As the legal adviser to the CBFCA I have been asked to provide some commentary on the decision and some potential consequences.
At the outset, even though the licence of the customs broker was reinstated by the AAT, all licensed customs brokers need to be careful not to consider this decision as evidence of any weakness in the rights of Customs to take action under Part XI of the Customs Act 1901 ("Act") or any vote of no-confidence in the role of NCBLAC. There were a number of factors at work in the decision which the AAT found mitigated against the cancellation of the licence in the first place and, as a consequence, the AAT ordered the licence to be reinstated and directed that a reprimand be issued against the customs broker.
Background to the case
In making the decision to recommend and cancel the licence of the customs broker, both NCBLAC and Customs pointed to a number of past errors and breaches of relevant regulations by the customs broker. These included movement of goods under customs control without authority (for which the customs broker had previously been issued Infringement Notices which had been paid), several errors in tariff classifications in import declarations, the failure to use funds provided by the client of the customs broker solely for the purposes for which it had been provided and making payments to Customs by the Customs EFT system which were subsequently dishonoured (and for which the customs broker's EFT entitlements were withdrawn). Some time after these events, Customs requested NCBLAC to provide a report which could be the precursor to the taking of action by Customs against the licence of the customs broker. NCBLAC came to the view that the licence should be cancelled in main part due to the issues associated with the movement of goods under Customs control without authority, the mishandling of client funds, the failure to honour payments attempted to be made by EFT and the view of NCBLAC that the cumulative effect of all of the errors and deficiencies in practice suggested that the customs broker would not comply in the future and action was necessary to protect the revenue and in the public interest.
During the period of the investigation by NCBLAC, Customs renewed the licence of the customs broker in July 2012.
Customs acted on the report and recommendation from NCBLAC and moved to cancel the licence of the customs broker. The customs broker then sought a stay in the cancellation of the licence pending an appeal to the AAT. Customs eventually conceded to such a stay and the matter proceeded to an urgent hearing before the AAT.
As mentioned above, the AAT ultimately decided that the grounds cited in the decision by NCBLAC and Customs did not support the cancellation of the licence.
Relevant aspects of the AAT decision
Some relevant aspects of the AAT decision were as follows.
The AAT took the view that many of the events in question occurred some time ago, some had already been penalised by way of Infringement Notice or revocation of the EFT privileges of the customs broker. Further, the AAT noted that following the errors identified by Customs, there was no further evidence of breach or likelihood of breach notwithstanding close attention by Customs to the operations of the customs broker.
There were other mitigating factors relating to the conduct in question by the customs broker including the illness of various employees, the overwork of other employees and difficulties in the conduct of one client which caused many of the problems.
The customs broker had provided a bond to Customs to guarantee future payments by the customs broker.
Implications of the Decision
- Any decision of any Tribunal or Court should be treated with caution given that the overall majority of such decisions will depend upon the particular facts of the case before the Tribunal or Court. However on occasions, clear and binding statements of principle appear in judgments.
There is the probability that Customs may appeal the decision.
As mentioned earlier, the decision should not be seen as a fatal blow to the power of Customs to take action against customs brokers under Part XI of the Act or as in any way adverse to the findings or operations of NCBLAC. The AAT was at pains to endorse the qualifications and expertise of NCBLAC and its members. However, the AAT came to different views as to the consequences of the acts.
The customs broker was issued with a reprimand which is still a significant consequence. Clearly, if the customs broker does not improve its conduct in the future then the issue of the reprimand and circumstances may mitigate in favour of more serious action by Customs.
We now have a very different environment within which licensees (whether they be customs brokers or the operators of licensed premises) operate. Customs has imposed significant additional conditions on such licensees and Government has made it clear that it will be significantly tougher on those in the private supply chain. The long delay between identification of errors and cancellation may not be repeated.
Given the new environment within which licensees operate and their extensive new conditions I think it is fair to expect that Customs will act more quickly in taking action against those that are believed to be in breach of their licences or the conditions associated with those licences.
The decision does raise the interesting issue of the use by Customs of Infringement Notices which are subsequently paid. The relevant provisions of the Act state that if an Infringement Notice penalty is paid, the liability of the person to the offence specified in the notice taken to be discharged, further proceedings cannot be taken against the person for the offence and the person is not regarded as having been convicted of the offence (see section 243ZK of the Act). However, in these proceedings it appears that both NCBLAC and Customs had identified the movement of goods under Customs control without authority (for which Infringement Notices had been issued and paid) as some of the grounds for action against the customs broker. Although this matter was not specifically raised by the decision of the AAT it may not appear to be within the spirit and intent of the Act for such Infringement Notices to then be used as evidence against a licensee in these types of proceedings. This may certainly give licensees cause to think carefully about merely paying Infringement Notices if the relevant alleged offences could not be used against them in future. In those circumstances, we would seek clarification both from Customs and from NCBLAC as to their intended treatment of events which have led to the issue of Infringement Notices which have been paid and whether, in fact, both Customs and NCBLAC believe that such events can, in fact, be the subject of further proceedings under Part XI of the Act.
In the circumstances, we would continue to recommend that licensees (whether customs brokers or those operating licensed premises) should continue to exercise extreme caution in the way in which they conduct their businesses, continue to observe the terms of the Act, observe the terms of the conditions associated with their licences and respond with extreme caution to suggestions from Customs or NCBLAC that they are in breach of their obligations.
All licensees and others receiving Infringement Notices should also be exercising care in responding to those Infringement Notices, especially if they are now to be used against them by Customs for other purposes.
I will be presenting on this topic at State Conventions of the CBFCA, as part of the CBFCA CPD program and during later member forums throughout the year.