Income Tax Act 1959 (Amended), Re [1991] PGSC 12; [1991] PNGLR 211 (5 July 1991)

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INCOME TAX - Taxation prosecutions - Nature of proceedings - Criminal proceedings - �In accordance with usual practice and procedure of the court in civil cases� - Averments as proof of matters alleged - Denial of presumption of income - Proceedings unconstitutional - Constitution, s 37(3)(4)(a)(10) ^*[ii]¹- Income Tax Act 1959, ss 299g(9)(10), 327 ^*[iii]^2*, 333(1) ^�[iv]³�.

CONSTITUTIONAL LAW - Constitution of the Independent State of Papua New Guinea - Basic rights - Protection of the law - �Presumption of innocence� - Until proved guilty �according to law� - Means whole body of law defined in s 9 - Constitution, ss 9, 37(4)(a).

N1>(1)�� A taxation prosecution commenced by writ of summons for recovery of a pecuniary penalty under s 299g(9) and s 299g(10) of the Income Tax Act 1959, is a criminal proceeding.

N1>(2)�� (Kapi Dep CJ dissenting) To commence such a taxation prosecution by writ of summons and to prosecute and proceed with it �in accordance with the usual practice and procedure of the Court in civil cases� pursuant to s 327 of the Act is unconstitutional in that it conflicts with s 37(3), 4(a) and (10) of the Constitution.

Discussion of the presumption of innocence until proved guilty �according to law� under s 37(4)(a) of the Constitution.

(Per curiam) Proof of guilt of a criminal offence �according to law� means according to the whole body of law as defined in s 9 of the Constitution, that is, criminal law under statute or as has been shaped and developed as part of the underlying law pursuant to Sch 2.2 and Sch 2.3 of the Constitution by judicial pronouncements. It is now clearly part of the underlying law of Papua New Guinea, appropriate to its circumstances that �a person charged with an offence� which is criminal in nature, because it carries criminal sanctions, must be tried �in accordance with the usual practice and procedure of the Court in criminal cases� as are substantially embodied in s 37 of the Constitution and must be proved guilty beyond reasonable doubt.

N1>(3)�� (Kapi Dep CJ dissenting) Section 333(1) of the Income Tax Act 1959 which provides that in a taxation prosecution an averment contained in the claim is evidence of the matter averred, upon which evidence a prima facie case may be established, is unconstitutional in that it usurps the judicial function in respect of criminal offences.

SCR No 2 of 1980; Re s 14(2) of the Summary Offences Act (Papua) [1981] PNGLR 50.

This was a Reference to the Supreme Court pursuant to s 18(2) of the Constitution which permits the referral of questions �relating to the interpretation or application of any provision of a Constitutional Law�. The questions referred to are set out below.

KIDU CJ AMET HINCHLIFFE JJ: In this Reference pursuant to s 18(2) of the Constitution the National Court has posed the following questions for determination by this Court:

N2>1.�� Is the �taxation prosecution� commenced by a writ of summons �prosecuted and proceeded with in accordance with the usual practice and procedure of the Court in civil cases�, pursuant to s 327 of the Act, unconstitutional as being inconsistent with the s 37(4)(a): Constitutional rights of �a person charged with an offence�?

N2>2.�� Is s 333(1) of the Act unconstitutional as being inconsistent with the s 37(4)(a) Constitutional rights of �a person charged with an offence�?

N2>3.�� If answers to 1 and 2 above be both negative, is the combined operative effect of s 327 and s 333(1) unconstitutional as being inconsistent with the s 37(4)(a) Constitutional rights of �a person charged with an offence�?

The Reference arises from a series of taxation prosecutions by the Chief Collector of Taxes pursuant to s 312 and s 323 of the Income Tax Act 1959 (as amended to date). The prosecutions were commenced by writs of summons pursuant to s 327 of the above-mentioned Act �the Act�. This provision is in the following terms:

�A taxation prosecution in the National Court may be commenced, prosecuted and proceeded with in accordance with any rules of practice established by the Court for Crown suits in revenue matters or in accordance with the usual practice and procedure of the Court in civil cases or in accordance with the directions of the Court or a Judge.�

The writs were specially endorsed under O 8, r 24 of the civil Rules of the National Court. The defendants defaulted in filing their defences. The plaintiff/prosecutor thus moved pursuant to these Rules to enter default judgments. This action was the equivalent in a criminal prosecution of asking the National Court to enter verdicts of guilty.

Part VII of the Act contains the relevant provisions under which the prosecutions were instituted. They provide as follows:

In this Part, �taxation prosecution� means a proceeding instituted in the name of the Chief Collector, in pursuance of Section 323 of this Act, for the recovery of a pecuniary penalty under this Act.

(1)�� A proceeding for the recovery of a pecuniary penalty under this Act may be instituted in the name of the Chief Collector by action in the National Court.

(2)�� Where the penalty sought to be recovered does not exceed K1,000.00, or the excess is abandoned, the proceeding may be instituted in the name of the Chief Collector by information in a court of summary jurisdiction.

A taxation prosecution in the National Court may be commenced, prosecuted and proceeded with in accordance with any rules of practice established by the Court for Crown suits in revenue matters or in accordance with the usual practice and procedure of the Court in civil cases or in accordance with the directions of the Court or a Judge.

(1)�� In a taxation prosecution, an averment of the prosecutor or plaintiff contained in the information, complaint, declaration or claim is evidence of the matter averred.

(a)�� evidence in support or rebuttal of the matter averred or of any other matter is given; or

(b)�� the matter averred is mixed question of law and fact, but in that case the averment is evidence of the fact only.

(3)�� Any evidence given in support or rebuttal of a matter so averred shall be considered on its merits, and the credibility and probative value of that evidence shall be neither increased nor diminished by reason of this section.

(b)�� proceedings for an indictable offence or an offence directly punishable by imprisonment.

(5)�� This section does not lessen or affect any onus of proof otherwise falling on the defendant.�

The �prosecutions� as commenced by writs of summons, �prosecuted and proceeded with, in accordance with the usual practice and procedure of the Court in civil cases�, pursuant to s 327 and especially endorsed under O 8, r 24 of the National Court Rules, all had statements of claim seeking orders that were in the following standard form:

N2>1.�� The defendant is an employer pursuant to s 299g of the Income Tax Act 1959 as amended.

N2>2.�� The defendant is obliged pursuant to s 299g to register with the Plaintiff as a Group Employer.

N2>3.�� The defendant is obliged under the provisions of s 299g(4)(f)(i) and (ii) to furnish to the Chief Collector of Taxes not later than the 14th day of February in each year, a copy of the Statement of Earnings issued by him to each employer in respect of Salary or Wages paid by him and the total of the amount deductions made by him as a group employer during the period of twelve (12) months that ended 31st December in the preceding year; and a statement in a form approved by the Chief Collector of Taxes signed by group employer, reconciling the total of the amounts of the deductions shown in each of those copies of Statement of Earnings with the total of the amounts paid to the Chief Collector of Taxes in respect of those deductions.

N2>4.�� Pursuant to s 299g(9) and (10) s 299l, the plaintiff is empowered to seek the imposition of a penalty.

The Defendant has failed to furnish to the Chief Collector of Taxes the Statement of Earnings and Reconciliation Statements for the years as set out below:

N2>2.�� That the Defendant pay such penalty as may be imposed by the Honorable Court within 21 days of the date hereof;

N2>3.�� Such further or other Order as to this Honorable Court seems fit.�

The first issue which arises is the question of the nature of a �taxation prosecution� � that is, whether it is a civil proceeding or a criminal proceeding. Although s 327 permits the prosecution to be commenced by writ of summons, prosecuted and proceeded with in accordance with the usual practice and procedure of the Court in civil cases, it is to the substantive provisions creating the cause of action that recourse must be had to determine or ascertain the true nature of the proceedings. The statement of claim relies upon s 299g(9) and s 299g(10) as empowering the plaintiff to seek the imposition of a penalty.

