clr/1977/1977_3_213.pdf

(2)of the Administrationof Justice (Miscellaneous Provisions) Law, 1964—Mikxommatisv. The Republic, 2 R.S.C.C. 125 to the effect thataggregation of the incomeofa wife, from sourcesother thanfrom her own labour,withthat of her husband,for income tax purposes, was not unconstitutional—Whether correctly decided. Income Tax—Assessments—Objectionthereto—Determinationof, by applyinglegislation which was not in force at the material time—Namely'section 22 of theIncome Tax Laws 1961-1969, 213 DEMETRIOS DEMETRIADES 1977 REPUBLIC instead of section 21 of the Income Tax Law, 1961, which was the legislationproperly applicable thereto—Validityof assessments. r^.vTAV!^ FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Administrative Law—Administrative Act—Objection to incometax Sept 8 assessments—Determination of—Failureto apply the correct Law torelevant facts—Validityofassessment. Equality—Discrimination—Discrimination on the ground of sex— Articles6 and28 of theConstitution. Right tomarry—Article22 of the Constitution. The respondent in this appeal was assessed by the Commis- 10 sioner of Income Tax to pay tax on the combined total of his income received by way of salary, and the income of his wife, derived from the letting of shops and flats, for the years of assessment 1962 to 1968. Upon a recourseby therespondent against theaboveassess- 15 ment the trial Judge annulled the sub judice assessments after holding: (a) That the income of the wife of .the respondent from rentsof flats and shopsisnot earned incomeas provided by section 22

(1)*of theIncome Tax Laws 1961 to 20 1969 but income from property and, therefore, should not be taxed separately. (

1. b)That section 22 of the Income Tax Laws 1961-1969 and allother similar earlier tax provisions areunconstitutional astoeingcontrary to Articles 24 and 28 of the 25 Constitution. In deciding as above the trial Judge stated that Judges of the Supreme Court, sitting alone, are not bound by decisions of the former Supreme Constitutional Court and that, therefore, he was not bound by the second leg of the decision of 30 the latter Court in Mikrommatis v. Republic, 2 R.S.C.C 125, and he could depart from it. Paragraph (
2. b)above was the subject of an appeal by the Republic {through the Minister of Finance and the Commissioner of IncomeTax) and paragraph (
3. a)was thesubject of a 35 cross-appeal by the respondent—taxpayer. *Quoted at p. 227 post. 214 5 Held,(A. Loizou J., dissenting) that the sub judice assessments must be annulled. (A) Per Triantafyllides, P., Stavrinides, J., concurring: 5 10 15 20 25

(1)That in determining the objections of the respondent for the years of assessment 1961-1968 the appellant Commissioner has applied the new section 22 of the relevant legislation, and not sections 21 of Gr. C. Ch. Laws 18/62 and 9/63 and the old section 21 of Law 58/61, which were in force, at the material time, in relation to the years of assessment concerned; thatbydoingso theCommissioner has failed, in .taking administrative action in relation to the matter before him, to apply the correct law to therelevant facts, and he has instead based himself on a provision, the said section 22, which was enacted in 1969 and which was, therefore, inapplicable in respect of the years of assessment 1961-1968; that, as a result, instead of deciding whether or not the affected income of .the wife of the respondent was income derived by her in the exercise of the right safeguarded under Article 25 of the Constitution, he examined the nature of such income from a much narrower angle, on -thebasis of whether or not it was "earned income" as defined in the income tax legislation; and ithat, consequently, the sub judice assessments have to be, and are hereby, annulled as being legally defective.

(2)That the issue of the validity of the new section 22of Law 58/61, which was not applicable to the assessments in question and which is not part of the legislation enacted on the basis of the decision in the Mikrommatiscase will be left entirely open. (B) PerMalachtos, J.,L. Loizou,J., concurring: 30 35 40

(1)That section 21 of the Income Tax Law, 1961 (now section 22 of the Income Tax Law, 1961-1969) is unconstitutional as being contrary to Articles 24.1 and 28.1 of the Constitution; that the argument that a husband and wife are considered asonefinancial unit and that the object of the Law is t 0 make the husband a channel through which the collection of tax in respect of the income of his wife is effected cannot stand (Hoeperv. Tax Commissionof Wisconsin, 76 Law. Ed. U.S.248 and CaseNo. 9 of 1957 of the Federal Constitutional Court of the Federal Republic of Germany adopted andfollowed). .215 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES

(2)That the said section 21 contravenes Article 24.1 of the Constitution, which provides that every person is bound to contribute according to his means towards the public burdens, by imposingon a married man theliability tocontribute, in addition to his own means, for themeans of somebody else.

(3)That the said section contravenes Article 28 of the Constitution which provides for equality before the law and against discrimination; that the addition of the income of the wife from other sources than from her own labour, to the income of her husband, results to unequal treatment between married men depending on whether their wives derive income from their own labour or from their own property; that, furthermore, a married man whose wife derives income from her own property, since the reduction of the scales for bachelors, as a result of Panayides v. Republic

(1965)3 C.L.R. 107,enjoyshisincome to a lesser extent thanan unmarried man; and that likewise it results to unequal treatment between married and unmarried women.

(4)That in viewof thejudgment in the appeal that section 21 of the Income Tax Law 58/61 is unconstitutional, an examination as to whether income from rents of flats and shops of the wife of the respondent, is earned income, as provided by section 21

(2)of the law, or not is rendered superfluous. In fact, counsel for the respondent clearly stated that if the appeal were decided in his favour he would not insist on the cross-appeal. On the questionwhether the trialJudge wasentitled to depart from the decision in the Mikrommatis case (supra) or whetherhe wasboundtofollowit: (A) Per TriantafyHides, P., Stavrinides,J., concurring:

(1)That a Judge of this Supreme Court acting under section 11

(2)of the Administration of Justice (Miscellaneous Provisions) Law, 1964 (Law 33/64) is, certainly, not to be regarded, in any way at all, as an "inferior court" in relation to a Full Bench of the Supreme Court; that he is bound, however, because of the doctrine of precedent, by the decisions of a Full Bench of .this Court—(and of the Supreme Constitutional Court and of the High Court of Justice as its predecessors)—simply for the sake of ensuring, as much as possible, certainty regarding the law in force, since his decisions are not of a final nature, in the sense that they are subject to 216 an appeal, whereas those of a Full Bench of this Court, as well as those of the Supreme Constitutional Court and of the HighCourt of Justice,are,indeed, of afinalnature. 5 10 15

(2)That a Full Bench of this Court can reverse its own case-law, as well as that of «the Supreme Constitutional Court and of the Higjh Court of Justice, on the same basis on which theHouseofLordsinEngland candolikewise.

(3)That it was not open, in the present case, to the learned trial Judge, not to follow, and to instead reverse, thedecision in the Mikrommatis case; that he was, of course, perfectly entitled to put on record in his judgment his opinion that the Mikrommatis case had been wrongly decided, but having done so he was bound to follow it, leaving the matter of its possible reversal to be dealt with, if need be, by a Full Bench of thisCourt onappeal. (B) PerMalachtos, J.,L. Loizou,J., concurring: 20 25 30 35 40

(1)That, no doubt, this court in its appellate jurisdiction is not bound to follow the decisions of the former Supreme Constitutional Court, or even its own decisions, and can always depart from them, when, of course, there are good reasons for doing so (see in this respect Constantinidesv. The Republic

(1969)3C.L.R. 523).

(2)That the Cyprus Courts regard judicial precedent as a source of law and the decisions of the Supreme Court are binding on all courts; that the present case was tried in the first instance by a Judge of this Court whose decision is not final and conclusive but is subject to appeal; that the decision in Mikrommatiscase was issued by the former Supreme Constitutional Court, which was constituted of three judges and which, according to Article 146.1 of the Constitution had exclusive jurisdiction to adjudicate finally on a recourse made to it on a complaint that a decision, an act or omission of any organ, authority or person, exercising any executive or administrative authority, was contrary to any of the provisions of the Constitution or of any law or was made in excess or abuse of powers vested in such organ or authority or person; that the trial judge in"the present'case was certainly entitled to express his disagreement with -the decision of the Supreme ConstitutionalCourt but was 'bound to follow it; and that the decision °f the former Supreme Constitutional Court should be regard- 217 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES ed equivalent to the decision of the Supreme Court sitting either on appeal or as a Full Bench in its Revisional Jurisdiction and soitcreates ajudicialprecedent. ( O PerA. Loizou, J.

(1)That the doctrine of judicial precedent is part and parcel of our judicial system as being the necessary basis for providing a degree of certainty as to the law, in order to show a consistency in judicial pronouncements and at that an equality of treatment before the law, and the means for the development of legal rules in a disciplined and regular manner; that the doctrine of precedent, however, particularly so in matters relating to constitutional and administrative issues should be more liberal than the manner in which it was applied under the Common Law system from which we inherited same until 1966 when the House of Lords introduced a more liberal approach to the binding effect of their own precedents on themselves.

(2)That subordinate courts, and with it is meant District Courts and Assize Courts, are bound by the existing judicial precedent of superior courts, and as far as such subordinate courts are concerned, the Supreme Court whether sitting as a Full Bench or in Benches of three, should be deemed as a superior court.

(3)That the Supreme Court is entitled, being the highest Court of the land entrusted with both original and appellate jurisdiction, concerned with the interpretation of the Constitution and having exclusive jurisdiction on Administrative Law matters, to depart from precedent if it is of opinion that they are wrong or that changed political, economic and social developments call for a review of its previous approach, particularly so in matters of Constitutional and Administrative Law; and that it should, however, be reluctant and cautious to depart from precedent and should always be guided by the fact that such a departure should not interfere retrospectively with contractual relations and fiscal arrangements. (With regard to precedent in Criminal Law matters, see the case of The Republic v. NicolaosSampson

(1977)2 CJL.R. 1 at p. 80).

(4)That the approach of .the learned trial judge was that since the then Supreme Constitutional Court was exercising original jurisdiction similar to that exercised by a single judge of ihe present Supreme Court trying a case on adrninistrative 218 10 15 20 25 law under the provisions of Law 33/64, the doctrine of judicial precedent did not apply as in its various manifestations operates so as to bind Courts in the lower line of the ladder of hierarchy of Courts; that, consequently, it assimilated the status of the then Supreme Constitutional Court vis-a-visthe exercise of the samejurisdiction under the aforesaid section 11 by one of the judges of this Court to that of a High Court Judge in England who are not bound by judgments of their colleagues in ithe High Count but are merely of a persuasive authority;.that there cannotbesuch comparison asthe Supreme Constitutional Court had exclusive jurisdiction and, though exercising its jurisdiction in the first instance, had the final word on the subject, whereas when a Judge of the Supreme Court today exercises the same jurisdiction in the first instance, his judgment is subject to appeal to the Full Bench of the Court; that irrespective, therefore, of the equal status of a judge of this Court with his colleagues, yet the fact that •thejudgment of such a judge is subject to appeal to the Full Bench of the Supreme Court, leads to the conclusion that such a judgment must be treated for the purposes of the doctrine of judicial precedent as being governed by the same principle that applied to the cases of Courts of first instance being bound by thedecisionsof Appellate Tribunals. On thequestionwhethertheMikrommatiscasewas correctlydecided: (A) Per TriantafyHides, P., Stavrinides,J.,concurring.

(1)That having carefully considered the ratiodecidendi of the decision in the Mikrommatis case, supra, in .the light of the correct application of the principle of equality—with particular reference .tosuch application to matters of taxation and of social and economic policies—and having, also, examined thesaid ratiodecidendi from the angle of its compatibility with .the enjoyment of ithe right to marry, and that, having further, taken judicial notice of the relevant social conditions existing at thematerial time, thisCourt (Triantafyllides, P., Stavrinides, J., concurring) has come to the conclusion that the decision in the Mikrommatis case was a correct one at the time when it was reached, on December 11, 1961, and that it was not inconsistent with Articles 24 and 28, or with Article 22, of the Constitution; and that, consequently, ithe relevant legislation, which was based on the said decision, was not unconstitutional at thetimewhenitwasenacted.

