Sidebottom v Giuliano
[2002] FCA 1262
•15 OCTOBER 2002
FEDERAL COURT OF AUSTRALIA
Sidebottom v Giuliano [2002] FCA 1262
RAYMOND LESLIE SIDEBOTTOM & ORS v EMMANUEL GIULIANO
V 12 of 2002
GOLDBERG J
15 OCTOBER 2002
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
V 12 of 2002
BETWEEN:
RAYMOND LESLIE SIDEBOTTOM
First ApplicantKELVIN ERNEST SIDEBOTTOM
Second ApplicantRPM COMMODITIES PTY LTD
Third ApplicantGV LIQUID TANKERS PTY LTD
Fourth ApplicantAUSTRALIAN PETROLEUM SUPPLIES PTY LTD
Fifth ApplicantAND:
EMMANUEL GIULIANO
Respondent
JUDGE:
GOLDBERG J
DATE:
15 OCTOBER 2002
PLACE:
MELBOURNE
CORRIGENDUM
In the reasons for judgment delivered 15 October 2002, counsel for the applicant should read “Ms M Lodge”, not “Ms B Lodge”.
VERITY QUINN
Associate to Justice Goldberg
15 October 2002FEDERAL COURT OF AUSTRALIA
Sidebottom v Giuliano [2002] FCA 1262
TAXATION – review of decisions by Collector to issue demands pursuant to s 60(1) Excise Act 1901 (Cth) – where prosecution proceeding already on foot in respect of same excisable goods – where reparation of duty pursuant to s 21B Crimes Act 1914 (Cth) sought in prosecution proceeding – whether prosecution proceeding and recovery proceeding pursuant to a demand constituted two mutually exclusive regimes for the collection of duty under the Excise Act 1901 (Cth) – whether demands made for an improper purpose – whether demands could be said to be made for the protection of revenue – whether making of demands was unreasonable or otherwise unfair.
Excise Act 1901 (Cth): s 60
Sidebottom v Commissioner of Taxation (1999) 95 FCR 255, referred to
Collector of Customs (NSW) v Southern Shipping Co Ltd (1962) 107 CLR 279, considered
Sidebottom v Giuliano (2000) 98 FCR 579, applied
Cubillo v Commonwealth (2001) 112 FCR 455, applied
Pickering v Deputy Commissioner of Taxation (1997) 37 ATR 41, referred to
Bellinz vCommissioner of Taxation (1998) 84 FCR 154, referred to
Laker Airways Limited v Department of Trade [1977] 1 QB 643, referred toRAYMOND LESLIE SIDEBOTTOM & ORS v EMMANUEL GIULIANO
V 12 of 2002
GOLDBERG J
15 OCTOBER 2002
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
V 12 of 2002
BETWEEN:
RAYMOND LESLIE SIDEBOTTOM
First ApplicantKELVIN ERNEST SIDEBOTTOM
Second ApplicantRPM COMMODITIES PTY LTD
Third ApplicantGV LIQUID TANKERS PTY LTD
Fourth ApplicantAUSTRALIAN PETROLEUM SUPPLIES PTY LTD
Fifth ApplicantAND:
EMMANUEL GIULIANO
RespondentJUDGE:
GOLDBERG J
DATE OF ORDER:
15 OCTOBER 2002
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The applicants pay the respondent’s costs of and incidental to the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
V 12 of 2002
BETWEEN:
RAYMOND LESLIE SIDEBOTTOM
First ApplicantKELVIN ERNEST SIDEBOTTOM
Second ApplicantRPM COMMODITIES PTY LTD
Third ApplicantGV LIQUID TANKERS PTY LTD
Fourth ApplicantAUSTRALIAN PETROLEUM SUPPLIES PTY LTD
Fifth ApplicantAND:
EMMANUEL GIULIANO
Respondent
JUDGE:
GOLDBERG J
DATE:
15 OCTOBER 2002
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
Introduction
On 31 January 2000 the respondent, the National Director of the Excise Investigation Branch of the Australian Taxation Office and a “Collector” for the purposes of the Excise Act 1901 (Cth) (“the Act”), made decisions under s 60(1) of the Act to demand from each of the applicants the sum of $9,289,732.33. This sum was said to be an amount equivalent to the duty then payable on certain excisable goods which the respondent alleged had been in the possession, custody or control of the applicants, namely various quantities of petroleum products. On 24 February 2000 the applicants applied to the Administrative Appeals Tribunal (“the Tribunal”) pursuant to s 162C of the Act to have the respondent’s decisions to issue the demands reviewed by the Tribunal. On 24 December 2001 the Tribunal affirmed the decisions of the respondent to make the demands. The applicants appealed to this Court from the Tribunal’s decision.
