Parker v Comptroller-General of Customs

[2008] HCATrans 332

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S317 of 2008

B e t w e e n -
STEPHEN EDWARD PARKER
Appellant
and
COMPTROLLER-GENERAL OF CUSTOMS
Respondent

FRENCH CJ
GUMMOW J
HAYNE J
HEYDON J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 24 SEPTEMBER 2008, AT 10.24 AM

MR J.T. GLEESON, SC: May it please the Court, I appear with MR M.J. DARKE and MR D.A. LLOYD for the appellant. (instructed by Yeldham Price O’Brien Lusk Lawyers)

MR D.J. FAGAN, SC: May it please the Court, I appear with my learned friend, MR G.M. ELLIOTT for the respondent. (instructed by Australian Government Solicitor)

FRENCH CJ: Yes, Mr Gleeson.

MR GLEESON: Your Honours, the Court raised a question by correspondence on Friday as to whether special leave should be retained in the light of the trial judge’s findings about the averment. We have provided a note on that question and we seek leave to rely upon that note. I would wish to supplement that matter orally in the light of Mr Fagan’s enthusiastic endorsement of the point. Would your Honours indicate whether it would be appropriate to do that immediately or at the end of the main argument?

FRENCH CJ: I think immediately would be good.

MR GLEESON: If your Honours please. The averment is found in volume 1 at page 13, line 45. As a matter of form it is rolled up and does not identify which are the matters of fact as opposed to matters of law which are averred. Justice Hayne in Labrador Liquor referred to that as a possible question which may need to be considered in an appropriate case.

GUMMOW J: What does 255 say?

MR GLEESON: Section 255 is set out on page 298, and as the Court discussed in Labrador Liquor and in El Hajje, under subsection 2(b):

a mixed question of law and fact –

may be averred but –

the averment shall be prima facie evidence of the fact only -

the question of law remaining untouched for the Court.

Under subsection 4(a) the averment cannot go to the intent of the defendant. Our short submission is that when the trial judge dealt with the case her Honour did not make a finding that the averment alone, independent of the evidence, established the conviction beyond reasonable doubt. That is a submission based on a construction of what her Honour did in the reasons and it is also based upon the fact that Mr Fagan, at first instance, never asked her Honour to convict Mr Parker on an independent basis solely of the averment to the exclusion of the evidence. What he sought to do was to say that the averment was something of a gap filler. To the extent that his evidence on any matter might fall a little short, the averment could complete the proof. Can I show first how Mr Fagan asked ‑ ‑ ‑

GUMMOW J: Just before you go on, Mr Gleeson, do I understand then that looking back at the averment, it uses this word “evade” in many provisions?

MR GLEESON: Yes.

GUMMOW J: Do you say, well, one looks at the word “evade” but then one looks at section 255(4)(a) of the statute?

MR GLEESON: Yes, and “evade” cannot be averred because it raises a matter of intent, and we rely upon the authorities which her Honour recited in the judgment. As to the element of intent involved in evasion, they are found at pages 319 to 321.

HAYNE J: Accepting for the purpose of argument that the proposition you have just put is complete and accurate, what was the trial judge to do if, as seems to be the fact, her Honour concluded that there was repeated movement of goods without payment of duty for which your client – the movement of which for which your client was responsible? What conclusion other than intent, absent your client going into the box and explaining these repeated movements of goods to the financial advantage that resulted, was open?

MR GLEESON: If your Honour’s question is on the premise that I am currently addressing, namely, did her Honour on a proper construction of the reasons make a finding based solely on the averment to the exclusion of the evidence on those questions, my answer is her Honour did not make such a finding because her Honour correctly directed herself, at page 322, lines 20 to 25, to the matter which your Honour referred to in Labrador and the Court dealt with in El Hajje. If your Honour’s question is directed to what was her Honour entitled to do once the averment was put together with the evidence, then we submit our basic appeal point remains sound. If we are correct that the entirety of the evidence was wrongly admitted, then we have addressed the matter.

HAYNE J: That sets up a dichotomy which repays some examination.

MR GLEESON: Could I add one other matter, though, in answer to your Honour’s question. Justice Gummow raised the question of “evade” which is a subsection (4)(b) matter. There are also at least two other problems in the averment. The first is that in paragraph 28 of the statement of claim on page 6 there is an allegation that Mr Parker was the owner of the goods within the meaning of section 4, which contains the extended definition of “owner”. We submit that that is a bare allegation of law without an averment of any underlying facts to which the statutory concept of “owner” is applied and therefore suffers the vice which this Court recognised in El Hajje in relation to an averment of excisable goods.

I mention that because, in answer to your Honour Justice Hayne’s question, a critical element in her Honour’s findings adverse to the appellant were that he was the owner and therefore a person liable to duty and therefore a person who may have evaded his obligation. We submit, based on paragraph 28, section 255 would not permit the Court to conclude he was the owner, and that is an issue under section 255(1) and (2)(b).

FRENCH CJ: Was that issue debated before her Honour?

MR GLEESON: None of this was debated, your Honour, for the reason I commenced with, which was that Mr Fagan’s approach was never to say you can independently convict on the averment. Instead, what he said was, “It is here as a residual matter and if there is any element that I fall short on, I rely upon the averment”. But the third example I would like to give with the averment before I come to what Mr Fagan put is in paragraph 36, which relates to the movement. The allegation contains inconsistent alternatives. Either Mr Parker carried out the movement or someone else on behalf of the company, Breven, with his knowledge, carried it out. So the averment avers inconsistent matters. We would submit the second of those matters, even if that were separately averred, would not establish that Mr Parker caused the movement of the goods within section 33.

That is not an idle point because when your Honour dealt with the question of movement – if I could ask your Honours to look at page 312, line 55 at paragraph 90 – her Honour made a finding on the evidence, not on the averment, that:

Mr Parker was the person who undertook the day to day management of Breven’s business, and, in particular, of its record keeping.

She used that finding on the evidence at paragraph 92 to draw an inference against Mr Parker through his failure to give evidence. At paragraph 95 she referred to the reliance on the evidence of the documents “seized from the warehouse” – that is under what we submit to be an unlawful seizure – analysed by Ms Lindsay which unravelled the circumstances. Critically, when her Honour sets out section 33 at paragraph 103 and then deals with it, her Honour’s conclusion at paragraph 112 is that:

Before Mr Parker may be found guilty6 under s33(1), it is necessary that the Comptroller show that he was the person who took the steps that caused the movement.

Her Honour does not say the averment establishes that. Her Honour says:

the evidence of his day to day control of the business and of the record keeping –

is the foundation for that conclusion that it was Mr Parker and that, I submit, is a reference back to paragraph 90.

To give one final example of how it was critical to her Honour to look at the evidence, if one goes back to page 322, after her Honour gave herself a Labrador warning at lines 20 to 30, we submit that nowhere in the following paragraphs does her Honour ever reason that she can properly get from the averment alone to guilt. That is most clear at paragraph 131 where her Honour says she is “satisfied on the evidence that” there was deliberate “and dishonest intent” by the appellant. One item of evidence supporting that conclusion is a denial that Mr Parker gave. That denial is set out on page 295, lines 20 to 30. It did not come from the averment. To show how her Honour was asked to deal with the matter, can I hand up three pages from the transcript ‑ ‑ ‑

FRENCH CJ: So the denial was falsified by the document seized under the warrant?

MR GLEESON: Yes. Could I hand up three pages from the black book in the Court of Appeal of the transcript at first instance, pages 1, 2 and 622?

When the case opened and there was discussion as to how it would proceed, on page 2 between letters D to G, Mr Fagan indicated there was a threshold question about the admissibility of a substantial proportion of the documentary evidence seized. There was an allegation that it was illegally obtained and he said this:

That’s really the first thing to determine, because if that evidence were to be excluded, there would be no plaintiff’s case here.

For that reason the parties proceeded on the voir dire, at the end of which her Honour ruled that the documentary evidence would be received and reasons given later. At the very end of the trial, at page 622, at the end of Mr Fagan’s case on the main trial, after he had tendered his evidence and had been cross‑examined, he came to the tender of the statement of claim, letter S to letter V. He acknowledged the problem – that it contained a mixture of assertions of law and fact – but said to her Honour that:

there are some residual matters in here which I would wish to rely upon on the basis of section 255. Therefore I tender the whole statement of claim on that basis –

ie, what we would submit is a gap‑filler basis. It was never tendered on the basis that her Honour could or should independently convict solely on the averment.

Your Honours, for that reason, we submit that when the Court of Appeal identified the issue in the appeal it did so correctly. That is found in volume 2 at page 515 between lines 40 to 50. Although the written submissions for Mr Parker had addressed both the voir dire and the main judgment, Mr Hutley did not press any appeal against the main judgment, and although Mr Fagan had responded to those submissions and said something about the averment, he never in oral submissions said to the Court of Appeal that the ultimate decision of the trial judge should or could be upheld solely on the basis of what her Honour found about the averment, and for that reason, the Court of Appeal, we submit correctly, identified that the issue before the court was the voir dire judgment, and as the court said:

No separate challenge was pursued in relation to the reasons for conviction or mounted in relation to the penalty, although both would properly be set aside if the evidence were held to be inadmissible.

Your Honours, for those reasons, we submit that the point now embraced by Mr Fagan should not lead to the revocation of special leave. If the point is sought to be ventilated in the appeal by Mr Fagan, our answer would be similar. We submit that he would require leave from the Court under rule 42.08.5 to amend his notice of contention three months out of time. We would oppose that leave on the ground that the point is so weak as not to justify being brought into the appeal.

If he were granted that leave, we would ask that it be done on conditions: first, as to costs; secondly, that we be permitted in response to raise the constitutional question of whether section 255 could have the draconian reach so as to intrude upon the Court’s basic powers – as Mr Fagan contends. We would submit there is a live issue of a constitutional kind as to whether Parliament can permit each and every fact necessary to ground a conviction to be proved by the hearsay averment of a person who will not be called to give evidence, who cannot be tested on that evidence through the usual process, particularly ‑ ‑ ‑

GUMMOW J: That is all very exciting, Mr Gleeson, but part of the answer is, a person in the position of your client gets in the box.

HEYDON J: It just reverses the burden of proof.

GUMMOW J: Milicevic v Campbell and a whole string of cases going back about 80 years.

MR GLEESON: Your Honour has discussed those matters in Nicholas and other cases.

GUMMOW J: Yes, exactly. I do not think one trembles at there is the threat of some constitutional case, Mr Gleeson.

MR GLEESON: In answer to your Honour Justice Heydon, it is more than the reversal of the burden of proof. The original section 255 in the original Customs Act was in that form and was in the form of section 15A of the Industries Preservation Act, which your Honour Justice Gummow discussed in Nicholas. This current form of 255 was introduced by the 1923 amendment to the Customs Act. It is in the similar form to the excise provision your Honours considered in El Hajje where Justice Kirby, at paragraph 67, identified the constitutional issue I am seeking to raise. Your Honours did not consider it there because it was not raised by the parties in the majority.

So what I am seeking to put is, if special leave is not revoked, which is my primary position, beyond there, if Mr Fagan wishes to ventilate this point, he should not be permitted to amend his notice of contention at this time given the weakness of the point, given how I have explained that her Honour never made such a finding. Were he to be permitted to raise it, we should be given that opportunity in response. Your Honours, that is what I wish to say on that first matter.

FRENCH CJ: Yes. Please proceed, Mr Gleeson.

MR GLEESON: Thank you, your Honours. Could I then proceed to three matters. Next, the issue which was between the parties on the special leave application itself, which was essentially – there seems to be an agreement that the Court of Appeal took away from Mr Parker the finding that he had from the trial judge that there was an O’Neill‑type contravention without that being raised by the Court of Appeal or submitted by Customs. The dispute between us is whether anything follows from it. The proposition being put by Customs is that what the Court of Appeal did was merely a piece of isolated obiter which it then put out of its mind when it dealt with section 138.

Our submission is that on a fair reading of the Court’s reasons that could not safely be concluded. I propose to do two things: one, to go to the Court’s reasons and after I have ‑ ‑ ‑

GUMMOW J: How about going to the warrant, which the Court of Appeal did not do, did it? The actual warrant, does that appear at page 144? I do not what comes out of it, but it may be that the warrant was perfectly valid but narrower than what the Act would have permitted the warrant to be, and that consequences flow from that in respect of the nature of the seizure.

MR GLEESON: Yes.

HAYNE J: There is a copy of the warrant annexed to the statement of claim at page 22, is there not? I am sure the text is found in various other places. Which do you say is the most convenient document to look at?

MR GLEESON: Page 22.

HAYNE J: There is a retype of it at 25 if ‑ ‑ ‑

MR GLEESON: Yes, your Honour, that is the actual warrant.

HAYNE J: Well, what did this warrant authorise?

MR GLEESON: Could I just seek guidance from your Honours? I was about to embark upon the question of whether this was isolated obiter, which is important to our materiality. If your Honours wish me to move directly to this matter I will seek to do so.

FRENCH CJ: I think Justice Gummow has just asked you a question, perhaps you can respond to it?

GUMMOW J: I am just anxious we do not get tracked into a false issue.

MR GLEESON: Yes.

GUMMOW J: What I cannot find at any stage, either at first instance or in the Court of Appeal, is a consideration of the terms of the actual warrant, rather than what the Act says and what the schedule of the Act says.

MR GLEESON: I understand your Honour’s question.

GUMMOW J: Do you understand the question?

MR GLEESON: Yes.

GUMMOW J: In other words, questions of wrongful seizure have to be measured not against what the Act might have permitted the warrant to state, but what it did state.

MR GLEESON: Your Honour, if I take you first to the trial judge and then the Court of Appeal to see whether that has been addressed. In the trial judge’s consideration, which is in volume 1 ‑ ‑ ‑

GUMMOW J: But just looking at the terms of the warrant, it talks about what?

HEYDON J: You have to find the information, do you not, to identify the goods?

MR GLEESON: Yes, can I be more direct? We do make the submission simply on the basis of the warrant itself that what it authorises is the break and entry of premises in which “any books or documents relating to the goods are or are supposed to be”. Then further steps including the removal and impounding of those books and documents.

GUMMOW J: What are the goods, as Justice Heydon asked you.

MR GLEESON: “The goods” is a reference back to the goods in the recital at line 30, which are the goods the subject of the information on oath. The correct information – could I hand to your Honours the correct information because it is not in the book, unfortunately?

HEYDON J: There is a Kingswood information at 136. I presume they will be similar?

MR GLEESON: Similar, but not identical. Your Honour should perhaps have – and I apologise for the reproduction of the book - this document, which is the Lawpark information and what it indicates is that there was a purchase of two bottles of Cheval Napoleon Old French Brandy which were labelled. One of them was tested, certain results were recorded on page 2 of the information and the conclusion was that the bottle of brandy – there is a discrepancy between the dates on page 1 and page 2, whether it is 1989 or 1988 – but the conclusion is it:

had a label which falsely described the contents of the bottle as “brandy” contrary to subsection 9(1)(b) of the Spirits Act 1906. Therefore Lawpark Pty Ltd have illegally dealt with goods, being the contents of the bottle.

We do submit that simply on the construction of the warrant the goods are the goods in the information that have been illegally dealt with and that is the one bottle of brandy. Therefore, the warrant authorises the entry of premises where one suspects books and records relating to those goods are and it authorises the impounding of those books and documents, ie, those relating to the one bottle of brandy and it does not authorise ‑ ‑ ‑

FRENCH CJ: It would seem - although I do not know whether there was evidence of this – that those who executed the warrant read it, not with the information, but with a notice to produce.

