Martino and Australian Taxation Office
[2002] AATA 1242
•29 November 2002
CATCHWORDS – CUSTOMS AND EXCISE – tobacco producer licences – cancellation of licences – whether brother of applicant an associate of the applicant – whether associate is a fit and proper person – whether cancellation of licences necessary to protect the revenue – whether alternative market to sell produced tobacco – decision affirmed.
Excise Act 1901 ss. 28, 29, 30, 32, 35, 39B, 39G, 39H, 39L, 44, 60, 61, 61A, 61C, 116 and 117; Parts III and IV
Taxation Laws Amendment (Excise Arrangements) Act 2001 ss. 4 and 6
Income Tax Assessment Act 1997 s. 995-1
Income Tax Assessment Act 1936 ss. 6 and 318; Part X
Crimes Act 1914 s. 19B
Customs (Prohibited Imports) Regulations 1956
Air Navigation Regulations 1947
Broadcasting Act 1942 ss. 83, 83A, 86AA and 88
Excise Tariff Act 1921
Excise Regulations 1925 rr. 3, 4, 5, 6 and 39A
Customs Act 1901 s. 60
Civiti and Secretary, Tax Agents' Board of Victoria 90 ATC 2039
Stasos v Tax Agents' Board (1990) 21 ALD 437
Re Dowling and Secretary to Department of Health (1985) 8 ALD 171
Re Taylor and Department of Transport (1978) 1 ALD 312
Hughes and Vale Pty Ltd and Anor v State of New South Wales and Ors [No.2] (1955) 93 CLR 127
Australian Broadcasting Tribunal v Bond and Others (1990) 94 ALR 11
Stephens v Abrahams (1902) 27 VLR 753
Parker v Churchill (1986) 9 FCR 334
State Drug Crime Commission of NSW v Chapman (1987) 12 NSWLR 447
F.H. Faulding and Co. Limited v Collector of Customs, Federal Court, 23 August, 1991, G50/1990
Repatriation Commission v Smith (1987) 15 FCR 327
DECISION AND REASONS FOR DECISION [2002] AATA 1242
ADMINISTRATIVE APPEALS TRIBUNAL )
) V2002/595
GENERAL ADMINISTRATIVE DIVISION )
ReFRANCESCO MARTINO
Applicant
AndAUSTRALIAN TAXATION OFFICE
Respondent
DECISION
Tribunal: Miss S A Forgie (Deputy President)
Date: 29 November, 2002
Place: Melbourne
Decision:The Tribunal affirms the objection decision of the respondent dated 15 April, 2001.
S A FORGIE
Deputy President
REASONS FOR DECISION
On 7 June, 2002, the applicant, Francesco Martino, applied for review of an objection decision made by a delegate of the respondent, the Commissioner of Taxation ("Commissioner") dated 15 April, 2001. That objection decision disallowed an objection made on 12 February, 2002 to an earlier decision dated 14 January, 2002 cancelling producers licences numbered 1S015286 and 1S015499 issued to F & F Martino ("the partnership") ("the licences"). Each licence is a producer licence granted under Part IV of the Excise Act 1901 ("the Act") authorising the partnership to produce tobacco seed, tobacco plant or tobacco leaf.
At the hearing, Mr Martino was represented by Mr Traczyk of counsel and later by his solicitor, Mr Primerano, and the Commissioner by Mr Lorkin of counsel. The documents lodged pursuant to s. 37 of the Administrative Appeals Tribunal Act 1975 ("T documents") were admitted in evidence together with a bundle of shipping documents, statements of Mr John Moore (General Manager of Tobacco Co-operative of Victoria Limited ("TCV")), Mr Robert Bourne Edgerley (Leaf Manager Australasia, Operations of British American Tobacco Australia Limited ("BATA")) and Mr Gary Lee Weston (Leaf Manager of Philip Morris Limited) and an Estimate to fob Cost.
THE ISSUE
There are two main issues in this case in considering whether the Commissioner was entitled to cancel Mr Martino's producer licence. The first centres on s. 39G(1)(f) of the Act and raises three sub-issues. The first sub-issue is whether or not Mr Martino is an associate of Mr Giuseppe Martino, the second whether Mr Giuseppe Martino is a fit and proper person and the third whether cancellation is necessary to protect the revenue. Regardless of the outcome of the first main issue, the second main issue is whether cancellation of the licence is necessary for the protection of the revenue.
THE LEGISLATIVE FRAMEWORK
Part III of the Act, which was repealed and substituted with effect from 7 September, 2000, provides for, among other matters, the licensing of the producers of tobacco seed, tobacco plant and tobacco leaf. Although reference is made in the Act to the Collector, amendments effected by the Taxation Laws Amendment (Excise Arrangements) Act 2001 ("Amendment Act") led to the Act's being administered by the Commissioner and a reference to a Collector is, in the context of this case, the Commissioner (Amendment Act, ss. 4 and 6). I have used both terms interchangeably in these reasons.
No person other than a holder of a producer licence may produce tobacco seed, tobacco plant and tobacco leaf (Act, s. 28). Licensed producers must produce those products in accordance with the Act and his or her producer licence (Act, s. 29). The Collector may cancel a licence if he or she is entitled to suspend it under s. 39G. Subject to s. 39G(2), the Collector may suspend a licence if he or she has reasonable grounds for believing that any one of the grounds set out in s. 39G(1) exists. Two of those grounds are relevant in this case.
The first ground is that the licence holder is an associate (within the meaning of the Income Tax Assessment Act 1997 ("ITA Act 1997")) of a person who is not a fit and proper person (s. 39G(1)(f)(i)). In determining whether a natural person is a fit and proper person, the Collector may have regard to the matters set out in s. 39H of the Act. Section 39H provides:
"The Collector may, in considering whether a natural person is a fit and proper person for the purposes of paragraphs 39G(1)(a), (b), (c), (d) and (f), have regard to:
(a)whether, within one year before the day of the Collector's consideration, the person has been charged with an offence of the kind referred to in paragraph 39B(a); and
(b)whether, within 10 years before the day of the Collector's consideration, the person has been convicted of an offence of the kind referred to in paragraph 39B(b); and
(c)whether the person is an undischarged bankrupt; and
(d)whether, within 10 years before the day of the Collector's consideration, the person has:
(i)held another licence which has been cancelled; or
(ii)has participated in the management or control of a company that has had its licence cancelled."
