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Chief Collector of Taxes v Clamp [1967] PGSC 8; [1967-68] PNGLR 405 (26 August 1968)

Papua New Guinea Law Reports - 1967-68

[1967-68] PNGLR 405 - Taxes, Chief Collector of v Clamp

[1967-68] PNGLR 405

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]

CHIEF COLLECTOR OF TAXES

CLAMP

Port Moresby

Frost J

24 July 1968

26 July 1968

26 August 1968

INCOME TAX - Evidence - Validity - “Necessary or convenient” - Certificate on mixed questions of fact and law - Severability matters of fact from matters of law - Printed signature - Income Tax Ordinance 1959-1967, ss. 239, 369^*[d]1- Income Tax Regulations 1959, reg. 52^*[di]2*.

Although matters certified under pars. (a), (b), (d) and (e) of reg. 52 of the Income Tax Regulations, may, according to the circumstances of the case, involve questions of mixed fact and law, matters of fact will normally be capable of “disentanglement” from matters of law. As the regulation only purports to make the certificate evidence of the facts stated therein it does not attempt to place matters beyond challenge by the Court. If the certificate is incorrect it can without difficulty be proved to be incorrect.

Australasian Jam Co. Pty. Ltd. v. Federal Commissioner of Taxation [1953] HCA 52; (1953), 88 C.L.R. 23, distinguished. Federal Commissioner of Taxation v. Rooney [1925] HCA 36; (1925), 36 C.L.R. 305 and Loughnan v. Hopkins[1939] VicLawRp 61; , [1940] V.L.R. 42, applied. Brady v. Thornton [1947] HCA 29; (1947), 75 C.L.R. 140, at p. 147, referred to.

Paragraphs (d) and (e) of reg. 52 are “necessary or convenient” to be prescribed for giving effect to the Ordinance and that portion of the regulation is therefore a valid exercise of the regulation-making power conferred by s. 369 of the Income Tax Ordinance 1959-1967. A certificate given under the regulation is therefore properly admissible as to the facts of service under par. (d) and the amount owing under par. (e).

Gibson v. Mitchell [1928] HCA 37; (1928), 41 C.L.R. 275, at p. 279, applied.

Copies of notices of assessment bearing the name of the Chief Collector printed thereon are admissible not only as compliance with s. 236 but also as conclusive evidence under s. 239 of the due making of the assessments and that the amount and all particulars are correct.

Meaning of “evidence of the facts”, “assessment”, “duly” and “signature” considered.

Additional cases referred to: R. v. Jacobsen and Levy, [1931] A.D. 466; Williamson v. Ah On [1926] HCA 46; (1926), 39 C.L.R. 95; R. v. Deputy Federal Commissioner of Taxation (S.A.); Ex parte Hooper [1926] HCA 3; (1926), 37 C.L.R. 368; Mobbs v. Powell; Fire and All Risks Insurance Co. Ltd., Third Party, [1965] VicRp 33; [1965] V.R. 222; Morton v. Union Steamship Co. of New Zealand Ltd. [1951] HCA 42; (1951), 83 C.L.R. 402.

Action.

The Chief Collector of Taxes commenced an action against Donald Arthur Clamp for the recovery of unpaid income tax, provisional tax and additional tax due under the Income Tax Ordinance 1959-1966 in respect of the assessable income earned by the defendant during the years ending 30th June, 1965, and 30th June, 1966. The defendant denied his indebtedness and further denied that he was served with the notice of assessment. The plaintiff sought at the trial to tender a certificate under reg. 52 of the Income Tax Regulations 1959 and the defendant objected on the basis that the regulation was ultra vires the regulation making power conferred upon the Administrator in Council under s. 369 of the Ordinance. The defendant also argued that copies of notices of assessment tendered by the plaintiff did not comply with s. 239 of the Ordinance.

Counsel:

Garnsworthy, for the plaintiff.

Bayliss, for the defendant.

Cur. adv. vult.

26 August 1968

FROST J: This is an action for the recovery of the balance of unpaid income tax, provisional tax and additional tax due in respect of the assessable income earned by the taxpayer during the years ending 30th June, 1965, and 30th June, 1966. The defendant denies his indebtedness and further denies that he was served with the Notice of Assessment.

