FEDERAL COURT OF AUSTRALIA - GENERAL DIVISION

GOBEN PTY LTD v CHIEF EXECUTIVE OFFICER OF CUSTOMS and ANOTHER

Beaumont, Hill and Lehane JJ

12 February, 9 April 1997 - Sydney

Beaumont J By its application dated 27 October 1995 the appellant, Goben Pty Ltd, applied to this court under s 39B of the Judiciary Act 1903 (Cth) for:

(1) an order of mandamus compelling the first respondent, the Chief Executive Officer of Customs, to approve the appellant ' s request for permission to move certain tobacco under the first respondent ' s control;

(2) (alternatively) for an order restraining the first respondent from refusing the request; and

(3) (further or alternatively) for an order declaring that the appellant was the beneficial owner of the tobacco.

By its amended statement of claim dated 23 May 1996, the appellant alleged, inter alia, that:

• It carried on business as a tobacco wholesaler.

• On 11 October 1995, it agreed to buy 38 cartons of tobacco products from a New Zealand corporation.

• On 12 October 1995, the tobacco products were delivered by air and road transport to the premises of its bailee, JAS International (Aust) Pty Ltd (JAS) (the appellant ' s bond store), a warehouse to which a licence granted under Pt V of the Customs Act 1901 (Cth) (the Customs Act 1901 (Cth)) related.

• On 19 October 1995, the agent of the second respondent, the Chief Commissioner for Business Franchise Licences (Tobacco) New South Wales, attended at the appellant ' s bond store and informed JAS that the second respondent was taking the tobacco products into his custody under s 58 of the Business Franchise Licences (Tobacco) Act 1987 (NSW) (the Tobacco Act).

(By s 58(1) of the Tobacco Act, any tobacco in a quantity that exceeds the prescribed quantity, which the Chief Commissioner reasonably believes is evidence of an offence by any person, may be taken and kept in custody by the Chief Commissioner until proceedings for any such offence have been heard and dealt with.)

The tobacco products remained in the appellant ' s bond store.

In the premises, the tobacco products were not taken and kept in custody by the second respondent within the meaning of s 58 of the Tobacco Act.

Thereafter on 19 October 1995, the second respondent, by his agent, claiming to be the " owner " of the tobacco products, applied to the Australian Customs Service (hereafter customs) under s 71E of the Customs Act 1901 (Cth) for permission to move the tobacco products from the appellant ' s bond store to another licensed warehouse (the second respondent ' s bond store).

(By s 71E(1) and (2) of the Customs Act 1901 (Cth), it is relevantly provided that where, as here, goods are " subject to Customs control " (conferred by virtue of provisions of the Customs Act 1901 (Cth) to be mentioned later), an application may be made to customs by their " owner " for permission to move them. By s 71E(3) , an officer of customs must, by notice in writing, either give permission (absolutely or subject to conditions) or refuse the application.)

(By s 4(1) , it is provided that, except where otherwise clearly intended, " Owner " in respect of goods includes any person (other than an officer of customs) being or holding himself out to be the owner, importer, exporter, consignee, agent, or person possessed of, or beneficially interested in, or having any control of, or power of disposition over, the goods.)

In fact, the appellant, and not the second respondent, was the " owner " of the goods.

Thereafter on 19 October 1995, the first respondent granted the permission sought by the second respondent, knowing (i) that the tobacco products remained at the appellant ' s bond store under the control of the appellant ' s bailee; (ii) that the appellant was their owner; and (iii) that they " could not lawfully be sold in New South Wales prior to Customs duty being paid and the goods being entered for home consumption " .

(Although not then mentioned in the appellant ' s pleading, reference should be made here to the material provisions of s 30 of the Customs Act 1901 (Cth) as they applied to these goods. By s 30(1)(a)(i) and (ii) , it is provided that unshipped goods shall be " subject to the control " of customs from the time of their importation: …

(i) until there has been compliance with a Collector ' s permit for their unshipment; and

(ii) until they are delivered into home consumption in accordance with:
(a) an authority to deal under s 71B ; or

(b) with a permission under s 162A granted on the giving of security or an undertaking for the payment of duty.)

The first respondent ' s decision to grant the second respondent ' s application under s 71E (the first decision) was bad in law because

(a) the second respondent was not the " owner " ; and

(b) the first respondent exercised the power under s 71E(3) improperly and denied the appellant natural justice; and

(c) the first respondent " failed to apprehend that s 58 of the [Tobacco Act] is invalid as it is inconsistent with s 30 , 33 , 71E and 153 of the Customs Act 1901 (Cth) " . [Emphasis added - this constitutional issue of the inconsistency of Commonwealth and State legislation is the central question in the appeal.]

(By s 33(1) of the Customs Act 1901 (Cth), it is provided that, except as authorised by that Act, a person shall not move, alter or interfere with goods that are subject to the control of the customs. The penalty is $50,000.

By s 153 , all duties shall constitute Crown debts, charged upon the goods and payable by their owner.)

On or about 19 October 1995, pursuant to the first decision, the tobacco products were moved from the appellant ' s bond store to the second respondent ' s bond store.

On 25 October 1995, the agent of the appellant applied to customs under s 71E for permission to move the goods to a licensed warehouse in South Australia.

On 26 October 1995, the first respondent decided to refuse the appellant ' s application (the second decision) for the stated reason that the second respondent had, in effect, so directed.

The second decision was bad in law

(a) for the reasons that the first decision was bad; and

(b) because the first respondent exercised his power improperly, and in breach of the rules of natural justice.

The tobacco products have since been stolen from the second respondent ' s bond store.

The second respondent is liable to the appellant in damages for the torts of conversion, misfeasance in public office and negligence.

The first respondent is liable to the appellant in damages for the torts of misfeasance in public office and negligence.

