Chief Executive Officer of Customs v Pham

LEGISLATION CITED : Crimes Act 1914 (Cth) Customs Act 1901 (Cth)

CEO of Customs v Pham [2006] NSWSC 1011 Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited [2003] HCA 49; 216 CLR 161 CASES CITED : L Vogel & Son Pty Ltd v Anderson, Minister of State for Customs and Excise (1968) 120 CLR 157 Murphy, Minister of Customs and Excise for the Commonwealth of Australia v H.F. Trading Company Pty Ltd (1973) 47 ALJR 198 R v Corbett (1991) 52 A Crim R 112 R v El-Rashid (unreported) NSW Court of Criminal Appeal, 7 April 1995

Chief Executive Office of Customs (Plaintiff) PARTIES : Vinh Phat Pham (also known as Peter Pham) (First Defendant) Sung Chau Pham (also known as Linda Pham) (Second Defendant)

COUNSEL : R. Bromwich (Plaintiff) M. Robinson / R. Nair (First and Second Defendants)

SOLICITORS : Australian Government Solicitor (Plaintiff) Burn & Swift Lawyers (First and Second Defendants)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

JUDGMENT 1 BELL J: On 4 October 2006 I convicted Vinh Phat Pham (also known as Peter Pham) and Sung Chau Pham (also known as Linda Pham) of a number of offences under the Customs Act 1901 (Cth) arising out of two importations into Australia of a quantity of contraband cigarettes: Chief Executive Officer of Customs v Pham [2006] NSWSC 1011 (the liability judgment). The proceedings were commenced by statement of claim that was filed on 30 November 2001. Defences were filed on behalf of each of the defendants in May 2002. The matter came on for hearing on 11 September 2006. The hearing occupied five days. 2 The facts are as set out in the liability judgment. It is sufficient for present purposes to state that the first importation was of 2,098,175 cigarettes sticks that arrived in Sydney on board the Hua Yun He on 25 January 2001. The total amount of duty payable in respect of the cigarettes was $408,745.47. Each defendant has been convicted of three, related, offences arising out of this importation: 1. Smuggling cigarettes contrary to s 233(1)(a) of the Customs Act . The maximum penalty for this offence is as provided by subsection 233AB(1), namely, a penalty not exceeding five times the amount of the duty that would have been payable on the smuggled goods if the goods had been entered for home consumption. The maximum penalty for this offence is $2,043,727.35. 2. On or about 22 January 2001 evading payment of duty payable on the cigarettes contrary to s 234(1)(a) of the Customs Act . This offence is subject to a statutory minimum penalty. Pursuant to s 234(2)(a)(i) the defendant is liable to a penalty that does not exceed five times the amount of the duty payable on the cigarettes and is not less than two times the amount of that duty. Accordingly, the Court must impose on each of the defendants a penalty for this offence of not less than $817,490.94. The maximum penalty that may be imposed on each defendant for this offence is, $2,043,727.35. 3. On or about 22 January 2001 making a false statement (by not declaring the consignment of 2,098,175 cigarettes) in a statement to a Customs officer, an offence contrary to s 234(1)(d) of the Customs Act . Where a person is convicted of an offence under this subsection 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 the duty payable on the goods: s 234(3). The maximum penalty in respect of this offence is thus one of $822,490.94. 3 The second importation was of 2,099,750 cigarette sticks, which arrived in Australia on board the Bunga Teratai Empat on 30 January 2001. The duty that was payable in relation to this consignment of cigarettes was $409,052.30. In relation to this importation, each of the defendants was convicted of the following offence: 1. On or about 30 January 2001 smuggling cigarettes contrary to s 233(1)(a) of the Customs Act . The maximum penalty that may be imposed upon each of the defendants for this offence is $2,045,261.50. 4 The proceedings are a Customs prosecution brought under Pt XIV of the Customs Act. The nature of Customs prosecutions is as discussed in Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited [2003] HCA 49; 216 CLR 161. Each offence of which the defendants have been convicted is an offence against a law of the Commonwealth. It is a "federal offence" for the purposes of s 16 of the Crimes Act 1914 (Cth) (the Act). It is necessary to have regard to the provisions of Pt 1B of the Act in dealing with the sentencing of persons for Federal offences. 5 Section 16A(1) of the Act requires the court to impose a sentence, or make an order, on a person convicted of a federal offence that is of a severity appropriate in all of the circumstances of the offence. In addition to any other matters, the court must take into account such of the matters as are relevant and known to the court that are set out in subsection (2)(a) - (p). 6 Section 16C(1) requires a court, before imposing a fine on a person for a federal offence, to take into account the financial circumstances of the person, in addition to any other matters that the court is required or permitted to take into account. Subsection (2) provides that nothing in subsection (1) prevents a court from imposing a fine on a person because the financial circumstances of the offender cannot be ascertained by the court. 7 Peter Pham was convicted before the St James Local Court on 19 September 1992 of an offence contrary to s 233(1)(b) of the Customs Act relating to the importation of 164 bottles of medicinal oil. For this offence he was ordered to pay a penalty of $5,000. On the same occasion he was convicted of an offence contrary to s 234(1)(d) of the Customs Act of making a false statement. For this offence he was ordered to pay a penalty of $2,000. 8 Linda Pham has no previous convictions. 9 Two references were tendered on behalf of each of the defendants. Mr Chan, the President of the Australian Buddhist Society, states that Peter Pham has been an active member of the Society and that he served as its President for two terms. Mr Chan has found Peter Pham to be an honest, reliable and sincere person. He attests to the commendable job that Peter and Linda Pham have done in raising their three children, who are now aged between 19 and 25 years. The eldest has completed a university degree and the two younger children are part-way through university courses. Mr Chan's reference attests to the defendants as being well known and highly respected members of the Chinese/Vietnamese community in Sydney who have been active in their support of that community. 10 Rachel Barker describes both defendants as committed to their religious beliefs and as dedicated to their family. 11 No evidence was led concerning the defendants' financial circumstances. 12 Customs officers intercepted each of the importations and seized the cigarettes before they were made available to the market. There has been no actual loss of revenue. 13 I am satisfied beyond reasonable doubt that prior to the first importation of cigarettes the defendants arranged for the importation of a quantity of gyprock, which was consigned to the entity, Intrax, as a dummy run. When this importation proceeded uneventfully the defendants arranged the importation of the two shipments containing contraband cigarettes in consignments of gyprock to the entity Outrax. The enterprise was a sophisticated one that involved considerable planning. 14 The defendants' counsel laid particular emphasis on two features of the offences in. The first is the absence of loss to the revenue, to which I have referred. The second is the factor to which s 16A(2)(h) of the Act is directed: the degree to which the person has cooperated with law enforcement agencies in the investigation of the offence. Counsel pointed to the evidence of Customs Officer Bulloch that Peter Pham had been cooperative at the time the search and seizure warrants were executed at the warehouse premises. Peter Pham was cooperative in the sense that he did not obstruct the Customs officers as they executed the warrants and he answered a number of questions asked of him. I reviewed this evidence at paragraphs [67] - [71] of the liability judgment. I do not consider that Peter Pham's conduct justifies mitigating the penalty that should otherwise be imposed on account of his cooperation with the authorities. I am of the same opinion in considering the case against Linda Pham. Efforts were made to conceal relevant documents from customs officers during the execution of a search warrant at the Pham family home. Linda Pham was present at the time. As I explained in the liability judgment, I reject as fanciful the suggestion that the endeavours to conceal incriminating evidence were carried out by the Pham's young daughter or the elderly lady at their own instigation. 15 Counsel for Customs acknowledged that each of the defendants were cooperative in that the proceedings were shortened as the result of their willingness to agree to a number of matters of fact. I propose to reflect this cooperation by some mitigation in the penalties to be imposed for each of the offences. 16 Neither defendant has shown contrition for the offences.

