Decision Today In Tax Returns Prosecution

Press, Volume CI, Issue 29855, 22 June 1962, Page 14

Decision Today In Tax Returns Prosecution

Counsel’s submissions in the case against Annette Mary Eleanor Jane Clifford concluded yesterday, when the defence withdrew its objections to the admissibility of certain Crown evidence, called no evidence itself, and made only a brief address.

The Court was adjourned at 11 a.m. until 10 o’clock this morning, when the presiding Magistrate, Mr H. Rosen, S.M., will give his judgment.

Mrs Clifford is charged with filing of nine wilfully false returns of income for the financial years 1950 to 1958—deficient in total by £238,613, the Crown alleges. Represented by Mr R. E. Harding, of Wellington, with him Mr P. H. T. Alpers, she has pleaded not guilty to each charge. Mr C. M. Roper, the Crown prosecutor in Christchurch, has conducted the case for the Commissioner of Inland Revenue, assisted by Mr R. C. Savage, of Wellington.

The courtroom in the Labour Department’s offices in the Majestic Theatre building, had all its. 14 available public seats occupied—Mrs Clifford again being present —and several women standing listening in the doorway when the case resumed at 10 a m. yesterday. However, with the -short defence address, the hearing lasted only an hour. Mrs Clifford's son, Mr Ogilvie Clifford, whose name has been frequently mentioned in evidence, arrived about midday to see how the case was progressing, only to find the courtroom deserted by all except a reporter. It was first expected that the Magistrate would reserve his decision, and there was some surprise at his announcement that he would give it this morning. However, the Magistrate has taken a full personal note of evidence in handwriting, and has also available a type, written transcript of evidence prepared by a team of three stenographers from the Magistrate’s Court office, who ■have worked in relays throughout the hearing. This typescript of evidence, given by 57 Crown witnesses, comprises about 160 foolscap pages. Objections Withdrawn When the Court resumed, and Mr Harding was called on by the Magistrate, he said: "In view of your Worship’s rulings of yesterday, we have come to the conclusion that today we shall deal only with questions of fact. That is as much as I need say at this stage, if my learned friend wishes to address."

The Magistrate: You have not said, Mr Harding, in so many words, that you are now not pursuing the matter of objection to other documents.

Mr Harding: It seems to us, having looked at it again, that these matters are covered, in effect, by yesterday’s rulings. The Magistrate: I would not like to think I had misled you, Mr Harding, in that respect by my ruling. I did intend that it would be appropriate now to deal with what I described as “the other documents” of which you had not given details. Mr Harding: We are perfectly content to leave it. What I have said is the product of consideration.

The Magistrate asked Mr Harding if he intended to call evidence. Mr Harding: There will be no evidence from this side. I am sorry, I forgot to mention that.

The Magistrate then asked Mr Roper if he wished to be heard on the matter of summing-up of facts. Mr Roper: My learned friend yesterday made certain objections to unspecified documents. I have not understood my learned friend to withdraw those objections. Mr Harding: I’m sorry if I was vague. I said I thought I wanted to object, and I now say I don’t want to. The Magistrate said he was prepared to allow the Crown to sum up on facts, even though it was not usual to allow such if the defendant did not call evidence.

“May it please your Worship, I do not propose to deal with the evidence given by the various tenants, or the alterations apparently made to the rent book for 1956.” said Mr Roper. “Those matters, I submit, speak for themselves. “Patent Falsity”

“I do wish to address your Worship very briefly on the question of the patent falsity of the returns of income as disclosed on their face,” Mr Roper said. “The summary of the details in the returns shows that from 1944 to 1958, although there was a comparatively small and steady increase in gross rents over those years, there were no great fluctuations either up or down in any particular year. The deductible items —such as repairs and rates— show no great fluctuation. “I submit that if the Crown shows the income for one of

the years under review is grossly understated, then the Court would be entitled to infer that the other years are similarly false, and that Mrs Clifford has engaged in a persistent course of conduct to defraud the revenue,” Mr Roper said. The evidence was that from 23 tenants resident in Clifford flats in the 1956 financial year, the rents amounted to a very large sum (£2086 Ils), which was not shown in the rent book, said Mr Roper. The view that Mrs Clifford had engaged in persistent conduct to defraud the revenue was strengthened by the gradually-increased gross rents returned after the investigation had commenced.

Of these increased returns, it had to be borne in mind that in the middle of the period under review, Mrs Clifford had about 47 properties let, almost all with their “out-buildings” tenanted, but by 1959. 1960. and 1961 she had disposed of seven properties by way of trust, and had disposed of 14 Kirkwood avenue by way of gift to her son—a very large, and, he would submit, lucrative property of 33 flats, which his learned friends were at pains to ask of a witness was it not “a very good address?” Assets and Liabilities

Furthermore, said Mr Roper, in Mrs Clifford’s letter of November 3, 1958, she had said she had ceased to obtain rents from two other properties, and her statements of assets and liabilities showed that between March 31, 1958. and March 31, 1959, three further properties—--305, 309. and 312 Montreal street—had gone from her assets statement.

