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High Court of Sabah and Sarawak |
] [Hide Context] 1
5 MALAYSIA
K22-58-2008
IN THE HIGH COURT IN SABAH AND SARAWAK AT KOTA KINABALU
CIVIL SUIT NO. K22-58 OF 2008
10
DATUK HARRIS MOHD SALLEH - PLAINTIFF
AND
THE GOVERNMENT OF MALAYSIA - 1ST DEFENDANT INLAND REVENUE BOARD - 2ND DEFENDANT
15 SHAHRIL JALINUS - 3RD DEFENDANT
STEPHEN CHUNG HIAN GUAN IN OPEN COURT
20 JUDGMENT
1. The Plaintiff was the former Chief Minister of Sabah and is now in business including in teak wood plantation, agricultural
herbal products, solar energy production and tourism. The 3rd Defendant is an employee of
25 the 2nd Defendant which is a statutory body and agent of the 1st Defendant.
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5 2. In 1975, the Sabah Government alienated a parcel of land under Provisional Lease 206290066 in Labuan to the Plaintiff which he subsequently sold to Iklim Emas Sdn Bhd for RM5,000,000.00 under a
Sale and Purchase Agreement (SPA) dated 03.08.1995.
10
3. The title deed to PL 206290066 was dated 25.10.1975 and contained 99.52 acres. It also contained the owner’s covenants to complete before January 1995 the reclamation of the land to the precised levels prescribed by the Director of Public Works and the construction of a
15 building in accordance with the terms and conditions in the title deed. The title deed also contained a prohibition against transfer and sublease of the land before fulfillment of the owner’s covenants.
20 4. Pursuant to the SPA, the Plaintiff agreed to sell the land to Iklim Emas subject to the Plaintiff obtaining an extension to the owner’s covenants within six months. Upon approval of the extension to the owner’s
covenants, Iklim Emas was to commence the reclamation.
25
5. Pursuant to the SPA the Plaintiff granted a power of attorney (PA) on the same date to Iklim Emas which was authorized inter alia to enter the land for reclamation purposes, to develop the land, to partition and subdivide the land into sublots, to charge the land and for that purpose to
30 execute the memorandum of charge and to sell and dispose of the land
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5 including to execute the memorandum of transfer on the Plaintiff’s behalf and in his name in writing to complete the transaction.
6. It was authorized to appoint and remove any substitute attorney and
10 in this respect Iklim Emas had appointed Projek Tebusguna Tanah (Labuan) Sdn Bhd (PTTL) as its substitute attorney. It was also authorized under paragraph 2 of the PA to pay all taxes, premiums, registration fees rates, charges, expenses and all other outgoings whatsoever payable by
the Plaintiff for or on account of the land.
15
7. On 8.12.1998, PL 206290066 was subdivided into several sublots, one of which was CL 205367844 containing 3.4880 hectares.
On
14.2.2000, CL 205367844 was sold via a sale and purchase agreement to
20 Lembaga Pembangunan Labuan. On 17.4.2000, CL 205367844 was further subdivided. One of these subdivided lots was CL 205368716 containing 2.0239 hectares.
25 8. On 18.10.2007, the 2nd Defendant issued a notice of assessment to the Plaintiff for RM381,559.66 on the disposal of CL 205368716 pursuant to the Real Property Gains Tax Act 1976 (RPGT). The notice of assessment was sent to the Plaintiff at his address as stated in a CKHT-1 form for the year of assessment 2007, which the 2nd Defendant submitted
30 was the last known address of the Plaintiff.
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K22-58-2008
5 9. This address was at 11A, Jalan Bukit Indah, 1/14 Bukit Indah, 68000
Ampang, Selangor Darul Ehsan. The Plaintiff did not receive the notice of assessment because that was not his address. It was
the address of
PTTL. Neither Iklim Emas nor PTTL paid the tax.
10
10. On 22.02.2008 the 3rd Defendant in purported exercise of the power conferred on the 2nd Defendant under Section 45(4) of the RPGT Act issued a certificate under Section 22(1) of the Act to certify that the Plaintiff was required to pay the tax in the sum of RM419,715.62 on the disposal of
15 CL 205368716. A copy of the certificate was extended to the Ketua Polis
Negara, Polis Di Raja Malaysia and Jabatan Imigresen.
