Course of the Sentencing Proceedings and Some Findings in the Remarks on Sentence
111Before moving to consider the grounds of appeal, it is appropriate to chart the course of the sentencing proceedings and, in particular, certain issues which have assumed particular significance before this Court.
112As previously noted, the Respondent pleaded guilty to the five counts on 13 February 2012, and asked for seven offences to be taken into account on Count 5.
Sentencing Hearing on 2 November 2012
113The sentencing proceedings were adjourned over a number of months with the principal sentencing hearing taking place before his Honour on 2 November 2012. It should be observed that the Respondent was represented by the same counsel on each occasion on which he appeared before the District Court.
114The Crown written submissions dated 2 November 2012 addressed issues of fact and law, culminating in the submission that "taking into account all the circumstances of the case, including the large amount of money involved, the fact there had been no reparation, and that the offences were committed for greed over a long period of time involving a breach of trust as a director, a lengthy full time custodial sentence is appropriate" (AB94).
115Written submissions of defence counsel on sentence focused upon the Respondent's subjective circumstances (AB165-166).
116The character witnesses referred to earlier (at [97]-[101]) were called to give evidence on 2 November 2012. The Respondent was not called to give evidence. The psychiatric reports then in existence were tendered, as was the presentence report.
117At the completion of the evidence, the Crown Prosecutor addressed on sentence, speaking to her written submissions. The Crown Prosecutor addressed the objective gravity of the offences noting, amongst other things, that it was a case of "greed not need" (AB198). The Crown Prosecutor pointed to the amount of money involved, the length of time over which the offences had been committed, the motive for the crime, the degree of planning and sophistication involved and an accompanying breach of trust. His Honour enquired as to whether financial gain was implicit in s.176A Crimes Act 1900 offences, with the Crown submitting that these offences involved financial gain for the Respondent (AB198-199).
118Counsel for the Respondent then addressed the sentencing Judge (AB199ff). Emphasis was placed upon the Respondent's subjective circumstances, including the psychiatric evidence. It was submitted that the offences did not involve planned or organised criminal activity. No submission was made for the Respondent that he did not gain personally with respect to any of the offences for which he was to be sentenced.
119Counsel for the Respondent raised tentatively the topic of an ICO - "I'd ask your Honour to consider taking all of the circumstances into account a slim possibility of an intensive correction order" (AB201).
120Some reference was made to the delay in the proceedings between January 2009 and November 2012, with a submission that delay should be taken into account in the Respondent's favour (AB200-201).
121The sentencing Judge observed, correctly, by reference to the cross-examination of character witnesses, that "The Crown seems to be in cross-examination challenging what the experts are saying in relation to his mental difficulties in 2007 and 2008" (AB202). His Honour referred to part of Dr Furst's report in the following exchange with counsel for the Respondent (AB202, lines 9-24) (emphasis added):
"HIS HONOUR: ... So you say, do you, that a consequence of what Dr Furst says in his second report where Dr Furst on page 8 says 'It's likely Mr Hinchliffe's mood was unstable at the time in question before the court, he may well have been experiencing some symptoms of hypomania. Although he was aware his actions at the time his judgment was poor'.
You say, do you, that there's evidence of a connection, not that you need it, but there's evidence of connection between the offending and his mental difficulties? Is that what you say?
[DEFENCE COUNSEL]: The highest I could put it is the possibility of that having occurred, your Honour.
HIS HONOUR: It's not just a possibility, the expert says it's likely. I'll see what the Crown has to say about that in a moment."
122His Honour then stated to the Crown Prosecutor that she had not sought to cross-examine Dr Furst. The Crown Prosecutor pointed to aspects of Dr Furst's report, and the absence of evidence from the Respondent, and submitted that counsel for the Respondent had been correct in submitting that the medical evidence suggested nothing more than a possibility of some connection between the Respondent's mental condition and his offences (AB203). The Crown submitted that there was insufficient material in the reports for the Court to find that the Respondent was suffering at the time of the offences from a mental illness.
123The sentencing Judge noted again that there had been no cross-examination of Dr Furst. The Crown emphasised again that there had been cross-examination of the witnesses who had been called (the character witnesses), but that the Respondent had not given evidence (AB206). It was then determined that the proceedings should be adjourned to allow Dr Furst to be called for cross-examination.
