Supreme Court New South Wales Medium Neutral Citation: R v Agius; R v Zerafa [2012] NSWSC 978 Hearing dates: 5-9, 12, 14, 15, 19-23, 26-29 March 2012; 2-5, 10-13, 16-20, 23-24, 26-27 April 2012; 1-4, 7-11, 14-18, 21-24, 28-31 May 2012; 4-7, 12, 18-22, 25-29 June 2012; 2-6, 9-12, 16, 18-20, 23-27, 30-31 July 2012; 14, 17 August 2012 Decision date: 23 August 2012 Before: Simpson J Decision: Robert Francis Agius (1) In respect of the first count on the indictment: Mr Agius convicted. Mr Agius sentenced to imprisonment for 4 years and 5 months, commencing on 31 July 2012 and expiring on 30 December 2016. (2) In respect of the second count on the indictment: Mr Agius convicted. Mr Agius sentenced to imprisonment for 4 years and 6 months, commencing on 31 December 2016 and expiring on 30 June 2021. Fix a single non-parole period of 6 years and 8 months, expiring on 30 March 2019. Kevin Zerafa (1)In respect of the first count on the indictment: Mr Zerafa convicted. Mr Zerafa ordered to perform community service work for 500 hours. Mr Zerafa to report to the Burwood District Office of the NSW Probation and Parole Service at 3.45pm on Tuesday, 28 August 2012. (2)In respect of the second count on the indictment: Mr Zerafa convicted. Mr Zerafa sentenced to imprisonment for 3 years, commencing on 23 August 2012 and expiring on 22 August 2015. Order that Mr Zerafa be released forthwith, on entering into a recognisance to be of good behaviour for 3 years. Catchwords: CRIMINAL LAW - sentencing after trial - conspiracy to defraud the Commonwealth - Crimes Act 1914, s 29D, s 68(1) - conspiracy to cause loss to the Commonwealth - Criminal Code (Cth) - Crimes Act 1914, Pt 1B - relevant sentencing considerations - nature and circumstances of offences - contrition - cooperation with law enforcement authorities - general deterrence - scheme involving fraudulent claims for deductible business expenses - false invoices - false document trail - period of offending - financial benefit - involvement and participation of offenders - attempts at concealment of offences - course of criminal conduct - necessity for adequate punishment - personal circumstances of offenders - evidence of good character - absence of mitigation - worst category case - effect of reduction in maximum penalty - totality - mitigating circumstances - influence of older and more powerful employer - attempt to halt participation - delay in proceedings - probable effect of sentence on family and dependants - must be exceptional - availability of intensive correction order - not appropriate - cooperation with prosecution in adducing evidence Legislation Cited: Crimes (Administration of Sentences) Act 1999 Crimes (Administration of Sentences) Regulation 2008 Crimes (Sentencing Procedure) Act 1999 Crimes (Sentencing Procedure) Regulation 2010 Crimes Act 1914 (Cth) Criminal Code (Cth) Criminal Code Amendment (Theft, Fraud, Bribery and Related Offences) Act 2000 Interpretation Act 1987 Cases Cited: Agius v R [2011] NSWCCA 119 Bui v Director of Public Prosecutions (Cth) [2012] HCA 1 Cameron v The Queen [2002] HCA 6; 209 CLR 339 DPP v Karazisis [2010] VSCA 350 DPP v Nikolic [2008] VSCA 226 Pearce v The Queen [1998] HCA 57; 194 CLR 610 R v Bateson [2011] NSWSC 643 R v Boughen; R v Cameron [2012] NSWCCA 17 R v Hinton [2002] NSWCCA 405; 143 A Crim R 286 R v Ida Ronen [2006] NSWCCA 123 R v Lanteri [2006] VSC 225 R v Scott [1975] AC 819 R v Togias [2001] NSWCCA 522 Category: Sentence Parties: 2008/45500; 2008/245425 Regina (Crown) Robert Francis Agius (Defendant) 2008/125795 & 2009/236626 Regina (Crown) Kevin Zerafa (Defendant) Representation: Counsel: P Neil SC/S McNaughton (Crown) I Barker QC/P Coady (Agius) P Hastings QC (Zerafa) Solicitors: Commonwealth Director of Public Prosecutions (Crown) Eddy Neumann (Agius) Brown Wright Stein (Zerafa) File Number(s): 2008/45500; 2008/245425; 2008/125795; 2009/236626 SENTENCE 1On 31 July 2012, following a five month jury trial, Robert Francis Agius and Kevin Zerafa were convicted on each of two counts on an indictment presented on behalf of the Director of Public Prosecutions (Cth) ("the DPP"). Each now stands for sentence in respect of the convictions. 2In respect of two other accused, who each stood trial with the two offenders, the jury was unable to reach unanimous verdicts. 3Each count on the indictment was, essentially, of conspiracy to defraud the Commonwealth. The first count alleged conspiracy between about 1 January 1997 and 23 May 2001, the second alleged conspiracy between 24 May 2001 and 23 October 2006. The wording of the two counts is different, in order to reflect two different statutory regimes under which the charges were brought. That came about by reason of a radical restructuring in 2001 of Commonwealth criminal legislation, resulting in the commencement, on 24 May 2001, of the Criminal Code (Cth) ("the Code"). The Code replaced, in relevant respects, the Crimes Act 1914 (Cth). In reality, what was alleged against each offender by the DPP was a single continuous conspiracy that spanned the period from 1 January 1997 to 23 October 2006. For a more detailed explanation, see Agius v R [2011] NSWCCA 119. 4The first count on the indictment was brought under s 86(1) and s 29D of the Crimes Act 1914. It alleged that, between about 1 January 1997 and 23 May 2001, each offender conspired with the other, with Owen Trevor Daniel, and with two others (the two co-accused who stood trial jointly with the two present offenders) to defraud the Commonwealth. The second count was brought under s 135.4(5) of the Code. It alleged that, between 24 May 2001 and 23 October 2006, each offender conspired with the other and with the same named individuals dishonestly to cause a loss, or dishonestly to cause a risk of loss, to the Commonwealth, knowing or believing that the loss would occur or that there was a substantial risk that the loss would occur. In my opinion, there is no difference of substance between the two charges. Section 135.4(5) of the Code is a statutory formulation of the manner in which the common law had interpreted s 86(2): R v Scott [1975] AC 819. 5Pursuant to s 86(2) of the Crimes Act, the first count carried a maximum penalty of imprisonment for 20 years. Section 86(2) was repealed on the commencement of the Code (Criminal Code Amendment (Theft, Fraud, Bribery and Related Offences) Act 2000). By s 418 of that Act, s 86(2) continued to apply in respect of offences committed before the repeal of the sub-section. It will be necessary shortly to consider the proper approach to the maximum sentence to which the offenders are exposed in respect of this offence. 6Pursuant to s 135.4(5) of the Code, the second offence carries a maximum penalty of imprisonment for 10 years. 7Sentencing in respect of Commonwealth offences is governed by Pt 1B of the Crimes Act. Perhaps somewhat superfluously, s 16A(1) directs me to impose a sentence that is of a severity appropriate in all the circumstances of the offence. 8More usefully, s 17A directs me not to pass a sentence of imprisonment on an offender convicted of a Commonwealth offence unless, having considered all other available sentences, I am satisfied that no other sentence is appropriate in all the circumstances of the case. 9Section 16A(2) contains a catalogue of matters that, where they are known and relevant, I am obliged to take into account. Those which, it seems to me, are relevant are the following: s 16A(2) (a) the nature and circumstances of the offences; (c) any course of criminal conduct of which the offences are part; (e) any injury, loss or damage resulting from the offences; (f) the degree (if any) to which the offenders have shown contrition for the offences; (j) the deterrent effect that any sentences I am considering may have on the offenders; (k) the need to ensure that the offenders are adequately punished for the offences; (m) the character, antecedents, age, means and physical or mental condition of the offenders; (n) the offenders' prospects of rehabilitation; (p) the probable effect that any sentence under consideration would have on the offenders' families or dependants. 10Section 16A(2)(h) requires consideration of "the degree to which the [offenders have] co-operated with law enforcement agencies in the investigation of the ... offences" (italics added). There was no cooperation by either offender in the investigation of the offences; however, there was a degree of co-operation in the manner in which the Crown was permitted to adduce the evidence in the trial, and this had a very considerable effect on the length of the trial and the burden on the jury, and on the court. It is appropriate to take this into account as a preparedness to facilitate the course of justice: see Cameron v The Queen [2002] HCA 6; 209 CLR 339. 11Neither offender has shown any contrition for his offences. Section 16A(2)(f) calls for no further consideration. 12It is to be noted that the s 16A(2) catalogue makes no reference to general deterrence. It is, however, well established that that is a relevant consideration, and is, in this case, of fundamental importance. 