WorkCover Corporation v John Jelfs No. SCGRG 95/797 Judgment No. 5088 Number of Pages 5 Workers' Compensation

[1995] SASC 5088

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA COX J

CWDS
Workers' compensation - miscellaneous matters - other matters - Workcover Act - employer - fraud - appeal against penalty. Workers Rehabilitation and Compensation Act s 120. R v Cameron and Simounds (1993) 171 LSJS 305; The Commonwealth v Hammond (1994) 178 LSJS 92 and R v Loveridqe (1994) 178 LSJS
234, considered.

HRNG ADELAIDE, 8 May 1995 #DATE 8:5:1995 #ADD 20:9:1995

Counsel for appellant:     Mr P J Rice

Solicitors for appellant:    McDonald and Co.

Counsel for respondent:     Mr J D Edwardson

Solicitors for respondent: Lawson Downs

ORDER
Appeal dismissed.

JUDGE1 COX J This is an appeal by the WorkCover Corporation against the penalties imposed in the Adelaide Magistrates Court under s120 of the WorkersRehabilitation and Compensation Act upon a defendant employer who defrauded the Corporation over a period of some 18 months by his receipt of weekly income maintenance reimbursements following systematic payments and other accident-related payments made by the Corporation to or on behalf of an injured person because, it was claimed - and this was the falsity - his injuries were received while on a particular work-related journey and so compensable under the Workers Rehabilitation and Compensation Act.

2. The injured person was the son of the present respondent and the matter arose in this way. The son was employed in a business which was, for practical purposes, run by his father, and the son had an accident when the motorcycle he was riding came into collision with another vehicle. As a result of a conspiracy between the father and son, claims were made by and on behalf of both of them to the Corporation that the accident happened while the son, Colin Jelfs, was returning to his parent's house after having delivered material to a printing works in the course of his employment. In fact, he was not so engaged at the time he had the accident. There was no delivery to any printing works that had anything to do with the accident at all. The fraud took the form of making false claims and then, as various investigators and others looked into the matter, repeating the claims as occasion required. The result was that WorkCover paid out to or on behalf of the injured son a total of $73,350 in round figures. So far as the present respondent, the father, was concerned, there were repayments to him by the Corporation of about $44,000.

3. In due course the fraud was detected and both father and son were prosecuted. The son, who I am told is a young man in his 20s, pleaded guilty to three offences arising out of the fraud and received a sentence of 18 months imprisonment, but this was suspended under a $300 bond to be of good behaviour for three years. He was also ordered, under s120(3) of the WorkersRehabilitation and Compensation Act, to repay the $73,350 to WorkCover. He was required to pay $1200 to reimburse the Corporation for its costs of the investigation and also to pay $800 by way of legal costs. I am told that there was no appeal from those orders made against the son.

4. The respondent was prosecuted on a complaint that alleged six different offences under s120. Count 1 referred to the payments made between September 1992 and March 1994 to the respondent to the amount of $44,000 by his dishonestly claiming that compensation payments had been made to his son for a compensable disability that resulted in his incapacity for work when there was, in fact, no such compensable disability.

5. Counts 2 to 6 related to dishonest statements made on one occasion or another in pursuance of the fraud. There is a degree of chance about the number of such formal false statements that any conspirator in this position might make. The number will be dictated, no doubt, by the frequency with which occasion arises to repeat it. Plainly there was a sense in which, the conspiracy having been hatched and the false claim once made, there was a degree of inevitability about its repetition if the fraud was to have its desired result. I say that not by way of minimising the seriousness of the fraudulent claims. Far from it. But in such a case not a great deal turns upon the number of times supporting affirmations of the false initial claim are made. Of course, there is this to be said. That each time such an occasion arises there is the opportunity for a dishonest man to repent his wrongdoing and to retrieve the position as best he can, and all such opportunities were declined by the respondent.

6. There was no denial on the respondent's part, as I expect there had been no denial on the son's, of the wrongdoing and its extent once the fraud came to light. The respondent pleaded guilty to the charges. On his doing so a certain irony appeared in the true state of affairs with respect to the son's accident. It turned out that the son was, in fact, engaged on a work related journey when he had this accident. It simply was not for the purpose that he asserted in his false claim to WorkCover. I need not trouble with the details of it, but evidently the father and son thought that for them to state the position as it really was was to invite disbelief on the Corporation's part, and so they fabricated this false story about a journey from the printery. Had they made the accident claim that was, in fact, available to them, their claim would have been treated in exactly the same way and none of this unhappy history would have eventuated.

7. Now, when I say that is the true position, that is what was put by the respondent through his counsel to the learned Stipendiary Magistrate, and not contested by the prosecution; so it was properly regarded as the fact of the matter by the Magistrate and Mr Rice, for the appellant, accepts that I should treat the matter likewise for the purposes of the appeal.

8. The other relevant consideration is that the son's accident, it seems, was caused wholly by the negligence of the motorist with whose vehicle he collided. That means that the son will, in due course, recover in full against the motorist, or the motorist's third party insurer, and will, therefore, be in a position to reimburse the Corporation for the weekly payments and other disbursements wrongly made by the Corporation under the legislation.

9. The position would have been exactly the same had the fraudulent claim remained undetected. The burden in the end, administrative costs and use of money and so on apart, would have devolved on the other motorist and ultimately his insurer, and that is exactly what will happen when the true account of the accident and its relation to the son's employment is substituted for the false account.

