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Supreme Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]
SCA NO 4 0F 2008
BETWEEN
COMMISSIONER GENERAL OF INTERNAL REVENUE
AND
CHIEF COLLECTOR OF TAXES
Appellant
AND
BOUGAINVILLE COPPER LIMITED
Respondent
Waigani: Injia DCJ, Lenalia J, Cannings J
2008: 28 April, 3 July
APPEALS – taxation appeals – appeal to National Court against decision of Commissioner General of Internal Revenue to disallow objection against assessment of income tax – nature of appeal – documents and other evidence to be considered by National Court – whether restricted to material considered by Commissioner General – whether a de novo appeal – Income Tax Act 1959, Section 247.
APPEALS – taxation appeals – circumstances in which National Court should strike out grounds of taxation appeal – res judicata – abuse of process.
The Commissioner General of Internal Revenue disallowed objections to assessments of income tax and the taxpayer exercised its right of statutory appeal to the National Court. Prior to hearing the appeal the National Court ruled on two motions, one brought by the taxpayer concerning the nature of the appeal and the other brought by the Commissioner General, asking that some of the taxpayer’s grounds of appeal be struck out as being unarguable or res judicata (already decided in a previous case) and therefore an abuse of process. The National Court ruled, on the first motion, that a taxation appeal is restricted to reconsideration of the material before the Commissioner General and is not an appeal de novo (from the beginning); and, on the second motion, that res judicata did not apply, there was no other abuse of process and that the grounds of appeal remain. The Commissioner General appealed against both rulings.
Held:
(1) A taxation appeal to the National Court under Section 247(b) of the Income Tax Act is a rehearing of the matter, based on reconsideration of the material that was before the Commissioner General, plus any other material that the National Court considers relevant, which the parties may adduce upon direction from the Court.
(2) The issues involved in the contentious grounds of appeal before the National Court were not resolved in any previous proceedings. Therefore they were not res judicata, there was no abuse of process and the National Court did not err by refusing to strike them out.
(3) The appeal against the National Court’s first ruling was partially allowed and the appeal against its second ruling was wholly dismissed.
Cases cited:
Papua New Guinea cases
Barlow Industries v Chief Collector of Taxes [1987] PNGLR 386
BCL v Chief Collector of Taxes (2007) SC853
BCL v Commissioner General, CIA No 6 of 2005, 10.01.08
David Toll v Kibi Kara & Ors (No 2) [1990] PNGLR 201
Dirua v Lawyers Statutory Committee (2005) N2905
Global Marine Australia Inc v Chief Collector of Taxes [1986] PNGLR 123
Kevin Latu v Fidelis Kaogo (2007) N3151
Patterson v Lawyers Statutory Committee (2005) SC822
Overseas cases
Brewing Co Ltd v Commissioner of Pay-roll Tax (Vic) (1979) 10 ATR 228, 79 ATC 4452;
Builder’s Licensing Board v Sperway Constructions (Sydney) Pty Ltd [1976] HCA 62; (1976) 135 CLR 616 at 621
Coal & Allied Ltd v AIRC [2000] HCA 47; (2000) 203 CLR 194
Commissioner of Pay-roll Tax (Qld) v John French Pty Ltd (1983) 14 ATR 228, 83 ATC 4283
Commissioner of Stamps (SA) v Rivington Farms Pty Ltd (1981) 12 ATR 296, 81 ATC 4449
Federal Commissioner v Winters (1997) 37 ATR 209
Feez Ruthning v Commissioner of Pay-Roll Tax [2002] QCA 396; [2003] 2 Qd R 41
Syngenta Crop Protection Pty Ltd v Commissioner of Taxation [1005] FCA 1646
WR Carpenter Holdings Pty Ltd v Commissioner of Taxation [2007] FCA FC 103
APPEAL
This was an appeal against two rulings by the National Court made prior to commencement of the hearing of a taxation appeal.
Counsel
N M Cooke QC, M M Varitimos and F Griffin, for the Appellant
J Griffin QC, E Andersen and N Pitoi for the Respondent
3 July, 2008
1. BY THE COURT: This case arises from a taxation appeal in the National Court.
2. Bougainville Copper Ltd (BCL) lodged objections against income tax assessments for 1999, 2000 and 2001, which the Commissioner General of Internal Revenue (the Commissioner General) substantially disallowed. BCL then filed an appeal against the decision to disallow the objections to the National Court, under Section 247(b) of the Income Tax Act. At stake is a tax liability of about K28 million.
3. Prior to hearing the appeal the National Court (Hartshorn J, the primary Judge) ruled on two motions, one brought by the taxpayer, BCL, concerning the nature of the appeal and the other brought by the Commissioner General, asking that some of BCL’s grounds of appeal be struck out. The Commissioner General argued that four grounds amounted to an abuse of process, as the issues raised were res judicata (already decided in a previous case) or were unarguable.
4. His Honour ruled, on the first motion, that a taxation appeal is restricted to a reconsideration of the material before the Commissioner General and is not an appeal de novo (from the beginning); and, on the second motion, that res judicata did not apply, there was no other abuse of process and, with one exception, that BCL’s grounds of appeal remained intact (BCL v Commissioner General, CIA No 6 of 2005, 10.01.08).
5. The Commissioner General has appealed to the Supreme Court against both rulings. In these proceedings the Commissioner General is the appellant and BCL is the respondent.
6. There are two major issues:
7. Before addressing them we will summarise the law on taxation appeals, discuss some terminology concerning administration of the Income Tax Act and set out the Commissioner General’s grounds of appeal.
THE LAW ON TAXATION APPEALS
8. A taxpayer dissatisfied with an assessment of income tax may seek redress under Part V (objections and appeals) of the Income Tax Act.
9. First, the taxpayer must lodge an objection. This is done under Section 245(1) (objections), which states:
... a taxpayer dissatisfied with an assessment under this Act may, within 60 days after service of the notice of assessment, post to or lodge with the Commissioner General an objection in writing against the assessment stating fully and in detail the grounds on which he relies.
10. Secondly, the Commissioner General makes a decision on the objection under Section 246 (decision of Commissioner General), which states:
(1) The Commissioner General shall consider the objection, and may either disallow it, or allow it either wholly or in part, and shall serve the taxpayer by post or otherwise with written notice of his decision.
(2) The Commissioner General may, where he considers it necessary, require the taxpayer in writing to furnish information relating to assessment or objection, before making [a] decision on the objections of the taxpayer.
11. Thirdly, if the taxpayer is dissatisfied with the Commissioner General’s decision on the objection, the taxpayer can either make an application to the Review Tribunal or appeal to the National Court. Section 247 (application for review or appeal) states:
A taxpayer dissatisfied with the decision [of the Commissioner General under Section 246 regarding an objection to an assessment] may, within 60 days after service of the notice [of the decision] either:—
(a) make an application to the Review Tribunal for review in the prescribed form; or
(b) file an appeal to the National Court in accordance with the National Court Rules.
