R v Caradonna

WOOD CJ AT CL DUNFORD J CARRUTHERS AJ Friday, 6 OCTOBER 2000 R v Angelo Antonio CARADONNA JUDGMENT 1 DUNFORD J: This is a Crown appeal against the inadequacy of concurrent sentences of two years to be served by way of periodic detention imposed on the respondent by her Honour Judge Tupman in the District Court in Sydney following his pleas of guilty to three counts of defrauding the Commonwealth contrary to the provisions of s 29D of the Crimes Act 1914 (Cth), which offence carried at the time a maximum penalty of 10 years' imprisonment or a fine of $100,000 or both. 2 Each of the counts related to obtaining money from the Australian Taxation Office. In relation to the first count, the respondent during the tax year 1994/1995 worked as a specialist tomato salesman at the Flemington Produce Markets for a company J B Tucker & Sons Pty Ltd which ceased trading when a liquidator was appointed in November 1995. The respondent was employed as a contract tomato salesman, not as an employee, and accordingly no tax was deducted by the company from his remuneration. Notwithstanding that, on or about 22 August 1996 the respondent submitted a taxation return for the 1995/1996 tax year which included a statutory declaration signed by him which stated that during the period from 1 July 1995 to 30 June 1996 he was employed by J B Tucker & Sons Pty Ltd and that during that period he was paid a gross weekly wage of $1,346 out of which tax amounting to $472 per week had been deducted. These statements in the statutory declaration were untrue. He also in the tax return made claims for various motor vehicle and other work related expenses which her Honour likewise found were not true. 3 As a result of lodging this return and statutory declaration the respondent was issued with a refund cheque in the sum of $23,906.60 on or about 25 September 1996. 4 In relation to count 2 the respondent on 11 July 1997 submitted a further tax return for the 1996/1997 tax year which included what purported to be a group certificate showing that he was employed by J K Engraving Pty Ltd and from that company had earned a gross salary of $93,600 from which the sum of $37,799.80 had been deducted by way of tax instalments, and also specified a travelling allowance of $1,850 and a uniform allowance of $400. The tax return specified that the accused was a salesperson with that company and that he had numerous deductions arising from work related expenses. At no stage was the respondent ever employed by J K Engraving Pty Ltd in any capacity, he did not receive the income alleged in the group certificate, nor were any tax instalments deducted, other allowances paid to him, nor did he incur the expenses for which he claimed the deductions. 5 Her Honour found that all the relevant statements made in that group certificate were erroneous and that the group certificate itself was a forgery, although she was not satisfied beyond reasonable doubt that the respondent in fact played any part in the forging or creating of the certificate; but she did find that he knew it was a forgery and that he knew that none of the relevant statements in it were correct. As a result of lodging that return the respondent was issued with a refund cheque from the Australian Taxation Office in the sum of $22,466.40. 6 In relation to the third count, on 26 August 1998 the respondent lodged a tax return for the 1997/1998 tax year. Once again this included a forged group certificate, this time specifying that during the relevant period he had been employed by J & K Ind Engraving Pty Ltd and had earned a gross salary of $95,400 from which tax instalments of $38,525.70 had been deducted, that a lump payment of $5,750 had been paid to him and there were travel allowances of $2,970 and a uniform allowance of $500. 7 Once again none of the relevant statements in the group certificate were true. The respondent had never been employed by the company specified which was not, in fact, a company registered in Australia. Once again, as I say, the group certificate was a forgery but her Honour did not find that the respondent was actually involved in forging or creating it but she did find that once again, when lodging it, he knew that it was a forgery and the statements in it were false. 8 As a result of his filing this tax return the respondent was due to receive a refund of $17,114.09, but the matter was investigated and the refund cheque was intercepted and the cheque cancelled by the Australian Taxation Office. 9 The total of the three refund cheques was $63,487.13 of which the respondent personally received $46,373.04. 10 The respondent initially pleaded not guilty but, after five days of evidence and virtually at the end of the Crown case, he changed his pleas to guilty. Her Honour described the prosecution case as a strong one in relation to the first count and "virtually overwhelming" in relation to counts 2 and 3. She therefore regarded the pleas of guilty more as a recognition of reality on the part of the respondent rather than as any indication of contrition; and accordingly afforded them little weight in discounting what would otherwise be appropriate sentences; but she did have regard to them as providing certainty and avoiding the possibility of a hung jury or a perverse acquittal which could have resulted from confusion with the documentary evidence, sympathy for the respondent or even antipathy towards tax collecting agencies. 