Chief Collector of Taxes v Dilon [1990] PGLawRp 300; [1990] PNGLR 414 (31 October 1990)

Papua New Guinea Law Reports - 1990

[1990] PNGLR 414 - Chief Collector of Taxes v Blasius Dilon 

[1990] PNGLR 414

SC396

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]

THE CHIEF COLLECTOR OF TAXES

V

BLASIUS DILON

Waigani

Kapi DCJ Amet  Brown JJ

13 July 1990

31 October 1990

INCOME TAX - Taxation prosecutions - Evidence and onus of proof on - Averment of prosecutor - Prima facie evidence - Summary dismissal not available - Unaffected by constitutional presumption of innocence - Income Tax Act 1959, s 333(1) - Constitution, s 37(4)(a) - National Court Rules, O 10, r 14.

The Income Tax Act 1959, s 333, provides:

N2>“(1)    In a taxation prosecution, an averment of the prosecutor or plaintiff contained in the information, complaint, declaration or claim is evidence of the matter averred.

N2>(2)      This section applies to any matter so averred although:

(a)      evidence in support or rebuttal of the matter averred or of any other matter is given; or

(b)      the matter averred is a mixed question of law and fact, but in that case the averment is evidence of the fact only.

N2>(3)      Any evidence given in support or rebuttal of a matter so averred shall be considered on its merits, and the credibility and probative value of that evidence shall be neither increased nor diminished by reason of this section.

N2>(4)      This section does not apply to:

(a)      an averment of the intent of the defendant; or

(b)      proceedings for an indictable offence or an offence directly punishable by imprisonment.

N2>(5)      This section does not lessen or affect any onus of proof otherwise falling on the defendant.”

A writ of summons issued against a taxpayer for failing to furnish to the Chief Collector of Taxes the statement of earnings and reconciliation statements for a tax year contrary to s 299g of the Income Tax Act, contained the following averments:

N2>“1.      That the respondent is a group employee under the Income Tax Act.

N2>2.       That he failed to provide a statement of earnings and reconciliation statement for 1987.”

The taxpayer pleaded in defence that he did not employ anyone in the relevant tax year. When no evidence was offered at the trial the trial judge, on application of the taxpayer, dismissed the summons on the ground that there was no evidence to support the claim.

On appeal,

Held

(Allowing the appeal)

N1>(1)      (Amet J not deciding) On the application to enter judgment for the defendant under O 10, r 14 of the National Court Rules on the ground of insufficient evidence to support the claim, the onus of proof remained with the Chief Collector of Taxes as prosecutor.

N1>(2)      (Amet J not deciding) The effect of s 333(1) of the Income Tax Act was to make any matter of fact averred in a statement of claim prima facie evidence of that matter.

N1>(3)      (Amet J not deciding) There was prima facie evidence of essential facts constituting the claim before the trial judge that the taxpayer was a group employee and had failed to provide relevant statements, which evidence was sufficient to require the matter to be determined on its merits.

N1>(4)      (Amet J dissenting) Section 37(4)(a) of the Constitution, which guarantees the presumption of innocence until proved guilty according to law, has no effect on the evidentiary provisions of s 333 of the Income Tax Act.

Cases Cited

Alva Natona Pty Ltd v Eric J Unger (Deputy Federal Commissioner of Taxation) (1981) 81 ATC 4443.

Evans v Button (1988) 13 NSWLR 57.

Evans v Lynch [1984] 3 NSWLR 567.

Jackson v Butterworth [1945] VicLawRp 66; [1946] VLR 330.

Kelly v JRA Ltd (1990) 92 ALR 651.

Naismith v McGovern [1953] HCA 59; (1953) 90 CLR 336.

Robins v National Trust Co [1927] AC 515.

SCR No 1 of 1980; Re Police Offences Act [1981] PNGLR 28.

SCR No 1A of 1981; Re Motor Traffic Act [1982] PNGLR 122.

SCR No 2 of 1980; Re Summary Offences Act 1977 [1981] PNGLR 50.

Van Reesma v Mills (1981) 81 ATC 4483.

Appeal

This was an appeal from a decision of the National Court to dismiss proceedings by the Chief Collector of Taxes under O 10, r 14 of the National Court Rules for want of sufficient evidence to support the claim.

Counsel

D L Cannings, for the appellant.

J Yagi, for the respondent.

Cur adv vult

31 October 1990

KAPI DCJ: This is an appeal against the decision of the National Court. A writ of summons was issued against the respondent for failing to furnish to the Chief Collector of Taxes the statement of earnings and reconciliation statements for the year 1987 contrary to s 299g of the Income Tax Act 1959 (as amended). The respondent pleaded in defence that he did not employ anyone in 1987.

At the trial, the Chief Collector of Taxes did not call any evidence either orally or by affidavit. Miss Weigall, counsel appearing for the Chief Collector of Taxes, made an application to cross-examine the respondent. Counsel for the respondent objected on the basis that the respondent had not given any evidence in the trial and therefore there was no right to cross-examination. It appears from the record of the trial that counsel for the respondent submitted that there was a defence raised and the onus was on the appellant to call evidence to prove its case. It was submitted that if no evidence is called by the plaintiff the respondent cannot be subjected to cross-examination. Miss Weigall then responded by offering no evidence at the trial. Upon this indication, counsel for the respondent then moved the court for the writ of summons to be dismissed. The trial judge upon the application dismissed the summons.

The appellant has appealed against the ruling on certain questions of law. The substantive ground is “that the learned judge erred in law in finding that the statement of claim and particulars of claim were not in evidence before the Court, in particular, that his Honour’s finding was in contravention of s 333 of the Income Tax Act 1959 (as amended)”.