10. So two things, at least, distinguish the present case from the usual social services fraud. First, there was in fact a legitimate claim available to the respondent which, had it been pursued, would have produced exactly the same result as the fraudulent claim to all concerned - that is, from a material point of view; it has a different result on the moral wellbeing of those who conspired to tell a different story. The second point of distinction is that no-one, in financial terms, would have suffered from the fraud propounded by the respondent and his son even had the fraud not been detected.

11. The appeal is against the learned Magistrate's order that the respondent be imprisoned for two and a half years, with a non-parole period of 20 months, but that the sentence be suspended on the respondent's entering into a $200 good behaviour bond for a period of two years. There were consequential orders made against the respondent similar to those made against his son. He was required to pay $1,208 for the investigation costs and $800 for the legal costs. The penalty I have recited was a global penalty comprehending all six counts on the complaint.

12. The Corporation appeals on the ground that the suspension was unjustified. I was taken to the recent decisions in this Court which emphasize that deterrence is the paramount consideration for social services frauds, and I accept Mr Rice's argument that a workers compensation fraud of the present type, that is, for weekly payments to a worker or for income maintenance reimbursements to an employer, is not distinguishable in type from a social services fraud.

13. The cases upon which Mr Rice relied particularly were R v Cameron and Simounds (1993) 171 LSJS 305, The Commonwealth v Hammond (1994) 178 LSJS 92 and R v Loveridge (1994) 178 LSJS 234. Those were cases of systematic frauds, in at least two of those cases by the use of fictitious claimants, made under the social services legislation over a lengthy period of time and the Supreme Court put great emphasis upon the obligation on sentencing courts to impose penalties that would deter potential wrongdoers from engaging in that kind of persistent public fraud. It did not avail the respondents in those cases that they had no previous convictions. As I have said, the paramount factor which a sentencing court is obliged to take into account in these cases is deterrence, deterrence of the particular offender from further wrongdoing but deterrence, especially, of others who might be minded to take the same dishonest path.

14. The learned Magistrate was criticised here for failing to acknowledge, perhaps even failing to perceive, the gravity of the respondent's wrongdoing and for putting far too much weight on his previous good character. However, Mr Rice did not submit, as, indeed, he could not submit, that a suspended sentence could never be justified in the case of a fraud of this sort. He did submit that it could not be justified in the case under appeal.

15. The reference to character evidence was in point because this respondent took the refreshing course of relying not merely upon an absence of previous convictions, but on evidence of reputation and good character properly so described. He called a witness to testify to his good standing in the community and he put in a number of documentary references to the same effect. He was a man of 57, who had done a degree of community work in his time and had been in no trouble with the authorities before this sorry affair.

16. Given the period over which the fraud was pursued, I accept that a qualification has to be made to the evidence of reputation. It is not the case of someone succumbing suddenly to the temptation to commit an offence which, once committed, is over and done with. This was a fraud which needed a conspiracy to prepare it and then the usual social services type repetition week by week to maintain it. So that must be a significant qualification upon the force that might otherwise be given to the evidence of good character. Nor, with respect, am I impressed by the learned Magistrate's seeing it evidently as a mitigating factor that the respondent `would have been in an extreme state of anxiety over your son's injuries when you embarked on this fraudulent conduct and did not carefully think through the serious course of conduct you were engaging in'. It is impossible to form any other conclusion than that the respondent and his son knew perfectly well, from the outset, what they were doing and what the consequences of their wrongdoing would be, namely, the payment to the son's credit, week by week, of income maintenance payments under the legislation. Their actions were deliberate and the results intended

17. The learned Magistrate was obliged, therefore, to take a serious view of the respondent's offending. He gave expression to that, at least in the first instance, by the imposition of a substantial prison sentence. The question is whether he was justified in suspending that sentence.

18. In my opinion, it was within the scope of a proper sentencing discretion, in this particular case, to do that. I have pointed to features of the fraud that made it quite unusual, namely the fact that there was a legitimate claim waiting to be made which would have produced exactly the same result, the only difference being that it would be an honest result and not a dishonest one. From a monetary point of view there would have been no difference. Secondly, even had the fraud remained undetected, the ultimate burden on the third party insurer of the motorist involved in the son's accident would have been exactly the same, as presumably, it will be now that the true facts have come to light. Indeed, it would have been the same, from that ultimate point of view, had the son not been engaged in a work-related journey of any kind when he collided with the other vehicle.

19. There is a factor that tells against the respondent that I have not mentioned. He appears to be a businessman of some substance. I do not say that he is wealthy, but there is every reason to suppose that he was in a position to meet the son's accident liabilities, even had that been the consequence of their telling the truth from the beginning. So the respondent cannot plead, as some of those engaged in social services frauds can, that real need was a pressing factor in their decision to defraud.

20. Notwithstanding that circumstance I am of the opinion, looking at the case as a whole, that the learned Magistrate was entitled to regard this as one of those quite exceptional cases, and they will be comparatively few, in which a suspended sentence, or its Commonwealth equivalent, is within the sentencing discretion, in this kind of case, notwithstanding the heavy emphasis that must be laid upon the factor of deterrence. For these reasons the appeal must be dismissed.

21. The appellant must pay the respondent's costs which I fix, by consent, at $600.