Import
duties take priority over secured creditors having a mortgage over imported goods
even when goods are released by Customs prior to payment, the High Court
decided in a ruling which affects banks’ margin of security when financing
imports.
Bank of New Zealand took issue with
Customs Department claims it had first priority over the sale of a $438,000
aerial mapping camera imported in February 2014. BNZ financed the importation by client NZ
Aerial Mapping Ltd and held a mortgage over the camera. Customs claimed $65,892 was due for GST payable
at the border plus interest for late payment.
Customs can impound goods, holding a
possessory lien over taxable imports until assessed duty is paid. It also operates a deferred payment
scheme. Goods can be released, with duty
to be paid in the month following.
The High Court was told Customs released
Aerial Mapping’s imported camera before payment, later receiving two
part-payments totalling $10,000 but was left with the balance unpaid after
Aerial Mapping was put into receivership by BNZ on a $4.1 million debt. Cashflow problems followed non-payment by a
Saudi client.
BNZ argued Customs lost its priority
under the Customs and Excise Act when the goods were released. It was an unsecured creditor.
Justice Brown ruled exemptions in the the
Personal Property Securities Act protect Customs priority for payment over
secured creditors claims Neither Aerial
Mapping nor BNZ agreed to Customs priority; it is imposed by statute. If the Customs and Excise Act is to be
interpreted any other way, Justice Brown said, Customs would simply impound all
taxable goods at the border prior to payment and not give importers the benefit
of extended credit otherwise available under its deferred payment scheme.
Fisk
v. Attorney-General – High Court (21.03.16)
16.046