WorkCover Corporation of South Australia v Musolino - [2007] SASC 249

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
WORKCOVER CORP OF SA v MUSOLINO
[2007] SASC 249
Judgment of The Full Court
(The Honourable Justice Duggan, The Honourable Justice White and The Honourable Justice Kelly)
4 July 2007
WORKERS' COMPENSATION - OFFENCES
CRIMINAL LAW - JURISDICTION, PRACTICE AND PROCEDURE - JUDGMENT AND PUNISHMENT - ORDERS FOR COMPENSATION, REPARATION, RESTITUTION, FORFEITURE AND OTHER MATTERS RELATING TO DISPOSAL OF PROPERTY - RESTITUTION
Respondent an ex-employee of Workcover Corporation of South Australia pleaded guilty in Magistrates Court to 82 offences of obtaining and aiding and abetting the obtaining of payments by dishonest means – respondent sentenced in Magistrates Court to term of imprisonment – respondent appealed to single judge of Supreme Court whereupon sentence was suspended – prosecution appeal against suspension of sentence.
Respondent made restitution after being sentenced in Magistrates Court and during hearing of appeal to single judge - restitution made pursuant to order of magistrate under s 120(3) of Workers Rehabilitation and Compensation Act 1986 - judge on appeal gave weight to restitution in deciding to suspend sentence - extent to which restitution is a mitigating factor in these circumstances discussed.
General and personal deterrence important considerations when sentencing for offences of fraud on social security system - protection of the integrity of social security system important consideration - such considerations have bearing on term of imprisonment and whether sentence should be suspended - deterrent effect reduced when sentence suspended.
Held: Appeal allowed and order suspending sentence set aside.
Workers Rehabilitation and Compensation Act 1986 s 120(1), s 120(3); Criminal Law (Sentencing) Act 1988 s 10(1)(f); Magistrates Court Act 1991 s 42(4); Criminal Law Consolidation Act 1935 ., referred to.
Everett v The Queen (1994) 181 CLR 294; Griffiths v The Queen (1977) 137 CLR 293; Malvasso v The Queen (1989) 168 CLR 227; R v Hinton (2002) 134 A Crim R 286; R v Smith (1987) 44 SASR 587; R v Zamagias [2002] NSWCCA 17, applied.
Ferrone v Waite (1996) S5788, 23 August 1996; Kovacevic v Mills (2000) 76 SASR 404; Neill v Police [1999] SASC 270; Police v Cadd & Ors (1997) 69 SASR 150; R v C (2004) 89 SASR 270; R v Nath (1994) 74 A Crim R 115; Workcover Corporation v Jelfs (1995) S5088, 8 May 1995; Elliot v Harris (No 2) (1976) 13 SASR 516, discussed.

WORKCOVER CORP OF SA v MUSOLINO
[2007] SASC 249
Full Court: Duggan, White and Kelly JJ

DUGGAN J. The respondent pleaded guilty in the Adelaide Magistrates Court to 82 offences of obtaining and aiding and abetting the obtaining of payments by dishonest means contrary to s 120(1) of the Workers Rehabilitation and Compensation Act 1986 (“the WRCA”). He was sentenced to imprisonment for 38 months and two weeks with a non-parole period of 19 months. The magistrate decided not to suspend the sentence.
An appeal against sentence by the respondent to a judge of this court was allowed, and the sentence imposed by the magistrate was suspended upon the respondent entering into a bond to be of good behaviour.
The Workcover Corporation of South Australia (“the Corporation”) has applied for permission to appeal to this court against the order that the sentence be suspended.
The grounds of appeal challenge the basis upon which the judge decided to re-sentence the respondent. This intervention arose by reason of the payment by the respondent to the Corporation of an amount which the magistrate ordered the respondent to pay by way of restitution pursuant to s 120(3) of the WRCA. The payment was made in the course of the hearing before the judge. The judge concluded that this factor, taken in consideration with other factors such as rehabilitation, justified the suspension of the sentence.
The offending
Before dealing with the arguments advanced on appeal it is appropriate to summarise the circumstances of the offending by the respondent.
The respondent had been employed as an internal auditor with the Corporation. He worked there for approximately six and a half years, commencing on 14 February 1989. He had access to information on the Corporation’s systems and, as part of his duties, he was required to check that there had been compliance with relevant legislation.
