Khoury v R

Some Findings of the Sentencing Judge

1. Having regard to the grounds of appeal, it is appropriate to set out a number of findings made by the sentencing Judge concerning the Applicant. The focus of the grounds of appeal was the offence under s.25(2) DMT Act based upon agreement to supply a substance represented to be a prohibited drug, cocaine.
2. The sentencing Judge described the offences in accordance with the Statement of Agreed Facts. When examining the Applicant's problematic history of substance abuse and subjective material tendered in the defence case, his Honour referred to the s.25(2) DMT Act offence (at ROS[51]) (my emphasis): "He claimed that he had been involved in the offence, due to promises of payment. It goes without saying, had the deal gone down, subject of course, to the person being ripped off not being a policeman and not being armed and not shooting the two prisoners if they found out it was not cocaine, both men stood to share in $400,000 if they had got away with the crime."
3. A little later, the sentencing Judge addressed the objective gravity of the DMT Act offences (at ROS[66]) (my emphasis): "I bear in mind, coming back to the objective gravity of the offending, those features that are self-evident. In relation to the first offence, of course, the drugs in question were not distributed to the community. They went to an undercover officer, not through any desire on the part of the two prisoners. That is the reality of the situation. And, of course, they did not have the cocaine to provide the two kilograms to the undercover officer. In that sense, of course, as is acknowledged by the Crown, and I will come back to this matter in a moment, the offending thus, although it might otherwise be close to the middle range or within the middle range of objective seriousness, is below, and I would suggest substantially below, the middle range of objective seriousness of offending as charged. That having been said, of course, it also is relevant to the sentencing exercise to take into account the fact that the character of the conduct of the prisoners in negotiating an arrangement, which was essentially meant to be a fraud upon the man Tom [the UCO], who they did not know was an undercover officer, is a matter that the courts have, on a number of occasions, expressed concern about because of the risks to the community by that form of conduct."
4. In the context of the s.25(2) DMT Act offence, his Honour referred to a number of sentencing decisions for "drug rip-off" supply offences (at ROS[67]-[69]): "67 There is a decision of Kijurina [2017] NSWCCA 117, particularly at [99] - [106], where it is acknowledged that 'drug rip offs' purporting to be actual drug deals may be less serious than a genuine plan to supply drugs but are still 'objectively serious', bearing in mind they attract the maximum penalties that the offence attracts on this occasion. Unlike most fraud or false pretences matters, the victim of such a drug rip off is unlikely to report the matter to police. Then again, it should be pointed out, if you rip off the wrong person they are likely to take matters into their own hands with devastating and fatal results. 68 As a result, subject to any violent retribution, the prisoner in question is likely to escape without punishment. The courts have said, to paraphrase what is said more eloquently in the judgment of Kijurina, that there is significant 'community interest' in not allowing the drug trade to be used as a vehicle for fraudulent activities and also endeavouring to deter the kind of violent response with such conduct and provoked. It is of upmost importance that courts impose sentences of sufficient severity to ensure others who may be attempted to engage in 'drug rip offs' be dissuaded from so doing. It is only in exceptional cases that a non-custodial sentence will be appropriate, as was pointed out at [103] of that judgment. 69 I note in relation to this matter by reference to some of the criteria that relate to such circumstances, there is no evidence that either prisoner was capable of fulfilling the offer or the order made by Tom. Even though they supplied a much smaller quantity of very high quality cocaine a few days before, the facts of the matter are that I cannot be satisfied beyond reasonable doubt that they had access to anything like the quantity they agreed to supply. I note the decision of Kalpaxis [2001] 122 A Crim R 320. … He offered to supply a commercial quantity of cocaine but the offer was not 'genuine'. There was no supply that took place and he had absolutely no capacity to supply the drug. That was an 'exceptional and extraordinary' case."
5. Soon after, the sentencing Judge made the following finding concerning the objective seriousness of the s.25(2) DMT Act offence (at ROS[72]) (my emphasis): "…as I have earlier indicated, having regard to the features of this case, self-evident from the facts and the other observations I have made, the offending is well below the [mid-]range of objective seriousness. But certainly it is not at the lowest end of objective seriousness, notwithstanding the absence of any cocaine."
