Commercial tax- claim by daylah

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									REPUBLIC OF TRINIDAD AND TOBAGO

                                IN THE COURT OF APPEAL

Civil Appeal No.13 of 2005
Tax Appeal Nos. 13-18 of 2001

                                       BETWEEN

                     TRINIDAD & TOBAGO NATIONAL PETROLEUM
                           MARKETING COMPANY LIMITED
                                                                   Appellant

                                      AND
                           THE BOARD OF INLAND REVENUE
                                                                  Respondent
CORAM:    S. Sharma C.J
          M. Warner J.A
          I. Archie J. A

APPEARANCES:

Mrs. Myrna Robinson-Walters for the Appellant
Mr. Nasim Mohammed for the Respondent


DATE DELIVERED: 18th November 2005

                                 JUDGMENT


DELIVERED BY SHARMA C.J.

1.    The Trinidad and Tobago National Petroleum Marketing Company
      Limited, (the appellant) is a State run company operating in the energy
      sector.


2.    The Board of Inland Revenue (the respondent) had assessed the
      appellant’s petroleum profits tax and unemployment levy liabilities for the
      years of income 1992, 1993 and 1994.




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3.   The appellant appealed to the Tax Appeal Board (hereinafter referred to
     as “TAB”) from a decision of the respondent to impose an additional
     $96,360.00 for the income year 1992.         Another appeal was initiated
     against the Respondent’s levy in the sum of $2,473,698.30 in respect of
     unemployment levy for the same year. Similar appeals were brought
     against the sums imposed by the respondent for the years 1993-1994 in
     relation to petroleum profits tax and unemployment levy.


4.   These notices were all filed on the 19th January 2001 on the grounds that
     the tax assessments were erroneous in law and fact and should be varied.


5.   Counsel for the appellant and the respondent arrived at a consent order
     on the 6th of October 2004, and thereupon made a joint application to
     the TAB for an order that the consent order be entered in terms of the
     agreement filed by the parties.


6    On the 14th January 2005, after hearing both parties on the matter, the
     TAB in an oral decision, refused to enter the consent order, on the grounds
     that:
     a.      the TAB failed to comprehend what was entailed in “accrued
             expenses” otherwise referred to as vacation costs;

     b.      the TAB was dissatisfied with the failure of the agreement to reflect
             how the reductions in the claims arose;

     c.      the TAB was unclear as to how the figures in the agreement came
             about; and
     d.      the TAB was dissatisfied with the unwillingness of the parties to file
             any documents produced during the settlement discussions.

     The TAB then set the matter for trial on the 2nd February 2005.




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7.    In the meantime, the appellant appealed the TAB’s decision by a notice
      of appeal dated the 27th January 2005.


8.    The respondent by way of pleadings filed on the 24th October 2005, joined
      with the appellant in requesting that the appeal be allowed.


9.    Both parties now urge this Court to direct the TAB to enter the agreement
      and grant an order in accordance with its terms.


10.   The appellant and respondent submit that the TAB has no discretion to
      decline to make an order in terms of an agreement, where the
      agreement raises no question of jurisdictional illegality. Counsel for the
      appellant and for the respondent rely on the case of Phoenix Park Gas
      Processors Limited and The District Revenue Officer Couva/Caroni, Civil
      Appeal No.13 of 2004 as being of general application to the issue of the
      right of the Tax Appeal Board to refuse a consent order.


11.   This Court in the judgment delivered by Nelson, J.A in Phoenix Park Gas
      Processors Limited and The District Revenue Officer Couva/Caroni, Civil
      Appeal No.13 of 2004 is invaluable in discussing this Court’s stance in this
      case. That case dealt similarly with an appeal from a decision of the TAB
      to reject an agreement reached by the parties. The TAB apparently was
      concerned that the draft agreements did not meet the requirements of
      the Land and Building Taxes Act, Chap. 76: 04.


12.   The decision in Phoenix Park can be summarised as follows:

      (a)   The TAB has the same powers as the High Court to enter consent
            orders based on section 3(3) and section 6(7) of the TAB Act.




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      (b)      A tax court entering a consent order is not concerned to approve
               or disapprove of the terms of a settlement between the Revenue
               and the taxpayer.


      (c)      The Revenue is entitled to collect more tax or to forgive taxes by
               way of concession or settlement of a court action. There is nothing
               illegal in the Revenue’s accepting less tax than it contends it is
               entitled to by way of compromise of an action in court.


      (d)      The Revenue is not precluded from accepting a particular
               interpretation of a taxing statute since neither issue estoppel nor res
               judicata applies to assessments to tax in different tax years, see
               Caffoor v Commissioner of Income Tax [1961] AC 584(PC).


      (e)      Since the parties created the dispute they can dispose of it as they
               please.   Only if the consent order involves some jurisdictional
               illegality will the court decline to enter a consent order.


      (f)      Furthermore, there is no obligation that the agreed terms to be
               mentioned to the judge.


