Coles v R

The facts for sentencing purposes

1. It was the agreed position for sentencing purposes that the counts in the indictment, and the offences on the Forms 1, were representative of the totality of the applicant's dishonest conduct between 2001 and 2008, including his utilisation of a business owned and operated by him and various companies he controlled for fraudulent purposes. This was reflected in a comprehensive agreed statement of facts and other materials tendered by the Crown on sentence.
2. For present purposes, it suffices to describe the applicant's business activities as involving him offering financial advice and related services to those of his clients who owned artistic works for investment purposes (most usually valuable oil paintings by acclaimed Australian artists) either personally or, more usually, through self-managed superannuation funds. In order that the client comply with the rules applying to investment in artworks, principally that the artwork held as an asset by such a fund not be displayed as an artwork but stored or held for sale, the applicant encouraged his clients to either allow him to hold works on consignment for sale (with the corresponding obligation to account to the client where a work was sold) or to store the works in his premises for a fee.
3. In respect of each of the artworks the subject of the 15 counts on the indictment, the applicant either dealt with the work contrary to the terms of the bailment, including by offering the work as security for a loan from which he benefited, and failing to account to the owner of the work after it was sold by retaining the funds for his own use. That conduct was also the subject of 11 of the 18 offences on the Forms 1 with the remaining seven offences involving the applicant fraudulently taking artworks for his own use.
4. The total value of the 35 artworks the subject of the indictment, including those on the Forms 1, particularised in the agreed facts by the title of the painting, was $5,956,500. None of those works have been recovered. Four hundred and thirteen artworks were seized by police, some of which have been restored to the owners of the artworks.
5. Although there was no obligation on the sentencing judge to appoint the objective seriousness of the applicant's offending referable to any range (none of the offences attracted a standard non-parole period), the objective seriousness was found to be well above the mid range having been the result of what the sentencing judge found was a deliberate, well planned and systematic fraud committed over many years. His Honour also regarded the applicant's dishonest dealings with clients who had reposed trust in him as a brazen breach of that trust and that his sole motivation was greed and the desire for financial gain to maintain an affluent lifestyle.
6. Save for the finding of special circumstances (a generous finding given that the sentencing judge also found the applicant an unimpressive witness with poor insight into his offending), the applicant's subjective circumstances, including his good character, did not attract any leniency.
7. At the sentencing hearing, the applicant's legal representative submitted that the delay between the initiation of the police investigation in 2009 and the commencement of proceedings in 2012 should be taken into account on sentence because the applicant "was left in limbo for three years" having given evidence on sentence that he had made contact with the police "on a number of occasions" and that the response of the police was "we'll get back to you". The sentencing judge was referred to Blanco v R [1999] NSWCCA 121; 106 A Crim R 303 as authority for the proposition that in those circumstances delay operated as a factor in mitigation of sentence.
8. In Blanco, the delay in sentencing was solely as a consequence of what the Court found was the inordinate and unexpected delay in the offender's arrest and charge. In light of that finding, Wood CJ at CL said: [16] The reason why delay is to be taken into account when sentencing an offender relates first to the fact of the uncertain suspense in which a person may be left; secondly to any demonstrated progress of the offender towards rehabilitation during the intervening period; and thirdly, to the fact that a sentence for a stale crime does call for a measure of understanding and flexibility of approach: See, in addition to Todd and Mill, the decisions in Harrison (1990) 48 A Crim R 197 at 198-199 and King (Court of Criminal Appeal NSW, 24 February 1998). [17] The present was not a case where the applicant had been arrested and had spent a long time awaiting sentence, or in a state of suspense as to whether he might be charged; nor is it a case where he had shown any commitment towards rehabilitation after having realised the error of his ways. However, it remains the fact that it is highly desirable that the prosecuting authorities act promptly where they have evidence of serious criminality. If they fail to do so, then they must expect that circumstance to be taken into account on sentencing. It is in the public interest that those who are suspected of serious criminality be brought to justice and be brought to justice quickly, particularly where there is a strong case available against them. I will return to this fact later, because it does seem to me that insufficient weight was given to it in the sentencing process.
