Criminal Law - Judgment and punishment - Orders for compensation, reparation, restitution, forfeiture and other matters relating to the disposal of property - Compensation - Costs incurred in investigation or prosecution - Whether result of offence.

Sentencing Act 1997 (Tas), s65.

R v Monks [2001] TASSC 41, considered.

R v Braham [1977] VicRp 11; [1977] VR 104; Fitzpatrick v R (2004) 146 A Crim R 323, followed.

Judgment Number: [2005] TASSC 87

1 The applicant seeks an order of compensation pursuant to the Sentencing Act 1997 "(the Act"), s68. On 23 June 2004 the respondent was convicted of the crime of attempting to dishonestly obtain a financial advantage, contrary to the Criminal Code, ss252A and 299.

2 The facts giving rise to conviction were stated in the comments on passing sentence in the following terms:

"The son of the offender was involved in a motor vehicle accident which occurred on 10 September 2003. His vehicle was uninsured. When Ms Galvin went to the scene of the accident, she took charge of the exchange of details between the respective drivers and wrote her details on a piece of paper to show that she was the driver of the vehicle that caused the accident. Eventually the other people at the scene agreed not to call the police. Ms Galvin then drove her son back to his workplace and, on returning home, she decided to maintain the impression that it was her vehicle that had been driven by her, which caused the accident. She persuaded a companion to crash the vehicle and return it back to her house. She rang her insurance company and reported the original accident and organised for a tow truck to move the damaged vehicle.

The following day, she contacted police and confirmed that she was the driver of the vehicle. She maintained her version to investigators employed by the insurance company. Quotations were obtained and repairs commenced until the insurer refused to accept the claim. Police were advised and interviewed the accused, who admitted responsibility. She told police that she had acted as she had because her son was uninsured and could not afford to pay for the damage he had caused to the other vehicle."

3 This application for compensation, made during the sentencing hearing, was adjourned for determination. The insurer sought an order:

"That the Respondent pay the Applicant the sum of $4,467.15, reflecting the loss and expense incurred by the Applicant as a result of the successful prosecution and conviction of the Respondent on 23 June 2004."

4 As formulated, the basis of the application is inaccurate. Costs incurred in the prosecution of an offence or crime are not ordinarily included in a s68 application and I am unaware of any circumstances where costs have been awarded against a person against whom a crime, provided for by the Code, has been proven. (See generally Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534.) In the court of petty sessions, court costs are often awarded together with the penalty, but apart from specific provisions such as those relating to the cost of analysis or certification, do not ordinarily include the costs of investigation or prosecution itself.

5 Costs may be awarded pursuant to the Code, s425, which states:

"(1) The court by which judgment is given on conviction of a person for a crime may, in addition to any other sentence, condemn that person to pay the whole or part of the costs or expenses incurred in or about the prosecution and conviction for the crime of which he is convicted.

(2) The payment of costs and expenses adjudged under this section may -

(a) be ordered by the court to be made out of moneys taken from the convicted person on his apprehension; or

(b) be enforced in the same manner as a fine under section 53 of the Sentencing Act 1997."

Here, no application was made by the prosecution. It sought a general order of compensation under the Act, s68, and left it for the applicant to pursue the claim. It is unlikely that s425 would permit a person other than the Director of Public Prosecutions to obtain such an order which, in turn, restricts costs to costs directly incurred by the Director and does not, in any event, extend to the costs of the police investigation.

6 The applicant was the insurer of the vehicle owned by the respondent. She represented to the insurer that it was her vehicle which had been involved in the accident and that she had been the driver. The accident had occurred on 10 September 2003. The insurer engaged a loss assessor in the investigation of the claim on 15 September. The assessor attended and photographed the scene of the accident, liased with police and interviewed six actual, or potential, witnesses between 17 September and 2 October 2003. Details and results of the investigation were provided to police who commenced their own inquiries in mid-October. Some little time before 27 October, the respondent was interviewed by police and admitted responsibility for her criminal conduct. On 9 October the assessor had advised the insurer that it ought refuse to indemnify the respondent on the claim. Notes recorded by the assessor show that at least as of 17 October the respondent had accepted the company's decision to deny liability. The complaint alleging the commission of the crime was laid in the court of petty sessions on 21 November 2003.

