R v Hawkins

Judgment 1HOEBEN CJ at CL: I will now ask Justice RS Hulme to deliver judgment in this matter. 2R S HULME AJ: This is an appeal by the Crown against sentences imposed on 9 November 2012 by Woods DCJ on the above named Respondent in respect of 8 offences for which a total effective sentence of imprisonment for 3 years 4 months including a non-parole period of 1 year 8 months was fixed. 3The first offence was that between about 16 and 23 May 2001 the Respondent defrauded the Commonwealth in that in the 2000 tax return of Pacific Computing and Innovation Pty Ltd total expenses of $440,694 were claimed, which amount was falsely inflated. This was an offence against s29D of the Crimes Act 1914 (Cth) which carried a maximum period of imprisonment of 10 years. The overstatement of expenses was to the extent of at least $191,020 and the resultant saving in tax was something over $68,000. 4The remaining offences arose under s134.2(1) of the Criminal Code (Cth) and each also carried a maximum period of imprisonment of 10 years. Each charge was to the effect that the Respondent did by deception dishonestly obtain a financial advantage from the Commonwealth. The deception was said to have occurred in tax returns, some of the Respondent and some of Pacific Computing and Innovation Pty Ltd. (It will be convenient hereafter to refer to that company as "PCI") 5Count 2 alleged that in the 2001 tax return of PCI total expenses of $309,891 were claimed, which amount was falsely inflated. The overstatement of expenses was to the extent of at least $184,162 and the resultant saving in tax was something over $62,000. 6Count 3 alleged that in his 2001 personal tax return the Respondent failed to include all his income. The understatement was to the extent of $407,498.76. 7Count 4 alleged that in the 2002 tax return of PCI total expenses of $288,532 were claimed, which amount was falsely inflated. The overstatement of expenses was to the extent of at least $164,348 and the resultant saving in tax was something over $49,000. 8Count 5 alleged that in his 2002 personal tax return the Respondent failed to include all his income. The understatement was to the extent of $21,133. 9Count 6 alleged that in his 2003 personal tax return the Respondent failed to include all his income. The understatement was to the extent of $324,399. 10Count 7 alleged that in the 2004 tax return of PCI total expenses of $394,117 were claimed, which amount was falsely inflated. The overstatement of expenses was to the extent of at least $186,028 and the resultant saving in tax was something over $55,800. 11Count 8 alleged that in his 2003 personal tax return the Respondent failed to include all his income. The understatement was to the extent of $182,581. 12The saving in tax arising from the offences involving PCI totalled $236,495.08. The saving in tax arising in connection with the Respondent's own tax returns was, in total, approximately $370,000. The combined shortfall was thus approximately $600,000. None of this money, or any penalties imposed by the Taxation authorities has been paid. 13Woods DCJ described the circumstances of the Respondent's offending as follows: "Mr Hawkins was a client of an accounting firm known as Owen T Daniel and Company. He had originally become associated with Daniel by having gone to that firm in the normal course of his business as an IT consultant. He is a person with expertise in the management of computer systems and he went along there to do some work. His efforts met with approval and after he had been there for some time, Mr Daniel, a person of apparently some considerable charm and charisma, invited the offender to participate in taxation arrangements which Mr Daniel assured him would be of advantage to him. He agreed. He dealt there, in that context, with Carol Abidadra, one of the employees of the firm, and he came to participate in an offshore round-robin scheme that operated to enable him to evade payment of company income tax and personal income tax. Between the financial years ended 30 June 1999 and 2004 the offender and his Australian company, PCI, engaged in twelve international transactions and consulting expenses and interest expenses for the company PCI for the financial years ended 30 June 2000, 30 June 2001, 2002 and 2004, and failure to declare personal income for the financial years ended 30 June 2001, 2002, 2003 and 2004. ... The way the scheme worked had been the brainchild apparently of a man called Robert Agius (who had offices, amongst other places, in Vanuatu, and connections in New Zealand) and Owen T Daniel, the Australian accountant who had substantial suburban offices in Burwood, Sydney. There were other people involved, but they were the two principals, it appears to me. The offender, Mr Hawkins, was advised by his advisers at Owen T Daniel to make telegraphic transfers overseas. He did so in twelve particular transactions, transferring, over the years in question, a total of $1.136 million from PCI's - that is, Pacific Computing Innovation - bank account in Australia to New Zealand bank accounts held in the name of Bilberry Limited and Security Life Nominees. These were foreign companies set up and operated in Vanuatu. The monies were sent to