CEO of Customs v Martino
[2001] VSC 217
•29 June 2001
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL & EQUITY DIVISION
No.5879 of 2000
| Chief Executive Officer of Customs | Plaintiff |
| V | |
| Francesco Martino and Giuseppe Antonio Martino | Defendants |
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JUDGE: | Bongiorno J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 20 February 2001 | |
DATE OF JUDGMENT: | 29 June 2001 | |
CASE MAY BE CITED AS: | CEO of Customs v Martino | |
MEDIUM NEUTRAL CITATION: | [2001] VSC 217 | |
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Criminal Law – Customs and Excise – Possession of excisable goods – Minimum penalties – Non conviction disposition – Excise Act 1901 (Cth) ss. 35, 117, 129 and 146 and Crimes Act 1914 (Cth) s. 19B.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr. E. J. Lorkin | Australian Government Solicitor |
| For the 1st Defendant | Mr. G. J. Lyon | CPH Lawyers |
| For the 2nd Defendant | Mr. C. Piesse | CPH Lawyers |
HIS HONOUR:
By writ issued out of this court on 26 June 2000 the Chief Executive Officer of Customs brought Excise Prosecutions (as that term is used in Part X1 Excise Act 1901 (Cth)) against the defendants in respect of 266,704 kilograms of cut tobacco leaf which was found in their possession on 11 April 2000 in a motor vehicle in which they were travelling on Whitfield Road, King Valley Victoria. The cut tobacco leaf was in 293 white plastic bags which, in turn, were enclosed in 30 larger black plastic bags.
The plaintiff also brought an Excise Prosecution against the second defendant for manufacturing excisable goods, namely tobacco, without a licence under the Act at 73 Hilma Street, West Sunshine shortly prior to 11 April 2000.
The charge of possession of excisable goods without authority was brought against both defendants pursuant to s. 117(1) of the Act. The charge of manufacturing excisable goods without a licence against the second defendant was brought pursuant to s. 35 of the Act.
In the same writ the plaintiff claims forfeiture of the tobacco seized, forfeiture of the equipment used to manufacture it seized from the premises of the second defendant on 13 April 2000 (being a cutting machine, a cutting blade, a press and a set of scales) and forfeiture of the motor vehicle in which the tobacco was found. That motor vehicle belonged to the first defendant.
The proceeding brought by the plaintiff, although alleging criminal offences, is brought in the civil jurisdiction of this Court by action in accordance with s. 136 of the Act. That provision prescribes that Excise Prosecutions may be commenced, prosecuted and proceeded with in accordance with any rules of practice established by the Court for crown suits in revenue matters or in accordance with the usual practice and procedure of the court in civil cases. In this instance the prosecution was instituted by writ upon which was endorsed a statement of claim in accordance with the applicable rules of civil procedure.
Neither of the defendants delivered a defence to the plaintiff's statement of claim and are thereby taken to have admitted every allegation of fact contained in it (Rule 13.12 Rules of Civil Procedure). In any event, in this case, the defendants by their counsel have each made specific admissions in respect of the allegation of their having jointly contravened s. 117(1) of the Act and the second defendant has admitted the breach of s. 35 alleged against him.
In opening the case counsel for the plaintiff stated the plaintiff's acceptance of the defendants' admissions in the terms set out and sought amendments to the statement of claim to confine the plaintiff's claims to those admitted by the defendants. That application being unopposed, leave was granted to the plaintiff to file an amended statement of claim in appropriate terms.
Thus, as the case commenced the plaintiff sought:-
(a)declarations that each of the defendants committed an offence under s. 117(1) of the Act;
(b)a declaration that the second defendant committed an offence under s. 35 of the Act;
(c)consequential convictions in respect of each defendant;
(d)a fine against each defendant on each of their convictions in respect of s. 117(1) of the Act in the sum of $127,719.22;
(e)a fine against the second defendant in respect of his breach of s. 35 of the Act in an unspecified amount less than $5,000:
(f)forfeiture of the tobacco seized:
(g)forfeiture of the first defendant's Toyota Hilux 4 wheel drive utility;
(h)forfeiture of the cutting machine, cutting blade, press and set of scales found at the second defendant's home; and
(i)an order for costs against the defendants.
The facts
The facts of this case have never been in dispute. To a very large extent they emerge from the defendants' answers to questions put to them by the police in a record of interview at the Moyhu police station on 11 April 2000 and what was put, on their behalf, by their counsel on the trial of this proceeding. None of those assertions was contested by the plaintiff.
