Thai v Director of Public Prosecutions (No 3) - [2009] SASC 97

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Criminal)
THAI v DIRECTOR OF PUBLIC PROSECUTIONS (No 3)
[2009] SASC 97
Judgment of The Honourable Justice Gray
7 April 2009
MAGISTRATES - JURISDICTION AND PROCEDURE GENERALLY - PROCEDURE - ORDERS AND CONVICTIONS - SENTENCING - RELEVANT FACTORS
CRIMINAL LAW - PARTICULAR OFFENCES - PROPERTY OFFENCES - OTHER FRAUDS AND IMPOSITIONS - FRAUDULENTLY OR DECEPTIVELY OBTAINING MONEY, VALUABLE, FINANCIAL BENEFIT OR ADVANTAGE
Appeal against sentence imposed by Magistrate - defendant and appellant convicted of 15 counts of engaging in conduct of falsifying document intending to deceive a bank to benefit himself or another party, contrary to section 140(4) of the Criminal Law Consolidation Act 1935 (SA) - appellant sentenced to one term of imprisonment of three years pursuant to section 18A of the Criminal Law (Sentencing) Act 1988 (SA) - Magistrate fixed non-parole period of 14 months - whether Magistrate erred in placing too much weight on matters of personal and general deterrence - whether Magistrate erred in treating offending as breach of trust - whether Magistrate erred in failing to have regard to psychological reports - whether Magistrate erred in failing to suspend sentence.
Held: appeal allowed - sentence imposed by Magistrate set aside - sentence of imprisonment suspended upon defendant entering into three-year good behaviour bond - good reason to suspend sentence - defendant had no history of previous offending - defendant has good prospects for rehabilitation - no breach of trust involved in defendant's conduct - defendant's culpability reduced by gambling addiction.
Criminal Law Consolidation Act 1935 (SA) s 140(4); Criminal Law (Sentencing) Act 1988 (SA) s 11 and s 18A, referred to.
Kovacevic v Mills (2000) 76 SASR 404; R v Telford (2005) 242 LSJS 33; R v Chapman [2001] NSWCCA 457; R v Petrovic [1998] VSCA 95, considered.

THAI v DIRECTOR OF PUBLIC PROSECUTIONS (No 3)
[2009] SASC 97
Magistrates Appeal
GRAY J.

This is an appeal against sentence
The defendant, Kim Tuan Thai, was convicted of 15 counts of engaging in the conduct of falsifying a document intending to deceive a bank and by that means to benefit himself or another party, contrary to section 140(4) of the Criminal Law Consolidation Act 1935 (SA). He was sentenced to an immediate term of imprisonment of three years. A non-parole period of 14 months was fixed.
The convictions followed a trial at which no challenge was raised to the facts as put forward by the prosecution nor any challenge to the conclusion that the prosecution had satisfied the onus of proof in respect of each of the elements of the 15 counts. However, the defence challenged the jurisdiction of the court, and in particular submitted, that South Australian Courts had no jurisdiction to deal with the conduct the subject of the charges.
Decision of the Magistrate
When sentencing, the Magistrate summarised the circumstances of the defendant’s criminal conduct as follows:
You have been found guilty of 15 counts of falsifying cheques intending to deceive a bank or other financial institution and to benefit by that means yourself or another person. Your conduct involved the writing of false details of payees and amounts on a series of cheque forms. The payees on those cheque forms had no entitlement to any moneys from the apparent account holders whose names appeared on the cheque forms. The cheque forms themselves had originally been issued for different accounts. The particulars of the bank branch account and name of account holder had been obliterated and other names and particulars substituted. The cheques were subsequently presented to banks and in some cases the cheques were honoured and payment was made. The total amounts for which the cheques were written was $163,340.12. The total amounts of moneys which were paid pursuant to certain cheques was $68,448.75. The remaining cheques were not honoured.
It is accepted that you were one of a group of offenders involved in a fraudulent scheme. You were not the architect of the scheme. There is no evidence that you presented any of the cheques yourself. You did however play a crucial role in the scheme. You were the person who falsified the details of payees and amounts on the cheques. You were involved in a course of conduct which extended over a period of 8 months from September 2003 until July 2004. The offending is serious. You were part of a sophisticated fraudulent scheme with the potential for large losses of more than $163,000.
