R v Mackay

[1996] QCA 102

[1996] QCA 102

COURT OF APPEAL

DAVIES JA
PINCUS JA
AMBROSE J

CA No 12 of 1996

THE QUEEN

v.

GRAEME STUART MACKAY

BRISBANE

..DATE 13/03/96

JUDGMENT

DAVIES JA:  The respondent was convicted on his own plea in the District Court on 14 December last of defrauding the Commonwealth between 18 May 1988 and 10 May 1990.  He was sentenced to 18 months imprisonment to be released immediately upon giving security by recognisance in the sum of $200 and that he be of good behaviour for 18 months.  The appellant, who is the Commonwealth Director of Public Prosecutions, appealed against that sentence.

The respondent is 49 years of age having been born on 13 December 1946.  At the date of his conviction and sentence he was a real estate agent with no prior criminal convictions.  In April 1988 the respondent, who was then the principal of a real estate agency, was informed by his sales manager, Griffiths, that a property development company, R E Adne Pty Limited, was interested in purchasing land encompassing three beach front blocks at Kirra and that a real estate agent representing R E Adne had approached the owners of two properties in one of these blocks, number 5 and 7, Lord Street.

The respondent and Griffiths then resolved to purchase those properties in a false name and to sell them to R E Adne at a profit.  There were two purposes in using a false name; to conceal from the owners the fact that the real purchasers were real estate agents and to conceal that fact from R E Adne.  Using that false name, they purchased each of the properties for $350,000 and within a month sold them to R E Adne, one for $600,000 and one for $800,000.

Each of the respondent and Griffiths made a profit of a little over $200,000 on the transaction, the balance of the profit going to a company who had provided sufficient funds to finance the purchase.  There can be no doubt the respondent's profit formed part of his assessable income and unless his deductions exceeded that income, part of his taxable income.  The same was, of course, true of Griffith's profit.  The respondent approached Rossiter, an accountant whom he had known for some years and with whom he had a business association, to see if the tax which he knew would be payable on his profit could be minimised.

It is of some significance, as Mr Jerrard, on behalf of the appellant pointed out, that that approach was after the end of the financial year in which the profit had been derived.  Rossiter made some proposals for property transactions to reduce that tax liability but none eventuated. He then proposed that they use tax losses of a client of his.  The respondent asked whether it was okay and how it worked to which Rossiter replied that he believed it would work and said, "We will make it look like a loan, the profit will be treated like a loan to you."

Rossiter also told him that the false name would be used in the transaction and that a fee of $30,000 would be payable to this client for participating in the transaction and declaring the profit on his tax return.  Rossiter was also to receive a fee.  The respondent must have known that no loan was involved and that the profit remained his, not that of Rossiter's client.

As appears from what I have said, he also knew that a false name was to be used in the transaction.  The transaction consisted of back-to-back bank transfers, $200,000 from an account in the respondent's name to an account in the name of Rossiter's client and $170,000 back from the client's account to the respondent.  In April 1989 after this transaction, the respondent signed a tax return prepared by Rossiter in which, in answer to the question in the schedule to the return, sale or transfer of property, was the word "No".

This signified no income was earned during the relevant year from the sale or transfer of property.  An amended return was later filed but no alteration was made to this part of it.  Plainly the question and answer would have been directed to the respondent's assessable income, that is, as to whether the respondent had made a profit from the sale of property and equally plainly the answer was false.  Moreover, it is inconceivable that the respondent would have believed that a transaction using a false name and made to look like a loan would legitimately reduce his taxable income notwithstanding
that, in the early part of the decade in which this transaction occurred, there are a number of very artificial tax schemes which it was commonly thought would legitimately reduce taxable income. 

That the respondent did not believe in the legitimacy of what he had done is confirmed by his later lies.  When interviewed by the tax officers on 25 May 1993 the respondent told them that Rossiter's client had been involved in the purchase of the properties, that he, the respondent, received no profit from their sale but that he obtained an unsecured interest free loan from that client repayable on demand.

He said it had been repaid.  He maintained that version of events in a further interview on 16 September 1993.  When interviewed by the Australian Federal Police on 17 March 1994 the respondent admitted his involvement in the transaction to buy and sell the properties in a false name and that he had derived a profit in the sum I have already referred to.  He admitted that he knew that the income was declared in Rossiter's client's tax return.  He was charged in December 1994.

A committal hearing was conducted in May 1995 and in September that year the respondent's counsel told the appellant that the respondent would be pleading guilty.  In the light of submissions which were made on behalf of the respondent to this Court by Mr Rafter, the respondent's counsel, I would for myself accept that the indication of a plea of guilty was in fact given reasonably soon after the committal hearing.  The appellant contends that a custodial term should have been imposed, that is, that the respondent should have been required to undergo a period of actual imprisonment.

