14 SULLY J: The Commonwealth Director of Public Prosecutions appeals against sentences of imprisonment passed upon Mr. O'Connor, the respondent. The sentences were passed on 10 August 2001 in the District Court at Sydney and by his Honour Acting Judge Downs QC.
15 On 14 May 2001 the respondent pleaded guilty in the Local Court to two charges of defrauding the Commonwealth contrary to section 29D of the Crimes Act 1914 (C'th). He was committed, accordingly, for sentence in the District Court. A contravention of section 29D attracts upon conviction a statutory maximum penalty of, relevantly, imprisonment for 10 years.
16 On 12 June 2001 the respondent pleaded guilty in the Local Court to two charges of possessing false instruments contrary to section 302A of the Crimes Act 1900 (NSW). He was committed, accordingly, for sentence to the District Court. A contravention of section 302A attracts upon conviction a statutory maximum penalty of, relevantly, imprisonment for 10 years.
17 On 9 August 2001, the respondent adhered to his guilty pleas before the learned sentencing Judge. The proceedings on sentence proceeded upon the basis of an agreed statement of facts. The respondent gave some brief oral evidence; and he put into evidence a number of very favourable testimonials. There was a pre-sentence report, to some of the contents of which I shall return presently.
18 The proceedings on sentence concluded on 9 August 2001. The learned sentencing Judge reserved his decision overnight. On the following day, his Honour sentenced the respondent to two concurrent terms of imprisonment of 3 years with a non-parole period of 18 months for the two offences contrary to section 29D. His Honour sentenced the respondent also to two concurrent sentences of imprisonment for 2 years with non-parole periods of 18 months for each of the two offences contrary to section 302A. All four sentences were dated so that they ran concurrently.
19 The present appeal of the Director challenges the two concurrent sentences imposed in respect of the section 29D offences. There is no appeal against the sentences imposed in respect of the section 302A offences.
20 The Director, in his written submissions lodged in support of the appeal, advances the contention "that this is an important case on the application of sentencing principles in revenue fraud cases, and in particular in the approach that a sentencing court ought to take in applying the decisions of this court. In particular, the Crown contends that a judge on sentence will fall into error unless principled reasons are given for departing from applicable sentences imposed by this court; and that such error occurred in this case". Those perceptions are underscored by the fact that the Director appeared in person to prosecute the appeal.
21 In the light of these perceptions it is useful to return, at the inception of a consideration of the merits of the appeal, to some first principles. I presume to re-state them in the form of the following extract from my own judgment in the recent decision of this Court, (Spigelman CJ, Mason P, Grove and Sully JJ, Newman AJ), in Regina v Simpson [2001] NSWCCA 534:
"99. Whenever an applicant for leave to appeal against sentence submits that there is cause to show why this court should intervene ………………………it is, as I think, obvious that the first thing to be established by the applicant is that the primary sentencing discretion has miscarried, by reason of some error of fact or of law; or because of the cumulative effect of errors of both fact and law. The errors, whether of fact or of law, may be either latent or patent; but whether latent or patent, some error must be demonstrated before this court becomes entitled at all to consider interfering with the sentence passed at first instance: Vachalec [1981] 1 NSWLR 351 at 353F; Visconti [1982] NSWLR 104 at 108G.
100. Error once demonstrated, it does not follow automatically that this court will, without more, intervene in fact and re-sentence. Before that can happen properly in law, the condition specified in s.6(3) of the Criminal Appeal Act 1912 (NSW) must be satisfied: that is to say, this court must be persuaded, not only that error has been shown in the process of reasoning of the primary sentencing court, but that some other sentence is 'warranted in law'. I agree with the observations made in this connection by Lee AJ in Astill [No. 2] [1992] 64 A Crim R 289 at 303, 304."
22 The written submissions of the Director summarise helpfully, and as follows, the bases of the present challenges to the two sentences passed upon the respondent in connection with the section 29D offences:
"(a) The head sentences and non-parole periods were manifestly inadequate when regard is had to the criminality involved in the provision of a deliberate and methodical tax evasion service to participants in the building industry over two years, for which the respondent's personal gain was over $468,000 and the loss to the revenue was a minimum of just under $1.5 million ……………;
(b) In all the circumstances, ………….. (the learned sentencing Judge) ……………erred in reducing the ratio of the non-parole period to head sentence to 50% - there was no principled reason given for departing from the usual range of 60% to two-thirds of the head sentence ………………..;
(c) Contrary to the finding of fact by his Honour, there was no evidence of any assistance given by the respondent to the authorities - the respondent's assistance was confined to a guilty plea………………….. ."
