R v Gangelhoff [1998] VSCA 20

Court of Appeal (Vic)|1998-07-29|Before: WINNEKE, P., CHARLES and CALLAWAY, JJ.A.

The applicant, who was born on 10 November 1952, pleaded guilty on 12 March 1998 to a presentment alleging four counts of defrauding the Commonwealth contrary to s.29D of the Crimes Act 1914 (Cth) and one count of attempting to defraud the Commonwealth, the offences being alleged to have occurred on or about 6 December 1991, 11 November 1992, 5 July 1993, 24 December 1993 and 21 December 1994, respectively. The maximum sentence for these offences was 10 years' imprisonment or a fine of $100,000 or both. The plea concluded on 13 March and on 24 March the learned judge sentenced the applicant to be imprisoned for four years on each of the first four counts, and to two years' imprisonment on the count of attempt. His Honour fixed a single non-parole period of 14 months' imprisonment and ordered the applicant to pay reparation to the Commonwealth of $180,329.36.

The circumstances giving rise to those offences were as follows. Under s.164 of the Customs Act 1901 and s.78A of the Excise Act 1901, prescribed users of diesel fuel are entitled to a fuel rebate where the fuel is used for particular purposes. In particular, primary producers may claim rebate where diesel fuel is used for agricultural or mining purposes. The applicant operated a business as a soil and sand merchant. He owned and managed an earth-moving business in which he excavated, transported and supplied soils. The bulk of his activity was as a soil merchant, involved in the excavation, direct sale and supply of sand and soils to customers. At various times he was engaged in minor agricultural work, but not to the extent or of the nature he later claimed in applications he made for diesel fuel rebate to the Australian Customs Service. Between 6 December 1991 and December 1994, the applicant claimed diesel fuel rebate on five occasions. The claims spanned work activity over four years. On each claim the applicant described his activities as "agricultural earth-moving activities at various farm property locations as detailed by attachments". On each claim the applicant used the services of a fuel rebate consultant, Joseph Reece, to compile and document the claim.

Before using the services of Reece, the applicant in 1990 submitted a claim in his own name where he claimed that the category of use entitling him to the rebate was mining. The claim was rejected. The applicant then in December 1991 submitted another claim with substantially the same supporting material but claimed the use as agricultural. The true nature of the applicant's work was misdescribed in order to give apparent eligibility to receive the rebate. Furthermore, the applicant falsified hundreds of fuel purchase receipts and documents purporting to record the jobs undertaken, which formed the factual basis or supporting material for the claim. This was the first successful claim made by the applicant and the basis for Count 1. The Australian Customs Service paid the applicant a total of $180,329.36 for the first four of these claims, but denied the last claim.

On or about 6 December 1991 the applicant claimed a total of $94,325 and was paid this sum. The prosecution accepted that some of the work pursuant to which fuel rebate was claimed was for genuine agricultural purposes and therefore eligible for rebate, but alleged that as to 50 per cent of the total claim, ($47,162.50), the applicant had no entitlement, giving rise to Count 1.

Count 2 related to the payment of $67,296.33 made to the applicant on or about 11 November 1992. Count 3 related to the sum of $29,657.88 paid on or about 5 July 1993. Count 4 related to the sum of $36,212.65 paid on or about 24 December 1993. Count 5 related to the unsuccessful attempt made by the applicant on or about 21 December 1994 to claim $63,559.60.

The offences were discovered when the Australian Customs Service carried out an audit on the last claim on 23 January 1995. Invoices provided by the applicant evidencing fuel purchases were shown to the franchisee of the Shell High Street Self-serve Regent where the fuel was supposedly purchased. After some comparison, the franchisee confirmed that these invoices were false, producing the actual records of fuel purchases in relation to the applicant. The substantial discrepancies between the fuel supposedly purchased and the fuel actually purchased caused the Australian Customs Service to commence investigations. The applicant was interviewed in relation to these matters on 19 October 1995, and admitted that the applications for diesel fuel rebate giving rise to Counts 2 to 5 were false and that 50 per cent of the application relating to Count 1 was also false.

The applicant admitted falsifying documents in support of these claims, alleging that he had the assistance of another person in producing the false records. He declined to implicate anybody else in the matter.

The applicant was committed for trial on 27 November 1997 and entered a plea of guilty at that time. He has made no reparation to the Australian Customs Service for any part of the total sum so defrauded.

The applicant sought leave to appeal in respect of the sentences imposed on him on seven grounds, but it is unnecessary to refer to them in detail since Mr Stuart, who appeared in this Court on behalf of the Commonwealth, conceded at the outset of his fair and helpful submissions that it appeared that the learned sentencing judge either did not take into account the fact that the sentences imposed were not subject to remissions as required by s.16G of the Crimes Act, or, if his Honour did take that matter into account, then the sentences imposed appeared not to reflect the adjustments required by that section. Accordingly, sentencing error having been conceded, the matter proceeded in this Court in effect as a plea.

