DFS Australia Pty Limited v The Comptroller-General of Customs

2. THE FACTS 3 There was no dispute as to the factual background to the present controversy. 4 The applicant operates "off-airport outwards duty free shops", one in Sydney and the other in Cairns. It has two broad categories of customers, "locals" and "travellers", the latter of whom are generally foreign travellers. Locals are charged a price for goods that includes import duty and, where applicable, GST, and travellers are charged a price that does not include those amounts. The present case concerns sales to travellers. 5 The applicant also has two broad categories of goods that it imports and sells in its stores. The first, and only presently relevant category, is goods on which the applicant pays import duty at the time of importation as required by the Customs Act 1901 (Cth) (Customs Act) and the Customs Regulations and in respect of which the applicant is granted an authority to deal with the goods (category 1 goods). These goods include watches, sunglasses, jewellery, leather goods and clothing. The second category includes fragrances, cosmetics, tobacco and alcohol which are imported under a bonded warehouse scheme. 6 The applicant's claim for a drawback of duty arises from the sale of category 1 goods to travellers. Those goods are displayed for sale in its stores with two prices, the duty and GST paid price payable by locals, and the duty and GST free price payable by travellers. When these goods are sold to a traveller, the goods are placed in a tamper proof transparent sealed bag as a part of what has been called the "sealed bag regime". The outside of the sealed bag contains a warning sticker (Warning Sticker) in bold type which reads: DUTY FREE GOODS UNDER CUSTOMS CONTROL DO NOT OPEN until proper export out of Australia Maximum fine of $50,000 7 The traveller is provided with two documents at the point of sale. The first is entitled "Export Non-LAGS" (Docket) and is printed in triplicate, one copy for the traveller which is placed in the sealed bag, one for Customs, which is stapled on the outside of the sealed bag and one which is retained by the applicant. 8 The Docket includes details of the name, departure date, destination and carrier details of the customer. It also includes information as to the items purchased and their price. In addition, the Docket contains a statement (Customs Debit Statement) to the following effect: I AGREE TO COMPLY WITH THE CARD HOLDER AGREEMENT AUTHORITY TO DEBIT MY CREDIT CARD ACCOUNT In consideration of [the applicant] not charging me any Customs Duty or GST on goods I have purchased from them, I authorize [the applicant] to debit my credit card account specified below with the amount of any Customs Duty and Excise/GST and WET [Wine Equalisation Tax] that [the applicant] is required to pay to the Australian Customs Service and/or the Australian Taxation Office as a result of my failure to export these goods in the prescribed manner. I further authorize the recording of my credit card details below. [There follows details of the credit card and a signature of the cardholder] 9 Beneath the Customs Debit Statement appears a declaration (Declaration) which reads as follows: DUTY/GST FREE - SEALED BAG DECLARATION I declare that all the information given by me in this document is true and correct and that I will comply with the conditions provided to me in the Terms and Conditions information sheet provided to me at the time of purchase. Signature of Customer____ 10 After the Declaration are the following words: Thank you for shopping at DFS Australia Retain receipt for Refunds/Exchanges After Sales Service [number provided] 11 The terms and conditions information sheet referred to in the Declaration is provided to the traveller at the time of purchase (Terms and Conditions). It is also stapled to the outside of the sealed bag. The Terms and Conditions are entitled "Duty/Goods and Services Tax (GST) & W.E.T. Free Sealed Bag Declaration" and relevantly provide as follows (emphasis in original): I will take these goods with me within thirty days of purchase when I depart from Australia on a journey to a foreign country. If I do not take the goods out of Australia on the flight/voyage specified above, I will notify the proprietor of the store where the goods were purchased by noon the next working day that the goods were not exported; and • If the goods are to be exported on a subsequent flight/voyage within 48 hours of these flight/voyage specified above, I will notify the proprietor of that intention and the next flight/voyage details; but • If not so exported within 48 hours, I will return the sealed bag containing the unused goods to the store. I am aware that if I bring the goods back with me on my return to Australia I will declare the goods to Customs if the total value of the declarable goods in my possession exceeds the passenger concessional limits. If the goods are packed in a sealed bag for carriage as cabin or hold luggage on an aircraft or cruise vessel: I will carry them in full view at the airport or wharf departure area and not pack them in my luggage. … I will surrender the sealed bag for examination and for invoice detachment to an authorised collection officer after passing through Customs. Where the sealed package is to be stored in the hold of an aircraft or cruise vessel, I will remove the Duty or Tax Free invoice and hand it to the authorised collection officer after the immigration point. ... Furthermore, I will not interfere with or break the seals of the bag or other package until I depart Australia; and I will not give a sealed bag or other sealed package to any other person to carry onto the aircraft or cruise vessel for me. … 12 Travellers who have purchased goods under this regime are obliged to present the sealed bag to personnel of Duty-Free Security Company, located between immigration and security at the international airport (or after Customs at the dock if the traveller is departing Australia by ship), who inspect it to ensure that it has not been tampered with and remove the Docket attached to the outside of the bag. The Dockets removed are provided to the Applicant and used by it as proof of export to claim a drawback of duty. If the traveller has not complied with the terms of the sale by taking the goods with him or her within 30 days of purchase, then the applicant attempts to recoup the duty and GST on the goods from the traveller. 13 The sealed bag regime does not relate to obligations that the traveller owes to Customs pursuant to any statutory regime. This is because under the present regime the applicant has already paid duty on the category 1 goods and upon export no duty is owed upon them. The only relevant question is whether or not, pursuant to the contractual arrangements set out above, the applicant falls within the description of "legal owner" as a result of these arrangements.

