Chief Executive Officer of Customs v Mourad El Sayed

[2003] NSWSC 1092

CITATION:	Chief Executive Officer of Customs v Mourad El Sayed [2003] NSWSC 1092
HEARING DATE(S):	28.10.03, 29.10,03
JUDGMENT DATE:	26 November 2003
JURISDICTION:	Common Law
JUDGMENT OF:	Mathews AJ
DECISION:	Orders; 1. The defendant be convicted of the offence of smuggling contrary to s 233(1)(a) of the Customs Act and that he pay to the plaintiff a penalty of $500; 2. the defendant be convicted of the offence of evading payment of duty contrary to s 234(1)(a) of the Act and that he pay to the plaintiff a penalty of $2,877,500; 3, the defendant be convicted of the offence of intentionally making a statement to a Customs Officer, reckless as to the fact that the statement was false or misleading, contrary to s 234(1)(d)(i) of the Act and that he pay to the plaintiff a penalty of $500; 4. the defendant be convicted of the offence of importing a prohibited import contrary to s 233(1)(b) of the Act and that he pay to the plaintiff a penalty of $5,000; 5. the charge that the defendant was in possession of prohibited imports contrary to s 233(1)9d) of the Act is dismissed; 6. the defendant is to pay the plaintiff's costs of these proceedings.
LEGISLATION CITED:	Customs Act 1901 Criminal Code Act 1995
CASES CITED:	Wootten v Dickson [2002] NSWSC 439 Wilson v Chambers and Company Pty Limited (1926) 38 CLR 131 CEO of Customs v Labrador Liquor Wholesale Pty Ltd 5 September 2003 HCA 49
PARTIES :	Chief Executive Officer of Customs v Mourad El Sayed
FILE NUMBER(S):	SC 21179/02
COUNSEL:	F Gleeson - Plaintiff J M Atkin - Defendant
SOLICITORS:	Australian Government Solicitor - Plaintiff Colin Daley Quinn - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

MATHEWS AJ

26 November 2003

20179/02
CHIEF EXECUTIVE OFFICER OF CUSTOMS
v
MOURAD EL SAYED

JUDGMENT

1 MATHEWS AJ: This is a customs prosecution brought pursuant to Part XIV of the Customs Act 1901 (“the Act”). The plaintiff, the Chief Executive Officer of Customs, is seeking pecuniary penalties in relation to five offences alleged to have been committed by the defendant under ss 233 and 234 of the Act.

FACTUAL BACKGROUND

2 The circumstances giving rise to the alleged offences are as follows. The defendant is a taxi driver who, from time to time, buys and sells different products. As he said in his record of interview, “I buy and sell. Anything I find cheap, I buy and sell.” For this purpose, he said that he had imported goods into Australia on four or five occasions before the shipment with which we are concerned in this case.

3 On 14 February 2001 the defendant registered the business name of Smileco (sometimes known as “Smilco”). Its principal place of business was listed as 125 Griffiths Avenue Bankstown, being the defendant’s home address.

4 On 29 June 2001, the defendant signed a Customs Brokerage Clearance Authority which nominated International Customs Freight and Logistics Pty Ltd (“ICFL”) as his agent for the customs clearance of his overseas shipments.

5 On 19 October 2001, the defendant flew from Sydney to Dubai in the United Arab Emirates. Whilst in Dubai, he arranged with Abu Younis General Trading (“Abu Younis”) for the shipment to Sydney of a container of goods. The nature of the goods to be shipped, and therefore the nature of the arrangement between the defendant and Abu Younis, is the central matter in issue in these proceedings.

6 On 23 November 2001, the defendant returned to Sydney from Lebanon. On 26 November 2001 and 30 November 2001, he transferred the amounts of US$20,000 and US$18,000 respectively to a bank account nominated by Abu Younis.

7 On 21 December 2001, Gary Coutsoudis of ICFL provided to customs officers an Australian Customs Entry for Home Consumption on behalf of the defendant. The document related to container No. CLHU8024700 (“the relevant container”) which was then on board a ship called the “Buxcrown” travelling from Dubai to Sydney. The supplier was said to be Abu Younis and the owner to be the defendant. The contents of the container were said to comprise 1,478 packages of plastic tableware food savers at an invoice price of $US15,932 ($A30,579.65). The duty payable on this consignment was $A1,528.98.

