Itaoui v Regina

LEGISLATION CITED: Crimes Act 1900 Crimes (Sentencing & Procedure) Act 1999

R v Thomson & Houlten [2000] 29 NSWLR 383 CASES CITED: Markarian v The Queen [2005] 79 ALJR 1048 Attorney-General's Application under s 37 Crimes (Sentencing & Procedure) Act 1999 [No 1/2002] [2002] 56 NSWLR 146; [2002] 137 A Crim R 180 paras 40-42 per Spigelman CJ

COUNSEL: Mr D. Baran - Applicant Ms J. Girdham - Crown/Respondent

SOLICITORS: M. Dorrough - Applicant S. Kavanagh (DPP) - Crown/Respondent

IN THE COURT OF CRIMINAL APPEAL 2006/815

SPIGELMAN CJ WHEALY J HOWIE J

THURSDAY 7 September 2006 Ahmed ITAOUI v REGINA Judgment

1 SPIGELMAN CJ: I agree with Whealy J. 2 WHEALY J: On 17 May 2005 Ahmed Itaoui ("the applicant") pleaded guilty to nine counts of obtaining a financial advantage by deception. These were charges under s 178BA of the Crimes Act 1900, each carrying a maximum penalty of five years imprisonment. The plea was dealt with by the learned sentencing judge on 12 September 2005. His Honour was also asked to take into account ten similar offences on a Form 1 and a further offence of attempting to obtain a benefit by deception. 3 The applicant has sought leave to appeal on seven grounds. It will be necessary to identify each of those grounds and, in discussion of those matters, to identify the reasons of the sentencing Judge in some greater detail.

The general background 4 It may be helpful to outline in broad terms the nature of the offences committed by the applicant. This background focuses on the applicant's employment as a legal clerk at the offices of George Shad & Co Solicitors at Bankstown between August 2001 and October 2002. The applicant had been given employment in the middle of 1999 by Mr Shad. The applicant had been studying law part-time when he was engaged. The nature of his employment was, at first that the applicant looked after conveyancing matters from commencement until exchange of contracts. This included interviewing clients, liaising with real estate agents and ensuring that the reports in relation to the condition of the property under negotiation were satisfactory. As time passed, the applicant was given greater responsibilities. He was permitted to be involved with conveyancing matters up to completion. Mr Shad's practice was essentially that of a conveyancer with a very considerable number of transactions flowing through his office. In the statement he provided to police, Mr Shad said that his firm settled approximately 60 conveyancing matters each week. His trust account was used extensively in the practice, with approximately sixteen to seventeen hundred trust account transaction entries in any one month. It appears that, over time, Mr Shad placed considerable reliance on the applicant and trusted him implicitly in relation to his dealings with the firm's trust account. 5 On 31 October 2002, Mr Garry Napper of the New South Wales Law Society carried out a random audit of the firm's trust account. On 1 November 2002, Mr Napper told Mr Shad that he was generally satisfied with the audit of the firm's trust account. He queried, however, one cheque drawn in favour of Marshall Motors. An examination of this brought to Mr Shad's attention that the amounts of money involved in this particular transaction, in fact, belonged to four unrelated clients. Mr Shad said he recalled signing the cheque for Marshall Motors for an amount of $119,915. The applicant had been in charge of the conveyancing matter relating to this cheque. The cheque was drawn and signed on 4 September 2002. The applicant told Mr Shad that the cheque related to settlement monies where the client wanted the money drawn in favour of Marshall Motors. 6 Mr Shad confronted the applicant who immediately admitted taking money from the four clients to pay $119,915 to Marshall Motors. The money had been used by the applicant to buy a Mercedes Benz Cabriolet car from Marshall Motors Pty Limited at Parramatta. The applicant admitted he had taken the money. In reference to other dealings with the trust accounts, he volunteered that there were "a lot more". The applicant gave details of these to Mr Shad and authorised him to have access to the applicant's personal bank account with the National Australia Bank. These banking records confirmed that, in most instances, the applicant had deposited the misappropriated trust funds straight into his account with the National Bank. 7 There is no need for me to detail each and every misappropriation. It appears, however, that the misappropriations are reflected in the nine counts and the first ten offences listed on the Form 1. The total amount of trust monies taken was $424,198.52. After the offences were detected, and at Mr Shad's request, the applicant handed over the Mercedes Benz he had purchased. He also handed over a green sports car he had purchased with part of the misappropriated monies. Mr Shad was able to re-sell the cars and this enabled him to recoup $128,000 through the resale. Mr Shad apparently took out a loan of $375,000 to cover the shortfall in the trust account. This enabled him to ensure that none of his clients was out of pocket. Mr Shad also brought civil proceedings against the applicant and, at the time of the sentencing of the applicant, there was an amount of $224,198.52 outstanding between Mr Shad and his former employee. 8 In general terms, the method adopted by the applicant to misappropriate monies from the trust account was this: the applicant would falsely represent that he was raising a trust account cheque for the benefit of a client. He then used the funds for his own purpose, including making deposits in own bank account or, for example, the purchase of a car. These acts were committed without the authority or knowledge of the clients and without the knowledge of his employer. I shall give a more precise example of the method used --

