Harnett v Ministry of Social Development
[2018] NZHC 1160
•23 May 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CRI-2018-404-054
[2018] NZHC 1160
BETWEEN DAVID EARLE HARNETT
Appellant
AND
MINISTRY OF SOCIAL DEVELOPMENT
Respondent
Hearing: 7 May 2018 Counsel:
P N Ross for Appellant
J V Barry for Respondent
Judgment:
23 May 2018
JUDGMENT OF BREWER J
This judgment was delivered by me on 23 May 2018 at 10:30 am pursuant to Rule 11.5 High Court Rules.
Registrar/Deputy Registrar
Solicitors:
Cathedral Lane Law (Napier) for Appellant Meredith Connell (Auckland) for Respondent
HARNETT v MINISTRY OF SOCIAL DEVELOPMENT [2018] NZHC 1160 [23 May 2018]
Introduction
[1] Mr Harnett appeals against a sentence of two years and four months’ imprisonment imposed on him by Judge P J Sinclair on 7 February 2018.1 He submits it is manifestly excessive and should be a sentence of home detention.
Background
[2] In 2006, Mr Harnett returned to New Zealand from Paris with his two young children. He had separated from his wife, who remained in France.
[3] On 30 November 2006, Mr Harnett applied for a Domestic Purposes Benefit. The benefit was granted from 8 December 2006. He subsequently applied for, and was granted, a number of benefits which were paid up to 30 October 2016.
[4] Mr Harnett was, however, the sole owner of a mortgage-free property in Grey Lynn which he rented to tenants. He was also the half-owner of a property in Paris. It is not known whether he received an income from that property.
[5] Mr Harnett, while receiving his benefits, never disclosed these assets, nor the income received from the Grey Lynn property. He completed and submitted 34 documents to the social welfare authorities which falsely stated he did not have any non-cash assets and/or cash assets and that he was not in receipt of income from any other source.
[6] Mr Harnett faced 11 charges of using a document dishonestly.2 The benefit overpayment was assessed as $259,150.48.
[7]Mr Harnett pleaded guilty to the charges, expressed remorse and repaid the
$259,150.48. As I understand it, he sold his interest in the property in Paris for about
$194,000 and his current partner advanced him the balance.
1 Ministry of Social Development v Harnett [2018] NZDC 4175.
2 Crimes Act 1961, s 228(1)(b); the maximum penalty for which is seven years’ imprisonment.
Judge Sinclair’s sentence
[8] Against this background, Judge Sinclair applied the principles applicable to benefit fraud summarised in Hogan v Ministry of Social Development:3
[10] … In my view, there were six aggravating features present in your offending:
·First, the extent of loss was significant. $259,150.48 was obtained by you of taxpayers’ money.
·Second, the offending covered a significant period; nine years and 10 months.
·Third, there was a breach of trust with the Ministry. Frequently offending of this nature is difficult to detect. The benefit system relies on recipients acting honestly and in good faith.
·Fourth, your offending has impacted the community. The benefit system funds beneficiaries in genuine need.
·Fifth, there was premeditation. The length of time of this offending, and the number of documents that you signed continuing to state that you were not receiving income, is indicative of premeditation and planning. You lied about your true financial circumstances from the beginning of your transactions, and then submitted 34 forms which were dishonest about your true circumstances. On each occasion, you had the opportunity to declare your true circumstances.
·Finally, the offending was repetitive.
[9] Judge Sinclair then had regard to four reasonably recent decisions of this Court involving benefit fraud,4 and concluded the appropriate starting point was four years and two months’ imprisonment.
[10]As to discounts:
[18] I turn to your mitigating factors. Up until this offending, it appears you were a largely law-abiding citizen. However, that has to be balanced against the length of this offending. This was not a one-off [offence] or temporary aberration on your part. However, you appear to be remorseful, and that is borne out by your letter tendered to the Court, but more particularly, the payment of the amount outstanding, which I will come to shortly. For these personal circumstances, I allow a modest discount of five percent.
