Kiribati Ports Authority v Dojin Co Ltd [2019] KICA 5; Civil Appeal 3 of 2018 (21 August 2019)

IN THE KIRIBATI COURT OF APPEAL ] Civil Appeal No. 3 of 2018
CIVIL JURISDICTION ]
HELD AT BETIO ]
REPUBLIC OF KIRIBATI ]

BETWEEN KIRIBATI PORTS AUTHORITY APPELLANT

AND DOJIN COMPANY LIMITED RESPONDENT

Before: Blanchard JA

Handley JA

Heath JA

Counsel: Elsie Karakaua for appellant

Banuera Berina for respondent

Date of Hearing: 16 August 2019
Date of Judgment: 21 August 2019

JUDGMENT OF THE COURT

[1] The appellant, the Kiribati Ports Authority, which provides various port services in Betio and Kiritimati, claims against the respondent, Dojin Company Ltd, for charges for services it says it has provided to Dojin. The claimed charges were for harbour control fees, piloting fees, environmental fees or levy, port dues, jetty charges, mooring charges, wharfages, port security services and crane hire. It has also rendered some invoices for VAT which have not been paid by Dojin.

[2] The Chief Justice, in a judgment delivered on 13 September 2018, found that because of the unsatisfactory way in which the claim had been pleaded he was unable to determine what might be owing in each head of claim in accord with the appellant’s Port Tariff 2010 set by its Board under its authorising statute. He expressly said that he did not intend to say that the appellant was not entitled to charge for the services to Dojin or that it had not rendered all or some of the services. But he said that the appellant had come to the Court with imperfect evidence which compounded its problem of establishing its claim with precision.

[3] The Chief Justice recorded that “there is clearly an acceptance by [Dojin] that [the appellant]) has provided to it, if not all, some of the services set out under the KPA Tariff 2010. Dojin’s case was that some of the services had not been provided, that the invoice charges for some of the services had been paid, that wrong amounts had been charged, that there had been double charging through duplicate invoices or incorrect invoices and, that some of the items charged lacked details to support them.

[4] Dojin also challenged the application by the appellant of payments actually made by it to the appellant. In relation to that the Chief Justice noted that each item of services rendered and charged under the Port Tariff was a separate and distinct debt if it was not settled, and must be proved separately by the appellant. It could not apply payments “carte blanche” whichever way it saw fit according to its own internal decision-making process irrespective of whether or not those separate and distinct debts had been proved.

[5] An agreement signed by both parties had been made in 2013 effective from the end of October of that year in the following terms:

“ AGREEMENT

This Agreement (“Agreement”) is made this 29^th October 2013, by and between Kiribati Ports Authority (Xmas Branch), referred to as “KPA’, and Dojin Company Limited as “Ship Agent”

W I T N E S S E T H:

WHEREAS, KPA desires to engage Dojin Ship Agent to continue in paying $10,000.00 per month in order to settle long outstanding debts that had not been settled earlier and at the same time is liable to pay a 75% pre-funding for incoming vessel. At the end of each month effective from the end of October 2013 all monthly bills must be fully settled at the end of that month.

Incompliance: KPA will immediately inform the Marine Director that Dojin cannot fulfill its contract as an agent, hence ship agent license shall not be issued or renewed.

Or

Other option: KPA will also proceed into legal court as to make claims through high court.

Confidentiality and Work Product:

The terms and conditions of this Agreement shall be kept confidential.

IN WITNESS WHEREOF, the parties here to have caused this Agreement to be executed as of the day and year first above written.

Signed: Signed:

KPA Kiritimati Branch Manager Dojin Managing Director

Dated: 3 December 2013 Dated: 5 December 2013”

[6] The parties disagreed on the interpretation of this agreement. At issue was whether it allowed the appellant to apply the monthly payments of $10,000 to subsequent invoices charged against Dojin after the signing of the agreement. The Chief Justice took the view that the agreement made it very clear that the appellant could not do this. He said, quoting the agreement, that it was made specifically to make Dojin “settle its long outstanding debts that had not been settled earlier” and to make Dojin also pay 75% pre-funding for incoming vessels which were under its responsibility.

[7] The Chief Justice held that the appellant had been wrong to apply “payments made under the Agreement to settle subsequent invoices which were disputed by Dojin”.

