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[2018] FCA 2105
Federal Court of Australia
2018-12-21
Wheelahan J
Original judgment source is linked above.
Introduction 1 These reasons relate to a number of issues that were raised for determination at a case management hearing on 17 December 2018. The matters that remained in issue at the conclusion of the hearing were - (a) an application by the respondents to file an amended defence to the further amended statement of claim; (b) an application by the respondents to withdraw an admission in their defence to the further amended statement of claim, if such an application was necessary; (c) an application by the cross-claimant for leave to file an amended notice of cross-claim; and (d) an application by the applicants for discovery of documents.
Pleadings 2 The applicants commenced this proceeding on 9 February 2017 against the first respondent (the Comptroller-General), who at that time was the sole respondent. The second and third respondents were later added to the proceeding. 3 The subject matter of the proceeding is gold jewellery that the applicants had purchased in the United Arab Emirates and which they brought to Melbourne International Airport on 14 August 2015. In paragraphs 4 and 24 of their statement of claim as originally filed each of the applicants alleged that upon his arrival at Melbourne International Airport, an Australian Border Force official took possession of the jewellery. The statement of claim then alleged that seizure notices that were later issued on 30 June 2016 in respect of the jewellery were invalid, with the consequence that the jewellery could not be condemned as forfeited to the Crown pursuant to s 205C of the Customs Act 1901 (Cth). The applicants sought relief based primarily on the alleged invalidity of the seizure notices. 4 In the defence to the statement of claim, the Comptroller-General admitted the allegations in paragraphs 4 and 24 of the statement of claim that on 14 August 2015 an Australian Border Force official took possession of the jewellery. 5 On 27 April 2018, pursuant to leave of the Court that had been given on 24 April 2018, the applicants filed a further amended statement of claim. The further amended statement of claim retained the allegations in paragraphs 4 and 24 that an Australian Border Force official took possession of the jewellery at Melbourne airport on 14 August 2015, but added an allegation that the official was not authorised to take possession of the jewellery by a warrant, and introduced a number of additional causes of action, namely conversion, detinue, and trespass to goods that were premised on the allegation that an Australian Border Force official took possession of the jewellery. 6 In their defence to the further amended statement of claim the respondents denied the allegations that an Australian Border Force official took possession of the jewellery, but alleged amongst other things, that the jewellery was found in the applicants' baggage during a search in circumstances where the applicants had denied that they had any dutiable goods in their possession, and alleged that the jewellery was forfeited to the Crown on 14 August 2015. Alternatively, the respondents alleged that if the jewellery was not forfeited to the Crown, then the jewellery was subject to customs control by virtue of sections 30(1)(a)(ii), 68(3) and 68(3A) of the Customs Act. 7 The Comptroller-General as cross-claimant now seeks leave to amend the statement of cross claim filed in the proceeding. The sole issue raised in opposition to the proposed amendments to the cross claim is whether the Comptroller-General should have leave to delete allegations in paragraphs 3 and 12 of the statement of cross claim that "an officer of the cross-claimant took possession of the [jewellery]". The cross respondents allege that this is tantamount to the withdrawal of admissions, because the Comptroller-General, as respondent, had admitted this fact in the defence to the statement of claim, and had not obtained leave to withdraw it. 8 I consider that it was not appropriate that there was incoherence between issues arising on the pleadings in the claim, and issues arising on the pleadings in the cross claim. I consider, therefore, that there are two anterior questions that arise. The first question is whether the Comptroller-General as respondent required leave to withdraw the admissions of paragraphs 4 and 24 of the statement of claim. The second question is whether, if leave was required, leave should now be given. Counsel for the respondents made an oral application for leave to withdraw the admissions, should it be held that leave was required. 9 In my view, the original admission by the Comptroller-General of the allegations in paragraphs 4 and 24 of the statement of claim that an Australian Border Force officer took possession of the jewellery on 14 August 2015 was made in a materially different context to that in which the allegations are now made. That is because the act of taking possession was not relied upon in the statement of claim as originally filed as giving rise to the causes of action in conversion and trespass to goods, or supporting the cause of action in detinue. 10 Counsel for the Comptroller-General submitted that if the jewellery was subject to customs control, as alleged in paragraph 4 of the defence to the further amended statement of claim, then the officer did not take possession of the jewellery, and therefore there was a proper basis to deny that the officer took possession of the jewellery. Counsel relied on Kitano v The Commonwealth (1974) 129 CLR 151 at 170 where Mason J stated with reference to s 35A of the Customs Act that goods subject to the control of customs are not as such in the possession of customs: cf, Zien v R (1986) 26 DLR (4th) 121 at 125 (Federal Court of Appeal). Whether that is the position in relation to the provisions of the Customs Act relied upon by the respondents in this case is a question that will have to be considered at trial in light of the evidence. 11 Counsel for the applicants relied upon authorities concerning the withdrawal of admissions in pleadings and submitted that the Comptroller-General should not be permitted to withdraw the admissions in paragraphs 4 and 24 of the defence to the statement of claim: Collie v Merlaw Nominees Pty Ltd (2001) 37 ACSR 361; Divcon (Australia) Pty Ltd v Devine Shipping Pty Ltd [1996] 2 VR 79; and Cooper's Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738. 