Gonzalez v The Queen

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCR 2020 0246

JOSIE GONZALEZ	Applicant
v
THE QUEEN	Respondent

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JUDGES:	MAXWELL P, EMERTON and SIFRIS JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	28 March 2022
DATE OF JUDGMENT:	10 June 2022
MEDIUM NEUTRAL CITATION:	[2022] VSCA 110
JUDGMENT APPEALED FROM:	[2019] VCC 1713 (Judge Lacava)

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CRIMINAL LAW – Appeal – Conviction – Obtain financial advantage by deception – Where settlement deed in civil proceeding to recover monies contained admissions – Where settlement deed tendered by Crown – Whether deed wrongly admitted into evidence – Whether deed privileged under s 131 of the Evidence Act 2008 – Whether s 131 extends common law ‘without prejudice’ privilege – Deed not privileged – No miscarriage of justice – Application for extension of time to appeal against conviction refused – Evidence Act 2008, ss 31(1), (2)(e), (2)(f).

CRIMINAL LAW – Appeal – Sentence – Appeal against sentence – Applicant found guilty of 14 charges of obtaining financial advantage by deception – Six charges charged as continuing criminal enterprise offences, with consequence that maximum penalty doubled – Deception carried out over almost two years and to a value of approximately $17,444,000 – Sentence of 9 years, six 6 months’ imprisonment with non-parole period of 7 years – Whether sentence manifestly excessive – Whether inadequate weight given to family hardship and fact defrauded funds were repaid – Where applicant solicitor at time of offending – Serious breach of trust – Value of the fraud very large – No remorse – Heightened need for general deterrence – Sentence within range – Application for extension of time to appeal against sentence refused.

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Counsel
Applicant:		Mr T Kassimatis QC with Ms G F Connelly
Respondent:		Mr C B Boyce QC
Solicitors
Applicant:	SLKQ Lawyers
Respondent:	Ms A Hogan, Solicitor for Public Prosecutions

MAXWELL P
EMERTON JA
SIFRIS JA:

The applicant, Josie Gonzalez, and her husband, Alvaro Gonzalez, were each charged with 14 counts of obtaining a financial advantage by deception.[1] Each charge addressed multiple fraudulent transactions committed between specified dates and referred to a course of conduct. Six of the charges were charged as continuing criminal enterprise offences, with the consequence that the maximum penalty was doubled.[2]
[1]Contrary to Crimes Act 1958 s 82.
[2]See Sentencing Act 1991 s 6I(1).
Both the applicant and Alvaro pleaded not guilty to all charges.
On 4 July 2019, following a trial by jury in the County Court of Victoria in which the applicant — but not Alvaro — gave evidence, the applicant and Alvaro were convicted on all 14 charges.
The applicant was sentenced as follows:

Charge	Offence	Maximum penalty	Sentence	Cumulation
1	Obtaining a financial advantage by deception	10 years	2 years	-
2	Obtaining a financial advantage by deception	10 years	3 years 6 months	-
3	Obtaining a financial advantage by deception	10 years	3 years 6 months	-
4	Obtaining a financial advantage by deception	20 years	3 years	6 months
5	Obtaining a financial advantage by deception	10 years	3 years 6 months	-
6	Obtaining a financial advantage by deception	20 years	5 years	1 year
7	Obtaining a financial advantage by deception	10 years	2 years	-
8	Obtaining a financial advantage by deception	20 years	5 years	1 year
9	Obtaining a financial advantage by deception	10 years	2 years	-
10	Obtaining a financial advantage by deception	20 years	5 years	1 year
11	Obtaining a financial advantage by deception	10 years	2 years	-
12	Obtaining a financial advantage by deception	20 years	5 years	1 year
13	Obtaining a financial advantage by deception	10 years	2 years	-
14	Obtaining a financial advantage by deception	20 years	5 years	Base
Total Effective Sentence:		9 years 6 months’ imprisonment
Non-Parole Period:		7 years
Pre-Sentence Detention:		106 days
Other orders:		Forensic sample order; declaration that the applicant was sentenced as a continuing criminal enterprise offender on charges 4, 6, 8, 10, 12 and 14.

Alvaro was sentenced to a total effective sentence of 7 years 6 months’ imprisonment, with a non-parole period of 5 years.
The applicant now seeks an extension of time in which to appeal against both conviction and sentence. In support of her application for an extension of time, the applicant relies on an affidavit sworn by her solicitor, Ms Sandra Gaunt. In summary, Ms Gaunt deposes that while a number of factors led to the delay — including changes in legal representation, delays in Legal Aid funding, and the complexity of the matter — none of these was attributable to the applicant herself.
For the reasons that follow, we consider that the applicant’s proposed grounds of appeal in respect of her conviction and the sentence imposed have no real prospects of success. We would therefore refuse the application for an extension of time.

