R v Boughen; R v Cameron

Judgment 1SIMPSON J: Pursuant to s 5D of the Criminal Appeal Act 1912, the Director of Public Prosecutions (Commonwealth) ("the Director") appeals against what he asserts to be the manifest inadequacy of sentences imposed upon the respondents by Finnane DCJ in the District Court, on 29 July 2011 (Boughen) and 9 September 2011 (Cameron). 2Each respondent pleaded guilty to two counts. The first count was of conspiracy to defraud the Commonwealth ( Crimes Act 1914 ("the Crimes Act ", s29D and s 86) between 1 July 1997 and 23 May 2001. The second count was of conspiracy dishonestly to cause a loss to the Commonwealth ( Criminal Code 1995, s 135.4(3)), between 24 May 2001 and 31 July 2004. In fact, although the language used in the two counts varies in accordance with the statutory provisions, what was alleged against each respondent was a single conspiracy, encompassing the whole of the period from 1 July 1997 to 31 July 2004, a period which came to be known as "the charge period". The reason that two separate charges were brought lies in a significant change to the structure of the criminal legislation governing offences against Commonwealth law. A detailed explanation can be found in Agius v R [2011] NSWCCA 119. 3The offence the subject of the first count was subject to a maximum penalty of imprisonment for 20 years, and/or a fine of $220,000. The offence the subject of the second count carries a maximum penalty of imprisonment for 10 years and/or a fine of $66,000. It was accepted, both at first instance and on appeal, that, for sentencing purposes, the lesser of the two maximum penalties ought to be regarded as the outer boundary. 4Finnane DCJ sentenced each of the respondents to imprisonment for two years, to be served by way of an Intensive Correction Order: see s 7 of the Crimes (Sentencing Procedure) Act 1999 ("the Sentencing Procedure Act "). 5The Director asserts that, in all of the circumstances, the length of the sentences was manifestly inadequate, as were the orders that they be served by way of Intensive Correction Order.

The facts 6A very detailed statement of agreed facts was put before the sentencing judge. Also in evidence was a lengthy statement made by each respondent, detailing his involvement in the scheme. 7At all relevant times the respondents were engaged in the entertainment industry, Boughen as a writer, and Cameron as a producer, of television programmes. Prior to about 1986, both were employed by a well-known television production company. At that time, the two respondents entered into a business partnership together, utilising a company called Concept Television Productions Pty Limited ("Concept"). They continued to write and produce television programmes, which Concept marketed to television networks. 8Soon after, they put the management of their business and taxation affairs in the hands of an accountant, whom it is best not to name, to whom I will refer only as "the accountant". The accountant handled those affairs, without apparent incident, until about 1990. At about that time, the accountant advised the respondents that their affairs could be managed so as to maximise their profits and minimise their taxation liabilities. The accountant assured each respondent that the arrangement was legal, and exploited "a legal loophole". The accountant introduced the respondents to a scheme that was no more and no less than a relatively simple income tax evasion scheme. The agreed statement of facts sets out, in considerable detail, the arrangements that were made. Put briefly, those arrangements involved each respondent and Concept making, against their declared income, false claims of deductions as business expenses. This was done through companies based in Vanuatu. The respondents and Concept were provided with invoices for services (initially designated management fees, later designated "licence" fees). The services were never, in reality, provided or received and no licences were ever issued. Nevertheless, the respondents and Concept made payments to another company, registered in Vanuatu, in respect of the invoices. The funds so paid (less a deduction in payment to the organisers of the scheme) were returned to the respondents and Concept, but accounted in their business records as loans, and therefore not income, and therefore not liable to taxation. A Vanuatu-incorporated company, Universal Entertainment Corporation Limited, was formed to operate as the vehicle for receiving, and repatriating, the funds. 9The arrangement was, from its inception, fraudulent. However, both respondents claim (and the Director accepts) that, at the commencement of the arrangement, they were unaware of the dishonest nature of the scheme, and that they did not become aware of its dishonesty until 1997. Acceptance of that proposition by the Director, presumably, explains the commencement date of the charge period. Although the respondents participated in the scheme from about 1990 or 1991, they did not stand for sentence in respect of any dishonest conduct prior to 1 July 1997. That remains the case. 10Notwithstanding their initial naivety, by 1997, both respondents were well aware of the fraudulent nature of the arrangement in which they were involved. Nevertheless, they continued to participate until 2004, when they dissolved their partnership. Over that period of time, Boughen evaded income tax of $520,000, Cameron evaded income tax of $506,000 and Concept evaded income tax of $727,000. 11By 2006, authorities had been investigating this, and other, tax evasion schemes. The accountant telephoned both respondents and told them to destroy, or get rid of, any records they may have retained. At the same time the accountant reassured them that there was no cause for concern. Eventually, in about 2007, investigators executed search warrants on the premises of the respondents. In December 2008, Court Attendance Notices were issued against each respondent, charging 17 offences in each case. After some negotiation, each respondent was charged with the present two counts. Each promptly entered pleas of guilty to both counts. 12The Australian Taxation Office ("the ATO") has issued assessments of income tax shortfall, administrative penalties and interest. That issued in respect of Concept is in the amount of $2,235,550.97; that in respect of Boughen is in the sum of $1,817,218.64, and that in respect of Cameron in the sum of $1,819,019.47. 13Although sentencing proceedings commenced on 26 May 2011, the actual sentences were not pronounced until July (in the case of Boughen), and September (in the case of Cameron). That delay was brought about by the sentencing judge's resolve to impose non-custodial sentences, and the need for inquiry and investigation as to the means by which that could be achieved.

