Masri v R

1. [1]

   KIRK JA: I agree with Fagan J.

2. [2]

   FAGAN J: The applicant seeks leave to appeal against an aggregate sentence imposed upon him by his Honour Judge J North in the District Court on 26 August 2022. The applicant pleaded guilty to two charges laid under s 233BABAD of the Customs Act 1901 (Cth), as follows:

   1. (1)

      Possession of tobacco products (6,248 kilograms of molasses tobacco and 9.5 million sticks of Manchester brand cigarettes) knowing the goods were imported with intent to defraud the revenue, contrary to sub-s (2) of s 233BABAD (the “possession offence”).

   2. (2)

      Importation of tobacco products (9.5 million sticks of Manchester brand cigarettes) knowing that the goods were imported with intent to defraud the revenue, contrary to sub-s (1) (the “importation offence”).

3. [3]

   Both offences were committed between about 29 August 2018 and about 21 May 2019. The maximum penalty for the possession offence was 10 years’ imprisonment. The importation offence also carried a maximum of 10 years’ imprisonment. Fines calculated by reference to the amount of customs duty not paid could also be imposed (although were not in this case). All tobacco products that were concerned in both offences were produced outside Australia and imported. Molasses tobacco, also known as water pipe tobacco, was subject to customs duty of about $900 per kilogram during the charge period. The customs duty on each cigarette stick was about 70¢.

4. [4]

   In sentencing for the possession offence, the learned judge took into account two other offences attached to a schedule in accordance with s 16BA of the Crimes Act 1914 (Cth). Those offences, committed in the same charge period, were as follows:

   1. (1)

      Dealing with money or property that was and that he believed to be proceeds of crime to a value of $1,000,000 or more, contrary to s 400.3(1) of the Criminal Code Act 1995 (Cth) (maximum penalty 25 years’ imprisonment or 1,500 penalty units or both).

   2. (2)

      Dealing with money or property that he intended would become an instrument of crime to a value of $100,000 or more, contrary to s s 400.4(1) of the Criminal Code (maximum penalty 20 years’ imprisonment or 1,200 penalty units or both).

5. [5]

   The applicant was one of the principals of a criminal syndicate engaged in importation and distribution of large quantities of tobacco products on which customs duty and Goods and Services Tax (GST) was not paid. The learned sentencing judge found that due to the applicant’s role as the leading principal in the conduct that gave rise to both the possession charge and the importation charge, the seriousness of his offending was “just below high range for matters of this type”.

6. [6]

   The sentencing judge allowed a 30% discount on the sentence imposed (of which 15% was for a late guilty plea). He sentenced the applicant to an aggregate term of 5 years’ imprisonment with a non-parole period of 2 years 6 months, commencing 1 August 2021. The indicative sentences nominated were 4 years 6 months for the possession offence and 4 years 9 months for the importation offence.

7. [7]

   The grounds of appeal for which leave is sought are as follows:

Agreed facts

1. [8]

   The offences occurred over a period of about nine months from August 2018. During that time undercover operatives (“UCOs”) met with the applicant and his co-offenders on numerous occasions and participated in the acts and events that constituted the possession and importation offences. The first interaction was a meeting between UCO1 and the applicant’s cousin and co-accused, Nadim Kanssan, on 2 July 2018. They discussed the supply of molasses tobacco to syndicate members. Between 18 July and 17 August 2018, Kanssan purchased molasses tobacco on four occasions from UCO1, to a total of 966 kgs. The applicant was not involved in those transactions.

2. [9]

   On 16 August 2018 Kanssan and another co-offender, Al Am Ali, met with UCO1 and UCO2. They discussed, inter alia, importing tobacco goods into Australia without payment of customs duty. During this meeting UCO2 informed these two co-offenders that he had a contact in Customs who could assist in the release of shipping containers. The co-offenders said they were interested in getting assistance from this contact.

3. [10]

   Following that meeting Kanssan introduced the applicant to UCO2. From then the applicant became involved in the offending to which he pleaded guilty. In summary, he attended at least 23 meetings to arrange acquisition from UCOs of a total of 6,248 kilograms of molasses tobacco delivered in Sydney and the importation of 9.5 million Manchester cigarette sticks from Dubai. All dealings concerned tobacco products on which Commonwealth customs duty and GST were not paid.

