Hirawani v The Queen

[2005] NZCA 133

IN THE COURT OF APPEAL OF NEW ZEALAND

CA110/04

THE QUEEN

v

PETER CHARLES HIRAWANI

Court:Glazebrook, William Young and O'Regan JJ

Counsel:S J Lance for Appellant

M D Downs for Crown

Judgment:30 May 2005 

(On the papers)

JUDGMENT OF THE COURT

We allow the appeal against sentence, quash the sentence imposed in the District Court, and substitute a sentence of four years and six months imprisonment on each charge, to be served concurrently.

REASONS

(Given by O’Regan J)

Introduction   

[1]        Mr Hirawani was convicted by a jury on 8 October 2003 on 369 counts of using a document pursuant to s 229A of the Crimes Act 1961 (now repealed).  The maximum penalty on each count is seven years imprisonment.  Mr Hirawani was sentenced by Judge Epati to five years imprisonment.  He originally appealed against both conviction and sentence, but the conviction appeal has since been abandoned.

[2]        This appeal against sentence has been heard on the papers under s 392B of the Crimes Act 1961.  The relevant materials, including written submissions which have been received in accordance with r 29 of the Court of Appeal (Criminal) Rules 2001, have been considered by the members of the Court who have conferred and agreed upon this judgment.

Facts

[3]        Mr Hirawani claimed false rebates in his personal tax returns.  He did this under two names: “Peter Charles Hirawani” and “Pita Paeroa”.  Having been successful in this for approximately two years, he enlarged the scheme to friends and associates, engaging in an elaborate system of offending.  The scheme grew into a full-scale business.  He pretended to be a tax agent to the Inland Revenue in order to obtain bulk delivery of blank tax return forms.  For his ‘services’ Mr Hirawani received 15% of the refunded tax.  An investigation by the IRD revealed that Mr Hirawani was responsible for the filing of approximately 2000 tax returns relating to between 700-800 different taxpayers.  Those taxpayers are now in debt to Inland Revenue.

[4]        The false information contained in the returns consisted of:

(a)$60 claim for expenses;

(b)Amounts stated as paid for housekeeper/childcare sufficient to allow a complete rebate to be claimed;

(c)Amounts stated paid as donations sufficient to allow a full rebate to be claimed.

The total amount of the improperly obtained deductions was $212,360.81.

Sentencing Remarks

[5]        In his sentencing remarks, Judge Epati said that he took into account the need for accountability, the promotion of responsibility, reparation, protection of the community, denouncement of the criminal conduct and deterrence.  He also took into account the gravity and seriousness of the type of offences committed.

[6]        The Judge viewed the offending as particularly serious in that it was sophisticated, professional and routine.  He agreed with the Crown that the operation was in the nature of a “production line” with routine claiming of false expenses.  The Judge described Mr Hirawani as holding himself out as some sort of a tax consultant, targeting people who were particularly vulnerable such as those from lower socio-economic groups or who otherwise lacked understanding of the tax regime.  Mr Hirawani was in effect running a business complete with business tools such as 0800 phone numbers, computers and staff.  The only purpose of this business was the defrauding of the tax authorities.

[7]        In setting the starting point, the Judge took into account the professionalism and sophistication of the offending and placed the culpability of the offending at the highest level.  Judge Epati drew on R v Hunter CA36/02 31 May 2002 for guidance.  He went on to highlight several further aggravating features: the pre-sentence report stated that Mr Hirawani continued to maintain his innocence and had little to say otherwise, the motivating factor for the crime was greed, the perpetration of the crime was persistent, calculated and pre-meditated, and once the Inland Revenue became aware of his operation, Mr Hirawani packed up, sold his car, office equipment and computers, and told his friends he was closing business to go to Australia for an operation on a brain tumour.  After he absconded he was extradited back to New Zealand to face the charges.  The Judge said Mr Hirawani shows no sign of remorse, and even in the last stages of sentencing there was no co-operation from him whatsoever.

[8]        Given the aggravating factors and the requirements of the Sentencing Act the Judge set a starting point of five years imprisonment on each count.  The Judge said there were no mitigating factors, and sentenced Mr Hirawani to five years imprisonment on each account, to be served concurrently.

Submissions for Mr Hirawani

[9]        On behalf of Mr Hirawani, Mr Lance made two key submissions: that the starting point adopted by the Judge was too high, and that the Judge was wrong to conclude that there were no mitigating factors present in this case.

