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Sectretary for Finance v Tausi [2003] TVHC 14; Case No 39 of 2002 (12 April 2003)

IN THE HIGH COURT OF TUVALU
CIVIL JURISDICTION

CASE NO: 39/2002

SECRETARY FOR FINANCE

v

OTINIELU TAUSI
Trading as TOGOLANDS

Ulika Kiatoa for plaintiff
James Duckworth for defendant

Hearing: 10 and 11 April 2003
Ruling: 12 April 2003

RULING

By writ filed on 4 September 2002, the plaintiff claimed payment of arrears of income tax for the tax years 1991, 1992 and 1993 together with interest and penalties adding up to a total sum of $64,371.18.

Appearance was entered for the defendant on 10 September 2002 but no defence has been filed.

On 19 November 2002 the defendant, by summons, gave notice that he intended to apply for the proceedings to be stayed on the ground "that an application had been made before the High Court in May 2000 in case number 13/2000 against the decision of the Commissioner for Taxes and Attorney General that remains to be determined. Any proceedings are premature before that case is resolved."

On 8 April 2003 the plaintiff filed for the entry of judgment in default of defence.

Both applications are before this Court, because of the absence of a Senior Magistrate, and each is challenged by the opposing party.

Counsel for the Secretary of Finance has helpfully provided the court with a chronology of events in support of his claim for judgment in default. From that it appears a team of assessors was established by the Secretary of Finance to make default assessments in relation to a number of businesses including Togolands. A notice of assessment was issued on 2 September 1996 and Togolands filed objection to it on 30 September 1996.

It would appear that, rather than follow the proper procedures under the Income Tax Act 1992, a series of meetings were held to try and resolve the matter by negotiation instead of hearing the objection as provided for under the Act. Similarly, although the decision was to be made by the Secretary of Finance, it would appear it was effectively made by the Minister and then passed on by the Secretary. Why such a procedure was adopted and why the Minister was involved at that stage instead of following the Act is not clear but the result was that a decision was made to reduce the sum due substantially and allowing payment by instalments.

The decision was served on Togolands on 30 April 2000 and it was that to which objection was filed in this Court on 23 May 2000.

At the hearing, I refused the application for judgment in default and ordered that this action should be heard after the determination of the objection in case 13/2000. I said I would give brief reasons and I do so now.

The plaintiff in this action has good grounds for judgment in default. The application for a stay, on the other hand, is not supported by any affidavit or explanation apart from that quoted above. The terms of section 57(3) of the Act makes it clear that the initiation of an objection to any assessment does not affect the objector's liability to pay the tax due. It is hard to see, therefore, that the stay was sought for any reason other than to try and avoid the consequences of failing to observe the terms of section 57(3).

On the other hand, defective though it was in form, the fact it had been filed does provide a reason far failure to file a defence.

Taking a practical approach to the overall situation, it seems sensible now to hear the objection first. The plaintiff in this action will not suffer loss by a further delay in his action as interest will still accrue.

However, it should be noted that the application for a stay is refused. The defendant shall file a defence within 28 days and the case shall then proceed under the normal timetable so it will be ready to be heard following the determination of the objection on case 13/00.

DATED this 12^th day of April 2003

Chief Justice