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Golden Star Trading Corporation Ltd v Attorney General [1998] SBHC 102; HCSI-CC 193 of 1997 (13 July 1998)

IN THE HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 193 of 1997

GOLDEN STAR TRADING CORPORATION LTD

-v-

ATTORNEY GENERAL

High Court of Solomon Islands
(Muria, CJ.)
Civil Case No. 193 of 1997

Hearing: 24 June 1998
Judgment: 13 July 1998

A. Nori for the Plaintiff
G. Samuel for the Defendant

MURIACJ: The plaintiff in this case has brought this application by way of originating summons seeking the following declarations and orders:

1. A declaration that the action of the Minister for Finance in cancelling the import duty remission granted to the plaintiff as described in the accompanying affidavit filed herewith amounts to wrongful exercise of statutory discretion and is unlawful;

2. A declaration that the duty remission granted to the plaintiff on 7 November, 1996 remains valid and available to the plaintiff for the duration of times stated therein, being one year from 7th November 1996;

3. An order that the plaintiff be entitled to damages to be assessed; and

4. Costs of this application to be paid by the defendant.

The facts in this case are not in dispute. On or about 19 September, 1996, the plaintiff lodged an application with the Minister, seeking 50% duty remission to import general merchandise. The basis for the plaintiff’s application for duty remission was to be in line with the policy objectives of the Government of encouraging Solomon islanders to develop in their business and commercial activities. On 7 November 1996, the plaintiff received a letter from the comptroller of customs conveying the Minister’s approval of its application. Immediately after receiving that approval from the Minister the plaintiff placed orders overseas for the importation of goods. Those orders were made and deliverable on a monthly basis. On the 4 April 1997, the Managing Director of the plaintiff received a letter from the Minister advising him that the remission given to the plaintiff earlier had been revoked. The Minister’s action came after the plaintiff had already placed orders for goods for the months of April and May 1997. Upon receipt of the Minister’s letter, the plaintiff’s Managing Director wrote on the 17 April 1997 to the Comptroller of Customs asking him to reconsider the plaintiff’s case. The defendant never responded to the plaintiff’s letter.

The case for the plaintiff is a short one and straight forward. It is contended on behalf of the plaintiff that the Minister’s exercise of his discretionary power to revoke the permission granted to the plaintiff was unreasonable and unlawful. The basis for that contention, submitted Mr. Nori, is that the Minister took into account extraneous matters, namely, a letter from a businessman in Honiara. That letter, argued Mr. Nori, influenced the Minister’s decision and as such the decision was unreasonable and unlawful. It is also argued that the Minister’s exercise of his discretionary power to revoke was made in breach of the rule of natural justice. The plaintiff was never given an opportunity to be heard so that it could put forward its case before the Minister exercised his powers to revoke the approval. Relying on the approval earlier on given by the Minister, the plaintiff already made orders overseas for his goods. Mr. Nori further argued that the Minister’s actions in revoking the approved duty remission without giving the plaintiff the opportunity to respond or to be heard on it, was unreasonable, particularly, as the Minister’s decision had substantial effect on the commercial and financial interest of the plaintiff. It is conceded by the plaintiff that the Minister has discretionary power to revoke a duty remission granted. However, that discretion must be exercised reasonably. It must be exercise with due regard to the interest of the parties affected by it. It is the plaintiff’s case that had the Minister given it the opportunity to be heard and to sort out its financial dealings with its overseas suppliers there would be no cause for complaint. Given the circumstances of this case, Mr. Nori argued, there was a duty on the Minister to act reasonably, even where the statute has granted absolute discretion to him.

On behalf of the defendant, it was argued by Mr. Samuel that the Government had power to revoke the permission to import goods on 50% duty remission. The decision to revoke the permission was made based on a change of Government policy and not through outside influence. In so far as the plaintiff’s argument that it had already placed orders overseas following the Minister’s initial approval of the 50% duty remission, it was argued by the defendant that there was no evidence to support that contention. Basically the defendants argument is that the Minister has the power to revoke permission granted and his decision is a matter of discretion. That the Minister had done in this case and there is nothing wrong with it, argued Mr. Samuel.

The question in this case is not whether the Minister after granting the remission had lawful power to revoke that grant, for the plaintiff conceded that the Minister has power to revoke a decision to remit duties after it was given. The question here is whether the Minister exercised his discretionary power lawfully. It is a general principle of law that discretion allowed by statute to the holder of an office is intended to be exercised according to the rules of reasons and justice. To my mind the exercise of discretion according to the rules of reasons and justice connotes the exercise of the discretion to be reasonable, taking into account the circumstances of the case and interests of both the plaintiff and the defendant. In other words, the Minister or the person exercising the discretion must take into account all matters that are essential to the exercise of the discretionary power.