Section 995-1(1) of the ITA Act 1997 provides that the word "associate" "… has the meaning given by section 318 of the Income Tax Assessment Act 1936 ("ITA Act 1936"). Section 318(1) is concerned with the associates of a natural person and provides that:
"For the purposes of this Part, the following are associates of an entity (in this subsection called the 'primary entity') that is a natural person (otherwise than in the capacity of trustee):
(a)a relative of the primary entity;
(b)a partner of the primary entity or a partnership in which the primary entity is a partner;
(c)if a partner of the primary entity is a natural person otherwise than in the capacity of trustee - the spouse or a child of that partner;
(d)…
(e)…"
Unless a contrary intention appears in the ITA Act 1936, the word "relative" includes a person's brother (ITA 1936, s. 6(1)).
Section 318(4) is concerned with the associates of a partnership and provides:
"For the purposes of this Part, the following are associates of a partnership (in this subsection called the 'primary entity'):
(a)a partner in the partnership;
(b)if a partner in the partnership is a natural person – any entity that, if that natural person were the primary entity, would be an associate of that natural person because of subsection (1) or (3);
(c)…"
Part X of the ITA Act 1936 is headed "Attribution of income in respect of controlled foreign income companies".
Even if the Collector concludes that he or she has reasonable grounds for believing that the licence holder is not a fit and proper person, he or she must not suspend the licence unless satisfied that it is a producer licence or a dealer licence and that it is necessary to suspend the licence to protect the revenue (s. 39G(2)). If the Collector is entitled to suspend a licence under s. 39L, the Collector may cancel the licence.
The second ground on which the Collector may suspend a producer licence under s. 39G(1) is that it is necessary for the protection of the revenue to suspend the licence (Act, s. 39G(1)(m)).
BACKGROUND
There was no disagreement between the parties as to many of the factual matters forming the background to this matter. In view of that and on the basis of the material in evidence in this case, I have made the findings of fact set out in the following paragraphs.
Since 1969, Mr Martino has been a tobacco producer in Victoria. Apart from two years when he was a sharefarmer, he has produced tobacco on his 30 acre farm at King Valley in Victoria and a further ten acres leased from a neighbour ("farm"). Mr Martino works the farm with his family and, at times, with the assistance of four, five or six farm labourers. His average annual production is in the order of 32,600 kilogrammes.
The tobacco industry was de-regulated in September, 1994. At that time, the Tobacco Leaf Marketing Board, which was a statutory authority, was replaced by the TCV. The TCV is a corporate body in which Victorian tobacco producers hold shares. On behalf of those producers, it arranges the sale of tobacco leaf to its customers. Provided producers have the appropriate permission to deliver their tobacco to the TCV, the TCV will accept it and offer it for sale to its customers. It then stores their tobacco to the extent that its customers purchase that tobacco. Mr Martino and his wife are members of the TCV, hold shares in it and have always sold their tobacco crop through it.
At the moment, the TCV has only two customers and they are Philip Morris Limited and BATA. The TCV owns a threshing machine and drying facilities and threshes and re-dries tobacco leaf on behalf of Philip Morris Limited and BATA. Each of the companies pays for the tobacco it purchases to be threshed and re-dried by the TCV. The amount each pays is determined on the basis of certain fixed and variable costs associated with the operation of the threshing and drying equipment. Philip Morris Limited and BATA each owns and uses specific equipment on the threshing machine. That equipment takes the form of baskets, of which there are thirteen on the machine and all must be utilised in any threshing operation, and an oven. On the basis of the evidence of Mr Weston and Mr Edgerley as well as that of Mr Moore, I am satisfied that neither company will permit the TCV to use its equipment to thresh tobacco for any other customer. That is so even if that customer is him or her self a tobacco producer and shareholder in TCV.
On 29 September, 1999, Mr Martino requested the National Director, Tobacco, Excise in the Commissioner's office, to register him under the Act as a producer for the production of tobacco on his farm (T documents, page 8). A certificate of registration as a producer of Tobacco Leaf was issued to Mr Martino on 29 October, 1999. It was expressed to remain in force until cancelled. In a letter dated 28 November, 1999 forwarding the certificate of registration, the Commissioner advised Mr Martino of his obligations to maintain records and to report to the Commissioner under the Act (T documents, pages 9-11).
On 11 April, 2000, Mr Martino's brother, Mr Giuseppe Antonio Martino, visited the farm. Mr Giuseppe Martino had previously been a tobacco farmer but was no longer engaged in the industry and had no input into the manner in which Mr Martino operated his tobacco farm. Mr Giuseppe Martino had bought 2½ bales of tobacco from another man for $500 per bale. That man had given him cutting equipment used to process tobacco leaf and the name of a man in Albury who might be interested in buying the tobacco leaf once Mr Giuseppe Martino had cut the bales into one kilogramme lots. The proceeds of the sale were expected to be in the order of $2,500 and so net Mr Giuseppe Martino a profit of $1,250. Trading in tobacco in this way is known as "chop chop" trade.
When he arrived at Mr Martino's farm, he told his brother that he was taking some tobacco for sale to another person. He asked Mr Martino to travel with him but Mr Martino declined to do so in his brother's truck. Instead, he said that he would go with him if they travelled in his own truck. They transferred the one kilogramme bags, which were packed inside large plastic garbage bags, to Mr Martino's truck. Mr Giuseppe Martino met the person to whom he intended to sell the tobacco but, for some reason not known to Mr Martino but found by Bongiorno J in subsequent proceedings in the Supreme Court of Victoria to relate to the manner of payment proposed by the potential purchaser, did not sell it. His Honour also found that Mr Martino knew that his brother was engaged in an illegal activity. The two brothers travelled back to the farm but, shortly before reaching it, were intercepted by the police.
On 26 June, 2000, Mr Martino was charged under s. 117(1) of the Act in relation to the possession of excisable goods without authority. The charge was laid by way of a writ issued by the Chief Executive Officer of Customs ("CEO"). The excisable goods were 266.704 kilogrammes of cut tobacco leaf. Mr Giuseppe Martino was also charged with the same offence and also under s. 35. That charge was heard by Bongiorno J in the Supreme Court of Victoria on 20 February, 2001.
On 16 February, 2001, the Commissioner gave Mr and Mrs Martino a continuing permission to move tobacco leaf. That permission was given under ss. 30 and 44 of the Act (T documents, page 129).