(2)That, for .the time being, .the issue of whether or not, .219 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES because of intervening factual and legal developments, the decision given in the Mikrommatiscase, and embodied in legislation based on it, has tobe.treated as being no longer valid will be left entirely open; that this course was adopted not only because .there is not, in the present case, material before the Court, concerning factual and legal developments after the decision in the Mikrommatis case, as should lead the Court to •the definitive conclusion that it is imperative to overrule it, but, also, because, even assuming that it were to be overruled, these are no adequate factors 'before the Court in order to be enabled to pronounce whether it is to be overruled only prospectively or retrospectively too, and, if so, as from what time in the past. (B) PerMalachtos, J.,L. Loizou,J., concurring: That the Mikrommatis case should be reversed; that the Supreme Constitutional Court wrongly decided that the addition of the income from property of a married woman, resulting from the application of section 19 of Cap. 323, to that of her husband, was a reasonable distinction based on the intrinsic nature of the community of life existing between spouses, and did not amount to a discrimination on .the ground of sex; and that section 19 of Cap. 323,ought to 'be declared as unconstitutional for the reasons explained above. <(C) PerA. Loizou, J.: That the Mikrommatis case was correctly decided and the reasonsgivenin thatcase arestillholdinggood. Appeal dismissed. Cases referred to: Mikrommatis and The Republic, 2 R.S.C.C. 125, at pp. 131, 132; Hoeper v. Tax Commissionof Wisconsin, 76 Law. Ed. 248; Attorney-General of the Republic v. Ibrahim, 1964 C.L.R. 195 at p.233; Board of Registration of Architects and Civil Engineers v. Kyriakides

(1966)3C.L.R. 640atp.654; Matsis v. The Republic

(1969)3 C.L.R. 245 at p. 258; Fekkas v. Electricity Authority of Cyprus

(1968)1 C.L.R. 173 atpp.183-184; •220 Panayides v. The Republic

(1965)3 C.L.R. 107 at pp. 116,, 117, 118, 119; 1977 Sept 8 Constantinides v. The Republic

(1969)3 CL.R. 523 at pp. 533, 545; REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Republic v. Georghiades

(1972)3 C.L.R. 594 at p. 690; Hadji Moussa v. Apostolides and Others

(1899)5 C.L.R. 6 at p. 11; Ismail and Another v. The Attorney-General

(1929)16 C.L.R. 9 at pp. 12, 14; Alma Shipping Co. S.A. v. V.M. Salgaoncar E. lrmaos Ltd. [1954] 2 Q . B . 94; London Street Tramways Co. Ltd. v. London County Council [1898] A.C. 375; Geelong Harbor Trust Commissioners v. Gibbs Bright & Co. [1974] 2 W.L.R. 507 at pp. 512-514; Knuller (Publishing, Printing and Promotions) Ltd. and Others v. Director of Public Prosecutions [1972] 3 W.L.R. 143; Young v. Bristol Aeroplane Company Limited [1944] 1 K.B. 718 at pp. 729,730; Tiverton Estate Ltd. v. Wearwell Ltd. [1974] 2 W.L.R. 176; Morsis v. The Republic

(1965)3 C.L.R. 1; Blackstone v. Miller, 47 Law. Ed. 439; Farmers. Loan & Trust Co. v. State of Minnesota, 74 Law. Ed. 371; Smith v. Allwright, 88 Law. Ed. 987 at p. 998; Republic v. Sampson

(1977)2C.L.R. 1 at p. 80; Anastassiou v. The Republic (reported in this Part at p. 91 ante at p. 106); Currie v. Commissioners of Inland Revenue, 12 T.C. 245 at p. 246; Inland Revenue Commissioners v. Maxse, 12 T.C. 41 at p. 61; Erichsen v. Last [1881-82] 8 Q.B. D. 414; East v. Watson, 43 T.C. 472; Smith v. Anderson [1880] 15 Ch. D. 247 at pp. 258-259; 221 1977 Sept 8 Municipal Corporation of Nicosia v. Rologis Co. Ltd.

(1963)2C.L.R.90 atpp. 110-111; REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Vita-OraCo.Ltd. v. The Republic

(1973)3 C.L.R. 273 at p. 280; Leitch v.Emmott [1929] 2K.B.236atp.247; Elmhirst v. Commissioners of Inland Revenue [1937] 2 Q.B. 551; Pikis v. The Republic

(1965)3 C.L.R. 131 at p. 149; Doe d. Wetherell v. Bird [1834] 2 Ad. &El. 161 at p. 166; Rolls v.Miller[1884]27Ch.D. 71 atp. 88; Noddy Subsidiary Rights Co.Ltd. v. InlandRevenueCommissioners[1966] 3AllE.R. 459 atp.470; Miliangosv. GeorgeFrank (Textiles) Ltd. [1975] 1 All E.R. 1076 at pp. 1084-1085; [1975] 3 All E.R. 801 at pp. 801, 820; Farrelland Another v. Alexander [1976] 1 All E.R. 129 at p. 137;[1976] 2AllE.R. 721 atp.741; Zimmerman v.Grossman [1971] 1AllE.R. 363; Boysv. Chaplin [1968] 1AllE.R. 283 at p.296; Jones v. Secretary of State for SocialServices, Hudson v. SecretaryofStatefor Social Services [1972] 1AllE.R. 145 atpp. 149, 174, 196; In re Harper and Others v. National Coal Board [1974] 2 W.L.R. 775 at pp.777, 780,781; Smith v. Central Asbestos Co. Ltd. [1973] A.C. 518; R. v.Gould [1968] 2Q.B. 65 atpp.68-69; R. v. Newsome, R. v. Browne [1970] 3 All E.R. 455 at pp. 457-458; United States v. South Buffalo Railway Company, 92 Law. Ed. 1077 atp.1081; Greenv. UnitedStates,2L. Ed. 2d 199atpp. 220; States Board of Insurance v. Todd ShipyardsCorporation,8 L.Ed. 2d. 620 at p. 625; UnitedStatesv.Barnett,12L. Ed. 2d 23at p.36; 222 15 United States v. State of Maine, 43 L. Ed. 2 d. 363 at pp. 371, 372; Republic v. Mozoras

(1966)3 C.L.R. 356; Morsis and The Republic, 4 R.S.C.C. 133 at p. 137; 5 Loizides and The Republic, 1R.S.C.C. 107; Constantinides v. The Republic

(1967)3 C.L.R. 483; Zambakides and Others v. The Republic

(1970)3 C.L.R. 191 at pp. 193, 194; 10 Lehnhausen v. Lake Shore Auto Part Co. and Barrett v. Shapiro, 35 L Ed. 2d 351 at pp. 354-355, 357-358; Dandridge v. Williams, 25 L. Ed. 2d. 491 at pp. 501-502, 503; Jefferson v. Hackney, 32 L. Ed. 2d. 285 at p. 296; 15 United States Department of Agriculture v. Moreno, 37 L. Ed. 2d 782 at pp. 787, 790; Kahn v. Shevin, 40 L. Ed. 2d 189 at p. 193; Weinberger v. Salfi, 45 L. Ed. 2d 522; Gedulding v. Aiello, 41 L. Ed. 2d 256; Boiling v. Sharpe, 98 Law. Ed., 884 at p. 886; 20 Schneider v. Rusk, 12 L. Ed. 2d 218 at p. 222; Weinberger v. Wiesenfeld, 43 L. Ed. 2d 514 at p. 519; Frontiero v. Richardson, 36 L. Ed. 2d 583; Jimenez v. Weinberger, 41 L. Ed. 2d 363; * Xinari and The Republic, 3 R.S.C.C. 98 at pp. 100-101; 25 Hji Kyriacos and Sons Ltd., 5 R.S.C.C. 22 at p. 27; Kannas v. The Police

(1968)2 C.L.R. 29;· Gelpcke v. The City of Dubuque, 17 Law. Ed. 520 at pp. 525-526; 30 Great Northern Railway Company v. Sunburst Oil & Refining Company, 77 Law. Ed. 360 at pp. 366-367; Linkletter v. Walker, 14 L. Ed. 2d 601 at pp. 604-606, 607608; 223 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES 1977 Sept. 8 Desist v. United States, 22 L. Ed. 2d 248 at pp. 254-256; Katz v. UnitedStates,19L. Ed. 2d576; REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Cipriano v. Cityof Houma, 23 L. Ed. 2d 647 at pp. 651-652; City of Phoenix v. Kolodziefski,26 L. Ed. 2d 523 at pp.530531; Hillv.Stone,44L. Ed. 2d 172atp.181; Jones v. Secretary of State of Social Services[1972] A.C. 944 at pp. 1026-1027; Pavlides v. TheRepublic

(1967)3C.L.R. 217 at pp. 229-230; Defrenne v. SocieteAnonyme Beige de NavigationAerienne 10 (Sabenna)(Case 43/75)

(1976)2 C.M.L. R. 98 at p. 128. Appeal and cross-appeal. Appeal and cross-appeal against the judgment of a Judge of the Supreme Court (Hadjianastassiou, J.) given on the 27th April, 1974 (Revisional Jurisdiction CaseNo. 15 160/70) whereby the income tax assessments relating to the income of the respondent in respect of the years of assessment 1962 to 1968 were annulled on the ground that the relevant legislative provisions concerning taxation of income, onwhich the assessments had been based, 20 were unconstitutional. A. Evangelouwith A. M. Angelides,Counsel of the Republic,for theappellants. A. Triantafyllides, for the respondent. Cur.adv.vult. IS Thefollowing judgments wereread:MALACHTOS, J.:This is an appeal by theAttorney-General of the Republic against the second part of a first instancedecision*of aJudgeof thiscourtinRecourseNo. 160/70 whereby it was decided that section 22 of the 30 Income Tax Laws 1961-1969 and all other similar earlier tax provisions are unconstitutional as being contrary to Articles 24 and 28ofour Constitution. * Reported in

(1974)3C.L.R. 246. 224 5 In the first part of his said decision, which is subject to cross-appeal, the trial Judge held that the income from rents of flats and shops of the wife of the respondent in this appeal, is not earned income as provided by section 5 22

(1)of the Income Tax Laws 1961 to 1969 but income from other property and, therefore, should not be taxed separately. Therespondent in this appeal wasassessedby theCommissioner of IncomeTax topay tax onthecombined total 10 of his incomereceived by way of a salary and the income of his wife from rents for the years of assessment 1962 to 1968, inclusive.To these assessments the respondent filed anobjection with the Commissioner of IncomeTax which hebased onthefollowing twogrounds. 15 20 25 30 (

1. i)thattheincomeof hiswifeshouldbeconsidered as having been derived through exercise of her right guaranteed under Article 25 of theConstitution i.e. through trade or business; and (
2. ii)if the aboveground isnot considered as correct, then the relevant enactment providing for the separation of the wife's income derived from profession, trade or business, as distinct from income from other sources, is unconstitutional, contrary to Articles 24 and 28 of the Constitution.In thisrespect thecaseof ArgyrisMikrommatis and The Republic, 2 R.S.C.C. 125, shouldbereconsidered sothat thewife's income from whatever source should be separately taxed. · The Commissioner rejected the objection of therespondent and relied on section 22

(2)of theIncomeTax Laws 1961 to 1969 and sections 13

(3)and 20

(5)of the Taxes (Quantifying and Recovery) Law, 53/1963 as amended. Since the assessments in question referred to a number 35 of years of assessment different lawsapplied and soI consideritconvenient atthisstagetorefer tothem. 1. For the year of assessment 1962 section 21

(2)of the Greek Communal Law for Imposition of Personal Contributions onMembers of theGreek Community,Law 40 18/62,applies.Thissectionreadsasfollows: 225 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Malachtos, J. 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Malachtos, J. "21.

(1)Theincomeof a married womanlivingwith her husband shall, for the purposes of this Law, be deemedtobetheincomeof thehusband andshallbe chargedinthenameof thehusband: Provided that thewifemayberequired topay that part of thetotal taxcharged upon thehusband which bears the sameproportion to that total tax as theincome of the wife bears to the total income of the husband and wife notwithstanding that assessment hasnot beenmadeuponher.

(2)For the purpose's of sub-section

(1)of this section, the expression 'income of a married woman' shall include any income other than income derived by a married woman from the exercise of the right safeguarded under Article 25 of the Constitution.

