R v Daswani [2005] QCA 167

SUPREME COURT OF QUEENSLAND

CITATION: R v Daswani [2005] QCA 167

PARTIES: R v DASWANI, Lakhmi Gulabrai (applicant)

FILE NO/S: CA No 107 of 2004 / DC No 3251 of 2003

DIVISION: Court of Appeal

PROCEEDING: Sentence Application

ORIGINATING COURT: District Court at Brisbane

DELIVERED ON: 20 May 2005

DELIVERED AT: Brisbane

HEARING DATE: 23 March 2005

JUDGES: McMurdo P, Jerrard JA and Fryberg J / Separate reasons for judgment of each member of the Court, each concurring as to the order made

ORDER: It is declared that the sentence imposed on count 15 is not cumulative on the non-parole period applicable in respect of counts 16 to 27, and that all effective federal sentences are concurrent

CATCHWORDS: CRIMINAL LAW – APPEAL AND NEW TRIAL AND INQUIRY AFTER CONVICTION – APPEAL AGAINST SENTENCE – APPEAL BY CONVICTED PERSONS – APPLICATIONS TO REDUCE SENTENCE – where applicant convicted after pleas of guilty to 15 counts of dishonest use of position as a director of a corporation under s 184(2) Corporations Act 2001 (Cth) (counts 1-15) and 12 counts of fraud under s 408C Criminal Code 1899 (Qld) (counts 16-27) – where sentenced to two years imprisonment on counts 1-15 with a recognizance release order after eight months – where sentenced to 10 years imprisonment on counts 16-27 – where sentence imposed on count 15 ordered to be served cumulatively on other sentences – where all other sentences to be served concurrently – where recommendation for parole after four years and three months – where sentencing judge stated sentence imposed to reflect overall criminality of offences – where offences occurred over two year period – where total amount misappropriated approximately $11,000,000 – where money gained from offending conduct used to finance flight from jurisdiction – where early plea of guilty by ex officio indictment – where no prior convictions – where cooperation with authorities once apprehended – whether sentence manifestly excessive / CRIMINAL LAW – APPEAL AND NEW TRIAL AND INQUIRY AFTER CONVICTION – APPEAL AGAINST SENTENCE – OTHER MATTERS – where during hearing of appeal the Court indicated it may allow the appeal but restructure the sentence imposed to lawfully reflect the intention of the sentencing judge – where could result in effective increase in sentence – whether if Court contemplating such a course it is required to advise applicant and give them an opportunity to withdraw their application / CRIMINAL LAW – JUDGMENT AND PUNISHMENT – SENTENCE – CONCURRENT, CUMULATIVE AND ADDITIONAL SENTENCES, SENTENCES ON ESCAPE AND COMMENCEMENT OF SENTENCE – POWER TO IMPOSE – where sentencing judge ordered sentence imposed for a Commonwealth offence be served cumulatively on sentences imposed for State offences – whether sentencing judge erred in making such an order – whether an order of similar effect may be made under s 19(3) Crimes Act 1914 (Cth) / Crimes Act 1914 (Cth), s 19(3) / Neal v The Queen (1982) 149 CLR 305, applied / Palmer v Attorney-General of Queensland [1994] QCA 022; CA No 441 of 1993, 2 February 1994, distinguished / R v Dube & Knowles (1987) 46 SASR 118, considered / R v Faithfull [2004] WASCA 39, 16 March 2004, distinguished / R v Gage (1992) 62 A Crim R 134, cited / R v Heiser, Cook & Attorney-General of Queensland [1997] QCA 014, CA No 506 of 1996, CA No 507 of 1996, CA No 513 of 1996, 4 March 1997, cited / R v Kawada [2004] QCA 274; CA No 187 of 2004, 3 August 2004, considered / R v McCullough & Singh [1998] QCA 226; CA No 73 of 1998, CA No 108 of 1998, 14 August 1998, distinguished / R v O'Brien (1991) 57 A Crim R 80, applied / R v Ollis & Anderson (1986) 21 A Crim R 256, cited / R v Pollock (1993) 67 A Crim R 166, cited

