IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY CIV-2014-442-064 [2016] NZHC 2868 IN THE MATTER UNDER BETWEEN AND of an appeal against a decision in the Customs Appeal Authority dated 19 August 2014 delivered by G D Pearson (2014 NZCAA 003/13) Section 272 of the Customs and Excise Act 1996 LAWRENCE REGINALD JURY Appellant THE CHIEF EXECUTIVE OF THE NEW ZEALAND CUSTOMS SERVICE Respondent Hearing: 17 February 2016 Counsel: P R McRae for Appellant A B Goosen for Respondent Judgment: 2 December 2016 JUDGMENT OF CLIFFORD J Table of Contents Introduction... [1] Context... [4] The Authority s decision... [14] The case on appeal... [18] Submissions... [19] Mr Jury... [19] Customs... [23] A preliminary point... [28] The substantive appeal... [40] Overview... [40] The statutory scheme... [42] Burden on appeal... [69] Intention... [78] Result... [95] JURY v THE CHIEF EXECUTIVE OF THE NEW ZEALAND CUSTOMS SERVICE [2016] NZHC 2868 [2 December 2016]
Costs... [96] Introduction [1] Under s 225(1)(o) of the Customs and Excise Act 1996 (the Act), any goods used or intended for use in the manufacture of dutiable goods, otherwise than in licensed manufacturing areas, are forfeited to the Crown. [2] Section 226 of the Act entitles a Customs officer to seize any forfeited goods or any goods he or she has reasonable cause to suspect are forfeited. [3] This appeal raises the issue of an owner s right to the return of goods so seized where the owner is subsequently found not guilty, of being party to unlawful manufacturing. In particular, when forfeiture is challenged where does the burden of proof lie? Context [4] Mr Jury farms some 17 hectares of land near Motueka. He grows a variety of crops. For many years he has grown tobacco as a crop. Initially Mr Jury, and other tobacco growers, enjoyed subsidies paid by the New Zealand Government to help local growers compete, on cost, with imported tobacco. Some years ago that subsidy was suspended. There then ceased to be a commercial market in New Zealand for any significant quantity of locally grown tobacco. Tobacco ceased to be a major crop in the Motueka area. Mr Jury, nevertheless, continued to grow tobacco. [5] Once picked, tobacco leaves must be dried/cured within two days or so in order to avoid deterioration. In other words, all other considerations aside, there is no point in growing tobacco unless it is dried/cured. It is not illegal to grow, dry and store tobacco. [6] By 2010 Mr Jury had approximately 4.8 tonnes of dried tobacco leaf stored in a shed on his property. That tobacco represented the product of a number of seasons crops.
[7] On or about 26 March 2010 Mr Jury sold one 40kg bale of tobacco leaf to a Mr Ferguson, who came to the property and took the bale away on a trailer. Customs officers observed Mr Jury and Mr Ferguson that day. Mr Ferguson was followed by the authorities as he returned to Auckland. When the police searched Mr Ferguson s Auckland property they found some 34kg of cured tobacco, 1.76kg of cut or processed tobacco and various equipment used for the production of manufactured tobacco. [8] On 4 May 2010 Customs and armed police officers executed a search warrant at Mr Jury s Motueka property. They seized the 4.8 tonnes of stored tobacco leaf. In September that year the Customs Service confirmed that the tobacco was forfeited to the Crown. [9] Mr Jury applied in October 2010 for a review of the seizure and forfeiture. Mr Jury was subsequently charged, jointly with Mr Ferguson, with the unlawful manufacture of tobacco. Mr Jury s challenge to the seizure was then put on hold. [10] Mr Jury and Mr Ferguson were tried by a Judge alone in the North Shore District Court over four days in November 2011. On 16 February 2012 Judge Hinton delivered a reserved decision, in which he convicted Mr Jury and Mr Ferguson of manufacturing tobacco. 1 [11] On appeal to the High Court, Mr Jury s conviction was quashed. The High Court found that the Crown had not established beyond reasonable doubt an essential element of that offence: that Mr Jury intended the tobacco to be used for an illegal purpose. 2 [12] After Mr Jury s acquittal Customs considered his challenge to the forfeiture of the tobacco. Following that review, the Chief Executive confirmed her decision. 1 2 New Zealand Customs Service v Ferguson DC North Shore CRI-2011-084-105, CRI-2010-084- 489, 16 February 2012. Jury v Chief Executive of the New Zealand Customs Service [2013] NZHC 59.
Mr Jury appealed that decision to the Customs Appeal Authority (the Authority). The Authority dismissed Mr Jury s appeal. 3 [13] Mr Jury now appeals against the Authority s decision to the High Court. He says that the Authority was wrong to dismiss his appeal. In particular the Authority: (a) wrongly approached the matter on the basis that Mr Jury had to prove he did not have the relevant intention, as opposed to challenging the basis upon which Customs had concluded that he did; and in any event, (b) did not apply the proper test for intention. The Authority s decision [14] The Authority summarised the issues before it as involving the contested positions of Customs that Mr Jury had the cured tobacco to sell to persons who would manufacture that tobacco illegally and not pay excise duty, and of Mr Jury that as it was legal to cultivate, cure, store and sell tobacco, his tobacco should be returned to him. As Mr Jury s appeal was a civil proceeding under the Act Mr Jury had, the Authority reasoned, to prove his case. The standard of proof was the balance of probabilities. [15] The Authority was satisfied, on the basis of his factual findings, that Mr Jury intended to sell the tobacco in question to persons, with a high level of certainty the tobacco would be manufactured in breach of section 68. 4 The Authority concluded that these factual findings made a close examination of the meaning of intention unnecessary. Key to the Authority s factual findings, and his decision, was the absence of a market to sell tobacco in New Zealand to licensed manufacturers. [16] Mr Jury did not give evidence. His partner, Ms Ward, did. The Authority found that her evidence, that Mr Jury intended to dispose of the tobacco for lawful 3 4 Jury v Chief Executive of the New Zealand Customs Service 2014 NZCAA 003/13, 19 August 2014. At [41].
