DPP (Cth) v Northcote

[2014] NSWCCA 26

Court of Criminal Appeal

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Director of Public Prosecutions (Cth) v Northcote [2014] NSWCCA 26

Hearing dates:

20/02/2014

Decision date:

14 March 2014

Before:

Hoeben CJ at CL at [1]
Garling J at [2]
R S Hulme AJ at [130]

Decision:

(1) Appeal allowed.

(2) Quash the sentences with respect to each offence imposed in the District Court of NSW (Jeffreys DCJ) on 17 September 2013.

(3) In lieu thereof impose the following sentences:

(a) On the offence of "Use Position as a Director Dishonestly" contrary to s 184(2) Corporations Act 2001, (Cth) the respondent Mr Bryan Northcote is sentenced to a term of imprisonment for a period of 3 years and 6 months commencing on 27 September 2013 and expiring on 26 March 2017.

(b) On the first offence of "Making a False and Misleading Statement in a Document lodged with ASIC", contrary to s 1308(2) Corporations Act 2001 (Cth), the respondent Mr Bryan Northcote is sentenced to a term of imprisonment for a period of 1 year commencing on 27 September 2013 and expiring on 26 September 2014.

(c) On the second offence of "Making a False and Misleading Statement in a Document lodged with ASIC", contrary to s 1308(2) Corporations Act 2001 (Cth), the respondent Mr Bryan Northcote is sentenced to a term of imprisonment for a period of 1 year commencing on 27 September 2013 and expiring on 26 September 2014.

(4) The Court directs that the respondent be released on 26 September 2015, being the expiration of 2 years of the sentence with respect to the offence contrary to s 184(2) of the Corporations Act 2001 (Cth), upon a recognisance that he be of good behaviour during the balance of the term of that sentence and upon him giving security in the sum of $1,000 without surety.

Catchwords:

CRIMINAL LAW - appeal - Crown appeal against sentence - offence of using position as executive and managing director of company dishonestly, with intention of directly or indirectly gaining an advantage contrary to s184(2) Corporations Act 2001 (Cth) - two offences of making false and misleading statement in a document filed with the Australian Securities Investment Commission contrary to s 1308(2) Corporations Act 2001 (Cth) - guilty plea - total sentence of two years imprisonment to be served by way of intensive correction in the community - whether sentencing judge erred in assessing the objective seriousness of the offences by failing to adequately take into account material considerations - whether sentence manifestly inadequate - importance of general deterrence

Legislation Cited:

Corporations Act 2001 (Cth)
Crimes (Appeal and Review) Act 2001
Crimes (Sentencing Procedure) Act 1999
Crimes Act 1914 (Cth)
Criminal Appeal Act 1912

Cases Cited:

Director of Public Prosecutions v Bulfin [1998] 4 VR 114
Green v The Queen; Quinn v The Queen [2011] HCA 49; (2011) 244 CLR 462
Kwok v R [2007] NSWCCA 281; (2007) 64 ACSR 307
Mulato v R [2006] NSWCCA 282
Muldrock v The Queen [2011] HCA 39; (2011) 244 CLR 120
R v Allpass (1993) 72 A Crim R 561
R v Boulden [2006] NSWSC 1274
R v Dodd (1991) 57 A Crim R 349
R v Donald [2013] NSWCCA 238
R v Geddes [1936] 36 SR (NSW) 554
R v Hawkins (1989) 45 A Crim R 430
R v Hinchliffe [2013] NSWCCA 327
R v JW [2010] NSWCCA 49
R v Pogson, R v Lapham and R v Martin [2012] NSWCCA 225; (2012) 82 NSWLR 60
R v Zamagias [2002] NSWCCA 17
The Queen v Tait [1979] 46 FLR 386
Veen v The Queen (No.2) [1988] HCA 14; (1988) 164 CLR 465

Category:

Principal judgment

Parties:

Director of Public Prosecutions (Cth) (Appellant)
Bryan Raymond Northcote (Respondent)

Representation:

Counsel:
R Bromwich SC / R Rankin (Appellant)
W G Roser SC / S Goodman (Respondent)
Solicitors:
Commonwealth DPP (Appellant)
Rankin Ellison Lawyers (Respondent)

File Number(s):

2012/278100

 Decision under appeal 

Jurisdiction:

9101

Date of Decision:

2013-09-17 00:00:00

Before:

Jeffreys DCJ

File Number(s):

2012/278100

Judgment

1. HOEBEN CJ at CL: I agree with Garling J.

1. GARLING J: This is an appeal by the Director of Public Prosecutions (Cth) pursuant to s 5D of the Criminal Appeal Act 1912 with respect to sentences imposed upon the respondent, Brian Raymond Northcote, in the District Court at Sydney by Jeffreys DCJ on 17 September 2013.

1. Mr Northcote had pleaded guilty to three offences. The first was an offence against s 184(2) of the Corporations Act 2001 (Cth) of using his position as an executive and managing director of Compass Hotel Group Ltd dishonestly, with the intention of directly or indirectly gaining an advantage for himself, namely, payments of money to Yardhouse Australia and New Zealand Pty Ltd ("YANZ") trading as NovaPrime, a company in which he had an interest. The two other offences were of making a false and misleading statement in a document filed with the Australian Securities Investment Commission (ASIC). These offences were contrary to s 1308(2) of the Corporations Act 2001 (Cth).

1. Having taken the guilty plea to these three offences, Jeffreys DCJ imposed a total effective sentence of 2 years imprisonment, to be served by way of intensive correction in the community under s 7 of the Crimes (Sentencing Procedure) Act 1999.

