INTEGRITY CARS (WHOLESALE) LTD v CHIEF EXECUTIVE OF NEW ZEALAND & ANOR [2001] NZCA 86 (2 April 2001)

IN THE COURT OF APPEAL OF NEW ZEALAND

ca128/00

	between	INTEGRITY CARS (WHOLESALE) LTD
		Appellant

	AND	CHIEF EXECUTIVE OF NEW ZEALAND CUSTOMS SERVICE
		Respondent

Hearing:	20 March 2001
Coram:	Keith J Fisher J Paterson J
Appearances:	R Asher QC and P P Buetow for the Appellant H S Hancock and D P Ryan for the Respondent
Judgment:	2 April 2001

judgment of THE COURT DELIVERED BY KEITH J

TABLE OF CONTENTS PARAGRAPH NO.

The issue and the proceedings [1]

The legislation and related international agreement [7]

The facts [12]

The High Court judgment [15]

The inspection fee [18]

The export fee [19]

The law [19]

Relevant explanations and commentary[22]

Application to the facts [29]

Result [34]

The issue and the proceedings

[1] Did the value for tariff purposes of certain goods imported into New Zealand include the export and inspection charges paid by the New Zealand importer to a Japanese company?The Customs Service said that it did while the importer said it did not.The importer's appeal to the Customs Appeal Authority failed and its further appeal to the High Court largely failed.It now appeals to this Court and the Customs Service cross appeals.

[2] The appellant, Integrity Cars (Wholesale) Ltd (Integrity), imported used cars from Japan.It was helped in that business by a Japanese company, Total Service Yamaguchi Co Ltd (TSY).TSY was an accredited member of the auction houses at which the cars were traded.Only accredited members could participate in the bidding at the auction houses.Accordingly TSY could participate but Integrity could not.

[3] In addition to paying TSY the auction prices and the auction fees for the ten cars in question, Integrity also paid it an "export fee" of ¥73,000 for each and inspection charges of ¥22,000 each for four of them.The latter charges had been paid by TSY for those cars which, at Integrity's direction, had received a Japanese automobile appraisal inspection (JAAI).The export fee was the total charge for the service of TSY representing Integrity in respect of the purchase of the car and the costs of exporting it.The costs of exportation included direct costs such as transporting the vehicle to the port of export, associated costs such as export documentation costs and also TSY's remuneration.There was no evidence of the exact breakdown of the costs.

[4] Integrity's customs agent presented to the New Zealand Customs Service, under s60 of the Customs and Excise Act 1996, import entries giving the price paid at auction plus the auction fee as the total value for import duty purposes.The Customs Service ruled under s61 that the export and inspection fees must also be included in the total value.

[5] As indicated, Integrity challenged that decision, first in the Customs Appeal Authority ((1999) 1 NZCC para 53-036) and then in the High Court before Panckhurst J ((2000) 1 NZCC para 55-016).It failed in both in respect of the export fee, but succeeded in the High Court in respect of the inspection fee. Integrity appeals to this Court against the inclusion of the export fee and the Chief Executive cross appeals against the non inclusion of the inspection fee.

[6] The appeal, a second appeal, is limited to questions of law;Customs and Excise Act s273.In the circumstances, that limit on the Court's jurisdiction has no consequence since counsel were agreed that on the one matter of fact which was in dispute the Judge had erred;his finding was contradicted by the only evidence on the point (para [15] below).Given the way the case has evolved on appeal, we need not repeat much of the factual detail which in any event is available in the published reports of the two decisions.

The legislation and related international agreement

[7] The case turns the second schedule to the Customs and Excise Act which sets out the rules for the valuation of goods for the purposes of the tariff.That schedule is designed to give effect in New Zealand law to the Agreement on implementation of article VII [the valuation article] of the General Agreement on Tariffs and Trade 1994 (1868 UNTS 279).That implementation agreement is essentially the same as that adopted in 1979 at the end of the Tokyo round of GATT negotiations.Both agreements are designed through their extensive detail and the procedures they lay down to reduce the opportunity for arbitrary valuations which could previously occur under the rather general language of article VII of the original GATT Agreement.The promise of easier access arising from lower tariffs could be denied if the duty payable was inflated by over valuing. The 1994 Agreement also has the added significance, compared with its 1979 predecessor, that all members of the World Trade Organisation must accept it; eg WTO Secretariat Guide to the Uruguay Round Agreements (1999) 110-115.As the New Zealand Customs Service has said, this means that, for the first time in international customs history, a uniform system of customs valuation will be applied by virtually all trading nations of the world;Electronic Documentation System - Customs Policy - Valuation (as updated 18 September 1997) 8.

