Bikhit v The Queen

[2007] NSWCCA 202

New South Wales
Court of Criminal Appeal

CITATION:	Bikhit v Regina [2007] NSWCCA 202
HEARING DATE(S):	21 June 2007
JUDGMENT DATE:	13 July 2007
JUDGMENT OF:	Beazley JA at 1; Grove J at 3; Simpson J at 11
DECISION:	(1) Grant leave to appeal. (2) Appeal allowed. (3) Quash sentence. (4) Re-sentence applicant under s 6(3) of the Criminal Appeal Act 1912 making an order under s 10A of the Crimes (Sentencing Procedure) Act 1999 to the effect that the proceedings be disposed of on the basis that no other penalty be imposed. (5) Order the release of the applicant forthwith.
CATCHWORDS:	CRIMINAL LAW – SENTENCING – accessory after the fact of fraud – pleas of guilty – parity – objective criminality – no loss to alleged victim demonstrated on prosecution case attributable to applicant’s conduct – inability of Crown to identify applicant’s criminality – special circumstances – application of s 10A of Crimes (Sentencing Procedure) Act 1999
LEGISLATION CITED:	Crimes (Sentencing Procedure) Act 1999 Crimes Act 1900
CASES CITED:	R v Negline (NSWCCA, 5 December 1990) R v Thomson; R v Houlton [2000] NSWCCA 309; 49 NSWLR 383
PARTIES:	Samuel Bikhit (Applicant) Regina (Respondent)
FILE NUMBER(S):	CCA 2007/1206
COUNSEL:	B Stratton QC/P McGrath (Applicant) N Noman (Respondent)
SOLICITORS:	George Sten & Co (Applicant) S Kavanagh - Solicitor for Public Prosecutions (Respondent)
LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	06/11/0763
LOWER COURT JUDICIAL OFFICER:	Mahoney ADCJ
LOWER COURT DATE OF DECISION:	29 March 2007

2007/1206

BEAZLEY JA
GROVE J
SIMPSON J

13 JULY 2007

SAMUEL BIKHIT v REGINA

Judgment

1 BEAZLEY JA: At the hearing of the appeal of this matter, the Court was of the opinion that the sentencing process was flawed and that Mr Bikhit’s application for leave to appeal against sentence should be granted and that the appeal be allowed. The Court ordered that Mr Bikhit be released forthwith and indicated that the Court’s reasons would be published at a later date.

2 The formal Orders of the Court are set out in the judgment of Simpson J. I agree with the reasons stated by her Honour as to why the Court made its Orders. I also agree with the additional comments of Grove J.

3 GROVE J: This applicant pleaded guilty to two counts of being an accessory after the fact to frauds committed by brothers named Gomes. The victim of the frauds was identified as Scottish Pacific Business Finance (Scottish), a subsidiary of St George Bank Limited, which engaged in debt factoring. The Gomes brothers were directors of a company called Smartpak Australia Pty Limited (Smartpak), which had an arrangement with Scottish to sell their trade debts to Scottish in return for fees and charges to be made by Scottish. The applicant was a director of Egypco Chemical Australia Pty Limited (Egypco), which was a customer of Smartpak.

4 On two occasions Smartpak invoiced Egypco for goods which were never ordered or delivered. Hence the invoices were false. Smartpak presented these invoices to Scottish. As a result Scottish paid to Smartpak part of the amount of the invoices known as the advance. Scottish then turned to the trade debtor Egypco for payment of the invoices. The total amount involved in the charges was a little over $200,000. Simpson J has pointed out the anomaly in amounts when comparison is made with the charges against the Gomes in respect of the transactions involving Egypco. Egypco paid Scottish the amount of the invoices. On one occasion the amount which Egypco paid to Scottish was supplied by Smartpak. On the other Egypco paid the account itself but was reimbursed by Smartpak. Consequently Scottish sent to Smartpak the balance of the invoice less its charges and commissions.

5 The Gomes brothers were involved in factoring a number of other false invoices to different companies which had nothing to do with the applicant. It was said that Smartpak engaged in these arrangements of presenting false invoices in order to meet a liquidity problem. It was also said that when the scheme was detected there was a loss to Scottish of $1.3m. Neither counsel for the Crown nor senior counsel for the applicant (neither of whom appeared in the proceedings below) could explain how this loss was established. The facts tendered in the District Court did not elucidate the matter but that sum might represent a loss when, as it eventually did, Smartpak went into liquidation.

