R v Child [1999] NSWCCA 407

New South Wales Court of Criminal Appeal CITATION : R v Child [1999] NSWCCA 407 FILE NUMBER(S) : CCA 60254/98; 60255/98 HEARING DATE(S) : 08/12/99 JUDGMENT DATE : 8 December 1999

PARTIES : Regina v Justin Matthew Child Regina v Paul Charles Child JUDGMENT OF : James J; Sperling J

LOWER COURT JURISDICTION : District Court LOWER COURT FILE NUMBER(S) : 96/11/0083 LOWER COURT JUDICIAL OFFICER : Job DCJ

COUNSEL : CK Maxwell QC (Crown) In Person SOLICITORS : SE O'Connor (Crown) - CATCHWORDS : Criminal law and Procedure - Sentencing - No question of principle DECISION : Appeal dismissed

IN THE COURT OF CRIMINAL APPEAL 060254/98 060255/98 JAMES J SPERLING J

WEDNESDAY 8 DECEMBER 1999 REGINA v JUSTIN MATTHEW CHILD REGINA v PAUL CHARLES MORRISON CHILD

JUDGMENT

1 JAMES J: Paul Child and his son Justin Child have applied for leave to appeal against sentences imposed on them. 2 After a trial in the District Court before his Honour Judge Job and a jury, Paul Child was found guilty of three counts of fraudulent misappropriation, that is offences under s 178A of the Crimes Act, and one count of obtaining a financial advantage by deception, an offence under s 178BA of the Crimes Act. 3 On each count of fraudulent misappropriation, Judge Job sentenced Paul Child to a sentence of penal servitude for five years four months, consisting of a minimum term of four years to date from 30 April 1998, which was the date of sentencing, and an additional term of one year four months, the sentences to be served concurrently. 4 On the charge of obtaining a financial advantage by deception, Paul Child was sentenced to a fixed term of imprisonment of two years to date from 30 April 1998. 5 At the same trial Justin Child was found guilty of three counts of aiding and abetting the fraudulent misappropriations by his father. On each count he was sentenced to a sentence of penal servitude for three years four months, consisting of a minimum term of two and a half years to date from 30 April 1998, the date on which he was sentenced, and an additional term of ten months. 6 The maximum penalty for fraudulent misappropriation and for aiding and abetting fraudulent misappropriation is penal servitude for seven years. The maximum penalty for obtaining a financial advantage by deception is imprisonment for five years. 7 Each of the applicants was legally represented at the trial. However, each applicant has appeared in person on these applications for leave to appeal against sentence. 8 The facts of the offences were stated by the sentencing Judge in his remarks on sentence and the following is a brief summary of what his Honour said: 9 The applicant, Paul Child, was a superannuation consultant and was the director of a company called Directors Dividends, which carried on the business of assisting clients to set up self-managed superannuation funds. The company Directors Dividends failed, owing a large sum of money. Paul Child was made bankrupt. As a bankrupt he was disqualified from acting as a director of any company. 10 Two companies, International Fund Managers, to which I will refer as "IFM", and Self Managed Superannuation, to which I will refer as "SMS", were set up. 11 Paul Child's two sons, the applicant Justin Child and his other son Adam Child, became the directors of the companies. At the time they became directors Justin was only 21 years old and Adam was only 20 years old. Neither of them had had any real business experience. At the trial Paul Child claimed that, although he had acted as a consultant, he had taken no part in the running of the two companies. 12 The three counts of fraudulent misappropriation by Paul Child and the three counts of aiding and abetting fraudulent misappropriation committed by Justin Child were based on similar events. In each case moneys were paid by a client of IFM or SMS. These moneys, instead of being paid into a special account, were paid into a general bank account of IFM or SMS and were then disbursed in various ways, otherwise than in accordance with the terms on which they had been received. 13 In the first case a company Thermaline Scientific Equipment caused two cheques totalling $210,655.33 to be sent to IFM. Instead of the cheques being deposited into two bank accounts which had been opened specifically to receive the cheques, Justin Child deposited the cheques into the general account of IFM. After a representative of IFM had made inquiries about what had happened to the cheques, Paul Child, after initially denying that the cheques had been received, admitted that the cheques had been wrongly paid into the account of IFM. 14 Arrangements were entered into to repay Thermaline. $132,587 was repaid by the applicants. The balance of $78,068.33 was repaid by the bank at which the IFM account was conducted, the bank acknowledging that the cheques from Thermaline should not have been credited to IFM's account. 15 In the second case a company Master Ceilings Pty Ltd caused a cheque for $152,079.65 to be sent to SMS for the purposes of a superannuation fund. The cheque was paid into a general account of SMS. At the time the cheque was deposited, the balance of the account of SMS was only $14. An amount of $20,000 was ultimately repaid to Master Ceilings Pty Ltd, leaving an amount of $132,079.65 outstanding. 16 In the third case, 18 cheques totalling $463,228.47 payable to a Combined Trade Unions Retirement Fund were paid into the bank account of SMS. 17 In the case of the charge of obtaining a financial advantage by deception, Paul Child had advised a doctor about the rolling over of the doctor's existing superannuation fund. The sum of $80,328.48 was paid to SMS for the purposes of the roll over. 18 The total effect of the various transactions was summarised by Judge Job as follows: "The total amounts of money received by IFM and SMS subject to the charges was $906,291. Moneys repaid by the prisoners amounted to $152,587. The balance, if there is a balance, of $753,704 banks had refunded $541,296 due to the fact that they had wrongly allowed cheques to be deposited into the IFM and SMS accounts. However, the loss to the banks and to the clients of the companies amounted to over three-quarters of a million dollars." 19 The sentencing Judge devoted part of his remarks on sentence to making findings about how the moneys paid into the bank accounts of IFM and SMS had been applied. Large amounts had been paid out of the SMS account to other superannuation funds and his Honour concluded that those payments had been made because previously amounts belonging to those superannuation funds had been wrongly paid into SMS's account and had been spent. 20 At least $92,487 had directly or ultimately been received from SMS by a company called Esperanza Lodge Pty Ltd. Paul Child gave evidence at the trial that Esperanza Lodge Pty Ltd was a discretionary trust of which he was not a beneficiary and that Esperanza Lodge did not trade in any way. He gave evidence that he could not explain why Esperanza Lodge had received money from SMS. He said that he had not been involved in those transactions. An investigation of the affairs of Esperanza Lodge disclosed that substantial moneys had been paid by Esperanza Lodge out of moneys received from SMS for the purchase, upkeep, training, transport and agistment of show horses. 21 It was the Crown case at the trial that, although Justin Child was a director of IFM and SMS and did all the banking for the companies, it was Paul Child who had controlled the activities of both companies. 22 As I have already indicated, Paul Child gave evidence at the trial that, although he had acted as a consultant to both companies and had given advice to clients of both companies, he had taken no part in the administration of the affairs of the companies, that being left entirely to Justin Child. Paul Child claimed that he was unaware that Justin Child had deposited clients' funds in the bank accounts of IFM and SMS or how the moneys deposited in those accounts had been spent. 23 At the trial, Justin Child gave evidence supporting his father's version, to the effect that after he had become a director of the companies he had been responsible for carrying on the affairs of the companies. He said that he had done all the banking and had written all the cheques. He was unable to account for where the money had gone. 24 Paul Child maintained the position he had taken at the trial when he was interviewed by a probation officer for the purposes of a pre-sentence report. The sentencing Judge quoted extensively from the pre-sentence report as follows: "Mr Child absolves himself from any involvement in the offences, maintaining he 'withdrew' after being declared bankrupt and spent two years staying at home, working on his computer. He claims he did not wish to get involved at all with the company his son was operating. On the occasions when he did act as a consultant to prospective clients, he maintains he did so reluctantly. Mr Child is adamant he had no involvement in the clerical/administrative affairs of the company. When discussing the impact on the victims, Mr Child indicated that he believed all the people involved had been reimbursed by the appropriate financial institutions, aside from Dr Rodgers. As a result, he minimised the anguish the victims had suffered. Assessment and Sentencing Alternatives: Mr Child portrays himself as a benevolent individual with strong Christian values, whose long-term goal is to establish a Ministry where people can access support and respite. It is difficult to correlate Mr Child's offending behaviour with his stated personal values. Whilst the offender tends to place particular emphasis on his medical condition and related emotional difficulties as mitigating factors in his offences, this Service finds it difficult to accept. Through the establishment of his Ministry, Mr Child is actively seeking donations, bequests and gifts of materials, provisions or equipment, which illustrates the offender's lack of insight into the community's perception of his offences".