Morton v Union Steamship Company of New Zealand Ltd [1951] HCA 42; (1951) 83 CLR 402 (26 July 1951)

HIGH COURT OF AUSTRALIA

MORTON v. UNION STEAMSHIP CO. OF NEW ZEALAND LTD. [1951] HCA 42; (1951) 83 CLR 402

Regulation

High Court of Australia
Dixon(1), McTiernan(1), Williams(1), Webb(1), Fullagar(1) and Kitto(1) JJ.

CATCHWORDS

Regulation - Excise - Duty - Liability for payment - Fixed by statute - Extension of liability by regulation - Validity - Excise Act 1901-1949 (No. 9 of 1901 - No. 46 of 1949), s. 164 - Excise Regulations 1925-1948 (S.R. No. 181 of 1925 - No. 95 of 1948), reg. 188.

HEARING

Sydney, 1951, July 10, 26. 26:7:1951
DEMURRER.

DECISION

July 26.
The Court delivered the following written judgment:-
This is a demurrer which, taking advantage of Order XXIV., r.1, demurs to is brought by the Collector of Customs for New South Wales and the cause of action in question depends upon reg. 188 of the Excise Regulations 1925 as amended. Regulation 188 is headed "Excisable Goods in Course of Removal. Responsibility for Safe Keeping". The relevant part of the statement of claim alleges that the defendant had the control and custody of certain excisable goods, namely, certain tobacco, cigarettes and cigarette papers, pending exportation of the goods to parts beyond the seas, and was responsible for the safe keeping of the goods while the same were in its custody and control. The pleading proceeds to allege that the defendant failed to keep safely the goods referred to, whereupon by reason of reg. 188 the defendant became liable to pay to the plaintiff an amount equal to the excise duty thereon. The amount of the excise duty payable on the goods is alleged to be 1,324 pounds 2s. 5d. In respect of the cause of action in question the plaintiff sought to recover this sum. (at p409)

2. The ground of the demurrer is that reg. 188 is invalid. The regulation is in the following terms:- "(1) Every person who has the control or custody of excisable goods, while such goods are in course of removal, or are in transit coastwise, or are in or at an approved place, or until delivery for home consumption or exportation to parts beyond the seas, shall be responsible for the safe keeping of such goods while they are in his control or custody, and shall account for such goods to the satisfaction of the Collector. (2) If any person fails to comply with his obligations under this regulation, he shall be liable to pay to the Collector an amount equal to the duty on the excisable goods not safely kept or not accounted for to the satisfaction of the Collector. (3) This regulation shall not affect the liability of any person arising under the Excise Act 1901-1923, or any security purporting to have been given in pursuance thereof, or of the Excise Act 1901. (4) Any sum payable to the Collector under this regulation may be sued for by action in any civil court having jurisdiction to entertain suits for debts to the amount claimed, as if it were a debt due by the defendant to the Collector. (5) In any action under this regulation, the statements or averments of the Collector in his claim or declaration shall be prima facie evidence of the matter or matters stated or averred." (at p409)

3. The question of the validity of the regulation depends upon the statutory power in pursuance of which it was adopted by the Governor-General in Council. That power is found in s. 164 of the Excise Act 1901-1949. The section is expressed as follows:- "The Governor-General may make regulations not inconsistent with this Act prescribing all matters which by this Act are required or permitted to be prescribed or as may be necessary or convenient to be prescribed for giving effect to this Act or for the conduct of any business relating to the Excise." (at p410)

4. There is no provision in the Act prescribing any matter or expressly permitting any matter to be prescribed to which the regulation would be relevant. The validity of the regulation, therefore, depends upon the words "all matters . . . as may be necessary or convenient to be prescribed for giving effect to this Act or for the conduct of any business relating to the Excise". A statutory power of this description has been considered by this Court in Carbines v. Powell [1925] HCA 16; (1925) 36 CLR 88 ; Gibson v. Mitchell [1928] HCA 37; (1928) 41 CLR 275 ; Broadcasting Co. of Australia Pty. Ltd. v. The Commonwealth [1935] HCA 3; (1935) 52 CLR 52 . (at p410)

5. A power expressed in such terms to make regulations enables the Governor-General in Council to make regulations incidental to the administration of the Act. Regulations may be adopted for the more effective administration of the provisions actually contained in the Act, but not regulations which vary or depart from the positive provisions made by the Act or regulations which go outside the field of operation which the Act marks out for itself. The ambit of the power must be ascertained by the character of the statute and the nature of the provisions it contains. An important consideration is the degree to which the legislature has disclosed an intention of dealing with the subject with which the statute is concerned. (at p410)

