Masri v R - [2023] NSWCCA 266 - NSWCCA 2023 case summary — Zoe

NSWNSWCCA

Masri v R

[2023] NSWCCA 266

Court of Criminal Appeal (NSW)|2023-08-11|Before: Kirk JA, Fagan J, Sweeney J

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At a glance

Source facts

Court

Court of Criminal Appeal (NSW)

Decision date

2023-08-11

Before

Kirk JA, Fagan J, Sweeney J

Catchwords

[2001] NSWCA 147 Ibrahim v R [2022] NSWCCA 161 Jomaa v R [2022] NSWCCA 112 Kada v The Queen [2017] VSCA 339

Source

Original judgment source is linked above.

Catchwords

[2001] NSWCA 147 Ibrahim v R [2022] NSWCCA 161 Jomaa v R [2022] NSWCCA 112 Kada v The Queen [2017] VSCA 339

Judgment (15 paragraphs)

[1]

HEADNOTE [This headnote is not to be read as part of the judgment] On 26 August 2022 the applicant was sentenced in the District Court for two offences against s 233BABAD of the Customs Act 1901 (Cth). The first involved possession of 6,248 kilograms of molasses tobacco and 9.5 million cigarettes knowing the goods were imported with intent to defraud the revenue (the "possession offence"). The second concerned importing those cigarettes with intent to defraud the revenue (the "importation offence"). In sentencing for the possession offence two offences of dealing in proceeds of crime were taken into account. The applicant was one of the principals of a criminal syndicate involved in importing and distributing tobacco products on which customs duty and GST were not paid. The offending occurred over a period of about nine months from August 2018. The syndicate, including the applicant, unwittingly engaged with three undercover operatives (UCOs) from whom they purchased in Sydney imported molasses tobacco and whose assistance the applicant accepted to import cigarettes without payment of duty or GST. The sum of duty and GST that would be attracted by all products concerned in the charges was $14,736,300. With respect to the importation offence the applicant was sole principal. The applicant travelled to Dubai to procure the cigarettes and he met the UCO there. The applicant paid the UCO $650,000 to arrange consignment of the cigarettes by container to Sydney and to have the goods released from the wharf in Sydney without payment of duty. After allowing for a 30% discount on indicative sentences (of which 15% was referrable to a late guilty plea), the learned sentencing judge imposed an aggregate of 5 years' imprisonment with a non-parole period of 2 years and 6 months. The applicant appealed the sentence on two grounds. First, that his Honour erred in finding that the applicant's moral culpability was not reduced by the involvement of the authorities in the importation offence. Second, that His Honour erred in taking into account the amount of unpaid duty and GST as a loss to the Commonwealth. The Court held (per Fagan J, Kirk JA and Sweeney J agreeing) granting leave to appeal against sentence and dismissing the appeal:

[2]

JUDGMENT

KIRK JA: I agree with Fagan J.
FAGAN J: The applicant seeks leave to appeal against an aggregate sentence imposed upon him by his Honour Judge J North in the District Court on 26 August 2022. The applicant pleaded guilty to two charges laid under s 233BABAD of the Customs Act 1901 (Cth), as follows: 1. Possession of tobacco products (6,248 kilograms of molasses tobacco and 9.5 million sticks of Manchester brand cigarettes) knowing the goods were imported with intent to defraud the revenue, contrary to sub-s (2) of s 233BABAD (the "possession offence"). 2. Importation of tobacco products (9.5 million sticks of Manchester brand cigarettes) knowing that the goods were imported with intent to defraud the revenue, contrary to sub-s (1) (the "importation offence").
Both offences were committed between about 29 August 2018 and about 21 May 2019. The maximum penalty for the possession offence was 10 years' imprisonment. The importation offence also carried a maximum of 10 years' imprisonment. Fines calculated by reference to the amount of customs duty not paid could also be imposed (although were not in this case). All tobacco products that were concerned in both offences were produced outside Australia and imported. Molasses tobacco, also known as water pipe tobacco, was subject to customs duty of about $900 per kilogram during the charge period. The customs duty on each cigarette stick was about 70¢.
In sentencing for the possession offence, the learned judge took into account two other offences attached to a schedule in accordance with s 16BA of the Crimes Act 1914 (Cth). Those offences, committed in the same charge period, were as follows: 1. Dealing with money or property that was and that he believed to be proceeds of crime to a value of $1,000,000 or more, contrary to s 400.3(1) of the Criminal Code Act 1995 (Cth) (maximum penalty 25 years' imprisonment or 1,500 penalty units or both). 2. Dealing with money or property that he intended would become an instrument of crime to a value of $100,000 or more, contrary to s s 400.4(1) of the Criminal Code (maximum penalty 20 years' imprisonment or 1,200 penalty units or both).
The applicant was one of the principals of a criminal syndicate engaged in importation and distribution of large quantities of tobacco products on which customs duty and Goods and Services Tax (GST) was not paid. The learned sentencing judge found that due to the applicant's role as the leading principal in the conduct that gave rise to both the possession charge and the importation charge, the seriousness of his offending was "just below high range for matters of this type".
The sentencing judge allowed a 30% discount on the sentence imposed (of which 15% was for a late guilty plea). He sentenced the applicant to an aggregate term of 5 years' imprisonment with a non-parole period of 2 years 6 months, commencing 1 August 2021. The indicative sentences nominated were 4 years 6 months for the possession offence and 4 years 9 months for the importation offence.
The grounds of appeal for which leave is sought are as follows: 1 His Honour erred in failing to conclude that the applicant's moral culpability was reduced by the involvement of the authorities in the process of importation of the Manchester brand cigarettes. 2 His Honour erred in taking into account the duty and GST allegedly evaded as a result of the actions of the applicant.

