Pongi v The Queen - [2012] NZCA 127

IN THE COURT OF APPEAL OF NEW ZEALAND

CA523/2011
[2012] NZCA 127

BETWEEN JOHN DAVID PONGI
Appellant

AND THE QUEEN
Respondent

Hearing: 23 February 2012

Court: Randerson, Potter and Simon France JJ

Counsel: W T Nabney and D P Weaver for Appellant
M D Downs for Respondent

Judgment: 29 March 2012 at 4.15 p.m.

JUDGMENT OF THE COURT

AThe appeal against conviction on 18 counts under s 143A(1)(d) of the Tax Administration Act 1994 is allowed.
BThe convictions on those charges are quashed.
CNo retrial is ordered.
DThe appeal against sentence on all 31 counts in the indictment is allowed. In substitution for the sentence of two years and six months imprisonment, a sentence of 15 months imprisonment is imposed on each of the remaining counts in the indictment with all terms to be served concurrently.

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REASONS OF THE COURT

(Given by Randerson J)

Introduction

The appellant was found guilty after jury trial before Judge Rollo of 31 counts of evading the payment of PAYE, GST and income tax. He was subsequently sentenced to concurrent terms of two years and six months imprisonment on all charges.[1]
[1] R v Pongi DC Tauranga CRI-2009-070-614, 16 August 2011.
Mr Pongi now appeals against conviction in respect of the 18 counts in the indictment which alleged that he knowingly applied or permitted the application of PAYE tax for a purpose other than paying it to the Commissioner of Inland Revenue, contrary to s 143A(1)(d) of the Tax Administration Act 1994 (the TAA).
The sole ground of the conviction appeal is that s 143A(1)(d) of the TAA does not apply unless PAYE has been actually deducted from the wages of the relevant employees, or there is a deemed deduction of PAYE under a tax law. The appellant’s submission is that neither of those circumstances occurred in the present case.
The appellant also appeals against his sentence on all counts in the indictment. The Crown acknowledges that, if the conviction appeal is allowed, there must be a consequential adjustment to the sentence.

Background

Mr Pongi was the majority shareholder and sole director of Quality Hort Limited, a company which provided labour to the kiwifruit industry. The company employed gangs of workers and charged orchardists for the services performed by its employees. It is not in dispute that the company did not pay any PAYE or GST over the period from May 2006 until January 2008. Over the same period, the company failed to furnish the Commissioner with the required monthly PAYE returns, two-monthly GST returns, and annual income tax returns.
In respect of PAYE, Mr Pongi’s evidence was that Quality Hort Limited received lump sums from the orchardists with whom the company contracted, less a 15 per cent withholding payment deducted by the orchardists. He said he believed that the 15 per cent withholding payment discharged the company’s tax obligations. The amounts received from the orchardists by the appellant’s company were divided between the workers and paid to them without any PAYE deduction.
One…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Pongi v The Queen

Details

AGLC: Pongi v The Queen [2012] NZCA 127
Case: [2012] NZCA 127
Decision Date: 29 March 2012

CaseChat Overview and Summary

John David Pongi appeals his convictions and sentences on charges related to tax evasion. The appeal was heard by Randerson, Potter, and Simon France JJ in the Court of Appeal of New Zealand. Pongi was found guilty of 31 counts of evading PAYE, GST, and income tax, and was sentenced to concurrent terms of two years and six months imprisonment. Pongi appeals the conviction on 18 counts of evading PAYE, arguing that the statutory provision does not apply unless PAYE has been deducted from the wages of the relevant employees or there is a deemed deduction of PAYE under a tax law. He also appeals the sentence on all counts in the indictment. The court found that there was no evidence to establish that PAYE was actually deducted from the wages of the employees or that a deduction of PAYE was deemed to have occurred under a tax law in this case. The appeal against conviction on the PAYE charges was allowed, and the convictions on those charges were quashed. No retrial was ordered as there is no realistic prospect that evidence could now be obtained to support fresh convictions on the PAYE charges. The appeal against sentence on all counts in the indictment was allowed, and a sentence of 15 months imprisonment was imposed on each of the remaining counts with all terms to be served concurrently.

The court's reasoning in this case highlights the importance of statutory interpretation in criminal tax cases. The court found that the statutory provision in question only applies if PAYE has been deducted or is deemed to have been deducted under a tax law. The court also found that there was no evidence to establish that PAYE was actually deducted from the wages of the employees or that a deduction of PAYE was deemed to have occurred under a tax law in this case. The court's decision to allow the appeal against conviction on the PAYE charges and quash the convictions on those charges highlights the importance of ensuring that the prosecution proves all elements of the offence beyond reasonable doubt. The court's decision to allow the appeal against sentence and impose a sentence of 15 months imprisonment on each of the remaining counts with all terms to be served concurrently demonstrates the court's consideration of the appellant's time already served in custody.

Orders