HILIP GEORGE MURDOCH, BRENNAN WILTON, JOHN WILLIAM LEARY, ANDREW JAMES

VINTNER, WILLIAM JOHN McCORMICK, NICHOLAS ERNEST BURY and BRENDON WITHERS

[1994] FCA 1286; (1994) 124 ALR 225

Administrative Law - search warrants - whether applicant failed to disclose material matters of which he was aware, or ought to have been aware - whether applicant made false or misleading statements to magistrate - whether applicant has duty to instruct magistrate on relevant law - s.10(1) of Crimes Act 1901 - whether material in application sufficient for the purpose of s.10 - whether decision to issue warrant vitiated by fraud of the applicant.

Administrative Decisions (Judicial Review) Act 1977: s.5.

Crimes Act 1914: ss.10(1), 29A, 29D.

Customs Act 1901

Listening Devices Act 1969 (Vic).

Customs (Valuations) Amendment Act 1981 (Cth)

Lego Australia Pty Ltd v Paraggio (1993) 44 FCR 151

George v Rockett [1990] HCA 26; (1990) 170 CLR 104

Karina Fisheries Pty Ltd v Mitson [1990] FCA 154; (1990) 26 FCR 473

R v Curran [1983] VicRp 77; (1983) 2 VR 133

Thomas A Edison Ltd v Bullock [1912] HCA 72; (1912) 15 CLR 679

Baker v Campbell [1983] HCA 39; (1983) 153 CLR 52

Counsel and Solicitors RJ Ellicott QC with AJ Bannon

for Appellants: instructed by Blake Dawson Waldron

Counsel and Solicitors MS Weinberg QC with GT Johnson

for First, Second, Third instructed by Australian

and Fifth Respondents: Government Solicitor

Solicitor for Fourth State Crown Solicitor

Respondent:

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

BEAUMONT AND WHITLAM JJ The appellants instituted proceedings in this Court seeking judicial review under the Administrative Decisions (Judicial Review) Act 1977 of decisions by a Justice of the Peace to grant two search warrants under s.10(1) of the Crimes Act 1914. The warrants were granted by the Justice of the Peace, the fourth respondent, on the Information of the first respondent, an officer of the Australian Customs Service ("ACS"). The second respondent is another Customs officer. The fifth respondents are members of the Australian Federal Police to whom the warrants were addressed. The first appellant is Lego Australia Pty Limited ("Lego Australia"), a company engaged in the importation into, and distribution in, Australia of toy building materials. The second appellants are a firm of accountants who formerly carried on business under the name Ernst and Whinney and now do so under the name Ernst and Young. This firm acted on behalf of Lego Australia in connection with the assessment of customs duty on imported goods.

2. At first instance, the appellants' case was that, in applying for the warrants, Mr. Paraggio, the first respondent, failed to disclose to Ms. Elder, the fourth respondent, the Justice of the Peace, the material matters of which Mr. Paraggio was aware, or ought to have been aware, and made statements that were false or misleading; and that this conduct breached the duty imposed upon a person applying for a search warrant under s.10(1) of the Crimes Act with the consequence, it was said, that the warrants were invalid. The appellants further contended that Ms. Elder's decisions to issue the warrants were decisions of an administrative character and that there was no evidence to justify the making of either decision; alternatively, they claimed that, in making the decisions, Ms. Elder failed to take into account relevant considerations, took irrelevant considerations into account, and exercised her power so unreasonably that no reasonable person could have so exercised the power.

3. Wilcox J dismissed the application (see Lego Australia Pty. Ltd. v Paraggio (1993) 44 FCR 151). This is an appeal from that order.

4. Section 10(1) of the Crimes Act provides as follows:

"10. (1) If a Magistrate or 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...or place:

(a) anything with respect to which any offence against any

law of the Commonwealth...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

...

... the Magistrate or Justice of the Peace may grant a

search warrant authorising any constable named in the

warrant...to enter at any time the premises...or place named

or described in the warrant, and to seize any such thing

which he or she might find there."

(It may be noted that, although s.10 was recently repealed by the Crimes (Search Warrants and Powers of Arrest) Amendment Act 1994, the new legislation does not apply here.)

5. The decision to issue the warrants was based on an Information sworn by Mr. Paraggio on 28 October 1991. In the Information, Mr. Paraggio made statements to the following effect:

(1) There were reasonable grounds for suspecting that there were on the

premises of Lego Australia or of Ernst and Young certain things,

price lists, consignment advices, shipping and other documents, which

related to the purchase of toy products by Lego Australia from Lego

Overseas A/S, Denmark ("Lego Overseas") and to their importation into,

and sale within, Australia by Lego Australia.

(2) There were reasonable grounds for believing that these documents

will afford evidence as to the commission of the following offences

which were suspected on reasonable grounds to have been committed:

"(a) Between December 1977 and January 1988 Lego Australia

Pty Limited contrary to section 29A of the Crimes Act

1914 with intent to defraud by false pretences caused

a benefit to be given by the Commonwealth in that it

falsely represented to the Australian Customs Service

that 'Lego' toy products purchased by it from Lego

Overseas A/S Denmark had been received by it on a

consignment basis thereby attracting a lower customs

valuation and consequently a lower assessment to

customs duty than was rightly payable.

(By s.29A(2) of the Crimes Act, it is provided, inter

alia, that any person who, with intent to defraud, by

any false pretence causes any benefit to be given by

the Commonwealth to any person, shall be guilty of an

offence.)

(b) Between October 1984 and January 1988 Lego Australia

Pty. Limited contrary to section 29D of the Crimes Act

defrauded the Commonwealth of custom duty in that it

falsely represented to the Australia Customs Service

that 'Lego' toy products purchased by it from Lego

Overseas A/S Denmark had been received by it on a

consignment basis thereby attracting lower customs

valuation and consequently a lower assessment duty

than was rightly payable."

(By s.29D of the Crimes Act (a provision which was

added in 1984) it is provided that a person who

defrauds the Commonwealth is guilty of an indictable

offence.)

(3) In 1986, ACS reviewed the valuation method used by Lego Australia

in the following context:

"7. Between 1976 and 1981 the provisions of Division 2 of

Part VIII of the Act had as the basic measure of

'customs value' the price that would be paid for goods

purchased under a notional contract of sale in the

open market between a buyer and seller in an arms-length

transaction. In non-arms-length transactions,

adjustments were made to the contract price to bring

it to an open market level. In 1981 these provisions

of the Customs Act were amended. These amendments had

the effect of varying the system of customs valuation

to impose duty upon the actual or 'transaction' value.

Duty is payable under this system on the actual sale

value of the contract.

8. Under both valuation systems, where a consignment

arrangement exists between the exporter and the

importer, 'customs value' may be established on the

basis of the sale of comparable goods in comparable

circumstances or by the use of actual or expected

realisations. The latter method, known until 1981 as

the 'end-realisation method', and later as the

'deductive method', calculates the 'customs value' of

goods by deducting certain allowable expenses from the

price of the first sale after importation to an

unrelated buyer in Australia.

9. From the time it commenced trading, following

incorporation on 6 December 1977, until 18 January

1988 Lego Australia Pty Limited represented to Customs

that the 'Lego' products imported by it into Australia

were imported on consignment and not pursuant to a

contract for sale. On this basis the 'customs value'

of the goods was accepted by Customs as being properly

calculated in accordance with the 'end-realisation

method' and later the 'deductive method'.

10. In 1986 Customs commenced a review of the valuation

method used by Lego Australia Pty Limited after

Customs noted that the level and range of expense

deducted from domestic selling prices had increased

significantly."

(4) Thereafter correspondence passed between the parties as follows:

"11. On 18 January 1988 the firm of chartered accountants

Ernst and Whinney, chartered accountants, wrote on

behalf of Lego Australia Pty Limited to Customs in

response to a request by Customs that Lego Australia

Pty Limited supply a copy of the consignment agreement

between Lego Australia Pty Limited and Lego Overseas

A/S. The letter stated:

'... there is no formal written consignment

agreement between Lego Australia and Lego

Overseas. The consignment agreement is

reflected in correspondence and consignment

shipping and sales documentation between the two

parties.' (Emphasis added)

12. Ernst and Whinney sought to provide evidence of that

statement in subsequent (annexed) correspondence ...

dated 18 January 1988, 9 September 1988, 19 December

1988, 13 January 1989 and 15 May 1989."

(Copies of that correspondence are also annexed to these reasons). An extract from the January 1988 letter has already been set out (Information para.11). In the Ernst and Whinney September 1988 letter, this was stated:

"We refer to your telephone enquiries of the company's Mr

Bretherton and our Mr Higgins in the above matter. In

particular, you enquired as to the basis of valuation

adopted by the company in respect of current entries for

home consumption.

