Collector of Customs (NSW) v Southern Shipping Co Ltd

107 CLR 279

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(Judgment by: OWEN J)

Between: COLLECTOR OF CUSTOMS (NSW)
And: SOUTHERN SHIPPING CO LTD

Court:

Judges: Dixon CJ
McTiernan J
Kitto 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

Hearing date: 27 March 1962; 28 March 1962; 4 May 1962
Judgment date: 4 May 1962

SYDNEY

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Judgment by:
OWEN J

The plaintiff, who is the Collector of Customs, brought an action to recover PD2,274 9s. 2d. from the defendant under s. 60 of the Excise Act. The matter came on for hearing before McTiernan J. when the parties agreed upon a statement of facts and his Honour thereupon stated a case for the consideration of the Full Court under s. 18 of the Judiciary Act. Before stating the facts, it is convenient to set out s. 60. By sub-s. (1) it provides that: "Where a person who has, or has been entrusted with, the possession, custody or control of excisable goods which are subject to the control of the Customs-(a) fails to keep those goods safely; or (b) when so requested by a Collector, does not account for those goods to the satisfaction of the Collector, that person shall, on demand in writing made by the Collector, pay to the Commonwealth an amount equal to the amount of the Excise duty which, in the opinion of the Collector, would have been payable on those goods if they had been entered for home consumption on the day on which the Collector made the demand". Sub-section (2) makes the amount payable under sub-s. (1) a debt due to the Commonwealth and enables it to be recovered by proceedings taken in the name of the Collector. Sub-section (3) makes a statement or averment in the claim or declaration of the Collector evidence of the matter so stated or averred, and sub-s. (4) provides that the section is not to affect the liability of a person arising under any other provision of the Act or under a security given under the Act.

The facts are that the British Australasian Tobacco Co Pty Ltd delivered 295 cartons of manufactured tobacco to the defendant at No. 4 wharf, Circular Quay to be carried by it in one of its ships to Hobart. No excise duty had been paid upon the goods but delivery of them to the defendant at the wharf and the proposed shipment therefrom to Hobart had been duly authorized by the Customs authorities in accordance with the Act and regulations. At all times the goods were excisable goods and subject to the control of the Customs within the meaning of s. 60. After delivery to the defendant they were placed by it in a shed on the wharf, colloquially known as the "dead house", with the knowledge and approval of the Customs authorities. The shed was used not only for the safekeeping of goods subject to the control of the Customs but also for the safekeeping of free goods which were particularly valuable or liable to pillage. It was, however, not a warehouse licensed pursuant to s. 78 of the Customs Act. The key to the store was handed (presumably by the Customs authorities) to the defendant on 17th April 1957 and during working hours it remained in its possession until 24th April 1957. The "usual practice" was for the key to be placed in the Customs office during non-working hours and pursuant to this practice it was placed by one of the defendant's employees in the Customs office at 11 p.m. on 18th April 1957 and remained there over the Easter holidays. Some time between midnight on Easter Saturday and 5 a.m. on Easter Sunday while the key was still in the Customs office, some unknown person forced the door of a switch-room adjoining the store and, having entered the switch-room and broken down a fibroplaster wall between the switch-room and the store, gained access to the store and stole 40 cartons of the tobacco. On 23rd April 1957 the defendant informed the plaintiff in writing of this fact and, on 28th May 1957, the plaintiff wrote the defendant a letter in which he requested it to account for the missing goods to his satisfaction. The letter set out the provisions of s. 60 and gave details of the goods. Further correspondence took place between the parties and, on 19th June 1957, the plaintiff wrote to the defendant stating that it had failed to account for the missing goods to his satisfaction and calling upon the defendant in terms of s. 60 to pay excise duty amounting to PD2,274 9s. 2d. The parties are in agreement that the goods were in fact stolen as stated by the defendant.

The first question for consideration is whether at the time when they were stolen the defendant was a person entrusted with their possession, custody or control, having regard to the fact that at the time of the theft the key of the store was deposited at the Customs office. In his statement of claim the plaintiff averred that the defendant was such a person and by s. 60 (3) this averment supplied prima facie evidence of the fact. It does not seem to me that the very meagre information contained in the agreed statement of facts enables a finding to be made to the contrary. The "usual practice" to leave the key at the Customs office during non-working hours may have been due to some requirement laid down by the Customs authorities or may equally have been adopted merely as a convenient safety measure taken by the defendant with the assent of those authorities. It is quite impossible to hold, in the absence of further evidence, that the handing over of the key operated as a constructive delivery to the Customs authorities of the possession, custody or control of the goods and this question must therefore be answered against the defendant.

