Upadhyaya v R

[2017] NSWCCA 162

Court of Criminal Appeal

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:

Upadhyaya v R [2017] NSWCCA 162

Hearing dates:

15 March 2017

Decision date:

07 July 2017

Before:

Leeming JA at [1];
Latham J at [24];
Campbell J at [25].

Decision:

(1) Refuse leave to amend to add particular (d) of the existing proposed ground of appeal as an additional ground;
(2) Otherwise grant leave to appeal;
(3) Appeal dismissed.

Catchwords:

CRIMINAL APPEAL – sentence appeal – appeal against aggregate sentence – fraud – corporate victim – where applicant the director of the corporate victim operating two horse studs – where applicant falsely inflated invoices for hay and oats – where primary judge made a direction under s 97 Victims Rights and Support Act 2013 (NSW) – whether aggregate sentence was manifestly excessive – consideration of the use of comparative cases in sentencing – consideration of the effect of compensation directions in mitigation of sentence – consideration of whether counsel can raise a new argument before the Court of Criminal Appeal that could have been raised before the primary judge – leave to raise new argument refused – leave to appeal otherwise granted – appeal dismissed

Legislation Cited:

Crimes Act 1900 (NSW)
Crimes (Sentencing Procedure) Act 1999 (NSW)
Criminal Appeal Act 1912 (NSW)
Victims Rights and Support Act 2013 (NSW)

Cases Cited:

Attorney General of New South Wales v Tho Services Limited (in liquidation) (ACN 000 263 678) [2016] NSWCCA 221
Barbaro v The Queen; Zirilli v The Queen (2014) 253 CLR 58; [2014] HCA 2
Betts v The Queen (2016) 90 ALJR 758; [2016] HCA 25
Chen v R [2015] NSWCCA 122
De Angelis v The Queen [2015] NSWCCA 197
Dinsdale v The Queen (2000) 202 CLR 321; [2000] HCA 54
Director of Public Prosecutions (Commonwealth) v De La Rosa [2010] NSWCCA 194
Hili v The Queen; Jones v The Queen (2010) 242 CLR 520; [2010] HCA 45
House v The King (1936) 55 CLR 199
Lu v R [2014] NSWCCA 307
Markarian v The Queen (2005) 228 CLR 357
Muldrock v The Queen (2011) 244 CLR 120; [2011] HCA 39
Mundine v R [2017] NSWCCA 97
R v Brough [1995] 1 NZLR 419
R v Kalache (2000) 111 A Crim R 152; [2000] NSWCCA 2
R v Hawker [2001] NSWCCA 148
R v Martin [2005] NSWCCA 190
R v Phelan (1993) 66 A Crim R 446
R v Stanbouli (2003) 141 A Crim R 531
R v Tadrosse (2005) 65 NSWLR 740
R v Woodman [2001] NSWCCA 310
The Queen v Kilic (2016) 91 ALJR 131; [2016] HCA 48
The Queen v Pham (2015) 256 CLR 550; [2015] HCA 39
The Waterways Authority v Fitzgibbon [2005] HCA 57; 79 ALJR 1816
Wainohu v New South Wales (2011) 243 CLR 181; [2011] HCA 24
Wong v The Queen; Leung v The Queen (2001) 207 CLR 584; [2001] HCA 64
Zreika v R (2012) 223 A Crim R 460; [2012] NSWCCA 44

Category:

Principal judgment

Parties:

Rajesh Chimanlal Upadhyaya (Applicant)
Crown (Respondent)

Representation:

Counsel:

 

W Lowe (Applicant)
K Shead SC (Respondent)

 

Solicitors:

  S Tully (Applicant)
C Hyland, Director of Public Prosecutions (Respondent)

File Number(s):

2011/234605

 Decision under appeal 

Court or tribunal:

District Court of New South Wales

Jurisdiction:

Criminal

Date of Decision:

20 August 2015

Before:

Judge Woodburn SC

File Number(s):

2011/234605

judgment

1. LEEMING JA: I have had the advantage of reading the judgment of Campbell J in draft. I agree with the orders his Honour proposes. However, I prefer to provide my own reasons. In light of his Honour’s summary of the charges, the Crown case, the sentencing judge’s reasons and the evidential and procedural background, I can be relatively concise.

Proposed ground 1

2. Proposed ground 1 of the appeal is that the sentencing judge “failed to take into account the making of a compensation order of $750,000 as a matter in mitigation of sentence”.

3. The applicant sought leave to add this ground during the hearing of the appeal, recognising (with respect, correctly), that it was not capable of being a particular of a single ground that the sentence was manifestly excessive, which was framed as disclosing latent error within the last category in House v The King (1936) 55 CLR 499.

4. The essential chronology is that following the applicant’s conviction for 14 counts of defrauding a body corporate and dishonestly obtaining a financial advantage, in amounts exceeding $10 million, the company’s application for a compensation order was tendered at the outset of the sentencing hearing on 31 July 2015. The maximum amount of compensation that could be ordered was $750,000: Victims Rights and Support Act 2013 (NSW), s 98(b). Senior counsel then appearing for Mr Upadhyaya formally advised that he made no submissions on the application. Her Honour adjourned until 20 August 2015 and on that day imposed sentence after giving relatively lengthy reasons. Her Honour then summarised the application, gave short reasons and made the compensation direction in the amount of $750,000 under s 97 of the Victims Rights and Support Act. Included in her Honour’s reasons was the statement that “I have not overlooked that Mr Upadhyaya has been sentenced to a lengthy term of imprisonment”.

5. I would refuse leave to rely on this ground, because it is, with respect, unsustainable.

6. First, no submission was made to the sentencing judge that her Honour should have regard to the compensation direction.

7. Secondly, the omission to raise this point before the sentencing judge was not by reason of some oversight. It was because the point was not available. At the time the applicant was sentenced, the compensation direction had not been made; there was merely an undetermined application for such a direction. Conversely, and consistently with the order of events, in the exercise of discretion under s 97 the judge referred to the lengthy term of imprisonment, which had by that time been imposed.

8. Thirdly, it is true that no submissions had been put in opposition to the making of a compensation direction, and I proceed on the basis favourable to Mr Upadhyaya that her Honour had determined to make the unopposed compensation direction at the time she imposed sentence. But this merely exposes the substantial difficulty with this proposed ground of appeal.

