R v Medalian - [2019] SASCFC 40

SUPREME COURT OF SOUTH AUSTRALIA
(Court of Criminal Appeal)
R v MEDALIAN
[2019] SASCFC 40
Judgment of The Court of Criminal Appeal
(The Honourable Chief Justice Kourakis, The Honourable Justice Bampton and The Honourable Justice Parker)
23 April 2019
CRIMINAL LAW - APPEAL AND NEW TRIAL - APPEAL AGAINST SENTENCE - APPEALS BY CROWN
CRIMINAL LAW - APPEAL AND NEW TRIAL - APPEAL AGAINST SENTENCE - GROUNDS FOR INTERFERENCE - JUDGE ACTED ON WRONG PRINCIPLE
CRIMINAL LAW - SENTENCE - INTERPRETATION OF SENTENCING PROVISIONS
CRIMINAL LAW - SENTENCE - SENTENCING ORDERS - NON-CUSTODIAL ORDERS - RECOGNISANCES
CRIMINAL LAW - PARTICULAR OFFENCES - OFFENCES AGAINST THE GOVERNMENT - DEFRAUDING THE COMMONWEALTH
Application for permission to appeal against sentence by Commonwealth Director of Public Prosecutions – where respondent pleaded guilty to the Commonwealth offence of smuggling tobacco with the intent to defraud the revenue – where respondent sentenced to a period of imprisonment on a home detention order under the Sentencing Act 2017 (SA) s 71 before release on a recognizance release order under the Crimes Act 1914 (Cth) s 19AC – whether sentence authorised by law – whether sentence manifestly inadequate.
Held, per Bampton J (Kourakis CJ and Parker J agreeing), granting permission and allowing the appeal – the sentence was not authorised by law, respondent resentenced.
Customs Act 1901 (Cth) s 108, s 203, s 233BABAD; Criminal Law (Sentecncing) Act 1988 (SA) s 33BB; Crimes Act 1914 (Cth) Pt IB Div 4, Pt IB Div 5, s 19AC, s 20, s 20AB; Sentencing Act 2017 (SA) s 71, s 72, s 96; Correctional Services Act 1982 (SA) Pt 4 Div 7, referred to.
R v Tran [2019] SASCFC 5; Hili v The Queen (2010) 242 CLR 520; Atanackovic v The Queen (2015) 45 VR 179; R v Kopa; Ex parte Director of Public Prosecutions (Cth); R v Istogu; Ex parte Director of Public Prosecutions (Cth) (2004) 206 ALR 197; R v Pham (2015) 256 CLR 550, applied.
R v Saleh (2015) 257 A Crim R 212; R v Zhang (2017) 265 A Crim R 113, considered.

WORDS AND PHRASES CONSIDERED/DEFINED
"recognizance", "sentencing order"

R v MEDALIAN
[2019] SASCFC 40
Court of Criminal Appeal: Kourakis CJ, Bampton and Parker JJ

KOURAKIS CJ: I would allow the appeal and join in the sentencing orders proposed by Bampton J for the reasons given by her Honour.
BAMPTON J: Mohammad Taghi Medalian pleaded guilty on the eve of his trial in the District Court to the offence of smuggling tobacco with the intent to defraud the revenue, contrary to s 233BABAD(1) of the Customs Act 1901 (Cth) (“the Customs Act”). The maximum penalty for this offence is 10 years’ imprisonment and/or a fine of $3,627,072.003 or otherwise 1,000 penalty units.
On 18 May 2018, Mr Medalian was sentenced to two years’ imprisonment reduced by “10% reduction and a bit of rounding down of the sentence” to one year and nine months.[1] The sentencing Judge ordered that Mr Medalian serve nine months’ imprisonment on a home detention order (“HDO”) before he be released on a recognizance release order (“RRO”) for 12 months (from the date of release) to comply with the condition that he be of good behaviour during the term of the recognizance.
[1] The Judge was only authorised to reduce the sentence he otherwise would have imposed by up to 10 percent pursuant to s 42(3)(e) of the Sentencing Act2017 (SA). A sentence of two years reduced by 12.5 percent results in a sentence of one year and nine months. It follows that the notional starting point adopted by the Judge was “rounded down” to the extent necessary to yield a head sentence of one year and nine months after a reduction of 10 percent.