The Magistrate addressed the defendant’s antecedents and, in that respect, noted:
I have been provided with a psychologist report by Mr Jeffrey Cummins dated 13 June 2006. Although that report is now two years old, it is helpful. It was written at a time when attempts were being made to resolve this case. The report provides a useful personal history which I will not repeat now, but I take it into account. The report shows that you are a capable person, that you have followed a series of occupations rising from skilled tradesman to business proprietor, first in a bakery business and subsequently in the clothing import and expert business. The report of Mr Cummins shows that you recognised that you had a problem related to gambling; Mr Cummins expresses the opinion that you suffered not only from a pathological gambling disorder, but also showed symptoms of an adjustment disorder with a mixed disturbance of emotions. He regarded the adjustment disorder as having been triggered by a combination of factors, the most important of which were the failure of your marriage, the failure of your business and the extent of your gambling problem.
I take into account that you sought assistance from a psychologist over your problems. I accept that you have ceased to gamble and that you have now re-established yourself in a steady job in the business of Mountain Rock Pty Ltd near Melbourne. I am informed, and I accept that, now that you seem to be getting yourself on your feet again, you and your wife have had serious discussions about reconciliation and that there is hope that that will occur. You enjoy the support of your elder daughter who is now a university student. You have felt a sense of shame over your involvement in this activity, you have said. You have become socially isolated from your extended family.
The Magistrate then addressed the suggested motive for the defendant’s conduct, his gambling addiction:
You have not offended previously. However, in offending of this sophisticated and lengthy type, the lack of prior offending is of limited assistance to an offender when it comes to sentencing. Gambling cannot be taken as an excuse for your offending. Habitual gambling does explain, at least partly, why you offended. Offending motivated by habitual gambling is to be distinguished from cold calculated offending unaffected by any emotions or negative habits. Nevertheless, your offending did not involve deliberate fraudulent conduct over a period of 8 months.
The Magistrate exercised his powers under Section 18A of the Criminal Law (Sentencing) Act 1988 (SA) and imposed the one sentence with respect to all offending. As earlier observed the defendant was sentenced to three years’ imprisonment and a non-parole period of 14 months was fixed. The Magistrate declined to exercise his discretion to suspend the sentence. He ordered that the defendant pay compensation of $8,904.
The Magistrate had specific regard to Section 11(1)(iv) of the Sentencing Act, which provides:
A sentence of imprisonment may be imposed if, in the opinion of the court, any other sentence would be inappropriate having regard to the gravity or circumstances of the offence.
The Magistrate reasoned:
A sentence of imprisonment is the appropriate penalty. After allowing discount of 25%, having regard to all of the factors that I have referred to and exercising the power under s.18A to impose one penalty, I would record convictions on all counts and impose one penalty of three years’ imprisonment. I turn to the question of suspension. I am mindful that you are a first offender, Mr Thai. I reiterate that in cases of a course of conduct involving sophisticated fraud over a significant period of time and involving a large amount of money, such prior good character is a qualified virtue. I reiterate that in offending of this nature matters of general and personal deterrence must prevail over other factors.
The Appeal
Deterrence
On appeal, it was submitted that the Magistrate had erred in the exercise of his discretion with respect to the suspension of the sentence for imprisonment. It was contended that the sentencing remarks disclosed error. It was said that the Magistrate approached the task of sentencing on the basis that matters of general and personal deterrence “must prevail over other factors”. It was accepted that matters of general and personal deterrence were of particular or heightened relevance when sentencing for crimes of the type committed by the defendant but it was said to be an error to take the view that those factors “must” prevail over the factors.
In Kovacevic v Mills,[1] Doyle CJ, Mullighan, Bleby and Martin JJ observed:
We agree with the further submission advanced from [counsel for the defendant] that in a case such as the present, considerations of deterrence cannot displace all other considerations, either at the outset or at the conclusion of the sentencing process. All relevant considerations must be taken into account, and given due weight. The establishment of a sentencing standard by this Court cannot require a judge or magistrate, when imposing sentence, to take into account only one of the considerations relevant to sentencing, be it deterrence or some other consideration. However, consistently with that, it is appropriate for this Court to indicate that a certain type of offending is likely to attract a certain type of punishment, and in particular imprisonment, and to indicate an appropriate sentence range for particular types of offending.
