DPP (Cth) v Fincham [2008] VSCA 186

3 The respondent was arraigned and pleaded guilty in the County Court to a presentment containing two counts of defrauding the Commonwealth by making false claims to the Australian Taxation Office for Goods and Services Tax ('GST') refunds (counts 1 and 2) and two counts of attempting to pervert the course of justice (counts 3 and 4).

4 The respondent controlled a company, which carried on the business of a scrap metal dealer. Goods exported from Australia do not attract GST. Accordingly, companies which sell goods overseas do not have to charge or remit the tax in respect of those goods. On the other hand, if an exporting company has been charged GST in purchasing goods which it subsequently exports, it is entitled to claim an input tax credit.

5 Between October 2000 and September 2001, the company controlled by the respondent lodged four business activity statements claiming that it had exported goods and was entitled to significant input tax credits for GST said to have been paid upon purchasing the goods. Consequently, an amount of $121,884.97 was paid by the Australian Taxation Office into a bank account operated by the respondent. The respondent's company was not entitled to any refund because the transactions recorded in the business activity statements had not taken place. The respondent

falsely stated to an investigator from the Australian Taxation Office that he had purchased and processed scrap metal which was placed in drums and shipped to Asia. The respondent said that the person who organised the shipping and export documents was one Rhamid Wassim. Later, the Australian Taxation received a facsimile from the respondent's solicitors purporting to be a letter from 'Rhamid' to the respondent confirming that the respondent would sell Rhamid 'export material'. No-one called Rhamid could be found at the address on the letter.

6 The respondent was charged with the offences of defrauding the Commonwealth in February 2004. A committal proceeding was conducted on 24 November 2004. The respondent pleaded not guilty. A trial was listed to commence on 28 June 2005.

7 On 16 May 2005 the respondent supplied his solicitor with a number of medical reports. On the basis of those reports the respondent's solicitor and the Crown successfully applied for the trial date to be vacated. A new trial date was fixed for 3 November 2005. One report was from Bay's Hospital stating that the respondent had been admitted to hospital suffering from symptoms of Alzheimer's disease and cardiac complications. The report was false. Another report purported to set out the respondent's medical history, stating that he suffered from blackouts, stroke, left-sided weakness, speech and swallowing problems and had undergone 'prostate procedures'. That report, too, was false.

8 A directions hearing was listed for 8 September 2005 in anticipation of the new trial date. On 7 September 2005 the respondent's solicitor received by facsimile a medical report sent by the respondent purporting to be from Peninsula Health Patient Support Services at Frankston Hospital. It stated that the respondent had been admitted to hospital after collapsing. It stated that he had suffered a stroke leaving him with paralysis down the left side, had undergone prostate and bowel procedures, had tests which revealed six bowel tumours and liver tumours, that the respondent would not be in a cognitive state so as to attend court for between four to six months and, if his condition was not stabilised, he had a life expectancy of 12 months. In fact the report was false. The report was tendered at the directions hearing on 8 September and a new trial date was fixed for 8 May 2006.

9 On 8 May 2006 counsel for the respondent advised the court that his ailments had overcome him and that he had collapsed and was in hospital suffering from severe bleeding caused by bowel cancer. The Chief Judge in the County Court required a medical report to be furnished. Documents were tendered to the Court which indicated that the respondent would be discharged from hospital in one or two days' time. A new trial date was fixed for 15 January 2007.

10 Between September 2005 and May 2006, an application was made by the respondent's solicitor for the prosecution to be discontinued on medical grounds. On 28 August 2006 the respondent's solicitor received a report purporting to be from Nepean Consulting Services, signed by a doctor, stating that the respondent had advanced colon cancer and a life expectancy of six to nine months. The report also stated that the respondent had a serious brain stem condition and had suffered a serious seizure which required him to undergo intensive therapy to regain the ability of speech. The report was tendered in court. The report was false.

