Reported Decision : (2002) 129 A Crim R 505 New South Wales Court of Criminal Appeal CITATION : Regina v Patrick Joseph O'Connor [2002] NSWCCA 156 FILE NUMBER(S) : CCA 60699/01 HEARING DATE(S) : 8 February 2002 JUDGMENT DATE : 7 May 2002 PARTIES : Regina Patrick Joseph O'Connor JUDGMENT OF : Handley JA at 1; Sully J at 14; Smart AJ at 39 LOWER COURT JURISDICTION : District Court LOWER COURT FILE NUMBER(S) : 01/11/0500 LOWER COURT JUDICIAL Downs DCJ OFFICER : COUNSEL : D. Bugg QC/R. Bromwich - Crown E. Fullerton SC - Respondent SOLICITORS : Comm. D.P.P - Crown - Crimes Act 1914 (C'th) Crimes Act 1900 (NSW) LEGISLATION CITED : Crimes (Sentencing Procedure) Act 1999 (NSW) Financial Transaction Reports Act 1988 Sentencing Act 1989 (NSW) Director of Public Prosecutions (Commonwealth) v El Karhani (1990) 21 NSWLR 370, 385 Regina v Simpson [2001] NSWCCA 534 Pearce v The Queen (1998) 194 CLR 610 R v Jermyn [1985] 2 NSWLR 194 Cameron v The Queen [2002] JCA 6 CASES CITED: R v Cappadona & anor [2001] 47 ATR 317 Director of Public Prosecutions v Hamman (unreported) CCA NSW, 1 December 1998 Regina v Tack Lee Pang [1999] 105 A Crim R 474 R v Cheng [1999] 107 A Crim R 460 Regina v Budiman (1998) 102 A Crim R 411 at 415 House v The King (1936) 55 CLR 499 DECISION : Appeal against sentence dismissed IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF CRIMINAL APPEAL 60699/01 HANDLEY JA SULLY J SMART AJ Tuesday 7 May 2002 REGINA v PATRICK JOSEPH O'CONNOR Judgment 1 HANDLEY JA: In this appeal I have had the benefit of reading the judgments of Sully J and Smart AJ in draft form. I agree generally with their reasons and with the order they propose but would add some brief reasons of my own. 2 This Crown appeal faced two difficulties. The first was the concession by counsel for the Director before the sentencing Judge that the sentences for these Federal offences should be concurrent. My brethren have dealt fully with this aspect and there is nothing I wish to add. 3 The second difficulty related to the provisions of the Crimes Act (Cth) which govern the sentencing process for Federal offences. Section 16A(1) requires the Court to "impose a sentence … that is of a severity appropriate to all the circumstances of the offence" and sub s (2) contains a non-exhaustive list of matters which the sentencing Judge must take into account. 4 Section 16G requires the sentence, fixed in accordance with s 16A, to be adjusted. It provides: "If a federal sentence is to be served in a prison of a State or Territory where State or Territory sentences are not subject to remission or reduction, the Court imposing the sentence must take that fact into account in determining the length of the sentence and must adjust the sentence accordingly". 5 Sentences in this State have not been subject to remission or reduction since 1989 when the Sentencing Act came into force. In Director of Public Prosecutions (Commonwealth) v El Karhani (1990) 21 NSWLR 370, 385 this Court held that a reduction in the order of one third for remissions and the like was "an appropriate starting point" when determining the adjustment required by s 16G. 6 Where the adjusted sentence or sentences exceed 3 years, as in this case, the Court is required by s 19AB(1) either to fix a single non-parole period in respect of those sentences, or to make a recognizance release order. This case clearly called for a sentence of full time custody and therefore the sentencing Judge fixed a non-parole period. It was common ground that the non-parole period fixed pursuant to s 19AB(1) is normally in the range of 60-66% of the adjusted head sentence. In this case the Judge fixed a non-parole period which was only 50% of the head sentence, but this Court has decided that it will not interfere on this ground alone. 7 The effect of the legislative scheme in New South Wales is to give a Federal prisoner a double discount when the time to be spent in full time custody is being determined. The Court decided in El Karhani (at 383-4) that the adjustment mandated by s 16G must be applied to the sentence provisionally fixed pursuant to s 16A(1), and that the non-parole period must then be fixed in relation to the adjusted sentence. This is clearly correct, and the Court was not invited to take a different view. It would perhaps have been more appropriate for the Parliament to direct that the non-parole period be adjusted instead with a view to achieving sentencing parity across the Commonwealth when the effect of remissions or reductions is taken into account. 8 This Court has no detailed knowledge of the way this sentencing legislation works in practice in those jurisdictions where sentences are subject to remission or reduction and the courts do not have to apply s 16G. We do not know, for example, whether in all or any of those jurisdictions the remissions and reductions operate in respect of the non-parole period fixed by the Court so as to entitle the prisoner to be released before he has served the full non-parole period. 9 We do not know therefore whether the effect of the legislative scheme is such that a given head sentence, fixed or provisionally fixed under s 16A, will result in prisoners serving different periods of full time custody in different States or Territories. 10 The result of applying these provisions in New South Wales in circumstances such as the present is that a Federal prisoner, whose indicative head sentence before adjustment is the same as the head sentence fixed for a State prisoner, will spend significantly less time in custody than the State prisoner. The Federal prisoner will, and the State prisoner will not, receive the benefit of the adjustment provided for in s 16G and their non-parole periods will be a similar proportion of the adjusted sentence or head sentence as the case may be. 11 In El Karhani this Court drew attention to the need for reform of these provisions saying at 387: "In parting with this case we would wish to associate ourselves with the comments of Hunt J in R v Paull concerning the need for further attention by Federal Parliament to the ambiguities of the Act brought to light by this case and by R v Paull … In saying this, we are mindful of the difficulty which Parliament faces in resolving the conflicting policy choices which need to be made and to which we have referred at the beginning of these reasons. The present legislation glosses over that difficulty and does not resolve it. Indeed in some ways it exacerbates it". 12 Twelve years have passed but the legislation remains unchanged. 13 The appeal should be dismissed. 14 SULLY J: The Commonwealth Director of Public Prosecutions appeals against sentences of imprisonment passed upon Mr. O'Connor, the respondent. The sentences were passed on 10 August 2001 in the District Court at Sydney and by his Honour Acting Judge Downs QC. 15 On 14 May 2001 the respondent pleaded guilty in the Local Court to two charges of defrauding the Commonwealth contrary to section 29D of the Crimes Act 1914 (C'th). He was committed, accordingly, for sentence in the District Court. A contravention of section 29D attracts upon conviction a statutory maximum penalty of, relevantly, imprisonment for 10 years. 16 On 12 June 2001 the respondent pleaded guilty in the Local Court to two charges of possessing false instruments contrary to section 302A of the Crimes Act 1900 (NSW). He was committed, accordingly, for sentence to the District Court. A contravention of section 302A attracts upon conviction a statutory maximum penalty of, relevantly, imprisonment for 10 years. 17 On 9 August 2001, the respondent adhered to his guilty pleas before the learned sentencing Judge. The proceedings on sentence proceeded upon the basis of an agreed statement of facts. The respondent gave some brief oral evidence; and he put into evidence a number of very favourable testimonials. There was a pre-sentence report, to some of the contents of which I shall return presently. 18 The proceedings on sentence concluded on 9 August 2001. The learned sentencing Judge reserved his decision overnight. On the following day, his Honour sentenced the respondent to two concurrent terms of imprisonment of 3 years with a non-parole period of 18 months for the two offences contrary to section 29D. His Honour sentenced the respondent also to two concurrent sentences of imprisonment for 2 years with non-parole periods of 18 months for each of the two offences contrary to section 302A. All four sentences were dated so that they ran concurrently. 19 The present appeal of the Director challenges the two concurrent sentences imposed in respect of the section 29D offences. There is no appeal against the sentences imposed in respect of the section 302A offences. 20 The Director, in his written submissions lodged in support of the appeal, advances the contention "that this is an important case on the application of sentencing principles in revenue fraud cases, and in particular in the approach that a sentencing court ought to take in applying the decisions of this court. In particular, the Crown contends that a judge on sentence will fall into error unless principled reasons are given for departing from applicable sentences imposed by this court; and that such error occurred in this case". Those perceptions are underscored by the fact that the Director appeared in person to prosecute the appeal. 21 In the light of these perceptions it is useful to return, at the inception of a consideration of the merits of the appeal, to some first principles. I presume to re-state them in the form of the following extract from my own judgment in the recent decision of this Court, (Spigelman CJ, Mason P, Grove and Sully JJ, Newman AJ), in Regina v Simpson [2001] NSWCCA 534: "99. Whenever an applicant for leave to appeal against sentence submits that there is cause to show why this court should intervene ………………………it is, as I think, obvious that the first thing to be established by the applicant is that the primary sentencing discretion has miscarried, by reason of some error of fact or of law; or because of the cumulative effect of errors of both fact and law. The errors, whether of fact or of law, may be either latent or patent; but whether latent or patent, some error must be demonstrated before this court becomes entitled at all to consider interfering with the sentence passed at first instance: Vachalec [1981] 1 NSWLR 351 at 353F; Visconti [1982] NSWLR 104 at 108G. 100. Error once demonstrated, it does not follow automatically that this court will, without more, intervene in fact and re-sentence. Before that can happen properly in law, the condition specified in s.6(3) of the Criminal Appeal Act 1912 (NSW) must be satisfied: that is to say, this court must be persuaded, not only that error has been shown in the process of reasoning of the primary sentencing court, but that some other sentence is 'warranted in law'. I agree with the observations made in this connection by Lee AJ in Astill [No. 2] [1992] 64 A Crim R 289 at 303, 304." 