(3)Nothing in this section contained shall prevent a woman living with her husband from being assessed in her own name in respect of income received in her own right but chargeable on her husband where the husband is absent from the Republic". 2. For the years of assessment 1963, 1964 and 1965 section 21

(2)of the Greek Communal Law for Imposition of Personal Contributions onMembers of theGreek Community, Law 9/63, applies. This section is identical to section 21

(2)of the Greek Communal Law 18/

2. For the years of assessment 1966, 1967 and 1968, section 21

(2)of the Income Tax (Foreign Persons) Law, 58/61, as amended by Laws 4/63 and 21/66 applies. This section is also identical to section 21

(2)of theGreek Communal Law 18/62. This section 21

(2)in 1969 was amended by section 15 of Law 60/69 and it is now section 22

(2)of the Income Tax Laws 1961 to 1969 but it does not apply in the present case since the years of assessment, as regards the respondent, are up to

1. In view of the fact that the Commisioner in rejecting the objection of the respondent relied on the new section 22 of the Law, reference wasmade toitbothby counselintheir respective addressesand thetrial court in its judgment but it was made 226 \ abundantly clear in the course of the proceedings that the material section of the law involved in the recourse was section 21 of Law 58/61, as amended by Laws 4/63 and 21/
2. Section 22 of the Law as amended reads as fol5 lows:, "22

(1)The.earned income of a married woman living with her husband shall, for the purposes of this Law, be assessed separately on her. 10 15 20 25

(2)Any income other than earned income derived by a married woman living with her husband shall, for the purposes of this Law, be deemed to be the income of the husband and shall be charged in the name of the husband: Provided that the wife may be required to pay that part of the total tax charged upon the husband which bears the same proportion to that total tax as the income of the wife charged in the name of the 'husband bears to the total income of the husband and wife charged on the husband notwithstanding that assessment has not been made upon her.

(3)Nothing in this section contained shall prevent a woman living with her husband from being assessed in her own name in respect of income received in her own right but chargeable on her husband where the husband is absent from the Republic". • Section 21 of Law 58/61 was enacted as a result of the decision in Mikrommatis case, supra, whereby the then Supreme Constitutional Court drew the distinction' be30 tween the wife's income from labour and thewife's income from property and held that the addition of the former income to that of the husband is unconstitutional whereas the addition of the latter income to that of the husband is not unconstitutional. 35 Before the above decision in Mikrommatis case all the income of the wife, from any source, whatsoever, was added to that of the husband for income tax purposes under section 19 of the Income Tax Law, Cap. 323. This section reads as follows: 19

(1)The income of a married woman living with 227 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Malachtos, I. 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Malachtos, J. her husband shall, for the purposes of this Law, be deemed to be the income of the husband and shall bechargedinthenameof thehusband: Provided that thewifemay berequired topay that part of thetotal tax charged upon thehusband which 5 bears the sameproportion to that total tax as theincome of the wife bears to the total income of the husband and wife notwithstanding that assessment has notbeenmadeuponher.

(2)If either a husband or a wife makes written 10 application to that intent to theCommissioner before the 31st January in the year of assessment, returns of income shall be required to be rendered by the husband and wife separately in the year of assessment and in subsequent years until the application 15 is revoked and the amount of the tax chargeable on the husband pursuant to subsection

(1)shall be apportioned between the spouses in such manner as to the Commissioner appears reasonable and the amounts so apportioned shall be assessed and 20 charged oneach spouseseparately.

(3)Nothing in this section contained shall prevent a woman living with her husband from being assessed in her own name in respect of income received in her own right where the husband is absent 25 from the Colony". theMikrommatiscasethe applicant whowasa farmer residing at Astromeritis on the 2nd March, 1961, after some correspondence with, and meetings at, the Income Tax Office, was informed that the income tax payable by 30 him in respect of the years 1954-1960, both inclusive, amounted to £74.- odd. It was the allegation of the applicant that the assessment of his income and the resulting tax were made arbitrarily as, during those years, he did not earn any taxable income. The applicant subsequently 35 alleged, by leave of the court, that section 19 of the IncomeTax Law, Cap. 323,wasunconstitutional as contravening Articles 6, 24 and 28 of the Constitution. The reasons for judgment of the court appear at pages 130 to 132 of the report and the relevant part reads as follows: 40 "In the opinion of the Court the term 'equal be228 fore the law' in paragraph 1 of Article 28 does not convey the notion of exact arithmetical equality but it safeguards only against arbitrary differentiations and does not exclude reasonable distinctions which have to be made in view of the intrinsic nature of things. Likewise, the term 'cUscrimination' in paragraph 2 of Article 28 does not exclude reasonable distinctions as aforesaid. • •The above view regarding the application of the principleof equality applies also to the interpretation ofparagraph 1 of Article

1. It follows,"therefore, bearing in mind the intrinsic nature of the status of marriage and the relationship it creates' between spouses, that reasonable distinctions in taxation legislation between married and unmarried persons do not in principle offend against paragraph 1 or 2of Article28 andagainst paragraph 1 of Article
2. The Court has examined section 19 of CAP 323 in the whole context of CAP 323 (including provisions such as allowances in respect of children and increased taxation on the income of unmarried persons) as well as against the background of the status of marriage as existing in Cyprus at present and it has come to the conclusion that, although the application of section 19 of CAP 323 may result in the making of a reasonable distinction between married and unmarried persons, it does not discriminate against married persons, as such, and it isnot, therefore, unconstitutional onsuch ground. Coming now to the question whether the application of section 19of CAP 323involvesanydiscrimination onthegroundofsex. Thereisnodoubt that amarried womanwhoseincomeis added to that of her husband and is thereby taxed to a greater extent than if it were to be taxed separately, enjoys the income from her property or from her own labour to a lesser degree than any married man taxed separately in respect of similar income. In the opinion of the Court the reason for such a 229 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. . DEMETRIOS DEMETRIADES Malachtos, J." 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Malachtos, J. differentiation between a married woman and any married man regarding incomefrom property, asresults from the application of section 19of CAP 323, is to be found in the community of life existing between spouses. The said community of life justifies 5 treating the spouses, when living together, as one financial unit in thisconnection. Such differentiation, therefore, is nothing more than the making by taxation legislation of a reasonable distinction based on the intrinsic nature of the marriage and does not 10 amount to a discrimination on the ground of sex. In the case, however, of a married woman not being able, through the application of section 19of CAP 323, to enjoy, to the same extent as any married man, the income from her own labour, the po- 15 sition is quite different. In such a case a married woman is placed in a disadvantageous position vis-avis any married man in the sameprofession, occupation, trade or business. Such a differentiation is not a reasonable distinction based on the intrinsic nature 20 of the marriage nor is it otherwisejustified. It, therefore, amounts to a discrimination on the ground of sexcontrarytoArticle
3. In this judgment the Court has used the expression 'income from her own labour' as meaning in- 25 come derived from the exercise of the right safe- . guarded by Article 25 of the Constitution and 'income from property' as meaning income from all other sources". The trial judge in the case in hand after hearing argu- 30 ments of counsel issued a long and elaborate judgment declaring section 22 of the Income Tax Laws 1961-1969 and all other similar earlier provisions unconstitutional as being contrary to Articles 24 and 28 of the Constitution. In sodoing he based his decision mainly on theAmerican 35 case of Albert A. Hoeperv. Tax CommissionofWisconsin, 16 Law. Ed. U.S.
4. At page 54 of the record the trialjudgehadthistosay: "In the case of Hoeper v. Tax Commission, U.S. Supreme Court Reports, 76 Law. Ed. U.S. 248, a 40 case which is on all fours with the present case, the facts are these:- The appellant married in the year 230
5. Subsequent to his marriage he was in receipt of income taxable to him under the income tax statuteof thestate,andparticularly s.71.05

(2)(d) and s. 71.09 4(c). Under the first section, in effect, the incomeof the wife shall be added to that of thehusband and the taxes levied shall be payable by the husband, but if not paid by him may be enforced against any person whose income is included within the tax computation; and under the second section, although married persons living together as husband and wife were given the right to make separate returns or join in a single joint return, again in either case the tax should be computed on the combined average taxable income of both. The wife of the appellant during the same period received taxable,income, composed of a salary, interest and dividends and ashareof theprofits of apartnership withwhich her husband had no connection. The assessor of incomes assessed against the appellant a tax computed on thecombined total of his and hiswife's incomeas shown by separate returns, treating the aggregate as the husband's income. The amount was ascertained 'andassessedandexceeded thesumof thetaxeswhich wouldhavebeen duehad their taxableincomesbeen separately assessed. Appellant paid the tax and instituted proceedings to recover so much of the tax which wasin excess of the tax computed on hisown separate income. He ascertained that the statute as applied to him violated the 14th Amendment. The Supreme Court of Wisconsin overruled this contention and confirmed the judgment for the appellees. Li The question before the Supreme Court of the United States was whether the state law, as interpreted and applied, deprives the tax payer of due process and of the equal protection of the law. The appellant says that what the State has done is to assess andcollect from him a tax,based in part upon the income received by his wife and that such exaction is arbitrary and discriminatory, and consequently, violative of the constitutional guarantees. On the contrary, the Attorney-General submitted on behalf of the appellees that practical considerations upon which legislature may well have relied are sufficient to sustain the law in question; and that under Wis- 231 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v, DEMETRIOS DEMETRIADES Malachtos, I. 1977 ^^ 8 REPUBUC (MINISTER OF FINANCE AND ANOTHER) T^»„- V ™™ DEMETRIOS DEMETRIADES Malachtos,J. consin laws the husband still has substantial pecuniary advantages from the property and income of t n e wu?e which are not possessed by other persons; and the fact that evasion of just income taxation (higher rates for higher incomes) would be easier if 5 the incomes of husband and wife werenot combined and tax assessed on this basis is a further considera.. tl0n ^. „, . „ supporting the law . It should be noted here that this appeal was allowed by majority. 10 The grounds of the present appeal are the following: "1. The Honourable Court wrongly decided that section 22

(2)of the Income Tax Law No. 58/61 as amendedbyLawsNos.4/63,21/66 and 60/69, and the earlier corresponding provisions by virtue of 15 which theincomefrom property of amarried woman living withher husband shallbedeemed tobe theincome of the husband and shall be charged in the name *of him, are unconstitutional as offending against the provisions of Articles 24 and 28 of the 20 Constitution. Consequently the Honourable Court erred in Law in declaring the assessments for the years of assessment 1962-1968 (both inclusive) null and void and of no effect whatsoever. (The earlier corresponding provisions are section 21

(2)of the 25 Income Tax Law No. 58/61 as amended by Laws Nos. 4/63 and 21/66 before its amendment by Law No. 60/69, section 21

(2)of the Greek Communal LawNo. 18/62 and section 21

(2)of theGreekCommunalLawsNos.9/63, 7/64 and 2/65). 30 2. The Honourable Court, in considering the question of constitutionality of section 22

(2)and the earlier corresponding provisions of the aforesaid Laws, though guided bycertain well established principles governing the exercise of judicial control of 35 legislative enactments, failed to take into account that— (

1. a)the power of the Legislature to classify for the purposes of taxation is of wide range and flexibility; 232 40 10 15 20 25 30 35 40 (
2. b)in taxation there is a broader power of classification than in some other exercises of legislation; (
3. c)absolute equality in taxation cannot be obtained and it is not required under the principleof equality; and (
4. d)in applying a Constitutional provision such asArticle 28, a Court can only interfere with the validity of legislation if the legislativeenactment concerned is clearly unreasonable and arbitrary. 3. The addition of the wife's income from property to the income of the husband for tax purposes is neither discriminatory between sexes nor between married men whose wives derive income from their labour on theonehand and thosewho deriveincome from theirproperty on theother handinasmuch as— (
5. a)'equal before the Law' does not convey the notion of exact arithmetical equality but it safeguards only against arbitrary differentiations and does not exclude reasonable distinctions which have to be made in view of theintrinsic natureof things; (
6. b)it is reasonable differentiation based on the intrinsic nature of the community of life existing between spouses. The said community of life in Cyprus- justifies treating the spouses when living together as one financial unit in this connection; (
7. c)the totalling of the income of both spouses for incometaxpurposes asaforesaid doesnot deserve condemnation as long as it is compensated by appropriate means of correcting injustices such as 'children allowances', 'wife's relief and 'wife's income allowance' which take into account the real fiscal capacityof both spouses; (
8. d)in the case of spouses living together there .are reasons for convenience and fiscal expediency in treating the aforesaid income as joint and the arrangement is justified by the 233 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Malachtos, J. 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Malachtos, J. consideration that in the normal case it is in effect really joint, the spouses being one person with common interests and responsibilities. The fact that in exceptional cases ahusband may possibly deriveno benefit from his 5 wife's income from property does not invalidatetherelevant taxprovision; (
9. e)it is common feature of many systems of income taxation that the household be regarded as one unit for tax purposes because the 10 family unit is both the basic element of sociallife and economic reality; (
10. f)'According to his means' in paragraph 1 of Article 24 of the Constitution does not mean . 'according to his income' but according to 15 his fiscal capacity, which is greater in the case of husbands whose wives derive income from property. 4. The fact that evasion of just income taxation would be easier if the wife's income from property 20 was not combined to the income of the husband for income tax purposes, is in it self sufficient to support the validity of the aforesaid income tax provisions. 5. The Honourable Court erred in law in follow- 25 ing the American caseof Hoeper v. Tax Commission of Wisconsin,284 U.S. 206