12 Collie v Merlaw concerned an application made at trial to amend a defence to withdraw an admission. Divcon (Australia) Pty Ltd v Devine Shipping Pty Ltd concerned an amended defence that was filed before the close of pleadings without leave, as permitted by rules of court. In Divcon, Beach J held that a party could not by that means withdraw an admission without leave, because r 25.02 of the General Rules of Procedure in Civil Proceedings (Vic) applied so as to require leave. In this Court, the corresponding provision is r 26.11 of the Federal Court Rules 2011 (Cth), which provides - 26.11 Withdrawal of defence etc (1) A party may, at any time, withdraw a plea raised in the party's pleading by filing a notice of withdrawal, in accordance with Form 47. (2) However, a party must not withdraw an admission or any other plea that benefits another party, in a defence or subsequent pleading unless: (a) the other party consents; or (b) the Court gives leave. (3) The notice of withdrawal must: (a) state the extent of the withdrawal; and (b) if the withdrawal is by consent - be signed by each consenting party. A defence to an amended pleading is permitted by r 16.55 of the Federal Court Rules, which provides that the respondent may amend the defence if the applicant amends the statement of claim and the respondent had filed a defence before being served with the amended statement of claim. In my view, the question that arises in this case is whether the defence to the further amended statement of claim that was filed by the Comptroller-General, including the denial of what was previously admitted in paragraphs 4 and 24, was authorised by r 16.55. In Yarrabee Chicken Company Pty Ltd v Steggles Limited [2010] FCA 394 Jagot J rejected an argument that the corresponding rule, O13 r 4(1)(a) of the former Federal Court Rules, had no limits on the right to amend. Jagot J held at [122] that the rule should be construed as permitting a defence to be amended in a manner that is responsive to an amendment in a claim, and that the change of position taken by the respondent in that case was not responsive to the amendment made to the claim. 13 Without taking account of authority, I would consider that r 26.11(2) is concerned with the withdrawal of an admission in a pleading by giving a notice of withdrawal in accordance with r 26.11(3). That construction is supported by the text of r 26.11(1) and (3), which is the context in which r 26.11(2) might be construed. However, that view would not be consistent with the decision of Beach J in Divcon (Australia) Pty Ltd v Devine Shipping Pty Ltd, to which I have referred above. Beach J held that the corresponding Victorian rule qualified the right to amend a defence without leave before the close of pleadings. By parity of reasoning, r 26.11(2) would qualify the right to amend a defence pursuant to r 16.55 of the Federal Court Rules so that no admission may be withdrawn without consent or leave. In this case, I do not need to resolve that issue. While the change of position of the Comptroller-General is explicable by the introduction of the new causes of action for conversion, trespass to goods, and detinue, the amendments which deny the allegations in paragraphs 4 and 24 of the further amended statement of claim are not responsive to amendments to the statement of claim in the sense identified by Jagot J in Yarrabee Chicken Company Pty Ltd v Steggles Limited. I therefore do not consider that the effective withdrawal of admissions was authorised by r 16.55. 14 However, taking account of the principles applied by the Court in determining whether to permit a respondent to withdraw an admission in a pleading, I have no difficulty in concluding that the Comptroller-General should be given leave to amend the defence in the form that is before the Court, including by denying the relevant allegations in paragraphs 4 and 24 that an officer of Australian Border Force took possession of the jewellery on 14 August 2015. The significance of those allegations was changed materially by the introduction of the additional causes of action. At the case management hearing, in response to a question from the Court, counsel for the applicants was not able to point to any prejudice that the applicants would suffer other than the loss of the benefit of the admissions, which by itself I do not regard as relevant prejudice. The other amendments that the respondents proposed to their defence were not opposed, and accordingly I would grant leave to the respondents to amend their defence to the further amended statement of claim in the form of the draft before the Court at the case management hearing. 15 It follows that the Comptroller-General, as cross-claimant, should have leave to amend the statement of cross claim in the form of the draft before the Court at the case management hearing.
Discovery of documents 16 In relation to discovery of documents, the applicants sought an order for standard discovery. The respondents, however, submitted that discovery should be limited. There were two categories of documents that were the subject of submissions. The first category was manuals and guides in relation to prosecutions under the Customs Act. I accept that documents in this category, as properly formulated, are relevant to paragraph 8A of the applicants' defence to the cross claim, which alleges an Anshun estoppel against the Comptroller-General. The second category was the prosecution briefs, and I understood that there was no dispute as to this category. 17 I was not persuaded on the material and the arguments put before me that there was any justification for standard discovery at this stage of the proceeding. Accordingly, I would make orders for non-standard discovery in terms of the two categories referred to above. 18 I will direct that counsel for the parties, upon considering these reasons, confer and submit a minute of order for the Court's consideration that addresses the resolution of the contested issues and provides for other directions that the parties desire to prepare the case for hearing. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wheelahan.
SCHEDULE OF PARTIES VID 86 of 2017 Cross-Respondents Second Cross-Respondent MASOUD ABBASNEJAD HAQIQI
Arbabun
Comptroller-General of Customs