Attorney-General v Karibaua [1997] KIHC 2; HCCC 46.94 (16 June 1997)

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The facts and issues in this case are similar to those in the case of Attorney-General in respect of Internal Revenue Board v Bureti Mote (HCCC 41/94), judgment in which was delivered on 10 February 1997.

In the present case the plaintiff, the Attorney-General in respect of the Internal Revenue Board, brings an action against the defendant Anatatia Karibaua to recover income tax totalling $6,313.22, plus interest of $1,832.84 for the period 19 August 1991 to 31 October 1994 and continuing at the rate of $2.59 per day, plus costs. The amount claimed represents tax owing in respect of the defendant's income for the years 1987,1988,1989,1990 and 1991 after giving the defendant credit for payments on account in the sum of $1,522.90.

The defendant did not lodge an objection or appeal against the assessments, nor has she challenged their accuracy.

I propose to deal first with the claim for tax owing for the years 1987, 1988 and 1989. The defendant's answer to that claim is that the notices of assessment for those years are invalid because the Internal Revenue Board had no legal authority to issue them. It is submitted for the defendant that the Minister was the proper person to have made the assessments as required by section 44 of the Income Tax Ordinance Cap. 44.

The Notices of Assessment to Income Tax for the years 1987, 1988 and 1989 (exhibits A, B and C) were issued by B. N. Forbes, Inspector of Taxes, on 19 July 1991 on behalf of the Internal Revenue Board. In Bureti Mote the High Court held that the Internal Revenue Board was not authorised to issue Notices of Assessment for tax years prior to 1 January 1990, which was the date the Income Tax Act 1990 came into effect. In respect of tax years prior to 1990, for a Notice of Assessment to be valid it must have been signed by the Minister or his delegate as required by the Income Tax Ordinance Cap. 44.

No doubt in an attempt to overcome the effect of the decision in Bureti Mote the plaintiff in the present case has produced a document (exhibit F) entitled "Delegation Instrument" in which the Minister on 14 April 1997 purported to delegate his functions and powers to the Inspector of Taxes retrospective 18 years to 1 January 1979. That document is in the following terms:

In exercise of the powers conferred upon me by section 74(2) of the Income Tax Ordinance Cap 44, I hereby delegate to the person holding or acting in the position of Inspector of Taxes for the time being, my functions and powers under the Income Tax Ordinance Cap 44.

This Instrument shall be deemed to have come into operation on 1 January 1979.

Published by exhibition at the Public Office of the Beretitenti this 14th day of April 1997.

There are a number of reasons why I regard that document as having no legal effect.

Firstly, the question to be decided is: At the material time, did B N Forbes have authority from the Minister to issue the Notices of Assessment? The material time was the time that the Notices were issued, i.e. 19 July 1991. The question is a question of fact, the answer to which is no. The Delegation Instrument did not come into existence until 14 April 1997 and so has no evidentiary value for the purpose of deciding the question.

Next, the Notices of Assessment were issued by B N Forbes as a delegate of the Internal Revenue Board, not on his own behalf. As has already been said, the Internal Revenue Board did not have authority to issue notices of assessment for tax years prior to 1990. The Delegation Instrument is not capable of remedying the situation because it does not purport to give the Internal Revenue Board that authority.

Finally, section 74(2) of the Income Tax Ordinance Cap 44 does not empower the Minister to make a retrospective delegation of his functions and powers. Section 74(2) provides:

"74(2)The Minister may by writing under his hand delegate to any public officer or to the person for the time being holding any public office specified by him the exercise of any power or the performance of any duty conferred or imposed upon him by any provision of this Ordinance”.

In my view, the delegation permitted by the subsection is one which comes into operation from the time that it is made. It does not permit a delegation which would commence its operation from a point 18 years back into the past, as the Minister has purported to do in the Delegation Instrument.

In that case, it is submitted for the plaintiff, there is no need for a delegation instrument anyway, since by virtue of section 60(3) of the Interpretation and General Clauses Ordinance Cap. 46 the Minister is deemed to have delegated his powers to the Inspector of Taxes.

"60(3) Where any Act confers powers or imposes duties upon a Minister and such power is exercised or such duty is performed by any public officer, a Minister shall, unless he contrary is proved, be deemed to have delegated to such public officer, under subsection (I), the exercise of the power or performance of the duty”.

The submission for the plaintiff ignores the facts of the case. The Notices of Assessment in question clearly show that they were issued by the Inspector of Taxes on behalf of the Internal Revenue Board, not on behalf of the Minister. The Inspector was specified therein as being the delegate of the Internal Revenue Board. That quite obviously precludes the possibility of a deemed delegation by the Minister under section 60(3), and I therefore reject the submission for the plaintiff in that regard.

