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CASE NOTE ON CEO –v- LABRADOR LIQUOR WHOLESALE PTY LTD
HIGH COURT OF AUSTRALIA 5 SEPTEMBER 2003
HIGH COURT RAISES THE BAR ON STANDARD OF PROOF
IN CUSTOMS PROSECUTIONS
The High Court, in a landmark decision, has ruled that Customs must apply
the criminal standard of proof, i.e. beyond reasonable doubt, in Customs
prosecutions under the Customs Act. The case arises from the
particular context of the Customs Act which governs the basis
for these types of Customs prosecutions.
Where an importer contravenes the Customs Act and it is alleged
that this has been done fraudulently so that the Commonwealth is deprived
of the Customs duty that would have otherwise been payable, then proceedings
are taken against the importer generally, in one of two methods.
The first method is for a prosecution to be instituted by the Director
of Public Prosecutions for an offence against the Crimes Act.
This has not been so common in the past but is becoming more and more
common. Generally, however, this type of proceeding will only be taken
where there is very clear cut evidence against the importer. This is because
the nature of these proceedings are clearly criminal proceedings and the
case against the importer must be proved beyond a reasonable doubt, i.e.
the criminal standard of proof.
The other way that proceedings can be instituted against an importer
is pursuant to section 247 of the Customs Act. This, in essence,
allows for proceedings to be issued in the Supreme Court (or the appropriate
lower court) 'in accordance with the usual practice and procedure of a
court in civil cases or in accordance with the directions of the Court
or a Judge.' In practice, this is meant that proceedings are issued on
behalf of the CEO of Customs through the Australian Government Solicitors
office by way of a civil writ. This writ seeks to claim the duty said
to have been evaded and then seeks to extract monetary penalties pursuant
to the relevant sections of the Customs Act.
The issue that has troubled the courts around Australia for many years
in respect of these 'civil prosecutions' is the question of what is the
applicable standard of proof that should be applied. In the past, there
has been inconsistencies between different court levels and different
States as to how this question was to be decided. In Victoria for example,
the Magistrates' Court would apply the criminal standard, whereas the
County Court and Supreme Court would apply the civil standard. The application
of the civil standard, however, was often affected by what was known as
the rule in the Briginshaw case. This required that if the civil standard
were to be applied, the nature of the issue would necessarily affect the
process by which reasonable satisfaction is attained and exactness of
proof would be expected.
It can be appreciated that all of the above created a lot of uncertainty
in terms of the way that these civil prosecutions, which were sometimes
known as quasi-criminal matters, were handled in the courts.
The other complicating matter in these civil prosecutions is the ability
of Customs to rely on what are called averments under section 255 of the
Customs Act. This section provides that Customs, in any prosecution,
can aver as to matters of fact and that declaration will be prima facie
evidence of the matter averred. Customs cannot aver as to matters of law
or intent. In a sense, the averment procedure reverses the onus of proof.
It is not used in Crimes Act prosecutions, but is used in Customs
It can be appreciated that combining the use of averments and the lower
standard proof gives Customs the ability to pursue claims which otherwise
would not meet the normal criminal law thresholds.
In the Labrador case, the High Court has made a detailed analysis
of the legislation, Parliament's intentions and the history of the legislation
and the way it has been judicially interpreted. In a unanimous decision,
the High Court has ruled that the criminal standard of beyond reasonable
doubt is to apply in these type of Customs prosecutions. It did, however,
rule that the proceedings nevertheless were still to be conducted on the
basis of civil procedure and that, therefore, provisions of the particular
relevant Evidence Act relating to civil cases would apply in the trial
of the relevant proceedings.
Kirby J noted:
This court has consistently held that, to deprive a person of a
fundamental right or privilege recognised by the law, clear legislative
provisions are required. This is especially so where that right or privilege
may be viewed as a basic doctrine of the law or, in effect, a "practical
guarantee of fundamental rights" and something more than a mere
rule of evidence law applicable in proceedings. In part, this approach
to statutory meaning arises from the respected Court's accord to the
legislature assuming, as they do, that the Parliament would not intend
drastic consequences for ordinary civil entitlements without expressly
considering and approving them. In part, the rule derives from the judicial
recognition that "vigilance is required against accidental or unintended
erosions of that right".
Hayne J Noted:
The standard of proof to be attained in Customs prosecutions or
excise prosecutions is not to be fixed by court established rules of
practice about commencing prosecuting or proceeding with a prosecution.
Nor is to be fixed by directions given on those subjects by a court
or judge. Standard of proof is not to be fixed by either of those methods
because it does not fall within the identified subject matters: commencing
prosecuting or proceeding with a prosecution.
In other words, Hayne J (who wrote the major judgment) was noting that,
while section 247 permitted the Judge to give directions as to the way
the case was to be run in terms of certain rules, the section did not
give the Judge the power to set the standard of proof.
Hayne J also made some interesting observations on the consequences of
the application of the criminal standard of proof in terms of the way
the averment provisions are to be used. He said:
No matter what standard of proof is adopted, the averment provisions
may, in certain circumstances, confront a Judge with the difficulty
of resolving a competition between the requirement of the averment provisions
that, as a matter of law, certain facts may, but need not, be taken
to have been established to the requisite standard, and evidence tendered
in contradiction of that conclusion. No matter what the standard of
proof, the Judge can resolve that competition in favour of the party
making the averment only if persuaded of the existence or occurrence
of the fact averred.
CONCLUSION AND CONSEQUENCES
This case will make it much harder for Customs to be able to successfully
run civil prosecution cases under the Customs Act. They will
now have to run these to the criminal standard of proof. Furthermore,
the High Court has given the strong indication that even the use of averments
will not be of great assistance because the Judge nevertheless, will still
need to be satisfied on a criminal standard as to the correctness of the
matters being averred to.
It has long been the writer's view that people who offend against the
Customs Act in a fraudulent matter are guilty of a criminal offence.
As such, they should be prosecuted under the Crimes Act and face
the threat of jail. By failing to adopt this course, Customs has long
given the impression that offences against the Customs Act are
simply 'white collar crimes' that can be disposed of by the payment of
a fine. While the fines applicable can sometimes be very substantial,
it is the writer's opinion that the wrong message has been sent to the
commercial community by Customs failing to treat these Customs Act
transactions as the criminal matters that they really are. This High Court
decision is, accordingly, very welcome.
LOUIS GROSS B. Juris., LL.B.
LOUIS GROSS & ASSOCIATES
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