On 29 March, 2001, a producer licence was issued to Mr Martino and his wife to produce tobacco at their property at King Valley. The producer licence commenced on 7 September, 2000, which was the date of the commencement of Part III of the Act in its current form, and continued until cancelled. (T documents, pages 86-88)
On 29 June, 2001, Bongiorno J delivered his judgement. He found Mr Martino to be in breach of s. 117(1) and made a declaration to that effect. His Honour also made a declaration that Mr Martino's Toyota Hilux utility truck had been forfeited to the Crown pursuant to s. 116(1)(e) of the Act. That was worth approximately $40,000. Pursuant to s. 19B of the Crimes Act 1914, he also ordered that Mr Martino be discharged without conviction in respect of his contravention of s. 117(1) upon his entering a recognizance in the sum of $100 to be of good behaviour for the period of one year from the date of his entering that recognizance. Together with his brother, Mr Martino was ordered to pay the CEO's costs. Mr Giuseppe Martino was also convicted of the same offence as well as of manufacturing excisable goods. He was fined a total of $127,919.22. A declaration was made that he had forfeited his cutting equipment. (T documents, pages 20-33)
In his judgement, Bongiorno J noted that letters had been written by Philip Morris Limited and by BATA to the effect that they would not buy tobacco from any grower convicted of any excise offence in relation to the "chop chop" trade. Bongiorno J expressed the view that "… it would be quite unjust in the circumstances of this case for them to do so …" (T documents, page 26)
On 5 July, 2001, officers from the Australian Taxation Office ("ATO") visited Mr and Mrs Martino at their farm. They raised with Mr and Mrs Martino a range of issues including the changes to the Act in September, 2000 and the changes that they mean for the production and movement of tobacco and Mr and Mrs Martino's liability to account for the output of the farm and for excise for any leaf they could not satisfactorily account for. The officers also advised them that the ATO had rated producers according to their risk to the tax revenue and that they had been rated as a high risk due to Mr Martino's recent conviction and the farm's yield of 664 kilogrammes per acre being a low yield when compared with the Victorian average. Mr Martino attributed the low yield to losses due to frost, leaf mosaic and poor cropping by a new strain he had chosen to plant. At that time, there were 52 bales of tobacco ready for delivery to the TCV for the fourth sale on 14 July, 2001 and a further 87 bales that were unlabelled and unnumbered but that were stored for future sales. (T documents, pages 43-51)
On 11 July, 2001, BATA sent a copy of the judgement to the TCV and wrote:
"Recital C of the Tobacco Purchasing Agreement between British American Tobacco Australia Limited ('BAT') and TCV dated 22 March, 2001 ('the Agreement') provides that:
'BAT has informed [TCV] and [TCV] has agreed that BAT will not purchase tobacco leaf which has been grown on farms or which has been sold or otherwise transferred to [TCV] by any tobacco farmer or other person who has been involved or otherwise dealt in the illegal sale of tobacco.'
In addition, 'Participating Tobacco Grower' is defined in the Agreement as:
'…those tobacco grower members of [TCV] offering through [TCV] tobacco for sale to BAT excluding any Grower whom BAT has notified to [TCV] in writing that BAT will not buy tobacco leaf from that Grower.
Pursuant to these provisions in the Agreement, I put you on notice that as of the date of this letter, BATA will not purchase tobacco leaf from TCV that involve Mr Martino and request that you immediately remove Mr Martino from TCV's list of participating tobacco growers supplying BATA." (T documents, page 40)
On 12 July, 2001, Philip Morris Limited wrote to TCV in similar terms (T documents, pages 38-39). TCV forwarded copies of both letters to Mr Martino on 13 July, 2001 and told him that there appeared "… to be no utility in you continuing to supply tobacco to the Co-Operative, and we ask you to make arrangements to retrieve the tobacco presently with the Co-Operative for the purpose of sale by the Co-Operative on your behalf" (T documents, page 37).
On 23 July, 2001, BATA advised the TCV that it would not purchase tobacco grown on Mr Martino's farm even if it were presented to the TCV by Mrs Martino who was jointly registered with Mr Martino as a shareholder in TCV. BATA cited its contract with TCV that it "…will not purchase tobacco leaf which has been grown on farms by any tobacco farmer or other person who has been involved or otherwise dealt in the illegal sale of tobacco" (T documents, page 53). The TCV asked Philip Morris Limited whether it would be prepared to accept tobacco supplied by Mr or Mrs Martino. Phillip Morris replied that it would not purchase tobacco supplied by either Mr or Mrs Martino and/or their partners. It also referred to its contract with the TCV (T documents, page 54).
The TCV wrote to Mr and Mrs Martino noting the position adopted by the two companies and requiring them to remove 52 bales of their tobacco from its warehouse (T documents, page 55). Mr Martino took delivery of them on 13 November, 2001 (T documents, page 58). When added to the further 87 bales that Mr Martino had on his property, he had 139 bales. As the excise duty value of the tobacco was $258.06 per kilogramme, the excise value of the 87 bales was $3.8 million.
On 10 December, 2001, a delegate of the Commissioner took into account the position adopted by BATA and Philip Morris Limited and considered that there is no apparent legitimate domestic market available in Australia and no current export market for tobacco leaf produced by Mr and Mrs Martino on his farm (T documents, pages 67-68). On 12 December, 2001, the delegate suspended Mr and Mrs Martino's licences and the Notice of Suspension was served on Mr Martino on 18 December, 2001. As a result of that suspension, Mr and Mrs Martino were not permitted to grow, store or cure tobacco other than as permitted by the Collector. (T documents, pages 71-78)
Mr Martino lodged a Notice of Objection against the decisions on 24 December, 2001 (T documents, pages 79-112). On 3 January, 2002, a delegate of the Commissioner granted Mr and Mrs Martino permission to grow 40 acres of tobacco when it became known that they had planted again (T documents, pages 113-116). With regard to the 139 bales that were stored on their property, Mr and Mrs Martino were given permission to move them to a bond store in Sydney provided they complied with conditions set out in the Commissioner's letter of 7 January, 2002. They advised the Commissioner that they would move the bales on 10 January, 2002. The bales have since been mislaid from the bond store and there whereabouts is unknown. It is a matter that the ATO is currently investigating.
In a letter dated 14 January, 2002, a delegate of the Commissioner advised Mr and Mrs Martino that their licences were cancelled on and from 15 January, 2002. He found that Mr Martino is a partner in F&F Martino, which is a licensed producer, and that Mr Martino is the brother of Mr Guiseppe Martino. The delegate stated that he believed on reasonable grounds that Mr Guiseppe Martino is not a fit and proper person. He went on to decide that, in terms of s. 39G(1)(f) of the Act, he believed on reasonable grounds that Mr Martino is an associate of Mr Guiseppe Martino, who is not a fit and proper person. Furthermore, he noted that the TCV has advised the Commissioner that it can no longer sell tobacco leaf on behalf of the partnership and concluded that the partnership has the capacity to produce tobacco leaf for which there is no apparent legitimate market. That possession and capability, he further concluded, constitutes a risk to the revenue within the meaning of s. 39G(1)(m). It was necessary for the protection of the revenue to suspend the producer licences. The Notice of Cancellation of the producers licences relied on ss. 39G(1)(f), 39G(1)(m) and 39L of the Act. (T documents, pages 132-137)
CONSIDERATION
In his written submissions regarding the first ground of cancellation in s. 39G(1)(f)(i), Mr Traczyk relied in part on the argument he had put forward in Mr Martino's Notice of Objection and as developed in his later Contentions of Fact and Law. Central to his submission was that the proposition that the meaning of "associate" was not plain and obvious for it is used in several different divisions of the ITA Act 1997 and it took its meanings from the different contexts of those divisions. Where the meaning of a word was not plain or obvious, regard had to be had to the purpose of the legislation in which it was used. The purpose of the Act, Mr Traczyk submitted, is to establish a licensing regime in order to minimise any risk to the revenue by preventing the establishment of "sham" business structures by persons of dubious character. An "associate" should be limited to any person who has input, control or influence in the production of tobacco product by the licence holder. To adopt a broader view of an "associate", Mr Traczyk submitted, would lead to an unjust and absurd result in which a licence holder of exemplary character could lose his or her licence even if a relative, from whom he or she had not heard for years, were found to be a person who was not a fit and proper person.
