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Supreme Court 13 December 2006

Chief Executive Officer of Customs v Pham

[2006] NSWSC 1370

Fraud & dishonesty
SENTENCE

Citation: Chief Executive Officer of Customs v Pham [2006] NSWSC 1370
Court: Supreme Court of New South Wales
Date: 13 December 2006
Judge(s): Bell J

Background

The plaintiff, the Chief Executive Officer of Customs, brought civil penalty proceedings against two defendants, a husband and wife, arising from two separate importations of contraband cigarettes into Australia in January 2001. The first shipment comprised approximately 2.09 million cigarette sticks, arriving in Sydney on 25 January 2001. The second shipment, of comparable size, arrived five days later on 30 January 2001.

Following a five-day hearing in September 2006, Bell J convicted both defendants in October 2006 of multiple offences under the Customs Act 1901 (Cth). Those offences included smuggling, evading payment of customs duty, and knowingly making a false or misleading statement to a customs officer. The December 2006 judgment dealt solely with the question of appropriate penalties.

The total customs duty evaded across both shipments exceeded $817,000. The proceedings had been commenced by statement of claim in November 2001, with defences filed in May 2002.

  • What monetary penalties were appropriate for each defendant across the four established offences, having regard to the statutory maximum and minimum penalties set by the Customs Act?
  • How should the court apply the sentencing requirements for federal offences under Part IB of the Crimes Act 1914 (Cth), including the requirement under s 16A(1) that penalties be of a severity appropriate to all the circumstances?
  • What weight should be given to the defendants' personal circumstances, including prior convictions, good character, and financial circumstances, in fixing the penalty amounts?
  • Should the penalties imposed on the two defendants differ, and if so, on what basis?

Decision

Bell J applied the sentencing framework in Part IB of the Crimes Act 1914 (Cth), which governs penalties for federal offences. Under s 16A(1), the court was required to impose penalties of a severity appropriate to all the circumstances, taking into account a range of specified matters. The court also had to consider the defendants' financial circumstances before imposing fines, pursuant to s 16C, though neither defendant had placed evidence of their financial position before the court.

The duty evasion offence arising from the first importation carried a statutory minimum penalty, meaning the court was required to impose on each defendant a penalty of at least twice the duty payable, amounting to no less than approximately $817,490. The court ultimately imposed $1,000,000 on the first defendant and $850,000 on the second defendant for that offence. Notably, the second defendant's penalty was set above the statutory minimum but below that of the first defendant.

The first defendant had prior customs convictions from 1992, for which penalties of $5,000 and $2,000 had been imposed. The second defendant had no prior convictions. The court accepted character references tendered for both defendants but declined to treat the fact that both defendants would together bear multiple penalties as a basis for moderating individual penalty amounts, given the absence of evidence about their shared financial circumstances.

Bell J imposed lesser penalties on the second defendant for offences arising out of the first importation, recognising her unblemished good character. For the second importation offence (smuggling), both defendants received the same penalty of $600,000. Both defendants were also ordered to pay the plaintiff's costs.

Orders Made

  • First defendant ordered to pay a penalty of $1,000,000 for evading payment of customs duty on the first importation (s 234(1)(a)).
  • First defendant ordered to pay a penalty of $200,000 for smuggling cigarettes on or about 25 January 2001 (s 233(1)(a)).
  • First defendant ordered to pay a penalty of $100,000 for making a false or misleading statement to a customs officer on or about 22 January 2001.
  • First defendant ordered to pay a penalty of $600,000 for smuggling cigarettes on or about 30 January 2001 (s 233(1)(a)).
  • Second defendant ordered to pay a penalty of $850,000 for evading payment of customs duty on the first importation (s 234(1)(a)).
  • Second defendant ordered to pay a penalty of $150,000 for smuggling cigarettes on or about 25 January 2001 (s 233(1)(a)).
  • Second defendant ordered to pay a penalty of $75,000 for making a false or misleading statement to a customs officer on or about 22 January 2001.
  • Second defendant ordered to pay a penalty of $600,000 for smuggling cigarettes on or about 30 January 2001 (s 233(1)(a)).
  • Both defendants ordered to pay the plaintiff's costs of the proceedings.

Key Takeaways

  • The duty evasion offence under s 234(1)(a) of the Customs Act 1901 (Cth) carries a statutory minimum penalty of twice the duty payable, which the sentencing court must impose regardless of mitigating factors. The maximum is five times the duty payable.
  • Part IB of the Crimes Act 1914 (Cth), including ss 16A and 16C, governs the sentencing of persons convicted of federal offences, requiring the court to impose penalties appropriate to all the circumstances and to consider financial circumstances before imposing fines.
  • Where defendants place no evidence of financial circumstances before the court, the court is not precluded from imposing substantial penalties. The absence of such evidence does not provide a basis for moderating penalty amounts.
  • Good character and the absence of prior convictions can warrant a differential in the penalty levels imposed on co-offenders. Here, the second defendant received lower penalties on the first importation offences by reason of her unblemished record.
  • A prior customs conviction, even one that is relatively minor and dated, is a relevant factor that may support higher penalties for a defendant who reoffends in a similar category of conduct.

Legislation and Cases Referenced

Legislation:
- Customs Act 1901 (Cth), ss 233(1)(a), 233AB(1), 234(1)(a), 234(1)(d), 234(2)(a)(i), 234(3), Part XIV
- Crimes Act 1914 (Cth), s 16, s 16A, s 16C, Part IB

Cases:
- Chief Executive Officer of Customs v Pham [2006] NSWSC 1011 (the liability judgment)
- Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited [2003] HCA 49; 216 CLR 161
- L Vogel & Son Pty Ltd v Anderson, Minister of State for Customs and Excise (1968) 120 CLR 157
- Murphy, Minister of Customs and Excise for the Commonwealth of Australia v H.F. Trading Company Pty Ltd (1973) 47 ALJR 198
- R v Corbett (1991) 52 A Crim R 112
- R v El-Rashid (unreported, NSW Court of Criminal Appeal, 7 April 1995)