FONNYS PVT LTD v. SRI LANKA PORTS AUTHORITY

014-SLLR-SLLR-2004-V-2-FONNYS-PVT-LTD-v.-SRI-LANKA-PORTS-AUTHORITY.pdf


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FONNYS PVT LTD.vSRI LANKA PORTS AUTHORITYCOURT OF APPEALSALEEM MARSOOF, J. (P/CA)
SRIPAVAN, J.
C.A. NO. 714/98JUNE 28, 2004 ANDJULY 21, AND 22, 2004
Sri Lanka Ports Authority Act, No. 51 of 1979, sections 6(1), 7, 37, 38, 63, and75 -Importation of tyres – Customs duty paid – Consignment not cleared notdue to importer’s fault – Decision to waive demurrage by Minister – Is it lawful-What is demurrage? – Right of Ports Authority to levy charges Basic rent andpenal rent.
The petitioner imported industrial off road tyres. The Customs approved thedocuments and the petitioner paid the customs duty on the consignment, butthe consignment was cleared after 63 days. The demurrage charges werewaived on the recommendation of the customs by the Minister. However, thePorts Authority requested the petitioner to pay the basic rent and all other portcharges – that included demurrage charges.
The petitioner sought to quash that order:
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Held:
Demurrage is a kind of compensation or charge that is levied by a shipowner or carrier from the charterer as a matter of contract for exceedinglay time.
The Ports Authority has a legal and statutory power to levy charges thatmay be agreed to by the parties by contract and the liability to pay thesecharges do not depend on whether the consignee was at fault. The ques-tion is not whether the consignee has been at fault for the delay butwhether the consignee occupied the warehouse or storage space of theAuthority for more than the period of grace.
Demurrage rent includes penal charges as well as basic rent.
The Ports Authority having rendered services is entitled to levy thecharges in terms of the Port Authority Act and it has a lien on the goodsuntil such charges are paid.
QUARE — Is the order made by the 2nd respondent, Finance Manager, PortsAuthority amenable to prerogative remedies?
Cases referred to:
The Johanna Oldendorff- (1973) 2 Lloyds Re. 285 at 304.
Krishna Mining Co. Ltd., v Pan Islamic Steamship Co, Ltd., (2002) 2 SRILR 39 at 42.
Sri Lanka Ports Authority v Peiris – (1981) 1 SRI LR 101
Tajit & Co. (Pvt) Ltd., v Sri Lanka Ports Authority and two others – CA678/99 CAM 20.7.00.
Tajit & Co. (Pvt) Ltd., v Sri Lanka Ports Authority and two others – SC12/2001 – SCM 18.7.2002
A.L.M. Hedayathulla with C. Colonne for petitioner
Arjuna Obeysekera, State Counsel for respondents.
Cur.adv.vult
September 17, 2004SALEEM MARSOOF, J. CA
The petitioner imported from Israel a consignment of industrial 01off-road tyres valued at US$ 25,238 which is equivalent to Rs,1,621,412.41 at the rate of exchange prevailing at the time of thefiling of this application. The said consignment arrived at the Port ofColombo in the steamer “Gibraltar Bridge” on or about 21st March
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1998. After having the shipping documents processed andapproved by the Sri Lanka Customs, the petitioner paid a sum ofRs. 949,333/- as customs duty for the said consignment on 31stMarch 1998, as evidenced by the receipt issued by the Sri LankaCustoms marked ‘D’. However, the petitioner states that its repre-sentatives were informed by the Valuation Department of the SriLanka Customs that the consignment cannot be cleared since thedocuments have been referred to the Preventive Division of the SriLanka Customs for their approval.