New Zealand to give the appearance of the payment of legitimate business expenses, being described as "management and consulting fees" and "interest expenses". The Burwood office, particularly Carol Abidabra, recorded false business expenses in PCI's financial documents relating to these overseas payments, and these false expenses in turn flowed through to the relevant company income tax returns thereby reducing the company's taxable income declared to the Australian Taxation Office. ... My conclusion is that while (the Respondent) may have started off being an "innocent abroad" in the field of taxation, he went along initially suspending the disbelief that must have afflicted any sensible person about the arrangements that were put to him. And as the years went by, the suspension of disbelief became more and more culpable. Certainly the jury took the view that he knew what was going on. ... ... the offending by Mr Hawkins was not, as it were, started by him - but he voluntarily persisted in it over a significant period of time, as the dates in the indictment indicate. The loss to the Commonwealth is, as I say, substantial, and it needs to be taken into account. When the police came to the offices originally, Mr Hawkins immediately gave them all the computer passwords and codes that were required for the police to, as it were, "gut" the system. As a result, they obtained masses of information which has led to the prosecution of a substantial number of people. The offences are objectively serious. The factor of personal deterrence is in my view not an issue in this case. I have no doubt that Mr Hawkins has been traumatised by being brought into this situation and I have every confidence that he will never be in trouble again. He does not need to be rehabilitated. He has already learned a lesson. However, the purpose of the offences was his own self-interest. ... While it is true that for all offences before me, the jury verdict means that the offender knew that the scheme was not legitimate, his state of mind was, in my view, initially less blameworthy. However, as the years passed, what commenced as suspension of disbelief, albeit culpable and the turning of a blind eye, turned into what must have been a positive realisation on his part that he was simply flouting the taxation laws. The level of culpability increased as time went by." 14Woods DCJ also found that the Respondent was of prior good character and had the benefit of a number of strong character reports, had been a hard worker and a productive member of the community. His Honour accepted that the conduct of the trial was considerably assisted by the forensic approach taken on the Respondent's behalf of agreeing on a number of matters and said that he would make allowance for that. 15His Honour said that he took into account that sentencing the Respondent would have an impact on his family "but I expect and hope that impact will not be too severe" and that there would be hardship to the Respondent's employees although it might be that the Respondent's business would be able to carry on. 16His Honour observed that personal deterrence and rehabilitation were not issues and that the principal consideration in sentencing was general deterrence. He said also that he had taken into account sentences imposed on others who had been sentenced in relation to connected or similar offences, including Mr Agius, and said that he was satisfied that the sentence imposed on the Respondent was not inconsistent with the general pattern of those sentences. 17The sentences imposed were: Counts 1-3 Imprisonment for 1 year commencing on 9 November 2012 and expiring on 8 November 2013; Counts 4-5 Imprisonment for 1 year 8 months commencing on 9 November 2012 and expiring on 8 July 2014; Counts 6-8 Imprisonment for 1 year 8 months commencing on 9 July 2014 and expiring on 8 March 2016. 18As has been said, the total effective sentence was of 3 years 4 months including a non-parole period of 1 year 8 months. 19There was no challenge to the findings of his Honour that I have set out above and although the Crown submitted that the objective criminality of the offences was extremely high and the Court might find that the sentences were manifestly inadequate, the substance of the Crown attack was that the overall sentence and the non-parole period imposed were manifestly inadequate. In that connection the Crown relied heavily on the sentences imposed in R v Jones; R v Hili [2010] NSWCCA 108 and, on appeal, Hili v The Queen; Jones v The Queen [2010] HCA 45; (2010) 242 CLR 520. 20The Crown submitted that the period of the Respondent's offending, 4½ years, was lengthy, the total amount of the frauds exceeded $600,000 and this was the second highest total tax shortfall referable to clients of Owen T Daniel and Company. 