R v Bernstein
[2008] VSC 254
•27 June 2008
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
CRIMINAL DIVISION
No 1711 of 2008
| THE QUEEN |
| v |
| MAURICE BERNSTEIN |
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JUDGE: | NETTLE JA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 23 June 2008 | |
DATE OF SENTENCE: | 27 June 2008 | |
CASE MAY BE CITED AS: | R v Bernstein | |
MEDIUM NEUTRAL CITATION: | [2008] VSC 254 | |
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Criminal Law – Sentencing – Suspended sentence – Theft – Obtain property by deception – – Deficiency in Trust Account – Legal practitioner – Plea of guilty – Restitution made – Relevance of age and mental condition – Wholly suspended sentence of three years’ and a fine of 240 penalty units.
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APPEARANCES: | Counsel | Solicitors |
| For the Crown | Mr C B Hillman, SC | Mr S Ward, Acting Solicitor for Public Prosecutions |
| For the Offender | Mr T F Danos | Mr T Danos (Solicitor) |
HIS HONOUR:
Maurice Bernstein, you have pleaded guilty to four counts of theft (Counts 1, 4, 5 and 6), one count of obtaining property by deception (Count 3) and one count of having a deficiency in your trust account without a reasonable excuse (Count 2).
The facts
You were admitted to practise as a solicitor in New South Wales in 1964 and, after marrying and moving to Victoria, on 1 September 1966 you were admitted to practise as a barrister and solicitor of this court. Following your admission here, you were employed as a solicitor with the firm of J & S Shatin, solicitors, and in 1972 you became a partner in that firm. Thereafter, the firm carried on practice under the name or style of J & S Shatin & Bernstein until Mr J Shatin died in 1980. Following his death, you and Mrs S Shatin carried on the practice in partnership until she died in 1984, and then you carried on alone until 1986.
In about June 1986, you entered into partnership with two long-standing employees of the practice, Gad Kolsky and Michael Karalis, and the three of you began to carry on the practice, at first from premises at 114 William Street, Melbourne and later, under the name ‘Shatin Bernstein & Kolsky’ (‘SBK’), from premises at 25 Ballantyne Street, South Melbourne.
In 1997, Mr Karalis left the firm and you and Mr Kolsky acquired his interest at a cost of some $173,000. Thereafter, you and Mr Kolsky continued to practise together in partnership, under the name ‘Shatin Bernstein Kolsky’, until the firm was dissolved on 16 November 2001.
On 23 April 2002, you committed the offence of theft which is the subject of Count 4. On that day you drew a cheque for $16,500 on the Shatin Bernstein trust account against the Estate of Elizabeth Freshman, and falsely described it in a file memorandum as payment made pursuant to an arrangement between Ms Fay Kayser (a beneficiary of the Estate) and Gryfenberg Nominees Pty Ltd. In truth there was no such arrangement. You used the cheque for $16,500 to repay your own indebtedness to the payee for monies borrowed on 20 July 1999.
On 24 January 2000, you committed the offence which is the subject of Count 1. On that day, you drew a trust account cheque for $20,000 against the Estate payable to Ms Kayser. You falsely described the transaction in the trust account ledger as ‘F. Kayser amount payable’. In truth, Ms Kayser did not receive the cheque and you did not intend that she should. Instead, you paid the cheque into your own bank account and used the proceeds for your own purposes.
Just over four months after that, you committed the offence of obtaining property by deception which is the subject of Count 3. At that time you were acting for Ms Kayser on the sale of her home, and on or about 2 May 2000 you received to her account the sum of $105,628.59 as part payment of the sale proceeds. You told Ms Kayser that you would be able to invest $100,000 of those moneys and you gave her to understand that the investment would be secure. You asked her not to say anything to anyone about the investment and, because she trusted you implicitly, she abided by your request. Ms Kayser then drew a cheque for $100,000 payable to you from her account which you then deposited into your own account for your purposes rather than investing the monies on her behalf as previously detailed to her.
At some time during 2000, one of Mr Kolsky’s clients made a complaint against him and you began to act as Mr Kolsky’s solicitor for the purposes of defending the complaint. That led, however, to a legal battle over the partnership, and to you concealing documents and other correspondence from Mr Kolsky. In turn, that led to him making a complaint against you (‘Mr Kolsky’s first complaint’).
