Paphos Providores Pty Limited v Constable Aziz Ladha
[2014] NSWSC 1788
•17 December 2014
Supreme Court
New South Wales
Medium Neutral Citation: Paphos Providores Pty Limited v Constable Aziz Ladha [2014] NSWSC 1788 Hearing dates: 1 and 6 May 2014 Decision date: 17 December 2014 Jurisdiction: Common Law Before: Johnson J Decision: 1. Summons dismissed.
2. The Plaintiff is to pay the Defendant's costs of the proceedings.
Catchwords: CONSTITUTIONAL LAW - judicial power of Commonwealth - plaintiff's property seized by Commissioner of Australian Federal Police pursuant to search warrant - decision taken not to prosecute plaintiff for offences against Trade Marks Act 1995 (Cth), s.148 - Commissioner sought order for destruction of seized property under Crimes Act 1914 (Cth), s.3ZQZB(3) and (4) - subsections permit magistrate in exercise of discretion to order destruction of property seized by Commissioner if satisfied there are reasonable grounds to suspect that property likely to be used in commission of serious offence if returned to person from whom seized - Crimes Act 1914 (Cth), s.3CA purports to confer function on magistrate in personal capacity and not as court or member of a court - whether despite s.3CA function exclusively judicial in nature and legislation invalid - function not exclusively judicial
CONSTITUTIONAL LAW - heads of Commonwealth legislative power - whether sufficient connection between exercise of function by magistrate and trade mark power under s.51(xviii) of the Constitution - sufficient connection found
CONSTITUTIONAL LAW - acquisition of property - whether order for destruction of plaintiff's property constitutes an acquisition by the Commonwealth of property to be undertaken on just terms for the purpose of s.51(xxxi) of the Constitution - no acquisition of proprietary interest by the Commonwealth - in any event provision incongruous with notion of acquisition of property on just termsLegislation Cited: Acts Interpretation Act 1901 (Cth)
Administrative Decisions (Judicial Review) Act 1977 (Cth)
Crimes Act 1914 (Cth)
Crimes Legislation Amendment Act 2011 (Cth)
Crimes Legislation Amendment (Serious and Organised Crime) Act (No. 2) 2010 (Cth)
Judiciary Act 1903 (Cth)
Trade Marks Act 1995 (Cth)Cases Cited: Attorney-General (Cth) v Alinta [2008] HCA 2; 233 CLR 542
Attorney-General (Cth) v Breckler [1999] HCA 28; 197 CLR 83
Attorney-General (NT) v Emmerson [2014] HCA 13; 88 ALJR 522
Boughey v The Queen [1986] HCA 29; 161 CLR 10
Brandy v Human Rights & Equal Opportunity Commission [1995] HCA 10; 183 CLR 245
Cheatley v The Queen [1972] HCA 63; 127 CLR 291
Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs [1992] HCA 64; 176 CLR 1
Commonwealth of Australia v Tasmania [1983] HCA 21; 158 CLR 1
Darkan v The Queen [2006] HCA 34; 227 CLR 373
George v Rockett [1990] HCA 26; 170 CLR 104
Grain Pool of Western Australia v Commonwealth of Australia [2000] HCA 14; 202 CLR 479
ICM Agriculture Pty Limited v Commonwealth of Australia [2009] HCA 51; 240 CLR 140
JT International SA v Commonwealth of Australia [2012] HCA 43; 250 CLR 1
Leask v Commonwealth of Australia [1996] HCA 29; 187 CLR 579
Love v Attorney-General (NSW) [1990] HCA 4; 169 CLR 307
Nintendo Co Limited v Centronics Systems Pty Limited [1994] HCA 27; 181 CLR 134
Olbers Co Limited v Commonwealth of Australia [2004] FCA 229; 136 FCR 67
Olbers Co Limited v Commonwealth of Australia [2004] FCAFC 262; 143 FCR 449
Precision Data Holdings Limited v Wills [1991] HCA 41; 173 CLR 167
Price v Fitzgerald [2000] FCA 134; 97 FCR 227
Re Director of Public Prosecutions; Ex parte Lawler [1994] HCA 10; 179 CLR 270
Re Woolley; Ex parte Applicants M276/2003 [2004] HCA 49; 225 CLR 1
R v Kirby; Ex parte Boilermakers' Society of Australia [1956] HCA 10; 94 CLR 254
R v Trade Practices Tribunal; Ex Parte Tasmanian Breweries Pty Limited [1970] HCA 8; 123 CLR 361
Theophanous v Commonwealth of Australia [2006] HCA 18; 225 CLR 101
Thomas v Mowbray [2007] HCA 33; 233 CLR 307
Tran v Commonwealth of Australia [2010] FCAFC 80; 187 FCR 54
Wainohu v State of New South Wales [2011] HCA 24; 243 CLR 181
Williams v Keelty [2001] FCA 1301; 184 ALR 411Texts Cited: --- Category: Principal judgment Parties: Paphos Providores Pty Limited (Plaintiff)
Constable Aziz Ladha (Defendant)
Commonwealth Attorney-General (Intervener)
Attorney-General for New South Wales (Intervener)Representation: Counsel:
Mr DPM Ash (Plaintiff)
Mr C Lenehan (Defendant and Attorney-General for New South Wales)
Ms NL Sharp (Commonwealth Attorney-General)
Solicitors:
Joe Weller & Associates (Plaintiff)
Australian Government Solicitor
(Commonwealth Attorney-General)
Crown Solicitor's Office (Defendant and Attorney-General for New South Wales)
File Number(s): 2013/317587 Publication restriction: Nil
Judgment
JOHNSON J: By Summons filed 22 October 2013, the Plaintiff, Paphos Providores Pty Limited, seeks declaratory relief with respect to an application for destruction of goods under s.3ZQZB Crimes Act 1914 (Cth) made by the Defendant, Constable Aziz Ladha, concerning items seized under search warrant.
The issues raised in these proceedings concern the validity of provisions in the Crimes Act 1914 (Cth). The provisions under challenge relate to search warrants, and steps which may be taken with respect to items seized under search warrant and, in particular, destruction of those items.
Given the constitutional issues raised, the Plaintiff served notices for the purpose of s.78A Judiciary Act 1903 (Cth). The Commonwealth Attorney-General and the Attorney-General for New South Wales intervened in the proceedings pursuant to s.78A to support the validity of the provisions under challenge.
