Chief Executive Officer of the Australian Customs Service v Karam & Anor

Chief Executive Officer of the Australian Customs Service v Karam & Anor - [2010] NSWSC 589 - NSWSC 2009 case summary — Zoe

[12]

JUDGMENT 1 HER HONOUR: On 2 August 2007, a sea cargo container imported by the defendants was stopped at Port Botany for examination by Customs officers. Documents provided to Customs in relation to the container stated that it contained shoes. In fact, it was found to contain a substantial amount of raw tobacco and boxes of cigarettes packed behind boxes of shoes. 2 These are proceedings under Part XIV of the Customs Act 1901 (Cth) seeking convictions and penalties for a number of offences arising from those events. The proceedings fall within the definition of "Customs prosecutions" (s 244 of the Act) and are brought by the Chief Executive Officer of the Australian Customs Service, as allowed by s 245 of the Act. The Chief Executive Officer is referred to throughout the Customs Act as the CEO and I have adopted that reference. 3 The defendants are two brothers, Mr Ronnie Karam and Mr Dory Karam. They deny the offences. 4 The statement of claim charges that each defendant has committed the following offences: "3. That he did, on or about 2 August 2007 at Sydney in the State of New South Wales, smuggle or attempt to smuggle goods, namely 150,000 cigarette sticks each containing tobacco, contrary to ss 233(1)(a) and 237 of the Act. 4. That he did, on or about 2 August 2007 at Sydney in the State of New South Wales, smuggle or attempt to smuggle goods, namely, about 12,926.20 kilograms of unmanufactured tobacco (leaf), contrary to ss 233(1)(a) and 237 of the Act. 5. That he did, on or about 2 August 2007 at Sydney in the State of New South Wales, import or attempt to import prohibited imports, namely, about 12,926.20 kilograms of unmanufactured tobacco (leaf), contrary to ss 233(1)(b) and 237 of the Act. 6. That he did, on or about 2 August 2007 at Sydney in the State of New South Wales, evade or attempt to evade payment of duty payable with respect to 150,000 cigarette sticks each containing tobacco, contrary to ss 234(1)(a) and 237 of the Act. 7. That he did, on or about 2 August 2007 at Sydney in the State of New South Wales, evade or attempt to evade payment of duty payable with respect to, about 12,926.20 kilograms of unmanufactured tobacco (leaf), contrary to ss 234(1)(a) and 237 of the Act. 8. That he did, on or about 1 August 2007 at Sydney in the State of New South Wales, cause to be made a statement to an officer being reckless as to (sic) fact that the statement was false in a material particular, namely in Customs Import Declaration Nature 10, numbered AHTMMGA7, declared the contents of shipping container GATU8215236 to be shoes, when the shipping container in fact contained shoes as well as 150,000 cigarette sticks and 12,926.20 kilograms of unmanufactured tobacco (leaf), contrary to ss 234(1)(d)(i) of the Act."

[14]