6. In the course of addressing the comparative roles of the Applicant and Mr El Sage, his Honour said (at ROS[109]-[110]) (my emphasis): "109 I also bear in mind that the two men were involved in a joint criminal enterprise which did not involve having to source cocaine at all. It involved a joint agreement to supply ultimately, between themselves, not with Tom, a false substance and making up a package to make it look like cocaine. I appreciate Mr El Sage had a relative of his transport him and Mr Khoury, but that ultimately is not a matter of great moment. 110 If real cocaine was involved in this transaction, then leadership in the scheme would involve actually sourcing the cocaine. But making up a false or deceptive package that looked like cocaine required little guile or criminal expertise or leadership by either person. It is in these circumstances, that whilst it is true Mr El Sage took a leading role in the negotiations, it was a matter of some substance, but not a significant matter, in the absence of any direct evidence from either prisoner as to what was to happen to the money. They were both jointly culpable. Even if it was true that Mr Khoury was 'the muscle', he was playing his role to get access to the money."
7. His Honour noted that the Applicant's offences were committed whilst he was subject to conditional liberty (at ROS[113]): "Mr Khoury committed the offences, as I said, whilst on parole and this is a more significant aggravation of conditional liberty than a breach of a good behaviour bond, which is still a substantial matter to take into account. This is a difference that makes up, to some extent but not all of, the difference between the men because of Mr El Sage's more extensive criminal history."
8. In a paragraph which became a focal point for submissions made in this Court, his Honour referred to the issue of financial gain arising from the s.25(2) DMT Act offence (at ROS[115]) (my emphasis): "Clearly, in both cases, the offending, particularly in relation to Count 2, was for significant financial gain. I do not regard that as an aggravating factor in relation to Count 1 because it is modest financial gain given that payment has to be made for the cocaine that is supplied. But, in Count 2, it was potentially a very significant financial gain, with no outlay on the part of either prisoner. Thus, it arises as an aggravating factor under s 21A(2). To use a colloquialism, it was all 'cop' for the two men if they got their hands on the money. I appreciate financial reward is very much an aspect of drug dealing. In this case, of course, there were no drugs to supply."
9. The sentencing Judge made findings of special circumstances with respect to both the Applicant and Mr El Sage (at ROS[122]-[124]): "122 Ultimately, in the spirit of what is required of me by the High Court in cases such as Markarian v R from 2005, I have determined that the total sentence for Mr El Sage should be slightly higher than that of Mr Khoury, but the effective non-parole period in relation to both men should be the same. 123 In reaching that decision, I have noted that there are 'special circumstances' pursuant to s 44 of the Act. There is a requirement for special circumstances to be recognised in the partial accumulation of sentences. In my view, Mr El Sage needs a slightly longer period of supervision to assist him to adjust to community living and to re-establish his relationship with his family and do his best to assist his family and to address his mental health issues. Mr Khoury should be assisted in that regard too. 124 They should both have the benefit of a finding of special circumstances, as I said, because professional assistance will hopefully assist them to address the factors that have contributed to their offending behaviour, both on this occasion and in the past. I have thus adjusted the relationship of the non-parole period to the balance of sentence."
10. Shortly after, his Honour passed sentence with respect to the Applicant as referred to earlier in this judgment.

Sentencing "Drug Rip-Off" Supply Offenders

1. Before moving to consider the grounds of appeal, it is appropriate to make some general observations concerning sentencing "drug rip-off" supply offenders.
2. The term "supply" is defined broadly in s.3(1) DMT Act, including "agreeing to supply", the s.25(2) DMT Act offence to which the Applicant pleaded guilty. "Supply" is defined as follows: "supply includes sell and distribute, and also includes agreeing to supply, or offering to supply, or keeping or having in possession for supply, or sending, forwarding, delivering or receiving for supply, or authorising, directing, causing, suffering, permitting or attempting any of those acts or things."
3. The deeming provision in s.40(1) DMT Act operated to render the Applicant liable to conviction for a s.25(2) DMT Act offence even though the substance involved was not a prohibited drug. Section 40(1) DMT Act states: "40 Effect of certain representations (1) A substance (not being a prohibited drug) which, for the purpose of its being supplied, is represented (whether verbally, in writing or by conduct) as being a prohibited drug or a specified prohibited drug shall, for the purposes of this Act and the regulations, be deemed to be a prohibited drug or the specified prohibited drug, as the case requires. …"
4. Given the grounds of appeal and the submissions made in support of those grounds, it is helpful to refer to decisions where this Court has considered "drug rip-off" supply offences in the context of both conviction and sentence appeals.