We confirm that for many years the company has paid customs

duty upon the deductive basis of valuation. This basis is

appropriate because stock is consigned by the exporter to

the company under arrangements whereby the company agreed to

store the exporter's stock consigned to Australia, but only

enters into contracts for the purchase of goods from that

stock as and when occasion demands. Accordingly, there is

no relevant transaction in relation of (sic) the goods at

the time of importation." (Emphasis added)

6. In their January 1989 letter, Ernst and Whinney stated this:-

"We refer to (Lego Australia's) recent undertaking to

provide certain documentation relating to its consignment

operations. Under those operations, stock is consigned to

the company by Lego Overseas A/S and is stored in Australia

at the company's expense. The company may enter into

contracts with Lego Overseas for the purchase of goods from

that stock as and when occasion demands. Stock may also be

re-exported from Australia without property in the stock

passing to the company." (Emphasis added)

7. In the 15 May 1989 letter, Ernst and Whinney stated the following:

"We enclose as requested a listing by Lego model numbers.

Against each number is an amount which Lego Overseas A/S has

advised it will entertain in offers to purchase goods from

the Lego Overseas A/S consignment stock held in Australia by

the company.

We confirm that while it may accept or reject such offers,

the practice of Lego Overseas A/S has been to accept the

company's offers to purchase consignment stock in the

amounts listed.")

(Emphasis added)

(5) In May and July 1989, following upon the review by ACS, the

following dialogue took place between the parties:-

"13. On 19 May 1989 Customs advised Lego Australia Pty

Limited that the 'end-realisation method' of customs

valuation was to be discontinued and that from 1 June

1989 imported 'Lego' products were to be valued on the

basis of adjustments made to price lists issued by

Lego Overseas A/S ('the flexible transaction value

method'). Annexed hereto and marked with the letter

'B' is a copy of a letter dated 30 May 1989 from Lego

Australia Pty Limited to Customs concerning the

proposed change in the valuation method."

(In Lego Australia's 30 May 1989 letter, which is also annexed to these reasons, this was stated:-

"...the stock in Australia is owned by the exporter (i.e.

its parent company) and the first sale takes place after the

goods have been imported...")

"14. The proposed date for the change in the method of

customs valuation was later extended at the request of

Lego Australia Pty Limited to allow further

submissions to be presented. Annexed hereto and

marked 'C' is a letter dated 20 July 1989 from Ernst

and Whinney, on behalf of Lego Australia Pty Limited

to Customs making representations concerning the

proposed change in customs valuation."

(In Ernst and Whinney's July 1989 letter, which again is annexed to these reasons, the following was stated:

"Stock is consigned to the Company by Lego Overseas A/S

('Lego Overseas') and is stored in Australia at the

Company's premises in Lane Cove.

There is no standing offer by Lego Overseas to the Company

in relation to the consignment stock. Rather, an indicative

price list only is provided and Lego Overseas remains free

to accept or reject the Company's offers to purchase

consignment stock.") (Emphasis added)

(6) In 1990 ACS conducted an audit as follows:

"15. In May 1990 Customs commenced an audit of Lego

Australia Pty Limited's import transactions pursuant

to section 214AA of the Act. Annexed hereto and

marked with the letter 'D' is a report of that audit

dated 14 June 1990. The Informant believes the

statements in the report to be true."

(The "summary" in the audit report annexed to the Information was in these terms:

"SUMMARY:

1. The original decision on valuation for Lego was made by

Mr Harry Dunner Senior Inspector July 1977, VFD (value for

duty) was established as 41.47% of the wholesale price.

File N85/9683 refers.

2. Mr Rodda, S.I. Valuation, Central Office, correctly

advised on 9 December 1977 that we were accepting a VFD

which was more than 36% less than what the supplier was

receiving for the goods.

3. An FOB Price has been established and that price is the

consignment price, and that price is also the amount that is

remitted to Lego Overseas A/S.

4. This Audit team is of the opinion that if all relevant

facts were presented to the Appraisements Section, in

particular copies of the order and acceptance of post

importation sale, then a correct decision on the price would

have been established. Whilst the current situation can

only benefit the importer as he is only using a 60% figure

of the Consignment Price, the full Consignment Price which

represents the true F.O.B. should be entered.

5. The failure to disclose this information has led to a

serious shortfall in import duty over the past years e.g.:

One year period 1/5/89 - 30/4/90

Customs Value Entered = (Illegible)

But this represents only (illegible) of true VFD.

True VFD for period = (illegible)

Approximate Duty Rate = 18%

Approximate amount of duty short levied = (illegible)

6. Whilst it may be said that the ACS has compromised

itself as a result of previous decisions given on file ...

those decisions were based on an incomplete set of documents

and as a result a decision biased in the favour of Lego

Aust. P/L. was obtained.

7. This file is referred for your most urgent attention and

onforwarding to Investigations in regard to the failure to

disclose. This is not a case of misrepresentation but

rather one of intentional failure to fully represent.")

(7) A claim was made by ACS for customs duty of $1,234,846.55

allegedly short paid; Lego Australia responded to the claim by paying

under protest and seeking review by the Administrative Appeals Tribunal

(paras.16 and 17 of the Information).

(8) A version of events was provided to the Informant by a former

employee of Lego Australia as follows:-

"18. The Informant has since been approached by a former

employee of Lego Australia Pty Limited, who between

1986 and December 1989 occupied a senior position

within the company and had an active involvement in

the importing process. The Informant understands that

the former employee was retrenched by Lego Australia

Pty Limited as a cost cutting measure. The former

employee's position was later filled by someone else

at the same level.

19. The former employee is known to the Informant as a

person who rendered assistance on request to the

Customs audit team during its audit of Lego Australia

Pty. Limited in 1990 and the Informant has confidence

in the reliability and accuracy of the information

provided by him. The former employee has sought

indemnity from prosecution for his part in the

transactions described in this Information.

20. The former employee states that from the time of his

employment in 1986 until December 1989, imports of

'Lego' products into Australia by Lego Australia Pty

Limited were purchased by Lego Australia Pty Limited

from Lego Overseas A/S according to an agreed export

price list. The former employee also states that

there was no consignment arrangement and that title to

the goods was vested in Lego Australia Pty Limited who

paid Lego Overseas A/S its invoice price on 90 day

terms. He understands that this arrangement had

existed since the incorporation of Lego Australia Pty

Limited in December 1977.

21. The former employee says that Lego Overseas A/S

produced two sets of documents for each shipment:

one set of documents for customs clearance

purposes, representing the purported consignment

arrangement and quoting the valuation basis

sales transaction including payment terms; and

one set of documents for internal purposes.

He says that the information contained in the two sets

of documents was essentially the same but differed in

the stated price of the goods. He further states

that:

between 1986 and August 1990 the internal sets

of documents received by Lego Australia

represented the actual import sales transaction

and were never revealed to Customs until the

time of the audit in 1990;

the sets of documents produced to Customs for

entry and clearance purposes were not a

reflection of the commercial reality that exists

between Lego Australia and Lego Overseas.

22. The use of dual documentation as described above

resulted in Lego Australia Pty Limited paying a lesser

amount of customs duty on its imports than it was

obliged to do. The former employee says that when he

expressed disquiet about this situation he was told by

his immediate supervisor, Mr Geoff Moore, who was and

is the financial controller of Lego Australia Pty

Limited, that he was employed to implement policy and

that was all that should concern him. He further says

that in late 1987 Ernst and Whinney alerted Lego

Australia Pty Limited to the proposed new audit powers

of Customs and that, as a consequence, Lego Australia

Pty Limited then abandoned its previous actual

purchase arrangements with Lego Overseas A/S and, on

the advice of Ernst and Whinney, restructured its

overseas ordering and payment system."

(9) The balance of the Information dealt with the possible location of

documents.

8. A copy of the warrant which related to premises at Lane Cove dated 30 October 1991, is annexed to these reasons. The other warrant was in similar terms. It will be seen that in the warrant, the justice stated that she was satisfied by information on oath placed before her on that date that there were reasonable grounds for suspecting that there were, at the places specified, certain things which satisfied the three conditions there described. The first condition related to documents of the kind there specified, including price lists and shipping and other documents. The second condition related to the acquisition of toy products by Lego Australia from Lego Overseas or their importation into, or sale within, Australia. The third condition referred to the existence of reasonable grounds for believing that the things to be searched for would afford evidence as to the commission of either or both the offences against s.29A or 29D of the Crimes Act. The warrant authorised entry to seize things which satisfied these three conditions.

9. The reasons given by Wilcox J for refusing relief may be summarised as follows:-

(1) His Honour first analysed, at some length, the evidence with

respect to Lego Australia's dealings with ACS in the period between 1977

and 1981. After considering the amendments made to the Customs Act in

1981 picking up the international agreement known as "Customs Valuation

GATT Agreement", his Honour said (at 158):

"...under the 1981 provisions, a non-arm's length

transaction might be used in the calculation of value.

Whether the transaction should be so used would depend upon

the extent, and reliability, of the information concerning

it that was obtained by ACS. But, of course, in order to

make that assessment, ACS needed to know about the

transaction. Whereas in the past the concealment of a

non-arm's length transaction may have had no practical

effect, after 1981 it prevented the Collector making a

judgment whether to apply the transaction value of the

goods. Concealment might affect the amount of duty."

(2) Wilcox J then described, also in some detail, the evidence as to

the dealings between Lego Australia and ACS in the period 1981-1988,

before describing the evidence in respect of the dispute which developed

between them and the subsequent conduct of the field audit in May 1990.

