Comptroller-General Customs v Woodlands Enterprises Pty Ltd
[1995] QCA 525
•28/11/1995
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 118 of 1994.
Brisbane
[The Comptroller-General Customs v. Woodlands Enterprises P/L]
BETWEEN:
THE COMPTROLLER-GENERAL CUSTOMS
Complainant
AND:
WOODLANDS ENTERPRISES PTY LTD
Defendant
__________________________________________________________________________
Fitzgerald P.
McPherson J.A.Pincus J.A.
___________________________________________________________________________
Judgment delivered 28/11/1995
Separate reasons for judgment of each member of the Court, all concurring as to the orders
made.
___________________________________________________________________________
ORDER TO REVIEW DISCHARGED. APPEAL DISMISSED WITH COSTS.
___________________________________________________________________________
CATCHWORDS: CUSTOMS AND EXCISE - defendant convicted of failure to notify Collector of Customs as to sale or disposal of diesel fuel and of obtaining rebates of duty which were not payable - whether defendant purchased fuel for use by it in primary production - whether fuel sold or disposed of by defendant to another person; whether mere licence to use - whether statement to Collector of Customs made knowingly.
Ss. 78A, 78AA, 120 Excise Act 1901 (Cth)
S. 120 Excise Act 1901 (Cth) (reprint as in force, 1990)
Ss. 164 Customs Act 1901 (Cth)Ss. 4, 19, 21 Sale of Goods Act 1896.
Counsel: | Mr J A Logan with him Mr J K C Foster for the complainant. Mr P J Lyons QC with him Mr R N Traves for the defendant. |
| Solicitors: | Australian Government Solicitor for the complainant. Feez Ruthning for the defendant. |
| Hearing date: | 9 February 1995. |
| IN THE COURT OF APPEAL | [1995] QCA 525 |
| SUPREME COURT OF QUEENSLAND | Appeal No. 118 of 1994 |
| Brisbane | |
| Before | Fitzgerald P. |
Pincus J.A.
McPherson J.A.
[Comptroller-General Customs v. Woodlands Enterprises P/L]
BETWEEN:
WOODLANDS ENTERPRISES PTY LTD
(Defendant) Appellant
AND:
COMPTROLLER-GENERAL OF CUSTOMS
(Complainant) Respondent
REASONS FOR JUDGMENT - FITZGERALD P.
Judgment delivered 28/11/1995
The circumstances giving rise to this appeal by way of order to review are set out in the
reasons for judgment of Pincus J.A. The fundamental question is whether the appellant
purchased the diesel fuel for use by it in rearing chickens: Excise Act 1901 (Cth), s. 78A;
Customs Act 1901 (Cth), sub-s. 164(7), definitions of “agriculture”, “primary production”
and “use”. The appellant did not use the fuel in rearing chickens if it sold or otherwise
disposed of it to its contractors, or if the contractors’ use of the fuel by causing it to be
converted into energy in hot air brooders which it had hired from the appellant did not
constitute use by the appellant.
The foundation of the appellant’s submission that it did not sell or otherwise dispose of the
fuel to its contractors was a proposition that property in the fuel never passed from the
appellant to the contractors. The respondent did not dispute that a sale involves property
passing, or that a contract which does not contemplate property passing from the owner
to another person at any point is not a sale; in the present legislative context, the reference
to “sale” in conjunction with “other disposal” “to another person” in the definition of “use” in
sub-s. 164(7) of the Customs Act emphasises the point. The respondent argued that
property in the fuel passed from the appellant to the contractors at or prior to the point of
its consumption in the hot air brooders; the appellant contended that it remained the owner
of the fuel until it was consumed, after which it was incapable of ownership by any person.
A considerable body of law has been developed in relation to sales of goods for
determining when property in goods sold is to pass, and I can discern no reason why a
similar approach, which is in any event consistent with orthodox principles governing the
construction of contracts, should not apply to a decision whether, not when, property in
goods passes (i.e., whether there is a sale). What must be ascertained is the parties’
intention, according to the terms in which they have contracted, set in the context of the
circumstances in which their contract was formed.
