Hartman v R - [2011] NSWCCA 261

Court of Criminal Appeal

Supreme Court

New South Wales

Medium Neutral Citation: Hartman v R [2011] NSWCCA 261
Hearing dates: 9 November 2011
Decision date: 07 December 2011
Before: Whealy JA
Adams J
Latham J
Decision:
The orders of the Court are:-
1. Leave to appeal is granted.
2. The appeal is allowed and the sentences passed upon the offender on 2 December 2010 are quashed.
3. In lieu thereof, the following sentences are imposed:-
(a) In relation to count 1, having regard to the Schedule of offences, the offender is sentenced to a term of imprisonment of 2 1/2 years commencing on 2 December 2010 and expiring on 1 June 2013.
(b) In relation to counts 2-19, the offender is sentenced to a term of imprisonment for 2 years, each term to commence on 2 December 2010 and expiring on 1 December 2012.
(c) In relation to count 20, having regard to the Schedule of offences, the offender is sentenced to a term of imprisonment for 18 months commencing on 2 June 2012 and expiring on 1 December 2013.
(d) In relation to counts 21-25, the offender is sentenced to a term of imprisonment of 16 months, each term to commence on 2 June 2012 and expiring on 1 October 2013.
(e) We specify a single pre-release period of imprisonment of 15 months to commence on 2 December 2010 and to expire on 1 March 2012. We order that, upon the expiry of the 15 month period of imprisonment specified, the offender be released upon his entering into a recognisance self in the sum of $1,000 to observe and comply with the conditions set out in the document annexed hereto and marked "A". In compliance with the provisions of s 20 Crimes Act 1914 (Cth), the obligation to so observe and comply will be for a period of 18 months from 1 March 2012.

Catchwords: CRIMINAL LAW - Sentencing appeal - insider training offences - error by trial Judge in reflecting assistance to authorities
CRIMINAL LAW - matters relevant to re-sentence - need for general deterrence in insider trading offences - subjective circumstances - co-operation with authorities - future assistance - whether psychiatric condition relevant - whether connected to offences - gambling addiction - remorse - rehabilitation - Ellis discount
Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth), s 13
Corporations Act 2001 (Cth), ss 1043A(1), (2), 1311(1)
Crimes Act 1914 (Cth), ss 16A, 16BA, 19AC, 21E
Criminal Appeal Act 1912, s 6(3)
Proceeds of Crime Act 2002 (Cth)
Cases Cited: BP v R [2010] NSWCCA 159; (2010) 201 A Crim R 379
DPP (Cth) v De La Rosa (2010) 205 A Crim R 1; [2010] NSWCCA 194
Director of Public Prosecutions (Cth) v El Karhani (1990) 21 NSWLR 370; A Crim R 123
Hili v R (2010) 85 ALJR 196
Johnson v the Queen (2004) 78 ALJR 616
KT v R [2008] NSWCCA 51; (2008) 182 A Crim R 571
Lodhi v The Queen [2007] 179 A Crim R 470
McQuoid [2010] 1 Cr App R (S) 43
MS2 and Ors v Regina [2005] NSWCCA 397; (2005) 158 A Crim R 93
R v Ellis (1986) 6 NSWLR 603
R v Hartman (2010) 81 ACSR 121; [2010] NSWSC 1422
R v Hearne [2001] NSWCCA 37; (2001) 124 A Crim R 451
R v Letteri (NSW CCA unreported 18 March 1992)
R v Rollins [2011] EWCA Crim 1825
R v Wright (1997) 93 A Crim R 48
Category: Principal judgment
Parties: Applicant - John Joseph Hartman
Respondent - Commonwealth Director of Public Prosecutions
Representation: Applicant - Mr T Game SC/S Buchen
Crown - Mr R Beech-Jones SC
Applicant - Johnson Winter Slattery
Crown - Commonwealth Director of Public Prosecutions

File Number(s): CCA 2010/65592
Decision under appeal

Citation:

R v Hartman (2010) 81 ACSR 121; [2010] NSWSC 1422

Date of Decision:

2010-12-02 00:00:00

Before:

McClellan CJ at CL

File Number(s):

2010/65592

Judgment

THE COURT: This is an application for leave to appeal by John Joseph Hartman ("the applicant"). It relates to sentences imposed by his Honour Justice McClellan CJ at CL (the sentencing judge) on 2 December 2010 ( R v Hartman (2010) 81 ACSR 121; [2010] NSWSC 1422).