21In response, senior counsel for the Respondent submitted that the (shortness of the) sentence imposed was more than justified by the sentences imposed on 2 other offenders involved in the same scheme, Agius and Zerafa, and indeed was disproportionately high when compared with those earlier sentences - see R v Agius; R v Zerafa [2012] NSWSC 978. It was contended that to allow this appeal would give rise to a legitimate sense of grievance on the part of the Respondent and in that situation, for the appeal to succeed, the Court would need to be satisfied that "... the inadequacy of the sentence appealed from is so marked that it amounts to "an affront to the administration of justice" which risks undermining public confidence in the criminal justice system". Reliance was placed on the remarks of French CJ, and Crennan and Kiefel JJ in Green v R; Quinn v R [2011] HCA 49; (2011) 244 CLR 462 at [42] wherein the passage quoted appears. 22(It should be noted that a Crown appeal has been lodged in the case of Zerafa and thus the foundation for the Respondent's reliance on the sentence imposed on Zerafa may disappear. However, the Crown has chosen not to appeal against the sentence imposed on Agius so the substance of the Respondent's submission remains.) 23As almost invariably happens in this Court, neither party sought to argue as to what the Respondent's sentence or sentences should be by reference to first principles of sentencing or comparing his criminality and subjective circumstances with the relevant statutory provisions. Indeed there was no criticism of the individual sentences and in that situation the Court should approach the matter upon the basis that the individual sentences, at least in their length, were appropriate. 24However, that assumption creates its own quandary. If the individual sentences were appropriate, the concurrency of sentences ordered by his Honour means that the Respondent in effect received no punishment for offences 1 - 3, and 5, the sentences for which were entirely concurrent with the sentence imposed on count 4, and no punishment for counts 7 and 8, the sentences for which were entirely concurrent with the sentence imposed for count 6. Such a result would be justifiable if one concluded that the maximum penalty for the totality of the Respondent's offending should be no more than the total effective sentence of 3 years 4 months including a non-parole period of 1 year and 8 months but such a result - for 8 offences - is surprisingly close to what was thought appropriate for but one of the individual sentences. That circumstance alone is strongly indicative of error. 25Hili and Jones had committed offences of the same nature, carrying the same penalty, and in a similar manner as those committed by the Respondent. Hili had lodged false income tax returns for 2 companies and for himself for the year ended 30 June 2002, for one of the companies and for himself for the year ended 30 June 2003, and for the same company for the year ended 30 June 2004. He and his companies evaded taxation totalling just over $398,000. Jones lodged false tax returns for his company for the year ended 30 June 2000, for himself and his company for the years ended 30 June 2001, 30 June 2002, and 30 June 2003, and for the company for the year ended 30 June 2004. He and his company evaded taxation totalling something over $362,000. (I should add that this summary of Hili's and Jones' offending is taken from the report at (2010) 242 CLR 520 at [5] and [6]. It differs to some degree from the account given by Rothman J at [2010] NSWCCA 108 at [6].) 26In successful Crown appeals this Court imposed sentences of 3 years including a minimum term of 18 months imprisonment on each of Hili and Jones. The sentences reflected allowances of 50% for pleas of guilty and assistance to the authorities. The unusually low proportion of the non-parole periods to the total sentence was because the judge at first instance had adopted that proportion. Appeals to the High Court by each offender were dismissed. In the reasons of the majority of that Court for dismissing the appeals, the following appears, at [62] - [63]: "The chief considerations which pointed to inadequacy in these cases were the nature of the offending, and the sentences that had been imposed in cases most closely comparable with the present. 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 (2010) 198 A Crim R 430 at [45], the sentences imposed had to have both a deterrent and a punitive effect, and those effects had to be reflected in the head sentences and the reconnaissance release orders that were made." 27Their Honours then went on to refer to two cases they considered closely comparable with the offending of Hili and Jones. In one of these, Ly v The Queen [2007] NSWCCA 28 the offender was a tax agent who lodged false income tax returns on behalf of clients who had left Australia. In consequence refunds totalling something over $328,000 were paid to the offender. None of these moneys had been recovered although it seemed likely that some $100,000 would be. The number of charges preferred was 55. The amounts the subject of the charges varied, one being as low as $381.50. The offender was 40 at the time of sentence and had no criminal record. He was allowed a discount of 25% for his plea and the effective sentence imposed was of 6 years including a non-parole period of 4 years. 