Circumstances of offending

The applicant and Alvaro are both lawyers. The applicant was admitted to practice in 2003; Alvaro was admitted in 2009, shortly before the commencement of the offending. Upon graduating, the applicant worked in a large law firm conducting insurance matters before moving to ProClaim, a claims management business providing services to insurers. In November 2010, she was ‘poached’ by one of ProClaim’s customers, Dual Australia Pty Ltd (‘Dual’), to set up an internal claims management system for its business. Dual is an insurance underwriter acting as a local agent for London-based Lloyd’s syndicates.
At the time the applicant was negotiating her move to Dual, Alvaro was newly qualified as a lawyer and was looking to set up a practice. The applicant suggested to the CEO and founder of Dual, Mr Damien Coates, that a law firm operated by her husband could do the legal work for the claims management division. Mr Coates gave evidence that he declined this offer, explaining that there would be a conflict of interest. The evidence of the applicant, to the contrary, was that Mr Coates said, ‘Go for it!’.
On 5 November 2010, shortly after the applicant commenced as claims manager at Dual, Alvaro incorporated a company under the name JAAG Lawyers Pty Ltd (‘JAAG’). JAAG was an acronym for ‘Josie And Alvaro Gonzalez’. The applicant and Alvaro were appointed directors, and another company controlled by the couple became JAAG’s sole shareholder. In January 2011, Alvaro set up a ‘virtual office’ for the company, using a Collins Street address, so as to give the impression that JAAG was an established law firm. As the judge later observed, in reality JAAG was a law firm in name only. It had no office or equipment, and it had no clients. Alvaro had only been admitted to practice for two years, and required supervision to practise as a solicitor.
The prosecution case, accepted by the jury, was that JAAG was formed by the applicant and Alvaro for the sole purpose of defrauding Dual.
Between 15 March 2011 and 6 May 2013, the applicant and Alvaro prepared a total of 428 invoices payable to JAAG which purported to be for legal work provided to Dual. Neither Alvaro nor the applicant was named on the invoices as having performed the work. In her role as claims manager for Dual, the applicant formally ‘received’ the JAAG invoices and forwarded them by email to Dual’s accounts officers for payment. Each invoice was accepted as valid and paid by Dual by electronically transferring funds to a JAAG bank account.
The total value of the 428 invoices over the relevant period of just under two years was approximately $17,444,000. The average value per invoice was $40,757.
JAAG paid tax and GST on these payments. However, the payments were not recorded in Dual’s ‘payee’ records as having been made to JAAG, but, on the instruction of the applicant, were entered as ‘counsel’ and subsequently as ‘Insured’s Own legal costs’ and, finally, using the names of barristers.[3] This was in contrast to the payments made to other law firms for legal work, which were correctly recorded under the name of the law firm.
[3]The barristers in question had not done any work for Dual and had no idea that their names were being used in this way.
The applicant’s conduct eventually came to light in early June 2013 when she was on maternity leave and another employee become suspicious of the large amounts of money being paid to JAAG as ‘counsel’ fees. The employee performed a company search of JAAG, which revealed it to be controlled by the applicant and Alvaro. She reported her findings to Mr Coates.
On 12 June 2013, Dual obtained a freezing order over the property of the applicant, Alvaro, and JAAG and related entities (‘Freezing Order’). Around this time the applicant and Alvaro obtained legal representation, and funds were released for that purpose.
Dual duly commenced civil proceedings against the applicant and Alvaro in the Supreme Court, seeking repayment of the sum alleged to have been fraudulently taken. No defence was filed. Instead, on 19 September 2013, the applicant and Alvaro, together with JAAG and associated companies, executed a deed of settlement with Dual (‘Deed’) by which they agreed to repay the amount taken and facilitate the recovery of tax and GST from the ATO.
The Deed contained a number of recitals setting out details of the alleged conduct. It recited that between March 2011 and May 2013, the applicant approved invoices rendered by JAAG totalling $17,444,174 for legal services purportedly provided by JAAG to Dual and forwarded the invoices to Dual’s accounts department for authorisation by Dual’s directors and payment by Dual. It also recited that JAAG was not entitled to any payment by Dual in relation to any of the invoices.
Further, in order to secure the recovery of taxes and GST, the Deed provided for the applicant and Alvaro to make certain ‘admissions’ as follows:
(a) Josie, in her role as Senior Claims Officer with Dual, had the responsibility of obtaining legal advice from one or more of a panel of legal practitioner firms authorised by Dual to provide it with legal advice about Dual’s liability in relation to insurance claims.
(b) Josie was also responsible for reviewing invoices rendered to Dual in relation to legal services obtained by Dual at her request as Senior Claims Officer with Dual and upon review, she was responsible for submitting the invoices to Dual’s Account’s [sic] Department as due and payable.
(c) JAAG was at all material times an incorporated legal firm, purporting to provide legal services.
(d) Josie and Alvaro were at all material times directors of JAAG and Josie was JAAG’s Principal.
(e) In the period between about March 2011 and about May 2013, Alvaro and Josie (she in breach of her fiduciary duty), caused JAAG to issue invoices to Dual totalling $17,444,174 for the provision of legal services[.]
(f) In fact, the invoices JAAG issued to Dual were fraudulent as the services referred to in the invoices issued to Dual were never provided.
(g)Josie authorised the payment of the fraudulent invoices and submitted the fraudulent invoices to Dual’s Account’s [sic] Department for payment. The fraudulent invoices were subsequently paid by Dual.
(h) As a result of the fraud, JAAG misappropriated $17,444,174 from Dual (the ‘Misappropriated Funds’).
