The Attorney- General v. A. D. Silva
[In’ the Privy Council]
1953 Present: Lord Porter, Lord Tueker, Lord Asquith of Bishop-stone and Mr. L. M. D. de Silva'i‘H Kl ATTORNEY-GENERAL, Appellant, andA. I). SILVA, Respondent
Privy Council Appeal No. 46 op 1951S. C. 301—D. C. Colombo, 18,416
Customs Ordinance (Cap. 185)—Sections 17, 22, 47, 108—Sale of Croton propertyfor failure to pay warehouse rent—Validity of such sale—InterpretationOrdinance (Cap. 2), s. 3—Public officer—Scope of his right to act for and onbehalf of Crown—Principal and agent—“ Ostensible ” authority of agent—Admission on a question of law—Not binding on appellate court.
The Customs Ordinance is not binding on the Crown by virtue of section- 3of the Interpretation Ordinance which provides that “ no enactment shall inany manner affect the right of the Crown unless it is therein expressly stated,or unless it appears by necessary implication that the Crown is bound therebyIts provisions, therefore, relating to payment of dues and charges on goods arenot applicable to goods which belong to the Crown.
Where tho Principal Collector of Customs, who had been appointed to hisoffice under the Customs Ordinance, sold by public auction in March, 1947,■with the sanction of the Chief Secretary, certain goods of the Crown for non-payment of warehouse rent in respect of them—
Held, that the Principal Collector of Customs had neither actual authorityunder sections 17 and 108 of the Customs Ordinance nor ostensible authorityon behalf of the Crown to sell the goods. The Crown could not, therefore,be sued by the purchaser for damages for the failure of the Principal Collectorof Customs to deliver the goods.
Held further, that an appellate court cannot be bound on a question oflaw by an admission in the lower court which would involve a.-n erroneousconstruction of a statute.
.^^.PPEAL from a judgment of the Supreme Court reported in (1951)
52 N. L. R. 481..
Gilbert Pauli, Q.C., with. Frank Gakan, Q.C. and Walter Ja,yawardene,for the defendant appellant.'
Phineas Quass, Q.G., with R. K.. JSandoo and Carl Jayasinghe, for theplaintiff respondent.
Cur. adv. milt.
2J. ST. B 27664-1,592 (6/58)
630' MR. L. M. D. DE SILVA.—The Attorney-General v. A. D. Silva
May 12, 1953. [Delivered by Mr. L. M. D. i>e Silva]—
In this case the plaintiff sued the Attorney General of Ceylon repre-senting the Crown for damages "which, according to him, weie payable inrespect of a breach of contract between himself and the Crown. TTis casewas that by a notification in the Government Gazette of the 21st February,1947, the Principal Collector of Customs acting for and on behalf of theCrown advertised certain goods for sale by public auction. He said thathe purchased these goods at an auction on the 4th March, 1947, and thatthereafter the Principal Collector wrongfully refused to deliver the goodsalthough he had done everything necessary to entitle him to delivery.The defendant pleaded inter alia that there had been no contract bindingon the Crown and prayed that the action be dismissed.
In the courts below the learned District Judge held that no valid con-tract between the plaintiff and the Crown had been established anddismissed the plaintiff’s action. The Supreme Court on appeal held thatthere had been a valid contract and awarded the plaintiff Rs. 40,000 byway of damages. The question before their Lordships is whether acontract binding on the Crown has been shown to have arisen.
