Commonwealth v Melbourne Harbour Trust Commissioners [1922] HCA 31; (1922) 31 CLR 1 (26 June 1922)

The Commonwealth and Another Plaintiffs; against The Melbourne Harbour Trust Commissioners Defendants.

The plaintiffs by their statement of claim in this action declared upon a bond, executed by the defendants, in the following form:—[The bond was here set out, and the judgment continued:—] The defendant demurred generally to the statement of claim.

The demurrer must be overruled. It might, perhaps, be sufficient to rest our opinion upon the decision of this Court in Marine Board of Hobart v. The Commonwealth[1], but, as the argument before us in the present case covered some new ground, we think it desirable to deal with it.

By sec. 42 of the Customs Act it is provided that the Customs shall have the right to require and take securities for compliance with the Act, and generally for the protection of the revenue of the Customs. And by the Customs Regulations 1913-1914, purporting to have been made pursuant to the Customs Act, it is provided that proprietors or lessees of certain wharves shall give security in accordance with the appropriate form in the Schedule. The bond in the present case followed the skeleton form set forth in Schedule I. to the Customs Act (see also sec. 47), and also the particular form set forth in the Customs Regulations.

The argument for the defendants, however, denied that the bond was a Customs security, or enforceable as such, on the following grounds:—(1) The bond exceeded the requirements of sec. 42 of the Act. It covered goods that were not dutiable. It could only be discharged on conditions that were not provisions for compliance with the Act or for the protection of the revenue of the Customs. The condition that the bond should not be discharged unless the goods mentioned therein were dealt with in all things in accordance with the Act and the Regulations and to the satisfaction of the Collector of Customs for the State of Victoria was cited as a particular instance of this vice. (2) The Customs Regulations relating to bonds were ultra vires. They required a bond which exceeded the provisions of sec. 42 of the Act, and deprived owners and consignees of a right that was said to exist under sec. 43, of depositing cash, or took away from the Collector of Customs a discretion that was conferred upon him under the section. (3) The provisions of sec. 48 of the Act were an attempt to exercise the judicial power of the Commonwealth, and therefore invalid.

It is unnecessary for us to consider the validity of the assumption involved in these objections, namely, that a bond to the Customs can only be supported if given in accordance with the provisions of sec. 42 of the Act; for we are of opinion that the bond can be supported under that section.

As a matter of construction we agree that the bond and the Regulations cover goods which are subject to the control of the Customs, whether dutiable or not dutiable. And, despite an incautious statement in the Marine Board's Case[2] to the effect that the Regulations only apply to dutiable goods, the Act brings under the control of the Customs all goods which are imported. (See secs. 30, 35-39.) Examination of the goods may be necessary to determine whether they are or are not dutiable and whether they are or are not prohibited imports (see secs. 49, 50, 52), and for other purposes. Sec. 42, then, must, as a matter of necessity, cover all goods subject to the control of the Customs, and indeed the later words of the section, providing that the Customs, "pending the giving of the required security in relation to any goods subject to" its control, may refuse to deliver the goods or to pass any entry relating thereto, make the legislative intent quite clear.

Let us examine the various conditions of the bond. The first provides for the safe keeping of goods discharged on the wharf whilst subject to Customs control, and the second for their proper entry and payment of duty, &c., before removal. We cannot see any better way of securing compliance with the Act and protecting the revenue, once the goods are out of the custody of the Customs, than by attaching liability to the person or body permitted to have possession of them in the event of the goods being lost or damaged or in the event of a failure to enter or pay duty (if any) upon the goods. These conditions are therefore, in our opinion, clearly within sec. 42. We next come to the condition that all such goods shall be dealt with in accordance in all things with the Act and Regulations and to the satisfaction of the Collector. So far as this condition stipulates for compliance with the Act and Regulations (see "This Act," sec. 4) the provisions of sec. 42 are not exceeded, unless the Regulations be ultra vires—a point more properly dealt with at a later stage. But so far as it stipulates for the satisfaction of the Collector the matter requires some consideration.

It is possible that the Collector might not, owing to some mistake, be satisfied that the Act and Regulations had been complied with when in fact and in law all had been duly followed. The possibility must be admitted, but we know that in ordinary business matters the due performance of an obligation often requires this performance to be certified to the satisfaction of some engineer, architect or other person.

