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Director of Public Prosecutions v Ip [2005] ACTCA 24 | Case summary | Zoe

ACTACTCA

Director of Public Prosecutions v Ip [2005] ACTCA 24

[2005] ACTCA 24

Court of Appeal (ACT)|2005-07-19|Before: Higgins CJ, Madgwick JJ

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Court

Court of Appeal (ACT)

Decision date

2005-07-19

Before

Higgins CJ, Madgwick JJ

Source

Original judgment source is linked above.

Judgment

Source: the ACT Courts (www.courts.act.gov.au). Converted to plain text by ZoeLaw. Not the official version.

DIRECTOR OF PUBLIC PROSECUTIONS v KA-HUNG IP

[2005] ACTCA 24 (19 July 2005)

CRIMINAL LAW – Crown appeal – sentencing – obtaining a financial advantage by deception – whether sentence manifestly inadequate – calculation of periodic detention.

Criminal Code Act 1995 (Cth), s 131, s 134

Proceeds of Crime Act 2002 (Cth), s 37

Crimes Act 1914 (Cth), s 16A, s 16BA, s 17A, s 20AB

Periodic Detention Act 1995 (ACT), s 4

R v Tait and Bartley (1979) 24 ALR 473

R v Reynolds [2004] NSWCCA 51

Weininger v The Queen (2003) 212 CLR 629

Moore v The Queen [1999] FCA 448

Murrell v R (1985) 4 FCR 168

R v Vougdis (1989) 41 A Crim R 125

Attorney General’s Application Under s 37 of the Crimes (Sentencing Procedure) Act 1999, No. 1 of 2002 (2002) 56 NSWLR 146

Craft v Diebert [2004] ACTCA 15

Dinsdale v The Queen (2000) 202 CLR 321

R v Mereana Otene-Waaka (unreported, ACTSC, 16 August 2000)

R v Hinton (2002) 134 A Crim R 286

R v Togias (2001) 127 A Crim R 23

No ACTCA 38-2004

No SC 182 of 2004

Judge: Higgins CJ, Gray and Madgwick JJ

Supreme Court of the ACT

Date: 19 July 2005

IN THE SUPREME COURT OF THE ) No ACTCA 38-2004

) No SC 182 of 2004

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: DIRECTOR OF PUBLIC PROSECUTIONS

Appellant

AND: KA-HUNG IP

Respondent

ORDER

Judges: Higgins CJ, Gray and Madgwick JJ

Date: 3 May 2005

Place: Canberra

THE COURT ORDERS THAT:

The appeal be allowed.
The number of periods of periodic detention be varied from 78 to 104, commencing on 5 November 2004.

IN THE SUPREME COURT OF THE ) No ACTCA 38-2004

) No SC 182 of 2004

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: DIRECTOR OF PUBLIC PROSECUTIONS

