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Sorm v R [2021] NZCA 88; [2021] 3 NZLR 558 (25 March 2021)

Last Updated: 19 October 2022

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IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA674/2019
[2021] NZCA 88

	BETWEEN	MARA SORM Appellant
	AND	THE QUEEN Respondent

Hearing:	4 November 2020
Court:	Miller, Brewer and Moore JJ
Counsel:	M E Goodwin for Appellant BCL Charmley for Respondent
Judgment:	25 March 2021 at 11.00 am

JUDGMENT OF THE COURT

A Application to adduce further evidence on appeal declined.

B Appeal against conviction dismissed.

C Appeal against sentence dismissed.
____________________________________________________________________

REASONS OF THE COURT

(Given by Moore J)

Introduction

[1] Following a jury trial in Hamilton, Mara Sorm was convicted of 52 charges of tax evasion.^[1] He was sentenced to four years and nine months’ imprisonment and ordered to pay $500,000 in reparation.^[2]
[2] He appeals both his conviction and sentence. As for the conviction, he says the trial miscarried because:

(a) the Judge’s questioning of witnesses was excessive, unfair and biased in favour of the Crown and thus unfairly prejudiced the jury against him; and
(b) in the course of his questions, the Judge erred in his characterisation of the funds taken from Mr Sorm’s company which led the jury to err.

[3] As for the sentence, Mr Sorm appeals only the reparation order. He says it was made without any consideration of his ability to pay and no discount to the sentence was given in recognition of the order.
[4] On the conviction appeal the Crown says the Judge’s questioning was relevant and necessary to clarify the complex evidence for the jury. Furthermore, the Judge did not mischaracterise the company funds transferred by the appellant, but in any event nothing turns on how they were characterised.
[5] On the sentence appeal, the Crown says the reparation order was appropriate and the end sentence was not manifestly excessive.

Background facts

[6] Mr Sorm and his wife Chhee Lay,^[3] operated three bakeries and associated retail food outlets in Matamata, Tirau and Thames. The businesses were owned by Micheel Limited (“Micheel”) of which Mr Sorm and Ms Lay were the directors and shareholders. Mr Sorm and his wife operated the businesses for nearly nine years between November 2003 and September 2012 when they were sold.^[4]
[7] At the end of 2012 Micheel came to the attention of the Inland Revenue Department (“IRD”). IRD sent a letter to Mr Sorm, Ms Lay and their accountant, Mr Yiu, advising that IRD was proposing to undertake a review of the company’s tax obligations for the 2012 financial year. Mr Yiu replied by advising there had been mistakes in the companies’ tax returns and that the gross income for the 2012 financial year was significantly greater than that returned. Unsurprisingly, this caused IRD to broaden its investigation into the three businesses and the tax liability of Micheel, Mr Sorm and Ms Lay. In the course of the investigation Mr Sorm undertook a voluntary interview and made three voluntary disclosures during which he accepted that the total net cash income omitted from his tax returns between 2008 and 2012 totalled $794,078.54. The corresponding core income tax unpaid was $381,763.60.
[8] Statistics New Zealand publishes business sector performance indicator figures of which gross profit ratios (GPR) are one. The GPR for café and restaurant businesses comparable to those operated by Micheel is approximately 64 per cent. Based on the voluntary disclosures, the GPR for the three Sorm businesses was only 39 per cent.
[9] Search warrants were executed at the three business premises and Mr Sorm’s residential address. In each, a “cashbook” containing records of sales over various periods was located. The Thames cashbook revealed daily cash takings for the period between 5 January and 25 July 2010. When added to the EPTPOS sales for the same period, IRD’s investigator, Ms Rintoul was able to calculate that approximately 61 per cent of sales were in the form of cash. She extrapolated that ratio back across the whole period Micheel had traded to determine the likely total income. The result was a GPR consistent with the national statistics. A similar exercise was undertaken in respect of the Tirau business. That cashbook recorded total sales between 21 January 2011–30 April 2011, and 1 June 2011–31 July 2011. When extrapolated back over the trading period, the GPR was revealed to be approximately 61 per cent, again broadly consistent with the national average. Notably no cash was deposited into the businesses’ bank account; only EFTPOS receipts. There were no notebooks found in Ronnie’s Matamata which related to that business. Ms Rintoul used the business’ bank statements and the figures from the other cafes to calculate what the actual total sales figure would have been within the period.
[10] From these calculations she was able to estimate how much GST had been underpaid by Micheel over the period. The total income for GST purposes was calculated to total $6,568,229.19 of which the GST component was $769,126.06.
[11] The income tax evaded by Mr Sorm and Ms Lay was calculated to be $1,023,190.84 and $1,010,365.79 respectively.
[12] Thus, the total tax evaded by Mr Sorm, as both a principal and a party, was approximately $2.8 million. We observe that the Commissioner was not required to prove the precise amount evaded for purposes of this proceeding. The charges were of evading or attempting to evade the assessment or payment of tax.
[13] One question, which assumed some significance at the trial, was where the funds had gone. The defence proposition was that if such a large sum had been suppressed, Mr Sorm would have had significantly more assets to show for it. Ms Rintoul undertook an assets accretion analysis. She found that approximately $750,000 had been applied to a combination of property and business purchases and the costs of living. Large amounts of cash in various denominations was found at Mr Sorm’s home. Additionally, the evidence was that the couple travelled overseas on eight or nine occasions during the relevant period.

