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So v Comptroller-General of Customs[2015] QDC 334

So v Comptroller-General of Customs[2015] QDC 334

DISTRICT COURT OF QUEENSLAND

CITATION:

So & Ors v Comptroller-General of Customs [2015] QDC 334

PARTIES:

CHI HO SO

&

JASPREET SINGH JOHAL

&

LUN SHING YIP

(appellants)

v

COMPTROLLER-GENERAL OF CUSTOMS

(respondent)

FILE NO/S:

BD 1655/2015

1656/2015

1657/2015

DIVISION:

Criminal

PROCEEDING:

Appeal

ORIGINATING COURT:

Magistrates Court, Brisbane 

DELIVERED ON:

18 December 2015

DELIVERED AT:

Brisbane

HEARING DATE:

4 December 2015

JUDGE:

Smith DCJA

ORDER:

  1. The appeals are allowed.
  2. The orders made in respect of each appellant in the Magistrates Court on 22 April 2015 are varied to the extent that orders for condemnation of the Rolex watches are set aside, but otherwise the orders are confirmed.
  3. I will hear the parties as to costs.

CATCHWORDS:

CRIMINAL LAW – JUDGMENT AND PUNISHMENT – FORFEITURE AND CONDEMNATION – should a condemnation order have been made for breaches of the Customs Act 1901 (Cth)

TAXES AND DUTIES – CUSTOMS AND EXCISE – whether condemnation order of forfeited goods should have been made

Acts Interpretation Act 1901 (Cth) s 15AA

Crimes Act 1914 (Cth) ss 4AA, 16A

Customs Act 1901 (Cth) ss 183UA, 203, 205, 205B, 205C, 205D, 205G, 208D, 229, 234, 237, 239, 245

Customs Tariff Act 1995 (Cth) Schedule 3, Chapters 71 and 91 

Justices Act 1886 (Q) ss 222, 223, 225

Allesch v Maunz (2000) 203 CLR 172

Bert Needham Automative Co Pty Ltd v Federal Commissioner of Taxation (1976) 10 ALR 501

Blackell v Red Dial Holdings Pty Ltd and ors [2004] WASC 141

Burton v Honan (1952) 86 CLR 169

CEO of Customs v Coulton [2005] NSWSC 869

Commissioner of Taxation v Cocaj and Anor [2004] 2 Qd R 488; QCA 69

Commissioner of Australian Federal Police v Craven (1989) 20 FCR 547

De Keyser v British Railway Traffic and Electric Co Ltd [1936] 1 KB 224

Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503

Forbes v Traders Finance Corporation Ltd (1971) 126 CLR 429

Hayes v Weller (No 2) (1988) 50 SASR 182

Hayes v Weller (1988) 50 SASR 136

Johnson v R (2004) 205 ALR 346

L. Vogel and Son Pty Ltd v Anderson (1968) 120 CLR 157

Lanham v Brake (1984) 52 ALR 351

Little’s Victory Cab Co Pty Ltd v Caroll [1948] VLR 249

Murphy v Farmer (1988) 165 CLR 19

Olbers Co Ltd v Commonwealth (2004) 136 FCR 67

Pettitt v Dunkley [1971] NSWLR 376

R v Brough [1995] 1 NZLR 419

R v Hoar (1981) 51 FLR 231

R v Hoar (1981) 148 CLR 32

R v Kalache  (2000) 111 A Crim R 152

R v Stanbouli (2003) 141 A Crim R 531

Re Director of Prosecutions; ex parte Lawler and Anor (1994) 179 CLR 270

Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33

Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247

Stocks v R (2000) 113 A Crim R 131

Teelow v Commissioner of Police [2009] 2 Qd R 489

Toy Centre Agencies v Spencer and others (1983) 46 ALR 351

Whim Creek Consolidated NL v Colgan and anor (1991) 31 FCR 469

Willey v Synan (1935) 54 CLR 175

COUNSEL:

Mr J. Hunter QC for the appellants

Ms E. Wilson QC with Mr C.K. Copley for the respondent

SOLICITORS:

Russo Lawyers for the appellants

Australian Government Solicitor for the respondent

Introduction

  1. [1]
    This is an appeal by the appellants against an order made in the Brisbane Magistrates Court on 22 April 2015 pursuant to s 205D(3) of the Customs Act 1901 (Cth) (“the Customs Act”) that goods seized by the respondent from the appellants were condemned as forfeited to the Crown.
  1. [2]
    There was no objection to the appeals being heard together.

Nature of appeal

  1. [3]
    Section 222(2)(c) of the Justices Act 1886(Q) provides that where the defendant pleads guilty then the person may only appeal on the sole ground that the fine, penalty, forfeiture or punishment was excessive or inadequate.
  1. [4]
    Section 223(1) of the Justices Act provides that the appeal is to be by way of rehearing on the evidence given in the proceeding before the justices.  There is also provision for the admission of fresh, additional or substituted evidence in certain circumstances.
  1. [5]
    Section 225(1) of the Justices Act provides that:

“On the hearing of an appeal, the judge may confirm, set aside or vary the appealed order or make any other order in the matter the judge considers just.”

  1. [6]
    In Teelow v Commissioner of Police[1]Muir JA held at [4]:

“It is a normal attribute of an appeal by way of rehearing that the powers of the appellate court are exercisable only where the appellant can demonstrate that having regard to all of the evidence now before the court, the order that is the subject of the appeal is a result of some legal, factual or discretionary error …”

Charges

  1. [7]
    The appellants pleaded guilty to the following counts:

Charge one

On 7 April 2015 at Brisbane in the state of Queensland [the appellants] did, contrary to ss 234(1)(a) and 237 of the Customs Act 1901,attempt to evade the payment of duty payable on 944 articles of jewellery and parts thereof, of precious metal or of metal clad with precious metal.

Charge two

On 7 April 2015 at Brisbane in the state of Queensland [the appellants] did, contrary to s 234(1)(d)(i) of the Customs Act 1901 as amended (“the Customs Act”), intentionally make a written statement, to an officer of customs, reckless as to the fact that the statement was false in a material particular.

Charge three

On 7 April 2015 at Brisbane in the state of Queensland [the appellants] did, contrary to s 234(1)(d)(i) of the Customs Act 1901 as amended (“the Customs Act”), intentionally make an oral statement, to an officer of customs, reckless as to the fact that the statement was false in a material particular.

  1. [8]
    The appellant So was ordered to pay a penalty of:
  1. (a)
    $13,484.90 in respect of charge one;
  1. (b)
    $1,250 in respect of charge two;
  1. (c)
    $1,250 in respect of charge three.
  1. [9]
    The default period with respect to charge one was six months imprisonment, charge two was one month imprisonment and charge three was one month imprisonment. He was ordered to pay the complainant’s costs in the sum of $644. Further, pursuant to s 205D(3) of the Customs Act the seized goods of So described in the seizure notice of 20 April 2015 were condemned as forfeited to the Crown.
  1. [10]
    The appellant Yip was ordered to pay penalties of:
  1. (a)
    $13,484.90 in respect of charge one;
  1. (b)
    $750 in respect of charge two; and
  1. (c)
    $750 in respect of charge three.
  1. [11]
    The default period with respect to charge one was six months imprisonment, charge two was 14 days imprisonment and charge three was 14 days imprisonment. He was ordered to pay the complainant’s costs in the sum of $644. Further, pursuant to s 205D(3) of the Customs Act the seized goods of Yip described in the seizure notice of 20 April 2015 were condemned as forfeited to the Crown.
  1. [12]
    The appellant Johal was ordered to pay a penalty of:
  1. (a)
    $13,484.90 in respect of charge one;
  1. (b)
    $750 in respect of charge two; and
  1. (c)
    $750 in respect of charge three.
  1. [13]
    The default period with respect to charge one was six months imprisonment, charge two was 14 days imprisonment and charge three was 14 days imprisonment. He was ordered to pay the complainant’s costs in the sum of $644. Further, pursuant to s 205D(3) of the Customs Act the seized goods of Johal described in the seizure notice of 20 April 2015 were condemned as forfeited to the Crown.

Proceedings below

  1. [14]
    A statement of facts was tendered as evidence below. It was submitted that each of the appellants attempted to evade the payment of $6,742.45 customs duty when they imported into Australia 944 articles of jewellery and four Rolex watches. In addition, each appellant made a false written statement and a false oral statement to a customs officer.
  1. [15]
    The appellants arrived at the Brisbane International Airport on 7 April 2015 from Hong Kong, China on Cathay Pacific flight CX157. On arrival each of the appellants presented an English incoming passenger card (IPC) to customs officers. Each of the appellants had signed their IPC and declared that the information given was true and correct.
  1. [16]
    Except for question four (relating to goods/samples for business/commercial use) all questions on the IPCs were answered “no” including question three which asked:

“Are you bringing into Australia:

Goods obtained overseas or purchased duty and/or tax free in Australia with a combined total price of more than AUD900, including gifts?”

