Wong as Executrix of Estate of Wong v Kelly, Comptroller-General of Customs S255/1999 [2000] HCATrans 724 (24 November 2000)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S255 of 1999

B e t w e e n -

DIANA YAO HO WONG as Executrix of the Estate of JOHN CHU TING WONG

Applicant

and

FRANCIS IVOR KELLY, COMPTROLLER-GENERAL OF CUSTOMS

Respondent

Application for special leave to appeal

GLEESON CJ

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 24 NOVEMBER 2000, AT 9.47 AM

Copyright in the High Court of Australia

MR P.R. GRAHAM, QC: If the Court pleases, I appear with my learned friend, MS D.B. McGOVERN, for the applicant. (instructed by Bradfield & Scott)

MR P.S. HASTINGS, QC: I appear for the respondent, may it please your Honours. (instructed by the Australian Government Solicitor)

GLEESON CJ: Mr Graham?

MR GRAHAM: There are two applications before the Court, your Honours. One is the application for special leave, the other is an application by the executrix of the estate of the first applicant, Mrs Wong, to be substituted for the first applicant.

GLEESON CJ: Is that opposed, Mr Hastings?

MR HASTINGS: No, your Honour.

GLEESON CJ: Yes, you have that order for substitution.

MR GRAHAM: Thank you. In relation to the leave application, your Honours, there are four issues which merit the grant of special leave. Firstly, there is the miscarriage of justice point where the Court of Appeal confused the status of the two applicants and transposed them, treating the first applicant as the primary offender and the second applicant as a person concerned in the offences of the primary offender, whereas they had, in fact, been charged and convicted the other way around.

McHUGH J: This argument is based on an error in the summary of the facts, is it not? Does it amount to anything more than that? It did not carry through or affect the court's reasoning.

MR GRAHAM: I think that is fair, your Honour.

McHUGH J: Yes.

MR GRAHAM: But there are three very important questions of law which warrant the consideration by this Court. The first question is, in relation to the offences of smuggling and evasion of the payment of duty which is payable, when are the offences committed? The Court of Appeal said they are committed when an Entry for home consumption is made. That cannot be right for this reason, that in respect of the three shipments concerned in this case, two of the entries were advance entries. Two of them were before the ship had even arrived in port, and obviously, at that stage, no duty is payable because duty is exigible when the ship comes into port of discharge with a view to delivering the goods to the consignee, so that that has to be wrong. Secondly, with respect, they are wrong even in respect of the entry that was made after the ship came into port because the offence of smuggling is committed, in our submission, when the ship arrives in port, not when an entry is later made in respect of it.

The second question for leave is that there is a requirement for intent in respect of both the offences of smuggling and of evasion of the payment of duty which is payable. In respect of smuggling, there must be intent to defraud the revenue. In the case of evasion of duty which is payable, there must be an intentional avoidance of the obligation to pay duty in circumstances where the person knows or suspects that he is liable to pay duty. Now, in our respectful submission, nobody, other than the true owner, could be guilty of the offence of smuggling or evasion of payment of duty because they alone would be the person who could relevantly hold the intent. If I could develop - - -

McHUGH J: But given the wide definition of "owner" in section 4, is it not fair to say that the issue of whether or not it was Rizoli or the House of Teak was the owner of the goods turned on findings of fact?

MR GRAHAM: No, your Honour. Your Honour, the court below said that the offences were committed by the making of the entries, and for the reason I first advanced in respect of the question of timing, that, with respect, has to be wrong. In relation to the question of - - -

McHUGH J: Can you take us to the relevant passage?

MR GRAHAM: Page 119, point 4, your Honour, paragraph 45 in the reasons for judgment which follows on from what they also said at page 110, in paragraph 8 at line 29.

McHUGH J: But your argument is that the House of Teak was the owner, is it not?

MR GRAHAM: That is correct, your Honour.

McHUGH J: Yes.

MR GRAHAM: Rizoli had nothing to do with this matter, apart from being named as the owner in the Entries for home consumption.

