RAJARATXAM, J.- Attorney-General r. W. M. Fernando
1977Present: Rajaratnam, J, Sharvananda, J, and Colin
THE ATTORNEY-GENERAL OF CEYLON, Appellant andW. M. FERNANDO, HONORARY SECRETARY, GALLEGYMKHANA CLUB, Respondent
S.C. 502/69 (F)—D.C., Galle 3715/M.
Subordinate legislation—Lotteries Ordinance, Section 19—Whether Houseof Representatives has power to pass resolution having retros-pective effect.
Subordinate legislation having retrospective effect is ultra viresunless the enabling Act expressly or by necessary implicationauthorises the making of retrospective subordinate legislation.Section 19 of the Lotteries Ordinance provides :
‘The House of Representatives may, by resolution, impose a taxon the gross proceeds of every Lottery ’.
Held : That the House of Representatives has not been vested,either by express words or by clear implication, with the powerto pass a resolution imposing a lottery tax with retrospective effect.Accordingly the Respondent was not liable to pay the additionalamounts of lottery tax claimed in respect of lotteries conductedbefore the date of a resolution which purported to increase therate of lottery tax retrospectively.
Cases referred to :
Mixnam’s Properties Ltd. v Chertsey U.D.C.. (1963) 2 All E.R.
787 1 ; (1965) A.C. 765
Phillips v. Evre, (1870) L.R. 6 Q.B. 1 ; 22 L.T. 869.
A.PPEAL from a judgment of the District Court of Galle.
V. C. Goonetileke, Deputy Soliction-General, for the plaintiff-appellant.
No appearance for the defendant-respondent.
Cur. adv. vult.
October 14, 1977. Raja8atnam, J.—
The plaintiff, as representative of the State, sued the defen-dant in his capacity as Secretary of the Galle Gymkhana Clubfor the recovery of Rs. 94,375.95 with legal interest, etc. On thefirsi cause of action the plaintiff sought to recover a sum ofRs. 88,997.40 being additional 10 per cent, payable as lottery taxfor two lotteries conducted by the Galle Gymkhana Club on18.10.63 and 13.12.63. On the second cause of action a sum ofRs. 5,360.50 was sought to be recovered in respect of lotteriesconducted on two other dates. There was no contest with regardto the claim under the second cause of action.
The main question turned round section 19 of the LotteriesOrdinance—whether this section enabled the House of Repre-sentatives to impose by resolution a Lottery Tax which hasretrospective effect.
KAJ ARATNAM, J.—Attorney-Genera} v. W. M. Fernando
The House of Representatives by its resolution on 20.12.63purporting to act under s. 19 of fhe Lotteries Ordinance resolvedthat “ with effect from October 1, 1963, there shall be levied atax of 40 per cent, of the gross proceeds of every lottery. ”
It is clear that this resolution expressly has made itself retros-pective. On the other hand the question before the Court iswhether under s. 19 of the said Ordinance, the House of Repre-sentatives can pass a resolution with retrospective effect.
The Section reads—
The House of Representatives may, by resolution imposea tax (in this Ordinance referred to as a ‘ lottery tax ’) onthe gross proceeds of every lottery. Such tax shall be payableby the promoter or promoters of the lottery as a debt dueto the Crown ’.
This right was again given to the House of Representatives bys. 8 of the Lotteries Ordinance <Amendment Act No. 2 of 1954).The preamble to this Act states—
“ Be it enacted by the Queen’s Most Excellent Majesty byand with the advice and consent of the Senate and theHouse of Representatives of Ceylon in this present Parlia-ment assembled and by the authority of the same asfollows ”, etc.
The date of assent, of this Act is 23.1.1954. It will be seen thatthe power given to the House of Representatives is evidentlyan enabling power by Act No, 2 of 1954.
In other words s 19 is the enabling power given by an Actof Parliament No. 2 of 1954 to the House of Representatives toimpose a tax by resolution, that is to say, the House of Repre-sentatives derives its whole tax imposing power through thisAct, No. 2 of 1954 which is incorporated in s. 19 of the LotteriesOrdinance. The enabling power given to the House of Repre-sentatives is contained within the four comers of this Act andit does not specifically refer to any power <to make any resolutionimposing taxes with any retrospective effect.