�An employee who contravenes, or fails to comply with a provision of this section that is applicable to him is guilty of an offence.�

�The penalty for failure to comply with any one of the requirements of Subsection (4)(a), or with the requirements of that paragraph as varied in pursuance of Subsection (6), is a fine of not less than K500.00 and not exceeding K2,000 or imprisonment for a term not exceeding six months, and the penalty for any other offence under this section is a fine of not less than K200.00 and not exceeding K2,000.�

In the cases under reference each defendant was alleged to have failed to comply with the provisions of s 299g(4)(f)(i) and s 299g(4)(f)(ii), which require that:

�A group employer shall not later than 14th February in each year, furnish to the Chief Collector:

(i)�� a copy of each statement of earnings issued by him to each employee in respect of salary or wages paid by him and the total of the amount of deductions made by him as a group employer during the period of twelve months that ended 31 December in the preceding year; and

(ii)�� a statement in a form approved by the Chief Collector signed by the group employer, reconciling the total of the amounts of the deductions shown in each of those copies of statements of earnings with the total of the amounts paid to the Chief Collector in respect of those deductions.�

It is abundantly clear that in each case under reference the defendant was alleged to have contravened or failed to comply with s 299g(4)(f)(i) and (ii) and therefore was �charged� with the commission of an �offence� for which he was liable to be found �guilty of an offence� and �convicted� pursuant to s 299 g(9), and �penalised� under s 299g(10).

Section 315(1) also provides confirmation that a �group employer� found guilty of offending against s 299g(9) is �convicted of an offence�:

�Upon the conviction of a person for an offence against Section 313 or 314 or a Group Employer against Section 299g(9) or Section 284, as the case may be, the court may order him within a time specified in the order to do the act that he has failed or refused or neglected to do, and a person who does not duly comply with such an order is guilty of an offence.

Penalty: A fine of not less than K200.00 and not exceeding K4,000 � plus K50.00 for each day during which the failure, refusal or neglect continues.�

Section 337 which prescribes the �treatment of convicted offenders� also confirms this status:

N2>�(1)�� where a pecuniary penalty is adjudged to be paid by a �convicted person� the court shall:

(a)�� commit the offender to a corrective institution until the penalty is paid;

(b)�� release the offender upon his giving security for the payment of the penalty; or

(c)�� exercise for the enforcement and recovery of the penalty any power of distress or execution possessed by the court for the enforcement and recovery of penalties or money adjudged to be paid in any other case.�

There cannot be any doubt that a defendant was �charged with an offence� for which he was liable to be �found guilty�, �convicted� and �penalised� pursuant to s 299g(9) and s 299g(10). He was further liable to be �deprived of his personal liberty� by application of s 337. There cannot be any doubt whatsoever that the �prosecution� was in actual fact and law in the nature of �criminal proceedings�. We do not consider that by disguising in a procedural provision such as s 327 that the true nature and character of the proceedings which the words, �guilty of an offence� naturally ascribe to the conduct, can be so easily altered.

Once it is acknowledged that a defendant is �charged with an offence� and the proceedings are criminal, with all the attendant criminal sanctions and consequences, then there cannot be any doubt that all the relevant Constitutional rights and safeguards apply. The two principle provisions are s 37 of the Constitution on the �protection of the law� and s 42 on �liberty of the person�.

N2>�(1)�� Every person has the right to the full protection of the law, and the succeeding provisions of this section are intended to ensure that that right is fully available, especially to persons in custody or charged with offences.

N2>(3)�� A person charged with an offence shall, unless the charge is withdrawn, be afforded a fair hearing within a reasonable time, by an independent and impartial court.

(a)�� shall be presumed innocent until proved guilty according to law, but a law may place upon a person charged with an offence the burden of proving particular facts which are, or would with the exercise of reasonable care be, peculiarly within his knowledge; and

(e)�� shall be permitted to defend himself before the court in person or, at his own expense, by a legal representative of his own choice, or if he is a person entitled to legal aid, by the Public Solicitor or another legal representative assigned to him in accordance with law.

N2>(5)�� Except with his own consent, the trial shall not take place in his absence unless he so conducts himself as to render the continuance of the proceedings in his presence impracticable and the court orders him to be removed and the trial to proceed in his absence, but provision may be made by law for a charge that a person has committed an offence the maximum penalty for which does not include imprisonment (except in default of payment of a fine), to be heard summarily in his absence if it is established that he has been duly served with a summons in respect of the alleged offence.

N2>(10)�� No person shall be compelled in the trial of an offence to be a witness against himself.� (Our emphasis.)

We reiterate that once it is acknowledged that a defendant is in actual fact �charged with an offence� and that the prosecution is criminal, then the whole of the Constitution, s 37, ensures that the right to the full protection of the law is fully available, per s 37(1), apply. These include, inter alia, s 37(3), (4)(a), (e), (5) and (10), set out above.

We agree with the dissenting views of Amet J in Chief Collector of Taxes v Blasius Dilon [1990] PNGLR 414 that the constitutional validity of the whole �prosecution� under the Act depends upon the proper construction to be given to the application of s 37(4)(a) to the relevant provisions of the Act. It is a threshold question which arises at the very outset � that is, whether it is constitutional to in effect �charge� a person with an �offence� by a civil process and to �prosecute� to a �finding of guilt�, �conviction� and the imposition of a pecuniary penalty �in accordance with the usual practice and procedure of the Court in civil cases�. The very commencement of the �prosecution� by a writ of summons, with all of the attendant pleadings and so forth pursuant to the National Court Civil Rules, raises the constitutional issue.

A careful examination of the relevant provisions of the Act, pursuant to which the �prosecutions� are instituted, quite clearly shows that it is vitally important to determine the true nature and character of this �taxation prosecution� under the Act. That determines whether or not s 37(4)(a), in particular, amongst the other provisions, has application to the �prosecution�.

Having determined the true nature of the �prosecution� as a criminal one where a defendant is �charged with an offence�, then no doubt arises that s 37 as a whole and, in particular, s 37(4)(a) is relevant and applies. The whole of s 37 and subs (4)(a) in particular, applies to the whole criminal process of �a person charged with an offence�. It is not expressed to be confined to the proof of guilt only. It is a right fully available to �a person charged with an offence� at the very outset to the final determination of guilt or innocence.

The full protection of the law and in particular the rights of �a person charged with an offence� are available to the whole process, which is �criminal�. The combined effect of the several provisions of s 37, in our view, must of necessity mean that all of the rights and �due process� of a criminal charge apply from start to final disposition. There is no basis for the interpretation that the full protection of the law applicable to a criminal proceeding does not apply to the determination of a prima facie case but only to the final determination of guilt or innocence. They are either available and applicable for all purposes or not at all. We will amplify on how the rights apply to the determination of the prima facie stage in discussing the impact of s 333(1) in question 2.

�A person charged with an offence shall, unless the charge is withdrawn, be afforded a fair hearing within a reasonable time, by an independent and impartial court.� (Our emphasis.)

The right to be afforded a fair hearing requires the following minimum procedures:

N2>(a)�� the defendant be given the opportunity to plead to the charge in person, (subject to s 37(5)),

N2>(b)�� that the defendant be given the opportunity to hear the allegations made against him, by admissible evidence,

N2>(c)�� the defendant be given the opportunity to question those persons who make the allegations against him, and

N2>(d)�� the defendant be given the opportunity to give and call evidence in reply to the allegations.�

To commence a �taxation prosecution� by a writ of summons, prosecute and proceed with it in accordance with the practice and procedure of a civil case, pursuant to s 327 of the Act is unconstitutional as it conflicts with s 37(3) of the Constitution. To the extent that rules of practice and procedure permitted in a civil case permit default judgments to be signed in the absence of a defendant, which in actuality is a �finding of guilty of an offence� and a �conviction�, the whole process permitted by s 327 is unconstitutional. This does not comply with the requirements of a �fair hearing� within the meaning of s 37(3).

�A person charged with an offence shall not be tried in his absence except in three exceptional circumstances:

(b)�� he so conducts himself as to render the continuance of the proceedings in his presence impracticable and the court orders him to be removed and the trial to proceed in his absence,

(c)�� provision may be made by law for a charge to be tried summarily, the maximum penalty for which does not include imprisonment (except in default of payment of a fine).�

Once again, to commence the prosecution of a person charged with an offence by a writ of summons in the National Court, with one of the attendant consequential procedures that a default judgment can be obtained in default of a pleading and in the absence of the defendant, the legal effect of which in reality is to record a finding of �guilty of an offence� and conviction, pursuant to s 299g(9), is contrary to s 37(5). To the extent that s 327 permits this it is unconstitutional: see Peter v South Pacific Brewery Ltd [1976] PNGLR 537 and SCR No 1a of 1981; Re Motor Traffic Act.