On 13 July 2000 the respondent submitted a claim to the Corporation in relation to an accident which he said took place when he slipped off a truck and injured his back. He claimed he had been working as an operations manager for a business firm on a weekly wage of $1,317. The respondent arranged for a person to provide a statement to the effect that he had witnessed the accident. The claim that the accident occurred was false. The respondent received compensation payments totalling $25,265.72 between July 2000 and February 2001. Payments were discontinued only after the Corporation received information about the fraud. The respondent challenged the discontinuance of payments in the Workers Compensation Tribunal.
The next series of offences arose out of a false claim by Peter Theodoropoulous who gave notice of a work-related injury on 14 August 2000. At about this time the respondent registered FR Musolino Pty Ltd with the Corporation as an employer. He prepared a sham contract of employment between the company and Peter Theodoropoulous which stated that Theodoropoulous was employed by the company. The respondent assisted in the claim by advising Theodoropoulous as to the medical practitioners he should consult. The respondent received $200 per week from the compensation payments. It was planned that Theodoropoulous would eventually claim a lump sum payment and that the respondent would receive a substantial sum as a result. The Corporation paid $25,085.23 before the fraud was uncovered.
A further fraudulent claim related to José Pietroantonio. The respondent explained to Pietroantonio that a scheme to obtain Workcover payments could be implemented and that detection would be avoided because of the respondent’s knowledge of the system. A false employment contract was again put forward claiming that Pietroantonio was employed by FR Musolino Pty Ltd. A bogus claim was made to the Corporation for compensation and $18,193.19 was paid out before the fraud was discovered. The respondent received $280 per week from the payments which were made. As part of the claim, the respondent prepared and submitted false work cards and arranged for a third party to make a false statement that Pietroantonio had been working as a tiler.
The last episode of offending involved the respondent’s fiancée Melanie Winen. The respondent tried unsuccessfully to arrange for Ms Winen’s parents to pretend that they employed her so that she could claim that a work accident had taken place. They refused and the respondent then registered a business name for the purpose of the fraud. A number of false documents were prepared by the respondent including a contract of employment, time sheets and pay slips. He then arranged for a claim to be made to the Corporation alleging that Ms Winen had suffered a back injury at work.
The respondent contacted the claims agent handling the claim and stated that Ms Winen was an honest and hard working person and that he had no concern about the claim. He arranged for the compensation payments to be paid to him. He received payments totalling $5,477.81. Further payments were stopped when the fraud was uncovered. When this occurred the respondent prepared documentation for Ms Winen to apply for a lump sum payment.
Restitution by the respondent
In view of the significance which has been placed on the issue of restitution in this matter, it is appropriate to summarise the part which it played in the proceedings in the Magistrates Court and before the judge.
The magistrate was advised that the respondent was prepared to put an investment property on the market in order to pay Workcover approximately $60,000 by way of restitution.
When commenting on this offer in his sentencing remarks the magistrate indicated that it had some relevance as a mitigating factor:
It appears that Mr Musolino has shown contrition (paragraph (f)) by his pleas, by a belated acknowledgment of his wrongdoing in communications to Workcover in April 2004 and by offering an immediate reparation down payment of $3,000 and by putting to the court a proposal by his wife to sell their home to pay the balance. The Corporation seeks a total of $60,000 comprising a partial repayment of the loss to the Corporation and an amount to reimburse the Corporation for the costs incurred in investigating and prosecuting the offences.
Pursuant to the provisions of Section 120(3) of the Workers Rehabilitation and Compensation Act 1986 I order the payment of $25,000 to make good the loss to the applicant Corporation resulting from the commission of the offences and I further order pursuant to the provisions of Section 120(3)(b) the payment of $35,000 reimbursement of costs incurred by the Corporation in investigating and prosecuting the offences. I waive the court fees and the levies.
The complainant accepts that through his counsel on Tuesday, Mr Musolino made a genuine statement of apology and I accept that acceptance.
The reference in parenthesis in the first line of these remarks is to s 10(1)(f) of the Criminal Law (Sentencing) Act 1988 (“CLSA”) which requires a court to take into account:
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; or
(ii) in any other manner.
The respondent was sentenced on 27 July 2006. The first hearing before the judge took place on 20 September 2006. In the course of that hearing his Honour asked defence counsel about the reference in the magistrate’s sentencing remarks to the respondent’s preparedness to sell the property. Counsel said that his client had discussed arrangements to pay the amount by instalments of $50.00 per fortnight. He said this was to be the position until the property was sold.