On 29 August 2001, the offender raised a cheque No 158655 for $3,500 from the trust account ledger for a file number 51090, the matter of a purchase by Michael Hronopoulos. On 30 August 2001, a trust account cheque was used to purchase a St George Bank cheque in the sum of $3,500. The bank cheque was then deposited in the applicant's personal account with the National Bank (this was in fact the "transaction" underlying count 1 in the indictment). This example gives a clear idea of the planning and deceit involved. 9 At the end of November 2002 the investigation was placed in the hands of the police. The applicant was first charged in relation to one matter on 4 December 2002. Further charges were laid throughout that month. The applicant, as he was entitled to do, declined to be interviewed by the police. 10 The applicant was committed for trial on 28 July 2003 on 25 counts of larceny as a servant. On 24 October 2003, he pleaded not guilty upon arraignment and the Court fixed a trial date on 1 March 2004. That and subsequent trial dates had been vacated. This Court was informed that one of these trial dates was vacated at the request of the applicant and another at the request of the Crown. Finally, an ultimate trial date was fixed for hearing on 16 May 2005. On 17 May 2005, the prosecution presented an indictment charging nine counts under s 178BA and the applicant thereupon pleaded guilty, as I have earlier noted. 11 It is necessary to mention by way of summary one other matter: in 2004-2005, the applicant was working for SENSIS Pty Limited. This company traded as Telstra Yellow Pages. While he was working there, he had access to the SENSIS financial account identifying the fact that Ferguson Toyota was entitled to a refund for overpayment on a SENSIS advertising account. The applicant went to the Ferguson Toyota dealership at Hurstville and made enquiries relating to the purchase of a new Toyota motor vehicle. The purchase price was $71,000. The applicant handed over a SENSIS cheque for $7,022.40 payable to Ferguson Bros Car Sales Pty Limited. The car dealer banked the cheque. On 15 February 2005, the applicant requested that the sales agreement be cancelled and that he be repaid the deposit of $7,022.40. As it happened, Toyota staff noted that their advertising account with SENSIS corresponded with the amount of the cheque they had received from the applicant. This led to contact between the car dealer and SENSIS. The police were then brought in to investigate. The applicant attended the Ferguson Toyota office for the purposes of collecting a cheque for $7,022.40. He was however met by the police and arrested. 12 These circumstances led to the Form 1 offence of attempting to obtain a benefit by deception.

