R v McLachlan - [2004] SASC 277

SUPREME COURT OF SOUTH AUSTRALIA
(Court of Criminal Appeal)
R v MCLACHLAN
Judgment of The Court of Criminal Appeal
(The Honourable Chief Justice Doyle, The Honourable Justice Perry and The Honourable Justice White)
15 September 2004
CORPORATIONS - MANAGEMENT AND ADMINISTRATION - DIRECTORS AND OTHER OFFICERS - CRIMINAL AND STATUTORY CIVIL LIABILITY OF OFFICERS - IMPROPER USE OF POSITION - SENTENCE OR PENALTY
CRIMINAL LAW - APPEAL AND NEW TRIAL AND INQUIRY AFTER CONVICTION - APPEAL AND NEW TRIAL - APPEAL AGAINST SENTENCE
Appeal against sentence - appellant convicted and sentenced to 9 years, with a non-parole period of 5 years, for 55 counts of improper use of position to gain advantage contrary to s 232(6) and s 1317FA(1) of the Corporations Law - whether sentence manifestly excessive - whether sentence manifestly excessive as significantly higher than sentences imposed for comparable offences - whether insufficient weight given to appellant's mental condition - whether insufficient weight given to appellant's father's involvement - whether too great an emphasis placed on element of general deterrence - whether the reimbursement of investor's losses a factor which should have been taken into consideration in sentencing - appeal dismissed by majority.
Corporations Law s 232(6), s 1317FA(1); Criminal Law (Sentencing) Act 1988 (SA) s 18A, referred to.
Mason-Stuart v R (1993) 61 SASR 204 , distinguished.
The Queen v Nicholls (1991) 160 LSJS 204; R v Rich and Hynes (1997) 68 SASR 390; R v Hunter (1984) 36 SASR 101; R v Cavanagh [1999] SASC 418, considered.

R v MCLACHLAN
[2004] SASC 277
Court of Criminal Appeal Doyle CJ, Perry and White JJ

DOYLE CJ Mr McLachlan has appealed against a sentence of imprisonment imposed by the District Court. A Judge of that Court sentenced him to imprisonment for nine years, in relation to which term of imprisonment the Judge fixed a non-parole period of five years. The sentence was a single sentence of imprisonment imposed pursuant to s 18A of the Criminal Law (Sentencing) Act 1988 (SA) in respect of 55 different offences.
Mr McLachlan has appealed on the ground that the sentence is manifestly excessive.
Facts
Mr McLachlan was found guilty by a jury after a long trial. He was found guilty on 55 counts in all. Each count charged him with the offence of being an employee of a corporation who made improper use of his position to gain an advantage for himself, contrary to s 232(6) and s 1317FA(1) of the Corporations Law. By virtue of schedule 3 to the Corporations Law the maximum penalty for each offence is a fine of $200,000.00 or imprisonment for five years, or both.
Mr McLachlan was employed by Thompson Brindal Ltd., (“the firm”) which carried on business as a stockbroker. He began employment there in 1989. In 1992 he became a client adviser. He was authorised to trade by computer in shares and options on the Australian Stock Exchange. He took instructions directly from clients.
He was also permitted by the firm…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading R v McLachlan

Details

AGLC: R v McLachlan [2004] SASC 277
Case: [2004] SASC 277
Decision Date: 15 September 2004

CaseChat Overview and Summary

In the case of R v McLachlan, the appellant was convicted of 55 counts of improper use of position to gain an advantage, contrary to s 232(6) and s 1317FA(1) of the Corporations Law. The appellant, Mr McLachlan, was an employee of Thompson Brindal Ltd., a firm that conducted business as a stockbroker, and was responsible for trading on behalf of clients of RetireInvest, a financial planning company. Mr McLachlan's conviction arose from his actions in transferring options purchased in his own name or by other clients of Thompson Brindal to RetireInvest clients, resulting in the latter incurring the losses that Mr McLachlan would have faced. The trial judge sentenced Mr McLachlan to 9 years imprisonment with a non-parole period of 5 years. The primary issue before the court was whether the sentence imposed by the trial judge was manifestly excessive.

The court considered several arguments advanced by the appellant. These included the assertion that the sentence was significantly higher than those imposed for comparable offences, the argument that insufficient weight was given to the appellant's mental condition and his father's involvement in the scheme, and the contention that the trial judge placed too much emphasis on the element of general deterrence. The court also examined whether the reimbursement of investor losses should have been a factor considered in the sentencing process. The majority of the court found that the sentence was not manifestly excessive and dismissed the appeal.

The court's reasoning involved a detailed analysis of the sentencing principles applicable to offences under s 232(6) and s 1317FA(1) of the Corporations Law. The majority held that while some sentences in similar cases appeared low, the totality of the circumstances did not lead to a conclusion that the sentence imposed was manifestly excessive. The court emphasised the importance of considering the gravity of the offences, the appellant's role in the scheme, and the need for deterrence. The dissenting opinion noted the appellant's father's involvement as a mitigating factor but ultimately agreed that the appeal should be dismissed.

