CATCHWORDS Administrative Law - Customs Act, 1901 - application for order of review of decision to seize goods - basis of decision false invoice declaration - meaning of "false" within para. 229 (1) (1) - whether rules of natural justice apply to Customs' seizure. Administrative Decisions (Judicial Review) Act 1977 Customs Act 1901 ss. 203, 204, 205, 206, 208, 229, 234. Social Services Act 1947 s. 138 TOY CENTRE AGENCIES PTY. LIMITED v. LEO SPENCER & ORS. NO. G. 234 OF 1982 10 MARCH 1983 AT SYDNEY LOCKHART J. IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) NO. G 234 OF 1982 ) GENERAL DIVISION ) BETWEEN: TOY CENTRE AGENCIES PTY. LIMITED Applicant AND: LEO SPENCER, RAYMOND PATRICK McMAHON and FRANCIS IVOR KELLY Respondents ORDERS JUDGE MAKING ORDERS: LOCKHART J. DATE OF ORDERS: 10 MARCH 1983 WHERE MADE: AT SYDNEY 1. The application be dismissed, 2. The applicant pay the respondents' costs, IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) NO. G 234 OF 1982 ) ) GENERAL DIVISION BETWEEN: 'TOY CENTRE AGENCIES PTY. LIMITED Applicant AND: LEO SPENCER, RAYMOND PATRICK McMAHON and FRANCIS IVOR KELLY Respondents REASONS FOR JUDGMENT 10 MARCH 1983 LOCKHART J. Toy Centre Agencies Pty. Limited ("the applicant") seeks an order of review under the Administrative Decisions (Judicial Review) Act 1977("the Judicial Review Act") of a decision of the third respondent, Francis Ivor Kelly, who is the Collector of Customs for New South Wales ("the Collector") to seize a consignment of 2,182 sets of 12" unassembled mini BMX pavement bicycles kits ("the goods") being the property of the applicant. The decision was made by the Collector on 17 November 1982 purportedly pursuant to the power of seizure conferred by s. 203 of the Customs Act 1901 ("the Act") which provides that an authorized person (an expression which includes an officer of Customs) may seize any forfeited goods. The Collector asserts that the goods were forfeited to the Crown by the operation of para. 229(1)(i) of the Act which provides:- "229. (1) The following goods shall be forfeited to the Crown: (i) All goods in respect of which any entry invoice declaration answer statement or representation which is false or wilfully misleading in any particular has been delivered made or produced." The Collector says that an invoice dated 13 September 1982 produced to the Customs as the basis of entry and clearance for home consumption of the goods in Sydney was false in a particular namely, that it described the front and rear wheels of the bicycles as being nylon bushed whereas in fact they contained ball bearings. The applicant does not dispute that the wheels contained ball bearings and that the statement in the invoice was incorrect, but it asserts that the statement was not false within the meaning of para. 229(1)(i) because the word "false" in that context was said to mean wilfully or intentionally false and not merely untrue as a matter of fact. The significance of the description in the invoice of the goods having nylon bushed wheels rather than containing ball bearings is that the Collector claims in effect that the bicycles were incorrectly entered under Tariff Item 97.01.300 (rate of duty 15%) instead of Tariff Item 87.10.100 (rate of duty 25%). The distinction turns in part on whether the bicycles were in the normal form of adult bicycles. The applicant claims that the goods were correctly entered under item 97.01.300 on grounds which include the ground that they were not in the normal form of adult bicycles. The difference in duty between the two classifications was initially calculated by the Collector at $6,504.61 but it appears was later reduced to $6,489.76. It is common ground that it is not necessary for the Court, on the hearing of this application, to determine the question of classification under the Tariff. The parties are in dispute about this question and it may. be considered in other proceedings. The goods were seized on 18 November 1982 by a Customs officer but were released to the applicant later in November upon its providing security to the Customs in the sum of $92,017.49 representing the market value of the goods less duty already paid by the applicant of $9,756.91. The applicant also paid the additional duty of $6,489.76. I turn first to the submission of counsel for the applicant that the word "false" in para. 229(1)(i) means wilfully or intentionally false, not merely untrue as a matter of fact. The word "false" may be used in either sense. In para. 229(1)(i) the word appears in the phrase "false or wilfully misleading" which suggests to me that the word is to be understood in the sense of untrue in fact. If the draftsman intended that it bear the meaning of "wilfully false" I would have expected to see the word "wilfully" or some like word used to govern "false". My view that it is sufficient to attract forfeiture of goods if the entry, invoice or declaration be false in the sense of untrue as a matter of fact apart from any question of intent 1s confirmed when para. 229(1)(i) is considered in the context of the Act as a whole especially para. 234(d), and the decided cases with respect to that provision, which states:- "234. No person shall - (ad) Make any entry which is false in any particular;..." Paragraph 234(d) has been the subject of various decisions over many years, all holding that "false" in the context of that provision means false in fact and not involving any element of wilfullness or mens rea. The cases include Dawson v. Jack (1902) 28 V.L.R. 634; Davidson v. Watson (1953) 28 A.L.J. 63 (at p. 64); Hansen v. Forbes a decision of Yeldham J. unreported 27 May 1977 (at p. 4); EX parte Falstein; re Maher (1948) 49 S.R.