N3150

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS No.1751 OF 2000

BETWEEN

MOUNT HAGEN
URBAN LOCAL LEVEL GOVERNMENT
Plaintiff

AND

SEK NO.15 LIMITED
Defendant

Mount Hagen: Lay J.
2007: 9 and 13 July

CIVIL - Organic Law on Provincial and Local-Level Governments- Delegation to Mount Hagen Town Authority to collect land tax - whether delegation survived repeal of the Act imposing the tax - Whether any law authorises Mount Mt. Hagen Urban Local Level Government to collect land tax.

Cases Cited

Ronny Wabia v BP Exploration Operating Co. and Others N1679
PNG Forest Products Ltd v The State [1992] PNGLR 85
SC 327 Arthur Ageva v Bobby Gaigo [1987] PNGLR 12

Legislations

Provincial Land Tax Act (Western Highlands)
Organic Law on Provincial Government repealed ()
Organic Law on Provincial Governments and Local Level Governments Provincial Government's Administration Act

Facts

The Plaintiff brought proceedings against the Defendant claiming K 56, 175 for land tax pursuant to the Provincial Land Tax Act, which was an act passed pursuant to powers granted by the Organic Law on Provincial Government (now repealed) and re-adopted pursuant to powers granted by the Organic Law on Provincial Governments and Local Level Governments, but only to the extent that it was not inconsistent with that Organic law. The Plaintiff claimed to be the delegate of the Provincial Government authorised to collect the tax. The Defendant applied to strike out the proceedings as disclosing no cause of action pursuant to National Court Rules Order 12 Rule 40.

Held

1. The delegation to collect land tax given by the Western Highlands Provincial Government to the Mount Hagen Town Authority by letter dated 5 November 1990 was repealed when the former Provincial Land Tax Act was repealed by the Organic Law on Provincial Governments and Local Level Governments.

2. No law or current delegation authorises the plaintiff to collect land tax.

Counsel
P. Kak, For The Plaintiff
M. Tamutai, For The Defendant

13 July, 2007 

1.	LAY J.:	The Plaintiff has sued the Defendant for land tax which the Plaintiff says is due to it as a delegate of the Western Highlands Provincial Government pursuant to the Provincial Land Tax Act No. 9 of 1985. The amount in dispute is K 56, 175 for six years commencing with and inclusive of 1997.

2.	The Defendant has applied to strike out the proceedings pursuant to Order 12 Rule 40 of the National Court Rules on the basis that the statement of claim does not disclose a cause of action, is frivolous, vexatious and an abuse of process of the Court.

3.	Both parties argue that the issue before the Court is whether the Plaintiff has power to collect land tax, and that I should decide that issue. The Plaintiff invited me to decide that issue even if I should come to the conclusion that its action does disclose a cause of action, and is not frivolous, vexatious and an abuse of process. At a subsequent appearance counsel for the Plaintiff withdrew that invitation and submitted that I should confine myself to the application at hand under Order 12 rule 40.

4.	The Plaintiff argues that: 

a)	By the Organic Law on Provincial Government (the former organic law) Section 57 the Provincial Government was authorised to impose and collect land tax;
b)	pursuant to Section 57 of the former organic law in the Western Highlands Provincial government enacted the Provincial Land Tax Act No. 9 of 1985;
c)	the Western Highlands Provincial government by letter dated 5 November 1990 delegated to the Mount Hagen Local Level Government the right to collect the land tax.
d)	The Organic Law on Provincial Governments and Local Level Governments (the new organic law, which came into force on 19 July 1995) Section 132 authorised the Provincial Government to adopt its previous legislation "to the extent that they comply with the provisions of the Organic Law.";
e)	by a law entitled Western Highlands Interim Provincial Government (Adoption of Laws) Act the provincial government adopted its former legislation including the Provincial Land Tax Act N0. 9 of 1985 and the Provincial Land Tax (Amendment) Act No. 1 of 1986;
f)	The Provincial Land Tax Act is authorised by Section 86 of the new organic law which authorises provincial governments to impose a tax on " developed property" and land and buildings are developed properly;
g)	Pursuant to Section 87 (2) of the new organic law, a local level government "may impose such other taxes or fees by virtue of a delegation from the National Government or a Provincial Government". The Plaintiff is imposing land tax as a delegate of the Provincial Government.
h)	Alternatively, a provincial government or local level government, pursuant to s 89 of the new organic law, may with the approval of the Internal Revenue Commission, apply other taxes and the Commissioner General of Internal Revenue has permitted the collection of land tax.

5.	An action may be struck out pursuant to National Court Rules Order 12 Rule 40 if the claimed cause of action is not worthy of serious attention, is manifestly unsustainable and cannot possibly succeed: Ronny Wabia v BP Exploration Operating Co. And Others N 1679, Sevua J. The court will not strike out the action unless it is clear that it is almost incontestably bad. If, notwithstanding problems with the pleading, the claim appears to present a substantial case the court will not proceed to strike out the action: PNG Forest Products Ltd v The State [1992] PNGLR 85, Sheehan J.

6.	To determine this matter it is not necessary to examine all of the submissions made by counsel. Issues of the validity of the Provincial Land Tax Act were raised, but as I have found it not necessary to determine that issue and as the Western Highlands Provincial Government was not represented, I have decided that that issue should wait until it is directly raised. Also put in issue was whether there was satisfactory evidence that the Western Highlands Provincial Government (Adoption of Laws) Act of 1995 was actually passed. I have not found it necessary to decide this question either.

