McGurk Construction & Rigging Company Ltd v Comptroller-General

[1987] FCA 245

Re: McGURK CONSTRUCTION AND RIGGING CO. LIMITED
And: COMPTROLLER-GENERAL OF CUSTOMS
Nos. WAG85 and G132 of 1986
Administrative Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Neaves J.(1)

CATCHWORDS

Administrarive Law - Judicial review - Application for licence to import goods into Australia refused - Meaning of "importation" - Whether goods imported prior to application for licence being made - Whether regulations authorise the grant of a licence to import goods after the goods imported into Australia.

Administrative Decisions (Judicial Review) Act 1977 (Cth), s.5

Customs Act 1901 (Cth), s.50, 51, 229(1)(b)

Customs (Import Licensing) Regulations, ss. 7, 8, 11, 17

HEARING

PERTH

#DATE 19:5:1987

Counsel for the applicant : Mr A.J. Templeman

Solicitor for the applicant : Warren McDonald French & Harrison

Counsel for the respondent : Ms C. Francas

Solicitor for the respondent : Australian Government Solicitor

JUDGE1

McGurk Construction and Rigging Co. Limited ("the applicant") has applied to the Court under s.5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the Judicial Review Act") for orders of review in respect of decisions made on 11 July 1986 and 28 November 1986 respectively by Mr Kho Carl Ling, an officer of the Australian Customs Service and relevantly a delegate of the Comptroller-General of Customs ("the respondent"). Each of those decisions was made under reg.11 of the Customs (Import Licensing) Regulations ("the regulations") made under the Customs Act 1901 (Cth) ("the Act") and refused to grant to the applicant a licence to import into Australia a second hand Manitowoc 4100W crawler mounted crane. At the hearing the applicant was primarily concerned to challenge the decision made on 28 November 1986 though the challenge to the earlier decision was not abandoned.

1. Sub-section 50(1) of the Act provides that the Governor-General may, be regulation, prohibit the importation of goods into Australia. That power may be exercised (sub-s.50(2)) -
   
   

(a) by prohibiting the importation of goods absolutely;

(b) by prohibiting the importation of goods from a specified place; or

(c) by prohibiting the importation of goods unless specified conditions or restrictions are complied with.

The regulations may provide that the importation of the goods is prohibited unless a licence, permission, consent or approval to import the goods or a class of goods in which the goods are included has been granted as prescribed by the regulations (sub-s.50(3)(a)).

1. Goods the importation of which is prohibited under s.50 are prohibited imports (sub-s.51(1)). All prohibited imports are forfeited to the Crown (s.229(1)(b)).

2. Regulation 7 of the regulations provides -
   
   

"7. The importation of any goods (not being goods which are excepted from the application of these Regulations) is prohibited unless -

(a) a licence under these Regulations to import the goods is in force; and

(b) the conditions and restrictions (if any) to which the licence is subject are complied with."

By sub-reg.17(1) the Minister may exempt from the application of the regulations any goods or any goods included in a class of goods. By Customs (Import Licensing) Regulations Exemption Notice No. M66 dated 19 March 1985 and having effect from that date (see Commonwealth of Australia Gazette No. S102 dated 29 March 1985), the Minister excepted from the application of the regulations all goods other than specified classes of goods. It is common ground that the crane in question fell within one of those specified classes so that its importation into Australia was prohibited unless a licence under the regulations to import it was in force.

1. The basic facts are not in dispute. The applicant was incorporated in New Zealand in 1974 and has since then carried on in that country the business of a construction and rigging contractor. The crane was manufactured in the United States of America. It was imported into New Zealand in 1975. It was purchased by the applicant in March 1984. It is said to have certain special characteristics, namely its mobility, its load weight of up to 200 tonnes and its boom length of 300 feet. It is also said to be particularly suited for heavy lifts up to 200 tonnes, the exact capacity of each lift depending on the radius involved. It may also be used in tandem with other cranes to execute lifts in excess of 200 tonnes.

2. The applicant arranged for the crane to be transported by sea from New Zealand to Fremantle, Western Australia. It arrived at the port of Fremantle on or about 23 March 1986 and was landed on or about 26 March 1986. It remains in storage on the wharf at Fremantle.

3. Section 68 of the Act provides that, subject to the Act, goods that are imported are required to be entered for home consumption, for warehousing or for transhipment. Sub-section 36(1) of the Act provides that, subject to sub-s.36(2) and s.37 which are not relevant for present purposes, an entry in respect of goods that are required or eligible to be entered is to be made by the owner of the goods giving to an appropriate Collector of Customs, in a manner prescribed by the regulations, an entry in respect of the goods containing the particulars required by the regulations. On the giving of the entry, the goods are, for the purposes of the Act, to be taken to be entered. Subject to the Act, where an entry in respect of goods has been made, the Customs may give authority in accordance with the regulations for those goods to be dealt with in accordance with that entry (sub-s.39(1)).