In its amended statement of claim, the appellant claimed, inter alia , the following relief:

(1) mandamus compelling the first respondent to approve the appellant ' s application under s 71E for permission to move the goods;

(2) an order enjoining the first respondent from refusing to approve that application;

(3) orders quashing the first and second decisions; and

(4) damages.

On 29 July 1996, in a reserved judgment (see Goben Pty Ltd v Chief Executive Officer of Customs (1996) 33 ATR 317 ), Davies J dismissed the appellant ' s application, for reasons to be mentioned later. In his reasons for judgment, Davies J followed the conclusion of Beazley J in a judgment given on 24 April 1996 (now reported: see Goben Pty Ltd v Chief Executive Officer of Customs(1996) 65 FCR 180 ) answering negatively the separate constitutional question raised by the appellant. There are appeals from each of these judgments, Davies J having granted leave to appeal from the judgment of Beazley J.

The separate constitutional question

As has been noted, the appellant claimed that s 58 of the Tobacco Act was unconstitutional. Accordingly, Beazley J ordered that the following question should be determined separately:

Is [s] 58 of the Business Franchise Licences (Tobacco) Act 1987 (NSW) invalid by virtue of the [C]onstitution in its application to goods which [ss] 30 , 33 and/or 153 of the Customs Act 1901 (Cth) apply by reason of the inconsistency of those provisions?

The scheme of the Tobacco Act

In order to place s 58 in its context, reference should be made to the material provisions of the legislative scheme of which s 58 forms part.

Part 1 (s 1 - 6 ) of the Tobacco Act deals with " Preliminary " matters, including the territorial scope of the Act and the extent to which the Act binds the Crown.

By s 3(3) it is provided that a reference in the Act to the sale of tobacco is reference to a sale in New South Wales.

By s 5 it is stated that:

This Act binds the Crown in right of New South Wales and, in so far as the legislative power of Parliament permits, the Crown in all its other capacities. [Emphasis added.]

Part 4 (s 27A - 33 ) deals with " Offences relating to the sale of tobacco " .

Section 27A provides for an expanded meaning of " sell " so as to include, inter alia , " (c) have in possession, custody or control for sale " .

By s 28 , a person shall not sell tobacco unless the person is the holder of a licence. The maximum penalty is 100 penalty units. Section 29 prohibits a person from carrying on tobacco wholesaling without a licence. Section 30 prohibits retail activity likewise. In each case, the maximum penalty is 100 units.

Section 33 deals with presumptions arising from the possession of commercial quantities of tobacco as follows:

If tobacco in a quantity that exceeds the prescribed quantity is in a person ' s possession, custody or control, it shall be presumed in any proceedings for an offence under this Part, unless the court is satisfied to the contrary:
(a) that the tobacco is in the person ' s possession, custody or control for sale, and

(b) that the person is carrying on tobacco wholesaling.

Part 5 of the Act (s 34 - 50 ) deals with " Licences " .

Section 36 deals with the grant of licences. Section 41 provides for the fees to be paid for licences.

Part 7 (s 55 - 62 ) deals with " Enforcement powers " .

By s 55(1) , the Chief Commissioner or any inspector shall have access to all premises, records and documents for any of the purposes of the Act or the regulations.

By s 56(2) , the Chief Commissioner, or any inspector, may apply to an authorised justice for a warrant to search any premises in the circumstances there specified. By s 56(3) , the justice may, if satisfied that there are reasonable grounds for doing so, issue a warrant. Nothing in s 56 is to limit or restrict any power conferred by s 55 on the Chief Commissioner, or on an inspector: s 56(4) .

By s 57(1) , the Chief Commissioner may, by notice in writing, require any person to do either or both of the following - (a) to furnish information; (b) to attend and give evidence before the Chief Commissioner or other officer - for the purpose, inter alia , of inquiring into that person ' s, or any other person ' s, liability under the Act; and the Chief Commissioner may require the production of records or documents relating to such information.

Section 58 , which is central to the litigation, is in these terms:

58 Seizure of tobacco
(1) Any tobacco:
(a) in a quantity that exceeds the prescribed quantity, and

(b) which the Chief Commissioner reasonably believes is evidence of an offence by any person,

may be taken and kept in custody by the Chief Commissioner until proceedings for any such offence have been heard and dealt with.

(2) When taking the tobacco, the Chief Commissioner shall tender a receipt to the person from whom it is taken.

(3) (Repealed)

(4) This section does not confer on the Chief Commissioner any right of access to premises in addition to the right conferred by s 55 or by a warrant under s 56 .

By s 59(1) , the Chief Commissioner may apply to the Supreme Court for an order in respect of tobacco taken and kept in custody under s 58 . The Supreme Court may require the Chief Commissioner to give notice of the application to a person who the court has reason to believe has an interest in the tobacco: s 59(3) . A person having an interest in any tobacco is entitled to appear and to adduce evidence: s 59(4) . The court may, by order, empower the Chief Commissioner to sell the tobacco and to pay the proceeds of sale into Court: s 59(5)(a) . Alternatively, the court, at the request of any person appearing to have an interest in the tobacco may fix the value of the person ' s interest and order the Chief Commissioner, on payment into court by that person of an amount equal to that value, to deliver tobacco, having a value equal to that amount, to that person: s 59(5)(b) .

By s 60(1) , if the court finds an offence under Pt 4 proven, and finds that any tobacco taken and kept in custody under s 58 was in any person ' s possession, custody or control for sale in the course of committing, or for the purpose of committing the offence, the court may, by order, declare that the tobacco (or its liquidated value) be forfeited to the Crown. Any tobacco so forfeited may be disposed of by the Minister on behalf of the Crown: s 60(2) .

By s 61 , on the application of a person claiming to be entitled to any tobacco taken, or to any money paid into court under s 58 or s 59 , the Supreme Court:

(a) if it is of the opinion that proceedings for forfeiture are not likely to be taken; or

(b) with the Chief Commissioner ' s consent,

may order that the tobacco (or money) be delivered (or paid) to a person appearing to the court to be entitled to it.

