Sidebottom v Commissioner of Taxation
[1999] FCA 1328
•24 SEPTEMBER 1999
FEDERAL COURT OF AUSTRALIA
Sidebottom v Giuliano [1999] FCA 1328
ADMINISTRATIVE LAW – judicial review – request for accounting under s 60 of the Excise Act 1901 (Cth) – whether decision to serve request is a decision of an administrative character made under an enactment – improper purpose – contempt of court – excess of power
PRACTICE AND PROCEDURE – contempt of court – whether Federal Court should deal with contempt of another superior court of record – whether request for information constitutes contempt
Excise Act 1901 (Cth) s 60
AdministrativeDecisions (Judicial Review) Act1977 (Cth) s 3, Sch 1 item (e)American Cyanamid Co v Ethicon Ltd [1975] AC 396 applied
AustralianBroadcasting Tribunal v Bond (1990) 170 CLR 321 applied
Brambles Holdings Ltd v Trade Practices Commission (1980) 32 ALR 328 referred to
Collector ofCustoms for the State of NSW v Southern Shipping Co Ltd (1962) 107 CLR 279 applied
Deputy Commissioner of Taxation vClarke and Kann (1984) 1 FCR 322 applied
Hamilton v Oades (1989) 166 CLR 486 referred to
Hammond v Commonwealth of Australia (1982) 152 CLR 188 referred to
John Fairfax & Sons Pty Ltd v McRae (1955) 93 CLR 351 cited
Naismith v McGovern (1953) 90 CLR 336 applied
R v Associated Northern Collieries (1910) 11 CLR 738 applied
Re Syme; Ex parte Worthington (1902) 28 VLR 552 referred to
Saunders v Federal Commissioner ofTaxation (1988) 88 ATC 4349 cited
Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96 referred toRAYMOND SIDEBOTTOM, LESLEY SIDEBOTTOM, AUSTRALIAN PETROLEUM SUPPLIES PTY LTD, GV LIQUID TANKERS PTY LTD and RPM COMMODITIES PTY LTD v E GIULIANO, THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA and LIONEL BARRIE WOODWARD, THE CHIEF EXECUTIVE OFFICER OF CUSTOMS
V179 of 1999
JUDGE: FINKELSTEIN J
DATE: 24 SEPTEMBER 1999
PLACE: MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
V179 OF 1999
BETWEEN:
RAYMOND SIDEBOTTOM , LESLEY SIDEBOTTOM, AUSTRALIAN PETROLEUM SUPPLIES PTY LTD, GV LIQUID TANKERS PTY LTD and RPM COMMODITIES PTY LTD
ApplicantsAND:
E GIULIANO, THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA) and LIONEL BARRIE WOODWARD, THE CHIEF EXECUTIVE OFFICER OF CUSTOMS
Respondents
JUDGE:
FINKELSTEIN J
DATE:
24 SEPTEMBER 1999
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
On 29 October 1998 the Chief Executive Officer of Customs (“CEO”) instituted an excise prosecution against the applicants in the Supreme Court of Victoria. The prosecution was begun on the civil side by writ of summons pursuant to s 134 of the Excise Act 1901 (Cth). According to the statement of claim delivered with the writ the CEO seeks declarations that each applicant has committed offences against the Excise Act and asks for orders that they be convicted of those offences. The CEO also seeks the imposition of fines and penalties in accordance with Part X of the Excise Act and orders for reparation under s 21B of the Crimes Act 1914 (Cth).
The prosecution arises against the following statutory background. By s 54 of the Excise Act the manufacturer of excisable goods or, where the owner of excisable goods enters them for home consumption, the owner of the goods, is required to pay to the Collector of Customs the excise duty on those goods. Certain blended petroleum products are excisable goods for the purposes of the Excise Act: see generally the definitions in s 77G. Petroleum blending that produces an excisable petroleum product is taken to constitute the manufacture of that product: s 77H. Accordingly the manufacturer is liable to pay the excise on the excisable blended petroleum product.
