Xiao v R

Background to the offences

1. The summary below is taken from the agreed statement of facts tendered at the hearing.
2. The applicant at the time of the offences was the Managing Director of Hanlong Mining Investment Pty Ltd (Hanlong Mining), a subsidiary of a Chinese corporation, Sichuan Hanlong Group Co Ltd (Sichuan Hanlong). He was appointed Managing Director in June 2009. In September 2010 he was appointed as Chief Executive Officer of another Australian subsidiary of Sichuan Hanlong, Hanlong Resources Ltd (Hanlong Resources). The principal activity of Hanlong Mining was to seek overseas investment opportunities in the mining industry on behalf of its parent company.
3. At the time of the offences the applicant had experience in trading in various financial products including shares and contracts for difference (CFDs). The manner in which CFDs operated was not explained in the Agreed Statement of Facts but it appears to be common ground that they are derivatives mirroring the performance of (in this case) shares. In essence a CFD is a contract between a buyer and a seller to exchange the current value of the share and its value at the end of the contract. If the difference is positive, the seller pays the buyer, if negative, the buyer pays the seller. The advantage (or disadvantage) is it allows persons to speculate on price movements without needing to purchase the underlying asset. This could lead to significant profits on a relatively small outlay. Conversely, it can lead to significant losses: see also the explanation of CFDs in Hartman v R [2011] NSWCCA 261 at [15]-[16].
4. The applicant's role as Managing Director of Hanlong Mining was to identify possible opportunities for investment in the mining industry for Sichuan Hanlong. The employees of Hanlong Mining received instructions from the applicant. In particular, Bo Shi Zhu (Mr Zhu) reported to him, although on some occasions he reported directly to the Vice-President of Sichuan Hanlong, Mr Huanjun Kang (Mr Kang) and its Chairperson, Mr Han Liu (Mr Liu) on the authorisation of the applicant.

The Procurement Offence

1. The procurement offence involved trading of CFDs in Bannerman and CFDs and shares in Sundance.

Bannerman

1. Sometime prior to June 2010, a decision was made that the Sichuan Hanlong Group acquire an interest in an Australian-based uranium mining company. Bannerman was such a company. Between September 2010 and July 2011, Mr Zhu with some consultation with the applicant, prepared or assisted in the preparation of an investment strategy with respect to Bannerman.
2. In August 2010, the applicant and Mr Zhu met with the Chief Executive Officer and Chief Financial Officer of Bannerman to discuss a joint venture but the negotiations did not proceed. Further discussions took place between representatives of the companies relating to a friendly takeover of Bannerman, but the negotiations failed.
3. On about 12 or 13 March 2011, the share price of Bannerman fell dramatically, following the disaster at the Fukushima Nuclear Power Plant. Further negotiations concerning a proposed takeover eventuated, culminating in Mr Peter Freeman, an advisor to Bannerman, telephoning Mr Zhu whilst he was at Sichuan Hanlong's office in Chengdu, China, with Mr Liu and the applicant, suggesting if Hanlong Mining put a proposal to Bannerman of close to a dollar per share, it would be seriously considered.
4. On 20 April 2011, the Board of Sichuan Hanlong met in Chengdu. The applicant and Mr Zhu were present at that meeting. Bannerman was identified as an immediate takeover target.
5. On around 27 June 2011, Hanlong Mining's corporate advisor, Gresham, recommended to Mr Peter Mansell, the Chairperson of Hanlong Mining, a strategy to bid $0.612 for 70% of Bannerman's shares. The advice was forwarded to Mr Zhu who discussed it with the applicant.
6. The applicant claimed he was told by Mr Liu (the Chairperson of Sichuan Hanlong) that he, Mr Liu, was keen to take over Bannerman. On 1 July 2011 there was a meeting between the applicant, Mr Zhu, Mr Bo Yang (Mr Yang), the Chief Financial Officer of Hanlong Mining, and Mr Nelson Feng Chen (Mr Chen), the Chief Operating Officer. A conditional offer of $0.612 per share for 70% of the company was agreed upon, the applicant expressing the view he thought Bannerman was worth 80 cents per share.
7. The applicant claimed that on 4 July 2011, he received further instructions from Mr Liu, and then told Mr Zhu to amend the proposal to a 100% acquisition. A conditional proposal offering to acquire 100% of Bannerman at $0.612 per share through a scheme of arrangement was forwarded to Bannerman on 9 July 2011.

Sundance

1. Sundance is an Australian-based international iron ore company which by August 2010 was a formal investment target of Hanlong Mining. In September 2010, Hanlong Mining engaged Bank of America Merrill Lynch (Merrill Lynch) to advise on how best to achieve the acquisition of 100% of the shares in Sundance.
2. From September 2010, the applicant and Mr Zhu worked with Mr David Wood of Merrill Lynch towards the acquisition. An attempt to acquire a position in Sundance was initially unsuccessful, although between 23 February and 20 April 2010, Hanlong Metals Limited, a subsidiary of Hanlong Resources, had purchased call options in Sundance, giving it an entitlement to 3.8% of the issued capital.
3. On 17 March 2011, following further protracted negotiations, Hanlong Mining acquired 16.1% of the issued capital of Sundance, from an entity described as the Talbot Group. The price was $0.44 per share.
4. On 20 April 2011, the applicant and Mr Zhu gave a presentation concerning Sundance to the board of Sichuan Hanlong. Although no final decision was reached, the preferred option which emerged following the meeting was a full takeover of Sundance.
5. On 16 May 2011, Sundance and Hanlong Mining entered into a confidentiality agreement, which enabled Hanlong Mining to conduct due diligence on Sundance.
6. About early to mid-June 2011, Mr Zhu took responsibility for the Sundance due diligence. On 11 July 2011, the applicant and Mr Zhu attended a meeting with Mr Liu, Mr Kang and two junior employees of Sichuan Hanlong. Following the meeting Mr Liu instructed the applicant and Mr Zhu to draft a proposal letter to Sundance for a 100% takeover at 50 cents per share.
7. On 14 July 2011, Mr Zhu drafted a conditional proposal, and on the 15 July 2011, discussed it with the applicant and sent it to Mr Liu for approval. That evening the conditional proposal was sent to Sundance offering to acquire 100% of the company at 50 cents per share through a scheme of arrangement. The proposal was reported to the ASX on 18 July 2011.
8. Between 11 and 15 July 2011, the share price of Sundance ranged between $0.35 and $0.405 per share. When trading resumed following the announcement on 18 July 2011, the opening price was $0.50 per share reaching an intra-day high of $0.515 and closing at $0.49 per share.

The Joint Commission Offence

1. In about June or July 2010 the applicant told Mr Zhu that Mr Liu was supportive of officers at Hanlong Mining co-investing in securities of companies in which Hanlong Mining was considering acquiring in interest.
2. Around December 2010 the applicant reached an agreement with Mr Zhu, Mr Chen and Mr Yang to invest in a joint fund for profit. That month, Mr Yang on the instructions of the applicant, set up a company in Hong Kong called Golden Stone Partners Limited (Golden Stone). On 6 January 2011 a wholly owned subsidiary, Wingatta Pty Limited (Wingatta), was incorporated in Australia. Its sole shareholder was Golden Stone and the director was a junior employee of Hanlong Mining.
3. On 13 January 2011 Mr Zhu caused Wingatta to set up a share trading account and CFD trading account (Wingatta share trading accounts).
4. During January 2011, the following funds were transferred to Golden Stone and then to Wingatta, from companies incorporated in the British Virgin Islands with bank accounts in Hong Kong, individually set up and controlled by each of the offender, Mr Zhu, Mr Yang, and Mr Chen: 1. A$700,000 from the applicant; 2. A$300,000 from Mr Zhu; 3. A$300,000 from Mr Yang; and 4. A$100,000 from Mr Chen.
5. On 15 March 2011, the applicant invested a further $100,000 in Wingatta.
6. The co-investors agreed that the distribution of profits from the Wingatta investment would be according to the proportion of the initial investment, the applicant 53.3%, Mr Zhu 20%, Mr Yang 20% and Mr Chen 6.7%. It was agreed that Mr Zhu would be responsible for all investment decisions.
7. Between January 2011 and 30 June 2011, Wingatta incurred losses of approximately $1.2 million dollars on its investments.
8. Shortly after the meeting on 1 July 2011, to which we have referred to in [18] above, the applicant, Mr Zhu, Mr Chen and Mr Yang discussed the losses incurred by Wingatta and Mr Zhu's investment decisions were criticised. Mr Yang told Mr Zhu he had to make up the lost money. The applicant and Mr Zhu agreed that since Hanlong Mining would soon submit a takeover offer for Bannerman, they could use that as an opportunity to get the money back. It was also agreed that since there were insufficient funds in Wingatta, Mr Yang should contact Sichuan Hanlong to obtain a loan of $1,000,000 from Hanlong Mining, to enable Wingatta to acquire Bannerman financial products. Mr Yang arranged for a loan of $1,000,000 to be transferred from a related entity of Hanlong Mining to Wingatta. It was recorded as a loan to Wingatta in the books of Hanlong Mining.

The Gold Pattern Offence

1. On 20 December 2010, Mr Luo, an employee of Hanlong Resources in Hong Kong, informed the applicant of details of a bank account in the name of Gold Pattern International Ltd (Gold Pattern) with Hong Kong Shanghai Banking Corporation (HSBC). On 7 February 2011, a trading account in the name of Gold Pattern was opened with IG Asia. The agreed facts record that the applicant was closely associated with Gold Pattern, the Gold Pattern HSBC bank account and the Gold Pattern trading account.
2. Between 1 and 8 July 2011, there were 37 separate orders on the Gold Pattern trading account to acquire 1,367,327 Bannerman CFDs at prices reflecting between $0.285 and $0.375 per share, for a total investment outlay of $282,034 (reflecting an underlying leveraged exposure of $424,061). On 8 July 2011, there were two orders disposing of 100,000 CFDs at a price reflecting $0.385 per share. The gross profit was $9,950.
3. On 11 July 2011, after the takeover announcement, the remaining CFDs were disposed of by 18 separate transactions, at prices reflecting between $0.475 and $0.51 per share. The underlying exposure on these remaining CFDs had increased from $395,511 to $591,708, resulting in a gross profit of $196,196.19. Thus the total gross profit was $206,146.
4. Although the agreed facts do not expressly say so, it is evident from the admission of the offence that the applicant procured the Gold Pattern transactions.

