Regina v Ronen & Ors [2005] NSWSC 991 | Case summary

Regina v Ronen & Ors [2005] NSWSC 991 | Case summary | Zoe

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1 HIS HONOUR: On 2 February 2004 an indictment was presented against the offenders and each was arraigned on that occasion. There was a minor amendment to the indictment and following that amendment the indictment on which the offenders were tried was in the following terms: - "That Ida Ronen, Nitzan Ronen and Izhar Ronen between about 1 October 1991 and 15 September 1995 at Sydney in the State of New South Wales did conspire with each other to defraud the Commonwealth namely the Commissioner of Taxation, contrary to section 86A of the Crimes Act 1914 (Cth) , and further, that between 16 September 1995 and 7 February 2001 at Sydney in the State of New South Wales did conspire with each other and George Segal to commit an offence against section 29D of the Crimes Act 1914 that is to defraud the Commonwealth, namely the Commissioner of Taxation, contrary to section 86(2) of the Crimes Act 1914 ". 2 The Crown at all times conceded that, although there were two charges, there was in fact only one conspiracy alleged against the offenders. This single conspiracy was represented by two counts in the indictment in order to reflect a change made to the name and precise wording of the section under which the first count had been drafted. The change came into effect at about the time of the commencement date of the second count. 3 Between February and early May 2004 there was an extensive number of pre-trial applications. This had the effect of preventing the empanelment of the jury until 3 May 2004. The trial was a lengthy one proceeding, without significant interruption until Friday 28 January 2005. On that date the offenders were found guilty by a jury of ten of the two charges of conspiracy to defraud the Commonwealth contained in the amended indictment. There is an issue I must decide regarding the maximum penalty applicable to these offences. It is however, sufficient at this stage to note that s 86A of the Crimes Act 1914 (Cth) provided until its later repeal for a penalty of 2,000 penalty units or imprisonment for 20 years or both. After the 15 September 1995, where a person conspired with another person to commit an offence against s 29D of the Crimes Act 1914 the conspiracy was punishable by identical penalties to those I have mentioned in relation to the former s 86A. 4 On 28 January 2005 bail was refused for all three offenders and they have remained in custody since. The sentence hearing was to occur on 7 March 2005 but prior to that date the offenders terminated the services of senior and junior counsel who had appeared for them at the trial and retained new counsel for the purposes of the sentence hearing. At the request of the offenders the original hearing date was vacated and, for reasons that appear in the earlier decisions given by the Court, the submissions on sentence did not in fact commence until 26 September 2005. On 29 September I adjourned the sentence proceedings until today. 5 The Crown has been represented throughout by Mr Tim Game SC and Ms Sarah McNaughton of junior counsel. Ms Fullerton SC and Mr Buscombe have, since March 2005, appeared for all three offenders. 6 At the outset of the sentence hearing the offender Ida Ronen (whom I shall refer to as Mrs Ronen) was indicted on an additional charge. This was a charge that between 7 and 10 April 2000 she was knowingly concerned in an offence against s 31 of the Financial Transaction Report Act 1988. This was described as a "structuring charge". To this charge, Mrs Ronen pleaded guilty. Additional submissions have been made both by the Crown and Ms Fullerton SC in relation to this charge and I have been asked to deal with it in the sentence proceedings relating to the conspiracy convictions. 7 Finally, by way of introduction, it is necessary to note that the Commonwealth Director of Public Prosecutions made a forfeiture application under ss 48(1) and 48(2) of the Proceeds of Crimes Act 2002. This application sought an order for forfeiture of Australian currency to the value of $209,525.00 being currency seized under a search warrant on 7 February 2001 by officers of the Australian Crime Commission and the Australian Federal Police. The money was found in a safe located in the main bedroom of Mrs Ronen's home at Unit 16B, 5-11 Thornton Street, Darling Point. The application is founded on the conviction of Mrs Ronen of the offences contained in the amended indictment to which I have made reference. With the agreement of Mrs Ronen's counsel and the Crown I made an order that the forfeiture application be heard at the same time as the sentencing proceedings. This was because of the potential the application had to bear on sentencing issues in relation to Mrs Ronen's situation. I have earlier today given judgment and made orders in those proceedings. In the light of those orders there is no need for me to give further consideration to the issue in these remarks on sentence.

