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SUPREME COURT OF WESTERN AUSTRALIA - CIVIL DIVISION

Chief Executive Officer of Customs v Pavlovich

Pidgeon AJ

29 June 2001 - Perth

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Pidgeon AJ.    I am required to assess penalties under the Customs Act 1901 (Cth) arising from admitted breaches of that Act committed by the defendant. It was claimed, and the defendant admits, that on 23 occasions between 10 April 1995 and 20 December 1997, he imported into Australia dutiable clothing. It is admitted that each importation was an importation with an intent to defraud the revenue and, by reason of that, the defendant on each occasion committed the offence of smuggling the goods. It is also admitted in respect of each importation that the defendant committed a further offence of evading the payment of duty which was payable. It is admitted in respect of each importation that the defendant committed a still further offence of knowingly making a false statement.

  2  The admissions came about in the following way. On 30 November 1998, the Chief Executive Officer of Customs, as plaintiff, issued a writ of summons against the defendant seeking declarations that the defendant had contravened s 233(1)(a) on 25 occasions between 4 January 1995 and 17 December 1997 by smuggling the goods. It also sought a declaration that he contravened s 234(1)(a) by evading duty that was payable and it sought a further declaration that he contravened s 234(1)(d) by knowingly or recklessly making statements that were false or misleading. The writ claimed convictions, reparations and penalties. An appearance was entered and a detailed statement of claim was filed on 7 February 2000 when it was alleged that the offences occurred on 23 occasions. The defendant sought detailed particulars. The statement of claim was amended by order of the Master dated 31 July 2000. The matter proceeded to case management and to an entry for trial.

  3  On 6 March 2001, the court was informed by an affidavit filed by the solicitor for the plaintiff that, on 26 February 2001, the matter was settled by way of a plea of guilty to the statement of claim and a request was made for it to be listed for sentencing. On 2 April 2001, the defendant signed a deed of agreement prepared by the solicitor for the plaintiff and it was later executed on behalf of the plaintiff. In this deed, the defendant admitted all the facts in the statement of claim. He consented to the making of the declaration sought and to the imposition of convictions in the manner requested in the statement of claim. The penalties are to be assessed by the court, but it was agreed under the deed that the plaintiff would accept in full discharge of the penalties the sum referred to in the deed and which was payable in the manner set out.

  4  I shall, for the purpose of assessing a penalty, refer to some of the facts and in order to do this I shall refer, in detail, to the first shipment, as the remaining 22 shipments followed a similar pattern. On 10 April 1995, the defendant imported a consignment consisting of about 744 items of clothing. They were in a container landed at the Perth Airport from the United States of America. The defendant gave to his Customs agent a false invoice. This said the total customs value of the goods was $1,089.98, when in fact the true customs value was $8,377.04. The customs agent, on behalf of the defendant, prepared and transmitted to the customs officers an entry for home consumption via the Customs Compile computer system. This was required to state the Customs duty payable on the goods and it followed that, by reason of the initial false information, this too was false. The entry stated that the Customs duty was $461.88, when the total amount was $3,549.91. The second consignment was similar, but was landed at Mascot Airport, Sydney. The remaining consignments were similar and most, if not all, were landed at the Perth Airport. The total declared value of the 23 shipments was $87,640.32, whereas the revised Customs value was $269,464.60. This meant that the duty evaded was $65,464.09. The minimum penalty for evasion is twice the duty evaded, and the maximum penalty 5 times the duty evaded. The minimum penalty for the offence of smuggling is twice the total duty on the goods. The total duty was $98,777.30. The maximum penalty is 5 times this figure. The penalty for making a false entry is a maximum penalty in each case of $5,000.

  5  Mr Prentice, in his submissions in mitigation on behalf of the defendant, made it clear that he did not wish to trivialise the offences. He recognised that the courts have consistently and invariably stated that these are offences of a serious nature and that the penalties that are imposed must be severe. He referred to the overlapping aspect of the criminality and, in this context, referred to the observations of Gibbs J (as he then was) in Murphy (Minister of State for Customs & Excise (Cth)) v H F Trading Co Pty Ltd (1973) 47 ALJR 198 at 199, where his Honour said that since the decision in L Vogel & Son Pty Ltd v Anderson (1968) 120 CLR 157, it is not possible for defendants to argue that they ought not to be convicted of more than one offence in respect of each evasion of duty. His Honour said, however, that in imposing penalties it is material to consider that although the offences were separate offences in law, they were substantially contemporaneous and connected.