(3) The primary Judge approached the present matter by classifying the

information in question into two groups: (1) information said to be

actually known to Mr. Paraggio, but not disclosed to Ms. Elder; (2)

information not actually known by Mr. Paraggio, but which he should have

known. After considering the authorities in this area, and in

particular, George v Rockett [1990] HCA 26; (1990) 170 CLR 104 and the Full Federal

Court decision in Karina Fisheries Pty. Ltd. v Mitson [1990] FCA 154; (1990) 26 FCR 473,

Wilcox J said (at 172):

"...failure by an applicant to disclose material information

that is in fact unknown to him/her at the time of seeking a

search warrant invalidates the warrant only in a case where

that information was previously known to the applicant but

forgotten, or where the applicant's ignorance results from

his/her wilful blindness or other bad faith. None of these

matters are suggested in this case."

(4) Turning next to the complaint that Mr. Paraggio failed to disclose

to Ms. Elder information of which he was actually aware, being matters

discussed at a meeting between Messrs. Dunner and Paraggio in October

1991, to which reference will be made later, his Honour said (at 175-6):

"The case put by counsel for the applicants on this aspect

of the matter is that Mr Dunner informed Mr Paraggio as to

the true situation on 25 October; that Mr Paraggio ignored

this new information and withheld it from the magistrate;

and now denies having received the information in the first

place. I do not know what Mr Paraggio would gain by doing

this. More importantly, I cannot reconcile this

suggested course of conduct with my assessment of Mr

Paraggio. I was favourably impressed with Mr Paraggio, from

his performance in the witness box. He seemed to me an

honest, fair-minded and reasonable person. He is obviously

a dedicated and conscientious Customs officer. No doubt,

like everyone else, he is capable of error, but I believe

that he attempted to carry out this investigation in a fair

and professional manner. I cannot attribute to him the

deviousness that this submission entails."

(5) Wilcox J went on to reject a complaint of failure to disclose

other matters and of misrepresentation in the same, or related, areas.

Finally, his Honour held that none of the other grounds for judicial

review of Ms. Elder's decision was in the instant circumstances, made

out.

10. Summarily stated, in their grounds of appeal, the appellants now seek to challenge, in their essential aspects, the conclusions and reasoning of the primary Judge.

11. It will be convenient first to consider the general principles in this area and then to apply those principles in the present circumstances.

12. In our opinion, the question for decision is entirely one of statutory construction, that is, the true meaning of s.10(1) in the present context. The principles of the general law have no application here. The relevant principles for present purposes were stated by the High Court in Rockett's Case, above. As the High Court there pointed out (at 110), the legislation there considered was in substantially the same terms as s.10 of the Crimes Act.

13. In Rockett's Case, a stipendiary magistrate issued a search warrant under the Criminal Code (Q.) on the sworn complaint of a police officer. An order to review was obtained in the Supreme Court under the Justices Act (Q.) to show cause why the warrant should not be reviewed. On appeal from the Supreme Court, the High Court ordered that the order to review be made absolute. The High Court enunciated the following propositions:

(1) The validity of a search warrant is necessarily dependent upon the

fulfilment of the conditions governing its issue. In prescribing

conditions governing the issue of search warrants, the legislature had

sought "to balance the need for an effective criminal justice system

against the need to protect the individual from arbitrary invasions of

his privacy and property" (at 110). Against that background, to insist

on strict compliance with the statutory conditions governing the issue

of search warrants "is simply to give effect to the purpose of the

legislation" (at 111).

(2) The opening words of the legislation - "If it appears to a justice"

(cf. Crimes Act, s.10(1) - "If a Magistrate or Justice of the Peace is

satisfied...") - impose on the justice the duty of satisfying himself

that the conditions for the issue of the warrant have been satisfied (at

111).

(3) Although it is implicit in the legislation that the applicant for

the warrant should entertain the suspicion and belief to which that

section refers, it must "appear" to the justice that there are

reasonable grounds for entertaining the relevant suspicion and belief.

The requirement that facts exist which are sufficient to induce this

state of mind in a reasonable person opens many administrative decisions

to judicial review and precludes the arbitrary exercise of many

statutory powers (at 111-2).

(4) The matters which must be made to appear to a justice must appear

"on complaint made on oath". If the information merely contains a

statement that the deponent suspects something, for which suspicion he

gives no relevant foundation, the court will declare that there was no

ground for the exercise of the magistrate's power to issue the warrant.

The requirement is that the sworn complaint should contain sufficient

facts to found the reasonable suspicion and the reasonable belief. If

that requirement is not satisfied, the information otherwise conveyed to

the justice is immaterial, but, if that requirement is satisfied, the

justice may seek confirmation by inquiry of the complainant (113-4).

(There is no evidence in the present matter that any such inquiry was made or was necessary. The justice gave no evidence; it is common ground that she gave no formal reasons for her decisions to grant the warrants; that being so, it should be inferred that her reasons were those stated in the Information.)

(5) In considering the sufficiency of a sworn complaint to show

reasonable grounds for the suspicion and belief to which a provision

such as s.10(1) of the Crimes Act refers, it is necessary to bear in

mind that suspicion and belief are different states of mind and that the

section prescribes distinct subject matters of suspicion on the one hand

and belief on the other (at 115). It is by reference to the means of

identification of the object of the search that the sufficiency of

reasonable grounds for suspecting and for believing, must be judged (at

117). The description of the object of the search is a reference point

for delimiting the scope of the warrant. The wider and less specific

the description of the object, the wider will be the powers of seizure

but the more difficult will be the task of persuading the justice that

there are, in the terms of, for instance, s.10(1)(b) of the Crimes Act,

reasonable grounds for belief that the object so described will, if

found, afford evidence of the commission of the particular offence (at

118).

(ii) The decisions and reasoning in Karina Fisheries

14. In Karina Fisheries, above, the Full Federal Court said (at 480):

"The appellant submitted that there was a duty on any

informant applying for a warrant to bring to the notice of

the justice or judge issuing the warrant all the facts

material to the decision to be made to him. So much was

held by the learned trial judge and was not in dispute in

the appeal.

(Emphasis added)

That there should be such a duty flows out of the very

nature of a search warrant and the procedure which applies

to its issue. A search warrant of the kind provided for in

s.10 of the Crimes Act (and also by s.71 by the Proceeds of

Crime Act) confers upon the person to whom the warrant

issues authority to search premises and seize documents in

the possession of another and thus authorises an invasion of

the privacy of persons in lawful possession or occupation of

the premises in which the search is to take place..."

15. The Court then cited a passage from Rockett's Case to the effect of proposition (1) above and went on to say (at 481):

"So too, to require a strict duty of full disclosure of

material facts by the informant seeking a warrant is but to

reflect the traditional policy of the common law to protect

the privacy of individuals against the arbitrary use of the

power of entry and search. (Emphasis added)

The obligation arises also from the fact that of necessity,

the issue of a search warrant is an ex parte procedure. In

granting ex parte relief, the courts of equity have always

required the applicant for such relief to bring to the

notice of the court all facts material to the determination

of the right to that relief. In such cases, as the High

Court (Isaacs J) pointed out in Thomas A Edison Ltd v

Bullock [1912] HCA 72; (1912) 15 CLR 679 at 682):

'Uberrima fides is required, and the party inducing

the Court to act in the absence of the other party,

fails in his obligation unless he supplies the place

of the absent party to the extent of bringing forward

all the material facts which that party would

presumably have brought forward in his defence to that

application.'" (Emphasis added)

16. Since the Court concluded, on the facts, that the Informant had not failed to disclose any material matter, the observations were obiter; moreover, as has been seen, they were not the subject of argument.

17. In Karina Fisheries, reference was made to a ruling on evidence made by McGarvie J in R v Curran [1983] VicRp 77; (1983) 2 VR 133 at 150-1. There, approval to use a listening device had been given by a magistrate under the Listening Devices Act 1969 (Vic.) At the trial, the accused sought to have excluded from evidence tapes of conversations made using the device. In a ruling excluding the evidence, McGarvie J said, (at 150-1):

"I consider that substantial weight is to be accorded to the

fact that the approvals from the Magistrates were obtained

on statements which were prone to mislead as to the real

purpose of the applications, and the fact that the

Magistrates were not informed that one of the accused whose

conversations were to be listened to had already been

charged with the murder. On an application for approval

there is a duty to bring to the notice of the Magistrate all

the facts material to the decision to be made. This flows

from the fact that the application for approval to a course

which affects the privacy of others and which would in the

absence of the approval be forbidden by the statute, is made

without the persons to be affected by the approval being

heard: cf. Thomas A. Edison Ltd. v Bullock ... Although I

must proceed on the basis that the misleading nature of the

supporting statement was due to error arising from a number

of persons being involved, and not designed, it was a

serious failure to comply with a legal duty. Had the

Magistrates been fully and correctly informed of all the

material facts their decisions may have been different.

(Emphasis added)

The consideration which I regard as carrying great weight is

the absence of the whole of the originally recorded

conversations on the tapes."

