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Accident Compensation Cases

Hogan v Ministry of Social Development (HC, 22/07/05)

Sentencing Tracker

Offender:
25, Female
Principal Offences:
Making false statement in order to obtain benefit (s 127 Social Security Act 1964) (x3)
Dishonestly using document with intent to obtain pecuniary advantage (s 229A Crimes Act 1961) (x3)
Plea:
Guilty
Custodial Sentence:
6 months
Appeal:
Custodial Sentence Upheld
Home Detention:
Leave to apply Granted
Aggravating Factors:
Length of time over which offending took place - 1 year 5 months in total
Mitigating Factors:
Guilty pleas
Lack of previous convictions
Personal circumstances - 2 children
Previous Convictions:
None
Notes:
Offender Hogan
Offender:
31, Female
Principal Offences:
Offence under Social Security Act 1964 (x4)
Dishonestly using document with intent to obtain pecuniary advantage (s 229A Crimes Act 1961) (x2)
Plea:
Guilty
Custodial Sentence:
6 months
Appeal:
Custodial Sentence Upheld
Home Detention:
Leave to apply Granted
Aggravating Factors:
Length of time over which offending took place - 2 years 6 months
Mitigating Factors:
Guilty pleas
Lack of previous convictions
Personal circumstances - 3 children
Previous Convictions:
None
Notes:
Offender Hawkins
Offender:
32, Female
Principal Offences:
Crimes Act 1961 offences (x4)
Making false statement in order to obtain benefit (s 127 Social Security Act 1964)
Plea:
Guilty
Custodial Sentence:
9 months
Appeal:
Custodial Sentence Upheld
Home Detention:
Leave to apply Granted
Aggravating Factors:
Length of time over which offending took place - 3 years 1 month
Mitigating Factors:
Guilty pleas
Lack of previous convictions
Personal circumstances - 3 children
Support of church
Previous Convictions:
None
Notes:
Offender Sapati
Offender:
25, Female
Principal Offences:
Social Security Act 1964 offences (x2)
Dishonestly using document with intent to obtain pecuniary advantage (s 229A Crimes Act 1961)
Plea:
Guilty
Custodial Sentence:
9 months
Appeal:
Custodial Sentence Upheld
Home Detention:
Leave to apply Granted
Aggravating Factors:
Length of time over which offending took place - 2 years 7 months
Mitigating Factors:
Guilty pleas
Voluntary confession
Lack of previous convictions
Personal circumstances - 2 children
Previous Convictions:
None
Notes:
Offender Kupa
Offender:
Male
Principal Offences:
Party to obtaining by false pretences (s 66 and s 246 Crimes Act 1961)
Plea:
Guilty
Custodial Sentence:
4 months
Appeal:
Custodial Sentence Upheld
Home Detention:
Leave to apply Granted
Mitigating Factors:
Guilty plea
Voluntary confession
Lack of previous convictions
Previous Convictions:
None

Judgment Text

JUDGMENT OF THE COURT (reserved): 
Gendall, MacKenzie JJ
[1]
These were five appeals brought against sentences of imprisonment (with leave being granted to apply for home detention) imposed in the District Court at Hastings on 9 May 2005 on offenders who pleaded guilty to various charges of using documents with intent to defraud and to obtain a pecuniary advantage in breach of s 229A of the Crimes Act 1961 and of making false statements to mislead and wrongfully obtain benefits under the Social Security Act 1964. Amounts dishonestly obtained ranged from $22,766 to $48,586. All appellants were first offenders and sentences ranged from 4 months' to 9 months' imprisonment with leave to apply for home detention. 
[2]
At the request of the informant and appellants' counsel a Full Court was convened to hear these appeals because it was contended or suggested that there were divergent High Court decisions relating to what was said to be “appropriate tariffs for benefit fraud”. As we discuss later, we do not think that any conflicting approaches have been adopted in recent times. 
