Golden Star Trading Corporation Ltd v Attorney-General [2001] SBHC 82; HC-CC 193 of 1997 (15 November 2001)

IN THE HIGH COURT OF SOLOMON ISLANDS

Civil Case Number 193 of 1997

GOLDEN STAR TRADING CORPORATION LIMITED

v

ATTORNEY - GENERAL

(ON BEHALF OF THE MINISTER OF FINANCE)

High Court oomon Islands

(FRANK O. KABUI, J.)

Civil Case Number 193 of 1997

Date of Hearing: 14th November 2001

Date of Judgment: 15th November 2001

Mr J. Apaniai for the Plaintiff

Mr S. Manetoali for the Defendant

JUDGMENT

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(Kabui, J.): By Summons filed on 19th 19th October 2001, the Plaintiff seeks assessment of damages, such further relief as the court thinks just and costs. This summons arises from Muria, C.J.'s order dated 13th July 1998 declaring, amongst other things, that the Plaintiff in Civil Case No. 193 of 1997 be entitled to damages to be assessed. I am accordingly being asked by the Plaintiff to assess its damages.

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The facts are as set out in Muria, C.J.'s judgment delivered on 13th July 1998. Briefly, the facts are that the Plaintiff in September 1996 applied to the then Minister of Finance for duty remission in respect of imported goods. A remission of 50% was granted by the Minister on 7th December 1996 for a period of one year. This duty remission was subsequently revoked by the Minister on 4th April 1997. In the meantime, the Plaintiff had to pay full duty on goods it had ordered before the revocation of its 50% duty remission. The Plaintiff now claims the loss it incurred as a result of the revocation of its 50% duty remission. The sum being claimed by the Plaintiff is $118,750.02. This sum represents the Plaintiff’s loss for having to pay the sum, which it ought not to have paid in the first place, but for the Minister's erroneous exercise of his powers under section 8 of the Customs and Excise Act (Cap. 121). This is a strange case. I find it rather awkward to deal with it. The application before Muria, C.J. was by Originating Summons seeking two declarations and an order that the Plaintiff be entitled to damages to be assessed. The main declaration being sought before Muria, C.J. was that the Minister's exercise of his discretion under section 8 of the Act above was both wrongful and unlawful in nature. In Muria, C.J.'s judgment delivered on 13th July 1998, it is clear that His Lordship based His Lordship's ruling on the ground that the Minister's decision to revoke 50% duty remission was contrary to the principles of natural justice, which would attract review by the Court. The basis for the claim for damages was not stated in the Originating Summons.

Remission of Duty

Remi of duty no doubt can be made under section 8 of the Act. This section states

...”The Minisay in any case direct, and the Comptroller may in anyn any case grant, the remission or refund in whole or in part of any duty payable or paid on any goods imported or exported, or manufactured in Solomon Islands, or of any rent, charges, or fees payable or paid to the Comptroller and in directing such remission or refund the Minister or the Comptroller, as the case may be, may impose such conditions as he may think fit.

Provided that in no single case shall the Comptroller grant a nt a remission or refund exceeding twenty dollars”...

class="MsoNoMsoNormal" style="margin-top: 1; margin-bottom: 1"> The proviso to this section does restrict the grant of remission or refu $20.00. The limit is $20.00. Section 235 of the Act would seem to suggest that section 8 as regards remission or refund only applies to goods lost or destroyed. An application would have to be made to the Comptroller for remission or :refund. Remission of duty is not the same thing as reduction of duty.

lass="MsoNoMsoNormal" style="text-align: justify; margin-top: 1; margin-bottom: 1"> Reduction of duty can only granted under section 7 of the Act. This section statestates:

ass="MsoNoMsoNormal" style="margin-left: 72.0pt; margin-top: 1; margin-bottom: 1"> (a) to impose import or export duties of customs upon any goods whatsoever which mich may be imported into or exported from Solomon Islands and to revoke, suspend, reduce, increase or alter any such duties, and to provide for the importation or exportation of any goods without payment of customs duty thereon:

p class="Mss="MsoNormal" style="text-indent: -.55pt; margin-left: 72.0pt; margin-top: 1; margin-bottom: 1"> Provided that all import or export duties of customs and and all exemptions from duties of customs set out in the First Schedule shall continue in force until revoked, suspended, reduced, increased or altered in the manner provided in this Act;

(b) to impose excise duties any goods whatsoever manufactured in Solomon Islands and tond to revoke, suspend, reduce, increase or alter any such duties and to provide for exemptions therefrom”...