uses, did not square with the realities of what it would have cost Mr Jury to produce the tobacco, and the absence of any market for the tobacco, other than for illegal manufacturing. [17] The Authority concluded: [50] I am satisfied the evidence establishes, on the balance of probabilities, Mr Jury held the tobacco in issue to sell; and the purchasers, with a high degree of certainty, would manufacture the tobacco, and evade the $3.34M (or thereabouts) of duty through breaching section 68. I am satisfied Mr Jury was probably aware of these clear and obvious circumstances. Accordingly, I am satisfied Mr Jury s state of mind constituted intent for the purposes of s 225(1)(o). The case on appeal [18] Mr Jury and the Authority settled the case on appeal in accordance with s 272(4) of the Act. They agreed that the following mixed questions of fact and law arose for determination: (a) (b) (c) (d) Did the Authority err in law and fact by upholding the Chief Executive s decision on the grounds that Customs had (and continues to have) reasonable cause to suspect that the tobacco leaf was intended for use in contravention of s 68 of the Customs and Excise Act 1996? What are the respective burdens of Mr Jury and Customs with respect to disproving or proving any alleged intended use (sufficient to justify return of the tobacco leaf or alternatively to justify continued forfeiture)? Whether the Authority accorded due relevance and weight to the High Court findings of fact regarding: Mr Jury s lack of any proven intention on the Ferguson sale; the lack of any duty on him to enquire; and that he was not shutting his eyes to the obvious, when determining Mr Jury s alleged intention with respect to the remaining tobacco? Did the Authority err in law and fact when it refused to exercise its discretion to grant relief under s 233(1)(c)of the Customs and Excise Act 1996?
Submissions Mr Jury [19] Mr Jury accepted there was, at least, an evidential burden on him on appeal to point to some evidence that his tobacco leaf was not intended for use in illegal manufacturing. He denied, however, that this required him to lead such evidence. That was particularly so in circumstances such as these, where there was absolutely no evidence before the Court of his intention to use the tobacco leaf wrongfully or impermissibly. He was entitled to point to the deficiencies in the Customs evidence, and the large leaps in logic required if it were to be accepted as establishing grounds for forfeiture. [20] A burden therefore remained on Customs to show it ever had a reasonable ground for concluding that Mr Jury s tobacco leaf was forfeited and, moreover, that any such grounds remained after the criminal prosecution was overturned for lack of proof of intent. That approach was consistent with existing authorities on the burden of proof in Customs matters. [21] That approach was also consistent with Customs actions in 2004, when Mr Jury s tobacco had also been seized. At that time, Mr Jury was also under suspicion for possessing tobacco intending it to be manufactured otherwise than in a licensed manufacturing area. On that occasion, Mr Jury had in fact supplied a small quantity of tobacco he had manufactured to family and friends. Mr Jury pleaded guilty to one charge of unlawful manufacture, and was convicted and fined $750. There was no evidence of Mr Jury being, as Customs had at one point suspected, complicit in offending by others who were manufacturing larger amounts of tobacco. On that basis, Customs withdrew all other charges that Mr Jury faced and returned Mr Jury s seized tobacco. [22] As for intention, Mr Jury argued that in s 225(1)(o) the phrase intended for use required the person owning or controlling the goods at the time the forfeiture occurred to have an actual or direct intention to achieve a specific result, rather than an oblique intention. The scheme and purpose of the Act supported a requirement of an actual intention. The Authority had failed to deal adequately with
this point. That was reflected by his reference, when determining that the requisite intention was present, to the balance of probabilities. But even if the second, less demanding, approach was taken to the requirement of intended for use, the evidence fell short of proving this. Mr Jury might have known or been aware of a possibility when he sold the tobacco that it would be illegally manufactured. But that did not mean he had the necessary intention. Customs [23] The Chief Executive had reasonably inferred that Mr Jury knew people who bought his tobacco would unlawfully manufacture it. [24] Under s 267 of the Act, the burden of proof was on Mr Jury in the appeal to the Authority. Mr Jury therefore had to prove on the balance of probabilities there was no legal basis for the seizure. To do so, he had to show the tobacco was not forfeited goods and that the respondent did not have reasonable cause to suspect that it was forfeited goods. He also had to produce evidence to show that he did not intend the tobacco to be unlawfully manufactured and that the respondent did not have reasonable cause to suspect that the tobacco was intended for unlawful manufacture. In relying on an alleged lack of evidence, Mr Jury sought to impermissibly reverse the onus and place it on Customs. [25] Mr Jury had not given evidence, and had failed to discharge his onus under s 267 of the Act. Customs was not relying on a presumed or deemed intention: rather Mr Jury did not produce any evidence from which the Authority could conclude: (a) Mr Jury did not intend his tobacco to be unlawfully manufactured; or (b) Customs did not have reasonable cause to suspect that he did. [26] There was no case law, Customs acknowledged, on the meaning of the word intended in s 225(1)(o). Forfeiture was a means by which Customs enforced customs law. Its effect was essentially punitive. In that context it was instructive to refer to the way the courts interpreted intention in criminal law.
