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Court of Criminal Appeal 21 November 2007

Baldini v Regina

[2007] NSWCCA 327

Fraud & dishonesty
CRIMINAL LAW SENTENCING ACCESSORY AFTER THE FACT OF FRAUD PLEAS OF GUILTY ASSESSMENT OF OBJECTIVE SERIOUSNESS PARITY

Citation: Baldini v Regina [2007] NSWCCA 327
Court: NSW Court of Criminal Appeal
Date: 21 November 2007
Judge(s): McClellan CJ at CL, Hall J, Price J

Background

The applicant was a director and controller of a paper products company that was a customer of Smartpak Australia Pty Ltd. Smartpak had a factoring arrangement with Scottish Pacific Finance, under which Scottish Pacific purchased Smartpak's invoices and advanced funds against them. The directors of Smartpak devised a scheme to create false invoices in the names of existing customers, including the applicant's company, and submit them to Scottish Pacific for payment.

The applicant participated in five such transactions, allowing false invoices in the name of his company to be produced and acknowledging them by accepting monthly statements that included the fraudulent invoices. Crucially, in each of the five transactions involving the applicant, Scottish Pacific was repaid in full using funds provided by Smartpak or related entities. The applicant pleaded guilty in the Sydney District Court to three counts of being an accessory after the fact to a serious indictable offence (cheating or defrauding by a director) under the Crimes Act 1900, with two further offences taken into account on a Form 1.

The District Court sentenced the applicant to an aggregate non-parole period of two years with a balance of term of six months. The applicant sought leave to appeal against the severity of that sentence.

  • Whether the sentencing judge erred in assessing the objective seriousness of the offences by attributing the overall loss of $1.3 million to the applicant's specific conduct
  • Whether the sentencing judge erred in finding aggravating factors had been established against the applicant
  • Whether Scottish Pacific suffered any financial loss as a result of the five specific transactions involving the applicant, and whether that was an essential element of the offences charged
  • Whether a section 10A order (conviction without further penalty) was appropriate upon resentencing

Decision

Price J (with McClellan CJ at CL and Hall J agreeing) found that the sentencing judge had misconstrued the agreed facts. The Crown had never alleged that Scottish Pacific suffered financial loss from the specific transactions involving the applicant. Instead, the applicant's counsel had accepted the agreed facts as a whole, and the sentencing judge incorrectly treated that acceptance as an admission that the applicant was responsible for the $1.3 million total loss.

The Court drew on its earlier decision in Bikhit v Regina, which involved a co-accused at the same sentencing proceedings. In that case, Simpson J had found that to "defraud" within the meaning of section 176A of the Crimes Act necessarily imports a loss of something of value to the victim, whether tangible or intangible, involving at minimum some prejudice to the victim's proprietary rights. Because Scottish Pacific had been repaid in full on each transaction involving the applicant, there was no such loss and no "defrauding."

The Court found that similar difficulties applied to the applicant's case. The evidence established that Scottish Pacific had not been deprived of anything in respect of the five transactions to which the charges related. The absence of loss meant the prosecution had failed to establish an essential element of the offences charged. The Court noted that the applicant had undoubtedly engaged in serious dishonesty and that, had he been charged instead with being an accessory to obtaining a benefit by deception, his guilty pleas would have been appropriate.

Having identified error in the original sentence, the Court was satisfied that a different sentence was warranted in law. Given that Scottish Pacific suffered no loss from the applicant's transactions and that he had already served almost eight months, the Court resentenced the applicant by making an order under section 10A of the Crimes (Sentencing Procedure) Act 1999. That provision allows a court to record a conviction but impose no additional penalty.

Orders Made

  • Leave to appeal granted
  • Sentences imposed for counts 1, 2 and 3 quashed
  • Applicant resentenced under section 6(3) of the Criminal Appeal Act 1912 with an order under section 10A of the Crimes (Sentencing Procedure) Act 1999 on each count, disposing of the proceedings on the basis that no further penalty be imposed
  • Applicant released forthwith

Key Takeaways

  • An essential element of an offence under section 176A of the Crimes Act 1900 (cheating or defrauding by a director) is that the victim suffer a loss of something of value, including at minimum prejudice to proprietary rights. Where evidence shows the victim was repaid in full, that element is not established.
  • A co-accused's acceptance of agreed facts as a whole does not amount to an admission of personal responsibility for every item of loss described in those facts. The sentencing court must carefully identify which losses are attributable to the conduct of the specific offender being sentenced.
  • Under section 10A of the Crimes (Sentencing Procedure) Act 1999, a court may record a conviction while imposing no additional penalty. The Court of Criminal Appeal applied this provision on resentencing where the underlying charges lacked proof of an essential element but the applicant had already served substantial custody.
  • Parity with co-accused sentenced at the same proceedings was a relevant consideration. The earlier Court of Criminal Appeal decision in Bikhit v Regina, involving a co-accused in the same scheme, directly informed the Court's analysis of the fraud element.
  • Participating in the production and acknowledgment of false invoices may constitute serious dishonesty, but the choice of charge matters. The court observed that the same conduct could have supported a charge of being an accessory to obtaining a benefit by deception, to which the pleas would have been appropriate.

Legislation and Cases Referenced

Legislation
- Crimes Act 1900 (NSW), ss 176A, 347, 350
- Crimes (Sentencing Procedure) Act 1999 (NSW), ss 10A, 21A(2)(g), 21A(2)(n)
- Criminal Appeal Act 1912 (NSW), s 6(3)

Cases
- Bikhit v Regina [2007] NSWCCA 202
- R v Ilbay [2000] NSWCCA 251
- R v Kollas & Mitchell [2002] NSWCCA 491
- R v Negline (NSWCCA, 5 December 1990)
- Regina v Sukkar [2006] NSWCCA 92