R v BB

1. [1]

   HIS HONOUR: The accused is charged with two offences, being two counts of breaching the Charter of the United Nations (Sanctions – Iran) Regulations 2008 (Cth) (hereinafter “the Iran Sanctions Regulations”). It is unnecessary to recite the allegations of fact, beyond the most general description.

2. [2]

   This is the first time an indictment on such a charge is to be preferred and the Court needs to adumbrate its preliminary view of the elements for the guidance of the Crown and the accused in the manner in which each approaches the evidence required to be adduced, in order to prove the alleged offences, or to test the relevance and effect of the evidence so adduced.

3. [3]

   It is necessary either to summarise or to recite the statutory regime. The offence is the supply of sanctioned goods to Iran, in contravention of the Iran Sanctions Regulation. It is established by a combination of statute, regulation and instrument to which the provisions of the Criminal Code (Cth) (hereinafter “the Criminal Code”) apply.

The Criminal Code

1. [4]

   As many have noted, the operation of the Criminal Code is probably more arcane than is in the best interests of the administration of justice. The Criminal Code, despite its title, is not a code of Commonwealth criminal law. Nevertheless, its general provisions apply to Commonwealth offences. It is the effect of Ch 2 of the Criminal Code that is the most relevant to the issue with which the Court must now deal.

2. [5]

   Chapter 2 of the Criminal Code reflects the disadvantages of seeking to “simplify” well-defined concepts. It replaces for the purposes of general Commonwealth criminal offences, the concepts “actus reus” and “mens rea” with the concepts of “physical elements” and “fault elements” (Div 3.1 of the Criminal Code). Leaving aside the need for voluntariness (Div 4.2 of the Criminal Code), a physical element is conduct or the result of conduct or a circumstance in which “conduct or a result of conduct, occurs”: Div 4.1 of the Criminal Code.

3. [6]

   As is clear from the provisions of Div 3.1(2) and Div 3.1(3) of the Criminal Code, unless otherwise prescribed or necessarily implied, every physical element must, in order for there to be an offence, be accompanied by a fault element. In the ordinary case, a person can be found guilty of an offence only if the necessary physical elements are proved and, in respect of each such physical element for which a fault element is required, one of those fault elements is proved: Div 3.2 of the Criminal Code.

4. [7]

   It may be easier to understand if a well-known example were provided. If one were to apply the foregoing to murder (a State offence), as if it were a Commonwealth offence, then the conduct of killing another would be the physical element and the intention to kill (or cause grievous bodily harm) would be two of the three fault elements in respect of that physical element that, if also proved, would give rise to guilt.

5. [8]

   Of course, the foregoing simplified example does not detract from the applications of the provisions in all their complexity. The statute must be applied to effect the purpose of the legislature, derived, as it must be, from the terms of the statute. Further, the concepts “physical elements” and “fault elements” do not equate to the concepts of “actus reus” and “mens rea”, which may not be obvious from the foregoing simplified example.

6. [9]

   It is necessary to deal in more detail with the terms of the Criminal Code. The provisions of Div 5.1 of the Criminal Code make clear that a physical element may have one or more of the following fault elements: “intention; knowledge; recklessness; or negligence”. Irrelevantly for present purposes, there can be particular offences that require no fault element. Further, intention is defined in Div 5.2 of the Criminal Code as occurring when a person “means to engage in that conduct”; believes that a circumstance exists or will exist; or, in relation to a result, means to bring that result about or is aware that it will occur in the ordinary course of events: Div 5.2 of the Criminal Code.

7. [10]

   Knowledge is further defined as being possessed by a person when that person “is aware [that the circumstance or result] exists or will exist in the ordinary course of events”: Div 5.3 of the Criminal Code. Recklessness, on the other hand, is defined, with respect to a circumstance, where: a person is aware of a substantial risk that the circumstance exists or will exist; and having regard to the circumstances known to the person it is unjustifiable to take the risks: Div 5.4(1) of the Criminal Code. In relation to a result, recklessness is defined in the same terms, with the necessary changes being made.

8. [11]

   The question whether a risk is unjustifiable is one of fact. Further, the provisions of Div 5.4(4) of the Criminal Code provide that proof of intention, knowledge or recklessness will satisfy the “recklessness” fault element. In other words, recklessness is the lowest bar in the hierarchy of fault elements associated with Commonwealth criminal offences. It is unnecessary to deal with negligence.