28In allowing the Crown appeals in R v Jones; R v Hili in this Court, Rothman J, with whose judgment the other members of the Court agreed had remarked, at [14]: "While the analogy is not always appropriate, there is much to be said for the applicability of statements relating to customs duty to offences of this kind. In that regard, I repeat the oft quoted passage from Kitto J in L. Vogel and Son Pty. Ltd. v Anderson, Minister of State for Customs and Excise for the Commonwealth of Australia [1968] HCA 90; (1967) 120 CLR 157 at 164: "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 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 weight the profits they hope for against the penalties they have cause to fear and find the gamble worthwhile."" 29I would, with respect, echo these sentiments. See also the citation of authority in R v Boughen; R v Cameron [2012] NSWCCA 17. 30Even without the guidance of the decision in Hili and Jones, I would take the view that the sentence imposed on the Respondent was manifestly inadequate. The Respondent's offending answered most of the description contained in [63] from the judgment in Hili and Jones quoted above. Furthermore, both the head sentence of 3 years 4 months and the non-parole period of 1 year 8 months strike me as utterly disproportionate to a fraud yielding a benefit of over $600,000. 31Save and except for the maximum penalty provided by the statutory provisions against which the Respondent offended there are no objective standards against which his offending is to be measured. And even the statutory provision provides limited guidance in that there is no upper limit on the extent of the offending that comes within it. However, in judging the seriousness of what the Respondent did, it seems to me that it is not inapposite to reflect on the fact that a vast number of taxpayers would need to work for at least 10 years - of course paying their living expenses meanwhile - to earn the $600,000 in after-tax or tax free money that the Respondent's offending yielded. 32The decision in Hili and Jones provides much support for this initial view. The Respondent's offending involved substantially more money than had either Hili's or Jones' and he was not entitled to any discount for a plea or assistance. But for that discount, the sentences imposed on Hili and Jones would have been imprisonment for 6 years including non-parole periods of 3 years. 33I return to the decision in R v Agius; R v Zerafa [2012] NSWSC 978. The first point to be made is that Agius and Zerafa were not, within the principles of parity, co-offenders. Although they and the Respondent were involved in the same broad scheme to which reference has been made, the activities of Agius and Zerafa involved much wider criminality than did that of the Respondent and Agius' involvement in the Respondent's offending seems to have been almost minimal. Whether Zerafa was involved in the Respondent's offending is not apparent. 34That said, the nature of the offending of Agius, Zerafa and the Respondent had a sufficient degree of common factors that concepts of proportionality have some relevance. 35Agius and Zerafa were sentenced by Simpson J. Agius was charged with 2 counts of conspiracy, in effect as her Honour said, to defraud the Commonwealth over a period from 1 January 1997 to 23 October 2006, 2 charges being necessary to reflect a restructuring of Commonwealth criminal legislation that occurred in 2001. Although the first conspiracy had carried a maximum penalty of 20 years imprisonment her Honour concluded that she should approach the matter on the basis of the reduced maximum penalty of 10 years that applied to the second conspiracy and that in the case of Mr Agius, the overriding question was one of totality. 36Her Honour concluded that Mr Agius actively presented and promoted the scheme, which was in fact that in which the Respondent participated, and implementation of it was under the direct control and supervision of Agius who received financial benefit albeit so far as the evidence before her Honour went, that benefit was relatively modest. Her Honour also observed, at [63]: "In respect of the eight companies (participating in the scheme) of which evidence was given, the financial loss was said to be in excess of $5 million. But there is also an intangible loss. The Australian taxation system, based as it is on self-assessment, depends for its integrity on the honesty of citizens. ... when it is known that the system can be, and is, cheated, the very structures of society are damaged." 37Her Honour accepted a Crown submission that Agius' situation was very close to a "worst case", calling for a penalty close to the maximum provided by law. The effective sentence imposed was of imprisonment for 8 years and 11 months, including a non-parole period of 6 years and 8 months, both of these periods having been reduced by one month on account of pre-trial custody. 38At the time of sentence Agius was approaching 63 years old, having been arrested some 4 years earlier. Simpson J found, in the way that the trial had been conducted, some willingness to facilitate the course of justice. 