Kauhanen v R
[1999] WASCA 14
•26 MAY 1999
KAUHANEN -v- R [1999] WASCA 14
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [1999] WASCA 14 | |
| COURT OF CRIMINAL APPEAL | |||
| Case No: | CCA:133/1998 | 18 FEBRUARY 1999 | |
| Coram: | MALCOLM CJ PIDGEON J ANDERSON J | 26/05/99 | |
| 50 | Judgment Part: | 1 of 1 | |
| Result: | Appeal and cross-appeal dismissed | ||
| PDF Version |
| Parties: | LEO TAPANI KAUHANEN THE QUEEN MICHELLE CLAIRE PERICLES |
Catchwords: | Criminal law and procedure Sentencing Attempted defrauding of the Commonwealth Appeal by male offender against total sentence of 3 years' imprisonment for five false claims for export development grants totalling $1,106,817 Sophisticated interstate scheme difficult to detect Parity and totality Female co-offender given suspended sentence Distinguishing mitigatory features No justifiable sense of grievance Sentence not manifestly excessive Criminal law and procedure Sentencing Crown appeal Attempted defrauding of the Commonwealth Total sentence of 3 years' imprisonment with 14 month pre-release period for male offender Sophisticated interstate scheme difficult to detect General and personal deterrence Principles applicable Sentence not manifestly inadequate Criminal law and procedure Sentencing Crown appeal Attempted defrauding of the Commonwealth Suspended total sentence of 3 years' imprisonment for female offender Sophisticated interstate scheme difficult to detect General and personal deterrence Principles applicable Youth, previous good character, prospects of rehabilitation and offences resulting from influence of dominant male co-offender Judicial clemency Sentences not manifestly inadequate Pearce v The Queen [1998] HCA 57 (1998) 72 ALJR 1416, applied Postiglione v The Queen (1997) 189 CLR 295, applied R v Liddington (1997) 18 WAR 394, discussed R v Petterson [1984] WAR 329, applied |
Legislation: | Export Markets Development Grants Act 1974 (Cth) s39(1) Crimes Act 1914 (Cth) s16A(2)(c), s16B(a) Criminal Code s688, s689 |
Case References: | Bugmy v The Queen (1990) 169 CLR 525 Catts (1996) 85 A Crim R 171 Clarke v The Queen [1996] 2 VR 520 Dickes (1983) 10 A Crim R 88 Everett & Phillips v The Queen (1994) 181 CLR 295 Greenburg (1993) 68 A Crim R 392 Griffiths v The Queen (1977) 137 CLR 293 Heryadi v The Queen, unreported; CCA SCt of WA; Library No 980113; 12 March 1998 Lee Vanit v The Queen (1997) 190 CLR 378 Leeth v The Queen (1992) 174 CLR 455 Lowe v The Queen (1984) 154 CLR 606 Malvoso v The Queen (1989) 168 CLR 227 Mill v The Queen (1988) 166 CLR 59 Pearce v The Queen [1998] HCA 57 at [45]; (1998) 72 ALJR 1416 at 1423-1424 [45] Postiglione v The Queen (1997) 189 CLR 295 R v GP (1997) 18 WAR 196 R v Gray [1977] VR 225 R v Liddington (1997) 18 WAR 394 R v Petterson [1984] WAR 329 R v Ruggiero [1998] SASC 6989 R v Tait (1979) 46 FLR 386 Ritter v The Queen, unreported; CCA SCt of WA; Library No 6380; 5 August 1986 Savvas v The Queen (1995) 69 ALJR 564 Sheedy v The Queen, unreported; CCA SCt of WA; Library No 970120; 26 March 1997 Siganto v The Queen [1998] HCA 74; (1998) 159 ALR 94 at 99 The Queen v Bay, unreported; DCt NSW; 30 January 1996 The Queen v Hogan, unreported; CA Vic; 11 March 1997 The Queen v Osenkowski (1982) 30 SASR 212 Thompson v The Queen (1993) 8 WAR 387 Wright (1994) 74 A Crim R 152 Attorney-General's Reference No 19 of 1992 (1993) 14 Cr App R 330 Britten v Alpogut [1987] VR 928 DPP (Cth) v Tugwell, unreported; CCA SCt of SA; File No SCCRM-96-12; Judgment No S5563; 15 April 1996 Greenburg (1993) 68 A Crim R 392 Grein [1989] WAR 178 Hall (1994) 76 A Crim R 454 Mortimer v The Queen, unreported; CCA SCt of WA; Library No 970526; 14 October 1997 R v Cameron & Simounds, unreported; CCA SCt of SA; File Nos SCCRM-93-134, SCCRM-93-135; Judgment No S4051 R v Mitchell, unreported; CCA SCt of WA; Library No 980618; 28 October 1998 R v Osenkowski (1982) 30 SASR 212 Repucci (1994) 74 A Crim R 353 Romeo (1987) 32 A Crim R 74 Urquhart v The Queen, unreported; CCA SCt of WA; Library No 950484; 13 September 1995 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : COURT OF CRIMINAL APPEAL CITATION : KAUHANEN -v- R [1999] WASCA 14 CORAM : MALCOLM CJ
- PIDGEON J
ANDERSON J
- Appellant
AND
THE QUEEN
Respondent
- Appellant
AND
MICHELLE CLAIRE PERICLES
Respondent
(Page 2)
FILE NO/S : CCA 141 of 1998 BETWEEN : THE QUEEN
- Appellant
AND
LEO TAPANI KAUHANEN
Respondent
- Applicant
AND
THE QUEEN
Respondent
Catchwords:
Criminal law and procedure - Sentencing - Attempted defrauding of the Commonwealth - Appeal by male offender against total sentence of 3 years' imprisonment for five false claims for export development grants totalling $1,106,817 - Sophisticated interstate scheme difficult to detect - Parity and totality - Female co-offender given suspended sentence - Distinguishing mitigatory features - No justifiable sense of grievance - Sentence not manifestly excessive
Criminal law and procedure - Sentencing - Crown appeal - Attempted defrauding of the Commonwealth - Total sentence of 3 years' imprisonment with 14 month pre-release period for male offender - Sophisticated interstate scheme difficult to detect - General and personal deterrence - Principles applicable - Sentence not manifestly inadequate
Criminal law and procedure - Sentencing - Crown appeal - Attempted defrauding of the Commonwealth - Suspended total sentence of 3 years' imprisonment for female offender - Sophisticated interstate scheme difficult to detect - General and personal deterrence - Principles applicable - Youth,
(Page 3)
previous good character, prospects of rehabilitation and offences resulting from influence of dominant male co-offender - Judicial clemency - Sentences not manifestly inadequate
Pearce v The Queen [1998] HCA 57; (1998) 72 ALJR 1416, applied
Postiglione v The Queen (1997) 189 CLR 295, applied
R v Liddington (1997) 18 WAR 394, discussed
R v Petterson [1984] WAR 329, applied
Legislation:
Export Markets Development Grants Act 1974 (Cth) s39(1)
Crimes Act 1914 (Cth) s16A(2)(c), s16B(a)
Criminal Code s688, s689
Result:
Appeal and cross-appeal dismissed
Representation:
CCA 133 of 1998
Counsel:
Appellant : Mr D Grace QC
Respondent : Mr S D Hall
Solicitors:
Appellant : Pryles & Defteros
Respondent : Commonwealth Director of Public Prosecutions
CCA 140 of 1998
Counsel:
Appellant : Mr S D Hall
Respondent : Mr T F Percy QC & Mr P E Harris
Solicitors:
Appellant : Commonwealth Director of Public Prosecutions
Respondent : Acting Director of Legal Aid
(Page 4)
CCA 141 of 1998
Counsel:
Appellant : Mr S D Hall
Respondent : Mr D Grace QC
Solicitors:
Appellant : Commonwealth Director of Public Prosecutions
Respondent : Acting Director of Legal Aid
CCA 142 of 1998
Counsel:
Applicant : Mr D Grace QC
Respondent : Mr S D Hall
Solicitors:
Applicant : Pryles & Defteros
Respondent : Commonwealth Director of Public Prosecutions
Case(s) referred to in judgment(s):
Bugmy v The Queen (1990) 169 CLR 525
Catts (1996) 85 A Crim R 171
Clarke v The Queen [1996] 2 VR 520
Dickes (1983) 10 A Crim R 88
Everett & Phillips v The Queen (1994) 181 CLR 295
Greenburg (1993) 68 A Crim R 392
Griffiths v The Queen (1977) 137 CLR 293
Heryadi v The Queen, unreported; CCA SCt of WA; Library No 980113; 12 March 1998
Lee Vanit v The Queen (1997) 190 CLR 378
Leeth v The Queen (1992) 174 CLR 455
Lowe v The Queen (1984) 154 CLR 606
Malvoso v The Queen (1989) 168 CLR 227
Mill v The Queen (1988) 166 CLR 59
Pearce v The Queen [1998] HCA 57 at [45]; (1998) 72 ALJR 1416 at 1423-1424
Postiglione v The Queen (1997) 189 CLR 295
(Page 5)
R v GP (1997) 18 WAR 196
R v Gray [1977] VR 225
R v Liddington (1997) 18 WAR 394
R v Petterson [1984] WAR 329
R v Ruggiero [1998] SASC 6989
R v Tait (1979) 46 FLR 386
Ritter v The Queen, unreported; CCA SCt of WA; Library No 6380; 5 August 1986
Savvas v The Queen (1995) 69 ALJR 564
Sheedy v The Queen, unreported; CCA SCt of WA; Library No 970120; 26 March 1997
Siganto v The Queen [1998] HCA 74; (1998) 159 ALR 94 at 99
The Queen v Bay, unreported; DCt NSW; 30 January 1996
The Queen v Hogan, unreported; CA Vic; 11 March 1997
The Queen v Osenkowski (1982) 30 SASR 212
Thompson v The Queen (1993) 8 WAR 387
Wright (1994) 74 A Crim R 152
Case(s) also cited:
Attorney-General's Reference No 19 of 1992 (1993) 14 Cr App R 330
Britten v Alpogut [1987] VR 928
DPP (Cth) v Tugwell, unreported; CCA SCt of SA; File No SCCRM-96-12; Judgment No S5563; 15 April 1996
Greenburg (1993) 68 A Crim R 392
Grein [1989] WAR 178
Hall (1994) 76 A Crim R 454
Mortimer v The Queen, unreported; CCA SCt of WA; Library No 970526; 14 October 1997
R v Cameron & Simounds, unreported; CCA SCt of SA; File Nos SCCRM-93-134, SCCRM-93-135; Judgment No S4051
R v Mitchell, unreported; CCA SCt of WA; Library No 980618; 28 October 1998
R v Osenkowski (1982) 30 SASR 212
Repucci (1994) 74 A Crim R 353
Romeo (1987) 32 A Crim R 74
Urquhart v The Queen, unreported; CCA SCt of WA; Library No 950484; 13 September 1995
(Page 6)
1 MALCOLM CJ: On 2 September 1998, Leo Tapani Kauhanen and Michelle Claire Pericles were convicted after trial of five counts in an indictment by which they were jointly charged on each count with having knowingly attempted to obtain an amount by way of a grant to a company that was not payable, contrary to s39(1) of the Export Development Grants Act 1974 (Cth). The offences were alleged to have taken place between 7 August and 20 October 1995.
2 Mr Kauhanen instituted an appeal against his convictions by a notice dated 23 September 1998. At the outset of the hearing in this Court on 18 February 1999, counsel for Mr Kauhanen sought leave to abandon the appeal against conviction. Leave was granted on the undertaking by counsel that a notice of abandonment would be filed before the end of the day.
