Director of Public Prosecutions v Cook (a pseudonym); Director of Public Prosecutions v Barber (a pseudonym)
[2016] VSCA 137
•10 June 2016
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCR 2016 0015
| DIRECTOR OF PUBLIC PROSECUTIONS |
| APPELLANT |
| v |
| ERNEST COOK (A PSEUDONYM)[1] |
| RESPONDENT |
[1]To ensure there is no possibility of identification, this judgment has been anonymised by the adoption of pseudonyms in place of the names of the respondents.
S APCR 2016 0016
| DIRECTOR OF PUBLIC PROSECUTIONS | |
| APPELLANT | |
| v | |
| GREGORY BARBER (A PSEUDONYM) | RESPONDENT |
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| JUDGES: | PRIEST, SANTAMARIA and KYROU JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 2 May 2016 |
| DATE OF JUDGMENT: | 10 June 2016 |
| MEDIUM NEUTRAL CITATION: | [2016] VSCA 137 |
| JUDGMENT APPEALED FROM: | DPP (Cth) v [Cook] & DPP (Cth) v [Barber] [2015] VCC 1851 (Judge Lawson) |
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CRIMINAL LAW – Sentence – Director’s appeals – Common law conspiracy to defraud – Respondents both sentenced to five year community correction orders – Whether sentences were manifestly inadequate – Respondents remorseful, pleaded guilty, received little financial benefit and will give evidence against co-offender – Sentences not manifestly inadequate – Residual discretion – Appeals dismissed.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant in S APCR 2015 0015 | Ms W Abraham QC with Mr J Dickie | Mr J Cain, Solicitor for Public Prosecutions |
| For the Respondent in S APCR 2015 0015 | Mr J Saunders | Hymans Solicitors |
| For the Appellant in S APCR 2015 0016 | Ms W Abraham QC with Mr J Dickie | Mr J Cain, Solicitor for Public Prosecutions |
| For the Respondent in S APCR 2015 0016 | Mr D D Gurvich QC with Mr P J Smallwood | Defteros Lawyers |
PRIEST JA
SANTAMARIA JA:
Overview
On 19 February 2015 the respondent Cook (now aged 29), pleaded guilty to one charge of conspiracy to defraud. On 9 September 2015 the respondent Barber (now aged 35) pleaded guilty to one charge of conspiracy to defraud. Following a plea on 15 June (Cook only), 20 August and 27 November, the respondents were sentenced on 15 December 2015 as follows:
| Ernest COOK | |||
| Charge on Indictment | Offence | Maximum | Sentence |
| 1 | Conspiracy to defraud [Common Law] | 15 years [Crimes Act 1958, s 320] | 5 year CCO 5 year CCO |
| Total Effective Sentence: | 5 year Community Correction Order | ||
| Non-Parole Period: | N/A | ||
| Pre-sentence Detention Declared: | N/A | ||
| 6AAA Statement: | 5 years’ imprisonment with non-parole period of 3 years | ||
| Other orders:
| |||
Gregory BARBER Charge on Indictment Offence Maximum Sentence 1 Conspiracy to defraud [Common Law] 15 years [Crimes Act 1958, s 320] 5 year CCO Total Effective Sentence: 5 year Community Correction Order Non-Parole Period: N/A Pre-sentence Detention Declared: N/A 6AAA Statement: 5 years’ imprisonment with non-parole period of 3 years
- Other orders: 400 hours of unpaid community service.
- Must participate in programs and/or courses that address factors relating to the offending behaviour as directed.
Grounds of Appeal
In relation to both respondents, the Director of Public Prosecutions (‘the Director’) appeals on the ground that the sentence imposed in respect of the charge for the respondent is manifestly inadequate.
Circumstances of the Offending
Both respondents were employed by ‘OT’ at a financial services company (‘the company’). The business sold house and land packages and assisted purchasers in preparing and submitting their loan applications. The house and land packages were promoted by another company which was owned by ‘HD’ and ‘NA’. NA was the sole director and shareholder of the company during the charged period. NA was also the partner of OT. Respondent Barber was employed at the company from around January 2008 until August 2010 (when aged 31 to 34). Cook was employed there from about March 2009 until 15 December 2011 (when aged 23 to 24 years old).
Both respondents started work at the company unaware of any illegal activity. Eventually, in the case of Barber after a few months and Cook between a few months and a year, OT introduced them to the creation of false documents to provide to financial institutions in support of loan applications. Barber also instructed Cook in this process.
The false documents created included employment records, payslips, banking records and identification documents. The company also provided a ‘fake employer’ phone number, which was answered by the company staff pretending to be the client’s employer. Both Barber and Cook were involved in the creation and editing of false documents during their time at the company. The company had a database of templates for that purpose. The documents were created and edited upon receipt of a hand written instruction sheet from OT showing the information that was to be provided as part of the loan application.
The total fraud involved some 533 approved loans totalling approximately $170,474,599. This could be broken down to 345 loans approved during the period Barber worked at the company, with a total value of $110,455,706 and 288 loans with a total value of $93,960,803 during the time Cook worked at the company.[2]
[2]As the time the respondents were employed at the company overlapped, so too do the breakdown figures. That is, where a loan was approved when both respondents were working at the company, it is included in both breakdown amounts.
During the offending period, OT received benefits totalling $5,948,443 from commissions in relation to the home loans, builders and the loan facilitation fee it charged clients. Barber received a salary of approximately $720.69 per week, totalling $61,258.65 over the period he was employed. Cook received approximately $512 per week, totalling $37,402.77 for the period he worked. Cook did not receive superannuation whilst working at the company, nor did he receive any commissions or profits of the business. OT also gave Cook a car that he had purchased for his restaurant business but was not using. Cook also arranged to buy a property through OT when he first started working.