  1. [17]
    The appellants collected their baggage and proceeded to a customs marshal point where they handed a carnet to a customs officer. A carnet is an internationally recognised document for the temporary importation of goods that allows for the temporary admission of goods without the payment of duties or taxes. The carnet presented by the appellants referred to “two bags 18K gold diamond”. The appellants were taken to a baggage examination bench and presented bags for examination.
  1. [18]
    Each of the appellants confirmed with a customs officer that they had read and understood the questions of the IPC, the baggage belonged to all of them, they packed the bags together, they were fully aware of the contents of the bags and they had signed the IPC presented.
  1. [19]
    The customs officer asked the appellants each if they had anything in their pockets and they removed mobile phones and cigarettes. They denied having anything else in their pockets and denied there was any jewellery in the bags that was not listed on the carnet. An officer examined one of the appellant’s suitcases and located three empty Rolex watch boxes. The appellants were asked “where are the watches?” and Mr So said “we didn’t bring them, the boxes are only to show, for display”. Mr Johal said “yes we only show what the case will look like” and Mr Yip nodded.
  1. [20]
    The examination continued. The appellants’ computer bag was opened and a Rolex watch was located. The officer asked the appellants where the rest of the watches were and the appellant So produced three Rolex watches from his jacket pockets. The appellants were then cautioned. A second customs officer approached the bench and spoke to the appellants. Mr So admitted that the Rolex watches and one black backpack were not listed on the carnet. Mr Yip nodded but did not speak and Mr Johal confirmed this. The officer asked the appellants if they had a list of items which were not on the carnet. Mr So replied that he did have such a list and gave to the officer a list of the items which were not declared. This list included 944 articles of jewellery and parts thereof, and the four Rolex watches. Duty was not paid on these items.
  1. [21]
    Three days later on 10 April 2015 each of the appellants participated in a record of interview with customs officers. They made admissions in the record of interview. They told customs officers that the undeclared jewellery and undeclared watches came from ManKing Jewellery Company Limited in Hong Kong. They knew they had brought the undeclared watches with them and did not declare them. They knew they would pay tax/duty on the items if declared. They intended to show the undeclared jewellery and undeclared watches to customers for the purpose of placing orders from a factory in China and did not intend to sell the undeclared jewellery and the undeclared watches in Australia. Further, their employer had instructed them not to declare the undeclared jewellery and the undeclared watches.
  1. [22]
    As to Mr So, he was 31 years of age at the time of the offences, a Chinese resident in Hong Kong, a salesman and had, since 18 April 2010, 31 previous arrivals in Australia.
  1. [23]
    As to Mr Johal, he was 31 years of age at the time of the offences, a British national, resident in Hong Kong, a salesman, and had two previous arrivals in Australia since 11 November 2014.
  1. [24]
    As to Mr Yip, he was 26 years of age, a Chinese resident in Hong Kong, a salesman and had four previous arrivals in Australia since 14 April 2013.
  1. [25]
    Customs officers had assessed the undeclared jewellery and determined that it had a value of $134,848.93. Each item was an article of jewellery or part thereof of previous metal or of metal clad with precious metal. Customs officers assessed the undeclared watches at a value of $59,270. Each article is a wristwatch, pocket watch or other watch without a case of precious metal or of metal clad with precious metal.

Prosecution submissions

  1. [26]
    The prosecution tendered an outline of written submissions. It was submitted that the articles of jewellery were assessable under subheading 7113.19.00 of Chapter 71 of Schedule 3 of the Customs Tariff Act 1995 (Cth).  As at 7 April 2015 the rate of customs duty payable in relation to the articles of jewellery was 5% of the value of the goods. 
  1. [27]
    The wristwatches were specified in subheading 9102.19.00 of Chapter 91 of Schedule 3 of the Customs Tariff Act 1995.  As at 7 April 2015 the rate of customs duty payable in relation to the articles of jewellery so specified was free.
  1. [28]
    The duty payable on the jewellery was $6,742.45 and $0 on the watches.
  1. [29]
    The minimum fine payable on the attempting to evade charge was $13,484.90 and the maximum was $33,712.26.[2]The maximum penalty for the false statement to a customs officer charge for each contravention was $42,500[3], however pursuant to s 245(4) of the Customs Actany penalty exceeding 200 penalty units (i.e. $34,000) was taken to have been abandoned[4]. 
  1. [30]
    Section 245(4) of the Customs Act caps the penalty which may be imposed for each offence charged and does not apply to cap the cumulative penalty which might be imposed for all offences charged or each proceeding instituted.[5]
  1. [31]
    The prosecution submitted the Court should have regard to s 16A of the Crimes Act1914 (Cth).  Additionally, the totality principle was relevant.[6]It was submitted the totality principle, however, had limited application because the appellants had each committed three distinct offences arising from separate conduct.
  1. [32]
    It was submitted that the following matters needed to be taken into account as set out by Cox J in Lanham v Brake:[7]
  1. (a)
    the seriousness of the offence;
  1. (b)
    its prevalence;
  1. (c)
    the obvious difficulty in detecting the offence;
  1. (d)
    the consequent need to impose deterrent penalties;
  1. (e)
    whether the offences are such that they are usually committed by persons of generally good character.
  1. [33]
    Customs offences are notoriously difficult to police and traditionally attract heavy penalties.[8]Penalties for Customs offences are to be of a very high order.[9]A punishment for deliberate offences against the Customs Actshould be severe.[10]
  1. [34]
    It was submitted that during the 2013-2014 financial year each week on average Customs cleared approximately 626,012 air passengers arriving into Australia on more than 3,667 flights. It was impracticable to examine the luggage of every passenger and of necessity Customs officers rely on information supplied to them.
  1. [35]
    In order to discover the undeclared jewellery and watches in this case the appellants’ luggage had to be thoroughly examined.
  1. [36]
    The quantity and value of the undeclared jewellery and the value of the undeclared watches and the amount of duty evaded was significant. There was a strong need for personal deterrence so the appellants would not engage in this type of conduct in the future. There was also a strong need for general deterrence.
  1. [37]
    It was submitted that the matter involved a deliberate breach of the Customs Actby the appellants.  It was further submitted that the IPCs were very clear in their terms.  The prosecution submitted that Customs had seized the undeclared jewellery and undeclared watches from the appellants on 20 April 2015.  They were seized under a seizure warrant issued under s 203 of the Customs Act on the grounds that the undeclared jewellery and watches were suspected on reasonable grounds to be forfeited goods for which seizure was necessary in the circumstances.  It was submitted that, by reason of the matters submitted concerning penalty, the Court should condemn the seized goods. 
  1. [38]
    It was submitted that there was a legitimate means by which the undeclared jewellery and undeclared watches could be brought into Australia on a temporary basis without payment of duty and the appellants knew this to be the case. Further, the appellants had pleaded guilty to the offences and the offences could only be conceived as a deliberate attempt to circumvent Australian Customs Law. It was pointed out that s 239 of the Customs Act provides that all penalties shall be in addition to forfeiture.
  1. [39]
    Costs were also sought.
  1. [40]
    Oral submissions were made by the prosecutor, largely consistent with the outline of submissions.[11]A schedule of comparable sentences was provided to the sentencing magistrate (Exhibit B). 
  1. [41]
    The appellants’ solicitor at this point tendered a statutory declaration prepared by Mr So as Exhibit C. Mr So confirmed in the statutory declaration that his boss at ManKing Jewellery told him not to declare certain items on the carnet document. This was because he was robbed in 2012 twice in Sydney and his employer had lost a large amount of jewellery as a result. This meant that insurance would cover only a certain value of the items listed on a carnet. This is why he travelled with two people when he made visits to Australia and elsewhere to show off the jewellery. He had worked for ManKing Jewellery for about eight years, and if the jewellery which was seized was forfeited he would certainly lose his job and his boss might very well try and make him pay for it out of his wages. The job market in Hong Kong is not particularly good because of the global financial crisis.
  1. [42]
    I note that the prosecution did not seek to adjourn the matter to investigate the matters raised in the statutory declaration.
  1. [43]
    In respect of condemnation, the prosecution submitted that very relevant was the fact that Customs deals with a large volume of items being imported into Australia by air passengers. There was also a strong need for personal deterrence in this case. The appellants had pleaded guilty to deliberate breaches of the Customs Act.  They chose to import the goods without declaring them. 