[8] Acting under Rules 1 and 2 of Order 36 of the High Court (Civil Procedure) Rules 1964, the Chief Justice directed that an account be taken by an independent referee of suitable professional qualification, preferably a chartered accountant, to be chosen by the parties within 21 days. A reconciliation statement was to be submitted by the parties to the referee together with any other relevant documents on the appellant’s claim and Dojin’s counter-claim. Costs of the referee were to be borne 70% by the appellant and 30% by Dojin. Costs of the litigation were reserved.

[9] From this order the Authority appeals. Dojin cross-appealed but has withdrawn that appeal.

[10] In this appeal the appellant challenges two aspects of the Chief Justice’s judgment. The first criticism which the respondent accepts and indeed supports, is that the Chief Justice has failed to address the question of the legality of the appellant’s charges. Dojin was not simply contending that in numerous instances mistakes had been made in the application of the Tariff to particular circumstances. It also said that in some respects the charges being made were beyond what was authorised by the appellant’s empowering statute or were unreasonable.

[11] It was evident to us that indeed the Chief Justice had failed to make any ruling on the legality of the charges as asserted by Dojin, although in fairness to him he may have intended to do so after receiving the referee’s report. We agree with counsel that this is a matter better dealt with before the referee is asked to do his or her work since, if Dojin’s view prevails, some of the detailed inquiry may be unnecessary.

[12] We asked counsel to draft a list of issues of legality that ought to be determined by the High Court, and, as amended by us with their agreement, it appears in the orders made below.

[13] The second challenge made by the appellant was to what the Chief Justice said about the 2013 Agreement. However, we are in entire agreement with his interpretation of it. The payments made by Dojin after it was entered into must to the extent of $10,000 per month be applied by the appellant towards the indebtedness that existed before the agreement was made. Additional payments must be treated as representing the 75% pre-payments for services to be performed. Then further payments not expressly stipulated for by Dojin can be appropriated as the appellant thinks fit. Of course if an appropriation is made to pay a claim that ultimately is found by the Chief Justice to be unlawful or incorrect in some respect, an adjustment will have to be made to correct that situation.

[14] To the following extent only, the appeal is allowed:

(1) Appeal allowed in part

(2) The case is remitted to the High Court for determination of the following issues:

• (a) Port dues:

Whether the rate charged by the Kiribati Ports Authority (“the Appellant”) is invalid on the ground of unreasonableness.

(b) Piloting fees:

Whether the Appellant can charge piloting fees even if the Respondent did not request a piloting service.

(c) Harbour control fees:

• (i) Whether the Appellant can charge harbour control fees in the place of piloting fees
• (ii) Whether the fee for harbour control services is already encompassed by the port dues charged by the Appellant
  

(d) Environmental fees:

Whether the Appellant has the power, under its enabling Act, to charge such fees as part of its Tariff charges and if so whether it can charge such fee if it does not perform any service that is environmentally related and if so, whether the Tariff amount is reasonable.

(e) Port security fees:

Whether the Appellant can make such a charge where it does not provide port security.

(f) VAT:

Whether a charge for VAT without specification in the invoice of the service to which it relates is valid.

(3) The High Court (or, if it so decides, the referee) is to determine issues raised relating to:

• (i) Wharfage charges
• (ii) Allegedly wrong statements of a vessel’s GRT or other matters relating to GRT
• (iii) Claims for daily charges where they are alleged to be incorrect
• (iv) Supporting details, if needed, for crane hire
• (v) Claims for services where the vessel to which they were allegedly provided has not been specified in the invoice
• (vi) Allegedly incorrect calculation of the cubic metres of cargo

(It is accepted by the parties that all charges made by the appellant other than for VAT are based on what appears in the Kiribati Ports Authority Tariff 2010)

(4) The orders made by the Chief Justice in para [109] of his judgment are varied by deleting Orders 2, 4 and 5 and replacing them with the following:

“2. The taking of accounts is to be done by an independent referee of suitable professional qualifications, preferably a chartered accountant. The High Court shall specify the questions to be answered by the referee having regard to his decisions on the legal issues. If the parties have not agreed upon a referee by
22 September 2019 or such later date as may be specified by the High Court, the referee is to be chosen by the High Court after consultation with the parties.

4. The referee’s determination is to be submitted to the High Court by such date as the High Court shall hereafter specify.
   
5. The case shall be listed for formal disposition as may hereafter be directed by the High Court”.
   

(5) The remuneration and disbursements of the referee are to be fixed by the High Court.

(6) The appeal is otherwise dismissed.

[15] We make no order for costs on this appeal.

[16] We have formed no view on any of the issues raised in Orders (1) and (2) in para [14] above.

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Blanchard JA

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Handley JA

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Heath JA