R v Thomson
[2003] VSCA 164
•24 October 2003
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No. 231 of 2003
| THE QUEEN |
| v. |
| ANDREW GEOFFREY THOMSON |
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JUDGES: | WINNEKE, A.C.J., ORMISTON and BUCHANAN, JJ.A. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 9 October 2003 | |
DATE OF JUDGMENT: | 24 October 2003 | |
MEDIUM NEUTRAL CITATION: | [2003] VSCA 164 | |
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Criminal law – Sentence - Corporation offences – Whether sentence imposed unreasonably disparate from sentence imposed on co-offender.
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| APPEARANCES: | Counsel | Solicitors |
| For the Crown | Mr. K. Wiltshire | Commonwealth D.P.P. |
For the Applicant | Ms. J. Dixon | Goldsmiths |
WINNEKE, A.C.J.:
In July 2003 the appellant pleaded guilty in the County Court to three counts of disseminating materially false and misleading information (concerning companies with which he was associated) likely to induce others to subscribe for securities when he knew (and, in the case of count 3, “or ought reasonably to have known”) that such information was false.
The counts on the indictment alleged offences contrary to s.999 of the Corporations Act 2001, notwithstanding that the offences alleged occurred in the first half of 2000. A question was raised at the outset of this appeal as to whether the Crown was entitled to allege offences pursuant to s.999 of the Corporations Act 2001, when that section has since been repealed. Counsel for the Commonwealth Director of Public Prosecutions submitted that the procedure was permitted by virtue of Chapter 10 of the Corporations Act, and in particular ss.1400 and 1401 thereof. In order to satisfy ourselves of the validity of the indictment and the counts thereon, we invited Mr. Wiltshire to forward to us written submissions justifying the validity of the indictment. That has been done. Counsel for the appellant has forwarded submissions in reply. After reviewing those submissions the Court is satisfied that the indictment charges offences in a manner and form which the relevant Commonwealth legislation permitted and which were appropriate to notify the appellant of what was alleged against him.
After a lengthy plea, during the course of which the appellant, amongst others, gave evidence, his Honour, on 28 August 2003, imposed a sentence of one year’s imprisonment on each of the three counts, ordered that they be served concurrently, and directed pursuant to the provisions of the Crimes Act 1914 (Cth.) that the appellant be released on his own recognisance in the sum of $1,000 after serving three months’ imprisonment. The order that the sentences be served “concurrently” should be understood to be an order, made in accordance with s.19 of the Crimes Act (Cth.), that the sentence imposed on each of the three counts commence at the date of sentence. It follows that the appellant has now served approximately half of the custodial portion of the sentence imposed.
It should be noted, for the purpose of a proper understanding of these reasons, that approximately one year earlier, the same judge had sentenced a man named Dale Munckton for an offence arising out of the same circumstances as those which governed the sentencing process of the appellant. Munckton, who was an officer of a company known as Dotnet Limited, had pleaded guilty to the same offence which constituted count 3 on the indictment which had been preferred against the appellant. Munckton was a young man, aged 21 at the time of the offence, who had initially been employed in the appellant’s group of companies as a technical adviser commencing in 1997. He appears to have risen to the rank of general manager by 1999 and thereafter he became a director of the entity whose false prospectus he was accused of disseminating. His Honour rightly regarded Munckton as being young and inexperienced at the time of committing the offence alleged against him and a person who had had “no background in company administration”. He considered that the offence which had been committed by Munckton was one of “failing to perform” his duties rather than “any deliberate attempt to deceive”; and that, accordingly, his offending was at the “lower end of the scale”. His Honour made it plain during the course of his sentencing remarks in respect of Munckton that it was the appellant who ran these companies and looked after their administration and that, by comparison, Munckton had no corporate experience. Accordingly, his Honour convicted Munckton but released him upon his undertaking to be of good behaviour for a period of 12 months.
The background to the offences committed by the appellant should be briefly stated. The three counts to which he pleaded guilty relate to the dissemination of three separate documents between January and June 2000. The appellant was a director and shareholder of a company called Hotlinks Internet Services Pty. Ltd. (“Hotlinks”) which traded as “Hotlinks Internet Services”. The equity in the business initially was owned by three partners of whom the appellant was one. As time went by he became the controller of the company. During 1999 and 2000 Hotlinks sought investment funds from private investors. Those investors were given various documents including the three documents which formed the basis of the counts on the indictment. The document forming the basis of count 1 was entitled “Dotnet Information Memorandum”; that upon which count 2 was based was entitled “World Intranet Work Inc Investment Memorandum”. The document alleged to be false and misleading in count 3 was entitled “Dotnet Limited Offer Information Statement”. This last statement was signed by the directors of the company (including Munckton) and lodged with Australian Securities & Investments Commission (“A.S.I.C.”), and formed the basis upon which members of the public were invited to subscribe for shares in the company.
