Kernich v Director of Public Prosecutions (Cth)

[1997] SASC 6050

IN THE SUPREME COURT OF SOUTH AUSTRALIA

DEBELLE J

Social welfare - social security payments - offences - appellant received Social Security payments - payments in excess of amount to which the appellant was entitled - convicted of nine offences - sentenced to 3 months' imprisonment - ordered to repay $3,600.85 - whether the sentence of imprisonment should have been suspended - gross delay in institution of prosecution -appeal allowed - sentence of imprisonment suspended upon appellant entering a security in the sum of $750 to be of good behaviour for 3 years and to make reparation. Social Security Act, 1991s1347(b), referred to. House v The King (1936) 55 CLR 499; R v Todd (1982) 2 NSWLR 513, applied. R v Suckling (1983) 33 SASR 133, discussed. Laxton v Justice (1985) 38 SASR 376; R v Vasin (1985) 39 SASR 45; Reimann v Robinson (unreported decision of Matheson J delivered 25 November 1987); David v Marcelline (unreported decision of Duggan J 20 May 1991); Flavel v Venning (unreported decision of Olsson J Jdt No 3507, 16 July 1992), considered.

ADELAIDE, 21 January, 18 February 1997 (hearing), 18 February 1997 (decision)

#DATE 18:2:1997

Appellant:

Counsel: Mr P Humphries

Solicitors: Reilly Basheer Downs & Humphries

Respondent:

Counsel: Mr Bonnici

Solicitors: DPP (Cwlth)

Appeal allowed.

DEBELLE J

1. This is an appeal against sentence.

2. On 26 November 1996 the appellant was convicted, on his plea of guilty, of nine offences of knowingly obtaining payment of a Social Security payment in excess of the amount to which he was duly entitled, contrary to s.1347(b) of the Social Security Act 1991. The magistrate imposed one sentence in respect of all nine offences, a sentence of 3 months imprisonment. In addition the magistrate ordered the appellant to repay the sum of $3,600.85 illegally obtained by him. The magistrate declined to accede to a submission the sentence should be suspended. She ordered that the sentence be served forthwith.

3. The appellant has appealed on the ground that the sentence was manifestly excessive and on the ground that the magistrate should have ordered a suspended sentence. When the appeal came on for hearing, Mr Humphries, who appeared for the appellant, abandoned the ground that the sentence was manifestly excessive. That decision was very properly made. The penalty was well within the range for this kind of offending. It is sufficient for present purposes to refer to the decisions of this court in Laxton v Justice (1985) 38 SASR 376, R v Vasin (1985) 39 SASR 45, Reimann v Robinson (unreported decision of Matheson J delivered on 25 November 1987), David v Marcelline (unreported decision of Duggan J, 20 May 1991) and Flavel v Venning (unreported decision of Olsson J, Jdt No S3507, delivered on 16 July 1992). Nothing is to be gained by repeating all of the factors mentioned in those cases. Those factors apply with equal force to the circumstances of this case. It is sufficient to note that in Laxton v Justice, Olsson J referred to the prevalence of this offence, the difficulties of detecting the offence and the fact that penalties should reflect a concern for the protection of the revenue. He referred also to the fact that frauds of this kind must be viewed seriously and that, generally speaking, a deterrent penalty is called for. He noted also that it was relevant to regard a continuing series of frauds of this type as increasing the moral blameworthiness of the offender's deceits by way of contrast with single or short term offences. Finally, and perhaps most relevantly, so far as this case is concerned, he noted that while it may be proper, in cases of first offences of this type, accompanied by mitigating circumstances, to impose a fine, nevertheless, a custodial sentence may well be appropriate in the case of serious frauds unaccompanied by substantial mitigating circumstances. Those principles have been applied continuously since, it is an unfortunate fact that the prevalence of the offending has not abated since the remarks were made by Olsson J and the courts continue to view the offence very seriously.

