Nina T.H. Wang v. Commissioner of Inland Revenue

CACV000106/1991

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Coram: Fuad, V.-P., Nazareth, J.A. and Mayo, J.

Date of Hearing: 4, 5 and 6 December 1991

Date Judgment handed down: 19 December 1991

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JUDGMENT

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Fuad, V.-P.:

1. This is an appeal by the Commissioner of Inland Revenue ("the Commissioner") against the decision of Barnett, J. dated 22nd May 1991 whereby, after a substantive judicial review hearing, he granted an application by Madam Nina T.H. Wang in relation to two determinations made by the Commissioner on 24th October 1990 under s.64(2) of the Inland Revenue ordinance, Cap. 112 ("the Ordinance). The judge granted the relief sought by the taxpayer by way of an order of certiorari resulting in the quashing of both determinations.

2. At all material times, Madam Wang and her husband controlled the Chinachem Group of Companies. World Realty Ltd. ("WRL") is a member of that group. On 9th February 1984 WRL furnished a profits tax return for the tax year 1982/83 which included a provision for diminution in the value of certain Land Exchange Entitlements (commonly known as "Letters B"). Some $86 million was claimed as an allowable deduction in respect of this diminution.

3. By his letter dated 26th March 1984, the Commissioner asked WRL to supply, inter alia, the name and address of the vendor of the Letters B. There was no response despite several further letters, and the issue of a formal notice, until 23rd October 1984 when Madam Wang, through her accountants, informed the Commissioner that the Letters B had been bought from Braulian Investment Ltd.,  S.A. ("Braulian") whose address in Panama was given.

4. The Commissioner caused searches to be made in District Land Offices in Hong Kong, founded on the particulars supplied by the accountants, and discovered that all the Letters B had been registered in the name of Madam Wang as leaseholder before they had been assigned to WLR. No mention of Braulian was found in the registers.

5. When the Commissioner examined the related Deeds of Assignment which had been provided at his request, it was observed that they had been executed by Madam Wang in favour of WRL and that  it was she who had acknowledged receipt of the consideration moving from WRL.  In the letter (5th March 1986) forwarding the Deeds, it was explained :-

6. The sole signatory seen on the Declarations of  Trust was Madam Wang, and Madam Wang's accountants told the Commissioner in correspondence that the purchase and sale of the Letters B had been negotiated by Madam Wang (as the "representative" of WRL) in Taiwan with a Mr Lam Yin Ching, whose address there was given.

7. The total consideration paid by WRL for the Letters B was said to be $168 million, and in their letter of 17th June 1986, the accountants informed the Commissioner that three cheques had been drawn on WRL's bank account with Chinachem Finance Co. Ltd. in settlement of the amount due to the vendor, and had been made payable as follows:-

8. By an earlier letter (9th May 1986) the Commissioner asked Madam Wang to supply particulars of all Letters B transactions she claimed she had undertaken on behalf of Braulian and any documentary evidence (a) concerning her appointment as trustee for Braulian (b) to show that the funds for buying the Letters B had been  provided by Braulian and (c) to show that the proceeds of the sales had been paid to Braulian.

9. In response, Madam Wang's accountants (letter of 17th June 1986) said that her appointment as trustee had been oral; that the money for the purchase of the Letters B by Braulian had been provided "by way of loan to Madam Wang (representing Braulian) by companies in the Chinachem Group" and that the $168 million had been paid to Mrs Wang "to reduce a prior indebtedness (incurred prior to 1st January 1981) between Lam Yin Ching and Mrs. Wang."

10. On 10th September 1986, the Commissioner sent a printed letter to Madam Wang telling her that she had been given a new file number. The letter was addressed to "Mrs Nina T.H. Wang as Agent for Braulian Investment Ltd. S.A." Her accountants returned the letter saying that Madam Wang was not the agent of Braulian and that she had "no authority to accept service" on their behalf.

11. On 15th September 1986, the Commissioner sent 6 forms to Madam Wang requiring her, under s.51(1) of the Ordinance, to complete and return them (covering the years 1981-1987) "in the matter of your principal Braulian ..." in respect of "assessable profits of the principal... made from business carried on in Hong Kong". On 23rd September the accountants sent the forms back saying. "As Mrs Wang has never acted and is not the agent for Braulian .... it is impossible for her to comply with your request." 'The Commissioner wrote back on the same day, making reference to the definition of the word "agent" in the Ordinance, and  asserting that on the facts Madam Wang had been Braulian's agent. He asked her "to complete the Profits Tax returns .... issued to her as agent for Braulian".