[27] Mr Goosen for Customs referred to the High Court decision on criminal intent of R v Wentworth, 5 where the majority decision of the English Court of Appeal in National Coal Board v Gamble was cited with approval. 6 In Wentworth the charge was manufacturing heroin. There Fisher J concluded that in a legal context intention was taken to include both ultimate (desired) consequences and incidental (undesired but foreseen) consequences, provided those incidental consequences were foreseen with sufficient certainty. Fisher J used the terms direct intention to refer to the former and oblique intention to refer to the latter. Mr Goosen argued, therefore, that, in the context of s 225(1)(o), intention encompassed both direct intention and oblique intention. Accordingly, Mr Jury had to prove that when he sold tobacco he did not foresee with virtual or moral certainty that the tobacco would be unlawfully manufactured. He had not done so. A preliminary point [28] Notwithstanding that the Authority had agreed the case on appeal, Customs first argued that Mr Jury s appeal had lapsed because he had failed to submit the case on appeal to the Authority within two months after the date the Authority gave its decision. That time period was mandatory and was unable to be extended. The appeal should not, therefore, be considered. [29] Appeals to the High Court from decisions of the Authority are provided for by s 272 of the Act. As relevant, s 272 provides: 272 Appeals to High Court (1) Any party who is dissatisfied with a decision of an Authority under this Act as being erroneous in point of law or fact may appeal to the High Court. (2) Every such appeal shall be made by filing a notice of appeal in the appropriate registry of the High Court within 20 working days after the date of the decision appealed against or within such further time as the High Court may allow. (3) Where a notice of appeal is filed in accordance with subsection (2), the appellant shall also, within the time specified in that subsection, file with the Authority a notice of appeal specifying the registry of the High Court in which the appellant intends to file the case on 5 6 R v Wentworth [1993] 2 NZLR 450 (HC). National Coal Board v Gamble [1959] 1 QB 11.
appeal, and, except in the case of an appeal by the chief executive, shall give security for the costs of the appeal of such amount and in such form as may be fixed by the Authority. (4) The appellant shall prepare a case setting forth the facts and the questions of law or fact arising for the determination of the High Court, and shall, within 2 months after the date of the giving by the Authority of his or her decision, submit the case to the Authority. (5) An Authority may return to an appellant a case submitted to the Authority under subsection (4) or further submitted under this subsection for such amendment as the Authority shall direct, and the appellant shall further submit the case to the Authority within such time as the Authority shall allow. (6) Where an Authority accepts a case submitted or further submitted to him or her under subsection (4) or subsection (5), the Authority shall sign the case, and shall deliver the case to the appellant. (7) The appellant shall, within 14 days after the date of receipt of the case delivered by the Authority pursuant to subsection (6), transmit it to the Registrar of the High Court in the registry specified in the notice of appeal, and the Registrar shall thereupon enter the appeal for hearing at the first practicable sitting of the court. (8) On the hearing of the appeal the High Court may, if it thinks fit, cause the case so stated to be sent back to the Authority for amendment, and subsections (5), (6) and (7) shall, with any necessary modifications, apply as if the case had been submitted to the Authority under subsection (4). [30] Whilst Mr Jury filed his notice of appeal in the High Court and with the Authority in time, he did not submit his case on appeal to the Authority within the two month period from the date of the Authority s decision. Mr Jury s case was submitted to the Authority some five working days late. [31] The Authority drew that matter to Mr Jury s attention, and questioned his jurisdiction to accept the case. The Authority maintained the view that, because of the late filing of the case on appeal, there was no jurisdiction. The Authority recognised, however, that the High Court could take another view. Sensibly, he concluded: In this case, there are contestable issues and I am satisfied signing the draft case on appeal is a proper means of putting the matter into the hands of the correct decision-maker in circumstances that do not prejudice either party.
[32] Before me, and largely in reliance on the decisions in Hawkes Bay Hide Processors 7 and Attorney-General v Howard, 8 Customs argued that the Authority did not have jurisdiction to agree the case, as it had been submitted to him out of time. Mr Jury s response was that, given the appeal was filed in time under s 272(2) of the Act, the appeal was properly before the Court. Even if the Authority did not have jurisdiction to extend time, the High Court did. In these circumstances, there was no prejudice involved, the appeal had merit and therefore if necessary time should be extended. [33] Hawkes Bay Hide Processors involved an appeal against a decision of the Taxation Review Authority (TRA). Such an appeal was then provided for at that time by s 43 of the Inland Revenue Department Act 1974. The question was whether the requirement to provide the case stated to the TRA within two months was mandatory, so that failure to do so brings the appeal to an end, or directory, so that failure to do so may be excused. Whether a requirement is mandatory or directory depends on the proper interpretation of the statutory scheme. Under s 43, the initial notice of appeal was filed only with the Authority, not with the High Court. It was not until all steps had been taken, and the case was accepted and signed by the Authority, that it was transmitted to the High Court to be set down for hearing. Richardson J summarised the statutory scheme under s 43 in the following terms: 9 All the steps which the appellant must take form a sequential series of acts upon which the institution of a valid appeal in the High Court depends. In my view there is no justification for drawing a distinction in principle between filing the initial notice of appeal with the Authority and transmitting the case to the High Court. It is only at the latter step that the High Court becomes seized of the appeal. That is a necessary step to bring into play the procedural rules of the High Court. Up to that point the institution of a valid appeal is dependent upon compliance with the requirements of the relevant Inland Revenue legislation. Subsection (6) cannot be considered in isolation. At each of the three linked steps required to be taken by the appellant in the institution of the appeal a specified time limit is imposed without provision for expansion. In each case Parliament has set the limit it considers appropriate for completion of that particular step by providing a fixed time for that step. In prescribing those limits it must be taken to have weighed all relevant public interest considerations. 7 8 9 Hawkes Bay Hide Processors of Hastings v Commissioner of Inland Revenue [1990] 3 NZLR 313, (1990) 12 NZTC 7,241 (CA). Attorney-General v Howard [2010] NZCA 58, [2011] 1 NZLR 58, (2010) 20 PRNZ 593. Hawkes Bay Hide Processors, above n 7, at 321.
