INCOME TAX CASE.

Dominion, Volume 3, Issue 798, 22 April 1910, Page 2

INCOME TAX CASE.

charge against bowron bros. decision of appeal court. magistrate upheld. Appeal to the privy council discussed.

A decision was given yesterday by the Court of Appeal on tho motion for prohibition which came before it in connection with the recently-heard income tax case in Christchurch. The case was ,argued in the Court of Appeal on April 13 and 14, tho plaintiffs being: .William Bowron, George Bowron, and George John Smith, merchants, of Christchurch, formerly carrying on business in co-partnership under the style of Bowron Brothers; and the defendants: Helyar Wedderburn Bishop, Stipendiary Magistrate, of Christchurch, and Wiiliam" Morris Tyers, inspector under the Land and Incomo Assessment Act, 1908. ■ . : . ■ Mr. C.,P. Skerrott, K.C., with him Mr. H. H. Ostler, appeared for . the plaintiffs; Mr. 3. W. Salinondj Solici-tor-General, and Mr. T. W. Stringer, K. 0.,, of Christchurch, for the defendants. THE CHARGES. It was pointed out during the hearing of tho motion that. in the Magistrate's Court at Christchurch, on March 1, 2, and 3, Mr. H. W, Bishop, S.M., heard charges against Bowron Brothers, in.connection-with, the firm's in,come tax returns, as follows:— (a) That the plaintiffs, on No- ' vemDer 6, 1906. at Christchurch, did. by wilfully and knowingly' making _a, falso return in writing in relation, to the income of the co-partnership firm of Bowron Brdr thers, affecting ; that firm's liabil- •'■ ity to taxation, evade full taxation in respect of income.tax. ■ ; (b) That tho plaintiffs, on November 6, 190G, at"' Christchurch, ' knowingly and wilfully made a ■ 'falso return in writing in rolation. to the income of the co-partner-ship firm of Bowron Brothers, af- . 'fecting that firm's. , liability to taxation. (c) That the plaintiffs, on November 6, 1906, at Christchurch, knowingly and wilfully delivered a false return in writing-, in relation to tho income of tho co-partner- ' ship firm of Bowron Brothers, affecting that firm's liability to taxation. ■ : '.-■■.■ ' .

Before evidence was taken, an objection made by the solicitor , for BowrOn Bros, that the magistrate had no jurisdiction to hear.the case was. over-ruled. The caso proceeded. Bowron Bros..'then applied to the Supremo' Court .for an order prohibiting the magistrate from ■■ hearing, determining, or adjudicating upon the .matter, and. on April I/the Chief Justice consented that thepoint should be argued in'the Court of Appeal, instead-of in the Supreme Court. It was this motion which came before the Chief Justice (Sir Robert. Stout), Mr.-Justice Mr. Jiistioe-;]M ;: wards, and, Mr. Justice 'Chapmsn,t |r &' ! the.Court of Appeal. ■ The grounds:of the emotion, were :■. that Mr. Bishop had np; jurisdiction to adjudicate uponlthe informations,..inasmuch as...they.,were, not laid (as plaintiffs alleged; within three years, after, fthe. date, when the matter of the informations' arose. , '■ .

DECISION OF THE CHIEF JUSTICE. In tho course of his: judgment, his Honour the Chief Justice said that this was .an aqtion for prohibition, which had been moved into tho Court of Appeal.'. Bowron Bros., the plaintiffs, had been charged in an information with three offences under the Land'and Income .Assessment ■to have been committed on November 6; 1906. That Act provided that "any informa-tion-or complaint in respect oF any fine, under this Act may be laid at any time.within three years next after the date'of the offence." It had been conteiidecl that "no information or comSlaint was laid" within three years of be date of the alleged offences. / What had been dono was shortly as follows:—An .information was prepared by the informant, .Tyers,. one of tho defendants, and he went to a Justice of the Peace named Mr. J. F. ; Andrews, of Wellington, exhibited the information, and swore to its contents. This took place on Friday,. November 5, 1909. The information, was duly signed' by Tyers and th& information signed by the justice. The.justice left tho information on the desk .where he had signed it, and ; the Solicitor-Gen-eral(Dr. Fitchett) took it and filed it in the office of the Magistrate's Court on Monday, November 8, 1909. No application was made to a justioe to issue a summons of warrant. The clerk of. the Magistrate's Court was asked, when the information was left with him, not to issue any. summons on the information until requested-to do so. Summonses were not actually' issued until January, 1910. On January 3 last, the clerk of the Magistrate's Court at Wellington was- requested by the Crown Law .Office to forward the information to the clerk of the Magistrate's Court at Christchurch) for the, purpose of issriing summonses. The defendants in/ the Magistrate's Court (Bowron Bros.) resided in Christchurch. Summonses were, issued: and the information heard before the magistrate (Mr. H. W.: Bishop, S.M.), and all evidence concluded. Counsel for Bowron Bros, contended before th<j magistrate that the proceedings were too late, that no information had been laid until the summonses were; issued, and that the magistrate had ■• no jurisdiction to hear the information. The magistrate overruled this contention. Before the magistrate gave his final decision on the, information, this action was commenced arid the action has been heard in the Court of Appeal. :