11. The Plaintiff contended that the Defendants were negligent and in
20 breach of their statutory duty in issuing the notice of assessment and the certificate and as a result he had been wrongfully defamed.
The Plaintiff complained that previously by a letter dated 24.10.2005, the 2nd Defendant advised that the disposal of CL 205368716 would not be subject to any RPGT. Therefore the Plaintiff filed this suit seeking
inter alia a declaration
25 that the certificate was illegally issued, null and void; that the Plaintiff was not liable to pay the tax assessed; for general damages, aggravated and exemplary damages of not less than RM 25 million for negligence and
or libel.
30
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5 12. The Defendants submitted that they were justified to issue the assessment because the CKHT-1 and CKHT-2 submitted to the 2nd Defendant regarding the acquisition and disposal of CL205368716 were in the name of the Plaintiff as the disposer of CL205368716 together
with a
copy of the title deed and SPA to verify this.
10
13. It was submitted that the SPA and the title deed clearly established that the Plaintiff was the owner and vendor of this parcel of land. It was submitted that a ‘disposer’ is a chargeable person under the RPGT Act
15 and a person holding a power of attorney, in this case PPTL, is not a chargeable person under the Act. Accordingly, the Defendants submitted that they were justified and correct to issue the notice of assessment and
the certificate to the Plaintiff.
20
14. The agreed issues for trial are as follows:-
1) whether the Defendants owed the Plaintiff a duty of care and or a statutory duty to ensure that the assessment made under
the notice of assessment dated 18.10.2007 on the disposal of
25 CL.205368716 was done correctly (Issue 1);
2) if the answer to Issue 1 is in the affirmative, whether the Defendants were negligent and or in breach of statutory duties by issuing the notice of assessment dated 18.10.2007 to the
30 Plaintiff (Issue 2);
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5 3) if the answer to Issue 2 is in the affirmative, whether the Plaintiff should have disputed the assessment by way of an appeal to the Special Commissioners of Income Tax (Issue 3);
4) if the answer to (Issue 2) is in the affirmative, whether the contents of the letter dated 22.02.2008 and or the certificate
10 issued under section 22(1) of the RPGT Act 1976 were defamatory of the Plaintiff (Issue 4); and
5) if the answer to Issue 4 is in the affirmative, whether the 1st
Defendant was vicariously liable for the acts of the 2nd and or
3rd Defendants in publishing the letter dated 22.02.2008
15 and/or the certificate under section 22(1) of the RP GT (Issue
5).
6) whether section 29 of the Inland Revenue Board of Malaysia Act 1995 bars the Plaintiff from suing the 2nd and 3rd Defendant (Issue 6).
20
15. Reading the RPGT Act, the authorities referred to by the parties and the facts and circumstances of this case, I find that
the Defendants did not owe any statutory duty to ensure that the assessment made under the
25 notice of assessment dated 1.8.2010 on the disposal of CL 205368716 was done correctly. In the case of X (minors) v Bedfordshire County Council (1995) 3 ALL ER 353 it was held as follows:-
1. Private law claims against public authorities for damages could be classified into four different categories:
30 (i) action for breach of statutory duty simpliciter (i.e. irrespective of carelessness);
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5 (ii) actions based solely on the careless performance of a statutory duty in the absence of any other common law right of action;
(iii) actions based on a common law duty of care arising either from the imposition of the statutory duty or from the
10 performance of it;
(iv) misfeasance in public office, i.e. the failure to exercise, or the exercise of, statutory powers either with the intention to injure the Plaintiff or in the knowledge that the conduct was unlawful.
15 2. In actions for breach of statutory duty simpliciter a breach of statutory duty was not by itself sufficient to give rise to any private law cause of action. A private law cause of action only arose if it could be shown, as a matter of construction of the statute, that the statutory duty was imposed for the protection of
20 a limited class of the public and that Parliament intended to confer on members of that class a private right of action for breach of the duty. Whether the statute provided other remedies for its breach and whether on the true construction of the statute it was shown that the protected class was intended
25 by Parliament to have a private remedy were indicia of whether a private law cause of action lay for breach of a statutory duty.
