Scott v James Patrick & Co Pty Ltd [1968] HCA 28; (1968) 117 CLR 242 (20 May 1968)

HIGH COURT OF AUSTRALIA

SCOTT v. JAMES PATRICK & CO. PTY LTD. [1968] HCA 28; (1968) 117 CLR 242

Customs (Cth)

High Court of Australia
Windeyer J.(1)

CATCHWORDS

Customs (Cth) - Penal provisions - Penalty imposed on owner of larger ship where small ship liable to forfeiture - "Owner" - Liability of owner's agent - Scope of agency - Unrelated to situation producing liability to forfeiture - Detention of ship before penalty ascertained by judicial proceedings - Power - Customs Act 1901-1965 (Cth), s. 4 "owner"*, s. 228.**

HEARING

Sydney, 1968, April 29; May 20. 20:5:1968
PROSECUTION.

DECISION

May 20.
WINDEYER J. delivered the following written judgment: -
This is a Customs prosecution, the name which the Customs Act 1901-1965 Act. The proceedings were instituted in the name of the Minister for Customs as the Act, s. 245, requires. At the time when the proceedings were commenced Mr. Kenneth McColl Anderson was the Minister and the proceedings were commenced in his name. He has since relinquished that office. Senator Malcolm Fox Scott is now the Minister. Assuming that when the Act speaks of proceedings being instituted "in the name of the Minister" this means in the personal name of the Minister for the time being (as to which see Bainbridge-Hawker v. Minister of State for Trade and Customs [1957] HCA 56; (1958) 99 CLR 521), and that upon a change of Ministers pending prosecutions are thereafter to be carried on in the name of the Minister who comes into office - I, at counsel's request, ordered that Senator Scott become the plaintiff in place of Mr. Anderson and that the proceedings be thereafter conducted in his name. (at p243)

2. On the evidence given before me the relevant facts are as follows. In September 1966 the M. V. Golden Spring arrived in Port Jackson and was berthed at a wharf in Walsh Bay. The owner of the vessel was, and is, Guan Guan Shipping Limited, a company incorporated in Singapore. It owns two vessels which trade between Malaysian ports and Australia. But this was the first time the Golden Spring had come to Australia. Her home port and port of registration is Singapore. In 1964 the Guan Guan company engaged the Charterwell Trading Company, a Singapore corporation, to look after its affairs in various ports to which its ships traded. In Australia these duties are actually performed by a company incorporated in the Australian Capital Territory called Chartwell Trading Company Limited. The shares in it are all owned by the parent company in Singapore. This Australian subsidiary appointed the defendant, James Patrick & Co. Pty. Limited, a company incorporated in New South Wales, to act as agents for the Guan Guan Shipping company's ships in Sydney in relation to Customs requirements and various port matters of entry and clearance, including the payment of pilotage dues. This arrangement was still in existence when the Golden Spring arrived in September 1966. The Australian Charterwell Company considered the defendant in the nature of a sub-agent. It itself made all arrangements for the stevedoring of the Guan Guan vessels. At some time after September 1966 it also took over the tasks which till then the defendant had been doing for those ships. However, in September 1966 the defendant looked after Customs matters for the Golden Spring. Whether there was any direct relationship between the owner and the defendant otherwise than through the Charterwell Company was not precisely proved; but the owner apparently always knew that the defendant would be attending to Customs requirements and the master of the vessel, it seems, expected to have the services of the defendant when the ship arrived. (at p244)

3. It is alleged in the statement of claim that at the time when the ship was in the port -

"A cocktail cabinet built into the cabin of the chief officer
of the said ship had a false bottom, and was within the meaning
of s. 228 (6) of the said Act a secret or disguised place adapted
for the purpose of concealing goods. Beneath the said false
bottom were twenty-eight transistor radios upon which customs
duty had not been paid." (at p244)

