R v Xx

[2020] NSWDC 771

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:

R v XX [2020] NSWDC 771

Hearing dates:

17 December 2020

Date of orders:

18 December 2020

Decision date:

18 December 2020

Jurisdiction:

Criminal

Before:

Abadee DCJ

Decision:

See paragraphs 137-139

Catchwords:

CRIMINAL LAW – sentencing – - fraud offences – solicitor misappropriation of clients’ monies in trust – multiple offences – additional offences on Form 1 – significance of offender’s Bipolar Disorder (1) which was undiagnosed at time of offending – whether causal nexus to offending – weight to usual sentencing considerations for offences of this kind, being general and personal deterrence – whether’ special circumstances’ arose

Legislation Cited:

Crimes Act 1900 (NSW), s 192E

Crimes (Sentencing Procedure) Act 1999 (NSW), ss 3A, 5 21A

Cases Cited:

Attorney-General’s Application under s 37 of the Crimes (Sentencing Procedure) Act 1999 (No.1 of 2002) (2002) 56 NSWLR 146

Director of Public Prosecutions (Cth) v De La Rosa (2010) 79 NSWLR 1

Hili v The Queen (2010) 85 ALJR 195

Johnson v R [2020] NSWCCA 126

Leung, Simon Yuk v R [2014] NSWCCA 44

McMahon v R [2011] NSWCCA 147

Oudomvilay v R [2006] NSWCCA 275

Parente v R (2017) 96 NSWLR 633

R v Curtis (No 3) [2016] NSWSC 866

R v Donald [2013] NSWCCA 238

R v El-Rashid (unrep, 7/4/95, NSWCCA)

R v Finnie [2002] NSWCCA 533

R v Glynatis (2013) 230 A Crim R 99; [2013] NSWCCA 131

R v Hawkins (1989) 45 A Crim R 430

R v Hinchcliffe [2013] NSWCCA 327

R v Hinchliffe [2013] NSWCCA 327

R v Marvin (NSWCCA, unreported 1 November 1995)

R v Mungomery (2004) 151 A Crim R 376

R v Pont (2000) 121 A Crim R 302

R v Smith (1987) 27 A Crim R 315

R v Stanbouli (2003) 141 A Crim R 531

R v Todorovic [2008] NSWCCA 49

R v Woodman [2001] NSWCCA 310

R v Wright (1997) 93 A Crim R 48

Stevens v R [2009] NSWCCA 260

The Queen v Olbrich (1999) 199 CLR 270

Texts Cited:

Odgers, Sentence (5th ed, 2020) Longueville Media

Category:

Sentence

Parties:

Director of Public Prosecutions
Mr XX

Representation:

Counsel:
Ms S Tasneem for the Director of Public Prosecutions
Mr P Lange for the offender

Solicitors:
Solicitor for the Director of Public Prosecutions
Hanna Legal for the offender

File Number(s):

2019/48381; 2019/363260

Publication restriction:

Non Publication Order on the name of the offender, any members of the offender’s family, or any information that may identify any of them.
A pseudonym has been used for the name of the offender.

SENTENCE REMARKS

BACKGROUND

1. The offender is before the Court for sentencing following his plea of guilty to five counts of dishonestly obtaining a financial advantage by deception, contrary to s 192E(1)(b) of the Crimes Act1900 (NSW). The offender, who at all material times was a legal practitioner, defrauded a large number of clients in a 14 month period from February 2018 to May 2019. The maximum punishment for this offence is 10 years’ imprisonment. There is no standard non-parole period for this offence.

2. The offender has also asked the Court to take into account, on a Form 1, five further offences under the same provision.

AGREED FACTS

3. There were two sets of agreed facts, signed by the offender and his legal representative in the sentencing proceeding, which are part of the Crown’s sentencing bundle. The longer version concerns all the offences (and the offences on the Form 1, save for the offence on the Form 1 that concerned the victim, Mr John Lawler). The shorter version concerned the additional offence involving Mr Lawler.

Background

4. The offender operated a business, which I will call ‘XX Lawyers’, with offices in Sydney and Brisbane, and also a firm, which I will call ‘YY Lawyers’, in Penrith. In 2018, XX Lawyers and the offender were engaged by several clients to handle their affairs. These involved many of the ‘bread and butter’ activities typically associated with a suburban legal practice: the sale and purchase of property, wills and probate, and family law proceedings. In handling his clients’ matters, the offender directed his clients to make payments into his trust account. What the clients did not know was that they were not, in fact, making payments into the trust account at all, or if they were, they did not know that the offender was immediately spending or transferring the deposits out of the account for other purposes not related to the client.

5. The offender’s modus operandi meant that on many occasions, the offender was unable to pay his clients and fulfil his obligations. This was manifested in a variety of ways, including: failing to pay other parties; breaching settlement agreements; and causing forfeiture of trust deposits. Ultimately, it was only because the offender received funds from other clients into his accounts or his transfer of funds from other accounts that he could pay his clients to some degree; although sometimes he made no attempts to repay them.

6. It was only a matter of time that the Law Society of NSW received complaints and initiated an investigation. In fairness to the offender, he met the receiver appointed to his practice or practices, provided relevant information and made certain admissions. This all helped the receiver to prepare his report and facilitate identification of most of the victims. This occurred in December 2018. In February 2019, he was charged with one offence of the present kind relating to misappropriation in the sum of $331,849.50. Eventually, the police became involved and initiated an investigation in April 2019.

7. But to his discredit, even after the involvement of the Law Society, the offender continued to have dealings with former clients and offered to supply legal services. This became the subject of an injunction application to the Supreme Court in August 2019.

Chronology of events

8. In its written submissions, the Crown produced a helpful chronology of the acts of misappropriation, cross-referenced to the relevant sequence offence. I reproduce, with some modification, part of that table below:

Offence	Date Range	Victims of Misappropriation
Sequence 1	26 February – 19 July 2018	Jodi Godfrey ($802,727.50, less $42,031.40 repaid by offender)
Sequence 2 – Form 1	12 September 2018	Larry and Patricia Mervin ($56,248.83 less $15,000 repaid by offender)
Sequence 3	9 – 11 October 2018	Julie Melrose ($1,207,023.36, less $1,105,523.36 repaid by offender)
Sequence 1 (taken into account on Form 1 to sequence 3)	31 October – 23 November 2018	John Lawler ($331,849.50, less $16,000 repaid by offender)
Sequence 4 – Form 1	19 November 2018	Hamada Alameddine ($139,387 less $10,000 repaid by offender)
Sequence 5 – Form 1	30 November 2018	Neal McFadgean and Roslyn Green ($58,800)
Sequence 6 – Form 1	3 December 2018	David Munro ($290,000)
Sequence 7	3-5 December 2018	Lars Glerup ($520,000)
Sequence 8	7 December 2018	Dennis Ellis and Mamie Ellis ($985,577.44)
Sequence 9	3 December 2018 – 10 May 2019	Peter Carter ($55,150)

9. Of course, the information in this table does not remotely convey the stories and human cost to the clients as a result of the offender’s fraudulent activities. The Agreed Facts (paragraphs 19-118) set out in extensive detail their stories. It suffices if I try to distil the essence of the fraudulent conduct in each case, by reference to each of the identified victims.