Under the Income Tax Ordinance 1959, it is provided that the Chief Collector shall make an assessment of the amount of the taxable income of a taxpayer and of the tax payable on that income (s. 228). As soon as conveniently may be after an assessment is made, the Chief Collector shall serve notice of the assessment in writing by post or otherwise upon the person liable to pay the tax (ibid., s. 236). Tax is due and payable on the date specified in the notice as the date upon which tax is due and payable, not being less than thirty days after the service of the notice (s. 259). Any tax unpaid may be sued for and recovered in any court of competent jurisdiction by the Chief Collector suing in his official name (s. 264). Under the Income Tax Regulations 1959 a notice by or on behalf of the Chief Collector may be served upon a person (inter alia) by posting it to him at his address for service (reg. 91 (c)).

At this stage of the trial it is for me to rule on the admissibility of certain documentary evidence.

The first document in issue is a certificate, by the Chief Collector under reg. 52 of the Income Tax Regulations 1959, which was tendered by Mr. Garnsworthy. The certificate is in the following terms:

“Certificate under Regulation 52 of the Income Tax Regulations

I, Raymond Francis White, Chief Collector of Taxes, hereby certify as follows:

(a) Donald Arthur Clamp, the defendant referred to in Writ W.S. No. 2 of 1968 (P) issued out of the Supreme Court at Port Moresby in the Territory of Papua, is a taxpayer.

The said Donald Arthur Clamp is a taxpayer who derived assessable income during the financial years ending 30th June 1965 and 30th June 1966.

(b) On 9th May, 1967, I duly made an assessment of income tax against the said Donald Arthur Clamp for the year ended 30th June, 1965.

On 9th May, 1967, I duly made an assessment of income tax against the said Donald Arthur Clamp for the year ended 30th June, 1966.

The amount of Income Tax on Income derived during year ended 30th June, 1965	4,027.80
The amount of Income Tax on Income derived year ended 30th June, 1966	2,2112.60
Credit for income tax paid	2,600.00
Additional tax for unpaid tax	220.30
	$3,760.70

Both assessments due and payable 8th June, 1967.

(d) Notice of the said assessments was duly served on the said Donald Arthur Clamp by posting on 9th May, 1967 by prepaid post notices of assessment in writing both dated 9th May, 1967, to Mr. Donald A. Clamp C/- J. H. Woodward P.O. Box 1070, Boroko; which said address was the address given by the said Donald Arthur Clamp in his income tax return for the year ended 30th June, 1966 as his address for service.

(e) At the date of this Certificate the aforesaid sum of $3,760.70 is due by the said Donald Arthur Clamp to the Administration of the Territory of Papua and New Guinea and remains unpaid.

DATED the Twenty-fourth day of July, 1968.

(Sgd.) R. F. White

RAYMOND FRANCIS WHITE

(Chief Collector of Taxes)”

Mr. Bayliss’ objection is that reg. 52 is void on the ground that it is ultra vires the powers conferred upon the Administrator in Council to “make regulations, not inconsistent with the Ordinance, prescribing all matters that by this Ordinance are required or permitted to be prescribed, or that are necessary or convenient to be prescribed, for giving effect to this Ordinance”: Income Tax Ordinance 1959, s. 369. Regulation 52 is in the following terms:

“In an action against a person for the recovery of income tax, a certificate in writing, signed by the Chief Collector, an Assistant Collector or a prescribed delegate of the Chief Collector certifying that:

(a) the person named in the certificate is a taxpayer;

(b) an assessment of income tax was duly made against him in respect of the year mentioned in the certificate;

(d) notice of the assessment was duly served upon him; and

(e) the sum named in the certificate was at the date of the certificate due by him to the Administration in respect of income tax,

N2>is evidence of the facts stated in the certificate.”

Regulation 52 is in similar terms to reg. 53 of the Regulations made under the Commonwealth Income Tax and Social Services Contribution Assessment Act 1936-1961, except that in the later regulation the certificate is to be “prima facie evidence of the facts stated”. It is curious that the expression “prima facie evidence” has been omitted from the Territory Regulation (see also s. 243 of the Commonwealth Act and s. 333 of the Ordinance).

“ ‘Prima facie’ evidence, in its usual sense is used to mean prima facie proof of an issue, the burden of proving which is upon the party giving that evidence. In the absence of further evidence from the other side, the prima facie proof becomes conclusive proof, and the party giving it discharges his onus”.

