Lego Aust Pty Ltd v Persons in Appn t-as Ernst & Young

[1995] HCATrans 385

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S142 of 1994

B e t w e e n -

LEGO AUSTRALIA PTY LIMITED

First Applicant

THE PERSONS LISTED IN THE APPLICATION HERETO t/as ERNST & YOUNG

Second Applicants

and

PHILLIP PARAGGIO

First Respondent

DAVID ROONEY

Second Respondent

COMPTROLLER GENERAL OF CUSTOMS

Third Respondent

WENDY ELDER

Fourth Respondent

WAYNE MARTIN MORRISON, ANTHONY JOHN EMMANUEL, PHILLIP GEORGE MURDOCH, BRENNAN WILTON, JOHN WILLIAM LEARY, ANDREW JAMES VINTNER, WILLIAM JOHN McCORMICK, NICHOLAS ERNEST BURY and BRENDON WITHERS

Fifth Respondents

Office of the Registry

Sydney  No S206 of 1994

B e t w e e n -

BRIAN EDNEY

Applicant

and

SERGEANT DAVID KING, Member Australian Federal Police

First Respondent

DETECTIVE CONSTABLE RUSSELL DEAN McRAE, Member Australian Federal Police

Second Respondent

WENDY ELDER, Justice of the Peace

Third Respondent

Office of the Registry
  Sydney   No S208 of 1994

B e t w e e n -

PETER ERIC DUNESKY

First Applicant

BAY WOOL PTY LIMITED

Second Applicant

and

SERGEANT DAVID KING, Member Australian Federal Police

First Respondent

DETECTIVE CONSTABLE RUSSELLDEAN McRAE, Member AustralianFederal Police

Second Respondent

WENDY ELDER, Justice of the Peace

Third Respondent

Applications for special leave to appeal

MASON CJ
DEANE J
McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON TUESDAY, 18 APRIL 1995, AT 9.35 AM

Copyright in the High Court of Australia

MR R.J. ELLLICOTT, QC:   Your Honours, in the first matter I appear with MR M.E. SAINSBURY for the applicant.  (instructed by Blake Dawson Waldron)

MR M.S. WEINBERG, QC:   If the Court pleases, I appear together with my learned friend, MR G.T. JOHNSON, on behalf of the first, second, third and fifth respondents.  (instructed by the Australian Government Solicitor)

MASON CJ:   The Deputy Registrar has certified that the fourth respondent submits to such orders as the Court may make except as to costs.  Mr Ellicott and Mr Weinberg, would it be convenient to call on Edney v King at the same time, or do you think that this matter should proceed independently of Edney v King?

MR ELLICOTT:   This is a presumption, but I think if I were in the Court’s position, I would call on the other matter at the same time.

MASON CJ:   Do you agree with that, Mr Weinberg?

MR WEINBERG:   There are some questions which are common to both applications, but there are also questions which ‑ ‑ ‑

MASON CJ:   That being so, I think it would be convenient to have the other matter called on at the same time and then we can hear arguments successively in the two cases.

MR D.H. BLOOM, QC:   Your Honours, in the matter of Edney and the matter of Dunesky following it, I appear for the applicants, with MR N.J. WILLIAMS.  (instructed by Eakin McCaffery Cox  and Freehill Hollingdale & Page)

MR M.S. WEINBERG, QC:   If the Court pleases, I appear together with my learned friend, MR G.T. JOHNSON, on behalf of the first and second respondents in each of those matters.  (instructed by the Commonwealth Director of Public Prosecutions)

MASON CJ:   Again, in these matters, in Edney the third respondent does not wish to be represented and will submit to any order of the Court save as to costs.  In Dunesky the third respondent likewise does not wish to be represented and will submit to any order save as to costs.  Yes, Mr Ellicott.

MR ELLICOTT:   Your Honours will see from the fact that there are two applications before your Honours that this is a fairly contentious issue which is bound to come up to the High Court for resolution.  It has already been the subject of a decision in Karina Fisheries which said that there was a duty.  There have been judgments of single justices of the Federal Court that have basically followed Karina Fisheries.  There is the decision in this case which went the other way, that is Lego.  Then there is the other matter that your Honours have called on where, as I understand it, a bench of five was set up in the Federal Court to determine the issue but the court, for reasons which no doubt my friend Mr Bloom will oppose, decided that it was not a matter in which the issue needed to be determined.

Having said that, it is a contentious issue but it is basically raising a matter of considerable significance and one which I would submit is not easily demonstrated not to be a matter of public importance, having regard to the fact that it has significance not only under the federal law but also under the State laws, some of which laws are in a similar form to those of section 10 of the Crimes Act as it stood at the time this matter came before the court.  Your Honours will be familiar with the fact that in 1994 a new Act was passed which repealed section 10 in the Commonwealth Parliament, but we would submit that does not change the significance of the issue, either from the point of view of this case or, alternatively, the issue as a matter of general public importance, because it does still, even if one could distinguish, contrary to our argument, the new federal law, it still applies in State law and in Territory law where the bulk of the criminal justice system is administered.

DEANE J:   Do you not have to divide into two matters?  The first is, as I read the judgments, whether the informant has to disclose everything material.  The second is whether, assuming that is answered against you, there is a difference between the majority and Justice Hill in the court below.  The first question seems to me to pose a very real question about whether it is arguable.  The second, as I read the judgments, regardless of what view is preferred, your client fails.  I am just indicating what through reading the judgments seems to me to be some problems.

MR ELLICOTT:   One would not gather a sense of optimism from any of the judgments.  That is for a reason that their Honours were not minded to see the significance of what had happened.

DEANE J:   I see the force of what you are saying once you get into the facts.

MR ELLICOTT:   That is what the case is about ultimately.  It is about the facts and it is about the failure to disclose material - I will call them facts which were material and which were known to the informant.  That is what this case fundamentally is about.  It has a degree of complexity that can be reduced to simplicity in this way.  Your Honours will be familiar with the Brussels Convention and that applied to valuation for customs duty purposes from 1976 to 1981.  Under that convention transactions between related parties could not be used for the purposes of customs valuation.  They looked to a transaction between purchaser and vendor where they were not related; that is to say, a market‑related transaction.