Background
The fifth applicant (“APS”) carries on the business of a wholesaler of petroleum products. It purchases petroleum products from wholesale distributors situated in various places including Queensland and New South Wales. One of the premises upon which it carries on its business is situated at Saxton Street, Numurkah in Victoria (“the depot”) which premises are owned by the third applicant (“RPM”). A number of underground and above ground storage tanks are located in the depot. The fourth applicant (“GVLT”) operates a freight cartage business. Its largest customer is APS for whom it collects and delivers petroleum products. The first and second applicants were at relevant times directors of APS, RPM and GVLT.
Prior to October 1998 the Australian Customs Service (“Customs”) carried out an investigation in relation to quantities of petroleum products including diesel fuel, solvent and kerosene which had been transported to, and stored at, the depot. Customs formed the view that quantities of petroleum products were mixed with other products on the premises to produce blended petroleum products which were then entered into home consumption without the payment of excise duty.
On 29 October 1998 the Chief Executive Officer of Customs issued a writ in the Supreme Court of Victoria against the applicants in which he alleged that:
(a)between 1 July 1996 and 1 August 1997 GVLT delivered to the depot various quantities of petroleum products which were placed in tanks at the depot and blended with other substances so that blended petroleum products were produced within the meaning of s 77G of the Act;
(b)the blending of the petroleum products occurred to the knowledge of the applicants and was initiated, controlled and directed by each of the first and second applicants;
(c)each of the petroleum products was an excisable good classifiable to item 11 or 12 of the schedule to the Excise Tariff Act 1921 (Cth) and a petroleum product within the meaning of Pt VIIB of the Act;
(d)excise duty was payable in respect of each act of blending and each of the applicants intentionally evaded excise duty which was payable on the excisable blended petroleum product produced on each occasion of blending;
(e)the excisable blended petroleum products which were produced were sold with diesel fuel removed from the depot;
(f) each of the applicants committed the following offences against the Act:
(i) manufacturing excisable goods in contravention of s 35 of the Act;
(ii)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) of the Act;
(iii)evading payment of duty which was payable in contravention of s 120(1)(iv) of the Act;
(iv)moving, altering or interfering with goods subject to the control of Customs, namely excisable blended petroleum products, without being authorised to do so by the Act, in contravention of s 61 of the Act;
(v)unlawfully conveying excisable goods, namely excisable blended petroleum products upon which excise duty had not been paid, in contravention of s 119(1) of the Act.
The Chief Executive Officer sought the following relief:
·declarations that each of the applicants had committed each of the offences alleged;
·orders that each applicant be convicted of each of the offences alleged;
·the imposition of a fine or penalty in respect of each such conviction;
·orders under s 21B of the Crimes Act 1914 (Cth) against the applicants including orders for reparation of the duty short‑paid together with interest.
On 9 December 1998 the applicants filed a defence in the Supreme Court proceeding in which, in substance, they denied there were any excisable blended petroleum products as alleged, said that they had paid all excise duty for which they were liable and denied the offences alleged to have been committed. The Supreme Court proceeding has not yet come to trial.
The decisions of the respondent on 31 January 2000 to demand payment of $9,289,732.33 from each applicant were made pursuant to s 60 of the Act which 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.
(1A) …
(1B) …
(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.
(3)In proceedings under subsection (2), a statement or averment in the complaint, claim or declaration of the Collector is evidence of the matter or matters so stated or averred.
(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.”
