Director of Public Prosecutions v Smith

[2015] VCC 67

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

AT BALLARAT
CRIMINAL JURISDICTION

CR 14-01743

DIRECTOR OF PUBLIC PROSECUTIONS

v

CHERYL SMITH

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JUDGE:	HIS HONOUR JUDGE ALLEN
WHERE HELD:	Ballarat
DATE OF HEARING:
DATE OF SENTENCE:	30 January 2015
CASE MAY BE CITED AS:	DPP v Smith
MEDIUM NEUTRAL CITATION:	[2015] VCC 67

REASONS FOR SENTENCE
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Subject:
Catchwords:
Legislation Cited:
Cases Cited:
Sentence:

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APPEARANCES:	Counsel	Solicitors
For the Director of Public Prosecutions	Mr D. Cordy
For the Accused	Ms W. Duncan

HIS HONOUR: 

1Ms Smith, you have pleaded guilty to four charges of obtaining property by deception.  The total amount obtained from your employer by your fraudulent conduct was $130,728.98.  You come before the court with no previous criminal history.

2You are aged 62, having been born on 3 March 1952. You previously lived a good and worthwhile life, you have been gainfully employed, you have raised a family.  This conduct that you embarked upon at some stage in 2009 was up until then, one would have thought, totally out of character.

3The circumstances of your offending were set out by the Crown in comprehensive detail in the Summary of Prosecution Opening, which was read to the court and tendered as Exhibit A, and which will remain on the court file.

4The victims in this matter was a company by the name of Regina Glass Fibre Proprietary Limited of Wendouree.  You were employed by that company in August 2008, originally on a part-time basis as an administrative officer.  In 2009 you were promoted to the full-time position of administration manager and you performed that role throughout the period during which you committed these offences.

5Needless to say, your employers placed in you a great deal of trust and your conduct represents an extremely grave breach of that trust, which has had serious consequences upon an already struggling business.  I heard and read a great deal about your shame and remorse.  So you should be deeply ashamed by what you have done.  You sought to explain to others why it was you did what you did, but of course no explanation justifies what you did at all.  I accept that you recognise that and that you acknowledge that what you did was gravely wrong.

6Your counsel read to me, only a few moments ago, an extract from a document you wrote in which you express regret for the harm that you have caused to your employer.  On balance I accept that too as being genuine.  It is usually impossible to demonstrate the purity of one's feelings or motives.  It is impossible for me to disentangle your feelings and to determine the extent to which your remorse is genuinely directed towards your blameless victim, the company which employed you, but I accept there is remorse there.

7In your role as administration manager, one of your responsibilities was to process supplier invoices by entering all the relevant supplier information into the MYOB Business Accounting software.  When accounts were ready to be paid you were to enter details from MYOB and the invoice into the CommBiz, short for Commonwealth Business Banking online banking system for payment.  You would then present the relevant invoice to the manufacturing manager for joint authorisation for payment.  As I have mentioned you were trusted and authorised to transfer company funds utilising the CommBiz account.

8After the invoice was authorised by the manufacturing manager you would make the payments through CommBiz.  However on numerous occasions during this process you substituted the supplier's bank details with your own personal bank details.  In the calendar years 2011 to 2013, 124 fraudulent transactions were identified whereby supplier details had been replaced by you with your own personal banking details.  The total amount stolen by you using this sophisticated process was just over $75,000.  The details of the individual transactions involved are set out at pp.2, 3, 4, 5 and 6 of Exhibit A.  Those transactions are the transactions covered by Charge 1 on the indictment. 

9In relation to Charge 2 on the indictment, a different form of fraudulent conduct was engaged in by you which involved theft by the improper use of cheques.  Examination of company records revealed that you had been writing cheques out to cash, making up fictitious details for the cheque stubs and also making out a number of cheques to yourself individually or jointly with your husband, making up fictitious details for the cheque stubs.  A large number of fraudulent thefts occurred by you using this process.  The details of those frauds are set out from paragraph 15 through to paragraph 54 of Exhibit A.  Between 1 January 2011 and 31 December 2013, you wrote out fraudulent cheques on 38 separate occasions which had a total value of $20,187.56.