4. The evidence does not disclose whether the applicant purported to make an entry in respect of the crane or whether, if it did so, the Customs regarded the crane as goods not eligible to be entered. It is clear, however, that the Customs took the view that the importation of the crane was prohibited unless a licence under the regulations was in force at the time of importation and that no such licence was then in force. The crane clearly remains subject to the control of the Customs pursuant to s.30 of the Act.

5. By application dated 12 June 1986 the applicant applied, pursuant to reg.8 of the regulations, for a licence to import the crane. The application sought a licence of unlimited term or, alternatively, a licence for a minimum term of five years. It was stated in the application that the applicant contemplated that the crane, upon its due importation into Australia, would be hired to contractors in Western Australia for use in connection with a number of major construction projects where there was said to be a need for a crane of the special characteristics and specifications of the crane in question. It was asserted that cranes with specifications and characteristics similar to those of a Manitowoc 4100W crawler mounted crane were not wholly produced in Western Australia in the normal course of business. Details were given of inquiries for the hire of the crane which the applicant had received between February 1986 and the date of the application. Those inquiries were said to have resulted because of the unavailability in Western Australia of cranes of similar performance and characteristics. The application set out the material on which the applicant relied as showing the location, availability and mobilisation cost of alternative cranes with similar performance and characteristics. The alternatives were all imported cranes with the exception of one which was described as being locally manufactured to the extent of about 20 per cent of the finished product.

6. The applicant also said that it had made enquiries to ascertain what cranes of similar specifications to the crane in question were available in Australia and that those enquiries revealed ten cranes none of which was available for hire in Western Australia, none being located in that State. It was said that, if the applicant was to continue its business operations in Western Australia, it would have to purchase a new crane of similar specifications and characteristics from overseas with a delay of between six to fifteen months. The application concluded -
   

"The Applicant's enquiries reveal that it is not possible to purchase a second-hand crane of 200 tonnes capacity in Australia at present. The delivery of a new crane of similar capacity ranges from six to 15 months from date of order with prohibitive costs particularly in light of unfavourable foreign exchange movements. The enquiries to the Applicant for the hire of the Manitowoc indicate the present need for a crane of similar capacity for the completion and commencement of construction projects and in particular the north-west shelf natural gas project. The number of cranes of similar capacity available throughout Australia for use in Western Australia is few and the mobilisation and demobilisation costs involved with respect to the use of cranes outside Western Australia add enormously to the project costs within Western Australia. In addition, the grant of an import licence to the Applicant will not involve the loss to Australia of foreign exchange as the only funds which will be sent to New Zealand will be sufficient cash from the hiring of the Manitowoc to cover the transport costs incurred by the Applicant to date. The balance of the cash flow from the hire of the Manitowoc will be and is required urgently by Westside Welders Pty. Ltd. in order to fund large Western Australian contractors under negotiation."

Westside Welders Pty. Limited is a company incorporated in Western Australia which is involved in steel fabrication and construction and in which the applicant has, or is intended to have, a substantial beneficial interest.

1. By letter dated 11 July 1986 Mr Ling informed the solicitors for the applicant that the application for a licence had been refused. After noting that second-hand cranes were subject to import licensing controls, referring to the terms of reg.7 of the regulations, and noting that the crane had been imported without a valid licence, the letter continued:
   
   

"Under the existing criteria against which applications for the importation of used, secondhand or disposals equipment are considered, licences are not approved where the goods or goods serving similar functions are being produced or capable of being produced in Australia in the normal course of business. Information available to the Australian Customs Service following extensive industry research indicates that cranes, including those serving similar functions to the Manitowoc 4100W, are capable of being manufactured locally in the normal course of business.

The points raised in your client's submission have been carefully examined against the general criteria and the special provisions published in Australian Customs Notice 83/273, a copy of which is attached for your information. In particular, I have closely considered the applicability of the provision for New Zealand contractors (paragraph 10, page 3). However, your client and the goods are not capable of satisfying the requirements which are rigidly observed. Accordingly, I can only advise that the approval of a licence to import the Manitowoc 4100W crawler crane is not appropriate."

