F.H. Faulding & Co Ltd v Collector of Customs

Re: F.H. FAULDING and CO. LIMITED
And: COLLECTOR OF CUSTOMS
No. G50 of 1990
FED No. 543
Excise Act - Evidence

COURT

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIAN DISTRICT REGISTRY
GENERAL DIVISION
O'Loughlin J.(1)

CATCHWORDS

Excise Act - Sub-s.60(1) - persons entrusted with possession, custody or control of goods must account for goods to satisfaction of Collector of Customs - appellant "lost" over 800 litres of spirit - appellant alleged short-delivery of spirit - whether spirit in "possession, custody or control" of appellant - whether Collector should have been satisfied by appellant accounting for the spirit.

Evidence - agent of appellant signed certificate acknowledging receipt of full consignment of spirit without ascertaining whether full consignment delivered - evidentiary weight to be attached to such a certificate.

HEARING

ADELAIDE

#DATE 23:8:1991

Counsel for the Appellant : Mr W.J.N. Wells QC, and Mr J.M.

Fitzpatrick

Solicitors for the Appellant : Corrs Australian Solicitors

Counsel for the Respopndent : Mr J. O'Halloran

Solicitors for the Respondent: Australian Government Solicitor

ORDER

The appeal be dismissed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

The appellant has appealed, pursuant to the provisions of sub-s.44(1) of the Administrative Appeals Tribunal Act (1975) (Cth), from a decision of the Administrative Appeals Tribunal ("the Tribunal") which was handed down on 11 May 1990. The Tribunal had reviewed and affirmed an earlier decision, manifested by a Notice of Demand dated 20 June 1988, of the respondent, the Collector of Customs. The Collector's demand was allegedly authorised by virtue of the provisions of sub-s.60(l) of the Excise Act 1901 ("the Act") which provides:-

"60. (1) Where a person (including a manufacturer) who has, or has been entrusted with, the possession, custody or control of excisable goods which are subject to the control of the Customs-

(a) fails to keep those goods safely; or

(b) when so requested by a Collector, does not account for those goods to the satisfaction of a Collector, the person shall, on demand in writing made by a Collector, pay to the Commonwealth an amount equal to the amount of the Excise duty which would have been payable on those goods if they had been entered for home consumption on the day on which the Collector made the demand."

When such a demand is made, the power of the Collector to enforce payment of the Excise duty is found in sub-s.60(2). That sub-section states:-

"(2) An amount payable under sub-section (1)... of this section shall be a debt to the Commonwealth and may be sued for and recovered in a court of competent jurisdiction by proceedings in the name of the Collector."

In circumstances that will be set out in detail at a later stage of these reasons, the Collector demanded that the appellant pay an amount of $22,902.88 as and by way of Excise duty. It was said that the demand was made because the appellant did not account for certain excisable goods to the satisfaction of a Collector when requested so to do. The power of the Tribunal to review the Collector's decision is to be found in the general provisions of sub-s.25(1) of the Administrative Appeals Act and the specific provisions of para 162C(1)(e) of the Excise Act; that latter provision states:-

"(1) An application may be made to the Administrative Appeals Tribunal for review of -

(a) - (d) ...

(e) a demand made by a Collector under section 60;

(f) - (h) ..."

Thus it is clear that the subject of any review by the Tribunal is to be limited to the demand that is said to have been made under sub-s.60(1) of the Act: it would not extend to the question of the appellant's liability pursuant to sub-s.60(2) to make payment. It has been necessary to emphasise this distinction because of the manner in which the Tribunal went about its task. In paragraph 1 of its Reasons for Decision it said:-

"This is an application for review of a decision of an officer of the Australian Customs Service (the Collector) that the applicant is in breach of s.60(1) of the Excise Act 1901 (the Act) and that an amount of $22,902.88 excise duty is payable in respect of 847 litres of ethanol alcohol, being the amount that would be payable if the goods had been entered for home consumption."

The first part of that paragraph was somewhat inappropriately couched but the second part was beyond the purview of the Tribunal. What was to be reviewed by the Tribunal was the right to make the demand for payment in accordance with the provisions of sub-s.60(1) of the Act - not the obligation to make payment: the Tribunal misconceived its role when, at the conclusion of its reasons, in the penultimate sentence, it said:-

"The applicant must pay excise duty which would have been payable on the spirit if it had been entered for home consumption."

