Aitchison v The Queen
[2015] VSCA 348
•15 December 2015
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCR 2015 0051
| MARTIN AITCHISON | Appellant |
| v | |
| THE QUEEN | Respondent |
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| JUDGES: | WHELAN and SANTAMARIA JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 20 October 2015, 15 December 2015 |
| DATE OF JUDGMENT: | 15 December 2015 |
| MEDIUM NEUTRAL CITATION: | [2015] VSCA 348 |
| JUDGMENT APPEALED FROM: | Director of Public Prosecutions v Aitchison (Unreported, County Court of Victoria, Judge Sexton, 17 February 2015) |
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CRIMINAL LAW – Sentence – Appeal and application for leave to appeal against sentence – Commonwealth offence – White collar crime – Repeated and extended fraudulent lodging of Business Activity Statements claiming fuel rebates – Systematic defrauding of public revenue which relies on trust and integrity – General deterrence – Whether general deterrence should be a sentencing objective in Commonwealth offences – Distinction between ‘marginal general deterrence’ and ‘absolute general deterrence’ – Whether the principle of general deterrence is inconsistent with s 16A of the Crimes Act 1914 (Cth) – Crimes Legislation Amendment (Powers, Offences and Other Measures) Act 2015 (Cth) – Whether introduction of express reference to general deterrence in s 16A(2) implied that it was not previously a relevant consideration in sentencing federal offenders – Whether previous good character is a sentencing consideration in white collar offences – Principle of proportionality – Whether proportion of harm caused by the offending should be a key sentencing consideration – Whether white collar offences committed against the public revenue should be distinguished from white collar offences committed against individuals – Whether sentence of 8 years with recognisance release order after 5 years is manifestly excessive – Appeal dismissed and application for leave to appeal refused.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr T Alexander with Mr H Kirimof | Bagaric Lawyers |
| For the Respondent | Mr D J Lane | Commonwealth Director of Public Prosecutions |
WHELAN JA:
For the reasons set out by Santamaria JA, I too agree that leave to appeal should be refused on proposed ground 1, and that the appeal should be dismissed.
SANTAMARIA JA:
On 28 November 2014, the appellant (now aged 64) pleaded guilty to three charges of obtaining financial advantage by deception and one charge of attempting to obtain financial advantage by deception. Following a plea on 28 November 2014 and 4 February 2015, the appellant was sentenced on 17 February 2015 as follows:
| Charge on Indictment | Offence | Maximum | Sentence | Cumulation |
| 1 | Dishonestly obtain financial advantage by deception from a Commonwealth entity [Criminal Code (Cth) 134.2(1)] | 10 years imprisonment [Criminal Code (Cth) 134.2(1)] | 2 years | Sentence to commence 17 August 2020 |
| 2 | Dishonestly obtain financial advantage by deception from a Commonwealth entity | 10 years imprisonment | 4 years | Sentence to commence 17 August 2017 |
| 3 | Dishonestly obtain financial advantage by deception from a Commonwealth entity | 10 years imprisonment | 5 years | Base sentence |
| 4 | Attempt to dishonestly obtain financial advantage by deception from a Commonwealth entity [Criminal Code (Cth) 134.2(1) and 11.1] | 10 years imprisonment [Criminal Code (Cth) 134.2(1)] | 18 months | Sentence to commence 17 August 2021 |
| Total Effective Sentence: | 8 years | |||
| Non-Parole Period: | To be released after 5 years on a recognisance of $2,000 to be of good behaviour for a period of 3 years | |||
| Pre-sentence Detention Declared: | 13 days | |||
| 6AAA Statement: | 11 years, with a non-parole period of 7 years and 6 months | |||
| Other orders: To make reparation to the Commissioner of Taxation in the amount of $5,853,709 | ||||
Grounds of Appeal
On 3 June 2015, Priest JA granted leave to appeal on the following grounds:
2.The learned sentencing judge erred by stating that the appellant’s previous good character was not a main consideration in sentencing the appellant.
3.The learned sentencing judge erred by failing to distinguish between white collar offences committed against the public revenue and individuals.
4. The sentence in all the circumstances is manifestly excessive.
Priest JA refused leave on the following ground:
1.The learned sentencing judge erred by holding that (marginal) general deterrence is a relevant sentencing objective in this case.
The appellant has chosen to elect to renew his appeal on the refused ground.
Circumstances of the Offending[1]
[1]The circumstances of the offending are taken from the Summary of Prosecution Opening – Exhibit A at the plea.
According to the prosecution opening, the relevant taxpayer was The Trustee for the Aitchison Family Trust (‘the Trust’), trading as Aitchison Heavy Haulage Pty Ltd (‘AHH’). According to that opening, AHH was incorporated on 10 May 2005.
Australian Taxation Office (‘ATO’) records show that, between October 2008 and January 2013, the Trust lodged 18 Business Activity Statements (‘BAS’s) claiming refunds of $6,454,224 of which $5,853,709 was paid into the Trust bank account. The refunds purported to be for fuel rebates used in the course of AHH’s business.
In relation to Charge 1, between 3 October 2008 and 3 April 2009, the appellant lodged three false BASs claiming a total of $406,694 and the ATO paid refunds totalling that amount. In April 2009, the ATO conducted a review of the third BAS. The appellant provided copies of tax invoices on 16 and 20 April 2009 purporting to be from Mobil for the purchase of 50,000 and 1,250,000 litres of fuel respectively. Third party checks were not conducted and the tax invoices were accepted. The tax invoices were false: AHH was not a Mobil customer.
In relation to Charge 2, between about 3 July 2009 and 8 April 2011, the appellant lodged eight BASs claiming refunds totalling $2,391,935 and the ATO paid refunds totalling that amount. In May 2011, the ATO conducted a review of the BAS that had been lodged for the period 1 January to 31 March 2011. The appellant provided seven false invoices that purported to be from Mobil. The invoices were accepted and the refund was paid.
In relation to Charge 3, between about 7 July 2011 and 12 October 2012, the appellant lodged six BASs for refunds totalling $3,055,180 and the ATO paid refunds totalling that amount.
In November 2012, the ATO conducted an audit on the activities of the Trust in relation to all BASs. Third party checks were conducted on the invoices the appellant previously provided. Mobil advised the ATO that they did not issue those invoices. Further, they advised that they had never delivered fuel to AHH’s business address.
On 7 January 2013, the appellant lodged a BAS on behalf of the Trust claiming a refund of $600,515. The ATO auditor contacted the appellant and made repeated requested for documents to substantiate the claim. The appellant did not provide the documents. The claim was not paid. This was the attempt that constituted Charge 4.
On 10 January 2013, an ATO auditor had a telephone interview with the appellant. The appellant advised that:
(a) He was the only person with access to the business records;
(b) His business dealt with haulage all over Australia and often dealt with transporting mining equipment;
(c) His business involved 100 to 200 vehicles per month which were owned by subcontractors;
(d) He used diesel in the trucks and he claimed fuel tax credits for the fuel used in those vehicles;
(e) The fuel was purchased in bulk and stored at the business address where there were tanks that could hold up to 150,000 litres.
The appellant leased the business premises from John Whee. Whee gave evidence that he leased the premises to the appellant to store automobiles. He advised that the premises were not licenced to store flammable liquid, and that there was a condition in the insurance policy that prohibited such storage.
The ATO audited all claims made by the appellant from 1 January 2009 to 30 September 2012 and, as a result of the audit, disallowed all claims.
