R v Gaitanis
[1998] VSCA 57
•24 September 1998
SUPREME COURT OF VICTORIA
COURT OF APPEAL
Not Restricted
No. 107 of 1998
| THE QUEEN |
| v |
| BASILIOS GAITANIS |
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JUDGES: | TADGELL, CHARLES and CALLAWAY, JJ.A. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 23 September 1998 | |
DATE OF JUDGMENT: | 24 September 1998 | |
CASE MAY BE CITED AS: | R. v. Gaitanis | |
MEDIA NEUTRAL CITATION: | [1998] V.S.C.A. 57 | |
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CRIMINAL LAW - Sentence - Revenue fraud exceeding $1m. - Whether sentencing judge to be taken to have improperly regarded considerable mitigating circumstances as outweighed by circumstances of aggravation - Whether failure to take into account abolition of remissions to be inferred from judge's failure to refer to it - Whether mitigating circumstances undervalued - Sentence of 5 years' imprisonment with 3-year minimum not manifestly excessive - Crimes Act 1914 (Cth.) ss.7, 16A, 16G, 29D.
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APPEARANCES: | Counsel | Solicitors |
For the Crown | Mr J.R. Champion | Director of Public Prosecutions (Cth.) |
For the Applicant | Mr O.P. Holdenson | Mitrakas, Savas & Co. |
TADGELL, J.A.:
The applicant, Basilios Gaitanis, seeks leave to appeal against sentence imposed on him on 28 April this year. He had pleaded guilty upon arraignment in the County Court on 16 April to eight counts of defrauding the Commonwealth contrary to s.29D of the Crimes Act 1914 of the Commonwealth (counts 1 to 5 and 7 to 9) and to two counts of attempting to defraud the Commonwealth contrary to s.7 of the said Act. He was sentenced to be imprisoned for five years and a non-parole period was fixed of three years.
The offences were alleged to have occurred over a period from March 1993 to November 1995. They consisted of the submission to the Australian Taxation Office by the applicant, then a certified practising accountant and a registered taxation agent, of a series of false income tax returns. Each return purported to be lodged on behalf of one of two taxpayers who had been, but had ceased to be, his clients. Each return contained false statements which, if true, would have entitled the taxpayer to a refund. In the result the Australian Taxation Office, on the faith of the returns, issued eight cheques to the taxpayers aggregating nearly $1,050,000. These cheques were referable to the financial years 1992, 1993, 1994 and 1995. The applicant also submitted two false returns for the 1996 year of income, claiming refunds amounting to $179,000, but his fraudulent system was discovered before refunds were paid.
The applicant was arrested on 26 August 1997 and granted bail. An application was made in the Supreme Court by the Commonwealth Director of Public Prosecutions pursuant to Division 2 of Part III of the Proceeds of Crime Act 1987 of the Commonwealth for a restraining order, and on 14 November 1997 the present applicant swore an affidavit setting out in some detail what amounted to a complete admission of his fraudulent conduct. This affidavit was available for use upon the Director's application to the Supreme Court and a restraining order was made.
The applicant was charged on 29 January this year and was immediately committed for trial after pleading guilty to all charges against him. His disposition upon arraignment quickly followed with the result I have summarised. I should add that the judge imposed also a pecuniary penalty pursuant to s.26 of the Proceeds of Crime Act 1987 equal to the sum that the applicant illicitly obtained, namely $1,049,990.54. The affidavit that the applicant has sworn was not available for use against him in the criminal proceedings without his consent: Proceeds of Crime Act 1987, s.48(6B). Such consent was given, however, before his arraignment and the learned judge had the benefit of reading the affidavit, as we have ourselves.
The applicant's modus operandi was described by the learned judge in some detail, which I need not repeat. The applicant's two former clients in question, brothers named Panagiotis and Dimitrios Vrettos, departed from Australia, it seems permanently, on 12 October 1991 and returned to live in Greece. The applicant's scheme was to continue to lodge returns for the financial years now relevant as though on their behalf, claiming that each of them was entitled to a refund of tax already paid through what is called the Prescribed Payments System. All the refund cheques so generated were negotiated by the applicant into one of two bank accounts in his name. None of the money has been recovered although, as we were told, a sum of $342,486 is held by the Official Trustee pursuant to the restraining order that was made under the Proceeds of Crime Act. Other property the subject of the order is expected to realise upon sale some $90,000 after payment of expenses and outstanding debts.
