R v Johnstone

Case [2004] NSWCCA 307

NEW SOUTH WALES COURT OF CRIMINAL APPEAL

CITATION:      Regina v Johnstone [2004]  NSWCCA 307

FILE NUMBER(S):
2004/1828

HEARING DATE(S):               2 September 2004

JUDGMENT DATE: 10/09/2004

PARTIES:
Regina
Robert Gary Johnstone

JUDGMENT OF:       Mason P Sully J Sperling J   

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S):          03/11/0272

LOWER COURT JUDICIAL OFFICER:     Karpin DCJ

COUNSEL:
M. Buscombe - Crown
A. Bellanto QC - Appellant

SOLICITORS:
Commonwealth Director of Public Prosecutions - Crown
Locantro Lawyers - Appellant

CATCHWORDS:

LEGISLATION CITED:
Corporations Act 2001 (C'th)
Australian Securities Commission Act 1989 (C'th)
Crimes Act 1900 (NSW)
Criminal Appeal Act 1912 (NSW)

DECISION:
Leave to appeal against sentence granted; Appeal against sentence dismissed

JUDGMENT:

IN THE COURT OF
CRIMINAL APPEAL

2004/1828

MASON P
SULLY J
SPERLING J

10 September 2004

REGINA  v  ROBERT GARY JOHNSTONE

Judgment

  1. MASON P:          I agree with Sully J.

  2. SULLY J:             In April 2003 Mr. Johnstone, the present applicant, pleaded guilty in the Local Court to a large number of charges each of which alleged, put simply, the commission by the applicant of an act of commercial fraud. The applicant was committed accordingly to the District Court for sentence.

  3. The proceedings on sentence in the District Court came on for hearing in the first instance on 18 July 2003 before her Honour Judge Karpin. The Crown Prosecutor indicated an intention to present a formal indictment against the applicant notwithstanding his pleas in the Local Court. It is not entirely clear to me from a reading of the available transcript why it was thought necessary to present an indictment; but after some desultory discussion about the matter it seems to have been generally agreed that there would be no objection raised by the applicant to his formal arraignment before her Honour provided only that such arraignment did not in any way detract from the applicant’s contention, with the substance of which the Crown agreed in any event, that the pleas of guilty upon which the applicant would stand in due course for sentence had been entered at the earliest practicable opportunity. The balance of the available Court time on 18 July was occupied by the formal tendering of the materials in the Crown case and by the calling of a deal of evidence in the applicant’s case. The proceedings on sentence were then adjourned part-heard until 5 December 2003.

  4. On that day the proceedings commenced with the formal arraignment of the applicant. An indictment containing 20 counts was then presented against him.

  5. The first count charged the applicant with having recklessly made a statement that was false or misleading, thereby inducing a named person to deal in securities, namely to subscribe for an interest in a managed investment scheme, namely a fund operated by Financial Options Group Inc Pty Limited, which I shall hereinafter refer to as FOGI. Such an offence contravenes section 1000 of the Corporations Act 2001 (C’th) and it attracts upon conviction a statutory maximum penalty of, relevantly, imprisonment for 5 years.

  6. The second count charged the applicant…

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Details
AGLC
R v Johnstone [2004] NSWCCA 307
Case
[2004] NSWCCA 307
Decision Date

CaseChat Overview and Summary

The case of R v Johnstone involves the applicant appealing against the severity of his sentences, which were imposed by Judge Karpin on 12 March 2004. The applicant, a former director of Financial Options Group Incorporated Pty Limited (FOGI), was convicted of multiple offences related to fraudulent activities, including breaches of the Corporations Act 2001 and the Australian Securities Commission Act 1989. Judge Karpin sentenced the applicant to a total of 20 separate sentences, which cumulatively resulted in an effective head sentence of imprisonment for four years and an effective non-parole period of two-and-a-half years. The applicant sought leave to appeal against the severity of these sentences, contending that both the head sentence and the non-parole period should be revised and reduced by the court.

The primary legal issues addressed by the court in this appeal were whether the applicant's sentences were excessively severe, warranting a reduction, and whether there was an error in the discount applied for the applicant's early plea of guilty. The court considered the objective criminality of the applicant's conduct, the subjective factors such as the applicant's early plea of guilty, and the overall discounting of the sentences. The court also examined whether the failure to provide reasons for the discount applied for the early plea constituted an error that warranted intervention.

The court found that while there was an error in not providing reasons for the discount applied for the early plea of guilty, it did not consider this error significant enough to warrant a reduction in the sentences. The court emphasised the significant objective criminality of the applicant's fraudulent conduct and concluded that the overall discount applied resulted in fair sentences. The court held that a sentence of imprisonment for four years and a non-parole period of two-and-a-half years was not so excessive as to warrant a more lenient sentence. Consequently, the court granted leave to appeal but dismissed the appeal against the sentence.

