Criminal Law - Jurisdiction, practice and procedure - Sentence - Factors to be taken into account - Miscellaneous matters - Reparation and restitution by offender - Gross breach of trust by senior employee - Substantial restitution mainly from funds advanced by friend.

Boian (1997) 96 A Crim R 582; Mickelberg (1984) 13 A Crim R 365; R v O'Keefe [1959] Qd R 395; R v Whitnall [1993] FCA 271; (1993) 42 FCR 512, approved.

Judgment Number: [2000] TASSC 22

HER MAJESTY'S ATTORNEY-GENERAL FOR THE STATE OF TASMANIA v

2 Sentence of two years', six months' imprisonment quashed.

3 Substitute a sentence of imprisonment for three years', nine months' from 3 December 1999.

HER MAJESTY'S ATTORNEY-GENERAL FOR THE STATE OF TASMANIA v

1 Upon her pleas of guilty to 66 counts of dishonestly obtaining a financial advantage contrary to the Criminal Code, s252A, the respondent was sentenced to imprisonment for two years, six months commencing on 3 December 1999. The Attorney-General appealed on two grounds, that the sentence was manifestly inadequate, having regard to all the circumstances of the case, and that the learned judge erred when he described the "eventual benefit received by the offender" as $132,000.

2 The respondent was employed by a credit union as a branch manager between 1990 and 1998. She managed branches at three locations. She was authorised to approve applications for personal loans and overdraft facilities without reference to other personnel. Her criminal activity, which involved misusing that authority for her personal benefit, commenced on 4 July 1991 and continued without substantial interruption for almost seven years until May 1998. For her dishonest purposes, she created 29 separate accounts and 66 separate personal loans or overdraft facilities. The 66 counts in the indictment concerned the establishment of an overdraft or personal loan in either a false name or in the name of a person who knew nothing of what she was doing. Although not directly the subject of any of the counts, she then took advantage of the loan or overdraft facilities by drawing funds from them, or by transferring funds from one account to another, on hundreds of occasions over the seven year period. Some of the funds were transferred internally to repay debits she had created and she also repaid some of the debits with funds obtained elsewhere. Some of the funds were retained by her for her personal use and benefit.

3 Overall, she fraudulently withdrew or applied at her direction, a total of $574,480.90. When she left her employment, in about mid-1998, the net capital sum she had taken for her own use and benefit, and not repaid, totalled over $200,000. However, from sources external to the credit union, she then repaid, in several amounts, a total of $72,331. The sources of the repayments were her redundancy and holiday pay entitlements, her equity in her home and a $20,000 advance to her by her partner. As a consequence of those repayments, it might be said that the net capital amount she had withdrawn for her own use and benefit and still retained, was reduced to $132,148.90. However, the loss to the credit union was far greater than that. It would have been entitled to interest on the withdrawn funds, and fees, charges and costs were payable on the various accounts and transactions. At a point in time after the respondent had repaid the sum of $72,331 referred to above, the credit union's loss was described as follows:

Net capital sum taken and not repaid by the respondent

Interest, fees, charges and costs lost or paid by the credit union

4 The credit union had an insurance policy under which it was indemnified by the insurer in the sum of $132,148.90. The respondent made a further payment to the credit union in the sum of $179,254.94 with money advanced to her by her partner. The situation at the time the sentence was imposed, therefore, was that the credit union had suffered no loss but the insurer was out of pocket, to the extent of $132,148.90.

5 When sentencing the respondent the learned judge said that, "... the eventual benefit received by the offender amounts to some $132,000". The second ground of appeal attacks that statement. The Director of Public Prosecutions submitted that the respondent had the benefit of all that she misappropriated and that she either spent it or had its use, and the fact that she applied some by depositing it into various accounts of the credit union in order to avoid detection by covering up what she had done, cannot be described as being otherwise than for her benefit. However, we do not consider that the learned judge made an appealable error when he expressed himself in the way he did. He was merely paying recognition to the statement of counsel for the Crown that "the actual advantage which can be attributed to the accused is $132,148.90". There is no reason to find that his Honour misunderstood or misapplied the facts of the case.

6 It is not known to what extent the learned judge reduced the length of the term of imprisonment because of the payments made by the respondent, but he stated that the making of restitution was a matter of significant mitigation in the determination of penalty. The material before his Honour established that of the total amount paid back to the credit union by the respondent after she left its employment, the source of $199,254.94 was the respondent's partner or friend, a Mr Morley, although $20,000 of that amount was advanced by him without realisation on his part of its destination. His Honour's statement is not the subject of a ground of appeal. However the Director submitted that if restitution comes exclusively from an offender's personal resources, it has greater mitigatory affect than in a case where it is advanced to the offender, by loan or otherwise, by a financially well-off friend or relative. He also submitted that to give great mitigatory significance to a restitution which is made possible in that way, would be akin to allowing the well-connected or wealthy to buy their way out of gaol and that the fact that a partner or friend was able and willing to assist the respondent, should not have been given great weight in this case.

