R v Powles [1999] VSC 268

2 On the material placed before me on this plea, the outcome of the conspiracy was to deprive the trust of money and to put money supplied by the Trust at risk of loss. The money was to be supplied to purchase what were called Prime Bank Instruments comprising Standby Letter of Credit, Prime Bank Notes and Master Collateral Commitments. The conspirators dishonestly induced the Trust to provide the funds by making representations which they knew to be false or to be incapable of being carried out, concealing facts which they were obliged to disclose and engaging in unauthorised acts. The latter included payments to Dougall, an employee of the Trust and the subject of the second charge.

The evidence presented before me on the hearing of this plea points to a strong Crown case. The conspiracy was formally set in motion by a letter dated 22 October 1991 in which Madden on behalf of Lin/Par, Walsh and Nair wrote a letter to the Trust marked "to the attention of Dougall". Lin/Par set out the terms on which it was proposed that Prime Bank Instruments should be purchased and sold at a profit. The letter represented, inter alia, that the transactions would be carried out by the Trust placing a sum in US dollars in trust with Allen Allen and Hemsley (Allens) in Sydney with instructions that it be forwarded by Allens to their London office for the attention of Powles who was then the London resident partner of Allens. The funds were to be directed to be held for the Trust and to be used only for a specified transaction. On receipt of the funds by Allens, Lin/Par would purchase on behalf of the Trust a standby letter of credit for an amount determined by the funds advanced. The letter of credit would be issued in the name of the Trust and delivered to Powles who would then draw upon the Trust funds to pay the cost of acquiring instrument. On the sale of the letter of credit by Lin/Par at an anticipated profit, Allens would deliver the standby letter of credit to the nominated bank of the purchaser and receive back the sale price. A further letter of credit would then be purchased and the process repeated. It was proposed that the profit on each transaction be split on the basis of 50% to the Trust, 25% to Lin/Par and 25% to Walsh. In a letter of 6 November 1991 from Madden for Lin/Par to the Trust referred to the purchase of US$25M PBN's and asked the Trust to forward $19.3M to Allens' trust account in London. The letter stated:

"Allens, once it has the funds, will instruct Lin/Par to purchase the PBN. As such you have the security of either funds or the PBN in your name and hence there is no risk to the Trust."

3 On the evidence before me, I accept that Madden, Nair and Walsh were the instigators of the scheme. To help secure the services of Powles, on about 17 August 1991, Lin/Par through Madden had agreed with Powles that he would be paid US$100,000 for each credit transaction, "upon closing".

4 I also accept that the involvement of Allens and Powles was critical to the acceptance of the proposal by the Trust. In particular, the promoters relied upon a reference supplied by Powles in a letter that he wrote to the Trust on 4 December 1991. This was a settled version of a draft sent to him by Madden at Lin/Par. In that letter Powles made the following relevant statements

(1) that Allens acted as solicitors for Lin/Par Ltd which had a registered office in Vanuatu

(2) the President of Lin/Par was Patrick J Madden Q.C. who had qualified personnel working with him with extensive banking and financial background

(3) that he had worked with Lin/Par and could advise that Allans was holding in Trust substantial monies for various transactions involving that corporation (in US dollars)

(4) that Lin/Par Ltd was capable of fulfilling its stated objectives to and for the Trust.

It appears that, inter alia, the last statement was false. Powles knew that Madden, Nair and Walsh and Lin/Par had for some time been attempting to engage in the sort of transactions proposed for the Trust and had been unsuccessful. In the course of those attempts he had also seen money lost. He and Madden had also misappropriated money. It appears that between March 1989 and January 1992 there had been about two dozen transactions in which Powles, Madden, Nair and Lin/Par Ltd and others had been involved. In none of these transactions had anyone been successful in purchasing, let alone trading, a Prime Bank Instrument and substantial sums of money had been lost. Powles, therefore, could not honestly state that Lin/Par Ltd was capable of fulfilling its stated objectives and could not with honesty have supplied the above reference of 4 December 1991.

5 On 21 December 1991, Nair approached Dougall to offer him substantial commissions.

6 The Trust advanced US$8.7M to Powles on 23 December 1991. It was deposited by Powles into a United States dollar call account, account number 103600, operated by him at the Westpac Bank, 75 King William Street London on 23 December 1991. He used that account as a repository for the money of the Trust and some other persons. On 31 December 1991, $8.5M was transferred to a Swiss bank by Powles.

7 On 31 December 1991 Dougall on behalf of the Trust had faxed to Powles a request to fax, as a matter of urgency, a copy of the prime bank coupon that was supposed to have been purchased by them. It seems that none had been purchased. Instead of receiving a copy of the instrument, Dougall received a letter dated 6 January 1992 from Powles together with a copy of a statement concerning the account. On 6 January 1992, Powles also wrote a letter to the Trust incorporating a representation drafted by Lin/Par to the effect that all funds to be paid to Allens pursuant to the program would either be held in trust in the United States dollar account at Westpac Banking Corporation or applied in payment for prime bank promissory notes to be issued and registered in the name of the Trust.

8 On 9 January 1992 Powles wrote to the American Express Bank Limited, at which an account had been opened for the Trust, confirming his appointment as a signatory and representing that at all times the money would either be held in trust or utilized for the purchase of prime bank promissory notes which would be registered in the name of the Trust and under his "control and authority".