124I pause at this point to note that the real issue which had arisen in the sentencing hearing involved the absence of evidence from the Respondent. It was for the sentencing Judge to make findings, on the balance of probabilities, as to any relevant nexus between the Respondent's mental state and his offending.
125In circumstances where there was a very live issue concerning the factual substratum upon which the psychiatrists had depended, the calling of Dr Furst to give oral evidence was not likely to advance the matter.
126The Crown position, at that point, involved reliance upon R v Qutami [2001] NSWCCA 353; 127 A Crim R 369 at 377 [58]-[59], 380 [79] with respect to reliance by an offender upon a history provided to psychiatrists, without the Respondent being called at the sentencing hearing to give direct evidence of relevant matters, in particular, in areas of controversy. On an issue such as this (any connection between a mental condition and the criminal conduct), the Respondent carried the onus of proof, on the balance of probabilities: The Queen v Olbrich [1999] HCA 54; 199 CLR 270 at 281 [27]-[28]. Given the point which had been reached in the sentencing hearing, the only effective way in which the Respondent could discharge the onus of proof on this issue was to give evidence himself, thereby exposing himself to cross-examination. The Respondent did not take this course, although there were clear opportunities for him to do so.
Sentencing Hearing on 29 November 2012
127Proceedings were adjourned until 29 November 2012, with Dr Furst giving evidence and being cross-examined by (a different) Crown Prosecutor.
128Once again, the Crown position was made clear that Dr Furst's opinions were based upon self-reports by the Respondent (AB218). At the conclusion of the evidence of Dr Furst, the proceedings were further adjourned. The sentencing Judge requested defence counsel to obtain some evidence concerning the Respondent's bankruptcy and its relationship to the agreed unpaid loss (AB 227).
Sentencing Hearing on 15 March 2013
129The proceedings next came before the sentencing Judge on 15 March 2013. The same counsel again appeared for the Respondent with yet another Crown Prosecutor appearing in the proceedings.
130Documentary evidence relating to the Respondent's bankruptcy and the civil proceedings was tendered (AB229-230). Contained within the documents tendered by the Respondent on this occasion were emails sent in February and March 2011, which indicated that the Respondent had been offered a position as a catering operations consultant with a firm which did business with Meiko. That firm made contact with Meiko by email, indicating that the Respondent had assured the firm that the issues between Meiko and the Respondent would not pose any difficulty.
131Meiko responded by email noting the ongoing legal dispute with the Respondent, and the substantial damage he had caused Meiko. In those circumstances, Meiko indicated that, if the Respondent was employed with the firm, the business relationship between Meiko and that firm would cease (AB160-161). The Respondent did not obtain employment with the firm.
132The response of the sentencing Judge to this material was to express the view that Meiko had "destroyed" the "real and genuine efforts" of the Respondent to seek to repay the funds defrauded by him (AB232-233). The Crown Prosecutor pointed out that the Respondent had been bankrupted in 2009, so that events in 2011 may not have much bearing on the issue (AB233).
133Once again, I pause to observe that Meiko's position seemed entirely understandable. In February-March 2011, the Respondent was awaiting trial on charges of defrauding MAP of some $1.5 million. It might be considered quite unrealistic for the Respondent to seek employment with a firm in the same industry where he would be required to have commercial dealings with Meiko. Given Meiko's experience with the Respondent, arising from events which were still before the criminal courts, it was reasonable for Meiko to express the firm view that it could have no trust in him, and any commercial dealings with him.
134The sentencing Judge came to utilise this issue in the Respondent's favour on sentence. Viewed objectively, this issue was neutral at best for the Respondent. In circumstances where he had been bankrupted in 2009, it is difficult to see how this employment opportunity in 2011, and Meiko's response to it, bore at all upon the question of sentence.
135In any event, as the April 2012 presentence report indicated (see [103] above), the Respondent had been in employment since April 2010.
136Ordinarily, no particular reference to an issue such as this would be called for on an appeal to this Court. However, the sentencing Judge appears to have regarded this aspect of the evidence as a pivotal issue in his decision to seek an assessment of the suitability of the Respondent for an ICO, with an assessment of that type only being permissible where the Court has formed the view that a sentence of no more than two years' imprisonment is likely: s.69(2) Crimes (Sentencing Procedure) Act 1999. His Honour determined that this course should be taken in what he described as "very special circumstances, particularly where the complainant [Meiko] has put itself in a position where it's resisted this man's best endeavours" (AB237).