Both respondents signed statements undertaking to give evidence against their co-offenders.
Arrest and Committal
On 15 December 2011, warrants were executed on the various premises associated with the company. A significant amount of materials were seized and subjected to analysis. Cook was arrested, charged and bailed on 19 December 2014 and indicated an early plea of guilty.
On 2 January 2015, Barber was charged. He made a ‘can say’ statement and plea offer on 22 May 2015. The matter was booked for a two day committal commencing 10 August 2015. That date was vacated due to Barber offering to be interviewed and provide a statement. On 9 September 2015, Barber pleaded guilty by way of straight hand up brief.
Sentencing Remarks
Cook was born overseas. He arrived in Australia in 2004 and is now a permanent resident. He undertook studies, completing a banking and information technology degree and a master’s degree in financial analysis. He graduated in 2008 and experienced difficulties obtaining work in his field as he did not have a permanent resident visa at that time. It was in that context that Cook was introduced to OT and began work at the company.
The sentencing judge accepted that Cook, once he became aware of the fraud, did not report the behaviour because he did not know which authorities to tell nor whether he would be believed. He was also financially supporting his brother and was struggling to meet mortgage payments.
While Cook was desperate to find a job in his chosen field and there were compelling personal reasons for his continuing to work at the company, it did not excuse his behaviour. Cook knew it was wrong to and contrary to the professional and ethical standards expected of a person working in the financial sector. The sentencing judge accepted that Cook now sincerely regretted his decision to continue working at the company and was truly remorseful.
Barber was also born overseas, and came to live in Australia in August 2006. Prior to coming to Australia, Barber had obtained a Bachelor of Computer Science and a master’s degree in business administration. He also completed a Master’s degree in accounting in Australia. Barber worked odd jobs whilst completing his degree. Upon qualification, he found it difficult to obtain work. He met OT through his mosque. Initially he was paid off the books at the company whilst gaining experience, before gaining on the books employment at a modest wage.
Barber presented as a naïve individual who was subject to exploitation by OT, who was older, more domineering and controlling. Barber remained with the company once becoming aware of the fraudulent activities because of his difficulties obtaining suitable financial work and the complexities of his relationship with OT. To his credit he left the company before investigations commenced and he was successful in obtaining financial work. The sentencing judge noted that it was unfortunate that he did not try to extricate himself upon learning of the illegal nature of the business and he had now lost all opportunity to work in the financial sector because of his conviction for this offending.
The sentencing judge accepted that both respondents were employees who acted at the direction and control of OT. Nonetheless, they were both important cogs in the company’s operations and were to be sentenced as such.
Both respondents were introduced to the false document creation gradually. After becoming aware of the process, both respondents continued to work at the company and take part in the creation and provision of the false documents.
Barber left the company in August 2010 and had little more to do with OT. Upon Barber leaving, Cook’s responsibilities increased, although he was still under the direction and instruction of OT. Cook was given an indication that he would be made a manager or alternately would be set up with a mortgage broking business from which he could process legitimate deals.
Throughout the time both Cook and Barber were working at the company, OT maintained close control of the false documents and nothing would occur without his instructions.
The nature of the operation was extensive and sophisticated. The sentencing judge was not satisfied that either of the respondents were fully appraised of the breadth of the operation or the financial reward OT derived from that operation.
To date, no actual loss had been advised by the banks. However, the informant indicated that 38 per cent of the sample set of loans, for which he had prepared a chart, were in arrears or closed or had legal action commenced for debt recovery. This far exceeded the normal write-off rate of one per cent or less in the industry. By their collective actions, the respondents facilitated loans whose financial viability was less secure than in the normal course of business.
Cook
The sentencing judge accepted that neither respondent received much by way of personal gain for their participation in the conspiracy. Both received what was effectively their wage.
The sentencing judge was satisfied that both respondents played equivalent roles, although Cook’s role changed when Barber left.
The sentencing judge accepted that Cook was young, naïve and impressionable and his role at all times was controlled by OT. Nonetheless, he played a significant role in the conspiracy. There was no evidence Cook suffered from any disability, psychiatric or psychological condition that would explain his behaviour. The sentencing judge took into account the four reasons Cook attributed to his participation:
·the difficulties obtaining work and the need to support himself and his brother;
·that OT made him feel trusted about the business operation;
·many of the company’s clients were immigrants and he thought he was helping them establish themselves in a new country; and
·over time he came to believe it was common practice in the mortgage industry.
Cook’s personal circumstances were taken into account, including his family circumstances overseas, his experience during the Gulf War, his relocation with his family to England following the war and his move to Australia to study, his relocation back overseas in 2011 for family reasons and his eventual return to Australia. Cook shared a strong bond with his wife and she remained supportive of him. They have one child together.
Cook left to go overseas in 2011. He returned voluntarily to Australia in August 2013, aware of the risk of prosecution.
The prosecution conceded Cook’s plea of guilty was at the earliest opportunity. The sentencing judge accepted there was real utility in Cook’s plea of guilty and it facilitated justice. It was also indicative of genuine remorse and acceptance of responsibility.
The sentencing judge summarised the extent of Cook’s co-operation with the authorities including his making three statements to police, signing an 84 page statement outlining his involvement in the offending, giving evidence at the committal of one co-offender, and being prepared to give evidence at the committals of other co-offenders. The co-operation was described by the informant as of significant value to the investigation overall and by the prosecutor as co-operation at the highest level. The sentencing judge accepted that the co-operation with authorities was at the highest level and came at some personal risk to Cook, although the risk was not specifically identified. A significant discount in sentence was warranted.