Subsequent Events

1. On 21 July 2011, ASIC commenced an investigation into the trading. On 5 September 2011, ASIC obtained ex parte orders preventing the applicant from leaving the country.
2. In an interview with ASIC the applicant denied he controlled the Hu trading account.
3. On 17 November 2011, the Supreme Court made orders permitting the applicant to travel to China to complete a doctoral thesis exam at Wuhan University of Technology. He was required to return by 26 November 2011. In breach of the order, the applicant failed to return, informing ASIC he was suffering from high blood pressure as a result of failing his doctoral thesis, which prevented him from taking long flights. Subsequent enquiries by ASIC revealed that he had not attended the university to complete his thesis, and that in 2012 he travelled on a number of international flights.
4. ASIC also ascertained that in 2012 the applicant changed his name to Jiayi Xiao and obtained employment under that name as Managing Director of a financial services firm in Hong Kong.
5. In July 2012, Ms Hu sent her son to live with her parents in Harbin, China. On 22 June 2013, she divorced the applicant, had her passport returned and left for China.
6. Proceedings were commenced against the applicant on 1 November 2013. On 12 January 2014, the applicant was arrested in Hong Kong and held in custody from that date. Following a contested extradition hearing, he was extradited to Australia. He arrived in Australia on 10 October 2014 and has remained in custody since his arrival.

The Subjective Circumstances

1. It is convenient to deal with the applicant's subjective circumstances when dealing with the reasoning of the sentencing judge.

The Sentencing Judgment

1. The sentencing judge summarised the facts surrounding the offences and the events which occurred subsequently, and noted the maximum penalty of ten years was the highest available in the Corporations Act, which he stated was an indication of how seriously the legislature treats such offence. He also noted that the maximum penalty had been recently doubled from five to ten years. He also emphasised that the offence was not a victimless one, having the capacity not only to undermine the integrity of the market, but also give rise to a lack of confidence in the commercial world generally. He noted that the amounts involved and the profits obtained in the present case were substantial.
2. His Honour stated that the objective gravity of the offences could be determined by reference to the applicant's position as Managing Director of Hanlong Mining, the steps he took to disguise the transactions, the amounts invested and the anticipated gain. In that context the sentencing judge noted that the applicant's role included direct involvement in the takeover offers. He said the fact that he was aware that he was improperly using highly sensitive and confidential information for his own personal gain was a matter of particular importance in assessing the objective gravity of the offences. It may be said that the use of price sensitive information, being an element of the offence, is common to all insider trading cases. However the sentencing judge emphasised that the breach of trust that occurred, in the present case, elevated the objective gravity to a very high level.
3. The sentencing judge noted that profit was a relevant matter to be taken into account in assessing the seriousness of the offence, but the better indication of criminality was the size of the transactions, best assessed by the amount of money invested or placed at risk.
4. The sentencing judge noted, referring to a decision of the Victorian Court of Appeal in Kamay v The Queen (2015) 47 VR 475; [2015] VSCA 296, that profit will loom large in the sentencing exercise, where it is a result of relatively small investments in highly leveraged financial products in order to obtain disproportionally large profits.
5. The sentencing judge stated that the circumstances in which the profits were made was a relevant factor. He stated the knowledge of the imminent takeover offers increased the objective seriousness of the offence.

The Grounds of Appeal

1. The applicant relied on the following grounds of appeal: Ground 1: The learned sentencing judge erred in his assessment of the objective seriousness of the offences. In particular, his Honour did so by: 1. finding that the offending conduct was "carefully planned and premeditated"; 2. finding that the applicant attempted to "conceal his involvement in procuring illegal trades", by "utilising various accounts as a form of disguise"; 3. the manner in which the use of the loan to finance the trading was taken into account; 4. in respect of count 2, finding that the offending was more serious because it involved "joint commission" liability; 5. finding that the seriousness of count 2 was elevated because it was "a serious and continuing disregard… of the law" and of the applicant's "fiduciary and other trust obligations… aggravated by the extent to which he was the dominant party"; 6. having multiple regard to overlapping features of the offending. Ground 2: The learned sentencing judge erred by having additional regard to the following matters as "aggravating" features of the offending: 1. the applicant's "attempts to conceal his involvement in procuring illegal trades"; and 2. the use of the loan to fund the Wingatta offending. Ground 3: 1. The learned sentencing judge erred by declining to take the utilitarian value or benefit of the applicant's guilty pleas into account, notwithstanding that the applicant was being sentenced for federal offences. 2. The reduction to the applicant's sentences by reason of his guilty pleas was inadequate. Ground 4: The learned sentencing judge erred by not taking into account evidence the applicant would experience more onerous custody by reason of the fact that he is a foreign national. Ground 5: The learned sentencing judge erred by not sentencing the applicant in accordance with s 19AB(1) of the Crimes Act 1914. Ground 6: The sentences imposed on the applicant are manifestly excessive. Ground 7: The applicant has a legitimate sense of grievance by reason of the sentence imposed upon his co-offender Bo Shi Zhu for the "Hanlong Mining Offending".

The Relevant Legislation

1. Before considering the parties' submissions, it is convenient to set out the relevant provisions of the Crimes Act concerning the sentencing of federal offenders. "16A Matters to which court to have regard when passing sentence etc. - federal offences (1) In determining the sentence to be passed, or the order to be made, in respect of any person for a federal offence, a court must impose a sentence or make an order that is of a severity appropriate in all the circumstances of the offence. (2) In addition to any other matters, the court must take into account such of the following matters as are relevant and known to the court: (a) the nature and circumstances of the offence; (b) other offences (if any) that are required or permitted to be taken into account; (c) if the offence forms part of a course of conduct consisting of a series of criminal acts of the same or a similar character - that course of conduct; (d) the personal circumstances of any victim of the offence; (e) any injury, loss or damage resulting from the offence; (ea) if an individual who is a victim of the offence has suffered harm as a result of an offence - any victim impact statement for the victim; (f) the degree to which the person has shown contrition for the offence: (i) by taking action to make reparation for any injury, loss or damage resulting from the offence; or (ii) in any other manner; (fa) the extent to which the person has failed to comply with: (i) any order under subsection 23CD(1) of the Federal Court of Australia Act 1976; or (ii) any obligation under a law of the Commonwealth; or (iii) any obligation under a law of the State or Territory applying under subsection 68(1) of the Judiciary Act 1903; about pre-trial disclosure, or ongoing disclosure, in proceedings relating to the offence; (g) if the person has pleaded guilty to the charge in respect of the offence - that fact; (h) the degree to which the person has co-operated with law enforcement agencies in the investigation of the offence or of other offences; (j) the deterrent effect that any sentence or order under consideration may have on the person; (ja) the deterrent effect that any sentence or order under consideration may have on other persons; (k) the need to ensure that the person is adequately punished for the offence; (m) the character, antecedents, age, means and physical or mental condition of the person; (n) the prospect of rehabilitation of the person; (p) the probable effect that any sentence or order under consideration would have on any of the person's family or dependants. … 19AB When court must fix non‑parole period (1) Subject to subsection (3), a court must fix a single non-parole period in respect of a federal sentence or federal sentences if: (a) a person is convicted of a federal offence, or of 2 or more federal offences at the same sitting; and (b) the court imposes the sentence or sentences on the person; and (c) either or both of the subparagraphs apply: (i) any of the sentences is a federal life sentence; (ii) the sentences, in the aggregate, exceed 3 years; and (d) when the court imposes the sentence, or sentences, the person is not already serving or subject to a federal sentence. (2) Subject to subsection (3), a court must fix a non-parole period in respect of all federal sentences a person is to serve or complete if; (a) while the person is in prison and is serving or subject to a federal sentence, the court imposes a further federal sentence on the person; and (b) the result is that the person is to serve or is to complete: (i) a federal life sentence; or (ii) federal sentences the unserved portions of which, in the aggregate, exceed 3 years; and (c) when the court imposes the further federal sentence, the person is not already subject to a non-parole period or recognizance release order in respect of a federal sentence. Non‑parole period not appropriate (3) A court may decline to fix a non‑parole period under this section if: (a) the court is satisfied that a non‑parole period is not appropriate, having regard to: (i) the nature and circumstances of the offence or offences; and (ii) the antecedents of the person; or (b) the person is expected to be serving a State or Territory sentence on the day after the end of the federal sentence, or the last to be served of the federal sentences, as reduced by any remissions or reductions under section 19AA. (4) If the court declines to fix a non‑parole period, the court must: (a) state its reasons for so declining; and (b) cause the reasons to be entered in the records of the court."

Grounds 1 and 2

1. Grounds 1 and 2 of the Grounds of Appeal assert errors by the sentencing judge in his assessment of the objective seriousness of the offence. Each of the grounds contains various subparagraphs, stating that in reaching his conclusion, he erred in making various findings and taking certain matters into account (Ground 1), and in having regard to certain matters as aggravating features of the offending (Ground 2).

Ground 1(a): The sentencing judge erred in finding that the offending conduct was "carefully planned and premeditated"

The applicant's submissions

1. The applicant referred to the fact that in a number of paragraphs in his sentencing judgment the sentencing judge made findings to the effect that the careful planning and premeditation increased the objective seriousness of the offences. He referred to the sentencing judge's statement that the profits made were a result of a "planned and strategic exploitation of his position of trust", that there was "significant planning of the enterprise", that the applicant's high level of confidence arose by reason of his "carefully planned and premeditated conduct" and the offences were thus "serious examples" of insider trading.
2. The applicant submitted he possessed the inside information in relation to Bannerman from about 1 July 2011 and, in relation to Sundance, from around 11 July 2011, although the proposal was not finalised until 15 July.
3. The applicant submitted that the trading took place immediately after the acquisition of the inside information and the products were disposed of in the following days. He submitted that the trading was a short term opportunistic play based on recently acquired information.
4. In these circumstances the applicant submitted the statement of facts did not support a reasonable finding that the offences were carefully planned or premeditated. He submitted pre-existing accounts were used to conduct the trades, there was no deliberate interspersing of gains and losses or unrelated trades to create a false impression and that there was no encryption. He submitted that in those circumstances the degree of planning did not go beyond that which is an inherent or common characteristic of insider trading offences. He submitted that while it was open to the sentencing judge to have regard to the value of the inside information and breach of trust, these matters did not provide a proper basis for an additional finding that the offences included a strategic or careful degree of planning.