The course of the hearing 13 The hearing before the sentencing Judge was unremarkable. Although the applicant did not give evidence at the hearing, there was tendered on his behalf a report from a forensic psychiatrist Dr Bruce Westmore. This report diagnosed the applicant as suffering from "an adjustment disorder with depressed mood". The depression related to the circumstances in which the applicant found himself at sentence. Dr Westmore however did not believe that the applicant had an anti-social personality disorder nor was he suffering from a major depressive illness. Secondly, Dr Westmore took a history from the applicant. This suggested that the reason, at least initially, why the applicant had strayed into the criminal behaviour represented by the charges in the indictment was that he had resented the fact, as he saw it, that his employer was taking advantage of him in relation to his services. He was, in effect, not receiving proper remuneration for the level of work he was performing for his employer. 14 In addition to the psychiatric report, there was a substantial body of favourable reference material. This came from a wide variety of sources. These references highlighted the fact that the applicant's criminal activities had been out of character and that he had been a person of good character prior to his dishonesty in his employer's office.

The sentence 15 The principal argument raised by Mr Baran on the applicant's behalf before the sentencing Judge was his assertion that a fulltime custodial sentence should not be imposed or that, alternatively, any sentence imposed should be a suspended sentence. 16 The sentencing Judge did not accept these submissions. His Honour sentenced the applicant to an effective sentence comprising a non-parole term of two years with an additional parole term of 18 months. The sentences were made up as follows:

Count 1: Imprisonment for one month to commence on 12 September 2005

Count 4: Imprisonment for four months to commence on 12 September 2005.

Counts 2, 3, 6 and 9: On each count, imprisonment for 12 months, non-parole period of nine months: both to commence on 12 September 2005.

Count 8: Imprisonment for 16 months, non-parole period of 12 months: both to commence on 12 September 2005.

Count 5: Taking into account the one matter on Form 1: Imprisonment for 18 months, non-parole period of 12 months: both to commence on 12 March 2006.

Count 7: Taking into account the ten matters on the Form 1: Imprisonment for two years, non-parole period of six months: both to commence on 12 March 2007.

The issues for determination 17 As I have said, the applicant seeks to leave to appeal from the sentence of imprisonment. The applicant relies on seven grounds, although three were especially emphasised in oral submissions before this Court. Essentially, error is asserted on the part of the sentencing Judge in the way in which his Honour dealt with the pleas of guilty; a claim that he failed to properly apply s 23(3) of the Crimes (Sentencing & Procedure) Act 1999; and a complaint of failure to take into account the medical evidence and the asserted delay. The Crown submission is that the sentence imposed was well within the proper range of a sentencing discretion and that, indeed, it might be classified as a lenient sentence at the lower end of the range, having regard to the objective criminality involved.

Grounds 1 and 2 18 These grounds are related. The complaint is that the sentencing Judge did not specify the discount he was applying in relation to the guilty plea and that he did not allow a sufficient discount. 19 There is no substance in these grounds. It is clear from a fair reading of the sentencing Judge's decision that he expressly stated the applicant was "entitled to have his pleas of guilty reflected in mitigation in penalty". Secondly, his Honour stated: - "The Crown accepts that the pleas of guilty were entered at the earliest opportunity. In the circumstances, I feel that I should accept that and accordingly have reduced the sentence by approximately the maximum permissible to reflect the utility of the pleas of guilty". 20 In my opinion, the reference by his Honour to the "maximum permissible" was clearly a reference to the top of the range referred by this Court in its guideline judgment in R v Thomson and Houlton [2000] 29 NSWLR 383. This means that his Honour allowed "approximately" a 25 per cent discount in order to reflect the utilitarian value of the pleas in each case. 21 I do not consider that any criticism can be levelled at his Honour because of his reference to the principles stated in Markarian v The Queen [2005] 79 ALJR 1048. His Honour meant no more than that he did not propose to set out in his judgment a mathematical calculation of the way in which each of the factors (including the plea of guilty) were to be set against a notional non-parole period and a notional balance of term unaffected by those considerations. In addition, although it is desirable that the sentencing Judge express the precise nature of the discount, it is, as a general proposition, not mandatory to do so (Thomson at para 113 per Spigelman CJ). His Honour's approach was a permissible one and not inconsistent with decided authority. The applicant can have no cause for complaint since he was given the benefit of not merely a significant discount but a discount at the top of the range.