McHUGH J: That is why I was asking you whether, given the wide definition of "owner" in section 4 of the Act, as to whether or not this was not a question of fact. .....got it wrong.

MR GRAHAM: Well, can I develop it this way, your Honour. Duty is exigible when goods are imported. Justice Windeyer said that in Forbes v Traders' Finance and one needs to look at the way that duty is applicable in Customs cases. Under section 18(1) of the Customs Tariff Act 1982 , duty is made payable on goods when they are imported. Under section 153 of the Customs Act 1995 , the duty is:

payable by the owner of the goods.

So that, to answer your Honour Justice McHugh, the question is, should the word "owner" in section 153 of the Customs Act be given its extended meaning contained in section 4, or is the restricted meaning of "true owner" applicable in those circumstances?

GLEESON CJ: Mr Graham, was the choice confronting the trial judge between Rizoli Pty Limited and House of Teak Furniture Pty Limited?

MR GRAHAM: Yes, your Honour. The House of Teak Furniture Pty Limited was the person that was invoiced. It was the consignee, it had the bills and the bills of lading were issued to it.

GLEESON CJ: I understand that, but the trial judge and the Court of Appeal seem to have treated the making of that choice as a question of fact to be determined on the evidence. Now, were they wrong about that?

MR GRAHAM: Yes, because, your Honour, they did it by saying that they were entitled to rely upon the wide definition of "owner".

GLEESON CJ: Together with the evidence?

MR GRAHAM: Yes.

McHUGH J: It is very wide, "holding himself out to be the owner", or having an interest, or being "possessed of", or "having any control of".

MR GRAHAM: Yes, but, your Honour, the question arises as to whether or not such a person can relevantly have an intention to defraud the revenue or an intention to avoid an obligation to pay duty which they know or suspect to be payable by them. The problem there is that if you look at the extended definition of "owner" which, of course, is by the preliminary words of section 4(1), "except where otherwise clearly intended" , and the court below did not refer to the judgment of Justice Mahoney, with which Justice Priestly agreed in Darch, where his Honour had said that, plainly, in many instances in the Customs Act, the word "owner" has to be given a narrower meaning because of those words. I think Justice Davies in Ace Customs Service, to like effect, said that the word "owner" has to be given a narrow meaning.

But the question that can well be asked is this. If you look at the extended definition of "owner", it includes, for instance, exporter, it would include the ship owner. Can a ship owner be guilty of evading the payment of duty which is payable in respect of goods because he is simply the owner within the extended meaning? Can the exporter, a company called Artford Industrial Limited in Hong Kong, be liable for the payment of duty in respect of goods? Can he evade the payment of duty which is payable?

GLEESON CJ: Did anybody argue in this case that the entry document itself constituted an admission that Rizoli Pty Limited was the owner?

MR GRAHAM: No, your Honour, not in those terms. I think not, your Honour.

McHUGH J: But the court below seemed to take the view it was a section 36 case. You say it is a 37 case, do you?

MR GRAHAM: One entry was under section 36, two were under section 37, but, of course, under section 38 - - -

McHUGH J: But, relevantly, this was decided under 36, was it not?

MR GRAHAM: That is the way they decided it.

McHUGH J: Yes.

MR GRAHAM: I mean, the facts were against them. They should have had regard to section 37 in respect of two of them. Can I put it this way, your Honour: if you make an Entry for home consumption, as we did in two instances here, and it is quite clear on the entries themselves, they say "Ship is due on" a nominated date which is after the date of the entry. So, it is clear they are section 37 entries. What happens if the ship sinks? Are you guilty of smuggling in respect of the goods if the goods never reached the port? What happens if, under section 38, the entry is withdrawn? Under section 38, any entry can be withdrawn. Does that mean that you committed an offence but you have ceased to commit once you put in a withdrawal of the entry. The idea of linking smuggling and evasion of payment of duty to the making of the entry has to be wrong, and the question of when the extended definition of "owner" is applicable is one that clearly needs to be addressed by this Court in the context of offences which require intent. Can each of the - the combinations and permutations would allow about ten different people to be owner, if the extended definition would apply - can each of those ten be convicted on the basis that they can have an intent of defrauding the revenue, or intentionally avoiding the payment of duty which they know or suspect to be payable by them? So, in our respectful submission, this case cries out for a grant for special leave to enable those issues to be considered.