The Prescribed Payments System was introduced in 1983. It provided for the deduction of tax at the source of payment in the case of taxpayers belonging to certain specified service industries such as the cleaning, building, transport and painting industries. The person for whom relevant work is performed is called under the system the "payer" and the taxpayer performing the work is called the "payee". Under the scheme, when a payee performs work for a payer, the former provides an invoice for the work in the matter. Of the total invoiced amount the payer sends a sum up to 20 percent directly to the Australian Taxation Office as tax paid on behalf of the payee, together with a form giving details of the payment. The balance of the invoiced amount is then sent to the payee together with a copy of the form that was sent to the revenue. A payee taxpayer submitting an annual taxation return can claim a credit for the tax pre-paid on that payee's behalf. It is effectively a self-assessment system. No original documents are provided by the taxpayer to the Australian Taxation Office and there is, or apparently was not at relevant times, a system of cross-checking between the Prescribed Payments System forms lodged by the payer and the amounts claimed as credits by the payee. The applicant, evidently with a working knowledge of the Prescribed Payments System, took advantage of the opportunity to defraud that the want of verification by cross-checking afforded.
The applicant has provided in his affidavit a remarkably detailed catalogue of the withdrawals he made from the two bank accounts into which he had paid the subject cheques. The withdrawals aggregated $986,294, and the uses to which the money is admitted to have been put are revealing. I merely list them by way of illustration without details: renovations - $18,055; furniture - $21,819; personal loan repayments - $9,299; wedding expenses, including honeymoon - $14,187; investment in Greek Broadcasting Service Pty Ltd - $7,500; Lalor property loan - $29,774; Honda Prelude motor vehicle - $33,150; purchase of brother's share of Lalor and Jacana properties - $60,000; Commonwealth Bank loan for Jacana property - $81,049; Toyota Seca motor vehicle - $11,162; Hyundai Excel motor vehicle - $14,591; Camberwell house - $356,075; investment moneys sent to Greece - $217,018; travelling, consisting of three trips to Greece and trips to Adelaide, Sydney, Port Douglas and Merrimbula - $36,486; gift to brother to help with divorce - $30,000; stamp duty for transfer of Lalor and Jacana properties to Blue Robin Pty Ltd - $4,890; set-up costs of Blue Robin Pty Ltd - $665; gambling on what are described as "pokies, casinos (Adelaide and Melbourne), horse racing, etc." - $40,570.
The balance of the fraudulently gained money, some $64,000, is said to have been used for living expenses, entertainment, shopping and the like and gifts of approximately $35,000 to two friends who were each having "financial troubles".
The criminality of the applicant's conduct must be classified as extreme. It amounted to brazen dishonesty by a person in a position of trust amounting to illicit extraction of public money for his own purposes. The plea in mitigation made on behalf of the applicant, however, comprehensive and ably presented as it was, revealed very appreciable mitigating factors. It is fair to say that the burden of the submissions made by Mr Holdenson in his equally comprehensive and able argument before us (he did not appear below) was that the mitigating factors were under-valued by the learned judge, who committed also specific sentencing errors. The notice of application for leave to appeal, which was filed on 11 May last, contained the sole ground that the sentence was manifestly excessive. By leave of the Registrar seven more particular grounds were added. These complained (and I paraphrase) that the learned judge failed to accord any or any sufficient weight to the applicant's plea of guilty (ground 2); to his co-operation with the authorities (ground 3); to his response to being charged, including his remorse and the adverse consequences to his health, mental and physical (ground 4); to the consequences for the applicant on his being convicted, including the loss of his relationship with his wife and child and the loss of his chosen profession and career (ground 5); to the applicant's contributions to his ethnic community (ground 6); to the abolition of remissions and a resultant alleged failure to comply with s.16G of the Crimes Act 1914 of the Commonwealth (ground 7); and to the applicant's being what is called a pathological gambler and the relevance of that to an assessment of his moral culpability (ground 8).