4. The appeal against the magistrate's refusal to suspend the sentence is an appeal against the exercise of discretion. The appellant can succeed only if he comes within the principles established in House v The King. (1936) 55 CLR 499, at 504 to 505. Those principles are well established and need no further repetition.

5. The magistrate took the view that there were aggravating features of the offending. The facts demonstrate the correctness of that conclusion. The offending occurred between 10 September 1993 and 31 December 1993. In respect of four offences the appellant received a benefit to which he was only partly entitled. In the case of the other five offences the appellant was not entitled to the benefit. In those five latter instances the appellant had received a Newstart allowance whilst he was receiving income from an employer. On each of the five occasions when he claimed the Newstart allowance the appellant had falsely answered a question asking if he were employed and, if so, the remuneration he was receiving. On each occasion he answered that he was not employed. In addition he was working under an assumed name of Davies. The other overpayments were made because the appellant had failed to declare that he was in gaol or because he had failed correctly to declare his earnings. The benefits were paid for the support of the appellant, his wife and two children. To summarise, the appellant not only made a false declaration on each occasion, but he used a false name to seek to conceal his deceit.

6. Counsel for the appellant informed the magistrate of the following facts relating to the circumstances of the appellant. The appellant is aged 35 years. He had resided with his de facto wife for a period of 18 years, but had separated in January 1996. There were two daughters of that relationship, aged 9 and 4. The daughters both reside with their mother. The appellant has access to his daughters twice in each week and has an excellent relationship with them. There are some prospects of a reconciliation with his former wife.

7. The appellant had been employed by the District Council of Loxton since early 1996. He was initially employed on a contractual basis on a river-front beautification project. That work had come to an end in August 1996 but the appellant was re-employed by the council in about mid October 1996 on a casual basis for an indefinite period. He is presently working 40 hours per week and his net income is of the order of $400 per week. The appellant has been informed that there are good prospects of full employment once he regains his driving licence in February 1997.

8. Until he had been employed by the District Council of Loxton the appellant had been without work and in receipt of Social Security benefits for approximately 4 to 5 years, that period punctuated by intermittent periods of casual employment. A substantial factor in the inability of the appellant to gain employment was the fact that he had been disqualified from holding or obtaining a driver's licence in about 1993 for a period of 3.5 years.

9. The appellant's mother had died in 1991 following a lengthy illness. The appellant had been very close to his mother; he did not deal well with her illness and subsequent death. He commenced drinking alcohol very heavily during her illness and his heavy drinking continued after her death. He developed also a chronic addiction to gambling. He gambled everyday. A substantial part of his income, be it wages or social service payments, was wasted on gambling and alcohol.

10. Following the commission of these offences the appellant had made a concerted effort to rid himself of both the addiction to gambling and to alcohol. Since mid 1995 he had ceased gambling, apart from a small bet on the Melbourne Cup. He had substantially reduced his consumption of alcohol. In addition, he had taken other steps to assist his rehabilitation. He had completed a six month course at the Murray Institute of TAFE in 1996. He had also recommenced playing golf after a long absence from that sport. It seems that as a teenager he was an accomplished golfer and had played the sport competitively.

11. Following the detection of the offences, the appellant had been making restitution at the rate of $40 per fortnight by means of deduction from Social Security payments. Once he was employed by the District Council of Loxton he began making voluntary payments from his wages, again at the rate of $40 per fortnight. At the date of the sentence he had repaid approximately $1600 of the payments wrongfully obtained.

12. The appellant has quite a number of offences over a period of about 17 years. They include serious driving offences and some street offences. In 1992 he was imprisoned for an assault occasioning bodily harm. He has, however, only two prior convictions for dishonesty, but neither, it appears, was an offence of great seriousness. The monies received by the appellant were applied towards the support of his wife and two children. At the same time it is apparent that a considerable part of the payments were used to satisfy his addiction to alcohol and gambling.

