R v Thomas
[2001] NZCA 418
•7 June 2001
| IN THE COURT OF APPEAL OF NEW ZEALAND | CA71/00 |
THE QUEEN
V
ALAN GORDON THOMAS
| Hearing: | 29 March 2001 |
| Coram: | McGrath J Ellis J McGechan J |
| Appearances: | P E Dacre for the Appellant M A Treleaven for the Crown |
| Judgment: | 7 June 2001 |
| JUDGMENT OF THE COURT DELIVERED BY MCGRATH J |
Introduction
On 10 December 1999 the appellant was convicted by Judge B N Morris, following trial by judge alone, on 24 counts of using a document with intent to defraud, under s229A of the Crimes Act 1961. On 1 March 2000 he was sentenced to three years imprisonment. He appealed against conviction and sentence.
Background facts
On 27 December 1989 the appellant suffered a strain injury to his right arm as a result of an accident while sailing. The first medical treatment sought by the appellant was on 3 April 1990, some three months after the date of his accident. He lodged a claim with the Accident Compensation Rehabilitation and Compensation Insurance Corporation (the Corporation) on 10 September 1990. On the same day the Corporation received a medical certificate advising that the appellant was unfit for work from 4 September 1990 for two weeks. The appellant noted his occupation as project manager on the advice of injury form that he completed. The Corporation accepted the appellant’s claim. Under the Act he became entitled to 80% of his pre‑accident weekly earnings of $730.77. This amounted to $584.62 per week.
Between 10 September 1990 and 11 August 1997 the appellant supplied medical certificates to the Corporation stating that he was either unfit for work or fit only for selected work. The period of incapacity stated in each certificate was generally for four, eight or twelve weeks.
The Corporation ascertained that between 3 August 1990 and 20 October 1997 the appellant had engaged in an immigration consultancy business conducted through a company. A number of subsidiary companies were also involved. Their activities involved publishing a Chinese newspaper, teaching immigrants English language and other activities. A total of 18 companies were incorporated in relation to businesses involving the appellant on various dates between 14 September 1992 and 18 July 1997. In nearly all he was both a shareholder and director. The appellant, during this time, attended work daily, and drew monies from the businesses.
During this period the appellant continued to submit medical certificates to the Corporation which stated he was unfit to return to work. At no time during the period involved did the appellant advise the Corporation that he was involved in his own consultancy business activities. He was interviewed on 20 October 1997 and he denied that he had been working. He was subsequently charged with intent to defraud by using a document capable of being used to obtain a pecuniary advantage.
The appellant was charged under s229A of the Crimes Act 1961 which states:
229A. Taking or dealing with certain documents with intent to defraud - Every one is liable to imprisonment for a term not exceeding 7 years who, with intent to defraud,-
(a)Takes or obtains any document that is capable of being used to obtain any privilege, benefit, pecuniary advantage, or valuable consideration; or
(b)Uses or attempts to use any such document for the purpose of obtaining, for himself or for any other person, any privilege, benefit, pecuniary advantage, or valuable consideration.
Each of the 25 informations laid against him alleged that the appellant, with intent to defraud, had used a document capable of being used to obtain a pecuniary advantage for the purpose of obtaining for himself a pecuniary advantage. The document in each case was a corporation medical certificate. The dates of the alleged offending spanned the period between June 1991 and August 1997.
District Court judgment
The Judge, following a decision of the High Court in Caverhill v Accident Rehabilitation and Compensation Insurance Corporation (2 October 1998, AP93/97 Potter J) held that the appellant was under a legal obligation to provide information to the Corporation on matters relevant to his right to compensation. There was an ongoing and uninterrupted responsibility to do so while he was receiving earnings related compensation to inform the Corporation of other earnings. The duty to furnish information as required by the Corporation arose under s99 of the Accident Compensation Act 1982 in relation to the first six counts. For remaining counts the Judge said it arose under s64 of the Accident Rehabilitation and Compensation Act 1992. There was evidence of general notification by the Corporation through medical certificates and forms completed by the appellant, of a requirement that he notify the Corporation if there were a change in employment undertaken or income received while in receipt of such compensation.
The appellant’s defence at his trial was that in refraining from notifying his working activities he lacked fraudulent intent. It was submitted by his counsel that, in an atmosphere of mutual distrust, he had assiduously questioned Corporation officials as to what he could legitimately do by way of rehabilitation and at what point his activities would become work. His belief, at all times, was that his work related activities were entirely rehabilitative, aimed at getting himself off compensation and into a business rather than undertaking work for that business. To the extent he was in error in so characterising his activities it was submitted the Corporation had failed properly to advise him that his duties of disclosure would arise in the circumstances.
