CEO of Customs v Rota Tech Pty Ltd & Ors No. Scgrg-98-465 Judgment No. S64

CHIEF EXECUTIVE OFFICER OF CUSTOMS v ROTA TECH PTY LTD, BUSUTILL & RUTTER
[1999] SASC 64

Civil

MULLIGHAN J The plaintiff is the Chief Executive Officer of Customs appointed pursuant to the provisions of the Customs Administration Act 1985. He is authorised by s245 of that Act to institute this action in the name of his office.
This action is a customs prosecution within the meaning of s244 of the Customs Act 1901 and is instituted in this Court pursuant to s245(1)(a) of the Act.
The first defendant, Rota Tech Pty Ltd (“Rota Tech”) is a company duly incorporated pursuant to the Corporations Law. At relevant times it carried on business of manufacturing, selling and supplying paint rollers and other painting accessories from commercial premises at 2 Gaelic Avenue, Holden Hill and the second defendant Anthony Francis Busutill and the third defendant Christopher Lee Rutter were, at all relevant time, directors of Rota Tech. The third defendant was also the secretary of the company.
On 17th October 1997 24.69 kgs of the drug ephedrine were imported into Australia. Ephedrine is known to be used as an ingredient in the illicit manufacture of amphetamines and is a prohibited import within the meaning of regulation 5 of the Customs (Prohibited Imports) Regulations being a substance prescribed as Item 72 in Schedule 4 to those regulations. It is not a narcotic substance. The importation of ephedrine is prohibited by s233(1)(b) of the Customs Act. A person who contravenes that section is guilty of an offence punishable upon conviction and the maximum penalty is $50,000: see s5, s233(1AA), s233 AB(2) of the Customs Act.
Each of the defendants was involved in the importation of ephedrine in the manner to be mentioned shortly. On 13th November 1997 a complaint was laid by the plaintiff in the Magistrates Court charging the second defendant and the third defendant jointly with importing the drug contrary to s233(1)(b) of the Customs Act. Pursuant to s245(4) of the Customs Act, a consequence of proceeding in that manner was that the prosecution was deemed to have abandoned in those proceedings the right to pursue any penalty above $5,000 with respect to each defendant. Upon further considering the matter, the plaintiff withdrew the complaint and brought this action with the consequence that upon conviction a fine of up to $50,000 may be imposed on each of the defendants.
Rota Tech is in liquidation and no funds are available to pay any fine. The plaintiff does not seek leave to proceed against Rota Tech.
The second defendant and the third defendant acquired the shares in Rota Tech in about July 1996 and became the sole directors of the company. They each borrowed about $80,000 for that purpose. I accept that neither of them had any criminal purpose in mind at that stage. They intended to carry out the business of the Rota Tech legitimately and in hope of profit. Rota Tech experienced some financial difficulties and incurred substantial debt.
The second defendant was approached by a man I shall refer to as “Ivan” with a proposal that he import ephedrine in this country which would be used by a member of a motor cycle group in Melbourne. Eventually the second defendant agreed. I mention his involvement later.
Rota Tech was used as the importer. On 19th September 1997 400 bags of cement were purchased in the name of Rota Tech from a South African company in Cape Town for 6,200 rand. The cement was delivered to Cape Town Harbour and packed into a shipping container on 22nd September 1997. The container was sealed and shipped to Fremantle in Western Australia where it was unloaded on 17th October 1997. Between 21st October 1997 and 5th November 1997 the container was transported by rail to Adelaide. Danzas Pty Ltd (“Danzas”) is a licensed customs broker and was engaged to facilitate the importation. There is no suggestion of any impropriety on the part of Danzas. Agents had been appointed in South Africa for the same purpose and documentation shows them to be the agent of the second defendant. The arrangement was that the container was to be delivered to the premises of Rota Tech at Holden Hill.
On 20th October 1997 Danzas received an invoice from the South African company which sold the cement. Some time later, Ivan contacted Danzas saying that he was a friend of the second defendant and that he would organise the shipment. On the 5th November 1997, Danzas lodged with the Australian Customs Service a customs entry for the consignment of the cement. A bill of lading indicated that the contents of the container was the cement and that the consignee was the second defendant at the address of Rota Tech.
On 6th November 1997 the container was examined by Customs officers. The seal was found to be intact and the seal numbers corresponded with the manifest. The container was opened and the bags of cement were unloaded. Two additional bags were found. Markings on these bags indicated that they contained cement but were different to that on the other bags and the bags were lighter. They were opened. They contained packages of ephedrine wrapped in brown packaging tape.
On 7th November 1997 the second defendant visited Danzas and requested that the consignment be delivered on the next day which was a Saturday. He was informed that delivery could not be made until the following Monday. He told Danzas that if he could not be contacted, a message should be left with his partner, the third defendant.
Sugar was substituted for the ephedrine by Customs officers and all of the bags were reloaded into the container. Warrants were issued to enable the premises of Rota Tech and the second defendant and the third defendant to be searched. The container was delivered to Rota Tech at 2.00 pm on 10th November 1998 and both the second defendant and the third defendant were observed speaking to the driver of the delivery truck and his assistant. The second defendant signed appropriate documentation acknowledging delivery of the container and the third defendant signed a cheque of Rota Tech payable to Danzas for charges and disbursements incurred with respect to the importation of the cement.
On 12th November 1997 at 1.20, Customs officers executed the warrants in company with members of the Drug Task Force. The two bags containing the packages of ephedrine were seized and the second defendant and the third defendant were questioned.