5. In R v Dendic and Mazzeo (1987) 34 A Crim R 40 ("Dendic and Mazzeo"), this Court (Street CJ, Slattery CJ at CL and Wood J agreeing) determined an appeal against conviction and sentence for a drug supply offence based on the concept of "offer to supply". The appellants made an offer to supply to an undercover police officer where the substance ultimately delivered was glucodin and not heroin. Street CJ observed at 45: "It seems fairly plain that the appellants intended what is known in the drug traffic as a 'rip-off'."
6. The argument advanced for the appellants in Dendic and Mazzeo was that what they did was more in the nature of obtaining property by a false pretence contrary to s.179 Crimes Act 1900. In rejecting this submission, Street CJ observed (at 46): "The proposition that section 179 in effect covers the field of fraudulent transactions does not attract me, …"
7. With respect to the sentence appeal, Street CJ stated at 47: "This was a transaction that, stated bluntly, involved an intended drug rip off of $72,000.00."
8. The Chief Justice noted with respect to one of the appellants at 47: "He chose to involve himself in the drug milieu for the purposes on this occasion of manipulating that drug traffic to his own financial advantage."
9. Street CJ observed (at 47) that there was nothing to indicate that imprisonment for three years with a non-probation period of 12 months was excessive for an offence of that type (then punishable by a maximum penalty of imprisonment for 15 years).
10. In R v Addison (1993) 70 A Crim R 213 ("Addison"), the Court referred to Dendic and Mazzeo in the course of dismissing an appeal against conviction based upon agreement to supply in a "drug rip-off" context. Gleeson CJ (Finlay and Grove JJ agreeing) said at 217: "Those directions, as counsel for the appellant acknowledged, conformed to the principles enunciated by this Court in R v Dendic (1987) 34 A Crim R 40. However, whilst formally taking the point that Dendic was wrongly decided, counsel put as his principal argument the proposition that, even if what was decided in Dendic applies to an offer to supply, it does not apply to an agreement to supply. It was argued that for there to be an agreement to supply there must have been an intention on the part of the appellant to supply, that is to say, to perform the agreement. The first observation to be made concerning that argument is that, if it be correct, there is an extraordinary lack of congruence between the concepts of offering to supply and agreeing to supply. Why Parliament should have intended such a result is not apparent. However, upon examination, the argument is based upon a false analogy. The basis of the argument was the decision in R v Freeman (1985) 3 NSWLR 303, which dealt with the offence of conspiracy to pervert the course of justice. The Court held that, for a charge of a conspiracy to pervert the course of justice, the Crown must prove an intention to pervert, or wrongfully interfere with, the course of justice. It is one thing to say that, for the purpose of the crime of conspiracy, the essence of which is a combination to achieve an unlawful purpose, it must be shown that the parties to the conspiracy intended to achieve the purpose. It is a different thing to say that, if Parliament makes it an offence to agree to supply goods of a certain kind, the offence is only committed if the accused person has the intention of honouring the agreement. In such a case, the relevant intention is the intention to agree, not the intention to perform the agreement. This is underlined by the consideration that the concept of agreeing to supply appears in a legislative context in close proximity to the cognate concept of offering to supply, which has the meaning explained in Dendic."
11. The applicant in Addison was sentenced to imprisonment for five years with a non-parole period of three years and three months. In dismissing the sentence appeal, Gleeson CJ said at 221: "As to the application for leave to appeal against sentence, Judge Nield sentenced the appellant on the basis that, as he said, he was engaging, for his own purposes, in a charade. Even so, the matter was of objective seriousness. The appellant has a substantial criminal history, including 10 convictions for drug offences. Finn, who pleaded guilty, received a minimum term of three years and an additional term of one year. His Honour gave careful and appropriate consideration to questions of parity. He also took into account, in the appellant's favour, a number of subjective circumstances set out in a pre-sentence report. I see no error of fact or principle in his Honour's approach to sentence. The sentence imposed was not manifestly excessive. Leave to appeal against sentence should be granted but the appeal should be dismissed, with time served to count towards sentence."