There were two contracts between the appellant and each contractor, a Broiler Growing
Agreement, in which the appellant was called the “Processor” and the contractor was called
the “Grower”, and a Hiring Agreement in which the appellant was called the “Owner” and
the contractor was called the “Hirer”. Each Broiler Growing Agreement recited that the
appellant had agreed to supply its contractor with “chicks of good quality and performance potential”, and that the contractor had agreed to “raise them as broiler chickens” on the
terms and conditions of that agreement. By those provisions, the appellant was required
to provide its contractor with a minimum number of batches of chicks per year, in numbers
related to the appellant’s production requirements and the numbers of chicks supplied to
other contractors, and to supply the contractor with advice, feed, medication, vaccination
and, at the discretion of the appellant, disinfectants for the proper and efficient raising of
the chickens. The appellant was also responsible for delivery of the chicks to its contractor
and transportation of the chickens from the contractor to the appellant “when the chickens
have reached marketable age ...”. The contractor was required to provide necessary
equipment for the proper care of the chickens and such labour and management as was
necessary for their proper and efficient rearing, including responsibility for placing the
chickens under the hot air brooders. The contractor was also required to provide water of
necessary quality and quantity for the proper and efficient rearing of the chickens” and to
“use exclusively the feed, medication, vaccination and disinfectants supplied by the
[appellant] and to use the same for the purposes only of the raising and production of the
[appellant’s] chickens”. Provision was made for the calculation of the payments to which
the contractor was entitled and it was agreed that the contractor was and would at all times
remain an independent contractor, not a servant, employee, or agent of the appellant. It
was also expressly provided that the chickens at all times remained the property of the
appellant.
The Hiring Agreement referred to plant and equipment owned by the appellant which was
listed in a schedule and included Hot Air Brooders, and provided for the appellant to hire
that plant and equipment to its contractor in consideration of a monthly hiring fee, to be paid calendar monthly in advance. Provision was made for the contractor to take care of the
plant and equipment and not dispose of or encumber it, and for the contractor to indemnify
the appellant in respect of injury arising out of the operation of the plant and equipment.
Re-delivery of the plant and equipment on termination of the hire was provided for, and cl.
12 was in the following terms:
“12. FUEL
At the expiration of each growing period the [appellant] will deliver an invoice
to the [contractor] with respect to all fuel whether it be in the nature of diesel,
methane gas or electricity supplied to the [contractor] by the [appellant] and
consumed by him [in] the course of each growing period. Within seven (7)
days of the delivery of the [appellant’s] invoice setting out particulars of fuelconsumption ... same shall be paid forthwith to the [appellant] ...”
In his reasons for judgment, Pincus J.A. describes the purchase of the diesel fuel by the
appellant’s contractors on its behalf, the delivery of the fuel by the supplier directly to the
contractors, and the appellant’s payment of the supplier. Reimbursement of the appellant
by the contractor was dealt with in the decision of the magistrate which is challenged in
these proceedings in terms which recognised that the appellant was not paid by
contractors for all fuel which they ordered and was delivered, but only so much of the fuel
as they used. The magistrate said:
“The [appellant] maintained some form of stocktaking of fuel on hand at the end of each batch of chickens and after taking into account the stock on hand at the commencement of each batch, the fuel delivered during the batch and the stock on hand at the end of the batch arrived at a figure of the fuel used during the growing of each batch. The [appellant] then calculated the actual cost they had paid for this fuel and charged the [contractor] this amount in respect of fuel used for each batch. I accept that there was never any intention on behalf of the [appellant] to make a profit on the price they paid for the fuel supplied when charging the [contractors]. The calculated cost of the fuel used was included in a document which the [appellant’s] witnesses referred to as a batch summary sheet. By virtue of clause 12, this amount had to be paid by the [contractor] and ... the practice was that an exchange of cheques usually took place in that the [contractor] would be paid the amount due to them on the batch summary sheet when they handed over their cheque in payment of the diesel, electricity and repair costs included in the batch summary sheet. ...”
It was on the basis of those findings that the magistrate concluded that a batch summary
sheet was, in effect, an invoice from the appellant to its contractors in relation to fuel, and
continued:
“The evidence satisfies me that the diesel fuel became the property of the [appellant] at the time of delivery to the tanks on farms ... by the fuel agent and that the property in the diesel fuel actually to the [contractors] at the time that they used the fuel for heating purposes. I find that the diesel fuel used was sold to the [contractors] by the [appellant].”
However, the conclusion that property passed to the contractors is merely an unexplained
assertion; no doubt the property in the fuel passed from the appellant when it was “used”,
but it does not necessarily follow that it passed to the contractor who used it. Conceptually
there seems no reason why an owner of fuel cannot authorise another person to cause it
to be consumed or converted into energy while it remains the owner’s property on the
footing that, if the fuel is used in that manner, the party using it will subsequently reimburse
the owner. Compare, for example, a contract authorising destruction of goods or a contract
authorising incorporation of goods into a third party’s property provided that the person
destroying or incorporating the goods into the third party’s property subsequently
reimburses the owner; it is not obvious that property in the goods must pass from the
owner to the person who must reimburse the owner; the parties could indicate a contrary
intention.