I do not accept Mr Traczyk's submission. Section 39G(1)(f)(i) is clear that the ground of cancellation for which it provides turn upon the licence holder's being an associate within the meaning of the ITA Act 1997. Certainly, words may take their meaning or shades of meaning from their context but, where they are defined, the starting point of any consideration of its meaning is the definition. When I turn to the definition provisions in the ITA Act 1997, they provide that an "associate" has the meaning given by s. 318 of the ITA Act 1936 (s. 995-1(1)). They do not provide that the word has the meaning given in other sections or divisions of the ITA Act 1936. In view of that specific reference to s. 318, I can have regard to no other meaning.
Having reached that conclusion, it is not relevant to consider the other submission that adoption of the meaning given in s. 318 will lead to an absurd outcome. I accept Mr Lorkin's submission that a situation such as that described by Mr Traczyk would be prevented by the further requirement in s. 39G(2) of the Act that the Collector must not suspend a producer's licence unless he or she is satisfied that it is necessary to do so to protect the revenue.
In this case, it is freely acknowledged by Mr Martino that Mr Giuseppe Martino is his brother. In view of that, Mr Giuseppe Martino is a relative of Mr Martino. As a relative, Mr Martino is an associate of Mr Giuseppe Martino by virtue of s. 318(1)(a). I will return shortly to the question of whether or not Mr Giuseppe is a fit and proper person.
For the moment, I will turn to Mr Traczyk' second submission. That is that the Commissioner could not rely on Mr Giuseppe Martino's being an associate of Mr Martino and not being a fit and proper person for the producer licences were held by Mr Martino in partnership with his wife and not alone. At the time the Notice of Cancellation relied on s. 39G(1)(f) and did not assert that the partnership is an associate of a person who is not a fit and proper person. It is not asserted, and cannot be asserted, that any of the partners is not a fit and proper person.
I do not accept that Mr Martino's being in a partnership was not asserted for it clearly was (T documents, page 132 at paragraph 1). Mr and Mrs Martino were the licence holders for the purpose of s. 39G(1)(f)(i). As I have said, that is concerned with whether the licence holder is an "associate" of a person who is not a fit and proper person. Section 318(4) of the ITA Act 1936 is concerned with the associates of a partnership. The effect of s. 318(4)(b) is that I must have regard to those who are associates of each partner who is a natural person. I must do so for if an entity of a partner, who is a natural person, is an associate of that natural person under, for the purposes of this case, s. 318(1), that entity is an associate of the partnership. As Mr Martino is a natural person who is a partner in a partnership and as Mr Martino is an associate of Mr Giuseppe Martino under s. 318(1), the partnership must be an associate of Mr Giuseppe Martino.
Having made that finding, I must return to whether Mr Giuseppe Martino is a fit and proper person. As he is a person who has been convicted of an offence under the Excise Acts within ten years of the Collector's considering Mr Martino's licence, regard may be had to that offence when considering whether or not Mr Giuseppe Martino is a fit and proper person (ss. 39H(b) and 39B(b)). It is clear from the fact that the conviction is a matter to which regard may be had, that my finding of the offence does not of itself mean that I must also find that he is not a fit and proper person.
To what other matters may I have regard? The answer to that question must be encompassed in what is meant by the expression "a fit and proper person". That expression has been used and considered in a variety of contexts. It has, for example, been considered in the context of the licensing of tax agents under the Income Tax Assessment Act 1936 (e.g. Civiti and Secretary, Tax Agents' Board of Victoria 90 ATC 2039, Deputy President Forrest and Stasos v Tax Agents' Board (1990) 21 ALD 437, Hill J), the licensing of persons to import certain drugs under the Customs (Prohibited Imports) Regulations1956 (e.g. Re Dowling and Secretary to Department of Health (1985) 8 ALD 171, Deputy President Hall and Mr Sinclair and Professor Webster, Members) and the Air Navigation Regulations 1947 (e.g. Re Taylor and Department of Transport (1978) 1 ALD 312, Mr Hall, then Senior Member and Captain Gibbes and Mr Thompson, Members).
In an earlier case of Hughes and Vale Pty Ltd and Anor v State of New South Wales and Ors [No.2] (Dixon CJ, McTiernan, Williams, Webb, Fullugar, Kitto and Taylor JJ) (1955) 93 CLR 127, it was said:
"The expression 'fit and proper person' is of course familiar enough as traditional words when used with reference to offices and perhaps vocations. But their very purpose is to give the widest scope for judgment and indeed for rejection. 'Fit' (or 'idoneus') with respect to an office is said to involve three things, honesty, knowledge and ability: 'honesty to execute it truly, without malice affection or partiality; knowledge to know what he ought duly to do; and ability as well in estate as in body, that he may intend and execute his office, when need is, diligently, and not for impotency or poverty neglect it." (page 156)
While this is a succinct statement of what is meant by a "fit and proper person" perhaps it may assist by referring to other cases to show how the precise meaning varies according to the context in which the expression appears. Perhaps one of the best known cases in which the expression was considered was Australian Broadcasting Tribunal v Bond and Others (1990) 94 ALR 11 (Mason CJ, Brennan, Deane, Toohey and Gaudron JJ.) . The High Court considered s. 88(2) of the Broadcasting Act 1942 which provided that the then Australian Broadcasting Tribunal ("ABT") might suspend or revoke a commercial licence if it appeared advisable in the public interest to do so. The ABT could have regard only to the matters set out in the sub-section. One of those matters was that the licensee was no longer a fit and proper person to hold the licence.
