R v Telford - [2005] SASC 349

SUPREME COURT OF SOUTH AUSTRALIA
(Court of Criminal Appeal)
R v TELFORD
Judgment of The Court of Criminal Appeal
(The Honourable Chief Justice Doyle, The Honourable Justice Bleby and The Honourable Justice Gray)
13 September 2005
CRIMINAL LAW - PARTICULAR OFFENCES - PROPERTY OFFENCES - MISAPPROPRIATION - FRAUDULENT CONVERSION BY PERSON ENTRUSTED WITH PROPERTY
CRIMINAL LAW - APPEAL AND NEW TRIAL AND INQUIRY AFTER CONVICTION - APPEAL AND NEW TRIAL - APPEAL AGAINST SENTENCE - GROUNDS FOR INTERFERENCE - GENERAL PRINCIPLES
Appeal against sentence - appellant convicted after pleading guilty to 32 counts of fraudulently obtaining property, 20 counts of falsification of accounts and 11 counts of forgery - total amount misappropriated by appellant was more than $22 million in breach of trust - appellant misappropriated funds in order to feed his gambling disorder - appeal on ground that sentence manifestly excessive due to number of errors by sentencing Judge - discussion of relevant case law and general sentencing principles - consideration of impact of gambling disorder on need for sentence to promote general deterrence. Held by majority: no error made by sentencing Judge and sentence not manifestly excessive - appeal dismissed.
Criminal Law (Sentencing) Act 1988 (SA) s 10(1)(j); Criminal Law Consolidation Act 1935 (SA) s 189, s 235, s 269WA, referred to.
R v Nguyen [2005] SASC 329; Black v S Freedman & Co (1910) 12 CLR 105; R v Telford (2004) 89 SASR 352; R v Barrick (1985) 81 Cr App R 78; R v Martin (1994) A Crim R 252; R v Powell (2001) 81 SASR 9; R v Novak (1993) 69 A Crim R 145; Ryan v The Queen (2001) 206 CLR 267; R v Davies (1996) 88 A Crim R 226; R v Cavanagh [1999] SASC 418; R v Dubois (2004) 88 SASR 304; Porter (1913) 9 Cr App R 213; Green (1915) 13 Cr App R 200; R v Chisholm (1985) 122 LSJS 230; R v Anderson [1981] VR 155; R v Engert (1995) 84 A Crim R 67; R v Prak (Unreported, Court of Criminal Appeal, SA S5781, 16 July 1996); R v Van Gelder (2003) 142 A Crim R 1; R v Davies (2004) 88 SASR 304; R v Hignett (2000) 210 LSJS 27, considered.

R v TELFORD
[2005] SASC 349
Court of Criminal Appeal: Doyle CJ, Bleby and Gray JJ

DOYLE CJ: I have had the advantage of considering the reasons of Gray J.
He sets out the background to the offending, and the nature of the offences. He has adequately outlined the sentencing Judge’s approach, and the issues raised on appeal.
That makes it unnecessary for me to repeat those matters. I will confine my reasons to the matters essential to my decision.
I agree with most of what Gray J has said. But I do not agree that the sentence is manifestly excessive, or that the sentencing Judge’s reasoning is flawed. I would dismiss the appeal.
The offences are very serious. The amount of money involved, more than $22,000,000, speaks for itself. Mr Telford used his position of responsibility and trust to commit the offences. He betrayed the trust placed in him by his employer. The money was obtained by a sophisticated scheme of deception. The deception continued over a period of time. It is an aggravating circumstance that Mr Telford applied his winnings to his own benefit, and continued to take company money to cover his losses and to enable him to continue gambling.
As Gray J points out, this is not a case in which the offender has imposed on elderly or frail persons, who depend on the offender for advice and for help with their financial affairs. But the deception and criminality involved remain very serious. Mr Telford’s employer depended on Mr Telford to discharge his duties honestly. An employer often has no choice but to trust senior employees. In that respect, the companies for which Mr Telford worked were heavily dependent upon him and upon his honesty.
As well, other employees, whom Mr Telford manipulated as part of his scheme of deception, have suffered from the realisation that they were part of his scheme. Unlike Gray J, I do not attribute any significance to the fact that there is no proof that the companies the victims of the offences have suffered any lasting damage. The loss of such a large amount of money must have had a serious impact on the companies. As the Judge observed, the major shareholder in the group of companies involved has suffered a substantial loss.
In crimes of fraud the amount of money involved is not the decisive consideration in determining the appropriate punishment. But it is a significant factor. It is likely that Mr Telford’s offences involved the largest amount of money dishonestly taken by an employee in this State. The amount of money involved was something that the Judge was entitled to treat as calling for heavy punishment. As well, the Judge was entitled to treat as significant the prolonged and repeated offending, the breach of trust and the sophisticated scheme that Mr Telford devised.
In my view, taken in combination the circumstances of this case were such that the Judge was entitled to take the view that a heavier sentence was called for than had been imposed in previous cases. Gray J has summarised the more recent cases.
I turn to the issues raised on appeal.
Mr Holdenson QC, counsel for Mr Telford, put his submissions forcefully, clearly and concisely. But in the end I am not persuaded that the Judge erred.
Mr Holdenson correctly submitted that the origin of the crimes lay in a pathological gambling disorder from which Mr Telford suffered. Gambling had become an obsession for Mr Telford. I accept that a product of this disorder was an element of irrational thinking on Mr Telford’s behalf, and impaired judgment. But even that proposition must be qualified. The irrational thinking and the impaired judgment was limited to this aspect of Mr Telford’s life. There is no indication that in other respects his thinking was irrational, or that his judgment was impaired.
Having considered the expert evidence, the Judge was not persuaded that Mr Telford was unable to control his gambling habit. He also found that there was no basis at all for finding that Mr Telford was unable to control himself when he embarked on and continued the dishonest scheme by which he obtained money. These are significant conclusions, and there is no reason to doubt their correctness.
I recognise the fact that an obsession with gambling led Mr Telford to gamble excessively. That, in a sense, explains the origins of the offending conduct. But it offers little by way of mitigation, when considering the dishonesty to which Mr Telford resorted. His resort to dishonesty did not involve conduct that he could not control. It was, at best, the product of a compulsion to gamble.