In his reasons for judgment, McPherson J.A. explains why the contractual relationship
between the appellant and a contractor satisfied neither the requirements of a bailment nor those of the Roman law contract of mutuum, which his Honour distinguishes from bailment
on the basis that bailment requires a return of the very goods bailed in their original or
altered form, while mutuum requires replacement by the equivalent in kind of the goods
used or consumed. Reference is also made by his Honour to a statement in 8 Am.Jur. 2d
§48 that “... mutuum ... partakes more of the nature of a sale and is so treated, since its
practical effect must always be to operate as a transfer of title where chattels are deposited
...”. While I see no reason to dissent from that as a general proposition, since the parties
to such a contract would ordinarily intend that property pass, that does not appear to be a
necessary consequence in all circumstances; for example, if the contract expressly
provided otherwise, or otherwise sufficiently indicated the contracting parties’ intention that
the property in the goods was to remain in the owner while the goods continued to exist.
Nonetheless, what is said in the passage quoted from the second edition of American
Jurisprudence illustrates the appellant’s difficulty. There is insufficient indication in its
contracts with its contractors that it was intended that it retain property in the fuel even when
taken from storage and used in the hot air brooders; property would ordinarily be expected
to pass at the point to the contractor proposing to use and pay for the fuel (cp. Bentley
Bros. v. Metcalfe & Co. [1906] 2 K.B. 548, 552), and the parties should be taken to have
so intended in the absence of contrary provision in their contracts.
The appellant therefore fails in relation to the first four appeals. Further, what has been
said establishes for the purpose of the fifth charge that the appellant made a statement to
an officer that was false in a material particular; the remaining question is whether it did so
knowingly or recklessly: Excise Act, sub-s. 120(1)(vi)(A). The charge alleged that it did so “knowingly”, but the magistrate appears to have held that it did so “recklessly”, and the
appellant has been content to contest that conclusion on appeal.
The magistrate’s findings and reasoning process on this issue might be clearer and more
coherent, but they contain a number of statements adverse to the appellant. The relevant
employee was “aware that not all diesel fuel purchased by the [appellant] was eligible for
rebate” and that “there had been major changes to the [appellant’s] operations”, and knew
the facts relating to its dealing with its contractors. While it believed “that the supply of fuel
to the [contractors] was not a sale”, it made the false statement “not caring whether or not
it was a sale”. It “did not seek advice on whether or not it was actually a sale”. Although not
expressly stated, those findings seem to carry with them implicitly a conclusion that it was
known that it would have been prudent to obtain legal advice but the appellant preferred not
to do so; the appellant was aware that its belief might be incorrect, but chose not to find out,
what the magistrate referred to at another point as “wilful blindness”.
In my opinion, a conclusion that the appellant made the false statement recklessly was
open in those circumstances.
I agree that the appeal should be dismissed, with costs.
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 118 of 1994.
Brisbane
| Before | Fitzgerald P. McPherson J.A. Pincus J.A. |
[The Comptroller-General Customs v. Woodlands Enterprises P/L]
BETWEEN:
THE COMPTROLLER-GENERAL CUSTOMS
Complainant
AND:
WOODLANDS ENTERPRISES PTY LTD
Defendant
REASONS FOR JUDGMENT - PINCUS J.A.
Judgment delivered 28/11/1995
This is an appeal by way of order to review against the conviction of the defendant company on five charges brought under the Excise Act 1901 ("the Act"), all of the charges relating to a diesel fuel rebate. For convenience the charges are set out at length in a schedule to these reasons, but it is desirable to summarise them. The first charge was that the defendant did, contrary to s. 88 of the Act, fail to notify the Collector of Customs as to the sale or disposal of diesel fuel in respect of which the defendant had made an application for rebate, within 21 days of such sale or disposal. The second and third charges alleged that the defendant obtained rebates of duty which were not payable. The fourth alleged that the defendant delivered a document to an officer of Customs which contained a statement which was untrue; the truthfulness of the statement depended on the question whether a rebate was payable in the circumstances which I will set out. The fifth charge was that the defendant did knowingly make in a document a statement which was false in a material particular, and that again depended upon the question whether a rebate was payable.
That in turn depended upon two inter-related points: firstly, whether diesel fuel had been purchased by the defendant "for use by him in primary production" and secondly, whether the fuel had been sold or disposed of by the defendant to another person. Had the defendant succeeded on these points all the charges must have been dismissed. And even if the defendant had not done so, then a question would have remained as to the last charge, namely whether the statement complained of was, if safe as alleged, made "knowingly".
