|
|
Home
| Databases
| WorldLII
| Search
| Feedback
National Court of Papua New Guinea |
Unreported National Court Decisions
PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]
OS 271 OF 1997
BETWEEN: UNITED TRADING PTY LTD
PLAINTIFF
AND: DAVID SODE, COMMISSIONER OF CUSTOMS
FIRST DEFENDANT
AND: INDEPENDENT STATE OF PAPUA NEW GUINEA
SECOND DEFENDANT
Waigani
Sevua J
17 August 1999
29 October 1999
CUSTOMS – Customs Act – Goods – Delivery, making or production of entry – False or wilfully misleading statement – Forfeiture and seizure – Form of notice of seizure – Customs Act, ss.122, 125,126 & 146
Where Plaintiff imported goods for home consumption and lodge Customs entry for Home consumption (Form 15 and assessed value of goods based on supplier’s invoice; and where Collector of Customs seized the goods as forfeited goods on the basis that the plaintiff’s “value placed on the goods were undervalued, misleading and false.”
Held
1. &##160; The powers of the Cthe Collector of Custom set out in sections 125 and 126 of the customs Act are to be exercised following the exercise of the powers in of tt. Henot pt to exercise his powers unde under ss r ss 125 a125 and 12nd 126 validly without having exercised his powers under s .122.
2. &#I60; ul woe a brudept comt commercial practice for the Collector of Customs to carry out a full physical examination and inspection of goods imported for home consumption if there is any suspicion that goods have been undervalued.
3. ҈ I60; If, the follow ng a eull examination and inspection of imported goods, the Collector of customs disc surplus or undervalued goods or goods imported in contravention of the Customs Act, only tnly those goods ought in principle, to be seized and detained . The powers of seizure does not extend to goods that have been properly documented and valued in the customs Entry for Home Consumption.
4. &##160; T60; The firse deft&dan17;8217;s seizure and detention of the goods in the two containers was not justified under s.126 of the Act because none of the goods were found to be surplus undeclared goods or gooportecontrion of n of the Athe Act.
Cases Cited
Uval (No. 67) Pty Ltd –vs- David Sode & The State, unnumbered & unreported judgment of Amet, CJ, 13th October, 1995 (OS 112/94)
United Trading Pty Ltd –vs- David Sode & The State, unnumbered and unreported judgment of Salika, J, May 1998, (OS 499/96).
Clover Pty Ltd –vs- David Sode & The State unnumbered & unreported judgment of Jalina, J 30th September, 1998, (OS 415/96)
Excel Trading Ltd –vs- Frank Barara & Ors unnumbered & unreported judgment of Woods, J 28th June 1999, (OS 127 of 1998).
Counsel
G. Garo for Plaintiff
C. Makail with C. Taipala for Defendants
29 October, 1999
SEVUA J: The Plaintiff in these proceedings, claimed the following relief in it’s Originating Summons:
1. A declanatiot thaoti N of e of Seizure dated 13 May 1997 and issued by the first defendant to the plaintiff in respect of
goods contained in two containers acatedae is and effep> 3. ـ C60; Costs 4. ـ D60; Damages 5. ҈ E60; Exemplary damapesO On the 15th September, 1KirriJ grathe secondef soby thintiff. In the tria trial befl before therefore, the plaintiff only pury pursued sued thosethose
reli relief sought in paragraphs 1,3,4 and 5 respectively. The facts of this case are as follows. The plaintiff carries on business as a wholesaler of general merchandise in Lae. In March 1997,
it imported some general merchandise from Singapore. On 20th March, 1997, it received a commercial invoice, VP/004/97 from the supplier of goods in Singapore, VP Enterprises. The invoice was
in respect of goods in two 20 foot containers. The total CIF value (Costs Insurance & Freight) of the goods in the invoice was
Singapore $28,891.97. The two containers arrived on the 24th March, 1997. On 7th August, 1997, the plaintiff’s customs agent lodged with the plaintiff a Customs Entry for Home Consumption or Form 15 (Exhibit
“E”), showing the amount of customs duty as K14,335.55. The containers were not cleared and were detained because the
first defendant said the value placed on the goods were’ undervalued, misleading and false” On 13th May, 1997 the first defendant, through his Lae Office, issued a notice of seizure pursuant to s.126 of the Customs Act (s.126 Notice).