3 Mr Kauhanen was sentenced on 24 September 1998 to imprisonment for 18 months on each count on the basis that the sentences on counts 1 and 2 were cumulative and the sentences on all other counts were concurrent with those sentences and each other. The total sentence was 3 years with a pre-release period of 14 months. Ms Pericles was also sentenced on the same date to imprisonment for a total of 3 years structured in the same way. In her case, however, an order was made that she be released from imprisonment forthwith, subject to her entering into a recognisance for security in an amount of $2,000 to be of good behaviour for a period of 3 years. The Crown has appealed against the sentences imposed upon both Mr Kauhanen and Ms Pericles. Finally, Mr Kauhanen has made an application for leave to appeal against sentence. This application was argued first.
Application for leave to appeal against sentence by Mr Kauhanen
The Offences
4 The offences of which Mr Kauhanen and Ms Pericles were convicted were that between various dates in August 1995 and October 1995 Mr Kauhanen and Ms Pericles:
"1. … knowingly attempted to obtain an amount by way of a grant to Speedy Group Pty Ltd that was not payable, contrary to section 39(1) of the Export Market Development Grants Act 1974.
(Page 7)
- 2. ... knowingly attempted to obtain an amount by way of a grant to Ferak Pty Ltd that was not payable, contrary to section 39(1) of the Export Market Development Grants Act 1974.
3. ... knowingly attempted to obtain an amount by way of a grant to Wireless Designs Pty Ltd that was not payable, contrary to section 39(1) of the Export Market Development Grants Act 1974.
4. ... knowingly attempted to obtain an amount by way of a grant to Hai Corporation Pty Ltd that was not payable, contrary to section 39(1) of the Export Market Development Grants Act 1974.
5. ... knowingly attempted to obtain an amount by way of a grant to Hansoi Pty Ltd that was not payable, contrary to section 39(1) of the Export Market Development Grants Act 1974."
5 Section 39(1) of the Export Market Development Grants Act 1974 provides that:
"A person shall not knowingly obtain or attempt to obtain an amount by way of grant that is not payable."
6 The maximum penalty for an offence under s39 is imprisonment for 5 years whether the offence is obtaining or attempting to obtain an amount. The indictment originally alleged that the amounts attempted to be obtained were, respectively, $312,000, $168,912, $191,405, $271,000,aand $163,000, a total of $1,106 817. Each count was amended at the trial by deleting the amount and treating it as a particular.
Grounds of Appeal
7 The application by Mr Kauhanen was made on three grounds, but ground 2 was abandoned at the hearing. Ground 1 was that the overall sentences imposed were manifestly excessive in all the circumstances of the applicant and the offences. In support of that ground, the applicant relied upon the following particulars:
"1. The learned sentencing Judge failed to give sufficient weight to:
(a) previous good character;
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- (b) the applicant's contributions to the Australian community in general and scientific community in particular.
- 2. The learned sentencing Judge erred in fact and in law in finding that the applicant stood to gain $515,908.50 if all five false claims had been successful.
3. The learned sentencing Judge erred in law by failing to have proper regard to the principle of totality by imposing cumulative terms of imprisonment with respect to counts 1 and 2 on the indictment."
8 Ground 3 was that:
"The sentence imposed upon the applicant is manifestly disparate to that imposed upon the co-applicant such as to give rise to a substantial miscarriage of justice."
9 The latter ground was added by way of amendment as a result of an application for leave made at the hearing, to which there was no objection by the Crown.
Sentencing Remarks
10 In her sentencing remarks the learned Judge noted that Mr Kauhanen had graduated from the University of Western Australia with a Bachelor of Engineering degree in electronics and had subsequently attended the Royal Military College of Duntroon. He subsequently operated a number of businesses involved in the research and development of electronics products and was responsible for a number of inventions. He controlled a number of successful companies which employed some 50 persons and had a gross income of some $100,000. As a result of his convictions, it was said that he had lost everything.
11 Mr Kauhanen suffered from depression at the time of sentencing and was suffering from a cancer which had developed in 1991. He had surgery and suffered from further medical problems in 1995. The learned sentencing Judge had been provided with a number of supportive references from family, friends, business associates and others. The learned Judge said:
"I accept that the offender Kauhanen has been very hardworking, has self-made success in his businesses. I accept
(Page 9)
- he is exceptionally talented and has great ability as an inventor. I accept that he is loyal to members of his family, is looked up to and respected by both family and friends."
12 There was an issue about whether Mr Kauhanen was irreplaceable in the business at the time of sentence and contradictory evidence was given about that matter. At the time of sentence, Mr Kauhanen was bankrupt. It was submitted that he had good prospects for rehabilitation. He also expressed a concern, which was reflected in his pre-sentence report, regarding the welfare of Ms Pericles. He said he felt responsible for her involvement and obviously regarded her as being young and inexperienced, which the learned Judge herself recognised.
13 It would appear that her Honour accepted that the applicant was a man of previous good character, he had contributed to the Australian community and had reasonable prospects of future rehabilitation. The issues or previous good character and rehabilitation loomed very large in the reasons for sentence of the learned Judge in respect of Ms Pericles. At the same time, her Honour reached the conclusion that both offenders were jointly involved in the planning and implementation of the scheme, although each had different roles to perform, so that in the end each received a sentence of 3 years. This was explained by her Honour as follows:
"Because they worked together and independently in prosecuting the fraud, I see nothing to differentiate between the offenders so far as the overall sentence is concerned."
14 The question which then fell to be considered in respect to each of the offenders was whether any part of the sentence ought to be served in custody and, if so, how much. It was submitted on behalf of Mr Kauhanen that the learned Judge ultimately distinguished between the two offenders in her disposition of them, based primarily upon their respective prospects of rehabilitation.
Ground 1 particular 1
15 In my opinion there was simply no merit whatsoever in the contention that the overall or total sentence of 3 years for these offences was manifestly excessive, having regard to the nature, number and circumstances of the offences, the threat they posed to the revenue and the fact that the attempts so nearly succeeded, but failed only because of a fortuitous conversation between two Austrade officers. The reasons for
(Page 10)
- this are apparent from what I will have to say with respect to other grounds. It was submitted by counsel for Mr Kauhanen in support of ground 1, particular 1 that there was nothing to distinguish between the two offenders in terms of their previous good character and prospects of rehabilitation. In my opinion, this particular point really falls to be considered in relation to the question of disparity raised by ground 3. I will deal with this aspect of ground 1 particular 1 in that context. The learned Judge expressly acknowledged the contributions of Mr Kauhanen when sentencing him and there can be no doubt that they were reflected in the sentences imposed. It follows that subject to the extent relevant to disparity ground 1, particular 1 fails.
Ground 1 particular 2
16 As to ground 1, particular 2, it was submitted that the finding that the applicant stood to gain $515,908, if all five false claims had been successful, was in error. Counsel for Mr Kauhanen submitted that it was not conceded that Mr Kauhanen himself would receive that amount of money. It was always put that the businesses would receive whatever moneys Austrade paid. They were of course, businesses which he and Ms Pericles controlled. Mr Kauhanen was in charge.
17 There was a substantial issue in the plea in mitigation regarding what was the correct amount involved. The applicant submitted through his counsel that the appropriate figure that Austrade would have paid would have been $395,000, because some $120,000 of the claims would have been disallowed as not being eligible for reimbursement. The offence, of course, was attempting to obtain a sum of money, so that it was not an element of the offence that the offenders were or would have been successful. The prospects of success and, in particular, the potential impact upon the revenue would be material on the question of penalty. The answer to this question involves an examination of the Crown case at the trial.
18 As to count 1, Mr Kauhanen was a director of Speedy Group Pty Ltd ("Speedy") from 16 March 1994 to 22 May 1995. Ms Pericles was also a director from 16 March 1994 to 1 May 1995. On or about 7 August 1995, an application was submitted by Mr Kauhanen and Ms Pericles to Austrade for a grant under the Export Market Development Grants ("EMDG") scheme. The application to Austrade claimed two items of expenditure which were overseas consultants' fees paid to Prusak & Consultants ("Prusak") and patent registration fees paid to Patents International Pty Ltd ("Patents International"). Ms Pericles, with the
(Page 11)
- knowledge and agreement of Mr Kauhanen, signed the application form for the grants in the name of one Juha Karhunen without his knowledge or authority. Prusak of Alberta, Canada, did not charge the amounts claimed and were not paid them. The Patents International documentation submitted to Austrade was created by Mr Kauhanen and Ms Pericles scanning genuine correspondence received from Griffith Hack, a patent attorney, regarding an unrelated matter which was used as a model for the Patents International documentation. Payment of the expenditure to Patents International, the subject of the claim, was effected by Mr Kauhanen and Ms Pericles by a "round robin" scheme involving various loans and payments by companies controlled by them.
19 As to count 2, Mr Kauhanen was a director and secretary of Ferak Pty Ltd ("Ferak") from 13 January 1995 to 6 March 1995. Ms Pericles was a director of the company during this time. An application was made to Austrade by the company for a grant under the EMDG scheme. The application was submitted to Austrade in South Australia by Mr Kauhanen and Ms Pericles on or about 21 August 1995. The application claimed patent registration fees paid to Patents International. Ms Pericles, with the knowledge and agreement of Mr Kauhanen, signed the application form in the name of Esko Kauhanen, knowing that he was deceased. Payments of the amounts claimed as expenditure to Patents International were effected by Mr Kauhanen and Ms Pericles by a "round robin" scheme involving loans and payments through various companies controlled by them. Mr Kauhanen, in company with a Mr Peter Power, attended an interview regarding the claim by Ferak with Austrade officers in Adelaide on 11 September 1995. Mr Power was unaware of any expenditure incurred by Ferak and had never sent or received correspondence from Patents International.
20 As to count 3, Mr Kauhanen and Ms Pericles were directors of Wireless Designs Pty Ltd ("Wireless Designs") from 13 January 1995 to 21 March 1995. An application to Austrade for a grant under the EMDG scheme to Wireless Designs was submitted in Victoria by Mr Kauhanen and Ms Pericles on or about 23 August 1995. Expenditure claimed in the application was for patent registration fees said to have been paid to Patents International. Ms Pericles, with the knowledge and agreement of Mr Kauhanen, signed the application form in the name of one Graham Hollingsworth without his knowledge or authority. The Patents International documentation was created by scanning genuine correspondence received from Griffith Hack in relation to an unrelated matter and using it as a model for the Patents International documentation. Payment of the amount claimed as expenditure to Patents International
(Page 12)
- was effected by a "round robin" scheme involving loans and payments by various companies controlled by Mr Kauhanen and Ms Pericles. Mr Kauhanen attended an interview at the Austrade offices in Melbourne on 5 August 1995 in relation to the claim.
21 As to count 4, Ms Pericles was a director and secretary of Hai Corporation Pty Ltd ("Hai International") from 18 January 1995 until May 1995. Mr Kauhanen and Ms Pericles applied to Austrade for a grant under the EMDG scheme. The application was submitted on or about 5 September 1995. The application claimed as expenditure patent registration fees paid to Patents International. Ms Pericles, with the knowledge and agreement of Mr Kauhanen, signed the application form for Austrade grants in the name of one Chris Chew, knowing that such a person did not exist. The Patents International documentation was created by scanning genuine correspondence received from Griffith Hack, patent attorneys, in relation to an unrelated matter and using it as a model for the Patents International documentation. Payment of the amount claimed as expenditure to Patents International was effected by Mr Kauhanen and Ms Pericles by a "round robin" scheme involving loans and payments through various companies controlled by them.