Sequence 1

10. Ms Godfrey was a client of XX Lawyers from June 2017, to assist her with various matters relating to her then husband, including an apprehended violence order, divorce proceedings and a property settlement. The matrimonial home was placed on the market in late 2017 but in February 2018, a portion of the proceeds of the sale was not deposited into the trust account, then in July 2018, another portion of the proceeds was deposited into the trust account but the next day was transferred into another account for the offender’s use. The offender had misappropriated the sum of $802,727.50. (Agreed Facts 19-27).

11. After consent orders were made by the Family Court in August 2008, Ms Godfrey required knee surgery, but was unable to access her share of the proceeds from the sale of the house and she had to borrow the sum of $50,000 from a close friend. The offender supplied excuses, regarding a need for repayment of Centrelink benefits and a need for the Law Society to issue a medical exemption. These excuses were false. By October 2018, Ms Godfrey still had not received property settlement monies, whilst her bills associated with the knee surgery were accumulating. After she made demand of him, the offender arranged to pay certain bills in October and November 2018 and another sum to allow her to partly repay her friend. These payments were made from the offender’s personal and business accounts (Agreed Facts 28-30).

Sequence 2 – Form 1

12. Mr Larry Mervin retained the offender to complete wills for himself and his terminally ill wife, Patricia. These were executed in March 2018. Mrs Mervin passed away on 27 August 2018. In September 2018, the offender advised Mr Mervin that he needed to sell assets in his late wife’s name in order to avoid tax. On 12 September 2018, Mr Mervin transferred the proceeds from the sale of his shares, in the sum of $56,248.83 in what he understood was the offender’s trust account. The same day, the offender transferred that amount into a business account and, thereafter, withdrew almost all of that money.

13. In September 2018, Mr Mervin obtained a death certificate and became anxious about obtaining probate so as to facilitate his access to these monies. He had bills to pay. The offender told him that it could take months for probate to be obtained. By November 2018, Mr Mervin was becoming more anxious so the offender arranged to pay him the sum of $7,500 to assist him to pay his bills. This was withdrawn from the offender’s business account. Mr Mervin persisted with his inquiry about when he could obtain the balance of the money and on 13 November 2018, another instalment of $7,500 was repaid to Mr Mervin. Out of the sum of $56,248.83 that the offender had misappropriated, $15,000 had been paid back (Agreed Facts 32-37).

Sequence 3

14. Ms Melrose was formerly an owner of the Willow Tree Roadhouse with her then partner, Mr Joe Fenech. But Mr Fenech developed a brain injury. Ms Melrose retained the offender to assist them with the sale of the business premises in January 2016. The mechanism to achieve this was setting up a vendor finance scheme when the new owners purchased the property. Ms Melrose’ name was placed on the mortgage. On 19 September 2018, Ms Melrose attended the offender’s office and signed some discharge mortgage documents as the new owners had sought to refinance. One of those owners wanted to re-borrow from Ms Melrose $1.2m to purchase other properties and Ms Melrose agreed. On 9 October 2018, the offender received settlement proceeds from the discharge of mortgage, representing the sum of $1,207,023.36, into his actual trust account. The next day, he represented to Ms Melrose that he would transfer all but a small proportion of those funds into an account in Ms Melrose’s name, but Ms Melrose told him to transfer the full amount.

15. But on 11 October 2018, the offender transferred the entire sum out of his trust account into his business account and from there, the offender made numerous transfers to other accounts and paid bills. The balance was brought down to just over $1,000 that day. On 12 October 2018, and in the belief that the sum of $1.2m was still in the offender’s trust account, Ms Melrose asked the offender to transfer a small sum ($5,523.36) into her trust account and hold the balance in his trust account until the new contract with the new owner was ready. The offender acknowledged her request that he would only hold the funds for a couple of weeks at most. But by 17 October 2018, Ms Melrose had not even received the small sum she asked to be transferred to her. The next day, the offender transferred the sum from a business account in his name.

16. By 23 November 2018, the new owner indicated that he still sought to borrow the $1.2m from her and Ms Melrose reminded the offender that the money was her only source of income. That day, however, she learnt from the Law Society investigator that her money had been transferred on 11 October 2018.

17. On 7 December 2018, the offender transferred (in separate amounts) an aggregate sum of $1,100,000 from a personal account in his name to Ms Melrose. These were largely funds belonging to Mr and Mrs Ellis, the victims of the offence sequence 8 (Agreed Facts 39-50).

Sequence 1 of H 136016101 – Form 1

18. In late October 2018, Mr John Lawler sought the offender’s services in relation to the purchase of a property in Queensland. On 31 October 2018, he transferred the sum of $300,000 into the offender’s trust account. The same day, the offender transferred the sum of $298,460 into a separate account in his name.

19. On 19 November 2018, the offender arranged for payment of the deposit and on 23 November 2018, Mr Lawler transferred a further sum of $31,849.50 to the offender’s trust account, and a small sum for a transfer fee. The same day, the offender arranged for the transfer of the larger amount which Mr Lawler had paid to him earlier, into a business account.

20. On 12 December 2018, Mr Lawler texted the offender an inquiry as to when the property would settle. He received no response from the offender.

Sequence 4 – Form 1

21. Mr Hamada Alameddine is the director of a company and controls a family trust. The offender acted for him prior to the subject offending. For the subject offence, he acted for Mr Alameddine on the purchase of commercial property in Queensland in a contract entered into on 13 November 2018. On 19 November 2018, Mr Alameddine transferred the sum of $139,387 into an account nominated by the offender. This was a business account. That same day, the offender transferred the sum of $10,000 from that business account to the trust account of a real estate agent and, further, withdrew the sum of nearly $200,000 from the business account, leaving it with a zero balance.

22. The offender unilaterally altered the settlement date on the sale on 30 November 2018, to 3 December 2018. Nearly a week later, Mr Alameddine asked if the settlement was delayed again. Mr Alameddine became sick with a viral infection, requiring his admission to hospital on 10 December 2018. The next day, he inquired of the offender whether settlement had been delayed again. But on 11 December 2018, a sales agent contacted Mr Alameddine, informed him that the settlement date had been altered to that date and that because he had transferred the funds, settlement could not take place that date. Mr Alameddine unsuccessfully tried to call the offender. Mr Alameddine was eventually able to obtain monies from the Fidelity Fund, but this required him to incur additional expenses of engaging a new lawyer, a fee for the vendors and penalty interest (Agreed Facts 52-60).

Sequence 5 – Form 1

23. In October 2016, Mr Neil McFadgean was diagnosed with Alzheimer’s disease. His daughter, Mrs Roslyn Green became his guardian in April 2017. But in August 2018, Mrs Green’s husband received a diagnosis of cancer, and this meant that Mrs Green could not continue to care for Mr McFadgean, or at least not as much. He needed to go into an aged care facility.

24. In September 2018, the offender was approached by Mrs Green to arrange for the sale of his residential property. On 8 October 2018, that property was sold for the sum of $800,000. It was from about the middle of October 2018 that the offender became involved in the transaction.

25. From late November 2018, at a time when she was making daily attendances at hospital to visit her husband for chemotherapy treatment, the offender informed Mrs Green of a delay to the settlement of the sale. He represented that her permission was required to facilitate access to the residential premises to secure a fence.

26. On 30 November 2018, the offender directed a real estate agent to transfer the balance of the deposit ($80,000) into a nominated account. The offender had nominated a business account; not a trust account. Immediately after it was made, the offender transferred the sum of $58,000 into a personal account in his name, a significant portion of which was used to pay business expenses.