17 The reasons for dealing with these economic offences by a regime that includes severe mandatory minimum pecuniary penalties include the importance of protecting the revenue by enforcing honest dealing by those engaged in the importation of goods into Australia. In this regard I note the observations of Kitto J in L Vogel & Son Pty Ltd v Anderson, Minister of State for Customs and Excise (1968) 120 CLR 157 at 164: Not only are the defendants guilty of a sustained course of conscious wrongdoing, 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. … Moreover, detection of frauds is not always easy. No doubt ordinary conceptions of honesty and of civic responsibly 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 weight the profits they hope for against the penalties they have cause to fear and find the gamble worthwhile. 18 Section 4K(4) of the Act provides that if a person is convicted of two or more offences (being offences against the same provision of a law of the Commonwealth joined in the same information, complaint or summons if founded on the same facts or forming or being part of a series of offences of the same or a similar character) the court may impose one penalty in respect of both or all of those offences. The penalty shall not exceed the sum of the maximum penalties that could be imposed if a separate penalty were imposed in respect of each offence. 19 Counsel for Customs submitted that s 4K would admit of the imposition of a single penalty in relation to the two smuggling offences (each being offences against the same provision of a law of the Commonwealth). However, in Customs' submission, since the two smuggling offences were discrete episodes of offending it was appropriate to impose separate penalties for each. Counsel for the defendants made no submissions with respect to the operation of s 4K. While these two offences occurred within a relatively short timeframe, I accept Customs' submission that they were discrete episodes of offending and that the appropriate course is to impose separate penalties for each. It is appropriate, as counsel for Customs acknowledged, in determining the amount of the penalty to have regard to the principle of totality. 20 In fixing penalties in relation to the three offences arising out of the first importation, it is proper to have regard to the circumstance that these were substantially contemporaneous offences connected with each other: L Vogel; Murphy, Minister of Customs and Excise for the Commonwealth of Australia v H.F. Trading Company Pty Ltd (1973) 47 ALJR 198. There is a considerable measure of overlap between the elements of the smuggling and evading duty offences. The offence of making a false statement to Customs was bound up with each of the other offences. In sentencing each of the defendants for the three offences arising out of the first importation it is necessary to avoid double counting. I propose to impose a substantial penalty for the offence of evading payment of duty (as I am required to do) and to impose penalties for the related smuggling and false statement offences that are more than nominal but which are substantially less than would have been appropriate if dealt with alone. 21 Counsel for Customs, in written submissions, acknowledged that the penalty imposed on each of the defendants should be much less than the maximum penalty, but in his submission, a penalty more than the minimum was appropriate in relation to the convictions for the offence of evading duty.

