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General Machinery Hire Ltd v Comptroller of Customs [2011] FJHC 121; Judicial Reveiw 001.2011 (28 February 2011)

IN THE HIGH COURT OF FIJI AT LAUTOKA
CIVIL JURISDICTION

JUDICIAL REVIEW NO 001 of 2011

IN THE MATTER of Customs Act, 1986

AND

IN THE MATTER of a detention notice issued by The Comptroller of Customs to the authorized officer of General Machinery Hire Limited dated 1 [sic] December, 2010 to detain four trailers and one molasses tanker (Vehicles)

BETWEEN:

GENERAL MACHINERY HIRE LIMITED:
A duly registered company with its registered office at Bouwale Street, Lautoka
Applicant

AND:

THE COMPTROLLER OF CUSTOMS, as the Chief Executive Officer of Fiji Islands Revenue and Customs Authority, a statutory body established by the Fiji Islands Revenue and Customs Authority Act 1998
Respondent

COUNSEL: Mr R Naidu with Ms N Basawaiya
For the Applicant
Mr B Solanki with Ms T Rayawa
For the Respondent

Date of Hearing: 18th February, 2011
W. Submissions: 21st February, 2011
Date of Order: 28th February, 2011

ORDER

1. The applicant-General Machinery Hire Limited (GMHL), a company duly registered in Fiji, seeks leave of court in terms of O. 53 r. 3(2) of the High Court Rules to apply for judicial review against the decision dated 03rd December, 2010 of the Comptroller of Customs (the comptroller) of the Fiji Islands Revenue and Customs Authority (FIRCA).
   
2. The decision pertains to the detention of two 'Dump Tandem Chassis', two 'Dump Tandem Trailers' and one 'Tanker Trailer Chassis' (altogether vehicles) on the basis of the 'Detention Notice' made pursuant to an exercise of power under Section 129 (2) (d) of the Customs Act 1986 (the Act) by the comptroller. The 'Detention Notice', which is being impugned in these proceedings, is marked as 'AS 1'
   
3. Mr Ajnil Kumar Singh, an authorized officer of GMHL, filed an affidavit dated 28th January, 2011, in support of the motion for judicial review. He deposed that the vehicles form specialised machinery in terms of their functionality, which were imported from Australia in early 2009 for the purpose of transportation of sugar and molasses for Fiji Sugar Corporation (FSC) to perform a contract entered into with FSC for five years from May, 2008. The documents leading to the formation of the contract are compositely marked as 'AS 2'.
   
4. It is common ground that GMHL is deprived of the use of the vehicles in consequence of the 'detention'. Consequently, GMHL asserts that it is exposed to the risk of monetary losses in an amount of $ 12, 000.00-15,000.00 per day owing to it being incapacitated to perform the contract without the vehicles. It also claims that the contract itself is bound to suffer in view of the detention.
   
5. GMHL, at the behest of its proprietary rights and contractual obligations being affected as briefly set-out above, seeks that the 'Detention Notice' (AS 1) of the comptroller be judicially reviewed by issuance of prerogative writs of certiorari and mandamus.
   
6. An interim order is also sought by GMHL on the basis of the affidavit of Mr Ajnil Singh dated 03rd February, 2011 to secure the release of the vehicles pending full determination of the application in order to be able to perform GMHL's contractual obligations with FSC. It is asserted that:
   

(i) The vehicles are fully insured;

(ii) That they (the vehicles) would not be subject to any encumbrances;

(iii) That there exists no reason for their disposal; and,

(iv) That no interests of Fiji Islands Revenue and Customs Authority (FIRCA) would be affected by such an interim order.

7. The application for judicial review is founded on the grounds:
   
   • (i) That the decision ultra vires the Act;
     
   • (ii) That the decision is unreasonable in that the comptroller had considered irrelevant considerations and disregarded relevant considerations and it was made after long time from the importation of the vehicles; and,
     
   • (iii) That the decision is tainted by failure of the comptroller to observe the rules of natural justice in that GMHL was not heard before the decision was made.
     
