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Central Pomio Logging Corporation Pty Ltd v The State; Suk, Collector of Customs, Rabaul; Maro, Komtagarea, Samol and Burua [1992] PGSC 2; [1992] PNGLR 20 (28 February 1992)

Papua New Guinea Law Reports - 1992

[1992] PNGLR 20 - Central Pomio Logging Corporation Pty Ltd v The State; Dennis Suk, Collector of Customs, Rabaul; Gima Maro, Michael Komtagarea, Gabriel Samol and Nathaniel Burua�

[1992] PNGLR 20

SC424

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]

CENTRAL POMIO LOGGING CORPORATION PTY LTD

V

THE INDEPENDENT STATE OF PAPUA NEW GUINEA;

DENNIS SUK, COLLECTOR OF CUSTOMS, RABAUL; GIMA MARO, MICHAEL KOMTAGAREA, GABRIEL SAMOL AND NATHANIEL BURUA

Waigani

Woods Los Brown JJ

30 May 1991

28 February 1992

ADMINISTRATIVE LAW - Judicial review of administrative act - Necessity to categorise nature of Comptroller of Customs' powers - Customs Act s 178 - Determination by Comptroller.

APPEAL - Appeal against refusal to grant mandamus - Principles on review of an administrative decision - "Unreasonableness".

Facts

Appellant is a logging company. A dispute arose over refusal by officers in the Department of Forests to grade and identify a specific type of logs in the process of being shipped overseas by appellant, despite appellant's possession of a valid permit to export logs. [The Comptroller of Customs is enabled by s 178 of the Customs Act to determine a dispute as to matters not involving contravention of the Act. Such determination is final.] Here, the Comptroller made orders referring the dispute to the Collector of Customs in Rabaul, directing that the Collector was to clear the vessel for sailing on a certain date after the matter between the Forests Department and the company was resolved. The Customs Collector's duty was to assess for duty the entire shipment, but failing certification by the forestry official, he refused to clear the vessel for sailing. The appellant then applied to the National Court seeking orders (1) in the nature of mandamus directing the Collector of Customs, Rabaul, to consider the company's application for approval and clearance for export of those logs on board "MV No 3 Kendari"; (2) declaring that the company had complied with its timber permits; and (3) declaring that all royalty payments necessary had been met, so that no further permits, licences or approvals were required from Forests for the export of the logs.

The National Court refused to make such orders and dismissed the motion. The appellants appealed against this decision.

Issues

N1>1.������ The nature of the Comptroller of Customs' responsibility under s 178 of the Customs Act i.e. whether it was administrative, executive or judicial.

N1>2.������ The nature of the referral of the dispute between the appellant and the Forests officer by the Comptroller to the Collector of Customs, and the nature of the exercise of the Collector's power.

Held

N1>1.������ The nature of the Comptroller's powers under s 178 must be categorised as to whether they are primarily administrative or judicial. Where administrative, the same responsibility must attach to the Collector of Customs at Rabaul to administer the provisions of the Customs Act. Thus, the court may judicially review the extent to which he has exercised his responsibilities in accordance with the Act and associated tariff acts.

N1>2.������ The proper test to be used when considering the Collector's powers to administer, in the absence of illegality or fraud, is whether his actions are "reasonable".

N1>3.������ In this instance, the Collector did not exercise his powers unreasonably so as to justify interference by the Court.

Cases cited

Associated Provincial Picture Houses Ltd v Wednesbury Corp [1947] EWCA Civ 1; [1948] 1 KB 223.

Council of Civil Service Unions v Minister for Civil Service [1985] AC 374.

Federal Commissioner of Taxation v Munro [1926] HCA 58; (1926) 38 CLR 153.

Nottinghamshire County Council v Secretary of State for Environment [1985] UKHL 8; [1986] AC 240.

Regina v Secretary of State for the Environment [1991] UKHL 3; [1990] 3 WLR 898.

The Queen v Trade Practices Tribunal [1970] HCA 8; (1969-70) 123 CLR 361.

Counsel

J Reeve, for the appellant.

Z Gelu and P Harricknen, for the respondents.

