Criminal Law - Appeal and new trial - Appeal against sentence - Grounds for interference - Sentence manifestly excessive or inadequate - Computer-related fraud - Bookkeeper misappropriated $420,000 over 21 months - Sentence of 3 years' imprisonment with 2½ years suspended plus 100 hours' community service manifestly inadequate.

Judgment Number: [2021] TASCCA 10

DIRECTOR OF PUBLIC PROSECUTIONS v CHERYL ANN KENDALL

2 Orders of the learned sentencing judge set aside.

3 Respondent sentenced to 4 years' imprisonment with effect from 24 August 2021, with 12 months of that sentence suspended on condition that she commit no offence punishable by imprisonment within two years after her release from prison.

4 Respondent not to be eligible for parole until she has served 18 months of that sentence.

5 Respondent ordered to pay compensation in the sum of $347,849.18 to PJ Robinson Pty Ltd within 28 days.

DIRECTOR OF PUBLIC PROSECUTIONS v CHERYL ANN KENDALL

1 The respondent to this appeal, Cheryl Kendall, was employed as a bookkeeper by a butchery company, PJ Robinson Pty Ltd. Over a period of about 21 months, from July 2018 to April 2020, she misappropriated $420,849 from her employer. On 20 August 2021 she pleaded guilty to three counts of computer-related fraud, contrary to s 257B(c) of the Criminal Code. On 24 August 2021 Martin AJ sentenced her to 3 years' imprisonment, with 2 years 6 months of that sentence suspended on conditions that she commit no offence punishable by imprisonment for a period of 2 years after her release from prison, and that she complete 100 hours of community service. The Director of Public Prosecutions has appealed. He contends that that sentence was manifestly inadequate in all the circumstances of the case.

2 PJ Robinson Pty Ltd was controlled by an experienced butcher named Phillip Robinson. The company operated a meat wholesale business in Glenorchy, trading as Robinsons Meat & Smallgoods. The respondent's duties included paying employees' wages in cash, and paying trade creditors from the company's bank account. She was given invoices for payment. She paid them by online internet transfers. The company had accounting software named Reckon Quickbooks. The respondent recorded the payments in the Quickbooks system.

3 Between 20 July 2018 and 17 April 2020 the respondent made 119 fraudulent electronic transfers from the company's bank account. Most of the payments were made to her bank account with Westpac, but 15 of them were made to accounts in the name of her daughter. She had access to the funds in her daughter's accounts. The individual amounts transferred varied between $442 and $11,300.18. The respondent disguised each transaction by making entries in the Quickbooks accounting system showing that each payment was made to a creditor or supplier of the business.

4 At the end of each month an accountant prepared Business Activity Statements and bank reconciliations for the company but he did not identify any discrepancies or matters of concern.

5 The respondent's offending came to light in early 2020 when Mr Robinson was preparing to sell the wholesale business and retire. He noticed a significant discrepancy between the anticipated bank balance and the actual balance. He arranged for his brother, Maurice Robinson, to conduct an audit. The brother asked the respondent about the debts of the business. She told him that they totalled about $775,000, but he concluded that they totalled about $1 million. He asked the respondent why the debts of the business were increasing when there was a lot of money coming into the account. She said that she did not know. He asked her for the payment slips that were produced when a payment was made. She said she could only produce slips going back to October 2019, and that she had thrown the rest out. The available payment slips showed that payments to a supplier named DR Johnson were being made into accounts with two different banks. One of those accounts, which was with Westpac, was actually the respondent's account. Maurice Robinson found out that DR Johnson did not have a Westpac account.

6 On 4 May 2020, more than two months after Maurice Robinson commenced his audit, he and Phillip Robinson spoke to the respondent about the fact that money was missing, and had been transferred into a Westpac account. She cried, admitted that the account was hers, and said that she was sorry. She said that she had taken about $70,000 to $80,000 over 12 months. In fact she had no idea how much she had taken. She said she had taken the money because of a gambling habit, and that she was getting help for that habit. She said that she would pay the money back, and that she did not want her husband to find out about what she had done. Her employment was terminated.