9 The moneys sent to the Swiss bank were paid back into the Westpac account on 13 January 1992. On 15 January 1992 they were transferred by Powles in response to representations made to him and Madden by one Wes Searle that he could obtain a Standby Letter of Credit with a face value of US$10M for a price of $8.55M. The funds were transferred to Barclay's Bank Plc into an account "A M Glasby" for the credit of the Commonwealth National Bank of Antiqua. That bank had, at that time, been closed by the Ministry of Finance in Antiqua. This transfer was contrary to the representation made by him to the Trust that no monies would be remitted until an appropriate bank security had been purchased and Powles acted dishonestly and colluded with Madden and Nair and others in so acting. The money having been transferred to that account, Powles and the Trust lost control of the money. It was never recovered. The Trust was not informed that this had occurred. Rather Powles wrote to Dougall on 16 January 1992 stating that a US$10,000,000 Letter of Credit had been purchased and that arrangements had been made for its resale. On 16 January 1992, Dougall wrote to Powles seeking clarification of what had transpired. Powles did not reply until 28 January 1992 when he wrote that the instrument had been purchased and was being discounted with a profit of $150,000 with the second roll over starting simultaneously with settlement. There had in fact been no purchase and no roll-over. Instead, on 30 January 1992, Powles wrote to Searle demanding the instruments or return of the money. Thereafter, on numerous occasions, Powles wrote to the Trust asserting that trading had taken place or was taking place and that profits had been generated. For example, he wrote,

ú on 3 February 1992, confirming $125,000 from the initial program had been segregated for the benefit of the Trust.

ú on 26 February 1992, confirming completion of the second $8.7M purchase on the Trust's behalf and that the profits would be remitted through the account at the beginning of the next week.

These statements were false. Further, notwithstanding the fact that there had been neither a purchase nor a sale, Powles, in breach of his obligations to the Trust in January and February 1992 directed unauthorised payments of monies to or for the benefit of Walsh, Nair, Madden, Dougall and himself out of the moneys retained in the account.

10 On the evidence before me, the pattern was thus set and, over the ensuing months until his sudden departure from London in November 1992, Powles continued to make false representations about trading in the bank instruments and remitted sums of money directly or indirectly to Nair, Madden, Dougall and himself out of the monies supplied by the Trust.

11 In all some US$61M was entrusted to Powles by the Trust. Powles received approximately US$1.8M. Over US$2M was paid directly or indirectly to Nair, Madden, Lin/Par, Walsh and Dougall. The amounts taken by Powles and the other conspirators and the amounts paid to Dougall were not recovered save for $15,000 repaid by Dougall. The first transfer of US$8.5M was not recovered and its precise fate is still not known. The remaining monies entrusted to Powles by the Trust were recovered. In about September 1992, Powles returned to the Trust amounts totalling approximately $28M from accounts in the Bahamas and London. In November 1992, when the partners of Allens discovered what had occurred, he gave the necessary information and powers of attorney to enable them to recover the remaining amounts. The result was that a total of some US$51M was recovered. An amount of US$17 M, was recovered from Citibank in Singapore. Fortuitously, orders were obtained freezing the sums held in Singapore in time to prevent the transfer of an amount of US$2.4M to an account in Luxembourg.

12 In assessing the role of Powles, I accept from the evidence before me that he was not the instigator or architect of the sophisticated scheme, but rather he was brought into the scheme and used to give respectability to it. As noted above he gave an important reference and also purported to give the Trust the security that the funds would be entrusted to him and Allens, held in Trust and only dispersed for the prime bank instrument that had been purchased. While it was clear that he was acting on behalf of Lin/Par he was also placed in the position of stake holder of Trust moneys pending the purchase of prime bank instruments and upon the sale of any prime bank instruments. In his dealings with the first amount of $8.7M he breached the undertaking he had given. In the reference he gave he made false statements and, thereafter, he aided the continuation of the conspiratorial scheme by making false representations that mislead the Trust as to the progress of the dealings. He also participated in the disbursements of funds which were not authorised and were in breach of the trust conferred upon him by the Trust. Thus it was the misuse of his and Allens' reputation and the abuse of the trust placed upon him and Allens that enabled the conspiracy to be carried out and continue for some eleven months. Amongst the payments that were made were of course payments to him which were unauthorised and payments to Dougall to corrupt Dougall. It is fair to say that in entering and participating in the conspiracy and in making the payments, Powles was guilty of very serious breaches of trust which put large sums of money at risk and which resulted in the loss of approximately US$11M, of which US$1.8M of which came to him. I draw no conclusions as to the respective roles and responsibilities of the other conspirators. It suffices to say that while, on the material before me, it appears that Madden and Nair and Walsh were the instigators, architects and managers and used Powles, nonetheless Powles role was very significant in that without his participation it is unlikely that the conspiracy would have borne any fruit. I am also satisfied that before embarking upon the enterprise with them and the Trust, he was aware of the highly dubious nature of the alleged Prime Bank Instrument market and that losses had already been suffered in previous attempts.

