Court of Criminal Appeal Supreme Court New South Wales Medium Neutral Citation: R v Hinchliffe [2013] NSWCCA 327 Hearing dates: 2 December 2013 Decision date: 20 December 2013 Before: Leeming JA at [1] Johnson J at [2] Hall J at [307] Decision: Decision Crown appeal allowed. Sentences imposed upon the Respondent in the District Court on 14 June 2013 are quashed. In lieu thereof, the Respondent is sentenced as follows: (i)for Count 1, the Respondent is sentenced to a fixed term of imprisonment for 12 months commencing on 21 June 2013 and expiring on 20 June 2014, (ii)on Count 2, the Respondent is sentenced to a fixed term of imprisonment for 12 months commencing on 21 September 2013 and expiring on 20 September 2014, (iii)for Count 3, the Respondent is sentenced to a fixed term of imprisonment for 12 months commencing on 21 December 2013 and expiring on 20 December 2014, (iv)for Count 4, the Respondent is sentenced to a fixed term of imprisonment for 12 months commencing on 21 December 2013 and expiring on 20 December 2014, (v)for Count 5, and taking into account the seven offences on the Form 1, the Respondent is sentenced to imprisonment comprising a non-parole period of one year and six months to date from 21 March 2014 and to expire on 20 September 2015, with a balance of term of one year and six months commencing on 21 September 2015 and expiring on 20 March 2017. The earliest date upon which the Respondent will be eligible for release to parole is 21 September 2015. Recommendation It is recommend that the psychiatric report of Dr Richard Furst 26 November 2013, together with the psychological report of Ms Emma-Jane Barclay dated 7 November 2013 be furnished to relevant authorities within Justice Health and the Department of Corrective Services, to assist the treatment and classification of the Respondent in custody. Catchwords: CRIMINAL LAW - sentencing - Crown appeal - Respondent pleaded guilty to five counts of defrauding a body corporate as a director contrary to s.176A Crimes Act 1900 with seven similar offences on a Form 1 - offences committed over 12-month period - Respondent obtained more than $1.5 million - Respondent sentenced to two years' imprisonment to be served by way of intensive correction order - whether factual error in characterisation of offences - whether error in assessment of objective gravity - whether error in approach to Form 1 offences - whether undue weight given to Respondent's subjective circumstances - heavy reliance upon psychiatric evidence where Respondent did not give evidence - whether erroneous to sentence by way of intensive correction order - whether sentences manifestly inadequate - errors established - sentences manifestly inadequate - whether residual discretion should be exercised to dismiss Crown appeal - Crown representative had contributed to factual error - held discretion ought not be exercised - interests of justice required resentencing - objective gravity of offences - importance of general deterrence for offences of fraud committed by company directors - Respondent resentenced to terms of full-time imprisonment Legislation Cited: Crimes Act 1900 Crimes (Sentencing Procedure) Act 1999 Criminal Appeal Act 1912 Cases Cited: Abbas v R [2013] NSWCCA 115 Bugmy v The Queen [2013] HCA 37; 87 ALJR 1022 Carroll v The Queen [2009] HCA 13; 83 ALJR 579 Director of Public Prosecutions (Cth) v De La Rosa [2010] NSWCCA 194; 79 NSWLR 1 Green v The Queen [2011] HCA 49; 244 CLR 462 Hili v The Queen [2010] HCA 45; 242 CLR 520 House v The King [1936] HCA 40; 55 CLR 499Majid v R [2010] NSWCCA 121 Markarian v The Queen [2005] HCA 25; 228 CLR 357 Milne v R [2012] NSWCCA 24; 219 A Crim R 237 Mulato v R [2006] NSWCCA 282 R v Baker [2000] NSWCCA 85 R v Ball [2013] NSWCCA 126 R v Dinh [2010] NSWCCA 74; 199 A Crim R 573 R v Donald [2013] NSWCCA 238 R v Geddes (1936) 36 SR(NSW) 554 R v Giam (No. 2) [1999] NSWCCA 378; 109 A Crim R 348 R v Glynatsis [2013] NSWCCA 131 R v JW [2010] NSWCCA 49; 77 NSWLR 7 R v Kong [2013] SASCFC 15; 115 SASR 425 R v MAK [2006] NSWCCA 381; 167 A Crim R 159 R v McGourty [2002] NSWCCA 335 R v Merritt [2004] NSWCCA 19; 59 NSWLR 557 R v Palu [2002] NSWCCA 381; 134 A Crim R 174 R v Pogson [2012] NSWCCA 225; 82 NSWLR 60 R v Qutami [2001] NSWCCA 353; 127 A Crim R 369 R v Radich [1954] NZLR 86 R v Rushby [1977] 1 NSWLR 594 R v Scott [2005] NSWCCA 152 R v Speechley [2012] NSWCCA 130; 221 A Crim R 175 R v Tannous [2012] NSWCCA 243 R v Williams [2005] NSWSC 315; 152 A Crim R 548 Stratford v R [2007] NSWCCA 279 The Queen v Olbrich [1999] HCA 54; 199 CLR 270 Weininger v The Queen [2003] HCA 14; 212 CLR 629 Texts Cited: --- Category: Principal judgment Parties: Regina (Applicant) Adam Samuel Hinchliffe (Respondent) Representation: Counsel: Ms HM Wilson SC (Applicant) Mr SJ Odgers SC (Respondent) Solicitors: Solicitor for Public Prosecutions (Applicant) Legal Aid (NSW) (Respondent) File Number(s): 2009/137251 Publication restriction: --- Decision under appeal Citation: --- Date of Decision: 2013-06-14 00:00:00 Before: Jeffreys DCJ File Number(s): 2009/137251 Judgment 1LEEMING JA: I agree with the entirety of the reasoning and proposed orders of Johnson J. Although there were other errors, the essential matter is that the sentencing judge seriously misunderstood the facts, leading to manifestly inadequate sentences being imposed, and although his Honour's error was contributed to by the Crown (and was not corrected by counsel then appearing for the Respondent), I agree with Johnson J that it remains necessary for this Court to intervene. 2JOHNSON J: The Crown appeals under s.5D Criminal Appeal Act 1912 with respect to sentences imposed upon the Respondent, Adam Samuel Hinchliffe, in the Sydney District Court on 14 June 2013 for offences of defrauding a body corporate, as a director, contrary to s.176A Crimes Act 1900. 3The Respondent had pleaded guilty to five offences under s.176A, each of which was punishable by a maximum sentence of 10 years' imprisonment. In addition, the Respondent requested the Court to take into account on sentence, on a Form 1, seven further offences under s.176A. The total amount involved in the Respondent's criminal conduct was $1,512,021.30. 4Jeffreys DCJ imposed a total effective sentence of two years' imprisonment, to be served by way of intensive correction in the community under s.7 Crimes (Sentencing Procedure) Act 1999. 5The sentences imposed by his Honour, which could not exceed two years to comply with the threshold for an intensive correction order ("ICO"), took the following form: Count Maximum Penalty Sentence Imposed Count 1 - On 12 September 2007, being a director of a body corporate, Meiko Australia Pacific Pty Limited ("MAP"), did defraud MAP in his dealings with that body corporate ($90,782.99) 10 years' imprisonment Nine months' imprisonment to date from 21 June 2013 and to expire on 20 March 2014 Count 2 - On 2 June 2008, being a director of a body corporate, MAP, did defraud MAP in his dealings with that body corporate ($150,000.00) 10 years' imprisonment 12 months' imprisonment to date from 21 September 2013 and to expire on 20 September 2014 Count 3 - On 4 June 2008, being a director of a body corporate, MAP, did defraud MAP in his dealings with that body corporate ($249,999.00) 10 years' imprisonment Nine months' imprisonment to date from 21 June 2013 and to expire on 20 March 2014 Count 4 - On 5 June 2008, being a director of a body corporate, MAP, did defraud MAP in his dealings with that body corporate ($150,000.00) 10 years' imprisonment 12 months' imprisonment to date 21 December 2013 and to expire on 21 December 2014 Count 5 - On 1 August 2008, being a director of a body corporate, MAP, did defraud MAP in his dealings with that body corporate ($430,000.00) 10 years' imprisonment 18 month's imprisonment to date from 20 December 2013 and to expire on 20 June 2015 In passing sentence for Count 5, seven similar offences under s.176A, occurring between 5 June 2008 and 5 September 2008, were taken into account (involving a total of $441,239.89) The Crown Appeal 6The Crown appeal was lodged on 17 July 2013. The Respondent was served with notice of the Crown appeal on 23 July 2013. 7The Crown relies upon the following grounds of appeal: (b)Ground 1 - the sentencing Judge erred in failing to adequately assess the objective gravity of the offences, or to give sufficient weight to it. (c)Ground 2 - the sentencing Judge erred in failing to impose a sentence that properly reflected the offences before the Court by way of a Form 1 schedule. (d)Ground 3 - the sentencing Judge erred in giving the Respondent's subjective case greater weight than was warranted, such that it impermissibly ameliorated the sentences imposed. (e)Ground 4 - the sentencing Judge erred in giving greater weight than was warranted to rehabilitation, thus diminishing the importance of punishment and denunciation. (f)Ground 5 - the sentencing Judge erred by failing to impose sentences that reflected the objective gravity of the crimes. (g)Ground 6 - the sentencing Judge erred in ordering that the sentences be served by way of intensive correction orders. (h)Ground 7 - the sentences imposed were manifestly inadequate. 8For the purpose of determining this appeal, it will be necessary to trace the course of the sentencing proceedings in the District Court, to seek an understanding as to how offences of this magnitude came to be disposed of by way of an ICO. The Crown contends that the sentencing process was flawed significantly, leading to the imposition of manifestly inadequate sentences. Facts of the Offences 9An Agreed Statement of Facts was tendered on sentence. The following narrative is drawn from that document. 10The Respondent did not give evidence at the sentencing hearing. 11From 9 December 2004, the Respondent was the sole director of a company, Swiss Systems Pty Limited ("Swiss Systems"). 12Meiko Beteiligungs GmbH ("Meiko") is a company which manufactures and sells dishwashers and other systems for commercial applications. Its head office and manufacturing plant is in Offenberg, Germany. Meiko has a number of subsidiaries around the world, including Meiko Australia Pacific Pty Limited ("MAP"), which was first registered as a company on 29 March 2007. 13Prior to establishing MAP in Australia, Meiko sold its products into Australia through a dealer. That dealer was the Respondent, who conducted his business through Swiss Systems. 14In early 2007, Meiko entered into discussions with the Respondent to purchase part of the business of Swiss Systems. A Deed of Agreement for Sale was prepared and was executed on or about 5 April 2007. The Deed of Agreement contemplated that the Respondent would enter into an employment agreement with MAP. 15On 15 April 2007, the sum of $1,544,253.70 was transferred from the account of MAP to Swiss Systems, as full payment for Meiko's part purchase of the company and stock. Under the terms of the sale, Meiko owned 900 shares in MAP and the Respondent held 100 shares. 16During the negotiations between the Respondent and Meiko for the part sale of Swiss Systems, the Respondent was told that he would have to wind down Swiss Systems no later than December 2007, and he agreed to do so. The Respondent did not meet the deadline and was granted a final extension until 30 June 2008. Whilst Swiss Systems continued to operate, the Respondent was required to run MAP and Swiss Systems as separate entities. 17The Respondent held the positions of managing director and company secretary of MAP from 29 March 2007 until 20 October 2008. Mr Burkhard Randel and Dr Stefan Scheringer were also directors of MAP. Throughout the same period, the Respondent was also the sole director and secretary of Swiss Systems. 18An employment agreement between the Respondent and MAP dated 31 March 2007, set out the detail of the Respondent's employment, including his remuneration and entitlements. The employment agreement was explained to the Respondent during a meeting with Mr Randel and others from Meiko in early April 2007, and it was signed by the Respondent. 19The employment agreement set out, in an attached schedule, the duties of the managing director. Those duties expressly included a duty to submit all matters deemed to be outside the normal course of business of MAP to a directors' meeting of the company for consideration and decision. Examples of matters deemed to be outside the normal course of the company's business included entering contracts for short or long term credit, as well as granting loans and credit, with the exception of according payment terms to clients under normal business practice. 20In an email dated 26 August 2008, the Respondent made an urgent request for funds from Meiko in order to pay outstanding creditors. As a result, the managing director of Meiko authorised the transfer of 400,000 Euros. The sum was transferred into the account of MAP in two parts, on 27 and 28 August 2008. As a result of the Respondent's request for an additional loan on behalf of MAP, Meiko requested financial information about MAP from the Respondent. He forwarded information on 5 September 2008. When this information was reviewed by Meiko's financial controller, Juergen Sachs, he located serious discrepancies in the accounts of MAP. Mr Sachs notified the board of Meiko and a more detailed audit was conducted. 21After further email correspondence and requests for information, the Respondent attended a meeting at the Meiko head office in Offenberg, Germany with Mr Randel and Mr Sachs. The first meeting was held on 9 October 2008. During this meeting, the Respondent was again asked to explain the unsubstantiated payments and to provide bank statements for Swiss Systems. The Respondent initially denied any knowledge of the withdrawals and stated that it could have been the bookkeeper at the time. A second meeting was held on 10 October 2008. During that meeting, the Respondent admitted to transferring the money from MAP to Swiss Systems in order to purchase a house in Mosman. 22The Respondent also told Mr Sachs and Mr Randel: "I took the money firstly to pay the deposit on a house that came up for sale in Mosman ... I took the money out of the deposit. It was $275,000. I then applied to the bank for a loan. I could not get enough money from the bank to settle on the house even though they told me that they would lend it. I took another $430,000 out of the MAP account and paid it to Swiss Systems. On the same day, I then drew bank cheques from Swiss Systems and gave it to my solicitor to settle on the sale of the property. Those are the five cheques you can see on the statement. I am very sorry, I regret that I have done this and know I have let you down." 23The Respondent resigned and the matter was reported to the police. 24At the time of the meetings in October 2008, the total amount of the unauthorised transfers was thought to be $730,000.00 (Counts 2, 4 and 5). 