(N.S.W) 133 (at p. 143) and see generally H. N. P. Wollaston, Customs Law 1904, Sydney (at pp. 148, 149, 156 and 157). Notwithstanding that most of the decisions bearing on, the question currently before me concern the construction of s.234 which establishes various offences including the offence of making any entry which is false in any particular (para. 234(d)), I cannot conceive of any reason why the material words in the two provisions (1.e. para. 229(1)(1) and para. 234(a) ) should be susceptible of different constructions. Indeed, plainly they should be construed consistently. In Forbes v. Traders' Finance Corporation Limited (1971) 126 C.L.R. 429 the High Court considered para. 229(1)(j) of the Act which provided:- "229 (1) The following goods shall be forfeited to Her Majesty: . (j) Any carriage or animal used in smuggling or in the unlawful importation, exportation, or conveyance of any goods." Menzies J. said (at pp. 432-433):- "The first contention on behalf of the Collector was that the learned judge was in error in importing knowledge as a necessary element of the user, to which s. 229 (3) relates. With that contention I agree. It would appear that the learned judge looked at s. 228 (1) of the Act and remodelled s. 229 (3) aun the fashion of the earlier provision. There is no warrant for so doing. The provisions of the Customs Act regarding forfeiture are indeed drastic, but they are provisions with a long history and, except where it is provided, either expressly or by necessary implication, that forfeiture is conditional upon knowledge of what has been done, proof of the act is sufficient and it is not for the court to import knowledge as an amelioration to mitigate the hardness of the statute. The learned judge reached his conclusion after consideration of a well-known line of cases relating to the necessity for mens rea as an element in statutory offences, but those cases have no application here. Not only is there no warrant in the statute for the construction adopted by the learned judge, it is opposed to convincing authority in relation to forfeiture under revenue laws." See also the judgment of Windeyer J. (at pp. 439 and 440). Counsel for the applicant relied on Cameron v. Holt (1980) 142 C.L.R. 342 in support of his argument that the word "false" means wilfully false. Cameron's Case concerned the Social Services Act 1947 (Cth.) and in particular para. 138 (1) (ad) which provides that a person who makes or presents to an officer of the Department of Social Security a statement or document which is false in any particular shall be guilty of an offence. Barwick C. J. said (at p. 346):- "The offence created by par. (dad) is that of presenting a statement or document to an officer which is false in any particular. Those who may commit the offence are not confined to the person who prepared the statement or document. The offence is presenting the document and no doubt, in my opinion, may be committed by a person who did not make the document but who, probably on behalf of its author or authoress, presented the document to the officer. It is the falsity of the document in some particular which is the gravamen of the offence. In other parts of s. 138 (1) there is use of the expression "false statement" coupled on occasions with the words "or misleading": see sub-pars. (a) and (c). I can see nothing in the language of the section or its subject matter which would warrant the conclusion that a person, not being the maker of the document, who presented it to an officer could be convicted and punished under this section if in fact the document contained a false statement, even though it was quite clear that the person presenting the document was unaware of its contents. Further, there is a presumption - in my opinion, a strong presumption - that in creating a criminal offence the legislature intends a guilty intent appropriate to the nature of the offence to be an ingredient of the offence. This presumption can only be displaced if the language of the statute read along with its subject matter requires the conclusion that the legislature intended that such guilty intent should not form part of the prescription of the offence: Lim Chin Aik v. The Queen [1963] A.C. 160, at p. 173, affirming the expression of Wright J. in Sherras v. De Rutzen [1895] 1 Q.B. 918, at p. 921; see also Sweet v. Parsley [1970] A.C. at pp. 162, per Lord Diplock. Not only is par. (d) associated with the preceding paragraphs, which, as I have said, in my opinion require the presence of mens rea, but there is nothing in the language or in the subject matter of s. 138, read along with the rest of the statute, which would warrant the displacement of that presumption. Further, the description of the prohibited act lends no support to the view that the mere untruth in