13The first task is to consider the nature and circumstances of the offences. The facts 14For sentencing purposes it is necessary to state the relevant facts. It is my task to find the facts, not inconsistently with the jury verdicts. Where the facts are adverse to the offenders, I may not take them into account unless satisfied beyond reasonable doubt of their existence. The following are the facts I find proved, where necessary beyond reasonable doubt. Background 15The conspiracy the subject of each count originated in an accountancy firm in Vanuatu. Initially the firm went by the name Moore Stephens Vanuatu; at some point it became PKF Vanuatu. Both Moore Stephens and PKF Vanuatu were part of a very much larger international organisation under the same names. During the period of the conspiracy Mr Agius was the senior partner of the firm and resident in Vanuatu. The conspiracy centred around a series, or pattern, of arrangements that concerned the preparation and lodgement of income tax returns on behalf of Australian companies conducting businesses of various kinds. A large number of Australian companies were invited to, and did, participate. The directors of eight of those companies gave evidence in the trial. These companies became involved via their association, professionally (as clients), with a NSW firm of accountants practising under the name of Owen T Daniel and Company, of which the now deceased Mr Owen Trevor Daniel was the principal and in which Mr Zerafa was initially an employee, and, from 2000, a partner. I will say more of Mr Daniel and his firm in due course. 16Throughout the trial, the arrangements were referred to as a "scheme". The scheme was colourfully referred to by one company director participant as "the round the world trading scheme"; the aptness of that label will become apparent. It is convenient to continue to use the term "scheme". 17That the scheme was fraudulent cannot, having regard to the jury verdicts, now be questioned. In any event, I am independently amply satisfied that it was. In order to disclose the extent of the conspiracy, it is necessary to set out, in some detail, how the scheme was initially designed to operate, and how, in practice, it did operate. What actually happened varied markedly from company to company, and on occasions departed substantially from what can be discerned to have been the original conception. 18At the heart of the scheme were fraudulent claims by Australian companies for income tax deductions said to be for business expenses. As designed, the scheme involved provision to the Australian company participants of invoices for specified services - usually identified as "management and consultancy services". The wording on the invoices was selected, sometimes in conjunction with the company directors, to appear to be relevant to the nature of the business conducted by the relevant company. For example, in respect of one company (Tara Pty Ltd) the business of which was information technology, the invoices provided (sometimes long after the claims for deductions had been made) identified investigation and report of network management requirements, preliminary investigation of Y2K liabilities, and review and analysis of a proposed "IP addressing scheme" as the services provided. These services never were provided by the invoicing companies. It was never intended that such services be provided. The invoices were prepared on the letterheads of UK registered companies. One invoicing company that featured prominently in the evidence in the trial was Billbury Ltd, but there were a number of others. 19Notwithstanding that no such services were provided, the Australian companies made payments of the amounts on the invoices. Payments were made to New Zealand bank accounts in the names of the UK invoicing companies. The Australian companies entered the payments into their profit and loss (income and expenditure) statements. The total of the expenses for the year, including the false entries, were then translated into the business expenses in the companies' income tax returns, and (in accordance with the self assessment system operated by the Australian Taxation Office ("the ATO")) resulted in reduction in the taxation for which the companies were assessed to be liable. The false claims for business expense deductions constituted the fraud the subject of the conspiracy in the first count, and the loss to the Commonwealth the subject of the conspiracy in the second count. 20The money paid to the New Zealand accounts was, within a short period, transferred to other accounts, also held in New Zealand banks, in the names of finance companies based in Ireland. One such company was Edgecumbe Ltd. The money was then, again within a short time, returned to Australia, usually to the personal accounts of the directors of the Australian companies. It was returned under the guise of loans, in circumstances to which I will come. The purpose of returning the money in this way was to avoid it appearing in the records of the directors as income, with potential income tax liability. The payment of money which was, in reality, the money of the companies, to the companies' directors, without its being declared for income tax purposes, was a secondary fraud, or loss to the Commonwealth. In some cases, the company directors transferred the money back to the company's accounts, recording the transfers as directors' loans. In respect of one company (Australian Safety Specialists Pty Ltd ("ASS")) there were at least two occasions on which the returned money was paid into the company account. This appears to have been a clerical or other error and was readily rectified. In respect of another participating company (Gladesville Bridge Marina ("GBM")) the loan documentation was made out in the name of the company, and the returned money was paid into the company account. This ultimately created very severe difficulties with the company accounts recording a ballooning loan. 21The scheme was, therefore, relatively simple; it could even be called crude. It involved the payment of money by Australian companies in response to false invoices for services not received by the Australian companies, and fraudulent claims of those amounts as deductible business expenses, and the return to the directors personally of the money, masquerading as loans in order to avoid personal income tax. 22Integral to the scheme was the maintenance of company accounting records that included the false transactions, and the preparation of income tax returns based on those false accounts. This was done by the company directors, with the assistance of Owen T Daniel and Company accountants. 23A notable feature of the scheme, as it was conceived, was an elaborate trail of documentation. In theory, that trail began with the invoices for services. It also included letters from the Irish finance companies purportedly responding positively to requests (which had never been made) for loan finance in specified sums, purported loan documents ("AUD dollar facility" - sic) and further invoices, this time from the finance companies, purportedly representing interest charges on the draw down of the loans. 24This documentation was clearly designed to give an appearance of authenticity to the transactions in case of inquiry or investigation by the ATO. Indeed, there was evidence, which I accept, from one company director (Mr Philip Waller of ASS), that Mr Agius, in explaining the scheme, said, in response to a query, that there would be ample documentation to satisfy any such inquiries. 25A variation of the scheme emerged in 2003. This involved the provision, to Australian companies, of documents entitled "certificate of insurance". These were alternatives to the invoices for management and consultancy services. In other respects, this variation followed a similar pattern to that I have already described. The certificates of insurance, which were, of course, false, purported to specify the nature of the insurance, the amount of cover, and the period of cover, together with the premium. The Australian companies paid the amounts specified as the premiums in the certificates to New Zealand accounts, most of the money was transferred to other New Zealand accounts, from which it was returned, again masquerading as loans, to the Australian company directors. The certificates of insurance were created to provide apparent authentication of the insurance payments in the event of inquiry by the ATO. 26Implementation of the scheme was, in fact, haphazard and inept. In many cases, invoices for services were not provided to the Australian companies. In others, they were not provided until after the Australian company directors had pressed for their provision, for the purpose of completing the company accounting records. Frequently, the amounts on the invoices did not correspond with the payments that were made. In some cases, the Australian companies made entries (false) in their accounts, purportedly representing payments to the UK companies for relevant services, but did not, in fact, send money to New Zealand. These were simply false claims for deductible expenses: they were not claims made in accordance with the design of the scheme, but they were a consequence of it and flowed directly from participation by those company directors. 27The evidence also shows that the scheme involved the incorporation, in Vanuatu, of a company associated with each participating Australian company. The purpose of these Vanuatu companies did not emerge from the evidence, and remains a mystery. Certainly, no money under the scheme was paid to the Vanuatu companies. 28In each case, the Australian company directors were told that participation in the scheme required payment of a fee as "start-up costs". This varied from $8000 to $12,000 over the period of the conspiracy and was deducted from the first payment. 