High Court of Australia Kitto J. Taylor, Menzies and Owen JJ. Anderson v L Vogel & Son Pty Ltd ORDER Declarations in accordance with pars. 1 and 2 of the prayer of the statement of claim. Order that the defendants and each of them be convicted of each of the offences charged in the statement of claim and be convicted also of having committed each such offence with intent to defraud the revenue. Order that the defendants pay to the plaintiff the penalties shown in the schedule attached to the reasons for judgment amounting in all to the sum of $157,632. Order that the defendants pay the plaintiff's costs of the action. Usual order with respect to exhibits. Stay of proceedings for fourteen days. Order not to be taken out in the meantime. Liberty to the parties to mention the matter within that time with a view to a further stay being applied for. Appeal dismissed with costs. Cross appeal dismissed. 1967, Dec. 8 Kitto J . delivered the following judgment:— L. Vogel and Son Pty. Limited and Henry Vogel its managing director are charged with offences against the Customs Act 1901 (as amended) Cth in respect of importations of piece goods into Australia from Western Germany in fourteen ships which reported at Sydney between 21st May 1962 and 19th December 1963. In each instance but one the defendants succeeded in getting the goods through the Customs by fraudulent means upon payment of less duty than was payable upon them; and in the remaining instance they attempted to do so. The goods imported in nine of the ships were misrepresented as being entirely of cotton whereas in fact they were a mixture of cotton and synthetic fibres. As regards the goods imported in the other five ships the price at which the defendant company had bought the goods was misstated. In each instance the course followed was carefully planned and deliberately pursued with intent to defraud the revenue, the amount of duty involved amounting in all to approximately $39,000. The methods adopted in all cases involved pre-concert with the German suppliers. In the cases of misdescription of goods an agreed code was employed in the orders sent by the defendants, so that what appeared to be orders for piece goods of cotton poplin were understood and confirmed by the suppliers as orders for piece goods of a cotton and polyester fibre mixture. In each of those instances the suppliers furnished the defendants with two invoices which described the goods as cotton poplin, and the defendants caused these invoices to be presented to the Customs as being respectively the relevant commercial invoice and the relevant "genuine" invoice required to be produced under s. 40B. They caused the goods to be entered for home consumption as cotton poplin and paid only the duty appropriate to that kind of material. In all but one of the instances in which prices were misstated the suppliers sent the defendants commercial invoices and "genuine" invoices stating the price as an amount in pence sterling per lineal yard. The defendants produced these invoices to the Customs and entered the goods for home consumption as having been bought at a price in pence per square yard being the equivalent of the price per lineal yard stated in the invoices. The prices at which the goods were bought were in truth, however, materially different. In respect of the cargo of each of thirteen ships, several offences against s. 234 were committed: duty was evaded, contrary to par. (a); a document purporting to be a genuine invoice which was not in fact a genuine invoice was presented, contrary to par. (c); an entry false in a particular was made, contrary to par. (d); and a document (the commercial invoice) containing a statement that was untrue in a particular was produced to an officer, contrary to par. (e). In respect of the remaining ship, a document purporting to be a genuine invoice but not being in fact a genuine invoice was presented, contrary to s. 234 (c), and two documents containing statements untrue in a particular were produced to an officer, contrary to s. 234 (e), these documents being a commercial invoice and an import entry, both misstating the price of the goods; but as events turned out in this instance a false entry was not in fact made and duty was not evaded. The goods on one of the ships were divided into three lots, on another into two lots, and on another into five, each lot being the subject of separate documents. In the first of these cases there were three evasions of duty, three presentations of documents purporting to be genuine invoices which were not genuine invoices, three productions to an officer of documents containing untrue statements, and two false entries. In the second case there were two offences under each of pars. (a), (c), (d) and (e), and in the third there were five under each of these paragraphs. In addition, in respect of one ship in relation to which duty was evaded there were two offences under par. (e) instead of only one, for a packing list, as well as the commercial invoice, was produced to an officer, and it too contained an untrue statement as to the nature of the goods. In the result the defendants admit that they are guilty of eighty-three offences against s. 234. They are further charged with having committed nineteen offences against s. 233 (1) (a) which provides that no person shall smuggle any goods. One such offence is charged in respect of each of twelve ships, two in respect of one ship, and five in respect of another. The reason for making several charges in respect of a ship is that the relevant goods on that ship were the subject of several invoices from the German suppliers and the goods covered by each invoice were separately