R v Watt [2005] NSWCCA 89

New South Wales Court of Criminal Appeal

CITATION: R v Watt [2005] NSWCCA 89

HEARING DATE(S): 03/03/05

JUDGMENT DATE: 3 March 2005

JUDGMENT OF: Grove J at 63; James J at 2; Barr J at 62

DECISION: Leave to appeal against sentence granted. Appeal dismissed.

CATCHWORDS: CRIMINAL LAW - sentencing - charges under s184(2) of the Corporations Act 2001 (Commonwealth) - that the applicant had used his position as an employee dishonestly with the intention of gaining an advantage - whether the sentencing judge erred in his assessment of the objective criminality of the applicant - whether insufficient weight given to the applicant's pleas of guilty - whether sentencing judge failed to adequately consider the reparation paid by the applicant - whether sentencing judge failed to adequately take into account subjective findings favourable to the applicant

LEGISLATION CITED: Corporations Act 2001 (Commonwealth)

R v Burke [2002] NSWCCA 353 CASES CITED: R v Rivkin (2004) 59 NSWLR 284

PARTIES: Regina v Cameron John WATT

FILE NUMBER(S): CCA 2004/2858

M Kloss - Appellant COUNSEL: Ms S McNaughton - Respondent

James Fuggle Solicitors and Barristers- Appellant SOLICITORS: Commomwealth Director of Public Prosecutions - Respondent

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): 03/11/622

LOWER COURT JUDICIAL OFFICER: Judge Berman

IN THE COURT OF CRIMINAL APPEAL 2858/04

GROVE J JAMES J BARR J

THURSDAY 3 MARCH 2005 REGINA v CAMERON JOHN WATT Judgment 1 GROVE J: The court is in a position to give judgment in this appeal and I will call on James J to give the first judgment. 2 JAMES J: Cameron John Watt has applied for leave to appeal against sentences imposed on him in the District court by his Honour Judge Berman on 16 April 2004. 3 On 1 December 2003 the trial of the applicant commenced before Judge Berman and a jury on eleven counts that whilst an employee of Baptist Investment and Finance Limited ("BIF"), a company associated with the Baptist Church, the applicant had used his position as an employee of BIF dishonestly with the intention of gaining an advantage for himself or, in the case of the fifth count, for someone else. These were charges of offences under s 184(2) of the Corporations Act 2001 (Commonwealth). It was alleged that the applicant had intended to gain an advantage by causing BIF to draw a cheque or by causing an amount to be credited to an account in the general ledger of BIF. 4 On 9 December 2003 the Crown, having presented all of its evidence, closed its case. On the following day 10 December 2003 the applicant commenced giving evidence in the defence case. Towards the end of the applicant's evidence-in-chief his counsel asked him whether he believed that, in causing certain entries to be made in a ledger account, which were the subject of some of the charges, he had been dishonest. Apparently to the surprise of everyone in court, the applicant answered the question his counsel had asked in the affirmative. 5 After a short adjournment counsel for the applicant informed Judge Berman that the applicant would be changing his plea on some of the counts to a plea of guilty. The applicant was re-arraigned in the presence of the jury and pleaded guilty to counts 2 to 7 inclusive and count 11. The trial continued on the remaining counts in the indictment, counts 1, 8, 9 and 10. At the conclusion of the trial the jury returned verdicts of guilty on those counts. 6 On each of counts 2 to 11 the applicant was sentenced to a term of imprisonment for two years to commence on 15 April 2004, which was the first day of the sentencing hearing and the day on which the applicant had gone into custody. On count 1 Judge Berman sentenced the applicant to a term of imprisonment for three years to commence on 15 April 2005, that is one year after the commencement of the other sentences. Accordingly, the effective head sentence was four years. His Honour set a non-parole period of two and a half years commencing on 15 April 2004 and expiring of 14 October 2006. The maximum penalty for an offence under s 184(2) of the Corporations Act is imprisonment for five years. 7 In his remarks on sentence his Honour stated the fairly complicated facts of the offences at some length. The following brief summary is derived from the statement of the facts of the offences in his Honour's remarks on sentence. 8 The company BIF carried on the business of receiving payments of money from members of the public on which it paid interest and lending money it had received for purposes associated with the Baptist Church. Money which had been received but had not been lent out was invested. 9 The applicant was originally employed as the assistant general manager of BIF but, because of the illness of the general manager, he became the acting general manager. As his Honour remarked, the applicant was clearly in a position of trust. 10 I will now summarise the conduct of the applicant which grounded the various charges. I will deal with the counts in the indictment in the order in which they were dealt with in his Honour's remarks on sentence. 11 Count 2. On 11 May 2001 the applicant caused a cheque for $2500 made out to cash to be drawn on BIF's bank account. One signatory to the cheque was the applicant himself. The other signatory signed the cheque, having been requested to do so by the applicant and believing that the cheque was for a legitimate purpose of BIF. The applicant cashed the cheque and used the proceeds to pay for registering his car and for some repairs which had been done to the car. 12 Count 3. On 15 May 2001 the applicant caused a cheque for $10,500 to be drawn on BIF's account. The cheque was made payable to the Baptist Union. The applicant used the cheque to buy a car from the Baptist Union, the car to be used by him for his own purposes. 13 Count 4. On the same day the applicant caused a cheque for $853.31 to be drawn on BIF's account. The cheque was made payable to an insurance broker and was used by the applicant to pay for insurance on the car he had just bought from the Baptist Union. 14 Count 5. On 28 May 2001 the applicant caused a cheque for $1800 to be drawn on BIF's account. This cheque was not used by the applicant for his own purposes. It was donated by the applicant to a church with which the applicant had some association. However, this was not an authorised use of BIF's funds and the church which received the funds was not a Baptist church. 15 Count 6. The applicant was acquainted with the general superintendent of the Baptist Church, a clergyman named Skinner, who, somewhat incongruously, was promoting a number of investment schemes, including the purchase of shares in a company called Great American Gold. The applicant wanted to buy shares in Great American Gold. On 30 May 2001 the applicant, in order to facilitate the purchase of shares in Great American Gold, caused the sum of $13,500 to be transferred from an account in the ledger of BIF styled "debtors-others" to an account in the name of a family company of the Reverend Mr Skinner. 16 Count 7. The applicant owed another employee of BIF the sum of $320. On 30 May 2001 the applicant paid the debt by causing the sum of $320 to be transferred from the "debtors-others" account to an account in the ledger of BIF in the name of that other employee. 17 Count 1. A result of the applicant committing the offences charged in counts 2 to 7 inclusive was that the "debtors-others" account in the ledger of BIF, which had been debited with the amounts of all the transactions, had a deficiency to the extent of $29,473.41. The applicant gave consideration as to how he could make good the deficiency. 18 One of the schemes being promoted by the Reverend Mr Skinner was investing with an entity called Anglo-Pacifique Inc which held itself out on the Internet as being a funds manager. An individual named Ray Johnson was associated with Anglo-Pacifique. In his remarks on sentence his Honour found that Anglo-Pacifique was a scam but that neither Mr Skinner nor the applicant knew that it was a scam. 19 I will now set out part of his Honour's remarks dealing with the payment of $4,000,000 of BIF's money to Anglo-Pacifique. "He (the applicant) did not intend to steal the $4,000,000. In fact the offender intended, and I am satisfied he actually believed, that Anglo-Pacifique would pay his employer interest on the $4,000,000 at the rate of seven per cent per annum. That belief was naïve but not dishonest. The dishonesty arises from another aspect of what the offender did. Ray Johnson had told the offender that there was a possibility of further 'bonus interest' being paid on the investment. The offender was told that this could be as high as 3.5 per cent per month or, assuming that the interest was only credited at the end of the year and thus not compounded, 42 per cent per annum. The seven per cent interest supposedly going to BIF was, so it was said, guaranteed but there was a possibility of bonus interest of 35 per cent per annum being paid as well. The offender was naïve in believing that BIF would get its money back with interest. But more importantly he was dishonest because he formed the intention that he would keep for himself any interest paid by Anglo-Pacifique above seven per cent per annum." 20 The applicant caused $4,000,000 of BIF's money to be sent to Anglo-Pacifique by an international money transfer made by BIF's bank, the Commonwealth Bank. This was the conduct of the applicant on which the first count in the indictment was based. The sum of $4,000,000 was never recovered. 21 In breach of the authority which the Commonwealth Bank had received from its customer BIF, which required any such payments to be authorised by two authorised signatories on BIF's account, the Commonwealth Bank in making the payment acted on instructions from the applicant alone. 22 After the money was sent Anglo-Pacifique sent emails purporting to show that ordinary interest at the rate of seven per cent per annum and also bonus interest was being credited to BIF. The applicant asked Ray Johnson to remit part of the bonus interest and Anglo-Pacifique remitted the sum of $57,354.12. The applicant's conduct in applying that sum gave rise to counts 8, 9 and 10. 23 Count 8. On 3 August 2001 the applicant caused the sum of $22,482.50 to be credited to an account in his own name in the ledger of BIF, thereby discharging his indebtedness to BIF on that account. 24 Count 9. On 6 August 2001 the applicant replenished the "debtors-others" account in the ledger of BIF by causing the sum of $29,473 to be credited to that account. 25 Count 10. On 6 August 2001 the applicant caused the sum of $5388.31, being what was left of the payment of $57,354.12 received from Anglo-Pacifique, to be credited to a savings account in the name of the applicant with BIF. 26 The remaining count in the indictment was count 11. The facts giving rise to this count were as follows. 27 On 3 October 2001 the applicant caused a cheque for $33,250 to be drawn on BIF's account. The cheque was payable to a real estate agent and the amount of the cheque was the balance of a deposit payable by the applicant and his wife on the purchase of a house for themselves. The applicant signed the cheque himself and obtained a second signature to the cheque by presenting it for signature to the new general manager of BIF, while the general manager was speaking to somebody else on the telephone. The general manager assumed the applicant would not be asking him to sign a cheque, unless the cheque was for a legitimate purpose of BIF. 28 In October 2001 the new general manager of BIF was alerted by the Australian Securities and Investments Commission ("ASIC") to transactions between BIF and Anglo-Pacifique of which ASIC had become aware. The general manager carried out an investigation and the applicant's offences were quickly discovered. Contracts for the purchase of the house by the applicant and his wife had not yet been exchanged and the cheque in favour of the estate agent was recovered. 29 In his remarks on sentence his Honour discussed the payment of the $4,000,000 to Anglo-Pacifique. Because what his Honour said is relevant to a ground of appeal relied on by the applicant, I will set out what his Honour said in full: "Ultimately BIF did not bear the loss of $4,000,000 sent to Anglo-Pacifique. That loss was borne by the Commonwealth Bank because it had transferred the money overseas after obtaining only one of the required signatures rather than two which should have been the case. I do not regard it as relevant in any way to the ultimate sentences which are to be imposed on the offender that this enormous loss was suffered by a bank rather than the offender's employer. That the offender breached the trust which his employer placed in him is obvious." 30 Having stated the facts of the individual offences his Honour concluded that the commission of the offences demonstrated significant dishonesty and that the applicant had been motivated by greed. His Honour said that the applicant was to be sentenced on the basis that at the time of committing all the offences he knew he was acting dishonestly. His Honour found that the offences represented a significant breach of trust on the part of the applicant. The applicant had been able to commit the offences because other persons had unquestioningly trusted him. His Honour observed that general deterrence was an important purpose in sentencing for offences such as those committed by the applicant. In the case of the applicant there was also a need for personal deterrence. 31 In his remarks on sentence his Honour noted some of the subjective features of the applicant. At the time of sentencing the applicant was twenty-nine years of age. He had grown up in what was described as a close knit, supportive and religious extended family. As a child he had suffered a serious head injury which caused him to occasionally suffer seizures similar to epileptic seizures. At the time of committing the offences he was undertaking a course in accountancy. 32 In his remarks on sentence his Honour referred to whether the applicant had made any restitution for his offences. His Honour said:- "There was evidence in the trial that the offender had repaid to BIF some of the money he took from them. He is, however, scarcely likely to be in a position to compensate the Commonwealth Bank for the $4,000,000 they lost. The fact that he has made some repayments is a matter that I will take into account. But I must also recognise that through the offender's conduct he has caused the Commonwealth Bank to lose a large sum of money. True it is, the offender did not intend anyone to lose $4,000,000 but, as I have said, he certainly accepted that risk when he organised for the money to go to the Caribbean." 33 In parts of his remarks on sentence his Honour referred to whether the applicant had evinced any remorse for his actions. I will return to this subject later in his judgment. 34 His Honour expressed doubts about the applicant's prospects of rehabilitation. His Honour said:- "If there is an unlikelihood of committing any further similar offences, this is more probably going to be because he will not be in a position to commit them rather than any acceptance by him of the wrongfulness of his conduct. I will take into account that because of these offences the offender will be less likely to be able to work in a similar position again. This is part of the punishment he will undergo as a result of having committed these offences. 35 The applicant had no previous criminal history. His Honour commented:- "The offender has no criminal history and was of good character until these offences were discovered. That is not something to which excessive weight should be given, however, especially in the light of the fact that such offences as these are invariably committed by people of prior good character, as well as the fact that these offences continued over a significant period of time. This was not a case where there was a single offence immediately regretted. On the contrary, once the offender started to use BIF's money as his own he continued on with some enthusiasm." 36 His Honour accepted that the applicant had been diagnosed by a psychologist as suffering from borderline clinical depression. His Honour accepted that for a number of reasons imprisonment would be more than usually onerous for the applicant. 37 A number of grounds of appeal were relied upon by the applicant in written or oral submissions I will deal with these grounds in turn.