The terms of s 333 are as follows:

N2>“(1)    In a taxation prosecution, an averment of the prosecutor or plaintiff contained in the information, complaint, declaration or claim is evidence of the matter averred.

N2>(2)      This section applies to any matter so averred although:

(a)      evidence in support or rebuttal of the matter averred or of any other matter is given; or

(b)      the matter averred is a mixed question of law and fact, but in that case the averment is evidence of the fact only.

N2>(3)      Any evidence given in support or rebuttal of a matter so averred shall be considered on its merits, and the credibility and probative value of that evidence shall be neither increased nor diminished by reason of this section.

N2>(4)      This section does not apply to:

(a)      an averment of the intent of the defendant; or

(b)      proceedings for an indictable offence or an offence directly punishable by imprisonment.

N2>(5)      This section does not lessen or affect any onus of proof otherwise falling on the defendant.”

This provision was not brought to the attention of the trial judge. I should point out that it is the duty of all counsel to bring all relevant law to the attention of the judge. Miss Weigall, who practises only in matters of tax, should have brought these provisions to the attention of the trial judge. I am sure that if the trial judge’s attention was drawn to this provision, he may well have come to a different ruling.

Under s 327 of the Income Tax Act 1959 a prosecution may be commenced, prosecuted and proceeded with in any number of ways set out under this provision. This deals with questions of practice and procedure. No question was raised at the trial or on appeal as to the validity of s 327. I therefore express no view on this issue. I have proceeded on the basis that it is valid. It is not clear from the record how the trial judge proceeded in this matter. But it would appear from the nature of submissions made by counsel for the respondent — and which were accepted by the trial judge — that he appeared to have applied the practice and procedure of the National Court in civil cases. Counsel for the respondent submitted that as the appellant called no evidence at the trial, he moved the court to enter judgment for the defendant. This would appear to be in accordance with O 10, r 14 of the National Court Rules. In such a trial, the evidence may be led either orally or by affidavit. However, in matters of taxation prosecution such as the present case, s 333(1) is applicable.

It must be emphasised at this point that what the trial judge decided was a preliminary evidentiary matter, that is, there is no evidence to support the plaintiff’s claim.

The trial judge did not decide any of the following issues:

N2>1.       What is the nature of a prosecution under the Income Tax Act? For the purposes of determining the preliminary issue as to whether there is any evidence, it is not necessary to decide the nature of a taxation prosecution. The nature of proceedings is relevant to the issue of whether the respondent is guilty of the offence and all other matters related to it. The trial judge had not reached this stage in these proceedings.

N2>2.       The weight to be given to any evidence before the court. The trial judge simply did not reach this stage.”

These are clearly matters which could have been decided by the National Court if the application to enter judgment for the defendant was dismissed and the trial allowed to proceed. In the circumstances, this Court has no jurisdiction to consider any matter not forming part of the decision of the National Court. The power of review is confined to the issues decided by the trial judge.

There is further reason why this Court should not embark on any matter not decided by the trial judge. As will appear later in my judgment, the ground of appeal will be successful and the matter will be sent back to the trial judge to complete the proceedings. The National Court will decide these issues at that time. The Supreme Court should not interfere in these circumstances. Advisory opinions are confined to s 19 of the Constitution.

Going back to the decision on appeal, the following issues were decided by the trial judge.

First, as far as an application to enter judgment for the defendant under O 10, r 14 is concerned, the onus is on the plaintiff to adduce evidence. It is clear from the trial judge’s ruling that the onus was on the Chief Collector of Taxes. There is no error in this regard.

Secondly, as to whether there was any evidence, the trial judge ruled that there was no evidence to support the plaintiff’s claim. The trial judge’s ruling would be correct if this was an ordinary trial in a civil case.

However, this is a taxation prosecution and s 333 is applicable.

The effect of this provision is that any matter averred in a statement of claim is evidence of that matter. I reach the conclusion that this provision establishes only prima facie evidence of the matter averred. It could not be otherwise because, under s 333(2)(a), evidence in support of the averment may be given. Any evidence that may be given in support or rebuttal of a matter averred is not affected by s 333(1). It does not affect any onus on the defendant (s 333(5)) as does s 334 where the onus is on the defendant to show that a taxation prosecution which has been instituted in the name of Chief Collector of Taxes was instituted without the authority of Chief Collector of Taxes. The question is whether the statement of claim contains prima facie evidence of the essential facts constituting the plaintiff’s claim? The claim contains the following averments.

N2>1.       That the respondent is a group employee under the Income Tax Act.

N2>2.       That he failed to provide a statement of earnings and reconciliation statement for 1987.

These averments deal with mixed questions of law and fact. Under s 333(2), an averment is evidence of the facts only.

By operation of law, the respondent is a group employee under the Act and has failed to provide a statement. That was the prima facie evidence before the trial judge by virtue of s 333(1) of the Income Tax Act 1959 (as amended).

The trial judge fell into error and it is so conceded by counsel for the respondent.

The question then arises whether s 37(4)(a) of the Constitution has any relevance to the issue of whether there was any evidence to support the claim at the close of the appellant’s case?

Section 37(4)(a) deals with determination of guilt and innocence and proof of guilt according to law. The trial judge had not reached this stage in these proceedings. This provision has no bearing on the issue of whether there is any prima facie evidence of essential facts constituting the claim. That of course is an issue which must be decided according to law. The law in this regard is s 333(1) of the Income Tax Act 1959.

I would allow the appeal and order that the matter goes back to the trial judge for further hearing. As the appellant closed its case, the court would call on the respondent whether to call any rebuttal evidence and then further deal with the case according to law.

