Fiji Law Reports

"Here the appellant was not a Fiji cit nor e up to the time he arrived in 1980, ever had his home here. For a short period iiod in 197n 1973 he intended to become a resident in Fiji but the intention never came to fruition. Hence he would appear to come within the scope of Section 11(e) of the Act as normally residing outside Fiji."

Neither counsel has since challenged that finding, nor the findings that the house was originally bought as a residence and not for the purpose of sale, nor that the change of mind occurred after the Wellers took up residence in 1980 and found conditions at Pacific Harbour not to their liking, because of the climate, and other factors. The argument on behalf of the Commissioner, both in the Court of Review and on appeal to the Supreme Court has been that the gain on sale is included in total income by virtue of the initial paragraph in Section 11 (referred to by Mr Stuart in the passage above) taken together with the provision in sub para. 11(e) whereby a non resident who does not carry on business in Fiji can be deemed to do so if he engages in the sale of land in Fiji.

The Court of Review rejected this submission. At page 6 of the decision (p.108 of the Case) it was held that there was no trace of any undertaking or scheme in the way provided in the later part of the proviso. No submission is made to the contrary by the Commissioner. But liability was and is claimed to arise from the "carrying on business" provision. In considering whether a person who had sold land was one who "engages in the sale of land" the Court of Review said that it would only construe subsection (e) as enlarged by the proviso if the non resident engaged in an undertaking or scheme for profit. This interpretation of engaging in a scheme as an ingredient of the proviso is challenged by Mr Scott.

The Court of Review acknowledged that the argument advanced on behalf of the Commissioner was that the proviso was in two independent limbs and the carrying on of an undertaking or scheme is only mentioned in the second. Mr Stuart then went on to say:-

'Even if it were, the words 'engages in' suggest something more than a single sale is required to bring a person within the taxing net ....it seems to me that there has to be something more than a single sale.'

We shall return to and discuss this viewpoint later, but it is necessary to continue with the course that the appeal followed thereafter. Based primarily on this construction of the words "engages in" and with some assistance from the historical background of Section 11(a) and 11(e) the Court of Review upheld the taxpayer's objection.

On appeal in the Supreme Court Kermode J. dismissed the Commissioner's appeal, but his reasoning followed a different path from the earlier decision. At page 7 of his judgment (page 13 of the case) he appears (and perhaps for arguments sake) to have accepted Mr Scott's submission that the taxpayer was "deemed" to be carrying on business in Fiji because of the sale of the villa. We have some reservations as to whether the learned Judge was accepting this as unequivocally as the passage quoted would at first sight suggest, for earlier on the same page Kermode J. had expressed the matter somewhat ambivalently.

However he did assume that the "deeming" provision applied, but went on to hold against the Commissioner by applying an exception found in Section 11(a).

Section 11(a) deals with persons (whether resident or not) who derive profit or gain from the sale of property if (a) the taxpayer's business is dealing in property, or (b) the property was acquired for sale, or (c) was part of an undertaking or scheme but an exception to 11(a) excludes purchase and sale which comprise a single transaction.

For the reasons advanced by Mr Scott we are of the view that the exception only relates to persons who fall within the ambit of Section 11(a) and does not apply to a person who is "deemed" to carry on business in the context of Section 11(e). But that is by no means the end of the matter for the heart of this case is the meaning of the phrase "engages in".

Although Mr Scott has persuaded us that Kermode J's use of the exception to clause 11(a) was erroneous, that does not mean that we accept the interpretation given to the crucial phrase by the learned Judge, to which reference has already been made.

If the conclusion that respondent engaged in sale of land because of the single if fact. nevertheless this Court can interfere the transaction under discussion is a finding of fact if it is a view which could not reasonably be entertained - (Edwards v. Bairstow [1955] UKHL 3; (1956) A.C. 14) and a fri oori of course if it is a misconception of law.

Mr Scott in his initial argument before us submitted that as no cross notice had been given, it must be taken that Kermode J's findingo the meaning of the phrasehrase was not challenged by the respondent. We think it fair to say that the members of the Court were not entirely happy with that position, and it became apparent from Mr Mitchell's submissions that he was not conceding that Kermode J. had unequivocally made such a finding. He made submissions to the contrary based on an examination of the page in the judgment already mentioned.

The position needed clarifying. Rule 19 of the Court of Appeal Rules - Cap. 12 Subsidiary Legislation - reads as follows:-

"19.(1) A respondent who. not having appealed from the decision of the Court below. desires to contend on the appeal that the decision of that Court shall be varied. either in any. event or in the event of the appeal being allowed in whole or in part. shall give notice to that effect. specifying the grounds of that contention and the precise form of the order which he proposes to ask the Court of Appeal to make. or to make in that event. as the case may be.