Under (a) above, the Minister may by order impose import or expoties on any goods at all imll imported into Solomon Islands or exported therefrom. Duties imposed by the Minister can be revoked, suspended, reduced, increased or altered by the Minister by order. Duty may not also apply to any goods designated by order of the Minister. Duties imposed by the Ministers are set out in the First Schedule to the Act. Goods that are exempted from duty are also set out in the First Schedule. This is stipulated in the proviso to section 7(a) above. Duties imposed, together with any duty exemptions would remain in force until revoked, suspended, reduced, increased or altered by order of the Minister.

By Order of the Minister

In practice, the Minister decides the rates of duties to be ed on goods imported into Snto Solomon Islands or exported from it. The Minister also decides which goods do not attract duties. As I have said above, these rates of duties and exemptions are set out in the First Schedule. The First Schedule can be amended by the Minister from time to time by order signed by him and published in the Gazette as legal supplements. An order is a form of subsidiary legislation. Section 16(1) of the Interpretation and General Provisions Act (Cap. 85) defines “subsidiary legislation” as meaning ...

“any legislative provision (includ delegation of powers or duor duties) made in exercise of any power in that behalf conferred by any Act, by way of by - law, notice, order, proclamation, regulation, rule, rule of court or other instrument;”...

This ff legislation is further treated in sections 61 and 62 of the Interpretation and Gene General Provisions Act above. Section 61 states -

class="Mss="MsoNormal" style="margin-left: 36.0pt; margin-top: 1; margin-bottom: 1"> ... “(1) Subsidiary legislation made after the ncement of this Act -

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(a) shall be published in the Gazettd

(b) shall come into operation on the date of publication or, if it is t is provided that the subsidiary legislation is to come into operation on some other date, on that date.

(2) Subsidiary legislation is in operation as from the beginning of the day on which it comes into operation”...

Lik, section 62 states –

... “(1) Subject to stion (3), subsidiary legislation made under an Act after ther the commencement of this Act shall be laid before Parliament.

(2) If Parliament passes a resolution, within three months after any subsidiary legislation is laid before it, to the effect that the subsidiary legislation is annulled, the subsidiary legislation shall thereupon cease to have effect, but without prejudice to the validity of anything previously done under the subsidiary legislation

(3) Subsection (1) does not apply y subsidiary legislation a on a draft of which is laid before, and approved by resolution by, Parliament before the making of the subsidiary legislation”...

Clearly, subsidiary legislation is a form of delegated legislation, which hr must be sanctioned by y Parliament through the Parliamentary procedures specified in section 62 above. When one compares section 20, which deals with Acts of Parliament with section 61, one sees the obvious similarity between these two sections. Both an Act of Parliament and a subsidiary legislation must be published in the Gazette. They both come into effect on the date of publication in the Gazette or if on a different date, that date. They come into operation from the beginning of the date of coming into operation. The point here is that for any subsidiary legislation to be effective, it must be published in the Gazette and comes into operation on the date of publication in the Gazette in the absence of another date designated for it to come into operation.

The First Sch

The First Schedule under section 7 of the Act contains the rates of customs duty that apply to all goods imported into or exported from Solomon Islands. The rates of customs duty in the First Schedule are not the same. Some rates of customs duty are higher than others. The First Schedule also contains goods which are exempted from customs duty. The rates of customs duty in the First Schedule are the maximum for individual items of goods to be paid by all importers and exporters. The First Schedule is a level playing field for all importers and exporters alike. The only exceptions are exemptions from customs duty. These exceptions are conventional in that they apply to the Head of State and Diplomatic Missions in Solomon Islands and other goods to be used for the public benefit.

Again,amendments, suspension or revocation effected by the Minister does not have any elemeelement of choice apart from exemptions, as to who should benefit from such changes in the rates of customs duty. Such changes in the rates of customs duty do not change the existence of a level playing field for all importers and exporters alike. In other words, the rates of customs duty may change but the fact of a level playing field for all importers and exporters remains the same. Any reduction of customs duty on any item of goods in the First Schedule applies to all importers or exporters subject to exceptions referred to above.

Was the 50% duty remission eive in law?