[3]
The personal circumstances of each appellant contained nothing unusual apart from the fact that they were first offenders and had dependent children, (except Stephen Hapi who was charged as a party to the offending of his former partner Ariana Kupa). In summary form the relevant features in respect of each appellant are as follows: 
Appellants 
Charges 
Amount 
Duration of offending 
Age 
Children 
Sentence 
Veronica Faye Colleen Hogan 
$22,766 
2 years 5 months 
25 
6 months. Leave to apply for home detention 
Judith Leeanne Hawkins 
$22,800 
2½ years 
31 
6 months. Leave to apply for home detention 
Antonia Sapati 
$48,586 
3 years 1 month 
32 
9 months. Leave to apply for home detention 
Ariana Valda Kupa 
$48,322 
3 years 
25 
9 months. Leave to apply for home detention 
Stephen Boyd Hapi 
1 (as a party to counselli ng and aiding Kupa) 
$38,600 
2 years 5 months 
27 
4 months. Leave to apply for home detention ”
[4]
At the conclusion of the hearing we advised counsel that each appeal would be dismissed as it had not been established that any one of those sentences, as it related to the individual appellant, was manifestly excessive and that our reasons in writing would follow. We now record those. 
[5]
The essential submission presented in support of each appeal was that the sentencing Judge wrongly applied and interpreted earlier High Court decisions erroneously and gave undue or disproportionate weight to the purpose of general deterrence when imposing prison sentences which, it was argued, were manifestly excessive in each case. 
[6]
There was some general submission that this Court had considered appropriate “tariffs” for what was called “benefit fraud” in sentencing the appeal cases of Sulusi v Police 3/9/04, Wild J, HC Napier AP29/04 where an appeal against a sentence of 6 months' imprisonment was dismissed, and McKay v Police 16/11/04, Miller J, HC Wellington CRI-2004-441-49 in what was said to be a similar case, a sentence of 6 months' imprisonment was varied because the appeal Judge considered it to be manifestly excessive in the circumstances. Counsel in the District Court, and before this Court, placed considerable emphasis upon the different outcomes in those cases. They relied upon the decision of Miller J in support of their appeals. 
[7]
We need to say now that the High Court has not considered “appropriate tariffs” for fraud sentencing and in our view it is not appropriate that it deliver a “tariff” judgment. That is a task for the Court of Appeal. Certainly the cases of Sulusi and McKay are not tariff cases. They are simply examples of sentencing appeals which led to different outcomes. 
[8]
Caution is required when comparing one sentencing case with another at first instance and the appellants are not assisted by a comparison between Sulusi and McKay. The sentencing Judge endeavoured to reconcile those cases but it does not appear to us that the Judges in fact adopted different approaches and in matters of principle there are no relevant distinctions. 
[9]
The District Court Judge in his sentencing notes in the present cases observed there was no presumption in favour of imprisonment but referred to what he saw was a long-standing support for the view that terms of 6 to 9 months' imprisonment were appropriate where amounts of over $15,000 had been obtained through fraud and the offending had continued over a significant period. He referred to evidence that was presented as to the prevalence of this type of fraud in the community and said that it established that substantial amounts were obtained by benefit fraud and that the Court had a responsibility to maintain the deterrent approach to matters which had been endorsed over many years. 
Should “welfare fraud” be regarded differently to other fraud? 
[10]
In our view the answer must be “No”. Cases of fraud and dishonesty, whether dealing with charges brought under the Crimes Act 1961, other legislation such as the Fisheries Act 1983, Social Security Act 1964, Injury Prevention, Rehabilitation and Compensation Act 2001, and the like, involve such a wide variety of circumstances in which such offending occurs that it is inappropriate for tariffs to be set in fraud sentencing — R v Rose [1990] 2 NZLR 552; (1990) 5 CRNZ 638 (CA)Has partially negative history or cases citing, but has not been reversed or overruled[Yellow] , at p 555; pp 640-641. 
[11]
Before we discuss some of the cases, we emphasise our view that fraud on the Ministry of Social Development is not different, for sentencing purposes, to any other fraudulent use of documents to illegally obtain money from agencies, individuals, or companies. In all cases the property offending becomes more serious, obviously, when it extends over a lengthy period and involves large amounts of money. 