The cement was purchased and imported to disguise the importation of the ephedrine. The second defendant and the third defendant initially tried to justify the purchase of the cement as being required for the business of Rota Tech. They told Customs officers that Ivan offered them cheap cement at $1 per bag which offer was accepted. They said they intended to sell the bags to retailers. Both of these defendants attempted to mislead the Customs officers and were untruthful. The second defendant also told a false story about the bags containing the ephedrine. He said that he had not seen them. When his house was searched, a card was found upon which was written “Epledrine (sic) HCL Hydrosioical 0011272 143 97049 93% proof KE”. The number is a telephone number in Cape Town with appropriate dialling codes. The second defendant refused to give any information or explanation about the card except to say that the writing was not his handwriting. Telstra records show that eight telephone calls were made from the telephone service of the second defendant to that number in Cape Town during the period from, and including, 6th and 15th September 1997. It will be remembered that the cement was purchased on 19th September 1997.
The third defendant subsequently made a statement to a Customs officer on 10th March 1998. He told them that the second defendant had used Rota Tech to import the ephedrine without his knowledge. However, a few days before the container arrived, the second defendant asked him if he was interested in bags of cement. When the container arrived, he was aware that some type of drug had arrived. Some time earlier he had seen and heard the second defendant take a telephone call from overseas, probably from Ivan, and the second defendant had written down the word “ephedrine” on a card. It is unnecessary to set out this statement in any detail what the third defendant told the Customs officers. It is sufficient to say that he acknowledged that by the time the container arrived at the premises of Rota Tech, he was aware that the drug had been imported illegally. He admitted writing out the cheque and allowing the premises to be used as the delivery point of the container. However, he maintained that he had nothing to do with the matter until that stage and that he was not aware of any use for the drug and for whom it had been imported.
Between 12.2kg and 18.6kg of amphetamine could have been made with the quantity of ephedrine which was imported. That amount of amphetamine would have a street value of $1,070,000. The ephedrine was seized by Customs officers on 10th November 1997 pursuant to s203B(2) of the Customs Act as specially forfeited goods as defined in that Act: see s183UA. In the absence of a claim for return of the ephedrine, it has been forfeited to the Crown pursuant to s205C of the Act.
The second defendant admits that he imported the ephedrine. The third defendant admits that he aided and abetted that importation by the second defendant in a limited, but significant, way. Despite what he initially told the Customs officers, he has acknowledged that he knew that a prohibited import was to be delivered, and was delivered, to the premises of Rota Tech. He allowed the container to be stored at the premises, he permitted the funds of Rota Tech to be used in the importation and he wrote out the cheque.
The plaintiff seeks a declaration that the second defendant and the third defendant at Fremantle on 17th October 1997 imported a prohibited import, namely ephedrine, in contravention of s233(1)(b) of the Customs Act and regulation 5 of the previously mentioned regulation, and that these two defendants be convicted of that offence and be fined accordingly. The plaintiff also seeks an order that these defendants pay the costs of the investigation by the Customs officers pursuant to s21B of the Crimes Act 1914 and the costs of these proceedings. That claim is for $9,806.
The evidence clearly establishes that the second defendant imported the ephedrine and in doing so acted as a principal, which is acknowledged by him. Consequently, the plaintiff has accepted that the case against the third defendant may proceed on the basis that he aided and abetted the commission of the offence by the second defendant in the manner conceded by the third defendant. The evidence permits the matter to proceed on that basis.
The second defendant asserts that when first approached by Ivan to participate in the crime, he was not interested but eventually he did agree because of the poor financial circumstances of Rota Tech. Ivan made all of the arrangements for the importation of the drug and used his name and the name of Rota Tech. He asserts that there was no specific arrangement as to any amount of money which he would receive but he was told by Ivan that he might make several thousands of dollars. He submits that he felt obliged to go along with the importation on this basis given his financial circumstances. None of the defendants contributed any money to the project, all of which was presumably provided by Ivan or those whom he was representing.
It is maintained by the second defendant that he did not know what substance was to be imported but he understood that it had something to do with drugs, probably amphetamine. At all times he was aware that the substance was a prohibited import. I reject that explanation. Given his relationship with Ivan, this agreement to be involved in the importation and his background, it is highly unlikely that he would become involved in such serious criminal activity without knowing what drug was to be imported. I mention the card found by Customs officers. Even if not in his handwriting, it was in his possession and related to the importation. The drug ephedrine is mentioned even though not spelt correctly. I find that the second defendant was aware of the nature of the drug.
I now mention the personal circumstances of the second defendant. He is aged 44 years and has lived with a woman in a stable relationship for some time. He has one young child from that relationship and an older child from an earlier relationship. The woman has a teenage boy, also from another relationship She does not enjoy good health and the second defendant has provided support to her and all of the children.
The second defendant is currently in employment as a painter and I accept that he is regarded as a good, reliable and responsible worker. He has a background of convictions for drug offences since early 1979 being eight offences of possessing cannabis, one offence of possessing hashish, one of trading in that drug, one of producing cannabis and one of supplying a controlled substance which was cannabis and one of possessing cannabis for sale. He was sentenced to imprisonment on three occasions which sentences were not suspended. On the last occasion, on 28th August 1996, he was sentenced to imprisonment for twelve months with a non-parole period of eight months. It may be seen that he acquired his interest in Rota Tech before he went to prison and he was released in about April 1997. Whilst he was in prison the third defendant undertook the running of the business of the company.