Appellant

The respondent held a senior position of ‘Director, Finance’ in the National Archives of Australia (‘NAA’). In late October/November 2002, he persuaded his employer to outsource accounting data processing activities, caused the normal, prudential tendering and contracting processes to be bypassed, and negotiated a contract with a service provider called 3I Consulting Pty Ltd (‘the company’).
The respondent and his wife had, in about September 2001, set up the company and were its only directors and joint controllers of the company’s resources. The company’s principal place of business was the residential address of the respondent and his wife. At no stage was any of this disclosed to the NAA, contact with the company being made through ‘Victor Seng’, a fictitious alter ego of the respondent.
Not content with dishonestly and preferentially obtaining the contract, the respondent arranged for the entire amount of the original contract remuneration ($1.5 million) to be prepaid to the company: he relied on a forged audit report as proof that the financial position of the company was sound. He also arranged for the deletion of a clause in the draft contract requiring the company to provide a bank guarantee to cover the prepaid amount.
The contract also specified that all prices were inclusive of goods and services tax (‘GST’), however the invoice that was ultimately issued by the company and, under the respondent’s authority, paid, was for $1.65 million, being $1.5 million plus GST.
In October 2003, the respondent, again through underhand machinations, brought about a variation of the contract to add debt recovery services at a cost of $275,000 inclusive of GST, which was again prepaid to the company.
The company provided some services to the NAA before the respondent’s conduct was discovered.
Upon being challenged, the respondent initially claimed, falsely, that the company was his wife’s business, that he was not involved in the daily operations of the company, nor did he administer the contract for the NAA, and that he had declared his interest in it to another employee at the NAA (relying on a forged email to that effect). However, the respondent subsequently made an early plea of guilty to the charge of obtaining a financial advantage by deception, and, on 19 March 2004 and 19 October 2004, repaid what in substance represented all the contract monies received by the company, plus interest. The offence taken into account
On 30 August 2004, subsequent to the respondent being charged with the substantive offence, he contravened a restraining order against him that had been made under the Proceeds of Crime Act 2002 (Cth), withdrawing $490,228 from two mortgage bank accounts and depositing $420,000 of that money into a Hong Kong bank account belonging to his sister-in-law. This conduct constituted the listed or ‘scheduled’ offence which had been charged under s 37 of the Proceeds of Crime Act 2002 (Cth). The maximum penalty prescribed for that offence was ‘imprisonment for 5 years or 300 penalty units, or both’. Again, soon after the conduct was discovered, the respondent arranged for the funds to be re-credited to the mortgage accounts on 5 October 2004 and at a very early stage admitted his guilt. He had initially alleged that he believed he was entitled to do what he did upon his mistaken belief that the restraining order had been lifted. There was, however, no evidence to suggest the possibility of any such belief being reasonably or honestly held. Relevant Legislative Provisions
The statutory matters to which the Court must have regard when passing sentence are set out in s 16A of the Crimes Act 1914 (Cth) as follows: (2) In addition to any other matters, the court must take into account such of the following matters as are relevant and known to the court:

The learned sentencing Judge was in no doubt that this was a serious offence. However, his Honour characterised the case as one of the respondent’s having abused his position of trust rather than stealing money from the Commonwealth. His Honour stated that this was ‘something less than straight out theft’ but considered nonetheless ‘that cases of substantial dishonesty by persons in positions of authority … require substantial deterrence’ and condign punishment.
As to the respondent’s very early guilty plea, his Honour said that, although it was inappropriate to state with precision what would have been the higher sentence imposed but for the guilty plea, and therefore to state with precision the discount to which the respondent was entitled as a result, it could be said that the sentence would have been ‘nothing but a substantial period of full-time custody’.
It is apparent that, throughout the sentencing hearings (which were conducted in two stages, so as to allow submissions on precise sentencing options after the trial Judge had indicated a preliminary view), his Honour took a number of matters into account: · The respondent’s subsequent conduct, namely the offence relating to the drawing down of a substantial sum of money contrary to Court orders, was expressly considered. · As to the respondent’s prior good character, his Honour affirmed a proposition, said to be supported by a number of State appellate courts (see Brian Roy Davies (1996) 88 A Crim R 226; R v Dubois (2004) 88 SASR 304; Brian Thomas Burke (1994 75 A Crim R 48), that it is ‘difficult to expressly apply a discount’ for that factor in major fraud cases, because people with prior offences of dishonesty would never be in a position where they could commit major fraud. However, his Honour later indicated that he had taken into account the references provided in support of the respondent as indicating that the respondent’s offence was very much aberrant behaviour. · The impact the conviction will have on the respondent’s lifestyle, in that he will never again hold either a senior position in a Commonwealth agency, or a position with any financial responsibility; later, his Honour said that he had taken into account ‘the additional cost to [the respondent] beyond the actual period of periodic detention’, in that the respondent’s ‘future career options are seriously limited’. · It was not correct, his Honour said, ‘to say that there was criminality in the sum of $1.925 million in the sense that that was the total loss.’ His Honour later said: …nonetheless, there is a degree of criminality that the court must recognise and must punish. It’s not the actual dollar sum of the loss, but the fact that a person in a position of trust abuses and perverts the tender process and awards a lucrative and remunerative tender to an entity controlled by himself and other members of his family rather than to an outside agency or body that won the tender in a fair fight.

