District Court New South Wales Medium Neutral Citation: R v MASCALL, MASCALL and SEWELL [2012] NSWDC 176 Decision date: 11 May 2012 Before: Cogswell SC DCJ Decision: Paul Mascall - for the offences of conspiracy to defraud the Commonwealth and conspiracy to cause a loss to the Commonwealth - 4 years imprisonment. To be released upon giving security in the sum of $500 by recognizance and without sureties after serving 2 years imprisonment. Lesley Mascall - for the offences of conspiracy to defraud the Commonwealth and conspiracy to cause a loss to the Commonwealth - 3 years imprisonment. To be released upon giving security in the sum of $500 by recognizance and without sureties, after serving 15 months imprisonment. Paul Sewell - for the offence of conspiracy to defraud the Commonwealth and obtain a financial benefit by deception - 2 years imprisonment, to be released forthwith upon giving security in the sum of $500 by recognizance and without sureties. Catchwords: CRIMINAL LAW - Particular offences - property offences - defrauding the Commonwealth - conspiracy - Vanuatu tax evasion scheme - reliance on advice of tax agent in entering the scheme - objectively serious offence - tax shortfall of over $166,000 (Lesley Mascall), over $174,000 (Paul Mascall), over $25,000 (Paul Sewell), over $450,000 (Air Solutions) and nearly $65,000 (Varitech) - offending behaviour part of course of conduct extending over long period. Sentence - purpose - general deterrence of great importance - personal deterrence - of little importance in this case - relevant factors - motivation - financial gain through evasion of income tax obligation - no prior criminality - all offenders of good character - excellent prospects of rehabilitation - parity - Lesley Mascall in a more serious category than co-conspirator (Mr McLean) - offending extended over longer period - significant delay in prosecution owing to extensive preparation - offenders aged between 56 and 71 - response to charges - active co-operation with authorities - retained accountant to rectify tax affairs - repaid debt - offered to assist authorities in prosecution of the accountant - pleas of guilty - 20 per cent discount - contrition - corrected an Australian Tax Office error resulting in additional reparation - remorse - all offenders offered a sincere apology - other offences in accordance with s 16BA Crimes Act 1914 (Cth) taken into account. Legislation Cited: Crimes Act 1914 (Cth), s 16A, s 16BA, s 29D and s 86(1) Criminal Code Act 1995 (Cth), s 134.2(1) and s 135.4(3) Cases Cited: Attorney General's Application under s 37 of the Crimes (Sentencing Procedure) Act 1999 (NSW) (No 1 of 2002) [2002] NSWCCA 518; (2002) 56 NSWLR 146 Regina v Boughen and Cameron [2012] NSWCCA 17 Bugmy v The Queen (1990) 169 CLR 525; [1990] HCA 18 Deakin v The Queen (1984) 58 ALJR 367; [1984] HCA 31 Regina v Dennison [2011] NSWCCA 114 Hili v The Queen; Jones v The Queen [2010] HCA 45; (2010) 242 CLR 520 Regina v Morris (1992) 61 A Crim R 233 Regina v Nguyen and Phan (1996) 86 A Crim R 521 Powell v The Queen (1974) 131 CLR 623; [1974] HCA 26 Putlan v The Queen (2004) HCA 8; 218 CLR 174 Category: Sentence Parties: Regina (Crown) Paul Mascall (Offender) Lesley Mascall (Offender) Paul Sewell (Offender) Representation: Counsel: A J Payne SC (Offenders) P M Wass (Offenders) D Lee (Crown) File Number(s): DC 2008/46247; 2008/254397; 2008/137007; 2008/246234; 2008/137010; 2008/137012 SENTENCE Introduction 1Paul and Lesley Mascall have been married for approaching 50 years. They have three children and six grandchildren. They have lived in Mona Vale for over 40 years and own their own home. Paul Mascall has spent almost all his working life in the air-conditioning business. He has had a very successful career. So has Lesley Mascall, as an administrative assistant in many companies over the years. She's found time to undertake voluntary work in the community for over 40 years. 2And yet this couple, along with Paul Sewell, who was engaged in business with them, are now facing sentencing for serious offences against the Commonwealth Crimes Act. 3How did this come about? It came about because they wanted to get access to profits generated by their business without having to pay income tax. They sought to relieve themselves of the legal obligation shared by all income earning Australians to pay tax on their earnings. Most people would probably welcome the chance not to pay income tax; it would make a substantial part of their income available for spending as they pleased. But most people acknowledge the obvious need for the government to levy income tax. It can provide essential services to us all as well as support those who have little or no income to be taxed. 4In these remarks, I will first set out the charges and penalties that Paul and Lesley Mascall and Paul Sewell face. I will formally convict them of the crimes. Then I must give some more detail about the crimes they committed. Next, I will say something about their personal circumstances. Then I must refer to the principles of law that will guide me in sentencing them and then to the arguments for them and for the prosecution. Finally, I will sentence them. Charges, penalties and convictions 5The charges Paul and Lesley Mascall face are the same charges. Each of them has been charged with an offence against s 29D and s 86(1) of the Crimes Act 1914 (Cth). The charge is that between 1 July 1997 and about 23 May 2001 they conspired with each other and Lynette Liles to defraud the Commonwealth. Each of them has pleaded guilty to that charge. The second charge each of them faces is an offence against s 135.4(3) of the Criminal Code Act 1995 (Cth). That charges that between about 24 May 2001 and 31 July 2004 they conspired with each and Lynette Liles to dishonestly cause a loss to the Commonwealth. 6In addition, under s 16BA of the Crimes Act, each of them has admitted two other offences and wish those other offences to be taken into account by me in passing sentence on them in respect of the charges which I have already read out. Each of them has pleaded guilty to a further offence against s 29D and s 86(1) of the Crimes Act that between about 1 July 1997 and about 23 May 2001 they conspired with each other and Lynette Liles to defraud the Commonwealth. In addition, each of them has admitted their guilt to an offence against s 135.4(3) of the Criminal Code Act that between about 24 May 2001 and 31 July 2004 they conspired with each other and Lynette Liles to dishonestly cause a loss to the Commonwealth. 