Mason CJ said of the matters that should be taken into account in considering what is meant by a "fit and proper person":
"... the statutory concept of 'fit and proper person to hold the licence', which is undefined, takes account of qualities and characteristics of the licensee apart from matters mentioned in s88(2)(a), (b)(ii) and (c). Thus, the concept comprehends matters other than the financial, technical and management capabilities necessary to provide an adequate and comprehensive service, lack of which is a ground for suspension or revocation under s88(2)(b)(ii). Thirdly, though fitness and propriety are necessarily related to the holding of the licensee's commercial licence and to the provision of a broadcasting service pursuant to that licence (see Re New Broadcasting Ltd (1987) 12 ALD 1 at 8-9), the concept should not be narrowly construed or confined. It must extend to any aspect of fitness and propriety that is relevant to the public interest, because the tribunal's power to suspend or revoke commercial licences is only exercisable 'if it appears to the tribunal that it is advisable in the public interest to do so, having regard only to the ... matters or circumstances' set out in paras (a), (b) and (c) of s88(2).
Some indication of the breadth of the content of the concept may also be gathered from the fact that it is a purpose of the Act to ensure that commercial broadcasting is conducted in the interests of the public: R v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45 at 53; 27 ALR 321. The provisions of the Act dealing with the grant, renewal, suspension and revocation of licences, the limitations on the ownership of shares, the determination of program standards and the extensive role given to the tribunal in connection with these matters are all designed to secure the attainment of that purpose. Commercial broadcasting is a very important medium in the communication of information and ideas. Moreover, a commercial broadcasting licence is a valuable privilege which confers on the licensee the capacity to influence public opinion and public values. For this reason, if for no other, a licensee has a responsibility to exercise the power conferred by the licence with a due regard to proper standards of conduct and a responsibility not to abuse the privilege which it enjoys. Possession of a licence or the exercise of the privilege which it confers has been described 'as in the nature of a public trust for the benefit of all members of our society': see the Australian Report of the Royal Commission on Television, (1954), p144; second reading speech on the Broadcasting and Television Bill 1956 (Cth) by the Honourable C W Davidson, Postmaster-General, House of Representatives Parliamentary Debates (Hansard), 19 April 1956, p1536.
A licensee which is a fit and proper person in the context of s88(2)(b)(i) must have an appreciation of those responsibilities and must discharge them. Conversely, a licensee which lacks a proper appreciation of those responsibilities or does not discharge them is not, or may be adjudged to be, a fit and proper person." (page 32)
Both of these aspects were also considered at some length by Toohey and Gaudron JJ. In relation to what is a "fit and proper person", they said:
"The expression 'fit and proper person', standing alone, carries no precise meaning. It takes its meaning from its context, from the activities in which the person is or will be engaged and the ends to be served by those activities. The concept of 'fit and proper' cannot be entirely divorced from the conduct of the person who is or will be engaging in those activities. However, depending on the nature of the activities, the question may be whether improper conduct has occurred, whether it is likely to occur, whether it can be assumed that it will not occur, or whether the general community will have confidence that it will not occur. The list is not exhaustive but it does indicate that, in certain contexts, character (because it provides indication of likely future conduct) or reputation (because it provides indication of public perception as to likely future conduct) may be sufficient to ground a finding that a person is not fit and proper to undertake the activities in question." (page 56)
Toohey and Gaudron JJ then went on consider whether it was enough to look at the character or reputation of a licensee or whether an examination should be made of the conduct of its affairs and activities. They said that this depended on the legislation and referred to s. 83(1), which provides that an applicant for a grant of a licence must give certain undertakings in relation to that licence, and s. 83(1), which requires that a fresh undertaking be given when the licence is renewed, as well as to s. 88(2). After noting that similar provisions appear in ss. 83A(4) and 86AA(4) in relation to the refusal to grant or the refusal to renew a commercial licence as to the suspension or revocation of a licence with which they were concerned, their Honours said:
"It is clear from s88(2) and from ss83A(4) and 86AA(4), that the question whether a company is fit and proper to hold a commercial licence extends beyond that which is involved in the provision of broadcasting services and compliance with the conditions and the undertakings under s83(1) or s86(4) which attach to the licence. See Western Television Ltd v Australian Broadcasting Tribunal (1986) 12 FCR 414 at 421; 69 ALR 465. Nevertheless, the question is directed to the fitness and propriety of the licensee to hold a commercial licence and to undertake broadcasting activities pursuant to that licence. See New Broadcasting Ltd (1987) 12 ALD 1 at 8. Even so, the nature of commercial broadcasting and the grant of power in ss83A(4), 86AA(4) and 88(2) of the Broadcasting Act on the basis that 'it appears ... that it is advisable in the public interest' indicate that the considerations which may be taken into account in determining whether a licensee is not or is no longer fit and proper are not closely confined.
Commercial broadcasting plays a significant role in the dissemination of information and ideas. That dissemination is vital to the maintenance of a free and democratic society. See Attorney-General (NSW) v John Fairfax & Sons Ltd and Bacon (1985) 6 NSWLR 695, per McHugh JA at 714. See also Hinch v Attorney-General (Vic) (1987) 164 CLR 15 at 83; 74 ALR 353; Victoria v Australian Building Construction Employees' and Builders Labourers' Federation (1982) 152 CLR 25 at 98; 41 ALR 71; Attorney-General v Times Newspapers Ltd [1974] AC 273 at 315. A commercial broadcasting licence thus carries with it an obligation to the community. It also carries with it the potential for powerful influence. The community is entitled to confidently expect that a licensee will discharge its obligation and, in particular, that the potential for influence will not be abused. Within this context it is necessarily sufficient to ground a finding that a licensee is not a fit and proper person to hold a commercial licence that the community could not or would not have confidence that the licensee would discharge that obligation. Equally it is sufficient to ground a finding that the licensee is no longer fit and proper that the community could or would no longer have the confidence. Those questions are apt to be answered by reference to the character and reputation of the licensee." (pages 57-58)
What is apparent from these passages from the High Court's judgement in the Bond case, is that the matters we must take into account in determining what is a fit and proper person depends upon the context in which those words appear. In the context of the Act, the person whose fitness and propriety is under consideration is not the licence holder but an associate of the licence holder; a third party as it were. The fitness and propriety of the associate is not determinative of whether the licence holder's licence may be suspended or cancelled for the Collector must not take either step unless satisfied that it is necessary to do so to protect the revenue (s. 39G(2)). Even taking into account that limitation, it seems to me that the privileges, obligations and responsibilities of a licence holder under the Act must have some hand in shaping the matters to which regard must be had in deciding whether an associate is a fit and proper person.