7 On 29 May 2020 Maurice Robinson reported the matter to the police. He gave them the results of his audit. The police obtained the bank statements of the respondent and her daughter.

8 On 8 July 2020 the respondent was arrested and interviewed. She made full admissions as to the payments and the fraudulent data entries.

9 By Tasmanian standards, this was a very serious case of fraud, having regard to the following factors:

• The misappropriation of the money involved a breach of the trust placed in the respondent by Phillip Robinson on behalf of his company.
• The amount misappropriated was a little over $420,000.
• It was likely that much of the misappropriated money would not be recovered. The respondent repaid $73,000 between her dismissal in May 2020 and her interview in July 2020. At the time of sentencing, Martin AJ made a compensation order under s 68 of the Sentencing Act 1997 requiring the respondent to pay the balance of $347,849.18 to PJ Robinson Pty Ltd. His Honour was told that she and her husband might lose their home as a result of proceedings for the recovery of the outstanding sum, but that the property was heavily mortgaged. The respondent was 59 years old when sentenced. She had not worked since her dismissal. The chances of her ever being able to pay much of the outstanding balance appear to be remote.
• The crimes were committed over a period of about 21 months, and involved 119 fraudulent payments.
• The respondent's fraudulent conduct involved some sophistication and complexity, in that the fraudulent payments were disguised as legitimate ones, making them very hard to detect.
• The misappropriations were in part motivated by a desire of the respondent to live beyond her means. She told the police that much of the money she had taken was spent on food, cosmetics and clothing.
• The respondent's crimes have had a devastating effect on Phillip Robinson. He sold the wholesale business for far less than he expected to, apparently as a result of difficulty in demonstrating its profitability. He has been left without retirement funds, and with debts that he is unable to pay. He has been diagnosed with major depression. He had worked hard in his businesses for decades, taking pride in looking after his customers by delivering good value quality meats, supporting charities, treating staff in a caring and considerate manner, and always paying his creditors. His life has now become particularly miserable. There is no need to list his psychological symptoms.
• PJ Robinson Pty Ltd had gone into liquidation without having paid about $110,000 in superannuation payments for the benefit of its employees. But for the respondent's misappropriations, the company would have had sufficient funds to make the payments that it should have made for their benefit. Whilst the respondent is not to be punished for the company's failure to make those payments in a timely manner, the impact on the employees must be regarded as a relevant consideration.

10 Some common mitigating factors are absent in this case. The respondent is not a youthful offender. She did not provide any significant assistance to those who undertook the task of identifying her fraudulent transactions - first Maurice Robinson and then the police. She did not stop defrauding her employer of her own accord, but stopped only because she was caught.

