DPP v Adams

[2006] VSCA 149

SUPREME COURT OF VICTORIA

COURT OF APPEAL

No. 43 of 2006

THE DIRECTOR OF PUBLIC PROSECUTIONS

v.

LEITH RICHARD ADAMS

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JUDGES:	VINCENT, ASHLEY and REDLICH, JJ.A.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	15 June 2006
DATE OF JUDGMENT:	7 July 2006
MEDIUM NEUTRAL CITATION:	[2006] VSCA 149	1st Revision  12 July 2006

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CRIMINAL LAW – Director’s appeal against sentence – Whether sentence manifestly inadequate – Financial adviser – Multiple counts of theft and using a false document – Lack of remorse and appreciation of the dishonest nature of the offending – Importance of general deterrence –  Sentence plainly inadequate – Suspension of substantial part of sentence contributed to inadequacy –  Respondent re-sentenced and minimum non-parole period fixed

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APPEARANCES:	Counsel	Solicitors
For the Crown	Mr P.A. Coghlan, Q.C., D.P.P. with Mrs C.M. Quin	Mr S. Carisbrooke Acting Solicitor for Public Prosecutions
For the Respondent	Mr P.F. Tehan, Q.C. with Mr N. Hutton	Mike Wardell

Redlich, J.A. delivered the judgment of the Court (Vincent, Ashley and Redlich, JJ.A.):

1. This is an appeal by the Crown against sentence. On 24 October 2004 the respondent was presented in the County Court at Ballarat on 32 counts of theft and four counts of using a false document (the 1^st presentment).  The respondent entered a plea of not guilty to all counts.  Following a trial which lasted two weeks, the jury found the respondent guilty of twenty one counts of theft and three counts of using a false document.  The following day, 8 November, the respondent was presented on  six counts of theft to which he pleaded guilty (the 2^nd presentment).  Following a plea in mitigation, the respondent on 26 January was sentenced as follows:  

1^st Presentment R01138366.1

·     count 3 - theft – 1 month imprisonment

·     count 10 - theft – 6 months’ imprisonment

·     count 11 - theft – 9 months’ imprisonment

·     count 13 - theft – 9 months’ imprisonment

·     count 14 - theft – 9 months’ imprisonment

·     count 16 - theft – 9 months’ imprisonment

·     count 17 theft – 6 months’ imprisonment

·     count 18 - theft – 9 months’ imprisonment

·     count 19 - theft – 9 months’ imprisonment

·     count 20 – theft - 6 months’ imprisonment

·     count 21 – theft - 6 months’ imprisonment

·     count 22 - theft – 9 months’ imprisonment

·     count 24 – theft - 6 months’ imprisonment

·     count 25 – theft - 6 months’ imprisonment

·     count 26 – using a false document – 9 months’ imprisonment

·     count 27 - theft – 9 months’ imprisonment

·     count 28 - theft – 1 month imprisonment

·     count 29 – using a false document – 9 months’ imprisonment

·     count 30 - theft – 10 months’ imprisonment

·     count 32 - theft – 9 months’ imprisonment

·     count 33 - theft – 9 months’ imprisonment

·     count 34 – using a false document – 9 months’ imprisonment

·     count 35 - theft – 12 months’ imprisonment

·     count 36 – theft - 6 months’ imprisonment

One month of counts 11, 13, 14, 16, 17, 18, 19, 20, 22, 24, 26, 27, 29, 32, 33, and 34, and two months of count 30, were ordered to be cumulative although no base count was specified.

2^nd Presentment R01138366.2-2

·     count 1 - theft – 10 months’ imprisonment

·     count 2 - theft – 12 months’ imprisonment

·     count 3 - theft – 10 months’ imprisonment

·     count 4 – theft – 6 months’ imprisonment

·     count 5 – theft – 6 months’ imprisonment

·     count 6 – theft – 6 months’ imprisonment

Two months of counts 1, 2 and 3, and one month of counts 4, 5 and 6 were also ordered to be cumulative.

1. The sentencing judge stated that the total effective sentence was three years three months’ imprisonment. He directed that two years and six months of the sentence be suspended for a period of three years, stating that it was his intention that the respondent serve nine months in custody. Various compensation orders were made pursuant to s.86 of the Sentencing Act 1991. A declaration was made as to 77 days pre-sentence detention.

1. There were two errors in the sentences pronounced although the Director does not seek to rely on either of them in support of this appeal.  First, no base sentence was identified.  There must always be a base term specified which will provide the point of reference for all directions relating to concurrency or cumulation.[1]  It appears highly likely that His Honour intended count 35 should be the base term.  It was the first count referred to by His Honour and the aggregate sentence which His Honour announced must have included a count on which a term of twelve months’ imprisonment was imposed.  Both parties agree that the sentencing orders should be rectified to reflect this if the appeal should fail.

   [1]R. v. Nikodjevic [2004] VSCA 222 at [39].

1. Second, the suspended sentence imposed was bad in law as s.27(2) of the Sentencing Act 1991 precludes the making of orders for suspension with respect to sentences in excess of three years. On 25 January 2006, at the behest of a representative from the office of public prosecutions, the matter was returned to the sentencing judge for sentence correction in relation to the second of these errors. His Honour varied the sentences previously announced by making no order as to cumulation on counts 17, 20 and 24 thus arriving at a total effective sentence of three years’ imprisonment. No other change was made to the sentences or orders for cumulation previously pronounced. His Honour ordered that two years three months of the sentence be suspended for a period of three years so that the respondent serve nine months in custody. If the sentence imposed was within the range of sentences which were open to the sentencing judge it would be unfair to the respondent that he should be exposed to an increased sentence because of an error made by the sentencing judge which is not the subject of specific complaint in the grounds of appeal. That is not to say that a specific error may never be taken into account if it is not a ground of appeal if it results in a sentence that is manifestly inadequate and which, in the public interest, requires reconsideration. As we have said, the Director did not complain as to the course followed, submitting that the County Court had inherent jurisdiction to recall an order that had been made in excess of power. Whether or not that be so, in view of the position adopted by the Director, it is unnecessary to consider this issue further.