(i) JAAG went on to pay the ATO ‘net amounts’ of about $1,433,164 to 31 March 2013 and $152,670 from 1 April 2013 in GST, JAAG also paid a total of about $3,930,947 in income tax and Alvaro paid approximately $140,000 in income tax on the Misappropriated Funds, purportedly in meeting their tax obligations, whereas JAAG and Alvaro have no beneficial entitlement to the Misappropriated Funds, but hold the Misappropriated Funds on trust for Dual and as such the funds are not assessable income or assessable for GST in their hands.
(j) And any further truthful admissions by JAAG, Josie, Alvaro and A&J or any of them necessary to establish that JAAG and Alvaro were not beneficially entitled to the funds obtained from Dual and that such amounts were not assessable income.
Finally, pursuant to Clause 7(b) of the Deed, Dual agreed to release and discharge the applicant, Alvaro and their related entities from any future proceedings upon satisfaction that their obligations under the Deed had been fulfilled and that Dual’s losses had been recovered. As the trial judge pointed out, this clause related only to civil proceedings; it did not preclude the matter being reported to police. In fact, Dual did not report the matter to police. The applicant’s conduct was reported to police by the Legal Services Board, which was carrying out its own investigation.
The applicant and Alvaro were formally charged on 30 May 2019.
The common particulars of each charge were that the applicant and Alvaro obtained the financial advantage of transfers of the specified funds, in the identified periods:
[B]y deception, namely by falsely representing that JAAG Lawyers Pty Ltd was entitled to payment of the amounts claimed in the [identified invoices], for legal services performed for Dual Australia Pty Ltd when JAAG Lawyers Pty Ltd were not entitled to any payment.
It was not in dispute that the invoices related to genuine claims made by Dual’s clients, nor that the applicant had submitted the invoices to Dual for payment. Nor was it disputed that payments were made on each invoice to a JAAG bank account, for the benefit of the applicant and Alvaro.
The prosecution case was that JAAG was not entitled to payment of the invoices because the asserted legal work was simply not carried out and because JAAG was not an authorised firm. It was alleged the applicant and Alvaro acted dishonestly because they knew they were not entitled to these payments.
The applicant’s defence was that all invoiced work was in fact done by Alvaro, billing himself out at the rate of $1,000 per hour (plus GST), and that the applicant was authorised to engage him to carry out that legal work, both by agreement with Mr Coates, and as part of her own independent briefing authority. A file of material was produced that was said to contain examples of the kind of work carried out by Alvaro. In sum, the applicant maintained that JAAG had a right to the money, and that it had been lawfully paid by Dual. At the same time, the applicant also denied that she had authority to approve payment of any invoice, thereby asserting she was not responsible for their payment. Her defence was rejected by the jury.
At trial, the prosecution relied on the following evidence to prove the contested deception and dishonesty elements of the applicant’s offending:
(a)evidence from Mr Coates that he did not agree to the applicant’s proposals to engage her husband to perform legal work for Dual, for reasons including her conflict of interest;[4]
(b)evidence from Mr Coates regarding Dual’s use of an approved panel of expert legal firms (with firms appointed by him and later by COO/Managing Director Peter Bailey) and the fact that the applicant was limited to using the firms on this panel (subject only to insured party requests);
(c)evidence from Dual officers, including Mr Coates, Mr Bailey, and Sonia Christian, and the applicant’s emails submitting invoices for payment,[5] all of which showed that the applicant was responsible for approving, and effectively did approve, the payment of each invoice;
(d)evidence from the applicant’s assistant, Ms Olga Karakotina, who processed numerous JAAG invoices and corresponded with JAAG by email, that prior to her own investigations she had no idea that her manager, the applicant, was a principal of JAAG;
(e)evidence of the efforts undertaken by the offenders to obscure the identity of JAAG and its principals;
(f)evidence of the admissions in the Deed;
(g)evidence of the acceptance of guilt implied by the terms of the settlement recorded in the Deed and the repayment of the funds; and
(h)the exceptionally high rates charged by Alvaro as a very junior lawyer.
[4]The applicant attacked the veracity of Mr Coates, and contested the reliability of other Dual witnesses.
[5]For example, by including the text ‘I have checked these invoices and am happy for these to be paid’ (email dated 17 March 2011, re Charge 1). Also: ‘All invoices have been checked and approved and I am fine for you to now attend to payment of these invoices’ (email dated 13 May 2011, re Charge 1). And: ‘All payments have been checked and approved and I am fine for you now to attend to these payments once we have adequate funds in the claims float’ (emails dated 14 January 2013 and 2 May 2013, re Charge 14).
The prosecution also relied on conduct that was said to involve deliberate concealments and deceptions by the applicant. This conduct included the following:
(a)the applicant gave repeated instructions to Dual’s accounts payable officers that JAAG invoices were to be coded as ‘counsel’ in the payee field of the accounts system — leading to JAAG being successfully hidden in payee-based reviews of Dual payments;[6]
(b)in a response to a 2012 audit that provoked questions about expenditure on ‘counsel’ (which was all JAAG expenditure), the applicant suggested re-coding this expenditure as ‘insured’s own’ (which it was clearly not) and made no attempt to clarify the true character of the payments;
(c)from February 2013, the applicant submitted 38 invoices for payment to JAAG, with a direction to the accounts payable officer to enter in the accounts system named barristers as the payees. (The applicant accepted that these named barristers had not performed any work for Dual, but claimed that a mistake had repeatedly been made);
(d)personal identification (by way of email addresses, personal phone numbers, names or signatures) was left out of the JAAG invoices and emails; and
(e)in May 2013, the applicant, ‘off-line’ at home on maternity leave, responded to email queries sent to the JAAG email address by Ms Karakotina, without identifying herself, and used deceptive third party references to JAAG and its non-existent ‘IT department’. She gave an implausible explanation relating to contacts from a barrister and, later, a barrister’s clerk.

