R v Burke

COUNSEL : Mr Paul Roberts SC for the Crown Mr Alex Shand QC for the Applicant SOLICITORS : Mr S E O'Connor for the Director of Public Prosecutions James Fuggle Solicitors for the Applicant CATCHWORDS : Criminal Law - appeal against severity of sentence - fraudulent misappropriation - where applicant pleaded guilty - where applicant cooperated with authorities - whether reimbursement by third party is a relevant consideration - how "fresh evidence" is to be taken into account on a sentencing appeal Crimes Act 1900, s178BA, s300 LEGISLATION CITED : Crimes (Sentencing Procedure) Act 1999, s21A, s22, s22A, s23, s32 Criminal Appeal Act 1912, s6 Barrick (1985) 7 Cr App R (S) 142 Hall (NSWCCA, 28 September 1995, unreported) Hawkins (1989) 45 A Crim R 430 Henry (1999) 46 NSWLR 346 Houghton [2000] NSWCCA 62 Kessey [2001] NSWCCA 469 Machtas (1992) 62 A Crim R 179 McKechnie (NSW CCA, 1 October 1987, unreported) CASES CITED: Newey (NSWCCA, 23 August 1990, unreported) O'Neil (NSWCCA, 24 July 1996, unreported) Phelan (1993) 66 A Crim R 446 R v Birks (1990) 19 NSWLR 677 Simpson [2001] NSWCCA 534 Siganto (1998) 194 CLR 656 Tooth [2001] NSWCCA 407 W [2001] NSWCCA 172 Webb [1971] VR 147 Woodman [2001] NSWCCA 310 DECISION : Application for leave to appeal granted; Appeal dismissed.

• 1 -IN THE COURT OF CRIMINAL APPEAL 60014/02

Giles JA Levine J Sperling J

Thursday, 29 August 2002 R v Burke Judgment 1 Giles JA: I agree with Sperling J. 2 Levine J: I agree with Sperling J. 3 Sperling J: On 16 November 2001, Kerry John Burke (the applicant) appeared for sentence in the District Court at Lismore before Ducker DCJ, having pleaded guilty to 39 charges of fraudulent misappropriation under s 178BA of the Crimes Act 1900 (NSW) and 11 charges under s 300(2) of the act. 4 The charges under s 178BA of the Crimes Act were all in the following form: [O] n or about [date] at Tweed Heads in the State of New South Wales, the defendant did, by deception, namely representing to [named person] that the sum of $x would be invested in [mortgage, trust etc.] dishonestly obtain for KJ Burke and Associates Pty Ltd [or KBA Financial Services Pty Ltd] a financial advantage, namely the use of the sum of $x. 5 The charges under s 300(2) of the Crimes Act were all in the following form: [O] n or about [date] at Tweed Heads in the State of New South Wales the defendant did use an instrument, namely [particular letter, form or document] which was and the defendant knew to be false, with the intention of inducing [particular person or entity] to accept the instrument as genuine and, because of that acceptance do some act to another's prejudice, namely [particular act relating to $x] , to the prejudice of [particular person or entity] . 6 The maximum penalty for an offence under s 178BA is five years imprisonment and, under s 300(2), ten years. 7 The charges were originally laid by investigators of the Australian Securities and Investment Commission (ASIC), hence the involvement of the Commonwealth Director of Public Prosecutions. 8 Ducker DCJ sentenced the applicant separately on each of the charges to produce an overall term of imprisonment of ten years (commencing from 2 October 2001) and an effective non-parole period of seven years and six months. 9 The applicant now applies for leave to appeal against the sentences imposed on grounds which include that the sentences are manifestly excessive.

Facts of offences 10 During the period spanned by the charges, namely February 1994 to June 2000, the applicant operated as an investment adviser and, for part of the time, also as an insurance broker. He operated his business through a company called KJ Burke and Associates Pty Limited which changed its name to KBA Financial Services Pty Limited ("KBA") on 18 April 2000. KBA operated from premises in Tweed Heads. Over the years, the applicant was a proper authority holder for MLC Limited (1991-93), Financial Wisdom Limited (1993-98) and Security Financial Planning Pty Ltd (1998-2000). 11 In addition to investment advising and insurance broking, the applicant was engaged in a variety of businesses, again operated through company structures. 12 All of the charges arise out of the applicant's dealings with his investment clients. Clients entrusted the applicant with money to invest, usually in relatively safe investments, such as Bankers Trust, Asgard or first mortgages on property. None of the monies which were the subject of the s 178BA charges were so invested by the applicant, despite his written assurance to the clients. Instead the monies were diverted to the applicant's own use and deposited into an account operated by him at the Commonwealth Bank (under the name of KBA). Many of the clients whose funds were misappropriated were elderly and/or retired people. Some 26 investors were involved. 13 The total amount of monies diverted by the applicant which are the subject of the s 178BA charges is $4,490,563. 14 The s 300(2) charges relate to unauthorised withdrawals by the applicant of funds which were properly invested. The total amount concerned in these charges is $923,150. These monies were again used by the applicant for his own purposes. 15 The offences came to light following complaints about the applicant in early 2000 which ultimately led to an investigation of his affairs by ASIC. The applicant was interviewed by ASIC investigators in April 2001. The applicant admitted to misappropriating about $5m of clients' funds and that, substantially, the misappropriated funds were used for the purposes of other businesses with which he was connected. 16 Tendered in the sentence proceedings was a liquidator's report to creditors of the applicant and his various companies. In that report the liquidator, Mr Phillip Jefferson said (at AB 126): Mr Burke appears to have treated all companies in the group as his "alter ego". Monies were deposited and transferred between companies and assets were transferred between entities (including Mr Burke and the various companies) without any proper consideration.