The financial position of the second defendant remains poor. He owns a house property of the value of about $93,000 which is subject to a mortgage, the amount owing under which is about $78,000. He owns two motor vehicles, the total value of which is about $5,500. He has debts of about $4,000 following the failure of Rota Tech for which he is responsible. He owes in excess of $30,000 to the Australian Taxation Office. He has cash in the bank of about $6,000 to $7,000. His wages are about $700 per week. It is unnecessary for present purposes to set out his periodic financial commitments in detail. They are of a familiar nature and it may be accepted that they account for most of his earnings.
I accept that the third defendant played a minor role in the importation of the ephedrine in comparison to the second defendant. He had no dealings with Ivan or anyone else regarding the importation. He came to learn of what was happening when overhearing telephone conversations between the second defendant and Ivan. He accepts that he participated in the importation by having knowledge of what was happening, allowing Rota Tech to be used for that purpose, allowing the container to be delivered to, and stored at, the premises of Rota Tech, and signing the cheque of Rota Tech for payment of the various expenses incurred by Danzas which amounted to $1,119.73. Rota Tech was immediately reimbursed by the second defendant in cash. The third defendant stood to gain nothing from this venture. He had no discussions with the second defendant about any payment for his services.
He is aged 30 years. He is a plumber and gas fitter by trade and has a stable working history. He has some convictions for serious driving offences and was convicted of attempted building breaking and felony in 1986 in respect of which he was fined $80.
He had known the second defendant socially for about a year before their acquisition of Rota Tech. He owns a house property. The debt incurred when he acquired his interest in Rota Tech which is secured by a mortgage of this house. The value of the house is only a little more than the amount owing on the mortgage. He had a motor car of the value of $14,500 and a boat. With the failure of Rota Tech, he has lost all of these assets. He now lives in a caravan park at Renmark and has occasional work in vineyards with variable earnings between $120 and $500 per week. He has been reunited with a young woman who, unbeknown to him, had his child four years ago and they have a stable relationship although they do not yet live together. She is again pregnant to him. Once this matter is over, they plan to live together.
I accept that the third defendant is now without assets and has substantial debts. He regrets his involvement in the importation. The second defendant caused him to become involved to the extent which has been mentioned and his degree of culpability is much greater than that of the third defendant.
It is acknowledged that the sentencing principles and the matters to be taken into account when passing sentence for a Federal offence set out in s16A of the Crimes Act, apply to the fixing of a monetary penalty to be paid by the second defendant and third defendant. The first principle is that the fine must be of a severity appropriate in all of the circumstances of the offence: s16A(1).
The matters which the Court must take into account are set out in s16A(2). Those which are of particular relevance in the present case are the nature and circumstances of the offence, the degree to which the offender has shown contrition, the plea of guilty, the degree to which the offender has co-operated with law enforcement agencies in the investigation of the offence, general deterrence, adequate punishment, personal circumstances of the offender, prospects of rehabilitation and the probable effect of the sentence upon the family and dependants of the offender.
Undoubtedly, this offence is a very serious breach of the criminal law. The importation of a drug to enable the production of such a large quantity of amphetamine calls for a fine approaching the maximum and the plaintiff is fully justified in bringing these proceedings in this Court so that a fine in excess of $5,000 could be considered. The surreptitious nature of the imputation demonstrated considerable planning and preparation, the general nature of which was known to the second defendant. The motive of the second defendant was financial gain. The consequence, if the importation was successful, was almost certainly widespread human misery caused by amphetamine abuse. A further matter of aggravation is that he deliberately involved his business partner, the third defendant, in the project and, I accept, presented him with a situation involving Rota Tech and the business premises which was already well developed. That situation contributed to the third defendant becoming involved. It is likely that he would have believed considerable difficulties would have arisen for the second defendant if he had aborted the project at that stage.
There are no mitigating matters regarding the offence so far as the second defendant is concerned. He was well aware of the nature and seriousness of his conduct. However, he did admit his guilt at an early opportunity. He co‑operated with the Customs officers. He is entitled to significant credit for those reasons. His previous bad record and his involvement with drugs do not suggest rehabilitation but his family responsibilities and the manner in which he is discharging them indicate that he has some prospects of living a law-abiding life. The impact of a fine on his dependants will be considerable and is a matter to be brought to account in fixing the fine but not to the exclusion of other relevant matters.
S16C(1) of the Crimes Act provides that before imposing a fine, the court must take into account the financial circumstances of the offender, in addition to any other matters that the court is required to take into account. With regard to that statutory direction, I think a fine of $35,000 is appropriate. Such a fine reflects the gravity of the crime, the aggravating features and the notion of adequate punishment and general and personal deterrence. But for the admission of guilt and the co-operation with the authorities, a fine approaching the maximum would be justified.