We commence from the acknowledged premise that �a person has been charged with an offence�. What does the expression �shall be presumed innocent� mean?

The right to the presumption of innocence is to render it �incumbent upon the prosecution to prove every fact and circumstance constituting the offence charged�.

The no case practice serves a separate and essential purpose: it is a procedural reinforcement to the presumption of innocence in s 37(4)(a), and to the accused�s right to silence in s 37(10). These citizen�s rights entail that the State must make out its case by the evidence it adduces, it cannot rely on making good any defects in its own case, by cross-examination of the accused or his witnesses: The State v Kuriday (Kearney Dep CJ, 18 June 1981 (N 300) unreported).

The �prosecution� by the procedure of a writ of summons and all the attendant civil case practice and procedure pursuant to s 327 infringes and denies a defendant these fundamental safeguards of a criminal trial. The right to the presumption of innocence is qualified and undermined by denying him the right to apply for a �no case to answer� ruling. Under the civil process a defendant is �compelled� to give �discovery�, provide �further and better particulars� of his �defence� and to file a �defence�, in default of which he is liable to be found �guilty of an offence� by the �default judgment� procedure. He is further required to answer �interrogatories�. All of these processes are foreign to the right to �presumption of innocence�. Section 327 of the Act which purports to empower this is therefore unconstitutional.

In SCR No 2 of 1980; Re s 14(2) of the Summary Offences Act [1981] PNGLR 50 at 53, Kearney Dep CJ said:

�The main thrust of the Constitution, s 37(4)(a) is to place upon a prosecutor the burden of proving the guilt of a person charged with an offence. In my opinion the phrase �according to law� refers to the whole body of law in the country, as exhaustively defined in the Constitution, s 9; it includes both the statute law and the underlying law.

By the underlying law that burden on the prosecutor is discharged only when he proves beyond a reasonable doubt that the defendant is guilty; that is, that the defendant is criminally responsible for the offence charged.�

In SCR No 1 of 1980; Re s 22A(b) of Police Offences Act (Papua) [1981] PNGLR 28 at 32, Greville Smith J, said:

�In my opinion �according to law� means in the context of s 37(4)(a) according to the common law in England which embodied that concept, and it was appropriate to use the expression �according to law� because the relevant law, was part of the common law in England which simultaneously with the coming into effect of s 37(4)(a) (together with the rest of the Constitution) became part of the �underlying law� of this country by way of s 20(2) of the Constitution and Sch 2.2(1) thereto. It is not that that part of the �Common Law in England� of which I speak became �the law� by way of s 20(2) and Sch 2.2(1), it became so directly by way of s 37(4)(a) of the Constitution. In the absence of s 37(4)(a) it would have become so by way of Sch 2.2(1).�

In SCR No 1a of 1981; Re Motor Traffic Act (at 136), Kearney Dep CJ again dealt with the impact of s 37(4)(a).

�I now turn to the impact of the Constitution, s 37(4)(a). With great respect, I do not agree with the effect of s 37(4)(a) as set out by Greville Smith J in SCR No 1 of 1980, quoted by the Chief Justice at 127. Had the Constitution intended directly to entrench by s 37(4)(a) the concept of presumption of innocence as it stood in the common law of England on 16 September 1975, it surely would have clearly so stated. The term �law� is defined by the Constitution Sch 1.2(1) as including the underlying law; and both Andrew and Miles JJ in SCR No 1 of 1980 construed the word �law� in s 37(4)(a) as encompassing all the laws of the country including the underlying law, and thus do not accept the approach of Greville Smith J. For myself, I adhere to the meaning of the phrase �according to law� I set out in SCR No 2 of 1980 quoted by the Chief Justice at 128. In that judgment, both Andrew and Miles JJ appear also to adopt that view of s 37(4)(a). It seems to me, with respect, that it is quite competent for Parliament to make laws on matters which are relevant to proof of guilt, such as the mode and standard of proof in criminal cases, provided those laws fall within its law-making competence and do not invade matters exclusively within the competence of other arms or organs of government, and are otherwise consonant with the Constitution. I might add that as a result of countless decisions over the last six years, I think it is now clearly part of the underlying law of this country, appropriate to its circumstances, that guilt must be proved beyond reasonable doubt. The underlying law is shaped as much by the way it is practised as by judicial dicta.�

We too do not accept the approach and construction by Greville Smith J. We agree with Kearney Dep CJ that the phrase �according to law� refers to the whole body of law in the country, as exhaustively defined in the Constitution s 9; it includes both the statute law and the underlying law. By the underlying law that burden on the prosecutor is discharged when he proves beyond a reasonable doubt that the defendant is guilty; that is, that the defendant is criminally responsible for the offence charged. We agree with Kearney Dep CJ that the �underlying law is shaped as much by the way it is practised as by judicial dicta�, and that as a result of countless decisions over the years since Independence, it is now clearly part of the underlying law of this country, appropriate to its circumstances, that guilt must be proved beyond reasonable doubt. Any Act which is intended to alter this rule must say it in explicit terms.

We adopt also the next paragraph of Kearney Dep CJ�s judgment (at 136), as being entirely apposite to the issues before us. That is:

�Bearing in mind the nature of the essential judicial function, it appears to me that for an Act which provides for a mode of proving guilt, to be valid in terms of the Constitution s 37(4)(a), its provisions must be such as to be capable of enabling a finding of guilt to the standard currently required by the underlying law, by a rational process, by an independent and impartial court charged under the Constitution, s 158(a), with the paramount duty of dispensing justice. I consider that the provisions referred to do not meet that test, and accordingly I respectfully agree with the Chief Justice that they are struck down by s 37(4)(a).�

In the same judgment, Kapi J (as he then was) (at 138) purported to agree with Kearney Dep CJ in this way:

�In relation to the question of the proper effect of the adaptation of the common law principle of presumption of innocence through s 37(4)(a) of the Constitution, I adopt the reasoning of the Deputy Chief Justice. The expression �according to law� in s 37(4)(a) does not adopt any particular principle of law. It simply means �according to the laws of Papua New Guinea�. One has to go to these laws, which are set out under s 9 of the Constitution. The relevant provision in this case is s 9(f) � underlying law. Strictly speaking, underlying law is different from the common law of England. Common law embodies the principles which apply in England. Underlying law embodies the principles established under Sch 2 of the Constitution; so it includes adoption of custom under Sch 2.1, adoption of common law principles under Sch 2.2, creation of new principles under Sch 2.3 and the development of these principles under Sch 2.4. See also my judgment in SCR No 4 of 1980; Re Petition of M T Somare [1981] PNGLR 265 at 284, the first Vanuatu judgment. Section 9(f) and s 37(4)(a) (in particular context) speak of underlying law as processed and established under Sch 2 of the Constitution and not of the raw principles of the common law of England.

The proper view is that the presumption of innocence is applied in Papua New Guinea as a part of the underlying law through Sch 2.2 of the Constitution.�

We said Kapi J (as he then was) �purported� to agree with Kearney Dep CJ�s reasoning, because we do not consider that on a careful reading they mean the same thing. Kearney Dep CJ stated (at 136) after disagreeing with Greville Smith J and adhering to what he had said in SCR No 2 of 1980:

�I might add that as a result of countless decisions over the last six years, I think it is now clearly part of the underlying law of this country, appropriate to its circumstances, that guilt must be proved beyond reasonable doubt. The underlying law is shaped as much by the way it is practised as by judicial dicta.�

We consider that this is the correct approach. We would consider that a further extension of this interpretation is that �proof of guilt of a criminal offence� �according to law� means according to the �criminal law� under statute or which has been shaped and developed as part of the underlying law pursuant to Sch 2.2 and Sch 2.3 by judicial pronouncements. We too are of the view that as a result of countless decisions of the National and Supreme Courts since Independence, it is now clearly part of the underlying law of Papua New Guinea, appropriate to its circumstances that �a person charged with an offence� which is criminal in nature because it carries criminal sanctions, must be tried �in accordance with the usual practice and procedure of the Court in criminal cases� as are substantially embodied in s 37 of the Constitution.

One of the substantive principles of the criminal procedure, which has become part of the underlying law, is that a person charged with an offence must be proved guilty beyond reasonable doubt. The principles are embodied in the right to �a fair hearing�, pursuant to s 37(3), (5) and (10). Yet another right of a person charged with an offence is the right to cross-examine the witnesses making the accusation. This has been interpreted to be embodied in s 37(3), the right to �a fair hearing�.