[8] WTO members state their desire, in the preamble to the Agreement, to elaborate rules for the application of the provisions of Article VII of GATT 1994 in order to provide greater uniformity and certainly in their implementation.They also recognise a need for a fair, uniform and neutral system precluding arbitrary or fictitious values, that value should be based on simple and equitable criteria consistent with commercial practices, and that valuation procedures should be of general application without distinction between sources of supply.As this Court said last year, when considering the same national and international provisions, we should, so far as the legislative language allows, interpret the legislation consistently with New Zealand's international obligations;Elitunnel Merchanting Ltd v Regional Collector of Customs (2000) 1 NZCC 61, 151 at 61, 156, para 15. As the Court also said, the close conformity in this case of the terms of the legislation and the treaty means that that presumption of interpretation can be applied without difficulty.

[9] The definition of the Customs valuation of imported goods in both the schedule (cl 2(1)) and the agreement (article 1(i)) is the "transaction value, that is the price paid or payable for the goods being sold for export".(The agreement reads "... the price actually paid ..." but that appears to be ofno consequence).The schedule (cl 1(1)) and the interpretative note to article 1 of the agreement define price actually paid or payable as meaning "the aggregate of all amounts paid or payable by the buyer to or for the benefit of the seller in respect of the goods".(The interpretative notes are an integral part of the agreement - as of its 1979 predecessor - and were accepted as such by the States parties when they became bound by the Agreement itself;see article 14.)If TSY is "the seller" then the payments in dispute, particularly the export fee, appear to have been made to it or for its benefit (indeed and for its benefit), with the consequence that they are part of the price for customs valuation purposes.

[10] Both the schedule and the agreement provide for the addition to the price of certain payments.The schedule provides as well for the deduction of others (transport to the place of importation, associated charges and insurance), while the agreement gives State parties a choice whether to include or exclude those payments. Among those elements to be added, according to the schedule, are

Commissions and brokerage in respect of the goods incurred by the buyer, other than fees paid or payable by the buyer to the buyer's agent for the service of representing the buyer overseas in respect of the purchase of the goods. (cl 3(1)(a)(i))

The Agreement provides for the addition to the price of

commissions and brokerage, except buying commissions. (article 8(1)(a)(i))

The interpretative notes define the term "buying commission" as meaning

fees paid by an importer to the importer's agent for the service of representing the importer abroad in the purchase of the goods being valued.

[11] The question under those provisions is whether or not the fees paid by Integrity have been paid to TSY as Integrity's "buyer's agent" or as "buying commissions".The Customs Service, in its notice of decision, ruled in accordance with 3(1)(a)(i) that TSY had "purchased the vehicles from various auction houses and then on-sold them to Integrity ... .As such we do not consider [TSY] to be merely a buying agent and accordingly [the two sets of] charges must be included in the transaction value."

The facts

[12] Other important undisputed findings of fact, additional to those summarised in paras [2] and [3], were set out in these terms by the High Court:

[c] Employees of Integrity regularly travelled to Japan to acquire stock.They would liaise with TSY and visit the auction houses where vehicles were available for inspection.Bidding at auction was automated and actual bids were registered by TSY staff under the direct instruction of an Integrity employee or by such employee.In either case the decision concerning which vehicles were purchased lay with the Integrity staff member.

[d] Upon a purchase being effected TSY was invoiced by the auction house for the purchase price plus a set auction fee, together with consumer or turnover tax of 5% levied on both the price and the fee.TSY paid such invoice, but Integrity remitted the amount of the purchase price and the auction fee by telegraphic transfer to TSY.The parties' terms of payment required that this sum be paid immediately.The turnover tax paid by TSY to the auction house was not reimbursed by Integrity.TSY obtained a refund of it upon proof that the vehicles had been exported.

[e] In the event of a purchase at auction in error, Integrity could elect to resell the vehicle.TSY attended to the resale and invoiced Integrity for any loss incurred.Likewise, if a vehicle should be condemned in New Zealand as an illegal import (typically because of an incorrect odometer reading), the risk lay with Integrity.However, TSY endeavoured to effect recovery in Japan on Integrity's behalf, if malpractice could be established against the party responsible.

