Comptroller-General of Customs v Parker [No 3]

[2006] NSWSC 1269

CITATION:	Comptroller-General of Customs v Parker [No 3] [2006] NSWSC 1269 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	10 November 2006
JUDGMENT DATE :	30 November 2006
JUDGMENT OF:	Simpson J
DECISION:	penalty in respect of each offence of evasion to be of 3.25 times the amount of duty evaded; reparation payable; penalty in respect of unauthorised movement of goods subject to Customs control $12,000; defendant to pay the costs of the plaintiff
CATCHWORDS:	penalty - offences under Customs Act 1901 - one offence of moving or interfering with, without authorisation, goods subject to the control of Customs - thirteen offences of evasion of duty payable - parity not relevant - general and specific deterrence - expense of defence of prosecution - delay - delay not taken into account - totality - reparation - costs
LEGISLATION CITED:	Crimes Act 1914 (Cth) s21B Customs Act 1901 s33(1), s234(1), s234(2), s263
CASES CITED:	CEO of Customs v Coulton [2005] NSWSC 869 Comptroller-General of Customs v Stephen Edward Parker [2006] NSWSC 390 Lowe v The Queen [1984] HCA 46; 154 CLR 606
PARTIES:	Comptroller-General of Customs - Plaintiff Stephen Edward Parker - Defendant
FILE NUMBER(S):	SC 13933/92
COUNSEL:	DJ Fagan SC / SG Elliott - Plaintiff MLD Einfeld QC/ A Vincent - Defendant
SOLICITORS:	Australian Government Solicitor - Plaintiff Yeldham & Associates - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

SIMPSON J

Thursday 30 November 2006

13933/92
Comptroller-General of Customs v Stephen Edward Parker

JUDGMENT: Re penalty

1 HER HONOUR: On 8 May 2006, after a contested hearing, I convicted the defendant of one offence of moving or interfering with, without authorisation, goods subject to the control of Customs, and of thirteen offences of evasion of duty payable to the Commonwealth under the Customs Act 1901: Comptroller-General of Customs v Stephen Edward Parker [2006] NSWSC 390 (“the conviction judgment”). The offence of moving or interfering with, without Customs authority, goods subject to the control of Customs, is created by s33(1) of the Customs Act. The offence of evasion of duty payable under the Customs Act is created by s234(1) of that Act.

2 It is now necessary to impose penalties in respect of each offence. In addition, the plaintiff (the Comptroller-General of Customs, to whom I will refer as “the Comptroller”) seeks an order for reparation under s21B of the Crimes Act 1914 (Cth) and an order, under s263 of the Customs Act, that the defendant pay the costs of the prosecution.

3 Pursuant to s33(1) of the Customs Act, the maximum penalty applicable to the offence of unauthorised movement of goods, was, at the time the offence was committed, $50,000; each evasion offence carries a minimum penalty of twice the duty evaded, and a maximum penalty of five times that amount.

4 The amount of duty that I found had been evaded is set out in para [135] of the conviction judgment, where the offences of which the defendant was convicted are specified. The table below sets out those amounts, together with the consequent minimum and maximum penalties to which the defendant is now exposed.

Conviction no (evasion offences)	duty evaded ($)	min penalty (x2) ($)	max penalty (x5) ($)
2	1,447,061.70	2,894,123.40	7,235,308.50
3	90,457.95	180,915.90	452,289.75
4	143,259.26	286,518.52	716,296.30
5	143,259.26	286,518.52	716,296.30
6	143,259.26	286,518.52	716,296.30
7	143,259.26	286,518.52	716,296.30
8	143,259.26	286,518.52	716,296.30
9	143,259.26	286,518.52	716,296.30
10	143,259.26	286,518.52	716,296.30
11	143,259.26	286,518.52	716,296.30
12	143,259.26	286,518.52	716,296.30
13	143,259.26	286,518.52	716,296.30
14	143,259.26	286,518.52	716,296.30
Total	3,113,371.40	6,226,742.80	15,566,857.00


facts

5 The facts of the offences are set out in detail in the previous judgment and may, therefore, be here recapitulated only briefly. The offences were committed over a period beginning in August 1987 and ending on 31 May 1990, a period of almost three years.

6 The defendant was a director and shareholder of companies that imported and distributed alcoholic spirits. Customs duty became payable on the liquor, relevantly, at times when it was released onto the domestic market. One of the companies held a licence (called a warehouse licence) issued under the Customs Act. An elaborate procedure, devised by Customs, was in operation, the effect of which was to permit the importation, storage and movement of liquor, and to enable the deferral of payment of the duty until such time as the liquor was released onto the domestic market. The system depended heavily upon accurate and honest documentation and record keeping.