In light of the findings, the court confirmed the orders proposed by Sully J, which included dismissing the appeal against the sentence. The applicant's request for a revision of the sentences was rejected, and the original sentences imposed by Judge Karpin were upheld.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

In my opinion Ground 3 has not been made good.Conclusions and Orders The conclusions to which I have come upon the three particular grounds which were argued in support of the application, entail a need now to consider whether the error which I have identified in connection with Ground 1 brings about a situation in which it would be proper for this Court to intervene upon the basis that, as provided by section 6(3) of the Criminal Appeal Act 1912 (NSW), another and more lenient sentence is “warranted in law”. I am wholly unpersuaded that this Court should intervene upon that basis. An overall discounting of otherwise proper sentences by 50 per cent seems to me to have given the applicant fair measure for all those considerations in the light of which he was entitled to particular discounts. I acknowledge the subjective matters that were urged both at first instance and on appeal; and I acknowledge that there is a proper weight, and a not merely insignificant weight, to be given to them in the proper scheme of things. I keep in mind also, however, what seems to me to be the significant objective criminality of the applicant’s fraudulent conduct. Bringing all of those considerations to account as best I can, I simply cannot accept a proposition that an effective head sentence of imprisonment for 4 years and an effective non-parole period of 2-1/2 years are so excessive that other and more lenient sentences are warranted in law. In my opinion leave to appeal against sentence should be granted. The appeal against sentence should be dismissed. Sperling J: I agree with Sully J’s opinion that the failure to give reasons for a discount of 15 per cent for the utilitarian value of the pleas of guilty, rather than 25 per cent or something in that order, was an error in the circumstances of this case. The pleas were entered at the earliest possible time and the case was complex with the prospect of a lengthy trial. Those were the circumstances which, it was said in Thomson and Houlton (2000) 49 NSWLR 383, at [153], will generally affect the appropriate level of discount. The timing of the plea was said, at [160], to be the primary consideration in determining where in the range of 10 to 25 per cent a particular case should fall. However, it was also said in Thomson and Houlton, at [160], that in some cases, in combination with other relevant factors, a plea of guilty will not lead to any discount at all. A fortiori, in some cases, a plea of guilty, in combination with other relevant factors, will not attract the discount which would be appropriate in isolation. If a discount which may be appropriate in isolation would reduce the sentence below that warranted for the offence, priority has to be given to setting an appropriate sentence. I am in agreement with Sully J that, in the present case, a lesser sentence than that imposed would not be appropriate and with his reasons for that opinion. I agree with the orders proposed by Sully J.

Ratio Decidendi

Legal Principle Established

The applicant asked Judge Karpin to take into account, when dealing with the offence charged under count 1, a further and related breach of the Corporations Act; and her Honour did so. The applicant further asked her Honour to take into account, when dealing with the offence charged in count 2 of the indictment, a further and related breach of the Australian Securities Commission Act; and her Honour did so. The applicant stood eventually for sentence on 12 March 2004. Her Honour imposed 20 separate sentences structured so as to produce overall an effective head sentence of imprisonment for 4 years and an effective non-parole period of 2-1/2 years. The applicant seeks leave to appeal against the asserted severity of those sentences. In oral submissions before this Court, the applicant contended that both the effective head sentence and the effective non-parole period should be revised and reduced by this Court; but he contended in the alternative that at the very least the non-parole period should be so revised and reduced. I adopt gratefully the following summary, taken from Judge Karpin’s remarks on sentence, of the material facts:“The facts of these matters are that Financial Options Group Incorporated Pty Limited, (FOGI), was incorporated on 7 December 1987. Robert Walker was instrumental in setting up the company and was a director from the company’s inception. The prisoner was appointed a director on 1 November 1999. The prisoner had known Walker for approximately ten years prior to that time. The prisoner is a chartered accountant. He was responsible for maintaining FOGI’s books of account, including trade ledgers, transaction files and accounting entries on the MYOB accounting system. He also assisted with investment decisions. FOGI held itself out as providing financial services to its customers. Over the period during which these offences were committed Walker was the managing director and the prisoner was designated finance director.A corporate brochure for FOGI dated September 1999 used to market the company to prospective investors, claimed that the company’s business was to provide,“Professional investment management in non regulated foreign exchange bullion and base metal markets.”It was said that the company had,“Extensive experience and expertise to identify market trading opportunities for clients.”It was also claimed that the company sought to provide a superior annual rate of return to clients compared with traditional investments in property, shares or fixed interest. Using a heading “Investment Strategy”, the brochure referred to “disciplined risk management within a diversified portfolio”. The company maintained that it employed a “stop loss criteria” in risk management.In reliance upon the claims made in the brochure augmented by assurances from Walker and on occasion from the prisoner, a number of investors paid money to FOGI and signed agreements with the company. A monthly report was forwarded to each investor together with an account statement showing the cumulative account balances after payment by FOGI of a return on the principal investment. Each month the report set out the monthly rate of return applicable to that month together with a statement of return to the client after deduction of fees and GST for the relevant month. Statements were made in these monthly reports which sought to explain the current financial position and returns offered by FOGI. For example only, “Both our short-term tactical financial markets trading and the longer term strategic financial markets positions contributed positively to our monthly performance.”Monthly reports in this form were sent to investors between 8 February and 4 December 2001, there being no reports in September 2000, or in February, May, October and November 2001. The brochure set out the qualifications and banking investment history of both of the directors. The prisoner is described as being a member of the Institute of Chartered Accountants and holding degrees of Bachelor of Business and Master of Taxation Law and Master of Business Law. He is further described as having gained extensive financial marketing experience as Chief Financial Officer of a large international trading and broking group attending to accounting, credit and compliance matters in the financial and commodity traded markets. His experience and qualifications are said to have provided him with a “practical insight, not only in respect of the physical trading but also a legal insight as to how the financial markets operate in Australia and international jurisdictions.”It was noted that he was approved by ASIC to act as reconciliations officer under the Managed Investment Act. Minimum deposits of $25,000 were invited from investors. Any additional deposits were to be made in multiples of $25,000. The brochure provided that funds would be at call and paid by cheque within 24 hours minimum of written instructions from the client requesting withdrawal. The monthly statements, the subject matter of counts 3 to 20 in the indictment were in each case signed by the prisoner and Walker.The modus operandi adopted by the prisoner and Walker was constituted by the issuing of the brochure seeking investments, the monthly investment reports together with verbal statements by both the prisoner and Walker.”