K.R.M. Holdings Pty Ltd v Murphy, P.A

[1985] FCA 493

Re: K.R.M. HOLDINGS PTY. LIMITED
And: PAUL A. MURPHY; R.J. POWER and GAVIN McDONALD
No. G235 of 1985
Administrative Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES REGISTRY
GENERAL DIVISION
Wilcox J.

CATCHWORDS

Administrative Law - Judicial review - Application for statement of reasons - Decisions to seize goods pursuant to s. 203 of Customs Act - Whether decisions excluded from operation of s.13 of Administrative Decisions (Judicial Review) Act - Application to the decisions of Schedule 2 of that Act - Discretion of Court to refuse application.

Administrative Decisions (Judicial Review) Act 1977 ss.13, 13A, 14, Schedule 2.

Customs Act 1901 ss. 203, 205, 208A, 229, 245.

Ricegrowers Co-operative Mills Limited v. Bannerman (1981) 38 A.L.R. 535 applied. Harper v. Costigan (1983) 50 A.L.R. 655 referred to.

HEARING

SYDNEY
#DATE 24:9:1985

ORDER

1. It be declared that in the events which have happened the applicant was entitled to make the requests that it made by two letters dated 18 June 1985 for the supply to it of a statement pursuant to s.13 of the Administrative Decisions (Judicial Review) Act 1977 in respect of the decisions of the respondents, or any one or more of them, to seize Mercedes Benz model 450 SEL motor vehicles, registration numbers TBU-744 R and OYR-29R and, in the events which have happened, the respondents, or such one or more of them who made the said decisions, are obliged to furnish to the applicant such statement within 28 days of this order.

2. The respondents pay to the applicant its costs of these proceedings.

JUDGE1

On 11 June 1985 Customs Officers seized two Mercedes Benz motor vehicles imported into Australia by the applicants, K.R.M. Holdings Pty. Limited. The seizure was effected by the second respondent, Mr. R.J. Power. The third respondent Mr. Gavin McDonald, is the Assistant Collector, Investigation Section, Sydney, in the Australian Customs Service. He recommended the seizure, adopting for the purpose of that decision the criterion that "seizure action should only occur where the prospect arises of obtaining sufficient admissible evidence to be successful in a subsequent action for recovery." The seizure was apparently approved by, or on behalf of, the Collector of Customs for New South Wales, who is the first respondent Mr Paul A. Murphy.

Notices of Seizure were issued by Mr Power in respect of each vehicle. The notices are in substantially identical terms; the only differences being in relation to particulars of each vehicle and in the respective prices said by the applicant to have been paid in England by it upon purchase of the vehicles. The stated reason for the seizure was that: "An authorised person believes on reasonable grounds that the above goods are forfeited under Section 229(1) of the Customs Act, 1901, viz:

(i) The motor vehicle was imported with intent to defraud the revenue; and/or

(ii) Entry for Home Consumption. . . made and lodged in respect of the vehicle was false in a particular in that the value for Duty was stated as $9148.48 whereas the true Value for Duty was greater than the stated amount; and/or

(iii) The invoice . . . delivered to Customs in respect of the vehicle was false in a particular. .".

On 18 June 1985 Mr. E. Meredith, a director of the applicant, wrote to the Collector identical letters - one in relation to each vehicle - seeking, pursuant to s.13 of the Administrative Decisions (Judicial Review) Act 1977, a statement in writing, setting out the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving reasons for the decision. On 26 July 1985 Mr. McDonald replied to each of those letters, giving notice pursuant to s. 13(3)(a) of the Act of his opinion that K.R.M. Holdings was not entitled to make a request for the statements because a decision made under s.203 of the Customs Act is a decision to which s.13(11)(c) of the Administrative Decisions (Judicial Review) Act refers and is included in the classes of decisions referred to in para (f) of Schedule 2 to that Act.

Prior to the receipt of those notices, on 8 July 1985, the applicant had filed two separate Applications - proceedings Nos. 167 and 168 of 1985 - seeking review, under the Administrative Decisions (Judicial Review) Act, of the decisions to seize. Those Applications have not yet been heard. On 22 August 1985 the applicant filed the present Application. This Application seeks declarations that, in the events which have happened, it was entitled to request and to obtain a statement pursuant to s. 13 of the Administrative Decisions (Judicial Review) Act in relation to those decisions. By agreement between the parties this proceeding has been brought on for hearing as a matter of urgency. The issues it raises are questions of law independent of the merits of the principal contest between the parties. It is not presently relevent for me to form any view about the legality of the seizures. I have no material to enable me to form such a view and I have not attempted to do so.