In June 2001 you were admitted to the Freemasons’ Hospital suffering from the effects of having taken four or five valium tablets. You told hospital staff that you took them because you found that prescribed doses of sleeping tablets were inadequate to overcome the severe insomnia from which you were suffering at the time. You were treated by Dr Yvonne Greenberg, a consultant psychiatrist, who saw you on five separate occasions over the period June 2001 to August 2001.
On 16 July 2001 you gave notice of intention to dissolve your partnership with Mr Kolsky and on 16 November 2001 it was dissolved. The same day, you commenced practice on your own account, under the name Bernstein & Associates, from premises at Suite 5, 412 Toorak Road, Toorak.
On 8 August 2001, Dr Greenberg reported that, although you appeared upset and ashamed about your irrational behaviour in concealing documents from Mr Kolsky, you were not significantly depressed and that there was no evidence that you were suffering from any form of psychiatric disorder. Dr Greenberg concluded that your cognitive function was ‘pristine’ and that there was no contra-indication from her point of view to your continuing to practise as a solicitor.
On 5 December 2001 Mr Kolsky was found to be guilty of misconduct and was suspended from practice for a period of six months.
Just over six months later, you committed the offence the subject of Count 6. On 19 July 2002, you opened an account at the ANZ Bank in the name of SBK Suspense Account. On 21 February 2003, you drew a cheque for $75,000 on your firm trust account payable to C. Woolstencroft and made a false entry in the trust account ledger to the effect that the sum of $75,000 was a loan by the Estate of Elizabeth Freshman to C. Woolstencroft. A letter which you prepared at the same time and a file memo also falsely recorded that the payment was a loan by the Estate to Mr Woolstencroft. In truth, you paid the $75,000 to Mr Woolstencroft in part repayment of your own personal indebtedness to him.
Finally, six months after that, you committed the offence which is the subject of Count 5. During November 2002 you sold a property in Alma Road St, Kilda as trustee for the Estate and at settlement you arranged for part of the moneys due to the Estate to be paid by way of a cheque of $19,350 drawn in favour of M. Bernstein. You then arranged for the cheque to be paid into your firm trust account and on 24 January 2003 you drew a trust account cheque in the amount of $19,350 together with $300 cash and deposited them to the credit of your wife’s bank account with the Commonwealth Bank. You covered that defalcation by means of a letter falsely representing that the cheque had been forwarded to Ms Kayser.
The deficiency in trust account which is the subject of Count 2 (a rolled up count) embodies the thefts the subject of Counts 1, 4, 5 and 6.
On 5 May 2003 Mr Kolsky made a further complaint to the Law Institute (‘Mr Kolsky’s second complaint’) concerning the fact that you had opened the SBK Suspense Account without his permission. That led in turn to a Law Institute audit of the Bernstein & Associates trust account and of client files.
Mr Kolsky’s first complaint, concerning your failure to disclose documents and correspondence, was listed to be heard before the Professional Complaints Tribunal on 17 May 2004. Some days before the hearing, however, you consulted Dr Greenberg once more and on 13 May 2004 she produced a report which I infer was intended to be presented to the Tribunal. In part it read as follows:
He convincingly described having felt totally disempowered by his partner and having endured months and months of offensive and abusive dealings with him.
Mr Bernstein said that he has been aware ever since 2001 that his offence will ultimately have to be dealt with in the appropriate Tribunal. His way of coping with this has been to repress that knowledge or put it out of his mind to the extent that he has avoided telling anyone, including me, his wife, or his children, about his predicament.
He said that he was informed a few months ago that a Tribunal Hearing would take place. When he saw the letter he was so fearful that he did not read the notices until a few days ago. He has not, to this day, told his wife or son.
From a psychiatric point of view Mr Bernstein has catastrophised [sic] the problem to the extent that he has been barely able to imagine that any aspect of his life, personal or professional, would survive. He has been unable to sleep and unable to think clearly or organise assistance for himself.
He has undertaken to see me regularly for the next few weeks. In my opinion he is not fit at this point to defend himself. I believe that he will settle quickly, as he did previously. I would anticipate that he will need ongoing treatment for the next four weeks or so.
Despite Dr Greenberg’s opinion, the hearing of Mr Kolsky’s first complaint went ahead before the Tribunal and on 17 May 2004, and the Tribunal upheld the complaint. You were fined you a total of $30,000 on condition that you continue treatment under Dr Greenberg.