Is it, then, beyond the ambit of sec. 42 that the Customs should require, not only a security for compliance with the Act, but a security conditioned upon that compliance, and all dealings not regulated by the Act, being to the satisfaction of its own officers? Such a provision may not be, we think, unreasonable or improper with respect to the goods the subject matter of the bond for the purpose of protecting the revenue. It may be that for that purpose it is desirable that the Collector of Customs should have as complete a dominion over them as if he continued to have their custody, or that their preservation and safety should be secured even more completely than if he had done so.

The security which is substituted for the possession of the goods by the Customs must be as effective for administrative and other purposes as the control of the goods would have been; otherwise the security is ineffective. Possession of goods by the Customs gives it a very real method of compelling compliance with the Act. And if the Customs gives up that possession many practical and legal difficulties might easily arise in proving non-compliance with the Act and in protecting the revenue. Consequently, the Customs requires that a party obtaining possession of the goods should satisfy it or one of its officers in the way specified in the bond. Indeed, it may be said that such a provision is almost necessary if the security is to be really effective. This conclusion also supports the Regulations.

One other argument on the form of the bond given in this case and prescribed by the Regulations must be noticed. It was said that the bond and the Regulations contravene the provisions of sec. 43 of the Act. Either the right of the party or that of the Customs to require security in the form of a guarantee or cash deposit is taken away and a bond in the form prescribed by the Regulations is the only form of security allowed. The objection cannot be sustained in the case of a party who, as in the case of the Melbourne Harbour Trust Commissioners, has given a bond. But in any case the provisions of sec. 42 merely enable the Collector as the agent of the Executive to relinquish goods subject to his control, in return for security in such one or more of the forms indicated by the statute as he chooses. And it is within the competence of the Governor-General under sec. 270 to prescribe by regulation that the security should take one form rather than another.

An argument was also made that sec. 48 of the Act is not a law relating to Customs, and is also a usurpation of the judicial power of the Commonwealth. Neither of these contentions can be sustained. The section makes provision for the enforcement of a Customs security, and in effect casts upon the party who purports to have given the security the burden of proving either that he has not executed it or that he has complied with its conditions or that the security has been released or satisfied. A law does not usurp judicial power because it regulates the method or burden of proving facts. And the mere statement of the purpose and operation of sec. 48 establishes it as a law relating to Customs.

The plaintiffs also contended that their claim was not demurrable even if the bond could not be supported by reference to the provisions of the Customs Act. In view of our opinion on the Act and the Regulations, we think it undesirable to make any pronouncement on this point.

The defendants pleaded as well as demurred to the statement of claim of the plaintiffs. And the plaintiffs demurred to pars. 4, 5, 6 and 7 of the defence. This latter demurrer must be allowed. It was admitted that the matters pleaded in pars. 6 and 7 of the defence could not be supported. And the matters raised by pars. 4 and 5 of the defence involve the same questions of law, already decided in favour of the plaintiffs on the defendant's demurrer; so that no further discussion of them is required.

This is an action on a bond dated 2nd August 1916 given by defendants to "the Customs of the Commonwealth of Australia" for £5,000 on conditions therein set out. The conditions are in substance that (1) if all goods which, without payment of duty, are discharged at the sufferance wharves at the Port of Melbourne shall, while on such wharf, be safely and securely kept on the wharf, &c., and there preserved in good condition by the Melbourne Harbour Trust Commissioners or their agents, free from loss, deficiency or damage—except from unavoidable accidents, and (2) if before removal the goods (a) be duly entered for home consumption and duty paid, or (b) be duly entered for warehousing and transhipment, and also (3) if all such goods shall be dealt with in accordance in all things with the provisions of the Customs Acts and Regulations, and to the satisfaction of the Collector of Customs for the State of Victoria; "then this security to be discharged."

The statement of claim alleges, in par. 2, that the instrument was furnished as a security pursuant to reg. 3 or 3A of the Customs Regulations. Then, by par. 3, one of two alternative legal views of the effect of the bond is presented. It is claimed that it was taken pursuant to sec. 42 of the Act, and that it is a "Customs security" within the meaning of sec. 48. By par. 4 the other alternative view is put forward, that, if it be not within sec. 48, the plaintiffs fulfil by allegations of fact the requirements of pleading in an action on the bond—considered as not within sec. 48 but either as given by virtue of regs. 3 or 3A, or as valid at common law.