The notice states that the two containers had “ been seized as forfeited to the State on account of a contravention for the Customs Act, namely that a Customs Entry for Home Consumption
consisting of Information derived from invoices and Declarations made and delivered to customs in respect of the imported goods is
false or wilfully misleading, therebye contravening Section 146(j) of the Customs Act, Chapter 101”. On the 15th September, 1997 Kirriwom, J ordered the first defendant to release the two 20 foot containers fully intact to the custody of the
plaintiff upon the plaintiff paying the sum of K14,335.55 provided the plaintiff pays the sum of K17,965.43 into Court as security
for damages. The plaintiff paid the sum of K14,335.55 on PNGBC cheque 511935 on the 2nd September, 1997. The sum of K17,965.43 was paid into Court on 30th September, 11997 in compliance with the order of Kirrriwom, J of 15th September 1997. I accept the plaintiff’s evidence in relation to the importation of the goods, the lodgment of customs entry form and the subsequent
difficulties it encountered in securing the release of the two containers until the Court order of 15th September 1997. The issue really, is whether the goods contained in the two containers were undervalued. The defendant’s case is that the goods were undervalued. They say that the information in the custom entry form were false or
wilfully misleading therefore the value of duty was not K14,335.55 as assessed by the plaintiff, but K32,300.98 . The basis of the
defendant’s assessment was the opinion of Mrs Jennifer Tobing, Valuation Research Officer of the first defendant’s office
in Lae . The defendants rely on her evidence and that of Canisius Laudiwana, both oral and in affidavit form. The evidence of Ms Tobing is pertinent to the issue I have adverted to . She swore an affidavit on 13th August, 1999, (Exhibit ‘G”), and she gave oral testimony before me on the 17th August, 1999. I found her to be a very intelligent witness. She spoke very fluent English and appeared very competent in duties .
She was very impressive witness and I could not detect any fault in the veracity of her evidence on oath. However, with the greatest respect to her competence and intelligence, I find that I cannot accept her evidence of forming an opinion
that the “valued placed on the goods were undervalued, misleading and false”. Whilst I accept that she and other officers
of the first defendant in Lae carried out a physical inspection of the goods in the presence of the plaintiff’s director, Jack
Koh, I find it quiet difficult to accept that, without any proper basis at all, she was able to form an opinion which led to the
revaluing of the goods at K32,300.98. There are six methods of revaluing goods imported into the country, one of which is the “fall back” method used by the
first defendant on the goods, the subject of these proceedings . It is a flexible interpretation of similar and identical goods .
This method compares prices of goods imported on or about the same time usually around the same month from the same country. The
first defendant used that method to re assess the value of the plaintiff’s goods by comparing prices on the records, of other
imported goods held by his office in the month of May, 1997. In my view, that the method is quiet unreliable and unrealistic. The first defendant could not correctly place a revaluation on goods
using that method without an actual physical check of each cartons of goods in the containers and verifying such goods with the information
and data in the custom entry or Form 15. In my view, that is the only proper method of revaluing customs duty on imported goods.
I was expecting the first defendant to produce evidence to the effect that the plaintiff did not declare various surplus goods found
in the two containers thus resulting in the undervalue of goods at K14,335.55. However that was not the case here. Although the first
defendant did carry out a physical inspection of the goods there is no evidence at all that the goods were undervalued because there
were surplus goods found in the containers that were not declared therefore imported contrary to the Act. So what then was the basis of the opinion by the first defendant that the value placed on the goods by the plaintiff were undervalued,
misleading and false? In my view when that question is resolved, the issue of whether s.126 notice was valid or not would be determined.
It is not a question of whether the first defendant had authority to seize the goods. Consistent with the powers, duties and functions
of the first defendant, I consider that the first defendant, must jealously guard his functions to ensure that correct customs duty
are assessed on all imported goods so that State, and indeed, the country and its people, are not deprived and denied of it’
income and revenue from the levy of customs duty by unscrupluous importers. The first defendant has the power and authority to seize
and detain any goods but that is not the issue here. I consider that the fall back method used by the first defendant in revaluing the plaintiff’s goods was misleading and inaccurate.
