Counsel: MR C KOURAKIS QC WITH MISS DAVEY - Solicitors: OTHAMS & CO

Counsel: MR M GRAY QC - Solicitors: COMMONWEALTH DIRECTOR OF PUBLIC PROSECUTIONS

Judgment No. [2000] SASC 106

On Appeal from MAGISTRATES COURT (MS J E SANDERS, SM)

(Full Court: Doyle CJ, Mullighan, Williams, Bleby and Martin JJ)

[2000] SASC 106

Full Court: Doyle CJ, Mullighan, Williams, Bleby and Martin JJ

1. DOYLE CJ, MULLIGHAN, BLEBY AND MARTIN JJ. This is an appeal against a sentence imposed by a Magistrate. The appeal was referred to the Full Court by a single judge, because the submissions for the appellant challenged the correctness of the decision of this Court in R v Cameron & Simounds (1993) 171 LSJS 305. That decision states the approach to be taken to the sentencing of offenders for offences such as those in question in this case. The Court sat as a court of five, to consider that challenge. The appellant submits as well that the sentence was imposed on an incorrect basis.

2. The appellant was charged with 34 offences under the Social Security Act 1991 (Cwth) ("the SSA").

3. Seventeen counts alleged the knowing and reckless making of a false statement in connection with a claim for a social security payment under the SSA, contrary to s 1344(1)(a) and s 1350 of the SSA. The other 17 counts alleged the knowing obtaining of a social security payment, which was not payable at all, contrary to s 1347(b) of the SSA.

The prosecution alleged that on two counts the appellant under-declared his income from employment. On the other counts of making a false statement the prosecution alleged that he failed to declare the receipt of income at all. The prosecution also alleged, as to the counts of obtaining a payment, that the appellant received payments to which he was not entitled.

The offences were disclosed by the matching of data held by the Australian Taxation Office. The offending occurred between 29 October 1996 and 22 June 1998. The overpayment involved was an amount of $7,065.92.

The appellant admitted the prosecution allegations.

The appellant's solicitor put submissions in mitigation to the Magistrate. The appellant lived in a country town, having returned there after undertaking some studies in Adelaide, and after working in Adelaide. The appellant returned to the country town because he was unable to obtain permanent employment in Adelaide. The appellant was living with his parents. He could not get full-time employment in the country town. He obtained some casual and part-time employment. The work was intermittent. There were delays in making payment to the appellant for work done, because the payments came from interstate. The appellant offended, according to his solicitor, because he was frightened that he would not get further work, or that there would be a delay in the making of payments to him, and that if his benefits were cut off he would be left without income. Once he started on this course, "things got out of hand and it became easier to continue to offend than to go and confess". After a time the appellant obtained permanent employment, and he then stopped claiming benefits. The appellant apparently notified the relevant Government agency that he had obtained employment. As we have already said, the offence came to light as a result of the Government agency matching its information with data held by the Australian Taxation Office. Apparently that came about some three months after the offending ceased.

When the appellant appeared before the Court he still had full time employment. He was 30 years of age. He was planning to marry and to live in the country town. He was repaying the amount of the overpayment. After he was dealt with by the Magistrate his brother paid off the balance owing.

The appellant appears to be a man of good character, apart from this series of offences. He had a minor conviction for an offence of larceny committed some 12 years earlier, when he was only 18 years of age. There were good prospects that he would settle down and live as a productive member of the community. Imprisonment would mean loss of his employment, as well as all the usual consequences that go with imprisonment.

The Magistrate noted that the appellant had not come forward and admitted his guilt, during the period of about three months after the offending ceased and before it was detected. She referred to relevant sentencing principles stated by a judge of this Court in Laxton v Justice (1985) 38 SASR 376. She referred in particular to the need to give prominence to the element of deterrence when sentencing for offences which, as she said, were large in number and over a considerable period of time. She referred to the matters put in mitigation and said that they were not:

"sufficient in the circumstances to overwhelm the penalty standards that have been laid down in all the circumstances since Laxton v Justice in judgments of the Supreme Court."

It is likely that she was there referring as well to the decision of this Court in Cameron, a decision which has often been cited by judges and magistrates when dealing with social security fraud.

The Magistrate convicted the appellant on all counts and imposed a single sentence of imprisonment pursuant to s 1353 of the SSA. The sentence was that the appellant be imprisoned for a period of 10 months, but that he be released after serving three months imprisonment, conditional upon him entering into a bond to be of good behaviour for a period of three years. The Magistrate made an order for reparation.

The salient features of the case are these. The case was a fairly common form of fraud in relation to social security benefits. The offending occurred over a considerable period of time. It involved a significant number of separate offences. The amount involved is significant, but certainly not as much as in some other cases. The appellant did not disclose his own guilt, but admitted it when detected. On the other hand, the appellant did stop offending, of his own accord, after he had found full-time employment. The appellant does not seem to have been in a situation of really pressing need. He was living with his parents and, in submissions to the Magistrate, counsel did not suggest that he was destitute. On the other hand, there is no reason to doubt that his financial circumstances were difficult. The appellant has only one minor conviction, sufficiently far in the past to be more or less disregarded. There is every reason to think that the interests of personal deterrence and of rehabilitation would be well served, and probably best served, by not requiring a custodial sentence to be served. There are, of course, other matters to be considered.

As the offences are offences against Commonwealth law, the sentencing of the appellant was governed by the provisions of the Crimes Act 1914 (Cth).

The relevant provisions of the Crimes Act do not require the Court to depart from the fundamental principles that apply when sentencing for similar offences under State law. We refer in particular to s 16A, which deals with the matters to which a court is to have regard when passing sentence, to s 17A which provides that a court shall not pass a sentence of imprisonment unless the Court is satisfied that no other sentence is appropriate in all the circumstances of the case, and to s 16G that requires the Court to take into account the fact that the sentence will be served in a prison of a state where sentences are not subject to remission.

We add that s1353 of the SSA permits a court to impose one penalty for all offences if a person is convicted of more than one offence.

