Director of Public Prosecutions v Hemer

[2020] VCC 1707

IN THE COUNTY COURT OF VICTORIA  Revised
(Not) Restricted
Suitable for Publication

AT MELBOURNE
CRIMINAL JURISDICTION

CR 20-00692

DIRECTOR OF PUBLIC PROSECUTIONS

v

KATHRYN HEMER

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JUDGE:	HIS HONOUR JUDGE GUCCIARDO
WHERE HELD:	Melbourne
DATE OF HEARING:
DATE OF SENTENCE:	22 October 2020
CASE MAY BE CITED AS:	DPP v HEMER
MEDIUM NEUTRAL CITATION:	[2020] VCC 1707

REASONS FOR SENTENCE
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Subject:
Catchwords: Plea – Sentence – Obtaining financial advantage by deception – Gambling disorder – Verdins principles – Mental health – Community Corrections Order

Legislation Cited:
Cases Cited:
Sentence:

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APPEARANCES:	Counsel	Solicitors
For the Director of Public Prosecutions	Ms J. Deppeler
For the Accused	Ms E. McKinnon

HIS HONOUR:

1Kathryn Hemer, you have pleaded guilty to two charges of obtaining financial advantage by deception.  The circumstances of your offending as summarised in a document prepared by the prosecution and tendered into evidence, the facts therein are agreed between the parties and I sentence you on the basis of those.  I will recite the salient aspects.

2Between 2009 and 2017, you were employed by Ferguson Winery as a company secretary and bookkeeper.  As part of your employment, you had the passcode to the company's online bank account and used its accounting software. Between 2 October 2014 and 30 April 2015, you unlawfully transferred from the company's accounts to bank accounts under your control, the sum of $29,145.60 by way of ten transactions.  These transactions were the offences contained in a rolled up Charge 1.  Between 26 July 2016 and
2 November 2017, you unlawfully transferred the sum of $118,441 from the company's account, to bank accounts under your control by way of forty-five transactions.  Those transactions were the offences contained in the rolled up Charge 2. 

3On the occasions of each transaction to which the charges relate, by the use of the accounting software, you created entries whereby you debited the account in the name of the company's sole director and then credited an account in her name, which gave the appearance that the payments were salary payments to her, rather than unlawful payments to you.  These transactions were discovered after new accounting firm which had been appointed by the company in late 2018 examined the company's and Ms Ferguson's records.  She was notified in July of 2019.  It was not until December 2019 that you were interviewed by police. You were again interviewed in late January 2020.  You made admissions in the interview to the offending.  You signed and dated a table of suspected transactions, although you said you had no idea how many times you transferred funds unlawfully.  You stated the money was probably used by you for gambling and living beyond your means.  That you believed that you had a gambling problem and you would seek help for it.

4In the later interview, further transactions covered by Charge 1 in the earlier period, were questioned and you agreed you had no authority to make the transactions in question.  As of today, I understand that you have repaid two and a half thousand dollars into the company's trust account for the purposes of restitution, at the planned rate of weekly payments to satisfy the debt in time.  Your employment with the company ended in December 2017.  The offences were detected in July 2019, as I have said, and were reported to police in August 2019.  The first file hearing was in December 2019 and the matter was resolved soon after the first committal mention on 22 March 2020, with an actual plea of guilty in May 2020. 

5I consider and it is conceded, this was a plea at the earliest time available and I will take that into account.  The plea has an utilitarian value of having avoided a trial, with its attendant costs and further delay and need for witnesses, both civilian and police to attend.  It has facilitated the course of justice and is an acceptance of responsibility on your part.  I accept that it is some evidence of remorse of itself.  Other material which I will mention in a moment, also confirms this aspect of your plea and I accept that the plea before this court is accompanied by remorse.  The plea has also significance in this period of pandemic which has caused disruption and delay in the delivery of justice by courts and it will reduce your sentence accordingly.