3. The mere assertion of the careless exercise of a statutory power or duty was not sufficient in itself to give rise to a private law cause of action. The Plaintiff also had to show that the
30 circumstances were such as to raise a duty of care at common law. In determining whether such a duty of care was owed by a
8
K22-58-2008
5 public authority, the manner in which a statutory discretion was or was not exercised (i.e. the decision whether or not to exercise the discretion) had to be distinguished from the manner in which the statutory duty was implemented in practice. Since it was for the authority, not for the courts, to
10 exercise a statutory discretion conferred on it by Parliament, nothing the authority did within the ambit of the discretion could be actionable at common law, but if the decision was so unreasonable that it fell outside the ambit of the discretion conferred on the authority that could give rise to common law
15 liability.
4. If, however, the claim was justifiable then the ordinary principles of negligence, i.e. whether the damage was reasonably foreseeable, whether there was proximity of relationship between the parties and whether it was fair, just and
20 reasonable to impose a duty of care, applied. In particular, the requirement that it had to be just and reasonable to impose a common law duty of care in all the circumstances before liability in negligence would be imposed applied not only where the plaintiff’s claim was for pure economic loss but also where the
25 claim was for physical damage.
16. In Hu Sepang v Keong On Eng & Ors. (1991) 1 MLJ 440, Lim Beng
Choon J (as he then was) said that where a cause of action is based on a
30 breach of statutory duty the Plaintiff must show that (a) the injury suffered was within the ambit of the statute; (b) the statutory duty imposed a
9
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5 liability to civil actions; (c ) the statutory duty was not fulfilled; (d) the breach of duty had caused the injury. Where a statute offered a power coupled with a duty to exercise it, failure to do so is a breach of that duty for which a remedy would lie. Where the loss is occasioned by a failure to exercise a power coupled with discretion there is no liability. But a Plaintiff
10 is still entitled to compensation if he can prove that there had been malicious refusal to exercise a discretionary statutory power.
17. Under the RPGT Act, every chargeable person who disposes of a
15 chargeable asset and every person who acquires the asset shall within one month file a return to the Director General of Inland Revenue setting out inter alia the name and address of the person or on whose behalf the disposal was made, the asset disposed of, the date and acquisition value, the date of disposal and disposal value of the asset. Where a person files
20 a return the Director General may accept the return and make an assessment accordingly. From the use of the word ‘may’, the Director General has a discretion whether to accept the return, whether to ask for more documents or clarification or whether to make an assessment . The Director General shall then cause to be served on every person assessed a
25 notice of assessment.
18. The evidence adduced showed that on 12.8.2004, the 2nd Defendant received a Return of Disposal of Chargeable Asset (CKHT-1) and a Return
30 of Acquisition of Chargeable Asset (CKHT-2) both dated 23.9.2000 in the name of the Plaintiff, filed by Messrs. Siti & Co. the solicitors handling the
10
K22-58-2008
5 sale and purchase, which declared that the Plaintiff had vide a SPA dated
14.2.2000 disposed of CL 205368716 and that the land was acquired on
3.8.1995.
10 19. Pursuant to the SPA dated 14.2.2000 for the sale of CL 205367844 including CL 205368716, Siti & Co. had retained RM222,840.00 pursuant to the RPGT Act. PTTL requested for this sum to be released and paid to it as it was not liable for RPGT for the sale of the lands. PTTL had already been assessed for income tax for the sale and disposal of the lands as part
15 of its business by the Cawangan Syarikat of the 2nd Defendant.
20. To facilitate the release of the retention sum, PTTL via its accountants Mohd. Nor & Associates requested
the Cawangan Syarikat of
20 the 2nd Defendant to confirm that it was not liable to RPGT. The 2nd
Defendant via a letter dated 24.10.2005 confirmed this. Siti & Co. upon receipt of this letter released the retention sum to
PTTL.