Uncontroversial facts as to the importation of the container 8 The defendants consented to the tender of an agreed statement of facts (Ex B) which, together with the relevant shipping documents, explained some of the circumstances in which the container was imported. That material establishes the following matters. The container was a forty-foot "high cube" (40' HC) sea cargo container. It arrived in Sydney from Vietnam on 2 August 2007 under a bill of lading issued by Jupiter Pacific Forwarding Joint Venture Co Ltd in Ho Chi Minh City, Vietnam (the Jupiter bill of lading). 9 The container was owned by Malaysia International Shipping Company Berhad (MISC). According to MISC records, it was released to Jupiter Pacific Forwarding JVT Co Ltd as shipper on 12 July 2007 under a "Master bill of lading" issued by MISC. In the Master bill of lading, the contents of the container were described as "880 CTNS 8,800 pairs of different kinds of shoes". 10 The container was returned to MISC in Vietnam on 13 July 2007 at the port of loading, where it was loaded onto the vessel "Hub Grandois" destined for Singapore. On that date, the Jupiter bill of lading was issued, naming Jupiter Pacific Co Ltd as the shipper. The consignee named in the Jupiter bill of lading was "Drovers Footwear Pty Ltd Unit 3, 55 Kent Road Mascot, NSW 2020 Sydney, Australia". The goods were described as "800 CTNS 1x40' HC 8,800 pairs of different kinds of shoes". 11 After the vessel arrived in Singapore, the container was transhipped to the vessel "Theodore Storm", which left Singapore on 23 July 2007 and arrived at Brisbane on 30 July 2007, where the container remained on board. 12 On 1 August 2007, Mr Matthew Arthur, a customs broker with Century Customs, created a "Customs Import Declaration Nature 10" for the goods in the container and lodged it through an electronic lodgement system, the "Integrated Cargo System" (in accordance with s 71L of the Customs Act). 13 The Nature 10 Declaration declared the contents of the container to be 8,800 pairs of shoes, in accordance with the Master bill of lading, the Jupiter bill of lading and the commercial invoice and packing slip provided to Jupiter Pacific in respect of the container. The Nature 10 Declaration declared a customs value of the goods of $48,817.35 and paid duty on that amount at 10% ($4,881.73) together with GST of $5,577.59. The duty in fact payable was $36,514.50 on the cigarettes and $3,933,442.66 on the tobacco. The importation of unmanufactured (leaf) tobacco was prohibited except by the holder of an appropriate licence, which neither of the defendants held. 14 On 2 August 2007, the Theodore Storm arrived in Port Botany, Sydney. The container was transported from the port to a customs examination facility where it was x-rayed and then referred for physical examination. The physical examination revealed 108 brown cardboard boxes at the front of the container, all of which contained shoes. Stacked behind those boxes were 490 unmarked brown cardboard boxes which contained the leaf tobacco, together with 15 boxes marked "Golden Eagle Virginia Filter Deluxe". Those boxes were found to contain 150,000 cigarette sticks. The weight of the tobacco was 12,250 kilograms. Facts in issue 15 The defendants called evidence to establish that the importation of the cigarettes and tobacco had been arranged without their knowledge by a person known to them, Mr Adnan Cheikho. Mr Cheikho was called as a witness in their cases in defence. He said that he had organised the importation of the tobacco with the assistance of the defendants' younger brother, Mr Jason Karam, who also gave evidence in their defence. Mr Cheikho said that he did not at any stage tell either of the defendants that the shipment contained tobacco or tobacco product. However, Mr Cheikho said that the defendants' brother Jason had known from the outset that Mr Cheikho was arranging the importation of tobacco. Jason Karam denied that, saying that he initially believed Mr Cheikho was importing sandals and that he (Jason) was told there was tobacco in the container only after it had reached the port at Ho Chi Minh City. 16 The defendants denied any knowledge of those arrangements. They each admitted importing the container itself (evidence of Ronnie Karam at T338.19; evidence of Dory Karam at T428.41) but said that they believed it carried shoes (Ronnie Karam at T314.13; Dory Karam at T428.41). Each relied in different ways on the contents of the packing list provided to Customs in relation to the container, which listed the different styles and quantities of shoes allegedly packed in the container. Ronnie Karam said the shoes listed on the packing list were shoes he had ordered and that they were to come from three different locations, including some from a factory in which he appears to have had a financial interest, known as the Chicken Shed (T369.25-38). Dory Karam said that he just went on the paperwork. He said "If I saw the paperwork saying it was shoes, I believed it was shoes inside the container" (T418.30). Each of the defendants denied having any knowledge that there were cigarettes or tobacco inside the container (T337.7; T418.35). 17 The critical fact in issue is accordingly what state of awareness, if any, the defendants had as to the true contents of the container before it arrived in Port Botany. Central to the determination of that issue is a careful analysis of the evidence surrounding the packing list and the commercial invoice. The packing list and commercial invoice 18 The documents tendered in the proceedings on behalf of the CEO included a series of contemporaneous emails between Jupiter Pacific in Vietnam and Jupiter Air Oceania Pty Limited (Jupiter Australia) tracking the course of the container. The main people who dealt with the shipment were Ms Ngoc Duong in Vietnam and Ms Jacqueline Pellaers in Sydney. On 10 July 2007, Ms Duong sent an email to Ms Pellaers advising her that the container was at the depot in Ho Chi Minh City but that she had still not received the commercial invoice and packing list required for customs clearance. Ms Duong stated: "As shipper's request for the shipment to Sydney, one container 40" was delivered to the shipper's warehouse in Friday 06 July. In 06 July afternoon, Jason asked us changing the container 40'HC for him cause of higher volume of cargo. We already sent one container 40'HC to his warehouse in 07 July and picked up this container at the same day. Now the container is already in depot and waiting for customs clearance. Jason promised us many times to provide the invoice and packing list from 06 July. However, we still do not receive anything from him until now; we made many phone calls to him. How can we do customs clearance for this if lack of document from shipper? The closing time of this vessel is 19: pm today. Therefore if he can not provide us the document before 12:30 pm, we cannot make sure about customs clearance for this container on time for tomorrow vessel. And it will be occurred the storage charge and more delay for this Pls kindly push them for this matter" (Affidavit of Jacqueline Pellaers sworn 15 January 2009, annexure D) 19 A further email sent by Ms Duong to Ms Pellaers later in the day on 10 July advised Ms Pellaers that Jason Karam was now saying that the commercial invoice and packing list would be provided by "the consignee": "Secondly, Jason asked us for handling the shipment, trucking, customs clearance … for exporting it to Sydney. Now the container was in depot but he still does not provide us the invoice and packing list. Therefore we cannot make Customs clearance for it. I checked with him but now he told me the consignee in Sydney will provide the invoice and packing list" (Affidavit of Jacqueline Pellaers sworn 15 January 2009, annexure C). 20 By that time, the container was in fact packed with shoes, cigarettes and tobacco. It appears from a later email dated 24 July 2007 (annexure H to Ms Pellaer's affidavit) that Jason Karam did ultimately send a commercial invoice and packing list to Ms Duong. The email forwarded two such documents, "provided by Jason", to Ms Pellaers, who had requested them in preparation for the arrival of the shipment in Sydney.

[18]