In R v. Kokkinos, unreported, Court of Appeal, 2 July 1998, Buchanan, J.A., with whom Callaway and Kenny, JJ.A. agreed, emphasized that it would be prudent for prosecutors to refer expressly to s.16G upon any plea in respect of a Commonwealth offence. This case is further indication of the wisdom of that advice.

The applicant had no prior convictions. The matters urged on his behalf during the plea were dealt with in detail in the learned judge's sentencing reasons and it is unnecessary to repeat all that his Honour said in those reasons.

Mr Parsons, who appeared in this Court on behalf of the applicant, relied on the fact that the applicant had made full admissions to the Australian Customs investigators, and had pleaded guilty at the committal.

The applicant's life has been characterized by a number of tragic circumstances, as well as failed relationships. His forays into the business world all seem to have ended in failure. Although he has been described as a workaholic, he has always been a physical worker who tended to neglect the documentary side of his business. When his business of extracting soil and sand and selling it effectively came to an end with very substantial debts, he resorted to these frauds in an attempt to keep his business afloat.

When this application commenced in this Court, we were informed by Mr Stuart that two significant matters had changed since the plea was heard before the sentencing judge. First, it had become apparent now that it was highly unlikely that there would be any further prosecution of Mr Ganinski, the assistance given by the applicant in relation to the possible prosecution of this person being one of the matters to which the sentencing judge had referred in his reasons. On the other hand, in relation to a certain Mr Nixon, whose involvement in these frauds had also been considered by the learned judge, his Honour had decided that the applicant's offer to assist the prosecution did not warrant any particular discount in sentence. Mr Stuart informed the Court that since the plea, Mr Nixon has admitted that several of the invoices which were used in these frauds were forged by him, and that a prosecution is now highly likely.

During evidence on the original plea an appropriate undertaking was given by the applicant to give assistance at that plea, and during argument in this Court we were told that that undertaking was regarded as one appropriate to base a discount in relation to sentence under s.21E of the Crimes Act.

The learned sentencing judge on the evidence before him concluded, correctly in my view, that such assistance as the applicant had then given, or promised to give the prosecution in relation to Messrs Nixon and Reece (both of whom were said to have conspired with the applicant to make his fraudulent claims), did not justify any discount, and in particular any discount under s.21E. The applicant had, however, given the authorities assistance in relation to Ganinski, which was variously described by the informant, Senior Inspector Craig William Voltz, in evidence as "excellent", as "one hundred per cent", as certainly of use in his investigations and as "brilliant". Although it was, I think, contemplated that this assistance would continue, no formal undertaking to give further assistance in relation to any prosecution of Ganinski was offered to the court. In any event the learned judge was clearly entitled to take the view, as he did, that the applicant was not entitled to any discount under s.21E in relation to Ganinski, but his Honour considered that the court could take the applicant's co-operation into account under s.16A(2)(h) of the Crimes Act.

Mr Stuart submitted to this Court that the scheme was a sophisticated one; on the other hand Mr Parsons argued that it was likely to have been devised by others, since the applicant's understanding of legal matters and accountancy was said in evidence to have been minimal.

The learned judge stated that these offences were serious and that their nature required immediate imprisonment to punish the applicant and to deter others from offending in this way. The applicant's financial circumstances had prevented him making any reparation to the Commonwealth. In this Court Mr Stuart submitted that the fraud was a serious one involving the actual receipt of over $180,000, and he argued that the attempt likewise was a significant one. The frauds covered a period of over three years and there was persistence in these activities which amounted to a serious fraud on the revenue. He submitted that what the applicant had done was to fabricate a vast number of invoices as the basis for his claims, and that his criminality spanned the whole period, including the preparation of all these invoices.

Mr Stuart made reference to R v. Nguyen & Phan [1997] 1 V.R. 386, and in particular to what was said by Brooking, J.A. at 389 as follows:

"The seriousness of the offence of defrauding the Commonwealth of a large sum of money by not declaring assessable income has in the past, perhaps, not always been sufficiently reflected in the sentence passed. Those who systematically defraud the revenue of a large sum over a substantial period must, in general, expect a substantial custodial sentence. The deterrent and punitive effect of that sentence should not be unduly diminished by allowing release from custody at an unduly early stage."

See also R v. Van Tran (1997), 96 A.Crim.R. 53, per Tadgell, J.A. at 55-57.

Mr Stuart conceded that the applicant should be entitled, in relation to his assistance involving Nixon and Ganinski, to a discount under s.16A(2)(h) in the Crimes Act. Mr Stuart also conceded that the assistance that was offered in relation to Nixon's future possible prosecution should also provide an entitlement to a discount under s.21E of the Crimes Act, but submitted that the Court should bear in mind that this assistance was delayed until March 1998 and that the applicant had not been frank in relation to Nixon in his first interviews. He accepted, however, that the assistance had revealed another person involved in the frauds and had facilitated the identification of Mr Nixon.

