REGINA v. PIPES [2004] NSWCCA 351

1 GREG JAMES, J: This is an application for leave to appeal against sentences imposed upon the applicant in the District Court of New South Wales in respect of his plea of guilty of one count of an offence under s.134.2 of the Criminal Code 1995 (Cth); that is, an offence of obtaining a financial advantage by deception. 2 In respect of that offence, the applicant was sentenced to imprisonment for a term of three years to commence on 6 February 2004, that term to expire on 5 February 2007. There was imposed in respect of that sentence a release recognisance to enable the defendant to be released on that recognisance on 5 February 2006, the recognisance being imposed under s.20(1)(b) of the Crimes Act 1914 (Cth) in the sum of $2,000. It included terms that the offender be of good behaviour for the balance of the sentence, and to appear if called upon to do so. 3 The applicant had been admitted to bail on 21 October 2003 and had remained on bail prior to the sentencing hearing. The sentence had been imposed following the matter having come before the court on 6 February 2004, and the offender was remanded in custody on that date. 4 The offender was charged in the following terms: that he did between about 11 December 2001 and about 23 December 2002, by deception, dishonestly obtain a financial advantage, namely, incapacity allowance payments from the Department of Defence. 5 In detailed reasons, the learned trial judge referred to the circumstances in which the offences had come to be committed. She noted that the maximum penalty provided for the offence was one of 10 years imprisonment. 6 The applicant had been employed by the Department of Veterans Affairs since 1993 and was a senior member of the Public Service. In July 2000, he was transferred to the Military Compensation and Rehabilitation Scheme within that department. It was part of his duties to make decisions as to whether ex military servicemen and women were entitled to be paid incapacity payments on account of being injured while on service. As part of his duties from time to time, he would have to inform ex-servicemen and their partners that they were no longer regarded as incapacitated and, therefore, would no longer receive incapacity payments. 7 Her Honour accepted that that aspect, at least, of his employment was stressful for him, and went on to find, however, that in that context the offender had attained such seniority within the department that he was able to recommend that such persons receive a one-off payment when in financial difficulty. 8 In the reasons her Honour gave for her sentence, she set out the mechanism whereby the sums that the offender obtained had become available to him from departmental funds. There were 20 of these payments that he managed to divert to his own benefit, utilising the accounts of persons who might have been able to receive such payments. The total amount he obtained was the sum of $155,644. 9 The monies were obtained in this way: the offender, thanks to the position of trust that he occupied at the higher level, had access to the departmental computer system database, which contained the personal details and bank account numbers of individual clients, these being persons whose claim for such a payment had been assessed by a claims assessor, who, if assessing the claim favourably, sent a request to the payroll office for which a number was allocated. 10 Once the number was allocated funds were credited directly to the bank account of the client, the number having been entered into the computer database. The applicant's access was such that he could enter the database and change or delete the information in it. His authority to do so enabled him effectively to conceal that he had had that access. He used the bank account details of the relevant clients in order to obtain the moneys and there was, in the result, no way in which a regularly conducted audit or examination of the information on the database would have revealed his conduct. 11 The learned trial judge found, in relation to that matter, that it was likely that had he not been detected that he would have continued to commit the offences. There were only four people employed in the Department in whom was imposed such a high level trust as he enjoyed and, as such, were able to exercise the access that he obtained. 12 The applicant had pleaded guilty at the Local Court. It was accepted that he had entered his plea at the earliest opportunity and had assisted the authorities in the investigation. 13 At a number of points in her reasons the learned sentencing judge referred to the applicant's contrition and remorse and the fact that he had repaid the money taken. When her Honour turned to the subjective circumstances, she referred to the applicant as being a man of 53 years of age, having been born on 19 November 1950, with no prior criminal convictions, married with two teenage children but separate from his wife, in particular, in consequence of his having to take out a mortgage on their jointly owned home in order to repay the money stolen. He resigned from the department immediately the offences were discovered and had been, until his imprisonment, working as a foreign exchange consultant. 