[10]      In regard to starting point Mr Lance made the following submissions:

(a)The Judge’s description of the offending as “sophisticated and professional” was incorrect.  Mr Lance says the offending was repetitive rather than sophisticated, and that it is surprising that Inland Revenue did not pick up on the returns earlier, given their similar nature;

(b)The Judge was wrong to characterise the offending as being at the “highest level”.  Mr Lance referred the Court to four cases of similar or more serious offending where offenders received lesser sentences than Mr Hirawani:

(i)In R v Hunter CA36/02 27 May 2002, the offending spanned a six year period, involved 422 charges and a total loss to the Revenue of approximately $400,000.  Mr Hunter pleaded guilty and received a sentence of three and a half years imprisonment.

(ii)In Heald v Police HC WN CRI-2003-485-11 9 September 2003, the appellant was sentenced on five charges of using a document to obtain a pecuniary advantage and one of conspiracy to defraud Inland Revenue.  The prosecution attributed responsibility for $879,103 of the fraudulent refunds to the appellant.  The appellant had a previous conviction of forgery.  The Court took a starting point of five years (or if not five years, four and a half) and imposed an effective sentence of three years imprisonment.

(iii)In R v Nua [2001] 3 NZLR 483, a senior customs officer entered into an arrangement with a used motor vehicle importer pursuant to which over a 15 month period the officer allowed the importation of 154 used vehicles without odometer inspections or GST. This led to $293,000 in unpaid GST and the release of unchecked vehicles into New Zealand. In return the official received between $150,000 and $200,000. An effective sentence of four years was upheld on appeal.

(iv)In R v Palmer CA332/03 31 March 2004, this Court considered an appeal against a sentence imposed under s 105A of the Crimes Act 1961.  The offender was found guilty at trial.  He had obtained a benefit of $269,896.20 in profit from his offending.  He was sentenced to eighteen months imprisonment and granted leave to apply for home detention.  This Court thought a sentence of two and half years would have been appropriate but did not interfere with the sentence;

(c)While the Judge said that personal gain was a significant factor in determining culpability, Mr Lance submitted that the Judge did not specify how much Mr Hirawani gained personally.  He led a relatively frugal existence, and he has no assets to speak of. The pre-sentence report stated that he was $20,000 in debt.  Mr Lance submitted that Mr Hirawani did not engage in lavish spending or a luxurious lifestyle.  In light of these observations, and the cases highlighted above Mr Lance submitted that Mr Hirawani’s offending is not at the “highest level”;

(d)The Judge wrongly categorised maintenance of innocence as an aggravating feature.  That factor should be treated as the absence of a mitigating factor;

(e)The Judge’s statement that the “motivating factor is simply greed” was not supported by any relevant data.  He reiterated the lack of evidence of significant personal gain;

(f)Lack of co-operation and/or absconding should not have been treated as an aggravating feature, but as a lack of a mitigating factor.

[11]      In regard to mitigating factors Mr Lance submitted:

(a)Mr Hirawani was not represented at sentencing.  He now instructs counsel that he is remorseful and if represented this would have been conveyed to the Court;

(b)The Judge gave Mr Hirawani no credit for his lack of previous convictions and otherwise good character.  To support this counsel referred to the pre-sentence report, and references supplied on Mr Hirawani’s behalf.

[12]      Overall Mr Lance submitted that the starting point was too high given this was not offending at the highest level, there was little personal gain, and because the Judge increased the starting point by reference to inappropriate aggravating features.  He says that some deduction should have been made from the starting point for mitigating factors.  Counsel further contended that, with regard to the totality principle, in all the circumstances an effective sentence of five years imprisonment was manifestly excessive.

Submissions for the Crown

[13]      For the Crown Mr Downs submitted that the 369 guilty verdicts reflect the jury’s satisfaction, beyond reasonable doubt, that Mr Hirawani was a professional fraudster: against this background the Crown submitted that a five year term of imprisonment was neither manifestly excessive nor wrong in principle.

[14]      Mr Downs said that R v Rose [1990] 2 NZLR 552, Cole v Police [2001] 2 NZLR 139 and the authorities referred to in those decisions, demonstrate that:

(a)Final sentences in the region of four to five years imprisonment can be expected for sophisticated offending involving significant sums of money or extending over substantial periods of time;

(b)Pleas of guilty and assistance to the authorities may result in meaningful discounts.

