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Le Godinet Beachfront Hotel Ltd v Commissioner of Inland Revenue [1996] WSCA 4; 04 1996 (26 August 1996)

IN THE COURT OF APPEAL OF WESTERN SAMOA
HELD AT APIA

C.A. 4/96

IN THE MATTER of the Goods and Services Tax Act 1986 and
The Income Tax Administration Act 1974

BETWEEN

LE GODINET BEACHFRONT HOTEL
whose registered office is at Sogi, Apia, Western Samoa
Appellant

AND

COMMISSIONER OF INLAND REVENUE
Department of Inland Revenue
Respondent

Coram: The Rt Hon. Lord Cooke of Thorndon, President
The Rt Hon, Sir Gordon Bisson
The Hon, Mr Justice Sheppard

Hearing: 26 August 1996

Counsel: T, Malifa for Appellant
Patoa'e Tanielu for Respondent

Judgment: 26 August 1996

JUDGMENT OF THE COURT
DELIVERED BY LORD COOKE OF THORNDON

This is an appeal from a judgment of Sapolu C.J., delivered on 11 April 1996, on a civil claim brought by the Commissioner of Inland Revenue against Le Godinet Beachfront Hotel Limited. The claim relates to goods and services tax allegedly due under the Goods and Services Tax Act 1986, since repealed. The amount claimed (including penalties and interest) was $128,800.39. There is no dispute as to quantum.

The history so far as it is appropriate to be noted is that in September 1993 the Commissioner laid an information against Derek Godinet, a director of the company, charging that on 10 August 1992 he failed to lodge a monthly goods and services tax return for the month of July 1992. That charge, together with 13 others against the same individual of a similar nature, came before the lower Court. At that stage Derek Godinet pleaded guilty, but from his conviction on the guilty plea he appealed to the Supreme Court and in a judgment, delivered on 1 July 1994, the Chief Justice allowed that appeal on the ground that it was not the director Derek Godinet who was the provider of the services in question but the company: and the effect of s.28 of the Act of 1986 was that, where an offence against the Act was committed by a company, every person who at the time of the commission of the offence was a director of the company or purported to act in that capacity should be guilty of the same offence unless he proved that the offence was committed without his knowledge or consent and that he exercised all due diligence to prevent the commission of the offence.

The Chief Justice held that the charge was not appropriate, inasmuch as to justify finding a director guilty of an offence under s.28 it would have been necessary to charge that the offence had been committed by the company and that the director was guilty of the same offence. That had not been done. Accordingly the Chief Justice, notwithstanding the guilty plea in the Magistrates Court, allowed the appeal and quashed the convictions of the individual director on all charges.

The next stage was that the Commissioner commenced the civil proceeding which has led to the present appeal, by a statement of claim dated 27 September 1994. Thereby the plaintiff alleged that, in accordance with s.13 of the 1986 Act, he had assessed the amount of tax which should have been collected by the defendant company in each month from 1 February 1992 to 30 November 1993, and that the total amount due (including penalties and interest) was the $128,800.39 already mentioned. The Commissioner also claimed interest at the rate of two percent per annum from 31 December 1993 until payment. It is convenient to mention that that claim for interest has not been pursued. Whether as would be normal in many jurisdictions, interest accrues from the date of the judgment is an issue not before us at present.

As already indicated, the civil proceeding was against the company. For reasons carefully explained by him the Chief Justice upheld that claim, giving judgment for the full amount claimed but not allowing any additional interest at that stage, as the matter of interest had not been addressed by counsel. He did give an opportunity to counsel to file written submissions on that aspect, but this Court understands that instructions were given by the Inland Revenue Department to counsel not to pursue the two percent claim.

From that judgment the company appeals. Notwithstanding the outcome of the prior criminal proceedings the argument now is, and was before the Chief Justice on the civil claim, that the company is not the appropriate legal entity to be sued: instead the directors collectively should have been sued. Mr Malifa, who has argued the case no doubt as forcefully as it could be argued, has broken his argument down into three main points. First, the one just mentioned, that the company has not been properly sued; secondly that, having regard to the repeal of the 1986 Act, no law allows for the recovery sought by the respondent; and, thirdly, that s.19(e)(vii) of the Acts Interpretation Act 1974, on which the Chief Justice relied, is only an aid to the interpretation of the law by way of general rule and cannot be used as the legal basis for recovery.