R. v. Jacobsen and Levy[dii]³ per Stratford J.A. cited Cross on Evidence, 2nd ed., p. 25. In my opinion, the omission of the words “prima facie” in the Territory regulation has not altered the meaning. The regulation cannot mean that it should be open to the Court not to act on the certificate if no other evidence is adduced. The certificate is certainly not conclusive evidence; it can be rebutted by other evidence adduced by the taxpayer as to the matters appearing in the certificate, cf. Williamson v. Ah On[diii]⁴, per Rich and Starke JJ.

At the outset of his submission concerning reg. 52, Mr. Bayliss referred to Federal Commissioner of Taxation v. Rooney[div]⁵. In that case it was held that reg. 54 of the Entertainment Regulations 1917, which provides

“in any legal proceedings by the Commissioner against the proprietor of an entertainment for recovery of entertainment tax the certificate in writing of . . . . the Commissioner . . . . stating the amount of entertainment tax due by the defendant shall be prima facie evidence of the facts stated”,

is within the power conferred by the Act to make regulations prescribing all matters which are necessary or convenient to be prescribed for giving effect to the Act. “It merely does for the purposes of the Act what in other Acts is done by sections in the Acts themselves”; per Knox C.J.[dv]⁶. This case was followed in Loughnan v. Hopkins[dvi]⁷ in which Lowe J., gives a useful explanation of Rooney’s case[dvii]⁸. In Rooney’s case it was thus held convenient for giving effect to the Act to modify the ordinary rules of the law of evidence. Mr. Bayliss sought to distinguish Rooney’s case[dviii]⁹ on the ground that the present certificate particularly under par.(d) involved a question of mixed law and fact and also went beyond what is convenient and he relied on Australasian Jam Co. Pty. Ltd. v. Federal Commissioner of Taxation[dix]¹⁰. In that case Fullagar J. had to consider reg. 43 of the regulations made under the Income Tax Assessment Act which provided that in certain proceedings a certificate in writing by the Commissioner stating that he is of opinion that the avoidance of tax was due to fraud or evasion, shall be conclusive evidence that the Commissioner was of opinion as stated in the said certificate. It was held that the regulation was void on the ground that it was inconsistent with the Act as its effect was to preclude the Court from deciding questions which by the provisions of the Act were committed to the Court for decision. Fullagar J. then went on to consider whether having regard to the Acts Interpretation Act 1901-1950 (Cth), s. 46, it was possible to “read down” the regulation so as to give it a partial valid operation, and Mr. Bayliss relied particularly on the following passage:

“Is it possible to treat reg. 43 as including a provision that a certificate of an opinion that there has been fraud or evasion shall be prima facie evidence that such an opinion was entertained, and to hold that, to the extent to which it so provides, it is valid? It is not possible, in my opinion, so to hold. Even if the regulation had in terms provided that such a certificate should be prima facie evidence only, I would not regard it as covered by Rooney’s case[dx]¹¹. The subject matter of the certificate is of a different character altogether from that of the certificates which were in question in Rooney’s case[dxi]¹² and in Loughnan v. Hopkins[dxii]¹³. Questions of law, as well as questions of fact, are, or may be, involved in the formation of the opinion. In Rooney’s case[dxiii]¹⁴ and in Loughnan v. Hopkins[dxiv]¹⁵ it was quite convenient if not necessary, that the certificate should be made prima facie evidence. In either case, if the certificate was incorrect, it could without difficulty be proved to be incorrect. In the case of reg. 43, the result of making the certificate prima facie evidence might be to place the formation of the opinion beyond challenge just as effectively as if the certificate were made conclusive in terms. This would be neither necessary nor convenient for giving effect to the Act, though it might be convenient enough for other purposes and from another point of view. The opinion which I have expressed is not weakened but is reinforced by the consideration that, where under the Act the Commissioner’s opinion is made a criterion of liability, the opinion can only be challenged within defined and narrow limits. When the Act makes the opinion of the Commissioner a criterion, and requires that opinion to be proved, it must be taken, in my opinion, to contemplate and require proof according to the rules of the common law, and any regulation which derogates from that requirement is inconsistent with the Act”[dxv]¹⁶.