29Perhaps the most elaborate part of the scheme was the documentation designed to provide evidence that the money returned to the company directors constituted loans. Commonly, if not invariably, an Australian company director received, unsolicited, a letter from a finance company in Ireland, stating that a request made by the director[s] for loan finance had been approved. (No such request had, in fact, been made.) With this letter was a document entitled "AUD dollar facility". These documents, on superficial assessment, had the appearance of genuine commercial transactions. They stated that finance was sought and offered "for the purpose of debt restructuring". Usually, the stated amount of the loan was $1 million. These documents, also, were created for the purpose of satisfying any ATO inquiry. That the purported loans were shams was evident, on closer examination, by two circumstances. First, notwithstanding the quantum of the loans, no security was sought. Second, the loan offers were accompanied by undated letters containing two palpably false statements - that the loans had been (fully) drawn down, and that the loans had been fully repaid. (These letters came to be known (inappropriately) as "letters of forgiveness" or "letters of comfort".) 30Money was sent from the finance companies to the Australian company directors. The amounts sent corresponded with the amounts purportedly paid in respect of the false "management and consultancy" fees claimed in the invoices, subject to deductions for administration expenses, and a single deduction, from the first payment, for "start-up costs". This was the last step in the "round the world trading scheme". 31Each of the statements in the "letters of comfort" was, as I have said, palpably false. There had been no draw down. The money that had, purportedly under the loans, been paid to the Australian company directors, was in fact money the property of the Australian companies, and was not loan finance; and the company directors had not repaid any loan to the finance company. 32Notwithstanding the statements that the loans had been repaid, the Irish finance companies continued to send invoices, purportedly for interest on the sums said to have been drawn down. The evidence is unclear about the ultimate disposition of money paid by the Australian companies (or their directors) in response to these invoices. One director (of ASS) said that they represented "a second bite of the cherry", and that that money, too, was returned under the guise of loans. The same director, however, also said that he was advised (by one of the co-accused who was not convicted) simply to pay the amount on the invoices, since the advantage the company was receiving was so substantial. 33In these cases, the communications were substantially with Moore Stephens or PKF, either through Mr Daniel, Mr Zerafa, or through other employees of Owen T Daniel and Company, or directly by the company directors. Communications were sometimes directly with Mr Agius, sometimes with employees of Moore Stephens/PKF. The insurance certificates 34Three of the companies the subject of evidence in the trial participated in the insurance arm of the scheme. In one case (ASS) this was said to be because the amounts of money it had put through the scheme had exceeded $3 million, and the view appears to have been taken that this exhausted the capacity of the loan facility. (That is a little difficult to understand, but that is what the evidence was.) The directors of ASS were therefore advised (by Mr Agius) to continue to participate by making payments to an insurance company, purportedly for "Key Man Insurance". In 2003 ASS paid $94,000 to this insurance company. The following year it paid $452,000. In each case, the bulk of the money was returned, again under the guise of a loan. 35Another company, Bemawell Pty Ltd, joined the scheme in 2003. Its payments, other than interest, were all made to the insurance company. Of five certificates of insurance that found their way into evidence, two purported to cover a single 12 month period. In the first, the amount of cover was said to be $500,000, the premium $50,000. The certificate was sent by covering letter dated just one month before the expiration of the 12 month period. In the second, the amount of cover was said to be $1 million, the premium $100,000. The certificate itself was dated just 28 days before the expiration of the stated period of cover. It was sent together with a letter from Mr Agius advising the director that funds should be in his account by close of business - ie that the premium would be returned to him. 36The remaining three certificates were for consecutive six month periods. In each case, the amount of cover offered was $500,000, the premium $75,000. One certificate was sent three weeks before the expiration of the period of cover, one mid way through that period, and one a month after the expiration of the period of cover. 37That the insurance variant was fraudulent was evident from the size of the premiums, the timing of the covering letters, the dates on the certificates, and the return of the bulk of the amounts paid as "premiums". 38At least two things seem to differentiate the "insurance variation" from the "management and consultancy" scheme. The first is that the communications were directly with Mr Agius. Neither Moore Stephens nor PKF appears to have had any, or any substantial, involvement. The other is that the scheme envisaged that, of the money sent to New Zealand, 10 percent would be retained in a "retention fund". This may have been merely for the purpose of securing a fund from which to pay any insurance claim that was made. At least two witnesses said that they understood that any claim would be limited to the amount held in the retention fund. That was 10 percent of the amount specified on the certificate as the premium. It is also a reasonable inference that the retention fund was intended to provide an appearance of authenticity. A further inference is that the retention money was held in some form of account that accumulated interest, payable to the insurance company or, eventually, its shareholder(s). (Evidence adduced on behalf of Mr Agius established that he had, in fact, purchased two Vanuatu registered and licensed insurance companies, Lime Street Insurance Ltd, and Security Life Nominees Ltd.) 39In respect of most participating companies, the amounts of money sent to New Zealand and claimed as deductible expenses were very significant, resulting in substantial revenue loss. For example, over a 6 year period, from 1999 to 2005, ASS sent almost $4 million to New Zealand; the total tax evaded was $1.27 million. In respect of other companies, the tax evaded ranged from just under $100,000 (over 4 years) (Anscott Pty Ltd) to $645,000 (over a 4 year period) (Hunter Civil and Hire Pty Ltd and associated companies). 40The nature and circumstances of the offending include the period over which it was perpetrated. That was, in the case of Mr Agius, a period of almost 10 years; in the case of Mr Zerafa, a period of more than 7 years, from the middle of 1999. It came to an end only on the execution of search warrants by officers of the Australian Federal Police ("AFP") in October 2006. However, the moral culpability of these two offenders could hardly have been more divergent. 41There is uncontroverted evidence that Mr Agius actively presented and promoted the scheme to clients of Owen T Daniel and Company. He did this through his association with Mr Daniel. He was in the practice of making regular visits to Australia, and of making contact with Mr Daniel, who identified and selected clients he considered suitable for participation; and he arranged for some of those clients to meet Mr Agius. On a number of occasions, at these meetings, Mr Agius outlined the processes involved in the scheme to them. It was his practice on these occasions to draw a diagram illustrating the path the money would take. A number of those diagrams, and some reproductions drawn from memory, were in evidence in the trial. 42Although it was common for Mr Daniel to tell potential recruits to the scheme that the arrangements were legal and above board and had been scrutinised by the ATO auditors and had survived that scrutiny, there was no evidence that Mr Agius himself gave that advice. Notwithstanding the assurances given by Mr Daniel, in general the participants were in no doubt that the arrangements they were embarking upon were fraudulent in that they centred upon false claims for deductible expenses. As a consequence, the directors of all but one of the eight companies identified in the trial entered pleas of guilty to various charges of dishonesty. No fewer than six of them have served terms of imprisonment. Others have suffered non-custodial penalties. The directors of GBM were granted immunity from prosecution. 43I am satisfied beyond reasonable doubt that the implementation of the arrangements was at all times under the direct control and supervision of Mr Agius. He did this with the administrative support of employees of Moore Stephens/PKF in Vanuatu, and also with the administrative support of employees of Owen T Daniel and Company, including Mr Zerafa, and other accountants and employees of the practice. At times, the Australian participants communicated directly with Mr Agius; at other times, they communicated through Owen T Daniel staff, or Moore Stephens/PKF staff. 44As I have mentioned, virtually all communications concerning the insurance certificates were with Mr Agius directly. He signed the certificates, and he signed the covering letters by which they were sent. 45He was a signatory on the bank accounts of all companies that had a role, from the organisational end, in receiving payments from the Australian companies and in transferring the funds from company to company, and in the return of money to the Australian directors. I accept, as was put on his behalf, that the evidence does not go so far as to establish to the requisite degree that he had control of those accounts. That is because, in respect of each account, at least two signatories were required. 