Sentencing of the applicant 17 The applicant was 41 years of age when sentenced. 18 In his remarks on sentence, Ducker DCJ was critical of the number of charges that had been laid. His Honour said that the matter could have been presented more efficiently using the procedure laid down in s 32 of the Crimes (Sentencing Procedure) Act 1999. 19 His Honour summarised the offences as follows (AB 19-20): [T] he common factor in all fifty offences, committed over a period of slightly in excess of six years, is the gross breach of trust by the offender. By betrayal of trust, blatant deceit, ruthless dishonesty, forgery, fraud, countless lies and other devious methods, the offender set about using his occupation as a financial adviser and later insurance broker, to embark upon a pre-meditated course of gravely serious criminal misconduct involving multiple acts of shameful dishonesty, the overall effect of which was to squander over five million dollars entrusted to him by his unfortunate clients. Their money was spent on his own business ventures, ostentatious living and, there is a very strong suggestion, unsuccessfully in the main, punting on racehorses. 20 His Honour referred to previous convictions for dishonesty. In 1985, at the District Court at Newcastle, the applicant was convicted of 18 counts of larceny as a clerk, one count of embezzlement, two counts of making a false statement, six counts of destroying records as a clerk and 12 counts of falsifying records as a clerk. The applicant was placed on a recognizance to be of good behaviour for six years and also ordered to serve 300 hours of community service. A term of the recognizance was that he repay $17,000. 21 His Honour said that he took into account the applicant's pleas of guilty in determining the sentence by discounting the sentence he would otherwise have imposed by twenty per cent. His Honour noted, however, that conviction, for most of the offences, would have been inevitable. 22 His Honour said that he made no allowance for remorse or contrition as he found that the applicant exhibited neither. 23 His Honour referred in detail to the personal hardship suffered by many of the investors who had lost money. Many were elderly people. Some had been forced to change their lifestyle because of the loss. 24 His Honour said that he was structuring the sentences for the individual offences taking into account the totality principle. His Honour further said: I have come to the view that any term of imprisonment of less than ten years duration would be inadequate to reflect the measure of criminality involved in this series of premeditated offences by this offender over a period of six years and the profound effects upon the victims of his gross betrayals of trust. 25 In relation to the non-parole period, his Honour said:

I find that there are no special circumstances by reason of which the usual ratio between non-parole and head sentence should be varied, except for charge 17 and 29. The special circumstances consist of the imposition of other sentences and the need created thereby for a shortened non-parole period that will allow a sufficient period for the offender to be on parole, bearing in mind the total term of imprisonment imposed. 26 His Honour structured the non-parole periods to produce an overall non-parole period which was 75 per cent of the overall term of imprisonment.

Grounds of appeal 27 The following grounds of appeal are as stated in the applicant's written submissions: 1. That His Honour erred in that insufficient weight was given to the plea of guilty. 2. His Honour erred in that insufficient weight was given to the cooperation shown by the Appellant to the investigating authorities. 3. The Appellant's subjective case was not fully or adequately put before the Sentencing Judge. 4. The Sentencing Judge erred in placing weight on the fact that indemnity insurance was not in place in relation to the Appellant's activities and that the victims of the Appellant's offences lost their investments. 5. That the Sentencing Judge erred when His Honour took into consideration in relation to sentence "there is no such fund for people holding themselves out as financial advisers" and "it seems there is no licence required". 6. The Sentencing Judge erred by placing excessive weight on the principle of deterrence. 7. The head sentence imposed by His Honour was manifestly excessive and some other sentence is warranted in law. 8. In the alternative it is submitted that the Sentencing Judge erred when he failed to find "special circumstances". The non-parole period imposed by the Sentencing Judge was manifestly excessive and some other sentence is warranted in law. Counsel for the Appellant will seek leave to tender further subjective material at the hearing of this appeal. 9. It is submitted that the prosecution by proceeding against the Appellant on all 50 counts unfairly prejudiced the Appellant. It is submitted that the Crown unfairly prejudiced the Appellant by not utilising the provisions of Section 32 of the Crimes (Sentencing Procedure) Act 1999. It is further submitted that the appellant has received a more severe sentence by reason of the manner in which the Counts were presented by the Crown. 10. The Sentencing Judge erred in that he took into consideration "ostentatious living" by the Appellant when there was little evidence to support this view. 11. The Sentencing Judge erred in that he failed to consider the Appellant's contrition and remorse as a mitigating factor in relation to sentence. 12. The Sentencing Judge failed to take into account the $457,000 repaid by the Appellant. [There is no Ground 13.] 14. The Sentencing Judge erred in giving excessive weight to the Appellants prior conviction. 28 I will not deal with the grounds of appeal precisely in that order, holding Grounds 7 and 8 over to the end.