10As far as Charge 3 is concerned, a different process was engaged in by you.  This involved MasterCard transactions.  During the course of your duties as administration manager you were permitted to use the company credit card to pay for small engineering purchases.  An examination of the credit card statements has revealed that a number of transactions that were obviously illegitimate.  That analysis of records shows that between October 2010 and December 2013 there were 84 occasions on which unauthorised fraudulent credit card transactions were employed by you to obtain funds or the value of $16,959.46,.

11Charge 4 relates to quite a different set of circumstances concerning improper claims for overtime.  A review of pay records from the company's Payline system indicates that you claimed unauthorised overtime on a number of occasions.  The total amount of overtime fraudulently claimed by you in wages was valued at $18,239.68. 

12These matters came to light at the end of 2013.  At that time I gather you were away from work having suffered a serious heart complaint and undergone heart surgery.  On 20 January 2014 you received a letter from your employer informing you that during your absence from the office on sick leave, these matters, some of these anomalies had come to light.  By 20 January, your employer had identified 62 fraudulent transactions in the year 2013 alone, resulting in a loss to the company of just under $40,000.  They informed you that they were continuing to examine the records for earlier years and that, as a consequence of these serious matters, your employment was immediately terminated.

13One of your responses to that letter, apparently, was to persuade your husband to join with you in an application to your bank for an extension on your mortgage of $40,000 to repay that amount that had initially been discovered. The police eventually charged you on 7 April 2014.  They interviewed you and you exercised your right to make no comment.  To your credit, since then the proceedings have moved unusually quickly, given the nature of the case.  As early as 1 October 2014, at a committal case conference, the matter was settled and it was indicated that you would plead guilty to these charges.  As the prosecutor has conceded, I will take your plea of guilty into account as one of the mitigating features of this case. 

14Since then you have taken further steps towards making restitution to compensate your former employer for its losses.  Unfortunately as a result of compulsory confiscation proceedings your assets have been frozen and the $40,000 has been unable to be paid to the employer.  There is no doubt in my mind that it will eventually be paid to the victim company.  In addition to that, in recent times you have cashed in a superannuation policy and obtained a further $15,000.  A bank cheque in that sum, payable to the victim company Regina Glass Fibre Proprietary Limited, was tendered in court today and will be provided by your solicitor, via the informant, to the victim company.  Also, today your solicitor has taken concrete steps to obtain a further $45,000 from your other superannuation fund.  Those funds I accept will be paid to the victim company in due course as you have now undertaken that they will be.  That means that, within a short time, the victim company will receive $60,000 by way of partial compensation, and in due course at least another $40,000, being the mortgage funds that were borrowed to repay them, and, in due course, probably further funds resulting from the sale of your home and the liquidation of your net equity in that home.  I will sentence you on the basis that at least $100,000 will be paid by way of significant part compensation to your victim within a short time.

15It can be reasonably expected that further funds will be forthcoming following the resolution of the confiscation proceedings.  That is a significant matter.  As I commented to Mr Cordy, no matter what might be said concerning the depth of your remorse, no one could have forced you to empty out your two superannuation funds nor to borrow further money from your bank.  You have taken those steps and I regard them as further evidence of remorse and evidence of cooperation on your part and a desire to make as much compensation as you can to your victim.  That is a significant mitigating feature in my view.

16A comprehensive plea in mitigation was made on your behalf by Ms Duncan of counsel.  She submitted, at the outset, a very helpful written outline of submissions.  A large number of documents were tendered in support of the plea.  They included the following: medical reports from your general practitioner Dr Cruikshanks, Exhibit 1; two reports from your treating psychologist Dr Wyatt, Exhibit 2; a report of the forensic psychiatrist Dr Owens, Exhibit 3. 

17I should have mentioned much earlier that Exhibit B was the victim impact statement.  There is no doubt that your appalling fraudulent conduct has had a significant deleterious effect upon the company which trusted you and which employed you.  There may be other factors which impacted upon the company's difficulties but the theft by you of more than $130,000 could have broken that company.  As Mr Rendell says, it certainly brought the company to "the brink of insolvency."  Your conduct has also caused the owner of the company, Mr Rendell, a great deal of personal anxiety, stress and distress.  I accept too that your conduct has resulted in significant expense to the company in trying to get to the bottom of these matters, carrying out audits, employing expert auditors and lawyers and the like.  I take those matters into account.