13 At the time in question, Powles was a highly respected senior member of Allens. He had come from modest and difficult beginnings. His parents separated when he was three. His mother tried to support the family by continuing to run the family butcher shop. He was educated in the State education system. He was dux of his Primary School and one of two children selected to go to a select school - Homebush Boys High School. He achieved success at school notwithstanding his work as a cleaner at the local cinema and in the butcher's shop. Gambling became a feature of his life, he having been introduced to it by his father during access periods. He completed his Leaving Certificate and obtained a Commonwealth Scholarship. He enrolled in a law course in Sydney University. The Commonwealth Scholarship enabled him to meet the University fees but he had no money to live on. As a result he obtained employment in the Department of Supply and then the Department of Works. In 1955 he obtained a position at the Attorney General's Department. He was allowed a few hours each week to attend lectures. He was able to spread the four year course over five years and completed his course in that time. He joined Allens in 1961, as a non-practising barrister, was admitted to practise in 1966 and, at the age of 26, was made a partner in 1967. As a partner, he worked in commercial and property matters. He developed a significant client base. He worked extremely hard and was well liked. In 1979, he was entrusted by the partners with the complex organisation of a change of premises and as a result of that success was asked to be Managing Partner from 1980 to 1982 (both inclusive) and led significant changes to the organisation of the firm. Because of his success, he was asked to continue for another year and, against his better judgment, accepted. He had found the position of Managing Partner extremely difficult and stressful. His wife gave evidence of how he changed, commencing with his responsibilities in the move of Allens to the MLC building. She gave evidence of him being a person who was very active and quick and decisive. The children had enjoyed a very good relationship with him. They thought he was a "fun person" and tended to follow him around and do a lot of things with him. He would spontaneously come up with exciting different ideas. From 1979 onwards, however, he became more irritable and somewhat grandiose she thought. As managing partner, he had so much power at work it seemed to spill over into other areas as well. One of the problems that he had as managing partner concerned the employment of relatives or friends of partners. There was a anti-nepotism rule but that did not stop partners attempting to pressure him to assist in the appointment of children, relatives and friends. At times he had to offend close friends. Further, when partners were disagreeing with each other he was usually called upon to mediate. He was very busy and doing an enormous amount of work. With that, there was a very high stress level.

14 As an inducement for him to stay on as Managing Partner for the fourth year, the firm paid for him and his family to go on an overseas trip. This appears to have been something of a disaster. He continued to behave in a hyperactive way and like the Managing Partner. He was unable to stay long in one place. He suggested that they miss Rome because there was nothing to see there and that they should go on to the next place. In Pompeii, their eldest son Jonathon, who was a classics student and was fascinated by Pompeii, wanted to stay for some time. Mr Powles insisted on moving on. He moved on while the others remained in Pompeii. She said his behaviour was very difficult and stressful. She was sufficiently concerned to organize a visit to a doctor for Powles in London. He saw a consultant cardiologist Dr Nixon whose report of 18 January 1983 commented that "the last three years have exhausted him." He referred to the current hyperuricaemia which indicated high levels of anxiety and his problem in saying "No". Reference was also made to a problem of hyperventilation. He discussed with Powles survival disciplines of sleeping and resting as required and the need to use relaxation and breath controlling systems. He commented

"If he calls back to work in his present condition at the end of this trip, he is unlikely to find the stamina or the foundation of sleep to see him through."

The family returned to Sydney and he took up the position for one more year of Managing Partner, the year - 1983. Mrs Powles said it was a disaster because things started to go wrong. She commented that alcohol became a more frequent part of his life and his consumption increased. Mrs Powles, who majored in psychology in her Arts degree and later became a registered psychologist, said that at the time she thought that he was showing symptoms of real stress but was concerned that there might be a by-polar psychiatric problem such as a manic depression type of problem. In the year that followed she described Powles as being angry and quite depressed. He was feeling unappreciated and the work load was still very high. He was still, however, rushing madly about.

15 The following year, 1984, she said he felt quite let down by what had happened and missed the activity and excitement of the Managing Partner position. It seemed to send him into a real slump of depression. He was angry, miserable and sad a lot of the time. He saw himself as "one of yesterday's men". He had considerable difficulty retrieving former clients from other members of the firm. The family situation was also complicated at that time because Mrs Powles' mother had a sudden onset of Alzheimer's disease and required a lot of Mrs Powles' attention.

16 While he was Managing Partner, Mrs Powles commented that his sleep patterns changed. He started to sleep very little. Sometimes he would have both the radio and television on in the bedroom at night. This continued after he ceased to be Managing Partner and his sleep patterns have remained bad ever since.

17 In the years that followed he started to want to opt out of the firm's social functions and stopped going to the Board Room for lunch with the partners. The drinking continued. He would come home from work and would slump into a chair and would drink to the point where he seemed to get into a somnolent and depressed state.

18 He continued to work as a partner at Allens in Sydney until 1989. In the latter part of the 1980's he was appointed the partner in charge of property section. In 1989 he was given the opportunity to run the London office and accepted the position. He was then aged 51. He was by 1991 and 1992 receiving $600,000 per annum in drawings from the partnership. Mrs Powles had hoped that her husband would see the position in London as a vote of confidence from his partners and that things would be a lot better. She thought the challenge of the job might make him feel more positive but it didn't seem to do so. On occasions, his energy levels were up and he did positive things but most of the time she said he was withdrawn and worked less. In particular he seemed to leave for work later and arrive home early and spend much of his time watching television and changing channels. It was her observation that he did not do things related to work efficiently at home. She mentioned inefficient behaviour with faxes which were transmitted to their home.