The allegations that are made against the applicants in the Supreme Court of Victoria are set out in the statement of claim. What follows is a brief summary of those allegations. The third applicant, Australian Petroleum Supplies Pty Ltd (“APS”), is a distributor of petroleum products from a depot in Saxton Street, Numurkah. The fifth applicant, RPM Commodities Pty Ltd (“RPM”), is the owner of the Saxton Street property and leases it to APS. The fourth applicant, G V Liquid Tankers Pty Ltd, operates tankers that are used to transport petroleum products purchased or sold by APS. Between 1 July 1996 and 1 August 1997 G V Liquid Tankers Pty Ltd delivered certain petroleum products to the depot: the quantity, type of product and date of delivery are set out in two lengthy schedules to the statement of claim. The products that were delivered to the depot were then blended with other substances producing blended petroleum products. The first applicant and the second applicant, each a director of APS, RPM and G V Liquid Tankers Pty Ltd initiated, controlled and directed each blending of petroleum products. The excisable blended petroleum products were then sold by APS as diesel fuel and removed from the depot without being entered for home consumption. The dates of removal and the quantities of blended petroleum products removed on each date are set out in the third schedule. The blended petroleum product produced on each occasion of blending was an excisable blended petroleum product in respect of which excise has not been paid. The total amount of excise that remains unpaid exceeds $6,390,000.
Each applicant is said to have committed the following offences against the ExciseAct in relation to each occasion on which excisable blended petroleum products were produced: manufacturing excisable goods without a licence in contravention of s 35; having in its or his possession, custody or control manufactured excisable goods upon which excise duty had not been paid in contravention of s 117(1); evading payment of duty in contravention of s 120(1)(iv). It is also alleged that each applicant committed the following offences in relation to each occasion when excisable blended petroleum products were removed from the depot: moving, altering or interfering with goods subject to the control of customs without being authorised to do so in contravention of s 61; unlawfully conveying excisable goods upon which excise duty had not been paid in contravention of s 119(1).
An excise prosecution is a proceeding which in most respects is governed by the rules of civil procedure: see s 136 of the Excise Act. This notwithstanding, the proceeding is in a very real sense penal in nature (R v Associated Northern Collieries (1910) 11 CLR 738) and in the absence of statutory provision to the contrary, the plaintiff is not entitled to discovery or interrogation (Naismith v McGovern (1953) 90 CLR 336 at 342) except where the defendant is a corporation (Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96).
In accordance with the rules of civil procedure in the Supreme Court, the applicants delivered their defence to the statement of claim. It is not a very informative document. However, it does indicate that the principal grounds upon which the applicants will resist the relief sought by the CEO are: first, that no blending of petroleum products took place at the depot; and second, if blended petroleum products were produced and sold as diesel fuel, removed from the depot and not entered for home consumption, none of the applicants were aware of the events occurring that constituted the commission of the offences alleged and none of them intended to commit any offence.
It is also necessary to mention that prior to the institution of the excise prosecution, Customs officers had executed search warrants in respect of various categories of business documents during the course of an investigation into whether the applicants had committed offences against the Excise Act. The execution of those warrants resulted in the production of a large quantity of business records by the applicants, as well as the production of business records by companies dealing with APS. It seems reasonable to assume that a good deal of the detailed information that appears in the statement of claim, and in the schedules to the statement of claim, is derived from those documents.
The events that give rise to the proceeding in the Federal Court are as follows. Section 60 of the Excise Act relevantly provides:
“(1) Where a person (including a manufacturer) who has, or has been entrusted with, the possession, custody or control of excisable goods which are subject to the control of the Customs:
(a)fails to keep those goods safely; or
(b)when so requested by a Collector, does not account for those goods to the satisfaction of a Collector;
the person shall, on demand in writing made by a Collector, pay to the Commonwealth an amount equal to the amount of the Excise duty which would have been payable on those goods if they had been entered for home consumption on the day on which the Collector made the demand.
…
(2) An amount payable under subsection (1), (1A) or (1B) of this section shall be a debt due to the Commonwealth and may be sued for and recovered in a court of competent jurisdiction by proceedings in the name of the Collector.