The Court gave leave to the appellant at the hearing to amend the notice of appeal, so that the appellant ultimately asserted that the sentencing Judge erred by: (a) imposing a manifestly inadequate sentence; (b) finding that a head sentence of two years was adequate, given the overall criminality and the nature and seriousness of the offending; (c) having regard to the fact that periodic detention was unavailable if a sentence of greater than 24 months was imposed, in arriving at the head sentence of two years; (d) finding that the offence was less serious than an offence involving the theft of property by an employee; (e) giving undue weight to the fact that there were some services provided under the contract, and failing to give weight to the role of the respondent in causing the outsourcing of the contract in the first place; (f) not taking into account, or giving sufficient weight to the matter on the schedule under s 16BA of the Crimes Act 1914 (Cth); and (g) fixing a periodic detention period of 18 months pursuant to s 4(2) of the Periodic Detention Act 1995 (ACT). Submissions
Essentially, the appellant submitted that the head sentence of two years’ imprisonment was manifestly inadequate in the circumstances, and that a head sentence of not less than four years’ imprisonment would have been appropriate. Following the principle that an appellate court will only interfere with a sentence if it be shown that the sentencing Judge was in error in acting on a wrong principle or misunderstanding or in wrongly assessing evidence (R v Tait and Bartley (1979) 24 ALR 473), the appellant argued, in summary, that the sentencing Judge had failed fully to appreciate the seriousness of the offence.
Developing the seriousness of the offence, the appellant pointed out that it involved: (i) a serious breach of trust by a senior officer, betraying a responsible financial position; (ii) dishonest dealing with public funds; (iii) misuse of a substantial amount totalling $1,925,000; and (iv) the respondent’s involvement of a number of staff at the NAA as ‘innocent dupes to assist his scheme’.
The appellant also pointed to aggravating circumstances of the offence: the use of a false name to conceal the true identity of those behind the company; the use of false audit reports and emails; the belated additional dishonesty, whereby the respondent included an amount of $150,000 for GST on the invoice to be paid to the company, even though that was not required by the contract, and in any event was not paid to the Australian Taxation Office; the fact that the respondent himself performed some of the duties outsourced to the company in the course of his employment by the NAA and using its own resources; and finally, the respondent’s conduct subsequent to the guilty plea, in that he transferred funds that were the subject of the restraining order to a Hong Kong bank account.
Further, the appellant submitted that his Honour had first determined that something less than full-time imprisonment was appropriate as the ultimate disposition, and then arrived at a head sentence low enough to allow less onerous sentencing options.
Next, it was argued that his Honour failed to take sufficient account of the subsequent listed offence.
As to the respondent’s plea of guilty, the appellant submitted that it came in the face of an overwhelmingly strong case.
The appellant submitted that too much weight was given to the effect a custodial sentence would have on the respondent’s dependants under s 16A(2)(p) of the Crimes Act 1914 (Cth), in that any medical treatment required by the respondent’s wife could be provided by health care professionals.
The respondent reminded us that specific error alone is not sufficient to warrant upholding a Crown appeal; the Crown must go further and show that (possibly in the light of, or as a result of, the error) a manifestly inadequate sentence was imposed: R v Reynolds [2004] NSWCCA 51 at [23], per Simpson J, Levine and Barr JJ agreeing. The respondent pointed to the sentencing Judge’s statement that, but for the ‘very early plea of guilty,’ there would have been ‘a substantial period of full-time custody’, arguing that his Honour was entirely justified in accordingly reducing the sentence substantially. It was also, correctly, submitted that matters of aggravation must be proved beyond reasonable doubt: Weininger v The Queen (2003) 212 CLR 629 at [18] – [19]. His Honour, it was said, could not be satisfied beyond reasonable doubt that it was unnecessary for the NAA to outsource the work it contracted the company to perform, nor could it have been satisfied beyond reasonable doubt that the company would have never been the successful tenderer.
The respondent also submitted that it could not be assumed from his Honour’s mere silence on any given point that, as an experienced sentencer, he had not given appropriate consideration to that point: Moore v The Queen [1999] FCA 448 at [58].
In response to the submission that the sentencing Judge had ‘retro-fitted’ the head sentence so as to make periodic detention available, the respondent submitted that his Honour had first indicated a sentence of two years’ imprisonment, with a non-parole period, and then noted that consequently both periodic detention and home detention were potentially available options as alternatives to service of the sentence in full-time custody (referring to the passage quoted in [18] above).
Addressing the contention that the sentencing Judge erred in finding that the offence was ‘less than outright theft’, the respondent argued that his Honour’s remark must be read in context: his Honour acknowledged that the offence was ‘a dishonest scheme’ and commented that there was ‘no question this is a serious offence’ requiring ‘the court to express a strong view in relation to general deterrence and specific deterrence’.
In terms of the scheduled offence and the allegation that the sentencing Judge gave insufficient weight to that matter, the respondent relied on Murrell v R (1985) 4 FCR 168 at 176, and R v Vougdis (1989) 41 A Crim R 125 at 128 – 129. There it was said that offences to be taken into account should be dealt with so as to ensure that ‘… by making sentences concurrent or by other means … the whole period of imprisonment is one which best meets the situation.’ This somewhat unhelpful statement was referred to as nevertheless reflecting ‘the discretionary nature of the sentencing task’ in Attorney General’s Application Under s 37 of the Crimes (Sentencing Procedure) Act 1999, No. 1 of 2002 (2002) 56 NSWLR 146 (‘Attorney General’s Application’). The respondent further referred to the observation of Spigelman CJ in that case (at 159) that ‘it will rarely be appropriate for a sentencing judge to attempt to quantify the effect on the sentence of taking into account [a scheduled offence].’ Consideration
As is well-settled, the row of the appellant in a Crown appeal against sentence is not easy to hoe. In the first place, as the Full Court of the Federal Court said in R v Tait and Bartley at 476: An appellate court does not interfere with the sentence imposed merely because it is of the view that that sentence is insufficient or excessive. It interferes only if it be shown that the sentencing judge was in error in acting on a wrong principle or in misunderstanding or in wrongly assessing some salient feature of the evidence. The error may appear in what the sentencing judge said in the proceedings, or the sentence itself may be so excessive or inadequate as to manifest such error (see generally, Skinner v R (1913) 16 CLR 336 at 339-40; R v Withers (1925) 25 SR (NSW) 382 at 394; Whittaker v R (1928) 41 CLR 230 at 249; Griffiths v R (1977) 15 ALR 1 at 15-17).
In the second place, to provoke actual intervention by the appellate court, even if some specific error can be pointed to, it is necessary to show that the error has resulted in a sentence that is manifestly inadequate. Speaking for the NSW Court of Criminal Appeal in R v Reynolds, Simpson J said: 23 It has long been established that a Crown appeal will be upheld only if the sentence imposed is manifestly inadequate. Manifest inadequacy may be demonstrated merely be reference to the length of the sentence itself; R v Whittaker (1928) 41 CLR 230; R v Cranssen (1936) 55 CLR 509 at 519-20. The task of the Court of Criminal Appeal in exercising power under s5D is to determine whether error has been made in the sentencing process: Dinsdale v R [2000] HCA 54; 202 CLR 321. This is an application of the principles stated in House v R (1936) 55 CLR 499 at 505. Error of the House variety may, as has been stated, be demonstrated by reference to the sentence itself, or by reference to the judge’s stated reasoning process which may expose the application of a wrong principle, the taking into account of extraneous or irrelevant matters, the omission of some material consideration, or a misapprehension of the facts: Dinsdale [3].

