ASSESSMENT OF DUTY

Dominion, Volume 26, Issue 186, 4 May 1933, Page 7

ASSESSMENT OF DUTY

Extra Payment Questioned SOUND-FILM EQUIPMENT Under an agreement duly executed, the W. R. Kemball Theatre Company in 1929 obtained from the Western Electric Company (N.Z.), Ltd., lease of sound-picture apparatus for use in the Paramount and De Luxe Theatres, and in accordance with the agreement the theatre company paid the requisite Customs duty on the apparatus leased. Subsequently the theatre company was incorporated under the name of Kemball Theatres, Ltd., and a new agreement as to the terms of the lease was drawn up. In the meantime, following certain inquiries, the Customs Department had increased the duty payable on the.electrical equipment already landed, and the Western Electric Company accordingly sought payment from Kemball Theatres, Ltd., the amount of the extra duty, amounting in all to £169 9/-. This the latter company refused to pay, and the question came for determination in the Supreme Court yesterday. The Chief Justice (Sir Michael Myers) found in favour of the defendant company, Kemball Theatres, Ltd., holding that the terms of a second agreement executed did not compel it to pay the extra amount of duty. Mr. A. B. Buxton appeared for plaintiff company, and Mr. H. F. Johnston, K.C., with him Mr. L. K. Wilson, for defendant company. Story of the Case. Mr. Buxton said that the Western Electric Company (N.Z.), Ltd., purchased sound-picture equipment from America, and hired to exhibitors here under agreement. In May and June. 1929, two agreements were made between Mr. W. K. Kemball and theplaintiff company to install equipment in the Paramount and De Luxe Theatres, Wellington, which were controlled by Mr, Kemball. Following the installation of this equipment, the Customs duty was assessed, and a demand sent to Mr. Kemball for the assessed Customs duty, which was paid by him. On September 25, 1930, the Western Electric Company was informed by Mr. Kemball that the company controlling the two theatres had become incorporated and a new agreement was drawn up, differing in form from the old one. In 1931, Mr. Buxton continued, the Customs Department started to make inquiries in America as to the invoice value of the equipment being imported by the Western Electric Company. The original estimate of duty that Mr. Kemball paid was based on the original invoice value of the goods. As a result of the inquiries made by the Customs Department, it was thought that the invoices which came out did not show the current domestic value in the United States, and therefore the invoice value was increased by 20 per cent, for the purpose of assessing duty. The question that the Court was asked to determine was whether Kemball Theatres, Ltd., were liable under the agreement made to pay the additional assessment of Customs duty. Additional Duty Paid.

Mr. Buxton said that when the new agreements were entered into it was not known that the extra duties would have to be paid. As a result of the . reassessment of duty the Western Elec- j trie Company had had to pay another I. £760(1. included in which was the . amount claimed from Kemball The- / a t res. Ltd. i Mead Walworth, assistant managing |

director of the Western Electric Company, said that in both forms of agreement the defendant company was entitled to cancel the agreement on giving six months’ notice. On July 16. 1931, defendants gave notice of cancellation, which was accepted by the company. On the expiration of the notice the equipments were removed.

After Mr. Johnston bad addressed the Court briefly, his Honour delivered judgment. He held that when the second agreement was entered into the payment due under the document had already been paid, and therefore the covenant to pay did not operate. Even if he did not hold that, his Honour thought that the cancellation before the document became due would be sufficient to disentitle plaintiff to recover.

Judgment was accordingly entered for defendant company with costs according to scale.