Chief Executive Officer of the Australian Customs Service v Karam & Anor [2010] NSWSC 589 (4 June 2010)

NEW SOUTH WALES SUPREME COURT

CITATION:
Chief Executive Officer of the Australian Customs Service v Karam & Anor [2010] NSWSC 589

JURISDICTION:
Common Law

FILE NUMBER(S):
08/289386

HEARING DATE(S):
2, 3, 4, 5, 6, 9, 10 & 11 November 2009

JUDGMENT DATE:
4 June 2010

PARTIES:
Chief Executive Officer of the Australian Customs Service (Plaintiff)
Ronnie Charles Karam (1st Defendant)
Dory Karam (2nd Defendant)

JUDGMENT OF:
McCallum J

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable

COUNSEL:
Mr L. P. Robberds QC (Plaintiff)
Mr M. Gollan (1st Defendant)
Mr G. Beauchamp (2nd Defendant)

SOLICITORS:
Australian Government Solicitor (Plaintiff)
Galloways Solicitors & Attorneys (Defendants)

CATCHWORDS:
Customs prosecutions - whether offences proved - elements of offences governed by parts of the Criminal Code - defence of mistake of fact.

LEGISLATION CITED:
Criminal Code
Customs Act 1901 (Cth)
Evidence Act 1995 (NSW)

CATEGORY:
Principal judgment

CASES CITED:
Browne v Dunn (1893) 6 R 67
Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd [2003] HCA 49; (2003) 216 CLR 161
Gill & Anor v CEO of Customs [2001] NSWCCA 470; 126 A Crim R 324
He Kaw Teh v The Queen [1985] HCA 43; (1984-5) 157 CLR 523
Shepherd v R [1990] HCA 56; (1990) 170 CLR 573

TEXTS CITED:

DECISION:
(1) As against the first defendant, Mr Ronnie Karam, I find the offences charged in paragraphs 5 and 8 of the Statement of Claim proved. I find the offences charged in paragraphs 3, 4, 6 and 7 of the Statement of Claim not proved.
(2) As against the second defendant, Mr Dory Karam, I find the offences charged in paragraphs 3, 4, 5 and 8 of the Statement of Claim proved. I find the offences charged in paragraphs 6 and 7 of the Statement of Claim not proved.

JUDGMENT:

1 HER HONOUR: On 2 August 2007, a sea cargo container imported by the defendants was stopped at Port Botany for examination by Customs officers. Documents provided to Customs in relation to the container stated that it contained shoes. In fact, it was found to contain a substantial amount of raw tobacco and boxes of cigarettes packed behind boxes of shoes.

2 These are proceedings under Part XIV of the Customs Act 1901 (Cth) seeking convictions and penalties for a number of offences arising from those events. The proceedings fall within the definition of “Customs prosecutions” (s 244 of the Act) and are brought by the Chief Executive Officer of the Australian Customs Service, as allowed by s 245 of the Act. The Chief Executive Officer is referred to throughout the Customs Act as the CEO and I have adopted that reference.

3 The defendants are two brothers, Mr Ronnie Karam and Mr Dory Karam. They deny the offences.

4 The statement of claim charges that each defendant has committed the following offences:

5 The CEO seeks orders that each defendant be convicted of each of those offences and that each pay a penalty pursuant to the relevant penalty provisions. The hearing proceeded on the agreed basis that the Court would first determine whether the offences were proved and that the question of penalty, if it arose, would be determined at a separate, later hearing (T108).

6 The CEO must establish the elements of the alleged offences beyond reasonable doubt: Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd [2003] HCA 49; (2003) 216 CLR 161 at [2] per Gleeson CJ; at [32] per Gummow J; at [90] per Kirby J and at [135]-[138] per Hayne J (McHugh J agreeing at [3]). For the reasons explained at length in that case, that is the position despite s 247 of the Customs Act, the effect of which is that questions of admissibility of evidence in the proceedings are governed by those provisions of the Evidence Act 1995 (NSW) that would be applied in a civil case in this State: at [40] per Gummow J, Kirby J agreeing at [92]; at [146]-[148] per Hayne J, Gleeson CJ and McHugh and Kirby JJ agreeing.

7 The offences are governed by parts of Chapter 2 of the Criminal Code: s 5AA of the Customs Act. That chapter of the Code codifies the general principles of criminal responsibility under laws of the Commonwealth: s 2.1 of the Code. Section 3.2 of the Code provides that, in order for a person to be found guilty of committing an offence under a law of the Commonwealth, the prosecuting authority must prove the “physical elements” of each offence and one of the “fault elements” for each physical element. The elements of each offence in the present case are considered below. It is convenient first to address the questions of fact raised by the evidence.

8 The defendants consented to the tender of an agreed statement of facts (Ex B) which, together with the relevant shipping documents, explained some of the circumstances in which the container was imported. That material establishes the following matters. The container was a forty-foot “high cube” (40’ HC) sea cargo container. It arrived in Sydney from Vietnam on 2 August 2007 under a bill of lading issued by Jupiter Pacific Forwarding Joint Venture Co Ltd in Ho Chi Minh City, Vietnam (the Jupiter bill of lading).

9 The container was owned by Malaysia International Shipping Company Berhad (MISC). According to MISC records, it was released to Jupiter Pacific Forwarding JVT Co Ltd as shipper on 12 July 2007 under a “Master bill of lading” issued by MISC. In the Master bill of lading, the contents of the container were described as “880 CTNS 8,800 pairs of different kinds of shoes”.

10 The container was returned to MISC in Vietnam on 13 July 2007 at the port of loading, where it was loaded onto the vessel “Hub Grandois” destined for Singapore. On that date, the Jupiter bill of lading was issued, naming Jupiter Pacific Co Ltd as the shipper. The consignee named in the Jupiter bill of lading was “Drovers Footwear Pty Ltd Unit 3, 55 Kent Road Mascot, NSW 2020 Sydney, Australia”. The goods were described as “800 CTNS 1x40’ HC 8,800 pairs of different kinds of shoes”.

11 After the vessel arrived in Singapore, the container was transhipped to the vessel “Theodore Storm”, which left Singapore on 23 July 2007 and arrived at Brisbane on 30 July 2007, where the container remained on board.

12 On 1 August 2007, Mr Matthew Arthur, a customs broker with Century Customs, created a “Customs Import Declaration Nature 10” for the goods in the container and lodged it through an electronic lodgement system, the “Integrated Cargo System” (in accordance with s 71L of the Customs Act).