[4]

The applicant's role in the possession offence

The applicant was a co-principal, together with Mr Kanssan, with respect to the syndicate's purchase of 6,248 kilograms of molasses tobacco from UCOs. Although the applicant was involved in arranging the purchases and effecting payments, he was not present on any of the eight occasions between 29 August 2018 and 28 March 2019 on which the product was handed to co-offenders by the UCOs. The key events in his role were as follows: 1. On 10 September 2018 he and Kanssan met with UCO2 and arranged for the payment of US$70,000 for 1000kg of molasses tobacco. The arrangements were confirmed in subsequent text messages between the three. It was agreed that an associate of the applicant and Kanssan would pay the money in cash in New York to an agent of the UCO, who would be required to produce a US$1.00 bill of a certain serial number to identify himself. This arrangement was duly carried out in New York on 17 September 2017. 2. On 25 September 2018 the applicant and Kanssan met with UCO2 and discussed his ongoing supply to them of molasses tobacco and the means of payment into overseas accounts. The applicant supplied UCO2 with a Samsung mobile with Cipher encryption software undetectable to law enforcement and assisted in setting up the device. He directed all future communications by UCO2 with the applicant and Kanssan be made on the device. 3. On 9 October 2018 the applicant, Kanssan and another co-offender, Arifur Moin, met with two undercover operatives (UCO2 and UCO3). The applicant and Kanssan introduced Moin to the UCOs so that Moin could explain how they would transfer funds to UCO2 and UCO3 in payment for molasses. This would involve the UCOs setting up overseas accounts, with which Moin offered assistance. The applicant further informed UCO2 that he had a contact in Fiji with whom UCO2 could speak, to obtain assistance with electronic fund transfers. 4. Prior to 16 October 2018 the applicant organised to pay UCO1 $200,000 for 2,130 kilograms of molasses tobacco. On 16 October that quantity was supplied by UCO1 and loaded into a van by three of the applicant's co-offenders (Kanssan, M Masri and H Masri) and UCO1. Payment was to be made at a later date into foreign bank accounts. On 18 October 2018 the applicant, UCO2 and UCO3 met and agreed upon arrangements for $100,000 to be transferred into a Norwegian bank account and a further $100,000 into an American account. 5. On 17 October 2018 the applicant organised the introduction of co-offender Azeem Khan to UCO2 and UCO3 and stated that Khan could arrange the transfer of funds into international accounts. The applicant, Kanssan and Khan discussed with the UCOs the logistics of making undetectable funds transfers into European and United States bank accounts. 6. On 13 November 2018 the applicant and Kanssan met with UCO3 to discuss supply of 294 kg of molasses tobacco for $20,000. The payment was made by the applicant handing over three Commonwealth Bank cheques. After the meeting the applicant and Kanssan took delivery of the 294 kg and placed it in the rear of the vehicle which they used to attend the meeting. 7. On 3 December 2018 UCO1 delivered 504 kgs of molasses tobacco to Kanssan and H Masri for an agreed price of $50,000. Kanssan handed over three cheques in payment of that amount. The cheques could not be cashed when presented because the Bank was unable to contact the owner of the company on which they were drawn. On 7 February 2019 the applicant and Kanssan met with UCO1 at the bank branch in Bankstown, where the applicant arranged for the $50,000 in cash to be obtained from the bank and paid to UCO1. 8. On 13 December 2018 the applicant and the co-offender Khan met with UCO3 and they discussed, amongst other things, a further 504 kgs of molasses tobacco to be supplied by UCO3 in consideration for $50,000 to be transferred to a United States bank account. Khan said that he could effect the transfer, with some other money payable to UCO3, at a fee of 20%. Kanssan and H Masri took delivery of the 504 kgs later that day. 9. On 29 January 2019 the applicant handed over to UCO3 a bag containing $49,800 in cash, which the applicant said was $50,000, in payment for a further quantity of 504 kgs of molasses tobacco that had been delivered by UCO1 to Kanssan and H Masri on 22 January 2019.