MR GLEESON: I am not sure about that, your Honour.

FRENCH CJ: There is no evidence of that?

HAYNE J: Well, unless the words “the goods” appearing at about line 36 are construed in some way to hark back to all of the kinds of goods mentioned in the notice to produce - how you do that is not yet articulated - where does the argument go, Mr Gleeson? The search was illegal, was it not?

MR GLEESON: The search was illegal and ‑ ‑ ‑

HAYNE J: How many years has this case occupied?

MR GLEESON: It is a long time, your Honour.

HAYNE J: Yes.

HEYDON J: If this point scored, and it does not really matter whether the complaints you were about to make about the Court of Appeal’s reasoning are sound or not and it does not really matter whether Justice Dunford’s reasoning is correct or not, I think you were going at one point to the reasons for the trial judge and the Court of Appeal to see whether this type of point was under consideration by them. Justice Gummow said remember he could not find any trace of it being considered, and you were about to have a look at that, I think.

MR GLEESON: Yes, and I will come to that now, but in terms ‑ ‑ ‑

HEYDON J: To be blunt about it, was this point taken on behalf of Mr Parker at trial or in the Court of Appeal, and if not, does it matter?

MR GLEESON: I am wanting to put this point which your Honours have identified as a distinct point to the Act, is a point leading to the same conclusion as the trial judge came to that the search and seizure was unlawful because it went beyond what was permitted by section 214(3).

HAYNE J: Assume you get to that conclusion so characterised, where does that take you, and the 138 issue that then has to be confronted is radically different, is it not? Is it not important to know under 138 what sort of illegality you are dealing with, what sort of impropriety you are dealing with, what the extent of it is?

MR GLEESON: Certainly, yes, your Honour, that is important.

GUMMOW J: What would we then do about that?

MR GLEESON: Can I go to the trial judge in the Court of Appeal and then attempt to answer the question your Honours are putting, and perhaps also to how the case was put. That has also arisen from your Honour’s question. In the trial judge’s decision at pages 274 to 275, her Honour’s conclusion at paragraph 24 speaks in terms of a “Schedule V warrant” being “considerably narrower in its scope than a s 214(1) Notice to Produce”. In paragraph 26 her Honour concluded that:

The documents seized, purportedly on the authority of the Schedule V warrant –

GUMMOW J: She talks about “a Schedule V warrant”.

MR GLEESON: Yes.

GUMMOW J: At some stage has her Honour set out Schedule V?

FRENCH CJ: But she refers in 26 to “the Schedule V warrant”, does she not?

MR GLEESON: Yes, there it is “the warrant”.

HAYNE J: Paragraphs 17 and 18 identify “the goods” in the recital to the warrant – the actual warrant – as “two bottles”.

MR GLEESON: Yes, perhaps her Honour there has ‑ ‑ ‑

FRENCH CJ: She finds the goods to which the warrant was intended to refer were the two bottles of French brandy.

MR GLEESON: Yes, that is perhaps on a reading of the warrant together with the information and reading it that both bottles are the subject of the illegality. It does appear to indicate it is one bottle, not two.

Her Honour’s conclusion at paragraph 26 is that the documents seized, purportedly on the authority of the warrant, went well beyond those relating to any single bottle of brandy mentioned in the notice to produce or even the two bottles of brandy mentioned in the information. Perhaps that is how her Honour is dealing with the two bottles. It is sufficient that they are mentioned. The seizure of documents was therefore an impropriety that could properly be called a contravention of an Australian law. Her Honour then also referred to the matter at paragraph 39.

Your Honours, there is this common thread of reasoning between both the approach your Honours have raised with me and O’Neill. Your Honours have looked at the construction of the warrant in question. The reasoning in O’Neill was based upon the form of the Schedule V warrant.

FRENCH CJ: But O’Neill was a red herring, having regard to what she had already found about the scope of the actual warrant.

MR GLEESON: I believe not, your Honour. Her Honour finds two problems, put neutrally. The first problem is the paragraph 22 problem, that there was a lack of proper identification of goods in the notice under section 214(1). That is the problem which Customs have conceded. Mr Parker was seeking to go beyond that in saying not just was there that that problem in identifying the goods you are meant to produce, but that you had searched and seized for documents going beyond the bottle, or the two bottles, whichever it was, that were the subject of the information and from that additional contravention, which was of course far more serious, that was the unlawful search and seizure. That was what Mr Parker was putting forward and which your Honour made findings on in 24 to 26 and in 39. What I was seeking to put was that the questions your Honours have raised about the construction of the warrant itself there are very close parallels to what Justice Dunford reasoned.

HAYNE J: That may be, but is it not evident from paragraph 39 the judge finds that documents “extraneous to those authorised” were taken?

MR GLEESON: Yes, and we embrace that.

HAYNE J: Yes, I understand that.

FRENCH CJ: It would depend on O’Neill. That just depended on the terms of the warrant. O’Neill was about the scope of the power conferred, or the limitations under 214(3).

MR GLEESON: And an essential part of Justice Dunford’s reasoning was to look at the construction of the Schedule V warrant ‑ ‑ ‑

FRENCH CJ: Of Schedule V?

MR GLEESON: And Schedule V is in the same terms as the individual warrant which your Honours have raised with me. If I can show how your Honour Justice Dunford was addressing this same issue. On page 72 of volume 1, in the transcript of the judgment between lines 10 to 40 his Honour in three paragraphs deals with the issue and in the second paragraph says that because the form of warrant is prescribed by the statute itself ‑ ‑ ‑

GUMMOW J: Where do we see Schedule V?

MR GLEESON: Annexed to our submissions in‑chief, your Honours. So the particular warrant here at page 22 follows the form of Schedule V which has the same point in it, namely, that the goods are a relation back to the recital and the recital tells you they are the goods which are the subject of either the information in writing or the original seizure and detention. So his Honour Justice Dunford looking at Schedule V ‑ ‑ ‑

FRENCH CJ: So they are goods unlawfully imported, et cetera, or illegally dealt with or the subject of such an intention, whereas the point is that the power in 214 in relation to the notice to produce extends to goods not necessarily unlawfully or illegally imported or otherwise dealt with?

MR GLEESON: Yes, because under subsection (1) you need ‑ ‑ ‑

FRENCH CJ: Those are the five‑year goods.

MR GLEESON: Yes, under subsection (1) you need one of two types of goods to trigger the ability to make the requirement. You need either illegal dealing or you need goods that you have seized or detained. Once you have got that, you make the requirement and you can require three things; books and records relating to those goods, five‑year goods and you can do some inspection and copying. Justice Dunford is reasoning that when one looks at Schedule V, the goods can only be the goods the subject of the information, and so Parliament in 1923 chose a form for Schedule V which quite deliberately did not refer to the five‑year documents.

HAYNE J: Well, is that right? I understand that the Act was amended in 1923, but is not the requisite starting point section 214 and, in particular, 214(1) and (3)? Does one not come to the Schedule only having first construed, or at least while at the same time construing, (1) and (3) of section 214?

MR GLEESON: I would embrace the latter, your Honour, at the same time and rely upon the ‑ ‑ ‑

HAYNE J: Then, in section 214(1), the last words of the subsection are “any such goods”. What are the goods referred to in that last three words?

MR GLEESON: Your Honour, could I just complete the answer on Justice Dunford and then answer that?

HAYNE J: Yes.

MR GLEESON: I was seeking to put on Justice Dunford that an essential part of his reasoning was that the form of Schedule V carried within it the recital and the recital took one back to the goods the subject of the information, and that form of reasoning which he applies to the statutory form of Schedule V we submit is the same reasoning as applies to the individual warrant. We have attempted to compare Schedule V with the warrant and we cannot find any point of substantial difference between the actual warrant and what the statute would have authorised. Then, returning to your Honour Justice Hayne’s question, Justice Basten dealt with that question and gave “any such goods” the broader meaning. That is at paragraph 48 on page 520 at about lines 20 to 30.

As a matter of authority, the other first instance decisions we can refer to have also given it that broader meaning and we have ascertained that under the predecessor section, which was in the 1890 Victorian Act, which I will hand up – the predecessor to section 214 was section 22 – the structure was a little different. Section 22(2) is the equivalent to what is now the last requirement in section 214(1) and it appears from the final words of subsection (2) that the inspection and copying right was attached to both classes of goods. In the light of that, it is unlikely that “any such goods” in the Federal Act was intended to have a narrower reach and to only relate back to the original goods the subject of the information.

HAYNE J: If that is right, does it follow that the opening words of 214(3) with their reference to failure “to comply with a requirement by the Collector under this section” extend to a failure to produce five‑year documents?

MR GLEESON: Yes, it refers to any person failing to comply with a requirement lawfully made under the section which would have to embrace any requirement made under (1).

HAYNE J: In that event, if you come to the words immediately before paragraphs (a), (b) and (c), “books or documents relating to the goods”, what are the goods there referred to?

MR GLEESON: The goods there referred to are the goods the subject of the Customs warrant which the officer must have with him or her in order to conduct what would otherwise be unlawful search, therefore, the warrant referred to in subsection (2), therefore the warrant set out in Schedule V. Schedule V tells you the answer to which goods they are. They are the goods which have been referred to in the opening lines of subsection 214(1), that is, either the goods illegally dealt with or the goods that have been seized or detained.

HAYNE J: But it follows – and I am not saying that this is an impossible reading – that the reading you assign to (3) is that a person who produces all documents relating to the unlawfully dealt with goods and refuses to produce any five‑year documents and thus fails to comply with the requirement cannot be subjected to a compulsory search. The only method of enforcement of the obligation to produce the five‑year documents is the penal provision of (1).

MR GLEESON: Yes.

HAYNE J: Now, as I say, I am not saying that is an impossible construction but I want to understand the way in which the construction is put.

MR GLEESON: Yes, it is put that way and can I add two points about it? Firstly, in terms of why that would be not anomalous or not contrary to a sensible purpose for the Act, we cannot put that any better than Justice Heerey did in Challenge Plastics Pty Ltd v Collector of Customs (1993) 42 FCR 397 commencing at the foot of page 400 over to page 401.

HEYDON J: What are the first words of the paragraph you want to rely on? I have Australian Law Reports.

MR GLEESON: It is in the Australian Law Reports at page 152 under a heading “Issue 1”. His Honour in the first couple of paragraphs engages in the same textual exercise that I am seeking to put and then in the relevant paragraph considerations of policy point in the same direction, we submit, explains the purpose.

FRENCH CJ: Schedule V does not define the seizure of power. That simply defines the terms of the warrant, so the seizure of power is to be found in section 214(3). I suppose the reading against you would be that, notwithstanding the apparent confinement of a Schedule V warrant to documents relating to goods the subject of illegal conduct, the power that surrounds it is wider and goes to the five‑year goods. That has to be found in section 214(3). It creates of course a curious dichotomy which you would rely upon.

MR GLEESON: Yes. We rely upon that and we, as best we can, seek to rely upon the fact that having the Customs warrant with you is one of the essential elements of the power arising under subsection (3), which takes one back to the schedule. Justice Heerey has put, we submit, the argument as to why ‑ ‑ ‑

GUMMOW J: Yes, but with all respect, the deficiency perhaps in that reasoning is that it does not explore the link between 214(1) and 214(3). Section 214(3) is a conferral of an immunity, is it not, to what otherwise would be a tortious act?

MR GLEESON: Yes.

GUMMOW J: Section 214(1) is the creation of a criminal offence.

MR GLEESON: The creation of, firstly, a new legal obligation and then a criminal offence if that legal obligation is not complied with.

GUMMOW J: Why would one frame the ambit of the immunity of 214(3) disharmoniously, if you like, with the sanction of 214(1) – the scope of 214(1)? That is the question Justice Hayne was putting to you, I think.

MR GLEESON: Yes. Under section 214(1) what is being created is a new obligation on any person who is an owner, which has the extended statutory meaning, of goods which fall into two categories – either goods illegally dealt with, in short, or goods which have already been seized and detained by Customs – for example, under section 203 seized for forfeiture. That person then has the onerous obligation to produce and comply with three matters. If there is any failure by that person, subsection (3) is an immunity, but authorises what would otherwise be trespasses to premises of persons beyond that owner to persons who may not have had any involvement in the illegal dealing to persons who may never have seen the 214(1) notice and may not know that it is not even being complied with. It could catch, for example, the accountant, a family member ‑ ‑ ‑

GUMMOW J: So you are saying, are you, that the person who loses their common law rights manifested by actions in tort by operation of 214(3) is a class of person which extends beyond the “any person” referred to in line one of subsection (3). Is that right?

MR GLEESON: Yes.

GUMMOW J: Is that what you are submitting?

MR GLEESON: Yes, and those persons are subject to not only the unlawful search and seizure, but then the impounding of books and documents which are on their premises, not even the right to keep a copy of them, and in ‑ ‑ ‑

HAYNE J: Is there not a statutory obligation to provide copies, I thought? There was early litigation in this Court about the obligation to provide copies, I thought.

MR GLEESON: Can I check that, your Honour? When Justice Heerey says at the end of the paragraph about policy that:

The removal of documents concerning goods dealt with over five years and the detention of such documents for an indefinite time would be vastly disruptive to any business –

that could be a business not only of a person who has not complied, but of a perfectly innocent person. So it is reasonable to think that absent clearer language than this, Parliament intended to say that disruption to the business of potentially an innocent person will be necessary to the extent they have the books, which are the core books, the ones that relate to the illegal dealing that they need to investigate and prosecute, or the books relating to the goods seized and detained. So, your Honour, that is that matter.

Secondly on that question, can I just deal with what we submit respectfully is an error in Justice Basten’s approach to this question which is found at pages 521 to 522. At 521, paragraph 50, his Honour summarises the reasoning of Justice Dunford and in paragraph 51 concedes the force of that argument. He then says, however, attention must be paid to the words “any requirement”. We acknowledge what he there says over the page, but then on page 522 at about line 18 says:

The recipient of the warrant –

by which his Honour means the person whose premises are being searched –

would have been conscious of the scope of the requirement and hence the categories of the goods to which the documents sought related.

GUMMOW J: Do you say that given the width of the class that is not always so?

MR GLEESON: That is wrong, and it is clear from the last sentence of that paragraph ‑ ‑ ‑

GUMMOW J: Well, cannot always be assumed.

MR GLEESON: Cannot always be assumed, and it is clear from the last sentence of that paragraph that this is a critical step to his Honour’s reasoning that the recipient of the warrant would not expect it to be:

more limited than the requirement to produce and handover documents, with which he or she has immediately previously failed to comply.

So (a) it may not be that person and (b) there is no requirement of immediacy although there is a requirement of one month. Could I just then note with ‑ ‑ ‑

HAYNE J: Just before you go to that, the question about provision of copies is dealt with by section 215 considered by the court in Baume v Commonwealth 4 CLR 97.

MR GLEESON: Your Honours, subject to checking Baume, the scope of 215 relates to documents presented in connection with entries or required to be produced under this Act which would probably cover the matter.

HAYNE J: It covers the latter and the obligations ‑ ‑ ‑

MR GLEESON: Yes. Can I deal with one further aspect of his Honour’s reasoning at paragraph 52 on page 522?

GUMMOW J: I think Baume……some study.

MR GLEESON: In paragraph 52, his Honour says that his preferred construction would create its own anomaly, which is that the third category of books and records under subsection (1) cannot be the subject of a search and seizure under (3). His Honour seized that as an anomaly and says, well, that is hard to explain but it does not justify a bigger anomaly. Our answer is that because subsection (3) is targeted at a different class of persons and has a different subject matter there is no anomaly in a deliberate decision that the only documents that can be seized through subsection (3) are those which triggered the original notice to produce. So, your Honours, in circumstances where the actual warrant here was in the same terms as Schedule V we submit that if the point is good for the warrant it is good for the statute.

