New South Wales Supreme Court CITATION : Comptroller-General of Customs v Stephen Edward Parker [2003] NSWSC 489 HEARING DATE(S) : 28/04/03 JUDGMENT DATE : 16 May 2003 JUDGMENT OF : Newman AJ DECISION : (1) The stay ordered by Sully J on 10 June 1994 in proceedings 10519/92, 12979/92, 13933/92 and 12382/93 is dissolved; (2) I vacate the order numbered (3) made by Sully J in those matters on 10 June 1994; (3) Leave is granted to the plaintiff to discontinue proceedings No 10519/92. Each party is to pay its own costs of that matter; (4) The plaintiff is granted leave to discontinue proceedings 12979/92. Each party to pay its own costs; (5) The plaintiff is given leave to amend statement of claim in matter 13933/92 in the form annexed to notice of motion filed on 14 December 2001 in that matter; (6)That the plaintiff be given leave to discontinue in matter 13933/92 against the first and second defendants. Each party to bear their own costs in that matter; (7) Matter 12382/93 is not to be re-listed for hearing unless this Court is to otherwise order; (8) The defendant is to pay the costs of the plaintiff's notices of motion; (9) The defendants' motion is dismissed with costs. CATCHWORDS : Customs and Excise - Prosecution - Stay of proceedings LEGISLATION CITED : Commonwealth Excise Act Customs Act CASES CITED : Walton v Gardiner (1992-1993) 177 CLR 378 012382/93: Comptroller-General of Customs - Plaintiff Stephen Edward Parker - Defendant 010519/92: Comptroller-General of Customs - Plaintiff Brevan Pty Limited - Defendant 1 Stephen Edward Parker - Defendant 2 013933/92: PARTIES : Comptroller-General of Customs - Plaintiff Lawpark Pty Limited - Defendant 1 Brevan Pty Limited - Defendant 2 Stephen Edward Parker - Defendant 3 Gary Thomas Lawler - Defendant 4 012979/92: Comptroller-General of Customs - Plaintiff Brevan Pty Ltd - Defendant 1 Stephen Edward Parker - Defendant 2 FILE NUMBER(S) : SC 012382/93; SC010519/92; SC013933/92; SC012979/92 012382/93: D. Faigan QC / G. Elliot - Plaintiff In person - Defendant 010519/92: D. Faigan QC / G. Elliot - Plaintiff COUNSEL : In person - Defendant 2 013933/92: D. Faigan QC / G. Elliot - Plaintiff In person - Defendant 3 012979/92: D. Faigan QC / G. Elliot - Plaintiff In person - Defendant 2 12382/93: Australian Government Solicitor - Plaintiff Deacons - Defendant 010519/92: Australian Government Solicitor - Plaintiff Dunhill Madden Butler - Defendant 1 Deacons - Defendant 2 SOLICITORS : 013933/92: Australian Government Solicitor - Plaintiff Pricewaterhousecoopers Legal - Defendant 1, 2 In person - Defendant 3 Deacons - Defendant 4 012979/92: Australian Government Solicitor - Plaintiff Pricewaterhousecoopers Legal - Defendant 1 In person -Defendant 2 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION NEWMAN AJ Friday, 16 May, 2003 12382/93 – COMPTROLLER-GENERAL OF CUSTOMS v Stephen Edward PARKER 10519/92 – COMPTROLLER-GENERAL OF CUSTOMS v BREVEN PTY LIMITED & ANOR 13933/92 – COMPTROLLER-GENERAL OF CUSTOMS v LAWPARK PTY LIMITED & ORS 12979/92 – COMPTROLLER-GENERAL OF CUSTOMS v BREVEN PTY LIMITED & ANOR JUDGMENT 1 HIS HONOUR: By notices of motion in the various matters where the Comptroller-General of Customs is plaintiff, that official seeks certain relief. The defendant, Stephen Edward Parker, also by way of notice of motion seeks to have the proceedings against him either permanently stayed or struck out. 2 I turn to the relief sought by the Comptroller-General of Customs. In matter No 10519/92 that official seeks to discontinue the proceedings on terms that each party pays its own costs. In matter No 12979/92 the Comptroller-General seeks the same order. In the two matters which bear the plaint numbers 12382/93 and 13933/92, the plaintiff seeks to amend the statement of claim in No 13933/92 to incorporate allegations contained in No 10519/92 and otherwise amend its statement of claim. Should the plaintiff be successful in persuading the court to take such a course, it does not intend to proceed with proceedings No 12382/93. Furthermore, the plaintiff seeks to have stay orders imposed by Mr Justice Sully on 10 June 1994 dissolved. That order stayed proceedings in all four matters pending further order of the court until final determination, both at first instance and on appeal, of proceedings in matter No 12134/92. I shall explain the nature and result of that latter set of proceedings later in these reasons. Additionally the plaintiff seeks an order vacating an order made by Sully J on 10 June 1994 that any final hearing of the four matters stayed be a hearing of all matters together, the evidence of one to be evidence in all. 3 Initially there were seven sets of proceedings brought by the present plaintiff either in that official's capacity as Comptroller-General of Customs or in one instance as Collector of Customs for the State of New South Wales. The six matters in which the plaintiff sued as Comptroller-General of Customs were the matters before Sully J which resulted in him granting certain relief on 10 June 1994 including the orders I have set above. 