BENCH v THE COMMISSIONER OF INLAND REVENUE [2017] NZHC 355

BENCH v THE COMMISSIONER OF INLAND REVENUE [2017] NZHC 355 [7 March 2017]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCRI-2017-404-00020[2017] NZHC 355UNDER Section 244 of the Criminal Procedure Act2011IN THE MATTER of an appeal against criminal sentencingBETWEEN CLIVE STEPHEN WILLIAM BENCHAppellantAND THE COMMISSIONER OF INLANDREVENUERespondentHearing: 6 March 2017Appearances: A Low and T Kelly for AppellantJ Angelson for RespondentJudgment: 7 March 2017JUDGMENT OF FOGARTY JThis judgment was delivered by Justice Fogarty on7 March 2017 at 11.30 a.m., pursuant tor 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Solicitors:Alexandra Low & Associates, AucklandMeredith Connell, Crown Solicitors, AucklandIntroduction[1] On 17 January 2017, Judge B R Pidwell of the District Court, sitting at Waitakere, sentenced the appellant to imprisonment for 19 months, concurrent, withno special conditions and standard release conditions for six months. The Judge'ssummary of the charges and the offending appear in the first five paragraphs of her judgment as follows:1[1] Clive Bench you appear for sentencing today having pleaded guilty on 17 March 2016 to three sets of charges laid under s 143B of the Tax Administration Act 1994. Specifically 21 charges of failing to provide information to the Commissioner of Inland Revenue with intent to evade the assessment or payment of tax laid under s 143B(1)(b) and (f). Fourteen charges of providing incomplete information to the Commissioner with intent to evade the assessment or payment of tax laid under 143B(1)(c) and (f) and three charges of providing incomplete information to the Commissioner to enable another person to obtain a refund or payment of tax in the knowledge that the other person was not lawfully entitled to the refund or payment laid under s 143B(1)(c) and (h).[2] Those offences all carry a maximum prison term of five years in the alternative or addition to a $50,000 fine.[3] You also have pleaded guilty to 40 charges under s 143A(1)(e) and 147 of the Act, for knowingly failing to deduct withholding tax as is required by the tax law. This offence is a fineable only offence with a maximum fine being $25,000 for the first offence and $50,000 for subsequent offending.[4] In summary, the facts are that you were the sole director of Aquaguard Limited, a limited liability company from 31 July 2003 and the managing director of GoCon Limited since the 12 January 2010. The offending took place between 2005 and 2011. It occurred in your capacity as a director and managing director of those two companies. It involved you failing to account for payments made into bank accounts the companies had access to when filing GST returns, continuing to charge GST while not GST registered and failing to return that money, failing to deduct withholding tax from amounts paid to contractors and receiving income without filling income tax returns.[5] Based on default assessments the estimated total of your offending resulted in a tax loss of $399,827.09. That is broken down as follows:(a) GST totalling $74,907.09 as a result of the incomplete information provided by you in relation to Aquaguard for the period ended 31 July 2005, 30 November 2005, 31 March 2006 to 31 May 2007 inclusive, 30 September 2007, 30 November 2007 and 31 March 2008 to 30 September 2008 inclusive.1 Inland Revenue Department v Bench [2017] NZDC 635.(b) GST totalling $77,792.79 as a result of failing to filingAquaguard's GST returns for the period ended 31 March2009, 31 May 2009 and 30 September 2009 to 31 March 2011 inclusive.(c) Income tax totalling $200,219.13 as result of failing to fileAquaguard's income tax returns for the periods ended 31March 2006, 31 March 2007 and 31 March 2009 to 31 March 2011 inclusive.(d) Withholding tax totalling $32,573.60 as a result of failing to deduct withholding tax payments made by Aquaguard to a contractor for the periods ended 30 November 2006 to 31 January 2010 inclusive and 31 March 2010.(e) GST totalling $6602.32 as a result of failing to file Gocon'sGST returns for the periods ended 31 March 2010 and 30 September 2010.(f) Income tax totalling $7732.16 as a result of failing to fileGocon's income tax returns for the periods ended 31 March2010 and 31 March 2011.[2] The sentencing came before the Judge on two occasions, as she records in her judgment:2[8] This sentencing process has been adjourned on two occasions to enable you to make inquiry and attempt to put your affairs in place to enable you to make a significant reparation contribution.[9] Initially the matter came before me on 19 August last year and I adjourned the sentencing to give you the option to address reparation in some significant way and indicated that that issue would have a bearing on the outcome of your end sentence. When the matter was called again before me on 11 October 2016 there was an indication that the family trust which your wife is a trustee of, was making a home available for sale and that a significant amount of money would be available from that to the IRD for purposes of reparation.