6The prosecution tendered a victim impact statement prepared by Ms Ferguson.  She writes of the financial loss which occurred and the consequential damage to the company's finances.  There have been further associated costs with the audit which was required to be undertaken to reveal the true cost of the operation.  The offending caused distress and mental anguish the company's director who had personally entrusted you the important aspect of the company's financial security and records.  She considered you her right hand person, colleague and friend.  The breach of trust involved has been keenly felt as a betrayal and she has had recourse to psychological assistance.  These reactions are understandable, particularly in a company of its size and because of the years in which a strong working and personal relationship was fostered.  I take this impact into account in recognition of the seriousness of your conduct. 

7The crime of obtaining financial advantage by deception carries a maximum penalty of 10 years imprisonment.  By this measure, the legislature has indicated this is a grave offence.  The maximum penalty is but one of many factors and guideposts to consider.  The offence of course can be committed in a wide variety of circumstances of various objective gravity.  Here the most relevant aspect is the ilk of the breach of trust involved.  In my view, given the close relationship and the size of the operation, this breach was significant.  The quantum involved is also comparatively substantial.  A review of many similar cases places it in the mid-range of like offending in my view.  The offending took place over two periods spanning a number of financial year periods and cannot be said to have been neither spontaneous nor sporadic, rather systematic and premeditated. The method may have been relatively unsophisticated, but sufficient to achieve its purpose which was effectively a theft for apparent greed, based on dishonesty. 

8I want to make one aspect clear.  There is another element in this course of conduct which could potentially reflect poorly on it because it suggests a more personal and punitive motive for the offending.  It arises firstly out of your answer in the record of interview about Ms Ferguson, in which you describe her as deceptive, and then description of the workplace as a septic place.  You told Dr Barth, during his clinical interview about ongoing conflicts, that regard to the scope of your work as well as what you considered to be low rated pay for duties that were beyond your role.

9You also disclosed to Mr Cummins who wrote in his report that the demands of the company and your progressively increased pressure, left you under increased load, exhausted and struggling.  I am unable to find, to the required standard, that this is a real causative or aggravating feature of your offending based on the evidence I have, in which in any event does not provide an amelioration of your culpability in any event.  I think it is more likely that as your capacity was impacted by illness, the pressure of work became too difficult and was exacerbated by gambling and you sought some financial comfort and security in the dishonest fashion that you did. 

10The primary sentencing considerations must be deterrence with denunciation of your conduct and just punishment.  I will return to these matters in a moment.  I consider that your moral culpability is significant, however your personal circumstances required that it be sensibly moderated in this case.  Breach of trust of this character are particularly egregious.  Authority in this state makes it clear that a gambling problem, or addiction, may explain an offence, but does neither excuse it or provide mitigation for it, or necessarily reduce the need for the sentence to adequately reflect the principle of general deterrence, that is deterrence of those in the community in a similar position to yours, from behaving in a similar dishonest way in breach of the trust which arises from the obligation of their employment, and more generally in dealing with financial transactions.

11The question of whether your gambling alleviates the need for the court to use its sentence to deter and denounce such conduct and to what extent is in fact a complex and difficult question.  On any view, the conduct is unacceptable as laying outside the law and beyond the expectation and values of the community.  And in the commercial sphere, where honest conduct is fundamental to protect the integrity of financial transactions of its citizens and companies operating within it.  However, your gambling addiction may not only reduce your moral culpability in my view, but reduce the application of general deterrence and denunciation of the conduct in your particular case, because it is intertwined and is not offered as the sole explanation.  Its impact needs to be understood as not standing alone and separate, but rather as the addictive factor which developed out of a complex matrix of circumstances in your background, and which together with those matters, led to your offending.

12Although your dishonesty bestowed upon you not only an ability to indulge your addiction, but benefited your lifestyle in some available funds illegally obtained, that is the financial advantage charged.  There is little or no real evidence of enrichment, luxuries, properties, items of extravagance, cars, jewellery, et cetera.  The court in this case is entitled on the evidence to view your gambling as inherently and directly connected, at one end of the spectrum, the circumstances of your life and mental health with the offending at the other end, in a way that explains the offending to a large extent, but also provides the moderate reduction of moral culpability, therefore as well as other primary sentencing principles I have mentioned, general deterrence, just punishment, denunciation.