THE WORDS OF THE STATUTE. I. The main contention was. that the information, though sworn before Mr. .Andrews, was not-in fact "laid" until the summonses' wore applied for; that tho mere signing and ■ swearing' of the information. before the justice was not "laying" the information; that the information was kept in the custody of the Solicitor-General, who must be presumed to bo the defendants' solicitor, and. that it was not in the custody of tho law till November 8; and that that was. too lato.

It would bo necessary, said his Honourj to examine the provisions of tho Justice of tho Peace Act to soo how informations were laid in New Zealand. Section 48 of the Justice of tho Penco Act, provided: "Whore a person is charged before a justice with tho commission \ of an offence for which ho is liablo / to ho punished' on summary con- ' viction before justices, the information shall lie taken in writing and shall bo in tho form (proscribed) or to the effect thereof; but it need not ho substantiated on oath, unless it is intended to issuo a warrant to compel tho appearance of the person enarged." ■ Section 49 said:

"Every such information shall be laid within six months from the time when the matter of such' information arose, except in cases whoro some other period of limitation is provided by tlio Act constituting the offence or any other Act." • . .

. There was nothing about a summons, or asking for a' summons in either of these sections. These sections provided for an information in writing, ajid the form was given. It need not have boon substantiated on oath, but it was in this case. Did the word "laid" in Section 49 not mean "presented to the justice and witnessed by him?". Nothing,was said about summonses in the Act until Section 54' was reached. In Section 54 if; was provided that one justice might receive "any such information" and thereupon such.justice or any other justice might' "issue a' summons or warrant to compel the attendance of the party charged," etc. Section 64 provided that an information might be withdrawn by permission of the justice who received the information. It had been said by counsel for Bowron Bros, that the justice who received the information woμld mean the justice who was asked to issue the summons, not the justice who took the information. It would be • seen that it was' not necessary, as in England, for. the justice who took the information to issue the summons. It had, been admitted that English authorities on this matter were not to be found directly in point. There were, however, some authorities which cast light on the cohtrovers,y. , His Honour went on to refer to a number of English cases, the. decisions in which, ho said, were not in Bowron Bros', favour. When dealing with one caie, his Honour pointed out that the words of the New Zealand Statute were riot that "the prosecution is to be commenced" within three years, but that "any information may be laid." The words were not the same. It might well be that, if no' summons was issued, there was no.prosecution. ..This. had been held in" several malicious prosecution actions. None of the cases cited showed, that the. ..laying of .the information .was not a disrtinct. step and the laying , ,was complete without any application for a summons. If the .words of the New Zealand Statute had 'been "commence" or "institute" a prosecution, there. jwould he, but for an, English decision, much to be said for Mr. Skerrett's contention. (

WAS THE INFORMATION "LAID"? •His Honour concluded; "The. question then; is: /Was the . information laid ?' The applying for. the summons at the time of swearing the information could not, in nty opinion, make the laying more complete than it was by the_. 'laying, , that.is ■ 'alleging the facts' in the information. . ,The objection made is. as to what was done with the information" afterwards! As was pointed but by the Solicitor-Gene.-»1, we have'no provision in our Statute for,.-leaving- the information'; in any office. As a fact, it was-left in . .the magistrate's office on.November'B. In the meantime it was in the .custody of tho informant's solicitor for three 'days. Does' this custody put an end to the. laying?';.. If the justice had kept it in his custody it could not have altered its' legal effect, and, therefore, it appears "to me that the whole question turns on tho -holding of .the information, which was.only 'laid', on tho sth, for these three days by tho solicitor for the informant. No authority has been cited to show that that could put an end of the proceedings, ■as the information was acted on afterwards.. As' the informant , could, , under our statute, go to any justice for' a. summons;;! think; it. ijiust be assumed that it was" not unlawful or improper for him to have :it in his-custody for making the, application. Our law, as has S'betofpfatntelfuCaiffefriri the power to; issue summonses from the English laiVj and it. has no provision for : filing an in any office. It is this consideration that has led -me to the 1, conclusion that this custody of the informant by the Solicitor-General . foi the three days did not A affect its validity. It is not necessary to consider the question whether, in any event, a prohibition could go, at the "stage the • proceedings in the Magistrate's ; Court nave reached. I am of opinion that judgment must be for; the defendants with costs." .'■•'..• ■..■'.■ ... .■: •, .

