Local Court New South Wales Medium Neutral Citation: NSW Police v Scott John Seward [2017] NSWLC 16 Hearing dates: 4 July 2017 Decision date: 13 July 2017 Jurisdiction: Criminal Before: Deputy Chief Magistrate Christopher O'Brien Decision: Re Sequence 1- I find the offence proved but deem it inexpedient to inflict any punishment. The charge will be dismissed pursuant to the provisions of section 10(1)(b) of the Crimes (Sentencing Procedure) Act conditional on the defendant entering into a bond to be of good behaviour for a period of 2 years. Re Sequence 2 – Taken into account on a Form 1 Catchwords: CRIMINAL LAW – sentence – dishonestly obtaining financial advantage by deception – assessment of objective seriousness – victim organisations role in offending – assistance to authorities – voluntary disclosure of guilt – treatment by media as extra curial punishment – disposition without recording a conviction. Legislation Cited: Crimes (Sentencing Procedure) Act 1999 ss 3A, 10, 10A, 21A, 23 Crimes Act 1900 ss 192E(1)(b), 192G(b) Cases Cited: AB v The Queen (1999) 198 CLR 111 Cobiac v Liddy (1969) 119 CLR 257 Hoffenberg v The District Court of New South Wales [2010] NSWCA 142 Panetta v R [2016] NSWCCA 85 R v Cartwright (1989) 17 NSWLR 243 R v Ellis (1986) NSWLR 603 R v Ingrassia (1997) 41 NSWLR 447 R v Mauger [2012] NSWCCA 51 R v Wran [2016] NSWSC 1015 Category: Sentence Parties: NSW Police (prosecution) Scott John Seward (the defendant) Representation: Sergeant Sala (police prosecutor, NSW Police) Solicitors: Mr Sutton (for the defendant) File Number(s): 2017/00107532 Judgment INTRODUCTION 1. The offender Scott John Seward pleaded guilty at the earliest opportunity and is to be sentenced in respect of one charge of dishonestly obtaining a financial advantage by deception contrary to section 192E(1)(b) of the Crimes Act 1900. That offence carries with it, if dealt with on indictment, a maximum penalty of 10 years imprisonment. As the matter is being disposed of in the Local Court, the maximum penalty is a fine of $11,000 and or imprisonment for 2 years or both. In addition, the offender has indicated an intention to plead guilty to a charge of publishing false/misleading material to obtain a financial advantage contrary to section 192G(b) and has asked the court to take that offence into account on a Form 1 when sentencing for the principal offence pursuant to section 192E(1)(b). 2. In undertaking this sentencing exercise I have considered the prosecution facts sheet that was tendered without objection and the written submissions and supporting documents submitted by the offender's solicitor. In addition, I have heard oral submissions from both Mr Sutton for the offender and Sergeant Sala for the prosecution. THE FACTS 1. The offending before the court in essence arises out of breaches of the National Rugby League (NRL) Salary Cap by the Parramatta National Rugby League Club. That club is one that competes in the NRL and is known and will be referred to in these reasons as the Parramatta Eels. To understand the factual matrix of the offending it is necessary to briefly touch upon the relevant corporate structure pertaining to the Parramatta Eels. The Parramatta Eels are wholly owned by the Parramatta Leagues Club. The two organisations are separate legal entities. Each of the Parramatta Eels and the Parramatta Leagues Club has a board of directors. At all relevant times, those boards were identical in their composition. As I understand it, the rugby league club relies upon funds being provided to it by the Leagues Club so that it can operate within the NRL. Put simply, the Parramatta Leagues Club funds and is financially responsible for the operation of the Parramatta Eels. The Parramatta Eels are of course subject to the rules and regulations that are prescribed by the NRL. These rules include compliance with a salary cap. This is an amount of money that an NRL club is permitted to pay its contracted players each season. The salary cap is apparently aimed at ensuring that wealthy clubs are not able to use funds at their disposal to buy the best players in the league. The measure is aimed at keeping all clubs on a relatively even playing level and seeking to ensure a competition that is balanced. 2. In 2011 the offender, who was apparently a long term rugby league enthusiast, obtained employment with the Parramatta Eels as the Manager of Membership and Commercial Business. In 2013 he was promoted to the position of Chief Executive Officer (CEO). The facts reveal that at the time that he commenced his employment as CEO, he was advised that the club was salary cap compliant. 