28 February 1992

WOODS LOS BROWN JJ: The appellant is a logging company which was originally aggrieved by a decision of the Comptroller of Customs in Port Moresby. The logging company (hereunder called "the company") had referred a dispute with the Collector of Customs at Rabaul to the Comptroller of Customs under s 178 of the Customs Act Ch 101. It is in the following terms:

N2>"s 178(1)������ If a dispute as to a matter not involving a contravention of this Act arises under this Act or in relation to the customs, the matter may, at the request of the persons interested, be referred to the Comptroller for decision and the Comptroller may, in such manner as he thinks proper, inform himself as to the circumstances, and determine the matter.

N2>(2)����� A determination by the Comptroller under subsection (1) is final."

The Comptroller determined the dispute by endorsing on the referral various comments including a note to the effect that "Customs is prepared to clear vessel to sail once matter between Forestry and Company resolved".

This note refers to the fact that the Collector of Customs, Rabaul, refused to clear the "MV No 3 Kendari" to sail from Rabaul with its cargo of logs belonging to the appellant. By letter of 10 May 1990, Mr Philip Naime, the Acting Collector at Rabaul, wrote to the appellant company giving reasons for his refusal. He said, in effect, that amongst the logs on board the ship were fresh logs which forestry officers claimed had not been checked for species identification, scaling and grading. That letter post dated the referral to the Comptroller since Pomio Logging had already on 4 May referred to him the Collectors' initial refusal, for commercial reality is such that delay in shipping becomes costly. The company was seeking to mitigate loss by clearing the ship as soon as possible.

In the event, the appellant by motion sought orders of the National Court in the nature of mandamus directing the Collector of Customs, Rabaul, to consider, according to law, the company's application for approval and clearance for export of those logs then on board "MV No 3 Kendari". To assist the Collector with his consideration (and thus avoid the impasse which had arisen over the Forests Department's refusal to certify to the satisfaction of Customs), the National Court was at the same time, asked for declarations that the company had complied with its timber permits in relation to the logs on board the ship (a Forests concern) and a declaration that all royalty payments necessary had been met, consequently "no further permits licences or approvals" were necessary from Forests for the export of such logs. Such declarations would, the company hoped, circumvent the difficulties Forests had created for the company in its efforts to export these particular logs, which were already loaded onboard the ship.

Sir Mari Kapi Dep. CJ heard the motion over a four-day period (12, 18, 21 and 24 May) and on 1 June 1990 gave his written decision. Mr Coady had appeared for the plaintiff company and Mr Gelu with Mr Harricknen for the various defendants. The facts and issues before the National Court would appear to have been extensively canvassed. The Judge refused to make orders and dismissed the motion. His Honour's refusal is that which the appellant asks this Court to set aside and quash, substituting orders in terms of its original motion, for mandamus and declarations. This Court has been ably assisted by counsel again.

The first question this Court must address is the nature of the Comptroller's responsibility on review. The National Court made no finding on the nature of the Comptroller's powers which he purported to exercise under s 178. His Honour did say, however, that "the Collector of Customs in Rabaul has exercised the discretion given him by law. It is clear. and we need not refer to any authorities, that where a person is granted a power, he should exercise that power when the need arises."

We consider that it is important to categorise the nature of the Comptroller's power, for different considerations will apply where the Comptrollor is found to be carrying out an administrative act or exercising an executive or judicial function. It would seem the Judge of first instance has treated the exercise by the Comptroller of his powers under s 178 as imbued with some discretionary power of review. The manner in which he has criticised the company's choice of avenues of appeal, by finding that the company was little short of mischievous in seeking judicial review where it also had referred the dispute to the Comptroller under s 178, illustrates, we consider, the error which has crept into His Honour's reasoning, caused through not first determining the nature of the Comptroller's power of review. He says -

"The plaintiff has not sought the judicial review of the decision of the Comptroller of Customs. However, when this issue is considered, s 178(2) of the Customs Act and the inherent powers of the National Court to review exercise of judicial authority under s 155 of the Constitution are relevant."

Now the exercise of judicial authority to which the Judge refers is the determination of a dispute before the Comptroller under s 178(1). We do not see such determination as an exercise of judicial power. Rather it is an administrative function.

