Merheb v R

1. [1]

   MITCHELMORE JA: I agree with the orders proposed by Davies J and with his Honour’s reasons.

2. [2]

   DAVIES J: The applicant pleaded guilty in the Local Court to three offences as follows:

3. [3]

   On 11 December 2023 Judge Hanley SC sentenced the applicant to an aggregate sentence of imprisonment for 3 years 6 months commencing 10 December 2023 and expiring 9 June 2027 with a non-parole period of 1 year 10 months expiring 9 October 2025. The indicative sentences, after a reduction of 40%, including 25% for the pleas of guilty, were as follows:

4. [4]

   The applicant now seeks leave to appeal against the sentence on the following grounds:

The Offending

1. [5]

   The applicant was sentenced on the basis of a very lengthy document consisting of a Statement of Facts with schedules containing details of various aspects of the offending. The sentencing judge summarised all of that material and the following is drawn from his Honour’s summary.

2. [6]

   On 5 May 2021 the National Recovery and Resilience Agency (“NRRA”) was established and was responsible for a number of grants authorised to provide financial assistance to disaster-impacted individuals. That included assessing claims for and administering payments of disaster relief on behalf of both the Department of Home Affairs (“DHA”) and the NRRA. Services Australia (“the Agency”) was established as a new executive agency commencing 1 February 2020. The Agency was responsible for delivering social, health and other payments and services on behalf of the Australian Government and its departments, including assessing claims for, and administering payments of, disaster relief on behalf of DHA and the NRRA.

3. [7]

   The Agency paid eligible customers directly to their nominated bank account. The Agency utilised a new identification confirmation process when dealing with new claims and required customers to establish their identity prior to providing approved original documents from a number of categories. Normal pre-grant identification confirmation processes did not apply to victims of major widespread disaster. Where payments have been granted during an emergency without sufficient identification documents, the identity must be confirmed and verified once the emergency period is over or within 12 weeks of receipt of a grant, or a further 12 week period which might be granted under extreme circumstances.

4. [8]

   The Australian Government Disaster Recovery Payment was a specific purpose one-off payment made available to provide immediate short-term financial assistance to eligible Australian residents that had been adversely affected by a major disaster. The assistance was a one-off payment of $1000 per affected adult for each disaster declaration.

5. [9]

   As a result of the COVID-19 pandemic, the Australian Government created two new income support payments to assist individuals affected by State and Territory government decisions relating to the pandemic. These payments were the COVID-19 Disaster Payment (“COVID-DP”) for those whose income was affected by State and Territory governments’ restrictions on movement or lockdowns, and the Pandemic Leave Disaster Payment (“PLDP”) for those who had been directed to self-isolate or quarantine due to having COVID-19 or being a close contact of someone who was required to do so. Both of these programs were administered by the Agency on behalf of the NRRA.

6. [10]

   In relation to the COVID-DP program, customers could make claims either by phone or online and could be paid before a customer completed full identification.

7. [11]

   The objective of the PLDP program was to provide financial assistance to persons who were unable to earn income because they were required to remain in isolation or were caring for someone who was in isolation. Initially that involved a lump-sum payment of $1500 for each 14-day period the person had to isolate. Throughout 2021 and 2022 the amounts paid were varied by the government. Claimants were required to satisfy interim identity requirements in order to demonstrate eligibility for the payment.

8. [12]

   The offending the subject of count 1 involved the applicant purporting to be a number of other people, and in each case alleging an entitlement to the payment either as a result of the New South Wales floods in 2021 or as a result of the COVID-19 pandemic. Count 1 consisted of a total of 33 disaster payment claims made by the applicant between 29 April 2021 and 11 February 2022 resulting in 45 payments totalling $43,800 made to five bank accounts in the applicant’s name and control. All of the people the applicant claimed to be were real people who could be identified within the agencies. They were all subsequently contacted by the agencies and confirmed that they had made no such claim and did not know the applicant.