It appears that certain investigations were conducted by thePreventive Division of the Sri Lanka Customs as to whether theconsignment in question has been under-valued. The petitionercomplains that the Preventive Division of the Sri Lanka Customstook 63 days to satisfy itself that there was no under-valuation ofthe goods, and the petitioner was allowed to clear the said con-signment only on 2nd June 1998. It is common ground that the peti-tioner made representations to the Director-General of Customsthat the petitioner should not be burdened with payment of portdemurrage charges for the said period. The Director-General ofCustoms had in his letter dated 29th May 1998 addressed to theChairman of the 1st respondent marked ‘G’ admitted that therelease of the consignment to the petitioner was delayed pendingthe investigation by the Preventive Division of his Department. Inthe same letter, the Director-General of Customs has recommend-ed to the Chairman of the 1st respondent that the port demurragecharges incurred during this period should be waived, “taking intoconsideration that the importer was not penalized for the subjectcontainer.”
The Director (Commercial Services) of the 1st respondent hasby his letter dated 6th July 1998 marked ‘H’ informed the petitioner,with copies to the other relevant authorities including the 2ndrespondent, that the Minister of Port Development, Reconstructionand Rehabilitation has allowed the waiver of demurrage rent on theabove consignment up to the date of clearance. However, when thepetitioner’s representative went to clear the goods, the 2nd respon-dent, who is the Finance Manager of the 1st respondent, has madean endorsement on the letter dated 6th July 1998 produced markedT to the following effect-
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“Waive penal rentRecover basic rent andAll other port charges”
The petitioner, in these proceedings initiated on 21st July 1998,seeks prerogative relief by way of-
a writ of certiorari quashing the order and / or decisionmade by the 2nd respondent as evidenced by the soendorsement made by him on the letter dated 6th July1998 marekd as T;
a writ of mandamus ordering the 1st and 2nd respon-dents to release the consignment referred to in the saidletter marked as T on payment of the relevant port han-dling charges.
It is relevant to note that despite the admission made by theDirector-General of Customs in his letter dated 29th May 1998marked ‘G’ that the non-delivery of the said consignment up toJune, 1998 was not due to any fault of the petitioner but solely due 60to the actions of the Customs, the petitioner did not cite theDirector-General of Customs or the Attorney-General as a respon-dent to this application. He made an application in January, 2003 toadd the Director-General of Customs as a party to these proceed-ings, which application was refused by this court by its order dated27th January 2003 on the ground of it belatedness and the fact'thatno relief had been claimed against the Director-General ofCustoms in the petition filed in this case.
The gist of the petitioner’s case is that the 2nd respondentFinance Manager has no legal right to make the said order or deci- 70sion by way of the said minute to pay what is referred to as thebasic rent and / or the said order is in excess of his authority and /or contrary to the Minister’s ruling to waive the demurrage rent.
The position of the petitioner is that the decision of the Minister towaive the ’demurrage rent’ communicated to the petitioner by theDirector (Commercial Services) of the 1st respondent through hisletter dated 6th July 1998 marked ‘H’ covered not only penal rent
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but also basic rent. It has been stressed that the Director-Generalof Customs has in his letter dated 29th May 1998 marked ‘G’ con-ceded that the petitioner was not at fault, and the delay was solelydue to the Preventive Division of the Sri Lanka Customs takingnearly 60 days to process the documents and complete investiga-tions, which has also been accepted by the relevant Minister in hisletter marked ‘H’. It is submitted on behalf of the petitioner that theSri Lanka Ports Authority Act, No. 51 of 1979, as subsequentlyamended, only sanctions the levy of ‘charges', there' being no ref-erence in the Act to ‘basic rent' or ‘penal rent*. The petitioner claimsthat it is entitled to take delivery of the said consignment on pay-ment of port charges only.
