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Federal Court of Australia |
COURT
IN THE FEDERAL COURT OF AUSTRALIACATCHWORDS
Bankruptcy Act - cancellation of registration of trustee - disputed allegation of fraudulent and dishonest conduct in relation to the importation of two second-hand cars in 1984 - findings of fact adverse to registered trustee - rejection of his evidence - finding that triennial statement did not disclose the true picture in relation to Customs Act offences - whether the trustee is a fit and proper person to retain registration - whether suspension or cancellation of registration appropriate - consideration of trustee's proposals for the orderly transfer of administrations to other trustees - whether cancellation should be postponed to enable proposals to be put into effect.HEARING
ADELAIDECounsel for the applicant : Ms C.M. Branson
Solicitor for the applicant : Australian Government Solicitor
Counsel for the respondent : Mr D.H. Peek
Solicitor for the respondent : Randle Taylor
ORDER
Upon the undertakings of the respondent.To call meetings of creditors of the estates of bankrupts and Part X administrations of which he is the registered trustee at his expense as soon as possible for the purposes of effecting his removal from that office and appointing a new registered trustee or the Official Trustee in his stead.
To advise each debtor of whose estates he is controlling trustee under Part X at his expense as soon as possible of his desire to be relieved of his duties under Part X so that the debtor may sign a new authority under sub.s.192(1) in favour of another registered trustee.
To make disclosure to the debtors and creditors of the estates referred to in undertaking no.1 and the debtors referred to in undertaking no.2 above of the reasons for his desire to be removed from the office and duties of trustee such disclosure to be in writing in terms approved by the Official Trustee or this Court.
To give notice to the Official Trustee of all meetings of creditors called pursuant to these undertakings and to allow the Official Trustee to be present and to speak thereat.
To not take further steps in the administration of any estate of which he is the registered trustee, other than the steps contemplated by the foregoing undertakings, without first giving notice thereof to the Official Trustee.
To permit the Official Trustee, members of his office, and his agents to undertake audits of the estates of which he is the registered trustee.
To forthwith not accept any further nominations or consents to act as a
registered trustee and to forthwith cause any consents which
have been
executed by him in respect of any creditor's petition to be withdrawn.
IT IS ORDERED that :
Further consideration of these proceedings be adjourned to 9.15 a.m. on Tuesday 12 February 1991.
That the parties be at liberty to apply in the meantime on short notice.
Note: Settlement and entry of order is dealt with in Bankruptcy Rule 124.
DECISION
Application is made under s.155(5B) of the Bankruptcy Act 1966 ("the Act") for an order that the registration of the respondent as a trustee in bankruptcy be cancelled.2. The respondent obtained registration as a trustee under s.155 by order of
this Court on 12 September 1983, and has remained a registered trustee since
then. In a triennial statement filed in
this Court under s.161A of the Act in
respect of the period from 20 May 1986 to 19 May 1989 the respondent disclosed
that within that period he had been convicted of
two offences, namely that
upon pleas of guilty entered in the Adelaide Magistrates Court on 6 August
1987 he was convicted of:
i) an offence contrary to s.234(1)(a) of the Customs Act 1901 in that on or
about 20 December 1984 at Adelaide he did evade payment of duty which was
payable. On this count he was fined $5,000,
being both the minimum statutory
penalty and the maximum fine which a court of summary jurisdiction could
impose.
ii) an offence contrary to s.234(1)(d) of the Customs Act in that on or about
13 December 1984 he did make an Entry for Home Consumption which was false in
a particular. On this count he
was fined $1,700.
3. In addition to the fines he was ordered to pay court costs of $11.00 and $12,000 towards the costs of the prosecution. The respondent pointed out in the triennial statement, by attaching a letter from his solicitors to this effect, that these offences are strict liability offences, and that he had pleaded guilty to them on the basis that the declaration as to value of a Porsche motor car which he was importing from Germany into Australia turned out to be false, but was not made with an intention to evade payment of duty.
4. The application which initiated these proceedings sought only an order suspending the registration of the respondent "in light of the abovementioned convictions". However the application was later amended to seek cancellation of registration, and the grounds in support of the application were considerably broadened.
5. Upon the trial of the application, the applicant has contended that in about December 1984 the respondent knowingly committed serious breaches of the Customs Act which involved deliberate fraud and falsehood in relation to the importation of not one but two second-hand Porsche motor cars into Australia from Germany. The two cars for convenience are referred to as the White Porsche and the Green Porsche. The White Porsche was the subject of the two charges to which the respondent pleaded guilty. That car was imported by the respondent in his own name. The applicant alleges that the respondent knowingly declared a price well below that which he actually paid in Germany to buy the car to avoid paying duty of Customs and sales tax. It is alleged that the purchase price was 29,085 deutschmarks or thereabouts whereas the declared value was the Australian dollar equivalent of DM 20,000.
6. In the case of the Green Porsche the applicant alleges that the respondent contrived to evade duty and tax by arranging for the car to be imported by a first-time immigrant to Australia, Winand Buschhuter. A first-time immigrant was, at that time, entitled to import a car free of duty if it had been owned and used by the immigrant for 6 months before departure for Australia, and was retained by the immigrant in Australia for personal use after arrival. It is the applicant's case that the purchase price of the Green Porsche was paid for by the respondent; that all shipping and other costs associated with the acquisition of the car were paid for by the respondent; that it was always intended by both the respondent and Mr Buschhuter that the car would be the property of the respondent; that on its arrival in Australia the respondent took the Green Porsche into his custody as soon as Mr Buschhuter cleared it through Customs without paying duty; and that the respondent thereafter intended to retain it as his own.
7. The applicant contends that proof of this conduct by the respondent demonstrates that he is not a fit and proper person to be registered as a trustee in bankruptcy.
8. In addition to matters concerning the two cars, the applicant raised a third which concerned the respondent's administration of the assigned estate of Vincent Russell Francis under Part X of the Act. During the trial the applicant withdrew this matter, and no further reference need be made to it.
9. The respondent has denied in the case of the White Porsche deliberately undervaluing the car. He says that although he handed over DM 24,000 to the dealer from whom he bought the car in Germany the real price which he paid was DM 20,000 net, as a refund of DM 4,000 German duty was to be returned to him by the dealer once the car left Germany. In the case of the Green Porsche he says his involvement in the importation by Mr Buschhuter was innocent. In particular he says he lent money to Mr Buschhuter to enable him to import the car as his own; and insofar as Mr Buschhuter presented to Customs false papers and made a false Entry the respondent was unaware of these facts.
10. I attach supplementary reasons which discuss the evidence, and record my findings on the credit of witnesses, and as to the facts. In my opinion, the applicant has established the facts alleged by him relating to the importation of the two cars. I have rejected the respondent's evidence which, on critical issues I found to be false. My findings also involve the conclusion that the explanation of the respondent's conduct relating to the White Porsche proffered in his triennial statement did not disclose the true picture.
11. Section 155(5B) relevantly provides that "the Court may, at any time, upon the application of the Registrar or any other person, or of its own motion, suspend for a specified period or cancel the registration of a person as a trustee under this section". The sub-section does not lay down criteria which are to guide the Court in the exercise of this power.
12. Sub-section 155(3A) lays down requirements for the enrolment of a person
as a registered trustee. One of the requirements is,
in para.155 (3A)(d),
that -
"(d) the Court is satisfied that the applicant is capable ofThe applicant's case, correctly in my view, contends that if it is established that a person no longer meets the requirements of para.155(3A)(d) the Court should exercise its power under sub.s.155(3B) in the public interest. In Re Humphreys and Walter (1931) 3 ABC 254 Lukin J. cancelled the registration of two trustees in bankruptcy who had unsuccessfully defended proceedings against them for money alleged to have been improperly received as secret commissions whilst acting as agents and financial advisers of the plaintiff company. The verdict of the jury indicated that the evidence of the two trustees had not been accepted as true. His Honour said at p 258 :
performing the duties of a trustee and is otherwise a fit and
proper person to be registered as a trustee,..."
