FEDERAL COURT OF AUSTRALIA

Ozzy Tyre & Tube Pty Ltd v Chief Executive Officer of Customs [2000] FCA 891

SEARCH WARRANTS – warrant framed as “three condition” warrant is not for that reason invalid – whether the third condition failed to sufficiently limit the warrant because it was unlimited as to time and manner of breach – whether a condition which “rolls-up” allegations of more than one offence invalidates the warrant – there is no requirement that each offence must be stated in a separate paragraph - whether use of the phrase “systematic breach” provided any practical limitation to the scope of search – a search warrant is required to disclose the offence in question so as to indicate the area of the search – the statement of the offence in a warrant need not be made with the precision of an indictment – lack of reference to the mental element of the offence does not invalidate the warrant where the section number and statute prescribing the offence has been stated – a warrant must be considered as a whole – sufficiency is determined from the standpoint of the ordinary person reading the warrant

WORDS AND PHRASES – evidential material

Crimes Act 1914 (Cth) ss 3(1)(b), 3C(1), 3E

Customs Act 1901 (Cth) ss 183UA, 198, 198(3), 198(3)(a), 233(1)(a), 234(1)(a), 234(1)(d), 234(1)(d)(i)

Dunesky v Elder (1994) 54 FCR 540 cited

Grollo v Macauley (1995) 56 FCR 533 cited

Harts Australia Ltd v Commissioner, Australian Federal Police (1997) 75 FCR 145 applied

Malubel Pty Ltd v Elder (1998) 88 FCR 242 referred to

George v Rockett (1990) 170 CLR 104 applied

Beneficial Finance Corporation v Commissioner of Australian Federal Police (1991) 31 FCR 523 applied

Ousley v The Queen (1997) 192 CLR 69 applied

Australian Broadcasting Corporation v Cloran (1984) 4 FCR 151 distinguished

Brewer v Castles (1984) 1 FCR 55; Brewer v Castles (No 2) (1984) 52 ALR 577 cited

Commonwealth of Australia v Northern Land Council (1991) 30 FCR 1 referred to

The Compagnie Financiere et Commerciale du Pacifique v The Peruvian Guano Co (1882) 11 QBD 55 cited

Cosco Holdings Pty Ltd v Federal Commissioner of Taxation (1997) 37 ATR 432 applied

OZZY TYRE & TUBE PTY LTD & ANOR v CHIEF EXECUTIVE OFFICER OF CUSTOMS & ORS

N 448 OF 2000

HELY J

5 JULY 2000

SYDNEY

THE COURT ORDERS THAT:

1.         The application is dismissed with costs.

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

REASONS FOR JUDGMENT

1                     The warrants the subject of challenge in these proceedings authorised the executing officer to search the premises described in the warrant for the kind of evidential material that satisfied all of the three conditions specified in the warrant, and to seize any such thing of that kind found on or in the premises.  A warrant framed as a “three condition” warrant is not, for that reason invalid: Dunesky v Elder (1994) 54 FCR 540; Grollo v Macauley (1995) 56 FCR 533; Harts Australia Ltd v Commissioner, Australian Federal Police (1997) 75 FCR 145, although the drafting technique has been criticised: Malubel Pty Ltd v Elder (1998) 88 FCR 242 at 262.

2                     The First Condition specified in the warrant is things which are originals or copies of enumerated documents or materials; the Second Condition is things which relate to specified companies, people or places; the Third Condition is as follows:

“THIRD CONDITION:           Things as to which there are reasonable grounds for suspecting that they will afford evidence as to the commission of the following offences against the laws of the Commonwealth:

(a)               that Ozzy Tyres and Tubes Pty Ltd did, on or about 13 January, 2000, smuggle goods described on Customs entry 1S.0013.1329J, namely 459 wheels, 60 Tyres, 59 Exhaust Pipes, 300 Nuts for wheels, 75 Turbo Timers and 88 Blow-off Valves (hereinafter ‘the goods’) supplied by Sunshine Industries Ltd of Japan, in contravention of sub-section 233(1)(a) of the Customs Act, 1901.