In the present case, the facts as I have said are not in dispute. The plaintiff, on the 19 September 1996 applied for a 50% duty remission to import general merchandise. On the 7 November 1996, approval was given of its application. On the 4 April 1997, the Minister revoked that approval. There is no evidence that the plaintiff had been given notice of the intended revocation of its approval. The concession by the defendant of the facts in this case, demonstrates the defendant’s acceptance that the plaintiff had not been given the opportunity to respond to or to prepare for the Minister’s decision. The only time the plaintiff knew about the revocation of its approved 50% duty remission was when its Managing Director received the Minister’s letter of revocation dated 4 April 1997 which letter the plaintiff received on the 10 April 1997. 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 & Exercise 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.

The Court is called upon in these proceedings to consider whether the exercise of that discretionary power by the Minister is one that this court can review. Counsel for the defendant has not taken issue with the inherent jurisdiction of this Court to review administrative decisions of Ministers or administrative bodies. Therefore, this question also does not arise for determination here. There is sufficient authority to establish that there is inherent jurisdiction in the High Court to review administrative decisions: see Attorney General -v- S.I Airways Ltd. (1985-1986) S.I.L.R. 262. The only issue that remains to be considered is whether or not the Minister properly exercised his discretion according to the principles of natural justice and fairness. This means that the defendant must act fairly and observe the minimum requisites of natural justice. In the present case this minimum requirement, at least, is the right to be notified or be heard or be afforded the opportunity to be heard before the decision against the plaintiff is taken. On the facts of this case, that had not been done and the plaintiff had clearly been deprived of the opportunity to be heard before the approval granted to him on 7 November, 1996 was revoked. Not doubt the plaintiff in this case stands to be financially affected as a consequence of the Minister’s decision to revoke its approved 50% duty remission.

In the circumstances of this ease, it is my strong view that the decision taken by the Minister to revoke the approved 50% duty remission undoubtedly affect the financial interest of the plaintiff. I consider that a minimum requirement of justice and fairness should be given to the plaintiff to advise it or give it notice of the reason for the decision and if that reason was likely to cast any negative consequences on the financial interest of the plaintiff, then it was all the more the reason for affording the plaintiff the opportunity to be heard before such a decision, prejudicial to its interest, was to be taken. No such opportunity had been given to the plaintiff in this case. When the plaintiff responded to the defendant appealing for reconsideration of the decision to revoke the approved duty remission, no response whatsoever was forthcoming from the defendant. This in my view can only mean that the defendant had no good reason whatsoever for not affording the plaintiff the opportunity to be heard before the Minister made the decision. In those circumstances, I can only conclude that the Minister had exercised his discretion wrongfully.

The supervisory nature of the jurisdiction of the Court in a matter such the one we are dealing with here was put clearly in R -v- Anderson; Ex parte Ipec-Air Pty Ltd (1965) 113 C.L.R.177. In that case, Kitto, J., stated:

“The Court while claiming no authority in themselves to dictate the decision that ought to be made in the exercise of such a discretion in a given case, are yet in a duty bound to declare invalid a purported exercise of the discretion where the proper limits have not been observed.”

And again Lord Denning in General Electric Co. Ltd -v- Price Commission [1975] ICR 1 also pointed out:

“Parliament often entrusts the decision of a matter to a specific person or body without providing for any appeal. It may be a judicial decision, or a quasi judicial decision, or an administrative decision. Sometimes Parliament says its decision is to be final. At other times it says nothing about it. In all these cases the Courts will not themselves take the place of the body to whom Parliament has entrusted the decision. The Courts will not themselves embark on a rehearing of the matter. Nevertheless the Courts will, if called upon, act in a supervisory capacity they will see that the decision making body acts fairly. The Courts will ensure that the body acts in accordance with the law ..........If the decision making body is influenced by consideration which ought not to influence it or fails to take it into account matters which it ought to take into account the Courts will interfere. If the decision making body comes to its decision on no evidence or comes to an unreasonable finding.....then again, the Courts will interfere..... And, of course, if the body acts in bad faith or for an ulterior object, which is not authorised by law, its decision will be set aside. In exercising these powers, the Courts will take into account any reasons which the body may give for its decisions. If it gives no reasons, in a case where it may reasonably be expected to do so, the Courts may infer that it had no good reason for reaching its conclusion and act accordingly”

Clearly on the evidence in this case the conclusion is that the plaintiff had not been given the opportunity to be heard before the decision which adversely affected its interest was made by the Minister. The effect of that decision was that the plaintiff would have to pay full duty once again for goods which it had ordered following the earlier approved 50% duty remission. That is a breach of the rule of natural justice and clearly, the decision of the Minister cannot stand on that basis.