[5]

The applicant's role in the importation offence

The applicant was the sole principal with respect to the importation of 9.5 million cigarettes from Dubai into Australia. He told UCOs that he was able to arrange for overseas contacts to consign tobacco products to Australia and that he had been involved for more than 20 years in the trade in tobacco products. The following is a summary of the steps taken by the applicant with respect to the importation of 9.5 million Manchester cigarette sticks, with the inclusion of some acts performed by others to provide context: 1. On 17 August 2018 UCO1 inquired of Kanssan and another co-accused whether they wanted assistance with getting a container "checked", meaning handled to bypass Customs. They said they did want such assistance and were waiting for the applicant to return from China, at which time a meeting would be organised to discuss the subject. On 22 August 2018 Kanssan arranged a meeting between the applicant and UCO2, which Kanssan also attended. They discussed importing a shipping container of cigarettes, bypassing Customs. The applicant said that he would pay, by transfer of funds into international accounts, for assurance that a shipping container could upon arrival into Australia be delivered into a warehouse without payment of customs duty. 2. During the 9 October meeting with UCO2 and UCO3 (see 11(c) above), the applicant and Kanssan discussed importing cigarettes from Dubai and China, and the applicant stated he personally knew the owner of Manchester cigarettes, as he was the first person to import Manchester cigarettes into Australia illegally, in 2009. 3. In the course of three meetings with UCOs on 1 November, 13 November and 21 November 2018, the applicant and Kanssan, with Khan also on the last occasion, discussed the following matters: 1. The applicant's desire to purchase a container load of cigarettes in Dubai, to be handed over to UCO2 and UCO3 to import into Australia without payment of customs duty and without stoppage by Australian Border Force, for a fee to UCO2 and UCO3 of $650,000. 2. The arrangements for obtaining a 40 foot high-cubed shipping container in which to import the cigarettes from Dubai. 3. The applicant's intention to travel to Dubai to facilitate packing the shipping container with cigarettes in the Jebel Ali Free Zone of Dubai, in readiness for importation to Australia. 4. The applicant's intention to create a G-mail account to facilitate the sharing of fraudulent documents and invoices with UCO3. 1. On 5 December 2018 in a meeting with Kanssan and UCO3, the applicant said he had a contact in the Commonwealth Bank who was willing to assist in creating false bank accounts and identification documents and, further, that the applicant had arranged with the co-offender Khan to meet in the coming weeks to discuss transfer to UCO3 of the deposit for the part he was to play in the proposed tobacco importation. 2. At a meeting on 13 December 2018 where the applicant, Khan and UCO3 were all present, the applicant reiterated an earlier agreement to make a down payment of $150,000 to UCO3 towards his agreed fee, to enable him to facilitate the sea freight of the cigarettes from Dubai. There was also discussion of $50,000 to be paid for a further 504 kg of molasses tobacco (see 11 above). Khan said that he could facilitate payment of the total of $200,000 into United States accounts for a fee of 20%. The applicant told UCO3 that his tobacco supplier in Dubai was ready and waiting for his order and could be trusted and relied upon 100%. 3. On 11 January 2019 the applicant, Kanssan and UCO3 met to discuss payment for the proposed import of cigarettes from Dubai into Australia. The applicant said he had by that date already paid for half of the Dubai shipment at $1.00 per packet. 4. On 29 January 2019 the applicant met with UCO3 to discuss the import of the cigarettes. They agreed that the most suitable period in which to travel to Dubai to facilitate the shipment would be between 20 and 28 February 2019. The applicant said that he was ready to proceed with the importation and he would arrange for the container to be packed when required. 5. On 15 February 2019 the applicant, Kanssan, Khan and UCO3 met to discuss the importation. Khan said that he had now arranged a Gmail account for deposit of fraudulent invoices and documents necessary for the shipment. He arranged to send UCO3 the username and password for the account after the meeting. They discussed payment of the remainder of the importation fee to the UCOs, which it was proposed would be done in staged amounts to look like contract payments. In Khan's absence, Kanssan provided to UCO3 a long list of written instructions from a Commonwealth Bank manager, explaining what UCO3 would have to do to set up a concealed bank account for use in connection with importation. 6. On 26 February 2019 the applicant travelled to Dubai with his wife. The applicant met UCO3 and discussed the details of the import. It appears that UCO3 had by this time secured a container to be used for the shipment, because he handed the applicant a bolt seal label, MOL BY60386, to be placed upon the container once packed. 7. After the meeting on 26 February 2019 there was an exchange of messages between the applicant and UCO3 to confirm what shipping documentation the applicant needed to obtain, including invoices. Then a Maersk shipping container MSU 661 7994 was sent to the Jebel Ali Free Zone, presumably through arrangements made by UCO3. The applicant met the container and arranged for it to be packed with the Manchester cigarettes that he had purchased. The applicant marked a number of the "shippers" in which the cigarettes were packed so that it could be determined upon arrival in Australia whether the consignment had been tampered with. Upon completion of packing the applicant bolted the container shut and fixed the bolt seal that had been provided to him by UCO3. Shortly afterwards the container was shipped on board a Maersk Line vessel for transport to Sydney. 8. On 29 March 2019 the applicant and Kanssan met with UCO3 in Sydney and the applicant provided to UCO3 a diagram of the manner in which he had marked the shippers of cigarettes within the container, to enable UCO3 to detect any tampering. The applicant also promised UCO3 that he would pay the sum of $500,000, being the balance due to UCO3 for his part in the importation, within two weeks of the container's arrival. 9. On 17 April 2019 the container in which the 9.5 million Manchester cigarettes were packed with the identified bolt seal label in place was offloaded from the Maersk Line vessel in Sydney and intercepted by Australian Border Force (ABF) personnel. ABF caused it to be delivered to a Kennards storage facility in Macquarie Park. There, the contents of the container were transferred into two storage units, identified as B51 and B56. 10. On 30 April 2019, UCO1 met three of the applicant's co-offenders (Kanssan, H Masri and El Masri) at the storage facility and handed them the keys to units B51 and B56. The co-offenders commenced to remove the shippers of cigarettes from the units and load them onto a truck that they had hired for the purpose. They transported most of the goods to another storage unit at Chullora that had been rented by one of them that morning, for a month. Some of the goods were transferred to a rented storage facility at Lansvale. Several vehicle movements were required to empty the Kennards units at Macquarie Park. 11. On 10 May 2019 the applicant and Kanssan met with UCO3 to pay for his assistance in the importation. They handed to the UCO a suitcase containing $500,090 cash.
The applicant was arrested on 21 May 2019. On the same day search warrants were executed at some of the storage locations to which the imported cigarettes had been taken. A large number of Manchester brand cigarettes were seized.