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The Facts 8 My first task is to outline the facts revealed by the evidence in the trial relating to the ongoing conspiracy between the three offenders. In undertaking the fact finding exercise the Court is prohibited from taking facts into account in a way that is adverse to the interests of the offenders unless those facts have been established beyond reasonable doubt. On the other hand, if there are circumstances which the Court is urged to take into account in favour of the offenders, it is enough if those circumstances are proved on the balance of probabilities (R v Olbrich (1999) 199 CLR 270. 9 The offenders were involved in and operated a highly successful and well established clothing business that traded under the name of Dolina. At various times, each of the offenders were, or are directors and shareholders of a number of companies trading under the Dolina name in the retail and wholesale clothing industry. These included Dolina Enterprises Pty Limited, Dolina Fashion Group and a joint venture operation between the two companies. These corporations and entities were involved in the manufacture and sale of garments which were in turn retailed through major outlets such as Coles Myer, David Jones and Rockmans. 10 In addition to the sales at the major outlets, the Dolina companies supplied garments to their own factory outlets. They operated as conventional retail shops. The shops were managed by Mrs Ida Ronen. Those outlets retailed garments to the public generally. Initially there were two, Ronen Young Fashions at Commonwealth Street Surry Hills and Dolina On Fovo at Foveaux Street Surry Hills. As the years passed a new shop opened at Surry Hills called Fashion Bargains and later a retail outlet opened at the factory premises at Epsom Road, Rosebery. This last business was known as "Warehouse". Three of the shops returned their income for income tax purposes through On Fovo Pty Limited. The income of Ronen Young Fashions however was returned in the tax return of Ida Ronen. The retail shops were heavily involved in discounting and the offering to the public of garments at very reasonable prices. As might be anticipated, the businesses had substantial turnovers including a substantial cash turnover. 11 In essence, the Crown alleged the existence of an agreement between the offenders to defraud the Commonwealth of income tax by concealing from the revenue a substantial proportion of cash income from the takings of the original two clothing outlets and later from the Bargain and Warehouse outlets as they came into existence. 12 The substantial argument raised by the defence at trial, although not the only matter relied upon, related to a reasonable possibility that the distribution of a substantial amount of cash takings from the retail outlets to Nitzan Ronen and Izhar Ronen may have been no more than the rightful return of the proceeds of sale of consignment stock to the consignor companies Dolina Enterprises Pty Limited and Dolina Fashion Group Pty Limited. I am however satisfied beyond reasonable doubt, consistently with the jury's verdict, that no such arrangement existed and that the distribution of cash from the retail shops was done in implementation of the agreement alleged by the Crown to be the conspiracy between the co-offenders, namely an agreement to conceal the true takings from the Commissioner of Taxation. 13 In addition, I am satisfied beyond reasonable doubt that the agreement existed from about the end of 1991 to the date of the arrest of the offenders namely, 7 February 2001. Although it is not possible to be absolutely precise as to quantum, I am satisfied beyond reasonable doubt that during these years the amount concealed, in implementation of the agreement, was somewhere between 15 and 17 million dollars. 14 The Crown's expert witness Georgina Wade compared the figures in the front of the "red books" kept by Mrs Ronen with tax returns and other statutory and accounting records. Her evidence, which I accept, estimated that the undeclared income was $14.8 million for On Fovo Pty Limited and $2.12 million for Ronen Young Fashions. These estimates were not precise for the entire period of the conspiracy but were very close to the entire period. On this basis the scope of the fraud represented by unpaid tax was approximately $8.125 million. 15 Ms Fullerton SC suggested that, as amended assessments have now issued for the financial years 1994 to 1999 in the case of On Fovo Pty Limited (and the years 1993 to 1999 for Mrs Ronen) it is possible to state with more certainty the amount undeclared at least in those years. These figures amounted to $12.76 million approximately. There are also estimates made in recent times of the tax liabilities for On Fovo Pty Limited and Mrs Ronen in the financial years 2000-2004. The preferred position argued on behalf of the offenders was that the undeclared income during the period of the conspiracy was not less than $15.5 million although, again, the precise amount could not be exactly stated. On the basis of this approximate estimation, it was submitted that the tax lost by virtue of the fraud would have been approximately $7.44 million. 16 As I have said, in the end I am not able to reach a conclusion that is absolutely precise in terms of quantum. Generally, I accept the evidence of Ms Wade, however, as providing a more accurate estimation of the figures involved. But whether the amount concealed is closer to $16 million than to $17 million, it is quite apparent that the dimension of the conspiracy was that of a fraud on a very large scale. 17 I propose now to make findings in a little more detail. These will relate to the participation by the individual offenders in the conspiracy and in so doing I will describe, by way of findings, the steps taken by the offenders on a regular basis to implement their agreement. 18 As I have said Mrs Ronen managed the businesses for herself and, in effect, for her sons. Customers of the retail outlets paid for the garments they purchased by cheque, EFTPOS, credit or cash. The precise method varied over the period of the conspiracy. The method of implementation of the agreement was simple in the extreme. In general terms Mrs Ronen, on behalf of herself and her sons, skimmed from the takings most, if not all, of the cash and later distributed it to her sons and herself for their own purposes. So far as her sons Nitzan and Izhar Ronen were concerned, the cash distribution was made available to them to use for their own personal purposes, for the purposes of their companies if they wished, or it was sent overseas for their benefit. For example, in the period of surveillance between April 2000 and 7 February 2001, there was approximately 74% of the cash skimmed sent overseas or kept in the safe. Of the total cash skimmed $753,400.00 was sent overseas for the benefit of the sons. In addition, at the time of the arrest an amount of $209,525.00 was seized from the safe, it being ready for distribution to Nitzan Ronen, presumably with a view to its being sent overseas as well. 19 I have described the cash skim as simple and indeed it was. Mrs Ronen would arrange for the cash takings from the shops to be delivered to the On Fovo shop. The offender would then, either herself or by someone on her behalf, arrange for the takings to be brought to her home at Darling Point prior to any banking taking place. At her apartment, Mrs Ronen would sort out the takings into cash and other forms of payment. A substantial proportion of the cash would be set aside and this amount would not be banked in the ordinary course of business. Banking would be done generally by the staff on Mrs Ronen's instructions. This extended to the non-cash part of the takings of the retail shops together with a very small part or proportion of the cash taken on a weekly basis. Although the cash skim itself was simple and straightforward, Mrs Ronen herself was a most meticulous book-keeper. She recorded the actual takings of each of the shops and the subsequent distribution of cash in a set of books kept at her home. These were described at trial as the "red books". They included books for each of the shops owned by On Fovo Pty Limited and a book also for her own shop Ronen Young Fashions. 20 Mrs Ronen recorded in precise details the actual takings of each of the shops and in the back of the books, following careful calculations, she detailed a split of the cash between Nitzan Ronen, Izhar Ronen and at various times Mrs Ronen herself. 21 Examination of the red books makes it perfectly clear that a formula based on total sales in the retail outlets was used as the basis of the distribution between the two sons. The cash to be distributed to them was retained in a safe in Mrs Ronen's bedroom until distribution took place. Bundles of money to be distributed to either Nitzan Ronen or Izhar Ronen were wrapped in paper on which were recorded precise details including the breakdowns of the calculations and distribution amounts. In general, these details tallied with the details in the red books. As I have already said, in the period under surveillance it is clear beyond reasonable doubt that a substantial proportion of the un-banked cash was remitted overseas on behalf of each of the two sons in a manner so as to make it undetectable by the authorities. It is open to me to infer beyond reasonable doubt in the circumstances revealed by the evidence that this system of remitting money overseas had been going on for a considerable time and, although it is not possible to be precise, generally speaking in reasonably substantial amounts. I am unable to be satisfied beyond reasonable doubt, however, that the amounts in the earlier period were necessarily as substantial as the amounts remitted in 2000/2001. 22 During the surveillance period there were a substantial number of telephone calls intercepted. These intercepts centred on Mrs Ronen's home telephone at her premises at Darling Point. The telephone calls included calls between the offenders; and between Mrs Ronen and an accountant who plainly had a role to play in the sending of substantial amounts of money overseas. 23 The skimmed and un-banked cash was not recorded or declared as income by On Fovo Pty Limited nor by Mrs Ronen, Nitzan Ronen or Izhar Ronen. The corporation and individuals filed or caused to be filed tax returns during the relevant period. Returns were filed from the financial year ending 30 June 1993 up to and including the financial year ended 30 June 1999. I accept beyond reasonable doubt that the offenders intended to deprive the Commonwealth of income tax, or at least the opportunity to obtain income tax, in relation to the un-banked cash throughout the entire period of the conspiracy including the years I have specifically mentioned. 24 A complication arose in the middle of the 2000 calendar year. As from 1 July 2000 the Goods and Services Tax regime was introduced. This posed a considerable problem for the offenders because proper compliance with the requirements of the GST laws would have revealed in a dramatic manner the amount of cash takings received in each of the retail shops. The intercepted telephone calls to which I have made reference show the substantial concerns each of the offenders had about this situation. They show their attempts to devise a system to overcome the problem that they perceived might well bring about their undoing. 25 Ultimately, Mrs Ronen took two additional steps in relation to the concealment of cash at this time. First, her then de-facto husband, Mr George Segal, joined the conspiracy. Mrs Ronen sought his assistance in making additional calculations for the purposes of the distribution which took into account the GST. These additional calculations were recorded in spreadsheets produced by a computer kept at the Darling Point residence. The involvement of Mr Segal was kept secret by Mrs Ronen from her two sons as she feared they would not approve. 26 The second step taken by Mrs Ronen was a more substantial one. This was the notion of creating a set of false till rolls for each retail outlet. These would show a reduced amount of cash from that actually taken in each retail outlet. These false till rolls were created on a cash register which was kept at Mrs Ronen's apartment for this purpose. The cash register was found and seized at the time of the execution of the search warrant on 7 February 2001 shortly before Mrs Ronen was arrested and charged. The system for the creation of false till rolls necessitated the involvement of another person, one Mark Talbot, who set up a computer system. It had, as one of its consequences, the facilitation of a system for creating false till rolls. Both Mr Segal and Mr Talbot gave evidence at the trial for the prosecution. Mr Segal was an indemnified witness. 27 The system adopted by Mrs Ronen and approved by each of her sons after the introduction of the GST was a system which required the banking of ten per cent of the cash takings of each of the shops but no more. The banking and the creation of false till rolls was intended to give the impression to the authorities, should they investigate, that the shops were regularly banking cash as well as other forms of takings related to each of the shops. These additional steps reflected the continuing nature of the conspiracy and its further implementation in circumstances designed to conceal the fraud from the authorities. 28 The conspiracy came to light only by chance. It appears, as a result of telephone intercepts being placed on another person's telephone service, that the Ronens' involvement in the distribution of large amounts of money from Australia to overseas locations was detected. This in turn led to the surveillance at Mrs Ronen's home to which I have made reference and subsequently to the execution of search warrants on 7 February 2001 and to the arrest of the offenders.