25Following the meetings on 9 and 10 October 2008, a number of comprehensive audits were conducted of the accounts of MAP and Swiss Systems. The audits revealed a large number of unauthorised transfers of funds from MAP to Swiss Systems by the Respondent. Count 1 26On 12 September 2007, the Respondent directed the transfer of 96,835.26 Euros from the MAP National Australia Bank ("NAB") Euro Account into the Swiss Systems NAB Euro Account. 27The application for the international telegraphic transfer recorded the purpose of the transactions as "Payment of August 2007 Rec". The transfer was signed by Gerald Walz. Prior to signing the transfer application, Mr Walz stated that he received approval from the Respondent. 28Of the transferred amount, $71,315.85 was used to pay Swiss Systems for the August 2007 reconciliation. That amount represented a legitimate transfer between the companies. 29The remainder of the transfer was the equivalent of $90,782.99. On 12 September 2007, $90,783.00 was deposited by Swiss Systems into a different NAB account, being a 12-month term deposit account in the name of Swiss Systems. The term deposit was listed as an asset of Swiss Systems on its 2008 balance sheet. 30At the time of the transfer, a further Swiss Systems NAB account was in deficit in the sum of $182,806.66. Count 2 31On 2 June 2008, the Respondent drew a cheque in the amount of $150,000.00 from a MAP NAB account and deposited it into the Swiss Systems NAB account which had been in deficit. The cheque bore the signature of the Respondent. 32No record of that transaction, or any underlying transaction which may have given rise to a liability, appeared in the creditors' or debtors' ledgers, or any other document of MAP. It was not a legitimate reconciliation between the companies. The transfer was made by the Respondent without authority. Count 3 33On 4 June 2008, the Respondent sent a fax to Mark Dowling of the NAB directing him to transfer 150,000 Euros (Australian Dollars - $249,999.00) from the MAP NAB Euro Account into the Swiss Systems NAB Euro Account. This fax was on the MAP letterhead, and bore the signature of the Respondent. The transfer was completed the same day. The general ledger of MAP contained the notation "Transfer to Swiss". 34No other record of that transaction, or any underlying transaction which may have given rise to a liability, appears in the creditors' or debtors' ledger or any other document of MAP. It was not a legitimate reconciliation between the companies. The transfer was made by the Respondent without authority. 35At the time, the Swiss Systems NAB Euro Account had a credit balance of 1,333.25 Euros. The funds obtained by the Count 3 offence were used to pay outstanding debts to Hupfer Metallwer in amounts of 105,672.49 Euros and 45,000.00 Euros. Count 4 36On 5 June 2008, the Respondent transferred $150,000.00 from the MAP NAB account into the Swiss Systems NAB account. 37No record of that transaction, or any underlying transaction which may have given rise to a liability, appeared in the creditors' or debtors' ledgers, or any other document of MAP. It was not a legitimate reconciliation between the companies. The transfer was made by the Respondent without authority. 38On 10 October 2008, the Respondent admitted to having made the transfers on 2 and 5 June 2008 described above (Counts 2 and 4), in order to pay the deposit for the purchase of a property at 252 Raglan Street, Mosman. The Respondent was unsuccessful at auction, but was successful in securing the purchase of this property later that day with an offer of $2.75 million. The deposit of $275,000.00 was paid to the real estate agent, Rowan Carroll of P Leahy Pty Limited, by cheque drawn on the account of Swiss Systems on 31 May 2008, the day on which the property was listed for auction. When he handed over the cheque, the Respondent asked Mr Carroll if he would wait a few days before banking it. The cheque was banked on 4 June 2008. Count 5 39On 1 August 2008, the Respondent drew a cheque in the amount of $430,000.00 from a MAP NAB account and deposited it into the Swiss Systems NAB account that same day. The cheque was dated 31 July 2008 and bore the signature of the Respondent. 40The MAP general ledger included an entry "Loan/Visa Swiss Systems P/L". Company records were searched and there was no invoice, record, document or journal entry of MAP that related to or explained this transaction. 41In accordance with the terms of his employment as managing director, the Respondent was required to submit all loan requests to a directors' meeting of the company. No approval was sought by the Respondent. The transfer was made by the Respondent without authority. 42On the same date, the sum of $429,037.14 was withdrawn by the Respondent from the Swiss Systems account using five bank cheques. That amount was used as funds for settlement on the purchase of the property at 252 Raglan Street, Mosman, with that settlement occurring on 13 August 2008. 43The Respondent applied for a mortgage with Westpac Bank on 8 June 2008. The loan was granted in an amount of $2,200,000.00. That amount fell short of the settlement of $2,475,000.00. 44In a meeting with representatives of Meiko on 10 October 2008, the Respondent admitted having taken $430,000.00 from MAP and paying it into the Swiss Systems account, before withdrawing it through five bank cheques. He said that he did so in order to make up the shortfall between the amount of the mortgage and the total due on settlement of the Mosman property. Form 1 - Offence 1 45On 5 June 2008, the Respondent sent a fax to Mark Dowling of the NAB directing him to transfer 50,000.00 Euros (Australian Dollars $79,573.49) from the MAP NAB Euro Account into the Swiss Systems NAB account. The fax was on the MAP letterhead and bore the Respondent's signature. The transfer was completed the same day. 46The general ledger of MAP contained the notation "50,000 Euros to Swiss Chq". No other record of that transaction, or any underlying transaction which may have given rise to a liability, appeared in the creditors' or debtors' ledgers or any other document of MAP. It was not a legitimate reconciliation between the companies. The transfer was made by the Respondent without authority. 47The balance of the Swiss Systems NAB account was in debit in the sum of $376,847.07 prior to this transfer. The transfer (and other deposits) reduced the balance to a debit of $77,081.80 at close of business on 5 June 2008. 48On 6 June 2008, the Respondent drew a cheque in the amount of $50,000.00 from the Swiss Systems NAB account and deposited it into the MAP NAB account. The cheque bore the signature of the Respondent. 49At this time, the balance of the MAP NAB account went from a credit of $1,859.96 (as a result of previous transfers to pay for the deposit on the Mosman property) to a credit of $51,859.96. The inflated balance enabled bills to be paid by MAP, without the account going into overdraft. 50On 12 June 2008, the Respondent transferred $15,000.00 from the Swiss Systems NAB account to the MAP NAB account. The transfer was used to pay about $60,000.00 in wages at MAP. If the money had not been transferred, there would not have been sufficient funds in the account to cover the wages due. 51On 16 June 2008, the Respondent drew a cheque in the amount of $50,000.00 from the Swiss Systems NAB account to the MAP NAB account. The cheque was signed by the Respondent. 52Prior to the deposit, the MAP NAB account had a debit balance of $2,355.70 due to withdrawals made earlier in the month for the house deposit, wages and monthly expenses. The deposits allowed MAP to make a number of payments over the next few days. Form 1 - Offence 2 53On 30 June 2008, the Respondent drew a cheque in the amount of $200,000.00 from the MAP NAB account and deposited it into the Swiss Systems NAB account on the same date. The cheque bore the Respondent's signature. 54The general ledger of MAP contained the notation "On account of year end settlement". However, the sum of $200,000.00 did not form part of a legitimate reconciliation between the companies. 55No other record of that transaction, or any underlying transaction which may have given rise to liability, appeared in the creditors' or debtors' ledgers, or any other document of MAP. It was not a legitimate reconciliation between the companies. The transfer was made by the Respondent without authority. Form 1 - Offence 3 56On 15 August 2008, the Respondent drew a cheque in the amount of $25,000.00 from the MAP NAB account and deposited it into the Swiss Systems NAB account on the same day. The cheque bore the Respondent's signature. 57The entry in the journal corresponding to this transaction was "Loan/Visa Swiss Systems". 58In accordance with the terms of his employment as managing director, the Respondent was required to submit all loan requests to a directors' meeting of the company. No approval had been sought by the Respondent. No other record of that transaction, or any underlying transaction which may have given rise to liability, appeared in the creditors' or debtors' ledgers, or any other document of MAP. It was not a legitimate reconciliation between the companies. The transfer was made by the Respondent without authority. 59On 25 August 2008, the Respondent drew a cheque in the sum of $10,000.00 from the Swiss Systems NAB account and deposited it into the MAP NAB account. The cheque bore the Respondent's signature. The transfer kept the MAP NAB account from being overdrawn. At the time of the transfer, the MAP NAB account had a debit balance of $72.89. 60The entry in the journal corresponding to this transaction was "Loan/Visa Swiss Systems". The memo line read "Transfer from Swiss". The company records were searched and, apart from the journal entry, there was no other document, invoice or entry relating to this transaction. Form 1 - Offence 4 61On 29 August 2008, the Respondent drew a cheque in the amount of $10,000.00 from the MAP NAB account and deposited it into the Swiss Systems NAB account. The cheque was signed by the Respondent. 62The entry in the journal corresponding to this transaction was "Loan/Visa Swiss Systems". 63In accordance with the terms of his employment as managing director, the Respondent was required to submit all loan requests to a directors' meeting of the company. No approval had been sought by the Respondent. 64No record of that transaction, or any underlying transaction which may have given rise to a liability, appeared in the creditors' or debtors' ledgers, or any other document of MAP. It was not a legitimate reconciliation between the companies. The transfer was made by the Respondent without authority. 65The transfer enabled the Swiss Systems NAB account to avoid being overdrawn more than $200,000.00 at the end of the month. Form 1 - Offence 5 66On 1 September 2008, the Respondent drew a cheque in the sum of $25,000.00 from the MAP NAB account and deposited it into the Swiss Systems NAB account. The cheque was signed by the Respondent. 67No record of that transaction, or any underlying transaction which may have given rise to a liability, appeared in the creditors' or debtors' ledgers or any other document of MAP. It was not a legitimate reconciliation between the companies. The transfer was made by the Respondent without authority. 68The transfer was used by Swiss Systems to pay bills worth over $10,000.00. On the same day, the sum of $12,000.00 was transferred into the Respondent's personal NAB account from the Swiss Systems account. Prior to the transfer, the Respondent's personal NAB account was in debit in the sum of $8,516.82. Form 1 - Offence 6 69On 5 September 2008, the Respondent sent a fax to Mark Dowling and Antoine Burke of the NAB, directing the transfer of 40,000.00 Euros (Australian Dollars $66,666.40) from the MAP NAB Euro Account into the Swiss Systems NAB account. 70The fax was on the MAP letterhead and bore the Respondent's signature. The transfer was completed the same day. 71The entry in the journal corresponding to this transaction was "Amount receivable S/Systems, Transfer". 72No other record of that transaction, or any underlying transaction which may have given rise to a liability, appeared in the creditors' or debtors' ledgers, or any other document of MAP. It was not a legitimate reconciliation between the companies. The transfer was made by the Respondent without authority. 73All of the transfers referred to above fall outside the general business of MAP, and required the approval of the board of directors of MAP. At no time did the Respondent inform any person in authority, or obtain any consent for the transferring of funds described in the charges from MAP to Swiss Systems, to be applied for his own purposes or those of Swiss Systems. The Respondent did not seek approval for any loan or another advance, either to himself or Swiss Systems. 74The total amount of the 20 transactions described above, made in the period 22 August 2007 to 5 September 2008, is $1,909,974.92. 75During the same period, the Respondent made eight transfers totalling $220,621.25 to MAP from Swiss Systems. Those amounts are not referrable to a reconciliation of the companies' accounts. They were attempts by the Respondent to repay a portion of the money that he had previously transferred without authority. Form 1 - Offence 7 76On 5 September 2008, the Respondent drew a cheque in the amount of $35,000.00 from the MAP NAB account and deposited it into the Swiss Systems NAB account. The cheque bore the Respondent's signature. 77The entry in the journal corresponding to this transaction was "Funds Transfer" and had been incorrectly entered as "Other Debtors" in the MAP ledger. 78No record of that transaction, or any underlying transaction which may have given rise to a liability, appears in the creditors' or debtors' ledgers or any other document of MAP. It was not a legitimate reconciliation between the companies. The transfer was made by the Respondent without authority. 79After the transfer, Swiss Systems paid about $26,000.00 worth of bills and payments over the next few days. Arrest and Charging of the Respondent on 4 January 2009 80On 4 January 2009, Detectives Watson and Philp attended the home of the Respondent at 252 Raglan Street, Mosman. The Respondent was cautioned and placed under arrest for the offences contained in Counts 2, 4 and 5. He was conveyed to Chatswood Police Station and, after receiving legal advice, he participated in an electronically recorded interview during which he declined to answer any questions. The Respondent was charged with those matters and was released on conditional bail. Monies Not Paid Back 81There was a further agreed fact. During the course of the sentencing hearing on 2 November 2012, it was conceded by counsel for the Respondent that none of the money which had been fraudulently obtained had been paid back to the victim company, and the Court was asked to proceed on that basis (AB197). Course of the Proceedings Against the Respondent 82The proceedings against the Respondent have had a protracted history. 