Allardyce Lumber Company Ltd v Sylvania Products Ltd [1998] SBCA 5; CA-CAC 10 and 12 of 1996 (27 February 1998)

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Court File No.	Civil Appeal No. 10 & 12 of 1996 (On Appeal from Civil Case No. 616/96)
BETWEEN:	ALLARDYCE LUMBER COMPANY LIMITED
	First Appellant

	KALENA TIMBER COMPANY LIMITED
	Second Appellant

	SYLVANIA PRODUCTS LIMITED
	Third Appellant
AND:	THE PREMIER OF THE WESTERN PROVINCE
	(representing the Western Provincial Executive of the Western Provincial Assembly) Respondents
CORAM:	MASON P., McPHERSON J.A., CASEY J.A.
HEARING:	TUESDAY 9 DECEMBER 1997
JUDGMENT:	27 February 1998

THE COURT: The three appellant companies, which conduct businesses in the Western Province of the Solomon Islands of harvesting and exporting round logs, in proceedings in the High Court against the respondent Premier, sought and obtained a declaration by Lungole-Awich J. that

“1. The Western Province Business Licence Regulation 1995, at the 83rd item in Schedule H, imposing licence fee of 150,000 per year for the business of exporting round logs, is ultra vires, and unconstitutional and therefore invalid. The rest of the provisions are not invalidated.”

The respondent Premier filed a notice of appeal against the making of this declaration but on 3 December 1997 gave notice, pursuant to mule 30 of The Court of Appeal Rules, that he abandoned his appeal.

“2. The Western Province Business License Ordinance, 1995, is not ultra·vires simply because an item in the 1995 Regulations (or even the whole) has been found ultra vires.

3. The Western Province Business Licence (Amendment) Regulations 1992, as the first item in sub-regulation 2(b)(iii) is revived to the extent but only to the extent that the licene fee of $50,000 per annum for the business of exporting logs is revived. That fee remains payable for the years affected by the court having invalidated fees which would have applied, but for invalidation, and until replaced by valid fee.”

The appellant companies appeal against the making of the third declaration, contending, for reasons which will be explained, that there is no reviver of the first item in sub-reg. 2(b)(iii)of the 1992 Amendment Regulations. The respondent Premier was not represented at the hearing of the appeal. Although no argument was presented on his behalf, he did not concede that the appellants’ appeal should be allowed.

In order to explain the question which now arises for decision we shall set out the relevant Constitutional and legislative provisions. The starting point is s.1 06 of the Constitution which provided

“106. No taxation shall be imposed or altered except by or under an Act of Parliament.”

“33(5) A Provincial Assembly has no power to make laws imposing altering or abolishing tax, except where power to do so is expressly conferred on the Provincial Assembly by or under this Act.”

Section 28 of the Act provides for devolution of legislative powers to provincial assemblies. Pursuant to that section, Western Province Devolution order, No. 1 of 1983, was made. Section 4 of that Order conferred upon the Western Provincial Assembly certain taxing and other powers as set out in Schedule 4. That Schedule, so far as it is relevant, provides

(c) fees for services performed or licences issued by or on behalf of the Provincial Executive (other than services performed or licences issued by them as agent of another) and

(d) such other means as may be approved for the purposes of this paragraph as the Minister may order.”

The effect of the provisions set out above has been the subject of discussion in a judgment of this Court Solomon Motors Ltd v Honiara Town Council (Civil Case No. 11 of 1994) to which reference will be made.

In 1993 the Western Province Business Licence Ordinance 1993 was enacted. Section 2 of that Ordinance revoked the Western Province Business Licence (Amendment) Ordinance 1989 and all amendments thereto and “substituted” the following provisions of the 1993 Ordinance. Section 17 of the ordinance also repealed a number of earlier enactments including the Western Province Business Licence (Amendment) Ordinance 1989, the Western Province Business Licence (Amendment) (No.1) Ordinance 1990, the Western Province Business Licence (Amendment) (No.2) Ordinance 1991 and the Western province Business Licence (Amendment) Ordinance 1992. The 1993 Ordinance set up a new regulatory scheme for the licensing of businesses in substitution for the scheme under the earlier legislation which was revoked as well as repealed.

Section 16(1) of the 1993 Ordinance authorised the Executive to make such Orders or regulations as might appear to be necessary or expedient for carrying out the objectives or provisions of the Ordinance, in particular to

“(2) Without limiting the powers of the Executive the Executive may make such orders and Regulations as appear necessary or expedient to calculate, regulate or enforce such fees.”