22 As to count 5, Ms Pericles was a director and secretary of Hansoi Pty Ltd ("Hansoi") from 18 January 1995 until 6 March 1995. An application was made to Austrade for a grant under the EMDG scheme on or about 6 September 1995. The application claimed as expenditure patent registration fees paid to Patents International. Ms Pericles, with the knowledge and agreement of Mr Kauhanen, signed the application form for the Austrade grant in the name of one Lauri Lasko, knowing that he was deceased. The Patents International documentation was created by scanning genuine correspondence received from Griffith Hack, patent attorneys, in relation to an unrelated matter and using it as a model for the Patents International documentation. Payment of the amount claimed as expenditure to Patents International was effected by Mr Kauhanen and Ms Pericles by a "round robin" scheme involving loans and payments through various companies controlled by them.
23 For present purposes, it is enough to say that the Crown case was that Patents International was a company formed and controlled by Mr Kauhanen and Ms Pericles. It was used by them at premises which they occupied at 414 Newcastle Street, Perth to create false documents and false invoices for the purposes of defrauding Austrade.
(Page 13)
24 It was submitted that, in assessing the level of criminality involved, the learned sentencing Judge ought to have taken into account not only that the offences were constituted by attempts, but also the fact that if the claims had been processed by Austrade and properly assessed, the amount that would have been payable would have been some $120,000 less than the total amount claimed: cfSavvas v The Queen (1995) 69 ALJR 564 at 568 per Deane, Dawson, Toohey, Gaudron and McHugh JJ.
25 This point was dealt with by the learned sentencing Judge as follows:
"Counsel on behalf of offender Kauhanen produced a table, exhibit S3, suggesting the amounts to be deducted in each claim. If that were done, the total funds payable, if the frauds had succeeded, would be $395,136. I do not accept those submissions insofar as they relate to Patents International invoices."
26 Her Honour went on to say that:
"Whether or not an Austrade assessor would have disallowed the items is a matter of no relevance to the overall criminality of each attempt."
27 In the present case, the gravamen of the offence under s39(1) of the Export Market Development Grants Act 1974 is the attempt to obtain payment of an amount that is not payable. From that standpoint, it seems to me that it detracts very little, if anything, from the gravamen of the offence if the claim included expenditure in respect of which a grant was not payable in any event because some of the expenditure was not eligible expenditure. Of course, it may well be that a person committing an offence under s39(1) would include one or more items in a claim, in the knowledge that they would be disallowed, for the purpose of making the balance of the claim seem more genuine. In the present case, it was accepted by Mr Kauhanen, when interviewed in relation to the offences, that amounts beyond those which could legitimately be claimed (if the claims were genuine) had been inserted for the purpose of verisimilitude.
28 I accept that there is a distinction between assessing the criminality of the attempt as an attempt to obtain the full amount claimed, on the one hand, and, on the other, evaluating the seriousness of the offence so far as its potential impact upon the revenue is concerned. In the latter case, the extent to which the false claim was made in respect of eligible expenditure would be relevant. However, its use as a mitigating factor would be limited by the extent that claims were included for expenditure
(Page 14)
- known to be ineligible for the purposes of verisimilitude. If there was no expectation of payment of a particular amount, it might be said that there was no attempt to recover that portion of the total amount. If, however, as was the present case, it was included as part of the plan of deception, it would be relevant to the degree of criminality involved. In any case, however, there might be a hope or expectation that the full amount would be paid.
29 The claim that some of the expenditure would never have been accepted by Austrade and was destined to fail was not supported by the evidence. It was submitted on behalf of Mr Kauhanen and Ms Pericles that, in any event, assuming that the claims had been paid something in the vicinity of over $200,000 claimed would have been rejected as being ineligible expenditure. For example, in relation to count 1 on the indictment, it was submitted to her Honour that Mr Arbuckle, the relevant Austrade officer, would not have paid out an amount of $61,300 because it was ineligible expenditure. The point was not put to Mr Arbuckle in cross-examination and, while acknowledging that onus of proof was on the Crown, the learned Judge commented in the sentencing context:
"It is unusual, I would think, that if it is such a good point it wasn't put to the witness fairly and squarely so that I had evidence on which to act rather than drawing inferences from documents when we have had extensive evidence from persons who are knowledgeable."
30 The end result in respect of count 1 was that there was no evidence before the learned Judge that any of the relevant expenditure was ineligible.
31 There was another instance in which it was suggested that the expenditure was ineligible, namely, a claim in respect of the costs incurred in connection with a provisional patent application for Japan. There was evidence from a Japanese patent attorney that the patent system in Japan had never included provisional patents. This evidence was given as part of the Crown case to show the fraudulent nature of the scheme. It was submitted on behalf of Mr Kauhanen that Austrade would have known that there was no such thing as a provisional patent in Japan and ruled that the expenditure was ineligible. In respect of that matter, the learned Judge pointed out that the question was whether an Austrade officer would have known that. It was not put to the relevant officer, Mr Arbuckle, that he had such knowledge or that he would have ruled that the expenditure ineligible.
(Page 15)
32 It was also pointed out by counsel for the Crown that the real difficulty with the contentions regarding ineligible expenditure was that a claim processed in South Australia had been assessed and found to be payable in full, notwithstanding that all of the invoices had not been provided. A cheque was drawn, but, upon discovery of the fraud, payment on it was stopped.
33 In each case the export development grant was calculated on the basis of expenditure found to be eligible expenditure. Austrade then deducted the first $15,000 of the expenditure and a grant was payable at the rate of 50 per cent of the remainder. The total amount of eligible expenditure claimed was in excess of $1,000,000 and on that basis the total of the grants which could have been made in respect of that expenditure, on the assumption that it was eligible, was some $515,000.
34 In the end, it was conceded by counsel for Mr Kauhanen that this mitigating factor, if established, was, at the best, marginal in that it may have reduced the threat to the revenue by something over $100,000. In my opinion, on an examination of Mr Kauhanen's record of interview and the relevant evidence, it is not possible to say that when Austrade applied their assessment procedures to these claims the amount paid would necessarily have been less than the amount claimed. Likewise, it is not possible to say that, if it was less, that was a result of any intention on the part of Mr Kauhanen to obtain less than the amount which was the subject of the conviction. In my opinion, there is no substance in ground 1, particular 2.
Ground 1 particular 3: Totality Principle
35 In support of the ground that the overall sentences imposed were manifestly excessive it was submitted that the learned Judge wrongly applied the totality principle by first imposing a total sentence and then determining what the individual sentences should be to make up that total. In Pearce v The Queen [1998] HCA 57 at [45]; (1998) 72 ALJR 1416 at 1423-1424 McHugh, Hayne and Callinan JJ said:
"To an offender, the only relevant question may be 'how long' and that may suggest that a sentencing Judge or appellate court should have regard only to the total effective sentence that is to be or has been imposed on the offender. Such an approach is likely to mask error. A judge sentencing an offender for more than one offence must fix an appropriate sentence for each
(Page 16)
- offence and then consider questions of cumulation or concurrence, as well, of course, as questions of totality."
36 Their Honours also said at HCA [49]; ALJR 1424 [49]:
"Looked at overall, it may well be said that the effect of the sentences imposed on this appellant is not disproportionate to the criminality of his conduct. Nevertheless, we consider that the individual sentences imposed on counts 9 and 10 were flawed because they doubly punished the appellant for a single act, namely, the infliction of grievous bodily harm. Further, to make the sentences imposed on those two counts wholly concurrent may also be said to reveal error in that to do so failed to take account of the differences in the conduct which were the subject of punishment on each count. The appeal under s5(1) of the Criminal Appeal Act 1912 (NSW) being an appeal against 'a sentence' it was, of course, the individual sentences that fell for consideration, not just their overall effect. If the Court 'is of opinion that some other sentence ... is warranted in law and should have been passed, [it] shall quash the sentence and pass such other sentence in substitution therefor'."
37 The position is the same under s689 of the Criminal Code. It was acknowledged, however, that upon the application of the totality principle and in order to avoid a crushing sentence, individual sentences may be reduced if, even by making appropriate sentences concurrent, the combination of cumulative and concurrent sentences in accordance with ordinary principles would result in a crushing sentence: cfMill v The Queen (1988) 166 CLR 59 at 63 per Wilson, Deane, Dawson, Toohey and Gaudron JJ; and Postiglione v The Queen (1997) 189 CLR 295 at 307-308 per McHugh J; and at 340 per Kirby J.
38 It was not submitted that the individual sentences of 18 months on each count were excessive. It was submitted that the totality principle was infringed in this case by the orders for cumulation. In passing sentence the learned Judge said:
"Turning then to the question of sentence, these five offences are very serious. The EMDG Act was enacted by parliament to assist Australians to develop markets for Australian products overseas. The EMDG scheme is one which relies to a considerable extent on trust. Offences of this type not only cast the scheme into public disrepute, but have the potential to affect
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- adversely those honest applicants for whom the scheme was created.
I am satisfied the two offenders engaged in a plan to defraud the public purse by attempting to obtain EMDG grants they knew were not payable. It was a prolonged and elaborate fraud. They did everything they could to obtain the funds, and were only defeated by the vigilance of Austrade officers.
Neither offender has shown any remorse or contrition. I accept the crown's submission that the conduct of the trial reveals that there has never been any acceptance by them of any wrongdoing, or genuine contrition.
Each offender relies on the references submitted on their behalf as evidence of their remorse, but after considering all of those references, it seems to me they go no further than to show the deep regret each now feels at being caught in their fraudulent scheme and finding themselves now liable to be sentenced.
Neither of the offenders chose to give evidence at trial, and I am left to assess their personal attributes from my observations of the videotaped interviews and the evidence of other witnesses at trial. From that evidence, and the education and previous business success of the two offenders, it is clear to me that each is highly intelligent and talented, and each comes from a respectable family.
I am satisfied offences of this nature are difficult to detect. The offenders in this case used elaborate measures to avoid detection. The prosecution of such offences is invariably prolonged and costly, and that proved to be the case here, when witnesses had to be called from New South Wales, South Australia and Victoria in the course of the 4-week trial.
Taking account of all of these factors, I am satisfied that a deterrent penalty is called for, both to deter others in the community who might believe the public purse is an easy target, and to bring home forcefully to these offenders that such offending will be punished.
In all the circumstances, I am satisfied that sentences of imprisonment are the only appropriate penalty, but that leaves
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- two furthers questions: the length of the sentence to be imposed; and whether the sentence should be suspended.
Looking first at the length of sentence, in the case of Sheedy, unreported, Library 970120, SCt of WA, CCA, that court considered sentences imposed in other places in Australia for breaches of section 39(1) of the EMDG Act. Those cases confirm the need for deterrent penalties. Sentences of 3 years' imprisonment have been imposed for offences involving frauds of $250,000 - that was in Hogan's case in Victoria in 1996 - and approximately $600,000 of which the offender personally received 15 per cent in Bay's case in New South Wales in 1996. In Sheedy, less than $250,000 of the grants applied for were amounts found to be not payable, and a sentence of 4 and a half years' imprisonment was reduced to 3 years' imprisonment on appeal.
The offenders in this case have been involved in seeking much greater amounts of money than in Sheedy or Hogan, but in this case neither received any of the money. In Bay's case the offender received approximately $90,000. As I said in the commencement of this case, the offenders sought grants to justify expenditure in excess of $1,000,000, and if successful would have received more than half a million dollars.
