Suva City Council v Prakash [2001] FJLawRp 28; [2001] 1 FLR 157 (16 April 2001)

	Home \| Databases \| WorldLII \| Search \| Feedback Fiji Law Reports

Carrying out a Business without licence – appeal against acquittal - operator apartments – meaning of 'business' – whether operating for profit or gain where income goes into a trust - whether residential property can fall under definition of 'operator apartments' - Business Licensing Act ss2, 5 and 18

Suva City Council issued two notices requesting the Respondent to pay a business licence fee of $220.00 for operator apartments at Charles Street. The Respondent objected on the basis that he was not operating a business. The Appellant summonsed him to Court and the magistrate found doubt about the business and acquitted the Respondent. The Appellant appealed on grounds that the business of renting out property was for profit or gain, that "operator-apartments" did apply to rented property and that the schedule in Business Licensing Act included businesses operating on residential property. Appellant counsel submitted that the Respondent was operating the flats for a profit for the estate he was administering, and that the rent received was taxable. The Court considered the purpose of the Business Licensing Act, and interpreted the words 'business', 'apartments' and 'operator apartments'.

Held – A business is any trade or activity carried on for the purpose of gain. It does not matter whether the gain accrues to the manager of the business, or not. The plain and simple meaning of apartments, is two or more suites of rooms allotted to a person or persons within a building. The inclusion of the words "operator apartments" in the Schedule clearly indicated the intention of the Minister to include a category of residential accommodation which is not a motel nor an hotel, nor a guest-house. Such category clearly intended to include operators of two or more apartments. The words "operator apartments" are clear and simple and apply to the Respondent's premises. Any accommodation let for profit which is two or more suites of rooms within a building, is subject to the payment of business licence. There is nothing ambiguous about the use of the word "apartments" in the Business Licensing Act. It is artificial to differentiate between licenses and leases, and between short leases and long ones.

Appeal allowed, acquittal set aside and substituted with a conviction, case referred back to the Magistrates' Court for mitigation and sentence.

This is an appeal from a decision of the Suva Magistrates' Court on 9th August 1999 to acquit the Respondent for an offence under the Business Licensing Act. The Appellant is the Suva City Council and the appeal is brought with the sanction of the Director of Public Prosecutions.

On the 26th of March 1998 the Respondent who operates a building with four apartments in Charles Street, Toorak was charged as follows:

ENGAGED IN BUSINESS WITHOUT A BUSINESS LICENCE: Contrary to Sections 5(1) and 18(1) of Business Licensing Act Cap 204 and By-Law No. 2 of the Suva (Business Licence Fees) (Amendment) By-Laws 1995.

OM PRAKASH f/n DAYA RAM of Suva in the Central Division did on the 23rd day of May 1997 carry out an Operator Apartments business without a valid Business Licence.

The Respondent pleaded not guilty, and the parties agreed to file a statement of agreed facts. It was agreed that the Respondent was the registered proprietor of a property at 14 Charles Street, together with one Nitya Nand. The property contains four flats rented out by the Respondent at monthly rents of $130.00, and $270.00. The rents are paid to the accused's business name of Prakash Estate Agency. On 15th May 1997, the Suva City Council issued a notice to the Respondent requesting him to pay by the 22nd of May 1997 a business licence fee of $220.00 (VAT inclusive) for the period 1st January 1997 to 31st December 1997.

The Respondent objected to the payment of the fee. The Suva City Council again requested payment on 15th October 1997. The Respondent did not pay. On 26th March 1998, summons was issued in the Magistrates' Court at Suva, under sections 5(1) and 18(1) of the Business Licensing Act Cap 204, and By-Law No. 2 of the Suva (Business Licence Fees) (Amendment) By-Laws 1995.

At the hearing the only issue for the learned Magistrate was whether the Respondent required a business licence for operating the flats at 12 Charles Street. After hearing extensive submissions by counsel, the learned Magistrate decided that the wording of the by-law which required a business licence for "operator-apartments" was ambiguous, and that as a matter of the statutory interpretation of a penal provision, the ambiguity ought to be resolved in favour of the Respondent. The grounds of appeal are as follows:

On appeal, counsel largely re-argued the grounds they had argued before the learned Magistrate. The Appellant submitted that there is no ambiguity in the legislation and the by-laws. The definition of a "business" under section 2 of the Business Licensing Act Cap 204 was any activity carried out for gain. Counsel submitted that the Respondent was operating the flats for a profit for the estate he was administering, and that the rent received was taxable. He said that the Respondent was clearly carrying out a business activity which was the operation of apartments. He said it made no difference whether the occupants were there for long leases, or for short periods, the only issue being whether the premises contained two or more apartments rented for gain. Nor, counsel submitted, was it relevant whether VAT was payable on the rentals or that the premise were used for residential purposes.