The Crown's submissions

1. In dealing with Grounds 1 and 2, the Crown emphasised the assertion of insufficient or excessive weight attributed to an issue does not itself establish error. However, it was submitted the sentencing judge did not err in the weight he gave to each of the issues raised by Grounds 1 and 2.
2. The Crown submitted that although there was some difference of opinion in this court concerning challenges to findings of fact made by a sentencing judge, the orthodox approach was that set out in R v Kijurina [2017] NSWCCA 117 at [88], namely that the applicant must demonstrate the finding was not open on the evidence.
3. The Crown submitted that it was open to the sentencing judge to find that the offence was carefully planned and premeditated. The Crown submitted the agreed facts showed that the applicant had been closely involved in the takeover negotiations for over 11 months, knew precisely when the takeover offers would be made, agreed with his co-investors they should exploit the materiality and confidentiality of the inside information as a way of recouping the Wingatta losses, agreed to obtain a $1,000,000 loan for the purpose of the trading and to acquire leveraged CFDs to maximise profit based on the high quality information in his possession, decided to use accounts in the names of other persons and wager a large amount of money. The Crown pointed particularly to the meeting of 1 July 2011 as demonstrating the conduct could not be described as spontaneous, ill-considered or opportunistic, citing Moore v R [2016] NSWCCA 185 at [75] ("Moore v R").
4. The Crown submitted that the time period between the acquisition of the information and trading whilst finalising the takeover highlighted the degree of planning. It was submitted the applicant acted immediately because there was only a narrow window of opportunity. It was submitted that the intensity of his trading in those circumstances highlighted his understanding of the high quality of the inside information and the opportunity for immediate profits.
5. The Crown contended that the applicant did not set up separate accounts as he already had trading accounts which were not directly linked to his name. He submitted the fact that there was no interposition of trading gains or losses was irrelevant in the case of a true insider, whose trading in his or her own name would be inherently suspicious. The Crown submitted that no encryption was necessary as the co-investors were working in the same office.

Consideration

1. As Basten JA pointed out in Moore v R at [75], whether an offence was planned involves matters of degree, the comparison being between a level of premeditation of criminal conduct and a response which is spontaneous, ill-considered or opportunistic. The offences in the present case could not on any view be said to fall within the latter category.
2. The agreed facts show that shortly after the meeting of 1 July 2011, to which we have referred in [18] above, it was agreed between the co-investors that they would seek to recoup the Wingatta losses by utilising information about the Bannerman takeover offer, obtaining a loan for that purpose. The loan was obtained and CFDs were acquired, first by the applicant through his various trading accounts on 4 and 5 July, whilst the Wingatta trading took place between 6 and 8 July, the trading thus taking place in the week leading up to the announcement of the offer, and involving a considerable number of separate trades. Unsurprisingly, the applicant and Wingatta immediately realised their profit by disposing of the CFDs when the offer was announced on the ASX.
3. Similarly, the Sundance trades involved a considerable number of trades taking place shortly prior to the announcement of the takeover offer. Once again the profit was realised immediately after the offer was announced on the ASX. None of this trading could be described as spontaneous or opportunistic.
4. It is correct, as the applicant pointed out, that pre-existing accounts were used. However, the use of such accounts, none with a direct connection to the applicant, further supports the proposition that the offences were carefully planned. Contrary to the applicant's submission, in our opinion, planning of this nature goes well beyond what could be described as an inherent or common characteristic of insider trading offences.
5. This ground of appeal has not been made out.

Ground 1(b): The sentencing judge erred in finding that the applicant attempted to "conceal his involvement in procuring illegal trades" by "utilising various accounts as a form of disguise".

The applicant's submissions

1. The applicant submitted that he was clearly associated with each of the trading accounts. He submitted that the agreed facts showed that the Market Star account was held by the applicant's personal company, the Hu account was in the name of his wife, and the applicant was the lead investor in the joint investment fund which traded through the Wingatta account.
2. The applicant pointed out that it was not alleged the accounts were opened in contemplation of the offences, but rather were established well before the offending conduct. He pointed out it was not stated in the agreed facts that the trading accounts were used as a form of disguise or concealment. He submitted that inferences adverse to the applicant could only be drawn if proved beyond reasonable doubt, and other explanations could be excluded, such as taxation benefits that might result. He also submitted that the finding relied on the assumption that the accounts were perceived as a form of disguise, notwithstanding the applicant's clear connection with each of the account holders.

The Crown's submissions

1. The Crown identified the following matters as relevant to the issue: 1. the applicant as managing director of Hanlong Mining was a true insider; 2. the applicant was an experienced trader and operated a number of share and CFD trading accounts in his own name; 3. the applicant signed a confidentiality agreement with Sundance and discussed the need for one with Bannerman; and 4. the applicant knew that he possessed information about the takeover which was price sensitive and not generally available.
2. The Crown submitted that under these circumstances the decision to use trading accounts in the name of other people could only be an attempt at concealment.
3. The Crown submitted the trading accounts were not closely associated with the applicant in the sense that their connection with him was obvious. It was pointed out that the Hu account was in the name of the applicant's wife and the applicant denied any involvement with it. The Crown submitted that the Market Star and Wingatta accounts had no identifiable link to the applicant, pointing out the opaque corporate structures that are a feature of British Virgin Island companies.
4. The Crown submitted that the alternative tax benefit hypothesis raised by the applicant was not raised in the court below and was not the subject of any evidence.

Consideration

1. In R v O'Donoghue (1988) 34 A Crim R 397 ("O'Donoghue"), Hunt J (at 401) stated an appeal to this Court is not by way of rehearing and error will only be demonstrated if there is an error of law, or if there is no evidence to support a particular finding, or the evidence is all one way, or if the judge has misdirected himself or herself. Significantly, he stated the Court has no power to substitute its own findings for those of the sentencing judge, save in those very narrow circumstances. Carruthers and Wood JJ agreed with his Honour (at 406).
2. Although no written submissions were directed to this point, senior counsel for the applicant submitted that the decision in O'Donoghue has been generally followed in this Court: see, for example, AB v R [2014] NSWCCA 339 at [44]-[63] where the authorities were extensively reviewed by Simpson J (as her Honour then was) with whom Meagher JA and Wilson J agreed; R v Kijurina [2017] NSWCCA 117 at [88] per Price J, Hoeben CJ at CL and Lonergan J agreeing.
3. By contrast in Clarke v R [2015] NSWCCA 232 Basten JA stated that the reasoning in O'Donoghue should be approached with caution for a number of reasons: [2015] NSWCCA 232 at [25]-[33]. His Honour reached the following conclusion (at [34]): "[34] In some circumstances, factual findings will themselves involve an evaluative judgment, of a kind similar to the exercise of a discretionary power. No doubt the appellate court should exercise restraint in interfering with such findings. However, if the court is satisfied that the sentencing judge made a mistake with respect to a particular factual finding, which was material to the exercise of the discretionary power, the court should identify error and then enter upon its own consideration of the appropriate sentence."
4. Hamill J agreed with Basten JA whilst noting that what was said by his Honour was contrary to a substantial line of authority in this Court: at [133]-[134]. The third member of the bench, Garling J, took a contrary approach: at [97]-[99].
5. The applicant submitted the correct approach was that suggested by the Western Australian Court of Appeal in Greenland v State of Western Australia [2017] WASCA 83. In that case it was held that because the sentencing judge was required to be satisfied of the fact in question beyond reasonable doubt, the approach to be taken by an appellate court on a conviction appeal laid down in M v The Queen (1994) 181 CLR 487; [1994] HCA 63 at 492-495, namely, whether the finding was reasonably open, should be adopted in considering the findings made by the sentencing judge. That approach has been held to apply in an appeal in respect of a judge alone trial: see Filippou v The Queen (2015) 256 CLR 47; [2015] HCA 29 at [12].

Ground 2(a): Concealment of procurement as an aggravating factor

The applicant's submissions

1. The applicant submitted that the alleged concealment was not post-offence conduct, but was rather an aspect of the conduct that constituted the offences. He submitted the use of third parties was the act of procurement in each count and was an element of the offences and thus could not be taken into account as an aggravating factor.
2. The applicant further submitted that as "attempts of concealment" had already been taken into account as an aspect of objective seriousness or moral culpability, the sentencing judge erred in giving additional weight to those circumstances as an aggravating factor.

The Crown's submissions

1. The Crown accepted that trading through third party accounts was a physical element of the procuring offence but submitted that the use of "obscure corporate entities registered in the British Virgin Islands" and a family member using a different last name was a different, more serious form of procurement.
2. The Crown submitted that the attempt of concealment was in the sentencing judge's view relevant to a number of factors including an awareness of wrongdoing and the degree of planning involved. It follows, it was submitted, that the reference to an attempt of concealment, as an "aggravating feature of the case" was appropriate.

Consideration

1. The sentencing judge stated at [74] that the applicant's attempt to disguise his criminal activities by utilising various accounts was evidence of a guilty state of mind, stating (at 103) that the applicant knew his conduct was wrong, dishonest, and contrary to law. He also said his attempted concealment was an aggravating factor.
2. It does not seem to us that the sentencing judge was stating the offence was aggravated merely because of the procurement of third parties to do the trade. As the applicant pointed out, procurement is an element of the offence under s 1043A(1)(d) of the Corporations Act and could not be an "aggravating" factor.
3. What the sentencing judge said aggravated the offences, was the deliberate concealment by the applicant of his involvement in the trading. That fact goes beyond simply procuring the trades by a third party and was a matter the sentencing judge was entitled to take into account in evaluating the seriousness of the offence. He was entitled, if not bound, to take such matters into account in considering the nature and circumstances of the offence for the purpose of s 16A(2)(a) of the Crimes Act.
4. In considering what were described by the sentencing judge as aggravating features, it is important to bear in mind that unlike, for example, s 21A(2) and (3) of the Crimes (Sentencing Procedure) Act 1999 (NSW), s 16A of the Crimes Act does not specify a series of aggravating and mitigating factors. Rather, it prescribes a number of matters required to be taken into account in imposing a sentencing that is appropriate in all the circumstances of the case. Those factors, as was pointed out in Wong v R (2001) 207 CLR 584; [2001] HCA 64 at [71] ("Wong v R"), are very diverse, without any guidance given as to how they are to be accommodated. Ultimately the task for a sentencing court is to frame a sentence taking all those factors into account, to the extent they are relevant and known to the court: Wong v R at [71]-[75].
5. In these circumstances, whilst it may be appropriate to speak of a particular aspect of the offence as aggravating it, in the sense of making it more serious, it is important to bear in mind there is no specific provision in the Act to treat certain matters as aggravating and others as mitigating. As noted by the plurality in Weininger v The Queen (2003) 212 CLR 629; [2003] HCA 14 at [22], it is "to invite error to present every question for a sentencer who is assessing a matter which is to be taken into account as a choice between extremes, one classified as aggravating and the opposite extreme classified as mitigating". In any event, as we have indicated, it does not seem to us that the sentencing judge treated the offence as more serious merely because of the procurement of the trades.

