Smith v The Queen [2018] VSCA 208

CRIMINAL LAW - Sentence - Manifest excess - Not arguable - Leave refused.

1 On 17 August 2017, following eight days of pre-empanelment argument before a judge in the County Court, the applicant pleaded guilty to a single charge of conspiracy to defraud. A plea hearing involving contested issues of fact was conducted over three hearing days in November and December 2017. On 9 February 2018 the applicant was sentenced to a term of imprisonment of three years.[1] A non-parole period of two years was fixed. The maximum penalty for the offence to which he had pleaded guilty was 15 years' imprisonment.

2 The applicant now seeks leave to appeal the sentence on two proposed grounds. The first is that the sentencing judge erred by failing to take into account that imprisonment would be a greater burden on the applicant because of his serious physical illness. The second is that the sentence imposed is manifestly excessive.

3 The applicant was part of a fraudulent scheme described in the prosecution opening on the plea as 'ghost terminal skimming'. Under such schemes wireless EFTPOS terminals are purchased and the software is modified in order to capture and store credit and debit card data and personal identification numbers (PINs). The modified devices appear to be legitimate EFTPOS terminals. The devices are then placed in situations where small transactions take place, such as in taxis and convenience stores. This requires the dishonest cooperation of the taxi drivers, convenience store employees or others to whom the devices are given. The modified devices download stored data on credit and debit cards which the participants in the conspiracy place on a computer and then transfer to a magstripe card, such as a blank gift card. The magstripe card, with the stolen data encoded on it, is then used at automatic teller machines ('ATMs') to make cash withdrawals.

4 The facts conceded or established before the sentencing judge revealed that the applicant played two roles in a fraudulent scheme of this kind.

5 The first role he played was as the person who used the magstripe cards with the stolen data to make cash withdrawals from ATMs.

6 The applicant lives in Sydney. He made four trips to Melbourne in the company of his brother-in-law, a co-offender, for the purpose of obtaining cash using magstripe cards with stolen data. Between 4 and 7 August 2015 he and his co-offender attended at ATMs on nine occasions to make withdrawals. Between 17 and 19 August 2015 he and his co-offender attended at ATMs on nine occasions for the same purpose. On 23 and 24 August 2015[2] the applicant and his co-offender attended at ATMs on 11 occasions for the same purpose. On 7 September 2015 the applicant and his co-offender came to Melbourne again. On 8 September 2015 they attended at ATMs on five occasions to withdraw cash. An astute police officer, who had been reviewing CCTV footage of suspicious activities, had anticipated their presence. He discovered them at an ATM and followed them until they separated. He then followed the applicant and eventually apprehended him in a hotel bathroom attempting to flush down the toilet receipts and cards. When apprehended the applicant was in possession of 16 cards and $2,900 in cash. The applicant also had two mobile phones. On one of them police found a receipt for a storage facility. When the storage facility was searched, cash, 124 cards with PINs written on them, storage devices, and computer equipment used in the fraudulent card skimming scheme were discovered. The applicant's co-offender was not apprehended and it is believed that he left Australia.

7 The applicant and his co-offender undertook over 130 separate transactions during their four visits to Melbourne. Typically, cash withdrawals, or attempted withdrawals, were undertaken by the applicant whilst his co-offender kept watch. Often, numerous transactions were undertaken or attempted at the one ATM. In all, the applicant and his co-offender successfully withdrew $26,584 and attempted to withdraw a further $22,094.

8 The second role of the applicant in the fraudulent scheme was that he approached two taxi drivers in an endeavour to persuade them to participate by using the modified devices. This was a matter which was contested on the plea. The sentencing judge found, for reasons he set out, that the applicant had attempted to 'recruit' the two taxi drivers.[3] It is not contended that the sentencing judge made any error in reaching that conclusion.

9 Another matter contested on the plea concerned the applicant's knowledge of the items found at the storage facility. For reasons set out by the sentencing judge, he concluded that the applicant did know of the relevant contents of the storage facility.[4] It is not contented that the sentencing judge made any error in reaching that conclusion.

10 Finally, it was contended on the plea that the applicant had been pressured into becoming involved in the conspiracy and that his family had been threatened if he did not comply. The judge said that there was no evidence that the applicant was under any pressure, save for his instructions to his counsel and an assertion in his record of interview.[5] It is not contended that the sentencing judge made any error in this regard.

