DPP v Dalton [2014] VCC 1521 (10 September 2014)


IN THE COUNTY COURT OF VICTORIA	Revised Unrestricted Suitable for Publication

DIRECTOR OF PUBLIC PROSECUTIONS

v

Allan Rae DALTON

JUDGE:	HIS HONOUR JUDGE TINNEY
WHERE HELD:	Melbourne
DATE OF HEARING:	Trial 28 August - 3 September 2014 Plea : 4 September 2014. Further plea 10 September.
DATE OF SENTENCE:	10 September 2014
CASE MAY BE CITED AS:	DPP v Dalton
MEDIUM NEUTRAL CITATION:	[2014] VCC 1521

APPEARANCES:	Counsel	Solicitors
For the Crown	Mr Sharpley	Office of Public Prosecutions

For the Accused	Mr Skehan	Emma Turnbull Lawyers

1 Allan Rae Dalton, following a short trial, a jury found you guilty of three charges of theft. The charges each carry a ten year maximum term of imprisonment.

3 You and a man named Michael Grochowski formed a joint venture in 2011 to develop a 30 acre block of land in Truganina. A company had been formed by you, being 99 Palmers Road Pty Ltd. Mr Grochowski of Project Management Australia Pty Ltd (PMA) was to obtain finance. He also had the role of appointing a firm to market options in this project. A firm named Prosperity Mutual engaged in that process. Seminars were held. Individuals attended. A number of individuals or companies took out options. Each option involved a deposit of $2,500 and a payment of $36,000. Typically the deposit was by way of credit card. The balance was paid by cheque and was made payable to a firm of solicitors. That firm of solicitors was Wisewould Mahony Lawyers. Cheques and the option signed by the grantee were sent to PMA’s office in South Melbourne. At that office, you would sign the options agreements from time to time on behalf of the company and collect and take cheques to Wisewould Mahony Lawyers.

4 The cheques would be deposited into the trust account of that firm, though it is clear that the joint venture was able to access the funds for reimbursements and expenses associated with the joint venture. There was the need for agreement in advance by the parties to the joint venture for the expenses to be incurred. The options taken out were obviously conditional upon the successful completion of the head contract with the vendors for the sale of the parcel of land. The vendors were the Chilean Club. In the event of the head contract not proceeding, the option deed would come to an end and the option grantees were entitled to a refund. You knew that. You had been told by lawyers.

5 You and Mr Grochowski had a falling out in August 2011. You presented to him a claim for reimbursement for soil and site testing work done by a firm called EnviroProtect. He asked you to verify that the payments had been made by you. You did not. You could not. Though you claimed in your evidence before the jury that you had spent over $180,000 on this work and were seeking reimbursement of some $120,000, if any work was done at all, it was done well prior to the joint venture agreement. You claimed that there had been an oral agreement between you and Mr Grochowski for payment of previously incurred expenses. That is, expenses which predated the formal joint venture document. That was not put directly to Mr Grochowski, and the tenor of his evidence was to the contrary. I certainly don’t accept your account in this area.

6 The joint venture document was explicit. Why would your presentation of the invoice have led to any conflict at all if there had been any agreement reached as to reimbursement for earlier incurred expenses? Why would you not have presented to Mr Grochowski the sketchy documentary support that was tendered through you at trial? One good reason not to have done so is that it demonstrated the age of the alleged expenditure and the insufficient proof of it matching the claimed quantum. Why would the earlier expenses not have been placed into the agreement, or at least reduced to writing, had there been such an agreement? I suppose there are many other questions that might be posed.

7 The fact is, Mr Grochowski felt you were not acting honestly. He said that he spoke to the firm and was told that there had not been work done. You provided no evidence of payment at all, and there had been no prior agreed expense incurred in any event. He immediately moved to bring the joint venture to an end. He could not trust you and did not wish to remain associated with you. I mention these various events in relation to the EnviroProtect reimbursement, only as it being the context of the relationship breaking down. I am not sentencing you in any way for any fraud or attempted fraud practised upon Mr Grochowski.

8 The firm of solicitors which had banked the various option fees took the entirely reasonable and appropriate view that from the moment it became apparent that the joint venture was shaky and that the head contract was likely not to proceed, they certainly were not going to disburse the option fees to anyone other than the option holders, given the existence of the right to a refund. You strongly challenged that stance and tried persistently to get them to release the funds to you. Letters and emails were fired off in each direction. You engaged lawyers yourself and tried to obtain the option amounts which were very significant indeed. Possibly up to $3 million. I make plain I am not inferring any criminal intent in that conduct. I sentence you only for the offences proven against you.

