Regina v Yeung LO Regina v Hui OUYANG [2004] NSWCCA 382 | Case summary

Monday 1 November 2004 Regina (Cth) v Yeung LO Regina (Cth) v Jui OUYANG Judgment 1 GILES JA: These are Crown appeals against sentences imposed by Goldring DCJ for customs fraud. The respondent Mr Hui Ouyang pleaded guilty to two counts of defrauding the Commonwealth. The respondent Mrs Yeung Lo pleaded guilty to two counts of being knowingly concerned in Mr Hui Ouyang defrauding the Commonwealth. Both were sentenced on each count to imprisonment for twelve months, the sentences on their first counts to commence on 18 June 2004 and the sentences on their second counts to commence on 18 December 2004, giving effective sentences of eighteen months, but with the sentences to be served by way of home detention. Both were also fined $30,000 for each offence. 2 The respondents, who are husband and wife, were directors of National Autoglass Supplies (Australia) Pty Limited ("National"). National's principal activity was the wholesaling of automotive windscreens. Mr Ouyang was the general manager of the company and Mrs Lo was its financial controller. At the time of sentencing Mrs Lo was the sole director and shareholder of the company. 3 In the periods September 1998 to January 1999 and March 2000 to December 2000 National imported thirty shipments of windscreens. It obtained them from Fuyuo Glass Industry Group Co Limited ("Fuyuo") in China. Eight shipments were imported in the first of these periods and twenty-two in the second. National was correctly invoiced by Fuyuo for the windscreens and paid the invoiced amounts. But the respondents also obtained false invoices from Fuyuo for customs declaration purposes. The false invoices were provided to freight forwarders and then to National's customs brokers, who relied on them in preparing declarations to the Australian Customs Service to obtain clearance of the windscreens. 4 The Australian Customs Service calculated the customs duty and the GST on the amounts of the false invoices, relying on their accuracy and without inspecting the goods. As a result, there was underpayment of customs duty of $167,268.35 and GST of $96,423.81, a total of $263,692.16. The precise calculation of the underpayment need not be explained. 5 Mr Ouyang was responsible for supplying the importation documents to the freight forwarders and the customs brokers. Mrs Lo was responsible for paying the correctly invoiced amounts to Fuyuo and the incorrectly calculated amounts of customs duty and GST. Their course of action was deliberate, in order to meet a cash flow problem of the company and for commercial advantage. The Judge recognised this, and considered that they were equally culpable. 6 The respondents were confronted in May 2002. They were interviewed, and the Judge noted that they co-operated fully and did not attempt to deny their involvement in what had occurred. A bank loan was taken out from which the underpaid customs duty and GST were paid in full, and the Judge assumed that interest was also paid. 7 The offences lay under s 29D of the Crimes Act 1914 (Cth), extended to knowing concern by s 5 of that Act. The maximum penalty for the offences was imprisonment for ten years or a pecuniary penalty of $110,000 or both. 8 The manifest inadequacy of which the Crown complained was focused into three grounds. I quote those three grounds - "(1) His Honour erred in concluding that the probable effect that sentences of full-time imprisonment would have on the children of the Respondents constituted exceptional circumstances warranting the making of home detention orders;

(3) His Honour erred in concluding that where offences are of an economic character and the offender has requisite means, substantial fines coupled with other penalties would constitute appropriate punishment." 9 The complaint was described orally as that there was error in converting sentences within the range to sentences no longer within the range by ordering that the sentences be served by home detention. It was essentially not as to the adequacy of the terms of imprisonment. Indeed, if the terms of imprisonment had been any greater it would not have been open to the Judge to order that the sentences be served by way of home detention. The complaint was as to the order that the terms of imprisonment be served by home detention. 10 It is important to keep this in mind. Section 7(1) of the Crimes (Sentencing Procedure) Act 1999 provides that a court that has sentenced an offender for imprisonment for not more than eighteen months may make a home detention order directing that the sentence be served by way of home detention. That is subject to the provisions in Pt 6 of the Act, which include that a home detention order must not be made unless the offender has been assessed as a suitable person to serve a term of imprisonment by way of home detention. It was said in R v Jurisic (1988) 45 NSWLR 209 at 215, speaking of the prior regime for home detention under the Home Detention Act 1996 - "The Act requires a trial judge to determine the appropriate sentence of imprisonment without regard to the possibility that a home detention order may be made. The trial judge will subsequently have to exercise the judicial discretion to refer under s 9 of the Act and the ultimate discretion to make the order for detention under s 11. The order under s 11(1) should only be made if the sentencing judge is satisfied that the term of imprisonment so served is the appropriate sentence, in the sense that it reflects the criminality of the conduct in the circumstance