12. If the taxpayer elects to go to the Review Tribunal under Section 247(a), the review is conducted in accordance with Sections 248 to 255 and 257 and 258 of the Act. Section 253 provides that the Review Tribunal has all the powers and functions that the Commissioner General has in making assessments, determinations and decisions under the Income Tax Act. Section 254 says the Review Tribunal must give its decision in writing and may either confirm, reduce, increase or vary the assessment.
13. If the taxpayer elects to go straight to the National Court under Section 247(b) – as BCL did in this case – only some of the sections of the Act that apply to Review Tribunal proceedings, apply: Sections 250 (grounds of objection and burden of proof), 251 (reduced assessments), 257 (pending appeal not to delay payment of tax) and 258 (adjustment of tax after appeal). There are some provisions of the National Court Rules (Order 18, Rules 15, 16 and 17) that apply to Section 247(b) appeals, which do not apply to Review Tribunal proceedings. These rules are contained in a special division of the Rules, Division 18.2, devoted to "taxation appeals". We will refer to them in detail later, as they are quite significant. After hearing the appeal, the National Court makes an order under Section 256 (order of National Court on appeal), which states:
The National Court may, on the hearing of an appeal under this Division, make such order as it thinks fit, and may by the order confirm, reduce, increase or vary the assessment.
14. Fourthly, if the taxpayer has gone to the Review Tribunal under Section 247(a), both the Commissioner General and the taxpayer have a right of appeal against the Tribunal’s decision to the National Court under Section 255 (appeal or reference to the National Court), which states:
(1) The Commissioner General or taxpayer may appeal to the National Court from any decision of the Review Tribunal that involves a question of law.
(2) The Tribunal shall, upon the request of the Commissioner General or taxpayer, refer to the National Court any question of law arising before the Tribunal.
15. The National Court determines the appeal under Section 256, so it may make the same sort of orders it makes after hearing a Section 247(b) ‘direct’ appeal.
16. Order 18, Rules 18 to 24, of the National Court Rules, also apply to Section 255 appeals against decisions of the Review Tribunal.
17. The final step in the process of objection and appeal is where the taxpayer has gone straight to the National Court under Section 247(b) or the National Court has determined an appeal under Section 247(a) against a decision of the Review Tribunal. In either case, the National Court makes an order under Section 256 and the Commissioner General or the taxpayer can appeal against it to the Supreme Court under the Supreme Court Act (subject to leave being required on questions of fact). The term ‘taxation appeal’ can therefore be used to describe three sorts of proceedings:
TERMINOLOGY
18. The Commissioner General of Internal Revenue is responsible for administering the country’s two major revenue statutes, the Income Tax Act 1959 and the Customs Act Chapter No 101. Those Acts establish two other offices, the holders of which directly assist the Commissioner General: the Commissioner of Taxation and the Commissioner of Customs. The offices of their predecessors, the Chief Collector of Taxes and Comptroller of Customs, were abolished by legislative amendments in 1992 which established the office of Commissioner General.
19. We mention this in view of the confusing description of the appellant in this case: ‘Commissioner General of Internal Revenue and Chief Collector of Taxes’. It would have been better to have named only the Commissioner General as appellant but the respondent took no issue with it so we will not press the point.
20. Another point of confusion arises from the National Court Rules, which, in Division 18.2 (taxation appeals), continues to refer to the Chief Collector of Taxes, rather than the Commissioner General of Internal Revenue. The National Court Rules, made by the Judges under Section 184 (rules of court) of the Constitution, have not been amended to catch up with creation of the office of Commissioner General.
21. The confusion is largely resolved by the Commissioner General of Internal Revenue (Consequential Amendments) Act No 1 of 1993, Section 2 of which states:
Any reference in any law to ... "the Chief Collector of Taxes", or the "Chief Collector" ... not amended by this or any other law to the "Commissioner General of Internal Revenue" or the "Commissioner General" shall be read as a reference to the Commissioner General.
22. This raises the question whether the National Court Rules is a "law", which is defined by Section 1 of the Interpretation Act to mean "a law of Papua New Guinea". We are satisfied that the National Court Rules (though they do not fit neatly into any of the categories of laws that comprise "the laws of Papua New Guinea" recognised by Section 9 of the Constitution) can be regarded as a "law" for the purposes of Act No 1 of 1993.
23. Therefore, though the National Court Rules have not been amended and continue to refer to the Chief Collector of Taxes, it is proper to read the Rules as referring to the Commissioner General, whenever the Chief Collector of Taxes is referred to.
THE APPEAL TO THE SUPREME COURT
24. The Commissioner General has raised ten grounds of appeal. The first five are about the nature of a taxation appeal to the National Court. The second five concern the primary Judge’s refusal to strike out any of BCL’s grounds of appeal.
Nature of appeal
25. It is alleged that the primary Judge erred in law by:
(a) finding that the appeal is a reconsideration of the material that was considered by the Commissioner General, rather than an appeal de novo;
(b) finding that the amendment to Section 247 only affected how an appeal is commenced;
(c) failing to find that a Section 247(b) appeal involved a hearing de novo;
(d) failing to find that the amendment to Section 247 rendered Division 18.2 of the National Court Rules irrelevant and inapplicable;
(e) suggesting directions that could be given by the National Court to clarify the parts of Order 18, Rules 15 and 16 of the National Court Rules, that continue to have effect.
Motion to strike out grounds of BCL’s appeal
26. It is alleged that his Honour erred in law by:
(f) finding that the Supreme Court in BCL v Chief Collector of Taxes (2007) SC853, did not make a substantive determination of the issues raised by grounds 3.5, 3.6 and 3.7 of BCL’s appeal;
(g) not striking out grounds 3.5, 3.6 and 3.7 of BCL’s appeal as being caught by the res judicata and issue estoppel doctrines;
(h) not finding that grounds 3.4, 3.5, 3.6 and 3.7 of BCL’s appeal were an abuse of process;
(i) failing to independently examine the documents in relation to grounds 3.5, 3.6 and 3.7 of BCL’s appeal to determine they were valid grounds of appeal;
(j) failing to strike out ground 3.4 of BCL’s appeal, as an estoppel cannot arise against the Commissioner General when exercising statutory powers under the Income Tax Act.
WHAT IS THE NATURE OF AN APPEAL TO THE NATIONAL COURT UNDER SECTION 247(b) OF THE INCOME TAX ACT?
27. Section 247(b) states:
A taxpayer dissatisfied with the decision [of the Commissioner General on an objection to an assessment] may, within 60 days after service of the notice [of the decision] ... file an appeal to the National Court in accordance with the National Court Rules.