4. This averment would, by virtue of s. 255 of the Act, be prima facie of the matters of fact. But the allegation that the cocktail cabinet answered the statutory description of a secret or disguised place adapted for the purpose of concealing goods is a mixed question of law and fact; and the averment was prima facie evidence of the fact only. Counsel for the plaintiff indicated that he might prove that certain photographs, which he had, correctly depicted the place in question. But he did not do so. The defendant had objected to them unless they were formally proved. The case proceeded, however, on the basis that the paragraph in the statement of claim which I have quoted was wholly admitted by the statement of defence. I have considered the case on that basis. In these circumstances I do not think it necessary to consider whether the allegation that the place was a "secret" or a "disguised" place was made out. I treated it as admitted. No objection was made on the ground that it is in the alternative. Nor do I have to consider closely the phrase "adapted for the purpose of concealing goods". The word "adapted" may mean here either so constructed as to be suitable for, or having been so altered as to become suitable for, the purpose of concealing goods. Whichever be the correct sense it is conceded that this cocktail cabinet in the chief officer's cabin answered the description. And it was "built in", which I take it means that it formed part of the ship. (at p245)

5. A representative of the defendant met the ship when it berthed. He obtained documents to be lodged with the Customs. These included the ship's report inwards, which was made out on a printed form bearing the defendant's name, also the report of the cargo. In these documents the defendant is described as "Agent" and in documents concerning harbour dues made out for the Maritime Services Board it is named as "Owner or Agent". The plaintiff relied principally on these documents when this prosecution was commenced. (at p245)

6. The concealed goods and the place of their concealment were found by the Customs authorities after the representative of the defendant had left the ship. A cabin boy was prosecuted and convicted of a smuggling offence. I assume that the transistor radios were seized and forfeited. No action was taken against any officer or other member of the crew except the cabin boy. But eleven months later the present proceedings were commenced against the defendant. It is not disputed that no officer, servant or agent of the defendant had participated in the attempted smuggling or had any knowledge of it: and that none of them knew of the secret place in the cocktail cabinet or of its contents, or had any ground for supposing or suspecting that it existed. In every ordinary sense the defendant was entirely innocent in the matter. It is however claimed that it is liable under s. 228 as if it were the owner of the vessel, and that an absence of guilty knowledge is irrelevant. (at p245)

7. The statement of claim par. 6 is as follows:

"At all material times the defendant acted as agent for
the owner of the said ship and was within the meaning of
s. 4 of the said Act itself the owner thereof." (at p245)

8. This was denied by the defendant. The central issue in the case is whether the defendant is for the purposes of s. 228 liable as "owner". For a full understanding of it, it is convenient to set out s. 228 of the Act in full, although only sub-s. (6) of it is involved in this case, and also to set out the definition of "owner" in s. 4.

"228. The following ships or boats not exceeding two
hundred and fifty tons registered tonnage and the following
aircraft shall be forfeited to Her Majesty -
(1) Any ship boat or aircraft used in smuggling, or knowingly
used in the unlawful importation, exportation, or
conveyance of any prohibited imports or prohibited
exports.
(2) Any ship boat or aircraft found within three nautical
miles of the coast or of land failing to bring to, or failing
to land at an airport, for boarding upon being lawfully
required to do so.
(3) Any ship boat or aircraft hovering within three nautical
miles of the coast or of land and not departing within
twelve hours after being required to depart by an officer.
(4) Any ship boat or aircraft from which goods are thrown
overboard staved or destroyed to prevent seizure by the
Customs.
(5) Any ship boat or aircraft found within any port or airport
with cargo on board and afterwards found light or in
ballast or with the cargo deficient and the master or
pilot of which is unable to lawfully account for the
difference.
(6) Any ship boat or aircraft within three nautical miles
of the coast or land having false bulk heads false bows
sides or bottoms or any secret or disguised place adapted
for the purpose of concealing goods or having any hole
pipe or other device adapted for the purpose of running
goods.
The owner of a ship exceeding two hundred and fifty tons
registered tonnage which would be forfeited if the ship were
less than two hundred and fifty tons registered tonnage shall
be liable to a penalty not exceeding One thousand pounds,
and the ship may be detained until the penalty is paid or
until security is given for its payment."