4 All matters arose as a result of investigations and actions taken by Customs Officers in 1990. Those actions involved the seizure of documents and liquor from premises occupied by companies nominated in the various plaints subsequently issued by the plaintiff. The defendant, Stephen Parker, was a director of two of those companies, namely Breven Pty Limited and Lawpark Pty Limited. 5 In his judgment of 10 June 1994 Sully J described the allegations made in relation to both the companies and individuals in his judgment. As no challenge has been mounted to the nature of the allegations outlined by Sully J in his judgment I adopt his description here. What Sully J stated is as follows:- "The Comptroller-General asserts that progress of this operation has disclosed that between early 1987 and April 1990: [1] Kingswood at all material times was owned, managed and controlled by Mr and Mrs Prestipino. [2] Kingswood operated a distillery of alcoholic spirit at premises at Werrington, distilling ethanol from brewery wast. [3] Kingswood's registered office is at 40 Henry Street, Leichhardt. It would appear that these same premises are in use, or, at least, have been in use at material times, as a retail liquor outlet. [4] Mr Parker was the Managing Director of Breven. Mr Lawler was, also, a Director of Breven. Mr Parker and Mr Lawler, in addition to their involvement with Breven, owned and were the Directors of Lawpark. [5] Breven operated a business of a spirit bottling plant and licensed Customs bond store, which business involved the storage, blending and bottling and packaging of potable spirit. It is asserted by the Comptroller-General that Breven carried out contract bottling for Kingswood, for Lawpark, and for various other principals. [6] Mr Colquhoun was the foreman of Breven, and supervised the storage, processing and bottling of alcoholic spirit on the premises of Breven. [7] Kingswood also supplied alcoholic spirit, which was methylated by the addition of certain prescribed chemicals, to a paint and ink manufacturing company, Phoenix Lacquer Co (Mfg) (NSW) ("Phoenix"). [8] Mr Jack Henry Bridger was, at relevant times, Managing Director of Phoenix. [9] Mr Cesare Antonio Paisio was, at relevant times, a former business associate of Mr Bridger and a long-established associate of Mr Parker. Against the foregoing background, it is the contention of the Comptroller-General that, between April 1987 and April 1990: [1] Kingswood distilled some 119 batches of alcoholic spirit from brewery waste. [2] The Australian Customs Service granted a series of permissions to Kingswood to methylate and denature that alcoholic spirit, by the process of adding prescribed chemicals that would render it unfit for human consumption, the resulting product being denominated Industrial Methylated Spirit, ("IMS"). [3] Kingswood maintained documents, which it produced to the Australian Customs Service, and which showed that the spirit had been methylated into IMS. [4] Kingswood also maintained documents, which it produced to the Australian Customs Service, which documents purported to show that the spirit had been delivered to Phoenix. [5] IMS was free from excise duty under the relevant Commonwealth legislation, whereas unmethylated spirit attracted a substantial excise duty. [6] In fact, about two-thirds of the previously mentioned alcoholic spirit was never methylated and was never delivered to Phoenix. [7] Mr Colquhoun supervised and managed the movement of some of that alcoholic spirit inside Breven's premises, and otherwise than as authorised by the relevant Commonwealth excise legislation. [8] Excise duty was not paid to the Australian Customs Service, as by law required, on the spirit which was not actually methylated by Kingswood. [9] Kingswood, and Mr and Mrs Prestipino, together with Mr Parker, knew of and participated in the scheme outlined above." 6 The matter bearing plaint no 12134/92 involved the following entities as defendants:- (1) Kingswood Distillery Pty Limited (2) Illuminato Prestipino (3) Connie Therese Prestipino. 7 The causes of action pleaded in that matter involved allegations of breaches by each defendant of various sections of the Commonwealth Excise Act in respect of one hundred and twenty batches of distilled alcoholic spirit. In the event matter no 12134/92 was the subject of a mediation which took place in November of 1997. On 25 November 1997 a deed of settlement was entered into between the plaintiff and Mr and Mrs Prestipino. This led to Sperling J giving a judgment for the plaintiff on 5 December 1997 which gave effect to the settlement reached following the mediation. As no appeal has been entered in relation to that judgment, the clog to the stay ordered by Sully J on 10 June 1994 being removed has disappeared. Ex facie the plaintiff is entitled to have the relief it seeks in having the stay lifted granted. I shall return to this matter when dealing with the application for a permanent stay or dismissal of the proceedings brought by the defendant, Mr Stephen Parker. 