Chevron Caribbean SRL v Attorney General
| Jurisdiction | Jamaica |
| Judge | David Batts |
| Judgment Date | 19 July 2013 |
| Neutral Citation | [2013] JMSC CIV 93 |
| Docket Number | CLAIM NO. 2011 HCV 05295 |
| Court | Supreme Court (Jamaica) |
| Date | 19 July 2013 |
[2013] JMSC CIV 93
Justice David Batts Q.C.
CLAIM NO. 2011 HCV 05295
IN THE SUPREME COURT OF JUDICATURE OF JAMAICA
Constitutional Law — Customs Act — whether Customs user fee a tax — whether Minister acted ultra vires the statute — whether wrongful deprivation of property — Restitution — Passing on Defence — Delay — National Interest — whether Defences to the claim
Richard Mahfood Q.C., Dr. Lloyd Barnett and Weiden Daley instructed by Hart Muirhead & Co. for Claimant.
Althea Jarrett instructed by the Director of State Proceedings for Defendant.
On the first morning of the hearing Dr. Lloyd Barnett indicated that there were areas of factual conflict and he required cross examination of the affiants. The Crown had made no arrangements for their witnesses to be present. Miss Jarrett for the Crown indicated that there had been no notice of intention to cross-examine and that at the Pre-trial review the Claimants then attorneys stated that there was no cross—examination required. The Crown also raised another preliminary issue. This being that they would wish the matter of liability and damages heard separately because it was their wish to rely on certain defences no notice of which had been given to the Claimants.
Upon Counsel indicating that they had not discussed these issues with each other, the court rose to allow discussions to take place. Upon the resumption the court was informed that the matter could proceed as there was an agreement on the facts and the defences to be relied upon.
Notwithstanding that which is stated on affidavit the parties now agreed that:
‘The money collected as Customs User Fee goes into the government general revenue as part of the Consolidated Fund and is used to fund the operations of Government including the Customs Department.’
The Defences to be argued were:
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i) A Limitation Defence which relied upon Statute
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ii) The passing on or windfall defence
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iii) Public Policy
The Crown promised to have a statement of the defence reduced to writing and served on the Claimant's attorney by the following day. An authority Kleinworth Benson Ltd. v. Lincoln cc (1999) LGR 1 was also handed out by the Crown. The hearing thereafter commenced.
The Fixed Date Claim form was filed on the 24 th August 2011 and claims the following relief:
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i) A Declaration that the Customs User Fee under Part 11b of the Customs Regulations was and is ultra vires the Minister of Finance.
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ii) A Declaration that the imposition of the Customs User Fee was and is unconstitutional.
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iii) A Declaration that the Customs User Fee is unenforceable and invalid
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iv) Restitution of the aggregate sum of J$548,777,578.78 which the Claimant has paid in Customs User Fee from May 7 th 2011 and all of the sums the Claimant shall have paid up to date of judgment herein, together with interest at the prevailing commercial rate from the dates of payments by the Claimant of the Customs User fees aforesaid to the date of full restitution or at such rate of interest and for such period as the Honourable Court deems just.
On the 21 st January 2013 an Amended Fixed Date Claim Form was filed. This made 2 changes to the original.
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a) The claim was corrected to reflect the fact that Chevron Caribbean SRL was a company incorporated under the laws of Barbados and registered in Jamaica as an overseas company, and
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b) Paragraph 1 of the Declarations sought was amended and now reads,
‘A Declaration that the Customs User Fee under part 11B of the Customs Regulations was and is ultra vires the Minister of Finance and/or was and is irrational and an abuse of his statutory discretion or power.’
The claim is supported by an affidavit of David Sterling dated 23 rd August 2011. He describes himself as the district manager of Chevron Caribbean SRL (‘Chevron’). That company is a subsidiary of Chevron Corporation and is an overseas company. The statement that the company is registered in Jamaica was later corrected. In fact it is an overseas corporation. It carries on the business of importing petroleum and ethanol and processing and selling of petroleum products through service stations under the Texaco brand throughout Jamaica.
He states further that petroleum is imported from various sources one of which is Trinidad and Tobago. In or about 2003 the Minister of Finance of Jamaica “purporting” to act under section 257 of the Customs Act amended the Customs Regulations to introduce a Customs user Fee ‘CUF’ of 2% of the value of goods. The fee was imposed on all goods imported to Jamaica including petroleum imported by Chevron. In April 2009 the Minister of Finance increased the CUF on imported finished petroleum products (but excluding that imported under the Petro Caribe Agreement), to 5%. The Customs Regulations were amended accordingly.