The appellant submits that the Magistrate wrongly sentenced on the basis that the appellant's offending continued during the period of three months, after the appellant obtained full time employment and before his offences were detected. In her sentencing remarks, the Magistrate said that the offending ceased "only when you were detected through, as I understand it, a data match process." As we understand the facts, this is not correct. The appellant notified the relevant agency that he had obtained full-time employment and stopped claiming benefits. He did this some two months before his offending was detected. The fact that the appellant ended his cycle of offending is something for which he deserves credit, even though he did not disclose his offending.

This is a material mistake. It is likely to have affected the Magistrate's approach to sentence. Accordingly, error having been demonstrated, the sentence must be set aside, and the appellant must be resentenced.

The appellant also submits that the Magistrate misconceived her role when she said, in the passage set out above, that the mitigating circumstances did not "overwhelm" the approach to sentencing for these offences established by decisions of this Court. This submission is closely linked to the main submission addressed on appeal, and it is convenient to deal with it as part of the consideration of this submission.

The main submission for the appellant is that in Cameron this Court established an approach to sentencing for offences such as these that is erroneous, because it holds that considerations of deterrence are to outweigh all other considerations. Alternatively, the submission is that the decision in Cameron has been widely misunderstood as so deciding, and that the Court should make it clear that that is a misunderstanding. Applied to the present case the submission is that even if the Magistrate's sentencing remarks were not to be taken literally, the Court should nevertheless assume that she sentenced either in accordance with the principles established in Cameron, or treating them as requiring her, more or less as a matter of course, not to give the weight that might otherwise be given to considerations of rehabilitation.

As we are satisfied that the Magistrate erred in another respect, it is not necessary to decide whether the Magistrate erred as a matter of sentencing principle. However, it is appropriate to take this opportunity to deal with the submissions relating to what this Court decided in Cameron.

Cameron was an application by the Commonwealth Director of Public Prosecutions for leave to appeal against certain sentences.

The Court dealt with two cases at the one time. In each case the offender had pleaded guilty to charges of imposition on the Commonwealth, and in each case the sentencing judge took into account further offences. Each of the offenders had used an assumed name to obtain unemployment benefits to which the offender was not entitled. The offending in each case involved a larger number of offences than the present case, and the offending had continued over a longer period of time. The amounts of money involved in each of the cases were greater than in the present case. Subject to that, and recognising that the offending in Cameron was more serious than in the present case, the cases were broadly similar to the present case. The offence of imposition on the Commonwealth attracts a maximum punishment of imprisonment for two years: s 29B of the Crimes Act. In Cameron the sentencing judge in one instance had imposed a sentence of imprisonment for two years and six months, but had ordered that the offender be released immediately upon entering into a bond. In the other case the sentence of imprisonment was for two years, but again there was an order for immediate release.

The Full Court granted the applications for leave to appeal, allowed the appeals, and set aside the sentences imposed. In one case the Court substituted a sentence of imprisonment for two years and six months, with an order that the offender be released after serving a period of imprisonment of nine months, upon the offender entering into a bond. In the other case the Court substituted a sentence of imprisonment for two years, with an order for release after a period of nine months, upon the offender entering into a bond.

In the course of his reasons, with which the other two members of the Court agreed, King CJ made the following observations which have been often referred to in subsequent cases. He said (at 306-307):

"In the case of both of these respondents the offending amounted to a systematic, deliberate and sustained fraud over a substantial period of time. The fraud involved planning and sustained implementation. The offenders, it is true, have no other convictions but that is of little significance when one is faced with such a sustained course of conduct of a criminal nature. This was not a case of a person with no prior convictions succumbing to temptation and being entitled, therefore, to rely upon the previous good record to secure the leniency of the court. Both of these offenders not only engaged upon a deliberate course of fraudulent conduct, but persisted in it over a long period of time. The crimes committed are serious crimes. The social security system is the method by which society provides an income to those of its members who, due to misfortune, are not able to provide an income for themselves. Parliament determines the conditions and the level of benefits, and no doubt, in doing so, determines not only what is necessary to meet the needs of welfare beneficiaries but also what society, through the taxpayer, can sustain in that regard. Abuse of the social security system jeopardises the system itself and therefore the welfare of all those who depend for their livelihood upon the system. It is the duty of the court to protect the social security system against this type of abuse by making orders which operate as an effective deterrence. Not only does a fraudulent abuse of the system jeopardise the system itself by placing an undue burden upon the taxpayer, and therefore, on society at large, but it also is a great injustice to all those welfare recipients who abide by the system, conduct themselves honestly and have to subsist on what is by no means a handsome income, namely the benefit prescribed by law as appropriate in the circumstances. It is a great injustice to those people if others are able with impunity to double their incomes by a fraud. For these reasons the courts have a great responsibility to protect the integrity of the social security system by imposing punishments for deliberate and sustained fraud which are likely to operate as a deterrent to others who may be tempted. It is necessary to acknowledge and to appreciate that recipients of social security benefits are, almost without exception, subject to great financial pressures. They are obliged to maintain themselves and to provide for their needs on an income which is by no means handsome. Therefore, there must always be a temptation to enhance that income, and if it appears that that can be done without running the risk of substantial punishment, it is likely that others will be tempted to follow in the fraudulent course. It is necessary for the courts to send, and consistently send, a clear signal to all who might be so tempted, that sustained and deliberate fraud upon the system will mean going to gaol."

He referred to the circumstances of the offenders, and to the mitigating circumstances in particular. Then he said (at 307):

"Nevertheless, in cases of this kind, that is to say of sustained and deliberate fraud over a period of time, the deterrent purpose of punishment must be paramount. The necessity of protecting the integrity of the social security system by deterrent penalties must take priority over other considerations."

His conclusion was that the order for immediate release of the offenders was "so disproportionate to the degree of their offending" that it was indicative of error. It was on that basis that the appeal was allowed, and the orders already referred to made.

The submission by Mr Kourakis QC for the appellant is that in the passages set out above, King CJ had held that in cases of the type referred to the sentencing court should, routinely and as a matter of course, put to one side considerations of rehabilitation and mercy, and consider only the deterrence of other offenders. Mr Kourakis submits that the effect of the decision was that if a case was of the type described by King CJ, it was not open to a sentencing court to impose a sentence in which considerations of rehabilitation were uppermost, or which might be said to reflect considerations of rehabilitation more than considerations of deterrence. His submission is that general sentencing principles require that in each case all relevant principles be considered and that considerations of rehabilitation could not, by decision of the Court, be eliminated. For that reason he submits that the decision is wrong and should not be followed.