11 There were a number of mitigating factors, as follows:

• The respondent had been a person of good character. She had no significant prior convictions. She had a good employment record, having worked all her adult life except for a period when she had a baby. She undertook family responsibilities, helping with her daughter's bookkeeping and baby-sitting her grandson. However people who commit crimes like these are usually persons of apparently good character. Otherwise they would not be employed in positions of trust. Further, the fact that the offending occurred over a significant period of time tends to cancel out the significance of an offender's prior good character. See Attorney-General v Saunders [2000] TASSC 22 at [10]; Langridge v The Queen [2004] TASSC 97, 12 Tas R 470 at [18].
• The respondent made full admissions when she was interviewed by the police in July 2020.
• She pleaded guilty. On her first appearance in the Supreme Court it was indicated that she was likely to do so. The Crown did not need to prepare the case for trial. The case against the respondent was strong, but her plea of guilty had a utilitarian value because it avoided the need for a trial, which would have been long and complex.
• The respondent made partial restitution, repaying $73,000 between May and July 2020. That sum included $20,000 that her daughter had borrowed, and all her superannuation. The repayment of money carries greater weight if it involves personal sacrifice: Scott v The Queen [1986] TASSC 81; Williams v Tasmania [2014] TASCCA 2 at [12]. It is highly unlikely that PJ Robinson Pty Ltd would have been able to recover more than a small percentage of the amount recovered if left to enforce its rights as a creditor. However the amount recovered represents only about 17.3% of the amount misappropriated, and no further payments were made between the interview in July 2020 and the sentencing 13 months later.
• The respondent was remorseful. She told Phillip and Maurice Robinson that she was sorry. She accepted responsibility for what she had done. Her conduct in making partial restitution, making full admissions, and pleading guilty at an early stage is all consistent with remorse, but only remorse which developed after 21 months of repeated dishonesty.
• The respondent had been suffering from anxiety and depression for some years. She has been taking anti-depressant medication for at least 9 years. The learned sentencing judge was provided with a report from a clinical psychologist who opined that her mental health symptoms precipitated her gambling addiction. The respondent told the police that she had seen a counsellor about her gambling, but stopped going because she felt too guilty. After she was charged she started seeing the psychologist every three weeks, and gained some insight into her behaviour. In the circumstances, the respondent's gambling addiction was not a significant mitigating factor. However the fact that she obtained ongoing professional help from the psychologist is a relevant factor.
• The respondent is troubled by the impact of her offending and imprisonment on her family - her husband, daughter and grandson. This is not the sort of extreme or exceptional case in which hardship to family members is a relevant consideration, but the psychological impact of the sentence on the respondent is a minor mitigating factor.
• The respondent is most unlikely to re-offend. However that is common in cases of this nature.

12 Counsel for the respondent made a submission to the effect that the appellant should not be permitted to complain that the sentence was manifestly inadequate because, during the sentencing proceedings, the prosecutor did not make a submission that a significant custodial sentence was required and, when the learned sentencing judge suggested that he might suspend all or part of the sentence and impose a community service order, did not submit that a partly suspended sentence was inappropriate.

13 There was no need to submit that a significant custodial sentence was required. The facts spoke for themselves. The respondent had misappropriated over $420,000 and, as regards victim impact, the consequences were unusually tragic. Further, the respondent's counsel told the learned sentencing judge that her client was "fully aware she's facing a lengthy custodial sentence", and that it was possible that the sentence would be "in excess of what would be permissible under a home detention order". The maximum operational period for a home detention order is 18 months: Sentencing Act, s 42AF(2). Counsel for the respondent had made no submission suggesting a sentence involving either a wholly or partly suspended term or community service.

14 After counsel had completed their sentencing submissions the learned sentencing judge enquired whether the respondent was "a candidate for community service" and was told by her counsel that she most definitely was. His Honour then asked the prosecutor whether he was able to order community service, "as a condition of suspension, whether it be fully suspended or partially suspended". The prosecutor told his Honour that he could do that pursuant to s 24(2)(a) of the Sentencing Act. After further discussion, his Honour ordered a report as to the respondent's suitability for community service and adjourned the matter to 24 August, with bail to continue.

15 On 23 August, having been alerted to the prospect that his Honour was contemplating suspending all or part of a sentence of imprisonment on condition of performance of community service, the prosecutor sent an email to his Honour's associate. That email included the following paragraph:

"I write to provide some notice that I would seek to be heard tomorrow as to the appropriateness of a wholly suspended sentence of imprisonment coupled with community service in this case. In my submission it would not be a proper exercise of the sentencing discretion."

16 The prosecutor attached copies of four decisions of this Court which he said were broadly comparable: Johnstone v Tasmania [2011] TASCCA 9; Director of Public Prosecutions v Allen [2017] TASCCA 24; Hodgetts v Tasmania [2018] TASCCA 15; and Pickerell v Tasmania [2011] TASCCA 13. All involved substantial head sentences, ranging from 2½ years to 5 years. None of the sentences were wholly or partly suspended. None were combined with community service orders.