13 The Nature 10 Declaration declared the contents of the container to be 8,800 pairs of shoes, in accordance with the Master bill of lading, the Jupiter bill of lading and the commercial invoice and packing slip provided to Jupiter Pacific in respect of the container. The Nature 10 Declaration declared a customs value of the goods of $48,817.35 and paid duty on that amount at 10% ($4,881.73) together with GST of $5,577.59. The duty in fact payable was $36,514.50 on the cigarettes and $3,933,442.66 on the tobacco. The importation of unmanufactured (leaf) tobacco was prohibited except by the holder of an appropriate licence, which neither of the defendants held.

14 On 2 August 2007, the Theodore Storm arrived in Port Botany, Sydney. The container was transported from the port to a customs examination facility where it was x-rayed and then referred for physical examination. The physical examination revealed 108 brown cardboard boxes at the front of the container, all of which contained shoes. Stacked behind those boxes were 490 unmarked brown cardboard boxes which contained the leaf tobacco, together with 15 boxes marked “Golden Eagle Virginia Filter Deluxe”. Those boxes were found to contain 150,000 cigarette sticks. The weight of the tobacco was 12,250 kilograms.

15 The defendants called evidence to establish that the importation of the cigarettes and tobacco had been arranged without their knowledge by a person known to them, Mr Adnan Cheikho. Mr Cheikho was called as a witness in their cases in defence. He said that he had organised the importation of the tobacco with the assistance of the defendants’ younger brother, Mr Jason Karam, who also gave evidence in their defence. Mr Cheikho said that he did not at any stage tell either of the defendants that the shipment contained tobacco or tobacco product. However, Mr Cheikho said that the defendants’ brother Jason had known from the outset that Mr Cheikho was arranging the importation of tobacco. Jason Karam denied that, saying that he initially believed Mr Cheikho was importing sandals and that he (Jason) was told there was tobacco in the container only after it had reached the port at Ho Chi Minh City.

16 The defendants denied any knowledge of those arrangements. They each admitted importing the container itself (evidence of Ronnie Karam at T338.19; evidence of Dory Karam at T428.41) but said that they believed it carried shoes (Ronnie Karam at T314.13; Dory Karam at T428.41). Each relied in different ways on the contents of the packing list provided to Customs in relation to the container, which listed the different styles and quantities of shoes allegedly packed in the container. Ronnie Karam said the shoes listed on the packing list were shoes he had ordered and that they were to come from three different locations, including some from a factory in which he appears to have had a financial interest, known as the Chicken Shed (T369.25-38). Dory Karam said that he just went on the paperwork. He said “If I saw the paperwork saying it was shoes, I believed it was shoes inside the container” (T418.30). Each of the defendants denied having any knowledge that there were cigarettes or tobacco inside the container (T337.7; T418.35).

17 The critical fact in issue is accordingly what state of awareness, if any, the defendants had as to the true contents of the container before it arrived in Port Botany. Central to the determination of that issue is a careful analysis of the evidence surrounding the packing list and the commercial invoice.

18 The documents tendered in the proceedings on behalf of the CEO included a series of contemporaneous emails between Jupiter Pacific in Vietnam and Jupiter Air Oceania Pty Limited (Jupiter Australia) tracking the course of the container. The main people who dealt with the shipment were Ms Ngoc Duong in Vietnam and Ms Jacqueline Pellaers in Sydney. On 10 July 2007, Ms Duong sent an email to Ms Pellaers advising her that the container was at the depot in Ho Chi Minh City but that she had still not received the commercial invoice and packing list required for customs clearance. Ms Duong stated:

19 A further email sent by Ms Duong to Ms Pellaers later in the day on 10 July advised Ms Pellaers that Jason Karam was now saying that the commercial invoice and packing list would be provided by “the consignee”:

20 By that time, the container was in fact packed with shoes, cigarettes and tobacco. It appears from a later email dated 24 July 2007 (annexure H to Ms Pellaer’s affidavit) that Jason Karam did ultimately send a commercial invoice and packing list to Ms Duong. The email forwarded two such documents, “provided by Jason”, to Ms Pellaers, who had requested them in preparation for the arrival of the shipment in Sydney.

21 The documents received by Ms Duong from Jason Karam were not on letterhead and did not identify any supplier. They listed the contents of the shipment as shoes, described as follows:

Quantity	Description
2000	SIPPING BLK/GREY
1500	SIPPING WHY/NAVY
1350	HOUNDSTOOTH BLK/WHT
1350	HOUNDSTOOTH RED/WHT
800	CHAKANYUKA BLK/WHT
800	CHAKANYUKA WHT
500	AUGMENT DUSTY/JADE
500	AUGMENT WHT

22 The defendants adduced evidence to establish that it was common for them to provide invoices in that form. Ms Pellaers, however, was not accustomed to receiving commercial documents for submission to Customs that were not on the letterhead of the supplier or importer. Immediately after receiving Jason’s documents from Ms Duong, Ms Pellaers sent an email to Ronnie Karam seeking the documents on letterhead. He ignored that request. His evidence as to why he did so is considered further below.

23 Ronnie Karam stated that he has been in the business of developing and selling shoes for many years. He initially conducted business through a company called Rogue Footwear Pty Limited. At some point before 2007, he commenced trading through a different corporate entity, Drovers International Pty Ltd, apparently in response to attempts by the Commercial Bank of Australia to enforce a charge over the assets of Rogue Footwear Pty Limited (T300.22).

24 Drovers Footwear Pty Limited (the company identified in the Jupiter bill of lading as the consignee of the container) was incorporated by Ronnie Karam but according to his evidence he did little if any trade through that company.

25 By 2007, many of the shoes sold by Drovers International were being manufactured in Vietnam. Ronnie Karam had a number of people working for him in Vietnam at that time, including Jason Karam and people referred to in the evidence only as Vu, Vinh and Le (T303-4).

26 Ronnie Karam used Jupiter Australia as his freight forwarding company for the importation of shoes from Vietnam into Australia. He also shared Jupiter’s offices at Unit 3, 55 Kent Road, Mascot and, in addition, used part of their warehouse facilities at those premises for the business of Drovers International (T308). At the time of the events relevant to these proceedings, Drovers International owed a substantial debt to Jupiter Australia and could only obtain the release of its consignments upon payment of “cash up front”.

27 Ronnie Karam was aware that Jupiter Australia used a company called FDI as its freight-forwarding agent in Vietnam. However, he stated that he did not have any direct dealings with FDI. When he wanted a container of shoes to be imported into Australia from Vietnam, one of his people in Vietnam (Jason or Vu) would contact FDI. Ronnie Karam would then be contacted by Jupiter Australia and told when the container was moving (T309).

28 At some point, Ronnie Karam became aware that Jupiter Australia had stopped using FDI as its freight-forwarding agent and was using a Jupiter company in Vietnam instead. He said that was of no concern to him as his relationship was with Jupiter Australia.