"(1) If a person is found guilty or convicted of an offence and the court finds that another person has suffered injury, loss, destruction or damage as a result of the offence, the court -

(a) must, if the offence is burglary, stealing or unlawfully injuring property; and

(b) may, in the case of any other offence -

order the offender to pay compensation for that injury, loss, destruction or damage.

(3) An order under subsection (1) may be made by the court -

(i) by a person in whose favour the order is sought;

(6) A court may exercise its powers under this section if the facts sufficiently appear from any evidence or material presented to the court, or from the available documents, together with admissions made by or on behalf of any person in connection with the proposed exercise of the powers.

(8) Nothing in this section takes away from, or affects the right of, any person to recover damages for, or to be indemnified against, any injury, loss, destruction or damage so far as it is not satisfied by payment or recovery of compensation under this section.

(9) In determining, for the purposes of this section, the amount of loss, destruction or damage to property that a person has suffered as a result of an offence, the court is not bound by the rules of evidence and it may inform itself in any matter in any way it considers appropriate."

8 The purpose of the legislative provisions is to facilitate the entry of a "civil judgment" in favour of an affected person to obviate the need and expense associated with a concomitant civil proceedings. In R v Monks [2001] TASSC 41, Evans J stated at par7:

"The purpose of s68 is to provide a means for straightforward claims to be dealt with quickly and at minimal cost. It is intended to facilitate claims and, consistent with that intent, I consider that the requirement for claims be made as soon as practicable should be construed generously in favour of claimants."

9 While questions of causation and available civil remedy are relevant, any assessment remains subject to pragmatic considerations. The criminal process ought not be used as a means of resolving complicated issues (R v Braham [1977] VicRp 11; [1977] VR 104) where liability and quantum cannot be simply determined or require a criminal court to engage in the examination or cross-examination of witnesses (Landolt (1992) 63 A Crim R 220). As Hampel J observed in Landolt (supra) at 223:

"In my opinion, the object of s92 (which is now replaced by s86 of the Sentencing Act 1991) is to enable the court to order compensation to the victim in cases in which both liability to compensation and quantum can be simply determined. The procedure is not designed to require a court sitting in its criminal jurisdiction to engage in what amounts to a contest requiring the examination and cross examination of witnesses, including the convicted person against whom the compensation order is sought. (See the observations by the Full Court in Braham [1977] VicRp 11; [1977] VR 104.) If upon an application for a compensation order it appears to the court that there is a real issue to be determined, it should decline to make an order and leave the question to be determined by a civil court in accordance with its normal procedures."

10 An applicant must be able to prove a causative link between the conduct and the loss in that "injury loss destruction or damage [is] a result of the offence" (the Act, s68). The test of causation is not based on foreseeability. As the Court of Criminal Appeal said in Fitzpatrick v R (2004) 146 A Crim R 323 at pars36 - 38:

"In our opinion, as a matter of causation, the destruction of the second vehicle and the damage to the house and contents was caused by the commission of the offence of setting fire to the vehicle, the subject of the indictment. The consequential damage, being of the same type and at the same location, was, in our opinion, a direct and foreseeable result of the commission of the offence.

Even if the damage to the second vehicle and the house was an indirect result, and not reasonably foreseeable, it was still open to the Court to make a compensation order. In our opinion, the damage to the second vehicle and the house was caused as a direct consequence of setting fire to the first vehicle. If we are wrong in that view, the alternative is that it was caused indirectly by setting fire to the first vehicle. There was no new additional intervening cause, and there were no issues in relation to mitigation or any contribution to the damage by the victim, as the victim was not at home at the time.