1. The sentences imposed by the sentencing Judge, which could not exceed 2 years to comply with the threshold for an Intensive Correction Order ("ICO"), took the following form:

Charge	Maximum Penalty	Sentence Imposed
Between 9/10/07 and 22/4/08, did use his position as an executive and managing director of Compass Hotel Group Ltd ("Compass") dishonestly with the intention directly or indirectly gaining an advantage for himself, namely, payments of money to Yardhouse Australia and New Zealand Pty Ltd t/as NovaPrime ("YANZ"), a company in which he had an interest.	5 years imprisonment	2 years imprisonment to date from 27/9/213 and to expire on 26/9/15, to be served by way of ICO
Make false or misleading statement in a material particular in a document lodged with ASIC on 2/1/08 being a document headed "Resignation of Director".	5 years imprisonment	12 months imprisonment from 27/9/13 to 26/9/14, to be served by ICO
Make false or misleading statement in a material particular in a document lodged with ASIC on 2/1/08, known as "Circular Resolution of the Board of Directors".	5 years imprisonment	12 months imprisonment from 27/9/13 to 26/9/14, to be served by ICO

The Crown Appeal

1. On 17 September 2013, the CDPP informed Mr Northcote that it intended to appeal. The Appeal was filed on 26 September 2013. The respondent was served with that Appeal on that day. On 5 December 2013, the CDPP filed an Amended Notice of Appeal containing two grounds, namely:

(a)   Ground 1 - His Honour erred, when assessing the objective seriousness of the offences, by failing adequately to take into account material considerations such as the amount of advantage obtained, the deliberate pre-meditated nature and duration of the offending, and the extent of the dishonesty involved, and by taking into account extraneous and irrelevant matters such as the absence of any evidence of detriment to the companies.

(b)   Ground 2 - The sentences are manifestly inadequate.

Facts

1. A Statement of Agreed Facts was tendered on sentence. It will be sufficient for the purpose of this appeal to set out a narrative of the principal facts and events.

1. Mr Northcote was the sole director and (with his wife) the ultimate owner of the company YANZ. YANZ traded under the name NovaPrime. It will be convenient to describe this corporate entity by its trading name, NovaPrime.

1. In November 2006, NovaPrime entered into an agreement with a West Australian hotel broker, Burgess Rawson (WA) Pty Ltd, which involved Burgess Rawson splitting with NovaPrime on a 50/50 basis, any sales commission obtained by Burgess Rawson for any successful hotel sale where the purchaser was introduced to the sale by NovaPrime. It will be convenient to refer to this agreement as the conjunction agreement.

1. By the time Mr Northcote entered into the conjunction agreement, he had become convinced that a successful business venture could be undertaken which involved the acquisition of a number of hotels in the Perth area. By about May 2007, Burgess Rawson had identified approximately 16 hotels in Western Australia as possible purchases. Negotiations were commenced.

1. Mr Northcote needed to raise capital to purchase the targeted hotels. In October 2007, Compass Hotel Group Ltd ("Compass"), a public company, was incorporated. Mr Northcote was appointed Chief Executive Officer and Managing Director of Compass upon incorporation.

1. In order to raise sufficient capital to purchase the targeted hotels, Compass undertook an initial public offer ("IPO"). A prospectus was issued with respect to the IPO of Compass in November 2007. The offer opened on 29 November 2007 and closed two weeks later, fully subscribed. The IPO raised $123 M.

1. Compass became part of the broadly described Compass Hotel Group, which consisted of it and a trust called the Compass Hotel Group Trust ("the Trust"). Wholly owned subsidiaries of Compass were used as vehicles to purchase each of the businesses associated with the target hotels in Western Australia. The Trust was the body used to purchase the freehold of the land associated with those hotels.

1. By 16 November 2007, and prior to the IPO, Compass had made offers to purchase 12 hotels and a market attached to one of the hotels. Those offers had been accepted by the vendors. Prices had been agreed and the sales commissions had been negotiated between Mr Northcote on behalf of Compass, Burgess Rawson and the respective vendors. In some instances the vendors had refused to pay sales commission as it was they who had been initially approached to sell their properties. In such cases, Mr Northcote, in his role as managing director of Compass, agreed that the relevant wholly owned subsidiary company would pay the relevant commissions, which were added on to the purchase price.

1. Between November 2007 and January 2008, Mr Northcote, as managing director and chief executive officer of Compass, had signed or authorised a number of documents to effect the purchase of the 13 businesses and associated freehold properties in Western Australia. The settlement for all purchases was completed in the early part of 2008, mostly in January and February, the last on 16 April 2008.

1. Between 17 and 21 January 2008, Burgess Rawson sent invoices to Compass and the hotel vendors with respect to the commissions payable for the purchase of the relevant hotels and businesses in Western Australia. The total of the commissions due from these sources was $3,271,248.

1. Pursuant to the conjunction agreement, NovaPrime was to receive 50 per cent of this sum, being $1,635,624.

1. Between 5 February 2008 and 21 April 2008, in accordance with the conjunction agreement, NovaPrime received five payments from Burgess Rawson totalling $1,566,730.

1. Thereafter, Mr Northcote arranged for the transfer of $1,091,984.19 from NovaPrime to bank accounts of other companies which he owned.

1. From the initial stages of formation of Compass, up until NovaPrime received the last payment from Burgess Rawson in April 2008, there were a number of occasions when Mr Northcote, in his capacity as the managing director of Compass, ought to have, but did not, disclose to Compass or its board of directors or its shareholders, the fact that he had an interest in NovaPrime and that NovaPrime would be receiving 50 per cent of the commissions arising from the purchase of the West Australian hotels by Compass.

1. Mr Northcote was a member of the Due Diligence Committee of Compass formed for the purpose of the IPO. That Committee met on 10 occasions during the period from 24 September to 23 November 2007. At each Due Diligence Committee meeting, an agenda item required those attending to declare any conflicts of interest. At no time during any of those meetings did Mr Northcote declare either his interest in NovaPrime or the existence of the conjunction agreement between NovaPrime and Burgess Rawson to share sales commissions.

