Commonwealth v Sterling Nicholas Duty Free Pty Ltd

126 CLR 297

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(Judgment by: OWEN J)

Between: COMMONWEALTH
And: STERLING NICHOLAS DUTY FREE PTY LTD

Court:

Judges: Barwick CJ
McTiernan J
Menzies J
Windeyer J

Owen J

Subject References:
Trade and commerce
Customs
Prohibition of supply of goods within airport

Legislative References:
Airports (Business Concessions) Act 1959 (Cth) - s 7

Hearing date: SYDNEY 1 December 1971; 2 December 1971
Judgment date: 29 February 1972

MELBOURNE

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Judgment by:
OWEN J

This is an appeal by special leave against two declaratory orders made in favour of the respondent company in proceedings taken by it in the equity jurisdiction of the Supreme Court of New South Wales. ^[F10]

The company carries on the business of selling imported goods free of duty to persons who intend to travel abroad by sea or by air. It occupies premises in Darlinghurst consisting of a showroom and a store and these are licensed as a private warehouse under the Customs Act. The customer goes to the showroom in which samples of the company's goods are displayed and there selects the article which he wishes to buy. If he does not wish to have the article in his personal possession on the ship or aircraft, it is delivered by the company, after an entry for export is passed by the Customs authorities, to the appropriate place on the ship or wharf chosen by the Customs authorities or, in the case of passage by air, to the place at the airport where freight is received for carriage by aircraft. The company's goods are at all times between their importation and their exportation subject to the control of Customs under s. 30 of the Customs Act.

In some cases the purchaser of the article at the company's shop wishes to have it in his personal possession on the aircraft in which he is to travel and it is these cases with which the present litigation is concerned. At the international terminal at the airport there is a room called the "farewell area". There the intending passengers and those who come to see them off foregather and to that area the general public has access. Underneath it and connected to it by a staircase is what is called the "holding area". Before the aircraft is due to leave, passengers pass through a door at the top of the stairs and go down to the "holding area" where they remain until they board the aircraft. Their friends and other members of the general public are not allowed into the "holding area". Customs officers are on duty in that area but not in the "farewell area". The company wishes to be able to deliver to its purchasers, either in the "holding area" or at the point where the passengers pass through the door in the "farewell area" leading to the "holding area", the articles bought by them which they wish to carry with them overseas. Two objections have been made to the adoption of this proposal, one by the Department of Civil Aviation which controls the airport and the international terminal, the other by the Customs authorities. Subject to the requirements of the Department of Civil Aviation, the Customs authorities are prepared to allow delivery to be made in the "holding area" to which, as I have said, members of the public who are not travelling are not allowed access but not at the doorway at the top of the stairs, while the Civil Aviation authorities refuse to allow the company to make deliveries to its customers either in the "holding area" or in the "farewell area".

The objection taken by the Civil Aviation authorities is based on the provisions of the Airports (Business Concessions) Act.

Section 7 (1) of that Act provides that:

"Except in accordance with an authority granted under the next succeeding section and the terms and conditions of that authority, a person shall not, within an airport, either personally or by his servant or agent, or as the servant or agent of another person-

(a)

sell for delivery within the airport, or supply, any goods or services;

(b)

carry on, or solicit for, any business; or

(c)

erect, display or distribute, or communicate by sound, any advertisement or public notice."

Sub-section (2) makes a contravention of sub-s. (1) an offence punishable by fine, and sub-s. (3) creates certain exceptions to sub-s. (1) which are not material here.

By s. 8 it is provided that:

"(1)

The Minister may, on behalf of the Commonwealth, by writing under his hand, grant to a person an authority to do, either personally, or by his servants or agents, or both, any act or thing referred to in sub-section (1) of the last preceding section.

(2)

An authority under this section-

(a)

may be included in, or granted in relation to, a lease or licence in respect of particular land within an airport; and

(b)

shall, subject to the next succeeding section, be granted for such period, on such terms and conditions and for such consideration as the Minister thinks fit."