This is not the first occasion upon which this matter has been before the Federal Court. On 16 March 1999 the respondent wrote a letter in common form to each applicant requesting each applicant to account for excisable goods under s 60(1) of the Act. The applicants contended that the requests were contrary to law and constituted contempt of the Supreme Court of Victoria. They commenced proceedings seeking declarations that the requests were invalid, punishment for contempt of court and injunctions restraining the making of the demands under s 60(1) of the Act for the payment of excise duty. Finkelstein J concluded that the decision to make the request for the accounting was not a decision that was reviewable under the Administrative Decisions (Judicial Review) Act 1977 (Cth), declined to entertain the application for interlocutory relief based upon the alleged contempt of the Supreme Court of Victoria but granted an interlocutory injunction on the basis that there was a serious question raised as to whether the requests were made for an improper purpose: Sidebottom v Commissioner of Taxation (1999) 95 FCR 255. The matter came on for final hearing and on 12 May 2000 Finkelstein J concluded that the revenue might require protection by the exercise by a Collector of the power to request an accounting under s 60(1)(b) of the Act. He discharged the interlocutory injunction which he had granted earlier and dismissed the application with costs: Sidebottom v Giuliano (2000) 98 FCR 579.
The reasoning of the Tribunal
The Tribunal heard evidence on the issue as to whether there had been blending of petroleum products to produce excisable blended petroleum products. The applicants made no submission to the Tribunal on that aspect of the case but, as there was no concession to the effect that there had been blending of petroleum products to produce excisable blended petroleum products, the Tribunal considered the evidence in detail and was satisfied that there had been blending of petroleum products at the depot.
The Tribunal then addressed the issue of whether any of the applicants had, or had been entrusted with, the possession, custody or control of the relevant petroleum products. The Tribunal rejected the submission by the applicants that s 60 must be interpreted as permitting only one person to be in “possession, custody or control” of any blended goods at any one time and found that each of the applicants had “possession, custody or control” of blended goods at various times. The Tribunal was also satisfied that each of the applicants had failed to keep the blended petroleum products safely and had failed to stop the blended petroleum products from going into home consumption. The Tribunal concluded that there was no reason why the Collector should not have issued a demand to each of the applicants and therefore affirmed the decisions of the respondent made on 31 January 2001.
The grounds of appeal
On 10 January 2002 the applicants filed a notice of appeal, which was amended on 8 April 2002. The notice of appeal, as amended, and as relied upon by the applicants, set out the following grounds of appeal:
(a)the Tribunal erred in finding that on its proper construction in the context of the Act s 60 authorised the making of the demand when the respondent had previously instituted a prosecution in the Supreme Court of Victoria against the applicants seeking penalties and reparation of duty in respect of the same excisable goods;
(b)the Tribunal should have found the respondent did not make the demand for the purpose for which the power to make the demand was conferred, namely to protect the revenue;
(c)the Tribunal should have found the respondent ought not to have made the demand and his making of the demand was a decision no reasonable decision‑maker would have made or was otherwise unfair.
The applicants’ primary submission was that the Act did not permit a request or a demand to be made pursuant to s 60(1) of the Act on a person who was being prosecuted in respect of the same dutiable transactions. The applicants submitted that there were two regimes for the collection of duty. The first was a self‑assessing system which was enforced by a regime whereby a person’s failure to pay the duty for which they were liable resulted in penalties under ss 117, 119 and 120 of the Act and reparation under s 21B of the Crimes Act. It was said that the second regime was pursuant to s 60 of the Act and involved the making of a demand. The applicants submitted that the two regimes were mutually exclusive.
In the alternative, the applicants submitted there was no power in the Collector to make the demands as the demands would not be made for the purpose of protecting the revenue and protection of the revenue was the only proper purpose for which a demand could be made. It was said that the demands would not be made to protect the revenue as, in the present circumstances, the revenue was already protected by the proceeding brought in the Supreme Court of Victoria.
Finally, the applicants submitted that the decisions to make the demands pursuant to s 60(1) of the Act were decisions that no reasonable decision‑maker would have made or were otherwise unfair. The unreasonableness and the unfairness relied upon was predicated on the existence of the proceeding in the Supreme Court of Victoria. The applicants submitted that in considering the unreasonableness and unfairness of the decisions to make the demands for payment, the following factors were relevant:
·if there was any duty payable, it could be recovered by the respondent plus penalties in the Supreme Court proceeding;
·the respondent thereby sought more than double the duty payable (in addition to penalties) from each applicant;
·the respondent could succeed in recovering the debt demanded even though subsequently the Supreme Court could find that there was no duty payable;
·the issue of the demands was thus a waste of both the applicants’ and respondent’s resources.
