R v Coukoulis [2003] VSCA 22

R v Coukoulis [2003] VSCA 22 - VSCA 2003 case summary — Zoe

[7]

The appellant was a solicitor who was admitted to practice in 1986 and who had set up practice as a sole practitioner in Frankston the following year. Much of his work involved operating a mortgage investment practice where clients invested moneys with him in order that they might be lent to third parties to be secured by first mortgage. Moneys accepted by solicitors in that way or otherwise in connection with a loan to a third party secured by mortgage were treated as trust moneys within the meaning of s.40(1) of the Legal Profession Practice Act 1958 ("the Act"). It should be noted that it is with that Act that we are concerned, not with the Legal Practice Act 1996[2], inasmuch as all the relevant transactions took place before the repeal of the Act by the later legislation. As to the first count it is sufficient for the present to observe that none of the deficiency alleged arose out of a misuse by the appellant of moneys in fact paid for any purpose into his trust account. As I would understand it, the complaint made, and the basis for the count to which the appellant has pleaded guilty, is that a significant proportion of the stolen moneys which are the subject of counts 2 to 47 were thereby "payable into any trust account" of the appellant as a solicitor, but that they were not paid in in circumstances where they should have been and that, for obvious reasons, he has been unable to give any satisfactory explanation for that failure. The deficiency was alleged on a between dates basis, that is between 8 July 1993 and 13 March 1996, a deficiency in effect arising on each occasion that moneys were wrongfully misappropriated by the appellant and not paid into his trust account, in that no such moneys were held in the trust account to be applied in accordance with the defrauded clients' instructions. Each failure to pay in was, in a sense, cumulative, and it was not overcome by any subsequent payment in on trust for the benefit of any of those clients, so that at the end of the period the sum alleged by way of deficiency, being $6,859,829 or thereabouts, was the sum total of each of the thefts of the moneys which have been treated as relating to the appellant's practice and which were not paid in in accordance with the Act and were thus, in total, not available for application on clients' instructions. It should be noted, however, that the admitted deficiency did not result in the whole $6,889,828.79 remaining unpaid, for, as will be seen, a considerable number of the later "loans" were used to repay moneys stolen earlier. In the end the actual claimed losses of his clients amounted to only some $3,963,781.53, which together with interest and some costs amounting to $427,154.73, was ordered by the judge to be paid by the appellant to the Legal Practice Board by way of compensation.

[19]

In the course of an extensive plea before the learned judge emphasis was placed on the appellant's plea of guilty, his co-operation with the authorities, his remorse, his lack of prior convictions and his otherwise good character. Much time was spent in explaining his career and how he had come to incur such heavy debts, even before his chain of offending began. It is clear, so it was emphasised, that he had worked hard both at school and at university in order to obtain his degree and his right to practise, as well as conducting himself industriously and conscientiously when an articled clerk and employed solicitor, and later in his own practice. It was said that he had an excellent reputation in the profession, especially in the Frankston area where he worked, and he also was highly respected in the Greek community. It was emphasised that his debts were by no means all of his own making, for his father had fallen seriously ill as a result of a heart attack while he was still at university. The appellant had had to take responsibility for his parents and his brother, which necessitated his working hard in the fruiterer's shops which his parents were conducting at the time. One shop had to be sold soon afterwards and by 1985 the family owed a substantial sum to a bank which had security on their house. The same year his father died, so that there were further burdens arising out of the high expectations the family had as a result of his qualifying as a lawyer. The sale of the family business did not resolve difficulties for he had to provide $40,000 to set his mother up in a child-care business which was ultimately sold, but all the money and much more was needed to purchase office premises for his practice in Frankston. In the end he had to abandon those premises but he had to find $220,000 to pay out the vendor. The family indebtedness had reached $400,000 in 1991, but at about the same time he felt under an obligation to buy a shop for $300,000 to set his brother up in business in a convenience store, which unfortunately failed. In the end result, as I have said, he had total debts of approximately $880,000 by July 1993 when the first of the thefts took place. The judge expressed scepticism that he could have lost $3,963,781 of the moneys supposedly lent and obtained by him, but in the end his Honour accepted that that was so and that none had been applied to support an extravagant lifestyle or the like. It must be observed, however, that all the stolen moneys were in one way or another applied for the benefit of the appellant, albeit that they were used to support or repay family borrowings or to support or repay other debts which he had incurred by reason of his wrongdoing, so that all of them involved his choosing what use he would make of the misappropriated funds.