[13] The Judge followed his summary with this statement:

As is apparent from this summary Integrity exercised a considerable measure of control over the relevant actions of TSY.It was therefore a short step to the submissions that : TSY was Integrity's buying agent, there was only one contract of sale which was between the auction houses and Integrity, and TSY's intimate involvement in the purchase process was in the capacity of an agent.

[14] Critical to the High Court's decision was this uncontested evidence by the General Manager of Integrity:

In Japan it is not possible for a foreign entity to directly buy used motor vehicles at auction or from dealers.Under their system both buyers and sellers of vehicles at auction must be members of the auction establishment to be able to gain entry and recognition.Business between dealers is restricted to persons who are either licensed dealers or vehicle exporters.

The High Court judgment

[15] Whether the inspection fees were to be included in the price turned in the end in the High Court on whether they came within the definition of "price paid or payable" to the seller in respect of the goods (cl 1(1), para [9] above). They did not come within cl 3(1)(a)(vii), as had at one stage been contended by Customs, since they were not for the costs of transportation, insurance, loading, unloading and handling until the goods had left the country of export. The Judge ruled in terms of cl 1(1) that the fees were not part of the price paid."An inspection fee, incurred prior to purchase and to assist in the decision to purchase, is not in my view an aspect of the price paid."This statement incorporates the error of fact in the judgment mentioned earlier (para [6]) : counsel agreed that the evidence was unequivocal that the inspections occurred after the sales.We return to that (para [18]). This aspect of the appeal consequently succeeded and it is against that ruling that the Customs Service cross appeals.

[16] The Judge's discussion of the principal issue, whether the export fee was to be included or not, turned on whether TSY was or was not the agent for the sellers:

Unless TSY was Integrity's agent, this charge must be included as part of the price paid pursuant to clause 3(1)(a)(i) and (vii).That is the rolled up charge must be seen as a combination of commission and expenses associated with transportation and handling the goods in Japan.But of course this analysis does not apply if the auction houses were the sellers of the goods.

[17] The remaining part of the judgment addressed Integrity's argument that it was an undisclosed principal in terms of the common law of agency.The Customs Service denied that there was any scope for an undisclosed principal because the auction houses would deal only with accredited Japanese entities.Having referred to authority, the Judge asked whether the ordinary assumption of willingness to contract with an undisclosed principal had been displaced.Had the auction houses made it clear that they were unwilling to contract with undisclosed principals or at least were there circumstances that should have led TSY to realise as much?(Perhaps the reference in that question should have been to Integrity.)Having quoted the Integrity evidence about the auction houses' rules, set out earlier (para [14]), he immediately concluded:

Given that evidence, the finding that TSY was not a buying agent of Integrity was in my view inevitable.The circumstances pertaining in Japan did not enable TSY to enter into contracts of purchase as an agent for Integrity as undisclosed principal.Both TSY and Integrity well knew that.TSY had no option but to enter such contracts in its own right, albeit that as between itself and Integrity the relationship was one which exemplified that of agent and principal.

The inspection fee

[18] As indicated (para [15]), the inspections were carried out after the cars had been bought at auction.It was impractical to carry them out any earlier. They occurred only if Integrity required them.They could be of assistance to Integrity in achieving New Zealand registration of the inspected cars.While the payments were made to TSY the payments were not made to it as the seller (even if it were the seller in the principal transaction).They were rather made to it after the sales were completed in respect of a service which it had arranged for the benefit of the buyer under the buyer's direction.We agree with Panckhurst J that those payments were not part of the price of the sale transaction.It follows that the cross appeal fails.

The export fee

* The law

[19] Whether the export fee is part of the "price paid" by Integrity depends on the meaning of the relevant provisions of the schedule in the light of its purpose.For a number of reasons we do not consider that the New Zealand common law of agency should have the decisive role it had in the High Court judgment.The relevant transactions occurred in Japan (there was no evidence of Japanese law) and because of their international character may have been subject to the United Nations Convention on Contracts for the International Sale of Goods to which both Japan and New Zealand are party (no argument was addressed to it).Much more significant are the facts that the Court is faced with interpreting legislation - and not, directly at least, with applying the common law - and that that legislation is designed to give effect to an international agreement.The Agreement is to be given a uniform interpretation and application, so far as that can be achieved, both because of its character as a world wide agreement and because of its particular subject matter, as emphasised by its preamble (para [8] above).To adapt words used about International Chamber of Commerce arbitration rules (a text which does not have treaty force), it would be singularly inappropriate to import into the construction of the 1994 Agreement technical rules of the common law.Rather, given its international currency, the language of the Agreement - and the schedule - should be construed on broad principles of general acceptation; Richardson J in CBI NZ Ltd v Badger Chiyoda [1989] 2 NZLR 669, 682, quoting Lord Macmillan in Stag Line Ltd v Foscolo Mango & Co Ltd [1932] AC 328, 350;see also Lord Wilberforce in James Buchanan and Co Ltd v Babco Forwarding and Shipping (UK) Ltd [1978] AC 141, 152-153.