18The details of your difficult personal history are set out in the reports of a Dr Wyatt and Dr Owens.  They are also conveniently summarised by your counsel in her written outline.  As I mentioned, you are now 62 years of age.  You had what can only be described as a traumatic childhood. Your mother was abusive, physically and emotionally, throughout your childhood and into your teens.  Fortunately, you were able to complete Year 11 at school, and eventually to qualify as a secretary.  A number of events have occurred in your life which have contributed to what has recently been diagnosed as post-traumatic stress disorder.  Apart from the suffering you endured at the hands of your mother and her abuse, according to what you have told the psychiatrist and the psychologist you were raped at the age of 16.

19You married early, at the age of 19.  It was not just an unhappy marriage, but a marriage which involved regular physical, sexual and emotional abuse.  You divorced aged 30.  You have one daughter from that marriage.  Fortunately you were able to remarry and you married your current husband, Mr Peter Smith, in 1999.  He has been very supportive of you.  He has been present in court throughout these proceedings and has been assisting in the steps that have been taken to facilitate the obtaining of funds for the purpose of restitution.  You have one daughter to Mr Smith.

20Your husband had a series of medical issues, resulting in surgery and significantly reducing his capacity to work, during the relevant period from 2011.  Exhibit 8 is a table which set out clearly the serious impact that his illness and medical treatment had on his capacity to contribute to the income of your household.  In a nutshell, his income dropped from just under $50,000 in 2008 down to just over $6000 in 2013.  Another matter which has been relevant to your emotional state, anxiety and depression has been the fact that one of your daughters suffered serious financial problems as a result of her husband developing a gambling problem and you feeling obliged to assist her in managing her financial burden.

21You have suffered serious health issues and you still do.  As Dr Cruickshanks says in his brief letters, you suffer Type 2 diabetes, you have had serious thyroid difficulties in the past resulting in a total thyroidectomy in 2010, and you have ongoing significant problems with your weight control.  In December 2013, you underwent quadruple coronary bypass surgery which was complicated by pulmonary embolus and bronchopneumonia.

22It would seem from the psychological material that you have a longstanding history of chronic depression and anxiety which was exacerbated by your illnesses and financial and personal problems.  Your general practitioner referred you to Dr Wyatt in April 2014 for treatment regarding anxiety and depressive symptoms.  Since then you have undergone 11 psychotherapy sessions with Dr Wyatt.  He says in his report that, although you were initially referred to him to help deal with the significant stress response of anxiety and depressive symptoms as a result of your upcoming court case, he determined that it was obvious that you had longstanding symptoms consistent with the formal diagnostic criteria for post-traumatic stress disorder.

23He says that it appears you have suffered a "life long battle with depressive and anxiety symptoms" which he believes to be "secondary to PTSD."  On the basis of the history he obtained from you during those extensive psychotherapy sessions, he says that you were emotionally and physically neglected and abused as a child by your mother up until your late teens and that after that you entered into a marriage which was "incredibly violent physically and sexually" for a period of over ten years.  According to Dr Wyatt, "The nature of these relationships has left Mrs Smith with a very low self-esteem, fear of abandonment and a need to please others to feel accepted and worthwhile as a person."

24In his opinion, at the time of the offending there were a number of factors impinging upon your conduct and your capacity to function properly.  They including significant financial, work related and family stressors which he says compounded your "ongoing battle with underlying mental illness."  In relation to your offending behaviour, Dr Wyatt expresses this opinion:

"I believe that her low self-esteem, fear of abandonment and need to            please others at a time of family financial difficulty and significant life                stress,   combined with compromised judgment due to her mental                    health condition, led to the behaviours for which she now finds   herself facing the court."

25On the question of remorse Dr Wyatt says that you are "incredibly remorseful and in fact the remorse itself combined with the fear of possible imprisonment is at this time having a significant exacerbating impact on (your) underlying mental health condition."  In relation to the impact of incarceration upon your mental health Dr Wyatt says as follows:

"I fear that Mrs Smith's mental health could deteriorate significantly if           incarcerated especially given the deterioration that I have observed in           recent months simply from her anticipation of the same… Mrs Smith is          an incredibly vulnerable person who could be exploited and physically            harmed without an ability to stand up to aggressive and anti-social                 personalities."