Ground 3 22 Here the applicant argues that the sentencing Judge erred in the ultimate sentence by failing to properly apply s 23(3) of the Crimes (Sentencing Procedure) Act 1999. This ground essentially involved the applicant in repeating all of the circumstances that were favourable to his case. This included previous good character, contrition, remorse, partial reparation and co-operation. The applicant's submissions suggest that the sentencing court was bound to suspend any sentence of imprisonment imposed on the offender. 23 Again, I am satisfied that there is no substance in this ground. The sentencing Judge made specific allowance for all of the matters mentioned in favour of the applicant. At ROS10.2 his Honour stated: - "He co-operated with the auditor's investigations to recover the misappropriated money. After he became a suspect in connection with count 7, he voluntarily acknowledged his involvement in other matters. Then he devoted considerable time and effort helping the investigator. This has been considered in his favour, bearing in the mind the matters set out in s 23. This entitles him to substantial leniency but not to the extent that the sentences are unreasonably disproportionate…I have taken into account his voluntary disclosure of offences other than count 7. But the facts are not akin to Ellis; R v Chan [2000] NSWCCA 345; R v Thwaites (unreported NSWCCA 6 October 1993)". 24 The proposition in this matter that the sentencing Judge was bound to impose a sentence of imprisonment suspended for two years has only to be stated to be rejected. There are undoubtedly some favourable features in the applicant's case but the applicant's extended dishonesty over a considerable period of time, coupled with the planning and deceit involved entirely warranted his Honour imposing a full-time custodial sentence and declining to order a suspended sentence.

Ground 4 25 This asserts that the sentencing Judge failed properly to take into account the medical evidence of Dr Bruce Westmore, a psychiatrist, in imposing a custodial sentence. 26 I have referred earlier to the evidence of Dr Westmore. Dr Westmore had made the diagnosis: "Adjustment disorder with depressive mood - this diagnosis is based predominately on his clinical presentation. He presented as a man with an intense, anxious and a near tearful affect and he also had a restricted subdued mood. I do not believe that he is suffering from a major depressive illness. His mood disturbance is occurring in response to identifiable psychological stressors". 27 These stressors, according to Dr Westmore, were the serious matters before the Court, the applicant's uncertain future and the impact these events had on him personally and on his family. Not surprisingly, Dr Westmore agreed during cross-examination that everybody who is charged with criminal offences suffers a change of emotion ranging from unhappiness and anger through to depressive illness. The psychiatrist confirmed, however, that the applicant here was not suffering from a major depressive illness. The sentencing Judge's findings were these (page 10 of ROS): - "After the offender was charged, he started experiencing mood disturbances such that he qualifies for a diagnosis of adjustment disorder with depressed mood. There is no evidence that he suffered from any mental illness at the time of the commission of the offences in 2001 and 2002…the adjustment order with depressed mood occurred in response to his being charged. There is no evidence that the adjustment disorder involves a major depressive illness. At the time of the offence in February 2005, it is likely that he was anxious and under stress because the 2001/2002 charges had not been resolved and the financial pressures on him and his family. His family were contributing to his legal fees. This stressed and embarrassed him. This explains but does not excuse the 2005 offence. The offender does not have an anti-social personality disorder". 28 The sentencing Judge accepted that the first two offences he committed may have arisen out of a sense of grievance that he was not being treated fairly in his employment. But after that time, the sentencing Judge found explicitly that his crimes were motivated by greed. His Honour also expressed concern, as well he might, that the 2005 offence was committed while the applicant was on bail. 29 In my opinion this was not a matter where the mental health of the applicant was such as to affect the objective gravity of the offence. There was no medical condition such as to warrant diminution of the principles of punishment denunciation and general deterrence. The applicant did not suffer from a major depressive illness so as to render him an unsuitable vehicle for either personal or general deterrence. His mental condition was not such that a custodial sentence might weigh more heavily upon him than other offenders so as to render a full-time custodial sentence inappropriate. (Regina v Israil [2002] NSWCCA 255 per Spigelman at paras 21-26) 30 In relation to the sentencing Judge's findings that psychotherapy was not available in gaol and that the applicant's reactive depression would mean that he would be probably vulnerable in gaol, these were matters that the sentencing Judge expressly took into account in the applicant's favour. Moreover, he found special circumstances on a number of basis, including the need for an extended period of parole to allow effective psychotherapy. 31 This ground has not been made out.

