Chief Executive Officer of Customs v Samisoni Volita Havili Kaufusi - [2012] NSWSC 200 - NSWSC 2011 case summary — Zoe

NSWNSWSC

Chief Executive Officer of Customs v Samisoni Volita Havili Kaufusi

[2012] NSWSC 200

Supreme Court of NSW|2011-07-22|Before: Rothman J, Gleeson CJ, Gummow J, Kirby J, Hayne J, McHugh J, Basten JA

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2011-07-22

Before

Rothman J, Gleeson CJ, Gummow J, Kirby J, Hayne J

Catchwords

[2000] VSCA 201 Cameron v R [2002] HCA 6
(1988) 166 CLR 59 Milne v A-G (TAS) (1956) 95 CLR 460 Pearce v The Queen [1998] HCA 57
(1998) 194 CLR 610 R v Majeric (2001) A Crim R 451
[2001] VSCA 15 R v McCourt (1993) 69 A Crim R 151 Smith v The Queen (1991) 25 NSWLR 1

Source

Original judgment source is linked above.

Catchwords

[2000] VSCA 201 Cameron v R [2002] HCA 6(1988) 166 CLR 59 Milne v A-G (TAS) (1956) 95 CLR 460 Pearce v The Queen [1998] HCA 57(1998) 194 CLR 610 R v Majeric (2001) A Crim R 451[2001] VSCA 15 R v McCourt (1993) 69 A Crim R 151 Smith v The Queen (1991) 25 NSWLR 156 Crim R 148 Veen v The Queen [No 2] [1988] HCA 14

Judgment (17 paragraphs)

[1]

Judgment 1These proceedings constitute a customs prosecution, being proceedings for the recovery of penalties under the Customs Act 1901 (Cth) (hereinafter, "the Act"), s 244. 2The defendant, Samisoni Volita Havili Kaufusi, has been charged with two offences: a) one (1) count of importing prohibited imports, in contravention of s 233(1)(b) of the Act, namely 3,949 kilograms of pure weight kava (Count 1); and b) one (1) count of causing a false statement to be made to an officer, in contravention of s 234(1)(d)(ii), or alternatively s 234(1)(d)(iv), of the Act (Count 2). 3By amended statement of claim filed on 1 April 2011, the plaintiff, the Chief Executive Officer (hereinafter, "CEO") of Customs, seeks orders that the defendant be convicted of the abovementioned offences and that a penalty in accordance with s 233AB(2) of the Act be imposed in relation to offence (a) and a penalty pursuant to s 234(2)(d) of the Act be imposed in relation to offence (b). The plaintiff also seeks costs against the defendant pursuant to s 263 of the Act. 4The offences with which the defendant has been charged require proof beyond a reasonable doubt, although, by specific provision (s 247) of the 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 at [2] (Gleeson CJ), [32] (Gummow J), [90] (Kirby J), [144] (Hayne J, McHugh J agreeing); Chief Executive Officer of the Australian Customs Service v Karam [2011] NSWCA 224 at [12] per Basten JA).

[2]

