R v George P Harris, Scarfe and Company Limited

The case of *R v George P Harris, Scarfe and Company Limited* involved an action brought by the Crown against the defendant company, merchants and importers, to recover penalties for offences against section 234 of the *Customs Act 1901*. While charges of fraud were withdrawn and the defendants admitted liability for penalties, the central dispute concerned the calculation of the minimum penalty applicable to seventeen admitted contraventions of the Act. The matter came before Isaacs J. in the High Court, who reserved a question of law for the determination of the Full Court.

The legal issues before the court were twofold. Firstly, the interpretation of section 243 of the *Customs Act 1901*, specifically the phrase "the maximum which is prescribed in pounds," in relation to the calculation of the minimum pecuniary penalty. This involved determining whether the minimum penalty was one-twentieth of a fixed monetary amount prescribed by a section, or one-twentieth of thrice the value of the goods, where the latter exceeded the fixed amount. Secondly, the court had to determine whether the defendants, as principals, had taken all reasonable precautions to prevent their agent from committing the offences, particularly in light of the agent's long and trusted service and the company's belief that no Customs vouchers were issued.

Regarding the calculation of the minimum penalty, the Full Court held that the phrase "the maximum which is prescribed in pounds" in section 243 referred to penalties explicitly stated in monetary terms at the foot of relevant sections, such as "One hundred pounds" in section 234. Consequently, where an offence occurred and thrice the value of the goods exceeded the prescribed monetary penalty, the minimum penalty was one-twentieth of the prescribed monetary amount, not one-twentieth of thrice the value of the goods. On the issue of reasonable precautions, Isaacs J. found that while the defendants had acted in good faith and were deceived by their long-serving employee, they had failed to take all reasonable steps to ensure the proper payment of Customs duties. Specifically, they had relied solely on the employee's word that no vouchers were issued, rather than making independent inquiries or requesting such documentation from the Customs, which were readily available.

Consequently, Isaacs J. determined that the defendants had not exercised the necessary care expected of an importer in fulfilling their public obligation to the Crown. While acknowledging the defendants' honesty and the considerable loss they had already suffered, he imposed a penalty for each of the seventeen offences consisting of the legal minimum penalty plus an additional sum of £5. This approach aimed to establish the principle of required supervision for importers while avoiding an unduly harsh penalty.