Comptroller-General of Customs v Stephen Edward Parker

Supreme Court of NSW|2005-04-18|Before: Simpson J

CITATION : Comptroller-General of Customs v Stephen Edward Parker [2006] NSWSC 387 This decision has been amended. Please see the end of the judgment for a list of the amendments.

CATCHWORDS : voir dire - admissibility of evidence - Customs prosecution - irregularity in manner in which evidence obtained - evidence obtained as the result of impropriety - Notice to Produce - lack of proper identification of goods said to have been illegally dealt with - powers conferred upon Customs officers - search warrant - power exercised under Customs Act - alternative power conferred by Crimes Act 1914 - balance between nature of offences and gravity of impropriety in obtaining evidence - extent of intrusion into the rights of the individual - no mala fides

PARTIES : Comptroller-General of Customs - Plaintiff Stephen Edward Parker - Defendant

COUNSEL : DJ Fagan SC with GM Elliott - Plaintiff DR Stack - Defendant

SOLICITORS : Australian Government Solicitor - Plaintiff Yeldham & Associates - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

13933/92 Comptroller-General of Customs v Stephen Edward Parker

REASONS FOR RULING ON EVIDENCE 1 HER HONOUR: This interlocutory judgment follows a voir dire hearing over a period of five days concerning the admissibility of evidence in the substantive proceedings. I ruled that the evidence in question would be admitted and proceeded with the hearing. These are my reasons for so ruling. The substantive proceedings involve the prosecution of Stephen Edward Parker (identified in the pleading as the third defendant, but the only defendant the subject of the present proceeding and henceforth referred to as "the defendant") for offences against the Customs Act 1901 (Cth) ("the Act"), alleged to have been committed by him in the late 1980s and the early part of 1990. At the outset of the proceedings counsel for the defendant raised objection to significant portions - indeed, virtually the whole - of the evidence by which the plaintiff proposes to prove the offences. The voir dire to which I have referred was accordingly conducted. Affidavits sworn by a number of witnesses were read, and most (if not all) deponents gave oral evidence and were cross-examined. 2 The objection to the evidence was taken under s138 of the Evidence Act 1995. The objection was that the evidence was obtained improperly and/or in contravention of an Australian law, and ought not to be admitted. S138 expressly provides that evidence so obtained is not to be admitted unless the desirability of admitting it outweighs the undesirability of admitting evidence that has been obtained in the way in which the evidence was obtained. I take the last words to incorporate into the decision to admit or reject the evidence an evaluation of the nature and degree of, and motivation for, the impropriety or legal contravention that attended the obtaining of the evidence. (This would, in any event, appear to come within the relevant considerations set out non-exhaustively in subs(3), particularly sub-para (d).) Other relevant considerations required by subs(3) to be taken into account include the probative value of the evidence, its importance in the proceedings, the nature of (relevantly) the offences the subject of the proceedings, whether the impropriety or contravention was deliberate or reckless, whether it was contrary to or inconsistent with a right of a person recognised by the International Covenant on Civil and Political Rights, whether any other proceeding has been or is likely to be taken in relation to the impropriety or contravention, and the difficulty (if any) of obtaining the evidence without impropriety or legal contravention. All of these are, in greater or lesser degree, material to the present determination. 3 The plaintiff concedes that there was an irregularity in the manner in which the evidence under consideration was obtained. The concession is, however, not as extensive as the irregularities contended for on behalf of the defendant. I will return to this. 4 I now turn to outline the relevant circumstances. 5 During the late 1980s officers of the Customs Service of Australia ("Customs") conducted a very extensive investigation into the suspected adulteration of alcohol in various forms. The exercise was known as "Operation Ludwig". It ultimately resulted, inter alia, in the present prosecution in which the plaintiff alleges against the defendant offences contrary to s33(1) and s234(1)(a) of the Act. By March 1990 Operation Ludwig had reached a stage at which the officers were prepared to use powers conferred upon them by the Act and other legislation to obtain, by compulsion, documentary material in the possession of the individuals and companies. 6 The references to legislation that follow are references to the legislation as it stood at the time of the relevant events. 7 Relevantly, two statutory provisions were potentially available to enable the compulsory acquisition of the materials. 8 S214 of the Act relevantly provided as follows: "214(1) Whenever information in writing has been given on oath to the Collector that goods have been ... illegally dealt with, ... the owner shall immediately upon being required so to do by the Collector produce and hand over to him all books and documents relating to the goods so ... illegally dealt with ... and of all other goods imported or exported by him at any time within the period of five years immediately proceeding such request, seizure or detention ... (2) For the purposes of this section, the Comptroller or the Collector of Customs for a State or Territory may issue any officer of Customs or officer of police a Customs Warrant, in accordance with the form in Schedule V, marked with a Customs stamp. (2A) ... (2B) ... (3) If any person fails to comply with a requirement by the Collector under this section, an officer of Customs ... having with him a Customs Warrant in the form of Schedule V hereto, may, at any time of the day or night, break open and enter into any house, premises or place in which any books or documents relating to the goods are or are supposed to be, and search - (a) the house, premises or place; (b) any person therein or thereon; (c) any chests, trunks or packages therein or thereon; and take possession of, remove and impound any of those books and documents which are found." 9 The "Comptroller" referred to in s214(2) is, by s4 of the Act, the Comptroller-General of Customs, a position which does not appear to be otherwise defined in the Act, but who, by s7, is charged with the general administration of the Act. The "Collector", referred to in subs(1), is identified in s8(1)(a) as: "(i) any principal officer of Customs; or (ii) any officer doing duty in the matter in relation to which the expression is used ..."