9 The lawyers at Wisewoulds would not relent. You, through your counsel sought to smear the solicitors, and Mr Grochowski, as engaging in some deceitful and shabby conduct to cut you out of the joint venture and to somehow profit. This was nonsense. The lawyers were acting in the way one would hope any ethical lawyer would when holding funds on trust, or as good as on trust, where there was a serious question mark in their mind as to the legitimacy of your requests, or at the very least, the certainty as to the right of refund in the event of the failure of the head contract. You smeared Mr Grochowski through your counsel. He was, it was argued, obtaining a financial gain in deliberately collapsing the joint venture. He wasn’t. He said that he ended up out of pocket and covering a shortfall, though he did receive a project management contract with the company which ultimately bought the block seven months after these events. He was entitled to a profit share under the original joint venture arrangement and was justifiably puzzled by the claims levelled against him as to enrichment.

10 . When the joint venture ran off the rails in mid-August, you took the three cheques the subject of these charges. They had been sent to PMA by the option grantees, Mr Owers and Ms Heywood, and were made out to Wisewould Mahony lawyers. You collected them on 15 August 2011 and did not account for them. You created a bogus business name in early October, Wisewould and Maloney Estate Services. This was created purely as a vehicle to steal these cheques. You set up a similarly bogus bank account in the same name and banked the cheques. You banked the first on

11 November. By that time, the head contract had been terminated. You knew that. A letter had been sent to your lawyers spelling out that Wisewoulds were refunding all the grantees given the failure of the head contract. The other two cheques were banked by you on 23 September 2011.

11 To cut a long story short, each of the option grantees ultimately received the refund of their deposit moneys from Wisewould Mahony Lawyers. Wisewould Mahony Lawyers had of course never received the full option fees. You had taken the cheques. The grantees queried with Wisewoulds the lack of a full refund and cheque traces were made which led back to your dishonest conduct. The total amount was $144,000. You ran a trial asserting your claim of right, that is, a belief in a legal right to take these cheques as you were named on the options agreements and there had previously been disbursal of funds for expenses incurred. You claimed you, or your company, had incurred expenses, and were trying to recover in this way the funds. It was nonsense. I seriously doubt whether you had incurred any expenses legitimately recoverable under the joint venture in relation to EnviroProtect. I am confident you knew the venture was at an end. Even if you had incurred expenses, if you had anything resembling a belief in a legal right, you would have written to these grantees explaining the situation or tendered the cheques to be held by your lawyer prior to converting them, or phoned them to get replacement cheques in favour of the company, or taken any number of other transparent legal steps pending the clarification of the issues.

12 On your own account, your gripe was with Mr Grochowski not them. To bank the cheques in the prevailing setting was an extraordinary act entirely inconsistent with any belief in any legal or even moral right to do so. What about the option holders? What about the total failure of the head contract? Your sketchy description of ongoing negotiations with the Chilean Club and subsequent contracts was entirely unsupported by any documentary evidence. The option holders were entitled to a full refund. You knew that. You had been told it by Wisewoulds. You engaged in a very cynical attempt in your evidence to convince the jury that you had telephoned each of

Ms Heywood and Mr Owers, mentioning that you had their cheques and explicitly receiving advice from them to proceed. Again, it was nonsense. The falsity of that was plain for all to see as Mr Owers came and went as a witness, and had not one word of any such conversation put to him by your counsel, nor was it even led by your counsel from you. It emerged in

13 Your counsel had cross examined Ms Heywood in relation to a claimed conversation that you had with her. I reject totally your account of mentioning to her who you were and the fact that you had possession of her cheques. When ultimately she got wind of the non-refund of her options money, she engaged a cheque trace to find out what had happened. That is because she did not know who had taken the cheques, Mr Dalton. Again though, this is academic. Even if you had those various conversations, to describe as a “few hurdles” the falling apart of the joint venture and failure of the head contract would have been dishonest in the extreme. You were keen to get your hands on their funds and had no belief in any legal or moral right. It was a grubby transaction. The funds were not deposited into the company account and your counsel either could not or would not tell me of the ultimate destination of that $144,000. You ran a trial, which was your right, and it is in no way an aggravating feature that you have conducted the defence in the way that you have. The jury were satisfied beyond reasonable doubt that you had no belief in any legal right to act as you did.