Evidence of Mr Ronnie Karam 23 Ronnie Karam stated that he has been in the business of developing and selling shoes for many years. He initially conducted business through a company called Rogue Footwear Pty Limited. At some point before 2007, he commenced trading through a different corporate entity, Drovers International Pty Ltd, apparently in response to attempts by the Commercial Bank of Australia to enforce a charge over the assets of Rogue Footwear Pty Limited (T300.22). 24 Drovers Footwear Pty Limited (the company identified in the Jupiter bill of lading as the consignee of the container) was incorporated by Ronnie Karam but according to his evidence he did little if any trade through that company. 25 By 2007, many of the shoes sold by Drovers International were being manufactured in Vietnam. Ronnie Karam had a number of people working for him in Vietnam at that time, including Jason Karam and people referred to in the evidence only as Vu, Vinh and Le (T303-4). 26 Ronnie Karam used Jupiter Australia as his freight forwarding company for the importation of shoes from Vietnam into Australia. He also shared Jupiter's offices at Unit 3, 55 Kent Road, Mascot and, in addition, used part of their warehouse facilities at those premises for the business of Drovers International (T308). At the time of the events relevant to these proceedings, Drovers International owed a substantial debt to Jupiter Australia and could only obtain the release of its consignments upon payment of "cash up front". 27 Ronnie Karam was aware that Jupiter Australia used a company called FDI as its freight-forwarding agent in Vietnam. However, he stated that he did not have any direct dealings with FDI. When he wanted a container of shoes to be imported into Australia from Vietnam, one of his people in Vietnam (Jason or Vu) would contact FDI. Ronnie Karam would then be contacted by Jupiter Australia and told when the container was moving (T309). 28 At some point, Ronnie Karam became aware that Jupiter Australia had stopped using FDI as its freight-forwarding agent and was using a Jupiter company in Vietnam instead. He said that was of no concern to him as his relationship was with Jupiter Australia. 29 Some of the shoes manufactured in Vietnam for sale by Drovers International were "vulcanised" shoes, that is, shoes that have the sole affixed to the shoe by being placed in an oven and "cooked" (as Ronnie Karam put it) as opposed to simply being glued to the shoe. The supplier that was manufacturing those shoes for Ronnie Karam's business in early 2007 was the factory referred to by him as the Chicken Shed ("because it looked bad": T314.40). 30 From 28 July 2007 to 3 August 2007, Ronnie Karam was attending an expo in Las Vegas. He said that, at that time, he was expecting the arrival of three containers organised by either Jason Karam, Vu or Le (T313.41). One was a 20 foot container. Another was an "LCL" (less than a container load). The third was the 40' HC container the subject of these proceedings. 31 Ronnie Karam gave evidence that he understood the three containers were carrying shoes from sources identified by him in the following terms (T314.15): "A. Two were from Anlac which was a new vulcanised factory we were trying, and the other one was coming from the smaller vulcanised factory that we were pulling out of because we owned the equipment as well, so we wanted to move that, and then there was some dress shoes coming out of Oscar and some further other products from different people. PLM, another factory."

[20]

36 When Ronnie Karam gave evidence, however, he volunteered "we say that all the time". He said the product launch was an excuse they had been using for six or seven years "because it hurries the containers along". He said that there was in fact no product launch for which any shoes were required on this occasion. However, the response to the Notice to Produce suggests that, at least until after the commencement of the hearing, Ronnie Karam was sticking to the story that he believed the container contained shoes urgently required for a product launch. After he abandoned that "excuse", his anxiety to get the container off the port as soon as possible was left without explanation. He did not suggest that he was in any hurry to get access to the shoes from the Chicken Shed, described by Dory Karam as "rubbish". 37 On 9 August 2007, Customs officers executed a search warrant at Jupiter's premises at 55 Kent Road, Mascot. They informed Ronnie Karam that tobacco had been found in the container. Ronnie Karam gave evidence that he had no knowledge until that point of there being tobacco in the container (T324.10). He said, however, that he did suspect at that time that Mr Cheikho was responsible for the inclusion of tobacco in the container because Mr Cheikho had previously asked him to undertake illegal importations. Ronnie Karam gave evidence that he had since confronted Mr Cheikho (T326.14): "Q. What, if anything, have you said to him? A. That he knows he did this and for him to 'fess up, you know, not me. It's got nothing to do with me. He knows that he did it. He's told me he's done it. And, you know, he has to 'fess up. So I asked [my solicitor] to subpoena him, you know, so that can happen." 38 Ronnie Karam also said that his brother Jason Karam "must have known about it … because Mr Cheikho needed help" (T326.34). Evidence of Mr Dory Karam 39 Dory Karam has a background in computer science. In about 2004, he was "co-opted" into the family business. He assisted Ronnie Karam with general office duties and also helped with the unpacking of consignments when they arrived at Jupiter. At the time Dory Karam joined the business, a decision had been made to close down the manufacturing arm in Australia and establish a factory or factories making shoes in Vietnam. Dory and Ronnie Karam both travelled regularly to Vietnam during the period when the company's manufacturing business was being built up in Vietnam. 40 One of Dory Karam's contributions to the business was to create a standardised template which he used to prepare commercial invoices and packing lists for shoes imported from Vietnam. He explained that the reason those documents were prepared by him rather than by the suppliers of the shoes was that the people manufacturing their shoes in Vietnam had very limited access to computers and "limited knowledge on what was required for Australian imports documents" (T410). Several samples of such documents were tendered on behalf of Dory Karam with the intention of establishing that this was a usual practice within the company. 41 At the execution of a search warrant at premises in Wicks Road, North Ryde on 10 August 2007, Dory Karam told Customs officers that the 40' HC container was supposed to be bringing product obtained following a "cleanup" of the Chicken Shed. He said that he was the instigator of that importation. He said that the company had ceased trading "because it was rubbish" and that they were trying to "recuperate (sic) as much dollars as we could". In his evidence in the proceedings, Dory Karam confirmed that it was his understanding that the 40 foot container was to contain shoes taken from the Chicken Shed (T429.35). 42 Dory Karam said in evidence that he was not part of the determination that the Chicken Shed would be closed, but that he understood it was not profitable and was to be closed down. He could not recall giving any instructions to Jason Karam in that regard, but said: "There would have been some sort of instruction to recoup [stock] as there were moneys outstanding" (T420.15). In cross-examination, he said that he would have given the instruction to Jason to collect those shoes and send them back to Australia (T429.2). That is completely inconsistent with the version of events given later in the trial by Jason Karam (considered below). 43 In his evidence-in-chief, Dory Karam said that he did not recall whether he completed or checked the packing list and the commercial invoice for the stock from the Chicken Shed. He said that it was quite possible that he may have given some assistance with the completion of those documents, but said: "It would have been just over the phone" (T420.35). I am satisfied that he was at that point seeking to distance himself from those documents. 44 Under cross-examination by Mr Robberds on behalf of the CEO, Dory Karam conceded that he had in fact typed the packing list and the commercial invoice on his own computer and emailed them to Jason Karam in Vietnam. That concession was made only after Mr Robberds had reminded Dory Karam that he had previously said the same thing to Customs officers at the execution of the search warrant. Dory Karam told the investigating officer on that occasion that, in order to prepare such documents, he would be in contact either with the people working for him in Vietnam (at that time mainly his father and his brother) or with the factory. He then said (Ex O, p 67): "And on that occasion it was the factory that I was in contact with and they basically gave me the details of what they had packed in the container"