9. The Crown advanced no submission in reply as to the significance of the passage of three years between the initiation of the investigation and charge after it was raised by the defence in submissions, including whether it carried any weight as a factor in mitigation in the particular circumstances of the case, and the sentencing judge made no reference in his sentencing reasons to having considered the applicant's submission that delay should attract leniency.
10. In support of what was said to be the applicant's entitlement to have had delay taken into account in his favour on sentence, at the hearing of the appeal significant reliance was placed on Sabra v R [2015] NSWCCA 38, where this Court had occasion to review the principles as to the potential for delay to be a mitigating factor in the sentencing exercise. In addition to setting out the relevant principles drawn from a number of authorities (including Blanco), the Court in Sabra rejected the approach of the South Australian courts exemplified in Pickard v R [2011] SASCFC 134 which requires an offender to demonstrate consequences greater than anxiety and a state of uncertain suspense before a sentencing court can take delay into account in mitigation (see Sabra) at [38]-[46]). At [45] Bellew J said: Delay which is not attributable to an offender may be relevant on sentence at a number of different levels. Ordinarily, such delay will be a mitigating factor if (as in the present case) it has resulted in significant stress to the offender, or has left him or her, to a significant degree, in a state of uncertain suspense. Where there is evidence that delay has led to consequences being visited upon an offender which are adverse to his or her circumstances and which are over and above stress and anxiety, be those consequences in the nature of interrupted rehabilitation or otherwise, then the weight to be given to such delay in the sentencing process will obviously be greater. But that is not to say that an offender must be able to establish consequences of that kind before delay can become relevant at all. To so conclude would be contrary to the weight of previous authority in this Court.
11. An analysis of the authorities to which Bellew J referred in Sabra, authorities which this Court has considered on numerous occasions, make it clear that preliminary to the question whether the applicant in fact suffered a significant detriment, or adverse consequences of any relevant kind, by the passage of three years from January 2009 to January 2012 which might have attracted mitigatory weight in the sentencing exercise (an evidential burden he was obliged to discharge on the balance of probabilities), is whether the passage of three years was a delay of the kind which might attract the considerations of fairness referred to in Todd v R [1982] 2 NSWLR 517 (at 519). That case was referred to in Mill v R [1988] HCA 70; 166 CLR 59, where the plurality of the High Court said (at [14]): … The long deferment of the trial or punishment of an offender, with the consequent uncertainty as to what will happen to him, raise considerations of fairness to an offender which must be taken into consideration when the second court is determining an appropriate head sentence. …
12. While it is clear that delay in the sentencing of an offender is a relevant consideration, a relevant principle for which both Todd and Mill are authority, as Simpson J observed in McKittrick v R [2014] NSWCCA 128 at [17], it is not every case where delay has occurred in the prosecution of an offender that a reduced sentence results, since each case depends upon its own particular circumstances. It seems to me that before any consideration can meaningfully be given to whether an amelioration in sentence is warranted because of the delay in the prosecution or sentencing an offender, the reasons for the delay need to be considered and, where necessary, some evidence directed to that question.
13. On the hearing of the appeal, the applicant's reliance on delay as a factor in mitigation proceeded on the assumption that three years from the execution of search warrants over the applicant's home and business by police in January 2009 to the laying of charges in January 2012 was of such a length that the Crown was obligated to explain the delay by calling direct evidence that the delay was both explicable and reasonable and, having failed to call that evidence, or to address any submission to the issue, the sentencing judge was obligated to afford it weight in mitigation of sentence.
14. The authorities to which I have referred recognise that an unexplained, unreasonable, or inordinate delay in commencing a prosecution, in particular where evidence is available to support the laying of charges and no charges are laid, or where there is evidence of wrongdoing but the police are dilatory in investigating whether it supports the laying of charges (as was the case in Blanco and, more recently, in McKittrick), might operate in mitigation of sentence even where the delay did not cause any change in the offender's circumstances. There was, however, nothing in the evidence before the sentencing judge in this case to suggest that the delay was of that order.
