Sogo Duty Free Pty Ltd and Anor and Commissioner of Taxation [2005] AATA 1298; (2005) 42 AAR 129; (2005) 62 ATR 1008; (2005) 89 ALD 236 (23 December 2005)

Customs Tariff Act 1995 section 15

Crimes Act 1914 section 29D

Re Secretary, Department of Social Security and Pluta (1991) 23 ALD 317

Re E Pty Ltd and Commissioner of Taxation (1987) [1987] AATA 202; 12 ALD 102

Cameron's Unit Services Pty Ltd v Whelpton & Associates Pty Ltd and Anor [1984] FCA 406; (1984) 4 FCR 428, 59 ALR 754

McMahon v Gould (1982) 1 ACLC 98, 7 ACLR 702

Rochfort v John Fairfax and Sons Ltd [1972] 1 NSWLR 16

Jefferson Ltd v Bhetcha [1979] 1 WLR 898

Beecee Group Ltd v Barton (1980) 5 ACLR 33

Caesar v Sommer [1980] 2 NSWLR 929 at 932

Re Slatergate Insurance Co Ltd (1980) 4 ACLR 733 at p 736

Street Nation Pty Ltd v Australian Communications Authority [2004] AATA 1251

1. This was an interlocutory application for a stay of proceedings which was issued by the Applicants and heard by the Tribunal on 28 November 2005. Mr Guzzo of counsel appeared for the Applicants and Mr Sest of counsel appeared for the respondent.
2. The Applicants are the owners and operators of duty free retail businesses.
3. In applications №2004/47 and №2004/48, the Applicants are seeking a review of a decision by the Respondent to disallow an objection to a Notice of Amended Assessment. The Notice relates to the Applicants' claim for a refund of input tax credits for GST paid to Australian suppliers of goods which had been sold to travellers departing Australia temporarily or permanently, from 1 July 2000 to 30 June 2001.
4. In application №2003/211-213, Sogo Duty Free Pty Ltd ("Sogo") is seeking a review of a decision by the Respondent to disallow an objection against a Notice of Amended Assessment. The Notice relates to the assessable income generated by the sale of stock by Sogo, principally on the basis that Sogo understated sales income by falsely recording domestic sales and sales to ships' crew, from 1 July 1999 to 30 June 2001.
5. Hoang Hai Chiem was a director of both Applicants. On 12 May 2005, Chiem was charged under the Crimes Act 1914 s 29D with failing to pay the Commonwealth customs duty payable pursuant to s 15 of the Customs Tariff Act 1995 in respect of goods which had been imported into Australia; and, further that he defrauded the Commonwealth by failing to pay excise duty payable pursuant to s 5 of the Excise Tariff Act 1921 in respect of goods which had been produced or manufactured in Australia.
6. Chiem's criminal charges appear to relate to his directorship of both Applicants and also relate to the same period which is the subject of the applications, namely, 1 July 2000 to 30 June 2001.
7. There were effectively two grounds upon which the stay of proceedings was sought by the Applicants. First, it was asserted that by hearing the matter, the Tribunal might be in contempt of the pending criminal proceedings. Secondly, it was asserted that the Tribunal should in any event grant a stay pursuant to s 33(1)(a) of the Administrative Appeals Tribunal Act (the AAT Act) on the grounds that a substantial injustice would be caused to the Applicants if the Tribunal proceedings were heard prior to the criminal proceedings.
8. With respect to the assertion that the Tribunal may be in contempt of the Magistrates Court if it proceeded with this application at the present time, Mr Guzzo emphasised that all transactions during the relevant period would be in issue in both proceedings. The Tribunal would be required to ascertain if each of the relevant sales complied with the relevant GST and the customs legislation and regulations. The criminal proceedings related to the same period and the same transactions.
9. Mr Guzzo cited Re Secretary, Department of Social Security and Pluta (1991) 23 ALD 317 in which the Tribunal stated that "it may well be a contempt of court for the Tribunal to proceed" to hear an application when related criminal charges were pending.
10. Similarly, Mr Guzzo cited Re Taxation Appeals (No. 163) and Commissioner of Taxation (VT85/618, Decision No. 3500, 26 May 1987) where Davies J, although deciding it would not be contempt of court if the Tribunal were to proceed, observed:

"It is ... strongly arguable that the investigation of this issue by this Tribunal, including the examination and cross examination of witnesses and the production of documents, while the same issue is being considered in the committal proceedings, would be a contempt of court as prejudicing the committal proceedings and the subsequent conduct of the trial".