Although R v Verdins[3] was not relied upon, the sentencing judge had regard to a psychological report who opined that Cook met the diagnostic criteria for Persistent Depressive Disorder as well as suffering significant anxiety. The sentencing judge had regard to the psychologist’s comments as to imprisonment being more burdensome for Cook.
[3](2007) 16 VR 269.
The sentencing judge had regard to the various referees who provided testimonials on behalf of Cook. The sentencing judge accepted that, but for this offending, Cook was of otherwise good character, and accepted the character evidence tendered on his behalf.
The sentencing judge considered Cook’s prospects of rehabilitation to be excellent. His conduct following his arrest demonstrated real insight into his offending and he accepted the wrongfulness of his actions. The sentencing judge considered it unlikely he would re-offend in the future.
The sentencing judge noted the offending was serious and that general deterrence and just punishment must be given weight in any sentence to be passed. Cook’s post offence conduct and high level of co-operation with the authorities led the judge to consider specific deterrence was less important in Cook’s case but his conduct must be formally denounced on behalf of the community.
Cook’s counsel submitted that a Community Correction Order (‘CCO’) was within range, alternately a suspended sentence was also available. The prosecution submitted that the offending was too serious for a sentence where a CCO would be available and submitted that the offending required a term of imprisonment and a non-parole period, relying on the objective seriousness of the offending and the sentencing principles that applied to white collar crime. The prosecution conceded specific deterrence did not often loom large in offending of this kind, that the respondents’ role was significantly different to that of OT and the personal gain was nominal.
The sentencing judge accepted that general deterrence was the primary sentencing consideration in cases such as this and courts needed to send a strong message that such offending will be severely punished.
Having regard to all the sentencing considerations, the sentencing judge considered that all sentencing principles could be achieved by the imposition of a CCO alone. The sentencing judge considered the particular combination of factors: the delay between the investigation and arrest; the considerable time having the matter hanging over Cook’s head; his voluntary return to Australia knowing he would be questioned by the authorities; Cook’s full co-operation, immediate acceptance of responsibility and provision of significant information to the authorities which was acknowledged to be of significant assistance; the undertaking to give evidence, with the potential of some personal risk to Cook; and that he had already given evidence against NA and been cross-examined at her committal.
Barber
The sentencing judge took into account Barber’s personal circumstances, including his family living overseas who are well respected, regarded and community minded and none of his family had ever been in trouble with the law. Barber had a wife and two children. His wife runs a family day care centre from home.
Following his departure from the company, Barber found work as a financial consultant and received formal accreditation as a mortgage broker. He worked at a number of firms but lost his job when the charges were laid. After two months’ unemployment, he obtained work as a car salesman. His current employer was aware of the charges.
Barber was charged on 2 January 2015. It was to his credit that he did not flee the country once advised by OT of the investigation.
It is intended that Barber would give evidence, along with Cook at OT’s committal.
The sentencing judge accepted that Barber worked at the company because he was desperate to obtain experience in the financial area. He took direction and acted on the instructions of OT. He was simply an employee. He was inducted into the processes at the company over a period of time. Although his role was limited to undertaking work directed by OT, ultimately he became fully acquainted with the illegitimate nature of the business.
The sentencing judge assessed Barber as a very naïve and modest man who saw the role at the company as an opportunity to gain experience in the financial sector. Barber was exploited by OT who was able to subtly indoctrinate him into the ways of the illegitimate business, knowing that Barber had no other options available to him in the financial industry at the time. It was to Barber’s credit that he was able to extricate himself from the company and find employment in the financial sector.
Following his arrest in 2015, Barber had been fully co-operative with the authorities, providing a statement and making full admissions in his record of interview. Barber had indicated his willingness to give evidence against OT. Barber was aware of the investigations but was not contacted by the investigators until 2015, so delay was a significant factor which the sentencing judge took into account.
By reason of the charge, Barber lost his employment in the financial sector and by reason of his conviction his career in that industry is effectively destroyed and his future job prospects significantly curtailed.
The sentencing judge accepted that Barber indicated his intention to plead guilty at the earliest opportunity and his plea has significant utilitarian value and facilitated justice and his sentence would be discounted accordingly.
The sentencing judge acknowledged that Barber had been fully co-operative with the authorities and had undertaken to give evidence if called upon to do so. The sentencing judge made Barber aware that he could be re-sentenced if he did not provide assistance if called upon to do so.
The plea of guilty was a strong indicator of remorse and Barber was embarrassed and ashamed by his actions. He was unlikely to offend in future.
The sentencing judge accepted that Barber played a similar role to Cook in his time at the company, although Cook’s role increased towards the end of his time at the company. Balanced against Cook’s higher degree of criminality for a limited period, Cook was quick to inform the authorities of his role and returned to Australia knowing he was the subject of investigations. Ultimately the sentencing judge concluded that both Barber and Cook should have the same penalty. Both received little financial benefit from the profits of the enterprise.
From the reference material tendered on Barber’s behalf, the sentencing judge accepted that he was a person of good character who was a devoted family man and a community-minded individual. All character references tendered on behalf of Barber attested that they knew him personally and were aware of the charge before the court. All agreed that his offending was out of character and they were shocked by it. They attested to the difficulties faced by Barber upon being charged.
Barber’s current employer advised that he was aware of the offending, and that Barber had been open and honest. The employment was ongoing.