At the hearing of the Summons on 1 and 6 May 2014, Mr Ash of counsel appeared for the Plaintiff. Mr Lenehan of counsel appeared for the Defendant and the Attorney-General for New South Wales. Ms Sharp of counsel appeared for the Commonwealth Attorney-General.
Relief Claimed in the Summons
The Plaintiff's Summons seeks the following relief:
(a) a declaration that s.3CA Crimes Act 1914 (Cth) is invalid, to the extent that it refers to an order sought to be made under ss.3ZQZB(3)(b) and 3ZQZB(4)(d);
(b) a declaration that s.3ZQZB Crimes Act 1914 (Cth) is invalid, to the extent that it purports to enable a magistrate to make an order under ss.3ZQZB(3)(b) and 3ZQZB(4)(d).
Factual Matters
The factual background to these proceedings is not contentious. It is contained in an Agreed Statement of Facts (Exhibit A) and the affidavit of the Plaintiff's solicitor, Joe Weller, which was sworn on 21 October 2013 and read without objection at the hearing of the Summons. Those documents reveal the following.
The Plaintiff is a company that operates retail shops at 103 Wattle Street, Punchbowl and 93 Bankstown City Plaza, Bankstown.
The Defendant is a New South Wales police officer. At all material times, the Defendant exercised powers and performed functions conferred on him pursuant to a delegation from the Commissioner of the Australian Federal Police ("AFP Commissioner") issued under s.3ZW Crimes Act 1914 (Cth).
On 15 August 2012, two search warrants were issued, pursuant to s.3E Crimes Act 1914 (Cth), by David Trotter, Registrar and Authorised Justice, in relation to the Punchbowl premises and the Bankstown premises.
On or about 15 August 2012, the Defendant, together with employees of Trademark Investigation Services and other New South Wales police officers, attended the Bankstown premises to execute the search warrant pursuant to s.3F Crimes Act 1914 (Cth). A number of items were seized, including items of clothing, handbags, wallets and jewellery.
On the same date, other New South Wales police officers, together with employees of Trademark Investigation Services, attended the Punchbowl premises to execute the search warrant applicable to those premises and a number of items were seized, including items of clothing, handbags, wallets and sunglasses.
The Defendant issued Property Seizure/Exhibit Form B56456 in relation to the Bankstown premises and Constable Declan Cullerton issued Property Seizure/Exhibit Form B56413 in relation to the Punchbowl premises to the respective occupiers of those premises.
The Plaintiff requested the return of the seized items in a letter from the Plaintiff's solicitor to the Defendant dated 19 September 2012.
On 24 October 2012, the Plaintiff commenced proceedings (2012/330777) ("the 2012 proceedings") in the Supreme Court of New South Wales seeking the return of the goods and damages, naming the AFP Commissioner and the Defendant as Defendants.
On 26 February 2013, the Plaintiff filed a Notice of Discontinuance as against the AFP Commissioner in the 2012 proceedings, leaving the present Defendant as the sole Defendant in those proceedings.
On or about 28 March 2013, a decision was made not to prosecute the Plaintiff for offences under the Trade Marks Act 1995 (Cth).
On 3 April 2013, the Defendant filed a Defence in the 2012 proceedings. Paragraph 6 of that Defence was in the following terms:
"In answer to the whole of the Claim, from the date of seizure until Thursday 28 March 2013, the items seized were held for a purpose under section 3ZQU of the Crimes Act 1914 (Cth), namely that the property was required for the investigation of suspected offences under the Trade Marks Act 1995 (Cth). On Thursday 28 March 2013, a decision was made not to prosecute the Plaintiff for offences under the Trade Marks Act. Consideration was then given as to whether to make an application for forfeiture of the items seized. On 3 April 2013, instructions were given to the Crown Solicitor to make an application for an order under s.3ZQZB(3) of the Crimes Act 1914."
On 8 April 2013, the Defendant applied to a magistrate for an order pursuant to s.3ZQZB(3) Crimes Act 1914 (Cth) for the items to be destroyed. The application stated that there are reasonable grounds to suspect that if the seized items are returned to the Plaintiff it is likely that the items will be used in the commission of serious offences, namely offences under s.148 Trade Marks Act 1995 (Cth). The Application sought an order for the destruction of goods itemised in NSW Property Seizure/Exhibit Form Nos. B56413 and B56456. The grounds contained in the Application included the following:
"There are reasonable grounds to suspect that, if the goods are returned to the respondent [Paphos Providores Pty Limited], it is likely that the goods will be used in the commission of serious offences namely offences under section 148 of the Trade Marks Act 1995 (Cth):
(i) All of the goods displayed falsified registered trade marks;
(ii) at the time the goods were seized, they were in the possession of the respondent for the purposes of sale.
It is necessary to destroy the goods to ensure that they are not used in the commission of an offence under section 148 of the Trade Marks Act 1995".
The Court was informed that the application to a magistrate has been stood over pending the resolution of the present proceedings instituted by the filing of the Plaintiff's Summons on 22 October 2013.
The Court was also informed that the 2012 proceedings in this Court have been adjourned to permit the resolution of the Plaintiff's claim for declaratory relief.
At the commencement of the hearing in this Court, Mr Ash stated that there was no challenge with respect to the issue and execution of the search warrants. The matters to be determined concern the validity of the provisions in the Crimes Act 1914 (Cth) upon which the Defendant relies in the application for destruction of the items seized under the search warrants.
Relevant Statutory Provisions
The provisions under challenge in these proceedings lie within Part 1AA of the Crimes Act 1914 (Cth) which is entitled "Search, information gathering, arrest and related powers".
Section 3C(1) relevantly defines a "serious offence" as being an offence against the law of the Commonwealth that is punishable by imprisonment for two years or more. An indictable offence under s.148(1) Trade Marks Act 1995 (Cth) involving goods with false trade marks is punishable by imprisonment for five years or 550 penalty units, or both. It was common ground in this Court that such an offence falls within the definition of a "serious offence" in s.3C Crimes Act 1914 (Cth).
Section 3CA Crimes Act 1914 (Cth) is of critical importance. That provision states:
"Nature of functions of magistrate
(1) A function of making an order conferred on a magistrate by section 3ZI, 3ZJ, 3ZK, 3ZN or 3ZQZB is conferred on the magistrate in a personal capacity and not as a court or a member of a court.
