SELLERS v COMMISSIONER OF INLAND REVENUE [2016] NZHC 60

SELLERS v COMMISSIONER OF INLAND REVENUE [2016] NZHC 60 [5 February 2016]IN THE HIGH COURT OF NEW ZEALANDNEW PLYMOUTH REGISTRYCRI 2015-443-000041[2016] NZHC 60BETWEEN KEVAN ANTHONY SELLERSAppellantAND COMMISSIONER OF INLANDREVENUERespondentHearing: 3 February 2016Counsel: J M Woodcock for AppellantS J Simpkin for RespondentJudgment: 5 February 2016JUDGMENT OF SIMON FRANCE JIntroduction[1] Mr Sellers pleaded guilty at the first opportunity to failing make PAYEpayments. He was sentenced to five months' community detention, 250 hours'community work and reparation of $38,968.70. Of that $11,000 was available for immediate payment, which was done, and the balance was to be paid at $20.00 a week. There was recognition that Mr Sellers was willing to pay more if he was able to obtain employment. That has happened since the sentencing and there is presently an offer to pay $300 per week.[2] Mr Sellers appeals the sentence on the basis that the quantum of community work and community detention is too high for the offending, and that insufficient recognition was given to the reparation paid and the willingness to pay more than $20 a week once Mr Sellers obtained employment.Offending[3] Mr Sellers was the principal of a struggling food business. Around mid-2007, he began to not file PAYE returns or pay the money to the Commissioner. Reminders were sent, but in August 2007 liquidation proceedings for unpaid tax were initiated.[4] That process wound its way through the Court. In July 2008 Mr Sellers filed all the outstanding PAYE returns, and a payment arrangement with the Commissioner was agreed. The liquidation proceedings were withdrawn.[5] However, default again started occurring both in relation to the payment schedule and new PAYE obligations. Returns were filed but payments not made. Eventually in 2014 the business was liquidated.[6] Fifty four charges were laid covering the monthly periods between August 2008 and May 2013. The charge was failing to pay the PAYE to the Commissioner having deducted it. The amount involved was $38,968.70.Decision[7] In R v Easton, the offender was convicted on 22 charges of failing to pay PAYE deductions to the Commissioner. The sum involved was $200,000. The offending spanned 14 months. At the original sentencing, Mr Easton was fined $66,000, and ordered to pay reparation of $140,000. The Solicitor-General successfully appealed. The Court of Appeal indicated that imprisonment will be the normal starting point for this type of offending. In the particular case the minimumstarting point was 12 months'.1[8] In the present case Mr Sellers pleaded guilty following a sentence indication of a sentence involving both community detention and community work. The quantum was unspecified but was expressed to be influenced by the final reparation arrangements. Given Easton, it is difficult to see that Mr Sellers has ground for complaint. He has avoided the normal sanction (namely imprisonment or home1 R v Easton [2013] NZCA 677.detention), seemingly because of the lower quantum of money involved. That is a legitimate factor but alternatively the period of offending, five years, and the deliberate repeating of the offending even after an arrangement was made could have been emphasised. These were enough to bring the normal presumption of imprisonment into play.[9] On appeal Ms Woodcock refers to the greater sums involved comparable cases such as Lobb (seven months' home detention and 400 hours community work in relation to $115,000)2 and Otto ($115,000, 19 month offending period, six months'home detention and 180 hours community work).3 It can be noted both involve home detention which necessarily implies imprisonment was the basic sentence. Neither alters my view that Mr Sellers in general terms has no ground for complaint. The community detention sentence is one month less than the maximum and the community work is not excessive.[10] The main issue to address is the reparation, and the credit for it. Ms Woodcock first submits there is no express acknowledgement of the effort made to obtain the $11,000, namely by obtaining permission to break his kiwisaver investment. I accept the endeavour involved, and also that the quantum is significant, being all that was available to Mr Sellers and approximately one third of the debt. Mr Sellers pleaded guilty at the first opportunity and there is no doubt about his commitment to make amends.[11] Although there was no express reference to many of these matters, the reality is that the actual sentence, for the reasons already given, does reflect credit. It is not of itself a manifestly excessive sentence and a sterner response was available.[12] The second issue is the reparation sentence itself. The sentencing remarks do not identify the quantum.4 It was seemingly intended to be for the balance of $27,968.70. Payment was ordered at $20 per week, with the intention at some stage it might be increased. However, as it presently stands payment would require2 Lobb DC Taupo CRI-2011-06-001773, 28 March 2012.3 Otto DC Hamilton CRI 2012-072-000565, 26 September 2014.4 R v Parkinson CA81/00, 25 May 2000 confirms reparation is a sentence requiring to be pronounced in open court.27 years, which is not a satisfactory position.5 Adjustment would be needed, but as it happens Mr Sellers has obtained employment and is proffering a much higher sum, as much as $300 per week.[13] These circumstances are unusual, especially on a defendant appeal. Normally I would need to reduce the quantum of the reparation sum in order to shorten the 27 year period it would require to repay it. However, the defendant is offering to achieve this effect by paying more. The length of the reparation sentence will reduce to two to three years as a consequence, a term which is obviously acceptable. In these unique circumstances I consider a modest adjustment to the other sentence to reflect this voluntary increase in repayment rate is appropriate. The voluntary increase is further evidence of Mr Sellers' remorse and his efforts to make amends.[14] For completeness I note a third reparation point raised by the appellant, namely an issue whether there is power to order reparation in relation to unpaid taxes. The concern is that the Sentencing Act requires that there have been loss to a"person" and whether that is so in the case of unpaid tax. Tax is payable to theCrown, and unlike, for example, the Crimes Act 1961, the Sentencing Act does not define person to include the Crown.[15] The reality is that reparation orders in these circumstances have been confirmed by the Court of Appeal on numerous occasions, so there is no scope for me to determine otherwise. One possibility in support of the current approach is that the person suffering loss is the Commissioner who is the person charged with collecting and managing tax. Whether that makes her any more a victim of unpaid tax than anyone else is certainly open to debate, but not one which it is open to me toresolve in the appellant's favour.Conclusion[16] The appeal is allowed in part.5 See, for example, R v Bailey CA306/03, 10 May 2004.[17] The sentence of five months' community detention is confirmed.[18] The sentence of 250 hours' community work is quashed and in its place asentence of 175 hours' community work is imposed.[19] Reparation of $38,968.70 is confirmed. The unpaid balance is to be paid at a rate of $200 per week.6_________________________Simon France JSolicitors:J M Woodcock, Barrister, New PlymouthCrown Solicitors, New Plymouth6 Although more was proffered, given the salary Mr Sellers is earning, I consider a level of caution is needed. He can, of course, pay more if he wishes.