…
(4) This section does not affect the liability of a person arising under or by virtue of:
(a)any other provision of this Act; or
(b)a security given under this Act.”
On 16 March 1999 the first respondent, Mr E Giuliano, an officer employed in the Australian Taxation Office, wrote a letter in common form to each applicant requesting each applicant to account for excisable goods under s 60(1). The letter advised that inquiries by the Australian Customs Service had revealed that:
“(a)Between 1 July 1996 and 31 July 1997 (‘the Period’) quantities of petroleum products including diesel fuel, solvent, and kerosene were transported to the depot operated by Australian Petroleum Supplies Pty Ltd at Numurkah, Victoria (‘the Depot’). Details of the movements of petroleum products to the Depot are set out in the attached Schedule.
(b)During the Period, petroleum products were mixed with other substances on or about each of the dates when there was a movement of one or other of those products into the Depot (as referred to in the Schedule), thereby resulting in the production of excisable goods on each occasion.
(c)No excise duty has been paid on any of the excisable goods produced at the Depot as referred to in sub-paragraph (b).”
The letter concluded with the following paragraph:
“As a Collector within the meaning of the Excise Act 1901, I hereby request that you, as a person with possession, custody or control of the excisable goods produced during the Period, account for those goods. If the goods cannot be satisfactorily accounted for within seven (7) days of the date of this letter, it is my intention to formally demand an amount equal to the amount of Excise duty in accordance with sub-section 60(1) of that Act.”
Section 60(1) does not impose a tax. It imposes upon a person who has or has been entrusted with possession of excisable goods a liability to make a payment in the nature of compensation for the loss of excise duty in the two circumstances mentioned: Collector ofCustoms for the State of NSW v Southern Shipping Co Ltd (1962) 107 CLR 279 at 292 per Kitto J. It is a provision for the protection of the revenue: Southern Shipping at 288 per Dixon CJ . The obligation that is imposed upon the person who is or has been entrusted with possession of excisable goods is to ensure that the goods do not irregularly find their way into home consumption. Accordingly, goods will be accounted for if the person parted with possession of them in a manner authorised by the Excise Act. Otherwise the duty to keep the goods appears to be absolute apart from, perhaps, inevitable accident: Southern Shipping at 287 per Dixon CJ.
The applicants say that the requests are contrary to law, that they are an improper exercise of the power conferred by s 60(1) being an abuse of that power and that they constitute a contempt of the Supreme Court of Victoria. In particular, the applicants contend that the requests were made for an improper purpose, namely to obtain information for the purpose of the excise prosecution being information that would not be available by the processes of the Supreme Court, thereby conferring an unauthorised advantage on the CEO. They also allege that the requests were intended to or could have the effect of prejudicing the applicants in their defence of the excise prosecution.
The applicants commenced this proceeding against Mr Giuliano, the Commissioner of Taxation and the CEO. The relief the applicants seek include declarations of invalidity, punishment for contempt of Court and injunctions restraining the respondents from making a demand under s 60(1) for the payment of excise duty.
The jurisdiction of the Court is invoked under two heads viz, the AdministrativeDecisions (Judicial Review) Act1977 (Cth) (“Judicial ReviewAct”) in respect of the decision to make the requests and s 39B(1) of the Judiciary Act 1903 (Cth) in relation to that decision and the alleged contempt. Section 39B(1) provides:
“The original jurisdiction of the Federal Court of Australia includes jurisdiction with respect to any matter in which a writ of mandamus or prohibition or an injunction is sought against an officer or officers of the Commonwealth.”
The matter that is presently before the Court is an application for interlocutory injunctions pending the trial of the proceeding. The specific orders that are sought are that:
1.The respondents be restrained from making any demand under s 60 of the Excise Act for the payment of excise duty until the final determination of this proceeding.
2.The respondents be restrained from issuing any other notices under s 60 of the Excise Act in relation to the matters which are the subject of these proceedings until the final determination of these proceedings.
3.Alternatively, the operation of the decision to issue the s 60 notices be suspended until 7 days after the final determination of these proceedings.