Pursuant to the authority conferred by s.16, the Western Province Business Licence Regulations 1993 were promulgated. Regulation 19 of he Regulations repealed the earlier Western Province Business Regulations 1989 and amendments thereto, including the Western Province Business Licence (Amendment) Regulations 1992. Regulation 14 and Schedule G of the 1993 Regulations imposed a business licence fee for exporting round logs at the rate of $10 per cubic metre exported or cut for export in the previous year land, if that was the first year of round log timber exporting, the fee was fixed at $50,000 for the year. That fee had also been prescribed for the preceding year ended 30 March 1994.

In Allardyce Lumber Company Ltd v The Premier of Western Province (Muria C.J.) 14 March 1995 (Civil Case No. 234 of 1994), it was held that the fee of $10 per cubic metre was a tax and unconstitutional because it was not authorised by the Constitution or the Western Province Devolution Order.

In consequence of this decision, the Province then enacted the Western Province Business Licence Ordinance 1995. Section 2 of that Ordinance revoked the 1993 Ordinance. Section 10(1) of the 1995 Ordinance provided that the Executive is to determine business licence fees. Section 16 authorised the Executive to make regulations prescribing business licence fees. Pursuant to that provision, the Western Province Business Licence Regulations 1995 were made. Regulation s16 of those regulations not only repealed the 1993 Regulations but also the 1989 Regulations and the amendments thereto including the 1992 (Amendment) Regulations. By reg. 11 and the 83rd item in Schedule 11 of the annual business licence fee for “Round log Timber Exporting” was fixed at $150,000.

It was the prescription of this licence fee which the primary Judge held to be unconstitutional and invalid on the ground that it amounted to a tax. In the light of the respondent Premier’s abandonment of his appeal against the declaration of invalidity, it is neither necessary nor appropriate for us to consider the correctness or otherwise of the primary judge’s conclusion on this point. This judgment should not be understood, therefore, as expressing any view of the point. If a similar question were to arise in the future it would require a consideration of Air Caledonie International v Commonwealth [1988] HCA 61; (1988) 165 C.L.R. 462 at 467 and Harper v Minister for State Fisheries (1989) 168 C.L.R. 315.

Nonetheless we should indicate very briefly the basis on which the primary judge’s conclusion was reached. His Lordship considered that a Province is empowered to impose the two taxes mentioned in Schedule 4 of the Western Province Devolution Order, namely, head tax and property tax, and no other tax. In that respect his lordship regarded the Solomon Motors case as stating two principles, namely (1) for a charge to be regarded as a licence and not as a tax, there must be a relationship between the charge for licensing the particular business and the activities performed by the licensing authority in relation to such licence, such as conducting investigations, inspections and inquiries to an extent that bears some arguable relationship, though not a precise arithmetical relationship, between the charge and the services: and (2) principle of reasonableness as applied to the amount of the fees charged.

His Lordship concluded that the two principles were not satisfied in the light of the evidence before him relation to the duties to be performed by a provincial government, particularly the duties imposed by the Forest and Timber Utilisation Act 1991. His Lordship said

“It may be said that the fee of $50,000 or a sum thereabout imposed for the year ending March 1993 bore arguable relationship to service provided in monitoring the business of exporting logs. The sum of $50,000 is not too far away from the estimate of $25,000 given by Mr. Beverly, taking into account that he did not enumerate all the duties expected of the authorities. Moreover it is not for the court to calculate the precise arithmetic ratio of the relationship. I am, on the other hand, sure that there is no way that a figure as high as $150,000 would be within range. It is my decision that the charge of $150,000 per year for licence for exporting round logs from Western Province, bears no arguable relationship whatsoever, to duties expected of officials of the province, in relation to the business. A province properly addressing its mind to licensing and licence fee, and not to taxing, would not charge the sum of $150,000 given the facts in this case. Letters written by the Province to the plaintiffs show that the province’s main consideration was raising of revenue. That is a consideration mainly in taxing. If the province wishes to tax in the logging business, the proper course of action is first to obtain that authority in an Act of Parliament.”

His Lordship also found that the fee of $150,000 stated in the 83rd item in Schedule H to the 1995 Regulations was unreasonable and ultra vires.

The invalidity of that fee did not infect the 1995 Ordinance, notably s. 10(1) relating to fees and s. 16(1) relating to the making of orders and regulations, particularly prescribing fees and matters relating to fees. As the primary judge stated, neither provision is vulnerable to challenge on the ground of ultra vires either for unreasonableness or excess of power under s.28 of the Provincial Government Act 1981.