The Commonwealth Director of Public Prosecutions (“the Director”) seeks permission to appeal on two grounds. The first ground is that in imposing a sentence which combined a HDO, pursuant to State legislation, and a RRO, pursuant to Commonwealth legislation, the sentencing Judge imposed a sentence which is not authorised by law. The second ground is that the sentence was manifestly inadequate.
For the reasons that follow, I would grant permission to appeal, allow the appeal on ground 1, and resentence Mr Medalian.
Background
The offending
Mr Medalian travelled to Iran from 9 February to 9 March 2016. On 12 May 2016, Australian Border Force (“ABF”) officers examined a shipping container originating in Iran (“the container”), consigned to MedalCo, deliverable to Mr Medalian’s home address. The consignor was Mehrdad Medalian. The container’s import declaration stated its contents as sesame oil, rock candy, tomato concentrate, jam fruit jellies, food syrups, and pomegranate drink. There was no declaration of tobacco on the import declaration. The contents of the container were x-rayed, and due to anomalies, cartons labelled as Yasmin brand Wrapped Saffron Rock Candy Swizzle Sticks were opened to reveal concealed Al Fakher brand molasses tobacco. The total weight of the molasses tobacco in the container was 1,080 kilograms, having an approximate payable duty of $725,414.40.
On 13 May 2016, ABF officers repacked the container, removing 720 kilograms of the tobacco and leaving 360 kilograms marked with a unique identifier, and arranged for the container’s onward delivery under observation. On 16 May 2016, search and seizure warrants were obtained for Mr Medalian’s home and work addresses pursuant to s 108 and s 203 of the Customs Act.
At the consignee’s request to the delivery company, the container was ultimately delivered to Mr Medalian’s business address. On 17 May 2016, ABF officers observed the container being delivered to Mr Medalian’s business address. The officers observed Mr Medalian opening the container. The officers then executed their search and seizure warrants for Mr Medalian’s business address, finding Mr Medalian standing by the open container. Officers seized the tobacco and Mr Medalian’s iPhone.
The warrants for Mr Medalian’s home address were also executed and a number of electronic items were seized. Mr Medalian gave an interview with the ABF officers at the time of the execution of the warrants on 17 May 2016.
Mr Medalian’s iPhone was forensically examined and images of Al Fakher brand molasses tobacco and a note with the name and address of the Al Fakher head office in Iran were recovered. SMS and chat threads on the messaging application “Telegram” in Persian/Farsi were also recovered and translated to reveal:
1A text message from Mr Medalian to an unknown person about the payment of $4,000 and stating Mr Arman Sakeat as his contact in Iran;
2A Telegram chat between Mr Medalian and another person discussing the risk of packing “cigarettes as well”;
3A Telegram chat between Mr Medalian and another person asking which brand of tobacco to buy;
4A Telegram chat between Mr Medalian and another person where Mr Medalian states that he was robbed while purchasing tobacco in Mowlavi, Iran; and
5A Telegram chat between Mr Medalian and another person about the purchase of tobacco.
Mr Medalian was arrested on 2 June 2016 and charged with the offence of smuggling tobacco with the intent to defraud the revenue, contrary to s 233BABAD of the Customs Act:
(1) A person commits an offence if:
(a)     the person imports goods; and
(b)     the goods are tobacco products; and
(c)     the person imports the goods with the intention of defrauding the revenue.
…
(4) An offence against subsection (1) or (2) is punishable on conviction by imprisonment for not more than 10 years, a fine not exceeding the amount worked out under subsection (5), or both.
…
(5) For the purposes of subsection (4), the amount is:
(a)     if the Court can determine the amount of the duty that would have been payable on the goods if the goods had been entered for home consumption on:
(i) if the day on which the offence was committed is known to the Court—that day; or
(ii) if that day is not known to the Court—the day on which the prosecution for the offence was instituted;
5 times the amount of that duty; or
(b)     otherwise—1,000 penalty units.
Analysis
Since the hearing of this appeal, the Court has handed down its decision in R v Tran[2] granting the Director permission to appeal a District Court sentence and holding that a sentencing judge was not empowered to order that only part of a sentence of imprisonment be served on a home detention thereafter that the prisoner be released on a RRO to be of good behaviour. Having considered the sentencing regimes under the Criminal Law (Sentencing) Act 1988 (SA) (“the CLSA”) and the Crimes Act 1914 (Cth) (“the Crimes Act”) insofar as they involved suspended sentences and home detention, the Court in Tran held that as at the date of Mr Tran’s sentencing on 27 April 2018:[3]
The State sentencing disposition corresponding to a recognizance release order pursuant to s 20(1)(b) of the Crimes Act is a partially suspended sentence. However, s 33BB(1)(b) of the [CLSA] precluded the making of a home detention order for that part of a partially suspended sentence which was to be served before the release on bond. Pursuant to s 33BB of the [CLSA], a home detention order could only be made for the whole of the term of imprisonment, or if a non-parole period was fixed, for that period.