25 21. The CKHT section however assessed RPGT on the transactions amounting to RM381,559.66 on 18.10.2007. The CKHT section was not aware that PTTL, and therefore the Plaintiff, was not liable for RPGT in respect of these transactions and that PTTL had already been assessed with income tax by the Cawangan Syarikat. Subsequently, the assessment
30 made on 18.10.2007 under the RPGT Act was cancelled.
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5 22. The problem and confusion in this case arose because different sections of the 2nd Defendant were responsible for assessing different taxes. The Cawangan Syarikat was responsible for corporate taxes while the Cukai Keuntungan Harta Tanah (CKHT) section was responsible for real property gains tax for individuals. Apparently the different sections did
10 not communicate nor cross-reference with each other. If they did, the mistake would not have arisen and the Plaintiff would not have to be put through any embarrassment by the issue of the assessment and the
certificate.
15
23. Notwithstanding that, under s. 49 and s. 50 of the RPGT Act, a return made by or on behalf of any person shall be presumed to have been made by that person or on his authority, by his attorney or agent. The evidence showed that the returns were submitted in the name of the Plaintiff on his
20 behalf by PTTL, the substitute attorney.
24. Under s. 52 (1) of the RPGT Act, no assessment notice or other document purporting to be made or issued for the purpose of this Act shall
25 be quashed or deemed to be void or voidable for want of form or be affected by any mistake, defect or omission therein if it is in substance and effect in conformity with or according to the intent and meaning of the Act and the person to whom it is addressed is designated according to
common intent and understanding.
30
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K22-58-2008
5 25. S.19(1) of the RPGT Act provides that a person upon whom a notice of assessment is served may within six years apply for a revision on the ground that the assessment is excessive by reason of an error or mistake in a return or other statement made by that person for the purposes of the assessment. The application shall be taken as a notice of appeal under s.
10 18 of the Act. S.19(2) provides that no relief shall be given in respect of an error or mistake as to the basis on which the liability of the person concerned ought to have been computed where the return containing the error or mistake was in fact made on the basis of or in accordance with the practice of the Director General providing at the time when the return was
15 made.
26. Reading the RPGT Act, there was no statutory duty on the 2nd
Defendant to ensure that the assessment was done correctly because the
20 Act makes provisions that no assessment notice or other document purporting to be made or issued for the purpose of the Act shall be quashed or be deemed to be void or voidable for want of form, mistake defect or omission and it provides for the assessment to be revised or for
an appeal against the assessment to the Special Commissioners.
25
27. Pursuant to S. 20(1) of the Act, where there is no appeal an assessment shall become final and conclusive for all the purposes of the Act. The 2nd and 3rd Defendant were therefore pursuant to s. 22(1) of the
30 Act entitled to issue the certificate to the Police and Immigration
13
K22-58-2008
5 Departments. They were merely carrying out their statutory duty under the
Act.
28. S. 18(1) of the RPGT Act provides that a person aggrieved by an
10 assessment made on him may appeal to the Special Commissioners against the assessment in the same manner as an appeal against an assessment of income tax made under the Income Tax Act 1967. The Plaintiff did not appeal against the assessment to the Special Commissioners before filing this suit. The authorities are clear on this. It is
15 only after he had availed himself of that remedy as laid down by the law that he has a right to come to the courts: Sun Man Tobacco Co. Ltd v Government of Malaysia (1973) 2 MLJ 163, Ta Wu Realty Sdn Bhd v Ketua
Pengarah Hasil Dalam Negara & Anor (2009) 1 MLJ 555.
20
29. The next question is whether the Defendants owed the Plaintiff a duty of care to ensure that the notice of assessment was done correctly. Again referring to the case of X (minors) v Bedfordshire County Council (supra) where it was held that the mere assertion of the careless exercise of a
25 statutory power or duty was not sufficient in itself to give rise to a private law cause of action. The Plaintiff also had to show that the circumstances were such as to raise a duty of care at common law. In determining whether such a duty of care was owed by a public authority, the manner in which a statutory discretion was or was not exercised had to be
30 distinguished from the manner in which the statutory duty was implemented in practice.
