R v Nagul
[2007] VSCA 8
•16 January 2007
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No. 49 of 2006
| THE QUEEN |
| v. |
| RICHARD ALFRED NAGUL |
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JUDGES: | MAXWELL P, CHERNOV JA and HABERSBERGER AJA | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 16 January 2007 | |
DATE OF JUDGMENT: | 16 January 2007 | |
MEDIUM NEUTRAL CITATION: | [2007] VSCA 8 | |
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Criminal law – Sentencing – Obtaining financial advantage and property by deception –Theft – Sentencing discretion enlivened – Changed circumstances of applicant’s family – Applicant’s wife seriously ill – Son commencing Year 12 – Hardship – Hardship not constitutive of exceptional circumstances – Court not to react with undue emotion to hardship – Mercy – Hardship to offender’s family due to his imprisonment taken into account in Court’s discretion to extend mercy – Mercy not appropriate as to head sentence but extended as to non-parole period – Principles of cumulation in respect of multiple offences.
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| APPEARANCES: | Counsel | Solicitors |
For the Crown | Mr C G Hillman SC | Ms A Cannon, Solicitor for Public Prosecutions |
| For the Applicant | Mr M J Croucher | Isakow Lawyers |
MAXWELL P:
I will ask Chernov JA to deliver the first judgment.
CHERNOV JA:
On 21 November 2005 the applicant, Richard Alfred Nagul, who is now aged 53 years, was presented in the County Court at Melbourne for trial on a presentment containing 36 counts of obtaining financial advantage by deception, (counts 1-10, 13-16, 18-39), one count of obtaining property by deception (count 17) and two counts of theft (counts 11, 12). The offences were said to have been committed between December 1993 and early 2001 while the applicant was in the employ of Spicers Paper Limited (“Spicers”) which was a listed company that was taken over by Paperlinx Limited. Throughout the relevant period the applicant held senior financial positions at Spicers and during most of it sat on its board. Essentially, the Crown alleged that the applicant used his senior position at Spicers fraudulently to redirect to his benefit cheques that were provided to the company,[1] to cause company funds to be paid to him,[2] and to present his cheques to the company in purported reduction of his debt to it when he knew there were insufficient funds in his account to meet those cheques on presentation.[3] After a trial that lasted 15 sittings days, on 16 December 2005, the applicant was found guilty by the jury of 25 counts of obtaining a financial advantage by deception[4] and two counts of theft.[5] Each offence carries a maximum custodial sentence of 10 years. After hearing a plea in mitigation of sentence, on 22 February 2006, the learned sentencing judge sentenced the applicant, who had no prior convictions, to a total effective sentence of six years imprisonment and ordered that he serve a period of imprisonment of four years before becoming eligible for parole. Not long thereafter the applicant filed notices of application for leave to appeal against his conviction and sentences and full grounds in support of the claims. Before dealing with these matters it is necessary to describe briefly the circumstances pertaining to the offending, most of which are taken from the Crown’s comprehensive and helpful summary of evidence to which no objection was taken by Mr Croucher who appeared before us for the applicant. In a sense this is not surprising given that, at the trial, the basic facts pertaining to each count were not in dispute. The primary issue was whether the applicant’s relevant conduct was dishonest. It is also convenient to set out now the applicant’s relevant personal circumstances.
[1]Counts 10-12, 17, 18, 39.
[2]Counts 4-9, 13, 38.
[3]Counts 1-3, 14-16, 19-37.
[4]Counts 1-3, 10, 15, 16, 18, 19, 23-37, 39.
[5]Counts 11, 12.
Background circumstances
The applicant’s parents had emigrated to Australia in 1949 and had worked hard for many years to give the applicant a sound home and education. He was born here on 24 October 1953. After successfully completing secondary school the applicant first studied Science at Latrobe University. Later he transferred to an Economics course, taking up part time employment with Pacific Dunlop as an assistant accountant. He left that company in about 1979 as chief accountant and then worked for another organisation as chief accountant where he reported to the financial director. In 1983 he obtained a Graduate Diploma in Accounting at Victoria University and became a member of the Institute of Chartered Accountants and the Australian Society of Certified Practising Accountants. The applicant married in 1984 and has one son who is about to commence study at Year 12 level. His elderly mother-in-law lives with him and his wife, his father having died in January 1999 and his mother four years later.
The applicant commenced employment with James Hardie Paper and Packaging Ltd in 1984, of which Spicers was then a subsidiary. In 1988 Spicers was floated as a public company and, in that context, the applicant became its General Finance Manager. In January 1985 he was appointed its Finance Director. Importantly, this meant that he became the effective financial controller of Spicers and sat on its board of directors. Thus, at all relevant times, the applicant was familiar with the form with which financial transactions were recorded at Spicers and what financial information had to be disclosed in the company's reports and accounts. Spicers’ Managing Director was Peter Hammond with whom the applicant worked closely over some years prior to September 1999, when Hammond became ill and underwent treatment for cancer. Although Hammond continued to hold the position of Managing Director until his death in March 2000, he remained at home from about September 1999 and the day to day running of the company was left to the applicant and two others, including Peter Waterworth who, following the death of Hammond, was appointed Managing Director.
I now turn to the impugned transactions.
Home loan repayments by dishonoured cheques
Counts 1-3 relate to a loan made by the company to the applicant in February 1992 in the sum of $210,000 (which was increased in June 1992 to $270,000) to assist him with the purchase of his home. A term of the loan, which bore compound interest at 10 per cent calculated monthly, was that it was to be repaid on 30 April 1993 or on such later date as determined by the Managing Director. The loan was made in the context of the applicant having effectively told the company by letter dated 26 February 1992 that he expected to receive $175,000 from the distribution of proceeds from a trust in the United States in late May 1993 and that he would repay the loan from those monies. As will become apparent, the applicant continued to represent to the company until early 2001 that he expected these funds to arrive any day and would apply them in repayment of his debts to the company. Those funds, however, never came and, assuming that the applicant had at some stage believed that they would be made available to him, by 1993 or 1994 he knew that was not the case.
