R v Robin Anthony Flack; R v Kenneth James Grindrod
[2009] NSWDC 94
•19 May 2009
CITATION: R v Robin Anthony Flack; R v Kenneth James Grindrod [2009] NSWDC 94 HEARING DATE(S): 16/02/2009 - 27/02/2009
JUDGMENT DATE:
19 May 2009JURISDICTION: Criminal JUDGMENT OF: Knox SC DCJ DECISION: Each offender is sentenced to 2 and ½ years imprisonment to be served by way of a non-parole period of 18 months imprisonment on each count to be served concurrently. CATCHWORDS: CRIMINAL - sentence - obtain money by deception - vehicle finance - representations as to engine numbers, chassis numbers, and vehicle identification numbers - vehicles did not exist - pre-finance agreements - co-offenders - course of dealing - application of monies other than to the construction of vehicles LEGISLATION CITED: Crimes Act 1900
Crimes (Sentencing Procedure) Act 1999CASES CITED: R v Corbett (1991) 52 A Crim R 112
R v Doherty (1991) NSWCCA
R v Hawker [2001] NSWCCA 148
R v Hawkins (1989) 45 A Crim R 430
Marks v R [2009] NSWCCA 24
R v Martin [2005] NSWCCA 190
McDonald v R [1994] FCA 959
R v Mears (unreported, NSWCCA, 14/03/91)
Mitchell v R [2006] NSWCCA 72
R v Mungomery (2004) 151 A Crim R 376
R v Pantano (1990) 49 A Crim R 328
R v Phelan (1993) 66 A Crim R 446
R v Swadling [2004] NSWCCA 421
R v Todorovic [2008] NSWCCA 49
R v Woodman [2001] NSWCCA 310
R v Wright [2009] NSWCCA 3PARTIES: Regina
Robin Anthony Flack
Kenneth James GrindrodFILE NUMBER(S): 08/11/0344; 08/11/0366 COUNSEL: Crown: Ms J Cash
Defence (for Mr Flack): Mr B Murray
Defence (for Mr Grindrod): Ms D Hawkins
JUDGMENT
Indictment and trial
1 The offenders, Robin Flack and Kenneth Grindrod, were found guilty after a trial before a jury at the District Court in Sydney on five counts on a joint indictment. The counts were bought pursuant to section 178BA of the Crimes Act 1900. The maximum penalty for each offence is 5 years imprisonment. There is no standard non-parole period established for these offences.
Offences
2 The particulars for each count were substantially the same. The offences all occurred within a three/four month period between January and April 2003. The offences involved false representations about various identification numbers for buses. Those numbers were obtained by the offenders using their knowledge of the vehicle financing industry and the systems of the entity, Willowstar Pty Ltd. (‘Willowstar’), by whom the buses were to be constructed. The buses were never constructed. No evidence has been adduced to show they existed.
3 As a result of those representations, the offenders obtained a financial advantage for Willowstar in each of the five counts on the indictment for amounts ranging from $297,000 to $394,000. In turn, Willowstar, through its officers, directed those payments, less a deposit, to a company of which the offender, Flack was a director, with which Grindrod was associated. Grindrod received a commission based on each of the transactions.
4 The amounts alleged in forensic accounting evidence was given in the trial by Mr John Fogarty, a Fraud Squad officer, showed that the offenders received benefits of the order of $1,544,000. The amount repaid was $512,787, which is approximately 30%.
Conduct of proceedings
5 The offences occurred in 2003. The offenders were arrested and charged in July 2007.
6 The trial took place between 16 and 27 February 2009. The verdict was delivered on 27 February 2009.
Background and findings of fact
7 Consistent with the jury’s verdict, I make the following findings of fact:
In mid 2002, Grindrod spoke to the Director of Australian Autobus about building buses for four bus chassis he was importing from the United States from the Bluebird company. In late 2002, Grindrod told two Australian Autobus employees including its general manager, Ron King, that the Bluebird chassis would be arriving around the end of February 2003. He also said that he was considering purchasing six chassis. He asked that Australian Autobus build the bus bodies for them.
Prior dealings
8 Australian Autobus had built buses for the offenders prior to these offences.
9 As a result of that prior association, the officers of Australian Autobus knew the offenders and the offenders knew the systems of Australian Autobus. There had been some difficulties relating to that prior arrangement.
Need for finance
10 In late 2002, King contacted Grindrod and told him that he was going to need pre-approved finance, a $10,000 deposit for each bus, and a 50 per cent payment four weeks from the job being started. These arrangements were re-stated in a letter from King to Grindrod at Coach Distributors dated 18 November 2002 confirming the verbal agreement. Grindrod responded to King in letters dated 18 November 2002 and 15 January 2003.
Representation
11 The offenders falsely represented to five financial institutions that five buses with particular engine numbers and particular chassis and engine numbers existed. At no stage did the buses exist and the details of the buses as stated by the offenders to the financial institutions were fictional. The offenders knew the falsity of both those matters.
