Pearce v Coynes Freight Management Group Pty Ltd
 FCA 320 (April 2010)
Coynes Freight Management Group (Coynes) operated two
warehousing businesses. Armik Group Pty Ltd imported vodka from
overseas and arranged for its storage at one of the warehouses that
was licensed to store underbond goods. The importation of the vodka
attracted customs duty. One week after importation, 849 cartons of
vodka were stolen from the warehouse.
Pearce (a customs officer / collector), wrote to Coynes pursuant
to s 35A(1) of the Customs Act 1901 seeking payment of
approximately $216,000, being an amount equivalent to the duty that
would have been payable if the goods were 'entered for home
consumption' on the date of the letter, plus GST.
Section 35A(1) of the Customs Act provides:
Where a person who has, or has
been entrusted with, the possession, custody or control of dutiable
goods which are subject to the control of the Customs:
a) fails to keep those goods safely; that person shall, on
demand in writing made by a Collector, pay to the Commonwealth an
amount equal to the amount of the duty of Customs which would have
been payable on those goods if they had been entered for home
consumption on the day on which the demand was made.
The Customs Regulations allow an 'owner' of
goods to seek to have duty remitted under certain circumstances
including where goods are 'stolen' before the goods left
the control of customs. In reliance on this regulation, Coynes
sought to have the duty remitted arguing that it was an
'owner' of the goods within the definition of that term in
section 4 of the Customs Act as it was 'possessed of
or beneficially interested in' or had 'control of or power
of disposition over the goods'.
Customs rejected the request to remit the duty stating that
Coynes was not the importer cited on the import entry documents: it
was therefore not the 'owner' of the vodka and was not
liable to pay duty on it. Rather, as a party 'entrusted with
custody of the goods' it was liable to pay
'compensation' (not duty) under section 35A.
An application for review of this decision to Customs was also
unsuccessful. Whilst Coynes had custody of the goods, all it could
do was to move and store the goods within its warehouse. As such it
was found not to be the 'owner' of the goods and not liable
for duty. Further, section 35A did not seek to impose customs duty
but rather to make Coynes liable to pay compensation for the loss
of duty and the legislation did not provide for any remission of
Coynes then sought to appeal to the Administrative Appeals
Tribunal (AAT). Pearce, on behalf of Australian Customs, sought
declarations from the Federal Court that Coynes was not entitled to
seek remission of customs duty for the goods, nor was it entitled
apply to the AAT for a review of the decision by the customs
The court held that the conditions in s 35A of the Customs
Act 1901 had been satisfied and that the warehouse operator
was liable to pay the amount equivalent to the duty that would have
been paid on those stolen goods, as claimed in the demand.
Justice Dodds-Streeton noted that:
It is common ground that Coynes
had or was entrusted with the possession, custody or control of
dutiable goods subject to the control of Customs. As the goods were
stolen, it failed to keep them safely in accordance with the
practically absolute obligation recognised in relevant authority as
independent of fault.
The warehouse owner was not paying the duty, but an amount in
compensation for it. Therefore, as 'only a person liable to pay
duty is entitled to a remission', Coynes was not eligible to
This case serves as a warning to warehouse operators - they may
be liable to pay an amount equal to the applicable customs duty on
imported goods even if goods are stolen without any fault on their
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This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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