8 ICFL obtained the information which enabled it to complete this document from a number of other documents which had been provided by the defendant. These included an invoice date 27 November 2001 from Abu Younis to “Smilco” at 125 Griffiths Avenue Bankstown. The invoice claimed a total amount of $US15,932.84 as payment for 1,478 cartons of plastic tableware at a unit price of $US10.78. Also provided by the defendant was a bill of lading which showed that 1,478 containers of plastic tableware had been loaded on board the Buxcrown on 29 November 2001.

9 On 27 December 2001 the relevant container was discharged from the “Buxcrown” at the Port of Sydney. The next day, 28 December, the container was examined by customs officers. It was found to contain a large number of white cardboard boxes with sticker labels marked “FOOD SAVER - SET OF 4 CONTAINERS”. One of the boxes was opened and found to conform with the description and to contain four plastic food storage containers. The customs officers proceeded to unload the rest of the container. After they had removed approximately six rows of boxes, they came to a box which was heavier than the previous ones. They opened this box and found 30 sleeves of cigarettes, each one containing ten boxes of 20 cigarettes each. The officers then completed unloading the container, placing the heavier and lighter boxes onto different pallets. Later they arranged for all boxes to be x-rayed. Most of the heavier boxes were found to contain cigarettes. A few contained half-kilogram packets of tobacco. Some days later, on 3 January 2002, customs officers examined the contents of all boxes removed from the relevant container. They found that 310 boxes contained plastic food savers. The remaining 1,168 boxes contained a total of 6,969,000 cigarettes and 15 kilograms of “Isfahan High Quality Tombac” tobacco leaf.

10 On 2 January 2002 customs officers searched the defendant’s home at Griffiths Avenue Bankstown pursuant to a warrant obtained under the Act. Several cartons of “Davidoff” cigarettes, one of the brands of cigarettes found in the shipping container, were located at his home. There were also two packages of tobacco leaf, one labelled “”Islamic Republic of Iran Tobacco Company Isfahan High Quality Tombac – ½ Kg”. The other was labelled “Ajami Tobacco Company Isfahan High Quality Tombac – 1 Kg”. This second block had been opened and approximately half had been removed, leaving about half a kilogram of tobacco. Finally the officers found two commercial invoices from Abu Younis, both dated 27 November and bearing the number 33-01 and both relating to the supply of 1,478 cartons of tableware. However the prices specified in these invoices differed from each other, and also, in some respects, from the invoice which the defendant had previously sent to ICFL and which had been used as a basis for completing the Entry for Home Consumption referred to in paragraph 7 above.

11 On 27 February 2002 a recorded interview took place between customs officer Simon Bowering and the defendant. An Arabic interpreter was present to assist the defendant as required. The defendant was also accompanied by his solicitor Mr Daley. The defendant was cooperative throughout the interview. He gave his occupation as businessman and part-time taxi driver. He said that he had worked as a tobacconist some years earlier (“four, five, six years ago, I can’t remember”). However, he had never imported tobacco or cigarettes into Australia. He had been in Australia for approximately 11 years and had close family members still living in Lebanon. He said that his trip to the Middle East in October 2001 had two purposes. The first was to take his mother back to see his brothers in Lebanon. The second was to do business. This included arranging with Abu Younis for the purchase and shipment of a large quantity of plastic food containers. He had no idea, he said, that the shipment was to contain anything other than food containers. In particular, he had no idea that the consignment would include cigarettes or tobacco. After the arrival of these goods, he said, he spoke to a solicitor in Emirates to enquire about taking legal action against Abu Younis who owed money both to himself and his brother.

12 Before the record of interview, ICFL, acting on behalf of Abu Younis, had lodged with customs a form under s 205B of the Act seeking the return of the tobacco and cigarettes from the subject container. The claim was based on the ground that the goods had been “incorrectly consigned to Sydney. Need to reclaim to satisfy order elsewhere.” Later, on 11 March 2002, ICFL faxed to customs an undated letter from Abu Younis addressed to Mr Coutsoudis of ICFL. The terms of the letter were as follows:

“ Subject: Container No.CLHU 8024700

With reference to the above mentioned container, kindly note that this container supposed (sic) to be shipped to Malaysia to our customer but somehow it has been shipped to Sydney.

Therefore, kindly ask you to return back the container to Dubai.

