Customs, Chief Executive Officer v Preston & Ors [2000] QSC 178

lDEPARTMENT OF '•.·• State Reporting Bureau ! -- -- TRANSCRIPT OF PROCEEDINGS Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau. SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION FRYBERG J No 9456 of 1997 REVtSED COPfES ISSUED State Reporting Bureau Date /ls; f I '!)--lJ THE CHIEF EXECUTIVE OFFICER OF CUSTOMS Plc:3.intiff and -· JOHN ..ROBERT PRESTON First Defendant and JOHN ALEXANDER BROGAN Second Defendant and BRENDAN ALASTAIR JACK Third Defendant BRISBANE .. DATE 05/01/2000 JUDGMENT 1 Iii f111,,r·, TIie I.aw Courts, C:l·11ri.:c Stred, Brisli:111c, () . •l(I()() Tclcnli11r1L''. ffl7l 32-l7 -l 1(.1) f.",,v· 11\71 1 lJ7 <;.:; l l -- 1 of 9 -- 05012000 T8/RRD7 M/T 6796/2000 (Fryberg J) HIS HONOUR: This is an application by the plaintiff for judgment in default of defence. The defendant has today filed a cross-application seeking an extension of time for delivery of a defence, having delivered a defence on the 29 December, well out of time, and filed it more recently 10 still. The action was commenced by a writ on 20 October 1997. An appearance was entered on or about 5 June 1998, though it is not clear whether that appearance was filed. It was at least received by the solicitors for the plaintiff from a firm of solicitors, Corby Livingstone, on behalf of the first defendant. I should add that the application is made only against the first defendant. However, some time later the solicitors who were acting for the first defendant ceased to act, and the solicitors presently acting apparently took over the conduct of the matter some time in 1999. A statement of claim was delivered on or about 7 September 1998. The first defendant apparently became aware of the statement of claim, but no defence was filed or served. An application to the Court in November last year was, by consent, dismissed and it was ordered that the first defendant file and serve a notice of intention to defend in accordance with Chapters 5 and 6 of the Uniform Civil Procedure Rules by 4 p.m. on 19 November 1999, failing which the plaintiff was to be at liberty to enter judgment. 2 JUDGMENT 20 2G 40 30 50 60 -- 2 of 9 -- 05012000 T8/RRD7 M/T 6796/2000 (Fryberg J) The first defendant was aware of that order. It was not complied with. The first defendant did, as I have said, deliver a defence on 29 December 1999, and it is for this defence with, if necessary, a further amendment orally foreshadowed in the course of argument today, that he seeks 10 the extension of time to which I have already ref erred. ,_:" The plaintiff contends that the defence, even with the proposed further amendment, still does not comply with the provisions of the Rules. Rule 166 provides that a party's denial or non-admission of an allegation of fact must be accompanied by a direct explanation for the party's belief that the allegation is untrue or cannot be admitted. If the denial or non-admission does not comply with that provision, the party is taken to have admitted the allegation. The document delivered on the 29 December deals with a number of the allegations in the statement of claim, but in 20 respect of almost all of them does so by not admitting the 2c allegations. The allegations broadly relate to nine aeroplane flights taking place on dates beginning in October 1995 and concluding in January 1996. In respect of each flight, the essence of the allegation is that the defendant represented to a duty-free shop that he was a member of air crew intending to travel overseas, was scheduled to make an overseas flight on a particular date in a particular aircraft, ordered a large quantity of cigarettes duty-free from the shop, and paid for them on a duty-free basis. 3 JUDGMENT 40 50 :\ () 60 -- 3 of 9 -- 05012000 T8/RRD7 M/T 6796/2000 (Fryberg J) The statement of claim further alleges that, in fact, the first defendant chartered a particular aircraft, loaded the cigarettes which had been ordered and delivered onto that aircraft, and flew the aircraft to Port Macquarie, where the cigarettes were off-loaded. Thereafter, they were released 10 for home consumption. The same process is alleged to have been followed on 13 occasions, and the consequent evasion of excise duty is alleged to amount to $124,361.15. If the amount of duty was evaded, the minimum penalty payable under the Excise Act is $248,722.30, and the maximum penalty $621,805.75. The penalties are, of course, payable in addition to the payment of the duty. One might have expected that the defendant would be in a position to state that, in his belief, some aspects at least of those allegations were untrue or that in his belief the allegations could not be admitted. The defence delivered by the defendant does not contain a statement of the former type nor does it contain any direct explanation of the latter type. Some explanation was attempted in the affidavit which has been filed, with reference to the draft defence. Essentially it is that the defendant is unable to say whether or not the plaintiff's claims are correct and the assertions of fact in particular are correct, because his 4 JUDGMENT 20 t0 30 50 ~o 60 -- 4 of 9 -- 05012000 T9-10/FF16 M/T 6797/00 (Fryberg J) records have been seized by the New South Wales Crime Commission and not returned. Whether the records which were seized have been returned is in dispute. The New South Wales Crime Commission, by its 10 senior financial investigator, asserts that all of the documents taken from the first defendant were returned to his solicitor or to him by 18 October 1999, and asserts that receipts are held for those documents. Whether or not this is true is not a matter capable of resolution today. It is, however, evidence from which I can draw the conclusion that the Commission at least contends that all such documents have been returned and will not be providing any further documents. The first submission on behalf of the first defendant was that in its form as delivered on 29 December, the defence 20 was compliant with the rules. Its only defect was that it 20 40 was out of time. In my view, however, the defence as delivered did not comply with the rules. It is necessary