[21]

That evidence cannot be reconciled with the evidence of Jason Karam (considered below), nor does it accord with common sense. There is no suggestion from any source that the container was in fact packed with the stock recouped from the Chicken Shed. I accept, as submitted by Mr Robberds, that Dory Karam's statement to the investigating officer on that issue was a lie. 45 Dory Karam agreed in cross-examination that he paid $13,600 in cash to Mr Figon at Jupiter Australia, representing most of the amount invoiced by Jupiter for customs duty and other expenses payable in respect of the 40' HC container (T428). There was a balance of some $2,000 payable on that invoice. Dory Karam said that, when Ronnie Karam came back to Australia, Dory told him that the invoice was "short" and that Ronnie needed to organise payment of the balance (T432). Evidence of Mr Jason Karam 46 The defendants' brother, Jason Karam, gave evidence by video-link from Vietnam. The contents of an affidavit sworn by him disclosed a risk of self-incrimination and I granted him a certificate under s 128 of the Evidence Act (T452). 47 Jason Karam stated in his affidavit that he had been approached in late June or early July 2007 by Mr Cheikho to arrange a container for some sandals to be sent to Sydney. Jason agreed and contacted Jupiter in Vietnam to arrange for a container to be delivered to an address provided by Mr Cheikho. That evidence in itself is inherently unlikely. Why would Jason agree to the use of his brother's import facilities, creating liabilities for his brother's company as consignee, to help someone else import footwear? 48 The description of the contents of the proposed shipment as "sandals" appears in the documents tendered in the proceedings on behalf of the CEO, in an email dated Wednesday 4 July 2007 from Jason Karam to Ronnie Karam. That email refers to two containers and says, relevantly: "The second is a 40ft high wall cont full of sandals The address is [address provided] also to be picked up by Friday"

[22]

In cross-examination, Jason Karam said that that was the container for Mr Cheikho (T462). Ronnie Karam did not explain what he thought as to why Jason had arranged a shipment of sandals at that time. He did not suggest that he had ever ordered a container load of sandals. 49 The emails tendered by the CEO establish that Ronnie Karam forwarded Jason's email to Guy Figon of Jupiter Australia asking him to arrange forwarding of the containers. 50 Jason Karam stated that Mr Cheikho later contacted him to say that the container delivered by Jupiter was not big enough and that he (Jason) then arranged for a larger container to be delivered. That is consistent with the email dated 10 July 2007 from Ms Duong of Jupiter in Vietnem to Ms Pellaers of Jupiter in Sydney set out above. 51 Jason Karam said in his affidavit that, later in July 2007, Mr Cheikho had contacted him and asked him to prepare the documents for the shipment and to send them to Jupiter. He stated that he prepared an invoice and a packing list and forwarded them to Jupiter. He said that he did not provide the documents on letterhead as the shipment was not associated with the family business and was a personal shipment by Mr Cheikho, through Jupiters, to Sydney. Jason Karam explained by reference to the taxation system in Vietnam that there was no way he could have done the paperwork and sent it without a company name (T470). 52 Jason Karam said that he was later asked by an employee of Jupiter to provide documents on company letterhead. He said that he ignored the request for two reasons. The first was that the shipment had nothing to do with the family business. The second was that as a result of his discussions with Mr Cheikho, he had become aware that Mr Cheikho was arranging for a shipment of tobacco to be sent to Sydney and that Mr Cheikho had contacts at Jupiter Australia who were to unload the shipment for him and distribute it through another contact he had in Sydney. 53 Mr Cheikho denied the last contention, in the following exchange (T504.41-T504.48): "Q. Jason has given evidence in this case that he became aware that you had contacts at Jupiter's who would unload the shipment for you and distribute it through another contact you had in Sydney. Did you tell that to Jason? A. No. Q. That's completely incorrect, is it? A. That's incorrect. Why would I contact Jupiter? I left on bad terms and the container came through Jupiter to Jupiter. Why would I contact them?"