The defence in effect demurs to the whole statement of claim, and the arguments maintain all the contentions therein appearing except that in par. 6—cancellation. The defendants' contention may be thus conveniently stated:—(1) The bond is invalid because, the defendants having no duty towards the Customs, there was no power under sec. 42 to require and take the bond. (2) Reg. 3A (the one really relevant) is invalid because it limits the possible security to a bond whereas sec. 43 of the Act gives the obligor a choice of bond, guarantee and cash deposit, leaving only details, though possibly important details, to be approved by the Collector; the bond therefore cannot be sustained as a Customs security under sec. 43, and if not, then it is outside sec. 48. (3) As it purports to be under reg. 3A and is not so in law, it entirely fails. (4) Regarded otherwise than as a "Customs security" under sec. 48, it has no validity under any Customs enactment, and at common law there is no proper obligee. (5) Sec. 48 is in any case invalid as an attempt to exercise judicial power. (6) The condition goes beyond anything reasonable because it requires that the goods shall be dealt with not only in accordance with the Act and Regulations but also to the satisfaction of the Collector. I deal with these objections as under.

(1)

The Melbourne Harbour Trust Commissioners are a body constituted by the law of Victoria, under the Act No. 2697 of 1915, to manage the Port of Melbourne, and the bed and soil and shores of the waters and parcels of land within the statutory metes and bounds. The exclusive management and control of the Port is vested in the Commissioners. Among their property are "wharves" (secs. 60 and 61) and sheds for the reception of goods (sec. 62). By secs. 110, &c., tolls and rates may be charged for receiving goods on wharves. This is equivalent to a business (see Port of London Authority v. Inland Revenue Commissioners[3]).

Under the Commonwealth Customs Tarifj Act, duties of Customs are imposed; and by the Customs Acts ancillary provisions are made separately, pursuant to constitutional requirement. By sec. 30 it is enacted (inter alia) that goods imported shall be subject to the control of the Customs from the time of importation until delivery for home consumption, or until exportation to parts beyond the seas, whichever shall first happen. By sec. 33 it is enacted that "no goods subject to the control of the Customs shall be moved altered or interfered with except by authority and in accordance with this Act." The double provision will be noted, showing that the phrase "in accordance with this Act" does not necessarily cover directions of the Collector.

Before imported goods are allowed to pass into the general stock of the community, entries have to be made, the goods examined, and, if found to be importable, may be imported and duties, if any, leviable must be paid. But, for the convenience of importers, goods are allowed to be deposited on the defendants' wharves and deposited in stores and sheds, pending the final determination of the owners as to their complete importation.

The defendants, for the benefit of their own undertaking, and having custody and control of the goods—of course, in large quantities, the duties on which probably reach several thousands of pounds—are required to give some security to the Government for the protection of the revenue in respect of the goods they undertake to receive on their wharves and in their stores and sheds. As soon as they assume the receipt and storage of uncustomed goods, they are in a position of responsibility. The Commonwealth is not bound to permit those goods, which are by law "under the control of the Customs," to remain there unless duty is forthwith paid. But, as the Harbour Trust, for its own business, desires to retain custody of the goods without paying duty, sufferance wharves are allowed, and the owner of such a wharf is required to give a bond to the Customs. The point taken is, therefore, unsustainable.

(2)