The following discussion then took place between his Honour and counsel:
HIS HONOUR:                   What are the instalments?
MR CHRISTOFOROU:        $50 per fortnight with the first payment being on 22 September.
HIS HONOUR:                   $1,300 a year?
MR CHRISTOFOROU:        That’s until such time as the house gets sold, on my instructions.
HIS HONOUR:                   If it gets sold.
MR CHRISTOFOROU:        I am assuming it will get sold, yes.
HIS HONOUR:                   If it doesn’t get sold, what happens?
MR CHRISTOFOROU:        If it doesn’t get sold, I presume $50 per fortnight.
HIS HONOUR:                   That’s $1,300 a year. What’s the interest on 60,000 at 6%? Three times that.
MR CHRISTOFOROU:        Yes. I haven’t managed to obtain specific instructions in relation to the question you have just asked me.
HIS HONOUR:                   It might be suggested that the restitution that is being offered is illusory. I think that the offer for restitution to sell the house is potentially a significant matter. When I hear that nothing has been done to put that in place, that the repayments don’t even equate to the interest on the moneys for outstanding restitution, I might be inclined to the view it is all illusory?
MR CHRISTOFOROU:        Can I get instructions on that?
HIS HONOUR:                   Certainly.
MR CHRISTOFOROU:        My instructions are that the house is still up for sale, there is an open inspection this Sunday apparently and the house will remain for sale until such time it is paid and the funds reimbursed to WorkCover.
HIS HONOUR:                   How realistic are the terms of sale?
MR CHRISTOFOROU:        I presume that they are in accordance with advice received from the salesman.
HIS HONOUR:                   Is there an agent appointed?
MR CHRISTOFOROU:        I believe there is, yes.
HIS HONOUR:                   Who is the agent?
MR CHRISTOFOROU:        LJ Hooker.
HIS HONOUR:                   What are the instructions in regard to the proceeds of sale?
MR CHRISTOFOROU:        I presume they will go to the wife and from there they will direct payments to WorkCover.
HIS HONOUR:                   That may not happen. All of this is easy to say now and nothing to give effect to.
MR CHRISTOFOROU:        I can indicate that Mrs Musolino is quite prepared to sign an authority to LJ Hooker to effect reimbursement to WorkCover. That’s the sole reason it has been put up for sale.
HIS HONOUR:                   That’s only now coming forward because of my pressing about it.
MR CHRISTOFOROU:        Indeed it is, but with respect no-one has indicated to the defendant previously that the house isn’t going to be for sale, or that the funds from the sale won’t be directed to WorkCover. If that is a concern to your Honour and to my friend, an authority can be drafted in favour of LJ Hooker.
Later in his submissions Mr Christofourou, for the respondent, said that the sum of $3,000 could be paid immediately. It would appear that the respondent offered to bring $3,000 in cash to the court on the day he was to be sentenced in the Magistrates Court, but Workcover expressed concern about their officers accepting money at the court and the money was not handed over.
The matter was adjourned to 20 September 2006 after the judge invited Mr Christofourou to discuss with his client the possibility of alternative sources of funds for restitution.
At the resumed hearing there were extensive submissions on a number of issues. In the course of the hearing the judge said to Mr Christofourou that the respondent should have the opportunity to make restitution before sentencing. Mr Christofourou said the sum of $3,000 had been paid to Workcover already. There was further discussion and Mr Christofourou said that when the matter was adjourned he would stress to his client the importance of the sale of the property and the making of restitution.
The judge delivered his reasons for judgment on 6 February 2007. By this time the court had been advised that restitution had taken place following the sale of an investment property in which the respondent had an interest. In the course of his reasons the judge said that the respondent had now complied with the order of the magistrate to pay the amount due to Workcover and added:
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.
There was no challenge to the head sentence or the non-parole period on appeal to the judge. When dealing with the matter of suspension in his reasons for judgment his Honour said:
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.
Restitution under the WRCA
The order for restitution was made by the magistrate pursuant to s 120(3) of the WRCA which provides as follows:
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.
An amount which is ordered to be paid under this section is a “pecuniary sum” within the meaning of that term as defined in the CLSA. Such amounts are enforceable in accordance with Part 9 Division 3 of that Act. Enforcement may be by way of sale of the debtor’s land except where the property is the debtor’s principal place of residence.