1. During the initial stages of formation of Compass, Mr Northcote recommended Burgess Rawson as the appropriate agent to facilitate the purchase of hotels by Compass in Western Australia. In making that recommendation he ought to have, but did not, disclose to Compass and its board of directors, his interest in NovaPrime or the fact that by reason of the conjunction agreement, it would receive 50 per cent of the commissions.

1. When the prospectus was issued with respect to the IPO for Compass, Mr Northcote, together with the other directors, signed a "Management Sign Off Certificate" as part of the due diligence process associated with the IPO. In doing so, each director, including Mr Northcote, certified that amongst other things, nothing had come to their attention which to the best of their knowledge or belief would cause them to believe that there was any material omission from the prospectus for the IPO. This was another instance where Mr Northcote was under a positive obligation to declare his interest in NovaPrime but failed so to do.

1. Between 6 December 2007 and 12 August 2008, there were 10 meetings of the Compass board of directors. At each of those meetings, the Chair of Compass, Mr Warwick Jones, asked whether any director, including Mr Northcote, had any conflict of interest to declare. Mr Northcote did not ever mention, let alone declare his interest in NovaPrime, and the monies which NovaPrime was receiving from Burgess Rawson.

1. During that period, there were also two meetings of the Audit and Risk Management Committee of Compass. Mr Northcote attended the meetings of that Committee by invitation. The issue of conflict of interest was raised as the first item on the agenda of each meeting. At no time did Mr Northcote declare any conflict of interest including his ownership of NovaPrime and the conjunction agreement.

1. On 2 January 2008, documents were lodged with ASIC notifying a change of directorship of NovaPrime. The effect of this change was to remove Mr Northcote from his position as a director of NovaPrime. The relevant documents lodged with ASIC included a "Circular Resolution of the Board of Directors" and a "Resignation of Director", both of which falsely recorded a change of directorship at NovaPrime on 1 October 2007. Each document purported to be signed by, inter alia, Mr Northcote on 1 October 2007. In fact there was no such resolution or change of directorship on 1 October 2007, and the documents were not signed on that day.

1. The backdated documents were lodged for the purpose of falsely indicating that Mr Northcote had ceased to be officially associated with NovaPrime as from 1 October 2007. This enabled Mr Northcote to assert falsely that, on and from 1 October 2007, there was no conflict of interest between his respective positions with Compass and NovaPrime. The signing and lodging of these two documents with ASIC on 2 January 2008 was the basis for the two charges against Mr Northcote under s 1308(2) of the Corporations Act.

1. The failure of Mr Northcote to declare at any of the times to which reference has been made above, his interest in NovaPrime, and NovaPrime's receipt of 50 per cent of the sales commissions from Burgess Rawson formed the basis of the offence against s 184(2) of the Corporations Act.

1. The Chairman of Compass, as a result of his own investigations in June 2009, became aware of Mr Northcote's interests in NovaPrime and the payments that the company had received pursuant to the agreement with Burgess Rawson. Mr Northcote was stood down from his duties and directorship of Compass on 16 July 2009.

1. In September 2010, Mr Northcote participated in a voluntary interview with ASIC, but made no relevant admissions in response to the allegations put to him, that he had breached his director's duties by failing to disclose a conflict of interest.

1. On 4 September 2012, Court Attendance Notices were issued and served on Mr Northcote. He appeared in the Local Court on the first occasion on 25 September 2012.

1. On 11 December 2012, he entered pleas of guilty to all three charges and was committed on that date to the District Court for sentence.

District Court Sentence Proceedings

1. The proceedings were stood over to 17 May 2013 before Jeffreys DCJ. On that day the CDPP tendered a bundle containing the Agreed Facts and other documents relevant to sentencing.

1. Mr Northcote gave evidence, both by way of an affidavit and orally, and a number of affidavits, essentially attesting to his previous good character, were read.

1. In his evidence in chief, Mr Northcote agreed with the Statement of Agreed Facts. In cross-examination he agreed that his conduct relevant to the charge involved more than simply not disclosing his relationship with Burgess Rawson. He agreed that, when he held the position of Managing Director of Compass, he knew he was going to personally profit from every hotel that was purchased by Compass through Burgess Rawson and knew that that was a matter which should have been disclosed by him. He agreed that he made a conscious decision not to disclose that matter at any of the Due Diligence Committee meetings, or the Board meetings.

1. He also agreed that in the period from October 2007 onwards, he was involved in making a number of decisions and taking many actions relating to the purchase of hotels in Western Australia by Compass, and that on each such occasion he knew that he stood to personally gain from such decisions or the steps which he took.

1. He was cross-examined with respect to the documents which were lodged with ASIC. He agreed that it would be accurate to describe his steps in lodging those false documents with ASIC as "... being attempts to conceal [his] activities rather than rectifying them".

1. At the end of Mr Northcote's evidence, the CDPP and counsel for Mr Northcote put submissions to the Court both in written form and orally.

1. Counsel for Mr Northcote in his written submissions, submitted that a sentence involving imprisonment was appropriate but that in Mr Northcote's case, that sentence ought be served by way of an ICO.

1. He submitted that an ICO was appropriate because:

(a)   an ICO remained available for white collar offences;

(b)   the offences, whilst serious, did not create a risk of significant loss for the Compass Group, or the investing public, or any material deception of the market;

(c)   the subjective factors, including his contrition and remorse, early pleas, otherwise being of good character, the punishment he had already suffered and the absence of a need for personal deterrence.

1. The CDPP submitted both orally and in writing that it would not be appropriate for any term of imprisonment to be served by an ICO. The CDPP submitted to the sentencing Judge that the imposition of an ICO would amount to appellable error in the context of the case because:

"Such an order would not meet the requirements recently restated by the NSW Court of Criminal Appeal for a sentence, particularly in market matters, to punish the offender, denounce his conduct and provide sufficient disincentive to others who may be tempted to offend."

That submission was immediately followed by a reference to R v Pogson, R v Lapham and R v Martin [2012] NSWCCA 225 at [143]-[144].