of the case." 11 These remarks I consider apply also to the current regime. In particular, it should be noted that there is a two-stage process. First, there is the determination of the appropriate sentence of imprisonment without regard to the possibility that a home detention order may be made. Secondly, there is the exercise of the judicial discretion in deciding whether or not a home detention order should be made. 12 In the present case, the Judge was plainly aware of this two-stage process. His sentencing remarks considered various matters relevant to arriving at appropriate sentences, including regard to statements that in matters involving social security fraud the needs of general deterrence were such that the penalty should normally be a full-time custodial sentence. His Honour did not entirely accept that this transposed to customs fraud, considering that in some respects customs fraud was more significant than social security fraud and, apparently, in other respects it may not have been more significant. But he acted upon the fact that the system of assessment of customs duty depends on the honesty of importers and their customs agent, because the customs officials rely on their statements as to the value and quantity of goods imported when assessing duty. 13 When the Judge came to the culmination of his remarks on sentence, he said this - "Where the offence is of an economic character and the offender has the requisite means, substantial fines may be highly appropriate penalties particularly where they are coupled with other penalties. Economic disincentives pay a significant role not only in personal deterrents but may also be of greater general deterrence to those engaged in business. It seems appropriate that the Court should, in appropriate cases, use substantial fines for those ends and I propose to do so in respect of each of these offenders. The offence is so serious and the requirements of general deterrents such that I must impose terms of imprisonment in respect of each offence. There is no alternative to the imposition of such a sentence. Although the charges against each offender differ they are all preferred under the same legislative provision and I accept that this was, in every sense of the word, a joint criminal enterprise and each of the offenders must be treated in the same way. Would you stand up please Mr Ouyang and Mrs Lo. I propose to fine each offender a sum of $30,000 in respect of each offence. In addition, in respect of each offence, each offender will be sentenced to a term of twelve months imprisonment. The sentences will be partly cumulative for a period of six months and partly concurrent. … Home detention is a type of imprisonment available in New South Wales. Having regard to the fact that both of the offenders have no family in Australia apart from their children who will suffer considerable deprivation and hardship if both their parents are in full time custody, considering the specific requirement of s 16(a) to (p), it appears appropriate that the custodial proportion of the sentences might, if the offenders be found suitable, be served by way of home detention. This option is made possible in this case only because of s 16A to P. The effect of imposing full time custody on both parents of two young children with no other family in Australia would cause extreme and undue hardship of an exceptional character. That provision makes a sentence to be served by way of home detention appropriate in the circumstances of this case. I, therefore, convict both offenders of the offences to which they have pleaded guilty. I direct that they be assessed as to their suitability to serve their sentences by way of home detention and I remind them to appear before me on Friday 18 June this year." 14 The Crown's first ground involved regard to the evidence, which the Crown submitted was inadequate for a finding that the hardship to the respondents' family went beyond that inevitably resulting from the imprisonment of a parent or carer and did not establish exceptional circumstances. A number of cases have said that hardship to the offender's family does not operate in mitigation unless there are exceptional circumstances. It is sufficient to refer to R v Maslen (1995) 79 A Crim R 119 and R v Edwards (1996) 90 A Crim R 510. The Crown submissions transposed this to the exercise of the discretion to make a home detention order. 15 The respondents were the parents of two children, aged three years and eighteen months respectively. Mrs Lo was the mother of an eighteen-year-old daughter from a previous relationship, who also resided with the respondents. The evidence was that the respondents had relatives in China, but no other family in Australia, and they had friends in Australia who were supportive. The Crown submitted that this was insufficient for a finding of exceptional circumstances because it failed to establish that full-time custody would impose hardship on the two young children, being the children who featured in his Honour's reasoning. 16 It does not seem to me that that is correct. It did not need extensive evidence to show that depriving two children aged three years and eighteen months of both their parents, not just one breadwinner or carer leaving another in another, would cause hardship. The bald evidence that there was no family in Australia, taken with the evidence in relation to the friends, that they were supportive without going further, in my view did found a proper inference that full-time custody served by the respondents would leave the infant children without any carer at all. 17 It should be noted also that the sentencing process was such that the prospect of a home detention order, to which the care of the infant children was plainly material, was flagged at an early time, but the Crown did not take up with the respondents in cross-examination alternative modes of care. The evidence was, it seems to me, enough to entitle the Judge to take the view he did, that there would be "extreme and undue hardship of an exceptional character". 