fact of the statement is sufficient. Indeed, the use of the word "false" tends in the opposite direction." Cameron's Case has no bearing on this case. It concerns essentially different legislation and, although the expression "false statement" was coupled on occasions with the words "or misleading" in the relevant provisions, the larger expression did not involve the use of "wilfully" before "misleading" as it does in para. 229(1)(a) of the Act. It was next submitted by counsel for the applicant that the statutory power of seizure conferred upon Customs officers and others by s.203 must be exercised in accordance with the rules of natural justice. It was submitted in particular that the applicant had a right to be heard before the Collector decided to seize the goods. It is not necessary to consider the question of the application generally of the principles of natural justice to decisions and acts made or done pursuant to the authority of the Act, in particular s.203, as it was the alleged failure of the Collector to hear the applicant that is the essence of its complaint. Counsel for the respondents conceded that the evidence would not permit a finding that the applicant had been invited by the Customs to freely put before them anything it wished before the decision was taken to seize the goods. The provisions of the Act relating to forfeiture and seizure have a long history and their operation may have drastic consequences and cause hardship. This arises from the very nature and purposes of the Act including the promotion of Australia's trading interests, the encouragement of local industry and the collection of revenue. The Act is an important instrument to Governments in the implementation of their fiscal and other policies. A wide range of goods is susceptible of forfeiture by the operation of s.229. They are goods or classes of goods which for reasons of public policy are regarded by the Legislature as being forfeited to the Crown once they answer the requisite statutory description. They include goods as diverse as smuggled goods, prohibited imports, goods in respect of which bulk is unlawfully broken, animals used in smuggling or in the unlawful importation or exportation of goods, and dutiable goods concealed in any manner, as well as goods falling within para. 229(1)(i). Also some goods forfeited to the Crown may require immediate seizure by their very nature, composition or possible use. They ~ -9- may, for example, constitute an imminent risk to human life or health or constitute a hazard. It is important to keep in mind that it 1s not any goods that may be seized under s.203. The power arises only in the case of forfeited goods or goods that the authorized person believes on reasonable grounds are forfeited goods. The goods are impressed with the status of forfeiture as a necessary antecedent to the exercise of the power of seizure. The Act contains a scheme which recognises a measure of protection of the rights of owners concerning goods once they are forfeited under s.229. Once an "authorized person" has seized goods pursuant to sub-s. 203(2) he must take them to an "approved place" (i.e. a place approved by a Collector as a place for the storage of a class or kind of goods in which those goods are included: sub-s. 204({1) ). Where goods are seized under s.203 the "responsible person" must as soon as is practicable serve on the owner of the goods or the person who had possession, custody or control of them immediately before seizure a notice in writing identifying the goods, stating that they have been seized under s.203 and specifying the reason for the seizure, setting out the terms of sub-s. 205(6) and specifying and setting out 'the address of an "appropriate person" and stating that any notice under sub-s.{(6) 1s to be given to that person (sub-s.205(2) ). A "responsible person" means in relation to goods other than narcotic-related goods, the officer of Customs who seized the goods or to whom the goods were delivered under sub-s. 204(3) (sub-s.205(1) ). An "appropriate person" means in relation to goods other than narcotic-related goods the Comptroller of Customs, a Collector of Customs or a principal officer of Customs (sub-s. 205 (1) ). Where a notice under sub-s.205(2) has been served in respect of goods seized under s. 203 the goods are deemed to be condemned as forfeited to the Crown unless, within 30 days after the date on which the notice was served, the owner of the goods or the person who had possession, custody or control of the goods immediately before they were seized, gives notice in writing to the appropriate person specified in the notice under sub-s. 205 (2) stating that he claims the goods (sub-s. 205 (6) ). Notwithstanding sub-s.205(6) any live animal or goods of a perishable or hazardous nature seized under s.203 may be sold or destroyed in accordance with the directions of a Collector (s.206). The Comptroller or a Collector may authorize any goods other than narcotic-related goods seized under s.203 to be delivered to a person claiming those goods under sub-s.205 (6) on that person giving security to pay the value of those goods if they are condemned as forfeited to the Crown (sub-s.208(1) ). Where notice under sub-s.205(6) is given in