Chalabian v R [2024] NSWCCA 47 | Case summary

Court of Criminal Appeal (NSW)|2023-11-08|Before: Leeming JA, Walton J, Fagan J, Johnson J

HEADNOTE [This headnote is not to be read as part of the judgment] The applicant, a solicitor, was found guilty by a jury of dealing with money in excess of $1 million that was proceeds of crime and that the applicant believed at the time of the dealing to be such proceeds: s 400.3(1) of the Criminal Code (Cth). On 23 June 2022, the appellant was sentenced to 12 years imprisonment with a non-parole period of 7 years and 6 months. The applicant's co-offenders, DR and DH, blackmailed the perpetrators of a conspiracy to defraud the Commonwealth, demanding payment of $25 million, in default of which DR and DH would publicise the fraud. They arranged with the applicant that they would deposit funds to his firm's trust account and that he would disburse those funds at their direction. Between 1 February and 26 April 2017 $24.2 million was deposited to the trust account and between 28 February and 18 May 2017 the applicant caused those funds to be transferred out, including approximately $880,000 to his own benefit. The sole issue at trial was whether the applicant believed at the time of dealing with the deposits to the trust account that the funds were proceeds of crime. The trial judge left to the jury the alternative of a verdict under s 400.3(2) if it should be found that the applicant was reckless as to the money being proceeds of crime and the further alternative of a verdict under s 400.3(3) if it should be found that he was negligent in that respect. DR and DH were both sentenced for an offence against s 400.3(1) of the Criminal Code on facts in common with the facts concerning the applicant's offence. Each of them was also sentenced for blackmail: s 249K(2) of the Crimes Act 1900 (NSW). DR was additionally sentenced for aiding and abetting the conspirators who defrauded the Commonwealth. DR's sentences for all matters were reduced by 20% for pleas of guilty. DH's sentences were reduced by 50% for pleas of guilty and assistance to authorities. The sentences of both DR and DH for the offence in common with the applicant were reduced still further by way of an unorthodox method of achieving appropriate totality of their sentences for the Commonwealth offences and the State blackmail offence. DM was one of the participants in the conspiracy to defraud the Commonwealth. After trial he was convicted of that offence and also of conspiracy to deal with the proceeds of crime derived from the fraud. DM was sentenced to 12 years imprisonment for the conspiracy to deal with proceeds of crime, cumulative by 2 years on a separate sentence for the conspiracy to defraud. The applicant pursued his application for leave with respect to only two grounds, which were to the following substantive effect: Ground 1, concerning conviction: that the trial judge's directions about the order in which the alternative verdicts were to be considered erroneously interfered with the jurors' freedom to organise their processes of reasoning and deliberation and precluded them from contemplation of the alternatives unless they first decided on a verdict of not guilty of the offence charged. Ground 3, with respect to sentence: that a justifiable sense of grievance arose from lesser sentences imposed upon DH and DR for their common offending and also from the sentence imposed upon DM. Held (Fagan J, Leeming JA and Walton J agreeing) refusing leave to appeal against conviction on ground 1, granting leave to appeal against sentence on ground 3 and dismissing the appeal against sentence. As to ground 1: 1. Leave was required to raise ground 1 because trial counsel did not seek a redirection concerning the jury's consideration of the statutory alternatives: Leeming JA at [1], Walton J at [2], Fagan J at [32]-[36]. 2. On a fair reading of the summing up, the jury were not directed about the sequence in which they should undertake their reasoning and deliberation: Leeming JA at [1], Walton J at [2], Fagan J at [48]-[50]. 3. The difference between the offence charged and the statutory alternatives lay in the applicant's state of mind, being either belief, recklessness or negligence as to the character of the money that passed through the trust account. The jury's consideration of the applicant's state of mind integrally included consideration of the alternatives to actual belief. The trial judge's directions did not, realistically, preclude them from deliberation about those alternatives: Leeming JA at [1], Walton J at [2], Fagan J at [50]. 4. Stanton v The Queen [2003] HCA 29 considered. As to ground 3: 1. The applicant's sentence bore an appropriate relationship to the starting points adopted in the process of sentencing DR and DH, taking into account relative objective gravity and the offenders' similar subjective circumstances. The discounts and the shortening for purposes of totality that resulted in DH's and DR's ultimate sentences for the offence in common with the applicant were points of incomparability. The application for leave failed to recognise that the widely different sentencing circumstances justifiably produced different outcomes between the applicant and the co-offenders: Leeming JA at [1], Walton J at [2], Fagan J at [68]-[72]. 2. Kelly v R [2017] NSWCCA 256 and R v Hausman; Hausman v R; R v Rostankovski; Rostankovski v R [2022] NSWCCA 24 considered. 3. DM's conviction for conspiracy to deal with proceeds of crime concerned proceeds of his conspiracy to defraud the Commonwealth, for which he was also sentenced. DM's side of dealing with the proceeds of DH's and DR's blackmail was only part of his conspiracy to offend against s 400.3(1). The two conspiracies for which DM was sentenced involved largely the same acts on his part. The sentencing judge made allowance for DM's subjective case, which was stronger than the applicant's. Taking into account the different sentencing circumstances, direct comparison did not demonstrate that the equivalent head sentences imposed on the applicant and on DM for their respective proceeds offences, nor any other component of their penalties, would justify a sense grievance on the part of the applicant: Leeming JA at [1], Walton J at [2], Fagan J at [73]-[74].

JUDGMENT

LEEMING JA: I agree with Fagan J.
WALTON J: I agree with Fagan J.
FAGAN J: The applicant seeks leave to appeal against his conviction on a charge that between about 1 February 2017 and about 18 May 2017 he dealt with money in excess of $1 million that was proceeds of crime and that the applicant believed at the time of the dealing to be such proceeds, contrary to s 400.3(1) of the Criminal Code (Cth). The applicant was found guilty of that offence on 21 April 2022 at the conclusion of a trial by jury that had commenced on 21 February 2022.
The maximum penalty for the offence is 25 years imprisonment and/or a fine of up to 1500 penalty units ($270,000). On 23 June 2022 the trial judge, Johnson J, sentenced the applicant to imprisonment for 12 years commencing that day and expiring on 22 June 2034. A non-parole period of 7 years and 6 months was fixed. The first date on which the applicant will be eligible for release to parole is 22 December 2029. The applicant seeks leave to appeal against that sentence.
Only two grounds of appeal are pursued, as follows: 1. The learned trial judge erred regarding the directions he gave to the jury about the requirement for unanimity. 3. The sentence imposed upon co-offenders Rostankovski and Hausman and the related offender Menon give rise to a justifiable sense of grievance on the part of the applicant. Leave is required with respect to the conviction appeal because ground 1 concerns an aspect of the summing up to which defence counsel took no objection at trial and upon which he did not seek a redirection. Rule 4.15 of the Supreme Court (Criminal Appeal) Rules 2021 is engaged.