A large sum of money was involved, the conduct involved a calculated and systematic, though crude, scheme.  The respondent persisted in his dishonesty on two occasions when approached by officers of the taxation office.  It involved fraud of a kind which is generally difficult to detect and although the respondent pleaded guilty and paid the tax due, he did this only after his fraud was uncovered.  Plainly the motivation for the fraud was greed.  Reference was made to the decisions of this Court in Wright, 1994 74 Australian Criminal Reports 152; Tacey, Court of Appeal No 434 of 1993, 2 March 1994 and Mai, Court of Appeal No 257 of 1995, 25 August 1995. 
In the first of those cases it was said that where a calculated and systematic fraud involves a substantial sum of money, the offender should usually be required to serve a term of imprisonment.  The Court left open the possibility that in any such case there might be circumstances which justify a wholly suspended term and of course the Court did not exclude the possibility that in cases not of this seriousness, a term of imprisonment actually served might be appropriate.  The present case was, in my view, of the kind described in Wright. 
This appears to have been accepted by counsel for the respondent below and indeed in this Court, who nevertheless sought to show that there were, in this case, some exceptional circumstances.  In the respondent's favour, the learned sentencing Judge rightly took into account his plea of guilty, albeit it only after committal.  However, His Honour went on to say that the respondent had demonstrated genuine remorse.  He seems to have arrived at that conclusion from the fact that, after making false statements to the taxation officers, the respondent made full admissions to the Australian Federal Police and indicated his preparedness to cooperate with the prosecution authorities, even to the point of giving evidence against his co-accused.

This is not a case in which the respondent gave evidence and it would be fanciful to suggest that except in an unusual case, a sentencing Judge can derive some indication of remorse from looking at a man standing in the dock.  In this case, I think that this Court is in as good a position as the learned sentencing Judge to determine whether the respondent was genuinely remorseful.  In my view, his conduct in making the admissions which he did to the Australian Federal Police after it was plain that they had uncovered his fraud, his plea of guilty after committal and his payment of all tax due are at least equally consistent with a motive, perhaps on legal advice, of obtaining a lower sentence, as with an expression of genuine remorse.

That does not mean that these factors should not be taken into account in his favour.  On the contrary, they should be, but not as evidencing remorse; but for his cooperation with the authorities and his willingness to give evidence against Rossiter, he would have received, from this Court, a higher sentence than that which I would now impose.

The other matter which the learned sentencing Judge took into account in the respondent's favour was that his co-accused, Griffiths, who - as a learned sentencing Judge said - would appear to be equally criminally culpable as the respondent, was not convicted because he was suffering from an illness which the prosecuting authority regarded as of sufficient gravity as to make it preferable in the community's interest not to proceed with the prosecution against him.

His Honour thought that the respondent might feel some genuine sense of grievance that the full force of the law was not brought to bear against Griffiths but was against him, at least in part, because he pleaded guilty and Griffiths did not.  However, if Griffith's illness was of such seriousness that the case should not have proceeded against him, it would presumably have been of sufficient severity to require a sentence which did not involve him serving a term of actual imprisonment:  compare Tacey.

I do not see that there would be any unfairness in a case like this in the respondent being required to serve a term of imprisonment whilst his co-accused, Griffiths - because of his medical condition - not being so required or for that matter, even being tried.  I therefore do not agree with His Honour that this was a fact in justifying his decision not to send the respondent to gaol.  The other considerations in favour of the respondent were the absence of any previous convictions and the high regard in which he was held by at least those who gave written references tendered on his behalf at the sentence hearing.

However, it is not uncommon in cases involving offences of this kind to find that the offender was otherwise of an apparently good character.  In summary, I can find nothing in this case which justifies a departure from the general view taken by this Court that in offences of this kind and this seriousness, a sentence involving a term of actual imprisonment is required, not least because of the difficulty in their detection and consequently the need for general deterrence.

I would therefore grant the appeal to the extent of substituting for the order that the respondent be released immediately and order that he be released upon his giving security by recognisance that he will be of good behaviour for 18 months after he has served three months of the term imposed by the learned sentencing Judge which was one of 18 months.

PINCUS JA:  In the reasons of the presiding Judge, there is reference to this case as being one of calculated and systematic fraud.  It seems to me clear enough that merely to show that a particular tax fraud is blatant and crude rather than systematic would not be regarded as a mitigating factor.  Secondly, I would refer to Mr Rafter's submission to the effect that the fact that Mr Griffith's prosecution was not pursued may seem to contrast oddly with the treatment of this respondent.  It is, to my mind, a little curious that ill health was regarded as a reason for not pursuing the Griffith's prosecution, as opposed to merely being relevant to the question whether imprisonment would be sought.  Nevertheless, I agree with the view of the presiding Judge that this was not a consideration justifying the course which the primary Judge took.  Lastly, I would comment that, but for the respondent's preparedness to assist in the prosecution of a co-offender, he would, in my view, have deserved a more substantial custodial sentence than was in fact imposed.

Subject to those comments, I agree with the views which have been expressed by the presiding Judge and with the order which His Honour proposes. 

AMBROSE J:  I agree with the order proposed by the presiding Judge and by his observations in the course of his judgment, also in the observations of Mr Justice Pincus.

DAVIES JA:  That will be the order of the Court.

...

DAVIES JA:  The Court will further order that the Sheriff of this Court or a nominated officer of the Sheriff's office explain to the respondent in language likely to be understood by him, the purpose and consequence of making a recognisance release order including an explanation of the matters referred to in section 16F(2) of the Crimes Act.

...

MR JERRARD:  I understand that I should ask that a warrant issue for his arrest in accordance with the order that you have made to serve in effect a period of three months imprisonment.

PINCUS JA:  And it is common to ask that it lie in the Registry for 24 hours or some such period; is there any‑‑‑‑‑

DAVIES J:  Is that appropriate in this case?

MR RAFTER:  I ask that it lie in the Registry although I have heard it being ordered to lie for longer than that, for seven to 14 days.

MR JERRARD:  I have got no difficulty with any period.  I assume the gentleman will surrender himself.

DAVIES:  Well, 14 days.  The Court will so order.

‑‑‑‑‑