2.1 Statutory Provisions 14 By agreement of the parties, the applicable version of the Customs Act includes amendments made up until and including Act No. 103, 2013 and may be found in the compilation dated 1 July 2013. The applicable version of the Customs Regulations includes amendments up to and including SLI No. 114, 2014, and may be found in the compilation dated 25 July 2014. It is to these versions that I refer below. 15 The Customs Act imposes Customs control on certain goods that are imported into Australia; s 30(1). If a person intentionally and without authorisation moves, alters or interferes with goods that are subject to the control of Customs, the person commits an offence punishable by a penalty not exceeding 500 penalty units; s 33(1). Pursuant to s 68(2) of the Customs Act, the owner of certain goods may enter the goods for home consumption or for warehousing at any time before the ship or aircraft upon which they are carried arrives at a port or airport in Australia at which they are to be discharged. An entry of goods for home consumption is made by communicating to Customs an import declaration in respect of the goods; s 68(3A). An import declaration is a communication to Customs in accordance with s 71A of information about goods to which s 68 applies that are intended to be entered for home consumption. 16 Subsection 4(1) of the Customs Act relevantly provides the following definitions: goods means movable personal property of any kind and, without limiting the generality of the expression, includes documents, vessels and aircraft. … Owner in respect of goods includes any person (other than an officer of Customs) being or holding himself or herself out to be the owner, importer, exporter, consignee, agent, or person possessed of, or beneficially interested in, or having any control of, or power of disposition over the goods. 17 Section 168 of the Customs Act provides that the regulations may make provision for and in relation to allowing drawbacks of duty paid on goods imported to Australia. 18 Regulation 134 of the Customs Regulations at the time of the applicant's drawback claims provided as follows: (1) Drawback of import duty is not payable on the exportation of goods unless each of the requirements in this regulation is met. (2) The goods must be available at all reasonable times before the exportation for examination by an officer. (3) Records that show: (a) that duty has been paid on the goods; and (b) relevant details of the receipt and disposal of the goods by the owner; must be available at all reasonable times for examination by an officer. (3A) If the goods are tobacco or tobacco products, the owner of the goods must give the Collector notice in writing, a reasonable time before the exportation, of the owner's intention to claim drawback on the exportation. (4) A claim by document for drawback of import duty paid in respect of the goods must: (a) be in an approved form; and (b) set out the amount of the claim and such other information as the form requires. (4A) A claim made electronically for drawback of import duty paid in respect of the goods must: (a) include information as required by an approved statement; and (b) be transmitted, and signed, in a manner that meets the information technology requirements determined under section 126DA of the Act. (5) If the goods were exported before the day on which this regulation commences, the person who is the legal owner of goods at the time the goods are exported must give the claim to the Collector in the period: (a) starting on the day on which the goods are exported; and (b) ending 12 months after the day on which the goods are exported. (6) If the goods were exported on or after the day on which this regulation commences, the person who is the legal owner of goods at the time the goods are exported must give the claim to the Collector in the period: (a) starting on the day on which the goods are exported; and (b) ending: (i) for tobacco or tobacco products - 12 months after the day on which the goods are exported; and (ii) for other products - 4 years after the day on which the goods are exported. (7) The claim must mention that, to the best of the knowledge, information and belief of the person making the claim, the goods have not been used in Australia otherwise than for the purpose of being inspected or exhibited. (7A) For tobacco or tobacco products, the claim must also mention that, to the best of the knowledge, information and belief of the person making the claim, the goods have not been, and are not intended to be, relanded in Australia. (8) Either: (a) the amount of the drawback must be at least $100; or (b) all of the following must apply: (i) the amount of the drawback is less than $100; (ii) the amount is claimed at the same time, and using the same approved form, as 1 or more other claims by the owner of the goods for drawback of import duty on the exportation of other goods; the sum of the drawbacks claimed is at least $100. 19 It is common ground that the applicant's claim for a drawback of duty satisfies all of the requirements of reg 134 with the exception of reg 134(6). 20 In 2006 the Customs Regulations were amended by the Customs Amendment Regulations 2006 (No.4) (Cth). The earlier version of the regulations was expressed quite differently to the current form, and in particular did not include any reference to a "legal owner" of goods. In the Decision, the Tribunal quotes former reg 134(1) as an example, which is as follows: (1) Drawback of import duty is not payable on the exportation of goods unless: (a) before the exportation, the owner of the goods gives to the Collector a notice in an approved form, or in an approved statement, of the owner's intention to claim drawback on the exportation; and (b) before the exportation, the goods are available at all reasonable times for examination by an officer; and (c) records that show: (i) that duty has been paid on the goods; and (ii) relevant details of the receipt, use and disposal of the goods by the owner; are available at all reasonable times for examination by an officer; and (d) a claim for drawback of import duty paid in respect of the goods that: (i) is in an approved form; and (ii) sets out the amount of the claim and such other information as that form requires; is given by the owner referred to in paragraph (a) to the Collector: (iii) after exportation; and (iv) not later than 12 months after the day on which the goods are exported; and (e) the claim also mentions that, to the best of the knowledge, information and belief of the person making the claim, the goods have not been used in Australia other than for the purpose of being inspected or exhibited; and (f) the amount of the drawback: (i) is at least $50; or (ii) being less than $50, is claimed at the same time and in the same approved form as 1 or more other claims by the owner of the goods for drawback of import duty on the exportation of other goods, and the sum of the drawbacks claimed is at least $50.

