Tuesday, February 28, 2012

Forgetting To Tell Centrelink About A Change Of Circumstances

Omissions Under the Commonwealth Criminal Code : Social Security Act Offences

The highly-anticipated High Court decision in CDPP v Poniatowaska may have come a little too late, since the government has changed the laws, but the principles set out by the court relating to establishing the physical elements of an offence under the Criminal Code remain relevant.

The High Court's decision in Commonwealth Director of Public Prosecutions v Poniatowska1 affirms the long-held principle that there should be a high burden upon prosecutors in criminal cases to prove every element of an offence, especially when the act complained of is said to be an omission.

The case involved a recipient of Centrelink benefits who failed to inform Centrelink of income (by way of commission) which she had earned. The crucial question raised (and ultimately answered) was: 'what exactly are the physical elements that need to be established when a person is charged with obtaining a financial advantage under the Criminal Code Act 1995 (Cth)?' The High Court (by a 4-1 majority, Heydon J dissenting) dismissed the Commonwelath Director of Public Prosecutions' (CDPP) appeal from the Supreme Court of South Australia.

But in anticipation of the High Court's decision, in July 2011, the Commonwealth government amended the social security legislation dealing with this issue, including making such amendments retrospective in nature.2 The amendments closed the loophole left open after the full court of the Supreme Court of South Australia's decision which led to the CDPP placing more than 16,500 social security fraud cases on hold.

Had the government not passed the amending legislation, the High Court's decision would have had widespread implications for the government and recipients of Centrelink benefits across the nation, as well as for persons previously convicted of social security fraud.

However, the new s.66A of the Social Security (Administration) Act (Cth) now explicitly provides for the requirement to notify Centrelink of a change in circumstances within 14 days of such change occurring, thereby codifying the relevant omission to be relied upon in future similar prosecutions of this nature.
And as Heydon J (in his dissent) noted, "It is common for decisions of courts to be reversed by the legislature after they have been delivered. It is less common for this to take place even before they have been delivered. Yet the legislature has got its retaliation in first in relation to this appeal."3

Background

The controversy began with Ms Poniatowska's failure to report employment income to Centrelink over the period 30 August 2005 to 30 May 2007. Poniatowska did not declare seventeen payments received in connection with her previous employment as a sales consultant, totalling $71,502. She also subsequently received payments of the Parenting Payment Single to which she was either not entitled or only partially entitled, totalling $20,162.58.

In the Magistrates Court of South Australia, Poniatowska pleaded guilty to seventeen charges of obtaining a financial advantage contrary to s.135.2 of the Criminal Code, for which she received a 21-month suspended sentence.

Poniatowska lodged a severity appeal to a single judge of the South Australia Supreme Court against the magistrate's sentence. The appeal was dismissed and Poniatowska then appealed to the full court. While originally only an appeal against the sentence, the grounds of appeal were subsequently amended and the appeal was dealt with as against both conviction and sentence.

Supreme Court of South Australia full court

The appeal was allowed (by a majority 2-1) and the full court set aside the convictions in August 2010.4
The majority (Doyle CJ and Duggan J) adopted a strict interpretation and application of the relevant provisions, namely s.135.2 should be read together with s.4.1 and s.4.3 of the Criminal Code (Cth).
Their Honours considered the definition of "engage in conduct" in s.4.1 and the provision that "engages in conduct" constitutes a physical element of the offence (s.135.2). Section 4.1 defines "engage in conduct" as doing an act or omitting to perform an act. Given this, their Honours concluded that an offence under s.135.2 could be committed by an omission.5

Their Honours then turned to the common law and the established general principle that there can be no criminal liability for an omission unless the conduct constitutes a failure to perform a legal obligation. Therefore, a relevant duty arising under the general law or statute must first be identified before establishing whether there had been a breach by way of omission.

The majority held that the duty or obligation can only arise under s.135.2 of the Code itself or a provision of the Social Security (Administration) Act 1999 (Cth). In this respect, Poniatowska was reminded in numerous letters of her ongoing obligation to advise Centrelink of any income received and was under fortnightly reporting obligations but it was unclear whether any formal notices under the Social Security (Administration) Act were issued.

The CDPP did not rely on any provision in the Social Security (Administration) Act to establish a duty of disclosure in these types of cases but argued that, in any case, the obligation not to obtain a benefit by means of omissions was created by s.135.2 itself.

The full court rejected this argument. The majority considered, among other things, the practical difficulties in following the CDPP's argument.

First, the majority held that s.135.2 did not make an omission to perform an act a physical element of the offence, as the omission is not identified in such a way that it creates a duty to perform the act. Their Honours reasoned that it would be impossible to identify the omission that attracts criminal liability - the link between the omission and obtaining a financial advantage was too unclear.

