Commonwealth v Sterling Nicholas Duty Free Pty Ltd

126 CLR 297

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(Judgment by: MENZIES J)

Between: COMMONWEALTH
And: STERLING NICHOLAS DUTY FREE PTY LTD

Court:

Judges: Barwick CJ
McTiernan J

Menzies JWindeyer 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:
MENZIES J

This is an appeal by special leave by the Commonwealth of Australia against the making of two declarations in proceedings instituted in the Supreme Court of New South Wales by Sterling Nicholas Duty Free Pty Ltd , which I shall call "the company".

The company's business is to sell to persons about to leave Australia for foreign parts, at duty free prices, goods imported into Australia, held in bond stores, and not subject to customs duty if exported from store. The goods having once been imported are subject to the control of customs as provided by the Customs Act 1901-1968 (Cth), s. 30 (a), until delivered for home consumption or until exported. Here we are not concerned with goods delivered for home consumption because the company's business is one that is dependent upon the exportation of its goods.

The course of business which the company would like to adopt, but which it has not been able to adopt, is to deliver the goods, after purchase and after entry for export, to the purchaser in what is called the farewell lounge at the overseas terminal at the Kingsford Smith Airport at Mascot. The reason why the company has chosen the farewell lounge as the place in which the goods should be delivered is simply that it has not access to another part of the airport, namely the holding room, to which intending passengers pass after leaving the farewell lounge. The farewell lounge is open to members of the public; the holding room is not and is supervised from time to time by customs officers. It seems that another seller of duty free goods, which holds a concession at the airport under the Airports (Business Concessions) Act 1959, does have access to the holding room and Customs does not object to that seller delivering its duty free goods to its embarking customers in that room. Goods to be so delivered are taken to the holding room from a bond store by a route which is subject to customs supervision.

The Commonwealth raised two objections to the company's proposal to deliver duty free goods to passengers in the farewell room. The first, that such delivery would be contrary to s. 7 of the Airports (Business Concessions) Act; the second, that Customs is not obliged to allow goods, subject to customs control and covered by an entry authorizing delivery to an overseas aircraft for export, to be delivered to an intended passenger on that aircraft while the passenger is in the farewell lounge.

His Honour the learned trial judge, who heard the matter in the Supreme Court, rejected both contentions of the Commonwealth and made declarations (1) that the company

"... is not prohibited by s. 7 of the Airports (Business Concessions) Act, 1959, from delivery at Sydney (Kingsford Smith) Airport to persons about to depart overseas by air, goods sold to those persons in its shop at Nos. 113-115 Oxford Street, Darlinghurst, the title to which goods has vested in these persons prior to their delivery at the said Airport", ^[F3]

and (2) that no delivery as aforesaid which conforms to elaborately stated conditions

"... shall be a movement alteration or interference with the goods so delivered otherwise than in pursuance of the said 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" ^[F4]

The Commonwealth has questioned the use which has been made of the power to make declaratory orders in relation to the legality of a course of conduct which a person wishes to follow, but I leave this point on one side to deal with the questions of law which have thus, hypothetically, emerged.

By s. 7 of the Airports (Business Concessions) Act certain acts are forbidden. The relevant prohibition here are against ^[F5] supplying goods within an airport, and ^[F6] carrying on any business within an airport. To understand these prohibitions it is, however, necessary to consider the whole of s. 7 (1) which is as follows:

"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."

It is to be observed that not all sales within an airport are prohibited. The prohibition is against sales of goods for delivery within the airport and such sales are prohibited without regard to actual delivery. It is the sale of this sort that is prohibited; delivery is not, as such, prohibited. The first question here is whether delivery pursuant to a contract of sale requiring delivery of the goods within the airport amounts to the supply of those goods within the airport. The word "supply" is a word of wide import. It could, perhaps, in some circumstances be applied to the giving of a book or a box of chocolates. As used here, however, the word cannot have such a wide connotation.

