R v Mrad

[2020] NSWDC 499

District Court

New South Wales

Medium Neutral Citation:

R v Mrad [2020] NSWDC 499

Hearing dates:

26 June 2020

Decision date:

30 July 2020

Jurisdiction:

Criminal

Before:

Bennett SC DCJ

Decision:

The overall effective sentence is one of 2 years 2 months. Order that he be released from custody on 30 September 2021 upon entering a recognizance in himself of an amount of $5,000, to be of good behaviour for 2 years.

Catchwords:

SENTENCING — Federal offenders

SENTENCING — Penalties — Recognizance

TAXES AND DUTIES — Dutiable transactions — Dutiable property — Goods

TAXES AND DUTIES — Dutiable transactions — Dutiable value — Goods

TAXES AND DUTIES — Offences — Proceedings

Legislation Cited:

Crimes Act 1914 (Cth)

Crimes (Sentencing Procedure) Act 1999

CustomsAct1901 (Cth)

Customs Prohibited Imports Regulation 1956

Customs Tariff Act 1995

Cases Cited:

Attorney General’s application under s 37 Crimes (Sentencing Procedure) Act 1999 number 1 of 2002 [2002] NSWCCA 518

Huang v R [2018] NSWCCA 57

Kim v R [2018] NSWCCA 68

R v Bekdache [2018] NSWDC 9

R v Lorenzo Fiordelli [2020] NSWDC 154

R v Saleh [2015] NSWCCA 299

R v Zhang [2017] SASCFC 5

Rakielbakhour v DPP [2020] NSWSC 323

Samardali v R [2018] WASCA 220

Xiao v R [2018] 96 NSWLR 1

Category:

Sentence

Parties:

Regina (Crown)
Gabriel Roger Mrad (Offender)

Representation:

Danielle New (counsel) (Commonwealth Crown)
Ahmad Moutasallem (counsel) (Offender)

Commonwealth Director of Public Prosecutions (Crown)
Stewart & Associates (Offender)

File Number(s):

2019/00094677

Ex Tempore Revised Judgement

INTRODUCTION

1. Gabriel Roger Mrad is before the Court for sentence charged with three offences, all of them contrary to s 233BABAB(1) Customs Act 1901 (Cth).

2. First of these was on 15 August 2018; the second was on 22 October 2018; and the third between 20 January and 26 March 2019.

3. All were at Mascot and all are allegations of the offender having imported goods, being tobacco products, with the intention of defrauding the revenue. Count 3 is in respect of two importations on separate dates rolled into one charge.

MAXIMUM PENALTY

4. The maximum penalty specified for an offence contrary to these provisions is imprisonment for 10 years with or without a fine represented by 1000 penalty units or calculated in accordance with s 233BABAB(5) Customs Act which is in the following terms:

5. “For the purposes of subsection (4), the amount is:

1. 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;

1. If the day on which the offence was committed is known to the Court - that day; or

2. If that day is not known to the Court - the day on which the prosecution for the offence was instituted;

6. five times the amount of that duty; or

1. Otherwise - 1000 penalty units”.

7. Thus for the first count, the fine could be as much as $183,344.00, for the second count $50,521.20, and for the third $270,702.00, and in each case, in the alternative an amount represented by 1000 penalty units.

8. I intend to impose sentences of imprisonment in this case and I choose therefore not to impose a monitory penalty in addition.

9. The Crown notes that the offences contrary to this provision carry the longest maximum term of imprisonment specified in the Customs Act.

THE TIMING OF THE PLEA OF GUILTY

10. It was necessary to arraign the offender upon the offences for which sentence is to be determined but he is entitled to a discount for the utility of his pleas of guilty for he accepted and acknowledged his guilt early in the prosecution. The Crown concedes that for utility it is appropriate to allow a discount of 25% to the sentences that would otherwise have been imposed on the individual offences. The Crown however does not accept that the pleas should be received as evidence of contrition and remorse in the assessment of the subjective aspect of this determination. The Crown case was at the very least compelling and there are challenges to the veracity of the offender’s assertions of contrition and remorse in light of inaccuracies in the documents tendered in his case to which I shall come.

OFFENCES TO BE TAKEN INTO ACCOUNT

11. Pursuant to s 16BA Crimes Act 1914 (Cth) the offender asks that two additional offences be taken into account in the determination of sentence for the third count on the indictment.

12. The first is another offence contrary to s 233BABAD(1) Customs Act alleging the importation of tobacco products with intent to defraud the Revenue on 19 November 2018. The same maximum period of imprisonment applies but the fine which might also be imposed would be $104,015.75 or one represented by 1000 penalty units.

13. The second offence also on 19 November 2018 was of importing objectionable goods in the form of abhorrent material for which the maximum penalty is a fine represented by 1000 penalty units or three times the value of the goods. This offence is contrary to s 233(1)(b) Customs Act.

14. The offender confirmed his wish that these matters be brought to account and admitted his guilt in respect of them. He must be sentenced to a term of imprisonment that will provide appropriate punishment for the offence to which he pleaded guilty and in which these are to be taken into account subject to the consideration that must be given to the additional offences that are brought to account.

15. I note that having availed himself of this arrangement the offender has the benefit of not facing separate punishment for the additional offences. I have reviewed the principles enunciated in Attorney General’s application under s 37 Crimes (Sentencing Procedure) Act 1999 number 1 of 2002 [2002] NSWCCA 518. Bearing in mind that the guideline was concerned with New South Wales offences, an example of the application of these principles to Federal offences is found in Huang v R [2018] NSWCCA 57 at para [55]. Although the legislation is not entirely identical in the Crimes Act of the Commonwealth with the relevant provisions in the Crimes (Sentencing Procedure) Act 1999 in New South Wales the guidance provided by the Chief Justice in the guideline judgement is of application.

16. The additional offences should impact upon the sentence for the principal offence requiring an appropriate increase in the sentence that would otherwise be applied to the principal offence standing alone, thereby to reflect the need for greater weight to be given to the aspect of personal deterrence arising from the extent of the offender’s misconduct and the community’s entitlement to retribution for all of his misconduct including the additional offences: Attorney General’s application under s 37 Crimes (Sentencing Procedure) Act 1999 number 1 of 2002 Ibid at [42].