These offences show a much more elaborate fraud than in Sheedy. In this case, fraudulent grants were sought in four different states by five different sham claimants, utilising companies with false directors. The offenders each played a distinct role in carrying out what I find to be a fraudulent plan to obtain these grants.
I am satisfied the offender Kauhanen was the inventor and the ideas man, and the person directing the fraud, but the offender Pericles was very much involved, and took care of all the paperwork. They worked together to implement the fraudulent scheme. The offender Pericles' role seems more prominent in the paperwork because she filled in so many documents and signed them in her own hand, but I am satisfied the offender Kauhanen was involved in what she did.
I do not believe it was a coincidence that it was the offender Kauhanen's dead relatives, and the addresses of the offender
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- Kauhanen's friends which appeared on the documents as sham directors and false addresses. That is not intended to minimise the role played by the offender Pericles. She used her business skills and intelligence to perpetrate this fraud.
Because they worked together and independently in prosecuting the fraud, I see nothing to differentiate between the offenders so far as the overall sentence is concerned. The maximum sentence for each offence is 5 years' imprisonment or a $10,000 fine or both. With five separate convictions the totality principle must inevitably limit the court's discretion and affect the overall penalty.
Although I consider these offences involve a much greater degree of criminality than did Sheedy's case, in this case the offenders never obtained any of the funds. All were attempts, whereas in Sheedy's case one of the offences was a successful obtaining. For these reasons I consider a sentence of 3 years' imprisonment to be the appropriate overall sentence.
I achieve that result by imposing 18 months' imprisonment on each count, with counts 1 and 2 to be served cumulatively with each other but concurrently with counts 3, 4 and 5."
39 It is clear from the above that the learned judge followed the approach which was held in Pearce (supra) by the High Court on the facts it was considering to be incorrect. That approach, however, had been previously approved by this Court on a number of occasions. For example, in Heryadi v The Queen, unreported; CCA SCt of WA; Library No 980113; 12 March 1998 Ipp J (with whom Malcolm CJ and Kennedy J agreed) noted at 6 that the offender had been convicted on three counts of importation of prohibited drugs into Australia, having been found in possession of them on his arrival. The sentencing Judge sentenced the offender to imprisonment for a total of 8 years which was structured by sentencing the offender to a term of 4 years on each of the three counts, directing that the sentences imposed in respect of the first two counts should be served cumulatively with the sentence on the third count being concurrent. The offender sought leave to appeal on the ground that the learned sentencing Judge had been in error in the application of the totality principle. As Ipp J said at 8-9:
"It is plain from his Honour's remarks that he did not approach the sentencing exercise by first fixing the appropriate sentence
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- for each separate offence and then, by application of the totality principle, reducing those sentences to arrive at an appropriate aggregate sentence. His Honour rather had regard to the overall criminality in all the offences, fixed on an appropriate aggregate for those offences, and proceeded to structure the separate sentences so as to achieve the aggregate sentence he had so determined.
While this method is not in accordance with the procedure described in Thomas, Principles of Sentencing, 2nd Edn (1979) pp56-57 (referred to in Mill v The Queen (1988) 166 CLR 59 at 63), the approach adopted by his Honour was nevertheless designed 'to ensure that the aggregation of the sentences appropriate for each offence is a just and appropriate measure of the total criminality involved' per McHugh J in Postiglione v R (1997) 145 ALR 408 at 417. McHugh J emphasised (at 417) that 'the application of the totality principle ... requires an evaluation of the overall criminality involved in all the offences with which the prisoner is charged' (see also the remarks of Kirby J at 442 to 443, and Jarvis v The Queen, unreported; CCA SCt of WA; Library No 930341; 14 June 1993). Such an evaluation is precisely what the learned sentencing Judge carried out. He attempted to ensure that the aggregate sentence passed should fairly and justly reflect the total criminality of the offender's conduct. In my opinion, he thereby fulfilled the requirements of the totality principle: Mill v The Queen, Postiglione v R, Jarvis v The Queen."
40 It follows that at the time the sentences in this case were passed on 24 September 1998 the learned Judge sentenced in accordance with the approach which had been approved by this Court although the judgment in Pearce was delivered on 10 September 1998. In that case, the single act of the offender of inflicting grievous bodily harm on a victim was an element of more than one offence. McHugh, Hayne and Callinan JJ said at 1424:
"Looked at overall, it may well be said that the effect of the sentences imposed on this appellant was not disproportionate to the criminality of his conduct. Nevertheless, we consider that the individual sentences imposed on counts 9 and 10 were flawed because they doubly punished the appellant for a single act, namely, the infliction of grievous bodily harm. Further, to make the sentences imposed on those two counts wholly
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- concurrent may also be said to reveal error in that to do so failed to take account of the differences in the conduct which were the subject of punishment on each count. The appeal under s5(1) of the Criminal Appeal Act 1912 (NSW) being an appeal against 'a sentence' it was, of course, the individual sentences that fell for consideration, not just their overall effect. If the court 'is of opinion that some other sentence ... is warranted in law and should have been passed' [it] shall quash the sentence and pass such other sentence in substitution therefor."
41 The appeal was allowed and the matter remitted to the Court of Criminal Appeal of New South Wales to be dealt with consistently with the reasons for judgment of the court.
42 This was a very different case. There were five similar offences committed on entirely separate occasions. The error which the High Court considered was masked in Pearce did not arise. Her Honour imposed the same sentence of imprisonment for 18 months in respect of each of the offences.
43 The question which arises is whether there has been a miscarriage of justice as a result. In my opinion, if the sentence for each offence was appropriate, there would be no occasion for this Court to interfere simply because the learned Judge first determined upon an aggregate sentence. Given that the offences were all part of the one course of conduct and spanned approximately the same period of time between August and October 1995, it was submitted that a lesser degree of cumulation ought to have been ordered among the five counts, having regard to ss16A(2)(c) and 16B(a) of the Crimes Act 1914 (Cth). I am quite unpersuaded by this argument. This would result in a total sentence of 18 months which would be wholly inadequate. The offences in question in this case involved a series of separate transactions, each of which represented an attempt to obtain a very substantial sum of money and posed a significant threat to the revenue. Four of the attempts were made in different States within Australia. But for the fact that two of the attempts were made from the one State leading to cross-referencing by Austrade, the attempts may well have been successful. In my opinion, the ultimate question is whether the total sentence of 3 years imposed upon Mr Kauhanen for these five separate offences infringed the totality principle by resulting in a "crushing" sentence. I am firmly of the opinion that that question must be answered in the negative.
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44 It is true, as counsel for Mr Kauhanen contended, that any appeal against sentence under s689 of the Criminal Code must be against an individual sentence. However, where an offender is sentenced for a number of offences, the question whether the individual sentences are correct, insofar as they are cumulative, can be tested by asking whether the total of the sentences imposed is proportionate to the total chapter of criminality involved. If it is not and is found to be manifestly excessive, it will necessarily mean that one or more of the individual sentences imposed is excessive, having regard to the context. While, on occasions, the problem may be solved by making one or more cumulative sentences concurrent, the totality principle may also have to be served by reducing one or more of the sentences imposed. In this case, it is sufficient to say that the totality principle has not been infringed and it is unnecessary to interfere with any of the individual sentences on the basis of the principle. Ground 1 particular 3 fails.
Ground 3: Disparity
45 While both Mr Kauhanen and Ms Pericles were sentenced to 3 years' imprisonment, it was contended that there was a manifest disparity in the disposition by reason of Ms Pericles being released forthwith on a bond while Mr Kauhanen was ordered to serve a minimum of 14 months, after which he would be released on a recognisance of $2,000 with a surety of $2,000 on condition that he be of good behaviour for the remainder of the sentence. This, of course, was in a context where the learned Judge saw nothing to differentiate between the offenders so far as their criminal culpability was concerned, but, by way of contrast to Ms Pericles, the learned Judge found no factors personal to Mr Kauhanen which would justify releasing him immediately and suspending his sentence in whole. The learned Judge pointed to several factors distinguishing the two offenders. Her Honour found that Ms Pericles was dominated by and dependent upon Mr Kauhanen and would not have become involved in the offences but for her relationship with him. She also co-operated with the authorities by making admissions in her record of interview. This, Mr Kauhanen had not done. She was also an undischarged bankrupt, significantly younger than Mr Kauhanen and the trial had taken a substantial toll on her health.
46 It was submitted that the disparity between the two sentences was unjustified and was so great as to give rise to a justifiable sense of grievance on the part of the applicant in the manner described in Lowe v The Queen (1984) 154 CLR 606 at 609-610 per Gibbs CJ; and at 611-614
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- per Mason J. Counsel for Mr Kauhanen conceded that there was some justification for disparity, but submitted that the extent of the disparity was too great and was manifestly excessive so as to justify the intervention of this Court. It was accepted, however, that no final conclusion could be reached in relation to this aspect of the matter until after the Crown appeals against sentence had been heard and determined.
47 It was submitted on behalf of the Crown that no disparity point arose because the terms of imprisonment were the same and the differences in terms of the periods of actual time in custody were related entirely to the particular offender's personal circumstances. Such an approach was taken in this Court in relation to the fixing of a minimum term before parole, under the regime which existed prior to 1988: Dickes (1983) 10 A Crim R 88 at 90 per Burt CJ. It was submitted on behalf of Mr Kauhanen that the same approach should not be followed in relation to the suspension of a sentence which is based upon the particular circumstances of the offender, including the prospects of rehabilitation. In my opinion, however, the question whether a sentence should be suspended depends upon a range of factors, including the nature, seriousness and circumstances of the offence, albeit that reform or rehabilitation of the offender is also an important factor: R v GP (1997) 18 WAR 196 at 217 218 per Malcolm CJ and the cases there cited; at 232-234 per Murray J; and at 242-243 per Steytler J; and R v Liddington (1997) 18 WAR 394 at 396-399 per Malcolm CJ; and at 406 per Steytler J. In R v Liddington at 401-402, Ipp J took a somewhat different approach saying:
"Malcolm CJ noted in R v GP (1997) 18 WAR 196, that, generally, the position in this State is, as was expressed (at 72-73) by Green CJ in Percy: 'A suspended sentence is the penultimate weapon in the extensive armoury of graduated penalties available to a judge of this Court for the punishment of crime.' On that basis, there is, in my view, no warrant for holding that the imposition of a suspended sentence should depend only or largely on the prospects of rehabilitation, or contrition, or any other factor. Once a suspended sentence is regarded merely as one of the sentencing options open to a judge, it should be employed as a sentencing disposition whenever warranted by all the circumstances of the case. There should be no rigid rule as to the primacy of any particular circumstance, and all factors which could possibly be relevant should be taken into account. Such factors would include the nature and seriousness of the offence, and all aggravating and mitigating circumstances, including circumstances relating to
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- the commission of the offence and those personal to the offender. This is so notwithstanding that 'double weight' might have to be given 'to some, factors for which the judge has previously made allowance [when determining the length of the period of imprisonment]'; see R v P (1992) 39 FCR 276 at 285.
- I see no incongruity in such an approach. After all, it is generally recognised that the seriousness of the crime is a factor that can militate against the suspension of a sentence. Yet the seriousness of the crime is a factor that will influence the length of the sentence imposed. Accordingly, just as the gravity of the offence and other aggravating circumstances will be taken into account both in determining the length of a term of imprisonment and whether that term should be suspended, so, in my view, should all mitigating circumstances be taken into account, not only in determining the length of the term of imprisonment, but in deciding whether or not to suspend that sentence.