9. [12]

   In default of the specification by the legislature of the fault elements associated with particular conduct or physical elements, the fault element, where the physical element consists only of conduct, is intention; and, where the physical element consists of the circumstance or result, recklessness is the fault element for that physical element.

10. [13]

    As is clear from the general law and as has been made clear in relation to Commonwealth offences, the physical and fault elements must be coincident, i.e. be in existence at the same time: Campbell v R [2008] NSWCCA 214.

The particular offence

1. [14]

   It is necessary to deal with the offence created by the legislature with which the accused has been charged. The courts in Australia have not before dealt with this offence or a charge preferred under it. During the course of the most helpful submissions by the Crown and Mr Pararajasingham, on behalf of the accused, much attention was paid to the offence and the regulations which give rise to the offence and the particulars thereof.

2. [15]

   The offence is one charged under s 27 of the Charter of the United Nations Act 1945 (Cth) and in particular under s 27(1) of the aforesaid Act, which is in the following terms:

3. [16]

   The provisions of s 27 define the term “engage in conduct” to include the doing of an act and the omission to perform an act. The Court, as presently constituted, has had the benefit of the second reading speeches and the schedule thereto. It is noteworthy that s 27 applies strict liability to bodies corporate, but not to individuals. The explanatory memorandum is also before the Court.

4. [17]

   The Charter of the United Nations Act defines, by the provisions of s 2, that a “UN sanction enforcement law” is “a provision that is specified in an instrument under subsection 2B(1). It is necessary then to proceed to the provisions of the Charter of the United Nations (UN Sanction Enforcement Law) Declaration 2008 which is a declaration made under s 2B(1) of the Charter of the United Nations Act.

5. [18]

   Under Cl 3 of that Declaration, those provisions mentioned in Sch 1 to the Declaration are specified as a UN Sanction Enforcement Law. Clause 7 in Sch 1 to the Declaration prescribes regs 10, 12, 14, 16, 17 and 19 of the Iran Sanctions Regulations. Regulation 10 of the Iran Sanctions Regulations is the relevant provision for present purposes.

6. [19]

   It is necessary to deal with more provisions in the Iran Sanctions Regulations than just reg 10.

7. [20]

   First, reg 5 of the Iran Sanctions Regulations prescribes “export sanctioned goods” which, relevantly, refers to Security Council documents that are numbered; goods that have been determined by the Security Council or the Committee; and, most relevantly, by reg 5(1)(d) of the Iran Sanctions Regulations, “goods specified in a determination under subregulation (2)”.

8. [21]

   There are criteria for the Minister to specify goods, but there is no challenge to the specification in these proceedings. The foregoing does not suggest that there could be or that there may not be.

9. [22]

   The Iran Sanctions Regulations, by reg 7, provides that a person makes a sanction supply in the following circumstances:

10. [23]

    The Court recites regs 10(2) and 10(6) of the Iran Sanctions Regulations, which are the most relevant aspects of the Iran Regulations for the purpose of these reasons:

11. [24]

    As can be seen from the foregoing, sanction supply is prohibited, unless it is an authorised supply and the term “authorised supply” is defined.

12. [25]

    Other than the foregoing, it is sufficient for present purposes to recite that the Charter of the United Nations (Sanctions – Iran) (Export Sanctioned Goods) List Determination 2008 (Cth), a Determination made under reg 5(2) of the Iran Sanctions Regulations lists nickel and its alloys, including in semi-fabricated form, that have a nickel content of greater than 25% or more by weight as a sanctioned good and that forms part of Div 3D of the export sanctioned goods list determination.

13. [26]

    The allegation in this proceeding is that the accused supplied two shipments of a metal alloy, each with a content of nickel of greater than 25% by weight, and that, as a consequence, the alloy provided to Iran, or intended to go to Iran, was a sanctioned good within the scheme outlined above.

Application of the Criminal Code to prescribed offences

1. [27]

   Much attention has been paid to the provisions of reg 7 of the Iran Sanctions Regulations, which defines a sanction supply. No criticism is intended by the foregoing comment. It is a natural and obvious prescription on which to concentrate.

2. [28]

   Nevertheless, the offence is prescribed by s 27 of the Charter of the United Nations Act, for which the Iran Sanctions Regulations is a particular prescription. As earlier stated, the terms of s 27 provide that an individual commits an offence if the individual engages in conduct and the conduct contravenes a UN sanction enforcement law. It is that provision to which the terms of the Criminal Code apply.