11 On 28 September 2006 the respondent's solicitor received a report purportedly written by Emma Beardsley of Peninsula Health stating that the respondent had malignant tumours in his bowel and required a bowel procedure and radiation therapy, and he had six to nine months to live. The report was false. The respondent's solicitor provided the report to the Director of Public Prosecutions to support his application to discontinue the prosecution.

12 When the representatives of the Crown intimated that they required a medical report from the respondent's treating specialists, the respondent's solicitor received a document purporting to be a report from the Nepean Consulting Group stating that the respondent had undergone a bowel resection and suffered from advanced colon cancer. The report said that the respondent had a life expectancy of 15 months. The report was tendered in support of the respondent's application to discontinue the prosecution. The report was false.

13 In November 2006 the Director of Public Prosecutions advised the respondent's solicitor that an independent specialist examination of the respondent was required. Thereupon the respondent abandoned his application for discontinuance. The matter was investigated by the Australian Federal Police. When the respondent was interviewed by the police, he denied the creation and use of false medical reports, saying that perhaps the wrong reports had been sent in. He said that he did not know how his solicitor had obtained the reports.

14 The maximum penalty for the offences alleged in counts 1 and 2 was ten years' imprisonment. The maximum penalty for the offences the subject matter of counts 3 and 4 was five years' imprisonment.

15 After a plea, the respondent was sentenced to be imprisoned for a term of two years on each of counts 1 and 2 and to a term of six months' imprisonment on each of counts 3 and 4. The sentencing judge ordered that the sentence imposed in respect of count 2 was to commence six months after the commencement of the sentence imposed on count 1 and that the sentence imposed in respect of count 4 was to commence upon the expiration of the sentence imposed on count 2. The effect of those orders was that the respondent was sentenced to a total effective sentence of three years' imprisonment. The sentencing judge ordered that the respondent be released forthwith upon giving security by entering into a recognisance in the sum of $1,000 on condition that he be of good behaviour for a period of three years. He was also ordered to make reparation of $121,884.97.

16 The Director has appealed, alleging that the individual sentences on counts 3 and 4 are manifestly inadequate and the failure to order any cumulation on count 3 and the order that the respondent be released forthwith upon entering into a recognisance to be of good behaviour resulted in a sentence which was manifestly inadequate.

17 The respondent is 55 years' old. He was born in New Zealand. His family came to Australia when he was 15 years' old. The respondent completed year 12. Upon leaving school he worked as an executive trainee for Ford and then worked in the finance department of Chrysler. In his mid-twenties he worked as a customs officer. He then bought a printing business, which failed. The respondent became a printing broker for seven years and then started his own businesses, one in the boating industry, which ended when the premises at which the business was conducted caught fire, and a scrap metal business in the course of which counts 1 and 2 were committed. In 2006 the respondent's company was wound up and the respondent became bankrupt.

18 The respondent is married and has two children in their twenties.

19 In 1984 the respondent was convicted on four counts of obtaining property by deception. He was fined $4,000 in respect of one count and entered into a good behaviour bond in respect of the remaining counts.

20 In the course of the plea, evidence was led from witnesses, described by the sentencing judge as 'impressive', of the considerable contributions to community life made by the respondent through Rotary over many years.

21 The sentencing judge was principally influenced by the state of the respondent's health in deciding not to require the respondent to serve an immediate custodial sentence. She said that 'substantial penalties should be imposed' but 'this is a very unusual case because of your ill health ... and so it follows that the weight that might otherwise be given to the principle of general deterrence is reduced ... These genuine medical difficulties weigh heavily in favour of a disposition which enables you to serve your sentence in the community.'

22 The respondent had been admitted to hospital on several occasions after fainting, the cause of which appears to be a mystery to the respondent's doctors. The respondent suffered from sleep apnoea and cardioneurogenic syncope. Of more significance, in November 2003 the respondent collapsed and was taken to hospital, where cardiac arrhythmia was diagnosed. It was found that the respondent had a very enlarged heart. His femoral artery was accidentally punctured and the respondent underwent vascular surgery. In March 2004 a pacemaker was inserted. Three months later he suffered from a stroke. After admission to hospital, the respondent recovered. A psychiatrist, in a report that was tendered in the course of the plea, said that he thought the respondent would spend virtually all his time in prison in St Vincent's Hospital and there was a risk that he would not obtain the necessary investigation that he required. In another report a psychologist said that she agreed with the psychiatrist's opinion of the likely difficulties to be encountered managing the respondent's medical problems in a prison environment.