"Before the Court makes an order enrolling an applicant as a13. It will be noted that the conduct of the two trustees which led to cancellation of their registration in that case was not conduct in relation to the performance of duties as trustees under the Bankruptcy Act, although the secret commissions were received by them in connection with their practice in partnership as accountants.
person qualified to act as trustee, it has to satisfy itself
not only of his experience and competence as an accountant, but
also of his honesty and good repute, and of his ability, as
such, to command and retain the confidence of the Court, of the
creditors and debtors in a bankruptcy proceeding, and of the
general community. As such, each of the respondents was duly
enrolled. Can I say that as such, in the fact of this verdict,
they retain such confidence, or as was said by Lopes, L.J., in
the case of In re Weare ((1893) 2 QB 439 at 448), quoted with
approval by the High Court in Southern Law Society v. Westbrook
[1910] HCA 31; (10 CLR 609 at 612) in regard to a solicitor, the word
'trustee' being substituted for 'solicitor' in that citation:
'Is the Court, having regard to the circumstances brought
before it, any longer justified in holding out the 'trustee' in
question as a fit and proper person to be entrusted with the
important duties and grave responsibility which belong to a
'trustee'? I think not. Is not the past happening calculated,
and likely, to engender suspicion and distrust? I think it is.
I have, therefore, in my opinion, no alternative. I must order
and direct in each case that the registration of the respondent
as a person qualified to act be cancelled."
14. The analogy drawn by Lukin J. between the position of trustees in bankruptcy and solicitors is a fitting one. The fundamental qualifications of honesty and good repute apply uniformly to both groups each of which are officers of a court. In Ziems v. The Prothonotary of the Supreme Court of New South Wales [1957] HCA 46; (1957) 97 CLR 279 at 297-298, a case involving a barrister, Kitto J. said "The issue is whether the appellant is shown not to be a fit and proper person to be a member of the Bar of New South Wales. It is not capable of more precise statement. The answer must depend upon one's conception of the minimum standard demanded by a due recognition of the peculiar position and functions of a barrister". That statement was approved by the High Court in Clyne v. N.S.W. Bar Association [1960] HCA 40; (1960) 104 CLR 186 at 189. So to with the respondent, the essential issue is whether he has been shown not to be a fit and proper person to be a registered trustee having regard to the minimum standards demanded by the position and functions of a registered trustee under the Act.
15. A person who engages in a course of conduct, whether alone or in conjunction with others, for the purpose of evading the due payment of duty and taxes, and thereby defrauding the Revenue, is not to be regarded as a fit and proper person to be entrusted with the responsibilities of a registered trustee in bankruptcy. That is so even if the conduct occurs otherwise than in the performance of responsibilities imposed on a registered trustee by the Act.
16. Conduct of this kind demonstrates a lack of honesty and of good repute at the time the conduct was engaged in. It does not necessarily follow that the person will thereafter forever be disqualified from gaining or holding enrolment as a registered trustee. The human capacity for reform and rehabilitation cannot be overlooked. Later, the circumstances of the person concerned may satisfy the Court that although at the time of the offending conduct he lacked the required qualities of character, with time those qualities have emerged or re-emerged.
17. That a person guilty of fraud or dishonesty will not forever be
disqualified is expressly recognised by sub.s.155(3B) which reads
:
"155(3B) Where a person -The requirement that conviction or release from prison must precede the application for enrolment by at least 5 years means that even in the most favourable case such a person cannot sooner qualify for registration. This is not to say that a person may not undergo a reformation of character in a shorter time; the section reflects the reality that the past happening will engender suspicion and distrust so that until at least five years have elapsed such a person is unlikely to command the confidence of the Court, and the community. The passage of substantial time, accompanied by good conduct consistent with genuine rehabilitation, is essential to the establishment of that confidence.
(a) has been convicted of an offence involving fraud or
dishonesty; and
(b) within a period of 5 years after the conviction or, if
the person was sentenced to imprisonment, after the person's
release from prison, makes an application under subsection (2),
the Court shall refuse the application."
18. Sub-section 155(5B) empowers the Court to "suspend for a specified period or cancel the registration". A similar power is contained in sub.s.155(5C), and the power in sub.s.155(5B) may also be invoked under sub.ss.176(2) and 212(2). Sub-sections 155(5C), 176(2), and 212(2) are concerned with default by a trustee in respect of the obligations of a trustee imposed by reason of the office by the Act whereas sub.s.155(5B) has a more general application: see Re Commins; ex parte Registrar in Bankruptcy for Southern District of Queensland (1989) 21 FCR 55 at 57. Sub-section 155(5B) vests in the Court a general disciplinary function in respect of registered trustees. The powers to cancel or suspend registration of a trustee are not punitive. The function of the Court is not to punish or exact retribution: Hardcastle v. Commissioner of Police [1984] FCA 105; (1984) 53 ALR 593 at 597 and MacMillan v. Pharmaceutical Council of Western Australia (1983) WAR 166 at 173-174. It is entirely protective in the public interest: Clyne v. NSW Bar Association at 201-202, NSW Bar Association v. Evatt [1968] HCA 20; (1968) 117 CLR 177 at 183-184.
19. The power to suspend registration for a specified period is one appropriate to be exercised where a trustee has fallen below the high standards required of him in the performance of his office, but not in a way which indicates that his intrinsic character lacks the qualities of honesty and propriety which are necessary attributes of a person to be entrusted with the responsibilities of a registered trustee: cf In re a practitioner (1984) 36 SASR 590 per King C.J. and Jacobs J. at 593. An exercise of the power to suspend is likely to be a fitting course where the requirements of the Act which rest on a trustee have not been met through oversight involving no moral turpitude. However, where a registered trustee in proceedings under sub.s.155(5B) is found to have been guilty of fraud or dishonesty, or other conduct, which displays a lack of the qualities of character required to be a registered trustee, the appropriate course, generally speaking, will be to cancel the registration. This will be so even in those cases where room exists for the belief that time may give the trustee standing to hold the office of registered trustee. An order for cancellation will mark the Court's opinion that when the order is made the trustee is not a fit and proper person to hold office. The order will not deprive him of the opportunity to reapply at a subsequent time and to offer positive evidence of the grounds upon which he seeks to be re-enrolled. On an application for re-enrolment the onus will be upon him to convince the Court of his complete repentance of his former misconduct and his determination to behave honourably in the future: Re a Solicitor (1952) VLR 385 at 389.
20. In the present case the respondent has not been convicted of an offence of fraud or dishonesty. The Court has however found, according to a lesser standard of proof, that he engaged in conduct in relation to the two cars of a serious kind which involved fraud and dishonesty. That conduct occurred in 1984, and demonstrated a failing in the intrinsic character of the respondent such that he was not then a fit and proper person to be registered as a trustee. If that were the only conduct of the respondent impugned in these proceedings it is probable that I would not, six years later, order that his registration be suspended or cancelled. In 1985 the fruits of his dishonesty, the two cars which he had paid for, were confiscated by Customs. In 1987 he was prosecuted. The resulting expenses, worry, and punishment to the respondent were such that the error of his ways would have been made very clear. His reputation and the performance of his professional duties as a trustee thereafter, according to a range of witnesses, has left nothing to be desired. It could have been concluded from his subsequent behaviour, particularly if it were accompanied by an expression of remorse, that he had repented and would now behave honourably in the performance of his privileges as a trustee and officer of the Court.
21. Unfortunately however, the matters proved against the respondent were not confined to conduct in 1984. It has also been established that in 1989 his triennial statement did not make honest disclosure of the circumstances surrounding his convictions in 1987. Statements of that kind, intended to reveal the circumstances of past transgressions, which gloss over the true facts or are misleading indicate a continuing failure on the part of the maker to act honourably, and, without more, may provide sufficient reason for disqualification: Re S. (a solicitor) (1986) VR 743 and In re a Solicitor (1916) 33 WN(NSW) 62. The findings made as to the lack of integrity of the respondent's evidence in these proceedings provides further evidence that presently his intrinsic character lacks the qualities of honesty and propriety appropriate to the office of registered trustee: cf re Humphreys and Walter, supra, and Bridges v. Law Society of New South Wales (1983) 2 NSWLR 361. The findings that the respondent failed to make truthful disclosure in his triennial statement and before this Court make it impossible to conclude that he has repented, and undergone such a change of character since 1984, that he presently meets the requirement of being a fit and proper person to be enrolled as a trustee. The findings which have been made leave me no option but to direct the cancellation of the respondent's registration.