Ground 1: That his Honour erred in that insufficient weight was given to the plea of guilty. 29 The sentencing judge said that a discount of 20 per cent should be allowed for the plea of guilty. He said that he made no allowance for remorse or contrition as he did not believe the applicant had any, and that the allowance related solely to the objective assistance provided to the criminal justice system by the plea of guilty albeit made in the face of overwhelming evidence. His Honour was entitled to find that the applicant had no remorse or contrition, and to see the plea of guilty as material only as to utilitarian value; no error in that respect has been shown. The applicant submitted that the overall sentence did not reflect the utilitarian value. Taking this as complaint that the 20 per cent was inadequate, in my opinion in the circumstances of this case it was a proper allowance.

Ground 2: That his Honour erred in that insufficient weight was given to the co-operation shown by the applicant to the investigating authorities. 30 The applicant co-operated in the ASIC investigation, producing documents readily, and submitted to an interview in which he readily admitted the facts on which the charges were later based. The applicant submits that a discount should have been allowed in addition to the discount for the plea of guilty. 31 There is no statutory provision for such a discount as in the case of a plea of guilty. Section 22 of the Crimes (Sentencing Procedure Act) 1999 relates to a plea of guilty. Section 23 relates to assistance to law enforcement authorities, but that is assistance which aids the apprehension and/or conviction of other offenders. 32 A full confession and co-operation with the investigating authorities from the start does not entitle an offender to a discount over and above the discount for a plea of guilty. Such behaviour may be relevant in other ways, such as being evidence of contrition in conjunction with other evidence. As I have said, the sentencing judge declined to find contrition. The applicant's co-operation and admissions were in the face of overwhelming evidence of his offending, and I do not think that he erred in failing to regard it as evidence of contrition. 33 The applicant invoked s 22A(2) of the Crimes (Sentencing Procedure) Act 1999 which provides that a court may impose a lesser penalty on an offender who has been tried on indictment having regard to the degree to which the defence has made pre-trial disclosures for the purposes of the trial. This provision has no application where there has not been a trial.

Ground 3: The applicant's subjective case was not fully or adequately put before the sentencing judge. 34 There was no evidence that any deficiency in the applicant's evidence before the sentencing judge was due to any act or omission on the part of counsel representing the applicant at the sentencing hearing. In submissions this was expressly put forward as a ground of incompetence of counsel within the principles considered in R v Birks (1990) 19 NSWLR 677. The applicant relied on affidavits said to show that there was a failure fully or adequately to put the applicant's subjective case because of counsel's incompetence. The Crown objected to the affidavits on the ground that they did not show this and were irrelevant. We ruled that they did not show it and declined to receive the affidavits. I do not think that relevant incompetence of counsel should be found apart from the affidavits. There is no basis for this ground.

Ground 4: The sentencing judge erred in placing weight on the fact that indemnity insurance was not in place in relation to the applicant's activities and that the victims of the applicant's offences lost their investment. 35 There was no mention of repayment or of insurance in the statement of facts tendered at the sentencing hearing. 36 The sentencing judge was referred by the Crown Prosecutor (Tr 9) to the record of interview in which (Tr 10) the applicant said that nothing remained of the misappropriated funds. The Crown Prosecutor went on to say that "no reparation was offered in this case or no moneys that have been repaid to the investors by Mr Burke". His Honour was also told that nothing would be available out of the applicant's corporate interests either (Tr 9). The Crown Prosecutor then said: Your Honour I should say, I suppose I should say at this point that one of the investors, the Blackburns, have taken civil action under a professional indemnity insurance policy that was carried by Mr Burke, and they've recovered their investment, their principal amount, I understand, of $150,000, but that was as a result of civil legal action they had to undertake themselves. There are prospects that perhaps other investors may take the same course, but there's no certainty of that your Honour. 37 The Crown Prosecutor went on to explain to the judge that the insurance to which he referred was - as he understood it - in favour of the applicant's principals, Financial Wisdom Pty Limited and Security Financial Planning Pty Limited. 38 The applicant gave the following evidence at the sentencing hearing (Tr 59-60): ROSSER: Q. Regarding the feeling about the investors, were you aware of any insurance coverage that they had? A. As an authorised representative, clients are covered under professional indemnity insurance up to a minimum of $10 million, and that coverage was in place during the time up until I believe 5 January of last year, when no professional indemnity insurance would cover anyone.