The trial

[14] The trial occupied two weeks. The evidence covered nine days. The exhibits ran to 5,495 pages. Six witnesses in total were called. The Crown called Ms Rintoul, Mr Yiu and the IRD investigator who executed a search warrant at Mr Sorm’s home.
[15] Broadly, the defence was that Mr Sorm had no sufficient knowledge of his obligations and certainly no criminal intention to evade tax. He claimed IRD’s assessment of the omitted income was exaggerated; his accumulated assets were relatively modest, and any unexplained cash purchases were funded by cash carried into New Zealand by his elderly mother, being the proceeds of property sales in Cambodia. He claimed the cashbooks did not contain sales records and in any event, he knew nothing about them. Furthermore, Ms Weaver, an expert accountant retained by the defence, was critical of Ms Rintoul’s methodology and, in particular, the extrapolation of the figures in the cashbooks to calculate the amount of suppressed income. Although the effect of Ms Weaver’s evidence demonstrated Mr Sorm’s voluntary disclosures to be false, she assessed the suppressed income as being in the range of $800,000 to $1,300,000.

Conviction appeal

[16] We must allow the conviction appeal if we are satisfied the jury’s verdicts were unreasonable having regard to the evidence, or a miscarriage of justice for any reason. A miscarriage of justice means any error, irregularity, or occurrence that has created a real risk that the outcome of the trial was affected; or has resulted in an unfair trial or a trial that was a nullity.^[5]

The interventions

[17] Mr Goodwin, for Mr Sorm, focuses the appeal on the Judge’s interventions. It is submitted that he questioned witnesses at length and he “extrapolate[ed] the answers”. Of the some 40 judicial interventions across the entire trial, Mr Goodwin points to 13 as being particular examples which would cause a reasonable observer to think that the Court was partial as between the parties.^[6] He submits that the Judge, when questioning the witnesses, appeared to have assumed a less independent and more partisan role. At other times he entered the arena of cross-examining defence witnesses during their examination-in-chief and questioning them in a manner which appeared to undermine their credibility.
[18] On other occasions, Mr Goodwin says the Judge assumed the role of prosecutor; for example, interrupting the evidence-in-chief by pointing out to Ms Rintoul that the summary she was referring to might be familiar to her but not necessarily for others, including the Judge. Mr Goodwin referred us to several examples where the Judge intervened with closed questions in circumstances which Mr Goodwin claimed would have been impermissible for Crown counsel in leading the evidence-in-chief.
[19] We had counsel take us through each of the 13 interventions at the hearing before us. The first seven occurred during Ms Rintoul’s evidence in chief. The next three occurred during Ms Weaver’s evidence in chief. The last three arose in the course of Mr Sorm’s cross-examination and involved exchanges with counsel and the interpreter.
[20] We do not consider it necessary to set out and analyse each of the 13 identified interventions. Rather, it is sufficient to refer to one example which reflects several of appellant’s complaints and to discuss the other complaints in a more general fashion. This approach reflects the essence of Mr Goodwin’s complaint; namely that it is the combined and cumulative effect of the Judge’s conduct which caused justice to miscarry rather than any particular intervention.
[21] For reasons which follow we are not satisfied that any of the Judge’s interventions, whether considered individually or cumulatively, rendered the trial unfair. In assessing the interventions, it is necessary to consider them in context. The first intervention complained of by Mr Goodwin illustrates this point. It occurred at a relatively early stage of Ms Rintoul’s evidence-in-chief. The prosecutor had referred her to Mr Sorm’s income tax returns for the relevant period. For the purposes of simplifying this detailed and voluminous material, Ms Rintoul had prepared a summary. Although the following passage is not the subject of criticism, it is necessary to include it to provide the context in which the criticised exchange occurred. The Judge interrupted the prosecutor’s examination of Ms Rintoul in the following way:

THE COURT:

Q: Does this summary cover the three taxpayers?

A: Yes it does.

Q: The company and both individuals?

A: Yes it does.

Q: And does this summary cover your analysis for all of the years that are referred to in the charges in this trial?

A: So each year is separated on a separate page.

Q: Yes, but there’s a summary for each year?

A: That’s correct.

So in this trial we’re covering six fiscal years?

A: Yes ...

Q: ... Are these summaries documents that you consider the jury would – could usually refer to in the future?

A: Yes.

Q.: And would you suggest that when it comes to this section of your evidence the jury would be probably well advised to take a note of these pages so they can come back to them?

A: Yes.

[22] The next intervention is also not criticised. Again we include it because it provides context. The Judge explained to the jury the nature and provenance of the evidence it was about to hear from Ms Rintoul:

THE COURT: That’s my impression too. Summaries are always good in documentary cases so you might want to make a record of the pages you’re looking at, the folder number and I simply say that because I expect that [the prosecutor] and possibly [defence counsel] might want to make reference to them in the future. There’s a lot of documents, some of which you won’t look at all and some of which you might want to look at more than once. Summaries are contained within this folder over pages 1932 to 1937. They are the taxation return summaries but there might be other summaries that are coming up as well but tax return summaries 1932 to 1937 covering all of the years in the charges that you’re dealing with.

[23] The prosecutor then continued his examination of Ms Rintoul by asking her who had prepared the summaries, what they related to and how the summary was compiled. The Judge then intervened. It is this part of the intervention which is objected to.

THE COURT:

Well I think that was a summary which you are very familiar with but I don’t think the rest of us are.
OK.
You’re speaking as a tax expert who knows your way around documents. I had trouble following it. Now looking at the left-hand side Micheel Limited IR10 details as filed, did the tax return as filed show a loss of $62.40?
That’s correct, yes.
For this year but on the information you were able to obtain under your powers in the Tax Administration Act section 16, were you able to re-assess that at a profit of $296,000 odd?
Yes, that’s correct. So re-assessments of, yeah, 290 –
And did that result in a re-assessment?
Yes, it did.
It did and that’s something you might talk to us about later perhaps. And if we just want to put it in plain English on your calculations there was an underreporting of profit of nearly $300,000.
Yes, that’s correct.
Looking now down to shareholder salary paid for Mr and Mrs Sorm you found that the information declared was accurate?
Yes. We for the shareholder salary paid you’re correct, yes.
And then there was an amendment?
Yes.
By voluntary disclosure?
There was an amendment by voluntary disclosure, yes.
And so that was the voluntary disclosure that occurred during that interview?
Yes, that’s correct. Yes.
Right, so the accountant said, ‘Look we’ve got the shareholder’s salary wrong, it better go up to this figure’ and you have accepted that?
We have, I haven’t actually accepted that.
But on the additional information you have included the voluntary as additional information?
Yes, so, yeah, the voluntary disclosure provided the original plus the amended shareholder salaries as, as told to us by the accountant as voluntary disclosure, yes.
And deemed dividend zero so zero is filed, no voluntary disclosure still zero but on information that you were able to obtain as part of your investigation, there was an increase for each of Mr and Mr Sorm of nearly $150,000?
That’s correct. That comes down from the amended taxable profit I’ve got and –
And that’s half of the profit?
Yes, half for each of them.
Half of the undeclared profit translates into a deemed dividend to the shareholders who are Mr and Mrs Sorm?
That’s correct, yes.
And that becomes personal to them as taxable income?
Yes, that’s right.
Now on the right-hand side additional income assessed as dividend income I’m not sure whether you ever spoke about that?
No, I was just taking us through that first column.
That first column. So when you’re on that first column you’re talking about the left hand side which actually has a number of columns, alright, see what I mean?
Yes.
It’s important that when you take us through documents which you are familiar with we are not, we need educating and that includes me and the other Judges in the room being the jury so I’ve just been careful now for the record to go through to clarify my understanding and I wonder if when you go through other documents you can treat it as a primer