The whole history of this matter began in that period where Lego went to the Customs for the purpose of determining a proper basis upon which the goods that were then brought into Australia on consignment ought to be valued.  It was determined that whatever went on between the parent and the subsidiary or between the head office and the branch should not be used for the purposes of valuation and that what should be used was a percentage of the value of the wholesale sale.  That was worked out at a figure of something like 41 per cent at the time.  That is how it started.  I cannot take your Honours into the complexity of it because we do not have time, but there is no doubt that at that time Lego went to Customs on the basis of the Brussels Convention.

There is no doubt that until 1981 it was appropriate to use what was called the end realisation method; that is to say, to take the sale, the wholesale sale, and make certain deductions from it.  That is exactly what they did and that is what the percentage represented.  Then Customs actually said to our client, “Put in an invoice on this basis”.  The people in Canberra, as they were wanting to do, raised their eyebrows and said, “What’s going on here?”.  The Customs officer who was looking after it, a Mr Dunner, explained it to them and they finally agreed that that was an appropriate basis.  So that the thing then went on from there from about 1978 onwards and they continued to put in these invoices which, admittedly, were not accurate in the sense that they represented other than the value for Customs duty purposes and they were stamped in that way.

In 1978 Lego Denmark took over from a British firm the sale of Lego products in Australia and they established a subsidiary which is Lego Australia, the applicant in these proceedings.  They simply went on doing the same thing but after discussing it with Customs.  There was a gentleman called Mr Dunner.  Mr Dunner was the representative in Sydney who dealt with valuations.  It is not clear that Mr Dunner knew that from then on there were sales between Lego Denmark and Lego Australia, but the fact is he said, “It was irrelevant to me whether there was a sale or a consignment; it wouldn’t have mattered because in effect I couldn’t use the sale if it was a sale or I couldn’t use the consignment if it was a consignment because under the Brussels Convention it was between related parties”.  So that from 1978 onwards the same thing happened.

This went through until investigations took place in 1987/1988.  I do not have time to tell your Honours about that, but what happened when this matter was investigated was that they called Mr Dunner in.  Mr Paraggio, the informant, was rather reluctantly brought into a conference between Mr Dunner and Customs officers.  Mr Dunner said, “I wasn’t misled in 1978.  I didn’t regard them as significant.  I didn’t regard consignment or sale as significant.  I took the view that the proper basis for Customs duty purposes was the end realisation method and it didn’t matter to me whether it was a sale or consignment”.

That meant of course that when the matter came before the magistrate for the purposes of a search warrant, the question of the guilty or innocent intent of Lego was of great significance.  From the period from 1977 through to 1981, as Mr Justice Wilcox said - and the Full Court agreed - there really was no basis for saying that there had been any criminal act.  But the fact is that from 1977/78 onwards there was a continuum of a practice that had been followed before.  It was never questioned, except in 1981 Lego wrote and said, “There’s a new law now.  They’ve introduced the GATT method.”  A letter was written and there is a question as to whether it meant one thing or another, but the fact is that the procedure was followed on from there.

There is no separate evidence before the magistrate that there was any guilty intent in 1981 when the letter was written.  The fact was that in 1978 there was a practice established and it just continued and Customs did not bother to investigate it or look at it and it was on that basis that it was accepted.  What they did, however, was alter the percentages from time to time, that is, it started off as 41 per cent of the wholesale value in 1978; later it was reduced to 38 and 33.  It was a matter for Customs to decide then whether that was an appropriate basis but it was always accepted.

The point of the case is this, that Mr Paraggio, as a result of that discussion in October 1991, well knew that Mr Dunner was not mislead. And Mr Dunner was Customs for all intents and purposes.  Yes, he was down the scale a bit but, in fact, the matter was taken to Canberra and Canberra agreed with him, ultimately.  So, it was a case where the Customs service itself was committed.  That fact was never brought to the attention of the magistrate and that was known to Mr Paraggio.  There was a smaller issue about whether - Mr Dunner said, “I knew there was a price list” from which you could imply there was a sale.  There is a debate as to whether Mr Paraggio knew that, and I am not relying on that.  That is an issue which is out there and I am not trying to suggest anything about it.  The basic issue, the basic fact is that Paraggio knew that Dunner said that he was not misled. 

What has actually happened is that the Customs service selectively has prepared the information, ignored the material that was known to Paraggio, known to them - I will say “known to Paraggio” first, because that is important - and by that method there has been, in effect, either a failure to disclose material facts or a misrepresentation.  Now, if you know that a fact is very material and you keep silent about it, that can be a misrepresentation.  I have no need to address your Honours on that particular subject.  It is admitted in the judgments below that fraud and misrepresentation can be the basis of setting aside an administrative decision.  They refer to Professor Wade. 

We are in an area where, on the one hand, the court below has rejected the notion of there being a duty to disclose material facts but, on the other hand, is saying it can be vitiated by misrepresentation.  A real question is whether - they do not mean exactly the same thing.  But so far as this case is concerned, it is our submission that it is quite clear, on the facts, that there is an admitted fact that was very material and not to disclose it was either a failure to fulfil a duty that we say existed because of Karina Fisheries and the principles there stated or, alternatively, is a misrepresentation.  On that basis, being an important matter, this Court should entertain it.

That rather puts in a nutshell what we say.  There are other issues involved.  Now, is it to be thought that Customs, a large organisation like Customs, can decide that a particular officer can undertake a particular investigation and, for instance, not look at the files for the purposes of working out what the relationship has been between the particular person who is under investigation and Customs.  Now, had all the facts been looked at here - and your Honours know that Lego has now been told that no criminal proceedings are going to brought against it; your Honours know that - had they undertaken the task of looking at their files, looking at the documents that they had then we rather suggest that all the expense and all the trouble and all the investigatory procedures that have gone on since would have been saved, but even if that is in a debatable area, just to ask the question, “Can a police force” or “Can a Customs police force just ignore its own files in relation to the relationship between the particular person being investigated and it and simply listen to what some other informant has said, some disgruntled employee, for instance; put together some facts, push them into an information, put them in front of a magistrate and then get a search warrant?” 