1. Australian Customs Notice No.83/273 is headed "Import Licensing Controls - Used, Secondhand or Disposals Earthmoving, Construction and Materials Handling Machinery and Equipment and Four Wheel Drive Vehicles" and bears date 6 December 1983. It refers to the Minister for Industry and Commerce having approved a change in the administration of import licensing controls on a range of used secondhand or disposals earthmoving and construction equipment. Paragraphs 5 and 6 read:
   
   

"5. In future import licences will not generally be approved where goods or goods serving similar functions are being produced or are capable of being produced in Australia in the normal course of business.

6. Where an importer considers that goods with particular features or technical capabilities are essential for a particular use the importer must produce evidence, in the form of correspondence exchanged with Australian manufacturers, to indicate that the end use cannot be performed by goods or goods serving similar functions that are being produced or capable of being produced in Australia in the normal course of business. If the importer of the equipment is not the end user, evidence of an order from the end user and the nature of the end use will be required. A licence issued to the importer may be conditioned to allow the equipment to be sold only to the nominated end user for the use specified. The import restrictions are not relaxed to allow temporary importation of equipment to carry out specific contracts."

Special provisions are made in respect of goods imported from New Zealand. Paragraphs 10 and 11 of the notice read:

"10. In accordance with the provisions of the Australia New Zealand Closer Economic Relations Trade Agreement, licences will continue to be issued to bona fide New Zealand contractors, who have been awarded construction contracts in Australia, for the importation from New Zealand of equipment covered by the controls; provided the equipment was owned by the contractors at the time tenders were submitted; was manufactured in New Zealand or was imported new into New Zealand; and is required to carry out the specific contracts involved.

11. Under the provisions of the Australia New Zealand Closer Economic Relations Trade Agreement, import licences will be issued on demand (subject to the conditions set out below) for goods, other than;

- tractors for articulated vehicles designed for highway operation and parts therefor (87.01.310); and

- four wheel drive vehicles (ex 87.02)

The conditions which must be satisfied for the issue of a licence are:-

- the goods must be of New Zealand or Australian origin and be exported from New Zealand to Australia; and

- the Collector must be satisfied that the machinery or equipment, if imported when new, would have been eligible for New Zealand preference or are (sic) eligible for duty free entry as re-imported goods."

Under a sub-heading "Caution to Importers", par.18 provides:

18. THE FOLLOWING ARE NOT CRITERIA FOR DETERMINING ELIGIBILITY FOR AN IMPORT LICENCE -

. Used or secondhand equipment is available immediately overseas, whereas locally made equipment, although available at 'normal' delivery times, cannot be obtained by a particular desired date;

. A project to be undertaken may have to be commenced and completed by specified dates;

. The equipment has already arrived in or is in transit to Australia;

. The project is a major one involving substantial capital expenditure;

. An undertaking will be given that the machines will be re-exported when a specific task is completed; or

. The equipment is the property of a company which uses it for work contracted for in any part of the world.

. Contractors submitting tenders for construction work in Australia have, when costing their tenders, assumed that licences will be issued to allow the importation of secondhand equipment to carry out the contract."

1. By letter dated 26 August 1986 the solicitors for the applicant requested that a statement in writing be furnished pursuant to sub-s.13(1) of the Judicial Review Act in respect of the decision dated 11 July 1986. A statement dated 30 September 1986 was furnished by Mr Ling. Paragraphs 8 and 9 of the statement read:
   
   

"8. An earlier industry survey conducted by the Australian Customs Service had established that goods serving similar functions to the Manitowoc 4100W crane were capable of being produced locally in the normal course of business.

9. Notwithstanding the existence of an Australian crane manufacturing industry, the granting of an import licence would have been possible for equipment imported from New Zealand provided the applicant was a bona fide New Zealand contractor who had been awarded a construction contract in Australia, and provided the equipment was owned by the applicant at the time the tender was submitted; was manufactured in New Zealand or was imported new into New Zealand; and was required to carry out the specific contract involved. This special provision was in accordance with the terms of the Australian New Zealand Closer Economic Relations Trade Agreement."

The statement in par.8 was said to have been based on Australian Customs Service records on file number C86/32912. Those records are not in evidence.

1. The reasons for the decision are set out in pars 13-22 of the statement. For present purposes it is sufficient to set out pars 17-22. Those paragraphs are in the following terms:
   
   

"17. From the information available to me, and outlined in paragraph 3 above, I formed the opinion that any action to issue an import licence after importation of the crane would have been a breach of regulation 7(a).

18. Notwithstanding my conclusion outlined in paragraph 17 above, I proceeded to examine the applicant's submission academically in order to ascertain whether the issue of a licence would have been otherwise possible under administrative guidelines set out in Australian Customs Notice number 83/273 (reference paragraphs 7 and 9 above).

