Criminal Law - Appeal and new trial - Appeal against sentence - Sentence manifestly excessive or inadequate - Computer-related fraud - $1.2 million stolen over 3½ years - Psychological illness.

Thompson v R [2005] WASCA 223; (2005) 157 A Crim R 385, referred to.

Judgment Number: [2010] TASCCA 21

2 The sentence of 7 years' imprisonment and the order for a non-parole period of 5 years are quashed.

3 In lieu of those orders, the respondent is sentenced to 6 years' imprisonment, with effect from 9 April 2010, and it is ordered that she not be eligible for parole until she has served 3½ years of that sentence.

1 This is a sentencing appeal. The appellant stole over $1.2 million from her employers over a period from 30 March 2006 to 30 September 2009. She was charged on 346 counts of computer-related fraud, contrary to the Criminal Code, s257B(c). She pleaded guilty to those charges in the Magistrates Court. Subsequently Tennent J sentenced her to seven years' imprisonment, and ordered that she not be eligible for parole until she had served five years of her sentence. The appellant contends that the head sentence and the non-parole period are both manifestly excessive.

2 The appellant worked for "Cradle Coast Water" in the administration and accounting area from July 1991 onwards. She had worked for that employer for over 14 years before her offending commenced. As from 1 July 2009, that employer's activities and staff were taken over by Tasmanian Water and Sewerage Corporation North West Region Pty Ltd, which trades as "Cradle Mountain Water". The appellant worked for that company from 1 July 2009 until her offending was detected. She was its cost controller and contract services officer.

3 The appellant made transfers and payments as follows:

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She made 57 transfers totalling $600,406.68, to her credit union account.

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She made 11 transfers, totalling $134,216.75, to joint housing loan accounts of her husband and herself. Those funds were used to repay a mortgage loan relating to one house, and to make reductions to the principal sum in relation to the mortgage over a second house.

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She made a transfer of $51,244.18 to a bank account of her husband.

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She made 24 transfers, totalling $110,753.62, to a bank account held by her sister.

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She made eight transfers, totalling $30,214.21, to a bank account held by her niece.

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She made four transfers, totalling $1,150, to building society and bank accounts held by a friend.

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She used $145,588.49 of her employers' funds to pay for 291 on-line purchases from eBay.

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She used $131,544.77 of her employers' funds to pay for 47 purchases from various suppliers.

4 The appellant misappropriated all the money by creating electronic files purporting to be for the payment of legitimate creditors. Each file listed the name of a creditor and an amount to be paid. On each occasion, the appellant obtained an authorisation for the payment, uploaded the file onto the computer to be scheduled for payment, then changed the details of the account to which funds were to be transferred, and then caused the transfer to proceed.

5 The learned sentencing judge characterised this as "a quite sophisticated means of fraud". I respectfully disagree. Before the days of computers, when businesses routinely made payments by cheque, it was very common for a fraudster to falsify the payee's name on a cheque butt so as to disguise a misappropriation. What the appellant did was the modern equivalent of that practice. Misappropriations were disguised as legitimate payments to the creditors of her employers. That involved a degree of sophistication but, in my view, a low degree of sophistication.

6 The appellant did not stop offending until she was caught. Her last dishonest transaction, which involved a misappropriation of $44,366.60, came to the attention of the employer's executive manager for commercial services some nine days afterwards.

7 It appears that the appellant started misappropriating money as a result of unhappiness in her marriage and associated depression. According to a report from a psychologist, she gained a sense of comfort and empowerment through being able to purchase goods and to be generous with friends. According to her counsel's plea in mitigation, she misappropriated money in order to make herself more happy, and to cheer herself up. She spent money on gifts for her husband, holidays with him, clothes and accessories for herself, dining, entertainment, a computer, and furniture. She paid a $5,000 deposit on a $70,000 vehicle, but did not pay the balance of the price or collect the vehicle. She provided financial assistance to her parents. She spent an extraordinary amount of money on toys. Police officers recovered 465 Beanie Kid toys and a quantity of dolls and display boxes, with an estimated total value of $9,000 to $10,000. The acquisition and retention of those items suggests a disturbed mind.

8 A significant prison sentence was called for in this case because of the following factors:

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The total amount misappropriated was $1,205,118.70.

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The appellant's criminal conduct extended over some 3½ years.

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Her criminal conduct involved 443 dishonest transactions. (There were fewer charges because some of the charges related to groups of transactions.)

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Her crimes involved breaches of trust. However it is significant that the appellant was an office worker, and not in a fiduciary position.

9 On the other hand, the following mitigating factors were relevant:

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The appellant was 36 years old when she was sentenced.

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She had no prior convictions.

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She was suffering from depression during the period of her offending. The misappropriations occurred because she was using her employers' money to try to overcome her depression. After her offending was detected, she accepted what she had done. Her psychologist reported that she had demonstrated catastrophic shame and remorse. She attempted suicide soon after getting caught.