18 The Crown submitted that nonetheless this was not enough to overcome the statements in the cases requiring exceptional circumstances. It referred in particular to R v Girard [2004] NSWCCA 170, a case in which both parents were incarcerated and in which it was said (at [21]) that it did not fall within the category of exceptional circumstances discussed in R v Edwards although the effect on the children could be taken into account as one of the subjective circumstances in assessing the appropriate penalty. It should be noted that in that case the evidence was that the children were to be looked after by grandparents. Further, the context was not the exercise of the discretion as to whether or not to make a home detention order, as the sentences imposed were sentences of three years with non-parole periods of eighteen months and so the option of home detention and other alternative means of serving a sentence were not open. 19 In this case, the Judge's finding was essentially a finding of fact. That minds may differ is demonstrated by two cases to which the Crown referred dealing with imprisonment of a sole parent. In one case, R v Tiki (CCA, 24 August 1994, unreported) it was considered that there was exceptional hardship. The child there was very young and in poor health, but was being cared for by the prisoner's mother. In R v Day (1998) 100 A Crim R 275 there were three teenage children, whose grandmother and aunt were prepared to care for them and in the case of the grandmother in her own home, and the Court observed that there was no evidence to show that those arrangements were impracticable even though they might have been less than optimal: it was held that there were no exceptional circumstances. 20 These show that each case depends on its own facts. The Judge's view of the facts in this case was well open to him and, with respect, in my opinion was correct. 21 Going then to the second and third grounds of appeal, which it seems to me can conveniently be considered together, the essence of the Crown's submission was that his Honour had misdirected himself by in some way treating the fines he imposed as making up for leniency afforded by the exercise of his discretion to make home detention orders, and that either because misled or independently his Honour had failed to pay sufficient regard to the need for general deterrence. 22 There is no doubt that general deterrence in the case of offences against the revenue has been emphasised, and reference may be made to cases such as R v Wright (1994) 74 A Crim R 152, R v Purdon (NSWCCA, 27 March 1997, unreported), R v Caradonna (2000) 118 A Crim R 312 and R v Cappadona (2001) 122 A Crim R 52. 23 I do not read the Judge as having erred in the manner first suggested. His statement about the part the substantial fines may play, in the first part of the passage earlier set out, is unexceptional and correct. His Honour did not, it seems to me, take the findings into account proleptically as making up for leniency in ordering that the custodial sentences be served by way of home detention. He can not have done so because of the two-stage process and the fact that at the time he made his remarks on sentence the second stage was incomplete. His Honour had not by that time received the assessment, and it may have been that the assessment of the respondents' suitability to serve the sentences by way of home detention would have been unfavourable. 24 Going then to general deterrence, the Judge was well alive of the need for it. He referred specifically to it in the second paragraph of the passage earlier set out, having adverted to relevant cases earlier in his remarks on sentence. His Honour said that he regarded the offences as so serious and the requirements of general deterrence such that he had to impose terms of imprisonment. General deterrence was again considered when he came to make a home detention order, but plainly there it had to be balanced against the need for general deterrence considerations in favour of serving the sentences by way of home detention. The emphasis on general deterrence in the cases could be outweighed, in this case by the hardship that would result to the infant children. 25 The Judge considered that the effect of full-time custody of both the respondents (and although his Honour did not in terms emphasise the word "both" it should be emphasised) on the young children was sufficient to outweigh the seriousness and the need for general deterrence when it came to exercising the discretion in relation to home detention. In my opinion, his Honour has not been shown to have erred in doing so. 26 For these reasons, it does not seem to me that error has been shown sufficient to make out manifest inadequacy through ordering that the sentences be served by way of home detention. In my opinion, the appeal should be dismissed. 27 BUDDIN J: I agree. 28 SMART AJ: I also agree. 29 GILES JA: The orders of the Court will be as I have proposed. **********

Regina v Yeung LO Regina v Hui OUYANG

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