The significance of restitution and contrition
It is clear that, in certain circumstances, restitution can indicate contrition and be taken into account by the court as a mitigating factor. However, the significance of restitution for this purpose will depend upon the circumstances of the case.
The magistrate was prepared to attach some weight to the offer to sell the property. However s 120(3) of the WRCA requires that an order for restitution be made and this resulted in the magistrate making the order in the present case. The most that could be said of an offer to sell property in these circumstances is that the respondent was prepared to facilitate a course of recovery which the Corporation was entitled to pursue in any event.
Although different in nature, cases of forfeiture provide an analogy. In R v Nath[1] the respondent pleaded guilty to a series of bribery offences involving the sum of $23,000. He was a public servant at the time of the offences. He was sentenced to imprisonment for four years with a non-parole period of two years. The sentence was suspended. On appeal by the Director of Public Prosecutions the order suspending the sentence was quashed. Perry J (King CJ and Prior J concurring) referred to the fact that the sentencing court made a forfeiture order in relation to the respondent’s interest in a house property which he owned with his partner. Perry J said at 118:
At the conclusion of the submissions on sentence, but before sentencing the respondent, the learned sentencing judge made an order for forfeiture to the extent of the total loss of $23,096.60.
It was submitted to the learned sentencing judge and to this Court that by acquiescing in that order the respondent had made full restitution. To say the least, there is some conceptual difficulty in equating an order for forfeiture with restitution in the ordinary sense. Be that as it may, the application was argued on the footing that the learned sentencing judge correctly took into account what he described as “full restitution”, although Mr Jennings QC for the Director of Public Prosecutions suggested that in this case there was an air of inevitability about the sale of the property which should result in this Court taking the view that the so-called restitution was not “a significant consideration”. In my opinion, that submission is correct.
[1] (1994) 74 A Crim R 115.
But there are other considerations which reduce the significance of contrition in the present case.
The offences took place in 2000 and 2001. While the respondent was under investigation, he wrote to the Corporation threatening defamation proceedings against the officers investigating the offences. He also wrote to the Corporation attacking the credibility of potential witnesses against him.
The charges were laid on 2 August 2002. The respondent was charged with other defendants. At a directions hearing on 6 August 2002 pleas of not guilty to the charges were intimated by the respondent’s counsel. There followed a series of hearings and mentions including an application for separate trials.
On 9 March 2004 the respondent submitted an offer to the prosecution to plead guilty on certain terms. The offer was rejected.
On 11 March 2004 counsel for another defendant, Rocco Benito Musolino, advised the prosecution that his client would plead guilty and give evidence for the prosecution. The court was advised of this development at a hearing on 12 March 2004. On 14 March 2004 the respondent’s matter was listed for trial. Between 18 March and 23 March 2004 the defendants Rocco Benito Musolino, Juliet Tripodi, José Pietrantonio and Peter Theodoropoulos pleaded guilty to various counts. On 19 March 2004 the court was advised that the respondent would also plead guilty.

On 20 May 2004 the respondent wrote to the Corporation apologising for his actions. A series of directions hearings in the matter then took place and, on 24 November 2004, the respondent’s counsel successfully applied to Mr Newman SM to disqualify himself from presiding in the respondent’s matter as he had sentenced other offenders. The court was also told that the respondent intended to apply for a disputed facts hearing. In due course, the matter was listed for a disputed facts hearing. Subsequently, the respondent’s counsel advised the court that there would be no need for such a hearing. The respondent was sentenced on 27 July 2006.
As has been pointed out, the magistrate was advised that there had been an offer by the respondent to pay $3,000 in cash and a proposal to sell a house property.
The magistrate acknowledged that there was an element of contrition in this offer but added that it was a belated acknowledgement of wrongdoing. The facts recorded above provide ample support for the magistrate’s assessment in this respect.
It is apparent from a reading of the transcript of the hearings before the learned judge that the property in which the respondent had an interest was not sold until after the issue of restitution had achieved some prominence in the discussion between his Honour and counsel in the course of submissions. As his Honour said to counsel in the passage of the transcript cited above, the issue had only come into prominence because he (the judge) pressed it. The court was advised that there had been some attempt to sell one of two properties in which the respondent had an interest but the details of that attempt were vague.