6 It is true that dishonesty on the part of the applicant can be perceived in his cooperation with the Gomes brothers in the negotiation of an invoice for goods which he knew had not been supplied. Nevertheless, in respect of the two matters in which he was involved, Scottish were paid the full amount of the invoices out of funds supplied by the Gomes brothers and following the “round robin” it would appear that the only persons out of pocket would be them, as Scottish had deducted its charges and commissions. No part of any deficiency could have arisen out of the Egypco transactions.

7 As I have stated, the applicant pleaded guilty to being an accessory after the fact and, whilst I can detect a detriment to Scottish in the sense that it made an advance to Smartpak on the basis of false invoicing, it is difficult to identify how the applicant is an accessory after the fact to that fraud. Perhaps it was intended by the prosecution to rely upon the payment (with the money provided by Smartpak) to Scottish after the factoring company sought to recover the invoiced debt, and that the applicant was an accessory after the fact in the sense that his action in making the payment obstructed the detection of the offence by the Gomes brothers in obtaining the advances to which they were not entitled.

8 However, neither counsel specified that this was the basis of the presentation of the charges. It is not articulated in that way in the statement of facts. The learned sentencing judge did not make a finding to that effect but he referred to the “agreed fact” that Scottish had incurred a loss of $1.3m. His Honour noted that, although that loss was agreed, it was disputed that it was due to the transactions which were the subject of the charges. He went on to say that the agreed facts in the cases of another offender and the applicant “expressly state that there was such a loss and that it was attributable to the actions of those offenders.” Although it is not entirely clear, I take that to be a finding by his Honour rejecting the contention that the loss was not due to the applicant’s transactions. However, as I have indicated above, neither counsel who appeared in the appeal could explain how any action of the applicant could have contributed to any loss.

9 The applicant has been in custody pursuant to the sentence imposed by his Honour for nearly three months. He gave explicit instructions to senior counsel to maintain his plea of guilty. In the extraordinary circumstances of this case, that is to say that the Crown was unable to point to precise facts and formulate what the criminality arising out of them for which the offender was to be punished, nor, I should add, was senior counsel for the applicant, I was, for my part, driven to the conclusion that the incarceration of the applicant for the time already served must be sufficient punishment for whatever misconduct he was acknowledging by his plea of guilty. In coming to that conclusion I took into account the potential liability of the applicant as an accessory after the fact along the lines abovementioned.

10 For those reasons I joined in the order that the proceedings be disposed of without imposing any other penalty pursuant to s 10A of the Crimes (Sentencing Procedure) Act 1999.

11 SIMPSON J: The applicant sought leave to appeal against the severity of sentences imposed upon him by Mahoney ADCJ in the District Court on 29 March 2007 following his pleas of guilty to two counts of being an accessory after the fact to a serious indictable offence. By s 350 of the Crimes Act 1900 each offence is punishable by imprisonment for five years. On each count the applicant was sentenced to imprisonment for 18 months, made up of a non-parole period of 12 months and a balance of term of six months, commencing on 27 March 2007 (and to be served concurrently). At the conclusion of the hearing of the application on 21 June 2007, the court made the following orders:

(1) Grant leave to appeal.

(2) Appeal allowed.

(3) Quash sentence.

(4) Re-sentence applicant under s 6(3) of the Criminal Appeal Act 1912 making an order under s 10A of the Crimes (Sentencing Procedure) Act 1999 to the effect that the proceedings be disposed of on the basis that no other penalty be imposed.

(5) Order the release of the applicant forthwith.

What follows are my reasons for joining in those orders.