Background

1. The following summary is drawn from the facts agreed on by the parties.  The respondent was the registered proprietor of a business called “Horsham Finance” which commenced trading on or around 2 March 1998.  The business purported to provide finance brokering services.  He was also the Director, Secretary and Shareholder of a business called E. Home Loans Pty Ltd which commenced trading on or about 13 December 1999.

1. Between them, the two businesses controlled by the respondent offered investors four types of investment schemes -

·     Farm Management Deposits

·     Car Club Investment

·     Overseas Money Market Investment

·     Bridging Loan Investments.

1^st Presentment

Farm Management Deposits

1. The counts on the first presentment related to the respondent’s Farm Management Deposits scheme and his Bridging Loan Investment scheme.

1. “Farm Management Deposits” (FMD) allowed eligible primary producers to set aside pre-tax income in high income years for use in low income years.  It was a pre-condition of the scheme that such deposits be held for a minimum of twelve months before the scheme’s tax benefits could be realised.  When opening an “FMD” account with an eligible financial institution, the institution was required to provide the primary producer with a mandatory statement outlining the general conditions of the scheme.  Such deposits had to be made with a “financial institution” as defined by the Income Tax Assessment Act 1936 (Cth).

1. Horsham Finance, the entity controlled by the respondent which purported to offer FMD’s, was not at the time it offered such services, a “financial institution” within the meaning of the relevant legislation and had not been granted authority under the Banking Act 1959 (Cth) to carry on banking business. Further, it was not an approved deposit-taking institution for the purposes of the Banking Act, nor was it an Australian Prudential Regulation Authority regulated entity, nor were its activities underwritten by the Commonwealth, or a State or Territory, in such a way as to bring it within the purview of the definition of “financial institution” provided by the Income Tax Assessment Act.

Bridging Loan Investments

1. From 1999 the respondent purported to offer investors an opportunity to earn higher interest than the banks by seeking a minimum deposit of $5,000.00 which generated annual interest payments of 10% of the sum invested.  The money invested was to provide “bridging finance” to purchasers of properties who required additional sums prior to or at the date of settlement in order to effect settlement.

Count 3

1. In 1999 the respondent asked Mr Glen Richard Taylor  if he wanted  to earn better interest than the banks were offering.  He told Taylor that a minimum of $5,000.00 was required and that annual interest payments would be made at a rate of 10%, paid in monthly instalments.  On 3 August 1999 Mr Taylor provided the respondent with a cheque for $5,000.00 to be invested for a period of 12 months with the option of withdrawing the sum invested at any time prior to the expiry of the 12 months.  The respondent printed an Investment Certificate upon receipt of the cheque and assured Mr Taylor that his money was “completely  safe.”  Mr Taylor’s cheque was deposited into the Horsham Finance NAB Cheque Account on 4 August 1999.  The proceeds of this deposit were used to pay a number of credit card accounts in the names of Leith Adams and Angela Adams, the wife of the respondent, in addition to sundry cheques, bills and cash withdrawals.  An amount of $92.53 was withdrawn  on 4 August 1999.  Monthly payments of sums equalling approximately 10% pro rata commenced to be made to Mr Taylor’s bank account from other sources.

Count 10

1. In November 1999 the respondent asked Mr Taylor if he wanted to invest more money with him.  Taylor agreed to invest a further $10,000.00 having satisfied himself by the deposit of monthly interest cheques into his account that his investment was performing well.  Again, the respondent assured Mr Taylor that his investment would be safe and he was provided with another Investment Certificate.

1. Mr Taylor’s cheque for $10,000.00 was deposited into the Horsham Finance NAB Cheque Account on 22 November 1999.  The proceeds of the deposit were then dissipated in a series of transfers and cheques.  Mr Taylor’s money was not invested, but a withdrawal against the amount he had invested was made on 22 November 1999 in the sum of $1,028.35.  Mr Taylor began to receive monthly cheques of $83.00 representing “interest” payments on his investment of $15,000.00.

Count 11

1. In late September 2000 the respondent represented to Mr Taylor that he would need to increase the amount of his investment to a minimum of $20,000.00 in order to remain in the scheme.  As a consequence, Mr Taylor wrote out a further cheque for $5,000.00 bringing his total investment to $20,000.00.  He received a Certificate confirming his investment in this amount.  That additional cheque for $5,000.00 was deposited into the Horsham Finance Trust Account on 23 October 2000.  The sum of $5,000.00 was then transferred on 24 October 2000 to the E. Homes Loan Account.  On 24 and 25 October 2000 the proceeds of this deposit were dissipated in a series of phone and internet transfers and cheques drawn on the Trust Account.  Accounts paid for by these funds include an outstanding credit card debt, the respondent’s wife’s car loan, accounts with Atlas Fuels and an amount of $1,000.00 provided to an employee of the respondent, one Martin Smith.

1. Interest payments continued irregularly, finally ceasing in approximately April 2001.  At a meeting held by the respondent and others in October 2001 Mr Taylor was notified that the respondent’s companies were in financial difficulty and required further capital.  On 6 May 2002 Mr Taylor was told by the respondent that his money would be repaid “in about three month’s time”.  

1. None of the principal invested by Mr Taylor has been repaid to him.  He did not authorise the use of the sums provided by him to the respondent for expenses personal to the respondent or his wife or to be applied to the running costs of either of the respondent’s two businesses.  His money was not invested as agreed.

Counts 13, 14, 16, 17, 18, 19, 20 and 21

1. Counts 13, 14, 16, 17, 18, 19, 20 and 21 involve a series of dealings entered into with the respondent by Lorna Melva Peterson.

1. In approximately October 1999 the respondent spoke to Mr Alan Edgar Peterson about investing in Horsham Finance.  The respondent explained that the investment involved assisting people in obtaining home loans by providing bridging finance when settlement in relation to the property they were hoping to buy pre-dated settlement of the property they were selling, resulting in a temporary shortfall.  The respondent explained that on settlement the money lent by Horsham Finance would be returned to it.  He told Mr Peterson that the money invested would be available at call provided 30 days written notice was given and that the investment would generate annual interest of 10%, paid in monthly instalments.