Ground 1(c): The manner in which the loan was taken into account

Ground 2(b): Use of the loan as a "serious aggravating factor"

The applicant's submissions

1. The applicant submitted that the loan was taken into account by the sentencing judge in the following manner: 1. it was a highly unusual and irregular arrangement and the intention to use the loan to fund the trading was an aggravating factor to be taken into account on sentencing; 2. the loan was a "demonstration both of a high-handed mentality in the offender whilst acting in gross breach of his position of trust and as to the level of criminality involved"; 3. the loan funds counted towards the quantum of investment in the illegal trades.
2. The applicant accepted that the sentencing judge was entitled to have regard to the loan as conduct engaged in to increase the investment amount, and arguably as reflective of the breach of trust. He submitted that he was not entitled additionally to have regard to the use of the loan as a serious aggravating factor.

The Crown's submissions

1. The Crown submitted that the loan was relevant in that it allowed the applicant to increase his investment, elevated the breach of trust, illustrated the seriousness of the applicant's conduct and indicated the applicant's confidence in the materiality of the information.
2. It was submitted that these matters justify the finding that the use of the loan was a serious aggravating factor. It was submitted the duplication complained of was a matter of form not substance.
3. At the hearing the Director submitted it was an aggravating factor because it was a loan from a related company and the applicant was only acting in his own interest rather than that of the company. However, when asked whether that involved the submission that what occurred was a breach of the applicant's duty as an officer of the company, she declined to accede to that proposition, understandably because the applicant was not charged with offences of that nature.

Consideration

1. As the applicant pointed out in his written submissions, the sentencing judge referred to the loan on a number of occasions in his sentencing judgment. The applicant accepted that the sentencing judge was entitled to have regard to the loan as increasing the amount available to be invested and as evidencing a breach of trust. The applicant's complaint however was that the actual fact of the loan was taken into account as a separate aggravating factor.
2. We do not think the sentencing judge in fact did so. In the particular paragraph complained of he said "the use of the loan, as I have indicated … was a serious aggravating factor". That plainly in our view was referring back to his earlier remarks as to how the loan increased the amount available for investment and evidenced the extent of the breach of trust which had occurred (at [63]-[65]). The applicant correctly accepted he was entitled to take the loan into account in this fashion. There was no error in the approach of the sentencing judge.

Ground 1(d): Count 2 more serious because it involved joint commission

The applicant's submissions

1. The applicant submitted the sentencing judge erred in applying the passage from the Fabriczy to which we have referred at [90] above. He submitted in the present case the relevant conduct was performed by Mr Zhu in procuring the acquisition of the relevant financial products. It was an essential element of the applicant's liability that he enter into an agreement with Mr Zhu and it was wrong to have regard to an essential element of the offence as the basis for imposing a more severe sentence.

The Crown's submissions

1. The Crown submitted that the sentencing judge did not regard the agreement to commit the offence as an aggravating feature but rather that the following facts justify the finding the conduct was more serious: 1. obtaining the co-investors' approval for the insider trading; 2. facilitating the $1,000,000 loan from a related company; 3. increasing the amount of investment by using the investors' pooled funds; 4. allowing the applicant to focus on his own trading whilst Mr Zhu took responsibility for the Wingatta trades; and 5. distributing the illegal gains among the co-investors rather than just being confined to the applicant.

Consideration

1. In the case of the Wingatta offending, it was Mr Zhu who procured Wingatta to effect the trades. Liability attached to the applicant because of the agreement he reached with Mr Zhu that trading be undertaken to take advantage of the inside information. Section 11.2A of the Criminal Code was introduced to provide for joint criminal responsibility in such circumstances: Handlen v The Queen; Paddison v The Queen (2011) 245 CLR 282; [2011] HCA 51 at [5].
2. If in fact the sentencing judge was saying that a joint commission offence is always more serious than when the same offence is carried out by an individual alone, we are unable to agree. Mr Zhu could only have procured Wingatta to effect the trades with the agreement of the applicant (and presumably the co-investors). It was a necessary element of the offence charged against the applicant which relied on s 11.2A of the Criminal Code that he entered into an agreement with Mr Zhu to enable the trades to be effected. There does not seem to us to be any justification for the proposition that that of itself makes the offence more serious.
3. However, we do not think that the sentencing judge was embracing such a broad proposition. In concluding the Wingatta offending was the more serious of the two charges he was considering not only the agreement which was an element of the offence, but the nature of the agreement including the borrowing of funds from a related company and the consequent breach of trust involved. His reference to Fabriczy, and his remarks that similar considerations applied in the present case, must be read in that context.
4. It follows that this ground of appeal has not been made out.

Ground 1(e): Count 2 is more serious because it was in "continuing disregard … of the law" and "aggravated by the extent to which he was the dominant party"

The applicant's submissions

1. The applicant submitted the expression "continuing disregard of the law" is ordinarily used to describe an offender with a lengthy criminal record or one who commits a further offence while subject to conditional liberty. He submitted by contrast the applicant was found by the sentencing judge to be a person of good character and the offending which had taken place was proximate in time and interrelated.
2. The applicant also submitted that the finding that he was the dominant party was also unsupported by the evidence. He submitted that the agreed facts did not show that Mr Zhu played a minor or subordinate role in the commission of the offences, but rather was a party to the agreement which underpinned the alleged illegal conduct and was directly involved in its commission.

The Crown's submissions

1. The Crown submitted that the conduct in Count 2 demonstrated a continuing disregard by the applicant of his fiduciary obligations and his position as Managing Director. It was submitted that finding the applicant was the dominant party was clearly available from the fact the applicant was the Managing Director of Hanlong Mining, the direct supervisor of the other participants, and gave specific orders to Mr Zhu in relation to the takeover offers.

Consideration

1. In our opinion it was open to the sentencing judge to find that the applicant acted in continuing disregard of the law in respect to Count 2. The entry into the agreement, the use of funds borrowed from a related company to trade using those funds and the subsequent agreement to trade in Sundance involved the continuing disregard by the applicant not only of the insider trading provisions but also the fiduciary obligations owed by him to Hanlong Mining. Although it is true that there was no evidence to suggest any breach prior to the events in question, there was a continuing breach from around 1 July until after takeovers were announced which justified the conclusion of the primary judge. In addition, so far as the applicant's personal trading was concerned, his improper use of confidential information was a further breach. In these circumstances, there was justification for this finding by the sentencing judge.
2. Further, in our opinion, there was evidence to support the finding that the applicant was the dominant party and it was reasonably open to the sentencing judge to be satisfied beyond reasonable doubt as to that matter. The applicant was the Managing Director of Hanlong Mining, the other co-investors in Wingatta all reported to him in that capacity, it was he who instructed that Golden Stone, the parent company of Wingatta be established, he was the most substantial investor in the company and profited the most from the trades executed on its behalf. This seems to us to provide ample basis for the finding by the sentencing judge.
3. It follows that this ground of appeal has not been made out.
4. We should add that it by no means follows from that conclusion that Mr Zhu was not an active and willing participant. As we have indicated subsequently in this judgment at [379], the agreed statement of facts suggest to the contrary. However in comparing the respective positions of the applicant and the co-investors, it was not erroneous to describe the applicant as the dominant party.

Ground 1(f): Having multiple regard to overlapping features of the offending

The applicant's submissions

1. The applicant submitted that the sentencing judge had regard to various overlapping factors without acknowledging the degree of overlap or repetition. It was submitted this resulted in an impermissible double counting.
2. In this context the applicant referred to the finding of concealment both in the assessment of objective seriousness and as an aggravating factor. He also referred to the failure to acknowledge the degree of overlap in adverse findings concerning the applicant's knowledge and awareness of wrongdoing and the degree of planning. The applicant referred to what he described as the multiple ways the Wingatta loan was taken into account (as a serious aggravating factor, contributing to the quantity of the investment involved and as a breach of trust) particularly in circumstances where the Wingatta offending was separately found to be more serious by reason of the applicant's participation in a joint criminal enterprise "involving the same parties".

The Crown's submissions

1. The Crown submitted that there was no indication that the sentencing judge gave specific factors "multiple and cumulative significance" in the sentencing exercise. It was submitted that the specific matters complained of were relevant to a number of different inferences, findings and conclusions of the sentencing judge.

Consideration

1. We do not consider that the sentencing judge erred in the manner suggested. The first matter complained of was a reference to concealment as an aggravating factor and then the apparent acceptance of the Crown's submission that the attempts of concealment along with certain other matters led to the conduct representing an extremely serious breach of the statutory prohibition on insider trading (at [85]). The sentencing judge also accepted the Crown submission as to the high level of the seriousness of the offence in the manner to which we have referred (above at [66]) where he referred to the applicant adopting the strategy of using third party accounts as a disguise (at [103]).
2. Although it may be said that, understandably, there was an element of repetition in the approach of the sentencing judge, ultimately what he did was to take the finding of concealment into account in support of his conclusion that the offence was of the high level of seriousness. Reading his judgment as a whole there does not appear to us to be any double counting of the nature of that complained of.
3. So far as the Wingatta loan was concerned, we have dealt with that matter in dealing with Grounds 1(c) and 2(b). For the reasons we have set out in dealing with those grounds we do not consider the sentencing judge took the mere fact of the loan into account as increasing the seriousness of the offence as distinct from noting it increased the amount available and involved a serious breach of trust. These two outcomes were separate matters the sentencing judge was entitled to take into account in assessing the objective seriousness of the offence. Once again there does not appear to be any impermissible double counting.
4. The applicant also complained that there was "multiple counting" having regard to the rolled up nature of the charges and multiplicity of the offending and then giving additional weight to the applicant's continuing disregard of the law. The sentencing judge was entitled to take into account the fact that the charges were rolled up charges in assessing the criminality of the offending: R v De Leeuw [2015] NSWCCA 183 at [116]. As we have indicated, the continual disregard for the law referred in our view to the ongoing breach by the applicant of his fiduciary obligations and his willingness to trade both personally and through Wingatta in the two companies in respect of which his employer proposed to make a takeover offer.

(a) The sentencing judge erred by declining to take the utilitarian value or benefit of the applicant's guilty plea into account, notwithstanding that the applicant was being sentenced for federal offences.

(b) The reduction to the applicant's sentence by reason of his guilty pleas was inadequate.