(b)               that Ozzy Tyres and Tubes Pty Ltd did, on or about 13 January, 2000, evade payment of $56,343 in Customs duty on entry 1S.0013.1329J, in respect of its importation of the goods, in contravention of sub-section 234(1)(a) of the Customs Act, 1901.

(c)               that Ozzy Tyres and Tubes Pty Ltd did, on or about 13 January, 2000, make a statement to Customs that was false or misleading in a material particular in regard to its importation of the goods by understating on the said entry by approximately one-half the true purchase price of the goods, in contravention of sub-section 234(1)(d)(i) of the Customs Act, 1901.

(d)               that Ozzy Tyres and Tubes Pty Ltd did, on or about 28 January, 2000, smuggle, evade duty in respect of, and make a statement that was false or misleading to Customs in respect of, a further 983 Japanese tyres from Heston Trading Pte Ltd of Singapore (hereinafter ‘the further goods’) imported on entry 1S.0032.1770E in contravention, respectively, of sub-sections 233(1)(a), 234(1)(a) and 234(1)(d)(i) of the Customs Act, 1901 by again understating to Customs at the time of entry the true purchase price of the further goods by approximately one-half.

(e)               that Ozzy Tyres and Tubes Pty Ltd did engage in systematic breach of these same 3 Customs Act provisions on its prior importations of car parts, tyres and wheels, its suppliers during the past 5 years being:

1.                  Sunshine Industries Ltd

2.                  Sunshine Ind Ltd

3.                  Heston Trading Pte Ltd

4.                  Plus K Company Ltd Tokyo

5.                  Nankang Rubber Tire Corp Ltd

6.                  Shimizu Enterprise

7.                  Tong Fong Tyres Pte Ltd”

3                     The warrants were issued pursuant to s 198 of the Customs Act 1901 (Cth) (“the Act”).  Section 198(3) of the Act requires that there be stated in the warrant:

(a)                the offence to which the warrant relates; and

            ...

(c)                the kind of evidential material that is to be searched for under the warrant.

“Evidential material” is relevantly defined in s 183UA of the Act, in relation to an offence, as meaning a thing relevant to the offence.  The Act does not follow the form of corresponding provisions in the Crimes Act 1914 (Cth) inasmuch as the latter Act further defines “thing relevant to an ... offence” as meaning (s 3C(1); s 3(1)(b)): “anything as to which there are reasonable grounds for suspecting that it will afford evidence as to the commission of any such offence”.  There is no corresponding provision in the Act.

4                     The applicant’s submissions accept, in principle, that the three stages required by the warrant under challenge operate as a refining process which has the legitimate effect of narrowing, by stages, the scope of the enquiry to be undertaken by those executing the warrant.  However, it is the third condition which substantially confines the search.

First challenge: par (e)

5                     The applicant’s first submission is that by reason of item (e) the third condition fails to limit the warrants sufficiently.  Item (e) is attacked on the basis that it is unlimited as to time (the identification of the suppliers during the past five years does not, expressly or impliedly, limit the period of the offence(s) alleged).  Item (e) is unlimited as to the manner of breach of ss 233(1)(a), 234(1)(a) and 234(1)(d) except that the breach(es) must have occurred “on its prior importations of car parts, tyres and wheels”.  The adjective “systematic” provides no practical limitation at all.  A warrant which is entirely unlimited as to the date of the things to be searched for and seized, and as to the date of a controlling offence, is not a proper exercise of the power conferred by s 198.

6                     Pars (a), (b) and (c) of the Third Condition each relate to goods in the form of car parts, tyres and wheels supplied by Sunshine Industries Ltd of Japan and described on Customs Entry 1S.0013.1329J.  Three offences are alleged to have been committed on or about 13 January 2000 in connection with that entry, namely:

(a)                smuggle goods, in contravention of s 233(1)(a) of the Act,

(b)               evade payment of Customs duty in respect of the importation of the goods, in contravention of s 234(1)(a) of the Act, and

(c)                make a statement to Customs that was false or misleading in a material particular in regard to the importation of the goods by understating on the entry by approximately one-half, the true purchase price of the goods, in contravention of s 234(1)(d)(i) of the Act.