AMET J: This appeal arises out of a decision of the trial judge in the National Court on 20 December 1989, dismissing the action by the appellant. The action in the National Court was a “taxation prosecution” under the Income Tax Act 1959 (the Act) commenced by a writ of summons for the recovery of a pecuniary penalty for alleged infringement of provisions of the Act.

To appreciate the nature of this “prosecution” and the very fundamental constitutional issues which, in my view, this process raised, it is necessary to set out the “allegations” in the “Statement of Claim”, “Particulars of Claim” and the “Orders” sought.

STATEMENT OF CLAIM

N1>“1.      The defendant is an employer pursuant to Section 299C of the Income Tax Act 1959 as amended.

N1>2.       The defendant is obliged pursuant to Section 299G to register with the Plaintiff as a Group Employer.

N1>3.       The defendant is obliged under the provisions of Section 299G(4)(f)(i) and (ii) to furnish to the Chief Collector of Taxes not later than the 14th day of February in each year, a copy of the Statement of Earnings issued by him to each employer in respect of Salary or Wages paid by him and the total of the amount deductions made by him as a group employer during the period of twelve (12) months that ended 31st December in the preceding year; and a statement in a form approved by the Chief Collector of Taxes signed by group employer, reconciling the total of the amounts of the deductions shown in each of those copies of Statement of Earnings with the total of the amounts paid to the Chief Collector of Taxes in respect of those deductions.

N1>4.       Pursuant to Section 299G(9) and (10) and Section 299L, the plaintiff is empowered to seek the imposition of a penalty.”

PARTICULARS OF CLAIM

The defendant has failed to furnish to the Chief Collector of Taxes the statement of earnings and reconciliation statements for the years as set out below:

“SERIAL NUMBERS

YEAR	FROM	TO
1987	817676(2)	817677(3)

AND THE PLAINTIFF SEEKS THE FOLLOWING ORDERS:

N2>1.       That the defendant be adjudged liable to penalty;

N2>2.       That the defendant pay such penalty as may be imposed by the Honourable Court within 12 days of the date hereof;

N2>3.       Such further or other Order as to this Honourable Court seems meet.”

NATURE OF PROCEEDINGS IN THE NATIONAL COURT

The proceeding in the National Court is a unique one. It is said to be a “taxation prosecution” instituted in the name of the Chief Collector of Taxes for the recovery of a pecuniary penalty for alleged breach of provisions of the Act. This process, it is contended by the appellant, is sanctioned by s 312 and s 323 of the Act, which provide:

N2>“312.   Taxation Prosecution

In this Part, ‘taxation prosecution’ is a proceeding instituted in the name of the Chief Collector, in pursuance of Section 323 of this Act, for the recovery of a pecuniary penalty under this Act.

...

N2>323.    Taxation Prosecution

(1)      [National Court] A proceeding for the recovery of a pecuniary penalty under this Act may be instituted in the name of the Chief Collector by action in the National Court.

(2)      [Court of summary jurisdiction] Where the penalty sought to be recovered does not exceed K1,000 or the excess is abandoned, the proceeding may be instituted in the name of the Chief Collector by information in a court of summary jurisdiction.”

The appellant has relied on s 327 in using the civil process in this prosecution. It provides as follows:

N2>“327.   Prosecution in accordance with practice rules

A taxation prosecution in the National Court may be commenced, prosecuted and proceeded with, in accordance with any rules of practice established by the Court for Crown suits in revenue matters or in accordance with the usual practice and procedure of the Court in civil cases or in accordance with the directions of the Court or a judge.”

The method of proof adopted by the appellant, in all such prosecutions heretofore has been to rely solely on the averments of facts contained in the statement of claim in reliance upon s 333(1), which provides as follows:

N2>“333(1)         Averment of prosecutor sufficient

(1)      [Evidence] In a taxation prosecution, an averment of the prosecutor or plaintiff contained in the information, complaint, declaration or claim is evidence of the matter averred.”

PLEADINGS

The writ of summons was issued on 31 March 1989, and served on the respondent on 2 May 1989. He filed notice of intention to defend, defence and affidavit verifying defence all on 23 May 1989. The suit was then set down for trial.

The respondent denied, in his defence, allegations 1, 2 and 3 of the statement of claim and pleaded that he did not employ anyone during 1987. The respondent filed and served on the appellant notice of discovery on 20 November 1989 requiring the appellant to give discovery with verification within 15 days of service. The appellant did not comply, but instead requested that the respondent attend the trial for the purpose of giving evidence.

Because of the unique nature of this process there was understandably some uncertainty as to the procedure at the trial. The appellant, as was the usual case, sought to rely on the allegation or “avertments” in the statement of claim as prima facie “evidence of the matter averred” by reliance upon s 333(1). The respondent applied for a non-suit contending there was no evidence before the court as the respondent had denied all the averments. Counsel for the appellant then sought to call the respondent to cross-examine him on his affidavit. Counsel for the respondent quite understandably objected, contending there was no evidence before the court on which to cross-examine the respondent. The court upheld this objection by the respondent, ruling that there was no evidence before the court upon which the respondent should be compelled to be cross-examined. The appellant offered no other evidence and the court dismissed the action awarding costs to the respondent. It is from this decision that the Chief Collector has appealed.

One of the primary issues raised is whether this “prosecution” is a civil proceeding or a criminal proceeding. It is important to note the provisions of the Act, pursuant to which the charges are laid and penalty sought in cl 4 of the statement of claim. Clause 4 is in the following terms: “Pursuant to section 299G(9) and (10) and section 299L, the plaintiff is empowered to seek the imposition of a penalty”. The relevant sections are:

“299G(9)

[Offence] An employer who contravenes, or fails to comply with a provision of this section that is applicable to him is guilty of an offence. 299G(10).