The next matter that I would wish to address is the lack of retainer point. The court below held at page 117, in paragraph 36 line 21, that a retainer "may be implied" and, furthermore, that it may be implied from conduct - sorry, they held that it "may be implied from conduct" and that it may be implied from conduct after the event. Your Honour, one only has to look at the headnote in Wright v Castle, to which the court was taken, where it is stated in these terms:

A Solicitor may, in the exercise of the general authority given him by his Client, defend a suit, but cannot institute one without a special authority for the purpose.

Now, if you happen to be the solicitor X you can defend a suit for the person, but you need special authority to institute proceedings for that person. What the court said is, that is not what is required, what the court said is that you can have an authority which is implied from conduct, but worse still, implied from conduct in nine years - sorry to interrupt, your Honour - in nine years after the event.

McHUGH J: I know, but, rightly or wrongly, the Court of Appeal got the principle right, did they not? They drew a conclusion that AGS had been retained prior to the institution of the proceedings. Now, then, can you put it any higher than they got it wrong as a matter of fact?

MR GRAHAM: For two reasons, they got it wrong because, as a matter of principle, it cannot be implied from conduct. An authority to enable a solicitor to start an action for a plaintiff requires an express authority.

GLEESON CJ: But not a written authority.

MR GRAHAM: It does not have to be written, your Honour. It requires an express prior authority. What they said is, you can have an implied authority, which we say is wrong. Secondly, they say, the implication can arise from conduct over a period of nine years after the event.

GLEESON CJ: Mr Graham, realistically, there is another matter to be considered, is there not? Where the solicitor involved is the Australian Government Solicitor and the client involved is the Comptroller-General of Customs, the circumstances that may permit you to infer the existence of authority might be rather different from the circumstances you would be looking for in what I would call other cases. I am not saying there is some kind of presumption of regularity within the Commonwealth Government, I am simply saying that as a matter of drawing inferences, the identity of the persons involved may be relevant, may they not?

MR GRAHAM: I need very briefly to take the Court's time by going to the supplementary application book and just pointing out a couple of documents which demonstrate that, on the facts, no such presumption could arise.

GLEESON CJ: But I was not putting it as a presumption, I was just putting it as a relevant factual circumstance.

MR GRAHAM: Yes, well, your Honour, let me just say that what the documents demonstrate is that there is a procedure in Customs that if you want to get the authority of the Comptroller-General, under section 245 of the Customs Act, to institute a Customs prosecution, there is a procedure of serving up a memorandum to the Comptroller-General which he signs off on by signing a formal authority to prosecute which contains a retainer of the Australian Government Solicitor. In relation to Rizoli, there was such a document. There was an attempt to secure one in respect of, amongst others, Mr Wong, but that was side-tracked and did not eventuate. So, it is quite clear that they had a firm procedure and there is an admission by the respondent that there is only one authority to prosecute that they have been able to find, that there is none that is applicable to Mr Wong, the only one that they could find is one in respect of Rizoli and, indeed, quite decently and fairly, at the heel of the hunt they drew this to our attention and thought it might be relevant, which is what prompted, of course, the retainer application, even after the hearing had concluded, whilst his Honour had the judgment reserved.

The third special leave point which is important, in our respectful submission, is the question of whether or not his Honour wrongfully admitted unsigned records of interview under section 86 of the Evidence Act New South Wales. Section 86 of the Evidence Act says that in criminal proceedings a record of interview is only admissible if it is signed, and the question is, was the Customs prosecution a criminal proceeding within the meaning of the words "criminal proceeding" in the Evidence Act, where used in section 86.