[23]

54 In relation to the invoice and packing list, Jason Karam said in cross-examination that he had obtained the information needed to prepare those documents from Mr Cheikho on the earlier date when he had met him. He said that the invoice and packing list he prepared listed all of the sandals mentioned to him by Mr Cheikho. 55 One could not accuse Jason Karam and Dory Karam of putting their heads together in relation to their evidence as to the provenance of the packing list and the commercial invoice. As recorded above, Dory Karam told Customs officers (at the execution of the search warrant at Wicks Road) that he obtained the information needed to prepare those documents from people at the Chicken Shed, who told him the details of what they had packed in the container. 56 Jason Karam's evidence on that issue is contradicted by the evidence of Mr Cheikho, who denied giving Jason Karam a description of any shoes to be shipped in the 40' HC container (T499.36). Mr Cheikho said that he would not know what to tell Jason Karam on that issue and did not know "what they call their shoes". He said that Jason knew all along that the plan was to import tobacco. Mr Cheikho's evidence on that issue accords with common sense and I accept it. 57 Jason Karam said it was only after the container was at the port in Ho Chi Min City (implicitly, after he had prepared the packing slip and invoice) that he had learned it in fact contained tobacco. He explained that he kept asking Mr Cheikho what was in the container, because the contents of the container were his (Jason's) responsibility. I do not accept his evidence on that issue. The emails referred to above disclose that the commercial invoice and packing list were provided by Jason not only after the container had arrived at the port in Vietnam but after he had promised Jupiter "many times" to provide them. 58 Jason Karam did not agree that he had assisted Mr Cheikho to export the tobacco. He said: "My hands were tied. The container was at the port already. I had arranged everything, packing this [sic: list?], everything was arranged already"(T465.51). He said that once a container is at the Vietnam Port it is "pretty much impossible" to take it back (T466.2). 59 Jason Karam said that he did not ring his brothers up to tell them the container had tobacco in it. Asked why not, he said: "I just left it, I just didn't want to deal with the situation. I didn't know what to do with it" (T466). He said that Mr Cheikho was supposed to fly back to deal with the shipment when it arrived in Australia.

[24]

Evidence of Mr Cheikho 60 Mr Cheikho was also granted a certificate under s 128 of the Evidence Act in respect of his evidence. Mr Cheikho is a former police officer who was discharged from the police service in 1994 when he was prosecuted for an offence of supplying cocaine. After serving a term of imprisonment for that offence, he obtained employment with Jupiter in Sydney at their warehouse at Kent Road in Mascot. His duties included packing and unpacking containers, collecting cargo from the airport and delivering consignments to customers. 61 Mr Cheikho was still employed by Jupiter in 2005 when Ronnie Karam and Dory Karam took up office and storage space at those premises. In his evidence, he described them as his clients. 62 In 2007 Mr Cheikho's employment with Jupiter came to an end. He went to Vietnam where he obtained employment with FDI, the freight-forwarding company formerly used by Jupiter Australia. His employer was Ms Lien. 63 Mr Cheikho gave evidence that, before he commenced his employment in Vietnam, he was approached at a coffee shop in Lakemba by a man who identified himself as Mohammed. Mohammed approached Mr Cheikho "on behalf of a group" and wanted to see if Mr Cheikho was willing to work with them importing cigarettes from overseas. They wanted a shipping company with a good reputation through which to organise for those importations. 64 Mr Cheikho said that, after he commenced his employment with FDI in Vietnam, he contacted Mohammed by telephone and told him that he had spoken to somebody who was willing to participate. He was referring to Jason Karam. Mohammed wanted Mr Cheikho to do a trial run to bring in a couple of boxes of cigarettes. Mr Cheikho said that he "explained it to Jason and he knew what was happening" (T486). 65 Jason Karam denied any knowledge of the trial run. According to his evidence, Mr Cheikho approached him for the first time in late June or early July 2007. 66 It appears that the cigarettes in the trial run were discovered by Customs officers in Ho Chi Min City when they inspected one of FDI's road containers. Mr Cheikho's employer, Ms Lien, received a telephone call to inform her of that fact. She later told Mr Cheikho that she had managed to pull the two boxes of cigarettes out of the container and replace them with two boxes of shoes. Mr Cheikho said that he explained those events to Jason Karam, and later to Mohammed. 67 About a month later, Mohammed called Mr Cheikho and said that they were ready to do "a proper run" (T487). Mohammed was going to give Mr Cheikho and Jason Karam $30,000 for their participation in the shipment and was also to pay all costs of the shipment. Mr Cheikho said that he and Jason Karam agreed to share the $30,000 equally.

[28]

