Gill & Anor v The CEO of Customs

[2002] HCATrans 351

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S2 of 2002

B e t w e e n -

PARAMBIR SINGH GILL

First Applicant

TAHNYA ELIZABETH BUTTERFIELD

Second Applicant

and

THE CHIEF EXECUTIVE OFFICER OF CUSTOMS

Respondent

Application for special leave to appeal

GUMMOW J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 13 SEPTEMBER 2002, AT 11.45 AM

Copyright in the High Court of Australia

MR P.W. NEIL, SC:   May it please the Court, I appear with my learned friend, MR E.G.H. COX, for the applicants.  (instructed by Reg Benson)

MR D.J. FAGAN, SC:   May it please the Court, I appear for the respondent.  (instructed by the Australian Government Solicitor)

GUMMOW J:   Yes, Mr Neil.

MR NEIL:   May it please your Honours, the special leave point that we seek to ventilate emerges from a consideration of paragraph 36 of the reasons of Mr Justice Giles in the Court of Criminal Appeal which commences at the foot of page 118 of the application book and proceeds on 119 to the second sentence which we submit indicates the fundamental error that occurred.  His Honour determined that a:

person could have had an intention to defraud the revenue if he intended that he pay less than the proper customs duty, whatever the proper customs duty may have been, and the intention to defraud could be found from facts which do not include the customs value of the motor vehicle.

Your Honours, our submission is that you cannot establish an intent to defraud without establishing by evidence that the conduct said to constitute the intent to defraud would or might have the result that the revenue was deprived.

CALLINAN J:   Why could you not simply rely upon evidence constituted by an admission that a person did intend to?  He said, “I intend to defraud the Customs”.  Why would that not prove the offence?

MR NEIL:   Your Honour, it may but, with respect, that is a different case because here of course there were no admissions.

CALLINAN J:   I know, but you were making a sweeping submission that in every case you had to prove value, that you could not prove the elements unless you proved the value.

MR NEIL:   I appreciate what your Honour says and I must apologise; I am seeking to confine the submissions only to the facts as found by the Court of Criminal Appeal.  The question of whether it was necessary for customs value to be determined in order for smuggling to be proved by proof of an actual importation with an intent to defraud ‑ ‑ ‑

GUMMOW J:   Where is the text of the section creating the offence?

MR NEIL:   Your Honour, that appears in the material that we sent up yesterday in the Customs Act.  It is section 233(1)(a).  One then has to go to the front of the material to the definition of “smuggling” in section 4.  So, if one looks at that in this case:

Smuggling means any importation . . . with intent to defraud the revenue.

GUMMOW J:   Yes.

MR NEIL:   Our proposition, your Honours, is this based on the facts found.  An intent to pay less than the proper amount of customs duty in fact payable on imported goods does not constitute an intent to defraud unless there is evidence that the amount paid was or might be less than the amount properly payable.  In this case of course, the vehicles were imported, false declarations as to the overseas purchase prices were made with considerable understatement of the actual overseas purchase prices, the Customs officer acted on the amounts falsely declared, deducted an amount of depreciation and arrived at an amount of duty which was paid on each vehicle.  The problem that we submit exists is that what has happened as a result of the finding that the conduct of falsely declaring incorrect overseas purchase prices is that it has led to an assumption without any factual basis to support the assumption that ‑ ‑ ‑

GUMMOW J:   We know that, but what do you say about the point made against you at page 156, paragraph 9, in Mr Fagan’s outline?

MR NEIL:   We seek to address it in this way.  We accept what of course flows from Peters and Spies.  Proof of actual deprivation is only necessary to prove defrauding but we submit that, for proof of an intent to defraud, there must at least be an evidential basis for concluding that there was a possibility of a defrauding, otherwise one is back to the Stephens v Abraham position that if one has an intent to defraud but no defrauding was possible, the intent to defraud in those circumstances cannot be relied upon to support a criminal conviction.  What we really submit is that these applicants were convicted because they intended to evade duty by paying less duty than may have been payable in the absence of any evidence capable of supporting an inference that the amounts they in fact paid were less than the amounts properly payable.

The difficulty arose because the failure to determine customs value meant that no amount of customs duty liable to be paid under the Customs Act was ever determined.  So in one case we have $11,000‑odd worth of duty paid and in another case we have $18,000‑odd worth of duty paid.  There is no doubt if the applicants had declared the correct overseas prices the amounts of duty assessed by the Customs officer would have been greater, but the problem was that he was not for his purposes, which seemed to be administrative, assessing the duty which the Customs Department charged in the way the Act required that it be assessed.  So one is left with a complete hiatus on the question of how can an intent to defraud, in the absence of any evidence capable of giving rise to a finding that a defrauding was possible, constitute the offence of smuggling?

