DPP v Kose [2006] VSCA 119

Court of Appeal (Vic)|2006-03-30|Before: WARREN, C.J., BUCHANAN and ASHLEY, JJ.A

CRIMINAL LAW - Crown appeal - Whether sentence was manifestly inadequate - Obtaining a financial advantage by deception - Fine without conviction - Effect on future employment - Failure to enter a conviction on the record - Sentencing Act 1991, s.6J(1) - Continuing criminal enterprise offender - Conduct of Crown at plea

1 This is an appeal by the Director of Public Prosecutions pursuant to the Crimes Act 1958, s. 567A. The appeal is against the sentence handed down to Mehmet Kose by a judge of the County Court on 7 December 2005 for three counts of obtaining a financial advantage by deception contrary to the Crimes Act 1958, s. 82.

2 The first count relates to a loan from the Commonwealth Bank for the purchase of land at 8 Gretna Court, Greenvale. This loan was granted on 29 July 2004. In obtaining $228,396 from the Bank, the respondent made the following misrepresentations:

•

That he was single with no dependent children. In truth, the respondent was married with one child.

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That he was employed by a business named Turkish Patisserie and received a gross income of $59,000 per annum. In truth, the respondent was not employed by such a business. This claim was supported by a letter that was, as the term is commonly understood, fraudulent.

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That he had received $40,000 from one Samaya Kose whom he described as a close relative. In truth, no such money was given by Samaya Kose to the respondent who is better described as not the respondent's close relative but as his wife.

3 The second count relates to a loan from RMJ Home Loans and Perpetual Trustees through an intermediary, Interstar Wholesale Finance, for the purchase of property in Dubbo, New South Wales. This loan was granted on 15 September 2004. In obtaining $60,000, the respondent made the following misrepresentations:

•

That he was single with no dependent children. As already stated, the respondent was in fact married with one child.

•

That he was employed by Kayer's Timber Floors and received a gross income of $62,000 per annum. In truth, the respondent was not employed by such a business. This claim was supported by a letter that was fraudulent.

4 The third count relates to a second loan from the Commonwealth Bank for the construction of two town houses on the property at 8 Gretna Court, Greenvale. This loan was granted on 15 September 2004. In obtaining $270,000, the respondent made the following misrepresentations:

• That he was single with no dependent children. As stated above, the respondent was in fact married with one child.

• That he was employed by Kayer's Timber Floors and received a gross income of $62,000 per annum. In truth, the respondent was not employed by such a business. This claim was supported by a letter that was fraudulent.

5 The respondent also omitted to declare that he had borrowed $60,000 from RMJ Home Loans and Perpetual Trustees (the subject of count two).

6 On 13 May 2005 the respondent was arrested, interviewed and charged. During the interview, he admitted that he had misrepresented his financial status with respect to the first and third loans to the Commonwealth Bank. The respondent subsequently paid each of the loans back in full.

7 On 7 December 2005, the judge imposed sentences:

•

on Count 1: a $3,000 fine;

•

on Count 2: a $2,000 fine; and

•

on Count 3: a $3,000 fine.

8 In total, the respondent was fined $8,000. Further, the sentencing judge exercised his discretion, pursuant to s.7(1)(f) of Sentencing Act 1991, not to enter a conviction on the record with respect to the offender. In his short reasons for sentence, his Honour appeared to base the reason for disposition by way of a fine without conviction upon the background of the respondent and matters of mitigation (his age, cooperation, plea of guilty, his parlous financial circumstances and the repayment to the financial institutions). The reasons for the imposition of fines are apparent. However, no clear reason is articulated for the non-conviction although it seems to be inferred in the same reasons for the imposition of the fine. The sentencing judge did not consider Part 2B of the Sentencing Act 1991. Indeed, the provisions were not mentioned by the prosecution.