HEYDON J: We do not have to bother about the statute. Whatever the construction of the statute, this warrant was lawful. The search was not lawful. Now, you were at one stage showing us where in the reasons of the courts below this point was dealt with and in relation to Justice Simpson it does not seem perhaps squarely to have been dealt with, but in substance the same point was dealt with. It does not seem to have been so approached in the Court of Appeal, though, no doubt because it was not so put to the Court of Appeal, or am I wrong? Ought we to allow an appeal against the Court of Appeal’s orders in relation to a point which may not have been taken before the Court of Appeal?

MR GLEESON: The way the point was taken at first instance is found in a disarmingly simple fashion at page 197.

HEYDON J: Paragraph 5?

MR GLEESON: Paragraph 5. The allegation is:

that in executing the Warrants –

the particular warrants –

Customs seized documents which did not relate to the respective bottle of brandy identified in each Notice to Produce.

HEYDON J: That is admirable.

MR GLEESON: When that is elaborated in the argument, it is found at page 209, lines 20 to 35.

HEYDON J: This is Mr Stack talking?

MR GLEESON: Yes. He says at about line 28, having invoked Justice Dunford:

In this case, it is quite clear that they did not seize documents in relation to the respective bottles of brandy referred, but seized an enormous quantity of material in relation to all activities . . . As a consequence, the action in seizing all of these documents, in my submission, is illegal.

GUMMOW J: He means illegal for the purposes of 138, does he?

MR GLEESON: Yes. Strictly, he means, is a contravention of Australian law for the purpose of section 138.

GUMMOW J: Contravention of Australian law?

MR GLEESON: Yes.

GUMMOW J: That is what the section says, is it not?

MR GLEESON: Yes. He is asserting that the action in seizing any documents ‑ ‑ ‑

GUMMOW J: Does that cover commission of a tort?

MR GLEESON: We would submit it would, your Honour.

GUMMOW J: I mean, there is no crime created by 214(3).

MR GLEESON: No.

GUMMOW J: That is in 214(1).

MR GLEESON: Yes. We agree that what 214(3) does is give an immunity from what would be a tort. We have also offered your Honours in our submissions ‑ ‑ ‑

HEYDON J: Footnote 9.

MR GLEESON: Yes, criminal provisions which also may be immunised by the section.

HAYNE J: “Australian law” is a defined term. We will have to come back to that. Where are we going immediately, Mr Gleeson?

GUMMOW J: You said there were some statutes that might have been immunised. Where do we find them? Criminal statutes, I should say, as well as the tort point.

HEYDON J: Inclosed Lands Act 1901.

MR GLEESON: Yes, section 4(1) of the Inclosed Lands Act 1901. We acknowledge that that section has within it a defence where there is a lawful excuse for the entry of premises. It is discussed in Darcey v Pre‑Term Foundation Clinic. We would also invoke common law offence of larceny, which is also subject to a similar defence. So where I was seeking to go, your Honours, was that I was taking your Honours to how the case was presented at first instance and then on appeal in order to make the submission that what Mr Parker’s counsel were sufficiently putting into play was that the seizure of documents beyond those relating to the two bottles of brandy were illegal, invoking a contravention – or perhaps more correctly, invoking an inability to justify that under section 214(3) and that that is a sufficient invocation of the point.

HEYDON J: But what was it put in these terms to the Court of Appeal though, a procedural problem? Paragraph 5 on page 353 of the appellant’s outline of submissions to the Court of Appeal seems to correspond with paragraph 5 of the outline of argument for the particulars of the illegality in front of Justice Simpson. The warrants only authorise Customs to seize documents relating to a French brandy.

MR GLEESON: Yes, and invoking Justice Simpson’s finding at paragraph 26 that the warrants ‑ ‑ ‑

FRENCH CJ: The legal power does not flow from the warrants. It flows from the provision, from the power conferred by section 214(3). So although the submission is in terms of what the warrant has authorised, it is really a question of what the statute authorised, is it not?

MR GLEESON: Yes, your Honour, and the warrant serves the function of identifying who are the persons who can exercise the power, and also a function of evidencing that they have been given the power.

HAYNE J: But a warrant may issue in terms narrower than the largest terms authorised by the statute, may it not?

GUMMOW J: May it not is not the function looking at 214(3) when it says “may” – “an officer of Customs . . . may” and the conditions precedent to the operation of the provision are two things – failure to comply and having within the warrant. If they are there the section operates by empowering these things to happen and that is the source of the power. These are conditions precedent. One of them is failure to comply and the other one is having a warrant.

MR GLEESON: Yes, a warrant in the form of Schedule V and I am not sure I have put the submission sufficiently clearly. We are submitting that these individual warrants were drafted to the fullest extent of what Schedule V permitted. There was no narrowing in the warrant, but they followed the format of Schedule V.

GUMMOW J: That is not necessarily the question. The question then is why do you read down the form of the Schedule V warrant – the significance of the form of the Schedule V warrant? How do you get rid of the notion of any such goods at 214(1)? It comes back to the relationship again between 214(1) and 214(3), one being penal and the other one being immunising. Why do you use a condition for the immunisation as reading down the extent of the immunisation when it does not fit harmoniously with the scope of the penalty at 214(1)? Unless we grapple with the language, we are not going to get anywhere.

MR GLEESON: Yes. I have sought to put the submission to your Honour that 214(1) allows requirements of three types and has a sanction of a criminal penalty and there are requirements imposed on the owner. Section 214(3) does create an immunisation which can be invoked against a range of persons greater than the owner. It uses the words “the goods”. It requires the Customs warrant to be part of the conditions precedent, as your Honour put. The Customs warrant is Schedule V. This particular warrant, if it matters, is to the full width of Schedule V. There is no difference. So one reads Schedule V with subsection (3) to ascertain the full scope of the immunisation.

GUMMOW J: We are talking about immunisation, we are talking about the State criminal law and we are talking about section 109 of the Constitution, are we not? That is how it works. It removes what otherwise would be the operation of the State criminal law, for example.

MR GLEESON: Yes, your Honour.

FRENCH CJ: And it displaces any liability that might otherwise arise at common law.

GUMMOW J: Yes.

MR GLEESON: Yes. Our submission on page 353 was that the appellant on the appeal was sufficiently invoking the finding at paragraph 26 of Justice Simpson’s judgment that an Australian law was contravened through the seizure of documents which went beyond ‑ ‑ ‑

GUMMOW J: What is the definition of “Australian law”? It is in that dictionary at the back.

MR GLEESON: It is in the dictionary:

“Australian law” means a law of the Commonwealth, a State or a Territory.

GUMMOW J: What about statutes?

HEYDON J: Dictionary Part 2, clause 9 talks about laws, written or unwritten.

MR GLEESON: As your Honour has read out, clause 9(2) of Part 2 of the Dictionary includes laws both written and unwritten “of or in force in Australia”. It is not merely statute. Your Honours, as the respondent addressed that issue in the Court of Appeal, I would ask your Honours next to go to page 371 between lines 10 to 20 in a section where the respondent is summarising the findings below. The respondent says:

A further aspect of illegality was that s 214 only permitted the execution of a warrant to seize “books or documents relating to” the goods specified in the Notice as having been illegally dealt with – not the wider category ‑

reference O’Neill –

Customs had executed its warrant with respect to the wider scope of documents.

So giving full weight to the issues your Honours have raised about further attention to the scope of the warrant in circumstances where the warrant was in the form of Schedule V and both parties conducted the appeal on an agreed basis that her Honour had made these findings, particularly paragraphs 24 to 27 of her judgment that there was this aspect of illegality, our submission then is it is still a good point that if the Court of Appeal was to deprive the appellant of that finding of illegality because it took a view that section 214 had a different scope, there ought to have been notice to the appellant and a chance to put submissions on it. Your Honours, the next step in the argument is, if the argument is still alive ‑ ‑ ‑

GUMMOW J: Well, what would those submissions have been? It is a familiar problem of natural justice cases, is it not, because the court in which the point is eventually taken says, well, what would be the consequences?

MR GLEESON: Yes. We know they would have been at least this much. They would have been that Justice Dunford’s decision was correct for all of the reasons given by Justice Dunford, which included his Honour’s careful analysis of Schedule V. They would presumably have referred to Justice Heerey’s decision as being supportive of Justice Dunford and Justice Davies’ decision to the same effect, and the argument would have gone at least as far as, because of the structure of the warrant in Schedule V, “the goods” means the goods the subject of the information.

Now, in my submission, it would not have rendered that submission a false submission to say one should also pay attention, of course, to the individual warrant given that it was in the form of Schedule V. It would not have defeated the submission based on O’Neill. It would only have strengthened it. It certainly would be consistent with it, and it would have strengthened the submission.

HAYNE J: Could I just understand that against what is said at page 549 in paragraphs 119 and following? In particular, do I read it aright to understand from the first sentence of paragraph 120 that what is there undertaken is application of 138 on the premise that what was seized was without authority of a valid warrant?

HEYDON J: The question is why was it? What did Justice Basten think was invalid about the warrant?

MR GLEESON: Yes, the answer is yes, but in the sense that his Honour found at page 537 in paragraph 90 to be the only element of invalidity. That is the short answer to your Honour’s question. If I could now simply – in other words, the first of the matters found by her Honour Justice Simpson, which was you did not sufficiently identify the goods in the notice, therefore the notice could never be complied with, therefore you never got to the ability to exercise any warrant under subsection (3), that her Honour found and that Justice Basten has brought to account in paragraph 120.

What he has not brought to account is the fact that the goods – the books seized went well beyond the books relating to the two bottles of French brandy, and that is what I wish to now show from his Honour’s judgment if I can, that the matter really has been omitted from the section 138 exercise.

The structure of his Honour’s judgment is, we have seen between pages 515 and 523, his Honour has dealt with the question and reached the conclusion at paragraph 53 that her Honour was mistaken at paragraphs 24, 25 and 39 of her judgment. They are the critical paragraphs – 24, 25 and 39 – which found what we submit is the second contravention.

For instance, paragraph 39, found on page 279, that was the point on which we had not been heard. If his Honour was merely expressing obiter which he was then to put out of his mind and decide the balance of the case on the basis that 24, 25 and 39 were correct, one would have expected a statement at paragraph 53 to make clear that this was mere obiter.

The next matter I will point to is that in paragraph 57 his Honour, with respect, correctly says there are two steps under section 138. The first is to identify whether it “was in fact obtained improperly or unlawfully” and then to consider “whether despite that conclusion” discretionary factors weigh in favour of its admission.

His Honour then gives some discussion to the principles governing section 138, and we would draw attention to three paragraphs - 60, 61 and 65 - because these become the foundation for his later application of the discretion. In 60 his Honour says that:

a deliberate or reckless disregard of legal constraints, involving a contravention of –

a fundamental right –

will undoubtedly weigh against admission.

In 61 he says “A deliberate ‘cutting of corners’” weighs against admission, but if it could have been done lawfully easily then that will tilt back the other way. Those two matters are important to his Honour’s later reasoning, and at 65 he re‑emphasises the first of them. What his Honour then does between paragraphs 66 and 118 is do the step one exercise. It is to identify the circumstances in which it is contended that section 138 is engaged.

In that review, your Honours will see that the first ground (a) his Honour rejects at the top of page 533 as giving rise to any “impropriety or unlawful behaviour”. Likewise with the second ground, at page 537, line 35.

He then comes to the third ground, the first of her Honour’s findings, and he finds that the notice was invalid and that that was sufficient to invoke section 138. As we will see, that paragraph 90 is the only paragraph in this section where his Honour finds an impropriety or a contravention which satisfies step one of the exercise. Had his Honour been treating the earlier matters as mere obiter, one would have expected a little section here saying, “and of course there is the second contravention which I am bound by the way the parties conducted the case to accept as having occurred even though I think it did not”. His Honour did no such thing. The fourth matter is dealt with and rejected at the foot of page 544. The fifth matter his Honour commences with at paragraph 108 and says:
The final complaint pressed by the Appellant related to the failure to train and educate customs officers in relation to the scope of a search permissible in execution of a warrant.

This was the ground run by Mr Parker’s counsel below and at the Court of Appeal level, seeking to assert there was something additional or aggravating about the fact that Customs had carried out a search for the five‑year documents knowing that a court decision, the only court decision on the question, said that would be unlawful.

In Mr Fagan’s submissions he asks your Honours to read paragraphs 108 through to 118 benevolently in the sense that his Honour is here not only dealing with the failure to train case but is in fact bringing to account in Mr Parker’s favour the second contravention which the trial judge had found. We submit the paragraphs do not bear that reading. One will see in paragraph 109 his Honour commences by saying:

As noted above –

that is paragraph 53 –

a proper consideration of s 214 does not support the view expressed in O’Neill’s Case . . . However, the Comptroller did not dispute the correctness of O’Neill’s Case but rather relied upon the fact that –

What was here being put in answer to the failure to train case was because Mr Swinton was the particular solicitor advising the Customs officers on the operation, and because he did not grasp the significance of O’Neill, then the Court should not find an impropriety of a failure to train character. His Honour says at the end of 109:

the complaint that the trial judge failed to address the issue must be addressed on that basis.

The issue is the failure to train issue identified in paragraph 108. The respondent says the Court should read paragraph 109 as Justice Basten saying, “I am addressing the whole of the appeal on this basis”.

His Honour then analyses this case. He finds at paragraph 111 that the trial judge had not addressed the failure to train case. That makes clear, of course, that his Honour is here only dealing with the failure to train case because she clearly did address the contravention we rely upon.

GUMMOW J: This is paragraph 27 and following of Mr Fagan’s submissions, is it not?

MR GLEESON: Yes. Mr Fagan’s submission is ‑ ‑ ‑

GUMMOW J: It comes down to some competing analyses of what the Court of Appeal was doing.

MR GLEESON: We submit he is wrong. We submit that on a fair reading of these paragraphs, what his Honour said was, “Your failure to train case does not get off the ground”. It does not get off the ground for the reason, as his Honour gives, that if you have Justice Dunford’s judgment telling you that collecting your evidence in this way is unlawful and if you get an advice from your solicitor telling you Justice Dunford is wrong, there is nothing in the slightest sense improper in the agency carrying out searches in a manner which the only court, a court of federal jurisdiction, has said is unlawful. If you carry them out, even if they are found to be unlawful at the end of the day, that is not improper conduct. Now, that is what his Honour found in paragraph 118. The Court sees at the bottom of 118, his Honour says, at about line 50:

there was no deliberate or reckless disregard of an established constraint on power . . .
That harks back to the test his Honour applied at paragraph 60, and what his Honour is saying is that a court decision telling you that certain conduct is unlawful does not amount to an established constraint on power unless perhaps it is a decision of this Court. Your Honours will see at the end of that paragraph his Honour concludes Customs:

did not act improperly, for the purposes of s 138, in failing to instruct its officers to operate otherwise.

Not a word of the contravention, because he is not addressing the contravention. The short result of that submission is that when his Honour comes to step two, at paragraphs 119 to 127 when he is now assessing the contraventions or improprieties, the only matter that he considers Mr Parker has got to be considered is the matter at paragraph 90. The reason that is not enough to exclude the evidence we can see clearly from, for instance, paragraph 122. His Honour says:

The seriousness of the intrusion on the rights . . . flowed from the extraordinary breadth of the power conferred by s 214.