...
We agree that in cases of deliberate and sustained fraud, deterrence must loom large in determining the appropriate sentence. But other matters, especially rehabilitation, must still be considered. We do not agree that deterrence must take priority over all other considerations, at least if that statement means that there is no scope for the Court to be influenced by considerations of rehabilitation in finally arriving at the sentence to be imposed. It may well be that King CJ did not mean to exclude considerations of rehabilitation, or mean to say that a sentence of imprisonment, with at least some of it to be served, must be imposed in every case of sustained and deliberate fraud. But his remarks are capable of being read as requiring an order for imprisonment, with at least some of it to be served, in virtually every case, and absent truly exceptional circumstances.
In our opinion the proper approach to sentencing is better reflected by saying that in a case of the type referred to by King CJ, [social security fraud] an order for imprisonment, with at least some of the imprisonment actually to be served, is ordinarily likely to be required. This is because the commission of a number of offences of fraud over a period of time makes imprisonment appropriate even for a first offender, because of the seriousness of the offending. The same matters may require that at least part of that term of imprisonment actually be served, even in the case of a person with no previous convictions. But there is still a need to consider all aspects of the matter, and to consider the interests of society and of the offender in the rehabilitation of the offender. Also, in an appropriate case, there may be room for the exercise of mercy and leniency: see Webb v O'Sullivan [1952] SASR 65 per Napier CJ at 66 and R v Osenkowski (1982) 30 SASR 212 at 212-213.
...
In our view in the more serious cases of sustained and deliberate fraud, deterrence is very important, imprisonment is likely to be required, but all mitigating circumstances and the rehabilitation of the offender must still be considered. Substantial mitigating circumstances, and in some cases considerations of mercy and leniency may lead to the conclusion that a sentence of imprisonment is inappropriate or that such a sentence is appropriate, but that the imprisonment need not be served.
I consider that the Magistrate’s view that general and personal deterrence “must” prevail placed too much weight upon those considerations when sentencing and in doing so failed to apply the relevant sentencing principles.
[1] Kovacevic v Mills (2000) 76 SASR 404.
In the course of the Magistrate’s sentencing remarks he made reference to other cases demonstrating a hardening of the Court’s approach to dishonesty offending:
I refer to the authorities to which counsel have referred me, namely Dubois and John and McFarlane. Those cases involved much larger amounts of money, but they are helpful in that they clearly state the principles to be applied in sentencing for large frauds. They indicate that a harsher view of sentencing for frauds has been taken by the Supreme Court in this State since the early 1990s. I have derived further assistance from the authorities of Ashdown, Craven and Perry. Ashdown and Perry are of assistance in that they involved offenders who had gambling addictions. All of the authorities mentioned involved fraudulent courses of conduct over significant periods.
Counsel for the defendant submitted that the majority of these authorities concerned circumstances where there had been a breach of trust by a person in a position of authority and responsibility. It was said that the present offending did not involve any breach of trust and that it was not appropriate to use those cases as a guide to the sentencing of the defendant.
This submission should be accepted. The defendant’s conduct did not involve a breach of trust. Such a breach is a matter of aggravation. I consider that the Magistrate drew too heavily on cases of fraud involving breaches of trust in determining his approach to sentencing in the present case.
In these circumstances the Magistrate’s conclusion that it would not be appropriate to suspending the sentence, and that imprisonment should be revisited. The Magistrate’s approach did not accord with correct sentencing principle.
Antecedents
On the hearing of the appeal further evidence was placed before the Court relevant to sentencing. It was accepted by the Director of Public Prosecutions that when considering the re-sentencing of the defendant, it was appropriate for the Court to have regard to this further material.
The defendant was born in South Vietnam in 1961 and was the fifth of seven children. His father worked as a policeman and his mother is an interpreter. Two of his older brothers served in the Vietnamese Army. He enjoyed a close family relationship and was treated well within his family.