Warrants were executed on the appellant’s premises and items seized included numerous contracts for vehicle and land purchases dated 2011 and 2012, as well as an undated statement of assets and liabilities – which listed assets of $3,025,000 and liabilities of $80,000.
The appellant attended an interview with the ATO on 10 July 2013 and made no comment.
Arrest and Committal
The appellant was committed by way of straight hand up brief on 31 July 2014, at which time he indicated that he intended to plead guilty to the offending.
Plea Hearing
History
The plea hearing commenced on 28 November 2014. It was adjourned part heard to 4 February 2015 to allow the appellant’s solicitor to obtain further evidence as to whether the effect on the appellant’s wife of imprisoning the appellant would amount to exceptional circumstances.[2]
[2]Markovic v The Queen (2010) 30 VR 589(‘Markovic’).
Defence Submissions
AHH was trading, with the appellant operating a prime mover truck and a trailer, during the charge period, although AHH was clearly not trading on the scale claimed by the BASs.
The telephone conversation with the ATO auditor on 10 January 2013 was set out in the prosecution opening; most of the appellant’s statements in that conversation were lies. The appellant’s business did involve haulage all over Australia and he did transport mining equipment, but he was not dealing with 100 to 200 vehicles and there was no bulk fuel storage at the business premises.
As to where the money went, some was put into the appellant’s business, American Dream Machine, which imported cars from the United States and repaired, restored and resold them. Some of the money was used to purchase cars that formed part of that business.
While the fraud involved vast sums of money, it did not dramatically change the appellant’s lifestyle. Although there were purchases of a houseboat and jet skis, most of the money went to paying debts, alleviating financial pressures, supporting people and conducting business.
The appellant’s personal circumstances were outlined at some length including his childhood, education, work history, relationship history and family circumstances leading up to the commencement of the offending in 2008.
By 2008, the appellant had incurred a number of debts through the purchase of a new prime mover and setting up the American Dream Machine company. He was working for a company called JFTA who were paying his invoices late due to financial problems. The appellant was owed about $100,000 by JFTA by the end of that year. He kept accepting their assurances that they would pay him. The appellant was also financially responsible for the family, including (a) his wife who was eventually not able to work due to crippling arthritis, (b) her daughter who suffered from anxiety and depression and (c) his adopted sister who lived in New Zealand and had issues with financial management as well as being morbidly obese, a diabetic and unable to walk. In 2008, the appellant calculated that his expenses were about $340,000 a year and he was earning $250,000 a year. JFTA had stopped paying him (ultimately it went into liquidation). It was at this stage that the offending began.
The appellant had been lodging BASs since AHH had been incorporated in 2005. There were no problems with the statements lodged between 2005 and 2008. Immediately prior to the offending, the appellant was three months in arrears with repayments on his truck. The finance company had called, threatening to repossess the vehicle. If the truck was repossessed, he would have no income. He called a director at JFTA with whom he thought he had a good relationship and was told ‘I will fucking well pay you when I’m fucking well ready and not before’.
On the first occasion, the appellant had no money, he was filling in his BAS and he decided to overstate his fuel usage. He knew there was a risk of detection, but viewed it as short term and temporary, albeit an illegal and immoral act. The appellant knew it would assist with the immediate financial pressures and intended to correct the overstatement in his next BAS. However, by the next BAS, the overpayment money – about $70,000 – was gone, the work had dried up from JFTA, there was no money coming in and expenses were coming out. It was in those circumstances that the appellant lodged the second false BAS for $142,000. The appellant’s fraud was not particularly sophisticated but it breached the trust upon which the tax system is based.
The appellant did not have any gambling problems, alcohol or drug issues or psychiatric disorder.
At the plea hearing, the appellant conceded that the creation of false documents and lying to the ATO about the offending were aggravating matters.
Some of the proceeds were used to fund lifestyle purchases, such as the houseboat, jet skis, his wife’s 2004 Mercedes, an apartment on the Gold Coast, his sister’s New Zealand house and the family home.
After the fraud was discovered, the appellant approached a lawyer who arranged for the appointment of a liquidator. The liquidation process took over 18 months and involved the appellant and his wife appearing unrepresented throughout the court process. The business assets for AHH and American Dream Machine were seized and sold, as were all the properties and vehicles. They were left with the furniture in the family home and $115,000 from the proceeds of the sale of the house which was to go to the appellant’s wife.
The money received from the fraud was dispersed into the appellant’s personal account, the AHH account and the American Dream Machine account. The total amount fraudulently obtained was $5,853,709. The financial situation was explained in further detail, including an explanation of where the money went and the value of the assets realised during the liquidation process.
Michael Roddie, a restorer of classic cars, who had known the appellant for six or seven years, gave character evidence that the appellant was a good person with whom he had business dealings.
Dr Carole Beaumont was the family general practitioner who gave evidence of the mental and physical health of her patients: Anne Aitchison (the appellant’s wife), the appellant, Hannah Rogers (Mrs Aitchison’s granddaughter, the appellant’s step-granddaughter) and Lisa Denilovich (Mrs Aitchison’s daughter, the appellant’s step-daughter).
The aggravating factors of the offending included the length of time over which the offending occurred, being twice given the opportunity to desist (and providing false documents and false statements), the substantial amount of money defrauded and the manner in which the fraud was conducted, which manner breached a system that relied upon trust and integrity.
The mitigating factors included the early plea of guilty, which had both utilitarian and subjective value, the appellant’s remorse, his age and health status – which included issues such as, among other things, high blood pressure, diabetes, high cholesterol and possible mild depression since 2005 – and his previous good character.
In relation to good character in white collar offending, it was submitted that this offending was more akin to social security fraud as a crime against the public revenue where an individual abuses the system rather than their position of trust. As such, the appellant should still be entitled to rely upon the full weight of his previous good character.
The appellant co-operated as fully as possible with the liquidator. He did not fight any aspect of the process for reasons including the likelihood that this would have created more fees and there would be less money realised.
The offending was characterised as unsophisticated and opportunistic.
The appellant submitted that the effect of the offending on the appellant’s wife, including her health and her dependence on the appellant, as well as the effect on the appellant in knowing the hardship he caused his family, enlivened the Markovic[3] principles.
[3](2010) 30 VR 589.
Whilst general deterrence, denunciation, just punishment and retribution were relevant sentencing factors, specific deterrence was of limited relevance in this matter as the prospects of reoffending were slight to remote.
The appellant and his family were aware that imprisonment was inevitable and the mitigatory features could only affect the length of the non-parole period.
The plea proceedings were adjourned to allow the defence to obtain further psychological material for the purposes of the Markovic submission. Upon the resumption of plea proceedings, reliance was placed upon the psychological report of David Ball, who determined that Mrs Aitchison satisfied the diagnosis of a major depressive disorder with mixed anxiety features and that her ‘personality functioning [was] likely to deteriorate following any incarceration of her husband’.
Since the liquidator had been called in two years earlier, counsel for the appellant said that the process has been a ‘living punishment’, and the process of dealing with the liquidator and the emotional and personal effect on the family meant that the sentence was the conclusion of the punishment rather than the commencement.
Prosecution Submissions
The prosecution relied upon Exhibit B on the plea – Crown Outline of Submissions and Additional Submissions.
Sentencing Remarks
The sentencing judge said that the appellant spent the money he fraudulently obtained on business expenses and supporting family members. The appellant’s expenses far outweighed his income, despite working long hours as a truck driver. While he was not living a luxurious lifestyle, the appellant was living more than a modest lifestyle.[4]
[4]Sentencing remarks, DPP v Aitchison (Unreported, County Court of Victoria, Judge Sexton, 17 February 2015) [17] (‘Reasons’).