On the face of s 178, it is a non-judicial power. It is not ancillary to any judicial function. Rather the Comptroller's powers in this case enable him to have a second view of a state of affairs before the Collector at Rabaul, a view which is final. What the Comptroller is doing is no more than the Collector has done. He is administering the Customs Tariff Act. Where a dispute has arisen, the Comptroller is not resolving a dispute between the Collector and the company aggrieved, rather he is bound to "inform himself as to the circumstances and determine the matter". In other words, as a decision maker of first instance, as an "appropriate authority" to carry into effect the levy and duty provisions, the Comptroller is but administering the Act. He should consider the material brought before him afresh.

We note that the lawyers for the appellant, Central Pomio Logging Corp. Pty Ltd, wrote on 8 May 1990 apprising the Comptroller in Port Moresby of facts which the plaintiff considered material for the Comptroller's consideration on the review under s 178.

The Comptroller has noted on the letter of the lawyers his decision in the following terms:

"Noted:

(1)����� Matter was reported to me by Collector (Rabaul).

(2)����� Customs is prepared to clear vessel to sail once matter between Forestry and company resolved.

(3)����� There is no question of discretion re powers because custom's requirements were met.

(4)����� Collector is to advise to clear vessel as (2) above on the 8/8/90.

Era Leva acting Comptroller".

In so far as the National Court found an exercise of the Comptroller's discretion, we must say no discretion appears in s 178 and the Comptroller expressly denies any discretion. Rather, he relies on his original powers under the section of the Act. By s 178(2) the validity of such a determination is made unexaminable in any proceedings except by prerogative writ on judicial review.

There should be a clear realisation of the need for a differentiation between judicial and administrative function.

Now the company's request for a review by the Comptroller in Port Moresby predates the company's application to the National Court for judicial review of the same decision. The Judge took issue with this course. He said:

"If, however, a party decides not to proceed by way of judicial review but by way of the procedure laid out under the Customs Act, in my view this is an election and he cannot pursue the matter by way of judicial review."

The company was in a quandary. As the primary Judge said, "The plaintiff has not sought the judicial review of the decision of the Comptroller of Customs".

The Comptroller's decision has been set out above, but really that decision does not determine the issues. They remain unresolved for, as the Comptroller says:

N2>"(2)���� Customs is prepared to clear vessel to sail once matter between Forestry and company resolved",

and later on he says:

N2>"(4)���� Collector is to advise to clear vessel as (2) above on the 8/8/90".

In effect the issues remain with the Collector at Rabaul. The issues were many and varied, for the plaintiff, while responsible to satisfy both Forests and Customs requirements, was seeking Customs clearance for logs, which clearance Customs at Rabaul ultimately refused to give on 10 May 1990.

The Acting Collector, Rabaul, gave his reasons when he wrote to the plaintiff advising, on information received from Forests, that deficiencies involving species identification, scaling and grading of fresh logs supposedly loaded on board "MV No 3 Kendari", were apparent.

Consequently no clearance was given. The facts pertaining to Forests requirements had not changed from the time of the plaintiff's referral to the Comptroller by letter on 8 May and the Collector's refusal to clear on 10 May. So it was the Collector's ultimate refusal which was the subject of the judicial review before the primary Judge, and we consider, to avoid the impasse created by the Comptroller's referral back to the Collector for ultimate decision, the plaintiff was entitled to seek judicial review of the Collector's reasons for refusal, for that refusal post dated the Comptroller's considerations on 8 May.

Had the Comptroller determined the issues and accepted or rejected Forestry Export Permit R-35 dated 30 April as sufficient for customs purposes (whether or not subject to the lodgment of a customs bond or a security deposit for Forests if it should subsequently be shown on delivery that specie or grading was incorrect), then the plaintiff cannot seek judicial review of the Collector's decision and deal with the same issue in the National Court. But the Comptroller has not dealt with the issues to finality. Consequently, the National Court may have reviewed the Collector's ultimate refusal to grant customs clearance, on the basis of a judicial review of an administrative decision. The Collector's duty is to administer the Customs duty provisions of the Act, and we see no change in the nature of that duty to the duty of the Comptroller under s 178(1).