19. Due to the existence of a crane manufacturing industry in Australia (reference paragraph 8 above), I formed the opinion that the granting of a licence would not have been appropriate under the normal criterion that a licence was only issued where goods or goods serving similar functions were not being produced or were not capable of being produced in Australia in the normal course of business.

20. I further considered academically whether the 'special New Zealand provision' could have applied thereby exempting McGurk Construction & Rigging Co NZ Ltd. (sic) from the application of the normal criterion (reference paragraph 9 above).

21. In his (sic) submission the applicant indicated that he had not been able to negotiate any binding contract in Australia and that the crane was imported for the purpose of looking for work which may or may not have been available in Australia. Accordingly, I formed the opinion that the applicant was not a bona fide New Zealand contractor and had not been awarded any construction contract in Australia. Furthermore, the crane in question was not manufactured in New Zealand and no evidence was provided by the applicant that it was originally imported new into New Zealand.

22. On the basis of the information available to me at the time the decision was taken on 11 July 1986, I was satisfied that any action to grant McGurk Construction & Rigging Co NZ Ltd. (sic) an import licence retrospectively was not consistent with the requirement of regulation 7(a). I was further satisfied that McGurk Construction & Rigging Co NZ Ltd. (sic) would not have been otherwise eligible to be granted a licence to import the Manitowoc 4100W crane under existing administrative criteria had the company applied for a licence prior to the crane being imported into Australia."

1. By letter dated 19 November 1986 the solicitors for the applicant requested that the decision to refuse a licence for the importation of the crane be considered by the Comptroller-General of Customs. The request was based on the provisions of Australian Customs Notice No.83/273 specifically referring to the importation of goods from New Zealand. Some additional material was contained in the request. It was stated that the crane had been imported new into New Zealand in 1975. It was also stated that the applicant had been "awarded contracts with Westside Welders Pty. Ltd. to carry out various contract works for which the Manitowoc is required". Although so described, the contract was in fact an arrangement made on 8 November 1986 for the hire of the crane by Westside Welders Pty. Limited on a monthly basis commencing on 15 December 1986 for the agreed sum of $40,000 per month. It was acknowledged that a formal agreement had not been executed but it was said that the parties regarded themselves as bound.

1. On 28 November 1986 Mr Ling made the second of the decisions the subject of this application, again refusing the grant of an import licence for the crane.

2. By letter dated 12 December 1986 the applicant's solicitors requested a statement pursuant to s.13 of the Judicial Review Act in respect of that decision. A statement dated 18 December 1986 was furnished. The statement contained the following paragraphs:
   
   

"12. I concluded that provisions of paragraph 10 of Australian Customs Notice 83/273 must be read and administered in conjunction with paragraph 7(a) of the Customs (Import Licensing) Regulations. In other words, these provisions are prerequisites for obtaining an import licence and must be satisfied prior to the goods being imported.

13. I therefore concluded that the fact that the applicant has been awarded work contracts subsequent to the importation of the crane into Australia was not a relevant consideration as there appears to be no statutory basis for the granting of a licence retrospectively. I was satisfied that any contrary decision would not be consistent with the requirements of paragraph 7(a) of the Customs (Import Licensing) Regulations."

1. For the applicant it was submitted that the decision-maker had fallen into error in concluding that the regulations, on their proper construction, precluded the grant of a licence for the importation of the crane. The principal argument advanced to support this proposition accepted that the regulations do not permit the grant of a licence in respect of goods after the importation of those goods into Australia but it was submitted that, in its context, the word "importation" in reg. 7 is to be read as referring to the processing of goods through the various stages set out in Part IV of the Act. That Part relates to "The Importation of Goods" and is divided into five divisions, the respective headings of which are "Preliminary", "Prohibited Imports", "The Boarding of Ships and Aircraft", "The Report of the Cargo" and "The Entry, Unshipment, Landing, and Examination of Goods".

2. Counsel for the applicant acknowledged that the meaning of "importation" had been considered in a number of cases. He referred to Lyons v. Smart (1908) 6 CLR 143 at p 150; Wilson v. Chambers (1926) 38 CLR 131 at pp 135-6, 138-9, 146-7, 150; Election Importing Co. Pty. Ltd. v. Courtice (1949) 80 CLR 657 at pp 661-2; Forbes v. Traders' Finance Corporation Ltd. (1971) 126 CLR 429 at pp 443-4; and The Queen v. Bull (1974) 131 CLR 203. He submitted that those cases were concerned with the meaning of "import" or "importation" in contexts different from that with which the Court is here concerned. Counsel also submitted that the construction given to reg.7 of the regulations by Wilcox J. in Frost v. Collector of Customs (Qld) (1985) 63 ALR 297 was wrong.