That is based upon his Honour’s view about O’Neill. In paragraph 123, his Honour is discussing the problem in the notice to produce. Paragraph 124 is the clearest paragraph on this issue:

In the result, the unlawfulness . . . turned on the failure adequately to identify the bottle –

in the notice. That is what it turns on. The other contravention has been dismissed. Then his Honour says:

There was no evidence to indicate that it would not have been relatively easy to comply with that obligation of specificity.

That is his Honour applying the principle he had enunciated at paragraph 61. That is, if there is unlawful behaviour but you could easily have got it lawfully, that either counts in favour of an admission or is at least neutral. His Honour could not have said that had his Honour brought to account that they were simply not permitted to seize the five‑year documents.

HAYNE J: Where is the point that you are now making best reflected in your notice of appeal to the Court of Appeal?

MR GLEESON: Volume 2 at several places. At page 335 at paragraph 1(d), Mr Parker invoked:

the fact that the Respondent had conceded that the Evidence had been obtained improperly or in contravention of an Australian law ‑ ‑ ‑

HAYNE J: I understand that. That is under the rubric “General failure to give adequate reasons” so where do I find best a distinct ground of complaint to the Court of Appeal of the kind that you have just articulated in this Court?

MR GLEESON: Paragraph 3 read together with paragraph 1(d), together with paragraphs 25 and 26.

GUMMOW J: Well, the remedy you seek from us is for the matter to go back to the Court of Appeal to rehear grounds 25 and 26, is it not?

MR GLEESON: Yes. I am accepting in terms of materiality that if your Honours considered our construction of the judgment was wrong and Justice Basten did take it into account, then there is no materiality. If your Honours considered that we were completely wrong on O’Neill and on how we say the warrant tells you which the goods are, your Honours will do nothing in our favour.

But subject to those two matters there is an error below which we have not been heard on. If the matter were remitted we would wish to submit that where one does have a decision of a court squarely in point to say the certain method of collecting evidence is unlawful, for an investigative agency to say “I will ignore that decision” and then if it be found that the decision is, of course, correct and it is unlawful, well, that is all okay, we submit that is a relevant matter in the discretion and not something the court would lightly regard as merely trivial or to be excused.

Under section 138 the court is not to admit the evidence unless it is affirmatively satisfied - and the onus rests on the respondent – that the desirability of admitting it outweighs the undesirability of admitting evidence obtained in the way in which it was obtained, that the way in which it was obtained here was in contravention of the law and in contravention of a case which said it was in contravention of a law and that, we submit, under subsection 3(d) would go to gravity, and (e) would go to whether there was at least recklessness.

Your Honours, can I say one matter about (f)? His Honour Justice Basten said no and invoked a right under the ICCPR – that is correct as to what happened. The right which Justice Basten was correctly identifying, the right to be free from unlawful interference with person and property, is of course in Article 17 of the Covenant. It does not strengthen our argument, but I want it to be clear that it is a right recognised in the common law and in the ICCPR.

HEYDON J: Those prejudices from your point of view in the court having proceeded on its conclusions about O’Neill’s Case is not just the loss of the chance to argue that O’Neill was correct, but also the loss of the chance to argue that, even if O’Neill were wrong, it did not matter because of the form of the warrant, that the warrant was on any view valid and the search was on any view unlawful.

MR GLEESON: On any view these documents could not ‑ ‑ ‑

HEYDON J: Qua the whiskey documents.

MR GLEESON: ‑ ‑ ‑ lawfully be obtained in the way they were obtained, not under section 214 and the respondent did not point to any other means by which they could lawfully have obtained the documents. The documents in turn were the entirety of the case. Now, Justice Basten in the Court of Appeal has not addressed it on that basis. They have addressed it on the basis that the evidence could easily lawfully have been obtained. That is the paragraph I referred to, paragraph 124. That, as a central element in the exercise of the discretion, is on an erroneous basis.

Your Honours, there are two final matters I wish to deal with in‑chief. Firstly, we have given written submissions on the correctness of O’Neill and I rely upon those. If there is any particular matter, I can deal with it in response to the notice of contention on that issue. The second issue is disposition of the appeal. In the event that your Honours were to

find for us, this is one of those cases where the exercise of a discretion has miscarried through ‑ ‑ ‑

HEYDON J: It is not really a discretion. I know “discretion” is a word of many meanings, but it is not really a discretion. You have to look at two things.

MR GLEESON: I am sorry, your Honour, what I should have said was that a mandatory exercise required by section 138 has not been carried out in accordance with law and findings have been made ‑ ‑ ‑

FRENCH CJ: It is an evaluative exercise rather than the exercise of a discretion, I suppose.

MR GLEESON: Yes, requiring certain factors which must be taken into account and some of them have been taken into account on the wrong legal basis and some factors have never been brought to account at all and we have findings against us in paragraphs 119 through to 127. If we be otherwise successful, we would respectfully submit that this may be one of those unusual cases in which, given the nature of the complaint, your Honours would consider whether to, pursuant to the powers under section 37 of the Judiciary Act, direct the matter be reheard by a differently constituted Court of Appeal. They are our submissions, your Honour.

FRENCH CJ: Thank you, Mr Gleeson. Yes, Mr Fagan.

MR FAGAN: Your Honour, I would wish to go first to the real merit point of, by reason of Justice Basten going on to reconsider O’Neill without adequately inviting appellant’s counsel to argue it, whether any real consequence was suffered to the appellant in the outcome of the appeal and that is the question of whether, in any event, did Justice Basten – to whom I will refer, having been effectively the Court of Appeal judgment – did Justice Basten, in any event, decide the application of section 138 on the basis, on the assumption, contrary to his own view, that O’Neill was right and that seizure of five‑year documents was not permissible under section 214(3) or under the warrant, however one looks at it.

Now, to understand his Honour’s judgment about that, from appeal book page 545 to the end, one needs to have a little history of the proceedings as to what was given emphasis by the appellant throughout the proceedings in the heads of contravention or impropriety which were raised and in that regard, at first instance the Customs conceded that the seizure of the documents was not justified because there was not a sufficiently precise notice in the first place. So right from the outset of the trial the appellant had his point of contravention.

He then set about to try to persuade her Honour that that contravention was deliberate. The case was that the Customs officers had deliberately given a notice that could not be complied with with a view to setting themselves up into a position where they could execute a warrant because that is what they really wanted to do. That was very squarely put to witnesses. They were cross‑examined on that and her Honour rejected that, accepted them on credibility, and found that the conceded illegality or contravention in that respect was despite bona fides.

GUMMOW J: This is picked up in paragraph 90, is it not, of Justice Basten’s reasons at page 537, this history?

MR FAGAN: That is right, your Honour, yes.

GUMMOW J: The last sentence in paragraph 90 on page 537.

MR FAGAN: Yes. Now, the other ground of contravention that was run was run in a very particular way at first instance and that was carried through into the appeal. The other particular of contravention was that the warrant did not permit seizure of documents relating to five‑year goods, in any event, but only seizure of documents in relation to illegally dealt with goods, even assuming the notice was sound and that the occasion for executing a warrant under 214 had arisen. The very particular way in which that was put was that right from the outset the appellant asserted that Customs lacked adequate system to train its officers and bring to their attention this particular holding of Justice Dunford in O’Neill’s Case – Judge Dunford as he then was – and that is how it came to be characterised as the failure to train case.

In this respect the appellant was content not to try to show deliberateness with respect to this aspect of exceeding warrant powers. The appellant concentrated in trying to show a deliberateness in relation to the other aspect of exceeding warrant powers, the insufficiently clear notice which had triggered the warrant in the first place. I will take your Honours to the written submissions to show that this point, on the basis that O’Neill was correct that a warrant could not be executed for documents relating to five‑year goods, was always embedded in the proposition that Customs real default which had led to the seizure being unlawful in this respect was a failure to train.

The reason why I am placing such emphasis on this is that it is necessary to understand that in order to see why Justice Basten’s judgment is structured as it is at the end of his reasons. He deals with the failure to train case. In doing so he is dealing with the proposition that O’Neill was right and that even if a notice was disobeyed and was a good notice and the right authority to execute a warrant arose, one could not execute it in relation to documents concerning five‑year goods.

There was no failure to train case to consider unless O’Neill was correct. The whole of what is at pages 545 through to 548, 108 to 118, the whole of that is predicated on the basis that O’Neill was right and his Honour had to consider whether Customs had failed to have an adequate system to draw this particular authority and the particular holding in it to its officers’ attention.

Now, on the basis that there were then two heads of contravention or impropriety which for the purposes of section 138 had to be considered, number one, they were of very different characters because one was always said to have been deliberate and the other one always not, and two, one of them was – that is the O’Neill point – really buried in this proposition of failure to train.

In these cases where section 138 comes to be applied, it is nearly always the case that the critical question is whether the breach was deliberate or reckless. That is nearly always the most important factor. That factor in this case had to be considered differentially for the two heads of contravention because one of them was mounted as a case of deliberateness and the other one not and avowedly so.

But other points in section 138 did not really have to be considered differentially. It was the one body of evidence that had been gathered under this warrant, and for example, 138(3)(a), a consideration to be addressed was the probative value of the evidence. Well, that was the same point for both heads. Likewise, (b) and (c) and (d) because whether (d), the contravention, was one of exceeding warrant powers because one had given inadequate notice or whether it was a case of exceeding warrant powers because one had seized too many documents, either way there was a certain level of gravity of contravention in the sense of seizing by force documents when one did not have the statutory basis for doing so.

But the thing that was differential was (e), the impropriety, and that contributes, given the history that I have given your Honours, to the reasons for Justice Basten structuring the judgment as he did. Now, the appellant’s submissions here and the approach to the judgment in those pages from 545 to the end involves, in our submission, a less than fair reading of his Honour’s reasoning, and it involves a dissection of the reasoning and a picking off of particular passages, for example, opening words of paragraph 124 and some part of paragraph 122 to which your Honours were taken just a moment ago, which isolate little pieces and really take them out of context.

But these pages from 545 to the end were where his Honour was addressing the whole application of section 138, particularly (3), and one has to read every bit of it holding all the other bits in mind.

HEYDON J: There are quite a few bits though which are not pleasant from your point of view; that is a problem.

MR FAGAN: Well, let me take your Honours in a sequence. If I could go to my own written submissions, our written submissions, at paragraph 21. What I would propose to do is to go through the documents which support the history that I have put to your Honours about the way in which this second particular of contravention was supported, so I am here elaborating with reference to the appeal books a point that I have made in broad terms.

First of all, if we go to appeal book 258, at the bottom of the page, line 60, these are the written submissions that were put to the learned trial judge on the voir dire. What appears at line 60 on that page is a heading, “The failure of Customs to properly educate” and what continues over on the following page and to the top of page 260 is the way in which this part of the case was put. At paragraph 100 on 259:

In particular, and notwithstanding that the Officers had a copy of the decision of In the matter of O’Neill, it seems perfectly clear that they did not understand the principles summarized in that decision.

Now, where there is reference to officers there, it is not a reference to the officers in the field. The officers in the field were not shown to have known of the relevant holding. It goes on to say that this is disturbing because there was an advice from the Australian Government Solicitor in South Australia of 31 July 1989.

Now, that is the document which is earlier in this booklet, appeal book 81. It was an advice signed by a Mr Gretsas and dated 31 July 1989 after the O’Neill decision had been handed down. At page 83 of the appeal book at about line 60 it set out in summary form his Honour’s holding:

that the only documents authorised to be seized were those in relation to the goods detained, and not those relating to any other importation within the previous five years.

There was reiteration on the next page. I just mention as an aside that these submissions to which I am drawing your Honours’ attention made to Justice Simpson at first instance, submissions as reproduced at page 259, did not refer to a subsequent advice which is reproduced in the appeal book at page 88, 11 August 1989, in which Mr O’Halloran had reconsidered Judge Dunford’s interpretation and advised the Collector of Customs in South Australia of his disagreement with it. At line 50 approximately he said:

It seems to me that Judge Dunford allowed the terms of the warrant to determine the meaning of sub-section 214(3). In my opinion this approach is wrong.

There was a summary from line 60. Now, that is a bit of an aside, but the point is that this submission was being made, as we see primarily at page 259, that there was a failure to educate, that an advice had been given by Mr Gretsas, it was said.

As you see, there was other evidence about this, but in any event, that is the way the case was being put, and that was all predicated on the proposition that O’Neill was correct, and that is where that proposition that the execution of a warrant was limited to the specified illegally dealt with goods, that is where it found expression in these written submissions. When it came to oral submissions ‑ ‑ ‑

HEYDON J: Just before you leave those written submissions, on page 245, paragraphs 47 and 48, the writer does seem to be taking a point that it is a:

Notices to Produce . . . only “specified” (without any chance of identification).one bottle of French brandy and, in these circumstances, the Plaintiffs were only entitled to seize documents relating to those specific bottles of French brandy.

And they have in fact:

seized a large quantity of documents which were unrelated to the relevant bottle –

MR FAGAN: Yes.

HEYDON J: It might have been put more crystally, but this seems to be ‑ ‑ ‑

MR FAGAN: There is no question that they were saying that O’Neill was right and that seizure of documents going beyond those that related to the illegally dealt with goods was not authorised, but ‑ ‑ ‑

HEYDON J: That would be true even if O’Neill were wrong?

MR FAGAN: I would not wish to argue with your Honour about that, but that was not the focus of the submission. The point that they were making was treating O’Neill as correct, treating the seizure of documents beyond those relating to the illegally dealt with goods as unauthorised, the focus of the complaint was a failure to train the officers about this because it was demonstrated that the officers did not know about it and did not adhere to it.

HEYDON J: This is under a heading – just a moment, it is hard to pick these headings up, “The sixth allegation”. This is 244 line 26:

The sixth allegation – documents unconnected with French Brandy were seized –

It is not in the training area.

MR FAGAN: Yes. It was implicit in the training proposition that this was the point about which there should have been training. I am not suggesting that they did not allege that the seizure beyond documents relating to the illegally dealt with goods was unlawful, but they did assert that. My point about all of this is that they concentrated their argument relating to that on a proposition that Customs’ real default in the matter was a failure to train officers that this was so.

When one follows through these submissions to Justice Simpson and then in the Court of Appeal, that is how it came about that Justice Basten dealt with the matter in the way that he did, and the point ultimately being that he had dealt with it as the appellant wanted it dealt with. He dealt with it as the appellant had always run it and his judgment encapsulating that at pages 545 to 548 needs to be understood as having grappled with what they wanted to argue. When one goes to oral submissions before Justice Simpson at appeal book page 218 line 50, he addresses:

The claim made by these various officers is that they didn’t understand section 214 –

and it goes on to page 219, line 37 approximately. What is being said there largely reiterates the written submissions that I took your Honours to earlier at page 259 in particular, and it concludes with the proposition O’Neill’s Case, of course, deals with this obligation to seize only those documents relevant to the particular goods. The complaint is made of a failure to train about that. There is recitation again of the text of Mr Gretsas’ advice and again, there is no reference to the subsequent advice, but that is how the case is put.

Then when one goes to the pure grounds which are in the next appeal book your Honour Justice Hayne asked my learned friend what grounds gave expression to the complaint about the Customs officers not having observed the restrictions of the O’Neill decision. He cited grounds 1(d) and 3 and 25 and 26, but the real grounds are on page 341 – grounds 22 and 23. In coming to those grounds I have passed over one intermediate step. I showed your Honours the written submissions that the appellant put at first instance; I showed you that they were repeated in the oral submissions. Her Honour’s judgment on that point was very limited. It is sufficiently quoted in paragraph 23 of our written submissions. Her Honour held – and this comes from appeal book 279:

there was little, if any, understanding or awareness of what was disclosed by the decision in O’Neill’s case, that is, the narrower scope of documents available to be taken pursuant to a warrant. Customs officers at the time believed that a warrant was as extensive as a Notice to Produce.