9. [13]

   Count 2 involved deposits paid into eight bank accounts in the applicant’s name and under his control. 21 of the deposits related to claims made under the applicant’s Customer Reference Number (“CRN”). They were not subject to any charge. 45 of those deposits formed the basis for Count 1. The remaining 123 deposits, totalling $126,942.42, related to claims made to Centrelink under CRNs corresponding to 73 individuals.

10. [14]

    For each deposit the applicant engaged in one or more subsequent transactions via internet transfers or cash withdrawals. A substantial number of internet transactions were from the initial destination account to another account of the applicant. During this period the applicant was the recipient of Jobseeker payments, and there were no other sources of income identified from his bank statements or declared by the applicant.

11. [15]

    On 16 December 2021, a search warrant was executed at the applicant’s residence. A silver iPhone 6 Plus and a black iPhone X were seized from the applicant’s bedroom. The sim card was located and retrieved from the black iPhone X.

12. [16]

    On 29 September 2022, the Agency gained access to the applicant’s black iPhone X. The content of the phone included over 200 screenshots taken by the applicant of Snapchat conversations with a person with the username “Selina Saab”.

13. [17]

    215 images of those conversations were analysed. 81 of them were considered as duplicates. The remaining 134 images contained information being capable of identifying 83 individuals. This identification information appeared to be sourced from databases in the holdings of the NSW Government, namely Services NSW and NSW Fair Trading.

14. [18]

    The applicant was also found in possession of 33 images which contained identification information of 17 individuals. Those images were used to enable or facilitate the offending which is the subject of count 2. The payments received into the applicant’s bank account for claims made purportedly by those 17 individuals was $31,300.

15. [19]

    Count 3 related to 72 of the images which identified 48 individuals.

16. [20]

    Selina Saab was an employee of Services NSW. The applicant’s then partner introduced him to Ms Saab and the three of them became close friends. The sentencing judge referred to Ms Saab as recruiting the applicant to engage in the offending. She was also charged in relation to the offending.

Ground 1: The learned sentencing judge breached the principle in De Simoni in regard to count 2, by finding that it was reasonable to infer that the monies were the proceeds of a fraud related crime.

1. [21]

   When the sentencing judge was discussing each of the offences, his Honour said in relation to count 2:

2. [22]

   The applicant submitted that he was charged with an offence contrary to s 400.9(1) of the Criminal Code. The applicant submitted that the statement made by the sentencing judge may be indicative of a breach of the principle in The Queen v De Simoni (1981) 147 CLR 383; [1981] HCA 31 at 389. In written submissions on this appeal the applicant said that the statement appears to reflect the standard of recklessness or that the applicant had some knowledge or belief about the proceeds. In oral submissions, the applicant’s counsel submitted that negligence might have been the standard referred to. The applicant submitted that the sentencing judge made the remark without qualifying it so as to clarify that his Honour was not making a finding as to the applicant’s mens rea because absolute liability applies to the elements in s 400.9(1)(b) and (c), with the result that there is no fault element and no requirement to prove any knowledge or belief on the part of the accused that the money was the proceeds of crime.

3. [23]

   The applicant also pointed to the sentencing judge’s acceptance of matters which the Crown had submitted showed that the applicant must have suspected from the outset of his offending that the money was proceeds of crime.

4. [24]

   The applicant submitted that the offence contrary to s 400.9(1) is part of Division 400 which creates a hierarchy of offences in relation to money laundering. The hierarchy is reflective of the varying levels of knowledge and therefore culpability in regard to the respective offences. The different maximum penalties reflect the seriousness within the hierarchy of offences. The applicant submitted that the lower level of maximum penalty of 3 years’ imprisonment for an offence against s 400.9(1) and the absence of a requirement to prove knowledge or belief on the part of the accused reflect that the offence is a less serious one than any within that Division.

5. [25]

   The applicant submitted that the sentencing judge did not refer to the principle in De Simoni in his remarks on sentence whereas counsel for the applicant said to the sentencing judge:

6. [26]

   The applicant submitted that the sentencing remarks did not reflect that his Honour was reminding himself that the applicant pleaded to the offence in count 2 pursuant to s 400.9(1) which does not impute any knowledge or belief on the part of the accused. The applicant submitted that absent such a reference, it cannot be argued that the remarks on sentence are reflective of his Honour taking special care to avoid the potential for a De Simoni error, or seeking to maintain clearly the distinction between the offence contrary to s 400.9(1) and the more serious offences such as those which rely on recklessness.