13. It is apparent from the remarks of the learned magistrate that she has had regard to all of the relevant factors when sentencing the appellant. As I have already mentioned, she was entitled to take a serious view of the offending. She concluded there was nothing which took the offence out of the normal case of this kind. But for the matter that I am about to mention, there would have been no cause for interfering in any respect with the sentence she had ordered.

14. There is, however, one troubling aspect. It is a matter which I regard as being of considerable concern. As already mentioned, the offending occurred between the months of September and December 1993. The matter for concern is the delay in the institution of the prosecution for these offences.

15. The offending was detected in mid-January 1994 as a result of information given to the Department by a member of the public. Between that date and August 1994 the Department was engaged in enquiries seeking to determine whether the person called Leslie Kernich and the person called Les Davies, the name assumed by the appellant, were the same person. The Department cannot be criticised for any delay in that period, although it does seem that six months is a long period in which to check a fact which could be ascertained with relative ease. However, I do not have regard to any delay in that period of about six months.

16. In August 1994 a questionnaire and a covering letter were sent by the Department to the appellant. He returned it at the end of August 1994. The questionnaire which he had completed is now missing from the departmental file. It is relevant to note that in the period August to November 1994 the Department calculated the overpayment and raised an obligation on the part of the appellant to repay the overpayment. I infer from these actions of the Department that the questionnaire completed by Mr Kernich contained something which indicated to the Department a basis upon which it was entitled to recover the overpayment.

17. On 28 November 1994 the Department sent a letter to the appellant requesting repayment of the amount of $3,685 which had been over paid and stating that, if he could not pay it in full, to discuss terms of payment with the Department. It appears that terms were agreed and the Department began to deduct payments at the rate of $40 per fortnight from Social Security payments made to the appellant.

18. I pause to note that, even by the end of November 1994, no officer of the Department had interviewed the appellant. There follows a gap in the departmental file for a period of some 12 months. According to the information supplied by the Department, there is nothing on its file to indicate what, if any, steps were taken during 1995. During this period the file was transferred from the regional office of the Department at Berri to its Prosecutions Department in Adelaide. There was nothing on the file which indicates when the file was transferred from Berri to Adelaide. I do not think it is unfair to infer that there was a complete oversight or, alternatively, that the Department was simply sitting on its hands.

19. In January 1996 enquiries resumed. Letters were sent to the appellant in February and in March 1997. He contacted the Department. There is no note of what was said. By this stage no person had called upon the appellant for an interview and even at the date of prosecution he had not been interviewed. In early March 1996 the Department sent the brief to the Commonwealth Director of Public Prosecutions with instructions to institute criminal proceedings. It was not until 23 July 1996 that the complaint was issued.

20. In the period from November 1994 until July 1996 the appellant was not aware that a prosecution would be instituted. It was in that period that he undertook the steps already mentioned to rehabilitate himself. He had begun to make the repayments in November 1994, and two later letters, dated 6 March and 18 March 1996 written by an officer of the Department, confirm an agreement made in March 1996 to repay the balance then due.

21. The fact that the Department calculated the overpayment in the period August to November 1994 suggests that there might have been some admission made by the appellant. That inference is confirmed by the fact that from about November/December 1994 the appellant began to make repayments. It is quite extraordinary that no attempt was made by the Department to interview the appellant and seek to secure an admission. As Mr Bonnici fairly emphasised, the standard of proof in criminal proceedings is quite different from that in civil proceedings. Nevertheless, it is a matter for note that the department seems to have been very loathe to take what might be said to be a very simple and straightforward steps to seek to secure some evidence to prove the offending. It might be commented also that a period of some 3 months from the end of August to end of November to calculate an overpayment is a very lengthy period to perform what must have been a relatively straightforward arithmetical calculation.