7                     Paragraph (d) of the Third Condition relates to goods in the form of tyres supplied by Heston Trading Pte Ltd of Singapore on entry 1S.0032.1770E.  The allegation is of commission of the same three offences by “again understating to Customs at the time of entry the true purchase price of the further goods by approximately one-half” (my emphasis).

8                     Paragraph (d) is in a “rolled-up” form, not suitable to an indictment.  Nonetheless it identifies the conduct which is said to have occurred on about 28 January 2000 which is alleged to constitute the three offences.  Understating to Customs at the time of entry of the goods, of the true purchase price by approximately one-half, is said to involve the making of a false or misleading statement to Customs in respect of the goods, as well as evasion of duty and smuggling.  I leave aside for later consideration of the significance (if any) of the omission from par (d) of any reference to the mental element of “knowingly or recklessly” which is an ingredient of the offence created by s 234(1)(d).

9                     It was not submitted that a warrant under s 198 may only be issued in relation to one offence.  The form of warrant the subject of consideration in Harts (supra) is set out at 156 ALR 152, at 161.  It alleged the commission of more than one offence, and an example of one such offence is:

“a.       an offence against Section 29D Crimes Act 1914, namely that between 30 June 1991 and 30 June 1995 at Brisbane and elsewhere in the State of Queensland, Steven Irvine HART did defraud the Commonwealth, namely the Australian Taxation Office.”

10                  Items (d) and (e) of the present warrant are poorly drafted.  Whilst a warrant must comply strictly with the statutory conditions of its issue (George v Rockett (1990) 170 CLR 104 at 111), it should be read fairly and not perversely: Beneficial Finance Corporation v Commissioner of Australian Federal Police (1991) 31 FCR 523, at 546.

11                  Paragraph (e) refers to “systematic breach of these same three Customs Act provisions” (my emphasis).  There is no offence established by the Act of “systematic” breach of one or more of its provisions.  However, “systematic” serves to describe, limit or control the type of breaches of ss 233(1)(a), 234(1)(a) and 234(1)(d)(i) to which par (e) applies.  The first two meanings given to “systematic” by the Macquarie Dictionary are:

“1.       Having, showing, or involving a system, method, or plan: a systematic course of reading, systematic efforts.

2.                  Characterised by system or method; methodical: a systematic person, systematic habits.”

12                  When par (e) refers to “systematic breach” the reference is to the same system or method as is described in the preceding paragraphs of the warrant.  That is to say a system or method whereby the true purchase price of goods is understated to Customs at the time of entry by approximately one-half.  “These same three Customs Act provisions” is a reference back to the three provisions referred to in par (d) of the warrant, and earlier in paras (a), (b) and (c).  I reject the submission that the adjective "systematic” provides no practical limitation at all.

13                  Then it is submitted that par (e) is not confined to importations in the last five years from the nominated suppliers.  Par (e) is unconfined as to time, and the portion of the paragraph which appears after the word “wheels”, simply gives some information as to who were the suppliers in the last five years, without confining the operation of the paragraph to that or any other time frame, or, for that matter, to the nominated suppliers.

14                  On a fair reading of the warrant, par (e) describes importations of car parts, tyres and wheels during the past five years from the nominated suppliers where the true purchase price of the goods imported was understated to Customs at the time of entry by approximately one-half, resulting in breach of ss 233(1)(a); 234(1)(a) and 234(1)(d)(i) of the Act.  The words following “wheels”, describe or define the prior importations, otherwise they have no work to do.  The position may have been clearer if the word “from” had been inserted after “wheels”, but on a fair reading of the warrant as drafted that is, in any event, its effect.

15                  Section 198 of the Act does not stipulate, in terms, that a warrant issued on the authority of that section must set bounds to the area of search which the execution of the warrant will involve.  However, cases on s 10 of the Crimes Act 1914 – eg Beneficial Finance Corporation v Commissioner of Australian Federal Police (1991) 31 FCR 523, and on s 3E of the Crimes Act, (which replaced s 10 with effect from 30 November 1994) – eg Harts v AFP (supra) – have held that both under the general law and under s 3E a warrant is required to disclose the offence in question so as to indicate the area of the search.  Those statements are equally applicable to a warrant issued under the authority of s 198 of the Act.