Reg. 3A is said to be invalid because "inconsistent" with the Act (particularly sec. 43), and therefore beyond the power of the Governor-General, under sec. 270, to make. The inconsistency suggested is, as I have said, that sec. 43 gives the obligor the choice of form of security and reg. 3A does not. The objection cannot, in my opinion, be sustained. Primarily, dues must be paid, and paid in cash and instanter. Parliament permits a deviation from that course, but only on certain conditions. The security cannot be validly taken in any form but those prescribed by Parliament, namely, "bond," "guarantee" or "cash deposit." But the approval as to which of these shall in any given case be taken is vested in the "Collector." He may require not merely one form but "all" or "any" of these forms. If he permits any other it is illegal, but he is the person as between him and the importer to choose which of the three shall be adopted. He may refuse to approve of any but a bond, and he may refuse the form or amount of it, or he may decline the offered guarantee and be dissatisfied with the solvency of the proposed surety. He may think a cash deposit proper or burdensome. The "Collector," it must be remembered by the definition section, 4, includes the Comptroller and any State Collector, and in fact any Customs officer doing duty in the matter. This may take place at any point of import throughout the vast coast-line of Australia. The officer may find it inconvenient to accept the money, or he may decline to take a guarantee; and so on. There is no reason for giving the choice to the importer, because strictly he should pay cash and the whole question of security is a relaxation in his favour. He must, therefore, do what is required by the Customs. It would be absurd that he should have the choice of any one of the three forms, and yet that "all" should either be required to be given or need approval. It need not be said that the Collector "in such a case is merely acting under the direction of the Crown and can be controlled in this respect by a direction of the Governor-General in Council." I am therefore of opinion that reg. 3A, which is expressly made "for the protection of the revenue," is valid. The bond is consequently, in the view so expressed, a security both under sec. 43 and sec. 48.

(3)

The point is that, the bond having been rested on reg. 3A, it must fail if that regulation is bad, even though, if otherwise pleaded, it could stand for other reasons that were good. That cannot be accepted. Well-known principles prevent it (see Nocton v. Ashburton[4]).

(4)

The fourth question arises only if the second point succeeds; but, as it was argued, I give my opinion. Apart from the strict provisions of secs. 43 and 48 the fact remains that the Customs could, and would, if the laws were observed, have refused to allow the goods to remain in the defendants' custody unless the bond has been given. And so the bond was in fact given. It has all the form of a common-law bond, and what is to prevent it having efficacy as such if it fails to operate under sec. 48? It is first said that the Commonwealth of Australia cannot sue because the bond is made in favour of "The Customs of the Commonwealth of Australia." But it purports to be under the Customs Act 1901-1916, and we have to see, as a matter of interpretation by reference to that Act, what is meant by the term "The Customs of the Commonwealth of Australia." By sec. 4 "The Customs" means the "Department of Trade and Customs." On 1st January 1901 the Governor-General directed it to be notified, and it was notified, that His Excellency with the advice of the Federal Executive Council had established certain Departments of State of the Commonwealth—and among these was "the Department of Trade and Customs." That was in pursuance of the power contained in sec. 64 of the Constitution, which also provides that the officer appointed by the Governor-General to administer those Departments shall be the Sovereign's Minister of State for the Commonwealth. Sec. 6 of the Customs Act declares that until otherwise lawfully determined (and it has not been otherwise determined) the Customs Acts shall be administered by the Minister of State for the Commonwealth, administering "the Customs," that is the Department. It is, therefore, incontestable that the name of the obligee "The Customs of the Commonwealth of Australia" is in law the Commonwealth for the purpose of the Customs. There are some very cogent authorities, including Maugham v. Sharpe[5], Reeves v. Watts[6] and others. But I shall quote from one only, Simmons v. Woodward[7]. There Lord Halsbury says of Maugham v. Sharpe that it "is a very apt and cogent illustration of a very familiar principle of law, that where you are dealing with a grantee, you may describe that grantee in any way which is capable of ascertainment afterwards: you are not bound to give him a particular name; you are not bound to give his christian name or his surname; you may describe him by any description by which the parties to the instrument think it right to describe him." Now, when we know as a matter of law that the Commonwealth of Australia transacts its business relating to the Customs, under the name of "the Customs" and by means of its Department of Trade and Customs, the objection as to identity is plainly unsustainable, even if we regard the deed as one at common law.

(5)

Sec. 48 was attacked as invalid because, it is said, it is an attempt by the Legislature to exercise judicial power and that, it is said, is vested exclusively in the Judicature. There is no substance in the objection. It is a mere evidentiary section and of a class well known in Customs Acts. For instance, in England, in the Act 39 & 40 Vict. c. 36, secs. 259, 260, 262. These are only examples of many enactments placing the burden of proof on defendants, whose knowledge of the true facts is necessarily greater than that of anyone else. Justice might easily be otherwise defeated. For instance, under the American Constitution, see per Marshall C.J. in the case of The Schooner Thomas and Henry v. United States[8], and by Gray C.J. in Holmes v. Hunt[9].