Defence submissions

  1. [44]
    It was submitted by the defence solicitor that Mr So was 32 years of age living in Hong Kong. He resided with his mother and father. He had a tertiary level of education, having completed his economics degree at university. He had been working at ManKing Jewellery since 2008 on a fulltime basis. He was a salesman/business developer. His employment involved significant travel. He travels for about 11 months a year showing off jewellery. He takes large samples of jewellery overseas to various locations and shows them to people, jewellers and the like. They then place an order with his company in China and attend one of the regular fairs which occur in Hong Kong three times a year. He does not go overseas to sell the items, only to show them, which is why they can be subject to the carnet. Because of the circumstances in Court it was quite possible he would lose his employment depending on the orders imposed.
  1. [45]
    With respect to Mr Johal, he was a British national in his thirties. He was born in Hong Kong and had been married for about seven years. He had a three year old child. He had completed year 11. He had worked at ManKing Jewellery on a fulltime basis for the last four years or so, employed as a salesman. Like Mr So he travels overseas for long periods of time showing off jewellery to try and get buyers interested in the factories in Hong Kong and China. He will also have difficulties if he loses his employment. It was submitted that Hong Kong was still in the grips of a recession and the job market was not good.
  1. [46]
    As to Mr Yip, he was in a de-facto relationship in his twenties. He was younger than the other two. He had achieved a high school level of education. He had a one and a half month old child. He had worked at ManKing Jewellery for about three years and, like the others, was a salesman employed travelling around.
  1. [47]
    It was submitted that the reason the three of them travelled together was because of the circumstances outlined in the statutory declaration. Reports were made about these robberies to the Police.
  1. [48]
    The appellants were guided by what their employer told them. It was accepted by the defence that there was a deliberate course of conduct. However, the defence submission was that there is to be a distinction made between people who come to Australia and do not pay customs duty on items they were intending to sell to increase their profit margins as compared to the appellants’ case where they merely brought the items to show off. There was no intent to sell them. It was submitted that this was a relevant factor. It was accepted that the appellants were misleading and dishonest at the beginning, but once the “jig was up” they came clean and provided a list of the items not listed on the carnet. They became completely cooperative and participated, indeed, in the interviews some three days later. There was cooperation and remorse. The appellants gave exactly the same version in the interviews. It was submitted that the items listed in the carnet were worth $393,553.75 USD, namely $524,738.33 AUD as compared to the undeclared items of $134,808.93 AUD for the jewellery and approximately $59,000 AUD for the watches.
  1. [49]
    It was submitted that the motive of only showing the jewellery was a very relevant factor under s 205D(3) of the Customs Act.  The appellants accepted that fines were appropriate.  It was further submitted that if fines of about $13,000 were going to be imposed on them that it was a significant penalty and was relevant in deciding the matter.[12]It was submitted also that Mr So had 31 previous arrivals in Australia and never had a problem in the past with declarations.  The defence stressed it was the employer who told them to do this and if they had not they may have lost their employment.  It was submitted that if the jewellery was forfeited there was a chance they would lose their jobs.  Relevant to the condemnation order was the significant penalty which would be imposed.  Crucially, in this case there was no deliberate attempt to bring in goods, to sell them and avoid paying duty. 

Further submissions

  1. [50]
    The prosecution by way of reply conceded there was no evidence to the contrary to that alleged by the appellants.[13]
  1. [51]
    The prosecution further submitted, by way of reply, that despite the two 2012 robberies Mr So continued to have his job. It was submitted that the fact there was no intention to sell did not mitigate the offending here.[14]
  1. [52]
    It was submitted that customs sought condemnation of the goods to send a strong message to other commercial importers who make deliberate efforts to conceal the importation of goods the subject of duty.
  1. [53]
    The defence further submitted the Court should take into account the appellants’ pleas of guilty on the first return date.
  1. [54]
    The matter came back before the Court on 22 April 2015. At that stage the prosecution had the information provided by the defence overnight and did not submit to the Court any evidence to the contrary. The defence solicitor submitted that he had spoken to the appellants’ employer who confirmed his clients’ instructions.

Sentencing remarks

  1. [55]
    The sentencing magistrate noted with respect to the allegation the goods were not for sale that “whilst I am obliged to take the view most favourable to you and particularly in circumstances where the prosecution produced no evidence to the contrary I must consider the objective facts also”. He found the explanations for the false statements confusing; his Honour held:[15]

“In any event ultimately I’ve come to the conclusion that I do not consider that I need to make a determination or take the view of the facts as urged upon me.  It seems to be to be superfluous to the determination of this case.  The gravamen of the offending is in attempting to evade customs duties and in the failure to declare the presence of a significant amount of property even in the face of a healthy suspicion by Customs authorities of wrongdoing… whether or not the intention was to sell the watches and jewellery is ancillary to the facts as presented to me.”

  1. [56]
    With respect of penalty, the magistrate had regard to the personal circumstances of each of the defendants and ultimately accepted the defence solicitor’s submissions as to the appropriate level of fine in relation to the charge of attempting to evade duty. He intended, however, to impose a higher fine on the other two charges than was contended for by the defence.[16]With respect to the condemnation, his Honour said:

“As to the condemnation order I’ve considered the provisions in s 239 and s 205D subsection (3) of the Act.  I have also considered the other provisions in the Act about concealed dutiable goods.  I have considered the facts of the matters.  It seems to me that what I must squarely consider in determining whether to make a condemnation order or not as was submitted on your behalf to consider the penalty otherwise imposed… Having regard to the facts that you were conversant with your obligations to declare and the fact that some of the jewellery was declared but this jewellery and watches were not, you lied and denied responsibility such that a thorough search had to be undertaken and the amount of duty you attempted to evade was significant, I do consider it appropriate and I will make the order sought to be made.”

Submissions of the parties

Appellants’ submissions

  1. [57]
    The appellants submit that it was not open to the magistrate, in all the circumstances of the case, to be satisfied it was appropriate to order the goods be condemned as forfeited to the Crown. The appellants point to the disparity between the duty avoided and the value of the items in question. In the case of jewellery the duty payable was $6,742.45 but no duty was payable with respect to the watches.
  1. [58]
    The Appellants accept that it is necessary for them to demonstrate some legal, factual or discretionary error to succeed.[17]It is submitted that when one considers the judgment at first instance in Hayes v Weller & Ors[18]and the decision on appeal[19], section 239 of the Customs Act does not mean that the fact of forfeiture is irrelevant in determining penalty.
  1. [59]
    The appellants rely, by way of comparison, on s 320 of the Proceeds of Crimes Act 2002 (Cth). 
  1. [60]
    It is submitted that the magistrate erred in failing to take into account the amount of duty payable on the jewellery and the fact that no duty was payable on the watches.
  1. [61]
    In oral submissions the appellants also argued that insufficient reasons had been given for the condemnation order. The appellants also submitted that it was possible for the court to make an order of condemnation for the jewellery but not for the watches.

Respondent’s submissions

  1. [62]
    The respondent’s position is that neither the penalty nor an alleged disproportion between the fines and duty avoided are part of the “circumstances of the case” to which regard ought to be had in deciding whether or not to make a condemnation order. Further, the magistrate was required to have regard to “all the circumstances of the case” to determine whether the appellants’ claim to title of the forfeited goods was better than the title of the Crown, or whether the Crown’s title should be vindicated by an order for condemnation. In the circumstances the relevant order made was open and correct.
  1. [63]
    The appellants say that regard should be had to s 15AA of the Acts Interpretation Act 1901 (Cth) i.e. regard is to be had to the purpose or object of the Act.  It is submitted that when one has regard to the meanings of “forfeiture” and “condemnation” in the context of the Customs legislation the words “in all the circumstances” serve a very limited purpose.  There is a strong scheme of the legislation.
  1. [64]
    The respondent refers to a history of an analysis of the legislation and notes that originally s 229 of the Customs Act related to forfeiture and s 262 of the Customs Act to condemnation.  Goods were automatically, at that stage, condemned under s 262.  It is conceded that condemnation is not automatic in this case but forfeiture is virtually automatic.
  1. [65]
    It is further submitted that under the current legislation s 205G declares the Crown title is perfected upon the making of a condemnation order under s 205D(3). It is, therefore, submitted in the circumstances that the “in all the circumstances” must be viewed in the context of the meanings of, and the distinction between, forfeiture and condemnation. It is submitted that what is at issue is whether the Crown’s title established by forfeiture should be vindicated by an order for condemnation. It is submitted that the relevant considerations are necessarily constrained. It is submitted the penalty is not relevant. The circumstances surrounding the offending conduct are relevant. At [49] of the respondent’s submissions it is submitted that the strong measure of forfeiture and condemnation is consistent with the protection of the revenue via proper collection of duty imposed by the Parliament. The matters relevant in this regard are,
  1. (a)
    the notorious difficulty in detecting Customs offences;
  1. (b)
    the porous nature of Australia’s border;
  1. (c)
    general and personal deterrence; and
  1. (d)
    a legislative scheme does not require payment of duty before seizure under warrant forfeiture and condemnation.
  1. [66]
    Alternatively, it is submitted that even if the penalty by way of fine should be considered the order for condemnation should stand. It is submitted that very modest fines were imposed on the false statement charges, the figure was the aggregate of the minimum fines available for each appellant.
  1. [67]
    The respondent further submits that the Proceeds of Crime Legislationis not relevant.  In the circumstances it is submitted the appeal should be dismissed.  
  1. [68]
    In oral submissions the respondent submitted it was not appropriate to sever the condemnation order.