Later, the Law Institute investigation into the Bernstein & Associates trust resulted in the discovery of the subject offences and on 3 December 2004, a receiver was appointed to the practice on the application of the Institute. Thereafter the practice was sold under the aegis of the receiver to an arms length third party purchaser and within a few days of the sale you paid a sum of $114,350 to the receiver with which to repay Ms Kayser the moneys the subject of Counts 1, 5 and 6.
On 30 September 2005, the Legal Professional Tribunal found you guilty of five charges of misconduct covering the defalcations which are the subject of counts 1, 4, 5 and 6, and also of one further charge of taking $17,285 executor’s commission from another estate when you were not entitled to do so. In its reasons for decision the Tribunal said that:
The Tribunal has given careful consideration to the matters put to it by both Counsel in deciding an appropriate penalty. The wrongful appropriation of $148,135.00 was a substantial amount involving five separate incidents. They occurred over a significant period of time. Mr. Bernstein had deliberately disguised these events. All the monies were taken from a family with whom he had had a long association since 1966. This was a serious abuse of the position of trust in which he had clearly been held. The five incidents involved considerable dishonesty…
The Tribunal also considered the remorse and shame clearly felt by Mr.Bernstein. He repaid a substantial amount of the misappropriated funds, and all outstanding funds have now been attended to. He immediately surrendered his practising certificate when the Receiver was appointed. He has suffered anxiety and depression, and at 63 years of age is unlikely to easily return to employment. He will suffer severe financial consequences. We of course take into account his plea of guilty and all the submissions made on the legal practitioner’s account by Mr O’Bryan. We also take into account all the oral evidence called on his behalf both as to character and the psychiatric evidence of Dr F[o]ulkes and his report dated 22 July 2005.
Nevertheless, the misappropriations and deliberate falsification of records in order to disguise them are a very serious matter. The Tribunal has a responsibility to protect the public. There is also a responsibility to impose a “penalty” which reflects in particular on aspects of specific deterrence that is to deter this legal practitioner and general deterrence that is to deter others who might be tempted to engage in similar conduct. After taking all factors into account and giving weight to a career which was previously unblemished, apart from the appearance before the Tribunal which essentially involved his partnership difficulties, the Tribunal is compelled to remove Mr.Bernstein’s ability to practise for a considerable period. In considering this penalty it is to be kept firmly in mind that this Tribunal is not a court exercising the powers and functions of a criminal court. Those powers and functions are very different to those of this Tribunal. In our view, criminal proceedings could have been brought against the practitioner and still may be. In such a case his acts of dishonesty would expose him to the sanctions of the criminal law. The orders of the Tribunal are that:
1. The legal practitioner may not apply for a practising certificate before 3 December 2009;
2. The legal practitioner may not apply for a practising certificate entitling him to operate a Trust Account until 3 December 2014;
3. The legal practitioner is to pay to the Law Institute of Victoria Limited the costs which have been fixed at the sum of $15,860.
Following the Tribunal’s decision, Ms Kayser instituted proceedings against you for the recovery of the $100,000 the subject of Count 3. Pursuant to terms of settlement dated 14 November 2005, your wife, Frances Bernstein, paid $100,000 to Ms Kayser in full and final satisfaction of that claim.
On 30 July 2007 you were interviewed by police concerning the subject offences. At that time you made full admissions and cooperated fully with the police. You were later charged and immediately signified that you would plead guilty to all charges. The matter proceeded by straight hand up brief before the Magistrates Court.
The nature and gravity of the offences
As already noted, your offending was repeated and protracted over a substantial period of time. Between January 2000 and February 2003, it involved a total of $230,850. Furthermore, while that is hardly the largest defalcation in the history of corrupt solicitors, the gravity of your offending was aggravated by the cunning and deceit with which you concealed your fraud from your partners and your clients. It was planned and premeditated, increasingly serious in terms of the amounts involved on each occasion, and a gross breach of trust of your oath and obligations as a solicitor.
