Commissioner of Taxation v Cocaj & Anor; Commissioner of Taxation v Behluli [2004] QCA 69

Court of Appeal (Qld)|2004-03-18|Before: McMurdo P, Williams JA and White JSeparate reasons, for judgment of each member of the Court, each concurring as to the orders, made

Australian Government Solicitor for the respondent in each appeal

[1] McMURDO P: I have had the benefit of reading the reasons for judgment of Williams JA in which the facts and issues are set out. I agree with his Honour that each appeal should be dismissed. I wish to make some further observations as to the effect of relevant provisions of the Excise Act 1901 (Cth) ("the Act"), and will only repeat those matters necessary to explain my reasoning.

[2] The appellants contend that the effect of s 134(2) of the Act is to limit the maximum penalty that could be imposed for each prosecution to $20,000, regardless of the number of offences charged or individuals joined in any single prosecution; the maximum penalty in the single prosecution of Ahmet and Selatin Cocaj on multiple charges was one penalty of $20,000, as it was in the single prosecution against Arben Behluli for multiple offences.

[3] The relevant portions of Pt XI of the Act, Excise Prosecutions, provide:

133. Proceedings by the Customs for the recovery of penalties under any Excise Act or for the condemnation of goods seized as forfeited are herein referred to as Excise Prosecutions.

134. (1) Excise prosecutions may be instituted by the CEO in the name of the office of the CEO by action, information or other appropriate proceeding:

(d) in a County Court or District Court of a State;

(e) in a Local Court, being a Local Court of full jurisdiction, of South Australia or of the Northern Territory;

(2) Where an Excise prosecution for a pecuniary penalty that, but for this section, would exceed $20,000 is instituted in a Court referred to in paragraph (1)(d) or (e), the amount of that penalty that exceeds $20,000 shall be taken to have been abandoned.

[4] Section 134 of the Act is in similar terms to s 245 Customs Act 1901 (Cth). That section was amended in 1982[1] to incorporate s 245(2), a section in comparable terms to the present s 134(2) of the Act. In 1985, s 134 of the Act was amended to parallel the 1982 amendment to s 245 Customs Act 1901 (Cth).[2] The explanatory memorandum to the amending Act noted that s 134(2):

"...confers jurisdiction on middle-tier Courts to hear and determine Excise prosecutions for penalties not exceeding $20,000 (new sub-section 134(2));

jurisdiction in relation to prosecutions, for which penalties in excess of $20,000 are sought, remains with Supreme Courts of the various States and Territories;

[5] This brief review of the legislative history of s 134(2) does not suggest that the use of the plural "prosecutions" in s 133 and s 134(1) and the singular "prosecution" and "penalty" in s 134(2) reveals any particular legislative intent, let alone any legislative intent capable of displacing the requirement of s 23(b) Acts Interpretation Act 1901 (Cth) that words in the singular be construed as including the plural and words in the plural as including the singular.

[6] If the appellants' contention were correct, a prosecution commenced by way of a District Court claim against ten joint offenders for related multiple offences under the Act would be subject only to a combined maximum penalty of $20,000 for all offenders and all offences, whilst if a separate claim were made in respect of each offender and each offence, the offender would be subject to the maximum $20,000 penalty on each offence. It seems implausible that the legislature would intend such an unfair, unattractive and impractical result.

[7] With the assistance of s 23(b) Acts Interpretation Act 1901 (Cth), s 134(2) should be construed as allowing a single excise prosecution for multiple connected offences against the Act resulting in pecuniary penalties to be instituted in a middle-tier court; if the prosecuting claim alleges liability for more than one pecuniary penalty ordinarily more than $20,000, each pecuniary penalty cannot exceed $20,000. There is no ambiguity giving rise to the principle of statutory interpretation requiring strict construction of penal statutes. Here each prosecuting claim was for two pecuniary penalties under s 129 of the Act and neither penalty could exceed $20,000;[3] each prosecuting claim was not limited to one penalty of $20,000. It follows that the appellants' contention as to the construction of s 134(2) fails.