My view is fortified by the lack of evidence of any undervalued surplus goods thus resulting in any unassessed duty. The powers of the first defendant are found in ss 125,126 and 146 of the Customs Act. Section 125 provides; “An officer............may seize- a) &ـ a60; any fory forfeited ship, aircraft or goods on land or water; or b) &ـ a6y shiy ship, air, aircraft or goods that he has reasonable cause to belare ft./p> > SectiSection 126 provides: “(1)) Wher ship, boar, aircraft raft or goods have been seized as forfeited, the seizing officer shall give written notice
of seizure and of the cause to ...........by delivering the notice to him- (b) ټ bt letddr addressedessed to him and transmitted by post to or delivered at his last known place of abode. Or business......” Section 146 provides: “The following are ited e StateState:-
> (j) All goods in cespe w ofh eich entry, invoice, declaration, answer, statement or representation that is false or wilfully
misleading in any particular has been delivered, made or produced........&;
The plaintiff’s submission contained references to a number of unreported and unnumbered judgments of the National Court. I refer especially to the Chief Justice judgment in Uval (No,67) Pty Ltd –v- David Sode, Collector of Customs and The State, 13th October, 1995. The Chief Justice’s judgment contained some very useful and sound principles which I wish to adopt and apply here. In fact the Chief Justice sets out some guidance to officers of the first defendant at page 7 of his judgment. This Court notes that, the first defendant’s act of ignoring those guidance simple leads to an error of judgment on his part therefore the legitimacy of his seizure of goods must be questioned by imported of goods who are affected by such seizure.
Since s. 122 of the Act empowers the first defendant to open packages and examine goods that are within the control of the Customs, it would be a prudent commercial practice for the first defendant to carry out a full physical examination and inspection of the goods imported for home consumption, if for any, reasons, he suspects that the goods have been undervalued or there are surplus and undeclared goods or goods that were imported in contravention of the Customs Act. If after a full examination and inspection of the goods, the first defendant discover any imported goods that are surplus and undeclared in the Customs Entry for Home Consumption or Form 15, those goods ought to be specifically particularized in the Notice of Seizure, then, and only then, can he issue a Notice of Seizure or a s.126 notice. As the Chief Justice said at page 9 “only the goods that are identified as having been allegedly imported or.....in contravention of the import permission and the Act ought to have been seized and detained and not all the containers plus all the other contents that were properly approved to be imported.”
I therefore propose to formulate the law in this situation to be this. Where, following a full examination and inspection by the Collector of Customs, of imported goods in a container or containers, he discovers surplus or undeclared goods or goods imported in contravention of the Custom’s Ac, only those goods, ought in principle to be identified, seized and detained, not the whole container or all the containers plus all the other contents that have been properly documented and valued in the Custom Entry for Home Consumption of Form 15. That means that in principle, those goods that are correctly entered and valued ought to be seized and detained.
For these reasons, I am of the view that the first defendants seizure and detention of the two containers, TRLU 2279680 and TRLU 2742958 was not justified under s.126 of the Act. It therefore follows that the Notice of Seizure or s.126 of the Act. It therefore follows that the Notice of Seizure or s.126 notice was invalid and of no effect on the basis that none of the goods in the containers were found to have been surplus or undeclared goods or goods imported in contravention of the Acct. I find that there was no lawful justification to seize and detain those goods.
As to damages, the defendants have not addressed the Court although they had every opportunity. Their written submission do not contain any submission on damages, therefore I consider that the plaintiff’s submission should be accepted. Whilst the plaintiff does not pursue a claim for loss of profit, I accept its submissions that the goods were unlawfully detained for 174 days (7/7/97 – 18/9/97). I also accept the plaintiff’s submissions that the kina equivalent of Singapore $28,891.97, at the rate of 1.0302 was k29,764.50. The rate of 1.0302 is contained in the customs entry annexed to Jack Koh’s affidavit as “JK2”. That amount together with the duty assessed at K14,355.35 totalled K44,100.05. I accept that the sum of K44,100.05 was the total cost of the goods to the plaintiff at the time of import.
The plaintiff haas been kept out that money for 174 days. As the plaintiff is not claiming loss of profit. I consider that it’s submission that it is entitled to an amount representing the loss for being kept outt of the K44,100.05 over 174 days is valid one. It is only the choice of the appropriate rate. Woods, J in Excel Trading –v- Frank Barara (OS 127 of 1998) Unreported and unnumbered, 28 th June 1999, applied a value of 11%. Salika, J in United Trading Ltd –v- David Sode & Ors (OS 499/96) unreported and unnumbered, May 1998, applied 20%. Jalina, J in Clover Pty Ltd –v- David Sode & the State (OS 415/96), unreported and unnumbered, 30th September, 1998, applied 8%.
