Commonwealth v Sterling Nicholas Duty Free Pty Ltd

126 CLR 297

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(Judgment by: BARWICK CJ)

Between: COMMONWEALTH
And: STERLING NICHOLAS DUTY FREE PTY LTD

Court:

Judges:
Barwick CJMcTiernan 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:
BARWICK CJ

The respondent Sterling Nicholas Duty Free Pty Ltd carries on the business in Sydney of a duty free shop with the concurrence of the Department of Customs and Excise. Goods may there be purchased for delivery on board ship or aircraft, an entry of the goods for export being made by the respondent on behalf of the purchaser. The respondent's authority from the Customs extends to such delivery. The property in the goods, at least in instances of the kind with which this case is concerned, may have passed to the purchaser before any such delivery of the goods. No difficulty appears to have been experienced in the course followed by the respondent in connection with goods delivered to ships or with respect to goods delivered to aircraft for placement in the hold of the craft. However, difficulties have arisen in cases where purchasers have desired to have the purchased goods with them in the cabin of a departing aircraft. The problem in this connection is how to effect the export of the goods following upon their entry for export. In the case of a purchaser who desires to have the goods with him or her in the cabin of the aircraft the respondent may lawfully remove the goods purchased by such a purchaser from its store and, so far as the Customs Act 1901-1968 (Cth) and regulations are concerned, carry them to the airport and there effect their export. But, two legal obstacles have been said to stand in the way of the completion of such a delivery of goods to such a departing passenger purchaser in the airport. First, it is said that delivery of goods, whether or not the property of the passenger purchaser, to that person within the airport is a breach of s. 7 (1) of the Airports (Business Concessions) Act 1959 (Cth). Second, it is said that only a delivery of such goods to a passenger purchaser in a particular area, namely the holding room, can lawfully be made in conformity with the control of the Customs to which admittedly the duty free goods are subject up to the time of their export from Australia.

The respondent, carrying on the business I have briefly described, had been informed by responsible officers of Customs that it could not effect such delivery at any place but the said holding room (to which it was denied entry for that purpose), and by the Department of Civil Aviation that it could not make such a delivery within the airport at all to a departing passenger purchaser. It, thereupon, brought a suit in the Supreme Court of New South Wales in Equity for declarations that its delivery of such goods within the airport to passenger purchasers was not a contravention of the said section of the Airports (Business Concessions) Act and that a described procedure, to which I shall later refer, did not involve a contravention of the Customs Act or the regulations made thereunder. The Commonwealth was the defendant to the suit, its interest in the matter embracing both the administration of the Airports (Business Concessions) Act and that of the Customs Act. The Supreme Court, Hope J., in full and careful reasons for judgment, ^[F1] decided that such deliveries as I have described were not in breach of the Airports (Business Concessions) Act and that a procedure carefully and precisely laid out by him would not contravene the Customs Act and regulations.

The Commonwealth of Australia has appealed to this Court from those declarations submitting that the Supreme Court was in error in both respects. Section 7 (1) of the Airports (Business Concessions) Act 1959 (Cth) says:

"7.(1)

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."

The respondent did not have an authority under s. 8 (1). But another person had such an authority to conduct within the airport the business of selling duty free goods for delivery within the airport. Section 8 (1) provides that:

"8.(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."

That other person was permitted by the Civil Aviation officials and the Customs officers to enter the appropriate holding room at the airport and there to deliver to departing passenger purchasers goods which they had bought in the shop in the airport and which they wished to have with them in the cabin of the departing aircraft. The respondent not being permitted to do so in the holding room proposed to hand over the goods which it had sold at a point where the departing passenger purchaser had cleared his or her ticket with the airline concerned and had received a boarding pass and was entering the staircase leading downstairs to the holding room. But it was claimed by the Commonwealth that such a course would be a breach of the Customs Act.

The Commonwealth submits that the delivery within the airport of goods is relevantly a "supply" of goods within the meaning of s. 7 (1). But, in my opinion, the proper construction of s. 7 (1) is that unless in accordance with an authority granted under s. 8, a person shall not sell within the airport goods for delivery within the airport or supply services within the airport. In my opinion the section properly read does not provide that a person shall not supply goods within the airport, whatever significance is given to the word "supply". It is quite obvious that the sub-section does not provide that a person shall not supply services for delivery within the airport. The word "sell" is not unqualified but qualified by the expression "for delivery within the airport". Consequently if it be applied to "services", it must be with this qualification. Such a reading is in my opinion nonsensical. It is thus clear to my mind that the verb "sell" is confined to the subject "goods". This leads me to conclude that the subject of the verb "supply" is the word "services" and not the words "goods and services".