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Events after conviction 29 It is necessary to make a number of findings of facts regarding events which have occurred since conviction. These have become relevant because of the ambit of the sentencing submissions. In March 2005, when Ms Fullerton SC sought the first adjournment of the sentencing hearing, it was made clear to the Court that senior counsel had instructions to put in train events which might lead to a settlement of the outstanding civil proceedings between the offenders, their companies and the Deputy Commissioner of Taxation. These proceedings, as I understand it, had been in abeyance for some considerable time prior to the change of legal representation which occurred earlier this year. 30 There are in evidence before me two affidavits of Colleen Anne Platford, a partner of Gilbert & Tobin. This firm presently acts for the offenders in both the criminal proceedings and the civil proceedings in the Federal Court of Australia. In the second of these two affidavits (Exhibit 10) Ms Platford states that on 26 September 2005 Terms of Settlements were agreed between the Australian Government Solicitor and the offenders' solicitors in respect of all of the proceedings commenced in the Federal Court of Australia by the offenders and On Fovo Pty Limited in respect of the amended tax assessments received by each of the offenders Nitzan Ronen, Izhar Ronen and On Fovo Pty Limited for years of income ended 30 June 1994 to 1999 inclusive. Similarly, Terms of Settlement were agreed between the parties to the litigation for the offender Mrs Ronen for the years of income ended 30 June 1993 to 1999 inclusive. 31 These Terms of Settlement represent the final detail of a successful mediation held in June/July 2005. The terms of settlement are confidential. The parties have agreed, however, that certain material matters in the settlement may be mentioned for the purposes of the sentencing hearing. The financial years mentioned do not cover the entire period of the conspiracy, as it will be recalled that it continued until 7 February 2001. Nevertheless, the Terms of Settlement embrace for those earlier years agreement in relation to the repayment of the primary tax, pre-assessment interest on the income not declared and, perhaps more significantly, a total penalty for fraud aggravation which is calculated at $7,180,508.00. 32 The terms of agreement then acknowledge payments that had been made at an earlier point of time on account of the subsequent liability, should it have been established. These would have been repaid to the taxpayers had the objections to assessment been successful. In the light of the settlement, the parties have agreed to treat these amounts as repayments of portion of the agreed liability. They amount to $6,754.417. 33 There is no need for me to set out in summary form the effect of all the details of the Terms of Settlement. They are, as might be expected, not uncomplicated. Relevantly, however, the terms note that the offenders, On Fovo Pty Limited and other relevant companies have lodged income tax returns in respect of the years of income ended 30 June 2000 to 2004 inclusive. The aggregate income tax liability for these individuals and entities in respect of those years has been estimated at a stipulated figure of $7,968.042.85. In addition, there has been a further acknowledgment that overall, as at the date of settlement, the amount of primary tax relating to the period 30 June 1994 to 30 June 1999 to be paid by the offenders and On Fovo Pty Limited is $14.2m. 34 The settlement then identifies an agreement for the repayment over time of the entire amount payable by stipulated instalments. These instalments are to be made over an agreed number of months with the final instalment due on 31 July 2006. There has already been a very substantial instalment ($8 million) paid after agreement in principle had been reached but before the terms of settlement were finally concluded and approved. 35 The Terms of Settlement provide for, in effect, a guarantee by Nitzan Ronen and Izhar Ronen of the obligations of On Fovo Pty Limited to pay the total amounts referrable to the agreement it has reached with the Commissioner including the amounts agreed as penalties. The agreement also provides for the situation of a default in payments or a default resulting from a failure to make a full and true disclosure of material facts. Following approval of the Terms of Settlement, the Federal Court proceedings were dismissed. 36 Ms Platford's earlier affidavit (Exhibit 1) confirms that she had received instructions from the offenders earlier this year to ask the Federal Court for a mediation of the civil taxation proceedings. She confirms that prior to that time the offenders, who had been represented by a different group of lawyers, had been advised to vigorously defend the civil taxation proceedings. Ms Platford then detailed the steps which were taken to advance the mediation and the settlement. There is no need for me to summarise those matters in these remarks on sentence. A number of points, however, that have emerged in the proceedings before me were touched upon by Ms Platford. They include the fact that On Fovo Pty Limited did not have sufficient assets to pay its tax liabilities and this extended to the penalty component. Secondly, in relation to the $8 million instalment paid after settlement in principle had been reached in July 2005, the Commissioner of Taxation applied a substantial portion of that amount in full repayment of the settlement amount that had been reached with On Fovo Pty Limited. Thirdly, Mrs Ronen had sold her home, which she had owned for many years in order to raise money to satisfy in part her liability to the Commissioner of Taxation. There was also evidence before me that the legal fees paid by the offenders to their previous lawyers in relation to the defence of the conspiracy charges was an amount just short of $13 million. 37 Evidence has also been given at the sentence hearing by Henry Edward Moore. He is the father-in-law of Nitzan Ronen and is a solicitor of the Supreme Court of New South Wales who has practised for many years as such. Since 1993 he has been a fulltime member of the Consumer Trader and Tenancy Tribunal. He swore an affidavit in these proceedings (Exhibit 11) and gave oral evidence. Mr Moore, at the beginning of 2005, became the sole director of various companies within the Dolina Group including corporations within the reaches of that Group. This happened as a consequence of the fact that Nitzan and Izhar Ronen had been convicted of the conspiracy offences on 28 January 2005. In a general sense, Mr Moore gave evidence of the steps he has taken to keep the Dolina businesses running. He has attempted, to ensure that the affairs of the company have been conducted properly and in accordance with the law; and he has been involved in the efforts to bring about a resolution of the taxation disputes. One matter that came to his attention was that a barrister who had been previously retained by the offenders in both the criminal proceedings and the civil tax proceedings had advised that legal expenses were deductible in relation to the defence of the criminal charges. Mr Moore discussed this matter with Nitzan and Izhar Ronen. They in turn authorised him to obtain a further advice from a New South Wales counsel well experienced in taxation matters. Not surprisingly, the advice was that the legal expenses were not deductible as had been claimed. The accountants for the companies were then authorised to disclose voluntarily to the Australian Taxation Office that the relevant returns should be amended for the year 30 June 2003 so as to include those legal expenses as income. 38 Mr Moore also confirmed that he did not have the task of running the Dolina businesses on a day-to-day basis. That was in the hands of a Mr Rodney Muller. Nevertheless, he regarded himself as acting in a role that would be equivalent to that of a non-executive director. He acknowledged that he knew nothing about the fashion industry. Although he had assumed overall responsibility for the companies, he accepted that he could not really be involved in the day-to-day management and that this was the task of Mr Muller. Mr Moore however expressed the opinion that the companies were now being run in a conservative manner and that their financial affairs, so far as they concern creditors including the tax office, had been brought up to date. He said it was the current intention to trade the businesses for the short term, particularly in the light of a period of uncertainty as to the future of the offenders prior to the imposition of sentence. Mr Moore indicated it may be necessary to re-assess the decision to trade in the future; and he indicated there was a real possibility that the businesses might have to be sold. 39 Mr Moore also gave evidence concerning his son-in-law's present situation. He said that Nitzan Ronen had four children aged six, five, three and one. As might be expected, he spoke of the difficulties the incarceration of their father was having on the children. Three of the children had been to see a child psychologist in relation to their father's incarceration. Mr Moore and his wife moved in with their daughter and the children and helped them cope with the situation for a period of about three months. 40 Mr Moore said that he had personally observed that Nitzan Ronen's incarceration had had a devastating effect on him and his family. He said that he had visited Silverwater Prison and observed the situation between the offender Nitzan Ronen and his young children. Mr Moore also observed that Izhar Ronen is suffering from the separation from his children, the eldest of whom, is currently undertaking the Higher School Certificate. His son will undertake his Higher School Certificate next year. 41 Finally, Mr Moore expressed the opinion that he was personally confident that Nitzan and Izhar Ronen would for the future categorically avoid any further breaches of the law in the manner in which they would be likely to conduct their businesses and lives in the future. He said that each of the men had expressed to him on many occasions how sorry they were that they engaged in the conduct especially in the light of the devastating effect it has had on themselves and their children. I will take account of these matters when I come to consider the subjective circumstances of the offenders in more detail.