16                  If par (e) were construed in the manner for which the applicant contends, then there would be force in its contention that it fails sufficiently to disclose the offence to which par (e) of the warrant relates so as to indicate the area of the search.  However, in the view which I take as to the proper construction of the paragraph, it sufficiently identifies the offences to which the paragraph relates so as to indicate the area of the search.  Paragraph (e) is not so vaguely worded that a person affected by it cannot know the object of the search: Ousley v The Queen (1997) 192 CLR 69 at 107.

Second challenge: pars (c) and (d)

17                  The offence the subject of par (c) of the warrant is identified as a contravention of s 234(1)(d) of the Act.  That offence is committed where a person knowingly or recklessly makes a statement to an officer that is false or misleading in a material particular.  There is no reference in par (c) to knowingly or recklessly.  Thus the statement of the offence omits one of its elements.

18                  The statement of the offence in a warrant need not be made with the precision of an indictment: Beneficial Finance (supra) at 533.  An error which might vitiate an indictment may not invalidate a warrant.  A legally incorrect formulation of the offence will not invalidate a warrant if the substance of the offence appears so as to indicate the area of search: Beneficial Finance (supra) at 543.

19                  The failure to state the offence in the precise terms of the statute makes no difference to the scope of the search.  The bounds of the search authorised by the warrant do not shift depending upon whether the words “knowingly or recklessly” are included or not.

20                  The offence is identified as a contravention of s 234(1)(d)(i) of the Act.  The headnote to Australian Broadcasting Corporation v Cloran (1984) 4 FCR 151 suggests that the case decides that it is not sufficient for a search warrant under s 10 of the Crimes Act 1914 to describe the particular offence in relation to which seizure is authorised merely by reference to the number of the section of the Act which prescribes such offence.  I am unable to extract a holding to that effect from the judgment of Lockhart J.  His Honour invalidated the warrants not because a description of the offence by reference to the number of the section of the Act which prescribes the offence is necessarily insufficient, but because the operative part of the warrant did not incorporate the section number, and, in any event, because the section prescribed a multitude of offences.

21                  The nature of a warrant and the intrusions which it authorises, are such that it should be a self-contained document.  But, in my opinion, where a warrant describes the offence to which the warrant relates by reference to the number of the section of the Act which prescribes the offence and states the elements of that offence, an omission of the mental element which does not impact upon the scope of the search, does not invalidate the warrant.

22                  The applicant submits that par (d) does not state an offence, but purports compendiously to state three.  An indictment drawn in terms of par (d) might be bad for duplicity.  There is no offence prescribed by the Act in terms of “again” understating to Customs at the time of entry, the true purchase price of goods.

23                  A warrant must be considered as a whole and the sufficiency of its descriptions is one of impression looked at from the standpoint of the ordinary person reading the warrant: Brewer v Castles (1984) 1 FCR 55; Brewer v Castles (No 2) (1984) 52 ALR 577.  In substance, par (d) alleges the commission of the offences referred to in paras (a), (b) and (c), but this time in relation to the importation of tyres on or about 28 January 2000 on entry 1S.0032.1770E.  Sufficient particulars are given of the offences for the purpose of designating the scope of the search.  The “rolling-up” of the three offences into a single paragraph, and the immaterial inclusion of “again”, are not productive of any material vice having regard to the purpose underlying the requirement that the warrant state the offence to which the warrant relates.  Whilst s 198(3)(a) requires the warrant to state the offence(s) to which the warrant relates, there is no requirement that the statement of each offence must be in a separate paragraph.

Third challenge: “reason to suspect”

24                  The warrant recites the satisfaction of the issuing officer that there are reasonable grounds for suspecting that there is or will be in the designated premises “evidential material” which satisfies the three conditions later specified in the warrant.  The warrant authorises search for and seizure of the kind (of) “evidential material” that satisfies those conditions.  The warrant does not contain a statement that “evidential material” has the meaning assigned by s 183UA of the Act, although in a later paragraph of the warrant particular acts are described by reference to the s 183UA definition.