[34] On that basis he concluded: There is no room in the statutory scheme for moderating the impact of those statutory limits by substituting a different timetable allowing longer time limits to be decided on a case by case basis by the Courts. [35] Attorney-General v Howard concerned a number of interlocutory procedural issues. 10 The substantive issue was whether Joseph Williams J had been correct to set aside a decision of Associate Judge Gendall. The Associate Judge had effectively extended the time limit for an appeal from the Human Rights Review Tribunal to the High Court to be served on the affected party and to be filed with the Tribunal. The Attorney-General sought to appeal Joseph Williams J s decision. 11 The Court of Appeal first had to decide whether leave was required to bring the appeal; if it was, it then had to decide whether leave should be granted, a question which in the normal way involved a consideration of merits. At issue on that point in Howard was the relationship between s 123 of the Human Rights Act 1993, and the High Court rules. As relevant, s 123 provided: 123. Appeals to High Court (4) Every appeal under this section shall be made by giving notice of appeal within 30 days after the date of the giving by the Tribunal in writing of the decision to which the appeal relates. (8) Subject to the provisions of this Act, the procedure in respect of any such appeal shall be in accordance with the rules of court. [36] Under the High Court Rules then in force an appeal was brought when the notice of appeal was filed in the High Court, filed with the decision maker and served on all directly affected parties. In concluding that the statutory scheme precluded the High Court allowing an extension of time for filing and service, Glazebrook J adopted the following reasoning of the High Court. Williams J first noted the confusion and tension within the statutory language. There the Judge concluded: 10 11 Attorney-General v Howard, above n 8. Attorney-General v Howard (2009) 19 PRNZ 324 (HC).
[45] The simpler and, in my view preferable approach, is to construe s 123(4) so as to require all those with a clear interest in the appeal to be given notice of it within the 30-day appeal period. That would obviously include the High Court, the Tribunal at first instance and the parties to the dispute. Such an approach would meet the intent of the provision which is self evidently to ensure that those with an interest in the appeal find out about it as soon as possible. It does not really make sense to construe it as if prompt filing in the High Court is all that is required. That would be to diminish the interests of the litigants before the [Tribunal]. They would after all have at least as great a stake as the High Court itself, in knowing of an appeal. [37] The regime for appeals in s 272 of the Act is materially different to those at issue in Hawkes Bay Hide Processors and Howard. Under the Act the submission of the case on appeal to the Authority is not a statutory requirement to bring the appeal. In contrast to the provisions at issue in the Hawkes Bay Hide Processors and Howard, s 272 of the Act provides that the appeal is brought when the notice of appeal is filed in the High Court. The High Court may extend that time period. There is no limitation on that discretion. The High Court could, therefore, extend the period for the filing of the appeal to a date later than two months from the Authority s decision. By necessary implication, the High Court can in this way extend the time for submitting the case on appeal to the Authority. [38] In these circumstances, it is not necessary for me to determine whether the Authority himself has the power to extend the time limit provided for the submission of the case on appeal to him. However, I prefer the view that this provision is of a different nature to the provisions by which an appeal is initiated. The different nature of that provision is reflected in the considerable flexibility in the process for finalisation of the case on appeal. In that context, and as regards the statutory scheme, in my view there is no jurisprudential reason why the Authority should not, in appropriate circumstances, agree to an extension of time for that step of the process. [39] Mr Jury was only five days late in submitting the case on appeal. The case on appeal raises issues of some importance. Customs identified no prejudice to it arising from the late filing of the case on appeal. In those circumstances, and to the extent necessary, I therefore extend the time for the initial submission of the case on appeal to the Authority. I turn now to the merits of Mr Jury s appeal.
The substantive appeal Overview [40] Mr Jury s substantive appeal raises two issues. They are: (a) who has the burden of proof; and (b) what is required for proof of intention. [41] Those issues are to be considered in the context of the scheme of the Act relating to forfeiture, seizure and condemnation. The statutory scheme [42] In Williams v Attorney-General, Richardson J described the statutory scheme, as it then applied under the Customs Act 1966 (the 1966 Act), in the following terms: 12 The ordinary statutory sequence in the class of case before the Court is thus: 1 the cause of forfeiture accrues; 2 the forfeited goods are seized; 3 there is a deemed condemnation or judgment of condemnation; and 4 forfeiture may be waived unconditionally or on terms and conditions. [43] By way of explanation: (a) Forfeiture, is the passing of title in the relevant goods to the Crown. (b) Seizure, speaks for itself. (c) Condemnation, is judicial confirmation that the goods in question were forfeited to the Crown when the cause of action arose. 12 Williams v Attorney-General [1990] 1 NZLR 646 at 676.