(1931)inasmuch as in that case the relevant income tax provision of the State of Wisconsin was found to be contrary to the 'due process clause' as guaranteed by the 14th 30 Amendment which does not correspond to anything in either Article 24 or Article 28 of our Constitution". Counsel for the appellant submitted before us that in considering the question of the constitutionality of a sta- 35 tute wehave to be guided by certain well established principles governing the exercise of judicial control of legislativeenactments.Heargued that— 1. No act of legislation will bedeclared voidexcept in a very clear case or unless the act is unconstitutional be- 40 yond all reasonable doubt. He referred us to the caseof 234 Attorney-General of the Republic v. Moustafa Ibrahim, 1964 C.L.R. page 195 at page 233; The Board for Registration of Architects and Civil Engineers v. Kyriakides

(1966)3 C.L.R. page 640 at page 654 and also Matsis v. The Republic

(1969)3 C.L.R. 245 atpage

2. The courts are concerned only with the constitutionality of legislation and not with its motives, policy or wisdom or with its concurrence with natural justice, fundamental principles of government or spirit of the Constitution. (Kyriakides case,supra, at page 654). 3; In applying a constitutional provision such as Article 28 a court can only interfere with the validity of legislation if the legislative enactment concerned is clearly unreasonable or arbitrary. He referred us to the case of Fekkas v.Electricity Authority of Cyprus

(1968)1 C.L.R. page 173 at pages 183-

2. When the constitutionality of a taxation law is attacked on theground that it infringes thedoctrine of equality the legislative discretion is permitted by the judiciary a great latitude in view of the complexity of fiscal adjustment; in other words, the power of the state to classify for purposes of taxation is of wide range and flexibility.
3. In taxation there is a broader power of classification than in someother exercises of legislation; and
4. Absolute equality in taxation cannot be obtained and it is not required under the principle of equality. The principles referred to under 4, 5 and 6 have been enunciated in theMatsis case. Counsel for the appellant also submitted that the trial judge did not give due weight to at least the last three principles. The object of section 21

(2)of the Income Tax Law No. 58/61, as amended by Laws 4/63 and 2 1 / 66, which is now section 22

(2), after the 1969 amendment, is to make thehusband a channel through which the collection of tax in respect of his wife's income is effected. The addition of the wife's income.from property to the income of the husband for tax purposes is neither discriminatory between sexes nor between married men whose wives derive income from their labour and those who derive income from their property and this is clear from the Mikrommatis case. The philosophy behind the reasoning 235 1977' Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Malachtos, J. 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. . DEMETRIOS DEMETRIADES Malachtos, J. in Mikrommatis case that "equal before the law" in paragraph 1of Article 28 does not convey thenotion of exact arithmetical equality but it safeguards only against arbitrary differentiations and does not exclude reasonabledistinctions which have to be made in view of the intrinsic 5 nature of things, is that this reasonable differentiation is based on the intrinsic nature of the community of life existing between spouses. The said community of life justifies treating the spouses when living together as one financial unit. The expression "according to his means" in 10 paragraph 1of Article 24 does not mean according to his income but according to his fiscal capacity. The aggregation of the income of both spouses for taxing purposes is but a technical device which does not deserve condemnation sinceit iscompensated byproper means of correcting 15 injustice such as children's allowances, wife's relief and wife's income allowances which.takeinto account thereal fiscal capacity of both spouses. In our income tax legislationprovision isbeingmadefor the aboveallowances and reliefs. Counsel for the appellant also pointed out that practical considerations, such as the fact that evasion of just income taxation would be easier if thewife's income from property was not combined to that of the husband, issufficient to support the validity of the relevant income tax 25 provisions. In other words, die object of the provision is to frustrate tax evasion which may be achieved by transferring property from one spouse to the other thus minimising the tax liability. Lastly, counsel for appellant argued that the trial judge 30 erred inlawinfollowing theAmerican caseofHoeperand submitted that in that caseit wasdecided bymajority that an attempt by the Statute to measure tax on a person's income by reference to the incomeof another, is contrary todueprocess asguaranteed bythe 14th Amendment.The 35 due process clause in the 14th Amendment does not correspond to anything in Article 24 or Article 28 of our Constitution. The trial judge seems to have overlooked this important point. Another reason for which the trial judge ought not to 40 follow theHoepefs caseisthatinCypruswehavethedistinctionwhichismadeinMikrommatiscase. 236 20 : On the other hand, counsel for the respondent by able and extensive arguments supported the decision of the trial Judgethat declaresunconstitutional section 21of the IncomeTaxLaw 1961(nowsection22of theIncomeTax 5 Laws 1961 to 1969). He submitted that as the law stands today thedecision of the SupremeConstitutional Court in Mikrommatiscase has to be reconsidered or extendedbecauseit createsmorediscrimination todaythan atthetime it was decided when under the then existing legislation an 10 unmarried person was paying more tax than a married one. This distinction ceased to exist after the decision of thiscourt inthecaseof Panayides v. TheRepublic

(1965)•3 C.L.R. 107 where it was decided that it is not reasonable to makein Cyprus a distinction between married and 15 unmarried persons in so far as the liability to pay personal tax, of the nature for which provision is made in Article 87of the Constitution, is concerned, nor does such a distinction has to be made in view of the intrinsic nature of things! The court was of opinion that as such distinc20 tion not being a reasonable one to make and not being one-which has to be made in view of the intrinsic nature of the status of a bachelor, contravenes Article-28 and • paragraph 1of Article 24 of the Constitution and, therefore, therelevant legislativeprovision inquestion, namely, 25 section 20 of Schedule A to Law 16/61 and paragraphs • 1and 2 of the table of rates of taxation attached thereto, ," are unconstitutional. Counsel for the respondent also submitted that another category is between married women as such. A married 30 woman who derives income from property is-placed in a worse position than a married woman who has income from labour.Shehastopaymoretax. Counsel for the respondent further submitted that oh the same grounds on which the Supreme Court of the 35 United States in Hoepefs case declared the law to be unconstitutional, this court must also declare section 21 of the law to be unconstitutional. He also referred us to Case No. 9 of 1957 of the Federal Constitutional Court of the Federal Republic of Germany and made available 40 tousthefull report translated inEnglish. ' In that case a provision similar to our section 21 of Law 58/61, i.e.section 26 of the.Income Tax Act of the 237 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Malachtos,-J. 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Malachtos, J. Federal Republic of Germany, as reenacted on 17th January, 1952,in connection with section 43 of the Income Tax Implementation Order was declared by the Federal Constitutional Court as unconstitutional. This section is as follows:

1. Married couples will be assessed jointly in so far as both are liable to tax without restriction and do not permanently live apart from one another. These conditions must have existed for at least four months within the period of assessment. 5 10
2. On ajoint assessment the income of thehusband and that of the wife are to be added together. Section 43 of the Income Tax Implementation Order is as follows: "Income from paid employment of the wife in a 15 trade unconnected with the husband is excluded on joint assessment". The facts of this case are shortly as follows: Mr. and Mrs. S. were assessed jointly for the year 1951 under section 26 of the Income Tax Act by virtue of a notice of 20 assessment from the Fiscal Court. The husband, as a retired civil servant, was receiving a pension and the wife had income from her retail business. Mr. and Mrs. S. appealed against the assessment order; they objected primarily to their joint assessment asthey thereby had topay 25 more tax owing to the progressive graduated tariff than on a separate assessment. The Fiscal Court rejected the objection as unfounded in so far as it related to joint assessment. Mr. and Mrs. S. then lodged a further appeal which after various procedural stages reached the Federal 30 Constitutional Court for its decision. The grounds of appeal were that section 26 of the Income Tax Law 1951 was contrary to Article 3of theBasic Law (Constitution) as by the differential treatment of married persons under section 43 of the Income Tax Implementation Order the 35 income of a wife from paid employment is excluded on a joint assessment whilst the income of the husband, on the other hand, is not, and also as against Article 6 of the BasicLaw.ThesetwoArticles read asfollows: Article 3

(1)All persons shall be equal before the 40 Law. 238 5

(2)Men and women shall have equal rights.

(3)Noonemay beprejudiced or favoured because of his sex, his parentage, his race, his language, his homeland and origin, his faith or his religious or political opinions. Article 6

(1)Marriage and family enjoy the special protection of theLaw. 10 Similararguments tothoseadvanced byCounselfor the appellant in support of his case, were advanced by the Federal Taxation Minister of the Federal Republic of t Germany.TheFederalConstitutional Court initsdecision stated that:- 15 The subject matter of the constitutional examination is not the question whether from an abstract angle the joint assessment of any two or more persons generally, or of spouses, in particular is compatible with the Basic Law, but rather it is a question of whether the joint assessment of a husband and wifeisunconstitutional withinthescope of the Income Tax Act of 1951 which is based on the progressive taxation of the individual tax payer. From a constitutional point of view, it might be unjustifiable to base taxation instead of on the income of a single person on the sum of the income of several persons living within thehousehold community either generally by selecting the principle of household taxation or by introducing a proportionate tariff whilst at the same time maintaining the principle of individual taxation. In such instance the decisive factor is that on account of being jointly assessed, a husband and wife in view of the progressive taxation scale designed with the productive capacity of the individual in mind, are in the final resultMn a worse position than other persons, the joint and several liability associated with joint assessment being an additional factor. In this system of modern income tax law based on the principle of individual taxation the two cases of joint assessment constitute an alien element. Up to the end of the First World War joint assessment was financially of little relevance both for the tax payer and also for the State as the progressive scale was minimal and the tax rates remained low. Only after the thought had 20 25 30 35 40 . 239 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Malachtos, J. 1977 Sept.·8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Malachtos, J. become established that, with direct taxes the equitable nature of the tax system required a more precipitous progressive graduation of the tax scale and since such graduation has led to a considerable gap between the highest and the lowest tax rate, has a severe additional burden on married couples occurred by virtue of joint assessment. This is, however, not offset by the creation of several tax classes and tax free sections of income for the wife and for the children incorporated into the scale. These allowances take account only of the increase in the minimum standard of living, an increase which is connected with the duty incumbent on the individual tax payer to maintain the members of his family and, therefore, changed nothing with regard to principle of progressive individual taxation. At the same time, the additional tax burden associated withjoint assessment has become a source of increased revenue for the State whilst in earlier times, it merely served to simplify administration procedures. Such an additional burden on a husband and wife tight to the state of matrimony, as is also produced by section 26 of the Income Tax Act of 1951,is incompatible with Article 6

(1)of the Basic Law. This Article places marriage and the family as the germ cell of each human community whose significance cannot be compared with any other human association, under the special protection of State regulations. The legal effect of Article 6

(1)of the Basic Law is, however, not exhausted in such functions, like many constitutional rules of law, .in particular those that define the relationship of the citizens to the Stateor govern communalrights.This Article purports several functions which are associated with one another and overlap each other. The task of the Constitutional Court is to develop the various functions of the Constitutional Rule of Law, in particular of a basicright. In so doing preference is to be given to the interpretation which most vigorously develops the legal effective power of the rule of lawinquestion. Aninterpretation of Article 6

(1)of the Basic Law under this principle shows that it does not only contain an acknowledgement and has an effect as aguaranteeof institutions, but, rather, in addition, simultaneously represents a Basic Rule of Law, i.e., a binding dictum for the entire sphere of Private and Public Law affecting marriage and the family. As the basis of family life and of thepreservation and increase of thena240 tion, marriage is under the special protection of the Constitution.It isbasedontheequalityofrightsof bothsexes. Thespecialprotectionof thelawof theStatefor marriage andthefamily asenactedinArticle6

