[2016] ACTSC 371

CRIMINAL LAW - JURISDICTION, PRACTICE AND PROCEDURE - Reparation orders - whether insurer entitled to reparation order for insurance payout for stolen property - whether loss suffered as a direct result of offence - meaning of "direct result" in Crimes (Sentencing) Act 2005 (ACT) s 19 - insurer suffered indirect loss - no entitlement

Crimes (Sentencing) Act 2005 (ACT) ss 6, 11, 13, 19, 20, 110

Crimes Act 1914 (Cth) s 21B

Legislation Act 2001 (ACT) ss 126, 139, 140, 142

Sentencing Act 1991 (Vic) ss 85B, 86

Fagan v The Crimes Compensation Tribunal (1982) 150 CLR 666

Kaplan v Lee-Archer [2007] VSCA 42; (2007) 15 VR 405

R v Annesley (Unreported, Supreme Court of the Australian Capital Territory, Penfold J, 4 November 2011)

R v Foster [2008] QCA 90; [2009] 1 Qd R 53

Arthur Delbridge et al (eds), Macquarie Dictionary (Macquarie Library, 3rd ed, 1997)

Explanatory Statement, Crimes (Sentencing) Bill 2005 (ACT)

Legal Aid ACT (Offender)

SCC 139 of 2014; SCC 140 of 2014; SCC 93 of 2016; SCC 94 of 2016

1. The offender was sentenced for offences of aggravated burglary and theft that occurred when, in the company of a co-offender, he forcibly entered a hair salon causing damage of $2,510 and stole property to the total value of $7,118.

2. Pursuant to s 19(2) of the Crimes (Sentencing) Act 2005 (ACT) (Sentencing Act) the Director of Public Prosecutions applied for reparation orders requiring the offender to make reparation to the proprietor of the salon (for the payment of insurance excess) and an insurance company (for the amount paid in satisfaction of the proprietor's insurance claim). Without objection, I made a reparation order in favour of the proprietor.

3. The offender contended that the insurance company was not entitled to reparation pursuant to s 19(1) of the Sentencing Act because it did not suffer loss "as a direct result of the commission of the offence."

4. Relevantly, s 19 of the Sentencing Act provides:

(1) This section applies if -

(a) an offender is convicted or found guilty of an offence against a territory law; and

(b) a person (the injured person) suffers loss or incurs expense (including any out-of-pocket expense) as a direct result of the commission of the offence.

...

(4) This section is subject to chapter 7 (Reparation orders) and section 134 (Operation of ancillary and restitution orders).

...

(Emphasis added.)

Section 19(5) of the Sentencing Act imports into s 19 the definition of "loss" in s 300 of the Criminal Code 2002 (ACT):

loss means a loss in property, whether temporary or permanent, and includes not getting what one might get.

5. Section 110 of the Sentencing Act, which deals with the evidential basis for making reparation orders, provides:

(1) A reparation order must not be made for the offence unless the court considers that the order should be made on the basis of facts established by -

(a) evidence given at the trial; or

(b) available documents; or

(c) admissions by the offender; or

(d) submissions made by or for anyone (including the director of public prosecutions).

"Available documents" is defined in s 110(2) by reference to evidence that would be admissible at the trial, depositions in any committal proceeding, written evidence in any committal proceeding and "any other relevant written documents." An example of "other relevant written documents" is provided, being documents concerning the value of an object or the cost of its repair. An example in an Act is part of the Act: s 126(4) of the Legislation Act 2001 (ACT') (Legislation Act).

6. Relying on the Macquarie Dictionary definition of "direct," which includes "without intervening agency," the Director of Public Prosecutions submitted that the ordinary meaning of "direct result" includes a loss suffered by an insurance company because of a claim made by the immediate victim of an offence: Arthur Delbridge et al (eds), Macquarie Dictionary (Macquarie Library, 3rd ed, 1997). The Director submitted that such an interpretation was consistent with the objects of the Sentencing Act.

7. The offender did not argue that the "without intervening agency" approach was wrong but submitted that, if such an approach was applied to the circumstances of the present case, the reparation order could not be made. Further, the offender submitted that the term "direct result" has a more restricted meaning than terms such as "as a result of" or "by reason of" which appear in comparable legislation. The offender argued that the loss suffered by the insurer should be characterised as "secondary loss by way of a ripple effect" (an expression used by McMurdo P in R v Foster [2008] QCA 90; [2009] 1 Qd R 53 (Foster)), and such a loss is not a "direct result" of the offence.

8. In many instances, without objection, the Court has made a reparation order in favour of an insurer.

9. The limits to s 19(1) received brief consideration by Penfold J in R v Annesley (Unreported, Supreme Court of the Australian Capital Territory, Penfold J, 4 November 2011). Her Honour declined to make a reparation order in favour of the insurer of an arson victim because she was not convinced that the insurer was entitled to an order. Further, her Honour was concerned that a reparation order "may cut across the contractual arrangements between ... [the insurer] and ... [the arson victim]."