The respondents' personal circumstances 14In the sentencing proceedings, each respondent gave oral evidence, and each put forward a comprehensive case concerning his personal circumstances. I shall deal with each respondent separately. Boughen 15In addition to his oral evidence, Boughen put before the court a brief medical report, and an array of testimonials as to his character. The lengthy statement made by him concerning his involvement in the scheme also contained some information concerning his personal circumstances. That statement accompanied an undertaking, pursuant to s 21E of the Crimes Act , to give evidence in any proceedings against Cameron, the accountant, or any other person, and to provide, to the Director and the Australian Federal Police ("the AFP"), such assistance as he was able. 16Boughen was born in March 1950. At the time he became involved in the scheme he was about 40 years of age; and the time he realised its fraudulent nature, he was 47; at the time he was charged (December 2008) he was 58; at sentence he was 61. He is now approaching his 62 nd birthday. A period of two and a half years elapsed from the service of the original Court Attendance Notices; in excess of three years from the execution of the search warrants. 17He began professional life as an actor, but by the early 1980s had taken up writing television programmes, an endeavour at which he had considerable success. In about 1986 he became involved with Cameron in the company Concept, to which I have already referred. He has no prior convictions. The testimonials spoke highly of his good character. He is married and is the father of two adult children. As a result of penalties, tax and interest charges he has incurred, it has been necessary to sell the family home. At the time of sentencing he was living in rented accommodation. 18From 2006 until a few weeks before the sentencing proceedings, he was employed, but surrendered this employment at that time in order to prepare himself for the hearing. It is apparent that he did this in anticipation of a custodial penalty. 19There was considerable delay in the finalisation of the proceedings. Of this, Boughen, in his oral evidence, is recorded as having said: "I have almost resigned, in fact have resigned on a number of occasions because of these dates which have been set forward for me to appear in court and to deal with these charges and face the charges, I never said that I am never going to plead guilty, I have always done that, I have always said I was prepared to assist. Those things resulted in me dealing with my family, preparing them, preparing myself both mentally and physically for what was about to happen because I did feel [sic - fear] the worst. I approached each occasion with a sense of foreboding, but got through it and in work-wise I did exactly the same, I arranged for people to come and take over my roles to assist and make sure the projects and the things that we were working on would continue and I've been doing that for two years, every time we go to court and get ready to go to court and you know the financial drain is quite expensive obviously, but we're finally here." 20The sentencing judge was told that, in part, the delay in finalisation of the proceedings was brought about by the wish of the ATO for certainty with respect to certain tax rulings then anticipated, and in waiting for a decision of the High Court in a related matter ( Hili v The Queen; Jones v The Queen [2010] HCA 45), to which reference will be made below. 21From the first return date of the original Court Attendance Notices (10 February 2009), until 11 February 2011, the matters were mentioned in the Local or District Court on at least 13 occasions. 22The medical report is in the briefest of terms. It states, in full: "Michael Boughen is known to have genetic haemochromatosis and has had regular venesections over the last five years." Boughen himself explained the nature of the disease as retention of iron in the blood through the liver. Treatment requires quarterly blood extraction under local anaesthetic. 23As mentioned above, Boughen has signed, pursuant s 21E of the Crimes Act , an undertaking to provide assistance to law enforcement agencies by providing any further information (additional to that contained in his lengthy statement), and to confer with officers of the AFP and the Office of the Director, in relation to the prosecution of Cameron, the accountant, and any other person to be charged in relation to the conspiracy, and to give evidence in any trial in accordance with that statement. The level of assistance so offered and provided was rated as "low". This assessment did not reflect any scepticism about the veracity or completeness of the information supplied; it was rated as low because the information Boughen was able to provide was already, essentially, known to the investigating authorities. 24Obviously, as matters have eventuated, it has not been necessary for Boughen to give further information about, or evidence against, Cameron. However, it may well be that the oral evidence he will or might be called upon to give in any trial of the accountant has considerable value. Cameron 25In respect of Cameron, before the court was a Pre-Sentence Report, his own statement, a medical report, and four testimonials. He also gave oral evidence. 26Cameron was born in September 1947. He was almost 50 at the commencement of the charge period, 61 when charged and almost 64 at the time of the sentencing proceedings. 27He has spent all of his working life in the television industry, in various capacities. He is divorced, but remains on good terms with his former wife, who provided one of the testimonials, and said that she and their children (two adults) did not attend court, at his request, because of the shame he felt. Cameron confirmed in evidence that this was so. 28He said that, although he entered the scheme innocently (believing it to be legitimate) he gradually realised that it was not. His suspicions crystallised in 1997, but he could not identify a way of extricating himself from his association with the accountant. 29The delay in proceedings also had an impact upon him. He described it in the following way: "It's been very stressful. I wake up every morning with this on my mind. Further to that I was - ATO seized my bank account at some point. I don't quite remember and I was left with no money whatsoever and my lawyers approached the ATO and asked them to refund some money so I could at least fund my defence to this or my appearances at court. So I was left with no money and of course no job and it was very stressful." 30He said that he had used all of his financial resources, including his superannuation, and for living expenses has borrowed against his life insurance. As to his attitude to his participation in the conspiracy, he said: "I'm sincerely ashamed by my actions. We never set out to create a situation like this and we find it very difficult. We've been embroiled in this almost - not against our will but against our planning. We never planned to do it and I regret it. It's ruined my life obviously and it's had an impact a little bit on my family. It's been the toughest couple of years that I can recall and it's probably not over yet. But yes it's been - I'm extremely sorry about what's happened and regret that I didn't have the courage or the knowledge to stop it earlier and confront [the accountant] about it. [The accountant] was actually a friend ... was our friend and confidant and helped us in many areas and so we trusted [the accountant] implicitly. [The accountant] had all these qualifications that we believed, which were true actually and so we didn't stop it when we should. I'm sorry we didn't and now I'm prepared to face the consequences of my action." 31At sentencing he was in receipt of CentreLink benefits. 32The medical report certified that Cameron "has a low grade prostate cancer diagnosed in 2005" which had been managed "with active surveillance", and was showing little evidence of progression, but which would require regular monitoring. 33Cameron gave an undertaking to provide assistance in similar terms to that of Boughen; his assistance was rated as "low/medium". Why the assessment was different from that of Boughen is not explained. However, the low rating is, in his case also, attributable to the fact that the authorities were already in possession of most, if not all, of the information he provided. It does not appear to take account of what might be the significant value of the evidence to be given against the accountant.

The sentencing proceedings 34As noted above, the sentencing proceedings commenced in May 2011. Each respondent was represented by senior counsel. Detailed material explaining the operation of the scheme was put before the sentencing judge in the agreed statement of facts. The case officer of the AFP, who prepared the documents and assessment of the respondents' assistance, gave oral evidence. Each respondent gave evidence and was cross-examined. 35The Crown Prosecutor provided the judge with detailed written submissions on sentence, together with references to, and copies of, previous authorities concerning penalties for tax evasion offences. 36He expressly (both in writing and orally) and forcefully urged that the only appropriate sentence was one of full time custody. 37Examination of the whole of the proceedings at first instance makes it clear that, while falling short of saying so expressly, senior counsel for each respondent accepted that proposition. For example, in written submissions, senior counsel for Cameron acknowledged: "15. The offender faces the prospect of being released from imprisonment in his mid-sixties with no assets, no money and no means of supporting himself." 38However, at an early stage of the oral submissions, his Honour explicitly stated that he was contemplating imposing a sentence that could be served by way of an Intensive Correction Order, which does not involve imprisonment. (I will deal below with the nature of such an order, which is a relatively new sentencing option.) 39Senior counsel for Cameron seized upon that suggestion, and urged that it was "open and available". Senior counsel for Boughen steered clear of embracing the proposal; he largely focussed his submissions on the role played by the accountant in the respondents' involvement in the conspiracy, and the extent to which the sentences ought to be reduced by reason of assistance to authorities and an early plea of guilty, and to the potential benefit to the Director of the undertakings to give evidence in the committal and trial of the accountant. For example, he concluded his submissions by acknowledging prior authority to the effect that general deterrence is an important aspect of sentencing in respect of such offences, but urged that the case was: " ... one that is deserving of all leniency that can be given." 40Earlier, he had said, in reference to previous authority: " ... it can be seen that the court has considered that the deterrent effect can be adhered to with sentences that involve non-parole periods falling well short of 18 months. And in my respectful submission this is a case from all the subjective factors ... which would make these men deserving of as much leniency as your Honour can afford in minimising that really effective element of the sentence." (AB 120)." 41In reply, senior counsel for the Director restated, with considerable emphasis, the proposition that any sentence that did not involve full time custody would reflect appellable error; that was, essentially, because of the need for the sentences to contain a significant element of general deterrence. 42Notwithstanding that urging, his Honour stood the matter over to 17 June, repeating that he was giving consideration to the non-custodial form of penalty.