[12]
Of course, there may be strong similarities in factual circumstances where persons fraudulently obtain money from the Ministry of Social Development, and there is a general desirability of consistency which is simply reflected in s 8(e) of the principles of the Sentencing Act. But fraudulent use of documents to obtain pecuniary advantages can occur in a wide range of circumstances, such as fraud upon insurance companies where false claims are made; fraud on the Accident Compensation Corporation where fraudulent claims are made; false claims to entitlements under the Student Loans Scheme; claims against employers, whether in private or private sector, for falsely inflated expenses' refunds; fraudulent use of loan application or valuation forms to “hydraulic” values so to defraud banks on mortgage financing; systematic fraud by employees defrauding employers and so on. For that reason we think that whilst the general description of “benefit” or “welfare” fraud may in a general way describe the type of offending, its relevance is limited only to its reference to the department that is defrauded. If it was that an attitude had developed that fraud on the welfare system by first offenders somehow was less serious than other types of fraud that distinction was inappropriate. Just as fraud involving public funds is not of itself more serious than other types of fraud (see R v Prior (1993) 10 CRNZ 147 (CA)Has partially negative history or cases citing, but has not been reversed or overruled[Yellow] ) so too it is not of itself less serious than other types of fraud. The tests or approaches to be adopted for sentencing fraud in circumstances such as these should be no different to that adopted in respect of other fraud cases. The starting point has to be the nature of the crime, its seriousness, the amount obtained over what period, other aggravating features, personal circumstances of the offender and all those matters which are set out as being required to be taken into account pursuant to s 8. They must then be viewed as in the context of the s 7 purposes which may be relevant to the offending and a judgment reached by the sentencing Judge based upon a combination of all those matters which are regarded as relevant to the individual case. The prohibition of imposing sentence of imprisonment contained in s 16 must be kept in mind although in the end if the relevant purposes of sentencing cannot be achieved by a sentence other than imprisonment and no other sentence would be consistent with achieving that end after applying the s 8 considerations, then a Judge in any individual case is quite entitled to impose a term of imprisonment. 
Historical approaches 
[13]
We now refer to some of the well-known authorities. 
[14]
In Faiers v Police (1989) 5 CRNZ 186Has Cases Citing which are not known to be negative[Green]  Anderson J (as he then was) identified some considerations for sentencing for fraud of this nature. He said: 
“(3)
It may be that this type of offending is no more prevalent than any other reprehensible acts in the community but it is a type of offending which is manifestly easy to accomplish and abundant in its ill-gotten rewards. 
(4)
It is in the nature of this type of crime that it can continue for a long period before it is discovered, if ever, and the very difficulty of discovery increases the community's losses. 
(5)
The community assists its less fortunate members by support from public funds in the expectation that the recipients will be honest. The difficulty of locating persons who commit these frauds raises a greater necessity for honesty and the greater expectation that trust will be honoured. 
(6)
In cases such as this if the judicial response were to impose periodic detention or community care or some other community based sentence after years and years of fraud, there would be an incentive on the part of some people to commit the fraud because the financial gains would be so favourably disproportionate to the price paid, if ever the recalcitrant is discovered. 
(7)
This is not a case of a passing act of dishonesty but involves a chronic and habitual repetition of dishonesty for significant financial gain at the community's expense. Where the offending is so persistent and so extended in time, the necessity for deterrent sentencing becomes very clear. ”
[P 187]
[15]
Later, in R v Goodin (1991) 8 CRNZ 77Has Cases Citing which are not known to be negative[Green] , Penlington J said that sentencing trends which appeared to him to emerge from Social Security Act 1964 prosecutions, were: 
“(1)
This kind of offending is regarded for sentencing purposes as theft from the community and a breach of trust as between the citizen and the State in that the rationale of the Social Welfare benefit system is that the State helps the needy from public funds and that its proper operation is dependent upon the honesty and truthfulness of the claimants against those funds. 