The applicant had pleaded guilty to nineteen charges of insider trading contrary to ss 1043A(1) and 1311(1) of the Corporations Act 2001 (Cth) (Counts 1-19) and six charges of communicating inside information contrary to ss 1043A(2) and 1311(1) of the Corporations Act (Counts 20-25). The applicant also admitted his guilt in relation to further charges of a like kind that were listed on a schedule. The additional insider trading matters were taken into account in the sentence imposed for Count 1, while the additional 'tipping' matters were taken into account in the sentence imposed for Count 20. Each offence carried a maximum penalty of imprisonment for five years and/or a maximum fine of $220,000.

In general terms, the applicant had traded with, and communicated to another person, inside information over an 18-month period. This was between about the middle of 2007 and up to early January 2009. The "information" consisted of targets set for the acquisition and disposal of shares. These targets were set by the applicant's employer Orion Asset Management Limited (Orion). The applicant was employed by Orion as an equities dealer. In that capacity, he acquired the "information" of the target set by Orion's portfolio managers. The applicant used the information to engage in "front-running"; off-market trading in Contracts for Difference (CFDs). This occurred from about the middle of 2008 to January 2009. Earlier, from mid 2007 to mid 2008, the applicant had passed inside information to a close friend (Mr Curtis) knowing that he would acquire CFD's in the relevant stock (the tipping offences). Prior to sentence, the applicant had consented to forfeiture of $1,575,949.43 under the Proceeds of Crime Act 2002 (Cth). This represented the substantial portion of the total profit particularised in the charges.

The applicant was sentenced to an aggregate term of imprisonment of four and a half years. A single non-parole period of three years was fixed. The non-parole period commenced on 2 December 2010 and is to expire on 1 December 2013. The individual sentences imposed on the applicant were as follows:

Count #1 3 years imprisonment Commenced: 2.12.10

Expires: 1.12.13

Counts #2-19 2 years imprisonment Commenced: 2.12.10

Expires: 1.12.12

Count #20 2 years imprisonment Commences: 2.6.13

Expires: 1.6.15

Counts #21-25 18 months imprisonment Commences: 2.6.13

Expires: 1.12.14

The insider trading sentences were made concurrent with one another, as were the tipping sentences. The latter, however, were then partially accumulated upon the sentence for Count 1. The sentence structure involves a substantial measure of accumulation between the two groups of sentences. The tipping sentences share only six months of concurrency with the sentence for Count 1 and they commence after the expiration of the sentences for Counts 2-19.

Grounds of Appeal

The applicant contends that the sentences imposed upon him were unduly severe in all the circumstances of the case such that lesser sentences are warranted in law: s 6(3) of the Criminal Appeal Act 1912 . The particulars of error contained in the Grounds of Appeal are as follows:

(1) The Sentencing Judge erred in the manner in which he had regard to the applicant's assistance to the authorities.

(2) The sentence for the group offences did not adequately reflect the applicant's assistance to authorities.

(3) The Sentencing Judge erred by failing to have regard to the applicant's demonstrated contrition.

(4) The Sentencing Judge erred by determining that there was a need to reflect general deterrence in the sentence passed upon the applicant.

(On the hearing of the application for Leave to Appeal, Ground 4 was modified. It was argued that the Sentencing Judge placed too much weight on the aspect of general deterrence and had failed to give adequate weight to the applicant's subjective circumstances. In other words, it was conceded that there was a need to reflect general deterrence in the sentences but that this aspect of the sentence was modified by other matters, particularly the applicant's mental health problems).

Facts Relating to the Offences

There was an agreed statement of facts before the Sentencing Judge. Its contents are set out in full in his Honour's remarks on sentence. We shall briefly summarise the relevant facts.

The applicant commenced employment as an equities dealer at Orion on 27 March 2006. He was then 20 years of age. His task involved the buying and selling of shares to align the target and actual weight of shares held on behalf of Orion's clients. He would do this through a number of brokers utilised for this purpose by Orion.

The stocks were bought and sold by Orion as fund manager on behalf of its clients. The level of stock held by Orion in any particular security was the ongoing responsibility of Orion's portfolio managers. It was they who set targets for the acquisition or disposal of specific stocks in order for Orion to maintain the best possible stock portfolio on behalf of its clients. The desired level of acquisition or disposal or particulars stocks was known as "target portfolio weights".