Condemnation transfers title of the goods at the point that the act giving rise to condemnation occurs: it is said to relate back to that act. (d) Waiver, allows the Minister, notwithstanding forfeiture and condemnation, to direct the restoration of any goods or property seized following forfeiture in his discretion. Waiver operates prospectively, not retrospectively. Waiver of forfeiture was regarded as an act of clemency, a matter for the Crown s merciful consideration. [44] In Williams a vessel was seized because, unbeknownst to its owner, it was used to import heroin. The owner subsequently applied for waiver. [45] The 1966 Act stipulated various categories of goods as forfeited. For example, dutiable or restricted goods found on any ship, boat or aircraft being unlawfully in any place (s 270(a)). Other provisions provided that goods and other property would be forfeited where there was an intent to defraud the custom s revenue. Section 275 gave customs officers the power to seize forfeited goods or any goods which they had reasonable and probable cause for suspecting to be forfeited. [46] Under the 1966 Act condemnation occurred automatically: (a) following seizure unless, within one month after the day of seizure, notice disputing the forfeiture was given to the Collector; or (b) on conviction for any offence where the 1966 Act so provided. [47] Where automatic, or deemed, condemnation did not occur then, quoting from the judgment of Richardson J in Williams: 13 Proceedings for condemnation are instituted by action in rem, either in the High Court (s 280) or in the District Court if the value of the goods does not exceed $12,000 (s 282). Where the cause of forfeiture is established in relation to the seized goods, judgment of condemnation is given. 13 At 675.
[48] A notice disputing forfeiture was sufficient, by itself, to prevent automatic condemnation. If such a notice was filed Customs was required to proceed by action in rem. In doing so Customs had the benefit of ss 299 and 300 of the 1966 Act. Section 299(1) provided: 299 Burden of proof in proceedings under the Customs Acts (1) In any proceedings under the Customs Acts instituted by or on behalf of or against the Crown (other than a prosecution for an indictable offence) every allegation made on behalf of the Crown in any statement of claim, statement of defence, plea, or information, and relating to the identity or nature of any goods, or to their value for ad valorem duty, or to the country or time of their exportation, or to the fact or time of their importation, or to their place of manufacture, production, or origin, or to the payment of any duty on them, or to any act done or omitted with respect thereto by any person, shall be presumed to be true unless the contrary is proved. [49] The question of proof of intent to defraud was dealt with explicitly in subs (5), which provided: (5) The provisions of this section shall extend and apply to proceedings in which the existence of an intent to defraud the revenue of Customs is in issue. [50] Section 300 then dealt with the question of justification, of particular relevance in cases of seizure on suspicion of forfeiture, in the following terms: 300 Burden of proof of justification In all proceedings that are instituted against the Crown, or against the Minister or an officer of Customs or member of the Police or any other person, for any seizure, arrest, or other act done in pursuance of the Customs Acts, and in which the existence of reasonable or probable cause or of any other justification for such act is in issue, the burden of proving the want of reasonable or probable cause or the absence of such justification shall be on the plaintiff. [51] In very simple terms, therefore, notwithstanding that the Commissioner had commenced condemnation proceedings, it was the owner of the goods who was required to prove the Commissioner s allegations as to the cause of forfeiture for example of an intent to defraud were wrong and also, where relevant, to prove a lack of justification for seizure.
[52] When the Act was passed in 1996, a number of charges were made to that scheme: (a) By s 225, the categories of forfeited goods were expanded. In particular, s 225(1)(o) provided: (1) The following goods shall be forfeited to the Crown: (o) any goods, equipment, or apparatus used or intended for use in contravention of section 68 and any goods manufactured wholly or partly using such goods, equipment, or apparatus. The inclusion of goods intended for use represents something of a departure from the traditional in rem understanding of the forfeiture and condemnation jurisdiction. It is difficult to characterise the intention of the person who owns or controls the goods in question as being a characteristic of those goods themselves and, hence, in rem. (b) By s 231, a right of appeal against seizure termed an application for an order disallowing seizure to the District or High Court (depending on value) was established. (c) Customs was no longer required to bring actions for condemnation when a notice disputing forfeiture was filed. Rather, by s 234 condemnation was deemed to occur: (i) if there was no appeal under s 231; or (ii) if any such appeal was dismissed. [53] Section 239 of the Act replaced s 299 of the 1966 Act. Section 239 provided, and still provides: 239 Burden of proof (1) In any proceedings under this Act instituted by or on behalf of or against the Crown (other than a prosecution for an offence against section 182(2), 183(2), 205(6), or 209(5)) every allegation made on
