Director of Public Prosecutions v Matthews
[2016] VCC 1261
•25 August 2016
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CRIMINAL DIVISION | Revised (Not) Restricted Suitable for Publication |
Case No. CR-16-00684
| DIRECTOR OF PUBLIC PROSECUTIONS |
| v |
| GARRY LEONARD MATTHEWS |
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JUDGE: | HER HONOUR JUDGE LAWSON | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 17 August 2016 | |
DATE OF SENTENCE: | 25 August 2016 | |
CASE MAY BE CITED AS: | DPP v Matthews | |
MEDIUM NEUTRAL CITATION: | [2016] VCC 1261 | |
REASONS FOR SENTENCE
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Subject:Criminal law – sentence – use position of director dishonestly, reckless as to whether the use may result in detriment to the corporation.
Legislation Cited: s184(2)(b) of the Corporations Act 2011 (Cth)
Cases Cited:DPP v Okoka (2016) VCC 172; R v Grossi [2008] VSCA 51
Sentence: Sentenced to three years' imprisonment. Released under paragraph 20(1)(b) of the Crimes Act1914 (Cth) after serving 12 months of the term of imprisonment upon giving security by recognisance of $2,000 on condition that the offender be of good behaviour for two years.
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APPEARANCES: | Counsel | Solicitors |
| For the DPP | Mr G Schubert | Solicitor for Office Public Prosecutions (Cth) |
| For the Accused | Mr A Lewis | Stary Norton Halphen Solicitors |
HER HONOUR:
1 Garry Leonard Matthews, you have pleaded guilty on indictment to one charge of use position as a director dishonestly, reckless as to whether the use may result in detriment to the corporation, contrary to s184(2)(b) of the Corporations Act 2001 (Cth).
2 The charge is serious and that is evidenced by the maximum penalty prescribed by Parliament, namely, five years' imprisonment.
3 This is a rolled up charge and the charged period is between 1 June 2010 and 9 August 2012, when you were the sole director and sole shareholder of Carrington Carpet Services Pty Ltd (ACN 006 732 421) (“CCC” “the company”).
4 The offending relates to the dishonest obtaining by you of $1,075,300 from a bank overdraft account operated by the company.
5 I will now proceed to sentence you on the basis of the Crown opening that was read at the plea hearing. There was no issue taken with that summary.
6 Your criminal conduct involved you authorising 406 cheques on the company’s ANZ account to be paid to cash between 1 June 2010 and 9 August 2012 in various amounts, totalling $1,075,300. The transactions were authorised to obtain money for your personal use rather than for any purpose of the corporation. The company account was overdrawn throughout almost all the relevant period. A schedule setting out the relevant cheques marked “A” was attached to the Crown opening. The withdrawals were not accounted for in the company’s accounting records.
7 During the charged period, you were paid a wage by the company totalling $186,244.60.
8 Because of the company’s inability to pay debts, the company was sued by a number of unsecured creditors. One of the creditors obtained a petition to wind up the company. The company became insolvent.
9 On 8 August 2012, Salvatore Algeri, a liquidator was appointed. The liquidator estimated the unpaid debt owed to unsecured creditors upon the winding up to be around $573,422. There will be no dividend paid to any unsecured creditors in the liquidation.
10 Mr Algeri’s opinion is that the company became insolvent in the financial period ending 30 June 2012. Due to the number of cash withdrawals made by you, the company had insufficient means to meet its required payments.
11 His opinion is that the financial statements of the company indicated that it would have been solvent if the funds were not withdrawn, with a net profit margin in the financial years 2011 and 2012 of 16.6% and 25.62% respectively.
12 On 15 August 2012 Mr Algeri wrote to you as director of the company, requesting the books and records of the company, and for the completion of a report as to affairs.
13 On 28 August 2012, you met with a representative of the liquidator, and during that meeting you were informed that various large cash withdrawals from the company’s ANZ account were noted. You advised that:
(a)you had withdrawn the funds from the account by signing cheques in exchange for cash;
(b)you had spent all the money at Crown Casino; and
(c)you had a gambling problem.
14 Crown Casino records show you lost $1,496,158 gambling in the years 2010 to 2012 inclusive.
15 In the charged period, various deposits were made into the company overdraft account, including some made by you, and those included amounts of $60,000 and $10,000 withdrawn from your personal superannuation account on 11 January 2012 and 13 March 2012 respectively, and a series of 16 payments which comprised a total of $259,000 for the period 25 June 2010 to 27 June 2012.
16 Demands have been issued to you from the liquidator seeking reparation on behalf of the company (in liquidation). To date, no moneys have been received and no further recovery action has been taken against you.