8. The legal mechanism of judicial review empowers the court to examine the decision of the comptroller and the process of making such decision in order to determine whether it (the decision) could sustain in law in light of the above legal challenges, which are well-established bases in public law for judicial control of administrative action. At the stage of leave, court is required to consider whether the facts of the case, in light of the above legal challenges, present an arguable case in favour of GMHL. The test derives from of the decision of Lord Diplock in Inland Revenue Commissioners v National Federation of Self-Employed and Small Businesses Ltd. [1981] UKHL 2; [1982] AC 617 at 643, where it was held that judicial discretion should be exercised to grant leave if an arguable case is disclosed '...on a quick perusal of the material...'.
   

(See also National Farmers' Union v Sugar Industry Tribunal, Fiji Sugar Corporation and Sugar Cane Growers' Council [1990] ABU 08/90; 07th June,1990).

9. Perusal of the material, though not quick but well-considered, reveals that the comptroller had made the decision under Section 129 (2) (d) of the Act to detain the vehicles. The Section states that:
   

'129 (1) An officer or other person authorised in that behalf by the Comptroller may at any time seize or detain any goods liable to forfeiture under the customs laws or any goods which such officer or other person has reasonable grounds to believe are liable to forfeiture thereunder.

(2) The following goods are liable to be forfeiture and may be seized or detained as aforesaid:

...

(d) all uncustomed goods;

...'

'Uncustomed Goods' is defined under Section 2 of the Act to include dutiable goods on which full duties have not been paid, and any goods, whether dutiable or not, which are imported or in any way dealt with contrary to the provisions of the customs laws.

10. The comptroller's decision that the vehicles were 'uncustomed goods' and, therefore, they could be detained, has stemmed from his earlier 'Short Payment Advice' [of duty] (AS 6) served on Mr Ajnil Singh of GMHL on 06th APRIL, 2009. The duty was found to have been short-paid by GMHL in an amount of $ 199, 729.79, when the vehicles were imported. This short payment of duty, admittedly, was sought to be resolved by FIRCA by its letter dated 21st March, 2009 [sic] by referring to a letter dated 23rd April, 2009 of GMHL in response to the Short Payment Advice (AS 6) of 06th April, 2009. The letter dated 21st March, 2009 of FIRCA (AS 7) read thus:
    

'As previously advised[,] the Comptroller of Customs & Excise has agreed to settle your case under the provisions of Section 155 of the Customs Act subject to you[sic] entering into a time to pay agreement (ttpa) with FIRCA and signing the completed compounding form.

...

Furthermore, you are to ensure that the first instalment is made on the date of signing in accordance with ttpa. I hope the above meets your requirements and looking forward to a speedy resolution of the case.

Sgd.

For Chief Executive Officer

Fiji Islands Revenue & Customs Authority'

11. FIRCA's optimism was met with a positive response from GMHL as Mr Ajnil Singh admitted guilt of the offence of 'preparing and passing a Customs Entry' [C7755 of 14.05.2008], as charged under Section 137 (a) of the Act. This admission was made on 26th May, 2009 and the offence was, thereupon, compounded by the Chief Executive Officer (CEO) of FIRCA on the same day with the imposition of a fine of $ 2000.00 (AS 8). Time to Pay Agreement (TTPA), as envisaged in 'AS -7', was also entered into between Mr Ajnil Singh and FIRCA on 27th May, 2009 (AS 9). The deficit duty was allowed to be paid in six equal monthly instalments of $ 34,000.00 from 1st August, 2009, which was paid as borne-out by documents marked 'AS 10A' – 'AS 10F'in accordance with TTPA.
    
12. The TTPA contained a clause, reproduction of which, I think is pertinent in view of its relevance in the context of this case. It read:
    

'The payment of duty and penalty by the Importer to the Authority constitutes the settlement of duty outstanding to the Authority by the Importer' - clause 3.