12. In R v Kalpaxis (2001) 122 A Crim R 320; [2001] NSWCCA 119 ("Kalpaxis"), Stein JA (Wood CJ at CL and Studdert J agreeing) said at [18]: "Given the wide definition of supply in s 3 of the Drug Misuse and Trafficking Act, the undisputed facts came within s 25. However, this does not require that a lengthy term of imprisonment be imposed. Indeed, the facts belie this. While Regina v Dendic and Mazzeo (1987) 34 A Crim R 40 is authority for the proposition that the circumstances encompass an offence of offering to supply notwithstanding that there was no intention of actual supply, the facts relating to the two offenders in that case bear no real parallel with the instant case. In particular, the subjective factors are to be distinguished as indeed are the objective circumstances of the offence."
13. Stein JA noted that the offender in Kalpaxis was affected by significant mental illness and continued at [20]-[22]: "20 In my view, his Honour was entitled to describe the present case as exceptional and extraordinary. It is, and given the facts and circumstances, the concern of the Legislature with the actual supply of drugs has little application. 21 The offence itself must be seen as falling at the least serious end of the spectrum encompassed by the breadth of the provision and the definition of supply in s 3. It needs to be emphasised again that there was no actual supply nor any intention or ability to supply drugs. 22 There is, it seems to me, an argument that offences of this nature, which apparently occur infrequently, ought be dealt with by a separate section of the legislation which can have as its maximum penalty a different penalty than life imprisonment. There is concern, that at least I have, that if it continues in the present situation there may be a skew in the JIRS statistics relating to offences under this provision which may have the capacity to mislead courts in the future."
14. The exceptional and extraordinary nature of the offence in Kalpaxis has been emphasised in later decisions of this Court. In R v Smith [2002] NSWCCA 378 ("Smith"), Wood CJ at CL (Howie J agreeing) said at [16]: "Ground 2 similarly lacks substance, there being no reason in principle why a genuine agreement to supply drugs should be regarded as any less serious than a proven act of supply. The decision in R v Kalpaxis [2001] NSWCCA 119 provides no support for the applicant, it having been a case where the offender never had any of the drugs in question, let alone any intention of supplying them. He was at the time suffering from a mental illness which led to a substantial departure from reality."
15. In R v Yaghi (2002) 133 A Crim R 490; [2002] NSWCCA 396 ("Yaghi"), Wood CJ at CL (Smart AJ agreeing) returned to this topic, referring to Kalpaxis at [11]: "In Regina v Kalpaxis (2001) 122 A Crim R 320, the Court was similarly concerned with an offender who offered to supply a large commercial quantity of cocaine to a purchaser, contrary to s 25 of the Drug Misuse and Trafficking 1985, without any means or intention of doing so. The case was described as 'exceptional and extraordinary', since from beginning to end it involved nothing more than a ruse by a mentally disturbed offender, who was out of touch with reality, and who was seeking to obtain sufficient money to enable him to spend time in Greece with his family, and with his father who was dying of cancer."
16. Wood CJ at CL continued at [14]-[21]: "14 Kalpaxis was a very different case from the present in so far as the 'transaction' there involved a single offender who was mentally disturbed, whose motivation was limited, and who had no realistic prospect of success in what was an extremely amateur venture. 15 The present case was far more serious since those involved behaved in an organised and systematic way, entirely consistent with that employed by those involved in high level drug dealing, as part of a plan to secure a substantial sum of money from another person, who was also involved in that trade. While this offence might also have had the flavour of an attempt or a conspiracy to obtain money by deception or by a false pretence, to so characterise it would, in my view, inappropriately minimise the criminality involved. 16 It is regrettably a fact of life, within the organised drug trade, that 'rip offs' occur, and those who choose to cloak such an endeavour with the appearance of a genuine drug deal, must accept the consequences if their conduct happens to fall within the specific provisions of the Drug Misuse and Trafficking Act. That this is the case is indicated by the decisions of this Court in R v Dendic and Mazzeo (1987) 34 A Crim R 40, R v Addison (1993) 70 A Crim R 213 and R v Salem NSWCCA 3 October 1997, each of which confirmed that the relevant mens rea was that relating to the agreement or conspiracy to make an offer to supply which would be regarded by the offeree as genuine, rather than an intention to perform it. 17 Part of the reason for that lies in the circumstance that, unlike most cases of fraud or false pretences, the victim of a drug rip off is unlikely to report the matter to police. As a result, subject to any act of violent retribution, which commonly follows such an event, the offender is likely to escape scot-free. 18 There is a significant community interest in not allowing the drug trade to be used as a vehicle for fraudulent activities of this kind, and also in deterring the kind of violent response which such conduct can very readily provoke. 