1. These grounds of appeal raised two issues. The first is whether in sentencing for a federal offence a discount for the utilitarian value of the plea can be given. Aligned to that is the question of whether in assessing the discount to be given, the sentencing judge should specify the quantum of such discount in his or her judgment. These issues were raised not only in this appeal but in the appeal of Mr Jinde Huang, to a lesser extent in that of Mr Jun Yu Huang. Those appeals were heard at the same time as this case, but will be determined separately.
2. The issue raised involves the divergence of views between the decision of this Court in Tyler v The Queen (2007) 173 A Crim R 458; [2007] NSWCCA 247 ("Tyler") and the cases which followed it, to the effect that such a discount could not be given, and the decision of the Court of Appeal of the Supreme Court of Victoria, in Director of the Public Prosecutions (Cth) v Thomas [2016] VSCA 237 ("Thomas") and the Victorian cases which followed it, which came to a contrary view (see also Director of Public Prosecutions (Cth) v Gow (2015) 252 A Crim R 573; [2015] NSWCCA 208 ("DPP v Gow")). To resolve this issue, a five judge bench was constituted in all three appeals.
3. The second aspect of this ground of appeal is whether the reduction in fact given to the applicant was inadequate.

(a) The applicant's written submissions

1. The applicant noted that the sentencing judge had not quantified the discount given for the plea, and submitted it meant the court must surmise what was meant by moderate significance as distinct from the highest level of significance for the purpose of sentence discounting.
2. The applicant submitted that the sentencing judge took the following approach to the question of the plea: 1. the guilty plea was taken into account as a mitigating factor; 2. the pleas were taken into account as indicating some acceptance of responsibility; 3. the pleas also contained an element of remorse or contrition which was taken into account elsewhere in the judgment (at [139]); 4. the early timing of the plea was considered to be an important factor; 5. pleas were evaluated in their overall context, including the applicant's failure to return from overseas in breach of court orders; 6. the pleas were entered in the face of a strong Crown case; 7. whilst the sentencing judge made no mention of the concept of facilitating the course of justice, paragraphs (d)-(f) were related to this issue; 8. the sentencing judge expressly declined to have regard to the utilitarian discount referred to in R v Thomson & Houlton. The applicant submitted it followed that the sentencing judge did not take into account the utilitarian value or benefit of the plea; and 9. the pleas were ultimately accorded a "moderate" significance or discount.
3. The applicant submitted each of subpars (h) and (i) above involved error.
4. The applicant submitted that the reasoning of the majority in Cameron v The Queen (2002) 209 CLR 339; [2002] HCA 6 ("Cameron") did not derogate from the principle that the utilitarian value of a guilty plea is relevant to the extent of mitigation to be afforded for the plea. He noted that in Tyler, Simpson J (as her Honour then was), with whom Spigelman CJ and Harrison J agreed, took a contrary view, interpreting Cameron as endorsing a principle "which specifically excludes reference to the utilitarian value of the plea" in federal matters (at [114]). He submitted that this approach had become orthodox in New South Wales, referring to Lee v R [2012] NSWCCA 123. He noted, however, that Basten JA in DPP v Gow had questioned the approach (at [26]-[28]), whilst it was rejected by the Victorian Court of Appeal in Thomas.
5. The applicant submitted that s 16A(2)(g) cannot validly be construed so as to exclude consideration of the utilitarian value or benefit of a guilty plea. He submitted Cameron is not authority to the contrary. He submitted it remained the case that the public interest in encouraging pleas of guilty is animated by utilitarian considerations. He stated that that was especially the case in relation to insider trading offences which are difficult to investigate, prosecute and prove, something the sentencing judge himself noted in the related matter of R v Zhu [2013] NSWSC 127 at [12]. He submitted there was no reason to doubt this circumstance applied in the present case, which involved numerous transactions and trading accounts, two separate bodies of inside information, alleged "joint criminal enterprise" and reliance on an accomplice who personally executed many of the trades.

(b) The written submissions of Mr Jinde Huang on this issue

1. Mr Jinde Huang adopted the same position as the applicant. He submitted that DPP v Thomas was correctly decided, subject to the fact that he did not accept the strength of the prosecution case had any bearing on any allowance to be made for a willingness to facilitate the course of justice (see Thomas at [5]). In particular he submitted the conclusion reached by the Court in Thomas that the construction of s 16A(2)(g) must be anchored in the text by reference to its context and purpose was correct. He also submitted the Victorian Court of Appeal was correct in concluding the mandatory obligation to take into account the fact of the plea is a cogent indication that the provision in question is concerned primarily with the effect of the plea, rather than with subjective matters relating to the offender and reveals a legislative intention to focus on the utilitarian aspect. He submitted the Victorian Court of Appeal was correct in stating the absence of words of limitation as to how the fact of a plea is relevant shows its utilitarian value may be taken into account regardless of whether or not it is also indicative of some other factor relevant to the sentencing process such as contrition (see Thomas at [16]).
2. The written submissions also noted that the Court in Thomas had regard to the Australian Law Reform Commission report which emphasised the importance of utilitarian considerations relating to a plea of guilty and stated that a discount for a plea, whether there was remorse or not, should be listed as a factor which could be taken into account in sentencing (see Australian Law Reform Commission, Sentencing, Report No. 44 (1988)) ("the ALRC Report").
3. In dealing with New South Wales decisions, the written submissions referred to the decision in R v Thomson & Houlton, in which Spigelman CJ, referring to s 22 of the Crimes (Sentencing Procedure) Act, stated that it had long been the practice of "this Court" to mitigate a sentence for a plea of guilty on three bases including its utilitarian value to the efficiency of the criminal justice system, and that this practice had been validated by the decision of the High Court in Siganto v The Queen (1998) 194 CLR 656; [1998] HCA 74 ("Siganto").
4. The submissions also referred to the decision of this Court in R v Sharma (2002) 54 NSWLR 300; [2002] NSWCCA 142 ("Sharma") in which Spigelman CJ stated that Cameron was concerned with general sentencing principles in the context of a Western Australian statute, and that these principles would have been applicable in New South Wales, subject to the position being modified by statute. However, he considered that this common law principle need not be invoked to construe s 22 in the absence of any statutory indication that it restricted the scope of the section (at [65]). The submissions stated that in Thomas at [115] the Victorian Court of Appeal endorsed the approach of Spigelman CJ in Sharma (at [64]-[68]) in construing s 16A(2)(g).

(c) The Crown's written submissions

1. The Crown submitted the correct approach to the present case was to consider the matter afresh, as a matter of principle, before addressing the relevance of precedent.
2. The Crown submitted that the proper interpretation of s 16A(2)(g) is to be determined from the text having regard to its context and purpose. It submitted the context included the other provisions of the Crimes Act, the pre-existing state of the law and the relevant extrinsic materials. It also involved the principle of legality and the presumption that the legislature will not be taken to interfere with basic common law rights in the absence of "unmistakable and unambiguous" language.
3. The Crown submitted that the primary obligation imposed on the Court in federal sentencing was that imposed by s 16A(1) that the Court must impose a sentence that is appropriate in all the circumstances of the offence. It was submitted that s 16A(2) imposes a secondary duty to take into account the matters specified in the section. However, there is no express language which signifies how those matters are to be taken into account. It was submitted that the text of s 16A(2)(g) is silent on how the fact of a guilty plea may be used to determine the sentence.
4. The Crown submitted that the presence of s 16A(2)(f) (which concerns contrition) does not alter that conclusion, contrary to what was said in Thomas at [17]. It was submitted the reasoning in Thomas failed to take into account that a plea may not only be a demonstration of contrition or have objective utilitarian value but can also indicate acceptance of responsibility and willingness to facilitate the course of justice. It was submitted this demonstrated that s 16A(2)(g) was not limited to the utilitarian value of the plea.
5. It was further submitted that the maxim expressio unius est exclusio alterius had no application to s 16A(2) which contains a non-exhaustive list of matters a court must consider. It submitted there were numerous paragraphs of s 16A(2) which overlap and the Court must adopt an instinctive synthesis approach which takes account of them all.
6. The Crown submitted that s 16A(1) accommodated the general common law principles of sentencing which include the principles of equal justice requiring like outcomes in cases which are relevantly identical and different outcomes in cases which are different in some respects. In addition, it was submitted that s 16A accommodates the common law principle that a person is not to be punished for exercising his or her right to a trial. It was emphasised that s 16A(1) requires a court to impose a sentence appropriate to all the circumstances of the offence, submitting that the offender was to be punished for the offence, not for the conduct of the defence case. It was submitted that once it was recognised these principles applied, the reasoning in Cameron determines how a plea of guilty may be used in imposing a sentence.

(d) The joint reply

1. In a joint reply, filed on behalf of all the applicants, it was noted the Crown accepted that the question turned on the construction of s 16A(2)(g). They submitted that no attention was paid to this issue in either Tyler or R v Harrington (2016) 11 ACTLR 215; [2016] ACTCA 10, a decision of the Court of Appeal of the Australian Capital Territory, which followed it. They submitted that neither of these cases are binding authority on the construction of the subsection.
2. The applicants submitted that it was wrong to describe s 16A(2) as secondary to s 16A(1). It was submitted each subsection must be read together, as the matters in s 16A(2) must be taken into account for the purpose of s 16A(1).
3. The applicants noted that s 16A(2)(g) refers to the fact of a plea. It was submitted that refers to its objective significance. It was submitted the language requires the sentencing judge to take into account the actual facilitation of the course of justice irrespective of the subjective intentions of the offender. They submitted there were no words in s 16A(2)(g) which limited its operation. It was submitted that this approach to construction was consistent with the approach taken by Spigelman CJ in Sharma in considering the equivalent State legislation. It was submitted that the same approach was taken in Thomas at [33].
4. The applicants submitted that it was unexceptionable to take into account the fact that s 16A(2)(f) dealt separately with contrition as strengthening the construction of s 16A(2)(g) for which they contended. They submitted, contrary to what was said by the Crown, that the court in Thomas did not draw a rigid distinction between s 16A(2)(f) and s 16A(2)(g) or deny that the various subsections overlapped. They pointed out that the instinctive synthesis approach has been held not inconsistent with the discrete discount for a plea.
5. The applicants submitted that the Crown's argument based on the principle of legality and equal justice should not be accepted as it ignores the text of the provision. They also submitted it did not sit comfortably with the development of the common law preceding the introduction of s 16A into the Crimes Act in 1990. Referring to Thomas at [24]ff, Shannon, and R v Bond (1990) 48 A Crim R 1 at 7-8 ("Bond"), they submitted that various courts had recognised the utility in encouraging pleas of guilty. They submitted, referring to Shannon at 449, there was authority for the proposition that there was a real distinction between increasing a sentence as a penalty for contesting a charge and as a measure of leniency for admitting it. The applicants also submitted that the respondent's characterisation of the common law developments does not acknowledge that concepts said to be distinct actually converge and become co-extensive, stating that a timely guilty plea which saves the inconvenience and expense of a trial also manifests a willingness to facilitate the course of justice. They submitted that this was consistent with what was said in Cameron at [19], [22], Thomas at 7(g)-(h), [139]-[149] and Linggo v R [2017] NSWCCA 67 at [35], [48], [50] ("Linggo").