The argument that the matters certified may involve mixed questions of fact and law does not take into account the terms of reg. 52 which expressly limit the evidentiary effect of the certificate to the facts stated in the certificate. For this reason it cannot be a ground of invalidity that that matters to be certified may involve questions of mixed fact and law. If on the proper construction of the regulation the matters to be certified or any them involved questions of mixed fact and law, the question on whether the certificate is evidence of any facts stated will depend on whether there “cannot be disentangled” such matters of fact: Brady v. Thornton[dxvi]¹⁷, per Dixon J. In that case the High Court had to consider averments under the Income Tax Assessment Act 1936-1946 (Cth), which contained matters of law or mixed questions of law and fact. As to par. (a) of reg. 52, the statement contained in the certificate is to the effect, having regard to the definition of taxpayer in the Income Tax Ordinance, s. 4, that the person named in the certificate is a person deriving income, which is a word which carries a legal meaning. But whether such a statement involves a question as to the legal definition of “income” will depend on the facts of each case. Certainly no such question of law is necessarily involved: Brady v. Thornton[dxvii]¹⁸ per Dixon J. The second statement (par. (b)) refers to an assessment of income tax.

“An ‘assessment’ is not a piece of paper: It is an official act or operation; it is the Commissioner’s ascertainment, on consideration of all relevant circumstances, including sometimes his own opinion, of the amount of tax chargeable to a given tax payer”: R. v. Deputy Federal Commissioner of Taxation (S.A.); Ex parte Hooper[dxviii]¹⁹, per Isaacs J.

Now although in any particular case questions of law may, but not necessarily, have been involved in the ascertainment of the amount of tax, whether such an ascertainment was made, in my opinion, is a question of fact. The word “duly”, however, “does signify that the action has been done legally, in due course, and according to the provisions of the law” (Stroud’s Judicial Dictionary, 3rd ed., vol. 1, p. 893), cited ibid. See also Mobbs v. Powell; Fire and All Risks Insurance Co. Ltd., Third Party[dxix]²⁰ per Gillard J. But the word “duly” in par. (b) and also in par. (c) (that the notice of assessment was “duly” served) is respectively severable from the statement of fact that the assessment was made (par. (b)), and that, if any manner of service was stated, that the notice of assessment was so served (par. (d)). The matters referred to in par. (c) are plainly matters of fact. A statement that the sum named in the certificate was at the date of the certificate due by the taxpayer to the Administration in respect of income tax (par. (e)) may possibly involve, depending on the facts of each case, a question of law, but also may involve no more than a statement of fact as to whether any sum has been paid in part payment of the tax set out in the assessment. Thus if the matters to be certified do involve questions of mixed fact and law, matters of fact will normally be capable of “disentanglement”.

None of the facts thus capable of being made evidence is, by its nature, as in the case of the formation of the opinion of the Second Commissioner before Fullager J., placed beyond challenge by the Court. As in Rooney’s case[dxx]²¹ if the certificate is incorrect, it can without difficulty be proved to be incorrect. Accordingly I consider that the argument based on the Australasian Jam Co. case[dxxi]²² fails.

The question then remains whether reg. 52 is necessary or convenient to be prescribed. Mr. Garnsworthy relied on a strong statement of the law by Isaacs J. upon a similar provision in the Post and Telegraphs Act 1901-1923 (Cth), s. 97.

“Why is it [the regulation] not ‘necessary or convenient’? These words in that collocation mean necessary or convenient from the standpoint of administration. Primarily they signify what the Governor-General may consider necessary or convenient, and no court can overrule that unless utterly beyond the bounds of reason and so outside the power”: Gibson v. Mitchell[dxxii]²³.

Wide as the power is thus expressed to be, I must say that I have considered whether in view of the detailed nature of the Ordinance and the specific provisions of s. 239 under which a copy of the notice of assessment signed by the Chief Collector is made conclusive evidence of the due making of the assessment and that the amount and all the particulars of the assessment are correct, the provisions of reg. 52 pars. (a), (b) and (c) which deal with the same matters but provide for a lower degree of cogency are either necessary or convenient. (See Morton v. Union Steamship Co. of New Zealand Ltd.[dxxiii]²⁴) But as I consider, for reasons l shall refer to later, that the copy notices of assessment tendered by Mr. Garnsworthy were properly admitted in evidence, and provide conclusive proof of the matters referred to in s. 239 (ibid.), it is unnecessary for me to rule on the validity of pars. (a), (b) and (c) of reg. 52, and consequently I express no opinion concerning the validity of such paragraphs. Turning to par. (d) in view of the very great number of notices of assessment to be posted, there may well be administrative difficulties in arranging for the appropriate officer to be called as a witness to prove the facts of service as shown by the Department’s records, and I consider that it is quite convenient that the certificate should be made evidence of the facts of service. The validity of paragraph (e) is fully supported by Rooney’s case[dxxiv]²⁵.