The applicant was born in Melbourne of Greek parents on 2 February 1965, being the first of four children, and is now 33 years old. His parents, migrants, are said to have had traditional Greek values, a somewhat ambiguous expression which evidently indicates values that include a strong desire that their children should be put under considerable pressure to succeed at school and gain an education of a kind that they themselves had not had. I may observe that this case seems to reflect an urge, so often productive of dishonest criminal conduct, to expect more out of life in the way of rewards and standards of living and comfort and luxury than our ancestors had, or perhaps ever thought necessary. Sadly in this case, it is an urge that the applicant's parents apparently encouraged. They were strict with him in his upbringing. His father is said to have been a heavy drinker and gambler and it was part of his culture to play cards for amounts in excess of what he could afford. By nature or nurture, the applicant followed suit. He is said to have done quite well at school, obtaining the VCE qualification and obtaining ultimately an economics degree at Latrobe University. There, however, he failed his second year on account of what was becoming, or had become, an addiction to gambling. He had a number of part-time jobs while at university and, upon graduating, obtained employment with a reputable firm of chartered accountants. The applicant apparently had a driving ambition and worked hard, gaining the respect of his employer in the process. By 1995 or 1996 he obtained a Certified Practising Accountant qualification after, it will be noted, he had committed a number of the offences now under consideration. The applicant lived with his family until the age of 28, when he married in 1993. His wife is Greek born, having been apparently a journalist with a Greek newspaper and worked also at a radio station. When first married they lived in Lalor in a property they were acquiring but later moved to a property at Camberwell, both properties referred to in the catalogue of expenditure which I have mentioned, the Camberwell property, of course, having been acquired with moneys fraudulently acquired.
At the time of the applicant's apprehension in August 1997 his wife was pregnant. Their son, their first child, was born very shortly afterwards. Not long after his birth the child was diagnosed to be suffering from the serious congenital condition of tuberous sclerosis. Regrettably the boy's prospects are not good and he is likely to be seriously disabled. Following the applicant's arrest and the revelation to his wife of the charges against him, she became bitter and in December 1997 decided to return to Greece, taking the child with her. It is said that she does not intend to return to this country and as a result the applicant, most unfortunately for him, has lost contact with her and with his son. He has now returned to live with his parents.
It seems pretty clear that the life that the applicant knew, especially that which he artificially and fancifully fostered for himself and his wife from 1993 until his arrest in August 1997, is forever gone. His pride is pricked and his shame severe, resulting in profound depression. These matters were, naturally enough, placed before the learned sentencing judge and his Honour, in a number of places throughout his sentencing remarks, acknowledged them. He acknowledged in particular that the applicant's apprehension had been "heavily destructive". His Honour further noted that the applicant's past achievements, and his pride and his family's pride in them, were in "tatters".
Upon the plea his senior counsel, Mr Heliotis, Q.C., emphasised the drastic effect of the applicant's criminal conduct upon his life. In response to that aspect of the plea the learned judge, in a passage of his sentencing remarks which has been the subject of no small debate in this Court, said this:
"As Mr Heliotis emphasised, these factors represent significant punishment in themselves, quite apart from anything that I impose. I cannot accept, however, that they justify or require me to impose anything other than a sentence proportionate to your crimes. That must be a significant term of imprisonment. In my opinion, this is the only course open to me. I should say that I have taken into account the requirements of s.16A of the Commonwealth Crimes Act. Accordingly you will be sentenced to the following terms of impri sonment:"
His Honour then imposed a term of imprisonment for each of the ten counts, being of either one, two or three years for each of the substantive offences, the amount of the cheque fraudulently obtained being apparently the principal determinant, and one year for each of the counts of attempt. As his Honour evidently desired to achieve a head sentence of five years with a minimum of three, he devised it by setting the commencement date for each sentence as follows: count 1 - 28 April 1998 (the day on which the sentence was pronounced); count 2 - 28 June 1998; count 3 - 28 August 1998; count 4 - 28 January 1999; counts 5, 6 and 7 - 28 June 1999; count 8 - 28 November 1999; counts 9 and 10 - 28 April 2000.
The factors to which his Honour was referring in the passage I have just quoted as representing "significant punishment in themselves" were apparently the matters personal to the applicant such as the loss of his profession and self-respect, his and his family's humiliation and shame and his depressive illness and the like. Mr Holdenson submitted here that this passage can only be read as a rejection of the submission that had been made to the judge that the several mitigating factors that were referred to, while significant in themselves, were counterbalanced by the enormity of the crimes. It was submitted to us that the judge had cast aside in the exercise of his discretion the applicant's plea of guilty, the circumstances in which the plea was made, the consequences of its making, and the applicant's responses to his being charged, that is, his remorse, his humiliation, his anguish and the loss ultimately, at least for the time being, of his wife and child. The submission was that the judge, in taking that approach, was acting, and manifestly acting, contrary to the strictures of the Court of Criminal Appeal in R. v. Hall (1994) 76 A.Crim.R. 454, particularly at 469 and 470. It was there said, at p.469, that:
"An approach to the question of taking account of a plea of guilty which proceeds on the basis that the mitigatory effect of his plea can be "cancelled out" or "outweighed by" an aggravating factor is, we think, impermissible."