There is no point of agreement other than relying on what you might call general integrity to ensure that a particular officer, in those circumstances, will be fair to the defendant.  Now, there must be a question of fairness involved.  It is no good just looking at section 10 of the Crimes Act and say it does not mention the word “fair”.  That is not an answer.  Fairness lies at the basis of administrative law and the exercise of administrative decisions and I have no need to remind your Honours of the analogy in relation to Anton Pillar orders and the like.  They are really in the same area.  They are saying, “If you are going to get something that is ex parte, then you have some sort of duty.  It may be a duty not to misrepresent.  It is certainly a duty not to be fraudulent.  Or, it may be a duty to disclose material facts.  If it is a duty to disclose material facts, then if you know them then you ought to reveal them.  If you do not personally know them but you have files available to you and you are a police officer, surely it is reasonable to expect that you will go to the files and do your job properly before you go to a magistrate unless there is some sense of urgency about.”  And may I say there was no sense of urgency in this case.

So that, your Honours, for those reasons and encapsulated in that way we would submit that this is, first of all, a matter which involves a serious question, a question of general public importance.  It is a case that provides its own basis in fact which is, in the limited way in which we put it, undisputed; in other words, it is an appropriate vehicle for this Court to entertain, and it is a matter which has to be laid to rest because the decisions below are revealing a certain lack of clarity about what is the appropriate principle. 

Mr Justice Beaumont and Mr Justice Whitlam attempted to explain this by looking at the statute but you cannot do it by just looking at the statute.  Certainly, it arises out of the statute, but if there is a duty either to disclose material facts or not to misrepresent or not to commit fraud, it comes dehors the statute, it comes because the statute is interfering with the property or the liberty of the subject, however it may be.  It is an invasion on property or privacy and, in accordance with Rockett’s Case, this Court has made it quite clear that the section should not be used unduly to invade that privacy or that property.

In deciding where the line is to be drawn, then an appropriate principle - and we would say “the appropriate principle” - is to require that there be a disclosure of material facts; certainly those known to the informant but, more particularly, we would go on and say those that are available to an informant in a situation such as this.         For those reasons we would ask your Honours to grant special leave.

MASON CJ:   Yes, thank you, Mr Ellicott.  Now, Mr Bloom, we think it would be convenient if we heard you at this stage.

MR BLOOM:   Just on the Karina Fisheries point, your Honour, or both?

MASON CJ:   No, no, in relation to the whole of your application.

MR BLOOM:   If your Honour pleases.  Your Honour, could I simply start by adopting what my learned friend, Mr Ellicott, has said in terms of principle on the Karina Fisheries point but just add this, that we say that the discharge of the obligation must depend upon the content of that obligation.  In other words, if there is a duty to make a full disclosure of all material facts then nothing less than that will suffice.  The Full Court in our case seems to have held, and on this point unanimously, that it is sufficient if the material - assuming a full disclosure is necessary, it is sufficient if the material before the justice conveys the message about the things about which full disclosure could have been made but was not made and, with respect, we say that is not enough.

The important point for this Court, with respect - and it arises in both Lego and in our case - and it has effectively divided the Federal Court below because Mr Justice French in Roberts v Moore, the case that became Jacobsen v Roberts when it came here but on a different point, agreed in advance with what Mr Justice Hill had to say in Lego and there is a difference in approach between them and the majority in Lego on the very important question, “What is the extent of the duty of disclosure?”

DEANE J:   But even if one accepts Justice Hill, the court of five has put a much more difficult test from the informant’s point of view and have unanimously, subject to Chief Justice Black’s point, held that your client failed to make it good.

MR BLOOM:   One starts, your Honour, with respect to them with the premise that they are against us on the existence of the duty.

DEANE J:   Well, no, on the scope of the duty.

MR BLOOM:   On the scope of the duty, I am sorry, yes, your Honour.

DEANE J:   But they have said they will assume a duty to disclose material or what is really material but that they will not accept the proposition that the magistrate has to embark on a hearing going through every document that is suggested to be relevant.

MR BLOOM:   No.  What we - - -

DEANE J:   You may not read it that way.  I would have thought that is the only real reading of what their Honours have said.

MR BLOOM:   Your Honour, what we say in our outline of submissions today is set out at page 4, paragraph numbered 6.  The first three of those, (a), (b) and (c) are the matters we say were available to be disclosed and which should have been disclosed to the justice; and the fourth, if we change it slightly, namely that the documents had not been supplied by the Australian Taxation Office at the time of execution of the warrant, is likewise a matter which we say should have been disclosed in terms.

Now, what Their Honours say below at page 69 of the application book is, even assuming, as your Honour Justice Deane points out, the existence of a wider duty, at the bottom of page 64:

Moreover, the facts alleged in the information and its attachments clearly conveyed the message that the authorities already held a substantial body of information and material.

Now, the authorities are different.  There is the Australian Taxation Office and the police.  The Australian Taxation Office held a substantial number of documents which obviously fell within the terms of the warrant.  The police knew about it; had not taken access to the those documents and it had not been disclosed to the justice that the documents were there; that a substantial number of them fell within the terms of the warrant and that access could be had to them there.  They were original documents that had been actually handed over by the applicants in these cases.

DEANE J:   Mr Bloom, I do not want to delay you but I think we are at cross-purposes.  I was raising with you the proposition that on what the court below had held, the result was as I put it to you.

MR BLOOM:   Yes.

DEANE J:   I was not raising with you the query whether what the court below held was justified by the evidence in the case.

MR BLOOM:   Your Honour, I simply say this, that in so far as they suggest that with a duty of full disclosure there can be a discharge of that duty by disclosure of less than the full material.

DEANE J:   Yes.  Well, I follow that, yes.

MR BLOOM:   It just cannot be right.  The two questions, in that sense, seem intricately bound up.

DEANE J:   So, in a complicated case, the magistrate really has to set out on a three or four-day hearing.

MR BLOOM:   No, your Honour, I do not submit that, not for a moment.  But what I do say is that the informant who has the advantage of appearing ex parte before the magistrate or the justice should make a clean breast of all material facts known to him that might affect not only the decision to issue the warrant in the discretion of the magistrate but the terms of the warrant; its width.  That is my submission with respect.  Your Honours, may I turn to the other point which we do not have - - -

McHUGH J:   Just before you do:  I have not had the opportunity to read Propend Finance.  Does that take the matter any further?

MR BLOOM:   The same point, your Honour.

McHUGH J:   I know it is the same point but does it take the discussion any further in any way?

MR BLOOM:   No, it takes it no further and comes to the same conclusion, that you can, in effect, disclose by disclosing material from which arguably inferences can be drawn rather than disclosing material clearly known in terms of making full disclosure.  But that is another case, your Honour, in which the same point, of course, has arisen and which is currently before the court.