[Penalties] The penalty for failure to comply with any one of the requirements of Subsection (4)(a), or with requirements of that paragraph as raised in pursuance of Subsection (6), is a fine of not less than K500.00 and not exceeding K2,000 — or imprisonment for a term not exceeding six months, and the penalty for any other offence under this section is a fine of not less than K200.00 and not exceeding K2,000. 299L.

N2>(1)      [Debt] An amount payable to the Chief Collector under the provisions of this Division is a debt due to the State and payable to the Chief Collector, and may be sued for and recovered in any court of competent jurisdiction by the Chief Collector suing in his official name.”

It is important to understand the precise nature of this “prosecution”. Clauses 2 and 3 of the statement of claim in fact allege the commission of two distinct offences, but which are chargeable under the one provision creating the omissions as offences, being s 299g(9). Clause 2 charged the failure to comply with the requirements of s 299g to register with the “Plaintiff” as a group employer. Clause 3 charged non-compliance with the requirements of s 299g(4)(f)(i) and (ii). In my view, cl 2 and cl 3 are in reality allegations of facts constituting separate offences pursuant to s 299g(9), for which penalties under s 299g(1) are applicable.

Whilst s 327 would appear to permit this “prosecution” to be “in accordance with the usual practice and procedure of the court in civil cases” and thus the prosecution by the writ of summons, I do no think that alters the true character and nature which the words, “guilty of an offence”, technically and naturally ascribe to the conduct “charged” as an “offence”. The defendant has been “charged” with “offences”, for which he is liable to be found “guilty”, “convicted” and penalised. Though the immediate “penalty” is only a pecuniary one, pursuant to s 337, the defendant is liable to “be deprived of his personal liberty” by being “committed” “to a corrective institution until the penalty is paid”. Section 337(1) provides that:

“where a pecuniary penalty is adjudged to be paid by a convicted person, the court shall:

(a)      commit the offender to a corrective institution until the penalty is paid;

(b)      release the offender upon his giving security for the payment of the penalty; or

(c)      exercise for the enforcement and recovery of the penalty any power of distress or execution possessed by the court for the enforcement and recovery of penalties or money adjudged to be paid in any other case.”

Section 337(2) and s 338 stipulate detailed provisions for time allowed for payment and release of offenders upon full payment or partial payment, according to a scale.

APPLICATION OF CONSTITUTION, S 37(4)(A)

The issue has arisen as to whether the practice and procedure prescribed and adopted by the operation of s 327 and s 333(1) is unconstitutional, being contrary to s 37(4)(a) of the Constitution, which as far as is relevant, is as follows:

N2>“(4)    A person charged with an offence:

(a)      shall be presumed innocent until proved guilty according to law ...”

The interpretation and application of this section has been exhaustively discussed in several leading authorities of this Court in Constitutional References for the opinion of the Court. They are SCR No 1 of 1980; Re Police Offences Act (Papua) [1981] PNGLR 28; SCR No 2 of 1980; Re Summary Offences Act 1977 [1981] PNGLR 50 and SCR No 1A of 1981; Re Motor Traffic Act [1982] PNGLR 122.

The preponderance of these authorities persuades me that the issue is a threshold one. It arises at the very outset; that is, whether it is constitutional to, in effect, charge a person with an “offence” by a civil process and to “prosecute” to a “finding of guilt”, “conviction” and imposition of a pecuniary penalty “in accordance with the usual practice and procedure of the Court in civil cases”. The very commencement of the “prosecution” by a writ of summons, with all of the attendant pleadings pursuant to the National Court Rules, in my respectful view raises the constitutional issue.

For instance, one of the direct issues raised is whether the standard of proof of “guilt” and “conviction” (per s 299g(9)) upon a prosecution by the following the civil practice and procedure — is to be on a balance of probabilities or beyond a reasonable doubt. That, in my respectful view, raises the s 37(4)(a) issues of presumption of innocence and proof of guilt according to law.

I am of the opinion that the immediate grounds of appeal and the issues as to whether there was “evidence” before the court or whether the defendant was compellable to be cross-examined, are premised on the presumption that the prosecution by the civil process of writ of summons is valid and constitutional. If the civil process permitted by s 327 or the averment provision s 333(1) are unconstitutional, then of course, these issues do not arise at all, for the “prosecution” process will have been struck down at the outset.

I am of the view that the constitutional issue arises at the outset, and the validity of the whole “prosecution” under the Act depends upon the proper construction to be given to the application of s 37(4)(a) to the relevant provisions of the Act.

I have the misfortune once again to be dissenting from the majority, who consider that the procedures do not raise the issue of the effect of s 37(4)(a). As the decision of the majority means that the case will be remitted to the trial judge to proceed to deal with the “prosecution” according to the law in accordance with the practice and procedure of the Court in civil cases, I do not express a concluded opinion on the constitutional issues that I consider are raised.

In any event, events would appear to have overtaken this decision. As it appeared from the drafts of my learned brothers in the majority, that the constitutional issues which I consider are raised were not going to be properly addressed, I have referred the same issues to be argued before the Supreme Court pursuant to the Constitution, s 18(2), when similar prosecutions were brought before me by the Chief Collector of Taxes, to obtain “default judgment” for failure on the part of 24 defendants to file notice of intention to defend and defence, the writ of summons being specially endorsed under O 8, r 24 of the National Court Rules. This is SCR No 2 of 1990.

I have read in draft the opinion of Brown J. In the penultimate paragraph he states:

“It is clear then that the Income Tax legislation (Federal) and customs legislation in Australia both have averment sections which have continually been the subject of judicial scrutiny. Since the Papua New Guinea Income Tax legislation is based on the Australian legislation, I can see no good reason to depart from established case law. I am satisfied that s 37(4)(a) of the Constitution, reiterating as it does a common law right, has no adverse impact on the taxation section.”

