Super Entertainment Centre Ltd v Honiara City Council [2021] SBHC 160; HCSI-CC 106 of 2020 (7 October 2021)

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Case name:	Super Entertainment Centre Ltd v Honiara City Council

Citation:

Date of decision:	7 October 2021

Parties:	Super Entertainment Centre Limited v Honiara City Council

Date of hearing:	23 September 2021

Court file number(s):	106 of 2020

Jurisdiction:	Civil

Place of delivery:

Judge(s):	Kouhota; PJ

On appeal from:

Order:	1. The defendant to refund to the claimant any fees paid by the claimant to the defendant under the Honiara City Council (Fees, Rate and Charges) Ordinances 2020. 2. Cost against the defendant to be tax if not agreed.

Representation:	Radclyffe A for the Claimant Pitry B for the Defendants

Catchwords:

Words and phrases:

Legislation cited:	the Honiara City Act 1999 S 4(1), s 4 (2), s 34 and 35, Local Government Act Cap117, s 50, s50 (3), Gaming and Lotteries Act, Cap 139, Interpretation & General Provisions Act s 61 (3), Cap 83, s 61 cap 85, Constitution s 106

Cases cited:	Y Sato & company Ltd v Honiara Appointed Council [1990] SBAC 7

The claimant is a limited company incorporated under the law of Solomon Islands and is carrying on the following business in Honiara,

The claimant has a gaming permit issued by the Gaming and Lottery Board under the Ministry of Home Affairs. It pays an annual fee of $10,000-00 for the permit which is valid until 2024. The Claimant paid to Defendant a business licence fee for the Casino for the year 2020 a sum of $100,000-00 under protest on 27^th January 2020 as the Defendant was threatening to close the Claimant’s business if payment was not made.

The Defendant, the Honiara City Council, was established by Section 4 of the Honiara City Act 1999. Section 4(1) of the Act states; “There shall be established under this Act for the purpose of the administration of Honiara City a body to be known as the Honiara City Council.” Section 4(2) of the Act states “The boundaries of Honiara City shall be as set out in Schedule 1, and shall be the area of authority of the City Council. The powers of the council to make laws and ordinances are provided in sections 34 and 35 of the Act.” Section 34 of the Honiara City Act is similar to Section 50 of the Local Government Act, Cap117, in the sense that they both deal with the law-making powers of a council. It must be noted that the Local Government Act is an Act which covers councils generally pre-independence and the Honiara City Act specifically relates to the Honiara City Council.

The claimant filed a category A claim against the defendant on 2^nd March 2020 seeking the following relief;

The reliefs the claimant is seeking depends on the Court's determination of issues identified by counsel for the defendant as issues for determination, they are as follows;

Although the parties have not filed any agreed facts, the facts, in this case, seem not to be in dispute. The claimant in support of its claim relied on the sworn statement of Michael Leong and David Romilo and the written submission of counsel for the claimant filed on 30^th April 2021. The defendant on the other hand relied on the sworn statement of the Acting and Deputy City Clerk of defendant Mr Fred Warereau

I shall now proceed to consider the first issue that is; whether or not the defendant is entitled by law to charge the claimant’s casino an annual business licence? The claimant avers that under Section 50(3) of the Local Government Act (Cap117) the claimant does not require a business licence from the defendant. Counsel for the defendant submits that while Section 50 gives power to the council to make bylaws, Section 50(3) also say as follows “ provided that if council shall make by-laws relating to the licencing of any occupation, trade, business or industry within its area of authority, no person shall be required to take out a licence or pay any licence fee for a licence entitling him to follow or exercise such occupation, trade, business or industry if such occupation, trade, business or industry is also required to be licensed under the powers of any Act for the time being in force.”

It is not in dispute that the claimant had paid for a permit under the Gaming and Lottery Act. By virtue of Section 30(3) the Interpretation and the General Provisions Act licence includes authorization, certificate or a permit. Mr Radcliff of counsel for the claimant submits that a gaming permit is therefore covered by the proviso to Section 50 (3) of the Act and pray that the relief sought in paragraph 1 be granted.

