Woodhall Ltd. v Chief Collector of Taxes [1975] PGSC 44; [1975] PNGLR 157 (29 August 1975)

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INCOME TAX - Rebate of tax - Dividends received by non-resident public company - Whether right to rebate of tax an accrued right such as to survive a repeal of s. 217 of the Income Tax Act 1959 - Income Tax Act 1959, s. 217[cxcv]¹ - Income Tax Act 1972, s. 30[cxcvi]², s. 41[cxcvii]³ - Acts Interpretation Act 1949, s. 44[cxcviii]4.

The receipt of dividends from Papua New Guinea sources on 21st August, 1972, by a non-resident Australian registered public company, did not vest in it an accrued right to rebate of tax under s. 217 of the Income Tax Act 1959, within the meaning of s. 44 of the Acts Interpretation Act 1949, and consequently s. 30 of the Income Tax Act 1972, by which s. 217 of the principal Act was repealed (either from 29th August, 1972 or 5th October, 1972), and s. 41 of the Income Tax Act 1972 by which the amendments were applicable to assessments in respect of income of the year of income commencing on 1st July, 1972, required the Chief Collector of Taxes to disallow a claim for rebate of tax in respect of those dividends. Hamilton Gell v. White, [1922] 2 K.B. 422 and Director of Public Works v. Ho Po Sang [1961] UKPC 22; [1961] A.C. 901 referred to.

The following statement of the history of the appeal is taken from the judgment of Williams J:

The appellant company (taxpayer) in its return of income for the financial year ending 30th June, 1973 included in its assessable income certain sums received by it as dividends. In the return the appellant asserted that its taxable income “is subject to section 217 rebate”. The Chief Collector of Taxes, when making his assessment, declined to allow the rebate claimed. By Notice of Objection the appellant objected to the disallowance of this claim. The Chief Collector disallowed the objection, whereupon the appellant requested the Chief Collector to treat the objection as an appeal and to forward it to the Supreme Court.

The parties reached agreement on certain facts and, at the request of the parties, the matter was referred to a Full Court of this Court.

N2>“1. The appellant was incorporated on 22nd October, 1953 in the State of New South Wales.

N2>2. At all material times the appellant was a resident of Australia as defined by s. 4 (1) of the Income Tax Act, 1959 (as amended) and was also a resident of Australia as defined by s. 6 of the Commonwealth Income Tax Assessment Act, 1936 (as amended).

N2>3. At all material times the appellant was not a resident of Papua New Guinea as defined by the said s. 4 (1), its central management and control not being in Papua New Guinea and its voting power being controlled by shareholders who were non-residents of Papua New Guinea.

N2>4. At all material times the appellant was not a private company for the purposes of the said Commonwealth Income Tax Assessment Act and in particular s. 46 thereof.

N2>5. The dividends of $1,800.00 and $285,000.00 respectively the subject of the assessment in respect of which this Appeal is brought, were paid to and derived by the appellant on 21st August, 1972 from Hornibrook Constructions Pty. Limited and Hornibrook (Pacific) Constructions Pty. Limited respectively.

N2>6. The said Hornibrook Constructions Pty. Limited was at all material times virtually wholly-owned by Hornibrook (Pacific) Constructions Pty. Limited and the said Hornibrook (Pacific) Constructions Pty. Limited was at all material times wholly-owned by the appellant and both of the said companies were at the said times incorporated in Papua New Guinea and the said dividends were derived by the appellant from sources in Papua New Guinea and were paid out of profits of the said companies earnt no later than the 30th June, 1972 entirely out of sources within Papua New Guinea.

N2>7. The income tax payable in respect of the said dividends under the said Commonwealth Income Tax Assessment Act was at all material times rebateable and was in fact fully rebated in terms of s. 46 of the said Act in respect of the year ended 30th June, 1973 and therefore amounted to Nil.