11 A further contested issue on the plea concerned the applicant's psychiatric condition. A consultant psychiatrist, Dr Usman Akram Malik, had written a report dated 5 December 2017 suggesting that the applicant at the time of the offences was suffering from what was described as a 'major neurocognitive disorder'. Dr Malik gave evidence at the plea hearing and was cross-examined. A number of matters concerning the applicant's activities and capacity were put to Dr Malik of which he had been previously unaware. The sentencing judge recorded the fact that Dr Malik had been 'compelled' to concede that in the light of these matters there were three likely diagnoses, being: neurocognitive decline, a major depression with a pseudo dementia, or malingering.[6] The sentencing judge continued:

There is no doubt in my mind that the third of those differential diagnoses applies to you, Mr Smith.

It is plain that together with your wife and brother, you deliberately misled Dr Malik as to your cognitive state, in order to attract a lesser sentence, than you might otherwise receive.[7]

12 It is not contended that the sentencing judge made any error in reaching that conclusion.

13 At the time of sentence the applicant was 48 years of age. He had grown up in Egypt. At birth he was diagnosed with Kartagener's Syndrome. This is a condition where the positions of the organs in the body are reversed. It necessarily has adverse health implications, in particular lung disorders. The applicant came to Australia in 1995. He has worked as a security guard, has driven taxis, and established at one point a childcare centre. The applicant is married and is the father of twin boys.

14 The sentencing judge described the applicant as a man 'without prior conviction'.[8] The applicant has been found guilty of offences of dishonesty in New South Wales in 1998. After an appeal, he was placed on what seems to have been a two year recognizance in lieu of a conviction. The sentencing judge was aware of that matter.

15 The applicant's physical health is not good. One consequence of the condition from which he has suffered since birth is that he has chronic lung problems. He has also suffered in the past from coronary disease and from hepatitis C. The sentencing judge heard evidence on the plea in relation to those conditions from the applicant's general practitioner, Dr Elarif.

16 The focus of the applicant's submissions on this application was his lung condition. It is necessary to review how that issue was dealt with on the plea hearing.

The applicant's lung condition and the burden of imprisonment

17 The outline of submissions filed on behalf of the applicant and relied upon before the sentencing judge, in relation to health issues, principally relied upon the applicant's asserted mental illness. As indicated, after hearing the evidence, the sentencing judge found that that condition had been feigned by the applicant with the assistance of his wife and brother. The only reference in the outline to the lung condition was the following:

The Offender's medical conditions - shortness of breath, his functioning on one lung, hypersensitivity to changes in temperature together with a previous heart attack in conjunction with Major Depression would also make a prison sentence more onerous to serve, especially in combination with his Major NCD diagnosis.

18 Dr Elarif's evidence concerning the lung condition was as follows.

19 Dr Elarif explained that Kartagener's Syndrome is an inherited condition. One consequence of this syndrome is that it can cause chronic lung disease.[9]

20 Dr Elarif explained that he had been seeing the applicant more often since approximately September 2017. He agreed that the prospect of his upcoming trial may have been a contributory factor in that regard.[10]

21 The symptoms from which the applicant suffered as described by Dr Elarif included shortness of breath, and Dr Elarif explained that this could manifest itself in his employment, recreational and social activities. He expressed the opinion that the applicant is not suited to engage in any employment that involves exertion or repetitive tasks, that his capacity to engage in sporting activities is extremely limited, and that his social activities are all restricted.[11] Dr Elarif also said that the applicant is prone to recurrent infections and that this manifests itself in the form of bronchitis.[12] Dr Elarif said that the two symptoms of the applicant's chronic lung disease are regular shortness of breath and fatigue.[13]

22 It was put to Dr Elarif by counsel for the applicant that the applicant has only one lung (as had been asserted in the Outline). Dr Elarif explained that his investigation had revealed that that was not the case and that rather the applicant had had a section or portion of one of his lungs removed.[14]

23 When questioned by the sentencing judge, Dr Elarif went through his consultations with the applicant, usually for bronchitis, commencing on 27 November 2017 and going backwards to 24 October, 16 October, 26 September, 20 September, 7 September, 28 August, 23 August, 18 July, and 6 April 2017.[15]

24 When cross-examined the following exchange took place between Dr Elarif and the prosecutor:

As best I can remember it, doctor, the proposition was this: whilst this man has some chronic lung disease, and that much is not disputed? - - - M'hmm, yep.

The extent to which it disables him, is a matter of his history to you. That's what you're relying on, correct? - - - Yes.

Indeed, the disability he tells you, is quite profound, correct? - - - Yes.

Is it the situation that you have referred him to respiratory physicians on numerous occasions, but he has not followed up? - - - Umm, I have referred him, and I believe my colleagues have, yes.

...

