The Queen v Hunter

IN THE COURT OF APPEAL OF NEW ZEALAND

CA36/02

THE QUEEN

KERRY MAXWELL HUNTER

Hearing:	27 May 2002
Coram:	Elias CJ Gault P John Hansen J
Appearances:	M J Ruffin for the Crown P L Borich and D J Clark for the Appellant
Judgment:	31 May 2002

JUDGMENT OF THE COURT DELIVERED BY JOHN HANSEN J

This appeal is against an effective sentence of 4 years imprisonment, imposed in the District Court at Manukau, on 422 charges of using a document fraudulently to obtain pecuniary advantage, to which the appellant had pleaded guilty. The offending extended over six year period
The appellant was a tax consultant based in South Auckland. He had a number of clients, of limited means, who owned small businesses. It appears a number of these businesses were in financial difficulty.
The appellant’s work for these clients involved all aspects of their dealings with the Inland Revenue. Some clients were personal and some corporate. There were three types of offending. The first involved entities in respect of which the appellant was the legal and beneficial owner, and which he had direct control over. In respect of these, he filed a number of false income tax and GST returns, and obtained refunds, which were placed into accounts under the appellant’s control.
The second involved fictitious client entities which were formed by the appellant without the knowledge of the client. In relation to these, he filed false income tax and GST returns and obtained refunds.
The third involved clients who gave the appellant full access to their financial affairs, including possession of their cheque books. In relation to those clients, he filed tax returns claiming false rental losses, tax losses, and partnership losses in order to obtain refunds
It appears that none of the clients for whom the appellant worked had any idea that the taxation benefits gained for them were fraudulently obtained. Apparently, the money was utilised to pay accounts for clients, but in some cases money from one client may have been used to meet debts of another client. There is no break down available that indicates the extent of this practise.
There was little direct personal benefit to the appellant in this offending. In addition to the fees received for the work carried out he received an additional $5000. The total loss to the Inland Revenue is $401,391.
The sentencing Judge noted the sheer scale of the offending, and accepted that there was little personal benefit to the appellant. He found, however, that there were aspects of the matter that appeared to cause the appellant a degree of satisfaction, in that he was able to achieve complex financial manipulation. The District Court Judge found there was a dual breach of trust involved, being the breach in the appellant’s capacity as a tax agent, and a breach of the trust owed to the clients to act honestly on their behalf and to honestly tell them what he was doing.
The Judge noted the difficulty in sentencing of this sort, and said the primary sentencing purpose was protection of the community, which meant the focus was not only upon the appellant as an individual, but took into account wider public concerns.
He saw as the aggravating features the number of charges, and the loss to the Inland Revenue. Other aggravating features were the breach of trust, and the inability to make any payment of reparation. As mitigation, he acknowledged the substantial costs saved as a result of the guilty plea, but balanced this against the cost of the investigation that was required to establish the appellant’s guilt, and to exclude the involvement of any other persons in his activities. He accepted the lack of personal benefit, and the absence of spending on luxury items and lavish lifestyle, which frequently accompanies such offending.
The Judge determined an appropriate starting point as one of five years. In considering cases referred to by counsel for the appellant, he accepted the greater personal benefit to the offenders in the cases cited, but compared that with the large number of charges here. As the Judge noted:
“I can’t overlook the blame-worthy aspect – on 422 occasions you elected to embark upon criminal activity. 422 times when you could have said ‘I’m not going to, I’m going to stop’ – but you didn’t. In my view, that type of high level or repetitive criminal offending must be recognised by perhaps a higher starting point than that suggested by Mr Borich. “
He allowed a discount for the mitigating features referred to above of one year, giving an effective sentence of 4 years.
On appeal, it is said the sentence was wrong in principle and is manifestly excessive. It was submitted the Judge erred in treating both the inability to make reparation and the cost of the investigation and prosecution as aggravating factors. In relation to the second ground, Mr Borich submitted that the starting point was too high, and the Judge failed to give an adequate discount for the early guilty plea and the combination of mitigating factors.
However a sentencing Judge treats the ability to make reparation, it is a factor that must be taken into account. The inability to make reparation is sometimes treated as an aggravating feature. On other occasions as the absence of a mitigating feature. It seems to us better to treat reparation on the basis that it is a factor to be taken into account by balancing it against other punitive factors in the sentencing process.
Mr Borich, relying on R v Bracefield (CA320/87 12 July 1988) submitted the Judge was wrong to take into account the costs of investigation. In that case this Court said at page 17:
“The expenditure of Police time, although indicative of the scale and complexity of the case, cannot be relevant at sentencing.”
This case, involving lengthy fraud against the Revenue, is far removed from the circumstances in Bracefield. In this case it was essential for the Revenue to fully investigate all returns involving the appellant to ascertain the correct tax position, and also to ensure that others were not involved. It is proper the expenditure relating to this be taken into account in the sentencing process in a similar way to the element of deterrence in sentencing for crimes that are difficult to detect. In any event, we are not satisfied this was a significant factor with the sentencing Judge. All he did was comment that the saving in costs from the guilty plea, advanced in mitigation, should be viewed against the cost of the investigation that was stressed by the Crown.
In his submissions, Mr Borich stressed the lack of personal gain for the appellant. He referred to a number of authorities, (R v Prasad (unreported Hamilton District Court 64/907, 6 March 1988) R v Barton (unreported CA370/00 29 March 2001), R v Lynn (C90/01 20 June 2001), R v Murphy (unreported CA85/98 22 June1998), R v Nua [2001] 3 NZLR 483, and R v Heald (unreported HC Wellington AP312/98, 17 March 1999)) in support of a comparative submission. In all of those cases there was greater personal gain, but in three a lesser sentence of imprisonment was imposed. In two, the same sentence was imposed, and in one a greater sentence. It was submitted, by comparison the insignificant personal benefit in this case made the sentence manifestly excessive.
In our view, a simple comparison of personal gain in offending of this sort is not helpful. What needs to be considered is the overall culpability of the offender, of which personal gain will often be a significant factor. However, in this case, the volume of the offending, coupled with the loss to the Revenue, are more important indicators of overall culpability.
Mr Borich also submitted the sentencing Judge wrongly took into account the appellant’s convictions in August 2000. There were eight charges of using an altered document with intent to defraud, and one of altering a document with intent to defraud. Mr Borich complained that these offences occurred after the raft of offending, the subject of this appeal. While mentioning the offending in August 2000, and earlier in 1985, the Judge does not appear to have used this as a factor to increase the starting point.
Finally, Mr Borich also submitted that the effective discount given in this case was only 20%. This was insufficient in view of the fact that it was accepted by the Crown that the appellant had pleaded guilty at the earliest practicable opportunity, and there were other significant mitigating factors. He further submitted that there were strong prospects for rehabilitation. In light of the psychologist’s comments:
“Criminal offending involved: Mr Hunter does not seem to understand the serious nature of what he has done and has blocked out the consequences of his behaviour.”