It may be trite, but it is nevertheless true, that not all people with a gambling disorder resort to crime to fund their desire to gamble. There is a distinct line that distinguishes the obsessive gambler from the gambler who commits crimes to obtain money with which to gamble. It is a line that warrants the court giving significant weight to deterrence, both individual and general, in sentencing an offender like Mr Telford who gambles obsessively, but who makes a choice to commit crimes to fund that gambling.
Nor do I accept the submission that Mr Telford’s gambling disorder put him in the category of offenders as to whom considerations of general deterrence are of limited relevance, because of a mental disorder or impairment, and because of the relationship of that mental disorder or impairment to the offending conduct. I have already explained why I do not accept that submission.
In my opinion the Judge’s description of the amount recovered from Mr Telford as a “relatively insignificant amount” does not indicate error. As Gray J observes, the companies that were defrauded recovered about $4,400,000 from Mr Telford. But as I understand things, about $4,000,000 of that amount was money misappropriated from the companies. Only about $500,000 was the product of assets that could be regarded as those of Mr Telford, in no way connected with his offending conduct. If the sentencing Judge was referring to the amount recovered from assets that were not the product of crime by Mr Telford, his observation is clearly correct. Even if the observation refers to the whole amount recovered, in the overall scheme of things it remains, in my opinion, a relatively insignificant amount.
Mr Holdenson submitted that the Judge attributed insufficient weight to the good prospects of Mr Telford being rehabilitated. I agree that the prospects are good. I also agree that Mr Telford was entitled to some credit for the fact that, apart from this offending conduct, he had been a person of good character, with a good employment record, and a worthwhile member of the community. But as is often being pointed out in cases of this kind, the latter consideration is eroded by the fact that it was his standing and reputation that contributed to Mr Telford obtaining a position of trust in which he was able to commit his crimes.
The Judge referred to these considerations. There is no indication that he attributed insufficient weight to them.
Mr Holdenson’s final point was that the reduction that the Judge made for the plea of guilty was insufficient. But for the plea of guilty, the Judge would have imposed a sentence of 16 years’ imprisonment. In fact, he reduced it to 14 years’ imprisonment. Mr Holdenson makes the point that the plea of guilty came late because Mr Telford disputed his liability, relying on a defence of mental incompetence. Once that issue was resolved against him, in the words of the Judge he “bowed to the inevitable”, but he had never denied the facts alleged against him.
The Judge’s reasons indicate that the reduction for the plea of guilty was affected by the fact that Mr Telford’s cooperation with the investigating authorities was not complete. That finding was not challenged on appeal. And it remains the case, as the Judge observed, that Mr Telford bowed to the inevitable only once the issue of mental incompetence had been resolved against him. The Judge was entitled to take the view that that diminished the extent to which the plea could be taken into account in mitigation of the offending.
A fair degree of latitude must be allowed to a sentencing judge in deciding the amount of the reduction to be allowed on a count of a guilty plea. I am not persuaded that the Judge is shown to have erred.
That leaves the final issue, which subsumes all of the other separate issues, of whether the sentence is manifestly excessive.
Taking into account all of the circumstances, I am not persuaded that it is. Having regard to the amount of money involved, and to the nature and circumstances of the offending conduct, the sentence is not out of line with the sentences imposed for other offences of this general kind. As I have already said, the Judge was entitled to take the view that the amount of money involved called for a penalty at the upper end of the range, and for a heavier penalty than that imposed in other cases. And, as I said in Cavanagh [1999] SASC 418 at [2], it is appropriate for courts to increase sentences imposed for substantial frauds of the kind involved here, for the reasons canvassed in that case.
It is regrettable that the Court should have to impose a substantial sentence of imprisonment on a man who has not previously offended. The sentence will work a real hardship on his family. But matters such as the good prospects of rehabilitation, and Mr Telford’s personal circumstances, are outweighed by the seriousness of his crimes and by the need to do all that the Court can to make it clear that dishonesty of this kind, and on this scale, will be severely punished. While the scale of the offending in the present case is unusual, offending of this kind, with its origins in a gambling disorder or in addiction to drugs, it is not uncommon. One of the responsibilities of the court in fixing an appropriate sentence is to be mindful of the need to mark the wrongfulness of the conduct, and of the need to protect the interests of the community by doing so and by imposing a sentence that will be a real deterrent to others. That is what the Judge has done.
It is for those reasons that I am not persuaded that the sentence is manifestly excessive. I would dismiss the appeal.
BLEBY J: I agree with the Chief Justice that the appeal should be dismissed. I agree with the reasons given by the Chief Justice. I merely add a few remarks of my own on three topics which were the subject of significant argument on the appeal.
The first relates to the effect of the appellant’s gambling disorder. The appellant complains that the sentencing Judge did not reduce or temper the weight given to general deterrence by reason of the appellant’s pathological gambling disorder, that the gambling disorder adversely impacted on, and to some extent impaired, the appellant’s judgment and that this explained the appellant’s offending. It was argued that because of this disorder there was a reduced moral culpability, particularly because gambling is not an illegal activity and indeed is supported by the State.
In rejecting that submission I agree with the sentencing Judge when he said:
While I allow for the fact that you were driven to offend because of your pathological gambling addiction, this provides an explanation rather than an excuse. Furthermore, I accept the opinion of Dr Balfour, the psychologist, that even if you found it difficult to control your gambling obsession, you were in control of your fraudulent conduct which was premeditated, calculated and systematic.
In cases of this kind the duty of the court is to impose a sentence which will operate to deter those in the community who might be tempted to commit similar offences. In those circumstances less allowance can be made for matters personal to you than would otherwise be the case.
There was no reason to temper the weight necessarily given to general and personal deterrence by reason of the appellant’s gambling addiction. He may have had difficulty in controlling his addiction, but he had a choice as to how he financed that addiction. He demonstrated his ability to exercise that choice by retaining for his own use and benefit the winnings that he derived from his gambling and by not using those winnings for further gambling. Instead, he chose to steal from his employer in order to continue the gambling habit. As Dr Balfour said:
I would view Mr Telford’s pathological gambling as being only indirectly responsible for his offending behaviour because he still had control over deciding if he would offend and how he would offend to finance his gambling.