That is what we say happened in this case because there was, with the utmost respect, a confusion between what the Customs officer did based on the false declarations, namely to assess duty not in accordance with the way the Act said it had to be assessed, but having regard to the overseas prices.  As your Honours may recall, section 161G of the Customs Act relevant to this case mandates that the overseas prices are irrelevant for the purpose of determining the actual amount of duty payable on the importation of the cars.  The actual amount of duty, had it been properly assessed, was referable to the value of the cars on the domestic or Australian market.  It had nothing whatsoever to do with the value of those cars or the purchase price paid for those cars overseas.

So there has, we submit, simply been an assumption of a material ingredient of proof of an intent to defraud flowing from the fact that more duty would have been payable if the overseas prices were correctly stated than was paid which overlooks the fundamental difficulty that the overseas prices were completely irrelevant to the determination of the amount of duty properly payable.

GUMMOW J:   What do you say about 233AB(2)?  I am looking at Reprint No 13, in particular the difference between 233AB(2)(a) and (b).

MR NEIL:   Your Honour, the first submission we put is that a penalty provision really does not bear on the construction of the elements of a criminal charge appearing in a substantive provision.  Moving on, if one looks at 233AB(1)(a):

where the Court can determine the amount of the duty . . . on the smuggled goods . . . if those goods had been entered for home consumption –

Here the goods were imported; they were entered for home consumption.  Then:

(i) where the date on which the offence was committed is known to the Court – that date; or
(ii) where that date is not known to the Court – the date on which the prosecution for the offence was instituted –

and then the penalty is set out:

(b) where the Court cannot determine the amount of that duty, a penalty not exceeding $100,000.

We say that merely recognises that within the smuggling offence there are different elements, depending upon the facts.  For instance, smuggling is not limited to an importation with an intent to defraud; smuggling includes an attempted importation with intend to defraud.  Of course, if the attempted importation was interrupted and there never was an importation, you cannot determine the amount of duty because duty is only levied on imported goods.  So we say that 233AB(1) is to deal with that kind of situation.  There are various others within the definition of “smuggling” which could apply such as attempted introduction of goods with intent to defraud, and there are other combinations as well.

Where there has been an importation, where the goods have been entered for home consumption, where without any question – and there was no issue about this – the Collector of Customs could have determined the actual amount of duty payable, then we submit that 233AB(1)(a) really is drafted on an assumption that the duty will be determined and made known to the court.  There are of course other offences of smuggling where no duty can be determined and an alternative applies.  So that is our submission, may it please the Court, in seeking to address that problem.

The fundamental proposition, however, is that if one permits confusion to continue between the fact of assessment of duty for administrative purposes, presumably for convenience because on the facts the Customs officer looked at the declared values, he applied a table for depreciation and then he applied a table to come up with a figure for duty which was very convenient, he was simply levying duty on a basis not sanctioned by the Act.  We get to a point where substantial moneys were paid with no evidence whatsoever as to what was the amount of duty properly payable under the Act and we submit that an intent to defraud to constitute an intent material in law must at least leave open the possibility that the revenue might be deprived.  That is something that requires evidence.  The only way that evidence could have been provided in this case was by evidence of a determination of customs value and then you look at another table and there is no difficulty.  For some reason that was not done and it was made plain to the Court of Criminal Appeal that that was the position.

Your Honours, that is fundamentally what we submit is a crucially important point in a criminal provision that has Australia‑wide application.  Our alternative submission is that Barendse was correctly decided but we do not submit that the Court of Criminal Appeal, if it considered it properly,

was entitled to depart from it.  We just submit that ,for the reasons that we have sought to identify, it was wrongly departed from.

GUMMOW J:   Yes, thank you, Mr Neil.

The Court is of the view that it has not been shown that there was any error in the construction applied to the legislation by the intermediate court of appeal.  Accordingly, the application is refused.

What should happen about costs?

MR FAGAN:   The respondent seeks an order for costs, your Honour.

MR NEIL:   I have no submission, your Honour.

GUMMOW J:   Yes, dismissed with costs.

AT 12.01 PM THE MATTER WAS CONCLUDED