19 It may be accepted that the criminality involved in such a case is somewhat less than that involved in a case where there was a genuine plan to supply drugs. It may also be accepted, as Kalpaxis suggests, that there would be merit in creating a specific offence with a lesser penalty than life imprisonment for conduct of the kind here involved. 20 However it does not follow, in my view, that conduct of the organised and elaborate kind seen in this case should be seen to involve an objective criminality comparable to that observed in a routine case of false pretences, or in one of obtaining money by deception, punishable by reference to the maximum penalty of 5 years imprisonment applicable, for example, to cases falling within ss 178BA, 178BB, and 179 Crimes Act 1900. Kalpaxis does not stand as authority for such a proposition, nor did it suggest an appropriate range of penalty for a case such as the present. 21 While it may not have been strictly appropriate to refer to the present heroin offence as a 'drug offence', such a label is understandable if taken to be a shorthand way of referring to an offence which comes within the Drug Misuse and Trafficking Act by reason of the combined effect of ss 25 and 26 of the Act. Having regard to the agreed statement of facts and the terms of the intercepted conversations, it was, on any fair view, a particularly serious offence which could have secured a substantial sum of money."
17. In Aoun v R [2011] NSWCCA 284 (Aoun"), with the concurrence of Basten JA and Adams J, I said at [44]-[47]: "44 The charge under Sequence 4 to which the Applicant pleaded guilty was based upon an offer to supply. The relevant intention that must be proved where there is a charge of supply involving an offer to supply is the intention inherent in the making of the offer. It must be a genuine offer made with the intention that it be regarded as genuine by the offeree. The intention required to bring conduct within this part of the definition does not involve any intention of ultimate supply - the intention is bound up with the making of the offer itself: R v Dendic; R v Mazzeo (1987) 34 A Crim R 40 at 45; R v Addison (1993) 70 A Crim R 213 at 217; R v Swan [2003] NSWCCA 318; 140 A Crim R 243 at 246-247 [12]-[18]. 45 A prosecution for supply based upon an offer for supply does not, of course, involve an actual supply. Nor does it involve an offender who has a prohibited drug in possession for supply, a different form of supply contained within the extended definition in s.3(1) DMT Act. 46 The approach to sentencing for offer to supply offences has been considered in a number of decisions of this Court. An early decision was that of R v Kalpaxis [2001] NSWCCA 119; 122 A Crim R 320, where an offender offered to supply a large commercial quantity of cocaine to a purchaser without any means or intention of doing so. The decision in R v Kalpaxis has been described as 'exceptional and extraordinary' since, from beginning to end, it involved nothing more than a ruse by a mentally disturbed offender, who was out of touch with reality, and who was seeking to obtain sufficient money to enable him to spend time in Greece with his family and with his father who was dying of cancer. The exceptional and extraordinary circumstances in R v Kalpaxis have been emphasised in later decisions: R v Smith [2002] NSWCCA 378 at [16]; R v Yaghi [2002] NSWCCA 396; 133 A Crim R 490 at 492-494 [11]-[22]. 47 The more typical offer to supply case involves an offer made to an undercover police officer or to a third person, in circumstances where the relevant conversation is recorded by way of telephone intercept or surveillance device. If there is an offer to supply a large commercial quantity of the nominated prohibited drug, then the offender is guilty of that offence. It is not necessary for the prosecution to prove more than the elements of the offence of offer to supply. An offender's plea of guilty to a charge of offer to supply admits the elements of that offence."
18. In R v Kijurina [2017] NSWCCA 117 ("Kijurina"), Price J (Hoeben CJ at CL and Lonergan J agreeing) said at [99]: "Another matter that his Honour appears not to have appreciated is the seriousness with which drug 'rip-offs' are viewed. Although the criminality may be less than in a case where there is a genuine plan to supply drugs, drug 'rip-offs' are objectively serious and remain subject to the penalties that apply to an offence contrary s 25(2) of the Drug Misuse and Trafficking Act."