17 On 13 June 2014, the liquidator made a supplementary report regarding suspected misconduct by you to ASIC pursuant to s533(2) of the Corporations Act2001 (Cth).
18 You were requested to participate in a record of interview, but that was not conducted. During the period you were moving from house to house and you may not have received the written request.
19 On 22 April 2016, you were committed on the charge contained in the indictment and you entered a plea of guilty to that charge and you were released on bail.
20 Mr Matthews, I consider this to be a serious example of this sort of offence. The charge on the indictment is a rolled-up charge and represents the 406 cheques that you wrote to cash in your favour. Objectively, I consider the offending to be serious, and involves a high degree of culpability on your part. Significant harm was caused to the company and there is a link between your offending and the company’s inability to meet its creditors’ demands, such that the company was placed in liquidation.
21 You are now aged 60 and you currently live in Darwin. You were recently employed as an assistant manager of an aged care facility. However, your employment was terminated when you disclosed to your current employer the details of this court attendance.
22 It is not in dispute that you utilised the money that you received through your criminal actions to support your gambling addiction.
23 Mr Lewis, on your behalf, informed the Court of the matters in mitigation. It is accepted that your plea of guilty is an early plea, and I have taken that into account in your favour. I have had regard to the ruling of the Chief Judge of this Court, Chief Judge Kidd, that Commonwealth offenders are to receive a discount for a plea of guilty on the basis of the utilitarian value of the plea in terms of cost-savings to the community.[1] I accept that your plea does represent a willingness to facilitate justice, and that the plea of guilty is some evidence of remorse.
[1]DPP v Okoka (2016) VCC 172
24 I accept that you now regret your involvement in this offending and its impact on those involved within the company and, in particular, the unsecured creditors. You now accept full responsibility for your actions.
25 You have no prior criminal history, and I have taken that into account. I have taken your previous good character, as evidenced by the many references that were tendered on your behalf, into account.
26 In addition, I have had regard to the fulsome admissions that you made to the liquidator when you were interviewed in August 2012.
27 I have had regard to the delay between the conclusion of the offending and the plea hearing. In the intervening period, I accept that you have taken positive steps to rehabilitate yourself, evidenced by attending Gamblers Anonymous, and also some counselling for gambling addiction in Darwin.
28 I have had regard to the report of Mr Stephen Gault, clinical psychologist, whose report dated 6 November 2015 was tendered, and also the letter from Dr John Clifforth dated 14 September 2015, and the report from Johanne Goncalves, counsellor at Amity Community Services Inc in Darwin.
29 Mr Gault diagnosed you as suffering gambling disorder, severe. He noted that in the past you had been diagnosed with depression, and that is consistent with Dr Clifforth’s letter. You took antidepressant medication during the period roughly corresponding to the offending period.
30 Mr Gault states that it would appear from the timing of your diagnosis that your mood disorder was related to the problems you were having with your gambling, and your marital problems that were existing at the time, and that your sense of dysphoria, which is low mood, depression, probably contributed to your need to gamble and zone out.
31 However, he confirmed that you had a well-established pattern of problem gambling prior to any difficulties you experienced with your depressed mood, and you continued to gamble after you ceased taking your medication in 2013 when you started to feel better.
32 In his opinion, it could not be said that your gambling problem was a response to, or caused by, your depressed mood. Mr Gault did not consider that you currently suffer from a mental disorder that would increase the burden incarceration.
33 Mr Lewis on your behalf specifically disavowed any reliance on the Verdins principles insofar as the offending was concerned. I have, nevertheless, had regard in a general sense to the matters raised by Mr Gault in his report.
34 Your work history was set out in great detail. I noted that you commenced employment following completion of Year 12, initially working part time with your father’s office cleaning business, and thereafter you started but did not complete a hotel management course. You worked with the State Bank for some years and left at about age 26, when you reached the ceiling of advancement for a clerk. You then moved into your father’s cleaning business, where you worked for about five years, and during that time Electrolux amalgamated with the business and after the takeover, you became manager of the carpet cleaning division. Subsequently, you were promoted to a supervisory position and then area manager.
35 In 1997, Electrolux sold off all but its core business, and then you commenced the company CCS. You were provided with the existing clients, and eventually the company morphed into a carpet supply and installation company that operated between the years 2005 to 2012. The company was reasonably successful and you employed five to seven employees.
36 I accept that the offending came about in the context of your gambling addiction, which grew steadily from your teenage years. You commenced betting on horses, and that morphed into poker machines. In the mid-90s, following the opening of the Crown Casino, you would indulge in poker machine betting. You were obviously targeted by the Casino, who considered you to be a potential high-end gambler. You obtained VIP status at the highest level, namely the black level, whereby you were provided with multiple incentives to continue to feed your gambling addiction.
