Clowes v Fiji Islands Revenue and Customs Authority [2009] FJHC 226; HBM029.2009L (7 October 2009)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Misc. Action No. HBM 29 of 2009L

BETWEEN:

MICHAEL LEO CLOWES of Lot 2 The Links, Denarau, Nadi, Businessman
Applicant

AND:

FIJI ISLANDS REVENUE AND CUSTOMS AUTHORITY
duly incorporated under Section 3 of the Fiji Islands Revenue & Customs Authority
Act 1998 having its registered office at Level 4, Building 3, Nasese Complex
Respondent

FINAL JUDGMENT

Of: Inoke J.

Counsel Appearing: Mr. M A Sahu Khan for the Plaintiff
[Ex-Parte Application]

Solicitors:M K Sahu Khan & Co. for the Plaintiff

Date of Hearing: 7 October 2009
Date of Judgment: 7 October 2009

INTRODUCTION

[1] This is an ex-parte application by the Plaintiff, Michael Clowes, to lift a Departure Prohibition Order issued against him by the Defendant, FIRCA, restraining him from leaving Fiji over the next 3 years without first paying up alleged outstanding duty.

[2] The applicant demonstrated urgency and irreparable and serious mischief so I heard the application and uplifted the Order for Mr Clowes to travel to Australia between 7 and 14 October 2009 to attend his son’s wedding.

[3] These are my reasons for uplifting the Order.

THE APPLICATION

[4] The motion was supported by Mr Clowe’s affidavit filed on 7 October 2009. He says in his affidavit that he has been living in Fiji for about 4 years now. He is a businessman and operates a day cruise business to Malamala Island. The parent company that operates and oversees the business is Sunsail Pty Limited. The business has been operating for about 2 and a half years. The business is augmented by the company that holds the native lease over Malamala. Apart from his business interests and financial commitment to Fiji, Mr Clowes has strong social and community ties here. He is the chairman of the NZPTC Foundation, a charitable institution, and chairman of the Junior Rugby Academy in Nadi. He is also a member of the building community of the Nadi District School and takes part in numerous other charitable activities as and when required.

[5] In late July 2009, Mr Clowes was served with a Departure Prohibition Order dated 15 July 2009 (the "Order"). On receiving the Order, he contacted his accountant to attend to his financial returns, which disappointingly for him, still remain unattended to. He contacted his solicitor on 1 October 2009 who made considerable enquiries on his behalf including writing to FIRCA. His accountant too wrote to the Immigration Department on Mr Clowes’ behalf and explained that it was not Mr Clowes’ fault for the delay in lodgment of his financial returns and asking that the Order be discharged. Despite these representations and undertakings to meet his tax obligations, Mr Clowes’ plea fell on deaf ears. The amount demanded included VAT and duty.

[6] Mr Clowes deposed in his affidavit as to the extent and value of his properties and assets in Fiji which are far in excess of what FIRCA claims to be due.

[7] The reason Mr Clowes wants to go to Australia is to attend his son’s wedding on Saturday 10 October 2009 in Brisbane. He says that it has been a very emotional time for both he and his wife. He has every intention to return to Fiji and has asked that the Order be lifted for a week. He has gone to the extent of offering a surety.

[8] The application is made pursuant to the High Court Rules and the Court’s inherent jurisdiction.

CONSIDERATION OF THE APPLICATION

[9] The Order is in the following terms:

DEPARTURE PROHIBITION ORDER

15th July 2009

To: Mr. Michael Leo Clowes

Managing Director,

Sun Sail Pty Limited or Sunsail Pty Limited

P O Box 1651

NADI

........

In accordance with the provisions of section 143C of the Customs Act, 1986 as amended by Promulgation 14 of 2007, I hereby issue this Departure Prohibition Order to prevent you from departing the Fiji Islands.

This order has effect throughout the Fiji Islands, including aboard the ships and vessels within the Fiji Islands’ territorial waters and aircraft within the Fiji Islands’ airspace.

This order may be revoked if you as the person having controlling interest in Sunsail Pty Limited also known as Sun Sail Pty Limited:

(a) Pay the outstanding and unpaid duty of ...; or

(b) Provide or arrange for security to be given for payment of the above amount.

This order is effective for 3 years from the date of issue unless extended or revoked.

Sgd

Comptroller of Customs

Cc: Director of Immigration

Commissioner of Police

Commissioner of Inland Revenue"

[10] Section 143C of the Customs Act 1986 provides:

(1) Notwithstanding any other provision of this Act, if the Comptroller is satisfied that a person –

(a) owes duty or has outstanding fines or penalties under the Customs Act 1986 or Customs Tariff Act 1986 or Excise Act 1986; and

(b) may leave Fiji without discharging such duty, fines or penalties under the Customs Act 1986, Customs Tariff Act 1986 or Excise Act 1986 or without securing such duty, fines or penalties,

the Comptroller may issue a departure prohibition order against the person prohibiting the departure of the person from Fiji for another country.