[8] The appellants contend the sentences imposed offend the principles of totality referred to in Mill v R[4] and that the appellants, Ahmet Cocaj and Arben Behluli, should have been dealt with under s 19B Crimes Act 1914 (Cth). As Williams JA explains,[5] the penalties set out in s 129 of the Act specify that very substantial minimum penalties well in excess of $20,000 apply to the appellants' offences against s 117 of the Act. Section 134(2) of the Act takes to be abandoned that part of each of those penalties which exceeds $20,000. Section 146 of the Act requires that no minimum penalty imposed by the Act shall be liable to reduction. It follows that the minimum penalty (and also the maximum) here for each offence against s 117 of the Act upon conviction was $20,000 and this penalty could not be reduced by the court. The substantial combined penalties of $40,000 each imposed on Ahmet Cocaj and Arben Behluli for their offences against s 117 of the Act appear much heavier than those often imposed for arguably more morally blameworthy conduct in the criminal courts on offenders with similarly favourable antecedents and limited financial means. They reflect, however, the determination of the legislature to impose heavy deterrent minimum penalties for excise evasion. The penalties imposed were not excessive nor did they offend principles of totality; they were the minimum penalties the learned primary judge could lawfully impose, once the appellants were convicted of the offences. This conclusion is consistent with the approach taken by and the observations of Bongiorno J in CEO of Customs v Martino,[6] although his Honour did not there consider the effect of s 134(2) on s 129 and s 146.

[9] The appellants contend that Ahmet Cocaj and Arben Behluli could or should have been dealt with under s 19B Crimes Act 1914 (Cth) and discharged without conviction for one or more of the offences against s 117 of the Act, avoiding the operation of s 129, s 134(2) and s 146 because there has been no conviction. Even accepting a court has power to so act despite s 146 of the Act, this was not an appropriate course here. The appellants deliberately set out to defraud the revenue and such conduct warrants substantial deterrent sentences in accordance with the spirit of the Act. The cases where it would be appropriate to use s 19B Crimes Act 1914 (Cth) to discharge an offender without conviction on an offence against s 117 of the Act, if that be possible, would be few: CEO of Customs v Martino.[7] The learned primary judge's sentencing discretion cannot be said to have miscarried in rejecting that course.

[10] I also agree with Williams JA that the penalties imposed on Ahmet and Selatin Cocaj for breaches of s 35 of the Act cannot be challenged for the reasons he gives.

[11] It follows that each appeal must be dismissed.

[12] WILLIAMS JA: These are appeals against "Excise Prosecutions" (s 133 of the Excise Act 1901 "the Act") brought in the District Court. In the original proceedings it was alleged against Behluli that he had possession of manufactured excisable goods, namely 54.6 kilograms of tobacco upon which excise duty had not been paid, contrary to s 117(1) of the Act and further that he kept or stored proclaimed material without authority, namely 1,197 kilograms of tobacco leaf, contrary to s 117(1). In the original proceedings against Ahmet Cocaj it was alleged that he had possession of manufactured excisable goods, namely 64.5 kilograms of tobacco upon which excise duty had not been paid contrary to s 117(1) of the Act, that he manufactured excisable goods, namely 64.59 kilograms of tobacco, contrary to s 35 of the Act, and that he kept or stored proclaimed material without authority, namely 448 kilograms of tobacco leaf, contrary to s 117(1). In the original proceedings against Selatin Cocaj it was alleged that he aided and abetted the manufacture of excisable goods, namely 64.59 kilograms of tobacco, contrary to s 35 of the Act.

[13] In each case the breach of the Act occurred on 8 October 1999, and therefore the Act as it stood then applies; in other words the substantial amendments made by the Amending Act No 115 of 2000 are not relevant.

[14] Behluli was fined $20,000.00 on each of the two breaches which ultimately he did not contest, making a total penalty of $40,000.00. Ahmet Cocaj, who also did not ultimately contest the allegations, was fined $20,000.00 on each of the two breaches of s 117(1) and $1,000.00 on the breach of s 35, making a total penalty of $41,000.00. The main ground of appeal relied on by Behluli and Ahmet Cocaj was that, because of the operation of s 134(2) of the Act, the maximum total penalty that could be imposed was $20,000.00.