3. [29]

   Of itself, the foregoing analysis may make little difference. However, plainly, the terms of s 27(1)(a), which refers to an individual engaging in conduct, requires, in the absence of an express provision to the contrary or a provision of necessary intendment, that the person has an intention to engage in the conduct and, that requires, that the person means to engage in that conduct. In those circumstances, the conduct must be deliberate and intended.

4. [30]

   Secondly, it is worth noting that the fault element associated with the provisions of s 27(1)(b) of the Charter of the United Nations Act is less obvious. On one view at least, whether conduct contravenes a UN sanction enforcement law is a circumstance or a result, which would require that the intention, if intention be the criterion, could be proved by a belief that the circumstance or result exists or will exist or will occur.

5. [31]

   It is at that point in the analysis that the Court is required to deal in a more detailed way with the UN Sanction Enforcement Law, being, relevantly, reg 10 of the Iran Sanctions Regulations. In doing so, it is necessary to bear in mind, again, the terms of reg 7 of the Iran Sanctions Regulations that prescribes that a sanction supply occurs when a person supplies, sells or transfers goods to another person; the goods are export sanction goods; and as a direct or indirect result of a supply the goods are transferred to Iran or are incorporated into goods that are transferred to Iran.

6. [32]

   Regulation 10, which prescribes the particular contravention of the regulation, specifies a person contravenes reg 10 if the person makes a sanctioned supply; and the sanction supply is not an authorised supply. The term “authorised supply” is, as earlier stated, defined: reg 10(6) of the Iran Sanctions Regulations. It is therefore necessary for the Court to analyse how, or in what circumstances, the person makes a sanction supply, which, in turn, depends upon an analysis of reg 7 summarised and recited above.

7. [33]

   Again, reg 7(a) refers to conduct, being the supply, sale, or transfer of goods to another person. Such conduct can occur only where, as earlier stated, there is a deliberate and intentional (including voluntary) supply, sale or transfer. The conduct requires intention as its fault element

8. [34]

   Similarly, the provisions of reg 7(c) of the Iran Sanctions Regulations are relatively uncontroversial. On its plain wording, it deals with the result of the supply and seems, on that basis, to be governed by the terms of s 5.2(3) of the Criminal Code and requires that the Crown prove that the accused meant to bring about the result or was aware that the result, being the supply, sale or transfer of goods to Iran, would occur in the ordinary course of events, as a consequence of the accused’s conduct. On one view, not argued, the result may be proved by proof of recklessness; see s 5.6(2) of the Criminal Code.

9. [35]

   The more difficult aspect is that which requires that the goods are export sanctioned goods in reg 7(b) of the Iran Sanctions Regulations.

10. [36]

    The provisions of reg 7(b) set out the terms of a fact or circumstance. Whether the goods are “export sanction goods” is a question of fact, albeit informed by the provisions of reg 5 of the Iran Sanctions Regulations. Of itself, such a distinction may not have much work to do. As was pointed out by the Court of Criminal Appeal in R v JS [2007] NSWCCA 272 at [152]; per Spigelman CJ, with whom Mason P, McClellan CJ at CL, Hidden and Howie JJ agreed.

11. [37]

    The Crown relies, by way of analogy, on the comments of Gleeson CJ (with whom, Gummow, Hayne, Heydon, Crennan and Kiefel JJ agreed) in R v Wei Tang (2008) 237 CLR 1; [2008] HCA 39. There, the Chief Justice analysed Ch 2 of the Criminal Code and relied on the analysis of Brennan J (as his Honour then was) in He Kaw Teh v The Queen (1985) 157 CLR 523; [1985] HCA 43 at 564. The issue before the High Court in Wei Tang was a question relating to the provisions prohibiting slavery. The Chief Justice analysed the physical element of conduct and described the fault element as intention, governed, therefore, by s 5.2(1) of the Criminal Code.

12. [38]

    At [47] and [48] of Wei Tang Gleeson CJ said:

13. [39]

    In particular, the last two sentences of [48], above, deals with the knowledge of facts as against the appreciation of the legal consequence or significance of those facts.

14. [40]

    However, the Court must be careful in applying that analysis to the present circumstances. The learned Chief Justice continued at [49] to say:

15. [41]

    Slavery, which was prohibited under the provisions of s 270 and defined in the same provision, was conduct that was always illegal. In the present circumstances, transferring goods to Iran is not always illegal. The contravention of the criminal law occurs only when the goods that are intentionally transferred are sanctioned goods, as defined.