9 The circumstances of the respondent were that at the time of offending he was 34, married with a three year old child and living with his parents in a house owned by his parents in law. The respondent was born in Turkey and came to Australia when employed by an international aid organisation. He is well educated and has achieved tertiary qualifications. The respondent was earning $22,000 per annum at the time of offending but was unemployed without income of assets at the time of sentence. His area of employment was the field of international aid. He pleaded guilty at the earliest opportunity. He made full restitution to the effected financial institutions including payment of interest and costs. There was no issue that he had shown full remorse and was unlikely to re-offend.

10 The Director of Public Prosecutions now appeals pursuant to the s 567A(1) of the Crimes Act 1958 (Vic) against the sentence. The Director makes a number of submissions in support of this appeal. They can be summarised thus:

• The respondent was granted loans that in total amounted to over $550,000. Although not explicitly stated in the Director's submissions, the intended significance of this fact is presumedly that the punishment imposed by the sentencing judge was not commensurate with the respondent's culpability as reflected in that large sum of money.

• Such material as there was placed before the sentencing judge on the plea did not justify his conclusion that the recording of conviction might impact on the respondent's employment prospects.

• The sentencing judge did not take into account notions of general deterrence and denunciation.

• The sentencing judge failed to recognise that the respondent had committed a "continuing criminal enterprise offence" under Part 2B of the Sentencing Act 1991 and execute the relevant duties under that Part.

11 The law in this type of case was compendiously stated by Charles, J.A. in R v Clarke.[1] In this light, the Director's submissions fall to be considered. As to their submission on the large amount of money obtained by the respondent through his deceit, a number of things can be said. First, as outlined in the respondent's submissions, there are a number of matters that go to mitigation. They are:

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The respondent admitted to his deceit upon first being interviewed by police;

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The respondent had indicated an intention to plead guilty at the very first opportunity available to him;

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The respondent had no prior convictions;

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The respondent is clearly capable of rehabilitation and is unlikely to re-offend.

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The loans deceitfully obtained by the respondent were paid back in full according to the terms under which they loaned.

12 Secondly, the Director's argument that "It is not to the point that the respondent did not default on the loan repayments" is not an adequate response. This factor, along with the fact that the respondent intended at every stage to repay the loans, evince the limited extent to which the respondent was willing to expose his victims to the risk of an unwarranted loss. This goes squarely to the culpability of his deception. Thirdly, it is clear from the transcript that the sentencing judge turned his mind to the issue of whether or not to enter a conviction. If, and I am not making any suggestion as to the disposition of the judge in his sentencing, his Honour's "sympathies [were] reasonably excited by the circumstances of the case",[2] it is not for this Court to deprive the respondent of this outcome. Fourthly, if the sentence is inadequate (and I am not suggesting it is), it is not manifestly inadequate which is the higher threshold the Director must meet if it is to persuade an appellate court to re-exercise its discretion.[3]

13 The Director's next main argument is centred around the sentencing judge's exercise of discretion under s. 8(1) of the Sentencing Act 1991 in deciding not to enter a conviction. Section 8(1)(c) directs a sentencing judge, in exercising such a discretion, to consider "the impact of the recording of a conviction on the offender's economic or social well-being or on his or her employment prospects". Much of the argument by counsel at plea was premised on the idea that this section was relevant if, on examination of a bundle of materials including various job application forms for potential positions for the respondent, the respondent was obliged to disclose any 'convictions' in his procurement of future employment. The respondent argued that because he was so required, a conviction would be severely detrimental to his future prospects of employment. The Director argued that, the duty of disclosure on those forms being more onerous than disclosing merely "convictions" but in fact going so far as to disclosing any finding of guilt under the law, the failure to enter a conviction would make little or no difference to the respondent's situation.

14 It is submitted for the Director that the sentence is manifestly inadequate in light of the seriousness of the offences which of themselves involved careful planning to fulfil the respondent's aim to be a property developer. At best for the respondent, it is not submitted by the Director that the financial institutions suffered monetary loss. Rather, it is argued that the institutions were entitled to know the true position of the respondent and were placed in an actual or potentially hazardous position. It is this hazard that constitutes the damage or harm identified by the Director. This fact combined with the fact of dishonesty belied the approach in the plea and, eventually the sentencing remarks, that the matter was not so serious because no-one was harmed. In these circumstances it is said that a prospective employer should know of the respondent's conduct.