CONVICTION APPEAL

[6]The applicant stated that this was done for her own ‘reporting’ or ‘information’ purposes, but she did not end up using this information. She did not explain this further.

Proposed ground of appeal

The sole ground of appeal against conviction ultimately pursued by the applicant was that a substantial miscarriage of justice arose from the admission of statements in the Deed into evidence and the use that the jury was permitted to make of those statements.
On appeal, although not at trial, the applicant submitted that s 131 of the Evidence Act 2008, which protects from disclosure evidence of settlement negotiations, prohibited the admission into evidence of the Deed at trial.[7] She contended that the admission of the Deed in her criminal trial was impermissible and, in light of its centrality to the Crown’s case, resulted in a substantial miscarriage of justice.
[7]At trial, the applicant argued unsuccessfully that the prejudicial effect of the Deed outweighed its probative value for the purposes of s 137 of the Evidence Act.
Section 131 relevantly provides:
131      Exclusion of evidence of settlement negotiations
(1)     Evidence is not to be adduced of—
(a) a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute; or
(b)      a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute.
(2)     Subsection (1) does not apply if—
(a) the persons in dispute consent to the evidence being adduced in the proceeding concerned or, if any of those persons has tendered the communication or document in evidence in another Australian or overseas proceeding, all the other persons so consent; or
(b) the substance of the evidence has been disclosed with the express or implied consent of all the persons in dispute; or
(c) the substance of the evidence has been partly disclosed with the express or implied consent of the persons in dispute, and full disclosure of the evidence is reasonably necessary to enable a proper understanding of the other evidence that has already been adduced; or
(d) the communication or document included a statement to the effect that it was not to be treated as confidential; or
(e) the evidence tends to contradict or to qualify evidence that has already been admitted about the course of an attempt to settle the dispute; or
(f) the proceeding in which it is sought to adduce the evidence is a proceeding to enforce an agreement between the persons in dispute to settle the dispute, or a proceeding in which the making of such an agreement is in issue; or
(g) evidence that has been adduced in the proceeding, or an inference from evidence that has been adduced in the proceeding, is likely to mislead the court unless evidence of the communication or document is adduced to contradict or to qualify that evidence; or
(h) the communication or document is relevant to determining liability for costs; or
(i) making the communication, or preparing the document, affects a right of a person; or
(j)the communication was made, or the document was prepared, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty; or
(k) one of the persons in dispute, or an employee or agent of such a person, knew or ought reasonably to have known that the communication was made, or the document was prepared, in furtherance of a deliberate abuse of a power.

