Chief Executive Officer of the Australian Customs Service v Karam (No 2)
[2013] NSWSC 33
•01 February 2013
Supreme Court
New South Wales
Medium Neutral Citation: Chief Executive Officer of the Australian Customs Service v Karam (No 2) [2013] NSWSC 33 Hearing dates: 10 February 2012 Decision date: 01 February 2013 Before: McCallum J Decision: On the charges alleged in paragraphs 5 and 8 of the statement of claim, first defendant discharged upon his giving security without surety by recognizance that he will be of good behaviour for a period of three years.
Second defendant convicted of the charges alleged in paragraphs 3, 4, 5, 6, 7 and 8 of the statement of claim and ordered to pay penalties as follows; on charge 3, a penalty of $2,000; on charge 4, a penalty of $10,000; on charge 5, a penalty of $2,000; on charge 6, a penalty of $73,029; on charge 7, a penalty of $7,866,885.32; on charge 8, a penalty of $1,000; second defendant ordered to pay half the costs of the proceedings.
Catchwords: CUSTOMS - offences - penalties - smuggling - importation of prohibited imports - evasion of duty - large quantity of tobacco leaf - discretion to discharge on recognisance - application of minimum penalties Legislation Cited: Bankruptcy Act 1966
Civil Procedure Act 2005
Crimes Act 1914 (Cth)
Customs Act 1901 (Cth)
Uniform Civil Procedure Rules 2005Cases Cited: Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304
CEO of the Australian Customs Service v Nabhan [2009] NSWSC 199
Chief Executive Officer of Customs v Coulton [2005] NSWSC 869
Chief Executive Officer of Customs v Jing [2007] NSWSC 1354
Chief Executive Officer of Customs v Pham [2006] NSWSC 1370
Chief Executive Officer of the Australian Customs Service v Karam & anor [2010] NSWSC 589
Chief Executive Officer of the Australian Customs Service v Karam [2011] NSWCA 224; (2011) 252 FLR 326
Cobiac v Liddy (1969) 119 CLR 257
Commissioner of Taxation v Baffsky [2001] NSWCCA 332; (2001) 192 ALR 92
Director of Public Prosecutions (Cth) v El Karhani (1990) 21 NSWLR 370
Kelton v Uren (1981) 27 SASR 92
L Vogel & Son Pty Ltd v Anderson (1968) 120 CLR 157
Nelson v Quinn [2001] WASCA 297
Pearce v R [1998] HCA 57; (1998) 194 CLR 610
R v Rivkin [2004] NSWCCA 7; (2004) 59 NSWLR 284
R v Weller (1988) 37 A Crim R 349Texts Cited: A Mason, "Mandatory Sentencing: Implications for Judicial Independence" (2001) 7(2) Australian Journal of Human Rights 21
G Brennan, "Mandatory Sentencing: Rights and Wrongs" (2001) 7(2) Australian Journal of Human Rights 3Category: Sentence Parties: Chief Executive Officer of the Australian Customs Service (plaintiff)
Ronnie Karam (first defendant)
Dory Karam (second defendant)Representation: Counsel:
LP Robberds QC (plaintiff)
MJ Gollan (first defendant)
P Lange (second defendant)
Solicitors:
Australian Government Solicitor (plaintiff)
Galloways Solicitors & Attorneys (defendants)
File Number(s): 2008/00289386 Publication restriction: None
Judgment
HER HONOUR: These are proceedings under part XIII of the Customs Act 1901 (Cth) seeking convictions and penalties for a number of offences arising from the importation of cigarettes and raw tobacco in a sea cargo container. The defendants are two brothers, Mr Ronnie Karam and Mr Dory Karam.
The statement of claim charged each of the defendants with the commission of the following offences (adopting the numbering of the pleading):
3. That he did, on or about 2 August 2007 at Sydney in the State of New South Wales, smuggle or attempt to smuggle goods, namely 150,000 cigarette sticks each containing tobacco, contrary to ss 233(1)(a) and 237 of the Act.
4. That he did, on or about 2 August 2007 at Sydney in the State of New South Wales, smuggle or attempt to smuggle goods, namely, about 12,926.20 kilograms of unmanufactured tobacco (leaf), contrary to ss 233(1)(a) and 237 of the Act.
5. That he did, on or about 2 August 2007 at Sydney in the State of New South Wales, import or attempt to import prohibited imports, namely, about 12,926.20 kilograms of unmanufactured tobacco (leaf), contrary to ss 233(1)(b) and 237 of the Act.
6. That he did, on or about 2 August 2007 at Sydney in the State of New South Wales, evade or attempt to evade payment of duty payable with respect to 150,000 cigarette sticks each containing tobacco, contrary to ss 234(1)(a) and 237 of the Act.
7. That he did, on or about 2 August 2007 at Sydney in the State of New South Wales, evade or attempt to evade payment of duty payable with respect to, about 12,926.20 kilograms of unmanufactured tobacco (leaf), contrary to ss 234(1)(a) and 237 of the Act.