The position of the respondents is that according to the SriLanka Port Authority Tariff Guide marked ‘2R2’, two different typesof rentals, namely basic rent and penal rent are charged from anyconsignee who utilizes storage space of the Port Authority, depend-ing on the number of days within which they clear their cargo. Therespondents contend that the recommendation of the Director-General of Customs contained in his letter dated 29th May 1998marked 'G' was to waive port demurrage charges only, and in factthe 1st respondent, acting on the request of the petitioner, soughtthe approval of the Minister of Port Development, Reconstructionand Rehabilitation to grant a waiver of demurrage charges by itsletter dated 23rd June 1998 marked ‘2R1’ addressed to theSecretary to the said Ministry. The decision of the Minister to waivethe ‘demurrage rent’ was conveyed to the petitioner by the Director(Commercial Services) of the 1st respondent through his letterdated 6th July 1998 marked ‘H’. The ‘demurrage rent’ referred to inthe said letter marked as H is in respect of ‘penal charges’ asappearing in the SLPA Tariff Guide marked as ‘2R2’. Accordingly, itis contended by the respondents that as only ‘penal rent’ or whatis commonly referred to as the ‘demurrage rent’ have been waived,the petitioner is liable to pay the basic rent and port handlingcharges to the SLPA, which has been calculated at Rs. 147,000 asevidenced by the documents marked ‘2R4a’ to ‘2R4c’.
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It is important to note that the petitioner does not seek to chal-lenge or question any recommendation or decision contained in theletters dated 29th May 1998 marked ‘G’, 23rd June 1998 marked‘2R1’ or 6th July 1998 marked ‘H’. These letters contemplated awaiver respectively of ‘port demurrage charges’, ‘demurragecharges’ and ‘demurrage rent’. The petitioner only seeks reliefagainst the order and / or decision made by the 2nd respondent as
evidenced by the endorsement made by him on the letter dated 6thJuly 1998 (H) which endorsement is marked as ‘I’ which requiredthe petitioner to pay ‘basic rent’ and ‘all other port charges’. The2nd respondent has gone on the basis that what has been waivedis ‘penal rent’. One of the main questions for decision in this casetherefore is whether ‘basic rent’ and ‘port demurrage charges’,which the petitioner has been directed to pay by the 2nd respon-dent, are caught up within the meaning of ‘demurrage rent’ whichhas been waived as evidenced by the letter ‘H’. In other words, wasthe 2nd respondent right in equating what has been variouslydescribed as port demurrage charges, demurrage charges anddemurrage rent with his own notion of ‘penal rent’, a phrase whichhas not been used in any of the letters marked ‘G’, ‘2R1’ and ‘H’?
Before considering the applicable statutory provisions and deci-sions of our courts interpreting these provisions, it will be useful toexamine the general meaning of some of the phrases used in theletters marked ‘G’, ‘2R1 ’ and ‘H’. As all these letters use the word‘demurrage’ in some form or other, the meaning of that term maybe elicited from relevant texts and case law. In The JohannaOldendorffW Lord Diplock divided the adventure contemplated bya voyage charter into four successive stages, where the two voy-age stages (i.e. the voyage prior to loading of the cargo and thevoyage after the loading of the cargo but prior to the discharge ofthe cargo) identified by him were in the hands of the ship ownerwhilst the loading and discharging stages are joint operationsbetween the ship owner and the charterer. The ship owner in con-sideration for the charter hire received by him, allows the charterera certain number of days within which the charterer must completethe loading or discharging operations, as the case may be. Thisperiod allowed by the ship-owner is commonly referred to as ‘laytime’. The moment the loading or discharging operation stretches
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beyond lay time, it triggers off liability for demurrage. In ‘Laytimeand Demurrage’by John Schofield (1986 Edition — Lloyds Press)at page 5, the concept of demurrage is explained as follows:-
“If loading or discharging are not completed within thetime allowed, then the ship-owner is entitled to be com-pensated for the extra time taken. This may either takethe form of liquidated damages, demurrage or unliquidat-ed damages, where the claim is one for detention.Demurrage is usually specified in the charter as a dailyrate and the parties may either agree for a limited period i6oon demurrage or more commonly, for an unlimited period.
It is now generally accepted that failure by the chartererto complete loading (or discharging) within the timeallowed is a breach of contract." (italics added)
The Oxford Dictionary (10th Edition) page 381 defines ‘demur-rage’ as “a charge payable to the owners of a chartered ship inrespect of delay in loading and discharging”. In Krishna Mining Co.