Section 13 of the Administrative Decisions (Judicial Review) Act, insofar as it is presently relevant provides:

"13. (1) Where a person makes a decision to which this section applies, any person who is entitled to make an application to the Court under section 5 in relation to the decision may, by notice in writing given to the person who made the decision, request him to furnish a statement in writing setting out the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision.

(2) Where such a request is made the person who made the decision shall, subject to this section, as soon as practicable, and in any event within 28 days, after receiving the request, prepare the statement and furnish it to the person who made the request.

(3) Where a person to whom a request is made under sub-section (1) is of the opinion that the person who made the request was not entitled to make the request, the first-mentioned person may, within 28 days after receiving the request -
(a) give to the second-mentioned person notice in writing of his opinion; or

(b) apply to the Court under sub-section (4A) for an order declaring that the person who made the request was not entitled to make the request.
(4) Where a person gives a notice under sub-section (3), or applies to the Court under sub-section (4A), with respect to a request, the person is not required to comply with the request unless -

(a) the Court, on an application under sub-section (4A), declares that the person who made the request was entitled to make the request; or

(b) the person who gave the notice under sub-section (3) has applied to the Court under sub-section (4A) for an order declaring that the person who made the request was not entitled to make the request and the Court refuses that application.

and, in either of those cases, the person who gave the notice shall prepare the statement to which the request relates and furnish it to the person who made the request within 28 days after the decision of the Court.

(4A) The Court may, on the application of -

(a) a person to whom a request is made under sub-section (1); or

(b) a person who has received a notice under sub-section (3),
make an order declaring that the person who made the request concerned was, or was not, entitled to make the request.

(5). . .

(6). . .

(7). . .

(8). . .

(9). . .

(10). . .

(11) In this section, "decision to which this section applies", means a decision that is a decision to which this Act applies, but does not include -

(a). . .

(b) a decision that includes, or is accompanied by a statement setting out, findings of facts, a reference to the evidence or other material on which those findings were based and the reasons for the decision; or

(c) a decision included in any of the classes of decision set out in Schedule 2,"

Although the notices issued by Mr. McDonald referred only to para (b) of Schedule 2, counsel for the respondents also relied upon para (e) of that Schedule. That Schedule lists classes of decisions that are not decisions to which s.13 applies.

Paragraphs (e) and (f) read:

(e) decisions relating to the administration of criminal justice, and in particular -

(i) decisions in connection with the investigation or prosecution of persons for any offences against a law of the Commonwealth or of a Territory;

(ii) decisions in connection with the appointment of investigators or inspectors for the purposes of such investigations;

(iii) decisions in connection with the issue of search warrants under a law of the Commonwealth or of a Territory;

(iv) decisions in connection with the issue of Writs of Assistance, or Customs Warrants, under the Customs Act 1901; and

(v) decisions under a law of the Commonwealth or of a Territory requiring the production of documents, the giving of information or the summoning of persons as witnesses;

(f) decisions in connection with the institution or conduct of proceedings in a civil court, including decisions that relate to, or may result in, the bringing of such proceedings for the recovery of pecuniary penalties arising from contraventions of enactments, and, in particular -

(i) decisions in connection with the investigations of persons for such contraventions;

(ii) decisions in connection with the appointment of investigators or inspectors for the purposes of such investigations;

(iii) decisions in connection with the issue of search warrants, Writs of Assistance or Customs Warrants under enactments; and

(iv) decisions under enactments requiring the production of documents, the giving of information or the summoning of persons as witnesses;"

Counsel for the respondents places primary reliance upon para (f) of Schedule 2. He says that the decisions made under s. 203 of the Customs Act to seize the vehicles each formed part of a statutory scheme which envisages the possibility of legal proceedings, of one sort or another; but being civil proceedings. It follows, he says, that the decisions were decisions "in connection with" the institution of proceedings in a civil court. Secondly, and whether or not this is so, he argues that the decisions were "decisions that relate to, or may result in, the bringing of such proceedings".

There is no doubt that the Customs Act contemplates the possibility of civil legal proceedings flowing from a seizure under s.203. That section empowers any "authorized person" - a term defined so as to include a Customs officer - "to seize any forfeited goods or any goods that he believes on reasonable grounds are forfeited goods". Section 229(1) lists classes of goods forfeited to the Crown. By para (a) it includes "all goods which are smuggled". The term "smuggling" is defined by s.4 to include "any importation of goods with intent to defraud the revenue", the first ground of seizure in this case. By para (i) the definition includes goods in respect of which any false entry or invoice has been made or produced; the second and third grounds of seizure. The case for the respondents, therefore, is that, by force of the statute itself, the two vehicles were "forfeited goods", or alternatively that Mr. Power believed on reasonable grounds that the vehicles were forfeited goods; and that, in either case, s.203 authorized the seizure.