8. That he did, on or about 1 August 2007 at Sydney in the State of New South Wales, cause to be made a statement to an officer being reckless as to (sic) fact that the statement was false in a material particular, namely in Customs Import Declaration Nature 10, numbered AHTMMGA7, declared the contents of shipping container GATU8215236 to be shoes, when the shipping container in fact contained shoes as well as 150,000 cigarette sticks and 12,926.20 kilograms of unmanufactured tobacco (leaf), contrary to ss 234(1)(d)(i) of the Act.
The parties agreed that the Court should first determine whether the offences were proved and that the question of penalty, if it arose, should be determined at a separate, later hearing.
In an earlier judgment, I determined whether the offences were proved: Chief Executive Officer of the Australian Customs Service v Karam & anor [2010] NSWSC 589. As against Mr Ronnie Karam, I found the offences charged in paragraphs 5 and 8 set out above proved. I found the offences charged in paragraphs 3, 4, 6 and 7 not proved.
As against Mr Dory Karam, I found the offences charged in paragraphs 3, 4, 5 and 8 proved. I found the offences charged in paragraphs 6 and 7 not proved.
The plaintiff appealed against that decision. The Court of Appeal allowed the appeal, holding that the offences charged in paragraphs 6 and 7 were proved as against Mr Dory Karam. The Court remitted the proceedings to me to determine the question of conviction in accordance with those reasons and to deal with the matter of penalty: Chief Executive Officer of the Australian Customs Service v Karam [2011] NSWCA 224; (2011) 252 FLR 326. This judgment determines those matters.
Proceedings against Ronnie Karam
Ronnie Karam was proven to have committed the following offences:
(a) importing prohibited imports contrary to s 233(1)(b) of the Customs Act, namely, 12,926.20 kg of unmanufactured (leaf) tobacco that had not been stemmed or stripped;
(b) making a false statement to an officer of Customs contrary to s 234(1)(d)(i) of the Act.
Under s 233AB(2) of the Act, the penalty applicable to an offence of importing prohibited imports is determined by reference to the value of the goods, where the Court can determine it. The value of the goods in the present case has not been determined and was not the subject of any evidence led by the plaintiff. In that circumstance it was common ground that the maximum penalty applicable to the offence was the alternative under s 233AB(2)(b) of a penalty not exceeding 1,000 penalty units ($110,000).
Under s 234(2)(c) of the Act, the maximum penalty for the false statement offence is a penalty not exceeding 100 penalty units ($11,000: see s 4AA of the Crimes Act 1914 (Cth)).
Each of the offences is a federal offence. Accordingly, the determination of the appropriate sentence or order is governed by s 16A of the Crimes Act 1914 (Cth). Section 16A(1) mandates the imposition of a sentence or the making of an order that is of a severity appropriate in all the circumstances of the offence. Section 16A(2) provides a non-exhaustive list of mandatory considerations to be taken into account to the extent that they are relevant and known to the court. That list does not explicitly refer to the consideration of general deterrence. However, it is well established that general deterrence must also be taken into account in determining the appropriate sentence: see R v El Karhani (1990) 21 NSWLR 370 at 377F per Kirby P, Campbell and Newman JJ.
Section 16C 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 the Court is required or permitted to take into account. It appears to be accepted that the term "fine" in that provision includes a penalty under the Customs Act: see Chief Executive Officer of Customs v Jing [2007] NSWSC 1354 at [25] per Howie J.
Finally, it is relevant to note the provisions of s 19B of the Crimes Act, which provides:
(1) Where:
(a) a person is charged before a court with a federal offence or federal offences; and
(b) the court is satisfied, in respect of that charge or more than one of those charges, that the charge is proved, but is of the opinion, having regard to:
(i) the character, antecedents, age, health or mental condition of the person;
(ii) the extent (if any) to which the offence is of a trivial nature; or
(iii) the extent (if any) to which the offence was committed under extenuating circumstances;
that it is inexpedient to inflict any punishment, or to inflict any punishment other than a nominal punishment, or that it is expedient to release the offender on probation;
the court may, by order:
(c) dismiss the charge or charges in respect of which the court is so satisfied; or
(d) discharge the person, without proceeding to conviction in respect of any charge referred to in paragraph (c), upon his or her giving security, with or without sureties, by recognizance or otherwise, to the satisfaction of the court, that he or she will comply with the following conditions:
(i) that he or she will be of good behaviour for such period, not exceeding 3 years, as the court specifies in the order;
(ii) that he or she will make such reparation or restitution, or pay such compensation, in respect of the offence or offences concerned (if any), or pay such costs in respect of his or her prosecution for the offence or offences concerned (if any), as the court specifies in the order (being reparation, restitution, compensation or costs that the court is empowered to require the person to make or pay):
(A) on or before a date specified in the order; or
(B) in the case of reparation or restitution by way of money payment or in the case of the payment of compensation or an amount of costs-by specified instalments as provided in the order; and
(iii) that he or she will, during a period, not exceeding 2 years, that is specified in the order in accordance with subparagraph (i), comply with such other conditions (if any) as the court thinks fit to specify in the order, which conditions may include the condition that the person will, during the period so specified, be subject to the supervision of a probation officer appointed in accordance with the order and obey all reasonable directions of a probation officer so appointed.