29 Some of the shoes manufactured in Vietnam for sale by Drovers International were “vulcanised” shoes, that is, shoes that have the sole affixed to the shoe by being placed in an oven and “cooked” (as Ronnie Karam put it) as opposed to simply being glued to the shoe. The supplier that was manufacturing those shoes for Ronnie Karam’s business in early 2007 was the factory referred to by him as the Chicken Shed (“because it looked bad”: T314.40).

30 From 28 July 2007 to 3 August 2007, Ronnie Karam was attending an expo in Las Vegas. He said that, at that time, he was expecting the arrival of three containers organised by either Jason Karam, Vu or Le (T313.41). One was a 20 foot container. Another was an “LCL” (less than a container load). The third was the 40’ HC container the subject of these proceedings.

31 Ronnie Karam gave evidence that he understood the three containers were carrying shoes from sources identified by him in the following terms (T314.15):

32 The reference to the factory that they were “pulling out of” was a reference to the Chicken Shed.

33 Ronnie Karam stated that, on the morning he returned from Las Vegas, he went to work thinking that the 40’ HC container would be at Jupiter’s premises in Sydney. He gave the following evidence as to a conversation he had with Ms Pellaers on that occasion:

34 At some point, probably on the same day, Ronnie Karam asked Ms Pellaers whether the container had arrived and she told him that it was being held by Customs for x-ray. He gave evidence that he said to her “Can you hurry it up? Just hurry the process up so we can get our shoes out” (T322.47). Ms Pellaers gave evidence to similar effect. She said that Ronnie Karam asked her whether there was anything she could do to secure the release of the container, telling her that the shoes were needed for a product launch. In cross-examination, Ms Pellaers said that she started to receive “a considerable amount of pressure to get the container delivered to the premises as soon as possible” (T209.9).

35 At the outset of the hearing before me, the CEO called on a Notice to Produce seeking documents from the defendants to substantiate the claim that Ronnie Karam had a product launch at around that time. Mr Golan, who appeared for Mr Ronnie Karam, responded to the call by saying (plainly on instructions) (T8.1-T8.3):

36 When Ronnie Karam gave evidence, however, he volunteered “we say that all the time”. He said the product launch was an excuse they had been using for six or seven years “because it hurries the containers along”. He said that there was in fact no product launch for which any shoes were required on this occasion. However, the response to the Notice to Produce suggests that, at least until after the commencement of the hearing, Ronnie Karam was sticking to the story that he believed the container contained shoes urgently required for a product launch. After he abandoned that “excuse”, his anxiety to get the container off the port as soon as possible was left without explanation. He did not suggest that he was in any hurry to get access to the shoes from the Chicken Shed, described by Dory Karam as “rubbish”.

37 On 9 August 2007, Customs officers executed a search warrant at Jupiter’s premises at 55 Kent Road, Mascot. They informed Ronnie Karam that tobacco had been found in the container. Ronnie Karam gave evidence that he had no knowledge until that point of there being tobacco in the container (T324.10). He said, however, that he did suspect at that time that Mr Cheikho was responsible for the inclusion of tobacco in the container because Mr Cheikho had previously asked him to undertake illegal importations. Ronnie Karam gave evidence that he had since confronted Mr Cheikho (T326.14):

38 Ronnie Karam also said that his brother Jason Karam “must have known about it ... because Mr Cheikho needed help” (T326.34).

39 Dory Karam has a background in computer science. In about 2004, he was “co-opted” into the family business. He assisted Ronnie Karam with general office duties and also helped with the unpacking of consignments when they arrived at Jupiter. At the time Dory Karam joined the business, a decision had been made to close down the manufacturing arm in Australia and establish a factory or factories making shoes in Vietnam. Dory and Ronnie Karam both travelled regularly to Vietnam during the period when the company’s manufacturing business was being built up in Vietnam.

40 One of Dory Karam’s contributions to the business was to create a standardised template which he used to prepare commercial invoices and packing lists for shoes imported from Vietnam. He explained that the reason those documents were prepared by him rather than by the suppliers of the shoes was that the people manufacturing their shoes in Vietnam had very limited access to computers and “limited knowledge on what was required for Australian imports documents” (T410). Several samples of such documents were tendered on behalf of Dory Karam with the intention of establishing that this was a usual practice within the company.

41 At the execution of a search warrant at premises in Wicks Road, North Ryde on 10 August 2007, Dory Karam told Customs officers that the 40’ HC container was supposed to be bringing product obtained following a “cleanup” of the Chicken Shed. He said that he was the instigator of that importation. He said that the company had ceased trading “because it was rubbish” and that they were trying to “recuperate (sic) as much dollars as we could”. In his evidence in the proceedings, Dory Karam confirmed that it was his understanding that the 40 foot container was to contain shoes taken from the Chicken Shed (T429.35).

42 Dory Karam said in evidence that he was not part of the determination that the Chicken Shed would be closed, but that he understood it was not profitable and was to be closed down. He could not recall giving any instructions to Jason Karam in that regard, but said: “There would have been some sort of instruction to recoup [stock] as there were moneys outstanding” (T420.15). In cross-examination, he said that he would have given the instruction to Jason to collect those shoes and send them back to Australia (T429.2). That is completely inconsistent with the version of events given later in the trial by Jason Karam (considered below).

43 In his evidence-in-chief, Dory Karam said that he did not recall whether he completed or checked the packing list and the commercial invoice for the stock from the Chicken Shed. He said that it was quite possible that he may have given some assistance with the completion of those documents, but said: “It would have been just over the phone” (T420.35). I am satisfied that he was at that point seeking to distance himself from those documents.

44 Under cross-examination by Mr Robberds on behalf of the CEO, Dory Karam conceded that he had in fact typed the packing list and the commercial invoice on his own computer and emailed them to Jason Karam in Vietnam. That concession was made only after Mr Robberds had reminded Dory Karam that he had previously said the same thing to Customs officers at the execution of the search warrant. Dory Karam told the investigating officer on that occasion that, in order to prepare such documents, he would be in contact either with the people working for him in Vietnam (at that time mainly his father and his brother) or with the factory. He then said (Ex O, p 67):

That evidence cannot be reconciled with the evidence of Jason Karam (considered below), nor does it accord with common sense. There is no suggestion from any source that the container was in fact packed with the stock recouped from the Chicken Shed. I accept, as submitted by Mr Robberds, that Dory Karam’s statement to the investigating officer on that issue was a lie.

45 Dory Karam agreed in cross-examination that he paid $13,600 in cash to Mr Figon at Jupiter Australia, representing most of the amount invoiced by Jupiter for customs duty and other expenses payable in respect of the 40’ HC container (T428). There was a balance of some $2,000 payable on that invoice. Dory Karam said that, when Ronnie Karam came back to Australia, Dory told him that the invoice was “short” and that Ronnie needed to organise payment of the balance (T432).