(2)
Where the amount of money fraudulently obtained and the length of time of the fraudulent conduct are significant the Court has found special circumstances for the purposes of s 6 and that because of those circumstances any other sentence than a full-time custodial sentence has been held to have been clearly inadequate or inappropriate. 
(3)
This kind of offending for sentencing purposes has been said to raise policy considerations of deterrence and public protection. These factors have been brought into account as special circumstances for the purposes of s 6. 
(4)
While the Court has affirmed that each case must be decided on its own facts it is noticeable that prison sentences in the range of between 6 months and 9 months have been the invariable sentences imposed where the amount fraudulently obtained has exceeded $15,000 and/or where the offending has extended over a period of several years irrespective of the personal circumstances of the offender. 
(5)
Below these limits of time and monetary amount the personal circumstances of the offender have been given more weight in the Court's assessment of whether a full-time custodial sentence would be clearly inadequate or inappropriate. 
(6)
Even where the amounts which have been fraudulently taken have been as low as $5,000 to $7,000 full-time custodial sentences of 6 months have been imposed and upheld leading inevitably to the conclusion that in those cases any other sentences than a full-time custodial sentence would have been clearly inadequate or inappropriate. 
(7)
Certainly, the financial ability and willingness of an offender to make reparation in whole or in substantial part before or at the time of sentencing has been considered to be a significant factor in bringing the Court to a point where it is unable to hold that a sentence other than imprisonment would be plainly and obviously inadequate and inappropriate. ”
It has to be kept in mind that Penlington J was dealing with the question of “special circumstances” so as to make a non-custodial sentence clearly inadequate or inappropriate in terms of the then s 6 of the Criminal Justice Act 1985. 
[16]
A little later, in Edgar v Police (1991) 7 CRNZ 659Has partially negative history or cases citing, but has not been reversed or overruled[Yellow]  Williamson J questioned the validity of the approach by Penlington J observing that imprisonment was not an inevitable sentence for persons who made false statements in order to obtain social welfare benefits but that each case and circumstances of each offender had to be carefully examined if a just sentence was to be arrived at. That of course is still the position. Williamson J then went on to say: 
“imprisonment should not be assumed to be the appropriate penalty for a person convicted of an offence under s 127 Social Security Act 1964. Indeed, especially because of s 6 Criminal Justice Act 1985, the presumption should be against imprisonment. It follows that I disagree with the principles often applied by this Court following the Faiers decision. In my view it is only if the aggravating features of a particular offence or offences or offender are so exceptional that they establish special circumstances that imprisonment may be the appropriate penalty. ”
[P 669]
[17]
Williamson J was dealing in that case only with a charge which involved a maximum penalty of one year's imprisonment pursuant to the Social Security Act 1964 and (as was Penlington J in R v Goodin, above), likewise had to determine whether the fraud in that case amounted to “special circumstances” under the then s 6 of the Criminal Justice Act 1985 so as to justify imprisonment. 
[18]
Subsequently, the Court of Appeal in R v Prior (1993) 10 CRNZ 147 (CA)Has partially negative history or cases citing, but has not been reversed or overruled[Yellow]  endorsed the view of Williamson J, which we have already expressed, that fraud involving public funds is not of itself more serious than other types of fraud so as to amount to “special circumstances” under the then s 6. But the Court of Appeal went on to say: 
“This is not to say that there is no room for the imposition of deterrent sentences where they are called for. That point was strongly made in Faiers. The Court must of course be satisfied that deterrence is in fact called for; but even where it is it must still pay regard to s 7 [desirability of keeping offenders in the community so as to keep any term of imprisonment short]. In this kind of case, the very fact of imprisonment will often of itself be a severe punishment. ”
[P 150]
[19]
With the introduction of the Sentencing Act 2002 it has been said that a more systematic approach is required than might have formerly been the case — see ACC v Wharekura 22/4/04, Randerson J, HC Hamilton CRI-2003-419-61. That was a case of fraud on the ACC under the Accident Insurance Act 1988 and Randerson J referred to the relevant purposes being rehabilitation and deterrence with the principle of consistency with other sentences balanced against the need for the least restrictive outcome. That fraud involved a sum in excess of $26,000 and the Judge said that in the usual case a sentence between 6 to 9 months' imprisonment would have been appropriate but because of a willingness to make reparation and actual rehabilitation, and that it was a Crown appeal the fine was increased from $4,000 to $10,000. 