The alternative submission is that magistrates and sentencing judges have misunderstood the remarks of King CJ, and are treating them as requiring them to put to one side considerations of rehabilitation that might otherwise result in a non-custodial sentence, or an order for immediate release after the imposition of a custodial sentence.

Underlying the submissions put by Mr Kourakis was the suggestion that because the imposing of a sentence requires the consideration of all of the facts of the case, and the application to those facts of a range of different and sometimes conflicting considerations, a sentencing standard for a particular offence or a particular type of offending cannot be set, at least in any meaningful sense. His submission is that to do so is necessarily inconsistent with the requirement for individual consideration of the offence and of the circumstances of the offender.

We reject that submission. In Police v Cadd [1997] SASC 6187; (1997) 69 SASR 150 Doyle CJ explained at some length why it is a proper function of this Court to set appropriate sentencing standards. We will not repeat that discussion. We accept that view. Other Courts of Appeal in Australia have taken the same view.

However, we agree that a sentencing standard cannot dictate a result in every case, or remove the need for consideration of the facts of each case and the application of the relevant considerations to those facts. It is worthwhile repeating again what Cox J said in R v King (1998) 48 SASR 555 at 557, a passage that Doyle CJ cited in Cadd:

"In a word, this case is about sentencing standards, but it is important, I think, to bear in mind that when a standard is created, either by cumulative force of individual sentences or by a deliberate act of policy on the part of the Full Court, there is nothing rigid about it. Such standards are general guides to those who have to sentence in the future, with certain tolerances built into or implied by the range to cater for particular cases."

We agree also with what Cox J said, to the like effect, in R v Hooper (1995) 64 SASR 480 at 491:

"It is necessary to say again that a penalty range or tariff for a particular crime, established by the practice of sentencing judges or by decisions made on appeal, is not something rigid and immutable from which no departure, certainly no upwards departure, may ever be made. Any standard range is intended to accommodate the ordinary run of cases, but there will be exceptional cases from time to time that fall outside the range. See R v King (1988) 145 LSJS 278 at 280; R v Prendergast (1988) 147 LSJS 486 at 487-488; R v Nixon (1993) 66 A Crim R 83 at 88-89. The overriding principle is always the need to fix a sentence that is proportionate to the gravity of the offence - the principle of proportionality, as it has been called."

We also repeat what Doyle CJ said in Cadd (at 166) about the purpose of establishing a sentencing standard, in a system in which sentencing is an individualised process:

"The function of establishing appropriate standards is an important aspect of ensuring, as best one can, that adequate standards of punishment are observed. Establishing appropriate standards also tends to ensure that there is such consistency of approach as is achievable in a system in which the appropriate sentence depends upon, in part, the circumstances of the individual case and of the individual offender, and a system in which sentencing is as individualised as it is in our system."

We agree with the further submission advanced from Mr Kourakis that in a case such as the present, considerations of deterrence cannot displace all other considerations, either at the outset or at the conclusion of the sentencing process. All relevant considerations must be taken into account, and given due weight. The establishment of a sentencing standard by this Court cannot require a judge or magistrate, when imposing sentence, to take into account only one of the considerations relevant to sentencing, be it deterrence or some other consideration. However, consistently with that, it is appropriate for this Court to indicate that a certain type of offending is likely to attract a certain type of punishment, and in particular imprisonment, and to indicate an appropriate sentence range for particular types of offending.

We turn now from those general observations to the application of the relevant principles to the present case.

In our opinion King CJ was right to emphasise in Cameron the responsibility of the courts to protect the integrity of the social security system, and the need for a firm approach to offences involving sustained and deliberate fraud. In particular, the Court must do what it can to deter such offending. Offences of the type in question are common. The fact that such offending occurs over a longish period of time demonstrates that the offending is calculated, or at least not committed on the spur of the moment. And it is true that sustained fraud against the social security system tends to undermine it, and because of its widespread and insidious nature, to impose substantial costs upon the community.

Nevertheless, we cannot fully subscribe to one aspect of what King CJ said in Cameron, encapsulated in the following passage (at 307):

"Nevertheless, in cases of this kind, that is to say of sustained and deliberate fraud over a period of time, the deterrent purpose of punishment must be paramount. The necessity of protecting the integrity of the social security system by deterrent penalties must take priority over other considerations."

We agree that in cases of deliberate and sustained fraud, deterrence must loom large in determining the appropriate sentence. But other matters, especially rehabilitation, must still be considered. We do not agree that deterrence must take priority over all other considerations, at least if that statement means that there is no scope for the Court to be influenced by considerations of rehabilitation in finally arriving at the sentence to be imposed. It may well be that King CJ did not mean to exclude considerations of rehabilitation, or mean to say that a sentence of imprisonment, with at least some of it to be served, must be imposed in every case of sustained and deliberate fraud. But his remarks are capable of being read as requiring an order for imprisonment, with at least some of it to be served, in virtually every case, and absent truly exceptional circumstances.

In our opinion the proper approach to sentencing is better reflected by saying that in a case of the type referred to by King CJ, an order for imprisonment, with at least some of the imprisonment actually to be served, is ordinarily likely to be required. This is because the commission of a number of offences of fraud over a period of time makes imprisonment appropriate even for a first offender, because of the seriousness of the offending. The same matters may require that at least part of that term of imprisonment actually be served, even in the case of a person with no previous convictions. But there is still a need to consider all aspects of the matter, and to consider the interests of society and of the offender in the rehabilitation of the offender. Also, in an appropriate case, there may be room for the exercise of mercy and leniency: see Webb v O'Sullivan [1952] SASR 65 per Napier CJ at 66 and R v Osenkowski (1982) 30 SASR 212 at 212-213.

In some cases the length of the period during which the offending occurs, or the amount involved, or the devices used to effect the fraud, is likely to lead a court to conclude that a sentence of imprisonment actually to be served is required. As is always the case in sentencing, and as Cox J said in R v King, a sentencing standard is a general guide to those who have to sentence in the future, with certain tolerances built into it.

