Musolino v WorkCover Corporation of South Australia - [2007] SASC 5

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Criminal)
MUSOLINO v WORKCOVER CORPORATION OF SOUTH AUSTRALIA
[2007] SASC 5
Judgment of The Honourable Justice Gray
6 February 2007
CRIMINAL LAW - JURISDICTION, PRACTICE AND PROCEDURE - JUDGMENT AND PUNISHMENT - ORDERS FOR COMPENSATION, REPARATION, RESTITUTION, FORFEITURE AND OTHER MATTERS RELATING TO DISPOSAL OF PROPERTY - RESTITUTION
CRIMINAL LAW - JURISDICTION, PRACTICE AND PROCEDURE - JUDGMENT AND PUNISHMENT - SENTENCE - RECOGNISANCES, PROBATION AND OTHER NON-CUSTODIAL ORDERS - PROBATION ORDERS AND SUSPENSION OF SENTENCE
Appeal against Magistrate's decision not to suspend sentence imposed in the Magistrates Court in respect of offences committed against the Workers Rehabilitation and Compensation Act 1986 (SA) - whether fact that appellant has complied with Magistrate's order by making full payment to the respondent provides good reason to suspend sentence - whether evidence of appellant's progress toward rehabilitation provides good reason to suspend sentence - good reason to suspend sentence exists - appeal allowed for the limited purpose of suspending the sentence of imprisonment imposed by the sentencing Magistrate.
Workers Rehabilitation and Compensation Act 1986 (SA) s 120(1), s 120 (3)(a); Criminal Law (Sentencing) Act 1988 (SA) s 10(f)(i), s 38, referred to.
R v Musolino [2004] SASC 89; R v Musolino (2003) 86 SASR 37; R v Berlinsky [2005] SASC 316; Elliot v Harris (No 2) (1976) 13 SASR 516; R v Harris (2001) 122 A Crim R 241; R v Regan [2003] SASC 287; Vartzokas v Zanker (1989) 51 SASR 277; R v Jarrett (1992) 58 SASR 457; R v Famiglietti [2005] SASC 489; Duncan v R (1983) 47 ALR 647, considered.

MUSOLINO v WORKCOVER CORPORATION OF SOUTH AUSTRALIA
[2007] SASC 5
Magistrates Appeal
GRAY J:
Background

This is an appeal against sentence imposed in the Magistrates Court in respect of offences against the Workers Rehabilitation and Compensation Act 1986 (SA). The respondent, WorkCover Corporation of South Australia (“WorkCover”), prosecuted the offending.
On 23 April 2004, the appellant, Rocco Reginald Musolino, pleaded guilty to multiple offences against section 120 of the Workers Rehabilitation and Compensation Act. That section relevantly provides:
(1)     A person who—
(a)     obtains by dishonest means a payment or other benefit under this Act; or
(b)     dishonestly claims to be entitled to a payment or other benefit under this Act; or
(c)     dishonestly makes a statement about a claim under this Act knowing the statement is false or misleading; or
(d)     dishonestly makes an application, or gives a return, under this Act knowing the application or return to be false or misleading,
is guilty of an offence.
Penalty:     $50 000 or imprisonment for one year.
(2)     A person who –
(a)     aids, abets, counsels or procures the commission of an offence against subsection (1); or
(b)     solicits or incites the commission of any such offence,
is guilty of an offence.
Penalty:     $10,000 or imprisonment for one year.
(3)Where a court convicts a person of an offence against this section, or finds a person guilty of such an offence without recording a conviction, the court must, on application by the Corporation or an exempt employer, order the person who committed the offence—
(a)     to make good any loss to the applicant resulting from the commission of the offence; and
(b)     to reimburse costs incurred by the applicant in investigating and prosecuting the offence.
The maximum penalty in respect of each of the offences was imprisonment for one year. The sentencing magistrate sentenced the appellant to one sentence in respect of all of the offending of 38 months and two weeks imprisonment with a non-parole period of 19 months. The magistrate declined to exercise his discretion to suspend the sentence.