In my respectful opinion the eventual payment of restitution when the matter was before the judge on appeal was of quite limited significance in determining whether it was appropriate to suspend the sentence. There was no attempt to pay restitution for at least two years after the date on which the respondent was charged. There was no payment prior to the passing of the sentence. For some months prior to the sale of the property the respondent was bound by a court order to make restitution and he knew that the Corporation was aware that he had an interest in an investment property which could have been the subject of enforcement proceedings. The sale of the property and the use of part of the proceeds for restitution was belated and took place after sentence and only when prominence was given to it in the course of submissions on appeal. It must be acknowledged that a submission was made that the property was for sale prior to sentencing, but the details were vague and there appears to have been no sense of urgency about the matter. Furthermore, there was an order in existence requiring the respondent to make restitution.
The relevance on appeal of events which occur after sentencing
An issue arises whether it is appropriate to take into account events such as restitution when they take place after sentencing. The matter is more often than not discussed in the context of fresh evidence.[2] It is not clear whether the test for the reception of fresh evidence on appeal pursuant to the CLSA is applicable also to the calling of evidence under s 42(4) of the Magistrates Court Act 1991.[3]
[2] See for example R v C (2004) 89 SASR 270.
[3] Neill v Police [1999] SASC 270.
In cases in which a test is applied for the calling of fresh evidence a distinction is drawn between events which occurred before sentence and events which occur after sentence has been passed. The latter situation is subject to a stricter rule.[4] However, it may be appropriate to permit consideration of events occurring after sentence if they assist in demonstrating the significance of events which occurred before sentence.[5] There is room for some flexibility in order to do justice in a particular case.
[4] R v Smith (1987) 44 SASR 587 at 588.
[5] Ibid at 588.
The judge was advised in an informal way that restitution had been made. In the particular circumstances of the case, I think it was appropriate for the judge, and it is appropriate for this court, to consider the significance of the restitution to the Corporation, linked as it was with an undertaking to pay some restitution made in the course of the sentencing hearing before the magistrate. However, as I have attempted to point out, that is not to say that there is no significance in the fact that this event occurred after sentencing and not before.
Prosecution appeals against sentence imposed in the Magistrates Court
Although this is a prosecution appeal, it comes after a successful appeal by the respondent to the judge. The question arises whether the court’s approach to prosecution appeals against sentence in these circumstances should be subject to the usual strictures which apply to prosecution appeals under the Criminal Law Consolidation Act 1935 (“CLCA”).
In Police v Cadd & Ors[6] the majority were of the view that the considerations relevant to prosecution appeals as stated by the High Court in Everett v The Queen[7] applied where there was a prosecution appeal against a sentence imposed in the Magistrates Court.
[6] (1997) 69 SASR 150.
[7] (1994) 181 CLR 294.
The present case differs from Cadd in that this is an application for permission to appeal following a successful appeal to a judge by the respondent. Nevertheless, there does seem to be an element of double jeopardy in the present circumstances and it is this consideration which provides the principal reason for placing prosecution appeals in a special category.
In my view, the prospect of the respondent in the present case being required by an order of this court to serve a sentence which a judge of the court has suspended justifies the application of the Everett principles. Accordingly, intervention should be regarded as exceptional. However, justification for interference may be found in cases where there is demonstrated error and where it is “necessary to avoid manifest inadequacy or inconsistency in sentencing”.[8]
[8] Griffiths v The Queen (1977) 137 CLR 293; Malvasso v The Queen (1989) 168 CLR 227 at 234.
Considerations relevant to social security and Workcover fraud
The factors relevant to the sentencing of offenders for frauds of this nature have been referred to in a number of authorities. Those authorities stress the importance of general and personal deterrence, the difficulty of detection, the protection of the integrity of the social security system and the elements of deliberation and planning which frequently accompany the commission of such offences. These considerations have a bearing on the length of any term of imprisonment which might be imposed and whether any such term should be suspended.[9]
[9] Workcover Corporation v Jelfs (1995) S5088, 8 May 1995.
In Ferrone v Waite[10] Perry J said:
“...offences of this kind are difficult to detect and, when uncovered, deterrence must be at the forefront of the sentencing process. Commonly, an immediate custodial term would be imposed where there has been a deliberate systematic defrauding over a period of time. The suspension of any term of imprisonment imposed in such circumstances is exceptional, not because the exercise of the discretion is couched in such terms, but because of the need to recognise that in such cases general deterrence looms large.”