We agree with what Mullighan J said in Keeley v Department of Social Security (Unreported, 30 July 1993, Judgment No. S4075):

"I do not think the Full Court in Cameron & Simounds v R (supra), in saying that the deterrent purpose of punishment must be paramount, was laying down a principle of sentencing that in all cases of fraud against the welfare system mitigating features of the circumstances of the offence and the offender can never assume prominence. The Court was speaking of the type of serious fraudulent conduct which it there had to consider. In the more serious types of cases, the need to deter others who are minded to deliberately and systematically defraud the system must prevail over matters of mitigation. However, in less serious cases the need for deterrence will not be paramount."

In our view in the more serious cases of sustained and deliberate fraud, deterrence is very important, imprisonment is likely to be required, but all mitigating circumstances and the rehabilitation of the offender must still be considered. Substantial mitigating circumstances, and in some cases considerations of mercy and leniency may lead to the conclusion that a sentence of imprisonment is inappropriate or that such a sentence is appropriate, but that the imprisonment need not be served.

To that extent only we would depart from what this Court said in Cameron.

There is one further thing that should be said. While imprisonment is likely to be required, it is preferable not to say that a case must be exceptional before a different approach is taken. For example, some offenders in this area are persons whose circumstances are extremely difficult, indeed distressing. An offender might be virtually destitute, with dependents to support. An offender might act as a result of domestic pressures that few people could withstand. That might be a circumstance, coupled with other circumstances, that warrants a more merciful approach in imposing sentence, even though it is a circumstance which is not wholly exceptional, because it tends to recur with this type of offending. It is for that reason that it is safer to say that imprisonment is the starting point, rather than that the case must exhibit exceptional features before a court can properly refrain from making an order for imprisonment. In saying this we do not intend to undermine our earlier statement that in cases of sustained and deliberate fraud, imprisonment is likely to be required.

In the course of his submissions, Mr Kourakis suggested that Cameron reflects a stricter approach to cases involving social security fraud (as it was loosely termed) than has been taken in cases involving fraud against revenue laws, and in particular laws relating to income tax.

Our firm view is that there is no reason for the courts of this State to take a less strict approach to revenue fraud than is taken to social security fraud. If anything, cases of revenue fraud are likely to attract heavier penalties because often the factors of poverty or pressing need, found in a number of cases of social security fraud, will be absent.

A brief survey of the cases from other jurisdictions indicates that, if there was a trend towards treating taxation and other revenue frauds less seriously, that trend has been arrested. The survey also indicates that in other Australian jurisdictions social security fraud is viewed seriously, and that absent substantial mitigating circumstances, an order for imprisonment is likely to be the appropriate punishment.

Comparison of Taxation and Social Security Penalties

The courts of several States have emphasised the importance of general deterrence in connection with offences against the social security system. As a consequence, the trend has been toward the imposition of custodial sentences with at least some amount to be served. One of the anomalies created by that approach, however, has been a disparity between penalties imposed for social security offences and those for taxation fraud.

In R v Wright [1994] QCA 16; (1994) 74 A Crim R 152, the appellant pleaded guilty to four offences of imposition in connection with false taxation returns. The offending was aggravated by the existence of a scheme involving payment of some of the income in cash. Over two financial years a total of $211,252 cash payments were received and not declared.

In respect of each offence, a sentence of imprisonment for 12 months was imposed, to be served concurrently. The sentences were suspended upon the offender entering into a recognisance in the sum of $500 on condition that he keep the peace and be of good behaviour for a period of two years. In addition a fine of $5,000 was imposed.

On a Crown appeal, the Queensland Court of Appeal took the opportunity to examine a number of cases in which sentences have been imposed for social security fraud and taxation fraud. The Court observed (at 156):

"An analysis of the two categories of sentences shows, in our opinion, that it is difficult to reconcile them. Whereas offenders convicted of social security frauds have generally been required to serve terms of imprisonment, even where the amounts involved have been small, the same cannot be said generally of those convicted of tax frauds, even where the amounts involved have been relatively large."

After considering a number of Queensland cases, the Court concluded that the cases demonstrated a general practice in cases of social security or Medicare fraud, whether charged as fraud under the Crimes Act or under the relevant social security legislation, to require service of a term of imprisonment except where there existed "strong mitigating circumstances". Having considered a number of cases involving fraud in connection with taxation, the Court said it was difficult to reconcile the decisions with the social security fraud cases. As the Court observed, there is no reason to believe that tax fraud is not prevalent or that it is easier to detect than social security offending.

The Court allowed the appeal and substituted a sentence of 18 months imprisonment. In view of a number of mitigating factors, an order was made that the respondent be released after serving three months of that sentence.

The same Court also had occasion to consider the anomaly in R v Mai (unreported, 25 August 1995). The respondent was convicted of three offences of defrauding the Commonwealth contrary to s 29D of the Crimes Act. The defrauding consisted of understating income in tax returns on three occasions. The total tax understated for the three financial years was approximately $153,000. The total tax unpaid was approximately $64,000. The sentencing judge imposed a sentence of two and a half years imprisonment but ordered that the respondent be released forthwith. On a Crown appeal against the adequacy of that sentence, the Court referred to the decision in Wright and the discussion concerning the comparison of sentences for taxation fraud with those imposed for social security fraud. The Court said:

"The latter [Social Security frauds] are, in general, offences which involve smaller amounts of money than are at issue in this case, but it is right to say that the offenders in most of those cases are individuals who do not have access to the kinds of income and funds which people who commit tax frauds often have. It would, I think, be a serious step if we were to create an invidious distinction between the social security frauds in which the offenders are often sentenced to short periods of imprisonment, and offences of this kind where the amounts involved and the intelligence, responsibility and general status in society of the offenders is usually such that one would not expect them to have a need to resort to dishonesty of this nature."

The appeal was allowed for the purpose of requiring that the respondent serve three months of the term of imprisonment.