That is really all her Honour said about it. But then we come to these appeal grounds. Now, there is what was put before the Court of Appeal that it does certainly, necessarily and implicitly involve the contention that O’Neill was right that you could not take documents beyond those that related to the particularly illegally dealt with goods. But it was all embedded in this proposition of failure to train.

To see how that was adhered to and pursued in oral submissions in the Court of Appeal, perhaps first of all written submissions, 363 to 365; that is appeal book 363. Again, in these written submissions in the Court of Appeal at paragraph 90 on page 363, there is just the reference to the one advice given by Mr Gretsas without the subsequent advice of nearly a month later by Mr O’Halloran and it culminates with the proposition at 93 in full support of those appeal grounds 22 and 23 that:

the only proper conclusion was that Customs did not properly train and educate its officers about the very powers they were exercising under section 214 – powers, which are, of course, of the most intrusive kind.

In these written submissions, back at page 354 at the bottom of the page in paragraph 9 and carrying over to the top of page 355, there was an assertion taking this complaint about failure to train to the level of asserting recklessness, but that was not followed up in oral submissions. The oral submissions about this were extensive. I will take your Honours to just a few references. We have given all the page references as a note to paragraph 25 of our submissions but some of them are worth highlighting. At page 392 from line 20, Mr Hutley, representing the appellant, there said:

But the problem is that they went in to seize all goods, all documents outside the scope of the warrant.

Justice Tobias observed:

TOBIAS JA: That’s because of O’Neill.
HUTLEY: Yes, and one of the cases we put is and her Honour didn’t address this, is that Customs had been aware of O’Neill’s decision for up to two years prior to this and had taken, we say, no real steps to ensure that officers were aware of it ‑

and so on. Equally briefly, at page 397 at the top there is a complaint that when one goes to the judgment – and that is no doubt to the passage from appeal book 279 which we have quoted in paragraph 23 of our submissions:

one for example finds no assessment for example of the gravity of the impropriety, even to the extent that her Honour found an impropriety with respect to O’Neill’s case.

Further down from line 30 and following there is further submission through to line 50. Everywhere this is mentioned, every time it is mentioned, the whole thing is embedded in the concept that there was a systemic failure in Customs with respect to training officers. At page 423, from the bottom of the page, Mr Hutley progressed to deal with this in full. He had on most points just flagged the proposition before really reaching it. It was recorded at the bottom there that, with the exception of one officer, the Customs officers had not been aware of the relevant decision. Most importantly, at page 424 from line 20, Justice Tobias asked:

TOBIAS JA: The O’Neill decision only comes in under the allegation of failure to train and educate its officers as a relevant impropriety, is that right?
HUTLEY: Yes, your Honour.

HEYDON J: What about line 36?

MR FAGAN: On the same page?

HEYDON J: Yes.

GUMMOW J: Yes, that is what I was going to ask you. When one looks at line 36, when one goes back to the outline of submissions, which I guess Mr Hutley is following, starting in the middle of page 365, it refers to voir dire judgment, then we get to paragraph (d):

no consideration was given to the seriousness of Customs’ illegal conduct ‑

and then we get to (e), proper training. Now, in the oral material you have been taking us to, does Mr Hutley deal with paragraph (d) as distinct from (e) in any discrete passage?

MR FAGAN: Subparagraph (d) of section 138(3)?

GUMMOW J: No. Paragraph (d) of these submissions at page 366.

FRENCH CJ: Which is tracking 138(3)(d).

GUMMOW J: Yes.

MR FAGAN: Certainly with respect to the other head of illegality – but I do not think that is what your Honour is asking. I will have to try to find a reference to what your Honour asked. I would not like to say no without ‑ ‑ ‑

GUMMOW J: But at some stage did he deal with the admitted defect in regard to the initial notice?

MR FAGAN: Yes, he did. I have not identified references to that in my written submissions, if your Honour ‑ ‑ ‑

GUMMOW J: I guess my question is: did he deal with any other alleged illegality other than that one under this rubric of 138(3)(d)?

MR FAGAN: He certainly would have, although I cannot give your Honour the reference off the top of my head. But he certainly would have dealt with the seriousness of Customs’ conduct à la section 138(3)(d) with reference to the giving of a notice which was insufficiently precise. He certainly did.

GUMMOW J: Yes, but beyond that?

MR FAGAN: Beyond that, and with respect to this question of having exceeded the restraint pursuant to O’Neill’s holding, I am not sure. I have identified next to paragraph 25 of the written submissions all the pages we could find where he dealt with O’Neill at all, and I will look through that ‑ ‑ ‑

GUMMOW J: It just seems to be what Justice Heydon just put to you. That seems to be it – lower down that page.

MR FAGAN: Well, no doubt he did submit that it was an impropriety relevantly for 138, but for the ‑ ‑ ‑

GUMMOW J: What is the “it”?

MR FAGAN: For Customs to have taken documents that related to things beyond the ones identified as illegally dealt with. But the focus of the argument was about – the argument proceeded accepting, and I will take your Honours to express statements of this, that that was inadvertent so far as the operatives in the field were concerned. The men who obtained the issue of the warrant and went out and executed it, it was accepted were acting inadvertently with respect to the limitation that Judge Dunford’s holding had imposed. Thus attention was directed by the appellant to looking for some aspect associated with this particular of exceeding the powers under 214, as they alleged it – some particular which would aggravate that departure. They sought the aggravation not in saying that anybody had known about O’Neill and had flouted it because they could not show that, they sought it in saying that there was within Customs this systemic failure of education.

KIEFEL J: Is that the point sought to be made by Mr Hutley at appeal book 408, line 15?

MR FAGAN: It was 408, was it, your Honour?

KIEFEL J: Yes, 408, line 15.

MR FAGAN: I am not sure which impropriety Mr Hutley was speaking of there without going back a little.

KIEFEL J: It seems to be about the reception of advice. The gravity of the impropriety in what was done in the execution of the warrant is linked to the failure to receive the advice which AGS had. That seems to be the content.

MR FAGAN: I am not sure, though, your Honour, which advice is being referred to without going back a little further because, bear in mind, there was advice from counsel in Sydney to AGS in Sydney with respect to this particular operation and that advice referred to O’Neill’s Case but did not refer to this particular holding of O’Neill’s Case and it urged caution about using section 214 in the current circumstances because counsel had a reservation whether one could say for the purposes of 214 that goods had been illegally dealt with where there was not identified any breach of the Customs Act. What was identified was a breach of the Spirits Act, because the brandy appeared to be adulterated, an expression used as extended, it had alcohol in it but it was not of pure grape spirit. I will, in due course, go back from 409 to see whether he was talking about this particular, but I am not sure about it at the moment, your Honour.

HAYNE J: In the course of your examination of that issue, would you also give thought to what appears at page 383, line 31, where Mr Hutley identifies the relevant illegality as the entry without authority, trespass to land and, as the President says, “a trespass to land and to goods”. That is step one. Step two of the argument seems to be a series of steps directed not to whether the evidence was obtained by unlawful seizure, but seems to be directed to a series of steps within Customs, either taken or not taken, which somehow are themselves described as improper and, at least as at present advised, seem to me to be a series of steps or omissions identified as improper steps or omissions colouring, in a manner not disclosed, the fact that at root we are concerned with an unlawful search or seizure.

MR FAGAN: Your Honour is referring to 383, line 31 and following?

HAYNE J: Lines 31 to 35 especially because you go from there to, well, why was there no valid warrant? There was no valid warrant because there was no valid notice to produce. There is then debate in the transcript in the Court of Appeal about, did you need a notice to produce, was it valid, et cetera, but then the argument seems to track down a path of saying – and what is more what Customs did was open to criticism because they did not train their people properly, they were trying to do it for mala fides purposes or various colourings of that kind.

Now, all that proceeds from a premise that each of those matters of colour is itself an impropriety of a kind which engages 138(1), whereas, at least at first blush it seems to me, and I may be quite wrong about this, but 138(1) is engaged once you observe no valid warrant, no authority to enter, therefore a trespass to land and to goods and what are the further improprieties that are being considered. Now, as I say, better you look at those ‑ ‑ ‑

MR FAGAN: Yes, I can say this, even without looking at it. As we understood the argument in the Court of Appeal, and it was not really different from what was run at first instance on exactly what your Honour is saying, they took one matter of contravention which was seizure of goods under a warrant which had been issued following non‑compliance with an invalid notice. They took that as a contravention. Section138(1) applied. Section 138(3) had to be dealt with.

They then proceeded to say with respect to that, well, 138(3)(e) is applicable here because they said examining a range of evidence, the notice was imprecise because the Customs officers deliberately made it so. They wanted there to be non‑compliance because they wanted to execute one of their own warrants under their own Act rather than go to the federal police and ask them to swear out an information to a magistrate and get a section 5 Crimes Act warrant. That was what they were arguing. In between the starting point contravention and the contention that section 138(3)(e) ought to be found unfavourably to Customs was a lot of evidence and argument about a lot of aspects of the Customs officers going to AGS for advice, AGS getting advice from counsel, AGS not really agreeing with the counsel’s advice, and so on.

Now, then with respect to the other point of contravention, they did not have that conceded at first instance. At first instance Customs did not concede that O’Neill was right and did not concede that the execution of the warrant was unlawful for an additional reason of seeking too many documents, and that is acknowledged by Mr Hutley on behalf of the appellant at AB 425 at about line 18 and following.

HAYNE J: At the end of the day what I am asking you to address - what do you say in answer to the suggestion that the number or kinds of respects in which there was, not so much a contravention of Australian law, but the number and kinds of respects in which Customs can be shown to have defaulted bears upon 138 because the hypothesis for the whole argument is goods were seized unlawfully. That was never an issue as I understood it.

MR FAGAN: That was never an issue on the first basis, the inadequacy of the notice. It was an issue at first instance on whether it was unlawful on that other basis. In the Court of Appeal, her Honour having determined to follow O’Neill’s Case, Customs did not agitate that any further and was content to have the appeal decided on the basis that O’Neill was right and that one could consider there was an excessive seizure of documents and could deal with the failure to train case, which was mounted upon the basis of that.

Now, if I may take your Honours to a few more references in these oral submissions. I took your Honours to 423 and from there right through to 442 this topic is dealt with in‑chief. Some other parts of it are worth identifying. At page 428, line 17 the appellant’s counsel grappled with the subsequent advice from Mr O’Halloran. At 46 the learned President observed that one could read the subsequent letter as “a reconsideration of the earlier advice”. On page 429 at 14 that discussion culminated in this. The learned President said:

So once again you put this breach, if Judge Dunford is correct, as based on ignorance rather than wilfulness?
HUTLEY: What we say is the breach is the O’Neill breach which her Honour treats as being conceded. That’s how it was put.

That was a construction that was put on the judgment, although it was recognised that in fact we had not conceded it.

This is in effect an aggravating [circumstance] to the gravity of the breach, that breach, because Customs in effect has allowed a practice to continue, and every witness said that they believed at all relevant times up till March 1990 that if you had a schedule 5 warrant which you executed you could seize all documents within the five year period.

At line 35 on that page, I think dealing with what Justice Gummow asked me earlier, Mr Hutley submitted:

that that goes to the gravity and we have a situation where Customs has not led any evidence to explain how it is that New South Wales were not properly educated.

I do not mean to prevent your Honours looking at other parts of it but there are just some highlights that emphasise the point I seek to make. At page 430, for example, line 32:

TOBIAS JA: So the situation is that New South Wales people were really proceeding out of ignorance, is that right?
HUTLEY: The people, the front line troops, who were executing these were proceeding out of ignorance.

A similar sort of discussion takes place on 432 from line 35 on to the top of the next page. The key line there is that the learned President observed that:

the flip side of that is they were acting in ignorant good faith.

Mr Hutley accepted that. At page 435 from line 25 down, Justice Tobias stated his understanding of the argument that was being put:

what you’re really saying is they had an education system, the education system failed not because of any mala fides but because they ought to have drawn the attention of all investigating officers round Australia –

and so on. And, note, your Honours, from line 45 Justice Tobias asked:

And they all said they didn’t know about it, or at least they didn’t know about this part of it.

The appellant’s counsel accepted that.

FRENCH CJ: Is that a convenient time, Mr Fagan?

MR FAGAN: Yes, I am sorry.

FRENCH CJ: The Court will adjourn until 2.15 pm.

AT 12.45 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.22 PM:

FRENCH CJ: Yes, Mr Fagan.

MR FAGAN: Your Honours, in the course of finding the answer to the question Justice Hayne asked of me just before lunch I have realised that by the focus of this appeal on those aspects which the appellant complained of that led to the warrants not really authorising, or the warrant not really authorising what was seized, I have not given any attention to other points of impropriety and illegality that were raised that have all fallen by the wayside long since, and I think it is with respect to those other points of impropriety that I will show your Honours just briefly in a moment that all these other allegations arose and matters were debated in written and oral argument to which Justice Hayne was asking me, well, did they just go to colour and the like or were they other points of impropriety.

If your Honours would look at page 336 in the second appeal book at some of the grounds, there is a group of grounds headed “The Rowling advice” from 4 and they go through to 9 and you will see that in 7 it is asserted:

Her Honour should have held that the failure to bring Mr Rowling’s advice or the substance of that advice to the attention of Mr Stilling . . .
(a) was improper . . . and
(b) constituted a contravention of an Australian law –

Now, Mr Rowling’s advice was the advice to Australian Government Solicitor Sydney about whether or not section 214 could be used here at all. So Mr Stilling was the man to whom the information was presented and who authorised the issue of the notice and who issued the warrant.

What was being said there was that there was a relevant impropriety just in relation to a process within Customs which led to the notice and the warrant being issued. That would have been intended to engage section 138(1)(b) which has regard to evidence obtained in consequence of an impropriety. So the chain was: Mr Stilling’s advice should have been brought to the attention of the officer who had to consider whether a warrant would go. That was not done. Therefore, there was impropriety in the conduct within Customs. In consequence of that, by a chain of events, the evidence was seized.

Now, that one was disposed of in the Court of Appeal at pages 529 to 533. I will come back to that a little later, if I may, but I will just go on to show you some of these other grounds. On page 338 of the appeal book grounds 10 and 11, here it was asserted that the notice was issued for an improper purpose, really just to bring about a default and get a warrant out, rather than really to obtain documents to have the party to whom the notice was presented produced them.

Again, that was rejected in the Court of Appeal at pages 533 through to 537. In connection with that the Court of Appeal, however, did, as it were, preserve that there had been conceded by Customs an illegality in the sense that the 214 notice was too imprecise. So the precise impropriety alleged here was not upheld, but the bare illegality of seizure because the 214 notice was not proper was preserved.

Then at the bottom of 388, grounds 12 to 14 were concerned with whether enough time had been given to the recipient of the notice to produce documents before the warrant was executed, and the alleged failure to give enough time was said in ground 14 to have been improper within the meaning of section 138.

In grounds 15 through to 18, the case asserted was that because so little time had gone by there really was not a non‑compliance with the notice anyway and the occasion for executing the warrant did not arise. Now, those two were rejected by the Court of Appeal at pages 538 and following.

Then there was a group of grounds, 19 to 21, which were said to identify an impropriety in that there was not a proper recording of the documents removed. We cannot find anywhere where that was dealt with in oral submission and it does not seem to have been dealt with in the judgment. I think it must have been abandoned at some point, but we cannot identify exactly where. Then there are the grounds, 22 to 23, which I have already taken your Honours to ‑ ‑ ‑

FRENCH CJ: I think Justice Basten referred to a significant reduction in the range of the arguments as against the grounds.