The appellant used the money to buy a large house for his extended family, a 2004 Mercedes car for his wife, a houseboat, a house in New Zealand for his ill sister and her husband to live in, two jet skis and a property on the Gold Coast. The appellant also set up another company called American Dream Machines Pty Ltd and purchased classic cars and parts from the United States to refurbish and sell as a form of superannuation.[5]
[5]Ibid [18].
The offending was very serious. It involved not only the appellant defrauding the Australian government of $5,853,709 but also misleading his family into believing he could afford his largesse on a truck driver’s salary.[6]
[6]Ibid [19].
The liquidation of the appellant’s company and assets did not provide full reparation for the dishonesty. The appellant and his wife lost many of the assets they had worked to build up legitimately. The appellant’s family were worse off emotionally and materially as a result of the offending.[7]
[7]Ibid [20].
The offending was aggravated by the appellant’s continued criminal activity after requests were made for documentation, after which he supplied false documentation and made false statements to the auditor in a futile attempt to avoid detection.[8]
[8]Ibid [21].
The appellant was aged 59 to 62 during the offending. It was the first time he was involved in any such criminal activity.[9]
[9]Ibid [22]. See [93] n 74 below.
The sentencing judge took into account the appellant’s background and personal circumstances, including the background of financial pressure and family tragedies that occurred around the time the appellant commenced offending.[10]
[10]Ibid [24]-[34].
The sentencing judge said that, whilst the appellant had his family’s interests at heart when he began committing the offending, he also demonstrated a level of greed both by the type of expenditure and the continuation of the offending.[11]
[11]Ibid [35].
The sentencing judge took into account a number of factors in the appellant’s favour including:
(a) His early plea of guilty;[12]
[12]Ibid [37].
(b) His contrition as evidenced by the early plea, consenting to the Court making an order for repayment, going into voluntary liquidation – which made some reparation (about $2,000,000 before liquidator fees were deducted) towards the loss to the Commonwealth – and his letter to the Court;[13]
[13]Ibid [38].
(c) The appellant’s age (64), his physical health issues and his depression, which in combination were likely to make his time in custody more burdensome, along with his concern for his wife and his family and how they would cope with his absence;[14]
(d) The fact that the appellant was to be sentenced as a person of previous good character who had no prior convictions and a good reputation within the community. However, whilst previous good character was of relevance, it did not shift the main sentencing considerations of general deterrence and denunciation for white collar crime. People of good character and reputation were usually able to commit these types of offences precisely because of their good reputation;[15]
(e) The appellant’s very low chances of re-offending and his very good chances of rehabilitation.[16]
[14]Ibid [39]-[41].
[15]Ibid [42].
[16]Ibid [43].
General deterrence was relevant in a case like this as the need to deter others from committing similar offending was of considerable importance. The taxation system relies upon people putting forward genuine claims and the loss of revenue affects all taxpayers. Specific deterrence was not relevant in this case.[17]
[17]Ibid [44].
The effect of the offending on the appellant’s family did not reach exceptional circumstances, but some reduction was given because the appellant’s worries about how his crimes burdened his family, particularly his wife, would make imprisonment more burdensome for him.[18]
[18]Ibid [45]-[52].
Ground 1
The appellant contends that:
1.The learned sentencing judge erred by holding that (marginal) general deterrence is a relevant sentencing objective in this case.[19]
[19]See [4]-[5] above.
The appellant accepted that current sentencing orthodoxy maintains that general deterrence is a particularly important consideration in the sentencing of white collar offenders.[20] When the appeal was first heard, s 16A of the Crimes Act 1914 (Cth) contained no express reference to general deterrence. Notwithstanding its absence from s 16A, courts had accepted that general deterrence was an important sentencing consideration in relation to Commonwealth offences.[21] The appellant referred to Director of Public Prosecutions (Cth) v El Karhani,[22] in which the Court had described the lack of express reference to general deterrence as a ‘legislative slip’.[23] The appellant submitted that this was ‘plainly wrong’. The appellant said that that case should be re-visited and that general deterrence should not be pursued as a sentencing objective for Commonwealth offences. The empirical data shows that it does not work. That data establishes that there is little, if any, deterrent effect from harsh penalties.[24]
[20]He referred to DPP (Cth) v Gregory (2011) 34 VR 1, 15 (Warren CJ, Redlich JA and Ross AJA).
[21]Relevantly, at the time of sentence, s 16A of the Crimes Act 1914 (Cth) provided:
Matters to which court to have regard when passing sentence etc.--federal offences
(1)In determining the sentence to be passed, or the order to be made, in respect of any person for a federal offence, a court must impose a sentence or make an order that is of a severity appropriate in all the circumstances of the offence.
(2) In addition to any other matters, the court must take into account such of the following matters as are relevant and known to the court:
(a) the nature and circumstances of the offence;
(b) other offences (if any) that are required or permitted to be taken into account;
(c)if the offence forms part of a course of conduct consisting of a series of criminal acts of the same or a similar character--that course of conduct;
(d) the personal circumstances of any victim of the offence;
(e) any injury, loss or damage resulting from the offence;
(ea) if an individual who is a victim of the offence has suffered harm as a result of the offence--any victim impact statement for the victim;
(f) the degree to which the person has shown contrition for the offence:
(i)by taking action to make reparation for any injury, loss or damage resulting from the offence; or
(ii)in any other manner;
(fa) the extent to which the person has failed to comply with:
(i)any order under subsection 23CD(1) of the Federal Court of Australia Act 1976 ; or
(ii) any obligation under a law of the Commonwealth; or
(iii)any obligation under a law of the State or Territory applying under subsection 68(1) of the Judiciary Act 1903;
about pre-trial disclosure, or ongoing disclosure, in proceedings relating to the offence;
(g)if the person has pleaded guilty to the charge in respect of the offence--that fact;
(h)the degree to which the person has co-operated with law enforcement agencies in the investigation of the offence or of other offences;
(j)the deterrent effect that any sentence or order under consideration may have on the person;
(k)the need to ensure that the person is adequately punished for the offence;
(m)the character, antecedents, age, means and physical or mental condition of the person;
(n)the prospect of rehabilitation of the person;
(p)the probable effect that any sentence or order under consideration would have on any of the person's family or dependants.
[22](1990) 21 NSWLR 370 (Kirby P, Campbell and Newman JJ).
[23]Ibid 378.
[24]He referred to studies that are summarised in Victorian Sentencing Advisory Council, Does Imprisonment Deter? A Review of the Evidence (2011). The report at page 2 summarises the evidence as follows: ‘The evidence from empirical studies of deterrence suggests that the threat of imprisonment generates a small general deterrent effect. However, the research also indicates that increases in the severity of penalties, such as increasing the length of terms of imprisonment, do not produce a corresponding increase in deterrence’ (emphasis in original).
In the alternative, the appellant submitted that, if general deterrence was to be maintained as a sentencing objective regarding Commonwealth offences, it should be applied in a different manner to the current status quo. He distinguished ‘absolute general deterrence’ from ‘marginal general deterrence’. The former is the theory that there is a connection between the existence of some form of criminal sanction and the incidence of crime;[25] the latter is the theory that harsher penalties will lead to a reduced incidence of crime. Whereas absolute general deterrence would have been satisfied with a large fine or a short prison term, no greater deterrent effect is achieved by imposing a particularly onerous penalty. In the present case, the sentencing judge had applied the theory of marginal general deterrence operating under the flawed assumption that harsher penalties will lead to a reduced incidence of crime. The appellant said that it is ‘repugnant to impose a harsher sentence on an individual to supposedly prevent the hypothetical crimes of others and harsh penalties do not deter crime in any event’.