1. On 11 October 1999 Mr Peterson gave the respondent a cheque for $2,000.00 made out to Horsham Finance.  He received a Certificate of Investment. His mother, Mrs Lorna Melva Peterson, handed over a cheque for $20,000.00 at the same time and received a Certificate.  Her monthly interest payments were to be $167.00.  Both cheques were deposited into the Horsham Finance Cheque Account on 12 October 1999.  Between 12 October and 18 October 1999 a series of cheques were written and transfers made resulting in a balance on 18 October 1999 of $5,062.59.  The sum of $4,015.00 was transferred to the respondent’s NAB Master Card;  $4,134.00 was transferred to the respondent’s NAB Visa Card Account; and $8,000.00 was transferred to the mortgage account held by the respondent’s wife in reduction of her home loan.

1. Mrs Peterson commenced receiving monthly cheques of $167.00.  Impressed with the performance of her investment her son took her back to see the respondent on 24 March 2000 to discuss investing more money in the respondent’s bridging finance scheme.  Mrs Peterson provided the respondent with a cheque for $40,000.00.  The respondent told her that this sum would be added to the original amount invested and would be applied in the same way, i.e. as bridging finance for home loans.  Her monthly interest payments were calculated to be $333.33. This cheque was deposited into the Horsham Finance Cheque Account on 24 March 2000, together with a cash deposit of $2,000.00. 

1. Between 24 March and 29 March 2000 a series of cheques were drawn and transfers made resulting in a balance on 29 March 2000 of $2,593.09.  The transfers and payments made in this period include the sum of $1,873.73 representing three payments to Angela Adams or credit cards held by her;  a cheque for $6,970.22 deposited into the respondent’s NAB Master Card Account;  a cheque for $4,223.73 made out to cash;  a cheque for $3,251.00 made out to Creeks Building Service in payment of renovations to the respondent’s offices;  and a cheque for $1,934.15 made payable to Boe-Tec representing payment for boat repairs.  These payments were not authorised by Mrs Peterson and were not made pursuant to the agreement she had with the respondent.

1. Mrs Peterson never received any payments from the respondent since September 2001. The principal has not been returned to her.

Count 22

1. On or about 28 February 2000 the respondent attended the home of Jeffrey Pekin and discussed the prospect of investing in Horsham Finance with him.  His wife was also present.  The respondent told them that if they invested $10,000.00 they would be assisting other people to obtain bank finance and in return they would receive annual interest of 10% of their investment, paid in monthly instalments.  He assured them that their investment would be safe.  The following day the Pekins provided the respondent with $10,000.00 and received a Certificate acknowledging their investment.  Their cheque was deposited into the Horsham Finance Cheque Account on 29 February 2000.  The sums of $10,000.00, $2,300.00 and $180.00 were then transferred the same day to the “L.R. Adams Trading As Insursmart” Account, which had a balance of $1,636.43 at that time.  On 2 March 2000 two cheques were drawn on that account for the amounts of $13,811.09 and $302.41 made payable to CGU Insurance.

1. The Pekins received an interest payment each month for the first year of their investment, but payments became irregular in mid 2001.  Pekin wrote to the respondent in October 2001 requesting the return of his investment.  On 24 October he was advised to attend a meeting to discuss the financial affairs of Horsham Finance.  He was told at that meeting that his investment meant that he was a stakeholder in the business.  His principal has not been returned to him.  He did not authorise the respondent to apply the sum he provided to him for any purpose other than the investment in “bridging finance” discussed in their initial meeting.

Counts 24 & 25

1. Mr Michael Peterson began working part-time for the respondent’s business Horsham Finance in 1999.  He became a full-time employee in January 2000 as a broker.  On 12 August 1999 Peterson invested $10,000.00 with Horsham Finance on the basis that this sum would be used as bridging finance for purchasers of property, secured against second mortgages.  On 22 May 2000 Peterson withdrew his investment.  On 19 June 2000 he transferred $5,000.00 to Horsham Finance to be invested in keeping with his original investment.  He received a Certificate of Investment and interest payments monthly.  On 22 June 2000 Peterson’s cheque was deposited into the Horsham Finance Trust Account together with the sum of $50.00.  At the time of this deposit the balance of that account was nil.  The funds deposited on this day were then dissipated by transferring $3,800.00 to E. Home Loans Horsham Account and paying $1,200.00 to E. Home Loan Pty Ltd Account.

1. In September 2001 Peterson requested the withdrawal of his $5,000.00 investment.  He did this by sending an e-mail to the respondent.  He did not receive a response and the principal has not been returned to him.  He left the respondent’s employ in November 2001.  He did not authorise the respondent to spend his investment on items relating to the running of his businesses or on the respondent’s personal expenses.

Counts 26, 27, 28, 29, 30, 32 and 33

1. Despite the fact that it was not an “eligible financial institution” for the purposes of holding Farm Management Deposits, Horsham Finance advertised as being capable of providing this product and offered interest rates competitive with the institutional lenders.

1. Mr Gary Terence Miller, having spoken to the respondent about investing $10,000.00 in such an account, completed what he believed were the necessary forms on 30 June 2000.  The forms were headed “Horsham Finance” and were titled “Farm Management Deposits”.  Mr Miller signed them believing them to be genuine and provided the respondent with a cheque for $10,000.00.  The respondent told him that he would receive an interest payment after 12 months.

1. The cheque for $10,000.00 was deposited into the Horsham Finance Trust Account on 5 July 2000.  On the same day $8,400.00 was transferred by cheque from the Horsham Finance Trust Account into E. Home Loans Account.  The funds deposited into this account were then paid to Insursmart Trust Account ($2,519.00), Insursmart Trade Account ($1,968.71) and E. Home Loans ($2,000.00), leaving a balance in the original E. Home Loans Account of $1,370.59.  On the same day, $688.24 was paid from the funds provided by Miller by cheque to Sandra Smith, another client of the respondent.  This transaction was not authorised by Mr Miller and was conducted without his knowledge.

