H K Systems Australia Pty Ltd v Debus - [2008] FCA 1704

FEDERAL COURT OF AUSTRALIA
H K Systems Australia Pty Ltd v Debus [2008] FCA 1704
ADMINISTRATIVE LAW – judicial review – decision by Minister to detain imported firearms under s 77EA Customs Act 1901 (Cth) – consideration of the public interest – whether decision involved error of law – whether decision unreasonable – whether decision failed to take into account a relevant consideration or took into account an irrelevant consideration
Held: application dismissed
Administrative Decisions (Judicial Review) Act 1977 (Cth) ss 5, 6
Customs Act 1901 (Cth) s 77EA
Firearms Act 1996 (NSW) s 4, Sch 1
Judiciary Act 1903 (Cth) s 39B
Attorney-General of the Commonwealth v Foster (1999) 84 FCR 582; [1999] FCA 81 cited
Fares Rural Meat and Livestock Co Pty Ltd v Australian Meat and Livestock Corporation (1990) 96 ALR 153 cited
Meggitt Overseas Ltd v Grdovic (1998) 43 NSWLR 527 cited
Warramunda Village Inc v Pryde (2002) 116 FCR 58; [2002] FCAFC 58 cited
H K SYSTEMS AUSTRALIA PTY LTD (ACN 094 079 544) v ROBERT JOHN DEBUS (IN HIS CAPACITY AS THE MINISTER FOR HOME AFFAIRS) and COMMONWEALTH OF AUSTRALIA
VID 1184 of 2007
NORTH J
13 NOVEMBER 2008
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 1184 of 2007

BETWEEN:
H K SYSTEMS AUSTRALIA PTY LTD (ACN 094 079 544)
Applicant

AND:
ROBERT JOHN DEBUS (IN HIS CAPACITY AS THE MINISTER FOR HOME AFFAIRS)
First Respondent

COMMONWEALTH OF AUSTRALIA
Second Respondent

JUDGE:

NORTH J

DATE OF ORDER:

13 NOVEMBER 2008

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:
1.The application is dismissed.
2.The question of costs is adjourned until 10.15 am on 8 June 2009.
3.Leave to the parties to apply to vary order 2 by motion returnable at 10.15 am on 8 December 2008, such application to be filed by 1 December 2008.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 1184 of 2007

BETWEEN:
H K SYSTEMS AUSTRALIA PTY LTD (ACN 094 079 544)
Applicant

AND:
ROBERT JOHN DEBUS (IN HIS CAPACITY AS THE MINISTER FOR HOME AFFAIRS)
First Respondent

COMMONWEALTH OF AUSTRALIA
Second Respondent

JUDGE:

NORTH J

DATE:

13 NOVEMBER 2008

PLACE:

MELBOURNE

REASONS FOR JUDGMENT

The applicant, H K Systems Australia Pty Ltd (HK Systems), conducts a business of importing firearms for use by the military, the police and other law enforcement bodies, and for use in the civilian sport and target shooting market. It designed a firearm known as the Heckler & Koch model R8 or SL8-R (both of which are hereinafter referred to as the R8), and arranged for it to be manufactured in Germany.
The first respondent, the Minister for Home Affairs (the Minister) has power under s 77EA of the Customs Act1901 (Cth) (the Act) to order the Australian Customs Service (Customs) to detain goods imported into Australia…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] FCA 1704
Decision Date: 13 November 2008

CaseChat Overview and Summary

H K Systems Australia Pty Ltd brought an application against the Minister for Justice, arguing that his decision to detain their imported firearms under s 77EA of the Customs Act 1901 (Cth) was discriminatory and an improper exercise of power. The primary dispute was whether the Minister had a duty to scrutinise all importations and whether he had discriminated against HK Systems by not ordering the detention of other similar firearms. The case was heard by the Federal Court of Australia.

The legal issues the court was required to decide included whether s 77EA imposed a duty on the Minister to scrutinise all importations, whether the Minister had discriminated against HK Systems by not ordering the detention of other similar firearms, and whether the Minister's decision was contrary to the legislative scheme. The court needed to examine the evidence provided by both parties and determine if the Minister's actions were lawful and reasonable.

The court found that s 77EA did not impose a duty on the Minister to scrutinise all importations, as Customs made submissions to the Minister only when necessary. The evidence showed that no submissions had been made regarding other firearms, which foreclosed any argument of discrimination. The court also determined that HK Systems had failed to establish that the Minister's decision was discriminatory or an improper exercise of power. The Minister's decision was based on the risk posed by the military-style appearance of the firearms, which aligned with the public interest considerations. The court dismissed the application and adjourned the question of costs to allow further proceedings if HK Systems chose to apply for authority to deliver the detained goods.

The court's decision emphasised the importance of transparency in the administration of s 77EA and suggested that the Minister should explain why submissions were not made in relation to other importations. The Minister's decision was found to be lawful, and the application was dismissed. The court adjourned the question of costs to provide an opportunity for further clarification on the administration of the section.

Orders

Orders of the court

1. The application is dismissed.

2. The question of costs is adjourned until 10.15 am on 8 June 2009.

3. Leave to the parties to apply to vary order 2 by motion returnable at 10.15 am on 8 December 2008, such application to be filed by 1 December 2008.

