CUSTOMS BROKER LIABILITY FOR FALSE STATEMENTS
Customs brokers are in a very difficult position – they are liable for any false statements in import declarations but will rarely handle goods and be able to verify the accuracy of the information that they are providing. The risk is made greater by the fact that liability does not require a deliberate intent to mislead.
The law against false statements
The Customs Act is relatively simple – if you make a false statement you breach the Act. When a customs broker lodges an import declaration it is making a statement. The relevant sections of the Customs Act do not require that the giving of false information was deliberate, negligent or even reckless – the offence is committed by the mere giving of incorrect information. Infringement notices can be, and regularly are, issued for the offence.
Reasonable mistake of fact
Strict liability can lead to unfair results, so there are defences provided. A key defence is reasonable mistake of fact. Generally, for an individual, a defence of mistake of fact exists if at the time of, or before, making the false statement, the person considered the relevant facts and was under a mistaken, but reasonable belief, as to those facts. Crucially, you must actually consider the relevant facts – ignorance of, or a mere assumption about, the relevant facts is not sufficient.
For example, consider a false declaration that goods were free of asbestos - if you simply assumed that the goods did not contain asbestos without asking the question of the importer, it would be hard to maintain the mistake of fact defence. If there are positive facts on which you have relied (such as statements from the supplier/importer), the next question is whether that mistaken belief was reasonable. In the asbestos example, if you have a long relationship with your importer, have informed them of Australia's asbestos requirements and the products are low risk, your belief in an importer/manufacturer declaration that the goods do not contain asbestos will be more likely to be reasonable.
On the other hand, if you are relying on information from a freight forwarder and you do not know if the exporter has been informed of Australia’s restrictions on asbestos, reliance on that information may not be reasonable.
Reasonable mistake of fact – corporations
The rules for corporations are more onerous. Firstly, it must be shown that the relevant employee who made the statement was under a mistaken but reasonable belief about the relevant facts. Secondly, the company must prove that it exercised due diligence to prevent the making of the false statement. Managers of corporate customs brokers need to ask themselves:
What systems are in place to ensure staff are aware of the relevant Australia legislation?
What steps are staff taking to form a reasonable belief about the relevant issue?
How is the corporation supervising that the relevant systems are being carried out?
The term 'due diligence' is incapable of a fixed meaning. 'Due diligence' requires more than good intentions, you must also take all reasonable steps to prevent the false statement being made.
Do I have to ask the question about every single import?
No client likes being asked the same question repetitively, especially if the answer is always the same. As a general rule, the legislation does not require repetitious examination of the same facts. If you have considered the facts on one occasion, and the circumstances of each subsequent import are the same, the legislation does not require reconsideration of the facts. However, at a minimum, the subsequent consignment would need to be the same goods with the same importer, manufacturer and exporter.
Be able to prove your actions
It is not enough to exercise due diligence, you need to be able to prove you did so. If you asked a question and received a response, have a written record of this. If information is given over the phone, ask the client to put the information in an email to you. Start from the premise that the ABF will not believe you asked a question unless you can prove it.
Have you received an infringement notice?
The Australian Border Force (ABF) should only issue an infringement notice if it believes that an offence was committed. Assuming the infringement notice relates to the giving of false information, it should be withdrawn if:
the false information was given due to a reasonable mistake of fact
if the fine is against a corporation, the corporation had exercised due diligence.
If you feel like you did nothing wrong and could not reasonably have identified the false information, chances are you have a good defence to any infringement notices.