The trial Judge found that the appellant had developed business interests in a variety of fields. These had started with a project involving placing migrants in jobs and progressed to the development of a group of companies engaged in advising and other services for immigrants or would be immigrants including publication of a newspaper “Migrant News”, business advice and advice on dealing with government agencies. His focus was on the Chinese market the importance of which he had recognised. In these activities the appellant was the boss, the ideas man, the driving force and the energiser. There was financial evidence indicating the activities were well established. Overall his activities were of the type that gave rise to disclosure obligations in terms of the Corporation’s requirements.
The Judge also concluded the appellant made a deliberate choice not to fulfil his obligation to provide information to the Corporation on his work related activities. His technique of questioning officials on the requirements, in the Judge’s view, was part of the appellant’s tactics of non-disclosure. This was exemplified by a draft of a letter to his case officer in the Corporation in April 1996 in which he asserted he had been out of work for five years but had a business plan to rehabilitate himself. The draft was located amongst papers of the appellant during a search under warrant of premises he occupied. The Judge contrasted this picture of his activities with the description on a website for the group of companies of a wide range of successful commercial activities. The Judge held there was a clear pattern of deception involved. He found that the prosecution had proved fraudulent intent on the part of the appellant.
The appellant had clearly obtained a financial advantage from his failure to fulfil his disclosure obligations. This took the form of his ongoing financial receipt from the Corporation of earnings related compensation. The appellant himself accepted in cross‑examination that this had enabled him to contribute over the years $100,000 to the various businesses.
The appellant was convicted on all but one count, on which he had been discharged during the trial.
Submissions on Appeal
On appeal the appellant was represented by Mr Dacre who had not appeared in the District Court. Mr Dacre’s principal submission, was that the Crown had failed to prove, as required under s229A, that each medical certificate was both capable of being used for, and was actually used to, obtain a pecuniary advantage. He argued that in order to have proved such an advantage was gained it was necessary that the Crown show the appellant was not entitled to receive the compensation relating to each certificate. On Mr Dacre’s argument once a claim was accepted by the Corporation, and a benefit paid, an entitlement under the Act arose which continued unless and until it was terminated pursuant to the Act, following reassessment by the Corporation of the appellant’s incapacity. No such reassessment was undertaken of the appellant’s case. Because the appellant’s entitlement under the Act remained in existence at all times covered by the charges it could not be said he had gained a pecuniary advantage by failing to provide correct information as to his working activity. Mr Dacre supported his submission by reference to the statutory provisions concerning incapacity and entitlement to earnings related compensation.
Mr Dacre also relied on R v Firth [1998] 1 NZLR 513 (CA) for the proposition that to prove a pecuniary advantage had been obtained it was necessary for the Crown to demonstrate that the defendant was not entitled to receive the money in question (Firth at p517). He also particularly relied on Brown v Accident Rehabilitation & Compensation Insurance Corporation (A121/99, Auckland, 9 December 1999, Robertson J). In that case the High Court allowed an appeal against conviction on charges under s229A where the appellant had submitted medical certificates that she was unable to resume work, having wilfully omitted to advise the Corporation that she was working.
For the Crown Mr Treleaven, who had prosecuted at the trial, advised us that the requirement to prove pecuniary advantage was referred to only in passing and then during the closing address of the appellant’s counsel at the trial. R v Firth was cited to the Judge but the appellant’s counsel did not discuss the statutory provisions at all in his submissions. As the High Court’s decision in the Brown case had been delivered only the day before judgment was given convicting the appellant, it was not cited to the Judge who had no opportunity to give it consideration. Mr Treleaven went on to argue that this Court should not follow Brown and that correctly understood Firth was not relevant to this appeal and should be distinguished.
The Brown case
The facts in Brown v Accident Rehabilitation & Compensation Insurance Corporation are closely similar to those in this case. The appellant had been convicted in the District Court on 3 charges under s229A of use of medical certificates with intent to defraud. She had also been convicted on a single charge under s166(1) of the 1992 Act of wilfully omitting to advise the Corporation she was working at a time she was receiving earnings based compensation, but appealed against only the s229A convictions. The principal ground for appeal was that there was no evidence to support the District Court Judge’s implicit finding that her entitlement to compensation had ceased.