15 The employment factor is relevant because in the plea below the sentencing judge received a bundle of materials provided on behalf of the respondent supposedly concerned with his employment prospects. The documents consisted of a text and extract on human rights development of which the respondent was an author to establish his qualifications in international aid together with a series of blank employment application forms for various international aid organisations. Below it was submitted that these documents established that the respondent was a person in a particular field such that his employment prospects will be prejudiced by the disclosure of a conviction. The Court was provided with copies of the same materials. Without dwelling on the actual or potential involvement of the respondent in the area of international aid work, it was apparent that the materials were of limited assistance. Indeed, some of the application forms went well beyond admission of a conviction and interrogated as to information of charges, offences, penalties and the like. Nevertheless, the materials were considered by the sentencing judge and it is apparent from the transcript of the plea that they factored into his Honour's analysis.

16 The respondent works in the field of what can loosely be termed "international development". Whether or not the respondent is obliged to disclose just "convictions" or will be burdened with a heavier obligation, the significance of entering a conviction on the record of the respondent is to cause a blow to his reputation. It should be evident to any potential employer that a fine with conviction is a more severe punishment than a fine without a conviction. For this reason, it is not to the point to say that, as the Director does, because the respondent will be obliged in any event to disclose this matter, refraining from entering a conviction on the record will not cause any change to his future employment prospects. I do not think this argument with respect to the recording of a conviction is made out. However, this is subject to what is said later.

17 The Director's third submission rests on the notions of general deterrence enunciated in DPP v Bulfin.[4] In that case, Winneke, P. stated that in "white collar" cases "the element of general deterrence will usually carry particular significance...both in relation to the totally effective sentence and the non-parole period; together with a strong denunciation by the sentencing court".[5] I think that the imperative of general deterrence is sufficiently met by the total fine imposed by the sentencing judge. It is relevant to note the position of the defendant in DPP v Bulfin:[6]

"The motivation to engage in conduct of the kind here under consideration may spring from many sources: a position of trust and the easy ability to abuse it; the enormous rewards that may be available; a position of high authority in some substantial enterprise and the offender's assumption that discovery or proof of wrongdoing can be avoided; greed or the burden of funding an extravagant lifestyle; weakness in succumbing to outside pressures to use deceitful means for business ends; and personal or corporate ambition, to name but a few. Whatever the motivation, offences of the kind here in question almost invariably involve a carefully calculated course of conduct over a long period, repeated deliberate acts of dishonesty, substantial amounts of money, and, frequently, losses (often tragic in their impact) to large numbers of small investors. The offender often holds a position making it possible, or has the ability, to disguise or camouflage the conduct in question. Detection is difficult, the investigation of the crime usually lengthy and very expensive, and the problems of trial and proof will frequently be extreme."

18 A comparison of the circumstances in DPP v Bulfin and this case leads to the conclusion that the importance of general deterrence in this instance is not so high. The respondent was not in any position that particularly involved an element of trust: he was an applicant for a loan. Nor did he seek enormous rewards; at every stage he intended to repay the loan, the "financial advantage" in this situation was the securing of a loan, not the misappropriation of a large sum. Proof of wrongdoing could not easily be avoided; without imposing a duty to do so in any way, had any of the loan institutions rung the respondent's purported places of employment, the fraud most likely would have been revealed. Clearly, Winneke, P.'s dicta in R v Bulfin do not extend to this type of case.

19 As pointed out by the sentencing judge, the gravamen of the respondent's conduct was the preparation of false documents. When one examines the nature of the respondent's offences, it is clear that they were motivated by a desire to place himself and his family into a financially secure position. This position is not significantly different from other people who commit these kinds of crimes. Now, faced with several thousand dollars in fines which the Court was informed was borrowed from relatives, the respondent has been set back significantly in this objective. This is enough to deter people in a similar position to engage in the conduct of the kind that the respondent did.