Mr Gollan, who appeared for Ronny Karam, acknowledged that the findings in my earlier judgment as to the nature of the offending would preclude dismissal of the charges under s 19B(1)(c). He submitted, however, that it would be within my discretion, without proceeding to conviction in respect of either charge, to discharge Ronnie Karam upon his entering into a recognizance under s 19B(1)(d). Since the mechanism for discharge on recognizance under that provision is an order in respect of a person for a federal offence, the determination whether to make such an order is governed by s 16A of the Act and necessarily includes the mandatory considerations listed in s 16A(2): Commissioner of Taxation v Baffsky [2001] NSWCCA 332; (2001) 192 ALR 92 at [15] per Spigelman CJ; Simpson J and Einfeld AJ agreeing at [110] and [111] respectively.
The nature of customs offences is well rehearsed in the authorities. The legislative policy underlying the penalty provisions of the Customs Act was considered by Kitto J in L Vogel & Son Pty Ltd v Anderson (1968) 120 CLR 157 at 164.4, where his Honour said:
The Customs laws represent the judgment of Parliament upon an important aspect of the economic organisation of the community, and the object of the penal provisions is to make that judgment as effective as possible.
More recently in Chief Executive Officer of Customs v Coulton [2005] NSWSC 869, Simpson J (at [32]) emphasised the requirement that penalties imposed for such offences reflect "the serious inroads made on the revenue by customs offenders", calling for a stern approach so as to render customs offending "a very unattractive proposition". The present offences must be approached with those remarks in mind and on the basis that they are of a serious nature.
The circumstances of the offences are set out in detail in my earlier judgment. The offenders are to be dealt with on the strength of the findings there made, to which I have had careful regard.
Without purporting to summarise my earlier judgment in any comprehensive way, the following may be noted as to my findings regarding Ronnie Karam.
The evidence at trial revealed that the importation was organised principally by two men who were not defendants in the proceedings and who have not been prosecuted, Mr Adnam Cheikho and another brother of the defendants, Mr Jason Karam. In accordance with my earlier judgment, Ronnie Karam is to be dealt with on the basis that he was not the owner of the cigarettes or tobacco intended to be imported and that his involvement was limited to permitting the use of his facilities (at [96]). I dismissed the smuggling offences as against him because I was not satisfied beyond reasonable doubt that he meant to import the cigarettes and the tobacco (at [122]).
The offence of importing prohibited imports found proved against Ronnie Karam is one of strict liability. In response to that charge, he raised the defence of mistake of fact. In rejecting the defence, I was satisfied that, after he received an SMS message from Dory Karam on 30 July 2007 which said "just say u know nothing about shipment", Ronnie Karam knew or suspected that someone was using his container to import tobacco or tobacco product, as he knew had previously been attempted (at [137]).
The false statement offence was based on a "Nature 10 import declaration" which the defendants caused to be lodged in respect of the container. The declaration was based on a commercial invoice and packing slip prepared by Dory Karam at the direction of Ronnie Karam which falsely described the goods in question as shoes. As to Dory Karam, I was satisfied that he was aware the statement was false in a material particular (at [165]). As to Ronnie Karam, I was satisfied that he was reckless as to whether the statement was false in a material particular (at [166]).
It was submitted on behalf of Ronnie Karam that, in accordance with my findings, he was not involved in the planning or execution of the importation. The plaintiff accepted that my findings support the first proposition (that Ronnie Karam was not involved in the planning of the importation). It was submitted, however, that he did have some involvement in the execution of the importation, since he took steps to have the container taken off the wharf and paid part of the balance of the fees payable to the freight forwarding company in the sum of $2,000.
I consider that, in all the circumstances of the offences committed by Ronnie Karam, his degree of moral culpability may be assessed as being low. He was not the architect of the undertaking and, in accordance with my findings, is to be sentenced on the basis that he was not aware of it until he received the SMS message from Dory Karam referred to above, since I am unable to be satisfied beyond reasonable doubt that he had relevant knowledge at any earlier time. The principal gravity of his offending lies in the fact that, upon having his suspicions raised after the container had arrived in Australia but before it was cleared through customs, he suffered the use of the resources of his business to persist in the importation of the container rather than alerting authorities, which would inevitably have inculpated one or more of his brothers.
I accept that the seriousness of his offending is aggravated by the steps he took from that point to secure the release of the container. His conduct is certainly not to be condoned, but may nonetheless appropriately be assessed in the context of the fact that he was placed in a predicament by the acts of others and not as a result of any planned conduct of his own.
It is relevant to have regard to the fact that there is no suggestion Ronnie Karam expected or sought any financial gain as a result of his involvement in the undertaking. Unlike many of the sentencing decisions in this field of the law, there is no finding in the present case of any deliberate plan to evade the payment of duty.