[6]

Liability for customs duty and GST on imported tobacco products

The Agreed Statement of Facts before the sentencing judge referred to amounts of excise that were payable on the tobacco products concerned in the charges. The facts also state that "there was no tobacco manufacturing occurring in Australia" at the relevant time and that all tobacco products that were the subject of the charges were imported. Accordingly, the products were subject to duty under the Customs Tariff Act 1995 (Cth), rather than excise under the Excise Act 1901 (Cth). At all times relevant to the applicant's offences, the rates of excise on Australian produced tobacco products, if there had been any, were the same as the rates of customs duty on imported tobacco products.
At all relevant times s 68 of the Customs Act required that the owner of goods imported into Australia by sea must "enter the goods for home consumption" no later than the arrival of the ship carrying the goods at an Australian port at which any cargo is discharged - unless the goods should be "entered for warehousing", which did not occur in relation to any of the tobacco products concerned in this case. "Owner" is defined in s 4 of the Act 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.
Section 68(3A) explains what is involved in the owner entering imported goods for home consumption, as follows: (3A) An entry of goods for home consumption is made by communicating to the Department [of Home Affairs] an import declaration in respect of the goods. The means by which an import declaration may be communicated are specified in s 71A.
Customs import duty payable on goods entered for home consumption must be paid at the time of the entry for home consumption: s 132AA. An amount of duty due and payable in respect of goods is a debt due to the Commonwealth, payable by the owner: s 165. If no import declaration is communicated, contrary to the requirements of s 68, the debt to the Commonwealth for the amount of the import duty nevertheless arises: Chief Executive Officer of Customs v Tony Longo Pty Ltd (2001) 52 NSWLR 458; [2001] NSWCA 147.
Importation of tobacco products is a "taxable importation" under the A New Tax System (Goods and Services Tax) Act 1999 (Cth). By force of s 33-15 of that Act, GST is payable by the importer to the Commonwealth "at the same time, at the same place, and in the same manner, as customs duty is payable on the goods in question".

[7]