27. On 7 December 2018, Mrs Green phoned the offender, who told her to attend settlement on 17 December 2018 and to bring a certificate of title to the property. She did not hear from the offender again. After the intervention of a different solicitor, settlement only occurred in late January 2019 (Agreed Facts 61-72).

Sequence 6 – Form 1

28. Mr David Munro is a former serving member of the Royal Australian Air Force. He had been discharged due to his medical condition and was due to receive compensation from the Department of Veteran Affairs (‘DVA’). On 23 November 2018, he agreed to purchase a residence in Raymond Terrace. On 30 November 2018, after receiving a referral to the offender, he deposited the sum of $2,500 into an account in the name of ‘YY Lawyers Trust’. This was not a designated trust account.

29. After he received the sum of $302,000 from the DVA, on 3 December 2018, Mr Munro transferred the sum of $290,000, by way of international money transfer, as directed by the offender. This was a business account associated with YY Lawyers Pty Ltd. It was not a designated trust account. The same day, the offender transferred the entire sum out of the account, leaving it with a negative balance.

30. On 4 December 2018, Mr Munro drove to the offender’s place of practice in Hornsby, but was unable to see the offender. He tried to call the offender on 11 December, the day before contracts were due to exchange. He was again told that the offender was unable to speak with him (Agreed Facts 73-79).

Sequence 7

31. Ms Renie Bartsch is the offender’s mother-in-law. She and Mr Glerup, Ms Bartsch’s de facto partner, were interested in purchasing a property in Queensland. By late November 2018, it appeared that Ms Bartsch and Mr Glerup had secured the means to finance that purchase, including proposed financial assistance from Ms Bartsch’s father (Dieter Bartsch).

32. On 2 December 2018, and after inspecting the property, they contacted the offender. The offender offered to negotiate as their agent for the purchase of the property. Since no contract for sale had been seen, on 3 December 2018, Mr Glerup transferred to the offender the sum of $70,000 as a sum representing his estimate of what the deposit was likely to be. The sum was transferred to the offender’s business account.

33. The next day, the offender transferred that same sum into an account titled ‘Queensland Building Business Account’. Later that evening, the offender directed Dieter Bartsch to transfer the sum of $450,000 into his ‘trust account’. This appears to have been done without Mr Glerup’s knowledge. At any rate, the offender explained to Mr Glerup that by procuring this sum, he and Ms Bartsch could show the vendor that they were ‘cash buyers’ and enable them to get a better deal. Both of them signed a contract and made an offer of $640,000 for the property.

34. On 5 December 2018, Dieter Bartsch transferred the sum of $450,000 to an account in the name of YY Lawyers. The same day, the offender transferred the sum of $449,000 out of that account into a personal account in his name. Subsequent transfers from that personal account resulted in there being only 2 cents in balance as at 11 December 2018.

35. After some negotiations regarding repairs to the property, the exchange of contracts should have occurred on 12 December 2018. At 4:45pm that day, Mr Glerup was informed by the vendor’s solicitors that the deposit had not been paid and that they had been unable to contact the offender.

36. Eventually, funds were received from the Fidelity Fund to meet the purchase price, but Mr Glerup and Ms Bartsch incurred additional expenses and, what is worse, the Law Society of NSW now has a registered interest on the property until they are able to sell their other home (Agreed Facts 80-89).

Sequence 8

37. Mr and Mrs Ellis are married and are both retired pensioners. In September 2018, it became necessary to sell their suburban home to enable Mrs Ellis to move into a Uniting Care operated independent living unit complex. Their son, Mr Roy Ellis, held a power of attorney for both parents. Roy Ellis knew of the offender from work that the latter had performed 10 years before.

38. On 2 November 2018, Mr and Mrs Ellis entered a contract for the sale of their home for a purchase price of $1,038,000. The contract provided that on settlement, the sum of $985,557.44 would be paid by the purchasers into the offender’s trust account. Roy Ellis instructed the offender to transfer $968,310 into the Uniting Care account to facilitate the acquisition of the new unit; with the balance to be used to pay the offender’s fees and provide a sum of approximately $15,000 into a joint account for Mr and Mrs Ellis.

39. On 7 December 2018, the sum of $985,577.44 was paid into a personal account in the offender’s name. The same day, the offender made two separate payments into Ms Melrose’s trust account (the subject of offence sequence 3) in the aggregate amount of $1,100,000, leaving only $6,500 in the account after the payments.

40. Later that afternoon, the offender assured Roy Ellis that the funds would be paid to Uniting Care by 11 or 12 December 2018. This did not occur. Only the deposit (less the agent’s commission) was received.

41. After Roy Ellis learnt, on 14 December 2018, that the offender’s practice had been placed into receivership, and that the entire proceeds from the sale had been dissipated, he was forced to negotiate with Uniting Care, as his mother was in danger of being evicted just before Christmas (Agreed Facts 90-97).

Sequence 9

42. Mr Peter Carter owns a business in Western Australia. In May 2018, he received correspondence from American Express Australia Ltd (‘AMEX’) relating to an outstanding balance on his credit card of $96,000. He was in the process of paying back $5,000 a month.

43. In late July 2018, Mr Carter was served with an originating process in the Hornsby Local Court issued by AMEX for recovery of a sum exceeding $100,000 against Mr Carter personally, and his business.

44. Mr Carter sought representation in the litigation. On 6 August 2018, the offender told him it would cost him $1,000 to write a letter and represent him. Mr Carter retained him in order to try to negotiate a settlement with AMEX for the debt claim.

45. Separately, by August 2018, AMEX increased the monthly repayments on the credit card, but Mr Carter found them difficult to pay. He continued to receive invoices from the offender in August and November 2018 for small amounts of legal fees.

46. In early December 2018, he inquired of the offender whether he had had talks with AMEX and the offender told him he had not. In response to Mr Carter’s suggestion that a $5,000 transfer be made to AMEX, the offender persuaded Mr Carter to transfer that sum to his account as it would “look better coming from our trust account… and they can see the funds are in account. They will see the funds are guaranteed, and we can negotiate a better deal.” Relying upon that advice, and in the expectation that it would be transferred to AMEX or its lawyers to reduce the size of his debt, on 3 December 2018, Mr Carter transferred the sum of $5,000 to a business account linked to the offender.

47. But on 7 January 2019, Mr Carter was notified by AMEX’s lawyers that judgment had been entered against him for the sum of $88,072.49 and demanded payment within 7 days. Mr Carter thereupon rang the offender who assured him that he would correspond with AMEX’s lawyers and would ‘sort out’ the problem. In the course of that conversation, the offender told Mr Carter that he was in the process of changing practices.

48. On 8 January 2019, Mr Carter made a direct payment to AMEX of $5,000. After doing so, he rang the offender and informed him of that fact. The offender told Mr Carter to “stop that” and not pay AMEX directly. He requested that he be allowed to ‘negotiate’ for Mr Carter since it would ‘look better’.

49. Three days later, Mr Carter transferred another $5,000 to an account with a different name. This was a business account in the name of Abdul Saleem Kassem (the ‘Kassem account’).

50. On 8 February 2019, Mr Carter authorised the offender to make two credit card payments in the combined sum of $5,000 into the Kassem account. On 17 February 2019, Mr Carter made a further transfer of $5,000, but this time to a personal account in the offender’s name.

51. In late February 2019, the offender represented to Mr Carter that he would try to put a ‘deal’ together for AMEX. He said to Mr Carter that if he could come up with $30,000 by the end of March, AMEX would forgive the balance of the debt. It appears that from February to early May 2019 Mr Carter continued to pay the offender and even granted him access to his internet banking account.