On or about 13 December 1993 the applicant drew a cheque in the sum of $246,325 on a joint account held by himself and his wife at Barclays Bank payable to Spicers in purported repayment of the home loan. The sum corresponded with the amount recorded on the company’s records as being due at that date pursuant to the housing loan. This cheque was dishonoured (count 1). On or about 30 June 1994 he drew a cheque on the same Barclays’ Bank account in the sum of $259,912 payable to Spicers in purported repayment of the loan. This cheque was also dishonoured (count 2). The cheques involved in counts 1 and 2 were drawn just prior to the end of the company’s relevant account reporting periods. The deposit of the cheques meant, as the applicant appreciated, that the company’s reports showed the amount of the debt as “nil”.
On 27 June 1995 he drew a cheque on a Westpac Bank account held jointly with his wife in the sum of $287,479 payable to Spicers in relation to the housing loan, and this cheque was also dishonoured on presentation (count 3). Because it was received on 27 June 1995, the amount of the company’s loan to the applicant did not appear in the annual report for the year ended 30 June 1995. It is plain enough that the applicant knew when he drew those cheques, and the others that were later dishonoured and are the subject of later counts, that there were insufficient funds or facilities available to meet those cheques on presentation. As will be mentioned later, the applicant’s case was that, with the approval of relevant management at Spicers, including Hammond, the cheques were presented to the company in order to give the appearance on the reporting date that the debt had been cleared. According to the applicant the debt was to be repaid out of the trust money to which I have referred.
By 1997 the balance of the loan and interest had risen to $308,653 and, at the applicant’s request, a loan agreement, drawn by the company’s solicitor, William Abbott, was executed by the applicant.
Drawings on Spicers’ US account (not guilty)
Counts 4-9 and 13, in relation to which the applicant was found not guilty, were concerned with his drawing, for his own purposes, of amounts, that totalled over $400,000, on the company’s United States currency account in Brisbane which was maintained to facilitate its international payments. Those drawings were credited to the applicant’s various bank accounts. They were made on 22 December 1995 (approximately $74,000) – count 4; 6 January 1997 (approximately $66,800) – count 5; 7 January 1997 (approximately $47,200 and approximately $38,100) – counts 6 and 7 respectively; 16 January 1997 (approximately $32,200) – count 8; 9 March 1997 (approximately $15,700) – count 9 and 30 September 1997 (approximately $135,500) – count 13.
Misappropriation of Anthonisz cheque
Counts 10-12 were concerned with the applicant’s effective misappropriation of the proceeds of a large cheque to his own benefit that was given to the company by one of its senior employees, Gordon Anthonisz, in partial repayment of his debt. The circumstances in which this occurred were these. In 1997 Anthonisz was required by Spicers to move from Sydney to Melbourne. This relocation involved him selling his Sydney family home, acquiring one in Melbourne and incurring other associated costs. It was company policy to provide temporary financial assistance to employees in relation to such costs on the basis that the facility would be reimbursed from the proceeds of the sale of the previous home. In the result, Anthonisz was given such assistance. After selling his house in Sydney he made a series of payments to the company, including one on 27 August 1997 by way of a solicitor’s cheque dated 15 August 1997 in the sum of $283,474 (“the Anthonisz cheque”)[6] that he gave to the applicant for deposit with the company. The Group Treasurer’s assistant, May Marshall, said in her evidence that on 27 August 1997 the applicant came into her office and handed her the Anthonisz cheque and told her that it was to repay the abovementioned drawings that he made on the company’s United States currency account. As a result, Marshall caused the applicant’s account relating to the US currency drawings to be credited with the amount of the Anthonisz cheque by way of a ledger entry . This left his account with a credit surplus (count 10).
[6]Anthonisz made a further payment in December 1997 in the sum of $110,000 and a final payment of approximately $20,000 in 1998. As a result, he presumed that the loan had been paid out in full by February 1998. The first he learnt that this was not the case was in March 2000 when he was contacted by the company’s internal auditor. As a result he spoke with the applicant who told him that there had been a mistake and assured him to “just leave it to me”.
A short time later on that day the applicant procured Marshall to give him a cheque for $15,000 (drawn on Spicers’ US currency account) payable to him, which he deposited into his bank account (count 11). On 18 September 1997 he directed Marshall “from the money that I’ve still got sitting there” (namely, his “surplus” in the Spicers’ US currency account) to draw a cheque for $17,000 payable to him. That cheque was also paid into his bank account (count 12).
Reimbursement of personal drawing (not guilty)
Count 14, in respect of which the applicant was found not guilty, was concerned with his purported reimbursement to the company for drawings that he had made from time to time on its account for personal expenses. Spicers permitted its senior employees to draw personal and business related expenses from advance accounts on the basis that it would be reimbursed at the end of each month. In December 1999 the applicant gave to Paul Amery, Spicers’ financial controller at the time, a post-dated cheque for the sum of $27,612 drawn on the National Australia Bank account in his name and that of his wife for the purpose of repaying his expense advance account. Amery was instructed not to bank it until advised to do so by the applicant. Eventually, the applicant told Amery to bank the cheque on a certain date but when the cheque was presented on 31 January 2000, being a date subsequent to the nominated date, it was dishonoured.