behalf of the Crown in any statement of claim, statement of defence, plea, or charge, that relates to (a) (b) (c) (d) (e) (f) the identity or nature of any goods; or the value of any goods for duty; or the country or time of exportation of any goods; or the fact or time of the importation of any goods; or the place of manufacture, production, or origin of any goods; or the payment of any duty on goods, shall be presumed to be true unless the contrary is proved. (2) The presumption in subsection (1) shall not be excluded by the fact that evidence is produced on behalf of the Crown in support of any such allegation. (3) The provisions of this section shall extend and apply to proceedings in which the existence of an intent to defraud the revenue of the Customs is in issue. (4) Notwithstanding the foregoing provisions of this section, in any proceedings for an offence against this Act where it is alleged that the defendant intended to commit the offence, the prosecution has the burden of proving that intent beyond reasonable doubt. [54] Neither s 300, nor any variant thereof, was included in the 1996 Act. [55] As before, customs officers were given the power to seize forfeited goods and any goods that he or she has reasonable cause to suspect are forfeited s 226(1) of the Act. [56] A new right of appeal to the newly established Customs Appeal Authorities, was provided for. Such appeals could be brought against customs rulings. Under Part 9 of the Act such rulings could be sought from Customs as to tariff and excise classifications. [57] In the case of such appeals, s 267 provided: 267 Grounds of appeal and burden of proof
(1) Subject to subsection (2), in an appeal the appellant is limited to the grounds stated in the appellant s notice of appeal, and the burden of proof is on the appellant. (2) The Authority may, either on the application of the appellant or of its own motion, amend the grounds stated in the notice of appeal. [58] Section 267 did not, at that time, apply to appeals against seizure as those were made to the District or High Court. [59] There are important differences between the 1996 and 1966 Acts in the area of forfeiture, seizure and condemnation: (a) The burden shifting presumption in s 239 has been limited. The reference to any act done or omitted with respect thereto by any person was not continued. On its face, the section now only applies to a limited number of customs facts. (b) As s 239 applies only to allegations by or on behalf of the Crown statements of claim, statements of defence, pleas or informations 14 its effect does not extend to appeals, either to Customs Appeals Authorities against customs rulings or to the courts for disallowance of seizure. (c) Subsection (4) of s 239 makes explicit that Customs has the onus of proving intent where intent is an element of an offence. Subsection (4) would appear to have been enacted for clarity as, on its terms, s 239(1) does not apply to such an allegation. Subsection (4) makes clear that although subs (1) applies where intent is an element of an offence, it does not shift the burden as regards that element of the offence. [60] The Act was amended again in 2008, in response to the Law Commission s Report Forfeiture under the Customs and Excise Act 1996. 15 14 15 Now charges. Law Commission Forfeiture under the Customs and Excise Act 1996 (NZLC R91).
[61] The Law Commission recommended that a new scheme of detention followed by confiscation replace the forfeiture, seizure and condemnation approach of the Act. In that scheme, a claimant could apply to the Chief Executive for review of detention, with a right of appeal to the Authority, the burden of proof would lie with the appellant. Goods could only be confiscated (title passing to the Crown) once that process was complete. In 2008 Parliament effectively adopted the procedural aspects of the Law Commission s recommendations (review followed by appeal), without adopting the detention/confiscation scheme. [62] Thus, the Customs and Excise Amendment Act 2008 repealed ss 231 to 235 of the Act and replaced them with the new scheme, now found in ss 231 to 235B, whereby a person with an interest in goods seized as forfeited, or as suspected to be forfeited, can first apply to the Chief Executive for review of her decision. Such an application can be made on the following grounds: (a) that there was no legal basis for the seizure of the goods; and/or (b) that the applicant should, in all the circumstances, be granted relief. 16 [63] Review of seizure therefore provides both for a challenge to the lawfulness of the seizure and for the exercise of what used to be termed clemency, notwithstanding the lawfulness of the seizure. [64] Having conducted her review, the Chief Executive has three options: (a) She may dismiss the application. 17 (b) She must, where she is satisfied there is no legal basis for the seizure, disallow the seizure and direct the return of the goods from the person from whom they were seized or who in her opinion is entitled to their possession. 18 16 17 18 Section 231(3)(a) and (b). Section 233(a). Section 233(b).
(c) She may, where she is satisfied that it is equitable to do so, having regard to the matters specified in section 234, grant relief by way of the return or delivery of the goods to some person or their sale and the payment proceeds in a manner she determines. 19 [65] Condemnation is dealt with in s 235A, which provides: 235A Condemnation of seized goods (1) If the chief executive dismisses an application for review, the dismissal is deemed to be an order for condemnation of the goods to the Crown. (2) The order for condemnation of the goods takes effect on the close of the 20th working day after the chief executive gives his or her decision on the application unless an appeal against the decision on the application is lodged before then. (3) If no application for review is made within the time specified by section 231(2), or if such an application is discontinued, the seized goods are condemned to the Crown. [66] Section 235B creates a right of appeal to a Customs Appeal Authority. Where such an appeal is brought within time, s 235C provides for condemnation in the following terms: 235C Condemnation of goods subject to appeal The goods that are the subject of an appeal under section 235B are condemned to the Crown if (a) (b) the appeal is discontinued; or the decision of the Customs Appeal Authority on the appeal neither (i) (ii) disallows the seizure of the goods under section 233(1)(b) (as applied by section 255(1)); nor grants relief under section 233(1)(c) (as applied by section 255(1)). [67] The provisions in Part 16 of the Act, relating to Customs Appeal Authorities, were not amended when the jurisdiction of those Authorities was extended to appeals 19 Section 233(c).