Counsel for the Respondent argued that apartments rented out which were VAT exempt were also exempt from the payment of business licenses. He said that residential dwellings should not be classed together with flats or apartments built on commercial zoned land. He further submitted that only hotels, guest-houses and apartments built on commercially-zoned land would require business licences, and that such accommodation normally advertised short-term rentals rather than the longer leases in apartments built on residentially zoned land.

"The Minister may by notification in the Gazette, designate any business as being one in respect of which a licence is required by the provisions of this Act."

"(1) No person shall engage in any business designated under the provisions of section 4 in Fiji without a licence issued by a licensing authority in respect of each place in which such business is carried on or, in the case of a hawker or other person carrying on business from or at no fixed address in Fiji, in respect of such businesses.

(2) Any person who acts in contravention of the provisions of subsection (1) shall be guilty of an offence."

"(1) Any person guilty of an offence against any of the provisions of this Act shall be liable on conviction to a fine not exceeding five hundred dollars, or to imprisonment for a term not exceeding one year or to both such fine and imprisonment."

The words "operator-apartments" did not appear in the list of designated businesses until 1995. Prior to 1995, motels were a designated business in some towns and not others. Hotels and motels were listed as designated businesses in the Suva (Business Licence Fees) By-Laws by Legal Notice No. 5 of 1979 and 48 of 1980, but were not included in the Business Licence (Fees) Regulations Cap 204 passed by Legal Notice No. 2 of 1979.

However by Legal Notice No. 46 of 1995 the Suva (Business Licence Fees) By-Laws 1986, and the Suva (Business Licence Fees) (Amendment) By-Laws 1993 were revoked and the Suva (Business Licence Fees) By-Laws 1995 came into effect. By-Law 2 states:

"Every person who, within the boundaries of the City of Suva engages in any of the businesses set out in the Schedule, whether jointly or otherwise shall take out a business licence and pay a business licence fee at the rate per year set out in such Schedule."

The Schedule includes the following categories of persons who require business licences:

A03	Accommodation, Hostels/Boarding Houses
A02	Accommodation, Guest Houses/Tourist Flats
H24	Hotel, with Liquor Licence and/or Restaurant and/or Refreshment Bar
M79	Motels
004	Operator, Apartments

It is clear that the schedule in 1995 intended to include different categories of residential accommodation which had not been included before. Such accommodation included premises which usually let out premises on short term leases (hotels and motels) and those which may involve longer term tenancies (Tourist Flats and Apartments).

There is no definition of any of the words used in the Schedule, and there is no definition of "flat", "motel" or "apartment." Section 2 of the Act provides that:

"business" means any form of trade, commerce, craftsmanship, calling or other activity carried out for the purpose of gain."

"hotel" includes a boarding-house, lodging-house, guest-hose and any building, vessel, premises, structure, caravan, or house on wheels or any part of any such building, vessel, premises, structure, caravan or house on wheels, not being a public institution, some part of which is used or occupied for the business of receiving guests or travellers desirous of remaining or dwelling therein for any period of time or to which persons are entitled to resort for accommodation for hire or reward of any kind."

Under the Hotels and Guest Houses Act Cap 195, all hotels and guest-houses must have a licence, which is issued by a Hotels Licensing Board appointed by the Minister. Under the Act, and the Regulations, hotels must have managers who keep registers of all the guests, the premises must be declared to be suitable for a hotel, and the manager must remain on the premises except for absences of up to one month. Under Regulation 9, university and school hostels, YWCA hostels, Government hostels and hostels run by charitable bodies, are exempted from the provision of the Act.

Under the Housing Act Cap 267, a hostel is defined as "a building wherein is provided for persons generally or for any class or classes of persons residential accommodation (otherwise than in separate or self-contained sets of premises) and board." A "dwelling-house" or "house" is defined to "include any part of a building which is occupied or intended to be occupied as a separate dwelling."

The first ground of appeal is that the learned Magistrate erred in finding that the Respondent was not conducting the business of renting out the property at 12 Charles Street, for profit or gain.

"If different conclusions are possible as to the ordinary meaning of the word "business" then it is necessary to decide which is the correct conclusion and that becomes a question of fact. It is clear that from the facts that all the four flats are occupied by tenants for the purpose of residence. Rental income derived are banked and held in trust for the beneficiaries until the beneficiaries attain the age of 21 years. The accused being a trustee does not derive any beneficial interest or profit."

The learned Magistrate found that there was doubt as to whether the premises were let for profit or gain, and therefore as to whether the Respondent was running a business.

Section 2 of the Business Licensing Act is very clear. A business is any trade or activity carried on for the purpose of gain. It does not matter whether the gain accrues to the manager of the business, or not. It is not suggested by the Respondent that the beneficiaries of the estate, will not profit from the rental income.

Counsel referred to the decision of Pearson J in Rolls v Miller (1884) Ch 71, which is authority for the proposition that profit and gain are not essential components of a business. In that case a charitable institution running a home for working girls, was held to be a business, although no profits were made. The activity was therefore in breach of a covenant not to carry out any business on the premises.

