Valeke v Attorney General [2015] SBHC 40; HCSI-CC 59 of 2013 (20 May 2015)

IN THE HIGH COURT OF SOLOMON ISLANDS
(Faukona PJ)

Civil Case No. 59 of 2013

BETWEEN:

VUETAKI VALEKE
Claimant

AND:

ATTORNEY-GENERAL
(Representing the Commissioner of Inland Revenue)
Defendant

Date of Hearing: 4th May 2015
Date of Decision: 20th May 2015

Mr A. Rose for the Claimant
Mr J. Muria (J) for the Defendant

RULING ON PRELIMINARY QUESTIONS.

Faukona J: There are two questions, which this Court is urged to determine and make ruling on as preliminary matters. The first question is, what is the proper construction of Clause 6.6 of an agreement signed on 7th March 1997, between Solomon Islands Government, Ross Mining (SI) Limited, Gold Ridge Mining and Ross Mining N.C. The second question is based on the same Clause; whether the Claimant is entitled to tax exemption for the period he employed with Gold Ridge Mining Limited up to the date of commencement of gold production.

2. Clause 6.6 states that all expatriate employees of Ross Mining, Ross (SI) the Mining Company, and their contractors and agents, engaged in operations under this Agreement shall be subject to such taxes as are generally in effect in Solomon Islands, only on their Solomon source income derived from such operations, on a non-discriminatory basis, whether or not paid in Solomon Islands provided that, without prejudice to Clause 6-7, during the period prior to the date of commencement of production, such expatriate contractors shall be exempted from income tax on their fees derived from the Project Operation under this Agreement and they shall not during such period, be entitled to any allowance under the Income Tax Act.

3. Clause 6.7 gives the power to Ross Solomon Islands and the Mining Company to withhold tax as at 7% on non-Solomon Islands Contractors, on behalf of the Government, from the gross payment made to them.

4. Besides the two points which this Court is urged to determine, Mr. Muria (J) submits the whole case premise on the definition of the words expatriate employee. Mr Muria (J) briefly expresses opinion on the definition which he thinks favourable to the Defendant's case. He submits that expatriate employee is someone acquiring residence in Solomon Islands to carry out certain specific task.It is the act of bringing that employee which qualifies him as expatriate employee. I will deal with this issue later.

Brief background of Claimant.

5. The Claimant is a Fijian national and citizen and was residing in Solomon Islands at the time of his employment by Gold Ridge Mining Limited as a building supervisor in 2006.

6. The Claimant first came to Solomon Islands about 2001 specifically for work purposes. He was previously employed by Honiara Builders and Dalgro (SI) since 2001, until commencement of his employment with Gold Ridge Mining Limited.

7. When he first started it was a one month contract. Then he entered into the second contract which lapsed in November 2007. The third contract commenced on 11th September 2009.

Definition of "expatriate employee:"

8. The words "expatriate employees" was entrenched in Clause 6.6 of the major agreement signed by all concerned parties including Solomon Island Government on 7th March 1997.

9. Mr Muria (J) relies on the definition expressed in the Assistant Deputy Commissioner of Inland revenue's letter dated 24th August 2009, in which he stated that the term expatriate related to people who come to Solomon Islands for the specific purpose of working. And that clause 6.6 does not cover foreign nationals who may, due to personal circumstances, live in Solomon Islands and subsequently undertake employment at Gold Ridge Mining Limited. This is in line with Mr Muria (J) submissions in paragraph 4 above.

10. In reinforcing the point Mr Sonia in his sworn statement deposed that, for tax purposes, having resided in Solomon Islands for more than six (6) months, the Claimant was regarded as a resident. Whether that particular attestation was backed by any statutory legislation, an issue Counsels did not address the Court on.

11. However, in Longman dictionary, 1987 (2nd Edition) expatriate is defined as a person living in a foreign country. Expatriate as define is more on a generic term. There is no dispute that the Claimant is a Fijian citizen and possessed a Fijian Passport.

