New South Wales Court of Criminal Appeal CITATION : R v HOUGHTON [2000] NSWCCA 62 FILE NUMBER(S) : CCA 60198/99 HEARING DATE(S) : 10/03/00 JUDGMENT DATE : 10 March 2000 PARTIES : REGINA v John Robert HOUGHTON JUDGMENT OF : Fitzgerald JA at 27; Abadee J at 28; Barr J at 1 LOWER COURT JURISDICTION : District Court LOWER COURT FILE NUMBER(S) : 99/11/0063 LOWER COURT JUDICIAL Herron DCJ OFFICER : COUNSEL : Crown: M Ierace Respondent: IS Lloyd QC SOLICITORS : Crown: Commonwealth Director of Public Prosecutions Respondent: Tesoriero Pegler R v Phillip Ngui, Court of Criminal Appeal, 23.8.90, unreported CASES CITED: R v Mark Patrick O'Neil, Court of Criminal Appeal, 24.7.96, unreported R v Egerton, Court of Criminal Appeal, 8.8.97, unreported DECISION : Appeal dismissed IN THE COURT OF CRIMINAL APPEAL 60198/99 FITZGERALD JA ABADEE J BARR J Friday, 10 March 2000 REGINA v John Robert HOUGHTON JUDGMENT 1 BARR J: This is an appeal by the Crown against what is said to be the inadequacy of the sentence imposed on the respondent in the District Court. The respondent pleaded guilty before the Magistrate of twenty-six counts of fraudulently applying company property whilst being a director. The maximum penalty for any such offence is ten years imprisonment. 2 On 22 March 1999 Judge Herron QC sentenced the respondent to twenty-six concurrent terms each of two years' imprisonment comprising a minimum term of eighteen months and an additional terms of six months. 3 The respondent, who is fifty-four years of age, is a man of prior good character who has been engaged for the whole of his working life in the superannuation industry. Following years of employment with insurance or superannuation firms he set up his own business in 1977. He was managing director and carried on the business competently, apparently without incident, until 1994. During the course of business his company routinely received large sums of money on terms that it be invested. The clients of his company seem to have been mainly superannuation funds. 4 Whether the respondent had the discretion to decide how and where such monies should be invested does not arise for consideration in this appeal since it could not be said that he had the discretion to deal with them as he began to in 1994. In that year he formed the desire to leave the superannuation industry and to generate a sum of money that would enable him to do so. Accordingly, he began to withdraw trust monies and use them for his own purposes. The sentencing judge found that, at least in the first place, he believed that his investments would produce such returns as would enable him to repay the money he knew he was wrongly taking from trust. His expectations were not realised and all the money was lost. 5 Between 10 January 1994 and 15 August 1997 the respondent systematically removed sums of money on twenty-six occasions. The lowest amount taken was $10,000 and the highest was $300,000. Altogether the respondent defrauded the owners of the money of $1,376,293. He routinely made false reports to conceal what he had done. 6 The respondent invested in speculative endeavours. The first was a copper mine in Queensland which, before it could be operated, had to be restored because the mine workings had collapsed. About $500,000 went into that venture before it became apparent to the respondent that it was all lost. The next venture was an investment scheme involving multiple prints of a painting of Atlanta, Georgia, apparently in conjunction with the 1996 Olympic Games. That endeavour failed as well. 7 From 1991 onwards the respondent was gambling heavily. Between June 1994 and September 1996 he placed $124,000 in bets with one bookmaker and a substantial amount of money with a second bookmaker. 8 Finally, he appears to have used trust monies to make personal loans to members of his family. 9 The losses were all insured and the owners of the money lost nothing. However, as his Honour found, the respondent was penniless at the end of these events. There was no prospect that the insurers would recover their loss, though some $20,000 appears to have been secured against the respondent's assets. 10 One of the defrauded customers of the respondent's business was the Bankstown District Sports Club Limited Superannuation Fund. On 24 June 1998 the trustees of that fund requested an audit and the respondent formed the view that his fraud would probably be discovered. 11 There was put before the sentencing judge a detailed explanation by the respondent of the reasons why he give himself up. First he consulted his solicitor. Then he told the law enforcement authorities and all the customers of his business who were concerned. 12 His case before the sentencing judge was that although he knew that an audit was about to take place, and that he thought that the results of that audit might well expose his fraud, that was not his motivation in seeing his solicitor and giving himself up. Rather, the matter had gone on for so long that he could bear it no longer and wanted to get everything off his chest. 13 The remarks on sentence do not make clear what view his Honour took about that issue, but it was an important one, and it seems to me that this Court ought to deal with the matter as though his Honour had found that it was not the impending audit, but the fact that the respondent had finally had enough of his fraud that caused him to give himself up. 14 In those circumstances, the case became a very unusual one because the evidence before his Honour showed that if he had wished, the respondent could have continued to defraud the clients of the business and conceal his fraud for a substantial further amount of time. The fact that the respondent gave himself up therefore merited a substantial discount. 