Giuseppe Antonio Martino (known as Tony) is a vegetable share farmer who lives in West Sunshine. He share farms market garden properties owned by others at Werribee South with his wife and has done for many years. As would be expected, he is not a man of property or wealth. He had little education and earns his living by hard physical work.
At about the beginning of April 2000 Tony Martino was at the Laverton market where he met a man known to him only as "Leon". Leon introduced Tony to the illicit tobacco or "chop chop" trade by offering to sell him 2 ½ bales of tobacco at $500 per bale to be cut up and sold in kilogram lots for a total of, perhaps, $2,500. Leon also gave him the cutting equipment used to process the tobacco leaf. Finally, he gave him the name of a contact in Albury, New South Wales who might be interested in buying the finished product so that the profit contemplated could be made.
Twelve hundred and fifty dollars, which would represent the profit which might be made on the transaction in which he was invited to engage was a significant amount of money to Tony Martino. He accepted Leon's offer although he knew that what he was going to do would be illegal as an evasion of excise duty.
Over the succeeding days Martino manufactured the "chop chop" in his garage at West Sunshine and when it was finished and bagged he set off for Albury to find the man who might buy it from him.
On the way to Albury Martino decided to visit his brother Frank who was a tobacco grower in the King Valley. He arrived at Frank's place about 4.30 in the afternoon after a long drive from Melbourne. When he told Frank that he was going to Albury to sell the tobacco that he had in his vehicle Frank offered to drive him to Albury but suggested that they travel in his (Frank's) vehicle which was an almost new Toyota Hilux utility.
Thus the tobacco which was packed in small plastic bags inside large plastic garbage bags was transferred from Tony's vehicle to Frank's vehicle and the two set off for Albury. Frank knew that Tony was engaged in an illegal activity. The illegality of the "chop-chop" trade was only too well known to tobacco growers.
In Albury the contact was found and negotiations for sale commenced but ended when the proposed purchaser offered to pay the purchase price with a personal cheque. Not surprisingly Tony Martino refused to proceed with the deal and the two brothers left Albury to return to the King Valley taking the tobacco with them. It was on this journey that they were intercepted by police, which event led to this series of prosecutions.
Tony and Frank Martino were taken to Moyhu police station where they each co-operated fully with the police and answered all questions put to them. They appeared to do so frankly and without withholding any relevant information.
I emphasise that none of the facts as I have outlined them was the subject of any contention between the parties before the Court. Accordingly it is upon this factual basis that I turn to consider the disposition of this case.
Findings
The defendants are each clearly in breach of s. 117(1) of the Act in that they were in possession of manufactured excisable goods on 11 April 2000 on Whitfield Road King Valley. Even if it could have been argued that it was really the second defendant who was in possession of the cut tobacco the first defendant was clearly complicit in the second defendant's offence in that he was driving the vehicle in which the cut tobacco was conveyed. Section 5(1) Crimes Act 1914 (Cth) deems such an aider and abettor to have committed the principal offence. Thus the plaintiff is entitled to a declaration that on 11 April 2000 each of the defendants committed a breach of s. 117(1) of the Act.
In as much as the second defendant cut the tobacco at his home at 73 Hilmer Street, West Sunshine in the days immediately preceding 11 April 2000, he committed an offence against s. 35 of the Act which prohibits the manufacture of excisable goods otherwise than as permitted. The plaintiff is, accordingly, entitled to a declaration in appropriate terms in relation to this breach of the Excise Act 1901 (Cth).
The plaintiff seeks convictions against each of the defendants in respect of the offences to which I have referred. Counsel for the plaintiff has submitted that convictions should follow the findings which have been made although he concedes that s. 19B Crimes Act 1914 (Cth) could apply to the offences which the defendants have committed so as to entitle the Court, if circumstances are otherwise appropriate, to deal with them without proceeding to conviction in accordance with that section. This is notwithstanding s. 146 of the Act which effectively fixes minimum penalties applicable upon conviction.
Before determining whether convictions are appropriate it is necessary to examine the personal circumstances of each of the defendants.
Francesco Martino
Both defendants were born in the small town of Monzaretta in the Province of Catanzaro in the Region of Calabria, Italy. Monzaretta, as I have heard, is in a rural area where the only real local industries are agricultural. In that part of Italy until comparatively recently opportunities were few, employment was difficult and the chance of economic advancement was slight.
