|
|
Home
| Databases
| WorldLII
| Search
| Feedback
High Court of Kiribati |
IN THE HIGH COURT OF KIRIBATI 2019
CIVIL CASE NO. 62 OF 2015
[KIRIBATI PORTS AUTHORITY PLAINTIFF
[
BETWEEN [AND
[
[DOJIN LTD DEFENDANT
Before: The Hon Chief Justice Sir John Muria
8 November 2019
Ms Elsie Karakaua for Applicant
Mr Banuera Berina for Respondent
JUDGMENT
Muria, CJ: The plaintiff in this case has claimed the sum of $667,253.17 against the defendant, being for unpaid port charges for various port services rendered to the defendant. The background to the case together with the evidence in support of each parties’ case were dealt with in the judgment of this Court given on 13 September 2018. I am not going to traverse them here again.
2. It is clear in the judgment of 13 September 2018, that the case had not concluded. The Court of Appeal recognized that. This
Court felt that the taking of account ought to be done by a Referee before the matter was to be brought back to this Court to conclude
the case. Hence the final decision on the issues had not been concluded. A time line was fixed by the Court to 13 November 2018
for the Referee’s report to be made and the case to be listed and to be finally concluded on
27 November 2018.
3. The parties, in the exercise of their right of appeal, opted to appeal to the Court of Appeal complaining that this Court failed to decide on the fate of the issues raised by the parties. Accepting the court of Appeal’s decision that the issues ought to be determined first before the taking of account and report by the referee are to be done, I shall now deal with the issues raised in this case.
Issues and Determination
4. The following issues were raised in this Court and are now remitted by the Court of Appeal to this Court to determine:
(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.
5. I deal with each of the issues seriatim. I do so, based on the evidence as already presented to the Court.
(a) Port Dues
6. The defendant raised the issue that the port dues is unlawful as being excessive and unreasonable, that is, that it was more revenue raising in nature rather than being payment of
fees for a service. It is submitted by Counsel for the defendant that before 2010, the plaintiff always charged port dues on per call basis which the defendant argued was cheaper. However, in its 2010 Port Tariffs, the plaintiff charged port dues on per day basis which the defendant argued is excessive and unreasonable. Counsel for the defendant relied on his comparison of the port dues
rates charged by other countries in the Region, such as Fiji and Marshall Islands. Counsel also relied on the Cabinet decision of
14 August 2013 instructing the Ministry of Communications, Transport and Tourism Development to amend the plaintiff’s 2009 Port
Tariff (should be 2010 Port Tariff). That decision by Cabinet was to amend the Port Tariff on port dues to “per call” instead of “per day”.
7. There can be no question that the power to prescribe levy for services provided by the ports in Kiribati is vested by law on the Kiribati Ports Authority and nobody else, subject only to the approval by the Minister. Section 18 of the Kiribati Ports Authority Act 1990 provides:
“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”.
8. The evidence before the Court is that the only effective Ports Tariff in place at the time was the Ports Tariff 2010 which charged port dues on “per day” basis. That is the law on port dues until it is changed. The argument by the defendant that the plaintiff was acting unlawfully by imposing port dues on ‘per day’ basis contrary to Cabinet’s decision made on 14 August 2013, does not have force. The Cabinet’s decision cannot have effect on the plaintiff’s action to charge port dues on “per day” basis unless that decision is appropriately actioned. This includes having the proposed amendment suggested by Cabinet included in the Ports Tariff 2010 so that it becomes law and thereby authorising the plaintiff to charge port dues on “per call” rather than “per day” basis. Until that process is done the plaintiff was entitled by law to charge port due on a “per day” basis.
9. At the material time at which the plaintiff imposed the port dues charge on the defendant on “per day” basis, the only Ports Tariff that was effective was the Ports Tariff 2010, signed into law by the Minister responsible under section 18 of the Kiribati Ports Authority Act. There was, therefore, legal basis for the plaintiff to charge the defendant port dues on “per day” basis in this case.
10. The next attack mounted by the defendant against the plaintiff on the port dues charges is based on the amount charged as a result of the “per day” tariff rate. It was argued for the defendant by way of an example that –
“if a vessel calls into a port in Kiribati and is liable to pay port dues in the sum of $1,000.00 then that is the sum it will pay when it leaves a port even after using the port for 20 days. Under the 2010 Tariff the same vessel must now pay $20,000.00 if it leaves a port after anchoring in it for 20 days”.