In R v Elvin (1997) 91 A Crim R 213, Higgins J sitting in the Supreme Court of the ACT, was dealing with taxation offences. He referred to his own previous decision in R v Whitnall [1993] FCA 271; (1993) 68 A Crim R 119 in which he said set out the principles to be applied and the approach to the sentencing of offenders who have defrauded the Commonwealth by means of false claims "whether in respect of tax liability or Social Security or other benefits". His Honour said (at 217):

"Whilst those who set out to defraud the revenue of substantial sums of money can ordinarily expect a custodial penalty, it is not necessarily the case that substantial remorse, co-operation and reparation will not so mitigate the proper penalty that the custodial term cannot be wholly suspended, particularly if the level of culpability is less than that usually found. Remorse, co-operation and reparation, particularly if the fraud is voluntarily disclosed and implicates other offenders, may lead to total suspension of a custodial term even though the original offending conduct was gravely criminal:"

Later in his judgment (at 219) his Honour observed that tax fraud is not to be regarded as less serious than social security fraud. He said that it may, generally, involve greater culpability if committed as a result of greed rather than need.

The South Australian Court of Criminal Appeal considered the same issue in R v Ruggiero (1998) 104 A Crim R 358. The respondents had pleaded guilty to three counts of imposition involving the omission of $880,000 gross income over three financial years and the avoidance of a total of $146,000 income tax. The respondents were husband and wife and each was sentenced to two years imprisonment but released forthwith upon entry into a bond in the amount of $500 to be of good behaviour for a period of two years. The Crown appeal was allowed for the purpose of ordering that each respondent serve a period of six months in custody. In the course of his judgment, Olsson J, with whom Cox J and Prior J agreed, said at 364:

"In general terms I agree with the submission that there is little reason to differentiate, in principle, between taxation imposition offences and those related to social security cases. In both scenarios there is a direct impact upon the revenue; the offences are difficult to detect; and the imposition has the practical effect of shifting undue financial burden on taxpayers at large. Indeed, in relation to taxation matters there is a further consideration. Whilst social security compliance investigation activities deflect resources from other, more productive areas, taxation compliance investigations are, in general, notoriously expensive to the community, as this very case illustrates. In so concluding I by no means ignore the point made by Mrs Shaw QC, of senior counsel, for the respondent. Intent to defraud is not an element of the offence enacted by s29B of the Crimes Act. None the less offences of the nature of these here under consideration are essentially offences of dishonesty, just as is the case of social security offences. It is for that reason that the Court of Appeal generically referred to them as cases involving serious fraud on the revenue in Wright. It seems to me that the considerations discussed in the authorities related to social security cases are certainly no less apposite to taxation imposition situations. Considerations of both personal and general deterrence must necessarily loom large as considerations in the sentencing process. Absent substantial mitigating circumstances, actual service of a custodial sentence must be seen as a norm in cases involving deliberate and sustained evasion of taxation, especially when an offence is motivated by greed rather than need. This was the view expressed in Wright and I consider it compelling. The fact that an offender has no relevant antecedent history will, usually, not serve to avoid such a result. Good character will have been lost where there has been a sustained offending over a significant period of time (Schneider (1988) 37 A Crim R 395 at 397, Veen [1988] HCA 14; (1988) 164 CLR 465)."

In New South Wales, the Court of Criminal Appeal has consistently taken the view that in cases of fraud on the social security system, a custodial sentence should be imposed unless there exist special circumstances justifying a lesser order. In R v Medina (unreported No. 60610 of 1989 delivered 28 May 1990), the respondent falsely claimed unemployment benefits from July 1983 to approximately February 1988. During that time he was fully employed under a false name. The sentencing judge had imposed a "Griffiths Remand" on the basis that the respondent was involved in a successful business which required his presence for its continued viability and, if sentence was deferred, the respondent might make full restitution. The Court said:

"On behalf of the appellant it was submitted by counsel that the orders imposed by the Judge were manifestly erroneous so that this Court should intervene, especially as what his Honour had done failed entirely to reflect any element of general deterrence. In support of this submission a number of cases were referred to, all of which make it clear that in the case of a fraud on the social security system a custodial sentence should be imposed unless there exist very special circumstances justifying some lesser order. I need only mention one. That is, R v Van Tung Luu (NSW CCA, unreported, 7 December 1984) in which Street CJ said (p 3): 'The courts of this State have uniformly sought to make plain to persons who abuse the system of social welfare that they must expect to face heavy penalties. The introduction into the administration of that system of overly meticulous preliminary checks before benefits are paid could result in real hardship to persons whose need for benefits is urgent and immediate. Thus it is that such susceptibility is open to abuse, which results in persons who do abuse it receiving salutary penal consequences at the hands of the courts.' The policy articulated in Luu has been applied in a number of decisions of the Court (R v Tipene, 7 May 1987; R v Perks, 8 May 1987; R v Bond, 14 May 1987 and R v Delcaro, (1989) 41 A Crim R 33). As Street CJ said in Perks: 'Those who set about defrauding the social service system of this nation can expect, when caught and brought to criminal judgment, to suffer serious consequences.' I should also make the observation that in Luu the Chief Justice emphasised the important element of general deterrence."

In R v Annecchini (unreported No. 60318 of 1995 delivered 24 April 1996), the appellant pleaded guilty to a single charge of defrauding the Department of Social Security, but the charge encompassed fraudulent claims made from October 1984 to April 1995. The appellant falsely represented that his wife was not in receipt of income. The total amount involved in the fraud was $97,341. The appellant suffered from poor health including alcoholism, a liver complaint and industrial deafness. He was aged 56. On an appeal against a sentence of two and a half years imprisonment of which the appellant was required to serve 18 months, Gleeson CJ with whom the other members of the Court agreed said:

"It is generally the fact that considerations of general deterrence are of importance in dealing with social security fraud. One of the reasons for that is that conduct such as that engaged in by the present appellant is difficult to detect, indeed it is probably detected in a relatively small proportion of cases, and when it is detected it is appropriate that other people in the community who might be tempted to engage in such conduct should understand the penal consequences that attach to it. Indeed, questions of morale become involved if those in the community come to think that people who practise fraud of this kind upon the Commonwealth can get away with it or, if apprehended, will be dealt with leniently. At the same time, in considering the weight to be given to considerations of general deterrence it is significant that one is here dealing with a person exhibiting the subjective characteristics to which reference has already been made. The problem which sentencing judges have in reconciling considerations of this kind were considered, for example, in R v Engert, Court of Criminal Appeal, unreported 20 November 1995."

R v Engert is now reported in (1995) 84 A Crim R 67. It was concerned with the sentencing of persons with mental disorders.