Such an approach, I think, is implicit in the Sentencing Act, and is consistent with the views expressed by this Court in R v GP and the Full Court of the Federal Court in R v P."
48 It was further submitted that an order made under s20(1)(b) of the Crimes Act is the equivalent of a suspended sentence. For the purposes of this case, I am prepared to accept that submission. I note, however, that in Dickes at 90, Burt CJ considered that the parity principle could not be applied to a decision not to fix a minimum term because that decision was "based not only upon the nature of the offence but also on the antecedents of the convicted person". With respect, the question whether or not to fix a minimum term required not only a consideration of the nature and circumstances of the offence, but also matters personal to the offender, including, his antecedents and, since the amendments in 1988, a prognosis about the offender at the time he would become eligible for release on parole: Thompson v The Queen (1993) 8 WAR 387. These matters clearly overlap with the matters relevant to the fixing of the head sentence. In my view, they are also relevant to the suspension of a sentence under s76 of the Sentencing Act 1995 (WA) or the making of an order under s20(1)(b) of the Crimes Act 1914 (Cth).
49 The principle that imprisonment is the sentence of last resort is contained in s17A(1) of the Crimes Act. In Lee Vanit v The Queen (1997) 190 CLR 378 in which, in the context of the application of the
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- principle that ambiguity in a penal statute should be resolved in favour of a person whose liberty is at stake, Kirby J commented at 401 that s17A(1) of the Act made it "plain that a sentence of imprisonment is to be one of last resort".
50 On the issue of disparity, it was made clear in Postiglione (supra) in which Dawson and Gaudron JJ said:
"The disparity between Postiglione's sentence and that imposed on Savvas is best illustrated by an indication of what, in our view, is the proper proportion which the actual time which Postiglione is liable to spend in prison in this country should bear to the time which Savvas is liable to serve in accordance with his sentence. Even allowing a greater benefit to Savvas in application of a totality principle, the various factors which favour Postiglione require that his total effective sentence, ie, the actual period which he is liable to spend in prison in respect of the offences for which he was sentenced in this country, should be of the order of two-thirds of the total period which Savvas is liable to serve in consequence of his sentences."
51 Thus, as between co-offenders, it is clear that the non-parole period may be taken into account when considering a case of disparity. Of course, in circumstances where, by reason of differing antecedents and prospects of rehabilitation, one co-offender is placed on probation and another is sentenced to a term of imprisonment, any apparent disparity may be justified by the difference in personal antecedents. The comparison which has to be made is in terms of the actual punishment. This was the approach adopted by Kirby J in Postiglione (supra) at 338, when, after referring to the tests of disparity, he went on to say:
"It has been stated many times that the fact that the prisoner feels a sense of grievance is not determinative. Say what they may, appellate courts cannot 'prevent an unjustified sense of grievance from arising in the minds of sentenced persons' (R v Tiddy (1969) SASR 575 at 579) but the object of the language chosen is to make it plain that some disparities, being inevitable, must be tolerated out of respect for the discretion of sentencing judges and a modest appreciation of the capacity of appellate courts to rectify discrepancies without causing new or different problems. The focus of the attention of an appellate court is not upon the nominal sentence but upon the actual punishment which it appears like the prisoners in the suggested
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- comparison will undergo (R v Tiddy (1969) SASR 575 at 577). Due allowance will be made for their respective criminality. Due allowance will also be made for their differing antecedents, personal circumstances and mitigating factors. But, if having made these allowances, the resulting disparity is clearly unjustifiable, the appellate court must intervene for otherwise it will condone the 'badge of unfairness' (Lowe v The Queen (1984) 154 CLR 606 at 611."
52 Kirby J at 342 adopted this approach with reference to the non-parole periods on the two offenders.
53 The question is whether there are appropriate grounds for discrimination either on the basis of the co-offender's involvement in the offence or on the basis of relevant circumstances personal to the offender or, I would add, a combination of both: cfPostiglione at 340 per Kirby J. In the present case, it was a combination of these factors which led the learned Judge to the conclusion that a suspended sentence was appropriate. For the reasons, which I will state fully in the context of consideration of the Crown's appeal I have concluded that the materials before the learned sentencing Judge justified her decision to fix a significant minimum term in the case of Mr Kauhanen and, in effect, to suspend the sentence of Ms Pericles.
54 It follows that ground 3 fails.
Conclusion
55 For these reasons, while I would grant Mr Kauhanen leave to appeal, I would dismiss the appeal.
Crown appeal against sentence
56 By notice of appeal dated 13 October 1998, the Crown appealed against the sentences imposed upon Mr Kauhanen and Ms Pericles on the following grounds:
"1. The sentence of 3 years' imprisonment imposed by the learned sentencing Judge was manifestly inadequate in that it failed to reflect:
(a) The substantial amount of money that would have been obtained had the offences been successful;
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- (b) that the fraud involved multiple claims submitted in four different States;
(c) that the scheme involved a high level of deceit including the use of sham company directors and manufactured documentation;
(d) that the scheme continued for many months and required considerable planning and effort on the part of you and your co-offender;
(e) the level of your involvement in the common plan to commit these offences;
(f) that the failure to obtain the money claimed was fortuitous and due to the diligence of Austrade officers;
(g) the need to provide for sufficient personal and general deterrence; and
(h) the absence of any genuine remorse or contrition on your part.
- 2. The learned sentencing Judge erred in treating as a mitigating factor the failure by you to actually obtain the funds sought.
3. In arriving at a total head sentence of 3 years the learned sentencing Judge wrongly applied the 'totality principle' to achieve a sentence which was manifestly inadequate.
4. The learned sentencing Judge erred in ordering that 14 months' imprisonment be set as the appropriate period which you must serve before being released, in that the pre-release period was manifestly inadequate having regard to:
(a) The seriousness of your criminal conduct;
(b) your lack of acceptance of, or remorse for that conduct; and
(c) the undue weight given to matters personal to you."
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57 Grounds 1 to 3 of the grounds of appeal in relation to Ms Pericles were the same. However, ground 4 was in the following terms:
"The learned sentencing Judge erred in ordering your release forthwith rather than requiring you to serve a specified period of imprisonment before being released in that such an order was inappropriate having regard to:
(a) The seriousness of your criminal conduct;
(b) your lack of acceptance of, or remorse for, that conduct;
(c) the undue weight given to matters personal to you; and
(d) the error in finding you had been dominated by your co-offender, and had blindly and foolishly followed his lead."
"I achieve that result by imposing 18 months' imprisonment on each count, with counts 1 and 2 to be served cumulatively with each other but concurrently with counts 3, 4 and 5."
59 Counsel for Ms Pericles expressly disowned any objection to the form of the ground of appeal. In my opinion, while the ground could have been better formulated, it was implicit that what was being contended was that the total of the individual sentences imposed as a result of the way in which those sentences were made cumulative and concurrent was such that there was an error in one or more of the individual sentences either by failing to increase the amount or by failing to direct that one or more sentences beyond those imposed in respect of counts 1 and 2 should be cumulative.
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60 In passing sentence on the two offenders, the learned Judge said:
"The offender Kauhanen is an electronics engineer and an inventor. The offender Pericles holds a bachelor of business degree from Curtin University, and worked with the offender Kauhanen in his businesses, developing products, from premises at 414 Newcastle Street in Northbridge. The offender Kauhanen was the ideas man while the offender Pericles did paperwork, accounting and documentation to support his projects.
During late 1994 and 1995, they worked together in attempts to obtain export market development grants which they knew were not payable. It was a prolonged, well planned and well executed fraud. The offenders began in December 1994 by setting up a bogus company, Patents International. They were the initial directors, but then they installed two sham directors so as to distance themselves from that company.
Then an existing company, Speedy Group Pty Ltd, and four new companies were formed, to be claimants for grants, each in relation to a different product invented by the offender Kauhanen. The same procedure was taken with the five claimant companies. The offenders substituted sham directors, some of whom were real people who never consented to be directors and did not know of their appointments. Others were dead relatives of the offender Kauhanen. Others were simply names, showing addresses of various friends, relatives and acquaintances of the offender Kauhanen.
Two of the claims were made in Perth, one in the name of Speedy Group, and the other in the name of Hai Corporation. One claim was made in South Australia in the name of Ferak. Office premises were leased in Adelaide, but only used on the day of an audit interview with Austrade officers. A claim was made in Victoria in the name of Wireless Designs. Another claim was made in New South Wales, in the name of Hair Corporation. Again, premises were leased in Sydney, but only used by the offenders for one day, for the purpose of an audit interview with Austrade officers.
The offenders obtained telephone numbers in South Australia, Victoria and New South Wales for use by the claimants in those
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- states, and arranged to have the numbers ring through to a bank of telephones located at 414 Newcastle Street, so that Austrade officers in other states would believe the claimants were resident in those states.
The offender Kauhanen attended all five Austrade audit interviews. The offender Pericles attended three of them, two in Perth and one in Sydney. At the audit interviews, and by facsimile later, the two offenders gave Austrade officers false invoices, correspondence and debit notes, in an attempt to justify the outlay of over $1,000,000 by the five claimant companies. The offenders knew that under the EMDG Act, expenses incurred to register foreign patents were eligible expenses. They relied on the false documents to convince Austrade officers that each claimant company had incurred expenses in preparing and lodging foreign patents.
By its verdict, the jury was satisfied beyond reasonable doubt that Patents International was a sham and not a firm of patent attorneys. Patents International was the two accused, who created and used false and misleading letterhead, showing Patents International operating in Sydney and Hong Kong, when in fact it was never anything but the two accused generating false documents at their premises in Newcastle Street in Northbridge.
The complexity and level of deceit used in the fraud is apparent in the contents of the Patents International letters. The offender Kauhanen used letters he had received from Griffith Hack, patent attorneys, beginning in 1991. Those letters were scanned into the computer at Newcastle Street and then used as the patent advice of Patents International.
It was a very well-executed fraud that would have succeeded had it not been for the vigilance of an Austrade officer at the Perth office. In South Australia, the offenders succeeded in convincing the Austrade officer to approve the claim, but payment on the cheque was stopped in time and they did not obtain the proceeds of that cheque. The total amount payable, if all five false claims had been successful, was $515,908.50."
61 Her Honour also said:
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- "This was not a case such as Sheedy appears to have been where a claimant grossly exaggerated a claim, some part of which was genuine. In this case by its verdict the jury has found that all the Patents International invoices were false; the claims were completely false. The Prusak invoices amounting to $61,300 in count 1 raise a different issue. They were claimed not as Patent expenses but as expenses incurred for an overseas consultant Joe Prusak to promote, advertise and market products in North America.
They came under the Austrade category 10, agents' consultants overseas. The court is aware that Mr Prusak was to be called as a crown witness and did not attend. He resides in Canada and was not compellable. There was no evidence at trial that these were not eligible expenses. Those issues were never put to Mr Arbuckle. What evidence there was showed Mr Prusak's name had been used by the offenders as a sham director of Ferak with a false Canadian address. There was also evidence that the telephone numbers and address for Prusak Consultants were false.
I am satisfied Prusak was used as part of the fraudulent scheme by the offenders and that these were false invoices. There is no reason to exclude them from the offenders' attempt, criminal attempt, to obtain grants which they knew were not payable. For these reasons I sentence on the basis that if successful the offenders stood to gain over half a million dollars. I am satisfied that amount fairly reflects the size of the fraud they attempted to perpetrate on the public purse."
