Shipment Thirteen
62 On or before 13 July 1999, Ozzy ordered the thirteenth shipment of goods from Sunshine Industries and paid Sunshine Industries $51,617.19.
63 A commercial invoice to the amount of $12,276.08 was produced to a customs broker to arrange the entry of the thirteenth shipment of goods into home consumption.
64 Customs duty in the sum of $1,841.41 calculated on the false customs value was paid by Ozzy.
65 As a result of the understatement of the customs value, Ozzy evaded payment of no less than $5,901.17 in customs duty.
Shipment Fourteen
66 On or before 21 July 1999, Ozzy ordered the fourteenth shipment of goods from Sunshine Industries and paid Sunshine Industries $337,704.15.
67 A commercial invoice to the amount of $25,143.38 was produced to a customs broker to arrange the entry of the fourteenth shipment of goods into home consumption.
68 Customs duty in the sum of $3,771.49 calculated on the false customs value was paid by Ozzy.
69 As a result of the understatement of the customs value, Ozzy evaded payment of no less than $46,884.13 in customs duty.
Shipment Fifteen
70 On or before 26 July 1999, Ozzy ordered the fifteenth shipment of goods from Sunshine Industries and paid Sunshine Industries $83,077.74.
71 A commercial invoice to the amount of $26,578.07 was produced to a customs broker to arrange the entry of the fifteenth shipment of goods into home consumption.
72 Customs duty in the sum of $3,986.71 calculated on the false customs value was paid by Ozzy.
73 As a result of the understatement of the customs value, Ozzy evaded payment of no less than $8,474.95 in customs duty.
Shipment Sixteenth
74 On or before 14 September 1999, Ozzy ordered the sixteenth shipment of goods from Sunshine Industries and paid Sunshine Industries $113,548.86.
75 A commercial invoice to the amount of $32,329.16 was produced to a customs broker to arrange the entry of the sixteenth shipment of goods into home consumption.
76 Customs duty in the sum of $4,849.37 calculated on the false customs value was paid by Ozzy.
77 As a result of the understatement of the customs value, Ozzy evaded payment of no less than $12,182.96 in customs duty.
Shipment Seventeen
78 On or before 29 September 1999, Ozzy ordered the seventeenth shipment of goods from Sunshine Industries and paid Sunshine Industries $142,620.46.
79 A commercial invoice to the amount of $36,848.07 was produced to a customs broker to arrange the entry of the seventeenth shipment of goods into home consumption.
80 Customs duty in the sum of $5,527.21 calculated on the false customs value was paid by Ozzy.
81 As a result of the understatement of the customs value, Ozzy evaded payment of no less than $15,865.86 in customs duty.
Shipment Eighteen
82 On or before 24 March 2000, Ozzy ordered the eighteenth shipment of goods from Heston Trading and paid Heston Trading $95,725.00.
83 A commercial invoice to the amount of $67,007.50 was produced to a customs broker to arrange the entry of the eighteenth shipment of goods into home consumption.
84 Customs duty in the sum of $9,939.12 calculated on the false customs value was paid by Ozzy.
85 As a result of the understatement of the customs value, Ozzy evaded payment of no less than $4,259.63 in customs duty.
86 As earlier stated, the total amount of customs duty that Ozzy and Ms Khamis sought to evade was $255,805.34.
Scheme of the Act
87 The offences with which Ozzy and Ms Khamis have been charged require proof beyond a reasonable doubt, although, by specific provision (s.247) of the Customs Act the prosecutions are conducted in accordance with the civil procedures of the Court. (See CEO Customs v Labrador Liquor Wholesale Pty Ltd (2004) 216 CLR 161)
88 A combination of the operation of s.155, s.159 and s.161 of the Customs Act makes clear that the value of the imported goods for the purposes associated with imposing duty is their customs value which is the transaction value of imported goods. (see sub-sections 159(1) and (2) of the Customs Act) The transaction value is the amount equal to the sum of their adjusted price in the import sales transactions (s.161 of the Customs Act) where price is defined as all payments that have been made directly or indirectly by the purchaser to the vendor or to persons related to the vendor (s.161 of the Customs Act) and includes buying commission (s.155 of the Customs Act). Thus the device of seeking to transfer some amount from the purchase price to a buying commission is a device which has no effect on the amount of duty that is payable.
89 In analysing the offences with which each of the offenders is charged, it is necessary to understand that "smuggling" means "any importation … of goods with intent to defraud the revenue." Each of the defendants have been charged with eighteen counts of smuggling contrary to s.233(1)(a) of the Customs Act and eighteen counts of making false statements contrary to s.234(1)(d) of the Customs Act.