COUNSEL: P E Smith for the applicant / A J MacSporran for the respondent

SOLICITORS: Hollingworth & Spencer for the applicant / Commonwealth Director of Public Prosecutions for the respondent

1. McMURDO P: Mr Daswani pleaded guilty by way of an ex officio indictment on 25 March 2004 to 15 counts of dishonestly using his position as director of a company under s 184(2) Corporations Act 2001 (Cth) (counts 1-15); 11 counts of dishonestly inducing a person to deliver property to a person of a value of more than $5,000 under s 408C Criminal Code (Qld) (counts 16-26); and one count of dishonestly obtaining a benefit of a value more than $5,000, namely, $8,650,000 under s 408C(1)(d) and s 408C(2)(d) Criminal Code (Qld). He was sentenced to two years imprisonment on counts 1-14 with an order under s 20(1)(b) Crimes Act 1914 (Cth) for his release on recognizance after eight months and 10 years concurrent imprisonment on counts 16-27 with a recommendation for parole after four years and three months. On count 15 he was also sentenced to two years imprisonment with a recognizance release order after eight months under s 20(1)(b) Crimes Act 1914 (Cth) but this sentence was ordered to be served cumulatively on the other sentences. The judge recommended that he be eligible to be considered for parole after serving a period of four years and three months imprisonment and declared under s 161 Penalties and Sentences Act 1992 (Qld) that 416 days spent in custody between 3 February 2003 and 25 March 2004 be declared as time served under the sentence. It is clear from the sentencing remarks that the effective sentence the judge intended to impose was 12 years imprisonment with a recommendation for parole eligibility after four years and three months, that is, because of the time already served, on 2 May 2007.

2. Mr Daswani originally contended, first, that the sentence as it was structured was flawed in that there is no power under the Crimes Act 1914 (Cth) to direct that a Commonwealth sentence be served cumulatively on a State offence and, second, that his sentence was manifestly excessive. Mr Daswani also applied to adduce further evidence which was not before the sentencing court, disputing aspects of the facts stated by the prosecutor before the primary judge. For reasons given at the hearing of the appeal on 23 March 2005, that application was refused.

The sentence proceedings

3. The facts constituting Mr Daswani's offending behaviour were placed before the primary judge in a Statement of Facts which became exhibit 1. The offences occurred between July 1998 and September 2000. Mr Daswani was the principal of a business conducted through a group of 16 companies known collectively as the Daswani Group of Companies ("the Group"). His family members were involved in the administration of the Group, which was conducted principally from a head office at Cavill Avenue, Surfers Paradise. The Group had successfully operated several retail outlets selling jewellery, children's wear and surf clothing in Brisbane, the Gold Coast, Sunshine Coast, New South Wales and Victoria for some years. Its employees and those who dealt with it believed it to be profitable, but by the end of 1999 Mr Daswani's personal assistant, Ms Richardson, was asking his advice on the priority of payment of accounts. In February 2000, Mr Daswani told her to prepare false invoices which he said he would use to obtain money pending his receipt of family money from overseas. By the end of September 2000, several creditors of the Group had outstanding accounts and one applied for a provisional liquidator to be appointed for the entire Group. Between 1 and 3 October 2000 liquidators or administrators were appointed in respect of all companies in the Group. Mr Daswani's wife and children left Australia at the end of September and he followed on 1 October 2000. In February 2003 he was arrested in Hawaii. A formal request was made for his extradition but he returned voluntarily to Australia in June 2003 when he was arrested and charged. He has been in custody solely in respect of these charges since that time.

4. Counts 1-15 concern the withdrawal of moneys from the various accounts of companies in the Group prior to the appointment of administrators. In committing these offences Mr Daswani effectively stripped funds from the Group to finance his flight from the jurisdiction and subsequent living expenses at a time when creditors were pressing for payment of the debts.

5. Counts 16-26 relate to Mr Daswani dishonestly inducing various lenders to deliver property to companies in the Group through false invoices to support applications for finance for very substantial amounts of money varying from $62,493 to $900,000. He committed these offences in an attempt to raise funds to keep his businesses afloat.