(1)of theBasicLaw 5 accordingly comprisestwoelements: (

1. i)Positively the duty of the Statenot only to protect marriage and the family from encroachment by external forces but also to promote these two institutions by suitable measures; and 10 (
2. ii)Negatively, the prohibition on the State itself against prejudicing or otherwise adversely affecting marriage. In any event, it categorically negatively prohibits any encroachment on marriage and the family through intru15 siveinterventions by the Stateitself. Joint assessment cannotbejustified bystatingthatitisnotcoupledtothemarriagebut rather tothesavingsachievedbyjointbudgeting and to a thereby increased taxation on married couples is merely an undesirable secondary consequence. The op20 portunity of making savings in the cost of living is not, however, taken into account in the entire remaining incometax law as afactor of productive capacity;thispoint of view is thus unknown to the system. Above all, however, it is not true that the increased taxation of married 25 couplesismerelyanundesiredsecondaryconsequence, for joint assessment is not only basically bound from a legal aspect to the marriage but rather the effect of increased taxation thereby occurring is precisely the main purpose of such provision. If the increased productive capacity 30 owing to joint budgeting within the household were the true criterion, the marital household community would notbetaxed as aunique phenomenon, themore so asitis in no way the typical case of the household community made up of several persons with a free market income. 35 Renunciation of joint assessment of spouseswould, therefore, likewise not mean an injustice in comparison with unmarried people as in the case of the latter there would in generalbe no opportunity of joint budgeting by twoor more persons. It is unintelligible how the placing of mar40 ried couples in a worse taxation position is intended to be able to be justified by the more elevated moral assessment of their status on.which the method of taxation is 241' 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS . DEMETRIADES Malachtos, J. 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Malachtos, J. based. The financial needs of the State are, however, never a suitable reason for justifying unconstitutional tax. Joint assessment is.said to serve the object of bringing back the wife into the home, the educational effect as it were, by the increased taxation burden associated there- 5 with restraining the wife from any occupational activity. In fact, there can be no misgivings from a constitutional law point of view of pursuing with a tax purpose other than theproduction of revenue.In the caseof jointassessment of married spouses,however, theinstructional effect 10 is quoted firstiy to justify a profession which even for another reason is unconstitutional. Secondly, the instructional purpose itself relates to an area which is already circumscribed constitutional law decisions, in which therefore, themerelegislatorisnolongerfully free tolaydown 15 dicta. This results both from Article 6

(1)of the Basic Law itself, as well as from Article 3

(2)and

(3)of the Basic Law. From this concept follows generally the acknowledgement of a sphere of privatelife which isprotected from State intervention. The amount of private 20 freedom of decision making by married spouses also includesthe decisivefactor of whether a wife dedicates herself exclusively to the home, whether she assists her husband in his profession or whether she should acquire her own free market income. The unsuitability of the so call- 25 ed instructional effect to justify joint assessment also follows from the principle of the equality of rights of the sexes under Article 3

(2)and

(3)of the Basic Law. The Basic Law assumes that equality of rights is compatible with protection of marriage and the family, with the re- 30 suit that the legislation may itself not assume any contradiction of the two principles. The equality of rights of women, however, includes the fact that she has the opportunityof achievinga free marketincomewith thesame legal chances as every male citizen. The view that the 35 gainful activity of a wifeis to beregarded ab initioasdisruptive of marriage contradicts not only the principle but also the text of Article 3

(2)of the BasicLaw. Thedirectional purpose of the law of restraining the wife from undertaking a free market activity is inappropriate for justi- 40 fying joint assessment. From all the above it follows that section 26 of theIncomeTax Act 1951 constitutes aprejudicial exceptional provision against married people and thereby infringes the dictum of Article 6

(1)of the Basic 242 Law to the detriment of marriage. The Federal Constitutional Court went further and stated that it requires no examination whether section 26 of the Income Tax Act 1951 is unconstitutional also under other constitutional law aspects, in particular on account of an infringement against Article 3 of the Basic Law, but stated that in this connection a number of questions would be raised by the material link of this section with section 43 of theIncome Tax Implementation Order 1951 which constitutes, according to the desireof the legislator an essential integral part of the overall regulations relating to the taxation of married couples. This creates, according to the nature of the income, an inequality within the group of married persons, for only if the wife is a wage earner, she is assessed separately but with all other,types of income of the wife jointly. (Question of the infringement of Article 3

(1)of the Basic Law).In the Regulation there is,moreover an unequal treatment according to sex. Only when the wife is a wage earner sheis separately assessed butif the husband is a wage earner, assessment will be made jointly (Question of the infringement of Article 3

(2)and

(3)of the Basic Law).In addition, doubts could exist as to whether section 43 of the Income Tax Implementation Order of 1951remainswithintheframework of theauthority. All these aspects may, however, remain undiscussed as section 26 of the Income Tax Act as such is null and void on account of the infringement of Article 6

(1)of the Basic Law and section 43 of the Income Tax Implementation Order of 1951has,therefore, lost its substance. In view of this result administrative considerations, which 30 have been cited to justify joint assessment, such as the simpler identifiability of the marital community in comparison with other household communities and the possibility of preventing tax manipulations among married personscannot beauthoritative.This,however,doesnot state 35 that such administrative aspects are of no significance if tax law is to be examined against the standard of Article 3

(1)of theBasicLaw, i.e.as to its compatibility with the basisof thegeneralfairness of taxation. 40 Counsel for the respondent finally submitted that the reasoning behind this Decision of the Federal Constitutional Court, particularly the dicta as regards Article 3 of the Basic Law, which is similar to Article 28 of our 243 ' 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Malachtos, J. 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Malachtos, J. Constitution, offered sufficient guidance in upholding the decisionof thetrialjudge. It is well settled that the Cyprus Courts in applying administrative law follow, by way of guidance, the Case Law of the continental countries. English and American 5 administrative law are not of much use,because they are not based on the concept of the recourse for annulment which isprovided for byvirtue ofArticle 146of our Constitution, and which has been taken from the continental administrative law system in Europe; but American Con- 10 stitutional Law Jurisprudence is most useful, and is followedbywayofguidancebyourSupremeCourt. In the Hoeper'scase, supra,it was decided that a husband cannot, consistently with the due process and equal protection clauseof theFourteenth Amendment, be taxed 15 by a State on the combined total of his and his wife's incomes as shown by separate returns, where her incomeis her separateproperty and, by reason of the tax beinggraduated, its amount exceeded the sum of the taxes which would have been due had their separate incomes been se- 20 parately assessed.In other words, an attempt by the State to measure tax on the income of a person byreference to the income of another, is contrary to the due process clause as guaranteed by the Fourteenth Amendment. However, the argument of. counsel for the appellant 25 that the dueprocess clausein theFourteenth Amendment does not correspond in anything in Articles 24 and 28of our Constitution, cannot stand. In Basu's Commentary of theConstitution of India, 5th edition, volume 1, it is stated at page 564 that the Four- 30 teenth Amendment to the American Constitution says that "No person shall b e . . .deprived of his life, liberty or property, without due process of law. In the result, theStatecannot make anylawimposing restric- 35 tions upon any of the fundamental rights, without conforming to the requirements of 'due process'. 'Due process' is a dynamic concept and theSupreme Court has refused to give it any static definition. Broadly speaking, it negatives anything which is ar- 40 244 bitrary or shocking to the universal sense of justice having regard to the circumstances of each case". One of the grounds on which the Hoeper's case was argued and decided, was unequal treatment and discrimi5 nation. It is also true that in the German case, supra, it was decided that section 26 of the Income Tax Act of theFederal Republic of Germany was unconstitutional as being contrary to Article 6

(1)of the Basic Law which provides 10 that "marriage and family enjoy the special protection of the State" and that this Article has no resemblance to Article 22

(1)of our Constitution, which safeguards the right of any person reaching nubile age, to marry and found a family, according to thelaw relating to marriage. 15 In interpreting, however, Article6

(1)of theBasicLaw, the Federal Constitutional Court stated clearly that this Article contains the notion of equality of both sexes.Althoughthecourtdidnot examinesection26of theIncome Tax Act under any other constitutional law aspect, itpro20 ceededand madecertain observationswhich appear atthe endofitsjudgmentwhichleadtotheconclusionastowhat wouldhavebeentheresulthad thissectionbeenexamined under Article 3 of the Basic Law, which is similar to Article28of our Constitution. 25 It is worth mentioning here that Article 23 of the International Covenant on Civil and Political Rights which covenant was ratified without any reservation by the Republic of Cyprus by Law 14/69 and which came into force on 23.3.1976, contains the very same provision to 30 that of Articles 6

(1)of the BasicLaw of the FederalRepublicofGermany.ThisArticlereadsasfollows: "23.1 The family is the natural fundamental group unitof society and isentitledtoprotection bysociety and theState. 35

1. The right of men and women of marriageable age to marry and to found a family shall be recognized.
2. No marriage shall be entered into without the free and full consent of the intending spouses. 245 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Malachtos, I. 1977 Sept. 8 REPUBLIC . (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Malachtos, J.
3. States Parties to the present Covenant shall take appropriate steps to ensure equality of rights and responsibilities of spouses as to marriage, du­ ring marriage and at its dissolution. In the case of dissolution, provision shall be made for the necessary protectionof anychildren". 5 After careful consideration of all the above Γ find my­ self in full agreement with the view reached by the trial Judge that section 21 of theIncomeTax Law 1961 (now section 22 of the Income Tax Law, 1961-1969), is un- 10 constitutional as being contrary to Articles 24.1 and 28.1 of ourConstitution. It contravenes Article 24.1 of our Constitution,which provides that every person is bound to contributeaccord­ ing to his means towards thepublic burdens by imposing 15 on a married man the liability to contribute,in addition to his own means, for themeans of somebody else. The argument that a husband and wife are considered as one financial unit and that the object of the law is to make thehusband a channelthrough which thecollection of tax in respect of theincomeof his wifeis effected, can­ not stand. These arguments, as well as all the other arguments of counsel for the appellant, are fully and lucidly answered 25 both in the Hoeper's and the German Case (supra) the reasoning of whichIfully adopt. The situation would certainly be different in the past · when the wife's property, owned at the date of marriage, or in any manneracquired thereafter, was theproperty of 30 her husband. Her earnings and income were his, and he might dispose of them at will. This anachronistic system has been abolished in all civilised and modern communi­ ties. Women are declared to have the same rights asmen, including property rights of married women and these 35 rights in Cyprus are guaranteed by the Constitution. It may well be worth mentioning here the following passage from the judgment of Mr. Justice Roberts in the Hoeper's case, which appears at page.251 of the report: "Since, then, in law and in fact, thewife's incomeis 40 246 20 in the fullest degree her separate property and in no sense that of her husband, the question presented iswhether the state haspower by an income-tax law to measure his tax, not by his own income but, in part, by that of another. To the>problem thus stated, what was said in Knowltonv. Moore, 178 U.S.41, 77, 44 L. ed. 969, 984, 20 S.Ct. 747, is apposite: 5 10 15 20 25 ( 'It may be doubted by some, aside from express constitutional restrictions, whether the taxation by Congressof theproperty of oneperson, accompanied with an arbitrary provision that the rate of tax shall befixed withreference to the sum of the propertyof another, thusbringing about theprofound inequality which we have noticed,·would not transcend the limitations arising from those fundamental conceptions of free government which underlie all constitutional systems'. Wehave no doubt that, because of the fundamental conceptions which underlie our system, any attempt by a state to measure the tax on one person's property or income by reference to the property or income of another is contrary to due process of law as guaranteed by the 14th Amendment.-That which is not in fact the taxpayer's income cannot be made suchbycallingitincome". This section 21 of the Income Tax Law 58/61 also contravenes Article 28 of our Constitution, which provides-for equality before the law and against discrimination. The addition of the income of the wife from other 30 sources than from her-own labour, to the income of her husband, results to unequal treatment between marriedmen depending onwhether their wivesderiveincome from their own labour or from their own property. Furthermore, a married man whosewife derives incomefrom her 35 own property, sincethe reduction of the scalesfor bachelors, as a result of Panayides case, suprain 1965;enjoys his income to a lesser extent than an unmarried man. Likewise it results to unequal treatment between married and unmarried women. .40 It follows from the above, that I am in disagreement with the decision in Mikrommatiscase, which, in myopi247 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Malachtos,
4. 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES nion, should be reversed. The Supreme Constitutional Court wrongly decided that the addition of the income from property of a married woman, resulting from the application of section 19 of Cap. 323, to that of herhusband, was a reasonable distinction based on the intrinsic 5 nature of the community of life existing between spouses, and did not amount to a discrimination on the ground of sex. Section 19 of Cap. 323, ought to be declared as unconstitutional for the reasons I have explained above. < Malachtos, J. In view of my judgment in the appeal that section 21 10 of the Income Tax Law 58/61 is unconstitutional, an examination as to whether income from rents of flats and shopsof thewifeof therespondent, is earnedincome, as provided by section 21