The immediately pertinent provisions of the Excise Act 1901 and Customs Act 1901 are as
follows:
Excise Act 1901
" Section 78A
(1)
A rebate is, subject to subsections (2) and (3) and to such conditions and restrictions as are prescribed (being conditions and restrictions that relate to goods generally, to goods included in a class of goods that includes diesel fuel or to diesel fuel only), payable to a person who purchases diesel fuel for use by him:
(a) . . . (aa) in primary production . . . " " (7) In this section . . . ‘primary production’ . . . and ‘use’ have the same
respective meanings as in section 164 of the Customs Act 1901. "" Section 78AA:
Where a person who has made an application for rebate under subsection 78A(1)
in respect of diesel fuel purchased by the person (whether or not the rebate has
been paid) sells or otherwise disposes of the fuel, or uses the fuel for a purpose
other than the purpose for which he or she purchased the fuel, the person shall,
within 21 days after the sale, disposal or use of the fuel, give a Collectorparticulars in writing of the sale, disposal or use. "
" Section 120:
(1) A person shall not: . . .
(vii)
Make in any declaration or document produced to any officer any statement which is untrue in any particular or produce or deliver to any officer any declaration or document containing any such rebate;
(vb) obtain any rebate which is not payable. " " Section 120 (1990 version):
(1) A person shall not: . . .
(vi) knowingly or recklessly:
(A) make a statement to an officer that is false or misleading
in a material particular; or(B)
omit from a statement made to an officer any matter or thing without which the statement is misleading in a material particular; "
Customs Act 1901
" Section 164:
(7) In this section:
‘agriculture’ means:. . .
(c) the rearing of live-stock
‘primary production’ means:
(a) agriculture
‘use’, in relation to diesel fuel in relation to a person, does not include the sale or other disposal of the diesel fuel by the person to another person. "
To tie this in with the wording of the charges, it will be noted that the first charge is laid under s. 78AA, the second under s. 120(1)(vb), the third under the same provision, the fourth under s. 120(1)(vii) and the last under s. 120(1)(vi)(A). It will further be noted that those parts of s. 164 of the Customs Act 1901 which are quoted are relevant only as defining terms in s. 78A of the Act.
The appellant was at material times in the business of chicken farming and the fuel which is the subject of these proceedings was in a sense used in that business, to heat the sheds in which the chickens were housed. But the appellant did not itself or by its employees do the work involved in rearing the chickens to the stage at which they were sold; that was done by other persons, conveniently described before us as "contractors".
The contractors were supplied with equipment and with chickens by the appellant.
There were written contracts which governed the relationship between the appellant and its contractors, and one such contract, headed "Hiring Agreement" contained a clause relating to fuel and reading as follows:
" Fuel.
At the expiration of each growing period the Owner will deliver an invoice to the Hirer with respect to all fuel whether it be in the nature of diesel, methane gas or electricity supplied to the Hirer by the Owner and consumed by him the course [sic] of each growing period. Within seven (7) days of the delivery of the Owners invoice setting our [sic] particulars of fuel consumption, (which invoice shall if signed under the hand of the Owner be prima facie evidence as the amount of fuel consumed by the Hirer) same shall be paid forthwith to the Owner, and in default of payment shall be recoverable pursuant to Clause 6 hereunder. "
The fuel in issue was supplied by the Shell Co. from a depot and Shell received payment for it from the appellant. The usual practice was that from time to time each contractor would order fuel from Shell which would deliver what was ordered into tanks owned by the appellant. It was the appellant, not the contractors, which had an account with Shell and the system was that Shell would issue to the contractor who ordered a particular delivery of fuel an invoice addressed to the appellant; the contractor would take the invoice to the appellant which would pay Shell. Periodically, the contractor would then pay to the appellant the amounts the appellant had expended for fuel ordered by the contractor from Shell.
As has been mentioned, the principal issues argued before us were whether the appellant purchased fuel for use by it in primary production so as to come within those parts of ss. 78A(1) and 78AA of the Act which have been quoted above, and secondly, whether there was a "sale or other disposal" of the fuel by the appellant to the contractors, within the exclusory definition of "use" in s. 164(7) of the Customs Act 1901 also quoted above. It was not disputed that there was a use of the fuel in primary production within the meaning of s. 78A of the Act, but the appellant asserted that that use was made by it, not by the contractors.
It is convenient to turn first to the question whether it is correct that, as the magistrate held below, the fuel in question was sold by the appellant to the contractors. It was contended here that the proper analysis of the facts which I have set out was that the payments made by the contractors to the appellant in respect of the fuel were not in discharge of the purchase price of fuel, but rather were made for exercise of a license or permission to use the fuel. That the fuel in question was used up is clear, but what is not quite so clear is what transaction between the appellant and the contractors came into existence or was effected when fuel was used.