(2) Without limiting the generality of subsection (1), an order made by a magistrate under section 3ZI, 3ZJ, 3ZK, 3ZN or 3ZQZB has effect only by virtue of this Act and is not to be taken by implication to be made by a court.
(3) A magistrate performing a function of, or connected with, making an order under section 3ZI, 3ZJ, 3ZK, 3ZN or 3ZQZB has the same protection and immunity as if he or she were performing that function as, or as a member of, a court (being the court of which the magistrate is a member).
(4) The Governor‑General may make arrangements with the Governor of a State, the Chief Minister of the Australian Capital Territory, the Administrator of the Northern Territory or the Administrator of Norfolk Island for the performance, by all or any of the persons who from time to time hold office as magistrates in that State or Territory, of the function of making orders under sections 3ZI, 3ZJ, 3ZK, 3ZN and 3ZQZB."
Section 3CA provides that the stated powers are conferred on a magistrate in a personal capacity and not as a court or member of a court. The powers are conferred on magistrates as persona designata: Wainohu v State of New South Wales [2011] HCA 24; 243 CLR 181 at 203 [34]ff. The second reading speech for the 1994 statute which inserted s.3CA made clear that the purpose of the provision was to guard against a finding that a breach of the separation of powers was involved: Price v Fitzgerald [2000] FCA 134; 97 FCR 227 at 230 [10]. Section 3CA is to be "seen as a provision designed to put beyond constitutional challenge specific powers conferred" by Division 4 of Part 1AA of the Crimes Act 1914 (Cth): Price v Fitzgerald at 234 [32].
Section 3ZQZB was enacted in its present form in 2011. The same statute amended s.3CA to include s.3ZQZB amongst the provisions specified in the section: Crimes Legislation Amendment Act 2011 (Cth). The explanatory memorandum for the 2011 Act stated that it clarified that the function of making an order under s.3ZQZB is conferred on a magistrate in a personal capacity.
Division 2 of Part 1AA (ss.3E-3S) concerns the issue and execution of search warrants.
Division 4C of Part 1AA is entitled "Using, sharing and returning things seized and documents produced". Subdivision A of Division 4C (ss.3ZQU-3ZQW) provides for the use and sharing by constables or Commonwealth officers of seized things and documents produced.
Subdivision B of Division 4C (ss.3ZQX-3ZQZB) is entitled "Returning things seized and documents produced". Section 3ZQX provides as follows:
"3ZQX When things seized or documents produced under Division 2, 4 or 4B must be returned
When things seized under Division 2 or 4 must be returned
(1) If the Commissioner is satisfied that a thing seized under Division 2 or 4 is not required (or is no longer required) for a purpose mentioned in section 3ZQU or for other judicial or administrative review proceedings, the Commissioner must take reasonable steps to return the thing to the person from whom it was seized or to the owner if that person is not entitled to possess it.
(2) However, the Commissioner does not have to take those steps if:
(aa) either:
(i) the thing may be retained because of an order under subsection 3ZQZB(3), or any other order under that subsection has been made in relation to the thing; or
(ii) the Commissioner has applied for such an order and the application has not been determined; or
(a) the thing may otherwise be retained, destroyed or disposed of under a law, or an order of a court or tribunal, of the Commonwealth or of a State or a Territory; or
(b) the thing is forfeited or forfeitable to the Commonwealth or is the subject of a dispute as to ownership.
When documents produced under Division 4B must be returned
(3) If the Commissioner is satisfied that a document produced under Division 4B is not required (or is no longer required) for a purpose mentioned in section 3ZQU or for other judicial or administrative review proceedings, the Commissioner must take reasonable steps to return the document to the person who produced the document or to the owner if that person is not entitled to possess it.
(4) However, the Commissioner does not have to take those steps if:
(a) either:
(i) the document may be retained because of an order under subsection 3ZQZB(3), or any other order under that subsection has been made in relation to the document; or
(ii) the Commissioner has applied for such an order and the application has not been determined; or
(b) the document may otherwise be retained, destroyed or disposed of under a law, or an order of a court or tribunal, of the Commonwealth or of a State or a Territory; or
(c) the document is forfeited or forfeitable to the Commonwealth or is the subject of a dispute as to ownership."
Section 3ZQZB is the provision at the centre of this litigation. It provides as follows:
"3ZQZB Magistrate may permit a thing seized or document produced under this Part to be retained, forfeited etc.
(1) A magistrate may, on application by the Commissioner, make an order under subsection (2) or (3) in relation to a thing seized or a document produced under this Part.
Use for purpose mentioned in section 3ZQU or for other judicial or administrative review proceedings
(2) The magistrate may order that a thing seized under Division 3 or 3A be retained for the period specified in the order if the magistrate is satisfied that the thing is being used, or is required to be used, for a purpose mentioned in section 3ZQU or for other judicial or administrative review proceedings.
Preventing use in committing terrorist act, terrorism offence or serious offence
(3) The magistrate may make any of the orders referred to in subsection (4) if the magistrate is satisfied that there are reasonable grounds to suspect that, if a thing seized or document produced under this Part is returned to any of the following persons, it is likely to be used by that person or another person in the commission of a terrorist act, a terrorism offence or a serious offence:
(a) the owner of the thing or document;
(b) in the case of a thing - the person from whom the thing was seized;
(c) in the case of a document - the person who produced the document.
(4) The orders are as follows:
(a) an order that the thing or document may be retained for the period specified in the order;
(b) an order that the thing or document is forfeited to the Commonwealth;
(c) for a thing that is not a document - an order that:
(i) the thing be sold and the proceeds given to the owner of the thing; or
(ii) the thing be sold in some other way;
(d) an order that the thing or document is to be destroyed or otherwise disposed of.
Thing or document must be returned if magistrate not satisfied
(5) The magistrate must order that a thing or document be returned to the following person if the magistrate is not satisfied as mentioned in subsection (2) or (3):
(a) in the case of a thing - the person from whom the thing was seized;
(b) in the case of a document - the person who produced the document;
(c) if the person referred to in paragraph (a) or (b) is not entitled to possess the thing or document - the owner of the thing or document.