His gambling may have been legal and uncontrollable. His stealing was illegal and controllable.
The need for deterrence is not diminished by the compulsive nature of the gambling. As I said in R v Nguyen[1], the deterrence to which s 10(1)(j) of the Criminal Law (Sentencing) Act 1988 requires the Court to have regard is:
… deterrence against further offending of the same type which is relevant, not deterrence against a continuing addiction, whether it be to drugs or to gambling. There may be cases where an addiction drives the offending in the sense that the offence is committed solely to enable the addiction to be satisfied. In such cases, there may be an indirect deterrence against continuing the addiction. But deterrence, for sentencing purposes, must always be directed against further offending of the type for which the person is being sentenced. In that sense, the fact of an addiction is not relevant.
[1] [2005] SASC 329 at [23], with the concurrence of Doyle CJ and Gray J.
In my opinion the sentencing Judge did not err in the manner in which he approached the appellant’s gambling addiction or with the weight that should have been given to deterrence in this case.
The second matter which I address briefly is the question of restitution. On that topic the sentencing Judge said:
A relatively insignificant amount has been recovered by you.
That is a rather awkward sentence, but in the context of the submissions made to the sentencing Judge, it seems reasonably clear that the Judge was there referring to what the appellant’s own counsel had submitted to the Judge in the passage quoted by Gray J at [66]. Counsel himself described what seems to have been a sum of less than $400,000 which the appellant had provided by sale of some personal assets as “insignificant” against the overall loss. True it is that a total of over $4.4 million was recovered by civil action brought by the companies by which the appellant was employed. That amount was recovered from bank accounts in the name of the appellant being, as I understand it, the immediate proceeds of the misappropriation and therefore traceable in equity as trust money.[2] Further money was recovered from the settlement of legal proceedings against the appellant and his wife instituted by the companies claiming the balances misappropriated. Voluntary restitution is one thing. Recovery of one’s own property and of damages by legal process is another. Given that the direct net losses of the companies from the appellant’s offending was in excess of $16 million, to say nothing of the indirect losses to those companies and their shareholders, the restitution to which the sentencing Judge referred was properly described as “insignificant”. This did not constitute any error on the part of the sentencing Judge.
[2] Black v S. Freedman & Co (1910) 12 CLR 105 at 110.
Finally, the acts of the appellant in preying on his employer from a position involving a high degree of trust were no less callous than financial advisers preying on innocent and trusting investors. The sentence imposed and the notional starting point of the sentencing Judge were consistent with the range of penalties for similar offending in the cases to which Gray J has referred. The sentence was not manifestly excessive. The conservative discount for the plea of guilty was appropriate in the circumstances.
GRAY J:
This is an appeal against sentence.
Background
On 19 September 2003 the appellant, Dennis Craig Telford, pleaded not guilty to 32 counts of fraudulently obtaining property contrary to section 189 of the Criminal Law Consolidation Act 1935 (SA), 20 counts of falsification of accounts pursuant to section 178 of the Act and 11 counts of forgery contrary to section 235 of the Act. The total amount misappropriated was more than $22 million.
The appellant elected for a trial by judge alone. The issue at trial was mental competence.
Pursuant to an order made under section 269WA of the Criminal Law Consolidation Act, medical specialists examined the appellant and reported to the Court.
Subsequently, on 26 August 2004 the learned trial Judge determined that the defence of mental incompetence was not made out. The Judge concluded that the appellant suffered from a pathological gambling disorder and that the disorder constituted a pathological infirmity of the mind within the meaning of “mental illness” in section 269A(1) of the Act. However, he was not satisfied that the appellant was unable to control his tendency to gamble. Therefore, the defence of mental incompetence had not been made out. The Judge reasoned:[3]
[T]he distinction between control of the gambling and control of the offending behaviour is, for reasons which I will come to, critical in determining whether the statutory criteria to determine mental incompetence are made out.
On the basis of the opinions expressed in the reports and the other factual material which is before me, I find that the accused suffered at the relevant time from a pathological gambling disorder answering to the classification of an “impulse control disorder”, within the diagnostic criteria which are contained in the Diagnostic and Statistical Manual of Mental Disorders.
…
In the result, on the whole of the evidence, even allowing for the fact that the accused describes himself as having a gambling “obsession”, I am unable to be satisfied on the balance of probabilities that the accused was “unable to control the conduct”, if the word “conduct” is taken to refer to his gambling habit.
I turn to the accused’s actions in carrying out the offences the subject of the charges. His conduct in that respect involved a lengthy and calculated course of conduct over a period of time, including the giving of instructions to other members of staff; in arranging telephone transfers of funds; in forging records; and taking other steps to execute, in a clandestine fashion, quite intricate transactions.
On no view of the evidence could it be suggested that the accused was “unable to control” that conduct. [Defence counsel] did not suggest otherwise.
Subsequent to this ruling, the appellant pleaded guilty to all 63 offences for which he was subsequently sentenced.
[3] R v Telford (2004) 89 SASR 352 at [91]-[105].

The circumstances of the appellant’s offending were set out in the sentencing remarks:
Your offending conduct occurred over a two and a half year period. It involved the misappropriation of very large sums of money from the two companies by which you were employed. During this relatively short time you managed to misappropriate a staggering total of $22,447,500. This was the product of 32 separate misappropriations ranging from $20,000 to $3 m.
…
Over the period of time during which the offences were committed you suffered from a pathological gambling disorder which led you to gamble heavily on horse racing. What began as a hobby turned into an obsession. You began wagering on credit in large sums of money with two licensed bookmakers with whom you placed bets by telephone. You lost heavily. Your gambling snowballed as you endeavoured to chase your losses.
In order to finance this activity you arranged electronic transfers of money from bank accounts operated by your employers into the accounts of the bookmakers. In order to conceal your conduct you created an elaborate system, involving the creation of false debts, forgery, and falsification of the company’s books of account. In the course of doing so other employees of the companies were unwittingly involved, in that you used your position of authority over them to cause them to take various steps which were part of the intricate web of deception which you created.