1. The CDPP provided to the sentencing Judge a schedule of relevant decisions in broadly similar circumstances. He then submitted this:

"In the case of serious criminal conduct by a company director, in the absence of exceptional circumstances, such as the provision of assistance and offer of future assistance: R v Howard [2003] NSWSC 1248 and R v Kamha [2008] NSWSC 765, a full time custodial sentence with a significant non-parole period is appropriate. There are no exceptional circumstances in this case that would justify any lesser sentence.

No sentence other than a sentence involving imprisonment is appropriate in all the circumstances of this case. The nature and circumstance of the offences and the other s 16A Crimes Act matters addressed above, warrant the imposition of a sentence that involves a not insubstantial full time custodial period."

1. In the course of submissions, senior counsel appearing for the CDPP accepted that whilst there was separate and discrete criminality involved in misleading ASIC by the filing of the documents which were false in a material particular, that it would be an acceptable course for the sentencing Judge to impose sentences in respect of each of the three charges which were wholly concurrent.

1. At the end of the proceedings on 17 May 2013, the proceedings were stood over to 21 May 2013. In a relatively brief exchange on that next day, when the sentencing Judge asked for some further assistance to understand the facts of what occurred, the sentencing Judge said that he intended to refer Mr Northcote "for an assessment for an intensive correction order in the community".

1. His Honour indicated that his view as to the appropriate sentence to be imposed was not at that stage a final one. Accordingly, to enable that assessment to take place, the sentencing proceedings were adjourned to 16 August 2013.

1. On that final occasion, some further clarification of the facts occurred, and the report of the assessment which was undertaken by a community corrections officer, and dated 13 August 2013, was tendered. That reported recorded that Mr Northcote had been assessed as suitable to perform community service work, and had been assessed as suitable for an ICO.

1. His Honour then proceeded to deliver his Remarks on Sentence and to impose the sentences.

Mr Northcote's Subjective Circumstances

1. Mr Northcote was born in April 1962. He was about 45 years old at the time of the offences, and 51 years old at the time of sentence. Mr Northcote had no prior criminal history.

1. There was no suggestion that he suffered from any psychiatric or mental health condition or any physical ill health of any relevance.

1. He gave evidence that he had been educated to Higher School Certificate Level in Sydney. He attended at the William Angliss College where he completed a Diploma of Hospitality Management and graduated in 1984. During that year he also undertook some further study at the Riverina Murray Institute of Higher Education at Wagga Wagga, in the area of wine science.

1. He married at the age of 24. He is the father of three children. He had essentially spent his career in the hospitality and hotel industry. For 10 years prior to becoming involved with Compass, he was the managing director and general manager of a hospitality consulting business which serviced hotels in NSW.

1. In January 2012, Mr Northcote and his wife separated after 26 years of marriage. They are now divorced. Mr Northcote stays in touch with two of his children. The third has had no communication with him since he separated from his wife.

1. In his affidavit, he expressed his remorse and regret for the circumstances leading up to his being charged. He accepted that it was his duty to ensure that he made adequate and frank disclosure and that he had not done so. He reported that he had been the subject of adverse publicity and industry gossip within the hotel and hospitality industry.

1. He concluded his affidavit with this paragraph:

"I pleaded guilty at the first occasion given my deep regret and resolve never to again find myself in such difficult circumstances and to try to re-establish the respect of my family and the community. It may be a long road, but it is one that I am committed to achieve."

Remarks on Sentence

1. The Remarks on Sentence commence with a short description of the charges including identifying the particulars of dishonesty with respect to the first charge of conduct contrary to s 184(2) of the Corporations Act. The sentencing Judge then noted the pleas of guilty which he found were motivated by a willingness to facilitate the course of justice and an indication of contrition. His Honour then noted the requirements of Part 1B of the Crimes Act 1914 (Cth), in particular, that he was obliged to impose a sentence that was of a severity appropriate in all of the circumstances.

1. His Honour acknowledged his obligation to take account of general deterrence, which he noted was a particularly important consideration in relation to offences of the kind with which he was dealing.

1. His Honour then noted the decision of this Court in R v Hawkins (1989) 45 A Crim R 430 at 435 where Lee J said that in considering the gravity of offences such as those with which the sentencing Judge was dealing, the sums of money involved are a significant matter to be considered.

1. Lee J said:

"In considering the gravity of offences objectively as is required, the amounts of money involved are a significant matter for consideration. The amount of money involved in cases of premeditated planned deception and fraud, are of necessity an important factor in the question of determining the degree of criminality for they are an indication of the extent to which a prisoner is prepared to be dishonest and to flout the law and to advance whatever are his own purposes."

1. His Honour then turned to consider the facts as set out in the Statement of Agreed Facts. In particular, he noted that NovaPrime received $1.566 M and that the offender in fact received a little under $1.1 M.

1. His Honour noted that the offender would be disqualified from managing a corporation for a period of five years, which he observed was a matter to be taken into account.

1. His Honour then went on to consider the facts surrounding the charging of commission by Burgess Rawson, the hotel broker. He noted that the commission charged of 2 per cent was the normal market rate which was paid either by the vendor hotels or else was included in the purchase price if paid by Compass. He also noted that on occasions when Compass was paying the commissions, the rate of 2 per cent was negotiated down to 1 per cent. He then went on to say this:

"It seems that Burgess Rawson would have been, in my view, entitled to commission in relation to the purchase of those various hotels. In the materials before me, it is difficult to establish what, if any, actual detriment was caused to Compass Hotel Group, and that is a matter that I take into account.

...

It seems clear in my view, and the Crown accepted, that a broker such as Burgess Rawson would have needed to be employed at some stage, and if the vendors of the particular hotels had not agreed for the broker to charge them commission, then somebody would have had to pay the commission. The commission is not an inflated commission, it was a market commission. That, in my view, is an important consideration in this matter."

