiction under r 5.49. The Court of Appeal accepted
Redcliffe’s argument that jurisdiction under r 5.49 did not apply. The Commissioner should have brought its objection by
applying under a different rule to strike out the proceeding. Redcliffe’s appeal was allowed. The Commissioner appealed
to the Supreme Court against this judgment.
The Supreme Court has held that the fraud alleged by Redcliffe was in fact a claim of legal error which does not come
within the fraud exception. The High Court has no power to recall or set aside judgments on questions of law which have
been the subject of appellate decision. For the same reason, the High Court also had no jurisdiction to declare its
earlier judgment was a nullity. The Commissioner had properly objected to the proceeding under r 5.49 and the
Commissioner’s objection to the High Court’s jurisdiction under r 5.49 was soundly based and should have been upheld.
Accordingly, the High Court’s judgment striking out the 2009 proceeding was reinstated.
To protect against abuse of process, fraud claims challenging the conclusiveness of judgments of the High Court in
future should undergo pre-trial scrutiny. When a party wishes to reopen a case, on the ground that it was procured by
fraud, the claim must be fully and precisely pleaded and particularised, and of sufficient apparent cogency that it
should go to trial. If a defendant applies to dismiss the proceeding on the ground that the threshold for fraud is not
met, the plaintiff must respond promptly and submit probative affidavit evidence which verifies the critical pleaded
facts relied on in the proceeding. Unless these requirements are met, the proceeding seeking to reopen the case should
be dismissed.
ENDS
[Scoop copy of judgment: SC_8_2012__CIR_v_Redcliffe__Ors.pdf]