6. In an Act of Parliament which lays down only the main outlines of policy and indicates an intention of leaving it to the Governor-General to work out that policy by specific regulation, a power to make regulations may have a wide ambit. Its ambit may be very different in an Act of Parliament which deals specifically and in detail with the subject matter to which the statute is addressed. In the case of a statute of the latter kind an incidental power of the description contained in s. 164 cannot be supposed to express an intention that the Governor-General should deal with the same matters in another way. (at p410)

7. Part VI. of the excise Act 1901-1949 relates to the payment of duty, the removal of excisable goods from factories, and excise control. Section 54, which is the first section in Part VI., makes the manufacturer liable to pay to the collector the excise duties on all excisable goods manufactured by him. Section 161 makes excise duties Crown debts charged upon the goods in respect of which the same are payable and makes them payable by the owner of the goods and recoverable at any time in any court of competent jurisdiction by proceedings in the name of the collector. Under s. 56 no excisable goods shall be removed from the factory without an entry made and passed authorizing their removal. Section 58 provides that entries may be made by the manufacturer or owner and passed by an officer and may authorize the removal of excisable goods for (a) home consumption, (b) removal to an approved place, (c) exportation. In the case of entry for home consumption, s. 59 requires that the excise duty shall be paid before the entry is passed. Under s. 60 the manufacturer must give security for the due removal or exportation of the excisable goods before any entry is passed for the removal of the excisable goods to an approved place or for exportation. By s. 16 the Customs are given a right to require and take securities for compliance with the Excise Acts and generally for the protection of the revenue. Pending the giving of the required security in relation to any goods subject to the control of the Customs, the Customs may refuse to deliver the goods or pass any entry relating thereto. The security may at the discretion of the collector be by bond or guarantee or cash deposit or all or any of those methods and it may cover all transactions for such time or such amount as the Comptroller may approve: ss. 17 and 18. By s. 61 all excisable goods manufactured are, until delivery for home consumption or exportation to parts beyond the seas, to be subject to the control of the customs; they may not be removed, altered or interfered with except by authority and in accordance with the Act. (at p411)

8. The defendant, in attacking the validity of reg. 188, gave it a construction which the plaintiff declined to place upon it. According to that construction reg. 188 imposed upon the custodian of the goods for the time being, if they were lost, destroyed or disappeared, an obligation to pay not the excise duty on the goods, but a sum of money of equal amount, so that the payment did not discharge the obligation of the manufacturer and the owner of the goods in respect of excise but left that liability outstanding. According to this construction reg. 188 would operate as a sanction and not simply as a means of recovering the duty charged on the goods by s. 161 which the statute made payable by the owner or the manufacturer. In support of this construction the defendant laid emphasis on the words "an amount equal to the duty" in sub-reg. (2) and upon sub-reg. (3). (at p411)

9. But, according to the construction given to the regulation by the plaintiff, the purpose of the regulation is to obtain from the person who has control or custody of excisable goods which are destroyed, lost or disappear, the amount of the duty payable in respect of those goods. (at p412)

10. No doubt this latter construction makes it somewhat less difficult to support the regulation and accords better with what might be supposed to be its substantial object. But it is unnecessary to decide between the two contentions, for, even accepting the construction given to the regulation by the plaintiff, it goes beyond the statutory power conferred by s. 164. (at p412)

11. The Excise Act 1901-1949 has given specific attention to the question who shall be liable to pay excise duty and to the mode in which the excise duty shall be recovered and the occasion upon which it shall be paid in the case of entry for consumption. It has given attention to the question of security for due removal and exportation and it has made specific provision in relation to these matters. The purpose of reg. 188 is to impose a liability in the events which it specifies upon another set of persons. It is a distinct and independent addition of liability to the liabilities which the legislature has provided. The liability for the safe keeping of the goods and to account for the goods to the satisfaction of the Collector falls on each person who in the course of or after the removal of the goods has control or custody thereof, and it would include carriers, warehousemen, wharfingers and perhaps stevedores. It is an important liability and to impose it marks a new step in policy. The regulation is something which is far more than incidental to the provisions of the Act or to its more effective administration. Regulation 188 is beyond the power conferred by s. 164 and is therefore void. (at p412)

12. The demurrer should be allowed with costs. (at p412)

ORDER

Demurrer allowed with costs.