46I am satisfied beyond reasonable doubt that Mr Agius received financial benefit from his involvement. The evidence in this respect is limited. Mr Agius was a director of International Finance Trust Company ("IFT Co"), which rendered annual accounts to participating companies, for administration. In each case, on the initial payment, a deduction was made for "set up costs". I accept that some portion of this amount was probably expended on the incorporation of the Vanuatu company. It was never contended on behalf of Mr Agius that he did not receive at least some of this amount. It is true that, so far as the evidence goes, the returns to Mr Agius were relatively modest, particularly in view of the very substantial amounts of tax evaded by the participating companies, and the high level of risk involved (which is, perhaps, more apparent to him now than it was). 47Mr Zerafa's involvement began at an early stage. The evidence shows that he frequently communicated with client participants, and with Moore Stephens/PKF, in the administration of scheme transactions. In the case of Tara, he was instrumental in making the initial arrangements to set up the structures. The facsimile by which he did this establishes beyond reasonable doubt that he had, by then, a working knowledge of the arrangements. That facsimile was dated 9 July 1999. 48I am satisfied beyond reasonable doubt that Mr Zerafa was also very involved, with a number of the companies, in the maintenance of the companies' accounts, and the preparation of the fraudulent income tax returns, and that he was well aware of the false records in the accounts, and the fraudulent claims in the income tax returns. 49On occasions, Mr Zerafa determined, or advised, the amount of money that should be sent overseas. On at least two occasions, he personally forwarded the "letters of comfort" to the directors, with the advice that they keep the letters in safe places. 50I am, however, satisfied in Mr Zerafa's favour that, initially, he acted solely on the instructions of Mr Daniel. I am satisfied (as is inherent in the jury verdicts) that he was, during the period 1997 to 2001 (count 1) aware of the fraudulent nature of the arrangements. I accept that it is possible, even likely, that his full appreciation of that fraudulent nature grew upon him gradually. I am quite satisfied that, by 2001, he had a fair working understanding of the nature of the arrangements, such that he could, and did, advise clients independently, without recourse to Mr Daniel. 51By 2001, Mr Zerafa had become a partner in the firm. He was trusted by Mr Daniel, who presented him to clients as "my right hand man". 52That Mr Zerafa did become aware of the fraudulent nature of the arrangements by 2004 is beyond doubt. He himself gave evidence that, on reading material disseminated by the ATO concerning overseas tax minimisation schemes, he approached Mr Daniel to express his concerns and urged that no new clients be initiated into the scheme. He was abruptly and discourteously rebuffed. However, it does seem that from that date no further clients joined the scheme. 53There is another aspect of the roles played by the two offenders in the conspiracy. In about 2003, the ATO began making inquiries into overseas transactions. In the cases of ASS and Tara, these inquiries resulted in audits of their taxation affairs. I am satisfied beyond reasonable doubt that Mr Zerafa took an active role in organising fabricated responses to the audit of Tara. In the case of that company (the information technology company to which I referred earlier) two meetings took place with officers of the ATO. Immediately before the first, Mr Daniel offered Tara's director, Ms Collette McKenna, a false story she could tell the ATO officers concerning her entry into the arrangements. I am satisfied that Mr Zerafa had no part in this fabrication, but I am also satisfied that he was aware of it. He attended the meeting, aware that Ms McKenna had been advised by Mr Daniel to give untruthful replies to questions asked of her. After that meeting, I am satisfied beyond reasonable doubt, Mr Zerafa requested Ms McKenna to compile a document that had the appearance of a consultancy report emanating from the invoicing company, and that corresponded with what appeared in the invoices - in other words, Mr Zerafa asked her to create false material in the hope that it would satisfy, and for the purpose of satisfying, the inquiries of the ATO that the invoices were genuinely for "consultancy" services provided. Since Mr Zerafa denied having made this request to Ms McKenna, there is no evidentiary basis on which to make any findings concerning any role that Mr Daniel may have had in this. I am unable to say whether Mr Zerafa did this on his own initiative, or at the instigation of Mr Daniel. Either is possible. I accept as a reasonable possibility that the original suggestion may well have come from Mr Daniel. I am satisfied beyond reasonable doubt also that when Ms McKenna produced this document, Mr Zerafa created, or was involved in the creation of, a cover sheet to provide added apparent authenticity. I am satisfied also that he arranged for invoices to be created, although I am not satisfied that he himself created the invoices. I am satisfied beyond reasonable doubt also, that Mr Zerafa provided Ms McKenna with three documents purporting to be "Consulting Agreements" with Billbury, that were also designed to mislead the ATO auditors. I accept the possibility that Mr Daniel provided these to Mr Zerafa. 54In relation to ASS, I am satisfied that Mr Zerafa participated in a "role playing" exercise on the evening before a scheduled meeting with ATO officers in April 2004, at which a false story was concocted to explain the invoices relevant to that company. 55Similarly false answers were provided by Mr Zerafa for the directors of Kylood Pty Ltd and Jiess Pty Ltd (Messrs Hili and Jones) when the ATO signalled its intention of making inquiries, and required answers to pertinent written questions. 56In his favour, I am satisfied that, certainly in the early stages, all of his participation was undertaken at and under the direction of Mr Daniel and not on his own initiative. 57There is no evidence, and it is unlikely, that Mr Agius was more than peripherally involved in these activities about which I have just spoken. He was, nevertheless, involved to a very significant degree in seeking to perpetuate and protect the conspiracy after the ATO's interest became apparent. A number of companies or their directors received "notices of demand" from the Irish finance companies, threatening legal action if the "loans" were not repaid. I accept that Mr Agius told the directors of at least two companies that these could safely be ignored, as they were sent only to provide an appearance of authenticity. I am satisfied beyond reasonable doubt that he was instrumental in devising and preparing the notices. There was email correspondence with some directors (Mr Waller and Mr Hili) after the scheme began to be exposed, in which Mr Agius sought to distance himself from the arrangements. 58I am satisfied also that Mr Agius was significantly involved in returning funds to the directors of GBM. The need for this arose because, for some reason, the loan documentation in respect of that company named the company as the borrower, rather than the directors. This resulted in entries in the company's books that showed a very large loan, which, it was believed, could not be eliminated other than by repayment. Accordingly, the directors of that company caused GBM to make a payment of almost $1 million to New Zealand. This rectified the problem in the company books, but created a new problem in having the money returned. Mr Agius engaged in a number of clandestine ways of returning this money. On one occasion, he made a personal cheque of more than $70,000 in favour of a sister of Mrs Eva Southcombe, one of the directors of GBM. On another, he entered into a spurious arrangement pursuant to which Mrs Southcombe and her husband purchased an expensive motor cruiser, for which he paid half, under the pretence of taking a half share. He and the Southcombes entered into email correspondence designed to give a false appearance of the joint purchase of the boat. 59Finally, on a number of occasions, he participated in returning to the Southcombes very large sums of money in cash and on other occasions arranged for a friend of his to do likewise. 60The above abbreviated account makes it very clear that Mr Agius in particular was heavily involved in both promoting and implementing the scheme arrangements and in attempting to conceal the true nature of the arrangements after the ATO began its inquiries. On his behalf it was submitted that I ought not to find that he was a "promoter". The principal argument put in support of this argument was that it was, in fact, Mr Daniel who was the promoter of the scheme. While I accept that Mr Daniel did actively promote the scheme, that does not exclude another from acting in a similar role. I am satisfied beyond reasonable doubt that an accurate description of Mr Agius' role is that of "promoter". I am, as I have mentioned, also satisfied that he undertook an active role in the day to day implementation of the scheme. Some weight was, on Mr Agius' behalf, attributed to the fact, which is not disputed, that Mr Agius played no part in the preparation of any of the income tax returns. I accept that to be a fact, but its relevance is non-existent. What Mr Agius did was to propose the fraudulent conduct to a number of company directors and provide them with the means of committing the frauds, safe (as they were led to believe) in the knowledge that the documentation would deflect any inquiry by the ATO. 61While, as I have mentioned, I am satisfied that Mr Zerafa also was actively involved, and became more so as time went on, and that he was well aware that he was involved in a fraudulent activity, I am also satisfied that he was led into this by an unscrupulous, immoral and overpowering employer, Mr Daniel. I will say more in due course about Mr Zerafa's personal circumstances. 