Are there two mutually exclusive regimes under the Act for the collection of duty?
I do not accept the submission that what the applicants describe as the “two regimes” for the collection of duty are mutually exclusive. The submission flies in the face of subs (4) of s 60 which provides:
“(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.”
This provision makes it clear that there can be a liability to pay an amount under s 60 at the same time that there is a liability arising under or by virtue of another provision of the Act.
In the present circumstances a liability in the applicants is alleged to arise by virtue of ss 117, 119 and 120(1)(iv) of the Act which make it respectively an offence:
·to be in possession, custody or control, other than as a manufacturer, of manufactured excisable goods upon which excise duty has not been paid;
·unlawfully to convey any excisable goods upon which excise duty has not been paid; and
·to evade any payment of any duty which is payable.
Section 129 allows for the imposition of certain penalties in relation to offences under ss 117 and 119 of the Act. Section 21B(1) of the Crimes Act provides:
“Where:
(a)a person is convicted of an offence against a law of the Commonwealth; or
(b)an order is made under section 19B in relation to a federal offence committed by a person;
the court may, in addition to the penalty, if any, imposed upon the person, order the offender:
(c)to make reparation to the Commonwealth or to a public authority under the Commonwealth, by way of money payment or otherwise, in respect of any loss suffered, or any expense incurred, by the Commonwealth or the authority, as the case may be, by reason of the offence; or
(d)to make reparation to any person, by way of money payment or otherwise, in respect of any loss suffered by the person as a direct result of the offence.”
The applicants submitted that s 60(4) had a very limited operation and was designed to preserve the Collector’s ability to bring proceedings under the Act against persons other than those who had been found liable to pay a debt due for duty. I do not consider that s 60(4) should be construed so restrictively. It preserves the opportunity for the Collector to initiate the procedure contemplated by s 60(1) even though the person against whom the procedure is initiated is the subject of other proceedings brought against the person under other provisions of the Act in respect of the same or a similar factual sub‑stratum by way of excise prosecution including an appended claim for reparation of duty.
Even if s 60(4) of the Act did not exist I would still reject the submission that a proceeding under s 60 of the Act and a prosecution for an offence against the Act which carries with it the opportunity for the payment of reparation in respect of any loss suffered by reason of the offence are mutually exclusive so that recourse to the s 60 procedure is precluded where a prosecution in the Supreme Court is in existence. There is no provision in the Act which warrants such a conclusion. As a matter of principle there is no reason why a demand cannot be made under s 60(1) after a prosecution for an offence arising out of the same factual substratum has been instituted in the Supreme Court. The power in s 21B of the Crimes Act to order reparation is discretionary and is not inconsistent with the recovery provisions in s 60(2). Any proceeding brought under s 60(2) of the Act, which is dependent upon a demand made under s 60(1), would contain different elements to a prosecution under s 117 or s 119 of the Act. No issue of mens rea or fault on the part of the person to whom the demand is addressed arises in a proceeding brought pursuant to s 60(2) whereas mens rea is an element which must be established in an excise prosecution: Kelly v JRA Ltd (1990) 92 ALR 651; Moore v Jack Brabham Holdings Pty Ltd (1986) 7 NSWLR 470. Indeed, in the Supreme Court proceeding it is alleged that each of the applicants “intentionally evaded excise duty” which was payable. Such an allegation need not be made in any recovery proceeding brought pursuant to s 60(2) of the Act. No inconsistency arises whilst a demand under s 60(1) remains unsatisfied and a prosecution under ss 117 and 119 is proceeding.
A situation may arise where a person is convicted of an offence under ss 117, 119 or 120 and an order for reparation is sought under s 21B of the Crimes Act. At that time it would be necessary to determine whether the Commonwealth or any person has suffered any loss by reason of, or as a result of, the offence. At that point of time the satisfaction of any demand made under s 60(1) of the Act would arise for consideration as, if such a demand had been satisfied in respect of the same factual substratum as underlay the offences in respect of which a conviction had been recorded, then it would be said that reparation ought not to be ordered as no loss has been suffered by reason of, or as a result of, the offences.