52. Mr Carter expected that the offender would correspond with AMEX, but in the event, the debt remained outstanding. Mr Carter asked the offender to commence a proceeding against AMEX. On 9 May 2019, the offender told Mr Carter he would be awarded the sum of $180,000-$200,000 in damages. The next day he asked Mr Carter to pay some money into the ‘S Law Group’ office account for court filing fees. As Mr Carter only had $380 in his account, the offender accepted the sum of $300.

53. By early June 2019, the offender was still nourishing Mr Carter’s expectations that he might obtain compensation from AMEX and asked for more money from Mr Carter, until 6 June 2019, when after promising to call Mr Carter the following day, he did not do so. Mr Carter did not hear from the offender again (Agreed Facts 98-113).

54. The offender was aware, from early December 2018, that the Law Society was investigating him yet he continued to withdraw and/or transfer funds from various bank accounts. None of the monies ($55,150) that Mr Carter paid to the offender’s accounts were used to repay AMEX. Mr Carter also paid legal fees to the offender in the sum of $2,990.

Objective gravity

55. The following features have been identified in the authorities as influencing the assessment of the gravity of this offence:

1. the amount of money involved[1] (and whether the loss is irretrievable)[2] ;

2. the length of time over which the offences are committed[3]  ;

3. the impact on public confidence [4] ; and

4. the impact on the victim [5] .

   1. R v Hawkins (1989) 45 A Crim R 430, R v Mungomery (2004) 151 A Crim R 376 at [40], R v Woodman [2001] NSWCCA 310, R v Finnie [2002] NSWCCA 533 at [59].

   2. R v Todorovic [2008] NSWCCA 49 at [19].

   3. R v Pont (2000) 121 A Crim R 302 at [74], [75], R v Mungomery at [40].

   4. R v Pont at [74], [75].

   5. R v Pont at [74], [75].

56. Although to some extent self-explanatory, some of the factors require explanation in terms of their significance to the overall assessment of objective gravity of the offending. In R v Finnie [2002] NSWCCA 533 at [59] it was held that although the amount of money defrauded is not determinative of the seriousness of the offence it “is relevant to a degree and particularly where the offences are premeditated, committed on a number of separate occasions and involve a degree of planning, and are for substantial amounts of money”.

57. Further, where, as here, a professional association has a Fidelity Fund to assist victims of fraud to recoup some of their losses, this is irrelevant when weighing the circumstance of how much was fraudulently obtained[6] .

    6. Stevens v R [2009] NSWCCA 260 at [69].

58. Here, the Crown’s quantification of the amount misappropriated was slightly complicated after taking into account some of the money repaid. The Crown quantified the amount misappropriated was $4,436,763.57, but once the repayments were taken into account, the amount of money obtained and never returned to the victims, collectively, was in the sum of $3,248,208.81. That is a substantial amount of money from anyone’s perspective.

59. The length of time can be relevant to indicate the degree of planning and to show it was not an impulsive offence. It also serves to reduce the weight accorded to prior good character. The period of offending here was not insubstantial, being around 14 months.

60. A further factor of significance, in addition to those I have mentioned, was the methods of evasion deployed by the offender. This, I think, is distinct from the consideration of planning, which I refer to below. Clients were ‘fobbed off’, their monies were intermingled with the offender’s monies and recycled as between different accounts and some clients were inveigled to transfer cash to him following representations of the benefits that might accrue to them.

61. The effect of the offender’s conduct on community confidence in the legal profession is also distinct from the aggravating circumstance of a breach of trust towards the offender’s clients, to which I will shortly refer.

62. Further, as the Crown notes in its written submissions, some of the victims were placed in circumstances involving some financial or other personal vulnerability or distress. Ms Godfrey was struggling to pay surgery bills; Mrs Ellis faced eviction from her nursing home due to her non-payment of fees, and Mrs Green had the sale of her property delayed as a result of the offending whilst she was caring for her terminally ill partner. I accept the Crown’s submission that notwithstanding the circumstance that the offending conduct did not give rise to the aggravating circumstance in s 21A(2)(l) of the Crimes (Sentencing Procedure) Act 1999 (NSW) (the ‘CSP Act’), these circumstances are relevant to the assessment of their objective gravity.

63. Whilst acknowledging that there may have been some differences between the principal offences, the Crown submits that viewing the position in its totality, the objective gravity was at the upper end of the range for this category of offending, having regard to the significant amount of money misappropriated, the significant period of time over which the offending occurred and the motive. Other considerations were relied upon as well in the Crown’s submissions, but they are referred to below in the section concerning aggravating factors.

The offender’s submissions

64. The Offender’s Counsel acknowledged the very serious nature of offending, of this kind, by an officer of the Court, but he urged the Court not to adopt any blanket assessment overall. Rather, the Court had to consider the gravity of each offence separately. In this regard, although it was true that there was a similar pattern of offending, there were differences. For example, for sequence 3, in relation to Ms Godfrey, the harm to her had been redressed independently of the Fidelity Fund. She had been repaid as a result of the offending conduct in relation to sequence 8. The Court should avoid ‘double counting’.

65. Whilst accepting that the amounts that the victims received from the Fidelity Fund should not be taken into account in assessing what, if any losses were sustained by individual clients, nevertheless, he submitted that the question whether loss was irretrievable was a relevant consideration to objective gravity[7] .

    7. R v Todorovic at [19].

66. As to the general nature of the offending, Counsel for the offender acknowledged that the pattern involved the offender often ‘robbing Peter to pay Paul’, but baulked at the characterisation of the offending as amounting to a Ponzi scheme. There was no evidence of any planning or deliberation to setting up a scheme to leverage payments received from one client to pay off other clients from whom he had taken monies.

67. Counsel for the offender submitted that the Court should take into account the mental illness of the offender when assessing objective gravity. For myself, I regard issues associated with the mental illness or disorder of the offender as relevant to his subjective case, to which I will later turn to at length in these remarks. Counsel accepted that to approach the matter in that way should not affect the outcome of the sentencing process.

68. The offender’s Counsel submitted that for all offences save for sequence 3 and sequence 9, they fell above the mid-range.

69. I accept that the happenstance that Ms Melrose received effective reimbursement of her losses from Mr and Mrs Ellis does sound in a reduction of the gravity of the offending conduct towards her, and to fail to recognise that could result in double counting. At the same time, the circumstance does not help the offender in relation to sequence 8 which concerns Mr and Mrs Ellis. That being so, I would assess the gravity of the offending conduct in relation to sequence 3 at about the mid-range of offending.

70. In relation to sequence 9, although the amount of money lost was not as significant as for some of the other offences, the length of time of the offending was more protracted, which undercuts the offender’s submission as to the relative impulsivity of the offending. I would regard that offence as being at the mid-range of objective gravity as well.

71. For the balance of the principal offences (sequences 1, 7 and 8), I do not see any material distinction in the gravity of that offending. I regard the offending for each of those offences as being above the mid-range and towards the high-range of objective seriousness of offending of this kind.

72. I now turn to certain aggravating circumstances relied upon by the Crown.

Aggravating circumstances

73. The fact that the offence involved a breach of trust is an aggravating factor to be taken into account under s 21A(2)(k) CSP Act. The breach of trust arises where it is the victim of the offence who has imposed that trust[8] . A solicitor who appropriates trust funds to his own use is an exemplar of this consideration. It has been observed that those who are placed in a special position of trust by the law and the community, such as solicitors and other professionals, who abuse that trust, call their profession into question and merit sentences calculated to ensure that other professionals will be left in no doubt that serious consequences will follow[9] , although I have alluded to this also in the context of the objective gravity of the offending.