[25]He referred to the Victorian Sentencing Advisory Council, Does Imprisonment Deter? A Review of the Evidence (2011), which at page 24 defines absolute deterrence as ‘[t]he manner in which crime is reduced or prevented by the existence of the criminal justice system as a whole, rather than through the threat or imposition of a particular criminal sanction’.
Further, the appellant submitted that the principle of legality applies to sentencing law and interpretation of statutes.[26] Thus, he submitted: ‘[a]bsent a clear statutory intention to apply these provisions in a manner which embraces the theory of marginal general deterrence, the courts are required to adopt an interpretation that will result in less encroachment on [fundamental] rights and freedoms’. He said that the interpretation that best advances that aim is one which would disregard general deterrence as an objective that is relevant to the sentencing of federal offenders. Alternatively, he contended that, if general deterrence was to be preserved, it should be interpreted to mean absolute general deterrence. He accepted that abolishing the goal of general deterrence or limiting it to absolute general deterrence would be likely to reduce the tariff for federal white collar offences. There was no objection to that in principle as the Court is not bound by previous sentencing trends or patterns, though they ‘stand as a yardstick against which to examine a proposed sentence’.[27] Finally, the appellant said that the Court of Appeal had itself expressed scepticism of the capacity of harsh penalties to deter crime.[28]
[26]He referred to X7 v Australian Crime Commission (2013) 248 CLR 92, 153 (Keifel J); Green v The Queen (2011) 244 CLR 462, 472 (French CJ, Crennan and Kiefel JJ); Lacey v A-G (Qld) (2011) 242 CLR 573, 583 (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ).
[27]He referred to Hili v The Queen (2010) 242 CLR 520, 537 [54], in which French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ quoted with approval Simpson J’s comments on the proper use of information about sentences passed in prior cases in Director of Public Prosecutions (Cth) v De La Rosa (2010) 243 FLR 28, 98 [303]-[305].
[28]He referred to Glascott v The Queen [2011] VSCA 109 [152] and DPP (Vic) v Russell [2014] VSCA 308.
After the initial hearing of the appeal, the court’s attention was drawn to an amendment to the Crimes Act 1914 (Cth). The Crimes Legislation Amendment (Powers, Offences and Other Measures) Act 2015 (Cth) commenced on 27 November 2015. Relevantly, it provides:
Part 1—General deterrence
Crimes Act 1914
1 After paragraph 16A(2)(j)
Insert:
(ja) the deterrent effect that any sentence or order under consideration may have on other persons;
2 Application of amendments
The amendment made by this Part applies in relation to determining, on or after the commencement of this item, a sentence to be passed, or an order to be made, in respect of a person, whether the person is convicted before, at or after that commencement.
In light of the amendment, the Court set down the appeal for further hearing.
The appellant contended that section 16A(2)(ja) is a statutory endorsement of an established common law sentencing factor which was introduced into federal sentencing for the first time on and from 27 November 2015. He contended that the enactment supports his position that general deterrence was not a sentencing consideration that operated in the Commonwealth jurisdiction prior to this date (ie when he was sentenced). This is manifest from the clear words of the provision (making general deterrence a sentencing factor) and the statutory presumption that legislation is not futile. The appellant referred to Baker v The Queen.[29] He also referred to the Replacement Explanatory Memorandum. It provided:
While subsection 16A(2)(j) refers to the deterrent effect that any sentence or order may have on the person (being sentenced), there is no reference in the Act to general deterrence to others as a sentencing principle. This omission has caused judicial concern as it is regarded as an important sentencing factor and is specifically included in most State or Territory legislation. While the list in subsection 16A(2) is non-exhaustive, introducing general deterrence into the Crimes Act will remove the need for courts to ‘read in’ general deterrence as a sentencing factor, thereby aligning the Act with comparable State and Territory sentencing legislation and further ensuring the application of relevant and consistent sentencing factors.[30]
[29](2004) 223 CLR 513, 523-4 [14] (Gleeson CJ).
[30]Replacement Explanatory Memorandum, Crimes Legislation Amendment (Powers, Offences and Other Measures) Bill 2015 (Cth), 71 [413] (emphasis added). The original Explanatory Memorandum contained an identical paragraph at 67 [406].
Alternatively, the appellant submitted that, if the new provision merely removed doubt regarding the state of the law, it still followed that the manner in which general deterrence was applied by the sentencing judge was wrong. He referred to his contention that marginal (not absolute) general deterrence was endorsed because the sentencing judge used deterrence to increase the penalty.
It is to be recalled that Priest JA refused the appellant leave to appeal on this ground. Accordingly, he cannot rely upon this ground as a matter of right. For the following reasons, I would refuse leave.
First, there is no basis for holding that Director of Public Prosecutions (Cth) v El Karhani[31] is plainly wrong.[32] There is a series of decisions in which appellate courts have held that the principle of general deterrence is not inconsistent with the version of s 16A of the Crimes Act 1914 (Cth) that applied at the time the appellant was sentenced. In Director of Public Prosecutions (Cth) v Gregory,[33] the Court said:
In seeking to ensure that proportionate sentences are imposed, the courts have consistently emphasised that general deterrence is a particularly significant sentencing consideration in white collar crime and that good character cannot be given undue significance as a mitigating factor, and plays a lesser part in the sentencing process. In the case of taxation offences, general deterrence is also given special emphasis in order to protect the revenue as such crimes are not particularly easy to detect and if undetected may produce great rewards. ‘Deterrence looms large’ as the present process of self- assessment reposes on the taxpayer a heavy duty of honesty. Moreover, general deterrence is likely to have a more profound effect in the case of white collar criminals. White collar criminals are likely to be rational, profit-seeking individuals who can weigh the benefits of committing a crime against the costs of being caught and punished. Further, white collar criminals are also more likely to be first time offenders who fear the prospect of incarceration.[34]
The unamended s 16A of the Crimes Act 1914 (Cth) made it plain that the matters which were expressly identified in s 16A(2) were in ‘addition to any other matters’. General deterrence has been a feature of sentencing practice throughout all jurisdictions, not just Australia. For it to be excluded, express words would have been necessary.[35]
[31](1990) 21 NSWLR 370, 378.
[32]Farah Constructions v Say-Dee Pty Ltd (2007) 230 CLR 89, 151-152 [135] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ).
[33](2011) 34 VR 1 (Warren CJ, Redlich JA and Ross AJA).
[34]Ibid 15-16 [53] (citations omitted).
[35]Just as the principle of legality is applied in construction of a statute to the effect that a statute will not be construed as derogating from basic rights absent express words or necessary intendment, so sentencing legislation will not be construed as abolishing well established sentencing principles in the absence of such words.