Under the provisions of that Act the Minister has granted to a competitor of the company a lease of an area in the terminal for a "duty free" shop and store and has granted it also an authority pursuant to s. 8. That trader is permitted to deliver in the "holding area" articles sold by it to intending passengers in its airport "duty free" shop and to this procedure the Customs authorities have no objection. The Civil Aviation authorities have refused, however, to grant the company an authority under the Act authorizing it to make deliveries at the airport of goods sold by it to intending passengers, apparently on the ground that to grant such an authority would involve it in a breach of the contractual arrangements which it has made with the lessee of the airport "duty free" shop. They contend that for the company to make delivery to a customer within the airport without an appropriate authority would be a breach of s. 7 (1) of the Act. It was in these circumstances that the company sought and obtained from the equity court the two declaratory orders which are now in question. The first of them declared that the company "is not prohibited by s. 7 of the Airports (Business Concessions) Act 1959, from delivering at" the airport "to persons about to depart overseas by air goods sold to those persons at its shop ... the title to which goods has vested in these persons prior to their delivery at the said airport".

In arriving at this conclusion the learned judge before whom the proceedings were heard had of course to construe the provisions of s. 7 (1) of the Airports (Business Concessions) Act. He was of opinion that if the contractual arrangements made between the company and a purchaser from it were such that the property in the goods passed to the purchaser before the goods reached the airport, the delivery of them to that purchaser at the terminal would not be within the provisions of s. 7 (1). There would not, he considered, then be any sale by the company within the airport for delivery within the airport nor would the company be supplying any goods within the airport or carrying on any business within the airport. Accordingly he held that the company required no authority under the Act to carry out its proposal. With all respect to his Honour, I am unable to agree with this conclusion because I am of opinion that if the company's proposals were carried into effect it would be supplying goods within the airport within the meaning of s. 7 (1). The word "supply" is not, in my opinion, to be limited to cases in which the person to whom goods are delivered is not then the owner of them. If in a business transaction between shopkeeper and customer the property in goods sold passes to the customer at a stage before the goods are delivered, the shopkeeper, I think, is properly said to have supplied the goods to the customer when he delivers them notwithstanding the fact that the property in them may have earlier passed to the customer. Accordingly I am of opinion that the first declaratory order should not have been made. The result is that the company cannot follow the course of business which it wishes to adopt unless it obtains an authority from the Minister under the Airports (Business Concessions) Act, and this the Minister refuses to grant.

The second declaratory order is one in which his Honour laid down a number of elaborate requirements to be fulfilled by the company in delivering "duty free" goods to its customers at the Airport, one such provision being that delivery should be made at the "checkpoint" at the doorway at the top of the stairs giving access to the "holding area" The order went on to declare that if the company complied with the requirements laid down in the order, such a delivery would not be "a movement alteration or interference with the goods so delivered otherwise than in pursuance of the said Act"-this being a reference to s. 33 of the Customs Act-"by reason only of any direction or requirement heretofore made or purporting to be made in pursuance of the provisions of the said Act that no delivery of those goods may be made in that manner at that place or by that procedure". Objection was made that the case was not one in which it was proper to make a declaratory order of this kind and that the court had, in effect, usurped the functions of the Customs authorities upon whom the obligation is imposed by s. 30 of the Customs Act of exercising the control of goods from the time of their importation until exportation overseas.

I think there is substance in these submissions but, in my opinion, it is unnecessary to decide them.

An examination of the relevant provisions of the Customs Act seems to me to show that for the Customs authorities to allow a seller of "duty free" goods to deliver them to a purchaser in the "holding area" and not on board the aircraft is in the nature of a concession made by those authorities. It is, I think, within their power to adopt such a course but the fact that that procedure has been adopted in the case of the airport "duty free" shop confers no legal right on the company to insist that it be allowed to adopt the same procedure even if it held an authority under the Airports (Business Concessions) Act enabling it to "supply" its customers with goods within the airport. For these reasons I am of opinion that the second declaratory order should not have been made.

I would allow the appeal.