13. It is in this background of facts that the comptroller decided to detain goods by notice of 'AS 1' of 3rd December, 2010. GMHL's response was prompt against the decision to detain the vehicles albeit the detention took effect in its (GMHL's) own premises. GMHL, through its lawyers, sought a reversal on 3rd December, 2010 itself of the decision disputing the comptroller's position that the vehicles were uncustomed ('AS 13'). It apparently relied on the above clause of TTPA to negate comptroller's assertion that vehicles were 'uncustomed goods' within the meaning of Section 129 (2) (d) read with Section 2 for the comptroller to have acted under Section 129 (1) of the Act as all customs duties had been paid.
    
14. FIRCA, by its reply to AS 13, stated that the vehicles were 'seized' (as opposed to 'detained' mentioned in the 'Notice of Detention' (AS 1)) and admitted that GMHL had paid duty on the importation of the vehicles. It went on to say in the reply marked 'AS 14' as follows:
    

'However, the payment of the said duty by [GMHL] and the 'seizure' [as opposed to detention in (AS 1)] actions are separate and the payment of the requisite duty does not preclude the activation of the latter. [GMHL] has been charged with the most serious offence under the Customs Act and the provisions of the Act empower the Comptroller of Customs to, at any time, seize and thereafter forfeit such goods, which are the subject matter of the offence. Also[,] please note the definition of the term 'uncustomed goods' as per [S]ection 2 of the Customs Act.'

(Emphasis my addition)

15. The above assertion of FIRCA triggered-off further correspondence between the parties in the form of letters under the caption '...Seizure of Motor Vehicles under Detention Notice 105559 (Notice)'. FIRCA, in a reply-letter dated 13th December, 2010 ('AS 16'), admitted that the offence was compounded under Section 155 of the Act and that GMHL had now been charged under Section 139 (b) of the Act. It reiterated that:
    

'The provisions of s. 137(a) and s.139 (b) of the Act differ considerably and you will appreciate the elements to [sic] the offences differ very much as well. The settlement between the parties was for the offence under s.137 (a) and obviously the parties are bound by that agreement insofar as the offence under s.137 (a) is concerned. The Comptroller is, however, not precluded from pursuing the investigation and consequent prosecution of other offences under the Customs laws based on new evidence gathered, particularly if there is, as it was in this case, fraud involved in the transaction.

16. The charge under Section 139 (b), as referred to in 'AS 16', had been presented to the Magistrate's Court on an undisclosed date by the comptroller as borne-out by 'AS 11'. The learned Magistrate, however, seemed to have taken cognizance of the matter at least on 18th November, 2010 as he ordered the issue of summons on Mr Ajnil Singh of GMHL returnable by 10th January, 2011. It is important to note here that the 'Notice of Detention' (AS 1) was issued on GMHL apparently some weeks after the institution of criminal prosecution for the offence under Section 139 (b) of the Act and two weeks after the learned Magistrate took cognizance of the offence.
    
17. The above represents the events preceding the 'Detention Notice' of 3rd December, 2011 in a chronological setting, notice of which was served on the Respondent-Comptroller of Customs before application was supported for leave.
    
18. Upon receipt of ex-parte motions for leave for judicial review and summons for interim orders, Mr B. Solanki entered appearance for the Respondent-Comptroller of Customs on 07th February, 2011, when the case was listed for support to consider leave. Mr Solanki moved court that the comptroller be given time to respond to the affidavits of GMHL and urged that both applications for leave and interim orders be taken-up inter-partes. Mr R. Naidu, appearing for GMHL, initially opposed adjournment and later chose not to pursue his objection as the necessity of obtaining interim orders ex-parte on the ground of urgency had whittled-away up until 28th February, 2011 so as not to affect GMHL's rights.
    
19. Court, in order to maximise fairness, allowed both requests of Mr Solanki and permitted the comptroller to file affidavits in opposition both to leave and to interim orders. Consequently, the hearing proceeded beyond the scope of - what is referentially termed as 'Pickwick' basis - that is, while the applications remained ex-parte the respondent is allowed to make submissions in opposition usually on points of law (See Pickwick International Inc (GB) Ltd v Multiple Sound Distributors Ltd and another; 1972 (3) AER 384-385). In the process, court was benefitted and it [court] was able to know the nature and the degree of evidence and the contentions of the comptroller in opposition. If it was otherwise, court would have had to determine the threshold issue of an arguable case at the stage of leave solely on the pleadings only of one party (being those of GMHL), a scenario, which is always desirable to be avoided in the hallowed traditions of justice but, of course, without compromising with an urgency in an appropriate case.
    