The sentencing judge had regard to the psychological and psychiatric reports tendered on the plea. The psychological report disclosed deteriorating health issues, including a diagnosis of mild arthritis in 2014, a discal problem with his back, anxiety and difficulty sleeping. The psychologist, was treating Barber’s adjustment disorder with cognitive behaviour therapy. She considered Barber to be very depressed and anxious and that he was embarrassed and ashamed and acknowledged the wrongfulness of his actions.
A psychiatric report confirmed that Barber’s mental state had deteriorated subsequent to the charge being laid. The psychiatrist considered that Barber had diagnosable Major Depressive Disorder and recommended psychological counselling and anti-depressant medication.
Counsel for Barber submitted that a CCO was appropriate. The Crown submitted that only a sentence of imprisonment would be appropriate, highlighting the sophisticated nature of the operation and the need for denunciation by the Courts of this kind of conduct.
The Crown contended that, although there were no losses recorded to date, lenders were exposed to a risk of loss and had the potential to undermine the commercial loan application process. Further, the Crown accepted all the mitigating factors submitted on Barber’s behalf, including the early stage of the guilty plea, evidence of remorse, assistance to authorities, no prior convictions, specific deterrence not being a significant factor, good prospects of rehabilitation, that his depressive disorder would make imprisonment more burdensome and that there was delay outside Barber’s control.
The Crown submitted that general deterrence should be given significant weight and the sentence imposed must deter others from engaging in ongoing fraud of this nature. Despite the mitigating factors, the Crown considered that nothing short of a sentence of actual imprisonment would satisfy the requirements of just punishment.
The sentencing judge accepted that a CCO was warranted for the following combination of features: that Barber voluntarily left the company before investigations commenced; he did not leave the jurisdiction when advised to by OT; he was co-operative with the authorities; he provided the significant information which strengthened the Crown case against OT; his willingness to give evidence against his co-accused if required to do so, with some potential risk of personal harm; and there was delay in charges being laid.
The sentencing judge considered that public policy requires that a significant sentencing discount be given by reason of the respondents’ high level of co‑operation and willingness to give evidence. The sentencing judge said that public policy dictates that offenders be encouraged to supply information to authorities that would assist them bringing principal offenders to justice, and that is precisely what happened here.
Grounds of appeal
In respect of each of the respondents, the Director contends that the sentence imposed was manifestly inadequate. The appellant contended that, in fixing the sentence, the sentencing judge:
(a) failed to adequately reflect the nature and gravity of the offence;
(b) gave excessive weight to factors in mitigation; and
(c) failed to take into account sufficiently the aspect of general deterrence.
The appellant said that any sentence other than a custodial sentence failed adequately to reflect the nature and gravity of the offending. In the case of white‑collar crimes such as were under consideration, there were three relevant principles: (1) general deterrence was the paramount consideration,[4] (2) mitigating factors are to be given much less weight and (3) the present offending involved a conspiracy. In such cases, the sentencing had to take into account not only the acts that were done but also the very agreement to commit an unlawful act.[5]
[4]Counsel referred to DPP v Bulfin [1998] 4 VR 114 and Dyason v The Queen [2015] VSCA 120.
[5]Counsel referred to DPP (Cth) v Estrada (2015) 45 VR 286.
The appellant submitted that the sentencing judge erred when she described the conduct as having the ‘potential’ to undermine the integrity of the loan application process in Victoria. The appellant argued that, on the contrary, the conduct significantly undermined the integrity of that process, as the offending involved the creation of false documents and provision of false information in support of loan applications over a lengthy period of time. It involved, in the case of Cook, assisting in the fraudulent obtaining of 288 loans worth over $93 million and, in the case of Barber, 345 loans worth $110 million. The appellant argued that the agreement was long-term; the fraud was multifaceted and perpetrated on a daily basis. It merited appropriate denunciation.
The appellant further submitted that the sentencing judge had overstated the ‘naivety’ and the ‘vulnerability’ of the respondents. Each was highly educated and otherwise capable.
The appellant contended that although neither respondent appears to have been aware of the fraud being perpetrated by the business when he was first engaged, each came subsequently to know its true nature. With full understanding, the appellant argued, both respondents had engaged in the conspiracy for an extended period of time.
The appellant accepted that the money earned by the respondents was comparatively modest; each worked effectively for wages and did not participate directly in the profits in the scheme. The appellant said that their role was analogous to those who acted as drug mules; their participation was central to the effectiveness of the scheme and their low level of personal gain did not diminish their moral culpability. Both respondents were also motivated by potential promotion and long-term goals of gaining experience in the financial sector and securing higher paid work.
The appellant also said that sentencing judge had given excessive weight to factors in mitigation. It accepted that there were ‘significant factors in mitigation’ but contended that ‘in combination these were not such as to permit the imposition of a sentence that did not appropriately reflect the gravamen of the conduct and achieve the aims of general deterrence’. Further, the appellant submitted that the excessive weight given to the early plea and cooperation was demonstrated by the significant disparity between the sentence imposed and declaration pursuant to s 6AAA of the Sentencing Act 1991 (‘the Sentencing Act’).
Finally, the appellant said that the judge had failed to take into account sufficiently the aspect of general deterrence. Accepting that being charged, convicted and sentenced to a CCO might well act as a ‘real deterrent’ to the respondents, the appellant contended that such an order failed to achieve the real need to send a strong message to others, including those in a similar position to the respondents, that such offending will be severely punished. The appellant said that the reasoning in Boulton v The Queen[6] did not justify the imposition of a sentence that failed to address adequately all sentencing purposes. This was a case where having regard to the seriousness of the offending, a CCO was insufficiently punitive.