The statements made in the three documents were false and misleading in material ways. Inter alia, the document which was the subject of count 1 informed potential investors that various computer programmes, developed by the companies in the appellant’s network, were - by contract - providing infrastructure to half a million sites in North America; that Dotnet Pty. Ltd. earned income from equity in a United States company; and that it had a 40% ownership in World Intranet Work Inc. which was valued at $30 million. These false statements apparently related to a package of computer programmes called “GAIN” (General Agents Insurance Network) which had never been fully developed so as to be operational. The document which was the basis of count 2 made a number of false statements about the status of the so-called GAIN programmes, including the statement that the GAIN marketing system had already proved profitable in its own right and that there was, in respect of it, an existing agreement between Dotnet and World Intranet Work Inc. The document upon which the third count was based was signed, inter alia, by the appellant on 31 May 2000 and, as I have said, lodged with A.S.I.C. It was then disseminated to investors who subscribed, so it would seem, about $80,000 between June and December 2000. Inter alia, that document asserted falsely that Dotnet had perfected the “service application” called “Genesis” which was the successor to the GAIN programme; and that the company was raising equity capital including an issue of approximately 1.3 million ordinary shares at 40 cents per share to employees and key business associates. The Crown alleged that this document contained other false and misleading statements.
On the plea hearing it was the appellant’s contention that, although the statements in the three documents were materially misleading and deceptive, the level of fraud involved was mitigated because the packages known as GAIN and “Genesis” were so close to being finalized and operational as to render the statements “almost true”. It was said that the appellant had a “reasonable expectation” that the packages could be operational within a matter of days because they were founded upon a package of programmes already developed by the appellant’s companies, which programmes were readily adaptable to other applications such as those used by insurance agents. Fruition would have been achieved, it was said, to the benefit of all if the banks had not withdrawn their support during the course of the “information technology boom”.
In his sentencing reasons the judge said that he was unable to conclude for himself how long it would have been before the programmes became “operational” as they had been represented to be. His Honour appeared to take as generous a view of the appellant’s conduct as was available to him on the material. Although more than half a million dollars had been subscribed by investors over the preceding year, it seemed that his Honour adopted the view that less than $100,000 had been the result of the false and misleading statements encompassed by the counts on the indictment. His Honour also found that:
“So far as the false representations that are contained in relation to the stage of development of the bundle of programmes called GAIN for the American market, and subsequently renamed Genesis in the Australian market, there is no dispute that at no stage was there a fully operational model of the programme ever produced.”
His Honour further found, as was the fact, that the appellant, by his plea, had conceded that the representations contained in the various documents were false at the time when he made them and, furthermore, had conceded that fact in the witness box. Nevertheless, as his Honour said, the appellant was one of the largest individual losers out of the collapse of the companies; the appellant and his wife having guaranteed their debts. The bank had foreclosed on several properties and his Honour was told (and appears to have accepted) that the losses of the appellant were of the order of $350,000. Consequently, the appellant had entered into a “Part 10 arrangement” under the Bankruptcy Act with his creditors and was still making payments pursuant to that arrangement.
His Honour further said, in his sentencing remarks, that the appellant:
“… appeared all too ready to assume that what you thought would be completed had already been completed, such as the GAIN contract in the United States and the completion of the GAIN system as a fully operational system. Indeed, it is in the making of such totally unjustified representations that you substantially misled investors …”
Nevertheless, his Honour went on to say that he had formed the view that the representations which the appellant had made to the investors were not made with deliberate dishonest intent but rather had been made “with a considerable degree of recklessness”. This appeared to be a generous finding in favour of the appellant having regard to the fact that he had pleaded guilty, in respect of counts 1 and 2, to the making of materially false representations with knowledge of their falsity. Having made the finding which he did, his Honour went on to say that he accepted:
“… that in terms of the seriousness of the offending for this type of offence, it falls far short of being in the most serious category. I agree that your misleading representations were not part of any deliberate scam, but rather more likely the consequence of over-enthusiasm and lack of proper planning and possibly a very strong ambition to try and succeed in your project.”
So far as the appellant’s personal circumstances were concerned, it would seem that his Honour accepted that his wife suffered from “Crohn’s disease” and that his 17 year old daughter suffered from epilepsy. Furthermore, his Honour noted that the appellant had no prior convictions, had been a long serving member of the Victoria Police force until 1991, and had pleaded guilty early in the piece. He went on to say that, but for the plea of guilty, he would have imposed a significantly heavier sentence than he proposed to impose. He accepted that the illnesses suffered by the appellant’s wife and daughter constituted “exceptional hardship”, which he also took into account in imposing the sentence which he did. His Honour further said that:
“When sentencing you [i.e. the appellant] I also note that I sentenced Mr. Munckton to a wholly suspended sentence. His position is quite different from yours. He was a very young man, he was engaged in a technical role in the business, not in an administrative or accountant role, and at the time I considered, I still consider, you were the one that was very substantially responsible for what went on, and he just did what he was told. He was, unfortunately, caught up in the business and in the representations because he was appointed a director of the company.” (my emphasis)
His Honour went on to find that the appellant was unlikely to re-offend, but that the nature of the offences were such that they required the imposition of a sentence which would fulfil the purposes of general deterrence because of the consequences which misleading and deceptive representations can inflict on investors in the capital market and that, accordingly, a sentence was required which reflected that purpose.
