McPHERSON v Commonwealth Services Delivery Agency - [2005] SASC 187

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Criminal)
MCPHERSON v COMMONWEALTH SERVICES DELIVERY AGENCY
Judgment of The Honourable Justice Gray
26 May 2005
CRIMINAL LAW - JURISDICTION, PRACTICE AND PROCEDURE - JUDGMENT AND PUNISHMENT - SENTENCE - RECOGNISANCES, PROBATION AND OTHER NON-CUSTODIAL ORDERS
CRIMINAL LAW - PARTICULAR OFFENCES - OFFENCES AGAINST THE GOVERNMENT - DEFRAUDING THE COMMONWEALTH
CRIMINAL LAW - JURISDICTION, PRACTICE AND PROCEDURE - JUDGMENT AND PUNISHMENT - SENTENCE - FACTORS TO BE TAKEN INTO ACCOUNT - CIRCUMSTANCES OF OFFENDER
Appeal against sentence imposed by magistrate - appellant pleaded guilty to 16 counts of false statement in claim for social security payment - the magistrate convicted the appellant and imposed the one penalty of two years’ imprisonment - appellant was released upon entering into a recognizance to be of good behaviour for a period of three years and that she be under the supervision of a community corrections officer for a period of 18 months - appellant appeals on the ground that the sentence imposed was manifestly excessive.
Consideration of personal circumstances of the appellant - consideration of appellant's youth, financial difficulties, prior good behaviour, good prospects of rehabilitation - consideration of nature of offending - consideration of sentencing standards for social security fraud.
Held - sentence imposed manifestly excessive - magistrate failed to pay adequate regard to appellant's personal circumstances - appeal allowed - sentence imposed by magistrate set aside - appellant re-sentenced - appellant sentenced pursuant to section 20(1)(a) of the Crimes Act, released upon giving security by recognizance in the sum of $1000 that she be of good behaviour for a period of four years, be under the supervision of an officer of the Department of Correctional Services for a period of 20 months - appellant to make reparation in the amount of $4,089.39 - appellant to pay court costs and counsel fees.
Social Security (Administration Act 1999 (Cth) s 212; Crimes Act 1914 (Cth) s 16A, s 20(1)(a), s 20(1)(b), referred to.
Kovacevic v Mills Kovacevic v Mills (2000) 76 SASR 404; R v Cameron and Simounds (1993), 171 LSJS 305; Keeley v Department of Social Security (unreported, 14 July 1993, judgment no. S4075), considered.

MCPHERSON v COMMONWEALTH SERVICES DELIVERY AGENCY
[2005] SASC 187
Magistrates Appeal
GRAY J:

This is an appeal against sentence.
Background
On 1 March 2005 the appellant, Sarah Rose McPherson, pleaded guilty to 16 counts of making a false statement in a claim for social security payment pursuant to sections 212 and 217of the Social Security (Administration) Act 1999 (Cth).
It was alleged that on 16 occasions between 25 February 2003 and July 2004 the appellant, in an application for payment of Youth Allowance, stated that she did not do any work in the period when in fact she was employed by either Allstaff Industrial Personnel (SA) Pty Ltd or North Eastern Community Hospital.
The magistrate convicted the appellant on all counts and imposed the one penalty of two years’ imprisonment. The immediate release of the appellant was ordered on the appellant entering into a recognizance that she be of good behaviour for a period of three years and that she be under the supervision of a community corrections officer for a period of 18 months.
The appellant appeals on the ground that the sentence imposed was manifestly excessive. She contends that the magistrate erred by not giving sufficient consideration to her guilty pleas and by giving insufficient weight to her youth, previous good character and personal circumstances. The appellant submitted that a custodial sentence should not have been imposed.
Counsel for the respondent accepted that the sentence was manifestly excessive. However counsel contended that a shorter custodial sentence with an immediate recognizance release order was appropriate.
Personal Circumstances of the Appellant
At the time of sentence, the appellant was 22 years of age and unemployed. She left school during year 10 and subsequently obtained a diploma in business administration and a certificate in aged care. She has been employed as a receptionist, a shop assistant and as an aged care worker. She is currently enrolled in full-time tertiary study to obtain a Bachelor of Arts.