62 The learned Judge then recounted the personal histories of the two offenders. As to Mr Kauhanen, the learned Judge said:
"Turning then to the offender Kauhanen, he is 41 years of age. He was born in Finland and came to Australia with his parents and three sisters in 1964 at the age of 7. The family lived in Tasmania where the offender attended Rosny College in Hobart. Later he graduated from the University of Western Australia with a bachelor of engineering degree in electronics.
There was evidence at the trial that he had attended the Royal Military Academy at Duntroon in Canberra in the early 1980s. The offender Kauhanen operated a number of businesses
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- involved in the research and development of electronics products, including radio modems and remote control light devices for the disabled - a number of his own inventions.
Those companies were operated quite successfully from the premises at 414 Newcastle Street. Some 50 persons worked or were employed there. I am told that at one time the offender Kauhanen had a gross income of some $100,000 annually. I have received a medical report indicating that the offender Kauhanen now suffers from depression. He also suffered a serious bout of cancer in 1991 for which he underwent surgery and had further medical problems associated with that in 1995.
There was evidence at trial that the particular form of cancer was hereditary, the same one suffered by his father and other relatives in Finland. I have received a number of references from business associates, family and friends of the offender Kauhanen, including references from the offender Pericles' parents and family.
I accept that the offender Kauhanen has been very hardworking and is a self made success in his businesses. I accept he is exceptionally talented and has great ability as an inventor. I accept that he is loyal to members of his family and is looked up to and respected by both family and friends.
Yesterday Peter Gregory gave evidence during the sentencing hearing to the effect that Wave Net had taken over Speedy Group's contracts with Mocom and Dacom but that the projects are falling behind without the offender Kauhanen's personal involvement. Mr Gregory said the offender Kauhanen was irreplaceable. Without him the projects will not make their deadline and are likely to lose funding and consequently lose overseas export markets for Australia.
Mr Gregory's evidence in this regard directly contradicts the sworn evidence of Mr Stroud called by the defence at trial, and I do not accept it. The offender Kauhanen is unmarried but has had a relationship with the offender Pericles for some 6 years. From the pre sentence report I am told that he is concerned about her welfare and feels responsible for her involvement in these offences because of her youth and inexperience. He has expressed an interest in paying a financial penalty and the pre
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- sentence report indicates that he is suitable for community supervision or a suspended sentence."
63 As to Ms Pericles, the learned Judge said:
"Turning then to the offender Pericles, the offender Pericles is 27 years old. She is the oldest of four daughters and was born and grew up in Bruce Rock. The family came to Perth where she completed her education as Rossmoyne Senior High School. Later she completed a bachelor of business degree at Curtin University.
I have received a large number of personal references for the offender Pericles. They have come from her family, including parents and sisters, numerous friends and some friends and acquaintances of the offender Kauhanen. It appears she is a fine sportswoman, having been a member and vice-captain of Willetton first division hockey team and she served for 2 years as a member of the Western Australian Women's Hockey Association first division committee.
Besides hockey I am told she has excelled in basketball and swimming and I am told she is musically inclined - plays the guitar and piano. The references show that the offender Pericles is held in high regard as a caring, loyal, sympathetic and trustworthy daughter, sister and friend.
Persons who knew both of the offenders have written character references on behalf of the offender Pericles, and expressed their belief that she did not control any of the offender Kauhanen's businesses, and that the offences are very out of character for her.
I have received a report from Helen Fowler, a psychologist. She advises that the offender Pericles suffers a significant level of depression, and the test results show that she had a dependent personality. I am told that individuals with dependent personalities tend to play a subordinate role to strong, nurturing figures, tending to abandon their own views so as to preclude conflicts.
In a pre sentence report I am told that the offender Pericles has displayed considerable distress during interviews, and now regrets being involved in these offences, and has stated that she
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- believes she should have worked elsewhere rather than with her boyfriend."
64 After referring to the EMDG scheme, the nature of the fraud and other relevant circumstances the learned Judge imposed the sentences giving rise to the total terms of 3 years as set out in relation to Mr Kauhanen's application. The learned Judge then continued:
"Turning then to the question of whether the sentences should be suspended, in the case of Wood v Samuels (1974) 8 SASR 465 Walters J at 468 said this:
Speaking for myself, I would think that a suspended sentence is imposed only when by eliminating all other alternatives the court thinks the case is one for imprisonment, and though it be a case for imprisonment an immediate custodial sentence is not required in the circumstances of the particular case.
In my view a suspended sentence is aimed primarily at the offender whom it is not appropriate to send to prison for the first time and who is most likely to benefit from the exercise of the court's clemency. In Littington [sic, Liddington] unreported, CCA SCt of WA, Library 970614, the Chief Justice at page 11 noted:
The primary purpose to be served by suspending a sentence is rehabilitation or reform.
On the other hand there can clearly be cases where the circumstances of the offending calls for a sentence of immediate imprisonment, and again I refer to the remarks of Malcolm CJ at page 220 in the Queen v GP (1997) 18 WAR 196. If the offenders would stand please, in your case Mr Kauhanen, taking account of the nature of this prolonged and elaborate fraud on the public purse, I would consider that a deterrent penalty is called for and that that should be one of immediate imprisonment.
I find no factors personal to the offender Kauhanen that would mitigate and lead me to suspend his sentence. In the case of the offender Kauhanen, I fix the sentence of 3 years' imprisonment. I note that he is a first offender.
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- I note he has talents which one hopes can be directed to the benefit of the community. Therefore, I order that he serve a non parole period of 14 months before being released. I order that his sentence of imprisonment commence on 2 September 1998, the day he was remanded in custody."
65 It was then pointed out to her Honour that under s19AC of the Crimes Act where the Court imposes a sentence that does not exceed or that in the aggregate does not exceed 3 years, the Court must make a recognisance release order in respect of that sentence or those sentences and must not fix a non-parole period. The order already referred to was then amended accordingly.
66 So far as Ms Pericles is concerned, the learned Judge said:
"In the case of the offender Pericles, there are factors requiring further consideration. The offender Pericles is 15 years younger than the offender Kauhanen. She began working with him when she left university, at the age of 20. It was her first job.
The evidence showed Mr Kauhanen was a brilliant designer and ideas man. There was evidence the offender Pericles was hopelessly in love with him, and dominated by him. Her dependent personality lends itself to her blindly and foolishly following his lead. I don't believe that the offender Pericles would have become involved in this criminal scheme had it not been for her relationship with the offender Kauhanen.
I accept from viewing her videotaped interview that she was very naive in her participation in these offences, and I accept that she cooperated in the investigation of the offences by making admissions during her video interview. She is now an undischarged bankrupt. The stress of the trial, and of her time on remand in custody since trial, has taken a toll on her health.
While the offences she committed are so serious that I am satisfied that a sentence of imprisonment is the only appropriate penalty, in the case of the offender Pericles an immediate custodial sentence is not required. I believe she is likely to benefit from the court's mercy, and the interests of justice will be best served by releasing her forthwith, subject to her entering into a recognisance with security in the amount of $2000 to be of good behaviour for a period of 3 years."
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67 Having clarified that Ms Pericles understood the effect of the order, an order was made in those terms.
68 Counsel for the Crown conceded that the various factors listed in ground 1 of the grounds of appeal were taken into account by the learned Judge, but submitted that insufficient weight was given to them because the total of the sentences imposed for the five offences was so out of proportion with the seriousness of the offences that the total sentence manifested error.
69 The principles applicable to an appeal by the Crown against sentence under s688(2)(d) of the Criminal Code are well-settled. In R v Petterson [1984] WAR 329 at 330 they were said by Burt CJ to be identical to those stated by Brennan, Deane and Gallop JJ in R v Tait (1979) 46 FLR 386 at 387-388 where their Honours said:
"An appellate court does not interfere with the sentence imposed merely because it is of the view that that sentence is insufficient or excessive. It interferes only if it be shown that the sentencing judge was in error in acting on a wrong principle or a misunderstanding or in wrongly assessing some salient feature of the evidence. The error may appear in what the sentencing judge said in the proceedings, or the sentence itself may be so excessive or inadequate as to manifest such error. (See generally Skinner v The King (1913) 16 CLR 336 at 339-340; R v Withers (1925) 25 SR (NSW) 382; Whittaker v The King (1928) 41 CLR 230 at 249; Griffiths v The Queen (1977) 137 CLR 293).
Although an error affecting the sentence must appear before the appellate court will intervene in an appeal either by the Crown or by a defendant, a Crown appeal raises considerations which are not present in an appeal by a defendant seeking a reduction in his sentence. Crown appeals have been described as cutting across 'time-honoured concepts of criminal administration': per Barwick CJ, Peel v The Queen (1971) 125 CLR 447 at 452. A Crown appeal puts in jeopardy 'the vested interests that a man has to the freedom which is his, subject to the sentence of the primary tribunal: per Isaacs J, Whittaker v The King at 248. The freedom beyond the sentence imposed is, for the second time, in jeopardy on a Crown appeal against sentence. It was first in jeopardy before the sentencing court."
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70 In Malvoso v The Queen (1989) 168 CLR 227 at 234 Deane and McHugh JJ made it plain that the statutory right of appeal of the Crown should be rarely exercised and brought only to establish some matter of principle and to afford an opportunity for the Court of Criminal Appeal to lay down principles for the governance and guidance of courts in sentencing: Griffiths v The Queen (1977) 137 CLR 293 at 310 per Barwick CJ. Deane and McHugh JJ went on to say at 234:
"That statement of the rare circumstances in which an appeal by the Attorney General against sentence can be justified should, in our view, be expanded by the inclusion of express reference to the need to avoid the kind of manifest disparity or inconsistency in sentencing standards which Barwick CJ saw as being 'error in point of principle' (see Griffiths (1977) 137 CLR 293 at 310). Otherwise, it should be accepted as representing general and authoritative guidance to the Courts of Criminal Appeal in this country."
71 The statement by Barwick CJ in Griffiths and its adoption and expansion in Malvoso were both confirmed in the joint judgment of Brennan CJ, Deane, Dawson and Gaudron JJ in Everett & Phillips v The Queen (1994) 181 CLR 295 at 300. See also Clarke v The Queen [1996] 2 VR 520 at 522 per Charles JA (with whom Winneke P and Hayne J agreed). The principles so stated are applicable equally to appeals against sentences under State and Commonwealth law: cf Leeth v The Queen (1992) 174 CLR 455 at 470-471 per Mason CJ, Dawson and McHugh JJ.
72 In the present context, where it is submitted that the sentences imposed were inadequate and the suspension of the sentence in the case of Ms Pericles was an inappropriate response, particularly in the light of the need for general deterrence, the oft-quoted comments of King CJ in The Queen v Osenkowski (1982) 30 SASR 212 at212-213 also need to be taken into account. The Chief Justice said:
"It is important that prosecution appeals should not be allowed to circumscribe unduly the sentencing discretion of judges. There must always be a place for the exercise of mercy where a Judge's sympathies are reasonably excited by the circumstances of the case. There must always be a place for the leniency which has traditionally been extended even to offenders with bad records when the judge forms the view, almost intuitively in the case of experienced judges, that leniency at that particular stage of an offender's life might lead to reform The proper role
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- for prosecution appeals, in my view, is to enable the courts to establish and maintain adequate standards of punishment for crime, to enable idiosyncratic views of individual judges as to particular types of crime to be corrected, and occasionally to correct a sentence which is so disproportionate to the seriousness of the crime as to shock the public conscience."