Turning to consider the adequacy of the sentence and any error attending that adequacy, it is plain that the sentencing Judge looked carefully at the whole of the case, and thoroughly and expressly considered the numerous factors he took into account in arriving at the head sentence. Nevertheless, with respect, in his Honour’s comments there is no acknowledgement of the fact that there was a direct and unarguable loss to the Commonwealth. Further, an appropriation by the respondent of the GST money, a matter properly to be taken into account, might possibly be thought to elevate the offence to a case of what in plain language would be called outright theft. However, in our view, the better assessment is that it is not relevant whether conduct charged as being the dishonest obtaining of a financial advantage from a Commonwealth entity (s 134.2) also amounts to ‘theft’ from that entity: both offences carry the same maximum penalty (cf. s 131.1(1) Criminal Code Act 1995 (Cth)), and some thefts may exhibit less criminality than some offences of dishonestly obtaining a financial advantage or vice versa. In any case, his Honour did not address the extent of the financial advantage dishonestly received by the respondent, and it must be the case that the extent of that advantage was in excess of $300,000.
It may also be said that, whether or not the company would have fulfilled its obligations under the contract, given the evidence that the debt recovery services were at least partially performed by the respondent using NAA resources and time, was a question relevant only as one of aggravation if the services had not been performed at all, rather than as mitigation.
Quite apart from these apparent, specific errors, in our view the material head sentence fixed on by his Honour was itself such as to bespeak error. The offence involved: · a sustained, complex and large-scale fraud, · attended by multiple instances of contributory dishonesty, · perpetrated by a senior officer, a man of mature years with the benefit of tertiary education, · breaches of trust by a person, part of whose obligation was to see that contracts for the performance of services for the NAA were honestly, prudentially and fairly awarded and supervised, · a high degree of criminality: the respondent was responsible for numerous instances of deception and dishonest departure from trust that led to the obtaining of the ultimate advantage, as well as the further crime committed just after his plea of guilty, · greed, not need, as the motivation for the offence.
Further, it was a matter of distinct (though not great) aggravation that the respondent committed the scheduled offence which, in our view, his Honour was obliged fully to take into account.
Notwithstanding the strong subjective features of the appellant’s case (further touched on below), we consider that the lower limit of an acceptable range of head sentences would have been three years’ imprisonment.
As to a ‘scheduled offence’, the requirement of Parliament under s 16BA(2) is that the Court must exercise a discretion to take it into account in sentencing for the primary offence or to decline to do so, and if the Court determines that it is appropriate, it should ‘take [it] into account’.
Possibilities of abuse attend this procedure. A person being sentenced may hope to gain some commendatory advantage from a law enforcement officer by augmenting that officer’s or his/her organisation’s tally of crimes solved. Or, the prospect of offence B being ‘scheduled’ may produce a guilty plea in relation to offence A, where one would otherwise not be forthcoming. In particular cases, that may or may not be appropriate. Thus, it is proper that the judicial discretion should be actively and carefully considered. It is such considerations that Spigelman CJ likely had in mind in Attorney General’s Application, when, speaking for the NSW Court of Criminal Appeal, he said (at [65] – [67]): … Law enforcement agencies and even courts may receive a perceived organisational benefit from increased disposal rates, but such institutional advantages should not be confused with the public interest.

