Director of Public Prosecutions v EB Ocean

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

CRIMINAL DIVISION

Revised
Not Restricted
Suitable for Publication

Case No. CR-18-00728

DIRECTOR OF PUBLIC PROSECUTIONS (CTH)

EB OCEAN PTY LTD (ACN 100 032 719)

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JUDGE:	HIS HONOUR JUDGE WRAIGHT
WHERE HELD:	Melbourne
DATE OF HEARING:	29 November 2019
DATE OF SENTENCE:	11 December 2019
CASE MAY BE CITED AS:	DPP v EB Ocean
MEDIUM NEUTRAL CITATION:	[2019] VCC 2072

REASONS FOR SENTENCE
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Subject:CRIMINAL LAW
Catchwords:   Plea of guilty – one charge of hindering compliance with the Biosecurity Act 2015 (Cth) – one charge of failing to carry out biosecurity activities in accordance with an approved arrangement – no prior criminal history – serious and deliberate offending – general deterrence – extra curial punishment.
Legislation Cited:  Biosecurity Act 2015 (Cth), Quarantine Act 1908 (Cth), Crimes Act 1914 (Cth),
Cases Cited:Klein (1989) 39 A Crim R 332, Cole (1993) 66 A Crim R 498.
Sentence:  Aggregate fine of $80,000 in relation to Charge 1 and Charge 2.

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APPEARANCES:	Counsel	Solicitors
For the CDPP	Mr Y Hardjadibrata Ms R Champion	Commonwealth Director of Public Prosecutions
For the Accused	Mr K McDonald	Jasper Lawyers

HIS HONOUR:

Introduction

EB Ocean Pty Ltd (EB Ocean) has pleaded guilty to one charge of hindering compliance with the Biosecurity Act 2015 (Cth) (Biosecurity Act) contrary to ss.636(1) and 636(2) which carries a maximum penalty of $108,000 for a corporation, and one charge of failing to carry out biosecurity activities in accordance with an approved arrangement contrary to ss.428(1) and 428(2) of the Biosecurity Act which carries a maximum penalty of $270,000 for a corporation.
EB Ocean has no prior criminal record.