11 Her Honour described the offences as serious matters, not at the top of the range for such offences but not at the bottom either, and found they were committed out of greed and not need. 12 The respondent was at the time aged 38, married with one child from the marriage and another expected, whilst he also had two children from an earlier marriage for whom he provided financial support. 13 His only previous convictions had been for driving whilst disqualified and he had never been to prison. He had a record of regular work since about age 10 in the fruit and vegetable field and at the time of sentencing he was conducting a business described as a "loans originator". 14 He also has a younger brother who is intellectually disabled who lives with their mother and it was said that he provided physical and financial support to his mother in the care of the brother. 15 Her Honour had some doubt as to whether the respondent was fully aware of the seriousness of the offences and accordingly rated his prospects of rehabilitation as being good rather than excellent. 16 Her Honour referred to the Crimes Act s 16A, particularly to the impact that a full-time custodial sentence would have on his family (s 16A(2)(p)) as a result both of his absence and lack of financial support, noting that his wife would soon find it necessary to give up her paid employment at least for a time because of the impending birth of their second child, and also the impact that this full time absence would have on his intellectually disabled brother and the additional burden it would place on their mother. 17 This latter circumstance in particular she regarded as a special circumstance which took the case outside the normal practice that cases involving fraud on the revenue call for a full-time custodial sentence and she expressed the view that the seriousness of the offences, general and personal deterrence could all be accommodated by sentences to be served by way of periodic detention. Her Honour also made a reparation order pursuant to section 21B of the Crimes Act in the sum of $46,373.04. 18 We have been informed from the bar table that, apart from the first weekend, the respondent has not attended for any periodic detention but claims to have a medical condition which prevents him doing so, and the extent of this condition and the validity of his excuse for non-attendance is still apparently under consideration. He has made no payments pursuant to the reparation order. 19 The submission made on behalf of the Crown is that offences of this nature warrant a full-time custodial sentence and that periodic detention fails to pay sufficient regard to the seriousness of the offence and need for general deterrence. 20 The offences were certainly serious involving as they did repeated, deliberate, premeditated frauds on the Commonwealth with sophisticated planning, and in the case of the second and third counts the use of documents known to be forgeries containing false statements of fact. 21 The amounts involved, although not as large as in some other cases, were nonetheless significant and unlike most taxation fraud cases, they involved not the mere non-disclosure of income with a resultant failure to pay tax due but extracting from the Taxation Office by way of supposed 'refunds' money which had never belonged to the respondent in the first place. 22 The principle that generally in the case of serious offences of defrauding the revenue the element of general deterrence is of major importance and that usually such offences should receive full-time custodial sentences has been referred to in a number of cases and it is not necessary to again analyse them in detail; see R v Morris (1992) 61 A Crim R 233, R v Whitnall (1993) 120 ALR 449, R v Wright (1994) 74 A Crim R 152, R v Nguyen and Pham (1996) 86 A Crim R 521, R v Ruggero (SASC - 1 December 1998), R v Kelvin [2000] NSWCCA 190 and Director of Public Prosecutions v Hamman (CCA - 1 December 1998). Lest any attempt be made to compare the amounts involved in the present case against the amounts involved in Hamman, I should point out that Hamman was dealt with under s 29B which provides for a maximum sentence of two years as opposed to the present respondent who is being dealt with under s 29D. 23 In R v Stitt (1998) 102 A Crim R 428, a case with some similarities to the present, although involving larger amounts, I said at 430, "Fraud on the Taxation Department is a serious offence and this is even more so when it involves a sophisticated scheme such as the present to obtain from the department so-called refunds of moneys which had never been paid in the first place and where such a substantial sum of money is involved." 