22. After the addresses of counsel I indicated my conclusions about the importation of the cars, and the respondent's evidence, to enable the respondent to consider his position; and I gave time for him to do so. When the case resumed evidence was led on his behalf about his practice, his performance of work as a trustee, and about his future intentions. I accept that evidence. The respondent is held in high esteem by those who know him and have worked with him. His professional work, according to the witnesses, is exemplary. He has a good rapport with creditors and debtors. He is noted by those who regularly engage his services for his efficient administration of bankrupt and assigned estates. He is described as a "solid, down to earth, person". He has a reputation for charging modest fees. He conducts by far the largest proportion of the private registered trustee work in South Australia - presently he is trustee of approximately 38 per cent of the bankrupt and assigned estates under administration. He is a partner in a reputable firm of chartered accountants. This evidence cannot however override the facts disclosed by the other evidence: re Humphreys and Walter at 257-258, In re Davis [1947] HCA 53; (1947) 75 CLR 409 at 416.
23. The respondent's response to the findings of the Court adverse to his case were also those to be expected of a professional man. He acknowledged that on the findings made the Court must take action against his registration as a trustee. He expressed regret that the administration of estates under his control will suffer dislocation. He has offered at his expense to take whatever steps are necessary to expeditiously implement the changes in the administration of those estates necessary to give effect to the order and directions of the Court. He has offered to do so in conjunction with the Official Trustee. He has offered constructive suggestions for the future administration of the estates under his control designed to minimise dislocation and delay.
24. Matters under the Bankruptcy Act in the hands of the respondent fall into
three categories :
i) matters where he is a controlling trustee holding an25. The applicant contends that the Court should forthwith cancel the registration of the respondent. It is said that this would have the effect of creating vacancies in the office of trustee. Where the respondent is a controlling trustee, the Official Trustee would contact the debtor, who could then sign a new authority in favour of another registered trustee: s.192(1); and failing that, the Official Trustee would assume the role of trustee: s.192(3). Where the respondent is trustee of a bankrupt estate the Official Trustee would advise the creditors and the bankrupt. Pursuant to s.160 the Official Trustee would take over the administration of the estate unless and until the creditors requisitioned a meeting at which they voted to appoint another registered trustee pursuant to s.159. Where the respondent is trustee of an assigned estate the Official Trustee would advise the creditors and debtors and arrange either for a meeting of creditors to appoint another registered trustee under sub.s.220(1) or for the appointment by the Court of another registered trustee or the Official Trustee under sub.s.220(2). The operation of these various sections is discussed in Muir v. Bradley (1984) 57 ALR 155. At p 156 Beaumont J. noted that in earlier proceedings in the matter a Full Court of this Court pointed out that the proposition that an order for cancellation of the registration of a trustee would create vacancies in the offices of trustee held by him was not entirely free from doubt, and the Full Court left the proposition open.
authority under s.188
ii) matters where he is the trustee of the estate of a
bankrupt
iii) matters where he is the trustee of the assigned estate
of a debtor under Part X.
26. The respondent on the other hand has submitted that the interests of the creditors in particular, but also the interests of the bankrupts and debtors, would be best served by deferring the cancellation of his registration for a short time to allow him, as the case may be, to contact debtors to arrange new authorities under s.188, or to call meetings of creditors of the bankrupt or assigned estates at which he would resign his office and the creditors would have the opportunity to fill the vacancy forthwith. In conjunction with this submission he has offered undertakings to make a frank disclosure to everyone concerned of the reason for his resignation in terms to be approved by the applicant or the Court, to have the Official Trustee present at the meetings, and not to take any other action in any estate without reference to the Official Trustee (this proviso being intended to ensure that necessary steps in an administration will go forward).
27. The respondent's submissions frankly disclosed that in some matters the creditors could be minded to appoint another registered trustee, Mr Huppatz, who is employed by the firm of which the respondent is presently a partner. At first sight it might be thought that the respondent's submissions reflect an element of self interest, and this was suggested by counsel for the applicant. But as I understand the evidence of Mr Huppatz, who is a former Official Receiver, and the explanations of counsel for the respondent, the purpose of the proposal is fairly and squarely to best serve the interests of the creditors, debtors and bankrupts. The respondent recognises that he cannot continue to take part in the administration of the estates and does not propose to do so. If the creditors chose to appoint Mr Huppatz he will perform his functions as registered trustee with the independence which his office would require. If the creditors chose to appoint someone else as registered trustee the papers will be handed over forthwith with such explanation from the respondent as is required. The advantages of this proposal, which Mr Huppatz has explained, are that in a substantial number of the matters he is already supervising the administration, and a minimum of dislocation and delay will occur if he is appointed the registered trustee. Members of the staff of the firm with whom he works are familiar with the files and would continue to perform their work under his supervision. If the files remain under his supervision it will not be necessary for a new registered trustee to come fresh to each matter, to recreate accounting records, and so on.
28. The respondent has offered to call the meetings of creditors, and to take the other action proposed at his expense within the next four to six weeks - as soon as it is possible to do so having regard to the time of the year and the number of matters.
29. If there were evidence of unprofessional conduct or incompetence by the respondent in the performance of his duties as trustee in the administration of estates I would not entertain the proposals which the respondent has made. However the evidence is to the contrary and the integrity of the other members of the respondent's firm, of its employees, and of Mr Huppatz is not in question.
30. The volume of work presently under the control of the respondent is considerable. If his registration were cancelled immediately, all papers pertaining to the various estates would be delivered to the Official Trustee. Notwithstanding the size and efficiency of the Official Trustee's office, inevitably there would be delays whilst those files were read and understood and until meetings of creditors could be called (and I think meetings should be called). In the matters under Part X, I think the delays would be even more significant, and the prospect of applications to the Court under s.220(2) increased.
31. The decision between the alternative courses contended for is not without difficulty, and I recognise the importance of matters argued by the applicant. Nevertheless, I think the course proffered by the respondent is the one most likely to favour the interests and wishes of the creditors. I think the respondent should be given the opportunity to pursue it. Liberty to apply will be given. The Official Trustee is to be consulted closely about the proposed meetings of creditors and he can seek the further intervention of the Court if that is thought necessary. I propose therefore, upon the undertakings of the respondent already mentioned, to adjourn these proceedings until 12 February 1991, with liberty to apply in the meantime.
32. The Official Trustee has expressed a desire to audit each of the estates under the administration of the respondent. There is no reason why this process cannot commence forthwith, and that step is likely to be welcomed, if not insisted upon, by each new registered trustee who is appointed. If any matter comes to light in the course of the audits which undermines the premise on which I have decided to adjourn the proceedings the applicant can apply to the Court on short notice.
33. The respondent has expressed his determination to take all measures to rehabilitate himself and to regain the confidence of the Court. The opportunity is his. His co-operation in the orderly transfer of matters under his control to new registered trustees or the Official Trustee, as each case requires, will provide a tangible step in that direction.
34. The Court has been invited to express a view as to the length of time which should expire before the respondent applies for re-registration. It is not possible for a court to express a view in advance. If the respondent decides in the future to seek registration, he must demonstrate his repentance and his rehabilitation at the time when the application is made. I can only express my view that even though the established fraud and dishonesty in relation to the two cars occurred six years ago it would be pointless for the respondent to apply before 1992.
35. The final matter raised by the applicant is whether the order for
cancellation of the respondent's registration should be made
on the
applicant's application. It is suggested, to be consistent with the decision
in re Alafaci; Registrar in Bankruptcy v. Hardwick
(1976) 9 ALR 262, that once
the Court has made findings of fact on the matters raised by the applicant,
the respondent should be permitted to apply
for the removal of his name. It
is to be noted that in re Alafaci the integrity of the registered trustee was
not in question. Where
the factual basis of the application is in dispute, and
where the resolution of disputed facts might call into question the integrity
of the conduct or the evidence of a registered trustee, the Court should make
findings of fact on those matters: see Bridges v.
Law Society of New South
Wales supra. It is important that those issues be resolved before memories
fade. If this does not happen
at the time of the application under
sub.s.155(5B), it is likely to be difficult to ascertain the truth at a later
stage if re-enrolment
is sought. It would be otherwise if the trustee offered
to resign and give to the Court an undertaking never to seek re-enrolment,
but
that is not this case. Where the Court proceeds to make findings, and those
findings are adverse to the integrity of the registered
trustee, I consider
the order for cancellation should be made on the application of the
Inspector-General or the party moving under
sub.s.155(5B).
SUPPLEMENTARY REASONS FOR FINDINGS OF FACT CONCERNING THE IMPORTATION OF TWO
PORSCHE MOTOR CARS BY THE RESPONDENT
36. In June and July 1985 Customs became aware of the possibility of breaches
of the Customs Act in relation to the importation of the two Porsches.