For the purposes of compensation, under s 117, the damage need not be reasonably foreseeable to be compensable. Consequently, it follows that it is not necessary to establish an intention to cause damage to all of the property ultimately damaged to justify a compensation order being made, in respect of any additional property damaged. The reason for that is that, if an outcome was not foreseeable, it logically cannot have been intended. In the case of the offence of criminal damage and the elements to found a compensation order, it is immaterial that the prosecution accepted in this case that the intention to damage property was limited to the first vehicle and the indictment was framed accordingly consistently with the decision in Pace. In our opinion, it is clearly not the case that only loss or damage to property that is the direct result of the commission of the offence is compensable."

11 In that decision the court set out general principles governing an application of this nature in the following terms at par43:

"However, if an application for a compensation order in favour of a victim of the offence is made to a court sentencing an offender the court will have the power and the duty to consider any evidence which may be material to that application, whether in relation to issues of causation, quantum of loss or other factors which may, in the particular circumstances, be relevant to determine whether or not any loss established should be compensated in full or at all. The Judge who is required to assess compensation under s 117 should proceed by reference to the same principles as those which would apply in an action for damages for personal injury: R v Fraser [1975] 2 NSWLR 521 at 525 - 526 and R v McDonald [1979] 1 NSWLR 451 per Street CJ and Lee J. This approach will include the application of such rules as, by statute or otherwise, are currently applied in an ordinary common law action for damages, for example those relating to contributory negligence and mitigation of damages (Sentencing Act s 113). The rules of natural justice must be observed. This will include an obligation to ensure that the parties, and in particular the offender, have due notice of the intended application and a sufficient opportunity of being heard. The onus of establishing an entitlement to compensation will be upon the applicant, that is either the State or the victim, and, except where this is agreed there will need to be evidence to establish the identity of the victim, the causation of the loss and its extent as well as any other facts which may need to be established in the particular case. Where there is a real issue whether the person claiming compensation has suffered any loss or as to the amount of his or her loss, the Court may not make a compensation order based merely on the prosecutor's representations to the court, but must require evidence proving the amount claimed as compensation: R v Horsham Justices; Ex parte Richards [1985] 2 All ER 1114; [1985] 1 WLR 986 (1986) 82 Cr App R 254. Whether or not the hearing will involve the taking of further evidence will depend upon the circumstances of the case, but ordinarily the evidence given at the trial should be sufficient: R v Bowen (1969) 90 WN (Pt 1) (NSW) 82 at 83 and R v McDonald. The facts which need to be established to make an order for compensation must be established according to the civil standard of proof: s 114 of the Sentencing Act and R v Field [1982] 1 NSWLR 488."

12 Here the attempted deception was made directly to the insurer which was required to consider and assess the claim made to it. This was not a case where an insurer seeks to cover administration of a claim made to it by a third party who has suffered loss as a result of criminal conduct of the offender. It was the party to whom the false representation was made. Its costs of investigating that claim were a direct consequence of the attempt by the respondent to acquire a financial advantage (Hookham v R [1994] HCA 52; (1998) 181 CLR 450).

13 The question of whether it is necessary for an applicant to show an equivalent civil remedy is available before being able to invoke the operation of the Act, s68, is more problematic. The existence or otherwise of a concurrent civil remedy was considered by the Full Court in Davies__ERROR! BOOKMARK NOT DEFINED. v Taylor (1997) 7 Tas R 265, a case involving the making of a reparation order under the Crimes Act 1914 (Cth), s21B. In his reasons for judgment, Cox CJ dealt with the issue of concurrence in his consideration of whether the means of a respondent were relevant to the assessment, stating, at 268:

"Likewise he relied on the decisions of R v McDonald [1979] 1 NSWLR 451 and R v Braham [1977] VicRp 11; [1977] VR 104 where provisions empowering the making of orders for compensation were said to be designed to enable the summary recovery of compensation and not provisions for additional punishment. Thus he argued that there was no apparent reason why a court, having power to short-circuit the process of recovery of a loss sustained by the Commonwealth by the summary procedure of a reparation order, should not be obliged to make an order of that kind and thereby obviate the further inconvenience and expense of taking civil proceedings to recover the loss. While it is arguable that in such circumstances the court should not exercise a discretion based on factors which would be irrelevant to the plaintiff's right to recover in civil proceedings, there is a clear reason for distinguishing the cases relied upon in the present instance, namely that the Commonwealth would have no civil remedy at all as against a director were it not for the existence of s21B.