Before turning to consider whether a case has been made out for the grant of interlocutory relief, there is a preliminary matter that must be dealt with. The respondents object to the jurisdiction of the court to determine the application under the Judicial Review Act. They say that the decision about which complaint is made (that is, the decision to make the requests) is not a decision of an administrative character made under an enactment: see s 3(1) of the Judicial ReviewAct. Alternatively, they contend that by reason of item (e) of Sch 1 of the Judicial Review Act, the decision is not one to which the Judicial Review Act applies.
Section 3(1) of the Judicial Review Act provides that, unless the contrary intention appears, a “decision to which this Act applies means a decision of an administrative character made … under an enactment, other than … a decision included in any of the classes of decisions set out in Schedule 1”. That Schedule includes:
“(e)decisions making, or forming part of the process of making, or leading up to the making of, assessments or calculations of tax, charge or duty, or decisions disallowing objections to assessments or calculations of tax, charge or duty, or decisions amending, or refusing to amend, assessments or calculations of tax, charge or duty, under any of the following Acts:
…
Excise Act 1901
…”The first ground of objection depends upon the meaning of the word “decision” as used in the Judicial Review Act. This was considered by the High Court in AustralianBroadcasting Tribunal v Bond (1990) 170 CLR 321. In that case Mason CJ, with whose judgment Brennan and Deane JJ agreed, said (at 337):
“…[A] reviewable ‘decision’ is one for which provision is made by or under a statute. That will generally, but not always, entail a decision which is final or operative and determinative, at least in a practical sense, of the issue of fact falling for consideration. A conclusion reached as a step along the way in a course of reasoning leading to an ultimate decision would not ordinarily amount to a reviewable decision, unless the statute provided for the making of a finding or ruling on that point so that the decision, though an intermediate decision, might accurately be described as a decision under an enactment.”
His Honour went on to say:
“Another essential quality of a reviewable decision is that it be a substantive determination.”
In my view, there is nothing in the nature of an ultimate or operative decision, or of a substantive determination, in the decision to make a request for an accounting. It is merely the first step in an inquiry that is designed to illicit information in the course of making a determination as to whether a demand under s 60(1) should be issued. Accordingly it is not a decision that is reviewable under the Judicial Review Act.
Strictly, therefore, it is unnecessary to consider the second ground of objection, but in deference to the arguments that were put it is as well that I state my views upon it. The effect of item (e) of the Sch to the Judicial Review Act was considered by the Full Court in Deputy Commissioner of Taxation vClarke and Kann (1984) 1 FCR 322. That case concerned an application to review a decision to issue a notice under s 264 of the Income Tax Assessment Act 1936 (Cth) requiring certain information and seeking the production of certain documents. Objection was taken that the decision to issue the notice was excluded from review by item (e). The Full Court said (at 325-326):
“The decisions which are excluded from review by par. (e) of the Schedule are decisions making assessments, decisions forming part of the process of making assessments, and decisions leading up to the making of assessments. Each category provides for some extension of the former, but the overall effect is to emphasise the essential need for a connection between the decision and an assessment.
It is inappropriate to attempt to define the boundary between those decisions which are and those which are not ‘decisions leading up to’ the making of an assessment. However, a decision does not lead to the making of assessment merely because it precedes the making of an assessment or because its purpose is to enable or facilitate the making of any assessment which may be made. A decision is not a decision leading up to the making of an assessment unless the making of an assessment has followed or will follow from the decision.
The notices are decisions because they are demands for information (Judicial Review Act, s 3(2)(e)). Although a sharp distinction cannot be drawn between the appellant’s inquisitorial function and his assessment function, where, as in this case, no assessment has been made and there can be no certainty that an assessment will be made, it cannot be concluded that a demand for information which does not form part of the making of an assessment necessarily is leading up to the making of an assessment. The information produced by the demand may result in an assessment, or in a decision not to assess, or may be of no utility. There is no sufficient relationship between the demands for information and the making of an assessment to attract par. (e) of the Schedule.”