Three possibilities
28. In the present case BCL appealed under Section 247(b) and before the hearing started a question arose as to the nature of the appeal, in particular: what documents and other evidence can be considered by the National Court? There are at least three possibilities:
(For a discussion of the difference between these three types of appeal see the decision of the High Court of Australia in Coal & Allied Ltd v AIRC [2000] HCA 47; (2000) 203 CLR 194.)
29. The primary Judge ruled that the first interpretation was the correct one. The Commissioner General argues that the third interpretation should prevail. BCL’s position is unclear. They initially supported the primary Judge’s ruling but as the hearing before us progressed they seemed to be advancing the second interpretation.
30. Each of the three interpretations is plausible as the wording of Section 247(b) is non-specific. It simply says the taxpayer may file "an appeal in accordance with the National Court Rules". There is no definition of the word "appeal" in the Income Tax Act or any other law such as the Interpretation Act. It is not a word that has a discrete, technical meaning.
The primary Judge’s ruling
31. The primary Judge concluded that it was the Parliament’s intention to confine a Section 247(b) appeal to reconsideration of the material that was before the Commissioner General. His Honour noted that Division 18.2 of the National Court Rules is devoted to taxation appeals. Rules 15, 16 and 17 apply to appeals to the National Court under Section 247(b). They state:
15. Appeals from disallowance of objection.
When the [Commissioner General] has been requested under the Act to forward an objection to the Court he shall—
(a) forward the notice of the objection to the Court within the time prescribed by law, or if no time has been so prescribed, then within 30 days after the date of the receipt by him of the request, or within such further time as is agreed between him and the taxpayer; and
(b) within seven days after the date on which he has forwarded or referred the notice of objection—give to the taxpayer written notice that the objection has been forwarded.
16. Documents to accompany notice of objection.
(1) The [Commissioner General] shall also forward, together with the notice of objection, to the proper officer of the Court—
(a) the assessment in respect of which the objection was made (including any amendment of the assessment); and
(b) the notice of the disallowance of the objection; and
(c) the request for the forwarding or reference of the objection to the Court; and
(d) any other documents in his possession or power which are necessary for the hearing of the appeal.
(2) If a dispute arises concerning the documents to be forwarded or as to their genuineness or the correctness of a copy of the documents, the Court may, on application made by a party to the appeal by motion, make such order as it thinks fit with respect to the dispute.
17. Setting down appeal for hearing.
(1) The taxpayer shall, within 14 days after the receipt by him of a notice that his objection has been forwarded, set down the appeal for hearing at the next available sittings of the Court appointed for the hearing of such appeals.
(2) The taxpayer shall give to the [Commissioner General] notice of the setting down at least 14 days before the day for which the appeal has been set down.
Relevance of National Court Rules
32. The Commissioner General argued before the National Court (and also before us) that those rules are now irrelevant and obsolete as they applied to the old Section 247(b), which was repealed and replaced by an amendment to the Act in 2000. The old Section 247(b) stated:
A taxpayer dissatisfied with the decision may, within 60 days after service of the notice, in writing request the Commissioner General either:—
(a) to refer the decision to the Review Tribunal for review; or
(b) to treat his objection as an appeal and to forward it to the National Court.
33. The primary Judge rejected that argument and held that the Rules continue to apply. Only those parts of the Rules that talk about the Commissioner General being ‘requested’ to ‘forward’ the notice of objection and other documents to the National Court should be disregarded, his Honour ruled. This is because Section 247(b) now provides that the taxpayer files the appeal to the National Court rather than requesting the Commissioner General to treat its objection as an appeal and forward it to the Court.
34. His Honour considered that the continued application of the Rules means that the Commissioner General is still obliged to forward a bundle of documents to the Court, comprising:
35. There is no inconsistency between those requirements and Section 247(b), his Honour ruled, so they continue to apply. The amendment of Section 247(b) only affected how an appeal is commenced. The nature of an appeal, the material to be considered by the National Court and how the appeal is conducted have not altered.
Rules 15 and 16 continue to apply
36. We agree with that part of his Honour’s reasoning and find that the Commissioner General’s urging to disregard Rules 15 and 16 was properly repelled. Section 184 of the Constitution gives the Judges of the Supreme Court and the National Court power to make rules of Court regarding the practice and procedure of the Courts. Section 184(4) states what happens in the event of an inconsistency between a statutory provision and a rule of Court:
If an Act of the Parliament comes into force that is inconsistent with a rule of Court, the rule ceases to have effect to the extent of the inconsistency. [Emphasis added]
37. The primary Judge applied Section 184(4), read down Rules 15 and 16 and ruled that they ceased to have effect to the extent of the inconsistency with Section 247(b). That that was the correct interpretation, is made clear by the wording of Section 247(b): "a taxpayer ... may ... file an appeal to the National Court in accordance with the National Court Rules" [emphasis added].
38. Furthermore, as the appeal is against a decision of the Commissioner General, it is desirable to have a full record of the Commissioner General’s decision before the appellate body, the National Court.
Next step
39. The next step in his Honour’s reasoning was to observe that there was no procedure in Division 18.2 of the National Court Rules for treating a Section 247(b) appeal as a hearing de novo and permitting some form of pleading, discovery, interlocutories and oral evidence. This is unlike in Australia (from where our taxation appeal laws have been largely copied) where the Rules of the Federal Court (the court that deals with taxation appeals) expressly allow a Judge to make orders regarding discovery and inspection of documents, interrogatories, admissions of fact or of documents, definition of issues, filing and serving of affidavits, giving of particulars and giving of evidence at the hearing, including whether evidence should be given orally or by affidavit. The Australian cases, such as Syngenta Crop Protection Pty Ltd v Commissioner of Taxation [1005] FCA 1646 and W R Carpenter Holdings Pty Ltd v Commissioner of Taxation [2007] FCA 103 indicate that a taxation appeal equivalent to an appeal under our Section 247(b) is a de novo hearing must therefore be distinguished, his Honour ruled.
40. His Honour regarded the amendment to Section 247(b) that inserted a reference to the National Court Rules, as significant:
If the Parliamentary intention when making the amendment had been for an appeal to be heard de novo, given the terms of Division 2 of Order 18 of the National Court Rules that were in force then and remain in force now and which do not provide for a de novo appeal procedure, to my mind that intention was not fulfilled.
In the circumstances therefore it is apparent that the nature of an appeal under Section 247(b) ... is a reconsideration of the material that was considered by the [Commissioner General], as opposed to a hearing de novo in which other material is considered.
41. His Honour also noted that there was no PNG case that dealt with the nature of an appeal under Section 247(b). There are two National Court decisions of Bredmeyer J that concern appeals under Section 255 of the Income Tax Act from the Review Tribunal to the National Court: Global Marine Australia Inc v Chief Collector of Taxes [1986] PNGLR 123 and Barlow Industries Pty Ltd v Chief Collector of Taxes [1987] PNGLR 384. In Barlow Bredmeyer J made the comment that:
An appeal to the National Court under Section 255 of the Income Tax Act differs from most other appeals heard by this Court. It is an appeal de novo; it is not limited to the evidence placed before the Review Tribunal.