11. The defendant’s argument is that the port dues based on “per day” rate is unlawful being excessive and unreasonable. The defendant accepts that the plaintiff has to provide services while at the same time make profits, taking into consideration the expenses involved in providing and maintaining port services. However, the defendant’s concern is that the rates based on “per day” is unreasonable as being excessive.
12. I think it is fair to say that from the plaintiff’s perspective, it has to recoupe 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 the defendant’s perspective, the rates charged by the plaintiff should be as low as possible, affordable and fairly applied to all customers of the plaintiff. The defendant suggested that the plaintiff should explain and make port users understand why changes were needed to be made. The defendant said that did not happen in this case.
13. I accept that the plaintiff is entitled to recover its costs of providing port services. Such costs must be reasonable. I also accept that the plaintiff 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 the defendant.
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 plaintiff, I find it difficult to say that the plaintiff’s action of imposing “per day” rate on port dues is unlawful, being excessive and unreasonable for two reasons. First, by law the plaintiff 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.
15. In the present case, the argument that the imposition by the plaintiff of “per day” rate for its port dues as being excessive and unreasonable and therefore unlawful cannot be sustained. I find that the rate charged by the plaintiff as Port Dues is valid.
(b) Piloting Fees
16. As agreed to by the parties, the issue here is whether piloting fees could be charged even if the defendant did not request it. That issue stems from the defendant’s argument that it never requested piloting service. The plaintiff’s position is that, even if the defendant did not request piloting services, can the defendant be charged piloting fees where piloting service has been rendered?
17. On the evidence before the Court, from Teera Anterea for the plaintiff and from Lavinia for the defendant, the following positions are established. First, the defendant did not request piloting service in Kiritimati Island. Secondly, piloting services in respect of vessels for which the defendant was Agent in Kiritimati Island were provided by the unlicensed pilot, Mr Kirikori in Kiritimati Island. Thirdly, although not licenced, Mr Kirikori was recognised and authorised to provide piloting services to any vessel in Kiritimati Island by the Ministry of Communications, Transport and Tourism Development (MCTTD) and up to the present moment, he is still providing piloting services on Kiritimati Island. Fourthly, the defendant has refused to pay for the piloting service provided by Mr Kirikori who is an unlicensed pilot.
18, Mr Berina referred to sections 15 and 16 of the Harbour Ordinance which provide as follows:
“Licensing of Pilots
15. The Marine Superintendent may grant certificates of competency to persons duly qualified and license pilots for the purpose of taking ships within such of the waters of the Gilbert Islands as may be specified in the licence:
Provided that no person shall be granted a certificate of competency or be licensed as a pilot unless he has satisfied the Marine Superintendent that he is capable of performing such duties.
Employment of pilots not compulsory
16. Nothing in this Ordinance will be held to make the employment of pilots by masters and owners of ships compulsory”.
19. Section 15 clearly envisages the two classes of persons who can perform the task of piloting ships within the waters of Kiribati. These are persons who are certified as competent to perform piloting task after some competency training and experience in navigation over certain area of water. They are then given certificates of competency for the purpose of taking ships within such waters of Kiribati. The other class of persons who are authorised to perform piloting services are licensed pilots who may not necessarily be employees of the Kiribati Ports Authority but are self-employed and can be hired by the Kiribati Ports Authority. But common to both classes is that it is the Superintendent of Marine who certifies a person competent to perform piloting services and licenses pilots.
20. There was a suggestion in this case, that although the vessels Agent (defendant) in Kiritimati Island did not request piloting services the Master of the vessels calling-in in Kiritimati Island verbally made requests to the plaintiff for piloting services to be provided. The requests were attended to and piloting services had been provided by the plaintiff’s pilot (Mr Kirikori). The defendant is demanding proof of such verbal requests made by the Masters of the vessels to the plaintiff.
21. Although the defendant demanded proof of the verbal requests by Masters of the vessels calling into Kiritimati Island for piloting
service, I am satisfied and I so find that verbal requests have been made by Masters of the vessels calling into Kiritimati Island
for piloting services and that the defendant’s pilot (Mr Kirikori) provided the piloting services. It must be noted that in
the first place, the vessels calling into Kiritimati Island were foreign vessels and the owners and Masters of such vessels were
obliged to pay for piloting services provided to their vessels.