Chevron does not import goods pursuant to the Petro Caribe Agreement. The regulations also exempted manufacturers who import capital goods and raw materials, certain players in the agricultural sector and manufacturers who were in operation for less than 3 years and certified by Jamaica Promotions.
The effect of the CUF, according to Mr. Sterling is that the cost of the end product supplied by private fuel importers is substantially higher than that sold by Petrojam which is exempt from the CUF. At paragraph 14 of his affidavit he states,
‘14. That the CUF is levied by the Jamaica customs department (‘Customs’) which falls under the portfolio of the Minister of Finance but is calculated based on the value of the goods imported rather than on the value of any service provided by Customs to the paying party. I also understand that the CUF is not allocated for use by Customs in its operations but forms part of the general revenue of Jamaica, that is, it is placed into the Consolidated Fund.’
Mr. Sterling alleged also that concerns were raised with the Minister of Finance regarding the levying of the CUF on private marketing entities but no response or explanation was received. No correspondence was exhibited in support of this assertion.
Chevron, says Mr. Sterling has had to adjust the prices of product sold on the Jamaican market to cover the cost of CUF. Its product is therefore less competitive on the market. The affidavit details the payments of CUF made and attaches a spreadsheet in support.
Acknowledgements of Service were filed on the 30 th April 2011 and 8 th September 2011. The first hearing date was the 13 th March 2012 and Case Management Orders were made. Among them was that the Defendant file and serve Affidavits in response on or before the 30 th April 2012. The Claimant was at liberty to file an affidavit in response by the 15 th June 2012. There was an Order for Standard Disclosure and Inspection of Documents.
The Defendant's affidavit was sworn to by Courtney Williams Senior Director of the Fiscal Policy Management unit in the Economic Management Division of the Ministry of Finance. At paragraph 4 of his Affidavit he states,
‘4. The customs user Fee (CUF) is a fee for the use of a broad range of services of customs collected by the Customs Department (Department). In order to ensure that the CUF is applied equitably, it is calculated on the value of the goods imported. As a consequence, an importer of goods of a low monetary value is not required to pay the same fee as an importer of goods of a high monetary value.’
The affiant at paragraphs 5, 6 and 7 contends that although the CUF was deposited in the Consolidated Fund it was subsequently removed by Warrant to finance the Customs Department and that it was not true it was used for road rehabilitation. These assertions must now be read subject to the fact as stipulated and agreed by Counsel at commencement, that not all the CUF was used to finance the operations of the Customs Department.
At paragraph 9 Mr. Williams explains the exception given to those who import under Petro Caribe in that it ensures the government continues to get maximum benefit under the Petro Caribe agreement. Other exemptions encouraged manufacturing and was an incentive to manufacturers.
By affidavit dated 8 th May 2012 Paula Folkes the Deputy Financial Secretary in charge of the Taxation Policy Division of the Ministry of Finance, also supported the case for the Defendant. She asserts that by letter dated the 14 th May 2003 the Private Sector Organisation of Jamaica proposed that the Ministry of Finance impose a 2% customs processing fee on goods imported. It was intended to be an alternative to a 4% cess on imports which had been imposed in 2003. The imposition of the 2% Customs User Fee was a direct response to that proposal. She states also that on the 31 st December 2008 2 new classes were added to the list of entities exempt from paying the 2% Customs User Fee being manufacturers who import capital goods and raw materials and members of the agricultural sector which import capital equipment for use in agricultural activity. The Defendant denied that the Customs User Fee is unlawful or unconstitutional.
By Order dated 4 th December 2012 the time for discovery was extended to the 31 st December 2012. Specific Disclosure Orders were also made and the time to file further Affidavits extended.
In his Second Affidavit dated 31 st December 2012 David Sterling stated that Chevron had been placed at a significant competitive disadvantage. He asserted that the Customs User Fee bears no relation to the cost of services rendered by Jamaica Customs Department. He attaches extracts from the budget of Jamaica over several years in an attempt to support that assertion. At paragraph 7 he stated,
‘Chevron has been paying the Customs User fee because it...
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...where a party has slept upon his right and acquiesced for a great length of time …..”. In Chevron Caribbean v The Attorney General [2013] JMSC Civ. 93, at paragraphs 35 and 36, I said: “[35.]…..Equity has long recognized the effect of laches………..” “[36] Where a wronged party sits on his rig......