Section 62 is in the following terms:

62. Return of tobacco by Chief Commissioner

(1) Nothing in this Part prevents the Chief Commissioner from at any time causing any tobacco taken and kept in custody under s 58 to be delivered to a person who the Chief Commissioner considers is entitled to it.

(2) No proceedings shall be taken against the Chief Commissioner as a consequence of the return of any tobacco in accordance with this section.

The determination of the separate question by Beazley J

Beazley J determined this question in the negative, holding that there was no inconsistency for the purposes of s 109 of the Constitution.

Her Honour was of the opinion (at FCR 189) that the " control " of the customs mentioned in s 30 of the Customs Act 1901 (Cth) means " the power to direct or regulate what may be done with the goods " . It does not mean or require that Customs have " physical possession " .

Beazley J was also of the view (at FCR 189, 192) that the phrase " taken and kept in custody of the Chief Commissioner " in s 58(1) of the Tobacco Act does not require that there be a physical taking or movement of the goods. On the other hand, her Honour held that the prohibition in s 33 of the Customs Act 1901 (Cth) " is directed to physical movement or alteration of or interference with the goods " .

Beazley J said (at FCR 192):

On the construction I have placed upon the phrase " take and keep in custody " , the custody to which s 58 refers may mean that the goods remain in the same place as they were when they were " taken " . The Chief Commissioner may move the goods if granted authority to do so under s 71E . If the goods were moved without the permission of customs under s 71E , the Chief Commissioner would thereby have committed an offence: see R v Sutton (1908) 5 CLR 789 . That does not make s 58 inconsistent with s 30 or with s 33 of the Customs Act 1901 (Cth).

The proceedings before Davies J

The final hearing of the proceedings took place, as has been noted, before Davies J who dealt with issues in addition to the separate question dealt with by Beazley J.

There was no real room for dispute about the facts, which his Honour found as follows:

The appellant, which did not hold a licence under the Tobacco Act to sell tobacco products by wholesale in New South Wales, imported into Australia a quantity of cigarettes having a customs value of $22,728.26. The goods arrived at Mascot on 12 October 1995 and were placed in the warehouse of JAS in Sydney, being a warehouse licensed under s 79 of the Customs Act 1901 (Cth).

On 12 October 1995, the appellant ' s agent copied an entry for home consumption under s 71A of the Customs Act 1901 (Cth).

On 16 October 1995, the goods were passed by customs as " Ready for Payment " .

Before the duty was paid, a delegate of the Chief Commissioner, Mr Terence Serrao, became aware of a statement in writing dated 9 October 1995, by a retailer of tobacco carrying on business in Sydney, which stated that the retailer had purchased, and would continue to purchase, tobacco from the appellant.

Mr Serrao, on becoming aware that the goods imported by the appellant exceeded the " prescribed quantity " defined in s 3(1) of the Tobacco Act, formed the view that, in the absence of a licence under the Tobacco Act, the tobacco was evidence of an offence by the appellant, and that it should be seized under s 58 of the Tobacco Act.

The seizure was effected on 19 October 1995 when officers of the Chief Commissioner, including Mr Serrao, entered the licensed warehouse of JAS and placed on the packages containing the tobacco labels identifying them as having been seized by the Chief Commissioner. At the time, a receipt was given to employees of JAS.

On 19 October 1995, an application was lodged with Customs on behalf of the Chief Commissioner, seeking permission, under s 71E of the Customs Act 1901 (Cth), to move the goods to another licensed warehouse in Sydney operated by Interport Pty Ltd (Interport). On the same day, customs granted the permission and the goods were then moved to Interport ' s warehouse.

On 25 October 1995, the appellant ' s customs agent applied under s 71E of the Customs Act 1901 (Cth) for authority to transship the goods under customs ' authority to a bond store in South Australia. The application was refused by customs on the ground that the goods were held in Interport ' s warehouse for the second respondent, and that the second respondent had stated that, until the question of offences under the Tobacco Act had been resolved, the goods were to remain in his custody.

Subsequently, most of the goods " were stolen or otherwise disappeared " (whilst the goods were in the custody of the Chief Commissioner).

The reasoning of Davies J

Davies J (at ATR 318) was of the view that, although customs had statutory " control " , Customs " does not [under the Customs Act 1901 (Cth)] enter into the possession, custody or control of the goods, as those words are understood in ordinary parlance. That is clear enough from the definition of ' owner ' … in s 4(1) " . The Customs Act 1901 (Cth) places no restriction upon dealings in goods under the " control " of customs. Property rights to possession, custody or control may pass. However, the Customs Act 1901 (Cth) requires that until the goods are delivered into home consumption in accordance with an authority to deal or other permission, the goods must be placed in a licensed warehouse and may not be moved without the authority of customs. The Act seeks to ensure that goods which are imported for home consumption are not released until duty is paid or is secured. The term " the control of customs " comprehends the totality of the rights conferred by the Act upon customs. Ordinarily, his Honour held, the rights exercised by customs in " controlling " the goods are those rights which are expressed in other provisions of the Act, rather than something that flows from the term " control " itself. An important element of the statutory concept of " control " is found in the prohibition against moving, altering or interfering with goods.

On the question whether Mr Serrao had reasonable grounds for believing that the goods held by JAS were evidence of an offence by the appellant under the Tobacco Act, Davies J was of the view that the expression " possession, custody or control " where used in s 33 of the Tobacco Act (in aid it will be recalled, of a presumption that a person is carrying on tobacco wholesaling), had " a wide denotation " . It may comprehend both an agent who has actual corporeal control, and the person on whose behalf the goods are held. The custody or control need not be exclusive. The present context (s 33 of the Tobacco Act) indicated that the person having the " possession, custody or control " of goods " for sale " and thus presumptively carrying on tobacco wholesaling (where the prescribed quantity was exceeded) was the appellant, rather than the warehouse proprietor.