There is, we hasten to say, no question of any kind of impropriety in the offence listed having been scheduled here and his Honour was right to take it into account: it was related by subject matter and by time to the criminality exhibited in the primary offence charged. Both offences concerned less than careful dealings in relation to financial matters.
Where the sentencer decides to take the listed matter into account, the matter must really and substantially, that is to say fully, be taken into account, even though, as Attorney General’s Application makes clear, it is only the principal offence (and only its maximum available sentence) in relation to which sentence is being passed.
The listed matter ought to have been taken into account as a matter, in substance, of a degree of aggravation: its effect must have been to diminish the credit otherwise due to the respondent for his early plea of guilty, and his substantial restitution of what had passed from or been lost to the NAA. It is not apparent that his Honour made any discrete error as to this matter, but the above considerations are, with others, pertinent to the question whether the notional head sentence and, derivatively, the actual orders determined by his Honour were manifestly inadequate.
Turning to consider the periodic detention sentencing option imposed by his Honour, it is clear enough that, on any view of the appropriateness of his Honour’s notional head sentence, the supposed ‘non-parole’ period of 18 months was not the appropriate measure for calculating the amount of periodic detention to be served.
In relation to ACT, as distinct from Commonwealth, offences, the ‘term of imprisonment’ clearly means what, in a non-periodic detention setting, would be the head sentence. When a non-parole period or recognisance release order is made, the term of imprisonment to which the person has been sentenced is that term which he or she is liable to serve, namely the head sentence where a non-parole period is fixed or, in the case of a recognisance release order, the sentence that would be served if no such order were made. That the person sentenced will (in the case of a recognisance release order) or may (in the case of a non-parole period) be released early is not to the point. In R v Mereana Otene-Waaka (unreported, ACTSC, 16 August 2000), Madgwick J so held.
The position is, however, not quite so simple for Commonwealth offences. Section 20AB of the Crimes Act 1914 (Cth) provides: 20AB Additional sentencing alternatives