The defendant’s family was affected by the Vietnam war. In 1975 they escaped after the communist regime came into power. They travelled first to Malaysia and then to Australia, arriving in Australia in 1978.
The defendant completed high school in Vietnam and once in Australia he undertook a short course in English and began work initially with a full loaded company and then later with General Motors. He then worked for the railways undertaking maintenance work for about 10 years and once eligible for long service leave he decided to leave his employment and commence work in an import and exporting business.
This business went poorly and he began losing money and it was in this context that the defendant commenced gambling. His gambling involved attending casinos where he was treated as a high roller. Unsurprisingly, his financial problems spiralled. He had to sell some real estate he had acquired and was incurring losses of more than $100,000. It was against this background that his marriage of 15 years failed in 1997. He continued to attend the casino in an attempt to get his life back on track and was being supported by his friends.
The defendant has been employed in managing the accounts and finances of a small business. He also is involved in taking orders from clients as well as helping out from time to time with manufacturing side of the business. At the present time he manages four staff members. His employer is fully aware of the present proceedings and in particular of the order of imprisonment that has been imposed. A written reference tendered on the appeal speaks highly of the defendant and it evidences the employer’s trust of the defendant with regard to financial matters.
A psychiatric report was tendered on appeal from Dr Raeside who expressed his conclusions in the following terms:
Based on the information available to me and from my interview with Mr Thai I was unable to find any evidence of a psychiatric disorder.
With respect to whether Mr Thai has a diagnosis of a Pathological Gambling (which I would not consider a formal psychiatric disorder in the sense that it is not a mental illness, but rather a significant psychological disorder classified in DSM-IV-TR), clearly much of it depends on the validity of Mr Thai’s account. It is obviously quite common for people who do suffer from pathological gambling to be distorted in their insight and thinking about their own gambling behaviours.
Whilst Mr Thai did not describe the typical compulsive features of gambling (such as the need to increase the amounts gambled in order to achieve the desired excitement, unsuccessfully making repeated efforts to control or cut back or stop the gambling, being restless or irritable when attempting to cut down, chasing losses, etc.), he clearly did report a preoccupation with gambling, the loss of his marriage and possibly his employment because of it, may have lied or concealed the extent of his gambling, and relied on others to provide money in order to continue his gambling. Obviously he disputes that he committed illegal acts in order to finance his gambling. Consequently, I would be prepared to concur with a diagnosis that he did have Pathological Gambling. He reported that he stopped gambling following his arrest. He did not report any difficulty in doing so.
For reasons already explained I found little evidence to suggest that Mr Thai was suffering any other psychiatric disorder (including an adjustment disorder) at the time of the offending.
Therefore, based on the information available I think it is likely that Mr Thai was experiencing difficulties around the time of the offending, including stress and possibly depressive symptoms, arising out of the breakdown of his marriage and business, but not at the time of the subsequent alleged offending.
…
Treatment and Prognosis
I do not believe Mr Thai requires any psychiatric treatment. However, I think that he would be advised to have some formal gambling counselling as he continues to not acknowledge the problem that his gambling had caused him previously, maintaining that it was more of a simple financial decision, notwithstanding the negative impact that it had on him. A brief course of gambling counselling may help to increase his insight, consolidate his gains, and decrease his likelihood of relapsing at a future date.
Any connection between the appellant’s gambling and his offending is not at all clear. This is not a case where the evidence shows that the offender was motivated to steal in order to finance further gambling. On the appellant’s own version of events he received only a small financial benefit for his part in the scheme, and this came after he had ceased to gamble.

The Court of Criminal Appeal considered the significance of an offender’s gambling addiction to sentencing in Telford.[2] In that case Mr Telford had misappropriated in excess of $22,000,000 from his employer. Doyle CJ (with whom Bleby J agreed) said:
[2]    R v Telford (2005) 242 LSJS 33.
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.[3]
[3]    R v Telford (2005) 242 LSJS 33, 34 [12]-[14].
...
It may be trite, but it is nonetheless 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 to the offending conduct.[4]
[4]    R v Telford (2005) 242 LSJS 33, 34-5 [15]-[16].