3. Regrettably, and within a short time of his commencing duties as CEO, the offender began to receive demands from both current and former players and their managers for the payment of outstanding sums of cash that had been agreed to be paid to them. These agreements to pay extra funds to players and managers were outside of the NRL salary cap and were clear breaches thereof. They are referred to in the facts as third party payments. Importantly, there is no suggestion that the offender was involved in any way in these arrangements and he had no prior knowledge of them. Rather, the offender inherited what was plainly a completely unsatisfactory circumstance the responsibility for which lay at the feet of others. Those other persons are not identified in the police facts. Upon his becoming aware of what was plainly a serious breach of the NRL rules, the offender sought assistance and guidance from the Boards of Directors only to be told to "Fix the problem or they would find someone who could". Whilst the offender had no prior knowledge of the predicament he had inherited, the words attributed to unnamed members of the Board of Directors certainly indicate that they did. 4. What is clear in my view, is that the offender was, as the CEO of the Parramatta Eels, completely out of his depth. He had not previously held the role of a CEO and was plainly in a position where he was left unsupported by his Board of Directors. A letter from his father addressed to the court and dated 31 May 2017 noted: "I firmly believed he did not have the experience or qualifications required to fill the position". I agree with the offender's father's assessment. The offender is plainly entitled to feel significantly let down by both his predecessors and by the Board of Directors to whom he was ultimately responsible. He was at the commencement of his term as CEO 38 years of age. He was the sole provider for his young family and was through his employment, fulfilling a childhood dream. As the offender himself remarked in his letter of apology to the court, "The dream quickly became a nightmare". I was told by Mr Sutton that despite repeated requests by the offender, the Board was tardy in providing him a formal contract of employment. This is in a context where the offender was told to "Fix the problem or they would find someone who could". Given that he was his family's sole breadwinner, it is not difficult to understand how his moral compass became so significantly compromised. I accept that he felt a degree of desperation and coercion at the time that the offences were committed. His letter to the court acknowledges this when he remarks "I wish I had been stronger and stood up for what I knew to be right". 5. By January 2014 the offender had been provided with a list of the outstanding cash payments that were due to players and their managers. The total amount outstanding was $589,000.00 and that amount needed to be paid in cash. No doubt the offender was well aware by this point that the club was in serious breach of its salary cap obligations. It is of course to be observed that such a breach is not a crime, but rather a breach of the rules of a sporting organisation, compliance with which grounds the right to participate in that organisation's competition. In any event, and after attempts at attracting wealthy business people to the club to provide the cash due to pay the players failed, the offender, whilst being continually pressed for demands for cash from players and managers became desperate to source the funds. The facts reveal that he then consulted the Parramatta Eels football and logistics team manager, Jason Irvine, for assistance. The offender was told by Mr Irvine that a club supporter, who was the owner of a landscaping and maintenance company, which already provided services to both the Parramatta Eels and the Parramatta Leagues Club, would be prepared to assist in meeting the player and player manager demands. The offender requested Mr Irvine speak with the supporter and request him to issue false invoices for landscaping work that the offender would then authorise for payment so enabling some payments to be made. The supporter was of the belief that all those in authority at both the Parramatta Eels and the Parramatta Leagues Club were aware of this arrangement. The offender did not have any direct conversations with the supporter and Mr Irvine liaised with him at all times. Over a short period of time in 2014 the offender requested (through Mr Irvine) that two invoices be issued to the Parramatta Eels for various services that were not supplied to the club. The invoices were false and were for the sole purpose of being able to make cash payments to players and managers. The total amount of the invoices was $76,000.00. Upon receipt of the invoices the offender authorised payment whereupon the invoices were then forwarded on to the accounts department for payment. The money obtained was paid into the account of Mr Irvine, who subsequently paid it out in cash to players and managers. At no time did the offender receive any of the money for himself. 6. Sometime later in an almost identical fashion, the offender engaged, along with Mr Irvine, in a further fraud whereby another club supporter agreed to provide false invoices for payment. Those invoices were in the total amount of $ 145,106.50. They were authorised for payment as the earlier invoices had been, and in due course the money received was paid to players and managers. Again, no money was retained by the offender himself. 