18. It is clear that his Honour was exercising the basic common law discretion to exclude unduly prejudicial material in order to ensure a fair criminal trial (see e.g. Evidence, its History and Policies, Julius Stone, W.A.N. Wells at 227). This kind of discretion is quite removed from civil proceedings of the present kind. Here, the question for the trial Judge was whether the authority of the administrative decision-maker in granting the warrant had been exercised in accordance with the relevant statutory provisions.

19. In our opinion, the principles discussed in Edison v Bullock, mentioned in Karina Fisheries and in Curran, are distinguishable for our purposes. In Edison, Isaacs J said (at 681-2):

"There is a primary precept governing the administration of

justice, that no man is to be condemned unheard; and

therefore, as a general rule, no order should be made to the

prejudice of a party unless he has the opportunity of being

heard in defence. But instances occur where justice could

not be done unless the subject matter of the suit were

preserved, and, if that is in danger of destruction by one

party, or if irremediable or serious damage be imminent, the

other may come to the Court, and ask for its interposition

even in the absence of his opponent, on the ground that

delay would involve greater injustice than instant action.

But, when he does so, and the Court is asked to disregard

the usual requirement of hearing the other side, the party

moving incurs a most serious responsibility.

...it is the duty of a party asking for an injunction ex

parte to bring under the notice of the Court all facts

material to the determination of his right to that

injunction, and it is no excuse for him to say he was not

aware of their importance. Uberrima fides is required, and

the party inducing the Court to act in the absence of the

other party, fails in his obligation unless he supplies the

place of the absent party to the extent of bringing forward

all the material facts which that party would presumably

have brought forward in his defence to that application.

Unless that is done, the implied condition upon which the

Court acts in forming its judgment is unfulfilled and the

order so obtained must almost invariably fall. I add the

word 'almost' in deference to such an exceptional case as

Holden v Waterlow ... The obligation is stated by Turner

LJ in that case ... to be to 'state their case fully and

fairly,' and so by Sugden LC in Dease v Plunkett ...,

where he said: - 'The plaintiff had not fully and fairly

disclosed the entire facts of the case.' Lord Cottenham

LC in Brown v Newall ..., observes that the power to grant

such an injunction should exist is indispensable, but, from

the liability to injustice, must be exercised with caution.

Then he says ... - 'The Court can have no ground upon which

it can proceed, in granting an ex parte injunction, but a

faithful statement of the case.' The learned Lord

Chancellor distinguishes between mis-statement, or

suppression likely to influence the Court in acceding to the

application, and that which is immaterial.

In the present instance the admitted circumstances are most

material: no order could have been made had they been

stated, without considering and weighing them, and therefore

the order for injunction was improperly obtained. In

Clifton v Robinson ..., even forgetfulness of a material

fact was not a sufficient excuse to prevent the injunction

being dissolved."

20. The considerations of public policy underlying the principle were explained by Davies, Gummow and Lee JJ in Town and Country Sport Resorts (Holdings) Pty. Ltd. v Partnership Pacific Limited (1988) 20 FCR 540 (at 543) as follows:

"...it is of the utmost importance in the due administration

of law that the Courts and the public are able to have

confidence that an ex parte order has been made only after

the party obtaining it has complied with its duty to

disclose all relevant facts."

21. A similar approach was adopted by the Court of Appeal of the Supreme Court of New South Wales in Garrard v Email Furniture Pty. Ltd. (1993) 32 NSWLR 662 per Mahoney A.P. at 676-7.

22. Again, it is clear that these principles have their source in the general law. (See The Varna (1993) 2 Lloyd's Rep. 253; and see M.S. Dockray "Disclosure and Arrest of Ships" (1994) 110 LQR 382)

(v) Does an applicant for a warrant under s.10(1) of the Crimes Act have a "duty" of disclosure?

23. As has been said, in our view, the present question is one of statutory construction and is not to be resolved by reference to the principles of the general law. In particular, the practice in equitable jurisdictions in the grant of discretionary relief, ex parte, in private civil litigation does not, in our opinion, provide an appropriate analogy here. That is to say, in our opinion, the instant matter is to be decided in accordance with the terms, express and implied, of the provisions of s.10(1) of the Crimes Act, properly construed. Those terms are relevantly explained in propositions (1) to (5) extracted above from Rockett's Case. Nothing there suggests the existence of a "duty" of disclosure in the informant, breach of which would invalidate the warrant. Indeed the existence of such a principle would be inconsistent with the approach taken in Rockett's Case. Under that approach, attention is focussed upon the role of the magistrate or justice as the administrative decision-maker in accordance with principles of administrative law. This may be contrasted with the position in private civil litigation where, if ex parte relief is sought, the conduct or misconduct of the party obtaining the relief, rather than the decision-maker, is the relevant consideration. Put differently, the present question is one of public or administrative law; its resolution depends upon the characteristics of the action of the decision-maker, including the processes adopted by him or her and, in the extreme case of "unreasonableness", the nature of the outcome if perverse.

24. It is true that, in an exceptional case, an administrative decision may be vitiated by fraud or misrepresentation even at common law (see, e.g. Sir William Wade, Administrative Law, 6th ed. at 257). The AD(JR) Act itself makes such a provision - see s.5(1)(g). In that special situation, it will be necessary to consider the conduct of the party making application for an administrative decision. But, generally speaking, the role of the court in judicial review is to supervise the activities of the Executive so as to ensure that administrative action takes place in accordance with the rule of law. This supervisory jurisdiction is very different in character from the function of the courts in determining civil disputes between private citizens. In other words, it may be one thing to apply the principles discussed in Edison v Bullock in ordinary civil litigation. It is another to seek to apply them in an application for judicial review of a decision to grant a warrant where the statutory authority to grant the warrant contemplates that the application for it will, necessarily, be made ex parte, yet where the statute also requires, in order to protect the legitimate interests of members of the community, that certain conditions be fulfilled before the warrant may be granted.

25. It follows, in our view, that there is no general, in the sense of abstract, "duty" of disclosure here. This is not to say that a warrant should not be set aside, as other administrative decisions can be, where there has been fraud or misrepresentation. For this purpose, a statement which was a half-truth and thus misleading (see e.g. R v Klysant (1932) 1 KB 442) would be treated, in this, as in other contexts, as a misrepresentation.

26. Put differently, the primary question here is not whether the informant was under an obligation to disclose to the justice a particular fact, but whether the statements in the Information were sufficient to satisfy the requirements of s.10(1). There is also a question whether the decision to grant the warrant was induced by fraud. It will be convenient to consider these questions separately. The first question will be considered from the standpoint of what appears on the face of the Information, that is, without recourse to any extrinsic material. However, the position in the case of the second question is different. There, since fraud or misrepresentation is alleged, it will be necessary to look at collateral material in order to ascertain whether any representation by the Informant was, when measured against the objective circumstances, false.

(b) The primary question: The allegation of fraud apart, was the material in the Information sufficient, on its face, for the purposes of s.10(1) of the Crimes Act?

27. As has been said, by the terms of s.10(1)(b), the justice had to be satisfied that there were reasonable grounds for suspecting that there was, upon the nominated premises, a thing or things as to which there were reasonable grounds for believing that it will afford evidence as to the commission of either of the two offences specified.

28. In drawing the distinction between suspicion and belief, the Court said in Rockett's Case (at 115) that suspicion is "a state of conjecture or surmise where proof is lacking". The Court went on to say (at 115) that the facts which can reasonably ground a suspicion may be quite insufficient reasonably to ground a belief, yet some factual basis for the suspicion must be shown. However, in the present case, as in Rockett's Case (at 119), the real question for determination is not whether there were reasonable grounds for suspecting that the described classes of documents were on the specified premises, but whether there was sufficient material in the Information to satisfy the justice that there were reasonable grounds for believing that those documents will, in the language of the statute, "afford evidence as to the commission of" either of the two offences.

29. In our opinion, taken on its face, the material in the Information was sufficient so as to satisfy the justice. It is, as has been noted, a separate question to be dealt with later, whether the decision to grant the warrants was vitiated by the fraud of the informant. But, in the absence of proof of fraud, the material in the Information, in our view, satisfied the conditions specified in s.10(1)(b).

30. In Rockett's Case, the High Court, referring to the consideration in Baker v Campbell [1983] HCA 39; (1983) 153 CLR 52 of the phrase "will afford evidence as to the commission of (an) offence" appearing in s.10 of the Crimes Act, said (at 119-20):

"...the case does not suggest that the only things for which

a search warrant might be issued are things which are or

will become admissible in evidence. The power to issue a

search warrant is in aid of criminal investigation as well

as in aid of proof at the trial, though it is necessary that

the investigation should have reached the stage where

reasonable grounds for the statutory suspicion and belief

can be sworn to. An object will answer the description in

par.(b) if there are reasonable grounds for believing that

it will assist directly or indirectly in disclosing that an

offence has been committed or in establishing or revealing

the details of the offence, the circumstances in which it

was committed, the identity of the person or persons who

committed it or any other information material to the

investigation of those matters."

