Arguments
38The offenders' counsel and counsel for the Director of Public Prosecutions correctly addressed the statutory regime which applies to me in sentencing for federal offences. That scheme is contained, as the High Court said, in Div 2 of Part 1B of the Crimes Act, in particular s 16A. In particular, as the High Court says, I must put emphasis on s 16A(1) which requires me to "impose a sentence or make an order that is of a severity appropriate in all the circumstances of the offence".
39I must take into account in accordance with s 16A(2)(a), also "the nature and the circumstances of offence." The offenders' senior counsel, in oral submissions, emphasised the leading role of the accountant. He accepted that Mr Mascall is "the next most culpable." But Mr Payne SC argued that there was "very little differentiation of any substance" between his client Lesley Mascall and Mr McLean.
40Mr McLean, it is important to record, has already been sentenced by his Honour Judge Freeman, a former judge of this Court. Mr McLean was involved in the same fraud. Mr McLean faced one offence of dishonestly obtaining a financial advantage by deception from the Commissioner of Taxation against section 134.2(1) of the Criminal Code Act. It carried a maximum of 10 years imprisonment. The amount involved in Mr McLean's case was about $66,500. He had pleaded guilty. He, too, was a director of Air Solutions. He was for some time also the managing director of Air Solutions. He was prosecuted for failing to declare the distributions which he received for income tax returns covering the years 2000, 2001, 2002, and 2003. His Honour sentenced Mr McLean to 3 years imprisonment. But his Honour directed that Mr McLean be released forthwith upon entering into a recognizance to be of good behaviour for 3 years.
41Mr Payne SC put much emphasis upon the principle of parity and the relevance of the sentence imposed upon Mr McLean to the sentences which I will need to impose upon Mr Sewell in particular, and also on Mrs Mascall.
42Mr Payne SC and Ms Wass in their written submissions referred to correspondence from the Commonwealth Director of Public Prosecutions dated 3 November 2011 which contained the following concessions -
"(1) The Crown considers Mr Sewell's culpability for the offences is less than that of Mr McLean;
(2) The Crown does not intend to appeal the sentence given to Mr McLean; and
(3) The reason Mr Sewell faces two charges is a result of the commencement of chapter 7 of the Criminal Code Act (Cth) on 24 May 2011. But for the change in legislation, Mr Sewell would have been offered the ability to plead guilty to one substantive offence, as was the case with Mr McLean."
Hence Mr Payne SC's submission that there was "little differentiation of any substance" between Ms Mascall and Mr McLean.
43However, Mr Payne SC also realistically acknowledged that the offending behaviour of Lesley Mascall is more serious because it extended over a longer period of time. Her offending extended over some 7 years, whereas Mr McLean's extended over some 4 years. In addition, as a result of her greater shareholding Mrs Mascall obtained a greater sum of money. The amount of money involved, so far as Mrs Mascall was concerned, resulted in a tax shortfall for her personally of $166,000, whereas Mr McLean's tax shortfall was about $100,000 less than that. In addition Mrs Mascall accompanied Mr Mascall to Vanuatu to make arrangements for various procedures that had to be set up over there.
44On the other hand, of course, as Mr Payne SC pointed out, Mr McLean was Managing Director of Air Solutions and involved in its day-to-day financial affairs. He also provided false information to the Australian Taxation Office. However, another factor which I will come to - and which is important to take into account in Lesley Mascall's case - is that I am taking into account in sentencing her the offences related to the 'Varitech conspiracy'.
45I take into account under s 16A(2)(c) the fact that the offending behaviour formed part of a course of conduct consisting of a serious of similar acts of the same character. That I take into account in respect to all three offenders. As was correctly described by Mr Lee, in his written submissions, the offending behaviour was "lengthy, persistent and calculated".
46Under s 16A(2)(e) I must take into account "any injury, loss or damage resulting from the offence". The loss to the revenue in respect of Mr Paul Mascall was over $174,000 and, as I have said, just over $166,000 in respect of Lesley Mascall. For Air Solutions the loss was just over $450,000 and for Varitech the loss was nearly $65,000. In Mr Sewell's case the loss was over $25,000. It must be borne in mind that the Mascalls own 62 per cent of Air Solutions and 50 per cent of Varitech. All tax penalties and interest have been paid by Air Solutions and by Varitech. All tax penalties and interest have been paid by Mr Sewell. A deed of settlement has been entered into between the Mascalls and the Australian Taxation Office so far as their personal income tax is concerned and I sentence them upon the basis that that in effect means that it has been repaid. I acknowledge, as Mr Payne SC pointed out, that interest and penalty charges include a significant punitive element.
47These steps also show a good deal of contrition and remorse, which is relevant to s 16A(2)(f). All of the offenders are remorseful and prepared to facilitate the course of justice, which is obvious by their pleas of guilty, which I take into account. On the one hand these pleas of guilty were entered into in the face of a very strong prosecution case. They were, to some extent in my opinion, acknowledging the inevitable. On the other hand, as Mr Payne SC argues, the legal proposition regarding liability for the tax was arguable and "an extremely long and complicated trial would have been pursued". I would be prepared to discount the sentences which I would otherwise impose by 20 per cent for each offender because of their pleas of guilty.
48I also take into account, in general terms, the fact that all of the offenders cooperated with the authorities in the investigation of the offences. The cooperation was quite active. They retained an experienced accountant, whose report I have read and taken into account and which was part of exhibit 1. The accountant was Mr Dennis Robertson. He was retained "to rectify their taxation affairs, not knowing whether or not they would be charged with any offences". They offered to assist in the prosecution of Ms Liles, however their evidence was not needed. So far as that assistance is concerned the authorities suggest that it is the practical value and the actual benefit which is more important to give weight to.