42. The primary Judge thought that those cases were of no use in determining the nature of a Section 247(b) appeal as they concern a different sort of appeal and there was no contest between the parties in either case about the procedure to be followed.
43. We agree with some of the observations his Honour made. It is true that there is no procedure in Division 18.2 for treating a Section 247(b) appeal as a hearing de novo. Our Rules are indeed very different from the Australian Federal Court Rules. It is correct to observe that Section 247(b) provides that the appeal is to be in accordance with the Rules, so if the Rules do not provide for a de novo hearing it might be inferred that no such hearing is permitted. His Honour validly pointed out that the two decisions of Bredmeyer J, which are amongst the leading PNG cases on taxation appeals, concerned a different sort of taxation appeal than the one in the present case and resulted from agreement between the parties as to the nature and procedure of the appeal.
44. However, not providing for something is different to not permitting it. If a law does not provide for something it does not necessarily follow that it is prohibited. We do not think that Division 18.2 was intended to provide an exhaustive code for hearing taxation appeals.
Other types of appellate jurisdiction of the National Court
45. We consider that the true nature of a Section 247(b) appeal is best ascertained by looking at such appeals in the context of other areas of the law in which the National Court has appellate jurisdiction. There are four main types of decision-makers from which an appeal lies to the National Court:
Appeals are creatures of statute
46. It is not possible to generalise and say that the nature of an appeal depends on the type of decision-maker from which the appeal
lies. The National Court – or whatever body is exercising appellate jurisdiction – must look at the nature and purpose
of the law that has conferred the appellate jurisdiction. This is because an appeal is a creature of statute. Kirby J explained this
fundamental point in the High Court of Australia’s decision in J in Coal & Allied v AIRC (2000) 203 CLR at 222-223:
Appeal, as such, was unknown to the common law. It is a creature of statute. It is a universal approach to the process called "appeal" in a particular statute. The word encompasses different litigious processes which have few unifying factors. No fewer than six forms of a procedure loosely called appeal have been identified. Within these broad categories are various subcategories reflecting the particular nature of the "appeal" in question, the issues which the appeal presents and the purpose for which it exists, derived from the language in which it is expressed.
In every case where the issue is that of the duty and function of an appellate court or tribunal, the only safe starting point is a careful examination of the language and context of the statutory provisions affording the appellate right, together with a consideration of the powers enjoyed by, and duties imposed on, the body to which the appeal lies.
47. The proper approach is to ascertain the legislative intention as expressed in the words used in the statutory provision. Mason J made a similar point in the High Court’s decision in Builder’s Licensing Board v Sperway Constructions (Sydney) Pty Ltd [1976] HCA 62; (1976) 135 CLR 616 at 621:
But in the end the answer will depend on an examination of the legislative provisions rather than upon an endeavour to classify the administrative authority as one which is entrusted with an executive or quasi judicial function, classifications which are too general to be of decisive assistance. Primarily it is a question of elucidating the legislative intent ...
48. That statement of principle was adopted and applied by Kapi DCJ in David Toll v Kibi Kara & Others [1990] PNGLR 201 and by the Supreme Court in Patterson v Lawyers Statutory Committee (2005) SC822.
49. Though it is dangerous to generalise, it is nevertheless useful to see what the laws of PNG say about the nature of appeals from other bodies to the National Court.
Appeals from other courts
50. For most such appeals, the appeal is by way of rehearing in the way that an appeal from the National Court to the Supreme Court is by way of rehearing under Section 6(1) (appeal to be by way of rehearing) of the Supreme Court Act, which states:
An appeal to the Supreme Court shall be by way of rehearing on the evidence given in the court the decision of which is appealed against, subject to the right of the Supreme Court—
(a) to allow fresh evidence to be adduced where it is satisfied that the justice of the case warrants it; and
(b) to draw inferences of fact.
51. The Supreme Court Rules 1984 make provision for a certified record of proceedings before the National Court to be supplied to the Supreme Court for its consideration. This includes a transcript of oral evidence, documentary evidence and other physical evidence considered by the National Court. The provision of the record of proceedings is not dependent on the consent of the parties.
52. It follows that a rehearing involves a reconsideration of the evidence given in the National Court plus any other evidence which the Court grants leave to introduce.
53. The District Courts Act does not expressly state that an appeal to the National Court is by way of rehearing. However a rehearing is implied by Sections 224, 225 and 229 of the Act. Upon the filing of an appeal, the Clerk of the District Court must furnish a certified copy of the depositions matter to the National Court (Section 224). The Magistrate whose decision is appealed must furnish his or her reasons for decision to the National Court (Section 225). The provision of these documents is not dependent on the consent of the parties. They are furnished under law. Section 229 (evidence to be received on hearing) states:
Evidence other than the evidence and proceedings before the Court by which the conviction, order or adjudication was made shall not be received on the hearing of an appeal, except by consent of the parties or by order of the National Court.
54. As for appeals from the Children’s Court established under the Child Welfare Act (Ch 276), Section 47 says the law relating to appeals from the District Courts applies. Therefore a rehearing is implied.
55. The Juvenile Courts Act 1991 provides for appeals from decisions of Juvenile Courts to a Magistrate Grade V, the National Court or the Supreme Court, depending
on which Court makes the primary decision regarding the juvenile. The procedure on appeal is the same. There is no express rehearing
provision. A rehearing is implied by Section 40 of the Act because it provides for the appeal court to consider "the records" of the primary Court. The records contain the evidence considered
by the primary court. Section 40(1) (hearing of appeals) states:
An appeal court hearing an appeal shall—
(a) consider the records relevant to the decision of the Court; and
(b) receive such evidence (if any) and make such enquiries as it considers necessary.
56. There is no provision in the Act for the primary court to supply its record of proceedings or depositions. However, it is implied by Section 40 that those records would be provided to the appellate court under the statutes which establish those courts.
57. The Village Courts Act 1989 provides for appeals from Village Courts to the District Court. There is no express rehearing provision. However, the nature of the hearing described by the appeal provisions suggests it is a rehearing based on the records (if any) of the Village Court and other evidence (if any) which the Magistrate hearing the appeal considers necessary. Section 89(4) states:
The Magistrate hearing the appeal ... shall—
(a) consider the records (if any) relevant to the decision; and
(b) receive such evidence (if any) and make such enquiries (if any) as he thinks necessary.