N2>8. The income tax payable by a company not being a private company under the said Commonwealth Income Tax Assessment Act in respect of all taxable income derived for the year ending 30th June, 1973 amounted to 47½ cents for each dollar of such income.”

L. J Priestley Q.C., with him P. A. Benson, for the respondent (Chief Collector of Taxes).

FROST CJ: This is an objection requested by the appellant taxpayer to be treated as an appeal to the Supreme Court and reserved for the consideration of the Full Court, following the disallowance by the Chief Collector of the taxpayer’s objection to the assessment of its income tax for the financial year ending 30th June, 1973.

The point of the case is whether the taxpayer is entitled in the circumstances to a rebate of tax, which was refused by the Chief Collector, in respect of certain dividends received in the financial year ending on 30th June, 1973, but prior to the introduction of dividend (withholding) tax.

The taxpayer is a company resident in Australia which during the year of income received, as appears from the admitted facts, dividends out of profits derived from sources in Papua New Guinea which, pursuant to s. 48 (1) (b) of the Income Tax Act 1959, were part of its assessable income.

In previous years, as in the case of all non-resident companies resident in Australia, the taxpayer had enjoyed an advantage over other non-resident companies resident elsewhere than in Australia in that it was entitled to a rebate of tax payable in respect of such dividends. This entitlement arose under s. 217 of the Papua New Guinea Act, read with s. 46 (2) (b) of the Australian Income Tax Assessment Act 1936 (as amended), because the amount of tax payable in respect of those dividends exceeded the amount of tax that in the opinion of the Chief Collector would have been payable under the Australian Income Tax Assessment Act 1936 in respect of such dividends, for the reason that under the Australian Act, s. 46 (2) (b), the taxpayer as a resident company was entitled to a rebate of tax on dividends included in its taxable income. The excess thus amounted to the whole of the tax payable.

It was accepted by the parties that if s. 217 had remained in operation at the end of the relevant financial year the appellant would have been entitled to an entire rebate of tax payable upon the dividends. However, under Act No. 49 of 1973 which provided for the payment of withholding tax in respect of dividends paid to non-residents, income upon which dividend (withholding) tax became payable was no longer to be included in assessable income (s. 189d), and s. 217 was repealed.

The dividends in question, amounting to $286,800, were received on 21st August, 1972, which is prior to the date on which the amendments relating to dividend (withholding) tax were to be deemed to have come into operation, viz. 29th August, 1972, and prior also to the date when the Act came into operation. Whether the repeal of s. 217 took effect on 29th August, 1972, as an amendment relating to dividend (withholding) tax, a view contended for by the taxpayer, or upon 5th October, 1972, when the Act came into operation, as submitted by the Chief Collector, is thus not material to the decision.

The taxpayer’s main argument is that at the date when the repeal took substantive effect, whether it was 29th August, 1972, or 5th October, 1972, the taxpayer had an accrued right to the benefit of s. 217. In the absence therefore of a clear expression of legislative intention to the contrary the repeal of s. 217 should not be construed as having a retrospective operation so as to destroy that accrued right. The amending Act, so it was argued, must in this regard be interpreted in the light of and subject to the Acts Interpretation Act 1949, s. 44 (c) and (e).

The respondent’s main argument was that s. 217 was not capable of operation during a particular year of income but only upon assessment under s. 228 of the Act at the end of the year of income if a taxable income then emerged. The repeal of s. 217 before 30th June, 1973, it was said, removed an entitlement which could have come into existence only at the end of the financial year.

Whether the argument involved an anomaly to the detriment of the taxpayer was disputed, and there is much to be said for the respondent’s submission that in various parts of the amending Act there can be discerned a legislative intention to remove exceptions based on Australian tax law.

In the absence of any express legislative provision relating to dividends received prior to 29th August, 1972, the case depends upon the proper construction of the Acts Interpretation Act 1949 (as amended), s. 44, and the appropriate rules of construction.

