Reported Decision : (2002) 134 A Crim R 142 New South Wales Court of Criminal Appeal CITATION : Regina v Reece Evan Wayne [2002] NSWCCA 426 FILE NUMBER(S) : CCA 60231/2002 HEARING DATE(S) : 15/10/02 JUDGMENT DATE : 15 October 2002 PARTIES : Regina Reece Evan Wayne JUDGMENT OF : Hodgson JA at 39; Buddin J at 1; Smart AJ at 33 LOWER COURT JURISDICTION : District Court LOWER COURT FILE NUMBER(S) : 02/11/0237 LOWER COURT JUDICIAL Nield DCJ OFFICER : COUNSEL : M Bracks (Crown) HK Dhanji (Applicant) SOLICITORS : Commonwealth Director of Public Prosecutions Giddy & Crittenden (Applicant) CATCHWORDS : Appeal against severity - social security offences - voluntarily ceasing fraudulent activities - significance of pecuniary penalty order - no basis for intervention. LEGISLATION CITED : Crimes Act 1914 (Cth) Proceeds of Crime Act 1987 (Cth) R v Allen (1989) 41 A Crim R 51 R v Bacon [2000] NSWCCA 549 R v Conway (2001) 121 A Crim R 177 CASES CITED: R v Lopez [1999] NSWCCA 245 R v Purdon (NSWCCA 27 March 1997 unreported) Hunt CJ at CL R v Sopher (1993) 70 A Crim R 570 R v Winchester (1992) 58 A Crim R 345 DECISION : Leave to appeal granted. Appeal allowed to the extent only that the condition of the recognisance referred to by the sentencing judge that there be actual payment of the pecuniary penalty be deleted. Otherwise the sentence is confirmed. IN THE COURT OF CRIMINAL APPEAL 60231/02 HODGSON JA BUDDIN J SMART AJ TUESDAY 15 OCTOBER 2002 REGINA v REECE EVAN WAYNE Judgment 1 BUDDIN J: The applicant pleaded guilty before a magistrate to three offences of defrauding the Commonwealth by receiving payments of the Newstart Allowance to which he was not entitled. Pursuant to s 29D of the Crimes Act 1914 (Cth) each offence attracts a maximum penalty of 10 years' imprisonment and/or a fine of $110,000. The first count spanned the period between about 14 May 1997 and about 11 November 1997. The second count spanned the period between about 4 July 1998 and about 20 April 2001. In respect of each of these counts the applicant falsely claimed the Allowance in the name of Kenneth James Pearse. The third count spanned the period between about 4 January 1999 and about 5 February 2001 and was claimed by the applicant in the name of Reece Evan Wayne. 2 The applicant adhered to his pleas of guilty when he appeared for sentence in the District Court on 8 April 2002. In respect of count 1 he was sentenced to imprisonment for six months to commence on that date and to expire on 7 October 2002. In respect of count 2 he was also sentenced to imprisonment for six months but this sentence was ordered to commence on 8 October 2002 and to expire on 7 April 2003. In respect of count 3 he was sentenced to imprisonment for one year and seven months to commence on 8 September 2002 and to expire on 7 April 2004. Pursuant to s 20(1)(b) of the Crimes Act, the sentencing judge directed that the applicant be released on 7 April 2003 upon entering into a recognisance to be of good behaviour for the balance of the sentence. The sentence in respect of count 3 was thus concurrent with the sentence imposed in respect of count 2 but was partly cumulative upon the sentence imposed in respect of count 1. The overall effective sentence was accordingly one of 2 years' imprisonment, of which 12 months were to be served in custody. It may be noted that the sentencing judge arrived at those sentences after having made the adjustment required by s 16G of the Crimes Act. Pursuant to s 26 of the Proceeds of Crime Act 1987 (Cth), an order was made by the sentencing judge requiring the applicant to pay to the Commonwealth the sum of $50,128.73, a figure which represented the value, at the time of sentence, of the benefits derived by the applicant from the commission of these offences. The sentencing judge in fact made it a condition of the recognisance that the applicant pay the pecuniary penalty order. 3 During the period between July 1987 and January 2001 the applicant was almost continuously in receipt of either unemployment benefits or the Newstart Allowance in the name of Kenneth James Vickers. In order to obtain the allowance, the applicant was obliged to lodge an application form each fortnight with a branch of the relevant department. Payments of the allowance were then credited to the applicant's account with the National Bank in that name. It was the name by which he had been known until he was approximately 12 years old, his mother having, when he was quite young, formed a de facto relationship with a man named Vickers. The applicant subsequently changed his name and in due course settled upon the surname of Wayne. 4 Because the applicant was in receipt of benefits in the name of Kenneth James Vickers, he was not entitled to receive any other benefits. So far as the Newstart Allowance which the applicant received in the name of Kenneth James Pearse (the surname Pearse being his mother's maiden name) was concerned, the amount which the applicant obtained was $27,947.59. In respect of the Newstart Allowance which he obtained in the name of Reece Evan Wayne, he received a total of $17,995.72. The total amount of the fraud upon the revenue was thus $45,943.31. 