2.2 The Tribunal's Decision 21 In rejecting the applicant's case, the Tribunal found that the phrase "the person who is the legal owner of goods at the time the goods are exported" should be understood to mean the single person who is the legal owner. It found that reg 134(6) contemplates that there can only be one such person who answers the composite description. The Tribunal found that this conclusion was supported by a consideration of the effect of the 2006 amendments, which was to narrow the definition of the relevant claimant from any person within the broad definition of "owner" under the Customs Act, to "the legal owner". The Tribunal found that the agreement between the applicant and the traveller in the present case does not suggest that the applicant will retain property in the goods until they are exported, but rather that the parties intended that the property in the goods pass in the store, when the goods are handed over by the applicants staff to the traveller. That being so, the applicant did not satisfy reg 134(6) and its claim to a drawback was not permitted.

2.3 The applicant's arguments on appeal 22 The applicant contends that the Tribunal erred in law in finding that there can only be one person who satisfies the description of "legal owner", that the Tribunal also erred in finding that the expression "legal owner" in reg 134(6) refers to an individual who retains property in the relevant goods at the time of export (grounds 1, 2) and that the Tribunal ought to have found that the expression "legal owner" in the context of the statutory scheme encompassed persons who enjoy the incidents of ownership less than absolute legal ownership in the relevant goods, including (without limitation) a beneficial interest in the goods and powers of disposition or control over the goods (ground 3). Further, the applicant contends that the tribunal erred in failing to find that the applicant retained property in the goods at the time of export, including a beneficial interest in the goods and/or powers of disposition and control over them at the time that the goods were exported, and therefore reg 134(6) of the Customs Regulations was not satisfied (grounds 4, 5). 23 The primary contest arising from the applicant's submissions is whether, as it contends, the legal owner encompasses persons who enjoy the incidents of ownership, including a beneficial interest in the goods and powers of disposition or control over them. It submits that the term legal owner in reg 134(6) is ambiguous and that the precise limits of what amounts to legal ownership in any given case will be a matter for debate, and notions of ownership are not amenable to crisp, comprehensive definition in the abstract, citing Tisand Pty Ltd v Owners of The Ship MV Cape Moreton (Ex Freya) [2005] FCAFC 68; (2005) 143 FCR 43 at [119], [121]. The applicant submits that in the present case guidance as to the nature of the rights over goods that Parliament intended to refer to by using the adjective "legal" comes from the present definition of "owner" in s 4(1). The applicant contends that in light of the expansive concept of "ownership", the use of the adjective "legal" suggests that reg 134(6) is referring to a category of ownership more confined than that provided for in the definition of "owner". Specifically, the word "legal" identifies those categories of "owner" that enjoy one or more incidents of ownership recognised by law. The adjective "legal" excludes from reg 134(6) those persons who fall into the definition of "owner" in s 4(1) but who lack any legal rights in respect of the goods at the time of export, but includes those persons "possessed of, or beneficially interested in, or having any control of, or power of disposition over the goods". It submits that each of these concepts (possession, beneficial interest, control and power of disposition) are concerned with legal incidents of ownership and legal rights enjoyed by a person in respect of the use of goods. Accordingly, it submits that any person who is entitled to any right of possession, or beneficial interest or control of or power of disposition over the goods will fall within the definition of "legal owner". The applicant submits that an alternative way of putting its case is that a person falls within the category of "legal owner" if he, she or it is "an owner of a legal or equitable interest" in the goods. 24 The respondent supports the decision of the Tribunal.

3.1 The relevant issues 25 Three issues broadly arise in the context of the present proceeding: (a) What is the correct construction of the term "legal owner" in the context of reg 134(6) and the legislative scheme as a whole? (b) Is the applicant a person who falls within that definition? (c) Did the Tribunal err in law in finding that the applicant did not fall within that definition?