9. If a submission had been made to the sentencing judge to the effect that “If your Honour is minded to accede to the company’s application for a compensation direction, your Honour should have regard to that in imposing sentence”, then her Honour would have erred in accepting it. The point of a compensation direction is to compensate a victim, reflecting a civil liability which is distinct from an offender’s criminal liability.

10. Very commonly, an offender’s criminal conduct will also give rise to civil liability. An offender who assaults another will be liable to pay damages for battery and perhaps also assault. A thief may be liable to pay damages for conversion. A director such as Mr Upadhyaya who defrauds his company will be liable on a suite of causes of action at law, in equity and under statute. But only in exceptional circumstances could that civil liability play any part in the determination of sentence.

11. Consistently with the jury’s verdict, the company has a civil claim entitling it to judgment for many millions of dollars against the applicant. That did not change after the compensation direction was made. It is true that if the company litigated that claim, then s 102 of the Victims Rights and Support Act 2013 qualifies what would otherwise be the company’s rights after a compensation direction has been made in relation to the entry of judgment and enforcement. Section 102(3)(a) of that Act prevents entry of judgment in respect of amounts which have in fact been paid under the compensation direction, while s 102(3)(b) prevents enforcement, without leave, of a judgment to the extent that it represents an unpaid amount under a compensation direction. The evident purpose is to prevent double compensation where amounts have been paid, and to regulate enforcement in circumstances where the direction provides an additional basis for recovery of a judgment debt. Those qualifications reinforce the connection between an offender’s civil liability and any compensation direction.

12. Further, the making of the compensation direction did not of itself give rise to any material hardship to the applicant. It is true that it exposed him to the possibility of streamlined enforcement by the company pursuant to s 101 of the Victims Rights and Support Act. But that merely facilitates the enforcement of an antecedent civil liability.

13. Moreover, it was common ground when the appeal was heard, some 19 months after the compensation direction was made, that the direction had not been enforced and that even if it were to be enforced, Mr Upadhyaya’s Australian assets had already been sold by the bank. Different considerations might arise where a compensation direction has been enforced and the enforcement has given rise, say, to demonstrable hardship. But it is not necessary in the present appeal to express a view as to whether in those circumstances regard may be had to the compensation direction in imposing sentence; cf Attorney General of New South Wales v Tho Services Limited (in liquidation) (ACN 000 263 678) [2016] NSWCCA 221 at [83].

14. Finally, it does not assist the applicant to point to the fact that a compensation direction does not fall within s 24B(2) of the Crimes (Sentencing Procedure) Act 1999 (NSW). That section prohibits regard being had to orders imposed under “confiscation or forfeiture legislation”. The Victims Rights and Support Act does not fall within that class of legislation, as the applicant correctly submitted. Confiscation or forfeiture legislation enables the State to recoup the proceeds of crime. In contrast, compensation directions compensate a victim for loss sustained through, or by reason of, the offence. It strikes me as a peculiar result if a court were precluded from having regard to orders made under confiscation or forfeiture legislation, but were required to have regard to orders reflecting an offender’s civil liability, when imposing sentence, although I would acknowledge that there might be exceptional circumstances where the contrary position might be arguable (for example, if very substantial compensation had been ordered and enforced and had led to significant hardship prior to sentence). But, as previously noted, that bears no resemblance to the circumstances of this appeal.

15. On the facts of this case there could be no error in failing to have regard to a compensation direction which had not been made, which has not been and might never be enforced, to which her Honour had not been asked to have regard, and which in any event made no appreciable difference to Mr Upadhyaya’s existing civil liability to the company. For those reasons, I agree that leave should be refused to rely on proposed ground 1.

Ground 2

16. Ground 2 (which was the only ground of the notice of appeal as originally filed) asserted that the sentence was manifestly excessive. To the extent that that ground was based on a failure to have regard to the compensation direction made shortly after sentence was imposed, there is no substance in it for the reasons already given.

17. The sentence was an aggregate sentence of 12 years with a non-parole period of 7 years and 9 months. The applicant made no complaint about any of the 14 indicative sentences, which were for periods of imprisonment from between 2 years and 3 months to 6 years and 8 months. No fewer than seven of the indicative sentences were for a period exceeding 5 years’ imprisonment. Nor did the applicant make any complaint as to to how his sustained dishonesty over some six years had been allocated to the 14 counts charged. As Latham J pointed out during argument, it is difficult to reconcile a challenge to the aggregate sentence based on manifest excess with an acceptance of the 14 individual indicative sentences, given the extremely substantial degree of concurrency involved, and the length of time throughout which the offending conduct took place.

18. Even so, it remains necessary to look at the sentence actually imposed. But appellate intervention on the ground of manifest excess or inadequacy is not warranted unless, having regard to all of the relevant sentencing factors, including the degree to which the impugned sentence differs from sentences that have been imposed in comparable cases, the appellate court is driven to conclude that there must have been some misapplication of principle: The Queen v Pham (2015) 256 CLR 550; [2015] HCA 39 at [28]; see also at [56]. For the reasons given below, none of the submissions advanced on behalf of the applicant causes me to reach that conclusion.

19. During the hearing of the appeal, counsel for the applicant indicated that he wished to rely on the particulars of the single ground of manifest excess as establishing patent error, as well as maintaining his appeal based on manifest excess. Accordingly, I shall address each of the particulars.

20. First, it was said that the sentencing judge erred in giving undue weight to there being repeated criminal acts. But each count itself (save for count 15) involved multiple criminal acts. For convenience, having regard to the temporal extent of the criminality, the indictment was framed by reference to period of time (for the most part, calendar years). In any event, on a fair reading of the reasons of the sentencing judge, this was a relatively minor matter, and the weight to be attributed to it was a matter for her Honour.

21. Secondly, it was said that the aggregate sentence imposed was the most severe that has been imposed for offences committed against s 176A and s 192E. Let that be assumed (the Crown did not submit to the contrary), noting that an aggregate sentence of 12 years imprisonment, although with a slightly shorter non-parole period, was imposed in De Angelis v R [2015] NSWCCA 197. That does not of itself bespeak error, especially when sentencing statistics do not distinguish between sentences imposed for a single offence and for multiple offences.