19 Powles had for 25 years prior to his departure to London been Chairman of the Psychiatric Rehabiliation Association. The Association ran sheltered workshops and residential units. He had been appointed Chairman at the age of 26. It is apparently now the largest charity in New South Wales concerned with mental health. He devoted long, and voluntary, hours to that charity and to assisting individuals connected with the charity in particular with legal problems. Prior to becoming Chairman of the Association he had been involved with Apex. He and his wife were also active in Amnesty International in the 1970's and 1980's..

20 Turning to his family, he met his wife when she joined Allens as an Articled Clerk in the same year that he joined the firm. She left the firm in April 1964 just before they became engaged. She continued to work but ceased to work toward the end of 1966 when their first child Jonathon was born. She did not resume work full time until 1981 but worked part time prior to that. They have four children. One other child sadly died. The eldest, Jonathon, has a PHD in music from Oxford and is lecturing at Liverpool University in composition. Their next child, Helen was born in 1968. She is a partner in a legal firm specialising in Industrial Law in Sydney. The third child, Maryanne is a music teacher and has commenced a job demonstrating musical instruments as well. The youngest child is Brian. He has just turned 25. He did his A levels in England and a University Degree in music in England. He also composes and plays the violin and supports himself in Sydney as Assistant Supervisor in the kitchen of a restaurant.

21 Unbeknown to his partners at Allens and his family, Mr Powles had from 1983 been embezzling client's funds. It appears that by the end of 1991 the amount stolen by Powles from clients totalled in excess of $3M. The money had been taken from clients with whom he was close. He had also embezzled $300,000 of his wife's inheritance and some $20,000 belonging to his mother.

22 It is worthy of note that his family including in particular his wife and mother continue to standby Powles and give him support notwithstanding the revelations about his conduct and his treatment of them. They have also stood by him notwithstanding painful and repeated public humiliation in the media which refer to him and his crimes when there is significant publicity relating to Allens. It also should be noted that after the defalcations and breaches of trust were discovered, Powles ceased to be a partner and was barred from legal practice. He also was made bankrupt. I am satisfied that he received no direct personal gain from his actions and neither did his family. The money was used to pay bookmakers and pay moneys to clients who had been defrauded. The thefts were to cover up criminality, not to serve greed.

23 During the 1980's and until late 1992 Mr Powles was a man of apparent integrity and capacity, a senior member of a major legal firm, respected in the legal and wider community, respected and loved by his family and apparently affluent. He had achieved much, had much to be proud of and much to lose. He and his family did not have an ostentatious lifestyle. Their children did not go to private schools. Yet he had apparently deliberately participated not just in criminal conduct but conduct involving serious breaches of trust and defrauded people of large sums of money, conduct that one would have thought, in light of his history, would have appalled him. The explanation for what occurred is not simple and has significant bearing on the ultimate decision to be made in sentencing Powles.

24 The explanation lies in a combination of factors. Firstly, Powles has suffered from an inherited psychiatric condition, namely, a depressive mental illness. It manifested itself in cycles of hyperactivity and low periods. Prior to 1980, there had with the benefit of hindsight been signs of problems. I have referred to Mrs Powles descriptions of his behaviour. There was also an incident in about 1968 when for a period of three weeks he was unable to speak at work although able to speak at home. He was prescribed Vallium. From time to time he had also suffered rashes. He was treated by a dermatologist who said that they were related to stress. Stress would exacerbate his difficulties and he developed the habits of gambling and drinking to feel better and, so, cope.

25 While he was a managing partner in and between 1980 and 1983, he was placed in a position of great stress. He attempted to cope with his difficulties in the way I have described but his gambling increased to the point where it put him into financial difficulty. In 1983 he took money for the first time from a client. I accept that he was in fear of physical injury from those with whom he was placing bets if he did not repay his gambling debts. I also accept that he believed that he would be able to repay the money, if necessary, by resigning and using his share of the partnership. After he ceased to be Managing Partner, he had difficulty getting the clients back that he had passed onto other partners and was made to feel like yesterday's man. He had been a figure of great importance in the firm and now ceased to be so. He continued his drinking and gambling and matters got worse. He "robbed Peter to pay Paul" to conceal the defalcations while hoping that he would somehow extricate himself. By the time he went to London in 1989 he was in very serious financial difficulty and under even more stress. When Madden, Nair and Walsh came to him promoting their prime bank instrument schemes and offering him commissions, it must have seemed like the answer to all his prayers.

26 I am also satisfied that the serious depressive illness under which he suffered significantly affected his judgment at all relevant times. He maintained the capacity to tell right from wrong and to understand the nature of his acts. His capacity to make judgments, however, in particular from 1983 onwards concerning how to deal with his gambling debts, the subsequent defalcation and what he was asked to do by Madden, Nair or Walsh, was affected and his capacity to appreciate the unreality of his hopes diminished. The Crown accepts these conclusions.