[20] That broad approach and the emphasis on uniformity also support reference to the developing international understanding of the meaning of the 1994 Agreement.That understanding may appear in the decisions of the courts of other parties to the Agreement (eg Fothergill v Monarch Airlines Ltd [1980] UKHL 6; [1981] AC 251 and Dellabarca v Christie [1999] 2 NZLR 548, 551, and the cases referred to there) and in the practice of the State parties (see article 31(3)(b) of the Vienna Convention on the Law of Treaties).

[21] There is a particular form of relevant state practice under the Agreement which has an added significance because the Agreement expressly provides for it.A Technical Committee on Customs Valuation is established under the Agreement (under the auspices of the Customs Co-operation Council - generally known as the World Customs Organisation) with a view to ensuring, at the technical level, uniformity in interpretation and application of the Agreement (see article 18 and Annex II).The Committee's publications, providing information and advice, appear as advisory opinions, commentaries, explanatory notes, case studies (in particular matters) and studies.While, by contrast to the interpretative notes, the publications do not have direct binding force, they plainly may have considerable authority.As the Committee has said, it is expected from the language of the Agreement that its decisions are to play an important and vital role in achieving uniformity in the interpretation and application of the Agreement;see the passages quoted in Sigma Agencies Ltd v Collector of Customs (Northern Region) [1997] 1 NZLR 467, 474-475.

* Relevant explanations and commentary

[22] The Technical Committee has adopted an explanatory note and later a Commentary on commissions and brokerage in the context of article 8 [cl 3(1)(a)(i)].The New Zealand Customs Service distributed those documetns as authoritative commentary.After referring to article 8(1)(a)(i) and the interpretative note, the Committee in the explanatory note continues:

2. Commissions and brokerage are payments made to intermediaries for their participation in the conclusion of a contract of sale.

3. Although the legal position may differ between countries with regard to the designation and precise definition of the functions of these intermediaries, the following common characteristics can be identified.

Buying and selling agents

4. The agent (also referred to as an `intermediary') is a person who buys or sells goods, possibly in his own name, but always for the account of a principal.He participates in the conclusion of a contract of sale, representing either the seller or the buyer.

...

6. A distinction can be made between selling agents and buying agents.

...

9. A buying agent is a person who acts for the account of a buyer, rendering him services in connection with finding suppliers, informing the seller of the desires of the importer, collecting samples, inspecting goods and, in some cases, arranging the insurance, transport, storage and delivery of the goods.

...

Conclusion

15. To sum up, when determining the transaction value of imported goods it will be necessary to include in that value commissions and brokerage incurred by the buyer, except buying commissions.Accordingly, the question of whether or not payments made to intermediaries by the buyer and not included in the price actually paid or payable should be added to that price will depend, in the final analysis, on the role played by the intermediary and not on the term (`agent' or `broker') by which he is known.It is also clear from the provisions of Article 8 that commissions or brokerage payable by the seller but which are not charged to the buyer could not be added to the price actually paid or payable.

16. It may also be worth pointing out that the existence and the nature of services rendered by intermediaries in connection with a sale are often not apparent from the commercial documents presented with the Customs declaration. In view of the importance of the interests at stake, national administrations will need to take whatever reasonable measures they consider necessary to ascertain the existence and precise nature of the services in question.

[23] The 1991 Commentary elaborates on the explanatory note.Taking up the point made in para 16 of the earlier document the Committee emphasises the problems that can arise from the lack of documentation, concluding on that matter:

8. In cases where sufficient evidence establishing an agency relationship is not produced, Customs may conclude that no buying agency relationship exists.

[24] The Commentary continues:

9. Sometimes, the contracts or documents do not clearly represent or reflect the nature of the activities of the so-called agent. In such circumstances, it is essential that the actual facts of the case be determined and various factors, as explained below, be examined.

