Khoury v R

Judgment 1BATHURST CJ: I have had the advantage of reading the judgments of Adams J and R A Hulme J in draft. 2I agree with R A Hulme J that Messrs Nehme and Bayeh were engaged in the same criminal enterprise as the applicant. However, as each of Adams J and R A Hulme J have said, nothing turns on this fact. 3Subject to that matter I agree with the reasons of Adams J. I also agree with the orders with which he proposes. 4ADAMS J: Introduction 5The applicant was sentenced on 8 February 2013, having pleaded guilty to two offences as follows - Count 1 - That on 27 March 2009, with intent to obtain a financial advantage for Chanti Pty Limited, he made a false statement to the Office of Fair Trading in relation to the sale of consignment vehicles contrary to s 178BB(1) of the Crimes Act 1900 (NSW) (now repealed which carried a maximum penalty of 5 years imprisonment). A Form 1 matter was taken into account in relation to this count (giving another false statement on 9 April 2008). Count 2 - That between 6 October 2008 and 23 April 2009, being a director of Chanti Pty Limited, trading as "European Car Specialists", he did defraud persons in their dealings with that company contrary to s 176A of the Crimes Act 1900 (now repealed, which carried a maximum penalty of 10 years imprisonment. In respect of count 1, taking into account the Form 1, he was sentenced to a term of 12 months' imprisonment commencing on 8 February 2013 with a non-parole period of 6 months. In respect of count 2 he was sentenced to a term of imprisonment of 3 years and 6 months with a non-parole period of 2 years to commence on 8 August 2013. 6Sentenced at the same time as the applicant were two of his employees, Najib Nehme and Danny Bayeh each of whom had pleaded guilty to a single count of being an accessory after the fact to the applicant's count 2 offence, carrying a maximum term of imprisonment of five years. Neither Nehme nor Bayeh was sentenced to a term of imprisonment. Bayeh was sentenced to a bond under s 9 of the Crimes (Sentencing Procedure) Act 1999 (NSW) to be of good behaviour for 3 years; Nehme was sentenced to a bond under s 9 to be of good behaviour for 2 years and additionally ordered to pay $40,000 compensation. 7The applicant seeks leave to appeal against his sentences on two grounds. The first ground is that he has a justifiable sense of grievance arising out of the sentences imposed upon Nehme and Bayeh, and the second ground that the applicant's sentences are manifestly excessive when his bad health, as revealed in fresh evidence admitted on the appeal, is taken into account. Facts 8The facts were agreed for the purposes of sentence. The following account is largely taken from the learned sentencing judge's account of them. The offences occurred in connection with a car dealership known as European Car Specialists operated by Chanti Pty Limited (Chanti), of which the applicant was the sole director and shareholder. Nehme was the "dealer principal" of the firm, Bayeh was the applicant's nephew and the general manager of the firm. Each were employees acting under the direction of the applicant in respect of their offences. The applicant's offences occurred in connection with the sale of nine vehicles on the consignment, Bayeh and Nehme being involved after the event in four of the nine transactions. 9There were two groups of victims, the first being the owners who left their cars under consignment for sale at an agreed amount and the second the people who bought (other) cars which had been consigned for sale but which were subject to third party financing encumbrances of which they had no knowledge and were not informed when they bought the cars. As to the first group, the cars also were encumbered to financial institutions which were to be paid out and the balance accounted for to the owners on sale, but this was not done. The applicant's role in the nine transactions was to decide that the proceeds of sale would not be paid to the owners (or to the financiers) but be diverted to other purposes of the company. 10So far as the transactions in which they were involved were concerned, Bayeh and Nehme assisted the applicant by making false assertions to customers about the progress of the sales, which delayed the detection of the applicant's frauds. In respect of the offences in count 1 and on the Form 1, the applicant was required as a licensed motor dealer to operate a trust account, and lodge a licensing annual statement and an auditor's report about the operation of the trust account with the Department of Fair Trading if he sold any cars on consignment. Chanti did not operate a trust account. On both 10 April 2008 and 1 April 2009 the applicant, as director of Chanti, lodged the licensing annual statements, each stating that no cars had been sold on consignment during the previous 12 months. Each statement was false and made with the intent of obtaining the financial advantage of not having to deposit the proceeds of the sales of the consignment cars into a trust account. 