62For the purposes of s 16A(2)(c), what I have said above is sufficient to show that both offenders engaged in a course of criminal conduct that constituted the offences. Company participants in the scheme filed false income tax returns year after year with the connivance of both offenders. This went on repeatedly over an almost 10 year period, in the case of Mr Agius, a 7 year period in the case of Mr Zerafa. 63It is hardly necessary to say that offences such as these call for sentences containing a strong element of general deterrence. The need for individual deterrence (s 16A(2)(j)) of the offenders is less obvious. I believe that it is unlikely that Mr Zerafa will require any further reminder of the need to avoid using his profession for fraudulent purposes. Indeed, on his behalf it was put that it is likely that he will lose his professional status as an accountant, and will not have the opportunity to use his profession for that purpose. I am less satisfied, in respect of Mr Agius, that the enormity of his criminality has been brought home to him; however, having regard to his age, his criminality, and the consequent need for a significant punitive element in the sentences, and what I would expect would be his capacity to practise accountancy in the future, he may well have little further opportunity for engaging in this kind of criminal conduct. What I have said really deals with the considerations raised by s 16A(2)(n). For the purposes of s 16A(2)(e), the immediate injury suffered by the Commonwealth was a very considerable loss of revenue. In respect of the eight companies of which evidence was given, the financial loss was said to be in excess of $5 million. But there is also an intangible loss. The Australian taxation system, based as it is on self-assessment, depends for its integrity upon the honesty of citizens. Of course, there will always be those who choose to cheat. They are cheating their fellow citizens, casting a greater burden on each of them. Further, when it is known that the system can be, and is, cheated, the very structures of society are damaged. The self-assessment system depends not only on the honesty of taxpayers, but on the confidence of taxpayers that others will make their proper contributions, or that, if they do not, they will be adequately punished. 64In my opinion, the two most important sentencing considerations, having regard to the role played by each offender, and the nature and circumstances of the offending, are general deterrence and the need to impose adequate punishment. The personal circumstances of the offenders 65I turn now to the considerations raised by s 16A(2)(m) - character, antecedents, age, means and physical or mental condition. Mr Agius 66Mr Agius was born in November 1949. He is now approaching 63 years of age. He was arrested in Perth on 28 April 2008. Although he was granted bail on 6 May, he was not released until 28 May. Until 1 July 2008 his bail conditions required that he report to police twice daily; thereafter he has reported on a twice weekly basis. He has, of course, been required to surrender his passport and he has not been permitted to leave New South Wales other than to travel to the Australian Capital Territory, and then with permission. He has remained in custody since the jury verdicts on 31 July 2012. 67On his behalf it was argued that the sentences ought to be mitigated by reason of the "onerous" conditions of bail. I do not accept that the conditions were such as to warrant any such mitigation. 68Evidence of Mr Agius' good character (other than his participation in these offences) was called in the trial, from his former wife, and from Mr Kalpokur Kalsakoa, a former minister in the Vanuatu government. 69For the purpose of the sentencing proceedings, a written statement from Mr Kalsakoa, together with 11 additional testimonials, was tendered. Another testimonial was forwarded directly to my chambers, by a person who identified herself as a relative of Mr Agius. (I arranged for copies of that document to be circulated to Mr Agius' solicitors, and to the Crown.) This morning I received a further letter from Vanuatu, which I have circulated to the parties. 70Also in evidence on Mr Agius' behalf was a report of a consultant psychiatrist, Dr Sharon Reutens. 71The character evidence in the trial, and the testimonials, are clear evidence that there is another side to Mr Agius. He has contributed generously to Vanuatu society, especially to the indigenous community. He is highly regarded as a man of integrity. Sadly enough, his conviction of these offences demonstrates all too clearly that that perception of him is simply false. While giving generously, particularly of his time, energy and skill to Vanuatu, he was instrumental in the systematic fraud of the entire Australian society. I find the character evidence of little weight in the sentencing decision. Given what is now known of his conduct, it would be anomalous to treat him as a person of good character. 72Dr Reutens had available to her a number of letters written by medical practitioners in other specialities. Neither these letters, nor any reports of those practitioners, was in evidence. 73Mr Agius is reported to have suffered a stroke in February 2009 - almost a year after his arrest. He appears now to suffer minimal after effects of the stroke, but is said to suffer anxiety about the possibility of a recurrence resulting from stress. 74He is also reported to suffer from severe sleep apnoea, for which use of a medical device was recommended. Dr Reutens reported that that device had not been made available to him in the short time that he was in custody following the jury verdict and before her meeting with him. He is reported to have possible degenerative changes in the right knee, and iron deficiency anaemia. On his incarceration, Corrective Services medical records showed that his blood pressure was elevated. 75Dr Reutens reported that Mr Agius found prison conditions difficult to adjust to, and stressful. He claimed to have suffered an incident of intimidation during the time he was in custody in 2008, and, for a time, was in protective custody, but found the isolation intolerable, and returned to the general prison population. 76Dr Reutens did not report any psychiatric disorder. What she reported was what one would expect of a middle aged, middle class man experiencing imprisonment for what is, essentially, the first time, and facing the reality of an extended period of incarceration. 77I find that there is nothing in the circumstances concerning Mr Agius that mitigates the gravity of his offences. On behalf of the DPP, it was submitted that his case comes very close to a "worst case", calling for a penalty close to the maximum provided by law. I accept that submission. That brings me to a consideration of what the maximum penalty is. Taken at face value, the operational legislation provides, in respect of the first offence, for a maximum penalty of imprisonment for 20 years; in respect of the second offence, a maximum penalty of 10 years. 78In similar circumstances, in R v Ida Ronen [2006] NSWCCA 123, this Court upheld a finding by the sentencing judge that it was appropriate to take into account the significant diminution in the maximum available sentence as indicative of a change of attitude on the part of the legislature (at [73]). I do not propose to depart from that approach. 79I am required, by the doctrine stated by the High Court in Pearce v The Queen [1998] HCA 57; 194 CLR 610, to impose an appropriate sentence in respect of each offence, before considering questions such as accumulation or concurrence, and totality. In my opinion, the overriding question in the case of Mr Agius is the question of totality; whether he were to be sentenced individually for two offences, each committed over a confined period, the second wholly consecutive on the first, or for a single continuous conspiracy over the entire period, the result will be much the same. Mr Zerafa 80Mr Zerafa is in a very different position. He was born in October 1975. He is now almost 37 years of age. He is married with two young children (now eight and six years of age) and has no criminal convictions. In his case, although there was no evidence in the trial of positive good character (other than the absence of criminal convictions), that deficiency has been made good in the sentencing proceedings. I am satisfied that his good character is a matter appropriate to be taken into account. That is because of the matters I am about to recount. He took up employment in the office of Owen T Daniel and Company in 1997, when he was 21 or 22 years of age. He had previously had very little employment experience, and none in a professional office. 81Although he could not have known it at the time, the environment into which he was inducted was morally poisonous. His employer, Mr Daniel, was a very corrupt man. He was, however, also gregarious, charming and charismatic. He was generous to Mr Zerafa who was an impressionable and vulnerable young man. The tragedy for Mr Zerafa is that he has never been exposed to an ethical working environment. 82As I have earlier mentioned, I am satisfied that he did not engage himself in this conspiracy of his own initiative, but did so under the malign influence of Mr Daniel. I also take into account, to his credit, that he did make an attempt, in 2004, to persuade Mr Daniel to cease involvement, and that notwithstanding Mr Daniel's rebuff, that attempt had the effect of limiting, if not bringing to an end, the participation of clients of the firm in the scheme. He is entitled to credit for that stand. 83I am satisfied also that Mr Zerafa received no direct financial reward or benefit for his participation. 