1. It should be noted at this point that for the purposes of this application, the issues relevant to the question of contempt overlap with the issues relevant to s 33(1)(a) of the AAT Act. It is therefore appropriate to consider both issues in tandem.
2. Section 33(1)(a) states that in a proceeding before the Tribunal, the procedure of the Tribunal is, subject to this Act and the regulations and to any other enactment, within the discretion of the Tribunal.
3. In Cameron's Unit Services Pty Ltd v Whelpton & Associates Pty Ltd and Anor [1984] FCA 406; (1984) 4 FCR 428, 59 ALR 754 Wilcox J adopted the principles set out by Wootten J. in McMahon v Gould (1982) 1 ACLC 98, 7 ACLR 702 which were:

_(a) prima facie a plaintiff is entitled to have his action tried in the ordinary course of the procedure and business of the court (_Rochfort [v John Fairfax and Sons Ltd [1972] 1 NSWLR 16] at p 19);

(b) it is a grave matter to interfere with this entitlement by a stay of proceedings, which requires justification on proper grounds (ibid);

(c) the burden is on the defendant in a civil action to show that it is just and convenient that the plaintiff's ordinary rights should be interfered with ([Jefferson Ltd v] Bhetcha [[1979] 1 WLR 898] at p 905);

_(d) neither an accused (ibid) nor the Crown (_Rochfort at p 21) are entitled as of right to have a civil proceeding stayed because of a pending or possible criminal proceeding;

_(e) the court's task is one of 'the balancing of justice between the parties' (_Bhetcha at p 904), taking account of all relevant factors (ibid p 905);

(f) each case must be judged on its won merits, and it would be wrong and undesirable to attempt to define in the abstract what are the relevant factors (ibid p 905);

(g) one factor to take into account where there are pending or possible criminal proceedings is what is sometimes referred to as the accused's 'right of silence', and the reasons why that right, under the law as it stands, is a right of a defendant in a criminal proceeding (ibid p 904) ...;

(h) however, the so-called 'right of silence' does not extend to give such a defendant as a matter of right the same protection in contemporaneous civil proceedings. The plaintiff in a civil action is not debarred from pursuing action in accordance with the normal rules merely because to do so would, or might, result in the defendant, if he wished to defend the action, having to disclose, in resisting an application for summary judgment, in the pleading of his defence, or by way of discovery or otherwise, what his defence is likely to be in the criminal proceeding (ibid pp 904-905);

(i) the court should consider whether there is a real and not merely notional danger of injustice in the criminal proceedings (ibid p 905);

(j) in this regard factors which may be relevant include:

(i) the possibility of publicity that might reach and influence jurors in the civil proceedings (ibid p 905);

(ii) the proximity of the criminal hearing (ibid p 905);

(iii) the possibility of miscarriage of justice eg. by disclosure of a defence enabling the fabrication of evidence by prosecution witnesses, or interference with defence witnesses (ibid p 905);

_(iv) the burden on the defendant of preparing for both sets of proceedings concurrently (_Beecee Group Ltd v Barton (1980) 5 ACLR 33);

_(v) whether the defendant has already disclosed his defence to the allegations (_Caesar v Sommer [1980] 2 NSWLR 929 at 932; Re Slatergate Insurance Co Ltd (1980) 4 ACLR 733 a p 736);

(k) the effect on the plaintiff must also be considered and weighed against the effect of the defendant ...;

(l) in an appropriate case the proceedings may be allowed to proceed to a certain stage, eg. setting down for trial, and then stayed (Beecee Group v Barton)".

1. Commenting on these principles, Deputy President SA Forgie in Street Nation Pty Ltd v Australian Communications Authority [2004] AATA 1251 stated:

The situation facing the Tribunal when there is a concurrent criminal proceeding is a little different from the situation that gives rise to the felony-tort rules in the courts. Rather than the defendant being common to both, generally the Applicant seeking review in the Tribunal is the defendant in the criminal proceedings instigated after the respondent in the Tribunal has referred the matter to the Director of Public Prosecutions. The dilemma that faces an Applicant in this situation is that the oral evidence that was given on oath at the Tribunal may be used in the criminal proceedings. Evidence that was given at the Tribunal may be inadmissible in the Magistrates' Court but it may have instigated the respondent to make inquiries it would not otherwise have made. Considerations such as these may mean that an Applicant who is facing criminal proceedings may conclude that the less said the better.

This dilemma means that a slightly different emphasis should be placed on the principles set out by Wootten J. Principles (g) and (h), regarding the right of silence tend to merge with principles (i) and (j). An Applicant pursuing a right of review in the Tribunal while facing criminal proceedings may face injustice in one or other of the proceedings unless the Tribunal exercises special care. Relevant factors in considering what amounts to injustice will include:

(1) the proximity of the criminal proceedings. If they are to be heard and determined in the near future and there are no countervailing factors, justice may require that the Tribunal proceedings are heard after the criminal proceedings;

(2) whether the Applicant in the Tribunal has already disclosed all of its evidence in both the Tribunal proceedings and those in the criminal courts;

(3) if the criminal proceedings are ultimately to be heard by a jury, any possible publicity that may reach a jury;

(4) whether the Applicant wishes to proceed in the Tribunal before the criminal proceedings or regardless of when the criminal proceedings are heard;

(5) whether the Applicant has been properly advised regarding such matters as the right to silence and possible consequences of having the Tribunal matter heard first;

(6) whether the disclosure of evidence in the Tribunal could lead the respondent to make inquiries that it would not otherwise have known it should be making; and

(7) any adverse effect on the Applicant and the respondent in not having the application in the Tribunal heard and determined in the normal course of business.