However, and notwithstanding these errors of expression, I am satisfied, from a reading of reasons of the Tribunal as a whole, that it addressed the correct issues during the course of its deliberations. The errors that have been noted do not necessarily mean, without more, that the matter must be sent back to the Tribunal. In particular the Tribunal had also concluded:-

"We find as a fact that the spirit came into the applicant's possession, custody or control and that the applicant has not accounted for the spirit to the satisfaction of the Collector and is in breach of s.60(1) of the Act."

There then followed the erroneous statement about the obligation to pay the Excise duty and a final statement:-

"For these reasons the decision under review is affirmed."

If that last statement had been preceded by a sentence such as: "The Collector was therefore justified in making the relevant demand" the form of the reasons would have been unimpeachable; and in fairness to the Tribunal, I consider that it is quite clear that such a conclusion can be inferred from its reasons.
The substantive questions can now be examined.
The appellant is a manufacturer of various pharmaceutical and cosmetic products. A constituent of these products, or, at least, of some of them, is ethanol alcohol ("the spirit") which, in the ordinary course of events, would be classified as excisable goods for the purposes of the Act: para 8(2)(c) of the Distillation Act 1901. However, the use of the spirit for industrial and scientific purposes is, subject to regulation, free of excise duty: Excise Tariff Act 1921 schedule item 2(M). Approval for the delivery of the spirit for industrial purposes to the appellant's premises at Thebarton, South Australia, has been granted by the Collector pursuant to regulation 142 of the Excise Regulations. By virtue of regulation 149 of those Regulations all spirit delivered in pursuance of regulation 142 remains subject to the control of the Customs: see also s.61 of the Act. Therefore, when the appellant accepts delivery of the spirit, it becomes "a person... who has, or has been entrusted with, the possession, custody of control of excisable goods which are subject to the control of the Customs" and a Collector may thereafter activate the provisions of sub-s.60(1).
In his Amended Notice of Contention, the Collector initially disputed the limiting effect of this last mentioned proposition; it was his claim that, on the proper construction of the phrase "has been entrusted with the possession, custody or control of excisable goods", the present appellant had taken such "possession, custody or control" of the spirit from the time when it was decanted into one of the compartments of the road-tanker that transported it from the manufacturer's refinery to the appellant's factory. The spirit was, and is, produced by CSR Limited at its refinery at Yarraville, Victoria and transported to the appellant's premises at Thebarton by United Tankers Pty. Ltd. The Collector sought to argue, first, that the appellant had become the owner of the spirit prior to it leaving the premises of CSR Limited and next, that the appellant had organised the method of transporting the spirit from Yarraville to Thebarton. The difficulty with these submissions is that they were not addressed by the Tribunal in its reasons; hence it would have been impossible for this Court to adjudicate upon such issues without the necessary finding of facts. As events transpired, Mr O'Halloran, counsel for the respondent, ultimately abandoned the first point and only faintly argued the second. However, as the Tribunal's finding that the spirit had come into the possession, custody or control of the appellant can, in my opinion, be otherwise sustained, it will not be necessary to consider any of the matters that were raised by the Collector in his Notice of Contention.
When the spirit is delivered to the appellant's Thebarton premises, it is placed in a storage tank; the tank has a capacity of approximately 13,000 litres. Some discrepancy between the quantities of the spirit that are delivered to the appellant and the quantities of the spirit that are used and accounted for by it in the manufacturing process is tolerated; for example the average monthly discrepancy for the period June 1987 to December 1987 was 21.7 litres. On the other hand, in January and February 1988 the discrepancy rose significantly to 130.3 litres and 95.8 litres respectively. In March and April 1988 officers of the Australian Customs Service attended at the appellant's premises to investigate those losses, but no action was taken. In his "Statement of Reasons" dated 3 August 1988, the decision maker noted that another officer of Customs had made a judgment "that due to certain factors, temperature in particular, these losses would be accepted, but the company's operations were to be monitored in future".