(e) The submissions at the hearing

1. Senior counsel for the applicant submitted that s 16A(1) and s 16A(2) need to be read together and it was not correct to say that s 16A(2) was merely ancillary to s 16A(1). He referred to the fact that contrition is dealt with separately from s 16A(2)(g), in s 16A(2)(f), whilst s 16A(2)(h) deals with cooperation. He submitted that s 16A(2)(g) was introduced into the Act against the background of a specific discussion concerning the utilitarian value of the plea and it was not correct to say it was not supported by the case law at the time, referring to Bond and Shannon.
2. Senior counsel for the applicant submitted it was not correct to say that s 16A(2)(g) did not provide for a discount, and that the plea, whether considered objectively or otherwise, was simply to be taken into account along with other matters referred to in s 16A(2). He referred to the fact that the Australian Law Reform Commission specifically referred to the "savings" of a plea and that the language of "discount" was the language of "what you were given for your plea". He stated that the language in that context was similar to the language of the State section considered in R v Thomson & Houlton. He submitted that by the time a sentencing judge came to consider a plea, he or she was indifferent to the other subjective circumstances of the offender.
3. Senior counsel for the applicant submitted that the plurality in Cameron was trying to avoid a problem about discrimination between offenders by referring to a willingness to facilitate the course of justice but submitted there was no difficulty with allowing a discount for a willingness to facilitate the course of justice in avoiding a lengthy trial and the consequential expense. He emphasised that Cameron was decided well after the introduction of s 16A(2)(g) and that the Act was introduced against the background of a specific discussion about the utilitarian value of the plea. He submitted further that it was an error not to quantify the discount.
4. Senior counsel for the applicant also submitted that the reasoning of the sentencing judge did not make it clear whether or not he had given a discount for the utilitarian value of the plea. He submitted there was no actual reference to facilitating the course of justice, something held in Linggo to be an error.
5. Senior counsel for the other applicants referred to the judgment of McHugh J in Markarian v The Queen (2005) 228 CLR 357; [2005] HCA 25 at [74] ("Markarian"), where his Honour stated the instinctive synthesis approach to sentencing was not inconsistent with allowing a discount for some factor providing it relates to a purpose distinct from a sentencing purpose. He noted that in that paragraph his Honour stated, referring to Cameron, that the "non-sentencing" purpose of the discount for an early plea or assistance is demonstrated by the fact that offenders are ordinarily entitled to additional mitigation for any remorse or contrition demonstrated with the plea, aside from the discount for the willingness to facilitate the course of justice. Senior counsel for the other applicants also submitted that what McHugh J said in Markarian effectively equated a discount for an early plea with a willingness to facilitate the course of justice. He submitted that the latter approach looked at the willingness to enter the plea which allowed the sentencing judge to look at what the plea provides. He submitted there would not be a difference depending on the strength of the Crown case because in any case, a plea always represents a willingness not to put the Crown and community to the expense of a trial.

Consideration

1. As was stated by the plurality in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27; [2009] HCA 41 at [47], the task of statutory construction must begin with a consideration of the text itself, the language actually being employed being the surest guide to legislative intent. The plurality pointed out that the meaning may require consideration of the context including the general purpose and policy of the provision, in particular the mischief it was intended to remedy: see also Commissioner of Taxation of the Commonwealth of Australia v Consolidated Media Holdings Ltd (2012) 250 CLR 503; [2012] HCA 55 at [39]; Thiess v Collector of Customs (2014) 250 CLR 664; [2014] HCA 12 at [22]-[23] ("Thiess"). The Court in Thiess referred at [23] to Cabell v Markham (1945) 148 F (2d) 737 at 739, where it was stated that it was wrong to make a fortress out of the Dictionary, and rather that statutes "always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning". More recently in SZTAL v Minister for Immigration and Border Protection (2017) 91 ALJR 936; [2017] HCA 34, the plurality explained the importance of consideration of context and purpose in the following terms (at [14]): "[14] The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected." [Footnotes omitted].
2. Gageler J, writing separately, also emphasised the importance of considering context in the first instance, making the following comments (at [36]-[38]): "[36] Drawing on that statement, and its antecedents, Brennan CJ, Dawson, Toohey and Gummow JJ said in CIC Insurance Ltd v Bankstown Football Club Ltd: '[T]he modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses 'context' in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy.' [37] Both of those passages have been 'cited too often to be doubted'. Their import has been reinforced, not superseded or contradicted, by more recent statements emphasising that statutory construction involves attribution of meaning to statutory text. The task of construction begins, as it ends, with the statutory text. But the statutory text from beginning to end is construed in context, and an understanding of context has utility 'if, and in so far as, it assists in fixing the meaning of the statutory text.' [38] The constructional choice presented by a statutory text read in context is sometimes between one meaning which can be characterised as the ordinary or grammatical meaning and another meaning which cannot be so characterised. More commonly, the choice is from 'a range of potential meanings, some of which may be less immediately obvious or more awkward than others, but none of which is wholly ungrammatical or unnatural', in which case the choice 'turns less on linguistic fit than on evaluation of the relative coherence of the alternatives with identified statutory objects or policies'." [Footnotes omitted].

The position at the time of the enactment of s 16A and s 16B

1. Although it appears that at the time s 16A and s 16B were introduced into the Crimes Act it was generally accepted that a plea could be taken into account, there was a divergence of views and consequent uncertainty as to the manner in which that could be done, and particularly whether its utilitarian or objective value could be considered. That is, there was uncertainty as to whether mitigation could be given with regard to the extent the plea saved time and cost to the community, and spared the victim the ordeal, and the community the expense, of a contested trial.
2. In New South Wales there was a divergence of views on the question. In R v Paull (1990) 20 NSWLR 427, decided shortly after Pt 1B was inserted into the Crimes Act, the Court stated (at 429), without referring to s 16A(2)(g), that a plea of guilty could be taken into account in mitigation "not only for the contrition which it indicates but also, as a factor in its own right independently of such contrition, for the co-operation in saving the time and cost involved in a trial - provided that it does not result merely from a recognition of the inevitable". The Court went on to state that the prisoner's plea of guilty in that case resulted from a willingness to co-operate and was a proper matter by itself to take into consideration in mitigation. This approach suggested the plea was not taken into account solely for its objective utilitarian value.
3. In Bond, a case involving a State offence but decided prior to the introduction of the Crimes (Sentencing Procedure) Act, Badgery-Parker J with whom Wood J agreed, stated (at 15) that a plea of guilty itself attracts some measure of leniency both as evidence of genuine remorse and because of the saving to the community which it represents by the avoidance of the need for a trial. Kirby P, as his Honour then was, (at 6-8) accepted it was appropriate and indeed desirable that such an allowance be made.
4. Earlier in R v Blewitt (unreported, NSWCCA, Lee, Yeldham and Grove JJ, 3 December 1987) Grove J (Lee and Yeldham JJ agreeing) stated the reason a plea of guilty attracts leniency is because in appropriate circumstances it may evidence remorse and contrition. By contrast, in R v Dodge (1988) 34 A Crim R 325 ("R v Dodge") an appeal against sentences for Commonwealth offences, Kirby P, with whom Enderby and Carruthers JJ agreed, stated (at 331) that it was "timely to say that in the present condition of the lists of criminal trials awaiting hearing, the public interest demands that greater attention be paid … to the consideration that a plea of guilty … saves public time and cost and contributes to reducing delays which are a matter of particular concern and potential injustice".

Introduction of Part 1B

1. It was against that background that Pt 1B of the Crimes Act was introduced. Its introduction followed an ALRC Report, (see above at [176]) which examined sentencing for federal offences. The ALRC Report summarised its proposals in relation to a plea and its reasons in the following terms (including the views of dissenting members): "173. 'Discount' on sentence for a plea of guilty. The Commission further recommends that courts be able to take into account in sentencing two matters that are not, strictly speaking, relevant. They have no bearing on the circumstances of the offence, or the offender's characteristics. However, practical considerations, in particular the need to reduce court delays, justify courts being able to take account of the fact that the offender pleaded guilty to the charge. The Commission has already recommended that a court should be able to have regard to evidence of contrition or remorse in determining sentence. A guilty plea may indicate contrition or remorse, but it may simply be a recognition of the inevitable. Some pleas may result from tactical considerations, or from charge bargaining. Allowing a 'discount' would have the advantages of encouraging shorter trials relieving delays and backlogs by lightening the court's workload in many cases, saving the expense (often at the cost of legal aid) and inconvenience of a trial saving trauma to witnesses, especially victims. But doing so may penalise those who plead not guilty undermine the principle that the defendant's plea must be made voluntarily weaken the requirement that the Crown prove its case beyond reasonable doubt create the risk that innocent persons will plead guilty. It can also be criticised as introducing administrative convenience as a sentencing principle, and reducing the need to search for other, more desirable, ways of tackling the workload of, and delays and backlogs in, the courts. The Commission agrees that a 'discount' for a guilty plea will have administrative benefits in helping to reduce court delays. At present 'discounts' of this kind are sometimes granted; eliminating them may increase delays. It is often very difficult to determine whether remorse is genuine or not. In the Commission's view, a plea of guilty, whether there is evidence of remorse or not, should be listed as a fact that can be taken into account in sentencing. The Commission's consultations indicate that Victorian legislation allowing a 'discount' for a guilty plea is 'working well'. The wide variety of cases which may arise involving pleas of guilty means that no particular amount should be specified as the amount, or maximum amount, of the 'discount'. The requirement to give reasons for sentence should apply in this case as in all others. 174. Dissent. Three members of the Commission do not agree that there should be a 'discount' for a plea of guilty. Their view is that this recommendation is made solely to help reduce court delays. Certainly, there are serious delays in matters coming on for trial and in the hearing of criminal trials. There are strong grounds for the re-appraisal of criminal trial procedures, without jeopardising the concept of a fair trial, to reduce delays. But this recommendation touches on something which is fundamental - the presumption of innocence. With that presumption goes the right of an accused to require the Crown to prove its case. 'Discounting' sentences for a plea of guilty amounts to offering accused persons an inducement to forego that right. Not only, in these members' view, should no 'discount' be available, but the presumption of innocence is so important that no regard should be had in sentencing to whether the offender pleaded guilty or not guilty." [Footnotes omitted].