Q. So what is your belief are the indemnity situation then regarding the clients that you had? A. My belief is that the clients that may take the course of civil action, against the professional indemnity insurer may be paid out.

HIS HONOUR: Q. But the contracted insurance was yours, was it? A. The company that holds the securities licence has, on behalf of its authorised representatives hold coverage for negligence as far as advice is concerned.

Q. But negligence would not necessarily cover criminal defalcation? A. It is my belief that it does, your Honour.

ROSSER: Q. You heard the matter raised about Mr Blackburn? A. Yes.

Q. Were you aware that he'd been paid out? A. No, I was not.

HIS HONOUR: Well, what is the situation that these various people that have been referred to, the various victims of these charges, have any of them received any money since the proceedings began?

WALSH: Only the Blackburns thus far, your Honour. If others take action they may receive some, but they have to initiate their own legal action.

HIS HONOUR: There's no fidelity fund such as there is for solicitors for financial advisers?

WALSH: No. It's a matter of them claiming on their indemnity policy. 39 His Honour reviewed the evidence of misappropriations. He referred to the losses sustained by the applicant's clients in those instances. He added (Tr 11): There is nothing that this Court can do to restore the situation of those who have lost so much. There is a faint suggestion that a few may recover something from some form of insurance. In any event, whilst that might alleviate the suffering of some, it means that insurance companies lose that amount of money. So, the suggestion that, because there may be an insurance company behind a few of the victims, a more lenient view ought to be taken, I reject. 40 This observation was not seriously divergent from the evidence. It failed to recognise an insurance payment to the Blackburns, but that was not a material error in the context of the total amount involved. His Honour was entitled to take the view, on what was before him, that a likelihood of further recoveries was not established. 41 I will set out the relevant legal principles here in greater detail than is necessary to evaluate the sentencing judge's approach on the material before him. These principles become more relevant when I come to the fresh evidence admitted in relation to the payments that have since been made. 42 In misappropriation offences, it is the misappropriation which - in broad terms - constitutes the offence. Any harmful consequences constitute aggravation. If the loss is irretrievable, that is, on authority, an aggravating factor. Reimbursement by the offender is not seen, therefore, as a mitigating factor but rather as alleviation of an aggravating factor. On the other hand, reimbursement by a third party does not alleviate the loss because the loss is still borne by someone. Consequential personal hardship suffered by the victims of misappropriation is, obviously enough, also to be seen as an aggravating factor. Unlike the loss itself, it may be alleviated by reimbursement by a third party as well as by the offender. 43 These propositions are established by the following authorities. In Siganto (1998) 194 CLR 656 at [29], Gleeson CJ, Gummow, Hayne and Callinan JJ said of the common law: [A] sentencing judge is entitled to have regard to the harm done to the victim by the commission of the crime. See also O'Neil (NSWCCA, 24 July 1996, unreported) and Barrick (1985) 7 Cr App R (S) 142. This is now the subject of legislation. The court must take into account "any injury, loss or damage resulting from the offence": Crimes (Sentencing Procedure) Act 1999, s 21A(2)(d). 44 Repayment by the offender has been categorised as avoiding a matter in aggravation, namely, loss of the money. In Phelan (1993) 66 A Crim R 446, Hunt CJ at CL (with whom Smart and James JJ agreed) said (at 448): In many of these cases, some emphasis has been placed upon the fact that the amount involved has voluntarily been repaid, but in my view it would be wrong to interpret those cases as supporting any proposition that an offender is able to purchase mitigation. Where there has been a substantial degree of sacrifice involved in the repayment, that is a matter which may properly be taken into account by way of mitigation. Otherwise, in my view, it is more a matter of aggravation where there has been a loss which is effectively irretrievable than a matter of mitigation when the loss has simply been made good. (Cited with approval in Woodman [2001] NSWCCA 310 and in Tooth [2001] NSWCCA 407.) 45 On the other hand, reimbursement by a third party does not avoid the loss being suffered by someone. In Newey (NSWCCA, 23 August 1990, unreported), Wood J (as he then was and with whom Gleeson CJ and Badgery-Parker J agreed) gave reasons for dismissing an appeal against sentence. The applicant was office manager of a firm of chartered accountants. He prepared and presented to the bank which held trust accounts for the firm a series of forged letters of authority, thereby obtaining cheques constituting withdrawals from the trust accounts. The immediate loss would have fallen on the clients for whom moneys were held but it appears that the bank paid out that loss. Wood J said (at p2): [The deception] led to a loss of a great deal of money and, for my part, I would not consider it relevant that the ultimate loss was borne by the bank. In Houghton [2000] NSWCCA 62, Barr J (with whom Fitzgerald JA and Abadee J agreed) said at [9] and [17]: The losses were all insured and the owners of the money lost nothing. However, as his Honour found, the respondent was penniless at the end of these events. There was no prospect that the insurers would recover their loss, though some $20,000 appears to have secured against the respondent's assets.