However, at the present time no proceeding has been instituted under s 60(2) of the Act. The s 60(1) procedure or regime occurs at an earlier point of time, namely when a decision is made to make a demand under s 60(1) and when the demand itself is made. The validity of the demands, and the validity of the decisions to make them, is to be determined at the date of the decisions and the date of the demands and even though the Supreme Court proceeding may have been commenced at that particular point of time, the existence of that proceeding does not preclude the making of the decisions or the making of the demands for the reasons to which I have referred.
Were the demands ultra vires on the ground that they were made for an improper purpose?
The applicants submitted that the purpose of a demand under s 60(1) of the Act is to protect the revenue: Collector of Customs (NSW) v Southern Shipping Co Ltd (1962) 107 CLR 279, and that the demands made in the present case would not protect the revenue as the revenue was already protected by the Supreme Court proceeding.
It is clear that s 60 is a provision for the protection of the revenue. In the judgment of the High Court in Collector of Customs (NSW) v Southern Shipping Co Ltd (supra) Dixon CJ said at 287:
“The provision is pointed at the loss of goods involving the loss of excise duty. The time of payment of excise duty is at or before entry for home consumption. The hypothesis is that by the loss of the goods duty has been escaped. There must be some doubt whether the destruction of the goods was also contemplated but upon the words of the section destruction is certainly covered ... Having regard to the place of the section it may be that the manufacturer is not included within the section but clearly other persons who are entrusted with the goods, as, for example, under s 58(b) or (c), fall within s 60 and incur what may be called an absolute duty to keep the goods safe from loss or destruction. Perhaps the word ‘absolute’ is too strong for it may be conceded that it is possible to except inevitable casualty -- what once was called ‘Act of God’. Paragraph (b) presents difficulties as an alternative but it would seem that it is pointed at cases where it cannot be shown that the goods were lost or destroyed but at the same time they are not produced and their whereabouts is not disclosed.”
(see also McTiernan J at 290‑291 and Menzies J at 299)
I also adopt, with respect, the observation of Finkelstein J in Sidebottom v Giuliano (2000) 98 FCR 579 at 583:
“The object of s 60 is to impose an obligation upon a person in possession, custody or control of excisable goods to ensure that those goods do not find their way into home consumption without the payment of duty.”
I reject the applicants’ submission that the demands could not have been made to protect the revenue. The revenue is not presently protected by the Supreme Court proceeding. It may never be protected by the Supreme Court proceeding as that proceeding may not succeed against the applicants. The applicants have denied the substantive allegations made in that proceeding and it has yet to proceed to trial. The only point of time at which it might be said that the demands, or rather satisfaction of the demands, would not protect the revenue would be if the Supreme Court proceeding had proceeded to conviction of the applicants with a consequent imposition of a penalty or fine and the making of an order for reparation. However, such a sequence of events does not invalidate or vitiate the initial decisions to make demands under s 60(1) of the Act at a time when the Supreme Court proceeding in relation to the prosecution is only pending and has not yet come to trial.
Although the applicants submitted that the Tribunal had erred in finding that on its proper construction in the context of the Act s 60 authorised the making of the demand when the respondent had previously instituted a prosecution in the Supreme Court of Victoria against the applicants seeking penalties and reparation of duty in respect of the same excisable goods, the issue was put somewhat differently before the Tribunal. Rather it was submitted that the respondent should not have exercised the discretion committed to him in s 60 to make the demands when the revenue was already protected by the prosecution proceeding in the Supreme Court. The Tribunal responded to this submission by identifying a clear distinction between the object of a demand made under s 60(1) and a prosecution for an offence under the Act. The Tribunal’s reasoning is encapsulated in par 144 of its decision in the following terms:
“In our view, the object of a demand made under s. 60(1) and an excise prosecution are quite different. One is to protect the revenue and, if thought appropriate, to enable the amount of duty to be sued for as a debt in a court of competent jurisdiction (s. 60(2)). The other is to prosecute a person for breach of a provision of the Act. That is to say, it is to ascertain whether a person has committed an offence. It may be that the penalty may be assessed using as its base the amount of duty that would have been payable on the goods to which the offence relates if those goods had been entered for home consumption on specified dates (s. 129). Even so, a penalty imposed in proceedings that ‘share many of the characteristics of criminal proceedings’ (Chief Executive Officer of Customs v Jiang at paragraph 87), does not equate with a debt that may be recovered under s. 60(2) in a civil proceeding. One is to punish and the other to protect the revenue. What penalty is actually imposed is not a matter for us and nor is the amount of any amount recovered in a civil proceeding. That with which we are concerned is simply the issue of the demand. The fact that there is an excise prosecution for the imposition of a penalty does not affect the manner in which we should exercise a discretion directed to protecting the revenue.”