I have quoted this paragraph fully because I want to state categorically my view that I do not accept, with respect, several propositions made by Brown J. First, the suggestion that because the Papua New Guinea legislation is based on the Australian legislation, there cannot be any good reason to depart from established (Australian) case law, cannot be accepted as a valid proposition of law or practice. Because the Papua New Guinea tax legislation is based on Australian legislation and because Australian Courts have interpreted and applied it in a particular way cannot possibly be any justification, morally, constitutionally, doctrinally or nationalistically, for this Court, which is the highest Court of this sovereign independent State to not depart from them. Secondly, there might well be established Australian case law, but that surely cannot be justification for this Court not to rule as it considers just and appropriate differently to what Australian Courts have decided. This is an independent sovereign Nation and this is the Supreme Court of this Nation, and it surely has the constitutional independence to determine the appropriate law and principles according to and consistent with this sovereign Nation’s autochthonous Constitution. Australia’s established case law is not Papua New Guinea’s case law. Foreign case law precedent only has persuasive value, it is not binding.

The next proposition that s 37(4)(a) of the Constitution reiterates the common law right is also to deny the autochthonous nature of a constitutional right. It might embody what was formerly a common law right analogous to English or Australian common law, but it is a constitutional right with pre-eminence. All foreign persuasive case law precedents and national statutes must be read subject to the supremacy of the constitutional law.

BROWN J: This appeal arose out of the National Court’s action in dismissing a taxation prosecution by the Chief Collector of Taxes against this respondent. The Collector’s writ claimed a penalty for breaches of s 299g(4)(f)(i) and (ii) of the Income Tax Act 1959 by the respondent (failing to furnish copies of statement of earnings in respect of salary or wages paid by him and of a reconciliation statement in approved form).

The respondent had filed a defence traversing the allegations contained in the statement of claim, denying in effect, the liability to furnish such statement and reconciliation document; further pleading that he did not employ anyone during the period in question but rather was self-employed and, as such, “drawings” were included in his assessable income. An affidavit was sworn by the respondent verifying his defence. That affidavit states:

N2>“2.      The defence as set out in the defence a copy of which is attached and marked ‘A’ is true in substance and fact.”

The judge at first instance dismissed the claim contained in the writ. No reasons apart from that which appears on the transcript were given. At the hearing defence counsel (who also argued the respondent’s case before us), submitted that there had been no evidence of the plaintiff. Miss Weigall for the Commissioner at the original hearing claimed to be entitled to call the defendant who was present. The judge refused leave and proceeded to dismiss the claim, ordering the plaintiff to pay the defendants costs.

What was not brought to the attention of the judge of first instance were the provisions of s 333(1) of the Income Tax Act, which provides:

“[Evidence] In a taxation prosecution — An averment of the prosecutor or plaintiff contained in the information, complaint, declaration or claim is evidence of the matter averred.”

To the extent then that defence counsel asserted before he judge that there was no evidence of the plaintiff, he was wrong. The statement of claim was as follows:

N2>“(1)    The defendant is an employer pursuant to Section 299C of the Income Tax Act 1959 as amended.

N2>(2)      The defendant is obliged pursuant to Section 299G to register with Plaintiff as a Group Employer.

N2>(3)      The defendant is obliged under the provisions of Section 299G(4)(f)(i) and (ii) to furnish to the Chief Collector of Taxes not later than the 14th day of February each year, a copy of the Statement of Earnings issued by him to each employer in respect of Salary or Wages paid by him and the total of the amount deductions made by him as a group employer during the period of twelve (12) months that ended 31st December in the preceding year; and a statement in a form approved by the Chief Collector of Taxes signed by group employer, reconciling the total of the accounts of the deductions shown in each of those copies of Statement of Earnings with the total of the amounts paid to the Chief Collector of Taxes in respect of those deductions.

N2>(4)      Pursuant to Section 299G(9) and (10) and Section 299(L), the plaintiff is empowered to seek the imposition of a penalty.”

Both counsel before this Court conceded that the provisions of s 333(1) were not alluded to in the court of first instance. The defendant, in his defence, specifically pleaded facts (verified by affidavit) which became evidence in the cause. The defendant not only traversed the allegations of the plaintiff by denial but, because the form of his defence included evidence by which he sought to avoid liability, he positively asserted facts which if believed would have afforded him a defence to the charges of failing, as a group employer, to furnish statements of earnings and reconciliation statements. The defendant said he did not employ anyone during the period in question but rather was a self-employed lawyer. The court record is as follows:

“Defendant says he did not employ anyone in 1987.

This raises the issue whether defendant failed in his duty under s 229. If case is closed then there is no evidences.

Miss Weigall — I am entitled to call the defendant as he is present.

Mr Yagi—

Miss Weigall — No evidence to offer.

Mr Yagi — WS be struck off and defendant be not called to answer.

— We have made representations defence anticipated a proper hearing. 2 adjournment in the past including the present matter.

Defendant has come in from Kimbe to attend this trial.

The WS 463/89 be dismissed.”

The court thereupon dismissed the claim.

As previously explained, the plaintiff was in evidence by virtue of the averment of fact in the statement of claim. It was not correct to say, as defence counsel did, that there was no evidence. It was equally not correct to refuse Miss Weigall leave to call the defendant on his affidavit for cross-examination. Mr Yagi relied on the defence filed as refuting the assertions of fact in the statement of claim and consequently must be deemed to have gone into evidence. The defendant’s evidence must have tipped the scales apparently in the mind of the judge of first instance, for he specifically alluded to the defendant’s evidence when he said that “this raises the issue”. The plaintiff had an undoubted right to cross-examine the defendant on his affidavit. The hearing has not been held in accordance with law and I would remit the proceedings back for re-hearing.

