R v Senese [2004] VSCA 136

R v Senese [2004] VSCA 136 - VSCA 2004 case summary — Zoe

[8]

On 22 November 1995, the applicant caused the Westpac certificates, which were then valued at approximately $4.3m., to be redeemed and for the proceeds to be paid into ECCCL's cash management account with its bank. Several months later, on 28 March 1996, the applicant directed that the certificates issued by NatWest also be redeemed and that the proceeds be paid into the same ECCCL account. The applicant did not inform the holders of ECCCL "A" class preference shares of these transactions. It seems that by 1995, or in the course of that year, for reasons which are not relevant for present purposes, the applicant and his companies were experiencing significant financial difficulties. The Crown alleged that, in order to deal with this situation, the applicant withdrew, progressively from about 24 November 1995, first the proceeds of the Westpac certificate and then those that came from the NatWest certificate - a total that was well in excess of $5m. - and used the money to pay the running costs and debts of ECCCL and those of his associated companies and to fund his personal expenditure, including payment of $800,000 for the building of his house in Brighton. Thus, the Crown said, the applicant stole the money belonging to the subscribers. These thefts were the subject of counts 25 and 26 and were the main focus of attention at the applicant's trial. The Crown stated its case against the applicant in two ways. Its primary case was that the applicant stole the proceeds of the deposits when he placed them into his company's cash management accounts, namely, on 22 November 1995 and 28 March 1996 respectively. Later in the trial the Crown contended, in the alternative, that if the jury were not satisfied that the applicant stole the money on those occasions, they should conclude that the theft occurred at or about the time when he commenced to draw on the funds, namely, very shortly after their deposit into the cash management account. Counts 27 to 51 were, as I have mentioned, alternative to counts 25 and 26 and related to the progressive withdrawals by the applicant from the cash management account. In any event, by 30 June 1996 the subscribers' capital investment, which had been placed in certified deposits, first with Dresdner and then with Westpac and NatWest, had been dissipated by the applicant in the way I have described.

[9]

It was the applicant's case at trial that he believed that he was entitled to deal with the certified deposits, and with their proceeds, in the way he did, having regard to the following. He claimed in his evidence that he effectively reinvested the funds that reflected the Westpac and NatWest certified deposits through a company called Menota Pty Ltd ("Menota") pursuant to an agreement made in about November 1995 whereby ECCCL (notionally) paid the proceeds to Menota in exchange for promissory notes issued by it. According to the applicant, they were backed by mortgages and had a future maturative value of not less than $10m. Menota then (notionally) lent the same amount back to ECCCL. The actual proceeds of the certified deposits, however, remained in ECCCL's cash management account and, on the applicant's case, were made available to ECCCL as loans from Menota. This arrangement, said the applicant, entitled him to draw on the proceeds as he did. He contended that the agreement with Menota was made in order to minimise the exposure of the invested funds to Australian taxation and in order to gain a greater return for the shareholders. Although the applicant's case was that the agreement with Menota was evidenced by an exchange of correspondence, this claim was not put to relevant Crown witnesses by his counsel, as will be mentioned again later. The Crown contended that this explanation by the applicant for appropriating the proceeds was but a tissue of lies and that in truth the applicant stole the money that belonged to the subscribers. It is apparent from the jury's verdicts that they rejected the applicant's contention as to his entitlement to deal with the proceeds of the certified deposits. As I will explain later, the Crown called evidence that, at the time when the Australian Securities and Investments Commission and the auditors were investigating the applicant's companies in March and April 1997, he procured a director of Menota, Dr Francken, to sign a letter on 22 April 1997, which the applicant had drafted and back-dated to 22 November 1995, that purported to reflect the agreement that he contended existed between ECCCL and Menota in respect of the proceeds of certified deposits. He also sent Dr Francken a facsimile on 25 April 1997 in which he purported to confirm earlier requests by ECCCL to Menota to liquidate the promissory notes and thereby put ECCCL in funds. These fraudulent letters were the subject of counts 53 and 54.

[53]

Moreover, said counsel, the judge failed to tell the jury that it was for the Crown to prove beyond reasonable doubt that the applicant did not hold such a belief and that they could not properly conclude that he had acted dishonestly unless they were satisfied beyond reasonable doubt that the Crown had excluded the reasonable possibility that the applicant held the belief for which he contended. It was not sufficient, it was claimed, for her Honour merely to state the relevant provisions of the Crimes Act dealing with theft and not explain how those principles operated, or could operate, in the context of the present case. In all the circumstances, said Mr Croucher, the jury might not have understood that they could not properly convict the applicant of the dishonesty offences unless they were satisfied beyond reasonable doubt that he did not have the belief for which he contended. Counsel contended that her Honour's charge effectively relieved the prosecution of the obligation of disputing the applicant's claim that he held this belief and in support of that contention counsel relied on certain observations of Gaudron, J. and Hayne and Gummow, JJ. in Murray v. The Queen[16]. In particular, Mr Croucher pointed to the statement by Gaudron, J.[17] that the issue for the jury was not whether they should accept the applicant's version, but whether the prosecution had negatived his explanation as being reasonably open. In that case, the defence was that the accused did not intend to pull the trigger that discharged the shotgun and killed the deceased. In the circumstances, said her Honour, the impugned direction misstated the issue for determination in a way that relieved the prosecution of proving its case beyond reasonable doubt. Similarly, Gummow and Hayne, JJ.[18] pointed out that it was erroneous for the trial judge to tell the jury that it was for them to decide which version of events they would accept - that of the prosecution or the accused. The question for the jury, said their Honours, was whether the prosecution had proved the relevant elements of the offence beyond reasonable doubt. Their Honours concluded that the trial judge's direction about accepting the applicant's version of events "was apt to mislead the jury about the decision they have to make, which was whether the prosecution had proved the relevant elements of the offence beyond reasonable doubt".

[114]

On one view of the applicant's conduct there is room for argument that the aggregate sentence understates the criminality of his fraudulent behaviour. Be that as it may, I consider that, for the reasons given below, the head sentence does not overstate the nature and extent of the criminality of the applicant's fraudulent conduct. The principal question under this ground is whether the sentence is outside the relevant range of sentences, particularly having regard to the operation of the principle of totality. This question does not admit of much argument. In sentencing the applicant the judge was required to fix a sentence that properly reflects the seriousness of the offence and of the offending conduct, taking into account the matters personal to the applicant and other mitigating circumstances, as well as the applicable sentencing principles. The principal offences here were obviously treated by Parliament as being very serious, attracting a maximum term of imprisonment of 10 years in the case of theft, and (then) 7 years and 6 months' (now 10 years) in respect of the false accounting charges. I consider that the applicant's offending conduct was very grave and demonstrated a complete disregard by him, over a significant period of time, of the fact that he held a position of trust and responsibility in respect of a significant number of people who entrusted a large amount of money to his care. He progressively disregarded their interests in preference to his own. Moreover, he went to considerable lengths to "invent" transactions and to manufacture evidence as to their alleged existence in order to hide his fraud and he continued to believe that he could talk his way out of his criminal behaviour until the jury delivered their verdicts. Even when the "writing was on the wall", when his empire was collapsing and with it, the securities that were in place in respect of the investments of the many subscribers, the applicant continued his brazen conduct of fraudulently using their funds for his own purposes, including his selfish material comforts, and those of his family, when he must have known that this constituted a serious breach of trust and amounted to criminal conduct.

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Judgment (155 paragraphs)

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