Intent to defraud the revenue

Sub-sections (1) and (2) of s 233BABAD of the Customs Act, under which the applicant was charged, are in the following terms: 233BABAD Offences involving tobacco products (1) A person commits an offence if: (a) the person imports goods; and (b) the goods are tobacco products; and (c) the person imports the goods with the intention of defrauding the revenue. (2) A person commits an offence if: (a) the person conveys, or has in the person's possession, goods; and (b) the goods are tobacco products; and (c) the person knows that the goods were imported with intent to defraud the revenue.
By his pleas of guilty the applicant admitted all elements of the charges under those provisions respectively. Concerning the importation offence, the extent of defrauding that was necessarily intended by the conduct admitted in the Agreed Statement of Facts was the amount of customs duty and GST that should have been paid on 9.5 million Manchester cigarettes at the date when they should have been entered for home consumption by the lodgement of an import declaration. That date was 17 April 2019, when the Maersk Line vessel discharged the container. It was an agreed fact that the amount of customs duty payable in accordance with the Customs Tariff Act was $7,768,625 and the amount of GST was $776,862.50, the total being $8,545,847.50. In written submissions to the sentencing judge the Crown prosecutor put a slightly different total of $8,435,867.
The Agreed Statement of Facts contains no detail of the origins of the molasses tobacco that was part of the total quantity of product concerned in the possession offence, count 1. On the hearing of the appeal the Crown did not dispute the applicant's contention that the molasses tobacco was drawn by the UCOs from stocks of seized product that authorities had accumulated from earlier intercepted importations that had been attempted by unrelated parties. The applicant's admission, by his plea of guilty, that he knew the goods "were imported with intent to defraud the revenue" was self-evidently based upon his knowledge that the price charged by the UCO's was between US$68 and AU$100 per kilogram whereas the customs duty alone, without counting GST or the inherent value of the product, was approximately $900 per kilogram.
It was an agreed fact that "the total duty evaded on the 7,214 kg of molasses tobacco was $7,506,379.53". That quantity of product refers to all offences committed by all members of the syndicate. The quantity concerned in the count 1 possession offence to which the applicant pleaded was 6,248 kg, there being nearly an additional 1,000 kg involved in additional offences to which the applicant was not party. The Crown's "total duty" figure must be inclusive of GST. On a proportional basis, the total of customs duty and GST that must have been unpaid on the 6,248 kg of molasses tobacco concerned in the applicant's offence would have been approximately the figure that was put to the learned sentencing judge in the prosecutor's written submissions, namely, $6,300,433.

[8]

Ground 2 - taking into account the duty and GST not paid

In his Remarks on Sentence North DCJ adopted the figures for unpaid duty and GST that had been provided in the prosecutor's written submissions, rather than the figures in the Agreed Statement of Facts. The difference was not material to the gravity of the offending in either count. The sum of $8,435,867 in respect of the imported cigarettes and $6,300,433 in respect of the molasses tobacco produced the total of $14,736,300 that his Honour referred to in the following extract from the Remarks: The offender A Masri possessed 6,248 kilograms of molasses tobacco and 9.5 million cigarettes, knowing that they were intended to defraud the revenue. In committing these offences, the offender participated in the evasion of AUD$14,736,300 in excise duty and GST. The Crown fairly submits that this is a significant amount and needs to be borne in mind in sentencing. […] Further, the loss of revenue has not been repaid. Mr Lange submits that contrary to the Crown's submission, there has been no relevant loss occasioned by the acts of the offender. Firstly, the cigarettes were at all times under the control of the authorities. And secondly, the molasses tobacco had been removed from the stores of the Australian Border Force for use in the controlled operation. This may be so, but I find this offender was involved in deliberate actions to possess the molasses tobacco product, and to import the 9.5 million cigarettes. The offender acted not knowing that the container was being tracked by the authorities and had no knowledge that the molasses tobacco came from the stores of the ABF.
With respect to his Honour, it was not accurate to speak of the applicant as having "participated in the evasion" of that component of unpaid revenue that related to the molasses tobacco. Nor was it correct to speak of that component having not been "repaid", if his Honour was thereby intending to refer to repayment by the applicant. The evasion of customs duty and GST on the molasses tobacco was effected by the person who imported the product, not by the applicant. However, the quantum of duty and GST that was payable at the time of importation of the 6,248 kg of molasses tobacco and that had not been paid was a relevant measure of the magnitude and gravity of the applicant's possession offence in contravention of s 233BABAD(2) because the offence concerned possession "knowing that the goods were imported with intent to defraud the revenue". The greater the amount of revenue of which the importer intended the Commonwealth should be defrauded, the greater the seriousness of the applicant possessing goods with knowledge that that intent accompanied their importation.
As regards the importation offence, concerning only the Manchester cigarettes, I do not accept the applicant's submission made to this Court, as follows: In respect of the cigarettes imported, those were under the authority of Australian authorities throughout. Putting aside the question of whether a customs debt arose at all, in circumstances where the cigarettes are imported for the purpose of a controlled operation, the fact is that the cigarettes were never destined, by the authorities, to reach customers. Practically speaking, if a debt arose, it arose only because of the actions of the authorities in importing the cigarettes.
By his plea of guilty to count 2 the defendant admitted to having imported the goods. On the agreed facts, he was the importer and the owner. Although he procured UCOs to effect the shipping of the container from Dubai to Sydney, the statutory obligations to make an import declaration, to enter the goods for home consumption and at that time to pay customs duty and GST rested with the applicant. Liability for duty and GST did not depend upon the applicant obtaining physical control over the goods or being able to sell them to customers. By arranging to obtain possession without having made an import declaration the applicant sought to evade his obligation to pay the duty and GST at the point of entry for home consumption, when the obligation arose. He sought to avoid detection and to frustrate any recovery action by the Commonwealth.
Although such actual evasion occurred it is not an element of the offence charged in count 2. The plea of guilty involves an admission that the applicant carried out the importation "with the intention of defrauding the revenue". A factor relative to the gravity of the offence is the amount of duty and GST of which it was intended that the Commonwealth should be defrauded. Insofar as the learned sentencing judge's observation that "the loss of revenue has not been repaid" was intended to refer to the duty and GST payable on the cigarettes, there was no factual error in speaking of failure to repay because the applicant had become liable in that regard. Nevertheless, the limit of relevance of the amount of duty and GST involved was to utilise it as a measure of the magnitude of the offending.
From the terms in which the Remarks on Sentence are expressed it appears that his Honour regarded the offending as aggravated by a consideration that the applicant's conduct actually costs the Commonwealth a loss of revenue of $14,736,300. That was not an accurate construction of the facts or of the applicable revenue statutes and it was not a matter properly available to be taken into account. Leave should be granted with respect to ground 2. After consideration of ground 1 it will be necessary to determine whether, factoring in all relevant circumstances, including the proper significance of the quantum of revenue referable to the tobacco products concerned, there is warranted any lesser sentence than that which the learned judge imposed.