1. His Honour then went on to consider in unexceptionable terms the subjective case of Mr Northcote. His Honour noted that whilst Mr Northcote was a man of prior good character, such fact is of lesser significance for crimes of the kind with which he was dealing, namely "white collar" offences.

1. His Honour found that Mr Northcote had shown "deep contrition" which was manifest in his early plea of guilty and by reference to the affidavits of various personal referees. As well, he noted that the probation officer had formed a similar view.

1. His Honour moved to the discussion of a number of the authorities and reached this conclusion:

"Having regard to the seriousness of the present offence, the need to ensure adequate punishment, the need for general deterrence and taking into account all of the circumstances, I am satisfied that imprisonment is the appropriate sentence. I then need to consider what that sentence should be and how that sentence should be undertaken."

1. His Honour moved to consider the relevance of the subjective case of Mr Northcote. He found that Mr Northcote had excellent prospects of rehabilitation and was unlikely to re-offend.

1. His Honour then considered the interaction between each of the three offences, and in particular noted a discussion which he had had in the course of submissions with senior counsel for the CDPP. He then said:

"Taking into account what was discussed on 17 May 2013, taking into account the fact that the provision to the regulator in relation to the false documents was effectively to either assist in the commission of the first offence or to cover it up, it is my view that it would be appropriate to take into account that activity when determining the sentence for the first offence, and then, bearing in mind that I have so taken it into account, that the sentences imposed in relation to the second and third offences be separate and discrete sentences, but wholly concurrent."

1. His Honour then expressed the view that having taken into account all of the circumstances, the appropriate sentence was one of two years imprisonment. His Honour then turned to consider how that sentence should be served and determined that it was appropriate for Mr Northcote to serve the sentence by way of ICO.

1. His Honour set out his reasons for so doing in a short passage in the following terms:

"My reasons for that are the commission of the offence in the way that I have found. I accept that the offender has shown deep contrition and I accept that the offender is unlikely to commit further offences and that his prospects of rehabilitation are very good."

1. His Honour then proceeded to sentence Mr Northcote and impose conditions on his ICO. Those conditions were of the standard kind which, amongst other things, required Mr Northcote to undertake a minimum of 32 hours community service work per month.

Grounds of Appeal

1. The Director of Public Prosecutions (Cth) identified two separate grounds of appeal. The CDPP submitted that Ground 1 identified errors on the part of the sentencing Judge which served to explain the imposition of a sentence which it submitted was manifestly inadequate. Ground 2 was that the sentence was manifestly inadequate.

1. In this Court, the parties proceeded upon the basis that although it was appropriate to consider the Grounds separately, there was a good deal of overlap between the Grounds.

Ground 1 - Errors in Sentencing Process

1. This Ground raised a question as to whether the sentencing Judge erred when assessing the objective seriousness of the offence, by:

(a)   failing to adequately to take into account material considerations; and

(b)   taking into account extraneous and irrelevant matters.

1. The CDPP submits that the sentencing Judge failed to adequately take into account material considerations such as the amount of the advantage obtained, the deliberate premeditated nature and duration of the offending, and the extent of the dishonesty involved.

1. The provisions of s 16A of the Crimes Act, require a court to impose a sentence that is of "a severity appropriate in all the circumstances of the offence". In addition, s 16A(2) lists a series of matters which a court must take into account in addition to any other matters to which the Court may have regard when passing sentence. Prime amongst these matters is, as the CDPP submitted, the objective seriousness of the offending.

1. It is clear that unless due regard is to paid to the gravity of the offence viewed objectively, there can be no proper attention to the principle that there needs be a reasonable proportionality between a sentence and the circumstances of the crime: R v Geddes [1936] 36 SR (NSW) 554 at 556 per Jordan CJ; R v Dodd (1991) 57 A Crim R 349 at 354.

1. In Dodd, the Court consisting of Gleeson CJ, Lee CJ at CL and Hunt J, said:

"... making due allowance for all relevant considerations, there ought be a reasonable proportionality between a sentence and the circumstances of the crime, and we consider that it is always important in seeking to determine the sentence appropriate to a particular crime to have regard to the gravity of the offence viewed objectively, for without this assessment the other factors requiring consideration in order to arrive at the proper sentence to be imposed cannot properly be given their place."

1. It is also clear that the Court will be slow to interfere with the determination of a sentencing Judge concerning the objective gravity of an offence: Mulato v R [2006] NSWCCA 282 at [37], [46]-[47].

1. I have earlier set out in [64] a passage from the Remarks of Sentencing where his Honour referred to the seriousness of the offence. That was the only reference to the seriousness of the offence. Such a reference does not, and cannot be seen to, amount to a proper assessment of the objective seriousness of each of the offences.

1. The principal offence involving Mr Northcote using his position as a director dishonestly to gain an advantage, was characterised by the following features:

(a)   the extended period of time over which the offence had taken place, namely, between October 2007 and April 2008;

(b)   the fact that the offences were premeditated and planned, which planning commenced in 2006 when the agreement with Burgess Rawson was first struck;

(c)   the large number of occasions upon which Mr Northcote was obliged to, but did not, disclose the arrangement with Burgess Rawson as his director's duties obliged him to do;

(d)   the significant number of transactions which were entered into to give effect to the arrangement to purchase hotels through Burgess Rawson as the hotel broker, which at each step of the way required disclosure of the conjunction agreement;

(e)   the extensive nature of the dishonesty engaged in by Mr Northcote to conceal from those entitled to know, the arrangements which would result in him personally profiting from the hotel purchases;

(f)   the fact that he personally profited by a sum of almost $1.1 M, and the total involved in the arrangement was about $1.56 M; and

(g)   as Mr Northcote agreed in his cross-examination, throughout the relevant period he knew that the arrangement with Burgess Rawson should have been disclosed, including the fact that he would personally profit from it, but made a conscious decision not to disclose it.