58. The Land Disputes Settlement Act provides for appeals from a decision of the Local Land Court to the Provincial Land Court. The Act is silent on the appeal being by way of a rehearing. However, Section 38 provides for the Local Land Court to keep a written record of its proceedings including evidence taken, and to forward a certified copy of the record to the Provincial Land Court, as a matter of course, whether or not an appeal is filed. Section 58 which sets out the grounds of appeal that are open to be raised by an appellant, are the sorts of grounds that would be available to an appellant from errors which may be apparent from the face of the record and would require an examination of the records to resolve, eg excess of or refusal to exercise jurisdiction.
59. It will be observed that in most instances where an appeal is from one court to another court, the appeal is either expressly or impliedly by rehearing, based on a reconsideration of the same material or evidence considered by the primary court. The provision of the records of proceedings of the primary court which contains the evidence or material considered by that court is expressly required by statute. Its availability is not dependent on the consent of the parties. Further, the power to receive fresh material or evidence on appeal by leave of the court is expressly or by implication conferred by statute. The rehearing thus involves a reconsideration of the evidence or material considered by the court together with any fresh evidence or material which may be produced by the parties by leave of the court.
60. A hearing de novo in respect of an appeal from a court is very rare. Indeed we are unaware of any appeal provisions that could reasonably be regarded as conferring de novo appellate authority on the National Court in such circumstances.
Appeals from tribunals
61. There are many statutes which establish statutory tribunals. An example is the Workers Compensation Tribunal established under the Workers Compensation Act. Section 49 expressly provides that an appeal to the National Court is by way of rehearing:
(1) Where in any proceedings under this Act a tribunal gives a decision or makes an order or award, either party to the proceedings may appeal from the decision, order or award on a question of law or fact, or both, to the National Court within the time and in accordance with the conditions prescribed by the Rules of Court for appeals from decisions of the District Court.
(2) An appeal under Subsection (1) may be by way of rehearing.
(3) The National Court shall decide the matter of the appeal and may affirm, quash or vary the decision, order or award appealed from, or substitute or make any decision, order or award which ought to have been made in the first instance, and may make such order as to the costs of the appeal or of the proceedings before the tribunal, or both, as it thinks proper.
Appeals from decisions of statutory boards, committees and other bodies
62. These are statutory bodies empowered to make collective decisions about the issue or cancellation of permits, licenses, certificates and the like. Some statutes provide for an appeal by way of rehearing but if the statute does not provide that the evidence before the tribunal is to be automatically placed before the appeal body – eg, it depends on the consent of the parties – it is likely that the appeal will be regarded as de novo.
63. For instance, Section 58 of the Lawyers Act 1986 provides for appeals from a decision of the Lawyers Statutory Committee. Subsections (4) and (5) state:
(4) An appeal under Subsection (1) or (2) shall be by way of rehearing by the Court.
(5) On an appeal, the record of proceedings of the enquiry by the Committee may, with the consent of the person making the complaint and the lawyer, be given in evidence on the appeal and shall be admissible evidence of the opinion of the Committee in relation to any matter contained in it and of the facts upon which the opinion is based.
64. In Toll v Kara [1990] PNGLR 201, Kapi DCJ, as he then was, interpreted these provisions to mean a de novo hearing. His Honour at page 205 stated:
It is therefore important to construe from s 58(5), the real nature of the rehearing under the Act. In my view, if the rehearing was by way of considering the appeal on the basis of the record before the Committee hearing, then there would be no need for subs (5). The parties would be concerned about the accuracy of the record and agree about the relevant documents but its admissibility is essential and not dependent on consent of parties. Subsection (5) in my view makes sense in a rehearing where the rehearing is not based on the record before the lower tribunal, but where the hearing is in the nature of a hearing de novo. Under subs (5), parties may shorten the need to call all the evidence again before the National Court, if they consent that everything they wish to call before the appellate court is contained in the evidence and the opinion of the Committee in the lower tribunal. If they do not consent, which they are entitled to do, then, of course, the parties will need to bring all the relevant information before the court by leading new evidence before it. Having come to this view of s 58(5), I infer then that it was the intention of the Parliament that the rehearing before the National Court is a hearing de novo, where the hearing is an original hearing and the parties may by consent admit the relevant evidence of the hearing before the lower tribunal and any other matters which parties may wish to call for the purposes of the hearing before the National Court.
65. Although the Toll decision was consistently followed by other Judges in other appeals from the Lawyers Statutory Committee, there was still confusion over what a hearing de novo entailed. The decision was clarified by the Supreme Court in Patterson v Lawyers Statutory Committee (2005) SC822, which endorsed the Toll decision and said:
It is necessary to point out the appellant’s misconception from our point of view of the law as set out in Toll’s case and as set out under 58(5) of the Act as far as the issue of consent of the parties is concerned. It is already clearly explained by Kapi DCJ but we reiterate the point again for the sake of clarity. We perceive, as did the Chief Justice in David Toll’s case, that the basis upon which he reached the conclusion that the hearing on appeal under s.58 is a rehearing de novo is because of the fact that all those records of proceedings in the Lawyers Statutory Committee and relied upon by the Committee to arrive at its decision do not automatically get admitted as evidence in the appeal hearing unless the parties consent to them becoming part of the materials that the appellate tribunal can have before it in its deliberation on the appeal. This meant that as long as no consent was given, the appeal hearing before the National Court was a fresh hearing and the parties were entitled to adduce fresh evidence. ....
There is therefore no question that an appeal from a decision of Lawyers Statutory Committee is by way of rehearing as stipulated in s.58(4) of the Act is a hearing de novo where viva voce evidence may be taken in lieu of or in addition to evidence already before the disciplinary tribunal based on which the decision appealed was made.
66. It is apparent from the Court’s reasoning in Toll that Section 58(5) is the telling provision which implied a hearing de novo. Another important provision is Section 59 of the Lawyers Act (powers of court to impose penalties), which states:
Where, after an appeal under Section 58, the Court is of the opinion that a lawyer has been guilty of improper conduct as a lawyer, it may confirm the penalty imposed by the Committee or may vary it by imposing any one or more of the penalties specified in Section 54.
67. Under Section 59, the National Court forms its own opinion as to guilt or innocence based on consideration of any evidence which parties may produce at the hearing. The Court then also forms its own opinion on the appropriate penalty. It may confirm or vary the penalty imposed by the Committee and impose another penalty specified by Section 54. It is clear from a combined reading of Sections 58(5) and 59 that the appeal is, by necessary implication, by way of hearing de novo.
68. It appears that the only provision in our statutes which expressly provides for a hearing de novo is Rule 6(5) of the Companies Rules (Ch 146) which deals with an appeal from a decision of the Registrar of the National Court on company winding up petitions. Rule 6(5) states:
The appeal shall be by a rehearing de novo of the application but each party, subject to any proper objections to admissibility, may rely on any affidavit used before the Registrar and on any evidence given orally before him, but if any other party desires the production of the deponent or witness for examination before the Judge the affidavit or oral evidence may not be relied on without production of the deponent or witness, except by leave of the Judge.