1. Mr Sest asserted that while there is some overlap in background facts, the issues in the criminal proceedings differ from the issues in the proceedings before the Tribunal. Specifically, the proceedings before the Tribunal involve, ultimately, an issue concerning the Applicant's GST liability and Sogo's income tax liability, whereas the ultimate question arising under the criminal proceedings is whether customs and/or excise duty was avoided. Mr Sest further pointed to the fact that on the question of income tax liability, the issue before the Tribunal does not turn on whether or not customers and/or excise duty was underpaid, while the question of income tax liability is not relevant at all to the criminal proceedings.
2. Mr Sest asserted that the Applicants cannot discharge the onus of demonstrating a real prospect of substantial prejudice if they can only point to theoretical, fanciful or superficial matters in support. It was not sufficient to refer in a general way to potential or insubstantial difficulties which may arise merely because of the existence of the other proceedings.
3. Mr Sest argued that the Applicants could not show any real prospect of substantial injustice, and that any suggestion that both sets of proceedings revolved around the same transactions was a "claim of the highest generality".
4. Mr Sest emphasised that as Chiem had already given a statement, the significance of the privilege against self-incrimination was diluted. Further, there was no certainty that Chiem would give evidence at all. In addition, as the criminal proceedings were only at the committal stage, there could be a substantial delay before a final hearing of these applications, if a stay were granted sine die.
5. Notwithstanding Mr Sest's contentions on behalf of the Respondent, the Tribunal considers that a stay of proceedings is warranted on a number of grounds.
6. It is by no means clear, based on the existing authorities, that to proceed with the application prior to the criminal proceedings would, under any circumstances, necessarily place the Tribunal in contempt of the criminal proceedings. Nevertheless, the learned pronouncements on the subject to date are such that there is a realistic prospect of such a finding, under certain circumstances at least; and this factor has been taken into account by the Tribunal in reaching its conclusion.
7. The Tribunal is concerned that Chiem's "right of silence" could be compromised. Mr Sest argued that this could not be the case because Chiem had already provided detailed statements to the authorities. These statements were, however, only in the form of answers provided at interviews and should not be regarded as comprehensive, complete or necessarily informative - there is a real possibility that a substantially greater amount of elaboration would be required from Chiem upon cross-examination in proceedings before the Tribunal. The use which could be made in subsequent criminal proceedings of information so disclosed at the Tribunal potentially creates a risk of injustice in the criminal proceedings which is more than "merely notional".
8. The Respondent complains that the Applicants have not provided a detailed explanation of precisely how Chiem could be compromised by giving evidence to the Tribunal. To ask the Applicants to provide such elaboration, however, might only compound the problem, for it could require the Applicants to disclose matters which might properly be the subject of Chiem's right to remain silent in the criminal proceedings. The Tribunal is satisfied that the prospect of Chiem being required to give evidence, and being subject to cross-examination, in relation to the same transactions which would be the subject of the committal proceedings, is sufficient to create a plausible apprehension of injustice and therefore contempt of the committal proceedings.
9. For much the same reasons, the Tribunal considers it appropriate to exercise its discretion under s 33(1)(a) of the AAT Act to grant a stay of proceedings. In this regard, the Tribunal has taken account of the Respondent's assertion that no substantial prejudice would be suffered by Chiem. The Tribunal considers, however, that for the same reasons that a hearing of the applications might constitute a contempt of the criminal proceedings, the hearing of the applications might create a substantial prejudice to the Applicants or, more particularly, Chiem. Added to this conclusion is the reality that, particularly by way of comparison, the Respondent would not be prejudiced by the granting of the stay of proceedings. The Tribunal accepts that protracted delays in the determination of an application are arguably inconsistent with the Tribunal's objective under s 2A of the AAT Act to provide a review mechanism which is, inter alia, quick, but at the same time the Tribunal does not consider it would be fair or just to insist that the matter proceed in circumstances which might prejudice the rights of an individual at a forthcoming criminal trial, which might place the Tribunal in contempt of those criminal proceedings or which might prejudice the appropriate disposition of those criminal proceedings.
10. The Tribunal does not consider that the current proceedings should be adjourned sine die. The outcome of the committal proceedings, whatever that outcome might be, could provide a basis for the Tribunal to re-evaluate its current view that a stay of proceedings is warranted. Accordingly, it is the conclusion of this Tribunal that these proceedings should be stayed until the conclusion of the committal proceedings, whereupon the Tribunal will consider the further disposition of this matter.

I certify that the twenty-four [24] preceding paragraphs are a true copy of the reasons for the decision of:

Solicitor for respondent: Australian Government Solicitors