On the hearing of the appeal, Miss Dixon, who appeared on behalf of the appellant, argued two grounds:
(1)That the trial judge had erred in imposing the sentence which he did because it was unreasonably disparate from the sentence which had been imposed upon Munckton.
(2)That the sentences imposed were manifestly excessive.
In support of the “parity ground”, Miss Dixon put forward an interesting argument. She said that it was apparent from his Honour’s sentencing remarks (to which I have referred in the preceding paragraph), that he had mis-directed himself in finding that he had imposed upon Munckton “a wholly suspended sentence”, a statement that reflected not only a lack of understanding of the powers which he had exercised pursuant to the Crimes Act (Cth.) in sentencing Munckton but which wrongly assumed that he had imposed a prison sentence which had been “wholly suspended”, when in fact that was not the case. Miss Dixon submitted that it could not be assumed that his Honour, by referring to a “wholly suspended sentence”, was merely mis-describing the effect of the sentence which he had imposed upon Munckton; because, as she submitted, there is a qualitative difference between a good behaviour bond and a wholly suspended sentence. It was put that the Commonwealth Crimes Act clearly differentiated between “conviction bonds”, which are described by s.20(1)(a)(i) and “suspended imprisonment” described by s.20(1)(b). Miss Dixon went on to submit that during the course of the plea made on behalf of the appellant, his Honour had alluded to Munckton’s sentence as one which was not a “smack on the wrist, not a prison sentence, nor a fine”; but that at the time when his Honour came to impose sentence upon the appellant more than a month later, he appeared to have forgotten that he had in fact sentenced Munckton to a good behaviour bond. Such a misapprehension was significant, so it was submitted, because comments made by his Honour during the course of the plea appeared to have raised an expectation that he was well disposed towards imposing upon the appellant a “wholly suspended sentence” until such time as he apprehended (wrongly) that that was the sentence he had imposed upon Munckton.
Ingenious though these arguments are, they cannot, in my opinion, succeed. The particular passage of the sentencing remarks which forms the basis of the submission appears to me to have been no more than a “throw away line” intending to indicate nothing more than that Munckton had received a non-custodial sentence for reasons which did not apply to the appellant. I cannot regard the remarks which his Honour made on the plea as foreshadowing a disposition on his part to impose a non-custodial sentence upon the appellant. Counsel for the appellant on the plea had certainly submitted that an appropriate penalty “could be entirely pecuniary” or “a wholly suspended sentence” of imprisonment. On the other hand, counsel for the prosecution had submitted that the aspect of “general deterrence” was a significant purpose of sentencing, and that “it is wholly appropriate for your Honour to consider a custodial sentence”.
There are clear differences existing between the appellant on the one hand, and Munckton on the other, which explains their respective sentences. Those differences were spelt out by his Honour in the course of sentencing the appellant, and they justify – in my opinion – the different sentencing dispositions. The fact is that the appellant pleaded guilty to three counts, whereas Munckton pleaded guilty to one. Not only that, but two of the counts to which the appellant pleaded guilty (namely counts 1 and 2) allege the dissemination of materially false and misleading information which the appellant knew to be false and misleading. These facts in themselves were sufficient reason to impose a sentence upon the appellant of a more
severe nature than that imposed upon Munckton. Furthermore, there were the differences in age and corporate experience which also justified the imposition of different sentences. Accordingly, I would not be prepared to uphold this ground asserting material “disparity”. The legitimate sense of grievance which the law requires to be entertained, not only by the appellant, but also by the objective by-stander, before a ground such as this can succeed does not, in my view, exist in this case. Even if it did, this is not a case where I think a different sentence ought to have been passed.
Manifest Excess
Miss Dixon argued that any term of actual imprisonment imposed upon the appellant was “tragic” for him. He had been of exemplary character, with a good background and record. She recognized, however, that a ground of appeal such as this does not admit of lengthy argument. The sentence on its face must appear to be so out of kilter with the circumstances of the crime committed and the appellant’s involvement in it, as to bespeak error on the part of the court which imposed it. Even if one thought that the crimes to which the appellant had pleaded guilty had been provoked by conduct which verged more on recklessness than deliberate fraud, one could never say that the sentences imposed by the judge in this case were beyond the range of those available to him.
In my view, the appeal should be dismissed.
ORMISTON, J.A.:
I agree both with the reasoning in the judgment of the Acting Chief Justice and in his conclusions.
BUCHANAN, J.A.:
I would dismiss the appeal for the reasons stated by the Acting Chief Justice.
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