Mr Kirikori could only have provided the piloting service after requests had been made.
22. In any case the defendant’s case on this issue is really that they refused to pay for the piloting services rendered by an unlicensed pilot. The answer to the dispute over payment of piloting charge or pilotage is that the obligation to pay pilotage charges rests on the owners, Master and Agent of any vessel, whether the piloting service was done by a licensed or unlicensed pilot. Furthermore, Mr Kirikori was authorised to perform piloting services in Kiritimati Island in the absence of licensed pilots.
23. The answer to the question posed must be in the affirmative. Even if the defendant did not request piloting service, the Masters of the vessels verbally requested the service and the plaintiff’s pilot provided the piloting service.
(c) Harbour Control Fees
24. The issues to be answered here are (i) whether harbour control fees can be charged in place of piloting fees and, (ii) whether the fee for harbour control is already encompassed by the port dues charged by the plaintiff. The answer to the question depends on what is a harbour control fee.
25. The Harbour Ordinance defines “Harbour dues” and “dues” to mean –
“any due, rate, fee, toll, tax, pilotage rate, light due, port charge or payment in the nature thereof payable or leviable under this Ordinance”.
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 Kiribati Ports 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 the defendant, would be tantamount to double charging and as such it would be unfair and unreasonable.
(d) Environmental Fees
28. There are three aspects to the question on environmental fees (1) whether the plaintiff has the power to charge such fees, (2) whether the plaintiff can charge such fees if it does not perform environmentally related service, and (3) whether the Tariff amount charged is reasonable. As to the first aspect, the relevant legislations are the Kiribati Ports Authority Act 1990 and Harbour Ordinance.
29. Part V – (DUES AND RATES) of the Act provides for the dues (charges) and rates to be levied on every vessel berthed at the wharf or in port and on goods landed or discharged within a port. The dues or charges are set out in sections 17, 18 and 19 of the Act. Section 20 then authorises the Minister to prescribe the rates to be charged which are set out under the Ports Tariff 2010.
30. The rates prescribed by the Minister are 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”. (Section 20 of the Kiribati Ports Authority Act). In this case such other written law includes the Harbour Ordinance (Cap 40), in particular, sections 41, 42 and 48 which, in my view, are relevant for our present purposes.
31. I set out sections 41, 42 and 48 here and they are as follows:
“41. There shall be levied and paid in respect of any vessel and of all goods loaded or discharged in a harbour, dues as may be prescribed by regulations.
........
32. Reading sections 17, 18, 19 and 20 of the Kiribati Ports Authority Act together with sections 41, 42 and 48 of the Harbour Ordinance gives a clear support for the suggestion that the plaintiff is entitled to levy environmental fees on all vessels that use ports and harbours belonging to the plaintiff to load or discharge goods or being in its ports or harbours. Section 48 of the Harbour Ordinance obliges all vessels that use the plaintiff’s ports or harbours not to cast or discharge “any night oil, sewage or other filth” into the harbour. Such power is obviously necessary to ensure ecological use of ports and harbours.
33. The duty on the plaintiff is to ensure that its ports and harbours are environmentally safe, operational and clean. The obligation is on the users, including all vessels, to use the ports and harbours in a manner that is free from environmental pollution or filth.
34. The defendant’s argument is that environmental fee is relevant to stevedoring activities. That is true and it must be noted that stevedoring is an activity involving loading and discharging goods or cargoes to and from a vessel. Such is an activity that section 48 of the Harbour Ordinance seeks to ensure that it is environmentally done. That must be a reasonable expectation arising out of the use of the plaintiff’s ports and harbours.
35. The answer to the three considerations raised in respect of Environmental Fees must be: (1) yes, (2) yes, (3) yes.
Port Security Fees
36. The issue asked of the Court to determine under this heading is whether the plaintiff can charge Port Security fees, if it does not provide port security. The answer to that question must obviously be that if the plaintiff does not provide security service, then there is no basis for charging the defendant port security fees.