1. Mrs Vila Miller is the mother of Gary Miller.  On 18 June 2001 Mrs Miller attended at the respondent’s offices in Darlot Street Horsham and spoke to the respondent.  The respondent arranged for her to complete forms on Horsham Finance letterhead, titled “Farm Management Deposit”, despite the fact that Horsham Finance was not authorised to hold such deposits.  Mrs Miller handed the respondent a cheque for $20,000.00, believing the representations made by the respondent about his capacity to provide the service he was purporting to provide.  Moreover, Mrs Miller believed that she was investing in a government-protected fund and that her investment was guaranteed.

1. Mrs Miller’s cheque was deposited into the Horsham Finance Trust Account on 18 June 2001.  On 20 June 2001 $18,000.00 was transferred from the Horsham Finance Trust Account into E. Home Loans Account.  On 20 June 2001 the proceeds of Mrs Miller’s cheque were  transferred into the E. Home Loans Account and from 20 June 2001 to 26 June 2001 the funds were dissipated through payments  to a number of the respondent’s clients for interest or other payments owing, to the respondent’s family for personal and domestic expenses, and for sundry business expenses.  Mrs  Miller did not authorise any of these transactions and none of them benefited her.  Her money was not invested by the respondent, contrary to his representations to her, and she has not recovered any of the capital sum she entrusted to the respondent.

1. In June 2001 Gary Miller deposited a further $17,500.00 into what the respondent represented to be a Farm Management Deposit Account held by Horsham Finance.  Again, forms were produced with Horsham Finance letterhead purporting to be a “Farm Management Deposit” documents.  Mr Miller completed the forms and signed them believing them to be authentic.  He did so believing that his investment had government protection and was therefore insured.  His cheque was deposited into Horsham Finance Trust Account on 29 June 2001.  On 3 and 4 July 2001 a number of large transfers were made from the Horsham Finance Trust Account utilising the proceeds of Mr Miller’s cheque, $10,000.00 being paid to E. Home Loans Account No. 79604201201 and interest and loan repayments to a number of the respondent’s clients.  The $10,000.00 part-proceeds of Mr Miller’s cheque deposited into the E. Home Loans Account were used  to make payments to the respondent’s wife, payment of credit card debts, various domestic and personal expenses and payments of interest and other money owing to the respondent’s clients.

1. Mr Miller did not authorise any of these transactions and none of them were conducted for his benefit.  On or about 19 October 2001, Mr Miller was notified that the company was having financial difficulties.  He has not recovered any of the principal paid to the respondent.

Counts 34, 35 and 36

1. On about 29 May 2001 Mr Lyall Hardy McClure and his wife consulted the respondent about depositing money into a Farm Management Deposit.  McClure’s daughter, Julie Nagorka, was present when the respondent visited McClure’s farm to discuss the investment.  McClure told the respondent that he was only interested in a Farm Management Deposit investment and proposed investing $50,000.00.

1. The respondent completed forms headed “Farm Management Deposit” and had McClure sign them, representing by his words and conduct that the forms were genuine when they were not.  The respondent said that he was unable to complete the paperwork because he needed an “F.M.D. Number”.  He left, taking the paperwork with him.  McClure handed him a cheque for $50,000.00 made payable to Horsham Finance.  Mr McClure’s cheque was deposited into Horsham Finance Trust Account on 30 May 2001.  The following day $48,000.00 was transferred to E. Home Loans Account.  Between 31 May and 4 June 2001 a series of internet transfers were made and cheques were written including $10,000.00 to E. Home Loans Visa Red Account;  $5,092.00 to True Blue Dealers and a number of payments to the benefit of the respondent’s wife.  The  remaining $2,000.00 was dissipated by way of a cheque and a series of internet transfers between 1 June and 15 June 2001. On 14 June 2001 a further $1,000.00 was drawn from the Horsham Finance Trust Account representing the dissipation of the balance of the amount invested by Mr McClure.

1. In late 2001 Mr McClure became aware that Horsham Finance was having financial difficulties.  He spoke to the respondent who told him that he was under new management and could not comment.  Mr McClure has not recovered the money he invested with the respondent.  He did not authorise the respondent to deal with his funds in any manner other than to deposit them into a bona fide Farm Management Deposit account.  This was not done on his behalf, contrary to the representations made to him by the respondent.

1. The respondent was interviewed by police on 2 September 2002, but declined to answer the questions put to him.

2^nd Presentment

1. In respect of this presentment, the respondent was presented on 6 counts of theft.  Counts 4 and 5 of this presentment related to the respondent’s Car Club Investment scheme and counts 2 and 3 to his Overseas Money Market Investment scheme.

1. The Car Club Investment Scheme was conducted under the auspices of E. Car Loans, another of the services offered by the respondent as an adjunct to his E. Home Loans business.  In March 2001 the respondent conducted a business seminar under the “E. Car Loans, Wizard” banner.  Potential investors were told by the respondent that the scheme involved leasing a vehicle whereby the purchaser would borrow money for the lease, 18% of which would be applied to a “car club” investment which in turn would generate returns sufficient to cover the lease repayments on the car, such returns to be paid annually.  The respondent told potential investors in the scheme that the money was capital guaranteed and that the money invested would be spread amongst a variety of funds to minimise risk.  Counts 4 - 6 inclusive relate to the operation of this scheme.

1. The Overseas Money Market Investment Scheme relates to a series of meetings conducted by the respondent with potential investors whereby he persuaded a group of “A List” investors to provide him with substantial sums of money which he undertook to place in the overseas money market on the understanding that the money invested would generate returns far greater than those advertised by local lending institutions.

Count 1

1. In early 2001, the respondent introduced Mr Dino Macchia to Mr Ross Morrison, having told Macchia that Mr Morrison intended to establish a bank in Australia.  The respondent further told Macchia that he, the respondent, intended to invest with Mr Morrison, that the investment was a good one and that the minimum required for the investment was $20,000.00.  The respondent represented to Macchia that this investment would produce a return of 10% per month.  Mr Macchia told the respondent that he could only afford to invest $10,000.00.  On 8 May 2001 Mr Macchia wrote a cheque for $10,000.00 which were deposited into the Jolithea Family Trust Account, an account operated by the respondent.  On 17 May 2001 two amounts of $4,000.00 and $5,000.00 were transferred to E. Home Loans Account  and $1,000.00 transferred to E. Home Loans Visa Red Account

1. On the same date the funds deposited in the E Home Loans Account were dissipated by a series of internet transfers being payments made either to other clients of the respondent or the payment of bills owing by the respondent.