Further reimbursements of personal drawings
On 27 May 2000 the outstanding balance in the applicant’s personal advance account was $112,974. On 31 May 2000 he provided a cheque drawn on a Macquarie Bank account in the name of himself and his wife in the sum of $39,422. This cheque was dishonoured on presentation (count 15). On 13 June 2000 the applicant drew a further cheque in the sum of $39,422 payable to Spicers, drawn on a National Australia Bank account in his name and that of his wife, again in purported payment of his advance account. At the time the bank account was overdrawn $62,637. Not surprisingly, the cheque was dishonoured upon presentation (count 16).
Misappropriation of cheque from Hammond estate
Counts 17 and 18 related to the applicant’s dealing with cheques directed to Spicers from the estate of Hammond, of which William Abbott was the executor. By letter dated 4 April 2000 to the executor purportedly written on the company’s behalf, the applicant requested payment of $37,215 which was said to be the outstanding balance in Hammond’s advance account at the date of his death. Enclosed were relevant bills and reimbursement summaries. Subsequent investigation disclosed that in fact this claim was inflated and that the total debt owed was only in the order of $22,752 (count 17). The applicant was found not guilty on that count.
Be that as it may, the executor forwarded to the applicant a trust account cheque in the sum of $37,215 payable to Spicers in satisfaction of the outstanding balance on Hammond’s advance account. That cheque, together with a cheque for $7.26 was deposited into Spicers’ bank account on 15 June 2000 by way of a deposit voucher bearing the applicant’s signature. The company ledger, however, shows that on 15 June 2000 $37,222 was credited in reduction of the applicant’s advance account (count 18). It is plain enough that the entry was procured by the applicant.
15 dishonoured cheques July 2000 – home loan repayments
Between 30 June and 1 August 2000 the applicant presented to the company 15 cheques each in the sum of $467,930 and drawn on his account at the ANZ Bank in purported satisfaction of his outstanding housing loan. All of these cheques were dishonoured (counts 19, 21, 23-33). The applicant was found not guilty on counts 20 and 22. Each cheque was for the same amount, but the cheque number relating to count 22 was unknown. The bank statement for the applicant’s account essentially disclosed that there were no funds in it to meet any of the cheques. Moreover, the cheques relating to counts 27-33 were all drawn after the bank account had been closed.
Tanword dishonoured cheque – home loan repayment
Count 34 concerned a dishonoured cheque written by the applicant on 26 October 2000 on his company’s – Tanword Pty Ltd – bank account in the sum of $467,923 in purported payment of the home loan. The cheque was dishonoured because the account had no funds.
Purported repayment of Anthonisz loan
By early 2001 a new management regime was operative at Spicers and, it seems, some enquiries were made as to the applicant’s financial position in relation to the company. Waterworth was the managing director, Spicers had been taken over by Paperlinx and the internal auditor was alive to the Anthonisz situation. In this context, and in order to disguise his misappropriation of the Anthonisz cheque, on 24 January 2001, the applicant drew a cheque in the sum of $264,000 on the Tanword account in payment for the Anthonisz loan. This cheque was dishonoured (count 35). On the following day, 25 January 2001, the applicant again drew a cheque in the sum of $303,221 on the Tanword account and again presented it as payment for the Anthonisz loan. This cheque, too, was dishonoured (count 36).
Further purported payments of home loan
Also on 25 January 2001 the applicant drew a cheque in the sum of $484,923 on the account with the National Australia Bank which he held jointly with his wife and provided it to the company in payment of the outstanding housing loan. This cheque was also dishonoured (count 37).
Petty cash repayment (not guilty)
Count 38, in respect of which the applicant was found not guilty, related to a cheque for $500 that he drew on 5 February 2001 on his account with Citibank in favour of Spicers as a reimbursement for amounts he had taken out by way of petty cash. That cheque was also dishonoured.
Misappropriation of Mercer cheque
On or about 21 February 2001 a cheque in the sum of $49,970 (“the Mercer cheque”) was received by Spicers from William H. Mercer Pty Ltd, the administrator of Spicers’ Superannuation Fund, as a reimbursement for the salary continuance insurance premiums that had been paid in respect of the salary of the late Hammond. The applicant misappropriated this cheque (count 39) to clear the Hammond advance account and did it in a way that gave the appearance that the money to discharge that account came from Hammond’s executor. The deposit voucher that was completed by the applicant showed that $37,215 (that had been claimed by the applicant as the amount outstanding on the Hammond account – see paragraphs [15] and [16] above) came from “William Abbott”. That amount was then credited to the Hammond account so as to reduce it to zero. The balance of the Mercer cheque, namely, $12,655, was credited against the applicant’s advance account.
Company’s investigations – early 2001
As previously indicated, by early 2001, Spicers, principally through its internal auditor, uncovered some of the applicant’s impugned transactions. In the result, the company sought assistance in that regard from Peter Morris of KPMG. After a meeting between Morris and Gregory Abotomey, who held the position of chief financial officer at Spicers following the Paperlinx takeover, Abotomey and the human relations manager of Paperlinx, John Tompkins, met with the applicant on 22 February 2001 (the day after he had misappropriated the Mercer cheque as described). At that meeting the applicant acknowledged the following:
(a) The outstanding housing loan amounted to approximately $484,000. He said, however, that it would be paid within a week from trust money that was coming from the United States.
(b)He had allocated the Anthonisz cheque to cover his drawings on the company’s US account. He acknowledged that such drawings were unauthorised, that he knew it was wrong for him to have done that, but that the circumstances were such that it was "just done". He said that the drawings were for personal reasons and that, later, he had told Hammond about them but was told to leave matters as they were.
(c)The cheque for $37,115 from the Hammond estate was credited to the applicant’s advance account in order to "buy himself time", but he intended to repay the money. He admitted that the cheque had come to him, that he had banked it, made the allocation as to where it had to be credited and advised his staff where it was to be allocated in the ledgers.
(d)He knew that he did not have the funds in his bank accounts to cover the cheques that he drew that were dishonoured but he intended to pay the amounts from the US trust money.