83Following the charging of the Respondent on 4 January 2009, the proceedings remained in the Local Court until October 2010. 84The Respondent was arraigned in the District Court on 15 October 2010. A trial date was fixed for May 2011. The trial date was vacated on the application of the Respondent. Thereafter, a trial date was fixed for February 2012. In that month, the Respondent pleaded guilty to the charges and the sentencing proceedings were adjourned. 85The sentencing hearing before Jeffreys DCJ extended over some 16 months commencing on 13 February 2012. 86The substantive sentencing hearing took place before his Honour on 2 November 2012, with the tender of the Agreed Statement of Facts and other material. A number of character witnesses gave evidence on that day. Further reference will be made to this evidence. The hearing was adjourned until 29 November 2012, when Dr Richard Furst, psychiatrist, gave evidence. Thereafter, the proceedings were adjourned to 15 March 2013, when further evidence was given by Dr Furst. 87The proceedings were adjourned again to 31 May 2013, following which the Respondent was remanded on bail for sentence on 14 June 2013. 88Reference will be made later in this judgment to aspects of the evidence, and certain findings made by the sentencing Judge. The Respondent's Subjective Circumstances 89The Respondent was born in March 1967. He was 40 or 41 years old at the time of the offences, and 46 years old at the time of sentence. 90The Respondent has a limited criminal history. In 2004, he was fined for a minor public order offence. In August 2010, he was convicted, with no further penalty under s.10A Crimes (Sentencing Procedure) Act 1999, for a traffic offence. Neither of these matters bore on the question of sentence for the present offences. 91A number of medical reports were tendered on the Respondent's behalf on sentence: (a)report dated 21 September 2010 of Dr Paul Friend, psychiatrist; (b)report dated 29 April 2011 of Dr Bruce Westmore, psychiatrist; (c)reports dated 17 May 2011 and 17 May 2012 of Dr Richard Furst, psychiatrist. 92In addition, a presentence report dated 16 April 2012 was furnished, together with an ICO assessment report dated 16 May 2013. 93Each of the psychiatrists who provided reports first saw the Respondent after his arrest and charging in early 2009. No medical evidence was adduced from any practitioner who had examined or treated the Respondent before that time. 94The Respondent informed the various psychiatrists who examined him in and after 2009 of treatment he had received in about 1998 for depression. 95Dr Friend diagnosed the Respondent as suffering from Type II Bipolar Disorder. Dr Westmore had assessed the Respondent on fitness issues and noted the diagnosis of depression, and then Bipolar Affective Disorder, reached by other psychiatrists. Dr Furst, the Respondent's treating psychiatrist, made a diagnosis of Type II Bipolar Affective Disorder. 96A number of character witnesses were called to give evidence on 2 November 2012. 97Alison Pamela Lord had known the Respondent since 1994, in the context of his relationship with his late wife, who died in February 2010. Ms Lord was a close friend of the Respondent's wife. Ms Lord described the Respondent as an honest, hard-working person. She stated that the Respondent, in 2007 and 2008, appeared to be hard working and honest and she "saw the same person that I've always seen, no different" (AB181). According to Ms Lord, the Respondent had "always been busy" and had "always been an inspired person who wants to do things, not the sort of person to sit still". She could not "state any particular change in a personality that I would have seen over that time, it's been the same to me since I've known him" (AB182). Of the offences, the Respondent had told Ms Lord that he had taken money, but had given no detail. 98Dennis Patrick Kassim had met the Respondent in about September 2011. He considered the Respondent to be "a very astute person" and spoke highly of his dealings with the Respondent in the 14-month period in which he had known him. 99Mark Daniel Hochstadt had known the Respondent since October 2009. The Respondent had discussions with Mr Hochstadt about career options. The Respondent had offered to work for him without drawing a salary. Mr Hochstadt spoke highly of the Respondent in the limited context in which he knew him. The Respondent disclosed to Mr Hochstadt that he had been charged with defrauding a company prior to taking over the temporary management of the business. He said that he had taken about $700,000.00 to enable him to buy a home for his dying wife, to make her happy. 100Evan Raulston Dillner had known the Respondent since he and his late wife had moved into the neighbouring property in 1994. He noted that the Respondent's employment involved a good deal of travelling. Mr Dillner was aware of the ill health of the Respondent's wife, noting that the Respondent had been one of her primary carers in the last 18 months of her life. Mr Dillner stated that the Respondent had appeared normal up until the time that the Respondent told him that he had been charged, and he saw "a bit of change in him at that time because obviously he was worried about the outcome" (AB192). Mr Dillner did not see any mood swings or depression in the Respondent in 2007 and 2008. The Respondent told Mr Dillner that he had been charged with fraud, telling him that he had taken about $900,000.00 so that he could buy his wife a Mosman property. Mr Dillner was unaware of the actual scope of the offences. 101Michael Stewart Doughty, an accountant, had known the Respondent on a professional basis since about 2000. He regarded the Respondent to be "very forthright, a compassionate person and very straightforward" in his professional dealings (AB194). Mr Doughty observed that the Respondent carried out "an extraordinarily high level of work, a lot of travelling, very focused on the success of the business" (AB194). Mr Doughty considered the Respondent to be "a very good character" (AB194). Mr Doughty saw the Respondent on several occasions each month for business in 2007 and 2008. He was "stressed because it was a new business" and appeared "very focused on the business, driven for the success of the business, excited about the prospects of Meiko" (AB196). 102According to the presentence report, the Respondent is the eldest of two children, having a younger sister. He also has an elder stepbrother. The Respondent reported having a difficult childhood. He detailed a history of ownership of various catering equipment-based businesses since 1992. The Respondent informed Dr Furst of aspects of his difficult childhood and that his mother had a history of mental health problems. 103The presentence report dated 16 April 2012 noted that the Applicant had been employed since April 2010 as a designer and sales person in a luxury kitchen business. His employer described the Respondent as a valued employee. 104Civil proceedings were brought against the Respondent by MAP, in which judgments were obtained in December 2008 in the sum of $730,000.00, and in May 2009 in the sum of $865,305.60. A sequestration order was made against the Respondent rendering him bankrupt in October 2009. 105The Respondent informed the author of the ICO assessment report dated 16 May 2013 that he was unemployed and in receipt of a disability support pension. 106I note that in an affidavit sworn on 18 November 2013 for the purpose of this appeal, the Respondent indicated that he received a disability support pension and has ended up impoverished with no prospects of employment. 107A further report of Dr Furst dated 26 November 2013 was tendered at the hearing of the appeal, in the event that the Court found error and issues of discretion and resentencing arose for consideration. In that report, Dr Furst (who had seen the Respondent regularly since February 2009) stated that the Respondent was working for Sydney Woodworkers, based in Brookvale. Dr Furst noted that the Respondent lived in a Department of Housing dwelling at Lane Cove, and was in receipt of a disability support pension for bipolar disorder. 108Mr Odgers SC, for the Respondent, clarified the position at the hearing before this Court, indicating that his instructions were that the Respondent had ceased his employment with Sydney Woodworkers after he learned that the Crown had appealed against sentence in July 2013. 109The Respondent has been in a relationship with a new partner since August 2010. The partner has a teenage daughter. The Respondent has no children of his own. 110Reference will be made later to a finding of contrition made by the sentencing Judge (see [161] below). With respect to issues of contrition or remorse, the following matters should be noted: (a)following the Respondent's initial denial at the meeting in Germany on 9 October 2008 with Meiko representatives (at which he said it could have been the bookkeeper), the Respondent made certain admissions at the meeting the next day and expressed regret for what he had done; (b)following the commencement of civil proceedings against him by MAP, the Respondent contested liability as to part of the sum which is the subject of the present offences, with judgment being granted against him in this respect in May 2009; (c)it was not until February 2012, more than three years after he had been arrested and charged, that the Respondent indicated that he would plead guilty to the charges (with a number of matters on a Form 1); (d)in April 2012, the Respondent told the author of the presentence report that a number of the financial transactions to which his current offences related, were due to the actions of the financial controller employed by his company at that time, although he acknowledged that he felt that he was ultimately responsible for the transactions in his capacity as the director of the company (AB58); (e)in May 2013, the Respondent told the author of the ICO assessment report that the company's financial controller had failed in that person's duties, with the author noting that the Respondent "seemed to accept responsibility being the director of the company and it appears that financial and material gains were contributing factors in his offending behaviour" (AB64). Course of the Sentencing Proceedings and Some Findings in the Remarks on Sentence 111Before moving to consider the grounds of appeal, it is appropriate to chart the course of the sentencing proceedings and, in particular, certain issues which have assumed particular significance before this Court. 112As previously noted, the Respondent pleaded guilty to the five counts on 13 February 2012, and asked for seven offences to be taken into account on Count 5. Sentencing Hearing on 2 November 2012 113The sentencing proceedings were adjourned over a number of months with the principal sentencing hearing taking place before his Honour on 2 November 2012. It should be observed that the Respondent was represented by the same counsel on each occasion on which he appeared before the District Court. 114The Crown written submissions dated 2 November 2012 addressed issues of fact and law, culminating in the submission that "taking into account all the circumstances of the case, including the large amount of money involved, the fact there had been no reparation, and that the offences were committed for greed over a long period of time involving a breach of trust as a director, a lengthy full time custodial sentence is appropriate" (AB94). 115Written submissions of defence counsel on sentence focused upon the Respondent's subjective circumstances (AB165-166). 116The character witnesses referred to earlier (at [97]-[101]) were called to give evidence on 2 November 2012. The Respondent was not called to give evidence. The psychiatric reports then in existence were tendered, as was the presentence report. 117At the completion of the evidence, the Crown Prosecutor addressed on sentence, speaking to her written submissions. The Crown Prosecutor addressed the objective gravity of the offences noting, amongst other things, that it was a case of "greed not need" (AB198). The Crown Prosecutor pointed to the amount of money involved, the length of time over which the offences had been committed, the motive for the crime, the degree of planning and sophistication involved and an accompanying breach of trust. His Honour enquired as to whether financial gain was implicit in s.176A Crimes Act 1900 offences, with the Crown submitting that these offences involved financial gain for the Respondent (AB198-199). 118Counsel for the Respondent then addressed the sentencing Judge (AB199ff). Emphasis was placed upon the Respondent's subjective circumstances, including the psychiatric evidence. It was submitted that the offences did not involve planned or organised criminal activity. No submission was made for the Respondent that he did not gain personally with respect to any of the offences for which he was to be sentenced. 119Counsel for the Respondent raised tentatively the topic of an ICO - "I'd ask your Honour to consider taking all of the circumstances into account a slim possibility of an intensive correction order" (AB201). 120Some reference was made to the delay in the proceedings between January 2009 and November 2012, with a submission that delay should be taken into account in the Respondent's favour (AB200-201). 121The sentencing Judge observed, correctly, by reference to the cross-examination of character witnesses, that "The Crown seems to be in cross-examination challenging what the experts are saying in relation to his mental difficulties in 2007 and 2008" (AB202). His Honour referred to part of Dr Furst's report in the following exchange with counsel for the Respondent (AB202, lines 9-24) (emphasis added): "HIS HONOUR: ... So you say, do you, that a consequence of what Dr Furst says in his second report where Dr Furst on page 8 says 'It's likely Mr Hinchliffe's mood was unstable at the time in question before the court, he may well have been experiencing some symptoms of hypomania. Although he was aware his actions at the time his judgment was poor'. You say, do you, that there's evidence of a connection, not that you need it, but there's evidence of connection between the offending and his mental difficulties? Is that what you say? [DEFENCE COUNSEL]: The highest I could put it is the possibility of that having occurred, your Honour. HIS HONOUR: It's not just a possibility, the expert says it's likely. I'll see what the Crown has to say about that in a moment." 