11It is not necessary to detail how each of the frauds occurred; essentially, the applicant simply pocketed the proceeds of sale. The total sum appropriated by the applicant amounted, on the sentencing judge's calculations, to approximately $1.3 million. It is necessary, however, to specify the acts alleged against Nehme and Bayeh separately. One of the cars brought in for sale on consignment was a Ferrari which was purchased by Nehme for $50,000 less than the $650,000 minimum sale price, the applicant appropriating the purchase price. Nehme did not tell the owner that he had bought the car and, in an email to him after he had bought it implied the car was still unsold and there was a potential buyer. The car was returned to its owner by police in due course. Nehme's next act as accessory after the fact occurred when he told a victim who had brought in a BMW for sale on consignment some three months after it had been sold to another person and the proceeds taken by the applicant, in effect that the vehicle was still unsold and requested a payout figure, ultimately telling the victim that the car had been sold and the balance outstanding would be repaid to the financier which, of course, did not occur. The victim discovered the fraud when another monthly payment was debited from his account. The third transaction in respect of which Nehme was an accessory after the fact involved a Mercedes consigned to the firm for sale. When the owner saw that his car was no longer on the lot (having been sold by Nehme but the proceeds not accounted for by the applicant) he became suspicious and asked Nehme for his car back until the buyer was ready to complete the purchase. Nehme told him there was a buyer willing to place a $50,000 deposit on the car but needed finance and that the car was in storage. Some three months after it had been sold he told the owner it had been sold and that payment to the owner's financier would be finalised. The owner made enquiries on the due date but was, in effect, brushed off, though it is not said this was by Nehme. Lastly, Nehme was an accessory after the fact to the applicant's fraud in relation to the sale on consignment of a Lexus. When the owner contacted Nehme about two weeks after the vehicle had been sold, he told her the buyer was waiting for finance, in effect, putting her off. After a week, the owner began calling Nehme but did not make contact until about two weeks later when Nehme said he would call her back. He did not do so and, when the victim went to the dealership the following week, she was met by the liquidators. The proceeds of the sale were taken by the applicant. 12So far as Bayeh is concerned he told the owner of a vehicle placed with the applicant on consignment a week or so after it was sold that he had a buyer who was organising finance and the vehicle was in storage pending the sale, obtaining documents from the owner based on that false statement and sending emails having the effect of putting her off. In the second transaction involving him, after a Mercedes Benz placed with the applicant's firm on consignment was sold Bayeh made statements to the owner over a number of days, in effect putting him off about the sale which was for less than the owner had agreed. Thirdly, he purchased a vehicle placed on consignment and did not tell the owner, whom he saw on a number of occasions, that he had bought the car and had encumbered it to a financier in order to enable him to do so. Lastly, a vehicle on consignment was sold but the owner put off by Bayeh with various excuses about the purchaser needing finance and making a number of excuses as to why the sale price was not forthcoming. The applicant had taken the money realised from these sales and not accounted for it to the owners. Comparative culpability 13The accessories did not obtain any of the proceeds of sale. As identified by counsel for the applicant in this Court, Mr Wendler, the only benefit they obtained was that their employment lasted longer than it otherwise would have because the money was used to prolong the life of the business, from which the applicant, as the learned sentencing judge said, derived status and an income. The sentencing judge rejected the evidence of the applicant that he did not tell his employees to lie to the car owners or the buyers and did not believe that he involved them in his offending behaviour. However, her Honour accepted that the applicant also had the interests of his employees in mind by enabling the business to continue. Mr Wendler accepted (as was at all events apparent) that not only was the applicant the one who profited but the employees acted under his direction as the instigator of the offences. Furthermore, Bayeh at 38 years and Nehme at 35 years of age were both significantly younger men. 14Mr Wendler submitted that the applicant could not have