Investigation by Customs officers led to the seizure of papers from the
respondent
and Mr Buschhuter relating to the acquisition of the cars, and
later to the seizure and confiscation of the cars themselves. A total
of nine
charges were laid against the respondent which alleged the deliberate acts of
dishonesty now alleged by the appellant. After
the trial in the Adelaide
Magistrates Court had been underway for a day or so the prosecution agreed to
accept the respondent's pleas
of guilty on the two strict liability offences,
and the other charges were withdrawn. The terms on which the pleas were
accepted
were recorded in writing, signed on behalf of the Collector of
Customs and the respondent, and included the following :
"3.(C) in making submissions as to penalty, Matthews by his37. The case of the applicant before this Court has, in substance, sought to prove the respondent's guilt on the charges which were withdrawn. In these proceedings the applicant cannot rely on averments contained in the pleadings as prima facie proof of the facts alleged. On all issues of fact alleged the applicant carries the burden of proof. The standard of proof is on the balance of probabilities. In considering whether that standard has been met the Court must, when a crime or quasi-criminal conduct is alleged, have regard to the gravity of those matters. I respectfully adopt the following statement from the judgment of Walters J. in Lemmer v. Bertram (1971) 2 SASR 397 at 399-400. His Honour said :
counsel will say :
i) that in making the following remarks, he is not
suggesting that there is any concession on the part of the
prosecuting authorities;
ii) that Matthews has been advised that the two
offences to which he is pleading guilty are offences of
absolute liability and that his pleas are entered on the basis
of that advice;
iii) that the pleas of guilty do not amount to
admissions of the existence of any mental state other than
inadvertence."
"Before canvassing the evidence, I propose to deal with the38. The resolution of the dispute on matters of fact relating to the two cars turns on the evidence of Mr Buschhuter, Mr Olivari and the respondent. Mr Olivari is the Customs officer who co-ordinated the Customs investigation in 1985. Many of the facts surrounding the acquisition of the two cars and their importation into Australia, by the end of the trial, ceased to be contentious. I shall first set out chronologically those facts as they are disclosed by the evidence, making reference on some topics to conflicts in the evidence between the respondent and Mr Buschhuter. Then I shall express my conclusions on the conflicting evidence of the witnesses.
burden which the plaintiff must accept in proving a claim in a
case such as this, where the facts alleged involve an element
of criminal or quasi-criminal conduct on the part of the
defendant. Although conduct of such kind is really in direct
issue on the pleadings, it seems to me that I am bound by
authority to hold that the ordinary civil rule as to
sufficiency of proof is the proper rule to apply, namely, that
the plaintiff must prove his case to my satisfaction on the
balance of probabilities (cf Helton v. Allen [1940] HCA 20; (1940) 63 CLR 691;
Rejfek v. McEllroy [1965] HCA 46; (1965) 112 CLR 517). Nevertheless, the
standard of proof required to tilt the scales in favour of the
plaintiff 'may vary according to the gravity of the fact to be
proved'. This matter was discussed by Dixon J. (as he then
was) in Briginshaw v. Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at p 362,
where the learned Judge said:
'But reasonable satisfaction is not a state of mind that is
attained or established independently of the nature and
consequence of the fact or facts to be proved. The seriousness
of an allegation made, the inherent unlikelihood of an
occurrence of a given description, or the gravity of the
consequences flowing from a particular finding are
considerations which must affect the answer to the question
whether the issue has been proved to the reasonable
satisfaction of the tribunal.'
I add a reference to the observations of Denning L.J. (as he then
was) in Bater v. Bater (1951) P 35, at p 37, where His
Lordship said:-
'In civil cases, the case may be proved by a preponderance of
probability, but there may be degrees of probability within
that standard. The degree depends on the subject-matter. A
civil court, when considering a charge of fraud, will naturally
require for itself a higher degree of probability than that
which it would require when asking if negligence is
established. It does not adopt so high a degree as a criminal
court, even when it is considering a charge of a criminal
nature; but still it does require a degree of probability
which is commensurate with the occasion.'
Whilst the authorities make it plain that the rule to be
applied in a case such as the present one is that a court
should require proof of the plaintiff's case merely on the
balance of probabilities, the sufficiency of proof may well be
affected by the presumption of innocence. As one of the
probabilities of the case, the 'ordinary presumption of
innocence' cannot be excluded (cf Doe d Devine v. Wilson [1855] EngR 708; (1855)
10 Moo PC 502 at p 531 [1855] EngR 708; (14 ER 581 at p 592); Motchall v.
Massoud (1926) VLR 273). I think, therefore, that even in a
civil proceeding, the standard of proof cannot be disassociated
from the subject-matter of the action and the nature of the
allegations upon which it is based, particularly where, as
here, the crime of assault is clearly charged on the pleadings.
It seems to me that the unlikelihood of the defendant
committing such a crime forms one of the elements which might
be weighed. On the other hand, the presumption of innocence
cannot shut out findings of fact which can and ought to be
properly made on the evidence, or the inferences which can and
ought to be drawn upon those findings."
39. The respondent is a chartered accountant, and in 1984 was carrying on practice in Adelaide on his own account. Whilst visiting one of his clients in the Barossa Valley in December 1981 he was introduced to Mr and Mrs Buschhuter, residents of Germany, who were holidaying in Australia. The respondent's client was the sister-in-law of Mrs Buschhuter. In 1982 the respondent and his wife, in the course of an overseas holiday, visited Mr and Mrs Buschhuter in Hamburg, and stayed with them overnight. It was a social visit. As the respondent speaks no German, and Mr and Mrs Buschhuter speak little English, communication between them has at all times been difficult.
40. The respondent, for a long time, has had a keen interest in Porsche motor vehicles. In 1982 he owned in Australia a Porsche model 924 but was keen to own a model 911. Whilst overseas in 1982 he looked at second-hand Porsche motor vehicles in England. He says that the quality of the vehicles there available led him to the view that if he were to acquire a vehicle overseas it would probably be necessary to purchase a left-hand drive vehicle in Germany and have it converted in Australia.
41. During 1982 to 1984 Mr and Mrs Buschhuter were seeking approval to migrate to Australia, and in late 1984 permission was granted to them to do so. They planned to leave Germany in November 1984. The respondent learnt of this, and decided that before Mr and Mrs Buschhuter left Germany, he would visit them again with a view to purchasing a used Porsche in Germany. Mr and Mrs Buschhuter were his only contacts in Germany, and he was keen to enlist their assistance to help him find his way about.
42. The respondent arrived in Germany and was met at Hamburg airport by Mr and Mrs Buschhuter on Monday, 15 October 1984. He stayed with them in their flat until he departed for Australia on Monday, 22 October 1984.
43. On Tuesday, 16 October 1984, the respondent's attention was attracted to a classified advertisement in a Hamburg newspaper for a 1978 Porsche model 911 SC Targa. Through that advertisement he made contact with the dealer, Sakalla GmbH, an automobile export business in Hamburg. The respondent and Mr Buschhuter visited the firm's premises. The respondent discussed the possible purchase of the car (the White Porsche) with Mr Sakalla in English. Mr Buschhuter was not closely involved in the discussion. By this time the respondent and Mr Buschhuter had visited several other car dealers in Hamburg but had not found a Porsche which the respondent considered suitable.
44. The vehicle being offered for sale by Sakalla appeared to meet the respondent's requirements. He says he was informed by Mr Sakalla that the car had been brought into Germany from Switzerland. The advertised sale price was DM 28,900. The respondent says that he did not negotiate over the price that day.
45. The respondent wished to have the vehicle examined by the German equivalent of the Royal Automobile Association before proceeding further. He was able to communicate this wish to Mr Buschhuter who took him to the "ADAC workshop" which was nearby. Arrangements were made by the respondent with that organisation for the car to be inspected on Friday 19 October 1984. At the ADAC office Mr Buschhuter acted as interpreter. There was discussion about the price of motor vehicles. Mr Matthews says that he was informed by Mr Buschhuter that in Germany there is a publication called "Swacke" which contains information as to current prices for second-hand motor vehicles. The publication was shown to them. The respondent says that he was informed that the average price for the type of car on offer from Mr Sakalla was DM 20,000. Mr Buschhuter confirms that there was discussion about price but is no longer able to remember what figures were mentioned.
