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High Court of Fiji |
IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION
Misc. Action No: HBM 03 of 2011L
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
EXTEMPORE JUDGMENT
Judgment of : Ms Dias Wickramasinghe J.
Counsel : Ms M. Latianara for the Plaintiff
(ex- parte application)
Solicitors : Messrs Krishna and Co for the Plaintiff
Date of Judgment : 31 May 2011
Keywords: Departure Prohibition Order; FIRCA;
INTRODUCTION
[1] The applicant, by his ex-parte Motion seeks to uplift a Departure Prohibition Order (DPO) issued against him by the defendant, (FIRCA) restraining him from leaving Fiji over the next 3 years without first paying up an alleged outstanding duty. The application is made pursuant to the High Court Rules and the Court’s inherent jurisdiction.
[2] The Motion was supported with the applicant’s affidavit filed on the same date. The affidavit attached nine exhibits, which I will examine in turn.
[3] The applicant deposes that his mother-in-law is ill with a terminal sickness at Bendigo Hospital, Australia; his wife left on the 21 May 2011 to be with her mother; and his presence is urgently needed in Australia. He also says that he has been attempting to uplift the DPO to travel to Australia as soon as possible and return on 12 June 2011. After hearing the submissions of the counsel on 24 May 2011, I was convinced that there was urgency and irreparable loss could otherwise be caused, so I heard the application and made an extempore judgment uplifting the DPO, for the applicant to travel to Australia.
[4] Below are the reasons for uplifting the DPO.
FACTS
[5] On 13 May 2011, the applicant was served with a DPO, dated 12 May 2011 [Exhibit MLC 1], claiming $23906.07 as fiscal duty and VAT for the importation of the vessel Volunte. The applicant states that up to date $59765.37 and $95,624.45 has been paid to FIRCA as VAT and duty for the importation of the vessel. He also submits marked Exhibit MLC 4, a record of the reconciled payments e-mailed to him by FIRCA on 16 May 2011, which sets out that there is an outstanding sum of $23906.07 to be paid as fiscal duty and VAT; the sum claimed in the DPO for the importation of the vessel.
[6] The applicant deposes that he had offered the following securities to FIRCA to enable it to uplift the DPO.
- (a) A letter of authority, authorizing Messrs Fiaz Khan Lawyers to release $23,906.07 to FIRCA from the sales proceeds of $F1,585,000.00, that is due to his company Kento Fiji Limited under an agreement with Rosie Holidays to sell the proprietary interest in the Native Land over Malamala Island. Applicant states that the matter will be finalized within 6 months from 18 April 2011 [Exhibit MLC 5and MLC 6].
- (b) FIRCA can lodge a claim on the property depicted in CT 3591 belonging to him and his wife - [Exhibit-MLC8A] that is currently valued at $850,000.00. -[Exhibit-MLC8B]. The property is currently encumbered to Westpac Bank for $302,156.00 [Exhibit-MLC7]. He also states that FIRCA is fully aware of the freehold ownership of this land, as he had submitted it as security on a previous occasion to FIRCA.
[7] The applicant also produced a letter dated 19 May 2011, address to FIRCA, explaining the above, but states that he had no response from FIRCA to the letter or to his phone calls.
LEGAL MATRIX
[8] In a comparable case, Michael Leo Clowes v FIRCA HBM 29 of 2009L ( 7 October 2009)-[Exhibit MLC 3], His Lordship Justice Inoke considered the law, which is identical to the Motion before me. I have considered the judgment and fully agree with Inoke J’s analysis of the law. Although I do not wish to be repetitive, for completeness of this judgment, I will briefly summarize the law.
[9] The Comptroller of Customs had issued the DPO under S.143C of the Customs Act 1986 as amended by Promulgation Order 14 of 2007, which stipulates:
"Departure prohibition orders
(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.".