Ltd. v Pan Islamic Steamship Co. Ltd Nimal Dissanayake J.,defined the term as “damages payable by the charterer for thedelay caused over and above the agreed time for discharging or 170loading.” Learned Counsel for the petitioner has invited our atten-tion to the following definition of the term found in The ShippingTerms’ of P&O Nedloyd-
“Demurrage
A variable fee charged to carriers and / customers for theuse of Unit Load Devices (ULD’s) owned by a carrierbeyond the free time of shipment.
Additional charges imposed for exceeding the free time,
which is included in the rate and allowed for the use ofcertain equipment at the terminal"iso
From the foregoing it would be apparent that ‘demurrage’ is akind of compensation or charge that is levied by a ship-owner orcarrier from the charterer as a matter of contract for exceeding laytime. The question that arises in the context of this case is whether‘demurrage’, whether in the form of ‘port demurrage charges’,‘demurrage charges’, ‘demurrage rent’ or ‘occupational charges’can be levied by a port authority such as the 1st respondent.
Fonnys Pvt Ltd. v. Sri Lanka Ports Authority
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The issue whether ‘demurrage charges’ in the form of portcharges or rent can be recovered by the Sri Lanka Ports Authoritywas considered by the Supreme Court in Sri Lanka Ports Authority igov Peiris t3>. In this case, the Sri Lanka Ports Authority (SLPA) suedthe defendant to recover a sum claimed by it as ‘prescribedcharges’ recoverable on account of demurrage. Judgment wasgiven for the plaintiff as prayed for in the District Court. But thisjudgment was set aside in appeal and the plaintiffs action dis-missed and a counter claim by the defendant allowed. The Court ofAppeal held that the plaintiffs claim to recover demurrage as ‘pre-scribed charges’ was untenable in law, upholding a contention ofthe defendant that the said sum could not be recovered as it wasnot a ‘port service’ referred to in section 4(1 )(a) of the Port (Cargo) 200Corporation Act, nor a ‘prescribed service’ referred to in section 63
of the Act. It was held that it was therefore beyond the powersof the Minister to fix rates for demurrage by order under section63(1) as it was not a ‘service’, and accordingly the claim made bythe plaintiff for demurrage on the basis of the charges so fixed bythe Minister could not be maintained.
On appeal, the Supreme Court held that the ‘prescribed ser-vices’ referred to in section 63 (1) are the ‘port services’ prescribedin section 4(1) of the Port (Cargo) Corporation Act, No.13 of 1958,as subsequently amended. These ‘services’ involve, inter alia, the 210provision of cargo barges or lighters by the Corporation for thelanding and discharging of cargo. It was not disputed that theCorporation is entitled to charge hire for the use of its lighters inconnection with the performance of its ‘port services’ and such hirecan be determined not only with reference to the weight of thecargo but also with reference to the time that the plaintiff’s lightersare engaged and detained in such ‘service’. A ‘service’ of stevedor-ing and landing is not corpplete until the lighter containing the cargois cleared by the consignee, and any default on his part in expedi-tiously clearing the cargo will result in the detention of the plaintiff’s 220lighter. In this factual background, Sharvananda, J. made the fol-lowing pertinent observation at page 106 of the judgment.
“It is only when the cargo has been cleared by the consigneecan it be said that the plaintiff has performed itsstevedoring/landing services and is discharged from its oblig-ations. Hence it is legitimate and competent for the
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Corporation to charge the consignee for undue detention asincidental to the charges for the hire of its lighters. When theMinister provided for ‘demurrage’ in the Gazette NotificationP1, he imposed such charge as a charge for the prescribed 230port services provided by the plaintiff, calculated by the timeinvolved in performing those services and he was entitled todo soIn my view the Court of Appeal was in error in hold-
ing that the Minister had acted ultra vires in fixing rates fordemurrage. The provision respecting ‘demurrage’ in P1 repre-sents a reasonable pre-estimate of the damages that willresult from the detention of the plaintiff’s lighters beyond thestipulated time.”