Facts

Throughout the charge period the applicant practised as a solicitor in New South Wales, as he had done for 23 years since his admission in December 1993. He was a principal of the incorporated law practice Lands Legal Pty Ltd. The practice was conducted from offices in York Street, Sydney. It had a trust bank account upon which the applicant was able to effect transactions. At trial, before the first Crown witness was called, a statement of agreed facts was tendered to the jury concerning a conspiracy between persons other than the applicant to defraud the Commonwealth and concerning the blackmail of the conspirators by Daniel Hausman and Daniel Rostankovski. The blackmail payments, totalling $24.2 million, passed through the Lands Legal trust bank account under the control and direction of the applicant. The issue in the trial was whether the applicant believed the funds were proceeds of crime at the time he carried out the trust account transactions.
The statement of agreed facts before the jury was as follows: 1. Between about 1 March 2014 and 17 May 2017, Simon Anquetil, Adam Cranston, Jason Onley and Dev Menon together with other people, not including the Accused, (together called "the Plutus conspirators") obtained large sums of money by fraudulently collecting tax revenue and not remitting it to the Australian Taxation Office (ATO). The Plutus conspirators later dealt with the proceeds of that fraud for their own benefit. 2. In 2014, the Plutus conspirators established a company called Plutus Payroll Australia Pty Ltd (Plutus). Using Plutus as a front, the Plutus conspirators offered payroll services to legitimate businesses (the clients). 3. Payroll services typically involve the following: (a) Clients pay to the payroll services company (Plutus) a gross sum that includes their workers' wages, superannuation entitlements, and tax required by law to be withheld and remitted to the ATO; (b) The payroll services company pays the workers' wages and superannuation contributions; and (c) The payroll services company also remits to the ATO the tax required by law to be paid to the ATO, specifically Pay as You Go Withholding tax (PAYGW tax), and Goods and Services Tax (GST) collected by the payroll services company (collectively the tax). 4. To carry out the fraud, the Plutus conspirators deceived clients into entrusting them with the provision of payroll services and into transferring large sums of money from which the client's workers' wages and superannuation entitlements were to be paid and from which tax was required to be remitted to the ATO (called "the payroll money"). 5. The Plutus conspirators agreed between themselves not to pay to the ATO substantial amounts of the payroll money. They did this with dishonest and fraudulent Intentions and thereby committed fraud under both State and Commonwealth laws. 6. The Plutus conspirators further agreed to deal with the payroll money they dishonestly obtained from clients for their own personal benefit and thereby committed money laundering offences under both Commonwealth and State laws. 7. As part of the fraud, the Plutus conspirators incorporated eight other companies to which the payroll money was transferred (called the "Second-Tier companies"). In effect, Plutus subcontracted its payroll services to the Second-Tier companies. The Plutus conspirators retained control over the Second-Tier companies by controlling the directors of those companies. Those directors played no role in the Second-Tier companies and were directors in name only (the nominal directors). Many of the nominal directors were recruited and managed by Daniel Rostankovski, who was knowingly participating in assisting the Plutus conspirators in carrying out the fraud. 8. By virtue of the subcontracting arrangement, the Second-Tier companies and its directors became legally liable under relevant taxation legislation to pay the tax to the ATO. 9. The Plutus conspirators implemented a plan to "phoenix" the Second-Tier companies in order to avoid the scrutiny of the ATO; that is, to wind up the Second-Tier companies when their liability for unremitted tax became too great and to incorporate new companies which could then instead be used to perpetuate the ongoing fraud. 10. During the relevant period, Plutus' clients paid Plutus substantial sums of money of which $141,291,923 was properly due and payable to the ATO as tax. The Plutus conspirators did not remit at least $105,625,304 of that amount to the ATO. The Second-Tier companies paid only $30,883,342 to the ATO at the Plutus conspirators' direction. 11. By this conduct the Plutus conspirators committed a fraud on the ATO and dealt with about $105 million in tax fraud proceeds for their own benefit. 12. On 26 April 2017, the ATO served a garnishee order on the Plutus bank accounts. The effect of the garnishee order was to freeze the Plutus Payroll bank accounts. 13. On 17 and 18 May 2017, Simon Anquetil, Adam Cranston, Jason Onley and Dev Menon and others (but not the Accused) were arrested and charged in relation to the fraud and money laundering offences. Participants in fraud and blackmail 14. By about August 2015, Daniel Rostankovski became a participant in the fraud. His principal role was to recruit, manage and control the unsophisticated people who became directors of the Second-Tier companies, including Anthony Palumberi, Ashley Mills, Alex Nappa, Angelo Coppola, Angela Yeoland and Ben Alaban. 15. When dealing with some directors, Daniel Rostankovski used the name "James" instead of his true name. 16. In 2015, Daniel Hausman shared business connections and an office space with Adam Cranston and Jason Onley. 17. In 2015, Adam Cranston introduced Daniel Hausman to Daniel Rostankovski. By late 2015, Daniel Hausman became aware that Daniel Rostankovski was involved in the fraud and that his role was to recruit directors for the Second-Tier companies. 18. Adam Cranston is the son of Michael Cranston. Until 13 June 2017, Michael Cranston held the role of Deputy Commissioner of Taxation at the ATO. 19. Stephen Barrett was a freelance journalist and a long-time acquaintance of Daniel Hausman. He had previously worked as a producer on the television show '60 Minutes'. In January 2017, Daniel Hausman called upon Stephen Barrett to become involved in a blackmail plan. 20. In or around January 2017, Daniel Hausman introduced Stephen Barrett to Daniel Rostankovski. 21. Clamenz Lawyers is a law firm. 22. Between at least 1 March 2014 and 17 May 2017, Dev Menon (one of the Plutus conspirators) was a solicitor at Clamenz Lawyers located at Level 46,19-29 Martin Place, MLC Centre, Sydney. He held the position of Partner at that law firm. Blackmail by Daniel Hausman. Daniel Rostankovskl and Stephen Barrett 23. Between about 1 October 2016 and 17 May 2017, Daniel Hausman, Daniel Rostankovskl and Stephen Barrett agreed upon and executed a plan to blackmail the Plutus conspirators by making demands for money. 24. On 1 February 2017, meetings took place between Stephen Barrett, Daniel Rostankovskl, Adam Cranston, Dev Menon, Jason Onley and Simon Anquetil, in a meeting room at Clamenz Lawyers. 25. Stephen Barrett informed the Plutus conspirators that he had been told about a tax fraud implicating some of them and was considering doing a media story. Stephen Barrett then left the meeting room and meetings between the other men continued. 26. Daniel Rostankovski demanded that the Plutus conspirators pay $5 million. He said that he was acting on the instructions of the directors of the Second-Tier companies and he threatened the Plutus conspirators with media exposure of the fraud, attention from law enforcement and violence if they did not pay the $5 million. In so doing, Daniel Rostankovski, Daniel Hausman and Stephen Barrett committed an indictable offence of blackmail. 27. The Australian Federal Police (AFP) lawfully recorded these meetings on 1 February 2017. 28. At 12.06pm Rostankovski departed Clamenz Lawyers. He telephoned Hausman and said that the Plutus conspirators would pay "a million dollars today". 29. On or about 15 February 2017, after consulting with Daniel Hausman, Daniel Rostankovski made a further demand with threats to the Plutus conspirators for a further payment of $20 million by sending an SMS message to Dev Menon. The message was to the following effect: "if their accounts get frozen no problem, the $ continues to minimum $20m under (b) (c) (d) etc and these directors will receive the $20m personally to remit off as they are, under the Act Dev, as you are well aware, personally liable for both super and PAYG which your clients Adam Cranston and Jay Onley would never pay. We are fully aware of GST ends up being worn by the company hence not a liable issue personally. So stop the bullshit and keep up the payments I strongly suggest." 30. In so doing, Daniel Rostankovski and Daniel Hausman committed a further indictable offence of blackmail.
There was undisputed evidence that between 1 February 2017 and 26 April 2017 a total of $24,244,740 was deposited to the Lands Legal trust bank account in 53 separate deposits, for each of which the transferor was recorded as Plutus Payroll. For 15 of the deposits the description was "ATOPAYGFUNDS" and for the remainder it was "INV BALANCE". From 28 February 2017 to 18 May 2017 $24,205.416.22 was withdrawn from the account. There were 22 separate transfers to the bank accounts of corporate entities associated with Hausman and $880,000 of the total was transferred to a Hong Kong entity by way of investment for a company associated with the applicant's mother. It was not disputed that the applicant effected the transfers out of the account, or caused them to be effected, on the instructions of Rostankovski and Hausman and that this constituted dealing with the money for the purposes of the charge.
It was the Crown case that the $24.2 million deposited to the Lands Legal trust bank account originated from the Plutus conspirators. It was alleged that the money was drawn from the sums received by Plutus Payroll Australia Pty Ltd from its clients, which the clients intended should be applied in payment of wages and by remittance of PAYG Withholding amounts to the ATO. The Crown alleged that the Plutus conspirators fraudulently failed to remit the amounts due to the ATO for PAYG Withholding and that, out of the amounts unlawfully held back from the ATO, they paid the $24.2 million for the benefit of Daniel Rostankovski and Daniel Hausman under duress of the successive blackmails referred to at pars 26 and 29 of the agreed statement of facts. There was evidence from which it was open to the jury to find that the blackmails were communicated by Rostankovski and Hausman on their own initiative and solely in their own interests, not on behalf of or for the benefit of the second-tier directors.