We consider also that another procedure of the right to �a fair hearing� and �presumption of innocence until proved guilty according to law� under the criminal process that has become part of the underlying law of Papua New Guinea, is that evidence of the allegations must be adduced, generally speaking, orally and be subject to the right of cross-examination. One very important procedure in the criminal procedure which has become a very vital part of the criminal trial process is the �no case to answer procedure� which reinforces and is inferentially embodied in the right to the presumption of innocence under s 37(4)(a). A procedure which purports to deny this right to avail oneself of the benefit of a �no case to answer procedure� in a trial is an infringement of the right to the �presumption of innocence�, and is therefore unconstitutional.

Another fundamental right in the criminal process, either prior to being charged, after being charged or at the time of trial is the right to silence and right against self-incrimination, which are embodied in s 37(10), and reinforced by s 37(4)(a). A procedure which compels or obliges an accused person to file a �defence� prior to the trial in court or to give �further and better particulars of the defence� or to give �discovery� or to �answer interrogatories� is in contravention of the right to silence and right against self-incrimination. Such procedural requirements relate to civil suits and are foreign to a criminal prosecution.

All of these principles of criminal procedure have become part of the underlying law pursuant to Sch 2.2 and Sch 2.3. They have also by virtue of the relevant constitutional provisions been elevated and given constitutional right status. So the underlying law principles of law relating to criminal procedure before trial or at the trial of a person �charged with an offence�, as are construed to be embodied in the phrase �according to law�, in addition to the standard of proof being beyond a reasonable doubt, are elevated to constitutional right status. If these principles were only to have underlying law status under Sch 2.2 and Sch 2.3 then s 37(4)(a) becomes meaningless and of no consequence. Section 37(4)(a) can be done without, for one can apply them by adoption and development under Sch 2. And indeed prior to Independence the principles and rights were embodied in the �common law� and the Bill of Rights. It is a deliberate choice by the founding fathers of the Constitution to elevate these rights and principles to constitutional rights status, and it is the duty of this Court to give meaning to the clear intent of the legislature.

Consequently no ordinary statute can stipulate different procedures, manner of proof of allegations and standard of proof against a person charged with an offence from those that have been adopted, developed and elevated to constitutional law status. To do so would be unconstitutional against these provisions.

In the end result to the extent that s 327 authorised a �taxation prosecution� to be �commenced, prosecuted and proceeded with, in accordance with the usual practice and procedure of the Court in civil cases�, which in this instance is by a writ of summons with the whole attendant practice and procedure of �civil cases� in accordance with the Rules of the National Court, it is unconstitutional as against several sections of the Constitution including s 37(3), (4)(a), (5) and (10).

Is s 333(1) of the Act unconstitutional as being inconsistent with the s 37(4)(a) Constitutional rights of �a person charged with an offence�?

This provision stipulates that the averment of the prosecutor contained in the complaint or claim is �evidence of the matter averred�. This in effect means, in the criminal process, that the allegation contained in the information is evidence of the facts alleged. The allegation in the information becomes �evidence� of the elements of the offence charged, in effect. By analogy and further extension, without the right of the defendant to cross-examine and without calling of any oral or other admissible documentary evidence, by the prosecution, this becomes evidence, sufficient to establish a �prima facie case� against an accused. This is a contravention of the right to the �presumption of innocence� and is therefore unconstitutional.

We further consider that any Act which requires a court to conclude that mere allegation (averment) in a charge (information or claim) is evidence of the facts alleged, and sufficient to found a �prima facie� case, without the court first being required to be satisfied, in its independent judgment, that there was sufficient evidence of the elements of the offence charged to so found a �prima facie� case against the defendant, amounts to a usurpation by the legislative arm of a function reserved by the Constitution to the judicial arm of the government; and, is accordingly unconstitutional and a nullity and of no legal effect. More fundamentally, it would be unconstitutional because it amounts to an exercise by the legislature of the judicial authority of the people in respect of criminal offences, which by the Constitution, s 158(1), is vested exclusively in the National Judicial System. It is of the essence of the judicial function that the court, when considering whether there is a prima facie case to be answered, brings to bear its own independent judgment as to whether sufficient evidence has been adduced, in the admissible form, to establish the elements of the offence charged. The fact that the evisceration of the essential judicial function, in considering whether a prima facie case has been made out, is achieved by the surgical knife of procedure does not affect the character of what was done; what cannot be done directly, cannot be done indirectly. Here there is, in truth, no judicial function for the court to perform; the legislation has wholly absorbed the judicial process.

Furthermore, in the factual circumstances of this particular group of cases, where because the defendants had not filed defences and because the writs of summons are specially endorsed under O 8, r 24 of the civil rules of court, the �prosecutor� has applied for �default judgment�, the �averment� performs a twofold function. First it establishes the prima facie case, and secondly in the absence of the defendants filing their defence, it becomes sufficient to found �guilt� of the defendant �beyond reasonable doubt� by the obtaining of default judgment.

This would be the effect of the �hybrid� process which the Chief Collector of Taxes was advocating in his submission in partially conceding that because the �prosecution� is of �an offence�, that the proof of guilt has to be beyond reasonable doubt but that the commencement by the writ of summons and the procedure of averment by virtue of s 333(1) are not unconstitutional. Suffice to say, such a contention and any acceptance of such a novel proposition is quite unsubstantiated and misconceived. It is quite unheard of in the criminal prosecution process that has become part of the underlying law and constitutional law of this country.

To obtain a criminal verdict of �guilty� by a mere averment, in the absence of the defendant, by the �default judgment� �practice and procedure of a civil case� is unconstitutional. It breaches a number of fundamental constitutional rights under s 37. Section 333(1) of the Act which purports to authorise this procedure is unconstitutional because it amounts to a usurpation of the independent judicial function reserved for the judicial arm of the government. It also offends against the presumption of innocence.

We have had the benefit of reading in draft the judgment of the Deputy Chief Justice. With the greatest respect we find ourselves in disagreement with our brother in fundamental respects. Firstly, there is a misconception of the facts upon which the reference was made. As we have recited, the plaintiff had moved for �default judgment� because the defendants had failed to file a defence, the writs being specially endorsed. The �trial� had therefore commenced, and the plaintiff was �prosecuting and proceeding with the prosecution in accordance with the usual practice and procedure of the court in civil cases� in accordance with the National Court Rules. The questions were properly raised and referred, they were not premature or hypothetical.

The second misconception, with respect, is that the Supreme Court does not have power to sever a question properly referred by the National Court under s 18(2) of the Constitution. It is not the function of the Supreme Court to substitute its own question for the one referred and to answer it. The proper course is to refer the question back to the National Court if it is considered to have been the wrong question.

We hold that the majority decision in Chief Collector of Taxes v Blasius Dilon is wrong and is hereby overruled.

KAPI DCJ: This is a Supreme Court Reference under s 18(2) of the Constitution by the National Court. This Reference arose out of a series of cases commenced by writ of summons by the Chief Collector of Taxes. The Chief Collector of Taxes claims that the defendants had failed to furnish their statement of earnings and reconciliation statements contrary to s 299g of the Income Tax Act 1959 and therefore seeks the imposition of a penalty on the defendants.

It is not clear from the Reference whether any further pleadings had taken place and whether the trial judge had commenced the trial on the merits of the claims. I have examined the sample file upon which this Reference has been based (WS No 267 of 1989). The following pleadings have been filed:

The defendant did not file notice of intention to defend and no defence was filed. The plaintiff has not filed a motion to enter default judgment in accordance with O 12, Div 3 of the National Court Rules. Instead the plaintiff set the matter down for trial pursuant to the provisions of O 10, Div 1 of the Rules. The matter was set down for trial on 21 September 1990 by the Registrar. I have examined twenty-four similar actions brought by the plaintiff and which were pending at the time of the reference. The pleadings in each of these actions reveal a similar set of facts:

A notice of intention to defend and a defence has been filed in respect of action, WS No 653 of 1990. In respect of this matter the plaintiff has also requested for trial to be set down and this has been given a trial date.

It is apparent from the pleadings in all these cases and the rules of court that the plaintiff seeks to go to trial in accordance with O 10, Div 2 of the Rules. That is to say the plaintiff will lead evidence to prove his case. In these circumstances, the plaintiff has chosen not to end this litigation by any of the pre-trial procedures provided by the Rules such as default judgment or summary judgment.