17 When the matter came before his Honour the next morning, he thanked the prosecutor for the authorities that he had sent, said that they were very helpful, and noted the prosecutor's submission "that to suspend the sentence entirely would be beyond the range of the sentencing discretion". There followed a short discussion between his Honour and the prosecutor about whether the authorities to which his Honour had been referred were directly comparable. The prosecutor repeated the submission he had made in writing in the email and stated that a wholly suspended sentence was "inappropriate.". His Honour then proceeded to sentence the respondent without giving any prior indication that he proposed to suspend nearly all of the head sentence.

18 Counsel for the respondent has criticised the prosecutor for not submitting that a substantial period in custody was required, and for being too subtle in his response to the suggestion that the sentence of imprisonment might be partly suspended. In support of the submission the respondent relied on the decision of the Victorian Court of Appeal in Matthews v The Queen [2014] VSCA 291, 44 VR 280. The decision does not support the submission that the appellant in this case should not be permitted to rely on the contention that the sentence was manifestly inadequate. In Matthews, the Court of Appeal determined that the decision of the High Court in Barbaro v The Queen [2014] HCA 14, 253 CLR 58 did not mean that a prosecution submission about the available range of sentences did not vitiate the sentencing discretion unless it was also demonstrated that the sentencing judge was influenced by the submission in arriving at his or her sentence. In the course of their reasons Warren CJ, Nettle and Redlich JJA made a comment at [25], not essential to their reasoning, that "it remains necessary to the proper functioning of the sentencing process that the Crown is able to and does draw to the judge's attention the possibility that acceptance of a defence submission might lead to appealable error."

19 In this case no such criticism can be made of the prosecutor. The prosecutor could not have made his contention that a wholly suspended sentence was not a proper exercise of the sentencing discretion any clearer. He referred the judge to relevant decisions of this Court. The prosecutor's email and his oral submissions were a reasonable response in the circumstances. He was not responding to a submission made on behalf of the respondent, and the learned sentencing judge gave no indication as to how much of the head sentence might be suspended. There is very little else, if anything, the prosecutor could have said. Nothing said or not said by the prosecutor indicated concurrence with the course taken by the sentencing judge, or induced his Honour to take that course.

20 In this State, this sort of offending is usually punished by a significant sentence of imprisonment with a non-parole period equal to half of the head sentence. That is the shortest permissible non-parole period: Sentencing Act, s 17(3). That course is not always taken. For example, in Hodgetts v Tasmania (above), a man who misappropriated some $700,000 over more than 4 years was sentenced to 5 years' imprisonment with a non-parole period of 3 years. This Court rejected an argument that the non-parole period made the sentence manifestly excessive. Partially suspended sentences are unusual but not unheard of in cases like this. For example, in Tasmania v Peck (unreported, Blow J (as he then was), 7 October 2009), a casino accounts clerk who stole nearly $200,000 over more than 5 years was sentenced to 27 months' imprisonment, with 9 months suspended and a non-parole period of 9 months. Although s 24(2)(a) of the Sentencing Act permits a sentencer who imposes a wholly or partly suspended sentence of imprisonment to impose a condition requiring the offender to perform community service, such a requirement is rarely if ever imposed in cases of large scale fraud. The maximum number of hours of community service that may be ordered is 240: Sentencing Act, s 31(1).

21 In a case of this nature, partly suspending a sentence and requiring the performance of some community service is unusual. Although we are not aware of, and have not been referred to, any other similar case in which such a course has been taken, we would accept that it is not inherently inappropriate, provided the package of sentencing orders, taken as a whole, is not unreasonably lenient. The prosecutor was given no warning that the learned sentencing judge was thinking of suspending nearly all of the respondent's sentence. In the circumstances of this case, the respondent's contention blurs the distinction between the role of the prosecutor and the role of the judge in the sentencing process. In our view, there is no reason the appellant should be prevented from contending that the sentence was manifestly inadequate.

