Criminal Law - Appeal and new trial - Appeal against sentence - Grounds for interference - Sentence manifestly excessive or inadequate - Computer-related credit card fraud - Sentence of 14 months' imprisonment with parole eligibility after 7 months manifestly inadequate.

Judgment Number: [2017] TASCCA 24

DIRECTOR OF PUBLIC PROSECUTIONS v STUART MALCOM ALLEN

1. Sentence of 14 months' imprisonment with parole ineligibility period of 7 months quashed.

1. Respondent sentenced to 2 years 6 months' imprisonment with effect from 4 August 2017.

1. Respondent not eligible for parole until he has served 15 months of that sentence.

DIRECTOR OF PUBLIC PROSECUTIONS v STUART MALCOM ALLEN

1. This is a Crown appeal against sentence. The respondent was found guilty by a jury of 45 counts of inserting false data into a computer contrary to the Criminal Code (the Code), s 257E, 5 counts of computer related fraud contrary to s 257B, and 1 count of fraud contrary to s 253A. On 4 August 2017 he was sentenced by Tennent J to imprisonment for 14 months, with eligibility for parole after having served half the sentence. The sole ground of appeal is that the sentence is manifestly inadequate. Her Honour made a compensation order under the Sentencing Act 1997, s 68. That order is not challenged and will remain in effect.
2. For the following reasons we have decided to allow the appeal.

1. The learned sentencing judge's findings of fact for sentence are not in contention. Between 12 March 2013 and 11 October 2013, the respondent fraudulently used credit card details of other persons to arrange transfers of money into accounts he controlled. Some of the card numbers and details were obtained by the respondent in the course of his employment at an apartment hotel in Melbourne between late 2012 and 17 March 2013, from credit cards used by guests at the hotel. The total amount of the fraudulent transfers the respondent attempted was $267,900. Not all of the transfers succeeded. However many transfers did succeed. The total amount the respondent dishonestly obtained was $101,900.
2. The dishonest transfers were achieved by various means. The respondent had a photography business called SMA Photography. On 12 and 13 March 2013 he made two online transfers totalling $5,000 into his bank account, using credit card numbers that were not his and falsely recording the transfers as payments to SMA Photography.
3. On 16 March 2013 the respondent activated a subscription to an online service for professional photographers called Photomerchant, which included a payment facility for the e-commerce website PayPal. On 18 March 2013 he opened a PayPal business account, into which credit card payments from customers of the business could be made through a "virtual terminal". On 29 August 2012 he registered the business with the Australian Business Register, thereby obtaining an Australian Business Number (ABN). He maintained a bank account. Between 7 May 2013 and 22 May 2013 the respondent used credit card numbers that were not his to process 12 payments into his PayPal account through the virtual terminal, purportedly for purchases from his business. The purchases were not real. The customer names he used were fictitious. None of the payments were approved, but the respondent, by five separate transactions, transferred $27,900 from his PayPal account into his personal bank account before the fraudulent transactions could be reversed. Those five transfers constitute the five counts of computer-related fraud. After each transfer he immediately withdrew the money. After 22 May 2013, PayPal recognised the irregularities and suspended the respondent's account.
4. The next series of dishonest transactions occurred months later. On 9 August 2013 the respondent incorporated a company, SMABV Pty Ltd. He opened a business account with the National Australia Bank on 13 August 2013 and successfully applied for a merchant facility which enabled online processing of credit card payments to the bank account. On 10 October 2013 the respondent processed 31 transactions into his bank account through the merchant facility, purportedly as payment for goods or services purchased from his business. The transactions were not real. In each case the name of the customer was fictitious. The credit card numbers were real but fraudulently obtained and used. The true card holders were from at least seven different countries. At least some of the numbers originated from the respondent's employment at the hotel in Melbourne which had ceased in March 2013. The total amount of the NAB transactions was $240,000. Some were refused either because they were recognised as unauthorised transactions, exceeded the credit limit which applied to a particular card, or were otherwise somehow irregular. However some of the transactions were approved, resulting in a deposit into the respondent's bank account of the total amount of $75,000 which was immediately available to him. On the following day, 11 October 2013, before his fraud was discovered, he went personally to a branch of the National Australia Bank in Glenorchy and withdrew $74,000. That withdrawal constitutes the single count of fraud.
5. Of the $74,000 withdrawn by the respondent on 11 October 2013, $63,000 was used to immediately purchase a BMW motor vehicle which, according to the respondent's counsel, he later sold "to pay himself a salary and for two holidays in Queensland as well as a trip around Tasmania".
6. When the police searched the respondent's house in November 2013 they found documents consisting of client folders, envelopes, letters and invoices. The documents were fabricated by the respondent to give the fraudulent transactions the appearance of legitimacy, as a means of concealing his offending.