Bleby J added the following observation:
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…
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 gambling.[5]
[5]    R v Telford (2005) 242 LSJS 33, 36-7 [30]-[31].
The New South Wales Court of Criminal Appeal took a similar approach in Chapman,[6] in which Ipp AJA (with whom Hidden and Barr JJ agreed) said in relation to the offender:
He was certainly under the effect, as established in the sentencing process, of a psychological condition. There is ample authority, however, from this Court to the effect that while a gambling addiction is relevant to the sentence it is not a mitigatory circumstance. It is sufficient to refer to R v Henry (1999) 46 NSWLR 346 where Spigelman CJ rejected the proposition that an addiction to gambling with attendant need for money could be the basis for a claim for mitigation. The effect of R v Henry and the authorities to the same effect is that the applicant’s compulsive conduct, the lack of financial gain on his part and his gambling losses do not in law constitute grounds for interfering in the sentence that was in fact imposed.[7]
Similarly, in Petrovic,[8] the Victorian Court of Criminal Appeal held that:
The fact that an offender was motivated to the commission of the crimes in question by an addiction to gambling will, no doubt, usually be a relevant, and may be an important, consideration for a judge sentencing the offender for these crimes. But as Tadgell JA said in R v Cavallin (unreported, Court of Appeal, 24 July 1996) at 10 –
“It is … important that the public does not assume that a crime which is to some extent generated by a gambling addiction, even if it is pathological, will, on that account, necessarily be immune from punishment by imprisonment.”
It is considerations such as these which have led this Court to say more than once that it will be a rare case indeed where an offender can properly call for mitigation of penalty on the ground that the crime was committed to feed a gambling addiction; see R v Scott Aiden Dawsan (unreported, Court of Appeal, 27 May 1997) at 6; R v Gregory Frank Pascoe (unreported, Court of Appeal, 29 April 1998) at 4-5.[9]
[6]    R v Chapman [2001] NSWCCA 457.
[7]    R v Chapman [2001] NSWCCA 457, [13].
[8]    R v Petrovic [1998] VSCA 95.
[9]    R v Petrovic [1998] VSCA 95, [20]-[21].
The respondent submitted that an offender’s gambling could not of itself be a factor in mitigation. It may be one of those aspects of the offender’s personal circumstances to be considered by a sentencing court. However, it was accepted that where the offender suffers from a psychological condition associated with that gambling behaviour the condition itself may be a more significant factor which amounts to mitigation, depending on the evidence of the impact of that condition on the offending, as discussed below.
In this case the medical evidence goes no higher than suggesting that the defendant’s mental state may have made him more vulnerable to invitations from others to participate in the relevant offending conduct. There is no evidence to support the defendant’s submission that the “sentencing court would have been entitled to find that but for the gambling of the defendant he would not have committed the offences concerned”.
Conclusion
The defendant’s criminal conduct is to be viewed as serious dishonesty offending. He took part in a scheme to deceive and defraud in a way that involved considerable planning. His alteration of cheques was sophisticated. He must have been well aware of their probable use. Although his gambling obsession may explain his conduct, his offending still remains as deliberate planned offending involving serious and ongoing deception. The defendant’s offending called for a head sentence of the order imposed by the Magistrate.
The issue arising on the appeal is whether the sentence should be suspended. I have reached the conclusion that good reason does exist to suspend the sentence. In reaching this conclusion, I consider that defendant’s prospects of rehabilitation are excellent and that this process should not be interrupted by an immediate custodial sentence. That defendant has steady long-term employment He is entrusted with responsibility with regard to financial matters and staff. The evidence before the Court suggests that he works well and for long hours in discharging his duties. His employer is aware of these proceedings. He continues to have family support and expresses himself as determined to avoid gambling. The medical evidence, and in particular a report from Dr Radeski provides support in this regard. It is also relevant that prior to this offending he had an unblemished record and that the offending is totally out of character. It is also relevant to observe that the conduct did not involve any breach of trust.
The appeal against sentence is allowed. The sentence of imprisonment imposed by the Magistrate is to be suspended upon the defendant entering into a three-year good behaviour bond.