The target portfolio weights for each of Orion's investment options were recorded by Orion's portfolio managers in an electronic spreadsheet which was linked to Orion's dealing system. From the dealing system, the applicant was able to see the difference between the target quantity (based upon the target portfolio weights) and the actual quantity of shares held on behalf of Orion's clients.

The applicant accessed Orion's dealing system throughout his working day. This enabled him to carry out his role as an equities dealer. From time to time, he was also provided with verbal instructions from the portfolio managers with regard to the manner in which particular shares should be bought or sold. This access and these instructions meant that the applicant was privy to information that enabled him to observe and generally effect:

(a) the time at which shares were bought or sold;

(b) the price at which shares were bought or sold;

(d) the stockbrokers to be used to buy or sell shares.

It was often the case that the portfolio targets involved the buying or selling of significant volumes of a particular stock. In the course of buying or selling in significant volumes, the applicant came to appreciate that large volume trading could potentially have the effect of lowering or raising the price of the stock within a short time frame.

Early in his employment career, in August 2006, the applicant had opened for his own benefit an IG Markets Ltd (IG Markets) trading account. IG Markets is part of the IG Group based in the United Kingdom. Its clients include brokers, fund managers and private investors such as the applicant.

The insider trading offences arose out of conduct by the applicant in which he used financial products offered by IG Markets in the forms of CFDs. A CFD is a derivative, the value of which is determined by the price of an underlying share. CFDs on individual shares are different to buying or selling the underlying shares in a number of respects. First, the CFD trader only has to pay a margin, usually about 10% of the total contract value, rather than having to pay the total transaction amount, as would be required if the underlying shares were bought. Secondly, unlike a share transaction, when a CFD is sold ("taking a short position") there is no need for a CFD trader to later acquire the underlying shares for transfer upon settlement. Thirdly, interest is calculated daily on a CFD trader's overnight position. Once a CFD position is open, it can generally be held open for as long as a CFD trader wishes. CFD trading is generally regarded as highly risky. While there is a greater potential to maximise returns, there is equally a greater potential to suffer large losses in a short time period.

The Australian Securities and Investment Commission (ASIC) in its Report 205 at July 2010 describes CFDs in these terms:

CFDs are a highly geared derivative product that allows traders to take a position on the change in the asset of an underlying asset or security...CFDs allow traders to take a short or long position on changes in the value of underlying assets through entering into a swap-style arrangement with the CFD issuer. A trader entering into a long position (buying a CFD), for example, is betting that the price of the underlying share will move higher relative to today's price. In contrast, a trader taking a short position (selling a CFD) is betting that the price will move below today's price.

In an associated document in evidence before the Sentencing Judge (ASIC Financial Tips and Safety Checks, Exhibit 3) the following warning was given:

Essentially, under a CFD you are borrowing money to bet on the short term movement of share prices. If you are right you make money. If you're wrong you lose...CFDs are generally highly geared products. This means your stake will generally only be a fraction of the market value of the shares you're contracting for...You're effectively gambling a much larger amount of money than if you went to the casino or racetrack. You therefore face potentially unlimited losses.

Initially, the applicant used his trading account with IG Markets for personal trading. This trading did not involve the use of inside information. Overall, it seems he lost money in relation to this early period of trading and his account was suspended for a time. From about mid 2008, the applicant re-commenced trading in CFDs after he had reopened his IG Markets accounts. These later trades were made based on the information the applicant received about trades Orion intended to make in the same stock. As he said in his statement to ASIC (Exhibit A, para 20):

If I saw that Orion needed to trade in a stock and that may have a material impact on the price of the stock, then I would trade for myself personally and then trade out of the position when I thought it was appropriate for my personal best interests.

In the same statement, the applicant indicated that his ability to trade using the insider information was constrained initially because of his financial position. Over time, however, the size of the trades he could make on his IG Markets accounts grew quite significantly. It appeared the account was in his own name and when it was initially opened, it was done so by use of an Orion letterhead document. There was no suggestion that a false name or false address or anything of that kind had been used.

It is necessary to backtrack to deal with the offences relating to the communications given to Mr Curtis. Mr Curtis was a childhood friend of the applicant. Inside information was communicated by the applicant to Mr Curtis during the period May 2007 to mid June 2008. Discussions between the two young men lead to a mutual understanding that Mr Curtis would trade in CFDs using inside information communicated to him by the applicant. Mr Curtis would provide the capital and the applicant would provide the information. This information, once again, related to Orion's intended trading in the shares and entities listed on the Australian Securities Exchange.