5 On 2 May 2001 members of the Australian Federal Police executed a search warrant upon the applicant's premises which were located on a farm in the central west of New South Wales. A large number of documents which were variously in the names of Vickers, Pearse and Wayne were discovered. In those circumstances and given the other evidence available to it, the Crown was able to present a powerful case against the applicant notwithstanding the fact that he declined to participate in a record of interview,. 6 The applicant gave evidence during the course of the sentence proceedings. He said that in 1996 he and his de facto wife jointly purchased a farm near Dubbo. Shortly after the purchase of the property the oat crop on the property was destroyed by flood. The owners of a neighbouring property were then killed in a car accident. As a consequence the applicant and his wife thereafter undertook to look after their three teenage children. 7 He gave evidence that he went to the New Start Office in Dubbo in order to apply for flood relief. He said that he was advised to apply for the New Start Allowance. He decided to accept that advice notwithstanding the fact that he was already receiving benefits in another name. The farm proved not to be financially viable, and the applicant then also applied for benefits in the name of Wayne. Not surprisingly in the circumstances the sentencing judge rejected a submission that the offences had been committed, not out of greed, but because of "a pressing need." No challenge is made to that finding. 8 The sentencing judge found that the offences had been committed quite deliberately. Moreover his Honour concluded that the applicant had embarked upon "a continuous course of conduct over a relatively long period of time." This Court has repeatedly said that it is only in the most exceptional of cases of this type that a non-custodial sentence may be imposed. Ordinarily salutary penalties are called for. 9 In R v Sopher (1993) 70 A Crim R 570 this Court said that: The element of general deterrence is important. The fraud is often difficult to detect and considerable public money and resources are expended in that regard. Social security payments are for those in need. It is important that only honest claims are made. The claimants for and recipients of such payments are often in pressing and impoverished circumstances and the avoidance of the delay caused by extensive checking of claims is important. (at 573) 10 In R v Purdon (NSWCCA 27 March 1997 unreported) Hunt CJ at CL (with whom McInerney J and Donovan AJ agreed) said: The rationale stated for the rule that a custodial sentence is to be imposed for social security fraud except in very special circumstances is that the offence is easy to commit but difficult to detect, it is widespread, and the introduction of more checks upon applicants for social security would cause delays in the payment of benefits and therefore hardship to those whose need is urgent. It has also been said that the rule reflects a concern for the protection of the revenue, but I would prefer to express it as a concern for the additional burden upon all taxpayers who shoulder the heavy burden of providing the funds for the social security system to operate and the even heavier burden created by the widespread abuse to it by frauds such as these. The rule is not based upon the fact that many of the frauds are perpetrated for motives of greed rather than need. Both types of fraud are widespread. They are equally difficult to detect. If the fraud is based upon a perceived need, a custodial sentence must be expected except in very special circumstances. If the fraud is based on greed, the custodial sentence will be longer. (at 5) The applicant does not submit, and nor could he have submitted, that this was an exceptional case. 11 The applicant is now aged 43. He is a qualified mechanic and had worked in that capacity for a number of years prior to acquiring the farm. He pleaded guilty to the offences at an early stage as a result of which the sentencing judge allowed a discount of 20% from the otherwise appropriate sentence. Furthermore the sentencing judge found that the applicant was genuinely contrite. In coming to that conclusion, the sentencing judge relied not only upon the remorse which the applicant expressed in the witness box but also upon the fact that it was also demonstrated by his plea of guilty and by his consent to the making of the pecuniary penalty order. See Crimes Act (Cth) s 16A(2)(f)(i). 12 The applicant had been before the courts on one previous occasion in relation to an inconsequential offence, in respect of which the charge was dismissed without conviction. The sentencing judge quite properly disregarded that matter and accordingly proceeded to sentence the applicant as if he were of prior good character. 13 The sentencing judge formed the view that the applicant was unlikely to re-offend. His Honour also said, "I doubt that he need do any more in his rehabilitation." This conclusion was no doubt attributable, in part at least, to the fact that the applicant had made considerable efforts to obtain further qualifications by undertaking a variety of TAFE courses in order that he might start up a workshop to service trucks and agricultural equipment in the local area. 14 The applicant's de facto wife suffers from systemic lupus, a condition which is exacerbated by psychological or emotional stress. In respect of that matter the sentencing judge said, "I do not doubt that she will suffer greatly by a prison sentence being imposed upon the offender. It is a matter to be taken into account in determining an appropriate sentence." 