against dismissal of applications for review of seizure. Section 267 of the Act applies accordingly. [68] Section 272 of the Act provides for appeals to the High Court. Such appeals are as of right. As already noted, s 272(1) provides: 272 Appeals to High Court (1) Any party who is dissatisfied with a decision of an Authority under this Act as being erroneous in point of law or fact may appeal to the High Court. Burden on appeal [69] The Authority was correct to proceed on the basis that Mr Jury carried the burden on his appeal. Section 267(1) makes that clear. That is also the general position as was made clear by the Supreme Court in Austin, Nichols & Co Inc v Stichting Lodestar. 20 As relevant here, the Chief Justice commented: In either case [a reference to appeals on the record and de novo appeals], the appellant bears an onus of satisfying the appeal court that it should differ from the decision under appeal. It is only if the appellate court considers that the appeal decision is wrong that it is justified in interfering with it. (Citations omitted) [70] The real question in this appeal is whether the Authority was correct in determining what Mr Jury carrying the burden on appeal meant. The Authority understood that to mean Mr Jury was not only required to prove that the Chief Executive had been wrong to dismiss his application for review: Mr Jury also had to prove that there were no reasonable grounds for seizure, if not in the sense of what had happened in 2010, then in terms of the Chief Executive s decision that Customs was entitled to retain Mr Jury s seized property. [71] As can be seen from the foregoing analysis, there is no basis in the Act for that conclusion. The Chief Executive is not presumptively correct where, through an officer, she concludes that there are reasonable grounds to seize forfeited goods on 20 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.
the basis they are intended for use in breach of the Act. There are a number of reasons why that is the case: (a) First, to the extent that s 239 creates a presumption of truth, it does so with respect to allegations in statements of claim, statements of defence, pleas or charges: it does not do so with respect to conclusions the Chief Executive reaches and on which she acts, other than to the extent those conclusions become allegations in that defined category of documents. (b) Secondly, an allegation of an intent does not come within the six categories of allegation found in subss (a) to (f) of s 239(1). (c) Finally, the express terms of s 239(4) states in any proceedings for an offence against the Act the prosecution must prove intent beyond reasonable doubt. It is not an offence under the Act to intend that goods be unlawfully manufactured. To that extent, s 239(4) does not apply directly where forfeiture, based on such an intent, is challenged. Nevertheless, and given the punitive nature of forfeiture, there is nothing in the Act to suggest that the same approach should not be taken to proof of intent where intent is the cause of forfeiture. [72] Section 300 of the 1966 Act did contain a far more general reversal of the burden as regards matters of justification. It was, however, repealed and not replaced. [73] Therefore, and as Mr Jury argued, the burden meant it was his job to satisfy the Authority that the Chief Executive had erred. The Chief Executive might, for example, have erred on a question of law. In that context, the Authority s understanding that the standard of proof was the balance of probabilities can be seen as inapt. Rather, and as the Supreme Court put it in Iti v R: 21 [30] In any event, we see no reason to depart from what this Court described in R v A as the well established view that the use of the word 21 Iti v R [2011] NZCA 114, citations omitted.
satisfied invites a Judge to undertake an evaluation of all relevant matters and reach judgment as to whether or not he or she is satisfied. We agree, as was said in R v A, that the use of the word satisfied in s 361D)3) does not imply any onus or standard of proof is required. As this Court observed in Wenzel, s 361D(3) requires a judicial assessment of the circumstances that the prosecution contends bring the case within the section. We add that the approach to the meaning of satisfied in R v A is consistent with that of the Supreme Court in a different context, professional discipline, in Z v Dental Complaints Assessment Committee. and Z v Dental Complaints Authority when discussing what it meant for a court to be satisfied : 22 [96] Before it is able to exercise its powers to impose penalties, the Tribunal must in the present case be satisfied that a practitioner is guilty of detrimental acts or omissions, or of professional misconduct. Being satisfied in this context simply means that the Tribunal has made up its mind that is the case. The term satisfied does not require that the Tribunal should reach its judgment having been satisfied that the underlying facts have been proved to any particular standard. Nor does the Act or any applicable procedural rule stipulate a standard of proof which the Tribunal must apply. That question must accordingly be decided on general principles having regard to the statutory context. [74] Although I consider the legislation on this matter to be clear, I am fortified that my interpretation is the appropriate one by reference to s 22 of the New Zealand Bill of Rights Act 1990 (NZBORA). [75] In Alwen Industries Ltd v Comptroller of Customs, 23 Blanchard J considered the significance of the passage of NZBORA for the 1966 Act s scheme for forfeiture, seizure and condemnation. Alwen concerned goods that had been seized as suspected to have been forfeited: the issue was whether the Comptroller could accept security in place of the seized goods pending confirmation of forfeiture. In terms of NZBORA s guarantee of the right to be secure against unreasonable search or seizure, Blanchard J reasoned: 24 Here there has been a seizure. Mr Ruffin conceded that clearly there has been both a search and a seizure. Section 21 of the New Zealand Bill of Rights Act provides: 22 23 24 Z v Dental Complaints Assessment Committee [2008] NZSC 55, citations omitted. Alwen Industries Ltd v Comptroller of Customs (1993) 1 HRNZ 574 (HC). At 586.
