The Queen v Gadaloff[1998] QCA 458

COURT OF APPEAL

de JERSEY CJ

THOMAS JA

WHITE J

CA No 384 of 1998

THE QUEEN

v.

NARELLE ANNE GADALOFF                       Applicant

CA No 395 of 1998

THE QUEEN

v.

GARTH MICHAEL GADALOFF                      Applicant

BRISBANE

DATE 23/11/98

JUDGMENT

THE CHIEF JUSTICE:  The applicants were sentenced in the Supreme Court on 27 October 1998 having pleaded guilty in the case of the male applicant to fraud with a circumstance of aggravation attracting eight years imprisonment against a maximum of 10; money laundering, four years imprisonment against a maximum of 20; and possession of tainted property, one year against a maximum of two; and in the case of the female applicant money laundering, for which she was sentenced two years imprisonment; and possession of tainted property, one year. All terms are to be served concurrently. They respectively seek leave to appeal on the ground that the sentences are manifestly excessive.

The applicants are husband and wife. Neither had any prior criminal history. Each is 33 years old. They have a two year old child who was born in July 1996. The offences occurred in this way. The male applicant was head bulk cashier for the Brisbane City Council. Over four to five years to August 1997 he systematically stole approximately $2.5 million of Council moneys. He would go to his office early in the morning before the arrival of other staff and remove money from the parking meter collection. He would mix those moneys with other Council takings and remove an equivalent amount from them in note form. He would then take the notes from the building. He was taking home as much as $7,500 in cash daily. He used this money to purchase land, furniture, cars and an extensive wine collection and to pay for an intended lavish overseas holiday - although it appears that that payment may not actually have been made - but in addition the moneys were used to pay for a luxurious lifestyle.

The Council detected the fraud when its officers noted a substantial drop in parking meter takings. Within a week of his arrest the male applicant consented to interim orders restraining dealings with his property. Obviously enough the acquisition of his and his wife's extensive property holdings could not have been explained by his normal Council wage.

He had declined to be interviewed by the police but did indicate early that he would be pleading guilty and he authorised the transfer into Queensland of approximately $240,000 he had placed in a Swiss bank account. That would have been difficult to recover but for his cooperation. Of the amount stolen estimated at $2,584,000 assets amounting to or valued at $2,199,833 have been or will be recovered which includes $328,000 from an accomplice, one Dewar. The nett ultimate loss should therefore be of the order of $380,000 on my calculations.

Some aspects of the conduct of the applicants which are of significance to the sentencing process are clearly established. Their gross breach of the trust the Council reposed in the male applicant as his employer, the significance of its being public money, the substantial amount of money stolen, that it was deployed for what might be considered self indulgent purposes and that the offence was committed over a protracted period. The learned sentencing Judge rightly gave emphasis to those matters and to the important role of deterrence in sentencing for this particular type of offence.

There was some criticism levelled, however, at the Judge's approach to some other matters especially in the written submissions put before us and it is convenient to mention those criticisms now.

First, although the Judge gave weight to the plea of guilty he described it as ambivalent. That is explained by the circumstance that although the applicants indicated early on that they would plead to an ex officio indictment later in January 1998 they sought committal proceedings necessitating the obtaining of proofs of evidence from intended Crown witnesses. That is explained, it seems, because the Council was contending for a higher amount in respect of the defalcation. In the end I do not think that any grudging recognition of the plea of guilty to be discerned from that adjective matters greatly to the resolution of the appeal.

Second, the Judge referred to the applicants' cooperation with the authorities but described it as limited. That is explained by their having declined to be interviewed by the police or render great assistance beyond facilitating the transfer of the Swiss moneys back into Queensland. The Judge's description was appropriate.

Third, there is criticism of His Honour saying that the applicants went to elaborate lengths to hide their dishonestly gained wealth. That again was, I think, open to him and to the extent that there was a flourish involved in the use of that adjective it is of no ultimate moment to the resolution of the proceeding.

I think the description was available when one considers that one of the courses taken for example was to purchase land in a third party's name followed by a transfer by that person into the applicants' names.

Fourth, His Honour referred to the need to extract the money and the assets which were recovered from the male applicant and that is criticised. The contention is that the Judge failed to give sufficient weight to the circumstances that restitution was made. I would for my part accept, however, the Crown response to that which points out that in reality all that has occurred is that the authorities have identified property bought with the stolen money and other cash reserves and confiscated them. There is a degree of artificiality in describing that process as involving positive acts of restitution. Certainly, the money recovered from the Swiss bank account falls into a different category but the Judge recognised that. I do not consider that the applicants have demonstrated any factual error of significance in His Honour's approach.

The female applicant was sentenced to an effective two years imprisonment as against her husband's eight years. The Judge accepted that her involvement was less than her husband's and it obviously was. She helped him hide the proceeds of his theft. For example, in 1994 she opened a bank account in her maiden name and the moneys passed through it or some of them passed through it. She was involved in the purchase of a motor vehicle for $48,000 and it appears some times drove it. Two years ago she was involved in dealings with solicitors for the purchase of properties for an aggregate of about $280,000. In August that year she opened two safety deposit boxes. Discovering the fraud the police located almost $800,000 in cash in at least one of those boxes. The female applicant had the sole right of access to those boxes although she exercised that right on all occasions but one in the presence of her husband and, it is said, at his direction.

Last year she was involved in negotiations for a rental contract for a villa in Spain the rental being $8,000 a week to be used during a 10-day first class holiday for herself, her husband and an accomplice, the holiday to cost overall about $60,000. It was a substantially lesser involvement than her husband's obviously overall but nevertheless it was substantial and to demonstrate that is why I have given those particulars now.

Counsel for the female applicant submitted that the learned Judge failed to give sufficient weight to a range of circumstances personal to her; that when she became involved she had no employment and she had the responsibility for the infant, that she was dominated by her husband, that she has suffered in other ways through, for example, the loss of her husband and the company of her child and her house, that her incarceration means that her child lacks her support. The Judge took these matters into account but counsel contends not adequately and he argued for a completely suspended sentence.

We were referred to Mr Justice Thomas' sentence of three years imposed on Allan, an accountant who laundered $1 million drug money over seven months personally benefiting to the tune of about $140,000 and my following sentence of his accomplice, West, to two and a half years imprisonment. West laundered about $950,000 and personally gained about $38,000. Drawing fine distinctions between those cases and this is not particularly helpful to me at this stage. That aside I do not consider the two years imprisonment imposed here to sit inconsistently with the sentences imposed on Allan and West. Certainly, theirs was drug money and that is significant. It is also significant, of course, here that substantial amounts of public money were involved.

I am not satisfied that the sentence imposed on the female applicant was manifestly excessive. The crux of the matter is ultimately that while pregnant and after the birth of her child she actively took part in the laundering of large sums of public money and derived a personal benefit. The circumstance of the child on which she now focuses cannot lead to unduly lenient treatment such as would in my opinion be involved in the suspended sentence proposal. The need for proper reflection of the goal of deterrence and retribution vindicates the sentence imposed on her here.

I would respectfully endorse the observations made on this subject by Mr Justice Thomas in two reported cases. The first is The Queen v. Tilley (1991) 53 ACR 1 where His Honour said at page 4:

"An offender cannot shield himself under the hardship he or she creates for others and Courts must not shirk their duty by giving undue weight to personal or sentimental factors."

The second is The Queen v. Le (1996) 2 Qd.R 516 where His Honour said at page 522:

"The hardship and stress shared by the family of an offender cannot be allowed to overwhelm factors such as retribution and deterrence."

This child will be cared for by a cousin presumably in conjunction with grandparents. Hardship to a child, as here - and there will inevitably be residual hardship because of the incarceration of both parents - is obviously a relevant factor but in my view the gravity of the offence taken with the high relevance to the sentencing of the goals of punishment and deterrence outweigh that issue and justified actual imprisonment. I say that conscious also of the provisions of Penalties and Sentences Act to which we were referred particularly section 9.

I turn to the male applicant. He has not challenged the head sentence but seeks the addition of a recommendation for early parole. We have been referred to a series of cases involving defalcation of substantial amounts. Corrigan (1994) 2 Qd.R 415, eight years for stealing $1.2 million with none recovered. Hinterdorfer 118/97, 10 years with a recommendation after four years and three months for $4.5 million with $2 million recovered. Chapple, 461/94, 10 years with a recommendation after four years in respect of $1.5 million with $300,000 recovered and Palmer, 441/93, 10 years for $1.5 million with $300,000 to $500,000 recovered. There were other cases. I regard Hinterdorfer, Corrigan, Palmer and Chapple as providing useful guidance in this case.

Hinterdorfer pleaded guilty to an ex officio indictment. He was 34 years old and had a young son. He had no prior criminal history. He was a clerk who stole public moneys to feed a gambling habit. As I have said he stole $4.5 million with $2 million recovered and was sentenced to 10 years with a recommendation for parole after four years and three months.

Corrigan pleaded guilty to misappropriating $1.2 million over three and a half years from a cab company of which he was chief executive. He received eight years with parole after four. No money was recovered.

Palmer, a solicitor, was sentenced to nine years for misappropriating $3 million with only about $500,000 recovered.

Chapple, also a solicitor, misappropriated $1.5 million over three years for personal purposes and having pleaded guilty was sentenced to 10 years with parole after four.

Taking all matters into account I consider the sentence imposed on this male applicant to fall appropriately within the range suggested by those cases. It was not, in my opinion, manifestly excessive but is indeed appropriate. I would, for those reasons, refuse both applications.

THOMAS JA:  I agree. I would add in relation to Mrs Gadaloff's application that she must have known what was going on. Knowing of her husband's extraordinary dishonesty she was prepared to benefit from his actions and did so to a very substantial extent. Her conduct deserves condemnation and she should not be permitted to shelter entirely behind her husband. In my view, having regard to the dimensions of her activity it would be an error in the sentencing discretion if she were not required to serve some part of a custodial sentence. In other words, I would reject Mr Martin's eloquent submissions that a wholly suspended sentence should have been imposed. Having reach that point I do not regard the present sentence as manifestly excessive and accordingly agree that her application should likewise be dismissed.

WHITE J:  I agree that neither sentence is manifestly excessive. I have been concerned about the applicants' child but there is no material or indeed any suggestion that he will not be cared for in a loving family environment with a relation and visited by his grandparents. Any number of calamities may befall families necessitating arrangements of this kind. That circumstance alone is not so special as to involve intervention by this Court. The seriousness of the offences to which Mrs Gadaloff pleaded guilty dictated that a term of imprisonment be imposed some part of which should be actually served. That she should serve that sentence until the statutory provision allows her to apply for release on parole cannot, in my view, be said to be erroneous. I would agree with the orders proposed by the Chief Justice.

THE CHIEF JUSTICE:  Both applications are refused.