District Court proceedings reinstated
Decision date: 31 October 2005
Case: Graham Ashley Robert Palmer v The Commissioner of Inland Revenue
Act(s): Goods and Services Tax Act 1985
Keywords: District Court, strike out, reinstated, summary judgment
Summary
The appellant was successful in having his statement of claim reinstated in the District Court.
Facts
On 5 February 1996 and 2 January 1998, the Commissioner issued GST refund cheques to two companies (for $29,013.21 and $59,422.03 respectively), both associated with Mr Palmer. These cheques were stopped shortly after being issued to allow for further investigation into the companies.
In the District Court, Mr Palmer claimed to have acquired those two cheques by Deeds of Assignment dated 21 February 1996, for the first cheque, and 20 January 1998, for the second. He argued that the Commissioner stopped the cheques without lawful cause or reason, and, having acquired the cheques, that he was entitled to summary judgment for the full amount of them. Mr Palmer's claims were brought after the expiry of the limitation period, and there were no grounds upon which the relevant limitation period could be extended or postponed. His claims were dismissed and the statement of claim struck out.
Mr Palmer appealed this decision to the High Court.
Decision
Mr Palmer's submissions contained several unsustainable arguments, and after some discussion with His Honour Justice Randerson, Mr Palmer accepted that the District Court Judge was right to dismiss the summary judgment application, but maintained that the proceedings should not have been struck out. This was the essential issue before His Honour, however, a variety of other issues were traversed, largely concerning the Limitation Act 1950.
On those matters, Justice Randerson concluded that the DC Judge had correctly applied the six year limitation period from the date on which the causes of action accrued: the date of issue of the cheques, or at latest, the date on which the cheques were stopped. He also refused to countenance any notion that Mr Palmer's claims could be regarded as claims for specific performance.
As to whether there were any grounds for postponement or extension of the limitation period, His Honour concluded that none of Mr Palmer's alleged grounds (including his own incarceration) fell within the scope of "disability" as defined in the Limitation Act 1950. Mr Palmer was, as he admits, aware of all the essential elements of his claims at the time the cheques were stopped, and there was no reason why the claims could not have been made within time.
Part payment of the cheques by the Commissioner was also argued by the appellant, but His Honour stated that "on the basis of the material presented at this late stage, I am not persuaded that it would be right to reach any conclusion one way or the other on [this point]." He noted that if there was some underlying agreement to refund the GST (as alleged by Mr Palmer) "then it may be that further discovery and investigation could reveal evidence of part-payment … however difficult that might appear at this stage."
He further noted that:
"Although, on their face, the Deeds of Assignment relate to the transfer of rights of action on the cheques, the appellant may still able to obtain an assignment of the rights of the companies to the benefit of any breach of underlying agreements of the kind for which he contends or he may be able to rely on provisions in the tax legislation which permit a shareholder to request the payment of GST to that shareholder. As both companies have since been liquidated, the appellant plainly faces substantial difficulties in that respect."
There was some allegation by Mr Palmer that the DC Judge failed to give proper consideration to "fraud, breach of statutory duty and misfeasance in public office". However, none of these was raised by Mr Palmer's pleadings, and they were consequently dismissed.
On the essential issue - whether the matter should have been struck out in the District Court - Justice Randerson held that although "the Judge was undoubtedly led to the point on the pleadings … where he considered the Limitation Act defence was so clearly made out that it was a proper case … to strike out the proceeding", in view of the material His Honour had before him, the correct action now was to set aside the strike-out order. The appellant would then be able to obtain discovery and have his proceeding heard substantively if he so wished.
As a final note, His Honour said:
"The appellant should not underestimate the very great difficulties he faces. He must establish there are still sums due to the companies by the Commissioner to which he personally has some entitlement and that any such claims are still within time. But, in my view, justice requires (particularly in the case of a lay litigant) that he be given the opportunity to pursue his claim, however difficult it may be."
Date published: 10 Oct 2006
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