dealt with for customs purposes. The defendants deny that they are guilty of smuggling any goods. Smuggling is defined by s. 4 (1) as meaning, inter alia, any importation of goods with intent to defraud the revenue. The defendants admit that they did import the goods to which the smuggling charges relate, and they admit that all their acts which constituted offences against s. 234 were done with intent to defraud the revenue; but they deny that their importation of any of the goods was an importation with intent to defraud the revenue. Their point may be expressed by saying that the offence of smuggling is not committed unless the intent to defraud the revenue not only exists at the time of the importation (as it plainly did in the present case) but characterizes the act of importation—unless, in other words, the intent is an intent to defraud the revenue by means of the importation itself and not by means of subsequent acts such as the presentation of false documents or the making of false entries. In my opinion it is unsound to divorce an importation of goods from the importer's conduct in passing or attempting to pass them through the Customs, when in truth the whole procedure has been adopted as a means of getting the goods into the country without paying the duty which is payable upon them. I see no logic in saying that while the offence of smuggling, as defined, is committed if the intent is to get the goods past the Customs under cover of darkness and without payment of any duty, it is not committed if the intent is to get them past the Customs under cover of false papers and upon payment of insufficient duty. A submission was made on behalf of the defendants that they ought not to be convicted of more than one offence in respect of each evasion of duty. It was said that in each case the importing with intent to defraud the revenue, the presentation of a false invoice as genuine, the making of a false entry and the production of a document or documents containing an untrue statement or untrue statements were merely steps by which the ultimate offence of evading payment of duty was committed. Each step was undoubtedly one of a connected series of steps, but each was a separate and distince piece of conduct for all that, and each involved its own deliberate contravention of the Act. Moreover, the ultimate step, the successful getting of the goods through the Customs without payment of full duty, far from being merely the sum of the means employed to that end, was itself a separate piece of conduct in furtherance of the general intent, for it resulted from the defendants' deliberately putting aside the opportunity that still remained to them, even after what they had already done, to pay the full amount of duty. I therefore convict the defendants of all the offences charged, and must observe the provisions of s. 243 (as it stood when the offences were committed) that the minimum pecuniary penalty for any offence was one-twentieth of the maximum which was prescribed in pounds, that is to say for an offence against s. 234 it was £5 or $10, and for an offence against s. 233 it was £25 or $50. The maximum penalty prescribed in pounds for each offence against s. 234 is $200, but as prescribed otherwise than in pounds it has to be worked out in accordance with the provisions of s. 241 and, if it applies, s. 240. The former of these sections provides that any person may at the same time be charged with an offence against the Act and with an intent to defraud the revenue, and that if in addition to such offence he is convicted of such intent the maximum penalty shall be double that otherwise provided. The defendants are here charged with intent to defraud the revenue in respect of each offence and they admit that in each instance they had that intent. I therefore convict them not only of all the offences but also of the intent in relation to each offence. The consequence is that unless s. 240 makes a difference the maximum penalty is, by virtue of s. 241, $400 for each offence against s. 234. The Crown, however, relies upon the provision in s. 240 that if any penalty shall be less than three times the value of any goods in respect of which the offence has been committed the maximum penalty shall be thrice the value of the goods. If this provision as well as s. 241 applies to the offences committed against s. 234 in this case the maximum penalty for each such offence is six times the value of the goods. The defendants submit that s. 240 does not apply to these offences. They say that it relates only to offences committed "in respect of any goods", and that offences against the paragraphs of s. 234 other than par. (h) are committed in respect of duty, documents, entries, and so forth—in respect, that is, of the immediate subject matter of the conduct which constitutes the offence—but not in respect of goods. A tendency of opinion favourable to the defendants on this point was expressed by Jordan C.J. and Street J. in Ex parte Falstein; Re Maher [1] , and upon consideration I think the contention is right. The expression "in respect of", in the context of the section, seems to me to refer to a direct connexion between the acts charged as the offence and the goods. To say that the offence of evading payment of duty (to take that example) is "in respect of" the goods to which the duty relates is correct only in the broad sense that the evasion is connected with the goods in logical thought. The more natural meaning to give the provision is that which treats "in respect of" as referring to a direct connexion with particular goods, as where the offence consists in something that has been done to or about the goods