39Zerafa was engaged in the scheme for some 7 years from about mid 1999, having commenced employment with Mr Daniel in 1997 when Zerafa was 21 or 22. He became aware of its fraudulent nature, and was involved in the maintenance of the companies' accounts and preparation of the fraudulent tax returns. He also took an active role in organising some fabricated responses to a tax audit and other enquiries made by the Australian Taxation Office. He was however found to have acted initially on the instructions of Mr Daniel and to have been led into his involvement "by an unscrupulous, immoral and overpowering employer, Mr Daniel". Eventually he expressed his concerns to Mr Daniel and urged that no new clients be initiated into the scheme. It would seem that his urging was followed. 40In a comparison of the offending of Mr Agius and the Respondent it is apparent that the duration of the Respondent's offending was much shorter than that of Mr Agius and the loss to the revenue much less than that due to Mr Agius' conduct. It may well be that the latter's own reward was appreciably less than the Respondent's. Similar remarks could be made in connection with any comparison between Mr Agius and Hili and Jones. 41To the suggestion that there is some disparity between the sentences imposed on Mr Agius on the one hand - effectively 9 years including a non-parole period of 6 years and 9 months - and the undiscounted equivalent of that imposed on Hili and Jones - 6 years including non-parole periods of 3 years, it is also to be borne in mind that the severity of a prison term is not simply proportional to its length. As has been recognised on a number of occasions - see R v Sciberras [2006] NSWCCA 268 at [50] and R v Mahmud [2010] NSWCCA 219 at [69]: " ... actual imprisonment for, say 10 years is more than twice as severe as one of imprisonment for 5 years. Having regard to the sorts of terms under consideration for drug dealing a sentence of one of the longer periods is likely to have an impact on an offender's life in terms of wife, children, job prospects and the like from which he may well never recover and these sorts of considerations also have to be borne in mind." 42In the result, I do not see the disparity for which the Respondent contends between the sentences imposed on Agius and Hili and Jones. Nor do I see that some increase in the sentence imposed on the Respondent will necessarily create such a disparity. 43As I have indicated, counsel for the Respondent also placed emphasis on the decision made in the case of Zerafa. Clearly there are differences between Zerafa's situation and that of either Hili and Jones, or the Respondent here. However, given that Zerafa's case is the subject of appeal and notwithstanding it is the decision of an experienced member of this Court, it does not seem to me that this Court should approach the matter on the basis of disparity with the decision made in Zerafa. To do so would create its own difficulties. If this Court decided this case by reference to the decision in Zerafa, no doubt the court that heard the appeal in Zerafa would be asked to decide that case by reference to what this court had done here and to do so even if this Court had expressed, but not implemented, the view that the sentence imposed on Mr Hawkins was manifestly inadequate. For obvious reasons I say nothing about what should happen to the appeal in the case of Zerafa. 44It may be accepted as counsel for the Respondent, relying on Green v R; Quinn v R [2011] HCA 49 at [35] et seq. contended, that mere manifest inadequacy in the sentence the subject of appeal does not require or justify this Court interfering and that if interference would create disparity with a sentence imposed on a co-offender the Court should only do so if the inadequacy of the sentence appealed from is so marked that it amounts to "an affront to the administration of justice which risks undermining public confidence in the criminal justice system". I have concluded that there will not be disparity but even if that be wrong, in my view the sentence imposed on the Respondent for an offence of the magnitude of his does amount to such an affront and, even if not quite so offensive, is so low by comparison with his criminality and the tax he avoided, and with the need to deter others from defrauding the taxation authorities, and to ensure that proper sentencing standards are established, that this Court should interfere and allow the appeal. 45The sentencing principles that apply to Commonwealth offenders generally were referred to by Woods DCJ and I do not regard it as necessary to detail these. It was not suggested that his Honour had erred in respects other than I have mentioned. His Honour also referred to the Respondent's subjective circumstances. I take them into account but it is unnecessary that I repeat them beyond recording that the Respondent was born in 1971, is married with two children, has been a productive member of the community and, at least by persons unacquainted with the subject offending, regarded as a person of good character. His Honour took the view that personal deterrence and rehabilitation were not needed. 46During the hearing of the appeal an affidavit of the Respondent was read. He observed that from 2006 until sentence on 9 November 2012 his life had been completely disrupted. I have no difficulty in accepting that evidence though it must be recognised that to a significant degree the length of the disruption will have been because of the Respondent's decision to plead not guilty. That said it strikes me that there is something fundamentally wrong with the justice system where the return date of the Court Attendance Notice initiating the proceedings against the Respondent was 3 June 2008 while the Respondent's trial was not listed to commence until August 2011. In fact because the Respondent's legal advisers wished to call as a witness someone also facing trial at the same time as Mr Agius, the Respondent's trial did not commence until August 2012. 