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16
Court of Criminal Appeal 29 August 2002

R v Burke

[2002] NSWCCA 353

Fraud & dishonesty
CRIMINAL LAW APPEAL AGAINST SEVERITY OF SENTENCE FRAUDULENT MISAPPROPRIATION WHERE APPLICANT PLEADED GUILTY

Citation: R v Burke [2002] NSWCCA 353
Court: Court of Criminal Appeal, New South Wales
Date: 29 August 2002
Judge(s): Giles JA, Levine J, Sperling J (Sperling J delivered the leading judgment; the other judges agreed)

Background

The applicant was a financial adviser who operated an investment business through a company called KBA Financial Services Pty Ltd from premises in Tweed Heads. Between February 1994 and June 2000, he induced clients to entrust him with funds for investment in relatively safe products such as first mortgages and managed funds. Instead, he diverted more than $5 million to his own businesses, personal expenditure, and, on the evidence, racehorse gambling. Many of his clients were elderly or retired people who suffered significant personal hardship as a result.

The applicant pleaded guilty to 39 charges of fraudulent misappropriation and 11 charges of using false instruments, spanning a period of over six years and involving 26 investors. The total misappropriated across all charges exceeded $5.4 million. He had prior convictions for dishonesty dating from 1985.

In the District Court at Lismore, Ducker DCJ sentenced the applicant to an overall term of ten years' imprisonment, commencing 2 October 2001, with a non-parole period of seven years and six months. The applicant sought leave to appeal to the Court of Criminal Appeal on the ground, among others, that the sentences were manifestly excessive.

  • Whether the overall sentence of ten years' imprisonment was manifestly excessive, having regard to the applicant's guilty plea, cooperation with authorities, and personal circumstances
  • Whether reimbursement of investor losses by a third party (such as a professional indemnity insurer or similar source) constitutes a mitigating factor in sentencing
  • How "fresh evidence" (evidence not before the sentencing court) is to be treated on a severity appeal, and in particular what threshold an applicant must meet before the appellate court will intervene

Decision

The Court dismissed the appeal, granting leave but finding no basis to interfere with the sentence imposed below. Sperling J, with whom Giles JA and Levine J agreed, found that the offending was serious in the extreme: it involved a prolonged, premeditated breach of trust by a professional adviser against vulnerable clients, aggravated by prior convictions for similar dishonesty. The 20 per cent discount for the guilty plea was appropriate, and the sentencing judge's finding of no genuine remorse was not disturbed.

On the question of third-party reimbursement, the Court held that such reimbursement does not operate as mitigation of the sentence in the conventional sense. Reimbursement by a third party does not expunge the loss caused by the offender; it merely moves that loss from the original victim to another party. It cannot alleviate the aggravating factor that the misappropriated funds were, in the relevant sense, entirely lost through the offender's conduct. The Court accepted that reimbursement was relevant only to the extent it alleviated personal hardship suffered by individual investors, and even then, a substantial number of investors remained uncompensated or had suffered the hardship of being deprived of their funds for a prolonged period.

On fresh evidence, the Court articulated the applicable test in detail. Where fresh evidence is admitted on a sentencing appeal, the appellate court must consider what sentence it would impose on the whole of the evidence, including the fresh evidence. If the appellate court would not impose a less severe sentence on that full body of evidence, the appeal must be dismissed, unless the sentence is manifestly excessive in the sense of falling outside the proper exercise of sentencing discretion. The mere fact that the fresh evidence might have produced a lesser sentence at first instance does not, of itself, require the appellate court to intervene.

Applying that test, Sperling J concluded that even taking the fresh evidence into account, the Court would not impose a lesser sentence. The appeal was therefore dismissed both on the ground of manifest excess and on the ground of fresh evidence.

Orders Made

  • Leave to appeal granted
  • Appeal dismissed

Key Takeaways

  • Third-party reimbursement of a fraud victim's losses does not constitute mitigation going to the gravity of the offence; it shifts the loss rather than erasing it, and cannot neutralise the aggravating feature that the funds were dishonestly misappropriated.
  • Where fresh evidence is admitted on a sentencing appeal, the dispositive question is whether the appellate court would itself impose a lesser sentence on the totality of the evidence, including the fresh material. A mere possibility that the fresh evidence could have influenced the sentencing judge below is insufficient to require intervention.
  • In dismissing the appeal, the Court of Criminal Appeal confirmed that prolonged, premeditated breach of professional trust, involving vulnerable victims and significant sums, attracts substantial custodial sentences even where a guilty plea discount is applied.
  • Prior convictions for dishonesty of the same character are a significant aggravating feature, and a sentencing court's finding that an offender lacks genuine remorse is entitled to considerable weight on appeal.
  • The Court of Criminal Appeal confirmed the established framework: an appellate court must quash and re-sentence only where the sentence imposed falls outside the proper range on all available evidence; otherwise, the appeal must be dismissed even if the court might have sentenced somewhat differently at first instance.

Legislation and Cases Referenced

Legislation:
- Crimes Act 1900 (NSW), ss 178BA, 300
- Crimes (Sentencing Procedure) Act 1999 (NSW), ss 21A, 22, 22A, 23, 32
- Criminal Appeal Act 1912 (NSW), s 6

Cases:
- Barrick (1985) 7 Cr App R (S) 142
- Hall (NSWCCA, 28 September 1995, unreported)
- Hawkins (1989) 45 A Crim R 430
- Henry (1999) 46 NSWLR 346
- Houghton [2000] NSWCCA 62
- Kessey [2001] NSWCCA 469
- Machtas (1992) 62 A Crim R 179
- McKechnie (NSW CCA, 1 October 1987, unreported)
- Newey (NSWCCA, 23 August 1990, unreported)
- O'Neil (NSWCCA, 24 July 1996, unreported)
- Phelan (1993) 66 A Crim R 446
- R v Birks (1990) 19 NSWLR 677
- Siganto (1998) 194 CLR 656
- Simpson [2001] NSWCCA 534
- Tooth [2001] NSWCCA 407
- W [2001] NSWCCA 172
- Webb [1971] VR 147
- Woodman [2001] NSWCCA 310