122His Honour then stated to the Crown Prosecutor that she had not sought to cross-examine Dr Furst. The Crown Prosecutor pointed to aspects of Dr Furst's report, and the absence of evidence from the Respondent, and submitted that counsel for the Respondent had been correct in submitting that the medical evidence suggested nothing more than a possibility of some connection between the Respondent's mental condition and his offences (AB203). The Crown submitted that there was insufficient material in the reports for the Court to find that the Respondent was suffering at the time of the offences from a mental illness. 123The sentencing Judge noted again that there had been no cross-examination of Dr Furst. The Crown emphasised again that there had been cross-examination of the witnesses who had been called (the character witnesses), but that the Respondent had not given evidence (AB206). It was then determined that the proceedings should be adjourned to allow Dr Furst to be called for cross-examination. 124I pause at this point to note that the real issue which had arisen in the sentencing hearing involved the absence of evidence from the Respondent. It was for the sentencing Judge to make findings, on the balance of probabilities, as to any relevant nexus between the Respondent's mental state and his offending. 125In circumstances where there was a very live issue concerning the factual substratum upon which the psychiatrists had depended, the calling of Dr Furst to give oral evidence was not likely to advance the matter. 126The Crown position, at that point, involved reliance upon R v Qutami [2001] NSWCCA 353; 127 A Crim R 369 at 377 [58]-[59], 380 [79] with respect to reliance by an offender upon a history provided to psychiatrists, without the Respondent being called at the sentencing hearing to give direct evidence of relevant matters, in particular, in areas of controversy. On an issue such as this (any connection between a mental condition and the criminal conduct), the Respondent carried the onus of proof, on the balance of probabilities: The Queen v Olbrich [1999] HCA 54; 199 CLR 270 at 281 [27]-[28]. Given the point which had been reached in the sentencing hearing, the only effective way in which the Respondent could discharge the onus of proof on this issue was to give evidence himself, thereby exposing himself to cross-examination. The Respondent did not take this course, although there were clear opportunities for him to do so. Sentencing Hearing on 29 November 2012 127Proceedings were adjourned until 29 November 2012, with Dr Furst giving evidence and being cross-examined by (a different) Crown Prosecutor. 128Once again, the Crown position was made clear that Dr Furst's opinions were based upon self-reports by the Respondent (AB218). At the conclusion of the evidence of Dr Furst, the proceedings were further adjourned. The sentencing Judge requested defence counsel to obtain some evidence concerning the Respondent's bankruptcy and its relationship to the agreed unpaid loss (AB 227). Sentencing Hearing on 15 March 2013 129The proceedings next came before the sentencing Judge on 15 March 2013. The same counsel again appeared for the Respondent with yet another Crown Prosecutor appearing in the proceedings. 130Documentary evidence relating to the Respondent's bankruptcy and the civil proceedings was tendered (AB229-230). Contained within the documents tendered by the Respondent on this occasion were emails sent in February and March 2011, which indicated that the Respondent had been offered a position as a catering operations consultant with a firm which did business with Meiko. That firm made contact with Meiko by email, indicating that the Respondent had assured the firm that the issues between Meiko and the Respondent would not pose any difficulty. 131Meiko responded by email noting the ongoing legal dispute with the Respondent, and the substantial damage he had caused Meiko. In those circumstances, Meiko indicated that, if the Respondent was employed with the firm, the business relationship between Meiko and that firm would cease (AB160-161). The Respondent did not obtain employment with the firm. 132The response of the sentencing Judge to this material was to express the view that Meiko had "destroyed" the "real and genuine efforts" of the Respondent to seek to repay the funds defrauded by him (AB232-233). The Crown Prosecutor pointed out that the Respondent had been bankrupted in 2009, so that events in 2011 may not have much bearing on the issue (AB233). 133Once again, I pause to observe that Meiko's position seemed entirely understandable. In February-March 2011, the Respondent was awaiting trial on charges of defrauding MAP of some $1.5 million. It might be considered quite unrealistic for the Respondent to seek employment with a firm in the same industry where he would be required to have commercial dealings with Meiko. Given Meiko's experience with the Respondent, arising from events which were still before the criminal courts, it was reasonable for Meiko to express the firm view that it could have no trust in him, and any commercial dealings with him. 134The sentencing Judge came to utilise this issue in the Respondent's favour on sentence. Viewed objectively, this issue was neutral at best for the Respondent. In circumstances where he had been bankrupted in 2009, it is difficult to see how this employment opportunity in 2011, and Meiko's response to it, bore at all upon the question of sentence. 135In any event, as the April 2012 presentence report indicated (see [103] above), the Respondent had been in employment since April 2010. 136Ordinarily, no particular reference to an issue such as this would be called for on an appeal to this Court. However, the sentencing Judge appears to have regarded this aspect of the evidence as a pivotal issue in his decision to seek an assessment of the suitability of the Respondent for an ICO, with an assessment of that type only being permissible where the Court has formed the view that a sentence of no more than two years' imprisonment is likely: s.69(2) Crimes (Sentencing Procedure) Act 1999. His Honour determined that this course should be taken in what he described as "very special circumstances, particularly where the complainant [Meiko] has put itself in a position where it's resisted this man's best endeavours" (AB237). 137Dr Furst was recalled to give further evidence on 15 March 2013. He was shown the transcript of evidence of the character witnesses adduced on 2 November 2012, and commented upon that evidence (AB240-248). 138The proceedings were adjourned to 31 May 2013 and his Honour requested an ICO assessment concerning the Respondent. Sentence Hearing on 31 May 2013 139On 31 May 2013, the same counsel appeared once again for the Respondent. A solicitor appeared for the Crown. It was on this occasion, for the first time, that his Honour directed a number of questions to the solicitor representing the Crown concerning the Agreed Statement of Facts, including the question whether the Respondent had benefited personally from the offences. This questioning occupied a number of pages of transcript (AB249-259). 140The tenor of his Honour's questions was whether there was evidence which would satisfy the Court beyond reasonable doubt that the Respondent benefited personally from all the offences. It must be said that his Honour squarely proceeded on the basis, which was confirmed by the Crown, that Meiko owned 90% of Swiss Systems. The solicitor for the Crown appears to have done his best to respond to the questions, although he noted at one point that he "thought the matter was for judgment" and "didn't really prepare myself" (AB258). The sentencing Judge observed, correctly, "You've been caught on the hop" (AB258). 141It is necessary for this Court to bear in mind this context in determining what use can be made of this course of questioning directed by his Honour to the Crown representative. 142It is noteworthy, as well, that his Honour did not direct any questions on this topic to counsel for the Respondent, who had appeared throughout the sentencing proceedings. 143His Honour indicated that a discount of 12.5% would be allowed for the Respondent's pleas of guilty (AB260). 144The Crown repeated the submission made earlier that a sentence of imprisonment of more than two years was appropriate, so that an ICO was not available as a matter of jurisdiction (AB260-262). The matter was stood over for sentence on 14 June 2013. Remarks on Sentence on 14 June 2013 145The remarks on sentence commenced with a short description of the five offences and the seven matters on the Form 1. His Honour then observed, with respect to the Form 1 matters (ROS2, AB14) (emphasis added): "I note, having availed himself of this arrangement, that is the Form 1, the offender has the benefit of not facing sentences of imprisonment for those additional offences, however by clearing the slate in this way as it is described he has provided considerable utility which must be brought to account to the offender. I do not overlook though that it could not be said that the offender would not have been inculpated in these additional offences but for his acknowledgement that he committed them, Attorney General's reference 56 NSWLR 146 at 65. The additional offences should impinge upon the sentence for the principal offence to a significant or marginal extent requiring an appropriate increase in the sentence that would otherwise be applied for the principal offence standing alone, Attorney General's reference at 42. The maximum penalty for each offence on the indictment and for the offences on the Form 1 are ten years imprisonment." 146A discount of 12.5% was allowed for the Respondent's pleas of guilty. 147The sentencing Judge then moved to a recital of the facts of the offences. Much of what his Honour said in this regard was drawn from the Agreed Statement of Facts. However, apparently drawing upon the exchange with the solicitor for the Crown on 31 May 2013, his Honour made a number of further findings which the Crown contends involved a misunderstanding of the facts. This issue will be considered under the first ground of appeal. 148The Crown written submissions had addressed a number of features of s.176A offences, which bear upon an assessment of the objective gravity of offences of this type - the amount of money involved, the length of time over which the offences are committed, the motive for the crime, the degree of planning and sophistication and an accompanying breach of trust. His Honour addressed some, but not all, of these issues (ROS10-11, AB22-23). 149Firstly, his Honour found that the amount of money involved was a very large sum and that the loss was effectively irretrievable. 150Secondly, his Honour observed that "At first blush it would appear that the offences were committed over a lengthy period of time", but that he would "have something to say about that in due course" (ROS10, AB22). It was common ground in this Court that his Honour did not return to this topic in the remarks on sentence. 151Thirdly, his Honour referred to motive, but said nothing more about it. 152Fourthly, the sentencing Judge observed that there seemed to be "not a great deal of planning but certainly some planning" (ROS10, AB22). 153Fifthly, his Honour observed that there was an accompanying breach of trust. 154The sentencing Judge referred to a number of authorities supporting the relevance of the five enumerated factors to the question of assessment of objective gravity, without further comment. 155Next, his Honour turned to the Respondent's subjective circumstances (ROS11-12, AB23-24). 156The sentencing Judge then turned to the circumstances of the offences. His opening observation contains a statement which the Crown says is factually incorrect (ROS12, AB24): "It is important to understand the circumstances of the offending. So far as the amount on 12 September 2007, which is the first count in the indictment, it seems that that amount was deposited into Swiss Systems, at that time, as I understand it, and I checked this with the Crown on the last occasion, that company effectively was owned ninety per cent by the German Company and ten per cent by the offender. There is no evidence that could satisfy me beyond reasonable doubt and the Crown conceded this, that that amount of money came to the personal account of the offender or that the offender benefited personally from that money, certainly the offender used that money for a company for which he had a substantial but lesser interest." 157It was not correct that Meiko owned 90% and the Respondent 10% of Swiss Systems. This arrangement applied to MAP (see [15] above). It was the Respondent who continued to own and operate Swiss Systems at this time. 158His Honour then turned to offences committed in the context of the purchase by the Respondent of the property at 252 Raglan Street, Mosman. His Honour said (ROS12-13, AB24-25): "In relation to the amounts drawn on 2 June, 5 June and 1 August, being $150,000, on 2 June, $150,000 on 5 June and $430,000 on 1 August. It is important to understand that the offender was interested in purchasing 252 Raglan Street. On 28 May 2008 he attended a certain bank, the details of which are known in the proceedings and for a proposed budget bank briefing. He had a discussion with one of the bank managers and it was indicted [sic] that he wished to purchase the premises at 252 Raglan Street and the bank effectively indicated to him that they would be happy to loan the funds for the purchase. On 31 May 2008 the offender attended the auction in relation to 252 Raglan Street. The property was passed in at auction and in subsequent negotiations, the offender agreed to purchase the premises for $2.75 million dollars, that offer was accepted and a cheque for $275,000 was given by way of a deposit. On 2 June 2008 the offender contacted the bank manager's assistant and began the process of making the loan application with that bank. On 14 June 2008 the offender spoke to the bank manager's manger [sic] who indicated that due to the financial climate it was unlikely that the loan which had been discussed on 28 May 2008 would be approved. The loan was subsequently refused. Eventually, the offender obtained a loan of $2.2 million dollars from another bank. It seems to me that the facts are, that Swiss Systems which was the company that the offender had was the agent for Meiko. Meiko agreed to purchase the agency Swiss Systems and effectively, the offender obtained ten per cent of a subsequent company and Meiko obtained ninety per cent." 159His Honour continued in passages which disclosed further factual misunderstanding (ROS13-14, AB25-26): "So far as the payments on 12 September 2007, 4 June 2008 and 5 June 2008, namely $90,073 which is the first count on the indictment; $240,999 which is the third count in the indictment, and $79,573.49 which is the first count on the Form 1; $200,000 on 30 June 2008 which is the second count on the Form 1; $25,000 on 15 August 2008 which is the third count on the Form 1; $10,000 on 29 August 2008 which is the fourth count on the Form 1; $66,666.40 which was the sixth count on the Form 1; $35,000 on 5 September which is the seventh count on the Form all that money went to the account of Swiss Systems. In relation to the amount of $25,000 on 1 September 2008 which is the fifth count on the Form 1, of that $25,000 which went into Swiss Systems, $12,000 was paid to the personal account of the offender. All the payments to Swiss Systems were not authorised, there is no evidence that would satisfy me beyond reasonable doubt that the offender personally benefited from the payments made to Swiss Systems. It is important in my view to take into account that the fact that, although the offender was involved in the amount in the indictment of the Form 1, it seems to me that the facts are that the offender personally benefited in the sense that the money went to his account for the payments on 2 June 2008, 5 June 2008, 1 August 2008, and 1 September 2008. So far as the payments on 2 June 2008, the 5 June 2008 and the 1 August 2008 which went to the purchase of 252 Raglan Street, that is an amount of $730,000. On 1 September 2008 there is another amount of $12,000 out of the $25,000, that $12,000 went to the personal account of the offender." 