Losses were paid out by you from the company’s accounts, but substantially all profits, that is, any credits paid out by the bookmakers, were paid into your own personal accounts or otherwise for your benefit. A relatively small amount was repaid by you to the bookmakers.
In this way you personally benefited to the extent of approximately $6 m. You applied those moneys towards the acquisition of property, investments and race horses, home improvements and maintenance of a lifestyle which would otherwise have been beyond your means.
The learned sentencing Judge determined that an appropriate head sentence was 16 years imprisonment, but then made a reduction of two years on account of the appellant’s pleas of guilty. This led to a resultant head sentence of 14 years. A non-parole period of nine years and six months was fixed.
The Appeal
Grounds of Appeal
Counsel for the appellant submitted that a number of alleged errors occurred in the sentencing process. It was also said that the sentence imposed was manifestly excessive.
First, counsel submitted that the sentencing Judge, in determining the appropriate penalty for the offending, failed to have proper regard to his earlier findings that, at the relevant time, the appellant suffered from a pathological gambling disorder and that the disorder constituted a pathological infirmity of the mind within the meaning of “mental illness” in section 269A(1) of the Act.
Counsel further submitted that the pathological gambling disorder was relevant to determining the criminal culpability of the appellant and the weight to be given to other sentencing considerations, namely the need for general deterrence. Counsel contended that the need for the sentence imposed promote general deterrence was reduced or moderated by reason of the appellant’s pathological gambling disorder, which, it was said, led to or contributed to the offending. Counsel submitted that the Judge erred by failing to have sufficient regard to this factor.
A further complaint raised by the appellant was that the sentencing Judge erred in concluding that the monies recovered from the appellant were “relatively insignificant”. Counsel also submitted that the Judge erred by failing to accord any or sufficient weight to the appellant’s previous good character. Finally, counsel contended that the sentencing Judge failed to have any or sufficient regard to the appellant’s pleas of guilty and cooperation with police.
Gravity of Offending
The circumstances of the appellant’s offending were grave. He misappropriated more than $22 million over 32 separate occasions from a company at which he was employed as a senior executive. The serious nature of the offending was exacerbated by the fact that it involved a breach of trust. As the sentencing Judge observed, the appellant constructed an elaborate system within the books and records of his employer to facilitate his misappropriations and to prevent their discovery. In this process the appellant used his office and authority. He abused the trust that had been placed in him. As will be discussed in greater detail below, the fact that the appellant used his position as an employee to misappropriate the funds is an aggravating feature of his offending.
The gravity of the offending conduct was also exacerbated by the way in which the proceeds of the gambling were deployed. As profits were made they were applied to the personal benefit of the appellant and his family. Money was spent on the family home. Rather than using the winnings to further gamble, the appellant, at least in part, applied the funds to his personal benefit, whilst continuing to misappropriate more of his employer’s funds to use for gambling. His obsessive compulsive gambling disorder may have led to his need to gamble but it did not lead to a need to steal.
Breach of Trust
As already observed, the fact that the crime of theft involves an abuse of trust is generally viewed as an aggravating factor. The use of a position and status to carry out and conceal criminal activities is potentially a potent aggravating factor.
The fact that the appellant used his position as an employee of the company is an aggravating feature of his offending. As earlier observed, the appellant used his position within the company to facilitate his offending. His employment, and the trust placed in him by his employers, was a vital part in the modus operandi of his offending. The appellant’s offending, as he himself acknowledged, amounted to a breach of trust.
In Barrick,[4] the English Court of Appeal suggested that the following factors should be taken into account in cases involving a breach of trust:[5]
[4] R v Barrick (1985) 81 Cr App R 78.
[5] Barrick (1985) 81 Cr App R 78 at 82.
(i)    the quality and degree of trust reposed in the offender including his rank;
(ii)     the period over which the fraud or the thefts have been perpetrated;
(iii)    the use to which the money or property dishonestly taken was put;
(iv)    the effect upon the victim;
(v)     the impact of the offences on the public and public confidence;
(vi)    the effect on fellow-employees or partners;
(vii)   the effect on the offender himself;
(viii) his own history;
(ix)those matters of mitigation special to himself such as illness; being placed under great strain by excessive responsibility or the like; where, as sometimes happens, there has been a long delay, say over two years, between his being confronted with his dishonesty by his professional body or the police and the start of his trial; finally, any help given by him to the police.
The majority of these factors, when applied to the present case, are telling against the appellant. At the time of his offending, the appellant performed the role of company secretary and chief financial officer of the company. In that capacity, he was responsible for numerous staff, and on occasion directed staff to carry out fraudulent transactions on his behalf. His conduct accordingly had a significant impact upon fellow employees of the company. The appellant’s offending took place over a period of some three years. The appellant used the money that he obtained to support his gambling disorder, and he used the proceeds of the gambling to acquire assets, thereby personally enriching himself. The extent of the appellant’s offending was the subject of some debate during the course of the sentencing submissions and appears not to have been completely resolved. Whilst the loss of more than $22 million undoubtedly impacted upon the employer in some way, there had been no suggestion that the employer had suffered any lasting damage from the loss.
Gambling disorder
Having assessed the appellant’s mental competence, the learned sentencing Judge was well aware that the appellant suffered from a pathological gambling disorder. The Judge was also aware that this disorder had contributed to the appellant’s offending. Indeed, the Judge accepted the medical evidence that the appellant had a pathological gambling disorder.
When considering the appropriate penalty for his offending the extent to which the disorder suffered by the appellant can be taken into account is limited. The evidence accepted by the Judge indicated that the appellant appreciated the nature and quality of his actions and knew that they were wrong. Mr Balfour, a psychologist, observed:
[The appellant] said that his offending commenced in 1999 and continued for approximately 3 years. He said that when he was not preoccupied with gambling he knew what he was doing was wrong. He acknowledges that he was able to avoid discovery by engaging in deception by falsifying a number of documents to hide the money trail and to maintain an appearance of financial propriety.