themselves, something in the nature of a dealing with the goods. The context of s. 240 actually supports this more specific construction; for it is easier to see a sensible policy in relating the amount of the penalty to the value of the goods where the offence directly involves the goods themselves than where it consists in conduct which does not touch the goods but relates to them only remotely and because it is conduct about some amount of duty or some document or the like which in its turn has a connexion with the goods in the general sense of a relevance to them. 1. (1948) 49 S.R. (N.S.W.) 133, at pp. 147, 155. I am therefore of opinion that s. 240 has no application to any of the offences here charged except the offences against s. 233 (1) (a). Smuggling undoubtedly is an offence in respect of goods, but s. 241 in my opinion does not apply to that offence, for intent to defraud the revenue is an ingredient in the offence, and it necessarily follows that a person cannot be convicted of that intent "in addition to" the offence. The maximum penalty for smuggling is therefore $200 as prescribed by s. 233 (1) (a) itself or three times the value of the goods, whichever is the larger. The latter is in fact the larger in this case, amounting to more than half a million dollars in all. Such a penalty, of course, would be out of all proportion to the circumstances of the case. Yet heavy penalties are obviously called for. Over a period of about nineteen months, the defendants did or caused to be done fraudulent act after fraudulent act in a systematic scheme of defrauding the Customs so as to gain the defendant company an illegitimate advantage over its competitors on the Australian market and thus to enable it to make profits which it had no right to make. The defendants ask me to take into account, and I do, that the offences related to goods of a total value of less than $140,000, that the duty evaded was less than $40,000, and that so far as can be ascertained the resale of the goods would have given the company a profit of only about $18,000 if the duty had never had to be paid. The turnover of the company's business seems to be worth about $800,000 a year, and according to the accounts that have been produced its net trading profits (for years ended on 30th June) were only in 1963 about $22,000, in 1964 $8,700, and in 1965 $3, 800. In 1966 there seems to have been a trading loss of about $16,400. I do not find it possible, however, to derive any very sure assistance from the accounts that are before me, for no one in the company has given evidence in support of the accounts or upon such obvious matters for inquiry as the real value of the company's assets, the nature or extent of its liabilities and the situation existing between it and other (presumably subsidiary) companies that are referred to in the balance sheets. The defendant Vogel has not appeared in the witness box, and I am therefore without information as to his personal situation. I mention these matters because I am invited to deal with the case on the footing that the company is in a comparatively small way of business, and to fix the penalties at amounts which will not cripple it. The evidence has not put me in a position to give more than very general weight to that kind of consideration. 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. It is to be noted that by virtue of s. 229 (i) all the goods referred to in the charges in this case became liable to forfeiture to the Crown. In fact they were sold by the defendant company in its business. Their total value was over $137,829. Consideration of the maximum penalties in a case to which s. 240 applies gives little assistance, if any, in deciding what penalty is appropriate to particular circumstances. Though the defendants' fraudulent conduct has been continuous the amounts of duty evaded have varied greatly, being in some instances very substantial and in others comparatively small. All things considered I think that upon each charge of smuggling there should be a penalty of four times the amount of the duty evaded or intended to be evaded, and it will then be sufficient to impose minimum penalties in respect of the other offences. I append a schedule showing the penalty I impose in respect of each charge. [*] 1. Reporter's Note: This schedule is omitted from this report. Declarations will be made as asked in pars. 1 and 2 of the prayer of the statement of claim and an order will be made that the defendants pay to the plaintiff the penalties shown in the schedule, the total amount of which is $157,632. The defendants must also pay the costs of the action. Cur. adv. vult. The Court delivered the following written judgment:— 1968, May 27 Taylor, Menzies and Owen JJ. This appeal is brought from an order made in the original jurisdiction of this Court whereby it was declared that the appellants and each of them were guilty of one hundred and two offences against the provisions of the Customs Act 1901 (as amended) Cth and penalties, totalling $157,632, were imposed. The proceedings were brought in this Court pursuant to s. 245 of the Act and were in respect of nineteen offences of smuggling goods (s. 233 (1) (a)) and other offences, numbering eighty-three, against the provisions of s. 234. Of these latter offences some were alleged as contraventions of par. (a) of that section and others as contraventions of pars. (c), (d) and (e). The goods involved in the smuggling charges had been brought to Australia in a variety of ships over a period of approximately nineteen months. The other charges were concerned with the evasion of duty payable in respect of such goods, presentation of false invoices and