137Dr Furst was recalled to give further evidence on 15 March 2013. He was shown the transcript of evidence of the character witnesses adduced on 2 November 2012, and commented upon that evidence (AB240-248).
138The proceedings were adjourned to 31 May 2013 and his Honour requested an ICO assessment concerning the Respondent.
Sentence Hearing on 31 May 2013
139On 31 May 2013, the same counsel appeared once again for the Respondent. A solicitor appeared for the Crown. It was on this occasion, for the first time, that his Honour directed a number of questions to the solicitor representing the Crown concerning the Agreed Statement of Facts, including the question whether the Respondent had benefited personally from the offences. This questioning occupied a number of pages of transcript (AB249-259).
140The tenor of his Honour's questions was whether there was evidence which would satisfy the Court beyond reasonable doubt that the Respondent benefited personally from all the offences. It must be said that his Honour squarely proceeded on the basis, which was confirmed by the Crown, that Meiko owned 90% of Swiss Systems. The solicitor for the Crown appears to have done his best to respond to the questions, although he noted at one point that he "thought the matter was for judgment" and "didn't really prepare myself" (AB258). The sentencing Judge observed, correctly, "You've been caught on the hop" (AB258).
141It is necessary for this Court to bear in mind this context in determining what use can be made of this course of questioning directed by his Honour to the Crown representative.
142It is noteworthy, as well, that his Honour did not direct any questions on this topic to counsel for the Respondent, who had appeared throughout the sentencing proceedings.
143His Honour indicated that a discount of 12.5% would be allowed for the Respondent's pleas of guilty (AB260).
144The Crown repeated the submission made earlier that a sentence of imprisonment of more than two years was appropriate, so that an ICO was not available as a matter of jurisdiction (AB260-262). The matter was stood over for sentence on 14 June 2013.
Remarks on Sentence on 14 June 2013
145The remarks on sentence commenced with a short description of the five offences and the seven matters on the Form 1. His Honour then observed, with respect to the Form 1 matters (ROS2, AB14) (emphasis added):
"I note, having availed himself of this arrangement, that is the Form 1, the offender has the benefit of not facing sentences of imprisonment for those additional offences, however by clearing the slate in this way as it is described he has provided considerable utility which must be brought to account to the offender. I do not overlook though that it could not be said that the offender would not have been inculpated in these additional offences but for his acknowledgement that he committed them, Attorney General's reference 56 NSWLR 146 at 65. The additional offences should impinge upon the sentence for the principal offence to a significant or marginal extent requiring an appropriate increase in the sentence that would otherwise be applied for the principal offence standing alone, Attorney General's reference at 42. The maximum penalty for each offence on the indictment and for the offences on the Form 1 are ten years imprisonment."
146A discount of 12.5% was allowed for the Respondent's pleas of guilty.
147The sentencing Judge then moved to a recital of the facts of the offences. Much of what his Honour said in this regard was drawn from the Agreed Statement of Facts. However, apparently drawing upon the exchange with the solicitor for the Crown on 31 May 2013, his Honour made a number of further findings which the Crown contends involved a misunderstanding of the facts. This issue will be considered under the first ground of appeal.
148The Crown written submissions had addressed a number of features of s.176A offences, which bear upon an assessment of the objective gravity of offences of this type - the amount of money involved, the length of time over which the offences are committed, the motive for the crime, the degree of planning and sophistication and an accompanying breach of trust. His Honour addressed some, but not all, of these issues (ROS10-11, AB22-23).
149Firstly, his Honour found that the amount of money involved was a very large sum and that the loss was effectively irretrievable.
150Secondly, his Honour observed that "At first blush it would appear that the offences were committed over a lengthy period of time", but that he would "have something to say about that in due course" (ROS10, AB22). It was common ground in this Court that his Honour did not return to this topic in the remarks on sentence.
151Thirdly, his Honour referred to motive, but said nothing more about it.
152Fourthly, the sentencing Judge observed that there seemed to be "not a great deal of planning but certainly some planning" (ROS10, AB22).
153Fifthly, his Honour observed that there was an accompanying breach of trust.
