Commissioner of Inland Revenue v Vincent Quan Chee [1993] SBCA 5; CA-CAC 7 of 1993 (23 June 1993)

IN THE SOLOMON ISLANDS COURT OF APPEAL
Civil Appeal No. 7 of 1993

BETWEEN:

THE COMMISSIONER OF INLAND REVENUE
Appellant

AND:

VINCENT QUAN CHEE
Respondent

Before:
Connolly P.
Williams J.A.

Delivered the 23rd day of June 1993

JUDGMENT OF THE COURT

When this appeal was called on for hearing the President drew attention to s. 6 of the Court of Appeal Act and stated that owing to the absence on leave of Palmer J. and the fact that the appeal was from the Chief Justice and only two Justices of Appeal were available in Solomon Islands it was not practicable for a Court of Appeal of three to be convened and that the Court was therefore duly” constituted by Williams J.A. and himself. Mr. Nori sought an adjournment of the appeal on grounds unrelated to the composition of the Court but neither party sought an adjournment on such a ground. Mr. Nori’s application for adjournment was considered and refused.

The facts relevant to this appeal may be shortly stated. On 13 July 1990 the Commissioner of Inland Revenue issued to the respondent Vincent Quan Chee Notices of Assessment of Income Tax numbers 7843, 7844, 7845 and 7846 for the years 1984, 1985, 1986 and 1987 in the total amount of $603,121.86. On 28 August 1990 the respondent gave notice of objection in relation to each assessment. It is not suggested that the notices of objection were not valid. However, the assessments were not amended under ss. 65 (2) of the Income Tax Act and a notice under s. 65 (3), rejecting the objections and confirming the assessments, was served on the respondent on 4 September 1990. No application was made under s.66 by way of appeal to the High Court within the period of 60 days as provided by that provision, a period which expired on 3 November 1990. This being a Saturday the time for lodging notice of appeal may have been extended by virtue of the Interpretation and General Provisions Act 1978 s. 49 to the following Monday, 5 November. This not having occurred, it follows that the assessments, by virtue of s. 68(1)(b)(ii) became final and conclusive for the purposes of the Act on 6 November 1990 at the latest.

Nonetheless an appeal to the High Court was in fact instituted on 30 November 1990 (27 days out of time). The respondent’s solicitor was advised on 13 February 1991 that the appeal was out of time and on 21 February 1991, the day before it was set down for hearing, he withdrew it, alleged on the understanding that “negotiation would proceed out of Court with a view to agreeing the actual assessable income” (see affidavit of David Quan sworn 19 June 1991).

On 5 March 1991 there was a conference between Commissioner and some of his Officers and the respondent was seeking some compromise or reconsideration of assessment. There is a dispute as to what occurred to which I shall return.

Finally, on 28 March 1991 the Commissioner commenced Civil Case No. 63 of 1991 for the recovery of the sum of $603, 121.86 the total amount assessed. The case was heard before Muria C.J. on 10 June 1992 and amongst the exhibits was document 15 which is a certificate under s. 75(2) giving the name and address of the respondent and the amount of tax due by him in the sum of $603,121.86, such certificate being, by virtue of s. 75(2) of the Income Tax Act, sufficient evidence that such amount of tax was due and sufficient authority for the Court to give judgment for that amount.

Nonetheless, the learned Chief Justice was persuaded that an undertaking had been given on 5 March 1991 that the assessment would be reconsidered by the Office of the Commissioner. His Lordship held that there was no impediment to the Commissioner’s reassessing and that he, the Commissioner, had “foregone the finality of his earlier assessment”.

As I have already said there is a dispute as to precisely what occurred on 5 March 1991. Diary notes were made, as it is said, by the respondent’s son Mr. David Quan. These notes record the respondent’s general contentions as to the extent of his profit and the then Commissioner’s reply that the assessment was final but it contains a statement, allegedly by the Commissioner, that after consultations they had agreed, for purposes of practicality, that they (presumably the Taxation Office) should reconsider the assessment and try to come to a compromise with the taxpayer and that in the light of this Konia (the Officer who had prepared the assessment) should “re-examine new sets of accounts from Yam & Co. (the respondent’s tax agents) and then, when a compromise was reached, a new assessment should be issued”. In the light of the internal history of this matter in the Tax office this seems a curious arrangement for the Commissioner to have made, if he made it, for on 1 March 1991 he had been advised in writing by the Attorney-General that the assessments had become final and that there was no provision in the Act for reconsideration of such an assessment and on 4 January 1991, the day before this conference, the Commissioner through Mr. Konia had informed the respondent’s solicitors in writing that the assessments were final and that arrangements should be made immediately to settle the liability.

Nonetheless, his Lordship made the finding to which I have referred based, as it seems to me, essentially on something which he recorded as having been said by Mr. Afeau, counsel for the Commissioner, in the course of his address. He seems to have been asked whether he accepted David Quan’s note and his reply as recorded is that “it is accepted as evidence of matters discussed on 5/3/91”. This is far from an unequivocal acceptance of everything contained in the note and may well go no further than accepting that the matters which were discussed were those referred to in the note.

If the events of 5 March 1991 gave rise to an arrangement which could be regarded, as a matter of law, as precluding the Commission from relying on s.68(1)(b)(ii) or s.75(2) it can, in the circumstances of this case, only be if the parties entered into a contract to that effect or if the Commissioner is, for whatever reason, estopped from setting up those provisions.

So far as the contract is concerned the Commissioner had a situation in which the assessments had become final as a matter of law. The matter had not been determined on appeal however and s. 68 (2) would permit the Commissioner to make an additional assessment. However an agreement to discharge the existing final assessment and to make a further assessment would require fresh consideration. The only consideration which was suggested was the prejudice allegedly incurred by the respondent in withdrawing his appeal. That however could not amount to consideration for the appeal was invalid anyway and the withdrawal did not change the situation in any respect. Moreover, the withdrawal of the appeal on 21 February 1991 could not, on the facts of this case, be regarded as consideration for an alleged agreement made on 5 March. So far as estoppel is concerned what would have to be shown is that the respondent acted to his detriment in reliance on a promise made by the Commissioner on 5 March 1991, the alleged detriment being the withdrawal of his appeal. For the reason already given the withdrawal of the appeal was no detriment and estoppel could not be established. Indeed it was expressly abandoned at the hearing before Muria C.J.

That is sufficient to dispose of this appeal but, by way of warning, we would say that the Commissioner is a public officer charged by law with the duty of determining, under the Income Tax Act, the tax lawfully payable by the taxpayer. He cannot bind himself by contract and he cannot be precluded by mistake or by estoppel from performing that duty according to law: Maritime Electric Company Ltd v. General Dairies Ltd [1937] UKPC 16; [1937] A.C. 610; Southend-on-Sea Corporation v. Hodqson (Wickford) Ltd [1962] 1 Q.B. 416; Re Exchanae Securities & Commodities Ltd (In Liquidation) [1988] Ch.46; Commonwealth of Australia v. Hamilton [1992] 2 Qd.R. 257.

The appeal must be allowed and the decision of Muria C.J. set aside, and in lieu, there must be judgment for the appellant for $603,121.86 with costs in this Court and in the High Court to be taxed.

BY THE COURT
(P. D. CONNOLLY P.)