3.2 The correct construction of "legal owner" in reg 134(6) 26 The relevant principles of statutory construction are well established. In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27 at [47], the High Court (Hayne, Heydon, Crennan and Kiefel JJ) said (citations omitted): This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy. 27 The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all of the provisions of the statute. The meaning of the provision must be determined by reference to the language of the instrument viewed as a whole; Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [69] (per McHugh, Gummow, Kirby and Hayne JJ). 28 In interpreting a provision of an Act, the interpretation that would best achieve the purpose or object of the Act (whether or not that purpose or object is expressly stated in the Act) is to be preferred to each other interpretation; Acts Interpretation Act 1901 (Cth), s 15AA. 29 A duty drawback is a particular kind of refund. It is not defined in the Customs Act, however, as Burchett J noted in Altendorf Australia Pty Ltd v Parkanson Pty Ltd [1995] FCA 252 at 38, the word has been used for centuries in relation to duties of customs and may be defined by reference to the Shorter Oxford English Dictionary as "an amount paid back from a charge previously made; especially a certain amount of excise or import duty remitted when the commodities on which it has been paid are exported". 30 It may be accepted that the broad purpose underlying a drawback scheme is, by definition, that import duty may be recovered when goods are exported without being used, but that does not mean that the legislative purpose of the regime set out in the Customs Act and Regulations reflects a purpose that any claim for drawback in those circumstances should succeed. Indeed under the regime, drawback entitlements manifestly do not apply in relation to all imported goods that have not been used. 31 The terms of s 168 of the Customs Act necessarily contemplate that drawbacks may only be available in prescribed circumstances of the Executive's choosing. For instance, there is no entitlement to drawback on goods that have been used in Australia otherwise than for the purpose of being inspected or exhibited (regs 129(1)(c) & (3), 131(3)) or if the price of the goods at the time of exportation falls below the prescribed percentage of customs value (reg 133(1)(a)). Regulation 134 (which I address in more detail below) also imposes a number of requirements which must be met, otherwise drawback of import duty will not be payable. 32 The respondent submits that the purpose of the drawback scheme within the Customs Act and Customs Regulations is to provide for recovery of amounts not exceeding the amount of import duty paid in a range of situations determined by the Executive. I accept that this is an accurate characterisation of the relevant purpose; a more precise purpose is difficult to be gleaned from the terms of the legislation. Whilst it is the case that a drawback of duty confers a benefit upon a claimant, I do not accept that this observation leads to the conclusion that the legislation should be construed beneficially in favour of all claimants. The scheme of the Customs Act makes plain that the Executive may prescribe circumstances in which, notwithstanding circumstances where goods are being exported after duties have been paid, a drawback is not available. Accordingly, the purpose or object of the legislative scheme is not broadly to ensure that drawbacks are given in respect of all goods exported which are unused. 33 I now turn to the language of reg 134(6). 34 It is to be observed that in reg 134(5) and (6) the adjective "legal" is added before the word "owner". Nowhere else in the regulation does the adjective appear. Accordingly, where the word "owner" appears elsewhere in the regulation, unless the context indicates otherwise, it has the meaning given to it by reason of the definition that appears in s 4(1) of the Customs Act, quoted above. That definition is extremely broad and encompasses persons who would not ordinarily be regarded as an owner at law. 35 In Chief Executive Officer of the Australian Customs Service v Karam [2011] NSWCA 224; (2011) 252 FLR 326 (Karam) Basten JA said of the definition (at [23]): … The definition purports to be inclusive, rather than comprehensive, but nothing turns on that for present purposes. The very breadth of the provision is illustrated by the initial recognition that a customs officer, no doubt exercising powers under the Customs Act, may fall within it. The bulk of the provision identifies persons by classifying their relationship with the goods. That element is broadened, by encompassing not only those persons who have a particular relationship with the goods ("being") but those who hold themselves out to have such a relationship. 36 In the same case, McClellan CJ at CL (with whom Allsop P (as he then was) agreed) said at [49]: It is apparent from the reach of the definition of owner in s 4(1) of the Act that the Parliament intended to make persons who the law would not otherwise consider to be the owner of goods liable to pay duty if they are the importer of those goods. The definition extends to the importer of goods whether or not they are also the legal owner. … 37 I have noted above that the term "legal owner" was introduced by an amendment made to the Customs Regulations in 2006. Regulation 134 in its pre-amendment form referred simply to the "owner" of the goods as a person permitted by paragraph (d) to make a claim for drawback (see reg 134(1) in its form before amendment, quoted in [20] above). On the other hand, after the 2006 amendments, the entitlement to make a drawback claim was restricted by sub-regulation (6) to "the person who is the legal owner of goods at the time the goods are exported". Plainly, and as counsel for the applicant, Mr Thomas, sensibly accepts, the statutory purpose of the narrowing is self-evident. It is to restrict the class of persons who may make a claim. 38 The wider meaning of "owner" is useful for compliance purposes in reg 134 and elsewhere and to cast a wide net for enforcement purposes; Karam at [49]. 