In March 1988 the appellant recorded a discrepancy of 891.6 litres of spirit (which at 95% vv equates to 847 litres of pure spirit); the appellant's return of its operations to Customs for that month showed that at the beginning of the month the appellant had 8046.1 litres of the spirit stored in its storage tank and that during the month it had accepted delivery of a further 8100 litres; these two figures total 16146.1. Yet at the end of the month, the appellant could only account for 15254.5 litres; 1591.1 litres of spirit remained in storage while 13663.4 litres had been used in manufacture. As a consequence, the appellant disclosed in its return that it had "lost" 891.6 litres of spirit.
The appellant undertook investigations into the loss during April and May 1988. Those of its employees who gave evidence before the Tribunal said that their enquiries had discounted leakage (from either the storage tank or the pipelines), spillage, evaporation, pilfering and improper use during manufacture; they concluded that their records properly accounted for all usage of the spirit during March 1988. By a process of elimination, they concluded that there must have been a shortfall in the quantity of the spirit that was delivered to the appellant in that month. The appellant's records showed that it took two deliveries of spirit in March 1988. The first, which was said to be of 4500 litres, was made on 10 March and the second, 3600 litres, was made on 25 March. The appellant concluded that the delivery of 10 March was defective and that, despite its records to the contrary, it only received 3700 litres on that day.
Evidence was led before the Tribunal to the effect that the appellant maintains rigorous controls and procedures relating to the delivery and receiving of the spirit. The first step in the exercise is for Mr Van der Moer, the appellant's purchasing supervisor, to ascertain the expected time of arrival of the road-tanker that is delivering the spirit. He then reads the delivery note to find out which compartment in the tanker contains the spirit that is intended for the appellant. Upon the arrival of the tanker, he checks the seals on the appropriate compartment while another employee from the Quality Control section withdraws a sample from the compartment; that sample is then tested for spirit strength. To verify the quantity of spirit received, Mr Van der Moer uses a dipstick to take a reading of the contents of the tanker's compartment; next he unlocks the storage tank and takes a dipstick reading of that tank. He then signs the unloading clearance (provision for which appears in the middle of the delivery note) and so authorises the unloading of the spirit. The tanker driver thereupon connects a hose from the tanker's compartment to the storage tank and disperses the spirit under Mr Van der Moer's supervision. When delivery is completed, Mr Van der Moer first checks that the compartment of the tanker is empty. He then dips the storage tank to verify the "before and after" delivery readings. Finally, he signs the acceptance certificate at the base of the delivery notice. Thereafter he takes a further "after delivery" dip reading of the storage tank a few hours later; this occurs after the volatile spirit has settled, thus giving a more accurate reading.
However, on 10 March 1988, when the appellant apparently took delivery of 4500 litres of spirit, Mr Van der Moer was not at work. Two other employees, Mr Waller and Mr Sunk, stood in for him. But they failed to follow the strict procedures to which reference has just been made. Mr Waller unlocked the storage tank but then took no further part in the process of delivery. Mr Sunk, a quality control technician, was left to take charge of the delivery of the spirit. He broke the seals of the compartment which he believed contained the appellant's spirit; he took a sample for testing. But he neither dipped the compartment nor the appellant's storage tank and he did not sign the unloading clearance. However, and contrary to his duties, he did sign the acceptance certificate; that certificate, which purported to acknowledge receipt of 4500 litres of spirit, should have been signed by Mr Waller as he was the person who had been authorised to accept delivery of the spirit in the absence of Mr Van der Moer.
Although he was aware that a delivery of spirit had been expected, Mr Van der Moer made no enquiries, when he arrived at work that day, to ascertain whether it had actually arrived. As a result he did not follow his usual practice of taking a second reading of the storage tank once the spirit had settled. Therefore no dipstick readings were made on 10 March 1988 by or on behalf of the appellant - either of the storage tank or the tanker's compartment.