3 Hogan v Ministry of Social Development (2005) 23 CRNZ 500 (HC).
4 Osborne v Ministry of Social Development HC Auckland CRI-2004-404-309, 27 August 2004; Aupouri v Ministry of Social Development [2013] NZHC 1224; Isakko v Police HC Christchurch CRI-2004-409-156, 16 September 2004; Aupouri v Ministry of Social Development [2013] NZHC 581.
[19] As mentioned, you have repaid the Ministry the full amount outstanding of over $259,000. As mentioned earlier, the Ministry acknowledges you are entitled to a discount and submits a 15 percent discount would be appropriate. This payment of reparation does need to be acknowledged and reflected in a discount, because you have repaid the community for the money you have received. However, that discount has to be tempered against the fact that the money was not yours in the first place and that you are, in fact, fulfilling a legal obligation to repay it. Furthermore, a defendant cannot simply buy him or herself out of being punished on the basis of paying reparation. The offending still requires, in my view, imprisonment, but you are entitled to a discount and it needs to be an appropriate discount given the amount involved. I allow a discount of 20 percent.
[20] Finally, I turn to your guilty pleas. You entered guilty pleas at a reasonably early opportunity. Given all of the factors outlined in the leading decision of Hessell v R, I allow a full discount of 25 percent.
(Footnotes omitted)
Discussion
[11] Mr Ross for Mr Harnett sought to distinguish the authorities referred to by Judge Sinclair. However, as he pointed out, there is no tariff decision for benefit fraud and each case turns on its facts. The record of previous decisions in this area is useful only in a broad sense. Mr Harnett nevertheless submits that the starting point adopted by Judge Sinclair was too high.
[12] Mr Ross’s principal submission is that insufficient credit was given to Mr Harnett for repaying the considerable sum it was calculated he had been overpaid. This sum was made up as follows:
Unemployment Benefit $1,278.14 Jobseeker Support $51,385.55 Accommodation Supplement $104,987.99 Temporary Additional Support $35,112.86 Domestic Purposes Benefit $65,231.99 Hardship Assistance $1,153.95 Total
$259,150.48
[13] Further, and I do not understand this submission was made to Judge Sinclair, Mr Ross averred that had Mr Harnett simply lived in his Grey Lynn house, he would
still have been entitled to a great part of the benefits he received. The overpayment is more apparent than real.
[14] Mr Ross told me, and it is not disputed, that for reasons of his own going to what he considered best for his children, Mr Harnett rented a house for himself and his children in another suburb of Auckland. Therefore, the rental he received from the Grey Lynn property offset the rental he was paying on the property he and his children occupied. I infer from Judge Sinclair’s sentencing notes that there was some surplus of income from the Grey Lynn property, but it cannot have been a large amount.
[15] The point that Mr Ross made to me was that some of the benefits received by Mr Harnett were income-related benefits, not asset-related benefits. He would have been entitled to them had he ordered his affairs differently by occupying the Grey Lynn house.
[16] I suggested to Mr Barry, counsel for the respondent, that he might wish to obtain a report from the respondent on the submission made by Mr Ross. I gave leave for him to do so, and I have since received an affidavit from Ms Kurene, an investigator for the Ministry of Social Development. It is thorough and I have found it useful. Mr Barry has succinctly summarised Ms Kurene’s conclusions:
·The appellant would not have been entitled to claim Accommodation Support and Temporary Additional Support, totalling $104,987.99 and $35,112.86, respectively.
·It is too difficult to make an assessment of [Mr Harnett’s] entitlements to other forms of benefit/support because of a lack of information provided on the half share he had in the Paris property and any hypothetical income he may have received from other people living with him at the [Grey Lynn property]. However, if no additional income was/would have been received from these sources, or any other sources not disclosed to MSD, then there would be no overpayment of the remaining Social Security entitlements.
·It follows that MSD can be sure that Mr Harnett should not have received $140,100.85. For the remaining debt of $119,049.63, MSD cannot be sure what the appellant’s entitlements would have been.
[17] My task is to examine the sentence, in the light of all the relevant circumstances, to see whether an error has been made such that a different sentence should have been imposed. In general, the focus is on whether the end sentence is
within the range available to the sentencing Judge, rather than the process by which it was reached.