69. The hearing before the Court is a fresh hearing of the same application in which parties are at liberty to present new material before the Court. The Court then makes a fresh determination on the matter in dispute.
70. The Toll decision as clarified and approved by the Supreme Court in Patterson’s case settles the law on the nature of a hearing de novo. It is a fresh hearing involving consideration of fresh material or evidence, which may or may not include the material or evidence considered by the statutory tribunal or authority, depending on the consent of the parties. The Court’s power to receive new material or evidence and to consider the matter afresh is expressly or by necessary implication conferred by statute.
Appeals from administrative or executive decision-making authorities
71. Some statutes say the appeal is by way of rehearing but also contain evidence provisions which indicate that it is actually a hearing de novo. For instance, Sections 311(2)(a) and (3) of the Civil Aviation Act 2000 state:
(2) In determining an appeal under Section 310 the National Court may—
(a) hear all evidence tendered and representations made by or on behalf of any party to the appeal, whether or not that evidence would be otherwise admissible in that Court; and...
(3) An appeal under this section shall be by way of rehearing.
72. Applying the Toll’s decision to this provision, a hearing de novo is implied by Subsection (2)(a).
THE PRESENT CASE
73. We now return to the statutory scheme in the present case. An appeal to the National Court under Section 247(b) of the Income Tax Act against a decision of the Commissioner General falls into the fourth category we referred to above. It is an appeal from the decision of an administrative or executive decision-making authority. There is no express rehearing or hearing de novo provision in the Act. Nor is it expressly stated that the appeal is an appeal in the strict sense.
74. As we pointed out earlier, the status of Rules 15 and 16 of the National Court Rules after the amendment to the Income Tax Act in 2000 is that the hearing of the appeal is based on a reconsideration of material in the form of documents supplied to the National Court by the Commissioner General, subject to Rule 16(2), which states:
If a dispute arises concerning the documents to be forwarded or as to their genuineness or the correctness of a copy of the documents, the Court may, on application made by a party to the appeal by motion, make such order as it thinks fit with respect to the dispute.
75. The Commissioner General’s submission is that the primary judge erred in concluding that the appeal was an appeal in the strict sense and restricted to the documents forwarded to the court by the Commissioner General. The Commissioner General submitted that the correct view is that the appeal is de novo. Reliance was placed on Section 250(b) of the Act which says that "the burden of proving that the assessment is excessive lies upon the taxpayer". Mr Cooke QC, for the Commissioner General, relied on various Australian cases where the appeal provisions are similar to ours: Feez Ruthning v Commissioner of Pay-Roll Tax [2002] QCA 396; [2003] 2 Qd R 41, Syngenta Crop Protection Pty Ltd v Commissioner of Taxation (2005) FCA 1646 and WR Carpenter Holdings Pty Ltd v Commissioner of Taxation [2007] FCA FC 103.
76. BCL’s anticipated position was that it would support the primary judge’s decision. But BCL took a slightly different position before us. Mr Griffin QC, for BCL, appeared to be submitting that the appeal was by way of a rehearing.
77. It therefore appears that the parties agree that the appeal is not one in the strict sense. We also agree with that proposition and respectfully consider that the learned primary judge erred in that regard.
78. When applying the principles from Toll’s case and Patterson’s case, we consider that a rehearing – as distinct from a hearing de novo – is implied by the appeal provisions of the Income Tax Act and the National Court Rules.
79. We have been driven to that conclusion by the following factors:
(i) the effect of the amendment to Section 247(b);
(ii) the required focus on the Commissioner General’s decision;
(iii) the mandatory production of documents;
(iv) the discretion to admit fresh documents;
(v) the purpose of the legislation.
(i) Effect of the amendment to Section 247(b)
80. A hearing de novo might have been permissible under the repealed Section 247(b). However, the amendments to the Income Tax Act in 2000 introduced significant changes to the nature of the decision made under Section 246 and the nature of an appeal from that decision under Section 247(b).
81. Section 246 was amended by introducing Subsection (2) under which the Commissioner General may "where he considers it necessary, require the taxpayer in writing to furnish information relating to assessment or objection, before making decision on the objections of the taxpayer" [sic]. This provision ensures that the Commissioner General takes into account all necessary information in deciding on the objection. Such a decision is therefore a final determination of the assessment, both on the facts and the law.
82. The amendment to Section 247(b) allows a taxpayer aggrieved by that decision to appeal to the National Court, rather than just, as was previously the case, request the Commissioner General to refer its objection to the National Court.
83. The filing of that appeal is required to be in accordance with the National Court Rules. However, Division 18.2 was not amended to reflect the amendment to Section 247(b). In 2005 when the Judges made the new Appeal Rules, the need to amend Division 18.2 to reflect the amendment to Section 247(b) was overlooked. A new rule could perhaps have included a requirement to file a separate notice of appeal and specify the nature of the grounds of appeal.
84. There is no question that some form of separate notice of appeal now has to be filed. It may take the form of a standard notice of appeal form prescribed by the District Courts Act (Dirua v Lawyers Statutory Committee (2005) N2905, which was followed in Kevin Latu v Fidelis Kaogo (2007) N3151). That was the practice adopted by BCL in the present case and we consider it to be a proper practice.
85. There is, however, confusion over the grounds of appeal which are to be set out in a notice of appeal. Section 250 was not amended at the time Section 247 was amended. Section 250 reflects an appeal under the old Section 247(b) where the notice of objection is treated as an appeal and forwarded to the National Court, in which case the objection is treated as some form of notice of appeal and the grounds of appeal are the same as those contained in the objection.
86. In our view, the law as it stands now is that an appeal is instituted by a separate notice of appeal, the grounds of appeal of which are the same as, and limited to, the grounds stated in the objection to an assessment. The appellant cannot depart from those grounds and introduce new grounds of appeal.
87. As to the onus of proof, Section 250(b) should be read consistently with the new Section 247(b) by saying that the onus of proof is on the taxpayer to persuade the Court that the Commissioner General erred in arriving at the decision. The taxpayer carries the burden of proving that the assessment is excessive. As submitted for BCL, this provision of its own does not vest in the taxpayer a right to call other evidence or material to discharge the onus placed on it. The burden of proof imposed by Section 250(b) is discharged by showing that on the material produced by the Commissioner General before the Court plus any new relevant material that may be adduced by both parties by direction of the Court, the Commissioner erred in his decision on the objection and as a result, the assessment is excessive.
88. The Australian Federal Court decisions relied upon by the Commissioner General, including the Queensland Court of Appeal decision in Feez Ruthning [2003] Qd R 41, are based on income tax assessment appeal provisions which are the same as or similar to our repealed Section 247(b).
