Kiribati Ports Authority v Dojin Co Ltd [2021] KICA 5; Civil Appeal 1 of 2021 (30 November 2021)

IN THE KIRIBATI COURT OF APPEAL
CIVIL JURISDICTION
HELD AT BETIO

REPUBLIC OF KIRIBATI
Civil Appeal No. 1 of 2021

BETWEEN KIRIBATI PORTS AUTHORITY APPEALANT

AND DOJIN COMPANY LTD RESPONDENT

Hearing: 24 November 2021
Judgement: 30 November 2021

Before: Blanchard JA
Hansen JA
Heath JA

Counsel: Ms. E Karakaua for Appellant
Mr. B Berina for Respondent

JUDGMENT OF THE COURT

The appeal

[1] Kiribati Ports Authority (the Authority) appeals against part of a judgment given by Muria CJ, in the High Court, on 23 November 2020. The appeal is limited to the question whether the Chief Justice erred in holding that the Authority was not entitled to recover harbour control fees from Dojin Company Ltd (Dojin). Muria CJ reasoned that harbour control fees were no different in kind from port dues, which he found were payable. The Chief Justice held that double-counting would result if the Authority were able to recover both harbour control fees and port dues from Dojin. The question for us is whether he was correct to reach that conclusion.

Background

[2] The Authority is constituted by the Kiribati Ports Authority Act 1990 (the Act). Its functions, in general terms, are to provide and maintain adequate and efficient port services and facilities at both Betio and Fxiritirnaii bland. T hose functions include the regulation and control of navigation, both in the appt-cac to and 'Mitnin the ports: generally, see s 7 (a) and (b) of the Act.

[3] Dojin is a shipping agent. it acts for a number of foreign shipping companies based outside Kiribati. As part of its responsibilities, Dojin pays charges levied by the Authority for use of its services within the ports at Betio and Kiritimati Island.

[4] The Authority claims that Dojin has failed to pay fees and other costs totalling $AUD667,253.17. In 2015, it brought proceedings against Dojin to recover that sum. The claim included harbour control fees, pilotage fees, environmental fees or levies, port dues, jetty charges, mooring charges, wharfage charges, port security services and crane hire.

[5] The Authority's claim was tried in the High Court, in October 2017. Because of the unsatisfactory way in which the claim had been pleaded, the Chief Justice, in a judgment delivered on 13 September 2018, considered that final resolution was not possible. Instead, he ordered accounts to be taken by a referee, who was to be agreed by the parties or appointed by the Court. The Authority appealed against that order. The appeal was directed to whether the Chief Justice ought to have ruled on a number of legal questions before referring accounting issues to a referee.

[6] This Court, in a judgment given on 21 August 2019, accepted that relevant legal rulings should be given first. The appeal was allowed in part, in order to specify with better particularity the nature of the legal inquiries that the High Court was to undertake before accounts were taken. In relation to the charges in issue on the present appeal, this Court said:

[14]...

• (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

The second High Court judgment

[7] The remitted questions were heard on 8 November 2019 and resolved by a second judgment delivered by the Chief Justice, on 23 November 2020. The Chief Justice explained his approach to deciding whether the Authority could charge harbour control fees, a pilotage fee and/or port dues. His Honour said:

12. I think it is fair to say that from [the Authority's] perspective, it has to recoup its costs of providing its services and that it is entitled to make some profit on its investment in ports services business. On the other hand, from [Dojin's] perspective, the rates charged by [the Authority] should be as low as possible, affordable and fairly applied to all customers of [the Authority]. [Dojin] suggested that [the Authority] should explain and make port users understand why changes were needed to be made. [Dojin] said that did not happen in this case.
13. I accept that [the Authority] is entitled to recover its costs of providing port services. Such costs must be reasonable. I also accept that the [Authority] is entitled to make profits on its investment in ports services business. However, such profit must not be earned at the unjust expense of the ports' customers, such as [Dojin].
14. Having stated what I feel are the general principles in determining what is reasonable when setting rates to be imposed on customers for services provided by utilities providers such as [the Authority], I find it difficult to say that [the Authority's] action of imposing "per day" rate on port dues is unlawful, being excessive and unreasonable for two reasons. First, by law, [the Authority] was entitled to impose "per day" rate for port dues under the Ports Tariff 2010. Secondly, while it was argued that other countries in the region, such as Fiji have used the "per call" rate instead of "per day", it does not necessarily follow that Kiribati should do the same. Comparison in rates with other neighbouring ports services providers is but only one factor and is not decisive in my view.