[20]
More recently in Ministry of Social Development v Gordon 4/5/05, John Hansen J, HC Invercagill CRI-2005-425-9, his Honour noted the importance of deterrence and said, where there were acts of dishonesty over 3 years involving fraud of $41,640, that a starting point of 10 months' imprisonment would be appropriate. Because of unusual strong mitigating circumstances the informant's appeal against a sentence of community work was not disturbed. The Judge said that “benefit fraud” was a major problem within New Zealand, which was a pernicious and insidious offence because of the difficulty of detection. He emphasised that deterrence was a major feature or factor to be considered, and whilst individual circumstances had to be taken into account mitigating features in similar cases were common and a term of imprisonment for serious offending was usual and appropriate. 
[21]
In R v Prescott 1/11/00, CA360/00, the Court of Appeal was considering ACC fraud involving submitting fictitious claims over a 3-year period to obtain $18,528. It dismissed an appeal against a sentence of 6 months' imprisonment, referring to R v Prior as a case concerned with a directly equivalent field of social welfare fraud where, but for a disparity complication, a sentence of 6 months' imprisonment would have been appropriate. The Court referred to common features that the appellant was a first offender and the effect of whom imprisonment on her children was a “sad but inevitable consequence of offending at this level”
[22]
Other Court of Appeal decisions such as R v Harlen (2001) 18 CRNZ 582; (2001) 6 HRNZ 440 (CA)Has partially negative history or cases citing, but has not been reversed or overruled[Yellow] , R v Beech 6/12/01, CA314/01 and R v Creeks 23/6/04, CA26/04 are examples of sentences of imprisonment being upheld, although imposed on first offenders with young children for serious fraudulent actions over extended periods. The crimes were (as here) under s 229A of the Crimes Act 1961, and those terms of imprisonment were between 15 and 18 months' imprisonment, although the amounts involved were in excess of $80,000. 
[23]
Even more recently than Sulusi and McKay there is another High Court example in Talipope v Ministry of Social Development 30/5/05, Fogarty J, HC Christchurch CRI-2005-409-87 where the Judge concluded that in a fraud of this kind an appropriate starting point would be in the order of 9 months' imprisonment where the amount involved was $15,459 and the appellant was a pregnant mother with care of a 4-year-old child. Notwithstanding those mitigating features a sentence of 8 months' imprisonment with leave to apply for home detention was upheld on appeal. 
General comments on the authorities 
[24]
As we have said since the passing of the Sentencing Act there has been a more systematic approach to sentencing generally. A restriction against imposing a sentence of imprisonment remains, but in our view not as forcefully as expressed in the previous s 6 of the Criminal Justice Act 1985, as it related to property offences. It is trite but it has to be repeated, that all cases are different as are all offences and offenders. The starting point must be to reflect the nature of the offence and its seriousness, and the culpability of the offender, balanced with a consideration of the nature and circumstances of the offender. Section 7 Purposes together with s 8 Principles have to be applied in a balancing exercise by the sentencing Judge so as to determine those which have relevance to the crime for which sentence is being passed, and to the individual offender. Some factors might outweigh others depending on the individual circumstances. A need for rehabilitation may in some circumstances have greater weight than a need for general or specific deterrence. The degree of the gravity of the offence, and amount illegally obtained may reflect the degree of culpability of an offender, and be such as to outweigh the desirability of not imposing imprisonment where such is necessary. The sentencing exercise is a matter of judgment and weighing many factors and not a mathematical exercise. In some situations one or a combination of factors or purposes may have to be given greater weight than others depending on the sentencing exercise being undertaken. 
[25]
What we have said is no more than what the Court of Appeal has been saying for years. 