26Dr Nicholas Owens, an experienced forensic psychiatrist, expresses similar opinions in his report.  He agrees that the appropriate diagnosis of your mental health situation currently is "chronic depression."  He also agrees that you display some features of post-traumatic stress disorder.  He attributes those to "early exposure to trauma… a series of traumatic events over many years" particularly in your teens and twenties including a rape and multiple physical and sexual assaults by your first husband.  In addition, your childhood "was characterised by repeated physical and emotional abuse…and this likely pre-disposed (you) to the development of mental health problems of a post-traumatic stress nature in later adulthood."  According  to Dr Owen, one result of your early years of abuse is that you have developed "a pattern of interactions with others" in which you find it "difficult to stand up to exploitation and abuse." 

27In relation to your offending conduct Dr Owen says as follows:

"Regarding the offending this appears to have occurred in the context          of significant stressors affecting her throughout the period of her   employment at Regina Glass Fibre Proprietary Limited." 

Later he says,  

"Although I found it difficult to establish an exact temporal sequence of          events with respect to her depressive symptoms during the period of                the offending I think it likely that in a general sense the stressors that              she experienced caused worsening of her depressive and anxiety               symptoms for which she was not getting any treatment other than anti-          depressants which had not been changed in dose for many years.  I                   think that her chronic depressive illness constitutes a mental   impairment that had the effect of impairing her ability to exercise   appropriate judgment and to make calm, rational choices or to think                  clearly when the offending occurred."

As I observed during the course of submissions, I have some difficulty with that opinion.  I am not prepared to find that your mental illness was a significant contributing factor to your offending behaviour.  On the other hand I do accept that your underlying mental illness, and the way in which that affected your capacity to function appropriately, did have some effect on your ongoing incapacity to act appropriately and to think properly about what you were doing.  It certainly does not excuse your conduct and it is not a significant factor in reducing your moral culpability, but I am not prepared to exclude it as a contributing factor.

28More important in my view are the other aspects of Verdins, the case concerning the impact of mental illness on the sentencing process.  Dr Owens expresses the same opinion as that expressed by your treating psychologist.  He says:

"I think that this woman would be at significant risk of her mental health        deteriorating significantly in the event that she was incarcerated.  She           is currently suffering from moderately severe symptoms of depression             and had a history of coping poorly with stress.  The stress of   imprisonment would likely lead to the worsening of depressive   symptoms, possibly including self-harm…I fear that she has limited                    emotional resources for confronting and standing up to the potentially         aggressive and anti-social acts of co-prisoners and would be    vulnerable to exploitation and physical abuse."

29Thus, both the experts, your treating psychologist and the consultant forensic psychiatrist, provide an evidentiary basis for me finding that, were you to be sentenced to a period of imprisonment to be served immediately, your mental health would be at risk of deteriorating significantly.  I also find that, for you, a sentence of imprisonment would involve considerable additional hardship compared to the mentally healthy prisoner or, to put it another way, compared to other prisoners who are not as vulnerable mentally and emotionally as you obviously are.

30I have taken these matters into account, by way of summary: the circumstances of your background, your mental illness, your personal circumstances and the financial and family stress under which you were labouring at the time you offended, your subsequent conduct in pleading guilty at an early stage and, in my view, doing everything you could have reasonably done to obtain funds to make restitution, and the evidence of the risk to your mental health that imprisonment would involve and the additional hardship, significant hardship in my view, that it would involve I consider this to be a case suitable to release you on a community corrections order, and that is what I propose to do.

31I have borne in mind, of course, the recent pronouncements of the Court of Appeal in the case of Boulton & Ors, some of which have direct application in this case.  This is clearly a case where, two years ago, I would probably have decided to wholly suspend a sentence of imprisonment.  That option is no longer open to me.  However, consistent with the statute and the opinions expressed by the Court of Appeal in Boulton the appropriate alternative is to release you on a lengthy and onerous community corrections order.