22 In Customs' submission, the circumstance that Linda Pham is a person of good character and that Peter Pham has a criminal record of a relatively minor kind (and has made a positive case of being a person of otherwise good character) is of lesser significance when dealing with revenue offences. He relied on the principles explained in R v Corbett (1991) 52 A Crim R 112 and R v El-Rashid (unreported), Court of Criminal Appeal, 7 April 1995. Taking into account the considerations of general deterrence that apply to economic crimes such as these, and in light of the principles stated in the authorities to which counsel referred, I accept that is so. It remains that each is entitled to some mitigation in penalty by reason of his/her good character. 23 The two smuggling offences involve a similar quantity of cigarettes imported by means of the same scheme. The objective seriousness of each offence is of the same order. However, the second offence was a repeat offence and is, on that account, deserving of somewhat greater punishment than the first, subject to the consideration of totality to which I have earlier referred. 24 Section 16A(2)(p) of the Act requires the Court to take into account the probable effect that any sentence or order under consideration would have on the persons' family or dependents. The defendants' counsel submitted that the mandatory minimum penalties that must be imposed upon the defendants will inevitably have a harsh impact on their family and that this was a matter that favoured some mitigation in penalty. The submission was not further developed. The defendants are married with three children who are now adult. I infer that the younger two who are still at university remain at least partially reliant on the defendants for financial assistance. There is no evidence from which I might draw any meaningful conclusion concerning the probable effect of any order on the defendants' family or dependents. The defendants engaged in a joint criminal enterprise to enrich their family by the commission of offences against the revenue. The penalties for these offences are pecuniary. I have considered whether it is appropriate to have regard to the circumstance that the substantial penalties, which must be imposed, will represent a drain on their shared financial resources as a basis for moderating the penalty to be imposed in each case. In the absence of any evidence concerning their financial circumstances, it seems to me that there is no warrant to do so. I propose to impose lesser penalties on Linda Pham in relation to the offences arising out of the first importation in recognition of her unblemished good character.

Vinh Phat Pham (also known as Peter Pham) upon your conviction for the offence of evading payment of Customs duty payable in respect of the importation into Australia of 2,098,175 cigarette sticks contrary to s 234(1)(a) of the Customs Act you are ordered to pay a penalty of $1,000,000.

Vinh Phat Pham (also known as Peter Pham) upon your conviction for the offence of smuggling a quantity of cigarettes into Australia on or about 25 January 2001 contrary to s 233(1)(a) of the Customs Act you are ordered to pay a penalty of $200,000.

Vinh Phat Pham (also known as Peter Pham) upon your conviction for the offence that on or about 22 January 2001 you did knowingly make a statement to a Customs officer that was false or misleading you are ordered to pay a penalty of $100,000.

Vinh Phat Pham (also known as Peter Pham) upon your conviction for an offence of smuggling cigarettes into Australia contrary to s 233(1)(a) of the Customs Act on or about 30 January 2001 you are ordered to pay a penalty of $600,000.

Sung Chau Pham (also known as Linda Pham) upon your conviction for the offence of evading payment of Customs duty payable in respect of the importation into Australia of 2,098,175 cigarette sticks contrary to s 234(1)(a) of the Customs Act you are ordered to pay a penalty of $850,000.

Sung Chau Pham (also known as Linda Pham) upon your conviction for the offence of smuggling cigarettes into Australia on or about 25 January 2001 contrary to s 233(1)(a) of the Customs Act you are ordered to pay a penalty of $150,000.

Sung Chau Pham (also known as Linda Pham) upon your conviction for the offence that on or about 22 January 2001 you did knowingly make a statement to a Customs officer that was false or misleading you are ordered to pay a penalty of $75,000.

Sung Chau Pham (also known as Linda Pham) upon your conviction for an offence of smuggling cigarettes into Australia contrary to s 233(1)(a) of the Customs Act on or about 30 January 2001 you are ordered to pay a penalty of $600,000.

The defendants are to pay the plaintiff's costs of the proceedings. **********

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