15. The overwhelming inference from the evidence before the sentencing judge was that the three year police investigation before CAN notices issued was due to the complexity of the investigation into the applicant's fraudulent activities, including the sheer number of paintings ultimately seized by police and the need to have them authenticated and valued by art specialists. The fact that very few of the paintings were labelled also meant that ownership in many works was difficult to trace. In addition, the duplicity of receipts issued by the applicant to various people for the same artworks in perpetration of the fraud, and the paucity of financial records provided by him to the liquidators of his companies and his trustee in bankruptcy, together with the paucity of documents seized by police under warrant, would inevitably have extended the investigation period.
16. There was no submission advanced in the court below or on the appeal that the offences were stale, that is, charged long after the offences were committed such as might attract leniency on that account alone.
17. While the Crown did not lead any detailed evidence from the officer in charge as to the precise course the investigation took, his evidence in chief having been limited to a discrete issue, neither was he cross-examined to suggest that the investigators were dilatory or the investigation unfocused, or that the passage of three years was not fairly accounted for by the nature of the applicant's offending, including either his deliberate or negligent failure to maintain proper business records.
18. In fact, in the following exchange, the applicant's legal representative effectively conceded that delay was not in issue: Q. You see Coles was trying to contact police to find out what was going on, wasn't he? A. Well Senior Constable Last never told me that. Q. Well he didn't say anything to the contrary, did he? A. No but - Q. That they were searching for Mr Coles? A. Well he wasn't searching for Mr Coles because he handed over the matter to the Fraud Squad. Q. Okay and it took several years. I'm not suggesting there was any delay in relation to the investigation but it took several years for Mr Coles to be charged, correct? A. That's correct. Q. Three years went by, right? A. Yes. Q. And when you made the decision to charge him you were able to locate him? A. Yes. Q. And you found him to be a taxi driver in the Ettalong/Central Coast area, yes? A. He told me that. [Emphasis added.]
19. There being no complaint by the applicant's legal representative at the sentence hearing about the time taken by police to fully investigate the matter and to assemble the evidence, the fact that the applicant contacted police in the early part of the investigation (assuming that the conflict between his evidence and that of the officer in charge concerning the nature and extent of contact in the first six months was resolved in his favour) was, in my view, of no weight as a factor in mitigation. To suggest, as counsel did on the appeal, that the applicant was in a state of uncertainty as to whether he would be charged might be accurate, but to suggest, as the applicant did in his evidence, that he "had no idea what the police really wanted of him" was disingenuous (and entitled to be treated as such by the sentencing judge) in light of what the applicant must be taken to have known was the inevitability of his being prosecuted for a systematic and patent course of fraudulent dealings over many years.
20. Finally, no evidence was called from the applicant or led on his behalf that he suffered any detriment as a result of the delay inherent in the investigation or, for that matter, adverse consequences of any kind. His change in material circumstances (he was driving taxis and living in rented accommodation at the time of his arrest) was unrelated, in any relevant sense, to the delay in the laying of charges. Neither did it indicate anything positive about his rehabilitation. The fact that he did not reoffend in the three years after his fraudulent business dealings were disclosed and investigated was doubtless because of his bankruptcy and the loss of his clientele and, in those circumstances, of no weight as a mitigating factor.
21. It is always preferable for a sentencing judge to refer to matters relied upon in mitigation, whether in acknowledgement of their weight or in finding they have no weight, and the reason for so finding. Although in this case it would have been preferable for the sentencing judge to have expressly distinguished Blanco, there being no evidential basis for the principles in that case or any related authority to have any application, I am not persuaded that the sentencing judge's failure to refer to the effluxion of three years and what was said to be the applicant's reaction to it, constitutes error, there being no principled basis for the delay in this case to have attracted any measure of leniency.
22. I would grant leave to appeal but dismiss the appeal.

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