84Mr Zerafa gave evidence in the trial over many days, and I had the opportunity to observe him in some detail. I should say at the outset, that I am satisfied that, in significant ways, the evidence that he gave was knowingly untrue. However, I also had some opportunity to make an assessment of his personal characteristics. I formed the view that, while he is intelligent, he lacked the strength to resist the overpowering personality of Mr Daniel. This may be due to family circumstances of which I have little evidence. He did give evidence that, at a critical time, he was almost estranged from his father, and this had the effect of driving him further into the sphere of influence of Mr Daniel. 85On 23 October 2006 a search warrant was executed by the Australian Federal Police ("the AFP") at the offices of Owen T Daniel and Company. At or about the same time search warrants were executed at the house of Mr Zerafa, and other employees of Owen T Daniel and Company. Although this was certainly not the first that Mr Zerafa knew of the interest of the ATO in the overseas payments scheme, it may well have been the first indication that the AFP had taken an interest, and that criminal law enforcement authorities were involved, and were interested in the accountancy practice as distinct from its clientele. It was not until 18 months later that Mr Zerafa was charged, and 5½ years later that the trial commenced. 86In respect of Mr Zerafa also, there were in evidence a large number of testimonials to his good character, and some medical evidence. Both he and his wife have, in the six years since the execution of search warrants that signalled the commencement of these proceedings, suffered from depression and anxiety. Their family life has been severely affected. The younger child was a baby when the search warrants were executed. The older child was two years old. As a consequence, the children have never lived in a normal, stress-free family environment. One child has exhibited very worrying behavioural tendencies. I am satisfied that it is probable that a fulltime custodial sentence would produce significantly adverse, and, in all probability, irremediable, effects on Mr Zerafa's wife and his children. That, in turn, would make a period of incarceration more difficult for him. Of course, those who commit criminal offences must live with the consequences to themselves, and to those closest to them. 87Uninstructed by authority, I would have considered that s 16A(2)(p) of the Crimes Act both entitled and obliged me to take those family consequences into account. However, binding authority requires me to take a different approach. Those circumstances may not be given substantial weight in the sentencing determination unless they can be categorised as "exceptional": R v Togias [2001] NSWCCA 522 at [9]-[17]; R v Hinton [2002] NSWCCA 405; 143 A Crim R 286 at [31]. In Togias, Spigelman CJ seems to have taken the view that, although the words "exceptional circumstances" are not to be found in s 16A(2)(p), nevertheless they have so consistently and repeatedly been notionally engrafted into the legislation by a number of State appellate courts that the time has passed for any court other than the High Court to reverse the trend. In Bui v Director of Public Prosecutions (Cth) [2012] HCA 1, in a different context, the High Court rejected a construction that would have put an impermissible gloss on the text of s 16A (at [19]; see also [25]-[27]). Nevertheless, Togias and Hinton state the law that I must apply. Powerful as the evidence of the impact on Mr Zerafa's family and dependents is, the circumstances here fall short of exceptional. I cannot allow s 16A(2)(p) to guide the sentence to be imposed. 88Mr Zerafa gave evidence in the sentencing proceedings. Apart from evidence concerning his family circumstances, he also gave evidence that the professional bodies governing the accountancy profession have moved to strike his name from the relevant registers. It is likely that he will lose his profession, and his livelihood. That is a significant extra-curial punishment. It is appropriate to take that into account. Besides the professional disgrace, it will no doubt bring with it a very heavy financial cost. 89Assessment of Mr Zerafa's culpability is very difficult indeed. 90On behalf of the DPP, it was submitted that his offences are close to a worst case, calling for a very severe penalty. 91I accept that, objectively speaking, the offences are very serious, although I reject the contention that, in Mr Zerafa's case, they fall into the worst category, or even near it. I do accept that they involve a breach of the trust reposed in an accountant, both by the clients, by the community, and by the ATO. That breach of trust is, as I have indicated, somewhat ameliorated by the absence of any moral or ethical guidance on the part of Mr Daniel, who could have been expected, but entirely failed, to introduce Mr Zerafa to morally and ethically acceptable accounting practices. Mr Daniel used Mr Zerafa (and others in the practice) as instruments in a personal war he appeared to be conducting against the ATO. I do not accept that Mr Zerafa's participation approximates a worst case. That is particularly so, because of his youth and naivety, in relation to the period covered by the first offence. 92On behalf of Mr Zerafa, it was proposed that an appropriate disposition would be the imposition of an intensive correction order pursuant to s 7 of the Crimes (Sentencing Procedure) Act 1999 ("the Sentencing Procedure Act"). The submission was put somewhat tentatively, perhaps because of the view I expressed in R v Boughen; R v Cameron [2012] NSWCCA 17 at [108]-[112]. I adhere to the view I there expressed, which, put shortly, is that the option of an intensive correction order is designed specifically for cases in which rehabilitation is a principal objective. It is appropriate to explain in more detail the rationale for that view. 93Section 7 of the Sentencing Procedure Act provides: "7(1)A court that has sentenced an offender to imprisonment for not more than 2 years may make an intensive correction order directing that the sentence be served by way of intensive correction in the community." "Intensive correction order" is not defined other than as "an order referred to in section 7" (Sentencing Procedure Act, s 3). Nowhere is the purpose of an intensive correction order explicitly stated. 94A number of statutory provisions concerning the making and administration of intensive correction orders provide guidance as to what it was that the legislature intended. These include the Sentencing Procedure Act, the Crimes (Sentencing Procedure) Regulation 2010 ("the Sentencing Procedure Regulation"), the Crimes (Administration of Sentences) Act 1999 ("the Administration of Sentences Act"), the Crimes (Administration of Sentences) Regulation 2008 ("the Administration of Sentences Regulation"). 95By sub-s (3), s 7 is subject to the provisions of Pt 5 of the Sentencing Procedure Act. Section 67 states some pre-conditions which must be met before an intensive correction order may be made; s 69 permits a court to refer an offender for assessment as to his or her suitability for intensive correction in the community where the court is satisfied, having considered all the alternatives, that no sentence other than imprisonment is appropriate and that the sentence to be imposed is likely to be for a period of no more than 2 years. By s 70, where an offender is referred for assessment, the Commissioner of Corrective Services is required to investigate and report to the court on, inter alia, matters prescribed by the Regulations. 96Regulation 14 of the Sentencing Procedure Regulation specifies the matters to be taken into account and addressed in an assessment report. Those matters include any criminal record of the offender, and the likelihood of re-offending, any risks associated with managing the offender in the community, including taking into account his or her response to supervision on previous occasions, the circumstances of the offender's residence, employment, study or other activities, the involvement of persons with whom it is likely the offender would reside, any drug or alcohol dependency or substance abuse, physical or mental health conditions of the offender, and matters of like kind. By sub-reg (4) the report must also include an assessment of factors associated with the offending that would be able to be addressed by targeted intervention under an intensive correction order and the availability of resources to address those factors by such targeted intervention. 97By s 81 of the Administration of Sentences Act, a court may impose conditions upon an intensive correction order (sub-s (1)), and must impose certain mandatory conditions prescribed by the Administration of Sentences Regulation. Further, the court may, at the time of sentence, or thereafter, impose additional conditions (sub-s (3)), but these are limited to such conditions as are prescribed by the Regulations, and such other conditions as the court considers necessary or desirable for reducing the likelihood of the offender re-offending (sub-s (4)). Before imposing an additional condition of the latter type, a court must consider whether the condition will create a need for additional resources and must not impose the condition unless satisfied that such resources would be available (sub-s (7)). 98The Administration of Sentences Regulation envisages the assignment of an officer of Corrective Services NSW to administer the intensive correction order, and/or a compliance and monitoring officer (presumably also of that state instrumentality, or a related one) having functions associated with the administration of the intensive correction order as supervisor. 