The Remarks on Sentence 43The Remarks on Sentence are dated 17 June 2011. His Honour recounted the circumstances of the respondents' employment, and the commencement of their partnership, and their initial contact with the accountant and their introduction to the scheme. Although he found that: "Anybody with the slightest understanding of business" would immediately have recognised its fraudulent nature, he nevertheless accepted that, initially, the respondents did not. That finding was in accordance with the stance taken on behalf of the Director, and with the commencement date of the charge period. His Honour briefly outlined the essential features of the arrangement. He accepted as a fact that, by 1997, each respondent was aware of the unlawfulness of what he was doing. That was in accordance with the pleas of guilty entered by the respondents. His Honour also accepted that, by that time, the respondents were benefiting very significantly (financially) from their participation in the scheme, and that they did not wish to lose that benefit, and so continued with the arrangement. He accepted that on realising that what they were involved in was unlawful "they did not know who to go to or what to do" and "chose" to continue. He accepted that, had the respondents not engaged themselves in the arrangement and paid tax, the amount payable would, by being subject to business deductions, have been "very much less" than the amount eventually assessed by the ATO. 44He described the scheme as "a fairly crude" one; and in a remark that has attracted some, although muted, criticism (criticism that I would reject) he said: "This was just tax evasion on a large scale." (AB 682) 45He noted the statements made by each of the respondents, and their offers of assistance in the prosecution of the accountant, and the assessment of the value of that assistance. In a finding reflecting a position he had posited during oral argument (and with which I agree) he placed considerably more emphasis than had the case officer on the respondents' offers to give evidence in the committal and trial of the accountant. He then mentioned two of the authorities to which he had been referred. These were (he said) Giles (correctly DPP (Cth)) v Gregory [2011] VSCA 145), and R v Wheatley [2007] VCC 718; 67 ATR 531. He also made a reference to Hili and Jones (see above). He is recorded as saying: "I am required to sentence them for what they did and I do that accepting, as I must, that the courts have said that for this type of offence sentences are [sic] full time imprisonment are appropriate. I have considered submissions by each of them and I have considered by the Crown [sic]. The Crown has gone so far as to say that any sentence that saw either of them in custody for less than 18 months would be a wrong sentence. I am of course not bound by the Crown's view of things, nor am I bound by anybody's view of things other than I am bound by the decisions of the Court of Criminal Appeal. I did consider whether I could impose an Intensive Correction Order on each of these offenders. The Crown has put to me that that would be wrong because the Court of Criminal Appeal has said that home detention, which was an earlier form which existed before Intensive Correction Orders is not to be in any way regarded as equivalent to a gaol sentence. General deterrence it is said overrides everything and general deterrence requires that people who engage in deliberate frauds should receive full time imprisonment." (AB 686-687) 46It was incorrect to say that senior counsel representing the Director had made a submission that anything less than full time custody for 18 months would be erroneous. Senior counsel refrained from proposing any specific term of the sentence of full-time custody for which he urged. 47His Honour determined that each respondent was entitled to a reduction, attributable to his assistance, together with his plea of guilty (see R v Cameron [2002] HCA 6; 209 CLR 339), of 40% on the sentence that otherwise would have been imposed and an additional reduction of 10% attributable to the delay in the proceedings, which he said was of four years (taking as the starting point 2007 when, he said, Commonwealth authorities were aware of the frauds). That gave a total reduction of 50%. 48Later, he clarified the reduction allowed in respect of assistance, and specified that 10% of the 40% allowed was for prospective future assistance, in providing any further information and, more importantly, giving evidence. This was for the purpose of s 21E(3) of the Crimes Act . He made fairly extensive reference to the new sentencing option of Intensive Correction Orders and compared it with the previously existing option of imposing a sentence to be served by way of home detention. 49He mentioned briefly the respondents' personal circumstances. 50At the end of the Remarks, in this context, he is recorded as saying: "The big difference between it [an Intensive Correction Order] and a full time custodial sentence in my opinion as someone who has personally visited many gaols including the worst parts of every maximum [sic] gaol in New South Wales - the essential difference between an Intensive Correction Order and gaol is the person subject to the Intensive Correction Order is not at risk of violence at the hands of inmates who could, for reasons of resentment, jealously and anything else decide to attack them. There is no rationality about gaols. What happens in gaols is impossible to predict. People who go to gaol as minor offenders sometimes become extremely violent and dangerous, even in minimum security institutions there can be acts of violence. I was involved in a hearing some years ago conducted by the Independent Commission Against Corruption. That was an inquiry into corruption in the gaol system and it became apparent during that inquiry, from the evidence of a number of prisoners that prisoners can organise to have other people bashed by passing messages to other prisoners in trucks going from one prison to another. I do not see that restrictions of personal liberty, such as are imposed by Intensive Correction Orders, should be denied to someone merely because if he is in gaol he can be bashed or raped. Perhaps the food in gaol is worse, perhaps their Honours were thinking of the food. However, I have to say of my knowledge of the food in gaol, on the whole it is pretty good." 51He stated his intention of imposing, in each case, a sentence of imprisonment for 2 years, to be served by way of Intensive Correction Order. He therefore referred the respondents for the necessary assessment to take place.

The Crown Appeal 52In the case of each respondent, two grounds of appeal, in identical terms, were identified. They were pleaded as: "1. His Honour misdirected himself when assessing the matters to be determined as to whether an Intensive Correction Order should be imposed on the respondent. 2. The sentences are manifestly inadequate." 53The written submissions of the Director expanded the second ground to include the following particularisation, asserting that the sentences: "(i) are, in view of the term, manifestly inadequate; (ii) reflect a failure on the part of his Honour to have any, or any proper, regard to the statements of principle by this Court in relation to sentencing in cases of revenue fraud; (iii) reflect little or no application by his Honour of principles of general deterrence; and (iv) are inconsistent with the objective gravity of the respondent's offending." The Director also asserted, in respect of the first ground, that his Honour erred in taking into account a number of irrelevant considerations. 54I will deal first with the manifest inadequacy ground.