Culpability
There is no direct evidence as to what motivated you to steal the money and, contrary to your counsel’s submission, I am not prepared to infer that your problems with Mr Kolsky in effect forced to do what you did in order to keep your head above water. As the evidence stands, it appears that counts 1, 3 and 4 were all committed before the trouble with Mr Kolsky began, or at least before it came to a head, and that the offences the subject of counts 5 and 6 were committed months after your partnership with him had been brought to an end. On the evidence, it is not improbable that your motive was greed. But, since I am not satisfied of that beyond reasonable doubt, I exclude it from consideration.[1]
[1]Cheung v The Queen (2001) 209 CLR 1, 13 [14] (Gleeson CJ, Gummow and Hayne JJ).
Dr Paul Foulkes, the consultant psychiatrist referred to in the Tribunal’s reasons, gave evidence on the plea that in his opinion you have an anxiety disorder and that since December 2004 you have had symptoms of generalised anxiety, panic attacks both nocturnal and during the day, and depressive symptoms likely to be secondary to your anxiety disorder. Dr Foulkes further stated that the condition from which you suffer was for some time productive of major difficulties for you in concentrating on your work and that it resulted in you ruminating on the future and in developing a sense of shame and remorse resulting from your actions. He noted that your condition gradually improved after the Tribunal hearing in September 2005. But he said that, once you learned of the subject charges in 2007, your symptoms and sense of shame and remorse returned more strongly than before, and in turn that led to social withdrawal which exacerbated the problem.
Dr Foulkes characterised your condition as an adjustment disorder with anxiety and depressive symptoms and he opined that, while there will be some gradual improvement in your condition once you have been sentenced, you will continue to have residual shame and remorse over your actions for most of your life. Cross-examined on his opinion, Dr Foulkes said, however, that there was no doubt that you knew that your actions were wrong at the time of your offending or, to put it as he did, that you would have known cognitively that what you were doing was contrary to the law. Thus, the most that he could say in your favour as to your mental condition at the time of offending was that your judgment about the ‘the underlying nature of what [you were] really doing and the possible consequences for [your] career were clouded.’
Counsel submitted on your behalf that the way in which your adjustment disorder had impaired your judgment at the time of offending substantially reduced your moral culpability. He relied on the decision of the Court of Appeal in R v Verdins[2] that impaired mental functioning falling short of a psychiatric illness may reduce moral culpability[3] if it has an effect on the offender’s ability to exercise appropriate judgment; or to make calm and rational choices; or to appreciate the wrongfulness of the conduct in question.[4] Counsel argued that being ‘clouded’ about the consequences for your career was tantamount to that condition.
[2](2007) 16 VR 269.
[3]As distinct from the offender’s legal responsibility.
[4]Ibid 275 [26].
In my view that submission overstates the position. I accept of course that mental impairment falling short of psychiatric disorder may have such an effect. But I consider that whatever it was that ‘clouded’ your judgment fell a long way short of the mark. I am fortified in that conclusion by the opinions expressed by Dr Greenberg when she had you under observation at the time of the offending.
After all, to say of a solicitor that he is aware that it is wrong to steal but that his thinking is ‘clouded’ as to the possible consequences for his career, must mean either that he knows that what he is doing is wrong and does not care that he may get caught or, alternatively, that he knows that what he is doing is wrong but goes ahead because he doubts that he will get caught. And in your case, it is clear that you were concerned not to get caught. You falsified entries in your trust account and created false memoranda and records in order to hide your fraud. You did such a good job of it indeed that, but for the fact Mr Kolsky learned fortuitously of the SBK Suspense Account and, therefore, on 5 May 2003 complained to the Law Institute about it, your defalcation might never have been discovered. Even after the audit began, you continued to abuse Ms Kayser’s trust in you by persuading her to tell the auditor falsely that she had authorised the payment of $16,500 the subject of Count 4. Then, when you learned that she had told the Law Institute about the $100,000 ‘investment’ the subject of Count 3, you approached her and demanded that she withdraw the claim.
It follows as I see it that your state of mind at the time of offending was that you knew that what you were doing was wrong, but you went ahead with it anyway because you doubted that you would get caught; and, in my judgment, whether or not that state of mind resulted from being ‘clouded’ by your adjustment disorder as to the possible consequences for your career, it does not go in substantial reduction of your moral culpability.
Victim impact
Since the audit, you have repaid all of the moneys which you misappropriated, although you have not paid any interest on them. According, therefore, to Ms Kayser’s victim impact statement, the Estate of Elizabeth Freshman has suffered a loss of interest as a result of your offending which is estimated at between $55,000 and $65,000. Ms Kayser also speaks in her victim impact statement of her loss of trust in you and of the depressing effect upon her of you having let her down as you did. Her statement in that regard is supported by a medical certificate.