22. In short, there is an extraordinary delay in what, on any view, was a routine matter from at least November 1994, if not earlier, from August 1994, until July 1996 when this prosecution was instituted. As I already mentioned, for a substantial part of that period, that is to say since November 1994, the appellant had been making repayments. In that time he had taken active steps to rehabilitate himself. He had secured regular employment. He has prospects now of gaining full-time employment. As already mentioned there are some prospects of reconciliation with his de facto wife. Whilst some of these details were known to the learned magistrate, she did not have before her all of the information which is now available.

23. It is because of the gross delay, a considerable part of which is unexplained and cannot be explained, that causes me to believe that it is appropriate in all the circumstances to interfere with the discretion which the magistrate exercised. Had she had all of the information now available before her the magistrate might well have ordered a suspension of the sentence.

24. If imprisoned the appellant will lose his employment. Imprisonment might jeopardise what prospects there are of reconciliation with his wife. It will certainly jeopardise his prospects of rehabilitation. As I have said, the delay is exceptional and it is not satisfactorily explained. If the matter had been dealt with promptly, there would have been little cause to suspend the sentence of imprisonment. But the delay has enabled the appellant to set about, on his own initiative, or a course of action to rehabilitate himself, only to find that his prospects of rehabilitation may be dashed, if not dealt a serious blow, by being required to serve this sentence of imprisonment. Fairness requires that his prospects of rehabilitation are not jeopardised by the Departmental delay. The investigation was straightforward. As Duggan J said in David v Marcelline: "Government departments responsible for the investigation of offences, particularly those which may lead to imprisonment, should bear constantly in mind the importance of ensuring that alleged offenders are charged and prosecuted without unnecessary delay."

25. In The Queen v Todd (1982) 2 NSWLR 513 at 519 Street CJ applied principles which had been expressed in this court in The Queen v Suckling
(1983) 33 SASR, 133. Speaking for the court, he said: "Moreover, where there has been a lengthy postponement, whether due to an interstate sentence of otherwise, fairness to the prisoner requires weight to be given to the progress of his rehabilitation during the term of his earlier sentence; to the circumstances that has been left in a state of uncertain suspense as to what will happen to him when in due course he comes up for sentence on the subsequent occasion, and to the fact that sentencing for a stale crime, long after the committing of offences, calls for a considerable measure of understanding and flexibility of approach - passage of time between offence and sentence, when lengthy, will often lead to considerations of fairness to the prisoner in his present situation playing a dominant role in the determination of what should be done in the matter of sentence - at times this can require what might otherwise be quite an undue degree of leniency being extended to the prisoner."

26. Those observations were made in circumstances different from these, but they are, nevertheless, relevant. The observations apply with even greater force when there has been an exceptional delay of this kind, and in that period of delay the offender has taken substantial and successful steps towards his own rehabilitation.

27. Although the learned magistrate mentioned the effect of the delay, she was, as I have said, not fully apprised of all of the matters. In my view, had she been aware of them, she would have been given them greater weight. The delay and its consequences are of a kind which, in the particular circumstances of this case, justify an order that the appellant be sentenced to a period of imprisonment, but that he be released upon entering into a bond (called by the Crimes Act "a security") to be of good behaviour on terms which I will shortly prescribe. I repeat, were it not for the exceptional circumstances of this matter and the delay, I would not have interfered with the sentence or the decision not to suspend it.

28. For these reasons the appeal will be allowed and the sentence of the learned magistrate will be varied. I confirm the sentence of 3 months imprisonment, but direct that the appellant be released forthwith, that release to be conditional upon the appellant entering into a security, in his own recognisance in the sum of $750, to be of good behaviour for a period of 3 years. It will be a condition of the security that he make reparation so that there is full restitution of the amount of the overpayments. There will be a further condition that he will, for a period of 2 years, be subject to the supervision of a probation officer and comply with all reasonable directions of that probation officer.

Order

1. Appeal allowed. 2. The respondent to pay the appellant's costs fixed at $150 and any disbursements that reasonably incurred.