FEDERAL COURT OF AUSTRALIA Collector of Customs v Wallace Laboratories Pty Ltd [2002] FCA 1339 CUSTOMS & EXCISE – claim by Collector that the respondent had failed to "account" to satisfaction of Collector under Excise Act 1901 (Cth) s 60 PRACTICE & PROCEDURE – whether open to respondent to raise as a defence that facilitation of audit by Collector constituted a statutory "account" Excise Act 1901 (Cth) s 60 COLLECTOR OF CUSTOMS V WALLACE LABORATORIES PTY LIMITED NO. N 320 OF 2001 BEAUMONT J 21 OCTOBER 2002 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 320 OF 2001 BETWEEN: COLLECTOR OF CUSTOMS APPLICANT AND: WALLACE LABORATORIES PTY LIMITED RESPONDENT JUDGE: BEAUMONT J DATE OF ORDER: 21 OCTOBER 2002 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Leave be refused to file the amended defence, being "MFI 9". Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 320 OF 2001 BETWEEN: COLLECTOR OF CUSTOMS APPLICANT AND: WALLACE LABORATORIES PTY LIMITED RESPONDENT JUDGE: BEAUMONT J DATE: 21 OCTOBER 2002 PLACE: SYDNEY REASONS FOR INTERLOCUTORY JUDGMENT (ON APPLICATION FOR LEAVE TO AMEND DEFENCE) BEAUMONT J: 1 The earlier history of this litigation is described in my reasons dated 30 May 2002 ([2002] FCA 659). 2 Wallace Laboratories Pty Limited ("Wallace") now seeks leave to amend its defence ("MFI 9") by, inter alia, pleading the following: "3A. In further answer to paragraph[s] 10, 11, 12, 13, 18, 19, 20 and 21 of the Further Amended Statement of Claim, the respondent says and the facts are that: (i) before making the requests referred to in paragraphs 10 and 18 of the further amended statement of claim, on 22 September 1998, the Collector by his servants and agents purportedly carried out a search of the Respondent's premises and seized certain records and goods ('the 1998 search'); (ii) during the course of the 1998 search the respondent facilitated the inquiries made by and on behalf of the Collector and in particular provided his servants and agents with access to premises containing stocks of alcohol which premises were otherwise then inaccessible to the Collector; (iii) during the course of the 1998 search the Collector failed and neglected to observe the existence of substantial stocks of alcohol or products containing the same in and upon the Respondent's premises; (iv) following the 1998 search the Collector purported to analyse the records and goods seized by him during the course of the 1998 search but failed to do so properly; (v) at the time of making the requests referred to in paragraphs 10 and 18 of the Further Amended Statement of Claim, the [C]ollector was by reason of the matters set out in subparagraphs (i), (ii), (iii) and (iv) above possessed of sufficient information to enable him acting honestly and reasonably to be satisfied that the Respondent had accounted for the alcohol the subject of the demands stated in paragraphs 12, 13, 20 and 21 of the Further Amended Statement of Claim; (vi) [h]aving provided the Collector with the information referred to in subparagraph (v) above in the manner referred to in subparagraphs (i), (ii), (iii) and (iv) above the respondent complied with and discharged its obligation under s60(1)(b) of the Excise Act 1901; (vii) in the event that the [C]ollector had observed the stocks of alcohol or product referred to in subparagraphs (ii) and (iii) above and in the event that the Collector analysed the records and goods seized by him during the course of the 1998 search properly he would, acting honestly and reasonably, have been satisfied that the respondent had accounted for the alcohol the subject of the demands stated in paragraphs 12, 13, 20 and 21 of the Further Amended Statement of Claim and could not, so acting, have been otherwise than so satisfied." 3 The Collector opposes a grant of leave to amend, contending in particular, that par 3A does not disclose an arguable defence to the first cause of action pleaded (see [2002] FCA 659; [8], [9]). 4 Where a person has control, etcetera, of excisable goods under Customs control, the presently material provisions of s 60 of the Excise Act 1901 (Cth) ("the Act"), as summarised at [3] of [2002] FCA 659, are that, when so requested by a Collector, the person does not account for the goods to the Collector's satisfaction, the person shall, on demand, pay to the Commonwealth the amount there specified. 5 On behalf of the Collector, it is, inter alia, submitted, in essence, that par 3A does not disclose an arguable defence, because it fails to allege any purported account of the goods on the part of Wallace. 6 In response, Wallace points, in essence, to the plea made by subpar (ii) of par 3A, where it is alleged that Wallace facilitated inquiries by the Collector, particularly by providing access to premises. 7 In my opinion, there is considerable force in the Collector's argument. 8 The notion of the statutory "account" contemplated by this legislative scheme is explained in the reasons in the High Court decisions cited in my earlier judgment. Plainly, it is a substantive concept referable to a process which may be described in dictionary terms (see [2002] FCA 659 at [17]) as "an explanatory statement of conduct". It may be accepted that an "account" can conceivably take a number of permissible forms. But, in my view, the facts and circumstances alleged in par 3A and, in particular, subpar (ii) thereof specifically, cannot amount to an "account" for the goods within the meaning of s 60(1)(b) of the Act. The grant of assistance there alleged, cannot, as a matter of characterisation, constitute a process of accounting for those goods. 9 Accordingly, I refuse leave to file the amended defence, being "MFI 9". I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont J. Associate: Dated: October 2002 Counsel for the Applicant: Mr S Gageler SC Mr C O'Donnell Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: Mr D Grieve QC Mr P Kintominas Solicitor for the Respondent: Benjamin & Khoury Date of Hearing: 21 October 2002 Date of Judgment: 21 October 2002