12. Madam Wang's accountants took issue with the Commissioner on the question whether she had indeed been an agent by their letter of 4th October 1986. In response to a letter from the Commissioner dated 14th October seeking  further information under s.51(4)(a) of the Ordinance, by their letter of 4th December, the accountants said that since they had been granted time, they had been able to look fully into the matter and also to take detailed instructions. They acknowledged that while the statement earlier made on behalf of Madam Wang (that the $168 million had been used to reduce prior indebtedness) was factually correct, it could "perhaps be described as an over simplification of the end result". They went on to say :-

13. On 8th December 1986 the accountants sent three letters to the Commissioner :-

14. The Commissioner replied on 17th December 1986 saying that the Profits Tax Returns had been issued to Madam Wang "as trustee (not agent) for Braulian .. whether [she personally] is carrying on any trade or business in her own right in respect of [the Letters B] is not our direct concern so far as this trustee file is concerned. As the trustee, your client is chargeable for hold on trust under s.14 ... in respect of the profit which is of course not her profit." There was also an enquiry about the variation of trust mentioned in earlier correspondence. Had a court order, as required by the Variation of Trusts Ordinance, Cap. 253, been obtained? Fresh forms were enclosed for completion and return.

15. The Commissioner sent Notices of Assessment and Demand for Profits Tax for the years of assessment 1980/81 and 1981/82 as follows :-

16. Notices of Objection to these assessments on behalf of Mdam Wang were served on the Commissioner as follows :-

17. On 22nd September 1987 the Senior Assessor (Appeals) wrote to Madam Wang "as trustee for Braulian" about the Notice of Objection dated 10th February 1987 saying that since agreement on the matter could not  be reached, it would be necessary for the Commissioner to determine the objection (under s.64(2) of the Ordinance). He asked for comments on a draft Statement of Facts enclosed in the letter. The accountants replied on 12th November suggesting two minor amendments to the draft Statement of Facts. The letter concludes, somewhat obscurely and, it must be said, unhelpfully "The Statement of Facts appears to us to be what is said by you and what is said by us. The facts are what has been said.What has been said may not be the facts."

18. The Commissioner wrote to Madam Wang on 20th May 1988 saying that he was unable to agree with the grounds set out in the 10th February 1987 Notice of Objection and enclosed his determination ("the first determination") together with the reasons therefor and the statement of facts upon which the determination was arrived at. The determination is a 12 page document in which he confirmed the assessment ($7,787,240) for 1980/81 as well as the assessment ($7,064,489) for 1981/82.  I think it is necessary to set out the Commissioner's reasons in full :-

19. Solicitors acting for Madam Wang gave notice of appeal to the Board of Review on 17th June 1988, under s.66(1) of the Ordinance, against the Commissioner's first determination. The grounds of appeal were that there was no evidence before the Commissioner that Madam Wang carried on a trade, profession or business in Hong Kong in selling Letters B or that she had acquired the Letters B in the course of trade or for the purpose of making a profit; the Commissioner had failed to take into account the fact that Madam Wang had not dealt or traded in the Letters B as trustee for Braulian; "the trade or an adventure in the nature of trade" was that (if any) of Braulian and not of Madam Wang; s.14 of the Ordinance did not apply to the facts of the case; and if there was liability for profits tax, it was, on the facts, a liability of Braulian and not of Madam Wang.

20. Madam Wang's solicitors wrote to the Clerk to the Board of Review about hearing dates on 5th July 1988, 24th August 1989 and 10th April 1990. The Clerk responded to the solicitors on 6th June 1990 giving the 26th - 28th November 1990 as the hearing dates for the appeal. It is common ground that the long delay was due to the fact that the Board had a heavy list of appeals to determine and a considerable backlog had resulted.

21. By his letter of 13th September 1990, the Chief Assessor (Appeals) sought certain information from the solicitors about the pending appeal.