…
I asked [the appellant] why he offended and he replied “I have thought about this an awful lot. Really gambling drove me I didn’t drive it. It is as simple as that.”
I asked [the appellant] who was responsible for his offending behaviour and he replied “Well I am. Well I am the one that carried out the acts. You’ve got to take your own accountability.”
I asked [the appellant] what was his attitude towards the alleged offences and he replied “Well its [sic] not something I am proud of. I am very ashamed that it has hurt a lot of people. I have broken the trust of a lot of people. It’s something that has worried me since I have been in here that I need to sort out because I can’t go back into the world again. I am definitely sorry I would never condone people who have always robbed their employer. I have always been very anti that. Then I found that I am here doing the same thing myself and that’s been very hard to come to grips with.”
I asked [the appellant] to explain to me why his offending behaviour is wrong and he replied “I stole money. In my position I have lied to people. I have broken their trust. Basically I have broken all the rules.”
An addiction to gambling is not an uncommon factor put forward in mitigation of sentence. Generally, courts have been unsympathetic to the submission that such an addiction is mitigatory. The courts have shown an unwillingness to distinguish between forms of addiction.
In Martin,[6] the Victorian Court of Criminal Appeal considered the case of theft by a person in a position of trust who was said to be a compulsive gambler. Crockett J observed:[7]
The Court was referred to a considerable number of authorities dealing with not dissimilar types of cases to that with which we are now concerned. Those authorities, I think it is true to say, generally speaking, show that a serious breach of trust by a servant of the Crown who steals a substantial sum of money over a not inconsiderable period of time calls for a sentence of such deterrent effect that it must involve some loss of the culprit's liberty. Imprisonment for a not insignificant period must be imposed notwithstanding that factors might exist that invite the exercise of clemency.
A case mentioned to us is a decision of this Court, Moffat (unreported, 15 December 1992). The Court there said:
"We turn now to the general deterrence ground. In our opinion, so-called ‘white-collar’ crimes are more susceptible to the application of this principle of sentencing than other crimes where the particularities of the criminal may be more relevant. Crimes of violence can often be explained by the individual characteristics of the offender. In consequence there may be few people in the general community likely to be dissuaded from similar conduct by the imposition of a custodial sentence upon that particular criminal. With thefts of this nature similar considerations are not so weighty. A custodial sentence sends a salutary signal to all persons, no matter how unblemished their records, that depredation of trust moneys, as a trustee, in significant sums warrants gaol. It is likely that many persons in the general community will be deterred from the commission of these offences if it is generally known that prison follows."
Applying the sentiments to be found in that passage and accepting them as representative of a number of propositions to be found generally in the cases, I have reached the conclusion that the judge did place too great weight upon the respondent's prospects of rehabilitation and upon the fact that he had a pathological gambling habit from which it was hoped he would be able to rehabilitate himself. This was at the expense of the elements of deterrence and retribution.
The other members of the Court, Southwell and Nathan JJ, agreed.
[6] R v Martin (1994) 74 A Crim R 252
[7] Martin (1994) 74 A Crim R 252 at 256-257.
In Powell,[8] Prior J, with whom Besanko J agreed, approved of the sentencing Judge’s acknowledgement that the motivation for Ms Powell’s offending, being her gambling addiction, did not alleviate the seriousness of her criminal conduct[9] or reduce the need to impose a sentence reflective of the principle of general deterrence.[10]
[8] R v Powell (2001) 81 SASR 9.
[9] Powell (2001) 81 SASR 9 at [8].
[10] Powell (2001) 81 SASR 9 at [12].
In Novak,[11] the Victorian Court of Criminal Appeal dismissed an application for leave to appeal against a sentence of six years and six months’ imprisonment with a non-parole period of five years imposed in respect of 21 counts of obtaining property by deception. The Court acknowledged that Ms Novak’s offending was driven by her compulsion to gamble. Vincent J, with whom Phillips CJ and Crockett J agreed, observed:[12]
[T]here is no shortage of evidence, which has been accumulating over the years, that persons do become addicted to gambling to the extent that their whole lives are affected by it. The commission of crimes of dishonesty in order to secure the necessary funds to satisfy temporarily their compulsion or obsession is a well-recognised phenomenon. It can, in my view and in some circumstances, constitute an important factor to be taken into account by a sentencing judge when assessing the degree of an offender’s moral culpability and the extent to which the sentence should incorporate an element of general deterrence.
[11] R v Novak (1993) 69 A Crim R 145.
[12] Novak (1993) 69 A Crim R 145 at 149.
Counsel for the appellant placed particular reliance on these remarks. However, in Martin, Southwell J drew attention to the observations of Vincent J in Novak and in particular to the last sentence of the quotation referred to above. Southwell J then observed:[13]
I quote those words because they were, in effect, put forward as authority for the proposition that, generally, evidence of addiction to gambling should reduce the relative importance of the element of general deterrence. It should, I think, be noted that his Honour did not say that in all or most cases proof of addiction to gambling would reduce the importance of that element. In a number of cases in recent years, including the one to which the learned presiding judge has just referred Moffat (unreported, Court of Criminal Appeal, Vic, 15 December 1992)), courts of appeal in Australia have underlined the importance of general deterrence in crimes of theft by persons in a position of trust, including some cases where the reason advanced to explain, but not to excuse, the crime, was addiction to gambling. As it seems to me, there is no logical distinction to be drawn, so far as evidence of addiction is concerned, between the commission of an armed robbery to obtain funds to feed on the one hand an addiction to heroin and on the other an addiction to gambling. The same can be said where the offence is not that of armed robbery but a theft in breach of trust. In the latter type of case at least, it would, in my opinion, be an unusual case where evidence of addiction to gambling will significantly reduce the importance of the element of general deterrence.
Nathan J expressly agreed with these observations.[14]
[13] Martin (1994) 74 A Crim R 252 at 257.
[14] Martin (1994) 74 A Crim R 252 at 257.