These matters have to be raised in a particular case before it can be referred to the Supreme Court for an opinion. To put these questions in this general way to the Supreme Court is to do so by way of hypothetical issue. This cannot be done in a s 18(2) reference: see SCR No 3 of 1982; Re ss 57 and 155(4) of the Constitution [1982] PNGLR 405, SCR No 5 of 1982; Hugo Berghuser v Joseph Aoae [1982] PNGLR 379 at 383. I adopt what I said, in SCR No 5 of 1985; Re Raz v Matane [1985] PNGLR 329 at 339-341, on when an interpretation or application of a constitutional law issue arises.

Amet J who is the trial judge and who referred the matter to the Supreme Court has explained in the course of considering this matter that on 21 September 1990, when these actions came before him, the plaintiff was not seeking to try the matter, that is, to call evidence to prove the claim, but that he was making a verbal application to enter judgment in default in accordance with O 12, Div 3 of the Rules. It is not necessary for me to consider this because the issue raised by the default judgment procedure relates to s 37(5) of the Constitution. This is not a constitutional issue raised by the Reference. The Constitutional issues raised by the reference are confined to section 37(4)(a) of the Constitution.

I find the facts to be this. The matter of WS No 267 of 1989 was set down for hearing on the merits. At the hearing, the defendant was not present. At this stage of the proceedings, the issues that can arise with regard to the Constitution are:

N2>(1)�� Whether the commencement of a taxation prosecution by way of writ of summons is inconsistent with s 37(4)(a) of the Constitution?

N2>(2)�� Whether the trial of a taxation prosecution without the defendant is inconsistent with s 37(5) of the Constitution?

It is clear that the first issue is raised by the reference but the second issue does not come within the ambit of any of the questions referred to in the Reference. This Court cannot address this issue. It has no power to amend the Reference. Likewise, it cannot address any other constitutional issue that is not raised by the Reference and not argued before this Court. I have had the advantage of reading the draft opinion of the majority and they deal with s 37(3), (4)(e), (5) and (10) of the Constitution. With respect, these constitutional issues are different and do not come within the ambit of 37(4)(a) of the Constitution. I therefore cannot express any opinion in relation to these provisions.

I now deal with the question of whether the commencement of a taxation prosecution by way of writ of summons pursuant to s 327 of the Income Tax Act is inconsistent with s 37(4)(a) of the Constitution?

It is clear from the provision that a taxation prosecution may be commenced, in accordance with three alternatives:

N2>(i)�� in accordance with any rules of practice established for Crown suits in revenue matters, or

N2>(ii)�� in accordance with usual practice and procedure of the Court in civil cases, or

In this Reference we are concerned with a taxation prosecution which has been commenced in accordance with the usual practice and procedure of the court in civil cases. In so far as the commencement of a taxation prosecution is concerned, what s 327 of the Income Tax Act does is simply adopt the usual practice and procedure of the court in civil cases. What is practice and procedure? In Acting Public Solicitor v Uname Aumane [1980] PNGLR 510 at 532, I said:

�Matters of practice and procedure may be defined to include the form and manner of conducting all litigation before the courts. This includes everything that leads up to the commencement of litigation in courts to final judgment and to its enforcement and appeal.�

It is clear from this meaning that what s 327 of the Income Tax Act adopts is the manner and form of conducting litigation in the National Court. In my view, it does not deal with other substantive matters of law, for example, the onus of proof, the degree of proof, etc. Those are matters which are dealt with by other laws.

An examination of the writ of summons is necessary. The writ of summons names the plaintiff and the defendant and states that a claim is made against the defendant by the plaintiff and informs the defendant to file a notice of intention to defend within thirty days of the receipt of the writ of summons. The writ of summons also sets out in the statement of claim the matters on which it relies to support the claim. In essence, the writ of summons makes an allegation, sets out the particulars of the allegation, notifies the defendant and gives him the opportunity to consider defending the claim.

By contrast, a person charged with an offence in a criminal matter is commenced by way of an indictment in accordance with the Criminal Practice Rules 1987. An examination of the form of indictment reveals that the indictment is in the name of the State against the accused person. The indictment then sets out the offence with which the person is charged, and is signed and presented by a prosecutor. By contrast, fewer details appear in an indictment than in a writ of summons. The question which arises is whether the form of writ of summons as outlined above is in any way inconsistent with the terms of s 37(4)(a) of the Constitution.

See SCR No 1a of 1981; Re Motor Traffic Act (at 127) per Kidu CJ. The proviso under s 37(4)(a) is not relevant in this case.

There appear to be two schools of thought on this matter. The first is that the presumption of innocence is expressly adopted by the Constitution and therefore is a matter of constitutional law: see Greville Smith J in SCR No 1 of 1980; Re s 22a(b) of Police Offences Act (Papua) [1981] PNGLR 28 at 38-39; Kidu CJ, Greville Smith J and Andrew J, in SCR No 1 of 1981; Re Inter-Group Fighting Act 1977 [1981] PNGLR 151 and Eiserman v Nanatsi [1978] PNGLR 457 per Wilson J. On the other hand, it is contended that presumption of innocence is qualified with the words �according to law� and is therefore a principle applicable in this jurisdiction not by express provision of s 37(4)(a) but in accordance with the common law which has been adopted as part of the underlying law in Papua New Guinea: see Kearney Dep CJ in SCR No 1a of 1981; Re Motor Traffic Act (at 136) and Kapi J (at 138-139).

I have now considered this matter again in the light of this case and I have come to the conclusion that I fell into error when I held the view that the words �according to law� related to the words �shall be presumed innocent�. The proper view is as set out by the Chief Justice and that is, that the presumption of innocence under s 37(4)(a) stands on its own and is separate from proving the charge according to law. Therefore, what I said in SCR No 1a of 1981; Re Motor Traffic Act (at 138-139) cannot relate to the presumption of innocence. However, what I said there will be applicable to the second part of s 37(4)(a) which I will come to consider in the next section.

The presumption of innocence has enjoyed long-standing recognition at common law. This principle is established by the leading case of Woolmington v Director of Public Prosecutions [1935] AC 462 at 481-482 per Viscount Sankey LC. This has received wide acceptance and many countries have adopted the principle in their constitutions including the Universal Declaration of Human Rights of the United Nations. Presumption of innocence means:

N2>2.�� The onus is on the prosecution to prove that a person has committed a crime.

The next question that arises is the meaning and the scope of the words �until proved guilty according to law�.

N2>(a)�� The evidence that is required to prove that a person has committed a crime;

N2>(d)�� any procedural requirement for hearing relating to evidence such as, for example, whether there is a case to answer at the end of the prosecution case.

These are matters which the Constitution has not adopted expressly as it has done with regard to �the presumption of innocence�. The intention of the framers of the Constitution is clear, that matters of proof are to be governed by �law�. If these matters are not governed by the Constitution, they are governed by other laws.

The question then arises, what is the meaning of the words �according to law�? These words have been used consistently in s 37 of the Constitution. They have been used in s 37(4)(a), s 37(4)(e) and s 37(15) of the Constitution. Section 37(15) has been considered by the Supreme Court in the case of Avia Aihi v The State [1981] PNGLR 81 at 84-85, where the Chief Justice said:

�A person is guaranteed the right to have his conviction and sentence reviewed by a higher court or tribunal but this provision provides that this review must be �according to law�. It was submitted that �according to law� means according to such principles as fair hearing and does not mean putting limitations on time for appeal as s 27 of the Supreme Court Act 1975 does. The Constitutional Planning Committee Report (the CPC Report) does throw some light on what the phrase �according to law� is supposed to mean. (The Constitution itself doesn�t define the phrase). Paragraph 26, p 5/1/5 of the CPC Report reads, inter alia, as follows:

�Firstly we propose the addition of a number of provisions under the head �Provisions to secure protection of law� to give additional rights and protection to individuals. These include the right to appeal in accordance with a law which sets out permissible grounds of appeal; ...�(Emphasis mine.)

At p 5/1/10, par 50: �However, we recommend a number of additional protections of the individual which we believe are important if Papua New Guinea�s system for administering justice is to be one which in fact dispenses justice. These include safeguarding the right of every person convicted of an offence to an appeal to a higher court or tribunal; ...�

The actual recommendation of the CPC is at p 5/1/25, par 13, which reads, �Every person convicted of an offence (including an offence as a detainee) shall be entitled to have his conviction and sentence reviewed by a higher court or tribunal according to law�.