90 Section 233(1)(a) makes it an offence to "smuggle any goods" which, from the above, necessarily involves an intention to defraud the revenue. Section 234(1)(a) of the Act makes it an offence to "evade payment of any duty which is payable" and s.234(1)(d) makes it an offence to make a statement intentionally to an officer either reckless as to the fact that the statement is false or knowing that the information is misleading in a material particular. As can be seen from the summary of the offences the contravention of s.233(1) and s.234(1)(a) necessarily involves significantly overlapping criminal conduct and it is difficult to envisage a situation where someone evaded duty that was payable without committing the offence of smuggling. On the other hand the making of a false statement under s.234(1)(d) is not necessarily involved in the offence of smuggling but has overlapping features with the offence of evading payment of duty. It seems that both the offence under s.233(1)(a) and s.234(1)(d) are partly the means by which, in the current circumstances, the offence under s.234(1)(a) is committed. Therefore there is a significant amount of overlapping criminality in the different offences. There seems to be little or no overlapping as between the different sets of offences relating to each of the eighteen different shipments. Each requires a new and different intention, a new and different act of smuggling and a new and different act of dishonesty.
91 The penalties made applicable to the offences with which each of the defendants is charged are set out in s.233AB and s.234 of the Customs Act. The offence of smuggling is set out in s.233AB(1) of the Act and, in the circumstances known in these proceedings, is a penalty not exceeding five times the amount of duty that would have otherwise been payable on the smuggled goods.
92 In relation to the offence of evading duty, s.234(2)(a) of the Customs Act provides for a penalty not exceeding five times the amount of the duty on the goods which would have been evaded if the evasion of duty had been successful and not less than two times that amount.
93 The offence of making a false statement carries a penalty under s.234(2)(c) of a penalty not exceeding 100 penalty units or, under the terms of sub-section 234(3) a penalty not exceeding 50 penalty units, or $5,500.00, together with twice the amount of duty payable on the goods.
94 The temptation in relation to an offence of this kind is to determine the seriousness of the offence largely based on the amount of money involved in the deception. However the Parliament has established a regime which covers a wide range of activity and has, quite deliberately, fixed the penalties (both minimum and maximum) by reference to the amount of money involved in the criminal conduct. As a consequence, the legislature has cleverly built in a factor relating to seriousness by making the penalties directly proportionate to the amounts involved in the criminal conduct. To take account, once more, of the amount involved in the criminal conduct would be to double count that factor in the fixing of the ultimate penalty.
95 As earlier stated, the offences in question cover a range of activity. At one extreme, the smuggling and evasion offences cover the tourist who seeks to bring into Australia liquor, tobacco and/or gifts beyond that which is allowable under the regulations. The circumstances of the offences would include persons who evade duty without any commercial interest or intent. Further, the offences include the importation of goods and associated acts in relevant circumstances where the goods are imported for business interests, but not for the purpose of profiting from the transaction. For example, a business would be guilty of the offences in circumstances where duty was evaded on goods brought in to equip better its facilities or staff. On the other hand, the offences in question, do not cover the importation of goods that are banned. Drug offences are dealt with quite separately and involve quite different penalties. In those circumstances, a situation such as the present, where a company and/or person are involved in the operation of a business which earns profit from the resale of goods imported into Australia, necessitates the view that the offences in question, once committed, are the exercise of a commercial decision to profit out of the deception of Customs and the taxpayer. The circumstances of the commission of such an offence have, in themselves, no redeeming qualities. Moreover, as has been stated for almost as long as the customs legislation has been in force (see R v Lyon (1906) 3 CLR 770), the imposition of heavy penalties for offences of this kind is necessary given the nature of the offence and the conduct in question. To allow an importer of goods to be required to pay only that which has been evaded in duty imposes no disincentive on the repetition of the offence and, more importantly, provides a commercial incentive on seeking to evade the duty. I will, later in this judgment, deal with the nature of the agreement reached which gave rise to the consent to the orders that the sections had been contravened.
96 It is essential, in dealing with a commercial enterprise that has made profits to which it was not entitled by the evasion of duty and the commission of these offences to impose condign punishment which properly reflects the denunciation of the conduct, the retribution that society needs to impose and properly establishes a deterrent for any other like minded entity or person from committing similar offences.
97 The circumstances of the commission of these offences were such that the corporate and personal defendants involved themselves in the utilisation of two sets of accounts, one of them false, the deliberate understatement of the price paid for goods, the planned and pre-meditated determination that it was in their commercial interests to commit an offence and perpetrated these offences over a significant period of time.
98 The practical restrictions on the capacity of law enforcement agencies to apprehend every offender for every offence necessarily requires the legislature and the courts to ensure that deceitful conduct in a commercial enterprise, once determined, is appropriately punished. The courts must ensure that there is a deterrent to the commission of such offences by persons acting in a commercial enterprise and not allow the deception to occasion only that which would be required to be paid if the offenders behaved as the law requires. In R v Lyon, supra, O'Connor J said:
"… it is one of the underlying principles of the Act that the Government should rely upon the importer to honestly state the truth according to his knowledge in reference to a matter in which he knows everything and the Customs authorities know nothing. In the case of the duties payable ad valorem if the Customs authorities took steps in each case to satisfy themselves of the value of the goods for duty before allowing them to land, trade would be seriously hampered. Almost of necessity they must take the importer's statement of value prima facie as true. The policy of the Act, therefore, is that the Customs authorities trust to the statement of the person importing the goods."