[8] Having held that the daily rate charged by the Authority for "port dueS' was valid, the Chief Justice considered separately whether the harbour control fees could be charged in place of piloting fees and whether, in any event, those fees were encompassed within the services rendered for which port dues were paid. In doing so, Muria CJ referred to the composite definition of the terms "harbour dues" and "dues," in s 2 of the Harbours Ordinance:

"harbour dues" and "dues" means any due, rate, fee, toll, tax, pilotage rate, light due, port charge or payment in the nature thereof payable or leviable under this Ordinance.

[9] The Chief Justice continued:

26. In the Court's view the definition of "harbour dues" encompasses all the dues, fees, rates, taxes or charges levied for the services rendered by [the Authority] for the use of its harbour. These include dues charged for the use of the port (port dues), piloting services (pilotage dues) and for the ecological use of the harbour (environmental fees or dues) and for entry and departure of vessels from the port.
27. The harbour control fee appears for the first time in the Ports Tariff 2010. It had never been charged prior to 2010. The harbour control fee should not have been charged in place of piloting fee and harbour fee. It is already encompassed in port dues. To add "harbour control fee" as separate dues when such fee has already been encompassed in the other dues already levied against port users such as [Dojin] would be tantamount to double charging and as such it would be unfair and unreasonable.
(Emphasis added)

Analysis

[10] The Chief Justice's decision rests on the proposition that the Authority could not charge both "harbour dues" as that term was defined in the Harbours Ordinance, in addition to "port dues". Muria CJ's view was that such "harbour dues" were already encompassed within the term "port dues" and if they were charged separately the Authority would get the benefit of double-counting. On the Chief Justice's analysis, harbour control fees ought not to have been included in the Betio and Kiritimati Port Dues, Fees and Tariff Notice, issued in 2010 (the Tariff Notice).

[11] In our view, the Chief Justice's analysis was flawed because he failed to apply correctly relevant provisions of both the Act and the Tariff Notice which authorise payment of specified dues. We now explain why he fell into error.

[12] We take the Act as our starting point for analysis. Various provisions of that Act confer specific, powers on the Authority to charge fees in return for services rendered by it in the operation of the ports: in particular, ss 17—20 (inclusive). Those provisions fall to be interpreted in light of the statutory requirements for services to be rendered by the Authority, set out in s 8(1 )(f) of the Act. The types of charge and the rates payable as dues are specified in ss 17— 19. Section 20 provides for the rates for relevant services to be prescribed by notice, with the approval of the responsible Minister. The Tariff Notice was published to notify users of port facilities in Betio and Kiritimati Island ports of the rates chargeable, as required by s 20.

[13] Sections 17, 18 and 19 of the Act empower the Authority to charge dockage dues, port dues and wharfage dues. Section 18 deals with "port dues" in the following terms:

Port dues
18. (1) Dues known as port dues shall be levied by and paid to the Authority on every vessel in a port, whether plying for hire or otherwise.
(2) Port dues shall be prescribed by the Authority by notice subject to the approval of the Minister.

[14] Section 20 of the Act empowers the Authority to levy rates for particular services that it provides to ship owners. Relevantly, s 20(a), (b) and (c) provide:

Rates
20. Subject to the provisions of this Act, the Authority may levy such rates as it shall, with the approval of the Minister and by notice prescribe for the use of any land, works or appliances belonging to it and for services, goods or facilities provided by it in pursuance of its powers under this Act or under any other written law, and, without prejudice to the generality of the foregoing, for any of the following matters -
(a) the landing, shipping, wharfage, cranage, storage or carriage of goods and the deposit with it or the placing of goods in its custody or control;
(b) the provision ofpilotage services to any vessel within the territorial waters of Kiribati;
(c) the use by any vessel, vehicle or person of any land, works or appliances, wharf of dock under its control;
(Emphasis added)

[15] For present purposes, the "port dues" and "pilotage services" authorised by s 18(1) and 20(b), respectively, assume significance. In reverse order, the Tariff Notice describes the fees payable for those services as follows:

A: Pilotaqe Fee

• i) Pilot on board, KPA charge: KPA Base $100 + $0.10 per GRT
• ii) If pilot is not on board the vessel then Harbour Controller fee is applicable for instructing the vessel to its anchorage position or berthing the pier, jetty and wharf: KPA Base $50 + $0.05 per GRT
• iii) Late arrival and departure/Pilot down time/Pilot travel time (minimum charge $150 per hour).