37 Over the years, your gambling spiralled out of control and you began to spend a greater portion of your time at the Casino, and in effect Crown Casino became the centre of your social life and activity outside of work.
38 Unsurprisingly, due to the excessive hours spent at the Casino, your second marriage failed. That was in the mid-2010s. Through your gambling, you exhausted all your personal savings and the proceeds of sale of the matrimonial property following the divorce from your second wife.
39 Over the charged period, you dissipated an extraordinary amount of money, and eroded your asset base in order to fund your gambling addiction. It was in this context that you accessed the overdraft account of the company in the manner described earlier, and all that money has been fritted away at the Casino.
40 By your reckless acts, you acted to the detriment of the company, and in a way that placed the company and the unsecured creditors at risk. I have been advised all the employees were paid out their entitlements, but it is obvious the business is no longer viable and is not functioning. Your actions jeopardised the ongoing viability of the company. You are now financially destitute, and in a very precarious position financially in terms of future security.
41 After the charge was laid, you commenced living with your elderly mother for about a year. You then did some work assisting in a gardening business for about another year to get back on track. You had a short period on Centrelink benefits, and then you obtained a job in September 2013 as a building manager in West Melbourne. That job provided on-site living arrangements, you worked in that role for two years, and it involved you managing builders and contractors.
42 Unfortunately, you could not desist from gambling, and that coincided with a period in your life where you were in a relationship with a woman who was also a VIP at the Casino, and heavily involved in gambling. Subsequently, that relationship failed.
43 Eventually you met your present partner, Sonya, who currently works as the manager of an aged care facility in Darwin. She does not support your gambling and issued you with an ultimatum that she would not have a relationship with you if you continued to gamble. She remained supportive of you, and it was because of her employment advancement that you relocated with her to Darwin.
44 Whilst in Darwin, you have been voluntarily attending Ms Goncalves, a counsellor, in relation to your gambling issues, and her letter confirms that you stopped gambling in August 2015. You had been attending Gamblers’ Anonymous meetings in Melbourne for about four weeks before moving to Darwin.
45 You reported to her that you had not been gambling since coming to Darwin, and that you had removed yourself from the environmental cues that included the Crown Casino and your regular social group of gamblers. Ms Goncalves considers that you are in the maintenance stage of change. Your current employment and your relationship with your partner Sonya are stable and supportive factors in maintaining your abstinence from gambling. Moving away from Melbourne has also taken you away from the strong triggers and cues that precipitated further gambling. She considered that you have a positive prognosis for maintaining control of your gambling problem. You have made a commitment to attending counselling on a bi-monthly basis for ongoing support.
46 Ms Goncalves’ observations are consistent with Mr Gault’s expressed opinion that you have reflected on your offending, you now have insight into the motivation for your gambling, and that your move to Darwin should be of assistance in removing you from your established network that you have developed at Crown Casino.
47 One of your referees, Michael Brown, has known you for over 30 years and he is fully aware of your addiction. Notwithstanding his awareness of your offending, he considers you to be a warm and kind-hearted person, willing to help and support others. He states that you are well-regarded in the community. He confirms that you have been proactive in recent times, dealing with the gambling problem.
48 I have taken his reference and the other referees’ comments into account. However, I must balance that with statements of principle about the reduced weight to be given to good character in cases such as this.
49 Since January 2016 you have been working as the assistant manager at an aged care facility in Darwin, where you have been involved with maintenance, catering and the general running of the place. The job has been important and assisted you to feel more productive and a contributing member of the community.
50 Mr Lewis agreed that this was a serious example of this type of offence, and that you engaged in dishonest and reckless conduct. He noted as a consequence of your plea and conviction that you will be disqualified from holding the office of director of any company from five years from the date of conviction or five years from the date of release from prison, and that will, I accept, impact on your prospects for future employment.
51 Mr Lewis highlighted the delay from the time the offending ceased, and when you entered the plea of guilty. It is a significant period of time, almost four years, and that was in part attributed to the negotiations between the parties. Nonetheless, I have taken that delay into account in your favour, and I accept that you have made significant attempts during that time to address your underlying offending behaviours, and removed yourself from the triggers of gambling late last year when you re-established yourself in Darwin.
52 Mr Lewis submitted an appropriate disposition would be a non-custodial order. He submitted that a term of imprisonment ought to be imposed but that you should be released immediately on a Recognisance Release Order.