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Maximum penalty for the offences 42 At the outset of these remarks on sentence I set out the maximum penalty applicable to the offences in the indictment in the period between 1991 and February 2001. 43 In May 2001, some four months after the arrest of the offenders, the statutory framework changed markedly. On 23 May 2001 s 29D of the Crimes Act 1914 (Cth) was repealed. The repeal came into effect the following day. On 24 May 2001 a series of offences were created by s 135.4 of the Criminal Code (Cth) 1995. These were the offences of conspiring with another person with the intention of dishonestly obtaining a gain from a Commonwealth entity; conspiring with another person with the intention of dishonestly causing a loss to a Commonwealth entity; and conspiring with another person to dishonestly cause a loss or a risk of loss to a Commonwealth entity. 44 Importantly, for present purposes, the maximum penalty for each of these offences was imprisonment for ten years. 45 The initial vehicle for these changes was the Criminal Code Amendment (Theft, Fraud, Bribery and Related Offences) Bill of 1999. The then Attorney-General, during the Second Reading, described it as introducing "a wide range of modern offences to protect the Commonwealth Government and public officials from criminals who would cause them financial harm or seek to obstruct, threaten or harm them". It was described as "a modern and transparent scheme" for preventing and punishing theft, fraud, bribery, forgery and related offences. The explanatory memorandum in relation to the Bill as circulated by the then Minister for Justice and Customs in para 196 said: - "Like proposed s 135.1, proposed s 135.4 is a series of general dishonesty offences. Proof of deception is not required. Indeed it has all the same components as proposed s 135.1 except there must be a conspiracy. … The other difference is that the maximum penalty is ten years imprisonment. While conspiracy usually carries the same penalty as the primary offence, the proposed penalty reflects what was recommended for the Model Criminal Code see Code (May 1997 Report ) and by the Gibb's Committee. Proposed s 135.1 will replace sub-s 86(2) of the Crimes Act 1914 , which has a maximum penalty of 20 years imprisonment. This is far too high and is inconsistent with the penalty for similar offences in other jurisdictions. The usual maximum penalty is ten years imprisonment. " (Emphasis added) 46 The repeal of the previous provisions of the Crimes Act 1914 in relation to fraud and conspiracy to defraud came into effect on 24 May 2001 by virtue of items 149 and 158 of Schedule 2 of the Criminal Code Amendment Act (Theft, Fraud, Bribery and Related Offences) Act 2000, No 137-2000. As I have said this was the same day that s 135.4 of the Code came into effect. Item 418 of Schedule 2 of the Act sets out a transitional provision. It is in the following terms: - " 418. Transitional - Pre-commencement offences 1. Despite the amendment or repeal of a provision by this Schedule, that provision continues to apply after the commencement of this item in relation to: (a) An offence committed before the commencement of this item; or (b) Proceedings for an offence alleged to have been committed before the commencement of this item; (c) Any matter connected with or arising out of such proceedings as if the amendment or repeal had not been made. 2. Sub item (1) does not limit the operation of s 8 of the Acts Interpretation Act 1901 ". 47 Relevantly s 8 of the Acts Interpretation Act 1901 provides that where an Act repeals in whole or in part a former Act, then, unless the contrary intention appears, the repeal shall not: "(b) Affect the previous operation of any Act so repealed or anything duly done or so suffered under any Act so repealed; or (c) Affect any right privilege obligation or liability acquired accrued or incurred under any Act so repealed; or (d) Affect any penalty forfeiture or punishment incurred in respect of any offence committed against any Act so repealed or (e) Affect any investigation legal proceeding or remedy in respect of any such right privilege obligation liability penalty forfeiture or punishment as aforesaid; and any such investigation legal proceeding or remedy may be instituted continued or enforced and any such penalty forfeiture or punishment may be imposed, as if the repealing Act had not been passed." 48 Ms Fullerton SC on behalf of the offenders has argued that, for the purposes of s 8, a contrary intention appears in the Crimes Act 1914 so as to result in the reduction of the maximum penalty applicable to the offences for which the offenders have been convicted. This argument centres upon s 4F(2) in the Crimes Act 1914. It is relevantly in the following terms: - "Where a provision of a law of the Commonwealth reduces the penalty or maximum penalty for an offence, the penalty or the maximum penalty as reduced extends to offences committed before the commencement of that provision, but the reduction does not affect any penalty imposed before that commencement". 49 As a consequence it has been argued on behalf of the offenders that the applicable maximum penalty for each offence in the present matter is ten years imprisonment. This argument is based primarily upon the language of s 4F(2) of the Crimes Act. Alternatively, senior counsel argued that the principles discussed in R v MJR (2002) 54 NSWLR 368 ought lead the Court to approach the sentencing of the offenders having regard to the current maximum penalty provided for in the Criminal Code Act 1995. 50 In the course of oral argument, Ms Fullerton SC maintained the proposition that s 4F(2) of the Crimes Act 1914 was the legislative key to the resolution of the question as to whether the maximum penalty for each offence in the present matter is ten or 20 years. It was conceded, however, that should this argument fail, the operative and determinative legislative provision must be item 418 (1 and 2). 51 In my opinion, the maximum penalty for each of the two offences in respect of which the offenders have been convicted is 20 years. My reasons are these: First, item 418 is the specific transitional provision for the legislation, which brought about the repeal of ss 29D and 86(2) of the Crimes Act 1914. Secondly, the language of item 418(1) literally and specifically refers to the amendment or repeal of a provision by "this Schedule". The Schedule effected the repeal of ss 29D and 86(2) and in those circumstances it is literally the situation that the legislature must have intended that the repealed provisions should continue to apply, notwithstanding their repeal, to offences committed before 24 May 2001 and proceedings for offences alleged to have been committed before the same date. Thirdly, the language of item 418(1)(b) is sufficiently wide to extend to sentencing proceedings following conviction at trial. 52 Fourthly, item 418(2) expressly preserves the operation of the entirety of s 8 of the Acts Interpretation Act 1901. Although this part of the analysis must necessarily involve the application of a degree of circulatory statutory language, it nevertheless follows, I think, that the statutory intention is clearly enough expressed so as to preserve both the offence and the penalty, notwithstanding the repeal. 53 Fifthly, the principles discussed by Spigelman CJ in MJR were considered essentially in the light of an analysis of old and new sentencing patterns. That was the matter in issue in that decision. It was not suggested that those principles were apt to affect the situation where the legislative intention had been clearly expressed in transitional provisions so as to preserve repealed offences and hence maximum penalties applicable to those offences. Spigelman CJ was concerned in one part of the reasoning with the case of an express parliamentary intention that a new sentencing regime should operate retrospectively (Siganto (1998) 194 CLR 656 at 662). That however, is not the case here where the present discussion relates to the expression of a parliamentary intention as to the retention of a previous maximum penalty rather than to a change in sentencing regime. 54 Sixthly, s 4F(2) is of a more general nature than the specific transitional provision contained in item 418. It does have work to do; but it is concerned with the reduction of the maximum penalty for an offence contained within the legislation rather than with the situation arising following the repeal of legislation. Moreover, s 135.4 introduced a series of "new" offences each carrying its own penalty. It was not in truth a provision implementing the reduction of penalty for the existing offence of conspiracy to defraud. Although it is not necessary to express a concluded opinion, the better view, in my opinion, is that the offences created by the new legislation in 2001 may properly be regarded as new offences, that is to say offences that are in some respects different in nature and character, albeit that they are similar to the offences in the repealed legislation. 55 Finally I am respectfully unable to agree with the decision of her Honour Judge Ainslie Wallace in Regina v Vo & Tran [District Court of New South Wales (unreported) 25 June 2004]. It appears that her Honour may not have been referred to item 418(2) when argument was presented in that case.