Mr Curtis purchased two Blackberry phones and these were used in their communications with one another. It was Mr Curtis' idea that communications should take place in this manner because the consequence would be that data would not be left on telecommunication services. It appears that it was agreed between the applicant and Mr Curtis that this system of messaging would also coordinate the taking up of a CFD position by Mr Curtis before the applicant commenced his trading in the shares of the same entity. This was done to maximise the likelihood that the share price would move in the same direction as the CFD taken out by Mr Curtis. The proposal involved, after the distribution of brokerage and other expenses, a sharing of profits.

The applicant stopped passing on information to Mr Curtis in about June 2008. By this stage, his financial circumstances had changed and he decided he would use the Orion trading information himself using his IG Markets account. He told Mr Curtis "I just can't keep on giving you this information".

In his statement to ASIC, the applicant said that when he started work at Orion, he had signed a personal trading policy document. This instructed him in relation to the insider trading laws and warned him against conflicts of interests that might arise between Orion, Orion's clients and his personal trading activities. His supervisor Tim Ryan told him that Orion strongly discouraged personal trading. The policy made it clear that he was required to notify Orion and obtain permission from his supervisor in relation to any personal transactions. In that situation, he was required to fill out a form and disclose the identity of his broker, how many shares he had bought and the price.

During his employment, the applicant was required on some three occasions to complete an audit form. This required him to state whether or not he had engaged in any trading during the relevant period. On each of these occasions, the applicant responded to the audit by stating that he had not been involved in trading. This was an untrue statement.

In evidence before the sentencing judge was a statement of Robert MacAlpine. He was a solicitor with ASIC. By August 2008, ASIC had become aware of concerns in relation to personal trading by the applicant. By late October 2008, ASIC had become aware of the trades conducted on the trading account held by the applicant with IG markets for the period between 1 October 2007 and 31 July 2008. This trading included four trades which eventually were represented by Counts 1 to 4 in the indictment.

By 8 January 2009, ASIC had become aware of trades on the account for the entire period from August 2008 to January 2009. ASIC was in the process of assessing this information relating to the overall trading of the applicant when events suddenly came to a head in mid January 2009.

The applicant received a request from IG Markets that he provide trade approval from Orion for the trades that he had done on the IG Markets account for the previous year. Written approval to this effect was required to be produced within one week, failing which, it was stated, IG Markets would present the matter to the applicant's employer. Clearly, there was no way out for the applicant and in a state of desperation he approached his father, Dr Keith Hartman, and told him everything that he had done.

The applicant's father immediately arranged an appointment for the applicant to see a solicitor, Mr Mark O'Brien and instructions were given, first, to inform Orion what had happened and secondly to make arrangements for the applicant to see ASIC with a view to making full admissions immediately.

The applicant wrote a meaningful letter of apology to his co-workers and employers at Orion and was notified in turn on the 20 January 2009 that his employment had been terminated. In the letter, Orion stated that it would disclose the applicant's conduct to ASIC immediately.

The applicant's voluntary recorded interview with ASIC took place on 21 January 2009. In this interview, the applicant made substantial admissions as to conduct he had engaged in while an employee of Orion. The admissions concerned:

(a) trading in CFDs that he had conducted on his account on IG markets; and

(b) his communication of confidential price sensitive Orion trading information to Mr Curtis.

In addition, the applicant also provided further information in the interview regarding other third party conduct not involving any transgression or misconduct on the applicant's part.

Following the completion of the interview, and no doubt because of it, ASIC commenced its formal investigation under s 13 of the Australian Securities and Investments Commission Act 2001 (Cth) in respect to contraventions, both by the applicant and Mr Curtis and associated entities, of offences under the Corporations Act 2001 .

On 22 July 2009, IG Markets commenced interpleader proceedings in the Supreme Court of Victoria in relation to the credit balance of the applicant's trading account. Later the Commonwealth Director of Public Prosecutions (DPP) applied for orders under the Proceeds of Crime Act 2002 (Cth) in relation to the credit balance of the account, being the sum of $1,592,499.93. With the co-operation of the applicant, these proceedings were resolved by consent. The ultimate consent orders effectively dealt with the property in dispute in the interpleader proceedings.

