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Local Court 26 July 2012

Independent Commission Against Corruption v Karkowski

[2012] NSWLC 6

Fraud & dishonestyPublic order & justice offences
CRIMINAL LAW SENTENCE TWO FURTHER FRAUD OFFENCES NEED FOR DENUNCIATION AND DETERRENCE

Citation: Independent Commission Against Corruption v Karkowski [2012] NSWLC 6
Court: Local Court of New South Wales
Date: 26 July 2012
Judge(s): Judge Graeme Henson, Chief Magistrate

Background

The offender was a building inspector employed by Willoughby Council. Following an investigation and hearing conducted by the Independent Commission Against Corruption (ICAC), he was charged with five counts of corruptly receiving a benefit under s 249B(1)(a)(i) of the Crimes Act 1900 and two counts of fraud under s 192E(1)(b) of the same Act.

The corruption charges arose from a series of transactions spanning roughly 2009 to 2010. The offender accepted sexual services, restaurant meals, gift cards, alcohol, a fountain pen, sports hospitality, and other benefits from various parties. In return, he took actions favouring those parties in his official capacity: overlooking an illegal brothel's operation, writing council reports that disguised his authorship, assisting a restaurant group with regulatory and immigration matters, accessing confidential council files for a property developer, and pressuring a third-party assessor to produce a favourable floor safety result.

The two fraud charges related to occasions when the offender claimed overtime pay from Willoughby Council while he was, in fact, attending the illegal brothel and receiving free sexual services. He was dismissed from his council position after his conduct was exposed, though he had secured new employment by the time of sentencing.

  • How to assess the objective seriousness of the offences when the prosecution elected to proceed in the Local Court rather than on indictment, thereby capping the available sentence
  • What discount, if any, to apply for the utilitarian value of the guilty plea, given the plea was not entered until four months after the first court date and after a brief of evidence had been served
  • What weight to give subjective factors including the offender's age (39), lack of prior convictions, employment history, family circumstances, and expressions of remorse
  • Whether a sentence of imprisonment was required for corruption offences of this nature, and if so, whether home detention was an appropriate mode of serving that sentence
  • How to account for the fact that none of the bribe-givers had been prosecuted, and whether parity considerations affected the outcome

Decision

Chief Magistrate Henson placed the collective offending in the lower end of the middle range of seriousness. Although the DPP's election to remain in the Local Court was treated as a concession that the conduct did not fall into the worst category, the court was clear that this placement did not diminish the need for condign punishment. Objective seriousness was assessed by reference to the statutory maximum penalties (7 years and 10 years respectively for the two offence types), not the Local Court's jurisdictional ceiling, consistent with R v Doan.

On the guilty plea, the court allowed a 15% discount for utilitarian value. The plea was not treated as an early plea because the offender had waited until the prosecution served a full brief of evidence before formally entering it, despite having acknowledged his conduct during the ICAC proceedings. The court also gave weight to the offender's good character references, absence of prior convictions, and what it accepted as genuine contrition and remorse.

The court held that corruption offences of this kind inherently called for a sentence of imprisonment. The offender occupied a position of public trust, was fully aware of the corrupt nature of his conduct (confirmed by telephone intercepts), and his actions damaged public confidence in transparent local government. General deterrence and denunciation were identified as paramount sentencing considerations.

On the question of parity, the court noted that the DPP's representative was unable to explain why none of the bribe-givers faced prosecution. The court acknowledged the offender was entitled to feel a sense of disenchantment at being the sole defendant, and treated this as a relevant factor in determining how the imprisonment should be served. Subject to a suitability assessment by Probation and Parole, the court found home detention to be the appropriate manner of serving the sentences of imprisonment. The two fraud charges resulted in convictions with two-year good behaviour bonds under s 9 of the Crimes (Sentencing Procedure) Act 1999, on the basis that the financial gain was modest and the offender's prior good record and the plea discount justified a more lenient approach on those counts.

Orders Made

  • On each of the four corruption counts (sequences 1, 2, 3, and 4): convicted and sentenced to imprisonment, to be served by way of home detention subject to a suitability assessment by Probation and Parole
  • One corruption count placed on a Form 1 (taken into account but not separately sentenced)
  • Proceedings adjourned to 6 September 2012 for the home detention suitability assessment; the offender required to report to Probation and Parole forthwith
  • Copies of agreed facts and sentencing remarks to be provided to Probation and Parole
  • On each of the two fraud counts (sequences 6 and 7): convicted and released on a two-year good behaviour bond under s 9 of the Crimes (Sentencing Procedure) Act 1999

Key Takeaways

  • Corruption offences involving a breach of public trust by a local government officer carry an inherent expectation of imprisonment, even where the objective seriousness falls at the lower end of the middle range and the prosecution elects to proceed in the Local Court.
  • Objective seriousness must be assessed by reference to the statutory maximum penalty for the offence, not the jurisdictional ceiling of the court hearing the matter, as confirmed in R v Doan and applied here.
  • A guilty plea entered only after a brief of evidence has been served will attract a reduced utilitarian discount; in this case the court allowed 15% rather than the higher discounts available for genuinely early pleas.
  • Where co-offenders or bribe-givers face no prosecution, parity considerations remain relevant to sentencing, even if the disparity does not alter the finding that imprisonment is required. The court treated the unexplained non-prosecution of all bribe-givers as a factor bearing on the mode of serving the sentence.
  • Fraud charges arising from the same course of criminal conduct as primary corruption charges may attract significantly lighter outcomes where the financial gain was small, the offender has no prior record, and a guilty plea has been entered.

Legislation and Cases Referenced

Legislation
- Crimes Act 1900 (NSW), ss 249B(1)(a)(i), 192E(1)(b)
- Criminal Procedure Act 1986 (NSW), s 32 (Form 1); Table 1 and Table 2 offence classification provisions
- Crimes (Sentencing Procedure) Act 1999 (NSW), ss 9, 22, 23(3)
- Local Government Act 1993 (NSW)

Cases
- Markarian v The Queen (2005) 215 ALR 213
- R v Borkowski [2009] NSWCCA 102
- R v Doan (2000) 50 NSWLR 115
- R v Duong (1999) 109 A Crim R 60
- R v Fryar (unreported, District Court, Charteris DCJ, 12 March 2010)
- R v Kennedy [2000] NSWCCA 527
- R v Nomchong (unreported, NSWCCA, 10 April 1997)
- R v O'Mally [2005] NSWCCA 166
- R v Pangallo (1991) 56 A Crim R 441
- R v Taylor [2000] NSWCCA 442
- R v Thomson; R v Houlton (2000) 49 NSWLR 383
- Retsos v R [2006] NSWCCA 85