16. [42]

    As a consequence, conduct which, in fact, transfers goods to Iran which, also in fact, are goods that are sanctioned, would not be a contravention, unless there was some fault element associated with the circumstance that the goods are sanctioned. A better analogy may be with the importation of drugs.

17. [43]

    In R v Saengsai-Or (2004) 61 NSWLR 135; [2004] NSWCCA 108, the Court of Criminal Appeal dealt with the application of the Criminal Code to the importation of narcotics. Applying s 5.6 of the Criminal Code, the Court recited that the default fault element for a physical element that consists of conduct, or only of conduct, is intention; and the default fault element for a physical element that consists of a circumstance or a result is recklessness: ss 5.6(1) and 5.6(2) of the Criminal Code, recited or summarised above.

18. [44]

    In the course of the judgment of the Court of Criminal Appeal, Bell J (with whom Wood CJ at CL and Simpson J agreed) analysed the application of the Criminal Code; its relationship to the general principles of criminal responsibility; and the fault elements associated with conduct, circumstances and result. In the course of her reasons for judgment, Bell J also relied on the comments of Brennan J in He Kaw Tey, supra, in particular, the passage at p 584 of 157 CLR, from which I extract the following passage:

19. [45]

    The Crown submission in Saengsai-Or, with which Bell J was dealing, was a submission that recklessness was the fault element associated with the circumstance that the thing imported contained narcotic goods and that it was not a significant departure from proof of mens rea under the previous regime: see Saengsai-Or, supra at [68]. Dealing with that submission, Bell J said:

20. [46]

    The analogy with the importation of drugs must also be treated carefully. Obviously, in this case we are dealing with a transfer rather than an importation. More relevantly, there are specific provisions relating to the importation of drugs which impact upon the manner in which importation has been prosecuted. For example, the provisions of s 300.5 of the Criminal Code excludes the necessity for the Crown to prove that the person knew or reckless as to the particular identity of the controlled drug or item that was being imported. Nevertheless, the provisions of s 300.5 do inform, in an analogous way, the manner in which one should treat the transfer of sanctioned goods to Iran as do the comments of the Court of Criminal Appeal in Saengsai-Or.

21. [47]

    The reliance by the High Court in Wei Tang and the Court of Criminal Appeal in Saengsai-Or on the comments of Brennan J in He Kaw Teh are informative. As Bell J explained in Saengsai-Or, it is difficult to imagine the law providing a maximum penalty of 10 years’ imprisonment for conduct that is otherwise legal, if the circumstance that renders it illegal has no fault element.

22. [48]

    In my view, the circumstance that the goods are export sanctioned goods, as the condition in reg 7(b) of the Iran sanctions prescribed, is a circumstance that requires a fault element and the only issue is: what is the fault element that is required?

23. [49]

    Applying the provisions of s 5.6(2) of the Criminal Code and applying it to the prescription in reg 7(b) of the Iran Sanctions Regulations, that prescription is a “circumstance” and the provision does not specify a fault element, as a consequence of which the fault element for that physical element or circumstance is recklessness. Of course, recklessness may be proved by evidence of intention or knowledge or recklessness: s 5.4(4) of the Criminal Code.

24. [50]

    On that analysis, the Crown is required to prove that the accused meant to sell, transfer or supply the nickel in the relevant quantities or content to Iran; and that he turned his mind to the fact that there was a substantial risk that the nickel, with that content, was a sanctioned good and unjustifiably took the risk, nevertheless: s 5.4(1) of the Criminal Code.

25. [51]

    The only alternative fault element that could, in my view, be arguable is that the accused knew that the goods were sanctioned goods. On the Crown case, as it has been very briefly explained, the Crown may be able to prove that. Nevertheless, there must be a fault element associated with the circumstance that the goods are sanctioned goods, otherwise conduct that would otherwise be wholly innocent would be the subject of criminal prosecution without fault. In the absence of an express provision rendering the offence one of strict or absolute liability that is not the appropriate interpretation of the provisions and the offence in question.

26. [52]

    For the above reasons, the Court directs that the Crown, in these proceedings, must prove, at the requisite standard, that the accused:

    1. (1)

       intended to make a supply;

    2. (2)

       with knowledge that the goods to be supplied consisted of a metal with a content of nickel greater than 25% by weight;

    3. (3)

       with knowledge that the direct or indirect result of the supply was that goods would be transferred to Iran; and

    4. (4)

       that the accused was reckless as to whether the supply was of sanctioned goods, including that the supply was not an authorised supply.