Henderson in 'stupid and complex' case win

Christchurch property developer David Henderson has pulled off a rare feat – a win in the High Court in Christchurch in a tax case against the Inland Revenue Department.

The IRD, a long-time foe of Mr Henderson's, was trying to wind up one of his companies, Tannadyce Investments Ltd, claiming tax arrears of $356,686.

As Tannadyce was insolvent and unable to pay its debts, it was just and equitable that it be liquidated, the IRD told the court.

Not so, said Associate Judge Rob Osborne. Because Tannadyce had filed judicial review proceedings against the IRD in the Court of Appeal, until this matter was decided, the department must back off.

Associate Judge Osborne said the court was "alert" to taxpayers who might try to delay and defer their tax obligations by filing appeals and getting adjournments. But, in the absence of evidence, the court could not speculate in this particular case.

Mr Henderson says Tannadyce denies any tax arrears. "It's so stupid and complex," he said about the case.

It is part of a long-term battle between Mr Henderson and the IRD, culminating in a complaint by Mr Henderson to the Ombudsman in 1999, after the IRD was said to have lost its tax records on Tannadyce.

Mr Henderson says he agreed to prepare a "global return" for Tannadyce on the basis of the records he could reconstruct. This showed a $2 million loss.

In 2004, the IRD contacted Mr Henderson, saying global returns were not acceptable. It assessed tax for the company at $356,686. Mr Henderson is disputing this assessment. To help prove his case, he is attempting to gain access to 200 Eastlight files the IRD is said to have put together on Tannadyce but failed to disclose to the firm and its lawyers.

In his decision, Associate Judge Osborne noted an earlier High Court judgment on another aspect of case, where Justice Christine French found there would be "conscious maladministration" if Tannadyce could prove the IRD was, in Osborne's words, "knowingly in possession of the very documentation which it had repeatedly and falsely denied possessing and which [Tannadyce] required in order to be able to file individual tax returns and avoid a default assessment. There is thus a finding of this court as to whether [Tannadyce's] proceedings disclose a reasonably arguable cause of action. It has been found that it does," Associate Judge Osborne said.

Meanwhile, the new owner of 2.4 hectares near Queenstown known locally as "Hendo's Hole" says he intends to fill in the site in preparation for a supermarket to be built. The site, part of the ill-fated Five Mile project, was dug out four years ago for a two-level underground car park, part of Mr Henderson's plan to develop a $2 billion township near Frankton for 10,000 people.

Auckland developer Tony Gapes bought the property from Hanover, one of Mr Henderson's lenders, in November for about $21m. Mr Gapes said he would fill in the hole with 350,000 cubic metres of earth, about 50,000 truckloads, at an estimated cost of $1.5m.

- © Fairfax NZ News