Circumstantial evidence of the applicant's belief

There are summarised in the following paragraphs some of the significant circumstances that the Crown relied upon to support an inference that the applicant believed the funds passing through his trust account were proceeds of crime. "Proceeds of crime" is a term defined in s 400.1(1) of the Criminal Code as follows: proceeds of crime means any money or other property that is wholly or partly derived or realised, directly or indirectly, by any person from the commission of an offence against a law of the Commonwealth, a State, a Territory or a foreign country that may be dealt with as an indictable offence (even if it may, in some circumstances, be dealt with as a summary offence).
The Crown alleged that the applicant was instructed and retained by Rostankovski and Hausman from December 2016 with respect to the intended deposit of funds into his firm's trust bank account and withdrawal and disbursement of those funds. The evidence included an intercepted phone conversation between Hausman and the applicant on 18 December 2016 in which Hausman referred to "that discussion we had the other day just about that strategy about the incoming funds". Hausman raised the possibility of "whether they could send it possibly to a law firm trust account overseas". The applicant warned that "that might complicate matters 'cause money goes overseas and comes back in it might raise … like the ATO might query it".
In that conversation the applicant gave the following advice: Applicant You can, you can certainly add another layer by sending it to a local law firm's trust account. So it will go from current bank account to a local law firm's trust account, and then from that trust account to, you know, Mr X's new bank account with NAB. That will certainly put another layer in between it. And then if someone, you know, if someone wanted to query where it went it's going to a lawyer's trust account. It could be to buy a property, it could be for anything. […] Hausman Okay. No, we're just, we just want to obviously protect these guys as much as we can just in case. Applicant Yeah. I reckon that's a good idea but, you know, that's a good idea you've got there, Dan, so um, if you send it to a local lawyer's trust account, easy, that just adds another layer.
There was evidence that from 1 February 2017 the applicant played a significant part in negotiating the terms of a draft deed between Plutus Payroll Australia Pty Ltd and seven second tier companies (as referred to at pars 7-9 of the agreed statement of facts). The nominal directors of the second-tier companies were also parties to the deed. Dev Menon had prepared the draft deed on behalf of the Plutus conspirators and he represented them in negotiating and settling its terms. WhatsApp messages from Hausman on 1 February 2017 showed that he gave instructions for the applicant to negotiate the deed and that he nominated one of the directors of the second-tier companies to be the applicant's purported client. Those messages explicitly stated that Adam Cranston and Jay Onley were "running this labour hire scam" and that "Dev Menon from Clamenz has been covering it up".
One of Hausman's messages on 1 February 2017 included the following: Your client [one of the second-tier nominal directors] just wants to do the right thing and have a lawyer defend his rights hence a sum of $ may be transferred to your Trust Account at his direction - once it hits - we take it from there.
In final form the deed was signed on 3 February 2017. It contained a recital to the effect that the second-tier companies were the subject of default assessments for "PAYG Tax" and that the ATO had garnished their bank accounts. The deed provided that Plutus Payroll Australia Pty Ltd would pay to the second-tier companies $5 million by instalments over 10 weeks.
Rostankovski made the second blackmail demand, on behalf of himself and Hausman, on 15 February 2017: agreed statement of facts par 26. The next day Hausman sent WhatsApp messages to the applicant that included the following: Bro I've thought about this. For every mill we get through b, c, d etc of that clause [referring to a clause of the 3 February 2017 deed] … I will pay you $20k per mill. [If] we end up with the additional $20m owed by these poor director bunnies, you're gonna get $400k. … We need to exert massive pressure on Dev to execute what had been effectively agreed in that clause. … If they can do 5m in 10 days - they can do another 15-20 in 8 weeks and we then do lunch. Keep the pressure on that scumbag Dev as he knows with what we have, if released to Journo, as well as the other 2 Cunts Jay Onley and Adam Cranston … they're all going to long bay. They will pay. …
In the second half of February 2017 the applicant negotiated with Dev Menon the terms of a deed of variation to the deed that had been signed on 3 February 2017. This provided that the minimum amount payable by Plutus Payroll Australia Pty Ltd to the second-tier companies was increased to $25 million, which was to be paid in full by 9 June 2017. The deed of variation was signed on 6 March 2017.
On 1 February 2017 and 22 February 2017 the applicant opened files in the names of two of the nominal second-tier directors, by reference to which the deposits to and withdrawals from the trust account were transacted. It was open to the jury to infer that the files in the names of these directors were sham arrangements and that the real clients were Hausman and Rostankovski. The Crown called the second tier directors. It was open to the jury to assess them as unsophisticated individuals, to whom the applicant gave no real advice. On 3 February 2017 the applicant prepared a deed under which one of the directors, Mr Mills, was purportedly appointed as a representative of the others.

The statutory alternatives to the offence charged

As in force during the charge period, s 400.3 of the Criminal Code created three different offences for dealing in proceeds of crime with a value of $1 million or more, graded according to the degree of culpability reflected in the offender's state of mind. The relevant subsections were in the following terms: 400.3 Dealing in proceeds of crime etc. - money or property worth $1,000,000 or more (1) A person commits an offence if: (a) the person deals with money or other property; and (b) either: (i) the money or property is, and the person believes it to be, proceeds of crime; or (ii) the person intends that the money or property will become an instrument of crime; and (c) at the time of the dealing, the value of the money and other property is $1,000,000 or more. Penalty: Imprisonment for 25 years, or 1500 penalty units, or both. (2) A person commits an offence if: (a) the person deals with money or other property; and (b) either: (i) the money or property is proceeds of crime; or (ii) there is a risk that the money or property will become an instrument of crime; and (c) the person is reckless as to the fact that the money or property is proceeds of crime or the fact that there is a risk that it will become an instrument of crime (as the case requires); and (d) at the time of the dealing, the value of the money and other property is $1,000,000 or more. Penalty: Imprisonment for 12 years, or 720 penalty units, or both. 3) A person commits an offence if: (a) the person deals with money or other property; and (b) either: (i) the money or property is proceeds of crime; or (ii) there is a risk that the money or property will become an instrument of crime; and (c) the person is negligent as to the fact that the money or property is proceeds of crime or the fact that there is a risk that it will become an instrument of crime (as the case requires); and (d) at the time of the dealing, the value of the money and other property is $1,000,000 or more. Penalty: Imprisonment for 5 years, or 300 penalty units, or both. [Emphasis added].
The provision for statutory alternatives is as follows: 400.14 Alternative verdicts If, on a trial for an offence against a provision of this Division (the offence charged), the trier of fact: (a) is not satisfied that the defendant is guilty of the offence charged; but (b) is otherwise satisfied that the defendant is guilty of another offence against this Division for which the maximum penalty, in penalty units, is less than the maximum penalty, in penalty units, for the offence charged; the trier of fact may find the defendant not guilty of the offence charged but guilty of the other offence, so long as the person has been accorded procedural fairness in relation to that finding of guilt.
Division 400 containing the above provisions also created offences for dealing in proceeds of crime of a value less than $1 million, or of any value, (ss 400.4-400.8) and offences for dealing with property reasonably suspected of being proceeds of crime (s 400.9). However, the learned trial judge directed the jury only as to the possible alternatives of finding the applicant guilty of an offence contrary to s 400.3(2), wherein the relevant mental element is recklessness as to the fact that the money was proceeds of crime, or an offence contrary to s 400.3(3), involving negligence in that regard. It has not been argued on the appeal that any wider range of alternatives should have been left.

