Citation: R v Smith [2000] NSWCCA 140; (2000) 114 A Crim R 8
Court: New South Wales Court of Criminal Appeal
Date: 1 May 2000
Judge(s): Dunford J, Foster AJA, Smart AJ
Background
The respondent was a solicitor who held practising certificates in both Queensland and New South Wales. By September 1996, the Queensland Law Society was investigating him over misappropriated client investment funds exceeding $6 million, and he voluntarily surrendered his Queensland practising certificate. Rather than ceasing practice, he relocated to Tweed Heads in New South Wales and continued operating as a solicitor without disclosing the Queensland investigation to the New South Wales Law Society.
The respondent received client funds purportedly for investment in registered first mortgages. He did not apply the money as represented; instead, he used incoming funds to service earlier fictitious investments, cover practice expenses, and meet living costs. To sustain the deception, he created bogus mortgage documents, certificates of title, and related instruments. The fraud in New South Wales spanned 20 months and involved approximately $2.83 million, of which $250,000 was later recovered.
After the New South Wales Law Society suspended his practising certificate in March 1998, the respondent continued to practise by registering another solicitor as the nominal principal of his firm. That solicitor believed he was engaged only as a consultant. The scheme unravelled in May 1998 when a bank contacted the Law Society, leading to the practice being placed into receivership.
Legal Issues
- Whether the sentence imposed by the District Court was manifestly inadequate for multiple offences of fraudulently failing to account, contrary to s 178A of the Crimes Act 1900.
- Whether the Court of Criminal Appeal should intervene in a Crown appeal against sentence and, if so, what sentence would more appropriately reflect the criminality involved.
Decision
Dunford J, with Foster AJA and Smart AJ agreeing, found the sentence imposed in the District Court was significantly below the range of a proper exercise of the sentencing discretion.
The District Court had sentenced the respondent to a fixed term of three years on four counts, and on the principal count (count 3, which incorporated 14 further offences on a Form 1) imposed a head sentence of five years with a minimum term of three years. The Court of Criminal Appeal found this failed to give adequate weight to the serious aggravating features of the conduct.
Those aggravating features included: the very large sum involved; the extended period of offending; the use of fabricated legal documents to deceive investors; the continuation of offending in New South Wales after being under investigation and then suspended in Queensland; the further continuation of offending after suspension in New South Wales through the use of another solicitor's practising certificate; and the position of trust the respondent held as a solicitor. The Court also noted that the respondent's apparent good character and community standing rested on a false premise, since his respectable lifestyle was itself funded by and part of the ongoing deception.
The Court acknowledged the mitigating factors accepted below, including the early plea of guilty, co-operation with the receiver, and the respondent's depressive illness, but found these did not bring the sentence within an appropriate range given the gravity and persistence of the offending. Following R v Hawkins and R v Allpass, the Court intervened and re-sentenced on count 3 with a higher total sentence, noting that as a Crown appeal the sentence imposed was not what it would have fixed at first instance.
Orders Made
- The Crown appeal in respect of count 3 was allowed.
- In lieu of the sentence imposed below on count 3, the respondent was sentenced to a total term of six and a half years, comprising a minimum term of four and a half years commencing 3 November 1999 and expiring 2 May 2004, and an additional term of two years commencing 3 May 2004 and expiring 2 May 2006.
Key Takeaways
- The Court of Criminal Appeal confirmed that a solicitor who exploits a position of trust to misappropriate client investment funds on a large scale, over a prolonged period, and using fabricated legal documents, will face sentences at the more serious end of the range for offences under s 178A of the Crimes Act 1900.
- Apparent good character and community standing carry diminished mitigating weight where those attributes were themselves maintained through the proceeds of the fraud and formed part of the deception.
- A depressive illness does not, of itself, substantially reduce sentence where medical evidence confirms it cannot credibly be identified as the cause of a sophisticated and prolonged fraud.
- In Crown appeals against inadequate sentences, the Court of Criminal Appeal applies a degree of restraint and does not impose the sentence it would have selected at first instance. The intervention threshold remains significant inadequacy, assessed by reference to the range of a proper sentencing discretion.
- Continuing to offend after regulatory suspension, and using another person's practising certificate to circumvent that suspension, are serious aggravating factors that compound the breach of trust inherent in a solicitor's position.
Legislation and Cases Referenced
Legislation:
- Crimes Act 1900 (NSW), s 178A (fraudulently omitting to account; maximum penalty seven years imprisonment)
- Justices Act 1902 (NSW), s 51A (plea of guilty at committal)
Cases:
- R v Hawkins (1989) 45 A Crim R 430
- R v Allpass (1993) 72 A Crim R 561
- R v Corbett (1991) 52 A Crim R 112
- R v Sellen (1991) 57 A Crim R 313
- R v Phelan (1993) 66 A Crim R 446
- R v Cole (unreported, Court of Criminal Appeal, 10 May 1974)
- R v Poppert (unreported, Court of Criminal Appeal, 25 July 1994)
- R v Holmwood (unreported, Court of Criminal Appeal, 25 October 1995)
- R v Hunt (unreported, Court of Criminal Appeal, 30 September 1997)
- R v George (unreported, Court of Criminal Appeal, 23 September 1994)