R v Liddell [2000] VSCA 37

11. So it is first desirable to look at the question whether the sentence otherwise was manifestly excessive. I should note first an argument to the effect that the principles of parity were disregarded. Undoubtedly, the other principal in the commission of this fraud, one Zehir, was effectively sentenced with respect to this offence to four years' imprisonment with a non-parole period of two years. Moreover, there is no doubt that Zehir played as big or even bigger part in the carrying out of the offence as did the applicant. The difficulty with the argument, as counsel fairly acknowledged, was that Zehir was suffering a particularly unpleasant disease which made treatment only practicable if he was held in a high security prison. It clearly weighed heavily with the judge who sentenced Zehir and that difference was noted by the sentencing judge in the present case in terms which make it very hard to reach the conclusion that the rules as to parity have been transgressed.

14. Other matters relied on for the purpose of showing that it was manifestly excessive were largely taken into account by the learned judge. He noticed as was obvious that there would be an interruption to his business career, although I would not characterise it as counsel did as the "destruction of the applicant's career path and business". There was no evidence to suggest that the businesses in which the applicant was engaged could not be embarked on in the future by him because this conviction and sentence made it impossible for him to engage in any of those businesses again, apart from his statutory disqualification as a direct or flowing from the conviction. Doubtless, fraud of any kind is serious and would make many people somewhat cautious in their future dealings with him but such evidence as there was did not show that they were businesses in which personal probity had a significance which was out of the ordinary. In the end counsel conceded that the primary affect on his career was the natural interruption that a sentence for a number of years gaol would cause. That much is obvious but destruction of career is ordinarily seen as being of particular significance only where the convicted person cannot effectively earn his or her living in the future in the same way. Delay was also relied upon but, although the trial judge did not refer to it explicitly, a number of the aspects of delay must be seen as the responsibility of the applicant. In the first place, detection of the fraud was exceptionally difficult and the scheme was deliberately designed to make it so. Although officials of the Australian Tax Office discovered the fraud in the sense of knowing that some party was wrongly obtaining refunds for sales tax, it was over six months later before the applicant was traced as being one of the perpetrators. That occurred largely by chance, through enquiries made relating to the other accused, Zehir. At this time the applicant was not in Australia and so was not arrested until after he had returned, in early 1997. It was suggested that those responsible for the prosecution took a long time but in my opinion the scheme was sufficiently sophisticated to make it essential that all its ingenious details be understood before embarking on any prosecution. There was then a further gap in time caused by the applicant's counsel being unavailable for the trial at the beginning of 1999, so deferring it until September last. Zehir was dealt with much earlier but that was because he pleaded guilty.

17. In all, however, the length of the sentence reflects the seriousness of the fraud as assessed by the learned sentencing judge. I would not disagree with his assessment of it. The details of the scheme and its comprehensive implementation appear in the judgment of Coldrey, A.J.A. It clearly took some time and effort to set up, it ran successfully for about 16 months and half a million dollars was claimed. There seemed little likelihood that its existence would be detected but for the fact that the Tax Office by chance learnt of its defects and so stopped paying refunds, although at that time unaware who the parties to the crime were. The scheme required the expenditure of not inconsiderable moneys to put in place a system which would make the applicant and Zehir invisible, in effect, from all who had to deal with them in relation to the sham transactions. An understanding of the law, of accounting, of computers and of current business practices were all employed to produce a fraudulent scheme whose falsity was not even recognised for 16 months and the perpetrators of which for more than six months thereafter. It was a fraud on the revenue of the most serious kind, albeit that it was stopped before their ill-gotten gains exceeded half a million dollars. As is frequently said, although the Commonwealth was the party defrauded, those disadvantaged were the taxpayers of Australia generally. There is neither remorse expressed nor any other extenuating circumstances established, other than that which might be said to flow from the applicant's good character and his repayment of one half of the moneys stolen. As to that I would not place excessive weight upon it, largely because there was a pecuniary penalty order made for that sum pursuant to the Proceeds of Crime Act 1957 (Cth.), creating a debt which not only would the applicant have been obliged to repay but which it seems he had the capacity to pay. The moneys were in fact borrowed from various persons who were willing to extend credit to him but it seems likely that the same money could have been obtained from him in due course from the interests he had in the various businesses and companies with which he was associated. This part repayment should not be disregarded, but none of these matters would persuade me that the sentence was manifestly excessive.

20. There remains only the principal point argued on the appeal, namely, the evidence of good character and the effect that it should have had on what otherwise I would consider to be an entirely appropriate sentence. For this purpose I assume that, as he stated, the learned judge made some allowance for that good character, the evidence about which he accepted. There was indeed a large amount of character evidence; some six witnesses gave oral evidence at the trial and there was in addition tendered a book of about two dozen personal references, letters and the like attesting to his kindness and good reputation. Sadly the striking aspect of this evidence was that he was seen by so many people to be such a good example to others in the community, a truly virtuous citizen who was a role model to so many. It is sad because clearly so many of those who looked up to him will find it perplexing that such a person should have deceived them. One has the feeling that many of them still cannot believe that the applicant committed the offence for which he was found guilty and in respect of which he abandoned his application for leave to appeal against conviction.