47In his affidavit the Respondent referred to having been imprisoned in five different locations prior to his current placement where he has been since December 2012 and to the fact that the prison authorities will not classify him until the appeal process is concluded. He is participating in and assisting others in, various courses in custody. He also gave evidence of family difficulties consequent on his incarceration. However, apart from the fact that the Mannus Correctional Centre, where the respondent presently is, is a long way from his family, the difficulties of which he speaks are a not uncommon incident of a husband, son and parent being in prison, and not of a nature arguing for leniency. 48One matter to which the Respondent referred which does operate in his favour is a delay of some two months in the hearing of this appeal due to the unavailability of a legal representative of the Crown. 49For reasons given, the Crown appeal should be allowed. The total head sentence should not be less than was thought appropriate (pre discount) in the case of Hili and Jones, viz. 6 years. I am also of the view that the non-parole period should be 3 years 6 months. As has been said, Woods DCJ found that personal deterrence and rehabilitation were not relevant in this case. It follows that any consideration of a need to protect the community against the Respondent may also be put aside. However, the duration and repetition of the Respondent's offending and the amount involved lead me to the view that considerations of general deterrence and retribution - the community's entitlement to feel that justice has been done - require a non-parole period of the length I have indicated. Comparison with the decision in Hili and Jones where appreciably smaller amounts were involved and the notional non-parole period was 3 years - argues in the same direction. I am satisfied that the sentence I propose is not such as to offend against considerations of proportionality or parity. 50Given the way the appeal was conducted, to achieve what I regard as the appropriate result, I would propose the following orders: (i) Allow the appeal; (ii) Confirm the sentences imposed in respect of counts 1 to 3, viz. imprisonment for 1 year commencing on 9 November 2012 and expiring on 8 November 2013; (iii) Quash the sentences imposed in respect of counts 4 to 8; (iv) In respect of each of counts 4 and 5, sentence the Respondent to imprisonment for 1 year and 8 months commencing on 9 November 2013 and expiring on 8 July 2015; (v) In respect of each of counts 6 and 7, sentence the Respondent to imprisonment for 1 year and 8 months commencing on 9 July 2015 and expiring on 8 March 2017; (vi) In respect of count 8, sentence the Respondent to imprisonment for 1 year and 8 months commencing on 9 March 2017 and expiring on 8 November 2018. (vii) Fix as the non-parole period in respect of the above sentences, 3 years 6 months commencing on 9 November 2012 and expiring on 8 May 2016. 51HOEBEN CJ at CL: I agree with the orders proposed by Justice RS Hulme. 52R A HULME J: I also agree with the orders proposed by R S Hulme AJ and with his Honour's reasons. I wish to add the following observation. 53Reference has been made to the learned sentencing judge taking into account hardship to the respondent's family and employees. The judge said in relation to the respondent's family: "I take into account that sentencing him will have an impact on his family, but I expect and hope that that impact will not be too severe. But I take it into account as I am bound to do." 54In relation to employees, his Honour said: "I take into account that there will be hardship to his employees. It may be that the business that he started will be able to carry on. Perhaps not, I do not know, but if you get involved in criminality, bad things happen to other people." 55His Honour did not make any finding that such hardship amounted to "exceptional circumstances". In my view, no such finding was open to be made on the material before him. However, authority required such a finding before such matters could have any material significance in the assessment of sentence: see, for example, the recent discussion of principles on the subject of taking into account hardship to third parties in R v McLeod [2013] NSWCCA 108 at [43]-[52] per Simpson J. 56The Crown did not take issue with his Honour's treatment of this aspect of the respondent's subjective case and so the matter has not been taken into account by me in agreeing with the disposition of the appeal proposed by R S Hulme AJ. Nevertheless, in my view this Court should not be seen to be implicitly accepting, let alone endorsing, as correct the sentencing judge's approach to this topic. 57HOEBEN CJ at CL: The orders of the Court will therefore be those proposed by Justice R S Hulme.