Persons with an interest in thing or document
(6) Before making an application under this section in relation to a thing or document, the Commissioner must:
(a) take reasonable steps to discover who has an interest in the thing or document; and
(b) if it is practicable to do so, notify each person who the Commissioner believes to have such an interest of the proposed application.
(7) The magistrate must allow a person who has an interest in the thing or document to appear and be heard in determining the application.
Special rule for things seized under Division 3
(8) The Commissioner may only make an application under this section in relation to a thing seized under Division 3 if the application is made:
(a) before the end of 60 days after the seizure; or
(b) before the end of a period previously specified in an order in relation to the thing under this section."
Section 3ZQZB was first inserted into the Crimes Act 1914 (Cth) in 2010 by the Crimes Legislation Amendment (Serious and Organised Crime) Act (No. 2) 2010 (Cth). At that time, s.3ZQZB empowered the magistrate to order that the thing be retained for a specified period, be forfeited to the Commonwealth, be sold with the proceeds to be given to the owner or that the thing be otherwise sold or disposed of. Section 3ZQZB replaced an old scheme relating to seized things under the then s.3UG Crimes Act 1914 (Cth).
The Crimes Legislation Amendment Act 2011 (Cth) repealed the then s.3ZQZB and substituted a new provision that applied more broadly.
Finally, it is appropriate to set out the terms of s.148 Trade Marks Act 1995 (Cth). That provision was altered substantially in 2013. Given the terms of s.3ZQZB Crimes Act 1914 (Cth), the hearing before me proceeded upon the basis that it is the present form of s.148 which is relevant, given that the application, if it is permitted to proceed, will involve consideration by a magistrate, for the purpose of s.3ZQZB(3), as to whether her or she is satisfied that there are reasonable grounds to suspect that if the seized items are returned to the Plaintiff they are likely to be used in the commission of offences under s.148 Trade Marks Act 1995 (Cth). This assessment would fall to be made at the time of the hearing of the application by reference to possible future events, clearly requiring consideration of s.148 in its present form.
Section 148 Trade Marks Act 1995 (Cth) presently provides as follows:
"148 Goods with false trade marks
Indictable offence
(1) A person commits an offence if:
(a) the person:
(i) sells goods; or
(ii) exposes goods for sale; or
(iii) possesses goods for the purpose of trade or manufacture; or
(iv) imports goods into Australia for the purpose of trade or manufacture; and
(b) any of the following applies:
(i) there is a registered trade mark on the goods;
(ii) there is a mark or sign on the goods that is substantially identical to a registered trade mark;
(iii) a registered trade mark on the goods has been altered, defaced, added to, wholly or partly removed, erased or obliterated; and
(c) the registered trade mark, or mark or sign, was applied, altered, defaced, added to, wholly or partly removed, erased or obliterated, as the case requires, without:
(i) the permission of the registered owner, or an authorised user, of the trade mark; or
(ii) the application being required or authorised by this Act, a direction of the Registrar or an order of a court.
Penalty: Imprisonment for 5 years or 550 penalty units, or both.
Summary offence
(2) A person commits an offence if:
(a) the person:
(i) sells goods; or
(ii) exposes goods for sale; or
(iii) possesses goods for the purpose of trade or manufacture; or
(iv) imports goods into Australia for the purpose of trade or manufacture; and
(b) any of the following applies:
(i) there is a registered trade mark applied to the goods;
(ii) there is a mark or sign applied to the goods that is substantially identical to a registered trade mark;
(iii) a registered trade mark applied to the goods has been altered, defaced, added to, wholly or partly removed, erased or obliterated; and
(c) the registered trade mark, or mark or sign, was applied, altered, defaced, added to, wholly or partly removed, erased or obliterated, as the case requires, without:
(i) the permission of the registered owner, or an authorised user, of the trade mark; or
(ii) the application being required or authorised by this Act, a direction of the Registrar or an order of a court.
Penalty: Imprisonment for 12 months or 60 penalty units, or both.
(3) The fault element for paragraphs (2)(b) and (c) is negligence.
Note 1: For registered trade mark see section 6.
Note 2: For applied to goods see section 9.
Note 3: International trade marks may be protected under the regulations: see Part 17A."
Issues for Determination
At the hearing of the Summons, the Court was assisted by detailed written and oral submissions concerning the legal issues falling for determination. Those issues may be summarised as follows:
(a) Is the function exercised by a magistrate under s.3ZQZB(3)(b) and (4)(d) in the present case one that is exclusively judicial in nature, despite the terms of s.3CA(1) which consigns the function as one conferred on a magistrate in a personal capacity and not as a court or as a member of the court?
(b) Even if the provision is valid in the circumstances of this case so as to permit an administrative or executive decision concerning destruction of the seized items, do the circumstances of the present case involve a valid exercise of the trade mark power for the purpose of s.51(xviii) of the Constitution?
(c) Even if a valid exercise of the trade mark power is involved, does a destruction order under s.3ZQZB(4)(d) involve an acquisition of property by the Commonwealth so as to require that acquisition of property to be undertaken on just terms for the purpose of s.51(xxxi) of the Constitution?
Some Observations Concerning the Search Warrant Process Under Part 1AA of the Crimes Act 1914 (Cth)
Before moving to the issues for determination, it is appropriate to consider aspects of the search warrant process which may give rise to an application under s.3ZQZB(3) and (4). This topic was the subject of some discussion during the hearing in this Court and an understanding of the process, and its statutory context, will assist the resolution of the issues raised in the proceedings.
The antecedent function of issuing a search warrant under s.3E involves an exercise of administrative and not judicial power: Price v Fitzgerald at 233 [22]. It is an administrative function, albeit one where the issuing officer is bound to act judicially: Love v Attorney-General (NSW) [1990] HCA 4; 169 CLR 307 at 322. An issuing officer may issue a search warrant under s.3E(1) if the officer "is satisfied, by information on oath or affirmation, that there are reasonable grounds for suspecting that there is, or there will be within the next 72 hours, any evidential material at the premises".
Section 3ZQX(1) requires the AFP Commissioner to take reasonable steps to return things seized in execution of a search warrant to the person from whom it was seized or to the owner (in certain defined circumstances). That is to take place once the AFP Commissioner is satisfied that a thing seized is not required (or is no longer required) for a purpose mentioned in s.3ZQU or for other judicial or administrative review proceedings. This provision creates a form of presumption in favour of return when circumstances described in s.3ZQX(1) come about.