46. Prior to the respondent leaving Australia he had arranged through his Australian bank to transfer A$20,000 to the Commerz Bank in Hamburg. After deductions for fees, the transfer made available to the respondent in Germany DM 50,875.57. On 17 October 1984 the respondent and Mr Buschhuter attended the Commerz Bank, and signed the paper work necessary to have DM 50,000 transferred into Mr Buschhuter's account at the Deutsche Bank. The balance was withdrawn in cash. This was done as the respondent was unable to draw other than the full amount from the Commerz Bank, and Mr Buschhuter had agreed, as a matter of convenience, for the money to be paid into his account and withdrawn as required. The respondent says that the transfer was for the amount which he perceived, before he left Australia, to be necessary to enable him to purchase one second-hand Porsche motor vehicle.
47. On the evening of Tuesday 16 October 1984 a conversation occurred between Mr and Mrs Buschhuter and the respondent as to the purchase of another Porsche motor vehicle to be brought into Australia by Mr Buschhuter. By the time this discussion occurred the respondent realised that Mr and Mrs Buschhuter lived in modest circumstances, that Mr Buschhuter was unemployed, and that they were not proposing to take their furniture to Australia as they could not afford a container. What was said during the discussion between the respondent and Mr Buschhuter is in dispute. As they were attempting to converse in the English language, the possibility that each misunderstood the intentions of the other cannot be overlooked. The respondent says that he offered to lend Mr Buschhuter all the funds necessary to buy a Porsche car, and to bring it into Australia. Mr Buschhuter was to repay the money in due course after his arrival in Australia, if necessary eventually by selling the car to raise the money although they realised this could not occur within 12 months of Mr Buschhuter's arrival. Mr Buschhuter on the other hand says that it was never his understanding that there was to be a loan arrangement. He always understood that the money which the respondent later advanced to buy the Green Porsche was intended for the purchase of that vehicle for the benefit of the respondent. He was to bring it into Australia so as to gain the benefit of the concession available to a first-time immigrant. To "comply with the law" he expected that on his arrival in Australia he would have to retain possession of the car for 12 months, although in this time the car would not be available to him for his general use.
48. After this discussion the respondent contacted his wife in Australia, and she arranged to transfer a further sum of money from Australia direct to the bank account of Mr Buschhuter at the Deutsche Bank. The amount transferred was the Australian equivalent of DM 16,000. The respondent in his evidence has not explained how this amount was determined.
49. On or about the morning of 17 October 1984 the respondent proposed a trip to Cologne, he says because he had been informed at the ADAC office that the Krefeld area of Cologne was a centre for the sale of second-hand Porsche motor vehicles. The respondent offered to pay for Mr and Mrs Buschhuter to travel with him to that area. Mrs Buschhuter bought the air tickets, the price of which was later refunded to her by the respondent.
50. Before the trio departed for Cologne, the respondent visited Mr Sakalla. He says he informed him of the proposed visit to Krefeld to look at other cars but asked Mr Sakalla in the meantime, to hold the White Porsche. The respondent says he paid him DM 200 to do so until the end of the week, and also arranged that if he rang Mr Sakalla from Cologne, Mr Sakalla would deliver the White Porsche to ADAC the following Friday for inspection.
51. On the afternoon of Thursday 18 October 1984 the respondent and Mr and Mrs Buschhuter flew to Cologne and hired a vehicle from Hertz. At some stage the respondent had become aware of an advertisement in a magazine for a Porsche model 911 for sale in the Cologne area by a Mr Bell. The respondent says that on their arrival in Cologne Mr Bell was telephoned by Mr Buschhuter and an appointment made to see him the following morning. Mr Buschhuter however says the telephone arrangements were made before they left Hamburg and the purpose of the trip was to inspect the car advertised. The probabilities strongly favour Mr Buschhuter's account. First thing on Friday 19 October 1984 the trio visited Mr Bell. Apparently he did not speak English. The discussions which then ensued regarding the vehicle, the Green Porsche, took place between Mr Buschhuter and Mr Bell in German. The vehicle was test driven. Then Mr and Mrs Buschhuter, the respondent, and Mr Bell drove to the Deutsche Bank in Cologne. Before leaving Hamburg Mr Buschhuter and the respondent had arranged with the Deutsche Bank to transfer funds to Cologne. At the Cologne bank moneys were withdrawn and DM 35,000 was then handed to Mr Bell on account of the purchase price of the Green Porsche. Mr Buschhuter says that DM 50,000 had been transferred to Cologne and that this sum was withdrawn in total, the balance of DM 15,000 after paying Mr Bell being handed to the respondent. The respondent however says that only DM 35,000 was withdrawn. The bank statements of Mr Buschhuter which have been proved in evidence indicate that on this point the respondent is correct. At some stage a contract note was drawn up and signed by Mr Buschhuter and Mr Bell, the stated purchase price being DM 35,500. The respondent says the additional DM 500 was given in cash by him to Mr Buschhuter and in turn paid to Mr Bell. Mr Buschhuter says the price paid was only DM 35,000 notwithstanding the price stated in the contract note.
52. The date shown on the contract note assumes importance. It is stated to be 1 April 1984, i.e. the contract note was backdated by a little more than 6 months. Mr Buschhuter says that he told Mr Bell that he needed to have owned the car for 6 months because he was emigrating to Australia and did not want to pay duty. He says that he had spoken with the respondent about the need for the documents to show that he had owned the car for 6 months. The respondent however denies this conversation. He says that he was unaware of the discussion between Mr Buschhuter and Mr Bell, and took no part in the preparation of the contract note, the terms of which were not made known to him. He was however aware from the events of the day that the price paid for the Green Porsche was DM 35,500.
53. Whilst in the Krefeld area, the respondent and Mr Buschhuter did not look at any other Porsche motor vehicles. This makes somewhat surprising the respondent's evidence that the purpose of the trip was to search for other vehicles, and that he had gone to Krefeld with the hope that he might find a more suitable vehicle than Mr Sakalla's White Porsche, as well as a Porsche for Mr Buschhuter. The respondent says that after inspecting the Green Porsche, he had come to the view that he should negotiate for the purchase of the White Porsche which would be more advantageous to him in terms of price although its condition was not as good as the Green Porsche; for this reason no further inquiry was made in the Krefeld area.
54. After completing the acquisition from Mr Bell, the hire car was returned. Mr and Mrs Buschhuter and the respondent drove back to Hamburg in the Green Porsche. On route, a telephone call was made to Mr Sakalla. The respondent says this was to instruct him to take the White Porsche to the ADAC for inspection. Mr Buschhuter says that the call was to confirm that the ADAC inspection had occurred.
55. On Saturday 20 October 1984 Mr Buschhuter and the respondent returned to Mr Sakalla's premises. A report from the ADAC was available. The respondent negotiated in English with Mr Sakalla. It had come to light that the speedometer in the car was not working, and that the car may have been a 1977 model, not a 1978 model as advertised. The respondent says he relied heavily on those matters and the information available in the Swacke book to the effect that the average price of such a car was DM 20,000. He says that the negotiations that morning reached a point where Mr Sakalla offered to sell the car for DM 27,500 but not less. Then discussion ensued regarding the respondent's intention to export the car to Australia. Mr Sakalla said that a refund of duty would be available to him as the car had been brought into Germany from Switzerland. As it was to be re-exported that duty would be refunded. The respondent says he understood from this conversation that there was some further leeway on the price. Mr Sakalla told the respondent that they would have to go to the German Customs people, produce the respondent's passport and papers, and convince them that the car was to be exported so that a refund could be obtained. The amount of the proposed refund was not mentioned. After this discussion Mr Sakalla said that he would sell the car to the respondent for a net price of DM 20,000 including a new speedometer on condition that he was able to get the duty back. An invoice was then typed up for the sale of the car, the arrangement being that Mr Sakalla would retain the car, and the respondent would pay him the following Monday. It would be necessary for the respondent to withdraw the money from Mr Buschhuter's account at the Deutsche Bank for this purpose.
56. It has not been proved by either party in these proceedings whether under German law duty would have been paid on an importation of the Porsche from Switzerland into Germany, or whether a refund would be available if the car were sold by Sakalla GmbH for export to Australia.
57. Later in Australia, an invoice from Sakalla GmbH was produced to Customs by the respondent's agent. The invoice is dated 20 October 1984 and shows the purchase price as "DM 20,000-netto". (DM 20,000-net)
58. On Sunday 20 October 1984 Mr Buschhuter and the respondent drove to the dock area where the respondent bought various gifts. He says that as he had no cash it was necessary for him to borrow money from Mr Buschhuter for this purpose. That evening they dined out at the respondent's expense, and again it was necessary for him to borrow money which he repaid the following day.