22 In relation to the criticisms of the prosecutor, the appellant relies on s 80(3) of the Sentencing Act. Section 80 reads as follows:

"(1) Before a court passes sentence on an offender found guilty of an offence, both the prosecutor and the offender, or counsel on the offender's behalf, may address the court in relation to that sentence.

(2) Without limiting the generality of subsection (1), in an address pursuant to that subsection the prosecutor may do all or any of the following:

(a) draw the attention of the court to any aggravating circumstances or the presence or absence of any extenuating circumstances in relation to the offence;

(b) if the court has a choice with regard to the kind of sentence that it may impose for the offence, comment on the appropriateness of those kinds of sentence;

(c) if the court has a choice with regard to those kinds of sentence, recommend that the court impose one of those kinds of sentence.

(3) The failure by a prosecutor to exercise the right conferred by subsection (1) is not to be taken into account by a court in determining any appeal against the sentence or in determining any motion to review the sentence."

23 From a pedantic perspective, it might be said that this was not a case in which the prosecutor failed to exercise his right to address the learned sentencing judge in relation to the sentence. However, consistently with s 80(3), it would be inappropriate for this Court to take into account the fact that the prosecutor did not anticipate, and make submissions about, the sort of lenient sentencing package that the learned sentencing judge decided upon. In any event, anything that the prosecutor said or did not say can make no difference to the adequacy or inadequacy of the sentence.

24 The principles applicable to sentencing appeals in which manifest inadequacy is asserted are as stated by Pearce J in DPP (Acting) v Pearce [2015] TASCCA 1, 28 Tas R 1 as follows at [8]:

"8 As in all such appeals as this, it is necessary to refer to the principles which limit the circumstances in which intervention of an appellate court is justified. The court sits to correct material error: Dinsdale v The Queen [2000] HCA 54, 202 CLR 321 per Kirby J at [57]-[60]. Where no specific error is alleged, this Court must be persuaded of error of the second type referred to in House v The King (1936) 55 CLR 499 at 505, that is, that the sentence imposed by the sentencing judge is 'unreasonable or plainly unjust'. It is not to the point that the sentence may be regarded by some as too lenient or too harsh. It must be established that the sentencing order is so manifestly wrong that it could only be the result of some undefinable error in the exercise of the judicial discretion: Bresnehan v The Queen [1992] TASSC 55; (1992) 1 Tas R 234 at 242. A court of criminal appeal may not substitute its own opinion for that of the sentencing judge merely because the appellate court would have exercised its discretion in a manner different from the manner in which the sentencing judge exercised his or her discretion: see Lowndes v The Queen [1999] HCA 29, 195 CLR 665 at [15], and the other cases referred to by this Court in Director of Public Prosecutions v CSS [2013] TASCCA 10. Sentencing judges should be 'accorded a wide measure of latitude': Postiglione v The Queen [1997] HCA 26; (1997) 189 CLR 295 per Kirby J at 336. Excess or inadequacy is either apparent or it is not: Dinsdale v The Queen (above) at [6]. In considering that question regard is to be given to all the matters that are relevant to determining the sentence: Hili v The Queen [2010] HCA 45, 242 CLR 520 at 539."

25 In this case the head sentence of 3 years' imprisonment was manifestly inadequate, particularly having regard to the scale and duration of the respondent's offending and the unusually tragic consequences for Phillip Robinson. The suspension of five sixths of the head sentence exacerbated that inadequacy. The requirement to perform 100 hours of community service, which perhaps might deprive the respondent of her liberty on Saturdays for about four months, made no significant difference.