12 The offenders gave Mr Ron King the false chassis and engine numbers. Although precisely who, or which entity gave, those numbers is unclear, I am satisfied that both knew those numbers were going to be provided to Mr King. He was asked to incorporate those details into an invoice that could be forwarded to the various financial institutions. Mr King had no dealings with any of the financial institutions or insurances companies other than to forward the invoices and banking details to them
Other documentation
13 The offenders arranged Australian Insurances Services to issue a Certificate of Currency in relation to each of the buses to be forwarded to the various financial institutions. This was done on the basis that the buses existed. The financial institutions entered into the hire purchase agreements with the two offenders and funds were electronically credited into the account of Australian Autobus.
Credit: allegations of forgery
14 The Crown further submits in relation to count 3 that the signature of the witness Patrick Frances O’Dea on the Hire Purchase Agreement was a forgery and that also must have been perpetrated by the offenders.
15 While I do not think the evidence supports any finding of forgery – and neither offender was so charged - I accept that the signature was not signed by Mr O’Dea. That document containing that forged signature was part of the documentation either prepared or relied on by the offenders.
Payments
16 At the request of Mr Grindrod, Ron King of Australian Autobus transferred that money out of the Australian Autobus account and into the account of 3F Pty Ltd. The sole director of 3F Pty Ltd at that time was Mr Flack. Mr Grindrod had been a director of that company.
Impact of representation
17 Evidence was given at the trial by officers from each of the financial institutions involved that none of the funds would have been advanced had it not been for the documentation advanced by the offenders – obviously with the false details which had been inserted.
Dealings with associated entities
18 The offenders each worked in the bus and coach business over many years. Flack was the sole director of Bathurst Coaches Pty Ltd, which is named as the hirer of the goods on the five hire purchase agreements. Flack and Grindrod were also directors of Coach Distributors Pty Ltd and Busco Investments Pty Ltd.
Repayments and restitution
19 The total amount obtained was $1,544,400 between 4 February and 3 April 2003. The offenders made repayments every month pursuant to the loan agreements. The offenders repaid $512,787 primarily from the monies advanced and smaller amounts subsequently. $1,031,612 is still outstanding, or $1,091,459 including interest.
20 Affidavits and statements were received from the financial institutions involved. These show:
Financial institution Amount advanced Amount outstanding BankWest $279,400 $118,337.16 Bank of Queensland $286,000 $140,298.63 Capital Finance $289,300 $240,757.93 Orix (count 4) $294,800 $249,962.9 Orix (count 5) $394,900 $342,102.64
Evidence on sentencing proceedings
Offenders’ evidence
21 Neither offender gave evidence in the trial. The offenders gave evidence on the sentence proceedings. Mr Grindrod’s wife and daughter also gave evidence.
Mr Flack
22 Mr Flack gave evidence as to the prior financial arrangements including Autobus’ request that pre-finance arrangements be put in place. The monies received were spent on business expenses and to finance vehicles from America. He said that he and Grindrod paid an establishment fee for those proposals to Equilinx. Equilinx was a Queensland institution that specialised in large loans. No documentation was advanced in evidence to corroborate the establishment of the loan to Equilinx, nor any documents relating to any history of negotiations nor the payment of the fee for the proposed arrangement. Mr Flack had made no efforts to obtain such evidence.
23 Mr Flack said he was not personally in financial difficulty in 2003 nor were at least two of the relevant companies in which he was involved. He intended to purchase a bus company in Queensland and to run that company using old vehicles from Bathurst and operate them in Queensland. That plan did not eventuate. The money advanced was not used for the purposes specified.
24 Neither Mr Flack nor the associated companies had paid for the Bluebird chassis previously forwarded. He was clearly hoping the proposed finance from Equilinx would be forthcoming. It was not. He did not seek to notify Autobus nor the financial institutions of that or any consequential problems – at any stage.
25 Mr Flack was cross-examined about where the vehicle identification and chassis numbers used in the documentation to the various institutions had come from. He maintains still that all those numbers were appropriate. No evidence was advanced either at the trial or on sentence to support that assertion which clearly went to the heart of the whole prosecution. He said as far as he knew those records had been forwarded to the relevant liquidators and then destroyed. No independent evidence was advanced to support that assertion.
26 In cross-examination, Mr Flack agreed that there were no payments made by him after 2004. He was made bankrupt on the application of Orix and the ATO in March 2005. From June 2004 he was subject to various restraining orders as to the disposal of monies. Mr Flack’s net fortnightly pay is about $700. He proposed to pay $500 per month towards the outstanding debt. That proposal was made following an inquiry as to the level of restitution after the jury’s verdict. No such arrangements were entered into nor any proposals for restitution made in the three month period which followed the jury’s verdict.