22. Thirdly, the applicant pointed to the 12 year sentence imposed in De Angelis and added that there were features which made that conduct objectively more serious, such as the “predatory” nature of the offending, and the number of victims, some of whom lost their life’s savings. He added that the impact of the conduct upon the company was much less severe. So much may be accepted. But there are countervailing considerations. Mr De Angelis had pleaded guilty, and his 12 year sentence reflected a 12.5% discount for the utilitarian value of that plea. The total amounts advanced by Mr De Angelis’ victimswas $8.5 million, which is the same order of magnitude but still appreciably less than the funds received by Mr Upadhyaya. There was also a large dispute as to the extent to which Mr De Angelis suffered from various psychiatric conditions, but it was accepted that there were some aspects of his subjective case which were made out (including that he had been abused as a child). Although Mr Upadhyaya also claimed to have been abused as a child, his background was on any view far more favourable than that of Mr De Angelis, and he showed no remorse for his crimes. Those matters suffice to refute any suggestion that De Angelis shows that the sentence imposed upon Mr Upadhyaya is outside the range legitimately available for his offending. Nor would I infer that her Honour gave the decision undue weight. To the contrary, her Honour with respect correctly recognised the limited value of any individual decision.

23. For those reasons, I would refuse leave to amend the notice of appeal to advance a separate ground 1 based on the compensation direction. I would otherwise grant leave to appeal against sentence, but dismiss the appeal.

24. LATHAM J: I agree with the orders proposed by Campbell J and with the reasons for those orders. I also agree with the additional reasons provided by Leeming JA.

25. CAMPBELL J: The applicant, Mr Upadhyaya, seeks leave pursuant to s 5(1)(c) Criminal Appeal Act 1912 (NSW) to appeal against an aggregate sentence imposed by Judge Woodburn SC of the District Court on 20 August 2015. The applicant was tried on an indictment containing 15 counts, though the jury was directed on 5 May 2015 to return a verdict of not guilty on count 14. As was stated in her Honour’s reasons: “[t]hat directed acquittal had no bearing on the strength of the Crown case in relation to the remaining counts” (ROS1). Count 15, known at trial as “the Flinn transaction”, involved conduct different in nature from the other counts.

26. On arraignment the applicant had entered a plea of not guilty to 11 counts of defrauding a company of which he was a director in his dealings with it under the now repealed s176A Crimes Act 1900 (NSW) and 4 counts of dishonestly obtaining a financial advantage in breach of the Crimes Act 1900 (NSW) s 192E. Leaving aside the Flinn transaction, conduct of the same type founded the alleged breaches of each of these sections; as from 22 February 2010, s 176A was repealed and s 192E came into effect. Both provisions carry a maximum penalty of imprisonment for ten years.

27. The trial commenced on 2 March 2015 and on 26 May 2015 the jury returned verdicts of guilty on all 14 remaining counts on the indictment. On 20 August 2015, her Honour imposed an aggregate sentence of imprisonment of 12 years, consisting of a non-parole period of 7 years and 9 months commencing on 20 August 2015 and expiring 19 May 2023, and an additional term of 4 years and 3 months expiring on 19 August 2027. The indicative sentences for each count, usefully tabulated in the Crown submissions, are as follows:

OFFENCE DETAILS

INDICATIVE SENTENCE

Count 1

Director defrauding a body corporate

Section 176A Crimes Act 1900 (NSW)

Between 31 August 2005 and 10 December 2005

Value fraud = $54,824

2 years and 3 months imprisonment.

Count 2

Director defrauding a body corporate

Section 176A Crimes Act 1900 (NSW)

Between 3 January 2006 and 20 January 2007

Value fraud = $258,688

3 years and 7 months imprisonment.

Count 3

Director defrauding a body corporate

Section 176A Crimes Act 1900

Between 22 January 2006 and 14 December 2006

Value of fraud = $426,854

4 years and 3 months imprisonment.

Count 4

Director defrauding a body corporate

Section 176A Crimes Act 1900

Between 4 January 2007 and 4 January 2008

Value of fraud = $702,189

5 years and 3 months imprisonment.

Count 5

Director defrauding a body corporate

Section 176A Crimes Act 1900

Between 4 January 2007 and 25 January 2008

Value of fraud = $1,816,223

6 years and 8 months imprisonment.

Count 6

Director defrauding a body corporate

Section 176A Crimes Act 1900

Between 3 January 2008 and 31 December 2008

Value of fraud = $550,589

4 years and 8 months imprisonment.

Count 7

Director defrauding a body corporate

Section 176A Crimes Act 1900

Between 14 February 2008 and 31 December 2008

Value of fraud = $1,396,567

6 years and 4 months imprisonment.

Count 8

Director defrauding a body corporate

Section 176A Crimes Act 1900

Between 6 January 2009 and 4 December 2009

Value of fraud = $902,800

5 years and 9 months imprisonment.

Count 9

Director defrauding a body corporate

Section 176A Crimes Act 1900

8 January 2009 and 4 December 2009

Value of fraud $1,475,874

6 years and 5 months imprisonment.

Count 10

Director defrauding a body corporate

Section 176A Crimes Act 1900

Between 11 January 2010 and 18 February 2010

Value of fraud = $205,529

3 years imprisonment.

Count 11

Dishonestly obtain a financial advantage

Section 192E(1)(b) Crimes Act 1900

Between 1 March 2010 and 6 October 2010

Value of fraud = $746,244

5 years and 3 months imprisonment.

Count 12

Dishonestly obtain a financial advantage

Section 192E(1)(b) Crimes Act 1900

Between 3 January 2010 and 5 February 2010

Value of fraud = $278,348

3 years and 3 months imprisonment.

Count 13

Dishonestly obtain a financial advantage

Section 192E(1)(b) Crimes Act 1900

Between 1 March 2010 and 16 October 2010

Value of fraud = $1,307,854

6 years and 3 months imprisonment.

Count 15

Dishonestly obtain a financial advantage

Section 192E(1)(b) Crimes Act 1900

On 16 December 2010

Value of fraud = $62,817

2 years and 6 months imprisonment.

28. Additionally, her Honour made a compensation direction under Victims Rights and Support Act2013 (NSW) s 97(1) of $750,000, the limit of the monetary jurisdiction of the District Court, in favour of the defrauded company Emirates Park Pty Ltd (“the corporate victim”).