10. One of the questions which could be the subject of an enquiry is whether the so-called buying agent assumes any risk or performs additional services other than those which are indicated in paragraph 9 of the Explanatory Note 2.1 and would normally be carried out by a buying agent.The extent of these additional services could affect the treatment of the buying commission.An example could be where the agent uses his own funds for the payment of the imported goods.This opens the possibility of the so-called buying agent sustaining a loss or gaining a profit arising from ownership of the good rather than receiving an agreed fee from acting as a buying agent.In this situation, the totality of the circumstances which apparently established a buying agency arrangement may be examined.

11. The result of this enquiry could indicate that the agent is acting on his own account and/or that he has proprietary interest in the goods.In this respect, attention is drawn to export houses or so-called independent agents who carry out similar activities but unlike buying agents, have proprietary interest in the goods and exercise control over the transaction or over the price paid by the importer.In these cases, the so-called intermediary in question cannot be considered as a buying agent.

...

13. In certain transactions, the agent concludes the contract, reinvoices the importer distinguishing the price of the goods and his fee.The mere act of reinvoicing does not make him the seller of the goods. ...

...

16. On the basis of the above considerations it could be concluded that various avenues are available to Customs to verify the nature of the services in question.During this process administrations expect the full cooperation of the importers to establish the truth and accuracy of any statement, document or declaration as provided for in Article 17 of the Agreement.

...

[25] Several significant points can be taken from these explanations of article 8(1)(a)(i):

1. documentation will be important but it is not essential (explanatory note para 16, Commentary paras 8 and 9);

2. the role played by the intermediary, rather than its title, is critical (en para 15; c para 9);

3. although designations and functions may differ between countries there are common characteristics (en para 3);

4. the agent or intermediary may buy (or sell) in its own name, but always for the account of a principal;it participates in the conclusion of the contract of sale representing the buyer (or seller) (en paras 4 and 9);but if, by contrast, it assumes risk or carries out other functions it may become independent and no longer be a buying (or selling) agent (c paras 10 and 11);

5. the fact that the intermediary has itself bought the goods and reinvoiced the importer is not determinative (c para 13);

6. the use of the words "selling" and "buying" (agents or commissions) and "intermediaries" (rather than "buyer," seller" and "agent") suggests that we are not concerned in any direct sense with the common law of agency as it operates in a buyer-seller relationship;

7. the emphasis throughout is on the relationship between the importer and the intermediary, rather than with any other principal;

8. decisions will often require case by case determination;this is not an area of clear rules (c paras 9, 12).

[26] Counsel for both parties also referred us to United States Court decisions and the United States Customs Service publication on Buying and Selling Commissions (1 June 1996).The publication was distributed by the New Zealand Customs Service on 7 April 2000 with the statement that it recognised the publication as being authoritative.While, as noted in Elitunnel, some of the earlier United States material appears to be based on different legislation, given the major United States role in world trade and in GATT, the United States Customs Service document must have real value.That is so even though the document is not expressly related to the 1994 Agreement. Furthermore, it is largely consistent with the statements made by the Technical Committee under the 1994 Agreement.The document begins its discussion of the question "When is the intermediary a buying agent?" with this passage:

The courts have said that no single factor is determinative. Whether a person is a bona fide buying agent depends upon all the relevant facts of each case and the totality of the evidence. The fact that a person is called a buying agent does not mean that he/she is in fact a bona fide buying agent.Also, the fact that a person enters into a buying agency agreement with the buyer does not mean that such a person is a bona fide buying agent. Having authority to act as a bona fide buying agent is not the same as actually performing as one.What needs to be considered is whether the services actually performed by the agent is what the parties agreed to and whether such actions are consistent with a bona fide buying agency.

In order to be considered a bona fide buying agent, the purported agent must be acting on behalf of and primarily for the benefit of the buyer, rather than for the seller or himself/herself.The main factor which determines whether a party is a bona fide buying agent is the right of the buyer to control the agent's conduct with respect to those matters entrusted to the agent.The buyer should control the purchasing process and the buying agent should take directions from the buyer and act upon the buyer's instructions. For example, a buying agent usually does not control who the manufacturer is or what is to be purchased.Normally, the buyer makes such decisions and the buying agent carries them out. Also, a buying agent usually does not control the manner of payment and other significant aspects of the purchase.While a buying agent may exercise some discretion, the ultimate purchasing decisions should be made by the buyer and not by the buyer's agent.The more discretion the purported agent has, the less likely it is that such person is a bona fide buying agent.

[27] Before turning back from the law to the facts of this case, we should consider the purpose of the exclusion of the buying commission from the transaction price.That purpose appears to be agreed.According to a New Zealand Customs Service memorandum which was widely distributed in 1988:

The New Zealand buyer is entitled to have an agent acting for him or her overseas providing the service of representing the New Zealand buyer overseas in respect of the purchase of the goods.