12 The “serious indictable offences” to which the applicant was alleged to have been an accessory were offences against s 176A of the Crimes Act – defrauding by company directors. A series of such offences were alleged to have been committed by the two principal offenders, Alfredo Julio Gomes and Jose Manuel Gomes, over a period between November 2002 and June 2003. These were the principal charges, against the Gomes brothers, in respect of which the applicant was charged as accessory. Paul Enzo Baldini (the director of State Packaging Pty Ltd, another customer of Smartpak) pleaded guilty to three counts in similar terms to those charged against the applicant, and asked that a further two offences be taken into account pursuant to the provisions of Pt 3 Div 3 of the Crimes (Sentencing Procedure) Act 1999 (“(Sentencing Procedure Act”).

13 Given the unusual circumstances of this case, it is necessary to set out in full the terms of one of the charges to which the applicant pleaded guilty. The second charge is, except for variation of dates and other particulars, in identical terms. The first charge appears in the Court Attendance Notice served upon the applicant as follows:

DETAILS OF OFFENCE/S

Crimes Act 1900, s 350 Law Part Code 35349

Accessory after the fact to a serious indictable offence

Between 9.00am on 01/11/2002 and 9.00am on 12/11/2002 at Marrickville

That Alfred Gomes and Jose Gomes between the 6th and 21st day of January 2003, at Sydney in the State of New South Wales, did, being a director of a body corporate namely Smartpak Australia Pty Ltd, defraud by factoring three false invoice (sic) in the name of Egypco Chemical Australia Pty Ltd for the amount of $104,164.72 to Scottish Pacific Business Finance a body corporate who had dealings with Smartpak Australia Pty Ltd, and, the Attorney General aforesaid (sic) charges that Samuel Bikhit the director of Egypco Chemical Australia Pty Ltd, knowing the said Alfred Gomes and Jose Gomes to have committed the said serious indictable offence in the manner aforesaid, afterwards, to wit, on or about the 28th day of May 2003 in the said state did receive, harbour, maintain and assist the said Alfred Gomes and Jose Gomes.

14 As stated in the charge sheets, the charges were brought under s 350 of the Crimes Act, which provides:

“An accessory after the fact to any other serious indictable offence [other than murder – see s 349] is liable to imprisonment for 5 years, except where otherwise specifically enacted.”

S 347 makes provision for the indictment, conviction and sentencing of accessories after the fact to serious indictable offences.

15 A “serious indictable offence” is defined in s 4 of the Crimes Act as:

“… an indictable offence that is punishable by imprisonment for life or for a term of 5 years or more.”

16 The offences to which the applicant was alleged to have been accessory were offences against s 176A of the Crimes Act, which is in the following terms:

“Whosoever, being a director, officer, or member, of any body corporate or public company, cheats or defrauds, or does or omits to do any act with intent to cheat or defraud, the body corporate or company or any person in his or her dealings with the body corporate or company shall be liable to imprisonment for 10 years.”

For the purposes of s 350, therefore, an offence against s 176A is a serious indictable offence.

17 From the material provided to the sentencing judge, and to this court, it is not easy to understand how the principal offences were alleged to have been committed. I will return to this.

18 The applicant entered pleas of guilty on 21 September 2006. Proceedings relevant to sentence took place in the District Court on 10 November 2006. On that date a document identified as an agreed statement of facts was put before Mahoney ADCJ.

19 The manner in which the prosecution case was presented was, to put it mildly, unsatisfactory. The statement of facts is remarkable for its level of obscurity. However, with the application of some imagination, and generously reading between the lines, it can be discerned that the Crown alleged the following.

20 The Messrs Gomes, who are brothers, were the directors of a company called Smartpak Australia Pty Ltd (“Smartpak”). The business of Smartpak was supplying various kinds of paper products. Both brothers worked in the business. In 1994 Smartpak entered into a “factoring agreement” with Scottish Pacific Finance Pty Ltd (“Scottish Pacific”). This involved Scottish Pacific purchasing invoices rendered by Smartpak to its customers. The purchase price was less than the face value of the invoices. Within a day or two of receiving the invoices Scottish Pacific paid a percentage on the invoice to Smartpak. This was called “the advance”. Scottish Pacific then recovered the balance from the customer, which it then forwarded, minus a “factoring fee” to Smartpak. The balance was known as “the reserve”.

