Comptroller of Customs v Chen
[2024] NZHC 590
•19 March 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-002091
[2024] NZHC 590
BETWEEN COMPTROLLER OF CUSTOMS
Plaintiff
AND
JIANYUAN CHEN
Defendant
Hearing: 18 March 2024 Appearances:
N Malarao / D Chen for the Plaintiff
A Simperingham / Dr K-C Leung for the Defendant
Judgment:
19 March 2024
JUDGMENT OF ASSOCIATE JUDGE GARDINER
[Reasons]
This judgment was delivered by me on 19 March 2024 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date.......................................
Solicitors:
Meredith Connell, Auckland Woodward Chrisp, Gisborne
COMPTROLLER OF CUSTOMS v CHEN [2024] NZHC 590 [19 March 2024]
Introduction
[1] At the hearing of the plaintiff’s application for summary judgment of its claim against the defendant, I entered judgment for the plaintiff in the amount of
$3,631,976.70. I now give my reasons.
[2] The plaintiff’s claim was for duties owed by the defendant for his importation of cigarettes and loose tobacco in New Zealand (Importations).
[3] On 25 February 2022, the defendant was prosecuted and sentenced to imprisonment for his involvement with the Importations.
[4] On 6 May 2022, the plaintiff issued an assessment against the defendant in relation to the Importations.
[5] The plaintiff commenced this proceeding against the defendant on 4 September 2023. The plaintiff sought a judgment sum of $3,520,076.16 plus any late payment interest and late payment penalty (Additional Duty), and costs against the defendant.
[6] The defendant opposed the summary judgment application in regard to the amount payable. He accepted that summary judgment on liability could be entered against him.
[7] The defendant asked the Court to invoke its residual discretion to not grant summary judgment because he had filed an appeal of the duty assessment with the Customs Appeal Authority (CAA). He disputes the amount of the duties on the basis that several of the Importations identified by Customs were purportedly misattributed to him. He said that the amount of the duties will be resolved by the CAA and therefore summary judgment on quantum should be refused.
[8] The defendant earlier sought an adjournment of the hearing on this basis. The Court refused that application.1
1 Comptroller of Customs v Chen HC Auckland CIV-2023-404-002091, 14 March 2024.
Legal principles
[9]Rule 12.2(1) of the High Court Rules 2016 provides:
The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
[10] The relevant principles governing a summary judgment application are well established:2
(a)The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried. The Court must be left without any real doubt or uncertainty.
(b)The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated.
(c)The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable. In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it.
[11]The wording of r 12.2 (“may give judgment”) indicates a residual discretion.
Having regard to the various authorities, the position is:3
(a)The discretion implied by the use of the word “may” is to be restrictively applied. In a great majority of cases, once the Court is satisfied the defendant has no defence, there is no room for the exercise of discretion.
2 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].
3 Jessica Gorman and others McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR12.2.11].
(b)The residual discretion may be invoked to avoid oppression or injustice to the defendant where:
(i)The proceeding involves the actions or possible liability of a third party which is not before the court;
(ii)The proceedings are such that the opportunity should be given to allow discovery or other interlocutory applications to be concluded;
(iii)The circumstances of the case disclose very unusual features, the presence of which leads the court to conclude that the entry of summary judgment would be oppressive or unjust; or
(iv)The combination of complex issues of fact and law justify the dismissal of the application for summary judgment, either as a matter of discretion or because the court cannot be satisfied that the defendant has no defence.
(c)Even where the court is not satisfied that a defence has been made out, in exceptional circumstances the application may be adjourned to allow for other processes to be followed.
Reasons for decision
[12] I found that the defendant had no defence to the claim, and declined to invoke the Court’s residual discretion to refuse summary judgment, or to adjourn the hearing until after the CAA appeal.
[13] The statutory framework is clear that a person is obliged to pay the duties assessed by the chief executive of Customs, even if they have applied for an administrative review or filed an appeal with the CAA.