160His Honour noted that the Respondent had been made bankrupt in September 2009 with his main creditor being Meiko. Reference was then made to the emails of February-March 2011 in which the Respondent sought employment in the same industry and Meiko expressed an unwillingness to deal with him (ROS14-15, AB26-27). 161His Honour made a finding of contrition in favour of the Respondent (ROS15, AB27): "I am satisfied that on 10 October 2008 the offender admitted to Meiko that he had taken without authority the sum of $730,000. That in my view is an indication of contrition. On 5 December 2008 the offender consented to judgment to $730,000 in the Supreme Court proceedings. His contrition is also indicated, in my view, in his plea of guilty and also in the evidence of Dr Furst and the report that I have from Dr Furst." 162In finding contrition, a number of the matters referred to at [110] above were not mentioned. 163His Honour then stated that the Respondent "has had for many, many years mental difficulties which are set out in various psychiatric reports that I have" (ROS15, AB27). Extensive reference was then made to parts of the psychiatric reports (ROS15-19, AB27-31). His Honour referred to well-known passages from the judgment of McClellan CJ at CL in Director of Public Prosecutions (Cth) v De La Rosa [2010] NSWCCA 194; 79 NSWLR 1 at 43 [177]-[178]. A finding was then made in the following terms (ROS20, AB32): "In this case, I am satisfied that on balance, having heard the evidence of Dr Furst, that the offender has been suffering from mental difficulties that he has, untreated, for many, many years. I am satisfied on balance that at the time of this offending the offender was suffering from that mental difficulty. I am satisfied on balance, according to the evidence of Dr Furst, that the offender's judgment in relation to the matters would have been impaired. I take those matters into account. I am also satisfied that the offender is still suffering from the mental disorder that he has, although he is being treated and he has progressed in that treatment and there is insight in relation to the treatment and the offending." 164No reference was made to the Crown's repeated submission that a finding to this effect should not be made given the absence of evidence from the Respondent. His Honour at no stage in his remarks on sentence referred to the fact that there was an absence of evidence from the Respondent to support Dr Furst's opinion and the significance of such absence. 165His Honour then referred to authorities concerning totality, concurrence and accumulation (ROS20-21, AB32-33). 166His Honour then said (ROS21-22, AB33-34): "In this matter, I am of the view that the offending in relation to the $730,000 and the $12,000 needs to be looked at differently from the other offending, but I propose to impose sentences which, taking into account the principles of totality, are partially cumulative and some are concurrent. I intend to impose sentences taking into account the principles that I have spoken of, including questions of general deterrence and other matters that I have referred to. It seems to me that the only appropriate sentence to be imposed is a sentence of full-time imprisonment." 167The sentencing Judge then identified the specific sentences identified at the commencement of this judgment. Reference was then made to the decision of this Court in R v Pogson [2012] NSWCCA 225; 82 NSWLR 60 at 84 [108]-[109], 90 [141]. 168His Honour provided the following reasons for sentencing the Respondent by way of an ICO (ROS23, AB35): "I have determined that it is appropriate for the offender to serve the sentences by way of intensive correction order. My reasons are the circumstances of the offending, the second reason is that I accept that the offender has taken considerable steps towards rehabilitation beyond that which the Court usually sees. In particular, I am impressed by the psychiatric reports in that regard. The offender admitted his offending to his German partners in October 2008 and it seems that, by February 2009 - admittedly he had been arrested a short time previously - he attended Dr Furst. As at May 2012, the offender had been attending Dr Furst for psychiatric therapy on no less than fifty occasions. Dr Furst, as I understand it, is still the treating doctor, and the offender, according to Dr Furst, was progressing extremely well. It is important to understand that prior to the intervention of Dr Furst, and eventually the Black Dog Institute, the offender's mental difficulties had previously been undiagnosed. The third reason is that in my view the offender has shown contrition. Importantly, he has also shown according to Dr Furst insight into his offending and the steps that he is taking, that is, the therapy with Dr Furst and the psychologist, to deal with what is obviously a personal problem producing serious criminal behaviour. In my view, it would not be of assistance to the offender, it would not be in the interests of justice or the community to curtail the offender's rehabilitation progress." 169His Honour then proceeded to make orders, directing that the sentence commence from 21 June 2013. Approach to the Grounds of Appeal 170The Crown identified seven grounds of appeal. It was submitted for the Crown that Grounds 1-6 identify errors on the part of the sentencing Judge, which serve to explain the imposition of manifestly inadequate sentences, the complaint contained in Ground 7. 171Mr Odgers SC submitted that Grounds 1-6 should be regarded as particulars only of Ground 7. 172Insofar as the Crown sought to make complaint concerning certain factual findings (areas of misunderstanding arising from the discussion on 31 May 2013), in the manner advanced by the Crown in support of Ground 1, Mr Odgers SC submitted that such a complaint should be the subject of a specific ground of appeal. 173In support of these submissions, he referred to passages in the decisions of the High Court of Australia in Carroll v The Queen [2009] HCA 13; 83 ALJR 579 and Bugmy v The Queen [2013] HCA 37; 87 ALJR 1022. 174At the outset, I accept that it is open to the Crown to advance grounds of appeal of the type relied upon in this case. The Crown has identified seven grounds which ought be considered by this Court, and not regarded as mere particulars of Ground 7. 175Further, in the circumstances of this case, it is open to the Crown to complain (under Ground 1) about the sentencing Judge's misunderstanding as to the facts, without the need for a specific ground in those terms. There can be no doubt that the Respondent was on notice of the Crown's argument in this respect, and was in a position to meet it, if he saw fit to do so. Senior counsel for the Respondent approached this topic by reference to technical and procedural issues. He told this Court (T11.11-15, 2 December 2013): "Now, I haven't made any submission about what the true position is one way or the other. I am not going to make a submission about that. The evidence is unclear, in the sense that the facts were ambiguous and the Crown position was interpreted in one way; the judge interpreted it in one way. I respectfully submit no error is shown on the part of the judge." 176I have approached this aspect of Ground 1, noting the position of the Respondent on this factual question. 177I am satisfied that it is open to the Crown to proceed in this way, in advancing grounds and submissions in support of this Crown appeal. Ground 1 - The Sentencing Judge Erred in Failing to Adequately Assess the Objective Gravity of the Offences or to Give Sufficient Weight to it Submissions of the Crown 178The Crown submitted that it was difficult to conclude with any precision from the remarks on sentence, what view the sentencing Judge took of the objective gravity of these offences although, given the sentences imposed, his Honour could not have regarded them as being particularly serious. It was noted that no assessment of objective gravity had been made. 179The Crown noted that the sentencing Judge had referred to features relevant to the assessment of the gravity of the offences, but that his Honour did not at any stage articulate his own assessment. It was submitted that this Court should readily infer, from the use of an ICO in this case, that his Honour viewed the objective gravity of the offending conduct as being relatively low. 180Whilst acknowledging that the characterisation of the gravity of an offence is classically within the discretionary role of the sentencing Judge, the Crown submitted that the sentencing discretion had miscarried substantially in this case. Reference was made to the sum of money involved, and the extended period of time over which the offences were committed, as indicating that the offences involved substantial dishonesty and could only be punished by a sentence of full-time imprisonment. 181In support of this ground, the Crown submitted that his Honour had regard to facts contrary to those agreed to by the parties, and which were more favourable to the Respondent than the evidence in fact established. The Crown acknowledged that there was a degree of ambiguity in the Agreed Statement of Facts, together with incorrect information provided by the Crown in oral submissions on 31 May 2013 (and not corrected by the Respondent) and that this contributed to the error. 182The sentencing Judge proceeded to sentence on the basis that all but the monies directly applied by the Respondent to the purchase of the Mosman property, plus an additional $12,000.00 that went to the Respondent's personal bank account, were simply moved from one company owned by Meiko to another which was 90% owned by Meiko, with no personal benefit accruing to the Respondent. 183The Crown submitted that this was not correct. What Meiko purchased was not the Swiss Systems company, but the agency business of Swiss Systems. The business purchased by Meiko was conducted by MAP, and was not linked to Swiss Systems, other than by the assumption of its business, and the commonality of the Respondent as employee of one and owner/director of the other. Part of the payment to the Respondent for his business was a 10% stake in MAP (this being the apparent genesis of the sentencing Judge's error as to Meiko's 90% ownership of Swiss Systems). As noted in the Agreed Statement of Facts, the Respondent was required to wind up Swiss Systems as part of the overall transaction. 184The Crown submitted that the sentencing Judge misconstrued part of the Agreed Statement of Facts to mean that MAP and Swiss Systems were both subsidiaries of the same parent company, with monies transferred from the one to the other still owned by Meiko, and applied to its general benefit. The Crown submitted that his Honour relied upon this factual misunderstanding to reduce the gravity of the offences to little more than an accounting irregularity. 185The Crown submitted that all of the monies transferred fraudulently from MAP to Swiss Systems went to the benefit of the Respondent, or to his wholly owned company. The Crown noted that the Respondent had discussed the company structure (accurately) with Dr Westmore, who recorded this information in his report of 29 April 2011 (AB101). What the Respondent said to Dr Westmore is not consistent with the construction adopted by the sentencing Judge. 186The Crown submitted that this error in interpreting the facts caused the sentencing Judge to greatly underestimate the seriousness of the Respondent's crimes, in that his Honour clearly distinguished between those offences where the fraudulently obtained monies went to a Swiss Systems account, and those monies that went to fund the Respondent's real estate purchase at Mosman, or were paid to his personal bank account. 187It was submitted that the error was a significant one, and must have led the sentencing Judge to assess the objective gravity of the Respondent's crimes as having considerably reduced seriousness than was the true position. The Crown submitted that, had the sentencing Judge properly and adequately assessed the objective gravity of the offences, and accorded it proper weight, he could not have concluded (as he apparently did) that these were not serious crimes. 