13This is so in my view when even the prosecution fairly concedes that the first and sixth limb of Verdins are enlivened in the sense that the full clinical picture which leads to that concession, must of necessity include the gambling you are undertaking to alleviate the mental and physical health picture active in your life at the time of the offending.  I will return to this after I summarise your personal history and background in order to draw some strands of it together.

14I take into account your personal circumstances and background.  You are 56 years of age and have no prior convictions or subsequent pending matters.  Your personal circumstances are set out in detail in reports of Matthew Barth dated 29 September 2020 and of Mr Jeffrey Cummins dated 24 September 2020.  They coincide as to these details.  You are one of five children.  Your childhood was difficult and traumatic. Your mother was volatile and judgmentally critical of you, verbally abusive and an alcoholic.  You had a greater emotional connection to your father, although he often worked long hours and was disengaged as a result from 'issues'.  Your father died in 2018 after some years of illness during which you provided ongoing care with him, although with some conflict with your siblings over the management of that care, leading to a distancing from most of them over the years. 

15As a result of conflict with your mother, you spent time with relatives from an early age.  Your uncle sexually abused you over many years, which included acts of sexual penetration and threats over disclosure, which left you with post-traumatic stress disorder, feelings of shame and guilt.  This ceased by age 11.  Only recently, you have begun to process and address the impacts of this abuse with psychological treatment.

16Your partnered with your first husband at age 16 and married at age 19 when you left the family home.  You had completed Year 11 at school and thereafter, commenced employment.  Despite a turbulent personal life, you have a very creditable work history.  You commenced with a local solicitor in administration and bookkeeping.  You were in that position for 10 years, which you left when you were required to care for your father and had your first son.  Thereafter, you continued to work in the same field for various companies in Victoria and New South Wales, and for a time in Western Australia. 

17You have two sons from your first marriage.  Your husband was domineering and controlling mentally and verbally abusive, as well as sexually oppressive.  He was a heavy drinker and ultimately you divorced in about 2000.  You then married again and your current husband is supportive of you.  That relationship has been stable and loving to this point.  He is the operations manager with a civil construction company.  You lived with your current husband in Echuca and although you had been working all this time and had employment as a finance manager for a directional drilling company in Echuca, you had to take a year off work to support your son Robert who was seriously injured in a motorcycle accident.  He was in a coma and was diagnosed with an acquired brain injury, with what are related health issues.  This also naturally provided additional traumatic impact upon you. You then moved to Melbourne in 2009, commenced employment in administration with Ferguson Winery where you worked until 2017. 

18Dr Barth writes of periods of sadness, anxiety and inadequacy for much of your life.  Your early life was clearly impacted by your mother's erratic and abusive behaviour.  The sexual abuse impacted on your emotional wellbeing with intense anxiety, intrusive memories and untreated post-traumatic stress disorder culminated and binge eating contributed to obesity and Trichotillomania and an irresistible urge to pull out body hair, which is known to impact on social and work functioning.  Your first relationship was abusive and mood disturbance made the pressures of work overwhelming and distressing. 

19During this relevant time, your husband was away from the family home for extended periods for work commitments.  To alleviate your situation, you found the pokies as a social outlet increasing considerably in 2014 and onwards, gambling four times a week, wagering and losing hundreds of dollars per night, causing significant tax, credit card debt and financial stress.  Your parents had been gamblers and introduced you to it as a family pass time, but it had become seriously problematic.

20Overlaying these issues been a history of significant health problems which have naturally contributed to the burden upon you.  At age 28, you were in and out of hospital with a malfunctioning liver, had your gallbladder removed.  You then had tubal ligation and laser therapy for cervical cancer.  Early you had contended with Raynaud's disease which was dealt with by medication.  You were then diagnosed with Fibromyalgia for a long period, pre-diagnosis when MS was suspected.  You developed Type 2 diabetes when pregnant with your second son and had been on medication for this condition in more recent years. 