MR FAGAN: Yes, there was a concentration, certainly, and in the end most of these have been dealt with in one way or another in the judgment, but that one relating to the recording of documents does not seem to have been and I think for that reason. Then, 22 and 23, these were dealt with under that heading of “Failure to train” at 545 to 548.

Thus we see that there were a range of improprieties or illegalities additional to just those which invalidated the seizure by direct proposition that the warrants were not authorised to be executed in the way they were. If we go to the judgment of the Court of Appeal starting at 529 under heading (a), from 529 through to 533 at the top, the court rejected the impropriety alleged in relation to not conveying Mr Rowling’s advice up to Mr Stilling.

At 533 to 537 the court rejected the impropriety which had been alleged in grounds 10 and 11 which was the improper purpose of issuing the notice. But then your Honours will see that at the lower half of 537, from line 40 down, the court stated at heading (c) “Reference to offence in notice to produce documents”. “Offence” there means reference to goods illegally dealt with or reference to illegal dealing with goods in notice to produce documents, as it seems to us.

What then is stated in that paragraph from there to the bottom of the page is a recording that Customs had conceded this illegality, and that is one of the ones – the insufficient notice point that went directly to the lack of authority under the warrant to seize what was seized. But as your Honours can see from comparison with the grounds raised that was a point of illegality that was really carved out by the Court of Appeal and was not quite directly within anything that the appellant had framed.

GUMMOW J: What then was the point in the structure of the Court of Appeal judgment ‑ ‑ ‑

MR FAGAN: Well, your Honour, going on ‑ ‑ ‑

GUMMOW J: No. If you go to the Court of Appeal judgment at 516, paragraph 42, his Honour tells you he is going to deal with it in three blocks. Page 516, about line 37:

it is convenient to deal first with the search powers conferred by s 214 of the Customs Act, secondly with the proper approach to exclusion of evidence under s 138 –

and I think what you have been dealing with is the second branch, that is to say, starting at page 529.

MR FAGAN: Yes.

GUMMOW J: But earlier than that, the first branch of the judgment is search powers, Customs Act, 214.

MR FAGAN: Yes.

GUMMOW J: What was the point of his Honour in the course of explaining 214 again into O’Neill and to say at paragraph 53 that that is the wrong construction? What flows, considering the rest of the judgment, from the treatment of O’Neill if that turns out to be wrong treatment?

MR FAGAN: Your Honour, with the greatest respect to Justice Basten, there was not a point for the disposal of the appeal. It was a digression. It was not necessary because Customs had accepted through counsel that we were prepared to conduct the case on the basis that O’Neill was right. In the end his Honour did, as we will show your Honours shortly, I hope, dispose of it on the basis that O’Neill was right, and that he had to consider the operation of section 138 by reference to the failure to train case which was mounted on the contention that – and so on.

GUMMOW J: We understand that.

MR FAGAN: So really this was a digression.

GUMMOW J: But the point that is worrying me is that that digression, as you perhaps correctly describe it, is then turned against you by your opponent.

MR FAGAN: Yes. Well, it worries us too, your Honour.

GUMMOW J: Because he then says this was an additional, in effect, 138 contravention that we did not know about. But you say it is not a 138 contravention you are relying on, that anyone was relying on.

MR FAGAN: Well, on the basis that O’Neill was right, the appellant had available to him an additional contravention on which he sought to found this aggravation of it, this exacerbation of it, through the complaint of the systemic failure to train, and he had the benefit of that and that was dealt with as he wanted it argued, dealt with and disposed of. Now, along the way, Justice Basten, grappling with section 214, found the analysis in O’Neill’s decision unsatisfying and digressed to state his different view.

GUMMOW J: You had not been urging that his Honour find that. No one had been urging that his Honour find that.

MR FAGAN: No. We were prepared to deal with it on the merits on the basis that that it was right. The question then is, when one comes to the later part of the judgment which I am just about to do at 545, whether one can then take his Honour at his word that his Honour would nevertheless proceed to dispose of the point the appellant had raised invoking O’Neill’s Case as a correct statement of the law, whether his Honour really did do that. In our submission, it is proper to give the judgment credit that it did follow with what was avowedly being done. By the way, up to that point, for example at 538 through 544 there was the disposal of another group of grounds which related to some other improprieties, and we just leave those. Then we come to the failure to train. At 109 his Honour noted:

a proper consideration of s 214 does not support the view expressed in O’Neill’s Case . . . However, the Comptroller did not dispute the correctness of O’Neill’s Case but rather relied upon the fact that Mr Swinton, who was the solicitor primarily responsible for legal advice in relation to the operation had failed to grasp the significance of the reference to O’Neill’s Case in counsel’s advice. Accordingly, the complaint that the trial judge failed to address the issue must be addressed on that basis.

His Honour was accepting from this passage forward that he must deal with the matter under this heading of “Failure to train and educate officers” on the basis that O’Neill was right. From this point, by the various things that are stated in the judgment, my learned friends seek to say, well, despite his Honour stating that intent at the outset he has failed to do it – that he has been unable to divorce from his mind a view that O’Neill was incorrect, but that is not so, with respect.

KIEFEL J: Mr Fagan, do you say that the nature of the illegality assumed no relevance in the defendant’s case at any point?

MR FAGAN: I am not sure what you mean.

KIEFEL J: The nature of the execution of the warrant in the way which would follow from O’Neill.

MR FAGAN: In practical terms, in fact, it really did not assume any significance because ‑ ‑ ‑

KIEFEL J: I mean, when I say relevance, I mean in relation to the application of section 138.

MR FAGAN: I am understanding your Honour’s question in that way. In practical terms, it really did not assume any insignificance because Customs founded its approach to this that the seizure of any document was an unlawful invasion.

KIEFEL J: It does not necessarily follow that because Customs made that concession that the defendant would give up saying that, well, there is a concession of illegality, but we still rely upon it strongly in relation to exclusion.

MR FAGAN: No, it did not follow that they would give up ‑ ‑ ‑

KIEFEL J: But do you say that they did or it was never part of their case?

MR FAGAN: No, your Honour, I do not say that they did give up on that. I say that they did maintain it, but for quite understandable reasons they maintained it as directed only to a very specific and precisely formulated concept and that was the failure to train. They had it that Customs was accepting and the court would proceed on the basis that every document taken was taken without lawful authority. Every aspect of it was a trespass.

KIEFEL J: But do you say that the seriousness of the contravention or illegality was not relied upon by the defendant?

MR FAGAN: No, but again I say that they relied on it in a special way. They said that because the seizure under the warrant was unlawful in the respect that a warrant, even if the occasion for executing one was triggered by a proper 214 notice would only allow seizure of a small number of documents, they said that because of that they could look to a graver view of Customs because there was a judgment that determined this matter and they had not properly disseminated it. That is the way they sought to add gravity to the admitted illegal seizure by invoking this second basis for saying that it was unlawful, but the representatives of the appellant only ever sought to make use of this second foundation of illegality in that way.

FRENCH CJ: Does a second rung of illegality, as it were, arise if you have a deficient notice? You never get to a valid warrant, do you, whose power or authority you can accede because you do not get a valid warrant from the outset?

MR FAGAN: I put it rather this way, if I may, your Honour, that on the concession we had made, we did not get to a lawful occasion for executing the warrant.

FRENCH CJ: You did not get to the satisfaction of one of the conditions precedent for the exercise of the power under 214(3).

MR FAGAN: Yes, your Honour, we did not.

FRENCH CJ: So we are not talking double illegality here. The second does not arise?

MR FAGAN: I suppose that could be said. Perhaps they are different ways of saying something that comes to the same. What I have been putting is that through the totality of the way the appellant put his case he identified, firstly, with our concession that there was not an occasion for seizing anything under any warrant. Secondly, he identified that even if there had been an occasion for executing this warrant, it would not have permitted seizure of these extra documents.

It was open to him to raise that because that would be taken into consideration in examining the surroundings of the unlawfulness, the unlawfulness on the grounds that we are now narrowed down to at this stage of the appellate process being grounds of unlawfulness that went to constituting the seizure of trespass. But, given that the whole conduct of his case from first instance and with considerable emphasis right through the oral submissions in the Court of Appeal was that this other way in which one could say they were never entitled to seize under this warrant was directed to the failure to train case, that is really what the Court of Appeal had to deal with, and did.

HAYNE J: Can I just understand that, and I know that we are marking time, but I need to understand it. Do I understand you to say that Customs’ position at all stages of this litigation is and has been that the seizure of any document was an unlawful seizure in the sense that its seizure was trespass to goods and entailed trespass to land?

MR FAGAN: Yes, your Honour. I am just hesitating because I do not know that we really articulated the trespass part, but it was implicit. We did acknowledge that there was not the lawful occasion for executing a warrant. My learned junior is just pointing out that it is actually in our defence, as your Honour puts it.

HAYNE J: Second, do I understand you now to assert a characterisation of the defendant’s position along lines broadly like this? The defendant sought to mount a case that not only was seizure unlawful; one, Customs knew it was unlawful; two, Customs ought to have known it was unlawful in the sense that officers properly trained and informed of the decision in McNeill would have known that they were going too far; three, Customs’ conduct was improper in that the warrant was obtained in circumstances revealing mala fides, bad purposes, motives, something of that kind; four, Customs’ exercise of its purported powers was improper because Customs did not give time or opportunity to comply with what in any event was a bad notice to produce, but is that the sort of framework that you are seeking to identify the defendant’s case as taking?

MR FAGAN: Yes, they mounted all of that, and with respect to number 1 the proposition that it was known to be unlawful, that was mounted just with respect to the particular that it was said they knew their 214 notice was inadequate and deliberately pressed it.

HAYNE J: And the “ought to have known” case, do I understand you to say – and Mr Gleeson may or may not wish to challenge this, I do not know – but do I understand you to say that the “ought to have known” case, Customs ought to have known what they were doing was unlawful, was a case that said, look, McNeill had decided the point, they ought to have known if there had been proper training, that there was no way they could seize all of the five year goods.

MR FAGAN: With respect to that one, one could characterise the way that they put it in retrospect as an “ought to have known” case.

HAYNE J: They are my words, not the defendant’s words.

MR FAGAN: Yes. No, one could characterise what they had run as amounting to that. The way they expressly put it was simply that the execution of the warrant for documents relating to five year goods flowed from an improper systemic failure to train. So perhaps that went so far as to amount to an “ought to have known” case. Perhaps one could construe it that way. My learned junior is just pointing out that in appeal book 1 at page 30 is our reply, not defence, but our reply, in paragraph 17 of which ‑ ‑ ‑

GUMMOW J: Page 130?

MR FAGAN: Just 30, your Honour, paragraph 17.

GUMMOW J: Thank you.

MR FAGAN:

the plaintiff admits that the documents were not lawfully obtained pursuant to s214 ‑ ‑ ‑

GUMMOW J: So there was no issue really?

MR FAGAN: No. Sorry if I am repeating myself, but it is really for that reason that they had that underpinning that it was accepted that there was an unlawfulness that attracted section 138. It was for that reason no doubt that they concentrated on making the other excess of the law relative to O’Neill’s Case in executing the warrant, they sought to make that a point from which to launch an exacerbation, an aggravation, of the matter by directing that into the failure to train case.

GUMMOW J: Well, the question then becomes I think, can it be said that looking at page 549 of the appeal book, which is the fourth and last section of his Honour’s reasons, “Application of discretion” is what follows apparently influenced by what his Honour had said in the first section of his reasons beginning back at 516 with “Search powers” with respect to O’Neill?

MR FAGAN: Yes. The way my learned friend seeks to advance that proposition is by taking parts of the judgment and construing them as revealing a residual view of Justice Basten that O’Neill was wrong and that he was dealing with the case on that basis.

HAYNE J: Does that proposition stand or fall on the sentences at line 40 on page 550?

MR FAGAN: He put that as being the clearest and it really does stand or fall on that, but when one goes back to look at some other passages just for example, in paragraph 118 his Honour was considering the advice that had been received regarding O’Neill. This is the end of the section dealing with the failure to train case. He said:

However, it is clear that Customs did not ignore the decision in O’Neill but obtained their own advice . . . Customs obtained advice from the AGS favouring the broader view, which advice was neither clearly mistaken, nor based on any misunderstanding of the statutory provision in question, nor of the principles of statutory construction.

Now, that is a reference to Mr O’Halloran’s opinion at page 83 of the appeal book, but my learned friend has read that when it discloses it is not based on any misunderstanding of the statutory provision. Of course, Mr O’Halloran in that advice expressed the view that Justice Dunford was wrong and that one could seize documents relating to five‑year goods under the warrant. But Justice Basten was not here saying that when that advice disclosed no misunderstanding, that he was treating this matter on the basis that Mr O’Halloran was right, he was merely saying that there was no misunderstanding of the identity and terms of the statutory provision.

The whole gravamen of this paragraph is to take that advice, which Customs had, and to go on to say that Customs were entitled to rely upon it reasonably and that leads to the view at the bottom that:

there was no deliberate or reckless disregard of an established constraint on power –

What his Honour means by that is, and starting with the word “However”, he is proceeding to attack the problem, as he said right back at paragraph 109, on the basis that O’Neill is right, that it was not observed here, but there was not any deliberate or reckless disregard of it. So all of that reasoning, which is closely juxtaposed with the last three pages and, particularly the bit at line 50 on page 550, it is all closely juxtaposed and clearly discloses that the matter has been approached on the basis, contrary to his own view, that O’Neill is right.

Now, when one sees from page 549 where the culminating application of 138(3) commences, Justice Basten started in paragraphs 120 and the first part of 121 by dealing with considerations (d) and (f) and (c) under section 138(3) and those were matters of the gravity of the impropriety and that was something that was common, whether the impropriety relevantly was one of having given an insufficiently clear 214 notice or one of seizing to wider frame of goods under the warrant. It was the same gravity, namely, the invasion of somebody’s private premises and the seizure of a large number of their business records.

In considering item (c), the nature of the offence and the subject matter of the proceeding – that was considered in paragraph 121. It is exactly the same consideration applicable to either of these heads of illegality relative to section 214. It was not necessary, with this appearing so close in proximity to what is on the last few pages dealing with O’Neill’s Case, to reiterate these considerations as applicable to the excess of the holding in O’Neill. The passage at the very bottom of page 549 is most important:

Ultimately, the weighing exercise required to determine whether the evidence should be admitted must turn on whether the actions of the customs officers could properly be described as involving wilful disregard of legal constraints -

Now, that is having regard to taking into account the seriousness of the invasion, but on the other hand the importance of the evidence in the case. In this situation, what was really going to dictate the operation of the judgment to be made under section 138(3) was whether their breaches of the law, their excess of their lawful authority was wilful or otherwise and that matter his Honour had just determined on exactly the opposite opening of the page at line 50 on page 548 in relation to the other particular. His Honour had just found that with respect to not observing the holding in O’Neill, there was no wilfulness or recklessness.

His Honour then proceeded at page 550 through further considerations relative to the operation of 133 and then we come to the beginning of paragraph 124.

HAYNE J: Just before you depart from 123, line 39 – the understood limits of the power is at least consistent with a reference to limits of the power as identified in McNeill or O’Neill, whatever the name of the case is.

MR FAGAN: Yes, your Honour. On the other hand, against that, my learned friend puts what is in 122 where his Honour spoke of something flowing from the extraordinary breadth of the power. But that, in our submission, is neutral. It would be a very slender reed to depend upon those words as indicating that Justice Basten was now proceeding on the basis that O’Neill was wrong and that everything else that followed about the application of 138 would proceed on the basis that O’Neill was wrong. That would be a direct contradiction of what he had said over four pages, from page 545.