24 It is in a very real sense not only a fraud on the Department as such but a fraud on all other taxpayers who pay what is due, and the need for general deterrence in such cases has been referred to a number of times and, although most of the cases to which I have referred have simply referred to custodial sentences, it is clear from the context that what was being referred to was full-time custodial sentences as opposed to custodial sentences to be served by way of periodic detention. This was impliedly acknowledged in R v Gentz [1999] NSWCCA 285 at para [6] and was expressly recognised by the learned sentencing Judge at p 9 of her Remarks On Sentence. A sentence of periodic detention has a strong degree of leniency built into it and, more importantly for present purposes, it is outwardly less severe in its denunciation of the offence and in its effect on general deterrence: R v Hollocoglu (1992) 29 NSWLR 67 at 73; and in the case of serious white collar crime, it does not adequately reflect the requirement of general deterrence. 25 Although in relation to State offences regard cannot be had to the effect that a sentence of imprisonment may have on members of the prisoner's family except in highly exceptional circumstances: R v Edwards (1996) 90 A Crim R 510, R v Day (CCA - 23 April 1998), R v Byrne (CCA - 5 August 1998), in the case of Federal offenders section 16A(2)(p) of the Act expressly requires the sentencing Court to take such matters into account, as her Honour purported to do. 26 However in my opinion the evidence did not justify her Honour in regarding the effect of a sentence of full-time imprisonment on the respondent's family, including his brother and mother, as justifying anything less than a sentence of full-time custody. It is not uncommon and it is a natural consequence of full-time imprisonment for families to be deprived of breadwinners, husbands and fathers. In the present case her Honour referred particularly to the effect of full-time custody on the care of the respondent's intellectually disabled and handicapped brother. There was no evidence from the respondent or from his mother as to the effect that imprisonment would have on the care of the brother, and the evidence of his sister Mrs Palumbo was extremely vague and amounted to little more than saying that he sometimes helped out with lawn mowing and other chores, but not how often or how regularly, that he sometimes paid for medicines and at other times provided financial support, although she did not know how much, and she conceded that if the respondent was interstate or overseas she would be able to assist their mother with the care of their brother. 27 I do not consider that this vague evidence justified departing from what her Honour acknowledged was the normal type of sentence for serious cases of fraud on the revenue, namely one of full-time custody; and the sentences of periodic detention in my view fail to contain a sufficient element of general deterrence. Futhermore, they failed to comply with the requirements of section 16A(1) of the Act which provides that in determining the sentence to be passed the Court must impose a sentence that is of a severity appropriate in all the circumstances of the offence. 28 I am therefore of the opinion that the sentences imposed in the present case are grossly inadequate. They disclose error on the part of the sentencing Judge and they call for the intervention of the Court. 29 As pointed out in R v Webster [1999] NSWCCA 313 by Grove J and Greg James J, with both of whom Sully J agreed, it is not sufficient for sentencing Judges to mouth a formula saying that they have had regard to sentencing principles laid down by this Court, it is necessary for them to also apply those principles, and if they do not, this Court is faced with the distasteful task of sending someone to prison some months after the sentencing process should have been completed. 30 As this is a Crown appeal, on account of the double jeopardy involved, this Court on re-sentencing will impose a lesser sentence that it considers should have been imposed at first instance. 31 Allowing for the very belated plea of guilty, for which I myself would only allow in the vicinity of five to ten per cent discount, and taking into account also, as required by s 16G of the Act the non-availability of remissions in this State, but noting also that in this case virtually none of the periodic detention has been served, I propose that the Crown appeal be allowed, that the sentences imposed by the sentencing judge be quashed and in lieu thereof on each count the respondent be sentenced to imprisonment for six months; such sentences to be concurrent, to date from today and expire on 5 April 2001. 32 Having regard to the length of the sentences and the provisions of s 19AC(3) it is not necessary to make a recognisance release order. I would also confirm the reparation order made by her Honour. 33 WOOD CJ at CL: For the reasons identified by Justice Dunford I am satisfied that the learned sentencing Judge erred in law in coming to the conclusion that exceptional or special circumstances were shown, sufficient to depart from the sentencing norm for cases of the kind now before the Court. 34 I recognise that the need for this Court to correct the error below has almost certainly led to an increase in the burden that the respondent will bear, beyond that which would have been occasioned had the correct sentences been imposed in the first instance. That is not an uncommon circumstance when the Crown finds it necessary to appeal against manifestly lenient sentences and that appeal is upheld. It needs to be observed again that Judges do not do any favour to persons standing for sentence by imposing sentences that are out of kilter with proper sentencing principle. That kind of sentence holds out a promise that is bound to lead to disappointment, and to an increase in uncertainty and anxiety while the inevitable appeal is awaited. 