3. I am unable to accept the applicant's argument. In The Queen v. Bull (supra) Barwick C.J. said at p 212:
   
   

"The question is not what constitutes importation in an abstract or universal sense: the question is when, according to the provisions of the Act, are goods imported into Australia. However, in general, importation of goods, in my opinion, according to the natural meaning of the word, involves landing them, or bringing them within a port for the purpose of landing them in the country or place in relation to which importation is regulated."

After examining a number of the provisions of the Act as then in force, his Honour concluded (at p.215):

"All the provisions to which I have so far referred operate on the footing that importation takes place on entry into port of the goods intended to be discharged from the ship at that port. The requirement of entry of imported goods unshipped necessarily denies the proposition that importation only takes place in any case when goods are landed. It seems to me that the conclusion that entry into the port with the intention of being landed constitutes importation, is implicit throughout the reasons for decision in Wilson v. Chambers & Co. Pty. Ltd., and is so expressed in the reasons of individual Justices e.g. (1926) 38 CLR at pp.134, 139."

His Honour then considered, and rejected, the argument put on behalf of the Crown - an argument which has no relevance to the present case - that the importation of goods carried by an overseas ship took place at an earlier point of time, namely on the entry of the ship within territorial waters. Menzies J. at p.248, Gibbs J. at pp.254-5 (with whose judgment Mason J. agreed) and Stephen J. at pp.265-6 gave a similar meaning to the word "importation".

1. In my opinion, the word "importation" in s.50 of the Act and in reg.7 of the regulations has its ordinary and natural meaning. No sufficient reason has, in my view, been advanced for construing it in a different sense. It follows that the crane was imported into Australia at the latest on 26 March 1986, a date anterior to that upon which the first application for an import licence was made.

2. The question remains whether, notwithstanding that reg. 7 is to be construed in the manner to which I have referred, there is power under the regulations to grant an import licence in respect of goods after the time at which the importation of those goods has taken place.

3. The text of reg.7 has already been set out. Regulation 8 provides that an application for a licence is to be in accordance with such form as the Minister directs and is to be delivered, in such manner as the Minister directs, to the Collector of Customs "at the port at which it is proposed to import the goods". At the relevant time, reg.9 provided:
   
   

"9. Except -

(a) where the Comptroller otherwise approves; or

(b) where goods in respect of which the licence is applied for have been exported at the date of the application for the licence,

a person shall not apply for a licence to import any goods unless he intends forthwith after the grant of the licence to give to the overseas supplier firm directions for the exportation to Australia of the goods."

The power to grant or refuse a licence is contained in reg.11 which, at the relevant time, was in the following terms:

"11. The Comptroller may -

(a) grant a licence in respect of all the goods included in an application for a licence;

(b) grant a licence in respect of part only of the goods so included; or

(c) refuse to grant a licence."

1. This question was considered by Wilcox J. in Frost v. Collector of Customs (Qld) (supra). In denying the existence of such a power, his Honour said at pp 306-7:
   
   

"The Australian Customs Service has apparently been willing to administer the import licensing regulations upon the basis that an application for a licence may be lodged, and will be considered upon its merits, after a vehicle has been imported into Australia. If a licence is then granted, the vehicle is treated as having been lawfully imported into Australia. If a licence is then granted, the vehicle is treated as having been lawfully imported and, subject to payment of any applicable duty, is released to the importer. But it is not easy to see the legal justification for this procedure. The effect of the Act and the regulations is that at the moment of importation, without the requisite licence, the vehicle was forfeited to the Crown: see Burton v. Honan (1952) 86 CLR 169 at 176; Bert Needham Automotive Co. Pty. Ltd. v. F.C.T.

(1976) 10 ALR 501 at 506-8; Pearce v. Button

(1985) 60 ALR 537 at 554-5. There appears to be no statutory basis for retrospective licences or for waiver of the Crown's title to forfeited goods. It appears that the Customs authorities have developed the practice of modifying the legislative provisions by adopting an attitude which is generous to importers but unwarranted in law."

It was urged upon me that I should not follow the view expressed by his Honour and conclude that the power to issue an import licence under reg. 11 remains available notwithstanding that the goods, as in this case, have been brought within the limits of a port and, in fact, landed.

1. The question is one of considerable public importance. At this stage I express no opinion upon it. It may be that it should be the subject of consideration by a Full Court of this Court. I will hear submissions from the parties as to the course which the further hearing of this matter should take.