However, the AFP Commissioner does not have to take steps to return under s.3ZQX(1) if an order has been made under s.3ZQZB(3) or an undetermined application under that provision remains on foot. This provision applies in the present circumstances, so that the Defendant (for the AFP Commissioner) is not required to return the things to the Plaintiff while an outstanding application under s.3ZQZB(3) is under way.
Section 3ZQZB(3) enables a magistrate, in the exercise of discretion, to make any of the orders referred to in s.3ZQZB(4) if the magistrate is satisfied that there are reasonable grounds to suspect that, if a thing seized under search warrant is returned to the owner or the person from whom it was seized, it is likely to be used by that person or another person in the commission of a serious offence. In utilising a formula based on satisfaction that there are reasonable grounds for suspicion, s.3ZQZB(3) uses language encountered frequently in the context of the power to issue search warrants, of the type seen in s.3E(1) (see [37] above).
Authorities concerning these terms in the context of the issue of search warrants appears to apply to this function as well. Suspicion is a "state of conjecture or surmise" or a "slight opinion but without sufficient evidence": George v Rockett [1990] HCA 26; 170 CLR 104 at 115. However, some factual basis for the suspicion must be shown - it must be something which, in all the circumstances, ought create in the mind of a reasonable person an actual apprehension of the relevant fact: George v Rockett at 115-116.
It is the magistrate who is required under s.3ZQZB(3) to be satisfied that there are reasonable grounds for suspecting the relevant matters. The notion of reasonable grounds for suspicion imports an objective test: Williams v Keelty [2001] FCA 1301; 184 ALR 411 at 446 [166]. By requiring reasonable grounds for suspicion, s.3ZQZB(3) calls for the existence of facts which are sufficient to induce that state of mind in a reasonable person: George v Rockett at 112.
Viewed in context, the word "likely" in s.3ZQZB(3) appears to mean that there is a substantial chance, a real and not remote chance, that the thing or things would be used by the relevant person in the commission of a serious offence, whether the chance is less or more than 50%: Boughey v The Queen [1986] HCA 29; 161 CLR 10 at 21. It is notable that the legislature has used the word "likely" and not the word "probable" in this statutory context: Darkan v The Queen [2006] HCA 34; 227 CLR 373 at 391-396 [56]-[71].
Section 3ZQZB(3) provides that the magistrate "may" make any of the orders referred to in s.3ZQZB(4). Subject to a contrary intention, the use of the word "may" means that an order may be made at the discretion of the magistrate: ss.2(2) and 33(2) Acts Interpretation Act 1901 (Cth). The provision allows for a range of orders which may be made:
(a) retention for a specified period (s.3ZQZB(4)(a));
(b) forfeiture to the Commonwealth (s.3ZQZB(4)(b));
(c) sale of the thing with the proceeds to be given to the owner (s.3ZQZB(4)(c));
(d) an order for destruction or that the thing be "otherwise disposed of" (s.3ZQZB(4)(d)). Viewed in context, a disposal order may involve the dumping or elimination of a thing which does not involve destruction.
Clearly, a wide range of circumstances will arise in which, if the statutory test is satisfied, the relevant order to be made may vary depending upon the nature of the thing and the type of offence which is likely to occur. In this case, Mr Lenehan and Ms Sharp submitted that a destruction order is the only realistic option. Sale is not open as that itself may involve a breach of the Trade Marks Act 1995 (Cth). Forfeiture to the Commonwealth would also be pointless as the Commonwealth would be left with things which could not lawfully be dealt with.
Mr Lenehan submitted that a magistrate considering an application under s.3ZQZB(3) would be required to give reasons, with the relevant decision being open to review under the Administrative Decisions (Judicial Review) Act 1977 (Cth). All counsel referred to the statutory obligation in s.3ZQZB(7) for the magistrate to allow a person who has an interest in the relevant things to appear and be heard in determining the application, thereby giving rise to a statutory obligation to accord procedural fairness.
If the function being exercised under s.3ZQZB(3) and (4)(b) is administrative in nature, a magistrate considering the application would not be bound by the rules of evidence.
Submissions diverged concerning what flowed from these features attaching to the determination of an application under the provision. Mr Ash contended that they fortified a conclusion that the function being exercised was judicial in nature, while Mr Lenehan and Ms Sharp argued that these aspects were consistent with the statutory description of the function as being administrative in nature, in accordance with s.3CA of the Act.
The First Issue - A Judicial or Administrative Function?
Submissions on the First Issue
It is not necessary to recount in great detail the comprehensive written and oral submissions made to the Court for the purpose of determining this question.
Mr Ash submitted that the function of making an order under s.3ZQZB(3)(b) and (4)(d) involves the exercise of the judicial power of the Commonwealth. As this power could only be exercised by a court, he submitted that s.3CA could not render the power one exercisable persona designata and that invalidity is therefore established.
Mr Ash submitted that the destruction power contained in s.3ZQZB(3) and (4) was final in nature and involved a process by which punishment is imposed for an uncommitted crime. He further contended that the judicial nature of the function was clear from the textual and contextual nature of s.3ZQZB(3), and that s.3CA(1) did not lead to a different result. Reference was made to the legislative history of s.3CA and s.3ZQZB since 1994 in support of this submission.
Mr Lenehan pointed to the terms of ss.3CA and 3ZQZB, which provide expressly for the relevant function to be administrative in nature. Reference was made to authority in support of the submission that the decision under s.3ZQZB(3) is largely forward looking and is not binding or authoritative in the relevant sense, so that a number of the indicia of the judicial function were not present.
Ms Sharp developed seven reasons as to why the s.3ZQZB(3) power was not judicial in nature. These submissions extended from a textual and contextual examination of the provision to characterisation of the function in a manner which, it was submitted, supported a conclusion that the function was not judicial in nature.
Resolution of Competing Submissions
The High Court of Australia has emphasised the "difficulty, if not impossibility, of framing a definition of judicial power that is at once exclusive and exhaustive": Precision Data Holdings Limited v Wills [1991] HCA 41; 173 CLR 167 at 188-189.