59. On Monday 22 October 1984 Mr Buschhuter and the respondent went to the Deutsche Bank where the respondent says he withdrew 31,000 DM (in round terms, the balance of the moneys paid into Mr Buschhuter's account). The withdrawal is confirmed by the bank statements. Then together they insured the Green Porsche in Mr Buschhuter's name after which they attended the motor vehicle registration department to reregister it in Mr Buschhuter's name. A new registered number was assigned to the vehicle, no. HH-WP-1762. Whilst Mr Buschhuter went to get new number plates, the respondent returned to the premises of Mr Sakalla to complete the purchase of the White Porsche.
60. The respondent alleges that he and Mr Sakalla went to the German Customs to arrange the refund of duty previously discussed. The respondent produced his passport and there was general discussion between Mr Sakalla and the Customs people which the respondent did not understand. He and Mr Sakalla drove back to the latter's office where Mr Sakalla explained there was a problem in that Customs would only refund the money after the car had actually left Germany. Mr Sakalla then told the respondent that the amount involved was DM 4,000; that he would have to pay this sum to him in addition to the net purchase price of DM 20,000; and that there would be a refund of DM 4,000 to the respondent in due course when the duty was recovered. The respondent thereupon paid over DM 24,000 and arranged for Mr Sakalla to organise the dispatch of the vehicle to Australia in a container. The respondent was to pay the associated freight costs from Australia. The respondent says that in addition to the purchase price of the car he also paid Mr Sakalla the cost of registering the car, a step that he thought was necessary before it left Germany.
61. Before leaving Germany, the respondent says he refunded Mr and Mrs Buschhuter the various moneys which he had borrowed from them, and paid the costs of the air travel to Cologne. He has given in evidence a list of these expenses together with other amounts that he paid for gifts to account for the expenditure of approximately DM 7,000, being the difference between the amount he says that he paid to Mr Sakalla and the money withdrawn from the Deutsche Bank. When he departed from Germany, the respondent had no German currency left.
62. After his return to Australia, a further DM 9,485.75 was transferred by the respondent from Australia to Mr Buschhuter's Deutsche Bank account to meet the cost of transporting the Green Porsche to Australia.
63. The White Porsche was shipped from Hamburg to Adelaide and entered Australia on 11 December 1984. On 13 December 1984 Customs agents acting on the respondent's behalf made an Entry for Home Consumption in respect of the White Porsche in which it was stated that the vehicle had a value for duty of A$7,857.61 being the equivalent of DM 20,000. That value was accepted for the assessment of $3,535.93 duty of Customs and $2,734.44 sales tax which the respondent paid to obtain clearance of the White Porsche.
64. The Green Porsche was shipped to Australia as part of the personal possessions of Mr and Mrs Buschhuter. Upon the acquisition of the Green Porsche they had arranged a container in which was packed the car and their furniture which they had initially intended to leave behind. That container arrived in Australia on 27 December 1984. On 4 January 1985 Mr Buschhuter and his wife travelled from the Barossa Valley where they were then living to Port Adelaide for the purpose of clearing their possessions through Customs. At Port Adelaide Mr Buschhuter made an Entry for Home Consumption in respect of the Green Porsche in which it was stated that he was the owner of the vehicle; that he was entitled to import the vehicle free of duty on the footing that he was an immigrant who had owned the vehicle in Germany for more than 6 months, viz from 1 April 1984, and that he intended to retain the vehicle for at least 12 months. The respondent had been informed of the impending arrival of the vehicle, and he was at Customs when Mr and Mrs Buschhuter arrived. After completing the formalities, Mr Buschhuter drove the Green Porsche from the Customs yard to the roadway. From there the respondent took possession of the car and drove it away. He had brought with him petrol, and trade plates that he had borrowed to enable him to do so. The respondent says that the vehicle was taken forthwith to Enzo's Auto Service in Adelaide to be converted from left-hand to right-hand drive, but as there were delays it was later removed to the respondent's home. The car suffered minor damage in transit from Germany. It was insured as part of Mr Buschhuter's personal possessions. The respondent obtained two quotes to repair the damage and prepared an insurance claim form for Mr Buschhuter to sign. From the time the respondent drove the car away from the Customs yard Mr Buschhuter did not again see it. Mr Buschhuter says that he did not request the respondent to convert the vehicle to right-hand drive, nor did he at any stage ask the respondent as to the whereabouts of the vehicle. Mr Buschhuter was at no stage asked to pay anything in respect of conversion, and he took no steps to have the vehicle registered or insured in his name in Australia.
65. Events did not turn out for Mr and Mrs Buschhuter as they wished in
Australia, and they returned to Germany on 17 July 1985.
The respondent first
became aware of investigations by Customs into the import of the White Porsche
on 25 June 1985. It was on that
day that the car was seized. Mr Buschhuter
says that before he left Australia he was contacted by the respondent who said
that he
wanted Mr Buschhuter to take the Green Porsche back to Germany and
sell it. The respondent informed him that Customs had confiscated
the White
Porsche and he was concerned that they would confiscate the Green Porsche as
well. Mr Buschhuter agreed to take the vehicle
back to Germany and commenced
making transportation arrangements. Before they were put into effect Customs
intervened. On the other
hand the respondent, whilst acknowledging that there
was discussion with Mr and Mrs Buschhuter regarding the Green Porsche after
the White Porsche was seized, says that he did not initiate the idea of them
taking the car back to Germany. He says (para.73 of
his affidavit) :
"In that context I was asked what they should do about the66. No refund of duty by Sakalla GmbH was ever received by the respondent. He says (para.62 of his affidavit) :
green Porsche. Again the problem of communication no doubt
emerged but basically I was being asked whether I thought they
should take the car back to Germany and sell it and my position
was that it was entirely up to them and that it was his car.
Obviously I wanted to be paid my money and no doubt Mr
Buschhuter viewed the possibility of taking the car back to
Germany and selling it as one way of paying me. I did not
suggest that he should do so but, on the other hand, it was my
firm view that he was the owner of the car and accordingly I
could not stop him from taking it to Germany if he wished."
"After my return to Australia I did attempt to secure the67. Cross-examination of the respondent revealed that both these telephone conversations had another purpose as well - to inquire about an acquaintance of the respondent who was making contact with Mr Sakalla to buy a Porsche in Germany. Notwithstanding the respondent's view that he would not recover the sum of DM 4,000 he had not sought to dissuade his acquaintance from dealing with Mr Sakalla. In March 1985 the respondent recommended yet another person who was seeking to buy a Porsche overseas to Mr Sakalla. That fact was confirmed by a telex dated 8 March 1987 discovered on the respondent's desk in the course of the Customs investigations.
refund of the DM 4,000. I telephoned Sakalla on at least two
occasions in late 1984 or into 1985. His response was simply
that it had not arrived yet. I was beginning to believe that I
was not going to get the money but I took a fairly fatalistic
view about it. I considered that I was still ahead financially
on the car and there seemed little point at that stage in
taking the matter further."
68. In 1987, after he had been charged with Customs Act offences, the respondent says he endeavoured to locate Mr Sakalla but could not do so. He was informed that Mr Sakalla had left Germany and moved to Lebanon. The respondent has produced copies of correspondence generated in his search for Mr Sakalla.
69. The applicant's case against the respondent in relation to the White Porsche rests in part on admissions which Mr Olivari says the respondent made to him on 18 September 1987. Before turning to those alleged admissions I refer to the other evidence as to the price paid for the White Porsche. The asking price in the advertisement which attracted the respondent in Germany was DM 28,900. An attempt was made to lead evidence from Mr Buschhuter that in Germany it is unusual for a motor vehicle to be sold at a price less than the advertised price. Mr Buschhuter has no expertise to give such an opinion and I place no weight on it. In the course of Mr Olivari's investigations in 1985 Mr Buschhuter told him that he believed the respondent bought the White Porsche for DM 26,000 - 28,000, although in his affidavit in these proceedings he says his impression is that a price of DM 28,000-29,000 was paid. Mr Buschhuter concedes that he does not know what price was paid, although it is reasonable to assume that he and the respondent would have discussed the price paid in Hamburg. His evidence as to price is of little probative value.
70. In apparent support of the respondent's evidence, is the invoice for "DM 20,000 netto" although no evidence has been led by either side as to significance of the stated price being "netto".