The appellant left her parent’s home when aged 15 years and commenced a relationship with a man some six years her senior. This relationship, cited as a cause of the appellant’s financial difficulties and subsequent offending, has now terminated and the appellant has recently formed a new relationship.
At the time of the offending, the appellant had commenced temporary reception work, employed by Allstaff, which required her to travel to various locations. This employment was irregular and uncertain. The appellant did not have a motor vehicle and found it difficult to attend work at some locations. At about this time, the appellant’s relationship with her former partner ended. Her partner left her with a substantial mobile phone bill and rent in arrears. She was required to find alternative accommodation. At this time the appellant was in considerable financial difficulty.
The appellant later sought employment from North Eastern Community Hospital. This employment was also irregular and uncertain. During this period, the appellant continued to experience financial difficulties. It was against this background that the appellant fell into a pattern of not declaring her income when applying for Youth Allowance benefits.
Magistrates Approach
As earlier observed, the magistrate imposed the one penalty for all of the offending, arriving at the sentence of two years’ imprisonment. The appellant was released immediately upon the entry into a recognisance to be of good behaviour for three years and to be supervised for 18 months, imposed pursuant to section 20(1)(b) of the Crimes Act 1914 (Cth).
When sentencing the appellant, the magistrate referred to the appellant’s pleas of guilty and her attempts to repay the monies fraudulently received:
You’ve pleaded guilty to the charges and they were indeed timely pleas and I must give you credit for that. The overall payment for your offending behaviour was almost $5,000, in fact $4,982. … You had made some attempt to repay the overpayment that you received. I understand that you have something in excess of $3,000 to pay.
The magistrate also noted that, whilst the offending occurred between February 2003 and July 2004, it was not continuous throughout this period. Rather, there were two distinct periods of offending. The magistrate further noted that in respect to twelve of the counts, the appellant was entitled to part benefits under the Youth Allowance scheme. With respect to the remaining four counts, the appellant was not entitled to any benefits.
In relation to the nature of the offending, the magistrate observed:
In completing these 16 applications, you lied. That’s the bottom line; that’s what it amounts to. You said ‘no’ to a question that required you to advise the Department of whether you were working or not. You chose to deliberately say ‘no’ when, in fact, you were earning an income from other employment so you were receiving an income from your earnings and also receiving money from social security which you were not entitled to.
When determining an appropriate penalty, the magistrate had regard to the appellant’s personal circumstances as outlined in the pre-sentence report. The magistrate noted that the appellant left home at an early age and that at the age and commenced a relationship with an older man. The magistrate also observed that the appellant has since terminated that relationship and commenced a “supportive” relationship with another man.
The magistrate concluded:
I consider that a term of imprisonment is warranted for this offending behaviour. I proceed to record convictions on all counts and impose one fine pursuant to S.21 of the Social Security Administration Act of 2 years imprisonment. There are grounds for me to direct that you not serve any of that time and I order immediate release on the condition that you enter into a bond to be of good behaviour for a period of 3 years in the amount of $10.
…
I make a reparation order in the amount of $4,089.39.
Issues on Appeal
Counsel for the appellant submitted that the sentence imposed by the magistrate was manifestly excessive, particularly when regard was had to the appellant’s youth, prior good character and personal circumstances. Counsel emphasised that in all but four of the fortnights concerned the appellant was entitled to partial payment of benefits and this was reflected in a relatively moderate amount of overpayment. Counsel further said that the appellant’s offending could be distinguished from the case of a person who never had any entitlement to a benefit because of earnings but continued to claim without declaring earnings. Finally, counsel pointed out that the appellant had commenced making reparation for the overpayments. She regretted her offending and displayed contrition and remorse.
Counsel for the appellant informed the court that the appellant’s previous financial difficulties, giving rise to the subject offending, were now resolved as a result of the termination of the relationship with her former partner and the commencement of a new, more positive and supportive relationship. Counsel also submitted that the magistrate paid inappropriate regard to the appellant’s relationship with her mother, and that the appellant’s failure to inform her mother of the proceedings was an irrelevant matter to consider when sentencing. In the course of his reasons, the magistrate observed:
Defendant, … what I really wanted to hear was that you have told your mother about this offending. Obviously from your reaction, you have not. I am reluctant to force you to do so. There are ways, of course, for me to get you to disclose that to your mother, but I think it should come from you on a voluntary basis rather than under legal compulsion.