It seems to me that there is no relevant distinction between a demand for information under s 264 of the Income Tax Assessment Act and a request for an accounting under s 60(1) of the Excise Act. In particular, it is clear that making a request for an accounting will not necessarily lead to a demand for the payment of an amount equal to the excise. On the contrary, if sufficient accounting is given no demand for payment can be made under the subsection.
Whilst I am dealing with the jurisdiction of the Court to deal with the application under the Judicial Review Act, it is also convenient to consider another and related question. Does this Court have jurisdiction to punish for contempt where that contempt is of another superior court? The respondents did not submit that the Court lacked jurisdiction, but it seems to me the position is far from clear.
It was once thought that the jurisdiction to commit for contempt was confined to a contempt of the court exercising the jurisdiction. Thus in Re Syme; Ex parte Worthington (1902) 28 VLR 552 at 556, Holroyd J said that “each court, according to its powers, defends its own prerogative, and it does not extend its protection to other courts, even though inferior and not Courts of record.” However, this view was rejected by the High Court in John Fairfax & Sons Pty Ltd v McRae (1955) 93 CLR 351. There it was held that a Supreme Court had power to deal not only with contempt of itself, but also with contempt of any inferior court as an adjunct to the general jurisdiction of the Supreme Court to control proceedings of inferior courts by the issue of writs of prohibition and certiorari. The power to commit for contempt is derived from “…the traditional general supervisory function of the King’s Bench, the function of seeing that justice was administered and not impeded in lower tribunals.”: John Fairfax at 363.
This reasoning would suggest that the Federal Court cannot exercise jurisdiction to punish for a contempt of another superior court. However, it has been held that this jurisdiction is conferred upon the Court by s 39B of the Judiciary Act. In Saunders v Federal Commissioner ofTaxation (1988) 88 ATC 4349 Northrop J rejected an argument that the Federal Court was not the proper forum to hear allegations concerning contempt of pending proceedings in a State Supreme Court. His Honour said (at 4357):
“This application [for contempt] was properly brought under sec 39B of the Judiciary Act, which empowers the Federal Court to restrain an officer of the Commonwealth. At present, the only link between the applicant and the Supreme Court is that a Magistrate has ordered the applicant to stand trial in the Supreme Court. The Federal Court is a proper forum to hear and determine the application. Support for this conclusion is to be found in Hammond v Commonwealth of Australia (1982) 42 ALR 327, where the High Court had no hesitation in determining that the Commonwealth would be in contempt of County Court proceedings if it required the plaintiff to answer questions before a Royal Commission designed to establish that he was guilty of an offence with which he had been charged in the County Court. In that case, the County Court was exercising federal jurisdiction. In the present case, the Supreme Court will be exercising federal jurisdiction.”
Whether or not, on the proper construction of s 39B(1), it was intended to give to the Federal Court jurisdiction over subject matter ordinarily within the exclusive province of a State Supreme Court was not discussed by Northrop J. Nor was the question whether, if that was the intended reach of s 39B, the Commonwealth Parliament has power to enact such a provision. However, this is not an appropriate occasion to resolve these issues. As the respondents conceded that jurisdiction does exist no argument was directed to any of these matters and I have been loath to deal with them in the absence of submissions. Proceeding then on the assumption that this Court does have power to deal with the matter, I am quite satisfied that this is not a proper occasion for its exercise. It seems to me that it will only be in exceptional circumstances that the Federal Court should undertake the function of dealing with a contempt of another superior court. That the integrity of the Supreme Court would be affected by the exercise of the jurisdiction is obvious. This is not to say that the power, if it exists, should never be exercised. There might be cases of extreme urgency where a refusal to exercise jurisdiction would cause substantial injustice. But those cases will be rare and most assuredly this is not one of them.
Accordingly, I decline to entertain the application for interlocutory relief based upon the alleged contempt of the Supreme Court of Victoria. I appreciate that the facts underlying both the alleged contempt and the other matters that are before the Court do overlap to a considerable extent so that, on one view, it might be said that it would be convenient that all issues arising out of those facts are heard and determined at the same time. For my own part, I do not find this a compelling argument. In my view the mere convenience of the parties is not a sufficient reason to require this Court to exercise jurisdiction to protect the processes of another superior court.
