Merheb v R

JUDGMENT

1. MITCHELMORE JA: I agree with the orders proposed by Davies J and with his Honour's reasons.
2. DAVIES J: The applicant pleaded guilty in the Local Court to three offences as follows: Count 1: obtaining a financial advantage by deception contrary to s 134.2(1) of the Criminal Code (Cth). The maximum penalty for this offence is imprisonment for 10 years and/or a fine of 600 penalty units. Count 2: dealing with property reasonably suspected of being proceeds of crime contrary to s 400.9(1) of the Criminal Code. The maximum penalty for this offence is imprisonment for three years and/or a fine of 180 penalty units. Count 3: dealing in identification information contrary to s 372.1(1) of the Criminal Code. The maximum penalty for this offence is imprisonment for five years and/or a fine of 300 penalty units.
3. On 11 December 2023 Judge Hanley SC sentenced the applicant to an aggregate sentence of imprisonment for 3 years 6 months commencing 10 December 2023 and expiring 9 June 2027 with a non-parole period of 1 year 10 months expiring 9 October 2025. The indicative sentences, after a reduction of 40%, including 25% for the pleas of guilty, were as follows: Count 1: imprisonment for 3 years. Count 2: imprisonment for 9 months. Count 3: imprisonment for 18 months.
4. The applicant now seeks leave to appeal against the sentence on the following grounds: Ground 1: The learned sentencing judge breached the principle in De Simoni principle (sic) in regard to Count 2, by finding that it was reasonable to infer that the monies were the proceeds of a fraud related crime; and Ground 2: His Honour introduced into his deliberations evidence that was not before him, upon which no submissions had been made nor opportunity provided to the applicant to make submissions, giving rise to procedural unfairness.

The Offending

1. The applicant was sentenced on the basis of a very lengthy document consisting of a Statement of Facts with schedules containing details of various aspects of the offending. The sentencing judge summarised all of that material and the following is drawn from his Honour's summary.
2. On 5 May 2021 the National Recovery and Resilience Agency ("NRRA") was established and was responsible for a number of grants authorised to provide financial assistance to disaster-impacted individuals. That included assessing claims for and administering payments of disaster relief on behalf of both the Department of Home Affairs ("DHA") and the NRRA. Services Australia ("the Agency") was established as a new executive agency commencing 1 February 2020. The Agency was responsible for delivering social, health and other payments and services on behalf of the Australian Government and its departments, including assessing claims for, and administering payments of, disaster relief on behalf of DHA and the NRRA.
3. The Agency paid eligible customers directly to their nominated bank account. The Agency utilised a new identification confirmation process when dealing with new claims and required customers to establish their identity prior to providing approved original documents from a number of categories. Normal pre-grant identification confirmation processes did not apply to victims of major widespread disaster. Where payments have been granted during an emergency without sufficient identification documents, the identity must be confirmed and verified once the emergency period is over or within 12 weeks of receipt of a grant, or a further 12 week period which might be granted under extreme circumstances.
4. The Australian Government Disaster Recovery Payment was a specific purpose one-off payment made available to provide immediate short-term financial assistance to eligible Australian residents that had been adversely affected by a major disaster. The assistance was a one-off payment of $1000 per affected adult for each disaster declaration.
5. As a result of the COVID-19 pandemic, the Australian Government created two new income support payments to assist individuals affected by State and Territory government decisions relating to the pandemic. These payments were the COVID-19 Disaster Payment ("COVID-DP") for those whose income was affected by State and Territory governments' restrictions on movement or lockdowns, and the Pandemic Leave Disaster Payment ("PLDP") for those who had been directed to self-isolate or quarantine due to having COVID-19 or being a close contact of someone who was required to do so. Both of these programs were administered by the Agency on behalf of the NRRA.
6. In relation to the COVID-DP program, customers could make claims either by phone or online and could be paid before a customer completed full identification.
7. The objective of the PLDP program was to provide financial assistance to persons who were unable to earn income because they were required to remain in isolation or were caring for someone who was in isolation. Initially that involved a lump-sum payment of $1500 for each 14-day period the person had to isolate. Throughout 2021 and 2022 the amounts paid were varied by the government. Claimants were required to satisfy interim identity requirements in order to demonstrate eligibility for the payment.
8. The offending the subject of count 1 involved the applicant purporting to be a number of other people, and in each case alleging an entitlement to the payment either as a result of the New South Wales floods in 2021 or as a result of the COVID-19 pandemic. Count 1 consisted of a total of 33 disaster payment claims made by the applicant between 29 April 2021 and 11 February 2022 resulting in 45 payments totalling $43,800 made to five bank accounts in the applicant's name and control. All of the people the applicant claimed to be were real people who could be identified within the agencies. They were all subsequently contacted by the agencies and confirmed that they had made no such claim and did not know the applicant.
9. Count 2 involved deposits paid into eight bank accounts in the applicant's name and under his control. 21 of the deposits related to claims made under the applicant's Customer Reference Number ("CRN"). They were not subject to any charge. 45 of those deposits formed the basis for Count 1. The remaining 123 deposits, totalling $126,942.42, related to claims made to Centrelink under CRNs corresponding to 73 individuals.
10. For each deposit the applicant engaged in one or more subsequent transactions via internet transfers or cash withdrawals. A substantial number of internet transactions were from the initial destination account to another account of the applicant. During this period the applicant was the recipient of Jobseeker payments, and there were no other sources of income identified from his bank statements or declared by the applicant.
11. On 16 December 2021, a search warrant was executed at the applicant's residence. A silver iPhone 6 Plus and a black iPhone X were seized from the applicant's bedroom. The sim card was located and retrieved from the black iPhone X.
12. On 29 September 2022, the Agency gained access to the applicant's black iPhone X. The content of the phone included over 200 screenshots taken by the applicant of Snapchat conversations with a person with the username "Selina Saab".
13. 215 images of those conversations were analysed. 81 of them were considered as duplicates. The remaining 134 images contained information being capable of identifying 83 individuals. This identification information appeared to be sourced from databases in the holdings of the NSW Government, namely Services NSW and NSW Fair Trading.
14. The applicant was also found in possession of 33 images which contained identification information of 17 individuals. Those images were used to enable or facilitate the offending which is the subject of count 2. The payments received into the applicant's bank account for claims made purportedly by those 17 individuals was $31,300.
15. Count 3 related to 72 of the images which identified 48 individuals.
16. Selina Saab was an employee of Services NSW. The applicant's then partner introduced him to Ms Saab and the three of them became close friends. The sentencing judge referred to Ms Saab as recruiting the applicant to engage in the offending. She was also charged in relation to the offending.

