CEO of Customs v Jian Wie Liang & Ors

Supreme Court of NSW|2005-06-20|Before: James J

CITATION : CEO of Customs v Jian Wie Liang & Ors [2005] NSWSC 591

DECISION : Penalty imposed - see par (37) of judgment

CATCHWORDS : CUSTOMS PROSECTION - penalty - offences of - smuggling - evading payment of duty - intentionally making a false statement to a customs officer reckless as to the fact that the statement was false in a material particular

Chief Executive Officer of Customs v MAK (2002) 133 A Crim R 562 Chief Executive Officer of Customs v Nasher (2002) 130 A Crim R 148 Chief Executive Officer of Customs v Tonmill Pty Ltd (2001) 160 FLR 1 CASES CITED : Comptroller General of Customs v Wong and Rizoli Pty Ltd (1998) 103 A Crim R 491 Director of Public Prosecutions (Commonwealth) v El Karhani (1990) 21 NSWLR 370 Vogel and Son Pty Ltd v Anderson (1956) 120 CLR 157

Chief Executive Officer of Customs v Jian Wei LIANG (AKA Victor LIANG) PARTIES : Elaine Qili WANG (AKA Elaine Wong)

C O'Donnell - Plaintiff COUNSEL : In Person - Defendants

Mary Hawkins - Australian Government Solicitor - Plaintiff SOLICITORS : -

7 - N THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

020087/02 CHIEF EXECUTIVE OFFICER OF CUSTOMS V JIAN WEI LIANG (ALSO KNOWN AS VICTOR LIANG) & 2 ORS

1 HIS HONOUR: In these proceedings I delivered a judgment on 21 December 2004 in which I found that each of the defendants, Jian Wei Liang, also known as Victor Liang, who I will refer to as the first defendant, and his de facto wife Elaine Qili Wang, also known as Elaine Wong, who I will refer to as the second defendant, had committed a number of offences under Pt 13 of the Customs Act ("the Act") in respect of importations of clothing from China in 1998. The proceedings are now before me for the imposition of penalties for the offences which the defendants committed.

2 The defendants were legally represented at the hearing on liability. They have not been legally represented at this hearing on penalty.

3 The facts of the offences can be ascertained from my principal judgment. However, I will now give a brief summary of the facts of the offences.

4 Between 1995 and July 1998 the two defendants carried on in partnership under the name New Century Clothing Co a business of importing clothing from China. A company New Century Clothing Co Pty Ltd was incorporated in July 1998. From 10 July 1998 this company owned and carried on the business of importing clothing which had formerly been carried on by the unincorporated business. At all times the first defendant was the sole director and the sole shareholder of the company. However, in my judgment of 21 December 2004 I found that the second defendant, although not a director or a shareholder, took part in the management of the activities of the company and after the incorporation of the company continued to receive a share of the profits of the business.

5 Between 2 January 1998 and 9 July 1998 there were twenty three importations of clothing by the unincorporated business, which were referred to in the proceedings as importations or shipments 1 to 23. The defendants or one of them gave instructions to customs agents for the compiling and lodging of an entry for home consumption for each of these importations. Between 10 July 1998 and December 1998 there were fifteen importations of clothing by the company, which were referred to in the proceedings as importations or shipments 24 to 38. The defendants or one of them gave instructions on behalf of the company to customs agents for the compiling and lodging of an entry for home consumption for each of these importations. All of the importations, apart from importation 15, were importations of clothing from the Wing Hung Knitwear Garment Factory in China. Importation 15 was an importation of clothing from the Li De Jia (Hong Kong) Trading Development Company.

6 In my principal judgment of 21 December 2004 I found that, with respect to each of the 38 shipments or importations the amounts stated in the entry for home consumption as being the values of the goods for the assessment of customs duty were not the true values but amounts less than the true values. Under the Act the value of the goods for the assessment of customs duty was the price paid to the overseas supplier of the goods. I found, with respect to each shipment, that the amounts stated in the entry for home consumption as being the values of the goods were not the prices which had been paid for the goods to the overseas supplier of the goods but amounts which were less than the prices which had been paid for the goods to the overseas supplier. The amounts stated in each entry for home consumption as being the values of the goods in the shipment were, in general, only about half of the true values of the goods, that is only about half of the prices which had in fact been paid for the goods to the overseas supplier.