Jupiter's attempts to obtain documents on letterhead 74 As already noted, the person within Jupiter Australia who dealt with the importation of the three containers was Ms Pellaers. She had only recently commenced working for Jupiter at the time of those importations. She had, however, some thirty years prior experience in the shipping industry. 75 I have already referred to Ms Pellaers' email to Ronnie Karam dated 25 July 2007 requesting a commercial invoice, packing list and packing declaration on letterhead. Ronnie Karam gave evidence (at T338-9) that he ignored that request, saying that it was "unusual" for Jupiter to ask him for documents. Ms Pellaers was cross-examined generally to that effect. Whether or not it was Jupiter's usual practice, I see nothing unusual or unreasonable in a request by a freight-forwarder for documentation that establishes the provenance of the goods sought to be imported. 76 Ronnie Karam said that when Ms Pellaers kept asking for documents on letterhead, he asked Dory to deal with it (T339.14). In due course, Dory Karam sent Ms Pellaers commercial invoices and packing lists on letterhead for the 20' container and the LCL, but not for the 40' container. 77 Ms Pellaers gave evidence that, from two or three days before the shipment of the 40' container was due to arrive, she attempted to contact Ronnie Karam and Dory Karam many times to obtain a commercial invoice for the consignment of shoes in the 40' container on the letterhead of the exporter company. The CEO relied in particular on evidence of phone records (Ex H) which showed telephone contact between Ms Pellaers and Dory Karam for 57 seconds on 30 July 2007. On the same day, Dory Karam sent an SMS message to Ronnie Karam in which he said "Just say u know nothing about shipment". I do not have any doubt that both defendants knew that message related to the container the subject of these proceedings. I found their evidence to the contrary completely unconvincing, and I think it is likely that they discussed that issue with each other before coming to Court: see T342.9; T425.17 and T444.27. Ultimately, when Ms Pellaers felt she had exhausted all avenues for obtaining the documents on letterhead, she provided the documents that she had originally received to Century Customs, the customs broker. 78 It was submitted on behalf of Dory Karam that it would not be fair to draw an adverse inference against him on the strength of the timing of the 57- second phone call and the SMS message. The basis for that submission was that the phone record of that call was not put to him in cross-examination, contrary to the requirement of fairness explained in Browne v Dunn (1893) 6 R 67. 79 I do not accept that submission. The defendants were well on notice of the contention that Ms Pellaers was calling them frequently in the days leading up to the arrival of the vessel in Sydney, trying to obtain documents on letterhead. They had every opportunity to meet that case. 80 Ms Pellaers gave evidence that, by contrast with her experience in attempting to contact Ronnie and Dory Karam to obtain an invoice on letterhead, after the 40' container arrived in Sydney she got "a lot of communication because then it was 'I want delivery of the container'" (T200.31) The warehouse at Kent Road 81 Each of the defendants gave evidence that Jupiter's warehouse at Kent Road was frequently attended by Customs officers without notice. Separately, Ronnie Karam gave evidence that he had wanted the container unpacked at that warehouse and that evidence was independently corroborated by Ms Pellaers. 82 The defendants relied on that evidence as demonstrating the inherent unlikelihood of their knowing the container held tobacco, since they would be unlikely to request to have it delivered to a place where they knew there was a risk of discovery of its contents by Customs officers.

[36]

89 Ronnie Karam's evidence as to the reply he sent to Ms Lien was very unsatisfactory. He agreed that the email related to a container sent from Vietnam to Sydney in which Ms Lien was involved before it left Vietnam and that the emails were talking about cigarettes in that container (T351.43-T352.3). He accepted that he had no misunderstanding when he received the email from Ms Lien that she was talking about the fact that cigarettes had been imported into Australia. He said that was why he wrote his response - because he didn't want to have anything to do with it (T352.12). 90 However, Ronnie Karam could provide no satisfactory explanation as to what he meant by the concluding words of his email, "I am just helping people out". He stated that the reference to "people" was a reference to Mr Cheikho. His evidence continued (T353.6): "Q. And how were you helping him out? A. Because I don't want to - if he's doing something like this, I don't want to know about it. "Don't get me involved in this situation." Q. That's not helping him by saying that, is it? A. Yes, because I'm protecting myself. HER HONOUR Q. How are you helping him, that's the question. How are you helping him? A. By staying away from - I don't want to get involved in this situation. If that's what they were doing, I don't know, so if he's doing it, I don't want to know about it." 91 He later sought to expand on that answer in the following further evidence-in-chief (at T400.3): "Q. And then you were asked a question, "And how were you helping him out." Your answer to that was, "Because I don't want to. If he's doing something like this, I don't want to know about it. Do not get me involved in this situation." Do you have anything further to add to that? A. As I said, I didn't want to get involved in the situation at all. I didn't want to have it in writing at all, that's why I said no, I didn't want to have any written communication with him. Also I didn't want to dob Adnan in. That's why I asked her to check her information out. Q. What did you expect that that would amount to? A. Because he had worked for her."

[38]

95 However, Dory Karam denied that he had discussed that evidence with Ronnie. I found the evidence of both defendants on those issues unconvincing. 96 In my view, there is a strong inference to be drawn from the language of the email, including the concluding words "I am just helping people out", that Ronnie Karam had at some point suffered the use of one of his containers for the purpose of importing cigarettes into Australia. Whether that evidence alone establishes that matter to a sufficient degree of certainty is another issue. On any view, the email exchange suggests that Ronnie Karam was not the owner of the cigarettes intended to be imported, and that any involvement was limited to permitting the use of his facilities. 97 Dory Karam's evidence in relation to the emails was less frank. He said that he could not recall receiving any messages from Ms Lien asking him to check on a container that had arrived in Sydney. As to the description of it as the "Ciragget cont", he said that he could have received the email and would probably have assumed that to be a brand of shoe (T434.30; T434.48). That was a ridiculous piece of evidence. I am satisfied that it was untruthful. 98 Dory Karam denied that it had ever occurred to him that the emails were speaking about a container sent from Vietnam to Sydney which contained cigarettes. Indeed, he appeared to suggest that he may not have read the email at all: (T434.14): "Q. Do you recall actually receiving these emails, that is the one addressed to Mr Cheikho and the one addressed to Ronnie and Dory? Do you actually remember receiving those emails? A. I think I just answered that one before. I receive a lot of emails through my mailbox. Half of them get sorted automatically. If I read it, it would have been in glance. If there was anything that was particular that I needed to reply to, I would have replied to it at a later stage." 99 I found Dory Karam's evidence on that issue very unsatisfactory and I do not accept it. I am satisfied that Dory became aware at some point of the attempted importation of cigarettes through his brother's facilities in May 2007. Application of the Criminal Code

[45]