His Honour also took into account that the owners of the money had not lost because they had been indemnified by insurers. In my opinion that did not mitigate the offences. There was still loss to the community which was not and could not be made good except perhaps by the security to which I have referred. 46 Reimbursement by a third party, may, however, be a relevant consideration in another way. Personal hardship may be suffered by victims as a consequence of loss. That is a further factor in aggravation. In relation to armed robbery, Spigelman CJ (with whom Wood CJ at CL, Simpson and Newman JJ agreed) said in Henry (1999) 46 NSWLR 346, at [95]: There is no doubt that impact on victims is an aspect of the seriousness of an individual offence. General patterns of impact of the character referred to in the literature to which the Crown referred, including statistical surveys, confirm the seriousness of the offence. Plainly the actual impact in each particular case will vary and, appropriately, cause variations in the sentence imposed. This is not a manifestation of inconsistency. Rather, it represents the consistent application of a principle which varies in its import according to the circumstances. 47 This principle has wide application: for example, Hall (NSWCCA, 28 September 1995, unreported) (broken hip caused by bag snatching); Webb [1971] VR 147 (pregnancy caused by rape); Kessey [2001] NSWCCA 469 at [26] (effect of a housebreaking offence on the victim's confidence and employment). The principle was recognised as applicable to misappropriation cases by Gleeson CJ in Machtas (1992) 62 A Crim R 179, at 182: It was submitted on behalf of the respondent that a matter to be taken into account in her favour is that the victim of the loss was a large financial corporation. I reject that submission. It may be more accurate to say that it is not an aggravating circumstance of the present offence that the victim was some individual who suffered great personal hardship as a result of them. 48 It must then follow that, where consequential personal hardship, sounding in aggravation, is alleviated, in whole or in part, by a third party payment, that is a relevant consideration. The payment goes to the extent of consequential personal hardship suffered and may alleviate such hardship altogether. 49 I would add two cautionary observations. The fact and extent of the loss itself is a very important consideration in evaluating the degree of criminality involved in misappropriation offences. It is only significant personal hardship which may make a significant difference to penalty. 50 Secondly, a sentencing court is not obliged to investigate whether there is insurance or has been some other form of third party payment in misappropriation cases, any more than it is obliged to investigate whether any other aggravating or mitigating factors arise for consideration. Facts relevant to aggravation and mitigation are matters for evidence. 51 No material error is disclosed in his Honour's treatment of the loss and insurance issues on the material before him. It was relevant that the victims had lost their investments. It was relevant that no case had been made out that any third party payment, such as insurance, would, to any material extent, alleviate the personal hardship suffered by many of them in consequence. There is nothing to suggest that his Honour was inappropriately influenced by these considerations. This ground of appeal accordingly fails. 52 It will be necessary to return to the matter of third party payments when I come to the fresh evidence admitted in that regard.

Ground 5: That the sentencing judge erred when his Honour took into consideration in relation to sentence that "there is no such fund for people holding themselves out as financial advisers" and "it seems there is no licence required". 53 In his remarks on sentence his Honour said (at p6): Like solicitors in many ways, although they do not have professional qualifications, these people handle large sums of trust moneys. There are two major differences, however. There is in existence, so far as solicitors are concerned, a statutory fund to provide reparation to those who have been defrauded by crooked practitioners. There is no such fund for people holding themselves out as financial advisers. It seems that there is no licence required. That accorded with the evidence. 54 Ground 5 must be rejected. A sentencing judge is entitled to make observations concerning a perceived deficiency in regulatory law. In the present case, the observations concerning lack of a fidelity fund and suchlike went no further than that. There is no reason to believe that his Honour's thoughts in relation to those incidental matters caused him to take a more serious view of the applicant's conduct than was appropriate.

Ground 6: The sentencing judge erred in placing excessive weight on the principle of deterrence. 55 Nothing is specified by the applicant in the remarks on sentence which demonstrates an error of principle on the part of the sentencing judge in relation to deterrence. 56 It is submitted that the sentencing judge imposed a sentence that was substantially more severe than the principle of general deterrence required. That goes to whether the sentence was manifestly excessive. I will come to that.