FRENCH CJ: The notice point was a point about whether the power under 214(3) was engaged at all.

MR FAGAN: The notice to produce point?

FRENCH CJ: Yes.

MR FAGAN: Yes, your Honour.

FRENCH CJ: That went to whether there was any power at all, irrespective of purported warrants and so forth.

MR FAGAN: Yes.

FRENCH CJ: The O’Neill point only engages if you assume that the notice is good, and then the question arises, what is the scope of the power to seize that attaches to a validly issued warrant?

MR FAGAN: Yes, your Honour.

FRENCH CJ: But if you do not get to a validly issued warrant because the notice is no good, then you do not get to O’Neill.

MR FAGAN: Yes, that is so.

FRENCH CJ: You say the case really was proceeding almost entirely on the basis of the notice at first instance?

MR FAGAN: Yes, at first instance and through appeal. That was the fundamental for the appellant and, insofar as they sought to invoke the second stage to which your Honour has referred, the sort of how much can we take part, they were simply using that as a springboard to an exacerbation.

FRENCH CJ: The way it was pleaded in the defence, and it is rather curious that it was pleaded in the defence at all because it was an evidentiary point, it was not put as I read it in answer to any pleading of fact.

MR FAGAN: Well, I can explain that, your Honour. The reason for that ‑ ‑ ‑

GUMMOW J: Perhaps you could look at page 21.

MR FAGAN: I am sorry.

FRENCH CJ: It is a kind of pre‑emptive strike.

GUMMOW J: Starting at paragraph 34 on page 21 and going down the rest of the page. The heading “ESTOPPEL” is misleading, by the way.

FRENCH CJ: That cuts out at 33, I think.

GUMMOW J: Yes, that is right.

HAYNE J: That evoked an admission in your reply, paragraph 13, page 29, the section 214 notice it served was invalid but the assertion the notice was not intentionally invalid.

MR FAGAN: Yes. What I was going to say background to that ‑ ‑ ‑

GUMMOW J: You did not omit paragraph 40 though. You omitted, however, 39.

MR FAGAN: We certainly were not conceding that the warrant had not been issued according to law. The warrant was issued at the same time as the notice.

FRENCH CJ: If the notice was defective, the warrant could not have been issued according to law, could it?

MR FAGAN: I am not too sure, with respect, that is right.

FRENCH CJ: You only get to the warrant if you have non‑compliance with the notice and the warrant is linked to the terms of the notice. It assumes a valid notice, does it not?

MR FAGAN: They are both issued together though, your Honour, by the issuing ‑ ‑ ‑

FRENCH CJ: Well, no, that is a matter of administrative convenience. The logical sequence is notice, non‑compliance, warrant, seizure and now there can be a gap in time of a month or a nanosecond, however long it takes not to comply.

MR FAGAN: Well, yes, your Honour, but our approach to this would have been – and I am reconstructing thinking – that the warrant was issued administratively by Mr Stilling, the collector of Customs, properly at the time, that it would not have been an invalid document just because there was a notice that was obscure. It would remain possible that the notice would be complied with, notwithstanding its obscurity, but – it would be possible that it could be complied with, I should say, so that notwithstanding its obscurity, the occasion for executing the warrant might arise if the person did not take objection on that ground. I mean, if you could comply, you would never execute the warrant, but if you did not complain about being unable to comply, there would not be a problem with the notice. It was not an inherent problem, it was a practical problem is what I am endeavouring to say.

HAYNE J: But the authority given by the warrant never arose in the events that happened. If you go to the terms of the warrant at 22:

You are hereby authorised in the event of . . . failing to comply immediately with ‑

and there was no such failure to comply because there was no valid notice.

MR FAGAN: The event did not properly arise because of the limitations of the notice. What we submit when one comes to paragraph 124 on page 550 is that it is just too much to read into that that, by this point in the judgment, Justice Basten has completely lost sight of what he stated some paragraphs ago – that he was going to look at the breach of O’Neill’s Case on the basis that O’Neill was right. It is too much to infer that he has approached the exercise of the judgment under 138(3) with respect to ‑ ‑ ‑

GUMMOW J: What his Honour should have said was, having concluded the excursus, it does not matter. Having regard to the way the case has been framed and pleaded, it does not matter.

MR FAGAN: Yes. His Honour could have said that.

FRENCH CJ: I am sorry, Mr Fagan. You were going to say when one of us interrupted you, I think, how it came about that we find the pleading relating to the warrant and the documents in the defence.

MR FAGAN: It is just a bit of history, but at the same time as these notices were issued and warrants executed at this premises, which was a bottling plant, there were other notices issued and warrants executed at the liquor supply premises of various persons and a large number of prosecutions emerged out of all of this. In one of the others there was a challenge to all of the documents which had been seized pursuant to the execution of a warrant following on a notice and the notice and warrant were similar to these.

That had been litigated in a protracted voir dire hearing before Justice Sully in the Common Law Division of the Supreme Court of New South Wales. There it had been accepted that the 214 notice which was similar to this was unacceptably vague and that there was consequently no justification for the seizure and all the discretionary considerations had been applied and all of this evidence that was examined at great length before Justice Simpson had, on a prior occasion, been examined at great length before Justice Sully and he had been satisfied that there were no mala fides, that the officers had thought they could properly execute a warrant following non‑compliance with this rather vague notice, and he had allowed the evidence in and that case had gone forward. The long delay in these proceedings has been referred to earlier ‑ ‑ ‑

FRENCH CJ: I am sorry. I was just asking about how the pleading came about.

MR FAGAN: Okay. The history is, shortly, that all of this had been considered at length on another occasion, so there was reason to take an economical approach about it from the outset here. I suppose that is the short answer.

Now, all of that has been addressed to the proposition that accepting there was insufficient invitation to Mr Hutley to make whatever submissions he wanted to make about O’Neill, nevertheless it has not translated into any procedural unfairness because of the way the case was ultimately resolved. Another question to be addressed here is was O’Neill wrongly decided so that Justice Basten was correct in the earlier part of his judgment in any event. If that were held to be so, then there would be no reason for this Court to grant the relief which the appellant seeks. That is the subject of our notice of contention.

There is not really anything that I can add to the points that have already been agitated between your Honours and my learned friend about that, except that I would just make this proposition, that the power comes from section 214(3), the power is conferred on a person holding a warrant. To glean legislative intention the best guide is to look at the sections. The legislature in the subsections stipulated what power there would be and in what circumstances.

The warrant is not a good guide to inferring legislative intent because it is apparent from the structure of the Act, that being a document set out in a schedule, that the warrant was intended to be a form of document which would give effect to the legislative intent prescribed in the subsections. If that approach is taken then one finds good reason in the use of the word “goods” in 214(3) for saying that they refer to all of the goods, that is, illegally dealt with and five‑year goods.

Then it may well be that the form of warrant that the legislature has prescribed is a rather inapposite one to give effect to its intent. However, the power springing from 214(3), that does not really matter. As for that purpose, one is just looking at the Schedule V statutory form of the warrant. If one then turns to the question of the actual warrant in this case, it is our submission that that cannot dictate any answer because the power comes from the subsection and it is conferred on a person who holds a warrant, and the only question is then ‑ ‑ ‑

FRENCH CJ: But that does not matter in this case because the warrant followed the form of Schedule V, so we are really looking at Schedule V as part of the statutory construction process, are we not?

MR FAGAN: That is what I submit, that is the only reason for looking at any form of the warrant, for statutory construction and because the form of the warrant actually in use was so closely conformable to what was enacted in Schedule V there is no question of a warrant that is invalid in form.

FRENCH CJ: It is right, is it not, that the warrant is issued upon the basis of the information which has to do with illegal or unlawful importation, et cetera, but against the contingency that there will be a non‑compliance with a notice?

MR FAGAN: Yes, against the contingency.

FRENCH CJ: So it is certainly not issued after the event?

MR FAGAN: The officers go out with a notice and a warrant.

HAYNE J: Would it be open, having regard to the provisions of section 25C of the Acts Interpretation Act, to – would it then have been open – there is a time issue in this too. We are talking 1995, are we not? Would it then have been open to issue a warrant in which, looking at page 22 of the appeal book, authorised the holder of the warrant “to enter into”, et cetera, “and search, any house”, et cetera, “in which any books or documents relating to the goods”, and there insert, “relating to any of the goods referred to in the written requirement made in pursuance of section 214”?

MR FAGAN: I am not sure I have appreciated your Honour’s question. If those words were added in?

HAYNE J: Would the warrant still be a warrant sufficiently issued under section 214(3)?

MR FAGAN: Your Honour, I would submit that that would be if the person ‑ ‑ ‑

HAYNE J: Section 25C of the Acts Interpretation Act says “substantial compliance” with a form is what is called for. I do not know when 25C came in.

MR FAGAN: The thing about that is, your Honour, that when one is considering what might be added to this warrant to give it greater clarity having regard to the effect of section 214, would it still be a warrant of the form, would it be sufficiently close for there to be no substantive departure, the first question is, of course, what additions would one be making, which goes back to what is really the proper construction of 214(3)?

Now, our submission is that on the proper construction the appropriate words to add would be “relating to goods said to have been illegally dealt with in notice served, all goods imported within the past five years”. If those words were added, we would submit, taking into account the proper construction of 214, such a warrant would be sufficiently conformable to the thing in the Schedule to the Act for it to be compliant.

FRENCH CJ: Would that be consistent with approaches to statutory interpretation which take, if you like, a constrained view towards interferences with common law rights and freedoms?

MR FAGAN: I would submit so, your Honour.

FRENCH CJ: In particular, those sorts of things protected by the tort of trespass?

MR FAGAN: Yes. Well, that, of course, is a background consideration in the construction of 214 throughout but, after all, 214 does provide for invasive powers. The exercise is just of what scope? There is no conflict with a statutory construction rule that requires one to take that into account if one does arrive on a proper evaluation of the wording that the view that the power is actually quite wide. That may well be and, bearing in mind that there is an absurdity, as identified by Justice Dunford, in the path of the more narrow construction, it may simply be that, as we contend, drives one to the construction we are submitting, notwithstanding the consideration that there is quite a bit of invasion of privacy involved.

I have just realised that I did omit to respond to a question Justice Kiefel asked me about page 409 of the appeal book. I did look at that more carefully over the lunch hour. Back at page 408 at about line 32, Justice Tobias referred to the seven or eight allegations of improprieties. I have taken your Honours to those just after lunch, identifying the different groups of grounds. What followed here was a consideration of those seven or eight allegations overall, coming to the top of page 409 where Justice Tobias said:

you would seek to put forward that the gravity of the impropriety was that had the advice been referred to the collector he would not have issued the notices –

Now, that gives away that what this was being addressed to was one of the other improprieties, the very first one in, I think, grounds four to nine and what followed on down came to the point your Honour asked me about at line 40 where Mr Hutley said:

I don’t submit that the only thing going for the gravity –

and so on. He was just addressing one of those grounds of impropriety that have now fallen away. I will just, if I may before sitting down, say something very briefly about the averments position.

HEYDON J: Can I just ask this. Mr Gleeson said, in effect, that the Court of Appeal deprived his client of two chances: one was to argue that O’Neill was right, and you say there is nothing lost there because O’Neill is plainly wrong and the Court of Appeal is plainly correct about that. But he said there was a second chance. He said, “Even if O’Neill is wrong, Mr Hutley could still have argued that this warrant, on its face, read with section 214(3), is far too narrow to justify the wide search that took place”.

MR FAGAN: Yes. Well, first of all, I suppose our substantive answer to that is that the warrant really is not to the point – this particular warrant. It was sufficiently like Schedule V to be a warrant under Schedule V, and the power then lay in it.

HEYDON J: Yes, all right.

MR FAGAN: I am sorry. Have I missed the point?

HEYDON J: Assume that one disagreed with you about that and that actually it is nothing like Schedule V and it is really – I am sorry. The warrant is certainly like Schedule V, but the search was far wider than Schedule V or the warrant. The warrant related to some documents to do with the importation of brandy. The search threw up many, many documents about whisky.

MR FAGAN: Yes.

HEYDON J: Now, Mr Gleeson’s point, I think, is that Mr Hutley could have taken that point before the Court of Appeal and cast the Court of Appeal into a different line of thinking in terms of applying section 138. Therefore, in terms of Stead’s Case, the application of 138 has to be reconsidered. You cannot say that it is futile him coming here.

Can I deal with that on the two alternative bases; one, that what we are submitting substantively about that here is right and the other that it is wrong. On the basis that what we are submitting here substantively is right, that submission is, as I have been indicating to the Court a moment ago, that albeit that the warrant is narrow, the power resides in 214(3). Section 214(3) is wide because of proper construction of goods in 214(3) is embracing. It is embracing of goods illegally dealt with, refer section 214(1), and it is also embracing of goods imported within the last five years, again refer to 214(1). That is the way we have put it here. So that the power stemming from 214(3) and on that view of goods is wide for anyone who has in his hands a conformable warrant, and these officers did.

Now, if that is right, he has lost nothing. If that is wrong and if the power to seize documents is only as wide as whatever you express in your warrant, and it was only in this case to seize documents that related to the bottle of French brandy, then on that basis the seizure of wider goods was unlawful for that reason. We submit he has lost nothing referable to that because (a) he had the case considered on the basis that the entire seizure was pursuant to trespass under an unlawful execution of a warrant altogether, and it does not get any more unlawful by being unlawful for two reasons. It just is unlawful and he had the benefit of that.

HEYDON J: Except the character and extent of the illegality can differ, can it not? Is there not a difference between a perhaps trivial mistake about identification and minds might differ about on the one hand and something that can lead to the sort of total ransacking of the premises?

MR FAGAN: No, I understand that, your Honour, but insofar as the character of the illegality might have been widened and more colourful and because it was on a second ground as well, namely, seizing documents relating to five‑year goods when your warrant only ever allowed seizure relating to a bottle of brandy, that he had fully and thoroughly considered because the way he drew that into saying this point of illegality attracts other considerations of the circumstances in which it arose, which should make the Court reject this evidence, that was all harnessed towards the failure to train and that was fully agitated and fully considered. He has lost nothing. It has all been dealt with, in our submission.

HEYDON J: Averment.

MR FAGAN: Averment, your Honour. All I want to say is this. All those points that Mr Gleeson raised would have been good to advance in the appeal pursuant to the grounds which they raised concerning averments there, but they dropped them. There were grounds about averments which they introduced by amendment in the notice of appeal at the second volume of the appeal book 346, 36A to 36E. Now, those grounds are all predicated on the proposition that her Honour had determined the case on an alternative standalone basis, that the primary facts were averred and thus proved and that she could reason from them to the matters of blameworthy conduct and what have you that needed to be arrived at in order to find the offences made out and give the relief that was granted.

When one looks at her Honour’s judgment at 321, paragraph 120, her Honour said:

There are two short routes to the conclusion that the Comptroller has established the facts pleaded . . . The first is to be found in the s255 averment.

Her Honour considered that, going through to paragraph 123 with the words:

I have concluded that the averment alone is sufficient to found a conclusion that all factual matters pleaded in the Re‑amended Statement of Claim have been proved. (There remains, of course, a further step: it is necessary to consider whether those facts are sufficient to (and if so, do in fact) establish the requisite standard -

That stops there. Then her Honour considers the second short avenue in paragraphs 124 and 125, and that is the results of the forensic accountant’s examination of the evidence which is in dispute as seized under this warrant. Then from 126 onwards, her Honour goes on to consider further that evidence of Ms Lindsay leading to the conclusion that the charges are made out.