successfully achieved his frauds without the connivance of the employees who dealt with the customers involved in the nine transactions, putting them off when they made enquiries about their vehicles. He submitted that Nehme and Bayeh were, in substance, co-offenders with the applicant and almost as guilty as he was. Subjective cases 15The sentencing judge accepted that the applicant's business was affected by the global financial crisis in mid to late 2008 and sales decreased dramatically with a consequence that he found it difficult to pay loans he had obtained to expand the business and continue paying his employees. He was also very depressed as a result of his marriage having ended in 2007 and he was diagnosed with major depression with alcohol and marijuana abuse. Her Honour accepted that to some extent these factors affected the applicant's thinking and decision making at the time of the offences. Her Honour also accepted that the applicant was a man of good character who had lost his business. He had made a substantial contribution to the work of a charity for which he performed volunteer work. He was remorseful and ashamed of his offences. The offences were out of character and he had good prospects of rehabilitation and was unlikely to reoffend. 16Bayeh and Nehme were also of good character whose prospects for rehabilitation were good. Parity 17The circumstances of the present case do not call for any discussion of the authorities dealing with the issue of parity. They were helpfully (if I may say so with respect) set out in Jimmy v R [2010] NSWCCA 60; (2010) 77 NSWLR 540 by Campbell JA at [53] and following. Of particular point in this case is the observation by Howie J as follows - "[245] The principle of parity should not be confined to a consideration of the sentences imposed upon co-offenders in the strict sense, that is persons involved in and charged with the very same crime. There is nothing in the decisions of the High Court that so confine it. Where the courts have stated that the principle of parity applies only to co-offenders, it has usually been in situations where the applicant has sought to use the principle for an illegitimate purpose by seeking to compare the sentence imposed upon the applicant with a sentence imposed upon another offender who was not engaged in the offence committed by the applicant. [246] The principle, whether it is called parity or proportionality or relativity between sentences, should be applied to bring about a just result in the sentences imposed upon persons who have been engaged in the same criminal enterprise regardless of the charges that have actually been laid against the offenders. However, I agree with Campbell JA that the principle is subject to the limits stated in [203] of his judgment." 18It seems to me that a difficulty here for the applicant is that neither Nehme nor Bayeh were "engaged in the offence committed" by him or, "engaged in the same criminal enterprise". Although, as a matter of fact, the delaying tactics undertaken by Nehme and Bayeh prevented the early disclosure of the applicant's offences, and to that extent perhaps facilitated them, they were not participants in his fraudulent conduct. I would not go so far as to state that the sentences imposed on Nehme and Bayeh are, in principle, incapable of giving rise to issues of parity but it is not necessary to decide this point in light of the conclusion I have drawn about the outcome of the appeal so far as this ground is concerned. 19In my view, the objective circumstances of the applicant's offences together with his instigating the accessorial offences committed by Nehme and Bayeh demonstrate such a marked difference in criminal culpability that, accepting the principles of parity apply, the difference in dispositions between the applicant on the one hand and Nehme and Bayeh on the other was well open to the sentencing judge in the exercise of her discretion. Bayeh and Nehme were not parties to the frauds of the applicant. What they did put off the time for his obligation to account. It is of considerable significance that the offence committed by Bayeh and Nehme carried a maximum term of half of that applying to the principal offence for which the applicant was sentenced. Furthermore, the number of offences to which they were accessories was less than half the number committed by the applicant. There is no reasonable basis for the applicant to have a justifiable sense of grievance arising out of the sentences imposed upon Nehme and Bayeh. Accordingly, I would dismiss this ground of appeal. The applicant's medical condition 20No suggestion of any heart problem had been raised in the sentencing proceedings, although the applicant had been experiencing shortness of breath for some months. An increase in this symptom after incarceration led to the applicant's being referred to a cardiothoracic surgeon, Dr Kumud Dhital who operated on him on 16 August 2013 after a chest x-ray and subsequent CT scan confirmed a severe aortic regurgitation (leaking of the aortic valve) with associated enlargement of the ascending aorta and an enlarged heart. He needed further surgery a few days later to repair a complication arising from this major cardiac surgery. The resilience of the heart to a leaky aortic valve may initially give rise to no signs or symptoms, which develop as the leak gets worse, as in the applicant's case. Dr Dhital reported that the enlarged aorta was likely to have been present for several years. Indeed, the accompanying murmur should have been obvious on routine clinical examination for quite some time prior to February 2013. 