Prior to the 21st February, 1947, the goods which are the subjectmatter of this case together with other goods belonging to various unitsof His Majesty’s Forces were lying on the customs premises. There isno doubt that they were Crown property. The units to which theybelonged were not showing any interest in these goods which by causingcongestion and in other ways inconvenienced the customs authorities.The full correspondence which passed between the Principal Collector,hia superiors in the Government of Ceylon, and the different units of theForces has not been produced, and what transpired in that correspondenceis not altogether clear but certain facts emerge with reasonable certainty.The Principal Collector described the goods as “ unclaimed cargo ” in thecorrespondence. The Flag Officer of Ceylon on the 13th May, 1946,stated that certain steel plates which constitute the greater part of thesubject matter of this action were not “ unclaimed cargo ”. Severalattempts to get the Services to remove the goods proved unsuccessful andon the 24thDecember, 1946, the Principal Collector obtained the sanctionof the Chief Secretary to sell them. The sale by auction already referredto was accordingly held on the 4th March, 1947, and the plaintiff declaredthe purchaser. Meanwhile the Ministry of Supply in Britain had appoint-ed an officer of the Services Disposal Board which was a local branch of theMinistry of Supply in England to take charge, and dispose of the goods.This officer after receiving offers from various people contracted to sell thegoods to Maharajan & Co. on the 23rd January, 1947. The facts statedabove are not in dispute.c
Before leaving the correspondence it is necessary to refer to a letter ofthe 28th November, 1946, in which the Principal Collector writing to theChief Secretary made the observation “ Presumably the goods have beenabandoned. ” On the strength of this it was sought to argue before theirLordships that the Crown had abandoned the goods. This point was notcanvassed in the Courts below and has not even been raised in the Casefor the plaintiff. Upon the meagre material before them their Lordships
MB. L. fflL D. I>E SILVA—The Attorney-General v. A. D. Silva 531
cahnot take any view other than that taken by parties in the Courts belowand by the Courts themselves, namely, that the property was the propertyof the Crown until at any rate the sale to Maharajan and Co.
The precise question which arises for their Lordships’ decision is whetherthe Principal Collector of Customs had authority to enter into a contractbinding on the Crown for the sale of the goods in question to the plaintiff.This question can conveniently be dealt with under two heads : had thePrincipal Collector actual authority to enter into a contract, if not did hehave ostensible authority to do so ?
It is argued that the Principal Collector had actual authority to enterinto the contract by reason of the provisions of sections 17 and 108 of theCustoms Ordinance (Chapter 185 Legislative Enactments of Ceylon).Section 17 makes warehouse rent payable in respect of goods left inCustoms Warehouses. It reads :—
“ On all goods lodged in any King’s warehouse, warehouse, or placeof deposit provided by Government, it shall be lawful for the Col-lector to charge, demand, and receive warehouse rent for all suchtime as the same shall remain in such warehouse, at such rates andunder such regulations as may from time to time be fixed by theGovernor, as warehouse rent payable on goods so lodged, and nogoods upon which warehouse rent may be due shall be removed untilthe same be paid. ”
Section 108 authorises the sale of goods left for more than three monthsin Customs Warehouses “to answer” the charges due thereon. Itreads :—
“ All goods left in any King’s warehouse or on the customs premisesfor a longer period than three months, unless permitted to remain bythe special permission of the Collector, shall, after public advertise-ment, be sold by auction to answer the duties, warehouse rent, orother charges due thereon, and any overplus shall be paid, if claimedwithin twelve months from the date of sale, to the owner of suchgoods, who shall have no further claim touching the same, but ifthere be no claimant such overplus shall be brought to account asrevenue.”
It is claimed by the plaintiff that the Customs Ordinance was bindingon the Crown, that warehouse rent was due under section 17 of theOrdinance on the goods in question, and that as they had been left on theCustoms premises for a period longer than three months, they were liableto bej&old after public advertisement under section 108. This was in factthe basis upon which the Principal Collector held the sale and it wouldwithout doubt have been a sound basis if the property had all the timebeen private property. But it is argued by the Crown that, no matter whatthe Principal Collector thought or did, the Customs Ordinance was notbinding on the Crown, that it, or at any rate the provisions in it relevantto this case, were inapplicable to property belonging to the Crown andthat therefore the plaintiff’s contention fails.
MR. L. M. 15. I5E SILVA—The Attorney-General v. A. 25. Silva
The first matter -which arises for consideration is whether the Ordinancebinds the Crown. Under section 3 of the Interpretation Ordinance(Chapter 2, Legislative Enactments of Ceylon) :—-
“ No enactment shall in any manner affect the right of the Crownunless it is therein expressly stated, or unless it appears by necessaryimplication that the Crown is bound thereby. ”
It is not expressly stated in the Customs Ordinance that the Crown is tobe bound thereby, and therefore the question which arises is whether theCrown is bound by necessary implication.