That there is a discretion has been recognised by Gibbs J in Murphy v H F Trading Co Pty Ltd & Another (1973) 47 ALJR 198. There his Honour, having referred to the second named defendant's circumstances (at 200) which included the fact that he stood to gain nothing financially by the offence and had limited assets and was responsible for several dependants, said (at 201):

'I am not prepared to hold, in the absence of argument, that the effect of this section is that an agent is liable for the duty which would have been payable by the owner of the goods, but in any case, having regard to the circumstances that I have mentioned, I would not consider it appropriate to make an order under s 21B of the Crimes Act against the second defendant.'

Likewise, in Hookham v The Queen [1994] HCA 52; (1994) 181 CLR 450, Brennan J (as he then was) said, at 456:

'Convictions which follow from application of s 8Y(1) or s 5(1) are nonetheless convictions and may enliven the power conferred by s 21B(1).

That is not to say that a court, exercising its discretion under s 21B(1), will not enquire into the circumstances which have exposed the offender to liability to conviction. It is one thing to hold that a court has power to make a reparation order; it is another to determine how that power should be exercised.'

The other members of the court clearly recognised the existence of a discretion whether to exercise the power contained in s21B, but all declined to embark, in that case, upon any definition of the parameters of the discretion and declined, in particular, to determine whether, and to what extent, the personal circumstances and means of an offender should be taken into account."

"* the absence of any vicarious civil liability on the part of the appellant for the relevant acts and omissions of the company;

* the absence of any intention on the part of the appellant that the bank would act to defeat his expectation that the Commissioner would be paid in full by the receiver and associated matters;

* the failure of the Commissioner to give notice to the appellant that, if he failed to have the company pay the unremitted tax before a receiver was appointed, he would be exposed to the risk that a reparation order would be made against him; and

* the absence of any dishonesty of purpose on the part of the appellant.

The absence of vicarious civil liability is a matter of no real moment. The whole purpose of s8Y is to impose vicarious criminal liability and, where this is imposed, effective vicarious civil liability may be imposed by means of a reparation order under s21B."

15 In may be that the Act, s68, does not require concurrent or equivalent remedy before a compensation order might be made, and that limitation to any extended claim can be considered by the tests governing causation. Here, costs associated with a police inquiry ought not be awarded. Where an insurer has paid to a third party an amount as indemnity, the amount can be readily quantified and awarded as if to the party who directly suffered the loss. Costs associated with that payment ought remain matters for civil remedy. If I am wrong in that approach, I would, nevertheless, in the exercise of my discretion in assessing the loss occasioned to the insurer, limit the assessment to those costs necessarily incurred to enable the insurer to decide whether or not to allow or refuse the claim for indemnity.

16 The claim was made by the respondent directly to the applicant, pursuant to a contract of indemnity. The insurer was entitled to investigate the validity of that claim. The falsity of the claim caused the investigation. The insurer suffered loss up until the time when it decided to reject the claim. It was then for the respondent to pursue or abandon her claim. If her pursuit was unsuccessful, the ordinary principles of costs in a civil case would apply. Here she did not pursue her claim from mid-October. The applicant is entitled to recover its loss up until the date of refusal. At that stage any decision to consider or bring criminal charges against the respondent remained for officers of the State.

17 Co-operation by the insurer in that process did not result from the commission of the offence. Investigation of the making of a false representation was integral to the offence itself and the costs incurred in that process were a direct result of the criminal conduct.

18 The claim made is for the amount of $4,467.15 which comprises the assessor's costs of $4,402.15 (excluding a GST component) and a towage fee of $65. The assessor's fees were based on an hourly rate of $80. Those costs are allowed up to the date of the advice to the insurer to refuse the claim, namely 9 October 2003. From that date further services involving 2.7 hours and telephone calls costing approximately $10 were incurred. The claim ought be reduced by $226.

19 Compensation is assessed in the sum of $4,241.15.