The first defendant, Frank Martino, was born on 25 January 1947. He left school at the age of eleven and began working on the family farm which grazed cattle, sheep and goats and grew beans, potatoes and wheat in a subsistence peasant farming operation. At the age of seventeen he left Italy for Switzerland where he worked in the building industry for three years until in 1967 he came to Australia to join his father who had already migrated. His father had commenced the share farming of tobacco in north eastern Victoria about 50 kilometres from where the first defendant now lives.
Frank Martino's life in Australia has been typical of many European migrants of his generation. Hard work was followed by modest material success. There followed marriage and three children who are now 26, 24 and 20. In due course Mr Martino was able to pay off his farm which he had bought in 1972 for $105,000. With its tobacco quotas it is probably now worth in the order of $300,000.
Tobacco farming is chemical and fertiliser intensive. The use of such products means that the land is agriculturally useless for some years after tobacco has been grown on it. It cannot be used for food production, either of crops or animals until it is cleared of chemical residues by the effluxion of time.
In the course of the hearing before me a bundle of correspondence was tendered which included letters written by Phillip Morris Limited, British American Tobacco Australia and the Tobacco Co-operative with which Mr Martino deals. In that correspondence the tobacco companies state in reasonably unequivocal terms that they will not buy tobacco from any grower convicted of any excise offence in relation to the “chop chop” trade. Thus, if Mr Martino was to be convicted and the tobacco companies carried out their threat (even though it would be quite unjust in the circumstances of this case for them to do so) the economic consequence would be devastating from his and his family's point of view quite aside from any penalty which the Court would have to impose consequent upon such conviction.
Further, the same bundle of correspondence suggests that in any event the tobacco industry will be hit by an economic downturn from the year 2002 in that Phillip Morris has indicated its intention of adjusting the price it will pay for Australian tobacco downwards by a compound annual rate of 6% until that tobacco reaches a price which it claims is comparable with similar off shore tobacco. Thus some economic adversity awaits Mr Martino regardless of the outcome of this case.
Counsel for Frank Martino also referred to the possibility of there being a buy back of tobacco growers’ licenses by the Federal Government. He submitted that should a conviction be recorded against Mr Martino in respect of his contravention of s. 117(1) of the Act his right to participate in such a buy back may well be jeopardised. No evidence of this possible or probable economic detriment was put before the Court but counsel for the plaintiff did not dispute the assertion and it seems not unreasonable to assume that some such detriment would be at least possible if not likely in the event that a conviction was recorded.
So far as Mr Martino’s general reputation is concerned Father Frank Jones, presently parish priest of Nathalia and formerly parish priest of Wangaratta, gave evidence that he had known the Martino family for many years and that they were held in the highest regard. This evidence was not challenged.
Finally, it should be noted that regardless of whether Mr Martino is convicted or not the fact that his Toyota Hilux vehicle (valued at something over $40,000) was used to convey the illegal tobacco has rendered it forfeited to the Crown by virtue of s. 116(1) (e) of the Act. I deal with this hereunder.
Section 117(2) of the Act provides that a person who contravenes s. 117(1) is guilty of an offence punishable upon conviction as provided by s. 129 (emphasis mine). Section 129 prescribes a minimum penalty in the event of such conviction of a fine of not less than twice the amount of the duty that would have been payable on the goods to which the offence relates if those goods had been entered for home consumption. In this case the duty which would have been payable was $63,859.61. Accordingly the minimum applicable penalty in the event of a conviction would be $127,719.22. By virtue of s. 146 of the Act there is no power in the court to ameliorate that minimum penalty by the application of s. 20 Crimes Act 1914 (Cth) or otherwise: see Darcy v Nikoloff [1954] SASR 62 where an ingenious argument put by Dr J.J. Bray on behalf of a distiller of illegal spirits to the effect that a legislative provision identical to s. 146 prohibited only reduction of a fine and not its complete remission (pursuant to a provision of the South Australian Justices Act which empowered a Court of Summary Jurisdiction to convict without penalty) was rejected by Reed J.
Counsel for the plaintiff conceded however that, subject to compliance with its terms, s. 19B Crimes Act 1914 (Cth) could be applied to the case of Mr Frank Martino so as to avoid his being convicted although the plaintiff's position was that it should not be applied in this case. It was the primary position taken by Mr Martino's counsel that the Court should apply s. 19B having regard to all the circumstances in which the offence was committed.