Mr, Justice Williams, Mr. Justice Edwards,' and Mr. Justice Chapman read judgments, in which they concurred with the. opinion of the Chief ousticai-. .• ■ • '■'~ . :■;.:' ■' THE FIXING OF COSTS, Mr. Salmond asked if tlio Court would fixi the' amounts of costs. \. Mr. Skerrett .said , :that the amount of costs to be allowed would be influenced by an appeal to the Privy Council Mr. Justice Edwards: That would immediately, put them on the highest scale. "■ " ." ■■"' '■■"■.• ; "

The Chief Justice: How much is involved in'this case? : \ : ' Mr. Skerrett:' I can't'mention the amount. I am unable to do so. The Chief Justice: It is over £500?' Mr! Skerrett: Yes. The Chief Justice said that the costs awarded would be such as would have been.allowed in the Court below —£18 18s.—and costs on the highest scale in the Court of. Appeal, as from a distance.- . . ■ •■/■..-.-

APPEAL TO PRIVY COUNCIL. Mr. \Skerfett then 'made: application for leave to appeal-to the Privy Couricil under'a rule which made, provision for appeal in the enforcement of a civil right. ■■■ , " -. ••' '■ ■ ' ' : : ,'■..' .! Mr. Salmond pointed out that this was a criminal matter iu which there was no appeal as of right..: ..' '.■.. Mr. Justice Edwards: This is not: a criminal case.' It is a civil suit. :

_ : Mr/ Salmond: In form it is a civil 'action; in reality it is a step in a criminal-prosecution. '. ,■'"■■ . .

; Mr.: Justice Chapman remarked that in England, : where judgments in criminal matters were not appealable, such a case as this would, not be described as a criminal, matter.

; Mr. Salmpnd: Possibly not; but I maintain that it is a rule, of the Privy Council not to hear, appeals in criminal matters, except on. exceptional grounds, and ;in very special cases. It would be- most anomalous to hold that the Privy Council was to entertain a criminal matter merely-because it came in the.form of prohibition. '

The Chief Justice: I have a doubt about the matter, as to. whether this is, ia effect, a criminal matter. I am hot looking at this case alone—becauso in this case it may be a very proper thing to appeal—but lam thinking of ■ the effect which a .decision might have I , that a criminal matter might' bo "stuck up" by means of ..prohibition. : . .

' Mr. Skerrett said that tho motion for prohibition was; in substance the enforcement of. a civil right—the right to prohibit the magistrate-from inflicting on Bowron Brothers a penalty, /wrongfully and without jurisdiction. ; '.The Chief Justice remarked that, in his opinion, the case- was a proper one for appeal, considering tho amount involved, but tho Court had to consider the , establishing of a, precedent. :' Mr. Skerrett: Your Honours are not controlling tho criminal proceeding in the least, and have no jurisdiction to control it. : If your Honours grant leave to appeal; without a stay of proceedings, thon ; tho criminal proceeding goes on. The ■ alternative is to grant' leave .to appeal, ordering a stay of execution. That would only stop the 'enforcement of costs in this Court, and would not warrailt a stay of tho criminal proceedings. :■". Mr. Salmond submitted that there was no precedent for tho application. It would bo the first occasion on which such a matter ever went before the Priw Counoil. ,