(e)The applicant was asked if he could provide any proof that funds were coming from the United States. He said he would do so (but this was never done).
(f)The applicant was asked what he had done with the moneys. He said that it was a personal matter and did not want to discuss it.
(g)He said that no-one else was involved in any of the matters that they had discussed and that nobody at Spicers was responsible for any of them.
The applicant was then suspended from his employment and escorted from the
premises later. He made the repayments to Spicers amounting to $178,000.
On 14 March 2001 the applicant met with Tompkins and Morris in Tompkins’ office. The latter two took notes of the conversations that ensued and gave evidence as to that. In summary, the applicant made the following relevant statements during that meeting:
(a)As requested, he signed a number of authorities enabling KPMG to obtain bank records held by him and Tanword.
(b)He reiterated that money was coming from a trust in Chicago that would be applied against the amount he owed to Spicers. He did not accept, however, the suggestion of Morris that he should authorise a KPMG employee in Chicago to liaise with the relevant persons there in order to expedite the obtaining of those funds.
(c)The applicant confirmed that he completed the vouchers for the deposit of the Mercer cheque. He admitted that in doing so “there was a degree of opportunism” and that he was trying to “buy time”. He said there was no intention to defraud the company and that he intended to repay all the monies owing.
(d)The applicant also acknowledged that he owed monies to Spicers, including the housing loan as well as his advance account, all of which amounted to approximately $800,000. More particularly, he acknowledged that the housing loan amounted to $484,000 and that he owed approximately $300,000 in respect of the advances from the US currency account. Again, he said that he would “get onto Chicago” to make arrangements for the funds to come to Australia.
Applicant’s relevant evidence at trial
The thrust of the applicant’s evidence at the trial was to the following effect. He said that he worked very closely with Hammond and, because he worked hard, he effectively became part of his “inner circle” with the result that Hammond “looked after him” in terms of financial benefits. The applicant claimed, as was also evident from other material, that Hammond was a dynamic managing director who had built Spicers to the position that it then enjoyed. The applicant essentially said that Hammond was a person who used a “broadbrush” approach to matters such as the provision of financial incentives to executives he regarded as outstanding. Hammond resented, said the applicant, the constraints that the company’s remuneration committee sought to impose in relation to matters such as the applicant’s remuneration package. He claimed that Hammond wanted to ensure that the applicant remained with the company and consequently was prepared to see that he was adequately remunerated. In order to achieve that, the applicant effectively said, Hammond was prepared to “bend the rules”.
It was in that context, said the applicant, that Hammond authorised his drawings on the company’s US currency account. According to the applicant, Hammond told him that those moneys would have been paid to him if Hammond’s hands were “not tied” (by the company’s remuneration committee). The applicant said that the moneys were essentially advances against the payment of future bonuses and salary increases that had not yet been processed and were an incentive for him to remain with the company. He claimed that the real reason for the payments was kept between himself and Hammond and that he was under instructions not to tell anyone else about it. As to the Anthonisz cheque, it was the applicant’s case that the misallocation of it as described was the result of Marshall’s misunderstanding of his instructions. He had handed her the cheque, he said, and she mistakenly credited it against his drawings on the US currency account. The applicant said it was when he was preparing the monthly reports in early September 1997 that he noticed that his "housing" loan, and not that of Anthonisz, had the benefit of the cheque. He communicated this to Hammond who told him to leave things as they were until otherwise advised. The applicant also said that all the drawings against his advance account were made with the knowledge of Hammond who kept a very close eye on the account.
The applicant claimed that in 1991 his late father informed him that there was a discretionary family trust in the United States of which his father was a beneficiary, that he expected to receive money from the trust and that he would pass it on to the applicant. Thus, the applicant said he had a real expectation of receiving those funds although in about 1993 or 1994 he concluded that the money would not be forthcoming.
In relation to the Mercer cheque, $37,215 of which was effectively deposited by him into the Hammond account such as to show that it was paid in by William Abbott, thereby creating the impression that it was in payment of the outstanding balance of the Hammond account, the applicant claimed that the reference on the deposit voucher to William Abbott was an error on his part. He said he did not realise his mistake in that regard until it was pointed out to him by Morris and Tompkins at the meeting of 14 March 2001 when he could no longer do anything about it.
In respect of the dishonoured cheques drawn in 2000 and 2001, ostensibly for the purposes of repaying the housing loan, the applicant’s case seems to have been that the real purpose of those payments was to maintain an appearance for "external consumption" that the debt was paid but that all relevant people within the office were aware of the "bouncing cheques". He claimed that after the death of Hammond he made Waterworth aware of the situation.
In the event, as has been noted, the applicant was found guilty of the 25 counts and was sentenced to six years' imprisonment with a non parole period of four years.
Application for leave to appeal
When the applications for leave to appeal against conviction and sentence were called on for hearing, Mr Croucher of the applicant sought, properly and responsibly, in my view, leave to discontinue the appeal against conviction and, there being no objection from the Crown, leave was granted. Mr Hillman for the Crown conceded, also sensibly, I think, that in sentencing the applicant his Honour did so on the erroneous basis that the financial benefit obtained by him from the offending was in the order of $724,000 whereas, on the judge’s own methodology of quantifying the benefit, the amount was only in the order of $480,000. Counsel conceded that this error reopened the sentencing discretion. As a consequence, the matter proceeded essentially as a plea in mitigation of sentence. It is now a matter for this Court to form its own view as to the appropriate sentences to be imposed in this case.[7] The task of this Court is to fix, in relation to each count, a sentence that justly reflects the seriousness of the offence and the offending conduct in light of the applicable sentencing principles and the personal and other mitigating factors referrable to the offender.
[7]See R v. Bolton and Barker [1998] 1 VR 692 at 697-698 per Callaway JA.