Trial directions concerning alternative verdicts

The contested element of the count charged in the indictment was the applicant's belief that the large sums passing through his firm's trust account were proceeds of crime. On 22 February 2022, day 2 of the trial, immediately prior to the Crown's opening address the learned trial judge provided to the jury a document that set out the elements of the offence charged (MFI 3) and read that document to the jury. It explained the element of belief in the following terms: 7 The Crown must prove that the accused believed that the money or other property was the proceeds of an indictable offence. 8 The Crown is not required to prove that the accused believed the money or other property was the proceeds of the same class or classes of indictable offence as the indictable offence or offences from which the money or other property was in fact derived. 9 The Crown is not required to prove that the accused believed that the class of offence from which the proceeds were derived or realised was known as a Commonwealth or State "indictable offence".
On 31 March 2022, day 26, prior to the commencement of closing addresses the learned trial judge returned to the written direction on the elements and read it aloud once more, including the above paragraphs concerning the element of belief. At the same time his Honour provided the jury with a written direction concerning the two available alternative verdicts (MFI 52). The following is an abbreviation of that document, extracted so far as relevant to the applicant's argument on the conviction appeal (emphasis as in original): ALTERNATIVE VERDICTS 1. If you are not satisfied that the accused is guilty of the charge on the indictment, the law provides for alternative verdicts that you are able to consider. 2. You only need to consider an alternative verdict if you are not satisfied that the accused is guilty of the charge on the indictment. First alternative verdict 3. The first alternative verdict is to an offence of dealing with money or other property being reckless as to the fact that the money or property is proceeds of crime. 4. In order for you to be satisfied of the first alternative, the Crown must prove each of the following elements beyond reasonable doubt: That between about 1 February 2017 and about 18 May 2017: (1) the accused dealt with money or other property; (2) the accused intended to deal with that money or property; (3) that money or property was the proceeds of crime; (4) the accused was reckless as to the fact the money or property was proceeds of crime; and (5) the value of that money or property was $1 million or more at the time of the dealing. 5. If you are not satisfied that the accused is guilty of the offence on the indictment, but you are otherwise satisfied that the defendant is guilty of the first alternative offence, you may find him not guilty of the offence on the indictment but guilty of the first alternative offence. Second alternative verdict 6. You only need to consider the second alternative verdict if you are not satisfied that either the charge on the indictment or the first alternative offence is established. 7. In order for you to be satisfied of the second alternative, the Crown must prove each of the following elements beyond reasonable doubt: That between about 1 February 2017 and about 18 May 2017: (1) the accused dealt with money or other property; (2) the accused intended to deal with that money or property; (3) that money or property was the proceeds of crime; (4) the accused was negligent as to the fact the money or property was proceeds of crime; and (5) the value of that money or property was $1 million or more at the time of the dealing. 8. If you are not satisfied that the accused is guilty of the offence on the indictment or the first alternative offence, but you are otherwise satisfied that the defendant is guilty of the second alternative offence, you may find him not guilty of the offence on the indictment and the first alternative offence, but guilty of the second alternative offence. Definitions […] Recklessness 13. For the first alternative, the Crown is required to prove that the accused was reckless as to the fact the money or other property was the proceeds of an indictable offence. 14. A person is reckless as to the fact the money or other property is the proceeds of an indictable offence if: (a) he or she is aware of a substantial risk that the money or other property is the proceeds of an indictable offence; and (b) having regard to the circumstances known to him or her, it is unjustifiable to take the risk. 15. The Crown is not required to prove that the accused was reckless as to the money or other property being the proceeds of any particular offence. It would be sufficient if the Crown has proved that the accused was reckless as to the fact the money was derived from any indictable offence. Negligence 16. For the second alternative, the Crown is required to prove that the accused was negligent as to the fact the money or other property was the proceeds of an indictable offence. 17. A person is negligent if his or her conduct involves: (a) such a great falling short of the standard of care that a reasonable person would exercise in the circumstances; and (b) such a high risk that the money or other property was the proceeds of an indictable offence; that the conduct merits criminal punishment for the offence.
At the time of providing MFI 52, after reading pars 1 and 2 of the document his Honour said this to the jury: In that respect, I should mention at this stage an important additional direction. As the law requires a unanimous verdict from you as the jury, the issue of alternative verdicts will only arise for consideration if each of you is not satisfied beyond reasonable doubt of the guilt of the accused for the offence charged in the indictment. So if you were not satisfied beyond reasonable doubt that the accused was guilty of the charge in the indictment, then you would consider the alternative verdicts that may be available.
Part way through the Crown address, on 1 April 2022 (day 27), his Honour identified an inaccuracy in par 18 of the written direction on alternative verdicts. A revised version was supplied (MFI 60 in place of MFI 52). The correction has no bearing upon the issues in the appeal and no more need be said about it.
On 5 April 2022 (day 29) at an early point in his summing up the learned trial judge distributed to the jurors an expanded written direction on the elements (MFI 70, in place of MFI 3). That document retained the paragraphs concerning the applicant's belief about the money that had passed through his trust account - as quoted at [23] above. Those paragraphs were renumbered 11-13. An additional paragraph 14 was inserted, as follows: 14 When determining under Element [4] whether the Crown has proved that the accused believed that money or property was the proceeds of crime, it is the actual belief of the accused at the relevant time that matters, not the belief of some hypothetical person, or the belief that one might think he ought to have had.
Having read the expanded elements direction to the jury, with additional explanation and instructions, his Honour drew their attention to the revised written direction on alternative verdicts, MFI 60, and read that out, also. His Honour then gave the following instructions orally: The offence charged in the indictment is based on belief. If you were not satisfied beyond reasonable doubt as to that, you would consider whether you were satisfied beyond reasonable doubt of the elements of the first alternative verdict based on recklessness. If you were not satisfied beyond reasonable doubt of the offence charged in the indictment, the belief offence, or the first alternative verdict, the recklessness offence, you would turn to the second alternative verdict based on negligence. So they are alternative verdicts available in circumstances where the offence charged in the indictment is brought to trial before a court. As I have said, in raising these with you, I am not expressing any view about these matters. I am merely trying to spell out to you the permutations and combinations of law which can arise where a criminal charge is before a jury for trial. I should raise one further matter with you. It is a matter for you as to how you approach your task in determining your verdict on the charge contained in the indictment and any alternative charge available for your consideration. As I have explained, if you are not satisfied beyond reasonable doubt of the offence charged in the indictment, it is open to you to turn to the first alternative offence; and if not satisfied beyond reasonable doubt of that, to turn to the second alternative offence. However, I direct you that you should not regard the availability of an alternative offence as an invitation to compromise your verdict. For example, it would be quite wrong for you to find the accused guilty of either of the alternative offences simply because some of you found that the accused was guilty of the principal count in the indictment but others were not so satisfied and would enter a verdict of not guilty to that charge. It would be unfair and contrary to your oaths or affirmations to decide to break the deadlock, if there was a deadlock, by convicting the accused on either of the alternative counts.