22. On 24th October 1990 the Commissioner sent Madam Wang two further determinations - one relating to the 8th December 1986 objection to her assessment as the agent for Braulian ("the second determination") and the other relating to the 18th February 1987 objection to having been assessed in her personal capacity ("the third determination"). It is in relation to these two determinations that Madam Wang sought orders of certiorari.

23. The second determination runs to 6 pages and the third determination to 5 pages. The assessments objected to were confirmed. Paragraph 1(15) of the second determination is as follows :-

Paragraph 1(14) of the third determination is in the same terms save that for the expression "her personal capacity" is substituted "the capacity of an agent".

24. In the third determination, the Commissioner stated that he wished to add that if he were wrong in deciding that Madam Wang was dealing with the Letters B in a personal capacity, it would be his view that she would be liable to profits tax in the capacity either of an agent or of a trustee for Braulian.

25. Also on 24th October 1990, the Senior Crown Counsel acting for the Commissioner suggested to Madam Wang's solicitors that if she were minded to appeal against the two further determinations (the second and third) it would be preferable for the three appeals to be consolidated and heard together by the Board of Review. She said she would not object to an adjournment. "In any case", the letter ended, "we reserve our right to argue before the Board at the hearing of the above appeal [against the first determination] that Mrs Wang was trading in Letters B in her personal capacity or that of agent of Braulian."

26. The solicitors addressed a letter to the Clerk of the Board of Review on 19th November 1990 pointing out that three assessments had been made against Madam Wang (as trustee; as agent; and personally) in respect of the same tax matter. They mentioned the first determination and the appeal that had been filed. They spoke of the two further determinations having been made by the Commissioner  "suddenly" and 4 years after the relevant Notices of Objection, and asked for a extension of time within which to file Notices of Appeal against those determinations. The application for extension of time  was fixed for 26th November. After further correspondence, short Grounds of Appeal were filed in respect of the second and third determinations on 23rd November, to protect Madam Wang's position in case the application for an adjournment failed.

27. When the hearing of the appeal against the first determination began on 26th November, Counsel for the Commissioner asked for an adjournment and this was granted. He also applied to have all three appeals consolidated. Despite objection by counsel for Madam Wang, the Board decided that in due course a date would be fixed for hearing all three appeals together.

28. The following were the grounds upon which orders for certiorari in respect of the second and third determinations were sought:-

29. Mr Kan, who is the senior partner of the firm of solicitors representing Madam Wang, gave the history of the matter in his affidavit. He referred to delays that had occurred at various stages on the part of the Commissioner in dealing with the three Notices of Objection. He foreshadowed the substance of the arguments which were addressed by Mr John Griffiths, O.C., to Barnett, J. and later to this court.  He relied upon the provisions of s.64(2) of the Ordinance which require the Commissioner to consider an objection "within a reasonable time".  He drew attention to the fact the Commissioner had made the two determinations forwarded on 24th October 1990 nearly 4 years after the Notice of Objection regarding the "agent" assessment had been filed and over 3 years and 9 months after that relating to the "personal capacity" assessment had been lodged. It was contended that the second and third determinations could not be regarded as having been made if "within a reasonable time", particularly since the first determination, involving much the some factual matter, had been made over 2 and a half years previously, on 20th May 1988. Therefore, it was said, the last two determinations were "unlawful as being outside [the] duties and powers .... in section 64(2) and (4) of Cap.112", consequently they were "invalid and of no legal effect, and should be quashed".

30. Undue delay is denied by Mr Luk Nai Man, the  Assessor (Appeals) in his affirmation of 25th arch 1991. He pointed out how long it took Madam Wang to supply some of the important information that have been legitimately sought.

31. Mr Kan pointed out that the two determinations complained of were almost identical with each other and in almost identical terms to the first determination.  He maintained that it was clear that the three bases of assessment were mutually contradictory for if Madam Wang was either a "trustee" or an "agent" of Braulian, she could not "personally" have been carrying on a business in the trading and in the buying and selling of Letters B in her "personal capacity". He went on to argue that in view of this, and the conclusions reached in the first determination, it amounted to an express and/or implicit rejection by the Commissioner of the assessments in the categories of "agent" and "personal", and consequently amounted to an implied   upholding of Madam Wang's Notices of Objection relating to the latter two categories. Mr Kan stated, in para. 19:-

32. The affidavit puts Ground 2 (the "Wednesbury" ground) in this way - since the Commissioner, when making his determination of 20th May 1988 had found as a fact and accepted that Madam Wang had acted as a trustee, the two determinations of 24th October 1990 "were an exercise of his powers and duties in so unreasonable a manner (because of the totally contradictory basis of fact on which the latter two are made when compared with his express findings in the 1988 determination), so that the exercise of his powers in' making the two purported determinations become open to judicial review."