7For reasons that will become apparent the offences that I am sentencing them for are relevant to the 'Air Solutions conspiracy' and the offences which I will take into account are related to the 'Varitech conspiracy'. 8The maximum penalty for the offences against s 29D and s 86(1) of the Crimes Act is 20 years imprisonment. The maximum penalty for the offences against s 135.4(3) of the Criminal Code Act is 10 years imprisonment. There is obviously a discrepancy between those two penalties and the higher Courts have indicated that, in effect, I regard the maximum for both offences as 10 years imprisonment and I do so. 9I formally convict Lesley and Paul Mascall of each of the offence against s 29D and s 86(1) of the Crimes Act relating to the Air Solutions conspiracy, which I have read out, and the offences against s 135.4(3) of the Criminal Code Act related to the Air Solutions conspiracy, which I have read out. 10Paul Sewell has pleaded guilty to one offence against s 29D of the Crimes Act, which charges that between about 16 December 2000 and 22 December 2000 he defrauded the Commonwealth, in that in his personal income tax return for the year ended 30 June 2000 he failed to include an amount of $23,754 as income, thereby dishonestly obtaining a financial advantage. He has also pleaded guilty to one other offence. That is an offence against s 134.2(1) of the Criminal Code Act that between about 13 November 2001 and about 20 November 2003 he did, by a deception, dishonestly obtain a financial advantage from another person, namely the Commissioner of Taxation. That charge relates to the failure to include amounts of income in three income tax returns for the years ended 30 June 2001, 2002 and 2003. The respective amounts, corresponding to those years, are $10,450, $6,213 and $15,000. The charge included an allegation that he thereby dishonestly obtained a financial advantage. 11I formally convict Paul Sewell of both of those charges. 12By way of explanation, the criminal activity of all of the offenders spanned a period during which the Commonwealth criminal law was amended. That explains why some of the charges are laid under the Crimes Act and some of the charges are laid under the Criminal Code Act, the relevant part of which became effective on 24 May 2011. The criminal activity 13Now I must give a little more detail about the criminal activity which these offenders engaged in and which led to the charges. 14What is called the 'Air Solutions conspiracy' is conveniently and concisely summarised in the statement of agreed facts contained in exhibit A. Over pages 3 and 4 the following is recorded - "Between about 1 July 1997 and about 31 July 2005, a tax evasion scheme was operated by some of the directors of Air Solutions." HIS HONOUR: I mention here the reference to Air Solutions is to Air Solutions International Pty Limited. I return to quoting from exhibit A, "Air Solutions directors were Paul Mascall, Lesley Mascall, Hamish James McLean, Paul Singleton Sewell and Christopher Chalinor. Each director was also a shareholder of Air Solutions. Lynette Kathleen Liles was Air Solutions' accountant. She was the promoter of the tax evasion scheme and assisted Paul and Lesley Mascall to incorporate a company in Vanuatu and put the scheme into effect. The scheme involved the following steps: - money was transferred out of Air Solutions, purportedly for payment of expenses incurred, to a bank account in Vanuatu named 'ZAX International Corporation', which was controlled by Paul and Lesley Mascall; - false expenses claims were made in Air Solutions' company accounts, thereby reducing Air Solutions' taxable income and evading the payment at company income tax; - money removed from Air Solutions was returned to that company's shareholders, Paul Mascall, Lesley Mascall, Hi-Tech Property Services Pty Ltd, McLean and Sewell in proportion to their shareholdings; - the money received by the shareholders was not declared income in the company income tax return of Hi-Tech, or the personal income tax returns of McLean and Sewell; and - the money received by Paul and Lesley Mascall either as a result of their shareholding in Hi-Tech, or as the persons who exercised control of the Vanuatu bank accounts, was not declared in their personal income tax returns. Between June 1998 and April 2003, $689,684 was sent from Air Solutions to ZAX. Between June 2000 and May 2003, $630,000 was distributed from the ZAX bank account to the shareholders of Air Solutions. The shareholders then repatriated their funds to Australia by transfers to bank accounts in Australia or by withdrawal of funds from automatic teller machines in Australia." 15I should add that Hi-Tech Property Services Pty Limited was controlled by Paul and Lesley Mascall, who used it as their investment company. Hi-Tech was, at all relevant times, the majority shareholder in Air Solutions. 16There was a second course of criminal behaviour, which is the subject of the charges on the schedule for Paul and Lesley Mascall and which is called the 'Varitech conspiracy'. Varitech is a reference to a company called Varitech Pty Limited. I take this summary from pages 34 to 35 of the agreed statement of facts in exhibit A - "Paul Mascall and Lesley Mascall, after receiving advice from Liles, commenced a tax evasion scheme involving Varitech. The scheme was similar to that operated through Air Solutions. However, as Varitech was a smaller company with less profit, there were only 6 distributions of Varitech's profits via Vanuatu to its shareholders. Varitech Pty Limited was incorporated on 3 July 1995. Varitech's directors at incorporation were Paul William Earnest Mascall and Iven Lockhart Muir. Lesley Ann Mascall and Caroline Bernadette Muir were appointed directors on 7 September 1999. Varitech issued 2 shares. One share was jointly held by Muir and Caroline Muir. The other share was held by Hi-Tech Property Services Pty Ltd. Varitech's business was the supply of specialised air conditioning equipment with Paul Mascall responsible for distribution in New South Wales and Muir responsible for distribution in Victoria. Lesley Mascall was the bookkeeper for Varitech and was responsible for maintaining Varitech's accounts. She provided information regarding Varitech's accounts to Veale & Co, who prepared the yearly financial accounts and income tax returns for Varitech. Paul and Lesley Mascall's personal income returns were prepared by Lynette Kathleen Liles. A total of $210,000 was transferred from Varitech to ZAX and to