23 The relevant factual background against which these contentions fall to be considered is summarised sufficiently, and as follows, in the Director's written submissions:
"6. The case revolves around an income tax withholding scheme known as the prescribed payments system (PPS). The PPS ordinarily required 20% of moneys paid to suppliers of goods and services in the building industry to be withheld and remitted to the Australian Taxation Office. The object of the PPS was to overcome tax evasion in, inter alia, the building industry, arising from the use of cash payments. The 20% rate of deduction and remittance could be reduced by obtaining a variation certificate, by which the rate of deduction was reduced. The rate could be reduced to zero by obtaining a zero percent variation certificate. The zero percent variation certificate was designed for use by low-income earners.
7. The fraud perpetrated by the respondent entailed obtaining and then fraudulently using a zero variation certificate. By this means, the respondent, as promoter of the scheme, on each occasion received a cheque ostensibly for services from a building company, quoted a zero variation certificate, relieving the building company of the obligation to deduct any tax, deposited the cheque, withdrew the proceeds in cash amounts below $10,000 to avoid the reporting requirements under the Financial Transactions Reporting Act 1987, retained 7% as a fee or commission, and then either gave the cash to the building company, or caused cash payments to be made directly to workers performing work for the building company.
8. Prior to coming to Australia in February 1997, the respondent was aware of schemes that had been in operation in Australia for 15 or 20 years whereby wages in the building industry were paid in cash, i.e. without tax being paid ……………., and that payment of tax was optional ……………… .
9. Upon arrival in Australia, the respondent went to an Irish pub and got a job straight away …………………. . He denied coming to Australia with the intention of not paying tax………….., but regarded the onus of paying tax as falling on the employer ……….., a responsibility which he later ignored.
10. The respondent used two different companies to provide the cheque-cashing scheme described above. In evidence he said that his commission proceeds of $468,000 were invested in a legitimate business operated by him.
11. The respondent obtained the first of the companies from a friend. He purchased a false identity for $3,000 and used it to set up the second company …………………. ."
24 Turning, as must now be done, to the question whether the appellant has demonstrated error in the primary sentencing process, it is convenient to deal first with the submission that the learned sentencing Judge erroneously found as a fact that the respondent had given to the authorities assistance such as to entitle him to some leniency in the matter of sentence.
25 This submission is made upon the basis of a brief reference appearing on page 36 of the 40-page remarks on sentence. The relevant passage reads as follows:
"As I have said, the prisoner does not have any prior convictions in Ireland or Australia. He cooperated with the authorities when arrested . It would seem that he pleaded guilty as soon as he reasonably could, and except for the offences he is a kind and respected citizen." [emphasis added]
26 I have read, and re-read, the quoted passage in the context of which it forms a part; and I have to say that, with all respect to the learned primary Judge, I am wholly at a loss to understand exactly what it was that his Honour was wishing to convey by, in particular, the sentence which I have emphasised in the foregoing quotation. If his Honour meant to convey nothing more than that the respondent had pleaded guilty at the earliest practicable opportunity, then the particular sentence is unexceptionable, although perhaps tautologous in context. If, on the other hand, his Honour was intending to convey that the respondent had assisted the authorities in some way that went beyond the utilitarian value to the authorities of his prompt pleas of guilty, then his Honour was plainly mistaken as to the purport of the evidence before him. That one glancing reference to assistance to the authorities stands alone, so far as I can see, in the 40 pages of the remarks on sentence. Of the two possible interpretations of what his Honour said, neither seems to me to be capable of rational preference over the other. In those circumstances, I am of the opinion that the Director has not made good his ground of appeal based upon this isolated statement of the learned sentencing Judge.
