Commissioner of Inland Revenue v Punjas Ltd [2005] FJHC 313; HBC0137.2005 (16 December 2005)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

ACTION NO. HBC0137 OF 2005

BETWEEN:

COMMISSIONER OF INLAND REVENUE
Level 5, Dominion House, Scott Street, Suva
PLAINTIFF

AND:

PUNJAS LIMITED
a duly incorporated company having its registered office at
63 Vitogo Parade, Lautoka
FIRST DEFENDANT

PUNJA AND SONS COMPANY LIMITED
an incorporated company having its
registered office at 63 Vitogo Parade,
Lautoka.
SECOND DEFENDANT

Mr M J Scott, Legal Officer of FIRCA for the Plaintiff
Mr Mr K Kumar, Messrs Young & Associates for the Defendants

Date of Hearing: 18 November 2005
Dates for Submission: 18 November, 25 November, 2 December
(Extension granted for service of Plaintiff’s further reply on 12 December 2005)
Date of Ruling: 16 December 2005

RULING OF FINNIGAN J

On 4 November 2005 I issued a judgment granting relief to the Plaintiff by setting aside certain consent orders made in 2002 in Civil Action No. HBC0101.2002L. The Defendants have lodged an appeal against that judgment and the consequent costs order. By Motion on Notice they now seek an order in this Court that execution and all further proceedings on that judgment be stayed until the appeal has been determined.

The order which I made in the judgment is of a particular kind. By setting aside the Consent Orders made in 2002 I released the Commissioner of Inland Revenue from a commitment made by Counsel on his behalf in the earlier proceedings not to levy further specified and particular taxes against the Defendants. The appeal therefore is a proceeding by the Defendants to reinstate that commitment pending the appeal.

The Submissions

Counsel for the Commissioner was ready to oppose the application on the return date of the motion and filed his written submissions that day. He filed a further written submission annexing further legal authorities and Counsel for the Defendants filed a succinct and concise submission in reply. Both complied with the timetable. Since then Counsel for the Commissioner has filed a further submission in reply and I gave leave for him to serve Counsel for the Defendants. There have been no more submissions.

Conclusions:

The diligence and energy of Counsel for the Commissioner and the breath and depth of what he put before me are impressive. To read it all has taken quite some time. There is therein a determined and detailed attempt to prevent a stay of my judgment.

At the end of the day the decision has to be made by commonsense as much as by legal principle. The Commissioner wants “the fruits of his judgment”. The Defendants say the Commissioner waited three years before acting on his second thoughts and will suffer no prejudice from a further six-month delay while the Defendants re-state their arguments in the Court of Appeal. They claim, with some justification from the documents in the file, that they are substantial companies with unchallenged ability to pay any taxes rightly assessed. They submit there will be no prejudice to the public purse if any assessment is further briefly delayed while there could be prejudice to them if liability is assessed against them and subsequently they are held not liable.

In respect of commonsense, I adopt the view expressed by Tikaram J A in Reddys Enterprises Ltd, to which I shall refer below, that there cannot be an inflexible rigid test for all types of stay or injunction cases. Each has to be considered by its own nature and in its own circumstances. In the case before him he did find that the applicant for stay carried a burden of establishing special circumstances to warrant granting a stay. The case before me is not dissimilar in that I also must take the public interest into account. I have considered that. I think the present Defendants are like the applicant in that former case in that they are not attempting to evade liabilities but wish merely to pursue and establish what legal rights they may have.

I promised Counsel a ruling before the Christmas vacation. To achieve that object this ruling like my judgment is in short form. Despite the overtones attaching to taxation matters I think the principles that should guide my decision are the commonsense principles stated in Reddys Enterprises Ltd –v- The Governor of the Reserve Bank of Fiji (1991) 37 FLR 73, the judgment of Tikaram J A. This is the case upon which the Defendants mainly rely. I accept that the balance of convenience favours the stay which the Defendants seek for the five reasons that Counsel states. The prejudice that might be suffered by the Commissioner if stay if granted is outweighed by the prejudice that might be suffered by the Defendants if the stay is refused. This includes the possibility suggested by Counsel that the Defendants may be assessed in the meantime and may subsequently file an objection to that assessment, but these are possibilities only and not by themselves decisive. The Defendants intend to argue a novel point of law and that is of some significance. The Commissioner has accepted the status quo for three years and his delay in applying to set it aside is a significant factor. I accept that the real enquiry where the Plaintiff has allowed a lengthy delay is “the balance of justice or injustice in taking one course or the other” and I accept the two authorities cited in that regard by Counsel for the Defendants.

Counsel for the Plaintiff annexed to his detailed submissions copies of twelve of the judgments on which he relies. This thoughtfulness is appreciated. The absence of considerative reference to the submissions and the authorities is not to be taken as lack of respect for the telling points therein. This is however only an application for interim stay and I found nothing novel in the many points offered by Counsel.

Orders:

I make the orders sought by the Defendants that execution and all further proceedings on my judgment dated 4 November 2005 be stayed until the appeal therefrom is heard and determined, and further that the costs of this application abide the result of the appeal.

D.D. Finnigan
JUDGE

At Lautoka
16 December 2005