Ground 1: The learned sentencing judge breached the principle in De Simoni in regard to count 2, by finding that it was reasonable to infer that the monies were the proceeds of a fraud related crime.

1. When the sentencing judge was discussing each of the offences, his Honour said in relation to count 2: I will take into account the offender has not been charged with fraud but that it is reasonable to infer the monies were the proceeds of a fraud related crime.

Submissions

1. The applicant submitted that he was charged with an offence contrary to s 400.9(1) of the Criminal Code. The applicant submitted that the statement made by the sentencing judge may be indicative of a breach of the principle in The Queen v De Simoni (1981) 147 CLR 383; [1981] HCA 31 at 389. In written submissions on this appeal the applicant said that the statement appears to reflect the standard of recklessness or that the applicant had some knowledge or belief about the proceeds. In oral submissions, the applicant's counsel submitted that negligence might have been the standard referred to. The applicant submitted that the sentencing judge made the remark without qualifying it so as to clarify that his Honour was not making a finding as to the applicant's mens rea because absolute liability applies to the elements in s 400.9(1)(b) and (c), with the result that there is no fault element and no requirement to prove any knowledge or belief on the part of the accused that the money was the proceeds of crime.
2. The applicant also pointed to the sentencing judge's acceptance of matters which the Crown had submitted showed that the applicant must have suspected from the outset of his offending that the money was proceeds of crime.
3. The applicant submitted that the offence contrary to s 400.9(1) is part of Division 400 which creates a hierarchy of offences in relation to money laundering. The hierarchy is reflective of the varying levels of knowledge and therefore culpability in regard to the respective offences. The different maximum penalties reflect the seriousness within the hierarchy of offences. The applicant submitted that the lower level of maximum penalty of 3 years' imprisonment for an offence against s 400.9(1) and the absence of a requirement to prove knowledge or belief on the part of the accused reflect that the offence is a less serious one than any within that Division.
4. The applicant submitted that the sentencing judge did not refer to the principle in De Simoni in his remarks on sentence whereas counsel for the applicant said to the sentencing judge: And even though it would give us the impression that there may have been other offences for which the offender has not been charged with, we need to be mindful of the De Simoni principle.
5. The applicant submitted that the sentencing remarks did not reflect that his Honour was reminding himself that the applicant pleaded to the offence in count 2 pursuant to s 400.9(1) which does not impute any knowledge or belief on the part of the accused. The applicant submitted that absent such a reference, it cannot be argued that the remarks on sentence are reflective of his Honour taking special care to avoid the potential for a De Simoni error, or seeking to maintain clearly the distinction between the offence contrary to s 400.9(1) and the more serious offences such as those which rely on recklessness.
6. The applicant submitted that a fair reading of the remark of the sentencing judge leads to a reasonable inference that his Honour appears to have averred a standard of recklessness or negligence. The applicant submitted that the matter did not fall within the definition of negligence in the Criminal Code.
7. The applicant submitted that if this Court was satisfied that the sentencing judge may, even inferentially, have had regard in some way to a recklessness or negligence standard, even though the elements of the more serious offences pursuant to s 400.4(2) or (3) were not specifically referred to, the Court would find that the sentencing judge had fallen into De Simoni error.