The chronology of events relevant to this appeal is complex. The offending the subject of the present proceedings occurred between July 2000 and February 2001. The appellant was charged in relation to these offences on 2 August 2002. The appellant had also engaged in an earlier course of conduct, involving multiple offences of fraudulent conversion, which occurred between 1 June 1999 and 1 March 2000. He was tried in the District Court in respect of these offences and was convicted by the jury. He was sentenced in respect of this offending to six years imprisonment with a non-parole period of three years. The sentence was upheld[1] on appeal and took effect on 22 April 2003 according to the judgment of the Court of Criminal Appeal.[2]
[1] R v Musolino [2004] SASC 89.
[2] R v Musolino (2003) 86 SASR 37.
However, the plaintiff had served just 18 months of his sentence when he was released on license in January 2005 on account of his exemplary behaviour while in prison and the significant steps that he had made toward rehabilitation while incarcerated.
In 2000, the appellant met his current wife and they married in February 2003. Eleven months later they had their first child and in May 2006, they became parents to twins.
The pleas in respect of the present offending were made on 24 March 2004 and the appellant was sentenced in respect of the subject offending on 27 July 2006. Apparently a factual dispute gave rise to the delay between the pleas and sentencing.
Circumstances of the Offending
The precise factual matrix that gave rise to this offending remains, to an extent, unclear. The offending involved the appellant’s participation in four separate fraudulent WorkCover claims. The prosecution case was that the appellant instigated and was thereafter involved in a scheme whereby under sham employment arrangements, a claimant would falsely allege that he or she had suffered a work injury. On the prosecution case, the appellant was the instigator of these sham claims.
The appellant was an employee of WorkCover from about 1989 until mid-1995. He was initially employed as a clerk in the accounts division prior to gaining a promotion to the position of auditor. He left WorkCover when he obtained employment with the Adelaide City Council.
In addition to his primary employment, the appellant was involved in numerous business ventures, some of which resulted in failure. In August 1997, he separated from his first wife. He signed all of his assets over to his wife and in addition spent some $20,000 on legal fees to secure contact with his son. Toward the end of 1998, the appellant commenced work at Omega Foods and toward the end of 1999 and the beginning of 2000, he became involved in unlawful activity.
An explanation for why or how it was that the appellant commenced the frauds against WorkCover has not been proffered. Counsel for the appellant submitted to the sentencing magistrate that the appellant was under financial pressure, which led him to commit the offences.
The first fraud involved a claim lodged with WorkCover by the appellant himself, submitted to WorkCover on 13 July 2000. The appellant claimed that he had injured his back when he slipped from the back of the truck that he was loading. He claimed that he had been working as an Operations Manager at a weekly wage of $1317.17 since 24 June 2000. No such incident ever occurred.
The appellant alleged that the incident had been witnessed by one Modaferri, whom he arranged to provide a statement to WorkCover. The appellant received compensation in respect of this claim in the amount of $25,265.72. Payments were discontinued by WorkCover after receiving information about the fraud. The appellant challenged the discontinuance in the Workers Compensation Tribunal.
Another fraud related to Peter Theordoropolous. The appellant prepared a sham contract of employment, purporting to employ Mr Theordoropolous as a concreter working for F R Musolino Pty Ltd and paying an annual wage of $72,500. A false claim was then lodged with WorkCover seeking compensation in respect of a sham injury. The fraud was instigated and sustained by the appellant. He directed Mr Theordoropolous as to the claims agent that he should see and the doctors that he should consult. In return, the appellant received a weekly cut of $200.00. As a result of this fraud, WorkCover paid $25,085.23 by way of compensation payments to Mr Theordoropolous.
A further fraud involved a claim by Jose Nicola Pietrantonio. Once again, Mr Pietrantonio, at the appellant’s instigation, entered into a sham contract of employment with F R Musolino Pty Ltd, purporting to employ him as a tiler at an annual salary of $85,000. The appellant convinced Mr Pietrantonio that he could implement the scheme and avoid detection because of his knowledge of WorkCover procedures. As part of the fraud, the appellant arranged for a false statement to be made by a witness, attesting that Mr Pietrantonio was performing tiling works for him. The appellant also prepared and submitted false work cards and invoices relating to the alleged work. The appellant received $280.00 every week as his “cut”. WorkCover paid $18,193.19 as a result of the fraud.
The final fraud involved a claim by the appellant’s then fiancée, Melanie Winen. At first the appellant attempted to convince Ms Winen’s parents to pretend to employ her and arrange a false work “accident”. When that failed, he suggested to Ms Winen that she make a false claim. He established a business for the sole purpose of making a claim. The appellant created a false contract of employment and concocted timesheets and payslips. He also concocted a false job description for an expert witness and gave false information. He prepared a letter for Ms Winen to sign, falsely stating that he had paid wages to her. The appellant received $5477.81 before the fraud was uncovered.
The total amount paid by WorkCover in respect of the frauds was $74,021.95. How much of this was received by the appellant remains unclear. Counsel for the appellant agreed with WorkCover’s submission that it would approximate $20,000.00.
The Sentence
During the course of sentencing submissions, counsel for the appellant informed the sentencing magistrate that the money obtained by the appellant had largely been used to retire debt. Counsel acknowledged that the severity of the offending called for a custodial penalty. However, counsel further submitted that having regard to all of the circumstances, in particular the rehabilitation achieved by the appellant, there was good reason to suspend the sentence.
The sentencing magistrate started with a head sentence of four years imprisonment, which he reduced by nine months and two weeks on account of the appellant’s unqualified guilty pleas, to arrive at a head sentence of 38 months and two weeks’ imprisonment. The magistrate fixed a non-parole period of 19 months. The magistrate declined to suspend the sentence, having formed the view that no good reason existed to suspend the sentence. In addition, the magistrate ordered, pursuant to sections 120(3)(a) and 120(3)(b) of the Workers Rehabilitation and Compensation Act, that the appellant make payments to WorkCover in the amount of $60,000.
The Appeal
The appellant appealed against the magistrate’s decision not to suspend the sentence imposed. He did not appeal against the head sentence.
The appellant made a number of complaints on appeal arising from the sentencing remarks of the magistrate, which his counsel contended gave rise to a need for this court to re-sentence the appellant. It was said that the magistrate misunderstood the period over which the offending occurred and sentenced on an incorrect basis. It was also complained that the magistrate did not give adequate weight to the fact that the subject offending occurred prior to the appellant’s imprisonment and his subsequent rehabilitation. It was also complained that the sentencing magistrate inadvertently took into account material tendered by the prosecution that had been agreed to be excluded. Other complaints were advanced. The points raised were all contested and were the subject of debate at the hearing of the appeal.
However, an event has arisen since the hearing of the appeal that makes it unnecessary to consider the sentencing remarks in any detail. On 29 November 2006, WorkCover’s legal representative advised the Court that the Fines Payment Unit had received a payment of $57,000 from the appellant, which was in addition to $3000 paid on an earlier occasion. Accordingly, since the hearing of the appeal, the appellant has fully complied with the order of the magistrate and has made full payment to the respondent. The respondent accepted that this was a relevant fact that should be brought to account. This fact alone gives rise to a need to re-sentence the appellant and to have regard to all of the circumstances of and surrounding the offending.
Re-sentencing
Serious Offending
Counsel for the respondent pointed to the serious nature of the offending, the need for the head sentence and non-parole period to reflect the gravity of the conduct and to give effect to the need for deterrence. These submissions should be accepted. Counsel for the appellant did not seek to have this Court interfere with the head sentence or non-parole period. His submission was that in the unusual circumstances of the present case, having regard to the significant and telling evidence of rehabilitation, good reason to suspend was apparent.
Restitution
As earlier observed, in addition to the imposition of a term of imprisonment, the magistrate ordered, pursuant to sections 120(3)(a) and 120(3)(b) of the Workers Rehabilitation and Compensation Act, that the appellant pay to WorkCover the total amount of $60,000 – restitution of $25,000 to make good WorkCover losses and reimbursement of $35,000 for costs associated with the investigation and prosecution of the offending.
Counsel for the respondent submitted that the weight to be given to the fact of restitution and reimbursement in this case is somewhat reduced due to the fact that the appellant made restitution and reimbursement pursuant to an order of the court and not of his own volition. Counsel submitted that if restitution and reimbursement were to be considered as truly demonstrative of contrition and remorse, it ought to have been effected prior to sentencing.
This submission should be rejected. Section 10 of the Criminal Law (Sentencing) Act requires a sentencing court to have regard to restitution and reimbursement as factors relevant to sentencing. Subsection (f)(i) provides:
A court, in determining sentence for an offence, should have regard to such of the following matters as are relevant and known to the court:
(f) the degree to which the defendant has shown contrition for the offence—
(i)by taking action to make reparation for any injury, loss or damage resulting from the offence;
The appellant is entitled to significant credit for having made full restitution.[3]
[3] See R v Berlinsky [2005] SASC 316 at [24] (Doyle CJ).
The fact that section 120(3) of the Workers Rehabilitation and Compensation Act mandates that a court make an order for monetary payments following a conviction for an offence contrary to the section does not in any way detract from the relevance and importance of this fact to sentencing. It remains for the sentencing court to assess the level of contrition involved.
The fact of full restitution with respect to losses and reimbursement with respect to costs demonstrates that the appellant fully accepts responsibility for his actions and acknowledges his guilt. In addition, it reinforces the other evidence supporting the finding that the appellant has made significant steps toward rehabilitation. Moreover and most significantly, the party aggrieved by the offending has now been recompensed for its loss.
Evidence of Rehabilitation
As earlier observed, since the offending the subject of this appeal, the appellant has remarried and is the father of three young children. Together he and his wife operate a transport business in which the appellant works as a driver.
During his period of incarceration, the appellant undertook a number of rehabilitation programs. His progress toward rehabilitation impressed the relevant authorities sufficiently so as to lead to his early release on licence, having served just 18 months of three-year non-parole period. Three references were placed before the sentencing magistrate from people associated with the appellant during his time at Cadell Correctional Centre where the appellant was incarcerated. The first was from Neville Kelton, a custodial officer, who wrote:
I have been taking Rocco out on community work at several locations around the local area working on community projects. Rocco’s attitude and nature as well as his work ethic are of an extremely high standard. The public he has had the good fortune to come in contact with he has treated with the up-most [sic] respect. It is a pleasure to work and associate with him.
Another was provided by the Pastor of Waikerie Community Church, Enzo Tirimacco, who was also the Chaplain at Cadell:
[O]ne of my duties includes visiting the prisoners and spend time on one to one bases.
It is during these visits that I get to know the prisoners, including Rocco Reginald Musolino. After speaking to him many times, it is obvious that he is sorry for what he has done, and realises the mistake he has made in going against the law.
During my visits, Rocco has manifested considerable remorse for his wrong doing and knows not to repeat this behaviour again.
Therefore I have no hesitation to recommend Rocco for home detention.
The third reference was provided by GG Sparrow, who was employed as a custodial specialist at Cadell:
Rocco Musolino was employed in the Olive business unit at PRIME – Cadell Training Centre from 9/01/04 to 20/07/04.
During his employment Rocco undertook various tasks associated with the maintenance of the olive groves, including monitoring and maintaining the micro irrigation system as well as planting, pruning, training and fertilising olive trees.