It is relevant to note that the above decision was based on theprovisions of the Port (Cargo) Corporation Act, No. 13 of 1958,240which has since been repealed and replaced by the Sri Lanka PortsAuthority Act, No. 51 of 1979, which is currently in force. Beforeexamining in depth the provisions of this Act relating to the matterin issue in this case, it is necessary to refer to another decision ofcourts which considered the interrelation between demurragecharged by the ship-owner and demurrage charged by a portauthority.
Krishna Mining Co. Ltd. v Pan Islamic Steamship Co. Ltd(supra), the plaintiff-respondent shipping company sued the defen-dant-appellant for the recovery of a certain sum as demurrage, due 250to them on account of the ship chartered by the defendant-appel-lant, being delayed at Chittagong. The defendant-appellant deniedliability to pay any demurrage and claimed in reconvention a certainsum being the value of 2000 MT of edible salt made unfit for humanconsumption as a result of being contaminated with goods unlaw-fully stored on the hatches of the ship. The District Court enteredjudgment for the plaintiff as prayed for and dismissed the claim inreconvention. On appeal it was contended that demurrage ischarged by the Ports Authority, and that the plaintiff-respondent hadfailed to prove that it was charged demurrage by the Chittagong 260Ports Authority and that the said demurrage was paid by the plain-tiff-respondent. The Court of Appeal pointed out that on aCharterparty agreement both carrier and the charterer agree in fix-ing a time for the purpose of loading and discharging the cargo,
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what is called the ‘lay time’. When the cargo is booked on F.I.C.S.basis under the Charterparty, loading and unloading of cargo isdone by the charterer’s stevedores. If the lay time, is exceeded bythe charterers, then the vessel is said to go on demurrage. Thecourt rejected the argument presented by the defendant-appellant
that as charterer, it can only be liable to pay demurrage to the ship-owner if the latter had paid demurrage to the relevant port authori-ty. At page 42 of the judgment, Dissanayaka, J. observed as fol-lows-
“Demurrage, is damages payable by the charterer for thedelay caused over and above the agreed time for dischargingor loading. It is to be observed that in the aforesaidCharterparty (P1) Gencon Rule 6 and the Rider Clause 3entered into by the parties has laid down a specific lay time forthe said cargo.
The demurrage agreed on a charter party is payable to thecarrier in respect of the ship as against demurrage paid to theport. Eventually, the carrier is liable to pay the port demurragefor the delay in moving the ship out of the port. The liability ofthe charterer to pay demurrage to the carrier for delay that iscaused on his behalf in unloading the cargo from the ship onthe Charterparty, is not dependant on the carrier’s liability topay demurrage to the port. It arises independently on theCharterparty.
In this case the defendant-appellant has agreed by Clause 18of the Charterparty and Rider Clause 5, to pay demurrage tothe plaintiff-respondent at US$ 3,000 per day. According to theaforesaid Clause 18 of the Charterparty and Rider Clause 5,the plaintiff-respondent is not obliged to produce documents toshow that they have paid the port demurrage, when theydemand demurrage which the charterer was liable to payunder the Charterparty agreement.”
It is clear from the above dicta of Dissanayke, J. as well as fromthe decision of the Supreme Court in Sri Lanka Ports Authority vPeiris discussed earlier that the concept of ‘demurrage’ is not onlyapplicable to the contract of Charterparty but is also relevant in con-nection with loss suffered by port authorities such as the 1st
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respondent as a result of delays in loading or unloading beyondwhat is known as ‘lay time’.
It is now convenient to examine in some depth the provisions ofthe Sri Lanka Ports Authority Act, No. 51 of 1979, as subsequentlyamended, insofar as they relate to the issues arising in this case.According to section 6(1) of this Act it is a statutory duty of the SriLanka Port Authority to “provide in any specified port, efficient andregular services for stevedoring, lighterage, shipping and tranship-ping, landing and warehousing of dry and wet cargo and cargo in 3iobulk; for wharfage, the supply of water, fuel and electricity to ves-sels, for handling petroleum, petroleum products and lubricatingoils in and from vessels and between bunkers and depots; forpilotage and the mooring of vessels”. According to section7(1)(z)(iii) of the Act, the Authority is empowered to provide orcause to be provided services involving “the sorting, weighing,measuring, storing, warehousing or otherwise handling of anygoods”. The Port Authority renders port services comprising interalia of port handling services and warehousing services, and it isempowered by section 75 of the Sri Lanka Port Authority Act to 320enter into such contracts as may be necessary for these purposes.Section 37 of the Sri Lanka Ports Authority Act provides that—
“(1) The charges that may be levied by the Ports Authorityfor the services provided by the Authority shall be fixed,and may be revised from time to time, by the Authority,with the approval of the Minister who shall, before givinghis approval, consult the Minister in charge of the sub-ject of Finance.