31. In Rockett's Case, it was held (at 120) that the sworn complaint was inadequate to found a conclusion that the identified bundle of documents would, if found, actually contain some statement or statements which were relevant to the commission of one or other of the alleged offences. Consequently, the complaint was inadequate to found the magistrate's conclusion that there were reasonable grounds for "believing" that the designated objects of the search would, if found, afford evidence as to the commission of an offence. It followed that the terms of the warrant were not supported by the sworn material placed before the magistrate. Accordingly, the grant of the warrant was beyond power and invalid.

32. In the present case, the requisite ingredients of the offences alleged in the Information were: (a) that a representation was made that the products purchased were received on a consignment basis; (b) that the representation was false; (c) that, as a consequence of the making of the representation, ACS allowed duty to be paid at a rate which was lower than would otherwise have been paid; (d) that there was an intent to defraud. It will be convenient to consider these in turn. For this purpose, as has been said, the question to be addressed will be considered by having regard to the material in the Information taken on its face, so that, for immediate purposes, it will not be appropriate to look beyond, or behind, the statements made in the Information. As has been said, different considerations will, however, arise at the next stage when dealing with the claim that the decisions to grant the warrants were induced by the fraud of ACS. In that context, it may be necessary to have regard to extrinsic or collateral material other than the statements in the Information. In considering the primary question to be addressed, it is proposed to look only at the material in the Information. This will be done, not only to determine whether (i) the material provides an adequate basis to justify the holding by the justice, on grounds that were reasonable, the belief that the objects of the search will afford evidence of the commission of the offences alleged; but also to determine whether (ii) (in the sense explained in Rockett's Case at 111-2), so far as material, any of the grounds of judicial review relied upon (i.e. no evidence; unreasonableness; taking into account irrelevant considerations; and failure to take relevant considerations into account) are made out. When reference is now made to the "sufficiency", or otherwise, of the Information, it is intended to pick up both of (i) and (ii).

(1) Did the Information contain a sufficient statement with respect to the alleged representation that the products purchased were received on a consignment basis?

33. As has been seen, it was stated in para.9 of the Information that Lego Australia represented that the goods "were imported on consignment and not pursuant to contract of sale". Whilst this statement was expressed in general terms, perhaps as a conclusion, there was specific material in the Information in this regard as follows:

(A) Reference was made in para.11 to Ernst and Whinney's letter dated

18 January 1988, in response to a request for a copy of the consignment

agreement, in which it was stated, in effect, that although there was no

formal written consignment agreement, there was in place an informal

arrangement between the members of the Lego Group evidenced by

"correspondence and consignment shipping and sales documentation"; and

that a formal consignment agreement was "shortly" to be entered into.

(B) In the subsequent correspondence annexed to the Information,

written by Ernst and Whinney on 9 September 1988, 19 December 1988, 13

January 1989 and 15 May 1989, references were made to stock being

"consigned"; to "consignment stock"; to "consignment operations"; and

to the "consignment arrangement".

(C) Reference was made in the annexed letter written by Lego dated 30

May 1989 to "consignment stock" and to "consignment inventory".

(D) In Ernst and Whinney's letter dated 20 July 1989 annexed to the

Information, reference is made to stock being "consigned".

(E) The ACS audit report dated 14 June 1990 annexed to the Information

examined "consignment" transactions entered into in 1989, but as the

summary of the report, set out above, indicated, the report also dealt

with consignment transactions in earlier periods, going back as far as

(F) In para. 21 of the Information, reference is made to matters stated

by the former employee with respect to "the purported consignment

arrangement".

34. In our opinion, subject to one qualification, the foregoing constituted a sufficient statement in the Information of the facts and circumstances relied on by ACS to establish what is essentially a question of primary fact, namely, that the alleged representation was made.

35. Our qualification is, with respect, as to the commencing date of the alleged misconduct. In this respect, Wilcox J said (at 176):

"Counsel for the applicants list several other matters,

known to Mr. Paraggio but not disclosed to Ms. Elder, which

they claim to be material.

First, they point out that Lego Australia did not commence

business until mid-1978. The first count set out in the

Information alleges that '(b)etween December 1977 and

January 1988' Lego Australia falsely represented the

position. Plainly, the reference to December 1977 was

wrong. The suspected criminal conduct could not have

commenced before mid-1978. Indeed, one can go further.

Given the terms of the 1976 legislation and Mr. Dunner's

view about the appropriate way of calculating value, it is

unlikely that the relevant period commenced before the end

of 1981. But it seems to me that any error in the

commencing date in the first count is immaterial. The

gravamen of the alleged offences was that Lego caused ACS to

believe that the goods it imported were received on

consignment, as distinct from sale prior to importation, and

that this caused a lower customs valuation with a lower duty

assessment. There was evidence to support a reasonable

suspicion of those facts throughout the whole of the period

specified in the second count and for most of the period,

possibly from as early as October 1981, referred to in the

first count. It is inconceivable that Ms. Elder's decision

to issue the warrants would have been different if the first

count had stated the period of commencement of the offence

as October 1981 rather than December 1977."

36. We agree with Wilcox J on the substantive point, although it might be thought that, in terms of the commencement date for the search for documents, the warrant went too far as a matter of form. But no complaint is made by the appellants that the warrant was bad in form. Rather, their complaint is that the ACS failed to disclose certain matters and was thus in breach of its alleged duty to do so. We will return to this claim when dealing with the second question, the alleged fraud.

(2) Did the Information contain a sufficient statement with respect to the alleged falsity of the representation?

37. The summary to the audit report dated 14 June 1990, annexed to the Information, indicated that only 60 per cent of the consignment price was being entered for duty and that the full F.O.B. price, which was also the consignment price, should have been entered; and that, notwithstanding that ACS may have "compromised itself as a result of previous decisions...those decisions were based on an incomplete set of documents and as a result, a decision biased in favour of Lego Aust. P/L was obtained". Whilst the audit report appears to accept that the goods were shipped on a consignment basis, the allegations of the former employee described in the Information contradicted this. It is there stated that, according to his information, the purchases were made pursuant to an agreed export price list, and that there was no consignment arrangement, that this has been the position since 1977 (para.20); that two sets of documents - one for ACS purposes and the other for internal use - were kept and not revealed to ACS until the audit in 1990; and that the documents produced to ACS did not reflect "the commercial reality" (para.21).

38. In our opinion, this material is a sufficient statement of what, again, is essentially a question of primary fact, namely, the falsity of the representation alleged.

(3) Did the Information contain a sufficient statement that as a consequence of the making of the representation, ACS allowed duty to be paid at a lower rate?

39. In para.22 of the Information, it is stated, by way of a conclusion, that the use of dual documentation as previously described in the Information, resulted in the payment of less duty. There was other material in the Information on the point. It will be recalled that it was stated (in para.7) that between 1976 and 1981, the Customs Act provided that the basic measure of "customs value" was, in effect, the market price; and that in transactions not at arms' length, the price fixed by the parties was to be adjusted accordingly; and that in 1981 the legislation was amended so as to impose duty on the actual or "transaction" value, that is, "the actual sale value of the contract". As has been seen, it was further stated (in para.8) that, under both valuation systems, in the case of a consignment arrangement between exporter and importer, "customs value" may be established on the basis of the sale of comparable goods or by the use of actual or expected realisations, known until 1981 as the "end-realisation" method and later as the "deductive" method, whereby the "customs value" was calculated by deducting certain allowable expenses from the price of the first sale after importation to an unrelated buyer in Australia. As has been noted, the Information stated (in para.9) that it was represented that importation was on a consignment basis, and not pursuant to a contract of sale; and that, on this basis, ACS accepted a calculation in accordance with the "end-realisation", and later, the "deductive", method. Reference is then made to the review (in para.10) and, ultimately (in para.15) to the audit. The summary in the audit report annexed to the Information has already been mentioned. As we have seen, it was there alleged that only 60 per cent of the true value for duty had been declared.

40. When these statements are read together they explain, adequately in our opinion, the assertion that, as a consequence of its representation, Lego Australia was allowed by ACS to pay less duty.

(4) Did the Information contain a sufficient statement that Lego Australia had the requisite intent to defraud?

41. The statement in para.21 of the Information of the claim by the former employee that Lego Australia produced two sets of documents which recorded different prices for each shipment, when read with the other statements in the Information and its annexures, amounts, we think, to a sufficient statement for this purpose.

42. For those reasons we have concluded that the material in the Information was sufficient to satisfy the requirements of s.10(1), the question of fraud apart.

(c) The second question: Was the decision to grant the warrant vitiated by the fraud of the Informant?

43. Lego Australia did not, in terms, plead fraud in its amended statement of claim. However, as appears from the pleading, which is annexed to these reasons, a lack of good faith, a failure to speak where there was a duty to speak, and abuse of office were alleged. For present purposes, it will be necessary to examine these claims to ascertain whether, in substance, any of them should be treated as allegations that ACS and the Informant misrepresented the position to the justice, at least in the sense that it is alleged that there was a statement of a half-truth only and that this misled the justice into deciding to issue the warrant.