[15] Section 129 of the Act provides that for a contravention of s 117 the applicable penalty is, where the court can determine the amount of duty that would have been payable on the subject goods, "a fine not exceeding 5 times the amount of that duty and not less than 2 times that amount". It was not disputed that the duty on 54.6 kilograms of tobacco was $12,890.14; given that quantity the maximum penalty was $64,450.70 and the minimum $25,780.28. Further, the duty on 64.59 kilograms of tobacco was $15,236.78; given that quantity the maximum penalty was $76,183.90 and the minimum $30,473.56. It was also agreed that the duty on 1,197 kilograms of tobacco leaf was $282,372.30; the maximum penalty would be five times that amount, and the minimum twice that amount. On 448 kilograms of tobacco leaf the duty payable was $105,683.20; the maximum penalty would be five times that amount and the minimum twice that amount.

[16] Relevantly s 134 of the Act provides that excise prosecutions may be instituted either in the Supreme Court or the District Court, the latter being a court being referred in paragraph (d). Relevantly subsection (2) then provides:

"Where an Excise prosecution for a pecuniary penalty that, but for this section, would exceed $20,000 is instituted in a Court referred to in paragraph . . . (d) . . ., the amount of that penalty that exceeds $20,000 shall be taken to have been abandoned."

[17] The competing submissions addressed to the court can be simply stated. On behalf of the appellants it was said that the $20,000.00 limit applied regardless of the number of offences alleged in the Statement of Claim; in other words, regardless whether there be one or ten breaches of s 117 alleged, the District Court could do no more than impose a penalty of $20,000.00. On the other hand, the respondent contended that the $20,000.00 limit applied to each breach of s 117 established.

[18] As is made clear by s 136 and s 137 of the Act the practice and procedure to be followed is that "of the Court in civil cases". That is why in this case the proceedings were commenced by way of Claim and Statement of Claim. There is nothing, either in the Act or in the practice and procedure of the District Court, which would prevent more than one breach being pleaded in the Statement of Claim. On the criminal side charges of similar nature can in general be included in the one indictment, and on the civil side various causes of action between the parties may be pleaded in the one proceeding. In practical terms such joinder does away with the duplication which would follow if, in a case such as this, there had to be a separate Claim and Statement of Claim for each alleged breach. Unless the construction of s 134(2) compels a contrary conclusion, there is no reason why joinder should not be allowed. There is no injustice to a defendant in so doing, and indeed none was alleged.

[19] I can see no reason why s 134(2) should be construed as contended for by counsel for the appellant. It may be of some significance that it refers to "an Excise prosecution" - the singular - whereas s 133 and s 134(1) use the plural - "Excise prosecutions". That is not decisive, but it is some indication that the $20,000.00 limit applies to each breach.

[20] It would be bordering on absurdity to hold that if two separate proceedings were instituted a penalty of $20,000.00 could be imposed in each, whereas if the two breaches were alleged in the one proceeding the combined penalty could not exceed $20,000.00. Particularly when one bears in mind the extremely large amounts which could be recovered by way of penalty if the prosecutions were instituted in the Supreme Court, it is inconceivable that it was the legislative intention that, if proceedings were commenced in the District Court, the maximum penalty, regardless of the number of breaches, was $20,000.00.

[21] It follows that in my view there is nothing in the principal ground argued on behalf of Behluli and Ahmet Cocaj.

[22] The court permitted the appellants to amend their Notices of Appeal to include the ground that the learned judge at first instance "erred in failing to direct himself on the application of the totality principle of sentencing".

[23] I have already referred to the maximum and minimum penalties which would have applied had these breaches been the subject of proceedings in the Supreme Court. The figures are only relevant in the present case to the extent that they indicate the serious possible consequences of offending behaviour of the type in issue here.

[24] The main argument addressed to the court by counsel for Behluli and Ahmet Cocaj was that, though each was dealt with for more than one breach, the conduct in question was essentially related to the same dutiable commodity namely tobacco. But strictly there was no overlap. The contravention evidenced by possession of manufactured excisable goods related to processed tobacco ready for use. The balance related to unprocessed leaf. Because of that there was no duplication in the charges. There was no "single transaction" as submitted by counsel for the appellants. The gravamen of a breach giving rise to an excise prosecution is essentially the lost duty which would have been payable on the goods to which the offence relates. If, as counsel submitted, the court applying the principle derived from Mill v R [1988] HCA 70; (1988) 166 CLR 59 was required to look at an appropriate aggregate penalty, that would be the penalty appropriate to the total amount of dutiable goods in question. The fact that the two breaches were identified on the one day is not to the point.