It is apparent that the protection afforded by s 131(1) closely resembles the ‘without prejudice’ privilege that exists at common law.[8] The effect of ‘without prejudice’ privilege is that communications made between parties in the course of ‘genuine negotiations with intent to compromise an existing dispute’ cannot be admitted into evidence[9] or made subject to discovery[10] in later court proceedings. The purpose and ambit of the privilege was explained by the High Court in Field v Commissioner for Railways (NSW):
As a matter of policy the law has long excluded from evidence admissions by words or conduct made by parties in the course of negotiations to settle litigation. The purpose is to enable parties engaged in an attempt to compromise litigation to communicate with one another freely and without the embarrassment which the liability of their communications to be put in evidence subsequently might impose upon them. The law relieves them of this embarrassment so that their negotiations to avoid litigation or to settle it may go on unhampered. … For some centuries almost it has been recognised that parties may properly give definition to the occasions when they are communicating in this manner by the use of the words ‘without prejudice’ and to some extent the area of protection may be enlarged by the tacit acceptance by one side of the use by the other of these words.[11]
[8]See, eg, Rajski v Tectran Corporation Pty Ltd [2003] NSWSC 476, [16] (Palmer J).
[9]Harrington v Lowe (1996) 190 CLR 311, 323 (Brennan CJ, Dawson, Toohey, Gaudron, McHugh and Gummow JJ); [1996] HCA 8. See also Rodgers v Rodgers (1964) 114 CLR 608, 614 (McTiernan, Taylor and Owen JJ); [1964] HCA 25.
[10]Australian Competition and Consumer Commission v NSW Ports Operations Hold Co Pty Ltd [2020] FCA 1232, [51] (Wigney J), citing Rush and Tompkins Ltd v Greater London Council [1989] 1 AC 1280, 1305; Bailey v Beagle Management Pty Ltd [2001] FCA 185, [17]–[18] (Goldberg J); Austotel Management Pty Ltd v Jamieson (1995) 57 FCR 411, 416 (Burchett J).
[11](1957) 99 CLR 285, 291–2 (Dixon CJ, Webb, Kitto and Taylor JJ); [1957] HCA 92. See also Mercantile Mutual Custodians Pty Ltd v Village/Nine Network Restaurants & Bars Pty Ltd [2001] 1 Qd R 276, 288–9 [28]–[29] (Byrne J); Biala Pty Ltd v Mallina HoldingsLtd [1990] WAR 174, 180 (Master White) (‘Biala’).
It is generally accepted that the ‘without prejudice’ privilege only applies to communications made in the course of negotiations, and not to any binding contract brought into existence as a result of those negotiations.[12]
[12]See Old Papa’s Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11, [92] (McLure J), citing Biala (1990) WAR 174, 180 (Master White); Bentley v Nelson [1963] WAR 89, 93.
While conceding that there is some authority to the contrary,[13] the applicant submits that the construction of s 131(1), at least in this State, remains unsettled. She submits that s 131(1), unlike the common law privilege, extends to agreements that record concluded settlements and is not limited to the negotiations prior to settlement. This is because s 131(1) uses the phrase ‘in connection with’ and does not employ a phrase or word — such as ‘during’ — that would clearly exclude the culmination of negotiations from the operation of s 131.
[13]Referring to Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq) [No 6] [2011] FCA 350, [16]–[21] (Rares J). Two further New South Wales authorities that are contrary to the applicant’s construction of s 131 were referred to by the respondent: Donnelly v Tenterfield Shire Council [1998] NSWLEC 29, [12] (Lloyd J); State Rail Authority (NSW) v Smith (1998) 45 NSWLR 382, 385 (Beazley JA) (‘Smith’).
The applicant submits that for a document to be prepared, or a communication to be made, ‘in connection with’ an attempt to negotiate a settlement of a dispute, there need only be a meaningful link between the document or communication and the attempt to negotiate. The phrase ‘in connection with’, she submits, does not confine the protection afforded by s 131(1) to negotiations that are actually on foot. The applicant points out that where the phrase ‘in connection with’ has been used elsewhere in the Evidence Act — such as in s 69 — these words have generally been given a wide meaning.[14] She submits that the same wide meaning should be given to those words as they appear in s 131(1) so as to best promote ‘the public interest in encouraging the settlement of private disputes’. It follows that a communication or document recording or reflecting the terms of a negotiated settlement is properly ‘connected with’ the attempt to bring them about.
[14]See, eg, R v Rondo (2001) 126 A Crim R 562, 586 [96] (Smart AJ); [2001] NSWCA 540; Lewis v Nortex Pty Ltd (in liq) [2002] NSWSC 1083, [4] (Hamilton J). Cf Nye v New South Wales (2002) 134 A Crim R 245, 251 [20] (O’Keefe J); [2002] NSWSC 1268; Thomas v New South Wales (2008) 74 NSWLR 34; [2008] NSWCA 316.
In oral submissions, senior counsel for the applicant referred the Court to a number of decisions in which s 131 had been considered or applied.[15] He submitted that most of these authorities simply assumed, without engaging in any real analysis or constructional exercise, that s 131 operated in the same way as the common law rules about the admissibility of evidence of settlement negotiations.
[15]The cases referred to were Australian Competition and Consumer Commission v Allphones Retail Pty Ltd [No 3] (2009) 259 ALR 541; [2009] FCA 1075; Andi-Co Australia Pty Ltd v Meyers [2004] FCA 1358; Korean Airlines Co Ltd v Australian Competition and Consumer Commission [No 3] (2008) 247 ALR 781; [2008] FCA 701; Seven Network Ltd v News Ltd (2006) 151 FCR 450; [2006] FCA 343; Smith (1998) 45 NSWLR 382; Western Australia v Southern Equities Co Ltd (1996) 69 FCR 245; Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq) [No 6] [2011] FCA 350.
In particular, he said, none of the cases considered whether sub-s (2)(f) might indicate that, in enacting s 131, the legislature intended to depart from the common law position that while settlement negotiations are privileged, the final agreement is not. Sub-section (2)(f) by its terms permits the use of the settlement agreement in proceedings concerning its enforcement, giving rise to the implication that the settlement agreement is otherwise protected by s 131(1). The correct approach, senior counsel for the applicant urged, is to focus on the language of the statute, and not on the common law (or on the cases that assumed the common law applied).
The statutory language, senior counsel submitted, means that a deed of settlement is made ‘in connection with the attempts to settle the dispute’ and is therefore protected by s 131 unless it falls within sub-s (2). Section 131(2)(f) enables the settlement agreement to be enforced by providing that it is not covered by the prohibition in sub-s (1) in a proceeding to enforce it, or in which the making of the agreement is in issue. The criminal proceeding in which the Deed was admitted in evidence was not such a proceeding.