21 The advantage of the arrangement to Smartpak was to ensure that it had a continuous cash flow and received money without having to wait until the customer paid. The arrangement so made was perfectly orthodox and many legitimate transactions took place. However the Messrs Gomes devised a means of raising false invoices which they sent to Scottish Pacific. This involved their creating invoices in respect of which no product order had been received and no product supplied. The false invoices all named existing known customers of Smartpak. These were customers who participated in the arrangement. When Scottish Pacific received the false invoices it paid, in accordance with the arrangement, a percentage of the invoice to Smartpak (that is, the advance). Thus, Smartpak received from Scottish Pacific money in respect of transactions which had not taken place, in payment for goods that had not been supplied. Scottish Pacific then sought to recover the balance (the reserve) from the customer. At the request of Smartpak, these participating customers paid to Scottish Pacific amounts owing on invoices they knew to be false. In order to have them do this, Smartpak provided them with funds.

22 The applicant became involved as an existing customer of Smartpak. He was the director of a company called Egypco Chemical Australia Pty Ltd (“Egypco”). On the two occasions represented by the charges against him, Egypco received from Scottish Pacific invoices relating to goods which it had not purchased and had not received. The applicant nevertheless paid the invoices to Scottish Pacific. On one occasion he did this using money provided to him by the Messrs Gomes; on the other, he paid from his own funds and was reimbursed by Smartpak. These transactions occurred in January and March 2003. Scottish Pacific was paid in full and, in fact, made its usual profit, by deducting from what it had received from the applicant, and before it paid Smartpak, its usual factoring fee.

23 The Messrs Gomes devised a system of record keeping which identified the invoices that were false. These were recorded in the computer system by placing a dot point after the product code on the invoice. By this means those who were aware of the arrangement could immediately recognise which sales were genuine and which were not. This was seen as indicative of the level of sophistication of the scheme implemented by the Gomes brothers. In my view, however, the scheme could hardly be described as sophisticated. While Smartpak, on the rendering of each false invoice to Scottish Pacific, received an immediate injection of some funds, it was obliged, once the invoices were forwarded by Scottish Pacific to the participating customers, to provide funds to that customer to pay to Scottish Pacific the amount on the full invoice. It then received back from Scottish Pacific something less – probably considerably less – than it had paid. Smartpak could not do other than lose money on the arrangement.

The sentencing proceedings

24 The applicant did not give evidence. No pre-sentence or psychiatric report was tendered. A Mr Arthur Essey gave character evidence in which he spoke highly of the applicant’s honesty and reliability. Written testimonials were provided by four other individuals. He was said to be “a sincere Christian”, generous with his time, money and energy, active in church affairs, and trustworthy.

25 On the day of the hearing a lengthy debate took place between his Honour and counsel for the applicant. During the course of this it was suggested that the proceedings against the Gomes brothers, and those against Mr Baldini, could conveniently be dealt with by the same judge. On 19 March 2007 those matters were listed before his Honour. The applicant was not present. Both Gomes brothers entered pleas of guilty to 12 charges of fraud as directors of Smartpak. These charges, too, all followed the same pattern with variations only in the particularisation of the offence. The second count appeared on the indictment in the following terms:

“Further that you between 1 November 2002 and 2 November 2003 at Sydney in the State of New South Wales, being directors of a body corporate, namely Smartpak Australia Pty Ltd did defraud Scottish Pacific Business Finance Pty Ltd by factoring false invoice number 46142 in the name of Egypco Chemical Australia Pty Ltd for the $44,144.40 to Scottish Pacific Business.” (emphasis added)

26 The seventh charge also related to Egypco, and alleged a false invoice in the amount of $20,589.36. It is to be observed in passing that the amount by which the Gomes brothers were said to have defrauded Scottish Pacific does not correlate with the amount specified in the corresponding charge against the applicant. That is also the case in respect of the second charge. The remaining 10 counts against the Gomes brothers made similar allegations of factoring false invoices, but in the names of various other customers of Smartpak. Each Gomes brother asked that a further 62 offences, listed on Forms 1 pursuant to Pt 3 Div 3 of the Sentencing Procedure Act be taken into account. The total of the frauds alleged against them in the 12 charges is $389,144.72. However, that did not accurately reflect the case sought to be made against them by the prosecution.