1. For most of the period of offending the respondent was aged 26. At the time of sentence he was about to turn 30. He is the only child of a caring supportive family. He was educated to grade 11. After leaving school he obtained employment including positions in accommodation businesses. He developed an interest in photography in about 2006. He undertook a footwear retail business venture which, though initially successful, ended in bankruptcy in about 2009. As a young person he was the victim of a sexual assault committed by a person from outside his family. His counsel told the sentencing judge that the consequences of the assault did not manifest themselves until after the failure of his business venture. He developed depression and anxiety. His poor mental health was compounded by a physical aliment which led to a dependence on narcotic analgesic medication. His employment became sporadic.
2. The respondent's history of offending is relevant to the sentence. In August 2011, when he was 23, he falsely reported to police that his car had been stolen. He made an insurance claim. The claim was dishonest because he had already been paid the full value of the car, $26,783, from a different insurance claim only a couple of weeks earlier. He was sentenced by Wood J on 15 December 2011. On the count of attempting to dishonestly acquire a financial advantage, her Honour ordered that the respondent perform 126 hours of community service. On the charge of making a false report the respondent was convicted but released on his undertaking to be of good behaviour for 18 months, expiring on 15 June 2013.
3. There was other offending, some of which took place before the crimes which are the subject of this appeal, and some of which occurred subsequently. Between 2010 and 2013 the respondent committed a series of social security frauds. While being paid Centrelink benefits he failed to declare income from various employers during the period 18 August 2010 and 28 March 2012, and for a short period in September 2013, resulting in a combined overpayment of $18,635.76. He was not sentenced for that offending until 25 August 2016, when he was sentenced to a term of imprisonment of two months but immediately released on his recognizance to be of good behaviour. Between 4 November 2013 and 9 December 2014, he forged prescriptions for narcotic analgesics and presented them at pharmacies to obtain the medication. This occurred about 30 times. He was sentenced on two separate occasions for that series of offences. On 6 March 2015 he was sentenced to imprisonment for two months wholly suspended. On 14 January 2016 he was sentenced to a further term of seven months, also wholly suspended.
4. By October 2014 the respondent had only completed 1½ hours of the 126 hours' community service he had been ordered to perform on 15 December 2011. An application for breach of the community service order was made and determined by Wood J on 1 October 2014. Her Honour, after taking into account what she had been told about the respondent's mental health and the reason for his failure to comply, notwithstanding the many opportunities he had been given, cancelled the order without further sanction. It is a condition of every community service order that the offender must not commit an offence punishable by imprisonment while the order is in force: Sentencing Act, s 28(a). In the course of her Honour's reasons she noted, as a matter of significance, that the respondent had not breached that condition. Her Honour also noted that the respondent had complied with his undertaking to be of good behaviour. No doubt, those comments were made on the basis of the information given to the court at the time, but neither of those things was true. Although, by that time, the respondent had not been convicted of or sentenced for any other offences, his subsequent admissions show that during the period since August 2011 in which the community service was in operation, he committed many other offences of dishonesty, including the crimes which are the subject of this appeal.
5. It is an aggravating factor that the crimes which are the subject of this appeal were committed in breach of the community service order. It is also aggravating that the offences committed prior to 15 June 2013 breached the undertaking given by the respondent on 15 December 2011 under the Sentencing Act, s 7(f). Before the sentencing judge the Crown made application for an order under the Sentencing Act, s 62, for breach of the undertaking. By that provision the judge had power to confirm, vary or re-sentence the respondent for the original false report offence. In the event her Honour cancelled the order, although it had already long ceased to be in force, and made no other order. The Crown does not challenge that order.
6. The sentencing judge had before her two reports from a consultant psychiatrist, Dr Stuart Hooper. The first is dated 13 February 2015 and was prepared for use in the court proceedings concerning the forged prescriptions in 2014. The second report is dated 3 August 2017 and was prepared for these sentencing proceedings. The first report mentioned that the respondent gave a history of problem gambling on blackjack at casinos, as a result of which he lost a total of $55,000 between 2011 and 2013. Dr Hooper reported the respondent as having, at the time of the 2014 offending, a major depressive episode on a background of major depressive disorder. He also reported the respondent to have narcissistic personality traits but without some features of a disorder. The report indicates that the respondent did not suffer from a mental illness which would have "clouded his consciousness". He understood his actions, but his behaviour was driven by his addiction. Dr Hooper's later report indicates that he had continued to treat the respondent on a fortnightly basis and prescribed medication. He reported that the respondent had "made real progress", was compliant with his medication and had "started taking ownership of past behaviors [sic]". He concluded by stating his opinion that the respondent "is not a risk to the community" and that "any term of incarceration would be extremely detrimental to his mental health and any chance of productive rehabilitation". Why imprisonment would be detrimental to the respondent's mental health was not further explained.