71. The applicant draws attention to the withdrawal of DM 31,000 on 22 October 1984 from Mr Buschhuter's account. Clearly this was the source of funds from which the purchase price was paid. The applicant has proved the Australian Customs and Quarantine statement lodged by the respondent when he returned to Australia on 24 October 1988 in support of the argument that the applicant brought few personal items back into Australia, and that the respondent's evidence about the expenditure of the DM 31,000 is improbable and should not be accepted. The evidence of Mr Buschhuter also suggests that expenses incurred by the respondent in Hamburg were considerably less than the respondent asserts.
72. Another piece of circumstantial evidence relied on by the applicant is
writing on a piece of paper seized by Mr Olivari in the
course of his
investigations from the respondent's office. The piece of paper is a sheet
from a desk calendar pad, in the German
language, for the months of August and
September 1984. On that sheet are several figures written by someone other
than the respondent.
They appear to be in the writing of a European. The
suggestion is that the figures were written by Mr Sakalla. The writing is
as
follows :
$28,500, - PKW (Price)73. On the reverse side of the paper appears the following writing, apparently in the same hand :
250, - Zoll (Duty)
75 - ADAC (ADAC)
260, - Tacho (Tachometer)
$29,085 -
Porsche 911 SC (Porsche 911 SC)74. According to the evidence of Mr Rozman, another Customs officer, this piece of paper was discovered in the respondent's office attached to the telex dated 8 March 1985 from Mr Sakalla to the respondent regarding the availability of another Porsche motor vehicle. The asking price stated in that telex was DM 28,500. The applicant submits that the inference should be drawn that the information on the piece of paper relates to the White Porsche as the details of the vehicle on the reverse side coincide, and the cost items for "ADAC" and "Tacho" are strongly indicative of the subject vehicle which was examined by ADAC, and required the fitting of a new instrument for recording speed. The applicant contends that it should be inferred from the fact that it was attached to the telex, that the information on the paper was being used as a reference to indicate other costs which would have to be added if the vehicle referred to in the telex were purchased. In turn this gives rise to the further inference that the respondent treated the figures as recording an actual transaction which had occurred.
Targa (Targa)
WeiB (White)
Glor (Colour)
E Fenstev (E Windows)
E Speigel (E Mirrors)
RadioCassette (Radio Cassette)
Spoiler (Spoiler)
75. At first, in his affidavit evidence, the respondent said:
"As to the piece of a German calendar which is said to haveNotwithstanding this, in the course of his cross-examination he asserted that when the telex left his office with the Customs officers the piece of paper was not attached to it.
been attached to that telex I am much less clear. I simply
have no memory of that piece of paper and how it came into
existence. I have heard Mr Olivari's proposition that it is
just the sort of thing that Mr Sakalla may have scribbled out
in his office during negotiations and I am not in a position to
positively refute that proposition. What I can say with
certainty is that if he did do that then it was at most part of
the negotiation process. The figure of 29085 may reflect his
negotiating position at some stage but it was certainly not
what I paid for the car as explained above. I am quite unclear
as to whether this scrap of paper indeed relates to the white
Porsche at all or whether it possibly relates to some other
car. I simply have no memory of the document."
76. The applicant relies on the evidence of Mr Olivari as to the discussion
he had with the respondent on 18 September 1987 to draw
the above items of
evidence together. Mr Olivari says that after the conclusion of the
proceedings in the Magistrates Court he was
holding various documents seized
under search warrants which he desired to return to the respondent. He called
on the respondent,
by appointment, for this purpose. The respondent invited
him into his office, and offered him coffee. Documents held by Mr Olivari
were handed over. Then he alleges the following conversation took place :
"I said: 'You look much better than last time I saw you in77. Following the conversation Mr Olivari made a brief hand written note of his attendance at the respondent's office, and later prepared a short "information report". In neither of these documents was the alleged conversation set out in question and answer form, although in the hand written note there is reference to the respondent saying that he had undervalued the White Porsche. At the time, Mr Olivari was asking these questions out of a matter of personal interest. So far as he knew, the 1984-1985 matters were officially concluded. He was not asked to recollect in question and answer form the conversation until March 1990.
Court. You looked ten years older then.'
He said: 'Yes, I wouldn't want to go through that again. All
the stress on the last two years.'
I said: 'I know. Those writs affected me too.' (I was
referring to civil proceedings he had instituted against
Customs Officers Rozman and Adam.)
He said: 'Yes, nothing personal. It was all part of the
game.'
I said: 'I can't see it being worth it. I reckon that it
cost you $100,000.00.'
He said: 'More than that. By my calculations it cost me
$150,000.00 all up, including legal fees. I wouldn't be that
stupid again. I could have bought a new one for the same
price. I am thinking of bringing some Porsches in through
Darwin. I think there is still a quid to be made, but I'll
send all the documents down to you first to vet. The prices
would be like those in the Swacke. What's the rate of duty
now?'
I said: 'I'll find out. How much did you pay for the white
Porsche? DM 31,000?'
He said: 'Not quite that much.'
I said: 'Buschhuter said 26,000 to 28,000.'
He said: 'That would be about right.'
I said: 'Why did you undervalue it?'
He sid: 'Because everybody was doing it, and I thought why
not? It's like having a fiddle on your tax.'
I said: 'But you didn't realise the extent of the
penalties?'
He said: 'No, it was a shock.'
I said: 'What about the car in Buschhuter's name?'
He said: 'I didn't intend to do that. Buschhuter arranged
for the false invoice. I didn't speak German. Once it was
done I just went along with it. Was that true, what you said
in Court about the chassis number making it a 78 model?'
I said: 'Yes.'
He said: 'Sakalla told me it was a 78, but I thought he was
just putting it over me to get a better price.'"
78. On the basis of the conversation alleged by Mr Olivari, the applicant contends that the evidence earlier recited falls into place: the purchase price of the vehicle was as shown in the slip of paper from the calendar, the expenditure of the DM 31,000 withdrawn from the bank on 24 October 1984 accords with the evidence of Mr Buschhuter as to various outgoings that he witnessed and with limited purchases of personal items for the respondent and his family, and the invoice for DM 20,000 was a sham.
79. The respondent attacks the credit of Mr Olivari. It is submitted by counsel for the respondent that Mr Olivari, probably out of a desire to prove the point that the applicant really was guilty of the Customs offences with which he was originally prosecuted on the recommendation of Mr Olivari, has reconstructed the conversation and events of 18 September 1987 in a way which will establish that. The respondent says the conversation occurred in unfriendly circumstances, and insofar as he made answer to the questions of Mr Olivari, which he considered to be impertinent, those answers should not be construed as making the admissions now asserted.
80. Where the truth lies in relation to the White Porsche turns to a large extent on the view which the court takes as to the credit of Mr Olivari and the respondent. I shall return to that question after referring to evidence concerning the Green Porsche.
81. The applicant's case in relation to the Green Porsche relies
substantially on the evidence of Mr Buschhuter who travelled from
Germany to
give evidence. His credit has been subjected to a strong attack. It has been
suggested that he has been induced to give
an account of events damaging to
the respondent so that the applicant will meet his travel costs to Australia
thereby giving him
the opportunity to visit family members who reside here.
Mr Buschhuter's recollection on points of detail has also been subjected
to
close scrutiny, and in some instances his recollection is demonstrably wrong,
for example in relation to the amount of money which
was transferred to
Cologne, and the amount which he withdrew on 19 October 1984 at the time the
Green Porsche was paid for. He has
also been cross-examined on an affidavit
filed in these proceedings which he swore at the Australian Consulate in Bonn
on 26 April
1990. An alteration made at Mr Buschhuter's request on that
occasion was emphasised. The following passage in a draft prepared from
instructions taken from him by telephone was struck out :
"It was agreed between myself and the respondent that on myand in lieu thereof the following paragraph was inserted :
entry into Australia I would transfer title of the second
Porsche to the respondent at his request. This agreement was
made in order that the respondent could avoid paying Customs
duty and sales tax on the second vehicle at the time of
importation into Australia."