33. In his affirmation, Mr Luk emphasised that it was never contemplated that Madam Wang could become liable to be taxed more than once over the same profit. His view all along had been, that on hearing the three appeals, the Board of Review would decide which, if any, of the bases upon what Madam Wang had been assessed was correct. This was why he had caused the second and third determinations to be issued - this would avoid legal argument over the Board's jurisdiction as well as saving time and costs.

34. Mr Luk pointed out that despite the number of the Letters B transactions, the magnitude of the cost, sales and profits, and the fact that the transactions had been carried out by Madam Wang in Hong Kong, no information about them had been volunteered to the Commissioner. Madam Wang had first claimed she was Braulian's trustee. Later she had expressed doubt as to the existence of a true trustee relationship. The Declarations of Trust produced in support showed Madam Wang as the sole signatory, the beneficiary being a foreign company with no presence or assets here. All the assignments and receipts had been signed by Madam Wang; the purchase cost had been paid by her, and the sales proceeds were made payable to her or at her direction.

35. He acknowleged that one set of assessments on the profits made by Madam Wang, in whatever capacity, could have been made, and the Board could have resolved the matter under s.68 of the Ordinance, by deciding whether she was liable to any tax in relation to the Letters B transactions and if so, in what capacity. And then, depending upon the decision of the Board, the Commissioner would have annulled the assessments and raised another set. However, he contended, this course would "jeopardise the public revenue". Since Madam Wang had made such late disclosures, the Commissioner had not been aware of the profits resulting from the transactions until 17th June 1986. And the profits were made in the first year of assessment (1980/81). Under normal circumstances, by virtue of s.60(1) of the Ordinance, the time limit for raising an assessment for that year would have expired on 31st March 1987.  Had  this course been followed, the Board's findings would probably not have been known before that date, and the Commissioner would not have been empowered to raise any assessment for 1980/81, even though based on facts found by the Board. $7.7 million revenue would have been lost.

36. Mr Luk also drew attention to the fact the the amount of tax due would be different, depending on Madam Wang's true capacity. As a trustee or agent, the tax rate would be 16 and a half per cent, whereas she would be  liable at the rate of 15 per cent if she had carried out the  transactions in her personal capacity. This called for alternative assessments.

37. Mr Luk further commented that it was plain that the three alternative assessments represented the Commissioner's alternative views. Therefore the three alternative determinations were no more than confirmations of the Commissioner's alternative views. He submitted that since the three assessments were issued in respect of the same profits, there could only be one set of facts relating to the derivation of those profits. When hearing the appeals therefore, the task of the Board would be to decide :-

He submitted that these questions would be the same in the circumstances of the present case whether there were one or three determinations before the Board.

38. As regards Ground 3, Mr Kan contended that the 20th May 1988 determination was, by reason of its terms, an express or implied decision annulling the Notices of Assessment made on the basis of "agent" and "personal capacity" and therefore the two further determinations of 24th October 1990 were void.

39. Many of the assertions made by Mr Luk were refuted in considerable detail by Mr Kan in his second affidavit dated 29th April 1991.

40. I have not referred to all the material before the judge, but I express the hope that what has been set out above sufficiently explains the issues which led to the resort to the courts.

41. In his careful reserved judgment, the judge, after reviewing the background in some detail, set out the gist of the opposing arguments. In referring to s.64(2) of the Ordinance, he held that the word "may" in that subsection attached to the options open to the Commissioner when he has considered an assessment and that the word "shall" covered  the whole of the Commissioner's duty to adjudicate upon an objection. His discretion lay only in confirming, reducing, increasing or annulling the assessment. The judge went on to say :-

42. The judge then considered whether an alternative remedy existed for Madam Wang, i.e. whether the propriety of the second and third determinations could be challenged before the Board, recognising that if such a remedy existed, the court could not, in the absence of special circumstances, decide the matter by way of judicial review. He noted the submissions of Mr Griffiths for Madam Wang, that an examination of s.68 of the Ordinance showed that it was the assessment and not the Commissioner's determination which was under scrutiny, and that the Board could look at the Commissioner's determination only to see how he had approached the case, and not with a view to ruling on its legality. Relying on R. v. Law Society of Alberta, Ex parte Demco 64 DLR 140, Mr Griffiths had submitted that even if the position were not so clear cut, at least there was grave doubt as to whether the Board could deal with the issue. "Therefore, there is not a sufficient remedy before the Board as would entitle this court to refuse to hear an application for judicial review."