Personal circumstances
You were born on 6 December 1941 and were close to sixty years of age when you began to offend. Now you are approaching 67 years of age and it is said that for all intents and purposes you have decided to retire for good. Theoretically, it would be open for you to apply in 2009 for reinstatement of your practising certificate. But I proceed on the basis of an assurance given by counsel on your behalf that it is not your intention to do so.
You are without any prior convictions and a number of witnesses gave evidence as to your reputation for good character and competence and efficiency as a solicitor. Some of them also spoke of your willingness to assist other practitioners. Mention was made too of the substantial contribution which you have made outside the law through your work on behalf of the North Eastern Jewish Community.
Mr Robert Poppins, a former mayor of the then City of Doncaster spoke of having met you in the early 1970’s and of the way in which you later become friends. He said that you acted as solicitor for several generations of his family and that he had had a considerable amount to do with you as part of his municipal responsibilities and through that in connection with the development of Jewish community recreational facilities.
Similarly, Mr Reeve, who was a mental health care professional and aged care facility manager now living in New South Wales, spoke highly of your abilities as a solicitor and adviser to him and his family over many years. Like Mr Poppins, he said that he found you always to be competent and professional and utterly reliable, and he spoke of your deep sense of shame and remorse over the subject offences and how painful for you it had been for you to disclose to him the fact that you had committed the offences.
Mr Sam Holt, a solicitor who has known you for the last 10 years, spoke highly of the help which you gave him when he was re-establishing himself in the practice of the law and stated that to his knowledge you enjoyed a high standing and reputation in the profession. He also remarked upon your deep sense of shame and remorse concerning the subject offences.
Similarly, Mr Dennis Churkovich, the solicitor who purchased your practice after it was put in receivership, spoke of knowing you professionally for a number of years before the purchase and of the help which you gave him as a sole practitioner during that time. He said that he found you always to be of considerable assistance and he regarded you as a competent and efficient professional.
The oral evidence as to your character and antecedents was supported by written references from Mr Nathan Maller, JP who has known you for 40 years and stated that he trusts you as he would a family member, and Dr Joshua Kolt who has known you for more than 30 years and who has always found you to be extremely helpful in assisting, advising and giving your time to him and his family.
It also appears that you have been happily married since 1965 and I observe that your wife and son were present in court to support you during the plea, and that your wife contributed significantly to the repayment of the misappropriated moneys. Their presence and support adds to the confidence which the witnesses expressed in you.
Sentencing considerations – general deterrence
The maximum sentence for theft and obtaining property by deception is 10 years’ imprisonment[5] and the maximum sentence for a deficiency in a trust account is 15 years’ imprisonment.[6] The latter higher penalty reflects the very serious nature of fraudulent breach a solicitor’s trust account obligations. As Young, CJ explained in Director of Public Prosecutions v Ryan,[7] offences which demonstrate that a solicitor is not to be trusted bring the whole profession into disrepute and, therefore, a solicitor who is guilty of such offences must be punished severely. The sentences to be imposed in such cases must be such as not only to reflect the nature and gravity of the offending but also to make plain the court’s abhorrence and denunciation of the nature of the offending and to provide general deterrence against the possibility of its repetition. [8]
[5]Crimes Act 1958, ss 74 and 81.
[6]Legal Practice Act 1996, s 187; see now Legal Profession Act 2004 s 3.3.21.
[7]Full Court, (Unreported 7 April 1986, 6).
[8]See further R v Krizmanic (Full Court) [1995] VSC 185 [19] (Callaway JA); R v Kesik [2006] VSC 493 [39] (Coldrey J).
Specific deterrence
Given your age and circumstances, I accept that the chances of you re-offending are limited. But in light of Dr Foulke’s evidence, it appears to me that there is still a need for a degree of specific deterrence. As matters stand, it is not clear that you have ceased to be ‘cloudy’ about the effects of defalcation. You need to understand that any repetition of such an offence would be followed by substantial adverse consequences.
Plea of guilty
You pleaded guilty to these offences and, therefore, are entitled to a discount on the sentence to be imposed. The fact that you made full admissions when questioned by police and that your plea came at the earliest possible time adds significantly to the extent of the discount. It is a strong indication of what I find to be your genuine remorse and of the likelihood of complete rehabilitation.