McHUGH J:   That is the main......,is it?

MR BLOOM:   Yes, your Honour.  Your Honours, may I begin by handing to your Honours some extracts of relevant legislation and only at this stage inviting your Honours to look at section 465 of the Victorian Crimes Act which your Honours will see is relevantly in the same terms as section 10(1)(b) of the Commonwealth Crimes Act as it was and to make the obvious point that there are now, in effect, three State Acts governing the issue of search warrants pursuant to which this same question will arise.

DEANE J:   Does the question still arise in a real form under the current Commonwealth legislation?

MR BLOOM:   We would so submit, your Honour, yes.

DEANE J:   I see.

MR BLOOM:   All that has been done is to replace suspicion and belief with suspicion and suspicion, effectively.

Your Honours, the decision of the majority below, in our respectful submission, reveals a fundamental misunderstanding of this Court’s unanimous decision in George v Rockett with important consequences generally for search warrants.  If I could ask your Honours to go to George v Rockett 170 CLR.  I take your Honours, firstly, to page 111 under the heading “The justice’s function”:

The opening words of s. 679 - “if it appears to a justice” ‑ impose on a justice to whom an application for a search warrant is made the duty of satisfying himself that the conditions for the issue of the warrant are fulfilled.

And over to page 112, about point 6 of the page, after the reference to Attorney-General v Reynolds:

Therefore it must appear to the issuing justice, not merely to the person seeking the search warrant, that reasonable grounds for the relevant suspicion and belief exist. 

And then to page 113, the first full paragraph on that page:

It follows that the issuing justice needs to be satisfied that there are sufficient grounds reasonably to induce that state of mind.

Then at page 115, under the heading “The facts to be established”:

In considering the sufficiency of a sworn complaint to show reasonable grounds for the suspicion and belief to which s. 679 refers, it is necessary to bear in mind that suspicion and belief are different states of mind and the section prescribes distinct subject matters of suspicion on the one hand and belief on the other.  The justice must be satisfied that there are reasonable grounds for suspecting that “there is in any house, vessel, vehicle, aircraft, or place - Anything” and that there are reasonable grounds for believing that the thing “will ... afford evidence as to the commission of any office”.

So “the thing” is identified.  And about it then, the justice says, “I believe that there are reasonable grounds for believing that it, that thing I have identified, will afford evidence as to the commission of an offence.”  That is clear, your Honours, from a passage on page 117, if one starts just above the first full paragraph:

Thus is seems that the better construction of s. 679 is that the existence of the thing is the subject of suspicion.

So to hold does not deprive the requirement of “reasonable grounds for believing” in par. (b) of significance. That significance depends on the manner in which a complaint which grounds a search warrant and the warrant itself identify the object of the search.  A thing must be identified either as a specific object or as an object which answers a particular description.  It is by reference to the means of identification of the object of the search that the sufficiency of both reasonable grounds for suspecting and reasonable grounds for believing must be judged.

In other words, it is a thing already identified about which that sufficiency is judged.

DEANE J:   What about a case where the police had a confession that said, “The things that will prove my guilt of this are in the bedroom of the house at” such-and-such an address.  Would you say that it would be impossible to get a search warrant?

MR BLOOM:   No, your Honour.

DEANE J:   Even though all that could be said is reasonable grounds for believing that the things which are thought or suspected will prove guilt of an offence are in the bedroom and it was quite impossible to identify what the things were?

MR BLOOM:   If the things - it is an unusual situation.  I mean the example given in Rockett’s Case, for instance, about a revolver - one might ‑ ‑ ‑

DEANE J:   Yes.  Well, the answer is they either can or they cannot get a search warrant in those circumstances.

MR BLOOM:   Your Honour, consistent, I suppose, with what I put:  they cannot if it is impossible to identify the things because one cannot say about those things that the reasonable state of satisfaction can exist.  Just continuing on in that passage:

Where a specific object is identified -

so this has already happened -

the question whether there are reasonable grounds for believing that, if it is exists and is found, it will afford evidence as to the commission of an offence is a discrete question to be answered according to the facts set out in the complaint.  Where the object is identified by description, the broader and less specific the description, the more difficult it is likely to be to satisfy the requirement of reasonable grounds for believing that a thing answering the description -

so it is a thing which already answers the description -

will afford evidence of the commission of an offence.

The stress in that passage, your Honours, is on the word “identified”.  So that for all those thereafter associated with the warrant:  those executing it, the occupier who, of course, may or may not be implicated in the offence, there is some understanding as to the things to be searched for and seized about which it was possible for the justice to form the requisite state of satisfaction.

Now, the real question is this, your Honours, “Can the existence of the reasonable grounds for believing be made one of the characteristics for the purposes of identification?”, because that is what the Full Court by a majority has held can be done here.  So that, in effect, the belief forms part of the process at the actual identification of the thing, rather than being applied to a thing which has first been identified.  It is our submission with respect, your Honours, that belief and identification are separate.  The thing must be one, at least answering a description, before it can be a thing about which the reasonable grounds for the belief can be held.

Your Honours, the passages then at page 118, commencing with the first full paragraph, are equally of assistance in this point:

It may be suggested that this emphasis upon description of the object of the search proposed to be conducted pursuant to a search warrant constitutes little more than a play on words.  But that is not the case.  The warrant, if issued, authorizes entry to search for the described object and authorizes the seizure of any object which comes within the particular description.  In other words, the description of the object of the search is a reference point for delimiting the scope of the warrant. 

Then, a little further down:

Thus, the requirement of “reasonable grounds for believing” in par. (b) performs the important function of preventing the authority to search and seize which a warrant confers from being worded in unjustifiably wide terms.

And then there is an illustration about looking for the entries in the books of a public company and not authorising a search for the entirety of the books.  So, that is the sort of specificity that your Honours, in a seven Judge judgment, had in mind in George v Rockett.

Your Honours, if one goes to the warrant in this case - it is in the application book at page 89 - the justice says she is:

satisfied by information on oath.....that there is reasonable ground for suspecting -

so that is the first one:  she states that there, “that there is in premises”:

THINGS which satisfy all THREE of the following conditions:

“company records”, “accounting books”; one turns to the second condition:

which relate to, arise out of or are connected with any one or more of the following:

(ii) the receipt or payment of monies by Bay Wool -

for instance.