Section 19B(1)(b) enables the Court to discharge an offender without proceeding to conviction although a charge is proved if the Court is of the opinion, having regard to certain expressed criteria, that it is inexpedient to inflict any punishment or to inflict any punishment other than a nominal punishment on the offender.
In Lanham v Brake (1983) 34 SASR 578 Cox J considered the factors to be taken into account in imposing penalties in respect of revenue offences under the Customs Act 1901-1982 (Cth) and offences under the Quarantine Act 1908-1982 (Cth). In the context of considering the applicability of s. 19B Crimes Act 1914 (Cth) to offences for which Parliament has provided a minimum penalty he pointed to the necessity for a sentencing court to take the expressed parliamentary intention into account in deciding whether to exercise a discretion not to proceed to conviction pursuant to s. 19B even if one or more of the criteria prescribed by the section is present.
In Hayes v Weller (1988) 50 SASR 182 Perry J (with whom King CJ and Jacobs J agreed) pointed out that revenue offences (in that case offences of smuggling under the Customs Act 1901 (Cth)) were notoriously difficult to police and have traditionally attracted heavy penalties. The Court considered that it would be a rare case in which it would be a proper exercise of judicial discretion to alleviate the hardship imposed upon a defendant by the imposition of minimum statutory penalties by having recourse to s. 19B Crimes Act 1914 (Cth). It should be noted that in that case the Court was dealing with the deliberate evasion of duty amounting to some $135,000 by the smuggling of a BMW motor car into Australia. The crime yielded a substantial financial benefit to the defendant; the only ameliorating feature appearing to be that he did not import the vehicle for other than his own private use.
Like those in the Customs Act, the penalty provisions of the Excise Act exist to protect the revenue from tax evasion. There is no doubt that the clandestine nature of much tax evasion in this area justifies a legislative policy of some severity. I respectfully agree with the observations of the South Australian judges to whom I have referred that where there was a deliberate scheme to defraud the revenue to the benefit of a defendant it would be seldom that s. 19B could be used to avoid the full force of the minimum penalty provisions of the Act. However, where full weight is given to the obvious legislative policy of the Act and it is still considered appropriate to proceed by way of a s. 19B disposition then a sentencing court should do so.
In the case of the contravention of s. 117(1) Excise Act 1901 (Cth) by Mr Frank Martino I consider that the criteria set out in s. 19B(1)(b)(i) and (iii) have been satisfied such that it is inexpedient to inflict any punishment upon him notwithstanding the legislative policy evident in the Act.
Frank Martino’s character and antecedents are exemplary. His contribution to this country as a migrant, tobacco farmer, husband and father entitle him, in my opinion, to the mercy of this court in its treatment of this offence. Further, the offence was committed under extremely extenuating circumstances. He stood to gain nothing from its commission. The use of his motor vehicle in the circumstances was fortuitous and his involvement in the commission of the offence peripheral. When one considers these matters together and together with the whole of Mr Martino’s circumstances, including the reality or the risk of substantial financial detriment as a consequence of having contravened the Act, it seems appropriate to me that the alternative disposition provided by s. 19B Crimes Act 1914 (Cth) should be pursued.
Accordingly, provided he is prepared to consent, I propose to discharge Mr Frank Martino without proceeding to conviction in respect of the offence which has been proved against him of contravening s. 117(1) of the Act upon his giving security in the sum of $100 that he will be of good behaviour for a period of 12 months after giving such security.
Giuseppe Antonio Martino
Tony Martino was born on 28 May 1953. His background was similar to Frank's although, unlike him, he had settled in a Melbourne suburb and earned his living by share farming vegetables as I have described. He is similarly of impeccable background and character.
Although much was able to be said by Tony Martino's counsel on his behalf his case differs fundamentally from that of his brother. He undertook the illegal activity in which he was engaged knowing that it was illegal and in the expectation of a financial gain even if that financial gain was, in the circumstances, of no enormous amount. He bought the tobacco, cut it, bagged it and was prepared to sell it in contravention of the Excise Act 1901, such that he would have deprived the revenue of some $63,859.61 and perhaps gained $1,250 for himself.