46 The defendants’ brother, Jason Karam, gave evidence by video-link from Vietnam. The contents of an affidavit sworn by him disclosed a risk of self-incrimination and I granted him a certificate under s 128 of the Evidence Act (T452).

47 Jason Karam stated in his affidavit that he had been approached in late June or early July 2007 by Mr Cheikho to arrange a container for some sandals to be sent to Sydney. Jason agreed and contacted Jupiter in Vietnam to arrange for a container to be delivered to an address provided by Mr Cheikho. That evidence in itself is inherently unlikely. Why would Jason agree to the use of his brother’s import facilities, creating liabilities for his brother’s company as consignee, to help someone else import footwear?

48 The description of the contents of the proposed shipment as “sandals” appears in the documents tendered in the proceedings on behalf of the CEO, in an email dated Wednesday 4 July 2007 from Jason Karam to Ronnie Karam. That email refers to two containers and says, relevantly:

In cross-examination, Jason Karam said that that was the container for Mr Cheikho (T462). Ronnie Karam did not explain what he thought as to why Jason had arranged a shipment of sandals at that time. He did not suggest that he had ever ordered a container load of sandals.

49 The emails tendered by the CEO establish that Ronnie Karam forwarded Jason’s email to Guy Figon of Jupiter Australia asking him to arrange forwarding of the containers.

50 Jason Karam stated that Mr Cheikho later contacted him to say that the container delivered by Jupiter was not big enough and that he (Jason) then arranged for a larger container to be delivered. That is consistent with the email dated 10 July 2007 from Ms Duong of Jupiter in Vietnem to Ms Pellaers of Jupiter in Sydney set out above.

51 Jason Karam said in his affidavit that, later in July 2007, Mr Cheikho had contacted him and asked him to prepare the documents for the shipment and to send them to Jupiter. He stated that he prepared an invoice and a packing list and forwarded them to Jupiter. He said that he did not provide the documents on letterhead as the shipment was not associated with the family business and was a personal shipment by Mr Cheikho, through Jupiters, to Sydney. Jason Karam explained by reference to the taxation system in Vietnam that there was no way he could have done the paperwork and sent it without a company name (T470).

52 Jason Karam said that he was later asked by an employee of Jupiter to provide documents on company letterhead. He said that he ignored the request for two reasons. The first was that the shipment had nothing to do with the family business. The second was that as a result of his discussions with Mr Cheikho, he had become aware that Mr Cheikho was arranging for a shipment of tobacco to be sent to Sydney and that Mr Cheikho had contacts at Jupiter Australia who were to unload the shipment for him and distribute it through another contact he had in Sydney.

53 Mr Cheikho denied the last contention, in the following exchange (T504.41-T504.48):

54 In relation to the invoice and packing list, Jason Karam said in cross-examination that he had obtained the information needed to prepare those documents from Mr Cheikho on the earlier date when he had met him. He said that the invoice and packing list he prepared listed all of the sandals mentioned to him by Mr Cheikho.

55 One could not accuse Jason Karam and Dory Karam of putting their heads together in relation to their evidence as to the provenance of the packing list and the commercial invoice. As recorded above, Dory Karam told Customs officers (at the execution of the search warrant at Wicks Road) that he obtained the information needed to prepare those documents from people at the Chicken Shed, who told him the details of what they had packed in the container.

56 Jason Karam’s evidence on that issue is contradicted by the evidence of Mr Cheikho, who denied giving Jason Karam a description of any shoes to be shipped in the 40’ HC container (T499.36). Mr Cheikho said that he would not know what to tell Jason Karam on that issue and did not know “what they call their shoes”. He said that Jason knew all along that the plan was to import tobacco. Mr Cheikho’s evidence on that issue accords with common sense and I accept it.

57 Jason Karam said it was only after the container was at the port in Ho Chi Min City (implicitly, after he had prepared the packing slip and invoice) that he had learned it in fact contained tobacco. He explained that he kept asking Mr Cheikho what was in the container, because the contents of the container were his (Jason’s) responsibility. I do not accept his evidence on that issue. The emails referred to above disclose that the commercial invoice and packing list were provided by Jason not only after the container had arrived at the port in Vietnam but after he had promised Jupiter “many times” to provide them.

58 Jason Karam did not agree that he had assisted Mr Cheikho to export the tobacco. He said: “My hands were tied. The container was at the port already. I had arranged everything, packing this [sic: list?], everything was arranged already”(T465.51). He said that once a container is at the Vietnam Port it is “pretty much impossible” to take it back (T466.2).

59 Jason Karam said that he did not ring his brothers up to tell them the container had tobacco in it. Asked why not, he said: “I just left it, I just didn’t want to deal with the situation. I didn’t know what to do with it” (T466). He said that Mr Cheikho was supposed to fly back to deal with the shipment when it arrived in Australia.

Evidence of Mr Cheikho

60 Mr Cheikho was also granted a certificate under s 128 of the Evidence Act in respect of his evidence. Mr Cheikho is a former police officer who was discharged from the police service in 1994 when he was prosecuted for an offence of supplying cocaine. After serving a term of imprisonment for that offence, he obtained employment with Jupiter in Sydney at their warehouse at Kent Road in Mascot. His duties included packing and unpacking containers, collecting cargo from the airport and delivering consignments to customers.

61 Mr Cheikho was still employed by Jupiter in 2005 when Ronnie Karam and Dory Karam took up office and storage space at those premises. In his evidence, he described them as his clients.

62 In 2007 Mr Cheikho’s employment with Jupiter came to an end. He went to Vietnam where he obtained employment with FDI, the freight-forwarding company formerly used by Jupiter Australia. His employer was Ms Lien.

63 Mr Cheikho gave evidence that, before he commenced his employment in Vietnam, he was approached at a coffee shop in Lakemba by a man who identified himself as Mohammed. Mohammed approached Mr Cheikho “on behalf of a group” and wanted to see if Mr Cheikho was willing to work with them importing cigarettes from overseas. They wanted a shipping company with a good reputation through which to organise for those importations.

64 Mr Cheikho said that, after he commenced his employment with FDI in Vietnam, he contacted Mohammed by telephone and told him that he had spoken to somebody who was willing to participate. He was referring to Jason Karam. Mohammed wanted Mr Cheikho to do a trial run to bring in a couple of boxes of cigarettes. Mr Cheikho said that he “explained it to Jason and he knew what was happening” (T486).

65 Jason Karam denied any knowledge of the trial run. According to his evidence, Mr Cheikho approached him for the first time in late June or early July 2007.

66 It appears that the cigarettes in the trial run were discovered by Customs officers in Ho Chi Min City when they inspected one of FDI’s road containers. Mr Cheikho’s employer, Ms Lien, received a telephone call to inform her of that fact. She later told Mr Cheikho that she had managed to pull the two boxes of cigarettes out of the container and replace them with two boxes of shoes. Mr Cheikho said that he explained those events to Jason Karam, and later to Mohammed.