Grounds of appeal

29. The application for leave was articulated in the Application for Leave on the basis that the sentencing judge imposed a sentence that was manifestly excessive having regard to the following particulars:

1. the significance in terms of her Honour’s reasoning to the fact that there were repeated criminal acts involved in the commission of the offence;

2. by failing to adequately take into account that the impact on the victim company would be temporary rather than irreparable;

3. by giving undue weight to the comparative case of De Angelisv The Queen [2015] NSWCCA 197 in determining an appropriate sentence to be imposed; and

4. by failing to have regard to the making of a compensation direction of $750,000 as a matter in mitigation of sentence.

30. Mr Lowe of counsel, who appeared for the applicant, sought leave to amend during oral argument to pursue the fourth particular as an error of principle separate from manifest excess in circumstances described briefly below (at [56]-[59]).

Summary of facts underpinning the offending

31. It is necessary to briefly to recount the facts forming the background to this offending.

32. The offending took place over a five-year period from September 2005 to December 2010 when the applicant was a director of the corporate victim. That company operated two horse studs in Australia: one at Murrurundi, in the Upper Hunter Valley, and the other at Diggers Rest, in Victoria. The applicant had worked for related entities in Dubai and UAE, and relocated to Australia in 1995 to work for the corporate victim.

33. The applicant was appointed a member of the board and financial director of the Murrurundi property operations. His responsibilities covered the broad scope of managing financial operations at that property. Horses at Murrurundi were fed both oats and hay to supplement the property’s pasture in quantities that depended on the weather conditions in any given period. The applicant was responsible for: ordering such fodder; authorising payment of invoices issued by suppliers; and counter-signing cheques in payment of such invoices. The relevant banking mandate required a co-signature, which was normally provided by Dr Sahu, a veterinary surgeon by profession, and the managing director of the stud at Murrurundi. On some occasions, however, the invoices were signed by the applicant alone. These cheques were honoured by the bank in breach of the mandate leading to civil proceedings against Westpac from which part of the corporate victim’s losses were recouped. The material made available to the Court did not disclose the precise amount, although there was reference in the sentencing hearing to Westpac having “to incur a significant payout”: see [AB265].

34. In her Honour’s reasons on sentence, she referred to the applicant’s scheme as a “deliberate, systematic and sustained defrauding of the company”: ROS11. The fraud was carried out by the applicant using his company, Yashraj Pty Limited, and two businesses that it operated, Tamworth Quality Grains and Feedpoint. The applicant caused falsely inflated invoices to be issued by Tamworth Quality Grains for hay and oats and by Feedpoint for oats.

35. The invoiced amounts from year-to-year are set out fully in her Honour’s reasons on sentence and were the subject of agreement between the parties: ROS5-8. These amounts also appear in the table at the end of [27] above. The moneys paid by cheque by the corporate victim to the businesses were banked by the applicant in his company’s account. There was an issue about how the loss suffered by the corporate victim should be quantified. This related to whether GST credits on the overpayments operated as an advantage to the victim, and the unspecified amount recouped from Westpac. I interpolate that Westpac took recovery proceedings against the applicant, having first obtained an asset freezing order against the applicant in aid of those proceedings. There was no evidence as to the amount recovered by it from the eventual sale of those assets. Her Honour however found the extent to which Westpac had paid damages to the corporate victim for breach of its mandate did no more than transfer the latter’s loss to the former. Her Honour was not persuaded by the GST argument. In the end her Honour took what I would regard as a permissibly pragmatic approach to these issues finding, and focusing on, the amount the applicant took for his own use and benefit, some $10.75million: ROS10. Each count on the indictment was in respect of an annual invoiced sum of between $54,824 (at the lowest end in 2005) to $1,816,223 (at the highest end in 2007) (see the table at [27] above).

36. I wish to emphasise her Honour’s conclusions before turning to the resolution of the issues. I repeat, the total amount of the fraud was around $10.75m. That is how much the applicant took from his employer, the company of which he was a director. The 14 separate counts represented offending which occurred over a period of 5 years. For 13 of the counts the applicant’s modus operandi was to overcharge for fodder supplied by entities which the applicant controlled. When I say “overcharge”, the invoices raising the charges grossly overstated the amount of fodder actually supplied. The first invoice overstated the supply by 28 per cent and the second by 33 per cent. The proportion of fraudulent content in the invoices soon escalated and typically, in the end, the applicant was overcharging by 80 to 90 per cent.

37. The Flinn transaction, the subject of count 15, was, as I have said, different. On that occasion the applicant purported to order fodder from a third party supplier on behalf of his employer, which paid for it, but directed that the bulk of the fodder be delivered to his own premises for his own use in the equine enterprise he conducted separately from the corporate victim.

Arguments of the parties

38. At the outset, it was conceded by counsel for the applicant at [23] of his written submissions that “[n]o issue is taken that the individual indicative sentences were within range”. Instead, the complaint of manifest excess in the imposition of the sentence is argued on the basis of severity of the aggregate and particularised on four different bases which it will be necessary to consider in turn.

39. As the Crown submitted at [20] of its submissions, “[i]t would appear that the focus of the complaint is that the degree of accumulation resulted in a manifestly excessive aggregate sentence”. Counsel for the applicant also argued (at [24]) that the aggregate sentenced imposed is equivalent to the most severe that has been imposed for offences committed against ss 176A and 192E.

The significance in terms of her Honour’s reasoning to the fact that there were repeated criminal acts involved in the commission of the offence.

40. The central submission in relation to this argument appears at [29] of the applicant’s written submissions. There it is stated that in assessing the objective seriousness of the offending, the sentencing judge took into account the fact that the offences formed part of a multiplicity of offences. The applicant makes reference to ROS13-14, in particular the observation at point (d) that “[t]he scheme perpetrated by the offender, and each count on the indictment (other than count 15) involved repeated dishonest acts” [emphasis added].

41. In turn, it is submitted that the reference to repeated criminal acts at various points in the sentencing remarks “had the effect of overstating the significance of those acts and masked error in the sentencing process”.

By failing to adequately take into account that the impact on the victim company would be temporary rather than irreparable.

42. This second ground was raised by the applicant in the context of dealing with the sentencing judge’s treatment of De Angelis as a comparative case. At [30] of his written submissions, the applicant points to the fact that in this case, Emirates Park suffered only a “temporary setback” as a result of the losses incurred by the fraud of the applicant.

