Malika Holdings Pty Ltd v Victoria Stretton

[2000] HCATrans 28

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M1 of 1999

B e t w e e n -

MALIKA HOLDINGS PTY LTD

Applicant

and

VICTORIA STRETTON (in her capacity as Regional Director of the Australian Customs Service for the State of Victoria)

Respondent

Application for special leave to appeal

McHUGH J
KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 11 FEBRUARY 2000, AT 9.59 AM

Copyright in the High Court of Australia

MR B.J. SHAW, QC:   If the Court pleases, I appear with my learned friend, MR M.A. DREYFUS, QC, for the applicant.  (instructed by Vann Fisher & Associates)

MR G.T. PAGONE, QC:   If it please the Court, I appear with my learned friend, MS M.M. GORDON, for the respondent.  (instructed by the Victorian Government Solicitor).

McHUGH J:   Yes, Mr Shaw.

MR SHAW:   If the Court pleases, this case turns on the proper interpretation of section 167 of the Customs Act.  The terms of the section at the time are set out in the application book at page 27.  The terms of the section as it now is are set out at page  ‑ ‑ ‑

McHUGH J:   I think we might call on your opponent.

MR SHAW:   If your Honour pleases.

McHUGH J:   Yes, Mr Pagone.

MR PAGONE:   If your Honours please.  My learned friend was about to tell the Court that the issue in the case turns upon             the proper construction of section 167 of the Act.  His Honour Justice Bill Batt, in the reasons for judgment, which in the application book commences at page 21 and following, sets out the relevant provisions.  Your Honours will see at page 26 that there is section 153 of the Act and then 165 of the Act and then at page 27 of the application book, section 167.  What that provides, your Honours, is that:

If any dispute arises as to the amount or rate of duty payable in respect of any goods, or as to the liability of any goods to duty, under any Customs Tariff, or under any Customs Tariff or Customs Tariff alteration proposed in the Parliament, the owner of the goods may pay under protest the sum demanded by the Collector as the Duty payable in respect of the goods, and thereupon the sum so paid shall, as against the owner of the goods, be deemed to be the proper duty payable in respect of the goods, unless the contrary is determined in an action brought in pursuance of this section.

Your Honours, the only other provision that I should draw specific attention to at this stage is subsection (4) of that section, which our learned friends refer to in their submissions but once, but, which was significant in the court below.  Subsection (4) provides that:

No action shall lie for the recovery of any sum paid to the Customs as the duty payable in respect of any goods, unless the payment is made under protest in pursuance of this section and the action is commenced within the following times:

McHUGH J:   But does not that subsection tend against you, and indicate that the whole purpose of 167 is to deal with a situation, as its history shows, where the importer has paid money over to get the goods and then seeks recovery, and 167 is dealing with that?  You have to read a great deal into 167 to make it a code or an exclusive manner - - -

MR PAGONE:   Your Honours, it is significant, we would say, that our learned friends at not stage, up until this minute - and I have no reason to assume that it would change - have contended that the decisions in Kawasaki was wrong, or the decisions in the subsequent cases such as Gaylor and A & G.  That is significant, your Honour, because the effect of those cases is to govern the fact and circumstances that our learned friends are concerned with.

May I take your Honours briefly to the Kawasaki case which I think is behind tab 1 in our folder.  It is Comptroller‑General of Customs v Kawasaki Motors (1991) 32 FCR 243.

KIRBY J:   Which tab is it?

MR PAGONE:   Tab 1, your Honour.  Now your Honours will see from the headnote that there was an amount of money that was demanded by the Comptroller in 1989 and the sum was paid and what was sought to be recovered in that case was interest.  And that is significant, your Honours, because the interest was not paid; not part of the duty.  If I may take the Court to page 258 of the judgment, their Honours Justices Hill and Heerey who constituted the majority set out the question, at about point 5 of the page:

The question that then arises is whether the enactment of s 167 in its present form operated to exclude any common law right of recovery so that in any proceedings for recovery s 167 operates as an exclusive code –

McHUGH J:   Yes, but that is the point, is it not?  This is not an action for recovery.  This is not an action by the importer.  The importer wants to defend.