Since there are two offences, I am required to consider whether they form part of a course of conduct within the meaning of s 16A(2)(c) of the Crimes Act and any overlap between the elements of the two offences: cf Chief Executive Officer of Customs v Pham [2006] NSWSC 1370 at [20] per Bell J.
The elements of the two offences found proved against Ronnie Karam are considered in my earlier judgment (at [124]; and see the discussion of the defence of mistake of fact at [126]-[140] and [158]). It is clear from a consideration of those elements that there is no direct overlap between the elements of the two offences. However, as acknowledged by the plaintiff, it is appropriate to bear in mind that the offences were substantially contemporaneous and were connected with each other: cf Coulton at [30].
Section 16A(2)(d) and (e) require the Court to take into account the personal circumstances of any victim of the offence and any injury, loss or damage resulting from the offence. Whilst it is perhaps curious to speak in terms of the "personal circumstances" of the revenue of the Commonwealth, it is clear in my view that Customs Act offences are not to be regarded as victimless crimes. In the different context of the offence of insider trading, the Court of Criminal Appeal has held that it is appropriate to regard the investing community at large as the victim of such an offence: R v Rivkin [2004] NSWCCA 7; (2004) 59 NSWLR 284 at [412] per Mason P, Wood CJ at CL and Sully J. In my view, customs offences may similarly be regarded as having the community at large as their victim.
Section 16A(2)(f) requires me to take into account the degree to which the offender has shown contrition for the offences. There is little that can be said on that subject, in light of the fact that the proceedings were defended. The offender's evidence at the proceedings on penalty did not address any change of attitude to the offences since they were found proved. However, it is relevant to take into account the manner in which the proceedings were conducted on behalf of Ronnie Karam. An extensive agreed statement of facts was provided to the Court and many uncontroversial issues were addressed with as much cooperation and efficiency as was consistent with Mr Karam's defence of the allegations against him. The principal issue on which the proceedings were fought was the plaintiff's circumstantial case as to Ronnie Karam's state of mind and awareness at various times. His conduct of the proceedings is to be taken into account as an indication of a willingness to facilitate the course of justice, which is a factor in his favour.
Under s 16A(2)(j) of the Crimes Act, the Court is required to take into account the consideration of specific deterrence. As already noted, general deterrence is also an important consideration, notwithstanding the absence of any specific reference to it in the section. As to specific deterrence, I am satisfied that the present proceedings will have had a salutary effect on Ronnie Karam. He has faced a prosecution of greater breadth than is reflected in the findings ultimately made against him and, in my assessment, is unlikely to re-offend.
Section 16A(2)(k) requires the Court to take into account "the need to ensure that the person is adequately punished for the offence". I have had regard to that consideration in the manner indicated elsewhere in these reasons.
Section 16A(2)(m) requires the Court to take into account the character, antecedents, age, means and physical or mental condition of the offender. Ronnie Karam is 39 years of age and is married with three children of ages ranging from three to seven. The evidence revealed a good employment history, Mr Karam having been self-employed and operating a number of businesses before obtaining his current employment with another company, always in the business of manufacturing and importing shoes. He has had a series of failed businesses. As an employee, he now earns $50,000 per annum. His wife works as a bookkeeper and they were described as being co-dependent on each other's income to support the family.
Ronnie Karam struck me as being a relatively intelligent man who has continued to apply his skills and experience in the shoe industry to support himself and his family, notwithstanding a number of business setbacks. The evidence at the proceedings on penalty revealed that he became bankrupt in 2008 and has no assets.
As already indicated, I consider the likelihood of his re-offending to be minimal and am satisfied on that basis that he has good prospects of rehabilitation: s 16A(2)(n) of the Crimes Act.
Section 16A(2)(p) requires the Court to take into account the probable effect that any sentence or order under consideration would have on any of his family or dependents. Mr Gollan submitted that Ronnnie Karam and his family will be significantly prejudiced well beyond the imposition of any monetary penalty if the Court proceeds to conviction. That submission was founded on the evidence of Ronnie Karam that his employment in the shoe industry requires regular travel, mainly to China and Vietnam but also sometimes to the UK, the US, Italy and Germany. Mr Karam made inquiries of the Chinese and Vietnamese consulates and was informed that it would sometimes be difficult to obtain a visa to enter those countries in the event that he had to disclose a criminal conviction. However, he was unable to obtain any confirmation of that information in writing.
I accept that the imposition of a substantial financial penalty would have an adverse impact on Ronnie Karam's family. I acknowledge that that consideration is not to be taken in isolation and must be weighed against the consideration of general deterrence and the requirement to impose a sentence of appropriate severity.
Against those considerations, it is necessary to consider whether I should exercise my discretion to discharge the offender on a recognizance under s 19B of the Crimes Act, as submitted by Mr Gollan. The proper approach to the application of that section was considered by the Court of Criminal Appeal in Baffsky. As explained by the Chief Justice in that case (at [10] and following), the application of the section calls attention to two discrete tasks.