Ground 9: It is submitted that the prosecution by proceeding against the applicant on all 50 counts unfairly prejudiced the applicant. It is submitted that the Crown unfairly prejudiced the applicant by not utilising the provisions of s 32 of the Crimes (Sentencing Procedure) Act 1999. It is further submitted that the applicant has received a more severe sentence by reason of the manner in which the counts were presented by the Crown. 57 In his remarks on sentence, the judge said: This matter, in my view, could have been presented more efficiently by presenting an indictment for about one tenth or, at the most, one fifth of the charges and having the remaining matters taken into account on a Form 1, according to the procedure laid down in s 32 of the Criminal Procedure Act. 58 He went on to say: I have done my best to formulate what I regard to be appropriate sentences in respect of each one of those fifty charges. However, I do not propose to set out the reasoning on each charge in detail. I have, I believe, applied the appropriate principles in each instance. The matters varied a great deal. It was not only upon the sums of money involved that the sentences were formulated. Eleven sentences were formulated against a maximum sentence of ten years and thirty-nine under a maximum of five years. The principle of totality also applies. That principle can no longer be applied as formerly by reducing a single global sentence. Each sentence must now reflect the degree of criminality involved in the relevant offence. Nonetheless this Court is obliged to, and has, taken into account the overall term of imprisonment which will be made up of a series of individual sentences, partly accumulated in some instances. Two sentences will have shortened non-parole periods to allow for sufficient time on parole. 59 Later his Honour said: I can see no other relevant matter which the Court needs to consider other than totality. I have come to the view that any term of imprisonment of less than ten years duration would be inadequate to reflect the measure of criminology involved in this series of premeditated offences by this offender over a period of six years and the profound effects upon the victims of his gross betrayals of trust. I have taken into account the totality principle by imposing a series of sentences which are wholly or partly concurrent. The partly accumulated sentences in many instances begin before the expiration of the non-parole period for the immediately preceding sentence. 60 The complaint developed in submissions was that the way the Crown presented its case prevented the proper application of the principle of totality to the applicant's prejudice. It did not. Nothing in the submissions indicated how the principles of totality were misapplied. 61 This ground of appeal fails.

Ground 10: That the sentencing judge erred in that he took into account "ostentatious living" by the applicant when there was little evidence to support this view. 62 The relevant passage in the remarks on sentence is as follows (p3): Their money was spent on his own business ventures, ostentatious living and, there is a very strong suggestion, unsuccessfully in the main, punting on racehorses. 63 This finding relates to the way the misappropriated money was spent. That was a relevant consideration. 64 There was sufficient evidence to support the finding that the money was spent, in part, on ostentatious living. The leasing of two BMW motor cars and a Land Cruiser and the applicant's financial interest in race horses was sufficient to justify the finding.

Ground 11: The sentencing judge erred in that he failed to consider the applicant's contrition and remorse as a mitigating factor in relation to sentence. 65 It was for the applicant to satisfy the court that he was contrite, that being a consideration in mitigation. His Honour was not bound to find, on the material before the court, that the applicant was contrite. His Honour found he was not, as I have mentioned. No error has been disclosed in the way his Honour dealt with this issue.

Ground 12: The sentencing judge failed to take into account the $457,000 repaid by the applicant. 66 The applicant gave evidence that on 16 June 2000 the proceeds of a lawsuit were paid into a bank account of KBA Financial Services Pty Ltd, one of the applicant's companies, that the cheque was cleared on 19 June 2000, and that on 11 July 2000 the bank account was frozen. The applicant said he would have been able to withdraw those funds but chose not to. He said he "was prepared to take the risks to help as many people that were dear and close to me as I possibly can". He went on to say, "As has turned out that has not been able to be fulfilled." 67 The liquidator was appointed in relation to the KBA company on 10 July 2000. He stated in his report, which was in evidence at the sentencing hearing, that, as at that date, two of the company's three bank accounts were in overdraft and one held funds in an amount which was in the order of $6000. 68 The sentencing judge was not bound to find, on this evidence, that the $457,000 had been utilised by the applicant in part reimbursement of defrauded clients. Indeed, on the evidence it was not open to be found that the $457,000 had been repaid by the applicant. This ground of appeal accordingly fails.

Ground 14: The sentencing judge erred in giving excessive weight to the applicant's prior conviction. 69 All the sentencing judge said on this topic was that the applicant had previously committed offences of a similar kind and that his record did not entitle him to leniency. 70 This ground of appeal fails.

Ground 7: The head sentence was manifestly excessive. 71 In sentencing for misappropriation offences, the most important considerations are breach of trust, the amount of money involved and the period over which the offences took place: see Machtas (1992) 62 A Crim R 179, per Gleeson CJ (at 182). As may be expected, the range of sentences varies greatly depending on the relationship between offender and victim, the amount involved and the period occupied by the course of conduct. 72 Two cases demonstrate that the sentence in the present case conformed with the proper exercise of judicial discretion on the evidence before the court at the sentencing hearing. In McKechnie (NSW CCA, 1 October 1987, unreported), Mr McKechnie sought leave to appeal against the severity of sentences which amounted effectively to a head sentence of twelve years with a non-parole period of seven years. He was a director and chairman of McKechnie Brothers Australia Pty Limited. The misappropriations extended over a period of four years and involved an amount in the order of $4.15m. Substantially, all of the funds were lost. The facts of the present case are very similar. Wood J with whom Hunt and Allen JJ agreed said: There is no reason of public interest or common sense why those involved in white collar crime should expect any leniency when they engaged in plunder of the kind and scale here involved. Executives who hold high office or positions of trust in the commercial world are expected to conform to exacting standards of honesty. The public is entitled to a full measure of confidence in those who control their investments and they are entitled to expect protection from law enforcement agencies and the criminal courts. The application for leave to appeal was dismissed. 73 The second case is Hawkins (1989) 45 A Crim R 430. Mr Hawkins was a solicitor. He misappropriated $2.6m belonging to or accountable to clients plus $4m from a finance company. The offences were committed over a period of about three and a half years. Again, the facts are similar to the present case. Mr Hawkins was sentenced to fourteen years imprisonment with a non-parole period of six years. The Crown appealed. An effective head sentence of fifteen years imprisonment was substituted with a minimum term of ten years. 74 On the material before his Honour in the present case, the sentence imposed was not manifestly excessive.