MR PAGONE:   And, your Honour, the question was whether the importer, in order to defend, had first to pay, under section 167, and then – and by paying under protest – invoke the provisions of the Act, or whether by some other mechanism, the importer could say, “Well I have managed to get the goods without having to pay, and that is all right.  I do not now have to comply with the provisions of section 167.  I do not need first to pay under protest.  By the way, that gives me a tremendous forensic advantage because the burden of proof shifts because it is, of course, the Comptroller of Customs who will need to prove the amount is payable.”  But put that to one side.  The question is principle is whether the provisions of section 167 govern so that if the importer wishes to contest, there must first be a payment to invoke the provisions that the section provides.

At page 263 in the joint judgment, their Honours begin, at the top of the page, by saying:

It may be conceded that s 167 confers upon an importer, who is in a relevant dispute with the Collector, a choice whether or not to pay under protest, but it does not follow, from that, that it also confers upon the importer a choice not comply with the terms of the section but rather to take action freed from its limitations.

Later on in that passage they talk about:

The wording of subs (4) is in the widest form.  It precludes any action for the recovery of any sum paid as Customs duty –

and then at about point 6 of the page:

It follows that s 167 represents the only method whereby an action for recovery of overpaid Customs duty can be brought where there is a dispute between the owner and the Collector as to liability or matters affecting liability and that it operates to exclude the availability of any alternative common law remedy.

And then your Honours, over the page - because this was a case where interest was being claimed.  At page 264, their Honours deal with this additional submission which, we say, is the essence of our learned friend’s case here:

It was submitted by the respondent that the present case was not a case which fell within s 167, that is to say, that the present case was a case where no protest was possible.  No doubt if this were the case, an action at common law might be taken to be outside the prohibition in subs (4).  The argument proceeds on the basis that there never was any “dispute as to duty” whether in terms of amount, rate or liability of goods to duty.

Which is the wording in section 167(1), your Honours:

This argument places too narrow a construction upon the words of s 167(1).  The dispute was not an abstract dispute as to the validity of the revocation of the TCO.

Now, your Honours, we would say that our learned friends correctly do not seek to agitate that, in the subsequent decisions - - -

KIRBY J:   What did Justice Beaumont decide in that case?  I see he dissented the appeal.

MR PAGONE:   He dissented, your Honour, yes.

KIRBY J:   And he set out a lot about the history of the section.  Did he agree with that part of the reasoning, or not?

MR PAGONE:   No, your Honour, he did not.  He was in dissent on those operative parts.  That decision has been followed, your Honours, in the cases to which we have referred, being Gaylor, which is the second case in our list behind tab 2; it being followed in the third case A & G International v Collector of Customs, which is the third case on our list; it has been followed in Matchbox Toys Pty Ltd.

KIRBY J:   One would expect that once the Full Court has passed on an issue, it will be followed until this Court sets it aside.

MR PAGONE:   And our learned friends  ‑ ‑ ‑

McHUGH J:   And in the Matchbox Case, Justice Kirby expressly reserved the question as to the effect of section 167(4), did he not?

MR PAGONE:   And our learned friends, your Honour, do not contend that the principle is wrong.  What they seek to say is that it is distinguishable.  May I take your Honours to their reply at page 97.  They say that, in relation to the cases that we put in our submissions, as to Kawasaki it is said in paragraph 1:

That case held that s.167 was an exclusive code in relation to the recovery by an importer of duty paid.

Well, that is not right, because the question was whether the interest was recoverable, and the could held it was not.  In paragraph 2, there is a reference to Gaylor, Matchbox and A & G and our learned friends say:

none of these cases supports the interpretation contended for by the respondent and each, when read in its entirety, acknowledges that section 167 is a code dealing only with recovery of duty paid.

That is not so.  When one looks at, for example, A & G one finds the same thing, and I take your Honours to that briefly, at tab 3, 129 FLR 23. Your Honours will see in the third – perhaps if I just begin by the second sentence of the headnote.

KIRBY J:   Which page?

MR PAGONE:   At page 23, your Honour.  Your Honours will see that:

The plaintiff overpaid customs duty –

and –

At first the overpayments were not made under protest;  later the question of correct classification of goods was raised, and subsequent payments were made under protest. 

