Chief Collector of Taxes v Bougainville Copper Limited and SCA No 56 of 2005; Bougainville Copper Limited v Chief Collector of Taxes (2007) SC853

• Jurisdiction: Papua New Guinea
• Judge: Kapi, CJ, Sevua J, and Kandakasi J
• Judgment Date: 02 February 2007
• Court: Supreme Court
• Citation: (2007) SC853
• Docket Number: SCA No 50 of 2005
• Year: 2007
• Judgement Number: SC853

Full Title: SCA No 50 of 2005; Chief Collector of Taxes v Bougainville Copper Limited and SCA No 56 of 2005; Bougainville Copper Limited v Chief Collector of Taxes (2007) SC853

Supreme Court: Kapi, CJ, Sevua J, and Kandakasi J

Judgment Delivered: 2 February 2007

SC853

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 50 OF 2005

BETWEEN:

CHIEF COLLECTOR OF TAXES

-Appellant-

AND:

BOUGAINVILLE COPPER LIMITED

- Respondent-

AND:

SCA NO. 56 OF 2005

BETWEEN:

BOUGAINVILLE COOPER LIMITED

-Appellant-

AND:

CHIEF COLLECTOR OF TAXES

- Respondent-

Waigani: Kapi, CJ., Sevua, and Kandakasi, JJ.

2005: 28 November

2007: 2 February

APPEALS – PRACTICE & PROCEDURE – Appeal against interlocutory decision lifting interim stay and injunction – Questions of fact raised in appeal – Leave required to raise questions of fact – Section 14(1)(2),(3) Supreme Court Act.

APPEALS – PRACTICE & PROCEDURE – Appellant raising issues not raised before trial judge – Appellant at no liberty to raise new points on appeal except with the agreement of the parties – Right of Appeal exists only against exercise of a trial judge’s decision on issues raised before him.

APPEALS – PRACTICE & PROCEDURE – Appeal against exercise of discretion of a trial judge – Appellant obliged to demonstrate identifiable and serious error warranting interference by Appellate Court before Supreme Court can interfere with trial judge’s decision.

CONSTITUTION – Income Tax Act – Whether requirement or policy of pay now litigate later harsh and oppressive within the meaning of s.41 of the Constitution – No equity in tax legislation – Law necessary for the support of public programs – Whether Chief Collector of Taxes issuance of statutory garnishee notices to taxpayer amounting to an abuse of his powers and therefore harsh and oppressive – Taxpayer under obligation to adduce appropriate evidence to establish claim of abuse or harsh and oppressive exercise of power – Taxpayer failing in its obligation – No case of abuse or harsh or oppressive exercise of power.

INJUNCTION – Application for interim injunction pending arbitration – Relevant issues and principles governing grant or refusal of relief considered – Requirements for undertaking as to damages and demonstrating a serious question to be determined at the trial or an arguable case on the merits not met – Effect of – Detrimental to grant of relief sought – Trial judge correct in declining grant of stay and injunction.

LEGISLATION – Proper construction of tax legislation – Interpretation favourable to tax payer preferable – No equity in tax legislation - Necessary to support Parliaments new and ongoing public projects - Policy behind Income Tax Act – Pay assessed tax now and litigate later – Appeal against tax assessments no basis to stay or stop by injunction the recovery of assessed taxes - Question of harshness of tax legislation within meaning of s.41 of the Constitution considered – Question to be considered within tax regime – Abuse of Collector of Taxes powers and extreme personal hardship and oppression could result in stay or injunction of powers to collect assessed taxes.

TAXATION – Proper construction of tax legislation – Interpretation favourable to tax payer preferable – No equity in tax legislation - Necessary to support Parliaments new and ongoing public projects - Policy behind Income tax Act – Pay assessed tax now and litigate later – Appeal against tax assessments no basis to stay or stop by injunction the recovery of assessed taxes - Question of harshness of tax legislation within meaning of s.41 of the Constitution considered – Question to be considered within tax regime – Prove of abuse of Collector of Taxes powers and extreme personal hardship and oppression could result in stay or injunction of powers to collect assessed taxes.

Papua New Guinea Cases Cited:

Government of Papua New Guinea and Davis v Barker [1977] PNGLR 386.

SCR No. 1 of 2000; Re Morobe Provincial Government for and on behalf of the Morobe Provincial Executive Council (2002) SC693, 27th September 2002).

Golobadana No 35 Ltd v. Bank of South Pacific Limited (formerly Papua New Guinea Banking Corporation) (2002), Unreported, N2309, 11th November 2002.

Mt. Hagen Airport v. Gibbs [1976] PNGLR 216

Public Employees Association v. Public Service Commission [1988-89] PNGLR 585.

Markcal Limited & Robert Needham v. Mineral Resources Development Co. Pty Ltd (1996) Unreported, N1472, 05th September 19/96.

Gobe Hongu Ltd v National Executive Council and Others (08/06/99) N1920.