It should first be noted that if there was an accrued right the fact of the repeal of s. 217 would not defeat the taxpayer because “when a statute is repealed, it is as to new matters as though it had never existed, yet as to transactions already completed under it, it still has full effect”. Per Blackburn J Butcher v. Henderson[cxcix]⁵ cited per Dixon CJ, Maxwell v. Murphy[cc]⁶.

The question is whether the taxpayer acquired any right which is preserved under s. 44. That Act provides that:

N2>“44. Where an Act repeals in the whole or in part a former Act, then, unless the contrary intention appears, the repeal shall not:

(c) affect any right, privilege, obligation or liability acquired, accrued, or incurred under the Act so repealed; or ...

(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, ...”

The respondent’s argument was in effect that every element of s. 217, including the assessment of tax at the end of the financial year if a taxable income had emerged, had to be fulfilled before it could be said that the taxpayer acquired a right to a rebate. It was thus submitted that the taxpayer could not bring himself under such a case as Ku-ring-gai Municipal Council v. Attorney-General for N.S.W.[cci]⁷ under which it was held that a right may be acquired for the purposes of the similar provisions of the Interpretation Act 1897 of New South Wales, s. 8, pending events to determine the quantum of the right.

Upon legislation similar to s. 44, the Privy Council has expressed a wide view of the meaning of rights acquired by giving effect also to provisions similar to s. 44 (e) keeping alive any investigation or legal proceedings in respect of such a right. The authority relied upon by the appellant was Free Lanka Insurance Co. Ltd. v. Ranasinghe[ccii]⁸, and in particular the following passage:

“The Board respectfully agrees with the Supreme Court in thinking that the respondent had, on September 1, 1951, ‘acquired a right’ against the appellants within the meaning of par. (b) of that subsection. The attention of their Lordships was drawn to a number of cases, including those referred to in the judgment of Gunasekara J in the Ceylon Supreme Court and including also the case in the House of Lords of Central Electricity Board v. Halifax Corporation ([1963] A.C. 785). The distinction between what is and what is not ‘a right’ must often be one of great fineness. But their Lordships agree with Gunasekara J in thinking that on September 1, 1951, the respondent had as against the appellants something more than a mere hope or expectation — that he had in truth a right, within the contemplation of section 6 (3) (b) of the Interpretation Ordinance, under section 133 of the Ordinance of 1938 although that right might fairly be called inchoate or contingent. In Director of Public Works v. Ho Po Sang ([1961] A.C. 901) the Board was concerned with an analogous problem under the language (closely approximating to that of the Ceylon Interpretation Ordinance) of the Interpretation Ordinance of Hong Kong. Their Lordships are well content to accept and adopt the language used by Lord Morris of Borth-y-Gest in the judgment of the Board in that case ([1961] A.C. 901, 922): ‘It may be ... that ... a right has been given but that in respect of it some investigation or legal proceeding is necessary. The right is then unaffected or preserved. It will be preserved even if a process of quantification is necessary. But there is a manifest distinction between an investigation in respect of a right and an investigation which is to decide whether some right should or should not be given.’ In the present case, as it seems to the Board, the appellants cannot now be heard to say that the respondent was not immediately after the accident an injured third party entitled to recover damages against Appuhamy and, as they think, his service upon the appellants of the notice of his claim (together with a copy of his plaint) pursuant to section 134 of the 1938 Ordinance was an assertion by him of his statutory right against the appellants; and nonetheless effectively so because the quantum of his claim was dependent upon the finding of the court in a decree made in his favour in his action against Appuhamy.”

In that case the repealed legislation provided that if after a certificate of insurance had been issued to a policy holder a decree in respect of any such liability as was required to be covered by a policy of insurance was obtained against the insured the insurer should pay to the persons entitled to the benefit of the decree any sum payable thereunder in respect of that liability. The respondent, who was injured in March, 1948, whilst driving a motor car which was in collision with a motor lorry owing to the lorry driver’s negligence, was, on 24th September, 1951, awarded damages against the owner of the lorry who was insured against third party risks with the appellant Insurance Company. Thereafter he began an action against the appellants and obtained judgment. On appeal by the appellants it was contended that as the legislation was repealed as from 1st September, 1951, before any decree was obtained by the respondent against the lorry owner the respondent could not assert any statutory right under the legislation.