  6  Mr Prentice referred to the decision in Comptroller-General of Customs v Wong (1998) 103 A Crim R 491, where the trial judge considered the question as to how he could mitigate the effect of the minimum and maximum penalties without doing disservice to the legislature's intent. His Honour reached the view that s 4K(4) of the Crimes Act 1914 (Cth) was applicable and he imposed one penalty in respect of a number of smuggling offences and I was asked to act on this basis. It was the submission of Ms M E Lindley for the plaintiff that this section is limited to summary proceedings and has no application to proceedings commenced by writ. Judges in this State have not acted under this section. In Goulding v Penello (1999) 43 ATR 179, Heenan J, at 182, referred to the fact that in Comptroller-General of Customs v Wong it was common ground before the trial judge that s 4K of the Crimes Act 1914 (Cth) was applicable. Heenan J said that, without deciding the matter, he would for present purposes adopt the view that the provision of the section is of application only to courts of summary jurisdiction and not to proceedings such as these. His Honour said even if that is not the correct view, his opinion was that the provisions of the Customs Act 1901 (Cth) clearly specified a minimum penalty of twice the amount of duty which would have been evaded by the commission of the offence. He considered that in those circumstances a court is required to apply that penalty. Hasluck J followed that view in Chief Executive Officer of Customs v Tonmill Pty Ltd [2001] WASC 77. I am of a similar view. Even if it could be argued that the section is applicable, it would not be open to use it to avoid imposing a minimum penalty provided by the legislature.

  7  The submissions in mitigation made on behalf of the defendant were that he was 32 years old and single. He ran the business through a company of which he was the sole director and shareholder. He commenced the business as a hobby and it built up. He has had no prior business experience or training, nor any prior dealings with the Customs Department. He was naïve in administrative and operational procedures. He has had no business training, he made some ill-informed decisions and has learnt from his mistakes, and he is laying the foundations for a successful business. He has no prior convictions. Reference has also been made to the fact that he has entered into the agreement, made the admissions and avoided the costs of a trial.

  8  This was a systematic series of offences carried out over a period in excess of 2½ years. The fact that the defendant has consistently deceived the Customs authorities over this period negates to a very large extent his previous good character. No matter how little previous experience he had, he obviously knew he was breaking the law. It must have been known to him that customs authorities rely on the honesty of those importing goods to administer the system. The previous lack of experience could not excuse consistently supplying the authorities with false documents. The fact that he has ultimately made the admissions he did is a factor to take into account, but this must be weighed up with the fact that it was a late admission. His attitude for the 2 years after the writ issued was to put the plaintiff to proof and for the matter to go through the process of trial. This must discount to a degree the mitigation of ultimately making the admissions.

  9  I would regard offending to this degree as extremely serious. I would not see it as the worst of its kind as the goods did come through a customs post and there was no attempt to hide them. Had this been the case, there would be further sanctions such as the forfeiture of the goods. I must take into account the overlap. There was by reason of the first offence an intention to import the goods without paying the duty. This intention became even more manifest in respect of the subsequent importations. As the pattern of offending would indicate, they were being imported with a view to avoiding paying full duty. I would see the offences of not paying the duty as being a separate act to importing the goods. Having landed them with the intention of not paying the duty, it was still open to desist by not providing the false information. The defendant did not desist, but supplied the false information. There was no overlap in this area. I would see an overlap to the extent that a false document was the means to give effect to the offence of evading duty.

  10  I consider in the light of these observations that the appropriate penalty applicable for the smuggling offence is 4 times the duty. I consider the appropriate penalty in respect of each false document should be a fine of $3000. The penalty in respect to evading the duty would be twice the duty evaded. I am reducing this particular penalty to the minimum under the Customs Act 1901 (Cth) by reason of the overlap to the extent I have indicated.

  11  It follows that the plaintiff is entitled to judgment for the declarations and convictions contended for and for the penalties I have imposed.