20 Mr McArdle for the Director referred the Court to the case of R v Kostikidis.[7] This was a Director's appeal against a sentence for offences of obtaining property by deception and theft. There the Director's appeal succeeded and the Court increased sentence. Charles, J.A. expressed strong views[8] as to the gravity of the offences and the need for general deterrence. In particular, Charles, J.A. (with whom Winneke, A.C.J. and Callaway, J.A. agreed) adopted the remarks of O'Bryan, J. in Philip John Cave:[9]

"Conduct of the kind perpetuated by the applicant is serious and impacts upon the community by way of making it more difficult for persons to obtain finance, and possibly at higher cost. It is probably necessary to say, through the courts, to persons in the financial community and would-be borrowers that an offence of this kind will not be treated leniently by the courts but may bring in appropriate circumstances a sentence of imprisonment."

21 In Kostikidis, Charles J.A. went on:[10]

"In extending credit, these institutions have little alternative but to rely to a substantial extent on the truthfulness of statements made in applications for finance and the honesty of applicants. Credit and other checks imposed by such institutions to attempt to avoid losses caused by such frauds increase the cost of lending and are reflected in higher charges made by the institutions and borne by the borrowing community. Offences such as what occurred here are not infrequently committed by persons of apparently good character, and they are difficult to detect and expensive to prosecute. Furthermore these offences occurred over a considerable period, and involved repeated deliberate acts of dishonesty and substantial amounts of money. For all these reasons, general deterrence would necessarily play an important role in the imposition of sentence."

22 On this basis, the Director submits a conviction ought have been entered in the present matter. However, after close consideration, I do not consider this case warranted the same level of punishment, denunciation and deterrence as arose in Kostikidis. As discussed above, there was in fact no damage to the financial institutions, there was always an intention to repay and those intentions were fulfilled. The loans were secured by mortgages and there was no real risk to the financial institutions. That factor left the court to consider a mature man who was well educated, with no history of misconduct and who was most unlikely to re-offend. These matters combined with his difficult financial circumstances and his obligations to pay any fine imposed meant, in my view, that it was open to the sentencing judge to determine in the overall sentencing synthesis that it was a case where a conviction ought not to be recorded. Whilst there might be some hesitation as to the efficacy of the submissions and the materials on the plea[11] as to likely impact on the respondent's employment prospects, it was, nevertheless a matter the judge below was entitled to consider. I say nothing further on that topic.

23 It follows that I do not consider manifest inadequacy in the primary judge's sentence has been made out by the Director. The Director's next submission relates to Part 2B of Sentencing Act 1991 (Vic); namely, that the sentencing judge, in light of the fact that the respondent is a continuing criminal enterprise offender under s.6H(1) of the Act, failed to execute his duty under s.6J to "cause to be entered in the records of the court in respect of that offence the fact that the offender was sentenced for a continuing criminal enterprise offence". Section 6J is cast in mandatory terms:

"6J. CCE offender status to be noted on record

(1) A court that sentences a continuing criminal enterprise offender for a continuing criminal enterprise offence must, at the time of doing so, cause to be entered in the records of the court in respect of that offence the fact that the offender was sentenced for a continuing criminal enterprise offence."

24 I accept the Director's submission that the respondent, having pleaded guilty to three counts of obtaining financial advantage by deception, is in fact a "continuing criminal enterprise offender". The Director did not seek, in all the circumstances of this appeal, to invoke s 6I of the Sentencing Act 1991 .

25 However, as the respondent points out, the Director omitted to bring these sections to the attention of the sentencing judge at plea. This is particularly relevant in light of Charles, J.A.'s fifth point in R v. Clarke that "the conduct of the Director at the original sentencing proceedings may be a matter of significance". It is well established that the prosecutor in the sentencing process is "under a duty to assist the court to avoid appellable error".[12] In this case, there was obviously an oversight by the prosecution. Now the Director seeks to correct that oversight here. If the oversight constituted, for example, a failure to mention an aggravating feature or some other factor that goes to the general sentencing discretion, then perhaps an appellate court would decline to intervene in a trial judge's decision. However, issue estoppel, or notions akin thereto, cannot operate in the face of a statute which imposes a positive obligation on a trial judge to enter something on the record of the Court.