Section 205(2) of the Act requires the person responsible for a seizure under s.203 to serve upon the owner of the goods a notice of seizure. Where such a notice is served, the goods are "deemed to be condemned as forfeited to the Crown" unless, within 30 days after service of the notice, the owner, or the person previously in possession; of the goods gives a notice of claim: s. 205(6). In such a case, the Collector may serve on the person who gave that notice a notice in writing requiring him or her to bring an action for recovery of the goods within four months: s.208A(1). Should the claimant fail to do so the goods are "deemed to be condemned as forfeited to the Crown without any further proceedings: s.208A(2). The first possibility, in relation to legal proceedings, is, therefore, that the claimant may bring an action for recovery; whether of his or her own volition or in response to a notice from the Collector.

The second possibility envisaged by the Act is an action by the Comptroller-General of Customs for the condemnation of goods seized as forfeited. Such an action must be brought in the Supreme Court of a State or Territory or in a County or District Court of a State or in a Local Court of South Australia or of the Northern Territory: see s. 245. In each case civil jurisdiction is invoked.

Finally, there exists the possibility of an action - in one of those same courts - for the recovery of pecuniary penalties: see s. 245. Although the result may seem anomalous, the statute makes clear that such an action is to be conducted in the same manner as a civil action in the relevant court: see s. 247.

Having regard to this statutory scheme, it is obviously correct to say that a decision to seize may result in the institution, by either the Collector or the claimant "of proceedings in a civil court". On the other hand, it may not. The owner or person previously in possession may fail - deliberately or inadvertently - to make a claim under s. 205(6) or to institute proceedings for recovery within four months of the receipt of a notice under s.208A(1). In either of those cases the Collector may be content to rely upon the statutory condemnation of the goods without considering it necessary to obtain an order for condemnation by a court; indeed, I would assume that this would be the usual situation. It cannot, therefore, be said that a decision to seize will necessarily result in court proceedings.

Counsel for the respondents argues that it is enough that the decision to seize may result in civil proceedings; that possibility, he says, makes the decision a decision "in connection with" the institution of such proceedings. I do not agree. The submission misreads the relevant phrase. The reference is to decisions connected with, that is related to or concerning, the institution of proceedings. It must be a characteristic of the decision when made that it be connected with proceedings. It is not enough that there may subsequently be proceedings which are connected with, in the sense that they arise out of, the decision.

The second submission of counsel depends upon the proposition that the category of "decisions" referred to in the phrase "decisions that relate to, or may result in, the bringing of such proceedings for the recovery of pecuniary penalties" is not limited to those decisions referred to in the opening words of the paragraph, that is as being decisions connected with the institution or conduct of proceedings in a civil court. It is enough, he says, that the consequences of a decision may be that proceedings are brought for the recovery of pecuniary penalties.

There are two major difficulties about this approach. In the first place, in a strict sense, there is no causal relationship between a decision under s.203 to seize goods and the bringing of proceedings for a penalty. Service may not be followed by an action for the recovery of penalties.

Neither is it a condition precedent to such an action: see s. 245. There will, no doubt, be cases in which the fact that particular evidence has been gained through seizure causes a decision to be made to begin proceedings for a penalty; but even in such cases it is not the decision to seize which results in the bringing of proceedings but rather the seizure itself.

Secondly, there is authority for the proposition that the category of decisions in the relevant phrase is not intended to be divorced from the opening words of the paragraph. In Ricegrowers Co-operative Mills Limited v. Bannerman (1981) 38 A.L.R. 535 at pp. 540 - 541 Bowen CJ and Franki J. said:

"In our opinion the basic limits in para (f) are to be found in the opening words which provide that decisions in connection with the institution of proceedings in a civil court or in connection with the conduct of proceedings in a civil court are outside s.13. We are only concerned with decisions in connection with the institution of proceedings in decisions that relate to the bringing of such proceedings or that may result in the bringing of such proceedings. It is not necessary to consider whether the inclusion in the definition of "decision to which this Act applies" of a decision "proposed to be made" has the effect of broadening the limits we have discussed.

"Paragraph (f) concludes with the words "in particular" indicating that the following four classes of decisions are encompassed by the broad opening words. The first and fourth sub-paragraphs are again of a broad and relevant nature. We read para (f)(iv) as excluding from s.13 decisions in connection with the investigation of persons for contraventions of enactments and decisions under enactments requiring the production of documents and the giving of information."

At p. 546 Northrop J. agreed in substance, commenting that the purpose of the specific reference to proceedings for a pecuniary penalty was to make it clear that, for the purposes of the Schedule, these proceedings were to be regarded as civil proceedings in a court exercising civil jurisdiction. Without such a provision, of course, it would have been strongly arguable that such proceedings - of which the Customs Act itself furnishes examples - were not within the description contained in the opening words of the paragraph.