Grounds 5 and 6 32 It was asserted that the trial Judge erred in holding that he had no alternative but to impose a custodial sentence. This may be taken together with ground 6. This alleges that the sentence imposed upon the applicant was manifestly excessive. 33 The offences for which the applicant came to be sentences involved a very large sum of money. The offences were committed over a period of 14 months and involved separate and significant breaches of trust. Further the sentences had to reflect the additional 11 offences on the two Form 1 documents - (Attorney-General's Application under s 37 Crimes (Sentencing Procedure) Act 1999 [No 1/2002] [2002] 56 NSWLR 146; [2002] 137 A Crim R 180 paras 40-42 per Spigelman CJ). In relation to the 2005 offence, it is difficult to see why this was brought on a Form 1. This was a very serious offence indeed and committed at a time when the applicant was on conditional liberty. It was a planned and carefully arranged offence, which undermined the applicant's claim for contrition remorse and rehabilitation to a significant degree. 34 The earlier offences involve serious breaches of trust not only to the clients but also the employer. Although the applicant was not a solicitor, he was performing the duties of a solicitor and would have well understood the nature and function of a trust account in a solicitor's office. 35 The essential complaint of the applicant is that were a significant number of matters that needed to be taken into account in favour of his position. There is no need for me to list these matters because it is clear that his Honour took them into account and there is no suggestion that he failed to do so in the applicant's submissions. The applicant's essential submission is that he should not have received a fulltime custodial sentence or, that if one were imposed, it should have been suspended. 36 In my opinion, it was well open to his Honour to conclude that, notwithstanding all the favourable matters that were taken into account on behalf of the applicant, the need for appropriate punishment, retribution and aspects of both personal and general deterrence required the imposition of a fulltime custodial sentence. The applicant submitted the crime was committed "more out of naivety and stupidity rather than excessive greed and criminality". This submission flies in the face of the findings made by his Honour and in the face of the objective facts surrounding the offences. The earlier offences involve serious breaches of trust and deserve condign punishment. The later offence was committed in circumstances, which amounted to a serious abuse of conditional liberty. The facts of that latter event appropriately gave the sentencing Judge cause for concern in relation to the applicant's prospects of rehabilitation.

Ground 7 37 The applicant contends that the trial Judge erred in failing to take into account the delay between the time of the committing of the offences and the ultimate sentencing. 38 His Honour however, took the question of delay into account. At page 14 his Honour said: - "I have considered the delay in finalisation the matter and the anxiety this must have caused the offender to experience. This entitles him to some leniency." 39 The period of time from the commission of the first offence until the date of the detection was approximately 14 months. The delay between the detection of the offences and the police charging the applicant was less than a month. The delay in having the matter dealt with in the District Court was occasioned by the vacation of two trial dates. The first of these was granted on the application of the Crown and the second was granted on the application of the applicant. 40 I am not satisfied that the delay here worked in any way unfavourably to the applicant. Indeed, the delay enabled him to demonstrate a reasonably strong case for rehabilitation, despite the re-offending in 2005. In any event, the sentencing Judge did take into account that there had been a delay in the finalisation of the matter. 41 There is no substance in this ground. 42 In my opinion the applicant has failed to demonstrate error. In that situation, and no lesser sentence being warranted, the appeal should be dismissed. 43 I propose that leave to appeal be granted but the appeal be dismissed. 44 HOWIE J: I agree with Whealy J.

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