Thus, in my opinion, reg. 52 sub-pars. (d) and (e) are valid, and the certificate properly admissible as to those facts of service set out in par. (d) and the amount owing under par. (e).

The other documents in issue at this stage are copy notices of assessments, certified by the Chief Collector, for the year ending 30th June, 1965, and the year ending 30th June, 1966. Mr. Bayliss did not object to their admission as evidence, but as he later argued that they did not comply with s. 239 of the Ordinance or the regulations, it is necessary for me to consider whether they were properly admitted in evidence.

Mr. Bayliss’ argument was that the Chief Collector was bound under the Ordinance to serve notice of the assessment in writing by post or otherwise upon the person liable to pay the tax (s. 236), and that the name of the Chief Collector “R. F. White” printed on the notices was insufficient evidence that the Chief Collector had complied with this section. He argued that the name so printed was not “a printed signature” under reg. 94(l) which provides that a certificate, notice or other document, bearing the stamped or printed signature of the Chief Collector shall, until the contrary be proved, be deemed to have been dully signed by the Chief Collector. However, in my opinion, this argument has no substance. “A signature is the writing or otherwise affixing of a person’s name,” (Stroud’s Judicial Dictionary, 3rd ed. (1951-1953), vol. 4, p. 2783); and there is no requirement that it should be written either in long hand or in capital letters. In my opinion, as the notices bear the printed name of the Chief Collector they are admissible not only as compliance by the Chief Collector with the provisions of s. 236, but also conclusive evidence under s. 239, of the due making of the assessments and that the amount and all particulars are correct.

Judgment for the plaintiff in the sum of $3,760.70 plus costs to be taxed.

Solicitor for the plaintiff: S. H. Johnson, Crown Solicitor.

Solicitor for the defendant: Colin Bayliss.

[d]* Sections 239 and 369 of the Income Tax Ordinance 1959-1967 provide:

N1>“239.(1) The production of a notice of assessment, or of a document under the hand of the Chief Collector or an Assistant Collector purporting to be a copy of a notice of assessment, is conclusive evidence of the due making of the assessment and (except in proceedings on appeal against the assessment) that the amount and all the particulars of the assessment are correct.

N1>(2) The production of a Gazette containing a notice purporting to be issued by the Chief Collector is conclusive evidence that the notice was so issued.

N1>(3) The production of a document under the hand of the Chief Collector or an Assistant Collector purporting to be a copy of a document issued by either the Chief Collector or an Assistant Collector is conclusive evidence that the document was so issued.

N1>(4) The production of a document under the hand of the Chief Collector or an Assistant Collector purporting to be a copy of or extract from a return or notice of assessment is evidence of the matter set forth in the document to the same extent as the original would be if it were produced.”

N1>“369. The Administrator in Council may make regulations, not inconsistent with this Ordinance, prescribing all matters that by this Ordinance are required or permitted to be prescribed, or that are necessary or convenient to be prescribed, for giving effect to this Ordinance and, in particular, prescribing penalties of not less than Two dollars or more than Forty dollars for any breach of the regulations.”

[di]** Regulation 52 of the Income Tax Regulations provides:

N1>“52. In an action against a person for the recovery of income tax, a certificate in writing, signed by the Chief Collector, an Assistant Collector or a prescribed delegate of the Chief Collector certifying that—

N2>(a) the person named in the certificate is a taxpayer;

N2>(b) an assessment of income tax was duly made against him in respect of the year mentioned in the certificate;

N2>(c) the particulars of the assessment are as stated in the certificate;

N2>(d) notice of the assessment was duly served upon him; and

N2>(e) the sum named in the certificate was at the date of the certificate due by him to the Administration in respect of income tax,

is evidence of the facts stated in the certificate.”

[dii] [1931] A.D. 466, at p. 478.

[diii][1926] HCA 46; (1926) 39 C.L.R. 95, at p. 128.

(1925) 36 C.L.R. 305.

[dv](1925) 36 C.L.R., at p. 308.

[dvi][1940] V.L.R. 42.

[dvii](1925) 36 C.L.R. 305.