27 The evidence in the trial was to the contrary, particularly from Mr O’Dea. When confronted by Mr Brown of Orix as to where the buses were, Flack was notably unspecific. What is of concern is that he has apparently maintained a degree of self-justification about his position. He maintained to Mr Smith that the money was to be transferred to Australian Autobus on the importation of the buses and later for building the buses to completion. No documentary or other corroborative evidence was ever advanced to support that proposition. Mr Flack continues to deny that his actions were illegal.
28 Flack denied that he used the monies advanced to repay some of the debt. He said those monies used for repayments came from other sources, the details of which are unclear. The money advanced was used for the expenses of the business of which he was the director. He maintained that he did not realise his actions were illegal at that time.
Mr Grindrod
29 Mr Grindrod was a business partner of Flack for many years. Mr Grindrod stressed at some length that Mr Flack was responsible for the financing arrangements. He regarded himself as purely a salesman and trusted Flack with all financial matters.
30 Mr Grindrod gave evidence that the vehicle identification and chassis numbers were made up by Coach Distributors. He did not recall the pre-finance deal but maintained that was what was involved. Again he did not produce any evidence to support that proposition.
31 Mr Grindrod said he was not in control of the finance of any of the companies including Bathurst Coaches. None of the finance agreements were in his name but he guaranteed those agreements. While he did not specifically seek to ascribe blame to the co-offender Flack, he said that all the money went into the 3F Pty Ltd accounts – a company of which he had formerly been a director. He resigned from 3F Pty Ltd in 1996. Mr Grindrod said that Flack used the money to prop up Bathurst Coaches without his knowledge. He denied he received any benefit from 3F Pty Ltd. He received the brokerage fee on the sales of those (non-existent) buses.
32 He agreed that he provided the engine numbers and instructed Mr King on the preparation of the invoices but still denied they were false. He said, “the buses were to come.” He maintains the distinction between the partnership and Bathurst Coaches. He believed he was not doing anything wrong.
Submissions
33 Following that evidence it was submitted on behalf of each offender that there were no false representations and that the arrangements were legitimate pre-finance agreements. Furthermore, counsel for Flack submits that a pre-finance arrangement would not be inconsistent with the jury’s verdict. The Crown submitted that a pre-finance agreement is inconsistent with the false representations made by the offenders that the buses existed that caused the financial institutions to enter into the hire purchase agreements.
34 I would not make that finding on the basis of either the verdict or the evidence at the trial or at the sentencing proceedings. The findings of a false representation on each count clearly indicate an acceptance by the jury of the dishonesty of the arrangements and the falsity of the representations that the buses existed. There is no satisfactory evidence as far as I can see that the specified buses ever existed. The offenders also supplied Mr King with false chassis and engine numbers, which they knew to be false. The offenders made the false representations to get the financial institutions to accept the details that, again, they knew to be false.
35 The forensic accounting evidence of Mr Fogarty of the NSW Fraud Squad set out how the monies received through the various accounts of 3F Pty Ltd were advanced and applied. None of the monies were used for the construction of buses. No evidence was ever advanced by the offenders either at the trial or at the sentencing proceedings to refute that analysis.
Pre-sentence report - Mr Grindrod
36 A pre-sentence report dated 4 May 2009 was tendered on behalf of Mr Grindrod. It provides that the offender lives with his wife of 43 years and has two adult children. He says he would not survive the prospect of separation from his wife and family. He is aged 64 years. The offender has responsibility for two family members aged 16 and 15 years who had previously been under the care of the Department of Community Services. The dependants under the care of the offender and his wife are advancing well. He presented to the author of the report as a hard-working family man who made an error in judgment.
37 Mr Grindrod was in the motor vehicle industry from the age of 14. Following the offences and liquidation of the business in 2003, he sold his two properties and all of his possessions. He currently operates a hire car business set up by his wife 10 years ago. Although his evidence is that he works 120 hours per week seven days per week, he does not draw a wage from that business. His wife receives the family assistance benefit.
38 The offender admits that his actions were “stupid.” He admits that he was not in financial difficulties at the time of the offences. The offender has no drug, alcohol, or gambling problems. He suffers from psoriasis, hypertension, and atrial fibrillation for which he is medicated. He is not medicated for any mental illness.
Pre-sentence report – Mr Flack
39 A pre-sentence report dated 4 May 2009 was tendered on behalf of Mr Flack. He is aged 62. He was born in England and migrated to Australia in 1979. He has a postgraduate qualification in industrial management, and certificates in transport management and statutory compliance. Between 1979 and 1991 he worked as a finance broker and has been in the transport industry since 1995. He has worked for the government since 2005 where he has apparently been promoted to the Australian Tax Office compliance section.
40 The offender stated that he did not intend to defraud anyone and that his actions were not for personal gain but to keep the business going. He used the loans as cash flow to prop up the business and pay off the debts. He says that the business difficulties were “overwhelming.”