73 In the present case two issues arise in respect of the last of these comments. The first is whether the sentences of 18 months on each count were manifestly inadequate. The second is whether the total sentence of 3 years was manifestly inadequate. There is a further issue which concerns whether what was, in effect, the suspension of the sentence was an appropriate exercise of the discretion to extend leniency of the kind referred to by King CJ in the first two sentences of the above passage. Where general deterrence is the dominant consideration it has been held by this Court that matters personal to an offender which might otherwise attract leniency, cannot be given so much weight: Catts (1996) 85 A Crim R 171 at 176 per Anderson J.
74 As to particular (a) of ground 1, as has been seen, it was submitted that had the claims been successful, in excess of $500,000 could have been obtained from the Commonwealth to which there was no entitlement whatsoever. The claims were not merely exaggerated, but totally false. As to particular (b), the fraud was geographically extensive in that claims were submitted to Austrade in four different States where sham offices had been established to establish the appearance of bona fide entities in South Australia, Victoria and New South Wales. Companies were set up to have the appearance of being unrelated to each other. Although companies were in fact acquired and Mr Kauhanen and Ms Pericles made directors, they then took steps to remove themselves from the boards of the companies and replaced themselves with sham directors.
75 It was not the Crown case that the inventions themselves, the subject of the patent applications, did not exist. The falsity was that in relation to the inventions, the relevant company was incurring eligible expenditure overseas. In addition to the claimant companies which were set up, another company referred to as Patents International was set up, of which Mr Kauhanen and Ms Pericles were directors who then removed and replaced themselves with sham directors. Patents International then produced false invoices which purported to be sent to each of the companies in respect of the inventions to give the false impression that the companies were incurring patent costs around the world in respect of the inventions. No such expenditure was, in fact, incurred and the whole
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- thing was entirely fictitious. All of the relevant documents were produced at the offices used by Mr Kauhanen and Ms Pericles in Perth.
76 As to particular (c), it was contended that the scheme involved a high level of deceit, including the use of sham directors, false contact persons, false addresses, telephone diversions and manufactured documentation. One of the sham directors was, in fact, a real person by the name of Juha Karhunen, a friend of Mr Kauhanen. While he had been approached by Mr Kauhanen to act as a director of unnamed companies, he had never consented. He was never approached again, but he was made a director of a number of companies and his signature forged on the relevant claim. When interviewed, Ms Pericles admitted that she had signed his name and had no authority to do so. The relevant claim form provided for a contact person to be nominated. In this particular case, the nominee was one George Neri, who was an employee at the premises from which Mr Kauhanen's business was run. He was asked whether he would be a contact person. He was told that Austrade would telephone and in that event to refer any queries through to Mr Kauhanen or Ms Pericles. He knew nothing about the matter. Thus, on the face of it, the names of Mr Kauhanen and Ms Pericles were not associated with the relevant company at all. Similar, and in some cases more elaborate, arrangements were made with respect to other companies involved. This involved the weaving of a substantial web of deceit with respect to each of the transactions.
77 When search warrants were executed at the offices at Newcastle Street in Perth, police found in the office normally occupied by Ms Pericles, a bank of five telephones against one wall. Each one carried the name of one of the claimant companies. Over those telephones were two clocks, one which read "Central time" and one which read "Eastern time". Thus, if anybody telephoned the company that was supposed to be in Sydney, the person who answered the call could say, "Good afternoon" or "Good morning" by reference to Sydney time or South Australian time, as the case may be.
78 In the course of executing the search warrant, police also located a vast amount of documentation relating not only to the claimant companies, but to Patents International. All of the documentation appears to have been created on the one central computer.
79 As to particular (d) relating to the extended period over which the dishonest behaviour continued, the preparations for the fraud commenced in late 1994. Claims were submitted over a period of a month between
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- 8 August and 31 August 1995 and the work associated with the attempts continued until late November 1995, involving on-site interviews by Austrade officers. At the interviews, additional documents were provided and representations made in support of the claims, all of which were fraudulent. At some of the interviews, there were requests for additional information. Answers were given at interview that the information was not readily available. It was subsequently provided.
80 As to particular (e), it was contended that both Mr Kauhanen and Ms Pericles played an active and vital role in the fraud. It was submitted that although their roles were different, neither of them was subservient to the other. Mr Kauhanen was "the front man". He arranged the interstate premises. It was contended that Ms Pericles was the person who created the documents. Most of the documents at the Newcastle Street offices were found in her room, leading to the inference that she was the person responsible for preparing the false documentation.
81 Mr Kauhanen was present at all five Austrade interviews. Ms Pericles attended three of them. It was apparent from the evidence that at the interviews both Mr Kauhanen and Ms Pericles played an equal role. Neither deferred to the other. They interrupted each other to answer questions. The inference was clear that they were acting as equal parties in concert. Mr Boyle, the Austrade officer who conducted the interview in Sydney, demonstrated this. In that case, the claim form purported to be signed by one Lauri Lakso, who was a purported director of the company, who lived in Finland. He asked whether the signature on the form was that of Mr Lakso. Ms Pericles answered in the affirmative. She was asked whether Mr Lakso was in Australia when the form was signed. Ms Pericles answered in the affirmative. She was asked whether the form was filled in in her handwriting. She said, "No, that's Lauri's handwriting". An examination of the evidence of the interviews in which Ms Pericles participated confirms that she was an equal participant with Mr Kauhanen at the interviews in which she was involved. The two offenders appear to have made use of a number of innocent people to further create the impression that the companies were genuine.
82 Particular (f) was that the failure to obtain the grants claimed was fortuitous, in that, but for the diligence of the Western Australian Austrade officers fortuitously uncovering the fraud, they would not have been discovered. A cheque in payment of the grant claimed in South Australia was received precisely at the time the Western Australian officers discovered what was going on and told their counterpart in South Australia to stop the cheque. Particular (g) repeated the submission to
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- which reference has already been made; that there was a need for strong personal and general deterrence to be incorporated in the sentence.
83 Finally, it was submitted in support of particular (h) that there was an absence of any genuine remorse or contrition on the part of either of the two offenders. While there were very many favourable character references provided, it is relevant to note that at the interviews with police officers there appears to have been an attempt to maintain the genuineness of the transactions. A significant number of the character references relate to the period during which the offences were being committed. To the extent that there has been remorse, it would seem to be related more to the fact that Mr Kauhanen and Ms Pericles were convicted rather than contrition for having committed the offences in the first place. It is, of course impermissible to increase what is a proper sentence for an offence to mark the court's disapproval of the fact that an accused has put the prosecution to the proof or having presented a time wasting or scurrilous defence: R v Gray [1977] VR 225 at 221 per McInerney and Crockett JJ. This principle was approved by the High Court in Siganto v The Queen [1998] HCA 74 at [21-22]; (1998) 159 ALR 94 at 99 per Gleeson CJ, Gummow, Hayne and Callinan JJ who said:
"A person charged with a criminal offence is entitled to, plead not guilty, and defend himself or herself, without thereby attracting the risk of the imposition of a penalty more serious than would have otherwise been imposed."
84 It is, of course proper for a Judge to observe that circumstances which might otherwise attract leniency are absent. In the case of Ms Pericles, while she made many admissions regarding her involvement with Patents International, she maintained that she had an honest belief in what they were doing; that she honestly thought the work was going to be done, the product was genuine and had obtained "some genuine patent attorneys to work out how much was the right amount to ask for". The records of interview of the Austrade officers were not challenged at the trial and no evidence was given by either Mr Kauhanen or Ms Pericles.
85 Counsel for the Crown submitted that the conduct of Mr Kauhanen and Ms Pericles involved a systematic, sustained series of attempted frauds upon the Commonwealth of such a nature that the dominant sentencing consideration should be one of general deterrence: Wright (1994) 74 A Crim R 152; and R v Ruggiero [1998] SASC 6989. In Wright there had been four offences of imposition contrary to s29B of the Crimes Act for which the maximum penalty was imprisonment for two
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- years. The gravamen of the offence was that the offender had intended to understate his income by some $200,000. In the result, for various reasons the actual loss to the Commonwealth was only $3,859. There was an early plea of guilty and some mitigating factors, but no evidence of genuine remorse. The plea was held by the Court of Criminal Appeal to be a recognition by the offender of the overwhelming case against him. A sentence of imprisonment for 12 months to be suspended forthwith on his recognisance to be of good behaviour together with a fine of $5,000 was set aside. A review of previous similar cases showed that in each an immediate term of imprisonment had been imposed. Some of these decisions were before and some after the introduction of s17A of the Crimes Act which enacts the principle that imprisonment is the sentence of last resort. Davies JA and White J said at 157-158 that the cases showed a general practice of courts in cases of social security or medicare fraud to require service of a term of imprisonment
"…except where there are strong mitigating circumstances…That same pattern does not emerge, or does not clearly emerge from the cases involving taxation fraud"
"…we think that where a calculated and systematic tax fraud involves a substantial sum of money the offender should be required to serve a term of imprisonment particularly where, as in this case, it is not an isolated act but is persisted in for some time."
87 The critical question in that case, as in the case of Ms Pericles, was whether there were considerations which, notwithstanding the seriousness of the fraud, and the substantial amounts involved, justified a wholly suspended sentence. Their Honours found no remorse or voluntary disclosure and that the offender was motivated by greed rather than need. Significantly they said at 160:
"A factor in the respondent's favour…is that referred to in Fenton [unreported, Ct of App, Qld, No264 of 1993, 18 October 1993]: that he had been released into the community by the learned sentencing judge and allowed to continue uninterrupted with his domestic and business affairs. But , given the circumstances of the case, that cannot be sufficient to prevent this Court from requiring the offender to serve a term of imprisonment. And we do not think there are in this case strong
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- personal circumstances in the respondent's favour. The sole motive for the respondent's conduct seems to have been greed rather than (as appears to have been accepted in Fenton) need. Nevertheless the term of imprisonment which we impose should reflect, in addition to the mitigating factors to which we have referred, the factor that we are requiring a person who has already been released into the community to serve a term of imprisonment."
88 The end result in that case was a sentence of imprisonment for 18 months with a recognizance release order to take effect after he had served three months of the term.
89 Ruggiero (supra) was also a case of income tax fraud involving offences of imposition under s29B of the Crimes Act. Mr and Mrs Ruggiero pleaded guilty to understating their income by some $880,000 over three years and avoiding tax of $146,000, so that the loss to the revenue was significantly less than the potential loss in the present case. They were each sentenced to imprisonment for two years but were released forthwith on a recognizance release order to be of good behaviour for two years. The offences were opportunistic in the sense that they operated a cash business and gave in to the temptation to understate their income. Both offenders were over 60, hardworking and of previous good character. It was regarded as a significant factor by the sentencing Judge that their capacity to pay the outstanding tax and penalties was dependent on their liberty. After conviction and sentence they had set about rehabilitating themselves and it was accepted by the Court of Criminal appeal that they were unlikely to offend again. Notwithstanding these considerations in their favour the Court set aside the sentences and imposed immediate terms of imprisonment of two years with a recognizance release order for their release after six months. Olsson J (with whom Cox and Prior JJ agreed ) said at [47] that:
"…an immediate release in a situation such as this sends entirely the wrong message to other persons who may be tempted to evade their due tax liability."
90 It was also acknowledged by Olsson J at [49] that reliance on a sophisticated and elaborate scheme must be seen as a circumstance of aggravation and that none existed in that case. His Honour's conclusion at [51] was:
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- "Whilst I would not alter the head sentences imposed, in my view orders for release forthwith simply cannot be justified. They are manifestly so disproportionate to the seriousness of the offending as to demand correction. At least some modest period must be served in recognition of the inherent gravity of the offences and the blatant persistence of the respondents in their criminal activity over a lengthy period of time…"
91 In the light of the decisions to which I have referred there would need to be a powerful reason in this case for not imposing a term of imprisonment involving the requirement for some part of the term to be actually served.