154The sentencing Judge referred to a number of authorities supporting the relevance of the five enumerated factors to the question of assessment of objective gravity, without further comment.
155Next, his Honour turned to the Respondent's subjective circumstances (ROS11-12, AB23-24).
156The sentencing Judge then turned to the circumstances of the offences. His opening observation contains a statement which the Crown says is factually incorrect (ROS12, AB24):
"It is important to understand the circumstances of the offending. So far as the amount on 12 September 2007, which is the first count in the indictment, it seems that that amount was deposited into Swiss Systems, at that time, as I understand it, and I checked this with the Crown on the last occasion, that company effectively was owned ninety per cent by the German Company and ten per cent by the offender.
There is no evidence that could satisfy me beyond reasonable doubt and the Crown conceded this, that that amount of money came to the personal account of the offender or that the offender benefited personally from that money, certainly the offender used that money for a company for which he had a substantial but lesser interest."
157It was not correct that Meiko owned 90% and the Respondent 10% of Swiss Systems. This arrangement applied to MAP (see [15] above). It was the Respondent who continued to own and operate Swiss Systems at this time.
158His Honour then turned to offences committed in the context of the purchase by the Respondent of the property at 252 Raglan Street, Mosman. His Honour said (ROS12-13, AB24-25):
"In relation to the amounts drawn on 2 June, 5 June and 1 August, being $150,000, on 2 June, $150,000 on 5 June and $430,000 on 1 August. It is important to understand that the offender was interested in purchasing 252 Raglan Street.
On 28 May 2008 he attended a certain bank, the details of which are known in the proceedings and for a proposed budget bank briefing. He had a discussion with one of the bank managers and it was indicted [sic] that he wished to purchase the premises at 252 Raglan Street and the bank effectively indicated to him that they would be happy to loan the funds for the purchase.
On 31 May 2008 the offender attended the auction in relation to 252 Raglan Street. The property was passed in at auction and in subsequent negotiations, the offender agreed to purchase the premises for $2.75 million dollars, that offer was accepted and a cheque for $275,000 was given by way of a deposit. On 2 June 2008 the offender contacted the bank manager's assistant and began the process of making the loan application with that bank.
On 14 June 2008 the offender spoke to the bank manager's manger [sic] who indicated that due to the financial climate it was unlikely that the loan which had been discussed on 28 May 2008 would be approved. The loan was subsequently refused. Eventually, the offender obtained a loan of $2.2 million dollars from another bank. It seems to me that the facts are, that Swiss Systems which was the company that the offender had was the agent for Meiko. Meiko agreed to purchase the agency Swiss Systems and effectively, the offender obtained ten per cent of a subsequent company and Meiko obtained ninety per cent."
159His Honour continued in passages which disclosed further factual misunderstanding (ROS13-14, AB25-26):
"So far as the payments on 12 September 2007, 4 June 2008 and 5 June 2008, namely $90,073 which is the first count on the indictment; $240,999 which is the third count in the indictment, and $79,573.49 which is the first count on the Form 1; $200,000 on 30 June 2008 which is the second count on the Form 1; $25,000 on 15 August 2008 which is the third count on the Form 1; $10,000 on 29 August 2008 which is the fourth count on the Form 1; $66,666.40 which was the sixth count on the Form 1; $35,000 on 5 September which is the seventh count on the Form all that money went to the account of Swiss Systems.
In relation to the amount of $25,000 on 1 September 2008 which is the fifth count on the Form 1, of that $25,000 which went into Swiss Systems, $12,000 was paid to the personal account of the offender. All the payments to Swiss Systems were not authorised, there is no evidence that would satisfy me beyond reasonable doubt that the offender personally benefited from the payments made to Swiss Systems.
It is important in my view to take into account that the fact that, although the offender was involved in the amount in the indictment of the Form 1, it seems to me that the facts are that the offender personally benefited in the sense that the money went to his account for the payments on 2 June 2008, 5 June 2008, 1 August 2008, and 1 September 2008. So far as the payments on 2 June 2008, the 5 June 2008 and the 1 August 2008 which went to the purchase of 252 Raglan Street, that is an amount of $730,000.
On 1 September 2008 there is another amount of $12,000 out of the $25,000, that $12,000 went to the personal account of the offender."