the making of false entries with respect to the same goods and the making of false statements, again, with respect to the same goods, in other documents produced to an officer of Customs. It was charged that each of these offences was committed with an intent to defraud the revenue (s. 241) and the appellants admitted the truth of the allegations of fact made against them but pleaded not guilty to the charges of smuggling. In the result the learned judge before whom the proceedings came found all the charges proved and imposed a penalty equivalent to four times the duty evaded in respect of each of the smuggling charges and, in respect of each of the remaining offences, he imposed, what was in the circumstances, the minimum penalty of $20. The first ground taken by the appellants was that the facts did not establish their guilt on the smuggling charges. They were not guilty of these offences, it was said, because the word "smuggling" connotes the clandestine introduction of goods into the country to which they are brought and there was no evidence that these goods were introduced into Australia in such a fashion; the goods, it was said, were entered for home consumption and released by the Customs to the importers. But putting aside for the moment the fact that the character of the goods in nine of the shipments in question was misdescribed in the relevant entries and that the true character of the goods was thereby concealed from the Customs so that a lesser rate of duty was attracted, it is apparent that this argument cannot prevail. Unfortunately for the appellants the Act, by s. 4, provides its own definition of "smuggling". It means "any importation, introduction or exportation or attempted importation, introduction or exportation of goods with intent to defraud the revenue". This does not, of course, mean that whenever a false entry or a false invoice relating to imported goods is made or produced to an officer with intent to defraud the revenue the offence of smuggling is committed. But it is committed whenever the importation of goods is accompanied by an intention on the part of the importer to defraud the revenue by the making of a false entry or by the production of a false invoice. That the appellants had such an intention and that they were engaged, systematically, in fraudulent practices over a substantial period is beyond doubt and the learned judge of first instance rejected the appellants' contention on this part of the case. He said: Their point may be expressed by saying that the offence of smuggling is not committed unless the intent to defraud the revenue not only exists at the time of the importation (as it plainly did in the present case) but characterizes the act of importation—unless, in other words, the intent is an intent to defraud the revenue by means of the importation itself and not by means of subsequent acts such as the presentation of false documents or the making of false entries. In my opinion it is unsound to divorce an importation of goods from the importer's conduct in passing or attempting to pass them through the Customs, when in truth the whole procedure has been adopted as a means of getting the goods into the country without paying the duty which is payable upon them. I see no logic in saying that while the offence of smuggling, as defined, is committed if the intent is to get the goods past the Customs under cover of darkness and without payment of any duty, it is not committed if the intent is to get them past the Customs under cover of false papers and upon payment of insufficient duty [1] . With these observations we agree and this ground of appeal must be rejected. 1. Ante, p. 161. It was further contended that it was erroneous to convict the appellants of all of the offences charged in relation to each series of transactions. Whether this argument stopped short of asserting that they should not have been convicted of more than one of the offences alleged in respect of each parcel of goods is not clear. The argument, such as it was, was based on the judgment in Reg. v. Connelly [2] , but we do not find in the judgments in that case any authority for such an uncertain proposition. On this point the learned judge whose order is under appeal said: A submission was made on behalf of the defendants that they ought not to be convicted of more than one offence in respect of each evasion of duty. It was said that in each case the importing with intent to defraud the revenue, the presentation of a false invoice as genuine, the making of a false entry and the production of a document or documents containing an untrue statement or untrue statements were merely steps by which the ultimate offence of evading payment of duty was committed. Each step was undoubtedly one of a connected series of steps, but each was a separate and distinct piece of conduct for all that, and each involved its own deliberate contravention of the Act. Moreover, the ultimate step, the successful getting of the goods through the Customs without payment of full duty, far from being merely the sum of the means employed to that end, was itself a separate piece of conduct in furtherance of the general intent, for it resulted from the defendants' deliberately putting aside the opportunity that still remained to them, even after what they had already done, to pay the full amount of duty [1] . We think these observations are unanswerable although we agree that, in determining the appropriate penalties to be imposed in respect of the numerous offences, it was material to take into consideration—as his Honour did—that, though the offences in each group were separate offences in law, they were substantially contemporaneous and connected. 