92 Attempts were made in four different States, involving the setting up of sham companies, the appointment of false directors, the use of false addresses, telephone diversions, fabricating stationery, all for the purpose of creating the impression that there were genuine companies making applications in four different States. The attempts failed because fortuitously, Mr Kauhanen and Ms Pericles put in two different applications in Western Australia in the name of different companies. Mr Kauhanen and Ms Pericles, although their names appeared nowhere on the Australian Securities Commission records and nowhere on the applications, were the people interviewed. By chance, the two officers realised that they had interviewed the same people at the same address in respect of applications by two different companies. It was this which triggered an investigation into the companies. As a result, it was discovered that there were applications made by other companies in other States which, on investigation, had similar characteristics. It was submitted that in cases such as this involving a fraud on the revenue, considerations of general deterrence should be "paramount". I did not understand that the submission was intended to convey that it should outweigh or overwhelm all other factors. In the Crown's written submission, general deterrence was referred to as the "dominant consideration": cfGreenburg (1993) 68 A Crim R 392; and Catts (above). It was the Crown's submission that the sentences imposed in each case suggested that too much weight had been given to personal mitigating factors, a point which was pursued on the Crown's appeal against sentence.
93 In my opinion, the mitigating circumstances referred to in relation to Mr Kauhanen did not distinguish this case from other cases involving the same type of offence where similar sentences had been imposed: see, for example, Sheedy v The Queen, unreported; CCA SCt of WA;
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- Library No 970120; 26 March 1997; The Queen v Hogan, unreported; CA Vic; 11 March 1997; The Queen v Bay, unreported; DCt NSW; 30 January 1996; and Ritter v The Queen, unreported; CCA SCt of WA; Library No 6380; 5 August 1986.
94 In Sheedy there were two offences under s39(1), one in respect of which $108,631 was obtained, which attracted a sentence of three years, and one attempt to obtain $138,373 for which the sentence was 18 months cumulative, making a total of four years and six months. On appeal to this Court the sentences were reduced to two years and 12 months cumulative. The similarity between that case and this was the fabrication of extensive documentation to support false claims. A particular aggravating factor was the use by the offender of an 18 year old employee over a period of more than a year to prepare false invoices by scanning valid in voices into a computer and altering the amounts and other material details to support the claims. The offences were regarded by Wallwork J (with whom Malcolm CJ and White J agreed) as a very serious example of their kind.
95 Wallwork J specifically referred to both Hogan (supra) and Bay (supra). In Hogan there were three counts of obtaining a total of $249,022 and one count of an attempt to obtain $156,664. The total involved was $405,686. The fraud was elaborate and involved a substantial amount of false and forged documents requiring time, premeditation, perseverance, planning and attention to detail all of which was designed to make detection difficult. There was no remorse, although there was a plea of guilty and the committal proceeding proceeded on the basis of a hand-up brief. There were two prior convictions for making a false document and two of using a false document. The EMDG offences were committed while the offender was subject to a suspended sentence. Two of the substantive offences of obtaining resulted in sentences each of two years and six months. A third substantive offence involved only $4,000 for which the sentence was three months. The sentence for the attempt was two years. The sentences were structured so that the total term was three years.
96 In Bay there were three substantive offences of obtaining grants which totalled some $635,000 of which $95.262 was paid to the offender by way of a commission of 15%. The first offence involved fictional expenses of $273,000, resulting in a grant of $198,012. The second involved fictional expenditure of $424,277 resulting in a grant of $206, 729 of which 15% was paid to the offender as commission. The third offence was similar and resulted in a grant of $230,339 of which 15% was
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- paid as commission. Bay had a prior conviction for an offence under the same Act. He was found to have been genuinely remorseful and contrite. He was sentenced to imprisonment for three years on each count to be served concurrently with a minimum term of 2 years.
97 It may be accepted that offences of the nature of those of which Mr Kauhanen and Ms Pericles were convicted are difficult to detect and costly to prosecute. There was a very substantial amount of documentation required. The prosecution called over 30 witnesses from around Australia, including Austrade officers who were required to return from overseas for the purposes of the trial. In my opinion, it was correct to describe the transactions as a systematic, larger scale attempted fraud upon the Commonwealth that was preceded by elaborate planning and involved deceit on a very large scale. Although it was an attempt, it was one which was calculated to be successful, but for the fortuitous discovery of the commonality between the two Western Australian applications. In each case, the attempt had proceeded to the point where everything had been done that was needed to be done to obtain the relevant grants. While under the relevant provisions in the Crimes Act both the attempt to obtain and the obtaining of a benefit constitute a completed offence for which the maximum penalty is 5 years, it is necessary to distinguish between the completed offence of obtaining a benefit, on the one hand, and an attempt to obtain a benefit on the other.
98 Under s554(b) of the Criminal Code the general penalty for an attempted offence where no specific penalty is otherwise provided is one half of the penalty for the completed offence. As already noted, s39(1) of the Export Development Grants Act provides the same penalty for an attempt as for the completed offence. It is common ground, however, that there should be some difference between the penalty for a completed offence and an attempt. In each case, it is a question of degree. In the South Australian case, the attempt proceeded so far that a cheque was received, but stopped before it could be presented. There is no reason to suggest that if matters had gone forward, the other transactions would have been other than successful.
99 In her careful, detailed and considered sentencing remarks the learned trial Judge canvassed the facts and circumstances in great detail. While neither of the offenders gave evidence at the trial, they had participated in interviews with the police and the Judge had the opportunity to observe them throughout the trial. There was also a wealth of information and reports made available. The learned Judge took into account all of the factors which are reflected in the particulars of ground 1
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- of the appeal. The issue is whether her Honour correctly weighed them in the balance in the exercise of the sentencing discretion. In the resolution of that issue it is not enough that this Court or any member of it might have imposed a more severe sentence or might not have suspended the sentence imposed on Ms Pericles. It is necessary in each case that there should be such a departure from what was appropriate that it can be clearly seen by the application of the principles to which I have referred that the discretion miscarried.
100 So far as the total of the sentences of three years is concerned, while I consider that the individual sentences were lenient I do not consider that they were, whether considered individually or collectively, so manifestly inadequate as to demonstrate, without more that the sentencing discretion had miscarried. There is no error of fact or principle which has been identified. The sentences themselves do not reveal any manifest inadequacy or inconsistency with sentencing standards which have been set for offences of this kind.
101 For these reasons ground 1 fails.
Ground 2: Failure to actually obtain the grants
102 Ground 2 of the Crown's appeal was that the learned Judge erred in treating as a mitigating factor the failure of the offenders to actually obtain the funds sought by way of grant. In my opinion, for the reasons already set out this was a minor aspect of mitigation in the circumstances, and I am not persuaded that there is any merit in this ground, having regard to my conclusion in respect of ground 1. No submission to this effect was made to the learned trial Judge.
Ground 3: Totality principle
103 Ground 3 was that the learned Judge in arriving at a total head sentence of 3 years wrongly applied the totality principle to achieve a sentence which was manifestly inadequate. I have already concluded that the learned Judge was in error in her application of the totality principle, but that this was not productive of manifest error in the end result so as to require the intervention of this Court. For this reason, as well as the reasons I have stated in relation to ground 1 of the Crown's appeal, I do not consider that ground 3 has been made out.
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Ground 4: Mr Kauhanen's pre-release period
104 Ground 4 contended that the pre-release period fixed by the learned Judge of 14 months which Mr Kauhanen was required to serve before being released was manifestly inadequate having regard to:
"a. The seriousness of your criminal conduct;
b. Your lack of acceptance of, or remorse for, that conduct; and
c. The undue weight given to matters personal to you."
105 The purpose of providing for a minimum term is to provide for mitigation of the punishment of the offender through conditional freedom, when appropriate, once the offender has served the minimum term that a judge determines that justice requires that he or she must serve before being granted conditional freedom, having regard to all the circumstances of the case, including matters personal to the offender: Bugmy v The Queen (1990) 169 CLR 525 at 536 per Dawson Toohey and Gaudron JJ.
106 In this case the learned Judge balanced the seriousness of the offending and Mr Kauhanen's prospects of rehabilitation in setting the pre-release period of 14 months which was some what longer than the minimum period he would have been required to serve had he been sentenced under the law of the State. In all the circumstances, I am not persuaded that the minimum term which was set was manifestly inadequate.
Ground 4: Ms Pericles release forthwith
107 Ground 4 of the Crown's appeal against sentence in the case of Ms Pericles was that the learned Judge erred in ordering her release forthwith rather than requiring her to serve a specified period of imprisonment before being released in that such an order was inappropriate having regard to:
"a. the seriousness of your criminal conduct;
b. Your lack of acceptance of, or remorse for that conduct;
c. The undue weight given to matters personal to you; and
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- d. The error in finding you had been dominated by your co- offender, and had blindly and foolishly followed his lead."
108 It was conceded by counsel for the Crown that the learned Judge had taken into account factors which were relevant in reaching her conclusion regarding Mr Kauhanen, but submitted that her Honour had failed to do so in the case of Ms Pericles. It was contended that the suspension of her sentence was inappropriate because it gave undue weight to the prospect of rehabilitation as opposed to other factors in circumstances where rehabilitation was rendered less likely given her conduct at the trial. I am not able to understand the significance of the last part of this contention. It was further contended that, given the conduct of her defence at the trial and her conduct when interviewed by the police, she had demonstrated that she lacked any contrition or desire to resile from her previous dishonesty and there were good reasons for doubting whether her expressions of remorse through her counsel and to friends were genuine. For these reasons it was submitted that this was not a case where there was a demonstrable desire to change which would be encouraged and facilitated by a suspended sentence.
109 The learned trial Judge, however, referred to the psychological report that Ms Pericles had a dependent personality and that such persons tend to play a subordinate role to strong nurturing figures, tending to abandon their own views so as to preclude conflicts. The pre-sentence report stated that she now regretted being involved in the offences and said that she should not have worked with Mr Kauhanen, with whom she was obviously infatuated. These aspects explain why she appeared to play an equal role in the commission of the offences and failed to live up to her reputation as a person who was caring, loyal sympathetic and trustworthy. As has been seen the learned Judge found that Ms Pericles was hopelessly in love with Mr Kauhanen and dominated by him and that her dependent personality led to her blindly and foolishly follow his lead. She had begun working for him in her first job on leaving university at the age of 20. She was 15 years younger than him. Her Honour concluded that she would not have become involved in these offences but for her relationship with him.
110 Given the findings of fact and the reasons expressed by her Honour, while it may well be that there is room for differing opinions in such a case, I am not able to say that the conclusion reflected a manifest error in the exercise of discretion so as to shock the public conscience. The cases do not exclude the possibility of what is, in effect, a suspended sentence,
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- even in a case such as this, although the circumstances must be exceptional.
Conclusion
111 For these reasons I would dismiss the Crown's appeals against the sentences imposed on Mr Kauhanen and Ms Pericles.
112 PIDGEON J: I have read the reasons of the Chief Justice. I agree with those reasons dismissing the Crown appeals against the sentences of Kauhanen and Pericles. I also agree that leave to appeal against sentence by Kauhanen should be refused.
113 ANDERSON J: I agree with the judgment of the Chief Justice and with the orders he proposes. There is nothing I wish to add.
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