Certain sections of the Ordinance and certain items in the schedulesthereof are relied on by the plaintiff as giving rise to such an implication.
Two sections of the Ordinance are relied on as giving rise to theimplication that the Customs Ordinance binds the Crown, namely, sections22 and 47. It has to be remembered that the Ordinance relates toCustoms and that it would be remarkable if its provisions, particularlythose relating to the payment of dues and charges, were applicable tothe Crown as this involves ex facie a liability on the Crown to pay itself.Section 22 reads :—
(1) The following articles shall be exempted from payment ofimport duties and export duties :—
articles of every description imported or exported for thepublic use of His Majesty’s Regular Naval, Military and AirForces in Ceylon, and all articles sold for the public use of HisMajesty’s Regular Naval, Military and Air Forces in Ceylon, thoughnot directly imported for that purpose ;
all wines, spirits and stores which are imported or purchasedor procured locally for the use of the Naval Commander-in-Chiefwhen residing in the Island, or which are supplied from HisMajesty’s dockyard at Trincomalee for the use of his servantsand of the sailors on duty at his place of residence ;
articles, clothing and materials for clothing imported for theuse in athletic sports and games of His Majesty’s Regular NavalMilitary and Air Forces in Ceylon ;
articles imported, purchased, or procured or exported forthe use of any mess or canteen of His Majesty’s Regular Naval,Military and Air Forces in Ceylon.
It will be seen that paragraph (a) is applicable to all articles to beput to “ public use ” by Her Majesty’s Regular Forces. It extends toarticles not directly imported for the purpose. Paragraphs (c) and (d)are applicable to certain specified articles which are to be put By theForces to. what may be described as “private use” (for example insports and games) by way of contrast to “ public use ” in paragraph (a).Paragraph (6) is applicable to certain specified articles to be used by theNaval Commander-in-Chief, his servants and sailors on duty at hisresidence.'
The language of the section, when looked at independently of otherconsiderations, is applicable to articles imported by the Crown and also to
AIR. L. AX. D. DE SILVA—The Attorney-General v. A. D. Silva
thnse which, are imported by private dealers and bthers. It has to benoted in this connection that articles “supplied from His Majesty’s dock-yard ” are not necessarily articles imported by the Crown.
The ground upon which it is contended that the Ordinance generallyis applicable to the Crown is that the legislature has expressly madecertain specific exemptions in favour of the Crown and thereby byimplication negatived the general exemption from the provisions of theOrdinance, which it would otherwise have had. It is said that suchexemptions would have been unnecessary if the Crown had not beenbound by the Ordinance as a whole, and that the implication that arisestherefrom is that the Crown is bound except where exemptions areexpressly conferred on it. Their Lordships are of opinion that upon acorrect view of section 22 it confers no exemption on the Crown andtherefore does not imply, necessarily, or at all, a liability which wouldexist but for such exemption.
The language of section 22 must be looked at in the light of the factthat the Crown enjoys immunity normally from statutory provisions.Their Lordships are of opinion that every word of the section possessessignificance, and is effective, in respect of articles imported or exportedby private persons, and only in that respect. Articles imported or ex-ported by the Crown enjoy exemption from duty under the generalimmunity of the Crown. There is nothing in the section which compelsthe view that it confers an exemption on the Crown.