Consideration

1. Section 400.9(1) of the Criminal Code provides: A person commits an offence if: (a) the person deals with money or other property; and (b) it is reasonable to suspect that the money or property is proceeds of crime; and (c) at the time of the dealing, the value of the money and other property is $100,000 or more. Penalty: Imprisonment for 3 years, or 180 penalty unit, or both.
2. Section 400.4(2) provides: A person commits an offence if: (a) the person deals with money or other property; and (b) either: (i) the money or property is proceeds of crime; or (ii) there is a risk that the money or property will become an instrument of crime; and (c) the person is reckless as to the fact that the money or property is proceeds of crime or the fact that there is a risk that it will become an instrument of crime (as the case requires); and (d) at the time of the dealing, the value of the money and other property is $100,000 or more. Penalty: Imprisonment for 10 years, or 600 penalty units, or both.
3. Section 400.4(3) provides: A person commits an offence if: (a) the person deals with money or other property; and (b) either: (i) the money or property is proceeds of indictable crime; or (ii) there is a risk that the money or property will become an instrument of crime; and (c) the person is negligent as to the fact that the money or property is proceeds of indictable crime or the fact that there is a risk that it will become an instrument of crime (as the case requires); and (d) at the time of the dealing, the value of the money and other property is $100,000 or more. Penalty: Imprisonment for 4 years, or 240 penalty units, or both.
4. The definition of "negligence" is found in s 5.5 as follows: A person is negligent with respect to a physical element of an offence if his or her conduct involves: (a) such a great falling short of the standard of care that a reasonable person would exercise in the circumstances; and (b) such a high risk that the physical element exists or will exist; that the conduct merits criminal punishment for the offence.
5. The provenance of the sentencing judge's impugned remark is clearly from written submissions of the applicant to his Honour which relevantly said: [17] Though one can infer that the $126,942.42 was reasonably the proceeds of a fraud related crime, for the purposes of this offence, the offender has not been charged with $126,942.42 worth of fraud. One must be cautious to ensure that there is no breach of the Di (sic) Simoni principle.
6. The Crown, in her submissions to the sentencing judge said in relation to count 2: While it was not possible to establish that each of these other claims was false, it was reasonably suspected that they were having regard to the circumstances of the claim and the receipt by the offender.
7. The Crown also, rather unfortunately and unnecessarily, said in written submissions to the sentencing judge: 29. While absolute liability applies to this offence in terms of the mental element, the Crown submits the offender must have suspected from the outset of his offending that the money was proceeds of crime. a. The offender was not employed at the time of the offending evidenced by the fact that he was in regular receipt of JohSeeker (sic) payments, and no other income was identified from his bank statements. b. Nonetheless, his multiple bank accounts received on average over $2,000 a week from Centrelink, the reference numbers contained within the descriptions of those transactions suggested the benefits were meant for 73 individual Centrelink customers, and for various types of benefits Centrelink offers. c. The deposits from Centrelink as a result of his own offending in Count 1 were delivered to the same accounts held by the offender. d. As paragraph 243 of the facts identifies, the offender was found in possession of 33 images which contained identification information of 17 individuals; these individuals' Centrelink customer numbers were shown in the transaction descriptions in the deposits onto the offender's bank account which is the subject of Count 2.
8. Although the sentencing judge set out this passage verbatim, and said that he accepted that the matters identified were relevant in the exercise of assessing the objective seriousness of the offending, his Honour did so after saying immediately beforehand: The amount of money the offender dealt with was not insignificant, being $126,942.42. It is subject to a charge under s 400.9(1), which is the third of four in the hierarchy of "reasonable (sic) suspected" money laundering offences.