In the present case, the appellant’s moral culpability was extremely high. It is implicit in the sentencing remarks that the Judge regarded the appellant’s gambling disorder as part of the appellant’s overall background and circumstances. The Judge found that his offending was repetitive, calculated and elaborate. The Judge also concluded that the appellant was able to control his offending. The Judge observed:
While I allow for the fact that you were driven to offend because of your pathological gambling addition, this provides for an explanation rather than an excuse. Furthermore, I accept the opinion of Mr Balfour, the psychologist, that even if you found it difficult to control your gambling obsession, you were in control of your fraudulent conduct which was premeditated, calculated and systematic.
The Judge correctly viewed the appellant’s gambling as one aspect of the background and circumstances of the offending that must be considered together with other factors.
Personal Profit
The fact that the appellant had personally profited from his offending was recognised in the sentencing remarks:
Losses were paid out by you from the company’s accounts, but substantially all profits, that is, any credits paid out by the bookmakers, were paid into your own personal accounts or otherwise for your benefit. A relatively small amount was repaid by you to the bookmakers.
In this way you personally benefited to the extent of approximately $6 m. You applied those moneys towards the acquisition of property, investments and race horses, home improvements and maintenance of a lifestyle which would otherwise have been beyond your means.
As counsel for the Crown submitted, this case cannot be characterised as one involving a man who has abused his personal circumstances and those of his family to “feed an addiction”. Rather, the appellant used money misappropriated from his employer to gamble in circumstances where a substantial portion of the winnings were used to his own benefit. He did not repay the money that he had misappropriated, nor did he, as one might expect of someone who is addicted to gambling, use his winnings to further “feed his addiction”. The fact that the appellant was financially enriched through his offending casts some doubt over the extent to which he can be viewed as a man “driven” to gamble.
Character
In Ryan,[15] the High Court considered the use of character evidence in the sentencing process. McHugh J observed:[16]
In considering a prisoner’s good character when sentencing, the court must distinguish two logically distinct stages. First, it must determine whether the prisoner is of otherwise good character. In making this assessment, the sentencing judge must not consider the offences for which the prisoner is being sentenced. Secondly, if a prisoner is of otherwise good character, the sentencing judge must take that fact into account. However, the weight that must be given to the prisoner’s otherwise good character will vary according to all of the circumstances of the case.
Kirby[17] and Callinan JJ adopted a similar view. Having acknowledged that previous good character is a factor relevant to sentencing, Callinan J went on to observe that: [18]
…good character is of less weight when a series of crimes are deliberately and carefully planned and executed.
[15] Ryan v The Queen (2001) 206 CLR 267.
[16] Ryan (2001) 206 CLR 267 at [36].
[17] Ryan (2001) 206 CLR 267 at [112].
[18] Ryan (2001) 206 CLR 267 at [175] (footnote omitted).
In Davies,[19] Cox J, with whom Doyle CJ and Bollen J substantially agreed, said the following regarding prior good character as a mitigating factor:[20]
[19].Davies (1996) 88 A Crim R 226.
[20] Davies (1996) 88 A Crim R 226 at 229.
[C]rimes of this sort are usually committed by respectable people of good standing - that is how they come to be in the positions of trust which they are able to exploit to their own advantage. The deterrent effect of the sentence or non-parole period upon other people of good reputation, in a similar position and similarly tempted, would be substantially diminished if persons who committed series of offences of this kind are still given substantial credit for their previous good character. Nor for the same reason should much allowance be made for the circumstance that, as is almost always the case, such a defendant is unlikely to offend again.
In Cavanagh,[21] Debelle J cited this passage and then continued:[22]
Those who might be tempted to offend in the same way must be under no misapprehension. They must be aware that a defendant of this kind will be sternly punished.
Sulan J, in Dubois,[23] also referred to the passage of Cox J in Davies and then went on to say:[24]
The previous good character of an appellant can only have limited weight in cases of this nature, as it is only people of good character who are in a position to act professionally for their clients, and it is usually those of good character who are able to place themselves into a position of trust and in situations in which clients blindly rely upon their advice and judgment.
In a similar vein, Perry J in Powell observed:[25]
There was much material before the learned sentencing judge which confirmed the respondent’s prior good character. However, this can only be given limited weight, not only because of the overriding need for general and personal deterrence, but also because she was engaged in criminal conduct for such a sustained period of time. Furthermore, it was her prior good character which enabled her to occupy a position in which she was able to perpetrate the frauds. As to that aspect of the matter, I agree with the dictum of Cox J in R v Davies…
[21] R v Cavanagh [1999] SASC 418.
[22] Cavanagh [1999] SASC 418 at [22].
[23] R v Dubois (2004) 88 SASR 304.
[24] Dubois (2004) 88 SASR 304 at [21].
[25] Powell (2001) 81 SASR 9 at [36] (footnote omitted).

In the present case the sentencing Judge acknowledged that the appellant had been of previous good character but concluded that in such cases, little allowance can be made for good character. The Judge recognised that it was the appellant’s good character that had earned the trust of his employer that ultimately enabled him to commit the offence. This accords with the principles derived from the authorities referred to above.
Restitution
As a matter of general sentencing principle, a reduction in the sentence that would otherwise be imposed may be justified if reparation is made or information is given that leads to the restoration of property.[26] When considering the appropriate reduction to be made in respect of reparation, the level of sacrifice made by offenders making reparation for their criminal conduct is a relevant matter.
[26] Porter (1913) 9 Cr App R 213; Green (1915) 13 Cr App R 200.
The amount recovered by the company from the appellant was of the order of $4.4 million. The sentencing Judge described this as “a relatively insignificant amount”. There was no suggestion made by defence counsel during the course of sentencing submissions that the restitution made was other than relatively insignificant. Rather, it was suggested that, when compared with the overall amount misappropriated, more than $22 million, the sum recovered from the appellant was insignificant:
His Honour: …I need to know surely if they did find some money that they had taken back, how much that is because that’s restitution in the ordinary sense.
[Counsel]:In the overall context of this there was some small amounts, one was a property which his parents had left to him which was about $200,000 which they got and there was another unit in the city somewhere around $150,000, but it was insignificant amounts against the overall loss and the bank account with the one and a half million, that was money that came from the misappropriation so he can’t claim that. Whatever small amounts he had, my understanding is that has gone back to the Corporation.
