Australian Customs Service v D'Aquino Bros & Ors [1999] NSWSC 129

New South Wales Supreme Court CITATION : Australian Customs Service v D'Aquino Bros & Ors [1999] NSWSC 129 CURRENT JURISDICTION : Admin Law Division FILE NUMBER(S) : 30047/95 HEARING DATE(S) : 17/09/98; 18/11/98; 26/02/99 JUDGMENT DATE : 26 February 1999

Chief Executive Officer of Australian Customs Service (Plaintiff) PARTIES : D'Aquino Bros Pty Limited (1 Def) Rex Nunzio D'Aquino (2 Def) Zina D'Aquino (3 Def) JUDGMENT OF : Kirby J

COUNSEL : L P Robberds QC/D McGovern/D Godwin (Pl) I Temby QC/T M Atkin (Defs) SOLICITORS : Australian Government Solicitor (Pl) Cheney & Wilson (Defs) CATCHWORDS : Approval of Customs penalty ACTS CITED : Customs Act 1901 Comptroller General Customs v Kingswood Distillers Pty Ltd DECISION : See para 11

JUDGMENT

1 HIS HONOUR: This is a matter with a long history. In 1995, a Statement of Claim was issued on behalf of the Australian Customs Service against a number of defendants, including D'Aquino Bros Pty Ltd and two directors, or officers, of that company, Rex Nunzio D'Aquino and Zina D'Aquino. 2 The allegation was that the company, aided and abetted by the other defendants, had smuggled alcohol into Australia in breach of s 233(1)(a) of the Customs Act 1901. 3 I have some familiarity with the matter. I have seen the original Statement of Claim, and the amended Statements of Claim which followed it, and they each are voluminous documents. 4 It is clear that, were the matter to proceed, it would take a considerable amount of time. Indeed, the parties contemplated taking the evidence of a number of witnesses in Scotland. It was in this context that the Court ordered on 18 November 1998 that the matter proceed to mediation. That mediation proceeded before Mr Trevor Morling QC over some five days in early February this year. The length of the mediation is itself some indication of the complexity of the issues. However, it was successful, and a Deed of Settlement dated 19 February 1999 was executed by the parties. That Deed has been shown to me in the course of these proceedings. 5 The parties now seek to implement the terms of that Deed. One aspect requires Court approval. The matter is put forward on the basis that, should the Court refrain from giving its approval, the parties would not seek to implement the balance of the terms. 6 The terms which appear in the Deed have been embodied, substantially, in a Notice of Motion which has been filed in Court today. Some eight orders are sought. Those orders, in summary form, are as follows: (1) that the plaintiff's claim against the third defendant, that is Zina D'Aquino, be dismissed with no order as to costs; (2) that the plaintiff be given leave to file a Fifth Amended Statement of Claim in the form of the document which is annexed to the Notice of Motion marked A; (3) that the claim for debt of the Fifth Amended Statement of Claim be stood over generally, with liberty to restore on three days notice; (4) that the second defendant, that is Rex Nunzio D'Aquino, be convicted of an offence under s 233(1)(a) of the Customs Act 1901, in respect of the aiding and abetting of the smuggling, referred to in para 5 of the Fifth Amended Statement of Claim; (5) that the second defendant pay to the plaintiff the penalty of $232,850.08 pursuant to the Customs Act 1901; (6) that the penalty be paid by instalments, which are set out in the Notice of Motion and appear in the Deed; (7) that if default is made in the payment of any of the amounts, the balance shall be payable immediately; (8) that there be no order as to costs as between the plaintiff and Rex Nunzio D'Aquino. 7 Now, dealing with those terms, the debt of the company is a matter which does not require the approval of the Court. It has been said in open court that it is a substantial sum. That sum has been revealed to me through the Deed of Settlement. 8 In respect of terms 4 and 5 however, that is, relating to the conviction and penalty of Rex Nunzio D'Aquino, the Court's approval is required. The giving or withholding of approval is based upon the Court's assessment of the penalty, and whether it is appropriate, having regard to the range of penalties that may be fixed by the Court in the circumstances. 9 I have been provided with the decision of Sperling J in a matter of Comptroller General Customs v Kingswood Distillers Pty Ltd dated 5 December 1997; and a later decision of 11 February 1999. Those decisions set out the principles to be applied in circumstances such as this. Indeed, the circumstances in that case, involving as it did a customs prosecution, are not dissimilar to the present case. I have some familiarity myself with prosecutions by the Australian Competition and Consumer Commission, the ACCC, under the Trade Practices Act, and the line of authority to which Sperling J refers. The penalty for an offence under s 233(1)(a) is fixed by s 233(1AA) and s 233AB(1). The penalty is determined by reference to the amount of duty evaded. The penalty should not be less than twice the sum evaded; nor should it exceed five times that sum. Here the duty evaded was $116,426.04. The penalty which is suggested is twice that sum, namely $232,850.08. 10 It is a further aspect of the penalty, or the agreement arising out of the Deed of Settlement, that Rex D'Aquino, during a period of five years, be prohibited from involvement in the preparation and presentation of documents of the Australian Customs Service, and prohibited from handling goods subject to control by that service. Should D'Aquino Bros be given a warehouse licence, there is an undertaking that Rex Nunzio D'Aquino will not enter the bond which is the subject of that licence during the same period, that is, five years. 11 Having considered the matter, and the authority which has been provided, I believe that the penalty is appropriate. It is within the range of penalties which this Court may impose. I therefore make the following orders, reading from the Notice of Motion: (1) The plaintiff's claim against the third defendant be dismissed with no order as to costs. (2) The plaintiff be given leave to file a Fifth Amended Statement of Claim in the form annexed to the Notice of Motion, and marked with the letter A. (3) The claim for debt of the Fifth Amended Statement of Claim be stood over generally with liberty to restore on three days notice. (4) The second defendant be convicted of an offence against s 233(1)(a) of the Customs Act 1901 in respect of the aiding and abetting of the smuggling referred to in para 5 of the Fifth Amended Statement of Claim. (5) The second defendant pay to the plaintiff a penalty of $232,850.08, pursuant to the Customs Act 1901. (6) The penalty of $232.850.08 be paid as follows: $26,250 to be paid on or before 30 June 2001. $40,250 will be paid on or before 30 June 2002. $40,250 will be paid on or before 30 June 2003. $40,250 will be paid on or before 30 June 2004. $40,250 will be paid on or before 30 June 2005. $45,600.08 will be paid on or before 30 June 2006. (7) If default is made in the payment of any of the amounts referred to in order (6), then the balance of the $232,850.08 shall become immediately due and payable. It shall carry interest from, and including, the date when default is made at the rate payable on judgments of the Supreme Court of New South Wales. (8) There is no order as to costs as between the plaintiff and Rex Nunzio D'Aquino. 12 They are the orders. I will return the papers that were sent to my chambers.