19. After referring to Yaghi, Price J continued in Kijurina at [101]-[104]: "101 In the present case, the respondent acted in a way which was consistent with dealing in prohibited drugs at a high level. He exchanged SMS messages, coded conversations and provided a genuine sample of methylamphetamine. The provision of the two testers and the agreement to provide the two kilograms were part of the false pretence. He stood to gain $240,000 by the deception. Whatever he then intended to do with the money has little significance as these were serious offences. 102 There is no mention in his Honour's sentencing remarks of specific and general deterrence. True it is that the judge formed a positive view about the respondent's prospects of rehabilitation but specific deterrence should not have been totally ignored. General deterrence remains an important consideration as was emphasised in Yaghi. 103 When sentencing for drug 'rip-offs' that purport to be genuine deals involving more than the large commercial quantity of a prohibited drug, it is of the utmost importance that courts impose sentences of sufficient severity to ensure, as far as possible, that others who may be tempted to engage in similar conduct are dissuaded from such criminal activity. It will only be in an exceptional case that a non-custodial sentence will be appropriate. 104 The sentencing guideposts were the maximum penalty of life imprisonment and standard non-parole period of 15 years."
20. In Diri v R [2019] NSWCCA 319 ("Diri"), Davies J (Macfarlan JA and Hidden AJ agreeing) said at [57]: "I do not consider that a proper reading of Yaghi and Kijurina results in a conclusion that supplying an inert substance is objectively less serious than supplying a prohibited drug. The remarks made by Wood CJ at CL in Yaghi were made in the context of a plan by the suppliers from the outset to defraud the purchasers by supplying what purported to be a large commercial quantity of heroin. On one level, defrauding a purchaser who intended to buy a large quantity of a drug like heroin may be less serious than supplying that quantity of heroin. But the Court in Yaghi and the Court in Kijurina both stressed the seriousness of such rip-offs. The sentencing judge in the present matter was rightly concerned about the danger of someone ingesting a substitute substance like bath salts. The applicant was unaware that he was selling to police operatives and, in that way, supplying another substance meant that the objective seriousness was not reduced."
21. What can be seen from these decisions is a clear line of authority where "drug rip-off" supply offences are regarded as objectively serious. The decision in Kalpaxis, upon which the Applicant seeks to rely in this case, is to be regarded as an extraordinary and exceptional case which provides no assistance to the Applicant. The conduct of the Applicant in the present case is closer to that seen in Dendic and Mazzeo, Addison, Smith, Yaghi, Kijurina and Diri.
22. At times, the terminology of fraud or false pretence is used with respect to "drug rip-off" supply offences: Dendic and Mazzeo at 46 (see [39] above), Yaghi at [15], [20] (see [49] above), Kijurina at [101] (see [52] above) and Diri at [57] (see [53] above). Counsel for the Applicant sought to draw such an analogy in this case. Whilst this aspect is to be taken into account in assessing the objective seriousness of the offence, this Court has consistently rejected an approach where the offence is to be characterised as being more one of dishonesty than a drug supply offence which is capable of attracting significant penalties under the DMT Act.
23. Clearly, it is relevant to an assessment of objective seriousness that the offer to supply, or agreement to supply in the particular case, as in the present case, did not involve the prospect that an actual prohibited drug would be provided for distribution in the community. However, there are broader policy considerations at play in "drug rip-off" supply offences as noted in the decisions to which reference has been made.
24. Having made these general observations, it is appropriate to turn to the grounds of appeal.

Grounds 1-3 - Challenges Directed to the Sentence for the s.25(2) DMT Act Offence

1. It is appropriate to consider these grounds together. Submissions of the Parties
2. Mr Webb, counsel for the Applicant, submitted that the sentencing Judge had erred in his approach to the offence under s.25(2) DMT Act. It was submitted that there had been a misapplication of legal principle in the way in which his Honour had applied s.21A(2)(o) Sentencing Procedure Act, which provides for an aggravating factor where the offence was committed for financial gain.
3. Whilst acknowledging that financial gain is generally speaking a salient factor in a large commercial supply offence, Mr Webb submitted that it was an error to identify it as an aggravating factor in what he described as an ingenuous or fraudulent supply involving speculation by the sentencing Judge upon the basis that there was no payment to an upstream supplier.