Second, the proposed ground of appeal was not raised below. Moreover, it is directly inconsistent with a concession made on behalf of the appellant before the sentencing judge.[36] On that occasion, counsel for the appellant submitted ‘that just punishment, general deterrence and denunciation and retribution require a longer head sentence in this case’. A distinction was drawn between general deterrence, which he accepted as relevant, and specific deterrence which was said to be ‘of very limited relevance’. During oral submissions before the sentencing judge, counsel for the appellant accepted the submissions of the prosecution that general deterrence is particularly important in tax related matters. While it is true that appellate courts have jurisdiction to consider matters not raised before the sentencing judge, they will do so only in either rare or exceptional circumstances.[37]
[36]In Romero v The Queen (2011) 32 VR 486, Redlich JA, with whom Buchanan and Mandy JJA agreed, said (at 489-90 [11]): ‘In sentencing appeals, this Court is reviewing the exercise of a discretionary judgment. It is not a rehearing of the plea in mitigation. It is not the occasion for the revision and reformulation of the case presented below. Given the nature of its supervisory role, this Court will not lightly entertain arguments that could have been, but were not advanced on the plea. It will have an even greater reluctance to entertain arguments that seek to resile from concessions made below or are a contradiction of the submissions previously made. The revivification of arguments abandoned or eschewed on the plea is highly undesirable and should not be countenanced, save where fresh evidence is adduced, or in the exceptional circumstance where it can be shown that there was most compelling material available on the plea that was not used or understood and which demonstrates that there has been a miscarriage of justice arising from the plea and sentence.’
[37]See Gipp v The Queen (1998) 194 CLR 106; Crampton v The Queen (2000) 206 CLR 161; Fingleton v The Queen (2005) 227 CLR 166; Heron v The Queen (2003) 197 ALR 81.
Third, there seems to be no basis in the sentencing remarks to suggest that the judge in applying a ‘marginal general deterrence’ rather than ‘absolute general deterrence’ imposed a harsher penalty in order to make general deterrence more significant. The appellant seemed to be contending that the mere existence of a penalty attached to a crime was sufficient to satisfy the objective of ‘general deterrence’. The appellant relied upon some comments in a paper of the Victorian Sentencing Advisory Council entitled Does Imprisonment Deter? A Review of the Evidence (2011).[38] However, as counsel for the CDPP pointed out, much more would be needed to support the proposition that increased penalties do not have any impact upon general deterrence. He distinguished those cases in which people commit crimes under the influence of mental impairment or of drugs or intoxication (where it can be seen that the defendant is not in a position to take in the measure of the deterrent effect of criminality) with cases of systematic and calculated fraud where defendants take a calculated risk that they will avoid detection and punishment. In the present case, because this argument was not raised below, this Court does not have the benefit of any observations that the sentencing judge may have made on it. Moreover, there was no suggestion of any mental impairment in the present case. On the contrary, the conduct of the appellant was that of a person who was a ‘rational, profit-seeking’ individual who was well able to ‘weigh the benefits of committing a crime against the costs of being caught and punished’.[39]
[38]See [58] n 24 above.
[39]DPP (Cth) v Gregory (2011) 34 VR 1, 16 [53].
The further submission in relation to the Crimes Legislation Amendment (Powers, Offences and Other Measures) Act 2015 (Cth) should be rejected. The point of the amendment was to clarify the law, not to change it. General deterrence has long been a fundamental aspect of sentencing such that clear language would be necessary to exclude it as a sentencing principle. Parliament did not intend to change the law. Rather, the point of the amendment was to overcome arguments about the proper interpretation of s 16A(2) such as that advanced by the applicant in this case. Two further considerations support the proposition that Parliament was not intending to add a new sentencing consideration. It will be noticed that the amendment is to operate from the day of its commencement ‘whether the person is convicted before, at or after that commencement’. So, in the present case, were the applicant to be resentenced, the amendment would apply in the determination of any resentence. Similarly, had a person pleaded guilty to some Commonwealth offence and not been sentenced before the commencement of the amendment, that person would be sentenced under the amendment. The potential for injustice is obvious. Had general deterrence not been a relevant sentencing consideration (as the applicant contends), the reasons underlying any decision to plead guilty may have been falsified by the amendment. In effect, the amendment would have had a retrospective effect. In these circumstances, it seems plain that, in enacting the amendment, Parliament did not intend to introduce something which it considered was not already there.
Leave to appeal should be refused on the proposed first ground.
Ground 2
The appellant contends that:
2.The learned sentencing judge erred by stating that the [appellant]’s previous good character was not a main consideration in sentencing the [appellant].[40]
[40]See [3] above.
The appellant submitted that previous good character is an important consideration.[41] He submitted that the relevance of good character in this matter was not diminished by the fact that people who commit white collar crimes can usually do so because of their good character and reputation. He submitted that his previous good character had no connection to the commission of the offences. He had not abused any position of trust or influence.
[41]He referred to Crimes Act 1914 (Cth) s 16A(2)(m).
In Director of Public Prosecutions v Bulfin,[42] the Court of Appeal referred to the fact that white collar offenders usually had no prior criminal history. Charles JA, with whom Winneke P and Callaway JA relevantly agreed, said:
The motivation to engage in conduct of the kind here under consideration may spring from many sources: a position of trust and the easy ability to abuse it; the enormous rewards that may be available; a position of high authority in some substantial enterprise and the offender's assumption that discovery or proof of wrongdoing can be avoided; greed or the burden of funding an extravagant lifestyle; weakness in succumbing to outside pressures to use deceitful means for business ends; and personal or corporate ambition, to name but a few. Whatever the motivation, offences of the kind here in question almost invariably involve a carefully calculated course of conduct over a long period, repeated deliberate acts of dishonesty, substantial amounts of money, and, frequently, losses (often tragic in their impact) to large numbers of small investors. The offender often holds a position making it possible, or has the ability, to disguise or camouflage the conduct in question. Detection is difficult, the investigation of the crime usually lengthy and very expensive, and the problems of trial and proof will frequently be extreme. Many of these matters were discussed by this court, similarly constituted, in R v Kostikidis and Mpehelevanas (unreported, Court of Appeal, 12 September 1996); see also R v Cave (1988) 32 A Crim R 484 per O’Bryan J at 487. The result of such considerations, in my view, is that the element of general deterrence will usually carry particular significance in sentencing for crimes such as the present, both in relation to the total effective sentence and the non-parole period; together with a requirement for strong denunciation by the sentencing court.
For persons first contemplating corporate criminality, a sentence which requires an offender to spend a substantial term in actual custody by virtue of the non-parole period fixed, is, in my view, much more likely to focus their attention and have real deterrent impact than a longer head sentence, much of which is likely to be served on parole after the offender’s release from custody. If this view be correct, to fix an unduly short non-parole period, would, in cases such as the present, be quite subversive of the whole concept of general deterrence, notwithstanding that a significantly longer head sentence was imposed. The sentencing practice discussed in Corbett must be understood with those considerations firmly in mind.[43]
[42][1998] 4 VR 114.
[43]Ibid 131-2.
Further, the sentencing judge did proceed upon the assumption that the appellant was of ‘previous good character’. She said:
You committed these offences at the ages of about 59 to 62 years, the first time you had been involved in crime. The question arises: how could a man commit such serious offences after leading an exemplary life to that point?[44]
Later, the sentencing judge said:
You have no prior convictions and I accept that before these offences were committed, your general reputation in the community was good. I therefore sentence you as a person of previous good character. However, as noted in many cases, whilst previous good character remains of relevance, it does not shift the main considerations in sentencing for white collar crime from general deterrence and denunciation, because people who commit these types of crimes usually can do so because of their good character and reputation.[45]
[44]Reasons [22].
[45]Reasons [42]. See [93] n 74 below.
The second ground should be dismissed.
Ground 3
The appellant contends that:
3.The learned sentencing judge erred by failing to distinguish between white collar offences committed against the public revenue and individuals.[46]
[46]See [3] above.