It is worth reiterating that “the burden of proof lies upon the party, who substantially asserts the affirmative of the issue”: Buzzard, May and Howard (eds), Phipson on Evidence (12th ed, 1976) at 91, quoting the decision in Robins v National Trust Co [1927] AC 515 at 520.

The burden of proof means a different thing to the standard of proof. The criminal standard of proof is commonly stated as proof beyond reasonable doubt while the civil standard, as proof on the balance of probabilities.

Phipson puts it thus when explaining proof of criminal offences in civil proceedings (at 124):

“The standard of proof required to prove a criminal offence in civil proceedings is no higher than the standard of proof ordinarily required in civil proceedings. However, the more serious the allegation the higher the degree of probability that is required. The gravity of the issue becomes part of the circumstances which the court has to take into consideration in deciding whether or not the burden of proof has been discharged. The more serious the allegation the more cogent is the evidence required to overcome the unlikelihood of what is alleged and thus to prove it.”

More important in this case however is the apparent misconception of the burden of proof as it affected the parties before the judge of first instance. The misconception was no doubt attendant upon the failure to realise the existence or effect of s 333(1).

When there is prima facie some evidence as contained in the averments, the plaintiff can appeal to the court as to its sufficiency if the defendant leads no evidence. But in this case the defendant (without, it appears, realisation in his counsel) had led evidence of rebuttal in his defence by way of his explanation supported by oath that he was not an employer. So it is in the sense of adducing evidence that the term is used here. Phipson states it thus (at 95):

“The onus probandi in this sense rests upon the party who would fail if no evidence at all, or no more evidence, as the case may be, were given on either side — it rests, before evidence is gone into, upon the party asserting the affirmative of the issue; and it rests, after evidence is gone into, upon the party against whom the tribunal, at the time the question arises, would give judgement if no further evidence were adduced. There is a logical difficulty in this case, as it is only evidence which is accepted by the tribunal of fact that counts, and the decision can only be given when all the evidence has been completed. Strictly, therefore, it is a question which arises on the assumption that the evidence already given will be accepted. Thus on an issue whether a contract was made or not, the plaintiff will call his evidence. It may not be accepted. The defendant, or other party concerned, must elect either to call his evidence or run the risk of having the other side’s evidence accepted. But if the defendant relies on fraud, mistakes, etc, the burden of proof on such issues clearly lies on him.”

Has the evidential burden been discharged in this case for the defendant has sworn that he was not an employer in the relevant sense over this period? The burden remains on the plaintiff to prove on the whole of the evidence that his case is established. But the plaintiff has not been able to put to the defendant questions under cross-examination that may lessen the probative value of his denials. He may obtain, for instance, an admission that the defendant registered as a group employer during the relevant period. Without permitting the right to cross-examine, the judge erred in law.

What effect, if any, does s 37(4)(a) of the Constitution have on the effect of s 333 of the Income Tax Act?

Section 37(4)(a) provides:

“A person charged with an offence:

(a)      shall be presumed innocent until proved guilty according to law, but a law may place upon a person charged with an offence the burden of proving particular facts which are, or would with the exercise of reasonable care be, peculiarly within his knowledge; ...”

Counsel for the respondent asserts that s 333(1) of the Income Tax Act has the practical effect of shifting the presumption of innocence to a presumption of guilt against the defendant.

The argument as to the effectiveness of the averment has been judicially considered in Australia from which legislation our Income Tax Act is derived. The corresponding section as s 243, now s 8zl of the Taxation Administration Act 1953 (Aust). That section is in the following terms.

“Averment

N2>8zl(1)  [Prima Facie evidence] In a prosecution for a prescribed taxation offence, a statement or averment contained in the information, claim or complaint is prima facie evidence of the matter so stated or averred.

N2>(2)      [same as s 333(2) of the Papua New Guinea Act]

N2>(3)      (Evidence to be considered on its merits) Any evidence given in support or rebuttal of a matter so stated or averred shall be considered on its merits, and the credibility and probative value of such evidence shall be neither increased nor diminished by reason of this section.

N2>(4)      (Effect of section) This section:

(a)      does not apply to an averment of the intent of a defendant; and

(b)      does not lessen or affect any onus of proof otherwise falling on a defendant.”

It can be seen that it is similar to that of the Papua New Guinea s 333 previously reproduced.

The Australian section has been judicially considered in two recent cases.

Alva Natona Pty Ltd v Eric J Unger (Deputy Federal Commissioner of Taxation) (1981) 81 ATC 4443 involved that company in a taxation prosecution. Southwell J, in giving judgment, referred to the conduct of the proceedings in the lower court. Proceedings which were, it seems, conducted in similar fashion to the proceedings in the National Court with one important exception. The National Court proceedings included evidence by the defendant. In the Australian case, the informant (Deputy Commissioner of Taxation) called no viva voce evidence. Relying upon the averments counsel for the defendant unsuccessfully submitted that there was no case to answer and he called no evidence; he relied upon submissions similar to those made here, to which I will refer. The defendant’s submissions in that case revolved first around his assertion that the informant could not rely upon an averment that “the time allowed for lodgment of the return was reasonable” being, it was asserted, a mixed question of fact and law. The court found that the question was one of fact which the informant may aver. Quoting from this judgment (at 4446):

“In the absence of any evidence from the defendant which might fairly raise an issue as to the reasonableness of the time allowed, the magistrate was entitled to find, as he did, that he was satisfied of proof of that fact. It is to be observed that the reasonableness of the time in general is a question of fact peculiarly within the knowledge of the taxpayer. He knows of any difficulties or complexities which may present themselves in the preparation of a taxation return. It may well be that the Deputy Commissioner has little knowledge of those matters. It cannot be said to be unjust to cast upon the defendant an evidentiary onus in such a proceeding, for example, by calling an accountant to speak of the difficulties involved.”