17. The submission made on the offender’s behalf is that the conduct upon which that charge was prosecuted was in large measure, if not entirely, the same conduct underpinning the principal offence and thus the extent to which the additional offence would impinge upon it would be no more than slight.

18. I do not entirely agree with that proposition. I would say though in relation to the abhorrent material, to which there is no doubt the adjective applies, could attract only a fine if it was prosecuted separately and thus the impact it has will be at best marginal.

19. The extent to which the additional offences will impact upon the principal offence is informed by the nature of the offence, the conduct upon which the Crown would rely in proof of it or which the offender admits. The offender has not given evidence in this presentation and thus it is necessary to consider his out of Court statements that he made in the course of captured conversations regarding the relevant conduct, if there are any, and facts which are either available from the direct evidence before me or available as inferences properly drawn from that direct evidence.

PRE-SENTENCE CUSTODY

20. The offender has spent no time in custody for these offences and therefore the sentences that I impose will commence today.

THE FACTS

21. The offences all occurred between 15 August 2018 and 26 March 2019 in the sequence set forth in the rehearsal of the facts below.

22. He imported over five occasions in total 120.95 kilograms of tobacco products and evaded in total $121,716.59 in duty. It is said on his behalf that relevantly these importations in the aggregate and the duty evaded was of modest proportion but as the Crown has submitted, and with which I agree, it is not only the value of the duty evaded and the quantity of the product that was imported that informs the objective assessment of the offending.

23. It is apparent from the facts that the offender, as he acknowledged, was well aware that he was embarked upon wrongdoing. He was persistent in his endeavour and he adapted to changing circumstances with his sole purpose the avoidance of the obligation he had to pay the duty that was due to the Commonwealth upon importation of these products.

24. I have been taken to authority in which there is discussion at appellate level referring to the second reading speeches on the presentation of the legislation to parliament. The purposes behind this legislation include the need to regulate the ingestion of tobacco, to control if not reduce and obviate the deleterious effects it has upon those who partake in it, and the consequential cost to the community of providing for their care once they are burdened by the diseases which affect them.

25. The facts are of some length. There is a background summary of what is involved in all of these transactions but I will go directly to paras [5] and following for the particular misconduct relevant to each of the allegations to which the offender has pleaded guilty.

26. Count 1 concerns the importation of molasses tobacco on 15 August 2018 in DHL packages. I pause to note that by definition tobacco products include material that contains tobacco and thus it is not the pure tobacco that is found within the bulk of the product which governs the prosecution but the bulk which includes tobacco.

27. The tobacco that is concerned is of a type described as “hookah” or “shisha” tobacco. These are types of tobacco with additives that are used in water pipes through which those using it ingest the smoke.

28. The product brought in on 15 August 2018 had details including an “House Airway Bill Number”, the particulars of a consignor in Jakarta, Indonesia, the consignee GRM Holdings Australia located at Merrylands, and a description “aromatherapy for Incenerated” (sic). The weight was specified at 20 kilograms and the date 14 August 2018.

29. The two packages were examined and each was found to contain 40 boxes labelled “BAKHOORINDO INCENSE”, suspected of containing molasses tobacco.

30. On 7 February 2019 the two consignments were deconstructed and samples taken for analysis. The analysis showed that all samples contained tobacco.

31. At the time of the importation on 15 August 2018 the relevant duty rate for water pipe tobacco was $916.72 per kilogram of tobacco content. The total amount of revenue payable to the Commonwealth on the 40 kilograms of molasses tobacco imported in count 1 would therefore have been $36,668.80.

32. There was an examination of the offender’s Apple iPhone X. On 5 December 2018 Vodafone provided a subscriber check confirming that the service number ending...542 was subscribed to the offender. WhatsApp conversations were examined contained the offender’s Apple iPhone IMEI number ending...294.

33. There were a number of messages between the offender and a man named George understood to be of the family name Hookahfina on 7 August 2018, relating to alteration of the packaging of the imported goods in order to have the goods cleared into Australia.

34. The conversation including the following points: the offender shared the fact that there was a loophole to moving George’s goods into Australia and suggested they needed to work together to benefit from it; the offender discussed the alteration of the packaging of the goods; the offender indicated that he had been shipping two, 20 kilogram DHL boxes daily into Australia for a year, which had been cleared; the offender did not want to get greedy and do big orders to “stuff it up”; the offender advised that George’s alternate business, which would be used in this arrangement, “had to look like a legit business”.

35. On 26 March 2019 he participated in a recorded interview with Australia Border Force officers. He made the following points in the course of his responses: he was the sole director of GRM Holdings Australia and the only person to run the business; he did not specifically remember the two consignments that came into Australia on 15 August 2018 but did remember importing incense from Jakarta, Indonesia; he did not import tobacco on this occasion; he talked to his suppliers about altering packaging to cover up and/or remove the labels on the tobacco but claimed that they were all jokes and he had no intention to go ahead with any of them and never did go ahead with any of them; he was receiving goods used for shisha but packaged as something used to make fragrance and these consignments had nothing to do with George.

36. The inaccuracies or misrepresentations contained in those responses compared with the discovered messages and the product imported are easily clear.

37. The second offence, count 2, importing tobacco products on 22 October 2018 was by way of the airport. On that day the offender arrived into Sydney International Airport from the United States of America on American Airlines flight AA73. He completed an incoming passenger declaration card on which he answered “no” to all questions, notably claiming that he was not bringing into Australia more than 2,250 millilitres of alcoholic beverage or 25 cigarettes or 25 grams of tobacco products.

38. He was subject to baggage examination and in a conversation with Australian Border Force officers he made the following representations:

He read and understood the questions on the incoming passenger card;

He answered the questions on the card himself;

He had signed the card;

He had packed his bags himself;

He was aware of the contents of his bags; and

The contents of the bags belonged to him.

39. When asked questions about anything to declare he said, “I brought some tobacco products from USA”. When asked how much he said, “a certain amount”. When asked why he did not declare them on his incoming passenger card he said, “Sorry, I made a mistake of not declaring on my declaration form. But I did declare on my last trip to US. And I paid duty and GST”.