The learned District Judge who held that the enabling sectiondoes not give any powers to the House of Representatives toimpose taxes with retrospective effect by resolution quite appro-priately reminded himself of the principle enunciated by Max-well (Interpretation of Statutes, 11th Ed. at p. 206 in the Chapteron “Retrospective Operation as regards vested rights”) —
“ Every statute, it has been said, which takes away orimpairs vested rights acquired under existing laws orcreates a new obligation or imposes a new duty or
KAJAKA'j-'a'AM, J. Attorney -Ventral v. W. M. Fernando
attaches a new disability in respect of transactions or con-siderations already past must be presumed, out of respect tothe legislature, to be intended not to have a. retrospectiveoperation
The legislature has not in s. 19 indicated within the contentof the words therein any reference to resolutions having anyretrospective effect.
On the relevant dates, i.e., on 18.10.63 and 13.12.63 the resolu-tion chat was in force for the imposition of taxes, imposed 30%on the gross proceeds. No doubt the licence reserved the rightto the Crown to recover the lottery tax with retrospective effectin the event of increasing the rate of tax subsequent to the issueof licence but that does not help the Crown if s. 19 is an enablingsecion to prospectively impose a tax without any reference toretrospectively impose any tax. I see no reason to infer anysuch intention on the part of the legislature.
I find that this levy of 30% was made on 7.7.55 with effectfrom 8.7.55 which was prospective. On the other hand on20.12.63 the levy of 40% was made as from October 1, 1963 (videHansard proceedings). It is my view that s. 19 did not empowerthe House of Representatives to then impose a tax with retros-pective effect.
It is difficult to hold for instance that the House of Represen-tatives the day after the assent to amendment Act, No. 2 of1954, i.e., on 24.01.54 could by resolution impose a tax to takeeffect from a date before 23.01.54.
The enabling s. 19 was enacted at a time when the Act hadto go through both the House of Representatives and the Senatebe the assent. A resolution of the House of Representativesperse had no legal validity without the enabling s. 19 of theLotteries Ordinance which was introduced by amendment Act,No. 2 of 1954.
Therefore we have to examine the scope and content of s. 19which is silent with regard to any resolution carrying anyretrospective effect. The fact that the resolution clearly intendeda retrospective effect does not mean that s. 19 enabled such aresolution. Section 19 is the parent provision, so to say, and perse the said section is prospective, as Maxwell states (p. 215—12th Ed. on Interpretation of Statutes) —
"Upon the presumption that the legislature does notintend what is unjuat rests the leaning against giving certainstatutes a retrospective operation. They are construed asoperating only in cases or on facts which come into existenceafter the Statutes were passed unless a retrospective effectwas clearly intended ”.
If s. 19 did not have such an intention, it cannot be said thatthe resolution enabled and passed thereunder could have aretrospective effect. The retrospective part is therefore outside
SHARVAXANDA, J.—Attorney-General o. W. M. Fernando
the scope of s. 19, which came into existence by the amendmentAct No. 2 of 1954.
The appeal preferred by the Attorney-General must thereforefail. The judgment and decree of the District Court is affirmedand the appeal is dismissed without costs.
I agree that the appeal should be dismissed without costs.Since the question involved is of some Constitutional import-ance, I set out below my reason for holding why the resolutionof the House of Representatives dated 20th. December, 1963,purporting to give retrospective effect thereto, is ultra vires andvoid.
A clear distinction has to be drawn between an Act of Parlia-ment and subordinate legislation, even though the latter iscontained in a resolution passed by the House of Representatives,a limb of the Legislature. A Court has no jurisdiction to declareinvalid an Act of Parliament, but has jurisdiction to declaresubordinate legislation to be invalid if it is satisfied that inmaking the subordinate legislation, the rule-making authorityhas acted outside the legislative powres conferred on it by theAct of Parliament under which such legislation is purportedto be made.
Subordinate legislation is always liable to be attacked byCourts on the ground that it is ultra vires, that it goes beyondthe powers conferred by the enabling statute on the rule-makingagency. Such subordinate resolution may be ultra vires by reasonof its contents or by reason of procedural defects.