13.   This cardinal principle pertaining to consent orders, is buttressed by the
      remarks of the author of Foskett’s on The Law and Practice of
      Compromise (5th edn) at para.10- 02:
            “No authority is needed to support the proposition that the courts
            welcome and encourage compromise…the court is not concerned
            with the terms of the compromise. This is a matter for the parties.
            Since they created the dispute, they can dispose of it as they
            please. Indeed it appears that the court cannot decline to enter a
            consent order or judgment merely because it is suspicious of the
            terms or disapproves of them. If the court is asked to make an order


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         outside of its jurisdiction or which is illegal, then it may properly
         decline to do so. Equally, as a matter of practice, the court will not
         make a binding declaration of right by consent, and it is likely that it
         would wish to be informed of the facts and law applicable to any
         proposed consent order or judgment affecting the status of the
         parties. Thus, although a court may make suggestions about the
         proposed terms of a compromise, it cannot refuse to give effect to
         them by means of an order or judgment desired by the parties.”


14.   This passage was approved by the Court of Appeal in Arthur J.S Hall v
      Simons [1999] 3 W.L.R 873. Lord Bingham commented that, “Adult parties
      of sound mind may ordinarily settle proceedings by an agreement made
      wholly out of court…      They may for a variety of reasons choose to
      embody their agreement in a consent judgment of the court; this will not
      in the ordinary way call for any exercise of judgment by the court…”.


15.   The case of Noel v Becker [1971] 1 WLR 355 is instructive. In that case,
      there was an agreement between the parties that was rejected by the
      Judge when the matter was heard and the Judge proceeded to make a
      new order in different terms, although he was informed by the parties of
      their disapproval of the new order. On appeal, the Court said suspicion
      by the Judge of the agreement based on a knowledge of the behaviour
      of one of the parties, should not be an impediment to the implementation
      of the agreement between the two parties made by their attorneys. The
      Court of Appeal further quoted from a Practice Direction (Minutes of
      Order) [1960] 1 W.L.R 1168, which noted:

         “In the case of terms scheduled to a consent order these terms
         represent an arrangement between the parties, and the registrar is
         not concerned to approve them, although he may properly offer



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         suggestions upon them if it appears to him that they may cause
         some difficulty.”

      The Court of Appeal in Noel v Becker felt this was similarly the position in
      the appeal before them. Further, the Court noted that once the consent
      order contained nothing outside of its jurisdiction then the Judge fell into
      error and ought to have made the order agreed to by the parties.


The jurisdiction of the TAB in regard to Orders


16.   There is no doubt that the TAB has the power to enter consent orders in
      respect of matters brought before it except in the instances already
      outlined.




      Section 3(3) of the TAB Act, Chap.4: 50 provides:
         “The Appeal Board shall be a superior court of record and have an
         official seal which shall be judicially noticed”.

      Section 6(7) of the Tax Appeal Board Act provides that the Appeal Board
      has all such powers, rights and privileges as are vested in the High Court of
      Justice in relation to matters necessary or proper for the due exercise of its
      jurisdiction.

      While these provisions enable the TAB to enter consent orders, it may also
      be argued (though it was not) that quite apart from these provisions, the
      TAB has an inherent jurisdiction to do so.


17.   In every civilised system of justice, the main function of the Courts is to
      resolve disputes defined by the parties and brought before the Courts,




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seeking a speedy judicial resolution. It is always desirable however if the
parties can settle the disputes themselves, in or out of Court.

The Courts oftentimes, play a very significant and pivotal role in such
resolutions. The wisdom of such an approach can never be overstated.
Indeed, this approach is at the heart of the New Civil Proceeding Rules,
which embody the principles of equality, economy, proportionately and
expedition. These factors are crucial and fundamental to an effective
contemporary system of justice.

When therefore parties have agreed to settle disputes between
themselves at any stage of Court proceedings then the Civil Court is
under an obligation to conform to the wishes of the parties – unless, to do
so, would be illegal, contrary to public policy, or contra bonos mores.

When a Court fails without good reason to respect the wishes of the
parties, this will inevitably undermine the administration of justice. This is
sadly exemplified on the facts of this case.

The record in these proceedings shows that the TAB not only refused to
enter the consent order but also fixed a trial date, which would
undoubtedly increase costs and judicial time will have been squandered.
In fact, both parties have come to this Court for relief, which in our view
could have easily been granted by the TAB legal costs have thereby
been increased.

The question to be raised here, is who should bear these unnecessary
costs? I have merely posed this question, in the hope that those charged
with judicial functions would reflect upon the damage done to the
administration of justice, the concomitant hardship caused and added
legal expenses incurred by the parties.




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18.   In light of the foregoing, it is clear that:
      i.      the TAB possesses the jurisdiction to make a consent order;

      ii.     the order requested by the parties was not illegal nor did it propose
              any terms outside the jurisdiction of the TAB;

      iii.    the TAB ought not to make a judgment on such an agreement, or
              delve into its terms, where there was no question of its jurisdiction or
              of an illegality based on the terms of the agreement.




Disposition

19.   The Tax Appeal Board clearly fell into error. The appeal is allowed. The
      order is set aside. Instead of remitting the matter to the TAB, this Court
      orders that a consent order be entered in terms of the agreement filed by
      the parties.




                                                                           S. Sharma
                                                                        Chief Justice


      I have read the judgment of the Learned President and for the reasons he
      has given I agree that the appeal be allowed.




                                                                           M. Warner
                                                                   Justice of Appeal

      I also agree with the judgment of the Learned President.




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          I. Archie
Justice of Appeal




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