6. Mr Daswani committed count 27 when he used a false contract of purchase of a business to obtain $8.65 million finance from the ANZ Bank in September/October 1999. The actual purchase price was $8.9 million but he inflated the price on the contract to $22 million to induce the Bank to provide the $8.65 million finance.

7. The prosecutor at sentence stated that the total amount misappropriated in the offending conduct was $11,269,180. Mr Daswani stripped hundreds of thousands of dollars from companies knowing they were about to be put into liquidation and left for overseas. Over $300,000 (with interest, close to $400,000) was seized in Hawaii where it had been placed in interest bearing accounts. Mr Daswani's businesses have been sold but because of the very considerable expenses of the liquidation and administration of the Group, just under $6 million remains outstanding.

[8] Mr Daswani was aged between 45 and 47 at the time he committed the offences and had no prior convictions. His counsel at sentence stated that Mr Daswani was a successful businessman who expanded his businesses too quickly and then lost everything, including $250,000 of his own money. He accepted he was foolish in leaving the jurisdiction but he acted on advice from a lawyer; he was advised by US Immigration officials upon entering the USA that there were no charges outstanding against him in Australia. He went to US Immigration in Honolulu on 3 February 2003 to renew his passport and was then advised that these charges were outstanding in Australia, was detained by the FBI and placed in custody. He did not challenge his extradition and volunteered to return to Australia. He cooperated fully with the authorities in the administration of justice. His wife provided a letter to the sentencing judge indicating that she and their children aged seven and five are supportive of him despite the devastating effect on them of his conviction. References were tendered attesting to Mr Daswani's high standing in business, social and church communities but these must be considered in the light of what the Court now knows about his serious offending behaviour. His counsel at sentence contended that a ten year sentence with a recommendation for eligibility for release on parole after three or four years to reflect the mitigating factors was appropriate.

[9] Mr Daswani's most significant mitigating factor is his early plea of guilty by ex officio indictment and his cooperation with the authorities once he was apprehended in Hawaii.

Is the order to serve a Commonwealth sentence cumulative upon a State sentence lawful?

[10] In R v O'Brien,¹ the Victorian Court of Criminal Appeal determined that a sentence imposed under the Crimes Act 1914 (Cth) cannot be ordered to be cumulative upon a State sentence, although that can be effectively achieved by the sentencing court fixing the commencement date of the sentence under s 19(3) Crimes Act 1914 (Cth) after the applicable non-parole period imposed on the State offences. Counsel for Mr Daswani and the respondent concede O'Brien rightly states the applicable law here. It follows that her Honour erred in ordering that the sentence on count 15 be cumulative on the State offences. That order can have no effect. But, as in O'Brien, that does not necessarily mean that this Court will reduce Mr Daswani's effective head sentence from 12 years to 10 years if the sentence the judge intended to impose was within a sound exercise of the sentencing discretion. If so, this Court could re-sentence and impose a lawfully structured sentence having the same practical effect as that originally imposed. The difficulty is that to now impose an effective head sentence of 12 years imprisonment would be, at least arguably, an increase in penalty if the present head sentence is, despite the sentencing judge's intention, actually 10 years imprisonment. If this Court were contemplating such a course Mr Daswani should be advised and given the opportunity to withdraw his application: Neal v The Queen.²

Was the sentence intended to be imposed manifestly excessive?

[11] Counsel for Mr Daswani contended that the head sentence of 12 years imprisonment is manifestly excessive because the offences should be regarded as amounting to a single course of conduct and the maximum penalty for the most serious of the offences, counts 16-27, is 10 years imprisonment so that the effective overall sentence should not have exceeded ten years. He contended that the statutory maximum penalty is a clear indication of the legislative intent as to the seriousness with which the worst examples of an offence are to be regarded. This is so even where there are multiple offences arising out of one course of conduct and regardless of the total amount of property dishonestly applied. By way of analogy, he argued that if Mr Daswani had been charged with misappropriating the $11 million involved in his fraudulent behaviour in one count he could not have been sentenced to more than the maximum period of ten years imprisonment.