(2) Until the charges are fixed under subsection (1) thecharges leviable for services by the Principal Collector 330of Customs, the Port Commissioner, the MasterAttendant of any specified port, the Port (Cargo)Corporation and the Port Tally and Protective ServicesCorporation on the day immediately preceding theappointed date shall be the charges for the respectiveservices rendered by the Ports Authority.”
Section 38 of the Act, provides for several ways in which the
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charges can be recovered. It is of interest to note that section 38(a)provides that—
‘The Ports Authority shall, in respect of charges which havenot been paid on any goods, have a lien on such goods andshall be entitled to seize and detain such goods until thecharges are fully paid, provided that the Principal Collector ofCustoms has no claim on such goods as goods seized or for-feited or goods liable to such seizure or forfeiture under theCustoms Ordinance."
The term ‘charges’ that appear in sections 37 and 38 has beendefined in section 89 of the Act in the following lines:-
“ ‘Charges’ includes charges, rates, fees and dues of everydescription which the Ports Authority is for the time beingauthorised to demand, take and recover and ‘charge’ shall beconstrued accordingly".
The charges that the Sri Lanka Port Authority could levy havebeen set out in the SLPA Tariff Guide marked ‘2R2’. These chargesinclude ‘basic’ and ‘penal’ charges which have been approved bythe relevant Minister. As the 2nd respondent Authority enters intocontracts with the parties who wish to make use of the servicesprovided by the Authority, the charges specified in the said TariffGuide will be recoverable in terms of these contracts. As hasalready been noted, section 38 of the Sri Lanka Ports Authority Actalso creates a statutory lien over the goods to facilitate the recov-ery of charges without recourse to courts.
The right of the Sri Lanka Port Authority to levy charges wheregoods have been detained by the Sri Lanka Customs has beenconsidered by this court in Tajit & Co (Pvt) Ltd v Sri Lanka PortAuthority and Two others (4). In this case the petitioner wanted tore-ship the cargo imported by it that had been detained by the SriLanka Customs. The petitioner took up the position that there wasa delay on the part of the Director-General of Customs to take adecision in regard to the re-shipment. In view of this delay, theDirector-General of Customs had recommended a waiver of part ofthe demurrage but notwithstanding such recommendation, the PortAuthority had called upon the petitioner to pay demurrage, rent andother port charges. The petitioner instituted proceedings in the
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Court of Appeal, challenging the decision of the Port Authority.J.A.N. de Silva, J. observed that—
“It is true that according to P3 the Director-General ofCustoms has suggested to the Ports Authority that the peti-tioner should be given some relief in respect of the consign-ment as there was no customs violation committed. It is 380observed that the concession suggested by the Director-General of Customs should be considered in the light of theprovisions of section 38 (1) of the Sri Lanka Ports Authority Actwhich deals with ‘Recovery of charges in arrears.’ ”
After analysing the provisions of section 38 of the Act, HisLordship concluded as follows:
“From the above, it is clear that the 1 st respondent has thestatutory authority to levy port charges, irrespective ofwhether the goods were seized by the Customs or not. Inthe circumstances, the rejection by the Ports Authority of 390the request made by the Director-General of Customs towaive part of the port charges cannot be considered as ille-gal or arbitrary.”