7. [27]

   The applicant submitted that a fair reading of the remark of the sentencing judge leads to a reasonable inference that his Honour appears to have averred a standard of recklessness or negligence. The applicant submitted that the matter did not fall within the definition of negligence in the Criminal Code.

8. [28]

   The applicant submitted that if this Court was satisfied that the sentencing judge may, even inferentially, have had regard in some way to a recklessness or negligence standard, even though the elements of the more serious offences pursuant to s 400.4(2) or (3) were not specifically referred to, the Court would find that the sentencing judge had fallen into De Simoni error.

9. [29]

   Section 400.9(1) of the Criminal Code provides:

10. [30]

    Section 400.4(2) provides:

11. [31]

    Section 400.4(3) provides:

12. [32]

    The definition of “negligence” is found in s 5.5 as follows:

13. [33]

    The provenance of the sentencing judge’s impugned remark is clearly from written submissions of the applicant to his Honour which relevantly said:

14. [34]

    The Crown, in her submissions to the sentencing judge said in relation to count 2:

15. [35]

    The Crown also, rather unfortunately and unnecessarily, said in written submissions to the sentencing judge:

16. [36]

    Although the sentencing judge set out this passage verbatim, and said that he accepted that the matters identified were relevant in the exercise of assessing the objective seriousness of the offending, his Honour did so after saying immediately beforehand:

17. [37]

    The essence of the complaint now made by the applicant is that when the sentencing judge said “it is reasonable to infer the monies were the proceeds of a fraud related crime”, his Honour was not speaking of the physical element of the offence but was inferring something about the mental element, and that mental element must have been recklessness or negligence. In that way, the De Simoni principle must have been breached.

18. [38]

    In my opinion, a reading of the sentencing judge’s remarks as a whole discloses no breach of the De Simoni principle by virtue of the impugned remark or otherwise. First, the sentencing judge twice referred to the offence charged as being contrary to s 400.9(1) of the Criminal Code, the second reference being during the discussion of count 2. His Honour referred to the correct maximum penalty and when reciting the facts for count 2 (sequence 34) his Honour headed that portion of the judgment “Sequence 34 Reasonably suspected proceeds of indictable crime”.

19. [39]

    Secondly, when discussing sequence 34, the sentencing judge said at the outset:

20. [40]

    Thirdly, having just made his second express reference to s 400.9(1), the sentencing judge said:

21. [41]

    Fourthly, as noted earlier, the impugned statement (at [21] above) was contained in the applicant’s submissions to the sentencing judge and simply adopted by his Honour. The applicant naturally does not suggest that he intended “reasonable to infer” in his submission to be a reference to the mental element. It is difficult, therefore, to understand how this Court should view those words as an inference by the sentencing judge about the mental element.

22. [42]

    Finally, it is not without significance that his Honour assessed the objective seriousness of the offending for count 2 to be within the midrange, yet the undiscounted indicative sentence for that count was imprisonment for 15 months against a maximum penalty of imprisonment for 3 years. When regard is had to the maximum penalties for offences involving negligence (4 years) and recklessness (10 years), the indicative sentence does not suggest in any way that his Honour took into account an aggravating factor which constituted a more serious offence.

23. [43]

    I would reject this ground.

Ground 2: His Honour introduced into his deliberations evidence that was not before him, upon which no submissions had been made nor opportunity provided to the applicant to make submissions, giving rise to procedural unfairness.

1. [44]

   When discussing prospects of rehabilitation and likelihood of reoffending, the sentencing judge said this:

2. [45]

   The applicant submitted that the italicised sentence introduced into the sentencing judge’s deliberation evidence that was not before him, that is, whether the video gaming convention involved a form of gambling. Although in the applicant’s written submissions emphasis was placed on s 144 of the Evidence Act 1995 (NSW), that aspect of the complaint was abandoned at the hearing of the appeal. The ground was put on the basis of a denial of procedural fairness.