Ground 8: In the alternative it is submitted that the sentencing judge erred when he failed to find "special circumstances". The non parole period imposed by the sentencing judge was manifestly excessive and some other sentence is warranted in law. Counsel for the applicant will seek leave to tender further subjective material at the hearing of this appeal. 75 His Honour did not vary the statutory formula for the non-parole period as a proportion of the head sentence, having found that there were no special circumstances warranting such a variation. 76 The only submission made was that the non-parole period was manifestly excessive and a lesser one should have been imposed. This was asserted but not further developed. His Honour was not bound to find special circumstances on the evidence before him. This ground of appeal accordingly fails.

Fresh evidence 77 For the reasons given above, this appeal must fail unless the evidence proffered as fresh evidence on appeal makes a difference. 78 As recorded earlier in this judgment, two of the applicant's principals in his investment adviser business were Financial Wisdom Limited (1993-1998) and Security Financial Planning Pty Limited (1998-2000). The evidence proffered on the hearing of the appeal consists essentially of two letters, one from each of those two companies. We allowed the tender of the letters on the basis that we would consider their admissibility as fresh evidence in the light of the submissions which were then to be made. Having heard the submissions I doubt that evidence of insurance payouts made subsequent to sentencing and a prospect of further payouts arising after sentencing qualifies as admissible fresh evidence. Arguably, it does not contribute to knowledge of facts existing at the time of sentencing and may not be admissible on that account. I will assume, however, that the evidence is admissible. 79 The first letter is from Financial Wisdom. It is dated 16 July 2002. It indicates that the company has received 32 claims from former clients of the applicant involving close to 60 individuals. Of these, ten have been settled in favour of the claimants, two have been referred to Security Financial Planning, five have been rejected and 15 remain outstanding. To date, approximately $1.8m has been paid out by Financial Wisdom, about 25 per cent of which related to interest and legal fees. Potential liability in respect of the remaining 15 live claims is approximately $2.12m not including interest and legal fees. It is possible therefore that the final compensation figure will be in the order of $4.5m including interest and legal fees. All payments to date have been made by Financial Wisdom itself. A grant of indemnity has not yet been received from Financial Wisdom's insurers. There is a deductible of $1m. It is uncertain whether the claims will be aggregated for that purpose. 80 In its letter dated 18 July 2002, Security Financial Planning states that 20 investors who were the subject of the proceedings have made investments during the time that Security Financial Planning was the principal. (Some of these may have been couples representing one claim.) The company has ceased to trade with minimal assets available for distribution. It is estimated that the company is good for between $0.25 and $0.46 in the dollar. The company's insurer, HIH Casualty and General Insurance Ltd was placed in provisional liquidation in March 2001. There is provision for payment of 90 per cent of claims made and approved by the Government funded HIH Claims Support Limited, but it would be necessary to establish liability by judicial proceedings to gain access to that fund. Such access is currently precluded by a court decision in May 2001 refusing an application for leave to proceed against Security Financial Planning. 81 It is apparent from the fresh evidence that a substantial number of the investors affected have been or will be reimbursed with interest. It is also apparent that a substantial number of investors affected will not be reimbursed fully and might not be reimbursed at all. 82 For the purpose of determining the effect of the fresh evidence which has been admitted, it is necessary for me to state my understanding of the meaning and operation of s 6(3) of the Criminal Appeal Act 1912, which provides as follows: On an appeal under section 5(1) against a sentence, the court, if it is of opinion that some other sentence, whether more or less severe is warranted in law and should have been passed, shall quash the sentence and pass such other sentence in substitution therefor, and in any other case shall dismiss the appeal. 83 In my understanding, the section operates as follows in the ordinary case, that is, a case not involving fresh evidence. If the sentence is manifestly excessive, in the sense that it exceeds the proper exercise of sentencing discretion, the statutory formula is satisfied and the appellate court must quash the sentence and re-sentence the offender. Where the sentence is not manifestly excessive, the appellate court must quash the sentence and re-sentence the offender if - and only if - (a) the sentence imposed below is vitiated by error, and (b) the sentence is more severe than the appellate court would have imposed and, necessarily, would now impose on re-sentencing the offender. 84 The following passage from Simpson [2001] NSWCCA 534, at [79] is in point. Sentencing appeals in this Court frequently proceed as if the statutory trigger for the quashing of a sentence were expressed as follows: "If it is of the opinion that error has occurred in the sentencing process." That is not the statutory formulation. By s6(3) this Court must form a positive opinion that "some other sentence… is warranted in law and should have been passed". Unless such an opinion is formed, the essential pre-condition for the exercise of the power to "quash the sentence and pass such other sentence in substitution therefore" is not satisfied. As the judgments in Dinsdale [(2000) 202 CLR 321] to which I have referred indicate, the exercise of the power in s6(3) further requires the identification of error in the requisite sense. 