Leaving aside the possibility of spillage, the fuel for which the contractors paid the appellant ceased to exist when it was used; it was turned into the various substances produced by its combustion. It was said on behalf of the appellant that in those circumstances one could not impute to the parties an intention to engage in a transaction of sale and in support of that reference was made to an English decision, Borden (UK) Ltd v. Scottish Timber Products Ltd (1981) 1 Ch. 25, especially at 46. The case concerned a sale of resin for use in manufacture, under a contract which provided that the property in the resin would pass when payment was made in full. Because, once used in manufacture, the resin became amalgamated with other products and could not be recovered, it was held that the clause in the contract reserving ownership did not achieve the result of leaving the vendor as the owner of the resin after the manufacturing process had taken place. The decision would be relevant to the present case if it were (as it was in Borden) one in which the existence of a contract of sale was common ground and if the dispute were (as it was in Borden) whether there could be continuation of the vendor’s ownership of the commodity sold, even after it was used in the process of manufacture. It is not easy to see what relevance the decision has to the present problem.
Ordinarily, one would expect that goods which are supplied to a consumer, consumed and then paid for would be regarded as having been bought by that consumer. Here, but for the circumstance that the fuel the contractors ordered and which Shell supplied pursuant to those orders was obtained on the appellant’s account, it could hardly be doubted that the contractors bought the fuel they ordered and used and paid for, the property passing at the time of delivery by Shell. But when one adds in the factor that Shell looked to the appellant not to the contractors for payment, analysis of the relationship between the appellant and the contractors becomes less certain. Were it not for cl. 12 of the hiring agreement quoted above, the natural interpretation of the parties’ dealings would be that property in the fuel would pass to the contractors when delivered by Shell at the contractors’ behest, they having the appellant’s authority to order the fuel on its account. But the clause makes it clear that only fuel consumed has to be paid for and the property must therefore pass to the contractors, if at all, at the time of consumption.
It was not and could hardly have been contended that it is impossible to have a contract for sale under which the property in what is sold passes as it is consumed; sales of electricity are a familiar example. The argument for the appellant was, as I understood it, that while it was possible to treat what occurred as a sale by the appellant to the contractors, it was more correctly characterised as the exercise of a license to consume the fuel, for a consideration. But that is to my mind a strained construction of what happened, which was that the contractors ordered the goods, arranged for their delivery, consumed them and paid for what was consumed; that transaction would ordinarily be described as one of sale and purchase. It is my view that the proper construction of the facts is that contended for by the respondent, so that it follows that the fuel was sold by the appellant to the contractors. It is unnecessary to consider whether there was "other disposal" of the fuel within the meaning of the definition of "use" in s. 164(7) of the Customs Act 1901.
It follows that the fuel was not purchased by the appellant for use by it and no rebate was payable to the appellant: see s. 78A(1) of the Act quoted above. Were it not for the fact that the fuel was, in my view, sold to the contractors by the appellant one would have to reach a conclusion on the question whether the physical use of the fuel by the contractors involved, so to speak, a vicarious use by the appellant. It was argued for the appellant that on the authority of decisions such as that in Quality Dairies (York) Ld. v. Pedley [1951] 1 K.B. 275, the Act, on its proper interpretation, should be regarded as treating the appellant’s part in arranging for the supply of fuel to the contractors for physical use by them as a use by the appellant, within the meaning of s. 78A(1) of the Act. Reference to the report shows, however, that the result arrived at depended on the conclusion that certain regulations imposed an absolute duty on one such as the appellant, so as to make it liable for things done by a contractor and the case is of no real assistance.
It is my view that, because of the exclusion in the definition of "use" in the Customs Act 1901, the fuel in question was not purchased by the appellant for use by it, but rather purchased for sale to the contractors; no rebate was payable and the points taken with respect to the first four charges I have mentioned fail.
"Knowingly"
That leaves the last charge for consideration, to the effect that the appellant knowingly made a statement which was false in a material particular. The statement complained of was an application signed on behalf of the appellant by one Nicholson to the effect that certain fuel was to be used in agriculture. The magistrate pointed out that because of the definition of "use" which I have discussed above, the statement that the fuel was intended to be so used was untrue. No point was taken before us that the truth of the statement should be judged without regard to the statutory definition and I proceed on the assumption, common to the parties, that if the appellant failed on the definition of "use" discussed above then its only answer to the last charge is that Nicholson believed that what he said was true, although it was wrong in law.
Having reviewed the evidence on the state of Nicholson’s knowledge, the magistrate concluded that he believed that the supply of fuel to the contractors was not a sale. He found in effect that Nicholson knew all the facts and that the appellant could not rely on Nicholson’s "mistake which is one of law". His conclusion was that Nicholson "should have been aware that the supply of fuel to the [contractors] was a sale" and that "at best, he has closed his eyes to the obvious or at least continued to claim rebates on the fuel knowing that it was likely that the supply of fuel was a sale, or not caring whether or not it was a sale".