Again it has been argued that section 47 (relating to Port dues) conferscertain exemptions on the Crown. It reads :—
47.—(1) All articles :—
(а)consigned to any officer of a public department in Ceylonand being the property of the Crown ; or
(б)consigned to any person for the purpose of being deliveredto any officer of a public department for the use or service of theCrown ; or
purchased out of bond by any officer of a public departmentfor the use or service of the Crown ;
shall be passed duty free on any such public officer delivering to theCollector a list of the articles and certifying at the foot thereof thatsuch articles are the property of the Crown or have been consignedto some person named in the certificate for the use or service of theCrown, or have been purchased out of bond for the use or service ofthe Crown.„
(2) All such articles passed duty free as aforesaid shall in case ofthe sale thereof be liable to and be charged with such and the sameduties of customs as may by law be payable or charged on the likearticles not exempted from duties of customs under this sectionand the officer of the public department in whose charge such goodsmay be shall furnish the Collector with the particulars of the salethereof and out of the proceeds of the same pay to the said Collectorthe duties which may be due thereon.
2*-J, JT. B 27664 (6/53)
MR. L. M. D. DE SILVA—The Attorney-General v. A. D. Silva
Paragraph, (a) relates clearly to the property of the Crown hut the effectof the section is merely to provide a convenient, hut not exclusive, proce-dure by way of a certificate whereby a public officer to whom Crownproperty is consigned can assert the immunity from duty which it enjoys.Its effect is limited to this. Paragraphs (6) and (c) provide a convenientprocedure by way of a certificate whereby a public officer may in certaincircumstances obtain free of duty articles which are not the property ofthe Crown for “ the use or service of the Crown”. The language ofparagraph (6), unlike the language of paragraph (c), is wide enough toapply to the property of the Crown. Their Lordships are of opinion thatthe effect of paragraph (6) in its application to the property of the Crownis not to grant exemption to the Crown but merely to provide a convenientprocedure similar to that provided by paragraph (a) whereby the Crowncan assert the immunity from duty which it enjoys. There is nothing insubsection (2) which makes it necessary to qualify what has been said.The duties recoverable under the subsection are recoverable from thesubject and not from the Crown.
Certain items in the schedules to the Ordinance have also been reliedon in support of the argument just discussed. Schedule A specifies theimport duties payable on various articles and in the table of exemptionsthere is the item “ regimental clothing, arms and accoutrements importedfor His Majesty’s land and sea forces including the Ceylon DefenceForce.” Schedule C prescribes the “ Dues leviable at the Port of Colombo ”and exempts from “ entering ” dues (l.vii) and “ over-hour and buoy rentcharges ” (4.iv) :—
“ men of war, vessels of the Imperial Light Service, troopships,hospital ships, and Royal Fleet Auxiliaries belonging to the Admiraltyor on Admiralty Charter which normally fly the Blue Ensign withAdmiralty Badge and carry no cargo on which freight is paid, andprivate yachts. ”
It also contains provision (5.iii) to the effect that :—
‘1 men of war, troopships, hospital ships, and Royal Fleet Auxiliariesbelonging to the Admiralty or on Admiralty Charter, which normallyfly the Blue Ensign with Admiralty Badge and carry no cargo on whichfreight is paid shall be exempt from tonnage dues in respect of anycargo discharged or loaded which is exempt from duty under sections22 and 23 of the Customs Ordinance. ”
In the same schedule “ Government cargo ” is exempted from firstharbour dues on imported (7.i) and exported (10-i) goods.<,
In part II of the same schedule dealing with ports other than Colomboexemption from port dues is conferred on
“any private yacht, vessel of the Imperial Light Service, man ofwar, troopship, hospital ship or Royal Fleet Auxiliary, belonging tothe Admiralty or on Admiralty Charter, normally flying the BlueEnsign with Admiralty Badge and carrying no cargo on which freightis payable. ”-
MR. L. M. D. DE SILVA—The Attorney-General v. A. D. Silva
►The charging section, under which customs duties are levied is section 9which enacts :—
“ The several duties of customs, as the same are respectivelyinserted, described, and set forth in figures in the table of duties(Schedule A) shall be levied and paid upon all goods, wares, andmerchandise imported into this Island.”