188The Crown pointed to the following features, which ought to have been given full weight by the sentencing Judge: (a)the offences involved a deliberate and considered course of dishonesty; (b)the dishonest conduct was motivated by a desire for financial gain; (c)the funds obtained by the Respondent were almost exclusively applied to his personal financial advantage, or to the advantage of a company wholly owned by him, with the ultimate aim of supporting a luxurious lifestyle; (d)the course of dishonesty involved the creation of false accounting entries which were intended to conceal the Respondent's crimes; (e)the Respondent was engaged in deceptive conduct over a period of one year to give effect to, and to conceal, his crimes; (f)as a director of a company operating in Australia, but owned by an international company, the Respondent's crimes represented a particularly grave breach of trust, in that the Respondent was not subject to the supervision of a locally based board - he was able to take advantage of his trusted position, and the lack of local oversight, to carry out the crimes and to conceal the fraud over a year; (g)the Respondent had been trusted to fulfil the role, not just of managing director, but also of company secretary, the offences constituting an additional breach of trust in this regard; (h)the amount of money involved in the fraud was considerable, in excess of $1.5 million, with fraud of this dimension clearly representing a significant loss to the company defrauded; (i)the offences taken into account on the Form 1, with respect to Count 5, were in themselves significant crimes requiring an appreciable increase in the penalty imposed on that count; (j)no restitution had been made by the Respondent to the company that had sustained the loss. 189As a result of the sentencing Judge's erroneous and inadequate review of the facts of the crimes, and their seriousness, the Crown submitted that an overall sentence was ultimately imposed which was incommensurate with the significant criminality involved, and was incapable of fulfilling the requirement for reasonable proportionality between the sentence imposed and the circumstances of the crime: R v Geddes (1936) 36 SR(NSW) 554 at 556; R v Ball [2013] NSWCCA 126 at [120]. Submissions of the Respondent 190Mr Odgers SC submitted that this ground of appeal had not been made out. He submitted that it was unnecessary for the sentencing Judge to embark upon a detailed finding as to where the offences lay on a range of objective seriousness. 191Senior counsel submitted that it was the obligation of the sentencing Judge to undertake a process of instinctive synthesis, and his Honour did so. There was no general obligation to give more weight to the objective gravity of the offences over the Respondent's subjective features. 192Reference was made as well to his Honour's findings concerning the Respondent's impecuniosity, and his efforts to make repayments of the defrauded funds. 193With respect to the areas of factual misunderstanding relied upon by the Crown, Mr Odgers SC submitted that it was open to his Honour to approach these matters upon the basis that the Crown had not demonstrated the contrary position beyond reasonable doubt. As mentioned earlier (at [175]), senior counsel refrained from making a submission concerning the accuracy of the matter. 194It was submitted that the Crown had not demonstrated that it was not open to the sentencing Judge to make the findings sought to be challenged under the first ground of appeal. Decision 195It may be taken that this Court will be slow to interfere with discretionary determinations of sentencing Judges concerning the objective gravity of offences: Mulato v R [2006] NSWCCA 282 at [37], [46]-[47]. 196To overturn a factual finding by a sentencing Judge, it is necessary for this Court to be satisfied that there was an error of principle, or a mistake of fact or law, such that the sentencing discretion of the trial Judge miscarried. In its review, the Court is bound by findings of fact by the sentencing Judge unless they were not open on the evidence or unless error is shown in the sense referred to in House v The King [1936] HCA 40; 55 CLR 499 at 504-505: R v Merritt [2004] NSWCCA 19; 59 NSWLR 557 at 573 [61]. 197However, what has been demonstrated in this case is an incomplete process of assessment of objective gravity by the sentencing Judge. 198Further, there is an irresistible inference to be drawn from orders actually made, that his Honour regarded the Respondent's offences as being at a relatively low level of objective gravity. Such a finding was not open in this case. 199I am satisfied that his Honour misconstrued the facts as part of the sentencing process. The fact that this was contributed to by Crown submissions on the last day of the sentencing hearing will be considered further on the question of the exercise of the residual discretion. 200It should be observed, however, that the Respondent had pleaded guilty to the five counts of fraud contained in the indictment, and had admitted his guilt of the seven counts to be taken into account on the Form 1. 201Added to that were the contents of the Agreed Statement of Facts, which quantified the sums obtained as a result of the frauds, and which, it was agreed, had not been repaid at all to the victim company. 202At no point, until his Honour raised the issue on the last hearing day, was there any submission on behalf of the Respondent that he had not gained financially as a result of all of the offences. The Crown had made specific submissions that there had been financial benefit on his part. To the extent that it may possibly be relevant, there was nothing in the various reports tendered in the sentencing proceedings which indicated that the Respondent had not himself benefited financially from all offences. Further, no submission had been made by counsel for the Respondent by reference to the shareholding arrangement relied upon (incorrectly) by his Honour. 203In these circumstances, it would appear that it was his Honour who raised this issue at the end of the sentencing hearing, with questions (without notice) being directed to a solicitor for the Crown, who was in attendance for a limited purpose, and who (according to the transcript) was not prepared to engage upon a detailed discussion of this aspect of the case. Questions of this type had not been directed to the Crown Prosecutors who had appeared on earlier hearing days. Notably, enquiries of this type were not directed by his Honour to counsel for the Respondent, who had been in attendance throughout the sentencing hearing. 204There is a further issue, however, which arises in this context. In the circumstances of this case, given the pleas of guilty, the Agreed Statement of Facts and other material, the onus would appear to be upon the Respondent, on the balance of probabilities, to establish that he had not gained personally from a substantial number of the offences of dishonesty to which he had pleaded guilty. A finding along these lines might operate to reduce sentence. In accordance with the principles in Olbrich v The Queen, this would seem to be an issue where the Respondent bore the onus of proof to the civil standard. To the extent that the sentencing Judge raised this issue, near the end of the sentencing hearing, upon the assumption that this was an issue for the Crown to negative beyond reasonable doubt, this does not appear to be the correct approach in law. 205Mr Odgers SC submitted that it was open to the sentencing Judge to regard this aspect as being one requiring proof to the criminal standard by the Crown. Alternatively, he submitted that this may fall into that category of case where the material available to the sentencing Judge will not permit the Court to resolve the issue in a way that goes to increase or to decrease the sentence to be imposed: Weininger v The Queen [2003] HCA 14; 212 CLR 629 at 636-637 [19], [22]. 206I do not accept this submission. If the Respondent sought such a finding in mitigation of penalty, he carried the onus of proof to the civil standard. 207However, error is demonstrated whichever approach is to be taken to the onus of proof. 208His Honour misunderstood the true facts in at least two respects. Firstly, a mistaken finding was made concerning personal benefit to the Respondent. Secondly, a mistaken finding was made by reference to the shareholding issue. 209I note, in any event, that even if it were the case that it was his company, Swiss Systems, and not the Respondent personally, who benefited from the fraudulent obtaining of about $820,000.00, this would do little to mitigate the seriousness of the offences: R v Scott [2005] NSWCCA 152 at [17]. 210The features of this case identified by the Crown at [188] above all point to an erroneous approach on the part of the sentencing Judge in an assessment of the objective gravity of these offences, culminating in the imposition of a sentence utilising an ICO. 211I am satisfied that Ground 1 has been established. Ground 2 - The Sentencing Judge Erred in Failing to Impose a Sentence Which Properly Reflected the Offences Before the Court by way of a Form 1 Schedule Submissions of the Crown 212The Crown submitted that the seven offences on the Form 1, to be taken into account on sentence for Count 5, were objectively serious and involved a further $441,239.89 defrauded by the Respondent. An appreciable increase in the sentence imposed for Count 5 ought to have resulted. The Crown submitted, however, that the sentence actually imposed (18 months' imprisonment) demonstrated a clear failure to impose a sentence that gave proper regard to the Form 1 matters. 213Further, the Crown submitted that the factual misunderstanding on the part of the sentencing Judge (considered under Ground 1) affected the Form 1 matters as well. 214To the extent that the sentencing Judge identified that the additional offences should be taken into account upon sentence for the principal offence "to a significant or marginal extent" (see [145] above), the Crown submitted that the approach adopted by his Honour indicated a marginal allowance only at best. 215The Crown submitted that the correct approach was to increase the sentence imposed for Count 5, to take into account the additional need for deterrence and retribution in respect of the offence in Count 5 for which the Respondent was to be sentenced, and that this had not occurred in the present case. Submissions of the Respondent 216Senior counsel for the Respondent submitted that the sentencing Judge had determined that the Form 1 matters were to impinge upon sentence for Count 5 to some extent. In this way, it was submitted that his Honour had not erred in the approach to the Form 1 matters, and that a greater sentence was imposed for Count 5 in a manner which indicated compliance with principle. 217Mr Odgers SC submitted that the Respondent's offences were part of one course of conduct committed by an offender suffering from a mental disorder, so that rehabilitation was a substantial factor on sentence. He submitted that it is difficult to see that there was a greater need for retribution or deterrence by reference to the Form 1 offences to be taken into account on sentence for Count 5. Decision 218In the course of submissions, the Court drew attention to his Honour's statement that "by clearing the slate in this way, as it was described he has provided considerable utility which must be brought to account to the offender" (see [145] above). Senior counsel for the Respondent acknowledged that this observation of the sentencing Judge did not accord with principle, but he contended that his Honour's overall approach to the Form 1 matters did not demonstrate error. 219It appears that his Honour's approach to the Form 1 matters involved a type of double counting in favour of the Respondent. It is no doubt correct that the Form 1 procedure involves a type of clearing the slate by an offender. In this way, an offender obtains an advantage in that there is a cap upon the available sentence confined to the primary offence, in relation to which the Form 1 matters are to be taken into account. However, it is erroneous to, in some way, seek to afford a further benefit to an offender because he or she has co-operated in such a process. To the extent that his Honour's words indicate that such an approach was taken, it was erroneous. 220The more fundamental difficulty with respect to the Form 1 matters, however, is that the sentence fixed by his Honour for Count 5 does not, when viewed objectively, appear to make any (or any adequate) allowance for the Form 1 offences. These were significant offences involving a substantial sum of money. The proper exercise of sentencing discretion called for an appreciable increase in sentence on Count 5, to take into account the additional need for deterrence and retribution arising from the Form 1 matters: Abbas v R [2013] NSWCCA 115. 221I would uphold the second ground of appeal. Ground 3 - The Sentencing Judge Erred in Giving the Respondent's Subjective Case Greater Weight than was Warranted Such that it Impermissibly Ameliorated the Sentences Imposed Ground 4 - The Sentencing Judge Erred in Giving Greater Weight than was Warranted to Rehabilitation Thus Diminishing the Importance of Punishment and Denunciation 222The parties addressed these grounds of appeal together and it is appropriate for this Court to consider them in the same way. Submissions of the Crown 223The Crown noted the evidence adduced in the Respondent's case at first instance, which did not include evidence from the Respondent himself. 224It was submitted that it was significant that none of the character witnesses knew the true extent of the Respondent's criminal conduct, or that it went beyond monies obtained for a real estate purchase. 225The Crown referred to the psychiatric reports which included diagnoses referred to earlier in this judgment. Dr Furst opined that the Respondent was likely to have been experiencing mood instability at the time of the offences, which he noted were motivated by the Respondent's need to purchase a Mosman property and fears that he might lose the property and deposit if he could not complete the purchase. Dr Furst had concluded that the Respondent was aware of his actions at the time, but that his judgment was probably poor. Further, although the Respondent told Dr Westmore that his mood was elevated and he felt invincible at the time of offending, he acknowledged, as well, that he was conscious of the decisions he was making at the time, although he reported some reduction in the clarity of his decision-making process. 226The Crown observed that the sentencing Judge appears to have regarded the psychiatric evidence as having very considerable weight. It was submitted, however, that his Honour had overlooked the fact that none of the witnesses, lay or expert, had been aware of the true extent of the Respondent's criminality. He had not told the character referees of the true extent of his offending. Nor had he provided a complete account of his offending to the psychiatrists. 227It was submitted that the unsatisfactory features of the history given by the Respondent to each of the psychiatrists was plainly a relevant factor to consider when determining the weight to be given to the opinions of each of them. In circumstances where the Respondent had been untruthful with his friends and the medical practitioners, this should have operated to undermine the weight to be given to this evidence. Not only had the Respondent not given evidence himself foundational to the opinions of the psychiatrists, but he had positively misled the experts when describing his crimes. 