Lum v Commissioner of Estate & Gift Duties [1995] FJHC 7; Hba0007j.86s (12 April 1995)

Fiji Islands - Lum v Commissioner of Estate & Gift Duties - Pacific Law Materials

IN THE HIGH COURT OF FIJI

At Suva

Appellate Jurisdiction

CIVIL APPEAL NO. 0007 OF 1986

BETWEEN:

LUI FUNG CHAN LUM
as executrix of the estate of
LUM BING WAI (deceased)
Appellant

AND:

THE COMMISSIONER OF ESTATE
AND GIFT DUTIES
Respondent

Mr. V. Mishra for Appellant
Mr. Ikeley for Commissioner of Estate and Gift Duties

JUDGMENT

This is an appeal by way of case-stated brought under Section 55 of the Estate and Gift Duties Act (Cap.203) ('the Act') against an assessment of 'estate duty' made by the Commissioner of Estate and Gift Duties ('the Commissioner') based upon a 'final balance' certified at $70,272 and which is comprised principally of the value of the deceased's half share in two Crown Leases situated in the rural township of Ba.

The relevant facts which are undisputed are conveniently set out in PART I of the case-stated for the Court and may be conveniently summarised as follows: The deceased, LUM BING WAI, was born in 1917 and carried on business as a merchant in Ba, Fiji until 1974 when he sold the business to his son. In 1977 the deceased emigrated to Australia where he lived until his death on the 10th of April 1983. On 31st October 1983 probate of the deceased's will dated 5th May 1970, was granted to the appellant his widow, by the Supreme Court of New South Wales and this was subsequently re-sealed by the Supreme Court of Fiji (now High Court) on the 23rd of February 1984.

Thereafter as required under the provisions of the Estate and Gift Duties Act, an Estate Duty Questionnaire and an Administrators Statement with relevant annexures was filed. A good deal of correspondence then ensued between the Commissioner and the local solicitors acting on behalf of the estate culminating in the above-mentioned assessment and appeal by way of case-stated.

The case-stated sets out the opposing positions of the parties as follows:

"The appellant admits that the deceased was domiciled in Australia at the date of his death, but that the rebate provided for by the second proviso to the First Schedule to the Estate and Gift Duties Act applied."

On the other hand:

"The respondent contends that the deceased was not domiciled in Fiji at the date of his death, hence the rebate sought by the appellant was inapplicable."

The question posed for the Court is in the following terms:

"Whether the respondent has correctly assessed the appellant by denying the rebate sought."

Learned counsel for the appellant in his oral and written submissions referred to Sections 3 and 4 of the Estate and Gift Duties Act and to proviso (b) in the First Schedule to the Act and forcefully submitted that there was an apparent conflict or inconsistency between the sections and the proviso in so far as the proviso discriminated between the estates of deceased persons domiciled in Fiji and those domiciled outside of Fiji.

Counsel for the Commissioner on the other hand asserted that there was no such inconsistency in the Act and furthermore in making the assessment the Commissioner was merely following the clear intentions of Parliament as expressed in the proviso.

It is necessary to consider the relevant charging provisions of the Act in order to ascertain the validity and/or eligibility of the deceased's estate to the exemption from estate duty granted under proviso (b) to the First Schedule of the Act.

In this regard Section 3 of the Act, imposes 'estate duty' in the following terms:

"In the case of every person who died (sic) after the commencement of this Act but before 12th September 1984 whether in Fiji or elsewhere, and wherever the deceased was domiciled, there shall be payable to the Crown, on the final balance of the estate of the deceased as determined in accordance with the provision of this Act, a duty (hereinafter called 'estate duty') at the rate and in accordance with the provisions of this Act."

It is plain from a reading of the charging section that 'estate duty' is imposed in the widest possible terms on the 'final balance' of a deceased's estate without any distinction being made as to the country of death and/or the deceased's domicile.

Then by virtue of Section 4 'estate duty' is charged and assessed as a percentage of the amount of the final balance of the estate in accordance with a graduated scale of percentages set out in the First Schedule, and Section 5 enumerates various classes of property to be included in computing the 'final balance' of the estate of a deceased person and of which reference need only be made to subsection (1)(e) which provides:

"The beneficial interest held by the deceased immediately before his death in any property as a joint tenant or joint owner with any other person or persons, if that property was situated in Fiji at the death of the deceased."