The approach in Medina was approved in R v Purdon (unreported No. 60659 of 1996 delivered 27 March 1997), a case involving social security fraud over a period of seven years and eight months. Compelling subjective circumstances existed, but the Court upheld the Crown appeal against the imposition of a bond and imposed a sentence of nine months imprisonment to be served by way of periodic detention, Hunt CJ at CL, with whom the other members of the Court of Criminal Appeal 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. See Regina v David Fernanda Medina (at 6); Regina v Mears (at 145)."

The same approach can be found in a number of other New South Wales appeal court decisions including R v Zongas (unreported No. 60302 of 1997 delivered 31 October 1997). That case involved an optometrist who, over a period of two years, defrauded the Commonwealth of $61,000 by submitting more than 1,000 false and forged claims. During the course of his judgment, Gleeson CJ with whom the other members agreed, repeated the remarks that we have previously quoted in Annecchini and made the general observation:

"Social Security systems, which are established for the benefit of the community, in large measure operate upon the basis of trust. The general availability to the community of the important welfare services provided by those systems is undermined by people who abuse that trust."

In R v Price (unreported No. 060438 of 1993 delivered 2 September 1993), the New South Wales Court again cited the remarks of Street CJ in R v Luu (Unreported, 7 December 1984) previously approved in Medina (above).

The Court also cited later remarks of Street CJ in R v Tipene (Unreported, 7 May 1987) when he said:

"It has been said repeatedly in this Court and by sentencing judges that those who practise frauds on the Social Services system of this country must expect to be severely dealt with when they are apprehended."

Hunt CJ at CL repeated similar remarks to those he made in Purdon in R v Herrera (unreported No. 60630 of 1996 delivered 6 June 1997. See also earlier remarks in R v Winchester (1992) 58 A Crim R 345.)

The remarks of Street CJ in Luu were again cited by the New South Wales Court of Criminal Appeal in R v Corbett (1991) 52 A Crim R 112. Gleeson CJ was a member of that bench. It was a case involving fraud by a medical practitioner against the Health Insurance Act. The Court made an interesting observation about the sentencing for white collar crimes which sometimes involved fraud on the public purse (p 117):

"Nevertheless, a feature of past sentencing for "white collar" crimes involving fraudulent abuse of trust, and sometimes involving fraud on the public purse, has been the imposition of lengthy head sentences, but with a substantial gap between head sentence and non-parole periods or minimum terms. This has probably been the consequence of a desire on the part of the courts, on the one hand, to reflect the need for general deterrence and, on the other hand, to give due account to the fact that the offenders involved frequently have no prior criminal history, are unlikely to re-offend, and have good prospects of rehabilitation. There is a further consideration that was referred to in the English Court of Appeal in Livingstone Stewart (1987) 85 A Cr App R 66, where Lord Lane CJ said (at 69): 'These offences involve the dishonest abstraction of honest taxpayers' money, and are not to be treated lightly. They are easy to commit and difficult and expensive to track down. However it must be remembered that they are non-violent, non-sexual and non-frightening crimes.'"

An authority which is often cited in cases of frauds against the revenue, whether they be avoiding the payment of income tax or sales tax or social security frauds, is R v Whitnall [1993] FCA 271; (1993) 120 ALR 449. That was a case involving false taxation returns. It is the judgment of Higgins J that is often cited. His Honour observed that frauds on the revenue, whether social security frauds or taxation frauds, were being treated "more and more severely" (p 453). He referred to a number of authorities including Medina and Corbett and said (p 456):

"At least, so far as the courts are concerned, serious frauds on the revenue will result in custodial sentences. In the absence of 'substantial mitigating circumstances', that sentence will include a period actually to be served."

During the course of his judgment Higgins J commented that it should be remembered that a sentence of imprisonment, even if suspended, "is a substantial punishment" (p 455). A similar observation was made by Winneke P in DPP v Carter (1997) 35 ATR 18 at 24 when his Honour said:

"The authorities make it clear that it is wrong to assume that a sentence of imprisonment, albeit wholly suspended, does not play a role in deterring others (Elliott v Harris (No.2) (1976) 13 SASR 516 at 527, per Bray CJ; R v Gillan [1991] FCA 184; (1991) 100 ALR 66 at 71; R v P [1992] FCA 626; (1992) 39 FCR 276 at 285).

Carter was a case involving under-declarations and failure to pay amounts of sales tax. Winneke P made some remarks of general application during which he commented adversely upon "ritual incantations" such as "serious frauds on the revenue will result in custodial sentences". His Honour said: (p 22):

"It should not be supposed that revenue fraudsters, who are shown by evidence to have deliberately defrauded the revenue for the purposes of enriching themselves, will not be treated with justified severity by the courts. However the degree of culpability of an accused person relevant to the punishment to be imposed must be dependent upon the facts, as found, in each case. Ritual incantations, such as 'serious frauds on the revenue will result in custodial sentences' (R v Whitnall [1993] FCA 271; (1993) 42 FCR 512 at 519; [1993] FCA 271; 25 ATR 506 at 513) are of little practical value, as Pincus JA pointed out in Wright's case at A Crim R 165. This is because what is 'serious' must inevitably depend upon the findings of the sentencing judge in the case under consideration."

Ormiston JA cited the passage from Higgins J in Whitnall to which we have referred and noted that the same view had been adopted by the Court of Appeal in Queensland in R v Wright.

A general observation was made about the trend in social security cases in R v Morris [1993] VicRp 68; [1993] 2 VR 192. Crockett J with whom Phillips CJ and Southwell J agreed said (p 199):

"We have been referred to a number of authorities in which the question arose as to whether a custodial or non-custodial sentence was appropriate in the case of fraud upon the Commonwealth revenue. Many involved social security fraud. It is clear that in recent years the trend has been towards the imposition of custodial sentences even upon first offenders (which most of such offenders seem to be) in the absence of substantial mitigating circumstances."

We have already decided that the Magistrate sentenced on a false premise. Whether she also treated the decision in Cameron as requiring her to give little or no weight to considerations of rehabilitation does not really matter. It is nevertheless appropriate for this Court to reconsider the sentence afresh, and in accordance with the principles we have stated.