It was said that because s 37 appears in the part of the Constitution headed �Sub Division-B � Fundamental Rights�, s37(15) is an absolute right incapable of being cut down by any ordinary law. This would have been true except for the words �according to law�. The argument that �according to law� here means the review of the conviction and sentence must be according to principles such as fair hearing, hearing within a reasonable time and so forth seems to me to be unnecessarily restrictive of the meaning of the phrase �according to law�.

The term �law� is defined in Sch 1.2(1) as including the underlying law. It seems to me that the term �law� as appearing in s 37(15) of the Constitution means any law applicable to or affecting s 37(15), if a liberal interpretation of s 35(15) is applied as dictated by Sch 1.5 of the Constitution which reads:

(2)�� All provisions of, and all words, expressions and propositions in, a Constitutional Law shall be given their fair and liberal meaning.�

That the right guaranteed by s 37(15) can not be done away with by any Act is not open to dispute. Any Act which purports to do this will be quite clearly unconstitutional. See Constitutional Reference No 2 of 1978; Re Corrective Institutions Act 1957 [1978] PNGLR 404.

This is not such a case. Section 27 of the Supreme Court Act does not prohibit appeals; it merely regulates the right of appeal. In my opinion, s 37(15) itself allows this to be done by subjecting the right to be �according to law�.�

�The first argument is put on a basis of right; that the applicant has a right to have her application considered by this Court. The argument was directed to the scope of the basic right of a convicted person under the Constitution, s 37(15). I consider that that right is not unlimited; in its terms, it contains the seeds of its own limitation in the phrase �according to law�. That phrase, in my opinion, means the same as it does in the Constitution, s 37(4)(a); that is, it refers to the whole of the law of the country, statute and underlying, as exhaustively defined in Constitution, s 9.

A law which imposes time-limits on appeals, such as s 27 of the Act, is not rendered unconstitutional by the Constitution, s 37(15); it is a �law� within the meaning of that word in the phrase �according to law�. It is therefore not surprising that the Constitution itself should contemplate that there will be statutory time-limits on appeal; for example, in s 103(4).�

�What is meant by according to law? In my opinion this phrase refers to the whole body of law defined under s 9 of the Constitution. In reviewing a sentence of a lower court by the appellate court, the conviction and sentence shall be reviewed according to the relevant law under which the person was convicted and sentenced. This phrase also includes the manner in which the appeal is to be dealt with. In the present case this includes the Supreme Court Act which sets out the right of appeal and the right to extend time. The right which may be enforced under this provision is the right of appeal according to law. According to law and in this case, according to the Supreme Court Act, s 27, a person has a right to appeal or make an application for leave to appeal within forty days. According to the Supreme Court Act a person may only have the right to extend time within the forty day period. However, when the forty day limit period has expired and the person convicted has not invoked that right, that person loses the right to come before the court. In other words a convicted person may only enforce this right under s 57 within the forty day limit.�

Section 37(4)(a) came up for consideration in SCR No 1 of 1980; Re s 22a(b) of Police Offences Act (Papua) and in SCR No 2 of 1980; Re s 14(2) of the Summary Offences Act [1981] PNGLR 50. In both cases the words �according to law� in s 37(4)(a) were consistently interpreted to mean the whole body of law in the country as exhaustively defined in s 9 of the Constitution and to include both the statute law and the underlying law. In SCR No 1a of 1981; Re Motor Traffic Act, Kearney Dep CJ and Kapi J adopted a consistent interpretation to the words �according to law�. The Chief Justice (at 128) quoted Kearney Dep CJ with approval as to the meaning of the phrase �according to law�. Andrew J agreed with the Chief Justice and the Deputy Chief Justice.

It is therefore clear from all these cases that the question of proving a person guilty is a matter to be determined by �law�. Section 37(4)(a) does not specifically state that law � one has to go to the laws of Papua New Guinea as set out under s 9 of the Constitution to determine matters concerning proving a charge in a criminal trial.

My position on s 37(4)(a) of the Constitution is now made clear. Presumption of innocence is a matter of constitutional law by virtue of s 37(4)(a). All matters of proof coming within the words �until proved guilty according to law� are determined in accordance with other laws. This is the position taken by Miles J (with whom Andrew J agreed) in SCR No 1 of 1980; Re s 22a(b) of Police Offences Act (Papua) (at 43, 47). Kearney Dep CJ (with whom Andrew J agreed) reached a similar conclusion on the question of standard of proof in SCR No 2 of 1980; Re s 14(2) of the Summary Offences Act (at 53). In SCR No 1a of 1981; Re Motor Traffic Act (at 136) Kearney Dep CJ was at pains to point out that the standard of proof beyond reasonable doubt is now part of the underlying law.

The significance of this will become apparent when I consider question 2. That question raises the issue of whether the procedural requirement of a no case submission (which is a common law procedure in a criminal trial) can be over-ridden by a statute (s 333 of the Income Tax Act)?

Is there anything by way of writ of summons which offends s 37(4)(a) of the Constitution? In my view, there is nothing in the form of a writ of summons which in any way affects any of the matters which I have set out in s 37(4)(a) of the Constitution. The writ of summons simply informs the defendant of the nature of what is alleged against him and gives him an opportunity to defend the allegation.

It has been argued that because the writ of summons commences the action, all the other rules concerning the civil procedure and evidence are also applicable. In particular, it has been argued that the writ of summons would enable the questions of the degree or the standard of proof to be adopted is that which is adopted in civil cases and that is, proof on the balance of probabilities. In my view, question 1 cannot raise the issue of the standard of proof. The trial judge had not reached that stage yet in the trial and therefore it cannot be said to have arisen before the trial judge in order to be referred to this Court. The question of the standard of proof required in a taxation prosecution is not a constitutional issue. It is a question of underlying law. As I have stated before, there is nothing in s 327 of the Income Tax Act which deals with the standard of proof to be applied in a taxation prosecution. As I have stated before, s 327 is only concerned with matters of practice and procedure. The question of standard of proof is a matter which comes within the terms �proved guilty according to law�. One therefore has to go to the law to determine these issues. As these are matters which are dealt with by laws other than the Constitution or an Organic Law, it cannot be said to be raising a constitutional law issue.

In any event it has been conceded by counsel for the Chief Collector of Taxes that, in a taxation procedure, the nature of the offence with which the defendants are charged in these particular cases come within the term �offence� under s 37(4)(a) and therefore by nature are criminal and therefore all matters set out under s 37(4)(a) would apply and by this concession it is conceded that the required degree of proof is that beyond reasonable doubt. I have no reason to doubt that this is the correct law to be applied in Papua New Guinea.

I have reached the conclusion that a writ of summons does not in any way infringe s 37(4)(a) of the Constitution.

Is s 333 of the Act unconstitutional as being inconsistent with the s 37(4)(a) constitutional rights of �a person charged with an offence�?

As I have stated previously in relation to question 1, the trial judge had not reached this point of the trial at which he has been called upon to rule on whether there is any evidence to constitute the elements of the claim, not had he reached the point where he had to consider whether the Chief Collector had adduced sufficient evidence to find the defendants guilty of the offence. Strictly speaking, this question has again been referred prematurely and at this stage is a hypothetical question. The trial judge must proceed with the trial until it reaches the stage of the application of s 333 to the facts of the case. This section can only arise at a point after the plaintiff has closed its case. The plaintiff has not yet been called upon to call evidence. We do not know if he will call evidence or simply rely on the averments. I have already dealt with the issue of when a constitutional issue arises in a s 18 Reference under question 1.

In any case, as to the question of whether there is any evidence of the elements of the claim at the end of the Chief Collector of Taxes� case, this issue was considered in the case of the Chief Collector of Taxes v Blasius Dilon [1990] PNGLR 414. I said (at 417-418):

�The effect of this provision is that any matter averred in a statement of claim is evidence of that matter. I reach the conclusion that this provision establishes only prima facie evidence of the matter averred. It could not be otherwise because, under s 333(2)(a), evidence in support of the averment may be given. Any evidence that may be given in support or rebuttal of a matter averred is not affected by s 333(1). It does not affect any onus on the defendant (s 333(5)) as does s 334 where the onus is on the defendant to show that a taxation prosecution which has been instituted in the name of Chief Collector of Taxes was instituted without the authority of Chief Collector of Taxes. The question is whether the statement of claim contains prima facie evidence of the essential facts constituting the plaintiff�s claim? The claim contains the following averments:

2.�� That he failed to provide a statement of earnings and reconciliation statement for 1987.