14 Her Honour noted that the applicant was an alcoholic with a long history of alcohol abuse and that that alcoholism was contributed to by the stress of the work that he was doing and the feeling that he was unsupported by his superiors. He had said that the crime was committed because of his drinking and those matters. The applicant had said that he gambled away all of the money that he had stolen and that while he was gambling he was in a trance, felt numb and did not care if he lost the money or not. 15 Her Honour noted that he had in 1988, for a period of about 18 months, attended Alcoholics Anonymous but that he had resumed drinking and had lied to his wife, leading her to assume that he was still attending Alcoholics Anonymous and still sober. 16 Her Honour then noted in her reasons for judgment that the applicant said that he then commenced to gamble. The applicant referred to gambling when he was drinking and, thus having the two problems, each contributing to the total picture. He gambled using any income available after payment of normal family bills and used available credit on his credit card. All of this was noted by her Honour but she also noted that the psychiatrist who had assessed the applicant did not regard gambling as a particular problem for the future. Further, that the alcoholism had been treated by the applicant in such a way that since the exposure of his crime he had returned to Alcoholics Anonymous, was attending meetings, had the urge to drink but had so far remained sober. 17 Her Honour noted that the urge to gamble, according to the applicant, was associated with his drinking and that the applicant had chosen to attend Alcoholics Anonymous on the basis that that would address his overall problem. 18 The psychiatrist who had prepared a report which was before her Honour, regarded the applicant as having a good prognosis for the future, notwithstanding his past in gambling, and that the applicant did not indicate that he had any overwhelming urge to gamble while committing these crimes but that rather it had been a way to dissipate the stolen money. 19 In the psychiatrist's report under Prognosis appears the following:- "1. Richard's prognosis from the point of view of his 'gambling' seems good. His finances are controlled; his urges are not significant. This favourable outlook may also be related to the gambling being somewhat of a 'red herring'. It seems secondary to the illicit acquisition of monies, which is obviously the reverse of the clinical picture one usually sees. He talked about the pivotal thoughts when he committed the first fraud. Richard articulated the awareness of his act being wrong. There was no mention of any sense of having to do it, fuelled by an escalating gambling problem. There is a not uncommon practice in gamblers who are reduced to take money, of initially leaving some of IOU, believing or hoping that they will soon pay it back. Richard dismissed this as missing the point. His primary focus was the taking of the money, rather than this being a 'necessary evil' to fund any specific venture or activity." 20 He had earlier to the psychiatrist said that he gambled as a way of escaping from problems or of "relieving a dysphoric mood (eg. feelings of helplessness, guilt, anxiety, depression)". 21 Her Honour concluded that it appeared that the theft of the money was the prime motivation of the offender rather than being driven to take the money because of the urge to gamble. Her Honour further concluded that the prognosis for the applicant was not as positive as he believed in relation to his alcoholism and referred to some observations by the psychiatrist as to his lack of insight. Her Honour accepted that from the material before the court the applicant was, in all other respects, a well-regarded member of the community and that the effects on the applicant and his family were profound. 22 Her Honour turned to the criteria under s.16A and held that it was necessary that the court set a sentence of appropriate severity. She concluded, rightly in my view, that full-time custody was the only appropriate option available in the circumstances. Her Honour noted the position of trust and the perceived loophole in the system which enabled the applicant to perpetrate the fraud on the Commonwealth. Her Honour said:- "It is significant to an assessment of the objective gravity of the offence that the crime was committed over a period of more than one year. I accept that it was a sophisticated manipulation of the system which allowed the theft to take place. The sum stolen was not inconsiderable, around $156,000." 23 Her Honour referred favourably to the applicant's subjective circumstances and his willingness to facilitate the course of justice and the lack of prior convictions but set against that that the crime was not a one-off or isolated offence. Her Honour was unable to find that the crime was driven by any pathological desire to gamble and accepted the psychiatrist's view that the gambling was a secondary matter to the theft. 