Finally reference must be made to proviso (b) to the First Schedule which reads:

"In the case of the estate of a person who, to the satisfaction of the Commissioner, was domiciled in Fiji at the date of death, the first $75,000 of the final balance of his estate shall be exempt from the payment of estate duty and, where the final balance of the estate in such a case exceeds $75,000 such excess shall attract duty at the rate appropriate to the full final balance of the estate."

From the above it is sufficiently clear that in the case of a deceased person domiciled in Fiji the legislature (not the Commissioner as appears to have been suggested) has provided a statutory exemption from 'estate duty' in respect of the "first $75,000 of the final balance of his estate".

Equally clear albeit implicit, the statutory exemption does not extend to cover the estate of deceased persons who were not domiciled in Fiji at the date of death. To this limited extent I agree with the submission of counsel for the appellant that the 'proviso' does discriminate between the estate of deceased persons who are domiciled in Fiji and those that are not.

Counsel further submits however that insofar as the substantive charging section makes no such distinction in imposing 'estate duty' therefore "... the schedule cannot be allowed to go beyond the Act and allow two rates of duties for different groups of people when the Act indicates that there is to be one duty for all".

With all due regard to the submission I cannot agree. In the first place, the First Schedule to the Act is not subsidiary legislation passed under a delegated law-making power and therefore to be read subject to the provisions of the principal empowering Act, rather the First Schedule to the Act is passed by Parliament, is part and partial of the Act and is required by Section 12 of the Interpretation Act (Cap.7) to be "... construed and have effect as part of (the Act)".

Secondly, the submission appears to confuse the taxing or charging provision which declares and imposes the duty or tax (viz.: Section 3), with the provisions which sets out how the tax or duty is to be levied, assessed and computed (viz.: Sections 4 and 5). It is in this latter respect that the distinction or statutory exemption applies and not to the former where one would expect the legislature to cast its net as widely as possible.

In the third place, the submission quite incorrectly seeks to impose an 'equity' or equality of treatment on all estates in the face of a statutory exemption which clearly provides for differing treatment. In this regard it is well to bear in mind the words of Lord Blackburn when he said in Coltness Iron Company v. Black (1881) L.R. 6 H.L. 315 at 330:

"No tax can be imposed on the subject without words in an Act of Parliament clearly shewing an intention to lay a burden on him. But when that intention is sufficiently shewn, it is, I think, vain to speculate on what would be the fairest and most equitable mode of levying that tax. The object of those framing a Taxing Act is to grant ... a revenue; no doubt they would prefer, if it were possible, to raise that revenue equally from all, and, as that cannot be done, to raise it from those on whom the tax falls with as little trouble and annoyance and as equally as can be contrived; and when any enactments for the purpose can bear two interpretations, it is reasonable to put that construction on them which will produce these effects. But the object is to grant a revenue at all events, even though a possible nearer approximation to equality may be sacrificed in order more easily and certainly to raise that revenue, and I think the only safe rule is to look at the words of the enactments and see what is the intention expressed by those words."

In similar vein Lord Cairns said in Partington v. A.G. [1869] UKLawRpHL 8; (1869) L.R. 4 H.L. 100 at p.122:

"... if there be admissible, in any statute, what is called an equitable construction, certainly such a construction is not admissible in a taxing statute, where you can simply adhere to the words of the statute."

Fourthly, the submission ignores the rule of construction of a statutory provision conferring the privilege of exemption from taxation as stated by Lord Young in Hogg v. Parochial Board of Auchtermuchty when his lordship said:

"I think it proper to say that, in dubio, I should deem it the duty of the Court to reject any construction of a modern statute which implied the extension of a class privilege of exemption from taxation, provided the language reasonably admitted of another interpretation."

A fortiori where the language is as plain and as clear as that to be found in proviso (b) to the First Schedule of the Act.

Finally, there is what might be called the 'reductio ad absurdum' argument which goes something like this. If the appellant's submission is accepted and all estates qualified for the statutory exemption for the "first $75,000", then who? is liable for and what? is the sense in Parliament prescribing 21 separate rates of duty for estates where the final balance is less than $75,000 (viz NIL to 14%)? To this rhetorical question counsel for the appellant could offer no meaningful reply.

In the light of the above I would have no hesitation in answering the question posed in the case stated in the affirmative.

The appeal is accordingly dismissed with costs to the Commissioner.

D.V. Fatiaki
JUDGE

At Suva,
12th April, 1995.

Hba0007j.86s