43. In support of this ground, the applicant points to ROS18, in particular her Honour’s remarks that “without minimising the loss actually suffered and the impact arising from that, it may be accepted … that this case is to be distinguished from those cases where a victim’s – or indeed a number of victims’ – life savings are stolen causing financial and emotional devastation”. The applicant argued that though the sentencing judge “appeared to embrace the submission that the distinction was a necessary one to be made in this case” (at [30]), the failure to act on that submission in framing an appropriate sentence entailed error.

44. In its submissions (at [33]), the Crown cited a passage in De Angelis where, far from characterising the victims in that case as “hapless” (see [30] of the applicant’s written submission), the Court referred to them as “not naïve, inexperienced or unworldly first time investors … rather, extremely well resourced … [at least some] with high profiles in business and professional circles”. The Crown says there is no sharp distinction between the way one might characterise the victims in the case of De Angelis and the present case.

45. In addition, the Crown pointed (at [34]) to a reference by the CEO of the corporate victim (Ex B) to the “severe impact” of the fraud occasioned by the applicant. It is submitted (at [35]) that while the sentencing judge took into account that this was not a case of stealing a victim’s life savings, the offending nonetheless “exhibit[s] a high level of criminality”.

By giving undue weight to the comparative case of De Angelis in determining an appropriate sentence to be imposed.

46. It is submitted on behalf of the applicant that the sentencing judge erred in giving undue weight to the comparative case of De Angelis. De Angelis is referred to at ROS28 alongside the cases of Chen v R [2015] NSWCCA 122 and Lu v R [2014] NSWCCA 307. As is stated by the Crown (at [27]), her Honour first stated that she had had regard to these cases, before stating that “the appropriate sentence for a particular offence will depend on all the relevant circumstances of the offence and the offender”.

47. The applicant observes at [26] that the aggregate sentence and aggregate non-parole period imposed in De Angelis were near identical to the present case, being 12 years and 7 years 6 months respectively. However, it is submitted that there are “distinctive differences which made it an imperfect comparative case to be used as a guidepost as to the upper marker of the appropriate range of sentences for this type of offending” (at [26]). In particular, the applicant points to:

1. The fact that the criminality in De Angelis was characterised as “predatory” (at [66] De Angelis); and

2. In De Angelis, there were a greater number of victims, the fraud was more widespread and some of those victims lost their life savings ([21]-[22] De Angelis).

48. In this case, it is submitted (at [30]) by the applicant that there is one victim and that whereas De Angelis involved “a predator knowing that the life savings of a victim was being taken and knowing it would be lost”, this case “involved an abuse of trust by someone who knew the financial position of the victim company”. In submitting that her Honour failed to give due or sufficient consideration to the circumstances of offending in De Angelis, the applicant argued, by reference to The Queen v Kilic (2016) 91 ALJR 131; [2016] HCA 48, that “use of comparable cases in support of imposition of sentence invites consideration be given to the circumstances of offending of the comparator case and whether that case is, in fact, a reliable yardstick to be used for determination of the sentence at hand”: at [31].

49. In reply, the Crown (at [30]) has drawn the Court’s attention to the fact that De Angelis might further be distinguished from the present case in that it involved a plea of guilty and 12.5% discount on sentence in circumstances where the fraud was of a lesser amount, being $8.5million.

By failing to have regard to the making of a compensation order of $750,000 as a matter of mitigation in sentence.

50. The final ground of appeal agitated on behalf of the applicant concerns the making of a compensation order in the sum of $750,000 by the District Court. This is the ground the applicant sought to raise as a ground of appeal independent of manifest excess. First, the applicant submits (at [32]) that the sentencing judge was aware of the fact that the applicant had few assets with which to satisfy the order, since the applicant’s assets in Australia had been frozen and sold by the bank. Second, it is submitted that her Honour ought to have mitigated the sentence to reflect the direction that compensation be paid.

51. In this regard, the compensation order is compared by the applicant (at [33]) to a forfeiture order, “(formerly) regarded by the courts as an additional penalty imposed on an offender and … properly taken into account in mitigation on sentence”. I interpolate that this “rule” was abrogated by the enactment of s 24B Crimes (Sentencing Procedure) Act 1999 (NSW) (‘Sentencing Procedure Act’). It was argued that nothing in s 24B precluded the sentencing judge from taking the compensation direction into account in mitigation. Further, it is submitted (at [33]) by reference to R v Stanbouli (2003) 141 A Crim R 531 at [78] that given the making of a direction that compensation be paid, “[p]ersonal deterrence should have been given less weight”.

52. The Crown, on the other hand, submits that: Stanbouli was decided prior to the commencement of s 24B; no funds have actually been paid by the applicant and compensation may never occur; the $750,000 is said to represent a small fraction of the total sum; and her Honour found that the monies defrauded were “substantially irretrievable”: ROS13.

53. Further, it is submitted by the Crown (at [38]) that the clear terms of s 97(1) are that the order is made following conviction and the imposition of penalty, thus the terms of the order could not be taken into account on sentence. Finally, since the argument in mitigation was never put at first instance, it is submitted (at [40]) that this poses an additional hurdle for the applicant.

Decision – the compensation direction

54. To explain how this ground came to be argued separately it is necessary to set out some detail from the hearing before this Court.

55. For this offending her Honour, not inappropriately by any means with respect, chose to impose an aggregate sentence. In accordance with the requirements of s 53A(2)(b) Crimes (Sentencing Procedure) Act 1999 (NSW), her Honour indicated the sentence she would have imposed for individual counts which appear in the table at the end of [5] above. Indicative sentences, of course, are not sentences which may themselves be reviewed under s 6 Criminal Appeal Act 1912 (NSW). At the same time, a consideration of their appropriateness may be relevant to the demonstration of manifest excess on appeal: Mundine v R [2017] NSWCCA 97 at [89] per Adamson J.

56. However, in both written submissions (at [23]) and on the hearing of the appeal (T2.50-3.7) (as recorded at [32] above), learned counsel indicated that “[N]o issue is taken that the individual indicative sentences were within range when regard is had to the scope and nature of the offending conduct, nor that some accumulation was required given the nature of the offences for which the applicant fell to be sentenced”. Given this, with respect, counsel really had no answer to the question raised in argument (T2.45, Latham J) “how does her Honour partially accumulate those sentences to represent the totality of the criminality and not get to the sentence that she did …?”