Davies J rejected the appellant ' s submission, that it was beyond the power of the Customs to permit the goods to be moved under s 71E(1) on the application of the second respondent because the second respondent was not their " owner " , as s 81B(2) required. His Honour said, inter alia, (at ATR 324):

Moreover, a provision such as s 35A(1B) of the Customs Act 1901 (Cth), which uses the phrase " the person to whom the permission [under s 71E ] was given " , shows that the words the " owner " in s 71E do not refer to one specific person but rather to the range of persons falling within the description of " owner " in s 4(1) .

It follows that customs was not limited in the exercise of the discretion conferred by s 71E to approving an application lodged by the person who was expressed to be the owner of the goods in the entry for home consumption. The Chief Commissioner claimed to have taken the subject tobacco into his custody. He was a person having control of the goods and was an " owner " as defined in s 4(1) of the Customs Act 1901 (Cth). In my opinion, the officers of customs were entitled to treat the Chief Commissioner as, relevantly, the " owner " , especially as the step to be taken was merely that of moving the goods to another licensed warehouse, the licensee of which was an agent of the Chief Commissioner.

In rejecting the appellant ' s argument that goods in customs control could not be " taken and kept in custody by the Chief Commissioner " whilst under that control, because they could not be moved without Customs ' permission, Davies J said (at ATR 322):

The matters put forward under this head have already been debated before and rejected by Beazley J … A constitutional question concerning inconsistency between s 58 of the Tobacco Act and ss 30 , 33 and/or 153 of the Customs Act 1901 (Cth) was posed for her Honour ' s consideration. Her Honour considered that there was no inconsistency. It was put to me that the real issue of the proceedings was, however, not one of inconsistency but of the true meaning of s 58 of the Tobacco Act. It was submitted that goods could not be taken and held in custody by the Chief Commissioner when they were both subject to the control of customs and could not be moved without the permission of customs.

As I am in agreement with the approach taken by Beazley J, I need not determine whether her Honour ' s findings strictly cover the issue which is before me. Her Honour considered that the goods could be " taken and kept in custody " for the purposes of s 58 of the Tobacco Act without there being any movement of the goods or interference with the goods which required the permission of Customs. I agree with her Honour. The taping and marking of the packages was not an interference with the goods: McNeill v Whitton (1915) 20 CLR 573 .

Davies J went on to say (at ATR 324):

The statement of claim raises the argument, along with many others, that, before acting under s 71E , Customs was bound to afford to Goben an opportunity to present reasons why its goods should not be moved and had not done so. I accept that there is, in general, a duty to accord to the proprietor of goods, under whose direction goods have been placed in a licensed warehouse, an opportunity to express a view as to whether the goods should be moved to a different warehouse at the behest of another who is not his agent. See Kioa v West (1985) 159 CLR 550 at 584; Johns v Australian Securities Commission (1993) 178 CLR 408 . However, as Brennan J said in Kioa v West at CLR 615 , the content of the principles of natural justice may be reduced to nothingness by the circumstances in which a power is exercised: see also Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 21 per Mason CJ.

In the present case, as the power was exercised to assist the Chief Commissioner to keep securely in his custody goods taken under s 58 of the Tobacco Act, it would have been entirely inappropriate to give prior notice to Goben or to its agent of the removal, for the effectiveness of the seizure might have been frustrated. In the circumstances, the content of the duty was reduced to nothingness.

Davies J proceeded to hold that no ground of judicial review of customs ' administrative decision-making process had been made out. His Honour said (at ATR 325):

In the result, I am not satisfied that there was any error in the course taken under s 58 of the Tobacco Act, including the seeking of and the grant of permission to move under s 71E of the Customs Act 1901 (Cth), or for any unlawful conversion by the Chief Commissioner of the goods.

After the goods had been passed as ready for payment on 16 October 1995, all that remained to achieve the authority to take the goods into home consumption was the payment of the duty. This could have been done at any time. The grant of the permission to move, under s 71E , in no way inhibited customs from clearing the goods under s 71B .

Davies J accordingly dismissed the application.

The appellant ' s grounds of appeal

By its notices of appeal, the appellant contends that Beazley J and Davies J should have held that s 30 of the Customs Act 1901 (Cth) was inconsistent with s 58 of the Tobacco Act.

The appellant also relies on the following as subsidiary grounds of appeal against the judgment of Davies J:

4. The learned trial Judge erred in failing to find that the second respondent had interfered with the goods being the tobacco products to the detriment of the appellant.

5. The learned trial Judge erred in holding that s 58 of the Tobacco Act authorised the taking of the tobacco products by the second respondent.

6. [Not pressed].

7. The learned trial Judge erred in holding that the duty on the first respondent to afford the Appellant the opportunity to be heard before the tobacco product was transported by the second respondent was reduced to nothingness.

The appellant ' s contentions

The appellant ' s contentions are to the following effect:

The second respondent ' s power to seize the goods is derived entirely from s 58 of the Tobacco Act. The provisions of s 58 - 62 operate as an exhaustive statement of the course to be taken in relation to tobacco to which s 58 is applicable. Section 58 contemplates that the Chief Commissioner, if exercising the powers conferred thereunder, is to take into his possession the tobacco in question. The term " taken and kept in custody by the Chief Commissioner " is a composite expression also used in ss 59(1) , 60(1)(a)(ii) and 62(1) . The Chief Commissioner ' s discretion is not to " take and, if the Chief Commissioner chooses, keep in custody " the tobacco. Rather, if the Chief Commissioner decides to exercise the power, the Chief Commissioner must " take and keep in custody " the tobacco.

The discretion conferred by s 58(1) is that of the Chief Commissioner, and not that of any other person.

