Sargood Brothers v Commonwealth [1910] HCA 45

Sargood Brothers v Commonwealth [1910] HCA 45 - HCA 1910 case summary — Zoe

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tended that these duties were 'collected' within the meaning of that section, that they were collected pursuant to the draft tariff, and therefore that the duties were to be deemed to have been lawfully imposed and collected. For the plaintiff it is answered that that is not the primary meaning of the words 'duties of ~ customs collected pursuant to any tariff or draft tariff;' that the section was intended to provide an indemnity, and put an end to disputes which might have arisen during the long period that elapsed between the introduction of the Customs Tariff Bill and the day when the tariff became law. The words are probably open to the construction contended for by the defendant ; but, if that construction were adopted, it would have the effect of changing the ownership of this money on that day. Up to that time the money had clearly been recoverable by the plaintiff if an action had been brought for that purpose. If, therefore, the section receives the construction contended for by the defendant, the effect would be to deprive the plaintiff of a vested right. Such a construction should never be adopted if the words are open to another construction. Comparing that section with the two preceding sections it will be seen that another construction is open. Sec. 4 provides that 'The time of the imposition of uniform duties of Customs is the eighth day of October, One thousand nine hundred and one, at four o'clock in the afternoon, reckoned according to the standard time in force in the State of Victoria, and this Act shall be deemed to have come into operation at that time' Sec. 5 provides that 'The duties of Customs specified in the Schedule are hereby imposed according to the Schedule, as from the time of the imposition of uniform duties of Customs or such other later dates as are mentioned in the Schedule in regard to any particular items, and such duties shall be deemed to have been imposed at such time and dates,' &c. The intention of the __ legislature, therefore, was to do what it was empowered to do by _ the Constitution, viz., to establish uniform duties of Customs, and they declared that they established them as from 8th October 1901, and they further declared that the duties so imposed were to be those contained in the Schedule to the Act. Moreover, the only way in which the legislature can authorize the collection of Customs duties is by imposing them as duties. It cannot authorize

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in Morgan v. Palmer (1), Steele v. Williams (2), and adopted in Hooper v. Exeter Corporation (3) clearly establish that proposition. But it is contended by the defendants that sec. 167 of the Customs Act 1901 prevents the application of the principle to moneys collected without legal authority as and for duties of Customs. That section, it is said, gives the importer an opportunity of obtaining his goods without making an irrevocable payment of the duty claimed, and if he chooses not to avail himself of the oppor- tunity, his payment of duty, it is argued, cannot be regarded as made under duress. Assuming that the section is applicable to moneys collected as and for duties under a proposed tariff, a matter which in the view I take of the effect of the section it is unneces- sary at present to decide, the alternative offered to the importer does not in my opinion affect the applicability of the principle. The Collector has the power to keep the goods under Customs control until the importer either pays the duty or takes the advantage of the section. he latter he can do only by depositing with the Collector the whole amount of the duty. He may, it is true, exercise his free will as to which of these courses he shall adopt. But there is a compulsion to adopt one or the other, and whichever course he may take he cannot obtain possession of his goods without handing over to the Collector either absolutely or conditionally the amount claimed as duty. It was also argued by the defendants that the Customs Act 1901, having provided in sec. 167 a method of recovering back moneys paid under an illegal ~ demand of duty, had in effect enacted that that and no other method could be followed, and had thereby deprived the importer _ of the right to question his liability in any other way. For this position Surgood v. The Queen (4) was relied on. But that decision is based entirely on the wording of secs. 21 and 22 of the Victorian Customs Act 1857. By the former, corresponding generally with sec. 165 of the Commonwealth Customs Act 1901, the adoption _ by the importer of the method prescribed is compulsory, not optional as under sec. 165, and sec. 22, for which no corresponding section is to be found in the Commonwealth Customs Act 1901, makes its plain that the procedure under sec. 21 was intended by