1. Mr Macchia did not authorise the respondent to deal with the funds he entrusted to him in any fashion other than in pursuit of the investments the respondent had represented to him.  The $10,000.00 referred to above was provided to the respondent to deposit into the new bank which the respondent said was being established by Morrison.  Mr Macchia received no return on his investment and the principal has not been returned to him.  Morrison did not tell the respondent that he was setting up a bank and did not receive any money from E Home Loans or from the respondent.

Count 2

1. On 1 February 2001, Mr Shane Alfred Lavell transferred $45,000.00 into the Jolithea Family Trust Cheque Account at the request of the respondent.  This transfer was made as a consequence of representations made by the respondent to Lavell inducing him to invest in a high-yield overseas investment scheme.  The respondent told Lavell that this scheme had the potential to earn up to 100% per annum and that the principal would be guaranteed.  The investment was to be for a period of 12 months with dividends payable monthly.  At the end of the 12 months Lavell was to have the option of reinvesting or opting out of the scheme.  He did not receive any documentation from the respondent certifying his “investment”.  In early February 2001, $34,500 was transferred from the Jolithea Family Trust Cheque Account to E. Home Loans Account.  The credit balance created by these deposits was then dissipated by a series of internet transfers, personal bill payments and cash cheques.  A further sum of $10,013.47 was transferred from the Jolithea account to Baruch Investments, Vanuatu.

1. Throughout the period of this investment Lavell enquired about its performance.  At one stage the respondent told him that he was having cash-flow problems.  The respondent asked Lavell for $30,000.00.  Lavell gave him $10,000.00 on 13 August 2001 to enable the respondent to pay wages. On 24 October 2001 Mr Lavell attended a meeting convened to discuss the financial problems confronting the respondent’s businesses. Shortly before Christmas 2001 Lavell asked the respondent about the performance of his overseas investment.  The respondent told him that it had not started to make a return at that stage.  The respondent told him that the money had been invested, but could not say where or with whom.  Lavell requested bank statements to verify the deposit.  The respondent told him that the bank would not provide the statements until a credit card debt was settled.

Count 3

1. On 18 April 2001 John Terence Trollope met with the respondent to discuss investing $20,000.00.  The respondent told him that his money would be invested overseas and would generate a return of 30% per annum.  On the strength of these representations Trollope went to the National Australia Bank with the respondent and deposited $20,000.00 into a trust account held by the respondent.

1. On 18 April 2001 a cheque for $20,000.00 was deposited into the Jolithea Family Trust Account.  The proceeds of that cheque were then transferred on 21 April 2001 into the E. Home Loans Account.  The proceeds of that deposit were then dissipated by a series of internet transfers and bill payments, being payments made to other clients of the respondent or payments of bills owed by the respondent including $2,500.00 toward the respondent’s residential mortgage.

Count 4

1. On about 3 March 2001 Margaret Evelyn Simonds and her husband attended the office of E. Home Loans to discuss the purchase of a new car.  There they discussed the workings of the Car Club Scheme with an employee of the respondent, Martin Smith. As a result of Smith’s representations, a loan for $16,585.00 was brokered by E. Car Loans.  Macquarie Leasing Pty Ltd was the lender.  Simonds signed a contract for the purchase of the car on 5 March 2001 and received the car a few days later.

1. On 21 March 2001 Simonds paid $2,520.00 to E. Car Loans by cheque representing her investment of 18% in the car club.  That cheque was deposited into the E. Home Loans Account on the same day.  The proceeds of this cheque were then dissipated in a series of withdrawals, cheques and transfers.  The sum provided by Simonds was entrusted to the respondent’s business for the sole purpose of investing in the respondent’s Car Club Scheme.  It was not so invested and Simonds received no benefit from its deposit into the respondent’s E. Home Loans Account.

Count 5

1. In March 2001 Mr Tim Paul Butler attended a business seminar run by the respondent under the “E. Car Loans, Wizard” banner wherein the respondent discussed the Car Club Investment scheme.  Approximately one month later Martin Smith, the respondent’s employee, visited Butler’s workplace and provided him with documents relating to the lease of a car.  The value of the lease was $24,000.00, 18% of which came to $3,870.00.  This sum was to be invested overseas in the short-term money market according to the terms of the scheme and the revenue generated by this investment was to cover the lease repayments.

1. On 18 June 2001 Butler wrote out a cheque for $3,870.00 made payable to E. Home Loans.  He gave the cheque to Smith.  That cheque was deposited into the E. Home Loans Account on 26 June 2001.  Between 26 and 28 June 2001 the proceeds of this account were transferred to other clients of the respondent.

1. In November 2001 Butler spoke to the respondent and asked for paperwork to verify his investment. The respondent attended at Butler’s workplace in December 2001 and told him that the money was tied up in the World Trade Centre, but because of the 11 September attack he was having trouble confirming the details. In 2002 Butler telephoned the respondent.  The respondent told him that the E. Car Loans Head Office did not have details of Butler’s loan.  In a subsequent phone call the respondent told Butler that E. Car Loans no longer existed, but that his investment was safe.  Butler has received no payments from the scheme and the money he invested has neither been returned to him or accounted for.

Count 6

1. In 1999 Ms Sandra Catherine Smith consulted the respondent for financial advice.  As a consequence, she restructured her home loan, borrowed an additional $6,000.00 and arranged for her wages to be paid to her loan account.

1. Approximately 8 months later the respondent advised Smith to withdraw $3,000.00 and invest it with Horsham Finance, one of the businesses operated and controlled by the respondent.  About 12 months later Smith invested a further $500 with the original investment.

1. Early in 2001 Smith wrote to the respondent requesting the return of her money.  Each time she contacted the respondent he told her that she would have to wait.  Despite repeated requests the amount of $3,500.00 has not been returned to Smith and the respondent has failed to account for it.

