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Supreme Court 20 July 2005

Commissioner for Fair Trading v TAUKEIAHO & Anor

[2005] NSWSC 722

Fraud & dishonesty
COOPERATIVES ACT OFFENCES OF OFFICERS IMPROPER USE OF POSITION FOR ADVANTAGE FAILURE TO ACT HONESTLY FALLING BELOW REASONABLE STANDARDS SENTENCE

Citation: Commissioner for Fair Trading v TAUKEIAHO & Anor [2005] NSWSC 722
Court: Supreme Court of New South Wales, Common Law Division
Date: 20 July 2005
Judge(s): Rothman J

Background

The Good Christian Housing Cooperative was established in 1997 to provide affordable housing to members of the Tongan community in inner-western Sydney. The cooperative leased six properties from what was then the NSW Land and Housing Corporation, paying a nominal rent of one dollar per annum, on the condition that the properties be made available to eligible community members.

The Commissioner for Fair Trading prosecuted two officers of the cooperative. The first defendant held a senior officer role and faced two charges: improper use of her position for personal advantage (s 223(2) of the Cooperatives Act 1992) and failure to act honestly in the exercise of her powers and duties (s 221(1)). The second defendant, a separate officer of the cooperative, faced a single charge of failing to exercise reasonable care and diligence in carrying out her duties (s 222(1)).

Both defendants pleaded guilty at the earliest opportunity and cooperated with investigators. The proceedings were dealt with summarily in the Supreme Court under Part 5 of Chapter 4 of the Criminal Procedure Act 1986.

  • Whether the first defendant contravened the duty to act honestly under s 221(1) of the Cooperatives Act 1992, and the appropriate sentence for that contravention
  • Whether the first defendant contravened the prohibition on improper use of an officer's position for advantage under s 223(2) of the Act, and the appropriate sentence
  • Whether the second defendant contravened the duty to exercise reasonable care and diligence under s 222(1) of the Act, and whether a conviction should be recorded
  • What weight should be given to mitigating factors including early guilty pleas, cooperation, personal circumstances, and psychological evidence

Decision

Rothman J found both defendants guilty of their respective charges. In sentencing the first defendant, his Honour imposed a term of 18 months' imprisonment with a nine-month non-parole period for the dishonesty offence under s 221, and a separate term of eight months' imprisonment with a four-month non-parole period for the improper use of position offence under s 223(2). His Honour noted that comparable duties under the Corporations Act attracted maximum penalties of up to five years' imprisonment, providing a relevant benchmark for the seriousness of these offences.

Despite the terms of imprisonment imposed, his Honour suspended execution of both sentences under s 12 of the Crimes (Sentencing Procedure) Act 1999. The first defendant was released on a good behaviour bond for the term of each sentence, subject to supervision by the NSW Probation and Parole Service, personal counselling, and other standard conditions. The practical effect was that the first defendant did not serve time in custody.

For the second defendant, his Honour was satisfied that the offence under s 222(1) was proved, but elected not to record a conviction. Relying on s 10(b) of the Crimes (Sentencing Procedure) Act 1999, his Honour released her on a six-month good behaviour bond. The judgment indicates that the second defendant's circumstances, including her early plea, cooperation, and personal situation, made proceeding without conviction appropriate.

The court drew on principles of sentencing for officer-duty offences, including the need to balance general deterrence against personal circumstances. The availability of a pre-sentence report, psychological evidence regarding the first defendant, and character references for the second defendant all informed the sentencing exercise.

Orders Made

  • The first defendant was found guilty of contravening s 223(2) of the Cooperatives Act 1992 and sentenced to eight months' imprisonment (non-parole period of four months), with execution suspended and the defendant released on a good behaviour bond for the term of the sentence
  • The first defendant was found guilty of contravening s 221(2) of the Cooperatives Act 1992 and sentenced to 18 months' imprisonment (non-parole period of nine months), with execution suspended and the defendant released on a good behaviour bond for the term of the sentence
  • Both good behaviour bonds were subject to conditions including supervision by the NSW Probation and Parole Service, personal counselling, and reporting requirements
  • The offence against the second defendant under s 222(1) of the Cooperatives Act 1992 was found proved; no conviction was recorded and she was released on a six-month good behaviour bond
  • The first defendant was ordered to pay the Commissioner for Fair Trading's costs, as agreed

Key Takeaways

  • Rothman J treated officer-duty offences under the Cooperatives Act 1992 as serious matters, drawing a direct parallel with equivalent provisions under the Corporations Act and the significant penalties those provisions carry.
  • Under s 221(1) of the Cooperatives Act 1992, an officer's obligation to act honestly applies to all exercises of power and discharge of duties; a contravention committed with intent to deceive or defraud carries a maximum of five years' imprisonment or 240 penalty units.
  • Suspended sentences under s 12 of the Crimes (Sentencing Procedure) Act 1999 remained available in sentencing for cooperative officer offences, particularly where mitigating factors such as early guilty pleas, cooperation, and personal circumstances were established.
  • Where an officer's failure fell under the care and diligence standard in s 222(1) rather than involving dishonesty, a court may decline to record a conviction and instead impose a good behaviour bond under s 10(b) of the Crimes (Sentencing Procedure) Act 1999, depending on the circumstances.
  • Early guilty pleas and cooperation with investigators carried significant weight in mitigation across both defendants' outcomes, affecting both the structure of the sentences and the decision not to record a conviction against the second defendant.

Legislation and Cases Referenced

Legislation
- Cooperatives Act 1992 (NSW): ss 221(1), 222(1), 223(2)
- Crimes (Sentencing Procedure) Act 1999 (NSW): ss 10(b), 12
- Criminal Procedure Act 1986 (NSW): Chapter 4, Part 5
- Corporations Act 2001 (Cth): Part 2D.1

Cases Cited
- O'Keefe v R (1992) ACrimR 201
- R v Woodman [2001] NSWCCA 310
- Hawker [2001] NSWCCA 148
- Pantano (1990) 49 ACrimR 328
- El-Rashid, NSWCCA, 7 April 1995