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Her marriage came to an end soon after the detection of these crimes. She and her husband have a daughter who was 6 years old at the time of sentencing. The appellant had been the primary carer for that child. Family Court proceedings had been instituted in relation to that child, as well as property matters. A parenting agreement had been negotiated. It provided for the care of the child to be shared between the appellant's husband and her parents while she remained in custody. Since both of the appellant's parents had significant health problems, there was uncertainty as to the child care arrangements in the long term.

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The appellant co-operated with the police, and made admissions in an interview. However her admissions related only to the transactions then known to the police. At the time of the interview, on 16 October 2009, the known transactions totalled $345,935.40. That was less than 30 per cent of the total amount misappropriated.

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She was subsequently willing to be interviewed as to her other fraudulent transactions. (This fact was not mentioned by the learned sentencing judge in her comments.)

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She pleaded guilty to all charges in the Magistrates Court at a very early stage. However the case against her was very strong.

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At the time of sentencing, $127,856.80 had been recovered. This comprised $87,156.80 recovered from the appellant, and $40,000 paid by her husband on 19 October 2009.

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More money would be recovered. Restraining orders had been made under the Crimes (Confiscation of Profits) Act 1993 in respect of two residential properties. One of those properties, where the appellant's parents were living, was worth about $230,000 and unencumbered. The other was worth about $330,000, but subject to a mortgage securing a debt of about $280,000. Both properties were jointly owned by the appellant and her husband. He had applied to the Family Court for an alteration of property interests. The total equity in the two properties was about $280,000, but it was not possible to predict what orders might be made in favour of the husband. One significant factor in the Family Court proceedings was that the size of the couple's equities in the properties had been increased as a result of misappropriated money being paid to reduce the mortgage debts. Apart from the real estate, the dolls and other items seized by the police could be sold and the proceeds refunded. The appellant was willing to co-operate in every possible way to maximise the amount that could be recovered.

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The appellant had been in stable employment with the employers in question ever since she was a teenager.

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She had done voluntary work for a number of community organisations, including the Girl Guides.

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She was an accomplished sportswoman.

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In the six weeks that she had been in custody prior to sentencing, she had commenced courses to improve her education, and had begun work on a guide or manual to be provided to remand prisoners when they first come into the prison system.

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She was unlikely to re-offend.

10 Counsel provided the learned sentencing judge with information about sentences imposed in eight Tasmanian cases involving thefts or misappropriations of sums between $200,000 and $1.7 million since the late 1980s. Details of those cases and several others were provided to this Court on the hearing of the appeal. I think it is fair to say that those cases do not reveal any tariff for misappropriations of the magnitude of $1.2 million or thereabouts. Each case depends on its own facts, particularly on the nature of any position of trust occupied by the offender, whether the offender had any significant prior convictions, and whether the offender pleaded guilty or went to trial. Significantly in my view however, it seems clear that no one convicted of crimes of dishonesty in Tasmania for at least 25 years has received a sentence involving a non-parole period as long as five years. It also appears that in the last 25 years only three offenders have been sentenced to more than six years' imprisonment for crimes of dishonesty: R v Room, 25 August 1989 (8 years); R v Durovic, 12 February 1993 (8½ years); Tasmania v Pannala, 12 December 2008 (7 years, with 3 years suspended in lieu of parole).

11 After considering all aspects of this case, I have come to the conclusion that both the head sentence of seven years' imprisonment and the non-parole period of five years were manifestly excessive, particularly having regard to the appellant's mental state at the time of her offending, the fact that she pleaded guilty at a very early stage, and her lack of prior convictions. In my view the orders of the learned sentencing judge were disproportionate to the level of the appellant's criminality, serious though it was.

12 I would allow the appeal, quash the sentence of seven years' imprisonment and the related order as to parole, and substitute a sentence of six years' imprisonment with effect from 9 April 2010 and an order that the appellant not be eligible for parole until she has served three years six months of that sentence.

13 I have had the benefit of reading the reasons for judgment of Blow J. I agree with those reasons and with the orders which his Honour proposes.

14 The particular issue which persuades me that the sentence is manifestly excessive is the psychological state of the appellant during the course of her offending. The appellant was suffering from depression during this period, and the offending occurred as a result. The sentencing judge was provided with the report of a psychologist. Relevant parts of the report, about which there was no dispute, are as follows:

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the history indicated that the appellant was significantly depressed and unhappy in her marriage, "although that depression was probably never recognised and certainly not treated";

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the impression was that the "onset of offending occurred within the context of overwhelming depression arising from unhappiness in her marriage";

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obtaining the extra funds gave the appellant a sense of empowerment and the means to stimulate relationships, particularly that with her husband;

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the resort to repeated misappropriation of funds served a tension reduction and self-soothing function, and it became a "compulsive behaviour pattern characterised by the build up of tension that was reduced by depositing more funds with which to stimulate relationships".

15 As Blow J has noted, the psychologist reported that the appellant had demonstrated catastrophic shame and remorse. The psychologist also expressed the opinion that given the appellant's enrolment in university studies to improve her education, and her involvement with community activities, "much of the work of rehabilitation has already been done".