In support of the plea in mitigation, Mr Croucher highlighted the mitigating factors that were put to the learned sentencing judge, including the applicant’s loss of career, particularly at the age of 53, his previous good character, the impressive evidence given as to his qualities as a devoted family man and his work history, the delay in the matter coming for trial, the assistance he gave to the company’s investigators and his restitution of $178,000 to the company. An important matter on which counsel also relied was the hardship that the applicant’s family was suffering by reason of his imprisonment which, it was said, materially added to his burden of serving the sentence. Before dealing with this submission it is convenient to dispose of two other arguments on which counsel relied in support of the claim for mitigation.
One argument was that, given the applicant’s dismissal from the company, he had forgone termination entitlements in the order of $500,000 and this, it was said, was a mitigating factor that was to be taken into account in the sentencing disposition. It would seem that this amount was based on the advice that the applicant had received from his solicitors as to the sum that he could expect to receive if his employment contract with Spicers had been prematurely terminated by the company. But as the learned President pointed out in argument, given the applicant's fraudulent conduct, the company was entitled to dismiss him summarily, so that he would have no right to compensation on the basis of having improperly lost the benefit of the remainder of the contract. Counsel nevertheless submitted that in the circumstances the applicant lost long service leave entitlements that had accrued prior to his sacking, and that this formed the bulk of the $500,000 referred to earlier. It seems to me, however, that given that no material was placed before the Court on this issue it is not possible to assess in quantitative terms the applicant’s loss in that regard. In the circumstances the only course that could be fairly adopted in relation to this claim that is most favourable to the applicant is to assume for sentencing purposes that he had forgone, by reason by his forced departure from Spicers, an amount in lieu of long service leave that is not insubstantial.
The second argument was based on the applicant’s admission of the substantive transactions. It was said that this shortened the proceeding "considerably" and, in the circumstances, amounted to a material matter of mitigation. In my view, however, there is no merit in this claim. The transactions were established by the Crown, essentially through documents that were tendered in evidence, and it is difficult to see how they could have been contradicted by the applicant. In the circumstances, to have attempted to do so would have been not only futile but an exercise in bad advocacy. At one point, as I understand Mr Croucher, it was said that, in any event, given the applicant’s admissions the Crown case could have been shortened and because this was not done the applicant was put through the ordeal of a longer trial than would otherwise have been the case. It was claimed that this was yet another factor that should be taken into account as mitigation. In my view, however, it may be that the Crown case could have been shortened by resort to a notice to admit, but I cannot accept that any relevant fault lies in the Crown’s thorough conduct of the trial such as to constitute it a mitigating factor for sentencing purposes. It seems to me that it was the applicant’s denial that he was dishonest in procuring the transactions and his contradiction of many of his admissions that he had made to the company’s officers that took up a significant period of the trial. Obviously enough, such conduct of the applicant’s case at trial is not a matter that is to be weighed against him for sentencing purposes.
I now come back to counsel’s submission based on the claim of hardship to which I have referred. In support of this claim the applicant filed, as he was entitled to do, affidavits sworn severally late last year and this month, by the applicant, his 17 year old son, his wife, his mother-in-law and his solicitor, who exhibited a letter of 19 December 2006 from a surgeon, Mr Michael Fink, as to the state of health of the applicant’s wife. Counsel also tendered a report dated 17 December 2006 from Suzanne Thompson, a Catholic chaplain at the prison.
More particularly, the material shows that the applicant’s son is a very good student and is about to commence Year 12 which it may be accepted is the, or one of the, most difficult periods for any young student. It is apparent from his affidavit that, unsurprisingly, he relied to considerable extent on the help and guidance from his father in his studies, and in life generally, and that the applicant had given him practical support throughout his young years, as well as to the household. Such assistance and friendship will not be available to him during the forthcoming year when he would have particularly relied on it. The material also makes plain that late last year the applicant’s wife was diagnosed as suffering from cancer of the gall bladder and bile ducts. The operation that was performed on 5 December 2006 resulted in a good early recovery. Mr Fink expects that she will soon commence chemotherapy in addition to other treatment in relation to her problems. He said that, although it is difficult to be certain about Mrs Nagul’s prognosis, her five year survival expectation is in the order of 30 to 40 per cent. Mr Fink also said that it is important that Mrs Nagul have the maximum family and social support over the period of her recovery from her operation and chemotherapy, which will probably be in the order of six months.
Needless to say this illness has added considerably to the stress and difficulty that Mrs Nagul and the applicant’s son face in coming to terms with his imprisonment. The son says that this causes him constant depressive feelings and emotional pain. Obviously enough, from an economic, social and emotional point of view for the Nagul family, the applicant’s absence is causing great difficulties for its members. Included in the concerns is the fear of losing the family home. It may also be accepted that these circumstances imposed yet another moral burden on the applicant. The report of Ms Thompson makes it apparent that she had regular contact with the applicant over several months while he has been in prison. She is generally aware of the family’s situation that I have described and confirms the applicant’s love for his family and the concern and pain that he feels for them. Ms Thompson makes the point that the applicant’s family is a small, close and rather private unit without a large support base.
Mr Croucher urged the Court to take this material into account in the sentencing disposition, not so much because it amounted to "exceptional circumstances" that might warrant its consideration in the ordinary way, but rather in the exercise of mercy, a discretion that was always open to be exercised in the appropriate case. Counsel submitted that the material warrants the Court exercising mercy in respect of the head sentence and the non-parole period.
Mr Hillman, on the other hand, submitted that the offending here was undertaken in aggravating circumstances, such that the hardship relied on by the applicant should not affect the head sentence or the non-parole period as imposed by the sentencing judge, but, if it were to be taken into account in an exercise of this Court’s discretion to extend mercy, it should only go to the question of the length of the non-parole period.
