Citation: Sakovits v R [2014] NSWCCA 109
Court: NSW Court of Criminal Appeal
Date: 20 June 2014
Judges: Leeming JA, Price J, Bellew J
Background
The two applicants, a married couple who were co-directors of a promotions company, were convicted after trial of conspiring to defraud the Commonwealth through a tax evasion scheme. The scheme, introduced by their accountant, involved routing company funds through a Vanuatu entity using false invoices for fictitious services. This allowed them to artificially reduce their company's taxable income and conceal personal income from the Australian Taxation Office over a period spanning April 2001 to September 2006.
The total tax shortfall across company and personal income tax was approximately $1.18 million. Neither applicant demonstrated contrition, and the sentencing judge found they were motivated by self-interest.
Following conviction, each applicant was sentenced to six months' imprisonment on the first count and five years' imprisonment on the second count, with release on recognizance after two and a half years. Both applicants sought leave to appeal against those sentences.
Legal Issues
- Whether the sentencing judge erred in assessing the hardship that a custodial sentence would impose on the applicants' family, including the elderly and seriously ill mother of one applicant
- Whether the sentences imposed on the second count were manifestly excessive
Decision
On the first ground, the applicants argued that the sentencing judge had failed to give adequate weight to the effect of imprisonment on the mother of one applicant, who was 85 years old, in severe frailty, and suffering from multiple serious medical conditions including obstructive pulmonary disease, advanced osteoporosis, and a suspected lung mass. The sentencing judge had found that her circumstances did not rise to the level of "exceptional" hardship required to significantly reduce a sentence. The Court of Criminal Appeal found no error in that conclusion, noting that the question of whether the threshold was met had to be assessed on the facts as they stood at the time of sentencing. The subsequent death of the mother did not affect this analysis, a point counsel for the applicants conceded.
On the second ground, the Court rejected the submission that the sentences were manifestly excessive. It emphasised the seriousness of the offending: the conspiracy was sophisticated, extended over more than five years, involved deliberate planning and repeated deception through false documents, and caused a substantial loss to public revenue. The Court drew on the High Court's observations in Hili v R; Jones v R (2010) 242 CLR 520, noting that serious tax fraud of this kind affects the whole community, is difficult to detect, and demands sentences with both punitive and deterrent effect. General deterrence was identified as carrying particular significance in this type of case.
The Court concluded that the sentences imposed on each applicant were entirely appropriate and that neither ground of appeal was made out.
Orders Made
In each case:
- Leave to appeal granted
- Appeal dismissed
Key Takeaways
- In dismissing both appeals, the Court of Criminal Appeal confirmed that sentences for serious, prolonged tax fraud conspiracies must reflect the community-wide impact of such offending, the difficulty of detection, and the need for both punishment and general deterrence.
- A finding that family hardship does not reach an "exceptional" level is assessed against the circumstances at the time of sentencing; subsequent changes in those circumstances do not, of themselves, establish error in the original determination.
- Where offenders demonstrate no contrition and are motivated by self-interest, those factors remain relevant to the sentencing exercise and weigh against mitigation.
- Sophistication in the commission of an offence is not limited to technical complexity; a scheme that requires sustained planning, the creation of false documents over many years, and deliberate concealment from revenue authorities may properly be characterised as sophisticated.
- The High Court's observations in Hili v R; Jones v R (2010) 242 CLR 520 regarding the gravity of sustained, planned tax fraud were applied by the Court of Criminal Appeal as directly relevant to the assessment of whether sentences in comparable cases were appropriate.
Legislation and Cases Referenced
Legislation:
- Crimes Act 1914 (Cth), ss 29D and 86(1)
- Criminal Code 1995 (Cth), s 134.5(3)
Cases:
- Hili v R; Jones v R (2010) 242 CLR 520; [2010] HCA 45
- Markarian v R (2005) 228 CLR 357; [2005] HCA 25
- Director of Public Prosecutions (Cth) v Gregory [2011] VSCA 145; (2011) 211 A Crim R 147
- Agius v R [2011] NSWCCA 119
- R v Boughen; R v Cameron [2012] NSWCCA 17
- R v Sakovits [2013] NSWSC 464 (the primary sentencing judgment)
- R v Hawkins (1989) 45 A Crim R 430
- Beldon v R [2012] NSWCCA 194
- Pham v R [2009] NSWCCA 25; (2009) 193 A Crim R 190
- R v Zerafa [2013] NSWCCA 222
- Eken v R [2007] NSWCCA 320
- R v Hart [1999] NSWCCA 240
- R v Ferrer-Esis (1991) 55 A Crim R 231
- R v Bateson [2011] NSWSC 643