R v Wallace[2015] QCA 62

SUPREME COURT OF QUEENSLAND

[1] MARGARET McMURDO P:  The applicant, Michelle Wallace, pleaded guilty on 22 May 2013 to six counts of fraud over $30,000 as an employee and one count of fraud over $30,000.  The offences occurred between February 2008 and June 2011. She was sentenced on 13 November 2013 to an effective term of 12 years imprisonment with parole eligibility on 8 November 2018, that is, after five years.  She has applied for leave to appeal contending that the sentence is manifestly excessive.  She has also applied to adduce evidence in her appeal not adduced at sentence.

The sentencing proceeding

[2] The offences occurred between February 2008 and June 2011 when the applicant was between 45 and 48 years old.  She was 51 at sentence.  She had no previous convictions but was dealt with but not further punished for breaching a bail condition in November 2011.

The facts of the offending

[3] The offending was a grave example of fraudulent behaviour.  The applicant was the office manager of a Gold Coast nursing home operated by a private company whose directors were Ms Barabra Lowe and Mr Gilbert Donnay.  Mr Donnay died on 27 June 2011.  As office manager the applicant had access to the business accounts including residents’ bond accounts, as well as the petty cash.  She was authorised to sign cheques on behalf of the company.  Most business transactions were by online banking and she was the only person able to use the online banking password.  She was also responsible for staff superannuation contributions and wages, and payments to suppliers and government agencies.

[4] The nursing home accommodated principally high care aged residents, with a smaller number of low care aged residents.  The low care residents were required to pay a bond in an amount negotiated with the nursing home.  The applicant was responsible for establishing individual bond accounts.  Sometimes the bond was paid into the business working account and then transferred by the applicant to individual bond accounts.  Some residents paid part of the bond and were charged interest on the outstanding balance until the full bond was paid.

[5] The applicant with her husband also operated two restaurants, one on Chevron Island and one at Broadbeach, through their own private company.  She worked full-time at the nursing home from 9.00 am until 4.30 pm Monday to Friday and worked for the restaurants outside these hours.  At times she monitored the restaurants via CCTV on her computer from the nursing home.

[6] She transferred money without authority from the bond accounts of some residents into the nursing home’s working account, and she failed to establish bond accounts for five residents who had deposited their bond money into the working account.  She appropriated that money for her own use.  Between February 2008 and late June 2011, in 149 transactions totalling $1,023,349.48, she paid her restaurant employees’ wages directly from the nursing home working account (counts 1 and 6).  Between March 2008 and July 2011, in 143 transactions totalling $1,153,374.58, she paid money from the nursing home’s working account into the business account for her restaurants (counts 2 and 4).  Between April 2008 and October 2010, in 49 transactions totalling $558,129.42, she used money from the nursing home’s working account to pay rent for her Chevron Island restaurant (counts 3 and 5).

[7] In June 2011 she learned that there was to be an audit of the bond accounts. She transferred $836,657 from Mr and Mrs Donnay’s personal term deposit to the nursing home working account by photocopying Mr Donnay’s signature from a fax.  The day after Mr Donnay died, she sought confirmation that the transaction had taken place.  Over the next three days she transferred $17,988.60 and $9,786.65 from the nursing home working account to her family business account.  She also transferred $11,366.50 for restaurant staff wages.  On 29 June 2011 she transferred most of the remaining funds, $612,399.04, from the Donnays’ account into the five bond accounts which she should have established earlier but did not (count 7).

[8] On 20 July 2011 Ms Lowe noticed her staff’s superannuation payments were in arrears.  The following day she discovered that a number of cheques had not been presented and that over $300,000 of staff superannuation which should have been paid had not been paid for approximately eight months.  Payments to the Office of State Revenue had not been made for five months and $120,000 was outstanding.  The Australian Tax Office was owed $180,000.  Various suppliers to the nursing home were also seeking payment for goods and services.

[9] Ms Lowe searched the applicant’s workspace and discovered documents in a box, including faxes to the bank concerning the Donnays’ account and signature blocks which appeared to have been cut and pasted.  The following day Ms Lowe made a complaint to police and told the Donnays’ bank to hold funds if any transfers were requested.  The applicant unsuccessfully attempted to transfer $6,893.20 by online banking into her restaurant account but the bank did not allow the transfer.  On 25 July 2011 she was removed as a signatory on the nursing home accounts.

[10] On 26 July 2011 Ms Lowe and her solicitor met with the applicant who admitted to transferring funds for her private use.  She became distressed, apologised, promised to repay the money and she formally resigned.

[11] The next day police executed search warrants at her home and at the Broadbeach restaurant.  She co-operated, produced records and made admissions.  She explained that the restaurants had not been doing well and that she used the money to keep them afloat.  She always hoped the restaurants would make a profit and that she would then pay back the money she had taken.  She took the Donnays’ money in an attempt to cover the money she had taken from the nursing home because of the approaching audit.

Counsel’s submissions at sentence

[12] The prosecutor at sentence noted that the applicant had not paid any restitution.  She had pleaded guilty at an early stage.  The maximum penalty for counts 1, 2 and 3 was 10 years imprisonment and for the remaining counts 12 years imprisonment.  She referred to the cases of R v Ripper;[1] R v Chapple;[2] and R v Heiser and Cook; ex parte Attorney-General (Qld).[3]  The applicant had spent five days in pre-sentence custody.  The prosecutor tendered a victim impact statement from Ms Lowe, which eloquently expressed the dreadful effect of the applicant’s offending.  When Ms Lowe’s business partner and dear friend Mr Donnay died, she was left with the full responsibility for the nursing home’s 117 residents and 120 staff.  The applicant had left her with debts of over $2.5m.  She was deeply concerned for the residents’ future and finances and for her staff.  She could not eat or sleep and felt constantly sick.  Later in 2011 when her beloved mother died, she had trouble coping and her world fell apart.  She had been very proud of the nursing home and its success.  She was particularly angry that, after the applicant’s first restaurant at Chevron Island was failing, she opened another restaurant with money stolen from the nursing home.  Ms Lowe was forced to sell the nursing home to pay money taken by the applicant.  Despite the applicant’s promises, she had not repaid any money, not even the sums stolen from the old and sick.  The applicant had stolen not only her money but the business she had worked so hard to build, her ability to care for and protect her staff and residents, her plans for her retirement and her legacy to her children and grandchildren.

[13] Defence counsel noted that the applicant was born in New Zealand where she married and had two children.  Her first husband suffered from an acute form of bipolar disorder so that she was the family’s primary income earner and struggled to look after him and their children.  Ultimately the marriage failed.  She met her present husband in 2001.  They moved to Melbourne in 2003 where she took up a managerial role in a telecommunications company.  In early 2007 the family moved to Upper Coomera and she took up the position with the nursing home.  She and her husband opened the Chevron Island restaurant but they were inexperienced and it was never successful.  Her husband spent less and less time at the restaurant, leaving its management to the staff.  The restaurant employed her son and debts mounted.  Instead of closing the failing business, they opened another restaurant at Broadbeach.  In October 2011 the landlord of the Broadbeach restaurant locked the doors and both businesses closed in debt.  She got nothing out of the misappropriated money or her restaurant business, was not leading an extravagant lifestyle and was left with enormous debts.  She was not in a position to repay anything.  Prior to this debacle she had led a blemish-free life.  Whilst on bail for the past 18 months, she had worked at an IGA store at Ashmore as a bookkeeper.  Her breach of trust was not as great as a solicitor or accountant taking clients’ money, although it was an aggravating feature that she was an employee.  She had pleaded guilty and assisted the authorities.  The offending was towards the top level of seriousness.  A head sentence of 11 years imprisonment with parole eligibility after one third was appropriate in light of the mitigating features.

The judge’s sentencing remarks

[14] The judge referred to the circumstances of the offending, the applicant’s antecedents and the submissions of defence counsel.  Her Honour concluded, however, that the applicant was in a position of enormous trust and her offending had caused great harm to many people, including Ms Lowe, the 117 residents and the 120 staff.  Ms Lowe was left with debts of over $2.5m and the offending had a greatly detrimental impact on her.  The applicant had not paid any restitution.  The breach of trust, not only to the business owners but also the elderly and frail residents and the staff, placed this offending in the worst category.  The applicant had been persistent and determined.  The judge noted the comparable sentences to which counsel had referred and concluded that, despite the guilty plea, the applicant should serve more than one third of the head sentence of 12 years imprisonment.  Parole eligibility should be fixed after five years.

The application to adduce further evidence

[15] In this application the applicant has sought to lead evidence not led at the sentence.

[16] She has provided an affidavit attesting to her ex-husband’s violence towards her.  He regularly verbally, mentally and emotionally abused her from the time of their marriage in 2005.  This progressed to physical violence in 2007 and 2008.  He once threw her to the ground.  They had counselling and he underwent anger management but his violence continued.  He would back fist her to the face if she said something to upset him.  He physically and emotionally abused her on a daily basis.  He controlled her freedom, her every move.  After a fight he would take her house keys and phone so that she could not leave or get help.  He threatened their children and restaurant staff.  She was afraid he would harm her children.  He banned her from seeing her daughter and he watched CCTV at the restaurant business to ensure that her daughter did not visit.  If her daughter came to the restaurant, he would arrive within ten minutes and, in front of staff and customers, force her to leave.  He was very volatile.  He would pretend to be the perfect husband socially but if she said something he did not like, he would whisper in her ear, “Wait til we get home, then you’ll know about it.”  When they got home he would become violent.

[17] He often threatened family and friends.  She was especially worried for her daughter whom he threatened whenever the applicant stood up to him.  He sometimes shoved the applicant to the ground, grabbed her by the throat and kicked and strangled her.  She was mostly able to hide the resulting bruises.  She was worried that if she told anyone about the abuse then that person would become a victim of his violence.  She made a complaint to police about her husband’s domestic violence in 2008 and kept a domestic violence incident diary.

[18] The night she first phoned police she used an old landline phone which she recharged as he had taken her mobile phone and car keys.  She was very scared and thought he was going to kill her.  The police came, took her diary and charged her husband.  He appeared and was sentenced to a one month suspended sentence.

[19] He would always check her phone and her computer.  When he became abusive, he would hide her phone and car keys and lock them in the room with him.  He often drank heavily and used drugs.  He made her sleep on the edge of the bed and if she moved he would punch her.  He would never apologise but claimed that she had triggered his anger.  She began to believe that she was the cause of his violence.

[20] The physical abuse ended in 2011 but the verbal abuse continued after their relationship ended.  He has tried to renew their relationship but she has been astute to ensure she is never alone with him.

[21] He would take money out of the restaurant bank account and tills and not tell her where the money went.  She thought he spent it on renovating cars or buying drugs.  He did not contribute to the restaurant business but expected her to ensure all bills were paid.  He would give free drinks to his friends at the restaurant.  When she tried to stop this, he would get angry and abusive.

[22] She set up the second restaurant to get away from him and to pay back the nursing home.  She was initially given free rent and hoped to build up the business and sell it at a profit.  A fire at a neighbouring business damaged the restaurant which was uninsured.  Her husband insisted the Chevron Island restaurant was his and although she continued to contribute by preparing the roster and wages, he would not physically allow her to go there.  She worked extremely hard at both restaurants and at the nursing home but was unable to get ahead financially.  She finally closed the Broadbeach restaurant and concentrated on the Chevron Island restaurant.

[23] Although she told the solicitor who appeared for her at sentence about her husband’s domestic violence and the pressure this placed on her, he said it was in her best interests not to raise it.

[24] The applicant also gave oral evidence at the hearing of this application.  She confirmed the truthfulness of her affidavit evidence and of the information she provided to psychiatrist, Dr T Mark Schramm.  She explained that she and her husband were no longer in business together once the restaurants closed.  Although they were separated, they continued living in the same house for quite a while as he was working away in the mines and came back as it suited him.  Prior to the restaurants closing, they lived off her wages from the nursing home.  He did not know she was taking money from the nursing home to support the restaurants.  When she tried to tell him he was not interested.  She knew the restaurants were not making a profit through 2008, 2009 and 2010.  He helped himself to money from the restaurant tills and treated the business money as his own.

[25] The prosecutor put to her that she stole a great deal of the money in April, May and June 2011 after she had separated from her husband.  She explained that at this time he was still in her life and threatening her.  She was in survival mode and an absolute mess, surviving from day to day.  She was “running in autopilot,” stuck in the bottom of a big dark hole.

[26] She was constantly juggling money from one account to another so that the auditors did not notice.  She had not realised how much she had taken for the restaurant business, which employed her two children at various times for a couple of years each.  She hoped that if she could make a success of the Broadbeach restaurant and sell it, she could pay him out.  But she became entangled in the day to day grind of trying to avoid him hurting her.

[27] She agreed she provided her solicitor advocate with her personal details.  She told him about her husband’s violence and that she linked this to her offending.  Her supporters at the sentencing proceeding asked why this material was not used in her defence.

[28] In re-examination she stated that on 26 April 2011 police came to her home as her husband had arrived and was violent.  She considered their relationship was over but his property was still at her house and he came over whenever he wanted.  She again called police to her home on 10 May 2011 because he slapped her face and grabbed her by the throat.  He was almost six feet tall, weighed over 100 kilos and often lifted her up by the neck.  When Ms Lowe and her solicitor confronted the applicant about her offending in July 2011, her husband was still living with her intermittently.  She explained that at the time of her offending she thought she was borrowing money from the nursing home but she now knew she did the wrong thing.

[29] The applicant has sought to lead evidence of the police report of a domestic violence incident on 14 December 2010.  It recorded that the applicant’s husband verbally abused her before throwing a half full glass of spirits at her.  The glass missed her but smashed on the wall.  Her diary reported earlier incidents of domestic violence on 27 July 2010 and 3 August 2010.  She complained to police at 6.29 am on Christmas morning 2010 when he had verbally abused her after drinking heavily and possibly taking drugs.

[30] Additionally, the applicant has sought to lead affidavit evidence from her daughter, Sara Alexander.  Ms Alexander confirmed that the applicant’s relationship with her second husband began to deteriorate from 2005. After the couple purchased the Chevron Island restaurant he began drinking heavily and became violent.  He gave away food and drink and spent all the money from the restaurant and he was not working in the business as he should have.  Her mother worked in the restaurant until the early hours of the morning as well as full time at the nursing home during the day.  Money disappeared from the restaurant business and the applicant’s husband blamed employees.  When the applicant confronted him he would say, “It’s my fucking money, I can do what I want cunt.”  He would often abuse Ms Alexander in front of customers.  He banned Ms Alexander from the restaurant and “kicked” her out of her mother’s house when she was only 21 years old.  She was forced to meet the applicant secretly.  He was abusive towards and controlling of her mother.  On one occasion her mother sent a text message using a code word to indicate she needed help.  Ms Alexander rang the police and went to assist.  The applicant’s husband had thrown a glass of beer at her mother.  The police put in place a domestic violence order.  His abuse got worse over time.  He emotionally and mentally belittled her mother.  On Christmas Eve 2010, he and a male friend were on drugs, perhaps acid and playing loud music into the early hours.  Her mother locked them outside because she and Ms Alexander were scared.  They crouched down, hid on the lounge room floor and phoned the police but the husband and his friend fled before the police arrived.

[31] She has seen her mother with a broken nose and with bruises to her arms from the husband’s violence.  He regularly took her mother’s keys so that she could not leave.  Ms Alexander once saw that the dashboard of her mother’s car was smashed in.  He “messed with [her] mother’s head and [she] was worried that he made her think that she deserved it.”  After 2008 he began to abuse the applicant in front of staff and customers at the restaurant.  Ms Alexander was extremely scared of him.  She has undertaken counselling so that she now understands that she was not to blame for his behaviour.

[32] The applicant also relied on an affidavit and reports from psychiatrist, Dr Schramm, who interviewed her at the Brisbane Women’s Correctional Centre on 10 September 2014 for two hours and 17 September 2014 for 2.25 hours.  He perused the appeal book record, the affidavits of the applicant and Ms Alexander and the police court brief.

[33] Dr Schramm considered that the applicant found prison something of a relief because she felt safe there.  Prior to her imprisonment she described symptoms consistent with post traumatic stress disorder (PTSD).  She had no history of psychiatric illness or substance abuse.  She was pleasant and co-operative at interview.  She was genuinely ashamed and remorseful about her criminal behaviour.  She described her husband during the period of the offending as frightening, tyrannical, drug-abusing, unpredictably violent and narcissistic.  At that time she was probably exhibiting the psychological and behavioural disturbances classically suffered by those subject to years of physical and emotional abuse, especially when socially isolated.  This is known as “battered persons syndrome.”  Whilst not a mental disease, those suffering from it commonly develop “learned helplessness” where the victim does not attempt to extricate themselves from the abuse and may even take responsibility for it as the applicant did.  Whilst she was not pervasively seriously depressed, she was “in a most unhappy state.”  She probably would not fulfil the complete criteria for PTSD but she had symptoms of it.

[34] Dr Schramm considered that the applicant’s claim of initially being unaware and then dismissing her appreciation of the wrongness of her repeated fraudulent behaviour was classic of the avoidant coping mechanisms that the chronically traumatised or battered engage in to cope.  She was generally aware her behaviour was wrong and was not so impaired as to be deprived of one of the capacities under s 27 Criminal Code 1899 (Qld).  As a battered woman she did not fully realise the repercussions of her behaviour.  Her claim of continuing to engage in the fraudulent behaviour so as to avoid further anger and violence from her husband was, on her account, understandable.  Her circumstances and state of mind very much affected her ability to formulate a mature and sensible response to her predicament.  The deliberate, yet unconscious “sticking one’s head in the sand” was an understandable and common response to cope with the overwhelming stress flowing from her fear of abuse from her husband and the ever-deepening mire caused by her fraudulent actions.  Further, she committed these frauds to avoid angering her frightening husband; she was not acting as a completely rational person.  Her actions were maladaptive but she was not operating within a completely rational framework.

[35] The respondent did not challenge Dr Schramm’s evidence.

Conclusion

[36] This Court will receive further evidence on an application for leave to appeal against sentence if its admission shows that some other sentence than that imposed was warranted in law and the exclusion of the evidence would result in a miscarriage of justice: R v Maniadis.[4]  This case illustrates the importance for lawyers to be educated in the potential impact of domestic violence on its victims.  Lawyers acting for those charged with criminal offences who claim to be victims of domestic violence should fully investigate those claims to determine their weight and relevance to the charged offending.  If appropriate, they should obtain relevant evidence of the kind produced in this application and place it before the primary court, either as a possible defence or, as here, in mitigation of sentence.

[37] The complainant’s evidence was plausible.  It was supported by the unchallenged evidence of her daughter and the police records.  Psychiatrist, Dr Schramm, whose evidence was also unchallenged, found no cause to question the veracity of her account to him and persuasively linked the impact of the domestic violence to the applicant’s capacity to fully understanding the moral blameworthiness of her offending.  The further evidence led in this application established that at the time of the offending the applicant was in an abusive, exploitive relationship which impaired her capacity to realise the full repercussions of her fraudulent behaviour and her ability to formulate a mature response to her financial and personal difficulties as she continued to take more and more money from the nursing home in the impossible hope that she would eventually repay it.  As Dr Schramm explained, she was not acting completely rationally.  She was exhibiting behavioural disturbances following her prolonged and significant physical and emotional abuse, commonly known as “battered persons syndrome.”  This took her offending behaviour out of the worst category of fraudulent offending in which the sentencing judge placed it.  The further evidence raises the possibility that some other sentence than that imposed may be warranted; if so, its exclusion would result in a miscarriage of justice.

[38] This Court should next consider, if it re-sentenced the applicant on the basis of the material before the sentencing court together with the further evidence produced in this appeal, whether it would impose a lesser sentence than 12 years imprisonment with parole eligibility after five years.  If so, the application to adduce further evidence and the application for leave to appeal should be granted and the appeal allowed.

[39] Even in light of the applicant’s concerning domestic situation at the relevant time, her fraudulent offending was extremely serious.  She perpetrated a deplorable fraud on her employers, breaching their trust and trammelling their rights, those of the elderly, vulnerable nursing home residents as well as those of the nursing home staff.  Her offending has had a dreadful impact on many peoples’ lives and especially on Ms Lowe.  A substantial head sentence was warranted, both as a personal and general deterrent and also to show the community’s disapprobation of such intolerable anti-social behaviour.  Importantly, however, as Dr Schramm explained, her capacity to fully realise the seriousness of her actions at the time of the offending was impaired because of her husband’s abuse.  This meant that her offending was not, as the sentencing judge considered in the absence of the evidence of domestic violence given in this application, in the worst category.  But even with this further evidence, her offending was towards the top end of the range of seriousness of major frauds.

[40] There were factors in the applicant’s favour.  She had no prior convictions, had previously led a responsible life, pleaded guilty at an early stage and co-operated with the authorities.  Once her offending was discovered, she was charged and, in time, she ended her abusive relationship.  She was able to find and maintain steady employment and did not re-offend.  These factors suggest she has excellent prospects of rehabilitation.  The most compelling mitigating feature, however, was that her offending was committed whilst her thinking was disordered because she was a victim of sustained spousal abuse.  This is a distinguishing factor from R v Chapple,[5] and also from R v Heiser and Cooke; ex-parte Attorney-General (Qld)[6] which additionally did not have the mitigating feature present in this case, an early guilty plea and co-operation with the authorities.  The applicant’s remarkable combination of mitigating features should be reflected in a recommendation for parole eligibility slightly earlier than the one third mark commonly given for timely guilty pleas.  I consider an effective head sentence of 11 years imprisonment should be imposed to reflect the objective seriousness of the offending but with parole eligibility after three years to reflect the various significant mitigating features.  This sentence is in line with that imposed in R v Ripper[7] where the offender suffered from psychological and psychiatric issues which lessened his moral culpability.

[41] It follows that the applications to adduce further evidence and for leave to appeal should be granted and the appeal against sentence allowed.

[42] I propose the following orders:

1. Grant the application for leave to appeal and the application to adduce further evidence.

2. Allow the appeal against sentence.

3. Vary the sentence imposed below by:

(a)Substituting 11 years imprisonment for 12 years imprisonment on counts 4, 5, 6 and 7; and

(b)Substituting 8 November 2016 for 8 November 2018 on all counts as the date the appellant is eligible for parole.

4. The sentence imposed below is otherwise confirmed.

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

[44] DOUGLAS J:  I agree with the reasons of McMurdo P and the orders proposed by her Honour.