22 The written submissions of the Director summarise helpfully, and as follows, the bases of the present challenges to the two sentences passed upon the respondent in connection with the section 29D offences: "(a) The head sentences and non-parole periods were manifestly inadequate when regard is had to the criminality involved in the provision of a deliberate and methodical tax evasion service to participants in the building industry over two years, for which the respondent's personal gain was over $468,000 and the loss to the revenue was a minimum of just under $1.5 million ……………; (b) In all the circumstances, ………….. (the learned sentencing Judge) ……………erred in reducing the ratio of the non-parole period to head sentence to 50% - there was no principled reason given for departing from the usual range of 60% to two-thirds of the head sentence ………………..; (c) Contrary to the finding of fact by his Honour, there was no evidence of any assistance given by the respondent to the authorities – the respondent's assistance was confined to a guilty plea………………….. ." 23 The relevant factual background against which these contentions fall to be considered is summarised sufficiently, and as follows, in the Director's written submissions: "6. The case revolves around an income tax withholding scheme known as the prescribed payments system (PPS). The PPS ordinarily required 20% of moneys paid to suppliers of goods and services in the building industry to be withheld and remitted to the Australian Taxation Office. The object of the PPS was to overcome tax evasion in, inter alia, the building industry, arising from the use of cash payments. The 20% rate of deduction and remittance could be reduced by obtaining a variation certificate, by which the rate of deduction was reduced. The rate could be reduced to zero by obtaining a zero percent variation certificate. The zero percent variation certificate was designed for use by low-income earners. 7. The fraud perpetrated by the respondent entailed obtaining and then fraudulently using a zero variation certificate. By this means, the respondent, as promoter of the scheme, on each occasion received a cheque ostensibly for services from a building company, quoted a zero variation certificate, relieving the building company of the obligation to deduct any tax, deposited the cheque, withdrew the proceeds in cash amounts below $10,000 to avoid the reporting requirements under the Financial Transactions Reporting Act 1987, retained 7% as a fee or commission, and then either gave the cash to the building company, or caused cash payments to be made directly to workers performing work for the building company. 8. Prior to coming to Australia in February 1997, the respondent was aware of schemes that had been in operation in Australia for 15 or 20 years whereby wages in the building industry were paid in cash, i.e. without tax being paid ……………., and that payment of tax was optional ……………… . 9. Upon arrival in Australia, the respondent went to an Irish pub and got a job straight away …………………. . He denied coming to Australia with the intention of not paying tax………….., but regarded the onus of paying tax as falling on the employer ……….., a responsibility which he later ignored. 10. The respondent used two different companies to provide the cheque-cashing scheme described above. In evidence he said that his commission proceeds of $468,000 were invested in a legitimate business operated by him. 11. The respondent obtained the first of the companies from a friend. He purchased a false identity for $3,000 and used it to set up the second company …………………. ." 24 Turning, as must now be done, to the question whether the appellant has demonstrated error in the primary sentencing process, it is convenient to deal first with the submission that the learned sentencing Judge erroneously found as a fact that the respondent had given to the authorities assistance such as to entitle him to some leniency in the matter of sentence. 25 This submission is made upon the basis of a brief reference appearing on page 36 of the 40-page remarks on sentence. The relevant passage reads as follows: "As I have said, the prisoner does not have any prior convictions in Ireland or Australia. He cooperated with the authorities when arrested . It would seem that he pleaded guilty as soon as he reasonably could, and except for the offences he is a kind and respected citizen." [emphasis added] 26 I have read, and re-read, the quoted passage in the context of which it forms a part; and I have to say that, with all respect to the learned primary Judge, I am wholly at a loss to understand exactly what it was that his Honour was wishing to convey by, in particular, the sentence which I have emphasised in the foregoing quotation. If his Honour meant to convey nothing more than that the respondent had pleaded guilty at the earliest practicable opportunity, then the particular sentence is unexceptionable, although perhaps tautologous in context. If, on the other hand, his Honour was intending to convey that the respondent had assisted the authorities in some way that went beyond the utilitarian value to the authorities of his prompt pleas of guilty, then his Honour was plainly mistaken as to the purport of the evidence before him. That one glancing reference to assistance to the authorities stands alone, so far as I can see, in the 40 pages of the remarks on sentence. Of the two possible interpretations of what his Honour said, neither seems to me to be capable of rational preference over the other. In those circumstances, I am of the opinion that the Director has not made good his ground of appeal based upon this isolated statement of the learned sentencing Judge. 27 A fair reading of the remarks on sentence as a whole seems to me to indicate two clear errors in the approach adopted by the learned sentencing Judge. The errors are inter-related, and they derive from what was, in my respectful view, a failure by his Honour to apply correctly the principles established by the decision of the High Court of Australia in Pearce v The Queen (1998) 194 CLR 610. Those principles are stated succinctly, and sufficiently for present purposes, in the following extract from the joint judgment of McHugh, Hayne and Callinan JJ at [45]-[48]: "45. To an offender, the only relevant question may be 'how long', and that may suggest that a sentencing judge or appellate court should have regard only to the total effective sentence that is to be or has been imposed on the offender. Such an approach is likely to mask error. A judge sentencing an offender for more than one offence must fix an appropriate sentence for each offence and then consider questions of cumulation or concurrence, as well, of course, as questions of totality. 46. Sentencing is not a process that leads to a single correct answer arrived at by some process admitting of mathematical precision. It is, then, all the more important that proper principle be applied throughout the process. 47. Questions of cumulation and concurrence may well be affected by particular statutory rules. If, in fixing the appropriate sentence for each offence, proper principle is not applied, orders made for cumulation or concurrence will be made on an imperfect foundation. 48. Further, the need to ensure proper sentencing on each count is reinforced when it is recalled that a failure to do so may give rise to artificial claims of disparity between co-offenders or otherwise distort general sentencing practices in relation to particular offences." 28 The proper application of these principles ought to have led the learned sentencing Judge to impose, separately in connection with each of the two section 29D offences, a proper head sentence. By "proper" I mean a sentence adequately balancing the relevant objective facts, and the relevant subjective considerations, the latter including the fact of the respondent's prompt pleas of guilty; and the adjustment necessary to be made in compliance with section 16G of the Commonwealth Crimes Act. His Honour ought then to have considered whether the given facts of the respondent's case did not justify a prudently measured, but nevertheless real, measure of cumulation. Then, and finally, his Honour needed to fix a single non-parole period in respect of the head sentences: see section 19AB(1)(d) of the Commonwealth Crimes Act. 29 In implementing that approach, his Honour was bound to proceed in a way that did not amount to nothing, or nothing much, more than an essentially artificial mathematical calculation. That is not novel law. It is taken to be the law in many cases of which a useful example is the landmark decision of this Court, (Kirby P, Campbell and Newman JJ) in Director of Public Prosecutions (C'th) v Said Khodor el Karhani [1990] 21 NSWLR 370. It is, however, useful to reinforce the point by reference to the following statements taken from the joint judgment of Gaudron, Gummow and Hayne JJ in the recent decision of the High Court of Australia: Wong v The Queen [2001] HCA 64; 185 ALR 233: "[74] …………………….. (T)he reasons of the Court of Criminal Appeal suggest a mathematical approach to sentencing in which there are to be 'increment[s]' to, or decrements from, a pre-determined range of sentences. That kind of approach, usually referred as a 'two-stage approach' to sentencing, not only is apt to give rise to error, it is an approach that departs from principle. It should not be adopted. [75] It departs from principle because it does not take account of the fact that there are many conflicting and contradictory elements which bear upon sentencing an offender. Attributing a particular weight to some factors, while leaving the significance of all other factors substantially unaltered, may be quite wrong. We say 'may be' quite wrong because the task of the sentencer is to take account of all of the relevant factors and to arrive at a single result which takes due account of them all. That is what is meant by saying that the task is to arrive at an 'instinctive synthesis'. This expression is used, not as might be supposed, to