What are those privileges, obligations and responsibilities? If, as in this case, the licence is a producer licence, the licence holder has the privilege of growing tobacco. A person who does not hold such a licence may not knowingly or recklessly grow tobacco (Act, s. 28). Unlike a wheat farmer or a market gardener, who produces his or her crop for his or her own profit, a tobacco farmer grows each crop for his or her own profit and also for the benefit of Australia's revenue for it is subject to the payment of excise under the Excise Tariff Act 1921. Tobacco is excisable and, as such, is subject to the CEO's control until delivered for home consumption or for exportation to a place outside Australia, whichever first occurs (Act, s. 61(1)). While it is subject to that control, the tobacco must not be moved, altered or interfered with except as authorised by the Act (s. 61(2)). A Collector may give a person written permission to remove goods that are subject to control from one place to another or to deliver certain goods for home consumption without entry (ss. 61A and 61C). The effect of s. 60 is that a person who has possession, custody or control of the tobacco must keep it safely and, when requested by a Collector to do so, must account for it to the Collector's satisfaction. If he or she fails to do either of those things, the Collector may make a written demand for him or her to 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.
As part of the regime of control under the Act, the licensed producer must produce tobacco in accordance with it (Act, s. 29), store tobacco at licensed premises (Act, s. 30) and maintain accounts and records in accordance with the Excise Regulations 1925 ("the Regulations") (Act, s. 32). Accounts are required of the number of hectares on which the producer grows tobacco leaf, the quantity of tobacco leaf harvested, the quantity of tobacco leaf cured, and all sales of tobacco leaf (Regulations, r. 3). Detailed records are required in various returns and books required under rr. 4, 5 and 6. Regulation 39A requires a producer to apply for permission to destroy Australian tobacco leaf stored on his or her premises. Even if permission is given, it may only be destroyed by an approved method and evidence must be given to the Collector to show that it has been so destroyed.
Given the nature of the privileges, obligations and responsibilities of the holder of a production licence, qualities of diligence, honesty and the likelihood of his or her observing the law would seem to be pivotal characteristics to be taken into account in considering whether an associate of a licence holder is a fit and proper person. It may be that there are other characteristics that may be relevant but, as I have only limited evidence about Mr Giuseppe Martino, I do not need to do so in this case.
Bongiorno J found that Mr Giuseppe Martino was a person from an impeccable background and had an unblemished character. He was a hardworking and responsible family man. His Honour also found:
"… He undertook the illegal activity in which he was engaged knowing that it was illegal and in the expectation of a financial gain even if that financial gain was, in the circumstances, of no enormous amount. He bought the tobacco, cut it, bagged it and was prepared to sell it in contravention of the Excise Act 1901, such that he would have deprived the revenue of some $63,895.61 and perhaps gained $1,250 for himself." (T documents, page 108)
He continued:
"… having regard to the extremely small gain he would have achieved if his illegal plan had been successfully completed there would appear to me to be no reason to impose upon him anything other than the statutory minimum penalty. In absolute terms that penalty is, in the context of this case, enormous. It will have an economic effect on Mr Martino which is way beyond that which would have been required to adequately punish him for these offences had the Act not provided for minimum penalties." (T documents, page 108)
Although Bongiorno J clearly viewed the minimum penalty that he was required to impose under the Act as far outweighing the gravity of the offence under the Act, the gravity of a person's action depends upon the vantage point from which it is viewed. In the context of this case, I must view it in the context of a licensing regime that is part of a wider scheme to ensure that the Commissioner collects the excise duty that has been imposed by authority of Parliament. Taken in that context, I view Mr Giuseppe Martino's actions in committing the offence are more serious. He committed knowing that his actions were illegal. It was not an offence committed inadvertently or even recklessly. Even if he had no long term plan to commit the offence, he availed himself of the opportunity to acquire tobacco leaf and cutting tools and then prepared it for sale. He knew that it was illegal to do so and that it was illegal to attempt to sell the finished product.
The passage of time is very forgiving. It is now over two years since Mr Giuseppe Martino committed the offence. There may be other circumstances pertaining to his conduct and behaviour since the offence that show that such behaviour is in the past. As it is, there is no evidence one way or the other. In the absence of such evidence, two years becomes quite a short time. Given the nature of the offence and the manner in which it was committed, it shows a person who is prepared to disregard the law for his own gain. He is not a fit and proper person within the meaning of s. 39G(f)(i) of the Act.
That is not an end of the matter for I must now consider whether the Collector was entitled to suspend the licences under s. 39G and, if so, to cancel it. I will take first whether the Collector was entitled to suspend the licences. Even though I have found that Mr Martino is an associate of a person who is not a fit and proper person, a decision must not be made to suspend his producer licence unless it is necessary to do so to protect the revenue. The expression "protect the revenue" is not defined in the Act and I am not aware of any authorities that have considered it. The word "revenue" has been considered in Stephens v Abrahams (1902) 27 VLR 753 by Hodges J in the context of an appeal against a conviction for, in essence, presenting a false document with intent to defraud the revenue contrary to the Customs Act 1901 ("Customs Act"). Hodges J took:
"… the 'revenue' to be moneys which belong to the Crown, or moneys to which the Crown has a right, or moneys which are due to the Crown, as indicated by sec. 153 of the Customs Act 1901, which says:-All duties shall constitute Crown debts charged upon the goods in respect of which the same are payable and payable by the owner of the goods and recoverable at any time in any Court of competent jurisdiction by proceedings in the name of the Collector.' I would include those duties as part of the revenue, and the question is, Was there evidence of an intent to defraud the revenue-that is, to get out of the revenue something that was already in it, or to prevent something from getting into the revenue which the revenue was entitled to get? That, I think, would be defrauding the revenue." (page 767 and see also Parker v Churchill (1986) 9 FCR 334 at 348, per Jackson J)
The ordinary meanings of the word "protect" include "keep safe, take care of" (The New Shorter Oxford English Dictionary, 3rd edition, 1993) and they would seem to be the senses in which the word is used in the expression "protect the revenue". Mr Martino's licence may only be cancelled if it is necessary to take care of the money belonging to the Crown in right of the Commonwealth. That has the aspect of ensuring that the Commonwealth receives all that it should in the form of any excise that is ultimately payable in respect of tobacco originally grown on Mr Martino's farm and keeps all that it receives. It also has the aspect of not spending more of the Commonwealth's money than need be spent in carrying out its supervisory duties and responsibilities under the Act and in ensuring that the tobacco is not marketed illegally in Australia, and so avoid the payment of excise duty, if it cannot be marketed legally.