39 The relevant question in the present case concerns the degree to which the new term "legal owner" narrows the field of eligible claimants for a drawback. 40 The Explanatory Statement issued by the Authority of the Minister for Justice and Customs at the time of the 2006 amendments (ES) stated in the commentary in relation to the amendment of reg 134: The amending Regulations also specify that the person who may claim drawback is now the legal owner of the goods at the time of exportation. 41 In my view, having regard to the policy and purpose of the legislative scheme, and the matters addressed in more detail below, the change from "owner" to "legal owner" was intended to reflect a narrowing of those able to make a claim, to that person or class of persons who have legal title to the property (whether as the sole owner or joint owners). It does not include those persons who may be described as being an equitable owner or who have only an equitable interest in the property. The basis for my conclusion is set out as follows. 42 First, whilst there is no universal meaning of the word "ownership" itself, the legal conception of "ownership" - also known as "title" - is the right recognised by the law in respect of a particular piece of property to exercise with respect to that property all such rights as by law are capable of being exercised with respect to that type of property against all persons and the "owner" is the person "in whom the ownership of property is vested"; Butterworths Australian Legal Dictionary (Butterworths, 1997). Thus in Kent v SS "Maria Luisa" (No 2) [2003] FCAFC 93; (2003) 130 FCR 12 (Kent) at [65] Tamberlin and Hely JJ said (emphasis added): 65. A helpful description of "ownership" is formulated by Jordan CJ in Gatward v Alley (1940) 40 SR (NSW) 174 at 178, where his Honour said in relation to a question as to ownership of a car: "A good title to property, in the sense of such ownership as the law allows, consists in having the legal right to exercise with respect to it all such rights, as against all such persons, as by law are capable of being exercised with respect to property of the class in question. A person who has possession of property but not ownership has, as a general rule, the same legal rights as the owner, save to the extent to which those rights are qualified as against the owner…" 66. Ownership, whether legal or equitable, therefore involves something greater than beneficial interest. Equitable ownership of property is commensurate with the right to relief in a Court of Equity: The Trustees Executors & Agency Co Ltd v The Acting Federal Commissioner of Taxation (1917) 23 CLR 576 at 583; Meagher, Heydon and Leeming, Meagher, Gummow & Lehane's Equity Doctrines & Remedies 4th ed. 2002 at [4-120]. … 43 In a different context, the reasoning of Mason J in Forestry Commission of NSW v Stefanetto [1976] HCA 3; (1976) 133 CLR 507 at 518 is apposite. In that case the relevant question concerned when a party to a contract "owned" certain equipment. His Honour said (emphasis added): It would, I think, be a bold step to construe cl. 43.3 as conferring upon the appellant the right to take and keep possession of plant and equipment not owned by the respondent in the legal sense of that word, being plant and equipment owned by third parties which was on lease or on hire-purchase to the respondent. Under a hire-purchase agreement it is the vendor, not the hirer, who is the owner of the goods and who is correctly so described as a matter of legal terminology, notwithstanding that the hirer has an "equity" in the goods which by statute may amount to a proprietary interest for certain purposes. Likewise, under a bailment or lease agreement, it is the bailor or lessor, not the bailee or lessee, who is the owner of the goods and who is properly so described. 44 Secondly, the Explanatory Memorandum of the Customs Amendment (Fuel Tax Reform and Other Measures) Bill 2006 (Cth) which inserted a new s 105C(2) to the Customs Act provides that the "legal owner" of the excise-equivalent goods at the time that they are used in manufacture in accordance with s 105C(1) must provide certain materials to Customs. The Explanatory Memorandum states (emphasis added): The use of the term "legal owner" will override the extended definition of "owner" in subsection 4(1) of the Customs Act. Only the legal owner of the excise-equivalent goods at the time they are used in the manufacture of excisable goods will be required to make the return and pay any ad valorem duty that is owing on the excise-equivalent goods. 45 This amendment reflects a change now made to the Customs Act and was a part of that Act by the time the 2006 amendments to the Customs Regulations presently in issue were made. Whilst not determinative, it tends to confirm what in any event in my view is apparent enough from the structure of reg 134 itself, that there is a distinction to be made in understanding "owner" and "legal owner". Whatever "legal owner" means, is not to be parsed from the language of the definition of "owner" which, by amendment, Parliament has sought to distinguish. Put another way, the notion that the words "legal owner" will override the definition of "owner" rather suggests that one should set to one side the idiosyncratic definition of "owner" in s 4(1) in considering the meaning of "legal owner" and consider the term afresh. 