Relevant Legislation 5Section 16A of the Crimes Act 1914 (Cth) sets out the relevant sentencing principles applicable to Commonwealth offences. As prescribed in s 16A(1), the Court must impose a sentence or make an order that is of a severity appropriate in all the circumstances of the offence. In addition, the Court must give regard to the list of criteria set out in s 16A(2), namely: "16A Matters to which court to have regard when passing sentence etc. ... (2) In addition to any other matters, the court must take into account such of the following matters as are relevant and known to the court: (a) the nature and circumstances of the offence; (b) other offences (if any) that are required or permitted to be taken into account; (c) if the offence forms part of a course of conduct consisting of a series of criminal acts of the same or a similar character-that course of conduct; (d) the personal circumstances of any victim of the offence; (e) any injury, loss or damage resulting from the offence; (f) the degree to which the person has shown contrition for the offence: (i) by taking action to make reparation for any injury, loss or damage resulting from the offence; or (ii) in any other manner; (fa) the extent to which the person has failed to comply with: (i) any order under subsection 23CD(1) of the Federal Court of Australia Act 1976 ; or (ii) any obligation under a law of the Commonwealth; or (iii) any obligation under a law of the State or Territory applying under subsection 68(1) of the Judiciary Act 1903 ; about pretrial disclosure, or ongoing disclosure, in proceedings relating to the offence; (g) if the person has pleaded guilty to the charge in respect of the offence-that fact; (h) the degree to which the person has cooperated with law enforcement agencies in the investigation of the offence or of other offences; (j) the deterrent effect that any sentence or order under consideration may have on the person; (k) the need to ensure that the person is adequately punished for the offence; (m) the character, antecedents, age, means and physical or mental condition of the person; (n) the prospect of rehabilitation of the person; (p) the probable effect that any sentence or order under consideration would have on any of the person's family or dependants." 6Those criteria described in s 16A(2)(d), (e), (f), (i) and (fa) of the Crimes Act are not relevant to the current circumstances. 7In addition to the criteria above, s 16C of the Crimes Act provides that before imposing a fine on a person, a court must take into account the financial circumstances of the person. However, the financial circumstances of the person does not dictate what fine is imposed. The obligation in s 16C is to consider whether the person can actually afford to pay the fine. In some circumstances, the criminality is so serious that not to impose an extensive fine would undermine the need for general deterrence (Smith v The Queen (1991) 25 NSWLR 1 at 23 - 24; Environmental Protection Agency v Ableway Waste Management Pty Ltd [2005] NSWLEC 469; CEO Customs v Labrador Liquor Wholesale Pty Ltd [2006] QCA 558 at [95] - [98]).

[3]

Applicable Penalties 8The penalties made applicable to the offences with which the defendant is charged are prescribed in ss 233AB and 234 of the Act. The applicable penalty for an offence of import prohibited import is set out in s 233AB(2). Section 233AB(2) reflects an intention by Parliament to make the penalty for an offence of import prohibited import directly proportionate to the amount of money derived from the offence. Section 233AB(2)(a) states that where the Court can determine the value of the goods imported, a penalty not exceeding 3 times the value of the goods or 1000 penalty units (being $110,000) whichever is greater may be imposed. If the Court cannot determine the value of the goods, the maximum penalty is 1000 penalty units (see s 233AB(2)(b)). 9The offence of making a false statement carries a penalty under s 234(2)(c) not exceeding 100 penalty units. 10Penalties for customs offences are to be of a very high order (CEO of Customs v Coulton [2005] NSWSC 869 at [48] per Simpson J). Kitto J in L Vogel & Son Pty Ltd v Anderson (1967) 120 CLR 157 at 164; 41 ALJR 264 at 267 provides reasons for the severity of sentences for customs offences: "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 fraud is not always easy. No doubt ordinary conceptions of honesty and of civic responsibility suffice to ensure a great deal of fair dealing with Customs, but for some people little seems to matter but fear of the consequences of discovery. The Customs Act 1901 (Cth) 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." 11The legislature has not indicated the method used to determine the value of the prohibited import. In its inclusion of a default provision, it has foreseen that circumstances may arise whereby the Court cannot place a value on a prohibited import. The default provision is activated when there is no evidence before the Court to assist with determining the prohibited import's value. It is by no means an acknowledgement that because the value of a prohibited import fluctuates over time according to varying factors, a value cannot be attributed to it. 12The Court notes that ss 159, 160 and 161 of the Act do not apply to the present proceedings. A combination of the operation of ss 155, 159 and 161 of the 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 s 159(1) and (2) of the Act). Those provisions deal with the "collector" attributing a transaction value to the imported goods for the purpose of imposing duty, not a penalty. 13The term "collector" is defined in s 8 of the Act as the CEO, the Regional Director, or any officer doing duty in the matter in relation to which the expression is used. To place the Court in the shoes of the "collector" for the purposes of ss 159, 160 and 161 would be inconsistent with the clear definition of a "collector" in the Act. 14The inconsistency between s 159(7) and the penalty provisions contained in the Act further demonstrates that the Court is not to apply s 159 when determining the value of the kava. Section 159(7) states that where a collector cannot determine the transaction value, they should deduce a value (referred to as the "deductive value"). Whereas, under the penalty provisions if the Court cannot determine a value the Court defaults to the penalty units provision, e.g. s 233AB(2)(b).

