Collector of Customs (NSW) v Southern Shipping Co Ltd
107 CLR 279(Judgment by: McTIERNAN J)
Between: COLLECTOR OF CUSTOMS (NSW)
And: SOUTHERN SHIPPING CO LTD
Judges:
Dixon CJ
McTiernan JKitto J
Taylor J
Menzies J
Windeyer J
Owen J
Subject References:
Trade and commerce
Excise
Goods subject to control of Customs
Stolen from wharf
Claim by Collector for amount which would have been payable
Legislative References:
Excise Act 1901 (Cth) - s 60
Judgment date: 4 May 1962
SYDNEY
Judgment by:
McTIERNAN J
This case, which is stated under s. 18 of the Judiciary Act 1903-1959 (Cth), consists of facts found upon the trial of an action based upon s. 60 of the Excise Act 1902-1952. The action arose out of the theft from a store on a wharf at Sydney of a substantial part of a consignment of tobacco which had been delivered to the defendant for shipment to Hobart. The whole consignment consisted of excisable goods which had not been entered for home consumption. The goods were subject to the control of the Customs and were in transit in the course of "removal to an approved place" in accordance with s. 58 of the Excise Act. The occupier of the wharf and the store was the Maritime Services Board. The consignment was deposited with the approval of Customs in the store pending shipment. In accordance with Customs' procedure the key of the store was kept in the Department's office on the wharf but it was accessible to the defendant if there was any occasion to open the store. The store was broken into and part of the consignment stolen at night and the thieves have not been detected nor the goods traced. The Collector sued the defendant on the basis that it was liable under both pars. (a) and (b) of s. 60 (1) to indemnify the Collector in respect of the stolen goods. The defendant has contended by way of defence that because Customs had control of the key of the store, the Customs not the defendant was in possession of the consignment and the defendant was therefore not answerable for its loss. The defendant also sets up that it was a reasonable precaution to take for the safety of the goods pending shipment to put them in the store and it therefore did not fail to keep them safely within the meaning of par. (a): and that as regards par. (b) it gave an unimpeachable explanation of the reason of the disappearance of the goods by reporting their theft which the Collector ought in law to accept. Further the defendant says that s. 60 is not a good exercise of the legislative power of the Federal Parliament.
In the case of The King v Lyon [F3] O'Connor J. made some observations which are as applicable to excise as to customs: "The whole policy of the Customs Act, as indicated by a number of sections, is that, from the time of importation until the time of paying duty, the customs shall not lose control of the articles imported. That is indicated directly in s. 30, which provides that imported goods shall be subject to the control of the customs from the time of importation until delivery for home consumption or exportation. The object of that provision, if it were necessary to give any reasons for its enactment, is obvious; if once goods go into home consumption, that is, into circulation, it becomes almost impossible to trace them. The only security the customs authorities could have in such a case for the payment of duty would be in most cases the personal security of the importer. Therefore it is, if the Act is to be effective, that all through the dealings with the goods, from the time they are first imported until duty is paid, they must be kept under customs control". [F4] This statement is, mutatis mutandis, applicable to the Excise Act. The object of s. 60 is to effectuate the policy in relation to excise explained by O'Connor J.
It is first necessary to consider the defendant's point that because the key of the store was kept in the Customs office, they, not the defendant, had possession of the goods when the thieves broke in and stole them. This point is not supportable in law. It is stated in Williams on Personal Property 16th ed. (1906) p. 68 "Unless the intention were that, from the moment of handing over the key, the goods should remain under the exclusive control of the person receiving the key, possession of the goods would not appear to be effectively delivered". See also Wrightson v McArthur; [F5] Goodeve on Personal Property 9th ed. (1949) p. 42. It is not possible to infer that there was any transfer of the goods from the defendant to Customs. The control of the key which Customs assumed was merely an incident of Customs control existing in the case of excisable goods not entered for home consumption.
It follows that the defendant was not divested of responsibility imposed by par. (a) or (b) of s. 60. The issues which therefore arise are whether the care which the defendant exercised by putting the goods in the store and locking it was sufficient to discharge its responsibility under par. (a) and whether its report-the reliability of which is not doubted-about the theft of the goods was sufficient under par. (b). The task of keeping goods safely cannot be said to have been fulfilled if the goods are stolen even though reasonable precautions were taken. Under par. (a) the person concerned is not liable unless he "fails". The plaintiff contends that that word means "does not" and imposes absolute liability. "Fails" is a word with various meanings. I think that in s. 60 its appropriate meaning is that the person concerned is to be liable if he comes short of keeping the goods safely, that is preserving them from loss or damage. The word "fails" in my opinion is not strong enough to impose upon the person concerned so onerous a duty as that of avoiding the unavoidable. The plaintiff's contention would mean that it does. Lex non cogit ad impossibilia. Paragraph (a) should be read subject only to that presumption. The facts here do not show that the goods were lost because of any event which in my view of the construction of par. (a) takes the defendant outside the operation of the words. Paragraph (b) is expressed to be alternate to par. (a). It is sufficient for the plaintiff's purposes here if his case under par. (a) is made out. I think it is.
Paragraph (b) is in my view a drag-net provision. It exposes every person who has or has been entrusted with the possession, custody or control of excisable goods which are subject to Customs' control to the liability of being requested by the Collector to account for them to his satisfaction. The accounting may be done by producing the goods or, if they are missing, by giving an explanation which is satisfactory to the Collector. He has a discretion, which he is bound to exercise reasonably, to reject what is done or stated by way of accounting for the goods. In my opinion it was reasonable for the Collector to reject the defendant's account of what happened to the goods because the reason for their disappearance from Customs' control, namely breaking entering and stealing, justified the Collector in considering that the defendant failed to keep the goods safely. The defendant was in default under par. (a) and that was sufficient to make it liable. Paragraph (b) was not, I think, intended to provide a person who contravenes par. (a) with the opportunity of explaining away his default thereunder.
As regards the question whether s. 60 is constitutional; in my opinion the nature of this section is that it imposes duties on custodians of excisable goods, subject to Customs' control, which are ancillary to and by way of security for the due payment of excise. The provision is machinery for the collection of tax imposed by the Excise Tariff, in this case, the Act of 1921-1956. In this view the section is within the legislative power to make laws with respect to "Taxation" (sub-ss. (ii.) and (xxxix.) of s. 51 and s. 90 of the Constitution) and it is not struck by s. 55.
For these reasons I would answer the questions as follows: I (a), (b) and (c), Yes; I (d) Yes, in this case, having regard to the defendant's breach of par. (a) of s. 60; II. Yes; and III. No. I would determine the action by ordering that judgment be entered for the plaintiff for the amount claimed, namely PD2,274 9s. 2d. with costs, including the costs of this case stated.