The prohibited supply does not cover anything which is not part of a business transaction. It is significant that what is prohibited by s. 7 may be authorized under s. 8 as a business concession. It is, however, obviously part of a business transaction to deliver goods that have been sold elsewhere for delivery at a particular place. I have come to the conclusion that such delivery amounts to supplying goods whether the delivery is regarded as pursuant to a contract or as made upon the authority of the purchaser. It is an essential element of the company's business that, unless delivery is made to an aircraft, it should occur at the point of the departure of the passengers to board outgoing aircraft. It must be within the airport. Such delivery is, in my judgment, the supply of goods within the airport. It was argued for the company that it could not "supply" goods at the airport because the property in the goods had passed, at the latest, upon entry for export. To accept this, however, would be to accept an altogether too narrow meaning of the word "supply". The supply of goods does not necessitate a change in ownership of the goods supplied. In many cases the word "supply" is equivalent to the word "provide" and it often happens that a person is provided by others with what belongs to him. Thus a shop, which has a home delivery service, supplies goods upon delivery notwithstanding that they may have been bought in the shop, or by telephone, or by mail order. A supplier is not merely one who sells. He may be one who delivers. It would, I think, be wrong to call the company the supplier of goods at the point when an entry for export has been passed. To become a supplier something more would still be necessary, namely the delivery of goods to the purchaser. Looking at the transaction from the point of view of the customer, it is, I think, obvious that it is not until delivery that the purchaser is supplied with the goods which he has bought.

My conclusion, that, if it were to follow the course of business proposed, the company would supply goods within the airport, makes it unnecessary to consider whether, in carrying out that course of business, the company would also carry on business within the airport and I leave that problem for another day. In my judgment the first declaration ought not to have been made.

The second declaration raises what I regard as a more complicated question. In essence it is that, to carry on business as set out in the declaration, would not be a breach of s. 33 of the Customs Act which provides that "No goods subject to the control of the Customs shall be moved altered or interfered with except as authorized by this Act".

The declaration is directed to entitle the company to deliver the goods in the farewell area once the customer has passed the airline checkpoint for departing passengers in that area. The basis of this declaration seems to have been that, because Customs has, in the case of goods being delivered by the holder of the business concession at the airport, made provision for delivery of goods to passengers about to embark who are in the holding room, the company, which has no access to the holding room, may lawfully deliver goods to passengers who are its customers in the farewell lounge, provided that this takes place after a particular point has been reached by the passenger.

This basis is not, I think, a sound basis for a declaration of right. What must be looked at are the provisions of the Customs Act, not the procedure which Customs has adopted to meet the business convenience of the holder of a business concession at the airport. It is these provisions that I now consider.

The goods to be exported in the course of the company's business are subject to the control of Customs until exportation: s. 30 (a). Such goods cannot be moved except as authorized by the Act: s. 33. Entries may be made and passed for all goods subject to the control of customs: s. 36. Warehouse goods may be entered for export to parts beyond the seas: s. 104. Entries are passed in accordance with s. 39 by the Collector placing on the entry the word "Passed" and adding his signature thereto, no less and no more. In particular the Act does not authorize any special notation upon an entry relating to delivery to a person as conferring authority under the Act with regard to the goods. All goods in respect of which an entry has been made and passed shall forthwith be dealt with in accordance with the entry: s. 40. To pass an entry for export to parts beyond the seas is to authorize export of the goods by a ship or aircraft as specified: s. 116. This authority no doubt extends to the movement of the goods requisite for such export, i.e. movement of the goods from the warehouse to the ship or aircraft in which they are to be exported: s. 114. The passing of such an entry does not authorize the handing over of goods to a purchaser who intends to take them to parts beyond the seas. If it did it would authorize the handing over of the goods in the company's shop in Oxford Street or at any other point. Such delivery is not exportation and would be, in effect, delivery for home consumption without any entry. The company, having been entrusted with the possession of dutiable goods, would, by handing them over to a purchaser in Australia, upon a promise to take them out of Australia, have failed to keep such goods safely.

This examination of the Act reveals no sound basis for a declaration to the effect that the company is entitled by law to deliver goods to its customers in the farewell lounge, even under the most elaborate conditions devised by the court to prevent the goods getting into home consumption by virtue of such delivery. The company's right under an entry is no more than to move the goods from its warehouse for export by a particular aircraft by which export is to take place. Nothing further is a matter of legal right. Accordingly, I consider that the second declaration should not have been made.

Having come to the conclusion that the declaration should not have been made, I do not find it necessary to consider whether this was a proper case for the making of declaratory orders. I would observe, however, that the observations of Lord Robertson in Rossi v Edinburgh Corporation, ^[F7] tend to support the conclusion that the declaration of the kind sought could, in a proper case, have been made. The court has, I think, a wide discretion in determining whether or not to make declarations and would, of course, take into account, in an appropriate case, the principle that, in general, matters of criminal law should be dealt with at trials for alleged offences.

For the foregoing reasons I would allow the appeal and set aside both declarations.