This construction, in my opinion, accords with what I apprehend to be the policy of the provision as disclosed by the Act as a whole. The Act is obviously an Act to enable the Commonwealth to grant business concessions on airports constructed on land acquired by the Commonwealth for the purpose of civil aviation. Sections 6 and 8 of the Act provide the means of creating such concessions. The concessionaires will be conducting the business of selling goods or of providing services. On any construction of the word "supply" they are quite unlikely to be conducting in the airport a business of supplying goods, i.e. not selling, but merely "supplying". Section 7 (1) is evidently enacted to protect the concessionaires against competition within the airport in the same areas of business as those in respect of which the concessions are granted. The limitation on the prohibition on sale, namely the sale for delivery within the airport, emphasizes this relationship of s. 7 (1) to the business of the concessionaire who, if authorized to sell, will only be authorized to sell for delivery within the airport. The terms of s. 8 (1) are tied to those of s. 7 (1). There are in this connection none of those considerations which have led to the use of the word "supply" as a means of preventing their distribution in statutes dealing with the sale and distribution of alcoholic liquors. Further if the mere delivery of goods within the airport was intended to be forbidden, it is somewhat strange that it was thought necessary or appropriate expressly to forbid sale for delivery within the airport. It must have been contemplated that goods sold for delivery within the airport would accordingly be delivered within the airport, though it must be conceded that theoretically a sale of goods for delivery within the airport might not be completed by such delivery. But such a result could have little relevance to the concessionaire who was entitled to make, but confined to, sales of good for delivery within the airport. I cannot think that the form of the sub-section was specifically designed to deal with uncompleted sales of goods for delivery within the airport and that the word "supply" was used to embrace deliveries within the airport of sales made elsewhere.

If the prohibition on sale of goods for delivery within the airport contemplates the completion of such sales by delivery and if the practical operation of the sub-section in that respect is to allow such deliveries, it seems to me highly unlikely that it was intended that the word "supply" should apply to goods. The provision as to sale would, alone, fully cover the field in which the concessionaire may be authorized to operate. There would be no need to protect the concessionaire against the deliveries in the airport of goods sold outside the airport, and in any case if it had been thought that there was any such need an express prohibition on such delivery would surely have been included. Consequently, I would reject the submission that delivery by the respondent to the passenger purchasers within the airport of the goods not purchased within the airport was a supply of goods within the meaning of the sub-section.

Therefore, in my opinion, the delivery by the respondent within the airport of goods to the passenger purchasers would not be in breach of s. 7 (1) because such a delivery is neither a sale of goods for delivery within the airport nor a supply of services.

However, if contrary to my own opinion, it should be thought that the sub-section does forbid the supply of goods within the airport, I should express my opinion on the submission that the delivery within the airport of the goods it had sold whether by the respondent or by a carrier or agent employed by it to carry and deliver the goods was the supply of these goods within the meaning of the sub-section.

In my opinion, the delivery of goods to a purchaser is not relevantly the supply of goods. It must be the case that large quantities of goods are delivered within an airport by carrier. Generally speaking the goods will be either the property of a seller or of a purchaser. The carrier will have no other connection with the goods than an obligation to carry and deliver them, either to a place or a person within the airport. It cannot be said, in my opinion, in any proper use of language that the carrier "supplies" the goods he carries. Nor, in my opinion, can it properly be said that the seller, by the act of delivery alone, "supplies" the goods he has sold. Nor can I think that s. 8 (1) contemplates the grant of an authority to a carrier to carry on his business of a carrier within the airport. For, if the carrier relevantly supplies within s. 7 (1) he could have an authority under s. 8 (1) to carry on as a business the activity forbidden by s. 7 (1). But does the seller, who delivers in accordance with the terms of sale, "supply" the goods? In my opinion he does not. I agree with what Sugerman J. said in Andaloro v Wyong Co-operative Dairy Society Ltd. ^[F2] In this connection I have had the advantage of reading the reasons for judgment prepared by my brother Windeyer. I agree with what he has to say on the meaning of the word "supply" in relation to goods which have been sold.