Analysis

We see nothing in the text, context or purpose of s 131 that would extend the common law privilege protecting settlement negotiations to finalised settlement agreements. In our view, such a construction is not supported by the language of s 131 and does nothing to advance its purpose of encouraging the settlement of legal disputes. Further, we consider that had the legislature intended to make such a pronounced change to the law of privilege, it would have done so clearly.
The language of s 131(1), which refers to communications between ‘persons in dispute’ and ‘attempt[s] to negotiate’ settlements, plainly refers to communications made during the period the parties remain in dispute. Self-evidently, there ceases to be an ‘attempt’ to negotiate an agreement once an agreement has been reached. Moreover, once an agreement has been reached, the parties cease to be ‘persons in dispute’. The final agreement is a product of the fact that the attempts to negotiate have been fruitful, the negotiations have been successfully concluded and the dispute has been resolved. It is trite that the settlement agreement is not a document or communication prepared or made in connection with ‘an attempt to negotiate’ the settlement.
That s 131(1) only applies to evidence of negotiations anterior to settlement is supported by s 131(2)(e), which permits the admission of evidence of communications made in connection with attempts to negotiate settlement where the evidence tends to contradict or to qualify evidence that has already been admitted about ‘the course of an attempt to settle the dispute’. The ‘course of an attempt to settle the dispute’ is clearly anterior to and separate from the final settlement.
Section 131(2)(f) is of no assistance to the applicant. The ‘evidence’ referred to in that sub-section is the evidence covered by the prohibition in sub-s (1), namely, evidence of communications made or documents produced during the period that the parties are in dispute and are attempting to negotiate a settlement. Sub-section (2)(f) simply provides that those communications or documents are not captured by the prohibition in sub-s (1) in proceedings to enforce the settlement agreement or where the making of the agreement is in issue. This reflects the common law position.
As Kaye and Niall JJA observed in Beling v McLeay (as Victorian Legal Services Commissioner):
At common law, it was well established that where there was a dispute as to whether a binding contract has been entered into between parties, or where it was alleged that an agreement has been the product of vitiating circumstances, such as misleading conduct, correspondence and communications between the parties, that preceded entry into the document, and which were conducted on a ‘without prejudice’ basis, were admissible in evidence. That principle has now been encapsulated in s 131(2)(f) of the Evidence Act.[16]
[16][2021] VSCA 256, [134].
It is implicit in s 131(2)(f) that the settlement agreement itself is not protected by s 131(1).
As to whether the construction advanced by the applicant promotes the purpose of s 131, we do not see, and senior counsel for the applicant was unable to explain, how extending the ‘without prejudice’ privilege to finalised agreements advances the purpose of ensuring that negotiations to avoid litigation or to settle it may go on unhampered.
This proposed ground is without merit. The application for an extension of time in which to appeal against conviction will be refused.

SENTENCE APPEAL

The applicant relies upon a single proposed ground of appeal against sentence:[17]
The (i) individual sentences imposed on charges 6, 8, 10, 12 and 14 and (ii) orders for cumulation imposed on charges 4, 6, 8, 10 and 12 resulted in a total effective sentence that was manifestly excessive.
[17]Prior to the hearing of the matter, the applicant abandoned her reliance on ground 1 for the purposes of the sentence appeal. However, she sought to rely on the ground should the Court re-sentence her. This leaves only ground 2 as presently relevant.
According to the applicant, the individual sentences particularised in this ground of appeal and the total effective sentence were manifestly too long given, first, that Dual was repaid in full (including by liquidating a property that the applicant owned before she worked for Dual), and, secondly, that the applicant and Alvaro have two young daughters who now have no parents to care for them and must live with relatives for whom the provision of care for their daughters is something of a burden. The trial judge accepted that this involved family hardship amounting to exceptional circumstances that warranted the exercise of mercy and that the applicant’s time in custody would likely be more burdensome because of her separation from her daughters. The applicant also relies on the fact that she has not committed any further offences since 2013.
The applicant submits that, having regard to these matters, the sentences imposed found an inference of error in the exercise of the sentencing discretion. She submits that there must have been some misapplication of principle for those sentences to have been imposed.
The respondent submits that the individual sentences and the total effective sentence were just in the circumstances.