27 I am satisfied that his mental illness has a biological basis. That is the view of Dr Greenwood and Dr Jolly, psychiatrists who gave evidence for Powles. That conclusion is supported by the fact that both his father and grandfather suffered similar mental illness and, sadly, two of his children have also been found to suffer from the same condition. I refer also to the crisis in November 1992 when he fled to Sydney and disappeared for several days. He eventually made contact with his daughter Maryanne. Her description of him was that of a person in a desperate psychological state. He was admitted to hospital and on release shortly afterwards attempted suicide by overdosing and slashing his wrists. I am satisfied that this was not a cry for help but a genuine attempt, in desperation, to end his life. I accept the psychiatric evidence that he continues to suffer from this depressive illness and that it is presently under control with medication. I am also satisfied that he remains a suicide risk.

28 I have come to the conclusion, therefore, that the explanation for Powles' behaviour lies in large measure in his depressive mental illness. He had coped with that in the past to some extent with his gambling and drinking. Under the impact of the stresses of the early 1980's, he lost control of his gambling. With his judgment impaired by his mental illness he stole from clients. From there on the stresses escalated and he became more enmeshed in criminal activity. By the time he was approached by Madden, Nair and Walsh, his judgment would have been affected by the state of his depressive illness in combination with the stresses under which he found himself, such stresses themselves being traceable in part to his depressive illness. He was in a vicious circle with the depressive illness prompting drinking and gambling which in turn led to stresses which exacerbated the depressive illness and the drinking and gambling.

29 It is not possible to answer the question whether but for the depressive illness, he would have committed these offences with which I am concerned. The Crown concedes, however, that he was at the relevant time suffering from a serious psychiatric illness which materially affected his judgment. In particular the Crown concedes that the illness so affected his judgment that he was not able to perceive at the outset that he was being made the target by "fraudsters, and once he got sucked in, he just found it difficult to extricate himself from that situation".

30 The Crown also concedes that the mental illness was such that the principles summarised by Callaway, J.A. in Tsiaras v R [1996] VicRp 26; [1996] 1 VR 398 are applicable. In that case Callaway, J.A., at 400, summarised the relevance of psychiatric illness in such circumstances in the following terms.

"Serious psychiatric illness not amounting to insanity is relevant to sentencing in at least five ways. First, it may reduce the moral culpability of the offence as distinct from the prisoner's legal responsibility. Where that is so, it affects the punishment that is just in all the circumstances and denunciation of the type of conduct in which the offence engaged is less likely to be a relevant sentencing objective. Second, the prisoner's illness may have a bearing on the kind of sentence that is imposed and the conditions in which it should be served. Third, a prisoner suffering from serious psychiatric illness is not an appropriate vehicle for general deterrence, whether or not the illness played a part in the commission of the offence. The illness may have supervened since that time. Fourth, specific deterrence may be more difficult to achieve and is often not worth pursuing as such. Finally, psychiatric illness may mean that a given sentence will weigh more heavily on the prisoner that it would on a person in normal health." (At 400)

31 In the case of Powles, his illness has a significant impact on the extent of his moral culpability. The Crown accepts that proposition. His motivation was not personal greed as has been noted in some recent serious cases of fraud. Rather they were acts of desperation and delusion in which the decisions that were made were significantly impaired by mental illness and made in circumstances created in part by that mental illness.

32 I also accept that the illness and circumstances were such that Powles is not a proper vehicle for considerations of general deterrence. The Crown accepts that proposition.

33 So far as special deterrence is concerned, I am satisfied that Powles has demonstrated genuine remorse. I am also satisfied that it is not the penalty so much that is likely to operate as a deterrent but rather the punishing experience that Powles has endured since and the losses he has suffered which will give the best guarantee of non-offending. He finds himself reminded from time to time of what he has done and his losses by gratuitous media publicity on occasions when Allens receives publicity in the press, providing him with constant reminders. Some of his children have had similar experiences. For some twenty months, prior to this hearing while working with a construction company, he has had to deal with lawyers. He received constant reminders during that period because while the lawyers were polite in dealing with him, there would always be an awkward silence when they first realised to whom they were talking. These reminders will continue for the rest of his life. To avoid non offending in the future the handling of the underlying mental illness is more important than the imposition of a penalty.

34 Thus while Powles' conduct involved very serious breaches of the law, in sentencing him for those breaches, it must be accepted that his moral culpability is significantly reduced, that he is not a proper vehicle for general deterrence and imposing a penalty for the purpose of specific deterrence is not a significant purpose. Thus, the penalty required for the purpose of punishment and condemnation and deterrence significantly less than might otherwise have been the case. I turn to consider the mitigatory factors relied upon by Powles.

35 The first matter to consider is the plea of guilty. Section 5(2)(e) of the Sentencing Act 1991 requires consideration to be given as to whether

"the offender pleaded guilty to the offence and, if so, the stage in the proceedings in which the offender did so or indicated an intention to do so; ... "

36 Powles was charged on 8 July 1996. Some time elapsed while steps were taken to have Powles transferred to Victoria, he then serving the sentence imposed in New South Wales for the defalcations. On 22 November 1996, the requisite consents were obtained for orders to transfer Powles to Victoria although the order was not made until 8 April 1997. In the meantime, on 4 December 1996, Powles had written to the authorities in Victoria raising the issue of him possibly giving assistance to the Crown in the matter and resolving the matter. On 8 May 1997 a hand-up brief committal occurred. Powles was represented by a solicitor, Mr Baird. Thereafter, he sought legal aid but it was refused. Nonetheless, Powles continued from time to time to make approaches to the Crown, but the Crown could not speak with him because he was not represented. It was not until 4 February 1999, when orders were made by Hansen, J. directing that legal aid be granted, that he was provided with legal aid. There were then difficulties because the lawyers engaged were not prepared to act without senior counsel and Victoria Legal Aid would not provide that level of assistance. On 21 April 1999, Mr Powles, without the benefit of legal representation and advice, issued a stay application based on the time that had elapsed and his inability to get legal representation necessary to defend the proceeding. He abandoned that application on 24 April 1999 and accepted the offer of legal aid. Counsel was not briefed until late June or early July this year.