7 A bound volume of sheets of paper described in the proceedings on liability as "the stock report" or "the table of purchase" was seized during the execution of a search warrant at the defendants' business premises on 17 March 1999. In the proceedings on liability counsel for the plaintiff submitted, and I accepted, that for all of the goods in all of the thirty eight shipments entries on a sheet or sheets in the stock report could be correlated with an entry for home consumption made to Customs. The true price paid to the overseas supplier for goods was entered in a column in the stock report which was described in the proceedings as the "cost" column and a false price, which was the price disclosed to Customs in the entry for home consumption, was entered in a column which was described in the proceedings as the "quoted prices" column.

8 The commission of the offences involved the procuring of false invoices from the overseas supplier of the goods, in which the prices of the goods were falsely understated, and the furnishing of those false invoices to customs agents, who were unaware that the documents were false, with instructions to arrange an entry of the goods into home consumption, the defendants knowing that in the entries for home consumption prepared by the customs agents the values of the goods for the assessment of customs duty would be stated to be the false prices in the invoices they had furnished to the customs agents. Payments to the overseas supplier of the prices stated in the false invoices were made openly by the defendants. However, payments to the overseas supplier of the difference between the prices disclosed to customs and the true prices of the goods were made secretly, by causing a large number of payments to be made, with false sender details, of amounts of less than $10,000. These payments were made with false sender details and in amounts of less than $10,000, in order to conceal that the defendants were making the payments and in order to avoid the reporting requirements and other provisions of the Financial Transaction Reports Act, (Commonwealth). The defendants engaged in this criminal conduct on all thirty eight importations of goods, over a period of almost a year.

9 The offences which I found that each of the defendants had committed were as follows; in respect of each of importations 1 to 23 an offence under s 233(1)(a) of the Act, which prohibits the smuggling of any goods, an offence under s 234(1)(a) of the Act, which prohibits a person from evading payment of any duty which is payable and an offence under s 234(1)(d)(i) of the Act, which prohibits a person from intentionally making a statement to a customs officer reckless as to the fact that the statement is false in a material particular; and in respect of each of importations 24 to 38, an offence under s 236 and s 233(1)(a) of the Act of aiding and abetting the smuggling of goods by the company, an offence under s 236 and s 234(1)(a) of the Act of aiding and abetting the evading of payment of duty by the company and an offence under s 236 and s 234 (1)(d)(i) of the Act of aiding and abetting an offence by the company of intentionally making a statement to a customs officer reckless as to the fact that the statement is false in a material particular.

10 I am not satisfied in respect of any of the offences that having regard to any of the matters set out in s 19B(1)(b) of the Crimes Act (Commonwealth), it would be appropriate to apply the provisions of s 19B in favour of either defendant and, accordingly, I convict each of the defendants of all of the offences which I found in my principal judgment had been committed and I will proceed to determine what penalties should be imposed.

11 The Act contains a number of provisions about the penalties which can be imposed for offences under Pt 13. Section 233AB (1) of the Act provides that the penalty for an offence against s 233 of the Act, where the court can determine the amount of the duty that would have been payable on the smuggled goods to which the offence relates, and the date on which the offence was committed is known to the court, is a penalty not exceeding five times the amount of the duty. In the present proceedings it was submitted by counsel for the plaintiff, and I accept, that the amount of customs duty that would have been payable on the goods in each importation can be determined and the date on which each offence of smuggling was committed is known to the court, being the date on which each shipment was discharged at Sydney.

12 Section 234(2)(a) of the Act provides that a person who contravenes s 234(1)(a) of the Act, where the court can determine the amount of the duty the payment of which would have been evaded by the commission of the offence if the goods had been entered for home consumption and the date on which the offence was committed is known to the court, is liable to a penalty not exceeding five times the amount of the duty evaded and not less than two times that amount. In the present proceedings it was submitted by counsel for the plaintiff, and I accept, that the amount of duty the payment of which would have been evaded by the commission of the offence can be determined and the date on which each offence was committed is known to the court.

13 Section 234(3) of the Act provides that, where a person is convicted of an offence under s 234(1)(d) of the Act in relation to a statement made in respect of the amount of duty payable on particular goods, the court may impose a penalty not exceeding the sum of $5,000 and twice the amount of duty payable on those goods.

14 Under s 236 of the Act a person who aids and abets the commission of an offence is deemed to have committed the offence and is punishable accordingly.

15 The plaintiff has calculated the total amount of customs duty payable by generally taking the figures in the cost column in the stock book as being the true prices paid for the goods and applying to those figures the rates of customs duty payable. In a very few cases no figures were entered in the cost column in the stock book. In these cases (goods of style ST-001 in shipment 17 and 18 and goods of style 055 in shipment 25) the plaintiff accepted, as being the prices of the goods, the prices disclosed in the invoices which had been produced to Customs.