67 About a month later, Mohammed called Mr Cheikho and said that they were ready to do “a proper run” (T487). Mohammed was going to give Mr Cheikho and Jason Karam $30,000 for their participation in the shipment and was also to pay all costs of the shipment. Mr Cheikho said that he and Jason Karam agreed to share the $30,000 equally.

68 Mr Cheikho said that he then spoke to Jason Karam, who arranged for a container, this time not through FDI but through Jupiter in Vietnam. Mr Cheikho said “[Mohammed] gave us an address where to drop it off and we dropped it off and then they packed it up and Jason did the paperwork and it was gone” (T488). Mr Cheikho said that he would not have sufficient experience or expertise in the area of shoes to be able to put together a packing list with brands and so on.

69 As already noted, Mr Cheikho said that he did not at any stage tell Ronnie Karam or Dory Karam that he had sent a shipment of tobacco their way. He said that he was to contact Mohammed again when the shipment was cleared through Customs.

70 Mr Cheikho agreed that, after the container was stopped, he spoke to Ronnie Karam a couple of times. He gave the following evidence as to those conversations (T494.32-T494.39):

71 It appears that the question “whether he was involved” was Ronnie Karam asking Mr Cheikho whether Jason Karam was involved. Mr Cheikho denied that he had ever told Jason he wanted to send some sandals to Australia (T500.23). Jason Karam’s evidence on that issue was bland and inherently implausible. I am satisfied that Mr Cheikho told Jason Karam from the outset of the plan to import tobacco.

72 Mr Cheikho said that, once the container was cleared, Jason was to notify him and he would then ring Mohammed to obtain an address and let Jason know where to redirect the container. It seems inherently unlikely that that was the plan. According to that account, Ronnie and Dory Karam believed the container was a genuine consignment for them, for which they had paid over $15,000 in expenses. Why would they allow Jason to redirect it to a stranger?

73 Mr Cheikho said that the $30,000 payment to him and Jason Karam and the expenses for importing the container were to be collected by Mr Cheikho from Mohammed after Mr Cheikho returned to Australia (T506). He did not explain how Ronnie Karam was to be divested of his container and reimbursed for his expenses without arousing his suspicion.

74 As already noted, the person within Jupiter Australia who dealt with the importation of the three containers was Ms Pellaers. She had only recently commenced working for Jupiter at the time of those importations. She had, however, some thirty years prior experience in the shipping industry.

75 I have already referred to Ms Pellaers’ email to Ronnie Karam dated 25 July 2007 requesting a commercial invoice, packing list and packing declaration on letterhead. Ronnie Karam gave evidence (at T338-9) that he ignored that request, saying that it was “unusual” for Jupiter to ask him for documents. Ms Pellaers was cross-examined generally to that effect. Whether or not it was Jupiter’s usual practice, I see nothing unusual or unreasonable in a request by a freight-forwarder for documentation that establishes the provenance of the goods sought to be imported.

76 Ronnie Karam said that when Ms Pellaers kept asking for documents on letterhead, he asked Dory to deal with it (T339.14). In due course, Dory Karam sent Ms Pellaers commercial invoices and packing lists on letterhead for the 20’ container and the LCL, but not for the 40’ container.

77 Ms Pellaers gave evidence that, from two or three days before the shipment of the 40’ container was due to arrive, she attempted to contact Ronnie Karam and Dory Karam many times to obtain a commercial invoice for the consignment of shoes in the 40’ container on the letterhead of the exporter company. The CEO relied in particular on evidence of phone records (Ex H) which showed telephone contact between Ms Pellaers and Dory Karam for 57 seconds on 30 July 2007. On the same day, Dory Karam sent an SMS message to Ronnie Karam in which he said “Just say u know nothing about shipment”. I do not have any doubt that both defendants knew that message related to the container the subject of these proceedings. I found their evidence to the contrary completely unconvincing, and I think it is likely that they discussed that issue with each other before coming to Court: see T342.9; T425.17 and T444.27. Ultimately, when Ms Pellaers felt she had exhausted all avenues for obtaining the documents on letterhead, she provided the documents that she had originally received to Century Customs, the customs broker.

78 It was submitted on behalf of Dory Karam that it would not be fair to draw an adverse inference against him on the strength of the timing of the 57- second phone call and the SMS message. The basis for that submission was that the phone record of that call was not put to him in cross-examination, contrary to the requirement of fairness explained in Browne v Dunn (1893) 6 R 67.

79 I do not accept that submission. The defendants were well on notice of the contention that Ms Pellaers was calling them frequently in the days leading up to the arrival of the vessel in Sydney, trying to obtain documents on letterhead. They had every opportunity to meet that case.

80 Ms Pellaers gave evidence that, by contrast with her experience in attempting to contact Ronnie and Dory Karam to obtain an invoice on letterhead, after the 40’ container arrived in Sydney she got “a lot of communication because then it was ‘I want delivery of the container’” (T200.31)

81 Each of the defendants gave evidence that Jupiter’s warehouse at Kent Road was frequently attended by Customs officers without notice. Separately, Ronnie Karam gave evidence that he had wanted the container unpacked at that warehouse and that evidence was independently corroborated by Ms Pellaers.

82 The defendants relied on that evidence as demonstrating the inherent unlikelihood of their knowing the container held tobacco, since they would be unlikely to request to have it delivered to a place where they knew there was a risk of discovery of its contents by Customs officers.

83 I think that evidence is, at best, equivocal. There is certainly some force in the contention put on behalf of the defendants. Equally, however, common sense dictates that if they were aware of the true contents of the container, the defendants may have preferred to have it unpacked within the system with which they were familiar. I do not place much weight on that consideration one way or the other.

84 In support of the fault elements of the offences, the CEO relied on the contents of four emails relating to the trial run organised by Mr Cheikho in May 2007. The emails were recovered from a laptop computer which was in Mr Cheikho’s possession when he arrived at Sydney International Airport on 10 October 2007. Three of the same emails were also extracted from a computer seized during the execution of the search warrant at Wicks Road.

85 Taking the emails in the order in which they were apparently sent, the first is from Ms Lien at FDI to “Adnan” at FDI dated 27 May 2007 under the subject “Ciragget cont”. The email is in the following terms:

86 The second email, also from Ms Lien, is dated 31 May 2007. It is addressed to both of the defendants and copied to “Adnan” at FDI. It carries the subject “Re: Ciragget cont”, suggesting that it may have been created by forwarding the first email. The second email is in the following terms:

87 The third email in the string is a reply to the second email sent by Ronnie Karam and copied to Dory Karam. It is in the following terms:

88 The fourth email is from Ms Lien to “Adnan” forwarding the string consisting of the first, second and third emails. There is no separate text in that email.