    8. R v Stanbouli (2003) 141 A Crim R 531 at [34].

    9. R v Pont at [47].

74. The Crown submitted that the offending was part of a planned activity as an aggravating factor to be taken into account under s 21A(2)(n) of the CSP Act. Here, as the Crown noted, the offending periods overlapped and, even more egregiously, the offender relied upon some fraudulent transactions with some victims (the victims of sequence 8) to assist him to manage his relations with other clients (the victims of sequence 3). I accept that, in a general sense, there was some planning in connection with the offending in each case. I am not, however, satisfied that there was planning in the sense required by this provision. I do not see any singular extensive criminal undertaking, and although it is the case that there are multiple victims and there is a pattern of offending conduct, I remain unconvinced that they could be said to be ‘organised’. This Court has presented to it a woeful series of circumstances affecting a range of the offender’s former clients. But there was no evidence as to how many clients that the offender had within the offending period; whether some of them were treated with dishonesty or in breach of trust like these unfortunate clients, to suggest the sort of systemic enterprise associated with this aggravating factor. I do not accept that this aggravating factor is made out on the requisite standard. I consider later, in the offender’s subjective case, the offender’s related submission that, on account of his mental disorder, his offending conduct in each case could be characterised as ‘impulsive’.

75. Although offending motivated by financial gain may be regarded as an aggravating factor in some circumstances (s 21A(2)(o) of the CSP Act), I also consider that factor below in my consideration of the offender’s subjective case as is also affected by his mental disorder.

Form 1 offences

76. I take into account, in each of the principal offences, the further offences associated with each of them, which are understood as enhancing the sentencing considerations of elevating personal deterrence and the community expectation of exacting retribution, within the parameters of the maximum punishment for the offence and the overall principle of totality[10] .

    10. Attorney-General’s Application under s 37 of the Crimes (Sentencing Procedure) Act 1999 (No.1 of 2002) (2002) 56 NSWLR 146 per Spigelman CJ (Wood CJ at CL, Grove, Sully and James JJ agreeing) at [41]-[44].

77. Counsel for the offender submitted that these Form 1 offences should be given significantly lower salience in the sentencing process.

78. I refer later at greater length to the relevance of the offender’s mental condition to the offending. As will be shown, although it generally plays some part in reducing the consideration of subjective deterrence, when combined with other subjective circumstances in the offender’s case, it does not diminish entirely the need for subjective deterrence, having regard to the circumstances of the additional offences. In my view, also, the circumstances of the offending in the additional offences, involving other victims, and other amounts of money, at different times, does enhance the retributive consideration applicable to each of the principle offences.

THE OFFENDER’S SUBJECTIVE CIRCUMSTANCES

Age & background

79. The offender was born in 1982. He was aged between 35 and 36 years during the period of his offending. He met his wife in 2007 and became married in 2013. They have no children from the marriage. It appears that his marriage has now broken down.

Mental condition

80. It is an agreed fact that since April 2019, the offender has been treated for bipolar disorder. On several occasions in 2019, he was admitted to and discharged from Gordon Private Hospital. He takes prescribed medication.

81. The main battleground in this sentencing proceeding concerns the related questions of the extent to which, if at all, the offender’s bipolar disorder caused or contributed to the offending, and therefore reduced his culpability, and the weight ordinarily given in offences of this kind to the sentencing consideration of general deterrence.

Onus of proof

82. The offender relied upon reports from three psychiatrists, Dr Artin Jebejian (the offender’s treating psychiatrist), Dr Alexey Sidorov and Dr Richard Furst (the last two being forensic psychiatrists). Naturally all of them were dependent, to a substantial degree, on out of court statements and opinions supplied to them by the offender. None of them were required to attend for cross-examination. However, although he furnished the Court with a personal written statement, the offender did not himself give evidence and could not be cross-examined on what he told any of the psychiatrists.

83. In R v Hinchcliffe [2013] NSWCCA 327 at [126], Johnson J (Leeming JA and Hall J agreeing) noted that on the issue of any connection between a mental condition and the criminal conduct, the offender carried the onus of proof, on the balance of probabilities: The Queen v Olbrich (1999) 199 CLR 270 at 281 [27]-[28].

Evidence

84. Dr Jebejian is the offender’s treating psychiatrist, seeing him after the offender had been admitted to his care in April 2019. He recounted a history in which the offender had suffered the death of a brother – for which he received no counselling – when he was only 10 years old, and that the offender had been diagnosed with Attention Deficit Hyperactivity Disorder, at school and university. At the age of about 18, the offender saw a psychologist after experiencing panic attacks. He was reputed to have had suffered panic attacks in his last year of senior school and after 2009, was reputed to have had a difficult relationship with his family who disapproved of a girlfriend. Whilst at university, it was said that he abused various illicit drugs. From 2011, he received a diagnosis of depression from a psychiatrist, Dr Cassimatis, after seeing him between 2011 and 2015. But thereafter the offender did not consult any mental health professional until he re-engaged with Dr Cassimatis between August 2018 and March 2019.

84. Dr Jebejian diagnosed the offender as suffering from severe Bipolar 1 Disorder and says he has suffered severe manic and depressive episodes, impairing his social and occupational functioning. During the manic episodes, it was said that the offender might develop an overconfident and grandiose self-esteem, disinhibited behaviour and impulsiveness, erratic spending, and irrational decision-making. His depressive episodes involved, amongst other things, low moods, lack of motivation and a lack of functionality. His diagnosis also contained psychotic features, reporting, amongst other things, conversations with his deceased brother. Dr Jebejian opined that his episodes could cover several days, but could extend for weeks, or be as short as a matter of hours. But his episodes ‘came to a head’ in 2018.

85. Dr Jebejian explained that Bipolar 1 Disorder is a disabling psychiatric illness which often goes unrecognised and, if it is not managed, it can significantly impair judgment. He recorded that Dr Cassimatis had diagnosed him with Bipolar II Disorder in 2012 and provided him with certain prescribed medicines, but after seeing him irregularly between 2012 and 2015, the offender did not see Dr Cassimatis again until August 2018. Dr Jebejian opined that a failure to diagnose led to a delay in appropriate treatment and led to the situation where symptoms of the condition were allowed to fester unmitigated. Dr Jebejian outlined his treatment of the offender and noted that although the treatment yielded benefit, the offender’s condition remains and he requires long term treatment.

86. Dr Sidorov, a consultant forensic psychiatrist, provided a medicolegal report based upon an assessment undertaken, by audio visual link, on 23 October 2020. Dr Sidorov also diagnosed a Bipolar Affective Disorder Type 1, based upon a history of manic episodes and depressive episodes. The Disorder was also likely exacerbated by his substance abuse. The effects of the manic episodes were to exacerbate his mood instability, contribute to his being more disinhibited, lose his ability for rational judgment and engage in the offending conduct. He opined that the circumstance that his mental illness was not appropriately treated at an earlier time contributed to his offending behaviour by causing him to become more disinhibited. He should have received mood stabilisers and his difficulties were exacerbated by his abuse of illicit drugs. He also opined that incarceration is likely to be a more stressful experience increasing the risk of a deterioration of his mental illness.