When the appellant isolated the delivery of 10 March as the likely event which caused the "loss", it set about making enquiries. Mr Van der Moer contacted United Tankers Pty. Ltd., and was provided with written advice showing that the tanker in question had five compartments, that the 4500 litres of the spirit that was intended for the appellant had been contained in compartment 5, and that the contents of the other four compartments had been delivered to the intended consignees. In addition, the advice showed that compartment 3 contained 3700 litres of the same spirit - 800 litres less than that which was intended for the appellant. This fact was seen by the appellant as the only possible explanation for the deficiency - that is, when the tanker arrived at the appellant's premises on 10 March it had discharged the wrong compartment. Mr Van der Moer made enquiries of that consignee in the hope that he had received a delivery of excess spirit. However that customer informed Mr Van der Moer that his delivery was correct.Mr Van der Moer discussed the possibility of a short-delivery with Mr Hazelhurst, a customs officer and asked him to enquire into the matter. Mr Hazelhurst ascertained that no-one had notified the Collector of a surplus receipt of the spirit; however that was the extent of his inquiries.
Before the Tribunal the appellant argued unsuccessfully that the demand made pursuant to sub-s. 60(1) of the Act was not justified; the appellant had submitted that the 891.6 litres of spirit had not been delivered to it and that therefore the spirit had not come into its possession, custody or control for the purposes of the Act. Moreover, the appellant submitted that the Collector had not undertaken all proper investigations with sufficient thoroughness. Finally, the appellant submitted that, in exercising his discretion, the collector had not taken into consideration all relevant factors, including, in particular, the circumstances surrounding the delivery of the spirit on 10 March 1988.
A Collector is not entitled to make a demand on any person (who for convenience can be called "the custodian") pursuant to sub-s.60(1) unless and until the Collector has first satisfied himself that all prior conditions that are contemplated by that sub-section have been fulfilled. For example, the demand can only be directed to a person "who has, or has been entrusted with, the possession, custody or control" of goods - and the goods must be excisable goods; furthermore the goods must be goods which are "subject to the control of the Customs": and the custodian must have either failed to keep the goods safely or, having been requested, failed to account for those goods to the satisfaction of a collector. If, in any given case, the relevant conditions exist, the Collector would be justified in making a demand for payment of the appropriate amount of Excise duty.
It was the case for the appellant in these proceedings that the Collector had not addressed one of those primary questions: that is, was the appellant a person who had, or had been entrusted with the possession, custody or control of excisable goods (being 891.6 litres of the spirit)? It may be assumed that the missing spirit was properly classified as excisable goods that was otherwise subject to the control of the Customs. It was further claimed that the appellant's method of operations, procedures and controls, coupled with its explanation about the alleged shortfall in the delivery that was made on March, 1988 amounted to an accounting for those goods which should have satisfied the Collector. As Mr Wells QC, counsel for the appellant put it, the material before the Collector and the material before the Tribunal was insufficient to constitute reasonable grounds for concluding that the appellant was the custodian of the missing spirit; in fact, he claimed that the available evidence showed that every possibility of the appellant being the custodian had been excluded. According to the arguments that were advanced on behalf of the appellant, first, the Collector (and therefore the Tribunal), should have been satisfied, as a result of its enquiries, that the excisable goods had never come into the possession, custody or control of the applicant: secondly, there being no onus on the appellant and, in particular, there being no obligation on the appellant to satisfy the Collector or the Tribunal that it did not receive the "lost" spirit, therefore the Collector behaved unreasonably in making a demand on the appellant.
The Tribunal had, so the appellant argued, made positive findings of fact that were consistent with - and only consistent with - its acceptance of the appellant's claim that there had been a short-delivery on 10 March 1988. In support of this proposition, the appellant referred to the following extract from the Tribunal's reasons for decision.