It is necessary to consider whether the fine should be reduced by reason of s16C(1). That provision is to be contrasted with s13(1) of the Criminal Law (Sentencing) Act 1988 which provides with respect to fines imposed under State law that the Court must not make an order requiring a defendant to pay a pecuniary sum if the Court is satisfied that the means of the offender, so far as they are known to the Court, are such that the offender would be unable to comply with the order or compliance with the order would unduly prejudice the welfare of dependants of the defendant. In such a case the Court may, if it thinks fit, order the payment of a lesser amount. S16C(1) does not prevent the imposition of a fine which the offender is unable to pay. I think it reflects the long-standing common law position. A sentence must always be linked with the particular circumstances of the offender as well as the circumstances of the offence: R v Jamieson (1975) 60 CrAppR 319. In that case Lord Scarman went on to say that “a sentence derives its character of justice or injustice from a combination of these two sets of factors”. In R v Rahme (1989) 43 ACrimR 81, Finlay J accepted that principle and said, at p86:
“... once a determination has been made that a fine should be imposed the correct procedure in assessing the appropriate amount of the fine is to determine it by reference to the gravity of the offence for which it is imposed. If the court is satisfied that the offender would be unable to pay the amount determined it may reduce it to take account of the offender’s means and impecuniosity.”

However, the offender’s capacity to pay, although a factor worthy of consideration, cannot be decisive: Flego v Lanham (1983) 32 SASR 361 per Wells J at p366.

