Court rejects claim that evidence inadmissible

Press, 23 November 1988, Page 15

Court rejects claim that evidence inadmissible

PA Wellington The Court of Appeal has rejected a claim that passing the Inland Revenue Department Amendment Act (No. 2), 1988, was the exercise of excessive and arbitrary power by the legislature.

The Court — Mr Justice McMullin, Mr Justice Bisson and Mr Justice Barker — has dismissed an application by a company director, Graeme Lyall Cann, in regard to the admissibility of evidence in a prosecution relating to GST. It has ruled the evidence of four Inland Revenue Department officers was admissible. In the judgment, Mr Justice McMullin said Cann was charged under section 229A(b) of the Crimes Act with fraud, using a GST return to obtain a pecuniary advantage for Excess Plant and Steel, Ltd.

Cann was a director and the general manager of the company. On May 25, 1987, he made a return on behalf of the company to the Inland Revenue Department under the GST Act 1985, said his Honour. In this he showed the total output tax paid by the company for a relevant period as $2017.05 and the total input tax as $223,511.04, as a result of which he claimed a refund of the difference — $221,493.99. The department paid the company $222,222.19, including the refund and interest.

Mr Justice McMullin said the commissioner later investigated the return, claimed the return was false and on July 14 an information in indictable form was sworn against Cann. On September 27, an application for Cann’s discharge under section 347 of the Crimes Act was made. This application was adjourned to October 19 when both it and an application by the Crown under section 344 A of the Crimes Act for an order as to the admissibility of the evidence of four officers of the department were heard.

By that date legislation affecting the admissibility of the evidence of the four officers had been passed. It was contained in the Inland Revenue Department Amendment Act (No. 2) which received the Royal assent on October 11.

The Crown sought an order that the officers were not prohibited by section 13 of the Inland Revenue Department Act, 1974, from giving evidence at the trial.

Mr Justice McMullin said the terms of the amendment were quite clear.

it related to the divulgence or communication of any matter or the production of any document in any court on or before October 11, 1988. It did not make an act illegal that was legal at the time it was committed. “The amendment is not a matter which goes to

the substance of the offence but rather to the admissibility of the evidence tendered in proof of its commission. Therefore in no sense can the amendment be said to be retrospective,” he said. His Honour said Cann’s counsel, Mr George Howley, had submitted the Court should intervene to protect Cann against the exercise of excessive and arbitrary power by the Government and that it was the responsibility of the Courts to ensure that there was an independent Judiciary and free democracy.

By no reasonable stretch of the imagination could it be said that the passing of the Inland Revenue Department Amendment Act (No. 2) was the exercise of excessive and arbitrary power by the legislature, his Honour said.

Parliament had done no more than endeavour to strike a balance between the need for departmental officers to maintain secrecy as to information coming to their knowledge within their employment and the public interest which would support the bringing to justice of persons who defrauded their fellow taxpayers.

For these reasons the Court dismissed the application for leave to appeal and held that the evidence of the four departmental officers was admissible.