20. The comptroller in his 'Notice of Opposition' dated 3rd February, 2011, contended that the vehicles remained uncustomed goods as 'the Plaintiff [sic] ha[d] been charged with the criminal offence of fraudulent evasion of duty and the Respondent [was] empowered to seize [as opposed to detain] and forfeit goods...'. In furtherance of the notice of opposition, Mr Lorima Vosa on behalf of the comptroller, filed two affidavits dated 15th February, 2011 against the grant of leave and interim orders. In his affidavit against the grant of leave, it was asserted that:
    
    • (i) The vehicles could have been categorised as smuggled goods under Section 129 (2) (a) for an offence under Section 139 (b) of the Act (Paragraphs 6 and 13);
      
    • (ii) The offence under Section 137 (a) was compounded at the request dated 27th March, 2009 of Mr Ajnil Singh as shown by document marked 'LV 2' (Paragraph 12 (ii));
      
    • (iii) FIRCA continued investigations for fraud in relation to Section 139 (b) and Mr Ajnil Singh was caution-interviewed on number of occasions after compounding the offence (Paragraph 12 (v);
      
    • (iv) There was sufficient evidence to show that the events leading to short payment was carefully orchestrated and Mr Ajnil Singh is being prosecuted at the instance of the Director of Public Prosecutions (Paragraph 10 (i)).
      
21. Moreover, the comptroller admitted paragraphs 19-24 of Mr Ajnil Singh's affidavit relating to the process of compounding the offence in terms of paragraph 15 (i) of the affidavit filed on his behalf and stated that the GMHL should have resorted to Section 161 of the Act to secure the release of the vehicles. This has been reiterated in terms of paragraphs 11(i) and (ii) of Mr Lorima Vosa's affidavit opposing interim orders.
    
22. Upon a careful consideration of the averments of respective affidavits filed by GMHL and FIRCA, the supporting documents, the provisions of the Act and submissions of learned counsel, court observes the following:
    
    • (i) (a) GMHL and FIRCA are in agreement that the offence of preparing and passing as genuine customs entry, punishable under Section 137 (a) of the Act, was sequel to the short-payment of duty, which was compounded in the exercise of powers of the comptroller in terms of Section 155 of the Act; and, that the GMHL was dealt with for the offence. GMHL is now being prosecuted before the Magistrate's Court for an offence under Section 139 (b) for an alleged fraudulent evasion of the same amount of duty of $ 199, 792.79 based on the same customs entry of C7755 dated 14th May, 2008. It is asserted by the comptroller that the 'Notice of Detention' of the vehicles was served on GMHL in view of the impending criminal prosecution before the Magistrate's Court (Paragraphs 16, 26 and 30 of the written submissions on behalf of FIRCA dated 17th Feb., 2011).
      

(b) While the charge before the Magistrate remained to be one under Section 139 (b), as admitted by the comptroller, submissions made on his behalf before this court referred to the charge as being one under Section 139 (a) of the Act. (Paragraphs 16 and 30 of the written submissions of FIRCA dated 17th Feb., 2011)

(ii) (a) The terms 'detention' and 'seizure' with their grammatical inflections have been interchangeably used by the comptroller even though the decision in issue, as borne-out by the 'Detention Notice' marked as 'AS 1', is detention per se. The phraseology, however, has been distinguishably used under the scheme and symmetry of the Act to mean permanency in the latter while it is not so in the former. The two words, therefore, connote two different situations with distinct legal implications and any obscurity in the use of the words would defeat the workability of the Act. It appears that the failure to appreciate the distinction between the two words is further manifested when the comptroller relied on Section 161 as a way out for GMHL to secure the release of the vehicles notwithstanding Section 161 indubitably applies only for cases of 'seizure' only and not for 'detention'.