On Tuesday 6 April 2022 (day 30) the jury submitted the following question during the course of the summing up: Could you please provide further clarification around alternative verdicts. As we understand it, we cannot consider an alternative verdict unless we all unanimously vote not guilty on the higher charge. Is this correct? Therefore, if we are divided on the indictment, we cannot drop to consider a lower verdict.
His Honour responded as follows: You are quite correct. You say: "As we understand it, we cannot consider an alternative verdict unless we all unanimously vote not guilty on the higher charge." That is correct. Then you say: "If we are divided on the indictment, we cannot drop to consider a lower verdict." That is correct. Let me just repeat the direction I gave you yesterday, which is along those lines, but it bears repeating given your question. After explaining the elements of the alternative verdicts, I then said to you: "If you are not satisfied that the Crown has proved beyond reasonable doubt all the necessary elements of the offence charged in the indictment, then you must find the accused not guilty of that charge. You may then consider whether the Crown has proved beyond reasonable doubt all the necessary ingredients of the alternative charge which are open to you." As I have indicated to you, the ingredients of the principal offence and the alternative charges are not identical. If you find that the Crown has proved beyond reasonable doubt each of the elements of the alternative offence, or either of them, then you may find the accused guilty of the relevant alternative offence. I went on to say this: "However, I direct you that you should not regard the availability of an alternative offence or offences as an invitation to compromise your verdict. For example, it would be quite wrong for you to find the accused guilty of either of the alternative offences simply because some of you found that the accused was guilty of the principal count in the indictment but others were not so satisfied and would enter a verdict of not guilty on that charge. It would be unfair and contrary to your oaths or affirmations to decide to break any deadlock by convicting the accused of either of the alternative counts." So that, I hope, confirms the correctness of the question in your note. Before I finally ask you to retire to consider your verdict, I will be giving you another document which relates to the return of verdict and which sets out in order the various alternative steps. I hope that that will assist too in your understanding of the process.
Also on day 30, shortly before asking the jury to retire to consider their verdict, his Honour distributed to the jurors document entitled "Return of Verdict", which spelt out the terms in which the foreperson should deliver the verdict in respect of the single count on the indictment or either of the alternatives, if applicable. The Return of Verdict document (MFI 73) was in the following terms (with emphasis and italics as in the original): 1 If each of you is satisfied beyond reasonable doubt that the Accused is guilty of the offence charged in the indictment (the belief offence), the appropriate verdict is "Guilty". 2 If each of you is not satisfied beyond reasonable doubt that the Accused is guilty of the offence charged in the indictment, but each of you is satisfied beyond reasonable doubt that the Accused was guilty of the first alternative offence (the recklessness offence), the appropriate verdict is "Not guilty of the offence charged in the indictment, but guilty of an offence of dealing with money or other property being reckless as to the fact that the money or property was the proceeds of crime". 3 If each of you is not satisfied beyond reasonable doubt that the Accused is guilty of the offence charged in the indictment (the belief offence) or the first alternative offence (the recklessness offence), but each of you is satisfied beyond reasonable doubt that the Accused is guilty of the second alternative offence (the negligence offence), the appropriate verdict is "Not guilty of the offence charged in the indictment, not guilty of the recklessness offence, but guilty of an offence of dealing with money or other property being negligent as to the fact that the money or property was the proceeds of crime". 4 If each of you is not satisfied beyond reasonable doubt that the Accused is guilty of the offence charged in the indictment (the belief offence), the first alternative offence (the recklessness offence) or the second alternative offence (the negligence offence), the appropriate verdict is "Not Guilty of the offence charged in the indictment; not guilty of the recklessness offence; not guilty of the negligence offence".
That direction was read over to the jury. Shortly afterwards they commenced deliberations, which continued for the balance of 6 April 2022 and throughout the next day. The jury were unable to resume their deliberations on Friday, 8 April due to illness amongst them. Illness and the need for jurors to isolate in order to avoid the spread of infection continued during the following week. The trial was thereby extended to a point where one of the jurors had to be excused due to other commitments. Deliberations of the remaining 11 jurors resumed on Tuesday, 19 April 2022 and continued on 20 and 21 April 2022, until the verdict of guilty was returned at 2:32 pm on the latter date.
Neither counsel sought any re-direction on any aspect of the learned trial judge's instructions to the jury concerning the alternative verdicts and the circumstances in which a verdict of guilty of either of those alternatives could be returned. In particular, his Honour explicitly asked counsel whether the terms in which he had responded to the jury's question on that topic were "satisfactory from the point of view of the parties". Both counsel responded in the affirmative.
There was a further exchange between the learned trial judge and counsel during the interruption to the jury's deliberations. By email from his Honour's Associate sent on Friday, 8 April 2022 the attention of counsel was drawn to s 5.4(4) of the Criminal Code, which is in the following terms: 5.4 Recklessness (4) If recklessness is a fault element for a physical element of an offence, proof of intention, knowledge or recklessness will satisfy that fault element.
By the email, his Honour asked counsel to consider whether s 5.4(4) "might apply so as to modify the 'no compromise' direction given to the jury". The email further explained the issue as follows: In other words, does s 5.4(4) operate so as to permit a unanimous verdict of guilty for the recklessness offence if some jurors are satisfied beyond reasonable doubt of the belief element and the balance of the jury are satisfied beyond reasonable doubt of the recklessness element?
The Crown responded with a written submission citing Stanton v The Queen [2003] HCA 29 and King v The Queen (2012) 245 CLR 588; [2012] HCA 24 in support of the proposition that s 5.4(4) does not operate as postulated by his Honour because s 400.14 does not permit a jury that is unable to agree upon a verdict with respect to the offence as charged on the indictment "to move to consider the first alternative verdict". Defence counsel informed his Honour, in writing, that he agreed with the Crown's submissions. On 11 April 2022 the learned judge informed the parties that he accepted the submissions that had been made and that he would leave the directions to the jury as they stood. Reasons for that decision were subsequently published: R v Chalabian (No 13) [2022] NSWSC 470 at [58]-[86].
For present purposes, the only significance of his Honour having invited the parties' attention to s 5.4(4) is that it caused the Crown to provide submissions containing a detailed discussion of the principal authorities that are now relied upon by the applicant to challenge his Honour's direction about consideration of alternative verdicts. Relevantly to the application of r 4.15 of the Supreme Court (Criminal Appeal) Rules 2021, it must be said that although there were placed squarely before defence counsel at trial the authorities now invoked to support of the point argued in the conviction appeal, he did not formulate any such point to the trial judge or ask for a re-direction.