[10] (1996) S5788, 23 August 1996.
It is, of course, necessary to retain flexibility to meet the circumstances of particular cases. In the joint judgment of Doyle CJ, Mullighan, Bleby and Martin JJ in Kovacevic v Mills[11] their Honours said:
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.
[11] (2000) 76 SASR 404 at [38].
It must be said that the circumstances which often place offending of this nature in a serious category are readily apparent in the present case.
Rehabilitation
When suspending the respondent’s term of imprisonment the judge said that he took into account the respondent’s steps towards rehabilitation, his employment, the fact that he had a young family to support, his demonstrated contrition and the fact that he made full restitution.
I have already referred to the topic of restitution and the issue of contrition. The matter of rehabilitation requires comment. The approach of the magistrate to rehabilitation was criticised by Mr Christofourou, but the judge did not make a specific finding of error in this respect.
In order to deal with the submissions on rehabilitation it is necessary to refer to a previous episode of offending in which the respondent was involved.
Between 18 May 1999 and 1 March 2000 the respondent committed a series of offences unrelated to the present matters. He was convicted of 15 offences of fraudulent conversion involving amounts totalling $201,642.00. He was sentenced to imprisonment for six years with a non-parole period of three years to take effect from 22 April 2003.
The respondent was released on parole in January 2005. He pleaded guilty to the present offences on 24 March 2004.
The learned judge stated in his reasons for judgment that the respondent undertook a number of rehabilitation programmes while serving his sentence and he secured an early release on licence after serving 18 months of the three year non-parole period.
References were tendered at the hearing before the magistrate in the present matter. One was from a custodial officer who commented on the high standard of the respondent’s involvement in community work whilst in custody. The chaplain at the Cadell Training Centre provided another reference stating that the respondent had shown considerable remorse for his behaviour. Another custodial officer stated that the respondent had been an industrious worker at the Training Centre.
At the time of the sentencing submissions before the magistrate the respondent expressed regret and apologised to Workcover.
The learned judge made the following assessment after summarising this material:
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.
In the passage set out above at para 22 the magistrate noted the respondent’s contrition. Later in his reasons he commented on the submission made on the respondent’s behalf concerning his prospects of rehabilitation:
Mr Musolino says, in effect, my crimes were so serious that they call for a sentence of imprisonment, but what would be achieved by sending me to prison now? I have been in prison for 15 counts of fraudulent conversion committed between May 1999 and March 2000. You can see from the pre-sentence report and from some of my references that I behaved myself in prison. I was co-operative, compliant, polite and remorseful. I didn’t just sit about waiting for my release, I participated in activities to help the community and in courses to promote my own rehabilitation. I am on parole. My behaviour will be strictly monitored while I am on parole. I have a wife and family. I have employment. I could not make money to reimburse Workcover while in prison. The combined restraints of a suspended sentence and parole, would almost guarantee that from now on I will lead a law abiding life.
Without giving the following observation any particular emphasis and with respect to those who have been in a much better position than I to evaluate Mr Musolino’s responses while in prison, I do not think it is unfair to be circumspect about the quality of his rehabilitation given that as recently as 2001 he showed himself to be an utterly unscrupulous con man.
An assessment as to prospects of rehabilitation in a matter such as this is necessarily subjective. The magistrate was sceptical about the respondent’s rehabilitation, but it could not be said that he thereby fell into error in making this observation.
No error by the magistrate
When the matter was before the judge various criticisms were made of the magistrate’s sentencing remarks. They are summarised in the following passage of the judgment of the judge:
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.
These matters were not further considered by the judge. He commented in his reasons for judgment that an event had occurred, namely, restitution, which rendered it unnecessary to consider the sentencing remarks in any detail. The criticisms which were made concerning the magistrate’s sentencing remarks were raised again on appeal to this court.
Despite this approach by the judge, it is now appropriate to consider the criticisms which were made by the respondent’s counsel.
First, there is the complaint that the magistrate overstated the period of offending. In the course of his sentencing remarks he said that the respondent’s conduct took place between July 2000 and September 2001. In fact, the last offence was committed in February 2001.