(b) This obscurity further surfaced in the written submissions dated 17th and 18th February, 2011 of FIRCA, on which Mr Solanki, counsel for the respondent, relied at the hearing on 18th February, 2011 so as to bolster-up a case of 'seizure' as opposed to the actual case in issue of 'detention [of the vehicles]'.

(iii) Institution of proceedings with the laying of the charge before the Magistrate by the comptroller, as borne-out by 'AS 11', was reflective of the fact that the investigations were complete and the matter could stand for trial. Detention of the vehicles, if at all, could have been necessary during investigations that were said to have been carried-out from about May, 2009 after the matter was compounded with the guilty plea from GMHL. There was no material before court that detention of the vehicles was ever contemplated and/or necessitated during such investigations, which prolonged for 18 months on lines of '...fraudulent evasion ... of duty', for which GMHL now stands charged. In that context, court is unable to fathom any reason to justify detention of the vehicles now. And, more so when there is no an explanation whatsoever from the comptroller or FIRCA as of now for the necessity to detain (the vehicles) as the matter is placed under the jurisdiction of the Magistrate to decide on the guilt of GMHL.

(iv) (a) Post-charge detention (as admitted by the comptroller), in anticipation of forfeiture by court, does not appear to be within the power of the comptroller; and it, in fact, amounts to an act of encroaching into the power of the Magistrate. It also impinges upon the authority of the Magistrate as the comptroller should not interfere with the subject matter of the case after the Magistrate took cognizance of the offence in terms of criminal proceedings.

(b) Forfeiture, in any event, appears to be a punishment at the discretion of the Magistrate upon an inquiry after the trial proper in view of the occurrence of the words '...liable to forfeiture' under Section 139 (b) of the Act. Forfeiture, therefore, does not appear to be automatic upon conviction. As such, it does not appear to form a mandatory part of the sentence contrary to the affirmation of Mr Lorima Vosa on behalf of the comptroller. (Paragraph 12 (vii) of Mr Lorima Vosa's affidavit/ 15th Feb., 2011)

(v) The power of the comptroller under Section 129 of the Act, notwithstanding the words '...the Comptroller may at any time seize or detain any goods liable to forfeiture...' does not appear to involve an unfettered discretion for detention or seizure of goods, as the case may be, under the customs laws and such discretion is meant to be fairly and reasonably exercised within confines of the law for such exercise to become valid.

(vi) The impugned decision affected the proprietary rights of GMHL in whatever form-be it for 'private gains' or for private losses. As such, it should appear to have been desirable to the comptroller to afford GMHL an opportunity of being heard before the deprivation of proprietary rights.

23. As regards the observation in paragraph 22 (i) (a), it appears that a legal question is bound to arise as to the legality of multiplication of charges on the same facts under the applicable principles of criminal jurisprudence and procedure. The issue is relevant because the 'detention of the vehicles', as admitted by the comptroller, is the direct result of the institution of the prosecution. However, GMHL is, advisedly, not seeking a challenge on those facts; hence, court would not delve into the matter.
    
24. In regard to the observations in paragraphs 22 (ii) (a) and (b), it seems that the comptroller is not certain as to what he was doing in light of his failure to appreciate the distinction between 'detention' and 'seizure' in correct legal perspective. The comptroller, in the circumstances, appears to have misapplied the relevant statutory provisions and has thereby stepped outside his own jurisdiction in Anisminic sense (See Anisminic Ltd. v Foreign Compensation [1968] UKHL 6; [1969] 2 AC 147).
    
25. Similarly, as to the observations in paragraph 22 (iii), it appears that the detention of vehicles is not consistent with a bona fide exercise of power by the comptroller and it consequently leads to a reasonable apprehension that statutory mechanisms have been used impermissibly beyond the objects of the Act.
    
26. Moreover, the observations in paragraphs 22 (iv) (a) and (b), seem to show that the comptroller has exceeded his power in detaining the vehicles when the criminal proceedings are pending before the Magistrate in the absence of specific provisions under the Act to do so resulting in ultra vires.
    