1. Counsel for the respondent correctly identified the principles which limit the circumstances in which intervention by an appellate court in an appeal on this ground of manifest excess or manifest inadequacy is justified. They have been stated by this Court on many occasions. As was recently re-stated by the High Court in Director of Public Prosecutions v Dalgliesh (a pseudonym) [2017] HCA 41, the discretionary nature of the judgment required of a sentencing court means that there is no single sentence that is just in all the circumstances. Sentencing judges must take account of and balance many different and competing factors to arrive at a single result: Wong v The Queen [2001] HCA 64, 207 CLR 584 per Gaudron, Gummow and Hayne JJ at 611 [75]; Markarian v The Queen [2005] HCA 25, 228 CLR 357 at 373-375 [37]. The respondent also relied on the principles which apply to intervention by appellate courts in Crown appeals against sentence. The principles were stated by this Court in Director of Public Prosecutions v Swan [2016] TASCCA 9 and need not be repeated.

1. The respondent is still a relatively young man who had not been to prison before, and who, at the time of offending, had only one prior conviction for dishonesty. He contributed to the community in other ways, including as a well-regarded and highly qualified football umpire. His counsel contends that a sentence of imprisonment for 14 months is "not an insubstantial penalty", carries sufficient specific and general deterrence, and was within the range of sentences reasonably open to the sentencing judge in the exercise of her broad discretion.
2. There was little else to be said in mitigation. The respondent submitted that the factors which the sentencing judge was required to take into account included delay, the respondent's mental health, his gambling problem, and his addiction to prescription drugs. However none of those factors deserved attribution of much, if any, weight.
3. Before this Court, counsel for the respondent mentioned the respondent's gambling problem, but otherwise placed no emphasis or reliance on it. It carries no mitigation. There was no assertion in the plea in mitigation made to the sentencing judge, nor any other evidence, that a gambling habit had contributed to the crimes or impaired the appellant's mental functioning: Deakin v Tasmania [2016] TASCCA 19 per Wood J at [39]-[40]. To the contrary, the evidence suggested that the money, or at least most of it, was not spent on gambling. Nor was there material from which it could have been concluded that a gambling addiction had reduced the significance of general deterrence or the respondent's moral culpability: Johnstone v Tasmania [2011] TASCCA 9 at [13].
4. The law concerning the relevance of delay to sentencing was stated by this Court in Prehn v The Queen [2003] TASSC 55 and subsequently applied in W v Tasmania [2007] TASSC 24 and Williams v Tasmania [2014] TASCCA 2. Unnecessary and long delay in investigating and prosecuting a case can be mitigating but it is not per se mitigating. If a prosecution is too slow it can be unfair on the accused, particularly if there is evidence of rehabilitation demonstrated in the meantime. Delay before the bringing of charges is generally of greater weight. In this case, the delay was not such as to make it a weighty sentencing factor. The respondent was arrested in November 2013. The nature of his crimes is such that considerable investigation was required. He was committed and first appeared in the Supreme Court in April 2015. For about a year after that the prosecution was led to understand that the respondent would plead guilty. When it became clear that he would not, the allocation of further prosecution resources was required to marshal and prepare evidence from around Australia and internationally. It was material that there was no evidence that the respondent had re-offended after the end of 2014. The delay also enabled the respondent to demonstrate that he had, according to Dr Hooper, taken steps towards rehabilitation during the period before trial by undertaking treatment to address his opioid addiction and gambling problem.
5. The relevance of psychiatric illness or impaired mental functioning to the sentencing process is stated in Director of Public Prosecutions (Acting) v CBF [2016] TASCCA 1 at [36] by Porter J, with whom Tennent J agreed. His Honour applied the reconsideration and restatement of the principles in R v Verdins [2007] VSCA 102, 16 VR 269 at 276:

"[32] Impaired mental functioning, whether temporary or permanent ('the condition'), is relevant to sentencing in at least the following six ways:

1. The condition may reduce the moral culpability of the offending conduct, as distinct from the offender's legal responsibility. Where that is so, the condition affects the punishment that is just in all the circumstances; and denunciation is less likely to be a relevant sentencing objective.
2. The condition may have a bearing on the kind of sentence that is imposed and the conditions in which it should be served.
3. Whether general deterrence should be moderated or eliminated as a sentencing consideration depends upon the nature and severity of the symptoms exhibited by the offender, and the effect of the condition on the mental capacity of the offender, whether at the time of the offending or at the date of sentence or both.
4. Whether specific deterrence should be moderated or eliminated as a sentencing consideration likewise depends upon the nature and severity of the symptoms of the condition as exhibited by the offender, and the effect of the condition on the mental capacity of the offender, whether at the time of the offending or at the date of the sentence or both.
5. The existence of the condition at the date of sentencing (or its foreseeable recurrence) may mean that a given sentence will weigh more heavily on the offender than it would on a person in normal health.
6. Where there is a serious risk of imprisonment having a significant adverse effect on the offender's mental health, this will be a factor tending to mitigate punishment."
7. In CBF, Porter J continued at [37]:

"It is always necessary to consider how the particular condition affected the mental functioning of the offender at the time of the offence, and how it might affect the person in the future. Further, the question must always be whether, in the particular case, it has been shown that the offender's moral culpability or the significance of general specific deterrence [sic] is reduced because of the condition: Romero v The Queen [2011] VSCA 45; (2011) 32 VR 486, per Redlich JA (Buchanan and Mandie JJA agreeing) at 490 [13]. The onus is on an accused: R v Skura [2004] VSCA 53 at [8]; Verdins at 272 [11]."