In this case, the Attorney-General, in paragraph 8 of the plaint,averred that—
“ the House of Representatives, by its resolution passed on20th. December, 1963, under section 19 of the Lotteries Ordi-nance, resolved that ‘ with effect from 1st October, 1963,there shall be levied a tax of 40 per cent, on the grossproceeds of every lottery'. ”
In his answer, the defendant took up the position that theresolution of the House of Representatives referred to abovewas ultra vires in that “ section 19 of the Lotteries Ordinancedid not empower the House of Representatives to impose byresolution a lottery tax having introspective effect ”. It is alwaysopen to a defendant to raise the question of ultra vires by wayof defence if proceedings are taken for the enforcement of anyprovision of a subordinate legislation.
The doctrine that subordinate legislation is invalid if it isultra vires, is based on the principle that a subordinate agencvhas no power to legislate other than such as may have expresslybeen conferred by the supreme Legislature. Subordinate legisla-
isHAKVAKA-NDA, J.—Attorney-General v. IV. M. Fernando43
tion is fundamentally of a derivatory nature and must be exer-cised within the periphery of the power conferred by the enablingAct. If a subbordinate law-making authority goes outside thepowers conferred on it by the enabling statute, such legislationwill ipso facto be ultra vires. ‘ The various special grounds onwhich subordinate legislation has been said to be ultra vires andvoid—e.g., because it is unreasonable ; because it is uncertain ;because it is repugnant to the general law or to some other statute—can, I think, today be properly regarded as being particularapplications of the general rule that subordinate legislation, tobe valid, must be shown to be within the powers conferred by thestatute. ”—per Diplock, L. J., in Mixnam’s Properties, Ltd. v.Chertsey U.D.C. (1963), 2 All E. R. 787 at 799.
It is competent for a Legislature to enact laws which haveretrospective operation. Even when Parliament enacts retrospec-tive laws, such laws are however “ Prima facie of a questionablepolicy and contrary to the general principle that legislation bywhich the conduct of mankind is to be regulated ought, whenintroduced for the first time, to deal with future acts and oughtnot to change the character of past transactions carried uponthe faith of the then existing law ”.—per Willes, J., in Phillips v.Eye (1870), L.R. 6 Q.B.l. The Courts will not therefore construestatutes to have retrospective operation unless such a construc-tion appears very clearly in terms of the statue or by necessaryimplication. When the validity of delegated legislation havingretrospective operation is raised, the Court will inquire further,whether the power to make regulations having retrospectiveoperation falls within the scope of the enactment from which itpurports to derive its authority. The preliminary question iswhether Parliament has authorised such retrospective legisla-tion. It will depend on the language employed in the statutoryprovision which may, in express terms, empower the agency toframe a rule or regulation with retrospective effect. But wheresuch language is not to be found, no rule or regulation whichcan operate with retrospective effect can be made.
The Court will examine subordinate legislation strictly andconfine it precisely within the limits of the enabling legislation.Thus, power to legislate by regulation in a manner which mayimpair the lierty of the subject, or impose some form oftaxation, which would have retrospective effect, or whichwould exclude the subject from access to the Courts, will notreadily be implied.
Section 19 of the Lotteries Ordinance which enables the Houseof Representatives to impose a tax by resolution reads asfollows :—
“ The House of Representatives may. by resolution, imposea tax on the gross proceeds of every lottery. ”
jV. JPalaniandy and two others t Republic oj Sri Lanka
Neither by express words nor by clear implication has the Houseof Representatives been vested with the power, under section 19of the Lotteries Ordinance, to pass a resolution imposing alottery tax with retrospective effect. Therefore, the retrospectiveeffect sought to be given by the resolution pased on 20th Decem-ber, 1963, was beyond the powers of the House of Representa-tives which derived its rule-making authority from section 19of the Lotteries Ordinance. The tax-levying power of the Houseof Representatives can be exercised only in respect of lotteriesconducted after the passage of the relevant resolution in theHouse. A resolution made under the statutory authority ofsection 19 of the Lotteries Ordinance can become part of the lawof the land only from the date of such passage. Hence, the defen-dant will not be liable for the additional amounts of lottery taxclaimed on the basis of the aforesaid resolution on the lotteriesconducted prior to 20th December, 1963.
Colin Thome, J.—
For the reason stated by my brothers Rajaratnam, J. and Shar-vananda. J., I agree that this appeal should be dismissed withoutcosts.
THE ATTORNEY-GENERAL OF CEYLON, Apellant and W. M. FERNANDO, HONORARY SECRETAR