Delay
I also allow for a reduction in sentence because of the significant delay between when the matter was first examined by the Institute and when charges were finally laid. In the scheme of things, that sort of delay was not particularly long and, for all I know, it might have been inevitable. But you were not responsible for it and, in my view, you should not have to suffer unduly as a consequence of it. The reduction in penalty which I allow recognises the significant psychological pressures to which you were subject while waiting for the inevitable. [9]
[9]See and compare R v Nikodjevic [2004] VSCA 222 [21]-[23] (Ormiston JA); R v Audino [2007] VSCA 318 [20]-[25] (Maxwell P).
Present psychological condition
It is necessary, too, for me to take into account your present psychological condition because, although your cognitive ability at the time of offending may have been ‘pristine’, it is apparent from Dr Foulkes’ evidence that the position has since deteriorated. As Dr Foulkes explained, you are now suffering from significant anxiety symptoms the result of adjustment disorder and taking Cipramil, which is an anti-depressant, and Rivotril, which is an anti-anxiety medication; and, in Dr Foulkes’ opinion, you are in real need of ongoing psychiatric care of the kind he is able to provide.
The decision in R v Verdins[10] shows that such impaired mental functioning at the time of sentencing may have a bearing on the kind of sentence to be imposed, and the conditions in which it is served, and may moderate the need for general and specific deterrence. It may also go in mitigation of punishment if there is a serious risk of imprisonment having a significant adverse effect on the offender’s mental health. Plainly, however, it is a question of fact and degree. As Batt, JA explained in R v Yaldiz,[11] general deterrence is not eliminated but still operates sensibly moderated in the case of an offender suffering from a mental disorder or severe intellectual handicap. Similarly, as Winneke ACJ observed in the same case,[12] whether a psychiatric condition should reduce or eliminate general deterrence as an appropriate purpose of punishment will depend upon the nature and severity of its symptoms and its effect upon the mental capacity of the accused.
[10]R v Verdins (2007) 16 VR 269, 276 [32].
[11][1998] 2 VR 376, 381.
[12]Ibid 383.
Age
Finally, there is the matter of your age. Sixty seven is hardly old, especially for a lawyer. But being of such an age does mean that you are likely to suffer more from the effects of prison than the majority of the prison population, and particularly so because of your mental condition. It also means that the need for rehabilitation is less relevant than it would be if you were younger if only because, if you remain in retirement as is said to be your plan, there may be little if any opportunity for you to re-offend. There remains a need for just punishment, and a sentence which will deter other persons from committing offences of the same or similar character and which sufficiently manifests the court’s denunciation of the type of conduct in which you engaged. But, in view of your age, even those considerations are less significant than in the case a younger man.
Sentence of imprisonment
Balancing the competing considerations to which the Sentencing Act 1991 requires me to have regard, and in particular the matters to which I have referred, I consider that you should be sentenced as follows:
· On Count 1 (theft of $20,000) to one year’s imprisonment.
· On Count 2 (having a deficiency in your trust account of $130,850), to two years’ imprisonment and in addition a fine of 240 penalty units.
· On Count 3 (dishonestly obtaining $100,000), to two years’ imprisonment.
· On Count 4 (theft of $16,500), to one year’s imprisonment.
· On Count 5 (theft of $19,350), to one year’s imprisonment.
· On Count 6 (theft of $75,000), to two years’ imprisonment.
I am also of the view that one year of the sentence imposed on Count 3 should be served cumulatively on the sentence imposed on Count 2, making for a total effective sentence of three years imprisonment plus the fine of 240 penalty units.
In setting the fine imposed on Count 2, I have had regard to the extent to which you appear to have profited from the defalcation by reason of your failure to pay interest on the amount of money misappropriated (although I have effectively halved the amount suggested by Ms Kayser because of the settlement which you reached with her in respect of the $100,000 obtained by deception).[13] I have also taken into account your counsel’s statement that you have the financial capacity to pay such a fine.[14] My principal purpose in imposing the fine is to meet the need for specific deterrence and just punishment while at the same time allowing for your age and present mental condition through a reduction in the sentence of imprisonment which it would otherwise be necessary to impose.[15]
[13]Sentencing Act 1991, s 50(5)(b).
[14]Sentencing Act 1991, s 50(1).