A: Sure, yes.

Q: And I might be insulting the intelligence of the jury but I need it even if they don’t, alright.

[24] In addition to his more generalised criticisms, Mr Goodwin says this intervention is of particular significance because, occurring as it did at such an early stage of Ms Rintoul’s evidence, it demonstrates how active the Judge was in imposing his influence and authority over the evidence in chief and taking over the prosecutor’s role; he was “putting his mark” on the case.
[25] However, in our view, the interventions, viewed in their proper context, are unobjectionable. There can be no criticism of the Judge in doing what he did. The portion objected to was introduced by a series of questions from both the prosecutor and the Judge. This had the effect of not only explaining how evidential summaries work but also orientating the jury in anticipation of the evidence it was about to hear. While the intervention was lengthy, its plain purpose was to familiarise the jury with how summarised evidence may be received and explain, through the witness, what the summary contained. As the Judge himself stated, he was attempting to put Ms Rintoul’s evidence into plain English for the benefit of the jury. He pointed out to Ms Rintoul that while she may have been “absolutely familiar” with the documents she was discussing, he and the jury needed “educating”. He pointed out that Ms Rintoul should adopt a similar approach when explaining other documents later in her evidence.
[26] In intervening in this fashion the Judge was not assuming the role of the prosecutor. He did not extrapolate Ms Rintoul’s answers other than to clarify and to place the evidence in the context of the case and the charges. Any closed questions he asked were unexceptional; the answers were obvious and none contained evidence which was not apparent from or contained in the summary. Nothing in what he did unfairly undermined the proper presentation of the defence case. Neither did the questioning give the appearance the Judge was biased in favour of the Crown case.
[27] We also note that the Judge took care not to patronise the jury through his questioning, pointing out that both he and jury were not as familiar with the summaries as the witness. This is an entirely orthodox judicial technique using self-deprecation to put the jury at ease.
[28] More broadly, we consider it relevant to our assessment that the overwhelming majority of the interventions occurred during the evidence of Ms Rintoul and Ms Weaver, both expert witnesses. In assessing the nature and effect of judicial interventions, expert witnesses are in a different category from witnesses of fact. Here, the plain purpose of the Judge’s enquiries was to help clarify complex and technical matters for the benefit of the jury’s comprehension. In contrast, particular care is required before a Judge intervenes to ask questions of a witness of fact such as a complainant or an eyewitness. Such interventions may be justified such as resolving an ambiguity. Intervening to question witnesses of fact has the potential to unwittingly bolster the Crown case to the prejudice of the defence or to give the impression of judicial partiality. Nothing in the Judge’s conduct relative to the evidence of either Ms Weaver or Ms Rintoul conveys that impression.
[29] It is also apparent from the Judge’s questioning of the experts that he was attempting to focus them on the evidence and issues relevant to the trial. That he may have intervened, at least in part, for the purpose of ensuring the evidence was presented in a cogent and economical fashion in the interests of ensuring the trial did not run over time, is also a legitimate concern. Not only are there obvious administrative complications when trials exceed their time estimates, but jurors can be distracted from their task if their personal and professional commitments are adversely affected by a trial running beyond the period they expected.
[30] Another point is that the Judge’s interventions of the expert witnesses all occurred in their evidence-in-chief thus permitting ample time for counsel for the defence to formulate his questions either in cross-examination or re-examination.