Reasons for sentence

The sentencing judge delivered a single set of reasons for the sentences imposed on the applicant and Alvaro. His Honour set out the background to the offending, including the events that led to the couple’s exposure and charges being laid. He described, in some detail, the applicant’s efforts to carry out and conceal her fraud. While the judge accepted that the offending was a joint criminal enterprise, he described the applicant as the ‘mastermind and the principal perpetrator of the fraud’.[18]
[18]Reasons, [42].
The sentencing judge noted that the applicant had denied wrongdoing, and had instead argued that her company had a right to the money that had been paid by Dual. In support of this defence, she led evidence which the judge considered to be ‘sheer nonsense’ and a ‘concoction of lies’.[19] The judge also noted that neither the applicant nor Alvaro had expressed any remorse for their conduct. The applicant, in particular, had tried to lie her way to an acquittal. While she was not to be punished for defending herself at trial, her lying while giving evidence was taken into account in assessing her prospects of rehabilitation.[20]
[19]Ibid [54].
[20]Ibid [59].
The sentencing judge also considered the applicant’s position as a legal practitioner to be relevant to the exercise of his sentencing discretion. While the fraud was not committed in the framework of a solicitor–client relationship, the applicant’s position as a legal practitioner should have made her more trustworthy and her conduct in this regard was ‘disgraceful’.[21]
[21]Ibid [58].
While the sentencing judge observed that the applicant and Alvaro had lived very well from the proceeds of their offending, he took into account that the stolen money had been repaid in full and treated it as a significant factor in mitigation. However, given that repayment only occurred once the fraud had been exposed and civil proceedings had been commenced, his Honour did not regard the applicant’s repayment of the funds as evidencing any remorse.[22]
[22]Ibid [61].
The sentencing judge took into account the applicant’s role as the mother of two young daughters, aged 6 and 11. According to the judge, the fact both children were without a parent to care for them was doubtless very difficult for them and for the relatives caring for them, who had their own children to look after. As already noted, the judge regarded this as an exceptional circumstance which, although not operating as factor mitigating the applicant’s offending, did warrant a measure of mercy.[23]
[23]Ibid [62]–[63]. See Markovic v The Queen [2010] VSCA 105.
The judge noted that because the applicant and Alvaro had pleaded not guilty — as they were entitled to do — they could not receive the reduction in sentence that would ordinarily follow a plea. However, he accepted that there had been some delay between the laying of the charges and the conclusion of the trial, and took this fact into account.[24]
[24]Ibid [64]–[65].
The judge also accepted that the applicant had not reoffended since the fraud was discovered in 2013.[25] However, she had a relevant criminal history. In 1995, while working as a salesperson at Myer, the applicant was dealt with in the Magistrates’ Court on charges of obtaining a financial advantage by deception and obtaining property by deception. Both charges were adjourned without the recording of a conviction. The judge noted the ‘remarkable similarity’ between the applicant’s current offending and the prior offences, which involved falsifying vouchers for returned goods to the tune of $24,332. This showed that there was a need for specific deterrence.[26]
[25]Ibid [65].
[26]Ibid [69]–[71].
In considering the applicant’s background and personal circumstances, the sentencing judge had regard to the report[27] of Mr Jeffrey Cummins, psychologist, tendered on the plea. According to Mr Cummins, the applicant suffered from some agitated depression as a result of the jury verdict, and he expressed concern that her mental health might deteriorate further following sentencing. Nonetheless, his report did not disclose any relevant mental health condition required to be taken into account in sentencing, or which would properly engage any of the Verdins principles.[28]
[27]Dated 21 August 2021.
[28]Ibid [72]. See R v Verdins (2007) 16 VR 269, 276 [32] (Maxwell P, Buchanan and Vincent JJA); [2007] VSCA 102.
The sentencing judge considered, but did not treat as mitigatory, the extra-curial punishment suffered by the applicant as a result of her offending — the loss of income and a property in Carlton North, unwanted media attention, and a real likelihood of never working as a legal practitioner again. While these matters were difficult for her, they were the natural consequence of the offending that she engaged in. The judge did, however, take into account the additional burden the applicant would face as a result of being separated from her children.[29]
[29]Reasons, [73].
Addressing the applicant’s prospects of rehabilitation directly, the judge described them as ‘only fair’. While he doubted she would ever have the opportunity to do so, his Honour said that he would not be surprised if she did re-offend, particularly in light of her conduct at trial.[30]
[30]Ibid [73].
Finally, the sentencing judge articulated and balanced the relevant sentencing principles as follows:
In sentencing you both for crimes of this kind, the sentence must have regard to deterrence, both general and (where relevant), specific. The sentence must denounce your offending and have proper regard to your prospects of rehabilitation. Here, there are fourteen charges and each one is serious. You each engaged in a lot of serious offending, over a period of more than two years and by deception you obtained more than $17m. But even though there are a number of offences, in arriving at just punishment, I must also have regard to the sentencing principle of totality. The sentences that I will now impose on each of you have regard to these sentencing principles.[31]
[31]Ibid [80].