It is unfortunate that, when the trial Judge sought assistance from counsel in this regard, neither drew his Honour’s attention to the specific terms of the relevant statutes, as may be seen from the exchanges set out in [19] – [21] above. Nevertheless, an unwitting contravention of s 4(2) of the Periodic Detention Act by his Honour’s approach has been exposed. At the hearing before us, counsel for the respondent rightly conceded that the amount of periodic detention that was imposed, if his Honour’s view that a two year head sentence of imprisonment would have been appropriate was correct, should have been the equivalent of two years, that is 104 periods.
Thus, in principle, for these two basic reasons, namely manifest inadequacy and technical error as to the Periodic Detention Act, the appeal ought to be upheld.
The question then arises what, if anything, this Court should do by way of re-sentencing.
The respondent’s wife suffers from an unusual skin disease that is both chronic and acute. She is quite extraordinarily needy of the respondent’s personal assistance to her. For cultural reasons there are difficulties in substituting the assistance of health professionals for that of the respondent.
The mandate of the Commonwealth Parliament is quite clear: the sentencing court ‘must take into account’ the matters set out in subs 16A(2) of the Crimes Act 1914 (Cth), including ‘(p) the probable effect that any sentence or order under consideration would have on any of the person’s family or dependants’. The contemplated taking into account of such factors must clearly be real and must occur in every case in which one or more of those factors exist. There is, with respect, simply no warrant for a sentencing court to presume judicially to qualify the clear parliamentary command by suggesting, as has been done, in R v Hinton (2002) 134 A Crim R 286, 293, that – The reference in s 16A(2)(p) of the Crimes Act 1914 (Cth) to the “probable effect that any sentence or order under consideration would have on any of the person’s family or dependants” should be read as if it were [preceded] by the words “in an exceptional case”: R v Togias (2001) 127 A Crim R 23.

Of course, what weight a listed factor is to be given is a discretionary matter. In many cases, it will not be possible to give a family’s suffering much or any weight. But as a matter of the letter and the clear conceptual intendment of the Parliament, it must be anxiously considered in every case where it exists.
Similar considerations are true, contrary to a view apparently expressed and relied on by his Honour (see [17] above) in relation to the question of previous good character in white collar fraud cases; character is a matter specifically adverted to in s 16A(2)(m). For our part, we see no inconsistency in regarding the respondent’s breach of trust as a circumstance of aggravation, while also regarding his excellent prior good character as a mitigating circumstance, even though it contributed to his having the opportunity to commit the breaches of trust inherent in the offence charged. It is not unknown for persons of previous bad character, through further dishonesty, to gain positions of trust and then to criminally abuse them. The respondent’s criminality involved no such thing. Nor should his generally law-abiding disposition be forgotten. We do not understand the authorities noted by his Honour to be in conflict with the views just expressed.
Further, this court cannot overlook the fact that the respondent’s periodic detention order has now been under implementation for six months, during which time he has been able to give his wife the personal care she needs. He has also constructively set about his employment rehabilitation.
Very properly, recognising the necessity for appellate restraint when considering re-sentencing on a justified Crown appeal, and from the application of what one might call principled compassion in what is an appropriate case for it, the Director did not press us to do more than to deal with the adequacy of the term of imprisonment, to endorse the necessity in principle that it should have been ordered to be served in a way more onerous than periodic detention, and to vary the sentence only in relation to the number of periods of periodic detention to be served. This, as we have said, would involve increasing that number from 78 to 104.
We consider that that is the correct course to follow. Disposition
The appeal is upheld. The periodic detention order made by the sentencing judge will be varied by requiring that the appellant serve 104 rather than 78 periods of periodic detention, credit being given for periods served. I certify that the preceding sixty-six (66) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.