If I were to imprison you today, your mother would find out. That would be an extremely shocking thing for her as she has no knowledge of these crimes that you have committed and that you are in court today to be sentenced for these crimes today.
It would be much between if you told your mother at home rather than her receiving a telephone call from the women’s prison saying that your are in gaol. I trust you [sic] find a way very soon to confess to your mother about this. I think it would be very rehabilitative for you to do so.
Counsel for the appellant said that as the appellant was an adult, her relationship with her mother was not a relevant matter. Indeed, the nature of the mother-daughter relationship, and the appellant’s reluctance to inform her mother of the proceedings, could have been affected by any number of matters extraneous to the sentencing process.
As earlier observed, counsel for the respondent conceded that the sentence imposed was manifestly excessive.
Sentencing Standards
In Kovacevic v Mills,[1] the Full Court provided sentencing guidelines in relation to social security offences. Doyle CJ, Mullighan, Bleby and Martin JJ observed:[2]
[1] Kovacevic v Mills (2000) 76 SASR 404
[2] Kovacevic v Mills (2000) 76 SASR 404 at [37]-[43]
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.
…
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.
Counsel for the appellant submitted that the appellant’s offending involved periods and amounts less than existed in those cases identified as falling within the category of less serious cases of social security offending. Counsel said that the sentence imposed by the magistrate was within the range identified as appropriate for as more serious offending.
Counsel for the respondent, although accepting that the term of two years’ imprisonment was manifestly excessive, submitted that the circumstances of the appellant’s offending did not demonstrate substantial mitigating features so as to lead to the conclusion that a term of imprisonment was inappropriate. Counsel for the respondent said that the offending was of a serious nature involving deliberate false statements, a substantial period of offending and a not insignificant sum. Counsel described the appellant’s offending as a sustained and deliberate welfare fraud that would, in the ordinary course, attract a custodial sentence. Counsel further contended that any mitigating features of the appellant’s offending or personal circumstances could be addressed by an order for immediate release.
When sentencing, the magistrate failed to pay adequate regard to the appellant’s personal circumstances, in particular her youth, her prior good character and her good prospects for rehabilitation. Although the magistrate referred to the appellant’s youth, pleas of guilty and prior good character, he gave insufficient weight to these matters when determining sentence. The magistrate also provided no clear indication as to the reduction made for the guilty pleas. Further, by referring repeatedly to the appellant’s reluctance to inform her mother about the proceedings, the magistrate appears to have had regard to an immaterial matter.
Counsel for the respondent also said that the length of the sentence imposed was not proportionate to the gravity of the offending, and in the circumstances was manifestly excessive.
The sentencing process miscarried. It is appropriate to re-sentence the appellant.
Re-sentence
When sentencing for crimes against Commonwealth Acts, regard must be had to the provisions of the Crimes Act 1914 (Cth). Section 16A(2) outlines the factors to which the Court ought to have regard:
(a)     the nature and circumstances of the offence;
(b)     other offences (if any) that are required or permitted to be taken into account;
(c)     if the offence forms part of a course of conduct consisting of a series of criminal acts of the same or a similar character—that course of conduct;
(d)     the personal circumstances of any victim of the offence;
(e)     any injury, loss or damage resulting from the offence;
(f)    the degree to which the person has shown contrition for the offence:
(i)by taking action to make reparation for any injury, loss or damage resulting from the offence; or
(ii)in any other manner;
(g)     if the person has pleaded guilty to the charge in respect of the offence—that fact;
(h)     the degree to which the person has co-operated with law enforcement agencies in the investigation of the offence or of other offences;
(j)    the deterrent effect that any sentence or order under consideration may have on the person;
(k)     the need to ensure that the person is adequately punished for the offence;
(m)    the character, antecedents, cultural background, age, means and physical or mental condition of the person;
(n)     the prospect of rehabilitation of the person;
(p)     the probable effect that any sentence or order under consideration would have on any of the person's family or dependants.
In the present case, the appellant’s youth, her prior good character and positive prospects of rehabilitation are material matters to consider when sentencing. The offending occurred when the appellant was 22 years old. She had lived away from the family home since the age of 15. She was attempting to manage what had become a series of serious financial problems. Her employment was sporadic and irregular. Whilst these factors do not excuse her deliberate false statements, they do demonstrate a degree of inexperience and immaturity, and they indicate a lower degree of criminal culpability than that described in other social security fraud offending, such as that referred to by King CJ in R v Cameron and Simounds.[3]
[3] (1993) 171 LSJS 305.