The Tribunal did not err in undertaking this line of reasoning.
The applicants submitted that the Tribunal overlooked the question of reparation. The Tribunal had earlier in its reasons expressly referred to the fact that in the Supreme Court proceeding the Chief Executive Officer was seeking the imposition of fines and penalties pursuant to Pt X of the Act and an order for reparation under s 21B of the Crimes Act. The fact that the Tribunal did not refer again to the claim for reparation under s 21B of the Crimes Act in the reasons quoted does not mean that the Tribunal had not had regard to that claim. In any event, for the reasons to which I have referred the existence of that claim did not preclude the making of demands under s 60(1) of the Act.
It follows from the matters to which I have referred that I reject the ground of appeal that the Tribunal erred in that it should have found that the respondent did not make the demands for the purpose for which the power to make a demand was conferred, namely to protect the revenue. The applicants were unable to point to or identify what the purpose might have been in making the demands other than the protection of the revenue. Rather, their submission was that the purpose for the demands could not have been the protection of revenue as the revenue was protected by the Supreme Court proceeding. I have already rejected that submission.
Were the decisions to make the demands unreasonable in the Wednesbury sense or otherwise unfair?
I turn to the submission that no reasonable decision‑maker would have made the decisions to make the demands or that the decisions were otherwise unfair.
The parties were in agreement that the exposition of Wednesbury unreasonableness by the Full Court of the Federal Court in Cubillo v Commonwealth (2001) 112 FCR 455 at 521 expressed the manner in which the issue of unreasonableness should be approached. The Court said:
“… it is necessary to bear in mind that a decision will be vitiated by Wednesbury unreasonableness, only if no decision‑maker, acting reasonably, could have made that decision or if it is shown that the decision was so unreasonable that no reasonable person could have come to it. In applying this standard a court must proceed with caution lest it exceed its supervisory role by reviewing the decision on the merits: Minister for Aboriginal Affairs v Peko‑Wallsend Ltd (1986) 162 CLR 24 at 41‑42, per Mason J; Attorney‑General (NSW) v Quin (1990) 170 CLR 1 at 36‑37, per Brennan J. It is not enough to show that another decision‑maker might have reached a different result or even that the court takes the view that a different decision would have been more appropriate: Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 626‑627, per Gleeson CJ and McHugh J; Friends of Hinchinbrook Society Inc v Minister for Environment (No 2) (1997) 69 FCR 28 at 59‑65, per Sackville J.”
Applying this test, I do not consider that unreasonableness is made out in relation to the decisions to make the demands for payment. The statutory criteria which needed to be established prior to the making of the demands were found to the satisfaction of the Tribunal and the applicants did not contest the Tribunal’s findings in relation to the blending of the petroleum products, the possession, custody and control of the products which were subject to the control of Customs and the failure of the applicants to keep those goods safely.
In those circumstances it was not unreasonable, nor indeed was it unfair, for the decisions to be made to make the demands upon the applicants. The fact that duty might be recoverable by way of the payment of reparation pursuant to s 21B of the Crimes Act in the Supreme Court proceeding did not make it unreasonable to make the demands as, at the time of the making of the demands, it did not follow inexorably that the duty otherwise payable on the blended goods would be recovered in the Supreme Court proceeding. As I have noted earlier, liability is denied by the applicants in the Supreme Court proceeding and the nature of the proceeding in the Supreme Court and the elements of proof required in it are different from the nature of the proceeding and the elements of proof required in it in any proceeding taken by a Collector to recover the duty as a debt due to the Commonwealth pursuant to s 60(2) of the Act.