respect of -1l- » goods seized under s.203 the Collector may retain possession of the goods without taking proceedings for condemnation and serve on the person who gave that notice a notice in writing requiring him to bring an action against him within four months of the service of the notice for the recovery of the goods or of the security given under s.206 in respect of the goods as the case requires (sub-s.208A(1) ). Where this last mentioned notice is given and the person to whom the notice was given does not within the said period of four months bring an action for the recovery of the goods or of the security in respect of the goods as the case requires, the goods shall be deemed to be condemned as forfeited to the Crown without any further proceedings (sub-s.208(2) ). Notwithstanding that goods have been sold or destroyed under s.206, a person may claim the goods under s.205 and institute proceedings for the recovery or condemnation of the goods and, if the Court decides that it would, but for the sale or destruction of the goods, have ordered that they be delivered to a person, the Court shall order the payment by the Commonwealth to that person of an amount equal to the proceeds of the sale of the goods where they have been sold or the market value of the goods at the time of their destruction where they have been destroyed (s.208B). All goods seized under s.203 that are condemned or -12- deemed under sub-ss.205(6) or (7) or 208A(2) to be condemned as forfeited to the Crown shall be dealt with and disposed of in accordance with the directions of the Comptroller (s.208D). Section 209 contains detailed provisions empowering the Customs to impound certain forfeited goods and release them on payment of duty and penalty. All these considerations lead me to conclude that a person whose goods have been forfeited to the Crown pursuant to para. 229(1)(i) does not have a right to be heard before the exercise of the power of seizure conferred by s.203. Before leaving this question I should refer to what I said in Ansell v. Wellis( 1982) 43 A.L.R. 41 in a passage relied on by counsel for the applicant (at pp. 58-59):- "Where a statute confers power upon a person or body to make a decision affecting the rights, property or legitimate expectations of a person, prima facie that power must be exercised in accordance with the rules of natural justice or the duty to be fair: Twist v. Randwick Municipal Council (1976) 12 A.L.R. 379 at 382; 136 C.L.R. 106 at 109-10; Salemi v. Mackellar (No. 2) (1977) 14 A.L.R. 1 at 19; 137 C.L.R. 396 at 419-420 and 439-41; Heatley Vv. Tasmanian Racing and Gaming Commission (1977) 14 A.L.R. 519 at 527-8; 137 C.L-R. 487 at 498-9, There are no standards of universal application to every kind of tribunal, be it adminstrative or quasi-judicial (that "convenient though inexact expression": per Kitto J. in Mobil Oil Australia Pty. Ltd. v. F.C. of T. (1963) 113 C.L.R. 475 at 501). The application of the rules of natural justice -13- must depend on the nature or subject matter of the inquiry; the extent to which the decision may affect the rights, property or legitimate expectations of any person; specific rules governing the procedures of the tribunal; the circumstances of the particular case, and so forth. I do not derive much assistance from attempts to define the rules of natural justice which have been made from time to time. The real difficulty in this case, as in most cases, is to give content to the applicable rules of natural justice or standards of fairness." I would not readily find that powers of statutory officers which affect the rights, property or legitimate expectations of a person could be exercised without his first being entitled to be heard, but the existence of such a right is not consonant with the power of seizure conferred by s.203 when the exercise of the power is considered in the light of the other matters to which I have referred. Nothing I have said is intended to suggest that the Customs should necessarily exercise the power of seizure once goods become forfeited under a provision of s.229. The circumstances in which the power will be exercised must depend on the circumstances of each case and. call for no attempt at definition by me. There are sound reasons why the Customs in an appropriate case may not exercise the power of seizure in respect of forfeited goods without first giving the owner of the goods an opportunity to explain to the satisfaction of the Customs why, for example, an invoice which formed the basis of entry contained a false statement. This was in fact what was done in the present case, but the Customs at the end of the day was left unsatisfied in the light of all the circumstances by the applicant's explanation. I think this practise of the Customs is desirable, but it does not follow that the owner of goods has a right to be heard before the power of seizure is exercised. It was next submitted by counsel for the applicant as I understood it, in a twofold submission,. first that none of the matters relied on by the Collector as constituting his findings on material questions of fact and referred to in para. (2) of the s.13 Statement of Reasons (apart from the finding that the invoice was false in a particular, using "false" in the sense of merely untrue in fact) could individually be regarded as material and, secondly that at the highest, they merely gave rise to a suspicion in the mind of the Collector that the false particular aun the invoice was deliberate. This was said to be insufficient to support the exercise of the power of seizure because the Collector had to be positively satisfied that the falsity was deliberate. This submission was based on certain of the provisions of sub-s.5(1) of the Judicial Review Act. The various matters considered by the Collector and the findings made by him should be read, not distributively, but collectively to determine the question of materiality. When this approach is adopted, which in my view is realistic and practical, the first part of the submission must fail. -15- The second aspect of the submission is inevitably bound up with the construction of the word "false" in para.229(1)(1), and it must fail in view of the construction I have placed upon the word "false". It is true that the Collector did not decide that the goods should be seized solely because he was satisfied on the information before him that the invoice contained an incorrect particular. The Customs sought an explanation from the applicant of that incorrect particular and was not satisfied in all the circumstances that the error was not deliberate. These considerations were regarded by the Collector as relevant to the question of seizure and, in my view, it has not been established that he was wrong. Then it was submitted by counsel for the applicant that the Collector failed to take two relevant considerations into account in the exercise of his decision to seize the goods namely, (1) that he did not himself determine whether the goods were dutiable under Item 97.01.300 or 87.10.100 and therefore whether the rate of duty should have been 15% or 25% and (2) that he did not place any weight upon a letter from the Reverend Roger Bush sent to the Customs by the applicant which spoke highly of the character of Mr. O'Hara, the Managing Director of the applicant. It was in effect a reference to Mr. O'Hara's good character. The Collector's evidence was to the effect that he considered it important that the goods be correctly classified ~16- and the proper rate of duty determined and that he considered that question at the time he made the decision to seize. He said in evidence:- "It exercised my mind, but primarily on the basis of the advice that was contained in the papers from the departmental Tariff officers." In other words, the Collector relied primarily upon the findings and advice by other officers in the Customs to determine the appropriate classification of goods and rate of duty rather than himself embark upon an exercise de novo of looking at the bicycles themselves and the report submitted to the Customs bearing on the falsity of the invoice. Hearing applications under the Judicial Review Act brings the Court into touch through the evidence, with the administrative practices of many Government Departments. The Departments themselves also become familiar with the requirements of the Judicial Review Act and, in certain cases, they have changed their procedures to accord with the purpose and spirit of the Judicial Review Act itself. The ultimate aim of the Judicial Review Act is to ensure that decisions of public servants and others which affect the rights, prospects and property of citizens, are made after giving careful consideration to the questions involved in the particular case, so that it is more likely that the decision will be right and justice done to the persons affected by it. This is really what the Judicial Review Act and the Administrative Appeals Tribunal Act 1975 are all about. But the Court must not require perfection from decision-makers or impose such -17- ~~ onerous duties upon them as to cause them to be afraid to make decisions, lest they be challenged on trivial grounds, or to pre-occupy them with minutiae. The determination by the Court of proper standards to be observed in decision-making inevitably involves balancing the requirement of fair play to the citizen against the real problems that confront decision-makers in the Public Service and calls for an approach by the Court that is fair, practical and of commonsense. There is no essential inconsistency between the duty of decision-makers to be fair to those who may be affected by their decisions and the advancement and efficiency of the Public Service. Extremes of view favouring one side or the other will not promote the plain objectives of administrative legislation including the Judicial Review Act. I say this because, to uphoid this submission of counsel for the applicant seems to me to ignore the practical problems necessarily involved in the workings of the Customs and to achieve no purpose that will ultimately benefit the citizen. To say that an officer of Customs, before deciding whether to seize forfeited goods, must himself have made whatever determinations are necessarily involved in leading to the description of the goods as "forfeited goods" for the purposes of s.229 is to ignore reality. It does not shock me that in a large branch of a Government Department such as the Customs, officers