"15. We heard extensive evidence of the checks and balances and controls on the dispensing of spirit during the manufacturing process. These controls are carefully regulated and secured and it is unlikely that the spirit was pilfered after it was poured into the storage tank.

16. When the applicant's staff members had satisfied themselves that their checks and balances precluded a loss of spirit during the manufacturing process, they turned their minds to the possibility that the missing spirit was never delivered to them."

These findings (if indeed they were findings), coupled with the failure of Mr Sunk to take readings of the spirit, thus leaving open the possibility of a mistake being made in the quantity of the spirit that was delivered, were inconsistent, so the appellant argued, with the ultimate finding that all 4500 litres of spirit had come into the possession, custody or control of the appellant on 10 March 1988. At first, I was of the opinion that paragraphs 15 and 16 of the Tribunal's reasons were mere summaries of arguments that had been advanced in the interest of the appellant; on reflection however, it is possible to infer that the Tribunal had intended to make findings that the "controls are carefully regulated and secured" and that it was "unlikely that the spirit was pilfered", that the staff "had satisfied themselves that their checks and balances precluded a loss of the spirit during the manufacturing process" and finally that the staff then "turned their minds to the possibility that the missing spirit was never delivered". But even if this is the case, that does not amount, as the appellant would contend, to a finding that the missing spirit was never delivered. I do not consider that the contents of these two paragraphs of the Tribunal's reasons assist in a resolution of the matter. But I do reject any suggestion that they constitute an inconsistency in the reasoning process.
I have made some adverse comments about aspects of the Tribunal's findings and reasoning; however it is important to avoid an overly zealous approach to the exercise of jurisdiction under sub-s.44(1) of the Act.

"... (W)hat may appear to be a loose or unhappy way of phrasing a thought ought not to be determinative of the outcome unless it is apparent that the Tribunal has, by its language, been led to make an error of law."

(Freeman v Defence Force Retirement and Death Benefits Authority (1985)0 8 ALN N97 per Sheppard J; see also Repatrication Commission v Bushell (unreported: joint judgment of Morling and Neaves JJ. 3 May 1991).

The matter of greater importance is to bear in mind that Parliament has entrusted to the Tribunal the power of reviewing the relevant decision. As Fisher J. said in Blackwood Hodge (Australia) Pty. Ltd. v Collector of Customs (New South Wales) (1979) 47 FLR 131 at p 145:-

"It is my firm view that this Court when hearing appeals from a Tribunal constituted for the purpose of reviewing decisions of this nature, should adopt a restrained approach. Parliament contemplated that only in exceptional circumstances should the decision of the Tribunal not be the final decision. This does not mean that when an error of law is identified, the court should be reluctant to intervene. In fact, it is under a duty to do so. Rather it should heed the comments of Davies L.J. (as he then was) in R v Industrial Injuries Commissioner; Ex parte Amalgamated Engineering Union (No. 2) (1966) 2 QB 31 at p 50: "I should like to echo the words of my Lord, Lord Denning M.R., in saying that I deprecate the practice, and hope it would not continue, of attempting to magnify or inflate questions of fact into questions of law and of trying to obtain decisions from the courts on matters which the legislature would appear to have thought suitable for decision by the various bodies and authorities set up under the Act of 1946'."

(See also Bisley Investment Corporation v Australian Broadcasting Tribunal (1981-82) 40 ALR 233 at pp 255-6 per Sheppard J., Federal Commissioner of Taxation v Cainero (1988) 88 ATC 4427 at p 4431 per Foster J., Politis v Federal Commissioner of Taxation (1988) 88 ATC 5029 at p 5032 per Lockhart J. and Federal Commissioner of Taxation v Swift (1989) 18 ALD 679 at pp 692-3 per French J.).

In considering whether there was any evidence that pointed to the appellant taking delivery of the missing spirit, one of the first questions that must be determined is the evidentiary worth that can be attached to Mr Sunk's signature on the acceptance certificate. Mr Wells went so far as to argue that, because the Tribunal had accepted that the usual controls were not in place during the morning of 10 March 1988 and because nobody took any readings of the storage tank or the compartment in the tanker, the signature on the certificate was "useless". He claimed that the signature, given in such circumstances, meant that its evidentiary weight was so slight as to have no logical probative value. In addition, whilst acknowledging that the Tribunal was not bound by the rules of evidence (paragraph 33(1)(c) of the Act), Mr Wells pointed to the Tribunal's acceptance of the fact that Mr Sunk had no authority to sign the acceptance certificate. Hence, so he claimed, any probative worth attaching to the certificate was further eroded because, at common law, it would not have been admissible in proceedings against the appellant: Scott v Fernhill Stud Poultry Farm Pty. Ltd. (1963) VR 12. In my opinion, it is not possible to dismiss the evidence of Mr Sunk's signature in such an arbitrary fashion; circumstances can vary from case to case and so it is a question for the Tribunal of fact to determine what weight (if any) should attach to a particular admission. So much is clear from the remarks of the majority in Lustre Hosiery Limited v York (1935) 54 CLR 134 at 138-139:-