1. Before the sentencing judge, counsel for the respondent assented to the proposition that the Verdins principles "did not assist" him. With one possible qualification, it was a proper concession. There was no material before the sentencing judge which justified the conclusion that any psychiatric condition suffered by the respondent reduced his moral culpability, had a bearing on the type of sentence which should be imposed, moderated or eliminated specific or general deterrence as sentencing considerations or that imprisonment would weigh more heavily on him. There was some evidence about the possible effect of imprisonment on the respondent's mental health but limited to Dr Hooper's statement that it would be "extremely detrimental". There is no reason to conclude that he will not receive the treatment he requires for depressive illness or addiction while in prison.
2. Conversely, there were many factors which suggested the need for a strong sentence, giving predominance to punishment, denunciation, general and specific deterrence and protection of the public. The respondent was not entitled to the mitigation a plea of guilty would have attracted, particularly for crimes which require allocation of a great deal of the resources of prosecution authorities in the facilitation of proof. It was fraud on a relatively large scale. The result of the respondent's dishonesty was a loss, mostly borne by banks, of $101,900. The money he obtained was all spent. None of the money taken by the respondent has been recovered or repaid. Although a compensation order was made, it seems likely that the respondent will not have the capacity to make restitution, at least for a long time. The respondent's dishonesty was not limited to the amount he obtained. He attempted to gain a further $165,000. His total dishonesty thus involved a very large sum. The respondent's criminal conduct was planned, carefully executed and involved numerous acts of dishonesty over a prolonged period. He was the sole author of the fraud and responsible for its execution. There was ample opportunity for the respondent to reflect on his conduct and weigh up the potential for gain against the risk of apprehension and punishment. He utilised knowledge of banking and business systems, and how credit cards may be used. He went to a lot of trouble to put in place the circumstances which allowed the crimes to be committed. He obtained and retained the credit card numbers and details. His reason for doing so could only have been for future dishonest use. Each count of inserting false data into a computer involved the use of another person's credit card number, and thus involved that other person in the crime. Some of the card numbers were obtained from an employer in a serious breach of trust. He made the necessary arrangements for the creation and use of the PayPal account to facilitate the fraud. When that potential means of dishonesty was no longer available to him he created another avenue for dishonesty by creation of his company and the National Australia Bank facilities. He repeatedly moved quickly to withdraw money as soon as it became available to him. He forged documents to conceal his crimes. General deterrence assumes a particular significance in the context of fraud, especially where the criminal action is generally well-planned and carefully executed, and offenders can therefore be assumed to have conducted a cost-benefit analysis of their conduct. His crimes did not arise from financial hardship. The greater part of the money he dishonestly obtained was spent on cars and holidays.
3. Counsel for the respondent submitted that the respondent was otherwise of good character. That submission carries force only until 2010 when the respondent's dishonest offending started. The earlier narrative of the respondent's antecedents reveals offending both before and after these crimes. Both are relevant to sentence: Rout v The Queen [2016] VSCA 126. The prior offending discloses that the crimes for which he was to be sentenced were not an uncharacteristic aberration. By committing offences after having been given a chance to reform and while subject to sentencing orders he manifested a continuing attitude of disobedience of the law. A more severe penalty for reasons of retribution, deterrence and protection of society was warranted as a result: Veen v The Queen (No 2) [1988] HCA 14; (1988) 164 CLR 465. The offending after the subject crimes cannot justify an increase in the head sentence which would, in the absence of considerations personal to the respondent, otherwise be imposed. However, it is relevant to "negate, reduce, or qualify an inference as to the offender's later conduct which would otherwise arise and operate in mitigation of sentence": R v Rumpf [1988] VicRp 55; (1987) 29 A Crim R 252 at 475-480. The respondent's subsequent conduct again served to indicate that dishonesty was not uncharacteristic for him, and lessened any mitigatory effect arising from the prospect of his rehabilitation or a claim to reduced need for specific deterrence. His repeated and continued dishonesty, both in the subject crimes and his later offending is also indicative of the singular absence of remorse.
4. Counsel for the appellant submitted that the changing nature of commerce is a factor relevant to the need for general deterrence, denunciation and protection of the public. The submission should be accepted. Financial transactions of a personal and business nature by use of credit cards and the internet are now very common, and increasingly form part of everyday life. Credit card fraud of this nature undermines the trust that members of society have in commercial institutions and markets. It imposes a great cost on the community and causes much inconvenience and disruption. These crimes targeted and affected many individuals, although it seems that the loss was ultimately borne by commercial or financial institutions. Courts may express, through sentencing, society's disapproval of crimes of this nature as a means of educating the offender and others about correct moral principles and values. Those weighing up whether to proceed with internet credit card fraud or similar conduct should be aware that harsh punishment will result. Sentences may thereby serve to deter others.
5. With the utmost respect to the learned sentencing judge, the sentence imposed fell well short of what was required to serve these predominant sentencing aims. As was pointed out in Director of Public Prosecutions v Dalgliesh at [7], "it is well understood that a sentence may be so clearly unjust, because it is either manifestly inadequate or manifestly excessive, that it may be inferred that the sentencing discretion has miscarried". This is such a case. After taking all factors relevant to sentence into account, the impugned sentence is so manifestly disproportionate to the nature, duration and gravity of the offending and the moral culpability of the respondent as to indicate an error of principle. A manifestly inadequate sentence is a failure of the due administration of criminal justice. Intervention of this Court is required to maintain adequate standards of punishment for crime and maintain public confidence in the administration of justice: Everett v The Queen [1994] HCA 49; (1994) 181 CLR 295 at 306. The sentence imposed at first instance discloses error in that it is "unreasonable or plainly unjust": House v The King (1936) 55 CLR 499 at 505. It follows that it is our opinion that a more severe sentence is warranted in law and should have been passed. There is no reason to exercise the residual discretion to dismiss the appeal, although error has been established.

1. This Court should resentence the respondent. By the Code, s 402(4A), we may take into account any matter relevant to sentence that has occurred between the imposition of sentence and when the appeal is heard. A number of matters were raised by counsel for the respondent. The respondent is presently housed in the reception prison for protection because it is agreed by the prison authorities that his homosexuality and participation in the suboxone program make him more vulnerable if housed in the main prison. He holds a responsible and trusted position as a wardsman. These considerations carry some, but very limited, weight. It was submitted that prison has been more onerous because the length of his sentence is not sufficient for him to be eligible for grant of a leave permit under the Corrections Act 1997, s 42. The result of this appeal means that this will no longer be a relevant consideration.
2. The sentence of imprisonment imposed on 4 August 2017 is quashed. The respondent will be re-sentenced to imprisonment for 2½ years from 4 August 2017. The respondent will not be eligible for parole until having served half of that sentence.