Pacific Hurricane in six transfers between 13 June 2000 and 31 March 2004. Between 16 June 2011 and May 2004, Iven and Caroline Muir received six transfers of funds from Vanuatu totalling $104,612. During the same period, $105,144.96 was retained in Vanuatu in bank accounts over which Paul and Lesley Mascall had control." Personal circumstances 17Mr A J Payne SC and Ms P M Wass, who appeared in the sentence proceedings for Mr and Mrs Mascall and Mr Sewell, helpfully set out in their written submissions (which be came MFI 4) information personal to their clients which, along with the details of the crimes, is important for a judge to take into account in sentencing offenders. Once again it is convenient to quote from pages 9 to 11 of those written submissions - "Paul Mascall is 71 and was born on 18 September 1940 in London. He is an only child. He and his parents emigrated in 1952 to Sydney. He attended North Sydney Boys High School and obtained the Leaving Certificate. He studied engineering (as his father had done). He went to Sydney Technical College and obtained a Mechanical Engineering Certificate. With further study, this was later converted to a Diploma. Paul Mascall has for approximately 10 years been the Treasurer of the Chartered Institution of Building Services Engineers. He has always worked. He undertook a number of drafting jobs with Star Machinery and later Van Gelder, where he worked as a Senior Draftsman. Later in sales engineering work at R Werner & Co (later Email Air), where he worked on cooling towers in the 1960s. He then worked with Carrier Air Conditioning. Later, he returned to Email Air in a more senior role. In the early 1970s he returned to Carrier and worked in the NSW Division as the Senior Sales Engineer and later as the NSW Sales Manager. In about 1977 - 1978 Paul was offered the role of Area Manager in Hong Kong. Lesley and Paul Mascall lived in Hong Kong for about 2 years. Paul and Lesley then returned to Australia and Paul worked for Carrier as National Sales Manager. He worked in that role for about 2-3 years until the early 1980s. In early to mid 1980s he was employed by F Muller as Marketing Manager. He then left to set up a small distribution business, Australian Air Filters and built it to a successful business. In the late 1980s he was asked to join Talbot Street & Associates as a Partner, a service company, servicing airconditioning plants. Paul Mascall then started Hi-Tech Property Services and he built the company up from 1992 to 1996 with airconditioning products. A product he sold was marketed and produced by Dunn Air Conditioning (a national company). From 1992 to 1996, Paul ran Dunn Air Conditioning (NSW) Pty Limited and then built the business. In 1996, Robert Dunn sold his share in the company and the company was renamed Air Solutions. At that time Sewell and McLean, and later Chalinor, bought into the company. In 1992 he undertook at Macquarie University a Diploma in Business. He later transferred and completed his MBA in about 1992. He works diligently in his church. Lesley and Paul Mascall met in about 1958. They married in 1965. They have 3 children: Sheridan (born 1966), Peta (born 1968) and Nicholas (born 1972). They have 6 grandchildren. In 1968 they moved to Mona Vale, where they currently reside. They own their own home. The Mascalls met Liles (then McPhee) in the 1980s. A mutual colleague introduced them and recommended her. For the next few decades, until this matter, she was their accountant. The Mascalls had no problems with the ATO in the many years prior to this matter and they trusted her implicitly as a friend and adviser." 18In respect of Lesley Mascall the submissions say this - "Lesley Mascall was born in Waverley, Sydney on 30 May 1943. She is 68 years of age. She attended Waverley Primary School, later Huntingtower School in Mt Waverley and finally Roseville Girls School. She left school at 15. That year she met Paul Mascall. She attended Hales Secretarial College in Sydney. She has always worked in an administrative/secretarial position and her past employers includes, JFK & Co Chartered Accountants, Scott Outboard Motors, H Poole & Co, Jacaranda Press and Weldon Publishing. She has performed voluntary work in the community for about 40 years. She has worked as a Sunday School teacher and in a community bookshop. She supports six children via World Vision. She is a member of Kiva, where she lends money to people in developing communities. She lends to six people at any one time. She also gives willingly to many charities from time to time. She works as a silversmith and artisan. In addition, she works in her Church community with counselling services." 19In respect of Mr Sewell, the submissions say the following - "Mr Sewell was born on 11 May 1955 in Canterbury. He is 56 years of age. He lived in Condell Park until he was 8 and later moved to Loftus. He left school after year 10 and joined the Royal Australian Navy at the age of 15 as an engine room maintenance mechanic. He performed those duties for about 7 years. Sewell then went to Adelaide and worked as an air conditioning mechanic for about 2 years. In about 1979, he worked at Alexandria Budge-Ellis Coop Limited (a division of Dairy Farmers) as a production planner, allocating workshop jobs and later in sales, selling cooling towers. He did this for about 7 years. Sewell then worked for Summit Refrigeration Products as a sales and manufacturing supervisor for about 12 months. In about 1986 he worked for Newarra Air Conditioning in Bankstown as a salesman. In July 1992 he joined Dunn Air Conditioning (Pty Ltd), later Air Solutions. Sewell is not married, having divorced in about 1987. He has no children. He has been living with his current partner for the last 20 years. They reside in a rented house at Mortlake. He is a regular donor to charities, particularly for cancer as both he and his partner's parents died of cancer." 20In addition, there has been provided to me in the form of exhibit 1, a folder of material regarding each of the offenders. There is in each case a psychological report, a medical report and a probation and parole report. Those reports, compared to what a judge often reads in sentencing cases, are relatively unremarkable. 21What is remarkable and more significant are the character references. Each of the offenders is obviously very highly regarded within the community. 