Counsel for the defendant in his counter submission submits that the exception provided in Section 50 (3) of the Local Government Act, (Cap117) is not applicable in the circumstances of the present case. Counsel submits that the permit issued by the Gaming and Lottery Board to Supreme Casino is specifically for the operation of the commercial gaming but it does not authorise the carrying out of business by the claimant. Counsel submits the Gaming Permit clearly indicates that the permit was issued specifically to Supreme Casino and was not issued to the claimant. He submits that the Exemption provided in Section 50 (3) of the Local Government Act would have been applicable in the present case if the Commercial Gaming Permit issued by the Gaming and Lottery Board was issued to the claimant and that it would have been different if the Gaming Permit also authorised the Supreme Casino to carry out of the business by the claimant. That submission is misconceived because Supreme Casino is one of the businesses operated by the claimant so whether the permit was issued to Supreme Casino or claimant makes no difference if the exemption applies. Counsel further submitted that if the permit issued by the Gaming and Lottery Board authorised the carrying out of business by the claimant that will cause injustice and absurdity. He, therefore, submits that the Court ought to prefer the interpretation of the exemption in Section 50 (3) of the Local Government Act which grants justice and avoids anomaly and absurdity since the Legislature never intended injustice or absurdity when it made the law in the first place.

It is pertinent to first deal with the Permit issued to Supreme Casino by the Gaming and Lottery Board. I am of the view, the permit issued by the Lottery and Gaming Board was a general authorization for the Supreme Casino to operate or engage in commercial gaming. The other business licence issued by the Honiara City Council specifically authorises the claimant to operate the business of commercial gaming within the boundary of Honiara City or the jurisdiction of Honiara City Council. In that respect, the business licence the defendant imposed on the claimant cannot be unlawful as the exception in Section 50(3) of LGA does not apply to the claimant as fees charged are for two different purposes. The permit generally authorises the claimant to engage in commercial gaming presumably in any part of Solomon Islands and the business licence specially authorized the claimant to conduct commercial gaming business within the Honiara City boundary.

To accept the claimant’s submission with regard to Section 50 (3) would cause absurdity. It would mean that all taxis and buses operating within Honiara City and other provincial centres do not have to pay any business licence to the Honiara City Council or any Provincial Government if they operate in any Province because they all have paid a vehicle licence to the Inland Revenue Division. I do not think that is what the legislature intended in Section 50 (3) of the Local Government Act. A business licence to operate a business within the boundary of a province or the Honiara City is a different matter from any permit authorising any person to engage in a particular trade or occupation. The former is a general authorization based on other considerations and the latter is specific and territorial.

I accept counsel for the claimant’s submission that the Local Government Act, Cap 117 was not repealed by the Honiara City Act 1999. However, when one considers the provision of Section 50 of the LGA and Section 34 of the Honiara City Act they cover the same issues. In that respect, it is my humble opinion that since the Honiara City Act was specifically enacted to establish the Honiara City Council as well as provide for its administration and law-making powers, it is believed the affairs of the Honiara City Council since the Act came into have been conducted under the provisions of the Honiara City Act and not the Local Government Act. Presumably, the provisions of the Honiara City Act would take precedence over the general provisions of any other Act if they deal with the same issues, otherwise, the general principle of abrogation should apply. No submission was made on this point so it has to wait another day. In any event, Section 34 of the Honiara City Act under which the defendant made the Honiara City Council (Fees, Rates and Charges) Ordinance 2020 contain no exemption as in Section 50(3) of the Local Government Act, Cap 117

Having considered submissions of counsel and the issues discussed above, I accept the submission of counsel for the defendant and refused to grant the relief sought in paragraph 1.

The second question is more complex because the court is in no better position than the defendant to determine the mathematical calculation as to what amount is reasonable or not. The council is authorised to make laws under Section 34 of the Honiara City Act 1999. The fees imposed on the casino by the defendant would be unconstitutional if it is unreasonable and excessive and if fee charge for the business licence issued to the claimant contravenes Section 106 of the Constitution. Counsel for the defendant submitted that in order for the annual licence fee of $100,000 to be unconstitutional, the claimant must provide evidence that the fee of $100,000 is a tax and is excessive and unreasonable under Section 61 of the Local government Act as amended. No such evidence is before the Court.