The Privy Council rejected the appellants’ submission that until the respondent got a decree he had no right at all, and held that the respondent had acquired a right when the cause of action arose, upholding the view of the Supreme Court that the obtaining of the decree was a condition not of the acquisition of the right, but of its enforcement.

The case of the Director of Public Works v. Ho Po Sang[cciii]⁹ was a case on the other side of the line. The case concerned an application by a lessee made before the repeal of the appropriate legislation for a rebuilding certificate enabling the lessee to call on those in occupation to quit which became the subject of an appeal and cross appeal to the Governor-in-Council, the decision upon which had not been given before the repeal. It was held that the entitlement of the lessee in the period prior to the repeal to have the proceedings considered by the Governor-in-Council was not a right or privilege acquired within the meaning of the Interpretation Ordinance. The Judicial Committee said:

“The question was open and unresolved. The issue rested in the future. The lessee had no more than a hope or expectation that he would be given a rebuilding certificate even though he may have had grounds for optimism as to his prospects.” (At p. 922).

Both these decisions were cited with approval by Gibbs J in Mathieson v. Burton[cciv]¹⁰ (at p. 23). But a different view was taken by Windeyer J who said (at p. 12) that he failed “to see why an immunity, or exemption from legal consequences, should not be called a right or privilege once it has taken effect”, but went on to say that the right should be not merely inchoate.

However, as it will appear, it is unnecessary, in my opinion, to decide whether the widening of the nature of the right protected under the relevant legislation to include inchoate or contingent rights was intended by the Privy Council to go beyond any extension of meaning to be inferred from the saving of any investigation, legal proceeding or remedy in respect of any such right.

The passage cited by the Privy Council from Director of Public Works v. Ho Po Sang[ccv]¹¹ must be taken in its entire context. It commences as follows:

“It is to be observed that under section 10 (e) a repeal is not to affect any investigation, legal proceeding or remedy ‘in respect of any such right’. The right referred to is the right mentioned in section 10(c), i.e., a right acquired or accrued under a repealed enactment. This part of the provisions in paragraph (e) of section 10 does not and cannot operate unless there is a right as contemplated in paragraph (c) ...”

Thus whatever the breadth of meaning given to s. 44 the question remains whether there was an accrued right immediately after the dividends were received. As submitted by the appellant the relevant right was acquired by 29th August, 1972, by virtue of s. 217, and in the context of the bundle of rights and duties imposed upon the appellant and the respondent by the Income Tax Act. As soon as the appellant derived the relevant dividends, so it was argued, it became liable to tax in respect thereof under s. 11, which imposes liability for tax upon the taxable income derived during the year of income, and s. 48 under which the dividends are assessable income. The next step in the argument was that, at the same time, the appellant became entitled to a rebate under s. 217 in respect of that income when the assessment procedure took place after the end of the fiscal year; in other words, the appellant had a right immediately vested as to something to occur in the future, and correlative to the right to a rebate was the liability to tax which arose when a dividend was received. It was then said that the assessment procedure merely worked out the fulfilment of the right which had accrued. The possibility of changes in tax rates or law in Papua New Guinea or Australia before the end of the year of income was said to affect not the existence of a right but its quantification.