[10] I am required by the Sentencing Act 2002 to keep in mind a number of purposes and principles. S 7 requires me to have regard of the need to hold you to be accountable for the harm that you have done to the victims of your offending and in the case the victim is society as a whole. Everyone in this country is obliged to pay taxes if they are working or are involved in a company and you failed to do that over a significant number of years to a significant amount.[11] I need to promote in you a sense of responsibility for an acknowledgement of the money that was not put in the public purse at a time when everyone in this society has the need for taxes to be paid to enable this country to function. If I can, I need to provide reparation for that harm, and2 Bench, above n 1.to denounce your conduct to deter not only you but other members of society from committing the same or similar offences again.[3] There are a large number of purposes and principles set out in the Sentencing Act 2002. In ss 7 and 8 alone one can count 19 separate principles. A sentencing Judge selects principles made relevant by the offending conduct. In this case the sentencing Judge selected the principle in s 7 requiring the Court to hold the offender accountable for the harm he has done to society as a whole;3 the need to promote in him a sense of responsibility for an acknowledgement of the money that was not put in the public purse at a time when everyone in this society has the need for taxes to be paid to enable the country to function;4 she also took into account the need to provide reparation if that was possible and to denounce the conduct to deter others.5[4] Counsel agreed the starting point, and so the Judge did not need to traverse the cases that had been referred to in the submissions for the purposes of the sentencing. Rather, she said:6[16] because there is essentially an agreement of the range available to this Court as dictated by higher authorities for a starting point. Your counsel acknowledges and accepts that the appropriate starting point in this case in regard to those authorities as submitted by the prosecution is between 24 and 30 months imprisonment.[5] The Judge identified as aggravating features the significant duration of the offending being over six years and the moderate degree of premeditation. She identified the loss to society as being just shy of $400,000 and took into account that the offender had now paid back $20,000. She took into account he had made no personal pecuniary gain, and was a bankrupt. She referred to a number of cases that had been referred to her by counsel, noted again the range agreed between counsel and considered the appropriate starting point was 28 months, reciting the cases she was particularly following. She then turned to aggravating and mitigating factors. She did not think there were any aggravating features personal to the offender that warranted an uplift. She thought he was entitled to a credit for his guilty pleas. So taking a starting point of 28 months she gave a discount for good character and3 Section 7(1)(a).4 Section 7(1)(b).5 Section 7(1)(d) and (e) respectively.6 Bench, above n 1.personal issues, reducing the sentence to 25 months. Taking into account the guiltyplea, an end result of 19 months' imprisonment was adopted. That figure beingunder two years, she then considered the appropriateness of a home detention sentence.[6] It needs to be kept in mind at this point that this was the second of two hearings before the same Judge, at the first of which reparation was discussed leading to the subsequent payment of $20,000. Following the first hearing, a further $1,400 was paid. The Judge also recorded attempts made by the appellant's wife topay further amounts on his behalf. In the end she was not satisfied that he was able to make any further meaningful contribution to the reparation amount, which is the full amount of the balance, $380,000 in round figures.[7] Then comes a critical finding for the purposes of her judgment.7[24] Despite an offer and despite promises, I am not satisfied that that reparation can be paid. Due to the level of offending, and the inability to pay meaningful reparation, I do not consider that home detention is the appropriate outcome for you today. It does not meet the gravity of the offending. In those circumstances I proceed to sentence you as follows.[8] That led to her conclusion:[26] In relation to each of the other charges you are convicted and sentenced to imprisonment for 19 months, concurrent. No special conditions. Standard release conditions for six months. You may stand down.