The case went on appeal to the Supreme Court which affirmedthe decision of the Court of Appeal. In Tajit & Co (Pvt.) Ltdv SriLanka Port Authority and Two others<5). His Lordship S.N. Silva,
CJ. observed as follows in the course of his judgment:-
“The only issue in this appeal relates to the amountspayable by the petitioner to the 1 st respondent in respect ofthe charges for the Space occupied by the containers dur- 400ing the period they were lying in the premises of the 1strespondent. The document P7 which is sought to bequashed is a summary of the bills that have been issued tothe petitioner. It is a claim for services rendered by the 1 strespondent in holding the goods during the relevant peri-od. This document does not in any way attract administra-tive remedies.
The 1 st respondent having rendered services, is entitled tolevy the charges in terms of the Sri Lanka Ports Authority
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Act, No. 51 of 1979 and it has a lien in terms of section 38(1)(a) on the goods until such charges are paid. It is clearfrom the document P7 that the 1 st respondent has granteda waiver to the petitioner in respect of the period 10.4.1999to 17.5.1999 although the goods were lying in the premis-es even during that period.
Learned President’s Counsel for the 1st respondent sub-mitted that such a waiver was granted on the basis that thegoods were detained on the orders of Department ofCustoms. However, we note that a waiver could not havebeen granted unless the goods were seized by theCustoms. It is a common ground that there was no seizureof the goods by the Customs and the goods remained theproperty of the petitioner throughout the period they werelying in the premises of the 1st respondent. Therefore, thewaiver that has been granted is without any basis in law.The petitioner has got a benefit by P7 which he is not enti-tled to in law. In the circumstances, the petitioner has nocause for complaint with regard to P7.” (Italic added)
Learned State Counsel appearing for the respondents hasrelied heavily on the decision of this court in the above case,which has been affirmed by the Supreme Court. At the hearingof this application, learned Counsel for the petitioner sought todistinguish this decision on the basis that the consignment of thepetitioner had been detained for no fault of the petitioner where-as in the decided case, there had been a delay in clearing thegoods. It is necessary to observe that the decision of theSupreme Court took cognizance of the fact that the Sri LankaPort Authority has a legal and statutory power to levy chargesthat may be agreed to by the parties by contract, and the liabil-ity to pay these charges do not depend on whether the con-signee was at fault. The petitioner in this case is complainingthat the Sri Lanka Customs delayed the investigation regardingvaluation of the goods which was the identical position taken bythe petitioner in the Tajit case. This position has been rejected,both by the Court of Appeal and the Supreme Court. As rightlycontended by learned State Counsel, the question is notwhether the consignee has been at fault for the delay but
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whether the consignee occupied the warehouse or storagespace of the 2nd respondent authority for more than the periodof grace*450
Learned Counsel for the petitioner concedes the right of the1st respondent authority to recover the rent and charges inquestion, and in fact states that his client is ever willing to paythe port charges and take possession of the goods. However, hecontends that the decision of the Minister to waive the ‘demur-rage rent’ communicated to the petitioner by the Director(Commercial Services) of the 1 st respondent through his letterdated 6th July 1998 marked ‘H’ covered not only penal rent butalso basic rent. It is the contention of the respondent that thephrase ‘demurrage rent’ appearing in the aforesaid letter is a 460reference to ‘penal charges’ that can be levied by the 1strespondent Sri Lanka Ports Authority in terms of section 37 ofthe Act, but it does not cover or include basic rent. The SLPATariff Guide marked ‘2R2’ makes reference to various types ofcharges, and deals with ‘Occupation Charges’ in paragraph
thereof in the following manner:
48.0 Occupation Charges
1
] FREE
] CHARGES470
] ARE LEVIED] AS PER CATE-]GORY OF] CONTAINER
] CHARGES ARE] LEVIED AS PER] CATEGORY OF] CONTAINER
Learned Counsel for the petitioner has pointed out that 480nowhere in the SLPA Guide marked ‘2R2’ has ‘demurrage rent’been defined or categorized as ‘penal rent’. He stresses that interms of paragraph 48.03 of this Guide the penal charge is alsoimposed on the basis of the number of days the importer failed
Imports if cleared within 3 clear days/exports if shipped within 7 clear days