Also, note that our company will cover all charges for the shipment.

Thanking you for your kind co-operation.

Best regards,

ABU YOUNIS GENERAL TRADING”
THE OFFENCES CHARGED

13 On 2 May 2002 the statement of claim was lodged in this matter. In it the plaintiff claimed pecuniary penalties in relation to five alleged offences under the Act. The first four arose out of the importation of the cigarettes and tobacco on 27 December 2001. The fifth related to the tobacco which was seized at the defendant’s home on 2 January 2002.

14 The five offences alleged by the plaintiff are as follows:

15 The first offence is that the defendant, on or about 27 December 2001, smuggled 6,969,000 cigarettes contrary to s 233(1)(a) of the Act.

16 The second offence is that the defendant evaded payment of duty which was payable contrary to s 234(1)(a) of the Act. This charge relates to the duty which would have been payable on the consignment of cigarettes.

17 The third offence is that the defendant intentionally made a statement to a customs officer, reckless as to the fact that the statement was false or misleading, contrary to s 234(1)(d)(i) of the Act. The offence relates to the statements contained in the entry for Home Consumption.

18 The fourth offence is that the defendant imported 15 kilograms of tobacco leaf contrary to paragraph 233(1)(b) of the Act. It is not disputed that the tobacco was, in the circumstances of this case, a prohibited import.

19 The fifth offence is that the defendant was in possession of prohibited imports contrary to s 233(1)(d) of the Act. This charge relates to the two packets of tobacco leaf which were found at the plaintiff’s home on 2 January 2002.

THE COURSE OF THE HEARING

20 The hearing was conducted by counsel for both parties in an extremely economical and efficient manner, for which they are to be commended. Mr F Gleeson, who appeared for the plaintiff, tendered a large number of affidavits, statements and accompanying documents. Mr Atkin, for the defendant, consented to the admission of all this material and did not seek to cross-examine any of the plaintiff’s witnesses. Accordingly, the plaintiff’s case was complete upon the tendering of the relevant documentation.

21 At the outset of the defence case Mr Atkin raised a matter of law in relation to the fourth and fifth charges. This arose out of the insertion into the Act, on 15 December 2001, of s 233(1AB). This new provision specifies that offences under s 233(1)(b), (c) and (d) are offences of strict liability. A note under this new subsection reads:

“ For strict liability see Section 6.1 of the Criminal Code.”

22 Section 6.1 of the Criminal Code Act 1995 provides, as relevant here:

“(1) If a law that creates an offence provides that the offence is an offence of strict liability:
(a) there are no fault elements for any of the physical elements of the offence; and
(b) the defence of mistake of fact under section 9.2 is available.”

23 Section 9.2 essentially mirrors the common law defence of mistake, and applies when the defendant is under a mistaken but reasonable belief about certain facts which, if true, would render his conduct non-criminal. As is the case under the common law, the defendant bears the onus of proving this defence upon the balance of probabilities.

24 Mr Atkin pointed out that the defendant had taken all steps necessary to procure the consignment of goods from Abu Younis well before 15 December 2001 when s 233(1AB) was inserted into the Act. By that date Abu Younis had been paid the total amount for the shipment, and the consignment was already on its way to Australia. In these circumstances Mr Atkin submitted that s 233(1AB) had no application to these offences and that the normal rules of criminal responsibility should prevail, including the necessity for the prosecution to prove requisite knowledge in order to establish the offences in question.

25 In support of this submission Mr Atkin referred to the judgment of Brownie AJ in Wootten v Dickson [2002] NSWSC 439, unreported, 22 May 2002. The facts of that case are quite different from those here, and do not bear repetition. His Honour found that the defendant in that case did not “import” the goods in question. His Honour cited extensively from the judgment of Isaacs and Starke JJ in Wilson v Chambers and Company Pty Limited (1926) 38 CLR 131. In particular, Starke J said (at 150):

“It cannot, in my opinion, be maintained that the mere act of bringing goods into port constitutes an importation; though unexplained it may be evidence of the fact. If goods, however, are brought into their port of destination for the purpose of being there discharged, the act of importation is complete. On the other hand, the act of importation is not complete if a ship enter some port of call with goods on board which is not the destined port of discharge for those goods. Actual landing is not necessary, as was argued, to constitute an importation for fiscal purposes.”