7 As was observed in Boian (1997) 96 A Crim R 582 at 586, the making of restitution does not affect the criminality involved in fraudulent conduct. Nevertheless, it is an important factor that all (or a substantial portion of) the money fraudulently taken has been recovered and it may bear upon the length of the sentence which should be imposed. The effect of crimes on a victim is an important consideration. It is in the public interest that offenders should be encouraged to lessen the impact of their crimes on the victim if it is within their power to do so. Mickelberg (1984) 13 A Crim R 365 at 370. Nevertheless, we agree that courts should be reluctant to reward discounts which are overly generous, to avoid offenders and particularly the wealthy and well-connected, buying their way out of deserved sentences. As was said by Stanley J in R v O'Keefe [1959] Qd R 395 at 400, "it would be of the worst example if any sentence induced or tended to induce a belief that offenders would escape punishment if, when convicted, they made or offered to make restitution. Offenders cannot bargain with the court, and, in effect, buy themselves out of sentences." However, we agree with the view of Higgins J in R v Whitnall [1993] FCA 271; (1993) 42 FCR 512 at 515, that there is no error in principle in the proposition that while an offender should not be allowed to purchase his or her immunity from proper punishment for the offence committed, it is nonetheless true that if the deficiency can be made good, particularly before the date of sentence, then the severity of punishment may be ameliorated. Restitution brought about by remorse may also attract greater consideration than restitution made merely for the purpose of ameliorating the severity of punishment.

8 The respondent asserted, both to the police and the learned judge, that she commenced to offend for the purpose of meeting the demands of a blackmailer and that much of her subsequent offending was committed for the same reason. His Honour refused to accept her assertions without evidence, whereupon the respondent gave evidence in support of them. His Honour positively rejected her evidence and concluded that her claims to have been blackmailed were false.

9 In his comments on passing sentence, the learned judge noted that she was 49 years of age. She commenced her employment in the finance industry in 1966 and held increasingly more responsible positions within the industry until her employment as branch manager from 1990 - 1998. She had no previous convictions. The learned judge said that while she might have had periods of difficulty in her personal life, she held a privileged position, both in terms of remuneration and trust and the amount she had taken was substantial and the conduct prolonged. His Honour said that but for the restitution she had made, albeit with the assistance of her partner, a longer term of imprisonment would have been imposed. After making allowances for her previous good conduct and a "significant" but unspecified allowance for the restitution, his Honour imposed the sentence of imprisonment for two years, six months.

10 It was not shown that the crimes were committed because the respondent was in financial need. They amounted to gross breaches of trust by an employee in a senior position, one of whose responsibilities was to ensure that other employees did not act in the same way. Although she pleaded guilty, she did not display genuine remorse, giving a false explanation for what she had done. Her previous apparent good character would have entitled her to favourable consideration if she had offended only once or twice, but by the time of her sixty-sixth crime, after almost seven years of offending involving the fraudulent withdrawal or application of over half a million dollars, its effect was negligible. She may not have had a tarnished reputation immediately prior to her detection, but she had clearly demonstrated that she was of bad character, so far as honesty was concerned.

11 General deterrence is a primary consideration in crimes such as these and a sentence of imprisonment of substantially greater length than the one imposed was demanded, notwithstanding the extent to which the respondent made restitution. Having regard to the level of sentences imposed in the past in other cases of serious frauds involving substantial amounts taken over long periods of time by employees in whom a high level of trust was reposed by their employers, the length of the sentence in this case was plainly inadequate to the point of error. Notwithstanding the need for caution in Crown appeals which has been accepted in cases such as Everett v R [1994] HCA 49; (1994) 74 A Crim R 241, R v Tait (1979) 46 FLR 386, Malvaso v R [1989] HCA 58; (1989) 168 CLR 227 and many others, it is the duty of the Court to interfere where it is necessary to avoid such a manifest inadequacy in sentence, or inconsistency in sentencing standards, that the error is of such gravity that it is essential in the administration of justice that it be corrected. Khan (1996) 86 A Crim R 552; R v Harland-White 23/1997. As recognised in those cases, regard will also be had to considerations of double jeopardy when re-sentencing the respondent. It is the determination of the Court that the sentence imposed by the learned judge should be quashed and in its place, the respondent should be sentenced to imprisonment for three years nine months from 3 December 1999.