The first is to have regard to the matters listed in paragraphs (i) to (iii) of subsection 19B(1)(b). Mr Gollan acknowledged that the offences in the present case are not of a trivial nature and so did not rely on item (ii). He relied principally on the character and antecedents of Ronnie Karam and the contention that the offence was committed under extenuating circumstances. Ronnie Karam has a respectable history as a hardworking family man who has devoted his energies to making a living in the shoe industry. To a lesser extent, Mr Gollan relied on the consideration of age but I do not think that is a factor of any significance in the present case.
As to the circumstances under which the offences were committed, Mr Gollan submitted, as I have accepted, that the offender's moral culpability may be assessed as being low. In my view, the circumstances considered above do serve to extenuate the offences. Having played no part in planning the importation, Ronnie Karam was placed in an extremely difficult position by his brothers and Mr Cheikho. It must not be overlooked that his failure to react appropriately to the information he received from them amounted to a serious criminal offence and cannot be dismissed as mere poor judgment. However, the simple fact is that, as one who became caught up in the undertaking rather than being one of those who planned and implemented it, and paying due regard to the natural pull of fraternal care, his conduct can readily be seen as being of significantly lesser seriousness than many of the other decided cases in this field.
The second task is to consider whether, having regard to those considerations, it is inexpedient to inflict any punishment, or to inflict any punishment other than a nominal punishment, or that it is expedient to release the offender on probation. It is at that stage of the Court's consideration that the matters identified in s 16A(2) discussed above arise: see Baffsky at [16]. Mr Gollan placed particular reliance in that context on the evidence of Ronnie Karam concerning the likely difficulties he would encounter in travelling for the purpose of his work in the event that convictions are recorded against him.
Mr Robberds QC, who appeared for the plaintiff, submitted that the Court should not place any weight on that evidence. It was submitted that visa requirements for travel to overseas countries vary from time to time and are not a matter as to which the Court can take judicial notice.
Mr Robberds referred in that context to the decision of Nelson v Quinn [2001] WASCA 297 at [65]. The appellant in that case had pleaded guilty to smuggling 11 items of audio and audio visual equipment, attempting to evade payment of duty on those items and three charges of knowingly or recklessly making false or misleading statements in respect of them. He was the sole director and shareholder of a company which carried on the business of importing and wholesaling electronic and other equipment. The conduct was deliberate but the amounts involved were small and he was a person of prior good character. The magistrate at first instance refused to exercise his discretion under s 19B of the Crimes Act.
The proceedings before McLure J included both an appeal against that decision on the grounds of alleged error and a merits review of the decision under s 186(1)(b) of the Justices Act 1902 (WA)(since repealed).
Determining the review on the merits, her Honour said (at [64]-[65]):
64 I regard the appellant's conduct prior to and whilst in Singapore, his belief that in due course the Commonwealth would not be financially prejudiced in any significant way and the motive for his conduct (in the context of the other matters) as constituting relevant extenuating circumstances for the purposes of s 19B(1)(b)(iii) of the Crimes Act. Other relevant circumstances in considering inexpedience and the exercise of the discretion include the appellant's relevantly clean record (in the context of a significant history of importing), and the fact that he has been indirectly affected by the financial penalties imposed on Nelson Corporation for the same conduct.
65 However, I would not exercise the discretion under s 19B of the Crimes Act in the appellant's favour based only on these matters because of the nature of the offences, the appellant's background and the repetitively deliberate conduct. I would exercise the discretion in the appellant's favour if, in addition to those matters, I was prepared to place significant weight on the financial consequences of the convictions for the appellant. On one view, those consequences may be regarded as disproportionate to the circumstances of the offence and the offender. However, I am not prepared to place significant weight on the financial consequences because they result from foreign countries making judgments about whether or not to permit the entry of foreign nationals based, inter alia, on their convictions. As the convictions in this case are otherwise appropriate, it is for those countries to assess whether they should be an impediment to the appellant's entry. Accordingly, I am not prepared in the exercise of my discretion to set the convictions aside and make an order under s 19B of the Crimes Act. The appeal will be dismissed.
Her Honour's conclusion at [65] entails an evaluative judgment as to the competing interests of the financial consequences for the offender of being unable to travel on the one hand and, on the other hand, a view as to the inappropriateness of the judicial arm of the State facilitating the withholding of information from a foreign State relevant to the judgment of that State whether or not to permit entry to a foreign national. As may be seen from her Honour's reasons, the side on which that evaluative judgment fell turned critically on her Honour's conclusion that convictions were "otherwise appropriate" and that the only thing that might have tipped the exercise of discretion in the appellant's favour (but for the foreign State issue) was the consideration of the financial consequences to him.