22Descriptions for Mr Mascall include "honest and hard working", "professional and diligent" and "completely trustworthy." One person said that there was "zero chance of him reoffending" and that the offences were "totally out of character for him." His business and private life were conducted with integrity. 23In respect of Lesley Mascall, descriptions of her refer to a person who has progressed to "greater compassion, caring and interested in others", and the offences have been described as "completely against her character and nature and completely contrary to anything I had previously known about her." She is described in terms of "honest and in no way greedy." She is described as a "trustworthy and honourable person." 24In respect of Mr Sewell, references about him describe him as a person who is "always ready and willing to help" and that "he would avoid allowing himself to be placed in a similar position any time in the future." He is described as "honest and diligent" and "well-respected within his community." He is regarded as "most helpful and supportive" and "very professional." He is also described as "competent and ethical." 25It is important to record that I have read those references and I will take them into account when I come to sentence each of the offenders. Guiding principles of law 26I now come to referring to the principles of law that will guide me in sentencing each of the offenders. I have had considerable assistance from senior counsel and counsel for the offenders as well as from Mr D Lee of counsel who appeared in the sentence proceedings for the Commonwealth Director of Public Prosecutions. 27A number of the authorities referred to concerned similar crimes in that they were about offenders who were engaged in tax evasion through Vanuatu. One of those cases was determined by the High Court. It was Hili v The Queen; Jones v The Queen [2010] HCA 45, (2010) 242 CLR 520. 28An important consideration in sentencing federal offenders is consistency. At page 527 ([18]) of Hili and Jones French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ said the following - "Consistency in sentencing federal offenders is achieved by the proper application of the relevant statutory provisions, having proper regard not just to what has been done in other cases but why it was done, and by the work of the intermediate courts of appeal." Their Honours went on to say at page 536 ([50]) - "The first and paramount means of achieving consistency in federal sentencing is to apply the relevant statutory provisions." Their Honours had earlier said at 528 ([24]) - "Chief among the principles stated in Div 2 is that provided by s 16A(1): that "[i]n determining the sentence to be passed, or the order to be made, in respect of any person for a federal offence, a court must impose a sentence or make an order that is of a severity appropriate in all the circumstances of the offence." 29Their Honours also described at 540 ([63]) the offending behaviour in that case which also is an apt description in many ways of offending behaviour in this case - "The applicants' offending was sustained over a long time. It was planned, deliberate and deceitful, requiring for its implementation the telling of many lies. The applicants acted out of personal greed. The amount of tax evaded was not small. Detection of offending of this kind is not easy. Serious tax fraud, which this was, is offending that affects the whole community. As was pointed out in R v Ruha (2010), 198 A Crim R 430 at 443 ([45]), the sentences imposed had to have both a deterrent and a punitive effect, and those effects had to be reflected in the head sentences and the recognisance release orders that were made." 30There are a number of decisions of the intermediate courts of appeal - namely, the Victorian Court of Criminal Appeal and Court of Appeal as well as the New South Wales Court of Criminal Appeal - to which I have been referred and which contain some statements of principle. 31In Regina v Morris (1992) 61 A Crim R 233, a decision of Victorian Court of Criminal Appeal, the Court (comprising Phillips CJ, Crockett and Southwell JJ) said the following over pages 238-239 - "In our opinion the critical consideration is that taxpayers cannot be permitted to defraud the revenue in the belief that detection can lead to no more than a requirement merely to make financial reparation and to pay a monetary penalty so as to enable the offender to 'purchase' immunity from prosecution under the criminal law." At 240 their Honours said in a passage which has been referred to and relied upon over the years since, the following - "It is clear that in recent years the trend has been towards the imposition of custodial sentences even upon first offenders (which most of such offenders seem to be) in the absence of substantial mitigating circumstances." 32A few years later the Victorian Court of Appeal in Regina v Nguyen and Phan (1996) 86 A Crim R 521, Brooking JA with whom Winneke P and Callaway JA said at 525 the following - "The seriousness of the offence of defrauding the Commonwealth of a large sum of money by not declaring assessable income has in the past, perhaps, not always been sufficiently reflected in the sentence passed. Those who is systematically defraud the Revenue of a large sum over a substantial period must in general expect a substantial custodial sentence. The deterrent and punitive effect of that sentence should not be unduly diminished by allowing release from custody at an unduly early stage." 33I should have added - when I was referring to the passage from [63] of the High Court's judgment in Hili and Jones - that I acknowledge that the amount of tax evaded in that case was more than the amount of tax evaded in this case. 34One thing which is clear from the passages which I have quoted is the emphasis which the intermediate courts of appeal place on the principle of general deterrence so far as these kinds of offences are concerned. 