The principal argument advanced in support of the magistrate’s conclusion that on the findings the false statement was knowingly made was that s. 24 of the Criminal Code applies to the case. Section 79 of the Judiciary Act 1903 makes Queensland laws "including laws relating to procedure, evidence, and the competency of witnesses" binding on all courts exercising federal jurisdiction in Queensland in all cases to which those laws are applicable. That binding effect applies "except as otherwise provided by the Constitution or the laws of the Commonwealth". Although the Crimes Act 1914 contains provisions of a general kind which bear upon criminal responsibility for offences against Commonwealth laws, I can find nothing in the Act which implicitly excludes s. 24 of the Code. It follows from Deputy Commissioner of Taxation v. Moorebank Pty Ltd (1988) 165 C.L.R. 155, a decision on s. 64 of the Judiciary Act 1903, that in assessing the applicability of State laws to actions within s. 64 one should be careful not to undermine a coherent scheme which Commonwealth law provides, in a particular field. No doubt the same principle applies when determining the applicability of State law under s. 79; as a recent example of a meshing together of State and Commonwealth laws, relating to procedure in criminal trials, I refer to Kesavarajh (1994) 68 A.L.J.R. 670.
In the present case, there does not appear to be any sufficiently strong reason to make s. 24 inapplicable as a defence and the submission that it applies receives some support from judgments in Clare (Court of Appeal, 22 December 1993, unreported). But it does not follow that Nicholson’s legal mistake is irrelevant in determining whether a false statement has been made "knowingly".
There is a lack of logic in reasoning from the fact that s. 25 establishes a defence of mistake of fact, not mistake of law, to the conclusion that the "knowingly" element of this offence is satisfied even if all that was known was the set of facts, not the conclusion which is a matter of mixed law and fact. Nor, in my respectful opinion is much help to be derived from decisions on statutes, creating offences, which do not explicitly require the presence of a certain state of mind; the difficult case of He Kaw Teh (1985) 157 C.L.R. 523 is an example.
The decision of the High Court in Murphy v. Farmer (1988) 165 C.L.R. 19 appears to me to assist the appellant. There a question was the meaning of the expression "false or wilfully misleading in any particular" as applied to a representation. The word "false" in the relevant provision was construed as meaning "purposely or deliberately or intentionally untrue" (29). The statutory context in which the expression construed in Murphy v. Farmer occurred is similar to that here; further, the word "knowingly" imports I think about as strong a mental element as "false or wilfully misleading" does. A decision tending the other way is Ianella v. French (1968) 119 C.L.R. 84, where the question was the effect of the expression "wilfully demanded or wilfully recovered". The point was that a demand for rental which was the subject of a charge was, although erroneous, said to have been induced by a mistake of law. By a majority, it was held that that mistake did not exculpate the defendant. Ianella v. French has in one sense more weight than the later case, for present purposes, since it related to the same type of problem as arises here, namely the relevance of a mistake of law.
But in the present case it is unnecessary to decide which of these two authorities should be applied; the appellant faces the difficulty of the finding that Nicholson "closed his eyes to the obvious or at least continued to claim rebates on the fuel knowing that it was likely that the supply of fuel was a sale, and not caring whether or not it was a sale". As Ianella v. French itself illustrates, such a finding is ordinarily enough to satisfy the mental element in the word "knowingly" or "wilfully": see at p. 96 per Barwick C.J. The appellant’s contention was not that such recklessness as the magistrate found was insufficient to prove the charge, but that the evidence did not show recklessness on Nicholson’s part. It is unclear to me what is the basis of that contention; the magistrate saw and heard Nicholson’s explanation of his conduct and the conclusion his Worship arrived at was one very much dependent upon his impression of the witness.
I therefore conclude that, whether or not in the absence of the findings just referred to the final charge should have been held proved, those findings support that conviction.
I would dismiss the appeal with costs.
SCHEDULE OF CHARGES
(i) On or about 10 August 1988 at Beerwah in the State of Queensland, Woodlands Enterprises Pty Ltd did, contrary to Section 78AA of the excise Act 1901 (as amended), fail to notify the Collector of Customs as to the sale or disposal of diesel fuel in respect of which the said Woodlands Enterprises Pty Ltd had made an application for a rebate of the excise duty paid thereon within 21 days of such sale or disposal of the said diesel fuel;
(ii) On or about 21 July 1988 at Beerwah in the State of Queensland, Woodlands Enterprises Pty Ltd did, contrary to Section 120(1)(vb) of the Excise Act 1901 (as amended), obtain a rebate of duty which was not payable;
(iii) On or about 20 November 1990 at Beerwah in the State of Queensland, Woodlands Enterprises Pty Ltd did, contrary to Section 120(1)(vb) of the Excise Act 1901 (as amended), obtain a rebate of duty which was not payable;
(iv) On or about 8 July 1988 at Brisbane in the State of Queensland, Woodlands Enterprises Pty Ltd did, contrary to Section 120(1)(vii) of the Excise Act 1901 (as amended), deliver a document to wit a Supplementary Application for Diesel Fuel Rebate to an officer of Customs which contained a statement which was untrue in a particular;
(v) On or about 24 October 1990 at Beerwah in the State of Queensland, Woodlands Enterprises Pty Ltd did, contrary to Section 120(1)(vi) of the Excise Act 1901 (as amended), knowingly make in a document, to wit an Australian Customs Service Supplementary Application for Diesel Fuel Rebate No. Q46946, a statement which was false in a material particular.