Further, those remarks must be considered in the legal context in which they were made. One of the grounds in the appeal, which was determined at the same time as the merits review, was whether the magistrate had erred in construing s 19B as requiring exceptional circumstances. Her Honour rejected that ground, holding that his Honour's approach was "consistent with the authorities" (at [51]). That approach must be taken to have been overruled at least in this State by the decision of the Court of Criminal Appeal in Baffsky, where the Court stated that the test formulated by the statute of determining whether punishment is "inexpedient" should not be painted with the judicial gloss of a requirement to establish "exceptional circumstances" (at [77]).
There is some force in her Honour's conclusion that, in a case where convictions are otherwise appropriate, a judge should be slow to stay his or her hand in proceeding to enter convictions on the strength of the financial consequences of an offender being unable to travel where the exercise of the discretion in that way would deprive foreign States of relevant information about border entry. As already noted, however, a critical aspect of her Honour's conclusion was the premise that, having regard to the nature of the offences, the appellant's background and the repetitive, deliberate conduct engaged in by him, convictions were otherwise appropriate.
As to the strength of the evidence led by Ronnie Karam in the present case on that issue I accept, as submitted by the plaintiff, that the evidence did not firmly establish the requirements for entry in any of the identified countries. Whilst I accept that visa requirements are not something of which I should take judicial notice, it accords with common sense to anticipate, and to accept for the purpose of sentencing, that a criminal conviction could well impede the offender's fulfilment of his obligations as an employee in the future.
The plaintiff submitted that the circumstances identified by Ronnie Karam are not such as to justify the court's exercising its discretion under s 19B. It was submitted that there must be "something that clearly distinguishes the circumstances of the offence under consideration from the typical offence, or circumstances of an unusual nature personal to the defendant before that section can be properly invoked", citing Kelton v Uren (1981) 27 SASR 92 per Jacobs J (at 93.6).
Those remarks were made in the context of consideration as to whether the exercise of the discretion was open on the basis that the offences were trivial. That is not the basis on which it is contended that the discretion arises in the present case. Further, for the reasons already explained, any approach that puts a gloss on the plain words of the statute must be taken to have been overruled in this State by the decision of the Court of Criminal Appeal in Baffsky.
The plaintiff also relied on the decision of R v Weller (1988) 37 A Crim R 349. However, that again was a decision in which s 19B was approached on the premise that the exercise of the discretion it confers should be reserved for cases exhibiting exceptional features. Further, it may be noted that the offending in that case involved the appellant's carefully planned and executed importation of a luxury car with intent to evade the revenue laws.
I am bound by the decision in Baffsky. Although the Court there rejected any requirement for an offender to establish exceptional circumstances before receiving the benefit of the exercise of the discretion under s 19B, the Court observed that this should not cast any doubt on the importance of general deterrence, including giving consideration to the seriousness, prevalence and difficulties of detection of the kind of offence under consideration (at [77] and [92]-[98]).
Mr Gollan's submissions have persuaded me that, having regard to Ronnie Karam's character, antecedents and age and the extenuating circumstances under which the offences were committed as considered above, it is open to me to exercise my discretion under s 19B to discharge him without proceeding to conviction upon his entering into a recognizance in accordance with that section. Further, having regard to the considerations discussed above in the context of s 16A and notwithstanding the importance of general deterrence, I am satisfied that it is expedient to take that course.
I do not consider it necessary to impose a condition that Ronnie Karam be subject to the supervision of a probation officer. For the reasons already discussed, I think he is unlikely to re-offend and I do not think he needs such supervision.
Costs
The plaintiff sought the costs of the proceedings against Ronnie Karam. Section 263 of the Customs Act provides:
In a Customs prosecution, whether commenced before or after the commencement of this section, a court may award costs against a party, and, where an amount of costs is awarded against a party other than the prosecutor, section 259 and any provision of a law of a State or Territory that, by virtue of an Act other than this Act, applies in relation to the recovery of pecuniary penalties under this Act apply in relation to the recovery of the amount of costs so awarded as if it were a pecuniary penalty adjudged to be paid by the party under this Act.
Ronnie Karam resisted the order sought by the plaintiff. It was common ground that, in accordance with s 247 of the Customs Act, which provides for the prosecution of Customs offences "in accordance with the usual practice and procedure of the court in civil cases", the issue of costs should be determined in according with s 98 of the Civil Procedure Act 2005 and part 42 of the Uniform Civil Procedure Rules 2005.
Ronnie Karam submitted that the appropriate order (as between the plaintiff and him) would be that each party bear his own costs. His position was based on the fact that he successfully resisted four of the six charges against him and took steps to limit the costs of the proceedings by co-operating in the preparation of agreed facts and in other ways.
The plaintiff resisted that approach, relying on the decision of the Court of Appeal in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 (at [38]). In that case, the Court held that, unless a particular issue or group of issues is clearly dominant or separable, it is ordinarily appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between the issues on which it was successful and those on which it failed.