To support the first step in his argument the appellant relied on the principle laid down by the High Court of Australia in Commissioner of Stamps (W.A.) v. Western Australian Trustee, Executor and Agency Co. Ltd.[ccvi]¹², that liability for tax in respect of income derived is imposed by a provision such as s. 11, and that the assessment is but a method of ascertaining the extent of that liability. Whether that principle was applicable was disputed by the respondent’s counsel upon the authority of Gordon Edgell and Sons Pty. Ltd. v. F.C.T.[ccvii]¹³, in which it was held that a taxpayer is not taxed until he is served with the notice of assessment, and that until then there is no tax under the Income Tax Assessment Act within the meaning of the words “a tax under this Act” contained in s. 103 (1) (a) (i).

This is an issue which it is not necessary to decide unless, upon the proper construction of s. 217, immediately after the dividend was received there accrued to the taxpayer a right or privilege in recompense therefor, or to use the words of Windeyer J previously cited, “an immunity or exemption from legal consequences” from the liability to tax on the dividends in question.

Such a construction, it seems to me, involves going behind s. 217 so as to treat the taxpayer’s entitlement thereunder as if the dividends were exempt from income, a concept basic to the Income Tax Act, and is contrary to the legislative intention. On the whole I consider that the entitlement under s. 217 cannot be construed as divided between rights accruing as at the date of the receipt of each portion of the taxable income of the relevant description, and the enforcement or investigation of those rights delayed until the assessment. The mere receipt of any dividend does not, in my opinion, constitute the happening of an event so as to confer a specific right such as is protected by s. 44 (a) or (e) — Hamilton Gell v. White[ccviii]¹⁴, per Atkin L.J at p. 431. To adapt the words of Blair-Kerr J cited in Director of Public Works v. Ho Po Sang[ccix]¹⁵ s. 217 prescribes a procedure to determine whether the taxpayer should be given a right which it did not have until the assessment was made.

PRENTICE SPJ: At the conclusion of the hearing of this appeal I had formed the preliminary opinion that the receipt of dividends from Papua New Guinea sources on 21st August, 1972 by the appellant, a non-resident Australian-registered public company, did not vest in it an accrued right to rebate of tax under s. 217 of the Income Tax Act No. 26 of 1959, within the meaning of the Acts Interpretation Act 1949 s. 44; and consequently that s. 30 of the 1972 Income Tax Act, by its repeal of the aforesaid s. 217 and by its s. 41, required the Chief Collector (the respondent) to disallow a claim for rebate of tax in respect of those dividends.

I have now had the opportunity to read the written submissions of counsel and I have had the advantage of reading the opinions of my brothers in draft. I find myself confirmed in the view that the combined effect of ss. 11, 217 and 228 in the general setting of the 1959 Act, was not to establish a right in the recipient of dividends received before the repeal of s. 217 came into effect (whether that were the 29th August, 1972 or the 5th October, 1972), to a rebate of tax such as would survive that repeal. In my view the appellant on 21st August, 1972, had no more available to him than a possibility that the Collector would as at 30th June, 1973 when he came to assess the income and to compute the tax payable by the appellant, assuming both the Papua New Guinean and Australian tax laws then remained the same on this subject, form an opinion in the appellant’s favour as provided for by s. 217. This possibility was eliminated by the repeal of s. 217 in 1972.

I am unable to find any ambiguity or anomaly such as might allow a construction of the sections in favour of the taxpayer in accordance with the well-known rules. That the Collector should be able to recover tax at twenty-five per cent on dividends received prior to the withholding tax coming into effect on 29th August, 1972 (for the receipt of which tax he might conceivably have to wait considerably more than twelve months) and only at fifteen per cent (received immediately on payment of dividend) on those received after 29th August, 1972 does not strike me as anomalous.

I agree with the Chief Justice and my brother Williams that this appeal should be disallowed, and generally in their reasons.

WILLIAMS J: [His Honour set out the history of the appeal and statement of facts included in the preliminary note at p. 157.] The Income Tax Act of Papua New Guinea as it stood on the date of commencement of the year of income, namely the 1st July, 1972, contained s. 217, which, in effect, provided that where the amount of tax payable under the Act by a person who was a resident of Australia but not a resident of Papua New Guinea in respect of income derived by that person from sources in Papua New Guinea during a year of income would, but for the section, exceed the amount of tax that, in the opinion of the Chief Collector, would be payable by that person under the Commonwealth Income Tax Act in respect of that income if the Commonwealth Act did not contain certain specified provisions, that person is entitled to a rebate in his assessment of the amount of the excess.