15 The respondent has a history of high blood pressure and has late onset diabetes. One of the risks arising from that condition is that the eyesight might be affected. The respondent had already consulted an ophthalmologist just before he appeared for sentence. 16 In imposing sentence his Honour took into account the respondent's confession and early plea of guilty, his prior good character, and that his state of health would make it more onerous for him to serve his sentence. I would not for my part have considered that the respondent's state of health by itself required a substantial discount from the sentence. 17 His Honour also took into account that the owners of the money had not lost because they had been indemnified by insurers. In my opinion that did not mitigate the offences. There was still loss to the community which was not and could not be made good except perhaps by the security to which I have referred. 18 His Honour was correct to take into account the prior good character of the respondent, but that fact could only have limited application in the present case. First, prior good character is always given less weight in sentencing for offences based on gross breaches of trust. It is generally only persons of good character who can have themselves appointed to positions of trust. Secondly, these offences were committed over three and a half years. It was quite correct to say that the respondent was of good character at the time of the first offences, but not thereafter. 19 Objectively there were many separate gross breaches of trust carried out systematically over a period of three and a half years involving a very large sum of money and deceptive tactics to cover up the activities of the respondent. The money was lost. The respondent's motivation was greed. Sentences imposed for offences involving such serious and persistent breaches of trust must be sufficient to deter others from offending, not least because they are so difficult to detect. 20 The attention of the Court was drawn to a number of recent cases of sentences imposed for the offences of a similar kind. They are insufficient in my opinion to establish a range of appropriate sentences but give some indication of what an appropriate sentence might be. In Regina v Phillip Ngui, Court of Criminal Appeal, 23 August 1990, unreported the applicant was a gambler who dishonestly obtained the proceeds of cheques on twenty-three occasions over a period of ten months. The total amount of money involved was $818,000. When the defalcations were discovered, the applicant confessed and pleaded guilty at the earliest opportunity. He was sentenced to imprisonment for six years, that term incorporating four and a half years. In delivering the principal judgment of the Court, Wood J, as he then was, observed in proposing leave to appeal be refused, that the applicant was treated favourably and that the sentence was well within the proper range of sentencing discretion. 21 In Regina v Mark Patrick O'Neil, Court of Criminal Appeal, 24 July 1996, unreported leave to appeal was refused. The applicant was a pay roll supervisor in a large company who dishonestly obtained money from his employer through computing accounting procedures. He pleaded guilty to twelve charges and asked the Court to take into fifty-nine others. Defalcations took over period of three years. The total amount of money was $1,063,000. The money was taken for gambling and when his dishonesty was discovered the applicant confessed and pleaded guilty. The overall sentence was ten years' imprisonment with a minimum term of six and a half years. 22 In Regina v Egerton, Court of Criminal Appeal, 8 August 1997, unreported the applicant was a company director who diverted into his personal accounts a number of sums of money. The total amount was $3 million and the defalcations took place over five weeks. The applicant appealed against the total sentences of two years incorporating a minimum term of one and a half years. In dismissing the sentence against the appeal the Court observed that the applicant's criminal activity was short and unsophisticated and the sentences were the most lenient that the circumstances allowed. The applicant pleaded not guilty. 23 In my opinion that case produced a sentence which, if the Crown had appealed, would have merited serious consideration for being increased by this Court. As it was, of course, there was no occasion for the Court to do such a thing, but that case should not be used as a yardstick in a case of this kind. 24 Other cases were cited to the Court, but they are of less relevance because either they were pre Sentencing Act cases or because the amount and period of time involved were substantially less than the present case. 25 In my opinion the sentences imposed by his Honour were below the bottom of the available range of sentencing discretion. However, the case was accompanied by the unusual feature to which I have referred, which merited a substantial discount. 26 When this Court hears appeals by the Crown against what is said to be the severity of sentences, the Court is not free to take the course it might if sentencing at first instance. A residual discretion exists favours the respondent to any such appeal if the sentence is found to be below the range of sentencing discretion, but not so far below it that the Court considers that it ought not to interfere. That is the view to which I have come. I would propose that the Court in its discretion not interfere with it. I propose that the appeal be dismissed. 27 FITZGERALD JA: I agree. 28 ABADEE J: I agree. 29 FITZGERALD JA: The order of the court, appeal is dismissed. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.