4. [11]

   The applicant was a co-principal, together with Mr Kanssan, with respect to the syndicate’s purchase of 6,248 kilograms of molasses tobacco from UCOs. Although the applicant was involved in arranging the purchases and effecting payments, he was not present on any of the eight occasions between 29 August 2018 and 28 March 2019 on which the product was handed to co-offenders by the UCOs. The key events in his role were as follows:

5. [12]

   The applicant was the sole principal with respect to the importation of 9.5 million cigarettes from Dubai into Australia. He told UCOs that he was able to arrange for overseas contacts to consign tobacco products to Australia and that he had been involved for more than 20 years in the trade in tobacco products. The following is a summary of the steps taken by the applicant with respect to the importation of 9.5 million Manchester cigarette sticks, with the inclusion of some acts performed by others to provide context:

6. [13]

   The applicant was arrested on 21 May 2019. On the same day search warrants were executed at some of the storage locations to which the imported cigarettes had been taken. A large number of Manchester brand cigarettes were seized.

Liability for customs duty and GST on imported tobacco products

1. [14]

   The Agreed Statement of Facts before the sentencing judge referred to amounts of excise that were payable on the tobacco products concerned in the charges. The facts also state that “there was no tobacco manufacturing occurring in Australia” at the relevant time and that all tobacco products that were the subject of the charges were imported. Accordingly, the products were subject to duty under the Customs Tariff Act 1995 (Cth), rather than excise under the Excise Act 1901 (Cth). At all times relevant to the applicant’s offences, the rates of excise on Australian produced tobacco products, if there had been any, were the same as the rates of customs duty on imported tobacco products.

2. [15]

   At all relevant times s 68 of the Customs Act required that the owner of goods imported into Australia by sea must “enter the goods for home consumption” no later than the arrival of the ship carrying the goods at an Australian port at which any cargo is discharged – unless the goods should be “entered for warehousing”, which did not occur in relation to any of the tobacco products concerned in this case. “Owner” is defined in s 4 of the Act as follows:

3. [16]

   Section 68(3A) explains what is involved in the owner entering imported goods for home consumption, as follows:

4. [17]

   Customs import duty payable on goods entered for home consumption must be paid at the time of the entry for home consumption: s 132AA. An amount of duty due and payable in respect of goods is a debt due to the Commonwealth, payable by the owner: s 165. If no import declaration is communicated, contrary to the requirements of s 68, the debt to the Commonwealth for the amount of the import duty nevertheless arises: Chief Executive Officer of Customs v Tony Longo Pty Ltd (2001) 52 NSWLR 458; [2001] NSWCA 147.

5. [18]

   Importation of tobacco products is a “taxable importation” under the A New Tax System (Goods and Services Tax) Act 1999 (Cth). By force of s 33-15 of that Act, GST is payable by the importer to the Commonwealth “at the same time, at the same place, and in the same manner, as customs duty is payable on the goods in question”.

Intent to defraud the revenue

1. [19]

   Sub-sections (1) and (2) of s 233BABAD of the Customs Act, under which the applicant was charged, are in the following terms:

2. [20]

   By his pleas of guilty the applicant admitted all elements of the charges under those provisions respectively. Concerning the importation offence, the extent of defrauding that was necessarily intended by the conduct admitted in the Agreed Statement of Facts was the amount of customs duty and GST that should have been paid on 9.5 million Manchester cigarettes at the date when they should have been entered for home consumption by the lodgement of an import declaration. That date was 17 April 2019, when the Maersk Line vessel discharged the container. It was an agreed fact that the amount of customs duty payable in accordance with the Customs Tariff Act was $7,768,625 and the amount of GST was $776,862.50, the total being $8,545,847.50. In written submissions to the sentencing judge the Crown prosecutor put a slightly different total of $8,435,867.

3. [21]

   The Agreed Statement of Facts contains no detail of the origins of the molasses tobacco that was part of the total quantity of product concerned in the possession offence, count 1. On the hearing of the appeal the Crown did not dispute the applicant’s contention that the molasses tobacco was drawn by the UCOs from stocks of seized product that authorities had accumulated from earlier intercepted importations that had been attempted by unrelated parties. The applicant’s admission, by his plea of guilty, that he knew the goods “were imported with intent to defraud the revenue” was self-evidently based upon his knowledge that the price charged by the UCO’s was between US$68 and AU$100 per kilogram whereas the customs duty alone, without counting GST or the inherent value of the product, was approximately $900 per kilogram.