3. [46]

   The applicant submitted that the sentencing judge failed to provide him with the opportunity to make a submission in relation to the matter of whether the applicant was continuing to gamble. That was said, in turn, to lead to the finding that an assessment of the applicant’s prospects of not reoffending was guarded.

4. [47]

   The applicant submitted that if this Court found that a consideration of his prospects of rehabilitation and his risk of reoffending was influenced in some way by an irrelevant matter, that would constitute an error of the type described in House v The King (1936) 55 CLR 499.

5. [48]

   In Weir v R [2011] NSWCCA 123, Garling J (with whom Macfarlan JA and Johnson J agreed) said:

6. [49]

   In Smith v R [2024] NSWCCA 59, Basten AJA (Adamson JA and Wilson J agreeing) said:

7. [50]

   The evidence about the applicant’s gambling addiction at the time of sentence was somewhat limited. The applicant did not give evidence at the sentence hearing. Rather, he wrote a letter to the Court apologising for his offending. In that letter he said this:

8. [51]

   The applicant’s partner also wrote a letter to the Court in which she said:

9. [52]

   Dr Dayalan, in his report, diagnosed the applicant with (inter alia) “problem gambling behaviour that is currently in early stages of remission”. Dr Dayalan went on to say:

10. [53]

    The Crown, in written submissions to the sentencing judge, said:

11. [54]

    Nothing was said in the applicant’s written or oral submissions to the sentencing judge about his gambling problem apart from a reference to what Dr Dayalan said generally about the applicant’s risk of reoffending (set out in the extract from the remarks on sentence at [44] above).

12. [55]

    On the basis of that evidence and those submissions, the sentencing judge made the remarks set out at [44] above.

13. [56]

    The evidence disclosed that the applicant’s partner would not tolerate his gambling, that his gambling was in the early stages of remission but that he would need to engage in a rehabilitation program to minimise the risk of relapse. What the evidence did not disclose was whether the plaintiff had not gambled since his arrest. His letter said only that his family was able to supervise him “should I have a momentary lapse and resort to gambling”.

14. [57]

    The sentencing judge’s finding that there was no evidence of his taking steps to address his gambling issue was supported by the evidence. His Honour then went on to refer to Dr Dayalan’s conclusion that the applicant was at low risk of offending, and to the view of the author of the Sentencing Assessment Report (“SAR”) that he was at “Medium-Low” risk of offending. His Honour then said:

15. [58]

    The failures to comply with court orders was a reference, mentioned earlier by the sentencing judge, to the applicant having committed the index offences whilst subject to a Community Correction Order, and to having breached his bail for the index offences by driving whilst his licence was suspended.

16. [59]

    The impugned remark made by the sentencing judge was unfortunate and should not have been made. However, there is nothing in the remarks on sentence generally that suggest that his Honour’s assessment of the applicant’s prospects of reoffending was informed by the remark made. That assessment only qualified the assessment from Dr Dayalan and the author of the SAR by the word “guarded”, and that was because of the applicant’s past failures to comply with court orders and to address his gambling addiction. Whether or not the applicant had gambled at the gaming convention made no difference to the fact that he had done nothing from the time of his arrest on 5 May 2022 to 11 December 2023 when he was sentenced, to address his gambling addiction.

17. [60]

    There was no practical injustice that flowed from the sentencing judge’s remark: Weir at [66]. In that way the inclusion of the remark in his Honour’s reasons was not material, and the remainder of his Honour’s remarks demonstrate clearly that it was not a factor affecting the outcome, that is, the finding on the prospects of reoffending: Smith at [44].

18. [61]

    I would reject this ground.

Conclusion

1. [62]

   I propose the following orders:

   1. (1)

      Grant leave to appeal.

   2. (2)

      Dismiss the appeal.

2. [63]

   IERACE J: I also agree with the orders proposed by Davies J and his Honour's reasons.