24 Her Honour accepted that a deterrent sentence needed to be imposed and in having regard to the non-parole period, as her Honour expressed it, said this:- "The usual ratio in commonwealth matters between non-parole period and head sentence is approximately 60 to 66%. There is no material before me to justify departure from that proportion." 25 Her Honour said later:- "Any further reduction in the non-parole period would not adequately reflect the objective criminality of the offence." 26 Her Honour said that in conjunction with saying that she had taken into account the matters in mitigation put to the court. 27 The course her Honour took in the upshot was to impose the sentence to which I have referred, directing the applicant's release on a recognisance in the way to which I have also referred. 28 Before us it was urged that her Honour has fallen into error in that the period that the applicant was required to spend in custody under the sentencing orders by her Honour was manifestly excessive; that the applicant needed supervision in the community, particularly in light of his gambling and alcoholism and that her Honour erred in not finding that the cause of the theft was gambling. 29 When one has regard to the material before her Honour and to the factual findings her Honour made, I am unable to conclude that her Honour erred in any respect and particularly not in the exercise of her discretion by failing to conclude that the offender needed a longer period of supervision in the community, particularly not in the context of requiring such a longer period in order that the applicant's gambling or alcoholism might be dealt with. As I see the evidence, it was entirely open to her Honour to conclude that the basis for the theft was not the pathological gambling. 30 Emphasis was made in the submissions put to us that the applicant had been contrite; that he initially admitted to the police in his electronically recorded interview as a suspected person the fact of his alcoholism and gambling but nonetheless, on the totality of the material, the conclusions to which her Honour came were, in my view, entirely open to her. 31 It was accepted in the submissions put to us that the applicant had to receive a custodial sentence but it was submitted that the fact of the three year total sentence sufficiently marked specific and general deterrence so that a non-parole period or period in custody approximating 60 to 66% of the total sentence exceeded that which her Honour should have imposed in the exercise of a sound discretion, this notwithstanding that the Probation and Parole report before her Honour indicated that a short period of supervision might well serve the circumstances of the relevant case. 32 Those submissions tended to focus entirely on the applicant's need for rehabilitation, whether that was a personal need or a need of the community to see the applicant rehabilitated was not made entirely clear. The submissions did not, in my view, deal with the fact that her Honour found that the period of actual custody she imposed was the shortest period appropriate to be served in custody for this offence. 33 The submissions that had been made in writing prior to the hearing of the appeal emphasised the subjective factors put forward at the hearing by the applicant. It was submitted that the crime could be explained as having been committed as a result of the confluence of those factors, those factors being generated in particular by an underlying dynamic of stress. 34 It was submitted that the proper characterisation of the offence was not that it was an offence of greed in which money was hoarded or lavishly expended, but that because the proceeds of the offence were gambled away that the applicant should receive some form of special consideration. 35 A number of decisions by this court and other courts have looked to matters such as alcoholism and gambling of a pathological kind as showing a basis in which the court might intervene where there might be effective steps taken to protect the community. All of that being accepted, such things might afford an explanation for the offence rather than an excuse of mitigation and such things might afford a basis for future rehabilitation, nonetheless, the submission does not go to the essential question before the court on this application for leave to appeal, which is, whether her Honour fell into such error in the exercise of her discretion that the court should intervene; whether in the sense propounded by the High Court in House v. The King (1936) 55 CLR 499 there was some such error that calls for this court's intervention. 36 I am unable to say that the period her Honour directed that the applicant should serve in custody is either of itself or, when considered in the context of the factual arguments put forward by counsel so ably on the applicant's behalf, attended by such error. 37 Since the matter has been fully argued before us, I would propose that the court grant leave to appeal but dismiss the appeal. 38 STUDDERT, J: I agree. 39 BELL, J: I also agree. 40 STUDDERT, J: The orders of the court are those proposed by Greg James J. **********

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