Saturday and after working hours, the rate is time and half. Sundays and Public holidays, the rate is doubled.
C: Port Dues

• i) Port dues sha// be levied to overseas vessels in poå, whether plying for hire or otherwise, at a rate of $10.00 per 100 GRT per day or part thereof.
• ii) Port dues shall be levied to overseas yachts in port, whether plying for hire or otherwise, at a rate of $50.00 per call (not exceeding 30 days), plus $5 per day (after 30 days).
• iii) Port dues shall be levied to local vessels in pod, whether plying for hire or otherwise at a rate of $0.50 per metre length per call with the exception of non-commercial waa-uoaa.
• iv) Port dues sha// be levied to al/ crafts using inner harbour basin anchorage at the o/d wharf swing-basin or Bairiki wharf at a rate of $1.50 per metre length per day or $20 per month (through application only).

[16] Item A of the Tariff Notice refers to a "pilotage fee". That type of charge is divided into two discrete categories. The first (Item A(i)) is charged when a pilot is on board a vessel entering the harbour and is guiding it to its anchorage or berth. The second (Item A(ii)) is where a pilot is not on board the vessel but is giving instructions to the Master to enable the vessel to reach its anchorage or berth safety. A higher fee is payable when the pilot is on board the vessel.

[17] For the purposes of Item A, the "Glossary" to the Tariff Notice defines the term "pilot" as follows:

Pilot: means any person not belonging to a vessel who has the conduct thereof.

[18] Mr Berina, for Dojin, argued that a harbour controller (to whom the Act refers as a Ports Master) who has responsibility for directing a vessel or vessels to their anchoring positions or berth should not be regarded as performing the services of a pilot, for the purposes of Item A of the Tariff Notice. He pointed to s 29 of the Act, which sets out the power of the Ports Master in relation to vessels. Section 29(1) provides:

29. (1) Notwithstanding anything contained in this Act, the Ports Master may within a port or the approaches to a port -

• (a) direct where any vessel shall be berthed, moored or anchored and the method of anchoring;
• (b) direct the removal of any vessel from any berth, station or anchorage to another berth, station or anchorage and the time within which such removal is to be effected; or
• (c) regulate the movement of vessels generally.

[19] The Ports Master is the official with power to control the use of the harbour and its approaches. As s 29(1 )(a) makes clear, the Ports Master is entitled to take control of a vessel and give instructions as to where it should be "berthed, moored or anchored and the method of anchoring". When exercising such powers, the Ports Master is acting to promote safety in the harbour and, more generally, to fulfil the Authority's statutory function, under s 7(b) of the Act, "to regulate and control navigation within ports and the approaches to ports".

[20] As Mr Berina submitted, the nature of the Ports Master's function does not necessarily fit easily within the ordinary definition of the term "pilot". However, the Tariff Notice, in defining the term "pilot" in its Glossary, has written its own dictionary. Applying that definition, we consider that the Ports Master is to be treated as a "pilot" who is not "on board the vessel" for the purposes of Item A(ii) of the Tariff Notice. As well as being consistent with the definition of the term "pilot" in the "Glossary" to the Tariff Notice, it also reflects the way in which the term "harbour controller: is used in Item A(ii) of the Tariff Notice. In context, the term "Harbour Controller" fee is used to describe the service provided when a pilot (as defined) is not on board. It is a fee that the Authority is legitimately entitied to charge, whether the service is performed by the Ports Master or some other person on the Authority's behalf.

[21] Item C of the Tariff Notice deals specifically with what are called "Port Dues". Those fees are directly related to the time that a vessel is berthed in the port, or at anchorage. They are levied at the daily rates for which item C(iHiv) of the Tariff Notice specify, in respect of different types of vessel. Port dues of this type are not the equivalent of harbour control fees. Charging for the use of a berth or anchorage on a daily rate is consistent with s 18(1) of the Act.