[12] The flaw in that argument is manifest. Mr Daswani was not charged with one count but with 27 counts, 11 of which were each punishable by up to ten years imprisonment. Whether sentences are imposed concurrently or cumulatively, the primary consideration is that the effective punishment imposed adequately reflects the seriousness of the criminal conduct. It is not the law that if one crime is committed another crime of the same sort can be committed with little or no increase in punishment. See the observations of King CJ in R v Dube & Knowles,³ cited with approval in R v Gage.⁴ Cumulative sentences for multiple offences occurring during a single course of conduct can be imposed, providing the effective sentence reflects the overall criminality: see, for example, R v Ollis & Anderson,⁵ R v Pollock⁶ and R v Heiser, Cook & Attorney-General of Queensland.⁷

[13] In contending that the sentence imposed was manifestly excessive, Mr Daswani referred to three cases, R v Faithfull,⁸ Palmer v Attorney-General of Queensland⁹ and R v McCullough & Singh.¹⁰

[14] These cases can all be factually distinguished from this case. They certainly do not demonstrate that the sentence here of 12 years imprisonment with a recommendation for parole after four years and three months was manifestly excessive. The effective sentence intended to be imposed in this case is supported by this Court's decision in R v Kawada.¹¹ Kawada pleaded guilty to a number of counts of fraud and dishonesty including five counts of misappropriation. He was sentenced to ten years imprisonment with a recommendation for post-prison community-based release after three years and four months. The property dissipated by his criminal conduct was in the vicinity of $10.3 million but only $33,000 of this was for his personal gain. He committed the offences in an attempt to recoup losses suffered by the companies in the hope of making a profit to repay the losses his employer had suffered through his actions. He was 54 years old at sentence and had no previous convictions. This Court refused Kawada's application for an extension of time for leave to appeal against sentence because he had no real prospects of success on appeal. Mr Daswani's conduct is more serious than Kawada's in that Mr Daswani received a much larger personal benefit and misappropriated money to fund his and his family's flight from the jurisdiction, making an effective sentence of 12 years imprisonment with a recommendation for parole eligibility after four years and three months within an appropriate range.

[15] The effective 12 year sentence intended to be imposed here sufficiently recognised the particularly serious aspects of this offending: the fraudulent conduct concerned over $11 million and resulted in losses of about $6 million. After Mr Daswani became aware of the hopelessness of the financial position of the Group he not only made fraudulent attempts to support them with stolen money but then misappropriated still further amounts to flee the jurisdiction and fund a new life. The recommendation for parole eligibility after four years and three months gave proper credit for Mr Daswani's prior good character, cooperation with the administration of justice and early plea of guilty to an ex officio indictment. The sentence intended to be imposed was not manifestly excessive.

[16] During the hearing of the appeal, this Court raised with Mr Daswani's counsel that there was a very real possibility that as in O'Brien this Court may allow the appeal on the basis that a cumulative sentence could not be imposed on count 15 but re-structure the sentences imposed to lawfully reflect the intention of the sentencing judge. Consistent with the spirit of Neal v The Queen,¹² the Court gave Mr Daswani's counsel the opportunity to obtain instructions as to whether Mr Daswani wished to pursue the appeal or instead have this Court make a declaration as to the effect of the sentence presently imposed.

[17] Mr Daswani's legal representative subsequently filed a letter in the registry indicating that Mr Daswani had instructed them in these terms:

"1. That he seeks a declaration that his sentence is one of 10 years imprisonment with a Recommendation for Post-Prison Community-Based Release after serving 3 years and 7 months on the State sentence. The Federal sentence is one of 2 years imprisonment with a recognizance release order after 8 months. The Federal sentence commences after the 3 year and 7 month period is complete (3rd September 2006). In addition there is a declaration of pre-sentence custody of 416 days (the dates being 3rd February 2003 and 25th March 2004).

2. That otherwise his appeal is abandoned."

The application for a declaration

[18] The correspondence from Mr Daswani's lawyers also states that the respondent does not oppose the making of the declaration sought.