27 A fair reading of the remarks on sentence as a whole seems to me to indicate two clear errors in the approach adopted by the learned sentencing Judge. The errors are inter-related, and they derive from what was, in my respectful view, a failure by his Honour to apply correctly the principles established by the decision of the High Court of Australia in Pearce v The Queen (1998) 194 CLR 610. Those principles are stated succinctly, and sufficiently for present purposes, in the following extract from the joint judgment of McHugh, Hayne and Callinan JJ at [45]-[48]:
"45. To an offender, the only relevant question may be 'how long', and that may suggest that a sentencing judge or appellate court should have regard only to the total effective sentence that is to be or has been imposed on the offender. Such an approach is likely to mask error. A judge sentencing an offender for more than one offence must fix an appropriate sentence for each offence and then consider questions of cumulation or concurrence, as well, of course, as questions of totality.
46. Sentencing is not a process that leads to a single correct answer arrived at by some process admitting of mathematical precision. It is, then, all the more important that proper principle be applied throughout the process.
47. Questions of cumulation and concurrence may well be affected by particular statutory rules. If, in fixing the appropriate sentence for each offence, proper principle is not applied, orders made for cumulation or concurrence will be made on an imperfect foundation.
48. Further, the need to ensure proper sentencing on each count is reinforced when it is recalled that a failure to do so may give rise to artificial claims of disparity between co-offenders or otherwise distort general sentencing practices in relation to particular offences."
28 The proper application of these principles ought to have led the learned sentencing Judge to impose, separately in connection with each of the two section 29D offences, a proper head sentence. By "proper" I mean a sentence adequately balancing the relevant objective facts, and the relevant subjective considerations, the latter including the fact of the respondent's prompt pleas of guilty; and the adjustment necessary to be made in compliance with section 16G of the Commonwealth Crimes Act. His Honour ought then to have considered whether the given facts of the respondent's case did not justify a prudently measured, but nevertheless real, measure of cumulation. Then, and finally, his Honour needed to fix a single non-parole period in respect of the head sentences: see section 19AB(1)(d) of the Commonwealth Crimes Act.
29 In implementing that approach, his Honour was bound to proceed in a way that did not amount to nothing, or nothing much, more than an essentially artificial mathematical calculation. That is not novel law. It is taken to be the law in many cases of which a useful example is the landmark decision of this Court, (Kirby P, Campbell and Newman JJ) in Director of Public Prosecutions (C'th) v Said Khodor el Karhani [1990] 21 NSWLR 370. It is, however, useful to reinforce the point by reference to the following statements taken from the joint judgment of Gaudron, Gummow and Hayne JJ in the recent decision of the High Court of Australia: Wong v The Queen [2001] HCA 64; 185 ALR 233:
"[74] …………………….. (T)he reasons of the Court of Criminal Appeal suggest a mathematical approach to sentencing in which there are to be 'increment[s]' to, or decrements from, a pre-determined range of sentences. That kind of approach, usually referred as a 'two-stage approach' to sentencing, not only is apt to give rise to error, it is an approach that departs from principle. It should not be adopted.
[75] It departs from principle because it does not take account of the fact that there are many conflicting and contradictory elements which bear upon sentencing an offender. Attributing a particular weight to some factors, while leaving the significance of all other factors substantially unaltered, may be quite wrong. We say 'may be' quite wrong because the task of the sentencer is to take account of all of the relevant factors and to arrive at a single result which takes due account of them all. That is what is meant by saying that the task is to arrive at an 'instinctive synthesis'. This expression is used, not as might be supposed, to cloak the task of the sentencer in some mystery, but to make plain that the sentencer is called on to reach a single sentence which, in the case of an offence like the one now under discussion, balances many different and conflicting features.