And, at p.470:
"A plea of guilty is a mitigating factor. It cannot cease to be so because there are aggravating features. A court's attitude towards the fact of a plea of guilty is expected to act as an encouragement to enter such a plea. The issue with which the court is to be concerned is what weight should be given to it in the circumstances. It is not a question as to whether the weight it has is to be cancelled out by other factors."
If I may say so, I think it may fairly be said that the passage from the sentencing remarks I have read was unfortunately expressed inasmuch as it is, to a degree, ambiguous. It is, I believe, capable of bearing the meaning that Mr Holdenson seeks to attribute to it. It is, of course, axiomatic that, in the absence at least of statutory authority, no sentence can ever properly be imposed which is not proportionate to the crime for which it is imposed. I would be reluctant to suppose that a judge so experienced as the judge in this case failed to heed the axiom. To suppose that his Honour did not heed it would be to attribute to him an error so fundamental that one is really constrained to search for a resolution of the ambiguity in some other way. The key suggested on behalf of the respondent is, I think, such as would indicate a preferable alternative interpretation to that which Mr Holdenson urged. Upon the plea, counsel for the applicant had submitted both that the applicant was a very poor vehicle for general deterrence and that there was no possible benefit to the community by locking him up. His Honour was urged below, in what were called the very special circumstances of the case, to impose a sentence all of which should be suspended. I think that the passage from the sentencing remarks which I have quoted is to be read as a response to that submission. It seems to me to be inappropriate to read the sentence "I cannot accept, however, that they justify or require me to impose anything other than a sentence proportionate to the crimes" divorced from the two sentences immediately following, namely, "That must be a significant term of imprisonment. In my opinion this is the only course open to me."
Had it been demonstrated that the learned judge treated what were unquestionably strong mitigating factors as overborne by the applicant's crimes, sentencing error would, of course, have been shown. I have been unable to conclude, however, that his Honour, having mentioned in no little detail most of the matters in mitigation that were put to him during the plea, proceeded ultimately not only to fail to give them weight but to say so. I think that the argument which was founded upon the quoted passage from the sentencing remarks, and which covered at least grounds 2 and 4 of the application, and probably others too, must fail.
Under the rubric of ground 7, which complained about failure to act in accordance with s.16G of the Crimes Act 1914, Mr Holdenson submitted that another specific sentencing error had been committed. Clearly, s.16G was applicable and had to be followed, so that the judge was required to impose penalties upon the footing that the maximum term of imprisonment allowable was not ten years but something somewhat less than that. The submission to us was that the judge should be taken to have imposed the sentence without regard to the abolition of remissions. That conclusion was said to be one to be inferred for two reasons, principally. First of all the Crown Prosecutor, in opening the case to the judge, said to him that all counts except counts 6 and 10 carry a penalty of $100,000 and imprisonment for ten years, and that the counts 6 and 10, the counts of attempt, carry the same penalty, "so that effectively it's a ten year maximum in respect of each of the ten counts". The judge did not mention the matter in the course of his sentencing remarks. Not only did he not do so, but in the passage quoted, to which I have referred a number of times, his Honour expressly did say that he had taken into account the requirements of s.16A of the Crimes Act. So, as I followed it, it was said that the judge had been misled by the prosecutor, and also by way of an expressio unius argument, his Honour should be taken not to have had in mind the requirements of s.16G.
The argument is to be ruled on only as a matter of inference. For myself I should not be prepared to infer for any of the reasons advanced that his Honour did not take into account s.16G. I decline to draw that inference largely because of the nature of the individual sentences of imprisonment that were imposed. They were, it will be recalled, sentences of either one, two or three years. Having regard to those individual sentences and to the overall head sentence, to which I shall refer in a moment, I think that the better view is that the inference which Mr Holdenson invited us to draw should not be drawn. Ground 7 therefore should, in my opinion, fail.