15 In relation to Commonwealth offences, the proportion which the custodial component of the sentence bears to the overall sentence is not constrained, in the same way as it is in respect of State offences. Accordingly the ratio between the custodial part of the sentence and the head sentence itself is "at large." Nevertheless a ratio of only 50% is not usually applied. In those circumstances it can be safely assumed that the sentencing judge was of the view that the subjective features of the applicant's case warranted, and should receive, particular consideration. 16 The applicant submits that "the sentencing judge erred in sentencing the applicant on the basis that the offences continued until they were discovered and would have continued had they not been discovered." 17 The evidence disclosed that the applicant, as at the time of his arrest, had not received payments in the name of Wayne for a period of about three months. Furthermore the applicant gave evidence that he intended in the near future to stop receiving any benefits at all. In those circumstances the applicant submits that the sentencing judge fell into error when he made the following remarks: Also, although I do not know, but the offender's counsel did not reject any comment, I suppose that, had the offender's frauds not been discovered, however they were discovered, the offender would have continued to receive the payments of the allowance in the names of Vickers, Pearse , and Wayne. 18 The applicant placed reliance upon this court's decision in R v Lopez [1999] NSWCCA 245 in which Adams J, with whom Spigelman CJ and Abadee J agreed, said: There is substantial difference between the culpability of a person who voluntarily ceased fraudulent behaviour on the one hand and that of a person on the other hand who continues that behaviour until it is stopped by discovery of the crime. It seems to me that the fact that the appellant voluntarily ceased his crimes, which does not commonly occur in this area, it is a significant fact of mitigation, not only because it shows an acknowledgement of wrongdoing to some extent and supports the conclusion that the fraud arose out of need rather than greed, but it is in the public interest to encourage offenders such as this to cease their activities. Full contrition would only be demonstrated by voluntarily disclosing the wrongdoing to the relevant authorities and seeking to make good the sum defrauded. Even so, bringing the offences to an end voluntarily seems to me, in the public interest, to be a significant fact which should be reflected in sentence by a real discount, although circumstances vary so greatly that the extent of such a discount cannot be specifically calculated. (at paras 17-18) See also R v Bacon [2000] NSWCCA 549. 19 The applicant submits that not only did the sentencing judge make "a significant factual error" but that his own actions entitled him to a "significant [degree] of mitigation." 20 There is no issue about the fact that, as I have said, the applicant had not claimed any benefits for a period of three months. Nevertheless no submission concerning this aspect of the matter was apparently made to the sentencing judge. Moreover had the misapprehension under which the sentencing judge is now said to have been labouring assumed any real significance then it could, and should, have been brought to his attention either at the time at which his Honour initially raised the matter or at an appropriate time during the course of the Remarks on Sentence. It would have been a simple matter to correct. Counsel appearing on behalf of the Crown bears just as much responsibility in matters such as this as does the representative of the offender. 21 Be that as it may, the circumstances in Lopez are far removed from the facts of the present case. In Lopez, a 22 year old immigrant from Peru had received nearly $24,000 in payments from the Department of Social Security to which he was not entitled. He had falsely claimed those payments in one name only. The sentencing judge appeared to accept that he was motivated by need rather than greed. The sentencing judge said quite explicitly that there was no indication that the offender, but for his arrest, was going to stop claiming payments. This Court found that that was a material error since the offender had in fact voluntarily desisted from his fraudulent behaviour for a period which was in excess of 12 months before he was approached by the authorities. Thereafter there was a substantial delay in commencing proceedings against that offender. Indeed by the time that action was actually initiated, the offender had already repaid over $5,000 by way of reparation. In those circumstances this Court concluded that it was a case in which the considerations referred to in R v Winchester (1992) 58 A Crim R 345 could, and should, apply. 