89. The law on the nature of an appeal from a revenue authority’s decision on an objection to an assessment from a decision of a review tribunal under different tax regimes in Australia is not conclusive. In some cases, both procedures are said to be hearings de novo. Others say the hearing is an appeal in the strict sense (Commissioner of Pay-roll Tax (Qld) v John French Pty Ltd (1983) 14 ATR 228; 83 ATC 4283; Brewing Co Ltd v Commissioner of Pay-roll Tax (Vic) (1979) 10 ATR 228; 79 ATC 4452; Commissioner of Stamps (SA) v Rivington Farms Pty Ltd (1981) 12 ATR 296; 81 ATC 4449).
90. While the case law on the practice and procedure for challenging tax assessments from capital-based economies whose court decisions have been cited to us, especially Australia (as our laws are based on Australian laws), we accept BCL’s submission that the interpretation of our statutes by reference to foreign statutes of different wording in a different context can lead to incorrect interpretation of our statutes, particularly when those decisions do not reflect significant changes in the wording of our statutes.
91. In our view, the amendment to Section 247 in 2000 introduced a significant change to the nature of an appeal, which is that the taxpayer was given a right to appeal directly to the National Court from the Commissioner’s decision on an objection made under Section 246.
92. Toll’s case can readily be distinguished from the present case. In Toll, under Section 58(5) of the Lawyers Act 1986, the statute made express provision for a rehearing and the introduction of the evidence and material considered by the primary decision-making body to be by consent of the parties. There are no similar provisions in the Income Tax Act.
93. In Barlow Industries v Chief Collector of Taxes [1987] PNGLR 386, Bredmeyer J heard an appeal from the Review Tribunal under the Act. The issue of whether a hearing was a hearing de novo was not fully considered. In Global Marine Aust Inc v Chief Collector of Taxes [1986] PNGLR 123, this was also an appeal from the Review Tribunal. The issue did not arise for consideration. We agree with the primary judge that these cases give little guidance on the issue.
(ii) Focus on the Commissioner General’s decision
94. The National Court’s focus in a Section 247(b) appeal is on the Commissioner General’s decision on the objection. The primary question is whether the Commissioner General erred in disallowing the objection and arriving at an assessment which is excessive.
95. The Act does not allow the Court to go beyond the decision made under Section 246 and conduct a fresh hearing, which would be tantamount to conducting a reassessment from the beginning.
(iii) Mandatory production of documents
96. It is significant that the forwarding of documents by the Commissioner General under Order 18, Rules 15 and 16 is not dependent on the consent of the parties. The Commissioner General is required by law to do so. The National Court Rules is a subordinate enactment made under Section 184 of the Constitution.
97. These documents are required to be placed before the Court for a good reason. It would be impractical and almost impossible to conduct an appeal without them.
(iv) Discretion to admit fresh documents
98. Order 18, Rule 16(1)(d) of the National Court Rules requires all relevant documents in the Commissioner General’s possession to be forwarded to the National Court.
99. If the taxpayer were concerned about the documents being forwarded (eg if it appeared that the Commissioner General was withholding documents) such concerns could be addressed through ad hoc directions issued under Section 185 of the Constitution. It would be reasonable to expect the Court to give an opportunity to the taxpayer to adduce other documents in his possession to counter those documents produced by the Commissioner General. The Court would facilitate this process by way of further ad hoc directions.
100. It can be inferred from Rules 15 and 16 that the Court’s consideration of the material before it is limited to a reconsideration of the same material considered by the Commissioner General. If it was not for the special provision in Rules 16(d) and 16(2) and the preliminary hearings that accompany those provisions, the hearing might well be an appeal in the strict sense. It is this specific aspect of the hearing process which brings the appeal to the status of a rehearing. A de novo hearing is clearly not intended by Rules 15 and 16.
(v) Purpose of the legislation
101. We do not believe that the legislature ever intended that the National Court would step into the shoes of the Commissioner General and re-make assessments. Assessment of tax is a specialised field. The Commissioner General remains the expert.
102. An appeal to National Court is and should be based on some error, an identifiable legal error, committed by the Commissioner General in the assessment process, which causes injustice to the taxpayer. An appeal by way of rehearing fits in well with that process. If the appeal were to proceed by way of a hearing de novo this would allow the parties to call any evidence they wish to call and commit the National Court to a fresh consideration of all evidence or material and a fresh determination of assessment. We do not think there is such legislative intent in these tax provisions.
Conclusion as to nature of appeal
103. We consider that the learned primary Judge erred in law by finding that an appeal to the National Court under Section 247(b) of the Income Tax Act is restricted to reconsideration of the material that was before the Commissioner General.
104. The better view is that such an appeal is by way of rehearing based on reconsideration of the material considered by the Commissioner General, which is supplied to the Court under Order 18, Rules 15 and 16 of the National Court Rules, plus any other material that the Court considers relevant, which the parties may adduce by direction of the Court. The appeal is not a de novo hearing.
105. The appeal against the ruling of the National Court concerning the nature of a Section 247(b) appeal will therefore be partially allowed.
DID THE PRIMARY JUDGE ERR BY REFUSING TO STRIKE OUT VARIOUS GROUNDS OF BCL’S APPEAL?
106. BCL based its appeal to the National Court on 11 grounds and the Commissioner General argued before the primary Judge that four of them should be struck out.
The grounds the Commissioner General wanted struck out
107. Ground 3.4: estoppel. BCL argued that for eight years after the closure of the Panguna mine due to the Bougainville Crisis the Commissioner General accepted that, for tax purposes, there had been no loss or disposal of its mining assets. Instead, depreciation of those assets were allowable deductions and resulting losses were carried forward to subsequent years of income. However, the Commissioner General suddenly changed tack and decided that there occurred, in 1990, a loss or disposal of assets, meaning that deductions were not allowed. BCL argues that the Commissioner General is estopped (prevented) from doing that as it had organised its affairs and lodged its income tax returns in reliance upon the Commissioner General’s representations.
108. Ground 3.5: constitutional issues. BCL argued that the Commissioner General’s decision to issue amended assessments for the income years 1990 to 1997 (which had a flow-on effect on the assessments for 1999, 2000 and 2001) was harsh and oppressive and contrary to Section 41 of the Constitution. Section 41 states that any act that is done under a valid law but in the particular case is harsh or oppressive is an unlawful act.
109. Ground 3.6: Bougainville Copper Agreement amendments. BCL argued that, because it had ceased operations for the extraction of minerals in 1990 due to the Crisis, it should be taxed under the tax regime that applied prior to the 1974 amendments to the Bougainville Copper Agreement. Further, that any tax dispute between it and the Commissioner General should be referred for arbitration in accordance with the Agreement.
110. Ground 3.7: facility agreement. BCL argued that under a facility agreement entered into by the State, CRA Finance Ltd and BCL, no tax was payable until at least two months after recommencement of BCL’s mining operations on Bougainville and the earning of sufficient income to pay the tax liability. Therefore even if the amount of tax assessed were correct, BCL was under no obligation to pay as mining has not recommenced.