44. It will now be necessary to refer to some of the detail of the history of the dealings between the parties as found by the primary Judge as follows:-

(A) The early dealings between Lego and ACS: 1977 - 1981

45. In this period, several meetings took place and correspondence was exchanged between the parties, on the method of calculation of duty. Mr. Harold Dunner, then Senior Inspector, Appraisements, in the Sydney office of ACS, was involved. (In February 1981, Mr. Dunner resigned from ACS. He commenced to act as a consultant to Lego Australia almost immediately thereafter.) The "End Realisation Method" was discussed and a modus operandi was apparently agreed. However, Wilcox J made this finding (at 154):

"...the decision of Mr Dunner and his Canberra superiors

were both made in the belief that the goods were sent to

Australia by British Lego on a consignment basis, and not

imported pursuant to a contract made between the importer

and exporter. They understood that there could not be a

contractual relationship between these two parties; they

were both parts of a single legal entity, British Lego.

However, it is only fair to add that, to Mr Dunner at least,

it would have made no difference if the importer and

exporter had been separate legal persons and the importation

made pursuant to a contract between them. Mr Dunner's

position was then, and remained at the trial, that a

contract between two related companies can never be used as

a basis of calculation of duty."

46. Mr. Dunner gave evidence at the trial. His Honour said (at 155):

"In the course of his evidence, Mr Dunner said that he was

never aware of the precise arrangement between Lego A/S and

the Australian company, but he was aware that the Australian

company was remitting to Lego A/S an amount equal to 65 per

cent of its receipts. This knowledge made him conclude that

it was pointless to inquire into the exact arrangement. He

thought that 65 per cent of the wholesale price could not

represent the arm's length market value of the goods at the

time of importation."

47. In this period, the parties exchanged correspondence with respect to the effect of the new legislation, the Customs (Valuations) Amendment Act 1981. The "deductive" method of determining computed value, rather than the end-realisation method, was discussed in correspondence and at meetings between representatives of the parties. At a meeting held on 2 November 1987, the Lego representatives handed over a document which sought to explain Lego's "calculation of duty liability based on the deductive method". Reference was made, in the document, to "the consignment agreement". The ACS officers then sought a copy of the consignment agreement and copies of documents showing the money Lego sent to Denmark for the goods. The Lego representatives refused to supply copies because they "could not see how these documents would have relevance" (at 162).

48. This matter was taken up by Ernst and Whinney in their letters dated 18 January and 9 September 1988 already mentioned. Of the latter letter, Wilcox J said (at 162-3):

"...this letter is potentially misleading. It correctly

states that for many years Lego has paid customs duty upon

the deductive basis of valuation. Using the present tense,

it states that 'stock is consigned' under arrangements

whereby Lego Australia contracts to purchase the goods only

when occasion demands. In 1988, and speaking of the current

position, that statement may have been true. As will

appear, Mr Paraggio was later told that Lego Australia

adopted a consignment arrangement with Lego A/S effective

after 31 December 1987. But the letter links the 'many

years' practice of paying customs duty on a deductive basis

with the current consignment arrangement by using the words:

'This basis is appropriate.' I think that, having regard to

their context, a not overly-suspicious reader who was

unaware of the change on 31 December 1977 would take these

words to mean that the deductive basis is, and always has

been, appropriate because the goods are, and always have

been, imported on a consignment basis."

49. In 1989, ACS informed Lego Australia that the sales made by Lego A/S to it were a sufficiently reliable indication of value. By letter dated 19 May 1989, an officer of ACS stated:

"I refer to a 1977 arrangement between your company and the

Australian Customs Service whereby Lego products imported

into Australia from your overseas parent company would be

valued for custom purposes under an end-realisation method.

With the introduction of the GATT valuation system in 1981,

this arrangement was amended to allow use of a flexible

approach to the deductive method.

Following a review of the operation and importations of your

company, it has been determined that this previously agreed

method of valuation is no longer appropriate and future

importations on and from June 1 1989 should be valued by a

flexible approach to the transaction value method under

Section 157(8) of the Customs Act.

Given that there is a known price which your supplier has

set for the goods at the time of importation and the first

sale which takes place after importation is between the two

Lego companies, this decision is entirely consistent with

the primary aims of GATT ie to as far as possible value

goods according to actual monies paid in a sale."

50. However, Lego Australia did not accept this approach.

51. In May 1990, as we have seen, Mr. Rooney performed an audit. Thereafter ACS demanded the shortfall in duty previously mentioned. Lego Australia appealed to the Administrative Appeals Tribunal. There were negotiations between the parties which were suspended pending Lego Australia's application for a tariff concession order. None of these matters had been resolved by the time the warrants were issued.

52. Mr. Paraggio became involved at the time of the audit. He read the audit report and a number of ACS files.

"It appears that a former Lego employee, whom Mr Paraggio

dubbed 'Mr Ogle', saw Mr Paraggio on 24 May 1991. Mr Ogle

knew about the audit. He told Mr Paraggio that Lego had

been 'evading duty for a long time and are still doing it

even though they have tidied up their act to appear

otherwise'. He said that, when he started with Lego in

1986, the company operated a system whereby it owned the

goods at the time of importation. It paid for the goods 90

days after invoice date. Mr Ogle said that he knew this was

not how the situation was represented to ACS. He told Mr

Paraggio that in 1987 the system was changed; Lego

Australia relinquished title to the goods but retained

possession. Its purpose was to revert to a consignment

arrangement and to disassociate the importation transactions

from sales in Australia."

54. Later, Mr. Paraggio obtained a written statement from "Mr. Ogle", in which he described how Lego Australia kept two sets of documents; one set for "internal purposes"; the other, which stated a different price, for customs. In that statement, he said:

"From the time I started with LEGO up to August 1990 the

documents used for customs purposes disclosed an amount

known as the wholesale amount and a value for duty

calculated at thirty percent of the wholesale amount. The

value for duty was the amount on which duty was paid

notwithstanding this amount was consistently lower than the

amount remitted for the same goods."

55. In June 1991, ACS obtained an opinion from an accounting expert to the effect that Lego Australia's financial statements "show stock in transit as assets and this is evidence of ownership ... and that the goods were not imported on a consignment basis".

(D) The conversation between Messrs. Dunner and Paraggio in October 1991 56. On 25 October 1991, at the invitation of ACS, Mr. Dunner spoke with Mr. Coates, an officer in the ACS Investigation Section. Mr. Paraggio was present for some of this time. As has been noted, there was a conflict in the evidence of Messrs. Dunner and Paraggio which his Honour (at 175-6) resolved in favour of Mr. Paraggio who had denied hearing from Mr. Dunner that he (Mr. Dunner) was aware of the existence of an internal price list or that Lego Australia imported the goods pursuant to a contract of sale.

57. In order to determine whether the informant misrepresented the position to the justice, it will be convenient to refer to the material allegations in the amended statement of claim as follows:-

(a) In para.24 of the amended statement of claim, it is alleged that the ACS officers "well knew" that "neither the mere non-existence of a consignment arrangement nor the existence of a sale arrangement necessarily dictated that the end realisation method or the deductive method was not applicable". (See also para.25(c).)

58. The difficulties in making out, in this area, a case of fraud on the decision-maker on the part of the ACS officers are self-evident. For one thing, the subject matter, that is, the course of dealings within the Lego Group, was something peculiarly within the knowledge of the Group, at least in the first instance. Secondly, as the history of the matter shows, there was room for argument about the true complexion or characterisation of the transactions under scrutiny. As well, complicated and contentious legal questions were involved. Given, in particular, the circumstance that the whole subject was argumentative and that, even after the field audit, several points of view were open, even reasonably open, we are not satisfied that the serious charge of fraud has been made out in this respect, even if the facts alleged in para.24 were made out. Moreover, as has been noted, it was the case of the ACS at the trial, and his Honour found, that in the correspondence written to the ACS there had been several examples of a lack of candour on the part of the appellants in this regard.

(b) In para.25(g) of the amended statement of claim, it is alleged that the ACS officers were aware, or ought to have been aware, of the matters alleged in para.10 thereof. The allegations in para.10 address the dealings between the parties in the period 1978 to 1981. Again, essentially for the reasons given in respect of the allegations made in para.24, we are not satisfied that, in this respect, the ACS officers knowingly misrepresented the position to the decision-maker.

(c) By para.25(b) of the amended statement of claim, it is alleged that the ACS officers knew, or ought to have known, of the information alleged to have been provided by Mr. Dunner in the interview in October 1991 (see para.21). As has been seen, his Honour found that Mr. Paraggio's evidence of the discussion was the more credible version. Again, we are not satisfied that a charge of fraud against the officers of ACS could be sustained here.

(d) In paras. 25(d), (e), (f), (g), (h) and (i) of the amended statement of claim, it is alleged that the ACS officers knew, or ought to have known, of a number of pieces of information. But, even if the allegations could be sustained as a matter of fact (a difficult task in the light of the trial Judge's findings), it would not follow, in our opinion, that the statements made in the Information were a misrepresentation of the position in any material sense.

59. It follows, in our view, that no case for the judicial review of the decision to grant the warrant on the ground of fraud has been made out.