Psychologist’s report – Mr Flack
41 A report of psychologist Terry Smith dated 27 April 2009 was tendered on behalf of Mr Flack. It stated that Mr Flack has a Masters degree in Accounting, has worked in auditing, and had been heavily involved with banks and the financing of buses after arriving in Australia in 1989.
42 The account given to the psychologist by Mr Flack was that the loan money was used for operating costs. He had a $25 million line of credit from Equilinx through the ANZ Bank and states that: “it was always about cash flow … I used the loan money as cash flow and the purchase of the six buses would have been taken from the Equilinx loan.” He said that in April 2003, the line of credit broke down and that he spent the rest of the year trying to organise the building of the buses. Bluebird then failed to deliver the chasses. The offender claimed that four were delivered later in the year and that the contract with Australian Autobus was valid.
43 The reality is that those buses, if they existed, were never delivered. Further, that even when the apparent difficulties about the importation of the Bluebird chasses became apparent, no attempt was made to discuss that with any of the financial institutions which had advanced monies based on the existence of those buses nor, indeed, Willowstar. It was left to those institutions to discover that fact and to raise it with the offenders. The evidence of Mr Brown from Orix about his meeting with Mr Flack was particularly evocative in that respect.
44 Mr Flack said that there were a number of stressors in his life at the time of the offences. His mother was placed in a nursing home in November 2002. He had extremely difficult negotiations with QANTAS over a three-month period. There were problems with several buses in Cowra, and he had the usual demands of organising buses for the start of the school year.
45 Mr Flack stated that he was not concerned about his actions prior to his arrest as he had been declared bankrupt in May 2005 and had worked closely with the liquidators until they had made a ‘null finding’ at the end of 2006. He said to Mr Smith that:
“Orix saw it as a civil matter … I ordered six buses, four of which eventually arrived and I presumed the other two were in production … everything was okay until the loan from Equilinx fell through … the UK mother company of Bluebird wanted to liquidate Bluebird and so wanted the pre-payment of the vehicles before it liquidated the company and that would have left me to repay the loan and not get the motors and chassis … in retrospect I acknowledge what I did was to use the money for consolidated revenue and I was raising the loan to buy the buses … this is the way business is conducted and I don’t believe my actions were illegal because my intention was always to complete the process of buying six buses … I completely deny having the intention to order the buses without the intention to build them.”
46 No documentation was ever advanced to support the details of that assertion.
47 Mr Flack further stated that: “I acknowledge my actions but do not believe that they were illegal because all along my actions were designed to buy the buses … my deep regret is that finance companies lost their money, that reputations were destroyed, and that working people lost their jobs.”
48 The offender was bankrupt for three years. He said that he has lost all his savings (approximately $70,000) defending these charges - including his wife’s superannuation. No evidence was advanced to support that submission. It is unclear to me where his earnings from his current job are applied.
Psychologist’s report – Mr Grindrod
49 A psychologist’s report from Anita Duffy was tendered in relation to Mr Grindrod. It set out that he worked for Jaguar until the age of 40 before moving into the finance industry. He started his own business in 1981 and ran it for 12 years before starting a business, Busco Finance, with Flack in 1992.
50 In 1999, Flack purchased Bathurst Coaches. Grindrod continued to operate Busco while Flack focused primarily on Bathurst Coaches. At the time Mr Grindrod was operating Busco Finance, it was one of Australia’s biggest bus finance brokers and he was one of the most respected brokers.
51 In 2003, Grindrod raised invoices to purchase buses for Bathurst Coaches. Grindrod alleges that the money raised was used by Flack to prop up Bathurst Coaches without his (Grindrod’s) knowledge. Busco was the guarantor for the loans of Bathurst Coaches. When Bathurst Coaches went into receivership in 2003, Busco and Mr Grindrod had to declare voluntary bankruptcy. Grindrod sold his Kiama property to pay the guarantee.
Medical issues – Mr Grindrod
52 The report also states that Grindrod currently has extremely severe anxiety and severe depression. Medical reports were tendered for Grindrod as follows:
53 Dr Cronin, dermatologist, stated that the offender has psoriasis indicated by inflamed legions on various parts of his body. This condition is aggravated by stress. Dr McNeil, urologist, stated that the offender has a urinary tract problem but that is not an urgent medical problem. Dr Rogers, cardiologist, said that the offender has a permanently irregular heartbeat with minimal symptoms, mild hypertension, and is considerably overweight. His medication from all these complaints is set out. There is no evidence that those matters cannot be attended to, or provided for, in a custodial setting.
54 Despite all these health issues, Mr Grindrod has been able to continue to work long hours – about 120 hours per week, seven days per week – on an unpaid basis in his wife’s car business.