The cases following the introduction of Part 1B

1. Initially, after Pt 1B was introduced into the Act, this Court took the view that s 16A(2)(g) permitted a discount for the utilitarian value of the plea. In R v Bugeja [2001] NSWCCA 196 Hodgson JA stated (at [27]-[30]) that the sentencing judge erred in failing to give a utilitarian discount for a Commonwealth offence . However, his Honour gave no consideration to the construction of s 16A(2)(g) in reaching that conclusion. Greg James and Adams JJ agreed with Hodgson JA on this point: at [33], [35].
2. The High Court appeared to accept in Siganto that the utilitarian value of a plea could be taken into account in mitigating the sentence. The relevant passage from the judgment of the plurality in that case (para [22]) is extracted in the passage in Cameron, which we have cited at [188] above.
3. It was of course the decision in Cameron which formed the basis of the subsequent decisions that the utilitarian value of the plea could not of itself be taken into account in mitigation at sentence. We have set out the relevant paragraphs at [188] above. A number of matters should be noted.
4. First, Cameron did not concern s 16A of the Crimes Act. The relevant legislation was the law of Western Australia picked up by s 4 of the Commonwealth Places (Application of Laws) Act 1970 (Cth). That included s 8(2) of the Sentencing Act 1995 (WA) which relevantly provided "the earlier in the proceedings that [the guilty plea] is made, or indication is given that it will be made, the greater the mitigation" and s 7(2)(a) which stated that an offence was not aggravated by the fact that the offender pleaded not guilty.
5. Second, the plurality in Cameron did not suggest the passage in Siganto was incorrect. To the contrary they stated (at [12]) that the distinction between a reduction for a plea of guilty and not penalising a person for not pleading guilty is a real distinction. The plurality suggested the rationale "may need some refinement in expression": see [188] above. They did not suggest the distinction did not exist.
6. Third, the plurality suggested the necessary refinement was that the plea is seen subjectively as the willingness of the offender to facilitate the course of justice (at [13]) and that the rationale for the rule insofar as it depends on factors other than remorse and acceptance of responsibility must "be expressed" in terms of willingness to facilitate the course of justice (at [14]) (emphasis added).

The present case

1. With respect to the sentencing judge, it is not entirely clear how he arrived at what he described as a "moderate" discount, or the factors he took into account in reaching that conclusion. However, he stated (at [113]) that the utilitarian discount identified in the guideline judgment in R v Thomson & Houlton did not apply, although he indicated (at [162]) he took the pleas into account as some evidence of acceptance of responsibility. It seems to us that in these circumstances he did not have regard to the utilitarian value. He was in error in not doing so.
2. It follows this ground of appeal has been made out.

Ground 4: The sentencing judge erred by not taking into account evidence that the applicant would experience more onerous custody by reason of the fact that he is a foreign national

The applicant's submissions

1. The applicant submitted that there was evidence that the applicant was separated from his family in China and he told the psychologist, Mr Diment, that he was very upset at not being able to see his children. The applicant, referring to R v Huang (2000) 113 A Crim R 386; [2000] NSWCCA 238 at [18]-[19] and Moss v R [2016] NSWCCA 242 at [66], submitted that the sentencing judge erred in failing to consider the fact that the applicant experienced more onerous custody as a result of these matters.

The Crown's submissions

1. The Crown referred to the fact that the sentencing judge expressly referred to the applicant's status as a foreign national and stated it warranted limited recognition. The Crown noted the judge referred to specific circumstances which reduced the application of the principle in the present case. In these circumstances, the Crown submitted there was no basis to conclude that the sentencing judge gave no weight to the principle.
2. The Crown submitted that, in any event, little weight should be given to this matter. It was submitted the applicant had lived in Sydney for two and half years in a house which he bought and thus had some community ties. It was pointed out the applicant had sufficient fluency to communicate both orally and in writing in English. Further, the Crown submitted there was no evidence of any other hardship that the applicant had experienced or was likely to be experienced, as a result of him being a foreign national. Finally, the Crown submitted that the applicant must have been aware that the inevitable consequence of his conduct if detected would have been incarceration in this country.

Consideration

1. As the Crown pointed out, the sentencing judge (at [123]) recognised the principle that some limited recognition can be given to the position of a foreign national serving a sentence of imprisonment. However, it is not clear whether he gave any weight to the matter aside from finding there was no evidence of specific hardship.
2. However, there was evidence that the applicant's immediate family was in China and that he told the psychologist he had not been able to talk to his children for two years. The sentencing judge did not seem to consider this evidence.
3. It seems to us that the judge erred in this respect. Whether or not it was a material error in the circumstances of the present case may be doubted. As it is necessary to resentence the applicant in any event, it is not necessary to pursue the matter further.

Ground 5: The sentencing judge erred by not sentencing the applicant in accordance with s 19AB(1) of the Crimes Act

1. The applicant submitted that s 19AB(1) of the Crimes Act required the judge to fix a single non-parole period in respect of the sentences for the two offences. He submitted that in fixing a non-parole period in respect of each offence, the sentencing judge did not comply with s 19AB. He submitted the resulting non-parole period was thus determined by reference to the erroneously fixed non-parole period for the individual sentences.
2. The applicant submitted the approach was productive of further error. He pointed out the ratios between the non-parole period and the individual sentences were approximately 62.5% in respect of Count 1 and 61% in respect of Count 2. However, the single non-parole period was 66.6% of the total term. It was submitted there was no explanation or justification for this discrepancy.
3. The applicant submitted that the legislation required the identification of one overall non-parole period having regard to the total sentence and all factors relevant to it. He submitted the sentencing judge failed to sentence in accordance with those principles.
4. Senior counsel for the applicant noted that what the sentencing judge described as the effective non-parole period simply resulted from the accumulation of the non-parole periods by 15 months. He submitted that the non-parole period was not fixed by reference to the total sentence.
5. Senior counsel for the applicant further submitted that in Eriyo v R [2015] NSWCCA 16 the Crown conceded that this approach was erroneous.

The Crown's submissions

1. The Crown submitted that the sentencing judge in fact fixed a single non-parole period. It was submitted the approach taken by the sentencing judge was in fact the same approach taken by this Court in Commonwealth Director of Public Prosecutions v Afiouny [2014] NSWCCA 176 at [85]-[91] where the Court was resentencing on a Crown appeal.
2. The Crown also referred to s 19AH which expressly provides that a failure to properly fix a non-parole period in accordance with s 19AB of the Act does not affect the validity of the sentence but rather the error is amenable to correction by the sentencing court. It was submitted in those circumstances if the matters complained of in this ground was the only error found, leave to appeal should be refused as the matter could be rectified other than through the appeal.
3. The Crown submitted further that any difference in the ratios between the head sentence for each offence and the respective non-parole periods compared with the ratio between the single non-parole period and the total sentence does not of itself indicate error. The Crown referred to the fact that the sentencing judge referred to the correct principles on this issue in fixing the non-parole period.

Consideration

1. Section 19AB of the Crimes Act obliges the Court to fix a single non-parole period when a person is convicted of two or more federal offences at the same time and the aggregate sentence to be imposed exceeds three years. Section 19AH states that if a court fails to properly fix a non-parole period, the error does not affect the validity of the sentence and the Court is empowered to amend the sentence to rectify the defect. In Hili v The Queen, the plurality stated that in making a recognisance release order or in fixing a non-parole period, the critical matter was the period of imprisonment justice required that the offender serve in custody (see [40]-[41]). In the present case there is no reason to suggest the sentencing judge did not adopt this approach. This ground of appeal has not been made out.
2. That is not to say the manner in which the sentencing judge embarked on his task is desirable. The fixing of individual non-parole periods for the separate offences tends to obscure the ultimate task required of the sentencing judge in fixing a single non-parole period. Notwithstanding this, there was no error in his Honour's decision on this issue.

Resentencing

1. As the applicant was successful on Ground 3, it is necessary that he be resentenced. In those circumstances it is not necessary to deal specifically with Ground 6 (manifest excess) or Ground 7 (parity). However, the submissions made by the parties on these grounds are of relevance in determining what sentence should be imposed. Accordingly, they are summarised below.

The applicant's submissions

1. The applicant submitted that assuming the judge had applied a discount of 15% for the plea of guilty, it would indicate a notional starting point for sentences of approximately seven years for Count 1, and eight years three months for Count 2, against a maximum penalty of ten years imprisonment. The applicant noted that after accumulation, the overall term of imprisonment was eight years and three months.
2. The applicant submitted that the following matters were relevant to the contention that the sentences were manifestly excessive: 1. the sentencing judge declined to find the offences fell into the worst category of cases or approached the worst category; 2. the offences were committed within a short period of time; 3. the profits were not at the top end for offences of this type; 4. the applicant was a person of previous good character; and 5. the applicant was found to be genuinely remorseful and have reasonable prospects of rehabilitation.
3. The applicant submitted that it was evident from the reasons of the sentencing judge that he had regard to the sentence passed in Kamay v The Queen (2015) 47 VR 475; [2015] VSCA 296 ("Kamay") which he submitted was the only sentence which came close to that passed in the present case. The applicant submitted Kamay's offending was markedly more serious and thus the decision does not derogate from the conclusion that the applicant's sentence fell outside the permissible range of sentences for the offender and the offence. He referred, in particular, to the following matters: 1. Kamay was sentenced on the basis his crime constituted "the worst instance of insider trading to come before the courts" (at [56]). 2. Kamay was charged with four counts of insider trading as well as the offence of money laundering (20 year maximum penalty) and identity theft (5 year maximum penalty). 3. Kamay made a gross profit of eight million dollars and a net profit of more than seven million dollars. The applicant submitted that because Kamay traded with certainty of outcome, the amount of profit was regarded by the Victorian Court of Appeal as "an important, if not a prime indicium, of the objective seriousness of the offence" (at [37]). 1. Kamay's insider trading occurred over a substantial period of time. Discussion concerning the use of the information commenced in May 2013. The trading took place between September 2013 and May 2014 and only stopped with Kamay's arrest. The applicant submitted he only traded on two days. 2. Kamay traded on 45 separate occasions. The offences were rolled up charges. 3. The type of information which Kamay possessed was unique. The applicant submitted that he conspired with Mr Hill, an analyst with the Australian Bureau of Statistics, to obtain highly confidential information which had national economic significance and the capacity to affect the value of the Australian dollar. He noted that it was held that Kamay traded systematically and strategically and thereby harmed the reputation of the Australian Bureau of Statistics. The applicant submitted there was no meaningful counterpart in his case. 4. The applicant noted that the Victorian Court of Appeal held the information enabled Kamay to trade from a position of virtual certainty (at [32]-[37], [41]). The applicant noted that on one occasion Kamay traded to a profit in excess of 2.5 million dollars in the space of 25 minutes. The applicant submitted that although the sentencing judge found in his case that the trading was borne of the belief the outcome was virtually certain, he did not find it had that objective quality nor could he have done so having regard to the uncertainty as to how the market would react to the conditional takeover offers. 5. Kamay stole the identity of others including from a customer of his bank to establish falsely subscribed telephone accounts so as to conceal his communications. That conduct formed the basis of the two identity theft offences and represented "some degree of separate criminality". 6. Kamay also engaged in money laundering by purchasing real property with the trading profits to give the proceeds of his offending a cloak of respectability.