The plaintiff submitted that this was not a case in which evidence on particular issues on which the plaintiff failed was solely referrable to those issues. Rather, much of the evidence formed part of the circumstantial case common to all the charges. Separately, it was noted that Ronnie Karam did not at any point indicate that he did not dispute charges 5 and 8, the charges found proved against him. In the circumstances, it was submitted that costs should follow the event and that both defendants should be ordered to pay the plaintiff's costs.
In my view, having regard to the preferring of six separate charges against Ronnie Karam, each of which constitutes a separate prosecution heard together with the others for convenience, this is a circumstance in which it is appropriate to differentiate, albeit without the precision of an assessment. Ronnie Karam successfully defended four of the six charges against him, including the most serious charges. In my view, the appropriate order is that each party bear his own costs.
Proceedings against Dory Karam
Following the remitter by the Court of Appeal, it was common ground that all six charges are proved as against Dory Karam.
As to the two charges of smuggling goods (charges 3 and 4), s 233AB(1) of the Customs Act provides that, where the Court can determine the amount of the duty that would have been payable on the smuggled goods, the maximum penalty is a penalty not exceeding five times that amount. The amount of the duty that would have been payable on the goods in question here was $36,514.50 on the cigarette sticks and $3,933,422.66 on the tobacco.
As already noted, the maximum penalty for importing the tobacco (charge 5) is $110,000 and the maximum penalty for the false statement offence (charge 8) is $11,000.
As to the two offences against s 234(1)(a) of evading duty (charges 6 and 7 remitted by the Court of Appeal), a minimum penalty applies. The applicable penalty is not more than 5 times the amount of the duty evaded and not less than 2 times that amount. The minimum penalty in the present case is accordingly $73,029 in respect of the cigarette sticks and $7,866,845.32 in respect of the leaf tobacco.
It was submitted on behalf of Dory Karam that the Court is not required to impose the minimum penalty under that section. Instead, it was submitted, the Court can release Mr Karam on a recognizance pursuant to s 20 of the Crimes Act, ss (1) of which relevantly provides:
(1) Where a person is convicted of a federal offence or federal offences, the court before which he or she is convicted may, if it thinks fit:
(a) by order, release the person, without passing sentence on him or her, upon his or her giving security, with or without sureties, by recognizance or otherwise, to the satisfaction of the court, that he or she will comply with the following conditions...
It was submitted that, since this provision allows for the recognizance to be imposed without sentence being passed, the mandatory minimum provision of s 234 of the Customs Act is not "triggered" if the court proceeds in that way. That, it was submitted, conferred the "flexibility" to require Mr Karam to be of good behaviour for a period as well as to impose a financial penalty.
Mr Lange, who argued this point on behalf of Dory Karam, submitted that Parliament could not be understood to have intended to exclude the operation of s 20. The difficulty with that approach, however, is that the only basis on which it was suggested that I would "think fit" to exercise my discretion under that section was that the imposition of the minimum penalty provided for in the present case would result in a crushing penalty, the severity of which would be disproportionate to the gravity of the crime.
It has been observed extra-curially that it is unusual and undesirable that the court should not have a discretion in the imposition of penalties: G Brennan, "Mandatory Sentencing: Rights and Wrongs" (2001) 7(2) Australian Journal of Human Rights 3. That, however, is a matter for Parliament. In the exercise of judicial power to impose a penalty, the Court must apply the law as it stands. There has been no challenge in the present case to the validity of the law, such as on the basis that the right to a fair trial falls within the judicial power of the Commonwealth under chapter 3 of the Constitution and includes judicial consideration as to whether a minimum sentence prescribed by Parliament should be imposed (a view rejected by Sir Anthony Mason extra-curially in "Mandatory Sentencing: Implications for Judicial Independence" (2001) 7(2) Australian Journal of Human Rights 21). Nor has it been submitted that, leaving aside the constitutional nature of judicial power, the law otherwise trespasses on some irreducible feature of the administration of justice.
Beyond observing that those are questions for another day, I do not think I am permitted to approach my task on the modest premise contended for by Mr Lange that it is absurd to impose a penalty in the order of almost $8 million (which can never be expunged by a declaration of bankruptcy: see s 83(3) of the Bankruptcy Act 1966) on a man in the circumstances of Dory Karam. Rather, I think I am bound to approach my task on the premise that the appropriateness and proportionality of the prescribed minimum penalties to the gravity of the offence has been determined by Parliament, and binds me. That, I think, follows from my obligation to do justice according to law. I do not think I am permitted to use the existence of a discretion which arises if the Court "thinks fit" as a "peg on which to hang lenience" dictated by any personal view: cf Cobiac v Liddy [1969] HCA 26; (1969) 119 CLR 257 at 276.3 per Windeyer J.
Having regard to the seriousness of the offending found proved against Dory Karam, I would not see fit to proceed by way of recognizance under s 20(1)(a) but for the attraction of adopting that procedure as a device for avoiding the harshness of the minimum penalties prescribed under the Customs Act. In those circumstances, for the reasons outlined above, I do not think it is appropriate to proceed under that section in this case. I have one reservation in reaching that conclusion which is that, as submitted with some force by Mr Lange, there is a measure of tension in mandating consideration of the financial circumstances of the offender (under s 16C of the Crimes Act) whilst requiring the Court to impose a penalty that necessarily sets that consideration at nought. That is an anomaly but not, in my view, a warrant for my circumventing the clear object of the statute by which I am bound.