89 Ronnie Karam’s evidence as to the reply he sent to Ms Lien was very unsatisfactory. He agreed that the email related to a container sent from Vietnam to Sydney in which Ms Lien was involved before it left Vietnam and that the emails were talking about cigarettes in that container (T351.43-T352.3). He accepted that he had no misunderstanding when he received the email from Ms Lien that she was talking about the fact that cigarettes had been imported into Australia. He said that was why he wrote his response - because he didn’t want to have anything to do with it (T352.12).

90 However, Ronnie Karam could provide no satisfactory explanation as to what he meant by the concluding words of his email, “I am just helping people out”. He stated that the reference to “people” was a reference to Mr Cheikho. His evidence continued (T353.6):

91 He later sought to expand on that answer in the following further evidence-in-chief (at T400.3):

92 Curiously, Mr Cheikho volunteered a similar explanation for Ronnie Karam’s reply to Ms Lien’s email in the following exchange (T497.17-T497.30):

93 I do not think that is a credible explanation of the contents of Ronnie Karam’s email and I do not accept the evidence of Ronnie Karam on that issue. If Ronnie Karam wanted to protect Mr Cheikho by not “dobbing him in”, a reference to that assistance in the email itself was self-defeating.

94 Ronnie Karam explained that the reason he told Ms Lien not to put this in writing and that it was better to speak over the phone was that Ms Lien spoke broken English. Dory Karam’s evidence on that issue was strikingly similar (T435.26):

95 However, Dory Karam denied that he had discussed that evidence with Ronnie. I found the evidence of both defendants on those issues unconvincing.

96 In my view, there is a strong inference to be drawn from the language of the email, including the concluding words “I am just helping people out”, that Ronnie Karam had at some point suffered the use of one of his containers for the purpose of importing cigarettes into Australia. Whether that evidence alone establishes that matter to a sufficient degree of certainty is another issue. On any view, the email exchange suggests that Ronnie Karam was not the owner of the cigarettes intended to be imported, and that any involvement was limited to permitting the use of his facilities.

97 Dory Karam’s evidence in relation to the emails was less frank. He said that he could not recall receiving any messages from Ms Lien asking him to check on a container that had arrived in Sydney. As to the description of it as the “Ciragget cont”, he said that he could have received the email and would probably have assumed that to be a brand of shoe (T434.30; T434.48). That was a ridiculous piece of evidence. I am satisfied that it was untruthful.

98 Dory Karam denied that it had ever occurred to him that the emails were speaking about a container sent from Vietnam to Sydney which contained cigarettes. Indeed, he appeared to suggest that he may not have read the email at all: (T434.14):

99 I found Dory Karam’s evidence on that issue very unsatisfactory and I do not accept it. I am satisfied that Dory became aware at some point of the attempted importation of cigarettes through his brother’s facilities in May 2007.

100 The next task is to identify the physical elements of each offence and the fault elements for each physical element in accordance with the principles stated in the Criminal Code. Section 5AA of the Customs Act provides that only parts 2.1, 2.2 and 2.3 of Chapter 2 of the Code apply to Customs prosecutions.

101 The parties did not refer me to any decision in which those provisions have been considered in the context of a Customs prosecution. The only decision I have identified that considers those provisions is the decision of the Western Australian Court of Appeal in Brayley v Malkovic [2008] WASCA 20, where a conviction for an offence under s 234(1)(d) was quashed. Apart from that decision, I have been uninstructed by authority in my identification of the elements of each offence in accordance with the principles stated in the relevant parts of the Criminal Code.

102 The first two charges allege smuggling of the cigarettes and the tobacco found concealed in the container. The Customs Act defines “smuggling” to mean “any importation, introduction or exportation or attempted importation, introduction or exportation of goods with intent to defraud the revenue”.

104 An intention to defraud the revenue means an “intention to prevent something getting into the revenue which the revenue is entitled to get”: R v Australasian Films Ltd [1921] HCA 11; 29 CLR 195 at 218. It is clear, in my view, that such an intention may be established on the part of a person who is not the owner of the goods in question.

105 I am not entirely convinced that the second physical element identified above (the circumstance of defrauding the revenue) is an element of the offence. The Court of Criminal Appeal has held (in respect of a prosecution to which the Criminal Code did not apply) that proof of an offence under s 233(1)(a) does not require proof of customs value (where that is the determinant of the duty payable): Gill & Anor v CEO of Customs [2001] NSWCCA 470; 126 A Crim R 324 at [34] to [36] per Giles JA; Howie J and Carruthers AJ agreeing. Giles JA said at [36]:

106 It is probably inconsistent with that decision to require the CEO to prove element (c) above.

107 Separately, I note that the fault element for the first physical element identified by Mr Robberds requires proof of intention in respect of the conduct of importing the goods. It is not clear to me whether that had been separately articulated as an element of the offence before the Code came into force: see generally Gill at [34] to [61]; CEO of Customs v Pham [2006] NSWSC 1011 at [26] to [27].

108 In light of those considerations, the better view may be that it is enough, in order for a person to be convicted of an offence under s 233(1)(a), to require proof of the following elements:

109 For abundance of caution, however, I have considered each of the elements proposed by Mr Robberds.

111 Adopting Mr Robberds’ analysis, it is accordingly necessary for the CEO to establish beyond reasonable doubt, as the fault elements for the offences of smuggling, that each of the defendants:

112 On the strength of the contents of the defence filed in the proceedings and the admission of each defendant that he imported the container in which the tobacco and the cigarettes were concealed, I am satisfied beyond reasonable doubt as to the first physical element of each of the two smuggling offences.

113 The second physical element of defrauding the revenue is established by paragraphs 40, 41 and 60 to 63 of the statement of facts (Exhibit B). Accordingly, as to each smuggling offence, I am satisfied of that element beyond reasonable doubt.

114 Proof of the fault elements rests on a circumstantial case. As noted by Bell J in Pham at [95], it is not necessary in such a case for the Court to be satisfied beyond reasonable doubt in respect of each circumstance, “but rather that the circumstances when viewed together admit of no rational explanation other than guilt: Shepherd v R [1990] HCA 56; (1990) 170 CLR 573.”

115 In view of the time it has taken to complete this judgment, I have taken care to review the evidence adduced on behalf of the defendants in detail so as to ensure that my conclusions accord with the impressions I formed at the time of the hearing.

116 I am also mindful of the submissions put on behalf of the defendants that the CEO might have taken further steps to investigate the involvement of Mr Cheikho from the outset and that, as a result, forensic opportunities may have been lost. Mr Cheikho’s guilt of any offence is not, however, inconsistent with the case brought by the CEO.