The appellant submitted that the sentencing judge had failed to appropriately apply the principle of proportionality which was the key determinant in the sentencing of all offenders including white collar offenders.[47] That principle provided that a Court should not exceed ‘that which can be justified as appropriate or proportionate to the gravity of the crime considered in the light of its objective circumstances’.[48] The appellant submitted that the ‘level of harm caused by the offence’ was a key sentencing consideration; it had to be in proportion to the ’level of pain inflicted by the punishment’. In the present case, the offending had not involved any harm to any particular individuals. This was an offence against the revenue. When she had said ’... the loss of revenue from fraudulent claims affects all taxpayers, and potentially affects those receiving services paid for by federal government revenue’,[49] the sentencing judge had overstated the impact of his offending. It was submitted on behalf of the appellant that his offending involved ‘an infinitesimally small amount of the total federal government revenue’ and that it had not affected the services provided by the federal government ‘in any meaningful way’.[50]
[47]The appellant referred to Veen v The Queen (1979) 143 CLR 458, 467; Veen v The Queen (No 2) (1988) 164 CLR 465, 472.
[48]Hoare v The Queen (1989) 167 CLR 348, 354 (emphasis removed).
[49]Reasons [44].
[50]The appellant compared the amount that he had stolen with the amount raised each year from individual income tax. He also contended that revenue considerations favoured a non-custodial term given that the cost of his imprisonment will be approximately $98,550 annually; he referred to the Australian Government Productivity Commission Report, Corrective Services, ch 8, Table 8A.7
While it may be accepted that the gravity of a crime may be exacerbated by circumstances such as the exploitation of the vulnerable, the fact that that element is not present may be irrelevant. In the present case, the appellant engaged in fraudulent activity between October 2008 and January 2013. There was no recklessness in what he did; it did not take place on the ‘spur of the moment’. His conduct was deliberate, persistent and calculated. It was compounded by the lies he told when he was being investigated: on two occasions he supplied false documentation and made false statements to the auditor appointed by the Australian Taxation Office.
In the present case, the appellant contended that the judge should have taken into account the fact that his ‘offending is an infinitesimally small amount of the total federal Government revenue’. In support of that contention, the appellant asked this Court to compare the amount he stole with the ‘total federal Government revenue from individual income tax alone which is over $180 [billion] annually’.[51] At the hearing of the appeal, the Court asked counsel for the appellant whether he wished to persist in this argument. He said it was not abandoned. He said a distinction was to be drawn between the ‘absolute value’ of a defalcation with its ‘relative value’ vis‑à‑vis (it seems) the loss suffered by the victim. On several occasions, courts have said that offences against the revenue are not victimless crimes: everybody suffers.[52] The present argument has only to be explained for its futility to become apparent.[53]
[51]The appellant referred to Budget: 2014-15 Overview, 13 May 2014, 31.
[52]DPP (Cth) v Milne [2001] VSCA 93 [12]; Hili v The Queen (2010) 242 CLR 520, 540 [63].
[53]One is reminded of a submission dismissed by this Court as being ‘almost breathtaking in its audacity’. See Dale v The Queen (2012) 272 FLR 275, 302 [131] (Weinberg, Harper and Whelan JJA).
The third ground should be dismissed.
Ground 4
The appellant contends that:
4. The sentence in all the circumstances is manifestly excessive.[54]
[54]See [3] above.
The appellant accepted that this ground did not admit of much argument. However, he said that there were a number of discrete considerations which, when viewed cumulatively, demonstrated that his sentence was manifestly excessive and fell outside the range of sentences reasonably open.[55] The appellant said that the punishment was too much: apart from the custodial sentence, he had been left destitute, as all his assets had gone.
[55]He referred to: (a) his early plea; (b) the fact that he was remorseful; (c) his advanced age (64 years old); (d) his good prospects of rehabilitation; (e) the fact that he had no prior convictions; (f) the fact that this was his first custodial sentence; (g) his poor physical health; (h) the fact that prison was especially burdensome because of his awareness that his family would experience hardship and his depression; and (i) the fact that he had made significant reparation (in the sum of approximately $2,000,000). He also pointed out that his offending did not include aggravating considerations typical for offences of this type such as (i) a breach of trust and (ii) complex planning.
The ground of manifest excess will only succeed if it can be shown that the sentence was wholly outside the range of sentencing options available.
In Markarian v The Queen,[56] Gleeson CJ, Gummow, Hayne and Callinan JJ described the well-established principles as follows:
As with other discretionary judgments, the inquiry on an appeal against sentence is identified in the well-known passage in the joint reasons of Dixon, Evatt and McTiernan JJ in House v The King, itself an appeal against sentence. Thus is specific error shown? (Has there been some error of principle? Has the sentencer allowed extraneous or irrelevant matters to guide or affect the decision? Have the facts been mistaken? Has the sentencer not taken some material consideration into account?) Or if specific error is not shown, is the result embodied in the order unreasonable or plainly unjust? It is this last kind of error that is usually described, in an offender's appeal, as ‘manifest excess’, or in a prosecution appeal, as ‘manifest inadequacy’.[57]
[56](2005) 228 CLR 357.
[57]Ibid 370-1 [25] (citation omitted).
In Hili v The Queen,[58] each of the defendants pleaded guilty in the District Court of New South Wales to one charge and three charges, respectively, against Commonwealth law arising from the evasion of income tax. The primary tax evaded over several years was $375,000 and $330,000 respectively. The sentencing judge sentenced both defendants to imprisonment for 18 months with release on recognisance after seven months. The Crown appealed to the Court of Criminal Appeal against each sentence on the ground that it was manifestly inadequate. The appeals were allowed in respect of one defendant’s sentence and two of the other defendant’s three sentences. Both men were sentenced to a term of three years, with release on recognisance after 18 months. Both applied for special leave to appeal to the High Court. In affirming the decision of the Court of Criminal Appeal, French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ said:
The applicants’ offending was sustained over a long time. It was planned, deliberate and deceitful, requiring for its implementation the telling of many lies. The applicants acted out of personal greed. The amount of tax evaded was not small. Detection of offending of this kind is not easy. Serious tax fraud, which this was, is offending that affects the whole community. As was pointed out in Ruha, the sentences imposed had to have both a deterrent and a punitive effect, and those effects had to be reflected in the head sentences and the recognisance release orders that were made.[59]
[58](2010) 242 CLR 520.
[59]Ibid 540 [63] (citations omitted). Heydon J wrote a separate judgment concurring with the majority on this matter: ibid 541 [70].
In Director of Public Prosecutions (Vic) v Karazisis,[60] Ashley, Redlich and Weinberg JJA (with whom Warren and Maxwell P relevantly agreed) said:
In Victoria, the contention that a sentence was manifestly inadequate is invariably expressed as a submission that the sentence was outside the range reasonably open to the sentencing judge in the circumstances. As with the ground of manifest excess, the ground of manifest inadequacy is a stringent one, difficult to make good. Error of this kind will not be established unless the appellate court is persuaded that the sentence was ‘wholly outside the range of sentencing options available’ to the sentencing judge. Put another way, it must be shown that it was not reasonably open to the sentencing judge to come to the sentencing conclusion which he/she did if proper weight had been given to all the relevant circumstances of the offending and of the offender.
The court will be astute to enforce the stringency of this test. As the High Court has emphasised:
The discretion which the law commits to sentencing judges is of vital importance in the administration of our system of criminal justice.[61]
[60](2010) 31 VR 634.