The Chief Justice: I have never heard of a case, Mr. Salmond, but that is not.to say it is ; not.covered by the' rulos. It does not follow-that, because the matter has not come up fore, there is no right. '. Mr. Salmond: If it had been• ah appeal to this Court, there would have been ho further appeal. Is it possible, then, that, because the appeal takes a. different form, it can go to the Privy Council? ~ , ■ ■ ~ The Chief Justice: There have t been , appeals in criminal cases. ' : ' Mr. Salmond: By special leave of the Privy Council. ' . ' . PUBLIC IMPORTANCE. ! ' Mr. Justice : Suppose we had given a decision against you,- :Mr. Salmond, surely ']wo ■ could ■ not havej refused you leave to appeal on .the! ' : ground, that the matter was .one ..of ; public importance? What is good for one is good for another. .' '; '" "■. ''-'' .'" Mr. Salmond: But my learned friend .I has made his application as'a matter - of right/ I do not deny,.that there i« ';' power under another rule for the.Court, '.-. in its,discretion, .to allow an appeal on •■ '■' a matter of public importance.: The... Privy Council has repeatedly laid it .'•'' down, however, that it will not grant leave to appeal in criminal matters, ex-; cept'in the most exceptional eiroum-:. stances. That being so, I submit r thatthere are no exceptional circumstances' ■ in this case; except the magnitude o£ the amount involved." If Mr. Skerrett'* <■ argument is correct, a , man sentenced to , ' .' penal servitude'is entitled to appeal to , 1 the- : ;Privy Council. There is nothing ■■; in .this' case except the merest', technj-.; cality.: The Privy Council will not' hear., such a case, unless there is some reason, to suppose that there is likelyj to be a grave miscarriage ■•;of justice.' ', This is a typical case in 'which' its ■ jurisdiction should not be exercised. ■ Mr. Skerrett: "We submit-that it is H plainly a -civil proceeding, and it is the . '■' enforcement of ' civil , rights- I - will 'alternatively apply that the Court exer- '■• ■ cise its discretionary power and: grant leave to appeal under the rule aa to public importance. It is not 'correct that : this'question involves a mere " technicality.- If pur contention is sound; it. involves,the infringement of a legaj V right given to the plaintiffs by statute. ■■ ■:'• If the three years, have expired,'•they '• ■■ have, under the statute, immunity from ; punishment. I .would point ont also - that the question has .never been the ; •-; subject of express 'decision'-in; England,''-"-"'■" and is clearly a matter involving general '■•'' interest in two senses« (1) It entails".;' the settlement of a qnestiori which may .J be constantly recurring;"and (2) the "■■ proceeding is really to recover duty owing to the State. Naturally, '_ the;- ■ State is interested, and -therefore it'ia . ; a matter of public interest. •■ ■ ■-..' >. ■ ■Mr. Salmond: It is not-to-recover -• duty. ■ ■ .' ' . '■; '•■■.''; ■'■'■.' -: Mr. Skerrett:,Substantially;it is - to •:'•• recover duty.' The"penalty ■ is , .a; flne-*- jnot exceeding £100 and a fine of three- :■': times'the amount of the duty, plus.,the:«■ duty itself. It is substantially to ie-c----cover. a sum of money.. It is only i-.-quasi-criminal,.at the most. , _ Mr. Sal- , .'-; mond's argument that an objection to : : .' jurisdiction may be -taken, in .New: ;'-• Zealand, either by appeal or by prohibi- :.-■■ tion, has no real weight. .; The Chief Justice: The Appeal Court would never be seised of it if it was--a mere appeal. It would end'in the ,' Supreme Court. '- : . : >: ■'■'. \-/ '■ Mr. Skerrett urged tha.t a proceeding > by way of prohibiticin was always an . enforcement of ' a "diyil- right. At ; all-' - times,' ; he' said,- proceedings in prohibi- ■' - tionwere-bn the'iivilV side of ■ :the ":&■ Court. If, , in the enforcing of a'civil , -,';•■■• right, subject matter was admitted '. to exceed £500, then there was a right ■/;'■ lif appealto the Privy Council. More. over, ..this was a matter of public imoortance. '." : ' ' _ -I, - * Mr. Justice Chapman: Presumably.--r£SMj{ . but," if the man in the street had been .- sued, he would, not; have -had that -..- interest.-■•■ •"■ ■' "'•' ~"■■' ■'■'.."'■.. '■'. . ..',';'.'' "•'Mr. Skerrett: Possibly not.; .;. '- ■•••-.■ ■'■. The' Cour t; granted'permission to Mr. i_ Sahßond to argue the matter, further, --•; on the , ground thaf'he had been;takea , t by surprise, and intimated • that ■ the • point would be decided after- counEel. had addressed the iCourt to-day. -