35The other decision which has been drawn to my attention is the recent decision of the New South Wales Court of Criminal Appeal in R v Boughen and Cameron [2012] NSWCCA 17. Simpson J delivered the judgment of the Court and Hislop and Latham JJ agreed. Once again, the fraud on the revenue in that case involved companies based in Vanuatu. Simpson J at [8] described the scheme in terms which appropriately apply to this case. Her Honour said - "The accountant introduced the respondents to a scheme that was no more and no less than a relatively simple income tax evasion scheme." Her Honour quoted at [67] from a decision again of the Victorian Court of Appeal in DPP (Cth) v Goldberg [2001] VSCA 107 at [51]. Her Honour quoted a passage from Vincent JA's judgment where his Honour had said - "The maintenance and integrity of the revenue collection systems, upon which the administration of government and the provision of a wide range of necessary services to the community are dependant, is vitally important to the proper functioning of our society." Simpson J in the following paragraph referred to another passage from Vincent JA's judgment where his Honour cited with approval remarks of the sentencing judge in Goldberg. Those remarks were as follows - "Tax evasion is not a game, or a victimless crime. It is a form of corruption and is, therefore, insidious. In the case of brazen tax evasion, honest citizens begin to doubt their own value and are tempted to do what they see others do with apparent impunity. At the very least, they are left the legitimate sense of grievance, which is itself divisive. Tax evasion is not simply a matter of failing to pay one's debt to the government. It is theft, and tax evaders are thieves." 36Once again in Boughen and Cameron I acknowledge that the amounts involved in tax evasion were greater than the amounts involved in this case. Nevertheless, it is important to note that at [93] Simpson J referred to two features of the offence in that case which her Honour said "strongly suggest more, rather than less, severe sentences. These are the period of time - seven years - over which they continued, and the amounts involved." The period of time in this case, so far as Mr and Mrs Mascall are concerned, is about the same. 37At [96] her Honour addressed the question of apparent disparity between sentences imposed upon apparently well-to-do respectable citizens and sentences imposed upon other members of the community who depend upon welfare services and perpetrate fraud upon the social security system. I quote - "There is undoubtedly a pathos about the prospect of two middle aged men, of prior good, even exemplary, character, each with some health issues, who have expressed remorse for their conduct, being sentenced to imprisonment. That pathos cannot be permitted to overshadow the objective seriousness of the offences: two middle aged men, intelligent, professionally successful, financially secure, prosperous, over a seven year period defrauded the Australian community of very significant sums of money, leaving others, less financially able to do so, to bear the burden of financing the many services government provides. The community cannot afford to be squeamish about discharging their duty, however personally painful it may sometimes be. To fail to sentence middle class offenders commensurately with social security offenders risks bringing the administration of justice into disrepute as perpetrating class bias." Arguments 38The offenders' counsel and counsel for the Director of Public Prosecutions correctly addressed the statutory regime which applies to me in sentencing for federal offences. That scheme is contained, as the High Court said, in Div 2 of Part 1B of the Crimes Act, in particular s 16A. In particular, as the High Court says, I must put emphasis on s 16A(1) which requires me to "impose a sentence or make an order that is of a severity appropriate in all the circumstances of the offence". 39I must take into account in accordance with s 16A(2)(a), also "the nature and the circumstances of offence." The offenders' senior counsel, in oral submissions, emphasised the leading role of the accountant. He accepted that Mr Mascall is "the next most culpable." But Mr Payne SC argued that there was "very little differentiation of any substance" between his client Lesley Mascall and Mr McLean. 40Mr McLean, it is important to record, has already been sentenced by his Honour Judge Freeman, a former judge of this Court. Mr McLean was involved in the same fraud. Mr McLean faced one offence of dishonestly obtaining a financial advantage by deception from the Commissioner of Taxation against section 134.2(1) of the Criminal Code Act. It carried a maximum of 10 years imprisonment. The amount involved in Mr McLean's case was about $66,500. He had pleaded guilty. He, too, was a director of Air Solutions. He was for some time also the managing director of Air Solutions. He was prosecuted for failing to declare the distributions which he received for income tax returns covering the years 2000, 2001, 2002, and 2003. His Honour sentenced Mr McLean to 3 years imprisonment. But his Honour directed that Mr McLean be released forthwith upon entering into a recognizance to be of good behaviour for 3 years. 41Mr Payne SC put much emphasis upon the principle of parity and the relevance of the sentence imposed upon Mr McLean to the sentences which I will need to impose upon Mr Sewell in particular, and also on Mrs Mascall. 42Mr Payne SC and Ms Wass in their written submissions referred to correspondence from the Commonwealth Director of Public Prosecutions dated 3 November 2011 which contained the following concessions - "(1) The Crown considers Mr Sewell's culpability for the offences is less than that of Mr McLean; (2) The Crown does not intend to appeal the sentence given to Mr McLean; and (3) The reason Mr Sewell faces two charges is a result of the commencement of chapter 7 of the Criminal Code Act (Cth) on 24 May 2011. But for the change in legislation, Mr Sewell would have been offered the ability to plead guilty to one substantive offence, as was the case with Mr McLean." Hence Mr Payne SC's submission that there was "little differentiation of any substance" between Ms Mascall and Mr McLean. 43However, Mr Payne SC also realistically acknowledged that the offending behaviour of Lesley Mascall is more serious because it extended over a longer period of time. Her offending extended over some 7 years, whereas Mr McLean's extended over some 4 years. In addition, as a result of her greater shareholding Mrs Mascall obtained a greater sum of money. The amount of money involved, so far as Mrs Mascall was concerned, resulted in a tax shortfall for her personally of $166,000, whereas Mr McLean's tax shortfall was about $100,000 less than that. In addition Mrs Mascall accompanied Mr Mascall to Vanuatu to make arrangements for various procedures that had to be set up over there. 44On the other hand, of course, as Mr Payne SC pointed out, Mr McLean was Managing Director of Air Solutions and involved in its day-to-day financial affairs. He also provided false information to the Australian Taxation Office. However, another factor which I will come to - and which is important to take into account in Lesley Mascall's case - is that I am taking into account in sentencing her the offences related to the 'Varitech conspiracy'. 