[15]Briant v Bessell (1994) 74 A Crim R 204, 207; Fox & Frieberg, Sentencing, State and Federal Law in Australia, (2nd ed) [4.206].
Suspended sentence
It was submitted on your behalf that, because of your age and the punishment which you have already suffered as a result of the loss of your ability to practise and the shame and disgrace of having been exposed as a thief, I should suspend the whole of the sentence. Reliance was placed on the fact that you are without prior conviction and so have never been imprisoned before, and upon the improbability that you will ever offend again. Your counsel also referred to a number of cases of solicitor defalcation in the last 10 years in which considerations of that kind were sufficient to persuade the sentencing judges wholly or partially to suspend the sentences which they imposed.
I start with the cases which counsel mentioned. By and large they seem to me to have turned on their own particular facts and circumstances:
1) In R vSirca,[16] the offender was sentenced to a wholly suspended sentence of imprisonment of three months. But the defalcation in that case was a one-off affair, where the amount of money involved was only $25,000, there was no personal benefit involved, there was an early plea of guilty, the prisoner showed genuine remorse, and the circumstances under which he worked at the time of the offences and his psychological status at that time and at the time of sentencing were all significant matters. Most importantly, perhaps, the offence in that case was one of having a deficiency in a trust account contrary to s 42 of the Legal Profession Practice Act 1958, for which the maximum penalty was only seven years.
[16][2001] VSC 128.
2) In R vHowse,[17] the offender had misappropriated some $200,000 over three years and was sentenced to three years’ imprisonment wholly suspended. In that case however, the offending had been informed by a chronic major depressive disorder which substantially reduced the offender’s moral culpability and the need for general deterrence. As in Sirca, too, the offence in issue was contravention of s 42 of the Legal Profession Practice Act 1958, for which the maximum penalty was only seven years imprisonment.
[17][2002] VSC 197.
3) In R v John,[18] which, as in this case, involved a contravention s 188 of the Legal Practice Act 1996 (for which the maximum penalty is 15 years’ imprisonment), the offender was sentenced to three years’ imprisonment wholly suspended. But in that case the amount of the shortfall was only $100,000 over a three year period and it was regarded as significant that the prisoner’s life was disintegrating and he was suicidal by the time he was detected. He was, however, a younger man that you, only 45 years’ of age at the time of sentencing, and after detection he had undertaken further tertiary studies. By the time of sentencing he was engaged in a business of inventory control in which he was thought to have a bright future, and he showed genuine remorse and his prospects of completed rehabilitation were excellent.
4) In R vGrant[19] the offender had been affected by a major depressive condition at the time of offending and for that reason it was conceded by the Crown that it was open to the judge wholly to suspend the sentence.
5) In R v Slattery,[20] which it was submitted was closest on its facts to your case, the offender was 61 years’ old and the deficiency was $300,000 and he was sentenced to 18 months’ imprisonment wholly suspended. In that case, however, the offending was the result of a major depressive episode with traumatic stress symptoms the consequence of one of the prisoner’s clients being murdered by her spouse, and in any event it was a remarkably merciful sentence.
[18][2001] VSC 416.
[19][2006] VSC 235.
[20][2008] VSC 81.
Furthermore, if I may say so with respect, I doubt that the sentences imposed in at least some of those cases gave due weight to the overriding importance of general deterrence in matters of this kind. For, even allowing that a suspended sentence is a sentence of imprisonment for all purposes, it is manifestly less burdensome than an immediate term of imprisonment.[21] It is also to be remembered that the maximum sentence for the offence of having a deficiency in a trust account has more than doubled since the Legal Professional Practice Act 1958 was first replaced by the Legal Practice Act 1996, from seven years to 15 years’ imprisonment. These days, the idea of a fully suspended sentence in a case of solicitor defalcation will seldom sit easily with the imperative that solicitors who act in fraudulent breach of trust account obligations ‘must … inevitably suffer severe punishment’.[22]
[21]R v Feretzanis [2003] VSCA 8 [48] (Callaway JA).
[22]Director of Public Prosecutions v Ryan, Unreported CCA 7 April 1986, 6 (Young CJ); R v Krizmanic [1995] VSC 185 [19] (Callaway JA).