The offending is less serious than the offending in Cameron. The appellant did not use a false name or fictitious identity, the offending occurred over a shorter period of time, and the amount of money involved was substantially less. Nevertheless, the offending is still appropriately described as a sustained and deliberate fraud over a period of time. It needs to be emphasised that the appellant committed a number of offences, each of which was serious, and continued to offend on a significant number of occasions. There is no suggestion that the appellant was destitute. As we recorded earlier, he was living with his parents at the time, and the submissions put to the Magistrate do not suggest that the appellant was facing a financial crisis. Also relevant are the fact that the appellant ceased offending of his own volition, his previous good character, the fact that he has obtained permanent employment and the fact that prospects of rehabilitation are good.

The maximum penalty for imposition on the Commonwealth, the offence considered in Cameron, is imprisonment for two years. The offences in question in the present case attract a maximum penalty of imprisonment for 12 months: s1350 of the SSA.

The offences are such that an order for imprisonment is the appropriate starting point. We consider that the sentence of ten months imprisonment imposed by the Magistrate was quite moderate. We would not impose a heavier sentence. In arriving at that sentence we have taken into account the fact that the sentence is not subject to remission, as required by s16G of the Crimes Act.

We are satisfied that the purposes of punishment are adequately served, and that considerations of rehabilitation are satisfied, if the appellant is not required to serve the whole of that sentence. The difficult question is whether it is appropriate to order that the appellant be released forthwith, and if not, the period that should be served before he is released.

We have found this a very difficult question. In the end, we have come to the conclusion that it is appropriate in the circumstances to order that the appellant be released forthwith. Balancing the various considerations admits of such a course. In the circumstances we think the need for general and personal deterrence is adequately met by the sentence of imprisonment. Personal circumstances and features of mitigation permit leniency. We mention each of them but it is the cumulative effect of them which tips the scales in favour of the appellant.

The appellant is aged thirty years and has been of good behaviour, with one relatively minor exception. He has lived a useful life and has always sought employment. He is presently employed. Serving any period of imprisonment would very likely bring that employment to an end and reduce substantially his prospects of employment during the rest of his life. He is shortly to marry. He is genuinely contrite and remorseful. He pleaded guilty at the first opportunity and co-operated with the authorities. These matters establish that he is well on the way to successful rehabilitation which is, of course, in the community interest. As King CJ observed in Yardley v Betts (1979) 22 SASR 108 at p112-113:

"The protection of the community is also contributed to by the successful rehabilitation of offenders. This aspect of sentencing should never be lost sight of and it assumes particular importance in the case of first offenders and others who have not developed settled criminal habits. If a sentence has the effect of turning an offender towards a criminal way of life, the protection of the community is to that extent impaired. If the sentence induces or assists an order to avoid offending in future, the protection of the community is to that extent enhanced. To say that the criminal law exists for the protection of the community is not to say that severity is to be regarded as the sentencing norm. Times and conditions change, and the approach of judges to their task must be influenced by contemporary conditions and attitudes. But public concern about crime, however understandable and soundly based, must never be allowed to bring about departure by the courts from those fundamental concepts of justice and mercy which should animate the criminal tribunals of civilised nations ... The protection of the public must remain our first concern, but if, consistently with that, we can, in our compassion, assist another human being to avoid making ruin of his life, we ought surely to do so."

See also Vartzokas v Zanker [1989] SASC 1591; (1989) 51 SASR 277 per King CJ at 279-280 and Moorehead v Police (1999) 202 LSJS 488 at 490.

Whilst the offences are undoubtedly serious, they are not so serious as to prevent an order for immediate release. The amount involved, although substantial, is less than the amounts usually seen in the most serious types of cases. The period of offending represents a relatively short period in a law-abiding and useful life. The appellant informed the Department of his employment with the consequence that payments to him ceased some months before his offending was discovered. In that sense, he voluntarily ceased his offending. This is a factor not commonly found in such cases. It is of particular significance.

Lastly, we mention reparation. Pursuant to s 16A(2)(f)(i), the Court is obliged to take into account any action by the appellant to make reparation in the context of contrition. As has been mentioned, the total amount received has now been repaid. It may be said that in arranging for reparation to be made, the appellant was doing no more than meeting an obligation imposed by law and repaying what he had illegally received by his own conduct. It should also be said that offenders cannot buy their way out of severe punishment by repaying what they should never have received. However, the Courts are obliged to regard reparation as a positive matter so far as an offender is concerned. In SA Police v John (1995) 181 LSJS 20, King CJ, with whom the other members of the Court agreed, said at 22:

"The fact that somebody has made the sacrifice necessary to enable full restitution to be made is an important consideration and, of course, this court encourages that course to be taken."

There the Court was sentencing under State law but the relevant provisions in the Criminal Law (Sentencing) Act 1988 are the same: see s 10(f). There are cases where reparation has been the decisive factor in the exercise of the discretion to suspend a custodial sentence: see The Queen v Robertson (1984) 115 LSJS 51. In that case, much like the present case, reparation was made after sentence was imposed and pending appeal. King CJ, with whom the other members of the Court agreed, said, when referring to reparation as the new factor, at 53:

"The new factor is important in another way because it shows that the appellant has made use of the time which he has had since he has been on bail to rehabilitate himself by working, and working hard, and making good use of the money which he has earned for the benefit of those whose money he had taken. This augurs well for his rehabilitation and gives this Court some ground for extending a leniency to him which was not available to the learned sentencing judge. I think that the combination of these two aspects of the new factor is sufficient to enable this court to intervene, bearing in mind that the appellant was in gaol from the date upon which he was remanded for sentence, 13 March 1984, to the date on which he was released on bail, 9 May 1984, a period of two months."

In Radjevic v Police (1997) 67 SASR 478 Debelle J regarded reparation favourably even though, as here, it was made from money borrowed.

In our view, the making of reparation is an important factor in the present circumstances and it should be acknowledged in a positive way in the sentencing process. Standing alone, it should not be regarded as decisive, but along with the other matters which have been mentioned, it justifies an order for immediate release.

For these reasons, we would allow the appeal and order, pursuant to s 20(1)(b), that the appellant be released upon his entering into a bond in the sum of $300 to be of good behaviour for a period of three years.