35 Having regard to the extent to which the sentence fell so far short of that which should have been imposed I am satisfied this is not a case calling for the exercise of the traditional discretion attaching to the Crown appeal. But for the principle of double jeopardy I would have considered a longer custodial sentence appropriate. However for the reasons identified by his Honour I agree with the orders proposed. 36 CARRUTHERS AJ: I also agree with the orders proposed for the reasons enunciated by Mr Justice Dunford. 37 WOOD CJ at CL: The orders will be as proposed by his Honour Mr Justice Dunford. 38 (Mr Stanton asked that the respondent be assessed for home detention. The Crown opposed the application. Discussion ensued.) 39 DUNFORD J: This Court having imposed concurrent sentences of 6 months imprisonment in respect of these matters, Mr Stanton, counsel for the respondent, has sought an order that the respondent be assessed as to his suitability for home detention. 40 It appears that the Court now has power, by virtue of s 20AB of the Crimes Act (Cth) and the amendment of the Crimes Regulations 1990 by the Crimes Amendment Regulation 2000 (No. 1) SR 99 of 2000, to order that a sentence for a federal offence be served by way of home detention. Accordingly, one is brought back to consider the provisions of s 7 and Part 6 (ss 74-83) of the Crimes (Sentencing Procedure) Act 1999 (NSW). 41 Section 7 provides that where a Court has sentenced an offender to imprisonment for not more than 18 months, it may make an order directing that the sentence be served by way of home detention, but Part 6 provides the procedure, and the restrictions on the making of such an order. 42 There are certain types of offences, and a certain type of offender in respect of whom such an order may not be made: ss 76 and 77, and s 78 provides that a home detention order may not be made unless the Court is satisfied of various matters, including (a) that the offender is a suitable person to serve the sentence by way of home detention, and (b) that it is appropriate in all the circumstances that the sentence be served by way of home detention, and there are other matters as well. An order may only be made if an assessment report states in that, that the offender is a suitable person for such an order: s 78(4). Section 80 provides for the referral of an offender for assessment and s 81 for the making of such assessment. 43 Section 7, or rather its predecessor, was considered by this Court in R v Jurisic (1998) 45 NSWLR 209, where the nature and effect of home detention was discussed. It was held that it is a less onerous form of detention than detention in a Corrective Services institution, and that in exercising the discretion to order an assessment, the Court should take into account that the making of an order under the section will entail a significant watering down of the sentence of imprisonment, and may lead to a sentence that was not otherwise appealable, becoming appealable. 44 It was also held that the sentencing court has a discretion to request an assessment, and then if and when a favourable assessment has been made, a further discretion whether or not to make the order. 45 I also refer again to the provisions of s 78(1)(b), that one of the matters the Court must take into account in determining whether to make such an order, is whether it is appropriate, in all the circumstances, that the sentence be served by way of home detention. 46 This case has come to this Court on appeal, on the grounds that an order for periodic detention resulted in error on the part of the sentencing judge, and sentences which were inadequate. Having regard to the principles of double jeopardy and the other matters to which I have referred, this Court has imposed a sentence at the bottom of what it would regard as the appropriate range for these offences. To make an order for home detention would further water down the effect of the sentences, and in my view would render the sentences that this Court has just imposed, inadequate. 47 The general rule that people who defraud the revenue in substantial amounts should suffer full-time custodial sentences would, in my view, not be satisfied by the imposition of home detention, with the concessions that service of a sentence in such manner entails. Therefore, I would propose that this Court refuse the application to have the respondent assessed for a home detention order. 48 CARRUTHERS AJ: I agree. 49 WOOD CJ AT CL: I also agree. The application for referral for assessment is accordingly refused. 50 It is appropriate to note that the prisoner appears to be in need of medical investigation. That need should be accommodated by the Department of Corrective Services. These remarks should be communicated to the Director of Health Services as soon as the respondent is admitted into custody. oOo

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.