By September 2009, ASIC and the applicant's legal representatives were in discussion regarding the possibility of the applicant cooperating to resolve criminal and other actions against him. In September and October 2009, there were further interviews by ASIC with the applicant. The subject matter of these interviews extended to a range of matters in which no allegation of impropriety was made against the applicant.

On 24 February 2010, the applicant provided ASIC with a signed statement in which he admitted the truth of all the facts and conclusions asserted against him. He also indicated his intention to plead guilty to the 25 offences set out in the annexed document. Finally, the applicant provided ASIC with an undertaking to cooperate for the purposes of s 21E of the Crimes Act 1914 (Cth) and two forms for the purposes of s 16BA of the Crimes Act 1914.

On 8 March 2010, the applicant was issued with Court Attendance Notices in which he was charged with 25 offences in substantially the same form as those contained in the indictment presented before the Supreme Court. On 6 April 2010, the applicant appeared before the Downing Centre Local Court and entered a plea of guilty to the 25 charges in the Court Attendance Notices. On 6 August 2010, the applicant was arraigned before the Supreme Court of New South Wales. He entered a plea of guilty to each of the charges contained in the indictment. In addition he asked for the offences listed on the Section 16BA forms to be taken into account as a part of the sentencing process.

The Applicant's Subjective Case - Material before the Sentencing Judge

The applicant presented a substantial subjective case at the sentencing hearing. For example, there was evidence to demonstrate that the applicant was fully willing to facilitate the course of justice. This was evidenced by his prompt attendance at ASIC on the 21 September 2009 and his voluntary admissions made during the first interview. It was evidenced thereafter by his facilitation of the making of the order under the Proceeds of Crime Act . It was also evidenced by his entry of a plea at the earliest available opportunity. His co-operation with authorities and the provision of assistance, both past and present, was also significant.

One factor of special importance in the sentencing proceedings was the material relating to the applicant's mental illness. This, of course, had a bearing not only on the subjective case presented on his behalf but also on the issue of the overall criminality involved in the commission of the offences.

The evidence before the Sentencing Judge included various reports of the applicant's treating psychiatrist, Dr Wilson, and the report of the consultant psychiatrist, Professor Jonathon Phillips.

Dr Wilson had treated the applicant since the time of his admission to the North Side Clinic in January 2009. He had been admitted in a distressed and suicidal state. Dr Wilson had diagnosed the applicant as suffering from a major depressive disorder with anxiety, pathological gambling and past (chronic) dysthymia. Dr Wilson stated in his report on 7 November 2009:

There was initial consideration given to the diagnosis of adjustment disorder with depressed mood, but his syndrome was much more severe, pervasive and persistent than an adjustment disorder. The pre-existing dysthymia and strong family history further contributed to the diagnosis of major depressive order.

In relation to the gambling addiction, referred to in his reports, Dr Wilson said:

Mr Hartman meets diagnostic criteria for pathological gambling. This includes preoccupation with gambling, a need to gamble increasing amounts of money, plus feeling gambling is pointless if you cannot gamble large amounts. He gambles to relieve dysphoria and as a way of achieving a sense of escape...as mentioned, some of Mr Hartman's stock market activity appears to constitute gambling behaviour also.

Dr Wilson developed this at page 3 of his report when he said:

There are elements of Mr Hartman's approach to his work in share trading that are closely akin to gambling. Mr Hartman describes a similar "rush" and excitement with share trading to gambling. The share trading also has a compulsive quality and often interferes with normal social and home function. A striking example is that Mr Hartman would wake through the night and check the price of various shares. He had his bedroom set up so that he faced the computer screen. Because he could not view the screen from the lying position, he kept binoculars with him, and viewed the screen through these throughout the night.

It appears that shortly prior to the sentencing hearing, the applicant suffered a brief relapse in relation to his gambling addiction. He had been free from gambling activities for quite a considerable time prior to this relapse. Dr Wilson had attempted to pre-empt this in his earlier work with the applicant. In his September 2010 report he said:

In the light of our work and various discussions, John and I together formulated his difficulties as involving a combination of factors such as being heavily prone to addiction, being inexperienced and foolish with regard to judgment as well as suffering significant depression and trying in a sense to self medicate by way of gambling which included his illegal activities.