It is not in issue that had s. 217 been in force at the close of the income year ending the 30th June, 1973 then all the conditions existed which would have entitled the appellant to a rebate under s. 217 in respect of the tax assessed on the dividends of $1,800.00 and $285,000.00 mentioned in par. 5 of the Admitted Facts, and that the effect of this would have been that no tax upon this income would have been payable pursuant to the Income Tax Act of Papua New Guinea.

However, by Act No. 49 of 1972 (to which I shall hereafter refer as “the amending Act”) s. 217 was repealed and the issue which arises for determination in this appeal is the effect of that repeal with respect to the dividends received by the appellant on 21st August, 1972.

The amending Act was assented to on the 29th September, 1972. Section 30 of that Act repealed the former s. 217 and s. 2 thereof provides as follows:

N2>(1) Subject to sub-section (2) of this section and to section 41 of this Ordinance this Ordinance shall come into operation on a date to be fixed by the Administrator by notice in the Gazette.

N2>(2) The amendments effected by sections 12 and 23 of this Ordinance and the amendments relating to dividend (withholding) tax shall be deemed to have come into operation on the 29th August, 1972.”

Reference should also be made to s. 41 of the amending Act. That section is as follows:

The amendments effected by this Ordinance, other than the amendments effected by sections 14, 15, 29 and 33 to 39 (inclusive) of this Ordinance apply to assessments in respect of the income of the year of income that commenced on the 1st July, 1972 and in respect of income of all subsequent years of income.”

Put shortly, the contention advanced for the appellant is that the dividends were received by the appellant on the 21st August, 1972, and that upon the proper construction of the relevant provisions of the amending Act they could not be effective to deprive the appellant of a right to a rebate which vested in the appellant on the date of the receipt of the dividends. For the Chief Collector the short contention is that when the provisions of s. 217 are considered in the context of the framework of the Income Tax Act as a whole its repeal had the effect of depriving the appellant of the rebate claimed and that the provisions of s. 41 of the amending Act reinforced this view. In its terms the repeal effected by s. 30 of the amending Act was to apply to assessments in respect of the year of income that commenced on 1st July, 1972 and when, after the close of that financial year, the Chief Collector came to make an assessment of the appellant’s income for that year, and the tax payable thereon, s. 217 was not then in existence. Hence there was no basis for the allowance by the Chief Collector of the appellant’s claim to a rebate.

It is here convenient to consider the broad structure of the Income Tax Act. By s. 11 (1) of the Act there is imposed a tax by the name of income tax for the financial year that commenced on the 1st July, 1959 and for each subsequent financial year upon the taxable income derived during the year of income by any person (which, by definition, includes a company), whether a resident or a non-resident.

By s. 4 “taxable income” is defined as meaning the amount remaining after deducting from the assessable income all allowable deductions. “Assessable income” is also defined in s. 4 to mean all amounts that, under the provisions of the Act, are included in the assessable income. For present purposes it is necessary to refer to only one provision of the Act relating to what is to be included in assessable income, and that is s. 48 (1) (b) (i), which provides that the assessable income of a non-resident includes dividends received from a resident company out of profits derived by it from any source.

Section 223 (1) requires the lodgment by a taxpayer of a return setting out both a full and complete statement of the total income derived by him during the year of income, and of any deductions claimed by him. By s. 228 the Chief Collector is directed to make an assessment of the taxable income and of the tax payable on that income.