22 The most significant point of distinction is of course that whereas in Lopez the offender's criminal activities had completely ceased, that could not be said in the case of the applicant. True it is that the benefits in the name of Wayne had not been claimed for a period of 3 months but the applicant had continued to make claims and receive benefits in the name of Pearse right up until the time of his arrest. Indeed he had done so for an uninterrupted period of almost three years. In those circumstances, it appears to me that the applicant was entitled to very little consideration for having apparently voluntarily desisted (at least at that stage) from continuing to claim the additional benefits in the name of Wayne. Nor in the overall circumstances of the case could much credence have been placed upon his claim that he intended in the future to cease making any further claims. I would be inclined to the view that that is the conclusion at which the sentencing judge arrived rather than infer, as the applicant submitted, that his Honour simply overlooked the matter. After all, the applicant had in the past, stopped making and receiving claims in the names of Pearse (and Vickers for that matter) for a period of time only to subsequently resume making them. 23 There is another aspect of Lopez which is relevantly different from the present case. The sentencing judge's remarks in that case made it quite clear, as I have observed, that the offender was being sentenced upon the basis that the offences would have been continued but for the intervention of the authorities. There is, in my view, however a degree of ambiguity about his Honour's remarks in the present case particularly when they are read in the overall context of the paragraph of the Remarks on Sentence in which they appear. Put simply, given the guarded fashion in which the remarks are expressed, I am not persuaded in the final analysis, that his Honour did in fact proceed upon the basis, as was contended by the applicant, that the offending conduct would have continued but for the discovery of his frauds. However, even if I am wrong in making that assessment I would not be prepared to conclude, for the reasons I have already given, that any material error has been demonstrated such as would call for this court to intervene. 24 The applicant also complains that "the sentencing judge erred in failing to properly take into account the making of a pecuniary penalty order pursuant to the Proceeds of Crime Act." It is common ground that at the time when he stood for sentence the applicant had repaid none of the money which he had dishonestly received. Nor did the applicant ask for an adjournment of the sentencing proceedings, pursuant to s 18(2) of the Proceeds of Crime Act, until the application for the pecuniary penalty order had been determined. Moreover the applicant concedes that the sentencing judge took into account the fact that he consented to the order being made. He also concedes that the sentencing judge regarded that action on the part of the applicant as being some evidence of his contrition. What is submitted however is that the sentencing judge erred in failing to take into account the fact that restitution was likely to be made and the hardship that would thereby be occasioned. There was evidence before the sentencing judge that the property which the applicant and his wife jointly owned was valued as being worth approximately $250,000. They had taken out a loan with a bank which was secured by way of mortgage over the property. Approximately $140,000 was owing to the bank at the time. The property itself was subject to a restraining order. It was apparent from the evidence before the sentencing judge that the sale of the property would enable the debt to the Commonwealth to be satisfied. The evidence also demonstrated that the sale of the property would entail considerable hardship to the applicant and his wife. We were informed that the property has not yet been sold but that it is anticipated that that will occur after this Court hands down its decision. 25 In R v Purdon supra, this Court said that: The order made under the Proceeds of Crime Act is made relevant to sentencing by that Act itself, but different views are held as to what effect it should have on the sentence. It is difficult to see how the mere repayment of the money fraudulently received should be regarded in itself as a punishment, but the balance of authority in relation to this Act appears to be that the extent to which the order can be complied with is a matter to be taken into account. (at 5) 26 In R v Allen (1989) 41 A Crim R 51, the Victorian Court of Criminal Appeal said: It is commonplace, when sentencing, to take into consideration the value of any goods stolen or destroyed – and not recovered from the offender. Similarly, the courts invariably take into consideration the fact than an offender has returned goods or monies stolen or has made some other form of recompense. Often this is seen, of course, as evidence of remorse, but apart altogether from remorse it is a relevant circumstance when determining the sentence appropriate to the crime. This being so, although an offender may be sentenced before an application for a confiscation order is made, then if at the time of sentencing it is apparent that the profits of the crime are confiscated, it is appropriate to bear that circumstance in mind when sentencing the offender. The weight to be attached for the purposes of sentencing to