43. After summarising the submissions of Counsel then appearing for the Commissioner, who had argued the contrary, the judge said:-

44. The judge went on to find that Madam Wang had been prejudiced in preparing for the appeals before the Board in respect of the "agency" and "personal" assessments. She and her advisers had assumed, not unreasonably, that once the Commissioner had made the "trustee" determination, the other two assessments had been abandoned and  impliedly annulled. The assessments were mutually exclusive.

45. The judge observed that Madam Wang now had to procure and adduce evidence, particularly documentary evidence, about what had taken place. In this she was "hamstrung". Her husband had been kidnapped and so could not help. Mr Lam was dead (although it was true that he had died before the assessments were made). His family were reluctant to cooperate with Madam Wang "because of the political overtones in Taiwan to the kidnapping of Mr Wang". "Therefore", concluded the judge, "while it is true to say that exactly the same matters will have to be considered in relation to all three assessments, and whilst it is true that the applicant had apple time to carry out any necessary enquiries in relation to the trustee assessment, I am satisfied that the applicant has suffered real prejudice."

46. The judge continued by remarking that judicial review was likely to be more expeditious and less costly than a hearing before the Board. Even if the Board did have power to deal with the issue, it was not certain that they would deal with it as a preliminary point. Madam Wong would be left in a state of uncertainty for a further indefinite period.

47. The judge also took into account, in exercising this discretion, that the Board of Review had no power to award costs so that even if she were successful, Madam Wang would not recover all or any of her costs.

48. He said that the submission made by Counsel for the Commissioner (based on what May, L.J. had said in R. V. Chief Constable, ex parte Calveley [1986] 1 QB 424, at p.439) that here no abuse and no breach of natural justice had been shown and no suggestion made that the Commissioner had behaved unreasonabley or unfairly, was, in the light of the facts, "a bold assertion".

49. The judge rejected the Commissioner's contention that if the last two determinations were quashed, this would  inhibit the fact-finding power of the Board. If they were to find that Madam Wang was not a trustee but that she was, in some other capacity, liable to tax, he felt that there would be no point in the Board remitting the case to the Commissioner with their opinion, the other determinations having been quashed. "For my part'', observed the judge, I think that it is not so much the fact-finding function of the Board which would be inhibited as the ability of the Commisioner to collect tax from the applicant if the appeal is successful in relation to the trustee assessment."

50. As to the suggested anomalous situation that would arise if the determinations were quashed (since there would remain the two alternative assessments and the objections thereto, and the Commissioner would still be under a statutory duty to determine the objections and to collect tax due under those assessments) and the question how those problems might be resolved, the judge said "in my judgment, however, those problems and difficulties are more apparent than real. Common sense will doubtless prevail and, in the light of my ruling, the Commissioner will in all probability annul those two assessments."

51. Finally, the judge said that he recognised that when exercising his discretion, he should have some regard to the general body of taxpayers, and he noted the substantial amount of tax in issue. But he indicated that, in the light of the facts, he had not been persuaded that this was a factor which should inhibit him from exercising his discretion in favour of Madam Wang.

52. I now turn to review the provisions of the Ordinance which seem to me to be of some relevance to this appeal :-

53. In my judgment, a crucial factor in the resolution of the issues which continue to divide the parties is the acceptance by Mr Griffiths both before the judge and before us that there was no impropriety in the revenue authorities making three alternative assessments. We have seen two cases which demonstrate the point and, although the statutes which were applicable were, of course, differently framed from our Ordinance, I think that citations from them are helpful for reasons which will later appear.

