Thompson v R [2016] NZCA 156 (26 April 2016)

Last Updated: 6 May 2016

IN THE COURT OF APPEAL OF NEW ZEALAND
CA488/2015 [2016] NZCA 156
BETWEEN	SYDNEY PHILLIP THOMPSON Appellant
AND	THE QUEEN Respondent
CA594/2015
BETWEEN	JANLYN MARYANNE DUZEVICH Appellant
AND	THE QUEEN Respondent

Hearing:	10 March 2016
Court:	Winkelmann, Peters and Collins JJ
Counsel:	P K Hamlin and E J Burton for Appellant Thompson J-A Kincade for Appellant Duzevich A J Ewing for Respondent
Judgment:	26 April 2016 at 11 am

JUDGMENT OF THE COURT

1. The applications for extensions of time to appeal are granted.
2. The appeals against sentence are dismissed.

____________________________________________________________________

REASONS OF THE COURT

(Given by Collins J)

Introduction

[1] Mr Thompson and Ms Duzevich appeal a sentence of 33 months’ imprisonment imposed on each of them by Judge Andrée Wiltens in the Auckland District Court on 22 July 2015.^[1] The sentences were imposed after Mr Thompson and Ms Duzevich each pleaded guilty to two representative charges of jointly obtaining money by deception.^[2]

Background

[2] The summary of facts to which Mr Thompson and Ms Duzevich pleaded guilty explained that in January 2009 Mr Thompson successfully applied to Work and Income New Zealand (WINZ) for “known-provider” status for his second-hand furniture business called Thompson and Thompson Rentals (Thompson and Thompson). This status meant that beneficiaries could use quotations supplied by Thompson and Thompson for furniture and whiteware when applying for a WINZ allowance/loan to purchase household goods. WINZ paid the funds directly to a bank account in the name of Mr Thompson.
[3] In fact, Thompson and Thompson was defrauding WINZ and splitting the proceeds with loan applicants, who were complicit in the fraud. Usually the goods quoted were never actually supplied by Thompson and Thompson. Between January 2009 and January 2013, Thompson and Thompson provided fraudulent quotes to nine applicants, causing WINZ to pay $5,325 on the basis of the fictitious quotations.
[4] In December 2011, the enterprise was expanded to include a business called Vichson Dentist and Optometrist (Vichson). Vichson applied to WINZ for authorisation to provide dental and optometry services. Complicit beneficiaries would provide WINZ with a quote from Vichson for dental treatment or optometry services. WINZ would then pay a loan/grant directly to a bank account in Mr Thompson’s name. The loan/grant was then split with the beneficiary receiving 75 per cent and Mr Thompson and Ms Duzevich receiving the balance.
[5] By March 2013, Vichson had provided 295 false quotations to 280 individuals. WINZ had paid out $375,315.64 as a consequence.
[6] The agreed summary of facts recorded Mr Thompson and Ms Duzevich received $95,160.16 between them. The summary of facts also recorded how Mr Thompson and Ms Duzevich worked together in Thompson and Thompson and Vichson and that Ms Duzevich also personally submitted a false quotation to WINZ in January 2012.
[7] Mr Thompson and Ms Duzevich were charged on 12 April 2013. In September 2014, Mr Thompson sought a sentence indication. On 19 December 2014, Judge Andrée Wiltens gave Mr Thompson a sentence indication, in the presence of Ms Duzevich, with a starting point of three years’ imprisonment and with a 15 per cent discount for a guilty plea. The sentence indication was declined.
[8] Mr Thompson and Ms Duzevich pleaded guilty to an amended indictment on 20 March 2015. The amended indictment contained two representative charges and alleged Mr Thompson and Ms Duzevich were joint offenders.
[9] In May 2015, Mr Thompson applied for a disputed facts hearing and Ms Duzevich applied to vacate her guilty plea. The sentencing scheduled for 11 May 2015 did not proceed because of the applications. Those applications were abandoned on 22 July 2015, and the sentencing proceeded that day.

