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Supreme Court 16 May 2003

Comptroller-General of Customs v Stephen Edward Parker

[2003] NSWSC 489

Fraud & dishonesty
CUSTOMS AND EXCISE PROSECUTION STAY OF PROCEEDINGS

Citation: Comptroller-General of Customs v Stephen Edward Parker [2003] NSWSC 489
Court: Supreme Court of New South Wales, Common Law Division
Date: 16 May 2003
Judge(s): Newman AJ

Background

Four sets of civil penalty proceedings under Commonwealth customs and excise legislation had been on foot since 1992 and 1993. The plaintiff, the Comptroller-General of Customs, brought the proceedings against companies and individuals alleged to have participated in a scheme to avoid excise duty on alcoholic spirit distilled between 1987 and 1990. In broad terms, the scheme allegedly involved falsely documenting the methylation of distilled spirit so that it appeared exempt from duty, when in fact a substantial portion of the spirit was never methylated and was diverted without duty being paid.

One individual defendant was a director of two of the corporate defendants. The proceedings had been stayed since 10 June 1994 by order of Sully J, pending final resolution (including any appeals) of a related set of proceedings against another party, the Kingswood Distillery.

By 2003, the Kingswood Distillery proceedings had been concluded. The Comptroller-General moved to lift the stay, consolidate and streamline the remaining proceedings, and discontinue some of them. The individual defendant cross-moved to have the proceedings against him permanently stayed or struck out.

  • Whether the stay imposed in 1994 should be dissolved now that the related Kingswood proceedings had concluded
  • Whether the defendant had established grounds for a permanent stay or dismissal of the proceedings on the basis of oppression, delay, or other abuse of process
  • Whether the plaintiff should be granted leave to amend one statement of claim to incorporate allegations from related proceedings, and to discontinue others

Decision

Newman AJ refused the defendant's application for a permanent stay or dismissal. Applying the High Court's test from Walton v Gardiner (1992-1993) 177 CLR 378, the court found no grounds had been made out to justify either a permanent stay or dismissal of the proceedings.

The defendant argued that the length of the proceedings and the volume of costs expended by the plaintiff demonstrated oppression and even vindictive conduct. The court rejected both contentions. It found that the delay was substantially attributable to the complexity of the matter and, critically, to the existence of false documentation associated with the defendant's own companies, which had made calculations difficult for the plaintiff. A good proportion of the costs incurred also related to proceedings against other defendants rather than the defendant personally.

On the plaintiff's motions, the court dissolved the 1994 stay and also vacated Sully J's related order that all four matters be heard together with evidence in one being evidence in all. The court accepted the plaintiff's proposal to amend the statement of claim in matter 13933/92 to incorporate allegations from related proceedings, describing this as a practical way of consolidating the remaining claims. Leave to discontinue two other proceedings, with no order as to costs in each, was also granted.

Orders Made

  • The stay ordered by Sully J on 10 June 1994 in all four proceedings was dissolved
  • Sully J's order that the four matters be heard together (with evidence in one being evidence in all) was vacated
  • Leave granted to the plaintiff to discontinue proceedings 10519/92, with each party to pay its own costs
  • Leave granted to the plaintiff to discontinue proceedings 12979/92, with each party to pay its own costs
  • Leave granted to the plaintiff to amend the statement of claim in matter 13933/92 in the form annexed to the relevant notice of motion
  • Leave granted to the plaintiff to discontinue matter 13933/92 against the first and second defendants, with each party to bear its own costs
  • Matter 12382/93 not to be relisted for hearing unless the Court otherwise orders
  • The defendant to pay the plaintiff's costs of the plaintiff's notices of motion
  • The defendant's motion dismissed with costs

Key Takeaways

  • Applying Walton v Gardiner, a permanent stay of civil penalty proceedings requires clear grounds of oppression or abuse of process; delay alone, particularly where attributable to complexity or to conduct by the defendant's own entities, will not suffice.
  • Where delay in proceedings is substantially caused by false documentation connected to the party seeking a permanent stay, that party faces a significant obstacle in characterising the continuation of proceedings as oppressive.
  • A high level of costs incurred by a plaintiff pursuing related proceedings against multiple defendants does not, without more, establish vindictive or improper conduct warranting a stay.
  • Once the condition precedent for a Sully J-style holding stay had been satisfied (resolution of the related Kingswood proceedings), the Supreme Court treated dissolution of the stay as a natural consequence.
  • Consolidating allegations from multiple related proceedings into a single amended statement of claim, and discontinuing the superseded proceedings, was accepted as a practical and legitimate case management approach.

Legislation and Cases Referenced

Legislation:
- Commonwealth Excise Act
- Customs Act

Cases:
- Walton v Gardiner (1992-1993) 177 CLR 378 (High Court of Australia)