As in this case the Crown alleged the use of medical certificates to obtain a pecuniary advantage. Robertson J held that required the Crown to prove that the defendant had no legal entitlement to receive the compensation in question; if she were legally entitled to the compensation there could be no pecuniary advantage. That in Robertson J’s view was the effect of this Court’s decision in Firth, a case involving invoices for advertising services. The Court there held that proof of a lack of legal entitlement was necessary “in cases….which are dependent on the issuing of an invoice or similar claim for payment.” (Firth p519). In Robertson J’s view the charges under s229A involved such a situation. Accordingly he went on to consider whether the Corporation had proved in Brown that the appellant was not legally entitled at the times she submitted certificates to earnings related compensation.
Under the 1992 Act compensation for loss of earnings is payable to employees incapacitated as a result of a work injury. To become entitled a claimant must satisfy the Corporation of the incapacity (s37A and 37B). An assessment is undertaken by the Corporation in order to determine if the test of incapacity is met. The Corporation may make such assessments at any time, and if the claimant is found to no longer be incapacitated the entitlement to weekly compensation immediately ceases.
Under s73(1) of the Act if the Corporation, on the basis of information in its possession, is not satisfied that a person is entitled to continue to receive compensation, it is required to suspend or cancel the payment. Under s73(2) the Corporation is required to decline to make any payments under the 1992 Act to a person who unreasonably refuses or fails to comply with any requirements made under the Act relating to any claim. Because of the distinction drawn in the two subsections Robertson J concluded that failure to meet requirements, including requirements to provide information, only required the Corporation to withhold payments. It did not terminate the underlying entitlements that could only be effected under the earlier subsection.
In the Brown case although work had been undertaken by the appellant at her coffee lounge it had not been proved she was no longer incapacitated. Indeed the trial Judge had found she could not sustain full time work. In those circumstances there was insufficient evidence to support a finding the appellant was no longer incapacitated. Her concurrent failure to provide information about her work was not an adequate basis to treat her entitlement to compensation as terminated. As her entitlement had not been disproved the High Court concluded that the Crown had failed to show there was any pecuniary advantage. The appeal against conviction under s229A was accordingly allowed.
In his own careful analysis of the three statutes applicable at the various times covered by the charges on which the appellant in this case was convicted, Mr Dacre argued the ratio of Brown had equal application to all charges under s229A on which the appellant had been convicted, and that accordingly all convictions under s229A should be set aside.
Decision
The term “pecuniary advantage”, in the context of s229A Crimes Act, has been considered in two recent decisions of this Court. In Ruka v Department of Social Welfare [1997] 1 NZLR 154, in delivering the joint judgment of himself and Richardson P, Blanchard J said:
Miss Ruka was charged that with fraudulent intent she used applications under the Social Security Act for the purpose of obtaining a pecuniary advantage. If, as we have concluded, she qualified for the benefits in question because she was not in a relationship in the nature of marriage, it follows that she did not, whatever her intent, use a document to obtain an advantage; that is, something to which she had no entitlement. (p163)
The joint judgment went on to hold it was not sufficient to satisfy the element of purpose of obtaining a pecuniary advantage that Miss Ruka “had set out to obtain a benefit to which, incorrectly, she believed herself not entitled”. The other judge forming the majority in that case, which allowed Miss Ruka’s appeal, was Thomas J who left open the question. (p171).
In R v Firth this Court, in its judgment delivered by Eichelbaum CJ, agreed with the view expressed by Richardson P and Blanchard J in Ruka observing that:
…we think it implicit in the term “advantage” that if a defendant were legally entitled to receive the money in question, he has not received a pecuniary advantage to which he was not entitled.” (p516)
Eichelbaum CJ went on in Firth to point out:
Section 229A is capable of being applied to a variety of circumstances. It does not necessarily follow that in all cases the “advantage” will be of a kind where the Crown must establish that the defendant is not entitled to the benefit obtained or attempted to be obtained.
He instanced the case of R v Hawkins (CA46-48, 52 and 58-63/93, 9 June 1993) where the “advantage” lay in the terms being made available for an unauthorised loan from a new creditor which were more favourable than those of an existing advance which it replaced, and then said:
We consider that in cases such as the present, where the document used is an invoice, or a similar kind of demand, and the defendant raises a tenable issue regarding entitlement to charge or claim as he did, the Crown is obliged to prove he was not so entitled.”
Later, in summarising this part of the Court’s judgment Eichelbaum CJ substituted “a similar claim for payment” for “a similar kind of demand”. (p519).