Principles in relation to Crown appeals

1. The principles in relation to Crown appeals are well settled and were recently reaffirmed in DDP v. Josefski.[2] It has been said that Crown appeals against sentence are now “commonplace”.[3]  That provides further reason why the Court should remind itself that its discretion to interfere with a sentence at the instance of the Director is not unfettered and should only be allowed in a “rare and exceptional case to establish some point of principle”. [4]  The Director did not take issue with the statement that before intervention by this Court should take place something more than manifest inadequacy in the sentence must be present.  Thus he contended that the sentence warranted this Court’s intervention because its egregious inadequacy constituted an error in principle in the sense explained in Everett v. R.[5]  It was also submitted that the sentence imposed was so disproportionate to the seriousness of the crime as to offend the public conscience and that this Court should intervene to enable the maintenance of “adequate standards of punishment”, to ensure “uniformity in sentencing” and “to lay down principles for the governance and guidance of Courts having the duty of sentencing convicted persons”.[6]

   [2](2000) 158 A. Crim. R. 185 at 187-190.

   [3]D.P.P. v. Wilson (2000) 1 V.R. 481 at 487 per Winneke, P.; D.P.P. v. Leach (2003) 139 A. Crim. R. 64 at 74 per Eames, J.A.

   [4]R. v. Clarke [1996] 2 V.R. 520 at 522; Josefsvki at 187-188;  D.P.P. v. Whiteside & Dieber (2000) 1 V.R. 331 at 336.

   [5](1994) 181 C.L.R. 295 at 300.

   [6]R. v. Clarke at 522.

1. The Director submitted that errors had been made by the sentencing judge in fixing the individual sentences, the orders for cumulation and the total effective sentence.  It was submitted that the sentences for the thefts of the farm management deposits were manifestly inadequate.  It was submitted that the sentences imposed on counts 35 (12 months’ imprisonment), count 30 (10 months’ imprisonment), counts 26, 29, 32, 33 and 34 (nine months’ imprisonment) and count 36 (six months’ imprisonment) were all sentences which failed to reflect the nature and gravity of each offence.  It was also submitted that the orders for cumulation in relation to those offences was inadequate.  A similar contention was advanced in relation to the individual sentences and orders for cumulation made with respect to the other counts. 

1. The Director also appeals against the sentencing judge’s decision to suspend two years and three months of the total effective sentence which it was submitted further contributed to the sentence being manifestly inadequate.  It was contended that the nature and gravity of the offences called for the imposition of a sentence with an appropriate non-parole period.  It was submitted that the suspension of a substantial portion of the sentence further illustrated the failure of the sentencing judge to give sufficient weight to the sentencing objectives of general and specific deterrence, denunciation and just punishment.

1. A partially suspended sentence is a sentence of imprisonment.[7]  A very wide discretion is conferred upon a sentencing judge when considering whether it is desirable to suspend the whole or part of a sentence, and it is recognised that it is difficult to appeal against such an order because of the weight which the sentencing judge may give to various factors.[8]  Where complaint is made that the sentencing judge has chosen to exercise his or her discretion to suspend all or part of a sentence, it is the exercise of that discretion that must be shown to be manifestly erroneous if the discretion is to be exercised differently on appeal,[9] nor should this Court devalue the right of the sentencing judge to act mercifully where that is the intention.  It was submitted on the respondent’s behalf that the real complaint of the Director on this appeal was that the individual sentences and the total effective sentence called for a sentence significantly greater than three years and required the imposition of a non-parole period.

   [7]Sentencing Act 1991, s. 27(5); D.P.P. (Cth) v. Carter [1998] 1 V.R. 601 at 607-8.

   [8]Sentencing Act 1991, s. 27(1); D.P.P v. Bahagiar & Heatcote [1998] 4 V.R. 540 at 547-548 per Batt and Buchanan J.J.A.

   [9]D.P.P. v. Johnston [2004] VSCA 150 at [28] per Ormiston, Batt and Chernov, JJ.A.

1. Mr Tehan SC who appeared with Mr Hutton for the respondent conceded that some of the sentences imposed could be described as lenient.  He submitted that none of them or the total effective sentence could be said to be “outside the range” of sentences which were open to the sentencing judge, that the present case should not be treated as a “rare and exceptional” one, that the Court should not find that any of the sentences imposed were manifestly inadequate and that in any event the Court should apply its over-arching discretion to dismiss the appeal.[10]  The respondent called in aid of the exercise of this discretion the application of mercy; [11] the fact that the respondent would be close to the completion of his sentence,[12] and the fact that any increase in sentence, taking account of double jeopardy, would be minimal.[13]

   [10]D.P.P. v. Leach (2003) 139 A. Crim. R. 64 per Eames, J.A. at 74-75; D.P.P.  v. Singh (1999) 106 A. Crim. R. 321 per Phillips, C.J. at 329-330.

   [11]R. v. Osenkowski (1982) 30 S.A.S.R. 212 per King, C.J. at 212-13.

   [12]D.P.P.  v. Wilson (2000) 1 V.R. 481 per Winneke, P. at 487.

   [13]D.P.P. v. Alateras [2004] VSCA 214 per Nettle, J.A. at[33].

1. The respondent at the time he was sentenced was a married 44 year old man with three children the youngest of whom who was then 15.  For most of the time the respondent and his family lived in Horsham.  The sentencing judge found that the respondent was by reputation a trusted and well regarded member of the Horsham community and an active member of the Assembly of God church.  For some 13 years the respondent had successfully conducted an earthmoving business until the decline of the wool industry.  He was eventually made bankrupt.  By the mid 1990s the respondent had been encouraged to move into the finance industry.  For some two years he was employed by a company which provided financial advice and assisted people with the budgeting and management of their debts and the consolidation of their loans into a single mortgage.  He became the area manager for the organisation and was responsible for some 20 employees.  By 1997 he had become a licensed finance broker and a licensed credit provider and commenced his own mortgage broking business which was to become Horsham Finance. 