10. It is trite to note that, in interpreting an ambiguous legislative provision, a purposive approach should be taken and the relevant provision should be read in the context of the Act as a whole: ss 139 and 140 of the Legislation Act.

11. The evidential basis for making reparation orders set out in s 110 of the Sentencing Act supports the view that there must be close connection between a person claiming reparation and the offence; s 110 contemplates that most of the material relevant to the claim for reparation will have been put before the court in the criminal proceedings.

12. The terms of s 20 of the Sentencing Act also support the view that, under s 19, there must be a close connection between a person claiming reparation and the offence, and that the entitlement to reparation under s 19 does not extend to secondary victims of property offences. Section 20(3)(a) empowers a court to order that an innocent third party who has acquired stolen property must restore it to the rightful owner and s 20(4) empowers a court to make an associated order that the offender recompense the innocent third party. If the interpretation for which the Director contended was correct, s 20(4) would be otiose.

13. I do not accept the Director's submission that the objects of the Sentencing Act (set out in s 6 of the Act) support the interpretation for which he contends.

14. With the exception of object (a) (to promote respect for the law and the maintenance of a just and safe society) each of the objects concerns sentencing in the conventional sense. It is true that the s 19 power to make reparation orders is contained within Chapter 3 of the Sentencing Act, which deals with sentencing and non-conviction options. Further, if an offender is sentenced to an intensive correction order or a good behaviour order, the order may (although it need not) include a condition requiring compliance with a reparation order: ss 11(5)(c) and 13(3)(e). However, the making of a reparation order is not a core part of the sentencing process; rather, it provides quick and convenient redress to a victim of crime, avoiding the need for a civil proceeding in which the evidence will largely duplicate the evidence that is before the court in the criminal proceeding.

15. Nor does object (a) support the interpretation for which the Director contends; as the making of a reparation order is a quick and convenient substitute for ordinary civil process it has little to do with the broader social objectives of promoting respect for the law and maintaining a just and safe society.

16. The Explanatory Statement to the Crimes (Sentencing) Bill 2005 (ACT) may be considered in working out the meaning of the legislation: s 142 Legislation Act. It is of some assistance. It states that the provision allows a reparation order to be made where "a victim of the crime suffers a loss or incurs an expense as a direct consequence of the offence." The references to "a victim of the crime" (rather than "a person" or "any person") and "direct consequence of the offence" together imply a relatively close connection between a person entitled to a reparation order and the offence. Further, the insurer of a victim of a crime would not ordinarily be described as "a victim of the crime."

Consideration of case law and comparable legislation in other jurisdictions

17. In their submissions, both parties referred to the decision of the Victorian Court of Appeal in Kaplan v Lee-Archer [2007] VSCA 42; (2007) 15 VR 405 (Kaplan). In that case, the Court considered s 85B of the Sentencing Act 1991 (Vic), which enabled a compensation order to be made "on the application of a person who has suffered any injury as a direct result of ... [an] offence." (Emphasis added.) The victim of thefts had suffered a post-traumatic stress disorder to which other events may have contributed. At [24] Buchanan JA (with whom Vincent and Nettle JJA agreed) stated that "direct" did not mean that there could be no step between the cause and the consequence or that the consequence must be solely due to the cause. At [25] his Honour opined:

Nor do I think that "direct" is a synonym for "immediate" or "proximate" or "obvious". An injury may be directly caused by a crime notwithstanding that the injury develops gradually or becomes manifest only after a lapse of time ... In a scheme of compensation which was designed to be a cheap and expeditious remedy tacked on to a criminal trial, in my view the introduction of the adjective "direct" is intended to exclude those results which are but tenuously related to crimes in that their contribution is a minor factor in the production of the injury.

At [28] his Honour observed that "direct" was inserted to emphasise that the crime must play a significant role in bringing about the compensable injury.

18. Nettle JA agreed with Buchanan JA, but added observations based on the High Court's decision in Fagan v The Crimes Compensation Tribunal (1982) 150 CLR 666 (Fagan), which his Honour considered may have informed the meaning of "as a direct result" in s 85B. Fagan concerned a claim for nervous shock by a child to whom the horrifying circumstances of his mother's death were gradually revealed. In Fagan, the question was whether nervous shock was sustained "by or as a result of" the offence. After observing that the expression covered two different (albeit overlapping) kinds of situation, Mason and Wilson JJ stated at 671:

Indeed the use of the two expressions may have been no more than caution on the part of the draughtsman to ensure that what might perhaps have been thought to be "indirect" results were brought within the terms of the section.