4. [22]

   It was an agreed fact that “the total duty evaded on the 7,214 kg of molasses tobacco was $7,506,379.53”. That quantity of product refers to all offences committed by all members of the syndicate. The quantity concerned in the count 1 possession offence to which the applicant pleaded was 6,248 kg, there being nearly an additional 1,000 kg involved in additional offences to which the applicant was not party. The Crown’s “total duty” figure must be inclusive of GST. On a proportional basis, the total of customs duty and GST that must have been unpaid on the 6,248 kg of molasses tobacco concerned in the applicant’s offence would have been approximately the figure that was put to the learned sentencing judge in the prosecutor’s written submissions, namely, $6,300,433.

Ground 2 – taking into account the duty and GST not paid

1. [23]

   In his Remarks on Sentence North DCJ adopted the figures for unpaid duty and GST that had been provided in the prosecutor’s written submissions, rather than the figures in the Agreed Statement of Facts. The difference was not material to the gravity of the offending in either count. The sum of $8,435,867 in respect of the imported cigarettes and $6,300,433 in respect of the molasses tobacco produced the total of $14,736,300 that his Honour referred to in the following extract from the Remarks:

2. [24]

   With respect to his Honour, it was not accurate to speak of the applicant as having “participated in the evasion” of that component of unpaid revenue that related to the molasses tobacco. Nor was it correct to speak of that component having not been “repaid”, if his Honour was thereby intending to refer to repayment by the applicant. The evasion of customs duty and GST on the molasses tobacco was effected by the person who imported the product, not by the applicant. However, the quantum of duty and GST that was payable at the time of importation of the 6,248 kg of molasses tobacco and that had not been paid was a relevant measure of the magnitude and gravity of the applicant’s possession offence in contravention of s 233BABAD(2) because the offence concerned possession “knowing that the goods were imported with intent to defraud the revenue”. The greater the amount of revenue of which the importer intended the Commonwealth should be defrauded, the greater the seriousness of the applicant possessing goods with knowledge that that intent accompanied their importation.

3. [25]

   As regards the importation offence, concerning only the Manchester cigarettes, I do not accept the applicant’s submission made to this Court, as follows:

4. [26]

   By his plea of guilty to count 2 the defendant admitted to having imported the goods. On the agreed facts, he was the importer and the owner. Although he procured UCOs to effect the shipping of the container from Dubai to Sydney, the statutory obligations to make an import declaration, to enter the goods for home consumption and at that time to pay customs duty and GST rested with the applicant. Liability for duty and GST did not depend upon the applicant obtaining physical control over the goods or being able to sell them to customers. By arranging to obtain possession without having made an import declaration the applicant sought to evade his obligation to pay the duty and GST at the point of entry for home consumption, when the obligation arose. He sought to avoid detection and to frustrate any recovery action by the Commonwealth.

5. [27]

   Although such actual evasion occurred it is not an element of the offence charged in count 2. The plea of guilty involves an admission that the applicant carried out the importation “with the intention of defrauding the revenue”. A factor relative to the gravity of the offence is the amount of duty and GST of which it was intended that the Commonwealth should be defrauded. Insofar as the learned sentencing judge’s observation that “the loss of revenue has not been repaid” was intended to refer to the duty and GST payable on the cigarettes, there was no factual error in speaking of failure to repay because the applicant had become liable in that regard. Nevertheless, the limit of relevance of the amount of duty and GST involved was to utilise it as a measure of the magnitude of the offending.

6. [28]

   From the terms in which the Remarks on Sentence are expressed it appears that his Honour regarded the offending as aggravated by a consideration that the applicant’s conduct actually costs the Commonwealth a loss of revenue of $14,736,300. That was not an accurate construction of the facts or of the applicable revenue statutes and it was not a matter properly available to be taken into account. Leave should be granted with respect to ground 2. After consideration of ground 1 it will be necessary to determine whether, factoring in all relevant circumstances, including the proper significance of the quantum of revenue referable to the tobacco products concerned, there is warranted any lesser sentence than that which the learned judge imposed.

Ground 1 – involvement of authorities in the importation.

1. [29]

   In the sentence proceedings the applicant submitted and the Crown accepted that Australian authorities, through the UCOs and in particular UCO3, had carried out all the physical steps required to effect the importation. They had provided transportation of the cigarettes from the supplier to the port in Dubai, arranged sea carriage of the container to Sydney, prepared documentation for that transport, arranged for the container to be released from the wharf in Sydney and caused it to be transported to Kennard’s storage facility at Macquarie Park, where the applicant’s associates were able to take possession of the goods.