1. The respondent’s offending course of conduct extended over a period which was slightly in excess of two years.  It involved thirteen victims and theft of a large sum of money, namely $231,500.  The respondent treated the monies invested by the victims or deposited with him as his own, using those monies for his own purposes.  The sentencing judge in the course of the plea correctly described the respondent as having used the funds in a “manifestly dishonest” fashion to pay his and his family’s personal debts and to pay the debts and expenses of the business.   Some of the funds were utilised to make repayments of capital or interest owing to other investors.  In addition to the use of funds for personal purposes, which is apparent from the summary of facts with which the Court was provided, funds were utilised for other personal items including maintenance of a speed boat.  The respondent did not use any of the funds for the purposes for which they were given to him.  For an extended period he continued to conceal his conduct when the victims made inquiries as to their investments or deposits.

1. In psychological and psychiatric reports tendered on the plea, the respondent was said to have attributed the financial difficulties of his business to problems that he experienced with the NAB in mid 2000 and that his offending related to an attempt to continue to provide finance to his clients and customers.  The psychiatric report evidenced the respondent’s attempts to blame others for his circumstances.  He claimed that his book keeper did not manage the accounts satisfactorily and that he was largely unaware of the significant financial problems of the business.  It appears that the respondent did not inform the psychologist that he had worked for some years in the finance industry prior to commencing his own finance business in Horsham.  In those reports he is recorded as claiming that it was not his intention to falsely use the victims’ personal savings.  He was emphatic that all of the money from the offences went into his business.  The summary of evidence reveals that was plainly untrue.  It was apparent from the plea and the submissions made on this appeal that the respondent still sought to minimise the extent to which he had used the funds for his private purposes and sought to exaggerate the extent to which those funds had been used to discharge the debts of the business. 

1. The respondent’s conduct relating to the FMD’s was a carefully planned deception.  He took deposits from clients who were primary producers while holding himself out as having authority to receive and retain such funds under the statutory scheme to enable them to gain tax benefits.  The respondent created a false document which suggested that he had authority to accept and retain such deposits under the government sponsored scheme and thereby exploited vulnerable people.

1. During the appeal we were informed that the defence advanced at the trial was that the respondent, having received the money, was entitled to use the funds for such purposes as he saw fit and that his conduct created only a civil obligation to the investors or depositors.  It was not suggested on this appeal that there was any legal or moral foundation for such a defence.  During the course of the plea, the sentencing judge was told by counsel for the respondent that, although he accepted the jury’s verdict and had pleaded guilty to the counts on the second presentment, the respondent still believed that he had done nothing illegal.  The learned sentencing judge in his reasons for sentence expressed concern that the respondent did not appreciate the dishonest character and gravity of his criminal conduct.  His Honour found the respondent’s ethical standards to be poor and that “a superficial moral awareness leads to only superficial contrition”.  His Honour made reference to those who had spoken in support of the respondent on the plea noting that they also “lacked a proper appreciation of the gravity of (the respondent’s) wrongdoing and its dishonest character”.  It was not suggested on this appeal that the sentencing judge had made any error in forming these conclusions about the respondent. 

1. The learned sentencing judge in his full and careful reasons adverted to the fact that the respondent had pleaded guilty to the counts on the second presentment.  In relation to the first presentment, the respondent had been convicted by the jury after a trial and fell to be sentenced accordingly.  As he did not plead guilty there was to be no discount nor was it contended on his behalf that there was remorse.  The sentencing judge took into account the respondent’s plea of guilty to the counts on the second presentment, even though it was not indicative of remorse, as it facilitated the course of justice by saving the community the expense of a further trial and thereby serving the public interest.[14] 

   [14]R. v. Morton [1986] V.R. 863; R. v. Gray [1977] V.R. 225 at 231; R. v. RND [2002] VSCA 192; Cameron v. R. (2002) 209 C.L.R. 339 at 343.

1. His Honour stated in his reasons for sentence that the respondent had sold the family home to repay a portion of the amount that he owed and that he had expressed the intention to make restitution for the balance of what he owed. 

1. The respondent sold his family home and applied the equity recovered to satisfy the amount that he owed to one victim.  The respondent’s family, at the time of sentence, lived in rented accommodation and had suffered financially.  On the plea, counsel for the respondent informed his Honour that some pressure had been placed upon the respondent by the victim (the subject of count 1 on the 2^nd presentment) and that $32,000 had been repaid to that victim.  The question was not explored on the plea or before this Court as to why the respondent had made a repayment to only one of the investors, of an amount well in excess of the amount stolen.  All that was said was that he had been placed under pressure.  It was submitted on the respondent’s behalf that when a property offender has done everything he can to meet compensation, the Court should consider that a weighty mitigating factor. 

1. The sentencing judge stated that the purpose of suspending part of the sentence that had been imposed was to give the respondent the opportunity to make restitution of the amounts that he had stolen and which were to be the subject of compensation orders to be pronounced that day.  His Honour had been informed that the respondent was currently out of work and had been unemployed for some time prior to the trial.  No suggestion was made by his counsel that it was possible the respondent would repay his debt to any of the victims after his release.  The psychiatric report tendered on his behalf had concluded with the observation that the respondent hoped that he would be able to pay back the victims in the future although he recognised that that possibility was unrealistic given the amount of the accumulated debt.  All that appears to have been said on the plea was that the respondent had no present capacity or expectation that he would be able to make restitution to the victims.

1. The sentencing judge considered that the need to give effect to general deterrence had been reduced to some degree in this case by the introduction of statutory measures that now regulate the finance industry.  His Honour had been told on the plea that the Financial Services Reform Act 2001 (Cth) established a new licensing system which required applicants to satisfy stringent licensing requirements and that the respondent would not have been able to obtain a licence under the new regime. It was submitted before his Honour and on this appeal that the new regulatory scheme within the finance industry meant that the view was justifiable that there could be some amelioration in the principle of general deterrence because of the standards now required of those who apply for a licence to practise in the industry. The Director, correctly in our view, submitted that the weight to be given to general deterrence was not to be reduced by reason of the fact that a new regime had been introduced to regulate the finance industry. The general deterrent effect of a sentence in such circumstances is to discourage deliberate and dishonest conduct by persons in a position of trust in dealing with clients’ money. That said, the Director did not allege specific error in his notice of appeal, relying only upon the contention that the sentences were manifestly inadequate.