The Collector of Customs for a state or territory is identified, in s8(1)(b), as the principal officer of Customs for that state or territory or for a part of that state or territory. At the relevant time the position in NSW was held by Mr Keith Stilling.

"Owner" (of goods) is broadly defined in a way that extends the common meaning of the word, and includes any person being or holding himself out to be the owner of, importer, exporter, consignee, agent or person possessed of, or beneficially interested in, or having any control of, or power of disposition over, the goods. 10 It will be appreciated that s214 contemplates, either explicitly or implicitly, a number of steps:

(i) the swearing on oath that goods have been illegally dealt with; (ii) the requirement by the Collector that the owner of goods produce books and documents (this is done by the issuing of a Notice to Produce, on the form prescribed by Form 61 to the Act); (iii) service of the Notice to Produce on the owner of the goods; (iv) (a) compliance with the Notice to Produce by the owner of the goods (in which case no further action under the section would be necessary); or, alternatively, (b) non-compliance with the Notice to Produce (in which case the provisions of subs(3) and (v) below would be activated); (v) execution of a Customs warrant. 11 It was the practice in Customs, when a s214(1) Notice to Produce was issued, also to issue, against the possibility of non-compliance with the Notice to Produce, a Customs warrant. This was for perfectly sound practical reasons. If an owner failed to comply with the Notice to Produce, it was necessary that Customs Officers be armed with a warrant for immediate execution, in order to avoid the possibility of removal or destruction of the books and documents they sought. 12 It was accepted in Customs that a person upon whom a Notice to Produce was served must be given a reasonable opportunity to comply. 13 An alternative avenue to compulsory acquisition of documents or other items lay in s10 of the Crimes Act 1914 (Cth), which relevantly provided as follows: "10.(1) If a Justice of the Peace is satisfied by information on oath that there is reasonable ground for suspecting that there is in or upon any premises, aircraft, vehicle, vessel or place: (a) anything with respect to which any offence against any law of the Commonwealth or of a Territory has been, or is suspected on reasonable grounds to have been, committed; (b) anything as to which there are reasonable grounds for believing that it will afford evidence as to the commission of any such offence; or (c) ... or that any such thing may, within the next following seventy-two hours, be brought into or upon the premises ... the Justice of the Peace may grant a search warrant authorising any constable named in the Warrant, with such assistance, and by such force, as is necessary and reasonable, to enter at any time the premises ... named or described in the Warrant, and to seize any such thing which he or she might find there. ..." 14 As it happened, the relevant officers opted to use the powers conferred by s214 of the Act in preference to those conferred by s10 of the Crimes Act. The circumstances in which this decision was made form part of the basis of the present proceedings. 15 On 16 January 1990 Mr John Ernest Morrison, an officer of Customs, swore an Information for the purpose of s214(1). He stated that, on 4 May 1989, a Customs officer in Brisbane had purchased two bottles of a particular identified brand of French brandy, the contents of which were analysed and found to have been adulterated. Because of the adulteration the label identifying the contents as brandy was false and contravened the provisions of s9(1)(b) of Spirits Act 1906. The label stated that the brandy had been imported by Lawpark Pty Ltd. Because of the false labelling, Mr Morrison alleged that Lawpark had illegally dealt with the goods. The illegal dealing was, in Customs parlance, "extension" of the brandy. 16 Acting on that Information, on 1 March 1990 Mr Stilling issued, pursuant to s214(1), a notice requiring Lawpark to produce and hand over to Mr James Michael Mutton, an officer of Customs: " ... all books and documents relating to such goods and relating to all other goods imported by you at any time within the period of five years immediately preceding ..."

