The statutory charge on goods by the New Zealand Customs Service
(Customs) outranks a General Security Agreement
(GSA) even if Customs has allowed the goods to be released
with the duty still owing.
So found the High Court in a recent decision, even though the
circumstances of the case were that the bank's security
interest crystallised prior to the existence of the statutory
Fisk and McCloy v Attorney-General concerned a camera over
which the BNZ had a GSA but which Customs took statutory charge
over under section 97(1) of the Customs and Excise Act 1996
The Court's analysis
The Court put significant weight in its interpretation of the
C&E Act and, in particular, sections 97, 99 and regulation
87(1), on the fact that the Chief Executive of Customs had the
right to confiscate and sell goods on which duty was owing, even
where those goods had been passed to a third party.
The Court's view was that, by virtue of section 97(2),
"Parliament has conferred on the chief executive a broad power
in relation to charged property to the extent of the unpaid
duty", and that the "logical consequence" of this
was that the rights of secured creditors under section 305 of the
Companies Act and sections 243 to 244 of the Insolvency Act did not
apply in situations where Customs had a statutory charge over an
This case serves as a reminder that:
not every interest in personal property will be identified on
the Personal Property Securities Register (PPSR)
statutory charges fall outside the Personal Property Securities
Act 1999, and
the scope, nature and priority of each charge will depend on
its own statutory regime. Other examples beyond the Customs
charge are the charge on proceeds obtained through legal aid grants
under the Legal Services Act 2011 and the charge over proceeds of
insurance under the Law Reform Act 1936.
The conclusion that the charge in this case was first ranking
was not due to the fact that it was a statutory charge, but rather,
to the structure of the relevant provisions in the applicable
Other statutory charges will have different characteristics and
their priority will need to be determined by reference to their
Our thanks to Nupur Upadhyay for writing this Brief
Counsel. For further information, please contact the lawyers
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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