[2] [2019] SASCFC 5.
[3] [2019] SASCFC 5 at [60].
The CLSA was repealed and replaced by the Sentencing Act 2017 (SA) (“the Sentencing Act”) on 30 April 2018. Section 71 of the Sentencing Act now prescribes the Court’s power to order that a defendant serve a sentence of imprisonment on home detention. Like s 33BB(1)(b) of the CLSA, s 71(1)(b) of the Sentencing Act precludes the making of a home detention order where a sentence is partially suspended sentence.
Section 72(2)(a) of the Sentencing Act provides that a person subject to a non‑parole period and a home detention order will remain on home detention until he or she is released on parole. Section 72(2)(b) provides that any other person subject to a home detention order will remain on home detention in accordance with Pt 4 Div 7 of the Correctional Services Act 1982 (SA). Simply put, a sentencing judge has no power to sentence a defendant to a home detention order under s 71 and order that upon serving a specified period of home detention, the remainder of the sentence be suspended pursuant to s 96 of the Sentencing Act.
Sections 71 and 72 of the Sentencing Act create an exclusive regime for the making of HDOs and leave no scope for the operation of a suspended sentence bond under s 96 of the Sentencing Act.
The corresponding Commonwealth sentencing disposition to a suspended sentence under s 96 of the Sentencing Act is a RRO under s 20(1)(b) of the Crimes Act. The RRO regime prescribed in Part IB of the Crimes Act is exhaustive and leaves no scope for any State sentencing options to be imposed in addition to a RRO.[4]
[4] Atanackovic v The Queen (2015) 45 VR 179 at 206 [86]; Hili v The Queen (2010) 242 CLR 520 at 536 [52].
HDOs and RROs are each standalone sentencing options.
As Mr Medalian was sentenced on 18 May 2018, the sentencing Judge purported to utilise the provisions of s 71 of the Sentencing Act in making the HDO. Applying the reasoning in Tran, the sentence imposed by the Judge on Mr Medalian, comprising both the HDO and the RRO, was not authorised by law.
Permission to appeal should be granted to impose a sentence authorised by law.
Resentencing
Mr Medalian is a 53-year-old married man with one daughter. The Court heard that he maintains close contact with his family in Iran. He has an excellent work history in the taxi industry and provided several references from colleagues associated with that industry as well as from his employees. It was submitted that he had established a legitimate importation business for products from his native Iran and a restaurant in North Adelaide that promoted Iranian food. He complied with his bail agreement upon being charged in June 2016 and since sentence on 18 May 2018 has complied with the HDO. He has no antecedents.
Counsel for Mr Medalian submitted that it would be a crushing reversal of fortune were he to be now required to serve his sentence in prison. It was submitted that the factors counting against an immediate sentence of imprisonment are: Mr Medalian’s age; his contribution to the community as evidenced by positive character references; his lack of antecedents; that the offending did not involve the use of a false identity or false addresses and was an isolated offence rather than part of a course of similar conduct; that molasses tobacco is less profitable than other types of tobacco, and, due to its weight, attracts a higher duty in proportion to its value; and that Mr Medalian was not to be the sole recipient of any financial benefit generated.
General deterrence is a critical consideration in sentencing for offences involving defrauding tax revenue.[5]
[5] R v Kopa; Ex parte Director of Public Prosecutions (Cth); R v Istogu; Ex parte Director of Public Prosecutions (Cth) (2004) 206 ALR 197 at 202 [20] where Williams JA observed, “Offences of the type in question are prevalent and it is obvious that the deterrent aspect of sentencing is of critical importance”.
In sentencing Mr Medalian for his serious revenue offence, the following matters are relevant:[6]
[6] R v Zhang (2017) 265 A Crim R 113 at 122 [37].
1his role as a principal organiser;
2the sophistication of the offending;
3the period over which the offending was committed;
4the quantity of the tobacco imported, and the amount of duty evaded;
5whether the loss of revenue has been repaid;
6whether the offending involved other illegalities, such as the use of false identities;
7whether he was involved in the distribution and sale of tobacco products within Australia; and
8the extent to which he gained financially from his offending.