[12]

Law concerning involvement of authorities in commission of offences

The following statements from the judgment of Badgery-Parker J in R v Taouk (1992) 65 A Crim R 387 have frequently been relied upon in this Court as identifying the considerations relevant to whether police involvement in the commission of an offence should be regarded as mitigating the offender's culpability (some citations omitted): A helpful discussion of the relevance to sentence of the fact that a crime was committed as the result of the setting of a police trap is to be found in Mandica (1980) 24 SASR 394; 4 A Crim R 34. King CJ said (at 402; 40-41), after referring to Birtles: "This ground for leniency does not exist, however, where the effect of the police trap is not to encourage a person to commit an offence which he would not have otherwise committed, but merely to detect and obtain evidence against an offender who is only too ready to commit the offence." […] In several of these cases, there are hints that impropriety on the part of the police is the factor which leads to mitigation of sentence; but in my view that is not the substance of what the courts were saying. As it seems to me, the real thrust of the decisions is that even where the conduct of the police was regarded by the court as within the bounds of acceptable police procedures, nevertheless if there was a possibility that the offence might not have been committed had the police not in some way facilitated it, that might be regarded as a matter which diminished the culpability of the offender. In my view, the point at which, if at all, the court will intervene to mark its disapproval of conduct by police which goes beyond that which the community regards as acceptable is the point where an application is made to exclude evidence obtained by improper means. Such considerations have, in my view, little to do with sentencing where the fundamental task of the court is always to evaluate the criminality involved. The sentencing process is concerned with the level of culpability of the offender who, whether as a result of police incitement, inducement or encouragement or otherwise embarks upon criminal conduct. See also Dugan [1984] 2 NSWLR 554 where this Court rejected the submission that in a case where conduct by police facilitated but did not incite the commission of a crime, the sentence should be reduced to mark the court's disapproval of the police conduct. […] However, when it comes to sentence, the question is not whether the accused can show that but for the involvement, encouragement or incitement by police he would not have committed the crime, but rather, whether there is a real possibility that but for the assistance, encouragement or incitement offered by police officers he would not have done so, and whether in all the circumstances of the case the involvement of the police in the commission of the crime was such as diminished his culpability.
Taouk was keen to bribe the judge if he could but he had no means of doing so until police officers suggested how a bribe could be offered and they made themselves available to convey the offer. Badgery-Parker J drew the following conclusions: Had [the police] acted otherwise, the crime may never have been committed. Certainly, it would not have been committed as and when it was. I find it impossible not to say that that is a circumstance relevant to the level of the criminality of the appellant. […] Whether he would have pursued his attempt in another direction can never be known. It is very likely that he would have tried. Be that as it may, I find it impossible to ignore, in assessing the level of his criminality, the fact that it was only because of the expressed willingness of the police officers to assist him that he was able to convert his wish to bribe the judge into the criminal offence of attempting to do so. I would myself give a great deal of weight to that factor.
In Kada v The Queen [2017] VSCA 339; (2017) 270 A Crim R 197 Tate and Kyrou JJA considered a number of authorities on the subject of reduced culpability by reason of police involvement in a drug trafficking offence. Their Honours summarised the principles as follows (with the concurrence of Beale AJA at [133]): (a) The involvement of police in the commission of a trafficking offence is a relevant sentencing consideration. (b) The weight to be given to police involvement will depend on the circumstances of each case. (c) The fact that there is a real possibility that the specific offending would not have occurred but for the involvement of the police may carry some weight. As this causation element will be present in many cases, considered in isolation, it will not necessarily be an important sentencing consideration. (d) The primary focus will usually be on how the circumstances of the police involvement in a particular case bear upon the culpability of the offender. Police involvement does not have a predetermined or uniform impact on culpability. Rather, there is a spectrum along which that impact is to be assessed, ranging from very little impact to substantial impact. (e) Factors that affect the impact of police involvement on culpability include the following: (i) The manner in which the involvement of the police contributed to the offending, including the nature and degree of any pressure or coercion applied, or encouragement or inducement offered, by the police to secure the commission of the offence. (ii) The extent to which the involvement of the police contributed to the offending. (iii) Whether the police dealt with the offender directly or through an intermediary. Ordinarily, the more remote the police involvement - including any pressure, coercion, encouragement or inducement by them - is to the offender, the less weight it will have on the sentencing synthesis. (iv) The readiness with which the offender responded to any requests for drugs by the police. The involvement of the police will carry greater weight if the will of the offender is overborne by them, compared to a situation where the offender regards the requests for drugs from the police as a welcome expansion to his or her trafficking operation. Conversely, police involvement will carry less weight if the offender, rather than the police, instigated the relevant trafficking transaction. (v) Whether the police became involved at a time when the offender was already trafficking in the relevant drug and, if so, the scale of his or her operation at that time and the scale of operation resulting from the police involvement. The involvement of the police will carry less weight if their requests for a drug can be accommodated within the offender's existing supply lines, compared to a situation where those requests can only be accommodated by material changes to the offender's scale of operation and supply lines. (f) The fact that no actual harm arises because the involvement of the police prevents the drugs from being distributed to the community is a relevant consideration. However, ordinarily, this fact will be accorded little, if any, weight as a mitigating circumstance. This is because it would be anomalous for the offender to receive a more favourable sentencing disposition due to a circumstance which, from his or her perspective, is fortuitous, namely, the involvement of the police.
Some of the above-mentioned considerations have no application to the importation offence in the present case, which is the only offence to which ground 1 is directed. However, to the extent that the matters considered in the above list are directly applicable here, or are reflected in equivalent or comparable circumstances of the applicant's offending, the list is an authoritative guide. Both R v Taouk and Kada v The Queen were considered in Jomaa v R [2022] NSWCCA 112 and in Ibrahim v R [2022] NSWCCA 161.