53 Mr Schubert, the Crown prosecutor, submitted this was a serious example of this offending, having regard to the objective circumstances. He submitted that no sentence other than a term of imprisonment involving actual incarceration is appropriate. He highlighted the fact that it is a rolled-up charge, and the maximum penalty to be applied.
54 He emphasised the need for general deterrence and denunciation. He did acknowledge your early plea of guilty, and the fact that that represents a willingness to facilitate the course of justice.
55 Mr Schubert submitted that the various deposits made by you into the company overdraft account during the relevant period should not be seen as a genuine attempt to make reparations to the company, particularly in view of the continued offending during and beyond the time of the deposits. He was referring to the moneys that you put in from your superannuation fund and other contributions that I referred to earlier.
56 Overall, I formed the view that you were aware of the nature of offending and its impact on the company at the time you made those deposits, and that this was a vain effort on your behalf, albeit a genuine effort, to make some reparation to the company for the moneys that you had withdrawn as cash from the overdraft.
57 Mr Schubert submitted that the diagnosis for gambling disorder, severe, is not linked in any way to the offending. He referred the Court to R v Grossi[2] and the comments made concerning the application of gambling addiction and the principles that the court must apply. The Court of Appeal in Grossi has made it clear that the need to obtain money to support a gambling addiction is not a mitigating factor, and I have taken that into account.
[2][2008] VSCA 51
58 Having regard to your particular circumstances, I am satisfied that the gambling addiction provides context and an explanation for the commission of this offence, but it does not warrant a reduction in moral culpability or any moderation of general deterrence.
59 At all times, you knew what you were doing was wrong. You continued to draw down on the overdraft to facilitate your gambling habit repeatedly, and over an extended and protracted period. You breached your responsibilities as a director, all the while knowing that you had a problem with gambling and at no stage did you take steps to address the gambling addiction.
60 I am not satisfied that your gambling disorder is directly connected to the commission of the crime. Rather, it merely provides a motive and an explanation for its commission. Therefore, I consider that there is a real need to emphasise both general and specific deterrence in this case. However, given that you are now taking positive steps to address your underlying offending behaviour, the need for specific deterrence is not as great.
61 Mr Schubert agreed that you had no prior convictions, but submitted that is often the case with white collar offenders. Such offenders often do not have prior convictions; they are people of good character and have good prospects of rehabilitation. He submitted it is often those characteristics which allow offenders access to the position of trust which they have abused, and in such cases these mitigatory factors must be given less weight than the factor of general deterrence.
62 Mr Matthews, this is a case where you used your position as sole director and sole shareholder to draw down irresponsibly from the company’s overdraft account. As I have said, at all times you knew what you were doing and that it was wrong. People who undertake the role as sole director of a company must understand that at all times they must act honestly in the discharge of their responsibilities, and where they abuse such a role and act recklessly to the detriment of the company, that there are real consequences. The court must impose punishment sufficient to send a message out to would-be offenders that, if you indulge in such conduct, you will receive stern punishment.
63 In sentencing you, I have had regard to the relevant sentencing provisions and the factors that I must take into account as listed in s16A(2) of the Crimes Act 1914 (Cth). Overall I consider, having regard to the objective features of the offending, that this is a serious example of this offence.
64 In sentencing you, I must balance all the matters counted in your favour with the need for denunciation, just punishment and deterrence.
65 Having regard to your post-offence conduct, I consider your rehabilitation prospects are good.
66 I have had regard to s17A of the Crimes Act 1914 (Cth), and I have considered all other available sentences, and I am satisfied that no sentence other than a term of imprisonment to be served is appropriate in all the circumstances.
67 I ask that you stand, please, Mr Matthews.
68 The formal court order is, in relation to the one charge on the indictment, you will be convicted and sentenced to three years' imprisonment. I order that you be released under paragraph 20(1)(b) of the Crimes Act1914 (Cth) after serving 12 months of the term of imprisonment, upon you giving security by recognisance in the sum of $2,000 to be of good behaviour for two years.
69 Mr Matthews, I am obliged to explain to you the purpose and effect of the order. You must serve 12 months' imprisonment, following which you will be released on the giving of a recognisance in the sum of $2,000 to be of good behaviour for two years. In the event that you fail without reasonable excuse to comply with the conditions of this order, you face the prospect of being resentenced. This order may be discharged or varied under s20AA of the Crimes Act 1914 (Cth).
70 Shortly, you will be asked to sign a document confirming that you are bound in accordance with this order, and that you agree to the order, and that you have been given a copy of this order.
71 Finally, I make the following declaration pursuant to s6AAA of the Sentencing Act1991 (Vic). But for your plea of guilty, I would have imposed a term of imprisonment of four years to serve three years' imprisonment.
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