99The mandatory conditions are prescribed in reg 175, and include such conditions as residence at premises approved by the supervisor; a prohibition on the offender leaving or remaining out of NSW without the permission of the Commissioner (of Corrective Services), a requirement that the offender receive visits by a supervisor at the offender's home at any time for any purpose connected with the administration of the order; a requirement that the offender authorise medical practitioners, therapists or counsellors to provide to a supervisor information (that would otherwise be confidential) about the offender that is relevant to the administration of the order; a requirement that the offender submit to searches of places or things under his or her immediate control, as directed by a supervisor; a requirement that the offender submit to breath testing, urinalysis or other medically approved test procedures for detecting alcohol or drug use, as directed by a supervisor; a requirement that the offender submit to surveillance or monitoring as directed by a supervisor; a requirement that the offender comply with any direction given by a supervisor that requires the offender to remain at a specified place during specified hours or that otherwise restricts movement during specified hours; a requirement that the offender engage in activities to address the factors associated with his or her offending as directed by a supervisor from time to time; and a requirement that the offender comply with all reasonable directions of a supervisor. 100A further condition is that the offender undertake a minimum of 32 hours of community service work per month, as directed by a supervisor from time to time. 101The additional conditions that may be imposed are set out in reg 176. They include requirements that the offender accept any direction of a supervisor in relation to the maintenance of or obtaining of employment; a requirement that the offender authorise contact between any employer of the offender and a supervisor; a requirement that the offender comply with any direction of a supervisor as to the kinds of occupation or employment in which the offender may or may not engage; a requirement that the offender comply with any direction of a supervisor concerning association with specified persons or persons of a specified description; a prohibition on consumption of alcohol; a requirement that the offender comply with any direction of a supervisor concerning attendance at specified places or districts or places or districts of a specified kind. 102By reg 178 the Commissioner may require a case plan to be prepared in relation to any offender or class of offenders and may adopt any case plan so prepared. 103The entire tenor of these provisions, I am satisfied, demonstrates that the objective of intensive correction orders is the rehabilitation of offenders at risk of re-offending, and in need of close supervision and guidance. In Boughen and Cameron I extracted from the Second Reading speech made by the Attorney General in the Parliament of NSW when the legislation was introduced. I do not propose to repeat that material. It is available to be taken into account by s 34 of the Interpretation Act 1987 which permits use of such material in order to confirm that the meaning of a statutory provision is the ordinary meaning conveyed by its text, or in case of ambiguity or obscurity, or manifest absurdity or unreasonableness, to determine the meaning of the provision. In my opinion the speech of the Attorney General confirms that an intensive correction order is precisely what its name implies: an opportunity to be provided to an offender for rehabilitation. 104Administration of an intensive correction order will necessitate the provision of considerable public resources, the magnitude of which will be determined in individual cases by supervisors from time to time, having regard to the particular circumstances of the offenders. 105Supervisors are entrusted with very considerable powers and discretions. Administrative law principles require that those powers and discretions be exercised for the purposes for which they are conferred, and not for extraneous purposes (such as additional punishment of the offender). 106The powers and discretions conferred presuppose an identified need for close supervision of the offender. The only proper purpose for their exercise, in my opinion, is correction - correction from criminal engagement. 107In a case where the risk of re-offending is low or non-existent, there is little, if any, purpose to be served by most of the mandatory conditions. It is difficult to see what purpose could be served by random visits by the supervisor to the offender's home; by provision of information, otherwise confidential, from medical practitioners, therapists or counsellors; by searches of places or things under the immediate control of the offender; by drug and alcohol testing; by surveillance or monitoring, by restriction of movement; by requiring the offender to engage in activities to address factors associated with the offending; or, indeed, compliance with directions of a supervisor. 108The same applies to the additional conditions permitted by reg 176, which include supervision of an offender's employment, associations and movements. 109I appreciate that, in R v Bateson [2011] NSWSC 643, Buddin J referred to two decisions of the Victorian Court of Appeal (DPP v Nikolic [2008] VSCA 226 and DPP v Karazisis [2010] VSCA 350), and one of the Victorian Supreme Court (R v Lanteri [2006] VSC 225), in each of which it was held that an order under apparently corresponding Victorian legislation was "not a light sentence", and was properly to be seen as "a significantly punitive disposition". In Karazisis it was said that the conditions of any such order are extremely onerous. But that was in a case in which the evidence showed clearly that, while the offenders had good prospects of rehabilitation, they were likely to achieve that goal with the assistance of intensive supervision. 110 In Nikolic, it was said that an intensive correction order: "... is not a light sentence. It is intended to be, and ordinarily will be, burdensome and will substantially contribute to the punishment of an offender, including where condign punishment is warranted." 111Putting aside my puzzlement at the last clause - I am not aware of any offence in respect of which condign punishment is not warranted - I cannot accept that the NSW legislative intended that the incidents of an intensive correction order (ie the supervisory elements, as distinct from the sentence itself, which is one of imprisonment) were intended be burdensome, or to contribute to the punishment of an offender. 112The punishment is the sentence of imprisonment: that sentence is imposed judicially. The intensive correction order specifies the manner in which the sentence is to be served. That is also determined judicially. The incidents of the intensive correction order are determined by a supervisor. They are not determined judicially. They ought not be seen as contributing to the punishment. 113In none of the Victorian cases were the precise terms of the legislation spelled out. I am unable to accept that an intensive correction order under s 7 of the Sentencing Procedure Act is necessarily significantly punitive. I accept that, where an offender is in need of intensive supervision, by reason of a significant risk of re-offending, the incidents of an intensive correction order may be seen (and felt) as burdensome. That will arise as a result of the discretionary power of the supervisor to impose requirements as to residence, association, movement and surveillance or monitoring. 114But those requirements ought only be imposed for the proper purpose of ensuring that the offender does not re-offend. To impose those requirements merely for the purpose of punishment or to bring home to the offender consequences of involvement in criminal conduct (see Lanteri) would, in my opinion, involve the use of the powers for an improper purpose. Considerable power and discretion reside in the person appointed as supervisor. It is inherent in the legislation that those powers and discretions be used for the purpose for which they are conferred. That is not for additional punishment. There are two vices in the potential use of the burdensome incidents of intensive correction orders other than for the purpose of securing the rehabilitation of the offender. One is that the degree of punitiveness would lie in the hands of a Corrective Services officer, and be imposed extra-judicially. That is contrary to all principle. The other is that, it is apparent, as I have said, that significant resources will have to be allocated for the implementation of these orders. It would be wrong to use those resources for the purpose of punishing an offender. The resources are to be provided for the purpose of rehabilitation. 115Properly used, the intensive correction order facility could and should be a beneficial adjunct to sentencing options. It would be a pity if its misuse by courts were to cause them, like other beneficial sentencing options, to be abandoned. And it would be a pity if those resources were applied to the punishment of offenders such as Mr Zerafa, who is plainly not in need of intensive correction or supervision, at the expense of vulnerable offenders who might, if they have access to the resources, benefit. 