Comptroller-General of Customs v Yip; Comptroller-General of Customs v So; Comptroller-General of Customs v Johal

This unusual matter arose from an incident in which it was alleged that the respondents intentionally sought to evade the duties and taxes payable on certain luxury goods (948 items in total) after arriving in Brisbane from Hong Kong. [7]. The total value of the undeclared goods was some $194,000. [9]. The court was required to consider the proper construction of s 205D(3)(c)(ii) of the Customs Act 1901 (Cth). That section provides:

 “(3)         If:

(a)    goods seized otherwise than as special forfeited goods have not been dealt with under section 206; and

(b)    proceedings of the kind referred to in paragraph (2)(b) or (c) are commenced in respect of an offence involving the goods; and

(c)    on completion of the proceedings, the court:

(i)            finds that the offence is proved; and

(ii)         is satisfied, in all the circumstances of the case, that it is appropriate that an order be made for condemnation of the goods as forfeited to the Crown;

the court must make an order to that effect.”

At the Magistrates Court level the respondents had both entered guilty pleas to:

• intentionally making a written and oral statement to an officer of Customs reckless as to the fact that the statement was false in a material particular; and
• attempting to evade payment of the duty payable on articles of jewellery and parts thereof of precious metal or of metal clad with precious metal. [10].

At the hearing the Magistrate ordered fines and made an order for condemnation under s 205D(3) of the Customs Act 1901 (Cth). [12], [14].

Subsequently, the respondents appealed to the District Court against the condemnation order.  The judge found that the magistrate had failed to provide adequate reasons for making the orders, in particular by not referring to:

1.the fact that the intention was not to sell the goods but merely to show them off;

2.the fact that no duty was payable on the watches;

3.the potential effect of forfeiture on their employment; and

4.[t]he disparity between the duty payable and the value of the goods. [15].

It was further held that the magistrate ought to have specifically taken into account the penalties imposed in determining whether to make the condemnation orders. [16]. Concluding that the orders below were infected by legal error, [17] his Honour revised the determination to the effect that a condemnation order was made in the case of the jewellery but not in the case of the watches. [19]. In coming to that determination, his Honour regarded the expression “in all the circumstances of the case” in s 205D(3)(c)(ii) of the Act as contemplating that the range of circumstances that might be considered in exercising this discretion was a wide one, and included the penalty imposed together with public interest based considerations, for example the difficulty encountered in detecting customs offences, the “porous nature” of Australia’s borders, general deterrence and the desirability of cooperation and pleas of guilty. [18].

The grounds of the application included the following:

(a)The learned judge erred in law, when considering s 205D(3) of the Customs Act 1901, in deciding that “all the circumstances of the case” was to be characterised widely.

(b)The learned judge erred in law, when considering s 205D(3) of the Customs Act 1901, in failing to decide that “all the circumstances of the case” was to be characterised narrowly, including in accordance with relevant authority.

(c)The learned judge erred in law, when considering s 205D(3) of the Customs Act 1901, in deciding that “all the circumstances of the case” could include, inter alia, the imposition of penalty. [33].

The applicant submitted that s 205D(3)(c) does not involve any discretionary judgment whatsoever, instead requiring the court to decide whether it is satisfied that a condemnation order is warranted (in which case, the section mandates that the order be made). [36]. It was further argued that the scope of circumstances relevant to satisfaction is a narrow one [37] and does not include a penalty imposed for the offence. [39].

In interpreting s 205D(3)(c) the court had regard to the historically established meanings of forfeiture and condemnation. [47]–[52]. Taking that approach, in the lead judgment his Honour, Justice Gotterson, took the view that there was indeed force in the applicant’s submission that the matters about which the court must be satisfied concern the perfection as a title in rem to goods to which title had already vested in the Crown upon forfeiture: “the circumstances of the case to which the inquiry as to satisfaction is referenced, are all of those that may have relevance to whether the vested title ought to be perfected by a condemnation order”. [53]. Conversely he regarded the respondents’ argument, that s 205D(3)(c)(ii) confers an exercisable discretion on the court, as  “a reading that pays little, if any, regard for the established meanings to which I have referred”, despite there being no indication of legislative intent to depart from those meanings. [40], [57].

In addition, the court observed that the fact that paragraph (c) did not use the language of discretion; [58] that the word “appropriate” is not synonymous with words such as “just”, “fair” or even “reasonable”, each of which tends to convey a sense of discretionary judgment; [59] and the fact that para (c) provides no guidance as to what would render it fair, just or reasonable that, in effect, the Crown’s title to forfeited goods be affirmed or that the Crown be deprived of the title to them; [60] were all compelling factors for rejecting the interpretation of s 205D(3)(c) for which the respondents contended. [61]. It followed that neither the fact that a penalty had been imposed for the offence, nor the amount of it, would be a circumstance relevant to the matter about which the court was to be satisfied. [64].

In the result given the applicant had established errors of law, the appeal was allowed and the orders made in the District Court, including the costs order, were set aside. The court ordered that the respondent pay the costs of the appellant of the appeal and of the appeal to the District Court on the standard basis. [70]–[72].