Ground 2: manifest inadequacy 55On behalf of the respondents, it was accepted that the quantum of defalcation is relevant to the assessment of the objective gravity of the offences. It was therefore urged that the quantum involves the tax shortfalls, as set out above, and not the significantly larger amounts of the assessments made by the ATO. It was also urged that each respondent should be held liable in respect of only half of the amount of the defalcation by Concept. 56While I would accept the former proposition, I have difficulty with the second. It seems to me that each respondent is equally liable in respect of the whole amount of the defalcation by Concept. I do not think this makes a significant difference to the assessment of objective criminality. It was also argued that, on one view, the losses to the Commonwealth were less than the raw figures above would suggest, because, had the respondents conducted their taxation affairs in a lawful fashion, there would have been an entitlement to various deductions which would have reduced their liability. 57The Director appeared to accept that that was the position. I also accept it, but, again, I do not think it makes a significant difference to the assessment of objective seriousness. It is impossible to quantify what the respondents' true tax liability would have been had they conducted their affairs honestly. 58The nub of the Director's case under this ground is that, while acknowledging the uniform line of authority to the effect that offences of tax evasion call for sentences that include a significant component reflecting general deterrence and that, generally, that can only be achieved by the imposition of sentences of full time imprisonment, his Honour did not apply those principles. 59At least since 1996, when Brooking JA said: "The seriousness of the offence of defrauding the Commonwealth of a large sum of money by not declaring assessable income has in the past, perhaps, not always been sufficiently reflected in the sentences passed. Those who systematically defraud the Revenue of a large sum over a substantial period must in general expect a substantial custodial sentence. The deterrent and punitive effects of that sentence should not be unduly diminished by allowing release from custody at an unduly early stage." ( R v Van Nhan Nguyen; Huu Duc Phan (1996) 86 A Crim R 521 at 525), appellate courts have consistently insisted that tax evasion offences ought to attract significantly deterrent sentences. This, properly, puts tax evasion in to the same class of offending as social security fraud, which has an even longer history of insistence on custodial sentences. 60The earlier occasions on which social security fraud has been treated as an offence calling for significantly deterrent sentences are catalogued in the decision of this Court in R v Mears (1991) 53 A Crim R 141 pp 145-146. Lee J quoted from the judgment of Street CJ in R v Luu (unreported, NSWCCA 7 December 1984): "The courts of this State have uniformly sought to make plain to persons who abuse the system of social welfare that they must expect to face heavy penalties. The introduction into the administration of that system of overly meticulous preliminary checks before benefits are paid could result in real hardship to persons whose need for benefits is urgent and immediate. Thus it is that such susceptibility is open to abuse, which results in persons who do abuse it receiving salutary penal consequences at the hands of the Court." To the same effect is the decision of this Court in R v Purdon (unreported, NSWCCA, 27 March 1997). This approach to social security fraud cases has been consistent in this State and others: see eg R v Medina (unreported, NSWCCA 28 May 1990); R v Carroll [1991] 2 VR 509; R v Cameron; R v Simounds (unreported, SACCA, 19 July 1993); Kovacevic v Mills [2000] SASC 0106; 174 ALR 77. 61As long ago as 1985, Olsson J, in the Supreme Court of South Australia, distilled four propositions from then existing authorities. These he stated as: "(1) Offences of this type of now prevalent. The offence is difficult to detect and penalties should reflect a concern for the protection of the revenue. (2) Frauds of this kind must be viewed seriously because they threaten the basis of the social security system which is designed to provide financial security for those in the community who are in need. A deterrent penalty is called for. (3) It is relevant to regard a continuing series of frauds of this type as increasing the moral blameworthiness of the offender's deceits by way of contrast with single or short term offences. (4) Whilst it may be proper in cases of first offences of this type accompanied by mitigating circumstances to impose a fine, nevertheless a custodial sentence may well be appropriate in the case of serious frauds unaccompanied by substantial mitigating circumstances." ( Laxton v Justice (1985) 16 A Crim R 46) 62Perhaps the strongest statement of principle is to be found is to be found in R v Cameron; R v Simounds (supra) in 1993. Two unrelated cases of social security fraud were before SA Court of Criminal Appeal. King CJ described the offences therein in question in the following way: "In the case both of these respondents the offending amounted to a systematic, deliberate and sustained fraud over a substantial period of time. The fraud involved planning and sustained implementation. The offenders, it is true, have no other convictions but that is of little significance when one is faced with such a sustained course of conduct of a criminal nature. This was not a case of person with no prior convictions succumbing to temptation and being entitled, therefore, to rely upon the previous good record to secure the leniency of the court. Both of these offenders not only engaged upon a deliberate course of fraudulent conduct, but persisted in it over a long period of time. The crimes committed are serious crimes. The social security system is the method by which society provides an income to those of its members who, due to misfortune, are not able to provide an income for themselves. ... Abuse of the social security system jeopardises the system itself and therefore the welfare of all those who depend for their livelihood on the system. It is the duty of court to protect the social security system against this type of abuse by making orders which operate as an effective deterrent. Not only does a fraudulent abuse of the system jeopardise the system itself by placing an undue burden upon the taxpayer and therefore, on society at large, but it also is a great injustice to all those welfare recipients who abide by the system, conduct themselves honestly and have to subsist on what is by no means a handsome income ... it is a great injustice to those people if others are able with impunity to double their incomes by a fraud. For these reasons the court has a great responsibility to protect the integrity of the social security system by imposing punishments for deliberate and sustained fraud which are likely to operate as a deterrent to others who may be tempted. It is necessary to acknowledge and to appreciate that recipients of social security benefits are, almost without exception, subject to great financial pressures. ... [His Honour then referred to personal circumstances of the two respondents which, he said, excited considerable sympathy.] Nevertheless, in cases of this kind, that is to say of sustained and deliberate fraud over a period of time, the deterrent purpose of punishment must be paramount. The necessity of protecting the integrity of the social security system by deterrent penalties is to take priority over other considerations." (italics added) 63These observations, and particularly the italicised paragraph, came under consideration by the same Court, constituted by five judges, in Kovacevic v Mills (supra). Four of the five judges considered that the italicised paragraph overstated the correct position, apparently by placing excessive emphasis upon deterrence. Their Honours said: "39. We agree that in cases of deliberate and sustained fraud, deterrence must loom large in determining the appropriate sentence. But other matters, especially rehabilitation, must still be considered. We do not agree that deterrence should take priority over all other considerations, at least if that statement means that there is no scope for the court to be influenced by considerations of rehabilitation in finally arriving at the sentence to be imposed. ... 40 In our opinion the proper approach to sentencing is better reflected by saying that in a case of the type referred to by King CJ an order for imprisonment, with at least some of the imprisonment actually to be served, is ordinarily likely to be required. This is because the commission of a number of offences of fraud over a period of time makes imprisonment appropriate even for a first offender, because of the seriousness of the offending. The same matters may require that at least part of that term of imprisonment actually be served, even in the case of a person with no previous convictions. But there is still a need to consider all aspects of the matter, and to consider the interests of society and of the offender in the rehabilitation of the offender. Also, in an appropriate case, there may be room for the exercise of mercy and leniency ... ... 43. In our view in the more serious cases of sustained and deliberate fraud, deterrence is very important, imprisonment is likely to be required, but all mitigating circumstances and the rehabilitation of the offender must still be considered. Substantial mitigating circumstances, and in some cases considerations of mercy and leniency may lead to the conclusion that a sentence of imprisonment is inappropriate or that such a sentence is appropriate, but that the imprisonment need not be served." 64The Court then referred to a submission made in that case concerning relative sentences in cases of taxation fraud and social security fraud and added: "47. Our firm view is that there is no reason for the courts of this State to take a less strict approach to revenue fraud [ie tax fraud] than is taken to social security fraud. If anything, cases of revenue fraud are likely to attract heavier penalties because often the fact of poverty or pressing need, found in a number of cases of social security fraud, will be absent." 65The last observation, while obiter dicta , is consistent with observations I made in 1999 in R v Hart , NSWCCA, unreported, 23 July 1999. 