Circumstances of the offence

A detailed summary of prosecution opening was tendered on the plea. That summary provides background material in relation to the obligations of persons under the Biosecurity Act and detailed background facts leading to the offending period. As such in these sentencing reasons I will only provide a relatively brief overview of the facts.
At the time of the importation of the consignment of prawns, EB Ocean was known as Sino Dilin Pty Ltd (Sino Dilin). The company changed its name to EB Ocean Pty Ltd in February 2017. The company is a small family company. Jack Zhang is the sole director and co-shareholder with two others. The company operated a seafood importing business from 32-34 McDonald Road, Brooklyn. The warehouse at the premises contained two freezers and an office.
In August 2016, EB Ocean (or Sino Dilin as it was known at the time) imported into Australia a consignment of frozen raw prawns from China that contained a virus.
An outbreak of the identified virus in Australia is capable of destroying local prawn farms and fisheries. The Department of Agriculture and Water Resources (the Department), amongst other things, manages biosecurity controls at the Australian border to minimize the risk of exotic pests and diseases entering the country. As part of these controls, the Department provides import inspection services to a range of imported commodities to minimize the risk of exotic pests and diseases entering Australia. These inspection services were previously supplied by the Australian Quarantine and Inspection Service, known as AQIS.
Under the Biosecurity Act, and its predecessor, the Quarantine Act 1908 (Cth) (Quarantine Act), importers of commodities could enter into ‘approved arrangements’ with the Department to enable the imported items to be delivered to approved premises of the importer without the need for them to be inspected on arrival in Australia. Under these approved arrangements, inspections of commodities were to be conducted in accordance with import permit conditions and the directions of the Department at the approved premises.
The company entered into an approved biosecurity arrangement with the Department, first under the Quarantine Act, which was later extended under the Biosecurity Act on commencement of that legislation.
Under the approved arrangement with the Department, the company could have consignments of imported seafood delivered to its business premises at Brooklyn after arrival in Australia. Any consignments of imported seafood that was the subject of biosecurity controls was able to be kept in a particular freezer, the ‘biosecurity freezer’, at the company’s premises.
In the company’s application to the Department for an approved arrangement dated
18 May 2015, it forwarded a plan of its warehouse on which was designated one of two adjoining freezers that was nominated as the biosecurity freezer in which any imported seafood subject to biosecurity controls was to be kept. The plan identified Freezer A as the designated biosecurity freezer and showed two access points with no access point to the adjoining freezer.
The consignment of raw prawns was required to be kept at the company’s business premises in accordance with the biosecurity arrangements approved by the Department. This arrangement required the consignment to be kept at a particular freezer at the company’s premises and became the subject of directions by the Department for inspection, sampling and testing of the raw prawns for viruses.
On two separate occasions in September 2016, the company vicariously through two of its senior managers, Ruby Lee and James Chen, hindered two biosecurity officers of the Department, who were conducting inspections in respect of the consignment of raw prawns.
On 5 September 2016, Biosecurity Officer Linda Czelusta attended the company’s Brooklyn premises to conduct a biosecurity inspection and verify the consignment of prawns. The booking of the biosecurity inspection occurred as a result of the company receiving biosecurity directions on 18 August 2016 by email to its agent.
Also in attendance on this day was Brian Robinson, a Biosecurity Enforcement Officer. Upon arrival, Ms Czelusta spoke with Ruby Lee who handed her documents including copies of the biosecurity directions for inspection, sampling and testing for the relevant consignment. Mr Robinson spoke with Mr Chen who was present at the inspection and advised him that Ms Lee was his superior and in charge of the premises.
Company employees brought pallets containing cartons out of the biosecurity freezer in the presence of Ms Lee and Mr Chen. The cartons presented were affixed with labels on the top, which included the lot number 160605084Y-031, which identified them as cartons of prawns from the relevant consignment. The cartons were white and contained no brand printing. The sides of the cartons had either printed numbers or stickers with printed numbers which identified the size of the prawns contained in the cartons.
Ms Czelusta requested that Ms Lee provide commercial documentation relating to the size breakdown of the consignment. Ms Lee responded that no such documentation was available. Mr Robinson observed Mr Chen start tearing the plastic from some of the pallets, giving access to the top row of cartons. 47 pallets containing cartons were provided for inspection. 13 samples were randomly taken from the pallets of cartons. The samples of prawns subsequently tested negative for the white spot syndrome virus and yellowhead virus.
After the inspection on 5 September 2016, photographs from the ABF inspection were analysed by Officer Robinson and compared with the photographs he took of the consignment of raw prawns presented to Ms Czelusta. It was clear to Robinson from the images, that the cartons presented to Ms Czelusta earlier that day did not match the cartons from the consignment that were inspected by the ABF at the Container Examination Facility on 21 August 2016.
The prosecution case is that on 5 September 2016, the company with Ms Lee and
Mr Chen hindered the inspection of Biosecurity Officer Linda Czelusta by presenting for inspection a consignment of prawns that were not the subject of the direction for inspection, sampling and testing for viruses. It is these facts that relate to Charge 1, hinder compliance with the Biosecurity Act.
On the Department discovering that the consignment presented to Ms Czelusta was not the relevant consignment under the directions for inspection, a further inspection was conducted by Biosecurity Enforcement officer Brian Robinson on 7 September 2016, to locate and verify the relevant consignment.
On 7 September 2016, at about 9:00 am, Officer Robinson along with other department officers attended at the company’s Brooklyn premises to locate and verify the relevant consignment, and to conduct other inspection relating to another consignment. At about 10am Robinson advised Ms Lee that they would be requesting entry to the freezers. Amongst other things the following then occurred:
Officers entered the biosecurity freezer with Ms Lee through an electronically powered blue roller door. The officers were searching for cartons branded 'Sealion' and 'Pacific Ocean', as photographs taken on 21 August 2016 showed these were the two brands of prawns included within the relevant consignment. Pallets of cartons bearing the branding 'Sealion' were not located inside the biosecurity freezer.
Access to the adjoining non-biosecurity freezer was requested and pallets branded 'Sealion' were observed inside the freezer, however, they were inaccessible due to the way pallets were stacked.
Officer Robinson instructed Ms Lee that the pallets branded 'Sealion' were required to be forklifted down for inspection. A short time later Ms Lee told him that pallets had fallen and could not be brought out. She then spoke to the company director, Jack Zhang.
A short time later, the power and lights at the premises went off for a short time. When the power and lights came back on, there was still no power to the non-biosecurity freezer and Mr Chen advised Officer Robinson that the roller door to the freezer was not operating. The emergency door to the non-biosecurity freezer was unlocked by
Mr Chen, however access to the freezer could not be gained due to rubbish on the floor.
Officers re-entered the biosecurity freezer. Mr Zhang was observed driving a fork lift and transporting 'Sealion' branded cartons between the biosecurity and non-biosecurity freezer via a door between the two freezers that was then not previously known. The 'Sealion' pallets were not previously visible in the biosecurity freezer. Officer Robinson requested that Mr Zhang stop what he was doing and that the not previously visible 'Sealion' pallets be presented for inspection.
Approximately 20 of the 'Sealion' pallets identified by Officer Robinson were presented for inspection. Each of the pallets were identified by hand written signs with consignment numbers. The cartons identified with these signs were from different consignments and did not form part of the relevant consignment.
A service technician, Christopher Maggio, arrived on the premises at about 1pm to attend to the non-biosecurity freezer roller door. Mr Maggio and other technicians had frequently attended the company premises to fix problems with the biosecurity freezer roller door, but never with the non-biosecurity roller door.
Before entering the premises and while still sitting outside in his van outside,
Mr Maggio was approached by Mr Chen. Chen instructed Mr Maggio by saying, “Don't fix it. Just say you can't fix it.”
At about 1:35pm, Officer Rissman used the newly discovered door between the two freezers to enter the non-biosecurity freezer and obtain the ‘Pacific Ocean’ carton with the number 160605084Y-031. These numbers identified this carton as part of the relevant consignment of prawns.
At about 2:05pm, Officer Robinson had a conversation with Ms Lee. She said that the carton Officer Rissman had located was not part of the relevant consignment and was a re-pack.
By the time all the 1808 cartons that were presented were identified as belonging to the relevant consignment, it was 4:40pm on 7 September 2016.