45I take into account under s 16A(2)(c) the fact that the offending behaviour formed part of a course of conduct consisting of a serious of similar acts of the same character. That I take into account in respect to all three offenders. As was correctly described by Mr Lee, in his written submissions, the offending behaviour was "lengthy, persistent and calculated". 46Under s 16A(2)(e) I must take into account "any injury, loss or damage resulting from the offence". The loss to the revenue in respect of Mr Paul Mascall was over $174,000 and, as I have said, just over $166,000 in respect of Lesley Mascall. For Air Solutions the loss was just over $450,000 and for Varitech the loss was nearly $65,000. In Mr Sewell's case the loss was over $25,000. It must be borne in mind that the Mascalls own 62 per cent of Air Solutions and 50 per cent of Varitech. All tax penalties and interest have been paid by Air Solutions and by Varitech. All tax penalties and interest have been paid by Mr Sewell. A deed of settlement has been entered into between the Mascalls and the Australian Taxation Office so far as their personal income tax is concerned and I sentence them upon the basis that that in effect means that it has been repaid. I acknowledge, as Mr Payne SC pointed out, that interest and penalty charges include a significant punitive element. 47These steps also show a good deal of contrition and remorse, which is relevant to s 16A(2)(f). All of the offenders are remorseful and prepared to facilitate the course of justice, which is obvious by their pleas of guilty, which I take into account. On the one hand these pleas of guilty were entered into in the face of a very strong prosecution case. They were, to some extent in my opinion, acknowledging the inevitable. On the other hand, as Mr Payne SC argues, the legal proposition regarding liability for the tax was arguable and "an extremely long and complicated trial would have been pursued". I would be prepared to discount the sentences which I would otherwise impose by 20 per cent for each offender because of their pleas of guilty. 48I also take into account, in general terms, the fact that all of the offenders cooperated with the authorities in the investigation of the offences. The cooperation was quite active. They retained an experienced accountant, whose report I have read and taken into account and which was part of exhibit 1. The accountant was Mr Dennis Robertson. He was retained "to rectify their taxation affairs, not knowing whether or not they would be charged with any offences". They offered to assist in the prosecution of Ms Liles, however their evidence was not needed. So far as that assistance is concerned the authorities suggest that it is the practical value and the actual benefit which is more important to give weight to. 49All three of the offenders, as I have already said, are persons of good character and I have taken into account a significant number of character references, which have been provided. None of them has a criminal record. 50I agree that there is no reason why each of the offenders would not have excellent prospects of rehabilitation. 51It is very important that I take into account the deterrent effect of sentencing of others who may consider such crimes. However, I do not think the offenders in this case require much personal deterrence. I doubt whether any of them would consider entering into such schemes in the future. 52Although the sentences will obviously have an impact on the offenders' families, I will take that into account as a general subjective factor rather than a specific mitigating factor because the extent of the hardship will be no greater to other families of other offenders who have committed other crimes. 53I should make some reference to Mr Payne SC's reliance on what he described as nine factors, which he said were very important for me to take into account. Many of them I have already referred to. The nine factors were: parity, the amount of tax and shares in Air Solutions, the cooperation with the Australian Taxation Office, the repayment of the tax and the fact that penalties have been paid, the delay in prosecution, the pleas of guilty, the offers of assistance and various other factors including the offenders' age and the fact that they had relied upon their tax adviser. 54The amount of the tax short fall was roughly about a third of that in Boughen and Cameron. All of the offenders have offered what is obviously a sincere apology. I take into account their cooperation and I take into account that the Mascalls corrected, on the advice of Mr Robertson, an error by the Australian Taxation Office which resulted in them paying an additional $100,000 in reparation. That shows the obvious contrition. 55I do take into account that there has been a good amount of delay in the charges coming to this stage of the sentencing. The conduct the subject of the charges was completed by 30 June 2005. A tax audit was completed by December 2006. Amended assessments were issued in mid 2007. The offenders were not charged until December 2008 and they appeared in the Local Court early the following year. They entered their pleas in November 2011. I have taken into account what Mr Payne SC and Ms Wass have said in their written submissions about the delay. There has been a significant delay, although I also take into account that in a case such as this there is a need for a good deal of preparation so far as the authorities are concerned. The trial would have been complex and that is one reason why I will discount the sentences I would otherwise impose by some 20 per cent. 56I also take into account the fact that all of them relied upon the advice given by the tax agent, Ms Liles, in entering into this scheme. 57So far as parity is concerned, I regard Lesley Mascall as being in a more serious category than Mr McLean. This is because the period of her offending was longer and the tax shortfall was greater. In addition, of course, - which is not directly related to parity - I am taking into account an additional offence in sentencing her. 58Finally, before turning to sentencing the offenders I must deal with a submission made by Mr Payne SC regarding the question of whether I take into account the New South Wales Court of Criminal Appeal's decision in a guideline judgment concerning additional offences under the New South Wales sentencing regime. The decision is called Attorney General's Application under s 37 of the Crimes (Sentencing Procedure) Act 1999 (NSW) (No 1 of 2002) [2002] NSWCCA 518, (2002) 56 NSWLR 146. 