His Lordship then concluded that invalidity attached only to the 83rd item in Schedule H. That conclusion in the context of the items in the schedule, was plainly correct. Each item is independent and not dependent on the validity of the feed contained in other items. The rest of the Schedule is therefore severable from the 83rd item. That item, however, does not exist in isolation from the prescription by reg. 11 of the 1995 Regulations of the fee identified in the item itself. It is the prescription of the excessive fee that renders the fee invalid and the prescription is effected by reg. 11. So reg. 11 itself, to the extent that it prescribes the offending fee, is invalid. As the prescription of the remaining fees is severable from the prescription of the 83rd item, the prescription of the remaining fees by reg. 11 is not affected by the limited invalidity of reg. 11, in its application to the 83rd item. What we have just said is not entirely consistent with the last sentence of declaration 1 made by his Lordship, namely “The rest of the provisions are not invalidated” but the difference is not one of substance.

The primary judge dealt with the question of repeal by saying that the fee of $150,000 was intended to replace the earlier fee of $10 per cubic metre imposed by the 1993 Regulations. In his Lordship’s view, reg. 14 and Schedule G of those regulations would revive, but for their invalidation, so that, in the event, the 1992 (Amendment) Regulations are revived in their original form to the extent only that the fee of $50,000 per year is payable for the business of exporting round logs.

The flaw in this approach to the problem is that the limited invalidity of reg. 11 and the 83rd item of Schedule H does not affect the valid operation of reg. 16 of the1995 Regulations. That regulation explicitly repealed both the 1989 Regulations and its amendments, including the 1992 (Amendment) Regulations as well, as the 1993 Regulations. For good measure, the 1993 Regulations had already repealed the 1992 Regulations. The 1995 repeal of the 1992 Regulations was presumably intended to ensure that the repeal of the 1993 regulations did not bring about a reviver of the 1992 regulations.

The existence of an express and unqualified repeal of the 1992 and the 1989 regulations makes it impossible to conclude that the repeal in some way conditional upon the valid operation in every respect of the 1995 Regulations or that the repeal of a particular provision in the earlier regulations is conditioned upon the valid operation of a provision in the 1995 Regulations which may be considered to be a substituted or replacement provision for something in earlier regulations.

His Lordship considered that support for his approach to the problem was provided by the comments of Dixon J. in Australian National Airways Pty Ltd v. commonwealth [1945] HCA 41; (1995) 71 C.L.R. 29 at 96. That, however, was a case in which a regulation was amended by a discrete statutory rule which provided for the omission of a sub-regulation and its replacement by a new sub-regulation, the effect of which was inconsistent with the Constitution. The consequence was that the amendment (consisting of the omission and the substitution) was invalid. There was, to use the words of Dixon J. (at 96)

“no intention to repeal former sub-reg. (3) independently of the adoption of the new sub-reg. (3)”.

It was possible to arrive at this conclusion because the statutory rule incorporating the amendment, dealt only with the omission of the old provision and the substitution of the new provision. It is impossible to treat the comments of Dixon J. in that case as having any application to the express and unqualified repeals in this case. This is not a case in which the Executive has done no more than omit a reference in a schedule to “$50,000” and substituted “$150,000”, either by way of amendment or repeal. The legislative process, as we have explained, has been far more complex including, as it does unqualified repeals, of earlier subordinate legislations which have not been limited to the amount fixed as licence fees for the business of exporting round logs.

More to the point, in this case, are the observations of Latham C.J. in Silk Bros. Pty Ltd v. State Electricity Commission of Victoria (1943), 67 C.L.R. 1 at 16-17. There the Chief Justice said

“Probably it was believed by the draftsman that the, whole of the landlord and Tenant Regulations were valid, but the repeal of the Fair Rents Regulations is not made dependent upon the continuance in operation of the Landlord and Tenant Regulations. The words of repeal are quite unequivocal, and a court must give effect to them even though an expectation as to the condition of the law after such repeal may be disappointed in whole or part. Grave difficulties would arise if a court were to attach an unexpressed condition to the operation of words of repeal so unambiguous as those in the present case. The door would be open to speculations of all kinds as to some probable, but unexpressed, intent of the legislating authority, and great uncertainty would arise as to the effect of repealing provisions.”

We refer also to s.23(1)(a) of the Interpretation and General Provisions Act 1978 which provides that the repeal of an Act does not revive legislation not in force immediately before the repeal. By s.45(1) and s.9(1)(a) of Part II of Schedule I8 to the Provincial Government Act 1981 references to an Act in s.23 of the interpretation and General Provisions Act 1978 include a reference to an Ordinance made under the Provincial Government Act 1981.

In the result the invalidity attaching to the prescription of the licence fee in the 83rd item in Schedule H of the 1995 Regulations does not result in a reviver of the licence fee of $50,000 in the 1992 (Amendment) Regulation.

Court of Appeal of Solomon Islands

Allardyce Lumber Company Ltd v Sylvania Products Ltd [1998] SBCA 5; CA-CAC 10 and 12 of 1996 (27 February 1998)