Then if I can take your Honours to the third paragraph on the headnote:

The plaintiff applied under s 273GA to the administrative Appeals Tribunal, which found that there had been a patent misconception of the law.  The plaintiff then commenced the present proceeding in the Supreme Court to recover amounts of duty that had not been paid under protest -

in other words, that section 167 had not been invoked.

McHUGH J:   Yes, but you have to face up to this point, have you not?  That your opponent says at page 98, about line 16 that:

This is the proper approach to take to s.167 in its historical context, being aimed at giving importers the right to obtain release of their goods and make payments in a way which does not prevent recovery action in the future.

And then your opponent says that has nothing whatever to do when they are seeking to recover money or interest, or anything else.  What they are seeking to do is to defend themselves from a late claim.  Now, why is that not an arguable question?  You have to go so far as to say that 167 says that any dispute, at any time, about the payment of customs duty, it provides the sole code.

MR PAGONE:   That is right, your Honour.

McHUGH J:   It is a large proposition to make, having regard to its history.

MR PAGONE:   No, your Honour.  Because having regards to its history, what the legislature sought to do, and did, was to create a code through which a person seeking to import could complain about the duty.

McHUGH J:   Well, to refer to “code” is rather question begging, because a code is the result of the construction you put on the sections.  The question is, what does 167 do?  Was it intended to take away common law rights?  It is a fundamental construction or a principle of construction, that you do not construe statutes as taking away fundamental rights in the absence of plain language.

MR PAGONE:   Your Honour, in response to the fundamental rights point, the answer is, there is no fundamental rights that have been taken away.

McHUGH J:   There was a right to defend prior to the enactment of 167, was there not?  And we know, as a matter of history, why 167 was introduced into the Act.  It was to enable, in the case of a dispute, for the importer to get hold of the goods speedily upon paying under protest.

KIRBY J:   Defnding in court sounds pretty fundamental to me.

MR PAGONE:   Yes, your Honour, of course it is, and there is still that right to defend in courts, just that there is a procedure by which to do it.  You must first pay under protest, and as we put in our submissions, even today, they could pay under protest and invoke that right.  All that has happened by the provision is to create – I will come back to whether it is desirable to be described as an exclusive code, but if your Honours will bear with me for a minute – an exclusive code by which that right may be invoked.  No more than that.  So that our learned friends, in saying that there has been a taking away of a fundamental common law right, is overstating the case by perhaps two and a half, rather than just by half.  It is a big statement.  It is just not so.  The right remains there but it is moulded and it is effected in a way that makes it doubtlessly convenient for the revenue but, nonetheless, preserves it, and so far as  ‑ ‑ ‑

McHUGH J:   But if you are right, are there any circumstances in which the importer can defend an action otherwise than through payment of the claim when you make it?

MR PAGONE:   Your Honour, there may be circumstances.  His Honour Justice Batt and presumably the Court of Appeal below identified some cases where questions of ownership might be, or whether the person was not the owner might be invoked; and I suppose challenges which are strictly constitutional challenges would also be relevant; and I suppose the usual array of administrative law challenges in proper purposes, and the like, would also be available.  But provided that the subject matter of the dispute sought to be agitated by the importer relates to the amount or rate of duty payable, which is what they want to raise here by way of defence, or the liability of the goods, then for them to do that they must first pay under protest.  His Honour Justice Ormiston said in the A & G Case that that may well seem draconian, but  ‑ ‑ ‑

KIRBY J:   It does a bit, and if it is to be draconian, it has to be very clear and the history is against you, and at least one construction of it is against you and that, presumably, it applies hundreds of times every week; it is an important matter for your administration; it is a federal Act.  All of these things to seem to point towards a grant of special leave.

MR PAGONE:   Well, your Honours, except that it is odd for our learned friends, as it were, to seek to agitate half a point because the point that your Honour seems to be minded to say, or to see as a special leave point, is a much broader one that can possibly be raised.  They would need to show that Kawasaki and that the rest of the line of cases, are wrong.  But I have never sought to say that, ever.

McHUGH J:   They say they should be confined to attempts to recover money from the Crown.  You really have to say that the policy of the Act is that when goods are brought into the country, you pay first, and then you recover your money from the Crown if the duty was not payable.  That is not easy to reconcile with the express terms of 153, which says:

All duties shall constitute Crown debts…..and recoverable at any time in any court of competent jurisdiction by proceedings in the name of the Collector.