Aggravating/Mitigating factors: s21A Crimes (Sentencing Procedure) Act
Aggravating factors
Planning and premeditation
55 The Crown submits that the offences were premeditated and committed on five separate occasions. The offences involved a degree of planning and were not impulsive. The criminality leads back to invoices prepared by King on the instructions primarily of Grindrod and insurance notes prepared by Flack. There had already been prior finance obtained for buses and accountants had already prepared the profit and loss statements.
(g) the loss caused by the offence was substantial.
There can be no issue of that.
(o) the offences were committed for financial gain.
56 In my view, that is a matter that is implicit in the charges themselves and should not be regarded as an aggravating factor.
Mitigating factors
57 The following factors have been established on the evidence.
(e) the offenders do not have any record of previous convictions;
(f) the offenders were persons of good character;
(g) the offenders are unlikely to re-offend;
(h) the offenders have good prospects of rehabilitation including by reason of their age.
Remorse
58 Counsel submit that remorse has been expressed by both offenders and should be taken into account by way of mitigation. Remorse is a factor in mitigation but only if:
(i) the offender has provided evidence that he accepted responsibility for his actions, and;
(ii) the offender has acknowledged any loss caused by his actions and/or made reparation for the loss.
59 The Crown submits that neither offender has met either of these conditions. Counsel for Grindrod submits that the offender has acknowledged the financial loss through reparation of monies to Capital Finance amounting to $36,011, which was obtained through the sale of a retirement unit. That was clearly done to discharge a caveat on that property prior to settlement.
60 In my view what evidence there is of remorse is qualified. Such evidence as there is has been given in the face of the sentencing proceedings and comes against the background of the trial where all matters were strongly contested.
Character
61 Both offenders were persons of good character. In that regard it was stated in R v Phelan (1993) 66 A Crim R 446 at 448 Hunt CJ at CL (Smart and James JJ agreeing):
“This Court has said on many occasions that prior good character is of less weight in such a situation of repeated offences over a period of time that it is when the offence committed is an isolated one”.
62 Much earlier, in the decision of R v Pantano (1990) 49 A Crim R 328 Wood J (Carruthers J agreeing) said at 330:
“…those involved in serious white collar crime must expect condign sentences. The commercial world expects executives and employees in positions of trust, no matter how young they may be, to conform to exacting standards of honesty. It is impossible to be unmindful of the difficulty of detecting sophisticated crime of the kind here involved, or of the possibility for substantial financial loss by the public. Executives and trusted employees who give way to temptation cannot pass the blame to lax security on the part of management. The element of general deterrence is an important element of sentencing for such offences”.
63 In the decision of R v Mungomery (2004) 151 A Crim R 376, Hulme J (Spigelman CJ and Adams J agreeing) said at [40]-[41]:
“In this regard authority makes it clear that the amount of money involved in premeditated deception is an important factor, and the period of time over which offences are committed a relevant, factor in determining the extent of criminality – see Hawkins (1989) 45 A Crim R 430, R v Mears (unreported, NSWCCA, 14 March 1991), referred to by Wood CJ at CL and Sperling J in R v Woodman [2001] NSWCCA 310.
“The cases in this area also stress the importance of general deterrence. Organisations, be they business or government, cannot operate effectively without placing a good deal of trust in their employees. Opportunities for the abuse of that trust are legion and breaches are often difficult to detect. Commonly, offenders are able to continue their depredations for long periods. Often matters only come to light when the total amounts involved become too large to be overlooked. It seems to me an inevitable inference that there must be many cases where offending is never discovered – a factor also arguing for sentences which are substantial deterrents.”
Extra curial punishment
64 Counsel for Mr Grindrod submits that the offender has suffered great extra curial loss as a result of the following:
· the liquidation of all his companies;
· the fact that he has been declared bankrupt. He entered a voluntary bankruptcy;
· the fact that it will be impossible for him to continue to work in bus industry where he has worked all his adult life;
· that he has been forced to sell family home and furniture. It is unclear to me what happened to the proceeds;
· the fact that he was forced to sell a unit he had planned for retirement. That occurred in November 2007 and realised $60,000. $36,000 was paid to Capital Finance to discharge its caveat on that property;
65 He had superannuation funds of $20,000, which were apparently applied to meet other debts.
66 Although I will take these matters into account as part of the general mix of factors, I do not regard those factors as constituting extra curial punishment in the way those matters are traditionally and properly regarded.
Range of criminality
67 The following features have been identified as relevant in determining the assessment of the gravity of the crime in these kinds of matters:
a) The amount of money involved and whether the loss is irretrievable;
b) The length of time over which the offences are committed;
c) The motive for the crime;
d) The degree of planning and sophistication; and
e) Any accompanying breach of trust.
68 The Crown submits that the offenders’ criminality is in the middle to high range of seriousness. Counsel for both offenders dispute that.
69 I find that the criminality involved is mid-range given the amounts involved, the relative sophistication of the scheme, the documentation and details required, the nature of the representations made to the variety of institutions and that the deception and falsity involved persons and entities with whom the offenders had established a relationship of confidence. That relationship meant that those processing or handling the transactions relied on the offenders’ scheme and representations without question.