7 It was the defendant who personally managed the business of the companies and maintained the documentation. He was instrumental in organising the release of large quantities of spirits onto the domestic market, in circumstances that meant duty became payable. In order to conceal the release, and evade the payment of the duty, he created false documentation. I held that this was done deliberately and with dishonest intent. I do not depart from that finding.

8 I was informed, without dissent on behalf of the Comptroller, that the defendant has not ever been convicted of any offence of dishonesty, nor, indeed of any criminal offence other than some relatively minor traffic infringements in Queensland. I was provided with a number of testimonials, in which the authors speak highly of the defendant’s character, paying particular attention to his honesty and integrity, and to his devotion and commitment as a family man. One of the authors described him as:

“… a fair and honest businessman with good ethics … honest and reliable in all his dealings …”

This theme recurred throughout all testimonials. I accept, of course, the opinions of these friends and acquaintances of the defendant; but I must observe that the defendant’s conduct over the three years in question belies the description of him as honest. The fact that the dishonesty was directed towards the revenue, thus cheating the whole of the Australian community of income and casting a greater burden on others who do honour their obligations and contribute, through taxes and other duties and levies, rather than towards individuals or companies with whom the defendant dealt in business, does nothing, in my view, to affect the degree or gravity of the dishonesty. These were offences of dishonesty of which the Australian public as a whole was the victim.

9 However, I accept that the defendant is well respected and, other than engaging in the transactions the subject of these proceedings, has conducted himself honestly and ethically.

10 Other matters going to mitigation of penalty were put before me. I was provided with evidence that the two companies have been deregistered and it was put that this indicated substantial financial losses to the defendant. It was, however, accepted that the mere fact that the companies had been deregistered did not establish that the defendant had recovered nothing from the company assets, and there was no other evidence to this effect. The references to which I have referred incidentally disclosed that the defendant has been engaged in business in Queensland for a number of years.

11 I now need to deal with four specific matters advanced on the defendant’s behalf. They are:

· parity

· general and specific deterrence

· delay

· totality

parity

12 That parity of sentences of co-offenders is a relevant and important consideration, is so well established as almost to be a truism: see Lowe v The Queen [1984] HCA 46; 154 CLR 606. But the principle is not so simple as merely to require that co-offenders be sentenced identically or similarly. Notwithstanding the submissions put on behalf of the defendant, this is not a case in which parity can conceivably be a relevant consideration.

13 I will outline how it is that the argument was put on behalf of the defendant.

14 The proceedings were commenced by statement of claim filed on 30 July 1992. In that statement of claim, and amended statements of claim which followed, four defendants were named. The present defendant was one; the two companies I have mentioned were others; and Garry Thomas Lawler was the fourth. Mr Lawler was said to have been a partner of the defendant in the conduct of the businesses, and in the management of the liquor business.

15 Identical allegations were made in the statements of claim against all named defendants.

16 At some stage (probably because of the deregistration) proceedings against the companies were discontinued.

17 On 3 February 2000 the Comptroller entered into a Deed of Settlement with Mr Lawler. The Deed was the result of mediation between Mr Lawler and the Comptroller. By the Deed Mr Lawler and the Comptroller agreed that, subject to the approval of this Court, Mr Lawler would be convicted of a single offence against s234(1)(a) of the Customs Act and pay a penalty of $50,000. It was necessary to incorporate the term requiring the approval of the court because of the quasi-criminal nature of the proceedings, and the fact that penalty was to be imposed. These were not mere civil proceedings in which the parties were able to reach agreement without the intervention of the court.

18 In any event, the Deed did attract the sanction of the court. On 9 February 2000 Barr J approved the procedure as a proper procedure, and made orders convicting Mr Lawler of the offence against s234(1)(a) and ordering him to pay a penalty of $50,000, together with interest, the penalty to be paid by instalments.

19 There are many reasons why I say that parity is not an issue in the present case. Firstly, the course taken by Mr Lawler amounted to the equivalent of a plea of guilty, he having negotiated the withdrawal of the other charges. That, alone, could not be sufficient to warrant rejecting the parity principles – if parity were otherwise relevant, it would be a simple matter to factor in the absence of the conventional discount in sentence allowed following a plea of guilty and to impose a penalty on the defendant accordingly. But the number of charges faced by the defendant is not so easily disposed of. That makes it very difficult to contemplate an approach that has any regard at all to the penalty imposed on Mr Lawler.