1. [1964] A.C. 1254. 2. Ante, pp. 161-162. The third ground of complaint is that the penalties on the smuggling charges were excessive. As already appears these penalties were in each case the equivalent of four times the duty evaded whilst the minimum penalty was imposed in respect of each of the remaining charges. In all, the penalties on the smuggling charges amounted to nearly $156,000. There is, in our view, no room for the suggestion that in fixing the penalties on these charges his Honour erred on any matters of principle; the argument merely is that the penalties were excessive in the circumstances. But his Honour's reasons make it plain why penalties of this magnitude were imposed and amply demonstrate the need for such penalties. We do not repeat these reasons; it is sufficient to say that having considered the matter fully we can see no justification for any interference with his Honour's order on this ground. The appeal by the appellants provoked a cross appeal by the respondent but it is one which, inevitably, must be dismissed since the respondent does not seek any variation of the order by which the proceedings were concluded. What is said, however, is that his Honour was in error in expressing the view in the course of his reasons that s. 240 has no application to the charges laid under s. 234. The former section provides that "If any penalty hereby provided shall be less than three times the value of any goods in respect of which the offence has been committed the maximum penalty shall be thrice the value of the goods" and his Honour took the view that the penalties provided by s. 234 were not penalties for offences "in respect of goods". In expressing this view his Honour referred to tentative expressions of opinion in Ex parte Falstein; Re Maher [1] , and considered that the language of the section naturally favoured this construction. However, the view which he entertained did not in any way affect the penalties which he imposed in respect of the offences against s. 234 for, in respect of each of those offences, he imposed the minimum penalty. But it was contended that the view which he took of s. 240 was erroneous and that it should be corrected. 1. (1948) 49 S.R. (N.S.W.) 133. It is, of course, clear that duty is imposed upon goods imported into Australia and that the Act requires entries to be made and genuine invoices to be produced in respect of such goods. Equally, it is clear that what s. 234 (a) penalizes is the evasion of duty which is payable in respect of goods. Likewise, what pars. (c) and (d) of s. 234 penalize is the presentation of false invoices and the making of false entries in respect of goods. The offence under par. (e) may presumably be committed in circumstances unrelated to the importation of goods but that is not the case here. Then, it may be observed that by s. 229 (i) "All goods in respect of which any entry invoice declaration answer statement or representation which is false or wilfully misleading in any particular has been delivered made or produced" are "forfeited to His Majesty". This section, it seems to us, picks up the offences created by pars. (c), (d), (e) and (f) of s. 234 and effects a forfeiture of the goods in respect of which any false entry is made, or any false invoice is presented, or, in respect of which any declaration or document is produced which is false in any particular. These considerations induce us to think that s. 240 comprehends as offences "in respect of goods" the evasion of duty payable on goods, the making of false entries and the presentation of false invoices and the making, in any declaration or document produced to an officer, of any statement relating to goods which is false. This is the view which was assumed as long ago as Lewis v. The King [2] , and, again, in Rose v. Brophy [3] . It is also the view which was accepted, after the point was raised, in Rose v. Griffin (unreported—but in which special leave to appeal to this Court was refused [4] ). Moreover it has been accepted without question in many unreported cases but, apparently, none of the cases to which we have referred were cited to his Honour or to the Court which decided Ex parte Falstein [1] . 1. (1912) 14 C.L.R. 183. 2. (1953) 55 W.A.L.R. 72. 3. (1954) 92 C.L.R. 670 (note). 4. (1948) 49 S.R. (N.S.W.) 133. One further matter remains to be mentioned. The order which his Honour made imposed a joint and several liability upon the appellants to pay the fines imposed and at the hearing the appellants contended that separate penalties should have been imposed upon each of them. The point was not taken in the notice of appeal but, having raised it at the hearing, counsel for the appellants suggested that if the appeal should otherwise fail, it might be appropriate to vary the order by providing that one-half of the penalties should be payable by one appellant and the other half by the other appellant. We refused to entertain this suggestion, not only because it was impossible to impose half the minimum penalty upon each of the appellants in respect of each of the offences laid under s. 234, but because it was not a course which we were prepared to undertake on the material before us. The matter is not free from doubt in proceedings in this Court under s. 245 but when we intimated to counsel for the appellant that the only course we would contemplate on this submission would be the remission of the case to the trial judge for the purpose of imposing separate penalties on each of the defendants this ground of appeal was abandoned. That being so we do not consider the question. In the result both the appeal and the cross appeal will be dismissed.