THIRD CONDITION:  as to which there are reasonable grounds for believing that the same will afford evidence as to the commission of ‑

the nominated offences.

Now, your Honours have said, in George v Rockett, that on the face of the warrant, effectively, there must appear statements of the satisfaction of the justice as to both relevant matters; the suspicion and the belief.  We have the suspicion in the opening part, the recital, of the warrant.  But we do not have the statement of satisfaction of the justice as to the requisite belief unless it is in the third condition and that is really what, with respect, the justice was doing.  Because there in the third condition she is really saying, “as to which things”, that is, those which have gone previously, “there are reasonable grounds for believing that the same will afford evidence as to the commission of one or more of the offences”.

This is the only possible place, if at all, where the justice expresses, as she must, her satisfaction that there are reasonable grounds for believing that identified things, presumably those identified in conditions one and two, will, if found, afford evidence.  It is not and cannot be, with respect, a part of the process of identification of the things themselves.  Your Honours know, from page 33 of the application book, that my learned friend, Mr Weinberg, conceded below that if the things were identified merely by reference to the first and second conditions then there was no doubt that the warrant was too wide.  That concession was made below.

Your Honours, a statement by the justice that she is satisfied that there are reasonable grounds for believing that the designated objects will afford evidence must appear on the face of the warrant.  That state of satisfaction is a precondition to her entitlement to issue a warrant and the statement of satisfaction is not, in our respectful submission, properly capable of forming a nominated characteristic of a thing for the purpose of enabling it to be identified so that the state of satisfaction about it can then be reached. 

Your Honours, the majority below held that the third so‑called condition is validly part of the identification process and that it has a limiting or refining effect in that it limits the objects of the search to things within the first two conditions about which the requisite belief objectively exists.  The assumption inherent in the majority’s reasons is that there will of necessity be coincidence between what the justice had in mind and what is lawfully able to be seized because the test is objective, but, as his Honour the Chief Justice pointed out below, a conclusion that objectively speaking a document, for example, will satisfy all three conditions, assuming they are validly all conditions, might well be reached by reference to material outside the information and, in particular and more importantly he points out, it need not of necessity be reached by reference only to what is contained in the information.

Your Honours, it is our submission that this is a point of general importance applicable to search warrants certainly in three State legislative regimes and, we would say, also with regard to section 3E as it now is, the

difference not being material in this point, and, your Honours, we point out that our learned friends concede that the three‑condition warrant so‑called was the general form of warrant used under section 10(1)(b).  There is no reason to suspect it will not continue to be the form of warrant used under section 3E or that if special leave is not granted in this case that it will not be the form that finds favour under those three State jurisdictions and, your Honours, in those circumstances, given that this is a search warrant case, one needs to act now and not wait and see whether, in fact, there is the adoption of the three‑condition warrant down the line.  If your Honours please, those are our submissions.

MASON CJ:   Thank you, Mr Bloom.  Mr Weinberg.

MR WEINBERG:   Might I inquire if I am limited to 20 minutes for the two applications or ‑ ‑ ‑

MR MASON:   We will see how you go, Mr Weinberg.  I do not think you need feel constrained by that.

MR WEINBERG:   If I may deal with the Lego matter firstly, if the Court pleases.  What my friend Mr Ellicott puts to the Court in regard to the duty expressed in Karina Fisheries has to be understood in terms of the fact that Justice Wilcox applied Karina Fisheries at first instance regarding himself as relevantly bound by that decision and notwithstanding the fact that his Honour applied Karina Fisheries, his Honour concluded that in the circumstances of this case the non‑disclosure of the conversation between Mr Paraggio and Mr Dunner on 25 October or so much of it as his Honour found Mr Paraggio had been present at and participated in was not a material fact.  It could not rationally have affected the decision to issue the warrant, largely because his Honour took the view that what Mr Dunner was doing was expressing an opinion about a question of interpretation of a statute and the law and that is not a matter that would be at all relevant to the justice.

The case was argued at two levels before Justice Wilcox.  There was firstly the argument about disclosure of what was known to Mr Paraggio and that was limited to the conversation that was had with Mr Dunner.  Justice Wilcox said that was not material.  An alternative argument or an additional argument was put saying there were other things that Mr Paraggio could have discovered if he had made inquiry and Justice Wilcox said that nothing in Karina Fisheries persuaded him that there was any general duty to make inquiry, to go off and talk to any of the other numerous officers of Customs or go off and look at archives to see what could be tracked through archives and so forth.

My friend makes it sound as though there is a file which one can go to.  These are thousands or hundreds of thousands of documents archived over many years going back to 1978.  So in our respectful submission, although the Full Court in Lego did say that their Honours were not of the view that Karina correctly stated the principle, it would not have made any difference because Justice Wilcox even applying Karina had said there was no failure to disclose material facts and the Full Court in effect, we say, endorsed the findings of fact made by his Honour.  That makes the case not a suitable vehicle, in our respectful submission, for the agitation of this point.

The other point to make about the judgment of the Full Court in Lego is, with respect, that we do not see a great difference between the formulation adopted by Justices Beaumont and Whitlam, on the one hand, where their Honours speak of fraud or misrepresentation vitiating the granting of a warrant and Justice Hill who says that he perceives a duty of candour which his Honour describes as a duty to act in good faith.  Both, plainly, are in the realm of impropriety, if one can put it that way.  There may be at a particular point some difference in emphasis between the two formulations, but in the overwhelming majority of cases we would have thought the result would be the same, whether one approaches the matter from the point of view that Justice Hill did or from the point of view that Justices Beaumont and Whitlam did.

So in our respectful submission, it is just not a suitable vehicle to raise the point because at the end of the day, whether Karina Fisheries correctly states the principle or not, the findings of fact made by Justice Wilcox, which are not, in our respectful submission, suitable matters for this Court to resolve to consider whether this was material or was not material - that is nothing more than a question of fact and degree, in our respectful submission - really raise no general question of principle for the consideration of this Court.  It would have been otherwise if Justice Wilcox had found that there was materiality in what was not disclosed and had overturned the warrant and the Full Court had said, no, there was no duty.  Then there would have been a vehicle to consider the question, but not, we submit, in the circumstances of this case.

