Customs broker legal obligations - FTA obligat… · Customs Act and broker licencing requirements...
Transcript of Customs broker legal obligations - FTA obligat… · Customs Act and broker licencing requirements...
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Customs broker legal obligations
April 2015
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Topics
1. Obligations and laws of agency and
contract
2. Negligence
3. Customs Act and broker licencing
requirements
4. Australian Consumer Law
5. Risk mitigation
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To whom do you owe obligations
Client
• who is the client
• multi-nationals
• freight forwarder
Australian Customs
Some third parties who will rely on your advice
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Obligations and laws of agency and contract
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Agency
• When will an agency relationship arise?
• Where a principal authorises a person to act on behalf of the principal
and create legal relations between the principal and a third party or to
make representations on behalf of a principal
• Extent of authority
– Actual authority
» Express authority - orally or in writing (T&Cs)
» Implied authority - arising from expressly authorised conduct that is
necessary or which ordinarily follows when exercising that express
authority
– Apparent or ostensible authority
» Authority as it appears to others
– To avoid doubt – set scope of your authority in your T&Cs
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Contract – Implied terms
• Terms of a contract between an agent and principal
– Implied terms
» Duty of agent to follow principal's instructions/act within authority
» Duty to exercise care, skill and diligence
» Duty to avoid conflict of interest and duty not to profit from position
» Duty to keep accounts and records
» Right of reimbursement and indemnity
» Confidentiality
» Any terms that give effect to the intention of the parties and those that
arising from custom or trade usage that are not expressly included
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Contract – express terms
– Express terms ordinarily included
» Scope of authority
» Client’s acceptance of the T&Cs
» Liability and indemnities
» Client’s warranties
– Unfair terms
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Liability
Consequences for breach of contract as an agent:
• Damages
Factors relevant to liability
• Contractual limitations and indemnities in your T&Cs
• Causation
• Remoteness
• Mitigation
• Misrepresentation
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Hypothetical
You specialise in imports of chemicals.
• A new client engages your services and asks what concessions your
other clients (their competitors) use.
– How do you respond?
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Negligence
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Negligence
Brokers owe a duty of care to a
client when providing specialist
advice and services to avoid
causing the client to suffer loss
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Negligence
How may a broker be negligent?
• brokers owe a duty of care to a client when providing specialist advice
and services to avoid causing the client to suffer loss;
• the broker breaches that duty of care;
• the client suffers loss; and
• that loss was reasonably foreseeable by the broker
When is it breached?
• there is a special relationship of proximity (e.g. via a contract);
• the broker provides specialist advice or has special means to acquire
knowledge; and
• it was reasonable for the other person to rely or act on the information
given
To whom is it owed – the client and third parties
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Liability
Consequences of acting negligently
• Claim in damages
Factors relevant to liability
• Contractual limitations and indemnities
• Acting in a manner widely accepted by brokers in Australia
• Lack of proximity
• Client or third party’s reliance on your advice was unreasonable
• Contributory negligence
• Voluntary assumption of risk
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Hypothetical
You discover that you have been mistakenly claiming a TCO for a
client’s goods.
• Your client is required to pay back the outstanding duty and, as the
goods have been on sold, they are unable to pass on the expense to
their customers.
• Have you breached your duty of care?
– Is there a sufficient causal link between your duty to the client and
the loss? Is it too remote?
– What obligations under the Customs Act have you potentially
breached and what action do you need to take?
– What if the client does not wish to report the underpaid duty to
Customs
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Hypothetical
You are processing an import of goods that are similar but not
identical to goods that are covered by a tariff precedent specifying
eligibility for a TCO.
• Do you
– advise your client to seek a TA?
– classify the goods according to the precedent without obtaining a
TA?
– other action?
• Does your answer depend on how much duty is payable
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Customs Act liabilities
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Customs Act
Broker’s liability overview
• deemed owner
• personally liable in some instances
• liability relates to role as broker/holder of a licence
Strict liability offences
• example of false or misleading statement (243T and 243U)
– not only the importer with full liability - whoever made or caused the
statement to be made
– be aware of ACN 2014/53 regarding identity theft
• failure to account for goods under Customs control (36(2))
• Maintaining documents (240AB)
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Offences requiring intent
Offences that require intent
• Smuggling – 233
– smuggling
– prohibited imports and exports
• Customs offences - 234
– evading duty
– obtaining drawback, refund, rebate or remission which is not payable
– false statements
• Goods under customs control – 36(1)
• Aiding and abetting – 236
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Hypotheticals
An “employee” of a client (with whom you have never dealt) calls
you instructing you to enter an upcoming shipment.
• Do you action their request?
• If no, how do you respond/what questions do you ask/documentation
you would require before you were to action their instructions?
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Broker Licencing requirements
A breach of a licence condition is a strict liability offence (s183CGC)
• Mandatory disclosure
– Must disclose false, misleading or incomplete information provided to
Customs
– Applies to information provided by other brokers
– Applies where the impact is “material”
– Information must be disclosed as soon as practicable
– Disclosure can be by way of amending the entry
– Conflicts with the requirement to maintain confidentiality
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Hypothetical
You obtain a new client who has transferred from another broker.
• You assess their first import and classify the goods to a heading that
attracts a rate of 5% duty.
• You discover that the former broker classified the goods to a heading
that has a duty rate of 0, which in your opinion was incorrect.
– What action do you take?
» To meet your duty to your client?
» To meet your Customs obligations?
– Would your answer change if your classification was different but
also attracted a duty rate of 0%?
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Broker Licencing – other requirements
Must ensure “Consent to Obtain Personal Information” completed on
request
• Must not allow Customs' systems or information to be used for
unauthorised purposes or to assist aid, facilitate or participate in any
unlawful or illegal activity
• Must undertake CPD
– failure to complete points must be notify to Customs with an
explanation of why
– New CPD structure – see ACN 2014/48
• Must ensure that all persons who participate in the work of the broker
are fit and proper persons
• Must report within 30 days of certain events occurring
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Consequences
• Warnings and education (considered in issuing infringement notices)
• Infringement notices
• Increased penalties and offences under the INS 1 February 2014
– See 2014 INS Guide
• Revocation of licence
• Prosecution
• Timeframes
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Defences/how to protect yourself and your client
• Voluntary disclosure of false or misleading information given to Customs
• Mistake of fact:
– Individual – mistake must be reasonable
– Corporation – due diligence requirement
• Are the elements of the offence made out:
– Example – Refunds application outside of 4 year period
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Australian Consumer Law
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Australian Consumer Law - Guarantees
• Apply to all services under $40,000
• Guarantees for the supply of services:
– rendered with due care and skill
– reasonably fit for purpose
– reasonably expected to achieve a known result
– supplied in a reasonable time (where not agreed/fixed)
• Any term that restricts the above guarantee will be void
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Australian consumer law - offences
It is an offence to:
• Make false or misleading representations about your services
• Engage in conduct which under all the circumstances is unconscionable
• Engage in misleading or deceptive conduct or conduct that is likely to
mislead or deceive
Unfair terms will be void
• relates to clients who are using your services predominantly for
personal, domestic or household use
• Soon to expand to small businesses
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Risk mitigation
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Risk mitigation
• Insurance
• Create clear and effective T&Cs to protect yourself and your business
– scope of authority
– limit liability
– indemnities
– allow disclosure of confidential information to Customs
• Rely on written instructions
• Internal due diligence
• Education – yourself and your employees
• External due diligence – use judgement and ask questions
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Questions
30
CONTACT Russell Wiese
T: 03 8602 9231
Lynne Grant
T: 03 8602 9246