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Sentencing discretion - Is it proper to take into account the reduced maximum penalty? 56 Although I have determined the maximum penalty applicable to each offence for which the offenders have been convicted, it is necessary to consider whether, as a matter of sentencing discretion, the Court is entitled to take into account as a matter relevant to the fixing of an overall sentence and the selection of a non-parole period the fact that in 2001 new offences were created, broadly categorised as in the nature of conspiracy to defraud, which carried a significantly reduced maximum penalty of ten years. The Crown did not concede that the Court could take this apparent change in legislative attitude into account but, with commendable fairness, conceded that, if such a matter could be taken into account, the Crown would not wish to put any submissions to stand in the way of appropriate account being taken of the change. 57 In my opinion, the question of statutory interpretation which I have decided in favour of the Crown and adversely to the offenders does not stand in the way of such a principle, based on fairness and justice, operating in the present matter. It is clear that, had the present offenders entered into the agreement the subject of the conspiracy found proven by the jury in the present matter in the second half of 2001, they would have rendered themselves liable to a prosecution under the new sections of the Commonwealth Criminal Code. I suggest that it may be confidently inferred that a jury would have, without difficulty, been able to find them guilty of a charge or charges under the new legislation based on the precise behaviour which has led to their conviction under the repealed sections of the Commonwealth Crimes Act. In such a situation, the offenders would have been rendered liable to a maximum penalty or penalties that did not exceed ten years imprisonment. 58 Moreover, the Explanatory Memorandum makes it clear that the attitude of the legislature, expressed in 2001 and continued up to the present time, is that the maximum penalty of 20 years was "far too high and inconsistent with the penalty for similar offences in other jurisdictions". Although the offence and the applicable maximum penalty remain alive for the purpose of sentencing the offenders notwithstanding the repeal of the previous legislation, I consider that principles of fairness and justice require that the sentencing court not overlook or disregard entirely the plainly expressed attitude of the Commonwealth Parliament in relation to so significant a matter as the halving of the maximum penalty for a range of modern offences that may, broadly speaking, be labelled as conspiracy to defraud offences. Just as a sentencing court may take into account an increase in maximum penalty as evidencing a parliamentary expression of the community's abhorrence of a certain type of criminal behaviour, so too the Court should be able to take into account the parliament's express statement that a prevailing maximum penalty is too high. 59 The Crown has brought to my attention authorities in which the existence of such a principle has been hinted at or contemplated. For myself, I have undertaken a degree of research, which has been necessarily limited by the time available to me, having regard to the necessity to deliver remarks on sentence promptly in this matter. Again, I have encountered a number of decisions, principally unreported, of the New South Wales Court of Criminal Appeal in which the principle has been mentioned. In none of the authorities given to me by the Crown or those I have researched myself is there any authoritative statement of the existence of or the scope of the principle. But I am satisfied nevertheless that the principle must exist and that it should have application in the sentencing exercise. [Pritchard (1999) 107 A Crim R 88 at 93; Stringer (2000) 116 A Crim R 198 at 222; Annechini (unreported) NSWCCA 24 April 1996 per Gleeson CJ; Bielaczek (unreported) NSWSC 1 March 1992 per Badgery-Parker J; White (unreported) NSWCCA 25 July 1991; Crump (unreported) NSWCCA 30 May 1994].

[17]

Objective seriousness of the offences - level of criminality 60 I next to turn consider once again the nature and circumstances of the offences. In this context it is necessary to make an assessment of the objective gravity of the offences committed by the offenders. At the outset, I should say that there has been no suggestion that there is any point of real distinction between the offenders in terms of the level of criminality displayed by his or her individual role in the conspiracy. Both in its inception and implementation the criminal agreement between the offenders displays a generally identical level of culpability on the part of each of them. 61 I have already made extensive findings of fact relating to the circumstances of the conspiracy. Although there were two offences, it needs to be recalled that the Crown case was that there was but one continuing conspiracy from the early 1990's to the date of arrest in February 2001. The facts I have found lead inevitably to a conclusion that the level of criminality involved in this ongoing conspiracy was very serious indeed. The degree of objective criminality on the part of each offender is shown to be serious by reason of the duration of the conspiracy, its object and its dimension. Added to this, during the course of the commission of the second offence, systems were evolved to prevent the new GST laws from bringing to light the true cash earnings of the retail businesses and in the last year of surveillance very substantial sums of money were sent overseas so as to put a sizeable proportion of the cash skimmed from the businesses out of reach of the authorities. 62 The overall cash skimmed throughout the entire period of the conspiracy was, as I have found, somewhere between $15 and $17 million. The tax payable on this amount was in excess of $8 million. 63 As my earlier findings will indicate, I cannot determine what amounts were sent overseas in the years prior to the period of surveillance. But whatever those amounts be, there can be no doubt that amounts were sent overseas in those earlier years and there is no warrant for thinking that they were other than reasonably substantial. As I have said, I cannot be satisfied, however, that the amounts sent overseas in earlier periods were of the dimensions of the amounts involved in the last ten months of the conspiracy. The skimmed cash that was distributed to, or for the benefit of, Nitzan and Izhar Ronen was used by them for their personal use for business purposes and, in general terms, it seems the balance was sent overseas. In Mrs Ronen's case the cash she took out of the businesses appears to have been used generally for her personal use and perhaps for some business purposes as well. The fact that monies were used by the offenders for business purposes does not, in my view, mitigate in any way the criminality involved. 64 Ms Fullerton SC submitted that the method of organising the cash skim was hardly a sophisticated one. I agree with this submission since all that was involved was the collection of the money, its counting and its being bagged and kept separately for distribution purposes. The method of bookkeeping utilised by Mrs Ronen, although meticulous, was by no means sophisticated. It was done primarily to have a record so that she could show her sons how the distributions were calculated and so that the three of them would know how the businesses were going in terms of total turnover and cash generated throughout the period. The gravamen of the agreement between them was to declare only the monies banked and to conceal from the revenue the remainder of the takings. This is hardly a sophisticated or complicated scheme. 65 On the other hand, this apparent homespun simplicity is offset by the manner in which the true situation was kept from the accounting and bookkeeping staff at Dolina; and kept also from the external accountants. It is also offset by the deceptive system of creating false till rolls and false records when the GST was introduced. Significantly, it is offset by the consideration that funds were sent offshore throughout the conspiracy. In relation to the assessment of the overall level of criminality involved in the conspiracy, it is also necessary for me to say that I consider that the level of criminality involved in the second offence is greater than that in the first. This is because of the duration of the conspiracy in the second period, the level of money involved and the fact that such a significant proportion in the last year of that period related to money going overseas. In addition, during this period the scheme to stultify the bite of the GST legislation by the creation of false documents was introduced. There was also the involvement during this period of Mr Segal as a co-conspirator and the involvement of Mr Talbot as well. 66 A consideration of all these matters leads me to the inevitable conclusion that the conspiracy in the present offences and its manner of implementation over nine or so years must be regarded as a situation where the offences fall into the worst category of offences of this type.

[18]

Mrs Ronen faces an additional charge 67 It is necessary at this stage before considering the subjective circumstances of the offenders to mention briefly the structuring charge to which the offender Mrs Ronen has pleaded guilty. The facts involved satisfy me beyond reasonable doubt that the offender was knowingly concerned in one Anthony Hutton conducting eleven cash transactions each of less than $10,000.00 in value which were structured so as to avoid the reporting conditions of the Financial Transaction Reporting legislation. There were eleven transactions on or about 7 April 2000 whereby a total amount of cash, amounting to $99,395 Australian dollars, was sent to Bank Leumi in Israel. The account was in the name of Tmuna. Mrs Ronen was the beneficiary of bank accounts in Israel in this name. 68 I am satisfied beyond reasonable doubt that Mrs Ronen took the cash from the retail shops she operated. It was undeclared and un-banked cash. She arranged to have it collected by Helena Rule, the wife of Anthony Hutton. Ms Rule was a practising chartered accountant who maintained written records of transactions of this kind, dealt with the clients and physically collected the money. On the particular occasion of 7 April 2000, by arrangement, Ms Rule went to the On Fovo outlet in Surry Hills and collected the cash monies. She took these to her home. Later Mr Hutton went to a number of different banks in the eastern suburbs and deposited the cash monies in structured amounts so that they could be forwarded to Mrs Ronen's account in Israel. 69 As this brief recitation of the facts demonstrates, the particular circumstances of this offence were part and parcel of the implementation of the conspiracy between Mrs Ronen and her two sons. Although separate evidence of this incident was not led at the trial of the offenders, it is clear that the incident fell into the category of a number of the overt but uncharged acts that I have found occurred in relation to the period between April 2000 and February 2001. 70 The maximum penalty for an offence under s 31(1) of the Financial Transactions Report Act is five years imprisonment and/or a pecuniary penalty of $33,000.00, 71 The Crown has submitted that a custodial sentence should be imposed for this offence because of its circumstances, the lack of any explanation by the offender and the need for general deterrence in matters of this nature. Anthony Hutton was charged with 21 charges which involved 299 occasions when he was involved in the transfer of some $2.7 million overseas. One of those charges related to the offence to which Mrs Ronen has now pleaded guilty. In the ultimate Hutton was, on appeal, sentenced to imprisonment by way of partly cumulative and partly concurrent sentences for a period of three and a half years. A non-parole period of 18 months was fixed to date from 6 June 2003 and to expire on 5 December 2004. Helena Rule was charged with three counts under s 31(1) of the relevant legislation. She entered a plea to two counts and agreed to the third count being taken into account on a schedule under s 16(B)(A) of the Crimes Act 1914. She was sentenced to twelve months imprisonment to be released after six months. One of the counts to which Ms Rule entered a plea of guilty related to the transfers which had been undertaken by Anthony Hutton on behalf of the offender Mrs Ronen on 7 April 2000.