57. Faced with this difficulty at the hearing, learned counsel sought “an amendment” to establish patent error on the same grounds (T4.20/5.5), however the main ground that was argued “separately” was the fourth ground, particular (d), relating to the failure of the sentencing judge to take the making of the compensation direction into account in mitigation.

58. The compensation direction was made under s 97 Victims Rights and Support Act 2013 (NSW) (set out below at [43]). Reliance was placed upon R v Stanbouli, relating to the mitigatory effect formerly given to forfeiture or confiscation orders made under proceeds of crime legislation in its various forms. As acknowledged, those principles have been abrogated by s 24B Sentencing Procedure Act. The primary basis for treating such orders as operating in mitigation was that confiscation of property is an additional penalty the imposition of which may have the effect of reducing the significance of personal deterrence.

59. It is important to bear in mind that the application for the compensation direction was dealt with by the learned sentencing judge immediately after she had passed sentence on the applicant while he was still before the Court and represented by Senior Counsel. Immediately after the direction was made, her Honour inquired of the Crown Prosecutor and of Senior Counsel for the applicant whether any further order was required (ROS34). Learned Senior Counsel responded, “No, your Honour”.

60. It is apparent that the applicant had received prior notice that the compensation order would be sought. Indeed, the matter was dealt with during the proceedings on sentence on 31 July 2015 (T18.15/40). Senior Counsel indicated that he had no submissions to make on that application. He then commenced to make submissions in reply which continued over an additional two and a half pages of the transcript without submitting that if her Honour proposed to make a compensation direction, then that matter should be treated as mitigatory, bearing in mind where the onus to prove matters in mitigation lies.

61. These circumstances create a difficulty for the applicant. The general rule is that the court’s powers under s 6 Criminal Appeal Act 1912 (NSW) are exercised on the material which was before the sentencing court and any relevant evidence of the applicant’s progress towards rehabilitation since sentence was passed: Betts v The Queen (2016) 90 ALJR 758; [2016] HCA 25. As the unanimous High Court said in Betts at [2]:

This general rule does not deny that an appellate court has the flexibility to receive new evidence where it is necessary to do so in order to avoid a miscarriage of justice.

62. However this argument is not new evidence. In truth it is an argument that, if available, could have been raised below. In Zreikav R (2012) 223 A Crim R 460; [2012] NSWCCA 44, Johnson J with the agreement of McClellan CJ at CL and Rothman J, said at [81]:

The Victorian Court of Appeal has emphasised recently, that in sentencing appeals, the Court is reviewing the exercise of a discretionary judgment and not rehearing a plea of mitigation. It is not the occasion for the revision and reformulation of the case presented below. The Court will not lightly entertain arguments that could have been put, but were not advanced on the plea, and will have an even greater reluctance to entertain arguments that seek to resile from concessions made below or are a contradiction of submissions previously made. The Court spoke of the need for exceptional circumstances before this can be done, where it can be shown that there was most compelling material available on the plea that was not used or understood, and which demonstrates that there has been a miscarriage of justice arising from the plea and sentence [citations omitted].

63. Having considered the argument for myself, I am not persuaded that the applicant has demonstrated that there has been a miscarriage of justice arising from the failure of Senior Counsel to advance this argument at first instance. I would not grant leave for it to be raised now.

63. The relevant principle concerning forfeiture or confiscation orders, before its abrogation by s 24B, was established by the decision in R v Kalache (2000) 111 A Crim R 152; [2000] NSWCCA 2 where Sully J (at [76], Hidden and R S Hulme JJ agreeing), after reviewing the authorities, accepted the principle expressed in R v Brough [1995] 1 NZLR 419 (25)-(40) in the following terms:

“… as a general proposition, confiscation orders under the Act should not be taken into account when assessing sentencing, subject to two qualifications. First, there may be exceptional or unusual circumstances where orders made, particularly orders to forfeit valuable property used in the commission of an offence, may have a disproportionate or exceptional effect on the offender, sufficient for some regard to be had to it when imposing sentence. Secondly, recognising that one of the purposes of sentencing is that the sentence to be imposed is to deter others who may be minded to commit like offences, if forfeiture orders of property used in the commission of offences are particularly severe, some adjustment to the sentence may be appropriate because the deterrent effect of the forfeiture orders may lessen the need for the deterrent element in the sentence. But it is difficult to conceive of circumstances where orders to forfeit the proceeds of the offence or for a pecuniary penalty order reflecting the benefit derived from the commission of an offence, should have any relevance to an appropriate sentence. These reflect the offender’s ill-gotten gains which … irrespective of sentencing for offences, the offender should be required to disgorge. (My emphasis.)

The principle, then, was that confiscation orders and the like should not be taken into account other than in exceptional circumstances and even then not when the only practical effect of the order was to require disgorgement of the ill-gotten gains of the offending at hand.

65. Section 97 Victims Rights and Support Act 2013 (NSW) is in the following terms:

(1) A court that convicts a person of an offence may (on the conviction or at any time afterwards), by notice given to the offender, direct that a specified sum be paid out of the property of the offender to any:

(a) aggrieved person, or

(b) aggrieved persons in such proportions as may be specified in the direction,

by way of compensation for any loss sustained through, or by reason of, the offence or, if applicable, any further offence that the court has taken into account under Division 3 of Part 3 of the Crimes (Sentencing Procedure) Act 1999 in imposing a penalty for an offence for which the offender has been convicted.

(2) A direction for compensation may be given by a court on its own initiative or on an application made to it by or on behalf of the aggrieved person.

It can be seen that a direction, if made, requires “a specified sum be paid out of the property of the offender … by way of compensation for any loss sustained through or by reason of the offence” (my emphasis). Quite clearly, a direction under s 97 is in the nature of a claw-back (disgorgement) of an offender’s “ill-gotten gains” which “the offender should be required to disgorge” in my opinion.

66. The general rule which R v Brough acknowledges is that such orders should not be taken into account. Two exceptions are identified. There is a proviso to the exceptions. A direction for compensation is either caught by the general rule, or if covered by (it could only be) the second exception is in any event excluded by what I have called the proviso. The compensatory direction by definition therefore does not operate in mitigation of sentence.