7.	There is one issue fundamental to the success of the action, and that is the Plaintiff's claim that it is authorised to collect the tax imposed by the Provincial Land Tax Act. In the statement of claim to the second amended writ, filed 29 November 2005, the plaintiff claims "The Mount Hagen Urban Local Level Government is empowered by the Provincial Land Tax Act No. 10 of 1985 to collect taxes calculated in accordance with Schedule 6 of the said Act. The plaintiff makes no other claim to authority to collect the tax.

8.	A perusal of the Western Highlands Provincial Land Tax Act establishes that there is no mention of the plaintiff and the plaintiff is not authorised to do anything by that Act. All that Act purports to do is impose a tax on all land in the Western Highlands other than land owned by certain persons specified in s. 7 and certain types of interest in land specified in s.9.

9. Not in the statement of claim, but in evidence produced to the court, the plaintiff says it is a delegate of the Western Highlands Provincial Government and pursuant to that delegation is able to collect land tax pursuant to the Provincial Land Tax Act. The delegation is said to be in a letter. The letter of delegation relied upon by the plaintiff is dated 5 November 1990 and reads as follows:

" The Provincial Executive Council at its October Meeting had approved the proposed transfer of land rate collection function from the Provincial Government to the Mount Hagen Town Authority. As of January 1991 the Mount Hagen Town, authority will be responsible for the referred function.

The areas covered are Mount Hagen town, Kerabug and Kagamuga. However, other areas not mentioned will be administered by the Provincial Government.
Joseph Rokpa, Cabinet Secretary".

10. The new organic law repealed the old organic law (see Section 120), and "under normal principles of statutory interpretation, the repeal of the Act repeals any rules or regulations made under that Act unless there is a specific savings provision": SC 327 Arthur Ageva v Bobby Gaigo [1987] PNGLR 12. However, Section 132 (1) of the new organic law saved former Provincial Government laws for 60 days. At the expiry of that 60 days, those former Provincial Government laws were repealed. It does not seem necessary to me to cite any further authority to find that when a law imposing tax is repealed, any delegation under that law to collect the tax so imposed must also be repealed.

11. When a law is adopted or re-enacted pursuant to Section 132(3) of the new organic law, that is a new law. It does not affect a continuous seamless application of a law of a previous Provincial Government. If the two laws are the same and the adopted or re-enacted law is adopted or re-enacted within the 60 days referred to in Section 132(1) of the new organic law, as appears to be the case with the Provincial Land Tax Act, there may be no moment in time between repeal of the old law and introduction of the new law, when law to the same effect did not apply in the Province. However, they are not the same law, having been made pursuant to powers conferred by different organic laws.

12. Neither Section 63 of the Interpretation Act, which provides "(1) The repeal of a provision does not- (c) affect any right, privilege, obligation, or liability acquired, accrued or incurred under the repealed provision...", nor Section 120 (2) (c) of the new organic law, which provides that the repeal does not "affect any right, privilege, obligation or liability acquired or incurred or offence committed against a repealed provision;...", can have the effect of continuing in force the delegation from the Western Highlands Provincial Government to the Mount Hagen Town Authority, given under the Provincial Land Tax Act made under the former organic law, once that law is repealed. To do so would create the impossible position of the continuation of a right to collect tax when the Act authorising the imposition of the tax had been repealed. It is unnecessary therefore to examine the question of whether rights acquired by the Mount Hagen Town Authority devolved upon the plaintiff. Nor is it necessary to consider whether the delegation of taxing power from a provincial government to a local level government must take place by a provincial law.

13. As to the submission that the plaintiff can rely on s. 89 of the new organic law, that is not pleaded in the statement of claim, nor has any law been produced which authorises the plaintiff to collect land tax. Pursuant to s. 83 of the new organic law, the plaintiff can only impose a tax as provided in the new organic law or by delegation from the National Government. Pursuant to Section 86 (2) of the new organic law the plaintiff could impose a tax by delegation from the Provincial Government but there is no evidence of a current delegation.

14. I therefore find that, as a matter of law, the Plaintiff's action against the Defendant cannot succeed because the power of delegation given to the Mt. Hagen Town Authority ceased to have effect upon repeal of the Provincial Land Tax Act 1985 made under the old organic law, pursuant to which the delegation was given. The new adopted Provincial Land Tax Act makes no provision for the plaintiff to collect the tax imposed by that Act and there is no delegation made in respect of that Act.

15. I am not unmindful of the plaintiff's submission that it has collected the tax since 1990 relying on the validity of the letter of delegation. The defendant is the only party which has objected to payment of the tax. I am invited to exercise the powers of the Court under Constitution Section 155 (4) to provide a remedy. It is not necessary to cite the decisions of the Supreme Court to the effect that the power under that section is a secondary power to shape orders to give effect to primary rights established under other law. I would be legislating if I made orders curing the defects which I have identified in this judgment. That is a matter for the Provincial Assembly. The Provincial Governments Administration Act s.18 (2) gives the Provincial Assembly power to pass laws with retrospective or retroactive effect. 

16. Orders:
1.	The proceedings are struck out for failing to disclose a cause of action; 
2.	The Plaintiff shall pay the Defendant's costs of and incidental to the action.

__________________________________

Paulus M. Dowa: Lawyer for Mount Hagen Urban Local Level Government 
Tamutai Lawyers: Lawyers for Sek No. 15 Ltd