[9] In her submissions before this Court, Ms Low, for the appellant, argued that this analysis shows that the sentencing Judge did not stand back and re-visit all thecriteria before imposing the end sentence. She criticised the Judge's focus on thepresence or not of significant reparation before she would exercise her discretion on home detention. She contended as an error or law an in-Chambers discussion between the then prosecutor, Mr Klein-Baum and Ms Low for the defendant, where she said:87 Bench, above n 1.8 IRD v Bench Auckland DC, CRI-2016-909-002808, 19 August 2016 (in-Chambers discussion before Judge Pidwell).THE COURT: Unless I see the reparation addressed I won't be persuadedby any other mitigating factors.MS LOW: And if I was to take you to authority where similar situations with similar levels were home detention has been available to the offender?THE COURT: I need to see some significant reparation.[10] Before this Court, Ms Low then submitted it seems clear that the learned District Court Judge viewed the payment of reparation as a determinative factor inMr Bench's sentencing and, more particularly, in her Honour's consideration ofwhether the home detention was a suitable sentence. I agree she did.[11] Ms Low then submitted that this fixed view that the payment of reparation was a determinative factor was in error, sufficient to require this Court to intervene, because it over-simplified the application of the provisions in the Sentencing Act which call for a large number of criteria to be brought into account.[12] She submitted that the Judge gave Mr Bench no credit at all for the reparation paid, of $21,400. Secondly, she submitted there should be no difference between recognising the merit and discounting on the grounds of reparation paid between those who can afford to fully repay and those persons who, due to insolvency (as here), have no ability to pay.[13] It was clear that the sentencing Judge's reasoning was that the relevance ofreparation was that it reduced the tax loss and so, the harm done to society. Thereby the gravity of the offending would be reduced, making a home detention sentence more justifiable. This reasoning dovetails into paragraphs [10] and [11] of JudgePidwell's decision, set out above.9 It provides the context for the advice in Chambers by the Judge to Ms Low that significant reparation would be required to avoid a sentence of imprisonment.[14] I can find no error of law in this approach of the Judge. She is obviously aware of s 7 and others, I am sure, of the Sentencing Act. Sentencing Judges are constantly applying criteria in the Act. The criteria selected for analysis are the criteria made particularly relevant by the facts of the offending. To be sure, at the9 See [2] of this judgment, above.end of all the analysis, the sentencing Judge must stand back and be satisfied that the sentence is consistent with the principles of the Act. But, it is not necessary for that aspect of the sentencing to be recorded in detail in the reasons.[15] Judge Pidwell's sentencing notes run to 26 paragraphs. They follow on twohearings and one Chambers' discussion. This is not, by any measure at all, theoutcome of hurried decision making.[16] Mr Angelson, for the Inland Revenue Department (Crown), submitted that reparation sums should not in any event significantly reduce penalties for tax offending, citing the Court of Appeal in R v Patterson:10The offender gets some credit for [repayment] but not much. Not much because the offender's culpability is not significantly reduced: he or she isstill a fraudster and would not have voluntarily returned the money or thing stolen but for being caught.[17] The Crown emphasised that although Mr Bench was an undischarged bankrupt, the Judge gave him two opportunities between August 2016 and January 2017 to address reparation in a significant way. The Crown also submitted that offers to make amends that are seen as incapable of fulfilment should not qualify as mitigating factors in terms of s 9(2)(f) of the Sentencing Act. He submitted thatJudge Pidwell's approach took precisely the approach required by the Act.[18] As to the detail of the Judge's reasoning the Crown cited s 31(1) of the Sentencing Act and in particular subss (2) and (4). Section 31 of the Act provides:31 General requirement to give reasons(1) A court must give reasons in open court—(a) for the imposition of a sentence or for any other means of dealing with the offender; and(b) for the making of an order under Part 2.(2) The reasons may be given under this section with whatever level of particularity is appropriate to the particular case.(3) Nothing in this section limits any other provision of this or any other enactment that requires a court to give reasons.10 R v Patterson [2008] NZCA 75 at [41].(4) The fact that a court, in giving reasons in a particular case, does not mention a particular principle in section 8 or a particular factor in section 9 or a consideration under section 10 or section 11 is not in itself grounds for an appeal against a sentence imposed or an order made in that case.[19] At no stage in the hearing or subsequently have I been persuaded that Judge Pidwell was in error of law or gave inappropriate weight to relevant sentencing principles.[20] On the contrary, I am of the view that the judgment under appeal is thorough, detailed and persuasive. The appeal is dismissed.