I might say that even if I were to consider the contempt allegation, my present view is that the applicants have not made out a case. The basis of the alleged contempt is the assertion that by making the requests Mr Giuliano has interfered with the ordinary resolution of the excise prosecution; either by putting undue pressure on the applicants as litigants in that prosecution, or because the requests are an attempt to obtain information for the CEO to use in the prosecution, being information which he could not obtain by discovery and interrogation.
I do not believe that there is much to be said in favour of these arguments. First there is no evidence indicating that the purpose of the requests was to put any pressure on the applicants, for example to deter them from defending the excise prosecution. Second, I do not accept that a response to the requests would illicit information that could not be obtained in the excise prosecution. It must be remembered that in Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96 it was decided that corporations are amenable to discovery and interrogatories in civil proceedings for a penalty. It is true that these processes will not be available against the first and second applicants, the directors of the corporate applicants. Nor was it suggested, no doubt for good reason, that Mr Giuliano might obtain information from those applicants which would not be discoverable from the corporate applicants. Thus the argument seems to have proceeded on a false premise.
Third, as the respondents point out, there is no duty imposed upon the applicants to provide any information in response to the requests. In certain circumstances, although perhaps not in the circumstances of this case, it might be assumed that a person asked to account for excisable goods will provide a response due to the serious consequences that follow from his failure to do so. However, the fact that practical reality might suggest that a person is likely to respond to a request for an accounting does not lead to the conclusion that the request is a contempt of pending legal proceedings. As I interpret cases such as Brambles Holdings Ltd v Trade Practices Commission (1980) 32 ALR 328, Hammond v The Commonwealth of Australia (1982) 152 CLR 188 and Hamilton v Oades (1989) 166 CLR 486, an attempt to illicit information by administrative process for use in a civil or criminal proceeding that is not otherwise obtainable in that proceeding will constitute a contempt if the person from whom the information has been requested is bound under pain of punishment to provide the information. There is no reason to extend the boundaries of contempt to a case where there is no compulsion to provide any information.
I can now deal with the claim that Mr Giuliano exceeded his power when making the requests. Here the applicants are on stronger ground, remembering that this is an interlocutory application and, as a first step, the applicants are only required to show that there is a serious issue to go to trial.
I have already pointed out the object of s 60. It is to impose an obligation upon a person to ensure that excisable goods do not find their way into home consumption without the payment of duty. The purpose for requesting an accounting is to inform the Collector whether or not the obligation has been breached. If the Collector knows that excisable goods have not been kept safely, he is not required to request an accounting. In that case he is empowered, without more, to make a demand for the payment of an amount equal to the duty payable on those goods. It follows, in my opinion, that if the Collector is satisfied that goods have not been kept safely, he is not authorised by s 60(1) to request an accounting. In that circumstance the limits of the power conferred by s 60(1) other than the power to make a demand have been reached: compare The Melbourne Steamship Co Ltd v Moorehead (1912) 15 CLR 333 at 347 per Isaacs J in relation to the scope of s 15B of the Australian Industries Preservation Act 1906-1909 (Cth).
If this view is correct or if it is sufficiently arguable for the purposes of an application for an interlocutory injunction, as I find it is, the next step is to apply this construction of s 60(1) to the facts of the case in so far as they are presently known.
As I have mentioned, although the excise prosecution brought against the applicants is civil in character it has aspects of a criminal case. What is being “prosecuted” are “offences”. What is sought are “convictions”. The allegations that are made are serious, the possible penalties are heavy and the gravity of any conviction is obvious. In virtue of these considerations it is proper to infer that the prosecution would not have been instituted unless the CEO was satisfied that there was a reasonable basis for making the allegations that the applicants have committed a number of offences against the Excise Act.