46 Thirdly, had the legislation considered that "legal owner" should mean "legal or equitable owner" or the holder of a legal or equitable interest in the goods, it could have said so, but did not. 47 Fourthly, the applicant points to a number of reasons why "legal owner" should not be interpreted in the manner that I have set out above. It submits that a construction of the regulation which confines its operation to travellers (as described above at [4]) produces an outcome that is seriously anomalous, inconvenient and improbable because first, the applicant, who paid the import duty, is at a loss because it is not eligible to claim the duty drawback, secondly, the traveller is in practical terms unable to satisfy the requirements of the regulation, and thirdly, even if the traveller were to claim the drawback, to do so would confer upon the traveller a windfall because it is the applicant, not the traveller, who has paid the import duty. It submits that each of the requirements imposed by reg 134 could not practically be satisfied by a person having the characteristics of a traveller who has purchased goods from one of its stores. For instance, such a person would not have access to the records required by reg 134(3), is unlikely to be in a position to provide a written notice to the Collector within a reasonable time prior to the exportation as required by reg 134(3A), would not have and could not reasonably be expected to obtain or be able to complete the approved form to claim a drawback as required by reg 134(4), and so on. 48 Such matters, the applicant submits, indicate that a construction that points to the traveller being the appropriate claimant for a drawback, but not the applicant, is incorrect. The applicant submits that in circumstances where the drawback regime is an example of beneficial legislation, it should be construed to give the fullest relief which the fair reading of its language will allow rather than a reading that is literal or technical; citing Bull v Attorney-General (NSW) [1913] HCA 60; (1913) 17 CLR 370 at 384. 49 However, in my view this argument reflects backwards reasoning. It begins with the incorrect premise that the legislative purpose is to permit the applicant's contractual arrangements to allow a drawback to be claimed. I have addressed the question of the purpose of the legislation above. The fact that no drawback is available in the circumstances because the applicant cannot satisfy the criteria in reg 134 simply means that that the scheme does not extend to that payment. It does not mean that the scheme fails generally. It can readily be perceived that an importer who fails to sell or use goods will in many cases satisfy the new requirements of reg 134(6), provided that it is a legal owner. 50 Furthermore, it is not the case that the scheme of the drawback provisions necessarily fails because it does not apply to the particular circumstances of the applicant. As Ms Alisa Okorn, compliance director of the applicant said, the applicant's business model is unlike other landside stores that sell duty free because at the time of import, the applicant is uncertain whether the imported category 1 goods will be purchased and used in Australia (by locals) or purchased and exported without use in Australia (by travellers). As a result of its business model, the applicant pays import duty on the category 1 goods that it sells to both locals and travellers at the time of import, and relies on the duty drawback scheme to recover duty paid in respect of category 1 goods sold to travellers. 51 For other duty free shops located outside airport departure areas the statutory "sealed bag regime" applies (as set out in reg 93(7) and s 96A). As a consequence, in practical terms, outward duty-free stores avoid the need to pay import duty at all by entering goods for warehousing rather than, as the applicant does here, for home consumption, and then selling the warehoused goods to travellers. Such goods remain under customs control until they are delivered to the traveller for export by them in accordance with the permission granted under s 96A(2). 52 Further, the applicant's contention that either Customs or the traveller who makes a drawback claim on the basis that he or she is the legal owner make a windfall, and therefore any construction that deprives the applicant of a drawback reflects an incongruity in the statutory scheme, assumes that in all cases where duty has been paid there should be a drawback. However, as noted, it is for the Executive to determine when a drawback may be paid and it is not incongruous that in some circumstances it has decided that it should not be. Indeed, it is a matter for the applicant whether it chooses to persist on its current business model. As noted, the sealed bag regime available to other duty-free retailers is equally available to the applicant. 53 Fifthly, the applicant complains that in circumstances where the ES stated that "no consultation was undertaken in relation to these amendments as they are of a minor or machinery nature and do not substantially alter existing arrangements" it should not be assumed that the amendments were intended to deprive the applicant of the ability to utilise a scheme which had successfully operated for about 15 years. However, these comments cannot displace the meaning of the language of reg 134(6). As the Tribunal observed, the amendments would be likely to have little or no effect in the case of a commercial exporter of goods, whose claims for drawback would be likely to be just as meritorious after the amendments as before. 54 Indeed, the applicant's submission that a construction which deprives it of the opportunity to make a claim for a drawback in respect of category 1 goods sold to a traveller suffers the difficulty that the Customs Act separately caters for the activities of landside or "off-airport" duty-free stores by creating a mechanism by which they can sell goods to travellers without paying any import duty in the first place. This is apparent from the scheme set out in s 96A of the Customs Act. 55 Finally, the applicant submits that the approach of the Tribunal was seriously flawed because its construction of the words "the legal owner" involved the incorrect conclusion that only a single person could be the owner. I consider the question of whether the Tribunal in fact fell into error in this regard below. However, the definition that I have arrived at does not depend on such a conclusion. There may be more than one legal owner within the definition (for instance joint tenants to a chattel), however, in the present case it is not necessary or appropriate to consider the full ambit of the definition of legal owner, but rather simply whether or not the applicant falls within that definition on the facts. 56 I now turn to consider whether the applicant has a legal interest in the goods the subject of the current drawback claims.