16 Each of the defendants has been found guilty and convicted of thirty eight offences under s 233(1)(a), thirty eight offences under s 234(1)(a) and thirty eight offences under s 234(1)(d)(i). Under section 4K(4) of the Crimes Act, if a person is convicted of two or more offences against the same provision of a law of the Commonwealth, the court may impose one penalty in respect of both or all of those offences but that penalty is not to exceed the sum of the maximum penalties that could be imposed if a separate penalty were imposed in respect of each offence. In the present case it would obviously be convenient to apply s 4K(4), if the provision can properly be applied.

17 In Comptroller-General of Customs v Wong and Rizoli Pty Ltd (1998) 103 A Crim R 491 Carruthers AJ, in similar circumstances to the present, noted that it was common ground between the parties that s 4K was applicable. However, in Chief Executive Officer of Customs v Mak (2002) 133 A Crim R 562 EM Heenan J of the Supreme Court of Western Australia held that s 4K of the Crimes Act was not applicable, in circumstances similar to the circumstances of the present case.

18 I propose to apply s 4K but I will also state the penalties I impose in a form which would be appropriate, if s 4K was not applicable. Whether s 4K is applicable merely affects the form of the court's orders and not the amounts of the penalties imposed.

19 According to calculations made by the plaintiff, which I accept, the total amount of customs duty payable on the thirty eight shipments was $515,608.96 and the total amount of duty evaded was $250,808.04. Applying the provisions of the Act which I have already referred to and taking $515,608.96 as being the total amount of customs duty payable and $250,808.04 as being the total amount of customs duty evaded, the minimum and maximum penalties for the total number of offences under each provision of the Act can be stated as follows: Offences under s 233(1)(a) (smuggling), minimum penalty $0, maximum penalty 5 x $515,608.96 = $2,578,044.80; offences under s 234(1)(a) (evasion of duty), minimum penalty 2 x $250,808.04 = $501,616.08, maximum penalty 5 x $250,808.04 = $1,254,040.20; offences under s 234(1)(d)(i) (making a false statement), minimum penalty $0, maximum penalty 38 x $5,000 plus 2 x $515,608.96 = $1,221,217.92.

20 It is apparent that I have to impose on each defendant a penalty of at least $501,616.08, being the minimum penalty for the offences of evading payment of duty.

21 The offences committed by the defendants are federal offences within Pt 1B of the Crimes Act and it is accordingly necessary to apply that part of the Crimes Act, including s 16A. I have already decided that s 19B, which is within Pt 1B, should not be applied in favour of either defendant. Under s 16A(1) I am required to make an order which is of a severity appropriate in all of the circumstances of the offences. I take into account all of the paragraphs of s 16A(2). As to paragraphs (a) and (c) I find that there were many offences committed by the defendants, that the offences were committed over a period of almost a year, that the commission of the offences was carefully planned, that the commission of the offences involved deliberate wrongdoing, that the defendants took elaborate measures to conceal their wrongdoing and that they deprived the Commonwealth of a substantial amount of customs revenue.

22 Although not specifically mentioned in s 16A(2) a court imposing a penalty for a Commonwealth offence must take into account general deterrence Director of Public Prosecutions (Commonwealth) v El Karhani (1990) 21 NSWLR 370. General deterrence is of particular importance in imposing penalties for customs offences. Although the Act has since been amended in some respects, what Kitto J said, as a judge at first instance, in Vogel and Son Pty Limited v Anderson (1956) 120 CLR 157 at 164 is of continuing relevance. Kitto J said: "…the offences are in a field in which punishments for deliberate offences must be severe. The Customs laws represent the judgment of Parliament upon an important aspect of the economic organization of the community, and the object of the penal provisions is to make that judgment as effective as possible. It is important to remember that Customs officers have of practical necessity to rely extensively upon the information supplied to them by importers, for the flow of commerce could not be maintained if every importation had to be fully investigated. Moreover, detection of frauds is not always easy. No doubt ordinary conceptions of honesty and of civic responsibility suffice to ensure a great deal of fair dealing with the Customs, but for some people little seems to matter but fear of the consequences of discovery. The Customs Act makes those consequences potentially drastic. It is for the courts to make them, in suitable cases, drastic in fact, for otherwise traders who are not saved by qualms of conscience from willingness to defraud their fellow citizens may weigh the profits they hope for against the penalties they have cause to fear and find the gamble worthwhile."