99 I repeat the oft quoted passage from Kitto J L. Vogel and Son Pty Ltd v Anderson, Minister for State for Customs and Exports for the Commonwealth of Australia (1967) 120 CLR 157 at 164:
"The duty evaded has now been paid, and I understand that when the evasions were discovered, the defendant's gave the Customs every assistance in their investigations. But when all the considerations relied upon by the defendants have been given due attention, the case still cannot be regarded as other than a serious one. Not only are the defendants guilty of a sustained course of conscious wrong-doing, but 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 organisation 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."
100 On appeal to the Full Court, the High Court said (120 CLR at 168):
"As already appears, these penalties were in each case the equivalent of four times the duty evaded whilst the minimum penalty was imposed in respect of each of the remaining charges. … 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 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."
101 In the circumstance of the commission of these offences and taking no account for this purpose of the amounts involved, I would assess the criminality of the conduct as above mid range of penalties. I, of course, will and do take account of the overlapping criminal conduct associated with the three different kinds of offences relating to each of the eighteen shipments.
Subjective Circumstances
102 There is little or nothing that can be said that would differentiate the company, Ozzy, from Ms Khamis in objective features. As already stated, both defendants pleaded guilty, or, more accurately, consented to findings of contravention when the matter was listed for hearing on the substantive matters. This was the first time that the defendants had pleaded guilty and each had, before that, maintained the right to defend the proceedings. The defendants are not and cannot be the subject of any penalty for maintaining a right, sacrosanct in the law, of putting the Customs to proof. Indeed, they are entitled to the benefits of their guilty plea, although not at the highest level, given that the plea was entered at a later time than could have been the case. Notwithstanding that the plea was entered on the day on which the matter was set down for hearing, there were obviously negotiations between Customs and the defendants in relation to the plea which gave rise to the agreement, in writing, and the agreed statement of facts. In the circumstances I propose to allow a 15% discount in sentencing for the utilitarian value of the plea of guilty. Amongst other factors involved in that discount is that the proceedings and the documentation provided to the Court, while showing a relatively strong case for the Customs, may have been difficult to prove in relation to every single incident and each valuation. Further, the complexity of the documentation and the transactions which they evidence would have made the substantive hearing of the matter a lengthy and complicated proceeding which would have occasioned considerable cost to both parties a significant part of which would have been irrecoverable.
103 Ms Khamis swore an affidavit which was put before me and the first twelve paragraphs of which were read. Ms Khamis was not cross examined on the affidavit.
104 Her personal circumstances are that the business, Ozzy Tyre & Tube Pty Ltd, was originally started by her father and was run out of a service station. He had a partner and, quite separately, there are suggestions that some of the difficulties faced by Ms Khamis were associated with wrong-doing, either moral or legal, associated with the resolution of issues of property ownership which arose on the death of her father.
105 Her father immigrated from Lebanon to Australia in approximately 1970 and worked as a factory hand, a taxi driver and ultimately bought the service station which formed the basis for the Ozzy business. He had, originally, a partner, who left the business in about 1990 and then ran the business together with another person. In 1991, Ms Khamis' father died whilst in Lebanon from a bomb explosion in a car in which he was travelling. Up until that time, Ms Khamis had nothing to do with the running of the Ozzy business, but from the time of the tragic death of her father, was required to start work there. The business was run by his then partner and Ms Khamis did the clerical work including answering phones, filing invoices, depositing money and running errands.
106 For reasons associated with the needs of the family, as the eldest child, Ms Khamis was required to forsake any independent career in order to run the business and support the family. It was in these circumstances that Ms Khamis became involved in the business and suffered the pressure placed upon her as a young woman by the need to ensure the security and living expenses of her entire family. In 1991 Ms Khamis was 18 years of age and necessarily felt that pressure and reacted to it in ways that a more mature and experienced person may not have.
107 It is rare, if not exceptional, for good character to be taken into account in "white collar crimes". Generally it is the very good character of the offender that has enabled the offender to perpetrate the crime. However, in circumstances such as the present where, in extremely tragic circumstances, a young girl has been required to undertake the pressures of running a business and supporting her mother and siblings, the character of the offender can not be ignored and she is entitled to understanding of the circumstances that gave rise to the pressure to make a profit and no doubt contributed to her succumbing to involvement in criminal activity. Ms Khamis effectively took over the business from 1995, at the age of 22.
108 Further, the plea of guilty itself shows a degree of remorse and contrition for the conduct that has been committed. It is implicit in the foregoing that Ms Khamis has no criminal record which is a matter I also take into account in fixing the sentence.