What is meant by the word "necessary"? I have taken the view that the meaning adopted by Allen J in State Drug Crime Commission of NSW v Chapman (1987) 12 NSWLR 447:
"As to the word 'necessary' it does not have, in my judgment, the meaning of 'essential'. The word is to be subjected to the touchstone of reasonableness. The concept is one as to what reasonably is necessary in a commonsense way. As Pollock CB said in Attorney General V Walker (1849) 3 Ex 242; 154 ER 833:
'It may be stated as a general rule that those things are necessary for the doing of a thing which are reasonably required or which are legally ancillary to its accomplishment.'" (page 452)
Mr Traczyk submitted that the Commissioner bears the onus of proof in establishing that there is a risk to the revenue. He further submitted that the standard of proof is much more than merely just on the balance of probabilities because the consequences to a person's livelihood of an adverse decision were grave. The words of ss. 39G and 39L are in terms of the Collector's being satisfied. Mr Traczyk did not refer to any authorities. If he had, he might have referred to those considered by O'Loughlin J in F.H. Faulding and Co. Limited v Collector of Customs, Federal Court, 23 August, 1991, G50/1990 when he considered a submission that the Tribunal had incorrectly assumed that the appellant in that case carried the burden. Counsel for the appellant, he said:
"… 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.'
32. 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.'
33. 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.
34. 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."
Although concerned with a case under s. 60 of the Customs Act, I consider that O'Loughlin J's conclusion is equally applicable in this case. All that is required is that the Collector, and so this Tribunal, is satisfied. Satisfaction, for all practical purposes, equates with the civil standard of proof which may be expressed as "the balance of probabilities". It equates with the interpretation of the expression "reasonable satisfaction" adopted by the Full Court of the Federal Court in Repatriation Commission v Smith (1987) 15 FCR 327 (Northrop, Beaumont and Spender JJ; and see page 335, per Beaumont J).
Is suspension necessary to protect the revenue in this case? I will look first to the protection of the revenue that may be derived in the form of excise duty if Mr Martino were to sell tobacco on the domestic market. The TCV sells tobacco on behalf of Victorian producers but it has only Philip Morris Limited and BATA as its customers. On the basis of the evidence of Mr Edgerley and Mr Weston, I am satisfied that neither BATA nor Philip Morris will purchase tobacco from Mr Martino and have refused on the basis that they do not purchase tobacco from any producer who has been involved in the illegal sale of tobacco. They would not be moved from that position. The TCV does not purchase tobacco. I have no evidence that there is any other purchaser of tobacco grown in Victoria. In the absence of a sale of his tobacco, it will not be possible to realise the excise duty that could be expected upon its entry for home consumption.
Even though there is no market in Australia for Mr Martino's tobacco, is there an export market for it? Mr Martino gave evidence of the efforts he has made to find a market for the crop that he had in the ground at the time that his licence was suspended. That crop, which he grew with approval provided he sold it overseas, yielded 360 bales of tobacco. He packed the bales in containers and shipped them to Dubai on approximately 4 July, 2002. The journey took approximately six weeks and, with insurance, cost $AU8,116.02. Mr Martino was unable to find a market for the tobacco in Dubai unless he presented it in a threshed and blended condition. Had it been in a threshed and blended condition and had it been acceptable to a buyer, the price that he could obtain was $US2.50 per kilogramme. At his hotel in Dubai, Mr Martino met a gentleman who indicated that he would help him to find a purchaser for the tobacco in Jordan. Mr Martino shipped the tobacco to Jordan where he thought that there was a buyer who would pay $US2.75 per kilogramme for it. That buyer was the International Tobacco and Cigarettes Company ("International"). When the bales were opened for examination by the potential buyer, the tobacco was found to be mouldy. None of it was saleable.
Even taking into account the cost of storage and of transport, Mr Martino said that he would be able to make a living if he could sell his tobacco in Jordan. International and he have not entered any agreement for International to purchase any tobacco crop that he may grow. All that it has indicated is that it will look at any tobacco that Mr Martino chooses to ship to Jordan.
Mr Martino said that he knew what happened to tobacco in a variety of climatic conditions in Victoria from dry to wet. He had inspected the containers before he sent them overseas and had thought that there were all right to take the tobacco. Mr Martino's view had been that if he dried the leaf a little bit more before he baled it, the leaf would not sweat and so would not become mouldy. If he were to send it again through the tropics he would made sure that it would "go good and proper" so that it will not go mouldy. He would dry it more. On the farm, he has kept tobacco leaf for years without its going mouldy.
Mr Martino said that his farm is not suitable for any other crop. One other farmer tried to grow cabbages on land that had grown tobacco but he was not successful. Others have tried broccoli but they have not been successful.
On the basis of his evidence, I find that Mr Martino has not yet found an overseas market for any tobacco that may be grown on his property. If he were to present threshed and blended tobacco, he may have a potential purchaser in Dubai prepared to look at his product. If he does not thresh it, he may have a potential purchaser in Jordan prepared to look at his product. A decision as to whether or not they would purchase it would only be made once they had looked at it.
The possibility of Mr Martino's being able to take advantage of any opportunity in Dubai is, for all practical purposes, non-existent. On the basis of the evidence of Mr Moor, Mr Weston and Mr Edgerley, I find that he would not be able to have his tobacco threshed at the plant operated by the TCV. He would not be able to do so because the contract between the TCV and each of the tobacco companies prevents it from using parts of the equipment owned by each of those companies without their permission. They have not given that permission and those parts of the equipment is essential for the threshing operation to be carried out. Even if Mr Martino were able to arrange for his own parts to take the place of the tobacco companies' parts, he would be faced with labour costs of $8,500 each day on top of fixed operating costs of the machinery. As 50 tons can be threshed in a day, Mr Martino's crop could be threshed in a day. There is, however, no evidence that Mr Martino would be able to obtain the necessary parts, their cost if he could, whether he was prepared to meet the cost and whether it would be an economic proposition to meet the costs of threshing.
That brings me to the possibility of Mr Martino's being able to take advantage of the market for leaf in Jordan that he is confident exists. I note that the evidence of Mr Moore, Mr Weston and Mr Edgerley is that they are not aware of any market for tobacco in leaf form but I accept that Mr Martino may have found a potential market. The question then becomes whether I am satisfied that he will be able to realise that potential market. That depends upon whether or not he can solve the problems he experienced in transporting his tobacco on the last occasion. I find that the potential purchaser rejected it because of mould. There is no evidence whether he would have rejected it for any other defect in condition and, for these proceedings, I assume that there was no other defect.
I find that Mr Martino is confident that he can solve the problem of mould that destroyed his previous crop in transit to Jordan. He blames, in part, the length of time that it took to get to Jordan and the time that it spent in Dubai before he shipped it to Jordan. Mr Martino's confidence arises from his experience of keeping tobacco for long periods and in the summer months in his shed on his farm. Mr Moore, Mr Weston and Mr Edgerley gave evidence that they had never attempted to export tobacco leaf in the same form. Mr Moore said that the time that it would take for it to become mouldy would depend upon the temperature and the humidity. It could be kept for four months awaiting sale in Victoria but sales are only conducted in the cooler months, Mr Moore said. The tobacco would become mouldy eventually. Mr Edgerley gave further evidence as to the reasons for mould developing on tobacco that has not been threshed and/or re-dried.
