R v Flint[2015] QCA 275

SUPREME COURT OF QUEENSLAND

[1] MARGARET McMURDO P:  The applicant, Matthew John Flint, pleaded guilty on 9 February 2015 to fraud involving property of a value of more than $30,000 between 17 November 2009 and 17 July 2012.  He was sentenced on 17 February 2015 to two years and six months imprisonment suspended after eight months with an operational period of three years.  The court ordered that the Registrar pay to the complainant the $15,000 paid into court by the applicant.  The court further ordered that the applicant pay $17,832.14 to the Registrar for transmission to the complainant within two years.  In default, the court ordered that the applicant be imprisoned for nine months.  In the event of non-payment, the applicant was to appear in the District Court at Bowen when called upon by notice to show cause why imprisonment should not be imposed for failure to pay that sum.

[2] The applicant has applied for leave to appeal against his sentence on the ground that it is manifestly excessive.  In his written and oral submissions he refined his contention of manifest excess to the compensation order of $17,832.14.  He has also applied for leave to adduce further evidence in the form of an affidavit affirmed by him on 9 September 2015 but not filed until 4 November 2015.

[3] I will summarise the relevant aspects of the sentencing proceeding and the parties’ contentions in this application before stating my conclusion for refusing the application to adduce further evidence, granting the application for leave to appeal against sentence and allowing the appeal to the extent of removing the order that the applicant pay $17,832.14 compensation.

Antecedents

[4] The application was aged between 43 and 46 at the time of his offending and was 48 at sentence.  His relevant criminal record was limited to minor summary convictions in England in 1985 for theft and deception for which he was fined £100 and £50 respectively.  In respect of the deception charge he was ordered to pay compensation of £55.

The circumstances of the offending

[5] The circumstances of his present offending were set out in a tendered Statement of Facts.[1]  He was employed as the manager of the Shute Harbour Slipway, a subsidiary of Trinity Marine Pty Ltd.  His responsibilities included creating invoices for customers on the business accounting software used by the complainant (MYOB).  A copy of the invoice was provided to customers who had to make payment before their vessels would be released.  The applicant would allow customers to use his computer to access their online banking services and transfer the required payment.  On 17 occasions involving 16 customers he provided his personal banking details instead of those of the complainant so that they paid him, not the complainant.  The total amount defrauded in this way was $65,021.28.  To avoid detection he used the complainant’s computer software to amend the customers’ invoices to reflect lower amounts than charged to and paid by the customers.  Once the customers’ payment was transferred to the applicant’s account, the applicant used the eftpos machine of a subsidiary business of the complainant to transfer the amount in the amended invoices to the complainant’s bank account.  The applicant kept the differences between these two amounts, in total, $32,832.14 and the complainant was out of pocket for that sum.

[6] The fraud was discovered when the applicant was away from work and the general manager noticed many inconsistencies between the invoices on the one hand and the work diaries and correspondence with customers on the other.  He confronted the applicant the following morning.  The applicant tendered his resignation effective immediately.  Some weeks later the complainant, after collecting evidence, referred the matter to police.  On 10 December 2012 the applicant went to the Whitsunday Police Station but declined to participate in an interview.  He was arrested and released on bail.  On 22 February 2013 he was served with a Notice to Appear in relation to 14 further related offences.  Eventually all his offending was charged as the single count of fraud to which he pleaded guilty.  Although the matter was originally listed as a trial or contested sentence in the District Court, it ultimately resolved into an uncontested plea of guilty.

The competing contentions at sentence

[7] The prosecutor emphasised that the applicant was in a position of trust and misled both his employer and the customers on a large scale over a lengthy period.  He was a mature man with a limited criminal history who had entered a plea of guilty saving the costs of a trial.  The prosecutor referred to the sentences imposed in two Court of Appeal decisions, R v Goodger;[2] R v Robinson; ex parte Attorney-General (Qld),[3] and to a District Court decision, R v Williams.[4]  He characterised the offence as a gross abuse of trust occurring over more than two and a half years.  The applicant’s attempts to conceal his offending were somewhat sophisticated.  He provided very limited co-operation with police.  An appropriate sentence must be imposed to reflect the community’s disapproval of such conduct and to provide personal and general deterrence.

[8] Defence counsel told the judge that the applicant was brought up in England where he developed a passion for sailing.  In his youth he represented the United Kingdom in sailing championships.  He won three European championships and came second in two world championships.  He built and raced a class of boat called a GP14.  In his teens he commenced a 24 year relationship with a woman who was to become his wife.  They travelled together to Australia and settled at Airlie Beach where they found employment in the tourism and boating industries.  They had a daughter in 2005 who was nine years old at sentence and with whom he had a close and loving relationship.  He and his wife put a $100,000 deposit on a block of land and borrowed $450,000 to build a house.  They then borrowed a further $50,000 to complete landscaping works.  Their marriage ended when his wife left after suffering a breakdown.  He became the sole carer of his then three year old daughter and was left with a crushing debt.  The property which had been valued at $1.2 million was sold for about $450,000 leaving the applicant with an unsecured bank loan of $95,000.  Mortgage insurance reduced the debt to $75,000.  He remained indebted to the bank for that amount.  He used the money from his fraud to service his debt and pay living expenses.  When he resigned from the complainant he lost holiday and severance pay amounting to thousands of dollars.

[9] Defence counsel submitted that Goodger should be distinguished as she had extensive previous convictions for dishonesty and had twice before been sentenced to imprisonment.  He referred to R v Sommerfeld[5] where the offender had been sentenced to a two and a half year fully suspended sentence for her first conviction for fraud which involved stealing $57,000 over three months.  He conceded that actual imprisonment of about six months was the most likely sentencing outcome for the applicant but submitted that a wholly suspended sentence was also appropriate, citing R v Voll[6] and R v Ali.[7]

[10] Defence counsel tendered eight character references[8] which supported his submission that the applicant, despite his offending, was still regarded highly in his community.  They also confirmed his submission that the offending occurred in the context of the applicant’s debts, divorce and parental responsibilities.  They referred to his devotion to his young daughter and stated that she would be distraught when separated from her father.  Counsel emphasised that the matter was always a timely guilty plea and that any delay was because the applicant understood his fraud related to about $30,000 rather than the total amount that came into his account, much of which was returned to the complainant.  The applicant had obtained a loan from a friend to enable him to offer a $15,000 bank cheque by way of compensation to the complainant.  The applicant understood he was likely to be sentenced to a period of actual imprisonment and intended to repay the loan for the compensation upon his release.  Counsel submitted that a head sentence of about two and a half years with a short period of actual imprisonment would meet the interests of justice.

[11] In reply, the prosecutor noted that the complainant was out of pocket for about $17,000.  He asked for an order for compensation in the entire amount.

[12] The sentence was adjourned as the applicant’s brother had died in England the previous night and the applicant wanted to assist his mother to make funeral arrangements.

The judge’s reasons for sentence

[13] The judge made the following observations when sentencing the applicant.  The offending occurred over almost three years; it was a fraud of $60,000 reaping the applicant a benefit of about $32,000.  Offending of that sort will generally be met by a term of actual imprisonment.  The applicant was a mature man.  He had a criminal history but it was dated and would not be taken into account.  He pleaded guilty and saved the community the cost of a lengthy and complicated trial.  His offending occurred at a difficult time in his life.  But for this offending, he was a person of good character as was demonstrated by the references.  He was caring for his daughter with whom he had a close and caring relationship.  He had offered to pay $15,000 restitution but that would leave his former employer out of pocket by about $17,832.14.

[14] The cases to which the judge had been referred demonstrated that fraud of this magnitude committed over a significant period of time by a person in a position of trust will generally result in actual imprisonment.  Wholly suspended sentences were imposed only in special situations quite different to this.  The partial restitution was significant.  The appropriate sentence was two years and six months imprisonment.  It was probably unlikely the applicant would re-offend.  To reflect the mitigating features the sentence should be suspended after eight months with an operational period of three years.  This gave him an opportunity to demonstrate this really was a one-off event.  The judge was unpersuaded that he did not have the capacity to make the remaining restitution.  He would have an opportunity to seek an extension of time to pay should that be necessary.  He probably could pay it within two years as he had the capacity to obtain and maintain work in the Airlie Beach area.  In the event that payment was not made within two years or such extended time as may be granted, the applicant was to appear in the District Court at Bowen when called upon by notice given to him to show cause why the nine months imprisonment should not be enforced because of his failure to comply with the order.  The judge emphasised to the applicant that if he could not make the restitution he should apply for an extension of time.

The competing contentions in this application

[15] The applicant contends that the sentence was manifestly excessive only insofar as it required him to pay compensation of $17,832.14 with a default period of nine months imprisonment.

[16] He seeks leave to adduce further evidence from the applicant to the following effect.  At the time he affirmed his affidavit he was employed at the prison earning approximately $47 a week.  He had one savings account which contained about $100.  His only asset was a 2004 Mitsubishi Magna worth between $2,000 and $3,000.  He was unsure of the status of his debt to the bank for his home loan.  He had been sent a $600 electricity account amassed by new tenants at his previous residence but payable by him because of delays in cancelling his electricity account from prison.  He would be unable to obtain credit because of his history.  He intended to declare himself bankrupt on his release into the community.  His first priority when released was to repay the $15,000 he borrowed to make the part restitution to the complainant.  He would be providing a home for and financially supporting his daughter.  He planned to return to Airlie Beach where his daughter and former wife lived.  As it was a small community he expected it would be difficult to find work, inferentially because of the notoriety of his offending.  He was told  this his conviction for fraud would prevent him from getting public liability insurance, without which he could not work as a self-employed shipwright and boat repairer, or even enter boat yards and marinas.  For the foreseeable future he had no realistic prospect of paying the restitution.

[17] The applicant contended that this evidence should be received as it showed a lesser sentence was warranted in law: R v Maniadis.[9]  Contrary to the respondent’s contentions, it was not appropriate to re-open the sentence and give this evidence under s 188(1)(c) Penalties and Sentences Act 1992 (Qld) as the further evidence did not concern matters of fact existing at the time of sentencing: R v Cassar; Ex parte Attorney General.[10]  He submitted that the further evidence supported the contention that the order to pay the complainant compensation of $17,832.14 was manifestly excessive and should be set aside.  This part of the sentence carried with it the real prospect that the applicant would have to serve an additional sentence of nine months imprisonment so that his potential effective sentence was not two years and six months suspended after eight months with an operational period of three years, but three years and three months imprisonment suspended after 17 months.  The order for compensation of $17,832.14 made the sentence manifestly excessive: R v Silasack;[11] Sobieralski v Commissioner of Police;[12] R v Robinson; Ex parte Attorney-General (Qld)[13] and R v Matauaina.[14]  He contended that the application for leave to appeal should be granted, the appeal allowed and the sentence varied by setting aside the order that he pay $17,832.14 compensation.

[18] At the suggestion of the applicant, as the complainant’s interests would be affected if the applicant were successful in his appeal, the complainant was served with the applicant’s material in this application.  The complainant filed an outline of argument but did not appear at the hearing.  It first contended that the application for leave to appeal was out of time and that an extension of time should not be granted.  Although the application for leave to appeal was stamped in the registry outside the appeal period, it was lodged with the general manager of the applicant’s correctional centre within the appeal period and was therefore taken to be filed within time.[15]  This contention is not made out.

[19] The complainant emphasised the House v The King[16] principles and contended that Silasack, Sobieralski, Robinson and Matauaina were all distinguishable.  This applicant had the opportunity to place before the sentencing court his submissions as to his ability to pay the compensation.  Further, unlike in those cases, the sentencing judge framed the compensation order in a way that provided for the applicant to apply for an extension of time to pay if this became necessary.  The complainant also emphasised that the applicant had not submitted any evidence about his financial position since his release from imprisonment in October 2015.  Some references tendered at sentence indicated that the referee would have no hesitation in working with or employing the applicant.  The complainant understandably urged this Court to dismiss the application for leave to appeal against sentence.

[20] The respondent resisted the application to adduce further evidence.  The material could have been provided during the original sentencing hearing.  Alternatively, the applicant could have applied under s 188(1)(c) Penalties and Sentences Act to re-open the sentence on the basis of the factual error that the judge was satisfied the applicant had the capacity to pay the compensation.  The respondent further submits that in any case the way this order was framed distinguishes it from the cases relied on by the applicant.  The applicant’s capacity to pay the full amount of the restitution was raised by the judge and the prosecutor but the applicant’s counsel chose to make no relevant submissions, relying on the possibility of further compensation as a demonstration of remorse.  The applicant had a clear opportunity to make submissions about any lack of capacity to pay the remaining compensation.  It may be inferred he did not do this because he apprehended this may result in a heavier sentence.  The sentence imposed leaves it open for the applicant to apply for an extension of time to pay the compensation and requires the applicant to appear in court to show cause why the default imprisonment period should not be enforced.  The sentence, the respondent contended, was not made manifestly excessive by the making of the compensation order, and the application for leave to appeal should be refused.

[21] At the hearing this Court raised with the parties whether, and if so, how, the order for compensation would be affected by any subsequent bankruptcy of the applicant.  The parties were given leave to make a further written submission after the hearing on this matter.  They helpfully produced a joint outline which makes clear that the compensation order in this case is a penalty as defined in s 4 Penalties and Sentences Act and is therefore a penalty under s 82(3) Bankruptcy Act 1966 (Cth).  Under s 82(3) penalties imposed by a court in respect of an offence against a law, including a state law, are not provable in the bankruptcy.  If the applicant were to become bankrupt, his liability under the compensation order would be unaffected and the availability to creditors in the bankruptcy to his estate would be unaffected by the order for compensation: Victoria v Mansfield.[17]

Conclusion

The application to adduce further evidence

[22] The applicant’s affidavit, which is the further evidence he seeks to adduce, is not helpful as it does not provide any current information as to his financial position since his release from prison in mid-October, about six weeks before his appeal hearing.  The affidavit does not disclose whether he has declared or is about to declare bankruptcy, whether he has obtained or is about to obtain employment, or any details of his current assets, income and liabilities.  It is not possible to conclude that the admission of the applicant’s affidavit evidence would demonstrate that some other sentence whether more or less severe was warranted in law.[18]  For those reasons the application to adduce further evidence must be refused.

Does the further compensation order make the sentence manifestly excessive?

[23] The applicant’s counsel at sentence did not state in terms that the applicant lacked capacity to pay the $17,832.14 compensation to the complainant after his release from prison.  The only rational inference, however, from the material placed before the sentencing court was that the applicant would have serious difficulty in paying that amount of compensation at that time.  This followed from the evidence of his parlous financial position following his marriage breakup which his counsel gave as the primary reason for the offending.  It was not contested at sentence that the applicant owed a debt to the bank of about $75,000 after the sale of his house and that he had a further debt to the person who lent him $15,000 for the compensation that he paid to the complainant.  He was represented by Legal Aid Queensland.  There was no evidence that he would have employment on his release from prison.  Two referees said that, should they be in the position to offer him employment, they would do so, but one was retired and apparently not in a position to offer employment and the other only offered a position should one become available.  The only rational inference was that he had no assets of value.  There was no evidence before the court as to his likely income and commitments when released from prison when he would have to repay his other significant debts and support not just himself but also his young daughter.  The applicant’s counsel did not by his silence implicitly imply that his client could pay the remaining compensation when released from prison.  The judge should have concluded that there was no evidence that the applicant had the capacity to make the remaining compensation.

[24] In the absence of cogent evidence that an offender has the capacity to pay compensation after release from a term of actual imprisonment imposed as part of a sentence, courts are reluctant to order offenders to pay compensation after serving a term of imprisonment.  To do so may jeopardise the offender’s prospects of rehabilitation; it would be apt to amount to a crushing sentence and would risk setting up the offender to fail at the time of release from prison when most in need of support to reintegrate into society.

[25] In Robinson[19] in allowing the Attorney-General’s appeal against the fully suspended sentence with a compensation order of about $30,000 originally imposed and in substituting a custodial sentence suspended after six months, I noted, with Atkinson J’s agreement, that the unfortunate aspect of imposing a period of actual custody in cases like this may mean that compensation is not paid.[20]  Chesterman J, also with Atkinson J’s concurrence, noted that there was much force in the submission, “that in cases of this kind if compensation or restitution is to be taken into account as a significant factor in mitigation the restitution should be paid or made before the sentencing process is carried out.”[21]  Of course, as this Court noted in Silasack those who commit offences of this kind remain liable to those they defraud in civil proceedings irrespective of any prison sentence imposed.[22]  They also have a moral obligation to repay the stolen money if and when they are able.

[26] The sentence imposed upon the applicant has the potential, if the applicant does not pay the additional compensation ordered following his release from prison, to become an effective sentence of three years and three months imprisonment suspended after 17 months imprisonment.  The cases relied on by the respondent at sentence and in this appeal namely Goodger, Robinson and the cases discussed in Robinson (R v Vinson;[23] R v Bourke;[24] R v Geertz[25] and R v Symes)[26] support a sentence of two and a half years imprisonment suspended after eight months.  They do not, however, support a sentence as high as three years and three months imprisonment suspended after 17 months for a fraud where the amount the complainant was out of pocket was about $33,000 committed by a mature man with a limited and stale criminal history who entered a timely guilty plea and had paid $15,000 in compensation.

[27] For these reasons I am persuaded the judge erred in finding the applicant had the capacity to pay the compensation of $17,832.14 on his release from prison and that the sentence was manifestly excessive insofar as it ordered the applicant to pay $17,832.14 to the Registrar for transmission to the complainant within two years, and in default nine months imprisonment.  It is regrettable that this will mean the unfortunate and faultless complainant will lose the benefit of that compensation order.  The applicant, however, remains morally and legally obliged to pay the complainant that sum and the complainant may wish to bring civil proceedings against him.  The revocation of the sentencing order for the restitution of $17,832.14 will mean that, if the applicant does become bankrupt, the complainant’s legal rights will be dealt with together with those of other creditors under the law of bankruptcy.

Order

[28] I propose the following orders:

1.The application for leave to appeal is granted.

2.The appeal is allowed to the extent of omitting the orders that the applicant pay the sum of $17,832.14 to the Registrar of the District Court at Bowen within two years for transmission to Trinity Marine Pty Ltd, PO Box 590, Airlie Beach 4802; in default of payment within that time, that the applicant be imprisoned for a period of nine months; in the event of non-payment that the applicant appear in the District Court at Bowen when called upon by notice given to him to show cause why imprisonment should not be imposed for failure to pay that sum.

3.The sentence imposed at first instance is otherwise confirmed.

[29] MORRISON JA:  I agree with the orders proposed by McMurdo P and with the reasons given by her Honour.

[30] JACKSON J:  I agree with the President.