8 I now turn to the proceedings which are the subject of the various notices of motion before the court. What I shall do is to briefly describe the nature of the proceedings. 9 First, matter 10519/92. Here the defendants are Breven Pty Limited and Stephen Edward Parker. Those proceedings were commenced on 21 January 1992 and involve allegations that each defendant breached various sections of the Customs Act in respect of four importations of liquor. 10 Matter 12979/92 also involves Breven Pty Limited and Mr Parker as defendants. Those proceedings were commenced on 4 June 1992 and involve allegations of breaches by each defendant of various sections of the Customs Act in connection with unauthorised movements and unauthorised distilling of large quantities of gin. 11 Matter No 12382/93 involves Mr Parker personally as a defendant. These proceedings were commenced on 25 June 1993 and involve allegations of breaches by Mr Parker of various provisions of the Commonwealth Excise Act in respect of forty one batches of liquor. 12 Matter No 13933/92 nominates four defendants. They are Lawpark Pty Limited, Breven Pty Limited, Stephen Parker and Gary Thomas Lawler. The defendants Breven Pty Limited and Lawpark Pty Limited were deregistered some time ago. The proceedings against Mr Lawler were settled following a mediation. On 9 February 2000 Barr J gave judgment for the plaintiff against Lawler giving effect to the settlement which had been mediated. Mediation between the plaintiff and Mr Parker produced no result. I should add that both Mr Lawler and Mr Parker were at all material times directors of both Breven Pty Limited and Lawpark Pty Limited. 13 The initial statement of claim in matter 13933/92 pleaded allegations of breaches by each of the defendants of various provisions of the Customs Act in connection with unauthorised dealings in large quantities of imported bourbon and scotch whiskey. 14 What the plaintiff seeks to do in relation to matter 13933/92 is:- (1) To delete the two deregistered corporate defendants; (2) Amend the calculations contained in the pleadings as a consequence of a comprehensive order carried out by one Tammy Lindsay, a chartered accountant who is a director of a company known as Horwaths (NSW) Pty Limited who described themselves as providing corporate business and accounting services. That report I should add is extensive. It is apparent from reading it that many of the original calculations made in the initial statement of claim were made as a consequence of poor documentation on the part of the defendant companies. This fact is of some importance when Mr Parker's application for a stay is considered. (3) To bring into these proceedings the matters involving false repack dockets which had been the subject of the statement of claim bearing plaint number 10519/92. (4) The plaintiff seeks to amend the statement of claim by simplifying the convictions and orders sought. 15 I return to the question of lifting the stay ordered by Sully J on 10 June 1994. As I have already said, the conclusion of the proceedings involving Kingswood Distillery Pty Limited removes the clog on the dissolution of the stay imposed by Sully J. On the other hand, Mr Parker seeks to have the stay made permanent or the proceedings discontinued. The relevant law in this regard in Australia is that adumbrated by the High Court in Walton v Gardiner (1992-1993) 177 CLR 378. At 393 they say as follows: "The inherent jurisdiction of a superior Court to stay its proceedings on grounds of abuse of process extends to all those categories of cases in which the processes and procedures of the Court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness." Later at 394-395 they said:- "In her judgment in Jago Gaudron J stressed that the power of a Court 'to control its own process and proceedings is such that its exercise is not restricted to defined and closed categories, but may be exercised as and when the administration of justice demands'. Her Honour added the comment 'that, at least in Civil proceedings, the power to grant a permanent stay should be seen as a power which is exercisable if the administration of justice so demands, and not one the exercise of which depends on any nice distinction between notions of unfairness or injustice, on the one hand, and abuse of process, on the other hand'. Subsequently in her judgment, her Honour made clear that, subject to some refinements which she identified, that comment was also appropriate to be adopted in relation to criminal proceedings." Finally, their Honours observed at 396:- "As was pointed out in Jago , the question whether criminal proceedings should be permanently stayed on abuse of process grounds falls to be determined by a weighing process involving a subjective balancing of a variety of factors and considerations. Among those facts and considerations are the requirements of fairness to the accused, the legitimate public interest in the disposition of charges of serious offences and in the conviction of those guilty of crime, and the need to maintain public confidence in the administration of justice. The question whether disciplinary proceedings in the Tribunal should be stayed by the Supreme Court on abuse of process grounds should be determined by reference to a weighing process similar to the kind appropriate in the case of criminal proceedings but adapted to take account of the differences between the two kinds of proceedings." 