[28] That essentially matches the explanation given in the same year by Saul L Sherman and Heinrich Glashoff in Customs Valuation : Commentary on the GATT Customs Valuation Code (1988 2d ed) 109 and quoted in part by this Court in Elitunnel (para [19]).Those authors distinguish between selling and buying commissions:

Only the fees paid by the buyer to his own representative are excluded.It is obvious that if the buyer himself goes abroad to negotiate the purchase, or if he sends a salaried employee, their travel expenses and salaries are costs of the buyer and are not to be added to the price as an indirect payment for the goods.There is no more reason to include the cost of hiring an outside agent to perform the same function.Hence the exclusion from customs value of buying commissions.The limitation to representation `abroad' should be liberally construed, so as to cover in full the commission of a buying agent who conducts negotiations partly in the exporter's country and partly in the importer's country.(The Note here speaks, as we often do in this book, in terms of the importer rather than the `buyer'. Buying commissions should be excluded whether or not the buyer is, technically speaking, the importer.In this context, the terms `importer' and `buyer' are plainly synonymous.)

* Application to the facts

[29] The assessment of the facts against the law is greatly helped by the factual findings made by Panckhurst J and repeated in part in paras [12]-[14] above.Mr Hancock, for the Customs Service, stressed the absence of documentation, first, concerning the alleged agency relationship between Integrity and TSY and, second, evidencing, for instance by way of an invoice, the sales to Integrity.Also relevant, he submitted, was that Integrity as the appellant before the Authority had the burden of proof under s267 of the Act. As has already been noted, documentation, especially of the agency agreement, is emphasised by the schedule, the Agreement, and the Technical Committee documents.But documentation, although highly desirable, is not essential. And, in the circumstances of the present case, it is accepted that Integrity did make the payments in issue (the auction price, the auction fee, the export fee and, in the four cases where it required inspections, the inspection fee). Also, the essential facts about the relationship between Integrity and TSY are not in dispute.As well, the lack of a written agreement was explained by Japanese business custom : the agreement was established by introduction, discussion and handshake or bow.In those circumstances the burden of proof is not an issue.The primary facts are not in dispute.Rather what is disputed is how those facts are to be assessed against the law, including its elaboration by the Technical Committee.

[30] In the present circumstances, a case by case approach is required.It is not decisive that TSY has concluded the contract and then in effect reinvoiced the importer here.Particularly that is so since Integrity exercised full control over TSY's purchasing decisions, and Integrity agreed to make immediate repayment to TSY of the price and the auction house fee.To return to the purpose of the exclusion of the buying commission from the transaction value, TSY's very closely supervised work fitted exactly with the work of Integrity's own staff in and around the auction house.The cost of the work of Integrity's staff is not part of the price paid.Why should the very closely related export fee paid to TSY be part of it?Further, immediately following the auction the cars become Integrity's responsibility (even if we do not know exactly when property in them passed to it).

[31] The relationship is sharply different from that in issue in Elitunnel.In that case, the New Zealand importer had no control over the Australian business with which it dealt, of the kind that would make the Australian business its buyer's agent.There was nothing approaching the complete control that Integrity's staff exercised in the present circumstances over the bidding by TSY.All that could be pointed to in Elitunnel were features that were equally consistent with a buyer-seller relationship (paras [23]-[24]).

[32] In this case the evidence was also uncontradicted that if problems arose, as they did from time to time, for instance with the New Zealand Customs Service impounding vehicles for allegedly false odometer readings, the issues were not between Integrity and TSY, but between Integrity and the auction house (or original vendor).TSY in those matters acted as Integrity's agent, just as it did in arranging the shipping to New Zealand and any inspections which Integrity required.

[33] For the purpose of the schedule, TSY was Integrity's agent as buyer and the export fees were paid to it for the service of representing Integrity in Japan in respect of the purchase of the cars; equally, in the words of the Agreement, the fees were buying commissions paid for the service of representing Integrity in Japan in the purchase of the cars.It follows that the appeal must succeed.

Result

[34] The appeal is allowed and the cross appeal is dismissed.The appellant is entitled to an order for costs of $5,000 together with reasonable disbursements, including travel and accommodation costs of two counsel to be fixed by the Registrar if the parties are unable to agree.

Solicitors

KPMG Legal, Wellington for the Appellant

Crown Law Office, Wellington for New Zealand Customs Service