(2)of thelaw, or not isrendered superfluous. Infact, counselfor therespondent clearly 15 stated that if the appeal were decided in his favour he would notinsistonthecross-appeal. A question which was raised during thehearing before us, although not included in the grounds of appeal, was whether the trial judge was entitied to depart from the 20 Mikrommatis case or whether he was bound to follow it. No doubt, this court in its appellate jurisdiction is not bound tofollow thedecisions'of theformer SupremeConstitutional Court, or even its own decisions, and can always depart from them, when, of course, there are good 25 reasons for doing so (seein this respect Constantinides v. The Republic

(1969)3C.L.R. 523). TheCyprus courtsregardjudicialprecedent as asource of law and the decisions of the Supreme Court are bindingon all courts. This binding effect of judicialprecedent 30 has been inherited from the English Judicial System. The present case was tried in the first instance by a Judge of this Court whose decision is not final and conclusive but is subject to appeal. The decision in Mikrommatis case was issued by our former Supreme Constitutional Court, 35 which was constituted of threejudges and which, according to Article 146.1 of the Constitution had exclusive jurisdiction to adjudicate finally on a recourse made to it on a complaint that a decision, an act or omission of any organ, authority or person, exercising any executive or 40 administrative authority, was contrary to any of the pro248 visions of the Constitution or of any law or was made in excess or abuse of powers vested in such organ or authorityor person. The trialjudgein thepresent casewascertainly entitled to express his disagreement with the decision of the Supreme Constitutional Court but was bound to follow it. The decision of the former Supreme Constitutional Court should be regarded equivalent to the decision of our Supreme Court sitting either on appeal or as aFullBenchinitsRevisionalJurisdiction andsoit creates a judicial precedent. For the reasons stated above, the appeal should bedismissed. On the question of costs, like the trial judge, I am of theviewthat thereshouldbemadenoorder. L. LOIZOU, J.: I have had the opportunity of considering the judgment of Malachtos, J. in which he has set out the facts and referred to the authorities relied on. I agree with his judgment and the conclusion that the appeal and cross-appeal should be dismissed and there is nothingthatI wishtoadd. A. LOIZOU, J.: By this appeal and cross-appeal from the judgment of a Judge of this Court who heard in the first instance the recourse under the provisions of section 11 of the Administration of Justice (Miscellaneous Provisions) Law, 1964, Law No. 33/64, very important, constitutional and legal issues connected with income tax legislation, are raised. The appeal has been filed on behalf of the Republic against thatpartof thejudgment of thelearnedtrialJudge by which it was decided that section 22

(2)of the Income Tax Laws, 1961-1969 and all other similar earlier tax provisions by virtue of which the income of a wife from property is added to the income of the husband for tax purposes, are unconstitutional, as offending against Arts. 24and28of the Constitution. The cross-appeal, on behalf of the tax payer, is against the part of thejudgment by which it was decided that the income of the wife of the tax payer (applicant before the trial Judge and respondent in die present appeal) had not beenderived in theexerciseof her right to carry on anoc249 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES Malachtos, J. 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES A. Loizou, J. cupation, trade or business in the sense of Article 25 of the Constitution and within the meaning of section 22

(2)of the Income Tax Laws, 1961-1969.It isclaimed that it was wrong to decided that his wife's income is not included in the notion of "income from labour" as enunciated in the case of Mikrommatis and The Republic, 2 R.S.C.C.p. 125,towhich extensivereference willbemade inthecourseof thisjudgment. The facts of thecase arebriefly asfollows:Therespondent in this appeal is a judicial officer of the Republic. His wife's income for the years of assessment 1962-1963, 1964; 1965, 1966, 1967 and 1968 consisted of rents which, as stated by him in his objection addressed to the Commissioner of Income Tax on the 6th March, 1970 (exhibit 2), were "derived from immovable property built and/or developed byhiswife who,in that respect, undertook an enterprise of her own". The said property consisted of six shops at Kimon Coast, Kyrenia. The money for their construction was secured from surrendering property to her father, who, in return, advanced to her the sum of £1,005 and the sum of £1,263 was lent to her by the respondent. It also consisted of twoflats atThemistoclis Street, Kyrenia, built from her dividends from her shares in the Katsellis Hotel Ltd., her rents and money borrowed from the Bank of Cyprus. None of the above propertiesformed part of thedowrygiventoher. It was also claimed that the income of his wife should be considered "as having been derived through the exercise of her right guaranteed under Article 25 of the Constitution, i.e. through trade or business or, if the above submission was not correct, then the relevant enactment providing for the separation of the wife's income derived from a profession, trade or business as distinct from income from other sources is unconstitutional, contrary to Articles 24 and 28 of the Constitution. In that respect, the case of Mikrommatis and The Republic, 2 R.S.C.C. p. 125, should be reconsidered so that the wife's income from whatever source should be separately taxed". The objection was determined by the Commissioner of IncomeTaxwho,byletterdated the4thApril,1970 (exhibit3),informed therespondent thathehaddeterminedhis outstanding objections for the years of assessment 1961 250 to 1968 as per attached Notices of Tax Payable. His decision was based on "the contents of section 22

(2)of the Income Tax Laws, 1961 to 1969 and sections 13

(3)and 20

(5)of the Taxes (Quantifying and Recovery) Law 53/ 1963 as amended". The relevant law in respect of the year of assessment· 1962, is section 21

(1)and

(2)of the Greek Communal Chamber Law, No. 18/62, theyears of assessment 1963, 1964 and 1965, section 21

(1)and·

(2)of the Greek'Communal Chamber Law, No. 9/63, and the years of assessment 1966, 1967.and 1968,section 21

(1)and

(2)of Law 58/61, asamended byLaws4/63 and 21/66. Section 21 which isfound recurring identically phrased in the aforementioned Laws, was enacted as a result of the decision in Mikrommatis case'(supra), in which the constitutionality of section 19of the then in force Income Tax Law, Cap. 323, was raised and in.which case the Court decided that that section was unconstitutional, inso far as it applied to the income of a wife from her own labour and that it.should beapplied modified accordingly. Before quoting verbatim sub-sections

(1)and

(2)ol section 21, it shouldbestated that this section, after 1969, was amended by section 15 of Law 60/69, and has been re-numbered, as section 22

(1)and

(2), but this section does not apply to the present case, because the years of assessment do not go beyond 1968. Though there is reference to this section 22

(1)and

(2)in the recourse and thejudgment of thelearned trial Judge, yet it is common groundthatthematerial-sectionissection 21. Both counsel argued the case before us in relation to the said section 21 and it is the unconstitutionality of this section as it wasbefore 1969 that isin issuein theseproceedings and which we have to determine in this appeal and no complaint has been made regarding the reference to the wrong section. As stated in The Republic v. Georghiades

(1972)3 C.L.R. 594, at p. 690, "This Court when hearing an appeal from a judgment of one of its members, approaches the matter as a complete re-examination of the case with due regard to the issues raised by the parties on.appeal, 25.1 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES A. Loizou, J. 1977 .Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES A. Loizou, J. or to the extent that they have been left undetermined by the trial Judge, or in the case of a successful appeal, in addition in the above, to the extent of the cross-appeal". In view, therefore, of this approach, this Court has to decidetheconstitutionality of section21whichgovernsthe assessments complained of, for the years 1962-1968. To theextentthatitisrelevant,itreads:"21.-

(1)Theincomeof a marriedwomanlivingwith her husband shall, for the purposes of this Law, be deemed to be the income of the husband and shall bechargedinthenameof thehusband: Provided that thewifemay berequired topay that part of thetotal tax charged upon thehusbandwhich bears the sameproportion to that totaltax as theincome of the wife bears to the total income of the husband and wife notwithstanding that assessment hasnotbeenmadeuponher. /

(2)For the purposes of sub-section

(1)of this section, theexpression 'incomeof a married woman' shall include any income other than income derived by a married woman from the exercise of the right safeguarded under Article 25 of the Constitution.

(3)Before proceeding any further with the issues raised in this recourse, it is useful to quote from the judgment of the learned trial Judge who referred therein also to the Mikrommatis case(supra) asfollows:"The Court, after dealing with Article 28 which deals withequality before thelaw, safeguarded under that Article, and after stating that the term 'equal before the law.' does not convey the notion of exact arithmetical equality but that it safeguards only against arbitrary differentiations and does not exclude reasonable distinctions which have to be made in view of the intrinsic nature of things, said at pp. 131-133:'It follows, therefore, bearing in mind the intrinsic nature of the status of marriage and the relationship it creates between spouses, that reasonable distinc252 tionsin taxation legislation between married and unmarried persons do not in principle offend against paragraph 1 or2ofArticle28andagainstparagraph 1 of Article24. 10 The Court has examined section 19 of Cap. 323 in the whole context of Cap. 323 (including provisions such as allowances in respect of children and increased taxation on the income of unmarried persons) as well as against thebackground of the status of marriage as existing in Cyprus at present and it has come to the conclusion that,'although the application of section 19 of Cap. 323 may result in the making of a reasonable distinction between married and unmarried persons, it does not discriminate against married persons,as such, and it is not,therefore, unconstitutional on suchground. Coming now to the question whether the application of section 19of Cap. 323 involves anydiscrimination ontheground ofsex. There is no doubt that a married woman whose incomeis added to that of her husband and isthereby taxed to a greater extent than if it were tobetaxed separately, enjoys the income from her property or from her own labour to a lesser degree than any married man taxed separately in respect of similar income. In the opinion of the Court the reason for such a differentiation between a married woman and any married man regarding income from property, asresultsfrom the application of section 19of Cap.323, is to be found in the community of life existing between spouses. The said community of life justifies treating the spouses, when living together as one financial unit in this connection. Such differentiation, therefore, is nothing more than the making by taxation legislation of a reasonable distinction based on the intrinsic nature of the marriage and does not amount to a discrimination on the ground of sex. In the case, however, of a married woman not being able, through the application of section 19of Cap. 323,to enjoy tothesameextent as anymarried 253 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES A. Loizou, J. 1977 Sept 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES A. Loizou, J. man, the income from her own labour, the position is quite different. In such a case a married woman is placed in a disadvantageous position vis-a-vis any married man in the same profession, occupation, trade or business. Such a differentiation is not a rea- 5 sonable distinction based on the intrinsic nature of the marriage nor is it otherwise justified. It, therefore, amounts to a discrimination on the ground of sexcontrarytoArticle28'. Finally,theCourtwenton: 10 'In this judgment the Court has used the expresssion 'income from her own labour' as meaning income derived from the exercise of the right safeguarded by Article 25 of the Constitution and 'income from property' as meaning income from all 15 other sources'." Thle learned trial Judge after referring extensively to the arguments advanced, and in particular to the United States Supreme Court case of Albert .A- Hoeperv. Tax Commission of Wisconsin, 76 Law. Ed. U.S. p. 248 and 20 theprinciplesgoverning thequestion of declaringLawsas unconstitutional came to the conclusion that "the Hoeper's case was oh all fours with the facts of the present case" and in the light of the observations made therein, adopted and followed it being in agreement with the rea- 25 soning behind it; and he had no doubt "that any attempt by the Commissioner to measure the tax on one person's property, income or means by a reference to the income of another is contrary toparagraph 1of Article 24 of our Constitution which establishes theprinciple of fiscal equa- 30 lity whereby every person is bound to contribute accordingtohismeanstowardsthepublicburdens". And further down he concluded by saying that— "the addition of the unearned income of thewife to that of the applicant brings about the inequality safeguarded by 35 Article 28 and results in a discriminatory treatment between married menwho enjoy their income to a lesserextent depending on thewife's income over which, as I said . earlier, they have no legal right. Similarly, a discrimination results between married men whose wives derive in- 40 come from their labour on the one hand and thosewhose wives derive income from their property on the other 254 hand". And found that "sub-section 2 of s. 22 and all other similar income tax enactments between 1961 and 1969applied to theapplicant, donotjustify such differentiation based on theintrinsic nature,of marriage, because a married man is placed in a disadvantageous position vis-a-vis any other man with the sameprofession, occupation, trade or business whose wife earns an income through her-labour, oncesuch differentiation isnot a reasonable distinction based on the intrinsic nature of the marriage,norisit otherwisejustified, becausetheexaction of taxis arbitrary". The aforesaid conclusions of the learned trial judge posed thequestion, asput byhim,whether, in thecircumstances of this case Mikrommatis case (supra)should be reconsidered, as counsel on behalf of the taxpayer claimed, becaue it was wrongly decided, in so far as it dealt with this second leg of the judgment, i.e. "income from property". The binding effect, therefore, of judicial precedent in our judicial system becomes an issue. On this point the learned trial Judge said: "I think I ought to add.that in Cyprus judicial precedent mayproperlyberegarded asa sourceof Law, and the binding effect we attach to precedent is inherited from the English judicial system and the Courts are bound to follow the ratio decidendiof decided cases.In European systems,however, aLaw report isgenerally onlypersuasive and not authoritative. In Cyprus, the decisions of the Supreme Court are binding on inferior courts and as at present advised,the Supreme Court of Cyprus sittingon appeal can changeitsmind andnotfollow precedent already .-laid down by it in a previous case if it is of opinion that the previous precedent was wrong (Papageorghiou v. Komodromou