The Act prescribes a minimum penalty for the contravention of s. 117(1) in which Tony Martino engaged of twice the amount of duty evaded. Accordingly, the minimum penalty in Tony Martino's case is $127,719.22.
Accepting, as I do, that prior to the commission of these offences Tony Martino was a citizen of unblemished character and, like his brother, a hardworking and responsible family man and having regard to the extremely small gain he would have achieved if his illegal plan had been successfully completed there would appear to me to be no reason to impose upon him anything other than the statutory minimum penalty. In absolute terms that penalty is, in the context of this case, enormous. It will have an economic effect on Mr Martino which is way beyond that which would have been required to adequately punish him for these offences had the Act not provided for minimum penalties.
So far as Tony Martino's breach of s. 35 of the Act is concerned the maximum penalty prescribed is a fine of $5,000. In the circumstances and having regard to the penalty which I must impose in respect of the breach of s. 117(1) it is appropriate that for the breach of s. 35 he be fined the sum of $200.
Forfeiture
It is an essential feature of revenue statutes such as the Excise Act 1901 (Cth) that goods upon which excise has been illegally evaded together with goods used in connection with the manufacturer of those goods and its transportation and handling are forfeited to the Crown. Section 116(1)(a), (c) and (e) are all provisions which have that effect in this case.
The tobacco, the subject of this action was seized by the police at Moyhu on the night the defendants were intercepted. By virtue of s. 116(1)(a) that tobacco is, it seems to me, forfeited to the Crown without the necessity for any order of this Court.
Similarly, the equipment used by Tony Martino at his home in West Sunshine to cut the tobacco, namely the cutting machine, cutting blade, press and set of scales referred to in the statement of claim are similarly forfeited to the Crown by virtue of s. 116(1)(c) of the Act.
Finally, the Toyota Hilux vehicle, the property of Frank Martino, in which the tobacco was being conveyed at the time the defendants were apprehended by the police is forfeited to the Crown by virtue of s. 116(1)(e) of the Act. As I was told, in the course of argument, that this vehicle was almost new and was valued at something over $40,000 its forfeiture to the Crown will itself impose a very significant penalty on the second defendant.
Costs
As this proceeding was brought in the civil jurisdiction of this Court the ordinary rules relating to costs apply and upon application made by counsel for the plaintiff it is appropriate that the plaintiff have his costs of the action against both defendants to be taxed.
Conclusion
There will accordingly be declarations and orders as follows:
(A) AS AGAINST THE FIRST DEFENDANT:-
(1)A declaration that on 11 April 2000 the first defendant at Whitfield Road, King Valley in the state of Victoria was in possession of excisable goods within the meaning of the Excise Act 1901, namely tobacco, contrary to s. 117(1) of that Act;
(2)An order that the first defendant be discharged without conviction in respect of such contravention of s. 117(1) Excise Act 1901 upon his entering into a recognizance in the sum of $100 to be of good behaviour for the period of one year from the date of entering such recognizance;
(3)A declaration that a Toyota Hilux utility truck registered number PQD 492 formerly the property of the first defendant has been forfeited to the Crown by virtue of s. 116(1)(e) Excise Act 1901.
(B) AS AGAINST THE SECOND DEFENDANT:
(4)A declaration that on 11 April 2000 the second defendant at Whitfield Road, King Valley in the state of Victoria was in possession of excisable goods within the meaning of the Excise Act 1901, namely tobacco, contrary to s. 117(1) of that Act;
(5)An order that the second defendant be convicted and fined $127,719.22 in respect of such contravention;
(6)A declaration that shortly prior to 11 April 2000 at 73 Hilma Street, West Sunshine in the state of Victoria the second defendant manufactured excisable goods, namely tobacco, contrary to s. 35 Excise Act 1901;
(7)An order that the second defendant be convicted and fined $200 in respect of such contravention;
(8)A declaration that the tobacco referred to in paragraphs (1) and (4) has been forfeited to the Crown by virtue of s. 116(1)(a) Excise Act 1901;
(9)A declaration that certain items being a cutting machine, a cutting blade, a press and a set of scales seized by excise officers at 73 Hilma Street, West Sunshine in the State of Victoria on 13 April 2000 have been forfeited to the Crown by virtue of s. 116(1)(c) Excise Act 1901; and against both defendants
(C) AS AGAINST BOTH DEFENDANTS:
(10)An order that the defendants pay the plaintiff's costs of this proceeding.
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