However, the common law definition of a business, in the context of a covenant relevant to a lease, can be of little relevance in Fiji, where the Business Licensing Act provides a clear unambiguous definition of a business. In Fiji, if an activity is not conducted for profit or gain (irrespective of who receives the profits) then it is not a business, and cannot be required to apply for a business licence.

As to the facts before the learned Magistrate, it was not suggested that the rentals were spent on charitable purposes, or that there were no profits after deduction of the necessary expenses of running rental properties. The Respondent was running the business as trustee for beneficiaries who will gain from them when they come of age. The same principle would apply if the beneficiaries had inherited a bus company, or a supermarket. The profits would simply be held in trust for the estate until the beneficiaries came of age. The business of running the supermarket or bus company, would still be a business, because they would still be run for the purpose of profit or gain. The fact that the trustee is required to pay the licence on behalf of the estate, is irrelevant. The cost of the business licence would simply be part of the expenses of running the estate.

I find therefore as a matter of law and fact that the learned Magistrate erred when she said that there was doubt as to the meaning of the word "business" and secondly when she found that the Respondent was not running a business for the purposes of section 5 of the Business Licensing Act.

Is there a doubt as to whether the word "operator-apartments" applies to the Respondent's rental property?

The insertion of the word "operator-apartments" in the 1995 By-Laws, suggests that a category of residential property was intended to be included in the list of businesses to be licensed, which had not been included before. Prior to 1995, and after 1995, motels and hotels were separately listed. The words tourist flats were included after 1995, referring presumably to flats let to people whose usual place of residence is abroad, and who are visiting Fiji for a short term holiday. Hotels and guest-houses provide accommodation (usually but not exclusively for short periods) where the manager is required to live on the premises. The word "motel" is not defined by statute, but The Concise English Dictionary defines a motel as "an hotel for motorists with adjacent parking." The same dictionary defines "apartment" as "a room or rooms in a building, a flat." The learned Magistrate referred to the Shorter Oxford Dictionary definition which is "a suite of rooms in a house or building allotted to the use of an individual or party." A "flat" is defined by the Shorter Oxford Dictionary as "a suite of rooms on one floor, forming a complete residence."

It would appear from these definitions of "flat" and "apartment", that there is no real or appreciable difference between them. The plain and simple meaning of apartments, is therefore two or more suites of rooms allotted to a person or persons within a building. It also appears clear that the By-Laws intended a business licence to be payable by any person or person who lets such suites out for profit or gain. The inclusion of the words "operator apartments" clearly indicates the intention of the Minister to include a category of residential accommodation which is not a motel nor an hotel, nor a guest-house. Such category clearly intends to include operators of two or more apartments.

Counsel for the Respondent suggest that the operators of apartments such as the Duncan Apartments, are covered by the By-Law. He says that such apartments are built on commercially-zoned land. He says that apartments built on residential zone must be exempt from paying business licences, because it was unlawful to run a business from a residential locality. He also points to the exemption from VAT for rentals on residential accommodation.

I cannot accept these submissions. The purpose of exempting persons from the VAT Decree is many-fold, and may well be, in the case of tenancies of residential property, to protect tenants from hardship. In respect of the zoning by-laws, the requirement that certain businesses may not be carried out in residential areas, may be to protect residents of such property, from disruption of the quiet enjoyment of their land. These are legitimate concerns of the zoning by-laws, and the VAT Decree. They are not relevant to the question of what a business is, for the purpose of the Business Licensing Act. Furthermore, as counsel for the Appellant points out, there are some businesses which are carried out from residential premises, just as there are some businesses such as pharmaceuticals, which are exempt from paying VAT on their products.

I find therefore that any accommodation let for profit which is two or more suites of rooms within a building, is subject to the payment of business licence. I see nothing ambiguous about the use of the word "apartments." Ground (b) is upheld.

The last ground of appeal is that the learned Magistrate erred in finding that residential property was not included in the schedule of the Business Licensing Act.

The schedule of designated businesses under the Act clearly includes residential accommodation. A motel, hotel and a guest house are all residential. A business which lets out property on long-term leases is no less a business, simply because of the length of the leases. To suggest otherwise, would be to give the by-laws an interpretation which is difficult to apply, and which may result in absurdities. If an apartment available for a two-week lease, and a one-year lease, is a business, then so is an apartment available for a one-year lease, or a lease with no definite length but where the rental is payable monthly rather than weekly or daily.

The by-law exempts the owners of one apartment. It requires licences for operators of two or more apartments.

I find therefore that it is artificial to differentiate between licenses and leases, and between short leases and long ones. The words "operator apartments" are clear and simple and apply to the Respondent's premises at 12 Charles Street.

For the reasons given above, this appeal is successful. The acquittal ordered by the learned Magistrate is set aside and substituted with a conviction. I refer the case back to the Suva Magistrates' Court for mitigation and sentence.

Fiji Law Reports

Suva City Council v Prakash [2001] FJLawRp 28; [2001] 1 FLR 157 (16 April 2001)