[6][2014] VSCA 342 (Maxwell P, Nettle, Neave, Redlich and Osborn JJA) (‘Boulton’).
Analysis
In Dinsdale v The Queen, Gleeson CJ and Hayne J said:
Manifest inadequacy of sentence, like manifest excess, is a conclusion. A sentence is, or is not, unreasonable or plainly unjust; inadequacy or excess is, or is not, plainly apparent. It is a conclusion which does not depend upon attribution of identified specific error in the reasoning of the sentencing judge and which frequently does not admit of amplification except by stating the respect in which the sentence is inadequate or excessive. It may be inadequate or excessive because the wrong type of sentence has been imposed (for example, custodial rather than non-custodial) or because the sentence imposed is manifestly too long or too short. But to identify the type of error amounts to no more than a statement of the conclusion that has been reached. It is not a statement of reasons for arriving at that conclusion [7]
[7](2000) 202 CLR 321, 325–6 [6] (‘Dinsdale’)
In Director of Public Prosecutions v Karazisis, Ashley, Redlich and Weinberg JJA said:
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 the offender.[8]
[8](2010) 31 VR 634, 662–3 [127] (‘Karazisis’) (citations omitted). See also DPP (Cth) v Watson [2016] VSCA 73 (Redlich, Priest and Beach JJA).
To similar effect, in DPP v Daing, Priest JA (with whom Maxwell P and Weinberg JA agreed) said:
Manifest inadequacy is a conclusion that does not depend on the attribution of specific error. The ground of manifest inadequacy is a stringent one, difficult to make good. A sentence is, or is not, unreasonable or plainly unjust; and inadequacy is, or is not, plainly apparent. Sentencing is a consummate example of the exercise of discretionary judgment. There is no single correct sentence for a particular offence or particular offender. Thus, this Court may only intervene at the suit of the Director if satisfied that the sentencing judge’s discretion miscarried because the sentence imposed was below the range of sentences that could, consistently with proper sentencing standards, justly be imposed for the particular offending. Intervention is not warranted simply because the individual members of this Court would, if sentencing at first instance, have imposed a different sentence. In the circumstances, it is only if it is ‘plainly apparent’ that the sentence imposed on the respondent is inadequate, as being ‘manifestly ... too short’, that this Court may intervene. Put another way, manifest inadequacy 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.[9]
[9][2016] VSCA 58 [42] (citations omitted).
In the present case, the offending was very serious. The fact that the amounts lent by the bank were secured by mortgages does not diminish the gravity of what took place. The appellant’s contention that the conduct damaged the integrity of the financial system must be accepted; it was not just, as the sentencing judge suggested, that it ‘had the potential to undermine the integrity of the loan approval process’. Moreover, the number of fraudulent files that were created was extensive; the amounts involved were very large: in the case of each of the respondents loans in the vicinity of $100 million were procured. The scheme was ‘sophisticated and sustained’ and the respondents were ‘important cogs’ in an operation which the sentencing judge described as ‘extensive and sophisticated’. The conduct was not isolated; it took place within the context of a conspiracy which adds to the moral culpability of all involved.
But, was the imposition of a CCO a manifestly inadequate sentence? Were CCOs ‘wholly outside the range of sentencing options available’ to the sentencing judge? Was this a case in which the sentencing judge had no option other than to impose a custodial sentence upon the two respondents?
In R v Williscroft, Adam and Crockett JJ said that ‘ultimately every sentence imposed represents the sentencing judge’s instinctive synthesis of all the various aspects involved in the punitive process’.[10] In R v Kenny, Young CJ said:
In order to make good a submission that the sentences passed are excessive, it is essential for an applicant to show that the sentences are manifestly and not merely arguably excessive. Such a submission is not one which is capable of a great deal of elaboration. As the majority of the Court said in Williscroft’s Case, to which reference has been made during the course of argument, the imposition of a sentence is in the last resort an individual sentencing judge’s instinctive synthesis of the various factors involved, and when application is made to this Court for leave to appeal on the ground that a sentence imposed in the Court below is excessive, the approach of the members of this Court must, I think, necessarily be the same. Each member of the Court instinctively synthesises the relevant considerations and, having done so, considers whether in all the circumstances he is able to say that the sentence imposed is so obviously excessive that there must have been some miscarriage in the trial Judge’s discretion.[11]
[10][1975] VR 292, 300 (Adam, Starke and Crockett JJ). See Markarian v The Queen (2005) 228 CLR 357, 384–90 for McHugh J’s explanation of the origin of the phrase ‘instinctive synthesis’ in Williscroft and of its proper meaning.
[11](Unreported, Court of Criminal Appeal Melbourne, Young CJ, Starke and Marks JJ, 2 October 1978) 2–3.
In R v Boaza, Winneke P said:
In the absence of specific error it is, of course, not an easy task for an applicant to demonstrate to an appellate court that the sentencing discretion has miscarried on the ground that the sentence imposed is a manifestly excessive one. It is trite to say that before an appellate court can interfere it would need to be persuaded that the sentence imposed … was wholly outside the range of sentencing options available … .[12]
[12][1999] VSCA 126 [42]. This test for manifest inadequacy has been cited with approval by this Court. See, eg, R v Abbott (2007) 170 A Crim R 306, 309 [13] (Maxwell P, with whom Eames JA and Habersberger AJA agreed). See also Whiteford v The Queen [2016] VSCA 26 [20] (Bongiorno and Beach JJA).