The applicant was, in my view, clearly entitled to a significant discount for his early plea of guilty. He was also entitled to have his sentence adjusted, under s.16G, not upon any formulaic approach (see DPP v. El Karhani (1990) 21 N.S.W.L.R. 370 at 384-5), but by making an individual judgment of what should be done in all the circumstances. The applicant was, as I have said, also entitled to have his co-operation taken into consideration under s.16A(2)(h) and under s.21E.

Taking all these matters into consideration, I would grant the application for leave to appeal against sentence. I would set aside the sentences imposed on each of Counts 1 to 5. I would substitute on each of Counts 1 to 4 a sentence of two years' imprisonment, and I would sentence the applicant on Count 5 to one years' imprisonment, all to be served concurrently. The total head sentence would therefore be two years' imprisonment. I would order that the applicant serve a period of 12 months' imprisonment before he is to be released on a recognisance of $1,000 to be of good behaviour for a period of two years on appropriate conditions.

Pursuant to s.21E of the Crimes Act I would specify that the sentence has been reduced because the applicant has undertaken to co-operate with law enforcement agencies in proceedings relating to offences, and state that the sentence I would have imposed but for that reduction is a term of two years and six months' imprisonment, and I would have ordered that the applicant serve a period of 18 months' imprisonment before being released on a similar recognisance.

I agree with the reasons given by Charles, J.A. and the orders which he proposes.

The formal order of the Court will be: The application for leave to appeal against sentence is granted. The appeal is treated as having been instituted and heard instanter and is allowed. The sentences passed below are quashed.

In lieu thereof the applicant is sentenced, on each of Counts 1 to 4, to be imprisoned for a period of two years and, on Count 5, to be imprisoned for a period of one year. Such sentences are to be served concurrently.

The Court directs that these sentences are to commence today, but it is declared that the period of 128 days is to be reckoned as already served under the sentences and it is ordered that there be noted in the records of the Court the fact that such declaration was made and its details.

The Court directs that the applicant be released, upon his giving a recognisance in the sum of $1,000 to the satisfaction of the Court that he will be of good behaviour for two years after his release, after he has served 12 months of the sentence.

The Court has decided that no sentence other than imprisonment is appropriate having regard to the nature of the offences, the applicant's role in their commission and the need to deter him and others from committing offences of the same or a similar character. It is ordered that these reasons be entered in the records of the Court.

The Court specifies that the sentence has been reduced because the applicant has undertaken to co-operate with law enforcement agencies in proceedings relating to offences and states that the sentence that would have been imposed but for that reduction is a sentence of two and a half years' imprisonment, of which the applicant would have had to serve 18 months before being released on a similar recognisance.

Mr Gangelhoff, you might not have fully understood what I have just said but I will hereafter be asking your counsel to explain it in detail to you. So that you better understand the meaning of what I have just said, I want to say to you that the order pronounced means that the sentence of four years' imprisonment on the charges of defrauding and attempting to defraud the Commonwealth imposed upon by you by the Court below has now been reduced to two years' imprisonment. That sentence begins today but you will be credited with the time you have already spent in gaol pursuant to it. Do you follow that?

Winneke, P. The recognisance release order I have pronounced means that, after you have served 12 months imprisonment of the sentence which has been imposed, and that includes the 128 days that you have already served, you will be released into the community to serve the balance of the term in the community. That is, another 12 months. Do you understand that?

Winneke, P.: The condition of your release is that you will be of good behaviour for two years after you are released. If you fail, without reasonable excuse, to comply with that condition the sum of $1,000 mentioned in the recognisance may be forfeited and you may be brought back before a court. The court would then have a number of options, including making you serve the whole of the two years' imprisonment. Do you follow that?

Winneke, P.: The recognisance that you will give today may be discharged upon an application made to a court under s.20AA of the Commonwealth Crimes Act. We have reduced the sentence that otherwise we would have imposed because of your undertaking to co-operate with law enforcement agencies in proceedings relating to offences, particularly those that might be brought against Mr Nixon. Do you follow?

Winneke, P.: If, without reasonable excuse, you do not co-operate in the manner undertaken the Director of Public Prosecutions may appeal against the sentence that we have imposed. In other words, if you say hereafter, "I am not going to co-operate as you want", then he has the option to come back and then we have the option to reconsider the sentence. Do you follow that?

Mr Stuart: Your Honour, there are just two matters. First of all, the question of reparation, Your Honour.

His Honour: The reparation order that was made below by the judge in favour of the Commonwealth still stands, Mr Gangelhoff. So it is part of our order that you make reparation to the Commonwealth in the sum of $180,329.36. What is the other matter?

Mr Stuart: Just a technical correction, I think, Your Honour, in delivering judgment it was indicated the maximum penalty financially was $10,000, it is actually $100,000

Winneke, P.: We will take that into account when we revise it.

(Recognisance release order signed and acknowledged by applicant.)

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