(1963)2 C.L.R. 221. parti.· cularlyVassiliades,J. (ashe then was)in hisdissenting judgment refused to follow a previous judicial precedent relating to adverse possession of immovableproperty). In Constantinides v. The Republic

(1967)3 C.L.R. 483, Triantafyllides, J. (as he then was) felt 255 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES A. Loizou, J. 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES A. Loizou, J. free to depart from precedent when dealing with the case of Loizides and The Republic 1 R.S.C.C. 107, quiterightlyin myview,because the process ofjudicial review of administrative acts under Article 146 is closely related with the continental countries, whosereports, asI have said earlier, havepersuasive force only. Triantafyllides, J. had this to say at p. 976: 'But I have, in this Case, considered the validity of the relevant reasoning in the Loizides case independenty of my past participation in its determination. My sole purpose was to decide correctly the present Case, irrespective of past views, but, of course, with due regard to the principle that precedent should not be disturbed unless there are good reasons for doing so.I have, in the end, reached the conclusion that the Loizides case was correctly decided'." HethendealswiththeMikrommatiscase, "With this in mind and for the reasons I have already given, I turn now to Mikrommatis case, and would make one preliminary observation about it, that it is difficult to discern with certainty the facts in issue, in order to extract the ratio decidendi,i.e. that part of the judgment the reasoning of which is essential for the determination of the facts in issue. As I have said earlier, it is not clear whether the facts of that case made it necessary for the Court to decide whether the unearned income of a wife derived from a source other than her labour should be added to that of a husband for income tax purposes. If this was not necessary in my view, then theviews expressed by the Court on that matter were obiter and no question of a binding precedent can arise. 'It is of courseperfectiy familiar doctrine thatobiter dicta, though they may have great weight as such, are not conclusive authority. Obiterdictain thiscontext means what the words literally signify—namely, statements by the way.If a Judge thinks it desirable to give his opinion on some point which is not necessary for the decision of the case, that of course hasnot thebindingweightof thedecisionof thecase, 256 and the reasons for the decision'. (Flower v. Ebbw. Vale Steel Iron ά Coal Co. Ltd., [1934] K.B. 132 per Talbot J. at p. 154). 10 15 On the other hand, if the reasons given by the Court in Mikrommatis case—covering what has been described by me as the 'second leg' of the decision— are part of the principles involved and not merely illustrations, then with respect, after careful conside­ ration, I find myself unable to agree with counsel for the respondent that that decision is the law of the land, though it might well be to the interest of fiscus that it should be so. It seems to me, therefore, that for the reasons I have given earlier, that I find myself unable to follow that doctrine and I feel free to depart from it because I am not bound by the said decision of the Court in Mikrommatis case once it appears to me the right thing to do". The doctrine of judicial precedent is as old as the re­ organization of our judicial system done shortly after the British assumed the administration of the Island in 1878. The establishment of an hierarchy of courts and the set­ ting up of a system of law reporting have always beencon­ sidered as two indispensable prerequisites to the operation of this doctrine. The first volume of the Cyprus Law Re­ ports published under the supervision of the Judges of the Supreme Court covers the year 1883 to the'year 1890. In the case of Hadji Moussa v. Apostolides & Others

(1899)5 C.L.R. p. 6 at p. 11, reference is made.to a part of a judgment cited to them as being obiter dictum which was defined as an incidental expression of opinion given by the Court in the course of its judgment but not neces­ sary for the decision of the case and therefore not binding. In the case of Ismail and Another v. The Attorney-Ge­ neral

(1929)16 C.L.R. p. 9 at p. 12, Belcher, C. J. said: "Undoubtedly therule of English Law as to thebind­ ing nature of the decisions of appellate tribunals which in the absence of any clear rule of Ottoman Law on the subject we may properly follow, is that such a Court should in general follow the previous 257 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES A. Loizou, J. 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES A. Loizou, I. decisions of the same Court. But in exceptional cases they are not bound to do so (Vernon v. Watson, [1891] 1 Q.B. 400). And atpage 14hesays: The decision is a comparatively recent one: it stands by itself, without any line of cases bending in its direction and without there being any subsequent case in which itwas followed: the decision is not supported by reasons other than the adoption of the ratio decidendi of a District Court judgment which when examined shows that it was based on a misquotation of the text in an Order in Council. I feel the greatest reluctance in overruling any prior decision of this Court because one of its chief functions is to build up a fabric of interpretation on whose permanence the public can rely; but the fabric must be sound as well as permanent". It will be helpful to refer also to the sequence in the Constantinides case (supra). On appeal, the Full Bench of the Supreme Court reversed the decision of Triantafyllides J. (as he then was) and its judgment is reported as Constantinides v. The Republic

(1969)3 C.L.R. 523. There was some divergence of opinion with the details of which I need not be concerned here, except that it was a case concerning a scheme for educational grants for public servants existing prior to the coming into operation of the Constitution'and which, in the Loizides case the Supreme Constitutional Court found as a vested right but made what it thought as being a necessary adaptation so that such educational grants should be payable for studies to Greece and Turkey with which Cyprus was, as it was said therein linked by the Zurich agreement than to the United Kingdom. Vassiliades, P. at p. 533, says the following regarding this adaptation:"But such adaptation was not 'necessary' in my opinion, for the determination of the Loizides case where the schemedid not fall tobe applied. Apart from the fact that such an obiter dictum cannot be considered as a decision constituting a precedent, looking at it in the light of developments since that time (May 1961) I take the view that it 258 10 15 20 25 30 35 40 5 went too far; and,it must now be adjusted. It gave, I think, too much emphasis to the division of the people of this Island into Greek and Turks with 'close affinity to the Greek and Turkish Nations respectively'." Hadjianastassiou J. at p. 553 after referring to the principles governing the useof precedent as being an indispensable foundation upon which todecide what is thelaw and • its application to individual cases providing some degree 10 of certainty, went on to decide that the Loizides case was , wrongly decided. In England from which we inherited the doctrine of precedent, the Courts are bound by decisions of Supreme Courts in the same hierarchy, and the Coiirt of Appeal 15 and the Divisional Court are each bound by their own decisions. Single Judges of the High Court are not strictly bound by their"brothers' decisions, but they will, as an ordinary practice, follow them. (See Alma Shipping Co. S.A. v. V.M. Salgaoncar E. Irmaos Ltd. [1954] 2 Q.B. 20 94); The ruling of the House of Lords in the London Street Tramways Co. Ltd. v. London County Council [1898] A.C. 375 that it was bound by its own decisions has now been- replaced by the recognition that that Court while •25 treating its former decisions as clearly binding, may depart from the previous decision when it appears right to do so. That is to be-found in the Practice Direction of [1966] 3 All E.R. p. 75 where it is emphasized that precedent is an indispensable foundation as providing some 30 degree of certainty and.as being the basis for orderly development of legal rules. In departing however from precedent, they stress that they will.bear in mind "the danger of disturbing retrospectively the basis on which contracts, settlements of property and fiscal arrangements have been 35 entered into and also the especial need for certainty as to the Criminal Law". In the case of Geelong Harbor Trust Commissioners v. Gibbs Bright & Co. [1974] 2 W.L.R. p. 507 at p. 514, Lord Diplock said:40 "If the legal process is to retain the confidence of the 259 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES A. Loizou, I. 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES A. Loizou, J. nation, the extent to which the High Court exercises its undoubted power not to adhere to a previous decision of its own must be consonant with the consensus of opinion of the public, of the elected legislature and of the judiciary as to the proper balance 5 between the respective rules of the legislature and of the judiciary as lawmakers. Even among those nations whose legal system derives from the common law of England, this consensus may vary from country to country and from time to time. It may be in- 10 fluenced by the federal or unitary nature of the constitution and whether it is written or unwritten, by the legislative procedure in Parliament, by the ease with which parliamentary time can be found to effect amendments in the law which concern only a 15 small minority of citizens, by the extent to which Parliament has been in the habit of intervening to reverse judicial decisions by legislation; but most of all by the underlying political philosophy of the particular nation as to the appropriate limits of the law- 20 making function of a non-elected judiciary". Whatever the position is, yet both the House of Lords and the Privy Council have been reluctant to depart from their previous decisions. (See Knuller (Publishing Printing and Promotions) Ltd. and Others v. Director of Public 25 Prosecutions, [1972] 3W.L.R. p. 143). The position regarding the Court of Appeal is to be found in Young v. Bristol Aeroplane Company Limited [1944] 1 K.B. 718 where Lord Greene, M.R. at pp. 729, 730, after reviewing numerous authorities, said: 30 ' "On a careful examination of the whole matter we have come to the clear conclusion that this court is bound to follow previous decisions of its own as well as those of courts of co-ordinate jurisdiction. The only exceptions-to this rule (two of them apparent 35 only) are those already mentioned which for convenience we here summarize:

(1)The Court is entitled and bound to decide which of two conflicting decisions of its own it will follow.