[10] FIRCA is empowered under section 143C of the Customs Act, s77A of the Income Tax Act, Customs Tariff Act 1986 or Excise Act to issue DPOs for failing to pay customs duties, excise duties and income tax if a person is unable to secure the outstanding payments owed to the State as stated therein.
[11] Inoke J in the case of Jacqueline White v FIRCA Misc Action No: 4 of 2010L quoted the unreported decision of Manoj Khera v Fiji Islands Revenue & Customs Authority [2006] FJHC; HBC 162 of 2006 (6 July 2006), where Singh J held about a DPO issued under the previous tax legislation:
'A DPO may therefore be seen is akin to a statutory writ ne exeat civitate. The Commissioner can impose it without having to go to court. Obtaining a writ ne exeat civitate is cumbersome and time consuming. At times before the writ is issued some taxpayers abscond. A DPO is a quick and ready method of ensuring that those who owe tax leave the country after paying tax. It provides for (an) effective remedy. As long as the Commissioner has good reason to believe that a taxpayer will abscond, he can issue a DPO. He cannot act arbitrarily or unreasonably. Factors like the amount of tax owed, whether a person has a citizenship elsewhere or a permanent residence or a business running in another country or whether other members of his family live in Fiji or elsewhere are all relevant factors.
...
For the restraint to be held valid it must be reasonable, it must be justifiable. There is a further qualification of reasonableness in a free and democratic society. A State must use no more restrictive means than are necessary to achieve the purpose of the limitation.
The Canadian case of R v Oakes 26 DLR (4th series) 200 discusses the concept of "reasonable and demonstrably justifiable" in a free and democratic society. It suggested to consider whether a law measured up to being "reasonable and demonstrably justifiable" one has to first look at the objectives which the law or statute sets out to achieve. It is said those concerns must be "pressing and substantial" and not "trivial or discordant" – p 27 Chief Justice Dickson. Secondly Oakes suggests that the means chosen to restrict the right must be reasonable and demonstrably justifiable under three elements of proportionality test, namely:
(a) Measures must be carefully designed and rationally connected to the objective.
(b) There should be minimal impairment of the right in question.
(c) There must be a sense of balance between the deleterious effect of the measures and objectives to be attained.
The New Zealand Court of Appeal in Moonen v Film & Literature Board of Review [2002] 2 NZLR 9 had occasion to discuss the approach to taken when considering reasonable limitation on freedom of expression which can be demonstrably justified in a democratic society. It suggested that the way to approach the issue is "first to identify the objective which the legislature was endeavouring to achieve by the provision in question. The importance and significance of that objective must then be assessed. The way in which the objective is statutorily achieved must be in reasonable proportion to the importance of the objective. A sledgehammer should not be used to crack a nut. The means used must also have a rational relationship with the objective, and in achieving the objective there must be as little interference as possible with the right or freedom affected. Furthermore, the limitation involved must be justifiable in the light of the objective.
[12] In Clowes v Fiji Islands Revenue and Customs Authority (Supra) Inoke J also said that:
"....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] It is a fundamental principle in civil law that an action could be filed or maintained only against a natural person or a legal person. The Customs Act does not define "person". The Interpretation Act (Cap 7) defines a 'person' to include 'any company or association or body of persons, corporate or incorporate. The formation of the legal entity is important to determine liability of the persons. i.e the proprietor is liable in a sole business; in a partnership all partners are equally liable unless there exists a partnership agreement to the contrary; and if the business is incorporated as a company, then it is the company that it is liable for its actions and not the directors, shareholders or its employees. Some statutes provide for the directors or employees of companies to be liable. Unless the law specifically attaches liability on company directors, shareholders or its employees, such persons are not liable in law for payment. A Court upon an application to lift the corporate veil may go against the company directors and their personal assets.
