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Koroi v Commissioner of Inland Revenue (No. 2) [2001] FJLawRp 78; [2001] 2 FLR 335 (31 August 2001)

JOKAPECI KOROI, MAHENDRA PAL CHAUDHARY, DR. GANESH CHAND & FIJI LABOUR PARTY v COMMISSIONER OF INLAND REVENUE, ATTORNEY-GENERAL AND THE REPUBLIC OF FIJI (No. 2)

High Court Civil Jurisdiction
31 August, 2001 HBC 179/01L

Value Added Tax Decree – urgent interim stay by First Defendant – judgment imposing permanent stay on imposition of VAT on 6 essential food items WEF 2 September 2001 - depriving Plaintiff obtaining fruits of judgment – appeal by D1 but no appeal lodged by present government D2 - where does balance of advantage and convenience lie? - no special circumstances offered to suspend normal laws and apply doctrine of necessity.

In (No. 1), the Court imposed a permanent injunction against re-imposing VAT on 6 essential food items with effect from 1st September 2001. D1, who is the applicant in these proceedings, filed a Notice of Appeal against the judgment impugned. Although D2 had not filed an appeal, it supported the application for stay, pending the decision of a new incoming government. The Court queried D1's appeal, given that government departments normally abide by the decision of the Court, and where the decision impugned was a political decision made by a caretaker government. The Defendants' affidavits had not descended into factual particulars in order for the Court to suspend the normal laws of the land, in order to apply the doctrine of necessity. Special circumstances were not offered here. The Court found on the other hand, the Plaintiff's two affidavits useful in setting out the market's preparedness for the change to accounting procedures for the removal of VAT to essential food items.

Held – The principles of stay are well established: the Appellant has to show special circumstances. The Court's approach in holding a balance of advantage is to give full and proper weight to the starting principle that there has to be a good reason for depriving a Plaintiff from obtaining the fruits of a judgment. The Defendants failed to supply factual particulars of special circumstances to enable the Court to assess whether to suspend the normal laws of the land, in order to apply the doctrine of necessity. The balance of convenience favoured 850,000 people not to have to pay VAT on essential food items.
Winchester Cigarette Machinery Limited v Payne & Anor (No. 2) (1993) TLR 647 appl.

Obiter dicta –(1) The First Defendant's lack of authority for use of public funds on litigation on matters outside its independent and neutral role is a matter of concern, when the Commissioner deposed he was not concerned with policy decisions, only with administration, collection and enforcement of VAT.

(2) Witnesses are not assessed by rank or by virtue of their high office, but by the quality of their factual, relevant, and credible evidence.

Interim stay refused. Matter adjourned to 27 September 2001 to perfect original orders.

Other cases referred to in Ruling
Krishna Murti v Atul Kumar Ambalal Patel (unrep) ABU0014/00
Peter Elsworth & Anor v Yanuca Island Ltd [2001] HBC015/97L Ruling 5 June 2001

Vipul Mishra for the Plaintiffs
Robert Smith for the First Defendant
Akamigbo for the Second Defendant

31 August, 2001

RULING
[Interim Stay]

Gates, J
The 1st Defendant returns to court on a Summons for interim stay dated 30 August 2001. He had filed a Notice of Appeal today, against a decision of this court in these proceedings delivered on 24 August 2001. He files the affidavit in support of himself as Chief Executive Officer of the Authority responsible for tax collection sworn also on 30 August 2001. I allowed this affidavit to be filed and read in photocopy form, awaiting the filing of the original, because of the urgency of this application.

The Plaintiff filed 2 affidavits in opposition. They are the affidavits of Sanjay Kamal Prasad a Director of Rajendra Prasad Ltd. A company operating a chain of supermarkets, sworn and filed on 30 August 2001, and the affidavit of Dr. Ganesh Chand, who has previously testified in these proceedings, a Minister in the Coalition Government, also sworn and filed on 30 August 2001.

Counsel have had to file their necessary papers and affidavits as well as written submissions and cited cases with great haste. They are to be commended for doing so with such speed and effectiveness.

Mr. Smith's argument is that because one of the orders in the judgment namely that there be a permanent injunction restraining the 1st Defendant with effect from 1st September 2001 from enforcing payment of VAT on 6 items of essential foods it was necessary that there be an urgent stay on such order, at least in the interim until a full stay application could be made. This would also allow the incoming Government following the General Election, which is presently being conducted, to consider the question of appeal when in office and be able to give full instructions to its lawyers.

Mr. Akamigbo for the Attorney-General the 2nd Defendant informs me that the present Government supports the application for stay. However there is presently no appeal filed on behalf of the caretaker Government whose re-imposition of tax has been impugned by the judgment. Whether or not the judgment will be appealed by the 2nd Defendants will depend upon the decision of the incoming Government. That decision is being left to the new government. This is a responsible stance to be adopted by all those concerned presently for the affairs of the State.