cloak the task of the sentencer in some mystery, but to make plain that the sentencer is called on to reach a single sentence which, in the case of an offence like the one now under discussion, balances many different and conflicting features. [76] In R v Thomson , Spigelman CJ reviewed the state of the authorities in Australia that deal with the 'two-stage' approach of arriving at a sentence, in which an 'objective' sentence is first determined and then 'adjusted' by some mathematical value given to one or more features of the case, such as a plea of guilty or assistance to authorities. As the reasons in Thomson reveal, the weight of authority in the intermediate appellate courts of this country is clearly against adopting two-stage sentencing and favours the instinctive synthesis approach. In this court, McHugh and Hayne JJ in dissenting opinions in A.B v R expressed the view that the adoption of a two-stage approach to sentencing was wrong. Kirby J expressed a contrary view. We consider that it is wrong in principle. The nature of the error can be illustrated by the approach adopted by the Court of Criminal Appeal in these matters. Under that approach, the court takes, for example, the offender's place in the hierarchy and gives that a particular significance in fixing a sentence but gives the sentencer no guidance, whatever, about whether or how that is to have some effect on other elements which either are to be taken into account or may have already been taken into account in fixing the guideline range of sentences. To take another example, to 'discount' a sentence by a nominated amount, on account of a plea of guilty, ignores difficulties of the kind to which Gleeson CJ referred in R v Gallagher when he said that: 'It must often be the case that an offender's conduct in pleading guilty, his expressions of contrition, his willingness to cooperate with the authorities, and the personal risks to which he thereby exposes himself, will form a complex of inter-related considerations, and an attempt to separate out one or more of those considerations will not only be artificial and contrived, but will also be illogical.' So long as a sentencing judge must, or may, take account of all of the circumstances of the offence and the offender, to single out some of those considerations and attribute specific numerical or proportionate value to some features, distorts the already difficult balancing exercise which the judge must perform. [77] The core of the difficulty lies in the complexity of the sentencing task. A sentencing judge must take into account a wide variety of matters which concern the seriousness of the offence for which the offender stands to be sentenced and the personal history and circumstances of the offender. Very often there are competing and contradictory considerations. What may mitigate the seriousness of one offence may aggravate the seriousness of another. Yet from these the sentencing judge must distil an answer which reflects human behaviour in the time or monetary units of punishment." 30 The learned sentencing Judge did not approach his task by looking at the fixing of proper and separate head sentences; at the appropriateness of providing for at least a measure of cumulation rather than for simple concurrence; and at the fixing of a proper non-parole period reflecting a considered judgment on the all-important question of the proportion of the head sentence(s) that justice required to be served in fact by the offender. His Honour took, instead, what I would respectfully describe as a rolled-up approach. His Honour distilled that approach in the following brief passage appearing at page 38 of the remarks on sentence: "Perhaps I should add though at this stage, as the offences were interlocked and as they were committed at the same time, I propose to order that all sentences be served concurrently." 31 If there were nothing further of relevance to be considered in this connection, I would be comfortable in the view that the learned sentencing Judge fell into manifest error in his Honour's failure, as I respectfully perceive it to have been, to give proper effect to the requirements of the decision in Pearce. 32 It is, however, the case that there is something additional to be taken into account. It derives from an exchange between his Honour and learned counsel then appearing for the Crown. The exchange is recorded at pages 3 and 4 of the transcript for 9 August 2001. The relevant passages are as follows: "HIS HONOUR: ………….. . I've heard recently that I'm required, am I not, and please correct me if I'm wrong, to impose a penalty in respect of each of the charges, is that right? (CROWN COUNSEL): That's correct your Honour, although I should indicate that the Crown will not be submitting there should be a consecutive component. Pearce's case I think in the High Court is the one requires – it's not specific Commonwealth legislation, I should say, it's for all sentences is a requirement to impose a sentence in relation to each matter. I think what had become a practice was to sort of throw it all into the pot and come up with a single number and the High Court has said you can't do that but that would be true of all sentences your Honour. …………………" 33 In a later exchange which is recorded at page 38 of the transcript for 10 August 2001, learned counsel then appearing for the Crown re-emphasised to his Honour that the Crown agreed that there should be concurrent sentences. 34 In those circumstances, I would decline, as a matter of discretion, to intervene now in order to correct those errors of which I have earlier spoken. There is ample authority for such approach: see for example R v Jermyn [1985] 2 NSWLR 194 per Street CJ at 198E, F; per McHugh JA at 205D,E; and per Lusher J at 205F. 35 I do not myself perceive any other patent errors in the published remarks on sentence. That entails that the present appeal, if it is to succeed, must succeed upon the basis that the sentencing process at first instance miscarried by reason of latent error. That entails, in turn, that the appellant must demonstrate that the end result reached by the learned sentencing Judge is so manifestly outside the range of a proper sentencing discretion, as to compel a conclusion that there has been, in some way or other that cannot be particularised, vitiating error. 36 In my opinion, such a case has not been made out by the appellant. I have arrived at that conclusion by the following process of reasoning: [1] The objective culpability of each of the two section 29D offences was, in my opinion, high. The appellant's written submissions propound that each of the two frauds was carefully planned and executed; entailed the provision of tax evasion services; and had nothing to do with the operation of such legitimate business as the respondent was carrying on, other than to provide a source of finance for that business. I agree with those submissions. [2] Relevant to the question of objective criminality were things said by the respondent, in part during the course of his evidence at the proceedings on sentence, and in part in the course of an interview which resulted in the preparation of a pre-sentence report that was put into evidence in those proceedings. In answer to questions from his own counsel, the respondent gave the following evidence: "Q. May I just ask you this Mr. O'Connor, when you were participating in the scheme through both International Excavations and Pro Line, were you aware in precise terms the way in which the revenue was being defrauded by your activities? A. At the time I didn't see it as a crime. I thought it was just being clever and at the time, when I came to Australia, there was thousands of people around me within the industry and that was the system at the time and I just adapted to the system and it was explained to me that on the PPS system whereby 20 per cent tax is withheld for employees at the time a lot of those temporary employees a lot of them worked for three or months and they were travelling around Australia before they returned to Ireland on their one year holiday visa and they had filed a tax return before they went back they would have received the 20 per cent tax which would have been passed on to the government that would have received it back from the Australian Taxation Office. That's not necessarily all the employees but there was a large percentage of them that used to work for maybe 3 to 4 months and travelled around Australia before returning to Ireland before their visa had expired. Q. And whilst you tell his Honour that you considered that it was clever and that it was rife within the construction industry is it proper to say that you were nevertheless aware that tax, the Australian tax office and the Commonwealth Revenue was being treated (sic) of an entitlement and indeed you participated in the system conscious of that although not fully aware of the criminality you were involving yourself with, is that a fair way to put it? A. That's correct. On hindsight I can see clearly that the government needed to collect taxes from the people to sustain the social structure that we have within this society and it's easy to talk in hindsight but at the time I was more focussed on building up my business and I was just so involved in the whole thing that I didn't really give it a lot of thought which is a regrettable (sic) I must say." These statements seem to me to describe an attitude that was either egregiously naïve or simply amoral. Given that it was beyond question that the respondent was intelligent, well educated, ambitious and resourceful, I have no reasonable doubt that the explanation of amorality is to be preferred to that of naivety. The learned sentencing Judge, who took overall a very favourable view of the respondent, was moved to comment about the second of the two quoted answers: "One would have thought, with a man of his qualifications or even without them, that this would have been rather obvious" . I entirely agree. [3] Also relevant to the matter of objective criminality is the consideration, which is in my opinion a consideration of very great practical significance, that frauds of the kind here in point are not, in the end, victimless crimes in the sense that they are committed only against somewhat amorphous entities described as "the Government" or "the Revenue" or the like. The real impact of frauds of the kind here in point is felt, and borne, by the great body of law-abiding tax payers who meet their taxation obligations not because they actually