The penalty of $2,000 in lieu of forfeiture in the case of a ship of more than two hundred and fifty tons, as the Golden Spring is, has been increased by the Customs Act 1967 (No. 54 of 1967), s. 10 of the Schedule, to $10,000. But the alleged offence was committed before the amendment became operative. The plaintiff's claim is for a declaration that the defendant has been guilty of an offence under s. 228 (6) of the Act and an order that it pay as penalty $2,000, the maximum penalty at the time when the alleged offence was committed. (at p246)

9. As I have said, the critical question is whether the defendant was the "owner" within the meaning of s. 228. The plaintiff's case depends upon s. 4. It provides that:

"In this Act except where otherwise clearly intended -
'Owner' in respect of a ship or aircraft includes every
person acting as agent for the owner or to receive freight
or other charges payable in respect of the ship or aircraft." (at p247)

10. I asked counsel whether there were any decisions on the effect of this definition in a case under the Customs Act. I was not told of any and I have not myself found anything directly in point. The definition is of long standing. Apart from the addition of the words "or aircraft" after "ship", which was made in 1923 by Act No. 12 of 1923, the definition stands as it was in the Customs Act 1901, one of the earliest Acts passed by the Commonwealth Parliament. The late Dr. Wollaston, who had much to do with the establishment of the Commonwealth Department of Customs, wrote in the Preface to his book Customs Law of Australia (1904) that the Act of 1901 was "acknowledged by experts in the legal profession, as well as by those having special knowledge of the subject of which it treats, in England, Canada, and Australia to be a model of drafting. The language throughout is terse, modern, comprehensive and free from ambiguity. It is not too much to say that there is scarcely a redundant word in the whole of its two hundred and twenty-seven sections". But, regrettable though it be, terseness and an absence of redundancy may be more productive of literary elegance than of an indisputable meaning. And that perhaps is what has happened. The definition of "owner" in respect of a ship seems, so far as I have been able to trace it, to be derived from the definition of "shipowner" in the Merchant Shipping Act, 1894 (U.K.), s. 492, which came from s. 66 of the Merchant Shipping Acts etc. Amendment Act, 1862. It applies in those Acts only to their provisions concerning the delivery of goods and lien for freight. It reads:

"The expression 'shipowner' includes the master of the
ship and every other person authorized to act as agent for the
owner or entitled to receive the freight, demurrage or other
charges payable in respect of the ship."

In its context this definition clearly enough comprehends within the term "shipowner" in the relevant sections of the Act in which it appears, persons who are the shipowner's agent for the purposes and in transactions of the kind there dealt with. And by the reference to persons entitled to receive freight, demurrage or other charges payable in respect of the ship it refers, it seems to me, to persons who receive charges on their own behalf not on behalf of the owners. Clearly the description comprehends a charterer by demise of the ship. This accords with the practice in the United States of calling a charterer having full possession and control of the ship the owner pro hac vice: see cases referred to in Caldarola v. Eckert(1947) [1947] USSC 110; 332 US 155 (91 Law Ed 1968) (at p248)