"No doubt an admission made by a party as to the correctness of a fact is admissible in evidence notwithstanding that the party has no direct knowledge of the fact and must rely for his belief upon the statements of others, or upon inferences from circumstances which he knows, or which have been reported to him. But such an admission may indicate a state of mind varying from a firm belief based upon a thorough investigation of the existence or occurrence of the fact down to a wavering preference for one of two or more possible hypotheses none of which have been tested or determined. It is apparent that the admissibility of the evidence must be distinguished from its sufficiency to establish or support an affirmative conclusion in favour of the party who tenders it, when the burden of proof lies upon that party. It does not follow that, because such evidence is admissible, it is enough to prove the issue. The question is not the subject of much judicial authority. In some of the cases a tendency appears to exclude altogether from evidence statements which indicate no more than belief derived from secondary sources, but this tendency cannot be said to be persistent."

Of course, "(i)f a man admits something of which he knows nothing it is of no real evidential value": Comptroller of Customs v Western Lectric Co. Ltd. (1966) AC 367 at p 371; see also Berry v Lowcock (1981) 27 SASR at p 114 per Jacobs J. However, it would not have been appropriate to describe Mr Sunk as knowing "nothing" - nor would it be correct to assume that his signature on the acceptance certificate was the only evidence relating to the quantity of spirit that was delivered to the appellant that day. There was evidence before the Tribunal that the appellant had ordered and was expecting a delivery of 4500 litres. Furthermore there was evidence of the internal records of CSR Ltd; they accounted for the dispatch of 4500 litres; and the records of United Tankers Pty. Ltd. showed that the contents of the tanker's compartment that were intended for the appellant were discharged into the appellant's storage tank. Finally, there was evidence that showed that the source of the information disclosing the "lost" spirit was the appellant's internal records.
The appellant therefore had to concede that it had ordered and paid for 4,500 litres of the spirit; it also had to concede that the written records of its supplier and its carrier supported delivery of that quantity. That was the background against which an assessment was to be made of Mr Sunk's signature. If then at some later date, the appellant finds a deficiency in its stock of spirit, it amounts to a process of ex post facto rationalisation to conclude assertively that, because its employees did not verify the quantity of the delivery that was made on 10 March 1988, there must have been a shortfall in that consignment. There is always a possibility that this might be the correct answer or, as the Tribunal chose to say, that might be no more than speculation. It was for the Tribunal to consider all this evidence and make what it could of it. As Diplock L.J. (as he then was) said in R v Deputy Industrial Injuries Commissioner; Ex parte Moore (1965) 1 QB 456 at 488:

"If it (the evidence) is capable of having any probative value, the weight to be attached to it is a matter for the person to whom Parliament has entrusted the responsibility of deciding the issue. The supervisory jurisdiction of the High Court does not entitle it to usurp this responsibility and to substitute its own view for his."

(See also Commissioner of Taxation v Brixius (1987) 16 FCR 359 at p 366).

There being no statutory indication to the contrary, it was for the decision maker (and so, the Tribunal) and not the Court to determine the appropriate weight to be given to the evidence: Minister for Aboriginal Affairs v Peko-Wallsend Ltd. (1985) 162 CLR 24 at p 41 per Mason J. as he then was. I conclude therefore that there was evidence properly before the Tribunal, including Mr Sunk's signature on the acceptance certificate, that pointed to the appellant having received a consignment of 4500 litres of spirit on 10 March 1988. Any view that I might have about the calibre of that evidence is not to the point. It was for the Tribunal to assess it and to give to it such weight as the Tribunal thought appropriate.
The appellant further complained that the Tribunal had erred in law by assuming that the appellant carried the onus of satisfying the Tribunal that it had never taken the spirit into its possession, custody or control. This error was said to be apparent from the following extract from the Tribunal's reasons:-

"24. The difficulty for the applicant is that we are left to speculate. The evidence is not of sufficient cogency to satisfy us on the balance of probabilities that the spirit was not delivered into the applicant's possession. The applicant's explanation for the disappearance of the spirit does not satisfy us that the spirit has not gone into consumption without payment of duty, nor that the revenue has not suffered."