67. Moreover, it was common ground that the applicant has not discharged the direction for compensation by satisfaction of it and is no position to do so. No actual reparation having been made, there is no occasion for giving the direction a mitigatory effect in any event. Leaving aside the category of payments under statute, reparation or restitution when actually made may operate in mitigation of sentence. The governing principles were explained by Hunt CJ at CL in R v Phelan (1993) 66 A Crim R 446 at 448 in these terms:

In many of these cases, some emphasis has been placed upon the fact that the amount involved has voluntarily been repaid, but in my view it would be wrong to interpret those cases as supporting any proposition that an offender is able to purchase mitigation. Where there has been a substantial degree of sacrifice involved in the repayment, that is a matter which may properly be taken into account by way of mitigation. Otherwise, in my view, it is more a matter of aggravation where there has been a loss which is effectively irretrievable than a matter of mitigation when the loss has simply been made good. [emphasis added]

(See also R v Woodman [2001] NSWCCA 310 at [32]).

68. There is no evidence that there has been any actual reparation in this case and in its absence the making of the direction for compensation does not engage any operative mitigatory principle.

Manifest excess – the remaining “particulars”

69. The principles by reference to which a decision is made about whether a sentence imposed at first instance is either manifestly inadequate or manifestly excessive were not in question in this appeal. It is worth, however, bringing to mind the consideration that this ground of appeal is concerned with latent error. In House v The King (1936) 55 CLR 199 Dixon, Evatt and McTiernan JJ famously expressed the principle in the following way:

It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure to properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.

(See also Markarian v The Queen (2005) 228 CLR 357 at 370 – 371 [25].)

70. In Wong v The Queen; Leung v The Queen (2001) 207 CLR 584; [2001] HCA 64 at 605 [58] Gaudron, Gummow, and Hayne JJ said of the “manifest excess” ground:

In this … kind of case, appellate intervention is not justified simply because the result arrived at below is markedly different from other sentences which have been imposed in other cases. Intervention is warranted only where the difference is such that, in all the circumstances, the appellate court concludes that there must have been some misapplication of principle, even though where and how is not apparent in the statement of reasons. (My emphasis.)

71. In Dinsdale v The Queen (2000) 202 CLR 321; [2000] HCA 54 at 325, Gleeson CJ and Hayne J pointed out that manifest excess “is a conclusion which does not depend upon attribution of identified specific error in the reasoning of the sentencing judge and which frequently does not admit of amplification except by stating the respect in which the sentence is inadequate or excessive”. Nonetheless, their Honours observed that three of the four grounds of appeal advanced in that case “seem to have been little more than particulars of what was the Crown appeal on the basis of manifest inadequacy”. Other than for particular (d), the applicant has adopted such an approach in the presentation of this appeal. Provided one bears in mind the condition necessary to be satisfied to make good an appeal on the ground of manifest excess, this has been a useful, and helpful, approach.

72. One reason why the approach has been useful is because, if I may say so, with respect, her Honour’s judgment is a model of its type. It is comprehensive, thorough and clear. This, it may be said, presents its own difficulties in the way of the applicant making good this ground of appeal. However advancing particulars of manifest excess has directed this Court’s attention to those aspects of the reasons the applicant complains of to make good this ground.

First particular

73. The first of the remaining particulars in substance is that the learned sentencing judge erred in evaluating the objective seriousness of the offending by taking into account that the offending involved repeated dishonest acts. With respect, there is nothing in this argument. Manifestly the offending involved a series of criminal acts performed over a period of about 5 years, as I have said, involving about $10.75 million. But the finding actually made by her Honour was in the following terms (ROS13-14):

The scheme perpetrated by the offender, and each count on the indictment (other than count 15) involved repeated dishonest acts. (My emphasis.)

It should be pointed out at once that this was only one of nine major factors identified by her Honour going to her evaluation of the objective seriousness of the offending. One can infer, for what it is worth, that this factor did not figure substantially in her Honour’s reasoning by having regard to its place in the context of the whole of her Honour’s reasons. It is clear, however, that her Honour understood that each count (other than count 15) covered a number of transactions during the period covered by the averment relevant to it in the indictment.

74. For sentencing purposes, her Honour drew upon the document signed by counsel entitled “Agreed Basis for Sentence”, which was admitted as Exhibit C. It is clear from this exhibit that each count did relate to a series of transactions and that her Honour chose her language carefully. For instance, Count 1 related to invoices for 10,297 bales of hay over a four-month period. To choose another at random, Count 10 related to invoices claiming payment of 16,025 bales of hay in January and February 2010. Each example involved a series of transactions. I am not satisfied that her Honour fell into the error identified in R v Tadrosse (2005) 65 NSWLR 740 at [28]-[29]; nor did her Honour purport to apply s 21A(2)(m) Sentencing Procedure Act at all.

Second and third particulars

The second particular contends that the learned judge failed to adequately take into account the extent of the corporate victim’s loss. It is said that her Honour failed to appreciate that the loss would be temporary rather than irreparable. The arguments in this regard were bound up with the third particular, the contention that the learned judge gave undue weight to De Angelis. It is convenient to deal with both of these arguments together. It is worth setting out in full here what her Honour said about De Angelis (ROS28):

On behalf of the Crown, the Court’s attention was drawn to the recent decisions of De Angelis v R [2015] NSWCCA 197, Chen v R [2015] NSWCCA 122 and Lu v R [2014] NSWCCA 307. I have had regard to these cases as I have been asked to do. Ultimately, the appropriate sentence for a particular offence will depend on all the relevant circumstances of the offence and the offender.