like doing so, but because they acknowledge, and are prepared to abide by their lawful obligations as citizens. [4] There were significant subjective matters to be brought to account in the respondent's favour. They included his relative youth, and his unblemished antecedent record. It is not necessary to go into the detail of these matters, since it was not contended at the hearing of the appeal that the learned sentencing Judge had in any way misapprehended the evidence concerning the relevant subjective considerations. [5] As I have earlier observed, the proper balancing of the relevant objective and subjective considerations pertinent to the respondent's individual case, entailed the bringing properly to account of the respondent's undoubted entitlement to some consideration by reason of his prompt pleas of guilty; and of the respondent's statutory entitlement pursuant to section 16G of the Commonwealth Crimes Act . [6] In my opinion, a proper head sentence imposed in connection with each of the two section 29D offences would have been a sentence in the order of imprisonment for 4 years. I would myself have thought that there was a clear case for a partial cumulation. That is so because, in my opinion, the incorporation of the second of the two companies which acted as vehicles for the respondent's fraud was incorporated as a separate and distinct enterprise, and after steps had been set in train to bring about the deregistration of the first of the two fraudulent corporate vehicles. I would myself have reflected that element of cumulation in a way that entailed head sentences effectively aggregated at the level of 5 years or thereabouts. [7] As to a non-parole period, I would have thought that a term in the order of 3 years or thereabouts would have been just in the circumstances of the present case. That would have kept in mind, but only as a broad indication, the approach, broadly favoured by the decision in el Karhani , of a non-parole period set at or about 60 per cent of the head sentence. [8] The point thus reached in the present process of reasoning raises a contrast between the end result that I would have thought to be appropriate: that is to say, an effective head sentence in the order of 5 years and an effective non-parole period in the order of 3 years; with the result in fact achieved of an effective head sentence of 3 years and an effective non-parole period of 18 months. Prima facie a disparity of that order would justify, in my opinion, the intervention of this Court. That intervention would entail, of course, the proper application of those constraints which have come to be described compendiously as "double jeopardy". That could properly have entailed an end result of an effective head sentence in the order of 4 years or thereabouts with an accompanying non-parole period in the order of 2-1/2 years or thereabouts. All other things being equal, I would not myself have thought that appellate intervention in order to bring about that particular type of corrected result could be characterised as mere tinkering. [9] It is, however, my opinion that all other things are not equal. That is so because of the consideration, of which I have earlier herein spoken, that the end result achieved by the learned sentencing Judge was achieved by an unsound process of reasoning in which the Crown concurred. This consideration seems to me to raise a real question of practical justice. The correctly principled answer to that question is to be found, in my opinion, in this Court's now declining, in the exercise of its relevant residual discretion, to interfere with the two sentences against which the present appeal has been brought. 37 That would be sufficient to dispose, adversely to the appellant, of the present appeal. There are, however, some additional matters which arose during the course of argument, and about which I think that it would be appropriate and useful to say something. [1] Much of what was submitted by the appellant in the present case was directed to the decision of this Court (Stein JA, Foster AJA, McClellan J), in R v Cappadona & anor [2001] 47 ATR 317. It was submitted, put simply, that the proper application to the respondent's case of the approach taken in Cappadona must have resulted in the passing upon the respondent of a significantly more severe sentence than the sentence in fact imposed. The learned sentencing Judge disposed in fairly short order of the submissions that had been put to his Honour in connection with the decision in Cappadona . His Honour said: "Although every case is different and must be decided upon its own facts, the Crown pointed out the similarity between this case and that of R v Cappadona …………………. . It is true, as was put by the Crown, that the prisoner, unlike Mr. Cappadona, assisted others to defraud the Commissioner of Taxation but Mr. Cappadona's offence involved the loss of revenue of three and a half million, not one and a half million, over a period of five years, not two years, with an intention to cease, and what is more significant is that Mr. Cappadona unlike the prisoner, did not unthinkingly adopt the scheme. Indeed he endeavoured to conceal it. The cases are otherwise distinguishable and I do not propose to go into any further details." As to that approach to the decision in Cappadona , the written submissions of the appellant contend: "No reason was given for imposing a sentence that was less severe than that imposed on Mr. Cappadona other than a comment to the effect that the amount and the duration in Cappadona were more serious than the respondent's role in assisting others to defraud the Commissioner of Taxation. This characterisation of the respondent's conduct understated its seriousness." The decision in Cappadona re-affirms certain principles of general application in connection with sentencing for revenue fraud offences. In that connection, the decision adopts an earlier discussion by a differently constituted Bench of this Court in Director of Public Prosecutions v Hamman (unreported); CCANSW; 1 December 1998. The relevant principles are summarised as follows in paragraphs [23] of the judgment of McClellan J: "(a) In determining the sentence appropriate to any offence regard must be had to its gravity viewed objectively; (b) The maximum sentence fixed by the legislature defines the limits of sentence for cases in the most grave category; (c) General deterrence is a predominate consideration when sentencing for offences of defrauding the revenue; (d) A sentence by way of periodic detention has a strong degree of leniency built into it and is outwardly less severe in its denunciation of the crime. Many in the community would regard a total deprivation of liberty for a period of months as more punishing than a number of short-term deprivations extending over a long period; (e) Although a matter to be taken into account it is of small account that when caught out the offender pays the tax due and additional tax by way of penalty; (f) Past integrity and good character carry little weight against systematic defrauding of the revenue over a significant period of time." Mr. Cappadona pleaded guilty to eight contraventions of section 29D of the Commonwealth Crimes Act . His activities were characterised by the Court of Criminal Appeal as "a deliberate and systematic fraud on the Australian Taxation Office over a period in excess of 5 years failing to make tax payments totalling $3,550,774" . The primary sentencing Judge concluded that an appropriate sentence on each of the eight matters would be imprisonment for 4 years, the sentences to be served concurrently. Making the adjustments required by section 16G, and also on account of early pleas of guilty, the sentences were reduced from sentences of 4 years to sentences of 2 years. His Honour ordered that the sentences be served by way of periodic detention in acknowledgement of the prior good character of Mr. Cappadona, and in particular his willingness to assist the authorities. The Court of Criminal Appeal allowed a Crown appeal. The crucial factor in the approach taken on appeal was that offences of the kind committed by Mr. Cappadona could not be punished justly otherwise than by the imposition of some full-time custodial sentence. To that end the Court indicated that the appropriate sentence on each of the eight charges was a sentence of imprisonment for 5 years to be served concurrently. Adjustments to take account of section 16G, and of the early pleas of guilty, reduced each of those concurrent sentences from imprisonment for 5 years to imprisonment for 2 years 6 months. A further 6 months was deducted to allow for the element of double jeopardy in a successful Crown appeal. Yet a further 6 months were deducted to allow for cooperation with the authorities. This process reduced a sentence of full-time imprisonment for 5 years to a sentence of full-time imprisonment for 18 months for each of the eight concurrent sentences substituted on appeal by the Court of Criminal Appeal. The effect of what was thus done was to send Mr. Cappadona to prison for a fixed term, actually to be served, of 18 months. The effect of the sentences passed upon the present respondent was to commit him to full time imprisonment for a non-parole period, that is to say for a period actually to be served, of 18 months. In my opinion, a comparison of the practical end results reached in the two cases of Mr. Cappadona and of the present respondent does not indicate such a discrepancy as should attract the intervention of this Court. [2] The submissions of the appellant drew particular attention to the ratio between the concurrent head sentences set by the learned sentencing Judge, and the accompanying non-parole periods set by his Honour. His Honour set non-parole periods of 50 per cent, in each case, of the concurrent head sentences. The appellant submitted that this departed from what was contended to be "the usual range of 60% to two-thirds of the head sentence" ; and that "no principled reason" had been given by the learned sentencing Judge for so departing from that range. The relevant principles are stated conveniently and as follows by Wood CJ at CL, (Meagher JA and Barr J concurring), in Regina v Tack Lee Pang [1999] 105 A Crim R 474 at 477: "The non-parole period has normally been set between 60 and 66 per cent of the head sentence: Behar at p.13 and Bernier (1998) 102 A Crim R 44 although there is no fixed rule in that regard. In any given case it will depend upon the subjective circumstances of the