1. Although Mr Northcote was charged with a single offence, because that offence included all of the conduct which involved the various acts of being in breach of his duty as a director, each act of which was accompanied by the dishonesty to which he pleaded guilty. This was objectively a very serious example of offending of the kind charged.

1. The learned sentencing Judge ought to have, but did not, make an assessment of the objective seriousness of the offence. Had he done so he ought to have assessed it as being at the higher end of the range of offending.

1. The CDPP submitted to the sentencing Judge, and to this Court, that the offences were deliberate and planned offences executed over a significant period of time. It submitted that:

"They involved the deliberate, premeditated and systematic abuse by the respondent of his position. He repeatedly failed to declare his interests in NovaPrime on occasions when he had a positive duty to do so. The respondent took active steps to conceal his dishonesty by arranging for false documents to be lodged with ASIC. As a result of his dishonesty, the respondent improperly obtained a benefit to himself and companies controlled by him in excess of $1.5 M. This was a gross breach of trust of not only the Board of Compass Hotel Group, but its shareholders and all those with whom he had dealings with respect to the purchase of the relevant properties."

1. This is a correct summary and an appropriate description of the objective seriousness of the offending. The sentencing Judge simply failed to accord to this serious instance of offending any proper assessment of it at all. He did not discuss it beyond simply recording the facts. He made no real assessment of the objective criminality of the offending.

1. He fell into error by failing to make any adequate assessment of this issue, and Ground 1 of the appeal, to this extent, must be upheld.

1. The CDPP also submitted that the sentencing Judge had taken into account matters which were irrelevant to the determination of an appropriate sentence. The CDPP submitted that the two matters which were taken into account by the sentencing Judge, and which were irrelevant, were:

(a)   the absence of any detriment to the Compass Hotel Group; and

(b)   the entitlement of Burgess Rawson to charge a market rate commission in any event.

1. The CDPP submitted that these matters were irrelevant because they were both concerned with whether there was any detriment to Compass, whereas the charge which was preferred under s 184(2) of the Corporations Act 2001 was a charge that Mr Northcote used his position dishonestly, not to cause a detriment to the Compass Hotel Group, but rather to gain an advantage for himself. Accordingly, so the CDPP submitted, the question of detriment was irrelevant and the absence of detriment, if that was the correct finding, was not capable of mitigating the objective seriousness of the offences before the Court.

1. The senior counsel for the respondent submitted that the sentencing Judge was correct to take into account as a consideration when sentencing, the absence of detriment to the Compass Hotel Group. It was submitted that the absence of detriment was relevant both when considering the nature and circumstance of the offences, and also whether there was any injury or damage resulting from the offences, both of which are specifically identified in s 16A of the Crimes Act as matters to which the Court ought have regard. The respondent pointed to other cases in which the absence of a detriment was considered to be relevant.

1. In particular, the respondent pointed to the decision of this Court in Kwok v R [2007] NSWCCA 281; (2007) 64 ACSR 307. But Kwok was a very different case to this. Whilst it is true that in Kwok the charge related to Mr Kwok obtaining an advantage for himself, or others (being companies with which he was associated), there was never any question of any inappropriate gain of money by Mr Kwok, or of any real detriment to the company. As Howie J said, at [129], the only deprivation suffered by the company of which Mr Kwok was a director as a result of his conduct, was:

"It's ability to determine whether to embark upon the leases independently of any contribution to the negotiations or decision making by the appellant."

1. Here, had Compass known of the advantage which had been obtained by Mr Northcote, it would have been able to consider whether it called upon him to give an account of his profit, that is, $1.56 M, to the company of which he was a director, namely Compass. It was denied the opportunity so to do. As well, as has earlier been noted, Mr Northcote obtained a significant personal advantage. Neither of these elements were present in Kwok.

1. In the nature and circumstances of these offences, and having regard to the terms of the charge, the absence of any monetary detriment to Compass, which was the way in which the sentencing Judge considered the matter, was entirely irrelevant.

1. Similarly, the question of whether or not Burgess Rawson would or would not have been able to charge a market commission, and if so who would or would not have paid it, was similarly irrelevant. The simple point to be made with respect to that is this: whatever be the charge which Burgess Rawson in fact levied, whether it be 2 per cent or 1 per cent, assuming for a moment that those charges were an appropriate market rate, the fact was that Burgess Rawson was willing to halve the commission which they received by sharing it with Mr Northcote. Thus, the fact that Burgess Rawson were or were not entitled to charge a commission at market rate, was entirely irrelevant as a factor to be taken into account in the nature and circumstances of this offence. What was relevant was the receipt of the money by Mr Northcote, and his dishonest concealment of the conjunction agreement.

1. It follows that the sentencing Judge fell into error in the respects identified in Ground 1.

Ground 2 - Manifest Inadequacy

1. The CDPP submits that the sentences imposed were manifestly inadequate. The CDPP submitted that having regard to the objective seriousness of the offending, and the need to give a sentence which reflected an adequate general deterrence, that the sentences imposed, to be served by way of an ICO, were wholly inadequate and reflected an error.

1. The CDPP submitted that authorities of this Court demonstrated that for a sentence involving offences of this kind, the real "bite" of general deterrence takes effect only if a custodial sentence is imposed: R v Boulden [2006] NSWSC 1274 per Whealy J (at [51]); R v Zamagias [2002] NSWCCA 17 per Howie J (at [32]); R v Donald [2013] NSWCCA 238 per Latham J (at [76]) [86]; R v Hinchliffe [2013] NSWCCA 327 at [274]-[277].

1. The CDPP also pointed to the fact that, although an ICO has the capacity to operate as a form of punishment, it does involve a significant degree of leniency: Hinchliffe (at [278]).

1. The CDPP submitted that the previous good character of Mr Northcote ought to be given little weight, together with the sentencing Judge's findings that Mr Northcote had expressed deep contrition, was unlikely to re-offend and had very good prospects of rehabilitation. The CDPP pointed to the remarks of Charles JA in Director of Public Prosecutions v Bulfin [1998] 4 VR 114 at 131.