Let me put it to you this way, doctor? - - - Yep.

If the symptoms that he tells you are as bad, and he's been referred to specialist treatment, would you expect if he was genuine, that these would be followed up, correct - - - Um, yeah, I would expect them to be followed up.[16]

25 In the course of re-examination his Honour interrupted a question about whether the doctor had seen the symptoms which he had described, saying the following:

It's perfectly plain that the doctor has. The doctor has reported each of the consultations that he has had with his patient, and indicated that at various times his bronchitis is acute, and he has had to be medicated in respect of it. There's no question of that. There's no question that this man's health is adversely affected by chronic lung disease.[17]

26 Shortly thereafter his Honour observed 'I accept that this man is not a healthy man'.[18] Later, when hearing the applicant's counsel's submissions the judge observed, in reference to the applicant's health: 'but I must take into account a number of things. One, that he'll do his time harder in gaol than he otherwise would'.[19]

27 In his sentencing reasons the judge set out the fact that the applicant suffered from, amongst other things, chronic lung disease.[20] He set out Dr Elarif's evidence of his consultations concerning the applicant's lung problems, including the complaints the applicant had made and Dr Elarif's treatment.[21] He referred to the submission that had been made that the applicant had had his right lung surgically removed and observed that that was contrary to the opinion of Dr Elarif who had said that a portion had been removed.[22] After referring to some other conditions, the sentencing judge referred to evidence that had been given by Dr Elarif to the effect that if the applicant did not get proper care in jail his chronic illnesses 'might get worse.'[23] In relation to the effect of the chronic lung disease upon the applicant, the judge said that Dr Elarif had accepted that he was entirely reliant upon the applicant's instructions to him in order to form an opinion on that matter.[24] The judge said that unless he was not properly treated in prison, his chronic lung disease was 'unlikely to become life threatening'.[25]

Proposed ground 1 - physical illness - submissions

28 It was submitted on behalf of the applicant in the written case that physical illness is a relevant mitigating factor in sentence in circumstances where it means that imprisonment will be a greater burden on the offender than would otherwise be the case, and also where there is a serious risk that imprisonment will have an adverse effect on the offender's health. It was contended on behalf of the applicant that, whilst the judge addressed the second factor, he ignored the first. It was submitted that the judge had given 'no weight' to the first factor and that that was an error. The applicant submitted that this error was made notwithstanding that the sentencing judge had expressly acknowledged during the course of the plea hearing that the applicant would find imprisonment harder because of his poor health. In oral submissions senior counsel emphasised reliance upon this Court's decision in R v Van Boxtel.[26]

29 Counsel for the respondent submitted that the sentencing judge had acknowledged and accepted during the plea hearing that the first limb of Van Boxtel was enlivened. Counsel accepted that while the judge had expressly dealt with the second limb in the sentencing reasons, he had not addressed the first, save in his recitation of the applicant's attendances on Dr Elarif during 2017. In that context counsel for the respondent submitted that the judge's reference to Dr Elarif's reliance on the applicant's own account of the effect of his condition was said to be significant, given the findings the judge had made as to the applicant's credit on the issue of his psychiatric condition, as was the evidence given by Dr Elarif as to the applicant's failure to follow up with specialists to whom he had been referred. Counsel for the respondent submitted that, even if the judge had made an error in overlooking the first limb of Van Boxtel, no different sentence should be imposed as there was a 'paucity' of reliable evidence as to the greater burden that prison would impose on the applicant by reason of his chronic lung condition.

30 In Van Boxtel Callaway JA, with whom Ormiston and Charles JJA agreed, adopted the analysis of King CJ on the issue of ill health in R v Smith.[27] King CJ had said that ill health was a factor tending to mitigate punishment 'only when it appears that imprisonment will be a greater burden on the offender by reason of his state of health or when there is a serious risk of imprisonment having a gravely adverse effect on the offender's health'.[28] Callaway JA observed that King CJ had identified two different ways in which ill health may be a factor mitigating punishment.[29]

31 In Van Boxtel Callaway JA also addressed an earlier decision of this Court in R v Boyes.[30] In Boyes Chernov JA had suggested that ill health or a disability was a mitigating factor only where imprisonment would mean that the offender would have more difficulty coping with his ill health or disability inside prison than outside it. In that context Chernov JA used the example of a one armed man. He suggested the one armed man could cope with prison life in much the same way as he coped with life outside prison, and that although the burden of imprisonment would be greater for him than for other inmates this increased burden was no different to the increased burden of his life outside prison.