MR PAGONE:   That is right, your Honour.  And if our learned friends which to contest that the duty is not payable, there is a procedure by which they can do that, and it is a procedure that makes perfectly good sense.  Not only does it make perfectly good sense, but the converse would see Customs stopping all goods from going through the border, unless they were first paid, because otherwise they would end up in this very problem that we have created; we have now, which would seem an odd result.  That would not help international trade one bit, and it would not help importers one bit.

McHUGH J:   Well that is the whole purpose of 167.  When you assess the goods then the importer must pay, under protest, if he wants to recover the money and then sues.  But you have let these goods through and now you claim duty was payable on them.

MR PAGONE:   But your Honour, there is a history of how the goods got through.  It was not suggested the goods were allowed through on the basis that they were not dutiable.

McHUGH J:   No, I know.

MR PAGONE:   The question was, get them through and then we will worry about the assessment hereafter.

KIRBY J:   Which is a desirable interpretation of the Act.

MR PAGONE:   It is, your Honour, a desirable interpretation of the Act.  If my learned friends are right, Customs would simply have to say, “Stop, because until we know what the duty is, we are not going to let them through”.

KIRBY J:   Well that is an argument of convenience.  It is not an argument of construction.

MR PAGONE:   Of course, your Honour, but it does go to the question of matters of public importance, and - I am conscious of the time - if I may go back to the proposition that was put by his Honour Justice McHugh.  It is, in a sense, true that the case to which I have taken your Honours to, is a case, or are cases, where it was the importer commencing the proceeding.  But which side of the Bar table, as it were, the issue arises cannot be the determining factor in the outcome of the case, because it would make no sense at all, with respect, for a litigant to be told, “No, you cannot raise that point if you are the plaintiff, but you can agitate the very same point if you are the defendant”.  The point is that, if any dispute arises - and the words of section 167 are not conditioned by “If any dispute arises by way of commencing proceedings as plaintiff”, it is “Any dispute as to the amount of goods”, et cetera, “then this proceeding follows” and this procedure is the one that needs to be followed.

KIRBY J:   Yes, but here we have an arguable point where there is a well‑heeled applicant who can afford Mr Shaw and Mr Dreyfus who wants to raise the issue – it is a general issue of importance to lots of people who could never afford Mr Shaw and Mr Dreyfus - and it seems to raise, at least arguably, an important issue of the construction of a very important federal statute.

MR PAGONE:   Well, your Honour, doubtlessly one may take the view that it is an important issue but this Court has said, on more than one

occasion, that the final Court of Appeal in relation to tax matters is generally the Federal Court, and the Federal Court has ruled upon it.

KIRBY J:   That seems to be honoured more in the breach than in the observance - - -

MR PAGONE:   Your Honour, perhaps one ought then to start a new wave of observance.  But it has been ruled upon.  It deals with this situation.  It has been followed.  The reason for it has been explained in the cases that have followed it, and even Justice Ormiston who described it as, perhaps, draconian was able to explain both why it should be so and - - -

KIRBY J:   Well, it may be draconian, but it may be convenient.  But, in the end, it is a question of what the Parliament meant by the words it used, so that  ‑ ‑ ‑

MR PAGONE:   If your Honour pleases, I see that my time has expired.

KIRBY J:   I just wanted to ask Mr Shaw a question. Mr Shaw you trailed the Constitution through your submissions like a sort of smelly fish. Are you really raising a constitutional point? If you are, there may be obligations to give notice under the Judiciary Act.

McHUGH J:   I thought you were relying on it as a matter of construction.

MR SHAW:   Really obliquely, saying this helps.

KIRBY J:   But sometimes that blows up and we would not want to have it up before the Court and then have a 78B problem, because it says the Court must stop.  Parliament purports to tell us to stop.  Anyway you ought to consider that.

MR SHAW:   Yes, I understand that your Honour, and I understand the inconvenience that would follow if we put it forward in the way which made it a great big issue instead of something just by the way.  But we certainly would bear that in mind, your Honour.

McHUGH J:   Yes, we need not hear you, Mr Shaw.  There will be a grant of special leave in this matter.

MR SHAW:   If your Honour pleases.

AT 10.23 AM THE MATTER WAS CONCLUDED