66The statements of principle concerning social security fraud set out above are not different from the statements of principle to be found in cases involving fraud on the revenue by means of the taxation system. Their application in the latter class of case may have been somewhat less rigorous. 67With respect to taxation offences, the rationale for the imposition of severe sentences has been stated in a number of different ways. See, for example, R v Caradonna [2000] NSWCCA 398 at [24], where it was pointed out that tax fraud is a fraud on all other taxpayers. In DPP (Cth) v Goldberg [2001] VSCA 107, at [51], Vincent JA, with whom Winneke P and Batt JA agreed, said: "The maintenance and integrity of the revenue collection systems, upon which the administration of government and the provision of a wide range of necessary services to the community are dependent, is vitally important to the proper functioning of our society. It hardly needs to be emphasised, from whatever perspective this conduct is approached, the activities in which the respondent engaged over a number of years, must be regarded as extremely serious indeed and his level of personal culpability as very high. ... Those who engage in the type of activities pursued by the respondent must anticipate the penalties properly reflective of the criminality involved will be imposed upon them. The principle of general deterrence assumes considerable significance in the determination of an appropriate sentence in such cases." 68I observe at once that the scale of offending in the present case does not come anywhere near the scale of offending in Goldberg . In that case, the offender had been the vehicle by which other, mostly unidentified, individuals evaded tax amounting to a total of $20 million or more. But that does not affect the principles stated. Earlier in the judgment, Vincent JA had cited, with approval, the remarks of the sentencing judge in that case, to the following effect: "Tax evasion is not a game, or a victimless crime. It is a form of corruption and is, therefore, insidious. In the case of brazen tax evasion, honest citizens begin to doubt their own value and are tempted to do what they see others do with apparent impunity. At the very least, they are left with a legitimate sense of grievance, which is itself divisive. Tax evasion is not simply a matter of failing to pay one's debt to government. It is theft, and tax evaders are thieves. [The offender's] money laundering was therefore a corrupt activity. ..." 69It is something of a curiosity, that in the face of these, consistent, statements of principle, the appeals (as in Goldberg ) are frequently brought by the Director of Public Prosecutions, reflecting, perhaps, a recognition of principle, but a failure of application. That is, notwithstanding the recognition of the seriousness of the conduct, and the need for strongly deterrent penalties, sentencing judges find it difficult to impose sentences that reach the high level which they have, in theory, accepted as being appropriate. 70That may be illustrated by a decision close to the present case: R v Wheatley (supra). That offender pleaded guilty to three charges, two of which were defrauding the Commonwealth and acting with the intention of dishonestly obtaining a gain from the Commonwealth. The first carried a maximum penalty of imprisonment for 10 years; the second, of imprisonment for 5 years. The circumstances of the offending are fully set out in the Remarks on Sentence; it involved loss to the revenue of almost $320,000. The offender had given an undertaking pursuant to s 21E of the Crimes Act to give future assistance. The combined sentence ultimately imposed was of imprisonment for 2 years and 6 months, the offender to be released on recognizance after 1 year and 3 months. This was a reduction in the sentence which would otherwise have been imposed of about one-third. 71The appellant, the offender, appealed against the sentences; however, on being cautioned by the Victorian Court of Appeal that it could increase the sentences, he abandoned the appeal. 72Another decision is that of Gregory (supra). The offender in that case was a solicitor who advised Wheatley and was involved in Wheatley's tax evasion. He was convicted after trial and sentenced to imprisonment for 2 years, to be released after serving 1 year. The custodial portion of the sentence that would otherwise have been imposed (16 months) was reduced by 4 months because the offender was a resident of NSW, but would be required to serve his sentence in a Victorian prison. The Victorian Court of Appeal held that that sentence was manifestly inadequate, and that a head sentence of 4 to 6 years' imprisonment would have been appropriate. The Court further held that the reduction of 25% by reason of interstate service of the sentence was "excessive and unjustifiable". It held that the appropriate range of imprisonment to be served before release was between 3 and 4 years' imprisonment. 73Notwithstanding that, on a Crown appeal, the court exercised its residual discretion and declined to interfere. Some of its statements of principle, however, are of some importance. The court noted the passage in Nguyen and Phan which I have extracted above. It commented on "white collar crime", and said: "53. In seeking to ensure that proportionate sentences are imposed the courts have consistently emphasised that general deterrence is a particularly significant sentencing consideration in white collar crime and that good character cannot be given undue significance as a mitigating factor, and plays a lesser part in the sentencing process. In the case of taxation offences general deterrence is also given special emphasis in order to protect the revenue as such crimes are not particularly easy to detect and if undetected may produce great rewards. 'Deterrence looms large' as the present process of self-assessment imposes on the taxpayer a heavy duty of honesty. Moreover, general deterrence is likely to have a more profound effect in the case of white-collar criminals. White-collar criminals are likely to be rational, profit-seeking individuals who can weigh the benefits of committing a crime against the costs of being caught and punished. Further, white-collar criminals are also more likely to be first time offenders who fear the prospect of incarceration. 54. In many if not most cases, imprisonment will be the only sentencing option for serious tax fraud in the absence of powerful mitigating circumstance. A sophisticated degree of planning accompanied by a lack of contrition should ordinarily lead to a more severe sentence of imprisonment ..." (internal references omitted.) Some may find it difficult to reconcile the statements of principle with the outcome. 74Finally, in Hili and Jones , the offenders were engaged in an arrangement similar to that of the present respondents. The tax evaded was about $400,000 (Hili) and over $360,000 (Jones). The sentencing judge, having allowed a reduction of 50% in each case in respect of the pleas of guilty and assistance, sentenced each offender to imprisonment for 18 months with a recognizance release order to take effect after 7 months. This Court upheld a Crown appeal, and sentenced each offender to imprisonment for 3 years with a recognizance release order to take effect after 18 months: R v Jones; R v Hili [2010] NSWCCA 108. The High Court upheld those sentences: see [68]. 75The High Court observed that the chief considerations which pointed to the inadequacy of the sentences at first instance were the nature of the offending, and other sentences that were closely comparable. The majority in the High Court said: "63. The applicants' offending was sustained over a long time. It was planned, deliberate and deceitful, requiring for its implementation the telling of many lies. The applicants acted out of personal greed. The amount of tax evaded was not small. Detection of offending of this kind is not easy. Serious tax fraud, which this was, is offending that affects the whole community. As was pointed out in Ruha [ R v Ruha, Ruha v Harris ex parte the Commonwealth DPP ] [2010] QCA 10 at [45], the sentence imposed had to have both a deterrent and a punitive effect, and those effects had to be reflected in the head sentences and recognizance release orders that were made." Those observations transpose precisely to the present case. 76Social security fraud and tax evasion are two sides of the same coin. In the passage from Gregory extracted above (at [53]), the Victorian Court of Appeal made some observations about common features of "white collar criminals". I may be permitted some similar generalisations about social security fraudsters. In contrast to "white collar criminals" social security fraud is usually committed by those who have access to the social security system. They are, by definition, almost universally less privileged, less prosperous, less educated, in possession of fewer resources, intellectual and otherwise. That is the sort of thing the SA Court of Criminal Appeal had in mind in paragraph [47] of Kovacevic extracted above. But in social security cases the courts have shown less reticence in imposing severe sentences than they have in tax fraud cases. Attention was drawn to this anomaly by the Queensland Court of Appeal as long ago as 1994: see R v Wright (1994) 74 A Crim R 152, at 156-159. Attached to the judgment of Davies JA and Oliver J is a table showing sentences imposed by Queensland courts in respect of social security fraud, to 1994, involving more than $60,000. Analysis of the sentences imposed in respect of social security frauds in other states, often after Crown appeal, supports their Honours' conclusion. I will refer to sentences actually imposed, but note that accurate comparison is not possible. That is because, in many of the cases, the applicable maximum penalty is not stated and, of course, there are invariably circumstances particular to each case that affect the result. With those limitations in mind, however, I note the following sentences. 77In Luu (supra, a NSW case), the offender was charged with three counts of imposition of the Commonwealth; a further 18 counts of the same kind were taken into account. The imposition was claiming and receiving social security payments to which he was not entitled. The amount involved was $62,000. In respect of those offences, he was sentenced to terms of imprisonment of 2 years. However, that case was complicated because those sentences were accumulated upon sentences for forgery and uttering, unrelated to the Commonwealth offences. Undoubtedly, the principle of totality had a bearing on the sentences imposed. This Court dismissed an appeal against sentence. 