87. Dr Furst is also a forensic psychiatrist. In his comprehensive report, Dr Furst received an account from the offender as to the circumstances of his offending. The offender reported to him that his mood was bad from the beginning of 2018, he reported that he would get “really high”, engage in offending conduct and then ask himself “what have I done?” whilst feeling ashamed and sorry. He acknowledged that he had been “robbing Peter to pay Paul... I would get manic. Either that or kill myself.” He reported to Dr Furst of money problems, staff problems and acknowledged his inability to distinguish monies in his trust account and monies in other accounts. He reported to Dr Furst his regret for his actions, indicating that he had sleepless nights reflecting upon the hurt he had caused.

88. Dr Furst also diagnosed bipolar affective disorder. He opined that the offender was suffering from the effects of poorly controlled bipolar affective disorder in 2018 and 2019, coinciding with the period in which the fraudulent conduct was committed. More specifically, after considering the agreed facts, Dr Furst opined that his poorly controlled bipolar disorder substantially contributed to his offending, during episodes of frequent and sustained manic episodes, featuring amongst other things, impulsivity, disinhibition, grandiosity and impaired judgment.

89. Dr Furst further opined that the absence of adequate treatment of his bipolar disorder, being mood stabilisers, at an earlier age likely contributed to the greater severity and frequency of those manic episodes. His rate of relapsing into either depression or mania was probably at least twice as high as it would have been, if his disorder had been more effectively treated.

90. Dr Furst was critical of the earlier professional treatment that the offender received. Apart from not being prescribed mood stabilisers, he believed that the offender had been erroneously diagnosed with ADHD and that this erroneous diagnosis led to his being prescribed a medication which destabilised his mood and increased the risk of his relapsing into mania. He also received antidepressant medication which may have been counterproductive to assisting with mood stability over the longer term. These drugs, in combination with the offender’s substance (cocaine) abuse would have been cumulative in terms of their destabilising impact upon his disorder.

91. I accept the medical opinions as to the offender’s diagnosis and the psychiatrists’ explanation of the effects and symptoms of that disorder.

Consideration

93. The offender’s Counsel submits that the Court should apply the principles of Director of Public Prosecutions (Cth) v De La Rosa (2010) 79 NSWLR 1 per McClellan CJ at CL, being as follows (citations omitted):

“• Where the state of a person’s mental health contributes to the commission of the offence in a material way, the offender’s moral culpability may be reduced. Consequently the need to denounce the crime may be reduced with a reduction in the sentence...

• It may also have the consequence that an offender is an inappropriate vehicle for general deterrence resulting in a reduction in the sentence which would otherwise have been imposed.

• It may mean that a custodial sentence may weigh more heavily on the person. Because the sentence will be more onerous for that person the length of the prison term or the conditions under which it is served may be reduced.

• It may reduce or eliminate the significance of specific deterrence

• Conversely, it may be that because of a person’s mental illness, they present more of a danger to the community. In those circumstances, considerations of specific deterrence may result in an increased sentence... Where a person has been diagnosed with an Antisocial Personality Disorder there may be a particular need to give consideration to the protection of the public.”

94. Where mental disorder is identified, it is well established that the extent to which the culpability of the offender is reduced, the requirement for general deterrence is to be moderated depends upon the nature and degree of the abnormality and the extent of its contribution to the offending conduct[11] . This is assessed by reference to a range of factors, including, whether the offender:

    11. Leung, Simon Yuk v R [2014] NSWCCA 44 at [67]-[68].

1. was in control of his cognitive faculties or emotional restraints;

2. had the capacity to make reasoned or ordered judgments;

3. was aware of the likely consequences of his or her conduct; and

4. appreciated the wrongfulness of his conduct, or of its moral culpability,

(see Odgers, Sentence (5th ed, 2020) Longueville Media, [4.74], p 335).

95. The offender’s Counsel submitted that all of the mitigating aspects identified by the principles in De La Rosa apply to this offender.

96. The solicitor advocate for the Crown acknowledged the offender’s mental disorder, and did not dispute that some causal attribution may be given to the disorder for the offending but submitted that the evidence indicated a ‘high functioning’ professional who, the agreed facts indicated, knew exactly what he was doing, and the wrongfulness of what he was doing. The latter feature was manifested by various ‘subterfuges’ and deceptions perpetrated against the individual victims. She drew a distinction between the effects of manic episodes, such as an impulsive, or disinhibited desire to engage in unusual or risky activities, such as bursts of spending and the calculated (and reasoned or rational) means by which the offender obtained the monies, which facilitated these unusual or risky pursuits.

97. Prior to De La Rosa, Hunt CJ at CL in R v Wright (1997) 93 A Crim R 48 acknowledged at [52] the significance of an offender’s suffering from a mental disorder in much the same way as was later identified by McClellan CJ at CL, but noted that whilst it was appropriate to moderate the sentencing principle of general deterrence, if the offender acted with knowledge of what he was doing and with the knowledge of the gravity of his actions, the moderation need not be great.

98. Hunt CJ at CL also noted that the significance of any mental incapacity has to be evaluated in light of the facts and circumstances of the individual case.

99. Also, in R v Donald [2013] NSWCCA 238, another case where an offender had bipolar disorder, the mental disorder was accepted to have compromised his ability to control his faculties and emotions, but it did not render him unable to understand the wrongfulness of his actions or to make reasonable judgments. In that case, the Court of Criminal Appeal determined that the offender’s moral culpability was moderately reduced, however there was still a significant role for general deterrence to play: at [76].

100. I consider that the offenders’ mental disorder is most relevantly assessed with reference to the following passage from Dr Furst’s report:

“The specific features of manic episodes that are causally connected with his offending conduct include elevation of mood, impulsivity, disinhibition, grandiosity and impaired judgment. People with mania typically have increased goal directed activities, including making grand plans, having decreased need for sleep, talking more than usual and spending more than usual. Libido is also typically increased and the rate of alcoholic consumption and drug use is substantially higher in people with bipolar disorder, especially when manic.

The poor judgement and poor planning that appears to have been evident when [the offender] opened extra offices and employed extra staff, incurring financial losses, was probably also precipitated and maintained by his mania/bipolar disorder, setting the foundation for later financial difficulties and being a further contributing factor to his offending.”

101. In his letters of apology to the various victims, the offender does not specifically identify the purposes for which he applied the misappropriated monies. It did not appear that he had any gambling or drug addiction, or used monies to sustain an extravagant lifestyle, which explains the motive of many other offenders for this type of offence. To Dr Furst, he confided that he had “Money problems. Staff problems”. I am prepared to infer that his manic episodes caused him to make decisions which resulted in his becoming generally over-extended in his professional life and caused financial strain. His motivation, such as it could be divined, may generally be regarded as being not purely of greed, but more financial need to redress the financial consequences of bad decisions contributed to by the disorder. Where fraud is based on greed, rather than need, it has been said that the sentence imposed should be longer[12] . It is in this sense that I find that a causal connection of some kind between the mental disorder and the offending has occurred and which, in my view, to some degree diminishes his culpability. That is relevant in reducing the weight to be ordinarily accorded to subjective deterrence and also the need for denunciation of his conduct.