The related provisions of s 59 - 62 also make it apparent that the " tak[ing] and keep[ing] in custody " , to which s 58(1) refers, is the acquisition of physical custody of the goods: see the references to " delivery " of the tobacco in s 59(5)(b)(ii) , s 61 and s 62(1) ; and the reference to " return " of the tobacco in s 62(2) .

The scheme established by s 58 - 62 is inconsistent with the powers of customs pursuant to the relevant provisions of the Customs Act 1901 (Cth). In this regard:

(a) The discretion given to the Chief Commissioner under s 58(1) is not expressed to be limited in any way. To read s 58(1) with the Customs Act 1901 (Cth) means that words such as " In the case of goods subject to the control of Customs, if the Customs grants permission " have to be added to s 58 .

(b) The concept of " taken and kept in custody by the Chief Commissioner " is not divisible into two parts. The judgments appealed from treat the phrase as if it were " taken and (and in the case of goods subject to the control of Customs, if the Customs agrees) kept in custody " .

(c) The terms of s 59 - 62 do not easily identify the way such provisions are to operate in the case where goods are under the control of customs. They are inconsistent with the rights of the customs under s 30 and 33 of the Customs Act 1901 (Cth). To make the provisions of s 59 - 62 operate in such a case it is necessary to amend them by adding words excluding the position of customs or otherwise clarifying the position. The terms of s 59 - 62 contemplate that any relevant discretions will reside in the Supreme Court, the Minister or the Chief Commissioner, and in no other person.

Inconsistency may arise in a number of ways, but as Dixon J said in Victoria v Commonwealth (1937) 58 CLR 618 at 630 :

When a State law, if valid, would alter, impair or detract from the operation of the law of the Commonwealth Parliament, then to that extent it is invalid.

Applying this test, ie treating s 58 as operative, it authorises the Chief Commissioner to " take and keep in custody, without reference to any other person " , tobacco which the Customs Act 1901 (Cth) says is not to be moved or interfered with, except under the authority of the Customs Act 1901 (Cth). The operation of the State law according to its terms would " alter " or " detract " from the operation of the Customs Act 1901 (Cth), particularly s 33 .

The provisions of s 30(1) of the Customs Act 1901 (Cth) refer to goods which are subject to the control of customs from the time of importation to the happening of an event referred to in s 30(1) . As O ' Connor J said in R v Lyon (1906) 3 CLR 770 at 784:

… the whole policy of the Customs Act 1901 (Cth) … 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 deliver for home consumption or exportation.

The term " control of the Customs " is one of wide ambit and has statutory emphasis in s 33(1) , which specifically provides that, except as authorised by the Customs Act 1901 (Cth), a person shall not move, alter or interfere with goods that are subject to the control of customs. The concept " interfere with " appears to refer to physical interference: Wilson v Chambers & Company Pty Ltd (1926) 38 CLR 131 at 137, 145, 149 and 151.

Both Beazley J and Davies J concentrated unduly, it is submitted, on the meaning, in the abstract, of " control of the Customs " . A central element of such control, to which insufficient weight was given, was s 33 . The particular case was, in any event, one where s 33 dealt with the very subject with which s 58 purported to deal.

The provisions of the Customs Act 1901 (Cth) are clearly intended to " cover the field " in relation to possession and disposition of goods under the control of the customs; but, in any event, there is a direct inconsistency between s 30 and 33 of the Customs Act 1901 (Cth) and s 58 of the Tobacco Act, because the operation of s 58 would impair or detract from the operation of s 30 and 33 .

In holding that the appellant was not entitled to notice of the second respondent ' s intention to seize its goods, Davies J assumed, incorrectly, the valid operation of s 58 .

Conclusions on the appeal

It will be convenient to consider the grounds of appeal in turn.

(a) Is the scheme established by s 58 - 62 of the Tobacco Act inconsistent with s 30 and 33 of the Customs Act 1901 (Cth)?

The first step is to ascertain the true meaning and operation of the relevant provisions of the Tobacco Act. Specifically, do the general words of s 58(1) , properly construed, apply to goods under the control of customs?

The importance of context and the purpose of legislation in the modern approach to statutory interpretation was explained by the High Court recently in CIC Insurance Ltd v Bankstown Football Club Ltd 141 ALR 618 at 634, where Brennan CJ, Dawson, Toohey and Gummow JJ said:

It is well settled that at common law, apart from any reliance upon s 15AB of the Acts Interpretation Act 1901 (Cth), the court may have regard to reports of law reform bodies to ascertain the mischief which a statute is intended to cure. Moreover, the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses " context " in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy. Instances of general words in a statue being so constrained by their context are numerous. In particular, as McHugh JA pointed out in Isherwood v Butler Pollnow Pty Ltd, if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent.

The Tobacco Act repealed the Business Franchise Licences (Tobacco) Act 1975 (NSW) (the 1975 Tobacco Act). In moving the second reading of the Bill for the 1975 Tobacco Act, the Minister (Mr Coleman) said (NSW Parliamentary Debates, 1975, 3 series, vol 119, p 1757-8):

The purpose of the bill is to provide for the licensing of wholesalers and retailers of tobacco and the payment by them of licence fees, assessed, where applicable, on sales turnover in a preceding period. As honourable members are aware, this is one of the measures decided upon by the Government to help bridge the gap between revenue and expenditure in this year ' s Budget. The background to the measure has already been explained by the Premier and Treasurer in his budget speech and by my predecessor at the introductory stage. There is little I need add except to stress that the decision to go ahead with the new licensing scheme was reached only after every avenue of cutting costs and reducing expenditures had been explored. The proceeds, estimated at $19.5 million this year and $29.5 million in a full year, will be applied towards the costs of running essential community services such as schools and hospitals.