That there was a basis for the CEO to allege that offences had been committed appears from the statement of claim. From that document it is clear that the CEO has in his possession detailed information concerning what occurred in respect of the blended petroleum products which it is alleged have entered into home consumption without the payment of excise. It is information that would inform the Collector whether the blended petroleum products, alleged to have come into existence at the depot, were not satisfactorily kept by the applicants. It also appears that the information that was gathered by the CEO is now in the possession of Mr Giuliano. Thus I can see no purpose for his requests.
In reaching this conclusion I do not leave out of account the evidence of Mr Giuliano. In an affidavit he deposed that the requests were made “in order to protect the revenue”, but apart from this general assertion Mr Giuliano did not explain in what way the revenue would be protected by the requests having regard to the information presently in his possession. Further, Mr Giuliano did not explain why, having regard to his present state of knowledge, he did not simply make a demand under s 60(1) without taking the trouble to request an accounting. If there is some reason why the revenue requires protection by a request for an accounting, it is not obvious to me as things presently stand. I am of the view that Mr Giuliano had sufficient information in his possession concerning the movement of the alleged excisable goods that no accounting for those goods was required “in order to protect the revenue”.
I note also that Mr Giuliano said that the requests were made in accordance with “Customs’ normal practice of requesting persons fitting the criteria laid down in section 60 to account for goods in accordance with that section.” I assume that normal practice to be to request an accounting when the Collector does not know whether excisable goods have been kept safely. I would be surprised if this practice is followed where the Collector knows that excisable goods have not been kept safely. In that event a demand may be made under s 60(1) without any need for an accounting. If the usual practice of Customs is to request an accounting, even when it is known that excisable goods have not been safely kept, then on my present view of the matter that is not a practice which is sanctioned by s 60(1). To the contrary, as I read s 60(1) it would be improper to make use of that subsection in those circumstances.
In the result, I have reached the conclusion for the purposes of the present application that the applicants have shown there to be a serious question raised as to whether the requests were made for an improper purpose.
It is not necessary for me to decide whether the requests were made for the purpose of obtaining information for use in the excise prosecution or to adversely affect the applicants in the conduct of that proceeding. Mr Giuliano has said that these were not his purposes and there is no reason to doubt this evidence for present purposes. However, once it has been shown, prima facie at least, that the protection of the revenue is not advanced by a request for an accounting under s 60(1) it should be inferred that the request was made for some illegitimate purpose; that is a purpose not contemplated by s 60(1). This is so even if Mr Giuliano was of the belief that he was making legitimate use of the subsection.
The next question to consider is what relief, if any, is to be granted. In essaying this task it is necessary to balance the risk of harm to the respondents inherent in granting relief before the merits of the dispute are explored, against the risk that the applicants’ rights will be significantly impaired before the trial. In American Cyanamid Co v Ethicon Ltd [1975] AC 396 at 406 Lord Diplock explained:
“The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial; but the plaintiff’s need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated under the plaintiff’s undertaking in damages if the uncertainty were resolved in the defendant’s favour at the trial. The court must weigh one need against another and determine where the ‘balance of convenience’ lies.”
The relief sought in paragraphs 1 and 2 of the motion, is designed to prevent the making of any demand for the payment of excise duty under s 60. If granted it would prevent a demand being made if the Collector is presently of the view that excisable petroleum products have not been kept safely by the applicants. There is no justification for the grant of relief of that kind. It would not be available if the applicants were wholly successful at trial.
It seems to me that only one of two possible orders might properly be made. One order is to enjoin the respondents from making a demand under s 60(1) based upon a failure by the applicants to respond to the requests for an accounting. This would still leave the Collector free to make a demand under s 60(1) on the ground that the first condition mentioned in the subsection is satisfied. I do not mean to suggest that I am necessarily of the view that a demand under s 60(1) can be directed to each applicant, in particular to APS the alleged manufacturer of the excisable goods. The precise ambit of s 60 is not a matter that requires consideration on this application.
To resist an order of the first kind the respondents point to the fact that a demand under s 60 is for an amount equal to the excise duty payable on excisable goods if they had been entered for home consumption on the day on which the Collector makes the demand. They say that in consequence of the proposed goods and services tax that will be enacted by the federal parliament, the rate of duty on diesel fuel is to be reduced significantly. Thus, it is said that if there is a restraint on the making of any demand and in the meantime the duty is lowered, the revenue may suffer to the extent of $2 million or more. It must be noted that the federal government has announced that the new goods and services tax will come into force on 1 July 2000.