2. [30]

   The learned sentencing judge said the following with respect to the UCOs’ involvement in the commission of the offences and the potential impact of that involvement on the applicant’s moral culpability:

3. [31]

   The applicant submitted on the appeal that his Honour erred in finding that the applicant’s willingness to engage in the offence meant that his moral culpability was not reduced as a result of the conduct of authorities acting through the UCOs. The following submission was put:

4. [32]

   The following statements from the judgment of Badgery-Parker J in R v Taouk (1992) 65 A Crim R 387 have frequently been relied upon in this Court as identifying the considerations relevant to whether police involvement in the commission of an offence should be regarded as mitigating the offender’s culpability (some citations omitted):

5. [33]

   Taouk was keen to bribe the judge if he could but he had no means of doing so until police officers suggested how a bribe could be offered and they made themselves available to convey the offer. Badgery-Parker J drew the following conclusions:

6. [34]

   In Kada v The Queen [2017] VSCA 339; (2017) 270 A Crim R 197 Tate and Kyrou JJA considered a number of authorities on the subject of reduced culpability by reason of police involvement in a drug trafficking offence. Their Honours summarised the principles as follows (with the concurrence of Beale AJA at [133]):

7. [35]

   Some of the above-mentioned considerations have no application to the importation offence in the present case, which is the only offence to which ground 1 is directed. However, to the extent that the matters considered in the above list are directly applicable here, or are reflected in equivalent or comparable circumstances of the applicant’s offending, the list is an authoritative guide. Both R v Taouk and Kada v The Queen were considered in Jomaa v R [2022] NSWCCA 112 and in Ibrahim v R [2022] NSWCCA 161.

8. [36]

   I do not accept the applicant’s submission that his involvement in the importation of cigarettes “could properly be described as being ‘ancillary’”. The cigarettes had been purchased by the applicant and he was at all material times the owner of them. They were to be distributed through his supply network in Australia when landed. He stood to profit and he was the principal of the importation enterprise. The applicant’s submission results from focusing unduly upon the transactional activities of getting the goods transported from Dubai to Sydney. UCO3 acted as the applicant’s agent or contractor to achieve shipment to Australia. According to the Statement of Agreed Facts the applicant paid UCO3 $650,000 to carry out these mechanical steps of physical importation as well as getting the goods released from the wharf.

9. [37]

   Given that tobacco importation is not of itself prohibited, the core of the offence lay in the intent to defraud the revenue. That intent was held by the applicant, not by UCO3. Lodging an import declaration upon arrival of the ship and payment of customs duty and GST were obligations of the applicant as owner and importer. The critical fact that put the importation in breach of s 233BABAD(1) was the applicant’s intent not to declare the goods or to enter them for home consumption or to pay duty on them. He thought that in UCO3 he had someone who could enable him to realise that intent by getting the goods off the wharf without his obligations as owner/importer being discharged.

10. [38]

    There was every reason for the learned judge to conclude that, absent UCO3 claiming to have the ability to achieve that critical part of the enterprise and offering to do so, the applicant would have found and/or corrupted some other person for the purpose. The facts are starkly different from those in R v Taouk, where it would not appear that anyone other than a police officer, or some other public office holder closely concerned in the administration of the criminal law, could possibly be in a position to approach a sitting judge to offer a bribe. In a case such as that it would be significantly doubtful that the crime of attempting to bribe would or could be committed at all without specific police assistance. That is not the case with the offence of importing in the present case, which depended upon finding someone who could get goods released from the wharf without payment of duty. Notoriously and regrettably, that is by no means an insurmountable obstacle.

11. [39]

    In all the circumstances it was open to the learned sentencing judge not to be satisfied that the conduct of the authorities had led the applicant to commit the importation offence where, but for the authorities’ involvement, he would not have been disposed to do so. Even if his Honour had entertained that possibility, if he thought that the applicant would not likely have sought out some other intermediary to arrange sea carriage of the container to Sydney and to get it off the wharf without payment of duty, the circumstances were so weak according to the criteria by which reduction of culpability is judged in such situations that there was no error in his Honour concluding that culpability was not diminished at all in this case. In particular, the applicant already had experience of importing tobacco without paying duty, as he admitted to the UCOs at an early meeting. There was no evidence that the UCOs incited or pressured the applicant to commit the crime. They merely offered the capability, which the applicant accepted and agreed to pay for.