In moving the second reading of the Bill for the Tobacco Act, the Minister (Mr Debus) said (NSW Parliamentary Debates, 1987, 3 series, vol 196 at 11265):

Business franchise licence fees on tobacco and petroleum products raise more than $1 billion for the Australian States and are crucial to the structure of State finances. In New South Wales these fees will raise a total of $366 million in 1986-87, which is about 9% of total State taxation receipts. It is therefore essential to the financial well-being of New South Wales that these revenue bases be protected from avoidance and evasion practices.

In moving the second reading of a Bill for amendments to the Tobacco Act in 1989, the Premier and Treasurer, Mr Greiner, said (NSW Parliamentary Debates, 1989, 3 series, vol 207 at 7314):

The principal purpose of these bills is to strengthen enforcement provisions in order to stamp out evasion of licence fees. Under the current provisions, it is an offence to sell tobacco or petroleum products without a licence. In addition, in any proceedings for an offence of selling without a licence, goods in excess of the prescribed quantity are presumed, unless the court is satisfied to the contrary, to be in a person ' s possession for sale. Tobacco which is evidence of an offence may be seized and held until proceedings for the offence have been completed, and in certain circumstances the court may order forfeiture of the tobacco. However it is not an offence for a unlicensed person to be in possession of tobacco or petroleum products for the purpose of sale, and in order to prove an offence of unlicensed selling, there must be direct evidence of a sale having been made.

In addition, tobacco may only be seized as evidence of the offence of selling without a licence if the goods were actually sold by an unlicensed person. This reduces the likelihood of a successful prosecution and limits the usefulness of the offence provisions as a deterrent. This severely restricts the effectiveness of the seizure power because most sales of illicit tobacco are carried out in ways and at times which are designed to avoid detection. To overcome these problems the bills insert in the two Acts a definition of " sell " which includes having goods in possession, custody or control for sale. A similar definition appears in the Poisons Act. In addition, a person who has possession, custody or control of more than the prescribed quantity of tobacco or petroleum products, shall be presumed in any proceedings for an offence to be carrying on a business of wholesaling, unless the court is satisfied to the contrary.

These specific objects and purposes, and the foregoing specific context of State revenue raising, ought, in my view, to be taken into account in construing the Tobacco Act. There should also be taken into account the adjectival character of Pt 7 of the Tobacco Act generally and of s 58(1) in particular, in that the power of the Chief Commissioner to seize is clearly intended to be exercised incidentally to the bringing of proceedings for an offence, and to be exercised temporarily, that is, only until the proceedings have been dealt with. In other words, s 58(1) ought to be viewed as procedural and incidental, rather than substantive, in its operation. It is a machinery provision to be invoked in aid of the collection of State revenue. It is not itself a provision for the imposition of tax or for the raising of revenue. Section 58(1) is subsidiary in that sense.

Another specific aspect of the context which the State legislature should be regarded as having taken into account in enacting s 58(1) is the limited scope of the common law powers of search and seizure independently of a warrant: see Gillies, The Law of Criminal Investigation, The Law Book Co, Ch 6; Allitt v Sullivan [1988] VR 621 at 634-5 per Brooking J.

As well, the Federal context ought, in my opinion, be taken into account in interpreting a State statute of the present kind. Aspects of the Federal context of which the State legislature should be taken to have had regard in enacting s 58(1) include the circumstances that in our Federation, it is accepted, and expected, that the States may raise revenue for their own purpose, that is, speaking generally, the Commonwealth and State taxation powers are concurrent and independent powers: see Victoria v Commonwealth (Second Uniform Tax Case) (1957) 99 CLR 575 at 614 per Dixon CJ; P H Lane, A Manual of Australian Constitutional Law, 6 ed, p 82 at 367.

At the same time, in enacting the Tobacco Act, the State legislature must also be taken to have been aware of the circumstance that, by virtue of the provisions of s 90 of the Commonwealth Constitution, the power to impose a tax on goods by way of a customs duty resided exclusively in the Federal Parliament.

As has been noted, s 5 of the Tobacco Act purported to bind the Crown in right of New South Wales (as to which no question arises) but also, so far as the legislative power of the State Parliament permitted, the Crown in all its other capacities. Section 5 thus recognises, correctly, that there are limits on the capacity of the State Parliament to " bind " the Crown in its other capacities, relevantly, the Crown in right of the Commonwealth: see Commonwealth v Bogle (1953) 89 CLR 229 at 259-60 per Fullagar J; Leslie Zines, The High Court and the Constitution, 4 ed at 353-66.

In Jacobsen v Rogers (1995) 182 CLR 572 at 590-1, Mason CJ, Deane, Dawson, Toohey and Gaudron JJ said:

The power of the Commonwealth parliament to enact s 10 of the Crimes Act 1900 (NSW) was not questioned before us. Plainly the Commonwealth has power to aid the investigation and prosecution of offences, the creation of which is incidental to the execution of its legislative powers. Nor are the circumstances such, in our view, as to raise any presumption that the Commonwealth did not intend the legislation to bind the States. It is true that in Re Richard Foreman & Sons Pty Ltd; Uther v FCT, Dixon J said: " A federal system is necessarily a dual system. In a dual political system you do not expect to find either government legislating for the other. " An expectation is somewhat less than a presumption and, as the next sentence of Dixon J ' s observation indicates, is not always realised: " But supremacy, where it exists, belongs to the Commonwealth, not to the States. " Moreover, that case was concerned with the " question of State legislative power affecting to control or abolish a federal fiscal right " . It is in that context that Dixon J made his remarks.

Their Honours went to on say (at CLR 591-2):

The question of Commonwealth immunity from State legislation is a difficult one which has not yet been fully resolved, but it is clear that the States, acting pursuant to the powers which they possess under the Constitution, are not subordinate to the federal government. Of course, the Commonwealth in the exercise of its paramount legislative power may restrict the effect of State legislation upon its operations. But it has always been recognized that the Commonwealth may be affected by State laws of general application. A law authorising the issue of search and seizure warrants may be such a law, particularly when it binds the occupier of premises subjected to a warrant only by relieving those to whom the warrant is issued from tortious liability. Under s 52 of the Constitution the Commonwealth has exclusive legislative power with respect to Commonwealth places, but State laws apply pursuant to s 4(1) of the Commonwealth Places (Application of Laws) Act 1970 (Cth). It is, however, unnecessary in this case to determine the effect of State legislation of a kind similar to s 10 .