Orders

Orders of the court

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Background

Background to the litigation

Mr McLachlan has appealed on the ground that the sentence is manifestly excessive.Facts Mr McLachlan was found guilty by a jury after a long trial. He was found guilty on 55 counts in all. Each count charged him with the offence of being an employee of a corporation who made improper use of his position to gain an advantage for himself, contrary to s 232(6) and s 1317FA(1) of the Corporations Law. By virtue of schedule 3 to the Corporations Law the maximum penalty for each offence is a fine of $200,000.00 or imprisonment for five years, or both. Mr McLachlan was employed by Thompson Brindal Ltd., (“the firm”) which carried on business as a stockbroker. He began employment there in 1989. In 1992 he became a client adviser. He was authorised to trade by computer in shares and options on the Australian Stock Exchange. He took instructions directly from clients. He was also permitted by the firm to trade on the Australian Stock Exchange on his own account, and did so. The clients of the firm included a large number of persons who were also clients of RetireInvest. RetireInvest carried on business throughout Australia as a financial planner, investing money for clients. RetireInvest conducted its business through a number of franchises, trading under that name. Mr Laming apparently engaged the firm to act as stockbrokers for the RetireInvest clients. Mr Mennie was handling the work of the RetireInvest clients. In late 1992 it emerged that substantial losses had been made by the RetireInvest clients as a result of option trading by Mr Mennie. In December 1992 a meeting took place involving Mr McLachlan, Mr Laming and Mr McLachlan’s father, who was Managing Director of the firm. Mr McLachlan’s father told Mr Laming about the losses made on the options. According to the Judge, at the meeting in December 1992 Mr Laming was given assurances that Mr McLachlan, who had taken over the work of these clients, “would be able to trade out of that losing position in the following months”. On that basis, Mr Laming did not inform his RetireInvest clients of the losses, and according to the Judge may have taken steps to conceal the losses from them. The arrangement that the three men reached seems to me to have been a dishonest arrangement but I bear in mind that we have not heard from the other participants. It was not the basis of the charges laid against Mr McLachlan. I accept that the fact that Mr McLachlan’s father was Managing Director of the firm played a part in Mr McLachlan becoming involved in the scheme, but there is no suggestion that Mr McLachlan resisted being involved in the scheme. Be that as it may, Mr McLachlan took over responsibility for stockbroking work on behalf of the RetireInvest clients. That trading continued for some time. I understand that those involved continued to conceal the true position from the RetireInvest clients. There appears to be no information as to the extent to which the losses were recouped. The offences for which Mr McLachlan was convicted were committed between April 1996 and March 1997. They fell into two categories. The first category comprises 43 counts. In each case Mr McLachlan transferred into the name of a RetireInvest client an option that Mr McLachlan had purchased in his own name, and on which he was facing a loss. The result was that the RetireInvest client incurred the loss that Mr McLachlan would have made. The second category comprised 12 counts. In each of those cases Mr McLachlan transferred options purchased by other clients of the firm (with whom Mr McLachlan had an association) to RetireInvest clients, causing them to incur the loss that would otherwise have been incurred by the client with whom Mr McLachlan was associated.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

DOYLE CJ PERRY J (dissent) WHITE J (dissent)

I am not persuaded that the cases to which Mr Braithwaite refers disclose an approach to sentencing that should constrain this Court in considering the appeal. And, for what it is worth, although I regard some of the sentences in cases involving s 232(6) and s 1317FA(1) as somewhat low, I do not consider that when all the circumstances are taken into account, they lead to a conclusion that the sentence imposed by the Judge is manifestly excessive.Conclusion For all those reasons I would dismiss the appeal. I would dismiss the appeal. I agree with the reasons published by Doyle CJ. I have nothing to add. I have read the reasons of the Chief Justice. But for one factor, I agree with those reasons, and would otherwise agree that the appeal should be dismissed. That factor is the circumstance that the offences for which the appellant was sentenced were committed whilst he was implementing another scheme involving dishonesty, to which his father, who was also the Managing Director of Thompson Brindal Ltd, was a party. I adopt the statement of the facts contained in the reasons of the Chief Justice. The appellant was born on 27 July 1967. He commenced employment with Thompson Brindal on 8 May 1989, shortly before his 22nd birthday. Apart from a period of about six months, during which the appellant had been engaged in door-to-door selling, this was his first significant employment. Between the ages of 18 and 21 the appellant had been extensively involved in the sport of rowing culminating in his participation in the Seoul Olympics in 1988. When he first joined Thompson Brindal, the appellant performed back office work but after a time became a client advisor. His status at Thompson Brindal at all times was that of an employee. In about December 1992, conduct of Mr Mennie, an employee of Thompson Brindal, which caused substantial losses to clients of RetireInvest, was discovered. This was an embarrassing position for Thompson Brindal. That discovery led to a meeting at the office of Thompson Brindal on 13 December 1992 at which the appellant’s father, Mr Laming from RetireInvest and the appellant were present. It seems that there may also have been others from Thompson Brindal present but that is unclear. The appellant was, of course, junior to his father, and appears also to have been junior to Mr Laming. The sentencing Judge described the appellant as being, at that time, “still young and comparatively inexperienced”. At that meeting, Mr Laming was assured by the appellant’s father that Thompson Brindal was “on top” of the problem and would trade their way out of it within three to six months. He was also told that the appellant, then aged 25, would be taking over the trading option service for RetireInvest clients. It was agreed that the appellant would engage in option trading on behalf of clients of RetireInvest with a view to recouping the losses incurred by Mr Mennie. It was also agreed that the clients of RetireInvest would not be told of the losses, nor the attempts being made to retrieve the position.

Ratio Decidendi

Legal Principle Established

Established by: DOYLE CJ,

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