In the case before the National Court, the primary question was that the defendant was an “employer” as defined by s 299g(1)(c) of the Income Tax Act. If that involves a mixed question of fact and law, s 333(2)(b) states:

N2>“(b)    the matter averred is a mixed question of law and fact, but in that case the averment is evidence of the fact only.”

Hence it may be available to the defendant to argue that since he “did not employ” any person he was not an employer at the relevant time. That is a conclusion he seeks to draw from primary facts and consequently he is subject to cross-examination on the primary facts which he puts forward in support of his case. If, as his counsel erroneously asserted, he could not be cross-examined because he did not go into evidence, then the averment of the prosecutor may be sufficient. But it requires a conclusion whether “employer” is a question of fact only for the averment to be sufficient.

On the question of standard of proof, the Australian Full High Court, in Naismith v McGovern [1953] HCA 59; (1953) 90 CLR 336 at 341, adopted with approval the reasoning of Fullagar J where he said in Jackson v Butterworth [1945] VicLawRp 66; [1946] VLR 330 at 332:

“A second matter of law which was debated was whether a taxation prosecution under Part VII of the Act is a civil proceeding or a criminal proceeding. It it were a criminal proceeding, the standard of proof which is required in criminal cases would be required here, and it would be necessary for the Court to be satisfied beyond reasonable doubt of the guilt of the defendant. In the view which I have ultimately taken of this case, this question does not appear to be important, but I may say that, in my opinion, the proceeding is civil and not criminal in character. The procedure is by action to recover a penalty and the rules of civil procedure apply.”

Of course the standard of proof has been succinctly put as quoted from Phipson, at 124.

I am satisfied that the s 37(4)(a) of the Constitution in no way affects the burden of proof in taxation prosecutions. The constitutional section is a written exposition of the common law onus or burden of proof.

The appellant’s submission on the constitutional question referred the court to SCR No 1A of 1981]; Re Motor Traffic Act [1982] PNGLR 122, where his Honour the Chief Justice stated (at 127):

“[A] person charged with an offence is guaranteed two rights by s 37(4)(a): first, the right to be presumed innocent of the charge; and second, the right to have the charge against him proved according to law.”

As I have previously said, the evidential burden may shift where a plaintiff adduces sufficient evidence to raise a prima facie case against a defendant and if the defendant chooses to call no evidence then there is some evidence on which a court may determine, according to the standard of proof required, the merits of the case or the plaintiff’s guilt.

At s 333 of the Income Tax Act, subs (5) states:

“This section does not lessen or affect any onus of proof otherwise falling on the defendant.”

This subsection to my mind recognises the evidential burden that may fall on a defendant where the prosecution, the taxation office, has adduced some evidence by way of averment.

This aspect was touched on by this Court in SCR No 1 of 1980; Re Police Offences Act (Papua) [1981 PNGLR 28, where Miles J stated (at 48):

“Essentially it seems to me that for the purposes of the law in Papua New Guinea including the application of the Constitution, s 37(4)(a) and its proviso, the question is one of statutory interpretation, of determining whether the legislation defining the offence shifts the persuasive burden and not merely the evidentiary burden to the accused.” (My emphasis.)

It is of assistance if we have regard to Australian decisions for the Papua New Guinea Act is based on the Australian Taxation Act. In Van Reesma v Mills (1981) 81 ATC 4483, the Supreme Court of South Australia heard an appeal by an appellant convicted of three offences under the Income Tax Assessment Act 1936 (Aust); two for failure to comply with s 225 court orders posted to him in June 1980 and requiring him to file tax returns for the years ended 30 June 1978 and 1979; and one for failure to comply with the Deputy Commissioner’s letter posted to him in December 1980 requiring him to file a tax return for the year ended 1980. In the reasons of the court given by White J there follows an explanation of the facts of the case (as 4484):

“In the court of summary jurisdiction, the complainant averred that the orders were:

‘... duly served upon the defendant by being posted on the 23rd day of June 1980 by pre-paid letter post addressed to the said defendant at his address, 1 College Street, College Park, SA 5069’;

and that the notice was:

‘duly posted by pre-paid letter post (on 12th December 1980) addressed to the said defendant at his address for service 1 College Street, College Park, SA 5069.’

The difference between the emphasised averments is important, because it is one to aver postage and another to aver service, the latter averment in itself implying receipt, the former in itself implying no more than postage. However, as will be seen, reg 59 comes to the aid of averred postage and deems service to have been effected when the notice would reach the addressee in the ordinary course of the post.”

The averment section in the Australian Act was found at s 243 which read:

N2>“243(1)         In any taxation prosecution, every averment of the prosecutor or plaintiff contained in the information, complaint, declaration or claim shall be prima facie evidence of the matter averred.

N2>(2)      This section shall apply to any matter so averred although:

(a)      evidence in support or rebuttal of the matter averred or of any other matter is given; or

(b)      the matter averred is a mixed question of law and fact, but in that case the averment shall be prima facie evidence of the fact only.

N2>(3)      Any evidence given in support or rebuttal of a matter so averred shall be considered on its merits, and the credibility and probative value of such evidence shall be neither increased nor diminished by reason of this section.

N2>(4)      ...

N2>(5)      ...”