26 Mr Atkin relied upon the first sentence of the quoted passage as supporting the proposition that an importation consists of more than the mere act of bringing goods into Australia, and also encompasses the negotiations and dealings which preceded it. However, this submission is inconsistent with the remainder of the passage. As Starke J went on to say, the act of importation is complete once the goods are brought into their port of destination for the purpose of being discharged. It is at this point that the importation takes place. Or, to put it in the terms used in the Criminal Code, it is at this point that the physical element of the offence of importation is committed. In this case, it means that the offence took place on 27 December 2001, after the enactment of s 233(1AB).

27 It follows that s 233(1AB) applies to the charges laid under s 233(1)(b) and (d), which are the fourth and fifth charges alleged in the statement of claim. These offences are therefore offences of strict liability.

28 I gave my ruling on this matter during the course of the hearing. The effect was to place the onus upon the defendant of establishing the defence of mistake of fact in relation to each of the fourth and fifth charges. For this reason, Mr Atkin sought to call the defendant to give evidence in the proceedings. Although the defendant had not previously made a witness statement, I permitted him to give evidence upon the basis that his evidence would not extend beyond the matters already raised in his record of interview. I will be recounting his evidence a little later. In the meantime it is apposite to set out my conclusions as to the matters to be proved and, more importantly, the matters at issue, in relation to each of the five offences charged.

First offence – smuggling contrary to s 233(1)(a) of the Act

29 “Smuggling” is defined in s 4 of the Act, as relevant here, as:

“any importation … of goods with intent to defraud the revenue”.

30 This charge relates to the importation of the cigarettes. There is no dispute as to the physical act of importation by the defendant. The sole matter in issue is whether the defendant intended to defraud the revenue. The plaintiff bears the burden of proving this matter beyond reasonable doubt, according to the principles enunciated by the High Court in CEO of Customs v Labrador Liquor Wholesale Pty Ltd, 5 September 2003, 2003 HCA 49.

Second offence – evading duty which is payable, contrary to s 234(1)(a) of the Act

31 It is not disputed that the defendant carried out the acts which would constitute this offence if the mental element were present, namely if the defendant knew of the existence of the cigarettes amongst the consignment of tableware. This is the central issue in relation to this matter. It is incumbent upon the plaintiff to prove the defendant’s knowledge beyond reasonable doubt.

Third offence – intentionally making a statement to an officer, reckless as to the fact that the statement is false in a material particular, contrary to s 234(1)(d)(i) of the Act

32 This offence relates to the information provided by the defendant’s agent in the Entry For Home Consumption, dated 21 December 2001. There is no dispute that the information was in fact false in that there were not 1,478 packages of tableware in the relevant container. The only issue under this offence is whether the statement was made recklessly, namely whether the defendant should, with due diligence, have known of the presence of the cigarettes and tobacco in the container. This is a matter which the plaintiff must prove beyond reasonable doubt. Clearly, proof of actual knowledge will establish this offence. The greater, knowledge, will inevitably include the lesser, recklessness.

Fourth offence – importing a prohibited import, contrary to s 233(1)(b) of the Act

33 This offence relates to the importation of the 15 kilograms of tobacco leaf found in the container. It is not disputed that the physical elements of this offence have been made out. According to my earlier findings, this is an offence of strict liability. Accordingly, it is for the defendant to show, on the balance of probabilities, that he honestly and reasonably believed that the whole consignment consisted of tableware and did not include the packets of tobacco leaf.

Fifth offence – possessing a prohibited import, contrary to s 233(1)(d) of the Act

34 This offence relates to the two packages of tobacco which were found in the defendant’s home on 2 January 2002. The defendant said that he had no knowledge of this tobacco before it was seized. It probably belonged, he said, to one of his family members, a number of whom were heavy smokers.

35 In my view, there is a fundamental flaw in the plaintiff’s case in relation to this fifth charge. The offence is one of strict liability, but this by no means absolves the plaintiff of proving the physical elements of the offence. In this case it is incumbent for the plaintiff to prove beyond reasonable doubt that the tobacco was a prohibited import. The importation of tobacco is subject to restrictions and conditions under the Act. So long as the restrictions and conditions are complied with, there is nothing illegal about importing tobacco. The plaintiff in this case has produced no evidence as to how the tobacco seized at the defendant’s home came into Australia. There is therefore no evidence from which a finding can be made that it was imported illegally. It follows that the plaintiff has failed to prove an essential element of this offence. I therefore find for the defendant in relation to this charge.

