Prehn v R [2003] TASSC 55

R v Schwabegger [1998] 4 VR 649; R v Todd [1982] 2 NSWLR 517; R v Law, ex parte Attorney-General [1995] QCA 444; [1996] 2 Qd R 63, applied.

Respondent: Commonwealth Director of Public Prosecutions

Judgment Number: [2003] TASSC 55

2 The recognizance release order made on 12 August 2002 is varied to provide that upon entering into a recognizance in the sum of $10,000 to be of good behaviour for a period of two years from the date of release, the appellant be released from prison after having served three years of the imprisonment.

1 I agree with the reasons for judgment prepared by Crawford J and with the orders which he proposes.

2 The appellant pleaded guilty to 28 counts of being knowingly concerned in a company doing an act with the intention of defrauding another person, contrary to the Corporations Law, s592(6). The offences were committed over a period of about three years from June 1995 to June 1998. The learned sentencing judge observed that the maximum sentence prescribed for each count was 2 years' imprisonment and said that he was obliged to impose a penalty on each count, at the same time having regard to the totality of the criminal conduct over all counts. His Honour did not consider that he should draw a significant distinction between the counts, except perhaps that the later ones were more serious than the earlier ones because they indicated a persistence in wrongful conduct for a long time.

1 A sentence of one year's imprisonment on each of counts 1 - 7, to be served concurrently with each other and to commence on 7 August 2002.

2 A sentence of 18 months' imprisonment on each of counts 8 - 14, to be served concurrently with each other but to commence at the expiration of the sentences imposed on counts 1 - 7.

3 A sentence of 18 months' imprisonment on each of counts 15 - 21, to be served concurrently with each other but to commence at the expiration of the sentences imposed on counts 8 - 14.

4 A sentence of two years' imprisonment on each of counts 22 - 28, to be served concurrently with each other but to commence at the expiration of the sentences imposed on counts 15 - 21.

4 The cumulative effect of the sentences was a total of six years' imprisonment. The learned judge ordered under the Crimes Act 1914 (Cth), s19AB, that upon entering into a recognizance in the sum of $10,000 to be of good behaviour for a period of two years from the date of release, the appellant was to be released from prison after having served four years of the imprisonment.

5 The appellant has appealed against the sentences, arguing that in total they were manifestly excessive, particularly having regard to:

(a) his pleas of guilty, with consequent saving of trial time;

(d) his good character, before and after the offences;

(e) the unexplained delay by the Director of Public Prosecutions for 18 to 20 months in bringing the matter before the Court for sentence in August 2002, following the appellant's indication in October 2000 that he would plead guilty; and

(f) his co-operation with investigating police and with the Director in the presentation of a statement of facts to the sentencing court.

6 The appellant and his wife were the sole shareholders of Joachim Prehn Insurance Services Pty Ltd. He was the managing director and for practical purposes, his acts and the company's acts were synonymous. His wife was not actively involved in operating or managing the company's affairs. He commenced the business in 1989. Initially it was successful and traded normally. It was an agent of National Mutual Life Association of Australasia Ltd and an authorised representative of National Mutual Financial Planning Ltd. It advertised and promoted those companies and their products, such as life insurance policies, annuities, managed investment schemes and fixed term and at call cash accounts. By means of his company, the appellant gave financial advice and made investments on behalf of clients.

7 In 1990 the appellant bought another business. Due to his solicitor's neglect, the contract contained no restraint of trade clause. He embarked upon some ill-fated litigation that all went wrong and he sued his then solicitors. Although it was accepted that it was all very stressful for the appellant, harmed his productivity, and made him depressed, the learned judge did not see that his litigious problems were a mitigatory factor in the sentencing process.

8 In December 1994, the appellant started gambling with substantial sums of money. A bookmaker in Vanuatu allowed him substantial credit for a betting account. Before long he was a pathological gambler. He placed bets with the Vanuatu bookmaker, local bookmakers and a TAB agency. He also invested in a pyramid scheme. In June 1995, as agent of his company, he committed the first of the 28 offences, each of which involved intentionally defrauding clients. Most of them were retirees, or other people who depended upon their capital for day to day living. Instead of investing their funds that were entrusted with his company with instructions for investment, he misappropriated them to his personal use or the use of the company. Most of it was spent to pay gambling losses.