Although R v Kenny and R v Boaza concerned appeals on the ground of manifest excess, the same considerations apply mutatis mutandis to a Crown appeal on the grounds of manifest inadequacy. Further, as stated by this Court in Hudson v The Queen:
The selection of a sentence involves the exercise of a judicial discretion which is informed by the circumstances in which the offence was committed and the character, antecedents and conditions of the offender. It is not possible to say that a sentence of a particular duration is the only correct or appropriate penalty to the exclusion of any other penalty. The method of instinctive synthesis will by definition produce outcomes upon which reasonable minds will differ. For that and other reasons, counsel are precluded from submitting that a specific sentence should be imposed.[13]
[13](2010) 30 VR 610, 616 [27] (Ashley, Redlich and Harper JJ).
In extensive and thoughtful reasons for sentence, the sentencing judge showed a complete awareness of the criminality involved and the need that it be appropriately punished. In the case of Cook, the judge took into account the fact that he played ‘a significant role in the conspiracy’ despite his youth and naïvety when he was first engaged in the business. The judge took into account his history of personal disruption occasioned by his coming from living in a warzone and having to move between several countries. But, she gave particular weight to what she described as ‘powerful mitigating factors’, being his early plea of guilt and his extensive cooperation with the authorities. The judge accepted the plea of guilty as an indication of ‘genuine remorse and acceptance of responsibility’ which merited a discount. In particular, the judge took into account Cook’s willingness to co-operate in the prosecution of his fellow conspirators: his evidence had been accepted as ‘a vital plank in the Crown case’ against them.[14] In the judge’s view, this assistance merited a ‘significant discount’.
[14]The sentencing judge referred to the remarks of Nettle JA (with whom Neave JA and King AJA agreed) in R v KCF (2006) 167 A Crim R 475, 480 [15]: ‘Plainly, an offender who has given assistance to the prosecuting authoritiesis entitled to be considered leniently. The policy is embodied in the sentencing principle stated in s 16A(2)(h) of the Sentencing Act 1991. It is in the public interest that thieves and other offenders be encouraged to fall out and so facilitate the exposure and prosecution of criminals who might otherwise go undetected or unpunished. Leniency in sentencing is calculated to have that effect. Furthermore, to adopt Callaway JA's reasoning in R v Duncan and to adapt it to the sorts of discounts that are to be allowed for cooperation with the police and the prosecution, in a time of rising sentences the discount should be more, rather than less’ (citations omitted).
Before the sentencing judge, the Crown had contended that, as this was a serious case of white-collar crime, all mitigating circumstances were outweighed by the needs of general deterrence and that those needs could be satisfied only by a custodial sentence. In response to that submission, the sentencing judge accepted that the conduct of Cook was ‘very typical of many white-collar criminals’. She said:
You [Cook] have no prior criminal history; specific deterrence does not loom large, you have excellent prospects of rehabilitation. The effect of being charged and its consequences are well understood by you and act as a real deterrent to you for the future. It is often said detection of white-collar crimes are difficult, investigations are lengthy and complex. All those factors mean general deterrence does feature as the primary sentencing consideration in such cases. There is a real need for the courts to send strong messages that such offending will be severely punished.
In Boulton, this Court decided that a CCO is capable of satisfying the requirement of severe punishment. Having explained what it was about imprisonment that made it ‘severe punishment’,[15] the Court briefly described its adverse effects.[16] It went on to say:
[15]Boulton [2014] VSCA 342 [103]–[106].
[16]Ibid [107]–[111].
Given the adverse features of imprisonment to which we have referred, the conclusion that imprisonment is the only appropriate punishment amounts to a conclusion that the retributive and deterrent purposes of punishment must take precedence. Put another way, it is a conclusion that the offender’s ‘just deserts’ for the offence in question require imprisonment, even though the court is well aware that the time spent in prison is likely to be unproductive, or counter-productive, for the offender and hence for the community.
The availability of the CCO dramatically changes the sentencing landscape. The sentencing court can now choose a sentencing disposition which enables all of the purposes of punishment to be served simultaneously, in a coherent and balanced way, in preference to an option (imprisonment) which is skewed towards retribution and deterrence.
The CCO option offers the court something which no term of imprisonment can offer, namely, the ability to impose a sentence which demands of the offender that he/she take personal responsibility for self-management and self-control and (depending on the conditions) that he/she pursue treatment and rehabilitation, refrain from undesirable activities and associations and/or avoid undesirable persons and places. The CCO also enables the offender to maintain the continuity of personal and family relationships, and to benefit from the support they provide.
In short, the CCO offers the sentencing court the best opportunity to promote, simultaneously, the best interests of the community and the best interests of the offender and of those who are dependent on him/her. On this analysis, if defence counsel submits that a CCO would be appropriate, it is no answer for a prosecutor (or a judge) to say, ‘How could a CCO be appropriate given that an offence of this seriousness has always received imprisonment?’ As we have endeavoured to explain, that question should mark the beginning, not the end, of the court’s consideration.
As the Attorney-General submitted, the CCO
is intended to be available in serious cases where an offender may be at risk of receiving an immediate custodial sentence, but the Court considers that immediate custody is not necessary to fulfil the statutory purposes of sentencing given the range of options provided by a CCO.
In this sense, the Attorney submitted, the CCO has ‘the robustness and flexibility to be imposed in a wide variety of circumstances’. We agree.[17]
[17]Ibid [112]–[116] (citation omitted).