It is plain enough I think that the offences of obtaining a financial advantage by deception and theft are serious offences, as is made plain by the maximum custodial sentence of ten years that has been prescribed in relation to them by Parliament. As the learned sentencing judge noted, the maximum sentence in relation to the offence of obtaining a financial advantage by deception was doubled in 1992. In most instances this offence produces a flow-on effect on the community that is significantly detrimental. It calls, for example, for expenditure of considerable funds on systems and methods aimed at preventing fraud, increases the cost of insurance premiums and the like and, in many instances, it compels the undertaking of costly and time consuming investigations into the fraud. Moreover, it is very often very difficult to detect.
That the offending here was of a most serious kind also cannot be doubted, I think. It involved, amongst other aggravating circumstances, a gross breach of the trust that the applicant had enjoyed as a very senior officer of the company. It also involved, over a period of over seven years, a considerable amount of planning and exploitation by him of his knowledge of the financial system and records of his company to facilitate the perpetration and the disguising of his fraud. He effectively stole not only from the company but also from a fellow employee and he lied and otherwise deceived the company’s representatives. When the offending was discovered the applicant continued to lie to the company’s officers about the transactions, insisting falsely that money was coming from the United States to repay what he had taken. Moreover, he sought to put the responsibility for the impugned transactions on fellow employees such as Hammond and Marshall. There is little doubt that the applicant’s primary, if not the sole, motivation for the conduct was greed, or at least financial gain. It is also plain that the principles of general deterrence and denunciation assume considerable importance in the sentencing disposition in this case.
It may be accepted that the applicant worked in a context where very considerable monetary rewards were the norm and there was only “loose” control as to how such benefits were made available to select employees. Nevertheless, putting to one side hardship, the mitigating circumstances on which the applicant relies, although obviously of importance, are, in my view, not very compelling. Nevertheless, primary amongst them is I think the applicant’s sound prospects of rehabilitation as the learned sentencing Judge properly noted in his sentencing remarks. It is also of some relevance that special deterrence is not of great significance in this case. But as Charles JA pointed out in DPP v. Bulfin[8] it will nearly always be the case that in significant white collar crimes, given the discovery of the offending and the lack of opportunity of repeating it, means that it is unlikely that there will be a re-offending. Nevertheless, as His Honour accepted in that case, the rehabilitation of such an offender and the likelihood that he or she will not re-offend are material considerations for sentencing purposes.
[8][1998] 4 VR 114 at 131.
As to the hardship material on which the applicant relies, it is plain enough, I think, that in almost every case the imprisonment of the offender imposes some hardship on others and, as Charles JA notes in Bulfin,[9] typically wreaks havoc on family members. Thus, the courts have effectively said that, other than in exceptional circumstances, hardship to family members of the imprisoned offender by reason of the incarceration is not a factor relevant to the sentencing disposition.[10] As Gleeson CJ explained,[11] “[t]here is nothing unusual about a situation in which the sentencing of an offender to a term of imprisonment would impose hardship upon some other person.” It has been said that exceptional circumstances might exist where, in effect, it would be “inhumane” to refuse to take the relevant hardship into account[12] and, although hardship on an offender’s children does not of itself constitute exceptional circumstances, it may be said to be present where, for example, the imprisonment of the offender leaves the children without parental care.[13] Even in such cases, however, special circumstances will not readily be found, as is apparent from R v. Carmody[14] and R v. Thai[15] in which both parents had been imprisoned and where the offenders’ children showed a marked adverse reaction to that situation. Similarly, in Holland this Court considered that the hardship to the applicant’s seven and a half year old daughter arising from her being left in the care of the grandparents while the applicant and the father served a sentence of imprisonment,[16] did not require the sentencing judge to find that the circumstances were exceptional for sentencing purposes.
[9]At 131.
[10]See R v. Boyle (1987) 34 A Crim R 202, R v. Yates (1997) 99 A Crim R 483 at 486-487 per Charles JA, R v. Carmody (1998) 100 A Crim R 41 at 45 per Tadgell JA, R v. Maslen (1995) 79 A Crim R 199 at 209 per Hunt CJ and R v. Holland (2002) 134 A Crim R 451 at 452 per Batt JA, 454 per Eames JA and 457 per O’Bryan AJA.
[11]R v. Edwards (1996) 90 A Crim R 510 at 515.
[12]R v. Wirth (1976) 14 SASR 291 at 295-296 per Wells J, approved in Boyle (1987) 34 A Crim R 202, R v. T (1990) 47 A Crim R 29 and R v. Adami (1989) 51 SASR 229 as cited in Holland.
[13]See Yates at 486 per Charles JA and the cases there cited. See also Holland at [31] per O’Bryan AJA and R v. Stewart (1994) 72 A Crim R 17 at 21 per Franklyn J there cited. Cf Carmody, a case that did not constitute “special circumstances” despite the child’s adverse reaction to his mother’s imprisonment in circumstances where both parents were imprisoned.
[14](1998) 100 A Crim R 41.
[15][2005] VSCA 283.
[16]The applicant was to serve nine months.