116If the particular circumstances of an offender do not call for intensive supervision or correction, and on the assumption that the supervisor would not misuse the powers granted, all that is left by way of burden on the offender subject to an intensive correction order is a minimum of 32 hours per month of community service. (There appears to be no specified maximum.) But the option of community service is already, by s 8 of the Sentencing Procedure Act, available. While s 7 requires the imposition of a term of imprisonment, with a direction that it be served by way of intensive correction order, a community service order is an alternative to a sentence of imprisonment. It is true that the maximum number of hours of community service that may be ordered under s 8 is 500 (compared with a minimum of 768 in respect of a 2 year sentence to be served by way of intensive correction). It would, however, be wrong in principle to make an intensive correction order (involving a sentence of imprisonment) in order to increase the number of hours of community service that could be required. 117I am satisfied that this is not a case that calls for an intensive correction order, nor a case that permits one to be made. Sentences Robert Francis Agius 118For the purposes of s 17A(1) of the Crimes Act, having considered all sentencing options, I amply satisfied that, in all the circumstances of this case, no sentence other than imprisonment is appropriate. That is because the offending involved deliberate, calculated, systematic and repeated frauds on Australian taxpayers, the provision of the means of perpetrating those frauds to the directors of at least eight Australian companies, and resultant very large losses to the revenue, over a lengthy period of time. 119Since it is necessary to impose separate sentences in respect of each offence, and since the offences were consecutive, it seems to me to be appropriate to fix sentences relevant to the period over which each was committed, and make the sentences entirely cumulative. I will ensure that the resulting aggregate sentence is equivalent to that I would have imposed had there been a single offence committed over the total period. 120Only two features of the offending mark out the first offence from the second. One is that the period covered by the first offence (4 years and 4 months) is a little less than that of the second (5 years and 5 months). The second is that, in my opinion, the gravity of the frauds escalated with repetition. Other than that, the offences call for approximately equal sentences. That is what I will impose. 121In reaching the sentences I have, I have not overlooked the degree of cooperation that was evident in the trial in the way evidence was adduced. That, as I mentioned, is indicative, to a degree, of a willingness to facilitate the course of justice. Nevertheless, I remain of the view that the offences, taken together, are in the worst case category and call for commensurate sentences. 122The sentence I consider appropriate in respect of each offence is imprisonment for 4 years and 6 months. In respect of the first, in order to take account of almost 1 month of pre-trial custody in 2008, I will impose a sentence of 4 years and 5 months, commencing on 31 July 2012 and expiring on 30 December 2016. In respect of the second offence, I will impose a sentence of 4 years and 6 months, commencing on 31 December 2016 and expiring on 30 June 2021. That is a total sentence of 8 years and 11 months. 123I will fix a single non-parole period of 6 years and 8 months, expiring on 30 March 2019. (I would have imposed a non-parole period of 6 years and 9 months, but have deducted 1 month in order to allow the benefit of the allowance for the 2008 pre-trial custody in respect of the sentence actually to be served.) The aggregate sentence and the non-parole period equate to what I would have imposed had the offender been liable to a single 10 year maximum. Kevin Zerafa 124In Boughen and Cameron I made plain my views that those who defraud the revenue by tax evasion must pay the same heavy penalties as those who defraud the revenue by social security fraud. I do not resile from those views. Two circumstances distinguish those cases from that of Mr Zerafa. One is that such cases invariably involve and are perpetrated specifically for the purpose of financial gain to the offender. That is not here the case. The second is that they invariably involve a conscious and deliberate decision on the part of the offender to participate in the fraud. That also is not the case here. Mr Zerafa was drawn, quite insidiously, into the conspiracy by an older and stronger employer. I have already held that, by mid-1999, Mr Zerafa was very aware of the essential nature of the scheme. It is true, as the Crown submitted, that he could have confronted Mr Daniel, could have left the employment, and could have reported the conduct to the relevant authorities or professional bodies. To hold that he ought to have done that is to ignore the realities of the situation in which he found himself. Had he had more experience of the world when he came into Mr Daniel's orbit, he may well have been in a better position to evaluate the true character of his employer, and the degree to which the work he was required to do departed from acceptable professional practice, and to have resisted Mr Daniel. He did not have that experience. That, in my opinion, significantly diminishes his culpability. In this context I place considerable store on his 2004 attempt to persuade Mr Daniel to abandon the scheme, and, indeed, the apparent success of those efforts despite Mr Daniel's arrogant and hostile response. 125I take into account, also, that it is now almost 6 years since the execution of the search warrants which alerted Mr Zerafa to the fact that he was at risk. He was not charged until some time in 2008 (the chronology with which I was provided shows 3 June 2008 as the first return date on a Court Attendance Notice). There have been lengthy delays in the preparation of this matter for trial. In saying that, I make no criticism of the Crown; the evidence was complicated and detailed. Moreover, some considerable additional delay was occasioned by applications, unsuccessful, made on behalf of the four accused for stay of proceedings, and appeals against the refusal of these applications. 126Nevertheless, the fact remains that there has been a period of 6 years of very considerable stress and anxiety. 127Notwithstanding the Crown's opposition, in respect of the first offence, I am not satisfied, for the purposes of s 17A of the Crimes Act, that no sentence other than imprisonment is appropriate in all the circumstances of the case. Mr Zerafa has been assessed as suitable for a community service order, and work is available for him. I propose, in respect of the first offence, to make a community service order, directing Mr Zerafa to perform community service work for 500 hours. 128In respect of the second offence, by s 20(1)(b) of the Crimes Act, it is open to me to impose a sentence of imprisonment but direct, by order, that Mr Zerafa be released forthwith, upon giving security without sureties, that he will be of good behaviour for a specified period. That is the course I propose to take. Robert Francis Agius (1)In respect of the first count on the indictment: you are convicted. I sentence you to imprisonment for 4 years and 5 months, commencing on 31 July 2012 and expiring on 30 December 2016. (2)In respect of the second count on the indictment: you are convicted. I sentence you to imprisonment for 4 years and 6 months, commencing on 31 December 2016 and expiring on 30 June 2021. I fix a single non-parole period of 6 years and 8 months, expiring on 30 March 2019. Section 16F 129I am required to explain to you the sentence. I have ordered that you be imprisoned for an aggregate period of 8 years and 11 months. I have fixed a non-parole period of 6 years and 8 months, which will expire on 30 March 2019. That means that you will be imprisoned for not less than 6 years and 8 months. If you are granted parole at the end of that time, or before the expiration of the aggregate sentence, you will serve the balance of the sentence in the community. If you are granted parole, the order will be subject to conditions determined by the relevant parole authority, and may be amended or revoked. If you fail, without reasonable excuse, to comply with the conditions of your parole, your parole may be revoked and you may be taken back into custody. Kevin Zerafa (1)In respect of the first count on the indictment: you are convicted. I order that you perform community service work for 500 hours. You are to report to the Burwood District Office of the NSW Probation and Parole Service at 3.45pm on Tuesday, 28 August 2012. (2)In respect of the second count on the indictment: you are convicted. I sentence you to imprisonment for 3 years, commencing on 23 August 2012 and expiring on 22 August 2015. I order that you be released forthwith, on entering into a recognisance to be of good behaviour for 3 years. Section 16F 130I am required to explain to you the latter sentence. The purpose of the sentence is to punish you for the crime of which you have been convicted. I have sentenced you to imprisonment for 3 years. However, subject to your entering into an agreement to be of good behaviour in that time, I have, in effect, suspended the operation of that sentence. You will be required to undertake to be of good behaviour for a period of 3 years. If you fail to be of good behaviour, you may be taken into custody to serve all or part of the sentence in prison. There are provisions in the Crimes Act which make it possible that the recognisance may be discharged or varied. Should you wish to seek discharge or variation you would be wise to seek legal advice. ********** Amendments 15 November 2012 - Reference to "good" in last line changed to "goal" Amended paragraphs: 109 15 November 2012 - Reference to "their misuse" changed to "its misuse" Amended paragraphs: 115 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 August 2013