[31] We accept that in respect of two of the interventions involving Ms Weaver, the Judge’s questioning might be regarded as mildly critical. For example, when Ms Weaver was explaining the benchmarking data, she criticised Ms Rintoul’s approach to GPRs. The Judge asked her whether her data was applicable to businesses of the size and type run by Mr Sorm and queried the rationale behind Ms Weaver’s calculations. We note that not only did defence counsel raise no objection at the time but, following the intervention, he developed the Judge’s line of enquiry. Another intervention followed Ms Weaver’s claim that there were transposition errors in Ms Rintoul’s calculations. The Judge asked her whether she was going to explain what the effect of any such errors would be. Ms Rintoul gave an example and added that it represented an “...example of potentially other errors that could have been made in her calculations”. This answer caused the Judge to observe that the jury was not interested in potential errors; it was for Ms Weaver to point to actual errors otherwise she would be speculating. In our view that was an entirely proper intervention and one which is not open to criticism.
[32] In addition to the interventions of the experts, Mr Goodwin pointed to three other interventions which took place during the cross-examination of Mr Sorm. The first occurred when the prosecutor was about to put to Mr Sorm questions about the professional advice he received regarding his tax liability. Defence counsel intervened and asked to discuss matters in chambers. The Judge refused. In the presence of the jury an exchange followed in which defence counsel observed that Mr Sorm’s tax position was still in dispute. The Judge pointed out to him that the Crown was asking Mr Sorm whether he had any tax to pay to which Mr Sorm had responded that he did not know but if he did, he would pay it. The Judge noted that the defence could re-examine on that issue and make submissions on the point, but noted it was not for the defence to put words in Mr Sorm’s mouth in cross-examination or even assist in resolving an apparent confusion.
[33] In our view the approach adopted by the Judge was the correct one. The Crown’s question to Mr Sorm was perfectly proper. The Judge formed the view that Mr Sorm was not confused. He interpreted counsel’s interruption as an attempt to help the witness in his answer. The criticism, such as it was, was of counsel rather than Mr Sorm. In our view the Judge was correct not to retire to chambers to deal with the matter as he did.
[34] The second intervention during Mr Sorm’s cross-examination occurred when the Judge asked the prosecutor to adopt a more economical line of questioning otherwise he would run the risk of being directed to move on. The Judge referred to Mr Sorm’s evidence, summarising it as a claim by Mr Sorm that the funds he received were wages. Mr Goodwin submits this was a particularly significant intervention because the Judge obviously confused wages and salary with shareholder returns. He submits the distinction is an important one because the timing of the liability to pay tax varies according to the classification of the income. In support of that submission he filed an affidavit from a forensic accountant which explains the distinction between the two forms of income and the effect of that distinction on when the liability to pay tax arises. In our view this is a distinction without difference. A taxpayer’s liability to pay the tax remains irrespective of the classification or the time at which the taxation liability arises. We cannot see how any misapprehension, if it was in fact a misapprehension, caused justice to miscarry in the context of the issues engaged in this case.
[35] The final objection involved the interpreter. Mr Sorm gave his evidence with the assistance of a Cambodian interpreter. The intervention occurred immediately after the Judge refused defence counsel’s request to go into chambers, as earlier discussed. The exchange between the Court and the interpreter follows:

THE COURT TO INTERPRETER

What’s going on here. There’s a discussion. Mr Interpreter, you will interpret, you will not discuss, you know that.
Yes sir, I, I because –
No, no. If you need, if he’s asking for clarification then Mr Dillon can ask the question again please.
Yes sir.
Please avoid the trap of – I know it’s a trap but you must avoid that.
Yes sir.