     12. R v Glynatis (2013) 230 A Crim R 99; [2013] NSWCCA 131 at [48].

102. That disorder may have been evident from 2012. I accept that the misdiagnosis and subsequent mis-prescription of medication has in all likelihood hastened the deterioration in that mental condition in the manner suggested by the offender’s psychiatrists. However, there is no question that for him to perpetrate the wrongs that he did, the offender was in command of his cognitive faculties. To the contrary, he ‘functioned’ at a high level. The ability to engage with a number of clients and receive and transfer large amounts of money do not betoken cognitive incapacity.

103. I do not accept that when he asked his trusting clients to transfer monies to his firm’s trust account, and thereafter diverted them to another account or accounts he controlled or dissipated them altogether for his benefit (whether it be personal or for his business) he was unaware of the certainty, if not substantial probability, that he was inflicting substantial financial losses upon his clients. I am unable to accept that, at the time of the offending, the offender did not understand the wrongful nature of his actions. To make such a finding would effectively controvert the effect of his pleas, which contains an element of dishonesty.

104. Nor do I accept the submission of the offender’s counsel in reply that the offender’s conduct after he had appropriated the monies is irrelevant. I accept the Crown’s submission that such conduct might generally be characterised as him engaging in obfuscation, evasion and involved continued acts of deception against clients who trusted him. This all betokened the dishonesty.

105. Nor do I accept the offender’s characterisation of the offending as impulsive, or spontaneous and attributable only to his mental disorder. Although there was some limited and generic evidence of the duration of manic episodes from Dr Jebejian, I am not persuaded that given the number of offences and the overall period of offending, that it could be said that he was in any continuous state where he could not bring rational judgment to bear. The circumstance that he continued to work for so long militates against such finding. Further, the circumstance that many of the transactions involved the conveyance of real property (Ms Godfrey, Mr Alameddine, Mr McFadgean, Mr Munro, Mr Glerup, Mr and Mrs Ellis and Mr Lawler), or court proceedings (Ms Mervin, Mr Carter) over periods of time – not requiring instantaneous conduct – is indicative of periods where it would ordinarily be expected that his mood had stabilised. In the absence of specific evidence to the contrary, I find that he had generally had time to think about his wrongdoing and the consequences of his wrongdoing.

106. I find that the paramount consideration of general deterrence to offending of this kind remains applicable, albeit that it is appropriate for it to be moderately reduced to a small degree. As I have indicated, the disorder is more relevant in reducing subjective deterrence and denunciation.

107. I accept that, in the light of his condition, the offender already has and will continue to find that incarceration will be more onerous for him than other inmates not afflicted with the same condition. Although this is a mitigating circumstance, it remains the case that ill-health cannot provide a license to commit crime (R v Smith (1987) 27 A Crim R 315 at 317).

Antecedents

108. The offender has had some relatively minor traffic offences. Otherwise, his record is unblemished.

Guilty plea

109. The Crown accepts that the offender is entitled to a 25% reduction on sentence and the individual indicative sentences.

Character

110. No character witnesses were called and no written testimonials were supplied regarding the offender’s good character.

Remorse

111. The offender supplied the Court with a personal written statement. In it, he asserted that it was only in April 2019 that he received the Bipolar diagnosis and it was only when he was in custody, and particularly after hospitalisation, that he really understood what had been wrong with him. He indicated suicidal ideation, based upon what he called the tremendous hurt and pain he had caused his clients. He acknowledged that he had breached the trust they had reposed in him to safeguard their money. He acknowledged taking advantage of their naiveté and the personal relationships for his own benefit and business and expressed that he was deeply ashamed of what he did to each victim. He said he wanted to apologise to the Law Society and legal profession, which he acknowledged bringing into disrepute. He also acknowledged causing significant harm to his family.

112. The offender’s legal representatives placed before the Court a bundle of letters, signed by the offender, to all of his victims. In those letters, he addressed and acknowledged the extent of wrongdoing and apologised to each victim. It is clear that he retained a vivid recollection of how he had committed the wrong. It is fair to acknowledge that the letters were not of the ‘template’ variety. Each of them were tailored to the particular circumstances of each victim.

113. I accept that the offender is remorseful.

114. The Crown also has noted that the offender made several admissions to the NSW Law Society and the receiver appointed to his practice or practices in December 2018 and also cooperated with that association’s investigation. These matters do not inflate the level of discount received on the guilty plea, but are relevant to proving remorse and also enhanced prospects of rehabilitation and I take into account his admissions and assistance in that way.

Prospects of re-offending

115. In his personal written statement to the Court, the offender asserted that he had developed insight, whilst in custody, as to his wrongful conduct.

116. Dr Furst has opined that the offender stands apart from the majority of inmates that come before the Court, given his conservative, religious family and professional background. He opined that his offending occurred when he was of highly unstable mood, but given that more effective mood-stabilisation would be expected, and given also his suspension from legal practice, he considered that there was no risk of violent, sexual or any other serious forms of re-offending. Whilst I do not entirely accept the premises for the opinion, I agree with the conclusion, but for different reasons.

117. I agree with the submission of Counsel for the offender that it is inevitable that that the plaintiff will not be placed again in the roles of officer of the court or occupy any professional position of trust or act in a fiduciary capacity. Leaving aside the circumstance of his remorse, which fortifies the offender’s position in this regard, his prospects of re-offending are very low.

Prospects of rehabilitation

118. In his personal statement, the offender said that he had used his time in incarceration working in a carpentry workshop, earning what, in comparison with his former professional takings, were modest amounts of money. He said he had completed a Salvation Army Positive Lifestyle course and indicated that he had reengaged with his Catholic faith. Through his involvement with Church and the PCYC, he says he has aspirations of trying to help young people understand the consequences of their actions.

119. The offender’s legal representatives placed before the Court a letter, dated 23 November 2020, from the Catholic Chaplain of the Goulburn Correctional Centre, in which the Chaplain confirmed the offender’s participation in chapel services, his commencement of theological studies and expressed desire to positively contribute in his life.

120. Other documents were tendered on the offender’s behalf which refers to the ‘life-oriented’ type courses he had participated in during the period of his incarceration.

121. He said that upon his release from prison, his intent was to obtain a ‘good honest job’, to make restitution for the money he had had taken, focus on his health and strictly follow medical advice from his doctors.

122. Dr Furst opined that the offender was likely to continue taking medication and likely to comply with psychiatric follow-up, and also would likely be compliant with recommendations for his psychological management or other therapeutic programs. This being so, his prospects for rehabilitation were good.

118. I accept their evidence and the offender’s submissions that the offender has utilised his time since his incarceration productively and that, with the benefit of psychiatric assessment, appears to be on the right track in terms of his rehabilitation. His prospects for continued rehabilitation are good.

Extra-curial punishment

124. The offender’s practising certificate was suspended on 11 December 2018. It is inevitable that, following these proceedings, he will never again be able to practice in a professional sense. The circumstance that the offender is a solicitor who has been or is likely to be struck off the roll of solicitors can be taken into account as a matter of extra-curial punishment[13] and I so find.

     13. Oudomvilay v R [2006] NSWCCA 275 at [19]; also Parente v R (2017) 96 NSWLR 633 at [32].

INSTINCTIVE SYNTHESIS

125. I have regard to all of the sentencing considerations enshrined in s 3A of the CSP Act. I acknowledge, also the maximum punishment as a legislative guidepost to be taken into account when imposing the appropriate sentence.