20 And there are additional reasons why parity is not a relevant consideration. Parity in sentencing depends upon relevant similarities between the offences for which sentence is to be imposed, as well as the personal circumstances of the offenders. What is not here known is the strength of the prosecution case against Mr Lawler; the extent to which he was involved in the actual transactions; the role he played in the business and in the offences; and the state of his knowledge of what the defendant had done. I reject the argument that parity is in any way material to the determination of penalty.

general and specific deterrence

21 It is not in dispute that general deterrence is a factor in this penalty decision. However, it was also argued that specific deterrence is not an issue. This, it was said, was because the defendant’s conduct was committed as a result of his holding a licence issued under the Customs Act, something he is unlikely ever to be granted again. Thus, he will not have the opportunity to engage in this particular conduct, and so specific deterrence can be put to one side. In my opinion that approach takes too narrow a view of specific deterrence as one of the considerations relevant to sentence. Specific deterrence goes further than deterring the offender from repeating precisely the conduct the subject of the offence or conviction. It has a broader purpose. It is also to deter the particular offender from engaging in any other form of dishonesty; in this case, particularly, dishonesty relevant to the revenue.

22 I therefore reject the argument that specific deterrence can entirely be put to one side for that reason. However, I do accept that the defendant has incurred very substantial expenses in his defence of the prosecution and that that itself, one would assume, would operate as a deterrent to any further conduct which might leave him in a similar situation. No doubt there are other circumstances, such as embarrassment, the disruption to personal and family life occasioned by the prosecution, and (again, I assume) anxiety about the outcome. (There was no evidence to this effect.) I therefore do not give any significant weight to the issue of specific deterrence.

delay

23 It is true that there has been lengthy delay in bringing these proceedings to a conclusion. The original statement of claim was filed in 1992. For a variety of reasons, which I do not think it necessary to detail, it is not until 14 years later that the proceedings are about to be concluded. It is not to be held against the defendant that he opted to defend (ultimately unsuccessfully) the prosecution. At different times he sought, successfully, a stay of proceedings, although that was ultimately lifted. I accept that delay is a relevant consideration. However, it cannot be overlooked that the penalties to be imposed are purely monetary penalties, and are fixed by reference to values that prevailed at the time of the offences. That is particularly so when one considers that the minimum and maximum penalties are mathematically calculated, as multiples of the quantum of duty evaded. In this sense, the long delay has worked to the defendant’s advantage. He is to be penalised, in 2006, by reference to minimum and maximum penalties, and quantum of duty evaded, in 1988 – 1990 money values. While I do not propose to take delay into account in any way that is adverse to the defendant, I do not think he can gain a great deal of comfort, in the selection of penalties, from that circumstance.

totality

24 I also do not think that the totality principle avails the defendant in any significant way. The submission put on his behalf really depended upon the magnitude of the penalties provided for by the legislature. I dealt with a similar issue in CEO of Customs v Coulton [2005] NSWSC 869 at [31] – [33]. I adhere to what I there said. This Court cannot shrink from imposing penalties of the appropriate magnitude simply by reason of the shock factor that results from an appreciation of the effect of what the legislature has decreed.

25 The point is that, here, the duty evaded was in excess of $3 million. The legislature has circumscribed the discretion available to the court by fixing penalties to be calculated on a mathematical formula, and, more particularly, by providing minimum penalties. The magnitude of the penalties to be imposed is a direct result of the magnitude of the offences committed.

26 A final submission relevant to the evasion offences was put as “a formal submission”. Since it was put as a formal submission, it can be disposed of briefly. It has, I am satisfied, no substance.

27 This submission was derived from one paragraph in the Re-amended Statement of Claim. Under para 39, and in giving particulars of the duty alleged to be payable, the Comptroller claimed duty:

“calculated at $33.61 per [litre], being the duty rate on 30 July 2002, in accordance with s234(2)(a)(i)(B) of the Customs Act. ”

28 The submission concerned the proper determination of the penalties applicable, and raised the interpretation of s234 of the Customs Act, subs(2) of which relevantly provides as follows:

“(2) A person who contravenes subsection (1) is guilty of an offence punishable upon conviction:

(a) in the case of an offence against paragraph (1)(a), [evasion of duty] by:
(i) where the Court can determine the amount of the duty on goods the payment of which would have been evaded by the commission of the offence if the goods had been entered for home consumption on:


(A) where the date on which the offence was committed is known to the Court - that date; or

(B) where that date is not known to the Court - the date on which prosecution for the offence was instituted;

a penalty not exceeding 5 times the amount of that duty and not less than 2 times that amount; or