[13]

Conclusion on ground 1

I do not accept the applicant's submission that his involvement in the importation of cigarettes "could properly be described as being 'ancillary'". The cigarettes had been purchased by the applicant and he was at all material times the owner of them. They were to be distributed through his supply network in Australia when landed. He stood to profit and he was the principal of the importation enterprise. The applicant's submission results from focusing unduly upon the transactional activities of getting the goods transported from Dubai to Sydney. UCO3 acted as the applicant's agent or contractor to achieve shipment to Australia. According to the Statement of Agreed Facts the applicant paid UCO3 $650,000 to carry out these mechanical steps of physical importation as well as getting the goods released from the wharf.
Given that tobacco importation is not of itself prohibited, the core of the offence lay in the intent to defraud the revenue. That intent was held by the applicant, not by UCO3. Lodging an import declaration upon arrival of the ship and payment of customs duty and GST were obligations of the applicant as owner and importer. The critical fact that put the importation in breach of s 233BABAD(1) was the applicant's intent not to declare the goods or to enter them for home consumption or to pay duty on them. He thought that in UCO3 he had someone who could enable him to realise that intent by getting the goods off the wharf without his obligations as owner/importer being discharged.
There was every reason for the learned judge to conclude that, absent UCO3 claiming to have the ability to achieve that critical part of the enterprise and offering to do so, the applicant would have found and/or corrupted some other person for the purpose. The facts are starkly different from those in R v Taouk, where it would not appear that anyone other than a police officer, or some other public office holder closely concerned in the administration of the criminal law, could possibly be in a position to approach a sitting judge to offer a bribe. In a case such as that it would be significantly doubtful that the crime of attempting to bribe would or could be committed at all without specific police assistance. That is not the case with the offence of importing in the present case, which depended upon finding someone who could get goods released from the wharf without payment of duty. Notoriously and regrettably, that is by no means an insurmountable obstacle.
In all the circumstances it was open to the learned sentencing judge not to be satisfied that the conduct of the authorities had led the applicant to commit the importation offence where, but for the authorities' involvement, he would not have been disposed to do so. Even if his Honour had entertained that possibility, if he thought that the applicant would not likely have sought out some other intermediary to arrange sea carriage of the container to Sydney and to get it off the wharf without payment of duty, the circumstances were so weak according to the criteria by which reduction of culpability is judged in such situations that there was no error in his Honour concluding that culpability was not diminished at all in this case. In particular, the applicant already had experience of importing tobacco without paying duty, as he admitted to the UCOs at an early meeting. There was no evidence that the UCOs incited or pressured the applicant to commit the crime. They merely offered the capability, which the applicant accepted and agreed to pay for.
For those reasons, although leave to appeal should be granted I would not uphold ground 1.