Law
Authorities/policy
70 In R v Woodman [2001] NSWCCA 310, (a two-judge bench decision) Wood CJ at CL stated that in sentencing offenders in relation to fraud offences, far greater assistance is gained from general sentencing principles rather than by reference to statistics or “schedules of fraud appeals” because of the enormous variation in objective and subjective circumstances involved: [22], [24]–[25]. Woodman was applied in R v Martin [2005] NSWCCA 190 where Johnson J said at [56]:
“This Court has observed that reference to sentencing statistics is of limited value in the case of fraud offences, given the enormous variation in objective and subjective circumstances involved, and the Court has expressed concern when an attempt is made to compare sentences for a specific offence of dishonesty with other cases involving dishonesty of a different kind: R v Hawker [2001] NSWCCA 148 at paragraphs 17-18; Woodman at paragraphs 22-24; R v Swadling [2004] NSWCCA 421 at paragraphs 29, 54. In each of those cases, the Court has emphasised that far greater assistance is derived from reference to general sentencing principles with respect to white-collar crime.”
Comparable authorities
71 In Mitchell v R NSWCCA 72, the court listed a number of Court of Criminal Appeal decisions involving s 178BA offences. Latham J said at [10] that:
“… the amount of money defrauded is but one factor in the commission of such offences, which bears upon the assessment of the offender’s criminality. Other factors, including the length of time over which the offences are committed, whether or not the offender occupies a position of trust, and the sophistication of the method employed to defraud the victim, play a part in placing an offence on the spectrum of offences of a like nature, bearing in mind that the maximum penalty is reserved for the worst class of case. The interplay of these factors in any given case, together with the subjective circumstances of the individual offender, is capable of giving rise to the imposition of seemingly disparate sentences, which might appear difficult to justify on nothing more than a relatively superficial comparison.”
72 I have also considered the matters of McDonald v R [994] FCA 959, R v Doherty (1991) NSWCCA, Marks v R [2009] NSWCCA 24, R v Corbett (1991) 52 A Crim R 112, R v Todorovic [2008] NSWCCA 49 and R v Wright [2009] NSWCCA 3.
Sentencing options
73 Mr Grindrod has been assessed as unsuitable for a Community Service Order by virtue of his medical condition and eligible for a Periodic Detention Order. Mr Flack has been assessed as suitable for a Community Service Order and eligible for a Periodic Detention Order. The Crown submits that only a fulltime custodial sentence is appropriate.
74 In my view, a community service order does not reflect the seriousness of the offences and the findings as to the criminality involved. I have considered the option of periodic detention carefully over the intervening period since the verdict, particularly given the offenders’ ages, family situations, health, dependants and their relatively precarious financial situations. Both have maintained employment over the last few years, which would not have been easy – particularly at their ages and given what health issues each have. Both offenders will find incarceration difficult for different – and some common – reasons. Even taking into account all those factors, I do not consider that such a sentencing option would properly reflect the principles of general and personal deterrence in the circumstances of these offences and these offenders.
Consideration
75 In addition to the findings as to criminality and the aggravating and mitigating factors as I have set out above, I take into account that the maximum penalty for these offences is one of five years imprisonment - obviously a sentence for worst-case offences and offenders. Here I have found that the offences involved mid-range criminality and seriousness.
76 In my view, the offences were clearly planned and pre-meditated. The scheme involved careful planning and the use of knowledge of the industry systems and practices. Further, the financing arrangements made could not have succeeded and been maintained without the utilisation of contacts made by the offenders, and each of them, over their respective years of association with the industry and Willowstar in particular. The scheme and course of conduct also involved establishing a trail of paperwork involving people and entities with whom the offenders had built up a prior relationship. Those institutions and individuals were entitled to place their trust in the offenders.
77 What was involved was a relatively sophisticated scheme, which took place over a period of about three months in which about $1.5 million was involved and approximately $1 million remains outstanding. That is a very substantial amount of money to have been lost. Ultimately the affected institutions have to meet, and indirectly the community has to bear, those losses through the costs of increased insurance and institutional loan handling premiums. There are also the indirect costs associated through the maintenance of higher levels of audit and accounting costs that the rest of the community have to bear to meet and deal with schemes of that nature. Those costs were exemplified in the course of the investigation and prosecution efforts required and evident in the course of this trial.
78 All these matters require particular consideration from the point of view of general deterrence.
Role of offenders
79 The offenders had been business partners for many years had apparently had a working relationship since 1994. Each of the offenders participated in various steps of the criminality involved. Each brought their respective experience, contacts and standing to the scheme and their levels of knowledge about how the financial institutions and system worked. The scheme involved representations of details of the relevant numbers from various bus and transport entities in which both were involved.