117 I am satisfied beyond reasonable doubt that Dory Karam meant to import the cigarettes and the tobacco. I am also satisfied beyond reasonable doubt that he meant to defraud the revenue.

118 Those conclusions are based on my view of the circumstances established by the evidence discussed above including, in particular, the following matters:

119 It was submitted on behalf of Dory Karam that it would be unfair to draw an inference that Jason asked Dory to prepare false documents, since that was not put to either of them in cross-examination. I have difficulty understanding how Mr Robberds should have foreseen to put that proposition, having regard to the way in which the evidence unfolded.

120 In any event, without drawing that inference, I am satisfied that Dory Karam had the relevant knowledge.

121 In my view, the circumstances outlined above when viewed together admit of no rational explanation other than Dory Karam’s guilt. Accordingly, I find the offences charged against Dory Karam in paragraphs 3 and 4 of the Statement of Claim proved.

122 After extensive deliberation, I am not satisfied beyond reasonable doubt that Ronnie Karam meant to import the cigarettes and the tobacco. I am satisfied that he was aware that the container held tobacco or cigarettes from at least a time shortly after he was told that the container had been stopped by Customs officers. I strongly suspect he had that awareness before that time. However, I cannot dismiss as unreasonable the existence of the alternative possibility that Jason and Dory Karam deliberately concealed the true contents of the shipment from Ronnie Karam, tipping him off only at the last minute with the SMS message to which I have already referred.

123 Accordingly, the offences charged against Ronnie Karam in paragraphs 3 and 4 of the Statement of Claim are not proved.

Charges under s 233(1)(b) - importing prohibited imports

124 The third charge against each defendant alleges importing or attempting to import a prohibited import, namely, the unmanufactured tobacco. That is an offence of strict liability: see s 233(1AB) of the Act. The offence is accordingly governed by s 6.1 of the Criminal Code. That section provides that there is no fault element for any of the physical elements of the offence, but that the defence of mistake of fact under s 9.2 of the Code is available.

125 The physical elements of the offence are the conduct of importing the goods and the circumstance that the goods are prohibited. As already indicated, I am satisfied beyond reasonable doubt as to the first matter. The statement of facts establishes the second and I am also satisfied as to that element.

(a) at or before the time of the conduct constituting the physical element, the person considered whether or not facts existed, and is under a mistaken but reasonable belief about those facts; and

(b) had those facts existed, the conduct would not have constituted an offence.”

127 The defendants rely upon that principle in the present case. A question accordingly arises as to their burden of proof in doing so. In proceedings governed by the whole of Chapter 2 of the Code, it is clear that a person who relies on s 9.2 bears an evidential burden only, that is, “the burden of adducing or pointing to evidence that suggests a reasonable possibility that the matter exists or does not exist”: s 13.3 of the Code. However, that section falls within Part 2.6 of the Code and accordingly does not apply to a Customs prosecution: s 5AA(2) of the Customs Act.

128 The Customs Act accordingly adopts the curious position, as to Customs prosecutions, of taking up part only of a collection of principles the express object of which was codification. The result appears to be that the principles of the common law (or some of them) apply to such prosecutions: cf Labrador Liquor at [20] per Gummow J.

129 On that basis I accept, as submitted in supplementary written submissions on behalf of the CEO, that the common law determines what is the burden of proof applicable to the so-called defence in s 9.2 of the Code. On that basis, it is sufficient for the defendants to raise a doubt about their guilt by raising the question of honest and reasonable mistake. If the CEO at the end of the case has failed to dispel the doubt then the defendants must be acquitted: He Kaw Teh v The Queen [1985] HCA 43; (1984-5) 157 CLR 523 at 593.2 per Dawson J.

130 As submitted by Mr Robberds, it may be doubted in any event whether that test is any different from the position described in s 13.3 of the Code as to the evidential burden of proof.

131 It was submitted on behalf of the defendants that the relevant “facts” are whether the container contained shoes, not whether it contained tobacco. I think the question is, more properly, whether the container contained only shoes, but I otherwise accept that approach.

132 For the reasons set out above in respect of the smuggling offences, I am satisfied beyond reasonable doubt that Dory Karam was not under a mistaken belief that the container contained only shoes. Accordingly, I find the offence charged against Dory Karam in paragraph 5 of the Statement of Claim proved.

133 As to Ronnie Karam, if he was under a mistaken belief immediately before the container arrived that it carried only shoes (which I doubt), I am satisfied beyond reasonable doubt that his belief in that respect was not reasonable.

134 Contrary to a submission put on behalf of the defendants, the date of importation was the date on which the vessel arrived in Sydney (2 August 2007), not the date of arrival at the first port: see Wilson v Chambers [1926] HCA 15; 38 CLR 131 at 150 (cited in Pham at [26]).

135 As frankly acknowledged by Ronnie Karam, he was under no misapprehension in May 2007 that the emails from Ms Lien related to a proposal to import cigarettes through his facilities. He may well have been involved in that importation. If he was not, he must have been furious, as he said in his evidence. He would certainly have been astute, from that point onwards, to the risk of a repetition of any such conduct.

136 In that context, I do not accept the reasons given by Ronnie Karam for ignoring Ms Pellaers’ request for documents on letterhead. It was his importation business. I am satisfied that he ignored the requests because he knew or suspected at that point that a genuine commercial invoice could not be obtained.

137 I do not accept Ronnie Karam’s explanation of the SMS message sent to him by Dory Karam. I am satisfied that, after receiving that message, Ronnie Karam knew or suspected that someone was using the container to import tobacco or tobacco product, as he knew had previously been attempted.

138 The absence of any evidence as to a reaction to that message is very telling. I conclude that either the message came as no surprise to Ronnie Karam (because he already knew about the importation of the tobacco and the cigarettes at that time) or he did react to it in terms that would have been too damning for him to repeat in evidence in the proceedings. It beggars belief to think that he did not know or strongly suspect, upon receipt of such a message from his brother, that the container was again being used to import cigarettes or other goods besides shoes.

139 The existence of knowledge or suspicion on Ronnie Karam’s part from at least the time he received that message is confirmed by his communications with Ms Pellaers trying to get the container off the wharf and his subsequent payment of the balance of the invoice. It was submitted on his behalf that, if he had the relevant knowledge at that time, such conduct was quite reckless. That may be so, but recklessness is not inconsistent with a guilty conscience.

140 Accordingly, I am satisfied beyond reasonable doubt that Ronnie Karam was not under a mistaken but reasonable belief that the container contained only shoes. I find the offence charged against Ronnie Karam in paragraph 5 of the Statement of Claim proved.