the fact that a confiscation order has been made is of course an entirely different matter. Often it may be entitled to little weight. But if, for example, the crime was one involving a fraud of some millions of dollars, it might be seen to have some real relevance when sentencing to be aware that a confiscation order had been made that was likely to be effective in the recovery of the amount of the fraud. It may be that for some reason the court may also see that in the very making of a confiscation order, there is something in the nature of punishment wrought. For example, if an offender who has mixed the profits of his crime of fraud with lawfully gotten gains, and purchased a residential property in which his innocent wife and family live with him in apparent respectability, has a confiscation order made apropos that residence, it might been seen that the order, in causing the disruption of his whole family, is in itself a form of punishment to him. The circumstances can vary infinitely, and any attempt to contemplate them in advance is futile. (at 57-8) 27 The Crown prepared written submissions in support of the application for a pecuniary penalty order which it sought from the sentencing judge. Contained within the written submissions were references to both Purdon and Allen. In particular, reference was made in those submissions to the issue of the likelihood that restitution would be made and the fact that the property would be the source of the funds to satisfy the debt. 28 In all the circumstances I am quite unpersuaded that the sentencing judge did other than have proper regard to, and give effect to, the relevant principles relating to the likelihood that the property would be sold. A fair reading of the Remarks on Sentence leads irresistibly to that conclusion. Not only did his Honour specifically refer to the possibility of the farm being sold but, as I earlier observed, he made it a condition of the recognisance upon which the applicant was placed that he pay the pecuniary penalty order. 29 In R v Conway (2001) 121 A Crim R 177, Heydon JA (with whom Bell J and Smart AJ agreed) said: The contention that a discretionary decision on sentencing should be set aside because "insufficient" weight was given to a particular factor is not an easy contention to succeed in. To fail to give any weight to a material matter is an error the evidence of which is relatively easy to demonstrate, and the consequence of which will usually be to cause the decision to be set aside. A contention that there was a failure to give sufficient weight to a particular factor involves a contention that some error occurred in a complex process of weighing that factor with others. However, an error of principle or a result which is plainly indicative of some error can be caused, and evidenced, by a failure to give sufficient weight to a relevant factor. (at 183-4) 30 In my view the applicant has failed to make out either basis upon which he makes complaint. 31 Accordingly I would propose that leave to appeal should be granted but that the appeal (in substance) should be dismissed. 32 HODGSON JA: I agree, subject to one matter which I will raise with counsel in a moment. 33 SMART AJ: I also agree with a similar caveat. 34 HODGSON JA: Smart J has raised for consideration one point that has not been discussed. As Buddin J pointed out, payment of the pecuniary penalty is a condition of the recognisance. The property is now going to be sold. The indications are that it will realise enough to pay the penalty in full. 35 The matter that Smart J has raised is if, perhaps in depressed circumstances with the drought at present, the property happens not to raise enough to pay the pecuniary penalty in full, it would appear that would have the consequence that the applicant would be returned into custody after release, or would not be released after the one year period. 36 The question has been raised whether that is really an appropriate result. If, for example, the drought depressed the value of the property, the sale may turn out not to enable payment of the penalty in full. 37 BRACKS: In the respondent's submission, it would not be necessary for the payment of the money to be made a condition of the recognisance; the order stands alone and the s 20 recognisance should not necessarily be conditioned that the applicant pay the moneys. 38 SMART AJ: So that really should be deleted? BRACKS : Yes. HODGSON JA : That would technically mean the appeal would be allowed to that extent. The Crown accepts that the charge in effect makes it unnecessary to have that as a condition of the recognisance. BRACKS : Yes your Honour. 39 HODGSON JA: The result would be, notwithstanding the view that in substance the appeal should be dismissed, the appeal will be allowed to the extent of removing that condition so that if the property does not realise the amount expected, that will not automatically mean the appellant has to go to prison. For those reasons the order of the Court will be: 1. Leave to appeal granted. 2. Appeal allowed to the extent only that the condition of the recognisance referred to by the sentencing judge that there be actual payment of the pecuniary penalty be deleted. 3. Otherwise the sentence is confirmed. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.