32 Callaway JA rejected this approach and considered it to be inconsistent with prior authority. He said that the relevant issue is not whether imprisonment will make the ill health a greater burden but whether the ill health will make imprisonment a greater burden. Callaway JA said:

If a one-armed person will, for that reason, find prison life more difficult than a person with both arms, he or she is more severely punished than an able-bodied co-offender if they are given the same sentence.[31]

33 Callaway JA's approach has been generally adopted,[32] and the respondent made no submission against its adoption here.

34 Before leaving Van Boxtel it should be noted that Callaway JA also emphasised that the weight to be given to ill health was, like all mitigating factors, 'another matter', observing that in some cases they might be of great consequence and in others they might make no difference when all relevant circumstances are taken into account.[33]

35 The introduction to King CJ's statement concerning the two different ways ill health may be mitigating, which, Callaway JA quoted and adopted, should also be noted. King CJ began by saying:

The state of health of an offender is always relevant to the consideration of the appropriate sentence for the offender. The courts, however, must be cautious as to the influence which they allow this factor to have upon the sentencing process. Ill health cannot be allowed to become a licence to commit crime, nor can offenders generally expect to escape punishment because of the condition of their health.[34]

Proposed ground 2 - manifest excess - submissions

36 In his written case the applicant submitted that the sentence imposed is manifestly excessive given the applicant's plea of guilty, his age, the fact that he was dealt with by the sentencing judge as a person without prior convictions, the delay, and the applicant's poor physical health. It was submitted that, whilst the applicant played an active and significant role in the conspiracy, there was no evidence that he ever used the skimming machines himself and, apart from being identified as offering machines to the two taxi drivers, there was 'precious little' evidence that he had anything to do with the skimming other than his use of the cards in the cash withdrawals. It was submitted that the amounts involved were 'relatively small' and that the charge could have been heard summarily in the Magistrates' Court where the maximum penalty would have been two years' imprisonment. In oral submissions senior counsel relied upon the judge's statement in the course of the plea hearing that the offending was 'a serious example' of the crime of conspiracy, but: 'It's not a very serious example. It is not the most serious example'.[35]

37 On behalf of the respondent it was submitted that manifest excess could only be established if the Court were to conclude that the sentence imposed was not reasonably open to the sentencing judge. It was submitted that in this case that proposition is not arguable.

38 The respondent submitted that the 'true criminality' of the applicant's offending was not properly recognised in the applicant's submissions. The applicant travelled from Sydney to Melbourne for the sole purpose of committing crimes of dishonesty. The acts which he carried out took place on 10 different days over five weeks. A sum of $26,584 was obtained and a further sum of $22,074 was attempted to be obtained. The applicant's conduct was part of a sophisticated and planned fraudulent scheme. The applicant had not only withdrawn or attempted to withdraw cash on numerous occasions as part of the scheme but he had attempted to recruit two taxi drivers to the scheme. It was submitted that the seriousness of the offending, and the lack of mitigating features, meant that it could not be argued that the sentence imposed was not reasonably open.

Proposed ground 2 - manifest excess - analysis

39 In our opinion proposed ground 2 is not arguable. Taking into account all of the mitigating factors, including the applicant's chronic lung condition, the sentence imposed of 3 years' imprisonment with a non-parole period of 2 years was clearly within the range of sentences open to the sentencing judge. The respondent's characterisation of the 'true criminality' of the applicant's offending was well founded in our view. Whether one characterises the particular offence as a 'serious' or 'very serious' example of the offence of conspiracy to defraud, the applicant's involvement in this highly organised and sophisticated fraudulent scheme fully warranted the sentence that was imposed.

Proposed ground 1 - the applicant's lung condition - analysis

40 Before turning to the specific issue of the sentencing judge's treatment of the lung condition a more general point needs to be made. The plea hearing in this matter extended over three days. That was because there were a significant number of contested issues raised concerning the circumstances of the offending and the applicant's health. In relation to the circumstances of the offending the applicant contested his involvement with the taxi drivers, contested his knowledge of what was found in the storage facility, and contended that he had been threatened and pressured into the offending. The sentencing judge found against the applicant on all these issues for reasons which he set out. At the plea hearing the principal health concern advanced on behalf of the applicant was not the lung condition. It was the asserted mental condition. The sentencing judge found that that condition had been feigned. As to the physical health conditions, at the plea hearing the contention was that the applicant's physical complaints ought to be taken into account in mitigation both because the burden of imprisonment would be greater and because there was a serious risk that imprisonment would have a gravely adverse effect on the offender's physical health. The judge rejected the second aspect of that contention and no complaint is made on this application in relation to that.