4. Counsel sought to develop a submission that, as this was a fraudulent transaction, there was a form of double counting which operated adversely to the Applicant in this case. It was submitted that s.21A(2)(o) was misapplied by reference to the financial gain which the Applicant was to make from what was a fraudulent transaction.
5. Mr Webb relied upon Kalpaxis and submitted that error had been demonstrated in the approach taken on sentence to the s.25(2) DMT Act offence.
6. The Crown submitted that no error had been demonstrated in the sentencing Judge's approach to financial gain for this offence. It was submitted that the Applicant's participation in the "drug rip-off" involved in the s.25(2) DMT Act offence was undertaken solely for the purpose of financial gain because the entirety of the anticipated proceeds would have been profit.
7. The Crown submitted that the sentence imposed for the s.25(2) DMT Act offence indicated that his Honour had characterised this offence as a lower level one and had imposed what was a lesser (but available) sentence in the circumstances.
8. The Crown pointed out that, according to sentencing statistics, the sentence imposed upon the Applicant for a s.25(2) DMT Act offence involving a large commercial quantity of cocaine (including deemed supply) was the lowest recorded sentence, with this confirming that an appropriately restrained approach had been adopted for this offence.
9. The Crown submitted that the description of the offence as being "ingenuous" as asserted in Ground 3 was not correct. There was a measure of calculation in the offence and it had not been demonstrated that the sentencing Judge had erred in his approach to this offence. Decision
10. When sentencing for a "drug rip-off" supply offence, it is necessary for the Court to take into account that a prohibited drug will not actually be supplied. As Street CJ said in Dendic and Mazzeo, such an offender is "manipulating [the] drug traffic for his own financial advantage" (see [41] above). As Gleeson CJ observed in Addison, the offender in that case was "engaging, for his own purposes, in a charade" (see [44] above).
11. It may be accepted that the criminality involved in such a case is "somewhat less than that involved in a case where there was a genuine plan to supply drugs": Yaghi at [19] (see [49] above).
12. Unlike most fraud or false pretences offences, the victim of a "drug rip-off" is unlikely to report the matter to police. As a result, subject to any violent retribution, the offender is likely to escape without punishment. There is a significant community interest in not allowing the drug trade to be used as a vehicle for fraudulent activities of this kind, and also in deterring the kind of violent response which such conduct can provoke: Yaghi at [17]-[18] (see [49] above).
13. The importance of general deterrence has been emphasised so that courts should impose sentences of sufficient severity to dissuade others who may be tempted to engage in "drug rip-offs": Kijurina at [103] (see [52] above).
14. It was both open to the sentencing Judge and appropriate to have regard to the financial gain aspect as an aggravating factor under s.21A(2)(o) Sentencing Procedure Act in the circumstances of this case. His Honour characterised appropriately the question of financial gain in his sentencing remarks (ROS[115] at [31] above). As Wood CJ at CL observed in Yaghi at [21] (see [49] above), the offence in that case was "a particularly serious offence which could have secured a substantial sum of money".
15. There has been no double counting of this aspect in this case: Hejazi v R (2009) 217 A Crim R 151; [2009] NSWCCA 282 at [10]. The factors that informed the aggravating factor of financial gain in this case were that there was no other party (no upstream supplier) who would share in the profit and there was no cost or overheads as the substance supplied was not in fact cocaine. If the purchaser had paid for the alleged cocaine, then the Applicant and Mr El Sage stood to gain the full financial sum flowing from the transaction. The nature and extent of financial gain in this case was unusual: Lee v R [2019] NSWCCA 15 at [54]. These were appropriate matters for the sentencing Judge to take into account as an aggravating factor on sentence for this offence (see ROS[51] at [25] above; ROS[115] at [31] above).
16. It does not assist the Applicant to describe what occurred as an "ingenuous supply" and not an "actual supply" as asserted in Ground 3. What the Applicant was doing was well known to sentencing courts and was characterised appropriately by the sentencing Judge, who was entitled to take into account the aspect of financial gain as an available aggravating factor under s.21A(2)(o) Sentencing Procedure Act.
17. None of the matters complained of in Grounds 1, 2 and 3 are made good and each ground should be rejected.

Ground 4 - Suggested Error in Assessment of Objective Criminality of s.25(2) DMT Act Offence Submissions of the Parties

1. Mr Webb made submissions in support of this ground which were, in truth, derived from the general complaint contained in Grounds 1 to 3. He submitted that the assessment of objective gravity for the s.25(2) DMT Act offence was infected by error because of his Honour's approach to the financial gain issue.