Therefore, even if the word "supply" in the sub-section is not confined in its application to services, the delivery by the respondent within the airport to departing passenger purchasers of the goods it had sold, would not, in my opinion, be a supply of those goods.

I turn now to the other principal submission of the Commonwealth which challenges the propriety of the declaration made by the Supreme Court as to a procedure which the respondent might adopt without infringing the Customs Act. I have already briefly indicated what that declaration provides. I have no need to repeat its precise terms or to describe the layout of the relevant parts of the airport; they are well set out in the reasons for judgment of the Supreme Court.

The jurisdiction to make a declaratory order without consequential relief is a large and most useful jurisdiction. In my opinion, the present was an apt case for its exercise. The respondent undoubtedly desired and intended to do as he asked the Court to declare he lawfully could do. The matter, in my opinion, was in no sense hypothetical, but in any case not hypothetical in a sense relevant to the exercise of this jurisdiction. Of its nature, the jurisdiction includes the power to declare that conduct which has not yet taken place will not be in breach of a contract or a law. Indeed, it is that capacity which contributes enormously to the utility of the jurisdiction.

Here the respondent was in business carrying out in relation both to ships and airports activities of the general kind proposed in this case. No doubt, duty free goods not desired to be personally carried by a departing passenger purchaser, or too large to be admitted to the cabin of an aircraft were being delivered by the respondent to the airport prior to and at the date of the commencement of this suit. Further, there had been actual opposition by the Customs Department to the course which the respondent desired and intended to take. In my opinion the Supreme Court was right to entertain the respondent's suit in relation to both the declarations sought. Further, assuming that conduct in accordance with the second declaration of the Supreme Court would not be in breach of the Customs Act and regulations, I find no reason to criticize the form of the declaration made. Indeed I would endorse it as a most careful and precise exercise of the jurisdiction to make a declaratory order.

I turn then to the question whether that declaration was rightly made. Whilst, as I have said, the duty free goods sold by it could lawfully be moved by the respondent to the airport for "shipment" on a departing aircraft, they remained until actually exported under the control of the Customs. Theoretically the goods ought to have been placed by the respondent on the departing aircraft. But the practical exigencies of an airport and aircraft operation make it necessary for the airlines and the Customs to accept a situation in which the goods to be exported are delivered at some place or to some person at the airport from which or by whom they are in a practical sense certain to be in fact exported. The holding room is quite clearly such a place, though without the presence of an officer of Customs, the diversion of such goods must remain a substantial possibility.

It must be remembered that the goods with which the respondent is concerned are not unlawful or prohibited imports. They are goods on which the appropriate duty has not been paid but which must be paid if they pass into domestic consumption. Whilst I would not minimize the matter, it must therefore be borne in mind that the consequence of such goods being passed back by the departing passenger purchaser to a person who places them in domestic consumption is that the respondent becomes liable to pay the appropriate duty thereon, as well as any other penalty or disadvantage for breach of the conditions on which it is allowed to sell duty free goods. The Customs' interest in the procedure of delivery adopted no doubt springs from difficulties of detection of any diversion of the goods which might take place. The practical exigencies to which I have referred have resulted in a manner of carrying out the Customs' control of goods on their path to export.

The place of delivery to the departing passenger purchaser which is laid out in the declaration of the Supreme Court is, in my opinion, substantially within the convention which the Customs Department has itself made and accepted for the delivery of duty free goods purchased for delivery personally to a departing passenger or departing passenger purchaser. Clearly, if such a passenger in fact carries the goods down the staircase to the holding room, his possession of the goods is treated by the Customs as a lawful possession of the goods, though of course, they remain under the control of the Customs. That possession is not regarded as or treated either by the Customs Act or regulations as in breach of or inconsistent with that control. It would be strange indeed, if, in the administration of this practical expedient in the export of the goods, the respondent should be regarded as in breach of the Act or regulations, or that control by handing the goods to that passenger. This is not a case of the court prescribing a course of conduct for the Customs in an area in which it is lawfully operating. The Customs has itself established a course of conduct, no doubt eminently suited to its own convenience, which, for reasons best known to itself, it was decided to apply in a discriminatory fashion. The question is not whether the Customs ought to insist on nothing short of delivery inside the departing aircraft. No doubt it could. But it does not. It is within the authority of the court, in my opinion, to decide that a particular course of conduct is within the convention prescribed by the Customs itself.

In my opinion both declarations made by the Supreme Court were rightly made. I would dismiss the appeal.