[25] Both Behluli and Ahmet Cocaj were given 18 months to pay the fine. Though each was of modest means the material does not establish that neither had the capacity to pay the fine within the prescribed time. It is not a case of a fine being imposed on a person totally incapable of satisfying it.

[26] Looked at in that light I am not persuaded that the totality principle has been breached by the penalties imposed on Behluli and Ahmet Cocaj in this case.

[27] There is one further matter to which reference should be made. Section 146 of the Act is in the following terms:

"No minimum penalty imposed by this Act shall be liable to reduction under any power of mitigation which would but for this section be possessed by the Court."

[28] One of the submissions advanced by counsel for the appellants was that the learned judge at first instance ought to have had regard, for example, to the appropriateness of making an order under s 19B of the Crimes Act 1914 in the light of the relevant principles set out in s 16A thereof. Apparently in some cases courts at first instance have had regard to provisions of the Crimes Act, such s 19B, rather than imposing a pecuniary penalty for a breach of s 117 of the Act. In none of those cases was detailed consideration given to whether or not that course was permissible given the express terms of s 146. It is not necessary to finally determine the point for purposes of this case, but it is my tentative view that s 146 must have the consequence that the minimum penalty provided for by application of s 129 and s 134(2) must be imposed. In other words, for each of the breaches of s 117 relevant for present purposes the penalty of $20,000.00 had to be imposed.

[29] It is necessary to say something more about the breaches of s 35 of the Act by Ahmet and Selatin Cocaj. That section makes it an offence to manufacture excisable goods without a licence and it is simply stated that the penalty is $5,000.00. It is important to note that s 129 does not apply to a breach of s 35. Nor, as no minimum penalty is imposed, would s 146 apply. Each appellant was fined $1,000.00 for the breach of s 35 and the principal submission made on behalf of each was that the learned judge at first instance should have dealt with those offences pursuant to s 19B of the Crimes Act. Though that would have been an option available at first instance it cannot be said, in my view, that there was any error in dealing with each appellant by imposing a fine of $1,000.00. The conduct of manufacturing differed from the gravamen of the other charges against Ahmet Cocaj of being in possession of manufactured tobacco and storing and keeping tobacco leaf. Given the overall serious nature of the conduct of Ahmet Cocaj I am not persuaded there was any error on part of the learned judge at first instance. So far as Selatin Cocaj is concerned his conduct was regarded as less serious and a fine of $1,000.00, where the applicable maximum was $5,000.00, cannot, in my view, be challenged.

[30] I would record that much was said at first instance, and again on appeal, about the background of each of the three appellants, their otherwise good character, and their asserted motivation in dealing with the tobacco, namely they wanted to supply it to refugees in Australia from Kosovo. It is not necessary to detail the material relevant to those submissions. Even taking all that was said in that regard into account, for all the reasons given above, no basis has been established for interfering with the orders at first instance.

[31] It follows that for all the above reasons each appeal must be dismissed.

[32] WHITE J: I have read the reasons for judgment of Williams JA and agree with his Honour that the construction contended for by the appellants of s 134(2) of the Excise Act 1901 (Cth) is not attractive and nothing in the legislation compels its acceptance. Neither is the "totality" principle offended by the penalties imposed.

[33] Since the application of s 19B of the Crimes Act 1914 (Cth) in light of s 146 of the Excise Act was not fully argued and, in the event, has proved unnecessary to consider here, I prefer to leave for another occasion consideration of this matter.

[34] I agree with the orders proposed by his Honour.

[1] Customs and Excise Amendment Act (No 81 of 1982) (Cth), s 61.

[2] Customs and Excise Legislation Amendment Act (No 40 of 1985) (Cth), s 39.

[3] Selatin and Ahmet Cojac were also each charged with an offence against s 35 of the Act and subject to a maximum penalty of $5,000.

[6] [2001] VSC 217, 29 June 2001, paras 21, 43-44.

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