[14] The alleged liability of the applicant arises from non-payment of custom duty for importation of a vessel. The DPO states that the applicant is liable as the person having controlling interest of S Y Volante. The DPO does not specify who imported Volante, nor does it explain how the applicant derived controlling interest. The liability for payment of duty under s 95(1)(c) of the Customs Act, is limited either to the importer or the exporter, as the case may be. It is therefore the legal entity responsible for the importation of S Y Volante that is liable for payment of duty and not the applicant who merely said to have controlling interest. I am, therefore satisfied that the DPO issued pursuant to s143C of the Customs Act 1986, as amended, is defective and invalid.
[15] The DPO in the instant action stated that it could be revoked, if the applicant as the person having controlling interest in S Y Volante pays the outstanding sum or provide security. Clearly, the DPO could be revoked upon the satisfaction of either of these two options. The applicant had opted for the second option, and had agreed to provide security by authorizing Messrs Fiaz Khan Lawyers to release sum of $23,906.07 to FIRCA from the sales proceeds of the sale to Rosie Holidays and offering FIRCA to lodge a claim over the property owned by him and his wife in CT 3591. I am mindful that the law authorize FIRCA to determine the acceptable undertakings as securities. However, it is obligatory on FIRCA to inform the applicant if the securities were insufficient after giving reasons.
[16] The applicant also deposes that he has been living in Fiji for about 6 years; has business interests and financial commitments in Fiji; operates a day cruise business to Malamala Island for the past four years under the business style 'Malamala Island Day Cruise'; Sunsail Pty Limited, which is the parent company, operates and oversees the business; Kento (Fiji) Limited, which exercise propriety rights over native lease of Malamala augments the business; has strong social and community ties as the chairman of the NZPTC Foundation which is a charitable institution, and chairman of the Junior Rugby Academy in Nadi; and also as a member of the building community of the Nadi District School; also takes part in charitable activities as and when required.
[17] Apart from the above securities, the applicant is willing to offer personal surety of Maikai Nawaqavonovono for the entirety of the sum claimed by FIRCA, viz $23906.07.
[18] The applicant was served with a similar DPO on 15 July 2009-[Exhibit MLC 2] which was uplifted in the case of Michael Leo Clowes v FIRCA (supra)-[Exhibit MLC 3]. Since then he has returned to Fiji and has continued with his business and other interests. Therefore this Court can safely infer that the applicant has acted in good faith in the past and is seemed to able to meet his debts from the security offered.
[19] I am satisfied that the applicant has taken reasonable endovours to give comfort to FIRCA to uplift the DPO. The Comptroller must exercise the statutory powers conferred upon him under s 143C, reasonably, justifiably and in good faith. Several attempts made by the applicant to uplift the DPO seemed to have been ignored or a decision has not been taken within a reasonable pace. The applicant had not been informed if the security was insufficient. I am convinced that the applicant, having a permanent base and substantial business in Fiji and being involved in projects with the local community, is not a 'flight risk', and is able to provide security to meet the money owed to the State.
[20] I have already determined that DPO is defective and invalid. In any event, in my opinion, the facts in this case do not, ex facie demonstrate that the Comptroller has exercised his discretion reasonably or justifiably.
[21] At the hearing, the counsel informed court that due to time constrains the applicant was unable to obtain the medical reports of the mother-in-law to attach to his affidavit. I am dissatisfied with his explanation especially in this modern age when technologies make communications efficient and simple. However, having considered his affidavit and considering the good standing of the applicant in the Fiji society, I dispense with this otherwise important documentation, which is the basis of his Motion to travel to Australia.
ORDERS
[22] At the end of the ex-parte hearing I granted paragraph 1 of the Motion i.e. the Departure Prohibition Order is to be uplifted upon providing of personal security of Maikali Nawaqavonovono for the entirety of the duty owed to FIRCA viz $ 23906.07 to enable Mr Michael Leo Clowes to travel out of Fiji.
[23] Having analyzed this matter in detail I make further orders as follows:
............................................................
Ms D Dais Wickramasinghe
Judge
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