1. In short, the CDPP submitted that the imposition of the ICO in the circumstances here did not pay adequate attention to the serious nature of the offence, the necessary general deterrence and the need to appropriately punish the offender.

1. Senior counsel for the respondent, Mr Northcote, submitted that the Court should conclude that an ICO, in the circumstances here, constituted a substantial punishment, and that the conditions imposed by the ICO meant that Mr Northcote was not living a carefree existence amongst the community because the ICO deprived him of his liberty in a real and not merely fictional sense: R v Pogson [2012] NSWCCA 225; (2012) 82 NSWLR 60 at [111] per McClellan CJ at CL and Johnson J.

1. In short, senior counsel for the respondent submitted that the sentences imposed could not be described as manifestly inadequate such that this Court would intervene.

1. It is clear that the exercise of sentencing is well recognised as involving different, and sometimes conflicting purposes: Veen v The Queen (No.2) [1988] HCA 14; (1988) 164 CLR 465 at 476-477; Muldrock v The Queen [2011] HCA 39; (2011) 244 CLR 120 at 129 [20]; Pogson at [114].

1. Section 16A of the Crimes Act calls attention to the need to ensure that a person is adequately punished for the offence, the nature and circumstances of the offence and the need for specific deterrence. As well, it requires attention to be paid to the prospect of rehabilitation of the person, the person's subjective circumstances, and the probable effect that any sentence would have on the person's family or dependents. These are all matters which are in tension.

1. However, as was said in Pogson at [143] by McClellan CJ at CL, and Johnson J:

"Sentencing courts have a responsibility to ensure that the sentence imposed punishes the offender, denounces their criminal conduct and provides sufficient disincentive to others who may be tempted to offend, to ensure that they refrain from criminal activity. Although some statements have been made suggesting that in relation to some offences, general deterrence may be controversial, this is not the case with respect to crimes involving the market or other forms of business dealings."

1. I would conclude that the CDPP has made good this ground of appeal.

1. The total effective sentence imposed of 2 years to be served by ICO was manifestly inadequate because it did not reflect the seriousness of the offence, the extent to which the respondent personally was financially advantaged by the offence, the need for general deterrence and the need to impose a sentence which both punished Mr Northcote and denounced his criminal conduct.

1. This ground should be upheld.

Should the Appeal be Dismissed?

1. Even though the CDPP has established error with respect to both grounds of appeal, this Court needs to consider whether, in the exercise of its residual discretion, the appeal nevertheless should be dismissed.

1. The primary purpose of appeals by the Crown, or the CDPP, against sentence under s 5D of the Criminal Appeal Act 1912, is to lay down principles for the governance and guidance of courts having the duty of sentencing convicted persons. This Court has in the exercise of its jurisdiction under s 5D of the Criminal Appeal Act, a residual discretion to decline to interfere with the sentence even though it is erroneously lenient: Green v The Queen; Quinn v The Queen [2011] HCA 49; (2011) 244 CLR 462 at 465-466 [1]-[2].

1. It has also long been recognised since The Queen v Tait [1979] 46 FLR 386, that a Crown appeal raises considerations which are different from an offender's appeal.

1. In Tait at 388-389, Brennan and Deane JJ said:

"A Crown appeal puts in jeopardy 'the vested interest that a man has to the freedom which is his, subject to the sentence of a primary tribunal' (per Isaacs J in Whitaker v The King). The freedom beyond the sentence imposed is, for the second time, in jeopardy on a Crown appeal against sentence. It was first in jeopardy before the sentence in Court."

1. Their Honours identified some instances of double jeopardy. They said that it would be unjust to a defendant to expose him to double jeopardy because of an error affecting his sentence if the Crown's presentation of the case was a cause of, or a contribution to, that error. Their Honours identified that it would be unjust to a defendant for a case on appeal to be made against him on a new basis that could have been successfully challenged at first instance.

1. In this Court the question of double jeopardy was considered in R v Tleige (Court of Criminal Appeal, New South Wales, 19 November 1982, unreported). In that case, Street CJ said:

"In determining what the quantum of sentence should be we have, as not infrequently occurs in the case of Crown appeals, borne in mind that the respondent has been twice in jeopardy in the matter of sentence. It will be distressing in the extreme for him to suffer the sentence passed on him some time ago being increased. This leads us to determine a sentence which is more lenient than would properly be appropriate if the matter were coming forward for sentence for the first time."

1. Another element of the principle of double jeopardy is the constraint on the sentence which this Court imposes if it decides to intervene. That element of the principle is well established and can properly be described as being "a sentence that is somewhat less than the sentence it considers should have been imposed at first instance": R v Allpass (1993) 72 A Crim R 561 at 562 per Gleeson CJ, Hunt CJ at CL and McInerney J; R v JW [2010] NSWCCA 49 per Spigelman CJ, Allsop P, McClellan CJ at CL, Howie and Johnson JJ agreeing at [96]-[97].

1. For State offences, some aspects of the double jeopardy principles have been removed by the provisions of s 68A of the Crimes (Appeal and Review) Act 2001. However, that section has no effect in these proceedings because they are Commonwealth offences.

1. Accordingly, this Court needs to consider whether in the exercise of its residual discretion, and having regard to the principle of double jeopardy, it is appropriate to intervene and, if it does, then it is necessary to impose a sentence which is somewhat less than would otherwise be the case.

1. I am satisfied that the Court should not exercise its residual discretion not to intervene with the sentences that were passed. Putting it another way, I am satisfied that it is appropriate for this Court to intervene in the circumstances of this case.

1. The sentence imposed by the sentencing Judge does not pay any adequate attention to the seriousness of the offending, nor to the numerous decisions of this Court which identify the important role of general deterrence in sentencing offenders for offences of this kind.