Brennan J said (at CLR 593-4):

The question whether a statute " binds " the Crown depends upon the circumstances including the terms of the statute, its subject matter, the nature of the entity in respect of which the question of applicability of the statute arises, the nature of the mischief to be redressed, the general purpose and effect of the statute and the nature of the activities of the Crown which would be affected if the Crown be bound.

See also the statement of general principle by McHugh J (at CLR 601).

Relevantly for present purposes, the question, one of construction of s 58(1) at this stage, is whether the State Parliament should, or should not, be taken to have intended that the Tobacco Act would impair, or detract from, the operation of the scheme for the imposition and collection of, customs duties established by the Commonwealth Parliament in the execution of its exclusive legislative power in that area.

In my view, when the language of s 58(1) is read in its overall context and considered in all of the foregoing aspects, it should be interpreted as not to have been intended to impair, or detract from, the Commonwealth ' s exclusive domain of the collection of customs duties and the scope of the apparently unqualified language of s 58(1) should be read down accordingly. It follows, in my view, that no question of s 109 inconsistency can arise in the present context: see Allders International Pty Ltd v Comr of State Revenue (Vic) (1996) 140 ALR 189 at 225-6 per McHugh, Gummow and Kirby JJ; cf State Authorities Superannuation Board v DCT (WA) (1996) 140 ALR 129 at 135 per Brennan CJ, Dawson, Toohey and Gaudron JJ.

Put differently, it should be presumed that the State Parliament intended that the Tobacco Act should operate in parallel and concurrently with the operation of the Customs Act 1901 (Cth). Specifically, it is reasonable to assume that the State legislature did not intend to interfere with the well-known concept of the control by customs of goods liable to customs duty as a means of ensuring that the duty will be collected. Against that background, the operation of s 58(1) should be read down so as not to impair, or detract from, Customs ' control of goods: cf Botany Municipal Council v Federal Airports Authority (1992) 175 CLR 453 at 466. It may be that the reading down should go further but this need not be finally decided for present purposes: see Trade Practices Commission v Manfal Pty Ltd [No 2] (1990) 27 FCR 22 ; Re Pollack; Ex parte DCT (1991) 22 ATR 670 ; 103 ALR 133 ; Allders International Pty Ltd v Comr of State Revenue (Vic) (1996) 140 ALR 189 at 225-6 per McHugh, Gummow and Kirby JJ.

This outcome accords with the reality of the Federal compact. As Mason CJ, Deane, Dawson, Toohey and Gaudron JJ said in Jacobsen v Rogers at CLR 587 :

In one sense, it may be said that when a search warrant is obtained on behalf of the Crown in respect of Crown premises, the Crown is consenting to the search and seizure which the execution of the warrant entails and there is no occasion to question the force of the section to bind the Crown. But that is to ignore the reality of the situation in which the Crown bears not one, but many aspects. As was observed in the Engineers ' case, executive power " is exercisable by different agents in different localities, or in respect of different purposes in the same locality, in accordance with the common law, or the statute law there binding the Crown " .

In any event, the scope of the control exercised by customs is sufficient to ensure that there is no collision in the administration of the Customs Act 1901 (Cth) on the one hand, and the Tobacco Act on the other. The nature of customs ' control was explained by Davies J in his reasons as has been mentioned. I agree with that analysis. As Mason J said in Kitano v Commonwealth (1974) 129 CLR 151 at 170:

Goods subject to the control of Customs are not as such in the possession of the Customs (see s 35A ). The provisions of the Act which spell out what is involved in the control of the Customs include those " giving the customs a right of examination (s 32 , 49(3) ), forbidding any movement, alteration or interference except by authority of a Customs officer (s 33 ), requiring for the purpose of securing the due importation of goods ' that they be entered and unshipped (s 49(3) ), and making elaborate provisions for ensuring that the unshipping is subject to adequate safeguards for the revenue (s 36 - 41 , 68 - 77 ) " (Collector of Customs (Vic) v Wilh Wilhelmsen Agency Pty Ltd (1956) 102 CLR 147 , per Kitto J).

In my opinion, as a matter of construction of the Customs Act 1901 (Cth), whether customs ' control is looked at generally or in a specific aspect (as for instance, in the grant of permission under s 33 of the Customs Act 1901 (Cth) to move goods), it was inherent in customs ' statutory control of the goods to grant assent to the action taken by the second respondent in the present case in his exercise of the temporary powers granted him by s 58(1) of the Tobacco Act.

It follows, in my view, that there was no constitutional inconsistency.

It may be noted that an analogous question has arisen of the operation, in the customs area, of Commonwealth postal legislation which precludes the mail being examined except in special circumstances by officers specially appointed. E J Cooper, in Customs and Excise Law , 1984, points out (at 119) that it appears that this has involved " an uneasy administrative compromise " . Whether or not it is fair to describe the circumstances of the present case in these terms, it is obviously possible to resolve any difficulties of this kind by co-operative action. Many examples of a joint or co-operative action between the Commonwealth and the States in other areas may be given, where conflict, and thus inconsistency, are avoided at the administrative level.