Where a statute confers power on a court or a judge, there is the question whether the power is conferred upon the court or the judge as such. Where the power is conferred on a court, there is ordinarily a strong presumption that the court as such is intended. But the presumption is rebuttable: Love v Attorney-General for New South Wales at 319. The interrelationship between s.3CA and s.3ZQZB assists the rebuttal of any presumption which may arise from the conferring of the power under s.3ZQZB(3) upon a magistrate.
The starting point is the text used by the legislature in ss.3ZQZB and 3CA. The wording of s.3CA(1)-(3) involves express language by the legislature pointing to an administrative and not judicial function being exercised by a magistrate under, amongst other provisions, s.3ZQZB. This formula reflects a clear legislative intention to confer the relevant powers upon a magistrate in a personal capacity, and not as a court or a member of a court. I do not consider that the legislative history of s.3CA and the later inclusion of s.3ZQZB in that provision provides any assistance to the Plaintiff in this case. Indeed, the inclusion of express reference to s.3ZQZB in s.3CA operates against the argument advanced by the Plaintiff.
The amendments effected by the Crimes Legislation Amendment Act 2011 (Cth) (see [26] and [31]-[32] above) evince a clear legislative choice to include the powers now contained in s.3ZQZB in the regime in s.3CA that applied to other powers conferred upon magistrates under Part 1AA. That choice was clearly open to the Commonwealth Parliament.
That said, the question is one of substance and not form. If the challenged function to be exercised in s.3ZQZB(3) and (4) involves the exercise of judicial power, then the provisions of s.3CA will not operate to save it from invalidity. It is necessary to consider the function to be exercised under s.3ZQZB(3) and (4) to determine whether the power being exercised is, in truth, judicial in nature.
A frequently cited passage concerning the nature of judicial power is the statement of Kitto J in R v Trade Practices Tribunal; Ex Parte Tasmanian Breweries Pty Limited [1970] HCA 8; 123 CLR 361 ("Tasmanian Breweries") at 374:
"Thus a judicial power involves, as a general rule, a decision settling for the future, as between defined persons or classes of persons, a question as to the existence of a right or obligation, so that an exercise of the power creates a new charter by reference to which that question is in future to be decided as between those persons or classes of persons. In other words, the process to be followed must generally be an inquiry concerning the law as it is and the facts as they are, followed by an application of the law as determined to the facts as determined; and the end to be reached must be an act which, so long as it stands, entitles and obliges the persons between whom it intervenes, to observance of the rights and obligations that the application of law to facts has shown to exist."
The existence of many positive features which are essential to the exercise of judicial power are not by themselves conclusive of it. Some features which are common ingredients in the exercise of judicial power may also be elements in the exercise of administrative power, and vice versa: Precision Data Holdings Limited v Wills at 189.
No single combination of necessary or sufficient factors identifies what is judicial power. The protean or chameleon nature of powers, and the so-called chameleon principle, have been noted in a number of authorities: Attorney-General (Cth) v Alinta [2008] HCA 2; 233 CLR 542 at 577 [93].
In Thomas v Mowbray [2007] HCA 33; 233 CLR 307, Gleeson CJ referred to the judgment of Dixon CJ, McTiernan, Fullagar and Kitto JJ in R v Kirby; Ex parte Boilermakers' Society of Australia [1956] HCA 10; 94 CLR 254 at 278, and observed (at 326 [11]):
"Their Honours went on to cite, as containing a statement of the 'true position', a work by Professor Willoughby [Willoughby, The Constitutional Law of the United States, 2nd ed (1929) at 1619-1620], who wrote:
'Generally speaking, it may be said that when a power is not peculiarly and distinctly legislative, executive or judicial, it lies within the authority of the legislature to determine where its exercise shall be vested.'"
The Chief Justice went on to say, at 327 [12]:
"Deciding whether a governmental power or function is best exercised administratively or judicially is a regular legislative exercise. If, as in the present case, Parliament decides to confer a power on the judicial branch of government, this reflects a parliamentary intention that the power should be exercised judicially, and with the independence and impartiality which should characterise the judicial branch of government."
Consideration as to whether the relevant power is judicial in nature involves an enquiry as to whether it involves the determination of existing rights and obligations relating (relevantly) to property and the making of a binding and authoritative decision which is enforceable. In my view, the exercise of the relevant power requires a decision maker to engage in a forward-looking process to look at what is reasonably likely in the future rather than a decision as to what has happened in the past. The power conferred by s.3ZQZB does not involve the resolution of a dispute about pre-existing rights and obligations: Precision Data Holdings Limited v Wills at 189. Rather, it involves the creation of new rights and obligations: Precision Data Holdings Limited v Wills at 191; Attorney-General (Cth) v Alinta Limited at 550 [2], 553-554 [14].
In reaching this conclusion, I have taken into account the Plaintiff's submission that a destruction order will bring to an end the Plaintiff's existing right to possess the seized items. Although as a practical matter that may be correct, in my view it does not colour the true nature of the magistrate's task. The function to be exercised by the magistrate will focus upon the likely future use of the things. If the statutory formula is not satisfied, the Plaintiff will be entitled to the return of the seized items. Although the statutory formula will no doubt require consideration of the present form and labelling of the items, the critical decision will involve a forward-looking exercise.
An order that the thing be dealt with in one of the ways contemplated in s.3ZQZB(4) gives rise to certain rights and obligations arising from the order a magistrate makes in the particular case, but those rights and obligations do not exist "antecedently and independently" of the making of that order: Precision Data Holdings Limited v Wills at 190. This exercise is not consistent with a judicial function.
I accept the submissions made on behalf of the Attorneys-General that the relevant power in this case is not distinctly in one category or the other so that it lies within the authority of the legislature to determine where its exercise ought be vested. In this case, the legislative expression in s.3CA is clear, with the function being placed in the administrative category.
I also accept the submission made on behalf of the Attorneys-General that an order under s.3ZQZB(3) is not conclusive or authoritative in nature. The statute does not purport to give a s.3ZQZB(3) order a conclusive character which would prevent collateral challenge in proceedings to compel compliance with the order: Attorney-General (Cth) v Breckler [1999] HCA 28; 197 CLR 83 at 111-112 [46]-[47]. An order under s.3ZQZB(3) is not enforceable nor binding or conclusive between the parties as it would be if it was an order of a court. The position may be distinguished from that of the determination in Brandy v Human Rights & Equal Opportunity Commission [1995] HCA 10; 183 CLR 245 at 254, 259-260, 268 and 270. The reasoning in that case which led to a finding that a judicial function was involved does not apply to the present proceedings. An order for destruction is not binding, conclusive and enforceable, applying the principles relevant to such a classification.