A number of cases to which counsel for the Crown referred illustrate the point. In R v Hampson[23] (where, admittedly, the amount of money involved was over $1 million), the offender was sentenced to five years’ imprisonment with a non-parole period of two years. In R v Kesik,[24] where the offending took place over an extended period between 1998 and 2000 and involved some $512,000, the offender was sentenced to a total effective sentence of three years with a non-parole period of 18 months. In R v Bakhaazi,[25] where the amounts involved totalled just over $200,000, the offender was sentenced to a total effective sentence of 39 months’ imprisonment with a non-parole period of 18 months.
[23][2006] VSC 229.
[24][2006] VSC 493.
[25][2006] VSC 496.
More generally, as Coldrey J put it in R v Keskik:[26]
[N]ot only do offences of this nature constitute a breach of the trust of clients, but they also constitute a betrayal of the trust of the profession of which you were a member and of the community you swore to serve upon your admission to practice. [They]undermine the confidence the community should have in its legal advisors. Consequently, the courts have a duty, by the sentences imposed on offenders, not only to reflect the gravity of the offences, but also to deter other lawyers who might be minded to commit similar criminal acts.
[26][2006] VSC 493 [39].
Exceptional circumstances
That said, however, in this case I am persuaded that your age and present mental condition are exceptional circumstances which in combination warrant suspending your sentence of imprisonment for a period of three years. Adding up the factors which point each way, I find that the balance is very close to even, and hence that a wholly suspended sentence of imprisonment without more would not suffice. But in my view, the combination of a wholly suspended sentence with the additional fine to be imposed on count 2 is sufficient in your case for the purposes of just punishment.[27]
[27]R v Belcher (1981) 27 SASR 46, 49 (King CJ); Director of Public Prosecutions v NLW [2004] TASSC 93 [18] (CCA).
I have taken into account the shame and loss of profession which you have suffered. They are no doubt a significant punishment for your betrayal of the trust of the profession. But other things being equal, I would imprison you now for being the thief that you are. It is only because of your age and mental condition that I am persuaded that a suspended sentence is in the interests of justice.
Sentence
Before sentencing you, I am required by law to ensure that you understand the purpose and effect of the order and the consequences that may follow if you commit another offence punishable by imprisonment during the operational period of the sentence. The purpose of suspending the sentence of imprisonment is to avoid subjecting a man of your age and health to the rigour of gaol and to enable you to continue your treatment with Dr Foulkes. You should understand that if you were ever to commit a similar offence again you would probably be sentenced to an immediate term of imprisonment. A wholly suspended sentence of imprisonment is taken to be a sentence of imprisonment for the purpose of all enactments except an enactment providing for disqualification for loss of office or the forfeiture or suspension of pensions or other benefits. Furthermore, if at any time during the period of three years for which the sentence is suspended, you were to commit in or outside Victoria another offence punishable by imprisonment, you would be guilty of an offence for which you could be proceeded against on a charge filed by an appropriate person at any time up to three years after the date on which the offence was alleged to have been committed. That means that you would be brought back to court, possibly even before me, and if on the hearing of such a charge you were found guilty, the court could restore the sentence held in suspense and order you to serve it. In short, if you commit another offence during the next 36 months which is punishable by imprisonment, you will expose yourself the risk in respect of the offences for which you are about to be sentenced of being imprisoned for a full three year period. Would you please stand? Do you understand that nature of the suspended sentence that I am about to impose upon you?
PRISONER: I do, sir.
Sentence
Maurice Bernstein, on each of the counts on the presentment of which you stand convicted, I sentence you as follows:
· On Count 1 (theft of $20,000) to one year’s imprisonment.
· On Count 2 (having a deficiency in your trust account of $130,850), to two years’ imprisonment and in addition to a fine of 240 penalty units.
· On Count 3 (dishonestly obtaining $100,000), to two years’ imprisonment.
· On Count 4 (theft of $16,500), to one year’s imprisonment.
· On Count 5 (theft of $19,350), to one year’s imprisonment.
· On Count 6 (theft of $75,000), to two years’ imprisonment.
One (1) year of the sentence of imprisonment imposed on Count 3 is to be served cumulatively on the sentence imposed on Count 2 making for a total effective sentence of three (3) years imprisonment and, in addition, a fine of 240 penalty units. Pursuant to s 27(2) of the Sentencing Act 1991 I order that the whole of the term of imprisonment of three (3) years be suspended for a period of three (3) years. The fine is payable within 30 days.
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