160His Honour noted that the Respondent had been made bankrupt in September 2009 with his main creditor being Meiko. Reference was then made to the emails of February-March 2011 in which the Respondent sought employment in the same industry and Meiko expressed an unwillingness to deal with him (ROS14-15, AB26-27).
161His Honour made a finding of contrition in favour of the Respondent (ROS15, AB27):
"I am satisfied that on 10 October 2008 the offender admitted to Meiko that he had taken without authority the sum of $730,000. That in my view is an indication of contrition. On 5 December 2008 the offender consented to judgment to $730,000 in the Supreme Court proceedings. His contrition is also indicated, in my view, in his plea of guilty and also in the evidence of Dr Furst and the report that I have from Dr Furst."
162In finding contrition, a number of the matters referred to at [110] above were not mentioned.
163His Honour then stated that the Respondent "has had for many, many years mental difficulties which are set out in various psychiatric reports that I have" (ROS15, AB27). Extensive reference was then made to parts of the psychiatric reports (ROS15-19, AB27-31). His Honour referred to well-known passages from the judgment of McClellan CJ at CL in Director of Public Prosecutions (Cth) v De La Rosa [2010] NSWCCA 194; 79 NSWLR 1 at 43 [177]-[178]. A finding was then made in the following terms (ROS20, AB32):
"In this case, I am satisfied that on balance, having heard the evidence of Dr Furst, that the offender has been suffering from mental difficulties that he has, untreated, for many, many years. I am satisfied on balance that at the time of this offending the offender was suffering from that mental difficulty. I am satisfied on balance, according to the evidence of Dr Furst, that the offender's judgment in relation to the matters would have been impaired. I take those matters into account. I am also satisfied that the offender is still suffering from the mental disorder that he has, although he is being treated and he has progressed in that treatment and there is insight in relation to the treatment and the offending."
164No reference was made to the Crown's repeated submission that a finding to this effect should not be made given the absence of evidence from the Respondent. His Honour at no stage in his remarks on sentence referred to the fact that there was an absence of evidence from the Respondent to support Dr Furst's opinion and the significance of such absence.
165His Honour then referred to authorities concerning totality, concurrence and accumulation (ROS20-21, AB32-33).
166His Honour then said (ROS21-22, AB33-34):
"In this matter, I am of the view that the offending in relation to the $730,000 and the $12,000 needs to be looked at differently from the other offending, but I propose to impose sentences which, taking into account the principles of totality, are partially cumulative and some are concurrent. I intend to impose sentences taking into account the principles that I have spoken of, including questions of general deterrence and other matters that I have referred to. It seems to me that the only appropriate sentence to be imposed is a sentence of full-time imprisonment."
167The sentencing Judge then identified the specific sentences identified at the commencement of this judgment. Reference was then made to the decision of this Court in R v Pogson [2012] NSWCCA 225; 82 NSWLR 60 at 84 [108]-[109], 90 [141].
168His Honour provided the following reasons for sentencing the Respondent by way of an ICO (ROS23, AB35):
"I have determined that it is appropriate for the offender to serve the sentences by way of intensive correction order. My reasons are the circumstances of the offending, the second reason is that I accept that the offender has taken considerable steps towards rehabilitation beyond that which the Court usually sees. In particular, I am impressed by the psychiatric reports in that regard. The offender admitted his offending to his German partners in October 2008 and it seems that, by February 2009 - admittedly he had been arrested a short time previously - he attended Dr Furst.
As at May 2012, the offender had been attending Dr Furst for psychiatric therapy on no less than fifty occasions. Dr Furst, as I understand it, is still the treating doctor, and the offender, according to Dr Furst, was progressing extremely well. It is important to understand that prior to the intervention of Dr Furst, and eventually the Black Dog Institute, the offender's mental difficulties had previously been undiagnosed.
The third reason is that in my view the offender has shown contrition. Importantly, he has also shown according to Dr Furst insight into his offending and the steps that he is taking, that is, the therapy with Dr Furst and the psychologist, to deal with what is obviously a personal problem producing serious criminal behaviour. In my view, it would not be of assistance to the offender, it would not be in the interests of justice or the community to curtail the offender's rehabilitation progress."
169His Honour then proceeded to make orders, directing that the sentence commence from 21 June 2013.