It should, however, be acknowledged there was not always a spirit of Federal co-operation in this area. The R v Sutton (1908) 5 CLR 579 , was a proceeding by customs for the recovery of pecuniary penalties for breaches of, inter alia, s 33 of the Customs Act 1901 (Cth). The defendant was a carrier who held a contract from the Government of New South Wales for the carriage of its goods from the Sydney wharves. Goods, which had been purchased in England and imported into the Commonwealth by the State of New South Wales, were landed at the wharf. Although customs demanded duty, the State refused to enter the goods, or to pay duty. The defendant, acting on the State ' s instructions, removed the goods from the wharf without the permission of customs, in what Robert Garran described as " the battle of Darling Harbour " : Prosper the Commonwealth, 1958, p 179. An argument for the State that the provisions of the Customs Act 1901 (Cth) placing under the control of customs, even duty-free goods, did not bind the State, was rejected, and it was held that the defendant had committed a breach of s 33 . The case may be distinguished from the present circumstances. Here, Customs and the State co-operated with each other, and the State ' s actions under s 58(1) of the Tobacco Act were carried out with the knowledge and acquiescence of customs.

The end to which control is given to customs should be borne in mind in the present connection. As O ' Connor J said in R v Lyons at CLR 584 :

The object of [s [30] … 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.

That is, the ultimate object is to protect the Commonwealth revenue; but this aim is not inconsistent or incompatible with the attainment by the State of its objective of collecting its own revenues.

In Sutton ' s case Isaacs J (at CLR 812) emphasised the need to avoid reducing the public administration of the Customs Act 1901 (Cth) to a chaotic condition by the use, as in that case, of physical force, and resulting in " open conflict " . Such force was not used here. There was no physical seizure, but only a constructive one. It appears now settled that physical action is needed to offend s 33 : see Wilson v Chambers at CLR 137, 145, 149 and 151. Moreover, as has been noted, the constructive seizure and the movement of the goods were done with customs ' acquiescence.

I agree with Beazley J that the present case may also be seen as analogous to Victoria v Commonwealth (1937) 58 CLR 618 where the State and the Commonwealth both legislated for the removal of wrecks. In concluding (at CLR 630) that " upon its proper construction [the Commonwealth Act] does not exclude the operation of … [the] State law … , unless at all events some step is taken by the Commonwealth authorities to exert the power given by [the Commonwealth Act] " , Dixon J there said (at CLR 631):

There is no reason for treating [the Commonwealth Act] as intending to do more than confer a concurrent or parallel power to enforce the removing of wrecks. No doubt there would be or might be an inconsistency if simultaneous attempts by Commonwealth and State authorities to remove the same wreck were possible. But that means, not that the Federal enactment is an exhaustive statement of what power to compel the removal of wrecks shall exist, but that it confers a power to remove wrecks the exercise of which is intended to be exclusive.

Dixon J added (at CLR 632):

… if Federal and State authorities both went to work upon the same wreck and began to remove it by different and incompatible means, one would have to give way to the other. The facts of the present case do not raise this or any other similar conflict …

It follows, in my view, that properly construed, s 58(1) of the Tobacco Act should be seen as a valid exercise of the States ' power to legislate " within their respective areas and subject matters " : see Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (Engineers ' case) (1920) 28 CLR 129 at 155; Leslie Zines, The States and the Constitution, a paper given at the Supreme Courts and Federal Court Judges Conference, January 1997, p 10-11.

Approaching the present question as essentially one of statutory construction of the State legislation (cf DCT v Moorebank Pty Ltd (1988) 165 CLR 56 at 61, 63; 19 ATR 1156 at 1157; 1158-9 ), reading the general words of s 58(1) down along the lines suggested, and having regard to the scope of customs ' control and the co-operative attitude here of Commonwealth and State, there is in truth no conflict of laws or in administration.

The challenge on the ground of suggested constitutional inconsistency should be rejected.

(b) Did the second respondent unlawfully interfere with the appellant ' s goods to its detriment?

To some extent, although a separate ground of appeal, this overlaps with the inconsistency argument.

As has been seen, s 33(1) prohibits " interference " with goods the subject of customs ' control, except as authorised by the Customs Act 1901 (Cth). Contravention of this section is made an offence. Questions may arise as to the standing of the appellant to raise this matter in civil proceedings, at least where it has not paid customs duty. But it is not necessary to pursue these questions since, in my view, no contravention of s 33 has been demonstrated.

It is true that the second respondent purported to effect what amounted to a constructive seizure of the goods for the temporary purpose of ensuring their safe custody pending the determination of the Tobacco Act proceedings. But, as has been said, this was done with the permission, or acquiescence, of customs. The symbolic seizure was not anything done in derogation of custom ' s rights of control over the goods, or of any of customs ' other rights. When viewed in the general context earlier discussed, including their Federal context, the statutory rights of the State to enforce the collection of its revenue should not be seen, necessarily or otherwise, as something inconsistent with the rights of customs to enforce the collection of its duty through the medium of the exercise of its control over the goods. Both Commonwealth and State revenue raising powers may be exercised independently, in parallel and concurrently. Whether customs ' permission to the second respondent to effect a constructive seizure is treated as an incident of customs ' control, or as implicitly authorised by the Customs Act 1901 (Cth) for the purposes of s 33(1) , is immaterial. However viewed, the symbolic, temporary seizure, in aid of collection of the State revenue was permitted by customs. That grant of permission was, in my view, within the power, or competence, of customs.

Nothing of any significance appears to turn on the circumstance that the goods were moved, with customs ' agreement, from one licensed warehouse to another. This appears to have been raised in ground 6 of the grounds of appeal, but is no longer pressed.

In my opinion, no grounds for judicial review, and no civil causes of action in this connection, have been demonstrated.

(c) Was the appellant entitled to be given prior notice of the second respondent ' s intention to seize the goods?

As has been noted, this ground of appeal (7) depends upon acceptance of the appellant ' s earlier argument that s 58(1) of the Tobacco Act could not validly operate in this area. Since I cannot accept that argument, it must follow, in my view, that there is no reason for interfering with the decision of Davies J in this connection.

Result of the appeals

For reasons different in some respects from those given at first instance, I propose that the appeals be dismissed, with costs.