Your victims have each made a victim impact statement setting out the inconvenience caused and the impact upon them of your conduct. They have got their option money back. Not from you, I hasten to add. It wasn’t as simple as that though. They were worried by the turn of events and distracted by the need to pursue their rights. There has been significant stress and inconvenience caused. I take into account the impact of the crimes. You have acted quite deliberately and have committed undoubtedly serious crimes upon them.

14 Mr Skehan, who appeared for you at trial, raised a number of matters in mitigation relying primarily upon:

• He argued that the offending was at the low to lower end of mid-level theft, as described in the Judicial College of Victoria manual, and that the context was of your feeling wronged or shut out by Grochowski and the lawyers.

He took me through the details of your criminal history including subsequently dealt with matters and conceded the breach of trust, the seriousness of the offending and the inevitability of an immediate term of imprisonment.

I see no need to go through your personal background in these reasons. I have no reason not to accept at least the personal family background placed before me in oral submissions and in the written outline of the plea Exhibit 1. You are now 60 years of age, born in January 1954. I take into account your personal background as far as I am permitted to. There is, however, nothing in it reducing your culpability for this offending. You have had some poor health in 2005 when you had a heart attack. I am prepared to accept that much. There has been no medical material placed before me as to the impact today or into the future of any such heart condition or the type 2 diabetes.

You have admitted a criminal history. The appearances in the criminal history document are not recent. They seemingly occurred in the context of either family and/or financial mishap or strain. Given their age, they are not greatly relevant to my task. Still, there is a past history of dishonesty offending. You have served terms of immediate imprisonment. You have a trial pending. You have also been dealt with more recently for dishonesty offending. You received a 78 day sentence in early May 2012 for going equipped to steal and driving offences occurring back in 2007. Later in May 2012, you received a six month term with three months to serve, three months held in suspense for a number of dishonesty offences, including obtain property by deception and possession of property suspected of being the proceeds of crime. The deception related to selling a car part and there was also a cheque offence. Again, they occurred prior to the offending for which I must sentence you.

15 Your counsel argues that you have an increased custodial burden. You had a heart attack in 2005 with a stent procedure performed in Geelong. He raised the fact of an admission to St Vincent's Hospital in 2010, but chose on your instructions not to place any material before me in relation to any medical issues. The submission was that you had type 2 diabetes, had previously had the heart issues and were less mobile and not long for this world. I asked if there was any support for that gloomy prognosis. He said there was none. Some material from Ballarat Hospital was placed before me, not in support of this submission, but as dealing with the circumstances of the first adjournment of this trial in August 2013. There had seemingly been no ongoing management of any heart condition. The plea was adjourned from last week to today to permit your counsel to place any medical material before the court. Today he said there was no material. I indicated that I would permit the matter to be further adjourned for any medical material to be obtained if he wished. He did not wish that to happen and was acting on your instructions. I am not able, on the materials placed before me, to find that there will be any increase in your custodial burden.

16 You have run a trial which was your absolute right. You cannot be punished for that stance. You will not be. However, I can see no evidence of any remorse for your crimes, or what you have put your victims through. That is not a matter in aggravation. It is just that a mitigatory matter that is sometime present is not present here.

I do think you have some prospects of rehabilitation. It is quantifying those prospects which is less easy. This conduct was committed by you, a mature man, as against people associated with your company. Still, you resist the suggestion that you have done anything wrong at all. Your present state can be contrasted with someone who, having acted criminally, takes full responsibility for the unlawful conduct, recognises the serious error in their ways and is remorseful. One who, by their responses to the offence, gives confidence that it will not be repeated. That is not your position by any stretch of the imagination. Still, I am prepared to find that you do have reasonable prospects of rehabilitation.

There is not much to be gained by descending to consider any delay in this case. Your counsel in no way relied upon delay. This matter was listed for trial in August 2013. It was adjourned in your absence, as it was claimed that you were medically unwell. A very incomplete note was filed. It was adjourned to August 2014. On the first day of this trial, the same application was made, yet again in your absence, yet again with very sketchy material. You were said to be in hospital and unavailable for trial. I required your counsel to place before me some evidence in support of that fact. I hasten to add, he was merely acting on instructions and had no responsibility for your conduct. Evidence was then placed before me from the informant as to the circumstances of the previous adjournment. The informant has spoken to your doctor, and I was told that once you received the news that the trial had been adjourned, you disconnected the machines and discharged yourself from hospital. There may be a live issue as to the accuracy of the timing of and circumstances of your discharge from the hospital, with later material suggesting it may have been the following day, but it does not change the tenor of the evidence suggesting you may have been playing possum. I say may. I do not need to determine that issue, that was last year.

