Hope rises in battle with IRD

A businessman is confident he can win a 20-year, $4 million David and Goliath legal battle with Inland Revenue.

David Hampton was running a chain of successful pre-school centres called Chesterfields Preschools Ltd, in Christchurch, when he ran into tax troubles.

He claims in court documents that the Inland Revenue Department owed him a series of refunds.

While he awaited his due cash, a tax bill was being racked up that IRD officials said would be put on hold until he got his refunds, avoiding late-payment penalties, he says.

But Mr Hampton, 53, says the Government department reneged on their deal, leaving him with a massive tax bill that spiralled out of control from 1993 to 2006 to reach $4m in unpaid tax and late filing penalties.

For the last two decades, Mr Hampton has been fighting his predicament that he says has cost him his business and more than $500,000 in legal fees, and has consumed his life.

Now, a Court of Appeal judgement has given him hope - if not another huge legal bill.

The ruling, released this week, says Mr Hampton may have a case to launch misfeasance proceedings against tax officials - claiming they were negligent in their duties and went back on promises he could pay his tax bill later.

He has won other court battles to so far avoid paying the staggering $4m tax bill, and two prior High Court rulings have also ruled in his favour.

Speaking on Wednesday Mr Hampton welcomed the Court of Appeal's conclusions that his misfeasance claim against individual IRD employees has a chance of success.

"It's a good result for the taxpayer," he said, in spite of the appeal court ruling against two of his claims - one against the IRD itself, and the other against the Crown lawyer who represented the tax department through various court proceedings.

The ruling says that if Mr Hampton, a former law student, stops trying to represent himself in the "difficult and complex" case and forks out for "properly qualified" counsel, he could - with leave of a High Court judge - take 20 individual IRD workers to court for alleged misfeasance.

Mr Hampton is criticised in the Court of Appeal's 60-page ruling for a long-winded and "difficult, if not impossible, to understand" amended statement of claim.

But it was that confusing and rambling document which left appeal judges thinking that it may just contain the germ of a misfeasance claim.

While the court was unable to judge whether misfeasance could be properly pleaded, it ruled: "The taxpayers should not be deprived of a final opportunity to do so."

Given that the IRD had "substantial success" at the appeal, Mr Hampton has been left to pick up costs.

He's vowed, however, to dig even deeper into his pockets to hire a new counsel and try to head back to the High Court.

In spite of the emotional toll it has taken on him - and the loss of his business which was wound up in 2006 - he feels he has gone too far to stop now.

"I think we have every chance of success."

"It's very much a David v Goliath battle, and one that's worth standing up for."

On Wednesday, the IRD welcomed the Court of Appeal decision, but wasn't able to comment further as the decision may be appealed.