[19] The declaration sought would significantly alter the sentence imposed at first instance. As noted earlier, however, a sentence under the Crimes Act 1914 (Cth) cannot be imposed cumulatively on State sentences¹³ (although an effective cumulative sentence can be achieved by the Court fixing the commencement date of the sentence under the Crimes Act 1914 (Cth) after the applicable non-parole period in respect of a State sentence). Because the learned primary judge could not lawfully order that the sentence on count 15 be served cumulatively upon the State sentences, the following more limited declaration should now be made: the sentence on count 15 is not cumulative on the non-parole period applicable in respect of counts 16 to 27 and is concurrent with the sentences imposed on counts 1 to 14. The application for leave to appeal against sentence is now otherwise abandoned so that no further order is necessary.

Order

[20] It is declared that the sentence imposed on count 15 is not cumulative on the non-parole period applicable in respect of counts 16 to 27, and that all effective federal sentences are concurrent.

[21] JERRARD JA: In this application I have read the President’s reasons for judgment and proposed declaration, and I respectfully agree with what she has written. I consider it appropriate for this Court to make a declaration in the terms the President suggests, even though Mr Daswani informed the Court that he had abandoned his application for leave to appeal the sentences imposed on him.

[22] I agree with the President that the effect of s 19(3)(d) of the Crimes Act 1914 (Cth) is that it is no longer possible simply to make an order that a federal sentence be served cumulatively upon a State sentence.¹⁴ Section 19(3)(d) requires that where a person is convicted of federal offences and State offences at the same sitting, and sentenced to imprisonment for more than one of the offences, then the court must by order direct when each federal sentence commences so that if a non-parole period applies in respect of any State sentences, then the first federal sentence to commence after the end of that non-parole period commences immediately after the end of the period. These reasons assume, as both counsel implicitly accepted, that a non-parole period as defined in s 16(1) of the Crimes Act 1914 applied within the meaning of s 19(3)(d) of that Act, calculated in accordance with s 135(2) of the Corrective Services Act 2000 (Qld) and s 157 of the Penalties and Sentences Act 1992 (Qld).

[23] The learned sentencing judge recommended pursuant to s 157 that Mr Daswani be eligible for post-prison community based release after serving four years and three months of the imprisonment the judge had imposed. On the assumption described, that made four years and three months the non-release period provided for in s 157 of the Penalties and Sentences Act, and the non-parole period applied by s 19(3)(d) of the Crimes Act 1914.

[24] Like the President, I respectfully agree with the construction of s 19(3) reached in R v O'Brien (1991) 57 A Crim R 80 at 87. That offender had been convicted of an offence under s 81 of the Crimes Act 1958 (Vic) and sentenced to two and a half years imprisonment with a minimum of one year to be served before becoming eligible for parole. He was also convicted of an offence under s 29A of the Crimes Act 1914 (Cth), on which count he was sentenced to one and a half years imprisonment to be released after nine months on his own recognisance. The sentencing judge directed that six months of the sentence of that second count be served cumulatively on the sentence on the first count, and that the sentence on that second count commence immediately after the end of the non-parole period of the sentence imposed on the first.

[25] The Victorian Court of Criminal Appeal noted that the learned judge had sought to impose an intended effective head sentence of three years, but held that the judge was in error in directing that six months of the federal sentence be served cumulatively upon the State sentence, for the reason that under the Crimes Act 1914 there was now no longer a power to make such a direction. The only power now given by the Crimes Act 1914 to bring about the result that a federal sentence was to be served wholly or partly cumulatively or concurrently with another sentence was the power in s 19 to direct when a federal sentence commenced. The direction given in that case, that six months of the federal sentence be served cumulatively upon the State sentence, could not have any operation according to its terms.

[26] This was because the federal sentence which that learned judge had imposed was necessarily to be served wholly concurrently with the State sentence. The federal sentence complied with s 19(3)(d) of the Crimes Act 1914 by commencing not later than immediately after the end of the non-parole period in the State sentence.