11. The definition on which the present case turns is less explicit and in fewer words than that in the Merchant Shipping Act; but in my view the dropping of certain words, presumably thought to be redundant, does not extend its denotation. As I understood the argument for the plaintiff, it was that the defendant had incurred liability as the owner of the ship because, said counsel, it had "acted as what might be called the normal ship's agents". I do not know quite what was meant by this. I do not doubt that anyone who performs the kind of duties that a ship's husband does is the agent of the shipowner in all matters of that kind. And merely acting in the capacity of a ship's husband is evidence of an appointment to do so: Chappell v. Bray [1860] EngR 1070; (1860) 6 H & N 145 (158 ER 60) But there is no evidence that the defendant ever acted here as a general agent for the shipowner or had any authority to do so. The words in the definition "every person acting as agent for the owner" denote I think any person who is an agent acting within the scope of his authority. And an agent acting for the owner in some matter or transaction within the scope of his authority may incur the same liabilities and penalties as the Act imposes upon the owner in respect of that matter or transaction. But I cannot accept the plaintiff's far-reaching proposition that the Act means that every person who acts as agent for the owner in any matter thereby becomes liable as owner for something quite outside his agency, something in which he did not have any part, of which he had no knowledge and which was quite outside his control. "Every agent", it is said, is a wide term. So it is. But would a tourist agent who accepts passage money, or a forwarding agent who accepts freight and arranges to have goods put on board, or an advertising agent who on behalf of the owner advertises the ship, be liable to a penalty merely because the ship was fitted with a cocktail cabinet having a "false bottom"? I think not. Is the present defendant in any different position? It is true that it was the agent of the owner to deal with Customs requirements but only in a lawful way, not to aid smuggling. (at p248)

12. It was urged for the plaintiff that in offences under the Customs Act liability is strict and not dependent on mens rea. But it is one thing to say that an act done by a man may be an offence against the law although he has no guilty knowledge. It is quite another thing to say that a man can be guilty of offence because of some act which he did not do, in which he had no part, and which was not done on his behalf, or because of some event over which he had no control and of which he had no knowledge. I was referred to a case in the Supreme Court of New Zealand, Helleman v. Collector of Customs (1966) NZLR 705 The case is instructive The Act there in question provides that if a ship having false bulkheads etc. or any secret or disguised place adapted for the purpose of concealing goods or other device adapted for smuggling comes within New Zealand waters - words much the same so far as in s. 228 - "the master and owner of the ship shall be severally liable to a penalty of five hundred pounds". Hardie Boys J. held that lack of knowledge by the master that his ship was fitted with a device adapted for smuggling was no defence in proceedings against him. His Honour said that "here the ship came within the territorial waters of New Zealand, having in its oil tanks these prohibited devices : for the control of that situation the master as well as the owner is made responsible" (1966) NZLR, at p 708 His Honour's reasoning in that case, which I would respectfully say was unanswerable, shews how different is this case. (at p249)

13. Paragraph (6) of s. 228 has a long history. It was in the Act in 1901 - in its present form, except that aircraft have been added to ships and boats, and "within three nautical miles of the coast or land" has been substituted for "within one league of the coast". Paragraph (6) was far from new in 1901. It formed part of s. 179 of the Customs Consolidation Act, 1876 of the United Kingdom as qualified by the amending Act of 1890, 53 & 54 Vict. c. 56. Its earliest Australian predecessor that I have traced is s. 44 of the New South Wales Customs Regulation Act, 1830 (11 Geo. IV No. 6). This was copied from s. 19 of the Act for the Prevention of Smuggling, 1825 (6 Geo. IV c. 108) of the United Kingdom, which Act was later superseded by 3 & 4 Wm. IV c. 53 s. 14. Smuggling, and attempts to suppress it, go a long way back in British history and there had been still earlier enactments providing that vessels engaged in smuggling, or having on board appliances for smuggling, should be forfeited to the Crown : see e.g. 45 Geo. III, c. 121 (1805) and 47 Geo. III Sess. 2, c. 66 (1807). (at p249)

14. Section 228 (6) is somewhat wider than some of its predecessors. They only enabled the forfeiture of ships owned by British subjects or, under 3 & 4 Wm. IV c. 53 s. 14, of foreign vessels not square rigged actually carrying goods in secret places. (at p250)