Furthermore, the appellant’s prior good character, her attempts to gain employment, and her tertiary studies indicate that she is a good candidate for rehabilitation. Her pleas of guilty and expression of regret for her offending are material matters.
The length of the period of the offending, the amount involved and the devices used to effect the fraud are relevant factors to be taken into account when determining the sentence to be imposed. A distinction may be drawn between the more serious forms of social security fraud and the present case. Serious offending of this nature often involves a long period of offending, large amounts of overpayments, the use of false names and the claiming of multiple benefits.
These aggravating features are not present in this case. Whilst it must be noted that the appellant’s actions constituted a conscious and deliberate act of fraud over a period of months, the personal circumstances of the appellant, the relatively low overpayments, her entitlement to at least partial payments and her promising prospects of rehabilitation put her conduct at the lower end of the range of seriousness for this type of offending.
In reaching this conclusion, regard has been had to the seriousness of the offending and the importance for sentences of this nature to address general deterrence. In Cameron and Simounds[4] King CJ, with whom Duggan and Debelle JJ agreed, observed:[5]
[T]he 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’s necessary to acknowledge and to appreciate that recipients of social security benefits are almost [sic]. 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 severe punishment, it is likely that others will be tempted to follow the example of fraudulent persons. 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.
[4] (1993) 171 LSJS 305.
[5] (1993) 171 LSJS 305 at 307.
The court has emphasised the need to address general deterrence when sentencing for social security fraud offences on numerous occasions. However, this does not constitute the only material consideration when determining the appropriate sentence to impose. As Mullighan J observed in Keeley v Department of Social Security:[6]
I do not think the Full Court in Cameron and Simounds v R , 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. After all “mercy to an individual offender is not inconsistent with recognition of the seriousness of offending”: Scott v Cameron (1980) 26 SASR 321 per White J at 324.
The present case warrants such a merciful approach.
[6] (unreported, 14 July 1993, judgment no. S4075).
It is encouraging that the appellant is currently undertaking tertiary studies. The termination of her former relationship and the commencement of a new relationship was said by the appellant’s counsel to be an encouraging development. However, independent support and supervision will greatly assist the appellant’s long-term rehabilitation. It will also help the appellant to address and resolve her financial problems. It is appropriate to proceed pursuant to section 20(1)(a) of the Crimes Act. That section relevantly provides:
(1)Where a person is convicted of a federal offence or federal offences, the court before which he is convicted may, if it thinks fit:
(a) by order, release the person, without passing sentence on him, upon his giving security, with or without sureties, by recognizance or otherwise, to the satisfaction of the court, that he will comply with the following conditions:
(i)that he will be of good behaviour for such period, not exceeding 5 years, as the court specifies in the order;
(ii)that he will make such reparation or restitution, or pay such compensation, in respect of the offence or offences (if any), or pay such costs in respect of his prosecution for the offence or offences (if any), as the court specifies in the order (being reparation, restitution, compensation or costs that the court is empowered to require the person to make or pay):
…
(iv)that he will, during a period, not exceeding 2 years, that is specified in the order, comply with such other conditions (if any) as the court thinks fit to specify in the order, which conditions may include the condition that the person will, during the period so specified, be subject to the supervision of a probation officer appointed in accordance with the order and obey all reasonable directions of a probation officer so appointed;
The orders of the Court are as follows:
-       The appeal against sentence is allowed.
-       The sentence imposed by the magistrate is set aside.
-Pursuant to section 20(1)(a) of the Crimes Act, the appellant is released without passing sentence, upon the appellant giving security by recognizance in the sum of $1000 that she will be of good behaviour for a period of four years. The appellant is to be under the supervision of an officer of the Department of Correctional Services for a period of 20 months and is to obey all lawful conditions and directions of the officer assigned to supervise her, that she is to report any change of place of residence to her assigned supervising officer within 48 hours of any such change. The appellant is to report within two working days at the office of the Department of Correctional Services at 181 Flinders Street, Adelaide.
-       The appellant is to make reparation in the amount of $4,089.39.
-The appellant is to pay court costs and counsel fees totalling $290.20.