On the application made to me to adjourn the trial this year, I required further evidence of your condition to be placed before me or, failing that, required that you appeared. I noted also that your counsel had been armed with instructions to apply to adjourn the trial, independent of any medical condition, an application that was hopeless and never renewed. Ultimately, I issued a warrant for your arrest. The suggestions of a heart attack slid away totally, and once you were before me, not one word was mentioned of any live health issue at all, or any other reason why the trial should not proceed. The delay is, to a large extent, explained by these events.

17 I take into account, as I must, current sentencing practices. I have looked at the various material held at the Judicial College of Victoria sentencing manual, dealing with the offence of theft and past sentences imposed. No amount of looking at other sentencing outcomes in other cases will provide the answer to the correct exercise of my sentencing discretion in your case. Each case is different. So, too, every offender.

18 I must pay regard to the gravity of the offence before the court. These people took out options with your company. As you were so keen to tell the jury. no doubt to bolster the claim of right, you were the sole director, the sole shareholder and the company secretary. That relationship now comes back to aggravate the offending, Mr Dalton. They entered the options agreements with your company. You signed on behalf of the company. They paid options cheques in favour of a firm of solicitors. You took those cheques physically in mid-August, and, within two months, you were registering a dodgy business name, and then a little later in October a bank name styled on that dodgy name. One or two letters were deliberately rearranged by you, in the hope that a bank would receive those cheques into your deceptive Wisewould Maloney account without noticing the true name of the payee, Wisewould Mahony. This was not spontaneous activity. It was quite deliberate and studied, calculated to deceive the bank, and to open up a pathway to the funds that you had no business even receiving, as you well knew. It is true, though, that at the same time there was a level of lack of sophistication. All roads led to you, given the details held at the bank and in relation to the business name. The backdrop to this was your knowledge of the failure of the head contract and the right to a full refund. You had been told that much, in some of the email traffic tendered on the trial by your own counsel. No doubt you were upset at the failure of the joint venture and the potential loss of a project that you had invested some time and effort into. However, this was serious criminal activity.

19 I have taken into account all of the submissions made and the exhibits tendered before me.

20 There are a variety of matters which must be taken into account by the court. I must take into account the maximum penalty. Here, ten years. I must pay regard to current sentencing practices. I must consider also your prospects of rehabilitation. You are not beyond redemption. I am prepared to find that you have some reasonable prospects of rehabilitation. You must be punished for your crimes, justly and proportionately. This court must denounce your conduct.

21 I must consider the protection of the community from you. That is a relevant consideration here. I accept that there will follow a period of many years when you will be disqualified from holding any management position within a company, and I take that into account.

22 You must also be deterred. You must be dissuaded from ever committing such crimes as these again. That is also a relevant consideration. This court must seek to deter others who might be minded to commit this type of offence. That purpose, known as general deterrence, is a relevant purpose of sentencing. The courts must make plain that this sort of conduct will not be tolerated.

23 I also must pay regard to totality of sentence in considering the extent of cumulation to be imposed as between the individual sentences imposed by this court. It is true that the last two offences occurred on the single occasion and I bear that in mind. Still, each cheque was to the value of $36,000. The first offence on the indictment occurred about six weeks previously. I have engaged in a last look at the overall effect of the sentences I will shortly pronounce in endeavouring to avoid the imposition of a sentence that might be described as crushing upon you, and to ensure that the overall effect is consistent with your overall criminality.

Sending a person to prison is always a matter of last resort. As your counsel correctly concedes, there is no alternative here. Your crimes are too serious.

Mr Owers. The order is not opposed and I have signed it. You have been convicted of theft. I am satisfied that as a result of the said offence, Mr Owers has suffered a loss of property, as spelt out in the application, to the tune of $2,000 and I order that sum to be paid.

24 On Charge 1, I convict and sentence you to 21 months' imprisonment. That is the base sentence;

I direct that three months of the sentence imposed on Charge 2 and three months of the sentence imposed on Charge 3 is to be served cumulatively upon the base sentence and upon each other. These orders produce a total effective sentence of 27 months or two years and three months' imprisonment.

27 I direct that you serve a period of 14 months' imprisonment before becoming eligible for release on parole.

28 You have served 14 days in custody already, and that period will be declared as a period already served, pursuant to this sentence. It will be noted in the records of the court.

County Court of Victoria

DPP v Dalton [2014] VCC 1521 (10 September 2014)