Mr Wells argued that this passage indicated that the Tribunal had misapprehended its task. He relied heavily on the remarks of Brennan J. when sitting as the Presidential member of the Tribunal in Re Pochi (1979) 26 ALR 247, a deportation case. His Honour there said at pp 254-255:-

"Before the Tribunal, the burden of proving the circumstances which warrant his deportation should be borne by the Minister..."

Later, at p 255, his Honour added:-

"But at the end of the day the decision-maker must be persuaded that deportation is in the best interests of Australia, and where the consequences of deportation are grave, he will not be lightly persuaded: see Briginshaw v Briginshaw (1938) 60 CLR 336 at 362."

When re Pochi went on appeal to the Full Court (Minister of Immigration v Pochi (1980) 31 ALR 666, Deane J. supported the view of Brennan J. saying, at p 685:-

"In my view, the Tribunal was bound, as a matter of law, to act on the basis that any conduct alleged against Pochi which was relied upon as a basis for sustaining the deportation order should be established, on the balance of probability, to its satisfaction by some rationally probative evidence and not merely raised before it as a matter of suspicion or speculation or left, on the material before it, in the situation where the Tribunal considered that, while the conduct may have occurred, it was unable to conclude that it was more likely than not that it had."

I do not take those statements to mean, as Mr Wells appeared to argue, that the Briginshaw standard is meant to be applied by every decision-maker to every administrative decision that he might be called upon to make. Brennan J. had earlier explained, when discussing what degree of proof was required, that in a deportation matter, an adverse finding "may carry adverse consequences of the most serious kind" (p 254). That was the context in which his Honour found it necessary to make reference to Briginshaw's case.
In my opinion it is sufficient to observe that in the overwhelming majority of cases, all that is required of the decision-maker is that he be reasonably satisfied of the occurrence or existence of such facts as are necessary to ground his decision: Rejfek v McElroy (1965) 112 CLR 517 at p 519. There was an obligation on the Collector to give "personal consideration to the whole of the material available to him..." and to make up "his mind reasonably on a balance of considerations:" The Collector of Customs (Vict) v Wilh Wilhelmsen Agency Pty. Ltd. (1959-60) 102 CLR 147 at p 160 per Kitto J. But a fair reading of the material, including in particular, the contents of the decision-maker's "Statement of Reasons" shows that the Collector acted responsibly and reasonably. Although it was never suggested, it must be clearly understood that there was no obligation on the Collector to investigate the records of any other user of the spirit as part of his investigations into the affairs of the appellant. In my opinion, therefore, there is no justification in the appellant's complaint that the Collector had not undertaken all proper investigations with sufficient thoroughness.
The facts that are relevant to the Collector's inquiries will be better understood by having regard to the purpose and effect of the relevant legislation, that is, the Excise Act. Like the Customs Act, it relies upon the personal integrity of the person whom I have earlier described as the custodian of the excisable goods: c.f. Collector of Customs (NSW) v Southern Shipping Co. Ltd. (1961-62) 107 CLR 279 at 290 per McTiernan J. When a person successfully applies for and obtains approval for the delivery of spirits, (Regs.142 and 143) he is bound to "keep records" of "the receipt and disposal of the spirits" (Reg.148). In its application (Form 19 of Schedule 1 to the Regulations) the appellant undertook to keep a book showing the quantities of spirit used and further undertook "that the book will be balanced monthly and kept ready for inspection at any time by an officer of Excise". Excise officers therefore play no role in supervising the delivery of the spirits; the matter is left, entirely on trust, to the custodian. In the Southern Shipping case, McTiernan J. had this to say at p 291 about para. 60(1)(b) of the Act (that is, not accounting for goods to the satisfaction of the Collector):-

"Paragraph (b) is in my view a drag-net provision. It exposes every person who has or has been entrusted with the possession, custody or control of excisable goods which are subject to Customs' control to the liability of being requested by the Collector to account for them to his satisfaction. The accounting may be done by producing the goods or, if they are missing, by giving an explanation which is satisfactory to the Collector. He has a discretion, which he is bound to exercise reasonably, to reject what is done or stated by way of accounting for the goods. In my opinion it was reasonable for the Collector to reject the defendant's account of what happened to the goods because the reason for their disappearance from Customs' control, namely breaking entering and stealing, justified the Collector in considering that the defendant failed to keep the goods safely."