16 The first factor relied upon by Mr Parker involves delay. His short point here is that it is now thirteen years since the original investigation in the matter. The matter commenced in the early 1990's and has not yet been resolved. On the face of it Mr Parker's point has merit. The delay unexplained would appear to be inordinate. 17 However, in evidence is a chronology of events commencing from the original seizure of documents by customs officers on 6 March 1990 from the two corporate defendants, Breven Pty Limited and Lawpark Pty Limited. It is apparent from this document that the original delay in disposing of the matters against Kingswood Distillery was brought about by the actions not of the Commonwealth but because of a series of interlocutory applications made by the defendant. Second, the chronology indicates that except for a short period in 1997-1998 the plaintiff has been active in pursuing the matter. 18 Furthermore, it is apparent from Tammy Lindsay's extensive report that the plaintiff's ability to quantify its claim was considerably hindered by the nature of the documentation coming from the companies Lawpark and Breven. In this regard Mr Parker as a director would have matters to explain. Since the receipt of Tammy Lindsay's report the plaintiff has moved with appropriate haste. 19 In my view the matters contained in the chronology in evidence and the background to Miss Lindsay's report counteract the force of Mr Parker's submission relating to delay. In short I do not find that he has made out that part of his argument. 20 He also relied upon an allegation that the Customs' stock-take which resulted in the calculations contained in the initial statement of claim were unreliable. Again as that stock-take was based upon documents said by Miss Lindsay to be unreliable and dealt with extensively in her report, I do not find that this submissions has substance. He also submitted that the expense involved in the matter, said to be some nine to ten million dollars, is inordinate and that this constitutes a basis for a stay. The fact of the matter is that a good proportion of the expenditure relates to proceedings brought against other defendants and in particular the Kingswood Distillery. I find no substance in this submission. 21 Mr Parker also submits that the fact that the plaintiff is still pursuing the matter so long after it commenced is indicative of vindictive conduct on behalf of the plaintiff. Again the matters contained in the chronology and particularly the fact that delay has occurred because of difficulty the plaintiff has had in making calculations because of false documentation stemming from the companies of which Mr Parker was a director would seem to me to answer this point. 22 Applying what fell from the High Court in Walton v Gardiner I am of the view that no grounds have been made out by Mr Parker for a permanent stay or that the proceedings should be dismissed. It follows that as the Kingswood Distillery matter has been disposed of, I should lift the stay on the four proceedings. 23 The plaintiff's proposal that the statement of claim in matter 13933/92 be amended to incorporate allegations found in other related proceedings is in my view a practical manner of disposing of the proceedings altogether. I would grant leave to the plaintiff to amend the statement of claim in the manner it proposes. 24 It follows that the other relief sought by the plaintiff should be granted. 25 The orders I make are as follows:- (1) The stay ordered by Sully J on 10 June 1994 in proceedings 10519/92, 12979/92, 13933/92 and 12382/93 is dissolved. (2) I vacate the order numbered (3) made by Sully J in those matters on 10 June 1994. (3) Leave is granted to the plaintiff to discontinue proceedings No 10519/92. Each party is to pay its own costs of that matter. (4) The plaintiff is granted leave to discontinue proceedings 12979/92. Each party to pay its own costs. (5) The plaintiff is given leave to amend statement of claim in matter 13933/92 in the form annexed to notice of motion filed on 14 December 2001 in that matter. (6) That the plaintiff be given leave to discontinue in matter 13933/92 against the first and second defendants. Each party to bear their own costs in that matter. (7) Matter 12382/93 is not to be re-listed for hearing unless this Court is to otherwise order. (8) The defendant is to pay the costs of the plaintiff's notices of motion. (9) The defendants' motion is dismissed with costs. ********** Last Modified: 06/12/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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