These averments deal with mixed questions of law and fact. Under s 333(2) an averment is evidence of the facts only.

By operation of law, the respondent is a group employee under the Act and has failed to provide a statement. That was the prima facie evidence before the trial judge by virtue of s 333(1) of the Income Tax Act 1959 (as amended).�

�The question then arises whether s 37(4)(a) of the Constitution has any relevance to the issue of whether there was any evidence to support the claim at the close of the appellant�s case?

Section 37(4)(a) deals with determination of guilt and innocence and proof of guilt according to law. The trial judge had not reached this stage in these proceedings. This provision has no bearing on the issue of whether there is any prima facie evidence of essential facts constituting the claim. That of course is an issue which must be decided according to law. The law in this regard is s 333(1) of the Income Tax Act 1959.�

In that case, the defendant was present at the trial. The plaintiff called no evidence and the defendant moved the court to dismiss the action. This is the procedure known as the nonsuit in common law or as set out in O 10, r 14 of the National Court Rules. This is the equivalent of the no case submission in a criminal trial. In Dilon�s case, the nature of a taxation prosecution was not an issue and I dealt with the issue in the context of a civil case. The effect of the decision in Chief Collector of Taxes v Blasius Dilon is that s 333 simply removes the duty on the plaintiff to call any evidence if he decides not to call any evidence. If he calls evidence to support all the facts averred, the defendant cannot succeed in any application to dismiss the action. This is an evidentiary provision which puts the plaintiff in an advantageous position. The practical effect of this is that the defendant cannot make an application to dismiss the action under O 10, r 14. As I found in that case, it is within the competency of the Parliament to overrule a principle of underlying law or any delegated legislation such as the National Court Rules.

N2>(1)�� Does s 333 of the Income Tax Act remove the presumption of innocence under s 37(4)(a) and shift it to the defendant?

N2>(2)�� Is it within the competence of the Parliament to deal with questions of evidence before a court?

N2>(3)�� Is it within the competence of the Parliament to practically remove the common law procedure of a no case submission?

As to the first question, I concluded in Chief Collector of Taxes v Blasius Dilon that the presumption of innocence is not affected by s 333 of the Income Tax Act. That in essence it is an evidentiary provision and simply makes it easy for the prosecution to establish a prima facie case. Can it be said that this shifts the onus of proof on to the defendant? The question raised is no different to asking the same question after a court makes a ruling that there is a case to answer in a criminal case. What that means is that there is evidence supporting the essential elements of the offence. It says no more than that. The ruling by the court that there is a case to answer does not shift the onus on to the defendant. I am not aware of any authority which supports this proposition � that the onus of proof shifts upon a ruling that there is a case to answer. The Parliament was not unmindful of the presumption of innocence under s 37(4)(a) of the Constitution. The Parliament addressed this issue in s 333(5) of the Income Tax Act: �This section does not lessen or affect any onus of proof otherwise falling on the defendant.� It could not be said more directly and clearly that this. With respect, I am not convinced by the majority opinion that s 333 shifts the onus of proof on to the defendant.

As to the second matter raised, the issue decided earlier in question 1 that matters of proof and evidence are determined in �accordance with law� and not by the Constitution becomes important. As to how evidence may be led in court, these matters are regulated by common law and are supplemented by the Evidence Act (Ch No 48) (s 2).

Under the combined effect of these laws, in a criminal trial, evidence of crime is led orally and is admitted only in accordance with the rules of admissibility. These are rules subject to change by the Parliament. Let me illustrate. Formally under the District Courts Act (Ch No 40), it was required to have a committal hearing with oral evidence given under oath. The court was then required to rule if there was a prima facie case in order to commit the matter to the National Court for trial. The Parliament amended the law and now provides that there is no need to call oral evidence in the District Court and statements of witnesses not under oath are admissible. This evidence is admitted by virtue of the law. The nature of the evidence admitted remains to be prima facie and liable to be tested at the trial. In the same way, according to the law (s 333 of the Income Tax Act), the statements of the Chief Collector of Taxes contained in the averments are admissible at the trial. That is the law.

The averments simply amount to prima facie evidence. Section 333 of the Income Tax Act does not put the matter any higher than that. If in a case, the Chief Collector of Taxes does not call any other evidence but relies on the averments, the only benefit he gets from s 333 is prima facie evidence. The question then arises whether that evidence is sufficient to find beyond reasonable doubt that a defendant is guilty of the offence. As I understand the underlying law relating to the �standard of proof� evidence, such as under s 333(1) of the Income Tax Act, which simply remains an allegation without any cross-examination can hardly satisfy the requirement of the standard of proof in a criminal trial.

Section 333 of the Act does not have the same effect as s 19ab(2)(e)(iii) of the Motor Traffic Act 1950, s 138a(1)(b) of the District Courts Act 1963 and s 38a(1)(c) of the Local Courts Act 1963 which were the subject of a reference in SCR No 1a of 1981; Re Motor Traffic Act. The essence of these provisions is that where a summons was served on a defendant and the defendant failed to appear, the court should record a plea of guilty and proceed to sentence. The court, apart from other matters, reached the conclusion that the onus of proof on the prosecution as required by s 37(4)(a) of the Constitution was removed by the amendments. Kearney Dep CJ was referring to this (at 136) of the judgment. Section 333 of the Income Tax Act falls far short of proving that a defendant is guilty. I am not convinced by the majority opinion that s 333 has the same effect as the legislation considered in SCR No 1a of 1981.

I might also add that, in SCR No 1a of 1981, the court concluded that the legislation in question completely removed the hearing by the court. That cannot be said of s 333 of the Income Tax Act. Under this provision, the whole hearing is preserved and all parties have the right to call evidence.

As I have stated earlier, this is hypothetical and cannot be raised by this Reference. The reason is that the trial judge had not reached that stage in the proceedings. However, as has been pointed out before, counsel for the Chief Collector of Taxes has conceded that the law relating to the standard of proof is that which is applicable to a criminal case and that is, proof beyond reasonable doubt. It has also been conceded by counsel for the Chief Collector of Taxes that the offence with which the defendants are charged under the Income Tax legislation comes within the meaning of the word �offence� under s 37(4)(a) of the Constitution and therefore all matters set out under that provision are applicable to a taxation prosecution. This issue was not raised by the case of the Chief Collector of Taxes v Blasius Dilon and on that basis I did not deal with that issue. This issue arises by the use of the word �offence� under s 37(4)(a) and that is that this provision is dealing with an offence which is of a criminal nature. There has been no disagreement as to the nature of the offence with which s 37(4)(a) is concerned. Counsel for the Chief Collector of Taxes, as I have pointed out before, has conceded that the offence which is in question in this Reference is an offence which comes within the meaning of the word �offence� under s 37(4)(a). By this concession, all of the law relating to a criminal trial is conceded and, in particular, the standard of proof in a taxation prosecution must apply proof beyond reasonable doubt. The question of the standard of proof in criminal trials is governed by underlying law which is proof beyond reasonable doubt.

I have concluded that s 333(1) does not offend s 37(4)(a) as it does not in any way affect the presumption of innocence. As I have found in the case of the Chief Collector of Taxes v Blasius Dilon, s 333(1) simply establishes a prima facie case and the questions of proof and onus of proof are not affected. The provision is careful in expressly pointing out that the question of the onus of proof on the defendant is not affected. I find that s 333 does not shift the onus of proof and places it upon the defendant. I would therefore find that s 333(1) is not inconsistent with s 37(4)(a) of the Constitution.

If answers to (1) and (2) above be both negative, is the combined operative effect of s 327 and s 333(1) unconstitutional as being inconsistent with the s 37(4)(a) constitutional rights of �a person charged with an offence�?

If both answers to the two questions are negative, then I do not see how the combined effect of such provisions can amount to being inconsistent with s 37(4)(a). I would answer this question in the negative.

Now what would happen to all these cases which have been commenced by writ of summons? As I have already stated, adoption of writ of summons in each of these cases does not offend any of the provisions of the Constitution.