It should be noted that s. 217 provided, in effect, for an entitlement to a rebate in an assessment of the amount of the excess of the tax payable under the Papua New Guinea Act over the tax payable under the Australian Act in a year of income. To ascertain the amount of tax payable by a taxpayer in a particular financial year it is first necessary to know his assessable income and his allowable deductions for that year, in order that his taxable income (if any) be arrived at. It is also necessary for the Chief Collector to form an opinion as to the amount of tax that would be payable upon the same income under the Australian Act, assuming that that Act did not contain certain specified provisions. It seems to me clear that none of the factors necessary for the operation of s. 217 were capable of ascertainment until the close of a particular financial year.

It was contended by counsel for the appellant that the principal purpose of the amending Act was to introduce a scheme of dividend (withholding) tax, and that the repeal of s. 217 of the principal Act was a necessary part of this scheme. Section 217 entitled a person who was a resident of Australia, but not of Papua New Guinea, to a rebate of tax. The amending Act introduced a scheme of dividend (withholding) tax under which non-residents receiving income from dividends from a resident company are charged with dividend (withholding) tax deducted at the source of payment. That income having attracted payment of dividend (withholding) tax is not otherwise taxable (see s. 189d). It was said by counsel for the appellant that if the Chief Collector’s view of the matter be correct then the result would be that the appellant would be liable to income tax at the rate of twenty-five cents in the dollar on dividends received up to the date of the coming into force of the dividend (withholding) tax, and with respect to dividends received thereafter in that financial year at the rate of fifteen cents in the dollar. This, it was said, produced an anomalous situation which could not have been intended by the Legislature.

Pursuant to s. 2 (2) of the amending Act the provisions of that Act relating to dividend (withholding) tax were deemed to come into operation on the 29th August, 1972. The appellant contended that, as the repeal of s. 217 should properly be regarded as a necessary part of the scheme of introduction of dividend (withholding) tax, then it must have been the intention of the Legislature that the repeal of s. 217 should become effective contemporaneously with the coming into operation of that scheme. The amending Act in stating that certain sections (including s. 30 which repealed s. 217) apply to assessments in respect of the year of income that commenced on 1st July, 1972, should be construed so as to refer to the process of assessment and not in such a way as to affect rights which had vested in a taxpayer prior to the introduction of the amending Act. It was argued that on the receipt of the dividends on 21st August, 1972 there had accrued to the appellant a right to the benefit of the provisions of s. 217, and that s. 41 was not effective to destroy this accrued right. In other words, it was said that s. 41 did no more than say that the amendments of the sections covered by s. 41 should apply in the assessment process from 1st July, 1972 onwards, but the effect given to a repeal of legislation by s. 44 (c) of the Ordinances Interpretation Act 1949, as amended, was still retained.

“Where an Ordinance repeals in the whole or in part a former Ordinance then, unless the contrary intention appears, the repeal shall not:

(c) affect any right, privilege, obligation, or liability acquired, accrued, or incurred under the Ordinance so repealed; or

The question thus arises whether, on the receipt of the dividends, the appellant then had an accrued right to the benefit of s. 217, which right was preserved by s. 44 (c) notwithstanding the subsequent enactment of the amending Act.

A number of authorities were referred to in argument concerning statutory provisions corresponding with s. 44 (c). The authorities draw the distinction between what is really a right accrued and what is no more than a mere hope or expectation that a right will come into existence. It was stated in the judgment of the Judicial Committee in Director of Public Works v. Ho Po Sang[ccx]¹⁶ that:

“It may be, therefore, that under some repealed enactment a right has been given but that in respect of it some investigation or legal proceeding is necessary. The right is then unaffected and preserved. It will be preserved even if a process of quantification is necessary. But there is a manifest distinction between an investigation in respect of a right and an investigation which is to decide whether some right should or should not be given. Upon a repeal the former is preserved by the Interpretation Act.”

The statement was cited with approval in Free Lanka Insurance Co. Ltd. v. Ranasinghe[ccxi]¹⁷.