Taking those points in the order adopted by counsel for the appellant, we note that in support of the first Mr Malifa relied on provision in the company's Articles of Association to the effect that the business of the company is to be managed by the directors and that they have power to bring or defend any proceedings by or against the company. Such provisions are commonly found in Articles of Association. Their purpose is to authorise the directors to manage the conduct of legal proceedings by and against the company. They do not purport to alter, and they could not legally alter, the liability imposed on the company under the general law by a statute or otherwise. As the relevant Article here provides, the proceedings envisaged are by or against the company, not proceedings by or against the directors. The Article is of no moment in considering the statutory liability arising under the l986 Act. There is no substance in that point.

The second and third points may be taken together. They are different ways of expressing the same idea. The Goods and Services Tax Act 1986 was repealed as from 1 January 1994 by the Value Added Goods and Services Tax Act 1992/1993. We are informed by counsel for the appellant, and accept for the purposes of this judgment, that the Value Added Goods and Services Tax Act, which is something of a mammoth piece of legislation by comparison with the 1986 Act, contains no express savings clause for liabilities under the 1980 Act. Mr Malifa did mention s.80 of the 1992/1993 Act, but only to make the point that that section dealing with applications for registration is not material to the question now arising. His contention has been that, because in the apparently comprehensive repealing legislation there is no relevant savings clause which could be availed of by the Commissioner in the present case, the question of such liability as in issue here must have been overlooked: that there is a vacuum only capable of being remedied further legislation. Like the Chief Justice, we are unable to accept that approach. The Acts Interpretation Act 1974, s.19, provides:

19. General provisions as to repeals - The provisions following shall have general application in respect to the repeals of Acts, except where the context manifests that a different construction is intended, that is to say:

...

(e) The repeal of an Act or the revocation of a rule, regulation or bylaw at any time shall not affect -

...

(vii) Any right to any Government revenues or any charges thereupon, or any duties, taxes, fees, fines, penalties, or forfeitures, or prevent any such Act, or regulation from being put into force for the collection or recovery, of any such revenues, charges, duties, taxes, fees, fines, penalties, or forfeitures, or otherwise in relation thereto:

There is no context in the repealing act with which we are now concerned of a nature manifesting a different intention, and the provisions of general application in s19 of the Acts Interpretation Act accordingly apply. Mr Malifa did not dispute that, in terms of paragraph (e)(vii), there was a right to Government revenues, but he contended that there is an absence of machinery to give legal effect to such a right. That is a view which we are unable to adopt. Counsel for the appellant does not question that the relevant assessments here were made before the repealing Act came into operation. We are not concerned therefore with whether the assessing power under the 1986 Act can be exercised in respect of appropriate earlier years after the repealing Act has come into force. We are not to be understood, however, as excluding that possibility: it is simply a question not now arising. Concerned as the Court is with assessments made before the commencement of the 1992/1993 repealing Act, we have no doubt that s.19(e)(vii) of the Acts Interpretation Act is wholly appropriate to preserve the right to revenue which the Commissioner seeks to enforce here. The circumstance that the extensive repealing Act contains no express provision on the subject is entirely consistent with the drafters of that legislation having appreciated that the general provisions of the Acts Interpretation Act were quit sufficient for their purposes. On that view there is no such vacuum as has been contended for.

One other point was taken by counsel with which we should expressly deal, and that arises under s. 23 of the 1986 Act:

23. Liability of directors - If a provider is a corporation, then the directors of that corporation shall, together with the corporation, be jointly and severally liable to remit tax collected by the corporation or pay any penalty imposed upon the corporation.

The argument under that head was that only the directors collectively could be liable and the company itself is not liable thereunder. It is manifest, however, that the corporation and the directors are jointly and severally liable. Neither s.23 nor anything else in the 1986 Act shifts liability from the corporation. There are occasions, as is obvious from s.23, when the directors are also jointly and severally liable, so there is no more in that point than in any of the others advanced by counsel. It may be added that s.23 refers to tax collected, not to tax that should have been collected, but in any event it does not detract from the corporation's liability. On the contrary it declares that liability.

What we have said is but a repetition at somewhat greater length of what was said by the Chief Justice himself in an impeccable judgment. The appeal must be dismissed.

There being no application for costs, no further order is required.

Solicitors:
Libra Law & Consultancy, Apia, for Appellant
Office of the Attorney-General, Apia, for Respondent