78Carroll (supra, Vic) is another case with its own complications. The offender was convicted on seven counts of imposition on the Commonwealth, involving $220,000. The maximum penalty applicable is not stated. At first instance, he was sentenced to imprisonment for 3 years and 6 months, with a minimum term of 2 years and 6 months, together with an order for restitution. The Victorian Court of Appeal, in a judgment dated 15 October 1990, allowed a Crown appeal and substituted an effective term of 5 years and 6 months with a minimum term of 4 years. It was then discovered that an error had been made in the application of relevant Commonwealth legislation concerning the allowance to be made in respect of sentences imposed in states where remissions of sentence were not available ( Crimes Act 1914, s 16G). In R v Carroll , the court reversed its earlier ruling and revoked the non-parole period of 4 years, substituting a period of 2 years and 8 months. 79In Medina (supra, NSW, 1990) the sum involved was $45,000. The offence was of false pretences with intent to defraud. The maximum penalty applicable is not stated in the judgment. At first instance a lengthy remand was imposed, with a view to permitting the offender to effect reimbursement. On a Crown appeal this Court held that a custodial sentence was called for and imposed a sentence of 2 years with a minimum term of 18 months. 80In Mears (supra, NSW, 1991) the offender was charged with six counts of being knowingly concerned in social security frauds, committed by members of his family. Three were offences carrying a maximum penalty of imprisonment for 5 years; three were of offences carrying a maximum penalty of 2 years. At first instance the offender was sentenced to a total period of imprisonment of 3 years with a non-parole period of 12 months. A Crown appeal was allowed, and an effective sentence of 4 years, with a non-parole period of 2 years, was imposed. 81In Cameron and Simounds (supra, S.A.), the offenders, who were not associated with one another, were convicted of similar offences, of multiple counts of imposition on the Commonwealth. In the case of Cameron , the period of offending was three years and ten months; the amount defrauded was $26,000. Full reparation had been made by members of the offender's family. 82Simounds also pleaded guilty to multiple charges of imposition, involving a total amount of just under $18,000, obtained over a period of almost three years. He was aged only 19 years at the time of the "substantial part" of the offending. 83At first instance Cameron was sentenced to imprisonment for 2 years and 6 months, Simounds for 2 years. An immediate release order was made in respect of each. 84On a Crown appeal, Cameron was sentenced to imprisonment for 2 ½ years, to be released after 9 months, and Simounds to imprisonment for 2 years, also to be released after 9 months. 85In Purdon , (supra, NSW, 1997) the fraud had been committed over a period of seven years and eight months, the offender receiving social security benefits to which she was not entitled. The amount so obtained is not stated in the judgment. At first instance the offender was made subject to a good behaviour bond; after a Crown appeal, a sentence of imprisonment for 9 months was imposed, to be served by way of periodic detention. 86These sentences may be contrasted with those imposed on the tax fraud cases to which I have referred above, supplemented by the following. In R v Morris [1993] 2 VR 192, the Victorian Court of Criminal Appeal had under consideration a Crown appeal following the sentencing of a barrister who had failed to declare, over a nine year period, significant amounts of income, resulting in the non-payment of an equally significant amount of tax. The charges were brought under s 29B of the Crimes Act 1914 , with a maximum penalty in respect of each offence of imprisonment for 2 years. At first instance he was sentenced to a total of imprisonment for 2 years; however an order was made directing his release forthwith (upon giving appropriate security). The offender had made significant payments by way of penalty and reparation, meaning that, as it then happened, the Commonwealth did not suffer any actual loss. 87On a Crown appeal, the sentences were set aside, and the offender was sentenced to imprisonment for 18 months to be served concurrently, but an order was made that the offender be released after 6 months of imprisonment. 88In Hamman (unreported, NSWCCA, 1 December 1998) a barrister in this State pleaded guilty to five counts, three of which were of imposition (contrary to s 29B of the Crimes Act , carrying a maximum penalty of imprisonment for 2 years), and two of defrauding the Commonwealth (contrary to s 29D of the Crimes Act , carrying a maximum penalty of imprisonment for 10 years). All offences were committed by the understatement of income, over a period of three years. At first instance he was sentenced to imprisonment for 2 years, to be served by way of periodic detention. Both the Crown and the offender appealed. This Court unanimously held that such a sentence was manifestly inadequate, and that a term of full time imprisonment ought to have been imposed (pp 24, 26 and 29). 89However, by majority (Sheller JA and Levine J), the Court exercised the residual discretion it retains in Crown appeals and dismissed the Crown appeal. The principal reason appears to have been delay in the prosecution. Their Honours then held that error had been made by the sentencing judge in failing to take into account the effect of s 16G of the Crimes Act , and reduced the sentence to one of imprisonment for 14 months, to be served by way of periodic detention. Barr J, who dissented on the outcome of the Crown appeal, would have imposed a sentence of imprisonment for 6 months. In reaching that sentence, he took into account the mitigating circumstances, as well as the principles that then applied in relation to Crown appeals. Six months was, therefore, the minimum term his Honour considered ought to have been imposed. 90In R v Whitnall (1993) 120 ALR (Full Court of the Federal Court, on appeal from the Supreme Court of the ACT) the offender had, over a 2 ½ year period, furnished false tax returns in his own name, and in the name of a company he controlled. The amount involved was almost $75,000. The charges were of fraud, carrying a maximum penalty of imprisonment for 10 years. At first instance, he was sentenced to imprisonment (the judgments on appeal do not disclose the term), which was fully suspended, together with some community service. The Full Federal Court, while acknowledging and endorsing the strong statement of principle concerning sentencing in respect of taxation fraud, dismissed the Crown appeal. 91The contrast in sentences actually imposed in respect of social security frauds and tax frauds demonstrates that what was said by Davies JA and White J in Wright was, and remains, fully justified. Notwithstanding strong statements of principle, tax offenders are treated more leniently than are social security offenders. 92I now turn to a consideration of the relevant circumstances in the present cases. 93Two features of the respondents' offences strongly suggest more, rather than less, severe sentences. These are the period of time - seven years - over which they continued, and the amounts involved. 94Other features point in the opposite direction. These include the health problems of each respondent (although these are far from being at the high end of health problems to be taken into account on sentencing that are seen in this and other courts); their prior good character (although it is well established, as is stated in some of the extracts above, that this is of less significance in offences of this nature); that the applicants have made, or will be obliged to make, reparations (see R v Gay [2002] NSWCCA 6 at [14] and [18]); and the delay in bringing the proceedings to a conclusion (also the subject of consideration in Gay ). I note that a somewhat less benign view of the relevance of reparations was taken by Sheller JA in Hamman : see p 17 of that judgment. 95Counsel for both respondents urged that significant weight be given to the circumstance that the respondents were inveigled, or lured, into the scheme by an apparently highly qualified, professional, accountant and that their participation was not initiated by themselves. Had the fraudulent conduct ceased on, or soon after, the respondents' realisation of its true character, this circumstance may have had some weight. Given that the conduct continued for another seven years after that realisation, its significance is diminished to almost nothing. 96There is undoubtedly a pathos about the prospect of two middle aged men, of prior good, even exemplary, character, each with some health issues, who have expressed remorse for their conduct, being sentenced to imprisonment. That pathos cannot be permitted to overshadow the objective seriousness of the offences: two middle aged men, intelligent, professionally successful, financially secure, prosperous, over a seven year period defrauded the Australian community of very significant sums of money, leaving others, less financially able to do so, to bear the burden of financing the many services government provides. The community cannot afford for judges to be squeamish about discharging their duty, however personally painful it may sometimes be. To fail to sentence middle class offenders commensurately with social security offenders risks bringing the administration of justice into disrepute as perpetrating class bias. 97Careful reading of the authorities discloses that there is, at times, disparity between statements of principle - Caradonna, Phan and Nguyen , Gregory - and what happens in practice. The language of L Vogel & Son Pty Limited v Anderson, Minister of State for Customs and Excise for the Commonwealth of Australia [1968] HCA 90; (1967) 120 CLR 157, quoted at [14] of Jones and Hili [2010] NSWCCA 108, is apposite: "The duty evaded has now been paid, and I understand that when the evasions were discovered the defendants gave the Customs every assistance in their investigations. But when all the considerations relied upon by the defendants have been given due attention the case still cannot be regarded as other than a serious one. Not only are the defendants guilty of a sustained course of conscious wrongdoing, but the offences are in a field in which punishments for deliberate offences must be severe. The Customs laws represent the judgment of Parliament upon an important aspect of the economic organization of the community, and the object of the penal provisions is to make that judgment as effective as possible. It is important to remember that Customs officers have of practical necessity to rely extensively upon the information supplied to them by importers, for the flow of commerce could not be maintained if every importation had to be fully investigated. Moreover, detection of frauds is not always easy. No doubt ordinary conceptions of honesty and of civic responsibility suffice to ensure a great deal of fair dealing with the Customs, but for some people little seems to matter but fear of the consequences of discovery. The Customs Act [1901-1960 (Cth)] makes those consequences potentially drastic. It is for the courts to make them, in suitable cases, drastic in fact, for otherwise traders who are not saved by qualms of conscience from willingness to defraud their fellow citizens may weigh the profits they hope for against the penalties they have cause to fear and find the gamble worthwhile." (per Kitto J, upheld on appeal, italics added) 98A direct parallel is to be found between the obligations of disclosure in Customs matters, as referred to in that passage, and the obligations of honesty and accurate disclosure of taxation matters central to the self-assessment system currently operating, and of which the two respondents took unconscientious advantage. 