Basic Charge (If not cleared/shippedwithin the specified period) (from
1 st dav upto the date cleared/shipped
Penal Charge
8th day to 14th day
15th day to 21st day
Thereafter
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to clear the goods. He therefore submits that in essence the socalled ‘penal charge’ is a form of demurrage as would appearfrom the authorities referred to above. Learned State Counselhas emphasized that in terms of the SLPA Guide, any goodsimported to Sri Lanka can be cleared free from the payment of
any occupation charges if they are cleared within 3 days of thegoods being stored on Port Authority premises. Learned StateCounsel further submits that according to the said Guide, if thegoods so imported to Sri Lanka are not cleared within the stipu-lated period of 3 days, the ‘owner’ of goods (including a ‘con-signee’) becomes liable to pay the basic charge from the firstday up to the date the said goods are cleared from the PortAuthority premises as provided in Clause 48.02 of ‘2R2’. It issubmitted by learned State Counsel that there is an additionalrent or charge that is payable by a delinquent importer whosegoods occupy the port facilities beyond a period of 7 days,which is known as the penal charge. This charge has been splitinto 3 tiers, as set out in clauses 48.03.01 to 48.03.03 of theGuide, and accordingly if the goods are not cleared within 21days, a higher penal rate is charged from the owner of goods. Itis the contention of the learned State Counsel that the SLPATariff Guide draws a distinction between basic charges (com-monly referred to as basic rent) and penal charges, which areimposed with a view of deterring undue delay in clearing thegoods, and have been structured in such a way that the longerthe delay the higher the rate one has to pay.
It is important to note that this question of interpretation aris-es in the context of a letter written by an officer of theGovernment for the purpose of communicating a decision of aMinister in regard to a matter for which there is no expressstatutory provision. In fact, learned State Counsel has stressedthat there is no express provision in the Sri Lanka Port AuthorityAct, No. 51 of 1979 for waiving any of the charges that may oth-erwise be levied by the said Authority, and that the Authoritycould have in law ignored the decision of the Minister to waive‘demurrage rent’ communicated to the petitioner by the letterdated 6th July 1998 marked ‘H’. While the 1 st respondent hasnot chosen to ignore the said letter, he has taken action to giveeffect to it, and the parties are in fact in dispute in regard only to
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the scope of the waiver purportedly made by the Minister asembodied in the said letter. The issue is simply, whether thephrase ‘demurrage rent’ as used in the said letter included‘penal rent’ only or whether it extended to ‘basic rent’ or ‘basiccharge’ as well. The 2nd respondent has sought to give a par-ticular interpretation to those words, and this court is not in aposition to find that the interpretation placed by him as reflected 530in the order marked T is unreasonable or irrational. Even if thiscourt was of the opinion (which is clearly not the case) that theinterpretation placed by the 2nd respondent is not well founded,this court will not intervene as it is definitely not a determinationof an authority made in the exercise or purported exercise ofany statutory power which is amenable to the supervisory juris-diction of this court under Article 140 of the Constitution.
It is necessary to add that learned State Counsel appearingfor the respondents has pointed out that the payment of basicrent and port charges are liabilities which arises from the con- 540tract between the petitioner and the 1st respondent authority,and that prerogative relief would in any event not be available insuch a contractual context. It is manifest from the authoritiesreferred to earlier in this judgment that ‘demurrage’ itself is amatter of contract between the charterer and the owner of a shipor the ‘owner’ of goods (including a consignee) and a portauthority. Although in the circumstances it is apparent that theorder marked T made by the 2nd respondent would not beamenable to prerogative remedies such as certiorari and man-damus, it is not necessary to decide this question in view of the 550position that the learned Counsel for the petitioner was not ableto refer this court to any statutory provisions under which a waiv-er of ‘occupational charges’ such as basic charge or basic rentcould be made.
For the foregoing reasons this court has to dismiss the appli-cation of the petitioner for the twin writs of certiorari and man-damus with cost fixed at Rs. 12,000/- payable by the petitioner.
SRIPAVAN, J. – I agree.
Application dismissed.