37 I am satisfied, that had legal aid been granted when first sought prior to July 1997 and discussions had occurred, the probabilities are that Powles would have found himself pleading guilty to similar charges. I am not in a position to judge the wisdom of the refusal of legal aid and do not seek to do so. It would be unreasonable, however, to proceed to sentence Powles on the basis that he chose not to plead guilty until just before the commencement of the trial. Even on that latter basis, however, it seems to me that a very substantial discount should be allowed because of the saving of community funds and the saving of court time. The legal aid funds saved will be in excess of $100,000 in respect of Powles alone. The trial is also likely to be reduced in complexity and in time with additional substantial savings in legal costs and court time. The Crown conceded that it would be unreasonable not to give Powles the full benefit and full discount attributable to a plea of guilty in the circumstances notwithstanding that the trial will proceed against the other accused. He should not have any discount reduced for that reason. As I have indicated, however, it seems to me that it would be reasonable to proceed on the basis that but for circumstances beyond his control, he would probably have pleaded guilty two years ago and been dealt with then.

38 Another significant mitigatory factor is the undertaking given by Powles to assist law enforcement authorities in the prosecution of the offences. It appears that such undertakings have been given in different ways in the past. In this instance, Powles has signed an undertaking witnessed by his solicitor in the following terms -

"I, Ronald Adrian Powles, undertake to the Court to assist, after sentencing, Law Enforcement Authorities in the prosecution of John Richard Walsh, Gopel Nair and Ross David Taylor by providing a statement and then, if called upon, to give evidence in these proceedings in accordance with my statement."

The value of that undertaking is of course uncertain. Counsel for the Crown, however, submitted that Powles' evidence is potentially of great value to the Crown because of the complexity of the case. Counsel submitted that I should proceed on the basis that Powles would be forthright and noted that Powles had acknowledged that he had not been in the past. In my view the undertaking given is, in all the circumstances, a significant mitigatory factor.

39 A third and significant matter relied upon is the age of the offences. Some seven to eight years has elapsed since the offences were committed. Counsel for the Crown identified a number of the steps that had been taken in the proceedings. Whether or not the delay has been excusable, the Crown concedes that Powles himself has not been responsible for any delay in the matter. Street, C.J. in R v. Todd [1982] 2 NSWLR 517 said

"Moreover, where there has been a lengthy postponement, whether due to an interstate sentence or otherwise, fairness to the prisoner requires weight to be given to the progress of his rehabilitation during the term of his earlier sentence, to the circumstance that he has been left in a state of uncertain suspense as to what will happen to him when in due course he comes up for sentence on the subsequent occasion, and to the fact that sentencing for a stale crime, long after the committing of the offences, calls for a considerable measure of understanding and flexibility of approach - passage of time between offence and sentence, when lengthy, will often lead to considerations of fairness to the prisoner in his present situation playing a dominant role in the determination of what should be done in a matter of sentence; at times this can require what might otherwise be a quite undue degree of leniency being extended to the prisoner."

It is not necessary that the delay be shown to be the fault of the Crown or that it be, in the circumstances, inordinate. (R.v Miceli (1997) 94A Crim R327 per Tadgell, J.A., for the Court, at 330, and R v Idolo, Court of Appeal, unreported 21/4/1998). In the present case a long period of time has elapsed. So far as Powles is concerned, he has had to cope with the uncertainty of whether or not he would be charged and then the uncertainty of his fate once charged. He is a person who suffers from depressive illness and thus will have found the delay and uncertainty very difficult. He found his time in the New South Wales prison system a frightening experience and, as he has waited to be dealt with over the years since 1995, he has had the harsh reality of prison environments and their constant threats of violence vividly before him. As I have noted, with his mental condition under medication and notwithstanding the difficulty and suspense of his position, Powles did obtain employment for approximately the last 20 months, working for a construction company. He has had to resign from that position. The delay, has had the result that he will have to start his rehabilitation again once these proceedings are finalised and any further penalty served. The delay has, therefore, caused a significant disruption to his rehabilitation. The Crown concedes that this delay is something that should also be taken into account as a mitigating factor in determining the penalty to be imposed upon Powles.

40 Powles is also entitled to the mitigatory benefit of the principles laid down by the High Court in Mill v R (1988) 166 CLR 59. Powles was sentenced by his Honour Judge Moore on 3 February 1995 in respect of the defalcations from client funds. Those defalcations occurred between 1983 and 1992. It was common ground that some of the monies taken from the Trust were used to conceal those defalcations. But for the fact that those offences had to be dealt with in New South Wales and the present matters had to be dealt with in Victoria, the defalcation charges and the Trust charges could have been heard and dealt with together. The result of the New South Wales proceedings was that he was sentenced to a total period of seven years imprisonment but was eligible for parole after serving 2 ½ years imprisonment.