There is one more matter I need to deal with in respect to the plaintiff's claim for tax owing for the years 1987, 1988 and 1989. Counsel has tendered a Certificate of Tax Owing signed by the Minister for those years (exhibit "G") but has not included that Certificate in her submissions. Such a certificate is provided for in section 59(2) Income Tax Ordinance Cap 44. In any event, for the reasons given in Bureti Mote I hold that, in the absence of valid Notices of Assessment creating a liability to pay tax, the Certificate of Tax Owing has no probative value.

As I have already indicated, the Notices of Assessment for the years 1987, 1988 and 1989 were signed by a person who had no legal authority to do so and are therefore invalid. It follows that the plaintiff has not proved that part of his case relating to tax owing for those years and the claim in respect thereof fails accordingly.

I come now to the plaintiff’s claim for tax owing for the years 1990 and 1991.

The Notices of Assessment for those years were put into evidence as exhibits D and E. The Notice of Assessment for 1990 was issued on 19.7.91 in the name of Barry Forbes for the Internal Revenue Board. The Notice of Assessment for 1991 was issued on 6 October 1993 and initialled by Matarena B Raiman for the Internal Revenue Board.

Matarena B Raiman gave evidence that both Barry Forbes and herself held the position of Inspector of Taxes when the Notices of Assessment were issued. She also produced the Inspector of Taxes and Staff of Taxation Division (Delegation) Instrument 1992 L.N.44 (exhibit H) by virtue of which the Internal Revenue Board delegated to the Inspector of Taxes full power and authority to administer the Income Tax Act as from 1 January 1990.

As mentioned earlier, as from 1 January 1990 the Internal Revenue Board has the responsibility of assessing every person chargeable to tax under the Income Tax Act 1990 (section 100(1)). Under section 100(9), a copy of a notice of assessment is receivable in any proceedings as conclusive evidence of the due making of the assessment and that the assessment is correct.

The only thing challenged by the defendant to this particular claim is that there was no proof that the Notices of Assessment for 1990 and 1991 were served on the defendant as required by section 100(6) of the Act.

The Inspector of Taxes gave evidence that she understood that both assessments had been served because copies had been placed on the office file. That would not have been done unless the Notices had been served. However, she had no knowledge of any specific details of the service. She did not know when or where the defendant had been served or who had effected the service.

Nevertheless, there was other evidence to support the inference that the defendant had been served with the Notices of Assessment. The Inspector said that the defendant had been called into the office to negotiate payment of the tax arrears and some payment was made by the defendant as a result. In paragraph 4 of the statement of defence the defendant herself admits to making a payment. It can be seen from the Notice of Assessment for 1990 that the defendant had been given credit for a payment of $522.90 and from the Notice of Assessment for 1991 that the defendant had been given credit for a payment of $1,000.

There was also evidence from another witness, Marontau Ruku, who worked as a tax clerk from 1986 to 1993, that he had followed up some unpaid Notices of Assessment by telephoning the defendant. However, he only remembered discussing with the defendant the tax owing for the years 1991 and 1992.

No doubt the defendant would have been able to throw some light on the issue but she chose not to give evidence. She of course does not bear any onus of proof, but her failure to testify is a fact which I am entitled to consider in assessing whether, on the whole of the evidence, the plaintiff has proved on the balance of probabilities that the Notices of Assessment for the years 1990 and 1991 were served on the defendant. I find that such service has been proved.

I therefore find that the plaintiff succeeds in his claim for tax owing for the years 1990 and 1991.

Accordingly, there will be judgment for the plaintiff in the sum of $4,598.10, made up as follows:

TAX YEAR 1990
Tax assessed		1_,438.54
Less payment	522.90	915.64
Plus Interest from 19/8/91 to 19/6/97 (2131 days at.37 per day)		788.47
SUBTOTAL		1_,704.11
TAX YEAR 1991
Tax assessed		2_,876.82
Less payment	1,000:00	1,876.82
Plus Interest from 6/11/93 to 19/6/97 (1321 days at.77 per day)		1,017.17
SUBTOTAL		2_,893.99
TOTAL(1,704.11+2,893.99)		4,598.10.

Because each of the parties has been only partly successful there will be no order as to costs.

High Court of Kiribati

Attorney-General v Karibaua [1997] KIHC 2; HCCC 46.94 (16 June 1997)