40. In the course of the baggage examination the officers located 158 x 250 gram packets of “Tea Party premium herbal flavoured molasses” and 44 x 250 gram packets of “Azure premium hookah tobacco gold line Dubai Apple”. These were subsequently held and he was issued a notice of assessment for $13,500.34.

41. On 22 October 2018 Joyce Elkouberci under the offender’s name submitted an online enquiry regarding the importation with custom’s broker, AFI Logistics.

42. On 23 October 2018 the offender lodged an import declaration through AFI Logistics. This described the goods as “Hookah tobacco (43 x 250 g) 15% tobacco content” and listed the total weight of tobacco as 1.6125 kilograms. The amount of duty that was paid with the import declaration was $1,735.61.

43. The import declaration submitted was incorrect as duty was payable on the full weight of the tobacco of 11 kilograms.

44. On 25 October 2018 the offender attended the Australian Border Force client services counter at Sydney International Airport and the goods were released by officers upon the presentation of import declaration number AC7NY3KRA which was the document lodged on 23 October 2018, and upon presentation of Entry for Home Consumption document which showed ‘clear’ in the Australian Border Force integrated cargo system. This was an error.

45. His iPhone was once again examined. WhatsApp conversations were accessed. There were a number of messages between the offender and Raphael Azure on 3 October 2018. The following discussion was captured: the offender recounted his conversation with a Customs agent to Raphael outlining that he was advised to read the laws on tobacco properly; he sent Raphael photos of a website which had the following text highlighted:

“Subsection 3(1) of the Customs Tariff Act defines “tobacco content” as “includes anything (including moisture) added to the tobacco leaf during the manufacturing or processing”... Paragraph 2 of Schedule 2 further explains that: this amendment will clarify the existing reference to “tobacco content” found within the Customs Tariff, confirming that the excise equivalent customs duty payable on tobacco and tobacco product is based on the total weight of the goods”.

46. Thus the offender was aware at the time of that communication on 3 October 2018 what the law provided. The messages continued: following the transfer of the photos the offender expressed the view,

“this project that we (sic) doing has no hope. They cracking (sic) on herbal and tobacco on the same level”.

47. He asked Raphael to wait because he had a “plan b”.

48. There were further WhatsApp conversations between the offender and Raphael in the period 22 to 25 October 2018 discussing the seizure of the goods in count 2 and how they planned to make up the losses that followed. Raphael checked on the status of the goods in count 2. The offender relayed to Raphael about how he was advised by some brokers that they did not want to deal with the offender’s goods and suggested that he “just pay it”. Good advice one might say.

49. The offender advised Raphael that the offender had “one more guy trying but no guarantees”. Raphael offered the offender 50 kilograms for free. The offender represented “my broker knows something is fishy LOL”.

50. The offender has not given evidence to explain in precise terms the representations in these exchanges but “LOL” according to my understanding of communication by way of these applications equates to “laugh out loud”.

51. The Australian government imposes duties on all legally imported tobacco products and at the relevant time, 22 October 2018, the duty rate for water pipe tobacco was $1,076.35 per kilogram of tobacco content. The total amount of revenue payable to the Commonwealth on the 11 kilograms of tobacco imported by the offender would therefore have been $11,839.85. He paid only $1,775.61 therefore the defrauded revenue amount was $10,004.24.

52. Count 3 involved as I noted previously two episodes of importation rolled into one charge. These were on 20 January 2019 and 26 March 2019.

53. On 17 January 2019 the offender arranged for a Full Import Declaration in the amount of $110.07 to be lodged through his broker for 49.8 kilograms of “Tea Party herbal molasses”. This related to the payment of GST for herbal molasses.

54. On 20 January 2019 the offender arrived into Sydney International Airport from the United States on United Airlines flight UA839. He completed an incoming passenger card in which he answered “yes” to bringing into Australia “goods/samples for business/commercial use” and “grains, seeds, bulbs, straw, nuts, plants, parts of plants, traditional medicines or herbs or wooden articles”.

55. He was subject to baggage examination and during conversation with the Australian Border Force officers he acknowledged the incoming passenger card; his signature; he had answered the questions; he went to the United States for business; he was declaring about 50 kilograms of shisha; he had completed an entry and paid the duty on the shisha before coming into Australia; the bags in his possession were his; he packed them himself; and he was aware of the contents.

56. In the course of the baggage examination the officers located 199 packets of “Tea Party herbal flavoured molasses” and shisha accessories. There was conversation that followed regarding the “Tea Party herbal flavoured molasses” found in the baggage.

57. When asked “Is this tobacco?” the offender said, “No, this is made from tea leaves. There is no nicotine (indicating to the package writing)”. When asked, “What is the difference?” he said, “I mix the tobacco with the molasses and I sell it, around 15 grams for $40 a session in my shisha lounge”. When asked why he did not send the shisha through the sea cargo/air cargo or by post he said, “Because it is always seized by Customs and the duty is too high. I would rather bring it in myself because the fees are cheaper. I declare it every time and pay the duty on a formal entry through my broker”. He was asked to provide the name of this broker and he gave a name and said that the broker told him that he would be searched every time he travelled because his name had been flagged.

47. On 7 February 2019, the goods seized on 20 January 2019 were deconstructed and samples taken for testing. On 7 March 2019 all samples were analysed and identified as tobacco molasses.

48. The Australian government imposes a duty on all legally imported tobacco products; at the relevant time of the import, 20 January 2019, the duty rate for water pipe tobacco was $1,076.35 per kilogram of tobacco content [1] . The total amount of revenue payable to the Commonwealth on the 49.75 kilograms of molasses tobacco imported by the offender would therefore have been $53,548.41.

    1. The phrase “tobacco content” used in the statement of facts might be read is a reference to the content of tobacco in the bulk, which as I understood the Crown case is not correct. As I understood the matter consistent with what follows immediately, it is the bulk which includes tobacco content to which calculation for the duty is applied.

49. He was interviewed on 26 March 2019 regarding this product. He said: the content goods definitely did not have tobacco; he was pretty shocked when he was advised that the analysis came back as containing tobacco; he continued to import tobacco goods after knowing the duty was calculated on weight and not content, “because he just intended to pay duty on the content”.