Application for leave to appeal against conviction - ground 1

Although ground 1 asserts an error in the learned judge's directions "about the requirement for unanimity", the applicant's submissions advance a different complaint, namely, that his Honour erred in his directions to the jury: that they could only consider the alternative counts if a unanimous verdict of not guilty was reached regarding the primary count, and then only in sequence.
The applicant refers to his Honour's use of the verb "consider" and cognate terms in the following parts of the written and oral directions (emphasis added to quoted passages): 1. Paragraphs 2 and 6 of the "Alternative Verdicts" document, stating that the jury "need only consider" an alternative verdict if not satisfied of the offence charged in the indictment. 2. The oral directions quoted at [25] above, that "the issue of alternative verdicts will only arise for consideration if each of you is not satisfied beyond reasonable doubt of the guilt of the accused for the offence charged" and "if you were not satisfied beyond reasonable doubt that the accused was guilty of the charge in the indictment, then you would consider the alternative verdicts". 3. The oral directions quoted at [28] above, that "If you were not satisfied beyond reasonable doubt as to [the applicant's belief that the money deposited to his trust account was proceeds of crime], you would consider whether you were satisfied beyond reasonable doubt of the elements of the first alternative verdict based on recklessness". 4. His Honour's affirmative answer, quoted at [30] above, to the jury's question whether "we cannot consider an alternative verdict unless we all unanimously vote not guilty on the higher charge".
The applicant makes the following submissions: 63 In the context of his Honour's summing up, the term "consider" referred to the jury's process of deliberation, which is quite different from the order of delivery of the verdict. 64 Whilst it was correct that the jury could only consider a verdict about the alternative counts after they were unanimously agreed that the applicant was not guilty of the primary offence, the jury was entitled to consider the primary count and the alternative counts in any order they saw fit. Stanton v The Queen at [35], [70]; [other citations omitted]. 65 The state of the applicant's knowledge of the provenance of the funds coming into his trust account was the sole issue for the jury to determine. There was a cascading series of conclusions available to the jury as to the applicant's awareness of the fact that he was dealing with the proceeds of crime: belief, recklessness, negligence or no knowledge at all. 66 The jury may have reached a different verdict about one of the less serious alternatives had they not been constrained by [the trial judge's] directions.
As in any summing up, his Honour's directions were in some respects concerned with what each juror, individually, would have to decide and in other respects they were concerned with the collective act of the jurors contributing their respective votes, or conclusions, to the verdict of the whole. In a criminal trial by jury the individual decisions of each juror as to what evidence should be accepted, what facts should be found and whether the elements of the charge have been proved beyond reasonable doubt are expected to be made after discussion. Jurors' individual reflection upon the evidence, their assessment of the issues and their exchanges of views with each other may take place in any manner and in any order of addressing the questions before them that they, severally, may choose. In Stanton v The Queen Gleeson CJ, McHugh and Hayne JJ said that the trial judge in that case, Anderson J, would have "impermissibly restricted [the jury] in the manner in which they might properly exercise their function" if he had purported to dictate "a sequence of deliberation": at [34]. Their Honours said at [35]: Jurors are free to organise their individual processes of reasoning, or their discussions as a group, in whatever manner appears to them to be convenient.
In Stanton v The Queen the appellant had discharged a shot gun at his wife at close range and killed her. He was charged with wilful murder contrary to s 278 of the Criminal Code (WA), on the basis that he had intended to kill the victim. If the jury were not satisfied of that intent but only that he intended to cause grievous bodily harm, he would be guilty of the statutory alternative of murder, contrary to s 279. If the jury were not satisfied that the appellant had either of those intentions but that he had had only menaced his wife with the weapon and had not intended to shoot, then a verdict of guilty of manslaughter, contrary to s 280, could be returned. In practical terms, having regard to the circumstances, the real alternatives (apart from acquittal) were guilty of wilful murder or guilty of manslaughter.
The grounds of appeal in Stanton v The Queen asserted that the jury had erroneously been directed to consider the possible verdicts in a particular order, whereas they should have been told that they could consider the charge of wilful murder and the alternatives in any order. It was contended that the directions taken as a whole had the effect of precluding individual jurors from considering manslaughter at all so long as any one of them found the accused guilty of wilful murder. The first passage in the summing up that was impugned on that basis included the following: You first consider wilful murder and if you're unanimously of the view that the accused is guilty of wilful murder, that will be your verdict. If you are unanimously of the view that he's not guilty of wilful murder, then you proceed to consider whether you find him guilty of murder. If you are unanimously of the view that he is guilty of murder, then that will be your verdict.
The second impugned passage was the response of the trial judge to the following question from the jury: If the jury is in conflict, do those who believe he is guilty of wilful murder have to move down to the charge of manslaughter? Do 12 people have to agree to manslaughter? His Honour answered in these terms: Yes, the law is quite clear. You can't come to consider the alternative verdicts of murder or manslaughter unless you are unanimously of the view that he is not guilty of wilful murder. So, whatever your verdict is on the first charge of wilful murder, it must be unanimous.
Gleeson CJ, McHugh and Hayne JJ held as follows: [36] A proper appreciation of what Anderson J said [referring to his Honour's answer to the jury question] requires attention to three matters: the issues as they emerged at the trial; the other directions that the jury had already been given; and the precise question to which he was giving an answer. [37] As to the first, it was common ground in argument in this Court that, ultimately, this was a single issue case. The critical question was whether the jury were satisfied beyond reasonable doubt of the appellant's intent to kill his wife. As a practical matter, if they were so satisfied, they would find wilful murder, and if they were not so satisfied they would find manslaughter. On the evidence, any other verdict was not a realistic possibility. There being, for practical purposes, only one issue, the answer to which (if agreed upon unanimously) would resolve the matter one way or the other, it is difficult to understand how any possibility of sequential reasoning on that issue could have arisen. In whatever order they examined the evidence, and considered the primary facts, when they came to decide whether the case was one of wilful murder or manslaughter, the jury would necessarily do that by reference to the single issue, of intent, on which the outcome depended.
As to the second of the matters identified by their Honours at [36], it was noted at [38] that elsewhere in the summing up the trial judge had suggested to the jury what they might find to be a convenient sequence to their deliberations, thereby negating that he purported to direct them in that respect. As to the third of the matters, their Honours said this at [39]: [39] […] The jurors were […] asking a question as to their responsibilities if some of them were of the view that he was guilty of murder and others were not. They asked whether the former group would then be obliged to "move down". That must have been a reference to the point of final decision; the finding of a verdict. Since the choice between wilful murder and manslaughter turned upon the resolution of the one issue, intent, the question cannot have been directed to a sequence of reasoning, as distinct from the formal act of finding a verdict. It was clearly understood, by the judge and by trial counsel (who agreed with the judge's response), as a question about the formal act of finding a verdict. That was the sense in which he used the word "consider" in the first sentence of his answer, as is further indicated by the terms of the second sentence of the answer. So understood, the answer was consistent with what the judge had earlier told the jury, and it involved no error.
The circumstances relevant to ground 1 in the present leave application are closely parallel to the circumstances in Stanton v The Queen. In this case, also, there was a single issue, namely, the applicant's state of mind with respect to the character of the $24.2 million that was deposited to his firm's trust bank account in 53 separate amounts and that was subsequently transferred out of the account. Did he believe that the money was proceeds of crime, or was he reckless, or negligent, as to whether it bore that character? Adapting the words of the majority in Stanton v The Queen at [38], it is difficult to understand how any possibility of sequential reasoning on that issue could have arisen. In whatever order the jury examined the evidence, and considered the primary facts, when they came to decide whether the case was one of belief, recklessness, negligence, or none of those alternatives, the jury would necessarily be determining a single issue of state of mind, on which the outcome depended.
Another parallel is the tenor of the jury question in the present case. It was concerned with the alternative contingencies (a) if all jurors "vote not guilty on the higher charge" or (b) "if we are divided on the indictment". This clearly concerned the position after individual and collective deliberation had taken place, at a point when votes would be counted in the formal process of adopting a verdict. The learned judge's answer would necessarily be understood as addressing that stage, not as a direction about the sequence in which the jurors should reason and discuss.
In my view it is clear that on every occasion when the learned trial judge told the jury that they would consider alternative verdicts only if not satisfied that the Crown had proved the offence charged, he was directing them with respect to the performance of their collective duty of casting their votes, or in other words, contributing their conclusions towards formally resolving upon the verdict to be returned. The words "consider" and "consideration" were explicitly used in conjunction with "verdict" and "alternative verdicts" and associated words or phrases. The sense of what his Honour said in the passages complained of is that the jury were merely told, correctly, that they need not consider how their voting stood with respect to the possible alternative verdicts unless and until they were unanimous that the applicant was not guilty of the charge on the indictment.
Nothing said in the passages complained of, or elsewhere in the summing up, conveyed that the jurors should not reflect upon, or discuss, or otherwise deliberate about whether the applicant was no more than reckless or negligent until after they had reached unanimity upon whether he believed that the money was proceeds of crime so as to be guilty as charged. On a fair reading of the summing up as a whole it does not convey any such direction about the sequence of deliberation. Further, a direction of that nature would be impossible to formulate in meaningful terms: deliberation about whether the applicant had the belief necessary to sustain the offence charged could not realistically be undertaken without concurrent deliberation on the integrally involved question of whether his state of mind may have been something less than belief, such as recklessness or negligence. Any attempt by the trial judge to propound and direct a sequence of deliberation on the single issue in the case would have been very odd and conspicuous. Counsel who appeared for the applicant at trial (who did not appear on the appeal) clearly did not perceive that his Honour conveyed such a direction, which tends to confirm the fair reading of the summing up in print.
Leave to appeal against conviction upon the ground argued should be refused. The ground has no merit. No miscarriage of justice arose from the aspects of the summing up that are criticised in the applicant's submissions on this ground.