26 Through no fault of the sentencing judge in this instance, an error of law has occurred and now must be corrected. However, the resentencing occurs solely for the purposes of correcting a technical slip.

27 For this reason, I would order that the orders of the sentencing judge be set

aside. In lieu thereof, I re-sentence the respondent, as sentenced below, to:

•

Count 1: $3,000;

•

Count 2: $2,000; and

•

Count 3: $3,000,

and further order that, pursuant to s 6J of the Sentencing Act 1991, it is entered in the records of the court in respect of those offences the fact that the offender was sentenced for a continuing criminal enterprise offence.

29 I agree essentially, for the reasons given by the learned Chief Justice, that this appeal should be dismissed. I wish to add something about three matters.

Failure to record a conviction

30 Late in the course of the appeal, it having become quite clear that the only real issue was whether a conviction should have been recorded, I raised the question whether, on a Director's appeal, a sentence could be said to be manifestly inadequate only because no conviction had been recorded. In that connection, I mentioned the sentencing regime set out in s.7 of the Sentencing Act 1991 ("the Act"), and in particular the language of the option set out in Sub-s.(1)(f). No clear answer was given by counsel to the question which I raised.

31 My researches subsequent to the hearing showed that this question was part of the subject-matter of the appeal in DPP v Marks[13]. There, this Court evidently proceeded upon the assumption that failure to record a conviction itself could evidence manifest inadequacy in a sentencing disposition.

32 In my respectful opinion, the assumption implicit in Marks was well-founded. That is so far several reasons.

33 First, Hayne, JA pointed out in R v Sessions[14] that -

"the fact of conviction is treated by the Sentencing Act as an element of the offender's punishment."

The truth of that observation is not just a matter of the language of the pertinent provisions. More than that, the provisions show that the decision whether or not to convict is treated by the Act as a matter of real importance. By s.7(1), the discretion not to record a conviction only arises in particular circumstances. By s.8(1), the sentencing court must consider certain matters when exercising that discretion. By s.8(2), subject to exceptions, a finding of guilt without the recording of a conviction "must not be taken to be a conviction for any purpose". In all, the statement by Fox and Freiberg[15] that -

"A conviction is 'a formal and solemn act marking the court's, and society's disapproval of a defendant's wrong doing', and so is to be regarded as a component of the sentence and to be accorded weight in considering whether or not the sentence is proportionate to the offence"[16]

is shown to be well-merited.

34 Second, there is authority, in the context of legislation relevantly similar to that of the Act, that the failure to record a conviction might provide the basis for a successful Director's appeal. R v Brown, ex parte Attorney General[17], was an appeal against sentence by the Attorney General of Queensland in the context set by the Penalties and Sentences Act 1992 (Qld). A majority of the Court of Appeal held that failure to record a conviction did not lead to the success of the appeal. But it was implicit in the reasons of Macrossan, CJ that the failure of the appeal depended upon the facts, not principle.[18] Pincus, JA dissented. In his opinion, the recording of a conviction had been mandated by the facts. The difference between their Honours' depended upon the facts. [19] Reference was made by both Pincus, JA and Lee, J,[20] the latter of whom agreed in the result with the Chief Justice, to the unreported Queensland case of Lang.[21] That was the converse situation. Complaint was successfully made on appeal that a conviction had been recorded. It serves to make the point that there is particular importance in the recording or non-recording of a conviction.

Section 567A, Crimes Act 1958, and s.6J(1), Sentencing Act 1991

35 The second ground of appeal was as follows:

"The learned sentencing judge erred in not sentencing the respondent as a 'continuing criminal enterprise offender' or count 3 in accordance with the requirements of Part 2B of the Sentencing Act 1991."