50. There was further questioning in which the officers put to him that the bags of “Tea Party” branded herbal flavoured molasses had a number written on the packaging which corresponded with the number written on the “Tangier” branded tobacco labels. He was asked why the product in the “Tea Party” branded packets smelt like the flavour listed on the “Tangier” label which shared the same number. He said that the product came in herbal and tobacco form and he used the numbers to label them accordingly.

51. It was put to him that it seemed as if he was going to put the “Tea Party” branded content into the “Tangier” branded packaging. The offender said that he understood that it appeared this way but he was surprised himself.

52. The responses when placed against the facts and what is known from the communications captured and a letter which is produced to the Court were, to a certain degree at least, disingenuous.

53. On 26 March 2019 he engaged in his misconduct by way of an airport walkthrough. He arrived into Sydney International Airport from Qatar on Qatar Airlines flight QR2906. He had completed an incoming passenger card in which he answered “no” to all questions, notably claiming that he was not bringing into Australia more than 2,250 mils of alcohol beverage or 25 cigarettes or kilograms of tobacco product.

54. He was subject to a baggage examination by officers and he represented: the incoming passenger card belonged to him; it was his signature; the bags belonged to him; he packed them and he was aware of the contents.

55. In the course of the examination the officers located a gold Apple MacBook laptop, 9 x 50 g packets of “Al Fakher” molasses, 1 x 100 gram packet of “Strikingly Fresh” lemon mint hookah tobacco.

56. The Australian government imposes duties on all legally imported tobacco products. At the relevant time of the imports, 26 March 2019, the duty rate for water pipe tobacco was $1,076.35 per kilogram. The total amount of revenue payable to the Commonwealth on the 550 grams of molasses tobacco imported by the offender would therefore have been $591.99.

57. He was interviewed. He was aware that the tobacco goods in his possession needed to be declared. He signed the incoming passenger card. He did not declare the tobacco. He said the tobacco was for his personal use. He was aware of the duty rates for tobacco and he purchased tobacco goods in Lebanon. The second importation by way of the airport walkthrough clearly is of less significance than the earlier event in this rolled-up charge.

58. The offences to be taken into account pursuant to s 16BA Crimes Act 1914 were first of all on 19 November 2018 when he arrived into Brisbane International Airport from the United States on Qantas airline flight QF56. He completed an incoming passenger card in which he answered yes to bringing into Australia more than 2,250 mils of alcohol beverages or 25 cigarettes or 25 grams of tobacco products.

59. He was subject to baggage examination and answered questions regarding the incoming passenger card in similar terms to his earlier responses to which I have already referred. In addition to acknowledging the matters of formality said he was declaring 1.5 to 2 kilograms of tobacco and that the other items were tobacco free.

60. There was a review of his “Super Dry” brand backpack in which the officers found nine x 100g packets of “Strikingly Fresh” branded tobacco, five x 250g packets of various branded tobacco and 50 “Tangiers” branded hookah tobacco labels. Further examination of his other luggage located 20 x 250 gram containers of “URTH” branded hookah molasses and 50 x 250 gram silver-tip lock pouches labelled “Tea Party handcrafted flavoured tea”.

61. He said that the items carried in the “Super Dry” backpack contained tobacco but that the items found in the other bag, such as the contents of the “URTH” branded containers and the “Tea Party” zip-locked pouches, did not contain tobacco but were an alternative for those who wanted tobacco free shisha. He also stated that he had a certificate of analysis from the manufacturer to support this.

62. The officers compared the “Tangiers” branded tobacco products with the contents within the “Tea Party” branded silver pouches and noted similarities. He was asked by the officers why he had 50 labels of tobacco and the corresponding number of empty containers and put to the offender that they believed that the contents of 50 “Tea Party” branded pouches were identical to the “Tangiers” branded tobacco. He maintained that the “Tea Party” branded products were tobacco free and that he had the tobacco labels for his personal use.

63. He was asked whether he wanted to pay tax on the tobacco products that he declared. He responded by saying that the duty on the tobacco should only be charged at 15% of the product’s weight as it had been tested in the lab to only contain 15% tobacco. He also said that when he previously imported tobacco through the Sydney airport they only charged him for 15% of the weight. The officer explained that he was not aware of how they dealt with the issue in Sydney but that the tax payable was assessed on the total weight of the tobacco product. The offender responded by saying that he did not want to pay the tax on the tobacco product.

64. The representation of his understanding of how calculations were made in Sydney was flawed.

65. The following goods were held by Australian Border Force. They were the 50 x 250 gram zip-locked silver pouches labelled “Tea Party handcrafted flavour teas”, the 50 Tangiers labels, and the 20 x 250 gram containers of “URTH” branded hookah molasses.

66. The analysis that followed after deconstruction on 21 November 2018 was on the 14 January 2018. Also analysed at that time were goods found in the offender’s other bags on 5 December 2018 which were deconstructed. Again the duty payable at that time was $1,076.35 per kilogram. The total amount of revenue payable for this offence on 17.5 kilograms of tobacco not declared and imported by the offender amounted to $18,836.13.

67. The total amount payable to the Commonwealth on the 2.15 kilograms of tobacco which he imported amounted to $2,314.15. Though he declared this product he knew at the time that the method of calculation he represented was not the correct method of calculating the duty. This is available to be drawn from the messages to which I earlier referred found at paras [22] and [23] at the agreed statement of facts.

68. The amount of the intended defrauded revenue in relation to these items was $1,967.03 and therefore the total amount payable to the Commonwealth was $20,803.16. This is the sum of the $1,967.03 and $18,836.13.

69. His phone was again analysed. There were two video files found which showed the execution of a man. These were properly classified as abhorrent according to the relevant regulation, 4A(1A)(a) Customs Prohibited Imports Regulation 1956.

70. On 23 September 2019 his iPhone was subject to a further examination and there were two further videos showing the execution of a man located on the phone. Again these were classified properly as abhorrent.

71. When he was interviewed about these importations on 26 March 2019 he said: he brought some tobacco products along with some non-tobacco products; all goods were seized pending testing; the tobacco products were thrown away without giving him the opportunity to pay for them; he denied that the “Tea Party” and “URTH” branded herbal products were tobacco; he admitted importing the “Strikingly Fresh” and “Tangiers” branded tobacco; he was aware there were video files of someone being shot on his phone and these were shared by his friends in a group chat approximately four years ago.

