OneSteel Manufacturing Pty Limited v The Comptroller-General of Customs

Case [2017] FCA 828

FEDERAL COURT OF AUSTRALIA

OneSteel Manufacturing Pty Limited v The Comptroller-General of Customs

[2017] FCA 828

File number: NSD 766 of 2017
Judge: RARES J
Date of judgment: 24 May 2017
Catchwords:

PRACTICE AND PROCEDURE – where competing import declarations lodged for cargo under Customs Act 1901 (Cth) and Comptroller-General of Customs unable to identify person entitled to be given import declaration advice under s 71C(4) – interlocutory application for order requiring Comptroller-General to issue import declaration advices in respect of cargo to applicants – balance of convenience

PRACTICE AND PROCEDURE – usual undertaking as to damages – whether appropriate to limit applicants’ obligation to give undertaking as to damages only to co-applicant company and not to co-applicant deed administrators of company – purpose of usual undertaking as to damages

Legislation: Customs Act 1901 (Cth) ss 4, 68, 71A, 71C
Cases cited:

Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57

Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125

National Australia Bank Ltd v Bond Brewing Holdings Ltd (1990) 169 CLR 271

Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1

Date of hearing: 24 May 2017
Registry: New South Wales
Division: General Division
National Practice Area: Administrative and Constitutional Law and Human Rights
Category: Catchwords
Number of paragraphs: 36
Counsel for the Applicants: Mr A Stewart SC with Mr K Josifoski
Solicitor for the Applicants: Holman Fenwick Willan
Solicitor for the First Respondent: Ms R Deane of the Australian Government Solicitor
Counsel for the Second and Third Respondents: The Second and Third Respondents did not appear

ORDERS

NSD 766 of 2017
BETWEEN:

ONESTEEL MANUFACTURING PTY LIMITED (ADMINISTRATORS APPOINTED) (SUBJECT TO DEED OF COMPANY ARRANGEMENT)

First Applicant

MARK MENTHA, CASSANDRA MATHEWS, MARTIN MADDEN AND BRYAN WEBSTER IN THEIR CAPACITIES AS ADMINISTRATORS OF ONESTEEL MANUFACTURING PTY LIMITED

Second Applicant
AND:

THE COMPTROLLER-GENERAL OF CUSTOMS

First Respondent

KYZA FREIGHT PTY LTD T/A CHINA SEA RATES

Second Respondent

TIM ROUTH

Third Respondent

JUDGE:

RARES J

DATE OF ORDER:

24 MAY 2017

Upon the applicants, by their senior counsel, giving to the Court the usual undertaking as to damages:

THE COURT ORDERS THAT:

1.The first respondent do all things lawful and necessary to be done to release the cargo entered under import declarations ACW4RNFEW; ACW6A4CTJ; ACW6AA9GH; ACW6A9NTG; ACW6CERGX; ACW4RX4XE; ACW6A9X37 from bond to the first applicant, including issuing an authority to deal under s 71C(4) of the Customs Act 1901 (Cth).

2.A copy of these orders be served by the applicants on the second and third respondents by email at tim@chinasearates.com by no later than 5.00pm on 24 May 2017.

3.If the second and third respondents oppose the final relief sought in the originating application, they must file and serve a notice of address for service by no later than 30 May 2017.

4.The originating application be stood over for further directions and, if no appearance is entered pursuant to order 3, final hearing on 1 June 2017 at 9.30am.

5.The costs…

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AGLC
OneSteel Manufacturing Pty Limited v The Comptroller-General of Customs [2017] FCA 828
Case
[2017] FCA 828
Decision Date

CaseChat Overview and Summary

OneSteel Manufacturing Pty Limited sought an interlocutory order to compel the Comptroller-General of Customs to release a cargo of steel to them, following competing import declarations by their customs agent and another party. The matter was heard in the Federal Court of Australia. The central issue was whether the Comptroller-General should be ordered to release the cargo to OneSteel, given that two separate import declarations were made and the Comptroller-General could not determine which party was entitled to the cargo. Additionally, the court needed to decide on the appropriate scope of the usual undertaking as to damages in this context.