15. But in this and other ways minor differences between s. 228 and its forerunners in the United Kingdom and the Australian Colonies may be disregarded. The significant thing is that ships having devices as described adapted for smuggling have for a long time been liable to forfeiture on coming within territorial waters. The provision in s. 228 that in the case of a ship exceeding two hundred and fifty tons the "owner" is liable to a penalty, and the ship is not liable to forfeiture, is in the nature of an exception to what was formerly a general rule. A penalty is imposed on the owner in lieu of the forfeiture which, if the ship had been small, would have been incurred. On the face of it one would expect the burden of the penalty to fall upon the same person, the owner, who would have suffered by forfeiture if the ship had been of a forfeitable tonnage. The provision that the ship may be detained until the penalty is paid reinforces this. However, it was said for the plaintiff that the definition of "owner" displaces this prima facie expectation of the legislature's intention. It was argued that, because of the definition, the owner and also "every person acting as agent for the owner" would be liable for the penalty. Counsel at first suggested that all of them would be severally liable. But later he took up the position that the penalty could not be exacted from more than one person in the case of the same visit of the ship ; but he did not abandon his contention that, because by definition "'owner' includes every person acting as agent for the owner", the defendant must be liable because he acted as the owner's agent for certain purposes. This proposition is to my mind mistaken. On the other hand, I do not accept the defendant's argument that the statutory definition of "owner" cannot apply at all to that word in s. 228. The real question is not, I think, whether it applies, but what is the effect of its proper application. I am inclined to think that any person who, acting as the owner's agent and within the scope of his authority, does, or makes a ship do, any of the acts which under the section would cause a ship not exceeding two hundred and fifty tons to be forfeited, would if the ship was of a greater tonnage, be liable to a penalty as "owner". There is thus, I think, room for an argument that the master who brings a ship of over two hundred and fifty tons fitted with smuggling devices as described in s. 228 (6) within three miles of the coast would be liable to a penalty. He would be acting as the owner's agent to create the situation on which the penalty depends. It could of course be said against this that in other sections of the Act, e.g., s. 64, there is an express reference to "owner or master" and that in the New Zealand enactment corresponding to s. 228 this is so. But whatever would be the true view in a case of that sort, I cannot accept the view that a person who does not participate in any way in producing the situation for which a penalty is imposed is nevertheless to be penalized because in some other transaction he was the owner's agent. (at p251)

16. I should notice one further matter. It was argued by counsel for the plaintiff that the extended meaning which he sought to put upon the word "owner" in s. 228 was required so that someone within the jurisdiction could be made responsible for the penalty in the case of a foreign ship. It was said that if that were not so the ship might clear the port, and the actual owner being abroad, no penalty could be exacted. But that overlooks the provision for the ship being detained until the penalty is paid or security given. It was said that that is not a sanction of any value, because the penalty must be ascertained by judicial proceedings ; and it was said the ship might, with impunity, sail in the meantime. That I greatly doubt. The liability to a penalty arises, as in other cases a forfeiture does, immediately a state of facts occurs which gives rise to the liability : cf. per Barry J. in Little's Victory Cab Co. Pty. Ltd. v. Carroll(1948) VLR 249, at p 253 I would add to the cases which his Honour there mentions Gelston v. Hoyt [1818] USSC 25; (1818) 3 Wheat 246 (4 Law Ed 381) in the United States It is true that the power of seizure given by s. 203 is only in respect of forfeited ships, aircraft or goods, and the Act apparently does not state how a ship is to be detained. But it authorizes detention until the penalty be paid. I think that as soon as the liability to penalty arises, the power of detention arises and subsists until the penalty payable be ascertained and paid or security be given. I see no reason why a certificate of clearance should not be refused in the case of a ship detained : see s. 118. If delay would prejudice the ship, security could be given for such amount up to the maximum as should in due course be determined. In any event the Act says the ship may be detained. That I take it means prevented, by force if necessary, from leaving. It is worth noticing that the Customs and Excise Act, 1952 of the United Kingdom deals with these matters differently. It is a more modern statute than ours. But that does not mean that our Act is ineffectual. Finally, suppose that there be difficulties in levying a penalty on the owner, that does not, I think, warrant construing the Act so as to impose a penalty on someone who is not in the particular case properly within the description "the owner". (at p252)

17. I dismiss the action with costs. (at p252)

ORDER

Action dismissed with costs.

Usual order as to exhibits.