I do not accept that, by making the demands, the respondent has thereby sought more than double the duty payable from each applicant. It is true that the making of the demands, and the failure of the applicants to comply with those demands, will give rise to the opportunity for the respondent and the Chief Executive Officer to have two vehicles by which the duty may be recoverable from the applicants. But it does not follow that the applicants will be put in the position of having to pay double the duty payable in addition to any penalties which might be levied against them in the Supreme Court proceeding. If the applicants were to respond to the demands and pay the duty payable, or if they paid the duty payable as a result of a proceeding brought against them pursuant to s 60(2) of the Act, the basis for an order for the making of reparation pursuant to s 21B of the Crimes Act would be removed to the extent of the amount of the payment of such duty as to that extent there would not be any loss suffered. Alternatively, if an order for reparation is made in the Supreme Court proceeding and is satisfied by payment by the applicants the result would be that the applicants would have a defence to any proceeding brought pursuant to s 60(2) of the Act on the basis that they had, to the extent of the payment of the reparation made, paid an amount equal to the amount of the excise duty which would have been payable on the goods if they had been entered for home consumption on the day on which the Collector made the demands.
In short, the respondent has not sought more than double the duty payable from each applicant; rather, the respondent by making the demands has availed himself of another opportunity to recover the duty payable other than by way of an excise prosecution in the Supreme Court.
The fact that the respondent might recover the debt demanded in a proceeding brought pursuant to s 60(2) of the Act even if the Supreme Court subsequently found that there was no duty payable in respect of the goods does not mean that at the time the demands were made they were unreasonable or unfair. At the time the decisions to make the demands were made the Supreme Court proceeding was pending but the applicants had filed a defence in which they had denied the substantive allegations made against them. In such circumstances the decision‑maker making the decisions to make the demands could only speculate as to the outcome of the Supreme Court proceeding. In any event, if the respondent recovered the debt demanded in a proceeding brought pursuant to s 60(2) of the Act he would do so because the relevant elements of the cause of action had been established to the satisfaction of the Court. If the Supreme Court found that in relation to the issues before it no duty was payable then that result would follow because the relevant elements of the offences in respect of which the applicants had been charged had not been established to the satisfaction of the Supreme Court by reference to the appropriate standard of proof. In this context no issue of unreasonableness or unfairness arises in relation to the decisions to make the demands.
It follows from this analysis that the decisions to make the demands and the making of the demands were not a waste of resources of the applicants or the respondent.
In the light of these findings and conclusions it is not necessary to conduct any detailed analysis of the authorities upon which the applicants relied in support of their submission that there was a principle of substantive unfairness, as distinct from procedural unfairness, which had been infringed. The applicants relied principally on the reasoning of members of the House of Lords in Inland Revenue Commission v National Federation of Self‑Employed and Small Businesses Ltd [1982] AC 617 and In re Preston [1985] AC 835. It is difficult to see how a principle of substantive unfairness can apply in the present circumstances. There may be an application for it, for example, in the revenue context where it is appropriate to have a principle that a statutory discretion should not be exercised in a manner which discriminates against taxpayers: Pickering v Deputy Commissioner of Taxation (1997) 37 ATR 41; Bellinz vCommissioner of Taxation (1998) 84 FCR 154 at 167, and in circumstances where issues of estoppel might arise: Laker Airways Limited v Department of Trade [1977] 1 QB 643 at 707.
However, in the present circumstances no issue of discrimination, estoppel or representation arises. It was submitted that substantive unfairness arises because of the additional burden imposed upon the applicants in circumstances which do not provide any legitimate public benefit. However, for the reasons to which I have referred there will be no additional burden imposed upon the applicants in the sense that there will be an increased burden in relation to payment of duty. As I have found, the Supreme Court proceeding and the making of a demand pursuant to s 60(1) provide two different routes to achieve the one result, the outcome of which is not the payment of duty twice over.
The appeal will be dismissed.
I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. Associate:
Dated: 15 October 2002
Counsel for the Applicants: Mr T Murphy and Ms B Lodge Solicitor for the Applicants: Blake Dawson Waldron Counsel for the Respondent: Mr BJ Walters SC and Mr G Livermore Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 7 October 2002 Date of Judgment: 15 October 2002
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