But as I have noted, Mr Croucher did not seek to claim that the hardship material in this case demonstrates the presence of "exceptional circumstances". Nevertheless, where hardship to the offender’s family cannot be taken into account for sentencing purposes because of absence of exceptional circumstances, it may be taken into consideration in determining whether mercy should be extended to the offender,[17] the exercise of mercy being part of the exercise of the sentencing discretion.[18] As King CJ said in R v. Osenkowski[19] in an oft cited passage cautioning against the circumscription of the sentencing discretion by Crown appeals, “[t]here must always be a place for the exercise of mercy where a judge’s sympathies are reasonably excited by the circumstances of the case”. Its application may arise where, for example, hardship to the family, or the family circumstances, make the imprisonment of the offender more onerous than would otherwise be the case. But, as will be seen, in the appropriate case mercy may also be extended effectively to the family member who suffers significant hardship because of the offender’s incarceration; or mercy may be extended where both factors are present, namely to the offender and family members. In R v. Nguyen,[20] for example, considerations that included the ill health of the offender’s wife and his concern as to its effects on their children for whom she was increasingly incapable of caring, the deterioration in his own mental health and, generally, the greater burden imposed on the offender by his imprisonment motivated the Court to invoke considerations of mercy in reducing the non-parole period. Similarly in R v. Dooley,[21] the applicant’s dependent wife suffered from schizophrenia, and probably also from post partum depression, and, since the appellant’s incarceration, had been admitted a number of times as an involuntary patient at a mental institution, compelling the appellant’s parents to look after the chid. In re-sentencing the appellant, the Court seems to have extended mercy[22] to him on grounds that included his sincere efforts at rehabilitation and the “additional burden of custody as a consequence of the plight of [his] family”.
[17]As was the case in both Carmody and Thai.
[18]R v. Miceli [1998] 4 VR 588 at 592 per Tadgell JA and at 594 per Charles JA. See also R v. Osenkowski (1982) 30 SASR 21; DPP v. Carteri [1998] 1 VR 601.
[19](1982) 30 SASR 212. See also Holland at 453-4 per Eames JA.
[20][2006] VSCA 184.
[21][2006] VSCA 269.
[22]At [15].
Consistently with the proposition that dispensation of mercy is part of the exercise of the sentencing discretion, it seems that considerations of mercy may operate both at the level of the fixing of the head sentence and of the non-parole period or, at least, the former is not precluded. In Miceli, for example, both the head sentence and non-parole period were reduced (the head sentence from two years to 18 months and the non-parole period from six to three months). In Nguyen and Carmody, on the other hand, only the non-parole period was reduced. In Carmody, that course is readily explained in the judgment of Tadgell JA. More particularly, although His Honour shortened the non-parole period explicitly “on the sole ground that some mercy was warranted”, he otherwise considered the sentence passed below to be “unexceptional”, and the mercy that was extended in that case was, as his Honour said,[23] effectively to the offender’s young child, notwithstanding that his Honour had explicitly rejected that "special circumstances" had been shown such as to take hardship to the child into account in the ordinary course of the sentencing disposition.
[23]At 45.
In the present case, I am of the view that the circumstances of hardship do not warrant the exercise of mercy such as to reduce the period of the head sentence that would otherwise be appropriate. I consider that the aggravating circumstances of the offending and the applicable sentencing principles are such as to leave no room for the proper exercise of mercy in that regard. In particular, I think that the importance of the operation of the principle of general deterrence and the need for the Court to express denunciation of the offending conduct requires the imposition of a head sentence in respect of each count, and a total effective sentence, that properly reflects the gravity of the offending, obviously in the context of the mitigating circumstances. It is impossible not to sympathise with the applicant’s family and recognise the hardship that they will bear because of his imprisonment, but in all the circumstances, as I have said, I consider that this does not justify the exercise of discretion to extend mercy in relation to the head sentence. It is important to bear in mind in this context the caution sounded by Callaway JA in Carmody,[24] namely that the sentencing judge will be failing in his or her duty of proper sentencing considerations where overwhelmed by an emotional response to the hardship that a sentence would impose upon the family of the offender. Similarly the exercise of mercy should not undermine the general principle that, save for exceptional circumstances, hardship to family members by reason of the offender’s imprisonment is not a relevant consideration for sentencing purposes.
[24]At 46-47.
In the circumstances I would impose a total effective sentence of six years' imprisonment, calculated as shown below, on the basis that the sentence imposed on Count 10 is the base sentence. Before dealing with each count, I should explain that I have sought to sentence the applicant in accordance with the principles stated by Ormiston JA (with whom Winneke P and Hedigan AJA agreed) in DPP v. Grabovac[25] in which his Honour recognised that in multiple offence cases “[t]he ordinary principles as to cumulation require that the sentencing judge should as far as practicable identify separate events, ‘episodes’ or ‘transactions’ giving rise to specific counts or groups of counts and to recognise them by ordering at least a degree of cumulation”. His Honour went on to say that the difficulties in sentencing for multiple offences arise not so much from providing for a degree of cumulation, but in having proper regard to the principles of totality and in avoiding the imposition of an inappropriately crushing sentence. A little later in his reasons his Honour said:[26]
“In general a court should avoid imposing artificially inadequate sentences in order to accommodate the rules relating to cumulation. … [I]t is preferably to achieve a satisfactory result by passing appropriate individual sentences, and to make those sentences wholly or partially concurrent, rather than by an order or orders for the cumulation of unnecessarily reduced individual sentences. Nevertheless a rule of this kind can only be a precept or guideline to be applied as and when practicable. In particular, though concurrency is to be preferred, a degree of cumulation ought to be ordered where sentences represent separate episodes or transactions which ought to be recognised, though at all times avoiding an imposition of a ‘crushing’ sentence.”
[25][1998] 1 VR 664 at 676. See also Johnson v. R (2004) 205 ALR 346.
[26]At 680.
Thus, in structuring the proposed sentences, I have sought to impose what I consider to be appropriate individual sentences and to make them cumulative or effectively concurrent such as to avoid the imposition of an inappropriately crushing sentence, while at the same time seeking to reflect by way of the total effective sentence, the applicant’s total criminality.[27] In the result, I propose that a total effective sentence of six years’ imprisonment be imposed. In my view, as I have said, each proposed sentence is appropriate to the relevant count and the total effective sentence properly reflects the overall criminality of the offending conduct.