85 There is an efficiency built into s 6(3). In an appeal against the severity of sentence, there is no need to resolve a question of error which has been raised as a ground of appeal if re-sentencing by the appellate court would not result in a lesser sentence irrespective of that question. 86 At this point, I should introduce a qualification. What I have said concerning the operation of s 6(3) is, I believe, correct in the generality. However, in special circumstances, some refinement is necessary. For example, if there were error in the sentencing process below which cannot have made any material difference to the result, the appellate court would not intervene, even if it would have imposed a less severe sentence were it re-sentencing the appellant. That is, of course, unless the sentence below was manifestly excessive, in which case the sentence would be set aside on that account and the appellate court would then re-sentence the appellant. 87 That situation is covered if one reads "error" in what I have written as meaning - as I intend it to mean - error contributing to the result. 88 Another example of a special case would be an error which has a narrow and discrete effect on the result, such as, for example, an omission to make an order that the offender is to be released on the expiration of the non-parole period where the sentence is not more than three years. In such a case, the sentence is relevantly more severe than it should have been, in that the offender might be required to serve longer than the non-parole period contrary to law. The appeal would be allowed in such a case, and the error would be corrected by adding the necessary order without the need to re-sentence the appellant afresh, even if the appellate court would have imposed a different sentence were it re-sentencing the appellant afresh. Again, that would be the situation unless the sentence was manifestly excessive, in which case the sentence would be set aside on that ground and the appellant would be re-sentenced. 89 It follows that where fresh evidence has been admitted on an appeal against sentence, that does not mean that the sentence should necessarily be quashed and the offender re-sentenced by the appellate court, even if it is thought that the new material would or might have led the sentencing court to a different result. As Sully J said in W [2001] NSWCCA 172, at [26]: It is one thing to say that the primary sentencing Judge, had his Honour been aware of this material, ought to have taken into account, and might well have come on that basis to an end result more favourable to the applicant than the result reached. It is an entirely different thing to say that it necessarily follows in such a case that this Court will, without more, interfere with what in fact happened in the Court below. 90 In an appeal against sentence based on fresh evidence, s 6(3) operates in the following way in the ordinary run of such cases. 91 If, taking into account the fresh evidence, the sentence is manifestly excessive - in the sense that the sentence, if passed on the evidence before the sentencing court together with the fresh evidence, would be in excess of the proper application of sentencing discretion - the appellate court must quash the sentence and re-sentence the offender. If, however, that is not the case, the appellate court must dismiss the appeal unless, on the evidence before the sentencing court together with the fresh evidence, the appellate court would impose a less severe sentence. In that event, the appellate court should allow the appeal but only if there is also the additional element of material error. 92 The fact - if it be the fact - that the fresh evidence may have resulted in a lesser sentence below, or even that it would have done so, does not mean that the appeal must be allowed and that the applicant must be re-sentenced by the appellate court. I repeat: if the appellate court is of the opinion that it would not impose a less severe sentence on the whole of the evidence, including the fresh evidence, the appeal must be dismissed unless the sentence is manifestly excessive in the sense in which I have used that expression. 93 I return to the present case. As previously indicated, the legal effect of reimbursement by a third party is limited. It does not sound in mitigation. It is not to be seen as alleviating the aggravating factor that, in the relevant sense, the whole of the misappropriated moneys has been lost. That is because reimbursement by a third party does not expunge the loss, merely moving the loss from one party to another. The reimbursement is to be seen only as alleviation of the personal hardship suffered by individual investors in consequence of the misappropriations. It seems that a substantial number of investors affected will not or may not be compensated, and those who are compensated will have suffered the hardship of being deprived of their funds pending settlement. All will have suffered worry and upset as a result of the misappropriations. On any view, the personal hardship caused by the course of conduct giving rise to these proceedings has been substantial. 94 I would not impose a lesser sentence than the one under appeal taking into account the evidence before the sentencing court and the fresh evidence admitted on appeal. That being so, the appeal should not be allowed on the ground of fresh evidence.

Conclusion 95 The appeal should be dismissed for these reasons. The orders I propose are that the application for leave to appeal be granted but that the appeal be dismissed. -oOo-

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