It goes on :
“ Provided that-
(а)the State Council may from time to time, by means of aresolution duly passed at any public session of the Council andsanctioned by the Governor, increase, reduce, abolish, or otherwisealter the customs duty leviable on any goods imported into orexported from the Island or into or from any specified port therein,or subject to such terms or conditions, if any, as may be expressedin the said resolution, may impose customs duty upon any goods soimported or exported whereon customs duty at the time when suchresolution is passed is not leviable ; or may add other goods to thegoods enumerated in the said Schedule as exempt from customsduty ; or may add to, rescind, or vary any of the conditions,exceptions, or provisions of the said Schedule with regard to thepayment of customs duty ;
(б)no such resolution shall take effect unless it shall have beensubmitted to and sanctioned by the Secretary of State, and suchsanction shall have been notified in the Government Gazette
A similar proviso exists (section 25 (2)) in respect of Schedule C'. Theitems in the schedules are thus seen to be capable of alteration by sub-sidiary legislation. Such legislation would no doubt indicate the view ofthe Statute taken by the authority to whom subsidiary legislative powerhas been delegated. But the terms of such legislation made under a Statutecannot serve to determine the meaning of the Statute itself. Their Lord-ships have not in the course of the argument been made aware whetherornot the items relied on were introduced into the Schedules by subsequentsubsidiary legislation. But they do not think it necessary to investigatethis matter because they are of opinion that, in any case, the implicationsthat arise from the items of the schedules referred to above are not strongenough to oust the applicability of the general principle that the Grown isnot bound by the Statute. Their Lordships do not think it necessary tosay anything more about them except, perhaps, that they appear to belargely concerned with provisions for the regulation of business betweenGovernment departments which do not need the force of law for theirproper execution.
Their Lordships therefore are of opinion that the Ordinance does notbind the Crown. It has been argued that apart from the Ordinance thePrincipal Collector has actual authority to do what he did, and that this
MR. L. M. X). HE SILVA—The Attorney-General v. A. D. Silva
authority was reinforced by the letter written to him by the Chief Secije-tary. It is a simple and clear proposition that a public officer has not byreason of the fact that he is in the service of the Crown the right to actfor and on behalf of the Crown in all matters which concern the Crown.The right to act for the Crown in any particular matter must be establishedby reference to statute or otherwise. It has not been shown that thePrincipal Collector had any authority to sell property of the Crown or toenter into a contract on its behalf for its sale : nor has it been shown thatthe Chief Secretary who authorised the sale had any such authority. ITisfunctions were defined by the Ceylon (State Council) Order in Council 1931and under this Order the most that can be said is that he was authorisedto deal with certain Crown property under the direct administration ofthe Government of Ceylon. It is therefore clear that the PrincipalCollector of Customs had no actual authority to enter into a contract forthe sale of the goods which are the subject matter of this action.
Next comes the question whether the Principal Collector of Customs hadostensible authority, such as would bind the Crown, to enter into thecontract sued on. All “ ostensible ” authority involves a representation bythe principal as to the extent of the agent’s authority. No representationby the agent as to the extent of his authority can amount to a “ holdingout ” by the principal. No public officer, unless he possesses some specialpower, can hold out on behalf of the Crown that he or some other publicofficer has the right to enter into a contract in respect of the property of theCrown when in fact no such right exists. Their Lordships think thereforethat nothing done by the Principal Collector or the Chief Secretaryamounted to a holding out by the Crown that the Principal Collector hadthe right to enter into a contract to sell the goods which are the subject-matter of this action. It is not necessary to consider whether the Ministryof Supply or the Disposals Board could have held out the Principal Col-lector as having such a right because they did nothing from which a
holding out ” can be inferred.
In advertising the goods for sale the Principal Collector no doubt repre-sented to the public that the goods were saleable. But the question iswhether this act of the Principal Collector can be said to be an act of theCrown. Their Lordships have considered whether by reason of the factthat the Principal Collector had been appointed to his office under theCustoms Ordinance, and was the proper officer to administer it, he mustbe regarded as having had ostensible authority on behalf of the Crown torepresent to the public that goods advertised for sale under the CustomsOrdinance were in fact saleable under that Ordinance. It is argued that,if so, although the goods were in fact not saleable under the Ordinancebecause they were Crown property, or property to which the sections of theOrdinance authorising sale were not applicable or for some other reason,the contract would be binding on the Crown and the Crown would beliable in damages as it could not fulfil it.