99I move from statements of principle and historical data to examination of comparable sentences that have recently been imposed. I am fully conscious of the limitation of the use of historical sentencing data: Hili and Jones , HCA, at [54]. 100The first question to be addressed is whether the sentences of 2 years (however to be served) were manifestly inadequate. A proper answer to that question is obtained by factoring in the 50% reduction that was allowed in respect of assistance to authorities, pleas of guilty, and delay in finalisation of the proceedings. That means the starting point was a head sentence of 4 years. This was in respect of offences perpetrated by a continuous and repeated course of conduct over a seven year period, involving tax evasion in large amounts. These were not offences that, once begun, proceeded of their own momentum. On each occasion that the respondents paid a fraudulent invoice, and on each occasion that they received the return of their payments designated as loans, and on each occasion that they signed income tax returns containing the fraudulent information, they acted consciously in perpetuation of the frauds. I refer again to the remarks of Olsson J in Laxton v Justice (supra). It is, as I have indicated above, of little moment that the respondents were initially drawn into the scheme by a persuasive, even forceful, professional: these were professional, intelligent men who, by 1997, recognised that what they were doing was dishonest. The evidence concerning their attitude, at that time, to their wrongdoing was unimpressive and weak. In his statement, Boughen said that "alarm bells" began to ring in 1997, and that he began to worry. Cameron (at para 97) said that he had "serious concerns" and that he discussed the matter with Boughen, but that they were nervous about the accountant and felt "vulnerable". Neither, apparently, considered it appropriate either to cease participation, or to take alternative advice on their positions. Nor is there any evidence that recognition of the wrongdoing occasioned any particular distress, anxiety, or concern above what has been mentioned. Notably absent from their statements, and their oral evidence, is any mention of conscience. 101The position is encapsulated in Hili and Jones , HCA, at [63] extracted above. 102In terms of comparable offences, those committed by Messrs Hili and Jones most approximate the present. This Court considered the sentences imposed at first instance (sentences of imprisonment for 18 months, with recognizance release orders to take effect after 7 months) to be manifestly inadequate, and substituted sentences of 3 years, subject to recognizance release orders to take effect after 18 months. These sentences were imposed after reduction of 50% referrable to assistance and pleas of guilty. This Court, with reservations, maintained that quantum of reduction, and this was not interfered with by the High Court. The starting point, therefore, of those sentences was 6 years, which the High Court held was appropriate. 103Another decision of some relevance is that in Gregory . The offender in that case was a prominent solicitor, who was convicted, after trial, of two counts of defrauding the Commonwealth and one of conspiracy dishonestly to cause a risk of loss to a Commonwealth entity. The fraud involved the concealment, by a client of the solicitor (the offender in Wheatley ), of $400,000 in income. The sentence imposed at first instance was of imprisonment for 2 years, with a recognizance release order after 12 months. This sentence was held to have been manifestly inadequate. The Victorian Court of Appeal accepted that a head sentence of 4 to 6 years, with a non-parole period of 3 to 4 years, was appropriate. Nevertheless, for stated reasons, the court exercised its residual discretion and declined to re-sentence. 104In this case, I am satisfied that the proper application of principle, as stated unanimously in the various authorities to which I have referred, and reference to the sentences imposed in Hili and Jones , (and, more importantly, the reasons given by the High Court for upholding those sentences) establish beyond doubt that sentences with a starting point of 4 years were manifestly inadequate. The starting point ought to have been 6 years. Applying a 50% reduction means that the sentences ought to have been imprisonment for 3 years. 105However, the Crown has challenged, not the reduction allowed in respect of the assistance and pleas of guilty, but the 10% allowed in respect of the delay in the proceedings. I accept that this reduction exceeded what was justified in the circumstances. His Honour overstated (as four years) the length of the delay, which was as I have set out above at [17]. It is not usual to quantify the reduction allowed in respect of delay, and, in my opinion, it is better that delay be taken into account on the overall assessment of a sentence. In proposing a starting point of 6 years, I have given what I consider to be the appropriate weight to that delay. 106In my opinion, in each case, Ground 2 must be upheld and the Crown appeal must be allowed. 107That, of itself, necessitates a conclusion that the orders that the sentences be served by way of Intensive Correction Orders were in turn erroneous. Only a sentence of 2 years or less may be served in that fashion (s 7, Sentencing Procedure Act ).

Ground 1: Intensive Correction Orders 108Even if I had not reached the conclusion that the sentences were manifestly inadequate, I would, in any event, have concluded that the subsequent orders that they be served non-custodially were erroneous. 109First, the use of Intensive Correction orders in these circumstances demonstrates a misconception of the nature of this, relatively new, form of punishment. Section 7 of the Sentencing Procedure Act was inserted by the Crimes (Sentencing Legislation) Amendment (Intensive Correction Orders) Act 2010, with effect from 1 October 2010. It is apparent that there has not been time for any significant judicial consideration of the circumstances in which its application is appropriate, certainly not at appellate level. However, it is clear that the principal focus of this sentencing option is rehabilitation. In the second reading speech the Attorney-General said: "The Bill introduces a new sentencing option - the intensive correction order - designed to reduce the offender's risk of re-offending through the provision of intensive rehabilitation and supervision in the community. It also abolishes the sentence of periodic detention, giving effect to recommendations from the NSW Sentencing Council and calls from the victims of crime representatives. Essentially, an intensive correction order is a sentence of imprisonment for up to 2 years which is ordered to be served in the community, where offenders can be subject to a range of stringent conditions including 24 hour monitoring, regular community work and a combination of tailored educational, rehabilitative and other related activities. ... While it is not intended to be a direct replacement of periodic detention, the power of the courts to make a periodic detention order will cease upon the commencement of the new intensive correction order. ... The restriction of the court setting a non-parole period for an ICO was an essential feature of the model recommended by the Sentencing Council, on the basis that the offender should be subject to supervision and conditions of the order for its full term. This would ensure that the rehabilitative focus of the order is maintained from beginning to end." (Parliamentary Debates (Hansard), Legislative Council, 22 June 2010, P 24426 and following.) 110This was a case in which, although the sentencing judge made no express findings concerning rehabilitation, it is plain that rehabilitation is an irrelevant consideration. There should be no, or minimal, prospect of either of the respondents re-offending. The entire tenor of the Remarks on Sentence was to that effect. That in itself renders the use of the Intensive Correction Order inappropriate. It may be that the removal of the Periodic Detention option has deprived sentencing judges of one vehicle by which to express denunciation of the conduct under consideration; but that is the clear expression of the will of the legislature. The Intensive Correction Order should not be used as a substitute for that now unavailable option. 111Second, an order that the sentence be served in the community, even with the restrictions it necessarily carries, and any additional restrictions imposed by the sentencing judge (such as abstention from alcohol), is a sentence that has inherent in it a high degree of leniency. That degree of leniency was unwarranted. It cuts directly across the frequently stated principles of sentencing for tax evasion to which his Honour was referred. 112Moreover, it is plain that his Honour was led into his erroneous course by his excursions into the realities of life in the prison system. These were the irrelevant considerations of which the Director rightly complained. 113This ground of appeal must succeed.