80 They had each been directors of the company 3F Pty Ltd., the company which received the benefits of the monies advanced although Mr Flack was the sole director of the company at the relevant time. While there was no evidence by the offenders or either of them to refute the analysis of the application of the monies received, neither did the Crown produce any evidence of a lifestyle consistent with misappropriation for reasons of greed or personal aggrandisement. What seems to have occurred is that the monies were used for company and running expenses which have not been substantially particularised.
81 Each of the offenders was a participant in the joint criminal enterprise and was responsible for the actions of the other. In my view, while there were differences in their involvement, there is nothing of substance to differentiate the overall effect of the different roles of each of the offenders. Nor do I think that there are any subjective nor personal factors which warrant a different approach to be taken in relation to each of them.
.
Repayment/restitution
82 The Crown submits that the continuing repayment of the loans was done to avoid detection and to allow the offending conduct to continue, and that it would not be appropriate to take into account these repayments as they were funded out of the defrauded funds and arose out of conduct to avoid detection. There is clearly a distinction to be made between amounts repaid out of the fraudulently acquired funds and the amounts paid from the offenders own resources.
83 I disagree with the suggestion that that repayment should be ignored to the extent that those payments came from the offenders’ own or family resources. Obviously it is better that some attempts were made at repayment than none at all. Unless attempts at restitution and recompense are recognised, there is little incentive for any such losses to be met or minimized.
84 While the amounts advanced have been repaid to the extent of about $400,000 - $500,000, the motivation of the offenders’ in terms of repayment were probably mixed, in part to maintain the appearance of a legitimate scheme, and in part to defer any day of reckoning.
85 Apart from the repayment of $36,000 from the sale of Mr Grindrod’s Kiama unit to enable the caveat on that property to be discharged, there have been no real attempts – even token attempts - to meet the amounts outstanding.
86 In terms of personal factors and personal deterrence, both offenders are older, mature individuals who are intelligent and articulate. They have each had obvious experience, contacts and reputations in the transport industry and the world of vehicle construction and finance in particular. Neither appear to have been in financial difficulties at the time of the offences.
87 Mr Flack is an educated, articulate and intelligent individual. He has qualifications and extensive experience in accounting and finance. He is neither naïve nor lacking in insight. He has obviously had substantial contact with solicitors and legal representatives. No documents were produced which would support his firmly maintained assertion of a pre-finance deal and the expectation of the Equilinx funds being available. His continued denials of his role and responsibility does him no credit – particularly in so far as I need to make an assessment of his remorse and prospects for rehabilitation.
88 Mr Grindrod has substantial experience in the world of insurance broking and financial dealing. He knew or must have known what was required to finance these proposed deals. Again no documentation or evidence was produced by him to show that he made any inquiries about the alternative scenario said to be indicative of a genuine pre-finance scheme.
89 Neither overtly sought to ascribe blame to the other. My impression was that Flack was the person who provided intellectual input for the scheme but that Grindrod also participated in terms of the provision of the relevant numbers well as knowledge of the way insurance systems operated. Neither are naïve – far from it.
90 Neither made any real effort to make any restitution despite the fact that both had been working for much of the time since the offences. Mr Flack’s offer to make a monthly system of payments was made after I had raised the matter following the jury’s verdict. Mr Grindrod made no payments from 2005 until August 2006 when he became bankrupt.
91 Both offenders are clearly committed to their families and those who are dependent on them. They have no prior convictions and indeed, it is sad to see these events occurring at the end of their respective careers when they became involved in a scheme that had the hallmarks of relatively sophisticated criminality that was involved. I do not consider the length of the sentences I am proposing warrants consideration of the life tables as was submitted. The offenders have had these proceedings hanging over their heads for some years since their arrest in July 2007 - and so have their families.
92 I do not think that the objectives of sentencing, particularly the aspects of general deterrence within the business spheres they occupied and operated and the personal deterrence can be met other than by the imposition of a period of full time custody of the period I am proposing.
Concurrency/accumulation
93 The Crown submits that the criminality involved multiple offences with multiple victims, and that the mere fact they occurred in the same criminal episode could not justify concurrent sentences. The Crown further submits that the imposition of wholly concurrent sentences for a series of offences creates the perception that there is not much difference between the effective penalty for one offence and the effective penalty for five offences. As such, there should be some cumulation of sentences to reflect the escalating seriousness of repeated offences.
94 I do not agree. The offences occurred over the total period between January and April 2003. They involved schemes of criminality in relation to each count that were substantially the same. The scheme involved a series of inter-connected events, the same kind of institutions as well as victims of the same class and industry. The amounts involved were substantially the same. The clear intention was to obtain finance from a number of institutions for each bus as described in each separate indictment.