Now, their Honours did not address the question of statutory construction in that regard. They addressed it at pages 121 to 122 and what they said at page 122, paragraph 63 is:

Notwithstanding the passage of the Evidence Act (NSW) Evans v Button is still good law.

Your Honours know that there has long been a contention which this Court is yet to address as to - - -

McHUGH J: Yes, I know that, but did we not refuse special leave in D'Aquino's Case on this point?

MR GRAHAM: No, your Honour, I looked at the transcript of that on the Internet and your Honours refused in that case on the basis that it involved the construction - Justice Brennan, I think, I think he was sitting - said, "It involves the constructions of some badly worded sections, why should we waste our time construing those sections, when you, the Customs, can have the Act amended". That is the basis on which it was refused. The question of whether it is criminal or civil did not, in fact, arise in the Court's consideration of that leave application.

But in D'Aquino, Justice Hunt in the Court of Criminal Appeal and the other judges with him, said they are criminal proceedings. In Evans v Button the court had said they are civil proceedings. So that that contest is yet to be resolved by this Court, but we are not concerned with the historic approach. What we are now concerned with is the Evidence Act 1995 as to whether or not they are criminal proceedings. What is particularly important is this, that in the definition of "criminal proceeding" the definition excluded prescribed taxation offences under the Taxation Administration Act 1995 , section 8ZJ. Those prescribed taxation offences have all the hallmarks of being the same as customs prosecutions under sections 244 and following of the Customs Act. They are proceedings for the recovery of pecuniary penalties, they can be brought in State Supreme Courts and civil procedure is followed.

The legislature expressly excluded from the definition of "criminal proceeding" prescribed taxation offences, but did not expressly exclude customs prosecutions. Now, some might say, "Well, it does not follow that they were all necessarily included in the first place", but the question is, if you look at the words of the definition of "criminal proceeding", the first question is, are customs prosecutions prosecutions for an offence? In our respectful submission, plainly they are. One only has to look at the orders that Justice Carruthers made to see that my clients were convicted of offences. So, one would assume that the proceedings by which those orders were made were prosecutions for offences. But the more telling point is this, that the New South Wales Evidence Act, as your Honours know, is modelled on the Commonwealth Evidence Act. Indeed, where sections are different, the numbering jumps. If you leave out a section in the State Evidence Act, the numbering leaves out the section altogether, so as to maintain the harmony.

GLEESON CJ: Thank you, Mr Graham.

MR GRAHAM: May I just finish one very brief point, your Honour.

GLEESON CJ: Yes.

MR GRAHAM: Your Honour, section 70(2) of the Commonwealth Evidence Act expressly deals with Customs prosecutions, so that they were clearly in the mind of the legislature when they drafted all these provisions of these Acts. If they had them in mind in dealing with one part of the Commonwealth Evidence Act, why did they not also have them in mind and exclude them in relation to the definition of "criminal proceeding"?

McHUGH J: That reference is missing in section 70 of the New South Wales Evidence Act, is it not?

MR GRAHAM: Yes, it is not there.

McHUGH J: No.

MR GRAHAM: But the definition of "criminal proceeding", your Honour, is the same in both Acts.

McHUGH J: Yes.

MR GRAHAM: The New South Wales definition is derived, in effect, from the Commonwealth Act. Plainly, the draftsmen of the Commonwealth Act clearly had Customs prosecutions in mind when he was drafting the Act.

GLEESON CJ: Thank you. Yes, Mr Hastings.

MR HASTINGS: If it please your Honours. Your Honours - - -

McHUGH J: Mr Hastings, before you start, the summary of argument is not up to standard for what this Court would expect, particularly from the Commonwealth, and with great respect to the counsel who signed it, to put a seven line argument in this case is hardly very satisfactory from the Court's point of view. I mean, it is just conclusory. One would expect more assistance from respondents and particularly the people for whom you appear.

MR HASTINGS: Your Honour, I can only say it is a view with which I would readily agree. I think the author of the document has perhaps taken advantage of seniority, certainly not something that I would purport to, but I take your Honour's point on board and I agree without demur.