9 The learned judge referred to the amounts involved as staggering. The 28 counts concerned cheques entrusted with the appellant and his company to a total value in excess of $1.9 million and of that sum, more than $1.7 million was misappropriated. Fortunately for the clients, none of them suffered a permanent loss, because the successor to National Mutual, AXA, made good the losses, including interest not earned on money intended for investment. The learned judge was informed that the appellant's company had repaid nearly $700,000 with little chance of more in the future. Some of the repayments had come from commissions earned by the company and received over the passage of time. Counsel for the Crown said that a fairly large proportion of the total repaid had in fact come from misappropriated moneys to which some of the offences related. In other words, Peter had been robbed to repay Paul.

10 It was pointed out by prosecuting counsel that the offences extended over a three year period and only came to an end upon detection.

11 Counsel for the Crown conceded to the learned judge that there had been a delay by the prosecution in proceeding with the case against the appellant. Detection of an offence first occurred in about mid-1998, after a complaint was made to National Mutual. On 4 September 1998, the Australian Securities Commission commenced an investigation. A series of interviews with the appellant took place in September or October. Although he made some important admissions, he was in a state of denial and made a number of untrue statements. On 11 February 2000, a complaint was issued. On 5 June 2000, the appellant pleaded not guilty to the offences charged in the complaint. He did not dispute the making of a committal order, but required the taking of depositions of witnesses. That process commenced on 4 October 2000. After the depositions of two witnesses had been taken, he decided not to require those of other witnesses. An order was made committing him for trial in the Criminal Court and he was remanded to appear in that court for the first time on 13 November 2000.

12 On 4 October 2000, at the conclusion of the committal process, the appellant's legal practitioner indicated to the Crown that he would plead guilty, although not to the charges laid in the complaint. There first needed to be resolved some outstanding issues, notably the precise offences that would be charged in the eventual indictment and particulars of them. Thereafter, virtually nothing was done about the case in the office of the Director of Public Prosecutions for about 20 months, until June 2002, by which time the appellant's legal practitioner was pressing for expedition. The case then proceeded quickly, leading to the filing of the indictment on 6 August 2002 and the pleas of guilty being entered and submissions made the following day. The sentences were imposed on 12 August 2002.

13 It was acknowledged by prosecuting counsel that the pleas of guilty were entitled to some mitigatory effect. They had saved the necessity for a trial it was estimated would have taken at least four to six weeks to conduct and a number of elderly and ill people, no doubt clients of the appellant who had been defrauded by him, had been relieved of the ordeal of having to travel from their homes in Burnie to Hobart and give evidence. Over the last two months or so prior to the sentencing hearing, there had been co-operation between the appellant, through his counsel, and the Director's office, leading to the settlement of an agreed statement of facts.

14 Counsel for the appellant conceded to the learned judge that the offences were grave, involving breaches of trust and large amounts of money. The appellant had no prior convictions. He was sentenced the day before his fifty-sixth birthday. He had been involved in a range of community activities that included Greening Australia, Community Land Care and soccer. He had a passion for farming. He was a State Emergency Service volunteer. At about the time of detection in 1998, his company lost its agency with National Mutual and he and his wife separated. Subsequently he moved from the Burnie area to the east coast and since February 2000 he had been employed as a coach captain for a bus company. On 31 January 2000, the Australian Securities and Investments Commission made an order under the Corporations Law permanently banning him as a dealer and investment adviser.

15 Counsel for the appellant explained to the learned judge that the appellant had been in a state of denial and could not accept that his conduct was wrong, until on 4 October 2000, when he heard the first two of a likely 20 witnesses give evidence at the committal proceedings. His attitude to what he had done suddenly changed with tears and with him calling an abrupt halt to the committal process. He instructed his counsel not to oppose committal and to indicate that he would plead guilty. His counsel informed the Director's office accordingly, but at the same time maintained, probably correctly, that the charges had not been appropriately drawn and would need to be redrafted for the indictment. It was on that day, 4 October 2000, that the appellant dramatically demonstrated remorse and contrition for the first time and his feelings in that regard had continued ever since, counsel said.