9. The essence of the complaint now made by the applicant is that when the sentencing judge said "it is reasonable to infer the monies were the proceeds of a fraud related crime", his Honour was not speaking of the physical element of the offence but was inferring something about the mental element, and that mental element must have been recklessness or negligence. In that way, the De Simoni principle must have been breached.
10. In my opinion, a reading of the sentencing judge's remarks as a whole discloses no breach of the De Simoni principle by virtue of the impugned remark or otherwise. First, the sentencing judge twice referred to the offence charged as being contrary to s 400.9(1) of the Criminal Code, the second reference being during the discussion of count 2. His Honour referred to the correct maximum penalty and when reciting the facts for count 2 (sequence 34) his Honour headed that portion of the judgment "Sequence 34 Reasonably suspected proceeds of indictable crime".
11. Secondly, when discussing sequence 34, the sentencing judge said at the outset: While the Crown conceded it is not possible to establish each of these other claims was false, it was reasonably suspected they were having regard to the circumstances of the claim and the receipt by the offender.
12. Thirdly, having just made his second express reference to s 400.9(1), the sentencing judge said: While absolute liability applies to this offence in terms of the mental element,…
13. Fourthly, as noted earlier, the impugned statement (at [21] above) was contained in the applicant's submissions to the sentencing judge and simply adopted by his Honour. The applicant naturally does not suggest that he intended "reasonable to infer" in his submission to be a reference to the mental element. It is difficult, therefore, to understand how this Court should view those words as an inference by the sentencing judge about the mental element.
14. Finally, it is not without significance that his Honour assessed the objective seriousness of the offending for count 2 to be within the midrange, yet the undiscounted indicative sentence for that count was imprisonment for 15 months against a maximum penalty of imprisonment for 3 years. When regard is had to the maximum penalties for offences involving negligence (4 years) and recklessness (10 years), the indicative sentence does not suggest in any way that his Honour took into account an aggravating factor which constituted a more serious offence.
15. I would reject this ground.

Ground 2: His Honour introduced into his deliberations evidence that was not before him, upon which no submissions had been made nor opportunity provided to the applicant to make submissions, giving rise to procedural unfairness.

Remarks on sentence

1. When discussing prospects of rehabilitation and likelihood of reoffending, the sentencing judge said this: There is no evidence of him taking those steps towards rehabilitation needed to address his gambling issue that he suggests was a principal factor in motivating his offending. He says in his letter to the Court his partner is helping him however advises he participates in online gaming competitions and in April 2023 participated in a video gaming convention for 3 days in which he won "a small amount for my attendance and success". My understanding is that these types of competitions involve a form of gambling. He claims Dr Dayalan will continue to assist him in his gambling addiction. There is no evidence of when and how this occurs or whether he has been advised or is attending programs such as the 12 Step Gambling Anonymous program that is free, and readily available in the community at numerous locations or online on a daily basis. Dr Dayalan opines: "There are limitations to prediction of any form of human behaviour as it involves a complex interplay between individual and environmental factors. A professional opinion based on the existing knowledge of risk factors associated with recidivism has been offered as requested in the instructions. In considering the various factors associated with risk of reoffending such as prior criminal history, psychosocial support, relationship status, employment, accommodation, financial circumstances, educational attainment, peer association, substance use problems, current mental state, and personality factors, I would regard Mr Merheb to pose a low to moderate risk of offending." The last assessment is consistent with the Sentencing Assessment Report author who assessed him as a 'Medium-Low" risk of re-offending. Despite my reservations about his addressing his gambling addiction I am prepared to make a guarded assessment of his prospects of not reoffending. I accept there are positive factors in his life that should ensure he does not, but I am concerned about his past failure to comply with court orders or address his gambling that he claims is a serious addiction. (emphasis added)