[20]

Ida Ronen 73 Ida Ronen is now 72 years of age. She was born on 4 December 1933. Physically she is not in particularly good health. As was obvious throughout the trial she has significant problems with knees, especially her right knee. She suffers from significant osteoporosis, lower back pain and has osteoarthritis of both knees. She also suffers from conjunctivitis and bilateral cataracts. In addition, she suffers from high blood pressure and controls this with medication. In addition Dr Mordecai, her general practitioner, has stated that she is now suffering from depression and anxiety. She is taking medication to help control the symptoms of these problems. It is clear that her physical and mental condition have deteriorated since she has been in prison. 74 Mrs Ronen was seen by Dr Roberts, a practicing psychiatrist, on 28 August 2005. He provided a report to the Court dated 31 August 2005 (Exhibit 4). I was invited to treat the history in this report on a limited basis namely, as relevant to the physical and mental situation of Mrs Ronen. Mrs Ronen confirmed to the psychiatrist some of the physical ailments which I have mentioned in connection with Dr Mordecai's report. She told Dr Roberts that she was feeling "hopeless very depressed and guilty". She cried and appeared considerably distressed throughout the interview. I should say that Mrs Ronen has also exhibited considerable distress during her appearances in Court both at the time of conviction and since. 75 The history she gave Dr Roberts involving her own personal and family background is consistent with other evidence given during the trial. Mrs Ronen is from Bulgaria. When she was about eight years of age, she and her family, along with other Jewish people, were expelled from Sophia following the Nazi invasion of Bulgaria. Some of her family went to the countryside where they managed to survive the war, although under conditions of significant deprivation. The family migrated to Israel in 1949. The offender had received a good level of schooling at a High School in Bulgaria before the Nazi occupation of the country. When she moved to Israel, she continued her education there, initially on a Kibbutz. She learnt textile design, she learnt how to cut and sew and became a factory manager looking after some 35 workers. She established clothing businesses in Israel involving retail outlets and manufacturing. 76 The offender was married for 30 years but the marriage was not a satisfactory one. The offender came to Australia in the early to mid-70's bringing with her, her two sons. At that stage her eldest son was about 17. It is apparent from the brief history she gave the psychiatrist and from the references that I have read that Mrs Ronen worked very hard in both Israel and Australia establishing her businesses. It is clear that, as well as being a successful business woman and someone who worked very hard in the businesses, she was a good mother to her sons, and a good grandmother to her grandchildren when they came along. Initially she was in partnership with a Mr Metchev but, as the years went by, she went on to establish her own business with her sons. This was the business of "Ronen Fashion". It is clear that the Dolina Enterprise has grown from these modest beginnings to a substantial business providing reasonably priced fashion goods to the major retailers throughout Australia. 77 Dr Roberts made the obvious point that Mrs Ronen's age and her physical and psychiatric difficulties make the experience of imprisonment for her more difficult than if those factors were not present. Her overall lack of resilience arising from her disabilities and the infirmities of age, it may be accepted, make prison experience more difficult for her than it would be for a younger woman in good health. Dr Roberts confirmed that Mrs Ronen suffers significant depression, agitation and confusion. She is receiving medication for these conditions. He recommends that she be referred to the Prison Psychiatric Services in the event of a custodial sentence of any length being imposed. 78 There was a considerable body of references placed before the Court relating to Mrs Ronen. These references attest to her qualities as a mother, grandmother and a loyal friend. In addition, she is praised for her charitable works particularly in relation to a number of Jewish organisations and especially in relation to the assistance she has provided to Bulgarian immigrants coming to Australia. She was described in one as an "angel of mercy". It appears that she has provided both practical and moral support for persons arriving in the country who may be lacking facility in the English language; and who lack financial well being and employment. 79 The testimonials speak as one in suggesting that Ida Ronen has demonstrated contrition for her offences. They point to her physical infirmities and her distressed mental state at the present time arising from her guilt over what she sees as the responsibility she bears to her two sons in relation to the offences. The hardship she is suffering in prison as a consequence of her age and infirmities is mentioned and stressed by a number of her referees.

[21]

Nitzan Ronen 80 The offender Nitzan Ronen is 47 years of age having been born on 31 December 1957. He has been twice married and his present wife, Somers Moore, is the daughter of Mr Henry Moore who has, since the incarceration of the male offenders, taken responsibility for the Dolina Group. He has four children aged six and a half, five, three and one. It seems all the children are having difficulties in coping with the fact that their father is in prison. It will be recalled that Mr Moore described Nitzan Ronen's incarceration as having a devastating effect on both him and his family. 81 Dr Roberts saw Mr Nitzan Ronen on 27 August 2005. He provided a report (Exhibit 3) which again I am invited to read for limited purposes related to the sentencing proceedings. Nitzan Ronen confirmed the family history described by Mrs Ronen to Dr Roberts and confirmed that his mother had worked very hard in business and that he too, had worked hard when he came into it after he left school. It appears that Nitzan Ronen after completing his Higher School Certificate commenced to study pharmacy at Sydney University. He had initially wished to study medicine but it didn't happen, one reason being that his English was not good. Soon thereafter he perceived an opportunity in the family business and commenced working in it. Nitzan Ronen admitted to Dr Roberts that he had done the wrong thing. He admitted his guilt and lamented the fact that he had not pleaded guilty as first advised. Not surprisingly, he described his present situation as being one in which he was depressed and angry. He told Dr Roberts that he deeply regretted his behaviour and its effect upon his children. 82 There are a number of references provided to the Court that attest to the generosity and benevolence of Mr Nitzan Ronen. He has supported a number of Jewish organisations and in particular provided financial and moral support for young people in difficulties especially teenagers. The picture created is of a philanthropic man with a strong feeling for his own family and for other families with difficulties. He is also depicted, as is undoubtedly the case, as a hard and industrious worker with considerable skill and experience in the clothing industry. A number of the references demonstrate that Nitzan Ronen regrets his actions in committing these offences and that he fully understands the ramifications to society stemming from the criminal activity in which he has engaged in. All these testimonials suggest that confidence may be reposed in the proposition that Nitzan Ronen will not offend again in relation to such matters. They confirm the impact incarceration has had on Nitzan Ronen's family.

[23]

General comments on subjective circumstances 87 I have in a relatively brief fashion summarised the subjective circumstances of each offender. Clearly enough Ida Ronen is experiencing the greatest level of difficulty arising from imprisonment. This is specifically related to her age and infirmity. Her two sons are in reasonably good health and are coping as best they can in an obviously difficult environment. 88 There is an obviously tragic aspect to the situation in which each of the offenders now finds himself or herself. Each offender is a person of previous unblemished good character. Each has worked very hard in the establishment and continuance of a highly successful business. Each offender is well regarded in the community especially in the Jewish community where they have practiced philanthropy at a high level. Each is regarded as an outstanding family member and is well regarded by friends and acquaintances in the business world and generally. Yet, each is imprisoned awaiting sentence for crimes of the most serious content. 89 The sentences which I must pronounce in relation to each offender will inevitably impact on their families. In the case of the two male offenders it will plainly impact upon their children and their wives. 90 Section 16A(2)(p) of the Crimes Act 1914 (Cth) requires the Court to consider the probable effects of any sentence would have upon the offenders' family or dependants. The Court of Criminal Appeal has, on a number of occasions, considered the sort of hardship that must be present before it can have an impact upon the sentence imposed. In R v Maslen & Shaw (1995) 79 A Crim R 199 Hunt CJ at CL at 209, stated that the hardship had to be sufficiently extreme, going beyond the sort of hardship which inevitably arise where a family is deprived of the breadwinner. See also Howie J in R v Hinton [2002] 134 A Crim R 286. 91 These authorities demonstrate that the question of whether the probable effect of the sentence upon a third party, family member or dependant will give rise to an exceptional case cannot be considered in isolation from the facts of the particular matter and the degree of criminality involved in the offence for which sentence is to be imposed. 92 Those considerations inevitably apply to the situation of the offenders here and their families. There are no circumstances identified by the evidence which could be described as "exceptional" for the purposes of the principles stated by Howie J in Hinton's case.