(ii) where the Court cannot determine the amount of that duty, a penalty [that, at the relevant time, was $50,000]
(b) in the case of an offence against paragraph (1)(b), by a penalty not exceeding 5 times the amount of drawback, refund, rebate or remission that was obtained by the commission of the offence and not less than 2 times that amount”

29 The subsection envisages three separate scenarios. They are

· the court knows the date on which the offence was committed and can determine the amount of duty that would have been evaded had the goods been entered for home consumption on that date;

· the court does not know the date on which the offence was committed but can determine the amount of duty that would have been payable had the goods been entered for home consumption on the date the prosecution was instituted;

· the court cannot determine the amount of duty evaded.

In the first two cases, the minimum and maximum penalties are those to which I have already referred – that is, multiples of the amount of duty evaded. In the third case, where the court cannot determine the amount of duty evaded, a maximum penalty of $50,000 was provided. Reference to the table appended to para [4] of these reasons reveals a vast discrepancy, in this case, between even the minimum penalties calculated in accordance with subs(2)(a)(i), and the maximum penalty that would be applicable under subs(2)(a)(ii). That discrepancy arises as a direct result of the quantum of the duty that was evaded by the defendant.

30 The effect of paragraph 39 of the Re-amended Statement of Claim is to invoke sub-para(2)(a)(i)(B) – that is, to assert that the court does not know the date on which the offences were committed, but nevertheless can determine the amount of duty that would have been evaded had the goods been entered for home consumption on the date the prosecution was instituted (30 July 1992).

31 Senior counsel for the defendant urged that the applicable sub-para is (2)(a)(ii) – that is, he argued that the court cannot determine the amount of duty evaded by the offences. That involves a direct challenge to the findings of fact inherent in the conviction judgment. Those findings (see, for example, paras [128] – [130]) were based upon an expert’s report that was not, in this respect, the subject of any dispute in the primary proceedings.

32 No evidentiary reason for challenging the findings of fact was advanced. Rather, the argument depended entirely upon a pleading point – that, because in para 39 of the Re-Amended Statement of Claim, the Comptroller identified the duty payable by reference to subs(2)(a)(i)(B), he had committed himself to making a case that the dates of the offences were not known to the court, and, in accordance with rules of fairness in litigation, could not depart from that position. Implicit in the argument, as I understand it, is the contention that the dates of the offences were known to the court, but that the Comptroller could not, at this late stage, change his position in order to rely upon sub-para (2)(a)(i)(A).

33 For a number of reasons the argument is untenable. Firstly, and perhaps most importantly, it would be quite fallacious to proceed on the basis that the court cannot determine the amount of duty evaded: that has already been done. Whether or not the dates of the offences are known to the court, in this case, makes no difference – the duty evaded is the same. Thus, there could be no injustice in permitting the Comptroller to rely, as an alternative, on subs(2)(a)(i)(A) rather than subs(2)(a)(i)(B).

34 Secondly, the argument requires a reversal of findings of fact on issues that were available to be litigated in the proceedings that were contested, but which were not litigated.

35 In any event, the Comptroller maintained that the dates of the offences are not known: the precise date on which the liquor was released onto the domestic market could not be determined. I do not need to resolve this issue. As I said, the submission was made as a formal one and no authority was put to support the proposition that I could reverse the findings of fact I have already made.

36 Senior counsel who appeared for the Comptroller sought penalties quantified as four times the amount of duty evaded. Senior counsel who appeared for the defendant urged for penalties calculated at two and a half or three times that amount.

37 The evasion offences can be seen, merely by reference to the amount of duty evaded, together with their systematic and calculated nature, very serious. I have concluded that the penalty in respect of each offence ought to be of 3.25 times the amount of the duty evaded. That is something less than midway between the minimum and the maximum penalties. The Comptroller can perform the calculations. In respect of the offence of unauthorised movement of goods subject to Customs control I impose a penalty of $12,000.

reparation

38 S21B of the Crimes Act provides for reparation to be payable on conviction for a Federal offence. The Comptroller seeks an order for reparation, in the amount of the duty evaded. No argument was addressed to the contrary. It is appropriate to make such an order. I propose to do so.

costs

39 S263 of the Customs Act provides for costs where the Comptroller is successful in a Customs prosecution. The defendant advanced no reason why an order should not be made. I propose to make such an order.

I direct the Comptroller to reduce these conclusions to short minutes of order.
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06/12/2006 - coversheet file number corrected - Paragraph(s) coversheet