That being the case, the Judge of first instance and this Court, if it be so minded, may review an administrative decision only where illegality, irrationality or procedural impropriety is found. We consider the passage by Lord Diplock in Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374 at 410 apposite. He proposed to deal with the second type of abuse, in the Wednesbury sense of "unreasonableness", for as we go on to say, we do not consider the other types of abuse of power have relevance here.

There is a right of judicial review available to a person aggrieved in respect of this administrative act. But it is not this determination by the Comptroller which the company sought to get reviewed by the National Court. Rather, the Court was asked to review the action of the Comptroller of Customs at Rabaul.

Mr Justice MacTiernan sought not to put too fine a point on the distinction between administrative and judicial or executive acts where administration is the primary function:

"But it is common-place in the field of administrative law that adjudication is not distinctive of judicial power exclusively:- and it is not necessarily inconsistent with true executive or administrative action." (The Queen v The Trade Practices Tribunal [1970] HCA 8; (1969-70) 123 CLR 361 at 371.)

And he further relies on comments of Issacs J, which he quotes at 371:

"The power and function of finally determining matters of fact and even of discretion are not solely indicative of judicial action. That is an attribute common to administrative bodies, and to subordinate bodies that are adjuncts to legislation and to judicial bodies:" (Federal Commissioner of Taxation v Munro per Issacs J. [1926] HCA 58; (1926) 38 CLR 153 at 176.)

We consider it important to recognise a distinction and to determine a predominantly administrative purpose. If an act is a judicial act, the Comptroller's exercise of his wide ranging powers may afford this Court greater ambit of review. The Comptroller's actions under s 178, however, is but the last step in the administrative function of determining customs duties. That determination is pursuant to statutory authority. The Comptroller's administrative function is not fettered or circumscribed by the wording of s 178. But as we say, he has declined to determine the issue.

We propose then to look at the Collector's decision of 10 May, with a view to finding, whether there has been an abuse of his power. No argument has been advanced to suggest the Collector has acted illegally, in an unlawful sense, so the first type of abuse may be disregarded for we see no need to pursue that course, on the facts.

We propose then to deal with irrationality or procedural impropriety in the sense of "unreasonableness" understood in Associated Provincial Picture Houses Ltd v Wednesbury Corp [1947] EWCA Civ 1; [1948] 1 KB 223.

The plaintiff says that the legal requirements for shipping of the round logs had been satisfied, in that duty had been paid; and, hence, the Collector was bound to release the logs for export. The plaintiff referred the Court to the Forestry Act Ch 216, particularly s 16 dealing with royalties and s 34 prescribing regulations relating to the assessment of royalties and the grading of logs for export. The plaintiff says that a dispute arose out of the application of those regulations in relation to the lodgement of log returns and payments and that reg 8 prescribes penalties for failure to comply with other regulations by way of a fine. The plaintiff, therefore, says the Collector is not entitled to use a breach, if any, of the Forestry Act as grounds for refusing to clear a log shipment. In fact, the plaintiff says the Forestry Export Permit had been issued pursuant to reg 32(c) and that there was no further need for enquiry by Customs pursuant to the Customs (Prohibited Export) Regulations.

This argument fails to take into account the requirements of the Customs Tariff (Amendment) Act (No 15 of 1990).

Prior to October 1989, export duty of 10% calculated in accordance with the principal Customs Tariff Act on all round logs, was imposed irrespective of species type. But the graduation of charges came into effect by virtue of para (f) of the amending act, which repealed the standing rate. The new graduation of charges came into effect from 18 December 1989. It was consequently necessary for the Department of Forests to effectively certify species type and grade of logs for the purposes of the Customs Tariff (Amendment) Act 1990 so that gradation, which affects the rate of duty, could be taken into account. Clearance remains the responsibility of the Collector, but he is entitled to rely on certification by the Department of Forests for gradations and species type when calculating duty applicable to round logs for export.