228Rather than adopting a cautious approach, however, the Crown submitted that his Honour embraced the psychiatric evidence as impressive, relying upon it as evidence of an extraordinary degree of rehabilitation, as evidence of contrition and as evidence justifying a refusal to curtail the Respondent's rehabilitation progress by imposing a full-time custodial sentence. 229It was submitted that the Respondent's consistent understatement of his criminality pointed to a lack of contrition and remorse and that, in addition, the sentencing Judge had overlooked or ignored evidence in which the Respondent sought to apportion blame to others (an accountant or company financial controller). 230The Crown noted that counsel for the Respondent had advanced a submission that he could put it no higher than a possibility that there was a causal link between the bipolar disorder and the offences. In effect, the Crown submitted that this was a correct characterisation of the evidence in the circumstances of the present case. 231It was submitted that his Honour had taken an unduly favourable and erroneous approach in applying the principles in Director of Public Prosecutions (Cth) v De La Rosa. 232The Crown submitted that the psychiatric evidence, taken at its highest, ought not to have led to a finding of significantly reduced culpability on the part of the Respondent. 233In approaching the evidence concerning the Respondent's rehabilitation in the way in which he did, the Crown submitted that his Honour not only overstated the evidence, but allowed its significance to wrongly outweigh the other purposes which a sentence is intended to fulfil for the purpose of s.3A Crimes (Sentencing Procedure) Act 1999. 234The Crown submitted that the Respondent's subjective case was wrongly given such weight by the sentencing Judge as to lead to the imposition of a sentence which was erroneous in its leniency, both in terms of the length of the individual sentences, the degree of concurrency, and the manner in which the sentence was to be served. Submissions of the Respondent 235Mr Odgers SC submitted that it was open to the sentencing Judge to make the findings which he did. Emphasis was placed upon the fact that Dr Furst had given oral evidence, and was cross-examined by the Crown. 236It was submitted that the Crown did not join issue with a finding that the Respondent suffered from bipolar disorder. In reality, it was submitted that the Crown sought to challenge only the weight which his Honour chose to give to this factor on sentence. In this way, it was submitted that the finding was open to the sentencing Judge and that the grounds of appeal which contended to the contrary should fail. Decision 237The present case provides a good illustration of the importance of the principle referred to in R v Qutami, and in other cases such as R v Palu [2002] NSWCCA 381; 134 A Crim R 174 at 184-185 [39]-[41]. 238Reports of psychiatrists and psychologists are tendered frequently in sentencing proceedings without controversy. Applying the principles in R v Qutami and R v Palu, sentencing courts will be cautious in attaching weight to untested histories provided to the authors of such reports, particularly in areas of controversy. 239In the present case, there was a live controversy concerning the existence of any causal connection between a mental condition which may have affected the Respondent and his extended course of dishonest conduct over a period of a year. At the time of the offences, of course, the Respondent was functioning in a responsible business position. He had occupied a position of this type, apparently with some success, for several years. The character witnesses did not support an evidence-based finding of any apparent difference in his conduct or demeanour in 2007 and 2008, as opposed to other periods. 240It was entirely clear to the Respondent's legal representatives, and the sentencing Judge, that the Crown was maintaining a submission that the absence of evidence from the Respondent at the sentencing hearing, was a significant factor in itself operating against findings in his favour, as to which he bore the onus to the civil standard. 241The process whereby Dr Furst was called to give evidence in fact missed the point. It was for the sentencing Judge to determine whether he was satisfied on the balance of probabilities of the matters which may operate in the Respondent's favour on sentence. The fact that Dr Furst may express an opinion, based upon what he was told in an untested way by the Respondent, did not advance the position. Nor did cross-examination of Dr Furst on these matters. 242The entire process was, in reality, one step removed from the true process required for the Respondent to agitate for findings to be made in his favour. In the circumstances of this case, it was clear that it was necessary for the Respondent to give evidence with respect to these matters. He did not do so. There was ample opportunity for the Respondent to give evidence on one of the several occasions when the matter came before his Honour. Although it was the Respondent's right to decline to give evidence in the sentencing proceedings, a consequence of such a decision is that favourable findings which he seeks to have made to reduce sentence may not be available to a sentencing court, acting in accordance with the law and by reference to the evidence. 243The Respondent's decision not to give evidence was relevant, as well, to the question of what was done with the funds defrauded by him over a period of 12 months. For reasons considered under Ground 1, findings favourable to the Respondent were made in the absence of evidence from the Respondent, and based upon a misunderstanding of the true factual position. 244This Court has observed that the failure of a Judge to attribute sufficient weight to an issue at sentence will not generally be a material error. The circumstances in which matters of weight will justify intervention by an appellate court are narrowly confined: R v Baker [2000] NSWCCA 85 at [11]; Majid v R [2010] NSWCCA 121 at [40]. 245I am satisfied, however, that the error in this case arises from the flawed approach adopted by the sentencing Judge. His Honour has disregarded evidence of significance and has failed to have regard to the absence of evidence from the Respondent, in circumstances where a submission had been made by the Crown that the absence of such evidence was of great significance in the resolution of issues in the proceedings. It should be observed, in any event, that the Respondent had told Dr Westmore and Dr Furst that he was conscious of the decisions he was making, and their wrongness, at the time of the offences (see [225] above). What the Respondent said to the psychiatrists was not of substantial assistance to him on sentence in any event. 246A consequence of this erroneous approach is that findings were made which were not supported by the evidence. In particular, a finding of the existence of a causal connection between the Respondent's offences and his mental condition was erroneous. 247There was evidence of the Respondent's mental health in and after 2009 which could be taken into account as a subjective factor on sentence. However, the sentencing Judge erred in approaching this evidence in the way in which he did. 248I am satisfied that these grounds of appeal have been established. Ground 5 - The Sentencing Judge Erred by Failing to Impose Sentences that Reflected the Objective Gravity of the Crimes Ground 6 - The Sentencing Judge Erred in Ordering that the Sentences be Served by Way of ICOs 249These grounds of appeal were argued together by counsel and will be considered together by the Court. Submissions of the Crown 250Drawing upon a number of submissions advanced in support of earlier grounds, the Crown submitted that the objective gravity of these offences was such that only a full-time custodial sentence could have addressed the criminality involved, and remained reasonably proportionate to the circumstances of the crimes. 251It was submitted that the offending was serious, extended in time, deliberate and extremely dishonest. The offences taken into account on the Form 1 with respect to Count 5 were of such seriousness that there should have been an appreciable and significant increase in penalty for the offence. The motivation was solely that of personal financial gain. 252The Crown submitted that the Respondent's offences included the acquisition of an expensive Mosman property. 253It was submitted that a course of criminality of this type committed by a person in a position of trust (as a director and as a company secretary), unameliorated by restitution or genuine remorse, had to be met with a significant custodial sentence to have an appropriate punitive and deterrent effect, both upon the Respondent and others who might be tempted to act dishonestly in this way. The Crown emphasised the importance, in a commercial environment, of company office holders justifying the trust that reposes in them and upon which the foundation for contemporary business and investment practice rests. 254It was submitted that the fixing of erroneous sentences was compounded by an order permitting each of the sentences to be served by way of an ICO. The Crown noted that counsel for the Respondent had (realistically) raised this sentencing option as a "slim possibility", with the sentencing Judge then adopting that prospect with some enthusiasm. The Crown pointed to authorities which state that an ICO has inherent in it a significant degree of leniency, involving no actual custody. Correctly assessed, the Crown submitted that the circumstances of the Respondent's crimes, and of his subjective case, were inconsistent with the leniency inherent in an ICO. 255It was submitted that a sentence of two years' duration, taken with the use of an ICO, did not meet the purposes of sentencing in this case, so that error has been demonstrated as contended for in these grounds. Submissions of the Respondent 256Mr Odgers SC submitted that reasonable proportionality between the offences and sentences required attention to be had to not only the objective circumstances, but also the subjective circumstances of the Respondent. It was submitted that his Honour had complied with this approach in this case. 257The sentencing Judge accepted that the only appropriate sentence was one of imprisonment. However, in light of all the circumstances, his Honour concluded that an overall sentence of two years' imprisonment was within the range of sentences open in this case. 258Senior counsel for the Respondent observed that the imposition of an ICO is available to white-collar offenders, noting what had been said concerning rehabilitation in R v Pogson at 83-85 [100]-[113]. Decision 259This is not a case of an isolated offence committed by an offender with an established mental condition bearing directly upon the commission of the offence. Rather, over the period of a year, the Respondent defrauded the corporate victim on several occasions, with him or his own company obtaining the benefit of about $1.5 million as a result. The offences involved acts of deception by the Respondent which were intended to guard against detection. 260A number of factors operated in the Respondent's favour subjectively on sentence. However, it was necessary for sentences to be imposed to adequately punish the Respondent for his offences, whilst at the same time fulfilling the functions of general and specific deterrence, and the other purposes of sentencing, including rehabilitation: s.3A Crimes (Sentencing Procedure) Act 1999. 261I am satisfied that error has been demonstrated in the circumstances of this case, both in determining that the sentences for the totality of the Respondent's crimes could be accommodated within a term of two years' imprisonment, and then ordering that the sentence be performed by way of an ICO. 262I am satisfied that these grounds of appeal have been made good. Ground 7 - The Sentences Imposed Were Manifestly Inadequate Submissions of the Crown 263The Crown referred to the submissions made in support of earlier grounds of appeal which, it was contended, were made good individually and which, when viewed together, serve to explain how manifestly inadequate sentences had been imposed. 264Whilst acknowledging the demands of the test of manifest inadequacy, it was submitted that it had been demonstrated in this case. 265It was submitted that the Respondent's crimes were of considerable seriousness which were not isolated transactions, but covered a period of a year. Further, the Respondent's subjective case, whilst positive, was by no means extraordinary or exceptional. A strong element of general deterrence was necessary, notwithstanding the Respondent's mental condition. Reasonable proportionality is required between the sentences to be imposed and the circumstances of the crimes. 266The Crown submitted that it was necessary for a full-time custodial sentence of some significance to have been imposed, and that the sentences imposed were manifestly inadequate. Submissions of the Respondent 267Mr Odgers SC submitted that it was necessary for the Crown to demonstrate that the sentences imposed were outside the range of sentences open to the Court in the exercise of sentencing discretion: Hili v The Queen [2010] HCA 45; 242 CLR 520 at 539 [60]. 268It was submitted that the sentences imposed lay within the available range of sentence. The Court was taken to a number of sentencing decisions referred to in the decision of this Court in Stratford v R [2007] NSWCCA 279 at [31]ff, which were said to support this submission. 269Whilst acknowledging the leniency of the sentences imposed, it was submitted that the sentences were not manifestly inadequate. Decision 270To make good this ground of appeal, it is necessary for the Crown to demonstrate that the sentences imposed were unreasonable or plainly unjust: Markarian v The Queen [2005] HCA 25; 228 CLR 357 at 370-371 [25]. 271Each of the offences for which the Respondent was to be sentenced was punishable by imprisonment for 10 years. Proper regard was to be given to the Form 1 offences in passing sentence for Count 5. 272These offences were objectively grave. This was demonstrated by the amount of money involved, the length of time over which the offences were committed, the Respondent's motive of financial gain, the level of planning involved (including false entries to disguise the conduct) and the very significant breach of trust involved by the Respondent, as both a company director and company secretary. 273The Respondent's effective prior good character was to be taken into account in his favour, although good character is of lesser significance on sentence for white-collar crime involving officers of a company: cf R v Williams [2005] NSWSC 315; 152 A Crim R 548 at 579 [60]-[61], Milne v R [2012] NSWCCA 24; 219 A Crim R 237 at 298 [272]. 