[18] I look first at the starting point of four years and two months’ imprisonment. I respectfully agree with the six aggravating features identified by Judge Sinclair. In terms of weight, the criminality of Mr Harnett’s conduct is evident by the large sum of money obtained over nearly 10 years through 34 dishonest representations involving applications for a number of different benefits.
[19] This was not passive offending of the sort often seen: for example, where a person receiving a benefit fails to declare that a new partner has moved in and continues to receive the benefit. Nor is it the sort of situation also commonly seen where a beneficiary in straitened financial circumstances is getting some assistance from a new partner, but it is erratic and the beneficiary worries that it might not continue.
[20] This is a case where a man with an unmortgaged house in Grey Lynn and a half-interest in a property in Paris, lies to obtain a benefit, tells more lies to obtain different benefits and to continue receiving them, and does so for nearly 10 years. Mr Harnett stopped receiving the benefits only because he was caught.
[21] I consider, having looked at the previous cases in the round, that the starting point of four years and two months was in the range available to Judge Sinclair.
[22]As set out above, the Judge reached her final sentence by applying discounts:
Personal factors 5% (2½ months) Reparation payment 20% (10 months) Pleas of guilty 25%
[23] Mr Ross submitted that Judge Sinclair made an arithmetical error. He calculated that the discounts combine to an overall discount of 50 percent. He applied this to the starting point of four years and two months, resulting in an end sentence of two years and one month’s imprisonment.
[24] However, a discount for a plea of guilty reduces the sentence which would otherwise be imposed, so it is calculated as a percentage of the provisional sentence. In this case it is 25 percent of 37½ months, which is just under nine-and-a-half months. That reduces the provisional sentence to just over two years and four months’ imprisonment. Judge Sinclair correctly rounded that down to two years and four months.
[25]There was therefore no arithmetical error in the Judge’s sentence.
[26]It remains to consider the appropriateness of the discounts.
[27] The discount for personal factors is unexceptional. Indeed, given the duration of the offending it was open to the Judge to give no discount.
[28] As to the discount for reparation, I conclude it is appropriate. I think the point that, had Mr Harnett ordered his affairs differently he would have been entitled to a portion of the benefits he received, is something of a red herring. His criminality is measured by what he did, and the repeated exercise of a dishonest intention. He was not entitled to the nearly $260,000 he received as a result. It does not reduce his criminality that, in hindsight, it can be said that had he been honest he could have received legitimately a part of what he obtained dishonestly. Nor does it affect the fact that the State paid out money in reliance on Mr Harnett’s dishonest assertions.
[29] The 20 percent discount for the making of reparation is at the higher end of the range available to the Judge. Had her Honour adopted the Crown’s submission that a 15 percent discount was appropriate, then I would not disturb it. As the Judge said, a defendant cannot buy him or herself out of being punished on the basis of paying reparation. This is not a case where a defendant has made an extraordinary effort to make reparation at considerable personal cost. An example would be a beneficiary who, with the support of an innocent partner, sells the family home to make reparation, thereby putting the family into a lesser standard of rented accommodation.
[30] I consider the discount of 25 percent for the pleas of guilty to be generous. I acknowledge it has become almost automatic for some Judges to give the full discount
so long as pleas are not entered just before trial. But that is not the law. The Supreme Court in Hessell v R rejected an approach which would mean that where a plea is entered promptly, even in the face of a very strong prosecution case, the maximum discount must be given.5 What is required is a proper evaluation of all the circumstances in which the plea is entered.6 In Mr Harnett’s case, his offending, once discovered, was ineluctable.
[31] Accordingly, I find that an end sentence of two years and four months’ imprisonment is not manifestly excessive. I add that had the end sentence properly fallen within the home detention range, I would not consider this an appropriate case for a sentence of home detention. This was serious and deliberate offending over a long period involving active steps on many occasions to dishonestly acquire a considerable sum of money. Deterrence and denunciation are to be emphasised.
Decision
[32]The appeal is dismissed.
Brewer J
5 Hessell v R [2010] NZSC 135, [2011] 1 NZLR 607 at [60].
6 At [65].
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