(2)The court is bound to refuse to follow a decision of its own which, 40 though not expressly overruled, cannot, in its opinion, stand with a decision of the House of Lords. 260 •

(3)The court is'not bound to follow a decision of its own if it is satisfied that the decision was given per incuriam. 5 10 I should perhaps add, speaking for myself individually, with regard to the observations in Unsworth's case [1940] 1K.B. 658, mentioned in this judgment, that I havecarefully considered my own observations there mentioned in Perkins' case [1940] 1 K.B. 56, and I have come to the conclusion that the criticism of them in Unsworth's case isjustified, and that what 1 said was wrong. What I said there formed no part of the ratio decidendi, as will appear from a reading of the judgment, and does not affect its validity for that reason". 15 The noble attempts of Lord Denning to persuade his brethren to accept his view that they should not be absolutely bound by previous decisions of their own if it was clearly shown to be erroneous and so they should be able to put it right, have been without success. (See Tiverton 20 Estates Ltd. v. Wearwell Ltd. [1974] 2 W.L.R. p. 176). 25 30 35 40 Since independence, a new situation has been created by the adoption of a written Constitution and the introduction, through its Article 146, of the process of judicial review of administrative acts as existing in continental countries such as Greece, France or Germany and the establishment of a separate sector of the judicature to review the exercise of administrative powers on the model of similar courts in continental countries. The adoption of the principles of administrative law evolved in the said countries which could be considered as part of the science of administrative law, can and are, generally speaking, adopted and applied by our courts as the law governing similar situations in Cyprus. (See Stelios Morsis v. The Republic

(1965)3 C.L.R. p. 1). Though this judgment does not purport to be a study of comparative law on the question of precedent, I am inevitably compelled, in view of the very significance of this question in the system of any country, to have a cursory glance to the approach in continental countries and in the United States of America from which we have drawn extensively, on account of their long experience in implementing and construing a written constitution. In France for long the decisions of 261 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES A. Loizou, I. 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES A. Loizou, J. the Courts (La Jurisprudence) have been acknowledged to play a major role in the development of thelaw.It has been stated that although precedents even of superior courts are not recognised as automatically binding, subsequently either on themselves or on inferior tribunals, this has tended to diminish and it is now generally agreed that a decision of the Cour de Cassation, is for all intents and purposesregarded asauthoritative for thefuture. Yet, deviation is not in itself a ground for quashing a decision of a lower court and there have been famous occasions when lower courts encouraged by writers of doctrine have resisted innovations of the Cour de Cassation. (SeeIntroduction to Jurisprudence, 3rd ed. byLord Lloyd, p.712). In the United States the principle of judicial precedent is sometimes applied and sometimes ignored in thefieldof Constitutional Law. The Supreme Court at times overruled decisions of long standing. (Blackstone v.Miller,41 L. Ed. 439, was expressly overruled in Farmer's Loan& Trust Co. v. Stateof Minnesota,74 L. Ed. 371). The question has always been posed whether the decisionsreflect ajudicial purposeandpolicy of adaptingconstitutional language byaprocessof construction tofit currentpolitical, economicandsocialdevelopments. The role of staredecisison the questions of constitutional interpretation is a matter closely related to the questions raised above. In the case of Smith v. Allwright, 88L.Ed. 987 atp. 998,Mr.JusticeReedsaid: "In reaching this conclusion we are not unmindful of the desirability of continuity of decision in constitutional questions. However, when convinced of former error, this Court has never felt constrained to follow precedent. In constitutional questions, where correction depends upon amendment and not upon legislative action this Court throughout its.history has freely exercised its power to reexamine the basis of its constitutional decisions. This has long been accepted practice, and this practice has continued to this day. This is particularly true when the decision believed erroneous is the application of a constitutional principle rather than an interpretation of the Constitution toextracttheprincipleitself'. 262 In Greece, theprevailing viewis thatjudicialprecedent is not included among the sources of law. They do not create law but they apply theexisting laws and in matters relating to administrative law it is recognised that thede5 cisions of administrative courts, and in particular of the Council of State, offer valuable assistance in the exploration of administrative law and the clarification of many of itsprinciples but they donot constitute a sourceof administrative law. (SeeStasinopoullos, theLaw of Admini10 strativeActs, 1951,p.20). . The aggregate effect of the position regarding judicial precedent in the countries referred to above, with such different legal systems viewed in the light of the Practice Direction of the House of Lords of 1966 and the pro15 nouncements of this Court, lead me to the following conclusions: (a) The doctrine of judicial precedent is part and parcel of our judicial.system asbeing the necessary basis for providing a degree of certainty as to the law, in order to 20 show a consistency injudicialpronouncements and at that an equality of treatment before the law, and the means for the development of legal rules in a disciplined and regular manner. The doctrine of precedent, however, particularlysoinmatters relating toconstitutional and admini25 strative issues-should be more Uberal than the manner in whichitwasapplied under theCommonLaw system from which we inherited same until 1966 when the House of Lords introduced a more liberal approach to the binding effect of theirownprecedents onthemselves. 30 (b) Subordinate courts, and with this I mean District Courts and Assize Courts, are bound by the existing judicial precedent of superior courts, and as far as such subordinate courts are concerned, the Supreme Court whether sitting as a Full Bench or in Benches of three, 35 shouldbedeemed asasuperior court. (c) The Supreme Court is entitled, being the highest Court of the land entrusted with both original and appellate jurisdiction, concerned with the interpretation of the .; Constitution and having exclusive jurisdiction on Admi40 nistrative Law matters, to depart from precedent if it is of opinion that they are wrong or that changed political, 263 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES A. Loizou, J. 1977 Sept. S REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES economic and social developments call for a review of its previous approach, particularly so in matters of Constitutional and Administrative Law. It should, however, be reluctant and cautious to depart from precedent and should alwaysbe guided bythefact that such a departure 5 should not interfere retrospectively with contractual relations and fiscal arrangements. With regard to precedent in Criminal Law matters, see the case of The Republicv. NicolaosSampson

(1977)2 C.L.R. 1at p. 80. A. Loizou, I. Finally the Court should also bear in mind that it has 10 a written constitution, that legislation has been entrusted to another authority of the State and there should be"limits of thelaw-makingfunction of non-elected judiciary", aspointed out byLordDiplock inGeelongHarbour Trust Commissionersv.Gibbs(supra). A problem, however, is bound to arise in the cases where under section 11 of the Administration of Justice (Miscellaneous Provisions) Law 1964 (Law 33/64), a judge of this Court is seized in the first instance with jurisdiction over recourses for the annulment of an admini- 20 strative act or omission under Article 146 of the Constitution. The approach of the learned trial judge on this issue was that since thethen Supreme Constitutional Court was exercisingoriginal jurisdiction similar to that exercised by 25 a singlejudgeof thepresent Supreme Court trying a case on administrative law under theprovisions of Law 33/64, the doctrine of judicial precedent did not apply as in its various manifestations operates so as to bind Courts in the lower line of the ladder of hierarchy of Courts; con- 30 sequently it assimilated the status of the then Supreme Constitutional Court vis-a-vis the exercise of the samejurisdiction under the aforesaid section 11 by one of the judges of this Court to that of a High Court Judge in England who are not bound by judgments of their collea- 35 gues in High Court but are merely of a persuasive authority. With respect, I feel that there cannot be such comparison as the Supreme Constitutional Court had exclusive jurisdiction and, though exercising its jurisdiction in the first instance, had the final word on the subject, whereas 40 when a Judge of the Supreme Court today exercises the samejurisdiction inthefirst instance,hisjudgment issub264 15 ject to appeal to the Full Bench of the Court. Irrespective therefore of the equal status of a judge of this Court with his colleagues, yet the fact that the judgment of such a judge is subject to appeal to the Full Bench of the Su5 preme Court, leads me to the conclusion that such a judgment must be treated for the purposes of the doctrine of judicial precedent as being governed by the same principle that applied to the cases of Courts of first instance being bound bythedecisions of Appellate Tribunals. •1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES A. Loizou, J. 10 Before, however, dealing with the approach of the learned·trial Judge on the issues raised in the appeal proper, I would like to stress once more that theissue before us was the constitutionality of section 21

(2)on the basis of which the aggregation of the income of husband 15 and wife was made, and this section 21

(2)is that of thePersonal Contributions (Imposition for theYear 1962) Communal Law 1962 (Greek Communal Law 18/62), which covers the year of assessment 1962; section 21

(2)of the Personal Contributions (Imposition for the year 20 1963) Communal Law 1963 (Greek Communal Law 9/ 63) which covers the years of assessment 1963, 1964 and 1965; and section 21

(2)of the Income Tax (Foreign Persons) Law 1961 (Law 58/61) as amended by Laws 4/63 and 21/66 for the years of assessment 1966, 1967 25 and 1968. This is the section which•immediately upon the pronouncement of the judgment of Mikrommatis the administration enacted in compliance thereto. These sections were the proper ones upon which the 30 assessments were decided and in examining the legality of the assessment in this administrative recourse, they are the ones that have to be considered from the constitutional point of view raised therein. It is immaterial that they were not the ones referred to by the respondent, although they 35 were the only ones upon which his decision could be reached. As stated by Triantafyllides, P. in his judgment in NicosAnastassiou v. The Republic (reported in this Part at p. 91 ante, at p. 106). "It should, perhaps, be pointed 40 out, at this stage, that the fact that in his sub judice decision the respondent Commissioner of Income Tax referred ' 265 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES . A. Loizou, J. expressly to section 5

(1)(b) of Law 58/61 does not preclude this Court from upholding his decision, on the basis of the same facts, but on the strength of an alternativelegal reason applicable to such facts (see, inter alia, Spyrou and Others (No. 1) v. The Republic

(1973)3 C.L.R. 478,484)". In dealing with theMikrommatiscase, thelearned trial Judge observed that it was difficult for him to discern with certainty the facts in issue therein in order to extract the ratio decidendi,that is to say, that part of the judgment the reasoning,of which was essential for the determination of thefacts in issue,and according to himitwas not clear whether its facts madeit necessary for the Court to decide whether the unearned income of a wife derived from a source other than her labour, should be added to that of her husband for income tax purposes; consequently, if that was not necessary then the views-expressed by the Supreme Constitutional Court on that matter were obiter and no question of binding precedent could arise. The Mikrommatis case was a recourse under Article 146 of the Constitution against income tax assessments. The applicant in that recourse was a farmer residing at Astromeritis who, after some correspondence with, and meetings at, the Income Tax Office, was informed of the decision of the Commissioner of Income Tax regarding the tax payable by himin respect of the years 1954-1960, against which decision hefiled that recourse; originally it wasbased on theground that the assessment of hisincome was made arbitrarily as he did not earn any taxable income. Subsequently and by leave of the Court, the applicant filed a notice of his intention to raise at the resumed hearing of that case, a supplementary legal point, namely, that section 19 of the Income Tax Law, Cap. 323, was unconstitutional. The Supreme Constitutional Court held that that legal point was material for the determinationof the case and went on to hear same and gaveits judgment thereon. This, alone, in myview, is sufficient for meto say that the differentiation made betweeen earned and unearned income of a wife was part of the ratio decidendiof the case. It has to be accepted that in the assessments, subject266 10 15 20 25 matter of thatrecourse,theincomeof thewife—a married woman living with her husband—was, under section 19 of the Law, Cap. 323, and in the absence of any writtenapplication that returns of income should be required to 5 .berendered bythehusband and thewifeseparately,deemed to be the income of- the husband for the purposes of the said Law and charged in the name of the husband. Had the Supreme Constitutional Court not been persuaded, andin the absence of adispute asto thefactual aspect 10 of the case, it has to be taken that the said income taxreturns included the income of the wife, it would not have considered it material to determine theconstitutionalityof section 19. Needless to say that the constitutionality of statutory provisions wasnever considered by the Supreme 15 Constitutional Court or this Court as its successor in abstracto, but only, if it wasmaterial to be done for thedeterminationof amatterinissuebeforeit. However, the learned trial Judge.went on to say thatif the reasons given by the Court in Mikrommatiscasewere 20 part of the principles involved and not merely illustrations, hefound himself unable after careful consideration, to agree with the view that that decision was the law of the land "though it might well be to the interest of fiscus that it should be so", and that the casein hand should be 25 considered and decided "in the light of our whole experienceandnot merelyinthat of what wassaidinMikrommatiscase 13yearsago". In arriving at the conclusion that the provisions of the Income Tax Law that correspond to section 19 were un30 constitutional, thus departing from the principles enunciated in Mikrommatiscase, the learned trial Judge referred to thecaseof Albert A. Hoeperv. Tax Commission of Wisconsin,16 Law. Ed. U.S. p. 248, which he found to be on all fours with the present case. That was a case 35 where it was held that a husband could not consistentiy with the due process and equal protection clauses of the 14th-Amendment, be taxed by a State on the combined total of his and his wife's income as shown by separate returns, where her income is her separate property and, 40 by reason of the tax being graduate, its amount exceeded the sum of the taxes which would have been due had the sum of the faxes which would have been due had their separate incomes been separately assessed. That was de267 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES A. Loizou, J. 1977 Sept. 8 REPUBLIC (MINISTER OF FINANCE AND ANOTHER) v. DEMETRIOS DEMETRIADES A. Loizou, I. cided in 1931 on a four to three majority. The basis of the decision was that in law and in fact the wife's income was in the fullest degree her separate property and in no sense that of her husband, and thequestion presented was whether the State had power by an Income Tax Law, to 5 measure his tax, not by his own income but, in part, by that of another. In theopinion delivered byMr. JusticeRoberts,emphasis is laid on the abolition of the spouse's ownership and control of the wife's property and the fact that women io were declared to have the same rights as the men in the exercise of suffrage, freedom of contract, choice of residence, for voting purposes, jury service, holding office, holding and conveying propert