Finally, the Court also said that the insertion of s 5(4C) of the Sentencing Act[18] required a process of deliberation that ‘should assist in the reconceptualisation of sentencing options’.[19] It said that that process:
will throw into much sharper focus the distinction we have sought to draw, between the narrow punitive purpose (and effect) of imprisonment, on the one hand, and the multi-purpose character of the CCO. The sentencing court should ask itself a question along the following lines:
Given that a CCO could be imposed for a period of years, with conditions attached which would be both punitive and rehabilitative, is there any feature of the offence, or the offender, which requires the conclusion that imprisonment, with all of its disadvantages, is the only option?[20]
[18]Section 5(4C) provides: ‘A court must not impose a sentence that involves the confinement of the offender unless it considers that the purpose or purposes for which the sentence is imposed cannot be achieved by a community correction order to which one or more of the conditions referred to in sections 48F, 48G, 48H, 48I and 48J are attached’.
[19]Boulton [2014] VSCA 342 [121].
[20]Ibid.
Accepting that a CCO is ‘intrinsically punitive and is capable … of being highly punitive’,[21] the Court said that a CCO could also satisfy the requirement of general deterrence. However, it added the caution:
But whether the CCO is utilised more widely, and whether it can be seen to serve the purpose of general deterrence, will to a very large degree depend upon there being an active and well-funded program of public communication. Otherwise, the use of the CCO may well attract the kinds of public criticisms which have characterised the increasingly punitive debate about sentencing in recent years.[22]
[21]Ibid [124]. See also DPP v Grech [2016] VSCA 98 [81] (Ferguson JA with whom Weinberg AP and Ashley JA agreed).
[22]Boulton [2014] VSCA 342 [128]. See also DPP v Borg [2016] VSCA 53 [102]–[110].
In sentencing Cook to a CCO, the sentencing judge said:
I consider the particular combination of features that are related your case, namely: the delay between investigation and your arrest; the fact that you experienced a considerable time with the prospect of being charged hanging over your head; the fact that you voluntarily returned to Australia knowing that you would be questioned by the authorities; the fact of your full co‑operation and immediate acceptance of responsibility, outlining to the authorities significant information that is acknowledged to be of significant assistance in their investigation of the conspiracy and their ability to understand the breadth of the conspiracy that has been utilised to prosecute the co-conspirators and potentially others; the fact that you entered a plea at the earliest possible stage in the proceedings, at committal mention; the fact of your undertaking to assist the authorities, by giving evidence when called upon to do so, with potential for personal risk of harm to you; and the fact that you have already given evidence against [NA] at her committal hearing and were cross-examined; and that you will be giving evidence in the future against her at her trial and also at the committal hearing of [OT].
In these circumstances, where the sentencing judge has carefully synthesized all relevant aspects of the offence and the offender, in our opinion the sentence is not manifestly inadequate.
Similar considerations apply to Barber. The judge took into account that Barber was fully acquainted with the ‘illegitimate nature of the business’. He had always worked for a modest wage. He had left the company before the fraud was discovered. After the fraud was discovered, he had refused to accept the advice of OT to leave Australia. After he was charged, he signed a witness statement and pleaded guilty. The judge took into account that he had indicated his intention to plead guilty at the earliest opportunity. He has undertaken to give evidence at the committal of OT. By reason of his cooperation with the authorities, he was entitled to receive a lesser sentence and, thereby, became subject to s 5(2AB) of the Sentencing Act.[23] Since the charge was laid, Barber found it difficult to find and, then, retain a position in financial services. His present employer described him as having been ‘open and honest with him’. He had shown remorse.
[23]Section 5(2AB) provides: ‘If, in sentencing an offender, a court imposes a less severe sentence than it would otherwise have imposed because of an undertaking given by the offender to assist, after sentencing, law enforcement authorities in the investigation or prosecution of an offence, the court must announce that it is doing so and cause to be noted in the records of the court the fact that the undertaking was given and its details’.
In sentencing Barber, the judge said:
Ultimately I accept by reason of the particular combination of features that have been highlighted by your counsel Mr Georgiou that a Community Correction Order is warranted. The particular combination of features that I consider to be important that apply in your case are the fact that you voluntarily left [the company] prior to the investigations being undertaken; you desisted from leaving the jurisdiction when advised to do so by [OT] knowing that investigations were being conducted into [the company]'s operations; you were co-operative when questioned by the authorities; the Crown acknowledged there is significant value in the information you have provided insofar as it strengthens the Crown case against the main conspirator and the architect of this conspiracy [OT], the fact of your willingness to give evidence against the co-conspirator, [OT], and others if required to do so; the fact of your plea entered at an early stage and your undertaking given to the court to assist authorities if called upon to do so, with the potential for personal harm to you although that was not identified, it is still nonetheless a risk. I have also taken into account the delay in the laying of the charges, and finally the steps taken by you in the meantime.
Importantly, by reason of your high level of co-operation with the authorities and expressed willingness to give evidence against [OT], the principal architect of this wide scale criminal conspiracy, public policy requires that a significant sentencing discount be given. Public policy dictates that offenders should be encouraged to supply information to authorities which will assist them, bringing principal offenders to justice, and that is precisely what has happened in this case.
As in the case of Cook, the sentencing remarks demonstrate the reasoning behind the sentencing judge’s synthesis of the factors relevant to the offending itself and to Barber himself. While another judge may have been minded to impose a term of imprisonment, as has been stated before, instinctive synthesis means that reasonable minds may differ. In our opinion, the judge was not compelled by the nature of the offending and the requirements of general deterrence to impose a custodial sentence on Barber. A CCO was not wholly outside the range of sentencing options available. For those reasons, the appeal should be dismissed.