What then was the position on the 21st August, 1972, when the appellant received the two dividend payments? It seems that they then became assessable income in that financial year. Whether or not they would form the only assessable income for that year could not then be determined. Similarly, the deductions allowable to the appellant in that year could not then be ascertained. In short, it appears that the question whether the conditions necessary for the operation of s. 217 had been met could not then be determined, but could only be determined at the close of the financial year, when all the relevant facts were known. It is not, in my view, to the point to examine the position as it subsequently transpired and to say that, in the result, all the necessary ingredients were present which would have given the Chief Collector no proper alternative than to grant the rebate had s. 217 not been repealed. To my mind, for the appellant’s contention that on receipt of the dividends on 21st August, 1972 he had an accrued right to a rebate to be sound, it is necessary to examine the position as it was known on that date. It seems to me that on 21st August, 1972 it was quite impossible to say that the appellant was entitled to the benefit of s. 217. At best it could only be said that the appellant had a hope or expectation that when all the relevant facts were known at the end of the financial year, and a return furnished and an assessment made, it would then be found that it was entitled to a rebate.

Accordingly, it is my view that on the receipt of the dividends there then did not come into existence an accrued right which was preserved by s. 44 (c) of the Ordinances Interpretation Act.

As I have said earlier, the appellant contended that it is indeed strange that if the Chief Collector’s contention be correct then a taxpayer in the position of the appellant, who, prior to 1st July, 1972, may, through the operation of s. 217, have paid no tax, was from 1st July, 1972 to 29th August, 1972 required to pay tax at the rate of 25%, and thereafter was subject to dividend (withholding) tax at the rate of 15%. This, it was said, was the result which the Legislature did not contemplate and that this Court should be loath to give a construction to the legislation which would produce this result. However this may be, it seems to me that the words of the Statute are plain and free from ambiguity and that this Court must give effect to them.

To sum the matter up, it is my view that the dividends received by the appellant were assessable income. It was bound to and did include them in its return of income for the financial year ending 30th June, 1973. The Chief Collector then made an assessment of the assessable income and the tax payable thereon. Before then s. 217 had been repealed and the appellant had no accured right to a rebate which was saved by s. 44 (c) of the Ordinances Interpretation Act. When the time arrived for the making of the assessment s. 217 no longer existed and in consequence the Chief Collector had no authority to grant the rebate claimed. In my view the appellant’s claim must fail.

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[cxcv]The effect of s. 217 is set out infra p. 168.

[cxcvi]Infra p. 166.

[cxcvii]Infra p. 167.

[cxcviii]Section 44 of the Acts Interpretation Act 1949, provides (where relevant).

N1>44. Where an Act repeals in the whole or in part a former Act, then, unless the contrary intention appears, the repeal shall not . . .

N2>(c) affect any right, privilege, obligation or liability acquired, accrued, or incurred under the Act so repealed; or . . .

N2>(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, . . .

[cxcix] (1868) L.R. 3 Q.B. 335, at p. 338.

[cc][1957] HCA 7; (1957) 96 C.L.R. 261, at p. 268.

[cci][1957] HCA 61; (1957) 99 C.L.R. 251, at pp. 266, 276.

[ccii] [1964] A.C. 541, at pp. 551-552.

[cciii][1961] A.C. 901.

[cciv](1971) 124 C.L.R. 1.

[ccv][1961] A.C. 901.

[ccvi](1925) 36 C.L.R. 98.

[ccvii](1949) 9 A.T.D. 43.

[ccviii][1922] 2 K.B. 422.

[ccix][1961] UKPC 22; [1961] A.C. 901, at p. 922.

[ccx][1961] UKPC 22; [1961] A.C. 901, at P. 922.

[ccxi] [1964] A.C. 541, at p. 552.

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Supreme Court of Papua New Guinea

Woodhall Ltd. v Chief Collector of Taxes [1975] PGSC 44; [1975] PNGLR 157 (29 August 1975)

Papua New Guinea Law Reports - 1975