The saga began on 16 June 1998 when Hardie was convicted in the District Court of seven failures to file income tax returns for the years ended 31 March 1991-1997. He was later convicted on 20 June 2000 of two further failures for the years ended 31 March 1998-1999.
He also failed to make GST (Goods and Services Tax) for the monthly periods ended 31 March 2003 - 30 April 2006.
In August 2002 the Commissioner obtained orders in the District Court requiring Hardie to file income tax returns for the years ended 31 March 1998 - 2001, and GST returns for the period February 2001 - April 2002. Hardie didn't comply.
In September 2006 the Commissioner obtained judgement by default in the District Court for Hardie's tax liability. The amount was an eye-watering $10,341,590.32. This amount included actual tax, penalties and interest.
Hardie applied to have the judgment set aside. The District Court instead confirmed the judgment in March 2009. The judgment was almost wholly upheld by the High Court in March 2010. Hardie was declined leave to appeal further.
While all this was going on, Hardie brought an application for judicial review in June 2007. That process is described as taking a "protracted course complicated by his serial failures to comply with directions". He discontinued the application in June 2008 the day before it was due to be heard.
On 23 December 2010 the High Court struck out Hardie's second application for review. In Hardie v Commissioner of Inland Revenue HC Auckland CIV 2010-404-1453  NZHC 2339 (23 December 2010), Keane J observed that the application for review constituted an abuse of process.
Hardie appealed. On 28 September 2011 the Court of Appeal allowed Hardie's appeal. The order striking out the application for judicial review by the High Court was set aside. In Hardie v Commissioner of Inland Revenue  NZCA 492 (28 September 2011), according to an IRD case note, the Court confirmed that a default assessment must not be arbitrary, disregard the law or known facts and must be a genuine attempt to ascertain the taxable income.
It's clear that Hardie and the IRD are going to be arguing for some time about the default assessment. What is more interesting about this case are the submissions already put forward by Hardie.
Maori don't need to pay tax
Stevens J in Hardie v Commissioner of Inland Revenue HC Auckland CIV 2009-404-1785  NZHC 412 (19 March 2010) comments at  that "[t]he flavour of the appellant’s defence can best be ascertained from a helpful distillation of arguments, described by [District Court] Judge Recordon as 'extremely difficult to comprehend'."
One of those submissions is that "[a]s a person of Maori descent, he is not obliged to pay tax under the Treaty of Waitangi". Counsel for the IRD noted that the appellant had not provided evidence of his whakapapa (genealogy or lineage) establishing on the facts that he is of Maori descent.
The Judge disposed of Hardie's argument pretty quickly, observing at :
Quite apart from this evidential difficulty, the appellant’s submission is legally flawed. Moreover, the appellant put forward no authority binding on this Court to support his extraordinary submission. The District Court Judge was quite correct when he concluded that the Courts have never accepted arguments that statutes passed by Parliament are not applicable to persons of Maori descent. This is particularly so in the case of obligations to pay tax. Such obligations arise under the legislation imposing taxes and axiomatically apply to all New Zealanders, irrespective of race. The exemption claimed by the appellant on the basis of Maori descent cannot succeed.Others have gone further than describing this argument as "legally flawed" and "extraordinary". I have seen it described as without merit , a non-starter, and patent nonsense.
Hardie later complained  to the Court that:
[t]he public release of said judgment has created intense diversionary time pressure on the Applicant since early Friday 16th April to defuse a publicity situation which, as predicted by the Applicant, has had severe adverse repercussions for others not responsible for, nor necessarily in agreement with, the views of, and/or the actions of, the Applicant.The dog ate my homework
Hardie acknowledges [9-11] that he has not filed the relevant tax returns during the periods for which the IRD issued default tax assessments. The Judge notes at  that:
[a]s a result, the Commissioner was left with no option but to proceed to make default assessments. This is because, having failed voluntarily to file tax returns, the appellant left himself open to default assessments being made by the Commissioner. Once the assessments had been made, the appellant failed to take advantage of the statutory procedures for challenging such assessments.So why didn't Hardie challenge the assessments using the statutory procedures available to him?
He would later plead  that the statutory procedures "required him to furnish returns before he could do so. He was unable to because his financial records were neither complete nor accurate".
The Intellectual Property Office of New Zealand (IPONZ) maintains a database of patent applications. The database lists 11 national phase entry patent applications filed this calendar year naming J D Hardie and Co as Contact. In each of those cases NZMarks Ltd is recorded as the Service Address.
The Companies Office lists individual Mark Lawton as sole director of NZMarks Limited. Lawton is a professional accountant whose website announces that his company Accplus
"can prepare annual and/or interim accounts for your business. As registered Tax agents we can help your business stay compliant with the Inland Revenue Department. We can prepare and e-file your required taxation returns including GST, PAYE, FBT and Income tax returns."The position is perhaps best summed up at  by Keane J who admitted to being:
"sceptical about Mr Hardie's claim that he was unable to invoke the statutory procedure because he was unable to file returns. The manner in which he has contested his tax liability in debt, and his first review application, suggests rather that he has been intent on deflecting any assessment and delaying any liability".Further steps
There are a few more procedures to go through while Hardie and the IRD argue about the default assessment. At some point even Hardie is going to run out of legal options. He will then need to pay up (if he is able) or declare himself bankrupt (if he is not).
Photo courtesy of author H. Michael Karshis under Creative Commons licence.