14
K22-58-2008
5 30. The assessment made on 18.10.2007 did not amount to an exercise of a discretion which would have been outside the purview of the court. It was a process that came under the ‘manner in which the statutory duty was implemented in practice’. In this case if the CKHT section had checked with the Cawangan Syarikat, it would have found out that PTTL
10 and therefore the Plaintiff had already been assessed with income tax and were no longer liable for RPGT. If such a system or procedure were in place to ensure that checks and references were made between the
different sections, the mistake complained of would not have occurred.
15
31. The stink was not in the assessment made on 18.10.2007 but in the letter issued to the Police and the Immigration. Was the
damage of the Plaintiff reasonably foreseeable? Was the relationship between the Plaintiff and the Defendants sufficiently proximate?
Is it just and reasonable to
20 impose a common law duty of care? See Caparo Industries plc v Dickman (1990) 1 All ER 568. On the facts and circumstances of this
case I find that it is just and reasonable to impose a common law duty of care on the 2nd Defendant otherwise a person’s financial standing or career or his right to travel may be adversely affected by the negligent implementation
of the
25 statutory duty.
32. However on the facts of this case, the CKHT1 and CKHT2 forms were submitted on behalf of PTTL, the substitute attorney of the Plaintiff.
30 The notice of assessment was sent to PTTL’s address. PTTL as the attorney of the Plaintiff was responsible to inform the Plaintiff of the
15
K22-58-2008
5 assessment. PTTL was responsible to either ask for a revision, to appeal against the assessment or to pay the tax as assessed. PTTL could easily have replied to the CKHT section advising that income tax had already been assessed by the Cawangan Syarikat and that the transactions were not liable for any RPGT. PTTL did not do any of these. This resulted in
10 the 2nd and or 3rd Defendants issuing the certificate under s.22(1) of the Act
which the Plaintiff complained of. If PTTL had acted accordingly, the s.22 (1) certificate would not have been issued. The faults
or omissions were
on the part of PTTL. This had resulted in a break in the chain of causation.
15
33. Further, the Plaintiff had not identified nor joined the officer who was responsible for the alleged tortious act. His or
her liability must be established before the 2nd Defendant and the 1st Defendant can be made liable vicariously as principal: Kerajaan Malaysia & Ors v Lay Kee Tee &
20 Ors (2009) 1 MLJ 1. In this case, the 3rd Defendant was not the officer
who carried out the assessment. He merely issued the certificate after the assessment had been done. The Plaintiff also did not adduce
any evidence to show that the assessment and the issue of the certificate were done in bad faith.
25
34. The Plaintiff should have sued or joined PTTL in this suit but he did not do so. Instead the Plaintiff separately sued PTTL in Kota Kinabalu High Court suit no. K22-88-2008 where the agreed issues for trial were very
30 different from the issues in this suit. For the reasons I have given, the
16
K22-58-2008
5 Defendants were not negligent in issuing the certificate with a copy to the
Police and Immigration Department.
35. Since I have answered Issue 2 in the negative, there is no necessity
10 for me to answer Issue 4. For the sake of completeness, I shall deal with Issue 4 briefly which is whether the contents of the letter dated 22.2.2008 and or the certificate issued under s.22(1) of the RPGT Act were
defamatory of the Plaintiff.
15
36. There were three letters dated 22.2.2008. Two of these letters, one in English and one in Bahasa Malaysia, were addressed to the Plaintiff informing him that the section 22 certificate had been issued against him and he was advised to obtain a clearance certificate otherwise he would be
20 prevented from leaving the country. These two letters addressed to the
Plaintiff were not defamatory.
37. The Plaintiff contended that the letter dated 22.2.2008 addressed to
25 the Police and Immigration was defamatory of him. This was a standard official letter informing the Police and Immigration that a s.22 certificate under the RPGT Act had been issued against the Plaintiff and sought the assistance of the Police and Immigration to prevent the Plaintiff from
leaving the country unless the tax was paid.