Note:

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

NORTH J

Section 77EA does not impose on the Minister a duty to scrutinise all importations and determine whether to exercise the power given to him by s 77EA. The evidence of Mr Potter explained the way s 77EA is administered by Customs. If Customs officers who process the applications for authorisations to import see a need for the Minister to act, Customs makes a submission to the Minister recommending that he use his power under s 77EA. The evidence that no submission had been made to him in relation to other firearms forecloses any argument that, by failing to order detention of firearms which HK Systems says have a like appearance to the R8, the Minister discriminated against HK Systems in making the order for detention. CONCLUSION Accordingly, HK Systems has failed on all four grounds advanced and the application should be dismissed.COSTS HK Systems faced a difficult problem of proof to establish discrimination by reference to the Minister’s inaction against other importers after the detention order was made. It is not clear why it needed to take on that burden. Under s 77ED(1) HK Systems is entitled to apply to the Minister for authority to deliver the goods detained into home consumption. One ground which could be raised in such an application is that like firearms have not been detained following the decision to order the detention of the R8. If that application were refused the Minister would need to explain his inaction in relation to other subsequent imports. That would provide a proper vehicle to test the discrimination argument because if HK Systems raised the matter before the Minister, the Minister would be bound to explain why he had not ordered the detention of firearms which HK Systems says have the same military style appearance as the R8. Whilst HK Systems has failed to establish that the Minister’s decision was made to discriminate against it, the picture which has emerged leaves a sense of unease in relation to the administration of s 77EA. The Minister has taken no positive action to explain why the administration of the section would not bring before him submissions in relation to subsequent importations if, as HK Systems says, the firearms subsequently imported exhibit the same vice as the R8. As it transpired, it was not necessary for the Minister to lead evidence on this issue because evidence emerged in the cross examination of Mr Potter on the matter. However this approach lacks transparency in the administration of the section. The Court is bound to act on the evidence that no submissions were brought before the Minister and hence the Minister was not shown to have acted unreasonably. However, in the interests of the transparent administration of the section it would have been appropriate for the Minister to explain why the Customs administration appeared to select one importer for special detriment. Having succeeded on the application, ordinarily the respondents would get their costs. However, with the above considerations in mind, it is appropriate to adjourn the question of costs for six months to see if HK Systems applies under s 77ED(1), and if so, whether those proceedings shed further light on the actions of Customs in the administration of s 77EA.

Ratio Decidendi

Legal Principle Established

Established by: NORTH J

Then, under the heading “Reasons for decision”, the Minister set out his reasoning as follows:20.I regarded the risk posed to the community by this type of firearm as significant having regard to its military-style appearance and consequently the increased potential for such firearms to cause fear and apprehension in the community. I also considered it was significant that:- (a)by reason [of] the military appearance and design of firearms of this kind, the AGD has been (and is currently) considering amending the Regulations so as to place them in the higher-risk category as referred to above; and(b)in most jurisdictions in Australia the general firearms community is prohibited from possessing military-style firearms or firearms of a military or machine-gun appearance.CONSIDERATION HK Systems sought to challenge the Minister’s decision on four grounds. Each will be considered in turn.Acting contrary to the legislative scheme HK Systems argued first that the regulations established a scheme whereby firearms were classified by the way in which they function. The conditions upon which firearms may be imported were imposed by reference to that classification. The R8 fell within the category of repeating action centre fire rifles and, as such, could be imported if the importation satisfied the police authorisation test. To satisfy this test the importer had to produce a statement from the State police showing that the importer was authorised to possess the firearm. HK Systems then argued that the regulations reflected the public interest in the control of the importation of firearms. Where s 77EA used the expression “public interest” it incorporated reference to the elements of the import controls contained in the regulations. Thus, when considering the public interest, the Minister was bound, so it was contended, to take the regulatory scheme as defining the public interest and not to act in a way which had the effect of contradicting the controls contained in the regulations. It followed that the Minister was not entitled to order the detention of firearms where the regulations allowed importation on the authority of, not the Minister, but the State police. Further, the Minister was not entitled to order detention of firearms on the basis of their appearance because the criterion for control in the regulations was function rather than appearance. HK Systems argued that, for the above reasons, the Minister’s decision to order detention of the R8 was an improper exercise of power in that he took into account an irrelevant consideration (s 5(2)(a) ADJR Act), failed to take into account a relevant consideration (s 5(2)(b) ADJR Act) and the decision involved an error of law (s 5(1)(f) ADJR Act). HK Systems contended that the terms of s 77EA(2) supported its argument. The section provided:(2)At the time an order is made to detain goods:(a)the goods must be goods the importation of which is restricted by the Customs (Prohibited Imports) Regulations 1956; and(b)the goods must have been imported into Australia; and(c)the importation of the goods must not breach this Act; and(d)the goods must not have been:(i)delivered into home consumption in accordance with an authority to deal with the goods; or(ii)exported from Australia.(Emphasis added.)

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 1184 of 2007

JUDGE:	NORTH J
DATE OF ORDER:	13 NOVEMBER 2008
WHERE MADE:	MELBOURNE

JUDGE:	NORTH J
DATE:	13 NOVEMBER 2008
PLACE:	MELBOURNE