23 An appeal from Kitto J's decision was dismissed by the full High Court. With regard to the penalties imposed by Kitto J, the Full High Court said at 168: "…There is, in our view, no room for the suggestion that in fixing the penalties on these charges his Honour erred on any matters of principle; the argument merely is that the penalties were excessive in the circumstances. But his Honour's reasons make it plain why penalties of this magnitude were imposed and amply demonstrate the need for such penalties. We do not repeat these reasons; it is sufficient to say that having considered the matter fully we can see no justification for any interference with his Honour's order on this ground."

24 As regards some of the matters referred to in s 16A(2) of the Crimes Act, which, if they had been present, might have entitled the defendants to some leniency, the defendants have shown no contrition (s 16A(2)(f)), the defendants did not plead guilty (s 16A(2)(g)) and the defendants did not co-operate with law enforcement agencies in the investigation of the offences (s 16A(2)(h)).

25 Not much is known to the court about the subjective circumstances of the defendants. Neither defendant wished to give evidence in the proceedings on penalty. It would appear that both of the defendants were born in China. They entered into a de facto relationship in 1990 and there have been two children of the relationship. The defendants came to Australia in about 1991. The business of New Century Clothing was set up in 1995 and the company was incorporated in 1998.

26 I received brief written submissions from the male defendant. In those written submissions he said that the business has been shut down and he is now an employee. He says that he is trying to raise two children and to take care of his elderly parents and his mother-in-law, that his home is mortgaged, that his savings have been spent on legal costs and that, if there is any more financial stress, "our lives will collapse altogether" and that he has suffered psychological harm.

27 In brief oral submissions the second defendant referred to her need to support her children and to the state of her health, a matter which I am required to take into account and I do take into account.

28 Under paragraph (p) of s 16A(2) I take into account the probable effect that any order under consideration would have on the defendants' family and dependants.

29 In imposing penalties on the defendants I take into account the sentencing principle of totality. I am sentencing the defendants for a large number of offences, which were of similar kinds and which, subject to one exception, arose out of importations from the same supplier, and which were committed within a confined period of time. In respect of each shipment each defendant is being punished for three offences, which, although legally separate, were substantially contemporaneous and connected. As was said by Hasluck J in Chief Executive Officer of Customs v Tonmill Pty Ltd (2001) 160 FLR 1 at 11, "imposition of penalties close to the maximum for each offence would produce an extraordinary result" and a recognition that severe penalties are to be imposed must be tempered by the requirement to observe the sentencing principle of totality. See also Chief Executive Officer of Customs v Nasher (2002) 130 A Crim R at 148 where Levine J held that it was "not inappropriate" to apply the principle of totality.

30 I have given consideration to whether the second defendant should be dealt with more leniently than the first defendant. However, in paragraph 161 of my principal judgment I said:- "As regards the second defendant, I am satisfied beyond reasonable doubt that, as was submitted by the plaintiff, I should find that, notwithstanding her attempts to distance herself from being a joint controller of the business, the many references to her in the documents of the business and the many documents sent by her or addressed to her in the operations of the business and the admissions by her in her evidence that she received a share of the profits of the business both before and after the incorporation of the company give rise to an inference, as being the only inference which could reasonably be drawn, that she was in joint control of the business with the first defendant and was well aware of the making of the untrue statements about the prices of the goods".

31 I have concluded that the same penalties should be imposed on both defendants.

32 Having regard to the objective facts of the offences, the subjective circumstances of the defendants so far as they are known to me and the principles of sentencing to which I have referred, I have come to the following conclusions:

33 For the offences of evading payment of duty I am required to impose a penalty of not less than twice the amount of duty evaded, that is, for the totality of the offences a penalty of not less than twice the amount of $250,808.04. I consider that the criminality exhibited by the defendants in committing these offences was such that a penalty more severe than the minimum penalty should be imposed. In my opinion, each of the defendants should be ordered to pay a penalty of three times the amount of duty evaded, that is, three times $250,808.04.

34 The penalty which I have decided should be imposed for the offences of evading payment of duty is a substantial sum and I consider that, having regard to the principle of totality, the penalty which should be imposed for the offences of smuggling should be considerably moderated. I consider that each of the defendants should be ordered to pay the sum of $247,000 for the totality of the offences of smuggling, consisting of penalties of $6,500 for each of the 38 separate offences of smuggling. I arrived at the figure of $247,000 on the basis that a total penalty of approximately $250,000 would be appropriate.