Sentencing decision

[10] In his sentencing decision, Judge Andrée Wiltens accepted the Crown’s submission that the amount involved in the fraud and the loss suffered by WINZ was an aggravating feature of the case.
[11] Judge Andrée Wiltens also identified as an aggravating feature the breach of trust involved in Mr Thompson’s and Ms Duzevich’s procuring from WINZ “knownprovider” status.
[12] The Judge adopted a starting point of three years’ imprisonment. This was the same starting point he had indicated on 19 December 2014. He regarded Ms Duzevich as being equally as culpable as Mr Thompson. He acknowledged that while Mr Thompson had sought WINZ accreditation and the bank accounts were in his name, Ms Duzevich had been a partner in the business, promoted the fraudulent scheme, accepted applications from beneficiaries and offended over a number of years. He also observed Ms Duzevich had shared in the proceeds of the joint enterprise.
[13] The only mitigating feature identified by Judge Andrée Wiltens was the guilty pleas entered by Mr Thompson and Ms Duzevich. He said that had sentencing immediately followed the guilty pleas he would have given a 15 per cent discount. However, there had been “prevarication” after the guilty pleas and he accordingly allowed a discount of only 7.5 per cent to reflect the couple’s guilty pleas.

Grounds of appeal

[14] Mr Thompson and Ms Duzevich each advance three grounds of appeal, two of which are common to them both. The common grounds of appeal are that Judge Andrée Wiltens erred:

(1) By not having sufficient regard to the fact that the loss suffered by WINZ was reduced by WINZ benefitting from a civil profit forfeiture order made against Mr Thompson under s 55 of the Criminal Proceeds (Recovery) Act 2009. That profit forfeiture order was made on 6 November 2013 and resulted in WINZ receiving $59,396 from Mr Thompson’s share of his home.^[3] The first ground of appeal also alleges the Judge failed to have sufficient regard to the ability of WINZ to recover losses from the beneficiaries who participated in the fraud.

(2) By not giving sufficient credit for the appellants’ guilty pleas.

[15] Mr Thompson also appeals on the ground that the Judge did not give him credit for his remorse, and Ms Duzevich on the ground that he erred by treating her as being as culpable as Mr Thompson.
[16] Mr Thompson and Ms Duzevich filed their notices of appeal out of time by eight and 51 days respectively. We grant extensions of time to appeal, which the Crown does not oppose.

Quantum of loss suffered and benefit obtained

[17] We accept that the effect of the profit forfeiture order obtained against Mr Thompson in November 2013 was to reduce the benefit Mr Thompson obtained from the fraudulent enterprise. The effect of the profit forfeiture order was that the net benefit to Mr Thompson was a sum in the vicinity of $30,764.16.
[18] We also accept that the magnitude of a victim’s monetary loss and a defendant’s monetary gain is relevant in assessing a defendant’s culpability.^[4] Reparation may be relevant in that it reduces the extent of both the victim’s loss and the fraudulent person’s gain. It may also be relevant as providing evidence of genuine remorse. However the circumstances of the reparation have to be assessed.
[19] In R v Patterson, this Court explained:^[5]

... [T]he most logical approach is to acknowledge “involuntary” recovery of money stolen in the starting point analysis and “voluntary” reparation as a mitigating factor ... [F]raud offending where no recovery is achieved is “more serious” than fraud offending with complete recovery, if only because in the latter case the victims’ loss is transitory and not permanent. The offender gets some credit for that in the starting point adopted, but not much. Not much because the offender’s culpability is not significantly reduced: he or she is still a fraudster and would not have voluntarily returned the money or thing stolen but for being caught ...

“Voluntary” reparation is quite different. Where an offender exhibits genuine remorse and has done his or her best to atone financially for the fraud, whether by selling assets or borrowing or promising to make recompense by instalments from future earnings, credit is appropriate as a mitigating factor. The reparation is material evidence of remorse, a factor recognised in s 9(2)(f) of the Sentencing Act ...

We agree with the judge that no further discount was appropriate on the grounds of remorse or reparation. The fact the Crown recovered the illgotten gains was not Mr Patterson’s doing and, in so far as it was relevant, it was appropriately taken into account in the starting point.