National Housing Corporation v Yama Security Services Pty Ltd (25/08/00) N1985.

Rimbink Pato v. Anthony Manjin & Ors (30/04/99) SC622.

Mauga Logging Company Pty. Ltd v. South Pacific Oil Palm Development Pty Ltd (No.1) [1977] PNGLR 80.

Kurt Reimann & Ors v. George Skell and Kimbe Soccer Association (21/03/01) N2093.

Internal Revenue Commission v. Dr. Pirouz Hamidian-Rad (22/03/02) SC692.

Mairi v Tololo [1976] PNGLR 125.

Misima Mines Ltd v Collector of Customs (18/12/03) N2497.

Patterson Lowa,& Ors v. Wapula Akipe,& Ors [1991] PNGLR 265; [1992] PNGLR 399.

Chief Collector of Taxes v. T.A. Field Pty. Ltd [1975] PNGLR 144.

Commissioner General of Internal Revenue v. Julian Paul Leach (24/09/98) N1779.

Premdas v. Independent State of Papua New Guinea [1979] PNGLR 329.

SCR No 1 of 1984; Re Minimum Penalties Legislation [1984] PNGLR 314.

MVIT v. James Pupune [1993] PNGLR 370.

PNGBC v. Jeff Tole (27/09/02) SC694.

Fly River Provincial Government v. Pioneer Health Services Limited (24/03/03) SC705

The Papua Club Inc. v. Nasaum Holdings Limited & Ors (02/12/05) SC812.

Van Der Kreek v. Van Der Kreek [1979] PNGLR 185.

Boyepe Pere v. Emmanuel Ningi (30/06/03) SC711.

Chan v Ombudsman Commission (25/06/99) SC607.

Overseas Cases Cited:

House v. The Queen (1936) 55 CLR 499.

Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 1 KB 64.

Clyne v DCT 150 CLR 1.

Watson v. Commissioner of Taxation (2002) FCA 374.

Uysal v. Deputy Commissioner of Taxation,(2003) FCA 1156.

Edelsten v. Wilcox & Federal Commissioner of Taxation (1988) 83 ALR 99.

Deputy Commissioner of Taxation v Akers (1989) 89 ATC 4725 at 4727.

Deputy Commissioner of Taxation v. Ho (1996) 131 FLR 188.

Deputy Commissioner of Taxation v. Saunders [2001] WASC 48.

Held v Deputy Commissioner of Taxation (1988) 19 ATR 1213.

Deputy Commissioner of Taxation v. Awad [2001] NSWSC 37.

Dianne McGrath Fingleton v. The Queen (2005) HCA 34.

Counsels:

Mr. N. M. Cooke Q.C. and Mr. M. M. Varitimous SC for the Appellant in SCA 50 of 2005 and the Respondent in SCA 56 of 2005.

Mr. E. Anderson and Mr.R. Lindsay for the Respondent in SCA 50 of 2005 and the Appellant in SCA 56 of 2005.

2 February, 2007

1. BY THE COURT: Before us are two appeals against a decision of Salika J., in the National Court given on 28 April 2005. The first one is by the Chief Collector of Taxes (CC of T)

1 SCA 50 of 2005.

1 while the second one

2 SCA 56 of 2005.

2 is by the Bougainville Copper Limited (BCL). The former is the first in time filed and it concerns only part of the decision appealed against. That concerns the learned trial judge’s decision that arbitration was part of the tax regime in Papua New Guinea (PNG). The later is against the whole of the decision of the National Court, including the issue of arbitration. The main focus there is the learned trial Judge’s decision to lift interim restraining orders issued by Gabi J., on 6 January 2005 which prevented the CC of T from enforcing certain tax assessments against BCL. Another area of focus in BCL’s appeal is Salika J.’s refusal to stay an appeal by BCL against certain tax assessments by the CC of T against it pending arbitration.

BACKGROUND

2. In order to appreciate the background from which these appeals are before us, it is necessary to set out the relevant chronology of events. On 24 September 2003, the CC of T issued, after an audit, notices of tax assessments against BCL for the tax years 1999, 2000 and 2001. The total amounts assessed was K28, 075,581; which became payable on or before 24 October 2003. Without having paid the taxes assessed against it, BCL on 24th November 2003 objected to all of the assessments. After not receiving payment for the assessed taxes from BCL, the CC of T on 19th February 2004, issued statutory garnishee notices under s.272 of the Income Tax Act 1959 (“ITA”). That prompted BCL the next day, 20th February 2004, to file an Originating Summons and Notice of Motion claiming a number of identical reliefs. The first relief BCL sought was a declaration that, it was not liable to pay taxes for the years 1990 to 2003. Secondly, it sought a declaration that, it was entitled to call for arbitration. Thirdly, it sought an injunction to restraint the CC of T from enforcing tax assessments against it and an injunction restraining the CC of T from issuing statutory...