26 Despite the making of partial restitution and the other mitigating circumstances, the respondent's crimes called for a sentence that would adequately condemn her conduct, and that should act as a general deterrent to others. Unfortunately the perceptions of large sections of the public as to suspended sentences are such that they do not tend to have much effect by way of general deterrence. As Evans J observed in Director of Public Prosecutions v Broadby, Cockshut and Woolley [2010] TASCCA 13, 20 Tas R 399 at [9], "there is a marked divergence between the views of the judiciary and the community in relation to the impact of suspended sentences". There is a tendency for members of the public to regard a wholly suspended sentence as scarcely being any punishment at all. In the circumstances of this case, members of the public are likely to disregard the suspended component of the sentence in assessing its severity or leniency. The orders of the learned sentencing judge were likely to have had virtually no effect by way of general deterrence. That is a factor that weighs in favour of a harsher package of sentencing orders.

27 In the case of a prosecution appeal, this Court has a residual discretion to dismiss an appeal despite a finding of appealable error: CMB v Attorney-General for New South Wales [2015] HCA 9, 256 CLR 346; Director of Public Prosecutions v JSP [2020] TASCCA 3 at [14]- [22]. Counsel for the respondent submitted that that discretion should be exercised in her favour because of the position taken by the prosecutor during the sentencing proceedings. The submission concerning the prosecutor's conduct must be rejected for the reasons stated above.

28 An inadequate sentence is likely to give rise to a sense of injustice, not just on the part of the principal victim of these crimes, but also on the part of the general public. As McHugh J said in Everett v The Queen [1994] HCA 49; (1994) 181 CLR 295 at 306_,_ "Inadequate sentences are also likely to undermine public confidence in the ability of the courts to play their part in deterring the commission of crimes." In view of those factors, this is not an appropriate case for the residual discretion to be exercised in favour of the respondent. The sentence was so inadequate that it is appropriate to impose a significantly heavier sentence in order to maintain appropriate sentencing standards and maintain public confidence.

29 In the course of his submissions, counsel for the respondent referred the Court to a report published by the Office of the Custodial Inspector entitled Lockdowns Review 2021. Because of staff shortages and other factors, prisoners in this State are experiencing lockdowns too frequently. The consequences include increased social isolation, fewer personal visits, decreased autonomy, and reduced control over almost all aspects of daily life. The respondent experienced three or four days in lockdown during the 45 days from her sentencing to the hearing of her appeal. The impact of continuing lockdowns is a mitigating factor to be taken into account for the purposes of resentencing.

30 This Court was also told that, since she commenced serving her sentence, the respondent had been getting some counselling support, though not therapeutic support. There is no other new information to be taken into account for the purpose of resentencing.

31 Having regard to all the relevant circumstances, particularly the scale, duration and impact of the respondent's offending, we consider that the respondent should receive a head sentence of 4 years' imprisonment. Because of her age, her good character before she commenced offending, the steps taken to make partial restitution, the respondent's remorse, and her pleas of guilty, we think it appropriate to suspend 12 months of the sentence and impose the shortest possible non-parole period. We do not see any point in imposing a condition requiring the performance of community service.

32 There is one further aspect of the sentencing that needs to be addressed. By virtue of ss 69(2) and 44 of the Sentencing Act, the learned sentencing judge was required to make an order that the compensation of $347,849.18 be paid within a specified period of no more than 28 days. He did not do that. Apparently officers of the Monetary Penalties Enforcement Unit are concerned that that might result in the compensation order being unenforceable. In the light of the High Court's decision in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, that might not be the position. However, in order to place the matter beyond doubt, it is appropriate that this Court set aside the original compensation order, make another one for the same amount, and allow 28 days to pay. No doubt the respondent will find it impossible to pay the required amount within 28 days, but that is a matter over which judges have no jurisdiction. She will have to deal with the Monetary Penalties Enforcement Unit.

33 For these reasons, the appeal is allowed. The orders of the learned sentencing judge are set aside. The respondent is sentenced to 4 years' imprisonment with effect from 24 August 2021, with 12 months of that sentence suspended on condition that she commit no offence punishable by imprisonment for a period of 2 years after her release from prison. It is ordered that she not be eligible for parole until she has served 18 months of that sentence. She is ordered to pay compensation in the sum of $347,849.18 to PJ Robinson Pty Ltd within 28 days.