126. For ‘white-collar’ crimes such as these offences, general deterrence is a particularly important sentencing factor. Such crimes frequently involve a serious breach of trust and are usually only able to be committed because of the previous good character of the person who has been placed in the position of trust [14] . In McMahon v R [2011] NSWCCA 147 Hoeben J (as his Honour then was; Hodgson JA and Grove AJ agreeing) noted that the community now views white collar crime very seriously, having regard to the fact that it is easy to commit and difficult and expensive to track down: at [83].

     14. Gleeson CJ in R v El-Rashid (unrep, 7/4/95, NSWCCA).

127. In referring to ‘white collar’ crime, I recognise that there should be no ‘one size fits all’ approach. For one thing, appropriation of a client’s monies in trust might be thought to be less difficult to detect than an offence like insider trading. For another, misappropriation of monies might be regarded as having a more direct effect on the clients concerned (even if the latter might obtain compensation from a Fidelity Fund) than less obviously apparent victims of offending conduct impairing the efficient operation of the market or fraud on revenue authorities. Nevertheless, the description is widely accepted within the community generally as denoting, at least, the character of typical offenders and the financial consequences of the offending.

128. In R v Marvin (NSWCCA, unreported 1 November 1995), a case which had some factual similarities to the present, in that Marvinwas a solicitor who had made regular misappropriations of trust monies, Sully J said:-

"Any solicitor who misappropriates client's funds for whatever reason, great or small, arguable good or arguably bad, commits a serious offence, not only in terms of contravening the relevant particular provisions of the Crimes Act, but in terms of the betrayal of public trust and confidence which such behaviour represents. It is appropriate to say simply that that must be regarded by the Courts, of all institutions, as serious conduct meriting in any but the most exceptional cases, a custodial sentence."

129. Also, more recent authorities indicate that in serious cases of white-collar crime, the purposes of punishment are best met by way of the imposition of full-time imprisonment rather than an intensive correction order (‘ICO’): R v Hinchliffe [2013] NSWCCA 327 at [279]; R v Glynatsis (2013) 230 A Crim R 99 at [73]–[76]. The offender’s Counsel did not submit for an ICO in this case. I consider he was right not to do so. As McCallum J (as her Honour then was) said in R v Curtis (No 3) [2016] NSWSC 866 at [51]:

“punishment by a sentence of imprisonment has real bite as a deterrent to others in the case of white-collar crime. White-collar crime is a field in which, perhaps more than any other, offending is often a choice freely made by well-educated people from privileged backgrounds, prompted by greed rather than the more pernicious influences of poverty, mental illness or addiction that grip other communities. The threat of being sent to gaol, provided it is perceived as a real threat and not one judges will hesitate to enforce, is likely to operate as a powerful deterrent to men and women of business.”

130. Not all of the matters referred to by McCallum J here apply with full force to the offender. I have found, for example, that he was not motivated by greed entirely and his culpability was reduced because of his bipolar disorder. Nevertheless, much of what her Honour said remains apposite, and in particular, the need to deter persons who occupy positions of privilege and responsibility. For reasons stated, the need for general deterrence is only slightly moderated.

131. Other significant sentencing considerations involve accountability and recognition of the harm done to the community generally, including, not least, the reputational damage to the legal profession. Also important, in my view, is the need for adequacy of punishment. I respectfully agree with the view expressed by McCallum J (as her Honour then was) in R v Curtis (No 3) [2016] NSWSC 866 at [53] when her Honour said that respect for the rule of the law and vindication of the principle of equality before the law suggests that white collar offenders should not be treated more favourably than other classes of offender who commit property offences involving dishonesty.

132. As noted, the weighting accorded to denunciation and specific deterrence is reduced, by reason of the offender’s mental disorder. It is fair to acknowledge, however, that the offender has presented a strong subjective case: that he has (relevantly) no prior record, good prospects of rehabilitation and, given the destruction of his legal career flowing consequentially from his convictions and punishment, he has already suffered and will continue to suffer the extra-curial punishment and there is little prospect of re-offending of the type considered in this proceeding. Further, in a case of this kind, though rehabilitation of the offender is not irrelevant, I think it is of reduced weight on the head sentence, although it has greater significance on the length of the non-parole period.

133. The offender’s Counsel did not dispute that the s 5 threshold has been crossed and that it is appropriate that the offender receive full-time incarceration. One cannot get away from the circumstance that the total effect of his offending conduct was to cause losses in the order of $3.25 million involving many clients over a not inconsiderable period of at least 15 months, overall in circumstances involving a betrayal of the trust reposed in him in the case of each client. I find that the s 5 threshold has been crossed.

134. I am conscious that the offender is being sentenced for multiple offences, at different times, involving different victims. There is plainly a need to ensure that the ultimate sentence imposed is appropriate to the totality of the offender’s overall offending and his personal circumstances and is not crushing. I am also conscious that, when considering the indicative sentence for each offence, notwithstanding that there is a similarity in circumstances, consideration needs to be given to whether there are relevant factual points of distinction, as already indicated when referring to the objective gravity of the principal offences.

Special circumstances

135. The Crown did not dispute that where a sentence of imprisonment is imposed, mental abnormality or disorder will be relevant both to the head sentence and also the non-parole period and may have particular significance to the latter[15] .

     15. Johnson v R [2020] NSWCCA 126 at [142]-[143].

136. Having regard to the circumstance that this will be his first custodial sentence, the need for treatment of his mental condition, his good prospects of rehabilitation, and the circumstance that an extended period on parole will assist with his eventual rehabilitation into society, I find that special circumstances arise.

137. I should say something regarding the extent of the variation of the non-parole period. In McMahon v R [2011] NSWCCA 147 the Court of Criminal Appeal rejected the proposition from earlier authority that because white collar crime was non-violent when compared with other offences, there should be a substantial gap between the head sentence and the non-parole period. The Court rejected the approach because it was “quite out of step with current community standards. The community now views white collar crime very seriously”: per Hoeben J (as his Honour then was) at [82] with Hodgson JA and Grove AJ agreeing). The Court at [85] instead adopted the approach in Hili v The Queen (2010) 85 ALJR 195. That is, that there is no overarching approach in fixing a non-parole period for white collar offenders. The relationship between the non-parole period and the total sentence will depend upon the facts of the case: Hili at [40], [44].

Prior custody

138. There is no dispute that the offender has been in custody for a period of 1 year and 30 days at the date of the sentencing hearing. The custodial sentence will be backdated to 19 November 2019.

SENTENCE

139. Could the offender please stand. You are convicted of the principal offences being sequences 1, 3, 7, 8 and 9.

140. I sentence you to a term of imprisonment of 8 years commencing on 19 November 2019 and expiring on 18 November 2027, with a non-parole period of 4 years and 9 months expiring on 18 August 2024, after which you will be eligible for release.

141. The indicative sentences (taking into account the guilty pleas) that I would have imposed are:

1. Sequence 1 (taking into account sequence 4 on the Form 1): 2 years’ imprisonment

2. Sequence 3 (taking into account sequence 1 for H136016101 on Form 1): 1 years’ imprisonment

3. Sequence 7 (taking into account sequence 5 on Form 1): 2 years’ imprisonment

4. Sequence 8 (taking into account sequence 6 on Form 1): 2 years’ imprisonment

5. Sequence 9 (taking into account sequence 2 on Form 1): 1 years’ imprisonment

142. It is recommended that the psychiatric report of Dr Furst of 1 December 2020 be supplied to the relevant authorities within the Department of Corrective Services, to assist the treatment and classification of the offender in custody.

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Endnotes

Amendments

12 February 2021 - Offender's name anonymised

Decision last updated: 12 February 2021