41 In Mill v R, the High Court was concerned with a situation where a prisoner had committed three armed robberies, two of them in Victoria and one of them in Queensland over a period of six weeks in late 1979 and early 1980. The Victorian offences were dealt with in September 1980 and he received 10 years imprisonment with a non parole period of 8 years. After he was released on parole in Victoria, he was returned to Queensland where he was convicted of the Queensland offence and sentenced to imprisonment for 8 years with a recommended non parole period of three years. The learned sentencing Judge in that instance recommended a short non-parole period in recognition of the fact that the prisoner had already served 8 years imprisonment for the Victorian crime. In the High Court it was submitted that in those circumstances when the prisoner comes to be sentenced by the second court, the prisoner

". . . should receive a sentence which would be consistent with the totality of the sentence he would have received if he had committed all the offences in the State or Territory of the original sentencing court and had been sentenced for all those offences on the same occasion."

It was said that this arose where the crimes concerned were "closely related in time and nature "and "committed in one State or Territory of the Commonwealth."

The High Court quoting from Thomas, Principles Of Sentencing, 2nd Edition (1979), pp. 56-57 stated

"The effect of that totality principle is to require a sentencer who has passed a series of sentences, each properly calculated in relation to the offence for which it is imposed and each properly made consecutive in accordance with the principles governing consecutive sentences, to review the aggregate sentence and consider whether the aggregate is 'just and appropriate'. The principle has been stated many times in various forms: 'when a number of offences are being dealt with and specific punishments in respect of them are being totted up to make a total, it is always necessary for the Court to take a last look at the total just to see whether it looks wrong [']: "When . . . cases of multiplicity of offences come before the Court, the Court must not content itself by doing the arithmetic and passing the sentence which the arithmetic produces. It must look at the totality of the criminal behaviour and ask itself what is the appropriate sentence for all the offences.' " (at 63)

The High Court referred to the decision of the Court of Criminal Appeal of New South Wales in the matter of R v Todd [1982] 2 NSWLR 517. In the reasons of the Court given by Street, C.J. (at 519 - 520) it was said

"It would be wrong, in my opinion, to disregard the practical situation that the appellant had already served a substantial period of imprisonment in Queensland for offences so closely related in time and character to the Sydney offences . . ."

The Court quoted also from the passage referred to above dealing with the impact of delay. The High Court noted that the Chief Justice went on to make it plain

"That the pre-existing sentence, and the aggregate term which would result in the sentence passed by the second Judge, were relevant matters necessary to be taken into account by him in determining the head sentence; " (at 64)

After referring to other authorities the High Court concluded

"In our opinion the reasoning expounded in Todd is correct and reflects a just and principled approach to the problem of sentencing when an offender comes to be sentenced many years after the commission of an offence because during the intervening period he has been serving a sentence imposed in another State in respect of an offence of the same nature and committed at about the same time . . ." (at 65-6)

"The principle is not confined in this operation to the fixing of a non-parole period. It applies also to the fixing of a head sentence which, when considered in association with the head sentence imposed by the first sentencing court, must be seen to be appropriate in all the circumstances. In the absence of statutory provisions enabling the new sentence to be back dated to a time when the offender was in custody serving the earlier sentence in the other State, it is not correct for the second sentencing Court to determine the head sentence by reference to the normal tariff applicable to the offence for which he is then being sentenced, leaving the fixing of a non-parole period alone to reflect the principles laid down in Todd. The long deferment of the trial or punishment of an offender, with the consequent uncertainty as to what will happen to him, raise considerations of fairness to an offender which must be taken into consideration when the second court is determining an appropriate head sentence. The intervention of a State boundary denies to an offender the opportunity of having the series of offences deal with together by a sentencing court which can avail itself with the flexibility in sentencing provided by concurrent sentences." (at 66)

The High Court went on to give guidance as to how a sentencing Judge should approach the task by saying that the sentencing Judge should have asked

"What would be likely to have been the effective head sentence imposed if the applicant had committed all three offences of armed robbery in one jurisdiction and had been sentenced at one time." (67)

They went on to indicate that the difference between the two approaches would have been a head sentence of 18 years with total aggregation as against 12 to 13 years with appropriate concurrency. The High Court went on to say that the only way to deal with the problem was to lower the head sentence that reflected the long deferment that had taken place while the offender had been in custody. He commented

"It is true that the lower head sentence will fail to reflect adequately the seriousness of the crime in respect of which it is imposed. That is unfortunate. However, it is to be preferred to the injustice involved in the imposition of a longer head sentence because of the inadequacy of the law to cope satisfactorily with the intervention of State boundaries."

It is arguable that the same principles would apply where the situation arose from the inability of prosecution authorities to process criminal charges at the same time.

42 The application of these principles in the present case would result in a significant reduction in the sentence that would otherwise be imposed. I turn to the question of Powles' age and health.