30
17
K22-58-2008
5 38. In an action for defamation, the court is to determine whether the words complained of are capable of bearing a defamatory meaning. This is a question of law that turns upon the construction of the words published. Having decided whether the words complained of are capable of bearing a defamatory meaning, the next step is to ascertain whether the words
10 complained of are in fact defamatory of the Plaintiff. This is a question of fact for the court to decide looking at the words complained of and the circumstances of the case: Chok Foo Choo @ Chok Kee Lian v The China Press Berhad (1999) 1 AMR 753, Tun Datuk Patinggi Haji Abdul Rahman
Ya’kub v Bre Sdn Bhd (1996) 1 MLJ 393.
15
39. On the facts and circumstances of this case, I find that the words complained of were capable of being defamatory and were in fact defamatory of the Plaintiff as pleaded in paragraph 11 of the Statement of
20 Claim. The contents of the letter meant that the Plaintiff being a well- known politician was not an honourable person in that he intended to leave the country without pay the RPGT assessed against him.
25 40. The Defendant pleaded that the letter was issued on an occasion of qualified privilege. It is settled law that it was for the Defendants to prove the facts and circumstances which established the occasion as qualified privilege when the letter was issued. A qualified privilege occasion is an occasion where the person who makes the communication has an interest
30 or a duty, legal, social or moral, to make to the person to whom it is made,
18
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5 and the person to whom it is so made has a corresponding interest or duty to receive it: Adam v Ward (
1917) AC 309.
41. In this case the letter was issued pursuant to s. 22 (1) of the RPGT
10 Act. S.21 (2) provides that any Commissioner of Police or Director of Immigration who receives a request under subsection (1) in
respect of any person shall take or cause to be taken all such measures as may be necessary to give effect to it. The 2nd and 3rd Defendants were under a statutory or legal duty to issue the letter and the Commissioner of Police
15 and Director of Immigration were similarly under such a duty to receive it.
S.22 (5) provides that no legal proceedings shall be instituted or maintained against the Government, a State Government, a police officer or any other public officer in respect of anything lawfully done under this section or subsection 32 (2). I am of the opinion that the Defendants were and are
20 protected by an occasion of privilege in issuing the letter.
42. The Defendants further submitted that the Plaintiff cannot sue the
2nd and 3rd Defendants by virtue of section 29 of the Inland Revenue Board
25 Act 1995. S.29(1) provides that no action or legal proceedings shall be brought against the Board in respect of any matter relating to any tax for which the Board is acting as the agent of the Government. S.29(2) provides that any action or legal proceedings in respect of any matter
relating to tax shall be instituted by or against the Government.
30
19
K22-58-2008
5 43. The Defendants submitted that the acts of raising an assessment and issuing the certificate were official acts of the 2nd and 3rd Defendants which were done in the course of discharging their duties as the agents of the Government and therefore related to tax
matters. It was submitted that the 2nd Defendant being an agent of the 1st Defendant and the 3rd
10 Defendant being an employee of the 2nd Defendant were and are
protected from any legal action for acts done as agents of the Government in any matter relating to tax. The Defendants also referred
to section 4(b)
of the Government Proceedings Act in support of this contention.
15
44. Reading the above provisions, I agree that the Plaintiff cannot institute or maintain any legal proceedings against the 2nd and 3rd Defendants but only against the 1st Defendant in respect of any claim which arises out of the revenue laws.
20
45. For the reasons given above, I dismiss the Plaintiff’s claims against the 1st , 2nd and 3rd Defendants with costs to the Defendants, to be taxed if
not agreed.
25
30 HIGH COURT II KOTA KINABALU
20
5 Counsel:
K22-58-2008
For Plaintiffs : Mr. Yunof Maringking with Mr. Tervor Maringking
Messrs. Maringking & Co. Advocates & Solicitors KOTA KINABALU
10
For 1st Defendants: Puan Siti Badariah Mohd. Yusof
Senior Federal Counsel
Attorney General’s Chambers
15 Level 3, Block C3, Parcel C
Federal Government Administration Centre
20 For 2nd & 3rd Defendants: Mr. Ahmad Khairuddin Abdullah with
Senior Revenue Counsel
Inland Revenue Board of Malaysia
Legal Department
25 Block 9, 9th Floor
Kompleks Bangunan Kerajaan
Jalan Duta
] [Hide Context]
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