The court determined that the Comptroller-General should be ordered to release the cargo to OneSteel based on the balance of convenience, as OneSteel appeared to be the rightful owner and there was urgency in resolving the matter. The court also held that the usual undertaking as to damages should apply to all parties involved, not just the co-applicant company but also the co-applicant deed administrators of the company, to ensure comprehensive protection against potential damages.

In summary, the Federal Court ordered the Comptroller-General to release the cargo to OneSteel and directed the co-applicants to serve the orders on the other respondents. If the respondents opposed the final relief, they were required to enter an appearance by a specified date, or the final hearing would proceed as scheduled. The costs of the interlocutory hearing were reserved.

Orders

Orders of the court

1. The first respondent do all things lawful and necessary to be done to release the cargo entered under import declarations ACW4RNFEW; ACW6A4CTJ; ACW6AA9GH; ACW6A9NTG; ACW6CERGX; ACW4RX4XE; ACW6A9X37 from bond to the first applicant, including issuing an authority to deal under s 71C(4) of the Customs Act 1901 (Cth).

2. A copy of these orders be served by the applicants on the second and third respondents by email at tim@chinasearates.com by no later than 5.00pm on 24 May 2017.

3. If the second and third respondents oppose the final relief sought in the originating application, they must file and serve a notice of address for service by no later than 30 May 2017.

4. The originating application be stood over for further directions and, if no appearance is entered pursuant to order 3, final hearing on 1 June 2017 at 9.30am.

5. The costs of the interlocutory hearing be reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

The Comptroller-General appeared by his solicitor, but there was no appearance by either Kyza Freight or Mr Routh when the matter was called outside the Court this morning. I am satisfied by the affidavit of Nicolaas van der Reyden of 22 May 2017, the solicitor for OneSteel and the administrators, that he served each of the respondents in accordance with the orders made on 22 May 2017. However, an affidavit by Mr Routh of 23 May 2017 and a copy of emails that he had sent to the Registrar of the Court and the solicitors for OneSteel and the Comptroller-General were provided to me during the hearing today. Having read those documents, without admitting them into evidence, I was unable to understand the nature of the claim which Kyza Freight or Mr Routh were seeking to make in the circumstances I will describe below.Background In essence, the reason that this proceeding has come to Court is that OneSteel’s customs agent in Australia, DSV Air and Sea, and Kyza Freight each electronically lodged separate import declarations to enter the cargo for home consumption under ss 68 and 71A of the Customs Act 1901 (Cth). As a result, the computer system operated by Customs recognised automatically that the Comptroller-General was then not in a position to give effect to either set of import declarations made by DSV or Kyza Freight in respect of the cargo. That was because the Comptroller-General was unable to identify the person who was entitled to be given an import declaration advice under s 71C(4) of the Act in respect of the cargo. Section 4 of the Act contains the definition of “Owner in respect of goods”, as:including any person (other than an officer of Customs) being or holding himself or herself out to be the owner, importer, exporter, consignee, agent, or person possessed of, or beneficially interested in, or having any control of, or power of disposition over the goods. Understandably, faced with competing claims by DSV and Kyza Freight as to which had the right to enter the goods for home consumption, the Comptroller-General was not in a position to determine which ought be recognised by the giving of an import declaration advice under s 71C. The transactional chain giving rise to the importation of the cargo is somewhat complicated. Not all the facts may be before me, but I will set out the material matters to explain why I consider it appropriate to make an interlocutory order that the cargo be released to OneSteel. Suffice to say that from about November 2016, OneSteel sought to purchase a cargo of about 7,000 metric tonnes of steel, consisting of universal columns and parallel flange channels, from Hyundai Corporation in South Korea. The original contractual arrangements involved OneSteel seeking to finance the purchase of the cargo through Steel Masters International (ME) FZE, a company doing business from Dubai in the United Arab Emirates. A purchase contract dated 25 November 2016 between OneSteel as buyer, and Steel Masters, as seller, identified the components of the cargo and that Hyundai was its manufacturer. It provided that OneSteel would pay Steel Masters about USD3,770,000 for the cargo.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In those circumstances, the administrators, properly, now have joined with OneSteel, by their senior counsel, in each offering to the Court the usual undertaking as to damages.Conclusion For these reasons, I am of opinion that I should order that the Comptroller-General do all things lawful and necessary to release the cargo that has been entered by DSV from bond to OneSteel, including requiring him to issue import declaration advices to deal under s 71C(4). I consider that, having regard to the commercial urgency and the unexplained absence from Court today of Kyza Freight and Mr Routh, I should stand the proceeding over to 1 June 2017 for further directions. I also will order that if Kyza Freight or Mr Routh wish to oppose the grant of final relief, including a declaration that OneSteel is and at all relevant times has been the owner of and entitled to immediate possession of the cargo, they enter an appearance on or before 30 May 2017, in default of which I will make the application for final relief returnable also on 1 June 2017. I will reserve the costs of the proceeding. I note that the Comptroller-General at this stage does not seek an order for costs.