The fact that the offending extended over a period of seven months and involved a well planned and ongoing course of dishonesty is sufficient to bring this case into a particularly serious category. The magistrate had more than adequate material before him, to indicate the extent of the offending. It appeared that he made a slip when referring to September 2001 instead of February 2001. However, I do not think that this had any effect on the decision whether or not to suspend the sentence.
There is a further consideration which is relevant to this complaint. The respondent’s dishonest conduct continued after Workcover stopped payments in February 2001. He lodged a notice of dispute against the discontinuance of the claim and continued to press his entitlement to compensation before the Workers Compensation Tribunal. These proceedings were not discontinued until around the time he entered his pleas of guilty to the offences. These circumstances are also relevant to the issue of whether he was contrite in relation to his offending.
The complaint that the magistrate did not give adequate weight to the respondent’s rehabilitation has already been considered.
The complaint that the magistrate took into account irrelevant material is based on the following passage in the magistrate’s sentencing remarks:
Industrial misfortune had already touched the defendant’s family. Mr Musolino himself had pretended to fall from a truck on the family property on 13 July 2000 as a pretext for a claim for compensation. For the purposes of this claim, the defendant’s cousin, Rocco Benito Musolino pretended to employ the defendant. Rocco Benito’s turn was to come. He claimed to have been injured on 12 September 2000. Apparently he had suffered a relatively minor and unprofitable injury. The defendant encouraged and assisted him to accept a retrospective appointment as a business manager at the munificent wage of $68,000 a year and to bring his own fake compensation claim.
The respondent was not charged with an offence in relation to the claim made by his cousin. The respondent’s alleged role in the making of that claim was referred to in an interview with the respondent.
However, I would accept the appellant’s submission that the magistrate was clearly aware of the conduct charged against the respondent and that he did not sentence him for uncharged conduct or take such conduct into account when considering whether to suspend the respondent’s sentence of imprisonment.
Conclusion
When discussing considerations relevant to the exercise of the discretion to suspend a sentence the learned judge said:
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): [12]
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.[13] 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.
[12] Elliot v Harris (No 2) (1976) 13 SASR 516 at 527.
[13] 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).
There can be no doubt about the appropriateness of the remarks made by Bray CJ. His Honour was there commenting on the erroneous statement by a magistrate who had said:
I agree with the view currently prevailing in England that a suspended sentence is really no punishment at all.
However, the judge in the present case went on to say that the suspension of a term of imprisonment will in no way detract from the capacity of the sentence to reflect the principle of general deterrence.
If that statement does no more than express the view that there is an element of general deterrence in a suspended sentence it is in accordance with the observations by Bray CJ in the above passage. However, that is not to say that a suspended sentence has the same deterrent effect as an unsuspended term.
It must be acknowledged that a suspended sentence is a significantly more lenient penalty than an immediate term of imprisonment.[14] The deterrent effect is reduced by suspending the sentence although not eradicated entirely. A relevant matter when considering suspension in a case such as the present is to determine whether the requirements of deterrence are of such a nature as to outweigh considerations in favour of suspending the sentence.
[14] R v Zamagias [2002] NSWCCA 17 at [32]; R v Hinton (2002) 134 A Crim R 286 at [33].

In my view, the respondent’s conduct was in the more serious category of offending for offences of this nature. The respondent used knowledge acquired as a former employee of the Corporation to assist him in arranging for the false claims to be made. The offences involved considerable planning and a high level of deceit by the respondent. They were committed over a period of approximately seven months and, as the architect of the schemes which were part of the overall offending, the respondent encouraged others to become part of that offending. The amount involved in the respondent’s offences was considerable.
Reference has been made to the fact that offences of this nature are difficult to detect and that there is a clear need to protect social security schemes. Although the respondent expressed contrition at around the time the matters were brought to court, his initial attitude was far from contrite. There is some relevance in the respondent’s good conduct in prison in relation to the previous matter, but in my view this consideration and the payment of restitution did not have the effect of reducing the significance of general and specific deterrence in this case.
I have reached the conclusion that the suspension of the sentence resulted in a manifestly inadequate penalty and that the importance of maintaining adequate standards of punishment requires this court to intervene by granting permission to appeal, allowing the appeal and quashing the order suspending the sentence.
WHITE J. I agree with the orders proposed by Duggan J and with his reasons.
KELLY J. I have read the reasons of Duggan J. I agree with the orders he proposes and with his reasons. I have nothing further to add.