Sufficiency of reasons

  1. [69]
    The appellants’ counsel submitted that the reasons given by the magistrate as to condemnation were insufficient and, as such, an error of law has occurred. In Soulemezis v Dudley (Holdings) Pty Ltd[20]Kirby P stated:

“This decision does not require of trial judges a tedious examination of detailed evidence or a minute explanation of every step in the reasoning process that leads to the judge’s conclusion. But the judicial obligation to give reasons, and not to frustrate the legislative facility of appeal on questions of law, at least obliges a Judge to state generally and briefly the grounds which had led him or her to the conclusions reached concerning disputed factual questions and to list the findings on the principal contested issues. Only if this is done can this court discharge its functions, if an appeal is brought to it. Where nothing exists but an assertion of satisfaction on undifferentiated evidence the judicial obligation has not been discharged. Justice has not been done and has not been seen to be done. Where it is necessary, for default of reasons, to resort to inferences which point to a reason for the decision of highly dubious relevance to the statute being applied, the result is that an error of law has occurred which this court can and should correct.” (my underlining)

  1. [70]
    In Resource Pacific Pty Ltd v Wilkinson[21]it was said:

“When an appellate court is invited to find that a trial judge provided inadequate reasons, it is important to understand the nature of the function being invoked. It is not the function of an appellate court to set standards as to the optimal, or even desirable, level of detail required to be revealed in reasons for judgment. Rather it is to determine whether the reasons provided have reached a minimum acceptable level to constitute a proper exercise of judicial power. Transparency in decision-making is an important value, but it is not cost free, and may involve separate parameters of quantity and quality.

…

[50] …

‘There is, I think, no formula the application of which to the instant case will indicate what, in that case, the judge must do. Where, in the decision of any ordinary dispute, reasons are necessary, they are necessary because of the expectation that, being a judicial decision, a sufficient explanation will be given of why the order was made. And, in my opinion, it will ordinarily be sufficient if ... by his reasons the judge apprises the parties of the broad outline and constituent facts of the reasoning on which he has acted.’”

  1. [71]
    It is my respectful opinion that the magistrate failed to give adequate reasons in this case. When determining the issue of condemnation he failed to refer to the following important circumstances relied on by the appellants’ solicitor:
  1. (a)
    the fact that the intention was not to sell the goods but merely to show them off;
  1. (b)
    the fact that no duty was payable on the watches;
  1. (c)
    the potential effect of forfeiture on their employment;
  1. (d)
    The disparity between the duty payable and the value of the goods.

Failure to refer to these matters was an error and an error of law.[22] 

Should the penalties have been taken into account in deciding the condemnation order?

  1. [72]
    Another key issue which was raised in these appeals was whether the penalties should have been taken into account in deciding the condemnation order.
  1. [73]
    Section 239 of the Customs Act1901 provides “All penalties shall be in addition to any forfeiture”.
  1. [74]
    In Hayes v Weller & Ors[23]von Doussa J considered a matter where Customs sought declarations that Customs offences had been committed regarding the importation of a BMW vehicle.  The car was forfeited and the general revenue received $46,000.  The minimum penalty was $46,000.  The cost of the car and shipping it to Australia was $32,000.  His Honour imposed bonds under s 19B of the Crimes Act.  His Honour at [59] held:

“The loss suffered by Weller in consequence of the forfeiture of the car is in itself substantial.  The cost of the car and shipping expenses totalled $32,000 and he has given $1,000 to Chislet.  Whilst the terms of s 239 clearly provide that the penalty required by s 233AB is in addition to the forfeiture, I do not think it follows that the fact of forfeiture is irrelevant in determining penalty.”

  1. [75]
    The Full Court allowed an appeal against his Honour’s decision.[24]Perry J, with whom King CJ and Jacobs J agreed, found the primary judge had erred in ordering a bond in light of the statement of principle in Vogelat p 164.  It may be said, however, that the Full Court did not definitively answer the issue concerning s 239.
  1. [76]
    In R v Hoar & Anor[25]the respondents were convicted of conspiracy to fish for barramundi during a prohibited period in the Northern Territory.  Recognisance release orders has been imposed at first instance.  Plant and equipment seized from them was ordered to be forfeited to the Crown.  The Crown appealed against the adequacy of the penalty.  The primary judge had taken into account the forfeiture in fixing the penalty.  The Crown alleged the primary judge had erred in taking into account the losses flowing from the seizure.  Relevantly, s 48(2) of the Fisheries Act (NT)provided:

“(2) The forfeiture shall be in addition to and not a part of a penalty imposed under this ordinance.”

  1. [77]
    The Court considered the primary judge was not in error in taking the losses into account. Fox and McGregor JJ held that s 48(2) did not have the effect of excluding forfeiture from consideration in sentence. Their Honours said:

“We do not therefore accept the Crown’s submission that the learned Chief Justice was in error in taking into account estimated losses consequent upon seizure.”

  1. [78]
    Further, it was held:

“Section 48(2) was inserted to declare that an order of forfeiture was to be regard as an exercise of power distinct from the imposition of penalty in the case of a substantive offence, not as a direction that the loss caused by forfeiture cannot be taken into account by a court in imposing penalty when the defendant is also a person suffering deprivation or loss by seizure or forfeiture.  The sentencing discretion is a wide one in which the situation of the accused himself must always be relevant.  It would be wrong in my view for a judge deciding an appropriate sentence to put it out of his mind that the prisoner had by seizure or a concurrent forfeiture order been deprived of substantial property or a means legitimately earning his living by utilisation of his equipment and plant.”[26]

  1. [79]
    The Crown appealed to the High Court on the question of forfeiture.[27]The Court held at p 39:

“Had forfeiture been authorised by the Act, the Chief Justice would have been entitled to take its impact on Hoar into account in assessing the penalty to be imposed on him, despite the provision under s 48(2)…”

  1. [80]
    In my view this is clear authority for the proposition that forfeiture may be taken into account when determining penalty.
  1. [81]
    My view is fortified by the approach taken by the Tasmanian Court of Criminal Appeal in Stocks v R.[28]In that case the primary judge had declined to take into account on sentence a forfeiture order and a pecuniary penalty order.  Underwood J held there was no provision of the relevant Act which prevented this consideration from being taken into account.  His Honour considered that Hayes v Weller & Anorand R v Hoar supported this conclusion.  Crawford J agreed with Underwood J.  SlicerJ dissented but his Honour did accept that the imposition of a pecuniary penalty is punitive in nature.
  1. [82]
    I should mention the respondent relied on the case of R v Stanbouli[29]in support of its argument that penalty was irrelevant.  In Stanbouli,Hulme J adopted the approach taken in R v Kalache.[30]In Kalache Sully J noted at p176 that it would be wrong to take into account on sentence the disgorgement of illegally obtained gains.  The present case is quite different from such a situation.  Regardless, his Honour considered at p 175 that forfeiture orders which were “particularly severe” may lessen the need for the deterrent element in the sentence.[31]
  1. [83]
    In my view, if forfeiture may be considered on the question of penalty, there is no reason why the reverse cannot apply, i.e. the penalty may be considered on the forfeiture application. Firstly, there is no prohibition on this in the section. Secondly, this is a penal statute which should be construed strictly. Thirdly, the term “in the circumstances of the case” is very broad – the case must include the criminal proceedings and its outcome.
  1. [84]
    Even though the penalty was the minimum on charge 1 it was still a significant sum – 2 times the duty payable on the jewellery and 6 times when one considers all appellants.
  1. [85]
    I therefore conclude his Honour ought to have specifically taken this into account when reaching his conclusion.
  1. [86]
    As the decision below was the subject of a legal error I consider I should exercise the discretion afresh.

Exercise of the discretion afresh

Relevant law

Legislative provisions

  1. [87]
    Section 203 of the Customs Act 1901 provides:

“203 When seizure warrant for forfeited goods can be issued

  1. (1)
    A judicial officer may issue a warrant to seize goods on or in particular premises if the judicial officer is satisfied by information on oath that an authorized person:
  1. (a)
    has reasonable grounds for suspecting that the goods:
  1. (i)
    are forfeited goods; and
  1. (ii)
    are, or within the next 72 hours will be, on or in the premises; and
  1. (b)
    has demonstrated the necessity, in all the circumstances, for seizure of the goods…”
  1. [88]
    The term “forfeited goods” is defined in s 299 of the Customs Act 1901 which reads, relevantly:

“229 Forfeited goods

  1. (1)
    The following goods shall be forfeited to the Crown…
  1. (a)
    All goods… which are smuggled or unlawfully imported, exported or conveyed…

(o)  All dutiable goods concealed in any matter.”