It follows that the capacity of the offender to pay cannot be the dominant factor when fixing the fine to be imposed. It is an important factor along with the other matters which the Court must take into account pursuant to s16A. Where the offence involves large scale drug importation for the illicit drug trade in this country, the financial circumstances of the offender, whilst relevant, should not assume prominence in the exercise of the sentencing discretion.
Pursuant to s15A of the Crimes Act, the laws of this State will apply with respect to enforcement and recovery of any fine imposed upon the second defendant and the third defendant. Consequently the fines may be paid by instalments, time for payment may be granted or extended, community service may be imposed in lieu of the fines or imprisonment may have to be served depending upon what arrangements are imposed should there be default in payment: see Part 9 Division 3 of the Criminal Law (Sentencing) Act. Imprisonment is not the only option upon default of payment of a fine.
The financial circumstances of the second defendant would not enable him to pay a fine of $35,000 except perhaps by instalments over a very long time. At present, without assistance, he could only afford to pay a small fine which would be an inappropriately light sentence.
I have considered the financial position of the second defendant as required by s16C(1), but all of the circumstances, including the past record of the second defendant, do not justify the reduction of what I regard as an appropriate punishment.
I now turn to the third defendant. Whilst his involvement in the importation was not extensive, it was significant and important. If he had not been willing to allow Rota Tech to be the importer, for the premises of the company and a cheque of the company to be used to give the appearance of a legitimate transaction, the scheme could not have been implemented. He chose to go along with the scheme rather than disclose it to the authorities which is a serious matter given the gravity of the crime. He did not initially admit his guilt. Indeed these proceedings were set down for trial because he continued to deny that he committed the offence. However, before the trial commenced, he acknowledged criminal responsibility on the basis that he aided and abetted the commission of the offence by the second defendant and the basis of that acknowledgment was accepted by the plaintiff and the second defendant. I accept that there had been negotiations about these matters for some considerable time and it was only shortly before the trial was due to commence that a basis for sentencing was resolved. It is reasonable in the circumstances to reduce the fine which would otherwise be imposed, to some extent, by reason of his admission of guilt. I propose to reduce the fine by fifteen per cent for that reason.
There is much to be said in favour of the third defendant. He has lived an industrious life. He has no significant criminal record and has real prospects of rehabilitation. He has not otherwise been connected with the drug scene. He has lost substantially through the failure of Rota Tech. He is relatively young and has a sense of purpose in his life, no doubt encouraged by the mother of his child.
An appropriate penalty is a fine of $6,000. I have considered his financial position and I accept that he will have great difficulty in paying that fine except over a long period of time.
Nevertheless the gravity of the crime and the need for adequate punishment and deterrence do not justify the reduction of such a fine because of his financial circumstances.
The claim of the plaintiff for the costs of the investigation and of these proceedings is justified. I reject the argument that the costs have been inflated by the abandonment of the proceedings in the Magistrates Court and the commencement of these proceedings. The second defendant and the third defendant have already been compensated by an award of costs for the proceedings in the Magistrates Court. The claim is reasonable and each of the second and the third defendant must pay those costs and are jointly and severally liable to pay the full amount.
I have had regard to this obligation of the second and the third defendant as part of their respective financial circumstances.
I make the following declarations:
1...... That the second defendant at Fremantle on or about 17th October 1997 imported ephedrine, a prohibited import, in contravention of s233(1)(b) of the Customs Act and regulation 5 of the Customs (Prohibited Imports) Regulations;
2That the third defendant between 1st September 1997 and 12th November 1997 aided and abetted the second defendant in that importation.

I convict the second defendant and the third defendant of an offence against s233(1)(b) of the Customs Act and that regulation. The conviction of the third defendant is based upon s236 of the Customs Act which provides that a person who aids and abets the commission of an offence against the Act shall be deemed to have committed the offence and shall be punishable accordingly.

I impose a fine of $35,000 upon the second defendant and a fine of $6,000 upon the third defendant.
I order that the second defendant and the third defendant pay the costs of the investigation by the Customs officers in the amount claimed, namely $9,806.

[1999] SASC 64

26 February 1999