The outcome in the present cases 
[26]
In the present cases, the sentencing Judge noted that these offences were also charges under the Crimes Act 1961 for which a maximum penalty of 7 years' imprisonment existed. He correctly identified that theft of public funds does not fall into a special category but clearly took the view that deterrent sentences may be required where the factual circumstances are such that amounts in excess of $15,000 are obtained over a long period but that a decision to imprison “will require individual consideration of the circumstances of each case”. He said: 
“The court will consider each case according to the history and personal circumstances of the offender, including his or her ability to pay reparation, the total amount of funds which have been misappropriated or stolen and the period of time over which the offending took place and the number of component acts of dishonesty which have been involved. ”
We cannot find any error in that approach. 
[27]
Obviously the Judge was, however, placing emphasis on the question of deterrence when he said: 
“Benefit fraud is at a worrying level and appears to be achieving something of a measure of condemnation in certain sections of the community … Given the number of benefit cases in this case some tariff structure must be maintained if anything resembling consistency is to be achieved. Individual sentencing cannot proceed in a vacuum and the amount of money involved, though not for the exclusion of other matters, is an appropriate starting point in the search for a proper sentence. ”
[28]
The Judge referred to the evidence which established the very substantial amounts that had been obtained by such fraud and no doubt viewed the evidence of the prevalence of the offending in the community as requiring a deterrent sentence. We do not think that in the circumstances of any of these cases that such an approach was wrong. 
[29]
If in adopting such an approach however, a sentencing Judge imposes a sentence of imprisonment that is outside the permissible range of boundaries then it will become manifestly excessive. But it is not manifestly excessive to impose a short period of imprisonment ameliorated by the granting of leave to apply for home detention in any of the circumstances of the appeals that we have had to consider. 
Deterrence 
[30]
Of course to impose a deterrent penalty does not necessarily require imprisonment, see Katoa v DSW (1991) 7 CRNZ 44Has Cases Citing which are not known to be negative[Green] . But if the culpability of an offender and the seriousness of the particular crime reaches a certain level that only imprisonment can provide a sufficient deterrence then there is no error in principle in imposing such imprisonment. Although there has been some debate as to whether imprisonment or stern penalties in fact deter others to committing crimes, this will always remain an area where the production of evidence is notoriously difficult, if not impossible. The fact remains that deterrence is regarded as a necessary feature or purpose of sentencing, and is so recognised for in s 7(1)(f). As a matter of common sense, if repetitive serious offending over a significant period might be seen to be “worth it”, in that only a minor or light penalty might be expected upon apprehension, then those who might be tempted to commit such crimes might be more inclined to do so. There is a view that stern sentences may be of particular deterrent value if offending is premeditated rather than impulsive so that an offender may evaluate the risk of offending and likely severity of punishment — R v Latta [1985] 2 NZLR 504; (1985) 1 CRNZ 462 (CA)Has Cases Citing which are not known to be negative[Green] , at p 506; p 464. 
Some features of fraud pattern 
[31]
As we have said there is such a diverse range of circumstances from which money is obtained by fraud that it is not possible to identify features common to all. In frauds on the Department of Social Development, or ACC, or other public Government bodies, which dispense funds there are, however, some similar fact patterns. One is the repetitive nature of the fraudulent acts. Those who obtain the domestic purposes benefit fraudulently are obviously young mothers (or sometimes fathers) who have children and who are often of otherwise good character. By fraudulent means they obtain the funds. They may have partners who do not support them so they are dishonest as to the existence of their partners. The partners themselves may equally be culpable in the offending through being aware and taking advantage of it. It is said that sometimes the system is being defrauded by (generally) those women in an attempt to alleviate financial burdens of the family. But sometimes it is for pure greed. Good motives are always advanced after apprehension. But, as one of the present appeals illustrates, the dishonesty related to the offender working and not disclosing that fact, and obtaining fraudulently the benefit of two incomes. Another of the present offences involved a mother who obtained funds, whilst being in fact supported by her husband, where assets of the family included two vans and a computer. But there will usually be common mitigating features however such as the offenders being first offenders of otherwise good character with children. Balanced against that, it is often the fact that a domestic purposes benefit, or increased benefit, is obtained by reason of the existence of children. 

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