In relation to Justice Wilcox’s findings, I should say also one thing.  I think my learned friend Mr Ellicott suggested there was a suggestion that Mr Paraggio had been told that there was another invoice or a second invoice which Dunner was aware of throughout the period.  In fact, Mr Justice Wilcox expressly preferred the evidence of Paraggio to that of Dunner on that point and so the only matter which was known to Paraggio arising out of the conversation on 25 October which was not disclosed in the analysis of Justice Wilcox in his Honour’s findings of fact was Dunner’s opinion that he had not been misled because of his opinion about the relevant state of the law in 1978 to 1981.

Dunner, of course, left Customs in February 1981.  Dunner’s views about the relevant operation of the Brussels Convention and so forth were Dunner’s views.  They are not to be regarded as the views of Customs.  The senior Customs officers who approved of Dunner’s initial decision did so upon the basis that they believed that these goods were being imported on consignment.  They had been imported on consignment at the time that British Lego operated in Australia and his Honour found evidence capable of satisfying the justice that there were reasonable grounds for suspecting or believing that false representations had been made going back to 1978 regarding these goods being brought in on consignment.

My friend says correctly that the Full Court and Justice Wilcox concluded that these offences probably were not committed prior to 1981 and that is because of the interpretation that Justice Wilcox and the Full Court placed upon the operation of the Brussels Convention.  We have said in our written submissions that that is of no consequence in the circumstances of this case, firstly, because, in our respectful submission, the finding that was made by Justice Wilcox expressly and in terms was that it was open to conclude that false representations had been made by Lego from the time it commenced trading in 1978. 

If there were no offence committed, it was because, notwithstanding the false representations, the higher level of duty was not payable anyway under the Brussels Convention, so that unbeknownst, as it were, to Lego through making the false representations no offence was actually committed in all likelihood prior to 1981, but, more importantly, in our respectful submission, it could not have had any practical impact upon what could be seized under these warrants if the warrants had said that the offences began in 1981 because, as this Court itself stated in George v Rockett, seizure under a warrant permits the seizure of documents which are relevant directly or indirectly to prove the commission of the offence.

Documents going back to the period 1978 to 1981 showing false representations being made in that period prior to the time the commission of the offences occurred could still have been seized under this warrant, in our respectful submission.  So there is no practical consequence.

DEANE J:   But did their Honours not go further than you say and hold that it was simply not open to the magistrate to be satisfied that there were reasonable grounds in relation to the pre‑1981 alleged offences?

MR WEINBERG:   I think their Honours’ finding was that in all probability the likelihood was that no offence of the kind designated in one of the two offences set out had been committed prior to 1981.

DEANE J:   I had read the judgments differently.  I read them as saying it was not open to the magistrate to have been satisfied.

MR WEINBERG:   Your Honour, we will accept that for our purposes because it makes no difference to our ultimate submission, which is that, firstly, warrants would in any event have issued, as Justice Wilcox found as a matter of fact.  It would have made no difference.  Secondly, if the warrants had been limited to the period 1981 onwards, it would have made no difference, in our submission, to the documents that could have been seized pursuant to the warrants.  Thirdly, that would be a matter of severance rather than quashing warrants and, in our respectful submission, again, questions of severance are well established and they are not matters of fundamental principle which call for the consideration of this Court.

To the extent that my friend argues that there is a broader duty to disclose material facts not known to the informant, we simply say that that has not ever been suggested in any search warrant case or any application previously for any kind of listening device, telephone intercept and matters of that kind, some general duty of either strict liability or general duty of care.  We say there is no warrant for that at all as a proposition and really we say that Justice Wilcox and the Full Federal Court were plainly correct in rejecting that broader attempt to broaden Karina Fisheries. 

We say there is a strong public interest in not broadening Karina Fisheries in that way.  Given the avenues that are available for challenge of search warrants under  the Administrative Decision (Judicial Review) Act, the capacity that this has for delaying investigations, we do not want to make too much of that point, but the fact is the Karina Fisheries principle opens the way very clearly to challenges to be made whereby what happens is that subpoenas are issued to discover what documents the police had in their possession, what documents the police could have obtained and one can, as has been the case, certainly in the Dunesky matter, effectively tie up an investigation for years because the product of that warrant has not yet been seen although it was executed in 1991.  It was not the case in Lego, but there is a very strong public interest, in our submission, recognised by the Court in limiting the Karina Fisheries principle to actual bad faith or fraud or misrepresentation.

If I can take the Court then to the Dunesky matter, and here we say the Karina Fisheries point is, if anything, even weaker than the point that is raised in Lego because here all six justices who considered the case concluded quite clearly that there had been clearly conveyed to the justice all the matters that my friend complains were not conveyed in terms and what his application really is about in so far as it relies upon Karina Fisheries is a submission that there has to be a degree of specificity about the documents that are in the possession of the police, the fact that seven arch lever folders, for example, were in their possession, rather than conveying clearly that a substantial body of documents were in their possession.  We say there is no special leave point there.

We say that the failure of his clients to be able to point to a single document before Justice Whitlam which he can say would have been material to the decision to grant the warrant - he was unable, as Justice Whitlam found, to point to a single document or a single fact that was not before the justice that might have affected the justice’s decision and he ran the case in a more global fashion and suggested that it was the failure to inform the justice in the kind of detail which he says principle requires under Karina Fisheries which vitiates this warrant.  We submit, with respect, that nothing in Karina Fisheries requires that degree of specificity.  Even if Karina Fisheries does correctly state the law, the finding of Justice Whitlam and all five judges of the Full Federal Court that there was complete and ample compliance with the Karina Fisheries principle in the circumstances of this case by clearly conveying all the matters that my friend complains of is plainly the answer to his submission. 

In so far as my friend then deals with the question of construction and the attack upon what have been called three‑condition warrants, he relies upon the judgment of Chief Justice Black in the Full Federal Court and he submits that based upon that judgment that that decision is correct and that all three‑condition warrants necessarily must be bad unless there is, as Chief Justice Black said, some additional limiting factor put in to the warrant to make it impossible for the police officer who is carrying out the search to rely upon anything other than information sworn before the issuing justice.

Now, we say, but with great respect to Chief Justice Black, that it is, in fact, Chief Justice Black’s judgment which is at odds with the decision of this Court in George v Rockett and that the decision of this Court in George v Rockett certainly, we submit, supports the proposition that it is permissible to describe the objects to be seized in the way in which this three‑condition warrant did and other three‑condition warrants have done.  If I can take the Court to George v Rockett for a moment and remind the Court again of the passages that are set out at page 117 and remind the Court that what was said at page 117 was that one can identify an object either as a specific object or an object which answers a particular description.