Submissions

1. The applicant submitted that the italicised sentence introduced into the sentencing judge's deliberation evidence that was not before him, that is, whether the video gaming convention involved a form of gambling. Although in the applicant's written submissions emphasis was placed on s 144 of the Evidence Act 1995 (NSW), that aspect of the complaint was abandoned at the hearing of the appeal. The ground was put on the basis of a denial of procedural fairness.
2. The applicant submitted that the sentencing judge failed to provide him with the opportunity to make a submission in relation to the matter of whether the applicant was continuing to gamble. That was said, in turn, to lead to the finding that an assessment of the applicant's prospects of not reoffending was guarded.
3. The applicant submitted that if this Court found that a consideration of his prospects of rehabilitation and his risk of reoffending was influenced in some way by an irrelevant matter, that would constitute an error of the type described in House v The King (1936) 55 CLR 499.

Consideration

1. In Weir v R [2011] NSWCCA 123, Garling J (with whom Macfarlan JA and Johnson J agreed) said: [64] It is clear that an offender is entitled to procedural fairness during criminal proceedings, including proceedings on sentence: Pantorno v The Queen (1989) 166 CLR 466 at 472-3 per Mason CJ and Brennan J, 482-483 per Deane, Toohey and Gaudron JJ; Parker v DPP (1992) 28 NSWLR 282; Baroudi v Regina [2007] NSWCCA 48; Button v Regina [2010] NSWCCA 264. [65] The particular form which procedural fairness dictates may vary. That is because the content of the requirement of fairness may be affected by what is said and done during the proceedings: Re Minister for Immigration & Multicultural and Indigenous Affairs; ex parte Lam (2003) 214 CLR 1 at [34] per Gleeson CJ. Here the relevant process was the sentencing of Mr Weir by King DCJ in circumstances where, the applicant contends that, King DCJ indicated the sentence that he proposed to impose. [66] The key to determining whether there has been a breach of the requirement of procedural fairness is to ascertain the consequence of any departure from the dictates of proper procedure because what is ultimately in issue is whether unfairness has resulted from the process: See Lam at [34]. The concern of the law is to avoid practical, and not merely theoretical, injustice: Lam at [37]. [67] One common basis for demonstrating that practical injustice and unfairness has occurred is where an individual has lost the opportunity to make submissions to the decision maker in opposition to a proposed course and in support of a course which he urges: Lam at [36]; Button at [18].
2. In Smith v R [2024] NSWCCA 59, Basten AJA (Adamson JA and Wilson J agreeing) said: [42] …The limit to the principle that procedural unfairness invalidates a judgment was expressed in Stead v State Government Insurance Commission in terms that "a properly conducted trial could not possibly have produced a different result". In Re Refugee Review Tribunal; Ex parte Aala Gaudron and Gummow JJ rejected the proposition that "trivial" breaches of the requirements of procedural fairness would not invalidate a decision. [43] Shortly after Aala, Gleeson CJ explained in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam that the purpose was to avoid "practical injustice". That principle has now emerged as a requirement of "materiality"; in Hossain v Minister for Immigration and Border Protection the joint reasons of the majority stated: "Ordinarily, as here, breach of a condition cannot be material unless compliance with the condition could have resulted in the making of a different decision." [44] Accordingly, it is not to the point that a different decision may have been "open"; once it is found that the breach was "material", that is, it was a factor affecting the outcome, it cannot be disregarded unless the conclusion reached by the judge was inevitable. (citations omitted)
3. The evidence about the applicant's gambling addiction at the time of sentence was somewhat limited. The applicant did not give evidence at the sentence hearing. Rather, he wrote a letter to the Court apologising for his offending. In that letter he said this: In my spare time, I participate in gaming competitions and conventions which would involve playing alongside other gaming users across Australia. In or about April 2023, I had the opportunity to participate in a video gaming convention in Melbourne for a period of 3 days. I confirm that I succeeded in the gaming convention and won a small money prize for my attendances and success. Since the time of my arrest, I have also strengthened my family ties by choosing to reside with my family at the family home in Mount Pritchard. This has allowed my parents and sister and wife to keep constant supervision over me should I have a momentary lapse and resort to gambling. I say that this arrangement has been positive, and I have since attended to a consultation with Dr. Dayalan, who is and will continue to be my treating Psychiatrist to address the gambling issue and other mental health issues which he has identified in his report prepared for the Court. (emphasis added)
