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District Court 30 July 2020

R v Mrad

[2020] NSWDC 499

Fraud & dishonesty

Citation: R v Mrad [2020] NSWDC 499
Court: District Court of New South Wales
Date: 30 July 2020
Judge(s): Bennett SC DCJ

Background

The offender faced sentencing on three counts of importing tobacco products with intent to defraud the revenue, contrary to s 233BABAB(1) of the Customs Act 1901 (Cth). The offences occurred at Mascot between August 2018 and March 2019, and involved the importation of hookah and shisha tobacco (water-pipe tobacco with additives) disguised with misleading descriptions on shipping documents. The offender sought to have two additional offences taken into account under s 16BA of the Crimes Act 1914 (Cth): a further tobacco importation offence and an offence involving the importation of objectionable material, both from November 2018.

Across five importations, the offender brought in approximately 120.95 kilograms of tobacco products and evaded a total of $121,716.59 in duty. His conduct, as Bennett SC DCJ noted, showed awareness of the wrongdoing, persistence across multiple occasions, and deliberate adaptation to circumstances to avoid customs obligations.

The offender had spent no time in pre-sentence custody, so all sentences were to commence from the date of judgment.

  • What sentences were appropriate for three counts of importing tobacco products to defraud the revenue under the Customs Act, carrying a maximum of 10 years' imprisonment?
  • What discount, if any, should be applied for the utility of early guilty pleas?
  • To what extent should two additional offences, brought to account under s 16BA of the Crimes Act 1914 (Cth), increase the sentence on the principal count?
  • How should the court characterise the objective seriousness of the offending, given the comparatively modest quantity of tobacco and duty evaded?
  • Whether the guilty pleas should be treated as evidence of genuine contrition and remorse, given concerns about the reliability of documents tendered by the offender.

Decision

The court imposed sentences of imprisonment across the three counts, declining to also impose monetary penalties (which were available in addition to imprisonment). Count 1 attracted 18 months' imprisonment, and Count 3, after accounting for the two additional offences, attracted 2 years' imprisonment, with the sentences structured to run cumulatively in part.

A 25% discount was applied to each sentence for the utility of the early guilty pleas, which the Crown conceded was appropriate. However, the Crown did not accept, and the court appears to have treated cautiously, any claim that the pleas evidenced genuine remorse, given inaccuracies in documents tendered on the offender's behalf and the strength of the prosecution case.

On the additional offences taken into account under s 16BA, the court applied the principles from the Attorney General's Application guideline judgment (adapted to federal offences as affirmed in Huang v R). The court found that the additional tobacco importation offence warranted a meaningful increase in the Count 3 sentence. The importation of abhorrent material carried only a fine if prosecuted separately, so its impact on the sentence was treated as marginal.

The court rejected the proposition that objective seriousness could be assessed solely by reference to the quantity of tobacco and duty evaded. The offender's knowing persistence, his adaptation of methods across multiple importations, and the legislative purposes underlying the customs duty regime (including regulation of tobacco consumption and reduction of its health costs to the community) were all relevant to the objective assessment.

Orders Made

  • Overall head sentence of 2 years and 2 months, commencing 30 July 2020 and expiring 29 September 2022.
  • Count 1: 18 months' imprisonment, commencing 30 August 2020 (note: the judgment records a clerical error in the expiry date, with the correct end date being 28 February 2022).
  • Count 3: 2 years' imprisonment (taking the additional offences into account), commencing 30 September 2020 and expiring 29 September 2022.
  • A 25% discount applied to all sentences for the utility of guilty pleas.
  • The offender to be released after serving 1 year and 2 months (that is, on 30 September 2021), upon entering into a recognizance release order in the sum of $5,000 to be of good behaviour for 2 years.
  • Breach of the recognizance would result in the offender being returned to court to address the consequences.

Key Takeaways

  • Under s 233BABAB(1) of the Customs Act 1901 (Cth), the maximum penalty for importing goods to defraud the revenue is 10 years' imprisonment, with or without a fine calculated as five times the evaded duty (or 1,000 penalty units). These are among the most serious offences in the Customs Act.
  • A 25% discount for the utility of early guilty pleas was accepted by the Crown, but early pleas do not automatically establish contrition and remorse, particularly where the prosecution case is compelling or where documents tendered in mitigation contain inaccuracies.
  • Objective seriousness in tobacco duty fraud is not measured solely by the quantity of goods or the amount of duty evaded. The offender's knowing persistence, willingness to adapt methods to evade detection, and the broader legislative purposes of the customs duty scheme are all relevant considerations.
  • Where additional offences are taken into account under s 16BA of the Crimes Act 1914 (Cth), the principles from the Attorney General's Application guideline judgment apply, adapted for federal offences, as confirmed in Huang v R [2018] NSWCCA 57. The sentence on the principal count should be increased to reflect the additional misconduct, personal deterrence, and the community's entitlement to retribution.
  • An additional offence that, if prosecuted separately, could attract only a fine will have at best a marginal impact on a custodial sentence imposed for the principal offence.

Legislation and Cases Referenced

Legislation:
- Customs Act 1901 (Cth), ss 233(1)(b), 233BABAB(1), 233BABAD(1)
- Crimes Act 1914 (Cth), s 16BA
- Crimes (Sentencing Procedure) Act 1999 (NSW)
- Customs Prohibited Imports Regulation 1956
- Customs Tariff Act 1995 (Cth)

Cases:
- Attorney General's Application under s 37 Crimes (Sentencing Procedure) Act 1999 No 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