at various levels consider matters which, in the end, result in the description of goods as "forfeited goods" and that those -18- determinations are not reviewed de novo by the officer who decides whether to seize the goods or not. In some cases of course, it may be necessary that he do so where, for example, facts found by other officers are on their face open to question. But in the present case there is nothing in the evidence to suggest that the decisions taken by the officers below the Collector himself, which were relied upon by him in exercising the power of seizure, were such as to put him on notice that he could not accept the fact that the goods were forfeited pursuant to para.229(1)(i). As to the letter from the Reverend Roger Bush, the Collector's evidence was in substance that he noted the letter but did not place weight upon it when making his decision to seize. I see no reason to find that the Collector acted otherwise than correctly. The letter was of doubtful relevance and on no view of the matter could it have played any material role in the question in this case whether to seize the goods or not. It was next submitted by counsel for the applicant that the Collector did not himself consider any matters relevant to the decision to seize, but acted as a mere "rubber stamp" and showed a "cavalier" approach to the whole question. It was said that there was no independent exercise of judgment by him, merely a reliance in every relevant respect upon the decisions of others or decisions or views of others and simply a failure by him to turn his mind to any relevant matter. It 1s sufficient to dispose of this submission to say that it has not been established. I am satisfied that the Collector gave -19- ' . proper attention to the matters which fell to him for consideration. His approach was not cavalier. He did not act as a "rubber stamp", whatever that may mean in the context of this case. Before leaving this question I should deal with one other Matter upon which counsel for the applicant strongly relied and which caused me concern throughout the case. The trial aborted after two days of hearing in January. I was informed on the second day by counsel for the then respondent (now the first of three respondents) that the real decision-maker was not the first respondent but the third respondent, Mr. Kelly, the Collector of Customs. Rather than run any risks, counsel for the applicant then sought and obtained leave to join not only the Collector but the second respondent also as he is an officer of the Customs and it was thought then that he may have been the relevant decision-maker. In fact it is common ground now that the Collector 1s the person who made the relevant decision to seize the goods. There was considerable confusion during the first two days of the hearing as to what document was in fact the Section 13 Statement. I adjourned the hearing to February and gave appropriate directions designed to flush out the true decision-maker and the reasons upon which he relied when making his decision. I also ordered the first respondent to pay the costs of the applicant thrown away by the adjournment. Even during the resumed hearing in February the Section 13 Statement tendered in evidence was admitted by the respondents to be incorrect in a number of particulars, and a portion of the affidavit of the Collector was found to be incorrect, although this evidence was led primarily by the respondents in chief. -20- These considerations do not affect the outcome of this case but they cannot have given the applicant any confidence in the administrative process. I said earlier that some Government Departments have fashioned their administrative procedures so as to recognize the role played by the Judicial Review Act (also the Administrative Appeals Tribunal Act 1975) in the area of administrative decision-making, but it seems plain to me that the message has not got through to the relevant section or sections of the Department involved in this case. It is time it did. I make this comment solely for the constructive purpose of ensuring that, in the future, administrative decisions will be taken by the Customs with due regard to the requirements of administrative legislation. There was a considerable body of evidence, both oral and documentary, concerning the history of events including conversations between officers of the Customs and Mr. O'Hara and their credit. In view of my construction of the word "false" in para. 229 (1) (i) as meaning untrue as a matter of fact and not wilfully untrue it has not been necessary for me to narrate many of the facts or to resolve questions of credit. However, in the event that the case goes further and different issues may be perceived as relevant on appeal, I should say that having considered all the evidence I am satisfied that where the evidence of Mr. O'Hara conflicts with the evidence of the first respondent or the Collector, all of whom were cross-examined, I prefer to accept the evidence of those respondents. I base this finding upon the probabilities, contemporaneous documents and my own assessment of the witnesses as I observed them whilst giving their evidence. -21- I would dismiss the application with costs. ~ Li Locos 10 MAR 183 a.