What the court was saying, in our respectful submission, was that it is really a question of evidential sufficiency.  The broader the description that one uses, the greater the degree of evidence which will be needed to be placed before the justice in the information to satisfy the justice that the objects so described in that broad form will - or that there are reasonable grounds for believing that they will afford evidence of the commission of the relevant offences.  So, in our submission, it is a question of evidential sufficiency.  If the police seek to use a wider form of expression by description, then they take the risk that the evidence that they place before the justice may not suffice to satisfy her of the matters of which she has to be satisfied, but there is nothing in the judgment, in our submission, which suggests that one has to identify with the degree of specificity or precision, advanced identification as it were, my friend contends for and that Chief Justice Black seemed to contemplate, documents before a warrant can issue.

We gratefully adopt your Honour Justice Deane’s question to my learned friend which, we submit, encapsulates the problem with that submission in one way very, very clearly, but there are also, with respect, other answers to the submission that Chief Justice Black is correct.  If Chief Justice Black is correct, then it must follow, in our respectful submission, that a police officer who executes a search warrant must confine the seizure of any documents so found to any document which can be said to be identified by virtue of the sworn information that was placed before the justice.  In other words, he does not carry out the search by looking at the warrant and testing whether the document objectively fits within conditions one, two and three in the way that the Full Federal Court has determined, but he goes on and also asks whether the document in question is one which was envisaged by the information.  He has the information, as it were, with him as part of the process of executing the warrant.

That, with respect, is a recipe for great difficulty.  Some informations in some of these fraud cases are very, very long and very complex indeed, hundreds of pages.  The difficulties that the householder confronts through reading a three‑condition warrant, in our submission, would be greatly exacerbated by having to consider also the facts set out in the information which is not normally shown to the householder in any event when a warrant is executed.  It is also, in our submission, to conflate and confuse the separate functions which a justice and an executing police officer carry out in relation to warrants.  The justice determines whether to issue the warrant.  The police officer executes the warrant.

As the Full Federal Court correctly, in our respectful submission, noted, when a police officer executes a three‑condition warrant of this type, the police officer has no impermissible delegation.  What the police officer is doing, in effect, is having to apply a series of objective tests to a document or thing which is to be seized and, if he is wrong about that, then there are remedies available to the householder.  If he seizes a document which does not fall within each of the three conditions, then the householder has an action in trespass, there are rights that might be available in resisting the admissibility of any evidence so seized in the exercise of discretion.

It is not as though the police officer can simply subjectively make up his mind whether or not he wants to seize something.  There is an objective set of indicia set out in these very convenient forms, these very convenient three‑condition warrants, whereby the refining process is undertaken.  In our respectful submission, Justice Lindgren correctly, with respect, pointed out that the three‑condition warrant meets and properly meets the requirements of section 10.  In our respectful submission, there is nothing in the requirement that there be identification of the object which must be seized which requires that process of identification to occur in a manner which excludes as an objective indicator whether or not the object in question will afford or is likely to afford evidence of the commission of specific narrowly designated offences.

That is a perfectly proper way, in our submission, of describing in general terms the kind of document that may be seized.  The police officer does not know, in many fraud cases, precisely what kinds of documents there are likely to be at the premises.  He cannot go along and say to a justice, “I suspect that there will be a diary for 1985 which will contain incriminating admissions.”  What he can do is say, “I suspect there will be diaries, notes, et cetera which may, on reasonable grounds, contain evidence of the commission of these offences”, without being able to designate them with greater precision than that.  If he finds a document which then satisfied each of the three conditions and does reasonably afford evidence of the commission of these offences, he is entitled to seize it.  If it does not meet that description then he is amenable to legal action.

There is nothing, in our submission, in George v Rockett which supports Chief Justice’s Black view.  If anything, George v Rockett, which was considered by every member of the Federal Court who has ruled upon these three condition warrants in recent years, every member of the Federal Court who has done so has concluded that three-condition warrants are perfectly consonant with the decision in George v Rockett.

We should say, your Honours, that it is not just the four members of the Full Federal Court who have considered three-condition warrants of this kind in this case.  Those three-condition warrants have been the subject of scrutiny in a number of other cases.  There are at least a dozen members of the Federal Court, different members of the Federal Court, who have considered challenges to three-condition warrants, some of them on this very basis.  It is really only Chief Justice Black who sees some difficulty about this form of warrant, and we submit with great respect that Justice Lindgren addresses the Chief Justice’s concerns.

So, for those reasons, in our respectful submission, neither case represents a suitable vehicle for the testing of the Karina Fisheries point, if I may put it that way.  A second matter, a final matter in relation to the Karina Fisheries point is that the new legislation very arguably changes any Karina Fisheries obligation because it sets out with great specificity the things that police officers are required to include in warrants.  It sets out in a detailed code which covers many pages matters which must be placed in warrants which must be placed before justices.

So, whatever implication might have been able to be drawn in relation to section 10 in its old form, there is a much weaker argument for that kind of implication being drawn under the new legislation which, as we see it, codifies to a great degree the obligations regarding what is placed before a justice. 

We accept Mr Bloom’s proposition that the new legislation does not alter the three-condition exercise, if I may put it that way, but we say it does in all likelihood very probably alter the Karina Fisheries obligation.  If the Court pleases.

MASON CJ:   Mr Ellicott.

MR ELLICOTT:   Your Honours, what we are submitting is not prescribing anything like a four-day hearing for a magistrate.  I know your Honour may have put that as an exaggeration but even a four-hour hearing is not meant.  But if a case demands it, of course, then a magistrate ought to give it that attention.  Your Honours may recall, in George v Rockett - - -

DEANE J:   Mr Ellicott, I may have misread a judgment but I thought the court below in the other case indicated that what was submitted was that the whole of the folders had to be put before the magistrate.  I was not suggesting that against what had been submitted on behalf of your client.

MR ELLICOTT:   If your Honour pleases.  I just wanted to pick that up because obviously the application of the warrants have to be adjusted for urgent and emergency circumstances.  It is no good having a principle that does not fit that.  That can be dealt with by the court by adopting a principle that says something to the effect that it requires that information which an informant may be reasonably expected to gather in the time.  There are all sorts of ways of putting it but the principle is not inviting an open slather on material information.  There have, in special cases, to be particular considerations given to the emergency or otherwise of it.  But quite apart from that, in the ordinary case as we would say ours is, where there has been an inquiry going on for some time, one would expect that Customs, first of all, would have gone through their files and it is not an undue burden to expect that they would have distilled from those files the material facts.