[4]

The Valuation of Drugs 15The conceptual and practical problems associated with determining the value of a particular drug are well recognised. In R v McCourt (1993) 69 A Crim R 151 at 156, Bollen J of the South Australian Court of Criminal Appeal rejected the submission that the Court should take judicial notice of the value of cannabis crops. He said: "If Judges turn to stored information or evidence given in other cases they may use out of date information. The normal yield and value should be proved in each case. Of course, if there be no dispute, we may expect agreed facts to be told to the Court." In this case, the parties have not agreed to a value of the kava. A member of the Police Force has provided sworn evidence which conflicts with the value that the defendant provided in his record of interview (see [35] - [36]). 16The market value of a drug depends upon the quantity of the drug, the drug's purity, whether the wholesale or retail market is assessed and the potential purchasers' perceptions of the drug. Anyone with a basic understanding of economics will know that the market value of a certain product will fluctuate according to supply and demand and that the wholesale value of a product is a far less than its 'street value' (R v Majeric (2001) 121 A Crim R 451; [2001] VSCA 15 (about 15 percent) The Queen v Belbruno (2000) 117 A Crim R 150; [2000] VSCA 201 (12 - 20 percent)). It is a well-accepted principle that the street value is the value adopted when dealing with drug offences and is that price which is obtained in a hypothetical sale by a hypothetical, willing but not anxious, vendor to a hypothetical willing, but not anxious, purchaser. 17The Court accepts the evidence of Constable Kenneth Bradshaw that kava sells for $20 to $30 per 15 to 30 gram 'deal' in the Northern Territory, where the most common market for the substance exists. The Court is satisfied beyond reasonable doubt that no less than $20 for a 30 gram deal is the value of kava and the Court will use that figure for the purposes of this sentence.

[6]

The First Offence Charged 23On or about 15 November 2008, the defendant arranged for a shipping container, allegedly carrying only innocuous frozen root vegetables to be transported from Nuku'alofa in Tonga to Sydney, Australia. The delivery address on the Bill of Lading (numbered TBUSYD129 -001) was the address and mobile number of the defendant. Concealed within the container was 3,949 kilograms of pure weight kava. 24The defendant had made all necessary arrangements to effect the importation. In a record of interview dated 15 December 2008, the defendant admitted to travelling to Tonga between 9 October 2008 and 6 November 2008. He sourced the kava from two persons in Tonga between 9 October 2008 and 31 October 2008. 25The defendant purchased 1120 kilograms from a person located in Vala'ava, Tonga. He paid $280 for that kava to be transported to Nuku'alofa by Air Chathams. The defendant later sourced an additional 2,374 kilograms from a farmer at Nuku'alofa. He was issued a commercial invoice numbered 443899 by Filipe Iongi, Fanga Nuku'alofa for 34 x Yam, 151 x Cassava, 54 x Taro Tarua, 264 x Giant Taro totalling $5470. The 151 x Cassava was in fact kava. 26The defendant said in his record of interview that he planned to sell the kava to members of the Tongan Community for $20 a kilo. The defendant also said that he planned to sell the root vegetables to the community. However, this subsequent intention did not alter the overall purpose of the arrangement, which was to import kava into Australia. 27The defendant engaged a Customs brokerage and freight forwarding company, UPS Supply Chain Services (hereinafter, "UPS"). He provided the original Bill of Lading, the commercial invoice numbered 443899, a Phytosanitary Certificate obtained from the Ministry of Agriculture and Forestry Plant Protection Organisation of the Tongan Government and a Tongan Customs Export Entry to an employee of UPS. Based on these documents, UPS created a Nature 10 Declaration which was provided to the plaintiff on 14 November 2008. The Nature 10 Declaration contained details of the contents of the container as including "other root or tuber vegetables (frozen)" and "frozen manioc (cassa)", with no reference to kava. It also provided that customs duty amounting to $3828.09 was payable. 28UPS issued an invoice to the defendant for an amount of $4983.38. The employee of UPS received various instalments of money from different persons between the months of November 2008 and September 2009 as payment of the invoice in entirety. The defendant had instructed those persons to pay the money to UPS. The payments were in relation to the innocuous frozen root vegetables. 29The container was transported on the vessel, "Capitaine Tasman", which stopped in Brisbane before arriving in Sydney on 15 November 2008. The container disembarked on 19 November 2008 and was transported to a Customs Container Examination facility where it was X-rayed. On 20 November 2008, Australian Customs Service (hereinafter "ACS") officers physically inspected the container at which point 176 white Hessian bags containing clear plastic seal bags of kava were located at the bottom of the container, concealed by 327 plastic bags of innocuous frozen root vegetables. The total amount of pure weight kava in the container was 3,949 kilograms.