49All three of the offenders, as I have already said, are persons of good character and I have taken into account a significant number of character references, which have been provided. None of them has a criminal record.
50I agree that there is no reason why each of the offenders would not have excellent prospects of rehabilitation.
51It is very important that I take into account the deterrent effect of sentencing of others who may consider such crimes. However, I do not think the offenders in this case require much personal deterrence. I doubt whether any of them would consider entering into such schemes in the future.
52Although the sentences will obviously have an impact on the offenders' families, I will take that into account as a general subjective factor rather than a specific mitigating factor because the extent of the hardship will be no greater to other families of other offenders who have committed other crimes.
53I should make some reference to Mr Payne SC's reliance on what he described as nine factors, which he said were very important for me to take into account. Many of them I have already referred to. The nine factors were: parity, the amount of tax and shares in Air Solutions, the cooperation with the Australian Taxation Office, the repayment of the tax and the fact that penalties have been paid, the delay in prosecution, the pleas of guilty, the offers of assistance and various other factors including the offenders' age and the fact that they had relied upon their tax adviser.
54The amount of the tax short fall was roughly about a third of that in Boughen and Cameron. All of the offenders have offered what is obviously a sincere apology. I take into account their cooperation and I take into account that the Mascalls corrected, on the advice of Mr Robertson, an error by the Australian Taxation Office which resulted in them paying an additional $100,000 in reparation. That shows the obvious contrition.
55I do take into account that there has been a good amount of delay in the charges coming to this stage of the sentencing. The conduct the subject of the charges was completed by 30 June 2005. A tax audit was completed by December 2006. Amended assessments were issued in mid 2007. The offenders were not charged until December 2008 and they appeared in the Local Court early the following year. They entered their pleas in November 2011. I have taken into account what Mr Payne SC and Ms Wass have said in their written submissions about the delay. There has been a significant delay, although I also take into account that in a case such as this there is a need for a good deal of preparation so far as the authorities are concerned. The trial would have been complex and that is one reason why I will discount the sentences I would otherwise impose by some 20 per cent.
56I also take into account the fact that all of them relied upon the advice given by the tax agent, Ms Liles, in entering into this scheme.
57So far as parity is concerned, I regard Lesley Mascall as being in a more serious category than Mr McLean. This is because the period of her offending was longer and the tax shortfall was greater. In addition, of course, - which is not directly related to parity - I am taking into account an additional offence in sentencing her.
58Finally, before turning to sentencing the offenders I must deal with a submission made by Mr Payne SC regarding the question of whether I take into account the New South Wales Court of Criminal Appeal's decision in a guideline judgment concerning additional offences under the New South Wales sentencing regime. The decision is called Attorney General's Application under s 37 of the Crimes (Sentencing Procedure) Act 1999 (NSW) (No 1 of 2002) [2002] NSWCCA 518, (2002) 56 NSWLR 146.
59Mr Payne SC and Ms Wass referred to a decision of the New South Wales Court of Criminal Appeal in Nguyen and Phan (1996) 86 A Crim R 521 which they argued held "without elaboration, that when taking into account on sentence offences under s 16BA Crimes Act, it is necessary for a sentencing court to comply with the general principles applicable to the New South Wales regime for taking offences into account." Counsel "respectfully submitted that this finding is unsound, having regard to the High Court's decision in Hili and Jones. That is, s 68 of the Judiciary Act 1903 (Cth) is not engaged in s 16BA sentencing of a federal offender." They argue that "care should be taken" in applying "the exposition of principles" in the New South Wales guideline judgment.
60There is, in my opinion, some force in that submission. The High Court had said in Hili and Jones at 527 ([21]), "to the extent to which Part 1B of the Crimes Act otherwise provides, State and Territory laws in relation to the sentencing of offenders are not picked up". Part 1B does "otherwise provide" by s 16BA. But that is because of what Gummow and Hayden JJ had said in Putlan v The Queen (2004) HCA 8; 218 CLR 174 at 189 ([41]), referring to the Judiciary Act -
"[Section] 68(1) was to be read in the sense it would have if, as a matter of express statement rather than implication, there was a qualification for provision otherwise made from time to time by the laws of the Commonwealth. That understanding should be accepted."
61However, on the other hand, the New South Wales Court of Criminal Appeal - which binds me - regards its own guideline judgment as applying in sentencing federal offences. That is apparent from Nguyen and Phan, which was referred to by the offenders' counsel and also in R v Dennison [2011] NSWCCA 114, which was decided after the High Court's decision in Hili and Jones.
62In my opinion, a comparison of the two statutory regimes demonstrates that they are substantially similar. Therefore, in my opinion, the reasoning - including the references to the rationale in taking into account other offences (which appears at [62] - [64] of Attorney General's Application) and to the elements to which weight is to be given (which is referred to at [42]) - is applicable. I therefore propose to take into account the guideline judgment in Attorney General's Application in sentencing these offenders.
63I also bear in mind what the High Court has said about fixing a non-parole period for federal offences by reference to what the High Court in Powell v The Queen (1974) 131 CLR 623; [1974] HCA 26, Deakin v The Queen (1984) 58 ALJR 367; [1984] HCA 31 and Bugmy v The Queen (1990) 169 CLR 525; [1990] HCA 18.