Their Lordships think that the Principal Collector cannot be regardedas having any such authority. He had no doubt authority to do actsof a particular class, namely, to enter on behalf of the Crown into salesof certain goods. But that authority was limited because it arose under
AIR. I_. M. D. DE SILVA—The Attorney-General v. A. D. Silva
certain sections of the Ordinance and only when those sections wereapplicable. It was said by Lord Atkinson in Russo-Chinese Bank v.Li Yau Sam  A. C. 174 at p. 184 :—
“ If the agent be held out as having only a limited authority to doon behalf of his principal acts of a particular class, then the principalis not bound by an act done outside that authority even though it bean act of that particular class, because, the authority being thusrepresented to be limited, the party prejudiced has notice, and shouldascertain whether or not the act is authorised.”
With that view their Lordships respectfully agree. In that case theauthority did not arise under a statute but in their Lordships’ view thisfact makes no difference. If there is a difference at all it would lie inthe circumstance that in a statute the limits of the authority conferredare fixed rigidly and no recourse to evidence is necessary to ascertainthem. The Ordinance could no doubt have made the representation bythe Principal Collector binding on the Crown, but it has not done so andto read into it any such provision would be unduly to extend its meaning.
It may be said that it causes hardship to a purchaser at a sale underthe Customs Ordinance if the burden of ascertaining whether or not thePrincipal Collector has authority to enter into the sale is placed upon him.This undoubtedly is true. But where as in the case of the CustomsOrdinance the Ordinance does not dispense with that necessity, to holdotherwise would be to hold that public officers had dispensing powersbecause they then could by unauthorised acts nullify or extend the provi-sions of the Ordinance. Of the two evils this would be the greater one.This is illustrated in the case under consideration. The subject derivesbenefits, sometimes direct, sometimes indirect, from property vested in theCrown, and its proper protection is necessary in the interests of the subjecteven though it may cause hardship to an individual.
The goods which are the subject matter of this action have beentreated so far without reference to the sale to Maharajan & Co. onthe 23rd January, 1947. The date on which the property passed fromthe Crown to Maharajan & Co. cannot be gathered with confidence fromthe evidence, and there is no evidence that Maharajan & Co. did not payor offer to pay warehouse rent. But even if property passed on the23rd January, 1947, (it could not have passed earlier) and no warehouserent was paid by Maharajan & Co., still the Principal Collector had no-right to sell the goods on the 4th March, 1947, because the period betweenthose two dates falls short of the three months prescribed by s. 108 asthe period after which alone goods may be sold for the non-payment ofwarehouse rent. The sale to Maharajan & Co. does not therefore alterthe fact that the Principal Collector had no authority to sell the goods.
Their Lordships wish to observe in passing that no argument wasaddressed to them on the contention raised in the Case for the appellantthat “ although the Principal Collector is a servant of the Crown, acts donein performing a statutory duty are done by him not as servant of theCrown but as the officer designated by the statute In view of theconclusion they have arrived at they do not, for the purposes of a.decision on this ease, find it necessary to examine it.
Dean v. A.nthonisz
The judgment of the Supreme Court proceeded largely on the basisof an admission said to have been made by the Solicitor General to theeffect that section 17 of the Customs Ordinance applies to the Crown.Before the Board there was some discussion as to the extent of theSolicitor General’s admission. Assuming, however, that the SupremeCourt rightly understood the admission their Lordships cannot he boundon a question of law by an admission which in their opinion would involvean erroneous construction of the Ordinance. Their Lordships will there-fore humbly advise Her Majesty that theappeal be allowed, the decree ofthe Supreme Court be set aside and the decree of the District Courtrestored. Each party must bear its own costs both on this Appeal andin the Supreme Court of Ceylon.
THE ATTONEY-GENERAL , Appellant , and A. D. SILVA , Respondent
The Attorney- General v. A. D. Silva