under the rules for the statement of defence clearly to relate to particular allegations made in the statement of claim. Rule 166 sub-rule 4 requires a non admission of an allegation of fact to be accompanied by a direct explanation. Each particular allegation must be dealt with. One could imagine that some allegations, particularly those involving mathematical questions, would require reference to documentation. However, I cannot imagine how it could not 5 JUDGMENT 50 ,.t\ '◄ \I 60 -- 5 of 9 -- 05012000 T9-10/FF16 M/T 6797/00 (Fryberg J) be possible for the defendant to form a belief that certain of the allegations were untrue. No such belief is asserted in the defence. Moreover, if one looks at the matter, the defence was delivered on 29 December only after the present application was brought. Not the slightest attempt has been made in the affidavit material before me to explain why that defence was not delivered on the date ordered by this Court. That date occurred well before the defendant went overseas and was one to which the defendant had consented. The missing documents in no way contributed to the defendant's inability to deliver the defence on time since the defendant still does not have the documents yet has been able to deliver this defence. There is simply no explanation of why it was not delivered on the due date. Also, knowing that the order had not been complied with, the 10 20 defendant went overseas. There is no explanation given of 20 why he disabled himself from giving the necessary instructions for the delivery of a defence. I say that simply because one of the points argued on his behalf was that he was unable to give instructions for the period he was overseas. To overcome the recognition of difficulties in the form of the defence as delivered, the solicitor for the defendant argued that a further amendment would suffice to accommodate the requirements of the rules and the terms of the proposed 6 JUDGMENT 40 JG 50 60 -- 6 of 9 -- 05012000 T9-10/FF16 M/T 6797/00 (Fryberg J) further amendment were read into the record in the course of the hearing. There was no document available setting out the terms, except the solicitor's own handwritten note of them. In my view, the proposed further amendment does not overcome the defects which have been identified in the existing defence. It is necessary for a defence to deal explicitly with allegations of fact. The proposed further amendment does not do that. Consequently, there is nothing to be gained by allowing further time for the amendment of the defence if all that can be achieved is the addition of the proposed further amendment. The defects will remain. A further argument addressed to me is that if the defence is still thought to be defective, then an adequate explanation is given in that the assertion is made, at least in affidavit material, that the defendant is unable to improve upon it because of his inability to obtain the necessary documents from the New South Wales Crime Commission. As I have said, whether or not that is true is in dispute. However, in my view, the fact that the defendant cannot get the documents (assuming it be the fact) is not shown on the 10 20 1 0 30 ')•~ _1.1 40 material to amount to an adequate direct explanation for the 30 defendant's inability to make the relevant admissions. It therefore follows that nothing can be achieved by a further extension. 7 JUDGMENT so 60 -- 7 of 9 -- 05012000 T9-10/FF16 M/T 6797/00 (Fryberg J) This is not a case where the Court is rigidly trying to enforce a timetable or pursue a regime of case management. It is a case where some form of timetable has been imposed on the defendant in order to progress the matter, but where the defendant has completely ignored the timetable and has not shown any willingness or capacity to be able to improve the position. There is no prospect on the material that the defendant will 10 be able to do any better than he has done, and his solicitor 20 frankly told me from the bar table that unless further documents are obtained from New South Wales Crime Commission, no improvement to the defence will be possible. That is a material factor in the exercise of a discretion in this case. Other material factors are the delay, the non- compliance with the rules and the order, and the failure to depose to any worthwhile defence. I should add that I explored with the solicitor for the defendant the question whether the defendant might make a payment into Court of an amount sufficient to cover the excise in dispute together with the minimum penalty and a small amount for costs, but was informed that such a condition would not be able to be complied with by the defendant and that the most that would 20 40 be able to be done was the provision of a sum of $200,000 in :o three months' time. That would not give me any confidence that the discretion ought to be exercised favourably to the defendant. 8 JUDGMENT 50 60 -- 8 of 9 -- 05012000 T9-10/FF16 M/T 6797/00 (Fryberg J) For these reasons, I have come to the conclusion that the time for compliance with the orders made by the Chief Justice should not be extended, though I was prepared to waive service of the application and make it returnable forthwith and I have dealt with it. The oral application 10 for a further amendment is likewise refused. The rules provide that any matter not admitted and in respect of which sub-rule 4 is not complied with is deemed to have been admitted. Effectively, this means that the 20 substance of the statement of claim is admitted. There is no argument but that the statement of claim does disclose a complete cause of action, even apart from the provisions of any deeming or averment provisions in the Act. In those circumstances, the plaintiff is entitled to the relief sought in the statement of claim. HIS HONOUR: Four times is, I think, $497,444.60. HIS HONOUR: I will re-number paragraph 7 as paragraph 4, i0 30 paragraph 8 as paragraph 5, and paragraph 10 as paragraph 6. 30 The penalty will be the sum of $497,444.60. Paragraphs 4 to 6 have been deleted, as has paragraph 9. There will be an order as per draft, initialled by me and placed with the papers. 9 JUDGMENT 50 60 -- 9 of 9 --