36 The remaining four charges all arise out of the presence in the relevant container of the cigarettes and tobacco. In each case it is the mental element of the offence which is at issue, namely the defendant’s knowledge that these goods were included in the consignment. The precise formulation of the mental element differs from charge to charge, as does the onus and standard of proof. However, the defendant’s knowledge remains central in relation to all these charges, and I now turn to discuss this matter.

THE DEFENDANT’S KNOWLEDGE

37 It is apposite to start with an account of the defendant’s evidence at the hearing. Essentially his version was consistent with that given in his record of interview.

38 The defendant said that his arrangement with Abu Younis was to bring into Australia a large quantity of plastic food savers and nothing else. He was asked why he sent $US38,000 to Abu Younis in November 2001 when the stipulated price of the food savers was less than half that amount, a little under $US16,000. He said:

“Because I buy extra plastic food saver, I send some to Lebanon for my brother and send some to Australia, and still I have some stock in Dubai.”

In relation to this explanation, the defendant said that his brother had already sold the stock which had been sent to him in Lebanon. He was asked by Mr Gleeson why there was no reference in Abu Younis’ invoice of 27 November 2001 to the consignment of stock which was sent to Lebanon. The defendant replied that he would not expect there to be a reference to the Lebanese consignment in the invoice sent to him, which related only to the Australian consignment. In any event, the documentation in relation to the Lebanese consignment was in Arabic. The defendant said that he had left a quantity of food savers behind in Dubai, because he was not sure whether he would be more successful in marketing them in Australia or in Lebanon, and wanted to defer his decision as to where to send them.

39 The defendant was asked about the two invoices from Abu Younis found at his home on 2 January 2002, both apparently relating to the same consignment of food savers, but setting out different prices. I do not propose to go into the details of the defendant’s explanation for these documents. Suffice it to say that it was sufficiently plausible to neutralise this evidence. In other words, no inference adverse to the defendant can be drawn from the presence in his home of these documents.

40 The defendant’s evidence was relatively short and in a narrow compass. As indicated, it was essentially consistent with the version given in his record of interview. In other words, there were no admissions or inconsistencies which could be used by the plaintiff to advance the assertion that the defendant knew of the existence of the cigarettes and tobacco amongst the consignment of tableware. Indeed, there is, as Mr Atkin has pointed out, no direct evidence at all of this matter. No admissions were at any time made by the defendant, and he clearly had no access to the consignment before it was searched by customs officers. Nor, Mr Atkin submits, can any adverse inferences be drawn from the documents and objects which were seized from the plaintiff’s home a few days after the arrival of the shipment. Accordingly, the Crown case is based entirely upon the drawing of inferences from the nature of the shipment itself. I should be extremely wary, Mr Atkin urged, about drawing inferences adverse to the defendant on the basis of such limited material, particularly when the matter to be proved is the central factual issue in these proceedings.

41 As a matter of principle, I accept Mr Atkin’s submissions in this regard. Putting aside for a moment the fourth charge, which is one of strict liability, I can only find for the plaintiff on the remaining charges if, upon an examination of all the evidence, I am satisfied beyond reasonable doubt that there is no hypothesis reasonably open which is consistent with innocence.

42 Mr Gleeson urges that there is only one inference which can reasonably be drawn from the evidence in this case, namely that the cigarettes and tobacco were included in the consignment by arrangement between the defendant and Abu Younis, and were deliberately packaged and packed so as to minimise the risk of discovery and therefore to evade the payment of duty and/or the obtaining of the requisite permits and licences. In this regard, Mr Gleeson strongly relied upon the element of deception in the manner in which the cigarettes and tobacco had been packed into boxes bearing false labels, and then placed in the container behind the genuine boxes of food savers in a manner which, he submitted, was clearly intended to avoid detection. Furthermore, the consignment, according to the labelling on the boxes, was precisely the consignment which the defendant had agreed to purchase, namely 1,478 cartons of food savers. Mr Gleeson also pointed out that as the goods comprised a full container load, the defendant was entitled to delivery of the container and its entire contents upon discharge at port in Sydney, subject only to the possibility of customs inspection. There was affidavit evidence to the effect that, at that time, covert customs examination of container contents occurred in only 0.2% of cases. Mr Gleeson finally pointed out that the defendant personally travelled to Dubai and that the amount paid to Abu Younis, namely $US38,000, very significantly exceeded the stated invoice price of the plastic food savers, which was $US15,932.84.