In Fagan, their Honours characterised the child's injury as a direct result of the murder.

19. In Kaplan, after discussing Fagan, at [56] Nettle JA concluded that:

when the draftsman of s 85B chose the expression "as a direct result of the offence" he or she had in mind the sense in which the expression was used in relation to the injury in Fagan, which is to say an injury that is judged as a matter of fact, according to common sense and experience, to have been caused by the offence. (Emphasis added.) (Citations omitted.)

At [58] his Honour observed that this interpretation of "direct result" was consistent with the object of s 85 B, which was to provide victims of crime with a speedy and low-cost option for seeking recompense from offenders without having to resort to civil proceedings.

20. In these proceedings, the offender's written submissions drew attention to s 86 of the Sentencing Act 1991 (Vic), which enables a court to make a compensation order in favour of "a person who has suffered loss or destruction of, or damage to, property as a result of the offence ...", contrasting that provision with the s 85B requirement of "injury as a direct result of the offence." (Emphasis added.)

21. In the Queensland case of Foster, a reparation order had been made in favour of a bank that had been defrauded by the offender. The offender was not convicted of fraud; rather, he was convicted of money-laundering on the basis that he had dealt with money that was the proceeds of crime (the fraud against the bank). On appeal, the question was whether the bank had suffered loss "as a direct result" (emphasis added) of the offence of money-laundering within the meaning of s 21B(1)(d) of the Crimes Act 1914 (Cth). Section 21B(1)(d) was interpreted in the context of s 21B(1)(c), which enables a reparation order to be made in favour of the Commonwealth or a Commonwealth public authority where there has been any loss suffered or any expense incurred by the Commonwealth or a public authority "by reason of" (emphasis added) an offence. McMurdo P (with whom Mackenzie AJA and Chesterman J agreed) said:

[71] ... The clear legislative intent in enacting s 21B(1)(d) is as follows. Federal offenders who through their offending have caused a loss to others should be liable to compensate those who have suffered that loss, where there is a sufficiently direct connection between the offence and the loss. Parliament intended that this should be done through the simple and cost-effective process of a court order made at, or shortly after, the sentencing proceeding.

...

[73] The legislature's use of the term "a direct result", rather than "the direct result" suggests it did not intend to limit the capacity to make a reparation order under s 21B(1)(d) to a single loss arising from an offence, if on the facts, there is more than one direct loss.

[74] The clear words of s 21B(1)(d) suggest a legislative intention that where, as a matter of fact, there is a close or significant connection between the loss suffered and the offence which caused it, a reparation order may be made in favour of the person suffering the loss. When read together with s 21B(1)(c), those words also suggest that, where a secondary loss by way of a ripple effect occurs as a result of an offence, a reparation order could not be made under s 21B(1)(d) in favour of the person suffering the loss. ... (Emphasis added.)

22. In these proceedings, the offender noted that, in 2013, Federal Parliament amended s 21B(1)(d), replacing the expression "by the person as a direct result of the offence" with the expression used in paragraph (c) "by the person by reason of the offence" (emphasis added).

23. The following principles can be drawn from Kaplan and Foster:

(a) Legislation of the type in question is designed to provide speedy recompense to victims of crime via a "shortcut" mechanism that utilises the evidence given in the criminal proceeding to achieve civil recompense. Generally, such legislation does enable recovery by persons other than immediate victims of crime. However, consistent with the "shortcut" nature of the compensation procedure, there must be a reasonably close connection between the offence and the victim's loss, regardless of whether legislation uses the expression "as a result of the offence" or "as a direct result of the offence".

(b) There is an established distinction between a broader category of claimant who has suffered injury or loss "as a result" or "by reason" of an offence and a narrower category of claimant who has suffered injury or loss "as a direct result" of an offence.

(c) Where the expression "as a direct result" is used, a claimant may only recover where, as a matter of "common sense and experience" the offence caused the loss. There must be "a close or significant connection between the loss suffered and the offence which caused it" and a claimant who has suffered a "secondary loss by way of a ripple effect" (i.e. an indirect loss) cannot recover. Or, to use a meaning of "direct" which is taken from the Macquarie Dictionary, there must be no "intervening agency" between the loss suffered and the offence which caused it.

24. In the present case, it is a moot point whether the insurer suffered loss "as a result of" the commission of the offences of aggravated burglary and theft. On one view, the insurer suffered loss as a result of the salon proprietor making an insurance claim and the insurer accepting the claim. In any event, the insurer did not suffer loss "as a direct result of the offence" because there was an "intervening agency" in the sense that the salon proprietor made an insurance claim and the insurer accepted the claim; the insurer suffered indirect loss by way of a "ripple effect".

I certify that the preceding twenty-five [25] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Chief Justice Murrell.