  1. [89]
    There is no dispute that the items here were forfeited goods as defined.[32]
  1. [90]
    Turning then to s 205 this provides:

“205 Requirement to serve seizure notices

  1. (1)
    After goods have been seized under a seizure warrant or under subsection 203B(2) or (2A), 203C(2), 203CA(3) or 203CB(2), the responsible person must serve, within 7 days after the seizure, a seizure notice on the owner of the goods or, if the owner cannot be identified after reasonable inquiry, on the person in whose possession or under whose control the goods were when they were seized.
  1. (2)
    Subsection (1) applies whether or not a claim for the return of the goods seized has been made under section 205B.
  1. (3)
    The notice must be in writing and must be served:
  1. (a)
    personally or by post; or
  1. (b)
    if no person of the kind referred to in subsection (1) can be identified after reasonable inquiry—by publishing a copy of the notice in a newspaper circulating in the location in which the goods were seized.
  1. (4)
    A seizure notice may be served on a person who is outside Australia.
  1. (5)
    In this section:

responsible person means:

  1. (a)
    in relation to goods other than narcotic-related goods—the officer of Customs who seized the goods or to whom the goods were delivered under subsection 204(3); or
  1. (b)
    in relation to narcotic-related goods—the member of the Australian Federal Police who seized the goods or to whom the goods were delivered under subsection 204(4).

205A Matters to be dealt with in seizure notices

A seizure notice must set out the following:

  1. (a)
    a statement identifying the goods;
  1. (b)
    the day on which they were seized;
  1. (c)
    the ground, or each of the grounds, on which they were seized;
  1. (d)
    a statement that, if a claim for the return of the goods has not already been made, and is not made within 30 days after the day the notice is served, the goods will be taken to be condemned as forfeited to the Crown;
  1. (e)
    if the notice is to be served in a foreign country—a statement that the person served, if that person has not yet made such a claim, may not make such a claim unless he or she has first appointed in writing an agent in Australia with authority to accept service of documents, including process in any proceedings arising out of the matter.

205B Claim for return of goods seized

  1. (1)
    If goods are seized under a seizure warrant or under subsection 203B(2) or (2A), 203C(2), 203CA(3) or 203CB(2), the owner of the goods may, whether or not a seizure notice has yet been served on the owner, make a claim to the appropriate person for the return of the goods.
  1. (2)
    A claim:
  1. (a)
    must be in writing in an approved form; and
  1. (b)
    must specify the grounds on which the claim is made; and
  1. (c)
    if it is made by a person who does not reside or have a place of business in Australia, must:
  1. (i)
    appoint an agent in Australia with authority to accept service of documents, including process in any proceedings, arising out of the matter; and
  1. (ii)
    specify the address of the agent for service; and
  1. (iii)
    be accompanied by the written consent of the agent signed by the agent, agreeing to act as agent.
  1. (3)
    In this section:

appropriate person means:

  1. (a)
    in relation to goods other than narcotic-related goods:
  1. (i)
    the CEO; or
  1. (ii)
    a Regional Director for a State or Territory; and
  1. (b)
    in relation to narcotic-related goods:
  1. (i)
    the Commissioner of Police; or
  1. (ii)
    a Deputy Commissioner of Police.

205C Treatment of goods seized if no claim for return is made

If:

  1. (a)
    goods have been seized under a seizure warrant or under subsection 203B(2) or (2A), 203C(2), 203CA(3) or 203CB(2); and
  1. (b)
    a seizure notice has been served; and
  1. (c)
    at the end of 30 days after the day the notice was served, no claim has been made for return of the goods;

the goods are taken to be condemned as forfeited to the Crown.

205D Treatment of goods seized if a claim for return is made

  1. (1)
    This section applies if:
  1. (a)
    goods are seized under a seizure warrant or under subsection 203B(2) or (2A), 203C(2), 203CA(3) or 203CB(2); and
  1. (b)
    not later than 30 days after the day the seizure notice was served, a claim is made under section 205B for return of the goods.
  1. (2)
    The authorised person who seized the goods must, subject to any law of the Commonwealth, a State or a Territory permitting their retention, destruction or disposal, return the goods unless:
  1. (a)
    the goods have been dealt with under section 206 or 207; or
  1. (b)
    not later than 120 days after the claim for their return is made, proceedings in respect of an offence involving the goods have been commenced and, on completion of the proceedings, a court has made an order for condemnation of the goods as forfeited to the Crown; or
  1. (c)
    not later than 120 days after the claim for their return is made:
  1. (i)
    an order permitting the goods to be retained for a specified period has been made under section 205E; and
  1. (ii)
    before the end of that specified period, proceedings in respect of an offence involving the goods have been commenced and, on completion of the proceedings, a court has made an order for condemnation of the goods as forfeited to the Crown; or
  1. (d)
    not later than 120 days after the claim for their return is made:
  1. (i)
    an order permitting the goods to be retained for a specified period has been made under section 205E; and
  1. (ii)
    before the end of that specified period proceedings have been commenced before a court of summary jurisdiction for a declaration that the goods are special forfeited goods and, on completion of the proceedings, a court has made an order for condemnation of the goods as forfeited to the Crown; or
  1. (e)
    if the goods were seized as special forfeited goods—not later than 120 days after the claim for their return is made, proceedings before a court of summary jurisdiction for a declaration that the goods are special forfeited goods have been commenced and, on completion of the proceedings, a court has made an order for condemnation of the goods as forfeited to the Crown.

Note: Subsection (9) gives special forfeited goods a wider meaning for the purposes of this section.

  1. (3)
    If:
  1. (a)
    goods seized otherwise than as special forfeited goods have not been dealt with under section 206; and
  1. (b)
    proceedings of the kind referred to in paragraph (2)(b) or (c) are commenced in respect of an offence involving the goods; and
  1. (c)
    on completion of the proceedings, the court:
  1. (i)
    finds that the offence is proved; and
  1. (ii)
    is satisfied, in all the circumstances of the case, that it is appropriate that an order be made for condemnation of the goods as forfeited to the Crown;

the court must make an order to that effect.

Note: Subsection (9) gives special forfeited goods a wider meaning for the purposes of this section.

  1. (4)
    If:
  1. (a)
    goods seized as special forfeited goods have not been dealt with under section 206 or 207; and
  1. (b)
    proceedings of the kind referred to in paragraph (2)(b) or (c) are commenced in respect of an offence involving the goods; and (c) on completion of the proceedings, the court is satisfied that the goods are special forfeited goods;

the court must make an order for condemnation of the goods as forfeited to the Crown, whether or not the court finds the offence proved.

Note: Subsection (9) gives special forfeited goods a wider meaning for the purposes of this section.

  1. (5)
    Subject to subsection (6) if:
  1. (a)
    goods seized as special forfeited goods have not been dealt with under section 206 or 207; and
  1. (b)
    proceedings of the kind referred to in paragraph (2)(d) or (e) are commenced in respect of the goods; and
  1. (c)
    on completion of the proceedings, the court is satisfied that the goods are special forfeited goods;

the court must declare the goods to be special forfeited goods and make an order for condemnation of the goods as forfeited to the Crown.

Note: Subsection (9) gives special forfeited goods a wider meaning for the purposes of this section.

  1. (6)
    A court must not make an order for condemnation of goods under subsection (5) if proceedings for an offence involving the goods have been commenced.
  1. (7)
    If the finding of a court in proceedings under paragraph (2)(b), (c), (d) or (e) in respect of goods that have not been dealt with under section 206 or 207 may be taken on appeal to another court, the goods are not to be returned under subsection (2), or disposed of under section 208D or 208DA, while that appeal may be made, or, if it is made, until the completion of that appeal.
  1. (8)
    For the purposes of this section, the return of goods requires their return to the person reasonably believed to be the owner of the goods in a condition as near as practicable to the condition in which they were seized.
  1. (9)
    In this section:

offence means an offence against any law of the Commonwealth, a State or a Territory. special forfeited goods includes goods that are forfeited under section 7, 10, 11 or 13 of the Commerce (Trade Descriptions) Act 1905.

  1. (10)
    In this section, a reference to completion of proceedings includes a reference to completion of any appeal process arising from those proceedings.”
  1. [91]
    Section 205G provides:

“205G Effect of forfeiture

When goods are, or are taken to be, condemned as forfeited to the Crown, the title to the goods immediately vests in the Commonwealth to the exclusion of all other interests in the goods, and the title cannot be called into question.”