43 In these circumstance, Mr Gleeson urged, there is an irresistible inference that the cigarettes and tobacco were included in the consignment by arrangement with the defendant, who therefore had the knowledge and intention requisite to prove of each of the four remaining charges.

Discussion

44 Three possible scenarios are raised by the evidence in this case. The first is that the cigarettes and tobacco were included in the consignment by prior arrangement with the defendant. The second is that the defendant arranged for the importation only of the food savers and therefore had no knowledge of the presence of the cigarettes and tobacco. The third (which is an extension of the second) is that the whole consignment was sent to Australia by mistake and was in fact intended for another purchaser.

45 I shall discuss this third hypothesis first, as it can easily be discounted. This is the scenario which was suggested by the claim lodged on behalf of Abu Younis for the return of the cigarettes and tobacco, and by the letter quoted in paragraph 12 above, which stipulated that the entire container was intended for a customer in Malaysia but had somehow been shipped to Sydney by mistake.

46 The container which arrived in Sydney on 27 December 2001 contained 1,478 cartons which, on their face, contained plastic food savers. This was precisely the consignment which, according to Abu Younis’ invoice dated 27 November 2001, was to be dispatched to the defendant. It was in fact loaded in Dubai two days later, on 29 November, onto a ship bound for Sydney. The proposition that another customer in a different country had ordered 1478 cartons which predominantly contained cigarettes and tobacco, but which were all labelled as containing food savers, is so untenable as to be ludicrous. I can only conclude that Abu Younis falsely made this statement in an endeavour to extricate itself, and possibly also the defendant, from an incriminating situation. By the time these letters were written the defendant had admittedly told Abu Younis of his problems arising from this shipment.

47 I accordingly reject this scenario as a reasonably available hypothesis. Indeed, the only realistic question arising from this evidence is whether it can be used against the defendant. However, I have determined that I should not use it in any way adversely to him. It is, after all, nothing more than a lie told by a third party. There might be any number of reasons, consistent with the defendant’s innocence, for Abu Younis to have made these false statements.

48 I return to the central issue, namely whether I am satisfied beyond reasonable doubt that the evidence presents no reasonably available hypothesis which is consistent with the defendant’s innocence, which in this case means his lack of knowledge of the actual contents of the container. One of the matters relied upon by Mr Gleeson, as mentioned, was the disparity between the amount paid by the defendant to Abu Younis and the stipulated price for the boxes of food savers. The defendant gave an explanation for this disparity in his evidence, as discussed earlier. Moreover, as Mr Atkin pointed out, the plaintiff has adduced no evidence as to the likely cost of the cigarettes and tobacco which were found in the consignment. Accordingly, there is no material from which I can infer that the $US38,000 which was paid by the defendant to Abu Younis represented the price of these products. It follows, Mr Atkin urges, that I should place no weight upon the disparity between the amount paid by the defendant and the stipulated price of the food savers. There is considerable substance in this submission. Accordingly, I propose to treat the disparity between payment and price as a neutral element which is of no particular assistance to the plaintiff.

49 However, this is by no means the end of the matter, for the deceptive manner in which the cigarettes and tobacco were packaged and then packed in the container strongly suggests that there was a deliberate attempt to evade detection.

50 During the course of addresses I asked Mr Atkin to describe a scenario consistent with the manner in which the cigarettes and tobacco were packaged and packed which was also reasonably consistent with the defendant’s innocence. Mr Atkin suggested that all products dealt with at the Abu Younis factory might have routinely been packed into identical cartons which were then labelled according their contents. It is possible, he suggested, that the wrong labels were mistakenly placed onto the boxes containing cigarettes and tobacco. The fact that these boxes were heavier than the boxes containing tableware would not have been apparent to Abu Younis’ employees if they were working in a mechanised, production-line system. No adverse inferences should be drawn, Mr Atkin urged, from the fact that the correctly labelled boxes were all located in one part of the container and the incorrectly labelled boxes elsewhere. One would expect, he suggested, that the incorrectly labelled cartons would have come from a separate batch on the factory floor, and would therefore have been packed separately from the correctly labelled cartons.

