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Supreme Court 16 November 2018

R v Falconer

[2018] NSWSC 1765

Fraud & dishonesty
CRIMINAL LAW SENTENCE PRIOR GOOD CHARACTER OF LIMITED WEIGHT CONTRITION GENUINE VERY HIGH OBJECTIVE SERIOUSNESS PARITY WITH CO

Citation: R v Falconer [2018] NSWSC 1765
Court: Supreme Court of New South Wales
Date: 16 November 2018
Judge: Adamson J

Background

The offender was a chartered accountant who served as Executive Director, Chief Financial Officer, and company secretary of TZ Limited, an ASX-listed public company whose principal purpose was raising capital to fund the operations of a US-based technology subsidiary. Between December 2006 and September 2008, he used his position as a director to dishonestly direct company funds to entities associated with himself and a co-director, Andrew Sigalla.

Across five counts under s 184(2) of the Corporations Act 2001 (Cth), the offender was involved in transactions totalling approximately $6.28 million, of which around $1.416 million flowed directly to the offender or his associated entities. A sixth count involved authorising the lodgement of false or misleading information with the ASX. The offender pleaded guilty on 9 November 2018, with the court accepting he had indicated his intention to plead guilty when the matter was committed to the Supreme Court.

Sigalla, the co-director, had previously been charged, tried, convicted, and sentenced for his role in the same offending. The offender's sentence therefore also required consideration of parity with Sigalla's sentence.

  • What was the appropriate sentence for five counts of dishonestly using a director's position to gain an advantage (s 184(2), Corporations Act), and one count of authorising false or misleading statements to the ASX (s 1309(1), Corporations Act)?
  • What weight should be given to subjective factors including prior good character, genuine contrition, and an early guilty plea?
  • How should the parity principle apply, given that the offender's conduct was less serious in some respects than that of his co-offender Sigalla?
  • How should individual sentences be structured (concurrency versus accumulation) to reflect the totality of the offending?

Decision

Adamson J assessed the objective seriousness of the offending as very high. The offender held a position of significant trust as both a director and a qualified chartered accountant, and he exploited that position over an extended period. The impact fell not only on TZ Limited but also on the broader investing public, including retail shareholders who had contributed capital to the company. The court placed considerable weight on general deterrence for this type of corporate misconduct.

On subjective matters, the court accepted that the offender's contrition was genuine and that his guilty plea was entered at the earliest reasonable opportunity. His prior good character, however, was treated as carrying limited weight given the nature and duration of the offending. These subjective factors warranted some mitigation but did not substantially reduce what the objective gravity of the conduct demanded.

Regarding parity with Sigalla, the court found that the offender's criminality was less serious: he was not the primary architect of the scheme, and the amount from which he personally benefited was smaller. Nonetheless, his offending was described as integral to the whole course of conduct. The sentences imposed on him were lower than those imposed on Sigalla, consistent with the parity principle as explained in Postiglione v The Queen (1997) 189 CLR 295.

The court structured the sentences with a degree of concurrency, recognising a broad course of related conduct across counts 1 to 5. However, accumulation was applied to reflect the distinct criminality of each count. Count 6, involving false statements to the ASX, was treated as sufficiently different in character to warrant further accumulation.

Orders Made

  • Conviction recorded on all six counts.
  • Count 1: 2 years and 3 months imprisonment, commencing 1 June 2017.
  • Count 2: 2 years imprisonment, commencing 1 October 2017.
  • Count 3: 1 year and 10 months imprisonment, commencing 1 February 2018.
  • Count 4: 2 years imprisonment, commencing 1 June 2018.
  • Count 5: 2 years and 6 months imprisonment, commencing 1 December 2018.
  • Count 6: 1 year and 7 months imprisonment, commencing 1 May 2020.
  • Total effective sentence: 4 years and 6 months, commencing 1 June 2017 and expiring 30 November 2021.
  • Non-parole period fixed at 3 years, expiring 31 May 2020.

Key Takeaways

  • Dishonest use of a director's position at a listed company, sustained over nearly two years and involving millions of dollars, will be treated as carrying very high objective seriousness, with general deterrence weighing heavily in the sentencing exercise.
  • Prior good character is of limited mitigating weight where the offending involves sustained, deliberate abuse of a professional position of trust held over an extended period.
  • Under the parity principle, a co-offender who was not the primary driver of a scheme and who retained a smaller personal benefit may receive a lower sentence, provided the sentencing court still reflects that their involvement was integral to the overall offending.
  • A genuine early guilty plea and genuine contrition remain relevant mitigating factors even in cases of high objective seriousness, though their effect is moderated by the gravity of the conduct.
  • Where multiple counts arise from a connected course of conduct, the sentencing court must balance concurrency against accumulation to ensure both that the total sentence reflects the full criminality and that distinct offences are not effectively absorbed into one another.

Legislation and Cases Referenced

Legislation
- Corporations Act 2001 (Cth), ss 184, 206B, 1307, 1309
- Crimes Act 1914 (Cth), Pt 1B, ss 16A, 16F, 17A, 19AB, 19AC, 20, 20AB
- Australian Securities and Investments Commission Act 2001 (Cth), ss 13, 19
- Crimes (Sentencing Procedure) Act 1999 (NSW), Pt 5

Cases
- Postiglione v The Queen (1997) 189 CLR 295
- Power v The Queen (1974) 131 CLR 623
- Hili v The Queen; Jones v The Queen (2010) 242 CLR 520
- Munda v State of Western Australia (2013) 249 CLR 600
- The Queen v De Simoni (1981) 147 CLR 383
- AB v The Queen (1999) 198 CLR 111
- Rich v ASIC (2004) 220 CLR 129
- Xiao v R (2018) 96 NSWLR 1
- Einfeld v R (2010) 200 A Crim R 1
- R v Achurch (2011) 216 A Crim R 152
- R v Sigalla [2017] NSWSC 52
- R v Kinch [2016] NSWSC 63
- R v Wilkinson (No 5) [2009] NSWSC 432
- Blanco v R (1999) 106 A Crim R 303
- R v Kearns [2003] NSWCCA 367
- R v Kennedy [2000] NSWCCA 527