The Judge was entitled to be somewhat cynical about rehabilitative possibilities.

For the Crown, Mr Ruffin, stressed the totality of the offending, and the significant loss to the Revenue. The Crown’s position was that the lack of personal gain did not in any way diminish the culpability of this offending. Mr Ruffin submitted that a 20% discount was in the range available to the Judge. As well, he said, had the Judge taken the starting point advanced by the Crown of 5½ years, the discount would have amounted to 25% in any event.
This was prolonged and sustained offending over a lengthy period. The lack of personal gain cannot mask the significant loss to the Revenue, or the extent of the appellant’s culpability. In offending of this sort deterrence is the most significant aspect in the sentencing. Given the sheer volume of offending over a lengthy period, the loss to the Revenue, and the appellant’s culpability, we are satisfied that a starting point of 5 years was within the range available to the sentencing Judge.
However, we recognise the value of a guilty plea in the saving of costs and Court time, particularly in cases of this type. Such discounts also send an important message to other offenders of the benefits of an early guilty plea. While we do not find it useful to attempt to set the appropriate discount in percentage terms, overall the appellant was entitled to greater recognition for his plea and co-operation. Taking into account that the Crown concedes that the guilty plea was made at the earliest practicable opportunity, and the other mitigating factors, we feel that the sentencing Judge failed to give sufficient credit.
Accordingly, the appeal is allowed to the extent that the sentence is reduced to one of three years and six months, on each charge, concurrent.

Solicitors

Crown Law Auckland for the Crown
Rice Craig, Auckland for the Appellant

[2002] NZCA 118

31 May 2002