First of all, duty remission under section 8 of the Act does not, as I have saxceed $20.00 in any s single case. Section 8 of the Act was an amendment in 1966 to give some relief to importers to claim duty remission for lost or damaged goods during the course of journey from the point of loading to delivery to the importer. To describe the purported 50% duty reduction granted to the Plaintiff in 1996 as duty remission is wrong in principle as well as in law. A 50% duty remission in this case is a legal impossibility under section 8 of the Act. The dictionary meaning of the word “remit” is “to cancel a debt, payment or penalty”. (see Oxford Advanced Learner's Dictionary, A.P. Cowie, Fourth Edition at 1066). The word “reduce” means “to make something smaller in size, number, degree, price etc”. (see the same Dictionary cited above at 1054). There is therefore a world of difference in the meaning of the words “remit” and “reduce” in the context of dealing with customs duty. The purported 50% duty remission granted to the Plaintiff must have obviously been meant to be 50% duty reduction under section 7 of the Act. Two things are wrong about this purported 50% duty reduction. First, section 7 of the Act does not give the Minister the power to grant reduction in the rates of customs duty to individual entities such as the Plaintiff or to private individuals. That is not the intention and spirit of section 7 of he Act. There can be reduction of rates of customs duty but that benefit is to be enjoyed by all. That is what I call the level playing field concept that is embedded in section 7 of the Act. It does make sense for it removes discriminatory inclinations, prevents abuse by the Minister and protects the revenue of the Government. Second, the purported 50% duty reduction was not made by order of the Minister published in the Gazette. There is no evidence of publication in the Gazette. It is therefore ineffective in law. It is a nullity as though the Minister had never made an order under section 7 of the Act. (see Hall & Co. Ltd v Shoreham-By-Sea Urban District Council & Another [1964] 1 A E R 1. The Minister could not have revoked nothingness. There was nothing to revoke.

Is the Plaintiff entitling to the refund of $118,750.0pan>

At the hearing, I raised with Counsel for both parties the implications of sections 7 and 8 of the Act and the effectiveness in law of the purported grant of 50% duty reduction in the absence of an order by the Minister published in the Gazette. Counsel for the Plaintiff, Mr Apaniai, in response said that the Plaintiffs application for assessment of damages was in pursuance of Muria, CJ.'s ruling on 13th July 1998. Counsel for the Defendant, Mr Manetoali, said nothing other than to say that he did not dispute the sum of $118,750.02 claimed by the Plaintiff. I had raised these two points of law for which neither Counsel, it would appear, was prepared to argue in any meaningful way. I had apparently gone outside their mind - set in this regard. I took Counsel for the Plaintiff, Mr Apaniai, as telling me that his client, the Plaintiff, had come to Court to reap the fruit of his judgment without further ado. This was a very powerful argument. Against this argument are the words of Muria, C.J. at pages 5 of His Lordship's judgment in these terms ...

“I will assume for the purpose of these proceedings that the Minister has the power to grant remission of duty and hence the power to revoke that grant. I said, assume, because my reading of section 8 of the Customs & Excise Act together with section 27 of the Interpretation and General Provisions Act would appear to leave room for argument as to whether the Minister does in fact have the power to grant remission of duty on goods imported. I would, however, say that a statutory discretion must be exercised by the person in whom the power is reposed. See Ansett Transport Industries (Operations) Pty Ltd – v Commonwealth (1977)139 C.L.R. 54. This question does not fall for consideration in this matter and I shall leave it at that for the moment” ...

His Lordship therefore did not decide the validity of the purported grant of 50% duty remission on 7th November 1996. His Lordship left it for another time. This is a matter of great importance to the collection of Government revenue. Does the Minister have the power under section 7 of the Act to reduce customs duty for his friends or supporters of his Government or anybody for that matter at the expense of Government revenue? The answer is no. As I have said, the Minister does not have the power to reduce customs duty for any particular category of persons than to do so for all importers and exporters alike. This is important because it means that doubt is now cast upon the lawfulness of duty reductions granted by the Minister in the past and now. It also means that any reduction of duty must be for the benefit of all importers and exporters alike and any deviation from this by the Minister would be invalid even if the order by the Minister were signed by the Minister and published in Gazette. There can be no discriminatory reduction of duty under section 7 of the Act for special category of persons. Even duty exemptions cannot be discriminatory for those who are entitled to the benefit that flows from them. I am fully aware of the fact that Muria, C.J. granted an order that the Plaintiff was entitled to damages to be assessed. I would find it almost impossible for me to assess damages that lack any legal basis. However, it would seem that His Lordship granted the order, as he did, on the basis of some negligence on the part of the Minister in acting in breach of natural justice and doing so in an unreasonable way. Whilst questions may be asked about the correctness of Muria, C.J.'s order for damages, His Lordship's order stands until set aside or appealed. I do not sit as the Court of Appeal. For what it is worth, I would grant the Plaintiff’s application. The damage suffered by the Plaintiff is assessed at $118,570.02. There will be cost for the Plaintiff.

F.O. Kabui