[10]

The Evidence of Kenneth Bradshaw 35The street value of a certain substance fluctuates. There may be times of oversupply due to drought or undersupply due to changes in drug taking fashions (Transcript at 25). However, the Court accepts the evidence of Kenneth Bradshaw that, in the Northern Territory, the street value for kava is $20 to $30 per 15 - 30 gram deal. In his affidavit sworn 8 November 2010, Mr Bradshaw states: "I have debriefed numerous offenders and remote community members involved in the trafficking and distribution of kava in the NT and on all occasions I have been informed that the kava sells for $20 to $30 per 15 to 30 gram deal. The kava is generally supplied to indigenous community members/co-offenders on credit in expectation of payment when the kava is sold". 36The Court regards Mr Bradshaw's evidence as credible given his involvement in the investigation of 25 to 30 kava offences in the Northern Territory since February 2009. His involvement in significant individual seizures of kava ranging from 20 kilograms to 294 kilograms whilst working at the Katherine Substance Abuse Intelligence Desk demonstrates his knowledge of the value of kava in the Northern Territory. 37The plaintiff submits that, taking the least expensive price point in the range calculated on Bradshaw's figures, the value of the kava in the Northern Territory is $20 per 30 grams, or $666.67 per kilogram. Therefore, based on this valuation, the imported 3,949 kilograms of kava equates to a value of $2,632,666.60. 38In paragraph 5 of his defence filed on 15 April 2011, the defendant did not agree with this valuation. In the record of interview dated 15 December 2008, the defendant states that he sells kava to the local community in Sydney at $20 per kilogram. At this rate, the total value of the imported kava (3,949 kilograms) would be $78,980. I do not accept the assertion by the defendant. That, of course, does not prove the opposite. Yet, here, there is evidence of a value in the Northern Territory. There is evidence of a large market amongst remote indigenous communities. There is, further, evidence of a history of the defendant selling in that market and no history of sales in Sydney. 39The Court also relies upon the evidence of Kenneth Bradshaw that all kava seized in the Northern Territory has originated from either Sydney or Brisbane.

[12]