  1. [92]
    Section 208D provides:

“208D Disposal of forfeited goods

All goods seized under a seizure warrant or under subsection 185(2), 185A(6), 203B(2) or (2A), 203C(2), 203CA(3) or 203CB(2) that are taken to be condemned as forfeited to the Crown under section 205C or that are so condemned under section 205D shall be dealt with and disposed of in accordance with:

  1. (a)
    in the case of goods other than narcotic-related goods—the directions of the CEO; or
  1. (b)
    in the case of narcotic goods—the directions of the Commissioner of Police or a Deputy Commissioner of Police; or
  1. (c)
    in the case of narcotic-related goods other than narcotic goods—in accordance with section 208DA.”
  1. [93]
    Looking then at the scheme, the issue of an s 203 seizure warrant occurs if the relevant goods are reasonably suspected of being forfeited goods as defined in s 183UA and s229 of the Customs Act. 
  1. [94]
    If the goods are seized under a seizure warrant, under s 205B of the Customs Act the owner of the goods may, whether or not a seizure notice has yet been served on the owner, make a claim to the appropriate person for the return of the goods. 
  1. [95]
    Once the goods are seized under the warrant, under s 205 the responsible person must serve within seven days after the seizure, a seizure notice on the owner of the goods. Section 205D provides for treatment of goods seized under a s 203 seizure warrant where a claim for return has been made.
  1. [96]
    Section 205D(2)(b) imposes a duty on the authorised person who seized the goods to return them unless not later than 120 days after the claim for their return is made, proceedings in respect of an offence involving the goods have been commenced and, on completion of the proceedings, a court has made an order for condemnation of the goods as forfeited to the Crown.
  1. [97]
    Section 205D(3) is central to the matter. It requires if proceedings of the kind referred to in s 205D(2)(b) are so commenced and on completion, the Court finds that the offence is proved and is satisfied, in all the circumstances of the case, that it is appropriate that an order be made for condemnation of the goods as forfeited to the Crown, the Court must make an order to that affect.
  1. [98]
    Forfeiture occurs via s 229(1) upon the establishment of facts that satisfy the subsection.

The authorities

  1. [99]
    The High Court in Forbes v Traders Finance Corporation Ltd[33]examined the history of the legislation. It was held that goods used in the unlawful importation or conveying goods under s 229(j) of the Customs Act 1901 were to be forfeited to the Crown, whether or not the owner of the goods knows of the use to which they are being put. 
  1. [100]
    Windeyer J noted at p 441 that the English laws against smuggling were relevant when considering the construction and operation of s 229 which is, in substance, a reproduction of them. Blackstonehad noted when duties were high smuggling was a very lucrative employment and the trade attracted much popular sympathy and approval.  His Honour noted:

“I mention all of this because the forfeiture for which s 229 now provides are derived from the drastic measures that were at that time enacted in an attempt to put down smuggling by confiscating the instruments of the trade.  The injustice of the confiscating the property of an innocent person was urged in argument in this.  But I do not think that we can modify the meaning of the words of the Act because they can be traced to enactments in social conditions and to meet social problems which are not those of today… contraband takes now new forms such as birds, narcotic and noxious drugs and other kinds of illicit imports.  Traffic in such things can be, using Blackstone’s words, a lucrative employment.  Parliament has not relented in the measures it prescribes to prevent it.”

  1. [101]
    In terms of the rationale behind the forfeiture laws in L Vogel & Son Pty Ltd v Anderson[34]Kitto J stated

“The duty evaded has now been paid, and I understand that when the evasions were discovered the defendants gave the Customs every assistance in their investigations. But when all the considerations relied upon by the defendants have been given due attention the case still cannot be regarded as other than a serious one. Not only are the defendants guilty of a sustained course of conscious wrongdoing, but the offences are in a field in which punishments for deliberate offences must be severe. The Customs laws represent the judgment of Parliament upon an important aspect of the economic organization of the community, and the object of the penal provisions is to make that judgment as effective as possible. It is important to remember that Customs officers have of practical necessity to rely extensively upon the information supplied to them by importers, for the flow of commerce could not be maintained if every importation had to be fully investigated. Moreover, detection of frauds is not always easy. No doubt ordinary conceptions of honesty and of civic responsibility suffice to ensure a great deal of fair dealing with the Customs, but for some people little seems to matter but fear of the consequences of discovery. The Customs Act makes those consequences potentially drastic. It is for the courts to make them, in suitable cases, drastic in fact, for otherwise traders who are not saved by qualms of conscience from willingness to defraud their fellow citizens may weigh the profits they hope for against the penalties they have cause to fear and find the gamble worthwhile.”

  1. [102]
    However in Murphy v Farmer[35]these cases were referred to, but the Court also noted:

“On the other hand it seems to us to be more strongly arguable that clear words should be required before there is attributed to the parliament an intention to take the draconian step of imposing automatic forfeiture as a penalty for any wrong entry, invoice, declaration, answer, statement or representation, regardless of whether the wrong information was provided as a result of an innocent mistake or excusable ignorance.  The effect of the penalty of automatic forfeiture under s 229(1)(i) can be devastating and quite disproportionate in that it applies regardless of the value of the goods or the importance or effect of the wrong statement which was made.”

  1. [103]
    In Burton v Honan[36]Dixon CJ noted that the forfeiture provisions contained in ss229(1) and 262 “are drastic and far-reaching, and that they have been considered necessary to vindicate the right of the Crown and to ensure the strict and complete observance of the Customs laws which are notoriously difficult of complete enforcement in the absence of strong provisions supporting their administration.”
  1. [104]
    His Honour noted that the purpose of s 262 was to make the conviction of the offender decisive on all matters of fact upon which the forfeiture of goods depends and that the section brings such issues speedily to a final conclusion.
  1. [105]
    This decision was given of course in the context of s 262 of the Customs Act.
  1. [106]
    In Whim Creek consolidated NL v Colgan & Anor[37]it was said:

“Dixon J (as he then was) described a similar notice given under another section of the Act as a step taken by Customs directed obtaining condemnation.  It is a statutory substitute for judicial proceedings by the Crown against the goods see Willey v Synan (1935) 54 CLR 175 at 186.  As Fox J pointed out in Pearce v Button (supra) (at 410-411) the Act says little about civil proceedings for condemnation, even so, it remains clear, that, in these such proceedings, the term condemnation refers not to a proceeding which has the effect of vesting title in the Crown, but to a proceeding which determines that upon some cause previously arising title had vested in the Crown see Bert Needham Automotive Co Pty Ltd v Commissioner of Taxation (Cth) (1976) 26 FLR 108 at 114 per Rath J.  However the provisions of ss 208, 208A, 208B and 244 of the Act all point, in varying degrees, to the fact that declarations of condemnation may be made by an appropriate Court in proceedings that have been instituted either by or against Customs.  The prosecution of those proceedings would ultimately determine whether the former acts or omissions of some party were such as to attract the forfeiture provisions of the Act.  If they did not then the claimant would be successful in his application for the recovery of the goods – and this would be so because a court would have determined that those goods were not, and had never been, forfeited goods.  If, however, the Court was satisfied that the relevant goods were forfeited goods, a declaration of condemnation would be the expected consequence.  On the subject of proceedings for a judicial condemnation Barry J pointed out in Little’s Victory Cab Co Pty Ltd v Carol [1948] VLR 249 at 253:

‘It seems that it must really be unnecessary for the Crown to institute condemnation proceedings, although it may do so as it wishes.’”

  1. [107]
    In Willey v Synan[38]Dixon J noted that the notice of seizure is a step taken by Customs “directed at obtaining condemnation.  It is a statutory substitute for judicial proceedings by the Crown against the goods”.  Latham CJ noted[39]that a notice in effect forces the “owner” to bring legal proceedings to prevent his claim from being extinguished.   
  1. [108]
    Indeed prior to the court having any discretion (such as under s 205D(3) of the Customs Act) the court was bound to order condemnation.[40]
  1. [109]
    In Bert Needham Automative Co Pty Ltd v Federal Commissioner of Taxation[41]Rath J noted:

“The term condemnation refers not to a proceeding which has the effect of vesting title in the crown, but to a proceeding which determines that upon some cause previously arising title had vested in the Crown.”