95 In my view therefore the sentences imposed for each offence should be the same and should be served concurrently.
Special circumstances
96 In R v Corbett (1991) 52 A Crim R 112 at 117, the court said:
“… a feature of past sentencing for ‘white collar’ crimes involving fraudulent abuse of trust, and sometimes involving fraud on the public purse, has been the imposition of lengthy head sentences, but with a substantial gap between head sentence and non-parole periods or minimum terms. This has probably been the consequence of a desire on the part of the courts, on the one hand, to reflect the need for general deterrence and, on the other hand, to give due account to the fact that the offenders involved frequently have no prior criminal history, are unlikely to re-offend, and have good prospects of rehabilitation.”
97 Counsel for the offenders has submitted that I should find special circumstances given the following factors common to each offender namely their respective ages, that neither have prior convictions, their respective supportive family backgrounds and work ethics and the related finding that each have strong prospects of rehabilitation. I agree. It is also submitted that this will be the first time in custody for each offender. I also take into account the health factors relevant to each offender. The Crown does not oppose a finding of special circumstances.
98 Those factors warrant a finding of special circumstances such that the statutory ratio should be varied to one of 60%.
Overall effect of sentence
99 Each offender is sentenced to 2 and ½ years imprisonment to be served by way of a non-parole period of 18 months imprisonment on each count to be served concurrently.
Matters common to both offenders
100 It would be my recommendation to the correctional authorities that both offenders be placed in a low security environment with appropriate medical facilities – particularly for Mr Grindrod. Counsel to provide copies of medical reports to Corrective Services.
Conditions of parole
101 On their release to parole, each offender is to:
· Comply with all reasonable directions of the Probation and Parole Service;
· Be of good behaviour during the period of the parole;
· Notify the Probation and Parole service of their address and employment and, in particular, if they are to be concerned either directly or indirectly with the raising of finance or credit.
Sentence
Robin Anthony Flack
Count 1
102 The offender is convicted and sentenced to a term of imprisonment of two years and six months (30 months) imprisonment commencing 19 May 2009 and expiring 18 November 2011, with a non-parole period of one year and six months (18 months) imprisonment commencing 19 May 2009 expiring 18 November 2010.
Count 2
103 The offender is convicted and sentenced to a term of imprisonment of two years and six months (30 months) imprisonment commencing 19 May 2009 and expiring 18 November 2011 to be served concurrently with count 1, with a non-parole period of one year and six months (18 months) imprisonment commencing 19 May 2009 expiring 18 November 2010.
Count 3
104 The offender is convicted and sentenced to a term of imprisonment of two years and six months (30 months) imprisonment commencing 19 May 2009 and expiring 18 November 2011 to be served concurrently with counts 1 and 2, with a non-parole period of one year and six months (18 months) imprisonment commencing 19 May 2009 expiring 18 November 2010.
Count 4
105 The offender is convicted and sentenced to a term of imprisonment of two years and six months (30 months) imprisonment commencing 19 May 2009 and expiring 18 November 2011 to be served concurrently with counts 1, 2, and 3, with a non-parole period of one year and six months (18 months) imprisonment commencing 19 May 2009 expiring 18 November 2010.
Count 5
106 The offender is convicted and sentenced to a term of imprisonment of two years and six months (30 months) imprisonment commencing 19 May 2009 and expiring 18 November 2011 to be served concurrently with counts 1, 2, 3 and 4, with a non-parole period of one year and six months (18 months) imprisonment commencing 19 May 2009 expiring 18 November 2010.
Sentence
Kenneth James Grindrod
Count 1
107 The offender is convicted and sentenced to a term of imprisonment of two years and six months (30 months) imprisonment commencing 19 May 2009 and expiring 18 November 2011, with a non-parole period of one year and six months (18 months) imprisonment commencing 19 May 2009 expiring 18 November 2010.
Count 2
108 The offender is convicted and sentenced to a term of imprisonment of two years and six months (30 months) imprisonment commencing 19 May 2009 and expiring 18 November 2011 to be served concurrently with count 1, with a non-parole period of one year and six months (18 months) imprisonment commencing 19 May 2009 expiring 18 November 2010.
Count 3
109 The offender is convicted and sentenced to a term of imprisonment of two years and six months (30 months) imprisonment commencing 19 May 2009 and expiring 18 November 2011 to be served concurrently with counts 1 and 2, with a non-parole period of one year and six months (18 months) imprisonment commencing 19 May 2009 expiring 18 November 2010.
Count 4
110 The offender is convicted and sentenced to a term of imprisonment of two years and six months (30 months) imprisonment commencing 19 May 2009 and expiring 18 November 2011 to be served concurrently with counts 1, 2, and 3, with a non-parole period of one year and six months (18 months) imprisonment commencing 19 May 2009 expiring 18 November 2010.
111 The offender is convicted and sentenced to a term of imprisonment of two years and six months (30 months) imprisonment commencing 19 May 2009 and expiring 18 November 2011 to be served concurrently with counts 1, 2, 3 and 4, with a non-parole period of one year and six months (18 months) imprisonment commencing 19 May 2009 expiring 18 November 2010.
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