Adelaide Brighton Cement v State of SA & Anor No. Scgrg-98-211 Judgment No. S123

[1999] SASC 123

ADELAIDE BRIGHTON CEMENT LTD v THE STATE OF SOUTH AUSTRALIA AND SOUTH AUSTRALIAN PORTS CORPORATION
[1999] SASC  S123

Civil
Duggan J

1. This is an application made by the defendants to strike out certain paragraphs in the plaintiff’s amended statement of claim.   The second defendant is a statutory authority set up by the first defendant to control the foreshore and various jetties, wharves, piers and harbors in South Australia.  The plaintiff carries on business in South Australia as a manufacturer and distributor of cement and related products.

2. According to the statement of claim, the second defendant owns a jetty at Klein Point and a wharf at Birkenhead, both of which are used exclusively by the plaintiff for the transport of limestone.  Prior to 28th April 1965, the second defendant levied charges on the plaintiff and others for the use of its shipping facilities.  The components of the charges are described in the amended statement of claim as:

   “ ‘Wharfage’: an amount calculated  on the basis of the amount of goods,  including limestone, passing over a jetty or wharf.  The rate of Wharfage was higher for some goods than for others.

   ‘Tonnage’: an amount calculated on the basis of the weight of a vessel and the amount of time it spent in dock at a jetty or wharf.”

3. On 28th April, 1965 the plaintiff and the second defendant entered into an agreement under which the plaintiff was to have continued use of the jetty and wharf.The use was to be uninterrupted and the recital to the agreement acknowledged that the plaintiff had requested the second defendant to provide improved and additional facilities at Klein Point and Birkenhead.  On 29th July 1985 the agreement was extended for 21 years commencing on 1st January 1986.  For the sake of simplicity I have said that the second defendant was a party to the contract.  In fact the South Australian Harbors Board, the predecessor of the second defendant, was the relevant party.  The two entities can be treated as the one body for the purposes of these reasons.

4. Included in the amounts to be paid by the plaintiff to the second defendant under the agreement were the following:

“WHARFAGE ON LIMESTONE	(xi)	on limestone shipped in any one calendar month from Klein Point to Port Adelaide the Company shall pay therefor to the Board ... wharfage calculated on the basis of one-half of the aggregate of the scheduled wharfage rates fixed from time to time for limestone shipped outwards from Outports generally and inwards at Port Adelaide by the Board or any other Authority empowered by law to fix wharfage rates.
WHARFAGE ON OTHER GOODS	(xii)	on all other materials and goods passing over the said jetty or wharf in any one calendar month the Company shall pay therefor to the Board ... wharfage at the full scheduled rates for materials and goods of a like nature for the time being fixed by the Board or any other Authority empowered by law to fix wharfage rates.”

1. Clause (xiii) provides that if the payments due from the plaintiff to the second defendant in any one year are less than a specified percentage of the actual cost to the second defendant of providing the improved and additional facilities referred to above at Klein Point and Birkenhead, the plaintiff shall pay to the second defendant a sum sufficient to make good the deficit.

2. The agreement then provided for certain payments to be placed in a fund. 

“ACCUMULATION OF              EXCESS PAYMENT	(xiv)	........ if any one calendar year as aforesaid the said payments so made to the Board shall exceed the said percentage of the actual cost the amount by which the payments so exceed shall be allowed to accumulate from year to year as a fund to be applied as hereinafter provided.
........ ........ DISPOSITION          OF ACCUMULATED FUNDS	(xv)	........ if any one calendar year as aforesaid the said payments are less than the said percentage of the actual cost then the Board before making any demand on the Company to pay to it the difference between the said payments and the said percentage of the actual cost shall apply towards the payment of such difference any amount which may then be available in the said fund PROVIDED that in the event of the Company having paid any such difference and in any subsequent year or years the total of the payments for wharfage and tonnage rates exceed the percentage of the actual costs hereinbefore referred to the amount of such excess shall be allowed to the Company as a rebate against future payments for wharfage and tonnage rates only to the extent of any previous payment made by the Company in satisfaction of such difference.”