Subsections (4) and (5) are similar to the Papua New Guinean subsections of s 333. Again the deeming effect of reg 59 touched on in the Australian decision reads as follows:

“Any notice or other communication by or on behalf of the Commissioner may be served upon any person:

(a)      by causing it to be personally served on him; or

(b)      by leaving is at his address for service; or

(c)      by posting it by prepaid letter post, addressed to him at his addressed for service;

and in any case to which paragraph (c) of this regulation applies, unless the contrary is proved, service thereof shall be deemed to have been effected at the time when it would, in the ordinary course of post, have arrived at the place to which it was addressed.”

The court in the Australian case of Van Reesma v Mills particularised the onus of proof in the following way (at 4485):

“It will be noticed that the onus of proof under reg 59 is different from that under s 243. Under reg 59, upon the prosecution proving (by averment or oral evidence) the postage of the pre-paid letter to the address for service, service upon the defendant is deemed to be proved (that is, beyond reasonable doubt) unless the defendant proves to the contrary (that is, on the balance of probabilities). That is to say, the legal onus shifts from the prosecution to the defendant under reg 59, once postage is proved. Under s 243, on the other hand, the legal onus of proof of service beyond reasonable doubt does not shift at any stage. It remains steadily upon the prosecution throughout. Section 243 merely establishes a prima facie case of service; and it then proceeds to construct certain safeguards about that prima facie case. For example, where, as here, the prosecution tenders oral evidence of departmental practice relating to postage in an effort to bolster the force of the averment and to rebut in advance the anticipated defence evidence of non-receipt, the prosecution is nevertheless entitled to continue to rely upon the undiminished force of the prima facie case arising out of the averment itself (subs (2)(a)); and where, as here, the prosecution relies upon both s 243 and reg 59 (at least with respect to the third 1980 complaint), the onus of proof of non-service continues to fall on the defendant under reg 59 notwithstanding the collateral force of s 243 (see subs (5) thereof).”

I would comment that the reference to the legal onus shifting relates to the evidentiary burden moving to the defendant because of the deeming provisions of reg 59. But in these proceedings before this Court, we are not concerned so much with any similar provision to reg 59, rather we are concerned with the effect of the constitutional provision on s 333 of the Taxation Act.

I am of the view however, that, as expressed by White J in the Australian decision, the legal onus of proof beyond reasonable doubt of the facts averred under s 333 does not shift at any stage. It remains upon the prosecution. Section 333 merely establishes, prima facie, the facts of matters averred. If the defendant is to bring some evidence then the standard of proof on the balance of probabilities so far as the defendant’s evidence is concerned applies. I am satisfied that s 333 of the Income Tax Act when used in connection with proceedings for a taxation prosecution does not infringe the constitutional right. Again (at 4488) of White J’s decision in Van Reesma v Mills, he states:

“An evidentiary onus rested upon the appellant to give his explanation concerning the 1978 and 1979 returns, otherwise the prima facie case would serve as sufficient basis for an inference of proof of service beyond reasonable doubt. In my view, the appellant gave evidence on oath with a satisfactory and convincing explanation why it was not only reasonably possible, but even inherently probable, that he did not actually receive any of the documents. All he had to do to escape conviction on the first two complaints was to introduce an explanation which was reasonably possible true and he did that. And to escape conviction on the third complaint, he had to establish that he probably did not receive the December 1980 notice. If the prosecution had wished to rebut the suggestion of a mix up or confusion about his mail at Norwood Post Office, the case could have been adjourned, the explanation investigated and if untrue, rebutted.”

In other words the evidential burden in taxation prosecutions at least, may shift.

Whilst the Australian tax prosecution cases have been conducted in accordance with the usual practice and procedure in civil cases this Court is not bound by the Australian decisions even though the High Court of Australia had so ruled in so far as Australian taxation prosecutions are concerned. More recently in the Supreme Court of New South Wales in Kelly v JRA Ltd (1990) 92 ALR 651, that the court had an occasion to consider whether the proceedings under the Customs Act 1901 (Aust) alleging evasion of customs were criminal or civil in nature.

The Comptroller-General of Customs sought to prosecute the defendant JRA Ltd for three contraventions of s 234 of the Customs Act 1901 (Aust) (the Act). The proceedings were brought in the Supreme Court of New South Wales pursuant to s 247 of the Act. Relying in part on s 255(1) of the Act, which purports to make averments in such proceedings prima facie evidence of the matters averred, the statement of claim merely averred the alleged breaches without pleading facts which, if proved, would establish an intent to commit the breaches. The defendant applied to have the statement of claim struck out as disclosing no cause of action. It was held by the court that the action was to be commenced and proceeded with in accordance with the usual practice and procedure of the Supreme Court of New South Wales in civil cases. The court followed Evans v Button (1988) 13 NSWLR 57; Evans v Lynch [1984] 3 NSWLR 567.

However the court found that a charge of evading payment of duty was not made out by evidence which proves no more than that the person charged failed or omitted to pay an amount payable by him. The word “evade” means more than a mere omission or neglect to pay the duty.

So in that case, the court was satisfied the statement of claim was insufficient in that, whilst averring facts that may be relied on to show the person charged failed or omitted to pay an amount payable by him, it could not rely on the failure or omission as evidence of evasion.

In that case, further evidence of the prosecution would have been needed. Consequently, the plaintiff’s action was stayed and leave granted to amend the statement of claim.

It is clear then that the Income Tax legislation (Federal) and customs legislation in Australia both have averment sections which have continually been the subject of judicial scrutiny. Since the Papua New Guinea Income Tax legislation is based on the Australian legislation, I can see no good reason to depart from established case law. I am satisfied that s 37(4)(a) of the Constitution, reiterating as it does a common law right, has no adverse impact on the taxation section.

I would accordingly remit the matter to the National Court for rehearing.

By majority matter remitted for re-hearing

Lawyer for the appellant: D Cannings.

Lawyers for the respondent: Kirriwom & Co.