The decision in Ricegrowers requires the rejection of this second submission but I add the comment that, if it had been the intention of Parliament to refer to a category of decisions regarding pecuniary penalties separate from that referred to in the opening words of the paragraph, it might have been expected - consistently with the lay-out of the Schedule - that this category would have been be the subject of a separate paragraph in the Schedule. A category of decisions limited only by the criterion that they may result in proceedings for the recovery of pecuniary penalties would be a major exception to the operation of s.13.

In relation to para (e) counsel for the respondent refers to sub-para (i), referring to decisions in connection with the investigation or prosecution of persons for offences against a Commonwealth law. He accepts that a decision to seize goods under s.203 would not normally be regarded as a decision "relating to the administration of criminal justice" but he submits that this does not matter; if the decision falls within one of the five sub-paragraphs (i) to (v) it falls within para (e). In Harper v Costigan (1983) 50 A.L.R. 665 Morling J. accepted such an argument, commenting at pp 670-671 that "the paragraph provides its own dictionary". I respectfully agree with that approach but it does not help the respondents in the present case. There may be occasions upon which the siezure of goods under s.203 assists the Customs authorities in relation to the investigation or prosecution of persons for offences against Commonwealth law, no doubt particularly the Customs Act itself. But the characterisation of the decision has to be made in relation to its purpose, not in relation to any particular result in any given case. There are numerous provisions in the Customs Act designed to facilitate investigation and the prosecution of offenders but s.203 is not one of them. Its purpose is much wider. It is intended as an enforcement measure, a provision designed to ensure, in the most direct and effective way, that persons who contravene the Act in relation to imported goods will not profit thereby. This is made clear both by the inclusion of s.229 - which is directly linked with s.203 - in Part XIII containing penal provisions and by the relationship of s.203, to condemnation. It would be inappropriate to provide for the condemnation of seized goods, in the event of inaction by the owner or person previously in possession, if the seizure was intended only for the limited purpose of facilitating investigation and/or presentation.

Finally, counsel submits that the Court should, in the exercise of its discretion, refuse relief in this case. He does not point to any particular feature of the case which warrants such a refusal but puts the general proposition that the disclosure of reasons for a s.203 seizure is inherently undesirable because such a disclosure might prejudice ongoing investigations or the anonymity of informants.

There is no doubt that the Court has a discretion: see the use of the word 'may' in the opening line of s.13(4A) and Harper at p.671. But such a general proposition in untenable. Had it been the view of Parliament that decisions under s.203 were decisions in relation to which, as a matter of principle, there ought to be no obligation to give reasons, it would have been easy to include such decisions in Schedule 2. The submission overlooks the serious consequences of a decision to sieze goods. Although, no doubt, such a provision is an essential feature of any effective Customs legislation, there could be no more fundamental interference with rights of property than to take goods from a person otherwise entitled to them under circumstances that, unless he makes a claim within 30 days, the goods will be condemned to the Crown. It is easily understandable that the view has been taken that such a decision should be made subject to a duty to give reasons and to the right to obtain judicial review under the Act.

In saying this I appreciate that there may exist cases in which the supply of a statement under s.13 of the Administrative Decisions (Judicial Review) Act, at least at the time of the application, would be contrary to the public interest because it would necessitate disclosure of material relating to ongoing investigations or to the identity of an informant. But provision has already been made, in ss.13A and 14 of the Act, to meet various situations where, for legitimate reasons, information should not be supplied. In particular, the Attorney-General is empoweed by s.14 to certify in writing that disclosure of information concerning a specified matter would be contrary to the public interest for any "reason specified in the certificate that could form the basis for a claim in a judicial proceeding that the information should not be disclosed." The matters referred to on behalf of the respondents fall within this category: see Young v. Quin (1984) 56 A.L.R.168; (1985) 59 A.L.R. 229 and Hilton v. Wells (1985) 59 A.L.R. 281 at pp 291-294. Where such a certificate is furnished the specified matter is to be excluded from any s.13 statement which is made: see s.14(2). It might be expected that, in a case such as that suggested by counsel, the Attorney-General would issue an appropriate certificate. If he failed to do so, it would be open to the Court to consider whether, nonetheless, it should so exercise its discretion as to refuse an order s.13(4A). It would, perhaps, be an unusual case in which, the Attorney-General not having acted under s.14, it would be proper to take that course but that is a matter to be considered when it arises. There is, in the present case, no discretionary basis for denying the applicant the relief to which it is entitled.

I propose to make orders under s.13(4A) upon the lines sought by the applicant. The respondents must pay the costs of this application.