3.3 Is the applicant a "legal owner"? 57 On the basis of the conclusion that I have reached above, it is necessary to consider whether or not the applicant is the "legal owner" for the purpose of its drawback claims. 58 There is no dispute that during the relevant period (August 2013 to October 2014), property in the goods the subject of the drawback claims was governed by the Sale of Goods Act applicable in the relevant jurisdiction (specifically, Sale of Goods Acts 1923 (NSW) s 22 and Sale of Goods Act 1896 (Qld) s 20 - there is no material difference in the terms). 59 According to the Sale of Goods Act 1923 (NSW), where there is a contract for the sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intended it to be transferred (s 22(1)). For the purpose of ascertaining the intention, regard is to be had to the terms of the contract, the conduct of the parties and the circumstances of the case (s 22(2)). Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made and it is immaterial whether the time of payment, or the time of delivery, or both, is postponed (s 23, Rule 1). Where goods are delivered to the buyer on approval or on "sale or return" or other similar terms, the property therein passes to the buyer when the buyer signifies approval or acceptance to the seller, or does any other act adopting the transaction (s 23, Rule 4(a)). If the buyer does not signify approval or acceptance to the seller, but retains the goods without giving notice of rejection, then either upon expiration of any time that has been fixed for the return of the goods or upon expiration of a reasonable time, the property passes (s 23, Rule 4(b)). 60 Ssubsection 24(1) of the Sale of Goods Act 1923 (NSW) provides: Where there is a contract for the sale of specific goods, or where goods are subsequently appropriated to the contract, the seller may by the terms of the contract or appropriation reserve the right of disposal of the goods until certain conditions are fulfilled. In such case, notwithstanding the delivery of the goods to the buyer or to a carrier or other bailee for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled. 61 The applicant submits that in the present case the features of the sealed bag regime, which were reflected in the Declaration and Terms and Conditions, evidence an objective intention on the part of the applicant and each traveller that property in the goods did not pass until export. It submits that this conclusion is consistent with the default rules for the ascertainment of intention under the Sale of Goods Acts. Of the categories of contract there identified, it submits that the agreement most closely resembles a contract on a "sale or return or other similar terms" basis because the contract here both contemplated and required that the goods be returned to the vendors in certain prescribed circumstances. While the traveller had possession of the goods upon purchase, he or she did not have property in the goods until such time as the obligation to return the goods expired after their export from Australia. 62 The respondent submits that a proper analysis of the intention of the parties, having regard to the term of the contract, yields the conclusion that the applicant did not hold property in the goods at the point of export because property passes in the store when the goods are handed over by the applicant's staff to the traveller. 63 In my view the sales terms set out in the relevant documentation and the circumstances of the case reflect the fact that property is intended to be transferred to the traveller at the point of sale. 64 I first consider the parties' intention having regard to the terms of the contract. At the point of sale the traveller receives, in the form of the Docket, a receipt for the purchase of the goods, signs an agreement authorising the applicant to debit his or her credit card with the amount of any duty, excise, GST or Wine Equalisation Tax that the applicant is required to pay as a result of his or her failure to export the goods in the prescribed manner (that is, the Customs Debit Statement) and signs the Declaration to the effect that that he or she will comply with the conditions set out in the Terms and Conditions. 65 The receipt contained in the Docket is in a conventional form, and records the price of the goods, the quantity purchased and that the total amount paid. It concludes with a conventional statement thanking the traveller for shopping with the applicant, inviting her or him to retain the receipt for refunds/exchanges and providing an after sales service number. The Customs Debit Statement also reflects a suggestion that a sale of the goods has taken place. It provides an acknowledgement on the part of the traveller that "I have purchased" the goods and indicates that if there is failure to export those goods the traveller will be required to pay an additional amount, being any additional duty that the applicant is required itself to pay. 66 The Declaration also tends to confirm an understanding and indeed mutual intention that property is transferred to the traveller at the time of sale in the store. The Declaration is to the effect that the information provided is true and correct and that the purchaser will comply with the terms and conditions "provided to me at the time of purchase", being in the store at the point of sale. 67 The Macquarie Dictionary (5th ed, 2009) defines "purchase" as: 1. to acquire by the payment of money or its equivalent; buy… 5. Law to acquire, as an estate in lands, otherwise than by inheritance 68 Subject to the contents of the Terms and Conditions, the Docket explicitly indicates that property is transferred at the time of sale. One would expect that most people who understand English would understand the references to "purchased" and "purchase" to reflect a mutual intention, both on the part of the applicant and the traveller, that property is transferred at the point of sale in the applicant's store. 69 The applicant, however, places emphasis on several conditions set out in the Terms and Conditions to suggest that "the legal and practical ability of the traveller to exercise ownership of the goods was severely constrained" and that the applicant enjoyed legal rights of control and disposition in respect of the goods which render the applicant a "legal owner". 70 The Terms and Conditions provide a promise that the traveller will take the goods with him or her within 30 days "of purchase" when they depart from Australia. If the traveller does not do so, he or she promises to notify the applicant by noon the next working day that the goods were not exported and, if the goods are not exported within two days the traveller will "return the sealed bag containing the unused goods to the store". The applicant submits that the effect of the sealed bag regime is that travellers are prohibited from accessing the goods prior to their export, prohibited from packaging the goods in their hold luggage (save in limited circumstances) and prohibited from giving the goods to any other person to carry on to an aircraft or vessel. Furthermore, the traveller is required to keep the applicant informed of the location of the goods and as was noted, under an obligation to return them if the goods are not exported within four days of the original intended export date. By implication, the traveller was also prohibited from selling or otherwise disposing of the goods to any other person until after export. 