Now, I will acknowledge it is not then expressly exposed in her Honour’s reasons the process by which the primary facts pleaded in the statement of claim and found proved by averment culminate in proof of the charges, but that step really hardly needed to be exposed. It is self‑evident from all the detail that is pleaded in the statement of claim that if all of what is said there went on ‑ ‑ ‑

HEYDON J: Is not the problem that Justice Simpson moved from being satisfied, presumably on the balance of probabilities, to being satisfied beyond a reasonable doubt after analysis of Ms Lindsay’s evidence, which in turn depended on reliance on the documents which had been seized, according to Mr Gleeson, unlawfully, so that they are jumbled up together, or they are not jumbled up, they are – she draws on the evidence to get herself up to the highest standard. She goes beyond the averment by relying on the evidence.

MR FAGAN: Well, her Honour did say that she found these two short routes available and it really followed from that that she considered ‑ ‑ ‑

HEYDON J:

to the conclusion that the Comptroller has established the facts pleaded ‑ ‑ ‑

MR FAGAN: “In respect of each offence.”

HEYDON J: But then she says, but then I have to consider to what standard, or I have to move up to the criminal standard of proof.

MR FAGAN: In our submission, from the fact that the charges were in the end found proved, that process has been undertaken, there would not have been any point in her Honour stating those matters at paragraphs 120 to 124, particularly the conclusion of 124, if that was not done by

her Honour. When one looks at what is in the pleaded statement of claim – I do not want to trouble your Honours with it in detail at the moment, but really the proposition that there had been blameworthy conduct constituting evasion could hardly but follow from the circumstance that it was found on averment that there had been a certain amount of whisky – of spirit in the bond.

At a certain time an amount had been added and an amount taken out, and there was a vast amount not accounted for, and no question that duty had not been paid for it, and that in addition to that there was a series of permissions for removal which are documents authorising removal from bond to bond still under the control of Customs which were not acquitted by receipt of the goods into the bonds nominated.

From all of that it did not really require – if one had everything in the statement of claim made out, it did not require any further reasoning to say there had been the offences alleged at the end of that. The pleading really sufficiently showed the process. Here are all the facts as I have just very much abridged them; therefore there has been an evasion. In any event, these appeal grounds to which I have drawn your Honours’ attention were raised, predicated on the basis that her Honour had alternatively found the offences proved in that manner. At the appeal they were not pursued, only the voir dire questions were pursued. It had the consequence, which I think it is fair to say none of us have really addressed until this point, that really the appeal was a futility. To have the evidence all excluded and not maintain those appeal grounds in relation to the averment was rather a waste of time, but anyway that was what was done.

On the basis of that, it is our submission that there is a second reason why there has been no denial of procedural fairness through the failure to hear this out because it has not resulted in any adverse consequence and from none of this does it follow that there would be any occasion for my client to be filing a notice of contention or seeking to agitate any of this here. It is something that the appellant raised, did not agitate and which has been dropped. It is not an answer to say that it ought to be the subject of a notice of contention for which leave and extension of time and so on would be required. Those are the submissions for the respondent, unless there is something else that your Honours would wish me to address. May it please your Honours.

FRENCH CJ: Thank you, Mr Fagan. Mr Gleeson.

MR GLEESON: Just briefly, your Honours. We submit it is quite inappropriate to suggest, as Mr Fagan just did, that a point which he never orally raised with the court, which he now says rendered the entire appeal futile, was one which the court was meant to be apprised of, one which, contrary to what Justice Basten has said at paragraph 40 of the judgment, if we were to win on the section 138 point the convictions would be properly set aside, one where he says he cannot point to the reasoning of her Honour in getting from the averment to beyond reasonable doubt that we should infer it happened and one where he seeks no notice of contention, which he must have from this Court ‑ ‑ ‑

HAYNE J: Just a moment, on that beyond reasonable doubt point, did not her Honour, having quoted Labrador and its statement about analogies with crime, say that that is the basis on which she acted?

MR GLEESON: Her Honour correctly, at page 322, lines 20 to 30, gave herself the Labrador warning.

HAYNE J: Yes, I had in mind more 321 at line 30 before she stated the “two short routes to the conclusion”, the immediately preceding sentence, “I bear these principles in mind in reaching the conclusion”. Is that not consistent only with her applying beyond reasonable doubt as the requisite standard?

MR GLEESON: With respect, no, your Honour, because her Honour then goes on at paragraphs 120, 121 and 123 to say she has concluded the averment, founds a conclusion that the factual matters have been proved, and she says:

There remains, of course, a further step: it is necessary to consider whether those facts are sufficient to (and if so, do in fact) establish to the requisite standard, the commission of the offences –

and in paragraphs 124 to 131 Mr Fagan can point to no place where her Honour comes back to address how she gets from the averment to the ultimate conclusion. Instead, she deals with the evidence, and I will take your Honours to that evidence, but we do submit that there is no notice of contention now to be put on the point. It is a ground upon which Mr Fagan did not succeed in the Court of Appeal and your Honours should not treat with it further. On the other matters, there are essentially two matters only I need to address. The first is Mr Fagan’s characterisation ‑ ‑ ‑

HAYNE J: Forgive me for interrupting yet again. Did not his Honour Mr Justice Basten describe the appeal with which he was concerned as an interlocutory appeal? Yes. I have in mind page 502, the last line and a half:

It is from that interlocutory judgment that the present appeal is brought.

That is to say, his Honour did not treat the appeal as putting in issue the conviction. Is that right?

MR GLEESON: Yes and no. He treated it as an appeal only from the interlocutory judgment because Mr Hutley did not press anything about the second judgment and Mr Fagan did not press anything about it. But his Honour treated it as following as common ground, at page 515, paragraph 40, that if the appellant succeeded on the appeal from the interlocutory judgment, both the conviction and the penalty would properly be set aside. What Mr Fagan is now saying is, even though he did not make the point, he was really inviting the Court somehow through his written submissions to approach the matter on a different basis, that it was a futility in ever looking at the interlocutory judgment because all he needed was the other one.

Your Honours, on the two other matters; the characterisation which has been placed upon what Mr Stack and Mr Hutley put is that the search and seizure of the documents, so far as they were the five‑year documents, was only relied upon as an element of a failure to train case; that the Court of Appeal dealt with failure to train, therefore the case has been dealt with.

That is a mischaracterisation of the case put at both levels. Mr Fagan places emphasis on the areas where the failure to train case was run and little or no emphasis on the area where the underlying illegality was identified. Without taking your Honours to it, could I give the references in Mr Stack’s submissions, pages 197, 209 and 244 to 245. In Mr Hutley’s submissions, inter alia, in the section at pages 424 to 425 that you have been to he picks up what Mr Stack had said at 197 and 224 to 225.

GUMMOW J: Are you going to say anything to us about the pleadings?

MR GLEESON: Yes. In terms of the pleadings, the allegation put in the defence in various ways included page 21 ‑ ‑ ‑

GUMMOW J: Just a minute, paragraph 44 of the defence, page 21, I think is designed to be consequential to paragraphs 34 to 43 as, in other words, curiously, but anyhow designed to found some section 138 arguments. Then it is not true of paragraph 40, but the rest of it seems to have been admitted. It is with that in mind that one approaches the conduct of the actual hearing.

MR GLEESON: Your Honour, within those paragraphs there are allegations in 40 that the warrant was not properly issued; 41 that it was not executed according to law and 42 that the documents referred to in paragraph 34, which are the whisky documents, did not fall within the authority of the warrant. That is squarely the point that the five‑year documents ‑ ‑ ‑

FRENCH CJ: But how do you get to that in this case, because at page 30 in paragraph 16 the plaintiff in reply – I mean, it is all rather odd to have pleadings about effectively questions going to admissibility – but the plaintiff is admitting that the section 214 notice was invalid and as a consequence the warrants that were executed were not properly executed according to law. I mean, you have a situation, do you not, that if the notice is invalid, a condition precedent to the exercise of the power to seize anything under section 214(3) is not satisfied. You are not then worried about the scope of the power because the condition for its exercise on any basis is not satisfied. Query then, how do you, having regard to that concession, get to worry at all about O’Neill and the warrants?

MR GLEESON: They cannot by the concession remove the second respect in which, if it be found, the warrant could never have authorised the seizure. It is a scope point, as your Honour ‑ ‑ ‑

GUMMOW J: Warrants do not authorise the seizure.

FRENCH CJ: The seizure power is 214(3), a Customs officer having with him a warrant in the form of Schedule V, coupled with a non‑compliance, are the two conditions that then enliven the power.

MR GLEESON: We agree that in a respect there was only one contravention, namely, the trespass.

FRENCH CJ: It is not a contravention; it is just a failure of power, is it not?

MR GLEESON: A failure of power resulting in one contravention.

FRENCH CJ: And then for a trespass.

MR GLEESON: But in terms of why section 214(3) failed to provide the necessary power, it did that for two reasons. The first reason was the precondition was never satisfied of non‑compliance, but there was a second reason, that even if that first precondition had been satisfied or had been waived by the recipient ‑ ‑ ‑

GUMMOW J: It is the “even if” that is the problem.

MR GLEESON: It is the “even if”, that the scope of what was being claimed was a scope of documents which ‑ ‑ ‑

GUMMOW J: The hypothesis that does not arise. That is what is put against you.

MR GLEESON: What I want to show your Honours is the reason it did arise was that Mr Stack – if your Honours would go to ‑ ‑ ‑

HAYNE J: Just before you go from the reply, it did not arise because of the admission in paragraph 17, the admission that the documents were not lawfully obtained. Now, you want to elaborate that and say not only were they not lawfully obtained, there was more than one reason they were not lawfully obtained.

MR GLEESON: And not an irrelevant reason, with respect, your Honour, because one of the mandatory factors under section 138(d) would be the gravity of it, and if one, through the ‑ ‑ ‑

GUMMOW J: The gravity is the contravention of the common law.

MR GLEESON: Of the common law and, under paragraph (h), the ease with which the documents could have been obtained lawfully. The central point here was that even if they had satisfied the precondition they could never, through this process, have got to the five‑year documents, being the whisky documents on which the entire case ‑ ‑ ‑

HAYNE J: The premise for that, Mr Gleeson, is that your client would have declined to abide the obligation under 214(1), is that right?

MR GLEESON: With respect, your Honour, it is the opposite premise. The premise is ‑ ‑ ‑

HAYNE J: Because the obligation under 214(1) was to afford inspection of the five‑year documents at least, was it not? Customs would have had access to and could have copied the five‑year documents had it made proper requirement, which it did not in this case, but is that not so?

MR GLEESON: I am putting that it could not lawfully through the subsection (3) route have impounded those documents. What I wish to indicate to your Honour was that, if your Honours would look at pages 199, lines 50 to 60, Mr Stack raised the question of exactly what was the admission upon which the matter was proceeding and Mr Fagan answered that at page 201, lines 10 to 20, that the only admission was the problem in the notice and therefore the failure to satisfy the precondition. So with that being the limited basis upon which Customs were admitting there was unlawful conduct ‑ ‑ ‑

GUMMOW J: Are you saying they were allowed to withdraw from their pleading? Mr Stack was not doing his job very well if that is what was going on.

MR GLEESON: Your Honour, there are two propositions. If their admission in the pleading was an admission of what was alleged in paragraph 42, that the whisky documents did not fall within the authority of the warrant, and if they were not permitted to withdraw from that ‑ ‑ ‑

GUMMOW J: Are you trying to say to us now that the case, notwithstanding these pleadings which have a history that predates them we know about, that the case before Justice Simpson was nevertheless conducted on a basis that departed from it, you had better say so.

MR GLEESON: What I am seeking to put is that before Justice Simpson in the face of these pleadings, when Mr Parker’s counsel said, “We seek clarification from Customs as to what is the unlawful aspect they admit”, Mr Fagan said, “We only admit one, namely, the failure to specify the brandy properly in the information”. Against that background, Mr Stack took on the challenge of trying to establish there were two problems, and they are the two problems on page 197, particularly paragraph 5 being the second issue, and it is paragraph 5, being the second issue, that he advanced in his oral submissions at page 209 ‑ ‑ ‑

FRENCH CJ: I am not wanting to trivialise it, but is it put as a kind of aggravating factor for the purposes of the section 138 evaluation, and really related to what they might have had in their heads or ought to have known about the scope of the power under section 214(3) if you had a properly issued Schedule V warrant?

MR GLEESON: With respect, your Honour, it was put more starkly than that. Simply, that section 214(3), plus the warrant, in these circumstances never authorised a seizure of the five‑year documents.

FRENCH CJ: I am just trying to get to the logic of it because, as I put to you before, I do not want to go around in circles with it, and I think you accepted, the condition precedents the exercise of any power under 214(3) was not satisfied, that was common ground because of the notice. So no question of the scope of the power arose in a real way. It is only on a hypothesis that if the notice had been valid, then they would have been exceeding the power conferred by section 214(3).

MR GLEESON: Your Honour, we would approach it from the opposite end. The basic claim was you unlawfully seized all of my documents, most of which went to whiskey and they are the case against me. Now, the person who is charged with the illegality, we would submit, cannot denude the excess of section 214(3) of its significance by saying “I am prepared to admit that the precondition never arose, therefore, you cannot bring into the section 138 equation the fact that I was seeking documents I was never allowed to seek under the section”. If that is what has happened here, by the admission of the precondition, Mr Fagan and his client have been able to say that your true complaint, which is the scope of the documents, is one the Court cannot consider under section 138.

We submit that is, as a matter of construction of 138, wrong and that is because under 138(1) one has to look at evidence which is obtained in a manner which is a contravention and under 138(3) the mandatory factors must require one to look at this aspect of the circumstance.

FRENCH CJ: Which is the relevant factor to this hypothetical case of excess of power – or let us call it the contingent proposition, struggling for some neutral language here?

MR GLEESON: It is at least subsection (3)(h) and ‑ ‑ ‑

HEYDON J: It is also (d), is it not?

MR GLEESON: It is (d), as gravity, because all they were allowed to lawfully seize were a few documents relating to brandy which were irrelevant to this matter.

FRENCH CJ: So the way you put it is they could not seize anything because they did not have a valid notice and even if they had a valid notice, they would not have been able to seize the whisky documents.

MR GLEESON: Yes, and those documents constituted the entirety of the case against the appellant. Secondarily, we rely upon (h), the difficulty of obtaining it without impropriety and that is the matter where, when one does look closely at paragraph 124 of Justice Basten’s and the Court of Appeals’ judgment, he has found that matter against Mr Parker. It is not just that the first sentence is in apposite language, as the respondent would put it, but that when his Honour applies the subsection (h) factor, he does it by reference not to this problem.

HAYNE J: Applying subsection (h), is it relevant to have regard to the ambit of the powers under 214(1)?

GUMMOW J: In other words, it could have been done according to Hoyle without too much trouble.

MR GLEESON: The answer is yes, but it is not a complete answer to paragraph (h) because if we are correct on our basic construction argument,

the difference between subsections (1) and (3), subsection (3) never permits the breaking and entering of premises, the seizing and the impounding as occurred here in relation to anything other than the illegal goods.

GUMMOW J: The relevant contravention of Australian law is partly common law and partly statute, is that right?

MR GLEESON: Yes, your Honour.

GUMMOW J: That is footnote 9?

MR GLEESON: Yes, your Honour. They are the matters in reply, your Honours.

FRENCH CJ: Thank you, Mr Gleeson. The Court will reserve its decision. The Court will adjourn until 10.15 tomorrow morning.

AT 3.45 PM THE MATTER WAS ADJOURNED

[2008] HCATrans 332

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