The Supreme Court took no issue with the approach taken by the Court of Appeal and stated: “The applicant does not deserve any credit for the recovery of the proceeds, which was achieved notwithstanding his attempts to frustrate recovery”.^[6]

[20] In these circumstances, the reparation was compelled by a profit forfeiture order in relation to Mr Thompson’s property valued at approximately $60,000. Any form of reparation was resisted and Mr Thompson unsuccessfully sought leave to appeal the profit forfeiture order.^[7] He did not voluntarily offer reparation and the subsequent recovery of the ill-gotten gains was therefore not due to Mr Thompson’s actions.
[21] Judge Andrée Wiltens made no explicit reference to the profit forfeiture order against Mr Thompson, and we proceed on the basis that he did not take it into account in fixing a starting point. However, we are not satisfied Judge Andrée Wiltens erred by failing to “deduct” the forfeited profits when quantifying the net gain achieved by Mr Thompson and Ms Duzevich or the net loss to WINZ, when that reparation was made under compulsion.
[22] We also find no fault with Judge Andrée Wiltens not taking into account the ability of WINZ to recover loans from fraudulent beneficiaries. There is a high degree of speculation involved in whether or not WINZ will actually be able to recover from the complicit beneficiaries and if so, to what extent.
[23] We agree with Judge Andrée Wiltens’ assessment of the culpability of Mr Thompson and Ms Duzevich. The starting point he adopted was within the range that was reasonably available in the circumstances of this case.
[24] This was a case that contained a number of aggravating features in addition to the extent of the fraud. We note in particular, the following aggravating features:

(1) the duration of the offending;

(2) the abuse of trust involved in acquiring “known-provider” status in order to perpetrate fraud;

(3) the number of separate incidents of fraud;

(4) the involvement of others in the fraudulent scheme; and

(5) the profit motive underpinning the fraud.

The guilty plea discount

[25] Counsel for Mr Thompson and Ms Duzevich acknowledge that a discount of 15 per cent was no longer appropriate given the delays that occurred in sentencing Mr Thompson and Ms Duzevich. Counsel have suggested that an appropriate discount for the couple’s guilty pleas would have been in the vicinity of 10 per cent.
[26] We understand Judge Andrée Wiltens’ concerns about the events that occurred after the guilty pleas were entered. The guilty pleas were entered almost two years after the charges were first laid. The events after the guilty pleas, detailed above at [9], justified Judge Andrée Wiltens adopting a discount that was somewhere between seven and 10 per cent. In the circumstances of this case, we do not think there is any ground to interfere with the guilty plea discount of 7.5 per cent adopted by Judge Andrée Wiltens.

Mr Thompson’s remorse

[27] The pre-sentence report records Mr Thompson’s remorse. In our assessment, given the magnitude of the offending combined with the aggravating features we have identified in [23], Mr Thompson’s remorse is not a particularly significant mitigating factor, which found no practical expression beyond the entry of the guilty plea. Mr Thompson received credit for his guilty plea. No further discount was required.

Ms Duzevich’s role in the offending

[28] We have carefully assessed the submissions made on behalf of Ms Duzevich in which it was urged upon us that Ms Duzevich’s role in the offending was less significant than Mr Thompson’s.
[29] We are unable to accept this submission. Ms Duzevich pleaded guilty on the basis of the agreed summary of facts, and that is the basis on which she was sentenced. Having regard to the narrative recorded in that summary, Ms Duzevich was an equal partner in the offending and so bears equal responsibility for it.
[30] Ms Duzevich’s role in the fraudulent enterprise included her:

(1) assisting Mr Thompson to run both businesses;

(2) submitting fraudulent Vichson quotations for dental and optometry work to WINZ; and

(3) conferring with Mr Thompson about fictitious quotations.

[31] Judge Andrée Wiltens was clearly justified in treating Mr Thompson and Ms Duzevich as being equal offenders.

Conclusion

[32] The applications for extensions of time to appeal are granted but the appeals against sentence are dismissed.

Solicitors:
Crown Law Office, Wellington for Respondent

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^[1] R v Duzevich [2015] NZDC 14033.

^[2] Crimes Act 1961, ss 240(1)(a) and 66(2).

^[3] Commissioner of Police v Thompson [2013] NZHC 2926.

^[4] R v Findlay [2007] NZCA 553 at [54].

^[5] R v Patterson [2008] NZCA 75 at [41]–[43].

^[6] Patterson v R [2008] NZSC 70 at [3].

^[7] Thompson v Commissioner of Police [2014] NZCA 261.