Australia: Who can be held liable for customs duty on goods stolen from a warehouse?

In brief - High Court clarifies range of people who can be considered to possess power or authority in relation to goods

Warehouse keepers have been reminded in a recent decision of the High Court of Australia of the extent of their responsibility for goods which they hold before they are entered for home consumption.

In the case of Comptroller General Customs v Zappia [2018] HCA 54, the High Court allowed an appeal from the decision of the Full Federal Court which had overturned the original decision of the Administrative Appeals Tribunal.

In essence, the decision turned upon whether an employee of the holder of a warehouse licence was within the description "a person who has, or has been entrusted with, the possession, custody or control of dutiable goods which are subject to customs control" in section 35A(1) of the Customs Act 1901.

Section 35A(1) provides as follows:

Where a person who has, or has been entrusted with, the possession, custody or control of dutiable goods which are subject to customs control:
  1. fails to keep those goods safely; or
  2. when so requested by a Collector, does not account for those goods to the satisfaction of a Collector in accordance with section 37;
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.

Collector serves notice of demand following theft of tobacco products from warehouse operated by Zaps

Zaps Transport (Aust) Pty Ltd (Zaps) operated a warehouse pursuant to which a warehouse licence had been issued. The sole director of Zaps was John Zappia. Domenic, his son, the other party to the proceedings apart from the Comptroller General of Customs, was employed by Zaps as its "General Manager" and its "Warehouse Manager". Zaps had notified the Australian Taxation Office that each of Domenic and his father was a person who participated in the management or control of the warehouse.

The goods, which were subject to the claim for duty, were tobacco products which had been stolen from the warehouse in a break in. The Collector had served a notice of demand under section 35A(1) on each of Zaps, Domenic and his father. Zaps was in liquidation and the father was bankrupt. The appeal from the Tribunal's decision to the Federal Court was only made by Domenic.

Who has "control" under section 35A(1) of Customs Act examined by Court

On behalf of Domenic it was sought to be argued that in determining whether somebody has "control" within the meaning of section 35A(1) it should be construed in context to denote a person who has "paramount control" as distinct from "subordinate control" of dutiable goods. The High Court rejected that narrow construction.

The most significant paragraph in the judgment of the High Court is as follows:

The reference to "the possession, custody or control" of dutiable goods is appropriately construed as a compendious reference to that degree of power or authority which is sufficient to enable a person to meet the obligations both to keep those goods safely and, on request by a Collector, either to show the goods to a Collector or to satisfy a Collector that the goods have been dealt with in accordance with the Act. A person who "has" the possession, custody or control of dutiable goods within the meaning of the section is a person who possesses power or authority in relation to those goods to that degree, irrespective of the manner in which that person might choose to exercise that power or authority.

High Court refers to Southern Shipping Co case

The Court referred to the often quoted decision in the case of Collector of Customs (NSW) v Southern Shipping Co Limited (1962] HCA 20, a 1962 decision of the High Court on the equivalent provision in the Excise Act 1901. In the 1960s and 70s there were numerous situations in which shipping companies were presented with demands by the Collector of Customs under such provisions, Southern Shipping Lines being one of them. In that case, a manufacturer had delivered to a shipping company excisable tobacco products which had not been entered for home consumption and which therefore remained "subject to the control of the Customs". Agents of the shipping company had locked the tobacco in a store on a wharf which was owned by the Maritime Services Board of New South Wales and the key was then handed to the Customs Office. The excisable goods were stolen from it. Payment was demanded from the shipping line or its agents. The High Court held that the shipping company was "a person who had the possession, custody or control" of the excisable goods and "a person who had been entrusted with the possession, custody or control" of those goods.

Another issue for that Court was whether the shipping company had "failed" to keep those goods safely. The High Court had answered in the affirmative. McTiernan J had said in that case "the task of keeping goods safely cannot be said to have been fulfilled if the goods were stolen even though reasonable precautions were taken". However, his Honour did reject an argument made by the Collector of Customs to the effect that "fails" meant no more than "does not" and thereby imposed absolute liability. He held that "the word "fails" in my opinion is not strong enough to impose upon the person concerned so onerous a duty as that of avoiding the unavoidable."

Those with responsibility for dutiable goods within their control should take heed of Comptroller General Customs v Zappia case

Whether or not the warehouse keeper in Zaps had any rights of recovery for any amount which it paid the Controller General of Customs as a result of this decision is not dealt with in the case.

This recent decision by the High Court is a reminder to those who have a responsibility for goods pursuant to licences obtained from the Customs Authorities that their duty is virtually absolute if the goods are lost whilst they are within their control.

Stuart Hetherington
Transport and logistics
Colin Biggers & Paisley

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions