R v Strawhorn (No 4)
[2007] VSC 554
•21 December 2007
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
CRIMINAL DIVISION
No. 1427 of 2003
| THE QUEEN |
| v |
| WAYNE GEOFFREY STRAWHORN |
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JUDGE: | HABERSBERGER J | |
WHERE HELD: | MELBOURNE | |
DATES OF HEARING: | 29 NOVEMBER 2006, 11 DECEMBER 2006 AND 12 DECEMBER 2007 | |
DATE OF JUDGMENT: | 21 DECEMBER 2007 | |
CASE MAY BE CITED AS: | R v STRAWHORN (NO. 4) | |
MEDIUM NEUTRAL CITATION: | [2007] VSC 554 | |
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Criminal Law – Sentence – Superannuation order under Part 3A of Sentencing Act 1991 – Consideration of relevant matters – Sentencing Act 1991, s.83F – Meaning of “child” in definition of “dependant” – Sentencing Act 1991, s.83D(1).
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APPEARANCES: | Counsel | Solicitors |
| For the Crown | Mr R. Elston SC | Stephen Carisbrooke, Acting Solicitor for Public Prosecutions |
| For the Respondent | Mr P. Morrissey | Galbally & O'Bryan |
HIS HONOUR:
Part 3A of the Sentencing Act 1991 (“the Act”) is concerned with “Superannuation Orders”. It was included in the Act by the Sentencing (Superannuation Orders) Act 2004, which commenced on 13 October 2004. The purpose of Part 3A is set out in s.83B. It states that such orders are:
to enable a court to make a superannuation order as a new sentencing option where a person who is or has been a public sector employee is convicted of an indictable offence involving abuse of office, corruption or perversion of the course of justice.
In his second reading speech in support of the Bill which became Part 3A of the Act, the Attorney-General, the Hon. Rob Hulls MP, said:
There is something particularly repugnant about a person who purports to be serving the community but in reality is taking advantage of his or her position as a public sector employee to act for his or her own financial benefit or other improper purpose … Many Victorians would find it strange that a person could subvert their position for their own gain and still walk away with publicly funded superannuation benefits earned while they were in that position of trust.
Following Mr Strawhorn’s conviction on 18 October 2006 of one count of trafficking in a drug of dependence in a commercial quantity contrary to s.71AA of the Drugs, Poisons and Controlled Substance Act 1981, Mr Elston SC applied, pursuant to s.83E of the Act, on behalf of the Director of Public Prosecutions (“the DPP”),[1] for the Court to make a superannuation order. Section 83C(1) of the Act provides that Part 3A applies in respect of an offender who is convicted of a relevant offence on or after 3 June 2004 irrespective of whether the relevant offence was committed before, on or after that date. Thus, it was irrelevant that the offence of which Mr Strawhorn had been convicted was committed on 19 May 2000.
[1]See sub-paragraph (a) of the definition of “authorised person” in s.83D(1) of the Act.
Section 83F(1) of the Act states that a pre-requisite for the making of such a superannuation order is that the court must be satisfied that s.83E(1)(a), (b) or (c) applies in respect of the relevant offence. It was not disputed that the relevant offence was within either of the first two limbs of s.83E(1) in that it was one which either
(a)involved an abuse by the person of his or her office as a public sector employee; or
(b)having regard to the powers and duties of his or her office as a public sector employee was committed for a purpose that involved corruption;
…
If it had been disputed, the decision of the New South Wales Court of Appeal in Director of Public Prosecutions v Harney[2] with respect to the application of a similar definition in s.2 of the Crimes (Superannuation Benefits) Act 1989 (Cth) would have resolved the issue against Mr Strawhorn.
[2](2003) 59 NSWLR 9.
There was also no dispute that Mr Strawhorn was within sub-paragraph (i) of the definition of a “public sector employee” in s.83D(1) of the Act. He was, at the time he committed the relevant offence, a “member of the police force of Victoria … under the Police Regulation Act 1958.”
Section 83F(1) of the Act also states that the Court “may make a superannuation order” if it considers that “having regard, as far as is practicable, to the matters specified in sub-section (2) it is appropriate to do so.” That sub-section relevantly provides as follows:
(2) The matters are—
(a)the financial circumstances of the offender, including any other order that the court or any other court has made or proposes to make—
(i)providing for the forfeiture of the offender's property or the automatic forfeiture of the offender's property by operation of law; or
(ii)requiring the offender to make restitution or pay compensation;
(b)the nature of the burden that the making of the superannuation order will impose and the degree of hardship likely to result from the making of the superannuation order on the offender or his or her spouse, domestic partner or dependants;
…
(d)the length of the period of service by the offender as a public sector employee before the offender committed the relevant offence;
…
(f) the nature and gravity of the relevant offence.
Section 83F(3) of the Act states that:
(3)If the court imposes a superannuation order, the court in determining the amount to be paid by the offender under the superannuation order—
(a)must have regard to the matters referred to in sub-section (2); and
(b)must not determine an amount which exceeds the total of the residual employer financed components of the superannuation benefits under the relevant superannuation schemes.
A “residual employer financed component” is defined in s.83D(1), as are the terms “member financed component” and “SG component”. Each of these components is to be determined by the administrators of the relevant superannuation scheme “after, where appropriate, obtaining advice from an actuary appointed by the administrators.” In simple terms, the “residual employer financed component” is the value of the total superannuation benefit as at the relevant date after deducting the “member financed component” and the “SG component”. The “member financed component” is the amount of the superannuation benefit “financed by member contributions” as at the relevant date. The “SG component” is “the amount that would have been the minimum employer financed amount necessary to avoid a superannuation guarantee shortfall” within the meaning of the Superannuation Guarantee (Administration) Act 1992 (Cth) in respect of the period during which the offender was a public sector employee in the period between 1 July 1992 and the relevant date. As Mr Strawhorn was still a member of the relevant superannuation scheme as at the date of conviction, the “relevant date” was the date of conviction, namely 18 October 2006.[3]
[3]See sub-paragraph (a) of the definition of “relevant date” in s.83D(1) of the Act.
Apparently because of constitutional concerns, the Victorian legislation, unlike the equivalent Commonwealth legislation, does not permit a superannuation order to be made against the superannuation itself. Instead, the amount determined by the court has to be paid separately by the offender. Thus, s.83H of the Act provides that a number of sections in the Act “apply to and in respect of a superannuation order as if the amount specified in the superannuation order were a fine imposed under section 49.” The sections in question allow the court, for example, to order that the superannuation order be paid by instalments (s.53) or that the offender be allowed time to pay it (s.54). This method of recovering the amount of a superannuation order makes, in my opinion, the determination of the appropriate amount and form of the superannuation order rather more complicated than it would otherwise have been. This is both because benefits can change between the date of conviction and the making of a superannuation order (such as increases in the amount of the final salary to be taken into account in calculating the total payment) and because there are certain restrictions on a member removing monies from the fund and differing taxation consequences of doing so, which are dependent on matters such as the age, state of health and financial position of the member.
Section 83E(2) of the Act provides that an application must be supported by a certificate given by the administrators of each relevant superannuation scheme specifying certain information. In this case, the Emergency Services Superannuation Board provided such a certificate by letter dated 23 November 2006 from Mr Brad McSwain, then the General Manager Integration and Technology at ESS Super, to the DPP. It stated that the value of the total superannuation benefit as at the relevant date, 18 October 2006, was $509,572.22 (s.83E(2)(a)). It went on to say that the “preserved component” of this amount was $272,347.57, and that the “restricted non-preserved component” was $237,224.65. I was later told that, in very general terms, the former component was the amount which must be preserved until Mr Strawhorn reached his preservation age (in his case, 55 years) and retired from the workforce, or until he reached the age of 65 years, if still working, and the latter was the amount which Mr Strawhorn could have cashed in if he had retired or resigned from the police force on the relevant date. The certificate then stated that the residual employer financed component as at the relevant date was $315,448.35 (s.83E(2)(b)). It further stated that the information was provided following receipt of actuarial advice (s.83E(2)(d)) and that no assumptions were required (s.83E(2)(c)).
At the hearing on 29 November 2006, I requested further information which Mr McSwain provided by a letter dated 4 December 2006. This letter broke the residual employer financial component of $315,448.35 into four parts, namely, $225,896.87, being the amount attributable to Mr Strawhorn's service from its commencement until 19 May 2000, the date of the offence; $39,428.44, being the amount attributable to his service from 20 May 2000 until he was moved from the Drug Squad on 21 December 2001; $28,595.66, being the amount attributable to his service from 22 December 2001 until the day of his arrest on 18 March 2003 and, finally, $21,127.38, in respect of the period from 19 March 2003 to 18 October 2006. I was subsequently informed that this last amount resulted from improvements in the benefits as a result of salary increases in the interim and Mr Strawhorn attaining the age of 50 years. Although Mr Strawhorn’s employment had been terminated, the benefits continued to accrue because no final payment of his superannuation had been made.
I still had further queries about Part 3A of the Act and its application to Mr Strawhorn’s superannuation, so that after sentencing him on 11 December 2006 I raised more issues with counsel for both parties, which I anticipated would be dealt with at a further hearing early in 2007. Despite a number of attempts to have the Crown respond to my requests for further information, nothing was forthcoming until nearly a year later, when Mr Elston SC appeared before me to announce that the DPP was filing a nolle prosequi in respect of the one remaining count on which the jury had again been unable to reach a verdict. The further hearing was subsequently arranged for 12 December 2007.
At that hearing, I was told by Mr McSwain, now the General Manager of Strategy and Technology at ESS Super that, of Mr Strawhorn’s residual employer financed component of $315,448.35, the sum of $88,574.16 could be cashed in now without him paying any tax and that, of the balance of $226,874.18, tax would be payable at the rate of 21.5% if cashed in before the age of 55, at the rate of 16.5% for the amount over the low tax threshold of $140,000 if cashed in between 55 and 60, and that no tax would be payable if cashed in after the age of 60.
I considered that these were relevant matters because Mr Elston submitted, on behalf of the DPP, that I should make a superannuation order in respect of the whole, or at least a substantial part, of Mr Strawhorn’s residual employer financed component. Mr Morrissey, who appeared for Mr Strawhorn, opposed the making of any order at all. Alternatively, he advanced arguments as to why various limited orders should be made.
I turn then to examine the matters to which regard must be had in considering whether to make a superannuation order and, if so, in what amount. First, Mr Strawhorn's financial circumstances (s.83F(2)(a)) were as follows. At the end of 2006, he owned his own home subject to an amount of $38,284.60 owing to the Police Credit Union as at 23 November 2006. Although there was no evidence led about the value of the property, I proceed on the assumption that this is a significant asset, given that it was said to be a normal family home in Glen Waverley. Mr Strawhorn also owned a 1997 Holden motor vehicle said to be worth about $12,000 and shares valued at about $2,000 (which was considerably less than they cost in May 2000). He had also received approximately $10,000 as the proceeds of the sale of his interest in his late parents’ property. Mr Strawhorn was also entitled to the sum of $44,049.12 for long service leave payable on dismissal or resignation but he owed the Police Department about $14,840.44 for salary mistakenly paid to him after it ceased to be payable following his arrest on 18 March 2003. His final payout figure was therefore $29,208.68. I was informed that although all of these assets had at one time been subject to forfeiture, Mr Strawhorn had successfully applied to have all of them excluded from forfeiture. In terms of liabilities, Mr Strawhorn had consented to an order requiring him to repay the $12,000 proceeds of the sale of the two kilograms of pseudoephedrine. A further liability was the sum of about $1,000 still owed to an orthodontist in respect of treatment for his daughter. Mr Strawhorn's brother, Phillip, had taken responsibility for this debt and other payments to the orthodontist totalling, in all, about $3,000, together with the interest due on the loan from the Police Credit Union in respect of which he had continued to pay $147 per fortnight.
In summary, as at the end of 2006, Mr Strawhorn's few assets, apart from the house and superannuation, were exceeded by the amounts he owed to the Police Credit Union and his brother. As previously stated, Mr Strawhorn's salary had ceased to be payable following his arrest on 18 March 2003. He was remanded in custody for a year before being released on bail. Most of 2005 had been spent attending the aborted trial and the trial which did not result in a verdict and four months of 2006 were occupied by this trial. It was therefore said that he had not been in a position to work since March 2003. In the period since then and prior to his imprisonment, Mr Strawhorn's income had been minimal, consisting of either a single parent's benefit or sickness benefits, or approximately $450 a fortnight.
At the latest hearing, I was told that, apart from one matter, there had been little change in Mr Strawhorn’s financial circumstances in the intervening year. What had changed was that, because he had been diagnosed as suffering from a depressive illness, since September 2007 he had been receiving a temporary pension benefit of just under $50,000 per annum from ESS Super. That benefit will cease in September 2008, when a decision will be made as to whether Mr Strawhorn’s application to receive a permanent disability pension will be granted. I was informed by Mr McSwain that the outcome of that application would not be affected by any superannuation order made by me.
Secondly, the “nature of the burden” that the making of a superannuation order will impose on Mr Strawhorn and the “degree of hardship” likely to result therefrom on Mr Strawhorn (s.83(2)(b)) are in some respects self-evident. The greater the amount of any superannuation order, the less that will be left for Mr Strawhorn when he is released from prison. Further, any superannuation order in excess of about $88,000 would also require Mr Strawhorn to pay tax at the rate of 21.5% on the excess if the whole amount of the order was to be paid from monies withdrawn from his superannuation. The purpose of superannuation is, of course, to provide funds on which a person can live in retirement. Those funds will be either in addition to or substitution for the old age pension. The problem facing Mr Strawhorn is that the superannuation may have to be utilised prematurely to pay off his debts and to provide his means of support following his release from prison because of the difficulties he may face in obtaining employment suitable for a person such as him in his fifties, with his health problems and his employment record.
However, the sub-section also directs attention to the “nature of the burden” that the making of a superannuation order will impose on certain other people and to the “degree of hardship” likely to result therefrom on those people. Because of the unfortunate death some 13 years ago of Mr Strawhorn's wife, there is no spouse or domestic partner and the only relevant people are his “dependants”.
The meaning of “dependants” in s.83F(2)(b) of the Act was the subject of some argument. “Dependant” is defined in s.83D(1) as meaning:
(a) a child of the offender; or
(b)any other person who in the opinion of the court is dependent on the offender or has a legal right to look to the offender for financial support.
Mr Elston submitted that the word “child” in sub-paragraph (a) of the definition should be limited to someone in their minority, whereas Mr Morrissey argued that in this context the phrase “child of the offender” referred to any off-spring of the offender, regardless of age.
In my opinion, the ordinary meaning of the word “child” would include both suggested definitions. I have concluded, however, that the preferable construction is that advanced by Mr Morrissey because I have some doubt about the argument that the word “child” in sub-paragraph (a) of the definition is limited to someone in their minority. If that were the intention, then one might have expected the inclusion of words such as “infant” or “minor”[4] or the phrase “under the age of eighteen years”[5] to make that intention clear rather than leave open the possibility that “child” was simply referring to the relationship of parent and child. Further, I accept Mr Morrissey’s argument that any incongruity in treating a wealthy adult son or daughter of an offender as a “dependant” of the offender was removed by the fact that the relevant test was to consider “the degree of hardship likely to result from the making of the superannuation order” on, amongst others, the offender's “dependants”. If the adult son or daughter were wealthy then “the degree of hardship” was likely to be non-existent.
[4]See the expression referred to in s.4(2) of Age of Majority Act 1977.
[5]See the distinctions drawn in s.45(a) of the Police Regulation Act 1958.
It was submitted by the defence that all of Mr Strawhorn's three children would suffer hardship if a superannuation order was made. Mr Strawhorn has two sons, aged 26 years and aged 22 years respectively, and a daughter, aged 17 years. At the end of 2006, all three children were living at the family home. Both sons were working, earning sufficient income to have enabled them to have jointly purchased an investment property. In the past, in the absence of their father, they had looked after their sister. She has now just finished year 12 at school. She was hoping to attend the Victorian College of the Arts or some other tertiary institution. She had a part-time job.
I do not consider that even a relatively large superannuation order would result in any real hardship for Mr Strawhorn’s two sons. They are financially independent of him with the ability to live in their own property rather than at the family home. However, in my opinion, any superannuation order in excess of about $270,000 would probably force Mr Strawhorn to sell the home in order to be able to pay both the order and the taxation on any withdrawn superannuation. This would result in some hardship on his daughter, in my opinion, because it would be an unexpected change in her arrangements at a crucial time in her life. A smaller superannuation order would also be likely to result in some hardship on the daughter in that her father's ability to look after her financially whilst she pursues her studies would be reduced, but the degree of hardship is not that great.
The third matter to take into account is the length of the period of service by Mr Strawhorn as a public sector employee before he committed the relevant offence (s.83F(2)(d)). In his case, it was over 26 years, having joined the police force on 18 February 1974 and rising through the ranks, until he was appointed a Senior Sergeant in February 1998. He received an official commendation in June 1987 for “initiative, enthusiasm and dedication to duty during operations which resulted in the arrest of fifteen persons for numerous drug related offences” and, in December 1988, for “leadership and administrative ability displayed during the planning and execution of … a major drive against organised criminals engaged in drug trafficking …”
In the circumstances, Mr Morrissey submitted that, at the very least, any superannuation order should not touch that part of the residual employer financial component in respect of those 26 years. He also submitted that account should be taken of Mr Strawhorn’s 34 months of service after his short period of offending.
The fact that the length of service before offending is one of the matters that has to be taken into account is a clear indication, in my opinion, that the amount of any superannuation order is not automatically to be for the full amount of the residual employer financed component. Otherwise, there is no point in referring to such a factor. I consider that there is a strong argument in this case that, by and large, the amount of superannuation attributable to Mr Strawhorn’s service before the date of his offence should not be included in the amount of any order. I do not accept, however, that the same applies to the amount attributable to Mr Strawhorn’s service after that date. Even though Mr Strawhorn has not been found guilty of any offence during this period, his service after 19 May 2000 was, to a very large extent, in my opinion, tainted by the offence he committed on that day.
Finally, there is the question of “the nature and gravity of the relevant offence” (s.83F(2)(f)). I agree with Mr Elston's submission that the offence is serious and should not be treated as a minor transgression. It is, after all, punishable by a maximum of 25 years' imprisonment.
Taking all of the above matters into account I consider that it is appropriate to make a superannuation order. In my view, I should fix the amount of the superannuation order to be $68,000, which is roughly equivalent to the total of the amounts of the residual employer financial component attributable to Mr Strawhorn’s service between the date of the offence on 19 May 2000 and the date of his arrest on 18 March 2003. I also order that Mr Strawhorn have twelve months in which to pay the $68,000. By that time, the uncertainty surrounding Mr Strawhorn’s final entitlements from ESS Super should have been resolved.
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