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 118 of 1994
Brisbane
| Before | Fitzgerald P. Pincus J.A. McPherson J.A. |
[Comptroller-General Customs v. Woodlands Enterprises Pty. Ltd.]
BETWEEN
THE COMPTROLLER-GENERAL CUSTOMS
(Complainant)
AND
WOODLANDS ENTERPRISES PTY. LTD.
(Defendant)
REASONS FOR JUDGMENT - McPHERSON J.A.
Judgment delivered the 28th day of November 1995
I agree with Pincus J.A. that this appeal should be dismissed.
The transaction by which the Shell Company supplied the diesel fuel at the request
of the contractor, but delivered it into tanks owned by the appellant Woodlands, involved
a sale of that fuel either to the contractor or to the appellant. It was probably a sale to the
appellant, who paid for it; but it is not necessary to decide that question. The argument
before us assumed that the appellant was the owner of the fuel at least until it was used by
the contractor, and unless the property passed to the appellant and not to the contractor,
the first point in the appeal would not arise at all.
Determination of that point depends wholly or partly on whether or not there was a
sale to the contractor on each occasion when fuel was drawn from the tank and used by the
contractor. Under s.4(1) of the Sale of Goods Act 1896 a contract of sale of goods is a
contract whereby the seller transfers or agrees to transfer the property in the goods to the
buyer for a money consideration, called the price. Under s.4(3) of the Act, a contract of
sale become a sale, as distinct from an agreement to sell, when the property in the goods
is transferred from the seller to the buyer. If the contract is for the sale of specific goods in
a deliverable state, the property in the goods passes when the contract is made,
irrespective of whether the time for payment is postponed. That is the effect of Rule 1 of
s.21 of the Act. Here the goods were not specific, but unascertained. It follows that no
property passed unless and until the goods were ascertained. See s.19 of the Act.
According to the well-known dictum of Atkin L.J. in Re Wait [1927] 1 Ch. 606, 630,
"ascertained" in this context probably means "identified in accordance with the agreement
after the time a contract of sale was made". In saying "probably", his Lordship expressed
himself tentatively; but his statement on the subject has been generally accepted as correct.
See Benjamin's Sale of Goods, 4th ed., §1-117. In a case like this, where quantities of
the goods are from time to time drawn from bulk, it is only when a specific quantity is
extracted that it is identified in accordance with the agreement and consequently
ascertained. See Benjamin §5-060. Not until then could the property in that quantity be
said to pass from buyer to seller.
The question here is whether it is the correct view of the transaction in this case that
it involves a sale, or series of sales, to the contractor of quantities of fuel as they are drawn
from the bulk fuel in the tank. That is so because the appellant submits that there was no sale here; but at most, a licence to the contractor to use the fuel, which remained the
property of the appellant. It appears to be implicit in the appellant's argument that, even
when a quantity of fuel was consumed, it never became the property of the contractor.
Conceding that the Hiring Agreement describes the appellant as the owner and the
contractor as the hirer, it remains difficult to identify in the Hire Agreement any licence to
hire the fuel in the tank. Clause 12, which is the only relevant provision, is concerned simply
with the timing and method by which the contractor is to be charged with and is to pay for
fuel "supplied to the hirer by the owner and consumed" during the course of a specified
period. Even assuming it was possible in law to postpone the passing of property in
quantities of fuel consumed until they were paid for, cl.12 does not set out to do so.
It must in any event be doubtful whether it is possible to defer the passing of the
property in circumstances like these. Roman law recognised a contract known as
mutuum, which was a loan for consumption or use of goods which were usually if not
always fungibles. Oil is an example commonly given. Traditionally, fungibles were goods
which required counting, weighing or measuring to separate a quantity from the mass for
the purpose of a contract. Glanvill mentions mutuum (Book X, c.13), but seems to have
meant something else. Mr Hall says it is not at all clear how far Glanvill's treatment of loan
for use "represents English law .. and how far it is a version or perversion of Roman law"
(G.D.G. Hall, Glanville, at p.xi. Nelson's Medieval Classics). In any case the Roman
contract of mutuum required replacement by the equivalent in kind of the goods used or
consumed.