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as it is embodied in Schedule A. The defendants' contention in reply is that the legislature has in sec. 7 expressed its intention so clearly to treat all duties collected under the proposed taviff as closed transactions that no other course is open to the Court than to give effect to that intention. See. 7 enacts as follows : - «All duties of Customs collected pursuant to any Taviff or Taviff alteration shall be deemed to have been lawfully imposed and collected, and no additional duty shall be payable on any goods on which duty was so collected, merely by reason that the rate at which the duty was so collected is less than the rate of duty applicable to the goods under this Act, and no duty shall be pay- able in respect of goods delivered for home consumption free of duty pursuant to any Tariff or Tariff alteration." It is a well recognized rule in the interpretation of Statutes that an Act will never be construed as taking away an existing right unless its language is reasonably capable of no other construction. On the other hand, it must never be forgotten that rules of interpretation are formulated for the purpose of aiding the Court in ascertaining the intention of the legislature from the language it has used. This Court has on many occasions laid down and acted upon principles of interpretation applicable in this case. In the State of Tasmania v. The Commonwealth (1) the learned Chief Justice adopted the following statement from the judgment of Lord Chief Justice Tindal in the Sussex Peerage Case (2): - " My Lords, the only rule for the construction of Acts of Parliament is, that they should be construed according to the intent of the Parliament which passed the Act. If the words of the Statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in their natural and ordinary sense. The words themselves alone do in such a case best declare the intention of the law-giver." In the same case Mr. Justice Barton (3) adopted the following passage from the judgment of Jervis C.J. in Abley v. Dale (4): - * We assume the functions of legislators when we depart from the ordinary mean- ing of the precise words used, merely because we see, or fancy we see, an absurdity or manifest injustice from an adherence

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posed Tariff" inasmuch as the latter properly construed did not purport to impose a duty on the outside packages in which goods subject to ad valorem duty were ordinarily imported. The con- tention is not in my opinion sustainable. Sec. 7 of the Customs Tariff 1908 by its retrospective imposition of the duties as col- lected puts Customs duties under the proposed tariff on the same footing as if they had been authorized by Statute at the time of collection, and for the purpose of ascertaining the amount of duty payable the proposed tariff must be read in conjunction with sec. 154 of the Customs Act 1901 just as an ordinary tariff would be read if the duties were being collected under normal conditions and under a Statute in force at the time of collection. In the ease of goods subject to ad valorem duty the valuation of the goods for the purposes of duty must by that section be taken to include every accessory of the goods necessary to place them free on board at the port of export. The outside package is clearly an accessory necessary for that purpose: for that purpose it is part of the goods, and its value must be included in their value, In imposing a duty on the goods, therefore, the legislature has imposed a duty on the outside package in which they are delivered on board at the port of export. The scheme of the Customs Tariff 1902, as well as that of the Act of 1908, is to recognize outside packages as so included. Otherwise it would be unneces- sary to expressly exempt them from duty as has been done in both those tariffs. The proposed tariff followed the same plan, and in expressly excepting from the general exemption of outside packages from duty those in which goods subject to ad valorem duty were ordinarily imported it indicated, in my opinion, a clear intention that that particular class of outside package should be charged with duty as being an accessory to the dutiable goods which it contained. Holding that view it is unnecessary for me - to refer to the alternative rate of duty mentioned in the defen- dants' amended defence. For these reasons I am of opinion that the duties in question were collected pursuant to the proposed " tariff within the meaning of sec. 7 of the Act of 1908, that they must therefore be taken to have been legally collected, and that the plaintiffs' action to recover the moneys paid in respect of them cannot be maintained.

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That an act done, for another, by a person, not assuming to act for himself, but for such other person, though without any precedent authority whatever, becomes the act of the principal, if subsequently ratified by him, is the known and well established rule of law. In that case the principal is bound by the act, whether it be for his detriment or his advantage, and whether it be founded on a tort or on a contract, to the same extent as by, and with all the consequences which follow from, the same act done by his previous authority." This has received the sanction of the House of Lords in Keighley, Mawsted & Co. v. Durant (1). To see how that rule applies to the present case we have to recollect that the Commonwealth Parliament had full powers to impose Customs duties in advance as it pleased provided it did not offend against any of the prohibitions of the Constitution ; and I may state at this point, I can see no want of uniformity in the only sense pertinent, namely, discrimination between States and parts of States. Further, the retroactive imposition of duties is equally competent to the Parliament: Colonial Sugar Refining Oo. Lid. v. Irving (2). Consequently when the Customs officers, professedly acting for the Commonwealth, made collections as upon the basis of certain tariff proposals, it was perfectly com- petent to the Commonwealth to adopt their acts, and by the regular process of parliamentary ratification - the only appro- priate method of Commonwealth action in that regard - to place itself in precisely the same position as if its command had been previously given. Not only does this apply to sec. 5 which is the Customs tariff proper ; it also applies with equal cogency to sec. 7, which is not what is technically called "the Customs Tariff,' but is confined to the specific acts therein mentioned. The principle I have referred to therefore entirely dissipates the notion that Parliament was vainly attempting to legalize an invalid Act; it was adopting, upon a principle thoroughly established by common law, the act of the Executive in collect- ing moneys as Customs duties, and once that was ratified and the moneys declared to be duties of Customs, they became such in law as fully as if their collection had been originally authorized. The same consideration with equal certainty ends the discussion