prisoner and the benefits or otherwise, of offering the possibility of release on parole." [NOTE: Behar is an unreported decision given on 14 October 1998 by the NSW Court of Criminal Appeal.] It is the case that the learned sentencing Judge gave no particular indication of the process of reasoning which had led his Honour to set the concurrent non-parole periods at 50 per cent rather than at some higher figure. The question thereupon arising for this Court is whether a non-parole period set at 50 per cent of head sentence involved a miscarriage of discretion, having regard to "the subjective circumstances of the prisoner and the benefits or otherwise, of offering the possibility of release on parole" . I am unpersuaded that there was appellable error in the setting of the non-parole periods. A ratio of 50 per cent gave the respondent, in my opinion, a marked degree of leniency; but on the view most favourable to the appellant, it does not seem to me that the practical difference resulting from a ratio of 50 per cent and a ratio of, say, 60 per cent is such as to warrant the appellate intervention of this Court. [3] During the hearing of the present appeal there was discussion between the Court and counsel concerning the purport and effect, in a case of the present kind, of section 16G of the Commonwealth Crimes Act . Part 1B of the Act, of which section 16G is a part, was introduced into the Act by amending legislation passed in 1990 and applying to all Federal offenders convicted after 17 July 1990. The decision, earlier herein referred to, of el Karhani was, if not the very first, at least one of the very first decisions made under the new sentencing regime that was introduced by Part 1B. The judgment of the Court concludes with some observations concerning the need, as the Court then perceived it, for "further attention by Federal Parliament to the ambiguities of the Act brought to light in this case ……………… ." . The Court commented: "The time taken in sentencing Federal offenders will necessarily increase under this legislation. However, judges must comply with the law as Parliament has stated it. The meaning of s 16G and the adjustment which it requires, is not plain. The obligation under s 16F to explain certain matters to the convicted offender makes it self-evidently desirable that that which has to be explained is itself reasonably clear. This cannot be said either of the purpose of the new legislation nor of its terms." (21 NSW LR, 387C, D) There has been no legislative clarification of, in particular, "the meaning of section 16G and the adjustment which it requires" . That being so, individual sentencing Judges, and various Benches of the Court of Criminal Appeal, have had to do the best they can to give dutiful effect to section 16G. It is clearly established that there must in fact be an adjustment of the kind required by section 16G; and that a sentencing process which fails to take account of the requirements of section 16G will be set aside on appeal as a miscarriage: R v Cheng [1999] 107 A Crim R 460. The proposition advanced in el Karhani , that an adjustment in the order of one-third would be normal, appears to have become generally accepted, but subject to the proviso that it is not "……………….. invariably or inevitably the case that a one-third allowance should be given" : Regina v Budiman (1998) 102 A Crim R 411 at 415 per Wood CJ at CL, Beazley JA and Dunford J concurring. It is interesting to note that in Budiman the Court was dealing with a sentence in circumstances where the sentencing Judge had not nominated a starting point and then exposed a precise mathematical adjustment on account of the requirement of section 16G. It was contended that the failure of the sentencing Judge to follow that course gave rise to an inference that his Honour had failed to take section 16G into account either sufficiently or at all. That contention was rejected. Wood CJ at CL, speaking for the Court, said: "While it well may have been helpful for him to have nominated the allowance made for the section 16G consideration, it was not mandatory for him to have done so, ……………….. . The process of sentencing is not to be converted into a mathematical exercise ………………………. . The existence of often overlapping considerations means that, in the absence of a clear misdirection in the approach adopted, it is the end result of the sentencing process which needs to be examined in order to determine whether there is appealable error." (102 A Crim R, 415) The foregoing developments concerning the proper understanding and application of section 16G have brought about a result which continues to be fundamentally ambiguous and unsatisfactory. The present respondent's case is, in my opinion, a good example of the unsatisfactory consequences in practice of section 16G in its present form. The respondent faced, in connection with each of the section 29D offences, a statutory maximum penalty of imprisonment for 10 years. It was necessary to calculate a proper sentence separately for each of those two offences: see Pearce previously herein discussed. The el Karhani norm of one-third would have entailed an immediate reduction from 10 years to about 7 years, without any consideration given to other mitigating subjective features of the case, and even assuming that the case was one that might properly attract in the first instance the statutory maximum penalty. It was not controversial at the respondent's sentence hearing that his case, serious as it undoubtedly was, was not so serious that an appropriate starting point in the separate setting of each separate sentence was the statutory maximum of 10 years. This entailed that, by reason of section 16G alone, the respondent was unlikely to have received a head sentence of more than, say, 5 years or thereabouts. A proper taking into account of the other subjective features which undoubtedly existed in the respondent's case must have entailed, on the view most adverse to him, a head sentence on each count that was closer to 4 than to 5 years. As I have earlier herein explained, even a prudent measure of cumulation would not have made any startling difference to the end result. That proposition could be countered, and with the support of ample available authority, by the proposition that the respondent's case was one in which it was inappropriate to apply the el Karhani norm of a one-third adjustment. The difficulty of principle that seems to me to impede that argument is that section 16G does not have attached to it any rider of the kind that is to be found, for example, attached to section 22A of the Crimes (Sentencing Procedure) Act 1999 (NSW) . Section 22A(1) gives a sentencing Court power to reduce a penalty "on an offender who was tried on indictment, having regard to the degree to which the defence has made pre-trial disclosures for the purposes of the trial" . Sub-section (2) adds, however, this rider: "A lesser penalty that is imposed under this section in relation to an offence must not be unreasonably disproportionate to the nature and circumstances of the offence." It seems to me to be, at least, arguable that an offender whose sentence was adjusted, in compliance with section 16G, to an extent which fell markedly below the el Karhani norm of one-third, had not received the substance of what he is intended by section 16G to receive. I do not suggest that such an argument would necessarily succeed; and I certainly do not suggest that any such argument would deserve to succeed. I do suggest that it might well succeed; and that it would take a comparatively simple statutory amendment to close off at least that loop-hole. Until some such legislative review takes place, cases such as that of the present respondent, where the relevant statutory maximum term of imprisonment is one of 10 years, will be affected inevitably by an application of section 16G that is going to mean in practice the end result of a sentence which will be said, as was in fact submitted in the present particular case, not to reflect the gravity, from the point of view of the public interest, of the particular offence. 38 For the whole of the foregoing reasons, I am of the opinion that the appeal should be dismissed. 39 SMART AJ: The Commonwealth Director of Public Prosecutions appeals against the alleged inadequacy of the head sentences and non-parole periods imposed upon Mr O'Connor by Downs ADCJ on 10 August 2001. Mr O'Connor was sentenced to two concurrent terms of imprisonment of 3 years with a non-parole period of 18 months for each of two charges of defrauding the Commonwealth contrary to s.29D of the Crimes Act 1914 (Cth). 40 The first charge covered the period 23 September 1997 to 23 October 1998 with cheques received from contractors in the building industry and paid into one of the bank accounts of International Excavations Pty Ltd (International), a company controlled by Mr O'Connor. The second charge covered the period 23 June 1998 to 29 September 1999 with cheques received from contractors in the building industry and paid into one of the bank accounts of Pro Line Plant Hire Pty Limited (Proline), a company controlled by Mr O'Connor using the name Kirkpatrick. In each instance after the cheques were banked into one of the company's bank accounts, Mr O'Connor withdrew cash and, after retaining a commission of 7 per cent, either handed the cash to the contractors for payment to their workers in cash or paid the workers in cash. No tax was deducted or paid. 41 Mr O'Connor was also sentenced to two concurrent sentences of 2 years imprisonment with non-parole periods of 18 months for making false instruments contrary to s.302A of the Crimes Act 1900 (NSW). Those sentences are not the subject of any appeal. Mr O'Connor entered pleas of guilty to all offences before the magistrate. 42 The principles to be applied in this appeal are set out in the classic passage in the joint judgment of Dixon, Evatt and McTiernan JJ in House v The King (1936) 55 CLR 499 at 504-505. "But the judgment complained of, namely, sentence to a term of imprisonment, depends upon the exercise of a judicial discretion by the court imposing it. The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If a judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred." These principles apply to Crown appeals against sentence and appeals by prisoners against sentence. 