16 Thereafter, he appeared in the Criminal Court on remand on 10 occasions prior to the sentencing hearing on 7 August 2002. On each occasion he travelled from Swansea to Hobart to answer his bail. His counsel explained that throughout that period, he frequently telephoned in an endeavour to ascertain what, if any, progress was being made. In April 2002, he was becoming particularly concerned about the delay in resolving his case and he asked for it to be brought on for hearing. On 10 April, his counsel wrote to the Director's office seeking an indictment. It was not until about June that the Director's office commenced to do anything about the prosecution of the case for the first time since October 2000.

17 It was submitted to the learned judge by the appellant's counsel that while the delay had continued since October 2000, the appellant's life had been on hold. He had already started a new life and obtained employment. He had met a woman and was considering the prospect of marriage. (It would have been his fourth.)

18 In his comments on passing sentence, the learned judge said:

"Your criminal conduct can be categorised as sustained and deliberate. It was entered into and persisted with to satisfy your pathological urge to gamble. Each crime was a grave breach of trust committed against those who could ill afford to lose their money. I have carefully considered your counsel's submission and read all the material he gave me, but there is little in it to mitigate against sentence.

I take into account your plea of guilty and the fact that by it, you have saved the State considerable time and money presenting a case against you. I take into account that you have co-operated in the presentation of your plea of guilty. I also take into account the fact that the prosecuting authorities delayed, without excuse, for a period I estimate to be in the order of 18 to 20 months in bringing this matter to the Court for sentence. However, such delay occurred after you had been committed for trial and therefore has less significance than delay that occurs between the commission of the offence and arrest, or between arrest and prosecution, during which times an offender has been in the process of self rehabilitation."

19 Counsel for the appellant did not attempt to persuade this Court that the learned judge made an identifiable error in the sentencing process, except to impose sentences that were manifestly excessive in their total effect. She pointed to factors that she submitted were mitigatory. It is unnecessary to deal with most of them at length, because they are well known as mitigating factors. They include that at the age of 55 years he had no record for offences, other than those for which he was to be sentenced. There was no reason to doubt that he had been well regarded in the community and had given service to it in a number of respects. He had led an industrious life up until the commission of the offences. Since 4 October 2000, he had displayed remorse, an acceptance of responsibility for the offences and a willingness to facilitate the course of justice. See Cameron v R (2002) 187 ALR 65 at 68. On that date he indicated that he would plead guilty and once the indictment had been filed, containing charges for offences he admitted, he promptly pleaded guilty.

20 Two matters that were submitted to be in the appellant's favour were his age and his claim that he had ceased gambling on his own accord. I do not think that either of them should have had a significant influence on the sentence. The age of 55 was not so advanced that it required special consideration. See Cobiac v Liddy [1969] HCA 26; (1969) 119 CLR 257 at 265. His cessation of gambling was not a consideration that demanded a lesser penalty, notwithstanding that most of the money he fraudulently misappropriated had been applied to his pathological gambling habit.