The question of the nature of a taxation prosecution is in no doubt. It is criminal in nature and therefore all relevant rules relating to such matters apply.

The trial judge may proceed further with these cases and deal with these matters following the rest of civil practice and procedure in the National Court. Other constitutional issues could arise and they can be considered at that time.

Alternatively, the trial judge does not have to follow the rest of the civil practice and procedure if he considers there may be other constitutional issues which may delay the determination of these cases on their merits. In which case, he may give directions under s 327 of the Income Tax Act which would avoid any such issues. Even though I have ruled that the writ of summons as it stands, is valid, the trial judge can under s 327 of the Act direct that the action be recommended by an indictment, and give further directions as to the procedures for the prosecution of the cases. It was clearly the intention of the Parliament to be flexible about the practice and procedure under s 327 of the Income Tax Act and this should be taken advantage of by the trial judge and proceed to deal with these cases without any further delay.

SALIKA J: Following questions were referred to the Supreme Court under s 18(2) of the Constitution.

N2>(1)�� Is the �taxation prosecution� commenced by a writ of summons, �prosecuted and proceeded with in accordance with the usual practice and procedure of the Court in civil cases�, pursuant to s 327 of the Act, unconstitutional as being inconsistent with the s 37(4)(a) Constitutional rights of �a person charged with an offence�?

N2>(2)�� Is s 333(1) of the Act unconstitutional as being inconsistent with the s 37(4)(a) Constitutional rights of �a person charged with an offence�?

N2>(3)�� If answers to (1) and (2) above be both negative, is the combined operative effect of s 327 and s 333(1) unconstitutional as being inconsistent with the s 37(4)(a) Constitutional rights of �a person charged with an offence�?

The facts as to how the references arise are stated in the joint judgment of the Chief Justice, Amet J and Hinchliffe J. Section 323 of the Income Tax Act 1959 provides that proceedings for recovery of a pecuniary penalty under this Act may be instituted in the name of the Chief Collector of Taxes in the National Court. This means a prosecution for recovery of a monetary penalty may be instituted in the name of the Chief Collector of Taxes. Such prosecution by virtue of s 327 of the Income Tax Act may be commenced prosecuted and proceeded with in accordance with any rules of practice established by the Court for State suits in revenue matters or in accordance with the usual practice and procedure of the court in civil cases or in accordance with the direction of the Court.

Section 323 of the Act is talking about pecuniary penalty and not imprisonment penalty. �The pecuniary penalty� provision suggests that the prosecution is not intended to be a criminal prosecution but for recovery of money which under normal circumstances is of a civil nature.

Section 327 of the Act provides a number of ways in which the prosecution may be conducted.

The Chief Collector, as is apparent, seems to have opted for the prosecution to be in accordance with the usual practice and procedure of the court in civil cases. He goes about this by filing a writ of summons and a statement of claim. Then it is expected that pleadings and interrogatories should take place.

The practice of the Chief Collector of Taxes has been that he files a writ with a statement of claim, with particulars of claim and then the orders he seeks.

When the statement of claim and the particulars thereof are read at the trial it is deemed to be evidence under s 333(1) of the Act.

And if the defendant has no evidence to offer or if he is not present the Chief Collector of Taxes may move for a default judgment to be entered. When default judgment is entered the defendant is found guilt of an offence and liable to punishment either pecuniary or imprisonment under s 299g(9) and s 299g(10).

The Chief Collector of Taxes has an option under s 327 of the Act as to how he should prosecute the matter. Once the Chief Collector of Taxes exercises which particular way he wishes to proceed then he must stick by that procedure. If he chooses the civil procedure then it has to be civil all the way from the start to the finish. If he is directed by the court to proceed in another manner then he should proceed by that manner and finish by that manner. During the course of hearing of this Reference it was admitted by the Chief Collector of Taxes through his counsel that the practice he had adopted is a �hybrid� practice that is, that the matter starts off as a civil matter and finishes off as a criminal matter.

Section 327 of the Act merely gives different options to the Chief Collector of Taxes as to how he should proceed if he is to prosecute for recovery of a pecuniary penalty in the National Court. There is nothing unconstitutional about s 327 of the Act on its own. It is not inconsistent with s 37(4)(a) of the Constitution, if the prosecution is purely civil in nature.

In relation to question 2 of the Reference, I would regard the averment provision of the Act as not being unconstitutional if the prosecution was purely a default summons.

Under s 327 of the Act the court could direct that the proceedings be by way of a default summons and if no intention to defend is filed then the averment by the prosecution would be sufficient to establish a prima facie case. In that sense s 333 of the Act would not be unconstitutional as being inconsistent with s 37(4) of the Constitution.

Even in proper civil proceedings s 333(1) of the Income Tax Act would not be unconstitutional, because in normal civil proceedings pleadings and interrogatories take place by which time the matter might be settled out of court or, if it goes right through then, only certain issues might be tried. In civil proceedings the defendant is not charged for an offence.

Again I would answer question 2 in the negative if the proceedings were civil per se.

It would follow then that the combined effect of s 327 and s 333(1) of the Act would not be inconsistent with s 37(4)(a) of the Constitution if all the proceedings were civil altogether and the relief being sought was of a civil nature.

I have answered the questions in the negative on the basis that the prosecution is conducted �in accordance with the usual practice and procedure of the court in civil cases� and the penalty is not of a criminal nature. In reality the prosecution is not �in accordance with the practice and procedure of the court in civil cases�. This is because it starts off as a civil matter and ends as a criminal matter. This factor has been conceded by the Chief Collector of Taxes through its counsel that if the defendant is found guilty he is guilty of an offence pursuant to s 299g(9) and s 299g(10) of the Act.

It is by operation of the penalty provisions of the Act namely s 299g(9) and s 299g(10) that the proceedings in reality turn into criminal prosecutions. Section 299g(9) says that an employer who fails to comply with a provision of that section that is applicable to him is guilty of an offence. It is the non-compliance or contravention of the provisions of s 299g(a) that one can be found guilty of an offence. To be guilty of an offence denotes or suggests that one has committed a criminal offence and if found guilty may be imprisoned.

As if subs (9) of s 299g was inadequate subs (10) provides that the penalty for failure to comply is a fine of not less than K500.00 and not exceeding K2,000.00 or imprisonment for a term not exceeding six months. This provision again makes it clear in no uncertain terms that one will pay a fine or go to jail for failure to comply with the Act.

Because of the operation of the penalty provision namely s 299g(9) and s 299g(10) and the concession made by the Chief Collector of Taxes that the prosecution under s 237 of the Act is in reality criminal in nature then the normal rules applicable to prosecution of criminal cases must apply. The Court is bound to have regard to the constitutional rights and safe guards specifically envisaged under s 37(4) and s 42 of the Constitution. Those rights and safeguards include the right to defend oneself, a presumption of innocence until proved guilty and liberty of the person.

As the proceeding is in effect a criminal prosecution by operation of the penalty provision of s 327 of the Income Tax Act then it becomes unconstitutional or inconsistent with s 37(4) of the Constitution. Once it is established at the outset that the prosecution under s 327 of the Income Tax Act is in effect a criminal prosecution then the normal criminal rules must apply. The practice of the Chief Collector of Taxes in the past has been that he has purported to prosecute its cases pursuant to s 327 of the Act. He knew the prosecutions were criminal in nature and yet did not accord defendants their rights under s 37(4) of the Constitution. This practice was and is clearly inconsistent with the Constitutional requirement.

Having now turned into a criminal case my answer to question one would be in the affirmative.

In relation to question 2, it would follow then that once it is determined at the outset that the prosecution is of a criminal nature the averment provision under s 333(1) of the Income Tax Act would become inconsistent with s 37(4) of the Constitution. The basic requirement in a criminal trial that a person is presumed innocent until proven guilty in not being observed. Therefore s 333(1) of the Act is against the grain of the Constitutional requirement.

In relation to the third question it would follow then that the combined effect of s 327 and s 333(1) of the Income Tax Act is inconsistent with s 37(4) of the Constitution.

[ii]* Infra 214

[iii]** Infra 211

[iv]� Infra 211

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Year	From	To
1985	429471(9)	429472(10)
1986	712272(0)	712276(4)

Supreme Court of Papua New Guinea

Income Tax Act 1959 (Amended), Re [1991] PGSC 12; [1991] PNGLR 211 (5 July 1991)

Papua New Guinea Law Reports - 1991