21More recently, you have had to contend with Lymphocytic colitis, a severe form of inflammatory bowel disease, which included chronic diarrhoea.  The court noted a letter from your GP, Dr Zhong, dated 2 October 2020 which outlined your current problems and the medication prescribed.  Significant in its composition to deal with colitis, reflux esophagitis, Fibromyalgia, diabetes and hypertension, as well as your mental health issues.  A letter from Dr Schneider dated 11 August 2020, a gastroenterologist, confirms the autoimmune disease, which currently besets your physical wellbeing.

22In very detailed reports by Dr Barth and Dr Cummins give a detailed picture of your mental health.  Dr Barth highlighted significant depressive and anxiety related symptoms of pervasive sense of hopelessness and deep sense of shame.  He diagnosed a major depressive disorder, with anxious distress and recurrent episodes of moderate severity, with significant risk of further deterioration which warrant continued psychological treatment.  Dr Barth describes clearly his opinion of the gambling as a dysfunctional coping mechanism to compensate for emotional distress.  There are no psychopathic or antisocial personality rather than interpersonally submissive, compliant and acquiescence tones in your behaviour.  He wrote that you are in a period of remission from significant gambling related problems, diagnosed as a gambling disorder of a moderate level.

23You have some reasonable insight into your behaviour in relatively early phases of addressing your propensity for gambling.  Dr Barth opined that your symptoms are becoming more intense with the involvement of this legal process making you more vulnerable to depressive mood disturbances and this vulnerability would be likely to be particularly intense in a custodial setting of a prison, with considerable risk of deterioration with severe levels of distress.

24He finds that your risk of future involvement in the criminal justice system is relatively low.  Mr Cummins in his comprehensive report assessed you as extremely severely depressed, severely anxious and stressed.  He similarly diagnosed a major depressive disorder, as well as suffering from a trauma and stressor related disorder in a form of complex and chronic post-traumatic stress disorder, that is the diagnosis appropriate to persons suffering from multiple post-traumatic stress disorders.

25Having diagnosed a gambling disorder of moderate severity, he writes of you chasing losses and using it to manage traumatic thoughts and feelings of anxiety, depression, loneliness and worthlessness.  He opines that the disorders have a nexus between symptoms relating to gambling and depression.  He agrees with the points made about the need for ongoing treatment, likely inevitable deterioration and exacerbation in reclusion.

26As for the two current issues of mental health and gambling, both reporting psychologists note your involvement currently with Ms McKenna from Yarra Valley, the psychology who provided a letter of confirmation in writing dated
7 August 2020.  That you began attending psychological services in February 2020, to address your mental health issues and continued this counselling as of this current period and into the future and also therapeutic counselling for gambling from Gamblers Help Eastern since February 2020, by way of a letter confirming your acetous attendance with Laurel Bennett, a gambling counsellor in which she writes of your high level of insight and desire to manage triggers to gambling in the future.

27Each of these four professionals note in turn your deep regret, remorse and shame at your dishonest conduct noting it in their reports, which I accept.  You have returned to work in a bookkeeping role with a company undertaking it from home, due to pandemic restrictions.  This will enable you to provide for some restitution on a regular basis, which follows a weekly repayment schedule which was shown to the court by way of your solicitor's records.  I take these reports and background into account.  The court received references on your behalf from Timothy Cronin, your son.  He is a clinical psychologist practicing in Melbourne, currently undertaking a PHD.  He has a close relationship with you and continues to support you.  He speaks of your mental health issues and physical ailments, your background as a caring, reliable and responsible mother.  His partner, an optometry practise manager and student nurse also wrote of your great remorse and shame, distress and out of character nature of the offending, contrary to the warm and generous person described.