2. The Crown submitted that it was open to the sentencing Judge to make the challenged finding concerning the objective seriousness of the s.25(2) DMT Act offence. The Crown noted that the submission made for the Crown at first instance was that the s.25(2) DMT Act offence fell below the middle of the range of objective seriousness for offences of this type and that no contrary submission was made by counsel for the Applicant in the District Court.
3. The Crown submitted that the finding made at first instance was open to the Court in the circumstances of this case. Decision
4. The assessment of the objective seriousness of an offence is quintessentially for the sentencing Judge and this Court should be very slow to set aside the judgment made at first instance in the exercise of a broadly based discretion: Mulato v R [2006] NSWCCA 282 at [37], [46].
5. The sentencing Judge found that the s.25(2) DMT Act offence lay "substantially below the middle range of objective seriousness" but "certainly … not at the lowest end of objective seriousness, notwithstanding the absence of any cocaine" (see ROS[66] at [26] above; ROS[72] at [28] above).
6. It was open to the sentencing Judge to make this finding. It is noteworthy that no more favourable finding concerning the objective seriousness of the offence was urged upon his Honour by the Applicant's counsel in the District Court with respect to the s.25(2) DMT Act offence.
7. What was said concerning the objective seriousness of "drug rip-off" offences in cases such as Yaghi, Kijurina and Diri supports the finding made in this case. Earlier decisions such as Dendric and Mazzeo and Addison point as well to the appropriateness of terms of imprisonment for offences of this type (see [40]-[42] and [44] above).
8. It was also relevant that the Applicant had actually supplied cocaine (the s.25(1) DMT Act offence) and had obtained and supplied blocks of powder so as to carry through with the s.25(2) DMT Act offence. This case was far removed from the acts of a mentally ill offender in Kalpaxis "who was out of touch with reality" (see Smith and Yaghi at [47]-[49] above).
9. I would reject this ground of appeal.

Ground 5 - Claim of Manifest Excess Submissions of the Parties

1. Mr Webb submitted that the total effective sentence was manifestly excessive having particular regard once again to features of the s.25(2) DMT Act offence addressed in earlier grounds of appeal.
2. The Crown submitted that the sentences passed upon the Applicant were open in the circumstances of the case taking into account, as well, the fact that the Applicant was subject to conditional liberty at the time of the offences.
3. The Crown submitted that the sentences passed were not manifestly excessive. Decision
4. To succeed on this ground of appeal, it is necessary for the Applicant to demonstrate that the sentences passed were unreasonable or plainly unjust: Markarian v The Queen (2005) 228 CLR 357; [2005] HCA 25 at [25].
5. In addressing earlier grounds of appeal, I have referred to factors which were relevant to sentence for the Applicant's s.25(2) DMT Act offence.
6. It is noteworthy, as the Crown submitted, that the actual sentence imposed for the Applicant's s.25(2) DMT Act offence is the lowest sentence recorded for this class of offence in sentencing statistics held by the Judicial Commission of New South Wales. This confirms that the sentencing Judge made a finding favourable to the Applicant concerning the objective seriousness of the offence to which his Honour then attached what was, in reality, a moderate sentence which took into account the features of the offence itself. The aspect of financial gain was an aggravating factor for this offence, but his Honour made restrained and appropriate use of it in determining sentence for the s.25(2) DMT Act offence.
7. The Applicant was sentenced as well for an offence of supplying a prohibited drug for which a sentence of 18 months' imprisonment was passed which has already expired.
8. The total effective term imposed upon the Applicant for these offences comprised imprisonment for four years and three months with a non-parole period of two years and nine months. By reference to the totality of the Applicant's criminality, and the fact that these offences were committed in breach of conditional liberty (the Applicant being subject to both parole and a good behaviour bond), the total effective sentence fell well within the exercise of reasonable sentencing discretion in the circumstances of the case.
9. This ground of appeal should be rejected.

Conclusion

1. The Applicant has not made good any of his grounds of appeal.
2. I propose the following orders: 1. grant leave to appeal against sentence; 2. appeal against sentence dismissed.
3. DAVIES J: I agree with Johnson J.
4. IERACE J: I also agree with Johnson J.

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