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extremely strong reason for not adopting that construction if the words are reasonably open to another interpretation which will make them a valid exercise of power. Very late instances of the way in which Courts will so consider a Statute are New York Central and Hudson River Railroad Co. v. United States (1), and El Paso and Northeastern Railway Co. v. Gutierrez (2). The United States is the only jurisdiction where considerations in respect of condonation of illegal acts could arise similar to those which present themselves in the Commonwealth, and it is satisfactory to me to have found since the close of the argument a decision in 1906 of the American Supreme Court: United States v. Heinszen & Co. (3), in which the simple principle of ratifica- tion was acted upon as the basis of a judgment exactly in point. Duties of Customs during 1900, 1901 and up to March 1902, when Congress passed a prospective Tariff Act, were illegally collected in Porto Rico solely under presidential authority. The importers sued to recover back the moneys they were ~ compelled to pay. At the time of action brought, and for some time afterwards, there had been no attempted ratification by Congress, The case therefore raised in an acute form the question of vested right as well as illegality. In June 1906, that is to say over four years after the goods had been actually imported, Congress passed an Act providing, with respect to the illegal exactions, that they "are hereby legalized and ratified and the collection of all such duties prior to March eight, nineteen hundred and two is hereby legalized and ratified and confirmed as fully to allintents and purposes as if the same had by prior Act of Congress been specifically authorized and directed." The desirability of definitely settling this question of con- _ stitutional power once and for all leads me to quote some passages from the judgment. After stating the ordinary rule as to ratifi- cation, and that it is elementary, the Court says (4) - - " That the power, of ratification as to matters within their authority may be exercised by Congress, State Governments or municipal corpor- ations, is also elementary," and instances are given. From one of

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duties was in a sense a vested right, it in principle, as we have H- C. or A. already observed, would be but the character of right referred to bien by Kent in his Commentaries, where, in treating of the validity - garcoop of Statutes retroactively operating on certain classes of rights, it ee is said (vol. 1, pp. 415, 416) :- - ' The legal rights affected in those Tux Com- "eases by the Statutes were deemed to have been vested subject to ces the equity existing against them, and which the Statutes recog- "agree nized and enforced.' " And again (1): "'Nor is it important, in any of the cases to which we have referred, that the legislative Act, which cures the irregularity, defect or want of original authority, was passed after suit brought, in which such irregularity or defect became matter of importance. The bringing of suits vests in a party no right to a particular decision' . . . and 'his case must be determined on the law as it stands, not when the suit was brought, but when the judgment is rendered.'" The Court therefore reversed the judgment of the Court of Claims (2). I next have to consider the argument that, whatever might have been the true construction and effect of sec. 7 if the matter were res nova, the decision in Cowan & Sons v. Lockyer (3) put an interpretation upon a precisely similar section favourable to the plaintiffs, and its re-enactment amounts to a legislative adop- tion of the earlier curial interpretation. As an argument that is, of course, quite sound ; but a sufficient answer, in my opinion, to its application to the present case is that the only question which arose for decision in Cowan & Sons' Case (3) was whether "collected" in sec. 6 of the Act of 1902 (sec. 7 of the Act of 1908) included a case where the importer declined to pay the duties demanded, and instead of that deposited the amount asa stake or security to abide the legal determination of the question in dispute. No doubt, opinions were expressed by the learned Chief Justice to a certain extent favourable to the views now urged on behalf of the plaintiffs as to the deprivation of a vested right (4) and as to the non-imposition of duties by sec. 6 (5). But though these __ were expressions of opinion of great weight and authority, I am

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protection in respect of the true construction of the tariff. The law says, in effect, to an importer "If you dispute liability, or amount, or rate, you are not foreed to pay the Crown in order to get your goods. You may if you choose get immediate possession of them without payment to the Crown, by merely depositing the money with a stakeholder, and may try the validity of the demand giving security in the meantime to pay it, should it be found lawful." If an importer deliberately elects, in the face of such an intimation, to pay at once, and finally close the transaction, having the means of avoiding it, it is hard to detect any element of compulsion upon him to make the payment to the Crown. Can the money paid in such circumstances never- theless be recovered back as extorted colore officii within the meaning of Steele v. Williams (1)? In my opinion clearly not. The right to recovery after a demand colore officii rests upon the assumption that the position occupied by the defendant creates virtual compulsion, where it conveys to the person paying the knowledge or belief that he has no means of escape from payment strictly so called if he wishes to avert injury to or deprivation of some right to which he is entitled without such payment. The nature of an involuntary payment was stated with respect to carriers under statutory liability - and is equally appropriate here - by Lord Chelmsford with the concurrence of Lords Colonsay and Cairns, in Great Western Railway Co. v- Sutton (2); and again in Lancashire und Yorkshire Railway Co. v. Gidlow (3). The essence of the statement is the inability to obtain, otherwise than by absolute payment, those services which the recipient is bound to render without it. But if the person paying has an obvious means within reach of avoiding payment without sacrificing any right, then, if he elects to pay instead of adopting the alternative course, he cannot afterward aver coercion into payment. This principle has been applied in several jurisdictions. In England the following are instances where the principle has been enforced either to granting or refusing relief : - Morgan v. Palmer (4); Knibbs y. Hall (5); and

