REGINA v KELVIN [2000] NSWCCA 190

Reported Decision : [2000] 46 ATR 1

New South Wales Court of Criminal Appeal

CITATION : REGINA v KELVIN [2000] NSWCCA 190 FILE NUMBER(S) : CCA 60532/99 HEARING DATE(S) : 18 May 2000 JUDGMENT DATE : 18 May 2000

PARTIES : REGINA v Wilfred H C KELVIN JUDGMENT OF : Mason P at 1; Heydon JA at 18; Smart AJ at 19

LOWER COURT JURISDICTION : District Court LOWER COURT FILE NUMBER(S) : 98/11/0087 LOWER COURT JUDICIAL Freeman DCJ OFFICER :

COUNSEL : Applicant: J W Conomos Crown: R F Sutherland SOLICITORS : Applicant: Peter O'Neill Crown: Commonwealth DPP CATCHWORDS : Tax fraud - professional accountant - Application for leave to appeal against severity of sentence DECISION : Sentence varied - See par 17

IN THE COURT OF CRIMINAL APPEAL CCA 60532/99

MASON P HEYDON JA SMART AJ

Thursday 18 May 2000

REGINA v Wilfred H C KELVIN

JUDGMENT 1 MASON P: The applicant seeks leave to appeal against the severity of sentences imposed in the District Court by Judge Freeman. The applicant pleaded guilty to six counts of defrauding the Commonwealth contrary to s29D of the Crimes Act 1914 (Cth). The maximum penalty in respect of each offence was 10 years imprisonment or a fine of $110,000 or both. On each count the applicant was sentenced to imprisonment for 2½ years, subject to a recognisance release order directing that the applicant be released on recognisance after 18 months of the sentence. 2 When he appeared for sentence in August 1999, the applicant was a certified practising accountant and registered tax agent who had been running his own accounting business at Balgowlah and Epping the previous 26 years. The offences were based on a system adopted between 1991 and 1995. The applicant removed tax stamps from documentation provided to him by clients. These stamps were then used in his own tax returns for the years 1991 to 1994 and in the returns of his former de facto wife for 1993 and 1994. The applicant then claimed in the relevant income tax returns that taxation instalment deductions had been made by him through the purchase of tax stamps. This not only satisfied the tax liability in the relevant years, but also resulted in a refund for those years. The conduct came to light when the applicant was reported to the Australian Tax Office by an employee. 3 The applicant was committed for trial. He pleaded guilty over a year later and only two weeks before the listed hearing date for trial. According to the sentencing judge the Crown case appeared to be a strong one. Shortly before the sentencing proceedings the applicant paid the reparation sought by the Australian Tax Office in the sum of $97,000. 4 The applicant was 54 at the time of sentencing. He had been through an acrimonious divorce eight years previously and he lived alone. The pre-sentence report provided by the Probation and Parole Service indicated that the applicant displayed little contrition, maintaining that his staff committed the offences. 5 The learned sentencing judge described the offences and the circumstances of the plea of guilty. He correctly observed that the value of the plea lay primarily in the utilitarian effect of having saved the community the cost of a trial. Reference was made to the reparation payment and to the almost inevitable loss of the right to practise as an accountant that would ensue conviction. 6 His Honour accepted the Crown submission that the applicant stood in a position of trust not only in relation to the Australian Tax Office but also in relation to his clients. He held that the applicant's action breached that trust in a number of ways. He pointed out that the system of taxation collection in Australia is necessarily dependent to a very large extent upon the honesty of those who are licensed and qualified to assist ordinary taxpayers in meeting their obligations. That system depends upon the honesty, integrity and co-operation of those persons. 7 The judge referred to the case law which reflects belated but now clear acknowledgement that tax fraud should not be treated more leniently than social security fraud as a matter of practice. He said that fraud on the Taxation Department is a serious offence, the more so when it involved a breach of a position of trust, as in the present case. Reference was made to the decision of the Victorian Court of Appeal in Nguyen and Phan (1996) 86 A Crim R 521 . Having regard to these factors, His Honour said that the issue of general deterrence loomed large. 8 I do not understand the applicant to dispute the correctness of these propositions. They are supported in this State by decisions such as R v Meares, CCA, unreported, 3 October 1997 and Stitt (1998) 102 A Crim R 428 to which this Court was referred by the respondent. 9 To my knowledge the leading authority in this State is Director of Public Prosecutions v Hamman, CCA, unreported, 1 December 1998, to which reference was made by Judge Freeman. In that case there were offences against ss 29B and 29D of the Crimes Act. The total income understated over a period of three years was in excess of $600,000. It was a case in which a barrister received cheques from solicitors which he did not include as part of his gross income over a period of three years. In some cases the cheques were endorsed in favour of third parties for the payment of debts owing to those third parties. The offences referable to s29D involved sums totalling almost $145,000. Unlike the present case, the defendant in Hamman cooperated to the fullest after he had been detected and he pleaded guilty at the earliest opportunity. There was extensive favourable character evidence. The Court of Criminal Appeal held that a sentence of two years imprisonment to be served by way of periodic detention was manifestly inadequate. However, considering the hardship of imposing a full-time custodial sentence on a respondent after he had become adjusted to and had served in part a sentence of imprisonment by way of periodic detention, the Crown appeal was dismissed. Sheller JA addressed the sentencing considerations in the following terms: General deterrence is a predominant consideration when sentencing for offences of defrauding the revenue.