It was next submitted that findings that the defendant had failed to keep the goods safely or had not accounted for them to the satisfaction of the Collector could not be made. The word "fails" in s. 60 (1) (a) connotes, so it was said, some degree of fault or neglect on the part of the custodian of the goods and none was shown. It was submitted further that, since the goods were in fact stolen and the defendant's explanation that theft accounted for their disappearance was believed by the Collector, the latter was bound to be satisfied that the defendant had accounted for the goods. These submissions necessarily involve determining the true meaning of the sub-section. Its purpose is to protect the revenue by ensuring that excisable goods do not go into consumption by devious means and without excise duty being paid on them. The failure to keep safely, to which s. 60 (1) (a) refers, is not designed to impose upon the custodian an obligation to preserve the goods against all perils. The happening against which they are required to be kept safe is that of going into consumption without payment of duty. In these circumstances I can see no good reason for reading the section as imposing upon the custodian something short of an absolute obligation to preserve the goods against that peril. In one context the word "fails" may import the notion of fault. In another it may mean no more than "omits" or "does not" (Ingram v Ingram; ^[F12] per Jordan C.J. ^[F13] ). In the context in which the word is found here, I think the latter meaning should be given to it. If so, there was a failure on the part of the defendant to keep the goods safely since they ceased to be in its custody in circumstances pointing to the probability that they would go into consumption.

The question then arises as to the meaning of the words "does not account for those goods to the satisfaction of the Collector" in par. (b) of the sub-section. The use of the word "or" in introducing the paragraph may at first sight appear to create some difficulty but if the purpose of the section is kept in mind I think that difficulty disappears. If the undoubted fact is that a custodian of goods has failed to keep them safe from the danger of going into consumption without payment of duty as, for example, where readily saleable goods have been stolen, par. (b) need not be called in aid by the Collector. But cases may easily be imagined in which the disappearance of the goods leaves it doubtful whether they may have gone into consumption or that it is likely that they will do so. If so, par. (b) may be invoked and the custodian may be required by the Collector to account for the absence of the goods in such manner as to satisfy him that the revenue has not suffered and, in the absence of an explanation which satisfies the Collector of that fact, the obligation to pay imposed by the latter part of the sub-section may be enforced. In the present case, the explanation given by the defendant for the disappearance of the goods was that they had been stolen and the probabilities were, in these circumstances, that they would go into consumption. The defendant failed to safeguard them against that danger and there was no need, in these circumstances, for the Collector to request the defendant to account for them. Nevertheless he did so and the account was not one upon which he was bound to satisfied that the revenue had not suffered or would not be likely to suffer.

The final questions for consideration relate to s. 55 of the Constitution, the effect of which, so the defendant contends, is to invalidate s. 60. The first limb of s. 55 requires that laws imposing taxation shall deal only with the imposition of taxation and any provision dealing with any other matter shall be of no effect. The second limb provides that: "Laws imposing taxation, except laws imposing duties of customs or of excise, shall deal with one subject of taxation only; but laws imposing duties of customs shall deal with duties of customs only, and laws imposing duties of excise shall deal with duties of excise only". Section 60 of the Excise Act is, so the defendant contends, a law imposing taxation. But the first part of s. 55 affords it no assistance. If s. 60 is a law imposing taxation and the Act in which it is found contains provisions dealing with matters other than the imposition of taxation, the validity of s. 60 would not be thereby affected. It would stand and the other provisions would fall. Accordingly it is upon the second part of s. 55 that the defendant must and does rely. The arguments put on its behalf run in this way. Section 60 imposes a tax. That tax is either a tax other than a customs or excise tax or else it is an excise tax. If it is the former, it infringes the second limb of s. 55 because it deals with more than one subject of taxation. If, on the other hand, it is an excise tax it equally infringes that limb of s. 55 because the statute of which it forms part not only imposes an excise duty but contains machinery provisions governing the assessment, collection and control of excise duties and provisions of this kind cannot be tacked on to an Act imposing an excise tax. In either event the result is invalidation because of non-compliance with the requirements of s. 55. And a law which infringes s. 55 is invalid (Per Dixon J. (as he then was) in Resch v Federal Commissioner of Taxation ^[F14] ).

The first question is whether s. 60 does impose a tax. The first view that I formed was that it does, but further consideration had led me to think that the obligation imposed by the section is to be regarded rather as an obligation to make good to the Commonwealth the loss of revenue which would have been received by it had the custodian of the goods kept them safely or accounted for them to the satisfaction of the Collector. What is declared to be payable is not the excise duty on the goods but an amount equivalent to that duty and there is, I think, a distinction between an obligation to pay a tax and an obligation to compensate the revenue for the loss of tax which would have been paid had the goods gone into consumption through lawful channels.

The questions asked should be answered: I (a) to I (d) Yes. II Yes. III No.