The Director argued that Mr Medalian’s offending is a serious example of revenue offending. It was submitted that it was a large-scale enterprise which reflected a high level of sophistication. Mr Medalian was a principal in the offence and was involved in:
1sourcing the tobacco product in Iran;
2organising the concealment method within the rock candy packaging;
3organising the legitimate consignment items with which the tobacco was to be sent;
4organising the customs declarations to be made;
5deliberately and dishonestly failing to declare the consignment contained tobacco;
6liaising with the shipping company for delivery; and
7receiving the consignment in Australia.
The offending, as characterised by the sentencing Judge, “was a significant importation which evaded a large amount of duty. It was a pre-planned and sophisticated enterprise. Mr Medalian was the principal in the enterprise with the expectation of profit”.
The Director submitted that an immediate sentence of imprisonment was appropriate having regard to the amount of revenue evaded; the amount of tobacco smuggled; the scale and sophistication of the offending; the fact that Mr Medalian was a principal in the offending and stood to profit from it; the need for general deterrence; and the difficulty in detecting offences of smuggling.
In sentencing for a federal offence there is need for sentencing consistency throughout Australia, which requires that a sentencing court have regard to relevant sentencing practices throughout the country.[7]
[7] R v Pham (2015) 256 CLR 550.
I have had regard to the schedule of cases provided to the sentencing Judge by the Director. The Court was referred to The Queen v Saleh,[8] the first decision of an appellate court considering s 233BABAD, where Mr Saleh pleaded guilty to one count of aiding and abetting the importation of tobacco with intent to defraud the revenue. The importation of tobacco led to the evasion of $996,997.50 in duty. Mr Saleh was sentenced to 20 months, with immediate release on a RRO. On appeal, the New South Wales Court of Criminal Appeal resentenced Mr Saleh to three years’ imprisonment, to be released on a RRO after two years. Mr Saleh was neither the principal nor the importer, but his activities (arranging freight forwarding, delivery and storage) were nonetheless not insubstantial. Mr Saleh was 35 years of age and had prior convictions relating to driving offences, making and using a false instrument, and dealing with property suspected of being proceeds of crime. Mr Saleh was found to have been emotionally vulnerable when approached to commit the offence and claimed to have been paid $3,000 for his role. The offending conduct occurred over a 12-day period.
[8] (2015) 257 A Crim R 212.
The Court was also referred to R v Zhang,[9] where Mr Zhang pleaded guilty to three counts of importing cigarettes and loose tobacco with intent to defraud the revenue. The importation of tobacco led to the evasion of $463,365.67 in duty. He was sentenced to four years and eight months, with a non-parole period of two years, for all offending. For the three counts of importing cigarettes and loose tobacco, Mr Zhang was sentenced to a head sentence of two years and seven months for his role as a principal in the offending committed over six months. This Court dismissed an appeal against the severity of the sentence. Mr Zhang was 24 years of age, had no priors and entered an early guilty plea. The Director pointed out that revenue avoided by Mr Zhang was substantially less than that avoided by Mr Medalian and did not involve travel overseas to source the product.
[9] R v Zhang (2017) 265 A Crim R 113.
Conclusion
I would grant permission to appeal. I would allow the appeal on ground 1. I would set aside the sentence imposed on 18 May 2018 and resentence Mr Medalian.
In resentencing, I bear in mind sentencing practices throughout Australia for similar offending. I note that the use of molasses tobacco is not common in Australia. The unique circumstances of this matter where Mr Medalian, has “served” nine months on the HDO and complied with the strict conditions of home detention, is a relevant matter in arriving at an appropriate sentence. I take into account Mr Medalian’s lack of prior offending, his otherwise good character, and his contribution to the community.
The sentence I would impose to reflect the serious nature of the offending and Mr Medalian’s personal circumstances is a sentence of two years’ imprisonment reduced by 10 percent on account of his guilty plea. This results in a sentence of one year, nine months and 19 days backdated to 18 May 2018. Having regard to the fact that Mr Medalian has spent nine months since the date of sentence on strict conditions of home detention, in the particular circumstances of this matter, I would order that Mr Medalian be immediately released on a RRO pursuant to s 20(1)(b) of the Crimes Act for the term of the sentence I would impose. I would impose as a condition of the RRO that Mr Medalian be of good behaviour for the term of the RRO.
PARKER J: I agree with the reasons of Bampton J and the orders that she proposes.