54. In Dodd and Tanfield v. Haddock (H.N. Inspector of Taxes) (1964) 42 TC 229, Buckley, J., at pp.238-9, said this:-

55. In Lord Advocate v. McKenna [1989] STC 485, a case before the Inner House of the Court of Session in Scotland, the revenue authorities came to understand that the taxpayer had been concerned in certain transactions with land. They held the view that tax might be payable as a result of these transactions but had insufficient information to determine whether any gain that might have been made by the taxpayer was of an income or capital nature and so they served notice of three assessments on the taxpayer - on an income basis; on a capital basis and on a capital gains tax basis. The court held that the Revenue "was fully entitled" to make the three separate assessments to tax. Lord Allanbridge pointed out that the Revenue would be entitled to payment of the tax found due, if any, under only one of the assessments and said, at p.490 :-

56. Lord Allanbridge, on behalf of the court, went on to approve the following passage from the judgment appealed against:

57. In this connection, it seems to me essential that the court has in mind, and gives effect to, the provisions of s.70 of the Ordinance which I mentioned in my summary of the statutory scheme in force. The section is in these terms:-

Therefore, unless s.70 is satisfied, no assessment becomes final and conclusive.

58. Here, objections were made by the taxpayer in respect of each of the three separate assessments, as was her right.  What is the true function of the Commissioner when performing his duties and exercising his powers under s.64(2) of the Ordinance?

59. Mr Litton relied heavily upon two local authorities for his proposition that the Commissioner in dealing with an objection did not have a fact-finding role - this was the function of the Board of Review. In Mr Litton's submission the Commissioner haft not "found facts" And had therefore made no "express findings" in his first determination.

60. Mok Tsze Fung v. The Commissioner of Inland Revenue [1962] HKLR 258 (a decision of Mills Owens, J.) and Commissioner of Inland Revenue v. The Board of Review,Ex parte Herald International Ltd. [1964] HKLR 224 (a decision of the Full Court), the cases cited by Mr Litton, were both decided when s.64 of the Inland Revenue Ordinance was in a somewhat different form, and I think it would be dangerous to apply what was said in those cases to interpret s.64 in its present form. All that it is necessary to emphasise is that although the Commissioner, and where appropriate, the Board of Review perform the same ultimate function (to confirm, reduce, increase of annul the assessment) they are, in character, very different bodies. When dealing with an objection, the Commissioner considers an assessment made by a member of his own staff. There is only one party in the proceedings, the taxpayer. The revenue authority cannot, of course, appeal to the Board against a decision of the Commissioner made in objection proceedings. Only when a taxpayer appeals to the Board (and thereafter) is there a true lis between parties. Only if the taxpayer accepts the commissioner's decision on his objection does the assessment become final and binding. It could hardly be otherwise if one of the most fundamental rules of natural justice (that no man can be a judge in his own cause) is to be observed.

61. In the statutory scheme I have outlined above, it must be emphasised that if a valid objection has been made, under s.64(1), unless and until the Commissioner in turn has made his determination under s.64(2) and transmitted it to  the objector under s.64 (4), any implementation of the relevant succeeding provisions of Part XI of the Ordinance  becomes impossible and frustates the intention of the legislature.

62. We have seen that the judge held that it was mandatory for the Commissioner to make his determination within a reasonable time under s.64(2) and that since he had failed to act within a reasonable time, he lacked jurisdiction to make the second and third determinations. If the learned judge's conclusion about the time element be right,does it follow that the consequences of the Commissioner's failure were what he found them to be? I would remark here that even if the Commissioner was not expressly required by that subsection to act "within a reasonable time", he would have been obliged by similar imperative language to act "without unreasonable delay" by s.70 of the Interpretation and General Clauses Ordinance, Cap. 1, which applies to the performance of all statutory duties, where no time is prescribed, unless the context of the relevant provision otherwise requires. Everything will, of course, depend on the true construction of the statute as a whole, but in my respectful view, a court should be slow to impute to the legislature an intention that the jurisdiction it has conferred on a person or body to perform a duty or exercise a power is necessarily taken away if unreasonable delay occurs.