“My final submission is concerned with the agreement of November 2, 1956, an agreement concerning the remuneration to be paid to Mr Ogilvie Clifford,” said Mr Roper. “It appears from that agreement that Mrs Clifford was prepared to pay the sum of £lO,OOO for services rendered in the earlier years—-for assistance given by him at one period when his mother was unwell, and at another period while she was overseas.”

Mr Harding: It says nothing about payment of £lO,OOO. It speaks of a balance of £5OOO to be payable from her estate.

The position is that this sum of £lO,OOO, which Mrs Clifford apparently thought these services were worth, was the whole of her net profit returned for 1944 to 1951,” said Mr Roper. “Furthermore, she states in that agreement her willingness to pay £5OO per annum to her son for legal services, which, for the period 1950 to 1956, amount to a third, and in some cases, a quarter of the net income for the particular years.

“I would submit that this agreement in itself indicates that this was a far more substantial business than Mrs Clifford would have the Inland Revenue Department believe, by her returns of income,” Mr Roper said. “They are my submissions, your Worship.” Mr Harding’s Address

Mr Harding then rose for his address. He said he would deal first with his learned friend’s final submission.

“My interruption of him did not have quite as much effect as I had hoped,” he said.

“The agreement to which he refers is an agreement by which Mrs Clifford and her son settled at a sum of £lO.OOO, not only for past services, but for past advances,” said Mr Harding. “Any lawyer who looks at it can only interpret it one way, as an attempt to minimise death duties —I don’t mean an unlawful attempt. These people were mother and son—only son.” In his submission, said Mr Harding, the Court would be loath to draw inferences from the matters to which Mr Roper had referred

“The matter comes down to this —is it proved beyond reasonable doubt, in any and

each of the years in question, that Mrs Clifford has wilfully returned less rent than she received?" said Mr Harding. “I put it in that way because rent has been almost the only topic No criticism has been made of the deductions Mrs Clifford has claimed." The picture was one of a very large number of tenements, said Mr Harding. There were 50 on the list, but of nine there had been no evidence whatever, except that they existed. The evidence of a large number of gas meters, which gradually diminished proved nothing as to which tenements were let for how long at what rent. “It merely proved those tenements were to let,” he said. The evidence of electricity supply merely showed that in a period of two months ending about May 25, 1956, electricity was used in the premises referred to at some time. What rents were payable, or paid, by those persons was not at all apparent. “Rent Not Established” “The Crown undertakes to show that Mrs Clifford had substantially more tenants who were paying rent I submit there is no means of getting at the rent from this evidence," said Mr Harding. “We do not know that more than four or five units were furnished, and we only know that from a sprinkling of witnesses of whom I asked the question.”

The defence had analysed the evidence given by the various tenants, but had made no attempt to assess the reliability of individual evidence, said Mr Harding “We do remember that at least one of them was prompted by the police,” he said, “but the general picture is of people who were admittedly quite vague as to other occupancies, and of whom scarcely one gave evidence that could be accepted, if at all, without the greatest reserve.”

The Magistrate: Was that one. Mr Homotiuik, who said he had forgotten all the good things, but remembered all the bad things? Mr Harding: When we heard his name we thought he was an Eskimo, so we were prepared to take his word for it and leave it. (Laughter.) Mr Harding then spent 20 minutes traversing the evidence given on the occupancy of Mrs Clifford’s various properties for certain periods, with the Magistrate taking a hand-written note of Mr Harding's remarks on each property.

“That is all I wish to say, sir, except that my learned friend in his opening address mentioned an average rent of £1 a week,” said Mr Harding. “There is no evidence on which to arrive at an average.” Summons for £260,409 Mrs Clifford had already been issued with a civil summons for income-tax of £260,409 10s Id, which would represent returns on about £400,000 of income an alleged net profit of £BO per tenant per year—in addition to what she had already returned, “just under £30,000," said Mr Harding. “It is surely inconceivable that she could have got £BO gross per tenant,” he said. “It certainly does not match my learned friend’s remark, on opening, of £5O per tenant."

Mr Roper: The position with the summons is that more years are involved. The Magistrate: It could well involve what was Social Security tax. The Magistrate asked Mr Harding for details of the summons. Mr Harding said it included Social Security tax. Mr Alpers rose to say that the summons covered provisional tax for the 1959 financial year, income-tax for the financial years 1944 to 1957 inclusive, the Social Security charge for the same years, and Social Security charge only for the 1958 year —“that being the tax-free year,’’ Mr Alpers said. This ended the defence submissions.

The Magistrate: I propose to adjourn the Court now. It will resume at 10 a.m. tomorrow, when I propose to deliver my judgment.

Whales Scarce.—The run of whales through Cook Strait this season has been "rather slow,” according to a spokesman from the Tory Channel whaling station today. So far, 23 whales have been caught. —(P.A.)