WILLIAMS J. The appellant's offending ceased when he obtained steady full time employment. He then voluntarily attended at a regional Centrelink office to cancel his entitlements. The sentencing Magistrate incorrectly proceeded on the basis that the offending continued until detected by Centrelink's data matching procedures. The fact that, by his own volition, the appellant was able to break the pattern of his fraud deserves recognition in the course of sentencing. In view of this error I consider that the appellant should now be resentenced.

The authority of R v Cameron and Simounds (1993) 17 LSJS 305 was mentioned during argument. Those were each cases of serious social security fraud in which the offender assumed a false identity, opened and maintained a bank account in a false name and periodically answered questionnaires in the fictitious as well as the correct name. The matters charged were offences under s 29B of the Crimes Act (1914) (Cth) ("the Act") although other offences were taken into account.

In the present case the degree of criminality is in a lesser category of offending than in the matters of Cameron or Simounds. In Cameron 129 offences committed over a period of 3 1/2 years were brought to account. Simounds involved 83 offences committed over nearly 3 years. Those cases each display features of aggravation involving planning and sustained implementation of a systematic and deliberate fraud in which the offenders persisted over a long period to obtain double benefits.

Kovacevic committed 34 offences spasmodically over 19 months. During the period of his offending the appellant was in and out of work with no assurance for the future. He feared that whenever he fell out of work he would be left without support for the following fortnight until his unemployment benefits were due to resume. Counsel outlined the appellant's apprehension of administrative delays in the processing of his claims for relief as his circumstances and status changed. The offending appears to be directly related to his perception of shortcomings in the system. The appellant will be sentenced on the basis of his perception but the submission has not been tested. Therefore, as a matter of fairness, the submission should not be allowed to carry any criticism.

The amount involved is not large. Reparation has been made to the Commonwealth since the matter was before the sentencing Magistrate. The manner of offending lacks sophistication. The appellant has excellent prospects. His continuing efforts to obtain steady employment and his timely cancellation of his claim when he found full time work deserve credit. The offending came to light on 31 August 1998 and after a further 20 months the appellant comes now to be resentenced in circumstances where in the meantime he has put his life in order. This fact, which works to the appellant's advantage cannot be ignored.

As in Birch v Fitzgerald (1975) 11 SASR 114 I am not persuaded that the appellant is in need of rehabilitation and it is not a factor in my assessment. In that case, Bray CJ remarked at 116 that there are "offences and offences". Likewise in my view there are frauds and there are frauds. Cameron and Simounds and the present case fall into different categories.

In awarding a custodial sentence the sentencing Magistrate regarded the deterrent aspect of the penalty as "overwhelming". Although that remark was based upon an incorrect view of the facts Her Honour's approach shows a rigidity in the application of sentencing principle which ought to be avoided.

In my view the statements in Cameron and Simounds reflect a proper approach to sentencing for the aggravated type of crime then before the Full Court. However, it may be assumed that King CJ, with whom Duggan and Debelle JJ agreed, intended their remarks to be applied with a knowledge of sentencing principle. I treat the criticisms of that case during argument as unjustified.

Section 16A of the Act lists particular matters which must be brought to account in sentencing. Personal deterrence is mentioned in s 16A(2)(j) but general deterrence is not. This matter was discussed by the Full Federal Court in Tapper v R [1992] FCA 600; (1993) 111 ALR 347 at 351-2:

"On the other hand, whilst the list of matters specified is not exhaustive, and matters specified are to be taken into account "in addition to any other matters", there is no mention of general deterrence. The question arises whether a court in sentencing a federal offender is entitled to take general deterrence into account, and, if so, to what extent. This question received the attention of the New South Wales Court of Criminal Appeal in Director of Public Prosecutions (Cth) v El Karhani (1990) 97 ALR 373. After referring to authorities, including the decision of this court in Davey [1980] FCA 134; (1980) 2 A Crim R 254, the court affirmed the "fundamental principle of sentencing, inherited from the ages" that one of the main purposes of punishment is to protect the public by the deterrence of potential offenders through fear of similar punishment. The court concluded at 380-1:

"The language of the Act gives no support for the proposition that general deterrence has been removed from the list of criteria to be considered by a court sentencing a person for a federal offence. On the contrary, s 16A(1) imposes on the court the duty, which is its primary obligation, to ensure that the sentence or order 'is of a severity appropriate in all the circumstances of the offence'. It is by this duty that the general principles of sentencing law are imported into the function of a court imposing a sentence on a federal offender convicted of the offence. What will be 'appropriate' will depend, in part, upon a consideration of fundamental notions, such as that of general deterrence.

"The list of particular considerations in s 16A(2) must be read as subject to the primary obligation of the court stated in s 16A(1). All that s 16A(2) requires is that the court should 'take into account' the listed matters. They provide a catalogue of matters to be considered in determining the 'severity appropriate in all the circumstances of the offence'. However, the opening words of s 16A(2) must be noticed. They state that the matters there listed are to be taken into account 'in addition to any other matters'. These words make it plain beyond argument that the legislature was not seeking, by the list, to exclude other relevant matters. One other such relevant matter is clearly the general deterrent effect of the sentence. As in this case, that may be equally important as the effect on the offender."

We agree with the conclusion and the observations and would only add that there is nothing in s 16A to suggest that general deterrence should be accorded less importance, or more, than the other factors expressly mentioned. In this respect s 16A has not ousted the general principles of sentencing law, which have always given general deterrence a significant place."

In our view, Gallop J was correct in putting emphasis on the element of general deterrence in sentencing a man who had abused a position of trust on no less than 11 occasions over a period of a year or so in order to steal a substantial amount of money from a public authority for the purpose of indulging an addiction to gambling. It is true that there is no rule of law that in all such circumstances an immediate custodial sentence is inevitable, and it is true that every case depends upon its circumstances. But unless the court can find particular circumstances, whether labelled "special", "extraordinary", or otherwise, the indications in the authorities are that such a sentence will generally be the appropriate sentence."

The Court records show that this citation was before the Full Court when Cameron and Simounds was argued.

In my opinion the remarks of King CJ reflect the approach taken to sentencing under the Act by the full Federal Court.

Although the circumstances can be described as marginal, I do not consider that an immediate custodial sentence is now required.

I agree that the appeal should be allowed and I agree with the sentence which has been proposed.