43 Where the nature of the error is discoverable (as distinct from the case where the nature of the error is not discoverable but the result is unreasonable or plainly unjust) the major question arises whether despite the error, some other sentence is warranted in law. The reasoning process may be faulty but the final result embodied in the order may be correct or perhaps more accurately, no lesser or greater sentence, as the case may be, should be imposed Discoverable error does not necessarily lead to a different sentence. Of course, it may do so. The Facts 44 The hearing before the judge proceeded on an agreed statement of facts, a Probation and Parole pre-sentence report, which was tendered by the Crown, Mr O'Connor's evidence and some testimonials. Mr O'Connor holds an Honours Degree in Civil Engineering, graduating in 1995. For about two years he worked in the construction industry in Ireland. He came to Australia in February 1997 on a working holiday visa for people under 26. It was common knowledge in Ireland that there was a boom in the construction industry due to the preparations for the Olympic Games and that there was a big demand for engineers and all types of construction workers. They were in short supply. It was notorious in Ireland that the building industry in Sydney operated on a cash payment basis (a cash society) and that workers were paid in cash. It was also common knowledge in Ireland that payment of tax was optional in the Sydney building industry and that cash could be generated by operating a cheque cashing facility. Upon his arrival in Australia Mr O'Connor obtained a job physically manning one of the earth moving machines. He soon discovered that what he had heard was true, that is, that there was large scale non-payment of tax. Indeed, he was told that this had been the position for the previous 15 to 20 years. Apparently, it has proved an intractable problem for the tax authorities. 45 After some months he and another man went into partnership for six months. They acquired an excavator and made a profit. Mr O'Connor decided to build up an earthmoving business of his own and acquired four additional machines under hire purchase. Workers were engaged. With the rapid expansion of the business it soon encountered cash flow problems. Wages had to be paid and money was needed for diesel fuel, repayments on the machines and the purchase of special attachments. Further, it was normal to have to wait three to four months for payment after the work was done. 46 Mr O'Connor said that he became involved in cheque cashing when a friend asked him to supply some labourers. Mr O'Connor did so. The friend paid him for the labourers by cheque. Mr O'Connor cashed the cheques, paid the labourers in cash and deducted a five per cent commission for handling the friend's wages roll and paying his employees. 47 A friend, Fergal Woods, caused an accountant to either provide or form a company known as International. Woods was the sole director and secretary. The address supplied by Woods was one at which he never lived but it was the address at which Mr O'Connor lived. Woods left Australia on 25 February 1999. 48 On 25 September 1997 a bank account was opened in the name of International at Burwood. The signatures were Woods and Mr O'Connor. On 26 September 1997 a second account was opened in the name of International with the Burwood branch of the Advance Bank. The applicant was Woods but the sole signatory was Mr O'Connor who explained to the Bank that Woods travelled a lot and would not be available to sign cheques. 49 On 1 December 1997 application was made to the Australian Taxation Office for a tax free number and a Prescribed Payment Scheme (PPS) deduction exemption certificate rated at 0 per cent. Under the PPS a company could obtain a deduction exemption certificate which entitled the company to receive payments without tax being deducted. 50 An 0 per cent PPS deduction exemption certificate is intended to be issued to low income earners in the building industry. On 19 December 1997 International was granted an 0% PPS deduction exemption certificate. That certificate was fraudulently used to defer all taxation liability relating to the dealings of International until it was deregistered in October 1998. From its opening until its closure in May 1998 O'Connor deposited cheques totalling $2,534,232.90 into the two International accounts. The cheques were from businesses in the building industry. 51 Mr O'Connor obtained a Workers' Compensation Insurance certificate for International which covered only one worker. He also applied for and obtained a Public Liability certificate in the name of International. This certificate was provided to payers and potential payers of International as "evidence" of the legitimacy of the company in the event that the payers were questioned by the ATO. 52 No application was made to the ATO to register International as a group employer for the purpose of paying group tax. Mr O'Connor provided copies of International's 0% PPS deduction exemption certificate to his customers to allow payments to International with no deduction for tax. 53 Mr O'Connor banked cheques from companies in the building and construction industry made out to International and retained a commission. Mostly it was 7 per cent. There is evidence that in some instances it was 5 per cent. On most occasions a special clearance was requested. He drew and cashed numerous cheques written out to cash for amounts less than $10,000, thus avoiding the reporting provisions of the Financial Transaction Reports Act 1988. Various branches of each bank were used within short periods of time on the same day. The balance of the cash was returned to the drawer of the cashed cheques. Mostly it was used to pay wages in cash. Mr O'Connor provided blank or false invoices from International to the drawers of the cheques to provide ostensible support for the payments. The payment of cash wages made it harder for the ATO to trace them, easier for the recipient not to declare those wages as income and facilitated the fraud on the Commonwealth by removing its opportunity to collect group tax. 54 During International's operation from October 1997 to May 1998 Mr O'Connor conducted 245 individual transactions through these accounts, withdrawing $1,989,802 in cash in amounts just under $10,000. 55 During the time International was operating Mr O'Connor was employed in his own name in the industry. In his personal income tax return for the year ended 30 June 1998 Mr O'Connor did not declare any income derived from, nor his involvement with, that company. 56 At least three persons worked for International during the 14 months of its operation but no group tax was paid and International never registered as a group employer. No employees have ever declared any income from International. 57 Based on the figures available the Crown calculated, on the assumption that the rate of commission was 7 per cent, that Mr O'Connor had personally gained a benefit of $139,286.14 over the 12 month period during which International operated. The Crown has further calculated that the minimum loss of revenue based on the cashed cheques was 20 per cent of $1,989,802, namely $397,960.20 being the normal PPS rate applicable had no deduction exemption certificate been sought. The total value of the tax lost is greater but it cannot be accurately quantified. These figures were not challenged. 58 In June 1998 Mr O'Connor caused International to apply to be deregistered. The deregistration came into effect from 23 October 1998. 59 About 15 April 1998 Mr O'Connor registered a company called OC Civil Pty Ltd (OC Civil), being the sole shareholder and director. OC Civil generally engaged in legitimate business in the building and construction industry. 60 In June 1998 Mr O'Connor assumed the name of Liam Kirkpatrick and, using an Irish birth certificate in that name, caused Proline to be registered. Within two weeks of its registration Mr O'Connor opened four bank accounts for Proline each at a different bank, using false identification in the assumed name of Kirkpatrick. He operated each account in that assumed name. Applications were made and granted for a tax file number and for a PPS deduction exemption certificate of 0 per cent. Proline never had any equipment and never employed any people. Mr O'Connor intended to use Proline and the PPS 0 percent deduction exemption certificate for a limited time to defraud the Commonwealth of taxation revenue. 61 Mr O'Connor actively offered the use of Proline to payers who wanted cheques cashed through it and the cash, less his commission, was returned to them. False or blank Proline invoices were provided along with a copy of Proline's PPS 0 per cent deduction exemption certificate allowing for the deferral of all taxation. 62 Between 25 November 1998 and 6 April 1999 OC Civil made five payments to Proline to a combined value of $89,395. Mr O'Connor negotiated at least 21 cheques to a value of $150,660 for cash through the OC Civil bank account. The total value of payments and purported payments from OC Civil to Proline is $240,055. All workers (and there were at least five of them) used (or employed) by OC Civil were paid in cash with the exception of Mr O'Connor. No tax has been forwarded to the ATO by OC Civil from wages paid to any workers other than Mr O'Connor. The cash funds from cheques cashed through Proline by OC Civil were, in part, paid as cash wages to OC Civil employees or subcontractors in an arrangement with Mr O'Connor to avoid tax. 63 Between 23 June 1998 and Mr O'Connor's arrest on 29 September 1999 Proline received 323 cheques totalling $4,705,612 and deposited them amongst three of Proline's bank accounts. This equates to an average monthly turnover of $313,707. All the cheques came from companies associated with the industry. A large percentage of those businesses had Irish owners. 64 During the fifteen month period Mr O'Connor, using the assumed name of Kirkpatrick, made 418 individual cash withdrawals from the three Proline bank accounts. The value of the structured transactions was $3,431,571. Most of the withdrawals were made by negotiating Proline cheques for cash at multiple branches of the banks within a short space of time on the same day. All of the deposit was withdrawn and slips were signed by Mr O'Connor using the name of Kirkpatrick. 