  1. [110]
    Bert Needham was followed in Olbers Co Ltd v Commonwealth.[42]That case was concerned with the forfeiture of boats, traps and equipment used in fishery offences.  It was held that forfeiture was automatic upon the commission of the offence.  FrenchJ (as he then was) said with regard to the provision that practical imperatives give rise to strict penal and forfeiture provisions in relation to fisheries.  It may be accepted this also applies to Customs matters.
  1. [111]
    His Honour also in this regard referred to Re Director of Prosecutions; ex parte Lawler and Anor.[43]In Lawlerthe High Court was also concerned the validity of the power to forfeit a boat under the Fisheries Management Act 1991 (Cth).  McHugh J said: 

“Protection of the nation's fishing grounds is a matter of high public importance.  If protection is to be achieved, drastic deterrents may be needed. If the means selected are reasonably proportionate to the purpose of protection, it is for the Parliament and not this Court to say whether they should be used.  In weighing the proportionality of Parliament's response in this particular field, the utility of deterrent measures is of paramount importance. Illegal fishing in the vast expanse of the Australian territorial waters is difficult to detect and expensive to combat.  The forfeiture of vessels engaged in illegal fishing not only sends a persuasive message to potential wrongdoers, it also prevents further illegal use of the vessels and renders the illegal behaviour of the masters and crews unprofitable ((66) See Calero-Toledo v. Pearson Yacht Leasing Co. [1974] USSC 126; (1974) 416 US 663 at 687.). Knowledge by the owner of a foreign vessel that he or she can lose the vessel also assists in enforcing the Act because it makes it likely that the owner will exercise vigilance to prevent the vessel being used in breach of the Act.”

  1. [112]
    Now s 205D was introduced into the Customs Act by Act number 85 of 1995.  Section205D(3) provides a discretion in the Court to order condemnation.  In deciding whether or not to make such an order the Court needs to consider “all the circumstances of the case”.

Relevant considerations

  1. [113]
    I agree with the respondent’s contention that “in all the circumstances” must be viewed in the context of the meanings of, and the distinction between, forfeiture and condemnation as discussed above.[44]
  1. [114]
    I do not agree though that the range of relevant considerations is as constrained as submitted. The term “in the circumstances of the case” is a wide one.
  1. [115]
    Contrary to the respondent’s submission, I consider the penalty is a relevant consideration because this is one of the circumstances of the case. Section 239 does not exclude the matter from consideration.
  1. [116]
    I agree though that other matters relevant would be:
  1. (a)
    the notorious difficultly in detecting Customs offences;[45]
  1. (b)
    the porous nature of Australia’s borders;
  1. (c)
    general and personal deterrence towards those who would not declare items but bring or attempt to bring in goods which are dutiable; and
  1. (d)
    the legislative scheme. 
  1. [117]
    As was said in Toy Centre Agencies v Spencer:[46]

“The provisions of the Act relating to forfeiture and seizure have a long history and their operation may have drastic consequences and cause hardship.  This arises from the very nature and purposes of the Act including the promotion of Australia’s trading interests, the encouragement of the local industry and the collection of revenue.  The Act is an important instrument to governments in the implementation of their fiscal and other policies.”

  1. [118]
    Aside from these matters though, other relevant considerations would include the intention behind bringing, or attempting to bring, the goods into Australia. For example it might be aggravating if there was a commercial intention.
  1. [119]
    Also, cooperation with the authorities e.g. the pleas of guilty would be a relevant consideration. Clearly enough the facts of the case are relevant. No doubt previous entries into the country and previous convictions would also be relevant.
  1. [120]
    It also seems to me a relevant consideration in this case that the appellants did not intend to sell the goods but intended merely to show them off. Also relevant would be the consequential effects of such an order, including hardship such as the risk of loss of employment. Very relevant also, in my opinion, was the amount the duty payable. The duty payable on the jewellery was in excess of $6,000 which was a considerable amount.
  1. [121]
    On the other hand, the duty payable on the watches was nil. This surely must have been a relevant consideration.
  1. [122]
    The proportion between the duty payable and the value of the goods is also relevant.

Conclusion

  1. [123]
    In conclusion my determination is to allow for condemnation of the jewellery but not the watches. In reaching this conclusion I have taken into account the matters mentioned above.
  1. [124]
    With respect of the jewellery, in particular, it seems to me that the factors in favour of condemnation are that it was of a high value, the amount of duty attempted to be evaded was significant, there was deliberate dishonesty on the part of each of the appellants, it is important that Australia protect its Customs interests, the offences are very difficult to detect and the appellants well knew they were evading duty by engaging in this deception.
  1. [125]
    On the other hand, it is my determination that the watches not be forfeited. Firstly, even though the watches were referred to in the particulars of charge 1, they were not referred to in charge one obviously enough because no duty was payable. It seems to me that a significant factor to be taken into account was that no duty was payable. Secondly, I also take into account the stated intention in bring the watches into the country.
  1. [126]
    As I noted earlier even though the penalty was the minimum on charge 1 it was still a significant sum – two times the duty payable on the jewellery and six times when one considers all appellants.
  1. [127]
    In those circumstances, in the exercise of the Court’s discretion I have determined that no condemnation order should be made regarding the watches.

Orders

  1. [128]
    My orders are then as follows:
  1. The appeals are allowed.
  1. The orders below are varied to the extent that the condemnation orders are removed with respect to the four Rolex watches but otherwise the orders are confirmed.
  1. I will hear the parties on the question of costs.

Footnotes

[1]  [2009] 2 Qd R 489 at [4] applying Allesch v Maunz (2000) 203 CLR 172 at pp 180-181.

[2]  Section 234(2)(a)(a) of the Customs Act 1901 which provides that where the amount of duty evaded can be determined the penalty is a minimum of two times the duty evaded and a maximum of five times the duty evaded.  Section 237 of the Customs Act 1901 provides that for the purposes of customs prosecution, any attempt to commit an offence shall be punishable as if the offence had been committed.

[3]  250 penalty units – see s 4AA of the Crimes Act 1914 (Cth) – at the date of the offence the amount of a penalty unit was $170.

[4]  In this regard [22] of the prosecution submissions is in error where it was alleged the maximum was $22,000.  This is conceded by the Respondent in its submissions.

[5]  See Commissioner of Taxation v Cocaj & Anor [2004] 2 Qd R 488; [2004] QCA 69.

[6] Johnson v R (2004) 205 ALR 346 at [18].

[7]  (1984) 52 ALR 351.

[8] Hayes v Weller (1988) 50 SASR 182.

[9] CEO of Customs v Coulton [2005] NSWSC 869 at [48].

[10] L. Vogel and Son Pty Ltd v Anderson (1968) 120 CLR 157 per Kitto J at p164; Ross Alfred Blackell v Red Dial Holdings Pty Ltd & Ors [2004] WASC 141 at [39]-[40]; and CEO of Customs v Coulton [2005] NSWSC 869 at [32].

[11]  Transcript day 1 pp 7-11. 

[12]  Transcript day 1 p 29.32.

[13]  Transcript day 1 p 35.7.

[14]  Transcript day 1 p 37.17.

[15]  Reasons p 3.25.

[16]  Reasons p 4.20.

[17] Teelow v Commissioner of Police [2009] 2 Qd R 489 at [4].

[18]  (1988) 50 SASR 136 at pp 141-142.

[19] Hayes v Weller (No 2) (1988) 50 SASR 182.  

[20]  (1987) 10 NSWLR 247 at p 259.

[21]  [2013] NSWCA 33 at [48].

[22] Pettitt v Dunkley [1971] 1 NSWLR 376.

[23]  (1988) 50 SASR 136.

[24] Hayes v Weller (No 2) (1988) 50 SASR 182.

[25]  (1981) 51 FLR 231 at p 237.

[26]  Ibid. per Muirhead J at p 242.

[27] R v Hoar (1981) 148 CLR 32 at p 39.

[28]  (2000) 113 A Crim R 131 at p 134.

[29]  (2003) 141 A Crim R 531 at [78].

[30]  (2000) 111 A Crim R 152 at pp 175-176.

[31]  His Honour followed the decision of R v Brough [1995] 1 NZLR 419.

[32]  Also see s 183UA of the Act and concession by the Appellants’ counsel at transcript p 6.10.

[33]  (1972) 126 CLR 429 at p 441.

[34]  (1968) 120 CLR 157 at p 164.

[35]  (1988) 165 CLR 19 at pp 27-28.

[36]  (1952) 86 CLR 169 at pp 178-179.

[37]  (1991) 31 FCR 469 at p 477.

[38]  (1935) 54 CLR 175 at p 207. See also Commissioner of Australian Federal Police v Craven (1989) 20 FCR 547.

[39]  Ibid. at p 180.

[40]  See e.g. De Keyser v British Railway Traffic and Electric Co Ltd [1935] 1 KB 224 concerning the English legislation.

[41]  (1976) 10 ALR 501 at p 506.

[42]  (2004) 136 FCR 67 at [74].

[43]  (1994) 179 CLR 270 at p 295.

[44] Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503 at [39].

[45] Hayes v Weller (No 2) (1988) 50 SASR 182 quoting Kitto J in L. Vogel & Son Pty Ltd v Anderson (1968) 120 CLR 157 at p 164.

[46]  (1983) 46 ALR 351 at p 355.