1. Counsel for the respondent referred the Court to a series of cases in an endeavour to demonstrate that the sentence imposed fell within the range of sentences that were open.  It was submitted that these cases demonstrated that the sentences imposed were not manifestly excessive.  It was accepted that a comparison of sentences imposed in other cases would only be of limited use, the nature and gravity of the offences being different in those cases.  In some of them, there was significant evidence of remorse and in others there were other compelling mitigating factors.[15]

   [15]R. v. Wu [2005] VSCA 18; R. v. Flavall [2006] VSCA 32; R. v. Benning [2005] VSCA 240; R. v. Arundell [2005] VSCA 19.

1. Counsel for the respondent submitted that any sentence which this Court might impose would, after due allowance for the principle of double jeopardy, involve a reduction of the sentence to a term which would be very close to the sentence which has been imposed.  Reliance was also placed upon the fact that the respondent was due to be released in six weeks and the Court should take that fact into account in support of its over arching discretion not to intervene. 

1. In explanation for the lenient sentences imposed, Mr Tehan argued that the sentencing judge must have given effect to the plea that rehabilitation and restorative justice should be significant factors in determining the appropriate sentence.  In our view there was scant evidence that such circumstances existed.  The respondent had demonstrated little remorse for his conduct.  As the sentencing judge found, neither he nor the witnesses called on his behalf at the plea demonstrated any recognition of the level of his moral culpability for the offences which he had committed, nor does it appear from his Honour’s reason for sentence that there were mitigating features of the respondent’s circumstances which excited his Honour’s sympathy to impose more lenient sentences than would otherwise be appropriate.  Even if one were to accept the mitigating factors relied upon by counsel for the respondent on the plea, consideration of the individual sentences imposed, the orders for cumulation and the total effective sentence leads, in our opinion, to the conclusion that the sentence was manifestly inadequate.  The respondent’s offending must be viewed as bold and persistent and involving a repeated betrayal of those who trusted him.  As the sentencing judge found, the respondent, from a position of trust, encouraged his clients, most of whom were dependent upon those funds, to invest or deposit money with him.  The funds were required for such things as building or purchasing a house, or to support members of the family.  The victim impact statements are illustrative of the level of stress and ill-health that was precipitated by the respondent’s conduct.  In one case the source of those funds was an award of damages for a work place injury.  For some of the victims the loss of funds was devastating as they were farming people who had to contend with the hardship of a long period of drought.

1. The importance of general deterrence in the imposition of sentences for white collar crimes was discussed by Charles, J.A. in Bulfin v. D.P.P.[16]  It was noted that offenders typically involved in white collar crimes usually had no prior criminal history.  It was that fact which often made the commission of the crime possible for such crimes were frequently committed by persons in a position of trust which they would not have been able to attain had they possessed a criminal record.  Charles, J.A., with whom the President and Callaway, J.A. agreed went on to state:

“Whatever the motivation, offences of the kind here in question almost invariably involve a carefully calculated course of conduct over a long period, repeated deliberate acts of dishonesty, substantial amounts of money, and, frequently, losses (often tragic in their impact) to large numbers of small investors.  The offender often holds a position making it possible, or has the ability, to disguise or camouflage the conduct in question.  Detection is difficult, the investigation of the crime usually lengthy and very expensive, and the problems of trial and proof will frequently be extreme.  …  The result of such considerations in my view, is that the element of general deterrence will usually carry particular significance in sentencing for crimes such as the present, both in relation to the total effective sentence and the non-parole period, together with a requirement for strong denunciation by the sentencing court.

For persons first contemplating corporate criminality, a sentence which requires an offender to spend a substantial term in actual custody by virtue of the non-parole period fixed, is, in my view, much more likely to focus the attention and have a real deterrent impact that a longer head sentence, much of which is likely to be served on parole after the offender’s release from custody.  If this view be correct, to fix an unduly short non-parole period, would, in cases such as the present, be quite subversive of the whole concept of general deterrence, notwithstanding that a significantly longer head sentence was imposed.”[17]

[16][1998] 4 V.R. 114.

[17]Ibid at 132 per Charles, J.A.

1. The Director has in our view made out the contention that the individual sentences, and the total sentence of three years’ imprisonment, were so plainly inadequate as to manifest error in principle. The sentencing judge’s decision to suspend two years and three months of the total effective sentence further contributed to the sentence being manifestly inadequate and reflected the failure of the sentencing judge to give sufficient weight to the sentencing objectives of general and specific deterrence, denunciation and just punishment.  The nature and gravity of the respondent’s offending required the imposition of a sentence with a substantial non-parole period. 

Sentence proposed

1. In our opinion the appeal must therefore be allowed.  In exercising the sentencing discretion we are conscious of the restraints imposed upon the Court by virtue of the principles of double jeopardy.  Bearing in mind those restraints we would impose the following sentences.

1. On the 1^st presentment we would vary the sentences on counts 26, 29 and 34 to 12 months’ imprisonment on each count.  On count 35 we would vary the sentence to 18 months’ imprisonment.  We would otherwise impose the same sentences as those imposed by His Honour on each of the other counts.  Treating count 35 as the base count we would make the same orders for cumulation as his Honour made save for the following. We would make no order for cumulation on counts 13,14,19 and 33. On counts 26, 29 and 34 we would order that two months of each such sentence be served cumulatively. On the 2^nd presentment we would vary the sentence on count 2 and impose a sentence of 18 months’ imprisonment. We would vary the sentence imposed on count 3 to 12 months’ imprisonment. We would otherwise impose the same sentences as those imposed by His Honour on the other counts on that presentment. We would make the same orders for cumulation save that we would vary the order for cumulation on count 2 to three months. In respect to the counts on both presentments we would order that each period of cumulation is to be served upon each other and upon the sentence of 18 months’ imprisonment on count 35 of the first presentment. The total effective sentence is three years and six months. We would order a non-parole period of two years be served before the respondent is eligible for parole. We note the orders for compensation made on the 26 January 2006 pursuant to s.86 the Sentencing Act.

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