[14]

Orders

Counsel for the Crown raised no issue about the power of the learned sentencing judge to impose an aggregate sentence as provided for in the Crimes (Sentencing Procedure) Act 1999 (NSW), notwithstanding that sentence was passed for two Commonwealth offences. The Crown in right of the Commonwealth may be taken to continue to accept the position stated by Basten JA in Mourtada v R [2021] NSWCCA 211 at [8].
Having found specific error, the Court is obliged to consider whether any lesser sentence is appropriate, "taking into account all relevant matters, including evidence of events that have occurred since the sentence hearing": Kentwell v The Queen (2014) 252 CLR 601; [2014] HCA 37 at [43]. Very limited submissions were made to the Court on this subject. No submissions were addressed to anything said to be compelling in the applicant's subjective case as presented to the sentencing judge. It is therefore not necessary or useful to recite his background circumstances, which may fairly be described as unremarkable. He was 39 years old when the offences were committed. As earlier mentioned, a discount of 30% was allowed and no submission was made to this Court that that should have been any different.
At first instance the applicant sought to establish good character in respects other than the specific offending, by tendering references concerning his contributions to Islamic charities operating in Lebanon. His Honour said this: [The] offender's own statement that he was either unemployed or under-employed at the time of the offending, again, may highlight the suspicion that some of these charitable donations were made, at least in part, from the proceeds of crime. But he is not charged with this and I will not take anything in that regard into account other than that it appears that he is generous and supportive, but that there is a live question as to where some money has emanated from.
There was a significant feature of the applicant's criminal record, which the learned judge correctly concluded disentitled him from leniency. In January 2012 the applicant participated in a joint criminal enterprise with Omar Elomar to import into Australia cigarettes in packaging that falsely represented the contents as aluminium frames and that had been consigned under documentation that so described the imports. The goods were consigned to a business named Alternative Glass. The applicant was convicted, after trial by jury, on a charge that he facilitated the release of the container in which the falsely described cigarettes were landed in Australia, with the intention of dishonestly causing a loss to the Commonwealth, contrary to s 135.1(3) of the Criminal Code. The loss was the duty and GST payable on the cigarettes. In proof of the charge the Crown led evidence of three previous importations in which, similarly, the names of legitimate importers of other types of goods had been appropriated, to disguise the true nature of what was being brought into the country. That evidence was received in proof of a tendency on the part of the applicant. He was found guilty after trial by jury. On 17 October 2014 he was sentenced to a term of imprisonment of 16 months, with a non-parole period of 10 months. An appeal against conviction was dismissed and he was refused leave to appeal against sentence: see Masri v R [2015] NSWCCA 243.
The sentencing judge in the present case found that the applicant had "shown some contrition", that he "has some chance of rehabilitation but cannot place great weight on it". An affidavit of the applicant's solicitor was read on the hearing of the appeal, from which it is established that he has progressed through custodial classifications to a stage where he is permitted unescorted leave from the correctional facility where he is housed, to engage in employment. It is said that he has acquired a skill as a factory hand and that there is a prospect of ongoing employment after his release. Those developments are to the applicant's credit. However, having regard to the applicant's criminal history and the depth of his involvement in the offences to which the present appeal relates, his good conduct in custody does not remove the reservation that the Court must feel as to the durability of his rehabilitation and the prospect of him abstaining from further offending after he returns to the community.
The applicant's solicitor also deposed to anxiety that the applicant feels with respect to the mental health of one of his daughters, who has been the victim of domestic violence by an intimate partner. The daughter drew emotional support from the applicant prior to his incarceration. A second daughter has been diagnosed with intellectual delay and obsessive compulsive disorder. Her condition has deteriorated since her father's incarceration. The learned sentencing judge received evidence and submissions about pressures on the applicant's family resulting from his imprisonment, including specific material concerning the position of the second daughter. The circumstances deposed to do not materially alter the picture that emerged in the sentence proceedings.
Although I have concluded with respect to ground 2 that the learned sentencing judge took into account the amount of unpaid revenue in an inappropriate way, when that quantum is considered for its correct and limited purpose as a measure of the objective gravity of the offending and when the learned judge's findings concerning subjective factors and the evidence of post-sentence developments are also taken into account, I am of the view that no lesser sentence is warranted.
I propose the following orders: 1. Grant leave to appeal against sentence. 2. Dismiss the appeal.
SWEENEY J: I agree with Fagan J.

Masri v R

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