51 I pay homage to Mr Atkin’s ingenuity of imagination and his persuasive delivery. However, the scenario which he presents, given the circumstances of this case, is so inherently unlikely as to be almost fanciful. It involves a high degree of speculation as to the nature of the packaging and work practices at Abu Younis’ premises. Moreover, the fact that the front three rows in the container consisted of correctly packaged tableware almost irresistibly suggests a deliberate disguise. It defies belief that the incorrectly labelled boxes could, by mere coincidence, have been placed in the rear of the container.

52 No other hypothesis consistent with innocence arises from the evidence, and I am unable to accept the scenario suggested by Mr Atkin as reasonably open. It follows that the defendant must have known that the consignment contained the cigarettes and tobacco which were seized by the customs officers on 28 December 2001. They were clearly included in the consignment by arrangement between the defendant and Abu Younis and were disguised in an attempt to avoid detection.

53 This finding is sufficient to establish the fault element in each of the four offences in question. Accordingly, in relation to those offences, being the first four charges laid in the statement of claim, I formally lodge a conviction against the defendant.

PENALTY

Substantial monetary penalties are liable to be imposed in relation to each of the four charges of which the defendant now stands convicted. The four charges and their penalties are as follows:

First offence – smuggling contrary to s 233(1)(a)(a) of the Act

54 Pursuant to ss 233(1AA)(a) and 233AB(1) the maximum penalty for this offence is five times the amount of duty payable on the smuggled goods. It is common ground that the total amount of duty payable on 6,969,000 cigarettes is $1,438,750. Accordingly, the maximum penalty for this offence is $7,193,750.

Second offence – evading duty which is payable, contrary to s 234(1)(a) of the Act

55 This charge also relates to the consignment of cigarettes. Pursuant to s 234(2)(a), a minimum penalty is payable of twice the amount of duty payable, with a maximum of five times that amount. Accordingly, the minimum penalty is $2,877,500 and the maximum is $7,193,750.

Third offence – intentionally making a statement to an officer, reckless as to the fact that the statement is false in a material particular, contrary to s 234(1)(d)(i) of the Act

56 The third offence relates to false statements made in the Entry for Home consumption. Under s 234(3) there is a maximum penalty of $5,000 and twice the amount of duty payable. Accordingly, the maximum penalty is $2,882,500.

Fourth offence – importing a prohibited import, contrary to s 233(1)(b) of the Act

57 The fourth offence relates to the 15 kilograms of tobacco leaf found in the container. Pursuant to ss.233(1AA)(b) and 233 AB(2) the maximum penalty is three times the value of the goods or $100,000, whichever is the greater. There is no evidence as to the value of the tobacco. Accordingly, the maximum penalty is $100,000

Discussion

58 Under the second offence, I am required to impose a minimum penalty which is much greater than any penalty I would have considered imposing had there been a discretion in the matter. On all accounts it will be ruinous for the defendant. However there is no choice in the matter, as Mr Atkin conceded. Accordingly, I will impose the minimum penalty of $2,877,500.

59 The first, second and third offences all relate to the importation of the cigarettes. Given the size of the penalty I am required to impose in relation to the second offence, I propose to impose nominal penalties only in relation to the first and third offences.

60 The fourth offence relates to the consignment of tobacco, and is therefore in a slightly different category. I propose to impose a penalty of $5,000 in relation to that offence.

61 Accordingly, I make the following orders:

1. I convict the defendant of the offence of smuggling contrary to s.233(1)(a) of the Customs Act and I order that he pay to the plaintiff a penalty of $500.

2. I convict the defendant of the offence of evading payment of duty contrary to s 234(1)(a) of the Act and I order that he pay to the plaintiff a penalty of $2,877,500.

3. I convict the defendant of the offence of intentionally making a statement to a Customs Officer, reckless as to the fact that the statement was false or misleading, contrary to s 234(1)(d)(i) of the Act and I order that he pay to the plaintiff a penalty of $500.

4. I convict the defendant of the offence of importing a prohibited import contrary to s 233(1)(b) of the Act and I order that he pay to the plaintiff a penalty of $5,000.

5. I dismiss the charge that the defendant was in possession of prohibited imports contrary to s 233(1)(d) of the Act.

6. I order the defendant to pay the plaintiff’s costs of these proceedings.

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Last Modified: 12/05/2003