75. I have referred (at [48] above when summarising counsel’s arguments) to the guidance provided by the High Court in R v Kilic about the use of comparable cases in sentencing proceedings. A number of points may be made. First, sentencing proceedings, like criminal proceedings generally, are both accusatory and adversarial. To the extent to which they are adversarial, it is for the parties to provide the Court with cases which are said to provide comparable sentences. Secondly, whether a case is appropriately comparable requires “consideration to be given to the circumstances of the offending” in the proffered comparator. Thirdly, it is only when the circumstances of the offending are found to be appropriately comparable that a proposed comparator may provide a yardstick. Fourthly, a single prior instance even of appropriately comparable offending is unlikely to provide much by way of useful guidance. This is because no single prior case is likely to be sufficiently comparable as to the nature and circumstances of the offending at hand and the subjective circumstances of the particular offender. Normally, it takes a number of appropriately comparable cases to provide a useful yardstick. Fifthly, as is clearly established, a yardstick is no more than that. It does not constitute a range within which the sentence under consideration must fall. A sentence markedly out of kilter with a useful yardstick may provide reason for pause before imposing the proposed sentence to consider whether there is good reason in the circumstances of the offending or the offender for a marked difference in outcome. Sixthly, it is well recognised in fraud offences that the usual limited utility of comparable sentences is further attenuated because of “the enormous variation in objective and subjective circumstances” in such offending coming before the courts: R v Hawker [2001] NSWCCA 148; R v Martin [2005] NSWCCA 190 at [56]: “far greater assistance is derived from reference to general sentencing principles”. Finally, it is an inevitable part of this process that previous decisions proffered as comparable frequently will be considered only to be discarded for failing to provide an appropriate comparator.

76. From her Honour’s reasons, it is apparent that although taken to the three cases by the Crown, her Honour derived no specific benefit from them. I infer her Honour found that they did not individually or together constitute an appropriate yardstick. Rather, entirely consistent with previous authority, her Honour directed herself, very appositely in a fraud case, that “the appropriate sentence for particular will depend on all the relevant circumstances of the offence and the offender”.

77. As set out at [48]-[49] above, the applicant’s primary submission was that the learned sentencing judge gave “undue weight … to …. De Angelis”. It was put by the applicant that the difference in circumstances between the cases “made it an imperfect comparative case to be used as a guidepost as to the upper marker of the appropriate range of sentences”.

78. There are two principal reasons why this submission must be rejected out of hand. The first is that faith and credit must be given to her Honour’s reasons. Her Honour made it clear from the language she used that she derived, at best, limited assistance from the cases proffered as comparators. In these circumstances it ill-behoves counsel, and it would ill-behove this Court in other than an exceptional and clear case, to go behind the reasons actually expressed by a sentencing judge for the sentence imposed. In Waterways Authority v Fitzgibbons [2005] HCA 57; 79 ALJR 1816, Hayne J remarked at 1835 [130]:

[B]ecause the primary judge was bound to state the reasons for arriving at the decision reached, the reasons actually stated are to be understood as recording the steps that were in fact taken in arriving at that result. [My emphasis].

It is trite to say that the provision of reasons is an ordinary incident of the exercise of judicial power: Wainohu vNew South Wales (2011) 243 CLR 181; [2011] HCA 24, at 213-215 [54]-[58]. In sentencing proceedings the provision of reasons for sentence explains for the parties, in particular the offender, the Court of Criminal Appeal, and the public, why a particular sentencing decision was made: Muldrock v The Queen (2011) 244 CLR 120; [2011] HCA 39 at 132 [30]. Her Honour explained her approach carefully. This Court should accept that was the approach that in fact was taken. It is not open to counsel in this case to argue that her Honour gave undue weight to De Angelis; in effect that her Honour said one thing but did another.

79. The second reason why the argument should be rejected out of hand is that sentencing outcomes in previous like cases have no precedential value: Hili v The Queen; Jones v The Queen (2010) 242 CLR 520; [2010] HCA 45 at 536 [53] – 537 [54] citing Director of PublicProsecutions (Commonwealth) v De La Rosa [2010] NSWCCA 194 at [303]- [305]; Barbaro v The Queen; Zirilli v The Queen (2014) 253 CLR 58; [2014] HCA 2 at 74 [40].

80. The only “range” is the range provided for by Parliament. Accordingly no previous decision serves as an “upper marker” of “an appropriate range”. There is nothing in her Honour’s reasons that suggests she fell into the elementary error attributed to her by the applicant; quite the contrary. And I would not draw that inference merely from the similarity of the sentence imposed. For what it is worth, I repeat that the sentence in De Angelis was an aggregate sentence of 12 years’ imprisonment with a non-parole period of 7 years and 6 months; in Chen the aggregate sentence was 10 years with a non-parole period of 6 years; and in Lu it was an aggregate sentence of 9 years with a non-parole period of 6 years.

81. It may be acknowledged that the circumstances of the offending and the offender in De Angelis were quite unlike all of the circumstances of the present case. But, as I have attempted to point out, her Honour recognised that and moved on to consider the appropriate sentence for this offending and this offender quite separately from the circumstances of De Angelis and the other cases.

82. Concerning the extent of the financial injury suffered by the corporate victim, it was conceded on behalf of the applicant in the proceedings on sentence that because of the amount involved, the fraud is likely to have a “significant impact” on the corporate victim’s “operations” (ROS17). Having reviewed the arguments, if I may say so, carefully, her Honour arrived at the following conclusions (ROS18):

… there was a significant impact on [the corporate victim’s] operations by reason of the commission of the offences. Having said that, and without minimising the loss actually suffered and the impact actually arising from that, it may be accepted as Mr Pesman SC [who appeared at the trial but not on appeal] submitted, that this case is to be distinguished from those cases where a victim’s – or indeed a number of victims’ – life savings are stolen causing financial and emotional devastation.

This finding was favourable to the offender. Her Honour did not fail to appreciate, or wrongly assess, the extent of the financial injury suffered by the corporate victim. Bearing that in mind, her Honour went on to evaluate the objective circumstances of the offending, which she recognised do not of themselves determine penalty, in the following way (ROS18):

The features of the offending I have identified warrant the conclusion, which was not put in issue that the offender engaged in various serious criminal conducts exhibiting a high level of criminality. Such a conclusion is required when regard is had, as it must be, to the time over which the offences were committed, the premeditation, the considerable dishonesty exhibited, the gross abuse of trust and the size of the financial advantage involved in the loss incurred.

Her Honour placed emphasis on the size of the advantage obtained by the applicant rather than on the extent of the loss suffered by the corporate victim. For my part I can see no error in this approach or in her Honour’s conclusion.

83. I am not satisfied that the applicant has demonstrated that the sentence passed was unreasonable or plainly unjust.

84. I propose the following orders:

1. Refuse leave to amend to add particular (d) of the existing proposed ground of appeal as an additional ground;

2. Otherwise grant leave to appeal;

3. Appeal dismissed.

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Amendments

07 July 2017 - Formatting problems resolved.

Decision last updated: 07 July 2017