The other basis for impugning the sentence, although assigned to several individual grounds, was essentially that the learned judge had under-valued the various mitigating factors that had been put to him. Ground 3 referred to the degree of co-operation which the applicant had shown to the authorities, facilitating the making of a restraining order of the kind I have mentioned, by the preparation of the affidavit to which I have also referred and, further, the consenting to the making of a pecuniary penalty order of the kind that the judge did make. It was pointed out correctly that the making of orders of that kind are to be treated as matters of mitigation: McDermott (1990) 49 A.Crim.R. 105 and Tapper (1992) 111 A.L.R. 347. Then it was said that, the consequences to the applicant of the offences having been brought to light - his loss of everything except life itself, as it was put in effect - were under-valued. Ground 6 put it that the applicant's contributions to his community, of which there were several enthusiastic testimonials, had been under-valued, and, finally, the matter of gambling, which was to some extent responsible for his predicament, was given insufficient consideration; and over-arching all those was a submission that there was manifest excess for each individual sentence and in the overall sentence of five years' imprisonment.
I need only say, I think, that in my opinion the sentence, though stern, was well within the available range. It was an audacious, carefully pre-planned, systematic, ongoing fraud. The motivation was, so far as appears, greed to support a personal lifestyle which was not the applicant's just due. I also agree with the learned sentencing judge that the Australian Taxation Office is entitled to expect tax agents, if not to work assiduously in the interests of the revenue, then not to work positively and dishonestly against the revenue. By way of a cross-check, I have asked myself whether, if specific sentencing error had been shown, I would have passed any different sentence if called upon to impose a sentence. Considering the matter as carefully as I can, I conclude that I would not.
In my opinion this application should be dismissed.
CHARLES, J.A.:
Iagree that the application should be dismissed, and for the reasons given by the presiding judge.
CALLAWAY, J.A.:
The case for the applicant as argued by Mr Holdenson ultimately assigned three specific errors to the sentencing disposition below, as well as contending that the sentence was manifestly excessive. The first specific error was the suggested omission to comply with s.16G. I respectfully agree with what the learned presiding judge has said in that regard. In doing so I do not overlook that the check-list referred to in R. v. Nguyen and Phan [1997] 1 V.R. 386 at p.388 was not provided to the learned sentencing judge in this case or the fact that the position has changed since R. v. Nguyen and Phan was decided, in the respect explained in R. v. Kokkinos (unreported, Court of Appeal, 2nd July 1998).
Both the other specific errors were said to be discernible from the passage that Tadgell, J.A. has read from the sentencing remarks. First, it was said that his Honour had allowed the plea of guilty, its surrounding circumstances and consequences to be cancelled or outweighed by circumstances of aggravation. To my mind that submission fails both on the facts and on the law. The learned judge expressly said that he was referring to factors which represented significant punishment in themselves. Those factors could not include the plea of guilty, the circumstances in which it was made or its consequences. Moreover, his Honour had expressly said
earlier in the sentencing remarks that the applicant was entitled to "a full discount" for his plea of guilty and that his claim of remorse was accepted. The legal error identified by Crockett and Southwell, JJ. in R. v. Hall was to treat a plea of guilty as commensurable with aggravating factors: see R. v. Shoukan (unreported, Court of Appeal, 15th February 1996) at p.10. I can see no indication in the sentencing remarks that his Honour fell into that error.
The other specific error that was said to arise from the passage at p.89 was this: that the learned judge regarded the factors to which he was referring as irrelevant. Those factors were what was described as the "total destruction" of the applicant's life, his loss of a professional career, of his family and assets and the depression that had been diagnosed by Mr Byrne and Dr Grainger-Smith. I do not for one moment suppose that the learned and very experienced sentencing judge fell into such an egregious error. I respectfully agree with Tadgell, J.A. that what his Honour said was responsive to the submission on the plea that there should be either a wholly suspended sentence or a very short term of imprisonment.
It is implicit in what I have already said that I do not think his Honour overlooked any of the other matters referred to in the grounds of appeal. That being so, it is a question of the weight to be given to them. It matters not what weight I would have given them, provided that the view taken below was properly open to the sentencing judge. Directing myself in that way, I cannot say, in the circumstances that have been described, that
the sentence was manifestly excessive.
For these reasons I, too, would dismiss the application.
TADGELL, J.A.:
The judgment of the Court is -
Application dismissed.
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