Close

Editorial Notes

  • Published Case Name:

    So & Ors v Comptroller-General of Customs

  • Shortened Case Name:

    So v Comptroller-General of Customs

  • MNC:

    [2015] QDC 334

  • Court:

    QDC

  • Judge(s):

    Smith DCJA

  • Date:

    18 Dec 2015

Litigation History

EventCitation or FileDateNotes
Primary JudgmentNo citation (Magistrates Court at Brisbane)22 Apr 2015Order that seized undeclared goods be forfeited to the Crown.
Primary Judgment[2015] QDC 33418 Dec 2015Appeal under s 222 of the Justices Act allowed: Smith DCJA.
Appeal Determined (QCA)[2016] QCA 339 [2017] 2 Qd R 36616 Dec 2016Leave to appeal granted; appeal allowed: Margaret McMurdo P, Fraser and Gotterson JJA.

Appeal Status

Appeal Determined (QCA)

Cases Cited

Case NameFull CitationFrequency
Allesch v Maunz (2000) 203 CLR 172
2 citations
Jump To
Cite 1 - (2000) 203 CLR 172
Cite 2 - (2000) 203 CLR 172
Australian Federal Police v Craven (1989) 20 FCR 547
2 citations
Jump To
Cite 1 - (1989) 20 FCR 547
Cite 2 - (1989) 20 FCR 547
Bert Needham Automative Co Pty Ltd v Federal Commissioner of Taxation (1976) 10 ALR 501
2 citations
Jump To
Cite 1 - (1976) 10 ALR 501
Cite 2 - (1976) 10 ALR 501
Bert Needham Automotive Co Pty Ltd v Commissioner of Taxation (Cth) (1976) 26 FLR 108
1 citation
Jump To
Cite 1 - (1976) 26 FLR 108
Burton v Honan (1952) 86 CLR 169
2 citations
Jump To
Cite 1 - (1952) 86 CLR 169
Cite 2 - (1952) 86 CLR 169
Calero-Toledo v Pearson Yacht Leasing Co. [1974] USSC 126
1 citation
Jump To
Cite 1 - [1974] USSC 126
Calero-Toledo v Pearson Yacht Leasing Co. (1974) 416 US 663
1 citation
Jump To
Cite 1 - (1974) 416 US 663
Commissioner of Taxation (Cth) v Consolidated Media Holdings Ltd (2012) 250 CLR 503
2 citations
Jump To
Cite 1 - (2012) 250 CLR 503
Cite 2 - (2012) 250 CLR 503
Commissioner of Taxation v Cocaj[2004] 2 Qd R 488; [2004] QCA 69
3 citations
Jump To
Cite 1 - [2004] QCA 69
Cite 2 - [2004] 2 Qd R 488
Cite 3 - [2004] 2 Qd R 488
Customs v Coulton [2005] NSWSC 869
3 citations
Jump To
Cite 1 - [2005] NSWSC 869
Cite 2 - [2005] NSWSC 869
Cite 3 - [2005] NSWSC 869
De Keyser v British Railway Traffic and Electric Co Ltd [1936] 1 KB 224
1 citation
Jump To
Cite 1 - [1936] 1 KB 224
Forbes v Traders' Finance Corporation Ltd (1971) 126 CLR 429
1 citation
Jump To
Cite 1 - (1971) 126 CLR 429
Hayes v Weller (1988) 50 SASR 182
5 citations
Jump To
Cite 1 - (1988) 50 SASR 182
Cite 2 - (1988) 50 SASR 182
Cite 3 - (1988) 50 SASR 182
Cite 4 - (1988) 50 SASR 182
Cite 5 - (1988) 50 SASR 182
Hayes v Weller (1988) 50 SASR 136
3 citations
Jump To
Cite 1 - (1988) 50 SASR 136
Cite 2 - (1988) 50 SASR 136
Cite 3 - (1988) 50 SASR 136
Johnson v The Queen (2004) 205 ALR 346
2 citations
Jump To
Cite 1 - (2004) 205 ALR 346
Cite 2 - (2004) 205 ALR 346
Keyser v British Railway Traffic and Electric Co Ltd [1935] 1 KB 224
1 citation
Jump To
Cite 1 - [1935] 1 KB 224
L Vogel and Son Pty Ltd v Anderson (1968) 120 CLR 157
4 citations
Jump To
Cite 1 - (1968) 120 CLR 157
Cite 2 - (1968) 120 CLR 157
Cite 3 - (1968) 120 CLR 157
Cite 4 - (1968) 120 CLR 157
Lanham v Brake (1984) 52 ALR 351
2 citations
Jump To
Cite 1 - (1984) 52 ALR 351
Cite 2 - (1984) 52 ALR 351
Little's Victory Cab Co. v Caroll (1948) VLR 249
2 citations
Jump To
Cite 1 - (1948) VLR 249
Cite 2 - (1948) VLR 249
Murphy v Farmer (1988) 165 C.L.R 19
2 citations
Jump To
Cite 1 - (1988) 165 C.L.R 19
Cite 2 - (1988) 165 C.L.R 19
Olbers Co Ltd v Commonwealth (2004) 136 FCR 67
2 citations
Jump To
Cite 1 - (2004) 136 FCR 67
Cite 2 - (2004) 136 FCR 67
Pearce v Button (1986) 8 FCR 408
1 citation
Jump To
Cite 1 - (1986) 8 FCR 408
Pettit v Dunkley (1971) NSWLR 376
1 citation
Jump To
Cite 1 - (1971) NSWLR 376
Pettitt v Dunkley (1971) 1 N.S.W. L.R. 376
1 citation
Jump To
Cite 1 - (1971) 1 N.S.W. L.R. 376
R v Brough [1995] 1 NZLR 419
2 citations
Jump To
Cite 1 - [1995] 1 NZLR 419
Cite 2 - [1995] 1 NZLR 419
R v Brough (1972) 126 CLR 429
2 citations
Jump To
Cite 1 - (1972) 126 CLR 429
Cite 2 - (1972) 126 CLR 429
R v Hoar (1981) 51 FLR 231
3 citations
Jump To
Cite 1 - (1981) 51 FLR 231
Cite 2 - (1981) 51 FLR 231
Cite 3 - (1981) 51 FLR 231
R v Kalache (2000) 111 A Crim R 152
2 citations
Jump To
Cite 1 - (2000) 111 A Crim R 152
Cite 2 - (2000) 111 A Crim R 152
R v Mathers [2008] QCA 69
1 citation
Jump To
Cite 1 - [2008] QCA 69
R v Stanbouli (2003) 141 A Crim R 531
2 citations
Jump To
Cite 1 - (2003) 141 A Crim R 531
Cite 2 - (2003) 141 A Crim R 531
R. v Hoar (1981) 148 CLR 32
2 citations
Jump To
Cite 1 - (1981) 148 CLR 32
Cite 2 - (1981) 148 CLR 32
Re Director of Prosecutions; ex parte Lawler and Anor (1994) 179 CLR 270
2 citations
Jump To
Cite 1 - (1994) 179 CLR 270
Cite 2 - (1994) 179 CLR 270
Resources Pacific Pty Ltd v Wilkinson [2013] NSWCA 33
2 citations
Jump To
Cite 1 - [2013] NSWCA 33
Cite 2 - [2013] NSWCA 33
Ross Alfred Blackell v Red Dial Holdings Pty Ltd & Ors [2004] WASC 141
2 citations
Jump To
Cite 1 - [2004] WASC 141
Cite 2 - [2004] WASC 141
Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247
2 citations
Jump To
Cite 1 - (1987) 10 NSWLR 247
Cite 2 - (1987) 10 NSWLR 247
Stocks v R (2000) 113 A Crim R 131
2 citations
Jump To
Cite 1 - (2000) 113 A Crim R 131
Cite 2 - (2000) 113 A Crim R 131
Teelow v Commissioner of Police[2009] 2 Qd R 489; [2009] QCA 84
3 citations
Jump To
Cite 1 - [2009] 2 Qd R 489
Cite 2 - [2009] 2 Qd R 489
Cite 3 - [2009] 2 Qd R 489
Toy Centre Agencies Pty Ltd v Spencer (1983) 46 ALR 351
2 citations
Jump To
Cite 1 - (1983) 46 ALR 351
Cite 2 - (1983) 46 ALR 351
Whim Creek Consolidated NL v Colgan (1991) 31 FCR 469
2 citations
Jump To
Cite 1 - (1991) 31 FCR 469
Cite 2 - (1991) 31 FCR 469
Willey v Synan (1935) 54 CLR 175
4 citations
Jump To
Cite 1 - (1935) 54 CLR 175
Cite 2 - (1935) 54 CLR 175
Cite 3 - (1935) 54 CLR 175
Cite 4 - (1935) 54 CLR 175

Cases Citing

Case NameFull CitationFrequency
Comptroller-General of Customs v Yip[2017] 2 Qd R 366; [2016] QCA 3393 citations
So & Others v Comptroller General of Customs (No 2) [2016] QDC 32 citations
1

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