59Mr Payne SC and Ms Wass referred to a decision of the New South Wales Court of Criminal Appeal in Nguyen and Phan (1996) 86 A Crim R 521 which they argued held "without elaboration, that when taking into account on sentence offences under s 16BA Crimes Act, it is necessary for a sentencing court to comply with the general principles applicable to the New South Wales regime for taking offences into account." Counsel "respectfully submitted that this finding is unsound, having regard to the High Court's decision in Hili and Jones. That is, s 68 of the Judiciary Act 1903 (Cth) is not engaged in s 16BA sentencing of a federal offender." They argue that "care should be taken" in applying "the exposition of principles" in the New South Wales guideline judgment. 60There is, in my opinion, some force in that submission. The High Court had said in Hili and Jones at 527 ([21]), "to the extent to which Part 1B of the Crimes Act otherwise provides, State and Territory laws in relation to the sentencing of offenders are not picked up". Part 1B does "otherwise provide" by s 16BA. But that is because of what Gummow and Hayden JJ had said in Putlan v The Queen (2004) HCA 8; 218 CLR 174 at 189 ([41]), referring to the Judiciary Act - "[Section] 68(1) was to be read in the sense it would have if, as a matter of express statement rather than implication, there was a qualification for provision otherwise made from time to time by the laws of the Commonwealth. That understanding should be accepted." 61However, on the other hand, the New South Wales Court of Criminal Appeal - which binds me - regards its own guideline judgment as applying in sentencing federal offences. That is apparent from Nguyen and Phan, which was referred to by the offenders' counsel and also in R v Dennison [2011] NSWCCA 114, which was decided after the High Court's decision in Hili and Jones. 62In my opinion, a comparison of the two statutory regimes demonstrates that they are substantially similar. Therefore, in my opinion, the reasoning - including the references to the rationale in taking into account other offences (which appears at [62] - [64] of Attorney General's Application) and to the elements to which weight is to be given (which is referred to at [42]) - is applicable. I therefore propose to take into account the guideline judgment in Attorney General's Application in sentencing these offenders. 63I also bear in mind what the High Court has said about fixing a non-parole period for federal offences by reference to what the High Court in Powell v The Queen (1974) 131 CLR 623; [1974] HCA 26, Deakin v The Queen (1984) 58 ALJR 367; [1984] HCA 31 and Bugmy v The Queen (1990) 169 CLR 525; [1990] HCA 18. Sentences 64I now come to imposing sentences on the offenders. In respect of Mr Paul Mascall I would regard an overall sentence - covering both offences and taking into account the other offences - of 5 years imprisonment as being appropriate. I would discount that by 20 per cent so that the appropriate sentence, in my opinion, would be 4 years imprisonment. I would set a non-parole period of 2 years imprisonment. 65For Lesley Mascall I would regard an overall sentence of 3 years and 9 months as being appropriate. I would discount that by 20 per cent so that I would regard a sentence of 3 years imprisonment as the appropriate sentence. I do not regard it as appropriate that Lesley Mascall be released forthwith and I regard an appropriate non-parole period for her as being 15 months imprisonment. 66For Paul Sewell, I regard an appropriate sentence as being 3 years imprisonment. I would discount that by 20 per cent to 28 months or 2 years imprisonment. In due course, because of the principle of parity and the concessions made the Commonwealth Director of Public Prosecutions I will direct his release forthwith. HIS HONOUR: Mr Williams and Ms Wass, I will formally sentence the offenders in a moment and I have indicated what the sentences will be. It seems to me that what I would do for Mr Paul Mascall - his overall sentence is 4 years - is to sentence him to 2 consecutive periods of 2 years and 2 consecutive non-parole periods of 1 year. Similarly with Mrs Mascall, 2 consecutive periods of 1½ years and 2 consecutive periods of 7 months and 8 months. Is that going to work? Do you ask for non-parole periods? WILLIAMS: The effect of the head sentence for a non-parole period must exceed 3 years. Your Honour has split them down the middle so it would be a recognisance release order that your Honour would have to make. HIS HONOUR: Yes, recognisance release orders. WILLIAMS: There is one further matter. HIS HONOUR: So far as you are concerned, Mr Williams, doing it that way 2 plus 2, 1 plus 1 with a recognisance release orders. WILLIAMS: There will be one recognisance release order. HIS HONOUR: Yes and I can do that, can I, one recognisance release order for the two? WILLIAMS: For the two head sentences that's so. HIS HONOUR: I will do the same for Mrs Lesley Mascall. I will direct Mr Sewell's release forthwith. There is only one crime for him forthwith. Three years under a recognisance release order for him? WILLIAMS: I understand your Honour that- HIS HONOUR: Sorry, his sentence is 2 years under a recognisance release order. WILLIAMS: Yes, technically speaking, your Honour, given that there are 2 charges in respect of Mr Sewell. HIS HONOUR: You are quite right. You are right, I am sorry. That needs to be 1 plus 1. WILLIAMS: Yes. HIS HONOUR: A recognisance release order forthwith. WILLIAMS: Yes. HIS HONOUR: Ms Wass, have you got anything to add? WASS: I don't wish to be heard on that. HIS HONOUR: What's the section, Mr Williams for the recognisance release order. WILLIAMS: Section 20(1)(b). I have a proforma order if that would assist. It is a fill in the blanks type of thing. HIS HONOUR: I would rather do it from the statute. Subsection 1(b), what sort of security or is it without security? WILLIAMS: A notional amount of $1000 or $500. HIS HONOUR: Okay. Without surety, I think. WILLIAMS: That's acceptable, your Honour HIS HONOUR: By recognizance? WILLIAMS: Yes. HIS HONOUR: Okay. 67Mr Paul Mascall, stand up, please, sir. In respect of the offence under s 29D of the Crimes Act of conspiring with Lesley Mascall and Lynette Liles to defraud the Commonwealth and taking into account the other offence under the same provision of conspiring to defraud the Commonwealth, I sentence you to 2 years imprisonment to commence today and to conclude on 10 May 2014. In respect of the offence against s 135.4 of the Criminal Code Act, that you conspired with each other and Lynette Liles to dishonestly cause a loss to the Commonwealth, taking into account the other offence under the same section, I sentence you to 2 years imprisonment to commence on 11 May 2014 and to expire on 10 May 2016. Under s 20(1) of the Crimes Act upon you giving security in the sum of $500 without surety and by recognizance I direct by this order that you be released after serving 2 years of imprisonment and that your release be on 10 May 2014. 