The second ground upon which the plaintiff relied is that the Minister’s decision was influenced by outside matters. In this regard, the plaintiff relied on a letter written by a businessman, Mr. Y. Sato of Y. Sato & Company Ltd, a letter dated the 5 February, 1997, addressed to the Prime Minister. That letter specifically requested the Government to cancel the 50% duty remission granted to the plaintiff. It is worth noting that this letter was addressed to the Prime Minister. However, the plaintiff obtained information from the Ministry of Finance that it was following this letter that the decision to revoke the duty remission was made. A copy of the said letter was also obtained and exhibited to Mr. Clement Honi’s affidavit as Exhibit “CH5”. Although one would like to think that the letter from the Managing Director of Y. Sato & Company Ltd. was not a matter influencing the decision of the Minister, the only proper inference to be drawn from the evidence before the Court, is that the said letter played a major, if not, the only, part in the Minister’s decision. The letter was written to the Government and aimed specifically against the 50% duty remission approved and granted to the plaintiff. The Minister’s reason given for the decision was that it was a matter of change of policy. However one would be forgiven to say that if it was only for the reason of change of Government policy one would have expected that reasonable measures would be taken to have the plaintiff informed of the change of the government policy before the decision was made. After all the duty remission was also made in consideration of the Government’s policy of encouraging Solomon Islanders to go into commercial and business ventures. One would think that it would be prudent that a change in that policy would have been made known to the plaintiff as the basis for the revocation of the approval of the duty remission, not that the plaintiff would have any objection to a change of Government policy, but that the plaintiff would have the opportunity to put before the Minister its side of the matter before the decision to revoke its 50% duty remission could be taken. Nothing of the sort happened in this case.

Clearly on the basis of the evidence before the Court, the only conclusion open to the Court is that the Minister’s decision was influenced by the letter addressed to the Government from the Managing Director of Y.Sato & Company Ltd. That is obviously taking into account extraneous matter which ought not to have been done. As the Minister had done so in this case, it clearly goes to the unreasonableness of the Minister’s exercise of his discretion and consequently the decision cannot stand. See the R -v- Anderson; Ex parte Ipec-Air Pty Ltd; see also General Electric Co. Ltd -v- Price Commission.

It was submitted by Mr. Samuel that there is no evidence to support the suggestion by the Plaintiff that following the approval of 50% duty remission the plaintiff placed orders overseas, as deposed in paragraph eight (8) of Mr. Clement Honi’s affidavit. Following the hearing the court called for the attachments specified in Exhibit “CH4” to Clement Honi’s affidavit. Some of those documents were supplied to the Court and others, not. However, having considered the plaintiff’s evidence and in particular Exhibit “CH4” together with the documents, it is abundantly clear that the plaintiff immediately after the receipt of the approval from the Minister, placed orders overseas. Those orders were made and deliverable on monthly basis. The documents showed that the orders arrived and duty to be paid on those goods were calculated and shown on those documents.

On the evidence before the court, the exercise of the discretion by the Minister responsible in this case was plainly made contrary to the rule of natural Justice, and took into account extraneous matters which he ought not to have done. In consequence of those actions this court has to come to the conclusion that the decision of the Minister, revoking the approval of 50% duty remission granted to the plaintiff cannot stand. He is not entitled to cancel the approval earlier granted to the plaintiff without giving the plaintiff an opportunity of showing cause or being heard in defense of his interest. The result is that the plaintiff’s application must succeed.

I grant the order sought in paragraph 1 of the originating summons.

As to the order sought in paragraph 2, the court feels that order cannot be granted, as there is power to revoke an order of remission granted in a given case.

The orders sought in paragraphs 3 and 4 must, however, be also granted.

The order of the court therefore is that orders sought in paragraphs 1, 3 & 4 are granted. The Court declines to make the order sought in paragraph 2.

Orders accordingly.

(GJB Muria)
CHIEF JUSTICE