65 On the Crown's calculations Mr O'Connor's personal gain on the Proline transactions was $329,302, being 7 per cent of $4,705,612 received by Proline from companies using its cheque cashing facility. Based on the turnover of Proline and the PPS rate of tax of 20 per cent which should have been deducted, the Commonwealth lost a minimum of $941,122. The tax revenue lost was greater but it cannot be accurately quantified. These figures were not challenged 66 Based on a commission of 7 per cent Mr O'Connor would have made $139,286 from the cheques processed through International and $329,392 from those processed through Proline, a total of $468,678. The minimum revenue which the Commonwealth was alleged to have lost was $1,447,969 (being $506,846.58 from International and $941,122.54 from Proline). An order was made against Mr O'Connor under s.21B(1)(c) of the Crimes Act 1914 to make reparation to the Commonwealth in respect of the loss suffered by it by reason of the offence in the amount of $164,098.51. That appears to have been a negotiated amount. 67 At an early stage in the sentencing hearing the Crown told the judge that while he had to impose a penalty in respect of each of the charges, the Crown "will not be submitting there should be any consecutive component." The view was taken by counsel for the Crown, counsel for the accused and the judge that the penalties on the State offences should be concurrent with those imposed on the charges of defrauding the Commonwealth. The State offences were correctly assessed as much less serious. 68 This brief outline demonstrates that the offences were very serious. The amounts involved were large, the frauds were carefully planned and executed over an extended period with much attention to detail and considerable organisation. 69 Mr O'Connor told the Probation and Parole officer that the environment in the building industry at the time of the offences to some degree in his own mind had legitimised his actions. There was a great deal of work and limited labour supplies and payment of cash to employees was customary. He was focussed on building up his excavating business and used the money he gained from setting up and running the bogus companies as a means to financially assist him to run his legitimate business. Employees would have sought alternative employment if not paid in cash. 70 Mr O'Connor expressed remorse for his actions and appeared to feel deeply the disappointment and hurt that his actions have caused his family. He presented as committed to face the consequence of his actions and to make reparation to the ATO. The Probation and Parole officer said that in interview Mr O'Connor presented as open and co-operative. The officer added: "The fact that his actions occurred in the context where the behaviour was seen as acceptable by his peers and associates is corroborated by the fact that all the people contacted in relation to the preparation of this report expressed their view that he was an 'honest' person. It does appear that the scheme in which he became involved presented an avenue to make 'easy' money, was perceived by the offender as a victimless crime, and little thought was given to the immorality of such a scheme." 71 There were four testimonials. They spoke of his many good qualities including the help he gave those in personal need and his generosity in sponsoring and supporting needy children in Third World countries. He gave a great deal of practical help and advice to members of the Irish community. Father A Hilliard has spoken of Mr O'Connor's insistence that he face the Australian courts and not leave the jurisdiction. Mr O'Connor must have known that he would be sent to prison. 72 Mr O'Connor said that at the time he did not see what he was doing as a crime. He thought it was just being clever. As he remarked, "when I came to Australia, there was thousands of people around me within the industry and that was the system at the time and I just adapted to the system." He admitted that as he participated in the existing system he was aware that the Commonwealth was being cheated although he was not fully aware of the criminality in which he had become involved. He added: "On hindsight I can see clearly that the Government need to collect taxes from the people to sustain the social structure that we have within this society and it's easy to talk in hindsight but at the time I was more focussed on building up my business and I was just so involved in the whole thing that I didn't really give it a lot of thought which is a (sic) regrettable I must say." In the Crown's grounds of appeal and during its address it attacked a number of the judges findings. 73 Appeal Ground 4 reads: "The finding of fact made by ... Acting Judge Downs that 'He [O'Connor] co-operated with the authorities when arrested' (Remarks on Sentence transcript p.36 was unsupported by the evidence." The judge said: "It was his intention to cease using the scheme late in 1999. ... the prisoner does not have any prior convictions in Ireland or Australia. He co-operated with the authorities when arrested. It would seem that he pleaded guilty as soon as he reasonably could, and except for these offences he is a kind and respected citizen." 74 There was no challenge to the proposition that Mr O'Connor had pleaded guilty as soon as he reasonably could. The statement that he had co-operated with the authorities is probably a reference to this statement by the Crown counsel who, after mentioning the dates on which the pleas of guilty were entered, continued: "Now your Honour I should say as a matter of fairness to the prisoner that there was a lengthy period of communication and negotiation in relation to the facts and to the charges. There was a considerably greater volume of charges many of them which went to the composition of the fraud if you like and those indications came from my learned friend's instructing solicitor I recall last year so in a sense those dates are apt to mislead a little if taken in isolation." 75 The words "when arrested" are used in the sense of "consequent upon his arrest." The phrase "co-operate with the authorities" is not used in the sense of "assist the authorities" that is by telling of other crimes or of others involved in his criminal activities or other criminal activities. When the judge referred to Mr O'Connor co-operating with the authorities he was referring to the lengthy period of communication and negotiation in relation to the facts and to the charges. That can be of considerable value when a large body of material is reduced to a relatively simple form, there is an undisputed statement of facts and just two charges covering the overall criminality in lieu of a series of charges dealing with different aspects. Ultimately there were pleas of guilty. A long and complex trial was avoided. While the language used in the sentence is not that traditionally used for what occurred it is possible to see what the judge probably meant. On this approach to what the judge said the complaint made is not of much consequence. 76 I am fortified in this approach by the absence of any discussion by the judge as to the extent of the assistance given to the authorities and the extent of any discount to be given for such assistance. Percentages would not need to be specified but it would be usual for an experienced judge such as this judge to discuss the matter and indicate at least whether a small, medium or substantial discount should be given. 77 If I am wrong in the approach I have taken, an error has been made but not one of great moment in that the judge does not seem to have given a discount other than for the plea of guilty and Mr O'Connor's remorse and contrition, albeit that that was probably quite substantial. That is not objectionable as the pleas certainly evinced not only a willingness to facilitate the administration of justice but an actual advancement of the administration of justice. 78 During the oral submissions the Crown contended that the judge had made errors of fact. It was submitted that this statement (R/S p.36) - " It would appear that although the prisoner had used the scheme for two years, the monies he fraudulently obtained were used to finance his legitimate business in which he was suffering from a cash flow" was not the evidence at all. It was submitted that the judge seemed to be suggesting that there was some economic necessity about becoming involved in this criminal scheme, that is, the legitimate business he was running suffered from a cash flow shortage. The legitimate business did not start until after he had his first foray using International to perpetrate a fraud. 79 I do not think that the judge was suggesting that there was some economic necessity which made Mr O'Connor become involved in the scheme. Mr O'Connor stated in evidence (T.9) that at the start he wanted to get some capital to buy an excavator and that he saw the scheme as an opportunity to supply labour and make some extra capital so he could build up an earthmoving business. OC Civil was not registered until 15 April 1998 but it is apparent that Mr O'Connor was seeking to establish an earthmoving business from an early date. The earthmoving business was a legitimate business but that does not mean that Mr O'Connor complied with the taxation laws applicable to it. Mr O'Connor, and OC Civil suffered cash flow problems particularly as the earthmoving business expanded; payments had to be made in cash and there was a delay of 90 to 120 days in receiving payment. 80 The Crown read too much into the judge's remarks. Some support for what the judge said is to be found in the pre-sentence report tendered by the Crown. 81 Appeal Grounds 1, 2 and 3 read: "1. The head sentences imposed were manifestly inadequate. 2. The non-parole period was manifestly inadequate. 3. In the circumstances of the case the percentage of the head sentences imposed relative to the non-parole was so low as to be manifestly inadequate." 