[14]Section 113(1)– (3) of the Customs and Excise Act 2018 (Act) provides:
113 Chief executive may assess duty where no entry made
(1)If the chief executive has reasonable cause to suspect that duty is owed on goods by a person who has not made an entry for the goods, the chief executive may assess the duty at the amount he or she considers appropriate.
(2)Customs must, by notice in writing, advise the person of the assessment.
(3)If the person is dissatisfied with a decision of the chief executive under this section, the person may, within 20 working days after the date on which notice of the decision is given, do 1 (but not both) of the following:
(a)apply for an administrative review of the decision:
(b) appeal to a Customs Appeal Authority against the decision. […]
[15] When an assessment of duty is made pursuant to s 113 of the Act, such duty must be paid within 20 working days after written notice of assessment is given by Customs to the person liable for the duty.4
[16] On 6 May 2022, the plaintiff wrote to the defendant with a formal assessment notice pursuant to s 113 and Subpart 8 of Part 3 of the Act (Assessment Notice). The Assessment Notice advised that an assessment had been conducted in relation to the Importations and that the defendant was liable for a total payment of $3,133,372.22, inclusive of compensatory interest (Assessed Duty).
[17] In addition to the Assessed Duty, the plaintiff has the right to continue imposing Additional Duty.5
[18] The Assessment Notice is deemed to have been issued on 13 May 2022.6 It also noted the due date for payment as 10 June 2022, being 20 working days from the date of notice.
[19] Section 119 of the Act prevents this Court from becoming involved in determining the correctness or otherwise of duty assessments:
119 Assessment to be taken to be correct
(1)Every assessment made by the chief executive under this Act, including an assessment made by way of amendment, must be taken to be correct.
(2)Duty is payable on the goods accordingly unless, on an administrative review or an appeal, -
(a) a different amount is determined to be the duty payable on the goods; or
(b) it is determined that no duty is payable.
4 Customs and Excise Act 2018, s 124(3).
5 Customs and Excise Act, ss 154–164.
6 Customs and Excise Act, s 426.
[20] The combined effect of ss 113 and 119 of the Act is that no assessment may be disputed in any court or in any proceeding on any ground whatsoever, except by either applying for an administrative review or appealing the assessment to the CAA. It follows that any assessment made is deemed to be correct and remains payable unless a different amount is established after a determination is made upon an administrative review or appeal to the CAA (if applicable).
[21] Finally, the Act plainly states that the obligation to pay any duty remains in force and is not suspended by any ancillary legal measures taken in disputing or challenging the assessment, including any appeal or administrative review. In particular, s 127(1) and (2) provide:
127 Obligation to pay duty not suspended by appeal, etc
(1)The obligation to pay duty under this Act is not suspended by any appeal, administrative review, or legal proceedings.
(2)The right to recover and receive duty under this Act is not suspended by any appeal, administrative review, or legal proceedings.
[22] It would be inconsistent with this explicit statutory regime for the Court to refuse to enter summary judgment, or to adjourn the hearing until after the defendant’s appeal to the CAA is determined.
[23] Further, the defendant has not pointed to any exceptional circumstances or potential injustice if judgment is entered against him. It is highly relevant that s 127(3) of the Act provides a statutory mechanism for the chief executive to immediately refund any overpayment to a person who is successful in any appeal, administrative review, or legal proceedings. Section 127(3) provides:
(3)If an appellant or any other person is successful in any appeal, administrative review, or legal proceedings,—
(a)the amount (if any) of the duty, or any security, received by the chief executive in excess of the amount that was properly payable must immediately be refunded to the appellant or other person by the chief executive; or
(b)as the case may be, the appellant or other person must be released from the conditions of the security imposed under section 240.
[24] The legislation could not be clearer that a person is obliged to pay the assessed duty even where they have filed an appeal or applied for an administrative review. Any excess paid will be refunded at the conclusion of those processes.
[25] In terms of potential injustice, it is also relevant that the defendant has not paid the $2,745,112.23 of assessed duty that he does not dispute.
Result
[26] I confirm the order made in Court entering judgment against the defendant for the sum of $3,631,976.70.
[27] As the defendant is receiving legal aid, I did not make an order against him for costs and disbursements.
Associate Judge Gardiner
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