The plaintiff placed great weight on his argument about royalty payments, a calculation referable to the Forests figures for logs felled and cleared for export; but before this Court, failed to clearly explain why the Collector should be absolved from responsibility under the Customs Tariff (Amendment) Act 1990 to properly assess duty if the Collector could not seek proper particulars of gradations and species type (with measurements sufficient to calculate duty) from the Department of Forests, the appropriate authority.

The plaintiff's argument goes to the power of the Collector to delay clearance until information sufficient for his purposes (to assess) from the responsible authority is to hand.

In fact, there was a divergence from the likely load of round logs (ascertainable from the application for export permit lodged with the Department of Forests) and the actual load, a divergence which showed the actual load to be less than the export licence granted for round logs.

But the responsible authority asserted to the Collector of Customs that it was not in a position to properly calculate gradations, species and measurements of the round logs for various reasons. The plaintiff says that the Forests Department should not have revoked its permit, for mechanisms were in place to reassess royalties and duties once the overseas purchaser had accepted delivery and checked logs against shipping documents. Again, the company says the Forests Department is estopped from purporting to revoke its permit, for the Department had every opportunity to check the loading of logs, having had two employees on site to do just that.

It is not the responsiblity of this Court to enquire however into the work practices of the two employees of the Department of Forests at the site of the loading onto the ship. These two employees (although the senior left the site early; only later did he say that he was not satisfied with the count) by their acquiescence, allowed loading to continue to its logical conclusion. Subsequently, days later (and after the issue of the Foresty Export Permit) at Rabaul, these officers became aware of other circumstances surrounding the issue of such permit and in evidence complained about their opportunities to count logs.

We do not consider that the reasons given by the Department of Forests show much appreciation of the commercial reality (for the plaintiff has suffered very materially from its failure to ship in accordance with contract). This failure will certainly reflect on the companies standing in future log shipments and indirectly on the Papua New Guinea's standing as an efficient, reliable and responsible supplier of logs.

This Court, however, is not satisfied that the actions of the Collector are such as to be unreasonable in the Wednesbury sense (Associated Provincial Picture Houses Ltd v Wednesbury Corp [1947] EWCA Civ 1; [1948] 1 KB 223).

The Collector at Rabaul may appear pedantic, but he is entitled to rely on the Forests Department as an appropriate authority for certification of information sufficient for calculation of duty. Wednesbury's case has been applied and approved in numerous decisions of the English Court of Appeal. More recently in Regina v Secretary of State for the Environment, [1991] UKHL 3; [1990] 3 WLR 898, the dictum of the Law Lords in Nottinghamshire County Council v Secretary of State for Environment [1985] UKHL 8; [1986] 1 AC 240 was reiterated and relied upon. In effect, the rationale for not interfering with the administrative act of an appropriate authority is that, in the absence of some exceptional circumstance such as bad faith or improper motive on the part of the appropriate authority, it is inappropriate for the Courts to intervene on the grounds of unreasonableness in a matter of public financial administration where there appears unfettered power in such appropriate authority. With this view we agree. Bad faith or improper motive by the Collector has not been shown.

Wednesbury's case states a proposition that, in considering whether an authority having so unlimited a power, has acted unreasonably, the Court is only entitled to investigate the action of the authority with a view to seeing if it has taken into account any matters that ought not to be, or has disregarded matters that ought to be, taken into account. The Court cannot interfere as an appellant authority to override a decision of such an authority but only as a judicial authority concerned to see whether it has contravened the law by acting in excess of its power. With this proposition we agree, although the decision may evidence bad administration, in a commercial sense.

The plaintiff has argued that procedural impropriety of the Collector, in relying on the Forests Department as he has done, is such that this Court should interfere.

The Collector is bound to rely on the checks by Forests which facilitate proper customs assessment. In the ultimate, we are not persuaded that the Collector has, by this refusal to clear these logs, acted so unreasonably as to justify this Court's interference.

We have reviewed the factual circumstances, giving rise to this appeal. The judge at first instance may have been led into error, but we would uphold his refusal to grant the orders sought by the appellant for the reasons we have given. The appeal is accordingly dismissed.

Lawyer for the appellant: C Coady & Associates.

Lawyer for the respondents: State Solicitor.