the service of the notice. "Such goods" were merely identified in the Notice to Produce as "one bottle of spirits labelled as 'Cheval Napoleon Old French Brandy'". 17 On the same day, in accordance with the usual practice and against the possibility of non-compliance with the Notice to Produce, Mr Stilling issued, pursuant to s214(2) of the Act, a Customs warrant in the Schedule V form, authorising Mr Mutton to enter and search any house, premises or place in which any books or documents relating to "the goods" were or were supposed to be, and otherwise to act in accordance with the powers conferred by subs(3). 18 The warrant opened with the following recital: "WHEREAS: information in writing on oath has been given to me that goods have been illegally dealt with."

There was no identification of "the goods" the subject of the warrant. "The goods" to which the warrant was intended to refer were the two bottles of French brandy. 19 The Notice to Produce was served upon the defendant during the morning of 6 March 1990 by Mr Mutton, at that time a Senior Inspector in the Investigations Branch of Customs. 20 Mr Mutton had a conversation with the defendant. At the request of the defendant he specified that the documents he wanted were those "relating to the extension of the brandy" and "blending records, bottling etc". The defendant said that he could not comply because he did not have any such documents. The conversation continued. Mr Mutton formed the view that there had been no proper compliance with the Notice to Produce. He therefore produced the Customs warrant which he executed. Other officers of Customs entered to assist in the execution of the warrant. They seized a large number of documents which they placed in boxes which they then sealed. Subsequently, they also searched the defendant's home and other premises and seized further documents which were similarly treated. 21 The proceedings were conducted on the basis that the documents seized are the foundation (and, indeed, virtually the whole of) the plaintiff's case against the defendant. 22 The plaintiff has conceded that there was "an irregularity" in the manner in which the evidence was obtained. The "irregularity" must, to make sense of the concession, be taken to amount at least to an impropriety for the purposes of s138 of the Evidence Act. The impropriety conceded is the lack of proper identification of "the goods" said to have been illegally dealt with. Such an impropriety is of some significance when due regard is had to the terms of s214, and the requirements of the Notice to Produce. That is because the section, and Notice to Produce, require the owner immediately upon being required to do so to produce and hand over all books and documents "relating to the goods so ... illegally dealt with" (as well as other documents). Thus, unless "the goods" - that is, the specific goods said to have been illegally dealt with - are properly identified, the person upon whom the notice is served could not reasonably be expected to identify documentation relevant to the specified goods. And since non-compliance with a Notice to Produce triggered the more coercive and intrusive procedure of the execution of a warrant, a failure to identify "the goods" with sufficient precision to permit compliance is of some real significance. However, because both the section and the Notice to Produce also require the production of documentation relating to all other goods imported or exported by the owner at any time within the immediately preceding five year period, the effect of the omission properly to identify the goods is considerably diminished. Compliance with the second limb of the Notice to Produce would, one would think, necessarily incorporate compliance with the first limb (unless, perhaps, "the goods" were thought to have been imported outside the five year period). That is, whether or not the person upon whom the Notice to Produce was served could properly identify the goods said to have been illegally dealt with, he or she would be required to produce all documentation relating to goods imported or exported within that period. Nevertheless, the lack of identification was conceded to be an irregularity such as to bring into play the provisions of s138 of the Evidence Act. 23 On behalf of the defendant it was contended that the impropriety, and, indeed, legal contravention, was far more extensive than that conceded