12. As far as employment is concerned S.37 (1) of the Labour Act used the word immigrant or non-indigenous worker. Section 2 of the Labour Act define "immigrant worker" to mean any worker whose passage to Solomon Islands has been provided in consideration of a promise to perform work. Under the same section non-indigenous worker means any person who is not entitled to enter Solomon Islands without complying with section 8 of the Immigration Act. Section 8 specifically refers to permit to enter and reside in Solomon Islands.

13. In this case the Claimant would not have been employed by GRML if he was not permitted to enter and reside pursuant to S 8, or was not issued with work permit pursuant to S.37. There is requirement that work permit can be issued to an expatriate or non-indigenous worker whilst still in his country of citizen.The qualification of possessing a work permit authorized by the Commissioner of Labour, entitles an expatriate or non-indigenous person to enter and reside in Solomon Islands.

14. There is evidence that GRML avoided the Claimants repatriation because of an urgent need for him to commence work. Therefore, GRML paid a conversion fee of $7,000.00, an arrangement which was endorsed by Labour Department of S.I Government.

15. With permit to enter and reside, and a permit to work, was a treatment accorded to the Claimant because he was an expatriate employee, who took up employment with GRML. He may be residing within Solomon Islands for four or more years before being employed by GRML. The payment of $7,000.00 was to retract him from normal procedures, an analogous to payment of passage to Solomon Islands from Fiji, with a promise to perform work with GRML.

16. With the material evidence available I am satisfied on the balance of probability that the Claimant was an expatriate at that time when he commenced employment with GRML.

Proper Construction of Clause 6.6 of the major Agreement:

17. Clause 6.6 is one clause being part of the major agreement executed by Ross Mining (SI) Limited, Ross Mining N.L, Gold Ridge Mining Limited and the Minister for Energy, Mines and Minerals on behalf of Solomon Islands Government.

18. The rationale behind clause 6.6 is not necessary to attract expatriate employees who provide specialist expert skill to be employed, but an incentive given to GRML during constructive phase so that expatriate employees, contractors and agents of Ross Mining ensuring work productivity is efficient and timely until date of commencement of production.

19. Clause 6.6 identified three categories of expatriates who were engaged and expected to work for Gold Ridge Mining. They were expatriate employees, expatriate contractors and expatriate agents. The first part of the clause ascribes that these categories of persons are subject to such taxes as are generally in effect in Solomon Islands only on their Solomon Islands source of income derived from such operations, whether or not paid in Solomon Islands. The second part of the clause provides for the exemption from income tax. However,reading of the sentences intended to cover tax exemption merely describe one category of expatriates who are eligible for tax exemption out of the three. It only concern expatriate contracts be exempted from income tax on their fees derived from the project operation. There was no mention of expatriate employees and agents to be exempted from tax, and there was no mention of salaries of expatriate employees be exempted from tax. There is nothing, even to imply exemption from income tax by expatriate employees or agents of Ross Mining limited. Only the fees received by the expatriate contractors be exempted from income tax, not even the salaries of expatriate contractors are subject to exemption.I'm afraid I cannot add or imply into the contract which had already being executed by the parties and had wholly been implemented.

20. What is left therefore is clause 12 of the Claimant's contract of employment. That clause specifically made reference to income tax exemption granted to Gold Ridge Mining Limited by the Solomon Islands Government. Basically clause 12 derives its validity from clause 6.6 of the main agreement. I have construed what I think is the meaning of clause 6.6. Therefore clause 12 cannot stand isolated, independent or of its own. It merely relied on Clause 6.6. In the light of my interpretation of Clause 6.6, I must therefore answer the second question that the Claimant is not entitled to tax emption to his salary for the period he employed with Gold Ridge Mining Limited to the date gold production commenced.

21. The parties have agreed that once the preliminary points are determined in favour of anyone that should finally determine the case. Determination has gone the Defendant's way and that perhaps should resolve the claim.

Orders:

1. Application on preliminary matters is in favour of the Defendant.

2. The Claimant claim is dismissed

3. Cost in the cause.

The Court.