36 Nothing was said about Part 2B of the Act on the plea hearing. In written submissions on this appeal, counsel for the Director directed attention to the failure of the sentencing judge to cause it to be recorded that the respondent was sentenced on count 3 for a continuing criminal enterprise offence, such failure involving non-compliance with s.6J(1) of the Act. Not until the Court raised the matter did counsel direct any attention to s.6I(1) of the Act. By that subsection, the maximum penalty for a continuing criminal enterprise offence is twice the length of the maximum sentence prescribed, or 25 years, whichever is the lesser.

37 In the circumstances which I have shortly described, the Director on the oral hearing did not rely upon s.6I(1), although it seems clear that the respondent should have been sentenced, in respect of count 3, having regard to that provision. In the event, ground 2 should be taken to address failure to record the fact that, in respect of count 3, the respondent was sentenced for a continuing criminal enterprise offence.

38 By s.567A of the Crimes Act 1958, the Director may appeal where a sentence is passed and the Director considers that "a different sentence should have been passed".

39 Section 6J(1) of the Act, I think it is clear, draws a distinction between the imposition of a sentence and the recording of the fact that the offender was sentenced for a continuing criminal enterprise offence. Thus -

"A court that sentences a continuing criminal enterprise offender for a continuing criminal enterprise offence must, at the time of doing so, cause to be entered in the records of the court in respect of that offence the fact that the offender was sentenced for a continuing criminal enterprise offence."

40 That seems to me enough to show that ground 2, because it should be taken to raise only the s.6J(1) point, raised an issue which was not justiciable by resort to s.567A. But if one needed to go further, the sentencing orders catalogued in s.7(1) of the Act emphasize, I think, the distinction between sentence and what is required by s.6J(1) of that Act.

The material relied upon to support the 'no conviction' submission

41 In my opinion, the material advanced in support of the submission that a conviction should not be recorded was weak. The learned sentencing judge did not say in his sentencing remarks that he accepted it. But in saying that he would accede to the request of the respondent's counsel not to record a conviction, I take his Honour to have implicitly accepted the asserted significance of the material. Given my own reservations, I am not prepared to say that his Honour was precluded from reaching that conclusion.

[1] [1996] VICSC 30; [1996] 2 V.R. 520 at 522; cited with approval in DPP v Bulfin [1998] 4 V.R. 114 at 117.

[2] R v Osenkowski (1982) 30 S.A.S.R. 212 at 212-13; as cited with approval in R v Clarke [1996] VICSC 30; [1996] 2 V.R. 520 at 523.

[3] R v Clarke [1996] VICSC 30; [1996] 2 VR 520 at 522.

[4] [1998] 4 V.R. 114.

[5] Ibid 132.

[6] Ibid 131-132.

[7] Unreported, Supreme Court of Victoria, Court of Appeal, 12 September 1996.

[8] Ibid at 11.

[9] (1988) A.Crim.R. 484 at 487.

[10] supra at 12.

[11] Namely, blank employment application forms that were relied on to demonstrate the probing questions that would require him to divulge his conviction to his prejudice.

[12] R v Tait and Bartley 24 A.L.R. 473; 46 F.L.R. 386; approved in Everett v R [1994] HCA 49; (1994) 181 C.L.R. 295 at 299 (Brennan, Deane, Dawson and Gaudron JJ.).

[13] [2005] VSCA 277. See [3], [21], [26], [27] and [30] in the judgment of Eames, JA.

[14] [1998] 2 VR 304 at 313.

[15] Sentencing, State and Federal Law in Victoria, 2nd edition.

[16] At 191-192, citing R v McInerney (1986) 42 SASR 111 at 124 per Cox, J.

[17] [1994] 2 Qd Report 182.

[18] See at 184-185.

[19] Pincus, JA noted that it had been conceded - he opined, correctly - that the Attorney might appeal against refusal to record a conviction.

[20] Pincus, JA at 187, Lee J at 192.

[21] Court of Appeal, 23 July 1992.

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