72. I confess I am unfamiliar with those particular Commonwealth offences but the maximum penalty in my respectful opinion seems to me to be entirely inadequate for having such abhorrent material and for bringing it into the country. I find it extraordinary that anyone could find any benefit from watching someone actually lose their life in circumstances as they are depicted. I do not know what is contained on those recordings. I have not seen them nor do I want to see them. I have sufficient information for the purpose of dealing with this as an additional offence to be taken into account.

73. There were further messages harvested from the offender’s WhatsApp account, here summarised from Annexure A to the agreed statement facts [2] : discussion of arrangements to initially import shipments of non-tobacco products under a brand name to establish trust with Customs to be followed by importing tobacco packaged in that brand to facilitate Custom’s clearance - 2, 4 and 6 in Annexure A; alteration of packages and the splitting of shipments of tobacco imports was to facilitate customs clearance - annexure A in paras [1] and [3]; tax excise payable on tobacco as at 3 August 2018 was discussed - at 3 of annexure A; the offender was researching relevant customs law for the purpose of disguising tobacco as a product of similar appearance but attracting no duty; the definition of “tobacco content” as outlined on the Customs Tariff Act 1995 as of 3 October 2019 is at topic 5 in the Annexure; research of relevant customs laws - item 7; discussions with the person Raphael about the shipment of tobacco disguised as maple leaves and honey at topic 7; preparation of falsified documents to disguise tobacco products as products which do not attract duty at topic 8.

    2. These topic or item numbers correspond with the subject matter divided into groups correspondingly numbered against the date upon which the conversations occurred.

74. I have read through the Annexure. There is no question that the offender knew what he was about in this conduct. He was taking strident means to avoid his obligations with regard to the payment of duty upon the importation of tobacco products.

75. The facts were supplemented with additional material which has not caused me to do other than to observe on the reliability of the statement he has provided with regard to the circumstances of the offending and his circumstances.

76. I have assessed his objective gravity with regard to the facts upon which the prosecution is brought for these offences. It is below midrange I would accept. The quantities involved and the amount of taxable duty evaded was relatively of modest proportion compared with other cases to which I have been taken.

77. But that is not the only factor that one considers when determining the objective gravity of the misconduct as has been correctly pointed out by the Crown in the submissions to which I shall come, but one way or another it could not be said that these individual offences fall near midrange, they are well below it. It does not follow however that the offender should avoid the punishment that he has earned in engaging upon what he has.

78. The additional material that is before me by way of exhibit B followed the presentation of the case before me on the earlier occasion when the matter was heard, when the offender produced a statement. He did not give evidence. This is untested material not given under oath or affirmation.

79. Some of it I would accept, because it could not be controversial.

THE OFFENDER

91. He was born in Beirut in 1984 and he came to New Zealand in 2001 where he lived until he moved to Sydney. His parents moved to Sydney in 2008. His father opened a tobacconist shop in Kingswood and later in Mount Druitt. He is well qualified in systems engineering and electro technology at university level. He followed the career of security electronic engineer until he sold the business that he operated and moved to Sydney to be closer to his parents and two brothers. He continued working for an electronic security supplier in Parramatta with big projects such as the Commonwealth Bank new building in Darling Harbour and other school projects and for retail outlets.

92. About 2013 he began working in the tobacco industry and opened a franchise store “Tobacco Station Group” at Merrylands. He married his wife in 2013 in Lebanon. She followed him to Australia but was here on a temporary visa. Regrettably in 2017 she was diagnosed with multiple sclerosis and because there was no Medicare entitlement in this country, and they had insufficient funds to pay for her treatment, she returned to Lebanon; he has been able to visit her once.

93. He is now living alone in Parramatta in rental accommodation; he says, “I am employed as a fulltime manager with “Australian American Tobacco”. I shall deal with the significance of that in a moment.

94. He acknowledged his plea of guilty to the three counts of importing tobacco products with intent to defraud the Revenue and acknowledged the further offences to be taken into account. He wrote:

“I know what I did was in 2018-2019 was illegal (sic) and I want to the Court to understand that I am truly remorseful for my actions. I knew that I was importing tobacco with the intention of defrauding the Revenue. I was taking a shortcut to try and get some money together to invest in my business”.

95. I note that the word “was” was repeated in the statement he provided, as I quoted it.

96. The arrest on 26 March 2019 was a huge wake-up call he said. He apologised to the Commonwealth sincerely. His decisions and his wrongdoing have him where he is. He feels ashamed for what he has done.

97. Paragraph [11] he writes:

“Since 26 March 2019, I am have (sic) remained involved in the shisha industry. I still import tobacco but I make sure that everything is done legally and that taxes are paid. I am currently employed fulltime in a company called Australian American Tobacco. This business is in its infancy, it is growing, I realise that there is a way to earn a living in this industry by doing the right thing.

So far, I have been involved in one importation in November 2019. In about November 2019 I was involved in the legal shipment of about 100 kilogram tobacco. The duty of the tobacco was paid on $144,469.02. Annexed to this document is the relevant tax invoice and a copy of the remittance”.

98. The Crown provided a current and historic company extract from ASIC recording that Australian American Tobacco Proprietary Limited had as a director the offender appointed on 27 June 2019 upon which date he ceased to hold that office.

99. The director and secretary of the company on 22 February 2019 is Andrew Stewart who is the offender’s solicitor acting for him and instructing counsel in these proceedings. Other members of this company are Monajed Holdings Proprietary Limited of the same address as Mr Stewart, Mrad Nominees Proprietary Limited, again of the same address as Mr Stewart, A & L Proprietary Limited at Bossley Park and Stewart Nominees Proprietary Limited of Engadine. Shares held by the members are 495 in the company Monajed Holdings Proprietary Limited, 495 in Mrad Nominees Proprietary Limited and respectively five each in the other two members.

100. First of all, it is noteworthy that the involvement in this company by the offender seems to be more than what he represented in his statement. That said, there is a measure of ambiguity in para [11] that I have quoted when he refers to the business in its infancy, growing, and his realisation that there is a way to earn a living by doing the right thing. Thus one might read that representation as consistent with someone who has a high level of executive function and interest in a company which he represents to be his employer, providing work for him as a fulltime manager.