[36] Mr Goodwin’s criticism is that the Judge should have permitted the interpreter to expand on his explanation. The intervention took place in the presence of the jury creating, in Mr Goodwin’s submission, the potential perception of misbehaviour by Mr Sorm.
[37] We cannot accept that criticism. First, there are obvious potential dangers in a Judge asking an interpreter in the presence of the jury to relay the content of discussions between the interpreter and the defendant. The Judge’s approach was entirely correct and orthodox; that is to remind the interpreter that their task is to interpret and if there is confusion on the part of the witness to ask counsel to repeat the question.
[38] Secondly, any criticism was of the interpreter, not Mr Sorm. It was the interpreter the Judge was instructing.
[39] Thus, in summary, we are not satisfied the judicial interventions in this trial were of such a frequency and nature they amount to unfair conduct by the Judge such that it led to a miscarriage of justice. This was a lengthy, complex and technical case. There were two defendants and a large number of charges on which verdicts were required. The Judge correctly recognised the importance of ensuring the evidence was presented in a cogent and comprehensible fashion. It was critically important that the evidence was both focused and understood.

Factual error: wages or shareholder salary?

[40] Mr Goodwin also seeks to make something of a reference by the Judge to “wages” during Mr Sorm’s cross-examination. Mr Sorm was being questioned on disparities between his 2009 tax return and a sum of $3,000 per week transferred from the businesses to his and his wife’s personal account. It is suggested that the Judge may have thereby led the jury to think money was wages for which tax ought to have been deducted as PAYE, whereas it was in fact shareholder salary which should be accounted for at year-end. Mr Goodwin sought to adduce further evidence on appeal, being the affidavit evidence of an accountant, Tina Pope, to this effect.
[41] Indeed, Mr Goodwin made only faint submissions about it, suggesting that it was an error of fact by the Judge that may have confused the jury. We do not think the Judge was suggesting that PAYE ought to have been deducted from the weekly payments. The point being made by Crown counsel was both much simpler and unanswerable; Mr Sorm earned income which he had not accounted for in his annual return. He himself referred to the payments as his “wage”. We see nothing in this ground of appeal and decline to admit the affidavit.

Sentence appeal

[42] We must allow the sentence appeal if we are satisfied, for any reason, that there is an error in the Judge’s sentence and that a different sentence should be imposed.^[7]
[43] In sentencing Mr Sorm, the Judge noted that on IRD’s analysis Mr Sorm had evaded approximately $1 million of income tax (for both himself and Ms Lay) and GST totalling $770,000. The total was approximately $2.8 million.
[44] Nonetheless, the Judge was required to make his own and independent assessment of quantum of tax evaded based on the evidence he heard over the two-week trial. He accepted Ms Rintoul’s evidence, describing it as “detailed and analytical and ... supported by exhibits”.^[8] He accepted IRD’s application of the GPRs and the extrapolation calculations corroborated, as they were, by the three cashbooks.
[45] He adopted a five-and-a-half year starting point which was reduced by nine months on account of Mr Sorm’s various mitigating factors which included his contributions to the community and his facility for hard work noting, however, that that these positive factors needed to be tempered by the fact that behind the scenes Mr Sorm was stealing from the community and was happy to do so until he got caught. The Judge also took into account the difficulties which Mr Sorm would face in jail. As for reparation he made an order for the payment of $500,000.
[46] Mr Goodwin does not challenge the five-and-a-half year starting point and we are satisfied it is well within range on the authority of Wang v R and R v Kumar, cases both cited by the Judge.^[9] We also note that this Court in Mehmood v R, which involved $1 million of evaded tax over a five-and-a-half year period, this Court held a starting point of four years’ imprisonment was “well justified” having regard to the scale of the offending.^[10] In Jukich v R, this Court observed that a starting point of two-and-a-half years’ imprisonment for the evasion of $516,713 of tax could have been higher.^[11]
[47] Mr Goodwin takes issue only with the reparation order. He submits that the quantum of tax owed is a matter to be determined by the Tax Administration Act 1994 (“the Tax Administration Act”) and the Court has no power to determine the amount of tax unless it has been through the dispute procedures provided for under that Act. Before the Tax Review Authority, there is a process underway to determine what tax, if any, Mr Sorm owes. Mr Goodwin submits that the reparation order does not take that factor into account; instead the Court appears to have taken the approach that Mr Sorm must sell assets not owned by him to pay the order.
[48] Furthermore, he submits that in terms of ss 9 and 10 of the Sentencing Act 2002 (“the Sentencing Act”), reparation is a matter of mitigation which should have been taken into account by the Judge. He suggests a discount of at least 10 to 15 per cent should have been ordered.
[49] Section 32(1) of the Sentencing Act provides that a Court may impose a sentence of reparation if an offender has caused a person to suffer:

(a) loss of or damage to property; or
(b) emotional harm; or
(c) loss or damage consequential on any emotional or physical harm or loss of, or damage to, property.