This view is supported by s.3CA(2), which provides that orders made under s. s.3ZQZB have effect only by virtue of the Act and are "not to be taken by implication to be made by a court".
The exercise of the power under s.3ZQZB(3) and (4) constitutes only the "factum by reference to which" the legislation operates to alter the law in the particular case: Attorney-General (Cth) v Alinta Limited at 553 [12]-[13], 561-562 [43]-[44], 577-579 [93]-[100]; Attorney-General (Cth) v Breckler at 111 [45]; Tasmanian Breweries at 371, 378.
The effect of an order under s.3ZQZB is to relieve the AFP Commissioner of the obligation to return the seized items under s.3ZQX(1). If the lawfulness of the AFP Commissioner's possession of the goods was challenged, then it would remain for a court in those proceedings to finally determine the rights and duties of the parties: Attorney-General (Cth) v Breckler at 111-112 [46]; Attorney-General (Cth) v Alinta Limited at 562 [44], 599 [175]. Both the magistrate's state of satisfaction in s.3ZQZB(3) and any order for destruction or forfeiture are "contestable in a court of law": French J in Olbers Co Limited v Commonwealth of Australia [2004] FCA 269; 136 FCR 67 at 93 [92].
In my view, an order for destruction under s.3ZQZB(4), being an administrative act, would be open to collateral challenge by the Plaintiff in the 2012 proceedings.
The adjudgement and punishment of criminal guilt under a law of the Commonwealth is a function well-recognised as exclusively judicial in character: Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs [1992] HCA 64; 176 CLR 1 at 27. However, I do not accept the Plaintiff's submission that the making of an order under s.3ZQZB(3) and (4)(d) is akin to the adjudgement and punishment of criminal guilt so as to be classified as judicial in nature. The relevant decision to be made under the provision is forward looking, applying a statutory formula as contained in the provision. The appropriate characterisation of the provision is that it is intended to prevent unlawful conduct in the future and is essentially protective in nature. As Gleeson CJ observed in Thomas v Mowbray at 327 [12], many "penalties are imposed administratively, although there is usually a capacity for judicial review or litigious contest". That capacity exists here, including the requirement to accord procedural fairness under s.3ZQZB(7).
I do not accept that a destruction order under s.3ZQZB(4) may properly be characterised as a form of punishment. But even if punishment was considered an apt description, as Gleeson CJ observed in Re Woolley; Exparte Applicants M276/2003 [2004] HCA 49; 225 CLR 1 at 12 [17], "punishment, in the sense of inflicting of involuntary hardships or detriment by the State, is not an exclusively judicial function".
It has never been the case that forfeiture could only take place by judicial order. The present provision may be seen as a contemporary example of statutory forfeiture of a type seen in customs and excise legislation, where forfeiture does not occur by judicial order: Cheatley v The Queen [1972] HCA 63; 127 CLR 291 at 310. Forfeiture and destruction procedures occur where there is no judicial order, including in circumstances where officers of the Commonwealth had reasonable grounds to believe items were forfeited under the relevant provision: Olbers Co Limited v Commonwealth of Australia [2004] FCAFC 262; 143 FCR 449 at 454-455 [14]-[15].
Forfeiture as a civil sanction may include elements of deterrence and protection of society, with an element of incapacitation affecting even innocent holders of property: Re Director of Public Prosecutions; Ex parte Lawler [1994] HCA 10; 179 CLR 270 at 290; Attorney-General (NT) v Emmerson [2014] HCA 13; 88 ALJR 522 at 529-530 [18]-[20]. Similar considerations apply to the making of a destruction order under s.3ZQZB(4)(d).
I am not persuaded that the power to be exercised under s.3ZQZB(3) and (4)(d) is judicial in nature. Rather, the power is administrative or executive. As with the power to issue a search warrant, it is to be exercised judicially (see [37] above). The magistrate is to exercise this administrative power in a just and fair manner with judicial detachment: Tasmanian Breweries at 373; Love v Attorney-General (NSW) at 322. The use of the persona designata mechanism in s.3CA(1) and (2) fortifies a conclusion that the power is administrative, and not judicial, in nature. If the magistrate is satisfied that the test in s.3ZQZB(3) is established in this case, an order for destruction may be made, but that order is not binding, conclusive and enforceable. The order may be subject to collateral challenge and would be open to review under the Administrative Decisions (Judicial Review) Act 1977 (Cth).
I determine the first issue adversely to the Plaintiff.
The Second Issue - A Valid Exercise of the Trade Mark Power under s.51(xviii)?
Submissions on the Second Issue
Mr Ash submitted that, even if the power under s.3ZQZB(3)(b) and (4)(d) was administrative or executive in nature and was valid, the circumstances of this case did not involve a valid exercise of the trade mark power for the purpose of s.51(xviii) of the Constitution. He contended that there was not a sufficient connection with the trade mark power and that, in any event, the exercise was disproportionate so as to fall outside the exercise of the trade mark power itself.
Mr Lenehan and Ms Sharp advanced submissions by reference to authority to rebut these submissions.