on behalf of the plaintiff. The defendant's contentions involved assertions of significant mala fides on the part of a number of senior Customs officers. Before moving to those it is necessary to record a little more about the use of, and perception of the use that could be made of, s214 of the Act. It may readily be accepted that s214 is not a shining example of the draftsperson's skill. However, the section appears to have given rise to rather more misconceptions than one would expect. Analysis of s214 throws up what might be thought to be an anomaly. By issuing a Notice to Produce, the Collector may require the production of books and documents relating to "the goods" the subject of the Information and the Notice to Produce, as well as all books and documents relating to all other goods imported or exported by the owner in the immediately preceding five years. 24 However, in the event of non-compliance with a Notice to Produce, the issuing of a Schedule V warrant conferred power upon Customs officers to take possession only of books and documents relating to "the goods" - that is, the goods said to have been illegally dealt with. Accordingly, a Schedule V warrant was considerably narrower in its scope than a s214(1) Notice to Produce. For the purpose of the execution of a Schedule V warrant it was necessary that "the goods" said to have been illegally dealt with be identified with some precision. A Schedule V warrant did not authorise officers to take possession of books and documents relating to other goods, or "five year documents". Since the Schedule V warrant is dependent upon the s214(1) Notice to Produce, it was necessary that the Notice to Produce adequately specify "the goods". It is for this reason that the irregularity in the Notice to Produce is of significance. 25 The view I have expressed of the scope of subs(3) is also the view taken by Dunford DCJ (as he then was) in a judgment delivered on 18 August 1988 in an appeal of Lawrence Charles O'Neill (although his Honour did characterise the result as "an absurdity"). 26 The documents seized, purportedly on the authority of the Schedule V 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, even if the particular bottle (or bottles) could, by reference to the Notice to Produce, have been identified. The seizure of the documents was, therefore, at the very least an impropriety. It could properly be called a contravention of an Australian law. 27 All of this is, I think, within the concession made on behalf of the plaintiff. During the period covered by the Operation Ludwig investigations, there was a degree of controversy within Customs as to what was authorised by s214. This controversy, at the time, did not centre around the construction of subs(3) or what was permitted by a Schedule V warrant as exposed by Dunford J in O'Neill. Rather, it concerned the scope of the concept represented by the words "illegally dealt with" as they appear in s214(1). There appears to have been a view among some Customs officers that the illegality that could trigger an Information, which could in turn trigger a Notice to Produce, was required to be an illegality directly referable to the Act, or an illegality under the Act. Some other form of illegality would not be sufficient to give rise to a valid Notice to Produce. The origin of this view is completely obscure. Of course, if there were no valid Notice to Produce, there could be no valid Schedule V warrant. It will be recalled that the illegality relied upon by Mr Morrison in his Information was a contravention of the Spirits Act 1906. It seems that no Customs officer was able on oath to attest to any illegality under the Customs Act. Indeed, it was for the purpose of investigating such suspected illegalities that the s214 Notice to Produce was desired. 28 As a result of the controversy, on 7 September 1989 Mr Barry Strang, who was then Regional Manager, Investigations for NSW in Customs, sought the advice of the Australian Government Solicitor ("AGS"). In a letter to AGS Mr Strang identified as one of the "perceived difficulties" the following: "Section 214 of the Customs Act 1901 , in regard to 'goods illegally dealt with' permits access to records relating to the 'goods' plus records relating to '.... all other goods imported or exported ...', and thus does not appear to relate to other ' goods illegally dealt with' ." (underlining and italics in original)