Given this lack of defined duty or obligation in s.135.2 and the failure of the CDPP to rely on any notice issued to Poniatowska (or any provision in the Social Security (Administration) Act) to establish a duty, the majority concluded that the court should set aside Poniatowska's convictions which, in law, could not be upheld.

Sulan J (dissenting) did not follow this strict interpretation of the legislation and instead took into account the legislative history of s.135.2. His Honour noted statutory interpretation requires the court to have regard to the context in which the words arise and their statutory purposes, and that the meaning of a provision is the meaning that the legislature has intended for them to have.

His Honour referred to the "Theft, fraud, bribery and related offences" report prepared by the Model Criminal Code Officers' Committee in 1991. In discussing the need for a general dishonesty offence, the committee had concern regarding situations where there will be no offence in the nature of deception shown but where there will be clear dishonesty. The committee cited the particular example of the defrauding of social security payments where the recipient fails to inform of a change in circumstance rendering the benefit no longer payable.

In enacting the legislative amendments, Parliament had regard to the committee's report and, interestingly, such amendments included the Criminal Code Amendment (Theft, Fraud, Bribery and Related Offences) Act 2000 which introduced s.135.2.

Sulan J reasoned that the intention of the legislature in enacting s.135.2 was to overcome the very issue identified by the majority, being the requirement for a duty to be identified when an individual fails to disclose they are obtaining a financial advantage in such cases. His Honour concluded that s.135.2 does not require the court to look to a duty of disclosure, whether by statute or common law, further than to what is provided in that section. In His Honour's opinion, the causative link between the omission to inform the relevant department of a change in circumstances and the resultant financial advantage was sufficient to satisfy the physical element of the offence.

The CDPP's appeal to the High Court

An application for special leave to appeal was expedited to the November 2010 special leave sittings of the High Court of Australia before Chief Justice French and Justice Gummow, where it was ordered that the application be referred to the full court for argument as if on appeal.6

Ultimately, the High Court granted special leave to appeal but dismissed the appeal with costs. The court held by majority (French CJ, Gummow, Kiefel and Bell JJ; Heydon J dissenting) that the law creating the offence in s.135.2(1) does not make the omission of an act a physical element of the offence, either expressly or impliedly, within the meaning of s.4.3(a) of the Code.

The majority drew attention to the need to identify a specific omission. Written submissions and oral argument for the Department of Public Prosecutions failed to identify the act that was omitted, and also when it was alleged that the omission occurred.

The majority noted the difficulty in moving from the assertion that Poniatowska knew she had an obligation to advise Centrelink to the identification of the omission to perform an act.

A strict interpretation of s.135.2(1)(a) and s.4.3 was applied. That is, the general principle expressed in s.4.3 does not extend to criminalising the omission of any act which can be causally connected to a particular result of the conduct.7

The majority held: "If the law creating the offence does not criminalise the failure to do a thing (the exception to the general principle stated in s.4.3(a)) and if that failure is not the breach of a duty imposed by the law (the exception to the general principle stated in s.4.3(b)) it is difficult to characterise the fact that a person does not do the thing as the omission of an act.

"[S]enior counsel for the appellant was unable in written submissions or in the course of oral argument to identify the act that was omitted, other than to say that the respondent 'failed to advise Centrelink of a payment of a commission received by her while she was in receipt of a Parenting Payment Single'. When pressed to identify when it was alleged the omission occurred in respect of a given charge, counsel responded by saying 'between receiving the commission and the receipt of the advantage'. The difficulty lies in moving from the generalised assertion, that the respondent knew she should advise Centrelink, to the identification in each count of the omission to perform an act.

"Section 135.2(1)(a) allows that the offence is one that may be committed by the omission to perform an act but the provision does not proscribe the omission of any specified act. The law creating the offence does not make the omission of an act a physical element of the offence within the meaning of s.4.3(a)."8

In dismissing the CDPP's appeal, the majority held that "the exceptions to the general principle that it [s.4.3 of the Code] states do not extend to criminalising the omission of any act which is able to be causally related to a result of conduct".9

As noted above, this case would have had widespread ramifications. And as Gummow J stated in the special leave sitting, this is a "major point of principle which involves a lot of money to the Commonwealth".10

(*Extracted from the article by L Geary & M Wong in NSW LSJ, February 2012)

ENDNOTES
  1. [2011] HCA 43.
  2. Social Security and Other Legislation Amendment (Miscellaneous Measures) Act 2011 (No. 91, 2011) s.2 (retrospective to 20 March 2000).
  3. Above n.1, at 45.
  4. Poniatowska v DPP (Cth) [2010] SASCFC 19.
  5. Ibid at 12.
  6. Commonwealth Director of Public Prosecutions v Poniatowska (A20/2010).
  7. Above n.1, at [36] and [43].
  8. Ibid at [35]-[37].
  9. Ibid at [44].
  10. Commonwealth Director of Public Prosecutions v Poniatowska [2010] HCATrans 304.

1 comment:

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