In my view, it follows that I am bound to impose the minimum penalties prescribed in respect of the two offences of attempting to evade the payment of duty. Notwithstanding that conclusion, it remains necessary to consider general deterrence and the matters identified in s 16A of the Crimes Act. Some of those matters are addressed above in the context of my remarks in respect of Ronnie Karam. The findings of fact made in my earlier judgment reveal that the offending of Dory Karam is substantially more serious than that of Ronnie Karam. As submitted by the plaintiff, the offences were committed in circumstances where he meant to import the cigarettes and tobacco and to defraud the revenue ([17] and [18] of the judgment); he was not under a mistaken belief that the container contained only shoes ([132] of the judgment); and he caused a statement to be made which he was aware was false in a material particular ([162] and [165] of the judgment).
Those findings reveal that Dory Karam played a significant role in the smuggling operation and that the offences committed by him were deliberate and dishonest. There is no suggestion that he has shown contrition for the offences or cooperated with law enforcement agencies. I am unable to make any finding as to his prospects of rehabilitation on the strength of the evidence before me. He has no dependants and accordingly there is no suggestion that the penalties I have to impose will have any impact on family or dependants.
As to s 16C of the Crimes Act, the evidence at the proceedings on penalty was that Dory Karam's taxable income in 2010 was in the order of $40,000. He owns an investment property which is subject to a mortgage which was in default at the time of the penalty hearing and not expected to return significant equity if sold. He is 35 years of age.
My attention was drawn to two decisions of this Court in which the minimum penalty was applicable but was not applied. In Coulton that appears to have been because Simpson J took the view that the defendant was entitled to a reduction in the minimum penalty by reason of a belated acknowledgement of guilt. That circumstance does not apply in the present case. In CEO of the Australian Customs Service v Nabhan [2009] NSWSC 199, Fullerton J imposed penalties less than the minimum. However, I accept, as submitted by Mr Robberds, that her Honour may have done so per incuriam. In any event, I would not consider it open to me to adopt that course. For the reasons already indicated, in my view the plain words of the statute require me to impose the minimum penalties. The plaintiff did not submit that the sentences should be any higher than the minimum penalties.
It remains to consider what penalties to impose in respect of the other offences. On the one hand the principles stated by the High Court in Pearce v R (1998) 194 CLR 610 would suggest that I should identify a separate penalty payable in respect of each offence reflecting the criminality of that offence. However, that decision was concerned with terms of imprisonment and questions of cumulation and concurrence in that context. It is not possible to impose financial penalties in such a way as to ameliorate the impact of multiple penalties (in accordance with the principle of totality) by extending any concurrency. Each financial penalty is necessarily payable in addition to each other.
In Pham, Bell J evidently took the view that it was permissible to impose a substantial penalty for an offence of evading payment of duty (as required by a minimum penalty applicable in that case) and to impose penalties for related smuggling and false statement offences that were "more than nominal but which are substantially less than would have been appropriate if dealt with alone" (at [20]).
With those considerations in mind, I do not think it is inconsistent with the principles stated in Pearce to impose penalties for the other offences which are little more than nominal, indicating that those penalties are substantially less than would have been appropriate but for the penalties required to be imposed by the statutory minimum.
Costs
The plaintiff seeks costs against Dory Karam. In accordance with the principles stated above, I do not think it would be a proper exercise of my discretion to refuse to make that order. It is no part of that discretion to consider Dory Karam's capacity to pay such costs. They are compensatory in nature. Accordingly, while I am left in a state of unease as to the harshness of the application of the law in the case of Dory Karam, the simple fact is that he was unsuccessful in defending the proceedings and is accordingly liable to pay the plaintiff's costs of the proceedings as against him. The appropriate order in my view, since he was one of two defendants, is that he pay half the plaintiff's costs of the proceedings.
The orders are:
In the proceedings against Ronnie Karam:
(1) that, without proceeding to conviction in respect of either charge, the defendant be discharged upon his giving security without surety by recognizance that he will be of good behaviour for a period of three years;
(2) that each party bear his or her own costs.
In the proceedings against Dory Karam:
(1) that he be convicted of the charges alleged in paragraphs 3, 4, 5, 6, 7 and 8 of the statement of claim;
(2) that, on charge 3, he pay a penalty of $2,000;
(3) that, on charge 4, he pay a penalty of $10,000;
(4) that, on charge 5, he pay a penalty of $2,000;
(5) that, on charge 6, he pay a penalty of $73,029;
(6) that, on charge 7, he pay a penalty of $7,866,885.32;
(7) that, on charge 8, he pay a penalty of $1,000;
(8) that he pay 50% of the plaintiff's costs of the proceedings.
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Decision last updated: 07 February 2013
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