Your Honours, can I just deal with the ownership point first. With respect to my learned friend, in my submission, the passage in the judgment of the Court of Appeal, on which great emphasis has been placed, has been distorted. Your Honours have been taken to page 119 of the application book in which it was said that:

The smuggling of the secreted goods under s 233 (1)(a) of the Act was effected by the delivery to customs of the entry document -

and it was put to your Honours that it was there said that the offence was, in effect, constituted by the Entry for home consumption. In my submission, that is not what is being said in that passage. All that his Honour is saying is that the means by which the smuggling took place was the delivery of an Entry for home consumption showing those details. The passage does not purport to indicate that the judge took the view that the offence was constituted by or completed by the delivery of the Entry for home consumption.

Otherwise, your Honours, we would say that the broad definition of "owner" in section 4 clearly permits either of the parties mentioned in this case to be capable of committing the offence against sections 233 and 234. Your Honours will have noted that in both of those sections the provision is not limited to offences by owners. It simply refers to "any person who" and proceeds to provide the offence, so that, in our submission, the broad definition of "owner" permits either company in this case to have committed the offence, and in the light of the evidence to which reference is made on the same page, that the agent had been told by Mr Wong to use the company, Rizoli Pty Ltd as the owner in the customs documents. We would submit that the evidence supported the finding which was made.

Your Honours, in relation to the authority issue, we would submit that that was simply a matter of fact which does not require intervention by this Court. We would submit that the principles are accurately adopted and that it was thereafter just a matter of fact for the court below to confirm the decision at first instance on that issue.

In relation to the third point, your Honours, we would say that there is an established line of authority which has held that proceedings of this nature are civil in substance. What we would also point out, that in this particular case, the point was of limited significance. It only went to the question of whether section 86 of the Evidence Act prohibited the production of what might be described as the unsigned record of interview. Presumably, if that application had been successful, the next step would have been for the prosecution to have sought to lead the evidence orally, and one would assume that that would have been a successful application because the evidence indicated that one of the Customs officers involved had made a lengthy statement on the day of the interview, which would have been contemporaneous, and pursuant to section 32 of the Evidence Act, one would assume that that witness could therefore have refreshed his memory and effectively put before the court precisely the same content as was contained in the document which it was, in fact, admitted into evidence. Given that this was a judge alone trial and not a jury trial, in our submission, the outcome was of little practical effect because, at the end of the day, the judge would either have the unsigned record of interview or the transcript of that day's hearing in which that material would be set out. So, for those reasons, your Honours, we would submit that this is not an appropriate matter for the grant of leave.

GLEESON CJ: Thank you, Mr Hastings. What do you say about that last point, Mr Graham, that if the document had been excluded, then the contents of the document could have been put in evidence orally?

MR GRAHAM: Your Honour, the fact of the matter is that there was oral evidence called from the witnesses themselves who were the source of the records of interview and the judgment of Justice Carruthers - and I am sorry, I cannot give you the page at the moment - but he clearly refers on a couple of instances to the fact that he reaches his conclusions because of the oral evidence, the other documents and because of the records of interview. I can give your Honours the references if you will allow me just a moment to find them.

GLEESON CJ: We will take it that what you said is right.

MR GRAHAM: Thank you, your Honour.

GLEESON CJ: The applicants seek to raise three matters as warranting a grant of special leave to appeal. The first two of those matters appear to the Court, on analysis, to turn upon findings of fact that were made by the primary judge and confirmed by the Court of Appeal. Those concurrent findings of fact were supported by ample evidence and the first two points do not raise matters appropriate for a grant of special leave to appeal.

In relation to the third matter, the applicant seeks to have this Court review a settled line of authority. However, the significance of the point of law established by that line of authority was marginal in the circumstances of the case and accordingly the case does not provide an appropriate vehicle for consideration of that point, even if it were otherwise appropriate for the Court to consider revisiting that line of authority. In those circumstances the Court is of the view that the application should be refused with costs.

AT 10.17 AM THE MATTER WAS CONCLUDED