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District Court 15 October 2021

R (Cth) v Jia Li He (No. 3)

[2021] NSWDC 770

Fraud & dishonesty
CRIME SENTENCE COMMONWEALTH OFFENCE SERIOUSNESS OF OFFENDING DETERRENCE CONTRITION

Citation: R (Cth) v Jia Li He (No. 3) [2021] NSWDC 770
Court: District Court of New South Wales
Date: 15 October 2021
Judge(s): Neilson DCJ

Background

The offender pleaded guilty to possessing tobacco products knowing they had been imported with intent to defraud the revenue, contrary to s 233BABAD(2) of the Customs Act 1901 (Cth). The offence carried a maximum penalty of ten years' imprisonment and/or a fine of five times the duty payable (here calculated at over $11 million).

Following a six-month covert investigation, the Australian Border Force executed search warrants on storage units in Sydney in April 2019 and seized nearly 1.9 million imported cigarettes and over 691 kilograms of loose-leaf tobacco. The goods had been imported from China, Japan and the Philippines using the postal and cargo systems, disguised as children's books and toys to evade detection. The total tobacco excise evaded exceeded $2.27 million.

A contested facts hearing had been conducted earlier in 2021. In that earlier judgment (R (Cth) v Jia Li He (No. 1) [2021] NSWDC 450), Neilson DCJ found beyond reasonable doubt that the offender was the principal organiser of the criminal enterprise in Australia, having recruited two associates to collect parcels and store the tobacco products. Evidence also indicated the cigarettes were being sold to customers in Sydney, suggesting the actual quantity of tobacco handled was greater than what was found at the time of the search.

  • What was the appropriate objective gravity of the offending when assessed against the sentencing factors applicable to serious revenue offences?
  • Whether the offending could be characterised as "sophisticated" and what weight to give the offender's role as principal organiser.
  • What head sentence was appropriate, and what discount should be applied for the guilty plea?
  • Whether an Intensive Corrections Order (ICO) was available as an alternative to full-time imprisonment.
  • What weight, if any, should be given to the effect of the sentence on the offender's family and dependants under s 16A(2)(p) of the Crimes Act 1914 (Cth)?

Decision

Neilson DCJ applied the sentencing factors for serious revenue offences set out in R v Zhang [2017] SASCFC 5, including the offender's role, the sophistication of the offending, the period of offending, the quantity of tobacco and duty evaded, whether revenue had been repaid, and whether distribution occurred within Australia. The court found that the offender was the principal organiser in Australia, had recruited two workers to collect and store the tobacco, and had been involved in its distribution. The lost revenue of over $2 million had not been repaid.

The court declined to characterise the offending as highly sophisticated, noting that while some planning was involved (using associates to collect parcels, storing goods offsite), the operation lacked features such as concealment of the offender's associations. The period of offending was assessed at no more than approximately six months, running from around October 2018 until arrest in April 2019. The court relied only on the tobacco quantities established by the agreed facts, notwithstanding that some product had already been sold before the search warrants were executed.

On the question of family impact, Neilson DCJ noted a divergence in authority about s 16A(2)(p) of the Crimes Act 1914 (Cth), which requires a court to consider the probable effect of a sentence on the offender's family or dependants. His Honour observed that the prevailing line of authority requires exceptional circumstances to enliven that provision, while acknowledging his own previously expressed view (as a Court of Criminal Appeal judge) that the provision should be applied according to its terms without any threshold requirement. Bound by the majority position, the court applied the exceptional circumstances test.

A head sentence of three years and six months was set, reduced by 15% (rounded up in the offender's favour) for the guilty plea, producing a head sentence of two years and eleven months. Because that head sentence exceeded two years, an ICO was not available. The court determined that the offender should serve two years in custody before release on recognisance.

Orders Made

  • The offender was convicted of the charge under s 233BABAD(2) of the Customs Act 1901 (Cth).
  • Sentenced to imprisonment for two years and eleven months, commencing 13 October 2021 and expiring 12 September 2024.
  • To be released on recognisance on 12 October 2023, upon giving security in the sum of $1,000.

Key Takeaways

  • The District Court confirmed that the sentencing framework from R v Zhang [2017] SASCFC 5, identifying eight factors relevant to serious tobacco revenue offences, applies to offences under s 233BABAD of the Customs Act 1901 (Cth), including possession offences under subsection (2).
  • A finding that the offender was the principal organiser in Australia, recruiting associates to collect and store illicit tobacco, significantly elevated the objective seriousness of the offence even where the operation was relatively small-scale.
  • An Intensive Corrections Order is not available where the head sentence exceeds two years; the court's determination of a head sentence of two years and eleven months placed the offender outside the ICO threshold entirely.
  • Under the current majority position in the case law, s 16A(2)(p) of the Crimes Act 1914 (Cth) requires exceptional circumstances before the effect of a sentence on family or dependants can be taken into account. Neilson DCJ applied that test while expressly reserving his own contrary view, expressed in earlier Court of Criminal Appeal decisions, that the provision should be applied on its plain terms.
  • Where the actual quantity of illicit tobacco handled exceeded what was seized (because some had already been sold), the sentencing court confined itself to the quantities established by the agreed facts in the absence of any reliable basis to quantify the additional amount.

Legislation and Cases Referenced

Legislation
- Customs Act 1901 (Cth), s 233BABAD(1) and (2)
- Crimes Act 1914 (Cth), s 16A(2)(p)

Cases
- R (Cth) v Jia Li He (No 1) [2021] NSWDC 450
- R (Cth) v Jia Li He (No. 2) [2021] NSWDC 769
- R v Zhang [2017] SASCFC 5
- R v Saleh [2015] NSWCCA 299
- Assi v R; Jomaa v R [2021] NSWCCA 181
- Merhi v R [2019] NSWCCA 322
- Barakat v DPP (Cth) [2020] VSCA 185
- Jabal v DPP (Cth) [2021] VSCA 33
- Hussein v The Queen [2016] VSCA 212
- Young v The Queen [2016] VSCA 149
- Samardali v The Queen [2018] WASCA 220
- R v Medalian [2019] SASCFC 40
- DPP v Ma [2020] VCC 582