It is clear that the transaction under the Hire Agreement in this instance does not involve a bailment. In Canada, it has been said that, unlike Roman law, "our law does not recognise a loan of fungibles for consumption (mutuum) as a real contract, that is to say,
it is not a bailment". See Bridge, Sale of Goods, at 64. Bailment requires a return of the
very goods bailed, in their original or altered form, and not some other goods of equivalent
value. See Chapman Bros. v. Verco Bros & Co. Ltd. (1933) 49 C.L.R. 306, 316, where
Starke J. said that if the identical subject matter, either as it stood or in altered form, is not
to be returned, but a different thing of equal quantity and quality may be given as an
equivalent, then a bailment is not created. Having referred to the decision of the Privy
Council in South Australian Insurance Co. v. Randell (1869) L.R. 3 P.C. 101, as
"decisive", His Honour went on to say that in the example given "it is a transfer of property,
and the title to the thing originally delivered vests in the transferee" (49 C.L.R. 306, 316).
In the United Sates, where mutuum is evidently recognised, it has been said that in "our
system of jurisprudence ... it has some of the characteristics of a bailment", but that it:
"... partakes more of the nature of a sale, and is so treated, since its practical effect must always be to operate as a transfer of title where chattels are deposited" (8 Am Jur 2d §48, at 787).
The fact that the oil was consumed by its use does not seem to me to prevent there
being a sale. Ordering food for consumption in a restaurant is now regarded as involving
a contract for sale of goods which is subject to the Sale of Goods Act. See Lockett v. A.
& M. Charles Ltd. [1938] 4 All E.R. 170; and Wallis v. Russell [1902] 2 I.R. 585, 611.
Since the decision in Sofman v. Denham Food Services Inc. 181 A2d 68 (1960), that has
been so even in New Jersey, where for long a different rule prevailed: Williston on Sales,
4th ed., §2.3, at 18-19. What is perhaps more to the point for present purposes, the supply
of electricity has been held to constitute a sale: Fickeisen v. Wheeling Electrical Co. 67
S.E. 788 789 (1910), W. Va. In Bentley Bros. v. Metcalfe [1906] 2 K.B. 548, 552, Collins M.R. said that the result of a contract to supply power, "whether it relates to gas, electricity
or any other motive power, is the consumption of that which is supplied". Such a contract,
his Lordship went on:
"... is in fact one of purchase and sale. It may be difficult to describe in precise terms the thing that is bought, but that does not alter the fact that there is a sale."
See also [1906] 2 K.B. 548, 553 (Cozens-Hardy L.J.). The position may be different where
the substance is supplied by a public utility in the exercise of statutory powers. In England
such a transaction has been considered a supply of services: Benjamin's Sale of Goods
§1-071; see also Bridge, op.cit, at 29; but that is not this case.
It follows in my opinion that the transaction here involved a sale, or a series of sales,
of the quantities of oil that were consumed by the contractor. The property in those
quantities passed to the contractor, probably at the time of consumption, or immediately
before it, when it was appropriated by the contractor for that purpose. It is, I consider,
correct to regard it as a contract for sale because it was "a contract whereby the seller
transfers or agrees to transfer the property in goods to the buyers for a money
consideration called the price": Sale of Goods Act 1896, s.4(1). It became a sale when
the property was transferred : s.4(3). It is not a bailment, or even a mutuum, because the
goods were not to be returned in specie, or at all.
For these reasons I agree that the transaction envisaged by the Hiring Agreement
cannot be regarded as a hire of, or even as involving a licence to use, the fuel delivered to
the tanks. Instead there was an agreement by the appellant to sell fuel to the contractor,
which became a sale as and when a quantity was drawn and consumed. It also follows, in
my opinion, that, within the meaning of s.78A(1) (aa) of the Excise Act 1901, there was no "use" by the appellant of the fuel "in primary production", which, by virtue of s.164(7)(a) of
the Customs Act 1901 does not include, but excludes, "the sale or other disposal of the
diesel fuel" by him "to another person".
On the remaining question, which is whether the appellant's false statement was,
within the meaning of s.120 of the Excise Act as it stood in 1990, knowingly made, I agree
with what has been written by Pincus J.A. Because it refers to a mistaken belief in the
existence of any "state of things": see Thomas v. The King (1937) 59 C.L.R. 279, 306,
s.24 of the Criminal Code is capable of comprehending a mistake about a matter of mixed
fact and law but that provision has no place in a context where, as here, the Commonwealth
law expressly defines the requisite state of mind as "knowingly or recklessly".
The order to review should be discharged. The appeal must be dismissed with
costs.
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