43 He is now 61 and his health is poor. While in prison serving the New South Wales sentence he suffered a heart attack and underwent a quadruple by-pass in April 1996. I accept that he could reasonably expect that the by-pass would function satisfactorily for about ten years. He suffers hyperlipidameia which has predisposed him to heart disease and requires ongoing medication for that condition. He continues to have some symptoms of ischaemic heart disease and remains at risk for progression of heart disease. He continues to be treated for his depression and requires medication in the form of Prozac. He remains a suicide risk. He takes Asprin daily to assist in his heart condition. Not long ago he had an episode of hepatitis which his general practitioner attributes to excessive alcohol consumption a feature of his depressive illness noted above. It is not otherwise suggested, however, that he has been consuming excessive alcohol since release from prison. It is not possible on the evidence before me to reach a conclusion as to the likely life expectancy of Powles and while expert views apparently differ about the significance of stress, the medical evidence before me would tend to support the conclusion that having regard to his heart condition, stress needs to be avoided. At best from his point of view, his future life expectancy is somewhat uncertain.

44 I am also satisfied that the probabilities are that his heart attack which occurred in prison was caused in part by the stress he experienced in coping with prison life. I accept that he found the experience frightening and stressful. He was conscious of the ever present risk of violence and experienced violence. He was moved from Long Bay prison to Park Lea prison but was there expected to give guidance to the younger prisoners. He found that extremely difficult and stressful. With his background and personality I am satisfied he would find prison life very difficult. He has also, however, the problem of his depressive illness. That will not be aided by further incarceration.

45 Next, and of some significance, there is the fact that for the last twelve months of his incarceration in Park Lea he was moved from the minimum security section to the medium security section. At the time he was moved, he had become eligible for work release and for weekend home release and those privileges were not available in the medium security section. Further I am satisfied that living in the medium security section was a more stressful and difficult situation than that in the minimum security section. This change of circumstances was the direct result of him being charged with the present offences. In 1997, on his return to prison from the Melbourne committal he also had a stressful experience worthy of a Kafka novel because of errors in the prison records. Thus it may be said that he has already received punishment in the form of a more arduous term of imprisonment than would otherwise have occurred if he had been able to remain in the minimum security section at Parklea.

46 Finally, it is relevant to note that Powles has demonstrated the capacity to rehabilitate himself. I have referred to the employment he obtained. This was no mean feat considering his age, his criminal record, his health and the fact that it was obtained outside Sydney. His treatment appears to have his depressive illness under control. He has also undertaken voluntary charitable work with the organisation preparing tapes of books for the blind. It is obviously in the community interest that any sentence imposed not prejudice the prospects of rehabilitation. Finally, I should note that while, as Powles counsel conceded, Powles has experienced remorse associated with being caught, I am also satisfied that there is genuine significant remorse for what he has done.

47 This case is unusual. On the one hand Powles has committed serious crimes of fraud. At the same time he can point to an unusual variety of strong mitigatory circumstances which warrant and require the granting of considerable leniency to him. It is significant that the Crown has expressed the view that all sentencing options are open. I assume that that involves a concession that it would be within the range of appropriate results that Powles be released without conviction. Be that as it may, Counsel for Powles did not suggest such a result but rather drew my attention to the possibility of imposing a term of imprisonment and suspending it.

48 Such a sentence does carry with it a significant measure of punishment for Powles. The offender has to comply with the law for the period of the suspension and, if he or she committs an offence punishable by imprisonment, whether in or outside of Victoria, may be proceeded against for breach of the order suspending the sentence (Section 31 Sentencing Act 1991). It is taken to be a sentence of imprisonment for all purposes and it remain on the prisoner's record as a constant reminder and burden. Powles would have to live the rest of his life with the criminal record of having been sentenced to imprisonment for the offences in question. It should also be borne in mind that he has also, like many people in the same position, had his life and position in society destroyed by his actions. In his case, however, he has had to face repeated public humiliation as a result of these events. He has had to watch his family also being exposed to this public humiliation. Press clippings were tendered which tend to suggest that when there has been publicity attaching to Allens, Powles and his wrong doing are also publicised whether relevant to the publicity or not. There is no reason to think that this will not continue into the foreseeable future.

49 Notwithstanding the mitigatory factors that I have listed, the situation is one where a sentence of imprisonment remains appropriate but an appropriate head sentence would be for a period of less than three years. Thus a suspended sentence may be considered.

50 In determining the sentence to be imposed and the question of suspension, it is difficult to strike the appropriate balance. Notwithstanding the mitigatory matters I have mentioned, it seems to me that the gravity of the conspiracy offence requires further punishment. I also consider that notwithstanding the mental illness and its impact upon Powles in the commission of these offences, special deterrence remains a relevant, although reduced, concern. Weighing up all the matters I have mentioned and, in particular Powles' undertaking to co-operate with the Crown, it is not appropriate in my view that Powles should serve any further period of detention even though a sentence of imprisonment should properly be imposed.

51 It would be appropriate in all the circumstances to fix a period of two years six months as the term of imprisonment. It would also be appropriate in all the circumstances that the sentence suspended for the maximum period of three years.

52 Accordingly, on count 1, the conspiracy count, I propose to sentence Powles to imprisonment for 2 years and 6 months and to suspend the operation of the whole sentence for 3 years. At to count 2, whatever penalty is imposed, it should be served concurrently because the payments of the commissions to Dougall were acts done in carrying out the conspiracy. The appropriate penalty in my view is imprisonment for one year but wholly suspended for 3 years.