[50] Only victims, as defined by s 4 of the Sentencing Act, may be recipients of a sentence of reparation.^[12]
[51] The first question is whether a reparation order may be made in favour of the Commissioner of Inland Revenue (“the Commissioner”) under s 32. To determine this question it is necessary to consider the following questions:

(a) Does the unpaid tax fall within the meaning of “loss of property” in s 32(1)(a)?
(b) Is the Commissioner a “person” and a “victim” for the purposes of s 32?

[52] On this issue we called for further submissions from the parties.
[53] Ms Charmley, for the Crown, submits that the definition of “property” includes economic loss. While property is not defined in the Sentencing Act, the Crimes Act 1961 (“the Crimes Act”) defines property as:^[13]

Property includes real and personal property, and any estate or interest in any real or personal property, money, electricity, and any debt, and any thing in action, and any other right or interest.

[54] Before it was repealed by the Criminal Procedure Act 2011, ‘property’ under the Criminal Justice Act 1985 was held to include a chose in action as the right to recover a debt. In Jane v Police the non-payment of a hotel bill was held to be property.^[14] The reasoning in Jane was adopted by this Court in Balajadia v R in respect of the loss of wages:^[15]

We consider the loss of wages or the loss of entitlement to wages amounts to a loss of property within the meaning of s 4 of the Victims’ Rights Act. Property is not defined in the Victims’ Rights Act. However, in the context of reparation Holland J in Jane v Police concluded that property must include a chose in action and a right to recover a debt. There is no indication that the legislature intended to depart from the approach in Jane in enacting the Sentencing Act and the Victims’ Rights Act. Moreover, a liberal interpretation accords with the United Nations’ Declaration of Basic Principles for Victims of Crime and Abuse of Power 1985, which defines victims as including people who have suffered “economic loss”. Adopting the Jane approach, each worker appears to have a chose in action for non-payment of wages in accordance with their employment agreements which provided they would be paid an hourly rate of $16 an hour.

[55] A person is not defined in the Sentencing Act but the Crimes Act defines a person as including “... the Crown and any public body ...”.
[56] Mr Goodwin submits that reparation orders were designed to compensate damages that would have placed a victim out of pocket or to compensate for emotional harm. An order of reparation is intended to provide “a simple and speedy means of compensating those who suffer loss from criminal activities”.^[16] Mr Goodwin submits the Court has no power to determine the amount of tax owing except as provided under the Tax Administration Act. The quantum of the debt owed by Mr Sorm and Ms Lay has yet to be determined and thus, Mr Goodwin submits, the debt falls outside the definition of property.
[57] We are satisfied that the Judge had jurisdiction to order reparation for the following reasons.
[58] First, we are satisfied that the meaning of property under the Sentencing Act includes a chose in action for the same reasons adopted in Balajadia. We are also satisfied that the Commissioner is a person within the definition of victim under the Victims’ Rights Act. There are obvious parallels between an unpaid hotel bill or unpaid wages and unpaid tax. Each involves a recoverable debt. We can see no basis in law or logic to make a distinction between unpaid taxes and other forms of debt.
[59] We also note that both the High Court and this Court have previously made reparation orders in favour of the Commissioner. The position was summarised by Simon France J in Sellers v Commissioner of Inland Revenue when he said:^[17]

[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 has been a loss to a “person” and whether that is so in the case of unpaid tax. Tax is payable to the Crown, 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 is open to me to resolve in the appellant’s favour.