In summary, on 7 September 2016, the company with Ruby Lee and James Chen hindered Officer Robinson’s inspection by concealing the consignment of raw prawns from him and preventing, frustrating, delaying and making more difficult Officer Robinson’s inspection to locate and verify the relevant consignment of prawns. This conduct forms part of Charge 1.
The inspection on 7 September 2016, further revealed that the company did not keep the consignment of raw prawns in the relevant freezer as required by the approved quarantine or Biosecurity arrangements. It is this conduct that relates to Charge 2, failure to carry out biosecurity activities in accordance with an approved arrangement.
The prosecution case is that at a point between the arrival of the consignment at the company’s premises and the initial attendance of the biosecurity officers at those premises on 5 September 2016, the company affixed labels purporting to be from the relevant consignment onto the cartons of prawns that were not the subject of the direction for inspection, sampling and testing for viruses but which were ultimately presented to Biosecurity Officer Linda Czelusta. The prosecution case is that prior to the affixing of these labels, the company knew or suspected that the consignment that was properly the subject of such directions contained a virus.
On 15 September 2016, the samples that were obtained from the ABF inspection on 21 August 2016 were sent for testing. On 26 October 2016, the department received positive test results for white spot syndrome virus from those samples and any movement of the consignment from biosecurity control was withheld.
The Department directed the company to either destroy the consignment of raw and diseased prawns or export it elsewhere. On 27 October 2016, the company elected to export the consignment and the Department directed the export of the consignment on 11 November 2016.

Nature and gravity of the offending

The prosecution submitted that the offending is serious when consideration is given to the potential harm that could be caused to the local prawn and crustacean seafood industry.
At the plea hearing, the prosecution called evidence from Carol Sheridan, Assistant Secretary of the Animal Security Branch of the Department. Ms Sheridan provided evidence in relation to the nature of the virus that was detected in the shipment of prawns and its potential impact on the prawn industry in Australia. In this instance the virus detected in the shipment of prawns was the white spot syndrome virus or WSSV.
With reference to science based research entitled the Generic Import Risk Analysis Report for Prawns and Prawn Products (IRA), Ms Sheridan gave evidence that WSSV can affect a wide range of species including prawns, lobsters, yabbies and crabs across freshwater, estuarine and marine environments. Ms Sheridan gave evidence that Australia’s farmed prawn industries would be most severely affected by WSSV in the period immediately after first establishment of the disease causing up to 100% mortality within 3-10 days. The effect of the virus in open waters is more difficult to predict however the IRA concluded that if WSSV became established in wild crustacean populations, it would be unlikely to be eradicable.
While not an expert in terms of economic impact, Ms Sheridan also provided some evidence which was not contested based on the findings of the IRA. For example Australia’s prawn production was valued at $338 million in 2013/14 and over the same period Australia’s rock lobster industry was valued at $586 million. Thus the potential for harm to the industry is great.
As to the level of culpability of the company, the prosecution submit that the offending which included the doctoring of the false consignment was committed expressly for the purpose of concealing from the Department officials the consignment identified as the consignment containing the virus infected prawns.
The prosecution further submit that the offending involved a breach of trust as the department relied on the company to comply with lawful directions once an import had been identified as requiring monitoring.
The offending involved a senior manager, Ruby Lee, the accounts manager, Cheng Chen and the sole director, Jack Zhang. Ms Lee and Mr Chen had been approved by the Department for the purposes of the company’s Quarantine Approved Premises. Thus, it was submitted that the moral culpability of the company is high.
In my view the offending in all the circumstances must be viewed as serious. The hindering of the Department’s officers was deliberate and done in order to try to deflect attention from the suspected infected consignment of prawns. The only explanation being for financial gain or to protect against loss.
Further, I accept the evidence of Ms Sheridan of the potential risk to the industry if the prawn and other crustacean populations were infected with WSSV which includes the damage to various species and potential economic loss.