23. Undoubtedly, a convicted person can ask to be given proper credit for a generous, upright and virtuous life when first that person must be sentenced for an offence, however serious. It is the extent of that credit which is here in issue and more specifically the extent to which one may infer, if one can, that the learned judge failed to give sufficient credit. In the end I cannot reach the latter conclusion. Moreover, for all the fulsome praise lavished upon the applicant, some of it had an air of unreality which failed to take into account all the circumstances of his life. One would concede that the applicant was not the conventional con-man who builds up goodwill in order to take advantage thereof to beg, borrow or steal from his acquaintances. At most it can be said on this score that his reputation for probity may have temporarily diverted attention from him. In that regard, at the trial he called a number of character witnesses in order to persuade the jury that he was not the sort of person who might commit the offence to which he had pleaded not guilty. The vice, however, in the character evidence is not that it was not genuine, nor is it a case where one may have the faintest doubt that that the applicant committed numerous acts of kindness for the benefit of many people less fortunate than himself. Rather, it is a case where that generosity, whether in terms of gifts to deserving charities or in terms of specific kindly acts, reflected only one part of the applicant's character. It is the sort of evidence which is exceptionally persuasive when called on a plea by an offender who has but one momentary fall from grace after a lifetime of hard work and good deeds. Clearly a number of the acts of generosity and kindness took place before this fraud was ever conceived and a number of them thereafter. But the applicant was only 34 or 35 when he was first drawn into the scheme and for nearly two years of his life was deceiving not merely the Commonwealth from whom he obtained money but all those who have been kind enough to come forward to speak on his behalf. It was a deception which existed not only during the actual carrying out of the scheme but thereafter until he was identified and arrested, which step he endeavoured to make as difficult as possible, and then thereafter by pleading not guilty and denying the perpetration of the fraud for which the jury has now found him guilty and about which conviction he no longer complains.

26. Throughout all this evidence it is remarkable, and yet in many ways not so remarkable, that there is hardly a mention of the effect of the finding of fraud on this scale has had upon each witness's (and letter writer's) opinion of the applicant. They can only speak of the man they know; it would seem that they find it hard to envisage that their paragon could have been acting so wrongly and so fraudulently during their very acquaintanceship with him. Of course, his good works over his 15 or so years of adult life must be counted in his favour, but I do not believe this is the kind of evidence, however extensive it might be, which required the learned sentencing judge to make an even greater discount for that good character. In all the circumstances the sentence was within the range appropriate for the offending and the offender.

34. I agree that the application should be dismissed for the reasons stated by Ormiston, J.A. and Coldrey, A.J.A.

39. On 10 September 1999, after a trial in the County Court at Melbourne, the applicant, who is now 39 years old, was found guilty by a jury of conspiracy to defraud the Commonwealth, namely the Federal Commissioner of Taxation, between 1 December 1993 and 30 August 1995. The indictment named Gurkan Zehir as a co-conspirator. The offence, which was contrary to s. 86A of the Crimes Act 1914 (C'wealth) carried a maximum penalty of 20 years' imprisonment or a fine of $200,000, or both. By operation of s.16G of this Act, a judge passing sentence in a State where sentences are not subject to remission, must take that fact into account in determining the length of any sentence imposed. This has the practical effect of reducing the maximum term of imprisonment to 13 years 8 months.

42. The applicant had no relevant prior convictions.

45. On 24 September 1999 after having heard a plea on the applicants behalf, the learned sentencing judge sentenced the applicant to be imprisoned for six years and directed that he serve a minimum of three and one half years before becoming eligible for parole. It was further declared pursuant to s.16E of the Crimes Act 1914 (C'wealth) that 15 days be reckoned as the period of imprisonment already served under the sentence.

48. At the time of the plea on 15 September 1999, the learned judge had ordered, pursuant to s.26(1) of the Proceeds of Crime Act 1987 (C'wealth) that the applicant pay $229,191.79 being half of the total amount of money defrauded. That amount was paid in the course of the plea from money borrowed by the applicant.

51. By Notice of Application for Leave to Appeal dated 5 October 1999, the applicant seeks leave to appeal against the sentence imposed on the following grounds:

1. The sentence imposed is manifestly excessive. 2. The learned sentencing judge failed to have sufficient regard to the sentence imposed on the co-offender, and thereby failed to have sufficient regard to the principles of parity. 3. The learned sentencing judge failed to have sufficient regard or to accord sufficient weight in the sentence he imposed to the evidence as to the Applicant's previous good character. 4. The learned sentencing judge failed to accord sufficient weight in the sentence he imposed to the Applicant's payment of the Pecuniary Penalty Order.

55. In order to consider the various grounds it is necessary to first outline the facts founding the offence upon which the applicant was sentenced. The indictment itself alleged that the fraud on the Federal Commissioner of Taxation occurred between 1 December 1993 and 30 August 1995. Whilst the fraud itself involved considerable pre-planning, the first and last applications received by the Australian Taxation Office were on 9 May 1994 and 11 July 1995 respectively.

58. The genesis of the fraudulent scheme is the operation of the Commonwealth Sales Tax Assessment Act 1992 (the Act). In simple terms the Act establishes a tax regime which provides that sales tax be charged at an applicable rate on the last wholesale sale of certain manufactured goods or goods imported into Australia. This is usually at the point where goods are sold from wholesaler to retailer. The tax liability falls on the person who is the seller of the goods. The Act also establishes legal requirements relating to registration for sales tax exemption, the quoting of sales tax exemption numbers and declarations, time for payment and, (inter alia) refund entitlements.

61. As there may be several wholesale sales of goods before they reach a retailer the Act provides exemption mechanisms that allow sales tax liability to be deferred until the last wholesale sale occurs. These provisions allow, for example, a manufacturer to sell goods to a wholesaler without the imposition of sales tax so long as the sale is made under quote of the wholesaler's sales tax exe--48637438C7.955349935/mail.vicnet.net.au--