60. In the result, we would dismiss the appeal, with costs.

HILL J I have read in draft form the joint judgment of Beaumont and Whitlam JJ and subject to the following comments agree with the conclusions they have reached and their reasons for so doing.

2. At the heart of most of the submissions of the appellant lay the correctness of what was said by a Full Court of this Court in Karina Fisheries Pty Limited v Mitson [1990] FCA 154; (1990) 26 FCR 473 at 480-481 in the following passages:

"The appellant submitted that there was a duty

on any informant applying for a warrant to bring

to the notice of the justice or judge issuing

the warrant all the facts material to the

decision to be made to him. So much was held by

the learned trial judge and was not in dispute

in the appeal.

That there should be such a duty flows out of

the very nature of a search warrant and the

procedure which applies to its issue. A search

warrant of the kind provided for in s 10 of the

Crimes Act ... confers upon the person to whom

the warrant issues authority to search premises

... in which the search is to take place. ...

So too, to require a strict duty of full

disclosure of material facts by the informant

seeking a warrant is but to reflect the

traditional policy of the common law to protect

the privacy of individuals against the arbitrary

use of the power of entry and search.

The obligation arises also from the fact that of

necessity, the issue of a search warrant is an

ex parte procedure. In granting ex parte

relief, the courts of equity have always

required the applicant for such relief to bring

to the notice of the court all facts material to

the determination of the right to that relief."

3. As the judgment in Karina makes clear the existence of the obligation to make full disclosure was not the subject of argument in the appeal in that case. The obligation was accepted by the parties. Nor was the existence of any such obligation essential to the decision in the case, for the Court found that, accepting such an obligation, it had not been shown to have been breached. It is accordingly open to this Full Court to decide for itself (without the usual strictures of following previous Full Court decisions as a matter of comity unless they are shown to be clearly wrong) whether such an obligation exists and if so the consequences for the purposes of judicial review of a breach of it. Karina has been followed since in a number of single judge decisions including Freeman v Roberts (1992) 37 FCR 399, per Ryan J; Rogers v Moore [1992] FCA 602; (1992) 39 FCR 201 per French J and in Lemesk Pty Ltd v Easterby (1993) 66 A Crim R 337 per Cooper J.

4. The genesis of the view that there is such an obligation is to be found in the judgment of McGarvie J in R v Curran [1983] VicRp 77; (1983) 2 VR 133. In that case a listening device, obtained from a Stipendiary Magistrate pursuant to s.4 of the Listening Devices Act 1969 (Vic), had been used to listen to and record conversations that took place in gaol between a person accused of murder and an acquaintance in a prison cell in the gaol. The evidence so obtained was strongly probative of the guilt of the accused and application was made at the trial to reject it. The application for the warrant for the listening device did not disclose that the accused had already been charged with murder or that the intention was to listen to conversations taking place between the accused and a co-accused also in the same prison.

5. As the joint judgment of Beaumont and Whitlam JJ points out, the question before McGarvie J was ultimately one of discretion to exclude the evidence of the cell tapes. However, the basis of the existence of that discretion was, as the judgment makes clear, the claim that the evidence had been illegally obtained: cf Bunning v Cross [1978] HCA 22; (1977-78) 141 CLR 54. The warrant was defective for a number of reasons. However among those reasons, in his Honour's view, was the failure of the statement, upon which the issue of the warrant was based, to disclose the fact that the accused had been charged and the purpose for which the warrant was intended. His Honour left open the question whether that failure was due to error or design. Having regard to his Honour's view that the warrant was defective, inter alia on the basis that the statement had failed to make adequate disclosure, I do not think that the case can easily be put to one side as a mere exercise of discretion. It does not, of course, bind us.

6. On the question of the exercise of discretion McGarvie J said (at 150-1):

"I consider that substantial weight is to be

accorded to the fact that the approvals from the

Magistrates were obtained on statements which

were prone to mislead as to the real purpose of

the applications, and the fact that the

Magistrates were not informed that one of the

accused whose conversations were to be listened

to had already been charged with the murder. On

an application for approval there is a duty to

bring to the notice of the Magistrate all the

facts material to the decision to be made. This

flows from the fact that the application for

approval to a course which affects the privacy

of others and which would in the absence of the

approval be forbidden by the statute, is made

without the persons to be affected by the

approval being heard: cf Thomas A. Edison Ltd.

v. Bullock [1912] HCA 72; (1912), 15 CLR 679, at pp 683-3,

... Had the Magistrates been fully and correctly

informed of all the material facts their

decision may have been different."

7. The reliance upon Thomas A Edison Ltd v Bullock was criticised in argument as inapposite to the exercise of an administrative discretion and involving an area of discourse foreign to the present context. It is true that a Magistrate issuing a warrant under s.10 of the Crimes Act 1914 (Cth), like a judge issuing a warrant under the Telecommunications (Interception) Act 1979 (Cth) or s.219B of the Customs Act 1901 (Cth), is performing an administrative rather than a judicial function: Love v Attorney General (NSW) (1990) 169 CLR 307; Hilton v Wells [1985] HCA 16; (1985) 157 CLR 57, although in so doing he or she must act judicially. As the Full High Court said in Love (at 321):

"The warrant is the outcome of a complaint upon

which the judge must bring his or her judicial

mind to bear and decide on the material before

him or her whether the warrant should issue.

The judge is under a duty to act judicially and

to that extent the issue of the warrant is a

judicial act but it is not a 'judicial act in

the same sense as is an adjudication to

determine the rights of parties', ... It is not

an order inter partes from which a party whose

conversations may be overheard has a right of

appeal. To adapt the language used in Hilton v

Wells, under s.16 a judge makes no order and

nothing that he or she does is enforced as an

order of the court. ...

The better view is that the issue of the warrant

under s.16 is a step in the administrative

process and is thus an administrative function."

(emphasis added)

8. It was, no doubt, with such a consideration in mind that McGarvie J in Curran introduced the reference to Thomas A Edison Ltd with the abbreviation "cf". The doctrine in Edison is, of course, a doctrine applicable to ex parte judicial relief and requires the bringing forward to the court by the party seeking relief of:

"... all the material facts which that party (ie

the absent party) would presumably have brought

forward in his defence to that application."

(Edison at 682)

9. There can be no direct analogy between the obligation of a participant in an administrative act and the obligation of a party in judicial proceedings. But it does not follow from the lack of a direct analogy that the same principle has no application, particularly given the intrusive character of a search warrant and its impact on the right to privacy. The source of any obligation of disclosure and the extent of that obligation must, however, be found outside the area of discourse of ex parte applications to a court.

10. In my opinion, the source of such obligation as may exist upon an informant must fall to be found, as the Full Court in Karina observed, both in the nature of a search warrant (as a step in an investigatory process, albeit a step which authorises an invasion of the common law rights of the citizen) and in the ex parte procedure which s.10 specifies.

11. The process under s.10, which commences with an information and concludes with the issue of a warrant, requires there to be furnished to the Magistrate or Justice an "information on oath" which is directed to the question which the Magistrate or Justice must decide, namely whether, relevant to the present case:

"there is reasonable ground for suspecting that

there is in or upon any premises ... or places:

(a) anything with respect to which any offence

against any law of the Commonwealth ...

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; ..."

12. The Magistrate or Justice does not decide whether anything of the nature described in the section in fact exists in or upon the nominated premises, nor does the Magistrate or Justice determine whether any nominated offence has been committed. The section is framed in terms of suspicion, even if, as in s.10(1)(a), the requisite suspicion must be "on reasonable grounds".

13. In my view, implicit in the obligation cast upon the Magistrate or Justice to determine the statutory issue entrusted to that functionary must be, at the very least, some obligation of candour on the part of the informant. It cannot be the case that an informant could be so selective of the material to be placed before the Magistrate or Justice as deliberately to lay an information from material adverse to the person whose premises are to be searched or whose criminality is suspected, neglecting altogether favourable material, so as to secure the issue of the warrant.

14. In my view, it follows from the restriction imposed upon the Magistrate or Justice that he or she be confined in deciding whether to issue a warrant to the information on oath furnished by the informant that that information can be relied upon as being as complete as the then investigatory process may permit. Equally, however, the informant will, of necessity in most cases, have to exercise an element of choice in determining what information to place before the Magistrate or Justice. Evidence held by the informant is likely to point in more than one direction. The mere fact that the informant may inadvertently omit material which might lead to a different conclusion on the part of the Magistrate would hardly seem to constitute a breach of the obligation which of necessity is placed upon the informant.

15. Another difficulty is that, the duty of the informant, whatever its content, may be a duty of "imperfect obligation", at least to the extent that failure to comply with the duty may not give rise to a right in the person against whom the warrant is to be executed in proceedings for judicial review to have the warrant set aside.

16. As the joint judgment of Beaumont and Whitlam JJ points out the present case arises in the context of judicial review and more precisely in the context of an application under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act"). Under that Act, one of the specified grounds in s.5(1) must be made out before the jurisdiction of the Court to review an administrative decision is enlivened. Of the nine grounds listed in that section only five could have possible relevance. These are:

"(b) that procedures that were required by law

to be observed in connection with the

making of the decision were not observed;

...