28Your son Robert currently works in the northern territory as an underground drill operator and writes of your circumstances of depression and mental health, of your caring and loving character and your embarrassment, remorse and shame for your conduct.  Your husband has written describing your physical and mental struggles, particularly the depression, your traumatic past, your care for your parents in difficult times and your characteristic altruism in the face of adversity.  These offences for which you are extremely remorseful are out of character and he writes of your desire to apologise to the victim unreservedly.  I take those into account. 

29It is not unusual for this type of offending, for the offender to be a person of good character, which must be taken into account, but which rightly is reduced somewhat in the circumstances of an ongoing course of conduct.  However, in my view, the complex combination of causative elements, ongoing issues of trauma, physical illness, mental instability, depression and disorder of gambling to alleviate these difficulties, operate to lead to a number of conclusions about which I am satisfied.

30Firstly in my view, your rehabilitation still requires commitment to work on your part, but is not only in the long term benefit of the community for you to continue to be a contributing working member of it for your family and yourself also.  Such rehabilitation has in my view, given your age and family support and ongoing efforts of professional assistance, very good prospects of long term success and resolution.  Your risk of reoffending is low in my view.  This process has also produced a salutary call to reclamation and reformation which will be ongoing.

31In this tangent, my view is that specific deterrence, while still remaining relevant, can be substantially moderated. It is still relevant because your gambling disorder and your skill set developed over many years of work in the bookkeeping administrative filed require ongoing honesty and transparency.  However, I repeat it is not a primary focus of the sentence.  The application of Verdins principles and the suitability of a disposition which addresses all relevant sentencing principles to be applied, that is by way of a community corrections order.  Is eminently available to the court in this case, combining as is highlighted by the guideline judgment in Bolton, rehabilitative as well as a punitive aspect.

32Imprisonment should in general terms be a measure of last resort and I am satisfied in this case that a community corrections order, which facilities rehabilitation and imposes incentives for a continuation of treatment, a punitive element of community work and by enabling you to continue working, allow you the wherewithal to repay the order for compensation is the preferred outcome.

33On the two charges of obtaining financial advantage by deception, you are convicted and I order that you serve, to the subject of a community corrections order for 24 months, with your consent.  You will be under the supervision of Corrections in that period, in which you will report as requested.  You will receive ongoing mental health treatment, with focus on your offending behaviour and history of trauma and Corrections will monitor and supervise this treatment as well as addressing your gambling disorder by ongoing treatment.

34Although unpaid community work is currently suspended due to the COVID-19 situation, I will order that you will perform 200 hours of it during the duration of the order.  I will also order that 50 hours be credited by way of treatment towards that total.  You will report to the Lilydale Office of Community Corrections within two days from today and you will obey all lawful directions of that service and not commit any further offences during the duration of the order.

35If during the course of those two years you commit any further offences, or you breach that order, or in any way you are in contravention of this order, I am empowered to punish you for that breach and you will be brought back before me for resentencing on these two charges, at which point it is unlikely that the court will take any other course except send you to gaol. But for your plea, I would have sentenced you to two years imprisonment, with a 12 month non-parole period. I order that you pay compensation pursuant to s.86 of the Sentencing Act in the sum of $147,586.60.  Ms Deppeler, are there any other ancillary orders that I need to sign?

36MS DEPPELER:  No Your Honour, there are not.

37HIS HONOUR:  The community corrections order will need to be signed.  I am not sure where Ms Hemer is currently, but she will need to sign that document, acknowledging and consenting to the order.  I am not sure how to best go about that, but do you have access to her readily Ms McKinnon?

38MS McKINNON:  Yes Your Honour, I do and I'm certain if Your Honour's associate forwards the form to be signed, then we'll be able to email it to her and have her sign it, scan it, return it today.

39HIS HONOUR:  All right.  So my associate will email that to you and then you can make arrangements for signature and return the document.

40MS McKINNON:  I'm grateful to the court.

41HIS HONOUR:  Thank you to both.

42MS McKINNON:  Thank you.

43HIS HONOUR:  Sine die.

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