101. Suspicious though one might be of that apparent inconsistency between the statement he provided and the records upon which he has not given evidence, I put it to one side in the assessment of this matter.

102. Of greater concern though are seizure notices on 18 September 2019, 20 September 2019 and 22 October 2019 in respect of 6,000 grams of tobacco, 7,000 grams of tobacco product and 1,000 grams of tobacco product respectively which is somewhat inconsistent with his representation regarding involvement in one importation in November 2019.

103. There is also material in his case in support of the diagnosis of his wife. The first symptoms were discovered in 2010. Diagnosis was made in July 2016 and since August 2019 she has been prescribed medication described in the report provided in the form of a multiple sclerosis evaluation. She was asymptomatic until 2016. There has been an MRI examination of her brain and spine showing non-specific white matter abnormalities and cervical spine lesions.

104. The development of this condition is discussed, treatment administered so far at the date of this document which bears 22 June 2020. The Crown has not challenged any of this material. I take it into account as being part of the material that informs a subjective case presented on behalf of the offender, but apart from the fact of her affliction and her location in Lebanon nothing else has been put before me to quantify whatever added distress he might be suffering as a consequence. However, I would accept that there must be some if he is in a relationship that has love and care that one would expect between them a husband and wife with a child of five years.

105. There is a reference speaking to the characteristics of the offender provided by Mr Swiney. He has been in various business ventures with the offender, and suggests he is honest and straightforward. The offender was under a lot of pressure when his wife and daughter had to return to Lebanon because of her medical condition and in their absence he may have been led into the problem that he has at the moment. How that is to be quantified or qualified he does not explain.

106. There is another reference from Ms Lipnicki with whom the offender has worked closely it is said. They have a strong friendship. She has her own business in Western Australia. She is aware of the charges which she attributes to poor judgement.

107. The offender has relied upon the present challenges that the community is facing by reason of the COVID-19 pandemic that has all but brought the world to its knees with impact upon all social activity and deteriorating economies across the globe. As at 25 March 2020 there were no infections within New South Wales Corrective Services establishments. I have a bundle of documents describing the strategies employed to obviate the risk of infection to inmates and staff. These include the cessation of contact or face-to-face visits and measures no doubt to ensure that the premises are kept clean. The only reported infection came yesterday when an offender or an accused - it is not entirely clear what the person’s status is - was apprehended after having travelled from Victoria and was found upon admission to the Parklea Correctional Centre to have the infection. There could be no doubt that Corrective Services will have detected this intrusion into the community within Corrective Services and taken steps to protect staff and inmates from the risk of exposure.

CONSIDERATION

108. The offender does have additional punishment to face as a consequence of the arrangements in place in Corrective Services; I accept that. This has informed the head sentences I have adopted in each case.

109. Subject to what one might say about the qualification that must be brought to bear with regard to his representations of contrition and remorse I am satisfied that he should spend a lesser time in custody than might otherwise have been appropriate so that he might build upon opportunities to restore his circumstances in the community and take what steps he might to engage upon business in a lawful manner without resorting to what were clearly deliberate and persistent strategies to deny the Commonwealth the revenue to which it was entitled.

110. I have already reflected upon what was observed in other authorities as to the goals sought to be achieved by this legislation but there is another dimension to this by reason of the faltering economy in this country and the need for the Commonwealth government and State governments across the Commonwealth to find resources to meet the challenges that they have been required to face.

111. The obligation we all have in the community is to make sure we pay our taxes whether by way of income tax, State revenue tax or duties and excise that might be due upon products that we consume or otherwise have at our disposal. When any of us fail to meet our obligations that must impact upon the wealth of the country and the opportunity that those responsible for government will have to meet the challenges and provide for the members of the community in need of help.

112. It would not take much research to realise that this country was to be coming out of a period of deficit, whereas it is now facing immeasurable debt for an extended period of time, and likely to increase. People in the community have sacrificed income, have sacrificed opportunities for review of income, all in the interests of the common good.

113. People who evade their responsibilities such as this offender deserve punishment and it must be made clear to those who might be tempted to avoid tax or duty, such as in this case, that if they are detected in the enterprise they will be punished and that other than in the most exceptional and substantial cases it will result in imprisonment.

114. I have not overlooked the submissions put on behalf of the offender which are urged vigorously, and to the full extent that could be argued. The submissions have come orally and in writing, first by way of a document prepared for the first hearing of the matter and thereafter with further submissions close to the day when I was to impose sentence and deliver judgement, which resulted in the Crown having to provide responsive submissions to those of the offender and for both parties to have the opportunity to make final submissions in light of the further material presented to me, lest it be suggested that they might be denied procedural fairness.

115. Thus the plea of guilty it was said on behalf of the offender involved two features; the utility for which discount of 25% must be applied in accordance with the decision in Xiao v R [2018] 96 NSWLR 1; [2018] NSWCCA 4, and also to reflect the extent to which the plea of guilty in each case facilitated the course of justice, or as the Crown has put it, the subjective aspect that the plea of guilty reflected contrition and remorse, which must be assessed in the face of the overwhelming Crown case that the offender would have had to face.

116. There is a question hanging over the extent to which he has demonstrated contrition and remorse but on balance, notwithstanding the material tendered on behalf of the offender, I will give him the benefit of the doubt in that regard and find that he is contrite and remorseful, at the same time recognising the inevitability of his predicament arising significantly from his representations harvested from the WhatsApp application, making clear what he was about and his state of awareness of wrongdoing.

117. Submissions were made with regard to objective seriousness and I was urged to give consideration to the amount of duty evaded as a factor to be considered amongst other factors but with predominant weight upon that aspect of the case.

118. It is acknowledged in the first tranche of submissions that the amount of duty evaded was a significant factor, or at least appeared to be. Some of the authorities with which I have been provided speak of people who evaded up to a million dollars in tax, leading to significant periods of imprisonment.

119. The observations made by his Honour Berman J SC of this court in R v Bekdache [2018] NSWDC 9 were relied upon with regard to the amounts specified, but as his Honour noted:

“A person who evaded personal income tax of $1,000,000 or defrauded social security of that sum would be regarded as a seriously dishonest criminal, but there is one aspect of what the offender did which arguably makes his conduct more serious - his evasion of the amount of duty payable came when he imported an addictive substance capable of causing harm to those who use it and to society generally”.