Other Relevant Considerations 42The defendant admitted, at an early stage, that he was responsible for importing the container and did so for commercial purposes. He also voluntarily participated in a taped interview at Customs House at Sydney International Airport and admitted to importing the kava to Australia to sell it to the community for $20 a kilo. Given the objective evidence, there may have been little realistic alternative. The defendant later pleaded guilty in his defence filed on 24 June 2010 and agreed to facts which strengthened the prosecution's case. In this respect, the defendant is entitled to the benefits associated with his guilty plea, the fact of the plea (s 16A(2)(g) of the Crimes Act ) and his cooperation with authorities (s 16A(2)(h) of the Crimes Act ), all of which facilitated the course of justice: see Cameron v R [2002] HCA 6; 209 CLR 339. 43The defendant has a number of previous convictions. Therefore, he is not entitled to leniency applicable to a person for a first offence. On 18 March 2009, he, with others, was charged in the Northern Territory with possession of 137 kilograms of kava, taking part in the supply of that same amount of kava and also unlawful possession of cannabis and supply of cannabis. The defendant was convicted and sentenced to an aggregate term of 9 months. 44Later, on 13 May 2009, the defendant was charged with possessing a commercial quantity of kava and supplying kava without a licence. He was convicted and sentenced to an aggregate term of 12 months imprisonment, to be served concurrently with the sentence received on 18 March 2009, with a non-parole period of 9 months. 45Details of the defendant's other relevant previous offences are listed below: Date Offence Result 3 May 2004 One (1) count of possessing a commercial quantity of kava Convicted and sentenced to an aggregate term of 6 months imprisonment, suspended immediately on the condition that he was to be of good behaviour for 2 years One (1) count of supplying kava without a licence 3 May 2004 One (1) count of entering Aboriginal land without a permit Convicted and fined $200

[13]

46Given the defendant's previous drug offences, there is an obvious need for specific deterrence. The defendant's criminal record is evidence of the defendant's continuing attitude of disobedience to the law. It strengthens the need, in this case, for retribution, deterrence and protection of society (Veen v R [No 2] [1988] HCA 14; (1988) 164 CLR 465 at 477). 47Other than the plea of guilty, there is no direct evidence before the Court of his remorse or contrition. The plea of guilty does show a degree of remorse and/or contrition, in this case, but not to the degree required to substantially reduce sentence. Furthermore the defendant's conduct was planned and premeditated, despite the defendant's contrary submission. It is clear from the defendant's criminal history that he would have continued to import kava to Australia if he had not been caught. (See CEO Customs v Labrador Liquor, supra). 48The Court is also required to consider a number of subjective factors, namely, the defendant's prospects for rehabilitation, his character, age, means and mental or physical conditions as well the effect of the sentence upon his family and dependants. The defendant's submissions raise matters relevant to the aforementioned considerations but there is no evidence testifying to the accuracy of those submissions or supporting them. The defendant has not made the Court's task easy in this respect. 49It is unnecessary to make reference to every consideration listed in s16A(2) of the Crimes Act . The Court has only referred to those that are most relevant in the present case. In the defendant's submissions, it is alleged that the defendant lives with and financially supports his (at that time) pregnant wife. It is also alleged that the defendant has non-insulin dependent diabetes and high blood pressure. He is receiving medication. I reiterate, however, that no evidence verifying these facts was adduced but, notwithstanding that lack of assistance, I will attribute weight to those factors. Further, the defendant is an active member of the community and is involved in the community church, choir and fundraising activities . He has an interest in Rugby Union in Australia .

[14]

The Imposition of Penalty 50As I stated in CEO of Customs v Ozzy Tyre & Tube Pty Ltd & Anor [2005] NSWSC 948 at [96]: "It is essential... 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." 51The maximum penalty imposed, in accordance with s 233AB(2) of the Act, should be three times the value of $2,632,666.60 (see [35]), that is $7,897,999.80. This figure is different from the figure in the plaintiff's calculations on penalty dated 22 July 2011 ($7,885,999.98). The Court considers the figure of $7,897,999.80 as the appropriate maximum. 52The Court has not been provided with any directly comparable cases or statistical information to assist with placing the defendant's offences within any hierarchy of offences of their kind. Therefore, the Court is unable to conclude that the offences are in the worst category of cases that attract the maximum penalty. The importation offences would cover a wide range of conduct including importation of relatively innocuous amounts. This is a large amount, imported in a container, involving significant long-term planning. It must at least be at or above mid-range in objective seriousness. 53There has been significant social and socioeconomic damage of Aboriginal Communities in Arnhem Land caused by kava. According to Professor Crough, kava has a number of adverse health effects including seizures, extreme weight loss in heavy users and cardiovascular disease. Considering these widespread effects, there is a need for general deterrence. 54In Smith v The Queen , Mahoney JA states at 23 that it: "...is the significance to others of the present punishment which has a particular importance...what is done to him should both mark, clearly and emphatically, the community's view of his offence and (if it may) deter other possible offences." 55The Court acknowledges that kava, like alcohol and hallucinogens, affects vulnerable communities.