However, recovery of more than $4 million is not an insignificant level of recovery. When viewed from the appellant’s perspective, more than $4 million was by no means insignificant.
Counsel submitted before the sentencing Judge that the appellant was a man with modest assets, all of which had been surrendered to make reparation to the company. Those assets totalled several hundred thousand dollars. Counsel for the Crown made no submission to contradict this position. Accordingly, the conduct of the appellant in making reparation was not insignificant. The Judge was incorrect in reaching the contrary conclusion. The appellant ought to have been given some credit for restitution. However it is appropriate to draw a distinction between the case of offenders making reparation or restitution from their own resources and the case of a defrauded party recovering the proceeds of the crime. The difficulty in the present case is that inadequate information has been provided to allow a conclusion that restitution has been made giving rise to any significant mitigatory effect.
Although the recovery effected by the appellant’s employer was not insignificant, it should be recognised that much of that recovery was the result of the employer taking recovery action.
General deterrence
The learned sentencing Judge’s remarks reflect this Court’s pronouncements concerning the need for general deterrence to be an important consideration in sentencing for misappropriations committed over an extended period of time in breach of trust. The Judge remarked:
In cases of this kind the duty of the court is to impose a sentence which will operate to deter those in the community who might be tempted to commit similar offences. In those circumstances less allowance can be made of matters personal to you than would otherwise be the case.
In Cavanagh, Debelle J observed:[27]
This kind of offending is premeditated, deliberate and repetitive. The fact that it involves deceit only serves to underline the criminal wilfulness of the conduct. In cases of this kind, the description of the crime as fraudulent conversion should not disguise the fact that it is a form of stealing – in this case, as in others, stealing on a grand scale. Deterrence must therefore be a predominant factor in the sentence.
This accords with the observations of King CJ, with whom Mohr and O’Loughlin JJ agreed, in Chisholm:[28]
The systematic course of dishonesty undoubtedly calls for a substantial sentence and there is, moreover, the important aspect of deterrence. The courts have a responsibility to impose sentences upon those who abuse the trust which is placed in them which will operate as a deterrent to others in a position of trust who might either for psychological or any other reason experience the temptation to take what does not belong to them.
[27] Cavanagh [1999] SASC 418 at [21].
[28] R v Chisholm (1985) 122 LSJS 230 at 232.
Deterrence depends upon the ability of the potential offender to weigh up, in a rational manner, the advantages and disadvantages of a course of conduct. As such, generally speaking, less weight will be given to general deterrence when sentencing an offender with a mental disorder because a mentally disordered offender is not considered to be “an appropriate medium for making an example to others.”[29]
[29] R v Anderson [1981] VR 155 at 160 (Young CJ and Jenkinson J).
In Engert,[30] Gleeson CJ, sitting on the Court of Criminal Appeal in New South Wales observed:[31]
In truth … the question of the relationship, if any, between the mental disorder and the commission of the offence, goes to circumstances of the individual case to be taken into account in the application of the relevant principles. The existence of such a causal relationship in particular case does not automatically produce the result that the offender will receive a lesser sentence, any more than the absence of such a causal connection produces the automatic result that an offender will not receive a lesser sentence in a particular case. For example, the existence of a causal connection between the mental disorder and the offence might reduce the importance of general deterrence, and increase the importance of particular deterrence or of the need to protect the public. By the same token, there may be a case in which there is an absence of connection between the mental disorder and the commission of the offence for which a person is being sentenced, but the mental disorder may be very important to considerations of rehabilitation, or the need for treatment outside the prison system.
In Prak,[32] Doyle CJ, with whom Cox and Bollen JJ agreed, observed:[33]
It is well established that individual deterrence and perhaps general deterrence may be less significant in the case of an offender suffering from a mental illness – R v Anderson. But in my opinion the normal approach to sentencing should be taken when there is no link between the mental condition and the commission of the offence.
[30] Engert (1995) 84 A Crim R 67.
[31] Engert (1995) 84 A Crim R 67 at 70-71.
[32] R v Prak (unreported, Court of Criminal Appeal, SA, S5781, 16 July 1996).
[33] Prak (unreported, Court of Criminal Appeal, SA, S5781, 16 July 1996) at 2.
The circumstances of this case reflect a “causal link” between the appellant’s mental disorder and his gambling. However, there is no such a link between his mental disorder and misappropriation, as referred to in the authorities,[34] suggesting that the need for the sentence to have some deterrent value may be substantially reduced.
[34] See also R v Van Gelder (2003) 142 A Crim R 1 at 6-7.
Cooperation and Pleas
The extent to which an accused cooperates with authorities to assist with their inquiries is a further factor indicating contrition and remorse that is relevant when sentencing. The Judge reached the following conclusion regarding the level of the appellant’s cooperation with police and his former employers:
Your counsel submitted that after your arrest you cooperated fully with the authorities. I accept that you cooperated to a degree, but I am not satisfied that you cooperated as fully as you could, either with the police, or in the process of identifying your assets when your former employers were endeavouring to trace the money which you stole.
Counsel for the appellant submitted that, although the Judge recognised that the appellant had cooperated “to a degree” with the authorities, the Judge did not have adequate regard to this cooperation when determining sentence.
As already observed, the appellant pleaded guilty to the charges immediately following the Judge’s decision that the defence of mental incompetence had not been made out. Notwithstanding that this was not, strictly speaking, the “first available opportunity” to plead guilty, it was submitted that the appellant was entitled to receive the full extent of the reduction in sentence that is ordinarily made when an offender pleads guilty at an early stage.
The Judge reduced the sentence that he would otherwise have imposed on the appellant from 16 years to 14 years on account of his guilty plea. This is a reduction of approximately 12.5 per cent. Counsel for the appellant submitted, in effect, that this was an insufficient reduction.
It is apparent from the sentencing remarks, in which express references were made to both the pleas of guilty and the cooperation of the appellant with the authorities, that the Judge considered these matters. Whether the Judge had sufficient regard to these matters therefore goes essentially to whether or not the sentence imposed was, in all of the circumstances, manifestly excessive. This will be discussed later in these reasons.