Commissioner General’s arguments
111. The Commissioner General argued before the primary Judge that ground 3.4 was a frivolous point of law, as it was unarguable. An estoppel cannot arise against public officials to prevent them doing what they are instructed to do by statute, particularly a revenue statute.
112. As for grounds 3.4, 3.5 and 3.6 the Commissioner General argued that they were all determined against BCL by the Supreme Court decision in BCL v Chief Collector of Taxes (2007) SC853. That was an appeal by BCL against a decision of Salika J in the National Court that allowed the Commissioner General to recover tax assessed for 1999, 2000 and 2001 by issuing garnishee notices under Section 272 of the Income Tax Act. The Supreme Court dismissed BCL’s appeal, the result being that it was obliged to pay the tax assessed, even though its Section 247(b) appeal to the National Court was pending.
Primary Judge’s decision
113. The primary Judge rejected all of those arguments.
114. As to ground 3.4 (estoppel), his Honour noted that under Section 231 of the Income Tax Act the Commissioner General is empowered to make an assessment in respect of any person liable to pay income tax. Section 232 allows the Commissioner General to issue an amended assessment. His Honour considered that both provisions conferred a discretion on the Commissioner General, so an estoppel argument could conceivably arise. Therefore he was not satisfied that ground 3.4 was not a reasonable ground of appeal or that it was frivolous or vexatious.
115. As to grounds 3.5, 3.6 and 3.7, his Honour ruled that the major issue before the Supreme Court in SC853 was whether BCL could be required to pay the amount of tax assessed before its appeal to the National Court was determined. The correctness of the assessments was not in issue.
116. Ground 3.5 (constitutional issues) was not addressed by the Supreme Court in SC853. Though there was a Section 41 argument raised, it was to do with whether the issuance of notices under Section 272 of the Income Tax Act was harsh and oppressive, not whether the issuing of amended assessments was harsh or oppressive.
117. Ground 3.6 (Bougainville Copper Agreement amendments) was largely not addressed in SC853. The only issue arising from the Bougainville Copper Agreement amendments that was determined was the question of arbitration. The Supreme Court decided that arbitration has no part to play in the resolution of disputes between BCL and the Commissioner General. Such disputes are to be resolved through the objection and appeal procedure under the Act.
118. Ground 3.7 (facility agreement) was considered in relation to the arbitration question but not specifically on the issues raised by this ground of appeal. Again, no substantive determination was made, his Honour ruled.
119. His Honour concluded that with the exception of the arbitration argument that formed part of ground 3.6 (which BCL conceded should be struck out), none of grounds 3.5, 3.6 and 3.7 had been determined by the Supreme Court. Res judicata did not apply. There was no abuse of process. Therefore he refused to strike out the grounds of appeal.
Commissioner General’s submissions before Supreme Court
120. The Commissioner General now argues before us that his Honour erred in refusing to strike out the four grounds. The Commissioner General has put the same sort of submissions before us as were put before the primary Judge.
Did the primary Judge err?
121. As to ground 3.4, the doctrine of estoppel on which BCL relies is a principle of equity, which has been adopted as part of PNG’s underlying law. Whether it would apply to prevent the Commissioner General exercising discretion under the Income Tax Act can only be determined by the National Court after hearing evidence. There is no hard and fast rule that estoppel cannot apply in the administration of a revenue statute (Federal Commissioner v Winters (1997) 37 ATR 209). If there were such a rule in equity, its application in PNG may be subject to Section 41 of the Constitution. The primary Judge properly concluded that ground 3.4 was not frivolous or vexatious. It is not an unarguable point. The primary Judge did not err in refusing to strike out this ground of appeal.
122. As to grounds 3.5, 3.6 and 3.7, we have considered the Supreme Court’s judgment in SC853. A cursory reading of it is sufficient to reveal that the Supreme Court was not determining the correctness of the assessments. It was concerned with whether the assessments could be enforced while still under appeal. The primary Judge succinctly explained how the issues were entirely different and we endorse his Honour’s reasoning. It is surprising that the Commissioner General persisted with the res judicata argument before us as it is untenable. The primary Judge did not err in refusing to strike out these grounds of appeal.
Conclusion as to refusal to strike out grounds of appeal
123. We consider that the learned primary Judge made no errors in refusing to strike out any grounds of BCL’s appeal.
124. The appeal against that part of the judgment of the National Court is dismissed. We thus dismiss grounds (f), (g), (h), (i) and (j) of the Commissioner General’s notice of appeal.
RESOLUTION OF APPEAL
125. We have partially upheld the first part of the Commissioner General’s appeal. We uphold the submission that the primary judge made an error of law when deciding on the nature of a taxation appeal. However, the correct view of the nature of such an appeal is not the one contended for by the Commissioner General, so the first part of the appeal is only partially upheld. A taxation appeal to the National Court under Section 247(b) of the Income Tax Act is an appeal by way of rehearing, so the National Court is not restricted to reconsideration of the material that was before the Commissioner General.
126. We have wholly dismissed the second part of the Commissioner General’s appeal. The issues involved in the contentious grounds of appeal before the National Court were not resolved in any previous proceedings. Therefore they were not res judicata, there was no abuse of process and the National Court did not err by refusing to strike them out.
COSTS
127. As both parties have been partially successful we will order that they bear the own costs.
ORDER
(1) Grounds (a) and (b) of the Commissioner General’s notice of appeal are partially upheld.
(2) Grounds (c), (d), (f), (g), (h), (i) and (j) of the Commissioner General’s notice of appeal are dismissed.
(3) Ground (e) of the Commissioner General’s notice of appeal is not determined.
(4) Those parts of the judgment and order of the National Court in CIA No 6 of 2005 that indicate that the nature of an appeal under Section 247(b) of the Income Tax Act is restricted to a reconsideration of the material that was considered by the Commissioner General of Internal Revenue, as opposed to a rehearing in which other material can be considered upon directions of the National Court, are quashed.
(5) It is declared that an appeal under Section 247(b) of the Income Tax Act is an appeal by way of rehearing, based on reconsideration of the material considered by the Commissioner General which is supplied to the Court under Order 18, Rules 15 and 16 of the National Court plus any other relevant material which the Court considers relevant, which the parties may adduce by direction of the Court.
(6) Those parts of the judgment and order of the National Court in CIA No 6 of 2005 refusing to strike out grounds of appeal 3.4, 3.5, 3.6 and 3.7 to the National Court, are confirmed.
(7) Those parts of the judgment and order of the National Court in CIA No 6 of 2005 awarding costs in the National Court are confirmed.
(8) The parties shall bear their own costs of the Supreme Court proceedings.
Appeal partially allowed, partially dismissed.
_____________________
Young & Williams: Lawyers for the Appellant
Gadens Lawyers: Lawyers for the Respondent
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