120. That resonates with what I said earlier about the purpose in having this duty imposed upon tobacco products.

121. The ultimate submission made is that a fulltime custodial sentence is not the only option available. It is conceded that there was some level of planning, premeditation and adaptation. I would suggest that this conduct was replete with planning, premedication and adaptation.

122. The concession is made that it continued over seven months. It was not elaborate or sophisticated; that I would accept. It was motivated by financial gain. He was not party of a criminal enterprise, he was the individual who engaged upon this for his own gain. I bring that to account. I agree with the submission that the conduct was below midrange.

123. Reliance is placed upon his statement and the role that he says he has with Australian American Tobacco; the proposition that he has contrition and remorse is, I would suggest, challenged by the latest seizures to which I have already referred, but at this point in the process I would accept that he regrets having engaged upon this conduct. I bring that to account.

124. Whether he is likely to reoffend is a matter upon which I withhold comment at this time. I would not find that his prospects for not offending are unguarded in light of the attitudes I have seen in the material in which he is the person engaged in direct speech.

125. The further submissions that prompted the need for responsive submissions from the Crown drew heavily upon the decision by Yehia SC DCJ of this Court. The judgement is R v Lorenzo Fiordelli [2020] NSWDC 154 decided earlier this year. The offender in that case did not receive a fulltime custodial sentence. Her Honour was moved by the significance of the COVID-19 pandemic in the sentencing exercise.

126. The person was charged in respect of six offences of jointly importing tobacco contrary to the same provision with which I am concerned and he was sentenced for 20 months to be served by way of an intensive corrections order. The amount payable was specified at $984,474.54.

127. The passage of the judgement dealing with the COVID-19 pandemic as quoted beginning at para [106] through to [119] with reference to cases that have been called upon to consider this problem, including a decision by Hamill J in Rakielbakhour v DPP [2020] NSWSC at 323.

128. His Honour spoke of gaols and similar institutions particularly susceptible to rapid spread should the disease find its way into the establishment. As the Crown correctly points out, his Honour was not concerned with sentencing the person; he was dealing with a bail application, although it cannot be said the concerns his Honour expressed are not relevant to the assessment of punishment in this case and I take it into account in that context.

129. The Crown supplementary submissions, which I will deal with at this point before I get to the main submissions, note that Fiordelli had no similarities to the present case. It submits, and I agree, that this is objectively more serious.

130. There is no evidence of age, health or family related issues insofar as the offender is concerned that could be brought to account with regard to COVID‑19. Every case will turn on its own facts and the person’s first time in custody upon which the offender relies is not a consideration relevant to the non-parole period. That is so. Standing alone it does not inform that decision but it is not ignored in conjunction with other matters that might inform the date upon which release is to be ordered.

131. The Crown correctly points out that the amount of revenue evaded is but one factor to be considered. It is noted that the offender deliberately imported relatively smaller amounts of tobacco than would be imported in shipping or airfreight consignments with his purpose to successfully avoid revenue.

132. The distinctions between this case and Fiordelli are summarised. Fiordelli involved the importation of large consignments and there were three participants in the enterprise. The offender in that case was not involved in the sourcing of tobacco whereas this offender sourced the tobacco and was solely responsible for bringing it into the country and solely responsible for the evasion that followed.

133. The co-offender of Fiordelli initiated the enterprise and organised sellers et cetera, and received fulltime imprisonment to be released after nine months. The offender’s motivation in the matter before Yehia SC DCJ was financial distress and significant debt. This enterprise in which this offender before me engaged was solely for personal financial gain.

134. His honesty and reliability is called into question because of his representation as an employee of Australia American Tobacco Proprietary Limited. It is suggested that upon proper analysis he is the alter ego of that company. The Crown also points to the further seizures reflecting further attempts to import tobacco.

135. There is the length of time in which he engaged on this misconduct. It was planned. He undertook measures to evade revenue adapting to circumstances as were presented to him.

136. I agree with the proposition it should be guarded on prospects of rehabilitation. I agree that this case turns on its own facts and at best the decision of Fiordelli provides an example of the approach to be taken in such a matter bearing in mind the differences between the two cases.

137. The Crown addressed the COVID-19 issues and noted there is no affidavit evidence or other representations from the offender regarding his own health or age or other related issues that might suggest he is at greater risk than the community generally.

138. The Crown acknowledges his lack of antecedents. It is said there is no evidence why his first term of fulltime custody might play more heavily on him. One might say that is correct. All I have is the fact of his wife’s predicament, which is clearly profound, but there is nothing before me with regard to that and the connection and impact upon the offender. He would be unable to travel to be with her in any event even without these proceedings because the border is closed for overseas travel.

139. The Crown has taken me through in her initial submissions the paragraphs in s 16A(2) Crimes Act1914. She urges partial accumulation upon the individual sentences which I have settled upon, and agrees with the proposition the sentence will be less than three years so a recognisance release order will be required.

140. I should note here that having looked at the JusticeLink system it does not comfortably accept the application of s19AC Crimes Act 1914 which requires a single recognisance release order. The structure of the entry into that system does not unfortunately reflect what the provision requires and the entry will be endorsed with a notation to explain how the electronic record of the Court, which becomes the record of the Court under the present state of the law, must be read in conjunction with the terms of s 19AC Crimes Act.

141. The Crown reminds me of the sequence of offending, the third count being a rolled-up charge, and the application of the principles in R v Saleh [2015] NSWCCA 299, which was the first appellate decision to consider this provision. The relevant considerations are the amount of tax defrauded, the scale of the enterprise, and the role of the offender in the enterprise and the profit to be achieved in the enterprise.

142. In the South Australian Supreme Court in R v Zhang [2017] SASCFC 5, the objective seriousness was assessed according to the role that the offender took, the sophistication of the offending, the period involved, the quantity imported and the amount evaded, whether the revenue had been repaid and whether there had been false identity (there is no suggestion of that in this case), whether he was involved in the distribution and sale of tobacco products, which this offender was, and the financial gain to be derived from the offending, which in this case fell to the offender.