In the same case Taylor J. explained that the legislation was designed to protect the revenue. He said at p 295:-

"... it is a provision which is designed to ensure that the excise revenue shall not suffer if excisable goods, by some irregular means, find their way into home consumption."

Finally, there are the remarks of Owen J. appearing at p 305:-

"If so, par.(b) may be invoked and the custodian may be required by the Collector to account for the absence of the goods in such manner as to satisfy him that the revenue has not suffered and, in the absence of an explanation which satisfies the Collector of that fact, the obligation to pay imposed by the latter part of the sub-section may be enforced. In the present case, the explanation given by the defendant for the disappearance of the goods was that they had been stolen and the probabilities were, in these circumstances, that they would go into consumption. The defendant failed to safeguard them against that danger and there was no need, in these circumstances, for the Collector to request the defendant to account for them. Nonetheless he did so and the account was not one upon which he was bound to be satisfied that the revenue had not suffered or would not be likely to suffer."

In the Wilhelmsen Agency case (supra) Kitto J. was called upon to consider the effect of s.149 of the Customs Act (1901-1950). The contents of the section were somewhat similar to sub-s.60(1) of the Act and provided:-

"If any dutiable goods which are included in the report of any ship... shall not be produced to the officer the master or owner of the ship... shall on demand by the Collector pay the duty thereon as estimated by the Collector unless the goods are accounted for to the satisfaction of the Collector."

At p 159, his Honour said:-

"What, then, is meant by the expression 'accounted for to the satisfaction of the Collector'? It appears to require that upon the information before him the Collector shall have reached two conclusions. One conclusion is that his information ought fairly to be accepted as establishing certain facts. The other conclusion is that what those facts show as to the history of the goods is satisfactory from the point of view of one concerned with the due protection of the interests of the Crown under the Customs Law."

The provisions of s.60 of the Act are therefore concerned with the protection of the revenue. What is more, they are directed to persons who, without supervision, have taken into their possession, custody or control, excisable goods. There is therefore a heavy responsibility placed on those persons to ensure, at all times that the revenue is protected. It is not sufficient, for example, to account for the missing goods by saying that a thief broke and entered an apparently secure store and stole them (The Southern Shipping case). Harsh as it may seem, that "account was not one upon which he (the Controller) bound to be satisfied that the revenue had not suffered..." (Owen J. at pp 305-6). Nor was it sufficient to say that the missing goods probably never left their port of loading (the Wilhemsen Agency case). Even though the explanation about a short-delivery might (contrary to the views of the Tribunal) may have a measure of appeal to some, it would not assist the appellant; like the stolen goods, the explanation of a short-delivery does not address the protection of the revenue.

It is necessary to turn back to the language used by the Tribunal in paragraph 24 of its reasons. I have concluded that it did not misconceive its responsibility. I do not believe that it deliberately or accidentally reversed the onus of proof. On the contrary, it recognised, sub silentio, that the appellant carried the responsibility of maintaining the relevant records that recorded accurately the spirit that it received and used; in like fashion it also recognised that the enquiries that the respondent could make were substantially limited to those records. Finally, the complaint about an alleged reversed onus overlooks the fact that the Tribunal, at that stage of its reasons, was addressing the question whether the appellant had accounted "for those goods to the satisfaction of a Collector". The obligation of "accounting" was a statutory obligation that had to be met by the appellant. It was in that context, that is, in questioning the nature of the appellant's accounting and the reasonability of the Collector's lack of satisfaction, that the Tribunal had proper cause to say that the evidence that was adduced by the appellant by way of explanation was "not of sufficient cogency to satisfy us on the balance of probabilities that the spirit was not delivered into the applicant's possession". That evidence was a relevant factor to be taken into account but the weight to be attached to it was for the Tribunal to determine: Repatriation Commission v Thompson (1988) 82 ALR 352 at p 358.
In my opinion therefore, the Tribunal was justified in concluding that the Collector's decision to make the demand on the appellant for payment of Excise duty was reasonable and that it should be affirmed. This appeal is therefore dismissed.

[1991] FCA 543

23 AUGUST 1991