12. [40]

    For those reasons, although leave to appeal should be granted I would not uphold ground 1.

Orders

1. [41]

   Counsel for the Crown raised no issue about the power of the learned sentencing judge to impose an aggregate sentence as provided for in the Crimes (Sentencing Procedure) Act 1999 (NSW), notwithstanding that sentence was passed for two Commonwealth offences. The Crown in right of the Commonwealth may be taken to continue to accept the position stated by Basten JA in Mourtada v R [2021] NSWCCA 211 at [8].

2. [42]

   Having found specific error, the Court is obliged to consider whether any lesser sentence is appropriate, “taking into account all relevant matters, including evidence of events that have occurred since the sentence hearing”: Kentwell v The Queen (2014) 252 CLR 601; [2014] HCA 37 at [43]. Very limited submissions were made to the Court on this subject. No submissions were addressed to anything said to be compelling in the applicant’s subjective case as presented to the sentencing judge. It is therefore not necessary or useful to recite his background circumstances, which may fairly be described as unremarkable. He was 39 years old when the offences were committed. As earlier mentioned, a discount of 30% was allowed and no submission was made to this Court that that should have been any different.

3. [43]

   At first instance the applicant sought to establish good character in respects other than the specific offending, by tendering references concerning his contributions to Islamic charities operating in Lebanon. His Honour said this:

4. [44]

   There was a significant feature of the applicant’s criminal record, which the learned judge correctly concluded disentitled him from leniency. In January 2012 the applicant participated in a joint criminal enterprise with Omar Elomar to import into Australia cigarettes in packaging that falsely represented the contents as aluminium frames and that had been consigned under documentation that so described the imports. The goods were consigned to a business named Alternative Glass. The applicant was convicted, after trial by jury, on a charge that he facilitated the release of the container in which the falsely described cigarettes were landed in Australia, with the intention of dishonestly causing a loss to the Commonwealth, contrary to s 135.1(3) of the Criminal Code. The loss was the duty and GST payable on the cigarettes. In proof of the charge the Crown led evidence of three previous importations in which, similarly, the names of legitimate importers of other types of goods had been appropriated, to disguise the true nature of what was being brought into the country. That evidence was received in proof of a tendency on the part of the applicant. He was found guilty after trial by jury. On 17 October 2014 he was sentenced to a term of imprisonment of 16 months, with a non-parole period of 10 months. An appeal against conviction was dismissed and he was refused leave to appeal against sentence: see Masri v R [2015] NSWCCA 243.

5. [45]

   The sentencing judge in the present case found that the applicant had “shown some contrition”, that he “has some chance of rehabilitation but cannot place great weight on it”. An affidavit of the applicant’s solicitor was read on the hearing of the appeal, from which it is established that he has progressed through custodial classifications to a stage where he is permitted unescorted leave from the correctional facility where he is housed, to engage in employment. It is said that he has acquired a skill as a factory hand and that there is a prospect of ongoing employment after his release. Those developments are to the applicant’s credit. However, having regard to the applicant’s criminal history and the depth of his involvement in the offences to which the present appeal relates, his good conduct in custody does not remove the reservation that the Court must feel as to the durability of his rehabilitation and the prospect of him abstaining from further offending after he returns to the community.

6. [46]

   The applicant’s solicitor also deposed to anxiety that the applicant feels with respect to the mental health of one of his daughters, who has been the victim of domestic violence by an intimate partner. The daughter drew emotional support from the applicant prior to his incarceration. A second daughter has been diagnosed with intellectual delay and obsessive compulsive disorder. Her condition has deteriorated since her father’s incarceration. The learned sentencing judge received evidence and submissions about pressures on the applicant’s family resulting from his imprisonment, including specific material concerning the position of the second daughter. The circumstances deposed to do not materially alter the picture that emerged in the sentence proceedings.

7. [47]

   Although I have concluded with respect to ground 2 that the learned sentencing judge took into account the amount of unpaid revenue in an inappropriate way, when that quantum is considered for its correct and limited purpose as a measure of the objective gravity of the offending and when the learned judge’s findings concerning subjective factors and the evidence of post-sentence developments are also taken into account, I am of the view that no lesser sentence is warranted.

8. [48]

   I propose the following orders:

   1. (1)

      Grant leave to appeal against sentence.

   2. (2)

      Dismiss the appeal.

9. [49]

   SWEENEY J: I agree with Fagan J.