[60] No doubt Simon France J’s reference to reparation orders in favour of the Commissioner being made on numerous occasions was made with the following cases in mind. In each the Commissioner was the beneficiary of the reparation orders. In Dickson v R, the appellant was required to make an order for reparation under the equivalent of s 32.^[18] The jurisdiction for such an order appears to have been assumed. In R v Hawken, an order for reparation in favour of the Commissioner was quashed because the appellant was unable to pay it.^[19] However, again, the jurisdiction for such an order was not discussed. In R v Allan, the appellant disputed the amount of a reparation order.^[20] The appeal was dismissed, but the Court’s jurisdiction to make such an order was also not discussed. The Court held that interest should not be included in the amount of reparation “given that the purpose of reparation is to compensate the victim for loss sustained”.^[21] In Zaheed v R, the reparation order made in the District Court was upheld.^[22] The jurisdiction was not discussed. In R v Easton, the appellant accepted there was jurisdiction for a reparation order in favour of the Commissioner.^[23] In the High Court the Judge observed:^[24]

[13] I am satisfied there was a “direct connection” between your conduct and the losses suffered by the IRD and that as a consequence I have the jurisdiction to impose a sentence of reparation under s 32(1) of the Sentencing Act 2002.

[61] Reparation orders have also been made in favour of the Crown in cases involving benefit fraud. In Cameron v R, the quantum of the benefit fraud was not settled.^[25] Reparation was ordered on the basis that the parties were to negotiate and supply the Court with an agreed figure. In Whitehead v R, reparation orders made in favour of the Accident Compensation Corporation on the basis that the appellant, in fraudulently obtaining ACC overpayments, had caused ACC to suffer a loss of property, namely the payments it had wrongly made.^[26] However, the jurisdiction for the order was not discussed in depth.
[62] We are satisfied that the jurisdiction exists for the Court to make a reparation order in favour of the Commissioner for unpaid tax. There is no reason why the Judge was required to defer to the civil debt recovery regime under the Tax Administration Act if he was satisfied to the criminal standard that the amount ordered was equal to or less than the amount owed to the Commissioner. The right to reparation under the Criminal Justice Act exists independently of other debt recovery mechanisms.
[63] The next question is whether the amount ordered was appropriate.
[64] We are easily satisfied that the reparation order of $500,000 was within the range available to the sentencing Judge. It fell well below the $2.8 million figure calculated by Ms Rintoul and was below what Ms Weaver indicated the value of the appellant’s assets was. It is not much more than the amount which Mr Sorm himself admitted in his voluntary disclosures and which is still unpaid.
[65] Although s 32 does not require the Court to embark on an enquiry into the defendant’s means and ability to meet any reparation order, the evidence in this case, from Mr Sorm’s own expert, Ms Weaver, was that at the beginning of the offending, Mr Sorm had $1.6 million in assets and by the end of the period, he had an additional $2 million worth of assets, namely a total of $3.6 million. Plainly on that evidence he had the means to pay reparation.
[66] As for any discount which the Judge should have applied on account of the reparation order, we note that Mr Sorm has made no payment. The PAC report reveals that he steadfastly maintains his innocence. For these reasons we do not accept that the Judge erred in failing to make any provision for the reparation order in his sentencing calculations.
[67] For these reasons we are satisfied the sentence appeal must fail.

Result

[68] We decline the application to admit further evidence on appeal. The appeal against conviction and sentence is dismissed.

Solicitors:
Crown Law Office, Wellington for Respondent

^[1] Tax Administration Act 1994, s 143B(2).

^[2] R v Sorm [2019] NZDC 23650.

^[3] Mr Sorm arrived in New Zealand in 1989 as a Cambodian refugee. Ms Lay joined him in 1994.

^[4] Ronnie’s Café and Bakery in Matamata commenced business in November 2003; Ronnie’s E-Café in Tirau from April 2006; Thames Bakehouse from November 2007.

^[5] Criminal Procedure Act 2011, s 232.

^[6] Tahere v R [2013] NZCA 86 at [31]; E H Cochrane Limited v Ministry of Transport [1987] 1 NZLR 146), (1987) 3 CRNZ 38 (CA); R v Loumoli [1995] 2 NZLR 656, (1995) 13 CRNZ 7 (CA); and R v Fotu [1995] 3 NZLR 129, (1995) 13 CRNZ 177 (CA).