(d) a fault element for that physical element, namely, intention. I assume that was intended to be a reference to the specific intent contained in the definition of "smuggling" in the Customs Act , namely, intention to defraud the revenue. 104 An intention to defraud the revenue means an "intention to prevent something getting into the revenue which the revenue is entitled to get": R v Australasian Films Ltd [1921] HCA 11; 29 CLR 195 at 218. It is clear, in my view, that such an intention may be established on the part of a person who is not the owner of the goods in question. 105 I am not entirely convinced that the second physical element identified above (the circumstance of defrauding the revenue) is an element of the offence. The Court of Criminal Appeal has held (in respect of a prosecution to which the Criminal Code did not apply) that proof of an offence under s 233(1)(a) does not require proof of customs value (where that is the determinant of the duty payable): Gill & Anor v CEO of Customs [2001] NSWCCA 470; 126 A Crim R 324 at [34] to [36] per Giles JA; Howie J and Carruthers AJ agreeing. Giles JA said at [36]: "The person could have had an intention to defraud the revenue if he or she intended that they pay less than the proper customs duty, whatever the proper customs duty may have been, and the intention to defraud could be found from facts that do not include the customs value of the motor vehicle." 106 It is probably inconsistent with that decision to require the CEO to prove element (c) above. 107 Separately, I note that the fault element for the first physical element identified by Mr Robberds requires proof of intention in respect of the conduct of importing the goods. It is not clear to me whether that had been separately articulated as an element of the offence before the Code came into force: see generally Gill at [34] to [61]; CEO of Customs v Pham [2006] NSWSC 1011 at [26] to [27]. 108 In light of those considerations, the better view may be that it is enough, in order for a person to be convicted of an offence under s 233(1)(a), to require proof of the following elements:

[59]

Charges under s 233(1)(b) - importing prohibited imports 124 The third charge against each defendant alleges importing or attempting to import a prohibited import, namely, the unmanufactured tobacco. That is an offence of strict liability: see s 233(1AB) of the Act. The offence is accordingly governed by s 6.1 of the Criminal Code. That section provides that there is no fault element for any of the physical elements of the offence, but that the defence of mistake of fact under s 9.2 of the Code is available. 125 The physical elements of the offence are the conduct of importing the goods and the circumstance that the goods are prohibited. As already indicated, I am satisfied beyond reasonable doubt as to the first matter. The statement of facts establishes the second and I am also satisfied as to that element. 126 As to the "defence" of mistake of fact, s 9.2 relevantly provides: "(1) A person is not criminally responsible for an offence that has a physical element for which there is no fault element if: (a) at or before the time of the conduct constituting the physical element, the person considered whether or not facts existed, and is under a mistaken but reasonable belief about those facts; and (b) had those facts existed, the conduct would not have constituted an offence." 127 The defendants rely upon that principle in the present case. A question accordingly arises as to their burden of proof in doing so. In proceedings governed by the whole of Chapter 2 of the Code, it is clear that a person who relies on s 9.2 bears an evidential burden only, that is, "the burden of adducing or pointing to evidence that suggests a reasonable possibility that the matter exists or does not exist": s 13.3 of the Code. However, that section falls within Part 2.6 of the Code and accordingly does not apply to a Customs prosecution: s 5AA(2) of the Customs Act. 128 The Customs Act accordingly adopts the curious position, as to Customs prosecutions, of taking up part only of a collection of principles the express object of which was codification. The result appears to be that the principles of the common law (or some of them) apply to such prosecutions: cf Labrador Liquor at [20] per Gummow J.

[61]

132 For the reasons set out above in respect of the smuggling offences, I am satisfied beyond reasonable doubt that Dory Karam was not under a mistaken belief that the container contained only shoes. Accordingly, I find the offence charged against Dory Karam in paragraph 5 of the Statement of Claim proved. 133 As to Ronnie Karam, if he was under a mistaken belief immediately before the container arrived that it carried only shoes (which I doubt), I am satisfied beyond reasonable doubt that his belief in that respect was not reasonable. 134 Contrary to a submission put on behalf of the defendants, the date of importation was the date on which the vessel arrived in Sydney (2 August 2007), not the date of arrival at the first port: see Wilson v Chambers [1926] HCA 15; 38 CLR 131 at 150 (cited in Pham at [26]). 135 As frankly acknowledged by Ronnie Karam, he was under no misapprehension in May 2007 that the emails from Ms Lien related to a proposal to import cigarettes through his facilities. He may well have been involved in that importation. If he was not, he must have been furious, as he said in his evidence. He would certainly have been astute, from that point onwards, to the risk of a repetition of any such conduct. 136 In that context, I do not accept the reasons given by Ronnie Karam for ignoring Ms Pellaers' request for documents on letterhead. It was his importation business. I am satisfied that he ignored the requests because he knew or suspected at that point that a genuine commercial invoice could not be obtained. 137 I do not accept Ronnie Karam's explanation of the SMS message sent to him by Dory Karam. I am satisfied that, after receiving that message, Ronnie Karam knew or suspected that someone was using the container to import tobacco or tobacco product, as he knew had previously been attempted. 138 The absence of any evidence as to a reaction to that message is very telling. I conclude that either the message came as no surprise to Ronnie Karam (because he already knew about the importation of the tobacco and the cigarettes at that time) or he did react to it in terms that would have been too damning for him to repeat in evidence in the proceedings. It beggars belief to think that he did not know or strongly suspect, upon receipt of such a message from his brother, that the container was again being used to import cigarettes or other goods besides shoes. 139 The existence of knowledge or suspicion on Ronnie Karam's part from at least the time he received that message is confirmed by his communications with Ms Pellaers trying to get the container off the wharf and his subsequent payment of the balance of the invoice. It was submitted on his behalf that, if he had the relevant knowledge at that time, such conduct was quite reckless. That may be so, but recklessness is not inconsistent with a guilty conscience. 140 Accordingly, I am satisfied beyond reasonable doubt that Ronnie Karam was not under a mistaken but reasonable belief that the container contained only shoes. I find the offence charged against Ronnie Karam in paragraph 5 of the Statement of Claim proved.