Application for leave to appeal against sentence - ground 3

Consideration of the applicant's proposed ground of appeal against sentence, involving a question of parity with the sentences imposed on three other offenders, requires a summary of the offences for which the others received their sentences and some untangling of the different circumstances relevant to punishment of each of them, including discounts that were applied for pleas of guilty and for assistance to the authorities.

Rostankovski

Rostankovski pleaded guilty to three charges as follows: 1. Aiding and abetting the commission by Adam Cranston of an offence against s 135.1(3) of the Criminal Code (engaging in conduct with the intention of dishonestly causing loss to the Commonwealth). Adam Cranston's principal offence was the Plutus tax fraud described in the applicant's statement of agreed facts reproduced at [8] above. 2. Blackmail, contrary to s 249K(2) of the Crimes Act 1900 (NSW), committed jointly with Hausman and constituted by making unwarranted demands with menaces, with intent to obtain a gain by threatening to publish accusations that three of the Plutus conspirators had committed serious indictable offences, namely, fraud and money laundering. 3. Jointly with Hausman and the applicant, dealing with money that was and that he believed to be proceeds of crime to a value of $1 million or more, contrary to s 400.3(1) of the Criminal Code. The particulars of the offence consisted of Rostankovski's part in causing the $24.2 million proceeds from the blackmail of the Plutus conspirators to be passed through the applicant's trust bank account.
The sentencing judge in the District Court concluded that it was open to him to fix an aggregate sentence for the two Commonwealth matters, counts (1) and (3). After applying a 20% discount for Rostankovski's pleas of guilty, the judge proposed indicative sentences of 1 year and 7 months for the offence of aiding and abetting a fraud and 9 years and 6 months for the money-laundering, underlying a proposed aggregate of 10 years. His Honour proposed a sentence of 4 years and 9 months with a non-parole period of 2 years and 5 months on count (2), the blackmail offence.
The sentencing judge then shortened the proposed aggregate for the Commonwealth matters from 10 years to 8 years (with a non-parole period of 4 years and 9 months) and he shortened the proposed sentence for the blackmail from 4 years and 9 months to 4 years (with a non-parole period of 2 years and 5 months). His Honour ordered that the reduced aggregate for the Commonwealth matters should commence at the expiration of the non-parole period for the blackmail. The reason for the shortening was to give effect to the principle of totality. Although not expressly stated in the remarks on sentence, it was open to infer from the approach taken that his Honour had proceeded from a mistaken understanding that the Commonwealth sentence could not commence any earlier than the expiration of the non-parole period for the State offence and that reducing each sentence was the only way to achieve an appropriate overall penalty. Rostankovski's effective total head sentence was thus 10 years and 5 months with an effective total non-parole period of 7 years and 2 months.
The Crown appealed to this Court and argued, inter alia, that the learned judge had erred in giving effect to the principle of totality by reducing each sentence rather than by maintaining the length of each term and structuring commencement dates to achieve greater concurrence. It was submitted that this method had resulted in reduction of both the Commonwealth aggregate sentence and the sentence for the blackmail to the point of manifest inadequacy. This Court concluded that the sentencing judge's method was open to him: R v Hausman; Hausman v R; R v Rostankovski; Rostankovski v R [2022] NSWCCA 24 at [104] and [124] (Fullerton J); [211]-[212] (Adamson J); [220] (Hamill J). The sentences were not disturbed.

Hausman

Hausman pleaded guilty to the following two charges: 1. Jointly with Rostankovski and the applicant, dealing with money that was and that he believed to be proceeds of crime to a value of $1 million or more, contrary to s 400.3(1) of the Criminal Code. This charge concerned Hausman's part in passing the $24.2 million proceeds from the blackmail of the Plutus conspirators through the applicant's trust bank account. 2. Blackmail, contrary to s 249K(2) of the Crimes Act, committed jointly with Rostankovski and constituted by Hausman's role in demanding with menaces the payment of $25 million by the Plutus conspirators.
Hausman was sentenced by the same judge as Rostankovski. His Honour adopted a starting point of 15 years for count (1), the money-laundering offence, and 10 years for count (2), the blackmail offence. A 50% discount was applied for early pleas of guilty and assistance to the authorities. That reduced the sentences to 7 years and 6 six months and 5 years, respectively. The sentencing judge then decided that, to give effect to the principle of totality, "the notional total effective head sentence would be 10 years imprisonment". His Honour considered that that was to be achieved by fixing a 5 year sentence for the blackmail (with a non-parole period of 3 years) to commence first and reducing the sentence for the money laundering from 7 years and 6 months to 5 years (also with a non-parole period of 3 years), to commence from the expiry of the non-parole period of the sentence for the blackmail. The result was an effective total head sentence of 8 years with an effective total non-parole period of 6 years.
The Crown also appealed this outcome and made the same contention about the sentencing judge's method with respect to totality as it made in relation to Rostankovski's sentence. In this Court it was observed that the sentencing judge's statement that he sought to achieve a "notional total effective head sentence [of] 10 years imprisonment" was obscure. The actual effective overall sentence was not 10 years. The Crown's argument was rejected in relation to Hausman as it had been in relation to Rostankovski and for the same reasons, at the references cited above. Hausman's sentence was not disturbed.

Menon

Dev Menon was found guilty, at the conclusion of his trial by jury, of the following offences: 1. Conspiring with Adam Cranston and others with the intention of dishonestly causing a loss to the Commonwealth, contrary to s 135.4(3) of the Criminal Code. 2. Conspiring with Adam Cranston and others to deal with money that was proceeds of crime and that the offender believed to be such proceeds, to a value of $1 million or more, contrary to ss 11.5(1) and 400.3(1) of the Criminal Code.
The outline of the conspiracy to cause loss to the Commonwealth, count (1), appears from the agreed statement of facts that was tendered at the applicant's trial, reproduced earlier in these reasons. The scheme was planned and its implementation commenced in the early months of 2014. Menon was not involved initially but from March 2015 was engaged in "back-office" accounting and legal work in the operation of the scheme. From June 2015 until his arrest in May 2017 he was a knowing participant in the conspiracy. He provided legal and accounting advice and services to the principal conspirators. He helped to manage the straw directors of the second-tier companies. From May 2016, with Jason Onley and Adam Cranston, Menon conducted the day-to-day operations of the second-tier companies. He played a prominent role in attempting to deflect ATO investigation and discovery of the fraudulent scheme.
Menon's participation in the conspiracy to deal with the proceeds of crime spanned the same period of nearly two years. His activities included facilitating transfers of the unremitted PAYG withholding amounts for the benefit of Jason Onley and Adam Cranston, using the trust account of Clamenz Lawyers, the law firm of which he was a member. Menon set up a company through which some of the proceeds were distributed. One aspect of his participation in this conspiracy was his involvement in creating the deed under which $24.2 million was transferred to the applicant's firm's trust account. He drafted and settled the deed with a view to disguising the true nature of the blackmail payments.
The learned trial judge, Payne JA, sentenced Menon to a term of 8 years and 6 months for the conspiracy to cause loss to the Commonwealth and 12 years for the money-laundering conspiracy: R v Dev Menon [2023] NSWSC 768. His Honour ordered that the latter sentence commence two years after the commencement of the sentence for the conspiracy to cause loss. The result was total overall term of 14 years with a single non-parole period of 9 years. In arriving at that decision his Honour took into account the sentence that Johnson J had passed on the applicant. Johnson J, in turn, had taken into account the sentences passed on Rostankovski and Hausman in the District Court.