27 A chartered accountant in the employ of the NSW Police Fraud Squad (Mr John Fogarty) gave evidence (in the Gomes proceedings) to explain the transactions. In cross-examination he agreed that, in respect of these transactions – that is, the transactions the subject of the 12 charges against the Gomes brothers – Scottish Pacific had been paid in full and was not out of pocket. These included the two counts involving Egypco, to which the applicant was alleged to have been an accessory.

28 As I understand the transcript, including the transcript of argument, the prosecution sought to establish that Scottish Pacific was out of pocket because Smartpak subsequently went into liquidation owing Scottish Pacific $1.3 million. Just how this came about was never fully explained. I assume that this represents the quantum attributable to false invoices outstanding on Smartpak’s liquidation. Obviously, in those circumstances, it could no longer fund the payments, through its customers, to Scottish Pacific.

29 The charges to which the applicant pleaded guilty involved, in total, so it was said, fraud on Scottish Pacific amounting to $212,354.23, although, as I have commented above, this was not the amount by which the Gomes brothers were alleged to have defrauded Scottish Pacific in respect of the Egypco transactions. That was a total of $64,733.76. The discrepancy was not, apparently, observed by any involved in the District Court proceedings and was never explained.

30 Mahoney ADCJ proceeded to sentence all four offenders on the same date, 29 March 2007.

31 His Honour sentenced the Gomes brothers identically to one another. The sentences imposed were in three tranches. On Counts 6 and 11 they were sentenced to fixed terms of imprisonment of 16 months commencing on 29 March 2007; on Counts 4, 5, 7 and 9, to sentences which his Honour expressed as follows:

“Non-parole periods of 69 weeks imprisonment … commencing on 29 September 2007 and ending on 25 July 2008 and a total term of 23 months commencing on 29 September 2007 and ending on 28 August 2009.”;


and on each of Counts 1, 2, 3, 8, 10 and 12, to imprisonment for 47 months, commencing on 8 March 2008, with non-parole periods of two years, expiring on 7 March 2010.

(The date of 25 July 2008 in the sentences imposed in relation to the second tranche appears to be a transcription error, since his Honour went on to specify that their earliest date of eligibility for parole was 28 July 2008.)

32 The non-parole period of 69 weeks translates to about 15 months; however, on the dates specified, the non-parole period is one of 10 months, with a balance of term of 13 months, a total head sentence of 23 months. All this appears to yield an overall head sentence of four years 10 months and 9 days with a non-parole period of two years 11 months and 22 days, and a balance of term of approximately 57¼ months. In sentencing the Gomes brothers Mahoney ADCJ stated his intention of allowing each a discount, pursuant to the principles stated in R v Thomson; R v Houlton [2000] NSWCCA 309; 49 NSWLR 383, in recognition of their pleas of guilty, of an unusually high 35 percent. Mr Baldini was sentenced to an aggregate total term of 2½ years, with a non-parole period of 2 years. He also was given a 35 percent discount, referable to the utilitarian value of his pleas of guilty, together with an offer of “worthwhile assistance to the authorites”.

33 There is no application for leave to appeal against the sentences imposed on the Gomes brothers and it is unnecessary further to attempt to sort out this rather unusual sentencing process. It is, however, necessary to note the Gomes sentences, because one of the grounds raised on behalf of the applicant concerned parity of sentencing, having regard to the extent of their relative criminality.

The remarks on sentence

34 The sentencing itself took an unusual course. The remarks on sentence run to a little over 41 pages of transcript. His Honour opened by observing that the remarks would be “very long”. He provided to counsel a “draft typescript” of his remarks, announced the sentences, and then proceeded to read from that document.

35 Quoting from the statement of facts tendered against the applicant, he said that Scottish Pacific had:

“… suffered a $1.3 million loss as a result of the alleged fraud committed by the directors of Smartpak and the customers identified as being involved in the fraud …

In summary the actions of the offenders assisted the directors of Smartpak to maintain the fraud .” (emphasis added)

36 He then referred to submissions made on behalf of the various offenders as follows:

“Messrs Gomes, in their evidence in this Court, and the legal representatives of all four accused presently standing for sentence, strenuously submit – with one exception which I will mention shortly – that Scottish had sustained no financial loss as a result of anything their respective clients had done with regard to Transactions 1 to 24 inclusive …

The exception mentioned above was the submission put on behalf of Mr Baldini that his involvement in the offences did not cause Scottish to suffer any loss and that any loss which might have been sustained by Scottish would have been confined to the investigation of the matter and the costs associated with the liquidation. When asked to reconcile this submission with the agreed fact that Scottish had incurred a loss of $1,300,000, the explanation offered was in these terms:

‘The loss is agreed but not due to the transactions the subject of the charges’.”