25                  The third condition refers to things as to which there are reasonable grounds for suspecting that they will afford evidence as to the commission of the nominated offences against the law of the Commonwealth.

26                  Section 198 only authorises search for a seizure of “evidential material”.  “Evidential material” is relevantly defined in s 183UA as meaning, in relation to an offence, a thing relevant to the offence.  The applicant contends that the inclusion in the third condition of the warrant of the words which I have emphasised has the result that the scope of the warrant extends beyond that authorised by the Act.

27                  I have already referred to the differences between the provisions of the Crimes Act, and the provisions of the Act in this regard (see [3] above).  A similar argument to the present argument was put to the Full Court in Harts v AFP (supra), but the argument failed because of the specific terms of the Crimes Act to which reference has already been made.

28                  Whilst the warrant is confined in its scope to “evidential material” the mere use of that expression is not a sufficient basis for a conclusion that the expression is used in its defined sense, (cf Dunesky v Elder (1994) 54 FCR 540, at 557), particularly having regard to the inclusion in the warrant of the words which I have emphasised and to the fact that in another part of the warrant, where incorporation of definitions in s 183UA is intended, there is an express statement to that effect.

29                  However, the use of the words which I have emphasised will not invalidate the warrant if things so described are not wider than what would be “evidential material” as defined in s 183UA: Harts v AFP (supra) at 151.  In other words, if a thing would be “relevant” to an offence if there are reasonable grounds for suspecting that it will afford evidence as to the commission of an offence, then there is no invalidity flowing from the use of the emphasised words.

30                  The emphasised words require the existence of facts which are sufficient to induce the requisite suspicion in a reasonable person: George v Rockett at 112, although whether it is suspected that the thing will afford evidence as to the commission of an offence is, in the first instance, a practical matter for the reasonable judgment of the executing officer: cf Malubel at 262.  Suspicion is no more than a “state of conjecture or surmise”, a “slight opinion but without sufficient evidence”: George v Rockett at 115.  Bearing in mind that the power to issue a search warrant is in aid of a criminal investigation, a thing may afford evidence as to the commission of an offence, even though it may not be admissible at a trial: George v Rockett at 119.

31                  A thing is relevant to an offence if it bears upon or is connected with the offence in the sense 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 who committed it, or any other information material to an investigation of those matters: George v Rockett at 120.  In the context of discovery, in Commonwealth of Australia v Northern Land Council (1991) 30 FCR 1 at 23 it was said that a document relates to a matter in question between the parties if it is “reasonable to suppose” that the document contains information which may either directly or indirectly enable a party to advance his own case or damage that of his adversary.  It is the Peruvian Guano test (The Compagnie Financiere et Commerciale du Pacifique v The Peruvian Guano Co (1882) 11 QBD 55, at 60, 63).  Material which has apparent relevance or which could reasonably be expected to throw light on an issue is adjectively relevant to that issue: Cosco Holdings Pty Ltd v Federal Commissioner of Taxation (1997) 37 ATR 432 per Spender J at 439-440.

32                  If there are reasonable grounds for suspecting that a thing will afford evidence as to the commission of an offence, then the thing has an apparent relevance to that offence.  The existence of the reasonable grounds for suspicion provides the requisite nexus between the thing and the offence to satisfy the requirement of relevance.  In my view there is no material difference between the notion that there are reasonable grounds for suspecting that a thing will afford evidence as to the commission of an offence and concepts of apparent or adjectival relevance.  Bearing in mind that a function of a search warrant is as an aid to an investigation, a thing relevant to the offence must include a thing which is adjectively relevant, as well as things which are of substantive relevance.

33                  I can think of no good reason why the words which I have emphasised should be included in Condition Three.  For the reasons which I have given, I do not think that the inclusion of those words leads to invalidity.  Nevertheless, the observations of Madgwick J in Malubel at 262G-263 in relation to the Federal Police are equally applicable to the Australian Customs Service.

34                  In the light of the conclusions which I have reached it is not necessary to address issues of severance, or return of items wrongfully seized.

35                  The application is dismissed with costs.

Associate:

Dated:              5 July 2000