[61]Ibid 662-663 [127]-[128] (citations omitted). The reference to the High Court is to Lowndes v The Queen (1999) 195 CLR 665, 671-672 [15] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ).
In several cases, the Courts have emphasised that those who systematically defraud the public revenue should be sentenced to substantial terms of imprisonment. In Director of Public Prosecutions (Commonwealth) v Rowson,[62] Kaye AJA, with whom Buchanan and Neave JJA agreed, said:
It is well recognised that those who systematically defraud the public revenue of large sums of money over a substantial period should be sentenced to substantial terms of imprisonment. The regime established for the collection of goods and services tax is basically dependent on the honesty of those participating in it. In cases such as this, considerations of general deterrence are given particular emphasis, and indeed prominence, in the sentencing process. The courts have a significant responsibility to protect the integrity of the revenue system, by imposing punishments, for deliberate and sustained fraud, which are likely to deter others who may be otherwise tempted to indulge in the type of conduct committed by the respondent.[63]
[62][2007] VSCA 176.
[63]Ibid [24] (citations omitted). Kaye AJA cited DPP (Cth) v Milne [2001] VSCA 93 [12]-[13] (Winneke ACJ); Kovacevic v Mills (2000) 76 SASR 404 [39]-[40]; DPP (Cth) v Alateras [2004] VSCA 214 [26] (Nettle JA); R v Alimic [2006] VSCA 273 [26] (Nettle JA). See R v Nguyen& Phan [1997] 1 VR 386, 389 (Brooking JA with whom Winneke P and Callaway JA agreed). In that case, Brooking JA said: ‘The seriousness of the offence of defrauding the Commonwealth of a large sum of money by not declaring assessable income has in the past, perhaps, not always been sufficiently reflected in the sentence passed. Those who systematically defraud the Revenue of a large sum over a substantial period must in general expect a substantial custodial sentence. The deterrent and punitive effects of that sentence should not be unduly diminished by allowing release from custody at an unduly early stage’.
In R v Boughen,[64] Simpson J discussed the manner in which sentences for social security fraud had diverged from sentences for taxation evasion. She said:
The statements of principle concerning social security fraud set out above are not different from the statements of principle to be found in cases involving fraud on the revenue by means of the taxation system. Their application in the latter class of case may have been somewhat less rigorous.[65]
[64][2012] NSWCCA 17.
[65]Ibid [66] (Simpson J with whom Hislop and Latham JJ agreed).
In Ridley v The Queen,[66] the appellant had been convicted after a trial on several indictments relating to defrauding the Commonwealth and attempting by deception to dishonestly obtain a financial advantage. He was sentenced to an overall period of imprisonment of eight years with a non-parole period of five years. He contended, among other things, that the trial judge had erred in finding that the commission of offences ‘involved a breach of trust’. The Court of Appeal took into account evidence given by an officer of the ATO that the Federal Tax System is now based on self-assessment and that ‘the Commissioner accepts that taxpayers take reasonable care and make an honest attempt to meet their obligations, their tax obligations, and that includes things like keeping records that they are required to keep and lodging returns and activity statements so that the information is correct. So when those statements and returns are lodged, the Commissioner will accept those and relies on the information that the taxpayer has provided that they have made a reasonable attempt and an honest attempt to meet their obligations, unless he has reason to believe otherwise and this applies to both income tax returns and business activity statements’.[67] In dismissing this ground, Allsop P said:
This is in terms a kind of trust. Members of the community rely on each other for honesty for the operation of the tax system. It was a legitimate comment by the primary judge and an entirely legitimate consideration.[68]
[66](2008) 192 A Crim R 139.
[67]Ibid 153 [84] (Allsop P with whom Johnson and Price JJ agreed).
[68]Ibid 154 [85] (Allsop P with whom Johnson and Price JJ agreed).
In a helpful and comprehensive submission, counsel for the CDPP described the sentences which had been imposed by the Court where the Revenue had been defrauded. He said that, until the present case, R v Bromley[69] involved the largest amount of money of which the Commonwealth had been defrauded and the longest sentence that had been imposed in Victoria. In that case, the defendant had pleaded guilty to (a) three rolled up charges of dishonestly obtaining a financial advantage by deception from a Commonwealth entity contrary to s 134.2(1) of the Criminal Code1995 (Cth); and (b) two rolled up charges of attempting to obtain a financial advantage by deception from a Commonwealth entity contrary to ss 11.1(1) and 134.2(1) of the Criminal Code1995 (Cth). The five charges related to fraudulent Goods and Services Tax (‘GST’) refund claims made by the defendant in 186 separate business activity statements lodged with the Australian Taxation Office (‘ATO’) between October 2001 and 4 June 2008. The fraudulent GST refund claims were made in the names of three separate companies under the defendant’s exclusive control. They gave rise to 151 payments totalling $9,462,384.57 forming the subject of the first three charges. Between October 2001 and March 2008, the defendant provided the ATO with numerous purported invoices and other documents as supposed evidence of various sales and purchases detailed in his BAS claims. As the sentencing judge observed, many of the relevant invoices which were submitted were ‘entirely fabricated or altered to include materially false information’.[70] The sentencing judge found that the conduct involved repeated and extended fraudulent activity. In that case, none of the money had been repaid. Having considered circumstances which were personal to the defendant and the authorities which mandated that the Court was obliged to impose a substantial period of imprisonment in order to reflect the duration and gravity of the offending, the Court imposed separate penalties in respect of each of the charges which, in the event, amounted to a total effective sentence of seven years and six months’ imprisonment and fixed a non-parole period of five years. The sentencing judge said that, but for the plea of guilty, he would have sentenced the defendant to a total effective sentence of 10 years with a non-parole period of seven years.[71]
[69](2010) 79 ATR 692 (Osborn J).
[70]Ibid [7].
[71]Ibid [51].
Counsel said that there had been an increase in penalties for Commonwealth offences.
Counsel referred to Director of Public Prosecutions (Cth) v Gregory.[72] In that case, the jury convicted the respondent of one count of conspiracy to dishonestly cause a risk of loss to a Commonwealth entity contrary to s 135.4(5) of the Criminal Code (Cth). He was sentenced to two years’ imprisonment and was ordered to be released after serving 12 months’ imprisonment upon giving security by recognisance of $5,000 to be of good behaviour for 12 months. The CDPP appealed on the grounds that the sentence and the order for release after 12 months were manifestly inadequate. In its reasons, the Court of Appeal agreed that the sentence was manifestly inadequate and agreed with a submission on behalf of the CDPP ‘that the appropriate range was a period of between three and four years’ imprisonment before the respondent was eligible for release’.[73]
[72](2011) 34 VR 1; the Court (Warren CJ, Redlich JA and Ross AJA) at 15-17 [51]-[57] discusses appropriate sentencing in cases of fraud upon the taxation revenue.
[73]Ibid 18 [67]. In the event, the Court exercised a residual discretion to decline to intervene in the sentence.