Resolution of Competing Submissions
The principles to be applied in resolving this issue may be found in the judgment of the plurality in Grain Pool of Western Australia v Commonwealth of Australia [2000] HCA 14; 202 CLR 479 at 492 [16]:
"The general principles which are to be applied to determine whether a law is with respect to a head of legislative power such as s 51(xviii) are well settled. They include the following. First, the constitutional text is to be construed 'with all the generality which the words used admit [R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd [1964] HCA 15; (1964) 113 CLR 207 at 225-226]. Here the words used are 'patents of inventions'. This, by 1900, was 'a recognised category of legislation (as taxation, bankruptcy)' [Stenhouse v Coleman [1944] HCA 36; (1944) 69 CLR 457 at 471], and when the validity of such legislation is in question the task is to consider whether it 'answers the description, and to disregard purpose or object' [Stenhouse v Coleman [1944] HCA 36; (1944) 69 CLR 457 at 471]. Secondly, the character of the law in question must be determined by reference to the rights, powers, liabilities, duties and privileges which it creates [Kartinyeri v The Commonwealth [1998] HCA 22; (1998) 195 CLR 337 at 352-353, 372]. Thirdly, the practical as well as the legal operation of the law must be examined to determine if there is a sufficient connection between the law and the head of power [Re Dingjan; Ex parte Wagner [1995] HCA 16; (1995) 183 CLR 323 at 368-369; Leask v The Commonwealth [1996] HCA 29; (1996) 187 CLR 579 at 601-602, 621, 633-634]. Fourthly, as Mason and Deane JJ explained in Re F; Ex parte F [[1986] HCA 41; (1986) 161 CLR 376 at 388]:
'In a case where a law fairly answers the description of being a law with respect to two subject-matters, one of which is and the other of which is not a subject-matter appearing in s 51, it will be valid notwithstanding that there is no independent connexion between the two subject-matters.'"
In the present context, s.3ZQZB takes its character from the offence that is the subject of the state of satisfaction in s.3ZQZB(3), namely s.148 Trade Marks Act 1995 (Cth).
I do not accept the Plaintiff's submission that there is not sufficient connection with the head of power in this case. It is the essence of the grant of legislative power under s.51(xviii) that it authorises laws that create, confer and provide for the enforcement of intellectual property rights in trademarks: Nintendo Co Limited v Centronics Systems Pty Limited [1994] HCA 27; 181 CLR 134 at 160. Here, the things seized under search warrant are described in such a way as to raise, on the face of it, a question as to whether contraventions of s.148 Trade Marks Act 1995 (Cth) are likely. The fact that the enquiry to be made is forward looking does not weaken, let alone break, the sufficient connection with the trade mark power.
Once this point is reached, the justice and wisdom of the law and the degree to which the means it adopts are necessary or desirable are matters for the legislature and not the courts: Leask v Commonwealth of Australia [1996] HCA 29; 187 CLR 579 at 602; Attorney-General (NT) v Emmerson at 541 [81]. Complaints about the justice, wisdom, fairness or proportionality of the measures adopted are complaints of a political, rather than a legal, nature: Attorney-General (NT) v Emmerson at 541-542 [85].
The second issue should be resolved adversely to the Plaintiff.
The Third Issue - Does the Requirement for Acquisition of Property on Just Terms Under s.51(xxxi) Arise?
Submissions on the Third Issue
Mr Ash submitted that even if the first and second issues were resolved adversely to the Plaintiff, the circumstances of this case would mean that an order for destruction of the Plaintiff's property would give rise to an acquisition by the Commonwealth of property that must be undertaken on just terms for the purpose of s.51(xxxi) of the Constitution.
Mr Lenehan and Ms Sharp submitted that there was no acquisition by the Commonwealth in this context and that, in any event, it would be incongruous and inconsistent to speak of just terms in the circumstances of a statutory provision such as this.
Resolution of Competing Submissions
I am not persuaded that a destruction order gives rise to an acquisition by the Commonwealth of property for the purpose of s.51(xxxi) of the Constitution.
There is no acquisition of a proprietary interest by the Commonwealth so as to trigger that provision: Commonwealth of Australia v Tasmania [1983] HCA 21; 158 CLR 1 at 145; JT International SA v Commonwealth of Australia [2012] HCA 43; 250 CLR 1 at 62-63 [149]-[150], 71 [183], 132 [369]-[372]; Tran v Commonwealth of Australia [2010] FCAFC 80; 187 FCR 54 at 107 [234]. An acquisition of property is not made out by mere restriction or extinguishment of a right of property: JT International SA v Commonwealth of Australia at 33-34 [42], 57 [132], 67 [167], 68-69 [172] and 128 [357]. The fact that the Plaintiff's business may be harmed if the seized items are destroyed does not mean that the Commonwealth thereby acquires something in the nature of property itself: JT International SA v Commonwealth of Australia at 132 [372] (Kiefel J).
The acquisition on just terms requirement under s.51(xxxi) of the Constitution is not triggered by a perception that the Commonwealth has somehow benefitted from the destruction of seized goods by the better achievement of legislative policy (ICM Agriculture Pty Limited v Commonwealth of Australia [2009] HCA 51; 240 CLR 140 at 180 [84]) or by relief from the cost and administrative inconvenience of having to deal with the seized goods in some other fashion (JT International SA v Commonwealth of Australia at 70 [177], 127-132 [353]-[372]; Tran v Commonwealth of Australia at 107 [234]).
I accept the submission of the Commonwealth Attorney-General that the incongruity principle is applicable where there is a risk that property, if not confiscated, will be used in the commission of crime in the future. A purpose of forfeiting (or destroying) property so as to prevent its use in future crime is incongruous with a notion of acquisition of property on just terms. Section 3ZQZB is directed to ensuring observance of the criminal law. It achieves this end by incapacitating the seized thing from being used in the commission of an offence. To apply the just terms guarantee under s.51 (xxxi) to s.3ZQZB would be to "weaken, if not destroy, the normative effect of the prescription of the rule of conduct": Re Director of Public Prosecutions; Ex parte Lawler at 278 (Brennan J).
It would be incongruous or inconsistent for the just terms requirement to arise where property is forfeited or destroyed in the exercise of a statutory provision such as s.3ZQZB(3) and (4): Theophanous v Commonwealth of Australia [2006] HCA 18; 225 CLR 101 at 124-126 [55]-[61], 128 [69]-[70]. Laws of that kind do not permit of just terms and are not laws with respect to "acquisition of property" as that expression is used in s.51(xxxi): Re Director of Public Prosecutions; Ex parte Lawler at 285.
The Plaintiff has not succeeded on the third issue.
Conclusion
The Plaintiff's challenge was directed to the validity of specific parts of ss.3CA and 3ZQZB (see [5] above). The Plaintiff has not succeeded in its claim for relief. The challenged provisions are valid.
The Defendant seeks an order for costs against the Plaintiff. Costs should follow the event as between the Plaintiff and the Defendant. No costs order is sought by either of the Attorneys-General who have intervened in the proceedings.
I make the following orders:
(a) Summons dismissed.
(b) The Plaintiff is to pay the Defendant's costs of the proceedings.
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Decision last updated: 17 December 2014
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