1. In my opinion the sentences imposed are offensive to the administration of justice, and are so mercifully lenient that this Court must intervene.

Re-sentence

1. But for the principles of double jeopardy to which earlier reference has been made and, as well, the express concession by senior counsel for the CDPP before the sentencing Judge that the sentences for the three offences should be wholly concurrent, on any re-sentencing, this Court would have been obliged to have accumulated the sentences so as to have encapsulated, in a total effective sentence, the overall criminality involved. After all, Mr Northcote engaged in the offences of providing a document to ASIC which was false in material particular in order to cover up his crime of failing to attend to his director's duties honestly. Unless the sentences were accumulated to a degree, then it would be difficult to see that they would, in an overall sense, capture the extent of his criminality.

1. However, in re-sentencing Mr Northcote, this Court paying due regard to the principles of double jeopardy, should sentence him on the basis that all sentences are concurrent, consistently with the concession made below, from which this Court was not invited to depart.

1. The principal offence against s 184(2) of the Corporations Act, involves, as I have earlier said, a high level of seriousness of the objective criminality. Mr Northcote personally profited by over $1 M from a deliberate pre-meditated course of conduct which extended over a lengthy period of time during which, on many occasions, he was in breach of his director's duties.

1. His offending was at the higher end of the range for this offence.

1. Mr Northcote was a man of prior good character and there is no reason to think that the sentencing Judge was in error when he found that he was unlikely to re-offend and had good prospects of rehabilitation. Because the Court is re-sentencing Mr Northcote, it is appropriate to have regard to the additional material filed on appeal which demonstrates that since commencing his sentence on 27 September 2013, he has complied with all of the conditions imposed on the ICO.

1. He has undertaken his community service under the direction of the Department of Corrective Services by working at a shop of a well-known charity every Thursday from 8.45am to 5pm. He has continued in employment in a business which is involved in the hotel industry, and that continued involvement has necessitated disclosure of his circumstances to new clients.

1. He shares custody of his 14 year old son with his former wife, and has access to his son every second weekend. He is financially supporting his son through an agreement for child support and by paying his school fees. He says that his former wife would experience significant difficulty in maintaining his son without financial support from him.

1. As well, the store manager of the charity shop where Mr Northcote has been working, has described him as making an exceptional contribution to the operations of the store, and has described him as humble, self motivated, hard working and a good team member.

1. It is proper to have regard to all of these matters and take them into account.

1. However, in my opinion nothing less than a term of full-time imprisonment served in custody is appropriate to reflect the nature and circumstances of the offence, and a penalty of such a severity as is appropriate to the offence. I do not discount having proper and due regard to the strong subjective circumstances involving Mr Northcote, but like so many other white collar crime offenders, these have less importance than they might in other circumstances.

1. It is appropriate that Mr Northcote serve out the balance of the 2 year term of imprisonment imposed originally by Jeffreys DCJ. Again, but for the principle of double jeopardy, I would have thought a longer period in custody was plainly appropriate. However, having due regard to that principle, it is appropriate to restrict the custodial part of the sentence of imprisonment to the maximum allowed by Jeffreys DCJ.

1. I propose the following orders:

(1)   Appeal allowed.

(2)   Quash the sentences with respect to each offence imposed in the District Court of NSW (Jeffreys DCJ) on 17 September 2013.

(3)   In lieu thereof impose the following sentences:

(a) On the offence of "Use Position as a Director Dishonestly" contrary to s 184(2) Corporations Act 2001 the respondent Mr Bryan Northcote is sentenced to a term of imprisonment for a period of 3 years and 6 months commencing on 27 September 2013 and expiring on 26 March 2017.

(b) On the first offence of "Making a False and Misleading Statement in a Document lodged with ASIC", contrary to s 138(2) Corporations Act 2001, the respondent Mr Bryan Northcote is sentenced to a term of imprisonment for a period of 1 year commencing on 27 September 2013 and expiring on 26 September 2014.

(c) On the second offence of "Making a False and Misleading Statement in a Document lodged with ASIC", contrary to s 138(2) Corporations Act 2001, the respondent Mr Bryan Northcote is sentenced to a term of imprisonment for a period of 1 year commencing on 27 September 2013 and expiring on 26 September 2014.

(4) The Court directs that the respondent be released on 26 September 2015, being the expiration of 2 years of the sentence with respect to the offence contrary to s 184(2) of the Corporations Act 2001, upon a recognisance that he be of good behaviour during the balance of the term of that sentence and upon him giving security in the sum of $1,000 without surety.

1. R S HULME AJ: I agree with the orders proposed by Garling J and with his Honour's reasons.

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ADDENDUM TO Judgment

1. THE COURT: On 14 March 2014, the Court delivered judgment on this Crown appeal. It allowed the appeal, quashed the sentences imposed in the District Court of NSW on 17 September 2013, and re-sentenced Mr Northcote.

1. Having determined that the sentencing Court fell into error, the Court considered whether, in the exercise of its residual discretion, the appeal should nevertheless have been dismissed. It decided that it was not appropriate to exercise its residual discretion to dismiss the appeal.

1. The judgment dealt with this issue between [108] and [117]. In particular at [113], reference was made to the question of whether s 68A of the Crimes (Appeal and Review) Act 2001 applied to the proceedings because the offences in question were Commonwealth offences.

1. The attention of the Court was not drawn during argument to the decision of the High Court of Australia in Bui v Director of Public Prosecutions (Cth) [2012] HCA 1; (2012) 244 CLR 638 nor to the decisions of this Court in Khazaal v R (No 2) [2013] NSWCCA 140 and R v Zerafa [2013] NSWCCA 222 which include a reference to the application of Bui in NSW.

1. However, having regard to the conclusions expressed in [115]-[117] of the judgment, no different sentence would have been imposed in this case.

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Amendments

07 April 2014 - Addendum added at end of judgment

Amended paragraphs: Addendum

Decision last updated: 07 April 2014