[76] In R v Thomson , Spigelman CJ reviewed the state of the authorities in Australia that deal with the 'two-stage' approach of arriving at a sentence, in which an 'objective' sentence is first determined and then 'adjusted' by some mathematical value given to one or more features of the case, such as a plea of guilty or assistance to authorities. As the reasons in Thomson reveal, the weight of authority in the intermediate appellate courts of this country is clearly against adopting two-stage sentencing and favours the instinctive synthesis approach. In this court, McHugh and Hayne JJ in dissenting opinions in A.B v R expressed the view that the adoption of a two-stage approach to sentencing was wrong. Kirby J expressed a contrary view. We consider that it is wrong in principle. The nature of the error can be illustrated by the approach adopted by the Court of Criminal Appeal in these matters. Under that approach, the court takes, for example, the offender's place in the hierarchy and gives that a particular significance in fixing a sentence but gives the sentencer no guidance, whatever, about whether or how that is to have some effect on other elements which either are to be taken into account or may have already been taken into account in fixing the guideline range of sentences. To take another example, to 'discount' a sentence by a nominated amount, on account of a plea of guilty, ignores difficulties of the kind to which Gleeson CJ referred in R v Gallagher when he said that:
'It must often be the case that an offender's conduct in pleading guilty, his expressions of contrition, his willingness to cooperate with the authorities, and the personal risks to which he thereby exposes himself, will form a complex of inter-related considerations, and an attempt to separate out one or more of those considerations will not only be artificial and contrived, but will also be illogical.'
So long as a sentencing judge must, or may, take account of all of the circumstances of the offence and the offender, to single out some of those considerations and attribute specific numerical or proportionate value to some features, distorts the already difficult balancing exercise which the judge must perform.
[77] The core of the difficulty lies in the complexity of the sentencing task. A sentencing judge must take into account a wide variety of matters which concern the seriousness of the offence for which the offender stands to be sentenced and the personal history and circumstances of the offender. Very often there are competing and contradictory considerations. What may mitigate the seriousness of one offence may aggravate the seriousness of another. Yet from these the sentencing judge must distil an answer which reflects human behaviour in the time or monetary units of punishment."
30 The learned sentencing Judge did not approach his task by looking at the fixing of proper and separate head sentences; at the appropriateness of providing for at least a measure of cumulation rather than for simple concurrence; and at the fixing of a proper non-parole period reflecting a considered judgment on the all-important question of the proportion of the head sentence(s) that justice required to be served in fact by the offender. His Honour took, instead, what I would respectfully describe as a rolled-up approach. His Honour distilled that approach in the following brief passage appearing at page 38 of the remarks on sentence:
"Perhaps I should add though at this stage, as the offences were interlocked and as they were committed at the same time, I propose to order that all sentences be served concurrently."
31 If there were nothing further of relevance to be considered in this connection, I would be comfortable in the view that the learned sentencing Judge fell into manifest error in his Honour's failure, as I respectfully perceive it to have been, to give proper effect to the requirements of the decision in Pearce.
32 It is, however, the case that there is something additional to be taken into account. It derives from an exchange between his Honour and learned counsel then appearing for the Crown. The exchange is recorded at pages 3 and 4 of the transcript for 9 August 2001. The relevant passages are as follows:
"HIS HONOUR: ………….. . I've heard recently that I'm required, am I not, and please correct me if I'm wrong, to impose a penalty in respect of each of the charges, is that right?
(CROWN COUNSEL): That's correct your Honour, although I should indicate that the Crown will not be submitting there should be a consecutive component. Pearce's case I think in the High Court is the one requires - it's not specific Commonwealth legislation, I should say, it's for all sentences is a requirement to impose a sentence in relation to each matter. I think what had become a practice was to sort of throw it all into the pot and come up with a single number and the High Court has said you can't do that but that would be true of all sentences your Honour. …………………"
33 In a later exchange which is recorded at page 38 of the transcript for 10 August 2001, learned counsel then appearing for the Crown re-emphasised to his Honour that the Crown agreed that there should be concurrent sentences.
34 In those circumstances, I would decline, as a matter of discretion, to intervene now in order to correct those errors of which I have earlier spoken. There is ample authority for such approach: see for example R v Jermyn [1985] 2 NSWLR 194 per Street CJ at 198E, F; per McHugh JA at 205D,E; and per Lusher J at 205F.
35 I do not myself perceive any other patent errors in the published remarks on sentence. That entails that the present appeal, if it is to succeed, must succeed upon the basis that the sentencing process at first instance miscarried by reason of latent error. That entails, in turn, that the appellant must demonstrate that the end result reached by the learned sentencing Judge is so manifestly outside the range of a proper sentencing discretion, as to compel a conclusion that there has been, in some way or other that cannot be particularised, vitiating error.
36 In my opinion, such a case has not been made out by the appellant. I have arrived at that conclusion by the following process of reasoning: