R v Phillips[2022] QCA 165

SUPREME COURT OF QUEENSLAND

1. [1]
   BOWSKILL CJ:  For the reasons given by Dalton JA, I joined in making the order at the conclusion of the hearing on 23 August 2022.
2. [2]
   MULLINS P:  For the reasons given by Dalton JA, I joined in the making of the order on 23 August 2022.
3. [3]
   DALTON JA:  This is an application for leave to appeal against sentence.  The sentence is said to be manifestly excessive.  The issue was confined, as it was accepted by the applicant that the head sentence was not manifestly excessive.  It was argued the primary judge’s order, that the sentence be suspended after the applicant had served six months of a three year sentence, showed that the sentence was manifestly excessive.  The application came on for hearing on 23 August 2022 and at the end of the hearing the Court made an order that the application be dismissed.  These are my reasons for joining in making that order.
4. [4]
   Mr Phillips was 67 at the time of sentence and had no criminal history.  He pled guilty to an unusual charge created by s 206(2)(a) of the Property Occupations Act 2014 (Qld):

“206 Wrongful conversion and false accounts

3. (1)
   This section applies if a licensee in performing the activities of a licensee or a real estate salesperson in performing the activities of a real estate salesperson—

1. (a)
   receives an amount belonging to someone else; or

2. (b)
   falsely accounts for money.

3. (2)
   The licensee or real estate salesperson commits a crime if the licensee or salesperson—

1. (a)
   dishonestly converts the amount to the licensee’s or salesperson’s own or someone else’s use; or

2. (b)
   dishonestly renders an account of the amount knowing it to be false in a material particular.

Maximum penalty—1000 penalty units or 5 years imprisonment.

…”

5. [5]
   Mr Phillips and a Mr Freeman came upon an opportunity to buy the management rights to the Rainbow Beach Resort for $1.00.  Mr Phillips obtained a real estate agent’s licence so that he was able to run that management business.  A company was incorporated.  Mr Phillips was the sole director; Mr Freeman had previous regulatory breaches which meant that he could not be a director.  Mr Phillips owned half the shares and Mr Freeman’s wife owned the other half.
6. [6]
   Mr Phillips, with his real estate agent’s licence, was the account holder of a trust account into which monies belonging to the unitholders in the resort were paid.  Mr Phillips allowed Mr Freeman to access the trust account over the internet.  Mr Freeman ran the management rights business.  He drew a modest salary for doing so.
7. [7]
   Soon after commencing the business it became clear to both Mr Freeman and Mr Phillips that there was insufficient money to pay the debts of the business.  Small amounts were taken from the trust account in order to pay the debts of the business.  Whatever the intention may have been at the beginning, this course of conduct continued for two years until $219,128.22 of the unitholders’ money had been taken.  Mr Freeman took the money, but Mr Phillips directed that it happen, and knew that it was happening.  There was no evidence that he overbore Mr Freeman.  However, he was the only director of the company, and he held the real estate licence which enabled him to be the trustee.
8. [8]
   The offending was sophisticated in that there was a computer accounting system which should have automatically paid the unitholders the amounts due to them from the trust account.  That part of the accounting system was disabled, and false entries as to unpresented cheques were made manually, so that the accounting system did not show that the unitholders’ money was being dispersed in breach of trust.
9. [9]
   The motive for the offending was to maintain apparent liquidity of the management rights business so that it could be sold for a profit.  That did not come about.  Liquidators were appointed to the company and there was no money to pay the amounts owing to the unitholders.  A fidelity fund paid most of the unitholders’ claims arising from the offending.  Mr Phillips and Mr Freeman have paid nothing to repair the position either of the unitholders or the fidelity fund.
10. [10]
    At some point Mr Phillips raised a loan for $100,000 which he paid into the insolvent management rights business.  He lost that amount of money, and because the money was secured, he lost the home in which he and his wife lived.  As a result of his offending, Mr Phillips lost his real estate licence.
11. [11]
    The Office of Fair Trading investigated.  They interviewed Mr Phillips and Mr Freeman in October 2019.  Mr Freeman made very extensive admissions; said that his actions were with the knowledge and approval of Mr Phillips; gave investigators thousands of emails between himself and Mr Phillips, and a spreadsheet showing the amounts taken in breach of trust, and their total.  In contrast, Mr Phillips told investigators that Mr Freeman was responsible for the day‑to‑day running of the business and that he (Phillips) was unaware of any unlawful transactions.  When investigators showed him emails contradicting this, he stopped co-operating with them.  In fact, Mr Phillips did not indicate a willingness to plead guilty until March 2022.
12. [12]
    Mr Freeman continued to co-operate.  In April 2020 his solicitors formally advised that he would plead guilty to an ex officio indictment.  He was sentenced in March of 2021.  Delay was due to the COVID-19 pandemic.
13. [13]
    Moynihan QC DCJ sentenced Mr Freeman to two and one-half years imprisonment suspended immediately.  He noted that he was 66 years of age at the time of the offending; had no criminal history, and had been in pre-sentence custody.  He took into account Mr Freeman’s very early plea and that he had facilitated the administration of justice.  He found that he displayed genuine remorse and insight.  He was the primary carer for his wife, who was being treated for cancer.  The prosecutor did not contend that any part of the sentence ought to be served in custody.
14. [14]
    There was only one other decision which counsel before the primary judge, and before this Court, could find which dealt with an offence under s 206(2)(a) of the Property Occupations Act.  That was a decision of McGinness DCJ in R v Anthony James Mauceri, a real estate agent, on 25 February 2022.  Mr Mauceri was charged with two counts of conversion over a period of four months.  He was 57 at the time, and 60 at the time of sentence.  He had two convictions for fraud.  One was minor and over 30 years old.  The other was relatively minor (stealing credits at a casino and petrol).  It was in relation to offending committed at about the same time as the Property Occupations Act offences.  Mr Mauceri appropriated $111,437.13 from his rental and sales trust accounts in order to pay personal expenses; pay his staff, and try to keep his real estate agency business solvent.  Mr Mauceri made admissions from the first interview in the investigation into his activities.  He entered an early plea of guilty.  He acted at a time of personal financial crisis.  He received a sentence of three years, suspended after serving seven months.
15. [15]
    The applicant relied on a case of R v Moussellmani.^[1]  That was a decision of this Court dismissing an application for leave to appeal from a sentence of three and a half years imprisonment, suspended after nine months, for three offences of fraud: s 408C of the Criminal Code 1899 (Qld).  That case involved the receipt of $183,500 from three homeowners who were induced to part with their money on the basis of Mr Moussellmani’s false representations that he was a licensed builder.  The offending took place over six months.  Some building work was performed, so that the applicant’s advantage from the fraud was something less than the total amount of money taken.  Moussellmani had prior convictions including for dishonesty.  This Court refused to interfere with the sentence.
16. [16]
    Moussellmani was said to demonstrate that the primary judge’s sentence here was too high.  Mr Moussellmani had prior relevant convictions and the applicant has none.  Further, s 408C(2A) of the Criminal Code meant that the maximum sentence in Moussellmani’s case was 20 years, not five.
17. [17]
    The first point of difference may be accepted.  However there are other points of difference against the applicant.  Mr Phillips engaged in offending for around four times the period of time which Moussellmani did; he took money from a trust account as a licensed real estate agent, an aggravation not present in Moussellmani’s case, and he took more money than Moussellmani did.
18. [18]
    As to the second point, the maximum sentence for any offence is always relevant as one of the considerations to be taken into account on a sentence, and the primary judge did consider it, and did note the contrast with the maximum penalty for fraud under the Criminal Code.  The structure of s 408C is that subsection (1) defines the crime of fraud for which there is a maximum penalty of five years.  Subsection (2) increases the maximum penalty in circumstances where, inter alia, the offender is the director of a corporation, or where property taken was subject to a trust.  Subsection (2A) increases the maximum penalty to 20 years if more than $100,000 is taken.  The structure of the section demonstrates that the facts that Mr Phillips (1) was a director; (2) held money on trust, and (3) took $219,000, all go directly to the criminality of his offending.  Along with the maximum penalty for the offence, these were also very relevant factors to consider, as the primary judge did, in deciding what sentence to impose on Mr Phillips.
19. [19]
    The other thing to note about Moussellmani is that it is not a case where the Court of Appeal considered the adequacy of the sentence, much less resentenced the offender.  The application in Moussellmani was based on a contention that the sentencing judge had made a specific error when sentencing.
20. [20]
    The last comparative case urged upon us was R v Phillips & Woolgrove.^[2]  In that case the Court of Appeal refused leave to appeal against a sentence imposed for an offence against s 601ED(5) of the Corporations Act 2001 (Cth): operating an unregistered managed investment scheme.  One hundred and thirty people invested a total of $US590,490 in the scheme.  Both the applicants “directly and significantly” benefitted from the proceeds of the scheme.  The “criminality essentially derived from their reckless failures to satisfy themselves before accepting investments from the public that the investment scheme did not require registration”.  This Court said, “Because recklessness rather than some higher degree of culpability was involved, the degree of the applicants’ criminality was not of the highest order.” – [67].
21. [21]
    The applicants in Phillips & Woolgrove were younger than the applicant before us, and each had criminal histories which were not insignificant and which involved dishonesty.  In the event, Mr Woolgrove was sentenced to two years imprisonment to be released after serving six months, and Mr Phillips was sentenced to two years imprisonment to be released after serving five months.  This Court refused to interfere, the President saying that the sentences were “by no means manifestly excessive”.  It was submitted that the case was particularly relevant here because the maximum penalty for the offence was five years.
22. [22]
    None of the cases discussed demonstrates that the sentence in this case was manifestly excessive.  Mauceri involved the imposition of a similar, but slightly higher, sentence for slightly lesser offending.  Moussellmani and Phillips & Woolgrove are instances of similar sorts of offending, although against different provisions and in slightly different contexts.  Similar sentences were imposed.
23. [23]
    The sentence imposed on this applicant had parity with that imposed on his co‑offender Mr Freeman, having regard to Mr Freeman’s extensive co-operation and having regard to this applicant’s non-co-operation; having lied to police at the outset, and then having failed to plead guilty for a considerable time while his proceeding was listed for a trial in the District Court.
24. [24]
    This applicant’s criminality was higher than that of Mr Freeman’s, given that it was the applicant who was the licensed real estate agent, and the applicant who was the trustee of the trust fund.  It was submitted that the loss of the applicant’s real estate agent’s licence was an extra-curial punishment.  The primary judge recognised that it was.  In my view, that was a slight factor in circumstances where the applicant had obtained the licence in his 60s only to carry out the venture which became the subject of the offending.  He had worked all his life until then without a real estate agent’s licence.  It was argued that the fact that the applicant lost over $100,000 of his own money by investing in the failing company meant that the sentence imposed upon him was disparate to that imposed on Mr Freeman.  I cannot see this.  The loss of $100,000 was not some sort of extra-curial punishment.  As the primary judge rightly recognised, it was the applicant’s decision to embark upon the business and invest in the business.  Had he not committed the offences, he would have been more financially damaged by those bad business decisions than he was.
25. [25]
    It is accepted that three years was an appropriate head sentence.  The primary judge ordered that the sentence be suspended early, after the applicant had served only six months of it, that is, making allowances for his age and his lack of prior convictions.  Because the sentence was to operate thereafter as a suspended sentence, the applicant was not burdened with having to comply with a parole order.  The sentence imposed was not manifestly excessive, but was comfortably within the range of appropriate sentences for this offending.