Port Moresby, 18 December 1969
1760. Confidential Immediate
Curtis has advised as follows in respect of tax rules under Local Government Ordinance.1 Gazelle Council tax rule for 1969/70 has not come into operation due to defect in the publication of the rule. This conclusion almost certainly applies to all tax rules for all councils for years 67/68, 68/69 and 69/70 although Curtis says he would need to sight text of each rule to make sure. He has not yet had time to do this. Because tax rule not yet in operation no legal liability to pay tax exists and hence no offence of failure to pay tax. Legal reasons for these conclusions set out briefly in paragraph three below.
2. In light of this we have to consider what steps are open. As I see it following possibilities exist.
(a) to make no disclosure of our knowledge of this point and allow councils to continue to prosecute tax defaulters. Curtis sees difficulty in doing this since courts regard it as duty of prosecutor to place all relevant facts before court that are known to prosecutor even though unfavourable to prosecution case. It is relevant to this point that the prosecution in the Tammur case is being handled by crown prosecutor.1
(b) to advise councils to withhold tax prosecutions until position is rectified by validating legislation. Curtis will advise further on scope of possible validating legislation.
3. Legal reasoning is briefly as follows. Section 47 of Local Government Ordinance requires rules to be published in local government gazette. This section also requires that rules come into operation on date of publication or such other date as is specified in the rule. Form of tax rule is that rule contains clause stating that it comes into operation on date of publication or two months after making of rule whichever is the later. Requirement as to publication is also governed by Statutory Instruments (Publication) Ordinance by virtue of which gazette notice of making of rule and specifying place where copy of rule can be bought is deemed to be publication. Since October 1966 all that has appeared in local government gazette is notice of making rule but no notice of place where copy of rule may be bought. The legal result is that there has been no effective publication of the rule in the gazette and hence rule has not come into force according to commencement provision in rule. There may be further point that publication of a rule in the gazette is a necessary step in the making of the rule so that failure to comply means that the rule is invalid. This has not yet been explored since it is unnecessary to do so in the case of tax rules but may be a vital consideration in the matter of the validity of all other council rules made since October 1966. These other rules have not yet been examined for commencing date provisions to ascertain whether they are on all fours with the tax rules in that respect.
4. If validating legislation contemplated I think that this should be done as soon as possible at a special meeting of the House of Assembly. I am giving further thought to what steps we should take.
[NAA: A452, 1969/5256]
1 As noted by the TIC, Hay’s telex was despatched as the MRC was ‘going ahead with a determined campaign of legal action against tax defaulters and against people breaking other tax rules … 187 tax warrants and 111 tax summonses were ready for execution on 17th December. It was intended to commence service of these on 18th December’ (record of special TIC meeting, 19 December 1969, NAA: A1838, 936/3/15 part 6).
2 Tammur had been charged with tax evasion. He appeared in court on 16 December and his case was adjourned until 28 January 1970 (telex 10143, Hay to DOET, 16 December 1969, NAA: A452, 1969/4001). Warwick Smith was agitated by the timing of Tammur’s summons, telling Hay that the matter should have been referred to Canberra—though, in fact, the MRC had taken the action unilaterally (Hay interview, 1973–4, NLA: TRC 121/65, 5:2/18–9).