(2) Other provisions regulating departure prohibition order under the Income Tax Act apply, with necessary modification, to this section."

(my emphasis)

[11] The Act does not define the word "person". Under s 95(1)(c), the person liable for duty under the Act is either the importer of exporter whatever the case may be.

[12] It is a very serious matter indeed that a person is stopped from moving freely within or out of Fiji. The Act has given the Comptroller wide powers under s 143C. But those powers cannot be abused. He may issue an order if he is satisfied that the person who owes the duty may leave without paying it or may leave without securing it. In other words, the person must owe duty and secondly he is a "flight risk". If any one of these two conditions are not satisfied then the Comptroller’s power to issue the Order does not arise.

[13] bThe Order was issued against Mr Clowes as "the person having controlling interest in Sunsail Pty Limited". It is implicit that the outstanding duty is owed by the company rather than Mr Clowes personally. The Order therefore does not comply with s 143C of the Customs Act 1986 pursuant to which it was issued and is therefore defective and invalid.

[14] Secondly, part of the alleged debt includes VAT which Mr Clowes says he may be entitled to a refund.

[15] Thirdly, he must be satisfied that Mr Clowes is a "flight risk". Section 115 of the Act provides that an officer or other person acting under his direction shall not be liable to any legal proceedings for any action taken by him in good faith in accordance with any provision of this Act. The corollary to that is that the officer must no act in bad faith. Considering Mr Clowes’ background, I think the Comptroller has not only acted in bad faith but has acted arbitrarily.

[16] The Income Tax Act provisions relating to Departure Prohibition Orders are in s 77A:

Departure prohibition orders

77A (1) Notwithstanding any other provision of this Act, if the Commissioner has the reason to believe that a taxpayer might leave the Fiji Islands without paying tax assessed upon him, then, whether or not the due date for payment of the tax has passed, the Commissioner may issue a departure prohibition order, in writing stating the-

(a) name and address of the taxpayer; and

(b) amount of unpaid assessed tax.

(2) A departure prohibition order has effect throughout the Fiji Islands, including aboard any vessel or aircraft within the Fiji Islands.

(3) If a departure prohibition order is issued in respect of a taxpayer, the Commissioner of Police and the Director of Immigration must each exercise the powers they lawfully possess, or cause an officer under their direction to exercise such powers, so far as is necessary to prevent the taxpayer named in the order from departing the Fiji Islands, including the removal and retention of any passport, identity card, visa or other travel document authorising the taxpayer to leave the Fiji Islands.

(4) A copy of a departure prohibition order issued by the Commissioner in respect of a taxpayer must, as soon as practicable, be served upon the taxpayer and upon the Commissioner of Police and the Director of Immigration.

(5) The Commissioner may revoke a departure prohibition order if the taxpayer-

(a) pays the amount of unpaid assessed tax; or

(b) provides or arranges for security be given to the satisfaction of the Commissioner for payment of the amount of unpaid assessed tax.

(6) A departure prohibition order is valid for a period of 3 years from the date of issue and the Commissioner upon review may extend or revoke the period.

(7) No proceedings, either criminal or civil, may be instituted or maintained, for anything lawfully done under this section, against the Commissioner or any other officer directed or authorised to act under this section."

These provisions apply with the necessary modifications under the Customs Act.

[17] Similarly, the Commissioner has a discretion which he must exercise reasonably and in good faith. Mr Clowes solicitors wrote to FIRCA on 2 October 2009 and made representations under s 77A(5)(b) for the Commissioner and the Comptroller to lift the Order simply for him to attend his son’s wedding but did not receive a response. His accountant made similar representations by letter on 2 October 2009 without success either.

[18] The facts in this case do not, in my opinion, show that neither the Comptroller nor the Commissioner have exercised their discretion judicially, reasonably or in good faith.

ORDERS

[19] At the end of the ex-parte hearing I granted paragraph 1 of the Motion which was that the Departure Prohibition Order be uplifted for the period 7 October 2009 to 14 October 2009 inclusive to allow Mr Clowes to travel with his wife to their son’s wedding in Brisbane. Also, I did not think that there was a need for surety so did not make any order in that regard.

[20] Having analysed this matter in detail I think I should make further orders which I now make:

1. That the Departure Prohibition Order dated 15 July 2009 issued by the Comptroller of Customs against Michael Leo Clowes is permanently stayed.

2. Copies of this Order, this Judgment, Ex-parte Motion and Affidavit filed on 7 October 2009 and the Order sealed on 7 October 2009 are to be served on the Comptroller of Customs and the Department of Immigration within 7 days.

Sosefo Inoke
Judge