71 Despite the care with which the applicant's submissions were put, in my view the preferable analysis of the transaction is that the traveller has entered into an unconditional contract in the store for the sale of specific goods, and that the property passes to the traveller when the contract is made. 72 The contractual conditions identified by the applicant in the Terms and Conditions are not to be understood as a reservation of the right of disposal until certain conditions are fulfilled (in which case the property would not pass until the conditions were met) but rather as an obligation to "return" the goods upon the happening of the specified condition. I accept the respondent's submission that the position is somewhat analogous to that considered by Schutt J in McPherson, Thom, Kettle & Co v Dench Bros [1921] VLR 437; (1921) 27 ALR 272 (McPherson), where a provision in conditions of sale at an auction permitted a resale by the seller in the event that the purchaser made default in payment. The Court there concluded that the provision in question was not a reservation of the right of disposal until certain conditions were fulfilled (in which case the property would not pass until the condition was fulfilled) but a right of resale upon the occurrence of a certain event, notwithstanding that the property had passed (at VLR 444). Unlike in McPherson, in the present case the Terms and Conditions do not specify the consequence of a "return". It may be implied that upon such return the traveller will receive a full refund of the amount that he or she has paid, upon which time title may return to the applicant. Alternatively, the traveller may pay any additional duty outstanding and retain the goods, although this prospect seems remote given that the traveller has already signed an authorisation to the applicant to levy any additional amount that it is liable to pay. Neither alternative supports the applicant's position. 73 The applicant submitted that the decision in McPherson should be understood as confined to its facts and in any event proceeded on an incorrect understanding of unconditional contracts by distinguishing between suspensive and resolutive conditions and holding that only the former render a contract conditional for the purposes of the equivalent of s 23 of the Sale of Goods Act 1923 (NSW). It submits that it is now clear that both types of condition render a contract conditional for the purposes of that regime. In my view, the authorities cited do not support this proposition; see Atiyah and Adams' Sale of Goods (13th ed) at 248. 74 I now turn to consider the conduct of the parties and the circumstances of the case, as required by s 22(2) of the Sale of Goods Act 1923 (NSW). One relevant factor is that the evidence indicates that the applicant does not attempt to recover the goods from the traveller if the traveller fails to comply with the Terms and Conditions - the only action that it takes is to debit the traveller's credit card for the additional amount of the duty, and only where the amount of duty is $50 or more. In my view this reflects an understanding on the part of the applicant that it holds no title to property in the goods after they have been sold to the traveller. 75 The respondent submits that a further relevant circumstance is that whilst the applicant follows a sealed bag regime when selling category 1 goods to travellers and thereby complies with s 96A(12) of the Customs Act and reg 93(7)(m) of the Customs Regulations, there is no legal requirement for it to do so. The goods that the applicant sells to travellers under the present arrangements are not subject to Customs control under s 30 of the Customs Act; Customs cannot compel the applicant to pay any customs duty upon breach of the arrangements that the traveller has with the applicant because that duty has already been paid by the applicant and the traveller commits no offence by failing to export the goods or by interfering with the sealed bag. As a consequence, the Warning Sticker placed on the sealed bag as to penalties liable to be paid is not accurate in the sense that offences and breaches are inapplicable in respect of the goods the subject of the regime under consideration. Nevertheless, the respondent submits that it is a relevant circumstance that the applicant and the traveller agreed to follow the sealed bag regime prescribed under reg 93 of the Customs Regulations. That regime, when one considers the interstices of the legislation, evinces an intention that property pass to the traveller in the store. I do not consider this circumstance to be material to considering the legal transaction between the traveller and the applicant. There is no evidence to suggest that the traveller was aware of or understood the sealed bag regime. 76 Ultimately my view, having regard to the matters for consideration within the Sales of Goods Acts, is that property passes to the traveller at the point of sale and that to the extent that the Terms and Conditions reflect any ongoing rights on the part of the applicant, those rights do not rise above entitlements to enforce the terms of the contract, and do not affect the transfer of legal ownership in the property when the contract is made in the store.

3.4 Consideration of the grounds of Appeal 77 The first basis upon which the applicant contends that the Tribunal fell into error is that it considered that there can only be one person who satisfies the description of "legal owner" at any one time, including the time of export, for the purposes of reg 134(6) of the Customs Regulations (grounds 1 and 2). 78 The applicant correctly observes that s 23 of the Acts Interpretation Act 1901 (Cth), read with s 13(1) of the Legislative Instruments Act 2003 (Cth) has the effect that words in the singular include the plural in the absence of a contrary intention. 79 The learned Tribunal member stated relevantly (emphasis in original): 40. The use of the expression 'the person' - rather than "any person"- who is the legal owner of goods at the time the goods are exported in regulation 134(6) contemplates that there can be only one such person who answers the composite description. … 41. … Now it must be the one person in the world who is the "legal owner" of the goods at the time of export. 42. … And there is no room in regulation 134(6) for an outcome that has more than one person in the world answering the description "the person who is the legal owner of goods at the time the goods are exported". 80 Initially, the respondent sought to defend the Tribunal's reasoning on the basis that by the wording of reg 134(6) the Executive intended to choose the singular form. However, in oral submissions, when confronted with the fact that more than one person may be considered to be a legal owner within its own definition of that term, the respondent accepted that the regulation encompassed both the singular and the plural. 81 In my view, grounds 1 and 2 of the appeal are made out. However, for the reasons that I have set out in more detail above, that does not vitiate the conclusions reached by the Tribunal because, regardless of whether the singular or plural is applied, the applicant does not fall within the definition of "legal owner". Accordingly, the remaining grounds of appeal must be dismissed, for the reasons that I have set out above.

4. DISPOSITION 82 I will order that the application be dismissed and the applicant pay the respondent's costs. I certify that the preceding eighty-two (82) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Burley.