[27]Mill v. The Queen (1988) 166 CLR 59 at 63 per Wilson, Deane, Dawson, Toohey and Gaudron JJ and R v. Coukoulis (2003) 7 VR 45 at 57 per Ormiston JA.
Turning to the individual counts, in respect of each of counts 1, 2 and 3, I would impose a sentence of 15 months’ imprisonment and cumulate three months of it.
I consider the offence disclosed by count 10 to be a very serious offence, involving as it did the Anthonisz cheque. Consequently I would impose a base sentence of two years and six months’ imprisonment. For like reasons I think that the offences in counts 11 and 12 are also serious and I would impose in respect of each a sentence of 15 months’ imprisonment and cumulate three months of that period.
In respect of each of counts 15 and 16 – purported payment of the applicant’s advance account – I would impose a term of imprisonment of 12 months and cumulate two months of that period.
In my view the applicant’s appropriation of the cheque in respect of the Hammond estate was also a very serious offence so that on count 18 I would impose a sentence of 18 months’ imprisonment and cumulate four months of it.
In respect of each of counts 19, 21 and 23-33 that relate to the applicant’s dishonoured cheques given in purported payment of his home loan , I would impose 12 months’ imprisonment in respect of each count. But because those 13 cheques in respect of which he was found guilty relate to a relatively short period of one month, and could be said to be an “episode” as described by Ormiston JA in Grabovac,[28] I would order that six months of those sentences be cumulated, and cumulate that period from the sentence imposed on Count 27.
[28]At 676.
Counts 34 and 37 are also related to the purported repayment of the applicant’s home loan with cheques that were dishonoured. In respect of each of them, I would impose a term of imprisonment of 12 months and cumulate two months of that period.
Counts 35 and 36 were concerned with the applicant seeking to “regularise” the Anthonisz loan. In respect of each of those counts I would impose a sentence of 15 months’ imprisonment and cumulate three months of that period.
Count 39 involved the Mercer cheque and, for the reasons given, the offence was, in my view, a serious one that warrants a sentence of 15 months’ imprisonment and I would cumulate three months of that period.
Turning now to the non-parole period, it is plain enough that the factors that were taken into account in fixing the head sentence may be differently weighted in the context of determining the non-parole period. Thus, as Charles JA said in Bulfin,[29] particularly good prospects of rehabilitation may justify a shorter than usual non-parole period, which is, after all, the minimum period that justice requires the applicant to serve having regard to all the relevant circumstances before becoming eligible for parole.[30] But it must also be borne in mind that a non-parole period has a penal element and that general deterrence should not be undermined by an unduly short non-parole period.[31]
[29]At 130. See also R v. VZ (2001) 7 VR 693 at 698 per Callaway JA.
[30]See Bugmy v. The Queen (1990) 169 CLR 525 and 538 per Dawson, Toohey and Gaudron JJ and R v. Cardona [1998] 2 VR 126 at 135 per Batt JA.
[31]R v. Brazel [2005] VSCA 56 at [24] per Callaway JA. See also Bulfin at 138 per Charles JA.
I would impose a non-parole period of three years, which is lower than usual, but I would do so principally because of the applicant’s very sound prospects of rehabilitation, it being in the interests of the community that the applicant continues his rehabilitation under conditional supervision,[32] and also because I think it is appropriate to extend some mercy to the applicant having regard particularly to the fact that his knowledge that his wife is very ill and requires his support, which he is unable to provide to her, must bear on his conscience and to that extent increase the burden of imprisonment. It is true that notwithstanding the lower non-parole period the applicant will not be able to give his wife the support he would otherwise have given her during her treatment. Nevertheless, the realisation that he has a sound prospect of being released on parole one year earlier than would otherwise have been the case is very likely, I think, to lessen the burden of the applicant’s imprisonment insofar as it applies to him and is also likely, I think, to ease the burden borne by his wife, as well as his son.
[32]See R v. Mulvale, Unreported, Court of Appeal, 20 February 1996 per Winneke P at 11.
For these reasons, I would sentence the applicant as I have proposed, such as to impose a total effective sentence of six years imprisonment with a non-parole period of three years.
MAXWELL P: I agree.
HABERSBERGER AJA: I agree.
MAXWELL P: The orders of the Court are as follows:
1.The application for leave to appeal against sentence is granted.
2.The appeal is treated as instituted and heard instanter and is allowed.
3.The sentences below are quashed and in lieu thereof the appellant is sentenced to the following terms of imprisonment:
Count 1 – 15 months
Count 2 – 15 months
Count 3 – 15 months
Count 10 – 2 years and 6 months
Count 11 – 15 months
Count 12 – 15 months
Count 15 – 12 months
Count 16 – 12 months
Count 18 – 18 months
Count 19 – 12 months
Count 21 – 12 months
Count 23 – 12 months
Count 24 – 12 months
Count 25 – 12 months
Count 26 – 12 months
Count 27 – 12 months
Count 28 – 12 months
Count 29 – 12 months
Count 30 – 12 months
Count 31 – 12 months
Count 32 – 12 months
Count 33 – 12 months
Count 34 – 12 months
Count 35 – 15 months
Count 36 – 15 months
Count 37 – 12 months
Count 39 – 15 months
4.The Court directs that three months of the sentences imposed on each of Counts 1 to 3, 11, 12, 35, 36 and 39, two months of the sentences imposed on each of Counts 15, 16, 34 and 37, four months of the sentence imposed on Count 18 and six months of the sentence imposed on Count 27 be served cumulatively upon each other and upon the sentence imposed on Count 10, making a total effective sentence of six years imprisonment.
5. A non-parole period of three years is fixed.
It is declared that the period of 399 days is reckoned as already served under the sentence and it is ordered that there be noted in the records of the Court the fact that that declaration was made and its details.
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