1. Tonnage and wharfage rates are prescribed by regulations made pursuant to the Harbors and Navigation Act, 1993 (previously the Harbors Act, 1936).  An amendment promulgated on 15 October 1992 altered the terms to “cargo services charge” and “harbour services charge” respectively.    In these reasons I will continue to use the terms “wharfage” and “tonnage”.  The charges are applicable generally to the users of facilities under the control of the second defendant.

2. It is alleged in the amended statement of claim that the wharfage and tonnage charges prescribed by regulation burden a step in the movement of goods within South Australia; that they bear no relationship to any service provided by the first defendant to the plaintiff; that they are a compulsory exaction; and that they are, therefore, a duty of excise within the meaning of s90 of the Constitution (Cwth).   The plaintiff seeks a declaration that, for these reasons, the charges are invalid.  

3. The short answer of the defendants to these claims is that the charges for which the plaintiff is liable arise from the plaintiff’s contractual obligations under the agreement, not by reason of any statutory impost.  The defendants contend that, although charges fixed by regulation are to be used in the computation of the plaintiff’s liability, this is as a matter of convenience.

4. In the present application, the defendants have applied for the striking out of those paragraphs of the amended statement of claim which assert that the charges to which I have referred are invalid and the further paragraphs which seek declarations to that effect.  The principal argument advanced by the defendants on the application was that the plaintiff’s pleading suffers from an internal contradiction and is bad.  Mr Whitington QC, for the defendants, argued that the plaintiff could not rely on the contract in some respects and disavow it in others.  He made the point that the plaintiff pleaded the agreement and nowhere in the statement of claim is it suggested that the agreement was entered into under any form of compulsion.  He said that the agreement consists of “a matrix of mutual interlocking obligations” and that it was inconsistent for the plaintiff to deny the obligation to pay the relevant charges and, at the same time, acknowledge that the agreement had force in other respects.

5. Mr Robertson SC, for the plaintiff, argued that the assertion that the charges were a tax was not incompatible with the further claim that the agreement gave rise to other obligations.  He said the plaintiff challenged the charges on the basis that they were statutory charges and not payable by reason of a contractual obligation.  He pointed out that tonnage rates (as distinct from wharfage rates) were not referred to in the agreement so that the defendant’s argument in relation to them was misconceived.  He then drew attention to those paragraphs in the statement of claim which referred to the fund provided for in the agreement.  The statement of claim asserts that substantial amounts of money have been paid into the fund pursuant to the agreement; that the second defendant owes a duty as a trustee or fiduciary to the plaintiff to maximise the fund moneys and manage them in a particular way; and that the second defendant has failed to comply with these obligations.  Various other claims are made in relation to the fund and in its prayer for relief the plaintiff seeks orders for the repayment of the charges paid by the plaintiff to the second defendant.

6. In my view the plaintiff is entitled to argue that, despite the agreement to pay the relevant charges, those charges were in reality a tax, the imposition of which was beyond the power of the defendants.  (cf. Attorney-General v Wilts United Dairies Ltd (1922) 38 TLR 781; The Commonwealth and the Central Wool Committee v The Colonial Combing, Spinning and Weaving Company Ltd (1922) 31 CLR 421 at 443-445, 458-460.)

7. In the present case, the plaintiff claims that there was a practical compulsion to pay the amount by reason of the defendants’ statutory monopoly over the facilities and the coercive powers to enforce the charges.  The plaintiff further asserts that the charges are not fees for services.  There is an alternative argument that the agreement does no more than refer to the statutory obligation to pay the charges.

8. I cannot say that the plaintiff’s case on this core issue is so obviously untenable that it cannot possibly succeed.  (Egan v The Commonwealth Minister for Transport (1976) 14 SASR 445 at 448.) Nor am I able to say that the plaintiff’s purported reliance on other aspects of the agreement necessarily gives rise to inconsistency of such a nature as to justify a striking out of the relevant pleadings pursuant to SCR 46.18. No doubt the effect on the remainder of the agreement of a finding that the charges are a tax is a matter which would arise for consideration at the trial, but this does not justify the conclusion that there is a fundamental inconsistency on the face of the pleadings. I am also satisfied that the pleadings effectively articulate the case which the plaintiff wishes to present at trial.

9. The application to strike out the pleadings will be dismissed.