(2) A respondent who desires to contend on the appeal that the decisions of the Court below should be affirmed on grounds other than those relied upon by that Court shall give notice to that effect specifying the grounds of that contention.

(3) Except with the leave of the Court of Appeal. a respondent shall not be entitled on the hearing of the appeal to contend that the decision of the Court below should be varied upon grounds not specified in a notice given under this rule to apply for any relief not so specified or to support the decision of the Court below upon any grounds not relied upon by that Court or specified in such a notice.

(4) .........................

(5) ..."

Accordingly we indicated that we would allow Mr Mitchell to support the decision of the Supreme Court on grounds different from those in the judgment - viz. on the reasoning which found favour in the Court of Review. Mr Scott was then given the opportunity, which he took, of re-enunciating the argument which he had apparently earlier advanced in the Supreme Court.

The foregoing-has been a lengthy digression on the course the case has taken so far, and we now return. as promised to the question of whether the "deeming" provision in clause 11(e) on the facts of this case brings the respondent within the concept of carrying on business in Fiji.

It is a simple question to which the answer in our view is equally simple. It does not.

In the course of his submission Mr Scott quite frankly acknowledged that the Commissioner's case was that "a non-resident who sells a plot of land, thereby and without more, is deemed to be carrying on business in Fiji because he thereby engages in the sale of land" - and to repeat, for the sake of absolute clarity - he agreed that his contention was put forward even though the original purchase had been for the purpose of residence, and the subsequent sale had been occasioned by a bona fide change of mind.

Having, we hope, clarified the crucial question, we turn our attention to the meaning of the governing phrase in the proviso to Section 11(e).

The Shorter Oxford Dictionary says that to engage (in) is "to occupy": "to mix up in".

Webster's Third International Dictionary (1971) dealing with the verb, lists "to involve or entangle in some affair or enterprise": "to begin and carry on an enterprise": "to employ or involve oneself".

The ordinary understanding which we take is that the word engage connotes occupation in some activity for a period of time-not whole time occupation, but certainly more than a brief moment of decision making in one's affairs.

With his usual industry Mr Scott provided us with some case references - none particularly decisive, but certainly none which supported his contention that a person who indulged in one effective action was a person who engaged in an activity. Indeed, if anything, we think the inferences are the other way.

Watts v. Smith (1890) 62 L.T 453 dealt with a restraint of trade clause - "not to engage similar business".

Kekewich J. said:-

"It is t is obviously a word of flexible meaning. Servants are engaged when a baris made between themselves and their employers and they arey are engaged for a particular purpose. Solicitors certainly, and I also think counsel, may be said to be engaged in a case: and ..... all persons in all classes are frequently engaged without meaning more than they are much occupied."

Bantine v. Hume [1943] VicLawRp 11; (1943) V.L.R. 123 is authority we believe for saying that a man is not engaged in if he occasionally performs some function - intermittent employment does not make a person "engaged".

" 'p>" 'engaged' has a considerable number of various meanings but the most appropriate to the situation (wholly engaged as a housekeeper) is from the Shorter Oxford Dictionar seems to be 'occupied' or ' or 'employed' - but it has a wider meaning than employed."

Similarly in R. v. Savvas&(1955) 955) 1 S.A.L.R. 452: "engage in a trade" was wider than being fully occupied and could relate to part time participation.

These are peripheral decisions, but they emphasise the dictionary concepts a person does does not engage in an activity unless he devotes a period of his time to it - not full time, but more than a brief encounter.

As has been so often said word must be construed in the context in which it is used. To engage in the selling of land means more than to decide to sell and thereafter complete the transaction in a straight forward way. It could mean devoting some substantial time to achieving and perfecting a sale. Even without the association of the words with following provisions contained in the proviso to Section 11(e) which the Court of Review took into account we are of the view that what the respondent did here did not amount to engaging himself in the sale of land.

He had previously been given some idea of the value of his property. He had declined offers. He came to Fiji to live on the property. Persuasive forces determined otherwise and he decided he must sell and doubtless issued the appropriate instructions to his agent to take the necessary steps to conclude a sale. One can only speculate how little time may have been involved in putting the decision into action, but it could easily have been of the briefest duration. Such documents as are on file indicate a prompt transaction. In these circumstances it would be contrary to the meaning we have discussed to say he engaged himself in the sale of land.

We do not wish however to be taken as saving that the phrase necessarily involves a plurality of dealings. One transaction may be quite complicated. It may require the vendor to devote himself and his energies to the transaction for such period of time as to lead one to say that he was so much occupied as to be engaged.

But there is no justification for so holding in the present circumstances. The appeal is dismissed with costs to the respondent.

(GOULD, V.P. and SPRING, LA. concurred.)

Appeal dismissed.

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