(6)

The reference to the satisfaction of the Collector is not arbitrary or even really additional; as already mentioned, it is assumed by the Act that goods might be removed, &c., "in accordance with this Act" ("Act" includes "regulations," sec. 4), and yet not "by authority." "By authority" means (sec. 4) by the authority of the officer of Customs doing duty in the matter in relation to which the expression is used. By the terms of the bond that officer is "the Collector," and that has practically the same meaning. There are many parts of the Act expressly requiring the satisfaction of the Collector, and these are elastic, as distinguished from precise provisions of the Act itself or the Regulations. But in any case it is a well-known principle that if such a term in the conditions were unauthorized it could be ignored, unless it were relied on as the ground of the breach.

The action is brought on a bond given by the Harbour Trust as to goods discharged without payment of duty at the sufferance wharves of the Port of Melbourne; and the demurrer raises the point that in several respects the bond contains conditions such as under the Customs Act the Customs authorities had no right to require of wharfingers. But even if the conditions could not lawfully have been imposed, that fact is no answer to the bond. The bond is not the exercise of a power, but a contract. There is nothing illegal or impossible in the contract itself; there is no law forbidding a wharfinger to consent to other conditions than those which are made imperative by the Act. The demurring party has to show that the statement of claim discloses no cause of action; but here there is a good cause of action in the promise under seal to pay £5,000 subject to the condition that if certain things are done the security is discharged. The contract remains and is binding until it be rescinded on some definite ground of fraud, mistake, &c. It is no defence to a contract to say that the defendant ought not to have been required (if he was in fact required) to make the contract. If the defendant ought not to have been required to make such a contract, the law provides other appropriate remedies. In the case of Marine Board of Hobart v. The Commonwealth[10] this Court entertained an action for a declaration that the Commonwealth is not entitled to require a bond with certain conditions, and for an injunction restraining the Commonwealth from taking any steps to compel the Marine Board to give such a bond; but, whatever be the appropriate remedy under the circumstances, the defendant cannot say that there is no cause of action on a contract not illegal in itself which was made and is not set aside.

The words of the bond follow, in the main, the form prescribed by the Customs Regulations 1913. They profess to be, and no doubt were meant to be, "pursuant to the Customs Act 1901-1916." In accordance with the form prescribed, they say that the Harbour Trust is "bound to the Customs of the Commonwealth of Australia." It is urged that the Customs is not a legal entity, is neither a person nor a corporation; and this is true. But it does not follow that the bond does not disclose any obligee. On a fair construction of the words, the obligee is the Commonwealth, in relation to the Customs Department, as distinguished from the Defence Department, the Department of Home and Territories, &c. A bond executed with a blank for the name of the obligee would ordinarily be void; but the Courts struggle to find, from a consideration of the whole document, who was meant to be the obligee—ut res magis valeat quam pereat. As said in Cruise's Digest, title xxxii., Deed, ch. xxi., "Mistakes in the description of the parties will not, unless very gross, make a deed void": Nil facit error nominis cum de corpore constat. Here, the Commonwealth, a legal entity, is the obligee; and it sues the defendant on the bond.

My view is that a demurrer to an action on the bond is not a proper means for raising the question as to the nature of the bond which the Customs has power to require.

I concur in the order proposed by the Chief Justice, Gavan Dufjy and Starke JJ.

Demurrer to statement of claim overruled. Demurrer to pars. 4, 5, 6 and 7 of the defence allowed.

Solicitor for the plaintiffs, Gordon H. Castle, Crown Solicitor for the Commonwealth.

[1] [1915] HCA 43; (1915) 20 C.L.R., 15.

[2] (1915) 20 C.L.R., at p. 19.

[3] (1920) 2 K.B., 612.

[4] (1914) A.C., 932, at pp. 965, 968, 977.

[5] [1864] EngR 512; (1864) 17 C.B. (N.S.), 443.

[6] (1866) L.R. 1 Q.B., 412.

[7] (1892) A.C., 100, at p. 105.

[8] (1818) 23 Fed. Cas., 988, at p. 990; 1 Brock., 367.

[9] (1877) 122 Mass., 505, at p. 519.

[10] [1915] HCA 43; (1915) 20 C.L.R., 15.

High Court of Australia

Commonwealth v Melbourne Harbour Trust Commissioners [1922] HCA 31; (1922) 31 CLR 1 (26 June 1922)

HIGH COURT OF AUSTRALIA