68Mrs Mascall, in respect of the offence under s 29D and s 86 of the Crimes Act, that you conspired with Paul Mascall and Lynette Liles to defraud the Commonwealth, taking into account another offence under the same provision, I sentence you to 1 year and 6 months imprisonment to commence today 11 May 2012 and to expire on 10 November 2013. In respect of the offence under s 135.4 of the Criminal Code Act, that you with Paul Mascall, conspired with Lynette Liles to dishonestly cause a loss to the Commonwealth and taking into account the other offence against the same provision, I sentence you to 1 year and 6 months imprisonment to commence on 11 November 2013 and to expire on 10 May 2015. Under s 20(1) of the Crimes Act, I direct by order that you be released upon giving security of $500 by recognizance and without surety after you have served a period of 15 months imprisonment and that you be released on 10 November 2013. 69Mr Sewell, in respect of the offence against s 29D of the Crimes Act, that you defrauded the Commonwealth, I sentence you to 1 year imprisonment to commence today 11 May 2012 and to expire on 10 May 2013. In respect of the offence against s 134.2 of the Criminal Code Act, that by a deception you dishonestly obtained an advantage from the Commissioner of Taxation, I sentence you to 1 year imprisonment to commence on 11 May 2013 and to expire on 10 May 2014. Under s 20(1), I direct by order that you be released upon giving security in the sum of $500 without surety by recognizance forthwith. HIS HONOUR: In a moment I will discharge my obligation to explain the sentences to the offenders. Mr Williams and Ms Wass, I will ask you first, whether I have the figures correct, the mathematics, so to speak. I don't say that lightly because what I am doing is imposing periods of years, so it needs to be right and the second thing is whether there are any factual legal errors that might be dealt with now rather than at a later time, if that is possible. Mr Williams? WILLIAMS: Your Honour, the technical aspects of the sentence are fine. HIS HONOUR: Mathematics work out, so far as you're concerned? WILLIAMS: Yes, thank you. There was a further matter that I wish to raise with your Honour. In relation to Mr Sewell, the Crown seeks a fingerprint order pursuant to s 3ZL of the Crimes Act. The reason that is requested is that these proceedings were commenced by way of court attendance notice. None the offenders were processed through a police station, none of their fingerprints are on record at this stage. Obviously it is only applicable to Mr Sewell that I will seek the order. My submission is that it is appropriate to do so. It is a serious offence and it should be properly recorded on his history and a further reason for the taking of the fingerprints your Honour is that in effect ensures the integrity of the police database of criminal histories. If there is duplicate names, the database can be sure that the offence that Mr Sewell is convicted of today is attached to the right profile. That is my submission. WASS: Your Honour, an order under s 3ZL is discretionary. In my submission in cases such as these they are awarded in two circumstances; one, where no issue is taken and very often done by consent, but also where, for example, in social security matters there are problems such as false names, also done in cases, Commonwealth matters such as passport matters where, again, false names are used and there's some issue about the use of a name. In this circumstance it does not arise. The full name and date of birth would suffice for records and taking of fingerprints adds a further imposition on Mr Sewell which is not warranted in all the circumstances of this case. HIS HONOUR: Have your other clients? WASS: They will, I think, be fingerprinted because they go into custody but they have not been otherwise, had their fingerprints taken. In my submission, the integrity of the database is not a valid submission where often in tax matters and tax offences they're dealt with in the Local Court, the fingerprints are never taken and in my submission it is simply not appropriate in your Honour's discretion to order that in this case. HIS HONOUR: I won't make the order. 70I decline to make the order sought. HIS HONOUR: What else? Ms Wass, the mathematics, the beginnings and ends? WASS: They seem fine, and to the extent I have been able to absorb your Honour's reasons as we sit here, I don't have anything I wish to raise. HIS HONOUR: Just in case there was some obvious thing I made a mistake in, that could be corrected here. WASS: No, there wasn't, to me as I stand here. WILLIAMS: Nothing further, your Honour. HIS HONOUR: Okay. I have signed MFI 1 and 2 which are the forms under s16BA. They will go on the respective court file. WASS: Your Honour, I apologise, I had written 15. I can't add, it seems. HIS HONOUR: Yes, the sums were wrong. I intended to sentence Mrs Mascall to 15 months as the period in the form of release and wrongly specified 10 November 2013 and that should have been 10 August; does that sound right? WASS: It does. 71So, Mrs Mascall, the direction in your case that you be released on 10 August 2013, that is after 15 months, not 18 months; so it is 15 months. Release date 10 August 2013. HIS HONOUR: I don't think there are any other formalities? WASS: One matter, Mr Sewell obviously needs to sign his recognizance release order. HIS HONOUR: I gather he goes to the Downing Centre to do that. My associate has the paperwork. I will mention the other matter, go off the Bench, review the orders, sign them and my associate will scan them and send them to the Registry or fax them, one or the other, so they'll be there when he goes down. Thank you. Mrs Mascall can be taken down. ********** 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: 08 October 2012