21The affidavits relating to the applicant's medical condition were tendered in accordance with the course conveniently stated in Iglesias v R [2006] NSWCCA 261 at [10] per McClellan CJ at CL (with whom Hulme and Hall JJ agreed), that where a medical condition which existed at the time of sentencing has later been found to be extremely serious, fresh evidence about it may be received and, in appropriate circumstances, cause this Court to intervene and resentence. 22So far as future care is concerned, Dr Dhital noted that the applicant had several ongoing medical issues - (i) hypertension which requires medication and regular review by his general practitioner; (ii) he has a mechanical aortic valve that requires life-long and careful anti coagulation (blood thinning) with daily Warfarin therapy. A lapse in appropriate control can lead to devastating consequences, namely that of bleeding if the blood is too thin and clotting with malfunction of the valve if the blood is not thin enough; (iii) he is known to have mild-to-moderate leak of his mitral valve that needs timely surveillance, with a clinical examination and echocardiography (6 monthly initially). Similarly his enlarged left ventricle also requires regular checkups; (iv) he remains under surveillance for his past diagnosis of bladder cancer; (v) he needs regular review of his polymyalgia rheumatica to determine the dosage of steroids he, needs to be on. Chronic steroid use also needs regular checkups to assess the presence and degree of problems that may arise from such therapy; (vi) his diagnosis of obstructive sleep apnea also will require surveillance. 23Dr Dhital expressed the opinion (though, as he candidly admitted, he was not "wholly knowledgeable" about the quality of medical care in prison), that the applicant is "more likely to receive better, timely, targeted and individualised care if he were to be out of prison". 24The applicant relied on an affidavit which criticised the quality of his care in prison but this was contradicted by reports of Dr Jacques Ette and Dr K Suresh Badami of the Justice Health & Forensic Mental Health Network, responsible for the applicant's medical care. I am unpersuaded that the applicant's care is inadequate to any material degree although I readily accept that it is a matter of anxiety for him that he cannot consult a doctor when he feels he needs to. It seems to me that the Court should proceed on the basis that he will be treated in accordance with the high duty of care assumed by the State by virtue of his imprisonment. 25The question thus arises whether the applicant's period of incarceration would be more onerous than it was considered to be when he was sentenced and, if so, whether any reduction in his sentence or, at least the non-parole period, is justified. As will have been noted from the summary of Dr Dhital's prognosis, essentially the problems (self-evidently considerable) from which the applicant suffers do not of themselves make his imprisonment significantly more onerous in a physical sense. The applicant's non-parole period was reduced on the basis of a finding by the sentencing judge that his psychiatric condition would make his experience of custody more difficult. I am not persuaded that the applicant's anxiety about his medical condition renders his incarceration significantly more onerous than was thought by the sentencing judge to be the case. Conclusion 26I propose that leave to appeal be granted and the appeal dismissed. 27R A HULME J: I differ with Adams J only insofar as his Honour regards Messrs Nehme and Bayeh as not being "engaged in the same criminal enterprise" as the applicant. There was only one criminal enterprise (defrauding customers of the applicant's business) and Messrs Nehme and Bayeh were involved in it, albeit in a different way to the applicant. 28However, as Adams J has pointed out, nothing turns on this. The criminal culpability of Messrs Nehme and Bayeh was at a level so far below that of the applicant's that, viewed objectively, the applicant could not be regarded as having a legitimate sense of grievance about the disparity of the sentences: Green v The Queen; Quinn v The Queen [2011] HCA 49; 244 CLR 462 at [31]. 29I agree with the orders proposed by Adams J.