143. I referred to the authority dealing with the motivation for parliament introducing this legislation. That is found in a judgement of R S Hulme AJ in Saleh where his Honour wrote:

“...the rationale advanced by the Attorney General at the time, viz. the need for penalties to provide a strong deterrent against illegal importation...the use of tobacco was something that the legislature had clearly indicated a desire to discourage by the imposition of increased duties, and that importations such as that assisted by the Respondent were calculated to contribute to tobacco being available at cheaper prices, increasing its use as a result”.

144. The Crown reminds me of the maximum penalty. It reminds me of the nature and circumstances of the offence in each case.

145. In respect of count 1 the label that was used, “Bakhoorindo incense”, in an attempt to conceal the presence of the tobacco in the packages, was a planned measure to evade the duty.

146. In count 2, two months later, a different mode of importation to conceal the activity is described. In the schedule offences a month after that, again travelling to the USA, adapting the circumstances, and the discussions that are reflected in annexure A dealing with arrangements to initially import shipments of tea under a brand name and using that tea name to successfully import tobacco at a later date; further planning in an attempt to deliberately conceal the larger amounts of tobacco in his luggage.

147. Count 3, the rolled-up offences, each three months after the previous offence. The facts are summarised and the Crown submits it was his direct, if not sole responsibility, for the importation and evasion of the duty.

148. The Crown concedes this was not elaborate or sophisticated but, and I agree, it was premeditated, planned and adapted to each obstacle presented. It was over the period of seven months and engaged upon repeatedly. He stood to gain financially. He possessed the tobacco products for future sale. He was the sole director of a business specialising in the sale of hookahs tobacco sold in his shisha lounge. He discussed his losses resulting in the seizure of tobacco goods and he researched customs law, well aware therefore of his obligations and the extent of his misconduct.

149. The total quantity and the total evasion are nominated. His attempts to deflect and conceal and his communication with other persons who were interested in the enterprise are also relied upon. He has also demonstrated familiarity with the processes.

150. The import of objectionable goods is discussed and it is noted that this assumes less relevance in the entire context with which I am concerned. This offending occurred within a course of conduct occasioned over seven months; the reasons why the Crown advances that submission are outlined; I agree with those.

151. The plea of guilty is then discussed. Utilitarian value is acknowledged. The subjective value of the plea requires proof on the balance of probabilities, proof of genuine remorse, acceptance of responsibility and the willingness to facilitate the course of justice; the strength of the prosecution case is relevant to this. As I have already indicated I am prepared to give the offender the benefit of the doubt in this regard in light of content of at least some of the statement he provided.

152. The Crown submits any subjective value of the guilty plea is limited. I cannot, I agree, give full measure for those subjective matters but he will have the benefit of a finding of contrition and remorse, albeit with the qualification that I cannot be satisfied of his prospects of not reoffending.

153. The Crown had the disadvantage of preparing this document without the material that had been offered by the offender but what is written here is apposite. She reminds me of the need for specific deterrence which is a matter which must be given due weight in this case, particularly in light of the subsequent importation or seizures I should say of tobacco to which I have referred.

154. General deterrence must be given appropriate weight both in terms of the undermining of health measures in this case and the loss of revenue to the government. There must be appropriate punishment. He has only traffic offences on his record but they are within that context not without significance and demonstrate an unfortunate attitude as a member of our community; but overall the record is of little moment in the assessment of punishment in this case.

155. I have already commented upon the prospects of rehabilitation and I am assisted with the course to be taken with structuring the sentence and the need for a period of time to provide an incentive for his rehabilitation.

156. I am provided with a summary of the relevant provisions for the imposition of sentence and I am provided with a summary of cases where the Courts have considered appropriate punishment. These include the decision of Kim v R [2018] NSWCCA 68, which I have reviewed, R v Saleh, Ibid, to which I have already referred, and Samardali v R [2018] WASCA 220 and R v Zhang Ibid.

157. I am satisfied that there is no sentence other than imprisonment to be imposed in this case. I have looked at the other options that are available to me. The objective seriousness of this misconduct is such that the qualified subjective case that has been presented on his behalf does not persuade me that I should do other than impose custodial sentences for these offences.

158. I have taken into account the additional offences and I will certify that I have done so.

THE SENTENCES

159. For each of the three counts on the indictment I make the following orders:

160. The offender is convicted.

161. For count 2, I specify a period of imprisonment a period of 1 year and 1 month, commencing on 30 July 2020. That will expire on 29 September 2021.

162. [THE END DATE OF THIS SENTENCE SHOULD HAVE BEEN 29 AUGUST 2021, the transcript of this exchange between bench and bar appears in the draft iteration of the ex tempore judgement]

163. For count 1 on the indictment I specify a term of imprisonment of 1 year and 6 months, commencing on 30 August 2020 and expiring on 29 January 2020.

164. [THE END DATE OF THIS SENTENCE SHOULD HAVE BEEN 28 FEBRUARY 2022, the transcript of this exchange between bench and bar appears in the draft iteration of the ex tempore judgement]

165. For count 3, taking into account the additional offences, I specify a period of imprisonment of 2 years commencing on 30 September 2020, expiring on 29 September 2022.

166. In each case I have applied a discount of 25% for the sentences that I would have otherwise imposed.

167. I order that the offender be released after serving 1 year and 2 months of this sentence. The overall head sentence is one of 2 years and 2 months from 30 July 2020 to expire on 29 September 2022. After serving 1 year and 2 months of the sentences he is to be released. That will be on 29 September 2021, and he will be released upon him entering into a recognizance release order himself in the sum of $5,000 to be of good behaviour for a period of 2 years.

159. In fact it’s after 29 September. The end of business on 29 September it expires. I should in those circumstances make that 30 September 2021, because the 1 year and 2 months expires on 29 September 2021. Stand up, please, Mr Mrad I need to explain to you what the sentence is.

160. You have an overall a sentence of 2 years and 2 months including a custodial component of 1 year and 2 months which will expire on 29 September 2021. Thereafter on 30 September 2021, the following day, you will be released upon recognizance release order. You will have to sign an agreement to be of good behaviour for a period of 2 years.

161. If you fail to comply with that you will be brought back to Court to answer for the breach and I will need to deal with that with regard to the release date that you would otherwise have enjoyed.

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Endnotes

Decision last updated: 03 September 2020