(d) that the decision was not authorized

by the enactment in pursuance of

which it was purported to be made;

(e) that the making of the decision was

an improper exercise of the power

conferred by the enactment in

pursuance of which it was purported

to be made; ...

(g) that the decision was induced or

affected by fraud; ...

(j) that the decision was otherwise

contrary to law."

17. In many cases which fall for decision by this Court the decision-maker is the head of a government authority or a delegate of that person and the decision sought to be challenged is made by reference to information which has been placed before the decision-maker taken from the files of the authority. In such a case the Court will have regard to all the material held by the authority in its files, not merely to the material actually placed before the decision-maker to determine, for example, whether the decision was an improper exercise of power (s.5(1)(e)) or as being so unreasonable that no reasonable person could have arrived at it (s.5(2)(g)). Thus it was held in Nestle Australia Ltd v Deputy Commissioner of Taxation (1986) 10 FCR 78 at 84 that material in the Taxation Office file must be regarded as available to the decision-maker. The present case is different because the decision-maker is confined to a consideration of material furnished by a third party informant.

18. Does it then follow that judicial review of the decision to issue a warrant must focus, in a case such as the present, solely upon the quality of the decision of the Justice or Magistrate, or can a warrant be set aside by reference to the quality of the act of the informant in laying the information, such as failure to comply with the content of any obligation to make information available to the Justice or Magistrate?

19. The leading High Court authority upon the issue of search warrants (the actual legislation under consideration being s.679 of the Criminal Code (Qld) in terms indistinguishable for present purpose from s.10 of the Crimes Act) is George v Rockett [1990] HCA 26; (1990) 170 CLR 104. In that case in a judgment delivered by all justices of the Court, their Honours said (at 110-111):

"The validity of such a warrant is necessarily

dependent upon the fulfilment of the conditions

governing its issue. In prescribing conditions

governing the issue of search warrants, the

legislature has sought to balance the need for

an effective criminal justice system against the

need to protect the individual from arbitrary

invasions of his privacy and property. ...

Nevertheless, in construing and applying such

statutes, it needs to be kept in mind that they

authorize the invasion of interests which the

common law has always valued highly and which,

through the writ of trespass, it went to great

lengths to protect. Against that background,

the enactment of conditions which must be

fulfilled before a search warrant can be

lawfully issued and executed is to be seen as a

reflection of the legislature's concern to give

a measure of protection to these interests. To

insist on strict compliance with the statutory

conditions governing the issue of search

warrants is simply to give effect to the purpose

of the legislation."

20. The emphasis in this passage upon compliance with the statutory conditions for issue of a warrant should not be read as confined to the formalities required to be included in the warrant, the existence of an "information on oath", the formation by the functionary of the necessary state of mind, or the presence of material properly before the justice which permits that state of mind to be formed, although each of these statutory conditions must be complied with. Simply because the Court made no mention of the need for the informant to exercise good faith in compiling the information, for example, (if that be the relevant test) does not require the conclusion that no such obligation existed. That is not surprising because it was not in issue in that case.

21. A search warrant is, as Mason J observed in Baker v Campbell [1983] HCA 39; (1983) 153 CLR 52 at 81, quoting from Dickson J in Attorney-General (Nova Scotia) v MacIntyre (1982) 132 DLR (3d) 385 at 397, "part of the investigative pre-trial process of the criminal law, often employed early in the investigation and before the identity of all of the suspects is known". For present purposes the issue of a warrant can be seen to emerge from what the High Court referred to in the passage quoted earlier from Love v The Attorney-General of NSW as an "administrative process". If that process miscarries because, for example, the informant has produced to the Magistrate on oath what purports to be an information containing material which is misleading, or omits to inform a magistrate of a matter which is relevant to the decision which the Magistrate has to make (at least when that omission is made other than inadvertently) there is no reason in ordinary principle why in an action for judicial review, whether under s.39B or the ADJR Act is not presently material, the warrant should not be set aside. In such a case, in terms of the ADJR ACT the procedures required by law for the issue of the warrant will not have been observed. This will be so because the law requires at the very minimum that the information on oath furnished to the Magistrate or Justice not be misleading. The resultant issue of the warrant will thus be contrary to law.

22. In some cases it may be possible to argue that what purports to be an "information on oath" is in truth not an information at all. That is not an argument made in the present case.

23. The ultimate question is not so much whether judicial review provides an appropriate remedy should there be a failure to comply with whatever obligation the law imposes upon the informant, but rather what is the content of that obligation.

24. I have given the matter anxious consideration. In determining what obligation the law requires it is necessary to balance competing policy interests, taking into account the place of a search warrant in the investigatory process, the intrusive nature of a warrant overriding the privacy of the individual whose premises are to be the subject of search, the fact that the warrant is obtained ex parte in an administrative process and the nature of the question which is to be determined by the Magistrate or Justice (acting judicially) before whom the issue of the warrant comes. Having regard to these matters it seems to me to impose too great an obligation upon the informant to say that the law (in the present case, s.10) implies a legal obligation to place before the Magistrate or Justice all material in the possession of the informant or known to the informant which might bear upon the decision which must be made. The nature of the issue to be determined, one of suspicion of the existence of things and suspicion or belief as to the committal of an offence, suggests to me that the obligation could not be intended to be imposed in terms of objective criteria. Thus it seems to me that the obligation should be stated in terms of an obligation to ensure that the material before the Magistrate or Justice is not such as to mislead and that any omission of relevant material was inadvertent. This is merely another way of saying that the informant must in compiling the information act in "good faith".

25. The power to lay an information before a Magistrate or Justice for the issue of a warrant, like all powers, must be exercised in good faith and for the purpose for which the power was conferred. If the informant does exercise the power in good faith then the issue of the warrant can not be criticised upon the basis that material was inadvertently excluded from the Magistrate's attention. Absent good faith upon the part of the informant the result will be different.

26. The question does not seem to have arisen in the United Kingdom or New Zealand. Fontana, JA in The Law of Search and Seizure in Canada (3d ed, 1992) states the Canadian position in terms similar to those which I have suggested above. The learned author writes (at 100-101):

"Complete honesty by the informant is an

essential requirement and an absence of honest

disclosure may void the process. Not only must

the contents of the information be true but the

informant must not omit, colour or distort

material facts."

27. The cases which Fontana cites in support of the above proposition are all cases where the validity of the particular warrant fell to be tested in the context of whether evidence obtained under the warrant was improperly obtained and should be excluded. However, they all illustrate that the content of the obligation imposed upon an informant in a context similar to that in s.10 is not as wide as that suggested in Karina.

28. Thus in R v Donaldson (1990) 58 CCC (3d) 294, a decision of the Court of Appeal of British Colombia, the informant was found to have practised deception by stating that certain information had come from a "reliable confidential source" when in fact it had come from an interception of a private conversation. In the result, evidence obtained under the warrant was not admitted.

29. While the reference in Fontana to the obligation not to "omit" might suggest a test as onerous as that in Karina, the author's citation of R v Garofoli (1988) 41 CCC (3d) 97 (Ont CA) and R v Falloncrest Financial Corp (unreported 9 November 1990, Ont Gen Div, cited by Fontana at 101, n67) make it clear that "inadvertent omission" (for example, brought about by haste) will not render a warrant invalid.

30. Garofoli, subsequent to the writing of Fontana's text, came before the Supreme Court of Canada and is reported as R v Garofoli (1991) 60 CCC (3d) 161. Although the actual decision in the case was overruled, nothing said in the judgments affects the use made of that case by Fontana. Sopinka J (at 188), with whose reasons Dickson CJC, Lamer CJC, La Forest and Gonthier JJ agreed, referred to the grounds for reviewing the issue of a search warrant to be "fraud, non-disclosure, misleading evidence and new evidence". This comment, although made by reference to s.8 of the Canadian Charter of Rights and Freedoms which guarantees the right to be "secure against unreasonable search or seizure" and s.24 of which guarantees a remedy for breach of the Charter, would, in my view, not be irrelevant to the common law.

31. In referring to the Canadian cases I would not wish it to be thought that they were concerned with judicial review as such. Each was concerned with the issue of the reception of evidence. None of these cases suggest a test as broad as that adopted in Karina. Further, while 'non-disclosure' is referred to in a number of the Canadian authorities, it appears that this is in the context of deliberate and not inadvertent non-disclosure.

32. I would accordingly hold that the obligation of an informant for a warrant to make disclosure should be stated in terms of good faith and by way of corollary, that a failure in good faith to disclose material relevant to the issue which the Magistrate or Justice has to determine will bring about the result that the discretion exercised by that functionary to issue a warrant will have miscarried by virtue that the procedures required by law for the issue of the warrant will not have been observed.

33. On the facts of the present case, as the joint judgment of Beaumont and Whitlam JJ makes clear, the evidence does not support a conclusion that there has been a misleading omission, (not being a merely inadvertent omission), or that there has been bad faith on the part of the informant. Although the issues are analysed in the joint judgment pursuant to the criterion of fraud, to the extent to which a criterion of "good faith" differs, no different result would obtain here. In the result I too would dismiss the appeal with costs.