Counsel for the CDPP also addressed the question of whether the appellant could be said to have been of previous good character.[74] He pointed out what might be described as the trajectory of the appellant’s criminality. He drew the Court’s attention to the sequence involved in the relevant charges. Originally, on 3 October 2008, the appellant had lodged a claim for a refund of $70,839.00. However, as he received refund after refund, the amount he sought increased dramatically. So:
[74]The Court gave the Crown leave to file an affidavit of Fiona Thompson, affirmed 15 October 2015. Ms Thompson is a solicitor employed in the Office of CDPP. In her affidavit, Ms Thompson said that she assumed the conduct of the present appeal in September 2015. Having reviewed the CDPP file, she ascertained that the appellant had a prior conviction. Exhibited to her affidavit was the court record of the Magistrates Court in Hobart. On 19 July 1995, in the Court of Petty Sessions at Hobart, the appellant was found guilty of dishonestly acquiring a financial advantage contrary to s 252A(1) of the Criminal Code Act 1924 (Tas). He was convicted and discharged on condition that he be of good behaviour for a period of two years. The amount involved was $802.00. Counsel for the CDPP said that he was bringing this matter to the attention of the Court so that the Court would be fully informed of the criminal history of the appellant. He made no further submissions about the relevance of this conviction.
(a) Charge 1 related to false returns lodged between 3 October 2008 and 3 April 2009.[75] The initial refund sought was for $70,839.00. The last refund the subject of this charge was for $193,789.00. The total fraud involved with respect to these BASs was $406,694.00. An ATO review took place in April 2009 in which the appellant provided false documentation;
[75]The final refund in respect of this charge was paid by the ATO on 23 April 2009.
(b) Charge 2 related to false returns lodged between 3 July 2009 and 4 April 2011.[76] The initial refund sought was for $150,798.00. The last refund the subject of this charge was for $431,344.00. The total fraud involved with respect to these BASs was $2,391,935.00. An ATO review took place in May 2011 in which the appellant provided further false documentation;
(c) Charge 3 related to false returns lodged between 7 July 2011 and 8 October 2012.[77] The initial refund sought was for $464,451.00. The last refund the subject of this charge was for $621,925.00. The total fraud involved with respect to these BASs was $3,055,180.00. An audit took place in November 2012 in which the ATO sought third party verification of the false documentation that had been supplied by the appellant. The third party advised that it had never supplied product to the appellant at the address identified by him. On 10 January 2013, an ATO auditor had a telephone conversation with the appellant in which he told further lies about the nature and state of his business;
(d) Charge 4 related to a BAS lodged in respect of the period 1 October 2012 and 31 December 2012. The appellant claimed a refund of $600,515.00. The ATO requested that the appellant provide documents to substantiate his claim. He did not supply any such documents and the claim was refused.
[76]The final refund in respect of this charge was paid by the ATO on 8 April 2011.
[77]The final refund in respect of this charge was paid by the ATO on 12 October 2012.
Counsel for the CDPP pointed to the plea material which was to the effect that the appellant had engaged in his first fraudulent lodgement in order to clear the costs on repayments associated with his truck. The money fraudulently procured was sufficient to meet those payments.
Counsel for the CDPP also referred to Cole v The Queen.[78] In that case, the appellant was sentenced on the basis that the offending involved the lodgement by the appellant of 778 false BAS claims to the Australian Taxation Office claiming a total of $1,764,202.88. The offending conduct was said to have occurred between 1 February 2007 and 11 February 2012. The amount dishonestly obtained on the first count was $1,727,239.07; the amount dishonestly obtained on the second count was $36,963.81. A reparation order was made pursuant to s 21B of the Crimes Act 1914 (Cth) for the sum obtained in count one. Sleight DCJ determined that a sentence of seven years was appropriate in respect of count 1 and two years in respect of count 2. Having taken into account the principle of totality, he sentenced the appellant to a total sentence of eight years’ imprisonment with a non-parole period of four years and nine months. In the Court of Appeal, the respondent conceded the appeal and accepted that a different sentence ought to be imposed on the ground that the appellant was sentenced on an incorrect factual basis as to the period of offending. The Court of Appeal remitted the matter to be dealt with in the District Court. On 11 December 2013, the appellant was resentenced in the District Court (Sleight DCJ). In resentencing the appellant, Sleight DCJ took into account several factors by way of mitigation that were personal to the offender in that case. He also took into account the fact that the defrauding of the Australian Tax Office occurred over a period of approximately five years ‘with such deliberate intent’. In resentencing the appellant, Sleight DCJ considered that the appropriate sentence on count 1 was six years and three months and one year and nine months on count 2. He then took into account the principle of totality and considered that the appropriate total sentence was one of seven years. To achieve that result, he reduced count 2 to nine months and made that sentence cumulative. He set a single non-parole period of three years and nine months.
[78][2013] WASCA 267.
In Keefe v The Queen,[79] the applicants were convicted, following a trial in the County Court, of two charges of conspiring dishonestly to cause a risk of loss to a Commonwealth entity. Each applicant was sentenced to a total effective sentence of seven years and six months with a non-parole period of five years. In that case, the applicants were directors of a company which conducted a mailing house operation. The company lodged a substantial proportion of its bulk mail at a suburban licenced post office. Payments were made which substantially understated the number of mail articles lodged for posting and the postage payable. Over four years the total underpayment for mail lodged via that post office was in excess of $2,400,000. The applicants contended that the head sentence of six years and six months in respect of the first charge was excessive having regard to the maximum penalty (10 years’ imprisonment), the absence of prior convictions, the presence of good character and various other factors in mitigation.[80]
[79][2014] VSCA 201.
[80]The defendants did not contend that the sentence imposed on the second charge (two years and six months) was manifestly excessive.
The Court said:
Appellate courts have repeatedly emphasised that serious fraud on the Commonwealth and its agencies requires the imposition of sentences that give real effect to principles of general deterrence and denunciation. Amongst the reasons for this approach are that:
(a)such offending has many harmful, but often hidden, social consequences;
(b) revenue systems often rely on honesty;
(c) the cost of fraud is borne by the whole community;
(d) fraud is difficult to detect, and if undetected the rewards may be great;
(e)the investigation and prosecution of fraud consumes considerable public resources; and
(f)general deterrence is likely to have a more profound effect in the case of white-collar criminals.[81]
[81][2014] VSCA 201 [77] (Redlich and Weinberg JJA and Sifris AJA) (citations omitted).
In Dyason v The Queen,[82] the appellant had systematically diverted funds from a residential aged care facility where she worked as a finance officer. Between 1 July 2004 and 26 November 2010, she dishonestly obtained approximately $1.4 million.[83] When a particularly large payment was queried by the bank, leading the chief executive officer of the aged care facility to instigate an inquiry, the appellant was stood down; she confessed her guilt and cooperated in the investigation. She pleaded guilty to seven charges of obtaining property by deception before a judge in the County Court. The judge imposed an aggregate sentence of five years’ imprisonment on the seven charges and a non-parole period of three years. The Court of Appeal rejected her contention that the sentence was manifestly excessive.[84] In doing so, the Court took into account that her case, unlike the present case, involved a gross breach of trust.[85] However, as noted by the County Court judge in sentencing, she had pleaded guilty at the earliest opportunity and cooperated in the investigation.[86] While the present case involved no comparable breach of trust, the amount dishonestly obtained was very much greater and the applicant lied on several occasions when he was asked to verify his expenditure.
[82][2015] VSCA 120.
[83]After some repayments by her and the reversal of a transaction by the bank, that amount was reduced to approximately $1.3 million.
[84][2015] VSCA 120 [41].
[85]Ibid [42]-[45].
[86]Ibid [13], referring to DPP v Dyason (Unreported, County Court of Victoria, Judge Harbison, 15 October 2014) [23], [31].
It may be accepted that the present sentence is stern and at the higher end of the range; it is not outside the range for comparable offences.
The fourth ground should be dismissed.
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