While Mr Martino has undoubted expertise in growing a tobacco crop and curing leaf on the farm, he did not give evidence of any experience in handling and processing tobacco after it had been sold to the tobacco companies for processing. Mr Edgerley, Mr Weston and Mr Moore have expertise in the processing of the cured leaf that is delivered to them. Each has substantial experience in the industry in so far as processing and handling the tobacco leaf is concerned and, in the case of Mr Edgerley and Mr Moore, that experience has been gained both in Australia and overseas. In view of that, I prefer their evidence as to the manner in which tobacco should be prepared for transport through tropical areas. I find that it should be threshed and redried to ensure a consistent moisture content. It should then be packed in cardboard containers that have first been lined with polythene liners. The liner protects it from absorbing odours, darkening in colour and becoming mouldy.
I find that tobacco leaves a farm in bale form i.e. it is cured and conditioned by the addition of moisture to maintain suppleness in the leaf and so avoid shattering of the leaf or lamina causing degradation, prior to market evaluation. If too much moisture is added, it becomes unstable. Tobacco leaving the farms is generally regarded as unstable and becomes stable only after it has been threshed and re-dried. While awaiting threshing, the unstable bales are placed in stacks of no more than four bales. If the air temperature is 23oC or higher, the bales must be rotated.
I also find that, were Mr Martino to attempt to export his tobacco to Jordan or to Dubai again in an undried state, it is likely that the tobacco would become mouldy in the container prior to its arrival. That would arise from the moisture content of the tobacco and the ambient air temperature as well as the varying humidity that it would meet during the voyage if the vents of the container were not sealed. Even if the vents were sealed, the outcome would not be any different for there would be a humid environment within the container.
I find that Mr Martino believes that he will be more successful in any subsequent attempt to transport tobacco overseas. On the evidence I have been given, I find that he has not addressed the problems of spoilage caused by humidity and high temperatures on tobacco leaf that has not been redried. He believes that his long years of experience in storing tobacco on his farm in Victoria will hold him in good stead. Given that the weather conditions in Victoria can be very different from those that prevail during the course of a voyage to Dubai and Jordan and even from those in Dubai and Jordan and given the evidence of Mr Moore, Mr Edgerley and Mr Weston, I find that he has not yet gained sufficient knowledge of an appropriate method to store and transport tobacco in order to prevent or reduce spoilage. It may be that there is a method other than that put forward by Mr Moore, Mr Edgerley and Mr Weston but there is no evidence of any such method.
On the basis of Mr Moore's evidence, I find that it costs the producer approximately $3.72, excluding labour and machinery costs, to get a kilogramme of tobacco to the sale floor. Mr Martino did not have an estimate of his costs. The average price for which a kilogramme of tobacco is sold on the Victorian market is $AU6.37. To these costs must be added the cost of packaging, transport and insurance at the very least if not the cost of some sort of broker to arrange the sale. There is no precise evidence of the costs and there must be a question whether a return of $US2.50 would cover all of Mr Martino's costs and give him the livelihood that he requires. He said that he is not an accountant and did not have the figures but there must be a question of the viability of the exercise. I have not gone into it further for it is not something that I have taken into account in reaching my decision.
Taking all of these matters into account, I am not satisfied that there is a market outside Australia for Mr Martino's tobacco. There may be a market but its existence is dependent upon Mr Martino's being able to get his crop to it in an appropriate condition. I am not satisfied that he has worked out how that can be achieved.
As there is no market in Australia or overseas, I am satisfied that suspension of his licence is necessary for the protection of the revenue. In the absence of a market, there is a continuing need to supervise the crop by the Commissioner. The continued storage of tobacco for which there is no market increases the risk that it will find its way to the illicit tobacco market. The revenue is penalised in that excise duty is not recovered from its sale. While Mr Martino carries the major responsibility for its safekeeping under the Act, there is no evidence that he has the means to meet the amount of excise duty that would be payable were he to fail to keep the goods safely or were he unable to account for those goods when requested by the Collector to do so under s. 60 of the Act. As the amount of excise duty stands at $265.34 per kilogramme, the amount would be substantial and, in the normal course of events, is not an amount that a grower ever contemplates having to pay. Taking these matters into account, I am satisfied that suspension of Mr Martino's licence is necessary for the protection of the revenue.
It follows that Mr Martino's licences may be suspended under s. 39G. That leaves open the question whether they should be cancelled under s. 39L for this is not a situation in which the Collector must cancel the licences under s. 39G(2). Two of the matters that need to be taken into account are my finding that suspension of the licence is necessary to protect the revenue and the likelihood of Mr Martino's finding an overseas market for his tobacco so that suspension would no longer be necessary to protect the revenue. On the evidence that I have, I find that there is no reasonable likelihood of Mr Martino's finding such a market in the near future. He has yet to work out the manner in which he would need to pack his tobacco to ensure that it arrived in a marketable condition. I appreciate that he is confident that he can do it but, in view of the evidence of Mr Moore, Mr Weston and Mr Edgerley who have some experience in the tobacco industry both in Australia and overseas and who have never known tobacco to be exported in the manner Mr Martino exported it and in view of the mouldy condition of the tobacco he did export, I am not satisfied that he is near to devising appropriate packing. When he has devised appropriate packaging, there will remain the question whether exporting his tobacco will be a cost effective exercise yielding him any return or any return providing a livelihood. Mr Martino has not undertaken the calculations but, in view of the evidence relating to the cost of production, packaging and transport that was given and the likely sale price of $US2.50, there must be a very real question as to the economic viability of the exercise. In the absence of such calculations, I do not make a finding on the matter.
In the absence of a market for Mr Martino's tobacco, however, and having found that there is no reasonable likelihood of his finding a market in the near future, I am satisfied that cancellation of Mr Martino's licences is the appropriate course of action.
For these reasons, I affirm the objection decision of the respondent dated 15 April, 2001.
I certify that the seventy-three preceding paragraphs are a true copy of the reasons for the decision herein of
Miss S A Forgie (Deputy President)Signed: ...............................................................
P. Paczkowski AssociateDate/s of Hearing 6 and 11 November, 2002
Date of Decision 29 November, 2002
Counsel for the Applicant Mr G. Traczyk,
Mr F. Primerano, solicitor
Solicitor for the Applicant Frank Primerano
Counsel for the Respondent Mr E. Lorkin
Solicitor for the Respondent Australian Government Solicitor
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