Comparison of the sentences generally

The applicant submits, and I accept, that "all three offenders [the applicant, Rostankovski and Hausman] had strong subjective cases". In support of the applicant's grievance arising from comparison of his sentence with the sentences of Rostankovski, Hausman and Menon, the applicant does not rely upon material differences in their respective subjective circumstances. Although not acknowledged in the applicant's written submissions, Menon's subjective case was markedly more compelling than the applicant's. His daughter suffered from a serious medical condition that made her highly dependent upon her parents. The incarceration of Menon would have a significant detrimental impact upon her well-being and would cast a very great burden on the child's mother to care for her, in effect as a single parent. Payne JA gave weight to those circumstances in mitigation of sentence.
The applicant's ground 3 is a claim of a lack of parity between, on the one hand, sentences imposed on co-offenders who were dealt with for multiple offences and received the benefit of the totality principle and, on the other hand, the sentence imposed on himself for a single offence, in common with the others, not attracting the operation of the totality principle. The Court must consider all components of the sentences that each offender is serving for each offence and must have regard to the circumstances of both the common and the unrelated offending of the co-offenders: Kelly v R [2017] NSWCCA 256 at [26] and [39] (Beech-Jones J, other members of the Court agreeing). Beech-Jones J said this: [33] A number of cases in this Court have considered the circumstance under consideration here, namely a claim of a lack of parity between a sentence imposed on a co-offender who was sentenced for multiple offences and received the benefit of the totality principle and another offender who did not, including Bell v R [2008] NSWCCA 206, Tran v R [2006] NSWCCA 266; Ayik v R [2013] NSWCCA 119 and El-Helou v R [2014] NSWCCA 209. Consistent with Postiglione v The Queen (1997) 189 CLR 295; [1997] HCA 26 in each of these four cases the Court took into "account" the actual gaol time served by each of the offenders solely referable to the common offence. However, the weight attributed to that factor varied, none of the cases considered that it was determinative and in each case, the Court did not engage in a strict mathematical comparison between the time served by the co-offender that was solely referable to the common offence and the non-parole period imposed on the applicant for leave to appeal […]
Kelly v R was applied - and was considered together with other authorities on the subject of parity in a case such as the present - by Dhanji J (Macfarlan JA and Adamson J agreeing) in Wood v R [2022] NSWCCA 84 at [44]-[56].

Comparison with Rostankovski's sentence

In comparing the applicant's sentence of 12 years for breach of s 400.3(1) with Rostankovski's aggregate sentence of 8 years for both the s 400.3(1) offence and his aiding and abetting of Adam Cranston's fraud on the Commonwealth, it is necessary to take into account how that aggregate was derived. The indicative sentence for the proceeds of crime offence, 9 years and 6 months after application of a 20% discount, implies a starting point 11 years and 10 months. The applicant could not reasonably complain about having received a head sentence 2 months longer than that starting point, for the offence that was common to both of them.
The applicant's objective criminality in dealing with the proceeds of crime was significantly greater than that of Rostankovski. He used his position as a solicitor to negotiate the deed under which the nature of the funds would be disguised. He thereby applied professional skill that was indispensable to the enterprise and that Rostankovski certainly did not have. He used his law firm's trust bank account as a cloak of legitimacy under which the funds could shed their status as blackmail payments and assume the guise of lawful dealing. Again, this was an indispensable contribution, at the core of the commission of the offence. As Johnson J observed in his remarks on sentence at [137]-[139], the applicant's role was greater than that of Rostankovski albeit less than the role of Hausman, who was the architect of the money laundering project. The benefits obtained by the applicant were very much less than those obtained by Rostankovski and Hausman but nevertheless substantial.
Having regard to the indicative sentences that underlie Rostankovski's aggregate sentence of 8 years for his two Commonwealth offences, the great majority of that aggregate must be attributable to the s 400.3(2) money laundering offence. However, the gaol time solely attributable to that offence remains undifferentiated and incalculable. In considering parity with the applicant's head sentence of 12 years and non-parole period of 7 years and 6 months, the Court is not bound, or able, to make a direct arithmetic comparison with the amount of gaol time to be served by Rostankovski solely referable to the common offence.
Comparing the applicant's sentence for that common offence with Rostankovski's aggregate sentence for two Commonwealth matters does not reveal unjust disparity when one considers the steps by which Rostankovski's comparable indicative starting point of 11 years and 10 months was reduced and incorporated into the aggregate. The initial discounting of 20% arose from Rostankovski's plea of guilty, which differentiated him from the applicant. The shortening of the aggregate from 10 years to 8 arose from the sentencing judge's unorthodox method of giving effect to the totality principle. Both of these are points of incomparability between the two offenders' sentencing processes. The application for leave fails to recognise that the widely different sentencing circumstances justifiably produced different outcomes between the applicant and his co-offender.

Comparison with Hausman's sentence

Similar considerations apply to the comparison between the applicant's sentence and Hausman's. The starting point for Hausman's sentence for the s 400.3(1) offence was 15 years. Johnson J found that he had initiated the money laundering scheme and had procured the applicant's advice and assistance in relation to it. His Honour assessed the applicant's role as significantly less objectively serious than that of Hausman, even taking into account the offender's contributions of essential professional skill and access to his trust account. The applicant has no legitimate grievance from comparison of his sentence with the starting point of 15 years for Hausman.
There were two stages of reduction that resulted in Hausman serving 5 years with a non-parole period of 3 years for the offence that was common to them both. First there was the 50% reduction for plea and assistance. Secondly there was the shortening of the resultant head sentence by a further 2 years and 6 months to achieve, by his Honour's unusual method, an appropriate overall effective sentence when the sentence for money laundering was accumulated on the non-parole period for the blackmail offence. Neither of the circumstances that gave rise to the two-step reduction was present in relation to the applicant. Therefore, direct comparison cannot demonstrate disparity and no justifiable sense of grievance can arise from considering Hausman's sentence for their common offence.

Comparison with Menon's sentence

Menon's involvement in dealing with the $24.2 million proceeds of crime was quite different from and less significant than the applicant's involvement. Menon drafted the deed and negotiated its terms with the applicant. He subsequently caused the several instalments of the blackmail money to be deposited to the trust account. Only the applicant used that account to cause the laundered funds to be passed out into the hands of Rostankovski and Hausman. Menon's involvement in the scheme was also significantly less than that of Hausman.
Menon's participation in the money laundering conspiracy with the other Plutus offenders, for which he was given a head sentence of 12 years, was of much wider scope and of longer duration than just the dealing with the $24.2 million in blackmail payments. The wider particulars are summarised at [62] above. However, his sentence for that offence was moderated by the circumstance that he was dealt with at the same time for the conspiracy to cause loss to the Commonwealth, which was committed over the same period of nearly two years and the overt acts of which substantially overlapped Menon's money laundering activity. In that situation and making allowance for the additional mitigating factors in Menon's subjective case, there is no disparity between the applicant's sentence and Menon sentence for their respective offences against s 400.3(1) of the Criminal Code.

Proposed orders

I propose the following orders: 1. Refuse leave to appeal against conviction on ground 1. 2. Grant leave to appeal against sentence on ground 3. 3. Dismiss the appeal against sentence.

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: 05 April 2024

Chalabian v R

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