[22] While the Chief Justice referred to the composite definition of "harbour dues" and "dues" in s 2 of the Harbours Ordinance, that definition does not assist interpretation of the Act and the Tariff Notice. The definition makes it clear that, to fall within it, charges and levies must be "payable or leviable under this Ordinance". The "dues" in issue in this case were levied under the Act, not the Ordinance. The Ordinance was enacted in 1977, well before the more specific provisions of the Act came into force. In our view, ss 17—20 of the Act, together with the Tariff Notice, govern the circumstances in which port fees are payable. We do not discern any real conflict between the Ordinance and the Act but, to the extent necessary, the Act should be regarded as having impliedly amended the Ordinance to enable the Authority to charge fees in accordance with the Act.

[23] In order to meet other criticisms of the High Court judgment made by Mr Berina, we make three further points:

(a) Mr Berina submitted that some of the pilotage fees charged by the Authority did not arise from services it rendered; rather, they related to pilotage provided by the private sector. If some piloting services are provided by the private sector (as opposed to a private pilot engaged by the Authority), they are not services for which the Authority can charge. So, for example, where a private sector pilot who has not been engaged by the Authority has been used to guide a vessel into port, the Authority cannot charge a pilotage fee or a harbour control fee. The Act ensures that the Authority is paid for the services it provides. The Tariff Notice fixes the rates that the Authority may charge for its services.
(b) Mr Berina a:so submitted that it was unreasonable and unfair for the Authority to charge certain fees at Betio but not at Kiritimati Island. The answer to that submission is that the Authority is entitled to choose whether or not to charge what would otherwise be a legitimate fee. No inquiry need be made into why, in any circumstance, a particuiar fee has been waived. The Tariff Notice cannot be invalidated by a decision of that type. Nor can a Court take any such type into account in interpreting the provisions of the Act and the Tariff Notice.
(c) Mr Berina referred us to an affidavit sworn by a Branch Manager of the Authority, Teera Anterea. Her affidavit addressed the purpose of the fees charged, as understood by the Authority. For present purposes, paras 14 and 15 of the affidavit state:

• 14. It is important to note that Port Dues and Harbor Control are applicable to all or any vessels who enter the port and berth/anchor with the directions/coordinates given by the Port Controller.
• 15. Harbour Control are charges resulting from the directions given by the Port Controller while Port Dues are charged per day when vessels anchor at the coordinates given by the Port Contrcller.

Broadly speaking, Ms Anterea's evidence accords with the findings we have made about the role of the Ports Master (to whom we think she is referring as the "Port Controlled') for which we have held fees are payable. We do not consider Ms Anterea's affidavit assists Mr Berina's argument.

Result

[24] The Chief Justice did not make any formal declarations as part of his judgment; he simply stated that the "issues posed have now been answered and referred the proceeding to a referee for accounts to be taken. He then fixed dates for the referee to investigate and report. With the effluxion of time, those timetabling directions are now redundant.

[25] In order to articulate clearly our interpretation of the Act and the Tariff Notice, we vacate the orders made in the High Court and substitute them with the following:

(a) The Authority is entitled to charge a pilotage fee under Item A(i) of the Tariff Notice when it provides a pilot (as defined by the Glossary to the Tariff Notice) to board a vessel to undertake his or her work.
(b) A harbour control fee may be charged under item A(ii) of the Tariff Notice in circumstances where the Authority suppiies a pilot to instruct the vessel to its anchorage or berthing position, but that pilot is not on board the vessel. A Port Master, exercising powers under s 29(1 of the Act, is a "pilot" for this purpose. However, a harbour control fee under item A(ii) is not payable unless the pilot has been provided by the Authority.
(c) The Authority is entitled to charge applicable port dues under Item C of the Tariff Notice when a vessel of the type described is in port, whether plying for hire or otherwise.

[26] At present, no referee has been appointed. We remit the proceeding to the High Court for a Judge to ensure that a referee is appointed promptly and a timetable is established for the commencement of the inquiry, the submission of the referee's report and the Court's consideration of it.

[27] We have considered whether costs should be awarded on this appeal. The appeal has resulted in declarations that make it clear both the fees that can be charged by the Authority and the need for those fees to respond to services rendered by the Authority. In that sense, both parties have enjoyed an element of success. For that reason, costs shall lie where they fall on this appeal.

[28] We endorse the High Court's decision to reserve costs in that Court, to await the outcome of the referee's investigation and report.

Blanchard JA

Hansen JA
Heath JA