[30]

When it came to questions of cumulation, however, different considerations had to apply. The non-payment of the moneys into the appellant's trust account was serious on any view, but it had to be remembered that every breach of the Act relevantly was proceeded by a theft which also had to be treated seriously, especially as each involved misuse of what ought to have been trust funds and for which the appellant had received what the judge believed to have been an appropriate sentence in each case: his reference to Grabovac made clear his intention to achieve that end. If that was the case, any cumulation, having regard to the commission of multiple offences, had to reflect only that aspect of the defalcation offence which added to the overall criminality of the offending. Whatever otherwise might be done, this was a case where the judge concluded, in applying Grabovac, that very considerable concurrency was required in order to satisfy the principle of totality. In that his Honour was correct but the application was quite inappropriate. The 47 theft counts, although part of a pattern of behaviour, can barely be characterised as one "continuing episode" for sentencing purposes, although they would justify a considerable degree of concurrency, as stipulated in Grabovac. If one were to ignore the extended time over which they were carried out, there were at least half a dozen methods employed by the appellant, though leading to the same end and motivated by the same purpose. Some involved "mere" misapplication of moneys deposited with him for lending, supposedly, to other clients; but others involved the misapplication of moneys paid to the appellant for conventional solicitor-client purposes, such as the consideration to be paid over on completion of contracts for the purchase of land or clients' moneys received for payment over on settlement of civil disputes. Although some clients suffered more than others, there were in the order of 40 different clients affected and the appellant's method of deceiving them varied to degree, in that some required the reassurance of false documents (as they turned out to be) or the production (as it turned out, without authorisation) of other clients' duplicate certificates of title.

[47]

Those factors cannot be overlooked. They take the offending into a class of criminality that is only to a degree ameliorated by the mitigating circumstances, worthy and significant though they may be. Whereas those factors might otherwise produce a significantly lower sentence in relation to other offences, the need for general and specific deterrence and for denunciation is here, as is the case with other very serious offences, of sufficient importance to call for an overall sentence of the kind in fact imposed by the learned sentencing judge. So far as specific deterrence is concerned, one must accept that it is unlikely that the appellant will be in a position to breach his trust as a solicitor again, but it is nevertheless appropriate that the inordinate greed evidenced by his thefts should be the subject of salutary warning, for theft can be committed in many other circumstances. Again, although the fact that the appellant has had no prior convictions is of importance and must be recognised, these are the very circumstances in which he was able to deceive so many of his clients. His very reputation, as a solicitor and generally in the community, enabled him to obtain the moneys he stole, to persuade his clients and others that he was always acting in their interests, to reassure them and to allow him to dissuade them from enquiring further as to the precise manner of their moneys' application. Implicit faith was, wrongly, placed in him in circumstances where, were the moneys obtained by an unqualified person or through a person with a lesser reputation, those depositors might well have been more cautious about protecting themselves against possible misuse of their moneys. The duration of the offending and the amounts involved are the clearest evidence of how he was able to deceive his clients and the other persons approached through Quayside Finance. Those factors take thefts of this kind outside the ordinary range of thefts from commercial or government institutions or other persons. They deserve the utmost condemnation and condign punishment.

[50]

As to concurrency and cumulation, I would propose the following orders, having regard to the practice described in Grabovac and Lomax. Of the sentence of four years imposed on count 1, I would direct that eighteen months thereof be served cumulatively upon the sentence imposed on count 2. Although in other cases a higher proportion of a term of imprisonment for such a count might be appropriate, having regard to the seriousness of such offences and the particular need to protect solicitors' clients in the use and supervision of trust accounts, some compromise must be reached, in order to give effect to the principle of totality, in a case such as the present where so many offences call for punishment, so that three-eighths of the term is, I believe, the appropriate extent of cumulation here to be ordered. Moreover, I would, unlike the learned sentencing judge, order a degree of cumulation of some of the terms for the more significant of the counts for theft. In my opinion it was inappropriate that they should all have been left to be served concurrently, having regard to the variety and seriousness of the appellant's behaviour. I have already remarked on the variety of frauds carried out on clients and others, but it is impossible, again having regard to the number of counts, to reflect the added seriousness of each count and I have chosen to confine the orders for cumulation to the counts involving the larger amounts, for which the heavier sentences were imposed and which, in one additional case, involved a considerable number of thefts. To that end I would direct that nine months of the term imposed for count 5 (which involved many thefts totalling over $2m.) and six months of each of the terms imposed for counts 13 and 14 be cumulated upon the term to be served in respect of count 2. Further I would direct that three months of each of the three year terms imposed for counts 3 and 4 be likewise cumulated on the sentence imposed on count 2 and finally that three months of the two year term imposed for count 9 be also cumulated on the sentence imposed on count 2. Count 9 has been selected as the only one requiring cumulation, on which a two year sentence was imposed, because it involved some ten separate thefts on one Paul Stratmann amounting to $247,500, of which some $192,500 remained unpaid at the time the receivers took over the appellant's practice. Although there might otherwise be reasons for recognising many of the other thefts by cumulation orders, there is a point at which minute cumulation orders can fairly be dispensed with.

At a glance

Court

Decision date

Before

Source

Judgment (64 paragraphs)

Parties