In Firth the legal entitlement of the appellant to invoice as he did for advertising services was in issue at the trial. The appellant was an intermediary, and there was evidence that his remuneration was to be by commission paid by the media provider of the services. The appellant deducted commission from payments he made to the provider but as well invoiced his own client for the full gross amount. The Court upheld the finding of the District Court Judge that a pecuniary advantage was established. (p521). There was sufficient evidence for the District Court Judge to be satisfied that there was no entitlement over and above the net charge for advertising free of commission.
Robertson J took the view in Brown that submission of medical certificates to support claims for continuing payments of earnings related compensation involved the same situation as in Firth. It was on that basis that he concluded the trial Judge should have considered whether the appellant was legally entitled to the earnings related compensation she received having failed to notify the Corporation she was working. Entitlement under the Act, in Robertson J’s view, was not lost by the failure to notify the Crown and on the facts the Crown had failed to prove there was a purpose of pecuniary advantage.
In invoices cases, where money is claimed for services provided, if a defendant was legally entitled to receive the sum claimed in his invoice, he could not have obtained a pecuniary advantage. In Firth proof that the defendant was not legally entitled to claim what he had invoiced was accordingly necessary to prove the purpose of obtaining pecuniary advantage. But as the judgment in Firth recognises, in different circumstances, proof that a pecuniary advantage has been sought may not require the Crown to prove absence of any entitlement.
An entitlement to earnings related compensation under accident compensation legislation is a contingent rather than an absolute right. The entitlement at all times depends on the recipient’s continuing incapacity and may be terminated by the Corporation, now pursuant to the 1992 Act, if the recipient is no longer incapacitated. The Corporation is expressly required to suspend or cancel payment of compensation if it is not satisfied, on the basis of information in its possession, that a person is entitled to continue to receive compensation (s73(1)). As well, on unreasonable refusal or failure of any person to comply with a requirement made under the Act, the Corporation must decline to make payments for which there is otherwise an entitlement. (s73(2)).
In those circumstances, if a recipient of earnings related compensation withholds from the Corporation relevant information which the recipient has been required to provide, the withholding will often advance the economic interests of the recipient. That is because the Corporation may, in consequence, fail to act under s73(1) or (2) or otherwise to put in train steps, such as reappraisal of incapacity, which could terminate the flow of compensation payments. Where the withholding of required information is coupled with the use or attempted use of a document for the purpose of advancing the recipient’s economic interests in this way, that will be use with intent to defraud under s229A if the recipient’s dishonest intention, or immediate purpose, is to create the situation which the recipient realises would or might deceive the Corporation into so failing to act. Wai Yu-Tsang v R [1992] 1 AC 269 P.C. Arguably that use may also be for the purpose of obtaining a pecuniary advantage without any need to go on to prove the absence of any entitlement to what was claimed, but it is not necessary in this case to decide that question.
Accident compensation fraud charges under s229A which are based on failure to disclose information in breach of requirements made under the Act differ from invoice cases, such as Firth, where the Crown must disprove entitlement. They differ also from cases where no question of entitlement arises such as the unauthorised loan refinancing case of Hawkins discussed in Firth. Cases such as the present form a separate category in which there is an entitlement in a sense but it is contingent, in particular, on the continuing incapacity of the recipient. For that reason to treat the medical certificates which are the basis for continuing claims for compensation as on all fours with invoices, as was done in Brown, in our view was in error although on the facts of that case the ultimate decision of the High Court was correct.
To the extent that the absence of entitlement forms a necessary element of pecuniary advantage in such cases it can be established by proving as a fact that the contingency has ended the entitlement, that is, in the previous context, that the incapacity of the recipient of compensation has ended. We do not accept, as Mr Dacre argued, that the entitlement does not end until it is established though the Corporation’s own procedures under the Act that the recipient is no longer incapacitated.
In the present case the trial judge correctly recorded that the Crown had to prove, beyond reasonable doubt, that each medical certificate was capable of and actually used for the purpose of obtaining a pecuniary advantage. He was plainly satisfied that the defendant, despite his injury, was able to and did work on a day to day or periodic basis to an extent that proved his incapacity had ended at all times covered by the 24 counts in the indictment on which he was convicted. In each case the actual use for pecuniary advantage of a document capable of being so used, was accordingly proved to the Judge’s satisfaction having applied the correct legal test.
Conclusion
For these reasons the appeal against conviction is dismissed. The appeal against sentence was abandoned by counsel for the appellant at the outset of the hearing and accordingly is also dismissed.
Solicitors
Crown Solicitor, Auckland
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