There was, about Mr Paraggio’s attitude, the view that what Mr Dunner was saying was rubbish.  Now, that was part of the evidence that was given, that he told Mr Dunner that what he was saying was rubbish.  Now, my friend has sought to put that particular question as a question about commenting about the law or what was the appropriate state of the law at the time.  It is not a dispute between Customs’ officers as to what was the appropriate rule to apply.  Mr Dunner’s evidence and the knowledge that Mr Paraggio had of it was about what Customs did at the time, and that is a significant matter.  Dunner said it was not relevant.  That is why I, on behalf of Customs, after it had been questioned by Canberra, took this particular course.  That is very significant, in our submission. 

Another significant matter is what happened in relation to the 1981 matter - the 1977-1981 period - partly because of the question that I have already put to your Honours about it being a continuum period, that is to say that things just went on after 1981 with the new law.  They went on with a question, “Well, do we go on as we were before?”, and they went on.  Customs did not investigate the matter then and they have left it in that period.

Mr Justice Wilcox was quite clear, that he thought that it would not have been exigible in that period.  So, Mr Dunner was right and what

Mr Dunner said was significant to the question of intent.  And if the intent of Lego goes back into that period and that period is not the possible subject of criminal proceedings then, likewise, if you are looking at the position post-1981, that intent is terribly important to determining that matter.  Had it been in front of the magistrate, the question arises what would the magistrate have done.  The magistrate may well, as the magistrate in a case referred to in George v Rockett wanted to do and that was to ask further questions.

Now, Mr Justice Wilcox did not apply Karina Fisheries per se.  He applied a test of “wilful blindness or other bad faith.”  Now that is quite different to the principle as stated in Karina Fisheries.  Karina Fisheries said that all material facts should be put before the justice.  That is why the Full Court and Mr Justice Wilcox went off on what we would respectfully submit was a frolic of their own because they were applying a different test.  They were looking for fraud and misrepresentation whereas the Karina test starts before fraud and it starts before misrepresentation. 

For those reasons, we would submit that your Honours should grant leave.  We would submit that if there is a decision to be made between my friend and Mr Bloom, ours is a better vehicle.  That is an unfortunate submission I have to put but I do submit that ours is a better vehicle, if your Honours want to make a choice, but it is a friendly submission, your Honours.  If your Honours please.

MASON CJ:   Mr Bloom.

MR BLOOM:   And it is taken in that way, your Honours.

Your Honours, we never, on the Karina Fisheries point below, at any stage of the proceedings submitted that all of the documents which the police had or had access to should be put before the justice.  What we said was simply this, that where the police constructively had possession of such a vast number of documents which fell within the terms of the warrant, it was necessary to disclose that fact to the magistrate so that the warrant might have been limited in terms of the information, in terms of what was being sought.  Your Honours, that is all I want to say about the Karina Fisheries point. 

As to the George v Rockett point:  my learned friend avoids dealing with the question of where the justice’s satisfaction appears in this warrant and as to how there can be both by means of this so-called third condition an expression of her satisfaction in relation to things, identified things, and that can also be part of the process of identification.  Chief Justice Black’s

view is an alternative view that we put and it is not the only view we put.  It is that if it can be part of the process of identification, nonetheless, it cannot be a proper part of the process because it leads to the problem that documents which objectively might be ascertained to answer the description would be outside those in the information.  The point of that is that it is only those upon the basis of the information which the justice forms the requisite state of satisfaction that she is entitled to authorise the search for and seizure of.

As to whether when documents are encountered in the course of a search that are outside the warrant, they may be seized.  There is some common law on that in England and, certainly, it is now the subject of section 3E which gives a limited right to seize documents outside the scope of the warrant in certain circumstances.  But the most important point which our learned friend makes, in our respectful submission, is this:  he says one can expect these three-condition warrants to continue in terms of section 3E - that is effectively what he was conceding - and in those circumstances, your Honours, this is a proper case for special leave because the point is of such importance and such difficulty and it seems at least, if we are right, that what the Full Court has held below by majority is completely in conflict with what this Court said in George v Rockett.  If your Honours please.

MASON CJ:   Thank you, Mr Bloom.  The Court will take a short adjournment to consider its decision in this matter.

AT 10.48 AM SHORT ADJOURNMENT

UPON RESUMING AT 10.56:

MASON CJ:   In the matter of Lego, having regard to the findings of facts made by Justice Wilcox, this case is not a suitable vehicle for determining whether there is a duty to disclose and what is the scope of such a duty.

On the findings of fact made, the proposed appeal does not enjoy sufficient prospects of success to warrant the grant of special leave.  The application is therefore refused.

MR WEINBERG:   We seek an order for costs?

MASON CJ:   Mr Ellicott, do you want to say anything in opposition to a grant of an order for costs?

MR ELLICOTT:   Your Honour, no proceedings are being taken.  All this has been abortive, the whole thing, and there is an important principle involved.  I know the Court would ordinarily grant costs but there comes a time when an applicant, even though it is a large corporation like Lego, has been put to task in relation to matters; it has been said that no proceedings are going to be taken against it and we have had to pursue this up to this point.  I would submit that we have legitimately done so.  The Court ought to make no order as to costs.

MASON CJ:   We think that costs should follow the event.  The ordinary rule should apply.  Therefore, the application is refused with costs.

In the matters of Edney  and Dunesky, in the light of the conclusion reached by the Full Federal Court that, even if there was a duty to disclose material facts, there had been such a disclosure, the case is not a suitable vehicle for determining the existence or scope of any duty to disclose.  On this aspect of the case, on the findings of fact so made, the proposed appeal does not enjoy sufficient prospects of success to warrant the grant of special leave. 

Likewise, in relation to the question arising in relation to section 10(1)(b) of the Crimes Act, we do not consider that the prospects of success is such as to warrant the grant of special leave.  The application is therefore refused.

MR WEINBERG:   We make a similar application for costs in this matter?

MASON CJ:   That not opposed, Mr Bloom?

MR BLOOM:   No, your Honour. 

MASON CJ:   The application is refused with costs.

AT 10.58 AM THE MATTER WAS CONCLUDED