[24]

Contrition and reparation 93 It is necessary that I next consider whether contrition has been shown by the offenders. In this context I will also examine the issue of reparation. 94 In general terms I consider that contrition and remorse has been demonstrated by each of the offenders but it is necessary to say that it has occurred at a very late stage. I accept that following the jury verdicts and subsequent to the imprisonment of the offenders, the realisation of their wrongdoing came home to each offender in a markedly emphatic manner. Many of the references to which I have referred make it plain that remorse and contrition have now been expressed by each of the offenders. This no doubt is attributable, at least in part to, the difficult circumstances in which each offender now finds himself or herself. A practical demonstration of contrition I think might properly be seen in the successful mediation of the dispute between the Income Tax Commissioner and the offenders and the Terms of Settlement which were approved on 26 September 2005. It must be conceded, however, that the expressions of remorse and the practical demonstration of their existence recognised by the Terms of Settlement have come, as I have said, very late in the piece. 95 I make it clear that the offenders were perfectly entitled to plead not guilty to the charges in the indictment. Each was perfectly entitled to take that course and to conduct a vigorous defence in relation to the charges. This cannot of course lead to any increase in the sentence that should be imposed upon them. It has the consequence however, that none of the offenders is entitled to the discount that, for example, an early plea of guilty would have otherwise earned. The only relevance of these matters for the present exercise is whether the offenders are entitled to some leniency arising out of the fact that contrition has now been demonstrated. In my view the presence of contrition, although it has occurred late in the piece, is a matter that can and should be taken into account in favour of each offender. It may be taken into account in assessing their likelihood of re-offending, and their prospects of rehabilitation. 96 In the same way, I take into account, in general terms, the Terms of Settlement reached between the offenders and the Commissioner of Taxation. This extends to a recognition of the amounts which have been repaid to the Commissioner. Significantly it includes a recognition of the amount of the penalty which has been agreed to be paid namely, $7,180,508.00. The Crown, however, asks the Court to note, particularly in relation to the Terms of Settlement, that substantial monies remain yet to be paid; and that there is no evidence from which I can infer, on the probabilities, that these payments will in fact be made. Ms Fullerton SC urged the Court, however, to find that, in terms of assessing remorse and contrition, the intention expressed in the Terms of Settlement is that all these monies are to be repaid. Senior counsel suggested there was every incentive for the offenders to honour the Terms of Settlement even though she accepted that in a real sense, time alone will prove whether the offenders have the ability to pay all the amounts required under the agreement. 97 I should add that there are a number of well-established principles that are operative in relation to the manner in which the Court may take these matters into account. I shall now come to deal with those before assessing the nature and structure of the sentences to be imposed. There is of course also a need to bear in mind a number of considerations to which attention must be paid in the present matter having regard to the provisions of the Commonwealth Crimes Act.

[25]

General principles in relation to revenue fraud 98 The principles of general application in connection with sentencing for revenue fraud offences have been recently and conveniently set out by Sully J in R v O'Connor [2002] 129 A Crim R 505 at 537. In that summary his Honour referred to the manner in which the relevant principles had been summarised in the earlier judgment of McClellan J in R v Cappadona [2001] 122 A Crim R 52. This summary in turn reflected the content of the Court of Criminal Appeal's decision in Hamman (CCA (NSW) unreported, 1 December 1998). 99 Ms Fullerton SC does not quarrel with the basic proposition underlying the general principles referred to in each of these decisions. Senior counsel accepts that, consistently with established principle, the Court will give predominant consideration to general deterrence in the sentences that are to be imposed on each of the offenders. There are however, a number of refinements to the propositions relevant to the specific circumstances of this case particularly in relation to the character and unblemished record of the offenders. Moreover, in one respect, senior counsel takes issue with one of the principles mentioned in the decisions of the Court of Criminal Appeal. This is the proposition appearing in the judgment of Sheller JA at page 17 in Hamman. There his Honour said: - "General deterrence is a predominant consideration when sentencing for offences of defrauding the revenue. Appeal Courts have discussed and emphasised the seriousness of frauds committed to the detriment of the public revenue. Inevitably, the Australian system of tax collection depends upon the honesty of taxpayers and, in particular, upon their fully declaring in each year of income what their gross income is. In a free society such as Australia the tax collector cannot check that every taxpayer has done so. The effect of dishonesty and non-disclosure of income increases the burden on all other taxpayers and particularly those who have truly disclosed their gross income. This demonstrates the serious nature of the offences charged against the respondent and the importance when punishing such offences to put in the forefront of the principles to be applied that of general deterrence. While undoubtedly it is a matter to be taken into account, it is, in my opinion of small account, that when caught out the offender pays the tax due and additional tax by way of penalty for which the offender is liable to a greater or lesser extent, according to the Commissioner's discretion, whatever the reason for non-disclosure. (Emphasis added) Past integrity and good character, devotion to family and work and contributions to the community, impeccable though they have been, carry little weight against the confession by a plea of guilty that over a period of three years which ended only when the respondent was caught out, the respondent knowingly on three occasions understated his income by very large amounts for his own benefit or advantage". 100 Ms Fullerton SC began her submissions by noting that the evidence on sentence enables the Court to calculate the loss to the revenue in this matter with greater certainty as this figure was the basis upon which fresh assessments were raised by the Commissioner of Taxation. That figure has been calculated to be $12.77 million (approximately although of course it does not cover the entire period of the conspiracy). In this context, the evidence of Ms Platford to which I have made earlier reference demonstrates that each of the offenders and On Fovo Pty Limited had entered into Terms of Settlement with the Taxation Commissioner which provide for the payment of a substantial amount of primary tax. Moreover, Ms Fullerton SC argues that each of the offenders has demonstrated contrition by the action they took in terminating the services of their previous legal representatives and thereafter instructing Ms Platford of Gilbert and Tobin Solicitors to settle the civil proceedings commenced in the Federal Court by their previous lawyers. The course of events which has followed, it is argued, reflects an acknowledgement that the conduct of the offenders in failing to properly return income received by them has rendered them liable as individuals to pay penalties and interest. The Court is urged to see their willingness to enter into a binding obligation to meet this impost as manifest evidence of their contrition. It is not to be seen merely as "an attitude redolent of efforts on the part of the defaulting rich to purchase immunity from proper punishment". The hardship to Mrs Ronen in selling her home unit at Darling Point has been pointed to in this regard. 101 In her final submissions, Ms Fullerton SC submitted that cases relied upon by the Crown (suggesting that tax and penalties paid once the offender is caught out are of little moment in sentencing for revenue fraud) were cases that all predated comments by the High Court in Rich & Anor v Australian Securities and Investment Commission {2004] 209 ALR 271. In that case, the punitive nature of civil penalties and their commonality with sentencing principles were discussed by the High Court. Reliance was also placed upon the comments of the High Court in Gray v Motor Accident Commission (1998) 196 CLR at [16]: "The increasing frequency with which civil penalty provisions are enacted, the provisions made for criminal injuries compensation, the provisions now made in some jurisdictions for the judge in a criminal trial to order restitution or compensation to a person suffering loss or damage (including pain and suffering) as a result of an offence deny the existence of "a sharp cleavage" between the criminal and the civil law." 102 Ms Fullerton SC submitted that these observations, together with the fundamental principle that a person not be punished twice for the same offence, dictate that substantial weight be given in the calculation of sentence to the fact that the Commissioner of Taxation has imposed penalties under s 226J of the Income Tax Assessment Act 1936 on the basis that the offenders intentionally disregarding the law and had been guilty of deliberate evasion of income tax. As indicated above the penalties imposed amounted to $7,180,508.00. 103 As a sentencing judge at first instance I am bound by the recent and authoritative statements of the New South Wales Court of Criminal Appeal. There are three points that I would make however in relation to the matter generally. The first is that, in the Hamman case where the statement of principle was enunciated, the taxpayer had undeclared income for three years aggregating $334,000.00. By the time of sentence, the taxpayer had paid his outstanding taxes and penalties which may have been as high as $260,000.00 (BC 9807407 at 24). Neither the amount of the undeclared income nor the amount of the penalty were in the same league as the amounts in the present matter. 104 Notwithstanding this factual difference, it needs secondly to be recalled that the particular statement of principle was to the effect that general deterrence is a predominant consideration when sentencing for offences of defrauding the revenue. It was in that context that Shellar JA said that it was, in his opinion, of small account that, when he had been caught out, the offender paid the tax due and additional tax by way of penalty. There is not, in my respectful opinion, any statement in the decisions of the High Court relied upon by Ms Fullerton SC that undercuts or devalues the principle that in this type of offence general deterrence remains a predominant consideration when sentencing. 105 Thirdly, in Hamman, Shellar JA said that undoubtedly it was a matter to be taken into account, namely that the tax had been paid including additional tax by way of penalty. None of the decisions relied upon by the Crown suggest that this matter should not be taken into account. In the present matter I propose to take it into account and I note, as I must, that the amount of the penalty is very substantial indeed. Notwithstanding this large penalty, it is my view that general deterrence remains an important and a predominant consideration in matters of this kind. As I remarked in Rivkin [2003] NSWSC 447 at [44], admittedly in a different context, it is an especially important matter in crimes such as "white collar crimes" because of the need to mark out to others who might be minded to breach their obligations that such considerations will generally merit, in appropriate cases, condign punishment. 106 One reason why this is so is because crimes of this type are particularly hard to detect. In addition to my own views on that matter, there are the view to which I have referred to earlier and which are set out in full in O'Connor and Cappadona. Moreover, it is the imposition of a term of imprisonment that bites, as the Crown submitted, in terms of general deterrence. If potential offenders, especially the very wealthy, thought they could buy their way out of gaol by the negotiation of large monetary penalties, the primary deterrent and denunciatory effect would be greatly watered down. 107 It is also important to bear in mind that the payment of a large amount of tax on undeclared income and additional penalties, even where they be for a large amount of money, are not matters which mitigate in relation to the crime itself. This was, it must be said, a deliberate crime pursued over many years and involved a calculated and sustained dishonesty (Saffron v R (unreported Court of Criminal Appeal 28 October 1988). 108 Payment of the tax and penalties may also be taken into account as recognition of contrition on the part of the offenders although, as I have stated earlier in these remarks on sentence that recognition and allowance for contrition is a factor that is not as powerful as it might otherwise have been given the belated quality it possesses. 109 The final matter advocated by Ms Fullerton related to the extent to which the Court may consider the character and unblemished record of each of the offenders. Ms Fullerton has argued that, although their individual good character will not be afforded the weight it might attract in a different context, the Court would nevertheless be in error to ignore it altogether (Ryan v R [2001] 206 CLR 267). I accept that submission and no contrary submission has been made by the Crown. Ms Fullerton argued on behalf of the offenders that an element of this consideration is that the nature of the agreement by which the offenders defrauded the Commonwealth was in essence a most unsophisticated fraud involving no interface with financial institutions or deception of the wider community. I have already addressed this submission in part at an earlier point of these remarks on sentence. There was however deception involved in relation to the financial employees in Dolina and involving the external accountants. There was also a considerable deception in relation to the scheme implemented to avoid the flow on problem likely to arise from the introduction of the GST. Nevertheless, it is proper to take into account that the offenders come before the Court without any prior convictions or offences and that they have hitherto been regarded as persons of unblemished character and excellence in the community. It is proper to take that matter into account although, as the authorities have observed on a number of occasions, white-collar crimes and frauds of this kind are frequently committed by persons of previous good character and persons who have no previous convictions (R v El Rashid per Gleeson CJ at page 3 NSWCCA unreported 7 April 1995).