He concluded:

“These submissions on behalf of all the accused are not sustainable in light of contested (sic - ? uncontested) evidence in the case. The agreed facts in the cases of Mr Baldini and Mr Bikhit expressly state that there was such a loss and that it was attributable to the actions of those offenders.”

37 His Honour then made the following finding:

“I am satisfied beyond reasonable doubt that all four of the offenders presently before this court and all the business entities referred to in exhibits 5 and 6 [these were the statements of facts tendered against the Gomes brothers] were hand in glove with one another and were fully aware in all presently relevant respects of why Smartpak was raising the sham invoices presently in question. As with a burglar and a receiver of stolen goods, there would have been no defrauding of Scottish by Smartpak, using sham invoices, without the sort of cooperation provided by the persons charged as accessory.”

38 His Honour found, in respect of Mr Baldini, that the three offences admitted by him were “in the high range of seriousness”; he held that the two offences committed by the applicant were also “in the high range of seriousness”, but less so than those of Mr Baldini. He gave two reasons for this:

“First, because his crimes are only two thirds the number and approximate value of Mr Baldini’s; and secondly, he made each repayment to Scottish only two calendar months after receiving the repayment demand.”

He considered it noteworthy that the second repayment was made before he had been provided by Smartpak with the funds to do so.

39 In contrast to the 35 percent discount he allowed on sentence for each of the Gomes brothers and Mr Baldini, he allowed the applicant only 25 percent. He gave no reasons for this discrepancy.

40 He found, pursuant to s 44(2) of the Sentencing Procedure Act, that special circumstances existed justifying departure from the statutory ratio between the head sentence and non-parole period that would otherwise have been applicable. This finding applied to all four offenders. At the conclusion of this lengthy procedure, his Honour imposed the sentences I have already mentioned, which he had already announced. Immediately before he did so, counsel for the applicant asked that he defer the actual passing of sentence in order to consider whether the applicant would be suitable for an order, pursuant to Pt 6 of the Sentencing Procedure Act, that the applicant serve his sentence in home detention. Without calling on the Crown, the Judge rejected that application.

The application for leave to appeal against sentence

41 On behalf of the applicant it was contended that:

“In their own right the sentences were too severe.”

42 Heavy reliance was placed upon the circumstance that no loss was occasioned (by the two transactions in which the applicant was involved) to Scottish Pacific; that the applicant neither sought nor received any benefit from the transactions; and that the applicant was not shown to have been aware of the larger scheme being operated by the Gomes brothers. It was contended that error could be shown in the assessment of the objective criminality of the applicant as being “in the high range of seriousness”. The final of these (no loss to Scottish Pacific) was contrary to an express statement contained in the agreed facts and was the subject of express rejection by his Honour.

43 Also challenged was the finding that all those involved:

“… were hand in glove with one another and were fully aware in all presently relevant respects of why Smartpak was raising the sham invoices …”

This, it was argued, infected the sentencing process because the applicant was sentenced on an erroneous assessment of his objective criminality.

44 A parity argument was also advanced, although this is more properly characterised as a “disparity” argument – the contention being that the criminality of the Gomes brothers was so significantly greater than that of the applicant that the sentences imposed ought to have themselves contained a greater element of disparity. It was pointed out that the total sentence imposed upon the applicant amounted to approximately one-third of the total of those imposed upon the Gomes brothers. It may here be observed that they pleaded guilty as principals to 12 charges of offences carrying maximum penalties of 10 years’ imprisonment, involving an elaborate (though remarkably foolish) scheme, together with acknowledging their guilt of another 62 such offences. This suggests that there is considerable merit in this aspect of the application.

45 Complaint was also made of the disparity in the discounts allowed in relation to the pleas of guilty. This, too, is well made.