35 For the offences of making false statements I consider that a penalty of $1,000 for each of the thirty-eight offences should be imposed, making a total penalty of $38,000.

36 Having regard to the possible doubt about whether s 4K of the Commonwealth Crimes Act is applicable, my orders will be stated both as global orders for all of the offences under each provision of the Customs Act and also as orders for a discrete amount to be payable for each separate offence.

37 On each defendant I impose the following penalties: For the offences under s 234(1)(a) of the Customs Act, of evading payment of duty, a total penalty of $752,424.12; for the offences under s 233(1)(a) of the Customs Act of smuggling goods a total penalty of $247,000; for the offences under s 234(1)(d)(i) of the Customs Act of making a false statement a total penalty of $38,000.

38 The penalties which I impose on each defendant for each separate offence are as follows:

Shipment Duty Evaded evasion of duty 3 x duty evaded 1 $4,127.74 2 $1,952.68 3 $5,303.57 4 $2,885.69 5 $5,351.07 6 $4,166.36 7 $1,906.52 8 $3,806.81 9 $8,862.20 10 $1,101.29 11 $12,889.35 12 $4,237.07 13 $11,041.80 14 $6,837.71 15 $7,824.25 16 $8,024.07 17 $15,011.75 18 $13,540.99 19 $8,006.45 20 $4,043.05 21 $5,055.71 22 $3,344.67 23 $8,741.02 24 $4,144.89 25 $590.96 26 $5,282.63 27 $3,484.43 28 $896.07 29 $3,409.34 30 $6,982.14 31 $6,869.67 32 $9,311.36 33 $14,971.67 34 $3,628.37 35 $12,488.48 36 $23,332.25 37 $1,921.53 38 $5,432.43 $250,808.04 $752,424.12 Penalty for offence of Penalty for offence of Penalty for offence of smuggle making a false statement 12,383.22 $6,500.00 $1,000.00 $5,858.04 $6,500.00 $1,000.00 $15,910.71 $6,500.00 $1,000.00 $8,657.07 $6,500.00 $1,000.00 $16,053.21 $6,500.00 $1,000.00 $12,499.08 $6,500.00 $1,000.00 $5,719.56 $6,500.00 $1,000.00 $11,420.43 $6,500.00 $1,000.00 $26,586.60 $6,500.00 $1,000.00 $3,303.87 $6,500.00 $1,000.00 $38,668.05 $6,500.00 $1,000.00 $12,711.21 $6,500.00 $1,000.00 $33,125.40 $6,500.00 $1,000.00 $20,513.13 $6,500.00 $1,000.00 $23,472.75 $6,500.00 $1,000.00 $24,072.21 $6,500.00 $1,000.00 $45,035.25 $6,500.00 $1,000.00 $40,622.97 $6,500.00 $1,000.00 $24,019.35 $6,500.00 $1,000.00 $12,129.15 $6,500.00 $1,000.00 $15,167.13 $6,500.00 $1,000.00 $10,034.01 $6,500.00 $1,000.00 $26,223.06 $6,500.00 $1,000.00 $12,434.67 $6,500.00 $1,000.00 $1,772.88 $6,500.00 $1,000.00 $15,847.89 $6,500.00 $1,000.00 $10,453.29 $6,500.00 $1,000.00 $2,688.21 $6,500.00 $1,000.00 $10,228.02 $6,500.00 $1,000.00 $20,946.42 $6,500.00 $1,000.00 $20,609.01 $6,500.00 $1,000.00 $27,934.08 $6,500.00 $1,000.00 $44,915.01 $6,500.00 $1,000.00 $10,885.11 $6,500.00 $1,000.00 $37,465.44 $6,500.00 $1,000.00 $69,996.75 $6,500.00 $1,000.00 $5,764.59 $6,500.00 $1,000.00 $16,297.29 $6,500.00 $1,000.00 $247,000.00 $38,000.00

39 The plaintiff applied for an order for costs. I was informed by counsel for the plaintiff, and I accept, that the total costs incurred by the plaintiff in these proceedings were in the vicinity of $175,000 but the plaintiff seeks recovery of only the amount of $127,844.

40 I see no reason why I should not make an order that the defendants pay the plaintiff's costs. I make an order against the defendants that they pay the plaintiff's costs assessed at $127,844. The plaintiff is, of course, entitled to receive only one set of costs and any payment by either defendant will operate pro tanto as a satisfaction of the liability of both defendants.

          N THE SUPREME COURT
          OF NEW SOUTH WALES
          COMMON LAW DIVISION