32I propose to release you on an order that will last for four years.  That is, this matter will hang over your head for four years; do you understand?  During that four year period you will be under supervision for the first two years.  You will be required to perform 300 hours unpaid community work.  I appreciate you are not well, physically and mentally, but hopefully you will get better and the work will be tailored to suit your capacities; do you understand?

33You will be required to be assessed and to  undertake treatment in relation to your mental health.  One hundred hours of that treatment may be credited against the community work hours; do you understand?  The order will be prepared now.

34The standard conditions of a community corrections order are that you must not commit any offence punishable by imprisonment during the term of the order; that is, for the next four years.  If you do you will be breached and you will be brought back before me and you will be liable to be re-sentenced in relation to this matter.  You understand that, do you not?

35OFFENDER:  Yes, Your Honour.

36HIS HONOUR:  You will be obliged to accept visits and to attend for supervision when required.  You must inform the Office of Corrections within two days of any change of employment or address; you must not leave Victoria without permission for four years; you must obey all lawful instructions and directions.  Do you understand that?

37OFFENDER:  Yes, Your Honour.

38HIS HONOUR:  You must never attend any appointment for any community work, supervision or treatment or assessment affected in any way by drugs or alcohol.  I am sure that will not be the case.  When I say you must obey all lawful instructions and directions that means that if you are directed to attend for community work or an appointment for assessment or treatment or supervision you must always attend when and where you are directed to attend; do you understand?

39OFFENDER:  Yes, Your Honour.

40HIS HONOUR:  Again, if you fail to comply with any direction or any condition of the order you will be breached and brought back before me to be resentenced.

41I do not think I can emphasise enough, but I have been watching your responses today, and I am satisfied on balance that you know how appalling your conduct was, how serious it was as a criminal offence and how the prosecutor was on strong ground in reasonably submitting for the imposition of an immediate term of imprisonment.  That was open to me, so serious was your conduct.

42Apart from taking all those other mitigating matters into account, which I have enumerated, I have imposed what might be described as a merciful disposition, because I consider that to be appropriate in this case in all of the circumstances.  You can come forward now and sit next to Ms Duncan and you will be able to sign this order.

43I declare pursuant to s.6AAA of the Sentencing Act that, had you not pleaded guilty in this matter, and that is inseparable from the other steps you have taken to cooperate such as signing the consent confiscation order and taking the steps you have taken to make restitution, all of those things are part of your plea of guilty, I would have sentenced you to be imprisoned for two years with a minimum non-parole period of one year.  That would be have been a relatively merciful sentence because even if you had run the trial I still would have had to take into account a number of those others matters that have been referred to in your favour.

44MR CORDY:  The forensic sample order, Your Honour.

45HIS HONOUR:  Yes, I will do that.  Pursuant to s.464ZF I order that you undergo a forensic procedure for a buccal scraping of your mouth so that the DNA can be placed in the databank.  You must attend at the Ballarat Police Station within a period of four weeks commencing four weeks from today.  Wait four weeks and then in the next four weeks you must attend at Ballarat Police Station to provide a buccal swab.  If you fail to cooperate in that procedure the police may use reasonable force to obtain an blood sample but I am sure that will not be necessary. 

46I have also made the compensation order, I will sign that, the consent order in this matter and here is the community corrections order to be signed.

47MR CORDY:  I think Your Honour indicated earlier that you'd made that compensation order.

48HIS HONOUR:  Yes, I made the order.

49MR CORDY:  Thank you.

50HIS HONOUR:  Has the community corrections order been signed?

51MS DUNCAN:  Yes.

52HIS HONOUR:  You are free to go now.  Ms Duncan, thank you for your assistance in this matter.

53MS DUNCAN:  I'm sorry, Your Honour, I was just discussing payment with Mr Cordy.

54HIS HONOUR:  I am sure your instructor will be able to sort that out.

55MS DUNCAN:  Indeed.  I didn’t mean to be rude.

56HIS HONOUR:  Not at all.  Thank you for your assistance in this matter.

57MS DUNCAN:  Thank you, Your Honour.

58HIS HONOUR:  Are there any other matters for me to attend to?

59MR CORDY:  No, I think we've reached the end, Your Honour.

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