46 A further complaint was made concerning the application of the finding of special circumstances which, it was argued, was not fully implemented in the result. Finally, it was argued that his Honour failed to consider assessment of the applicant for suitability for alternatives to fulltime imprisonment, such as suspension of the sentences, or service of the sentence imposed by home detention. There is merit in all of these complaints.

47 This court experienced significant concern about a number of aspects of the proceedings. I have extracted, in full, one of the charges against the applicant. It alleges that he was accessory to the defrauding (that is, actual defrauding) of Scottish Pacific by the Gomes brothers. That defrauding, it was alleged, occurred in respect of a discrete transaction in which three false invoices were provided to Scottish Pacific. The second charge was in relevantly identical terms. It is true that the statement of facts – agreed on behalf of the applicant – expressly asserted that Scottish Pacific had suffered a very significant – $1.3 million loss:

“… as a result of the alleged fraud committed by the directors of Smartpak and the customers identified as being involved in the fraud .” (emphasis added)

and that:

“… the actions of [the applicant] assisted the directors of Smartpak to maintain the fraud.”

48 These, however, were general statements about the scheme operated by the Gomes brothers. The applicant was charged with two specific offences referable to two specific transactions. The evidence (in the Gomes/Baldini proceedings) clearly established that, in respect of these transactions, Scottish Pacific suffered no loss.

49 “Defraud” is not defined in the Crimes Act. However, it has been the subject of judicial consideration on a number of occasions. Some of the authorities are referred to in Howie and Johnson: Criminal Practice and Procedure NSW, LexisNexis Butterworths 1998 at pp 116, 626 in the notes to s 176A of the Crimes Act. In my opinion to “defraud” necessarily imports a loss to the victim of something of value. I acknowledge that the loss may be intangible, although, it must, in my opinion, at best involve prejudice to the victim’s “proprietary rights” (R v Negline (NSWCCA, 5 December 1990)).

50 Here, the evidence failed to establish that Scottish Pacific was deprived or defrauded of anything in respect of the transactions in which the applicant was involved. There was therefore no “defrauding” of Scottish Pacific. But this was an essential element of each offence charged.

51 This conclusion raises an awkward question for this court. In my opinion, based on the evidence presented to Mahoney ADCJ, the prosecution did not establish that either principal offence (defrauding Scottish Pacific by the Gomes brothers) had been committed. Axiomatically it did not establish that the applicant was an accessory to either of those offences.

52 The awkward question thus raised is whether the pleas of guilty ought to have been rejected.

53 The applicant was legally represented and entered pleas of guilty to both charges. It would have been open to the judge to reject the pleas, but this he does not appear to have contemplated. The transcript of the sentencing proceedings makes it clear that the applicant’s counsel strenuously pressed for the pleas to be maintained. He did not want to become involved in a lengthy and expensive process of seeking leave to withdraw his pleas or having rejection of the pleas imposed upon him. This is entirely understandable. The evidence did establish that the applicant was involved in some wrongdoing. He undoubtedly assisted the Gomes brothers in a deceitful enterprise as a result of which Scottish Pacific eventually suffered significant losses. Had he been charged, for example, with being an accessory to an offence of obtaining a benefit by deception (s 178BA, itself punishable by imprisonment for five years, and therefore a serious indictable offence), his pleas would have been quite appropriate.

54 But that does not mean that the judge is obliged to sentence on the basis of the applicant’s accessorial liability to a serious fraud in the absence of adequate evidence as to the nature and extent of the fraud. It is inescapable, in my opinion, that the applicant was sentenced on the basis that he bore or shared, responsibility for the loss of $1.3 million ultimately suffered by Scottish Pacific as a result of the conduct of the Gomes brothers. In fact, on the basis of the charges to which he pleaded guilty, he bore no responsibility for any loss.

55 In my opinion, what his Honour did was to characterise the applicant’s participation in two discrete transactions as participation in what might properly be called a conspiracy, or an overall scheme or enterprise. But that was not the charge brought against him.

56 In my opinion it was not open to the judge to sentence the applicant as he did. The evidence was simply deficient and failed to establish any criminality relevant to the charge brought.

57 It is for these reasons that I joined in the orders made.

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