[15]      Mr Downs argued that Hunter underscored both propositions. In Hunter, in relation to offending not dissimilar to the present offending, the Court observed that a starting point of five years was within the available range, though the sentence of four years imprisonment was reduced to reflect a guilty plea made at the earliest opportunity and other mitigating features.

[16]      Notwithstanding the argument made by Mr Lance, Mr Downs submitted that Mr Hirawani’s offending was sufficiently serious to warrant the term of imprisonment imposed: he committed fraud over a number of years, his methods were reasonably sophisticated and his motivation was greed.  Not only was the public purse a victim but also the taxpayers whom the he pretended he was properly representing.  There was a breach of trust vis-à-vis those persons.

[17]      Mr Downs accepted that the Judge was wrong to characterise lack of remorse and absence of co-operation as aggravating features.  However he emphasised that it was the resulting sentence that was the focus of the inquiry rather than the means by which it was calculated  He said there are no mitigating factors in this case.  The argument that the Judge should have taken into account Mr Hirawani’s previous good character ignored the fact his offending dated back to 1993, and was from that point on his means of employment.  He also observed that Mr Hirawani fled the country, ordered the destruction of evidence and, at the time of sentencing, continued to maintain his innocence. In regard to personal gain the Crown said that it hardly needed to be observed that the purpose of the scheme was personal gain: the submission made by Mr Lance to the opposite effect was unsustainable on the evidence.

Discussion

[18]      The Crown rightly conceded that the Judge made an error of principle in characterising maintenance of innocence, lack of remorse and absence of co-operation as aggravating factors.  Those factors are to be considered as the absence of a mitigating factor.  Given such an error of principle this Court must consider the sentencing exercise afresh.

[19]      Mr Lance cited several cases to us, arguing that they involved similar or more serious offending than the present case, yet received lower sentences.  However all of those cases are distinguishable in that the offender was co-operative and/or entered a guilty plea.  As the Judge noted in this case, Mr Hirawani was obstructive throughout the trial process, indicating remorse through his lawyer only at the time of this appeal.  The Judge said at [7]: “There is no sign of remorse. In fact even to the last stages of this trial in sentencing, there is simply no co-operation whatsoever from him”. This case is further distinguishable from those cited on the basis that Mr Hirawani absconded to Australia, and ordered the destruction of evidence.  These are aggravating factors.

[20]      Hunter, Rose and Cole all support a starting point of four to five years for sophisticated offending involving significant amounts of money extending over substantial periods of time.  Here the offending spanned roughly seven years and involved the defrauding of over $200,000 from the Revenue. Mr Hirawani’s scheme was elaborate involving intermediaries, pamphlets, and features common of most businesses such as 0800 numbers, computers and staff.  The Judge was right to describe the scheme as a business, the sole purpose of which was the commission of fraud.  Mr Hirawani was responsible for the filing of approximately 2000 tax returns relating to between 700-800 different taxpayers.  As the Crown submitted not only was the Inland Revenue Department a victim, but so too were the taxpayers for whom Mr Hirawani acted.

[21]      Mr Hirawani’s motivation for offending was also at issue.  The Crown submitted that his motivation was greed and personal gain, while Mr Lance pointed to Mr Hirawani’s modest lifestyle and the fact he is now in debt.  We have no doubt that greed was a motivating factor but the scale of the gain was limited: Mr Hirawani apparently received only 15% of the refunded tax, meaning that a small portion of the $212,360.81 defrauded from the Inland Revenue Department would have gone to him.

[22]      Given the above factors we believe a starting point of four and a half years is appropriate: the offending was relatively sophisticated and elaborate, Mr Hirawani was obstructive throughout the trial showing no remorse, he absconded to Australia and ordered destruction of evidence, he defrauded the Revenue of a substantial amount of money, and he prayed on innocent taxpayers.

[23]      We agree with the Judge that there are no mitigating factors present here.  The contention that the starting point should be discounted on the basis of Mr Hirwani’s previous good character is flawed in that it ignores that the offending spans back to 1993, and was Mr Hirawani’s source of employment for approximately seven years.

[24]      We therefore impose a sentence of four years and six months imprisonment for each charge, to be served concurrently.

Result

[25]      The appeal is allowed, the sentence imposed in the District Court is quashed, and we substitute a sentence of four years and six months imprisonment on each charge, those terms to be served concurrently.

Solicitors:
Lance Lawson, Rotorua for Appellant
Crown Law Office, Wellington