I do not accept that there is any risk to the revenue if the Collector is restrained from making a demand under s 60(1). First, I am able to ensure that this proceeding will be heard and determined before 1 July 2000. Second, the Collector will not, in any event, be enjoined from making a demand under s 60(1) on the basis that the first condition has been satisfied. On the basis of the allegations made in the excise prosecution, it appears that the Collector is in a position to make such demands if so advised.
The second possible order is to restrain the use to which any information provided by the applicants in response to the requests is to be put. What I have in mind here is an order that will prevent any use of that information being made, either directly or indirectly, in connection with the excise prosecution. I note that the respondents have proffered an undertaking much to that effect.
To determine which, if any, of these possible orders should be made it is necessary to consider how the applicants will be affected if denied relief and also what effect the making of any of these orders will have on the respondents.
This is not an easy exercise. In the first place it is by no means clear that the applicants will respond to the requests. Their case is that no excisable goods were manufactured at the depot. If that is true then none of the applicants would have had in their possession excisable goods subject to the control of Customs. It would follow that s 60(1) could not be relied upon to impose upon the applicants an obligation to pay compensation to the Commonwealth. Moreover, s 60(1) is not designed to illicit information concerning whether a person has had excisable goods in his possession. It proceeds on the assumption that this is the case. Of course it is possible, although I think unlikely, that the applicants may seek to show that if the goods the subject of the requests were excisable goods, then the applicants did deal with them in a way permitted by the Excise Act. If they provide information along those lines and it is ultimately found that the requests were improperly made, the making of a demand based upon the second condition mentioned in s 60(1) will have no effect. That is to say, the Collector cannot determine that a person has failed to satisfactorily account for goods if there was no obligation to provide an accounting. And there is no such obligation if the goods the subject of the request are not excisable goods.
On the other hand there is a potential that the applicants may be disadvantaged if they provide information to the Collector and that information is used, in one way or another, for the purpose of the excise prosecution. If an order is made preventing the respondents making any such use of the information then that risk is removed.
On balance, I do not believe that the applicants are entitled to an order restraining the making of a demand under s 60(1). If the request for an accounting turns out to have been properly made and no satisfactory accounting is provided, then any demand made will be perfectly lawful. If the requests should not have been made, then any demand based on the failure to give an accounting will be of no force.
Accordingly, although the risk of harm being suffered in the excise prosecution as a result of the provision of information to Mr Giuliano is not great, I think that the orders should ensure that no information that is provided in response to the request will find its way to those who are prosecuting the Supreme Court proceeding. The order that I have in mind, subject to any comment by counsel, is as follows:
That until the trial of this proceeding or further order, the respondents and each of them whether by themselves, their servants or agents or otherwise howsoever, be restrained from using any information provided by the applicants in response to the requests for an accounting made on 16 March 1999 under s 60 of the Excise Act 1901 (Cth) whether directly or indirectly for or in connection with the proceeding commenced in the Supreme Court of Victoria on 29 October 1989 being action no. 7634 of 1998.
If this order is made, or an undertaking to that effect given, the applicants will not suffer any irreparable harm if they choose to provide an accounting. Further, I do not see how the respondents will suffer any harm by the making of such an order. The fact is that the respondents are willing to abide by an undertaking substantially along those lines suggests to me quite plainly that they will not.
I will stand the matter down to enable the parties to bring in minutes of orders to give effect to these reasons.
I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.
Associate:
Dated: 24 September 1999
Counsel for the Applicant:
Ms B King QC
Mr T Murphy
Solicitor for the Applicant:
Cornwall Stodart
Counsel for the Respondent:
Mr B Walters
Mr G Livermore
Solicitor for the Respondent:
Australian Government Solicitor
Date of Hearing:
9 June 1999
Date of Judgment:
24 September 1999
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