63. It must, I think, be observed that s.64(2) does not contain words to the effect : "If the Commissioner fails to make his determination within a reasonable time [or within (say) 3 months of receiving the objection] the objection shall be deemed to have been upheld." This is not surprising. If the reasonable time formula were used, no taxpayer would know where he stood and in the event of a dispute between the Commissioner and the taxpayer, ultimately only a court could decide what was a reasonable time. Nor is it surprising that the legislature, in this particular provision (contrasted with so many others in the Ordinance) did not fix a definite period within which the Commissioner must act, for so much would depend on the resources at his disposal, the number of objections that fell for determination at any given time, the other work that needed to be done, and the co-operation of the taxpayer.

64. In my judgment, construing the Ordinance as a whole, the legislature could not have intended consequences of the kind I have discussed if the Commissioner is dilatory in performing his statutory duty under s.64(2) even though mandatory language is used.

65. However, the taxpayer is not placed in an impossible position or otherwise prejudicied if he thinks that the Commissioner has not dealt with his objection within a reasonable time (even though, as here, the tax assessed is held over). He will need to know how he stands, particularly in case it should turn out that he has to take the matter beyond the revenue authorities. As Cooke, P. observed in a New Zealand case, Smith v. Commissioner of Inland Revenue [1987] 1 NZLR 726, at p.731, when commenting  upon statutory provisions that required notice of objection to an assessment to he given within a specified time, and provided that the assessment was conclusive except in objection proceedings:-

I do not suggest for one moment that this is what happened here, put in my view a taxpayer cannot refrain from seeking a usual and effective remedy which is open to him so that he can later complain that an authority has failed to act when it should have done.

66. Since certiorari is a discretionary remedy, in my judgment, it would not be a proper exercise of discretion to grant it where no benefit could lawfully accrue to the applicant. This would be a fruitless exercise. It will be recalled that the judge recognised that despite the relief he had decided to grant, there would remain outstanding two alternative assessments and the related objections which the Commissioner was required by the Ordinance to deal with, but expressed the confident view that common sense would prevail in the light of the court's decision and that the Commissioner would annul the two assessments considered in   his second and third determinations.

67. With very great respect to the learned judge, who plainly dealt with the case with great care, I do not think that can be right. It is the duty of the Commissioner to collect tax which is due under and in accordance with the Ordinance. If, as here, three alternative assessments are lawfully made, then, unless the Commissioner feels able on the facts before him to annul any particular assessment  under s.64(2), if the taxpayer does not agree with his determination, the matter must go to the Board of Review, and, perhaps, even further. Where the Commissioner concludes that the taxpayer is liable to pay tax but has been given insufficient and conflicting information for him to determine the proper basis of assessment (and surely a compelling case can be made out that this happened here) he would be failing in his statutory duty if he were to rule out two of the bases upon which the taxpayer might ultimately be found liable, (by a Board comprising experienced lawyers, and after full argument) with the result that if the sole assessment which remains alive is annulled by the Board, the taxpayer would escape tax which might lawfully be due.

68. In my respectful opinion, the Commissioner could not lawfully do what the learned judge expected him to do.

69. It seems to me that the procedure adopted, and the stand taken, by the revenue authorities was perfectly reasonable and certainly lawful, and the Board, as revealed by the record of their proceedings on 26th November 1990, seem to have anticipated no difficulties in performing their statutory duties. Three alternative assessments were made. There were three objections under s.64(1) followed by three determinations under s.64(2) but for which the assessments would not have reached the Board. Only one lot of tax (for the same two tax years) was being claimed. The issue between the taxpayer and the revenue before the Board would be whether any one of the assessments was sustainable. It is clear from a proper reading of the statutory scheme (and this was common ground) that it is the assessment which is the subject of an appeal to the Board, as it stands after the Commissioner's determination; the appeal is not against the determination as such. It would be quite wrong, in my view, to regard the first determination as creating, as it were, some form of estoppel against the Commissioner in relation to the second and third determinations.

70. For the reasons I have attempted to give, in all the circumstances of the case, and on the law as I understand it, I have been persuaded that a discretion properly exercised could not have resulted in the order against which the Commissioner appeals. I would therefore allow his appeal and set aside the judge's order dated 22nd May 1991.

Nazareth, J.A.