[26]

The sentences to be imposed 110 What then are the appropriate sentences to be imposed? At the outset there is a need for me to state that I am satisfied that no other sentence than imprisonment is appropriate in all the circumstances of the case in relation to each of the offences involving the offenders. This observation extends to the structuring charge to which Mrs Ronen has pleaded guilty. (s 17A of the Crimes Act 1914 (Cth)). 111 Secondly, the Court is required to consider the extent to which the sentence imposed should be directed towards the need for personal deterrence. There is, as well, an obligation to consider the prospects of rehabilitation. For the reasons that I have earlier outlined I am satisfied there is no need for personal deterrence. It is unlikely that any of the offenders will offend again. The prospects of the rehabilitation of each are at a high level. 112 Mrs Ronen is to be sentenced for three separate offences. Her sons are to be sentenced for two offences. In those circumstances it is the duty of the sentencing court to fix an appropriate sentence for each offence and then consider questions of cumulation or concurrence, as well as questions of totality. (Pearce v The Queen (1998) 194 CLR 610 at 624). 113 I shall first deal with the situation of the two male offenders. 114 In relation to the first charge in the indictment the appropriate sentence, in my view, is one of imprisonment for a term of 5 years. The sentence is to commence on 28 January 2005. In relation to the second charge, it is the more serious of the two for the reasons that I have earlier expressed. In my view, it warrants a sentence of imprisonment for a term of six and a half years. I have concluded that a degree of accumulation is necessary in relation to the sentences because I consider that the criminality in the second offence cannot comprehend the total of the criminality in the two offences. The sentence for the second offence should commence on 28 January 2007 and expire on 27 January 2013. This means that the accumulated sentences will in total constitute a term of imprisonment of eight and a half years from 28 January 2005 to the date I have mentioned in 2013. The structure of these sentences is intended to reflect the totality of the criminality in the two offences. 115 Section 19AB of the Crimes Act 1914 (Cth) requires that the Court in these circumstances fix a single non-parole period or make a recognizance release order. In my view it is appropriate to fix a single non-parole period. The purpose of the non-parole period is to provide a mitigation of the punishment of the offenders in favour of rehabilitation through conditional freedom. The non-parole period however, must incorporate all the relevant sentencing principles including denunciation and deterrence. The normal range for a non-parole period is sixty to sixty six per cent of the total sentence (R v Bernier (1998) 102 A Crim R 44) although in certain cases a higher non-parole period might be justified. In the present matter, in the case of the two male offenders, I consider that a non-parole period of five years and six months should apply. This period will commence on 28 January 2005 and expire on 27 July 2010. I should add that in selecting this figure I am conscious of the fact that it is towards the top end of the normal range. In my opinion however, any lesser term for the non-parole period would not adequately address the principles I have mentioned. 116 In the case of Mrs Ronen it is necessary to first consider the structuring charge. Mrs Ronen pleaded guilty to that offence and this must be taken in account. I will reduce by one month the penalty that I consider is warranted for this offence so that the penalty to be imposed for the structuring charge is imprisonment for a period of eight months. That term of imprisonment should commence on 28 January 2005 and expire on 27 September 2005. In relation to the conspiracy charges in the indictment I consider that, as with her sons, the appropriate sentence for the first charge in the indictment is imprisonment for a term of five years. So far as the structuring charge is concerned I think it is entirely comprehended in Mrs Ronen's involvement in the continuing conspiracy between 1995 and 2001. The structuring charge is but one instance of the implementation of that conspiracy and hence will be reflected by its being dealt with as an entirely concurrent term with the sentences to be imposed for the conspiracy charges. 117 For this reason I conclude that Mrs Ronen's sentence of imprisonment for the first conspiracy charge should commence on 28 January 2005. In relation to the second charge it should be a sentence of imprisonment for a term of six and a half years. The sentence should commence, for the reasons I have earlier indicated, on 28 January 2007 and expire on 27 July 2013. 118 In relation to Mrs Ronen I consider that I should set a single non-parole period but that it should differ from the period specified for Nitzan and Izhar Ronen. This is solely because of her age, her infirmity and the fact that her physical and mental condition have plainly deteriorated while she has been in custody. In my view it is appropriate to determine a non-parole period of four years and six months. This should commence on 28 January 2005 and expire on 27 July 2009. 119 Ida Ronen, in relation to the charge to which you have pleaded guilty under the Financial Transaction Reporting Act you are convicted and I sentence you to a term of imprisonment of eight months commencing on 28 January 2005 and which will have expired on 27 September 2005.

Regina v Ronen & Ors

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