21 An issue that occupied much of counsel's submissions to the Court concerned the mitigatory value of the delay of the prosecuting authorities, for what the learned judge estimated to be in the order of 18 to 20 months, in drafting and settling the indictment, between the order for committal in October 2000 and the eventual filing of the indictment in August 2002. Delay between the commission of an offence and final disposition of a case is not per se mitigating, but it may work in favour of an accused if it is not attributable to the fault of the accused. As stated in R v Schwabegger [1998] 4 VR 649 at 659, the investigation and prosecution of criminal conduct should be conducted as quickly as is reasonably practicable and a legitimate sense of unfairness can develop when the criminal justice system proceeds in what can be perceived as too leisurely a fashion. Weight can be given to evidence of rehabilitation demonstrated by the accused in the meantime and to the circumstance that he or she has been left in a state of uncertain suspense as to what would happen when in due course he or she came up for sentence for crimes committed some years before, in this case between four and seven years before. If the relevant delay is significant, it may amount to a powerful mitigatory factor in an appropriate case. R v Schwabegger at 660; R v Todd [1982] 2 NSWLR 517 at 519 - 520; R v Law, ex parte Attorney-General [1995] QCA 444; [1996] 2 Qd R 63 at 66. "Passage of time between offence and sentence, when lengthy, will often lead to considerations of fairness to the prisoner in his present situation playing a dominant role in the determination of what should be done in the matter of sentence; at times this can require what might otherwise be a quite undue degree of leniency being extended to the prisoner." R v Todd at 519 - 520.

22 In this case, I am satisfied that the appellant was entitled to some benefit as a consequence of the undue delay that took place, although it was not so long and its effects, particularly of unfairness, were not so great that he was entitled to what might be described in other circumstances as a quite undue degree of leniency.

23 It is difficult to discern a sentencing range in this State for offences of the nature committed by the appellant. Based on my knowledge and experience gained as a judge in criminal courts, and in this Court, it is my assessment that the total head sentence of six years' imprisonment was not manifestly excessive, although I think it was on the high side and that one of five years' imprisonment would also have been unassailable. In making that assessment I have had regard to the criminality of the accused and in particular to the number of crimes, the period over which they extended, the large amount of money that was fraudulently misappropriated, the fact that most of it will never be recovered and the circumstances of the persons from whom he took the money, notwithstanding that in that last regard, they were reimbursed by AXA, which ultimately must bear the loss. I have also had regard to all the mitigating factors to which I have referred. I am particularly of opinion that a head sentence of five or six years was not inappropriate, having regard to the need for a sentence of general deterrence. Crimes and offences of this nature committed by financial advisers against trusting members of the public, who depend on the funds entrusted to the accused for their living, are becoming more common, although I acknowledge that may at least partly have been brought about by an increase in the numbers of such advisers in the community.

24 At the time of sentencing on 12 August 2002, the effect of the Corrections Act 1997 (Tas), s68(1), on a sentence imposed for a crime or offence under State legislation, was that a sentence of six years' imprisonment would have been subject to a non-parole period equal to one half of the term, unless the sentencing judge made an order under the Sentencing Act 1997 (Tas), s17(2), extending the non-parole period or barring parole altogether. (Amendments by the Sentencing Amendment Act 2002 (Tas), affecting those provisions did not take effect until 1 October 2002.) If the appellant's offending acts, that are the subject of the offences in this case, had instead been charged under State law as crimes under the Criminal Code (Tas), an overall head sentence of five or six years' imprisonment would also have been appropriate and unassailable on appeal. It would normally have been expected in such a case, at the time of the sentencing orders in this case, that in all the circumstances, having particular regard to the appellant's age, his lack of prior offending and his apparent remorse and rehabilitation, that an order under s17(2) would not have been made and the usual non-parole period of half the sentence would have applied. It is my view that there ought to be consistency between sentences imposed in Tasmania for State and Commonwealth offences, where the circumstances allow for it. I conclude that the appellant has a justifiable sense of grievance concerning the pre-release period set in this case. It was approximately equivalent to the basic non-parole period, without an order to the contrary being made under Tasmanian legislation, that in the usual case of an offender without prior convictions, was likely to have applied to an eight year sentence of imprisonment for white collar crime. When viewed in that light, the length of the four year pre-release period in this case was manifestly excessive.

25 I would allow the appeal to a limited extent by varying the recognizance release order so that it provides for the appellant to be released after having served three years' imprisonment from 7 August 2002. In fixing that period, I have had regard to s19AG that requires, when calculating the pre-release period, that account be taken that the period will not be subject to remission under the Tasmanian sentencing laws. I have also taken into account all of the relevant factors to which I have referred in these reasons.

26 I agree with the reasons for judgment of Crawford J, and with the orders he proposes.