Rocco’s attitude and punctuality was very good and he proved himself to be a reliable worker who could complete tasks with a minimum of supervision. He also performed well in a team environment.
…
Rocco proved himself to be reliable and industrious, and to be genuinely interested in all tasks required of him during his employment.
In open court at the time of sentencing submissions, the appellant expressed his regret and apologised to WorkCover.
The above demonstrates that the appellant has made every effort to turn his life around. He is gainfully employed. He has a young family. Importantly, the fact that he has made full payment demonstrates that he has acknowledged the need to take responsibility for his actions and has done so.
Discretion to Suspend
The courts have repeatedly and consistently emphasised that a suspended sentence is very real punishment. As observed by Bray CJ in Elliot v Harris (No 2): [4]
So far from being no punishment at all, a suspended sentence is a sentence to imprisonment with all the consequences such a sentence involves on the defendant’s record and his future, and it is one which can be called automatically into effect on the slightest breach of the terms of the bond during its currency. A liability over a period of years to serve an automatic term of imprisonment as a consequence of any proved misbehaviour in the legal sense, no matter how slight, can hardly be described as no punishment.
Over the ensuing decades, these remarks have been adopted, applied, reaffirmed and echoed on numerous occasions.[5] As such, the suspension of a term of imprisonment will in no way detract from the capacity of that sentence to reflect the principle of general deterrence.
[4] Elliot v Harris (No 2) (1976) 13 SASR 516 at 527.
[5] See for example R v Harris (2001) 122 A Crim R 241 at [42]-[48] (Gray J); R v Regan [2003] SASC 287 at [24], [27]; Vartzokas v Zanker (1989) 51 SASR 277 at 279 (King CJ); R v Jarrett (1992) 58 SASR 457 at 459 (King CJ).

The court is empowered to suspend a sentence of imprisonment by section 38 of the Criminal Law (Sentencing) Act, which relevantly provides:
(1)Where a court has imposed a sentence of imprisonment upon a defendant, the court may, if it thinks that good reason exists for doing so, suspend the sentence on condition that the defendant enter into a bond—
(a) to be of good behaviour; and
(b) to comply with the other conditions (if any) of the bond.
The test for suspension established by the legislature is whether, in the discretion of the court, good reason exists to suspend. This is the test to be applied by sentencing courts in exercise of the discretion to suspend sentences.[6]
[6] See discussion in R v Famiglietti [2005] SASC 489 at [30]-[38].
In my view, good reason to suspend the sentence does arise in the circumstances of the present case. The appellant has made significant steps toward rehabilitation. He has a new and young family to support. He is gainfully employed. He has demonstrated that he is contrite and remorseful in respect of this offending. He has made full restitution and reimbursement to the victim of his offending. The need for personal deterrence is much reduced.
The appellant should be allowed to continue with his rehabilitation. The imposition of an immediate custodial term will not advance his rehabilitation. As was observed by the Western Australian Full Court in Duncan: [7]
“When it has been demonstrated by evidence that society does not need to be protected from the applicant, should the punitive and deterrent aspects of the sentencing process be allowed to prevail, and possibly destroy rehabilitation which has been shown to have taken place”: see Dunn J (Wanstall CJ concurring) in Bell v R (1981) 5 A Crim R 347 at 351. In Bell’s case the court decided that the learned sentencing judge unduly fettered his sentencing discretion by believing that only custodial punishment could be imposed. The case is authority for the proposition that where, prior to sentence, there has been a lengthy process of rehabilitation and the evidence does not indicate a need to protect society from the applicant, the punitive and deterrent aspects of the sentencing process should not be allowed to prevail so as to possibly destroy the results of that rehabilitation.
[7] Duncan v R (1983) 47 ALR 647 at 749.
Conclusion
This appeal is allowed for the limited purpose of suspending the sentence of imprisonment imposed by the sentencing magistrate. Otherwise, the orders of the magistrate remain unchanged.