71. I agree that for the reasons given by my Lords the Vice-President and Mayo, J., the appeal must he allowed. I   would add only that although the scheme of the Ordinance may not be readily apparent, upon careful reading, as demonstrated by my Lord the Vice-President, it becomes quite clear, at any rate so far as the issues in this appeal are concerned. For my part, I confess that I have been much assisted by the analysis particularly of Mills-Owens, J. in Mok Tsze-fung, and of Blair-Kerr, J. in the Herald International case, of the relevant provisions of the Ordinance as they then stood. But the effect of the not insignificant amendments since made to them not having been canvassed before this Court, I, too, do not consider it safe to rely upon those two judgments; as my Lord has demonstrated, that is not necessary.

72. Moreover, the alternative nature of the three assessments and the Determinations of the objections to them, in my view, points conclusively to none of them being in the nature of findings of fact by the Commissioner is the sense relied upon by the judge.

73. I would add finally, that even on the evidence itself, I am satisfied the Commissioner proceeded not upon findings of fact made by him, but upon the conflicting and shifting grounds put forth by the appellant, grounds that it must be said the judge was clearly more than generous in describing as "the somewhat obscure way in which the applicant tried to explain the background to the transactions".

Mayo, J.:

74. I have had the advantage of seeing my Lord Fuad's judgment and the observations which have been made by my Lord Nazareth. With respect I agree entirely with what they say. I would, however, like to make a few observations of my own.

75. The main issue which has to be considered in this appeal is the effect of s.64(2) of Cap.112.

76. Barnett J. found in his judgment that the Commissioner did not "confirm, reduce, increase or annul" the two assessments which are complained of "within a reasonable time". As a consequence of this he held on p.18 in the appeal bundle of his judgment that "the Commissioner ...lacked jurisdiction to make the two Determinations".

77. This conclusion can only be correct if the section contained within it an implication that if the Commissioner did not act within a reasonable time his acts would be nullified. There is nothing in the section or in the Ordinance which could possibly entitle one to come to any such conclusion. To do so would fly in the face of the whole of the scheme set out in the Ordinance. It is  pertinent to observe that the learned judge did not consider   the legislation as a whole or give any reason for coming to  the conclusion that if the Commissioner was guilty of unreasonable delay the consequence would be that he would lack jurisdiction to proceed to perform the functions he was required by the section to perform.

78. This then leads to the other main difficulty which arises in considering this judgment. That is the appropriateness of the relief sought in the judicial review of the issue of a writ of certiorari.

79. Looking at this matter as a whole it is evident that the complaint which is made by the respondent is the delay which occurred in making the Determinations in respect of the two further assessments.

80. It is clear from p. 630 of the 5th Edition of Wade, Administrative Law that "certiorari and prohibition deal with wrongful action, mandamus deals with wrongful inaction".

81. This would appear to he borne out from the judgment of Cooke P.in Smith v. CIR [1987] 1 NZLR 727. He had this to say at p. 731.

82. The consequence of this is that the application for certiorari was misconceived. The relief sought should have been for the issue of a writ of mandamus if the respondent considered that the Commissioner was being dilatory in the discharge of his duties. It is though significant to observe that the respondent and her advisers do not appear to have made any complaint in respect of the Commissioner's delay in making the Determinations he was required to make under s.64(2).

83. When the correspondence is considered as a whole there was no justification whatever for the respondent to conclude that the assessments which had been made upon her in a personal capacity and as an agent would not be proceeded with in due course. It  is also relevant to add that it was conceded before us that there was no inherent objection to the Commissioner entertaining alternative assessments which relate to the same subject matter. It is obvious from the correspondence which was exchanged between the parties that the 3 assessments dealt with the same facts which lay before the Commissioner and that it is artificial to argue that the facts relating to any one of the assessments could be considered in isolation.

84. It would follow from this that if the Commissioner is able to consider alternative assessments dealing with a similar factual background there is equally no difficulty in having alternative Determinations in similar circumstances.

85. It would accordingly appear to be unlikely that the respondent suffered any prejudice as a result of delay on the part of the Commissioner and therefore it is unlikely that she would have succeeded in obtaining relief in the form of an order for a writ of mandamus to issue.

Fuad, V.-P.:

86. In handing down these judgments allowing the appeal, we make an order nisi that the taxpayer shall pay the costs of the Commissioner in the court below and on the appeal.

Representation:

Mr Henry Litton, Q.C. and Mr Robert Andrews (Crown Solicitor) for the appellant

Mr John Griffiths, Q.C. and [Mr Ramesh Sujanani (Ip, Ku and Stoppa) for the respondent.