37. What the plaintiff did in this case was to lump Jetty charges with security fees and have them combined as one charge. Jetty Charges are not Port Security charges. They are two different charges. In this case, the evidence to justify the plaintiff charging Port Security fees is lacking especially as the defendant’s vessels were not in port. Equally, the evidence does not specify what sum represents jetty charges in this case. Invoice #00003558 does not help the plaintiff. The Port Security Fees cannot be charged in this case as no evidence of security service was shown.
VAT
38. The question posed for the Court to determine here relates to the validity of a charge for VAT without specification of the service to which it relates in the invoice. This concern might not have arisen if the plaintiff had taken steps to adhere to the rules of pleadings in civil cases. Proper pleadings would have set out the particulars upon which VAT was charged or if such particulars were not included in the first place, application to remedy the default could have been made to amend the pleadings, as was pointed out in Attorney-General –v- Tawaia [2001] KICA 11; Civil Appeal 01 of 2000 (5 April 2001).
39. Counsel for the plaintiff made no attempts to show how the plaintiff could be said to have justified charging the defendant VAT in this case. It simply claimed being entitled to charge the defendant VAT under Invoice #3562 in the sum of $26,829.98 for value of the services provided. The plaintiff only sought to justify charging the defendant VAT by stating that it did so “pursuant to the VAT Act 2013” and that the charges applied to all other “agents” including the defendant.
40. No attempts had been made by the plaintiff to draw the Court’s attention to the provisions of the VAT Act to show the relevant requirements for charging VAT. Had that been done, the plaintiff would have noticed what I would call the general rules or criteria applicable when charging VAT. There is the requirement to state the nature or the kind of service supplied (section 13); there is the requirement to state the time of supply of service (section 14); there is the requirement to state the place where the supply of service occurred (section 16); and there is the requirement to state the value of the service supplied (section 17). These general requirements are statutory and the supplier of the services must comply with them. The recipient of the supply of services or goods is entitled to know such details. None of the sort occurred in this case.
41. There is a further point which neither of the parties to this case adverted to. Under the VAT Act, a supplier of goods or services can only charge VAT if that supplier is registered. Not every business or person who supplies goods and services can charge VAT. So to be entitled to charge VAT and claim under it, a person must apply under section 8 to the Board for a VAT Registration Certificate. If approved, the successful applicant will be registered and issued with a VAT Registration Certificate.
42. The issue of the entitlement in law to charge VAT has not been raised in this case. Perhaps both parties proceeded on the assumption that the plaintiff had been registered and issued with a VAT Registration Certificate. Had the defendant raised the point in its defence, the Court would have been obliged to consider and determine it.
43. In this case, there is no evidence adduced by the plaintiff to show the particulars of services supplied to the defendant so as to justify charging the defendant VAT. As the provisions of the VAT Act referred to above obliged the plaintiff to provide such particulars and having failed to do so, the plaintiff would not be entitled to charge the defendant VAT in this case. The question is answered accordingly, that is to say, that a charge for VAT without specification in the invoice of the service to which it relates is not valid.
Taking of Accounts by Referee
44. Having decided on the issues posed by the Court of Appeal, the order of the High Court on the taking of accounts by the referee must be implemented. The matters set out in paragraph 3 of the Order made by the Court of Appeal in page 7 of its judgment must be attended to by the referee. On the evidence before the Court and in the light of the way the evidence was led at the trial, the matters set out in paragraph 3 of the Order of the Court of Appeal are best dealt with by taking accounts to be done by the referee.
45. The order made by this Court on taking accounts by a referee has been varied and now appeared in paragraph 4 of the Order of the Court of Appeal. The taking of accounts “is to be done by an independent referee of suitable professional qualification” preferably a chartered accountant.
46. The date, 22 September 2019, stipulated in the order of the Court of Appeal, for the parties to agree upon a referee had long come and gone, without a referee being agreed to by the parties. The Court can still fix “such later date” for the parties to agree to a referee and advise the Court.
Conclusion
47. The issues posed have now been answered. The Order of this Court on the taking of accounts by the Referee had been accepted by the Court of Appeal and must be implemented.
48. The Court now fixes 30 November 2020 for the parties to agree upon a referee and advise the Court. Thereafter the referee is to submit his determination on or before 27 December 2020. The case is now fixed for 28 December 2020 for formal disposition.
49. Costs reserved.
Dated the 23rd November 2020
SIR JOHN MURIA
Chief Justice
PacLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.paclii.org/ki/cases/KIHC/2020/34.html