7. In 2015 the offender was told by Mr Irvine that another supporter would be willing to assist the club with paying players outstanding cash amounts. The offender then requested this supporter, via Mr Irvine, to inflate a contract for the supply of certain services to the Parramatta Eels. The contract was inflated by the amount of $30,000.00 per year for a period of 4 years. The inflated amount in the contract was to be used for the payment of players outside the salary cap. The offender again had no direct dealings with this supporter. This inflated contract was signed on the 16 March 2015. It is this conduct that is the subject of the offence that is to be dealt with on a Form 1. The accused resigned from the Parramatta Eels in June 2015 prior to any invoices being received by the club in respect of this contract. I accept that his resignation was as a consequence of his being unable to deal with the stress to which he had been subject and his inability to continue engaging in the conduct that now brings him before the Court. 8. In early 2016 the offender approached the CEO of the NRL, Mr Greenberg. The offender's conscience by now having got the better of him, he made a full and complete disclosure to senior NRL officials over a number of weeks as to the conduct that he and others had engaged in at the Parramatta Eels, both before and during the time that he was engaged there as the CEO. The taking of this step by the offender involved considerable courage for which he ought to be commended. 9. The facts reveal that he was both honest and expansive with the NRL. As a consequence of his disclosures to the NRL, information was passed to the New South Wales Police Force and a criminal investigation was commenced. In July 2016 officers from the New South Wales Police approached the offender in relation to the allegations of false invoicing and fraud. He made immediate admissions and voluntarily provided police with a statement over a number of days. The police facts indicate that in their view, the entire matter would not have come to light without the full and frank disclosures made by the offender. This is of course a matter of some real significance to which I will shortly return. OBJECTIVE SERIOUSNESS 1. In assessing the objective seriousness I must have regard to the maximum penalty prescribed by the legislature, the amount of money involved, the length of time over which the offence was committed, the offender's motive, the degree of planning, and the fact that this matter involved a breach of trust. Plainly, the amount of money involved is substantial, being $221,106.50. In this regard I note that it was indicated to me during the submissions that the loss was one occasioned to the Parramatta Leagues Club, it being the entity which funded the operation of the Parramatta Eels. Of real importance is the fact that had the Parramatta Eels honoured the agreements they had reached with players and managers for payments outside the salary cap, then those payments would have been made by the Parramatta Leagues Club in any event. As I understand it, those agreements were enforceable in the traditional way notwithstanding that they involved a breach of the NRL rules. As was explained to me by the prosecutor, those agreements could not be honoured because to do so would have exposed the Parramatta Eels as salary cap cheats. No doubt such exposure would have resulted in serious sanction by the NRL. I note that in due course the cheating was uncovered and sanctions were put in place including the loss of premiership points and the removal of the Board of Directors. 2. The offending occurred over a 7 month period between November 2014 and June of 2015. The offender's motive was not one of personal gain, other than so far as it impacted upon his continuing employment, but rather, to fix up what was a diabolical mess that he had inherited from others. Plainly, there was a degree of planning involved in the offending and, as the offender himself acknowledges, there was a significant breach of trust. Given the fact that the offender received no actual financial benefit, the fact that he had no involvement in the initial salary cap breaches which created the environment giving rise to his criminal behaviour, and the fact he was personally and professionally ill equipped for the role he was undertaking, I have concluded that his offending can be assessed at a point at or towards the lower end of objective seriousness for offences of this type. 3. This finding is despite the quantum involved and the period of the offending. In coming to this conclusion I have had regard to the seriousness with which offences under this section are generally regarded. When senior employees such as the offender commit offences of this type, custodial sentences often result. This however is an unusual and unique case that can be readily distinguished from others brought before the court. The most important distinguishing feature is that the Board members, or at least some of them, being the member elected representatives of the victim organisations, connived in the commission of the offence. Those Board members had, prior to the offender's engagement as CEO, created the circumstance that they then pressured the offender to resolve, and in his seeking to do so, the offence before the court was committed. Their willingness to allow the commission of the offence, places these victims in a vastly different category to the victims of almost all other offences of this type. THE OFFENDER'S SUBJECTIVE CASE 1. The offender is aged 41 years. He is married with 2 children, aged 7 and 10. His wife suffers from a debilitating illness, although she is apparently symptom free at this time. Prior to coming to work in Sydney for the Parramatta Eels, the offender had worked in sporting administration with the Western Bulldogs, an AFL team based in Melbourne. Upon his resignation he returned to Melbourne and was unemployed for about 5 months. He then obtained employment as the General Manager of the Melbourne Cricket Club – Kew Sports Club. He remained in that employment until he was charged with the matters before the court, following which his employment was terminated. He is currently employed doing casual work in a supermarket. He continues to reside in Victoria. The material reveals that those who know him well observed deterioration in his mental health following his taking up the position of CEO with the Parramatta Eels. Subsequent to his resignation he has been treated for depression. He continues under the care of a psychologist who describes him as someone who is unlikely to reoffend. He requires ongoing counselling and psychotherapy to rebuild his life personally, socially and professionally. His prognosis is described by his treating psychologist as "good in light of his intelligent and reasoned approach to recovery and the support of significant others". ASSISTANCE TO AUTHORITIES 1. Looming large in this matter is the issue of the discount on penalty that ought to be afforded the offender as a consequence of the assistance he has provided to authorities. Plainly that assistance has been substantial. It has long been the case that a sentencing court is able to extend leniency to an offender who has provided assistance to authorities. Sometimes that leniency will be substantial, especially if it is motivated by genuine remorse and contrition: see R v Cartwright (1989) 17 NSWLR 243. I accept that it is in this case. In extending leniency for assistance courts must ensure that the ultimate outcome is not disproportionate to the actual offending. As in any sentencing task, the court must strive to impose a penalty that is, in the final analysis, a fair and just one. The discount for assistance can result in the imposition of a less serious sentencing option and is not limited to the imposition of a numerically lesser penalty. Relevantly in this case, any discount for assistance must also have regard to the voluntary disclosure by the offender of his guilt in circumstances where the facts reveal that had that disclosure not been made, the offences before the court would not have come to light: see R v Ellis (1986) NSWLR 603; Panetta v R [2016] NSWCCA 85. There is an obvious public interest in such a course being taken by an offender (see AB v The Queen (1990) 198 CLR 111) and courts should reward an offender in such circumstances by meaningful reductions in penalty. 2. Section of 23 of the Crimes (Sentencing Procedure) Act 1999 indicates how a court is to deal with the issue of assistance to authorities. Subsection 23(2) sets out the matters a court must consider in determining whether a lesser penalty is to be imposed. Subsection 23(3) provides that any lesser penalty must not be unreasonably disproportionate, and subsection 23(4) requires a court that imposes a lesser penalty to indicate what penalty would otherwise have been imposed save for the assistance. So far as the factors to be taken into account pursuant to subsection 23(2) are concerned, I note the significance and usefulness of the offender's assistance is high; that the prosecution accept that the information he has provided is truthful, complete and reliable; that the nature and extent of his assistance is high; that his assistance was offered in a timely manner and that the assistance relates solely to the offence before the court. It is not suggested in any of the material that there has been any promise of future assistance by the offender. Whilst the written submissions of the offender's solicitors make reference in paragraph 48 to promised assistance, those submissions provide a mere recitation of the relevant law and do not suggest that there will be assistance to authorities by the offender in the future. 3. As will be plain, many of the section 23 factors that must be considered operate favourably for the offender and in my assessment he must be given very significant leniency in the disposition of this matter. It is of course, necessary for me to indicate the penalty that would have been imposed but for the offender's assistance and I will shortly return to this aspect. THE MEDIA 1. Mr Sutton submitted a large number of excerpts of media articles touching upon the offender and his conduct all of which have been considered. His submissions suggest that the media has hypothesized that the offending was for personal benefit in circumstances where this was not in fact the case. Sergeant Sala submitted that the media coverage did not amount to extra curial punishment. My consideration of the material submitted by Mr Sutton does not allow me to draw the conclusion he urges and I am in agreement with the submission of Sergeant Sala. While I have no doubt that the publicity and media coverage has caused the offender significant humiliation and embarrassment I am not of the view that it amounts to extra curial punishment such as would warrant some consideration being given in respect of the sentence to be imposed. In R v Wran [2016] NSWSC 1015, Harrison J reflected on what he described as "a sustained and unpleasant campaign by some of the daily newspapers circulating in Sydney" towards the offender in that case. He referred to "distasteful and wholly misleading headlines" that made allegations about "her criminality, sexual conduct and reputation that had no basis in fact". He accepted in that case, that the treatment of the offender by the media, and its disproportionate intensity, went beyond the traditional case of adverse publicity such as to warrant a lesser punishment being imposed. I am not satisfied from what has been provided that the media treatment in this case goes beyond traditional adverse publicity and I do not propose to mitigate the sentence to be imposed on this account. THE STATUTORY CONSIDERATIONS 1. The Crimes (Sentencing Procedure) Act 1999 mandates that the court is to take into account the aggravating and mitigating factors set out in section 21A of the Act, along with any other objective factor that affects the relevant seriousness of the offending. So far as the aggravating factors in section 21A(2) are concerned, I note that the offender abused his position of trust, that the offending involved a series of criminal acts, and that the offending was planned. The mitigating factors pursuant to section 21A(3) are that the offender does not have any record of previous convictions, was a person of good character, is unlikely to reoffend, has good prospects of rehabilitation, is remorseful and has accepted responsibility for his actions, has acknowledged the loss caused by his actions, has pleaded guilty, and has provided assistance. All of these relevant aggravating and mitigating factors will be taken into account. 2. Section 3A sets out the purposes for which the court may impose a sentence. Those purposes are: 1. to ensure that the offender is adequately punished for the offence, 2. to prevent crime by deterring the offender and others from committing similar offences, 3. to protect the community from the offender, 4. to promote the rehabilitation of the offender, 5. to make the offender accountable for his or her actions, 6. to denounce the conduct of the offender, 7. to recognise the harm done to the victim of the crime and the community 1. In the unusual circumstances of this case, all of these purposes will be taken into account to the extent that they are relevant. So far as punishment is concerned, the offender's voluntary disclosures have meant a very significant self-imposed punishment. He lost his employment and his future prospects of employment, particularly in the field of sports administration must be regarded as limited. Given the highly unusual and unique circumstances of this case, I am not of the view that general deterrence has a significant role to play. For the reasons earlier articulated this is a fraud case that is far removed from the usual fraud cases that this court encounters. Further, I note that the defendant's mental health does not make him a suitable vehicle to be made an example of as a means of deterring others. I am satisfied that specific deterrence has no role to play given my view that he will not reoffend and in all the circumstances the community does not require protection from the offender. I am also of the view that the sentence to be imposed will promote the offender's rehabilitation. He has already been made accountable for his conduct and the orders I will make will provide sufficient denunciation. So far as the harm to the victim is concerned, I have already remarked on this aspect earlier in these reasons. THE PARTIES SUBMISSIONS 1. Mr Sutton for the offender submitted that I would deal with the matter by recording a bare conviction pursuant to section 10A of Crimes (Sentencing Procedure) Act after balancing all of the relevant objective and subjective considerations. He particularly stressed the circumstances giving rise to the offending, the voluntary disclosure made by the offender, the fact that there was no personal gain by him, his mental health, the fact that he was a person of good character and his early plea of guilty. Sergeant Sala noted that in cases of this type some form of custodial sentence would normally be appropriate. In broad terms, and noting that each case must be dealt with on its merits, I agree with that submission. She did however fairly acknowledge that in all the circumstances of this case, the section 5 threshold requiring a custodial penalty to be imposed had not been crossed. She accepted that there was no actual benefit that had been obtained by the offender and that as a consequence of his conduct there was a significant detriment to his employment prospects. She conceded the offender had provided significant assistance to police. She placed weight in her submissions on the need for general deterrence. It was argued that the matter was objectively serious due to the offenders' position, the large amount of money involved and the fact that his behaviour would have been hard to identify in the normal course. In making that submission she nevertheless properly conceded that his criminality was lowered as a consequence of the fact that he had himself identified it to authorities. Implicit in the submissions of both the prosecutor and the offender's counsel was that a conviction be recorded. CONCLUSION 1. It is to be observed that the submissions of the parties whether they involve a request for leniency or otherwise do not bind the court. A court will be guided and assisted by submissions but in the final determination a decision as to whether or not a conviction ought to be recorded is a matter solely for the sentencer. At its core, a sentence must be individual and it must fit the crime. In imposing it a court must acknowledge the importance of its public dimension and the maintenance of public confidence in the justice system. Somewhat unusually I have determined in this matter to impose a lesser penalty than that suggested by the offender's solicitor. In doing so, I have borne firmly in mind the remarks of Windeyer J in Cobiac v Liddy (1969) 119 CLR 257 at 269 that "a capacity in special circumstances to avoid the rigidity of inexorable law is of the very essence of justice", together with what was said by Spigelman CJ in R v Ingrassia (1997) 41 NSWLR 447 at 449 that "the legal and social consequences of being convicted of an offence often extend beyond the penalty imposed by the court". 2. I have decided that in all the circumstances of this case I ought not proceed to conviction and that instead I should make an order discharging the offender on condition that he enter into a good behaviour bond for a period of 2 years. In determining to take this action I have had particular regard to the following factors as prescribed by section 10(3) of the Crimes (Sentencing Procedure) Act; the offender's character, antecedents, age, mental condition, and the extenuating circumstances in which the offence was committed. I have also borne in mind the fact that the offending is not in its nature trivial. In having regard to other matters that I regard as proper, I have paid particular attention to the defendant's early plea of guilty, his assistance to authorities and the affect that a conviction would have upon his already diminished employment prospects. It is important to remember that while section 10(3) mandates the factors that a court is to have regard to in dealing with an offender pursuant to the section, there is no statutory requirement that all of the factors be present prior to disposition in this way: see Hoffenberg v The District Court of New South Wales [2010] NSWCA 142, per Basten JA at [8]. Accordingly, the fact that an offence is not trivial does not give rise to some type of legislative barrier to it being disposed of in the way that I propose. I have also taken into account the offence on the Form 1 in reaching my conclusion and can indicate that had this offence not been taken into account then the term of the section 10 bond would have been for a lesser period. 3. Needless to say, the more serious the offending the less scope there is for a court to deal with an offender without recording a conviction. In this case however, my view as to the compelling nature of the extenuating circumstances concerning the offending conduct leaves no room for the recording of a conviction. As was made clear in R v Mauger [2012] NSWCCA 51 by Harrison J, with whom Beazley JA (as the President then was) and McCallum J agreed, the fact that a conviction is not recorded should not "dilute or downgrade the significance of the imposition of a s10 bond". There are onerous consequences if an offender fails to comply with a section 10 bond and it should not be assumed that because this court has decided not to record a conviction that the sentence is automatically lenient. R v Mauger (supra) also makes clear that the prospect of a conviction having a detrimental consequence upon employment is something that I am entitled to take into account and I have done so. R v Mauger (supra) is further authority for the proposition that the imposition of a bond even without conviction can meet the need for denunciation and general deterrence in an appropriate case. In my assessment this is such a case, particularly when one has regard to the factual matrix of the offending and the assistance that the offender provided to authorities. I have concluded that such a disposition will not affront community standards, particularly when the facts of the matter are made clear, or that it would be otherwise inappropriate. I propose to order the dismissal of the charge be conditional upon the offender entering into a bond to be of good behaviour. Such a bond will satisfy the need for denunciation and general deterrence and as I have earlier found, specific deterrence has no role to play. To comply with the provisions of section 23(4)(c) of the Crimes (Sentencing Procedure) Act, I state that without the significant assistance that has been provided by the offender a more serious penalty would have been imposed being a conviction and the imposition of a section 9 bond. ORDERS 1. Re Sequence 1 - I find the offence proved but deem it inexpedient to inflict any punishment. The charge will be dismissed pursuant to the provisions of section 10(1)(b) of the Crimes (Sentencing Procedure) Act conditional on the defendant entering into a bond to be of good behaviour for a period of 2 years. 2. Re Sequence 2 – Taken into account on a Form 1. Deputy Chief Magistrate Christopher O'Brien Downing Centre Local Court 13 July 2017 ********** NOTE: A Crown inadequacy appeal was dismissed in the District Court on 3 November 2017. 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. Decision last updated: 03 November 2017