[69]

(b) in the absence of any specification of a fault element for that physical element within the section itself, intention as the fault element for that physical element: s 5.6(1) of the Code . 149 I have approached the physical element on the basis that it is necessary for the CEO to prove what duty was in fact payable: Gill at [63]. The agreed statement of facts establishes the duty that was payable in the present case and the fact that the duty was not paid (paragraphs 39 to 41 and 60 to 63). 150 In my view, however, it must also be established that the duty was payable by each defendant. None of the parties addressed me on that issue. 151 It is clear enough that duty is payable under the Customs Act by the owner of the goods: see s 165 of the Act. It is not clear to me, however, whether duty is ever payable by any person other than the owner. 152 The term "owner" is defined as follows: "Owner" in respect of goods includes any person (other than an officer of Customs) being or holding himself or herself out to be the owner, importer, exporter, consignee, agent, or person possessed of, or beneficially interested in, or having any control of, or power of disposition over the goods". 153 Without having had the assistance of any submissions on this issue, I do not think that either of the defendants was or relevantly held himself out to be in any of those roles in respect of the cigarettes and the tobacco. 154 The "owner" of the goods identified in the Nature 10 Declaration was "Drovers Footwear". I am prepared to accept that that description was apt to identify the company that in fact meant to import the container, Drovers International Pty Ltd. Although Ronnie Karam was the sole director and principal of that company, it would not follow that he was personally liable to pay the duty payable on goods imported by it. As to Dory Karam, he was no more than an employee of the company. 155 In any event, the goods on which duty was in fact payable were the cigarettes and the tobacco. The evidence does not satisfy me that either defendant was an owner of those goods within the meaning of the Act. 156 Accordingly, I am not satisfied beyond reasonable doubt as to the first physical element of those offence as against either defendant. It follows that the offences charged against each defendant in paragraphs 6 and 8 of the Statement of Claim are not proved.

[74]

(d) a fault element in respect of that physical element, namely recklessness as to the fact that the statement was false or misleading in a material particular. 159 The statement in question in the present case was the Nature 10 Declaration lodged electronically by Mr Arthur on 1 August 2007 through the Integrated Cargo System. Mr Robberds acknowledged that the Integrated Cargo System is not an "officer" within the meaning of the Customs Act and that the CEO has not adduced evidence of any officer having accessed the statement. He submitted, however, that the first physical element of the offence is established by operation of the Customs Act. Section 234(2B) of the Act provides, relevantly: "Where an import entry … is taken, under s 71L, to have been communicated to Customs, then, for the purposes of paragraph (1)(d), the part of the communication constituting the transmission to Customs is treated as a statement made to the CEO." 160 The CEO, as defined in s 4 of the Act, is an officer of Customs. 161 Section 71L of the Act makes provision for communication with Customs electronically. The defendants did not dispute that the Nature 10 Declaration to Customs was made pursuant to that section and, therefore, to the CEO. I accept that analysis. 162 Further, I am satisfied that each of the defendants caused the statement to be made. It is common ground that the statement was based on the commercial invoice and packing slip prepared by Dory Karam at the direction of Ronnie Karam and submitted by them for inclusion among the relevant shipping documents. Accordingly, I am satisfied beyond reasonable doubt as to the first physical element of the offence. 163 The second physical element of the offence (whether the statement was false or misleading in a material particular) is plainly made out. The statement made in the Nature 10 Declaration was false, both as to the goods declared and as to the customs value of those goods. Accordingly, I am satisfied beyond reasonable doubt as to the second physical element of that offence. 164 As to the fault elements, I do not think there can be any doubt that the defendants meant to cause a statement in those terms to be submitted by the Customs broker. The only issue is whether they were reckless as to the fact that the statement was false or misleading in a material particular. The principles for determining whether that element is established are set out in s 5.4 of the Criminal Code which provides: "(1) A person is reckless with respect to a circumstance if: (a) he or she is aware of a substantial risk that the circumstance exists or will exist; and (b) having regard to the circumstances known to him or her, it is unjustifiable to take the risk. (2) A person is reckless with respect to a result if: (a) he or she is aware of a substantial risk that the result will occur; and (b) having regard to the circumstances known to him or her, it is unjustifiable to take the risk. (3) The question whether taking a risk is unjustifiable is one of fact. (4) If recklessness is a fault element for a physical element of an offence, proof of intention, knowledge or recklessness will satisfy that fault element." 165 For the reasons explained above in respect of the smuggling offences, I am satisfied beyond reasonable doubt that Dory Karam was aware that the statement was false in a material particular, which establishes the second fault element as against him in accordance with ss 5.4(4) and 5.3 of the Code. Accordingly, I find the offence charged against Dory Karam in paragraph 8 of the Statement of Claim proved. 166 As to Ronnie Karam, the circumstances considered above satisfy me beyond reasonable doubt that he was aware of a substantial risk that the statement was false in a material particular. Further, I am satisfied beyond reasonable doubt, having regard to the circumstances which I have found were known to him, that it was unjustifiable for him to take that risk. Accordingly, I am satisfied beyond reasonable doubt of the second fault element as against Ronnie Karam on the basis that he was reckless. I find the offence charged against Ronnie Karam in paragraph 8 of the Statement of Claim proved.

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (76 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (9)

Cited By (2)