Background and circumstances of the defendant company

Mr McDonald, who appeared on behalf of the company, tendered a detailed history of the company and its director Jack Zhang which I have taken into account and will briefly summarise.
Jack Zhang began working in the seafood industry in about 1985 in China and then later in Malaysia running his own seafood exporting business. While in Malaysia,
Mr Zhang met his now wife Dilina Quan. Ms Quan originally registered Sino Dilin Pty Ltd in about 2002, the company changing its name to EB Ocean Pty Ltd in February 2017.
In 2004, Mr Zhang was planning to start a seafood importing business in Australia and Ms Quan transferred her shares in Sino Dilin to Mr Zhang in order to assist him in commencing his business. Mr Zhang became the sole director of the company at that time and remained so during the time of the offending.
In 2013, Mr Zhang became a citizen of Australia. In 2014, in order to expand the business, Mr Zhang purchased the property at 32-34 McDonald Road, Brooklyn via a family trust. In July 2015, approval was granted by the Department which confirmed the premises as an approved place for the performance of quarantine.
In May 2016, the company applied to the Department for an approved arrangement for existing quarantine approved premises under the Biosecurity Act. In June 2016, the company was issued with a permit to import uncooked peeled prawns and on
1 July 2016, the approved arrangement application was granted by the Department.
Following the offending between 5 and 7 September 2016, the Department revoked the approved arrangement of the premises and suspended the company’s import permits. As a result the company could no longer engage in seafood importation and Mr Zhang is also unable to obtain an importing permit in his own name. As a consequence, in December 2017, the cold storage of the premises was leased to a local seafood distribution business that is not involved in importation. Further, as a result of the charges, the company’s five full time employees, one part time driver and three casual employees have been let go.
It was submitted that Mr Zhang’s reputation has been damaged and his family has also suffered as a result of negative publicity. It was submitted that the negative publicity also included being falsely associated with an outbreak of WSSV in Queensland which was the subject of a television news program broadcast in
July 2018.
Tax returns of the company representing the 2016-2018 period were tendered demonstrating that what was a profitable business, now is operating at a loss.

Relevant sentencing considerations

As the charges to which the company pleaded guilty are Commonwealth charges, I am required to take into account a number of matters pursuant to s 16A of the
Crimes Act 1914 (Cth). Ms Champion who appeared on behalf of the Commonwealth Director of Public Prosecutions at the plea, highlighted a number of the matters in s 16A(2) that must be given weight and I have taken those into account.

In addition to the non-exhaustive general matters listed in s 16A(2), Ms Champion also made submissions in relation to factors of general application taken from recent authorities in relation to sentencing for federal offending by corporations.
I also take into account general principles in relation to the circumstances of the corporate offender including: the size of the company and its financial position; whether the company has engaged in similar conduct in the past; whether the company has demonstrated contrition and remorse and whether the company has suffered any extra-curial punishment arising from the finding that it has contravened the law.
It is clear that in cases of this nature, general deterrence must be the paramount sentencing consideration. The consequences of contamination of the commercial and non-commercial populations of crustaceans as noted above, would result in significant losses to prawn and other species and potential great economic losses. As such others need to be sent a message that offences of this nature will attract criminal sanctions. It is also clear in the authorities that potential harm is a matter that is able to be taken into account when assessing the seriousness of the offence and the potential penalty.[1]
[1] See for example Klein (1989) 39 A Crim R 332 and Cole (1993) 66 A Crim R 498.
It was submitted by the prosecution that specific deterrence should also play a part in the sentencing equation. However in my view given the fact that the company has no prior convictions and the fact that as a result of the charges the company has effectively been shut down and unable to import, in my view specific deterrence need not carry great weight.
I take into account the plea of guilty in this matter which is of great utilitarian value. While the plea is late, this case attracted a number of complex issues and would have taken up a significant amount of time if it was to run as a trial. As such the plea of guilty has facilitated the course of justice.
I also take into account the fact that the company has effectively ceased operation as a result of the charges. This is not a company that had diverse sources of income and seafood importation was the principle business. The charges have resulted in authorisations and permits being cancelled by the Department and further, adverse publicity has had a negative effect on the company and Mr Zhang. As such in my view in the circumstances I accept that there has been a degree of extra curial punishment.

Sentence

Would the representative of EB Ocean Pty Ltd please stand.

On Charge 1, hinder compliance with the Biosecurity Act 2015 (Cth) contrary to ss 636(1) and 636(2), and Charge 2, failing to carry out biosecurity activities in accordance with an approved arrangement the Biosecurity Act, contrary to ss 428(1) and 428(2), EB Ocean will be convicted and fined an aggregate of $80,000.
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[2019] VCC 2072

11 December 2019