[15]

The Capacity for the Defendant to Pay 56As at 15 December 2008, the time at which the defendant was interviewed by ACS Officers (see annexure J to Agreed Statement of Facts), the defendant was unemployed and had been for two years. The plaintiff submits that the defendant's occupation was importation and distribution of kava and root vegetables (Transcript at 15). 57The defendant did not give evidence and there was no direct evidence before the Court of his financial position. According to the defendant's submissions (paras 53, 54, 62 and 63), he currently works as a truck driver and earns $600 - $800 per week, depending on overtime. The defendant supports his wife by paying her an allowance of $150 and pays rent to his sister amounting to $150 per week. His weekly expenditure is $397.70. Again, there is no evidence to this effect. 58Nevertheless, there is scope for the operation of s 16C of the Crimes Act to perform a useful function (CEO Customs v Labrador Liquor , supra) , but its effect, because of the absence of evidence, must be based on impression . Following the proceedings the Court sought evidence of financial circumstances from the defendant. None was forthcoming. 59The Court accepts the plaintiff's submission in this respect and grants limited weight to the defendant's perceived financial circumstances when determining the appropriate sentence. This poses a number of problems with the imposition of sentence given that, on the impression of the Court, it is unlikely that the defendant will be able to pay the fine. I refer to the comments I made in 2005 in CEO of Customs v Ozzy Tyres : "112 ...The difficulty with which Customs is faced is that by their very nature, a penalty which is confined to a pecuniary penalty will, in the case of impecuniosity, be problematic. It may be that the legislature needs to consider seriously the capacity, in the case of impecuniosity or inappropriateness of pecuniary penalty, for other penalties to apply. I do not here suggest that full time imprisonment would be appropriate, but some form of community service either with or without supervision and/or restrictions on movement, or other kind of penalty, should be included in the range of penalties available so that persons who perpetrate criminal offences of this kind can be the subject of a practical punishment which, in turn, would have the added benefit of repaying society with the assets of intelligence and hard work which, for example, the personal defendant in this matter, clearly has." 60If a pecuniary penalty were imposed in Queensland, non-payment could be enforced by a variety of means, including imprisonment. That is not the case in New South Wales and makes more obvious the extension of the available type of penalty for the offence in circumstances where it is anticipated that the offender may not be able to pay. 61Nevertheless I must deal with the legislation as it exists. The objective circumstances are at least mid-range. There is little to be said for the defendant on subjective matters. This is the defendant's first importation offence. His other offences include kava dealing, particularly to the remote indigenous community. He is therefore entitled to some leniency but not to the same degree as if this were the first offence of any relevant kind. 62Notwithstanding the Court's perception (albeit without evidence) of the defendant's financial capacity, a penalty must be imposed that takes account of the maximum fine, the value of goods (and profit that would otherwise have been obtained) and the need for deterrence. 63Other than the plea of guilty, the fact of which I otherwise take into account in reducing the penalty by 25 percent, there has been no contrition or remorse. Nevertheless, the plea and the facts agreed by the defendant displays co-operation with the enforcement agency: see, generally, s 16A of the Crimes Act . 64If the defendant's financial circumstances are that he is impecunious, then a large fine will have little or no impact on his ability to earn money as a truck driver and, therefore, on his family: s 16A(2)(p) of the Crimes Act. It will affect his ability to continue to import kava and may, in that sense, act both as a punishment and a personal deterrent.

Chief Executive Officer of Customs v Samisoni Volita Havili Kaufusi

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