Relevant Recent Case Law
In Cavanagh the Court acknowledged that the total amount of the defalcation will have some bearing on the penalty to be imposed and will assist in determining the seriousness of the offending in relation to other similar offending. Debelle J, with whom Doyle CJ and Wicks J agreed, observed:[35]
[W]hile little is to be gained by comparing the nature of the offending with other cases, the amount which has been stolen by the offender will have some bearing on the penalty. While it is extremely difficult to make close comparisons between cases because the facts and circumstances of each case will differ, it is nevertheless necessary to place the offending in the overall scale of offending so that justice appears to be done to other persons who have been dealt with or will be dealt with in the future for offending of this kind. The amount taken in this case was significantly lower than in other cases which have been before this court in recent years. Another factor is that the length of this sentence reduces the scope for longer sentences when larger amounts are involved. This is not to say that the overall level of sentences for this kind of offending will not have to be increased in the future.
[35] Cavanagh [1999] SASC 418 at [23].
The amount of the defalcation in Cavanagh was of the order of $240,000. Cavanagh fraudulently converted about $96,000 from one victim and about $115,000 from another. These two victims were both elderly widows. The balance was misappropriated from the Trustee Companies Officers Association. Cavanagh’s conduct involved a very serious breach of trust in that he misappropriated the funds in the course of his work as a financial adviser employed by a firm of solicitors and through his role as treasurer of the Association. The money taken was used to personally benefit Cavanagh. Victim impact statements revealed that the conduct had a devastating impact upon the two elderly women. There was no realistic prospect of restitution. Cavanagh was sentenced to imprisonment for eight years, with a non-parole period of five years.
In Dubois, the defendant pleaded guilty to 31 counts of false pretences. A further 21 offences of a similar nature were also taken into consideration. The offending occurred over five years and occurred when Dubois was conducting his own business as a financial planner. The offending was motivated by greed, Dubois using the money that he misappropriated to enhance his own lifestyle. There were a number of victims and the amount involved was about $2 million. The starting point for the head sentence was 15 years’ imprisonment. This was reduced to 12 years on account of Dubois’ guilty pleas, contrition, remorse and cooperation with authorities. A non-parole period of eight years was fixed. This sentence was upheld on appeal.[36] A more severe penalty than might otherwise have been imposed for offending of this nature was warranted by the very grave circumstances of the defalcations and the devastating affect that this had on elderly members of the community who had trusted Dubois with their life savings.
[36] Special leave to appeal to the High Court was refused.
Davies[37] involved a chartered accountant charged with 18 counts of fraudulent conversion perpetrated against a wealthy, elderly client. The total amount converted was $492,000. $50,000 was repaid to the victims. Davies pleaded guilty to five counts during his trial and was convicted of the remaining 13 counts at the conclusion of his trial. Davies was sentenced to a head sentence of six years’ imprisonment with a non-parole period of four years.
[37] R v Davies (2004) 88 SASR 304.
Powell involved a defendant who pleaded guilty to 52 counts of falsification of accounts. Over a two-year period, Powell had, on 52 separate occasions, falsified documents and records of the bank at which she worked, obtaining a total of nearly $700,000. Powell used the proceeds of the offending to support her gambling addiction. The sentencing Judge imposed a sentence of imprisonment of five years and six months and fixed a non-parole period of two years. This Court allowed an appeal brought by the Director of Public Prosecutions on the grounds that the sentence imposed by the sentencing Judge was manifestly inadequate. The sentence was increased to seven years imprisonment with a non-parole period of three years and six months.
Hignett[38] involved 70 counts of fraudulent conversion by a property manager. This offending occurred over more than six years and involved a property manager in a position of trust taking advantage of an elderly, disabled and vulnerable client who relied upon Hignett to manage his financial affairs. A reduction of two years was made on account of the pleas of guilty and cooperation with the police. The court imposed a sentence of 10 years with a non-parole period of six years.
[38] R v Hignett (2000) 210 LSJS 27.
This Court has indicated that more substantial penalties than those that have been previously imposed are appropriate for offending of this nature. In Cavanagh, Doyle CJ observed:[39]
The sentence is high compared with other sentences for similar offences. Some reduction is appropriate on that basis. But, in my opinion, the time has arrived for an increase in the sentences imposed for substantial frauds of this kind for the reasons indicated by Debelle J. This was what Cox J foreshadowed in R v Davies (1996) 187 LSJS 467; 88 A Crim R 226. In future, a sentence of the order originally imposed by the sentencing judge would not be regarded by me as inappropriate.
[39] Cavanagh [1999] SASC 418 at [2].
It is also to be observed that in the present case the appellant did not, as in Dubois and Cavanagh, take advantage of the ill and elderly with devasting effect on their remaining years. Nor was the appellant’s offending of the same character as in Davies or Hignett, where advantage was taken of an elderly but wealthy victim and in the latter case a disabled victim.
Manifestly Excessive
The sentencing Judge’s starting point of 16 years, was excessive and manifestly so. Such a starting point is beyond the range of starting sentences for significant offences of misappropriation. In circumstances where substantial amounts have been taken from the ill and elderly, starting sentences of between 10 and 14 years have been considered appropriate. In a very real sense, this appellant’s offending did not involve that level of criminal culpability. However, his offending was extensive and invovled a large sum, well beyond the amounts taken in most other cases in this State.
It may be that the learned sentencing Judge’s mischaracterization of the extent of the restitution made by the appellant and the relatively moderate reduction that he made on account of the appellant’s guilty pleas contributed to the imposition of an excessive penalty. It may be that the Judge gave too much weight to general deterrence in the circumstances. It is possible that the Judge did not give sufficient mitigatory effect to the appellant’s gambling disorder that was diagnosed as a mental disorder.
Conclusion
I would allow the appeal.
The sentence of 14 years’ imprisonment with a non-parole period of nine years and six months was, in the circumstances, manifestly excessive. I would re-sentence the appellant. I would start with a head sentence of 13 years imprisonment, reduced to 10 years and six months on account of the appellant’s guilty pleas. I would fix a non-parole period of 7 years. I would back date the sentence to the date on which the appellant was first taken into custody.