4. The applicant's partner also wrote a letter to the Court in which she said: I say that after I entered Salim's life, I have been a positive influence on him, and we have since grown closer to one another and we confide with each other. I would not tolerate Salim gambling and I have told Salim this.
5. Dr Dayalan, in his report, diagnosed the applicant with (inter alia) "problem gambling behaviour that is currently in early stages of remission". Dr Dayalan went on to say: Mr Merhab will need to consult a psychiatrist to discuss treatment options for attention deficit hyperactivity disorder. The options include psychiatric medications and psychological treatment to improve the symptoms and his functioning. He will also need to engage in a rehabilitation program to minimise the risk of relapse into gambling. Effective management of his ADHD will also assist him in abstaining from gambling. His prospects of engaging in vocational training will improve if his attention deficits are effectively treated.
6. The Crown, in written submissions to the sentencing judge, said: There is currently no evidence before the Court to suggest that the offender is taking active steps in addressing his gambling issue.
7. Nothing was said in the applicant's written or oral submissions to the sentencing judge about his gambling problem apart from a reference to what Dr Dayalan said generally about the applicant's risk of reoffending (set out in the extract from the remarks on sentence at [44] above).
8. On the basis of that evidence and those submissions, the sentencing judge made the remarks set out at [44] above.
9. The evidence disclosed that the applicant's partner would not tolerate his gambling, that his gambling was in the early stages of remission but that he would need to engage in a rehabilitation program to minimise the risk of relapse. What the evidence did not disclose was whether the plaintiff had not gambled since his arrest. His letter said only that his family was able to supervise him "should I have a momentary lapse and resort to gambling".
10. The sentencing judge's finding that there was no evidence of his taking steps to address his gambling issue was supported by the evidence. His Honour then went on to refer to Dr Dayalan's conclusion that the applicant was at low risk of offending, and to the view of the author of the Sentencing Assessment Report ("SAR") that he was at "Medium-Low" risk of offending. His Honour then said: Despite my reservations about his addressing his gambling addiction I am prepared to make a guarded assessment of his prospects of not re-offending. I accept there are positive factors in his life that should ensure he does not, but I am concerned about his past failure to comply with court orders or address his gambling that he claims is a serious addiction.
11. The failures to comply with court orders was a reference, mentioned earlier by the sentencing judge, to the applicant having committed the index offences whilst subject to a Community Correction Order, and to having breached his bail for the index offences by driving whilst his licence was suspended.
12. The impugned remark made by the sentencing judge was unfortunate and should not have been made. However, there is nothing in the remarks on sentence generally that suggest that his Honour's assessment of the applicant's prospects of reoffending was informed by the remark made. That assessment only qualified the assessment from Dr Dayalan and the author of the SAR by the word "guarded", and that was because of the applicant's past failures to comply with court orders and to address his gambling addiction. Whether or not the applicant had gambled at the gaming convention made no difference to the fact that he had done nothing from the time of his arrest on 5 May 2022 to 11 December 2023 when he was sentenced, to address his gambling addiction.
13. There was no practical injustice that flowed from the sentencing judge's remark: Weir at [66]. In that way the inclusion of the remark in his Honour's reasons was not material, and the remainder of his Honour's remarks demonstrate clearly that it was not a factor affecting the outcome, that is, the finding on the prospects of reoffending: Smith at [44].
14. I would reject this ground.

Conclusion

1. I propose the following orders: 1. Grant leave to appeal. 2. Dismiss the appeal.
2. IERACE J: I also agree with the orders proposed by Davies J and his Honour's reasons.

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