I have not been addressed as to the appropriate rate to apply, however it would seem that a rate in between the three that have already been applied would not be unreasonable. I think it is a matter of discretion really, so I am contended to apply a rate of 15%. The plaintiffs loss for being kept out of its money over 174 days would therefore be assessed at 15% which is K3,153.45. I therefore assess that amount in general damages.
I consider that the plaintiff is entitled to exemplary damages in the exercise of my discretion. This view is based on the fact that the unreported decisions I have adverted to are very identical and it seems obvious to me that the first defendant through his officers in various ports in the country have not learnt any lessons from those cases. I also emphasise that the relevant considerations established as guidelines in Uval (No.67) case have not meant anything to the first defendant . The nature of exemplary damages being punitive in nature, I consider that the first defendant should be made to pay for his unjustifiable conduct and conduct without any proper legal basis. I would assess the sum of K5,000.00 as exemplary damages. It is obvious the first defendant has not learnt from the award of K2,0000 in exemplary damages in OS 499/96 which involved the same parties.
I am satisfied of the legal fees totalling K8,350.67 from the evidence of Marilou Delfin. The fees are costs occasioned by the unlawful detention of the goods by the first defendant.
In respect of te sum of K17,965.43 which was paid into Court, I consider that the plaintiff is entitled to the loss of access to it ass it was paid into Court as a result of these proceedings occassioned by the unlawful detention. I would allow interest at 8% from the date of the payment to 30th October, 1999, which is 2 years 30 days (700 days). Interest is K2,992.39.
At the Court’s direction, both counsel have made submissions in respect of costs reserved on 14 May 199 when the trial was aborted due to the fact that Mr. Makail was not ready to proceed. The plaintiff had flown it’s witness from Lae to Port Moresby for the trial however, in view of Mr Makail predicaments, the trial had to be aborted. I then directed Mr Makail to explain why he was not ready for the trial on that date, and reserved the question of costs.
The plaintiff was ready to proceed. Mr Jack Koh had been flown from Lae the day before the trial as he was required ass a witness. Mr Makail drew my attention to a letter written by Mr John Kawi, then Acting Solicitor General dated 31st May, 199. I have also perused the affidavit of Frankie Komang who was the counsel at the callover on the 5th March 1999 when the trial date was fixed for th 14th and the 17th May 1999. Upon perusal of that letter and affidavit I find that Mr kawi was negligent in his duties as counsel having carriage of this case. On page 2 of his letter, he said “I had the carriage and the conduct of this matter. I simply did not take note of the trial dates of this matter”. He was aware of the trial dates because he had been advised by Mr Komang.
The defendants have submitted that neither Mr Kawi, nor Mr Komang, nor the first defendant should bear the costs of that adjournment, the State should. I see no justification for the tax payers though the State to bear the costs of a lawyer’s negligence. I find that Mr Kawi was negligent, and it follows in my judgment that his conduct must be punished by the awarding of costs against him personally. The State was not negligent therefore it cannot be ordered to pay those costs. The plaintiff had had to bear the expenses of airfares, accommodation and other related costs. It claims the costs incurred on 14th May 1999, on a solicitor /client basis. I therefore order that Mr Kawi pays the plaintiff’s costs on the 14th May 1999 on a solicitor/client basis and such costs shall include the plaintiff’s witness’s airfares and accommodation only.
I order judgment for the plaintiff against the first defendant in the sum of K5,000.00 . I order judgment for the plaintiff against the second defendant in the sum of K29,307.89.
Other orders of this Court are: the sum of K17,965.43 paid into Court on 30th September 1992, be refunded to the plaintiff; costs incurred by the plaintiff on 14th May, 1999 are to be paid by Mr John Kawi on solicitor /client basis, costs of airfares and hotel accommodation incurred by the plaintiff on 14th May, 1999 and the plaintiff costs of these proceedings to be borne by the second defendant . Except for the costs of airfares and accommodation, all party/party costs and solicitor/client costs are to be taxed if not agreed upon. Post-judgment interest will run at 4% until final settlement.
Orders accordingly.
Lawyer for Plaintiff: Henaos
Lawyers for Defendants: Acting Solicitor General
PacLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.paclii.org/pg/cases/PGNC/1999/94.html