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Supreme Court 1 September 2005

CEO of Customs v Coulton

[2005] NSWSC 869

Fraud & dishonesty
PROCEEDINGS CRIMINAL IN NATURE IMPORTATION OF TOBACCO ADMISSION OF GUILT CONVICTIONS THREE OFFENCES OF SMUGGLING PENALTIES PROVIDED BY THE ACT

Citation: CEO of Customs v Coulton [2005] NSWSC 869
Court: Supreme Court of New South Wales
Date: 1 September 2005
Judge(s): Simpson J

Background

The Chief Executive Officer of Customs brought civil penalty proceedings against an individual who had orchestrated three separate importations of tobacco into Australia during 1999. The proceedings were criminal in nature, brought under the Customs Act 1901. The defendant had evaded customs duty by disguising large quantities of Drum tobacco as other goods, first as coconut soap and then as motor oil, and by instructing licensed customs brokers to submit false importation documents.

The three importations involved approximately 349,000g, 383,000g, and 1,069,000g of Drum tobacco respectively. Total duty evaded across all three importations amounted to approximately $390,489. The first and third shipments were seized by Customs officers on arrival; the second was released to the defendant and presumably entered the market.

After initially filing a defence disputing a number of facts, the defendant ultimately consented to nine convictions on the day the contested hearing was due to commence. The judgment therefore dealt solely with the appropriate penalties, a reparation order, and costs.

  • What penalties were appropriate for each of the nine offences, having regard to the statutory maxima and minima under the Customs Act 1901?
  • How should the principle of totality be applied across nine offences arising from three separate criminal enterprises?
  • What weight should be given to general and specific deterrence, and to the defendant's subjective circumstances, including his admission of guilt?
  • Whether a reparation order should be made in respect of the duty evaded on the second importation (the only shipment not seized).
  • Whether the defendant should be ordered to pay the plaintiff's costs of the proceedings.

Decision

The Court convicted the defendant of nine offences in total: three counts of smuggling under s233(1)(a), three counts of evading payment of duty under s234(1)(a), and three counts of knowingly or recklessly making a false or misleading statement to a Customs officer under s234(1)(d)(i) of the Customs Act 1901. Each group of three offences corresponded to one of the three importations.

In selecting penalties, Simpson J calibrated each penalty primarily to the amount of duty evaded in the relevant importation. The third importation, which involved the largest quantity of tobacco and the greatest duty liability, attracted the heaviest penalties. The Court applied the principle of totality to ensure the overall penalty package remained proportionate, and considered both general and specific deterrence as relevant sentencing factors.

The Court accepted the defendant's admission of guilt as a mitigating circumstance, but the penalties nonetheless reflected the serious and deliberate nature of the offending, including the use of false identities, false documentation, and the involvement of licensed customs brokers.

A reparation order of $83,215.08 was made in respect of the second importation only, representing the duty actually evaded on that shipment (the one not seized). The Court noted no reason had been advanced against such an order. A costs order was also made under s263 of the Act on the basis that declining to make it would effectively reduce the practical benefit of the penalties imposed.

Orders Made

  • First importation: conviction for smuggling, penalty $135,000; conviction for evading duty, penalty $135,000; conviction for making a false or misleading statement, penalty $45,000.
  • Second importation: conviction for smuggling, penalty $180,000; conviction for evading duty, penalty $180,000; conviction for making a false or misleading statement, penalty $72,000.
  • Third importation: conviction for smuggling, penalty $540,000; conviction for evading duty, penalty $540,000; conviction for making a false or misleading statement, penalty $225,000.
  • Reparation order of $83,215.08 in favour of the plaintiff pursuant to s21B of the Crimes Act 1914 (Cth).
  • Defendant to pay the plaintiff's costs of the proceedings pursuant to s263 of the Customs Act 1901.
  • Total penalties: $2,052,000.

Key Takeaways

  • The amount of duty evaded was the primary factor in calibrating penalties for tobacco smuggling and duty evasion offences under the Customs Act 1901, with each offence scaled to the seriousness of the corresponding importation.
  • Where multiple offences arise from a series of related criminal enterprises, the principle of totality requires the court to ensure the aggregate penalty remains proportionate to the overall offending, rather than simply accumulating penalties mechanically.
  • An admission of guilt is a relevant mitigating factor in proceedings that are criminal in nature, even where those proceedings are brought by way of civil enforcement under the Customs Act 1901.
  • A reparation order under s21B of the Crimes Act 1914 (Cth) was available and appropriate in respect of the importation where duty was actually lost to the Commonwealth (because the goods were not seized), but was not sought in respect of the shipments that were intercepted.
  • Under s263 of the Customs Act 1901, a costs order in favour of the plaintiff is available as a matter of course, and declining to make it would undermine the effective value of the penalty regime.

Legislation and Cases Referenced

Legislation:
- Customs Act 1901 (Cth): ss233(1)(a), 233AB(1), 234(1)(a), 234(1)(d)(i), 234(2)(a), 234(2)(c), 263
- Crimes Act 1914 (Cth): ss4K, 16A(1), 16A(2)(c), 21B
- Crimes Act 1900 (NSW)

Cases:
- Cameron v The Queen [2002] HCA 6
- Chief Executive Officer of Customs v Mourad El Sayed [2003] NSWSC 1092
- Comptroller-General (Customs) v Wong and Rizoli Pty Ltd (1998) 103 A Crim R 491
- L Vogel and Sons Pty Ltd v Anderson [1967] HCA 46; 120 CLR 157
- Murphy v H.F. Trading Company Pty Ltd (1973) 47 ALJR 198
- Pearce v The Queen [1998] HCA 57; 194 CLR 610
- R v Bugeja [2001] NSWCCA 196
- R v Thomson; R v Houlton [2000] NSWCCA 309; 49 NSWLR 383
- R v Todd [1982] 2 NSWLR 517
- R v Williams [2005] NSWSC 314