Re-sentencing 114By s 68A of the Crimes (Appeal and Review) Act 2001, this Court may not, by reason of any element of double jeopardy involved in the respondent being sentenced again, impose a less severe sentence on a Crown appeal than it would otherwise have considered appropriate. That this legislation applies to Commonwealth offences was established in Director of Public Prosecutions (Cth) v De La Rosa [2010] NSWCCA 194 upheld by the High Court in Bui v Director of Public Prosecutions (Cth) [2012] HCA 1 . 115However, it remains open to this Court to take into account the circumstances of the respondents since the sentences were imposed, and particularly those circumstances which directly flow from compliance with the orders made. Accordingly, the court received additional material in that respect. 116Evidence of Cameron's circumstances since sentencing was put before the court in affidavit form. It is fair to say that, in compliance with the requirements of the conditions of the Intensive Correction Order, he has had to go to considerable lengths. He was living in a property he owns in northern NSW, where supervision of an Intensive Correction Order was unavailable. (The property itself is to be forfeited to the ATO.) For assessment for his suitability for an Intensive Correction Order, he travelled to Grafton, a round trip of 700 kilometres. On being found suitable for such an order, and in order to qualify, from a residential point of view, he relocated to Sydney. This involved his daughter surrendering a tenancy on a one bedroom unit in which she previously lived, and taking a lease on a more expensive two bedroom unit. She has incurred costs of about $3,000; he of about $1,000. 117He has attended a four-week induction programme. He is required to perform community service at Parramatta each Wednesday, and has to date complied faithfully with that requirement. I assume that this has been so since about September or October 2011. He is also required to perform work on two days each week at a charitable organisation, but this appears to be related to his eligibility for a Newstart Allowance from CentreLink, and not to the requirements of the Intensive Correction Order. 118He is subject to regular and random visits from his supervising Probation and Parole Officer, and to alcohol testing. 119It is not possible to recreate the circumstances that existed at the time of sentencing, such as to make it appropriate to impose precisely the sentences that should then have been imposed. I am satisfied that the quite onerous conditions justify a significant moderation in the sentence I would otherwise propose. 120No sworn evidence of Boughen's circumstances since sentencing was put before the Court, although reference was made, both in the written and oral submissions, to those matters. No objection having been taken by the Director, I propose to accept what is there stated. 121Boughen has been meeting his obligations since approximately July. He, too, attended a four-week induction course, and has performed community service on one day each week at Penrith. He has, however, been able to obtain employment, as a television producer, at a very comfortable salary. He has also been required to submit to random breath and alcohol testing, and has been visited at his home by supervising officers. 122He has been declared bankrupt, on his own petition, and, from his salary, pays a considerable sum to his trustee. While that fact was put before the Court in relation to events since the making of the Intensive Correction Order, it is a direct result of his offences, and not attributable, or relevant, to the consequences of the first instance sentencing. 123Although the disruption to Boughen's life, and that of his family, has not been as great as is the case in relation to Cameron, his compliance with the terms of the Intensive Correction Order has been over a considerably longer period. It also warrants moderation, to an equal degree, in the sentences I would otherwise propose. Moreover, since this appeal was heard on the last day of the 2011 court term, there has been inevitable delay in its finalisation. 124By s 17A of the Crimes Act , a court is not to pass a sentence of imprisonment for a federal offence, unless, having considered all other options, it is satisfied that no other sentence is appropriate in all the circumstances of the case. I have considered the sentencing options available. I am satisfied that no sentence other than one of imprisonment is appropriate in the circumstances of these cases. 125Re-sentencing presents an unusual complication. As set out above, each respondent pleaded guilty to two charges. However, as explained above, that was solely because of the peculiarities of the structuring and restructuring of Commonwealth criminal legislation. It is quite clear that the respondents were guilty of a single conspiracy that continued over the whole of the charge period. Ordinary principles of sentencing would dictate that a single sentence be imposed. But the existence of two counts, in respect of each of which an appropriate sentence must be passed, preclude that course, and require that separate sentences be imposed, appropriate to the criminality involved in each offence: R v Pearce [1995] HCA 57; 194 CLR 610. 126That, I accept, is somewhat artificial, but is required in order to comply with Pearce. As it happens, the offending in relation to each count was of approximately equal duration, the first covering the period 1 July 1997 to 23 May 2001 (3 years and 10 months), and the second the period 24 May 2001 to 31 July 2004 (a period of 3 years and 2 months). 127In my opinion the appropriate total sentences, allowing for the reduction of 40%, are of 3 years and 7 months. By reason of the respondents' compliance with the terms of the Intensive Correction Orders and further delay in finalisation, I would further reduce that to 3 years. That should be divided into equal sentences for the two offences. Accordingly, I propose that, in respect of the first count, each respondent be sentenced to imprisonment for 1 year and 6 months, commencing on 27 February 2012 and expiring on 26 August 2013, and in respect of the second count, to imprisonment for 1 year and 6 months, commencing on 27 August 2013 and expiring on 26 February 2015. 128Section 19AC of the Crimes Act requires that, when imposing sentences that, in the aggregate do not exceed 3 years, the Court make a recognizance release order. 129I propose that a recognizance release order operate after the respondents have served 18 months in prison. 130I therefore propose the following orders: Boughen

1. Crown appeal allowed, sentences imposed below quashed;
2. In lieu thereof the offender be sentenced as follows: (i) Count 1: imprisonment for 1 year and 6 months, commencing on 27 February 2012 and expiring on 26 August 2013; (ii) Count 2: imprisonment for 1 year and 6 months, commencing on 27 August 2013 and expiring on 26 February 2015;
3. On the expiration of 18 months (26 August 2013) the offender be released, upon giving security, without surety, by recognizance, to the satisfaction of the Court, that he will comply with the conditions specified in s 20(1)(a) of the Crimes Act 1914. Cameron:
4. Crown appeal allowed, sentences imposed below quashed;
5. In lieu thereof the offender be sentenced as follows: (i) Count 1: imprisonment for 1 year and 6 months, commencing on 27 February 2012 and expiring on 26 August 2013; (ii) Count 2: imprisonment for 1 year and 6 months, commencing on 27 August 2013 and expiring on 26 February 2015;
6. On the expiration of 18 months (26 August 2013) the offender be released, upon giving security, without surety, by recognizance, to the satisfaction of the Court, that he will comply with the conditions specified in s 20(1)(a) of the Crimes Acts 1914. 131HISLOP J: I agree with Simpson J 132LATHAM J: I agree with Simpson J

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 27 February 2012