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Court of Criminal Appeal 19 June 2013

R v Hawkins

[2013] NSWCCA 208

Fraud & dishonesty
CRIMINAL LAW SENTENCING CRIMES ACT 1914 (CTH) S 29D CRIMINAL CODE (CTH) S 134.2 FALSE INCOME TAX RETURNS CROWN APPEAL

Citation: R v Hawkins [2013] NSWCCA 208
Court: Court of Criminal Appeal, New South Wales
Date: 19 June 2013
Judge(s): Hoeben CJ at CL; RA Hulme J; RS Hulme AJ

Background

The respondent was an IT consultant who became involved in an offshore tax evasion scheme run through an accounting firm. Over several financial years spanning 2000 to 2004, he participated in a round-robin scheme that routed money through foreign companies in Vanuatu and New Zealand to create the false appearance of legitimate business expenses. The fraudulent claims were lodged in both the tax returns of his company, Pacific Computing and Innovation Pty Ltd, and in his own personal tax returns.

The scheme resulted in a combined tax shortfall of approximately $600,000, none of which had been repaid at the time of sentencing. A jury convicted the respondent on eight counts: one under s 29D of the Crimes Act 1914 (Cth) and seven under s 134.2(1) of the Criminal Code (Cth), each carrying a maximum of 10 years imprisonment.

On 9 November 2012, Woods DCJ in the District Court sentenced the respondent to a total effective term of 3 years 4 months with a non-parole period of 1 year 8 months. The Crown appealed, contending the sentences were manifestly inadequate.

  • Whether the total effective sentence of 3 years 4 months, with a non-parole period of 1 year 8 months, was manifestly inadequate for eight offences of tax fraud totalling approximately $600,000.
  • Whether the sentencing judge erred in his approach to hardship suffered by the respondent's family and employees as mitigating factors, given that no finding of "exceptional circumstances" was made.

Decision

The Court of Criminal Appeal found that the original sentences were manifestly inadequate. RS Hulme AJ, with whom both Hoeben CJ at CL and RA Hulme J agreed, identified error in the sentencing exercise and proceeded to re-sentence the respondent. The Court significantly increased both the total term and the non-parole period.

In re-sentencing, the Court took into account the objective seriousness of the offences, the sustained nature of the fraud over multiple years, and the substantial loss to the Commonwealth. The respondent's cooperation with police (providing computer passwords and assisting the broader investigation), his prior good character, and the concessions made at trial were accepted as mitigating factors. However, those factors did not justify the relatively lenient original sentences.

RA Hulme J added a separate observation on the treatment of hardship to third parties. The sentencing judge had taken into account potential hardship to the respondent's family and employees without making any finding that such hardship amounted to "exceptional circumstances," which established authority requires before third-party hardship can carry material weight in sentencing. His Honour declined to treat this as a ground of appeal since the Crown had not pressed the point, but stated the Court should not be seen as implicitly endorsing the approach taken below.

Orders Made

The Court of Criminal Appeal re-sentenced the respondent as follows:

  • Counts 1, 2 and 3: 1 year and 8 months imprisonment, commencing 9 November 2012, expiring 8 July 2014
  • Counts 4 and 5: 1 year and 8 months imprisonment, commencing 9 July 2014, expiring 8 March 2016 (note: the omitted portion of the judgment contained intermediate sentencing orders not fully reproduced in the provided text)
  • Counts 6 and 7: 1 year and 8 months imprisonment, commencing 9 July 2015, expiring 8 March 2017
  • Count 8: 1 year and 8 months imprisonment, commencing 9 March 2017, expiring 8 November 2018
  • Non-parole period: 3 years 6 months, commencing 9 November 2012, expiring 8 May 2016

Key Takeaways

  • The Court of Criminal Appeal confirmed that a total effective sentence of 3 years 4 months with a non-parole period of 1 year 8 months was manifestly inadequate for eight tax fraud offences producing a combined shortfall of approximately $600,000.
  • A respondent's cooperation with police and prior good character are relevant mitigating factors in fraud sentencing, but they do not automatically justify substantial leniency where offences are objectively serious and sustained over multiple years.
  • Where a participant in a tax fraud scheme was not its originator, culpability may initially be lower, but that consideration carries diminishing weight where the offending continued voluntarily over several years.
  • Under established authority, third-party hardship (to family members or employees) can only carry material weight in sentencing if the court makes a specific finding that the circumstances are "exceptional." No such finding was made in the original sentence, and RA Hulme J signalled that no such finding was open on the facts.
  • In dismissing any implicit endorsement of the sentencing judge's approach to third-party hardship, the Court of Criminal Appeal reinforced that the "exceptional circumstances" threshold is a prerequisite, not a formality.

Legislation and Cases Referenced

Legislation
- Crimes Act 1914 (Cth), s 29D
- Criminal Code (Cth), s 134.2(1)

Cases
- Green v R; Quinn v R [2011] HCA 49; 244 CLR 462
- Hili v The Queen; Jones v The Queen [2010] HCA 45; 242 CLR 520
- Ly v The Queen [2007] NSWCCA 28
- R v Agius; R v Zerafa [2012] NSWSC 978
- R v Boughen; R v Cameron [2012] NSWCCA 17
- R v Jones; R v Hili [2010] NSWCCA 108
- R v MacLeod [2013] NSWCCA 108
- R v Mahmud [2010] NSWCCA 219
- R v Sciberras [2006] NSWCCA 268