141 Paragraphs 6 and 7 of the Statement of Claim allege two offences of evasion of duty, in respect of the cigarettes and the tobacco respectively. Mr Robberds submitted that the elements of those offences are as follows:

142 With great respect to Mr Robberds, I do not think that is the correct analysis of the elements of the evasion offences under the principles stated in the Criminal Code. As to the fault element of “blameworthy conduct”, Mr Robberds relied on s 5AA(3) of the Customs Act, which provides:

143 Prior to the application of Chapter 2 of the Criminal Code to Customs prosecutions, it had been held at common law that the offence of evading payment of duty under s 234(1)(a) was not made out by evidence proving no more than that the person charged failed or omitted to pay an amount payable; what was required was proof of “some blameworthy act or omission” on the part of the person charged: see Pham at [37]-[39] and the cases cited therein.

144 I do not think s 5AA(3) of the Customs Act was intended to preserve such jurisprudence. The express object of Chapter 2 of the Criminal Code is to codify the general principles of criminal responsibility under laws of the Commonwealth: see s 2.1 of the Code. That section states that Chapter 2 “contains all the general principles of criminal responsibility that apply to any offence, irrespective of how the offence is created”.

145 It must be accepted, as I have already noted, that the Customs Act has taken the curious position of adopting parts only of the principles so codified. As to those parts, however, it would be a strange outcome if the common law continued to apply to the extent of any inconsistency with the principles there expressly stated.

146 It follows, in my view, that the notion of “blameworthy conduct” discussed in Pham must now be taken to be embodied in Division 5 of Chapter 2, which contains the principles relating to “fault elements”.

147 Further, I do not think that the second physical element postulated by Mr Robberds, namely “knowing that the duty was payable” is properly characterised as a physical element within the meaning of Division 4 of Chapter 2 of the Code.

148 If my analysis is right, the elements of the offence of evasion of duty under s 234(1)(a) are:

149 I have approached the physical element on the basis that it is necessary for the CEO to prove what duty was in fact payable: Gill at [63]. The agreed statement of facts establishes the duty that was payable in the present case and the fact that the duty was not paid (paragraphs 39 to 41 and 60 to 63).

150 In my view, however, it must also be established that the duty was payable by each defendant. None of the parties addressed me on that issue.

151 It is clear enough that duty is payable under the Customs Act by the owner of the goods: see s 165 of the Act. It is not clear to me, however, whether duty is ever payable by any person other than the owner.

153 Without having had the assistance of any submissions on this issue, I do not think that either of the defendants was or relevantly held himself out to be in any of those roles in respect of the cigarettes and the tobacco.

154 The “owner” of the goods identified in the Nature 10 Declaration was “Drovers Footwear”. I am prepared to accept that that description was apt to identify the company that in fact meant to import the container, Drovers International Pty Ltd. Although Ronnie Karam was the sole director and principal of that company, it would not follow that he was personally liable to pay the duty payable on goods imported by it. As to Dory Karam, he was no more than an employee of the company.

155 In any event, the goods on which duty was in fact payable were the cigarettes and the tobacco. The evidence does not satisfy me that either defendant was an owner of those goods within the meaning of the Act.

156 Accordingly, I am not satisfied beyond reasonable doubt as to the first physical element of those offence as against either defendant. It follows that the offences charged against each defendant in paragraphs 6 and 8 of the Statement of Claim are not proved.

157 The final charge alleges that each defendant caused a statement to be made being reckless as to the fact that the statement was false in a material particular.

158 I accept that the elements of that offence are those identified by Mr Robberds, which are consistent with the decision of the Western Australian Court of Appeal in Brayley v Malkovic to which I have already referred, at [14] per Wheeler JA; Pullin and Buss JJA agreeing. The elements identified by Mr Robberds are:

159 The statement in question in the present case was the Nature 10 Declaration lodged electronically by Mr Arthur on 1 August 2007 through the Integrated Cargo System. Mr Robberds acknowledged that the Integrated Cargo System is not an “officer” within the meaning of the Customs Act and that the CEO has not adduced evidence of any officer having accessed the statement. He submitted, however, that the first physical element of the offence is established by operation of the Customs Act. Section 234(2B) of the Act provides, relevantly:

161 Section 71L of the Act makes provision for communication with Customs electronically. The defendants did not dispute that the Nature 10 Declaration to Customs was made pursuant to that section and, therefore, to the CEO. I accept that analysis.

162 Further, I am satisfied that each of the defendants caused the statement to be made. It is common ground that the statement was based on the commercial invoice and packing slip prepared by Dory Karam at the direction of Ronnie Karam and submitted by them for inclusion among the relevant shipping documents. Accordingly, I am satisfied beyond reasonable doubt as to the first physical element of the offence.

163 The second physical element of the offence (whether the statement was false or misleading in a material particular) is plainly made out. The statement made in the Nature 10 Declaration was false, both as to the goods declared and as to the customs value of those goods. Accordingly, I am satisfied beyond reasonable doubt as to the second physical element of that offence.

164 As to the fault elements, I do not think there can be any doubt that the defendants meant to cause a statement in those terms to be submitted by the Customs broker. The only issue is whether they were reckless as to the fact that the statement was false or misleading in a material particular. The principles for determining whether that element is established are set out in s 5.4 of the Criminal Code which provides:

(a) he or she is aware of a substantial risk that the circumstance exists or will exist; and

(b) having regard to the circumstances known to him or her, it is unjustifiable to take the risk.

165 For the reasons explained above in respect of the smuggling offences, I am satisfied beyond reasonable doubt that Dory Karam was aware that the statement was false in a material particular, which establishes the second fault element as against him in accordance with ss 5.4(4) and 5.3 of the Code. Accordingly, I find the offence charged against Dory Karam in paragraph 8 of the Statement of Claim proved.

166 As to Ronnie Karam, the circumstances considered above satisfy me beyond reasonable doubt that he was aware of a substantial risk that the statement was false in a material particular. Further, I am satisfied beyond reasonable doubt, having regard to the circumstances which I have found were known to him, that it was unjustifiable for him to take that risk. Accordingly, I am satisfied beyond reasonable doubt of the second fault element as against Ronnie Karam on the basis that he was reckless. I find the offence charged against Ronnie Karam in paragraph 8 of the Statement of Claim proved.

167 As against the first defendant, Mr Ronnie Karam, I find the offences charged in paragraphs 5 and 8 of the Statement of Claim proved. I find the offences charged in paragraphs 3, 4, 6 and 7 of the Statement of Claim not proved.

168 As against the second defendant, Mr Dory Karam, I find the offences charged in paragraphs 3, 4, 5 and 8 of the Statement of Claim proved. I find the offences charged in paragraphs 6 and 7 of the Statement of Claim not proved.

Supreme Court of New South Wales

Chief Executive Officer of the Australian Customs Service v Karam & Anor [2010] NSWSC 589 (4 June 2010)