Analysis

It is well established that the ground of manifest excess is very difficult to make out and will only succeed if it can be shown that the sentence was ‘wholly outside the range of sentencing options available’ to the sentencing judge.[32] It must be shown that it was not reasonably open to the sentencing judge to come to the sentencing conclusion which he or she did, if proper weight had been given to all the relevant circumstances of the offending and the offender.[33] For the intervention of this Court to be warranted, it is not enough that we regard the impugned sentence as stern, or that we would not ourselves have passed the same sentence.[34]
[32]R v Boaza [1999] VSCA 126, [42] (Chernov JA).
[33]Clarkson v The Queen (2011) 32 VR 361, 384 [89] (Maxwell ACJ, Nettle, Neave, Redlich and Harper JJA; [2011] VSCA 157.
[34]Leimonitis v The Queen [2018] VSCA 198, [32] (Priest JA).
The sentence imposed on the applicant is a long sentence that will deprive her two children of the care of their mother through their formative years and it will deprive the applicant of her ability to lavish that love and care on her children. It represents severe punishment.
However, as the respondent pointed out, there were a significant number of factors militating in favour of a lengthy sentence in this case:
(a)The value of the fraud was very large indeed — approximately $17.4 million.
(b)The applicant’s role in the fraud was critical; she was the person the judge found to be the ‘mastermind’, the ‘person on the inside’;[35] she was necessary for the fraud’s commission and was the ‘principal perpetrator of the fraud’.
(c)In defrauding her employer, the applicant acted in gross breach of trust. It was because of the trust placed in her that she was able to carry out the fraud for so long and with such apparent ease. As the sentencing judge found, the applicant’s behaviour amounted to ‘offending … at a very high level for a fraud of this kind.’ His Honour described a fraud of this nature committed by a legal practitioner as ‘disgraceful’.
(d)The applicant has shown no remorse. Her account of what occurred was rejected by the jury as untrue. The judge, having seen her give her evidence, described it as ‘a concoction of lies’. The applicant’s complete lack of remorse and apparent belief that she could lie her way out of difficulty weighs against her prospects of rehabilitation, which the sentencing judge found to be ‘only fair’.
(e)The applicant and Alvaro committed the fraud for no other purpose than to enjoy an opulent lifestyle that they were unable to afford through honest endeavour.
(f)The applicant had a relevant prior conviction for ‘remarkably similar’ offending which was also committed in breach of trust. This bears upon specific deterrence.
[35]Reasons [42].

Furthermore, as the sentencing judge recognised, general deterrence is an important consideration when sentencing for offending of this kind. The applicant was placed in a position of significant trust by her employer, as is evidenced by the fact that she was able to manipulate her colleagues and Dual’s business systems to steal the enormous sum of money that she did, and she thoroughly and cynically abused that trust. In addition, she was a member of the legal profession, the trustworthiness of which is vital to the administration of justice and is relied on by the community as a whole.
The judge’s reasons for sentence were thoughtful and thorough. He took into account all relevant matters, and weighed in the sentencing synthesis the hardship the applicant will suffer as a result of her separation from her children and, more generally, the dreadful circumstance that two young children will be deprived of the care of both of their parents for many years and reliant on relatives who are already under pressure caring for their own children. He also took into account that the applicant had repaid the funds that were stolen. In respect of the latter, it was well open to him to find that the repayment was not a sign of remorse or contrition.
This was an audacious fraud that was committed in breach of trust over a period of almost two years. The deceit was calculated and prolonged, and took advantage of the high level of trust reposed in the applicant. The amount of money taken was very large, and its theft was motivated purely by greed. The repayment of the funds was made, apparently, because the applicant believed she had no choice rather than as a gesture of remorse. It was facilitated by the fact that much of the money was conveniently invested in real estate, which could be liquidated.
In our view, it is highly significant that the applicant has failed to show any remorse, and was content to get into the witness box to spin a further web of lies in order to assert her entitlement to the funds. We have read the transcript of the applicant’s evidence, which involved, as the sentencing judge said, a tissue of lies that can only be described as brazen.
It is also significant that the applicant has offended in a similarly deceitful manner in the past. She appears to have learned nothing. Specific deterrence had to play an important part in the sentencing synthesis.
The maximum penalty for the offences charged where the applicant stood to be sentenced as a continuing criminal enterprise offender is 20 years’ imprisonment. The sentences for charges 6, 8, 10, 12 and 14 had to be imposed with the 20 year maximum sentence as a guidepost. The amounts of money referrable to those charges were significant ($1.1 million, $1.5 million, $2.1 million, $1.7 million and $2.6 million, respectively), as was the breach of trust involved on each occasion. This was very serious offending.
Having regard to these matters, we are far from persuaded that the individual sentences imposed upon charges 6, 8, 10, 12 and 14 were outside the range. We also consider the individual orders for cumulation to be modest in all the circumstances. But for the mitigatory matters relied upon (most particularly the situation in which the applicant’s children now find themselves, and the fact of repayment), the sentence could well have been higher.
The application for an extension of time to appeal against sentence will be refused.

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[2022] VSCA 110

10 June 2022