The Crown's submissions

1. The Crown submitted that the applicant's submissions involved three contentions. The first was that the circumstance of the case did not warrant the sentence imposed.
2. In relation to that matter the Crown submitted that this was one of the most serious instances of insider trading in Australian history coupled with a number of uniquely aggravating features. The Crown noted that the conduct involved a gross breach of trust, that the applicant was aware his conduct was wrong, dishonest and contrary to law, knew of the confidential nature of the material and chose to trade in CFDs to maximise his profit. The Crown submitted that these findings were not disputed.
3. The Crown submitted there was an absence of any significant mitigating factors. It was submitted that the value of the guilty plea was limited, there was no challenge to the sentencing judge's finding that there was no motivation other than greed, and that there was no significant psychological conditions affecting the applicant at the time of sentence.
4. The Crown submitted that contrary to what was put by the applicant, the fact that the offending took place only over a short period of time, was an integral feature of the high quality of the information. It also submitted that the investment and profit was within the highest range and the applicant bore significant responsibility for the total amount involved in the illegal trading through Wingatta.
5. The Crown submitted that contrary to the applicant's submissions, the sentencing judge found the applicant's prior good character to be relevant but referred to established principle in stating less weight should be afforded to that finding as it was essential to the applicant's position of trust through which he committed the offence. The Crown submitted the sentencing judge did not unreservedly find the applicant was genuinely remorseful and the finding as to his good prospects of rehabilitation was based only on the psychologist's report, not evidence from the applicant himself.
6. The Crown submitted referring to R v Kilic (2016) 259 CLR 256; [2016] HCA 48, that the sentencing judge was not required to find the offending was within or approaching the worst category before imposing a sentence in the upper range. It was submitted that although the utility of terms such as "high range" of objective seriousness has been questioned, the applicant did not dispute this finding by the sentencing judge.

1. In relation to the third contention of the applicant, namely that the sentences were far more severe than those imposed in other cases, the Crown submitted the sentences imposed in those cases either concerned a contravention at a time when the maximum penalty of imprisonment was five years and/or involved criminality which was significantly less serious.

The applicant has a legitimate sense of grievance by reason of the sentence imposed on the co-offender, Mr Zhu

The sentence imposed on Mr Zhu (R v Zhu [2013] NSWSC 127)

1. Mr Zhu was charged with three offences, each involving contravention of s 1043A(1)(d) of the Corporations Act. The first of these offences occurred between 8 December 2006 and 30 March 2007 whilst Mr Zhu was employed as an executive in the Corporate Finance Advisory Division of Caliburn Partnership Pty Ltd (Caliburn), a corporate advisory firm. The offence carried a maximum penalty of five years.
2. The offending involved the acquisition of some 266, 095 CFDs and 10,900 shares relating to an entity, Veda Advantage Ltd, for a total outlay of $94,517.81 ($5,000 of which was provided by an associate, Mr Yu). The total profit on disposal was $81,483.60 of which $55,814.50 was retained by Mr Zhu and the balance went to his associates.
3. On commencing employment with Caliburn, Mr Zhu signed a contract of employment containing a confidentiality provision. On 16 November 2006, he acknowledged in writing that he was aware of and agreed to comply with "Employee Trading Rules", designed to prevent insider trading by requiring approval of any trades.
4. The CFDs were acquired in the names or trading accounts of other persons. The sentencing judge found (at [42]) that this was cogent evidence of his desire to trade without risk of detection.
5. The sentencing judge found the seriousness of the Caliburn trading arose from the fact the offences were committed with pre-mediation and planning and with knowledge they were in breach of his employment obligations. The sentencing judge noted that at the time of the Caliburn trades Mr Zhu knew what he was doing was wrong (at [81]).
6. The sentencing judge stated that even accepting that Mr Zhu did not appreciate the criminality of his trading, there was no doubt he was aware he was breaching company policy and acting dishonestly (at [81]). He stated that the inside information was of high quality and his primary motive in trading was to obtain a personal financial benefit (at [82]).
7. The sentencing judge stated he considered the objective gravity of the offending significant, although not at the high end of the range. He stated his involvement was less than, for example, a senior executive, and the extent of his knowledge was that although he knew his conduct was wrong, he did not possess sufficient appreciation of the criminality involved in his behaviour (at [84]).

The applicant's submissions

1. The applicant submitted that he had a legitimate sense of grievance when his sentences were compared to those of Mr Zhu. He acknowledged that there were differences in the objective and subjective considerations which justified a more severe penalty in his case. However, he submitted the following matters meant it was not legitimately open to impose such a markedly disparate sentence: 1. Mr Zhu was deeply involved in the Wingatta offending. He was involved in establishing the bank account, trading accounts and personally performed the trading activities. 2. Mr Zhu stood to gain a meaningful share of profits and stood to benefit from the $1,000,000 loan. 3. The single rolled up charge contemplated additional trading in Bannerman and Sundance for his personal benefit. 4. Mr Zhu held a senior position in Hanlong Mining. 5. Mr Zhu committed previous insider trading offences.
2. Senior counsel for the applicant emphasised that Mr Zhu received a 25% discount for his plea, submitting it was not clear what discount was given to the applicant. He submitted that although Mr Zhu was under the applicant in the employment hierarchy, the two of them were involved in the transactions together.
3. Senior counsel for the applicant submitted that even if the distinctions drawn by the sentencing judge were accepted, the parity issue did not go away. In that context he submitted that the sentencing judge was incorrect in stating that the applicant was the dominant figure in the Wingatta trades. He submitted that contrary to the decision in O'Donoghue, this Court should draw its own inference on this question as distinct from determining whether the inference drawn by the sentencing judge was available on the evidence. As will be seen it is unnecessary to resolve this issue.

The Crown's submissions

1. The Crown submitted that the disparity was not unjustifiable or without due proportion. It was submitted that Mr Zhu was only involved in the Wingatta offending with the agreement of the applicant, which highlighted his subordinate role.
2. The Crown acknowledged Mr Zhu stood to gain a share of the profits but submitted again, his role was subordinate to the applicant. The Crown also acknowledged that Mr Zhu held a senior position with Hanlong Mining but submitted he only held that as a result of being recruited by the applicant.
3. The Crown submitted the rolling up of the charges does not prevent the total criminality being assessed. It was submitted that other than limiting a finding of good character, Mr Zhu's involvement in less serious offending with previous employers had limited significance in sentencing for the Hanlong Mining offences.
4. The Crown submitted of greater significance was the evidence Mr Zhu gave in the sentencing hearing which was largely accepted. His evidence included the dominant role the applicant played. The Crown accepted that the sentencing judge's findings in that case, whilst irrelevant when it came to sentencing the applicant, formed a basis for significant disparity.
5. The Crown also pointed to Mr Zhu's willingness to plead guilty before charges had been laid which was said to be in stark contrast to the applicant's steps to frustrate the investigation and prosecution.

Consideration

1. The offences were serious examples of offences of this nature. The trading involved taking advantage of the knowledge the applicant acquired in his position as Managing Director of the company in relation to takeovers for which he had responsibility. It involved in these circumstances a breach of trust, particularly as in relation to the Wingatta trading, it extended to the use of funds borrowed from a related company of the company.
2. It is important however, in considering this issue, to bear in mind that the applicant has not been charged with any offence relating to misuse of his position of a Director of Hanlong Mining so he cannot be punished for such an offence. However, that does not seem to us to preclude taking into account the fact that the actions of the applicant involved a significant breach of trust.
3. The amounts involved in the transactions were substantial, both as to the amounts invested and the profits earned. Further, the trading took place making use of leveraged instruments which had the potential to generate significant profits for relatively small outlays. Although the trading was not risk free, as there would always be some uncertainty how the market would respond to the conditional takeovers which were made, the risk of loss was minimised by the possession of the inside information.
4. Contrary to the applicant's submission, we do not think the seriousness of the offences was lessened by reason of the fact that they took place over a relatively short period of time. The trading took place over the time the information remained price sensitive. Once that period had expired, there was no further opportunity to trade.
5. Unlike the sentencing judge, we do not think the concealment increased the seriousness of the offence to any significant extent. It is a common consequence of insider trading that the investor will seek to conceal the trades. Further, it is not a case where new trading accounts were used or where any steps beyond using the accounts in question were used to conceal the offences.
6. We accept that some account must be taken of the applicant's prior good character. However, generally it is only persons with good character who are able to commit offences of this nature.
7. In this context, the importance of general deterrence must be emphasised. These are not victimless crimes. At a micro level they involve trading on what is presumed to be an open market in circumstances where one party has confidential information unknown to his or her counterparty which will generally involve the counterparty acting to his, her or its disadvantage. At a macro level the financial affairs of this country depend, to a significant extent, on the integrity of the stock market. Trading is not confined to professional investors. Many persons, corporations and their superannuation funds trade on the basis that they are dealing on an informed and open market. Trading of the nature of that involved in the present case undermines the integrity of the market, and if not prevented would lead to a loss of confidence in the ability of people to invest in listed companies on an informed basis. It is for this reason that the offences are regarded as serious, as evidenced by the maximum penalty of 10 years imprisonment.

Conclusion

1. In the result we would make the following orders: 1. Grant the applicant leave to appeal against sentence. 2. Appeal allowed. 3. Quash the sentences imposed on the appellant on 11 March 2016 and in lieu thereof impose the following sentences: 1. In respect of Charge 1 having regard to the scheduled offence, the appellant is sentenced to a term of imprisonment of 5 years commencing on 12 January 2014 and expiring on 11 January 2019. 2. In respect of Charge 2 the appellant is sentenced to a term of imprisonment of 5 years and 6 months commencing on 12 July 2015 and expiring on 11 January 2021. 1. In accordance with s 19AB(1) of the Crimes Act 1914, fix a single non-parole period of 4 years and 6 months, such non-parole period will expire on 11 July 2018.

Amendments 06 February 2018 - Coversheet - add T Prince (Respondent) [93] add (c) (d) and (e) in quotation [193] change view to review [223] change [46] to [47] [227] change Legislative to Legislation [295] change amendable to amenable DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 February 2018