Every one has the right to be secure against unreasonable search or seizure, whether of the person, properly or correspondence or otherwise. In the words of Richardson J in R v Jeffries [1994] 1 NZLR 290; (1993) 1 HRNZ 478 at p 300; p 490: A search is an examination of a person or property and a seizure is a taking of what is discovered. Later in the same judgment his Honour said p 301; p 492: A search will be unreasonable if the circumstances giving rise to the search make the search itself unreasonable or if an otherwise initially reasonable search is carried out in an unreasonable manner. I would respectfully suggest that the same dictum is adaptable to a seizure. It will be unreasonable if the circumstances giving rise to it make the seizure itself initially unreasonable or if an otherwise reasonable seizure is continued in an unreasonable manner. [76] In my view, and in light of the protections affirmed by NZBORA in s 21, very clear statutory language indeed would be required to interpret the scheme of the Act in the way the Authority did. No such language was considered appropriate by Parliament. [77] I therefore uphold that aspect of Mr Jury s appeal. In my view, the Authority proceeded on the basis of a significant error in law. Intention [78] Section 68 of the Act prohibits the manufacture of tobacco other than in licensed areas. Section 200(1)(e) of the Act creates the offence of manufacturing tobacco in contravention of s 68. It is not, however, an offence to possess goods intending that they be used in contravention of s 68. Goods intended to be used in contravention of s 68 are, nevertheless, forfeited. Such goods may be seized if Customs has a reasonable cause to suspect that intent. [79] Mr Ferguson and Mr Jury faced charges under s 200(1)(e). Mr Ferguson raised the justification of personal use. The Judge found he had not established that justification. That finding was not challenged. Mr Jury was charged under s 66(1)
of the Crimes Act 1961, as well as s 200(1)(e) of the Act, as being a party to Mr Ferguson s unlawful manufacture. Section 66(1) provides, as relevant: (1) Every one is a party to and guilty of an offence who (b) does or omits an act for the purpose of aiding any person to commit the offence; [80] In Mr Jury s case, and as Allan J described matters: The argument for the respondent is that the appellant did an act (selling the tobacco leaf) for the purpose of aiding Mr Ferguson to commit the offence of manufacturing tobacco without the requisite licence. [81] Mr Jury appealed his conviction on the basis that the District Court Judge had been wrong to find that he had the necessary purpose. In this appeal against the Authority s decision, Mr Jury argued that the approach Allan J took to that question was the required approach in this appeal when assessing the Authority s decision on intention. [82] The relationship between purpose for s 66(1)(b) purposes and intention as generally required for criminal offences has been discussed in a number of cases. In the context of s 66(1)(b) the issue is whether purpose requires a subjective desire that an unlawful consequence occurs; i.e. that is what the defendant wants. It is in that context the concepts of direct and oblique intentions have been referred to. In R v Wentworth, Fisher J discussed that relationship in the following terms: 25 The key word in s 66(1)(b) is "purpose". An accused is liable only if his own act was done for the "purpose" of aiding the principal to commit the primary crime. Glanville Williams appears to invest the word "purpose" with the notion that the accused must desire the commission of the crime, or his own assistance in the commission of the crime, as an end in itself. On this view it would not be enough that the accused saw the crime, or assistance in committing the crime, as merely an incidental means to some other desired end. In this Mr Williams seeks to draw a distinction between "purpose" and "intention". In a legal context "intention" is normally taken to embrace both ultimate (desired) consequences and incidental (undesired but foreseen) consequences so long as the latter are foreseen with sufficient certainty when the course of action is deliberately embarked upon. "Direct intention" may be used to 25 R v Wentworth, above n 5, at 456.
refer to the former and "oblique intention" the latter. There is room for argument as to the degree of certainty with which the accused must predict the incidental consequence (Orchard, "Criminal Intention" [1986] NZLJ 208: "virtual" or "moral" certainty is sufficient; query anything less) but in principle both types of intention qualify. Contract killers usually want money, not the death of their victims per se. Receipt of money is the ultimate, desired, consequence. Death of the victim is the incidental, perhaps regretted, consequence. If it is clear that the intended course of action will result in both, both are said to be intended. [83] With reference to R v Wentworth, and to Pulman 26 where that analysis was adopted, Allan J correctly explained the law as regards purpose in the following terms: [24] Accordingly, the prosecution was not obliged to establish beyond reasonable doubt that Mr Jury actually wanted or desired to assist the manufacture of tobacco by Mr Ferguson. It was sufficient if it could be shown to the necessary standard that Mr Jury himself knew that it was virtually certain that Mr Ferguson would manufacture tobacco from the raw material supplied by the appellant. It is not sufficient that it was more likely than not that manufacturing would follow, or even that it was highly likely. The notion of virtual certainty is to be equated with the ordinary burden of proof carried by the prosecution in a criminal case. [84] The issue here is not the relationship between intention and purpose. It is the meaning of the word intent itself in s 225(1)(o). It is the presence of that intent which renders conduct (the possession of tobacco), which is itself lawful, subject to the punitive response of forfeiture. In that context, the following explanation of with intent crimes found in Simester and Brookbanks Principles of Criminal Law is a helpful starting point: 27 With intent or ulterior intent crimes Sometimes the intentional doing of an actus reus is not itself an offence and becomes criminal only when done for some further purpose. For example, if D carries a crowbar in his bag he does nothing wrong, but if he carries the crowbar with intent to use it in a burglary, he is guilty of an offence. 28 Crimes of this sort require what is often called an ulterior intent. 29 The main feature of such crimes is that they specify, as part of the mens rea, an intent to do something that is not part of the actus reus. In the example above, the actus reus is simple possession of the crowbar it does not matter 26 27 28 29 R v Pulman HC Auckland CRI-2007-057-2376, 27 August 2010. AP Simester, WJ Brookbanks and Neil Boister Principles of Criminal Law (4th ed, Thomson Reuters, Wellington, 2012) at [4.2.7]. Section 233(1)(a). See generally Horder, Crimes of ulterior intent in Simester and Smith (eds.), Harm and Culpability (Clarendon Press, Oxford, 1996) 153.