Residual discretion
Even if we were of the view that the judge had erred in not imposing a custodial sentence upon Cook and upon Barber, the question of the residual discretion would have arisen for consideration.
In the case of Cook, it was submitted that it was almost nine months since he stood for sentence (June 2015) and almost five months since he was sentenced. Since then, he has complied with the terms of the CCO[24] and his rehabilitation is under way. It was said that Cook was of a low risk of reoffending.
[24]Evidence in the form of an email from the relevant community corrections office was tendered.
In the case of Barber, evidence was tendered in affidavit form that he had already carried out 148 of the 400 hours required of him. Further, by reason of his sentence, he had been unable to be with his father when he had become seriously unwell. He was suffering psychological problems and was undergoing psychological treatment. A report from his psychologist confirming his evidence was tendered. In Karazisis, the Court set out some of the various circumstances in which it may not be appropriate to allow a Crown appeal even where the sentence is manifestly inadequate:
Circumstances may have changed to such a degree as to warrant leaving even a sentence that may be viewed as manifestly inadequate to stand. When an offender is given a non-custodial sentence and has complied with its terms for a significant period, there may be powerful reasons why that sentence should not be disturbed. A similar point can be made in situations where an offender, who received a short custodial sentence, has served the entirety of that sentence and been released by the time the Crown appeal is heard.[25]
[25]Karazisis (2010) 31 VR 634, 658 [107]. In CMB v Attorney-General (NSW) (2015) 317 ALR 308, the High Court reaffirmed the proposition that, in a Crown appeal against sentence to the Court of Appeal, in addition to establishing relevant error, the Crown also bears the onus of persuading the Court of Appeal that the Court’s discretion should not be exercised so as to lead to the dismissal of the appeal. See also DPP v Zhuang [2015] VSCA 96 [47], [49] (Redlich, Priest and Beach JJA) (‘Zhuang’).
Accordingly, even if we had been satisfied that there was error in the exercise of the sentencing judge’s discretion, the appeals should be dismissed.
KYROU JA:
I have had the benefit of reading the joint judgment of Priest and Santamaria JJA in draft. I gratefully adopt their Honours' summary of the facts, the judge's sentencing remarks and the submissions of the parties. For the reasons that follow, I respectfully disagree with their Honours' conclusion that the sentences imposed on the respondents are not manifestly inadequate. However, I would dismiss the appeals in the exercise of this Court's residual discretion.
As appears from the extract from Dinsdale at [65] above, a sentence may be
manifestly inadequate because the wrong type of sentence has been imposed. This is what has occurred here. A CCO was not reasonably open as a sentencing disposition because it did not adequately reflect the nature and gravity of the respondents' offending and did not give sufficient weight to the sentencing considerations of denunciation, just punishment and general deterrence. The respondents committed a very serious white collar crime for which general deterrence was a paramount sentencing consideration. Only an immediate custodial sentence was reasonably open to the judge.
The offending occurred over a lengthy period and involved many millions of dollars. As Priest and Santamaria JJA have stated, the judge was wrong to conclude that the offending simply had the potential to undermine the integrity of the loan approval process; it had, in fact, damaged the integrity of the financial system.[26]
[26]See [68] above.
Although the respondents were not aware of the fraudulent scheme when they commenced working for the company, upon being introduced to the illegal activity and appreciating its true nature, they became willing participants in it over a substantial period. The judge correctly described the fraudulent scheme as 'sophisticated and sustained' and was right to conclude that the respondents' roles were 'significant' and facilitated the success of the scheme. The respondents could — and should — have left the company as soon as they realised that they were participants in a fraud. They did not do so out of self-interest. The fact that they did not share in the profits of the fraud and were paid what was essentially a wage does not lessen their role in the criminal enterprise or diminish their moral culpability. Likewise, their initial naïvety does not excuse their subsequent knowing participation in the fraudulent conduct over a lengthy period.
I acknowledge that the respondents were able to rely upon strong mitigating circumstances including, in particular, their early pleas of guilty, their remorse, their co-operation with the authorities and their strong prospects of rehabilitation. However, these sentencing considerations could have been accommodated by a significant discount to the custodial sentence that would otherwise have been warranted and a suitable non-parole period.
An appropriate sentence for each of the respondents would have been 3 years' imprisonment with a non-parole period of 2 years.
The onus was on the Director to satisfy this Court that it should not exercise its residual discretion to dismiss the appeals notwithstanding that he has established that the sentences were manifestly inadequate.[27] I am not persuaded that the Director has discharged this onus. The respondents commenced serving their CCOs on 15 December 2015, their rehabilitation is progressing well and there is very little risk that either of them will reoffend.
[27]Zhuang [2015] VSCA 96 [47], [49]; DPP v Oksuz [2015] VSCA 316 [167] (‘Oksuz’).
In Green v The Queen,[28] French CJ and Crennan and Kiefel JJ stated that one of the reasons why a Crown appeal may be dismissed in the exercise of the residual discretion is to avoid disruption to an offender's rehabilitation in the community.[29] Their Honours also said that, in the case of Crown appeals, an intermediate appellate court's role of laying down principles for the governance and guidance of sentencing courts can be achieved to a very significant extent by explaining why the impugned sentence was wrong without disturbing that sentence.[30] That is the course that I have adopted in the present cases.
[28](2011) 244 CLR 462 (‘Green’).
[29]Ibid 466 [2], 479–80 [43]. See also Oksuz [2015] VSCA 316 [170]–[171].
[30]Green (2011) 244 CLR 462, 465–6 [1], 478 [37].
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