This must needs to be a curtailed ruling in view of the need also for an immediate decision. I queried Mr. Smith during the course of argument as to how it was that the Commissioner of Inland Revenue, the public servant, was making an appeal. Normally government departments, such as the Registrar of Titles, are content to abide the decision of the court, where, as here, they have no public or professional interest in the decision. The case concerned the validity of a political decision made by the caretaker government the 2nd Defendant to re-impose VAT on essential food items. As was made clear by him in the course of a lengthy affidavit the Commissioner accepts he is not concerned with policy decisions, only with administration, collection and enforcement of the VAT. I asked Mr. Smith to consider the position of public funds being incurred on litigation matters outside of the Commissioner's role and to consider the repercussions of lack of authority for such public expenditure.

It was strange therefore for the Commissioner to go outside of his independent and neutral role to advocate a decision made by the Government of the day. I allowed time for instructions for careful consideration on this matter to be taken by Mr. Smith from the Commissioner. In due course Mr. Smith informed me that his instructions were to continue.

I have next to consider the stay itself. The principles for stay are well established. I refer to the Court of Appeal's decision in Krishna Murti v AtuI Kumar Ambalal Patel (unreported) Court of Appeal Fiji Civil Appeal No. ABU0014 of 2000 p 2-3 and my own decision in the same case (unreported) Lautoka High Court Civil Action No. HBC00225.99L 8 March 2000. Both of which dealt with the principles. The Appellant has to show some special circumstances. In the Winchester Cigarette Machinery case (p 648) which I cited in Peter Elsworth & Anor. v Yanuca Island Ltd. (unreported) Lautoka High Court Civil Action No. HBC0157.97L 5 June 2001, at p 9: Lord Justice Ralph Gibson had said:

"...in recent cases, it had been said that the practice of the court had moved on from the principle that the only ground for a stay was the reasonable probability that damages and costs paid would not be repaid if the appeal succeeded.

Those cases held that the approach of the court now was a matter of common sense and a balance of advantage.

But in holding any such balance of advantage, full and proper weight had to be given by the court to the starting principle that there had to be a good reason for depriving a Plaintiff from obtaining the fruits of a judgment."

For the purposes of this urgent interim stay only, I presume in the Appellant's favour that all of the grounds are arguable.

Mr. Smith argues that the Commissioner and the Minister of Finance by virtue of their high office are to be accepted when they testify of dire necessity in their affidavits. I respectfully differ from that view. Witnesses are not assessed by rank, but by the quality of their factual, relevant, and credible evidence. Neither witness descended to factual particulars such that a court upon that evidence alone, could suspend the normal laws including the supreme law of the land, in order to apply the doctrine of necessity to otherwise unlawful acts. Evidence to excuse unlawful conduct must needs be of a very high standard. More so when the Constitution is being breached.

Where does the balance of advantage and convenience lie? Is it with the Commissioner and his staff for the 1st Defendant or with the successful litigant the Plaintiff moving the court on behalf of, or for the advantage of, most of Fiji's population, over 850,000 persons. The other consideration is perhaps the caretaker government, represented by the Attorney-General the 2nd Defendant, who may or may not appeal the decision.

The Commissioner says the judgment will cause disruption. No doubt this is partially true. On the other hand the Plaintiffs have descended to particulars, and in 2 focussed affidavits have effectively countered the Commissioner's affidavit, which it must be said was largely opinion and advocacy. Mr. Sanjay Prasad, the supermarket director, said there was wide awareness of the decision and of its effect. There was no uncertainty in the market place and instructions were well in place in stores for the change from 1st September 2001, nor was there confusion amongst the shopkeepers he had spoken to. He had also consulted his accountants Price Waterhouse Coopers who had given necessary advice for the change, which he said was relatively simple.

As I had indicated, in weighing the respective advantages and convenience in Chandrika Prasad v Republic of Fiji [Respondent's Summons for Stay No. 2] 20 December 2000, one must consider the numbers involved. 850,000 people will no doubt find it no inconvenience at all not to have to pay VAT on essential food items. I cannot envisage a Court of Appeal, if the Commissioner succeeds, imposing a retrospective commencement date for re-imposition.

I decline to grant an interim stay on the declaratory orders and injunction at this stage. I order costs for the Plaintiffs of $500. I shall be prepared to hear an application later for stay based on fuller evidence and argument if so desired. Meanwhile 27 September 2001 is already fixed for attendance at court for the perfection of the original orders.

Application refused.

Marie Chan