Ratio Decidendi

Legal Principle Established

In essence, the reason that this proceeding has come to Court is that OneSteel’s customs agent in Australia, DSV Air and Sea, and Kyza Freight each electronically lodged separate import declarations to enter the cargo for home consumption under ss 68 and 71A of the Customs Act 1901 (Cth). As a result, the computer system operated by Customs recognised automatically that the Comptroller-General was then not in a position to give effect to either set of import declarations made by DSV or Kyza Freight in respect of the cargo. That was because the Comptroller-General was unable to identify the person who was entitled to be given an import declaration advice under s 71C(4) of the Act in respect of the cargo. Section 4 of the Act contains the definition of “Owner in respect of goods”, as:including any person (other than an officer of Customs) being or holding himself or herself out to be the owner, importer, exporter, consignee, agent, or person possessed of, or beneficially interested in, or having any control of, or power of disposition over the goods. Understandably, faced with competing claims by DSV and Kyza Freight as to which had the right to enter the goods for home consumption, the Comptroller-General was not in a position to determine which ought be recognised by the giving of an import declaration advice under s 71C. The transactional chain giving rise to the importation of the cargo is somewhat complicated. Not all the facts may be before me, but I will set out the material matters to explain why I consider it appropriate to make an interlocutory order that the cargo be released to OneSteel. Suffice to say that from about November 2016, OneSteel sought to purchase a cargo of about 7,000 metric tonnes of steel, consisting of universal columns and parallel flange channels, from Hyundai Corporation in South Korea. The original contractual arrangements involved OneSteel seeking to finance the purchase of the cargo through Steel Masters International (ME) FZE, a company doing business from Dubai in the United Arab Emirates. A purchase contract dated 25 November 2016 between OneSteel as buyer, and Steel Masters, as seller, identified the components of the cargo and that Hyundai was its manufacturer. It provided that OneSteel would pay Steel Masters about USD3,770,000 for the cargo. Next, Steel Masters entered into a financing arrangement with Mercantile Credit Inc, a New York based company, to assist in the funding of about 50% of the purchase price for the cargo. Mercantile Credit opened a letter of credit with Israel Discount Bank of New York (IDB Bank). The letter of credit was subsequently amended to provide for a later shipment date than had originally been agreed. The amended letter of credit, by its terms, would expire, if not drawn on, on 25 April 2017. On 9 April 2017, the cargo was shipped on board MV Molengracht, a ship owned by Spliethoff Transport BV, in Incheon, South Korea for discharge at Newcastle, Australia. The seven bills of lading, representing the total cargo, issued on behalf of the carrier, named Hyundai as the shipper and were made out to the order of “Israel Discount Bank of New York”. The notify party was DSV (the first bills of lading). On 9 April 2017, Hyundai issued seven invoices for the cargo to Mercantile Credit that, again, named DSV as the notify party.