41 Thus, the intense focus placed in the course of this application upon the mitigating factor constituted by the increased burden of imprisonment as a result of the applicant's chronic lung condition does not reflect the emphasis placed upon the relevant matters at the plea hearing.

42 Having said that, the lung condition was a matter relied upon in mitigation, and in the course of the plea hearing the judge said that he accepted that it was a matter that he 'must take into account'. Yet the sentencing reasons, while they set out Dr Elarif's evidence as to his consultations with the applicant, do not expressly refer to this matter as a mitigating factor. The sentencing judge did address the health issues at some length, but, whereas it is sufficiently clear that he did not accept that there was a significant risk of a gravely adverse effect on the applicant's health (the second limb of Van Boxtel), he does not repeat in his sentencing reasons his acceptance of the increased burden of imprisonment (Van Boxel's first limb). The issue then arises as to what is to be made of that lacuna in the sentencing reasons.

43 As was explained by this Court in R v Koumis,[36] transparent and accessible reasoning is essential to the sentencing process. It is generally expected that express reference to material considerations, including circumstances the judge regards as mitigating, will be included in the reasons. If such a matter is absent, that will not of itself vitiate the sentencing discretion. The issue then is whether the matter was material. If it was, the sentencing judge was obliged to take it into account, and, as this Court in Koumis then explained:

The conclusion that the sentencing judge has failed to do so or to give it sufficient weight, will then commonly depend upon whether it can be said that a markedly different sentence would have followed, had the matter been taken into account.[37]

44 The increased burden of imprisonment as a result of the applicant's chronic lung condition was a material mitigating factor. The sentencing judge said as much himself in the course of the plea. Is it to be assumed, or concluded, that because he did not expressly refer to that factor, in terms, in the course of dealing with the many issues he was required to address in the sentencing reasons, that it was a matter which he had overlooked or failed to give proper weight? In the circumstances of this case, we do not think so.

45 We are unpersuaded that the sentencing judge did in fact overlook, or fail to give proper weight, to this consideration. He expressed his acceptance of it as a mitigating factor in the course of the plea and he set out the relevant evidence in his reasons in some detail. In any event, following what this Court said in Koumis, we do not consider that the sentence itself reveals that the judge had overlooked this matter. In our opinion a markedly different sentence would not have followed had the applicant's health been taken into account. Indeed, in terms of s 281 of the Criminal Procedure Act 2009, even if we were satisfied that there had been an error in the sentence first imposed, we are not satisfied that a different sentence should be imposed for the reasons we have given in relation to proposed ground 2.

46 Proposed ground 1 was arguable and we will grant leave to appeal on that ground. The appeal will be dismissed.

[1] DPP v Smith [2018] VCC 75 [59] ('Reasons').

[2] The Reasons at [16]-[18] state that the relevant dates are 21 and 23 August. This is inconsistent with the Summary of Prosecution Opening on Plea at pp 23-6. The 21 and 23 August dates stated in the Reasons are assumed to be an error. The difference in dates is inconsequential in any event.

[9] Transcript of Proceedings (12 December 2017) 109 ('Transcript').

[19] Transcript of Proceedings (13 December 2017) 178.

[24] Reasons [48]. The trial judge cited the passage from the cross-examination quoted above which in the materials before us is at Transcript 136-7. The page cited by the sentencing judge was 'T 94'. It was agreed by counsel before us that this difference was explicable by a difference in pagination and that the judge was referring to the passage in the cross-examination we have quoted.

[26] [2005] VSCA 175; (2005) 11 VR 258 ('Van Boxtel').

[27] (1987) 44 SASR 587 ('Smith').

[29] Van Boxtel [2005] VSCA 175; (2005) 11 VR 258, 267 [29].

[30] [2004] VSCA 97; (2004) 8 VR 230 ('Boyes').

[31] Van Boxtel [2005] VSCA 175; (2005) 11 VR 258, 268 [33].

[32] See DPP v Granata [2016] VSCA 180 [90]; R v Smart [2005] VSCA 226 [26]; Bowen v The Queen [2011] VSCA 67 [66]; R v PFG [2006] VSCA 130 [58]; Judicial College of Victoria, Victorian Sentencing Manual (at 18 November 2013) 'Circumstances of the offender - Physical health' [10.8].

[33] Van Boxtel [2005] VSCA 175; (2005) 11 VR 258, 268 [33].

[34] Smith (1987) 44 SASR 587, 589.

[35] Transcript of Proceedings (13 December 2017) 178.

[36] [2008] VSCA 84; (2008) 18 VR 434 ('Koumis').