82 In support of these grounds the Crown contended that the sentence did not reflect the criminality involved in the provision of a deliberate and methodical tax evasion service to participants in the building industry over two years for which Mr O'Connor's personal gain was over $468,000 and the loss to the revenue was a minimum of $1,447,69 million. No principled reason was given for reducing he ratio of the non-parole period to the head sentence to 50 per cent, that is, for departing from the usual range of 60 per cent to 66? per cent. 83 The Crown stressed the seriousness of the offences and of that there can be no doubt. The Crown pointed to these matters. (a) Mr O'Connor did not merely assist others to commit fraud but provided a tax evasion service for which he was paid a commission (b) He provided blank or false invoices to conceal the fraud (c) He avoided the cash reporting provisions of the Financial Transactions Reports Act by making cash withdrawals under $10,000. (d) He used false identities and adopted the identities of others. (e) It was a fraudulent scheme of considerable planning and sophistication. It involved the highest level of premeditation (f) The obtaining of a zero deduction exemption certificate was a calculated abuse of a hardship concession built into the scheme (g) Offences such as these are hard to detect (h) The income tax system is overwhelmingly a trust system that depends upon honesty to make it work (i) Tax fraud has the practical effect of shifting an undue financial burden on taxpayers at large. Tax fraud in price sensitive industries where there is extensive competition punishes those who incur the cost of compliance and encourages flaunting of the tax laws (j) Specific and general deterrence is of cardinal importance. 84 I do not disagree with any of these points except that I would not have regarded the scheme as sophisticated. The judge was concerned that there appeared to be acceptance of the practices revealed in the evidence in substantial sections of the building industry. 85 Before the judge the Crown sought to use the decision of this Court in R v Cappadona [2001] NSWCCA 194 as the benchmark for fixing the sentences in the present case. There were submissions to the same effect before us. It was submitted that the judge erred in not giving principled reasons for departing from the sentence (or perhaps, the approach to sentence) in Cappadona. The judge thought that there were significant differences between the facts in Cappadona and those in the present case. Cappadona had engaged in a deliberate and systematic fraud on the ATO over a period in excess of five years, failing to make tax payments totalling $3,550,774. In an attempt to avoid detection he created fake business records and, when the frauds were uncovered, provided false information and documentation to the ATO in an attempt to avoid detection. McClellan J, who delivered the judgment of the Court, commented that the fraud was carefully organised and involved a great many criminal acts. Cappadona was able to perpetrate his fraud more simply. As to some employees and subcontractors he paid them in cash and did not remit group tax for the overtime component. Cappadona required his wife to assist him in the clerical aspects of implementing the fraud against her will. She did not like the dishonesty of her husband's scheme. 86 Mr O'Connor did not effectively compel anyone to assist. His fraud involved a much smaller sum and extended over less than half the period, that is about two years instead of over five years. Nor did he attempt, as Cappadona did, to conceal the fraud when investigations by the ATO started. While Cappadona is a useful case the factual matrix in that case is quite different from the one in the present case. In any event, sentencing by way of factual analogy is unsound. 87 The helpful part of Cappadona is the recapitulation by McClellan J of the principles applicable when sentencing for revenue fraud. I have applied these. That recapitulation was based in part on the statement of principles by Sheller JA in DPP v Hamman, CCA, unreported, 1 December 1998. 88 The maximum custodial penalty for an offence against s.29D of the Crimes Act 1914 (Cth) is 10 years imprisonment. The maximum penalty is reserved for the worst category of case. While both the subject offences evinced grave criminality neither offence fell within the worst category of defrauding the Commonwealth. While I am conscious of the vices of a mathematical and formulaic approach and that it can and does lead to error, it is of assistance to consider the correct starting point. In each instance that is a sentence of 7 to 8 years. Either would be unchallengable. 89 As this is a Crown appeal I will take a starting point of 7 years. Section 16G of the Crimes Act 1914 (Cth) requires the sentencing Court to take into account in determining the length of the sentence, that this Federal sentence is to be served in a prison of a State where State sentences are not subject to remissions or reduction and to adjust the sentence accordingly. Until the introduction of the Sentencing Act 1989 in New South Wales remissions were one-third of the sentence imposed. Since 1989 the remission granted in respect of Federal sentences being served in New South Wales has usually been one-third, although this is not a rigid figure. In the present case there is no good reason not to follow the usual practice. A discount of one-third on a starting point of 7 years is 2 years 4 months. That reduces the sentence to 4 years 8 months. 90 The plea of guilty evinces a considerable willingness to facilitate the administration of justice: Cameron v The Queen [2002] HCA 6 at para 14. There was an advancement of the administration of justice. A lengthy and complex trial was avoided. Further, there was remorse and contrition. An allowance for these would reduce the sentence to 3 years 6 months to 3 years 3 months. This is close to the sentence which the judge imposed. 91 While the undoubted objective seriousness of the offence and deterrence are of cardinal importance and the applicant's previous good character is given little weight, it is not left entirely out of account. In the present case the previous good character embraced not only a lack of prior convictions in Ireland and Australia but positive acts of assisting others. That assistance was substantial. 92 If an overall approach is taken to the sentences and the objective seriousness of the offence and deterrence are treated as cardinal factors and then allowance is made for the plea of guilty and the substantial willingness to facilitate the course of justice which that reveals and for the applicant's remorse and contrition and a little weight is given to the applicant's previous good character and positive assistance to others, a head sentence in the vicinity of 3 to 4 years results. This does not involve the detailed step-by-step approach earlier mentioned but involves a consideration and balancing of the relevant factors and arriving at an overall result. It is the instinctive synthesis spoken of in the cases. The Crown has not made out a case for intervention as to the head sentences imposed. 93 As earlier mentioned, the Crown complained that the judge gave no reasons for imposing a non-parole period of 50 per cent of the sentence and why he departed from the usual range of 60 to 66? per cent. The judge did not in terms address this issue. However, he was aware that this was Mr O'Connor's first conviction and first time in custody. Mr O'Connor has significant support from members of the Irish community in Sydney and the members of his large and close family. It is improbable that he will offend again. Indeed, the evidence adduced points to rehabilitation with Mr O'Connor having both the intelligence and the desire to rehabilitate himself. The judge thought that it was understandable how a relatively young single man in a new country could get caught up in the offending scheme, especially as it appeared to him to be accepted in our society in the boom conditions which prevailed. 94 The judge said: "I propose to reflect the deterrence in the sentence, and both counsel put to me, as it was white collar crime and fraud on the government, which was rife in the industry, I should and I propose to increase substantially the gap between the head sentence and the non parole period, R v Bracken (an unreported decision of the Court of Criminal Appeal of New South Wales of 4 November 1994)." 95 This passage suggests that the judge had increased the head sentence to adequately reflect the element of deterrence and that a longer non-parole period was not required to reflect deterrence. It was sufficient if this was reflected in the head sentence. The passage is unhappily expressed. There are cases where the element of deterrence is primarily reflected in the head sentence. However, it should also be reflected, at least to some extent, in the non-parole period. 96 If a non-parole in the range of 60 per cent to 66? per cent had been selected it would have ranged from 21½ months to 2 years instead of 18 months. That is too small a difference to warrant intervention especially as there were materials which would warrant a non-parole period of less than 60 per cent. 97 The critical mistake made in the sentences was making them concurrent. However, that was the course which the Crown, in effect, submitted to the judge should be taken, when its counsel stated "the Crown will not be submitting there should be any consecutive component." It would be incorrect now to depart from the basis on which the judge was invited by the Crown to sentence. 98 The two major frauds, that is, that perpetrated via International and that perpetrated via Proline, warrant in total a sentence of imprisonment considerably more than 3 years with a non-parole period of 18 months. While I regard the individual sentences as being at the bottom of the permissible range I see no justification for making the sentences wholly concurrent. One of the factors to be taken into account when considering questions of concurrency is whether the resulting sentences adequately give effect to the total criminality revealed. Indeed, if the sentences had been made partially concurrent and partially cumulative so that the effective period of imprisonment was 5 years and the effective non-parole period was 3 years this would have been correct, 99 This Court views frauds on the revenue as very serious and meriting stern and substantial prison sentences. They involve significant elements of dishonesty and they affect the common good adversely. Such frauds impose greater burdens on others and penalise those who act honestly. This is of particular importance in areas where there is a high degree of competition. The system of individual responsibility and honesty is designed to keep the costs of administering the revenue laws within tolerable limits. It is to the disadvantage of the community as a whole if compliance costs are high and revenue has to be diverted to these from projects which benefit the community as a whole and from the needy. Those participating in or perpetrating revenue frauds should not expect lenient treatment. 100 With reluctance, but for the reasons earlier given, the Crown appeals against sentence must be dismissed. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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