27. Insofar as the observations in paragraph 22 (v) are concerned, court opines that the contention of the comptroller that, he has an untrammelled power and/or discretion to detain or seize goods at any time for an alleged violation of customs laws, is not in accord with administrative law principles and such an exercise of power is subject to review.
    
28. Furthermore, on the observation in paragraph 22 (vi), it appears that, while right to a hearing is not an inveterate rule in public law, facts of this case reveal that such a hearing was justifiably warranted.
    
29. In the circumstances, the case, as complained of by GMHL, satisfies the criteria laid down by Lord Atkin in R v Electricity Commissioners ex parte London Electricity Joint Committee Co. Ltd. [1924] 1 KB 171 for this court to assume its supervisory jurisdiction over the matter. The criteria, which sometimes referred to as 'Atkinian formula', are on the following lines:
    

'wherever any body of persons having legal authority to determine questions affecting the rights of the subjects, and having the duty to act judicially, act in excess of their legal authority, they are subject to the controlling jurisdiction of the King's Bench Division exercised in these writs.'

The applicability of above criteria to facts of this case, as noted above, displaces Mr Solanki's contention that the comptroller is not amenable to judicial review. It would also be relevant to note here the grounds of 'illegality', 'irrationality' and 'procedural impropriety' to subject an administrative action for judicial review by court as enunciated in Council of Civil Services Unions v Minister for Civil Service [1985] AC 374 at 410)

30. On the above reasoning, court finds an arguable case for review against the decision of the comptroller dated 03rd December, 2010. Court, accordingly, grants leave for GMHL to apply for judicial review.
    
31. The comptroller has not satisfied court as to why the detention of vehicles should be in force at this point of time after more than 18 months from their importation, despite the investigations being completed on alleged fraud. GMHL, on the other hand, has shown that its proprietary rights as a corporate body are affected by the detention of vehicles.
    
32. Having regard to the facts of the case, court is of the view that the balance of convenience favours GMHL entitling it to secure the release of the vehicles. Court, therefore, is inclined to grant interim relief as prayed for by GMHL. The grant of leave shall, in terms of O. 53 r. 3 (8) (a) of the High Court Rules, operate as a stay of the said decision and proceedings, if any, by the comptroller over the matter that this application relates to, until the final determination of this application. The respondent-Comptroller of Customs of FIRCA is, accordingly directed to release the vehicles listed in 'AS 1' forthwith to the applicant-GMHL. GMHL is to give undertakings as deposed to in paragraph 8 of the affidavit by Mr Ajnil Singh dated 03rd February, 2011 within a month after an inspection of the vehicles.
    
33. Accordingly, orders are:
    
    • (i) Leave to apply for judicial review against the decision, as contained in the 'Notice of Detention' [of the vehicles] dated 03rd December, 2010 of the respondent-Comptroller of Customs of FIRCA, is granted;
      
    • (ii) Grant of leave shall operate as a stay of the said decision and proceedings, if any, by the comptroller over the matter this application relates to, until the final determination of this application;
      
    • (iii) The respondent-Comptroller of Customs of FIRCA is directed to release the vehicles listed in the said 'Notice of Detention' marked as 'AS 1' forthwith to the applicant-GMHL;
      
    • (iv) GMHL is directed to give undertakings in accaordance with paragraph 8 of the affidavit dated 3rd February, 2011 by Mr Ajnil Singh within a month;
      
    • (v) Application is to be listed for full hearing on a date/s suitable to court and to the parties; and,
      
    • (vi) Costs in the cause.
      
34. Deputy Registrar of this Court is directed to communicate this order to the respondent-Comptroller of Customs of FIRCA forthwith and have proof filed for the purposes of the record. Copies of this order are also served on the counsel for applicant-GMHL and for respondent-Comptroller, to facilitate compliance by the comptroller upon receipt of such copy.
    
35. Orders accordingly.
    

PRIYANTHA NAWANA
JUDGE

HIGH COURT
LAUTOKA
28th February, 2011.