The Court of Appeal in Y Sato & company Ltd v Honiara Appointed Council [1990] SBAC 7, CA CAC 15 & 16 OF 1998 cited by counsel for the defendant provided some guidance as to the difference between a licence and tax when it states “Generally speaking, a tax is a charge which is made solely for the purpose of raising revenue whereas a licence fee is a charge made primarily for the authority or privilege of him carrying on a particular activity and for the defraying the cost of regulating that activity and for providing services which will benefit those carrying that activity”

In addition to the observation made by the Court of Appeal, another obvious difference between a tax and a licence is “normally a licence is issued to cover a period, normally one year or 12 months, a tax is charged in the event, a clear example is export and import duty and Goods tax which are charge whenever one import or export goods.”

Counsel for the defendant in his submission made reference to the sworn statement of Mr Fred Warereau in which Mr Warereau outline the services the council provides to the residence of the city including the claimant. Mr Warereau deposed part of the fees charged to the claimant to cover the cost of these services. He also deposed that the defendant will continue to incur costs in processing the claimant’s application for renewal of business licence at the beginning of every year. The associated costs counsel submit is not limited to papers, toner and printing machines. He submit part of the business licence fee collected from the claimant had defrayed the cost incurred by the defendant in preparing the application of business licence fee. Therefore counsel submits the business licence fee charged to the claimant by the defendant in the circumstances does not amount to a tax. Counsel submits that it ought to be considered that the licence fee charged by the defendant to the claimant is a charge made primarily for the authority or privilege in carrying out its business.

On the evidence before and on the views expressed as what amounts to a tax or a licence I am satisfied the fee paid by the claimant to the defendant is not a tax and therefore not unconstitutional.

The third question is whether the letter dated 17^th December 2015 constituted an agreement between the parties that can be disposed of easily. I had the opportunity to view the letter by the defendant to the claimant dated 17^th December 2015. The words in the letter which I believe the claimant aver constituted agreement between them and the defendant stated “any increase from 2020 would be reasonable” That sentence was on the part of the letter with words ‘ without prejudice.’ I consider the statement relied on by the claimant is vague and made without prejudice. It does not amount to any agreement between the parties.

With respect to the fourth relief sought, no evidence was adduced by the claimant that it had paid the per unit licence to the defendant. The defendant relied on the sworn statement of Mr Warereau in his sworn statement filed on 24^th April 2021 and submit they only charge one licence to the claimant for rental purposes. I, however, consider that claimant is challenging the per-unit licence fee for commercial and residential properties in the Ordinance. Paying a licence per unit in my view is a scheme aimed at maximizing revenue rather than a licence which is supposed to cover services by the council such as inspection and other administrative tasks associated with the licence. A per-unit fee on rented properties would amount to property tax more than a licence.

To conclude I will consider the crucial issue raised by counsel for the claimant. Mr Radcliff of counsel for the claimant submits that the copy of Legal Notice No. LN 122/19 and LN 118/19 Exhibit FW 3 does not include the schedules referred to in the Gazette. Counsel submits that the 2020 Ordinance is subsidiary legislation and is required to be gazetted by virtue of Section 61 of the Interpretation and General Provisions Act, Cap 85. Counsel for the claimant, therefore, raises questions about the validity of the Ordinance and enforceability of the ordinance.

Counsel for the defendant on the other hand submit, the fact that schedule fees were not part of the gazette as it appears in the publication, it does not mean that the ordinance is not effective. He submit that part of the Ordinance which was gazetted made reference to schedules 1 and 2 of the ordinance, therefore, the schedule fees annexed to the sworn statement of Mr Warereau were affected in that they were reference in part of the ordinance which was gazetted. I disagree with the counsel’s submission in that regard. I think the failure is fatal, my view is that schedules to the Ordinances only form part of the ordinance if they are published if not they do not form part of the subsidiary legislation. Schedules to an Act or Ordinance is part of the Act or the ordinance and is used to spell out in detail the provisions of the Act or the Ordinance. In that respect, if the legislation required the act or ordinance to be gazetted then the schedules must also be gazetted otherwise they would not be part of the Act or the ordinance and are invalid.

In the present case therefore since the schedule fee were not gazetted they do not form part of the ordinance and cannot be imposed. I, therefore, declared that any fees imposed by the defendant under the Honiara City Council (Fees, Rate and Charges) Ordinance 2020 is void and unenforceable.

High Court of Solomon Islands

Super Entertainment Centre Ltd v Honiara City Council [2021] SBHC 160; HCSI-CC 106 of 2020 (7 October 2021)