"While there was no written or oral agreement with the82. I have carefully considered the criticisms made of Mr Buschhuter's evidence. Whilst there are inaccuracies in it I am satisfied that he is a witness of the truth who has endeavoured to do his best to explain what happened. I am left with the firm impression not that Mr Buschhuter has deliberately given a false account of what occurred, but rather that he never fully understood how his role in the Green Porsche transaction was to be carried out. I am satisfied that at all times he understood he was to import the Green Porsche for the respondent and would do so in his name to attract the concessions available to a first-time migrant. Having agreed to adopt the role of owner of the car he entered into the spirit of the ruse. The respondent says that Mr Buschhuter told him, when the Green Porsche was registered in Germany, that he chose the letters "WP" in the registered number HH-WP-1762 to indicate "Winand's Porsche". Mr Buschhuter does not recollect this, but if it is the case I treat that conduct by Mr Buschhuter as no more than part of the ruse. The probabilities arising from the financial and personal circumstances of Mr Buschhuter are strongly against the assertion that a genuine loan was made by the respondent to Mr Buschhuter. I accept Mr Buschhuter's evidence that it was never his belief that he was importing the car so that he could sell it eventually in Australia to make a profit for himself.
respondent there was an understanding that if I was not able to
repay the respondent the purchase price of the vehicle, then
the vehicle would be given back to the respondent. However,
the vehicle was retained by Mr Matthews from the date of its
arrival in Australia and was never in my possession except on
the day Customs clearance was arranged."
83. A critical issue is the intention of the respondent in relation to the transactions concerning the Green Porsche. There are aspects of the evidence which lead me to the firm conclusion, according to the standard of proof earlier stated, that the respondent did intend that the Green Porsche would be brought into Australia for his benefit solely, and that Mr Buschhuter was to be a puppet for this purpose to avoid the imposition of duty of Customs and sales tax. The same evidence causes me to positively reject the hypothesis that there was a misunderstanding between Mr Buschhuter and the respondent as to whether the money was advanced to Mr Buschhuter as a loan. I find that the respondent's evidence, so far as it seeks to paint an innocent gloss over the events which the applicant has been able to establish by independent evidence, reflects a deliberate attempt to conceal the truth.
84. The matters upon which I mainly rely for these conclusions are :
The Green Porsche contract note
The evidence of the respondent given in his affidavit and
during the first day of his cross-examination made no reference
to an anticipation on his part that Mr Buschhuter would be
required to pay any imposts levied on the Green Porsche in
Australia at the time of its clearance through Customs.
Implicit in his evidence was the notion that none would be
paid. His conduct, as he described it, on 4 January 1985 at
Port Adelaide was consistent with this understanding,
particularly his lack of surprise that no duty or tax was
assessed. I am satisfied that the respondent knew at that time
that duty of Customs and sales tax would not be levied only on
the footing that Mr Buschhuter was importing the car as his own
and as a car which he had owned in Germany for at least 6
months before his departure. Against this state of knowledge
his evidence that he was ignorant of the backdating of the
contract note signed by Mr Bell was incredible. The need for
backdated evidence of Mr Buschhuter's ownership of the car was
essential to the importation of the car without incurring duty
and tax.
On the second day of his cross-examination the respondent was
asked to precisely itemise the outgoings which he intended to
"lend" Mr Buschhuter. He did not include Australian duty of
Customs and sales tax. When this was pointed out - and I am
sure that the importance of the question was understood by him
- he said that he had forgotten to mention that expense, that
he had always intended that duty would be paid, and that he had
anticipated lending a further A$10,000 or thereabouts for this
purpose. When asked whether he had taken the means to pay
these expenses to Port Adelaide on 4 January 1985 he said that
he had not, but that he had expected, when the duty and tax had
been quantified, to ring his bank manager, with whom no prior
arrangement had been made, and arrange a loan by telephone.
The proceeds of the loan would be transferred immediately to a
branch of the bank at Port Adelaide where he would collect it.
I consider this explanation to be false, and illustrative of
the respondent's manipulation of his evidence to endeavour to
exculpate himself.
The evidence of Mr Buschhuter that he discussed the need to
backdate the invoice with the respondent, has a strong ring of
probability about it, whereas the denial of the respondent that
he had knowledge that the invoice was backdated is incredible.
The improbability of a loan transaction
The evidence of the respondent provides no credible reason why
he should stretch his own financial resources to the point
which he did to make a loan, interest free, to a man whom he
barely knew in the circumstances described by him. There was
nothing in writing to confirm the fact of the loan. It was at
all material times the respondent's belief, so he says, that Mr
Buschhuter could not sell the car in Australia within 12 months
of his arrival. The financial circumstances of Mr and Mrs
Buschhuter were such that there was no realistic prospect of
the "loan" being repaid until the car was resold. The
assertion by the respondent late in his cross-examination that
he always intended to advance further money in Australia to pay
duty and tax of A$10,000, which he would borrow from his bank,
makes the respondent's evidence the more incredible.
The respondent's failures to record in any way the fact of the
loan; to fix a time for repayment; to set down the total of
the money "advanced" to Mr Buschhuter or to seek to confirm
with him the extent of his alleged indebtedness; and to seek
repayment, also point strongly against the fact that a genuine
loan was made.
The conduct of the respondent in relation to the Green
Porsche from the time of its clearance through Customs on 4
January 1985 is opposed to the likelihood that his transaction
with Mr Buschhuter was as he asserts. Even if Mr Buschhuter
were to be disbelieved when he says that he was not consulted
about the conversion of the motor vehicle to right-hand drive,
and even if it could be accepted that the respondent arrived at
Customs when the vehicle was to be cleared with petrol and
trade plates as an act of further kindness and generosity to
assist Mr Buschhuter, his conduct thereafter is inexplicable.
No satisfactory explanation is offered as to why the vehicle
was retained by the respondent, and why it was not made
available to Mr Buschhuter to register, insure, and use in a
manner which would be expected had there been a genuine loan to
him.
The interview on 25 June 1985
The respondent was interviewed by Mr Olivari and Mr Rozman on
25 June 1985. Mr Olivari's account of conversations on that
day has not been subject to attack. In the course of those
conversations the respondent said that he had transferred DM
50,000 to a bank in Germany to provide funds whilst he was
there, and that the White Porsche cost DM 20,000. He was asked
the question "How did you spend the DM 30,000 whilst you were
in Germany?" The respondent replied "I would have spent it on
odds and sods I guess". In my opinion this answer is
significant in that it fails to disclose the transaction with
Mr Buschhuter. If that had been a legitimate transaction, a
ready explanation could have been given for the expenditure of
that money.
I return now to the White Porsche. The respondent's evidence
about the payment of DM 4,000 to Mr Sakalla, which was to be
refunded, is rendered improbable by the respondent's failure to
make any serious attempt to recover that amount, or to warn
others against dealing with Mr Sakalla when it was not
refunded. In any event, the adverse view which I have formed
about the respondent's credibility on matters relating to the
Green Porsche causes me to reject his evidence about the price
of the White Porsche. The rejection of his evidence, however,
provides no proof of the applicant's case. That proof must be
found in the other evidence.
The attack made on Mr Olivari's credit failed. Naturally there
is reason to question whether he could accurately remember word
for word the conversation which occurred on 18 September 1987,
2 years later, but when the respondent's account of that
conversation is considered it is notable that he agrees that
each of the topics mentioned by Mr Olivari was raised. He
agrees substantially with Mr Olivari's account, although he
seeks to avoid the import of his answers by saying he was
responding evasively as he disliked and distrusted Mr Olivari.
I am unable to accept the respondent's explanation of his
answers about the two cars on that occasion. I consider his
answers to Mr Olivari contain admissions.
Among documents obtained by Mr Olivari from the respondent's
office on 25 June 1985 was an envelope which had the
respondent's writing on the reverse side. The respondent
acknowledges that this writing was made by him in Hamburg, he
says on Tuesday 16 October 1984. Part of the writing includes
figures apparently relating to a "guard red" car. Different
figures are shown for deutschmarks and Australian dollars for
"pay" and "invoice", suggesting a scheme to invoice a motor
vehicle at less than the amount paid. When cross-examined on
this document the respondent admitted that he was contemplating
asking for an invoice for a price lower than he actually paid.
I am satisfied that the clear inference from the evidence is
that the respondent deliberately undervalued the White Porsche
in his Entry to evade duty and tax.
I find that the slip of paper from the German calendar was
attached to the telex of 7 March 1985 when the two documents
were located on the respondent's desk on 25 June 1985. I
consider the inferences from those documents contended for by
the applicant are fairly to be drawn. On the balance of
probabilities I find that the writing on the calendar slip
records the details of the White Porsche transaction, the basic
purchase price being DM 28,500 together with extras.
The applicant has established the facts alleged relating to the
importation of the two cars.
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