23 In committing the offences the respondent produced ten false documents designed to deceive those in authority for the purpose of advancing his own interests. Each crime was premeditated. The respondent persisted over a significant period of time with a carefully calculated campaign of deceit. Counts 1 and 2 covered four documents created over a period of five months. Counts 3 and 4 concerned the production of six documents over a period of 18 months. The respondent deliberately exploited systems which rely upon trust in order to function efficiently. Accordingly, it was important that the punishment imposed upon the respondent should promote the objects of denunciation and general deterrence. The sentence in this case singularly failed to achieve those objects.

24 In general, I am of the opinion that a sentence which requires an offender to spend a term in actual custody is required to concentrate the minds of and have a real deterrent impact upon those contemplating the production of false documents to obtain money and delay or abort court proceedings. In the present case, I consider that neither the circumstances of the offences nor the personal characteristics of the respondent justified the course which the sentencing judge took.

25 The respondent was entitled to a discount as a consequence of his plea of guilty, even though the plea was not made at an early stage. His ill health was also a significant mitigating factor. The sentencing judge said that there was a 'real risk' of the respondent's health suffering from 'a lack of appropriate treatment' if he was incarcerated. That conclusion was based upon the opinion of the psychiatrist, Dr Walton. Dr Walton said in April 2007 that there was a risk that the respondent would not obtain the necessary investigations that he required. He did not say that incarceration itself otherwise posed a threat to the respondent's health. By the time the respondent was sentenced, he had undergone further testing which had resulted in the recommendation that his pacemaker be replaced. Overall, I do not consider that the respondent's ailments were so serious that imprisonment posed any real risk to his health.

26 The sentencing judge found that the respondent was remorseful. She said:

It perhaps follows from your lack of insight that you had no expressed remorse but I am assured by your counsel that is not the case and indeed I accept your plea as an indication of that.

The plea was made at a late stage and was preceded by persistent denials of any wrongdoing. The respondent's initial response to enquiries from the Australian Taxation Office was to claim that another company was responsible for the shipping and export of the scrap metal. When he was interviewed about the false medical reports, the respondent said that he had no idea how the reports were provided to his solicitor. In a report by a psychologist provided to the Court, she said that in January 2008 the respondent denied any wrongdoing in relation to the fraud charges and also denied compiling the false medical reports, stating that he believed a disgruntled ex-employee was attempting to place the blame on him. The plea was a mitigating circumstance but, seen against the background of persistent denial of any wrongdoing, it hardly demonstrated remorse.

27 In my opinion the sentencing judge's failure to require the respondent to serve an immediate term of imprisonment did constitute error in principle. The suspension of the entire sentence resulted in punishment which was so disproportionate to the seriousness of the crime as to shock the public conscience and undermine public confidence in the ability of the courts to play their part in

28 In determining an appropriate punishment, this Court is circumscribed by the principle of double jeopardy, which is particularly significant in this case as the respondent is now at liberty. He has faced the prospect of deprivation of his liberty by imprisonment and has been spared. As a consequence of those constraints, I would not interfere with the individual sentences or orders for cumulation and concurrence imposed by the sentencing judge. I would, however, order that the respondent enter into a recognisance to be of good behaviour for a period of three years after he has served a term of 12 months' imprisonment.

29 I agree for the reasons given by Buchanan JA that the appeal should be allowed, and the sentence imposed upon the respondent adjusted accordingly.

[1] See Everett v R [1994] HCA 49; (1994) 181 CLR 295, 306 (McHugh J). See also DPP v Oversby [2004] VSCA 208; R v Clarke [1996] VICSC 30; [1996] 2 VR 520, 522 (Charles JA); R v Osenkowski (1982) 30 SASR 212, 213 (King CJ).