274The psychiatric evidence concerning the Respondent pointed to the existence of a mental condition which is relevant on the question of sentence. However, for reasons expressed earlier in this judgment, this evidence was of limited use on sentence. Further, general deterrence remained a very significant factor on sentence for this class of offending, even where there was evidence of a mental condition affecting the Respondent at the time of the offences. Of relevance are recent statements of this Court in R v Donald [2013] NSWCCA 238 (an offence of dishonestly using one's position as an employee of a corporation with intention to obtain an advantage), where Latham J (Hidden and Adamson JJ agreeing) said at [76]: "I have no difficulty accepting that the respondent's bipolar disorder compromised his ability on occasions to control his faculties and emotions, but I do not accept, given the nature of his offending, that he was unable to understand the wrongfulness of his actions, or to make reasonable judgments. In those circumstances, the respondent's moral culpability for his offending was, in my view, moderately reduced. There was still a significant role for general deterrence to play, particularly where serious breaches of trust and dishonest trading in the market were concerned: Hartman v R [2011] NSWCCA 261 at [79], [91] and [92]; R v Pantano (1990) 49 A Crim R 328 at 330." 275It is notable that, unlike the present Respondent, Mr Donald had given evidence in his sentencing proceedings. 276In the same case, Latham J said at [86]: "It has also been repeatedly observed that the real bite of general deterrence takes hold only when a custodial sentence is imposed: R v Boulden [2006] NSWSC 1274 per Whealy J at [51]; R v Zamagias [2002] NSWCCA 17, per Howie J at [32]. Notwithstanding judicial statements to the effect that a suspended sentence is a sentence of imprisonment, the community (including those in 'white collar' occupations) might be justifiably forgiven for thinking that an offender who is serving a bond in the community has escaped meaningful punishment." 277Considerations of this type have application to the present case. 278This Court has emphasised, as well, the significant degree of leniency involved in the use of an ICO as a sentence. Although statements made in R v Pogson (in the joint judgment of McClellan CJ at CL and myself) point to the breadth of the concept of rehabilitation, and the capacity of an ICO to operate as a form of punishment, it is necessary not to lose sight of the need for an appropriate level of punishment, in the form of immediate incarceration, in cases such as the present. Even in R v Pogson, it was found that the use of an ICO was manifestly inadequate, although the Crown appeals were dismissed on discretionary grounds. 279The decision in R v Pogson should not be utilised to pass an entirely inappropriate sentence, which sees an offender such as the Respondent, with his magnitude of offending, being dealt with by way of an ICO. The purposes of punishment require imprisonment by way of full-time imprisonment and not an ICO, in cases of significant white-collar crime: R v Glynatsis [2013] NSWCCA 131 at [73]-[76]. 280I do not think that the sentencing decisions referred to in Stratford v R to which the Court was taken, provide any assistance to the Respondent in this case. 281The explanation for the imposition of manifestly inadequate sentences in this case may be found largely in the various errors identified in the first six grounds of appeal. The succinct statement of Wood CJ at CL (Giles JA and Levine J agreeing) in R v McGourty [2002] NSWCCA 335 at [34]-[35] has application to this case: "34 Clearly it was necessary and appropriate for his Honour to take the subjective matters into account, but they had to be kept in perspective. They should not have become the reason for imposing a sentence which, in my view, was weakly merciful and which did not properly reflect the objectives of punishment, retribution and deterrence, both general and personal. 35 The result, so it seems to me, was to produce a sentence - whether suspended or not - that was not reasonably proportionate to the crime. Rather, it was of the kind which offends the principles enunciated in decisions such as Regina v Dodd (1991) 57 A Crim R 349 and the earlier decision in Regina v Rushby (1977) 1 NSWLR 594." 282I am satisfied that Ground 7 has been made good. The Residual Discretion and Resentencing Submissions of the Parties 283If error was demonstrated, Mr Odgers SC submitted that the Court should dismiss the Crown appeal in the exercise of the residual discretion available to the Court. 284He submitted that the conduct of the Crown in preparing an ambiguous statement of facts, and in contributing to the sentencing Judge's misunderstanding of the facts on 31 May 2013, bore upon the exercise of discretion. 285He submitted, as well, that allowing the appeal would occasion injustice to the Respondent, whose progress in rehabilitation ought be taken into account, as well as the risk that imprisonment would derail that progress. 286In this respect, Mr Odgers SC relied upon statements in R v Kong [2013] SASCFC 15; 115 SASR 425 at [102] concerning the Respondent's personal circumstances, his progress towards rehabilitation, the harshness of sentencing a person to custody who has been free in the community and has taken significant steps to rebuilding his life, as being factors relevant to the exercise of the residual discretion. 287An affidavit of the Respondent sworn 18 November 2013 was read, together with two affidavits of John Pearson, the Respondent's solicitor, affirmed on 22 and 27 November 2013 respectively. The first affidavit annexed a report dated 7 November 2013 of Ms Emma-Jane Barclay, the Respondent's treating psychologist which addressed his progress and the risks if he should go into custody. That affidavit confirmed, as well, that the Respondent had been complying with the conditions of his ICO. 288The second affidavit annexed a further report dated 26 November 2013 of Dr Furst concerning the Respondent's current psychiatric condition. Dr Furst noted that the Respondent had managed to secure employment this year and had maintained his relationship with his partner, whilst being engaged in a work program as part of his ICO and living independently. Dr Furst expressed the opinion that the Respondent would be vulnerable in a prison setting if not medicated, and he suggested that a trial of Lithium be used in the future, especially if his mood deteriorates. 289The Crown submitted that application of correct sentencing principles, in light of the Respondent's crimes and taking into account his subjective circumstances, should not lead the Court to decline to intervene on discretionary grounds. It was submitted that the circumstances in which the sentencing Judge came to misunderstand the facts and the Respondent's non-intervention to correct the position on 31 May 2013, were also relevant in consideration of the exercise of the residual discretion in this case. Decision 290It has been said that the primary purpose of Crown appeals against sentence under s.5D Criminal Appeal Act 1912 is to lay down principles for the governance and guidance of courts having the duty of sentencing convicted persons, so that this Court, in the exercise of its jurisdiction under s.5D, has a residual discretion to decline to interfere with the sentence even though the sentence is erroneously lenient: Green v The Queen [2011] HCA 49; 244 CLR 462 at 465-466 [1]-[2]. This discretion may be exercised for reasons other than double jeopardy: R v JW [2010] NSWCCA 49; 77 NSWLR 7 at 24-25 [92], [95], 33 [150]. 291In determining whether or not the discretion should be exercised, it is open to the Court to receive evidence of what has happened between the time of sentence and the hearing of the appeal: R v Speechley [2012] NSWCCA 130; 221 A Crim R 175 at 195 [129]. 292There is no doubt that the conduct of the Crown in the District Court may, depending upon the circumstances, be relevant to the exercise of the residual discretion. It is necessary, however, to consider what has happened in the case at hand. In the present case, the sentencing Judge raised on the last hearing day, issues concerning the facts of the case. The issues raised were of some complexity. The Crown representative present on that occasion was a solicitor expecting to take judgment, who had not prepared for questions of this type, asked as they were without notice. Doing the best he could, the Crown representative sought to assist the Court, involving acceptance of certain misunderstandings advanced by the sentencing Judge. His Honour did not direct any questions on these issues to counsel for the Respondent, who had been present throughout the proceedings. Nor did counsel for the Respondent rise to make any contribution on the topic. 293There was clear error on the part of the sentencing Judge, involving a misunderstanding of the facts. This led his Honour to adopt a view of the facts which had not been advanced on behalf of the Respondent at the lengthy sentencing hearing, and which was not supported by the evidence. 294In these circumstances, I do not consider that this Court should decline to intervene. The sentencing process at first instance was marked by clear error, leading to the imposition of an unreasonable or plainly unjust sentence. The interests of justice require the imposition of appropriate sentences for these serious crimes: R v Dinh [2010] NSWCCA 74; 199 A Crim R 573 at 587 [79]. 295As to the balance of the submissions advanced in support of the exercise of the residual discretion, it is regrettable that the Respondent has been placed in his present position by the imposition of manifestly inadequate sentences. It may be inferred from the approach of the Respondent's counsel that he had formed the accurate view that there was no realistic prospect of the use of an ICO (see [119] above). Likewise, counsel was careful not to overstate the use that could be made of the psychiatric evidence and any connection to the criminal conduct (see [121] above). 296It was the approach of the sentencing Judge which culminated in the imposition of manifestly inadequate sentences by way of an ICO. A number of errors were made along the way to reach this point. A consequence of this is that the Respondent was given false hope concerning this appeal. 297In R v Rushby [1977] 1 NSWLR 594, Street CJ (Lee and Slattery JJ agreeing) observed at 597 that it is "cool reason, not passion or generosity" that must characterise sentencing. In the same case, Street CJ adopted (at 597-598) a passage from the judgment of the New Zealand Court of Appeal in R v Radich [1954] NZLR 86 at 87, where it was said: "If a Court is weakly merciful, and does not impose a sentence commensurate with the seriousness of the crime, it fails in its duty to see that the sentences are such as to operate as a powerful factor to prevent the commission of such offences." 298Considerations of this type arose in R v McGourty, to which reference has been made (see [281] above). 299I am satisfied that the Court should not dismiss the Crown appeal in the exercise of discretion. In sentencing the Respondent, I take into account the objective gravity of these offences, and the Respondent's subjective case, which is substantial, but not exceptional. Regard must be had, in particular, to general deterrence. Serious offences of this type committed by company directors call for significant sentences: R v Giam (No. 2) [1999] NSWCCA 378; 109 A Crim R 348 at 353 [27]; R v Williams at 576-578 [44]-[48]. 300In resentencing the Respondent, it is appropriate to apply the 12.5% discount for the Respondent's pleas of guilty. 301Individual sentences ought be fixed for each offence, with a level of partial accumulation, keeping in mind the totality principle. The aggregation of all sentences should constitute a just and appropriate measure of the total criminality involved: R v MAK [2006] NSWCCA 381; 167 A Crim R 159 at 164 [15]. 302Fixed terms are appropriate on Counts 1-4, with a non-parole period to be set as part of the sentence on Count 5. 303A finding of special circumstances will be made on Count 5 having regard, in particular, to the Respondent's health issues and the need for an appropriate period of conditional liberty to assist his return to the community upon release. The effective non-parole period represents the minimum period the Respondent should serve in custody for all his offences, having regard to all the purposes of sentencing. 304The sentences should date from 21 June 2013, when the Respondent commenced the sentences which he has been serving by way of an ICO. This approach accords with that conventionally taken by this Court in circumstances such as this, so that time served in this way counts as part of the sentence imposed by this Court: R v Tannous [2012] NSWCCA 243 at [88]-[90]. 305The sentences to be imposed will involve an effective non-parole period of two years and three months (from 21 June 2013) with a balance of term of one year and nine months. 306I propose the following orders: (a)Crown appeal allowed. (b)Sentences imposed upon the Respondent in the District Court on 14 June 2013 are quashed. (c)In lieu thereof, the Respondent is sentenced as follows: (i)for Count 1, the Respondent is sentenced to a fixed term of imprisonment for 12 months commencing on 21 June 2013 and expiring on 20 June 2014, (ii)on Count 2, the Respondent is sentenced to a fixed term of imprisonment for 12 months commencing on 21 September 2013 and expiring on 20 September 2014, (iii)for Count 3, the Respondent is sentenced to a fixed term of imprisonment for 12 months commencing on 21 December 2013 and expiring on 20 December 2014, (iv)for Count 4, the Respondent is sentenced to a fixed term of imprisonment for 12 months commencing on 21 December 2013 and expiring on 20 December 2014, (v)for Count 5, and taking into account the seven offences on the Form 1, the Respondent is sentenced to imprisonment comprising a non-parole period of one year and six months to date from 21 March 2014 and to expire on 20 September 2015, with a balance of term of one year and six months commencing on 21 September 2015 and expiring on 20 March 2017. (d)The earliest date upon which the Respondent will be eligible for release to parole is 21 September 2015. (e)I recommend that the psychiatric report of Dr Richard Furst dated 26 November 2013, together with the psychological report of Ms Emma-Jane Barclay dated 7 November 2013 be furnished to relevant authorities within Justice Health and the Department of Corrective Services, to assist the treatment and classification of the Respondent in custody. 307HALL J: I agree with Johnson J. ********** 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: 07 January 2014