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such later date, &c. But in the meantime, in accordance with the usual practice, duties are paid on any goods imported at the rates prescribed by the proposed tariff. In most cases, by the time that the tariff has been enacted, the goods have passed into circulation with the duty added. The purchasers from the importers have paid on the basis of this duty ; and they will not be indemnified if the duty, not being sanctioned by the Act, be refunded to the importer. Sec. 7, accordingly, says in effeet - Let bygones be bygones. If duties have been collected under tariff resolutions not finally sanctioned by Parliament, they may be retained by the Crown. On the other hand, if no duty, or too little duty, has been paid - if the Act impose a duty which was not in the proposed tariff, or if it increase a proposed duty - let things remain as they are. "All duties of Customs collected pursuant to any Tariff or Tariff alteration shall be deemed to have been lawfully imposed and collected." "Duties of Customs" here cannot mean lawful duties of Customs. This would render the section objectless, unmeaning. What is the use of enacting that "all lawful duties of Customs collected" &ec. "shall be deemed to have been lawfully imposed"? It is clear that the words here mean money collected as duties of Customs; in the same sense as the word "duty" is used in sec. 163 of the Customs Act 1901. That Act is incorporated with this Act, and is to be read with it (sec. 2). I cannot accept any of the subtle sugges- tions for the interpretation of these simple words. We have been reminded of the doctrine that Parliament is to be presumed not to intend to interfere with vested rights. But, in applying this principle, we should bear in mind the nature of the legislation which we have to consider. It is a Customs tariff, legislation in which it is the invariable and necessary practice to interfere with vested rights, to validate past unlawful collections, to make retro- spective laws. We have also been reminded of the fact that a decision was given by two of the members of this Court in 1904 in a case in which reference was made to the corresponding sec. 6 of the Customs Turiff 1902 (Cowan & Sons v. Lockyer (1)); and it is argued that the legislature, in re-enacting the same words in sec. 7 of the Customs Tariff 1908, must be taken to

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for the valuation of goods. which are to pay duty according to their value: "When any duty is imposed according to value," &e. It provides that the value to be taken is the "fair market value" of the goods, that is,the particular dutiable goods mentioned, eg. (woollens) in the country of export it is to be the " fair market value" (of the woollens imported) in the usual and ordinary commercial acceptation of the term, and "free on board" at the port of export with a further addition of 10 per cent. on such market value. What is the meaning of "free on board"? Does it mean more than that the market value of the goods is to be ascertained on the hypothesis that they were put on board the ship with all such charges paid as were necessary for the purpose of bringing them - those very goods in their packages - to the hold of the ship? I can find no indication of any intention to bring under the ad valorem duty goods other than those which Parliament in its Customs tariff has specified ; and Parliament has actually treated packages as being distinctive goods, separate from their contents for purposes of duty, in the Customs Tariff 1902, in the proposed tariff of 8th August 1907, and in the Customs Tariff 1908. It may also be fairly urged that the expense of making the wooden cases and packing therein ought rather to be treated as an expense incidental to the voyage from the port of export, and as covered by the 10 per cent. provision, not as an expense incidental to the bringing of the goods to the hold. Such packages would not have been necessary but for the voyage - would not have been necessary if the ship were the ultimate destination. In the case of a tariff so elaborate and discriminative for purposes of protection, it would seem absurd to make the same kind of package pay (say) 40 per cent. if it carry woollen goods, and 5 per cent. if it carry cotton. I shall not refer to questions which might be raised, under sec. 55 of the Constitution, if this sec. 154 is to be treated as imposing taxation on packages. But I think that we should approach the question in that frame of mind which is appropriate with regard to sec- tions which are said to impose taxation, and should insist on a strict construction in favour of His Majesty's subjects. My opinion concurs on this point with that of the Chief Justice, that the claim under the sec. 154 should fail. I may point out also

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