16 It is established that a psychiatric or psychological illness may be treated as a mitigating factor in sentencing: R v Tsiaris [1996] VicRp 26; [1996] 1 VR 398 at 400. The principle was explained by Steytler P in Thompson v R [2005] WASCA 223; (2005) 157 A Crim R 385 at [52] - [55]. The reasons for this approach are that persons suffering from such illnesses have a lesser moral culpability than those not suffering from a disability, and such persons should only be punished in accordance with their level of moral culpability. Moral culpability is lessened where there is a causal connection between the illness and the offending behaviour, in the sense that the condition contributed to the offending. Additionally, the weight to be given to the factor of personal deterrence, depends upon the nature and effect of the illness. The illness may be such that it affects the offender's ability to rationally analyse the likely gains from the crime against the prospect, and likely severity, of the punishment. If that be the case, there is little justification in affording that consideration the same measure of significance as it might have in the case of a well person. Similarly, as to general deterrence, the presence of a psychiatric or psychological disorder, may mean that the offender is not an appropriate vehicle by which to convey a message to the general community.

17 In my view, the moral culpability of the appellant is significantly lessened by the fact of her psychological illness which had a major contribution to her offending. It really only needs to be noted that after the offences were detected, police officers recovered a very considerable number of toys which had been stored away, and which included 465 of the one type of toy. As Blow J has said, "the acquisition and retention of those items suggests a disturbed mind". It seems to me that the psychological state of the appellant was given insufficient weight in the sentencing process.

18 I have read the reasons for judgment of Blow J. I agree with his reasons and the conclusion he has reached that the appeal should be allowed. I also agree with the reasons of Porter J. I wish to add some comments regarding an aspect of the appellant's personal circumstances and whether it amounts to a mitigating factor, and a brief remark about the order relating to parole.

19 The appellant has a six year old child, and, at the time of sentencing, was the primary carer of her child. Submissions made on behalf of the respondent urged this Court not to regard this as a matter in mitigation. The submissions drew the Court's attention to case-law regarding hardship which a sentence of imprisonment will have upon members of an offender's family, and referred to the principle that the court should not have regard to hardship upon a prisoner's family unless it is exceptional (Maslen and Shaw v R (1979) 79 A Crim R 199 at 209 per Hunt CJ, Boyle (1987) 34 A Crim R 202). The courts regard hardship to family as part of the price to pay for committing an offence: Boyle at 204 - 205, and McAree v Barr [2006] TASSC 37, Porter J, at par[21]. However, that principle does not squarely address the issue in this case. It was not contended on behalf of the appellant, either before this Court or before the learned sentencing judge, that the appellant's child would suffer exceptional hardship. The principle referred to is confined to the impact of a prison sentence upon an offender's family, and does not relate to the impact of a prison sentence upon an offender as a consequence of his or her family circumstances.

20 The appellant had had the primary care of her daughter for some years after her husband had moved to Launceston, at about the time the offending commenced, in early 2006. At the time of sentencing, the child was young and was at a formative stage of development. Care arrangements for her daughter had been made and put in place once the appellant was remanded in custody but, as noted by Blow J, these arrangements were somewhat uncertain in the long-term due to the ill-health of the appellant's parents. The report from the psychologist described the appellant as "most distressed" about the adverse impact of imprisonment and the separation that would entail for her daughter.

21 It is plain that as a consequence of the appellant's circumstances a gaol sentence would be a more severe penalty for her than for other offenders, and a lengthy sentence particularly difficult.

22 It has long been recognised that if imprisonment would result in hardship to an offender due to factors such as illness and physical disability, then that additional hardship or burden may be taken into account: Sentencing in Tasmania, Professor Warner, 2nd ed, 2002 at 3.524 and 3.701. The appellant's situation is analogous in my view. Due to the appellant's role as parent and primary carer, her sentence of imprisonment will be particularly burdensome.

23 This factor, labelled in one case "maternal deprivation" (Murray, Lynette Anne, Slicer J, comments on passing sentence, 25 April 1997) but which could equally be referred to as parental deprivation, is a factor that may be given some weight in mitigation depending on the particular circumstances of the individual case.

24 I conclude that this consideration is to be regarded as one of the factors in mitigation in this case. It could not alter the fact that a lengthy prison sentence was required due to the seriousness of the appellant's criminal conduct. However, the added burden that the appellant would experience in serving a prison term, given her role as parent and primary carer, was a factor that was deserving of some weight, and, in the circumstances of this case, warranted a less severe sentence than otherwise would have been imposed_._

25 For the reasons given by Blow J, I consider the sentence was manifestly excessive. A reduction in the head sentence and non-parole period is required. The crimes are not of such a nature that a lengthy non-parole period is needed (R v Corbett (1991) 52 A Crim R 112 at 117). In my view, the appellant's lack of prior convictions, the mitigating factors, particularly her psychological state at the time of offending and her good prospects of rehabilitation, warrant a substantial gap between the non-parole period and head sentence. I agree with the substituted sentence proposed by Blow J.