Mr Strang authorised AGS to seek the advice of counsel on this, and another, presently immaterial, issue. 29 Mr Peter Swinton, of AGS, forwarded a Brief to Advise to Mr Rowling of counsel on 28 September 1989. It is not entirely easy to discern the specific issues on which Mr Swinton asked Mr Rowling to advise. Mr Rowling provided his advice on 27 October 1989. 30 Relevantly, the gist of the advice was that an illegality against the Spirits Act would not suffice to permit the issue of a Notice to Produce under s214(1). For present purposes it is unnecessary to explore his reasoning. His advice was given in strong terms, as follows: "So doubtful is it in my mind that s214 can in the last resort assist the Collector that it seems to me that the only safe course, that would enable the Collector to obtain documents from the relevant parties before they could be destroyed without substantial doubts as to the legality of his actions, would be to obtain a search warrant under the provisions of s10 of the Crimes Act ..." 31 It appeared, on the present hearing, to be common ground that this opinion was incorrect. For my part, I can see no reason why an illegality under the Spirits Act would not constitute an illegal dealing for the purposes of s214. However, it is not necessary to resolve that question. That is peripheral. What is of importance is that the advice had been given, and given in strong terms, and was known to some Customs officers. I might add here that, even when delivered, it was not universally accepted as correct. A number of senior Customs officers, some of them holding legal qualifications, frankly disagreed. Mr Swinton himself considered it to be "very debatable": he was reported to have described it as "overly legalistic and on balance probably too conservative". This advice was never drawn to the attention of Mr Stilling when he was presented with the Information on oath and invited to issue the Notice to Produce and the Schedule V warrant. This, it was contended on behalf of the defendant, disclosed mala fides on the part of the various Customs officers who were involved in the preparation of the Information and its submission to Mr Stilling. 32 At this point it is apposite to observe, that, of all the Customs officers who gave evidence on the voir dire, there was not one whose evidence I do not accept as having been given truthfully and with integrity. Each was, to my observation, a conscientious officer. The attempt to impugn them as having been involved in some sort of conspiracy to achieve their ends failed. In this respect it is to be recalled that they were giving evidence at a time fifteen years after the events concerned. 33 However, the present issue is whether there is any mala fides in the course of action they took such as to infect the evidence obtained. 34 As I have indicated, there was quite a lot of debate and disagreement about the effect of Mr Rowling's advice. Nevertheless, most, if not all, of the officers who gave evidence accepted that the advice should have been drawn to the attention of Mr Stilling at the time he was asked to issue the Notice to Produce and the warrant. What was not clear was whether, or the extent to which, that was in fact done. Mr Stilling himself had no recollection of having seen the advice prior to issuing the documents, and said that he would not have issued them had he known of the advice unless he had received clarification, qualification, or alternative advice sufficient to satisfy him that the s214 procedure was appropriate. 35 Quite obviously, it would have been better had the Rowling advice been disclosed to Mr Stilling before he issued the documents. It would have been better had the position as to the scope of s214 been clarified before that occurred. However, I am quite satisfied that the omission (if it existed) to draw the advice to Mr Stilling's attention was not brought about by any dishonourable or dishonest motive on the part of any officer. It was brought about by a combination to two things: firstly, the serious and well-founded doubts about its accuracy; and, secondly, a lack of clarity about the identity of the person whose responsibility it was to ensure that Mr Stilling was aware of it. 36 Another matter raised on behalf of the defendant concerned the clear resistance to the use of the alternative available procedure, that provided by s10 of the Crimes Act. A number of officers gave evidence that they preferred to use the s214 power if it were properly available to them. This was, in short, because s10 required the involvement of the Australian Federal Police. There was, perhaps, an issue of territoriality in that the Customs officers wished to retain control of the investigation, which they might have lost had the Australian Federal Police become involved. Further, some had doubts about the relative capacities of the Australian Federal Police compared with those of Customs officers to identify the documents caught by the warrant. It seems to me that these concerns were probably well founded. Operation Ludwig had been a major and sustained investigation, involving many officers and a great deal of work. One would expect that the officers involved would be better versed in what they were looking for on execution of the warrant than would police officers who had previously been uninvolved. 37 Another matter that was argued, concerning the motivation of Customs officers, concerned what was said to be their preference for seizure of documents pursuant to a warrant over voluntary production of the documents pursuant to a Notice to Produce. In this context it should be recalled that 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. Even so, I can see no possible advantage to Customs officers in obtaining documents pursuant to a warrant over obtaining them pursuant to a Notice to Produce. No such advantage was elicited during the course of the extensive cross-examination of all officers. It was merely put to them that they had a preference for executing a warrant rather than securing production pursuant to a Notice to Produce. The point of this was that it was suggested that they had engineered non-compliance with the Notice to Produce in order to enliven the warrant powers. As I have indicated, I see no benefit such as to motivate any of the officers to take this course. 38 It was also argued that the execution of the warrant was improper because there was no basis for concluding that the defendant had not complied with the Notice to Produce. The evidence was that the defendant had claimed that no relevant documents existed. The officers were not, in my opinion, bound to accept such a statement - to hold otherwise would be to render meaningless the power to execute a warrant in any case where a recipient of a Notice to Produce claimed not to be in possession of the relevant documents. It was also put that the officers did not allow a reasonable time for compliance. This cannot be sustained. Once the defendant had denied having possession of any relevant documents there was no point in waiting any longer. 39 Other matters raised were an allegation that documents unconnected with French brandy were seized. This was, really, covered in what I have said earlier: on the basis of O'Neill's case, with which I respectfully agree, documents extraneous to those authorised to be taken by the warrant were in fact taken. However, I am quite satisfied that this came about by reason of a lack of understanding of the complexities, and, indeed, anomalies, of s214, and not by reason of any ill will, collateral purpose, or mala fides on the part of any Customs officer. 40 The final point made was that Customs officers failed adequately to record what was seized. The evidence does not enable me to reach a final conclusion as to this, and, given the vast amount of documentation that was taken, it may well be that recording was less than optimal. However, again I am satisfied that, if this did occur, it was not done with ill intent. 41 S138 of the Evidence Act requires, in effect, a balancing of a number of matters. One of these is the nature of the offences and subject matter of the proceedings in which the evidence is sought to be tendered; against that has to be weighed, inter alia, the gravity of the impropriety or contravention, whether it was deliberate or reckless, and the extent (if any) of the intrusion into the rights of individuals. 42 As I have made clear, I am satisfied that the impropriety in the collection of the evidence was not such as should be met with exclusion of the evidence so obtained. The offences alleged against the defendant are serious, and the evidence is important. I am not in a position to judge at this stage its probative value, except to repeat that, as I understand it, the evidence so obtained amounts virtually to the whole of the prosecution case.

10/05/2006 - file number and file name error - Paragraph(s) n/a

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