“But with the State sentence providing for a head sentence of two and a half years and a non-parole period of one year, the federal sentence of one and a half years, commencing at the end of that non-parole period, did not, and could not, extend the effective head sentence at all. The head sentences on count 1 and on count 2 both extend to the same date. The head sentence on count 2 was therefore wholly concurrent with the head sentence on count 1 and the effective head sentence thus in fact imposed was one of two and a half years.”¹⁵

[27] The learned judge sentencing Mr Daswani ordered only that the sentence on count 15 be cumulative on the earlier sentence that the judge had imposed. That sentence had included a sentence of 10 years imprisonment on each of counts 16 to 27, and concurrent sentences of two years imprisonment on counts 1 to 14. What the learned sentencing judge failed to do was to direct when the sentence on count 15 commenced in accordance with s 19(3)(d). Had the learned judge ordered that it commence at the end of the non-parole period which applied, namely the four years and three months referred to, then the effect of the sentence imposed would have been that Mr Daswani was obliged to serve a minimum period in custody of four years and 11 months, being the four years and three months non-parole period on the State sentences and the cumulative eight months to be served on the federal sentence on count 15, before release on a recognisance release order. However, that was not what the learned judge ordered or intended. The judge intended a 12 year head sentence, with possible release on parole after four years and three months, which would be on 2 May 2007, taking time served into account.

[28] Mr Daswani’s affidavit material, read in support of the application he was then making for leave to appeal, referred to and exhibited the calculations by those conducting the management of his sentence in the correctional centre holding him. That material shows he is being treated as if the learned sentencing judge had made orders as required by s 19(3)(d), and had ordered that the sentence on count 15 commence at the end of the four year and three month non-parole period on the State sentences. The correctional centre documents inaccurately describe him as eligible for post-prison community based release only on 3 January 2008, whereas the date the learned judge intended, and which date was not affected by the ineffective order for a cumulative term on count 15, is 2 May 2007. That remains the date on which Mr Daswani is eligible for post-prison community based release.

[29] The ineffective order for a cumulative sentence on count 15 should not be treated by a correctional centre as an effective and valid order under s 19(3)(d). For those reasons I would limit any declaration to one that the sentence on count 15 was not cumulative on the non-parole period in respect of counts 16 to 27, and that all effective federal sentences are concurrent. I would not make a declaration in the terms proposed by Mr Daswani’s legal representative because to do so would be to vary the terms of all of the federal and State sentences. This could only be done by the exercise of the power given in s 668E(3) of the Criminal Code, namely to quash the sentences imposed and pass such other sentences as this Court considers were warranted in law and should have been passed. That power is not exercisable when Mr Daswani has withdrawn his application for leave.

[30] I add that I respectfully agree with the President that Mr Daswani cannot complain because the intended maximum term of 12 years imprisonment was longer than the permissible maximum sentence on counts 16 to 27. In R v Heiser, Cook & Attorney-General of Queensland [1997] QCA 014 this Court wrote:

“However, there is no principle that no matter how many offences are committed, how long the period over which they are committed, or how much is involved cumulative sentences exceeding the maximum permissible for a single offence should never be imposed. It is necessary to ensure that the punishment imposed is proportionate to the total criminality, and it is permissible to achieve this by requiring some sentences to be cumulative upon others.”

I accordingly agree with the President’s pithy observation that it is not the law that if one crime is committed another crime of the same sort can be committed with little or no increase in punishment.

[31] FRYBERG J: I agree with the reasons for judgment of Jerrard JA and, like him, with the reasons of the President. I also agree with the order which her Honour proposes.

Footnotes

1. (1991) 57 A Crim R 80, 84-88. ↩

2. (1982) 149 CLR 305. ↩

3. (1987) 46 SASR 118, 124. ↩

4. (1992) 62 A Crim R 134, 139. ↩

5. (1986) 21 A Crim R 256. ↩

6. (1993) 67 A Crim R 166, Hunt CJ. ↩

7. [1997] QCA 014; CA Nos 506, 507, 513 of 1996, 4 March 1997, at p 5. ↩

8. [2004] WASCA 39, 16 March 2004. ↩

9. [1994] QCA 022; CA No 441 of 1993, 2 February 1994. ↩

10. [1998] QCA 226; CA Nos 73 and 108 of 1998, 14 August 1998. ↩

11. [2004] QCA 274; CA No 187 of 2004, 3 August 2004. ↩

12. See fn 2. ↩

13. See s 19(3), Crimes Act 1914 (Cth) and O'Brien at 86-87. ↩

14. The terms “federal” sentence and “State” sentence are used herein as defined in s 16(1) in Part 1B of the 1914