The reasons for the applicant's depressive condition were not in issue. It appears to have been generally accepted at the sentence hearing that the applicant's serious depressive problems began when he was in his last year at school. Prior to this time, he had been a relatively happy boy, successful in many areas of his schooling and popular with his many friends. There was however, as Dr Phillips in his reports noted, a strong family history of psychiatric disorder. Up until his final year at school, the applicant had recorded a generally happy family life but his situation changed dramatically when his brother Alex was diagnosed with serious bi-polar disorder at the age of eighteen. Alex made a suicide attempt at the time. He was treated by psychiatrists and found to be medication resistant. There were involuntary admissions to hospital. These events, according to the applicant's father and teachers, had a significant effect on him and led to serious changes in his personality and behaviour.

In his September 2010 report, Dr Phillips expressed the opinion that the applicant suffered chronic depression spectrum symptoms and that these, according to reliable material, had been in existence at the time of the commission of the offences. Dr Phillips thought it probable that the applicant had sought temporary relief from his dysphoric state through his illegal activities. He explained that relief, at least in part, was achieved through his personal trading activities and through gambling. However, he did not believe that the applicant had a personality disorder in those regards. He concluded in this report:

Mr Hartman has a clear understanding of his wrongdoing. He does not deny his illegal actions. He recognises that he will be punished for his illegal actions and is trying to make adjustment to this. He is ashamed by his illegal actions and is contrite. He is not psychopathic by disposition. He committed his illegal actions at a time when his thinking was altered because of his chronic depression symptoms with motivation at the time principally to lift himself (albeit in a temporary matter) above his anhedonic symptoms. He remains in therapy with Dr Wilson and has reached a point in the process of treatment where it is highly unlikely that he will offend again.

We turn next to consider a third factor that was of importance in the sentencing hearing.

The material before the Sentencing Judge relating to the applicant's provision of assistance to the authorities and cooperation with them was beyond doubt compelling. Indeed, at the hearing, the experienced Crown Prosecutor informed the Sentencing Judge that the assistance he had provided was "substantial" and "significant". The learned Crown Prosecutor added (Transcript 101):

What happened as well was that not only was there a plea, but there was, I am instructed, a disclosure of his own activity as regards a number of activities that he had been involved in. It does not happen often in cases such as this...the number of cases that people expose, frankly, the whole of their activity is unusual and it is sought to be encouraged by the investigator involving these matters and sought to be encouraged by the only way that is possible by your Honour dealing with it here.

Mr MacAlpine in his statement said (Appeal Book 240-241):

[42] The offender's assistance to ASIC commenced with his participation in an interview on 21 January 2010.

[43] The offender's participation in the interview provided ASIC with assistance in a number of ways:

(a) he identified and explained conduct that he had engaged in;

(b) he identified and explained conduct that he alleged Mr Curtis had engaged in;

(c) he identified sources of evidence for ASIC to pursue in an investigation of possible offences;

(d) his admissions were made voluntarily under caution with consequent evidential and not merely informational value; and

(e) savings in ASIC's time and resources flowing from the assistance referred to in (a)-(d).

[44] I believe that the offender was candid and truthful in interview.

Mr MacAlpine made it clear that, in the absence of information being disclosed by the applicant, ASIC would not have identified the tipping offences nor would they have been likely to have obtained material that assisted them in the investigation as to whether Mr Curtis had himself engaged in insider trading. He fairly stated that without the assistance of the applicant, there would not have been sufficient admissible evidence to prove the tipping offences to the required standard in a defended prosecution.

In relation to the final statement made by the applicant in February 2010, Mr MacAlpine said that the provision of this statement enabled the charging and prosecution of the applicant to be commenced earlier than it could otherwise have been. It saved ASIC from deploying resources to obtain most of the witness statements that would have been needed for a full brief of evidence against the applicant. Mr MacAlpine also made reference to the manner in which the applicant had given an undertaking to assist and give evidence in any proceedings against Mr Curtis. Although no decision had been made as to whether any charges would be brought against Mr Curtis, it was stated that the applicant would be a crucial witness in any future criminal or civil proceedings against Mr Curtis. He reiterated that the applicant had also provided information and assistance in relation to further matters in which it was not alleged the applicant had any involvement. This assistance was also provided on a voluntary basis.

In the concluding portion of his statement, Mr MacAlpine said:

[68] Since participating in the interview on 21 January 2009, the offender has at all times assisted ASIC in a timely and effective manner.

[69] I consider that the offender has made a genuine effort to fully cooperate with ASIC's investigators and lawyers and to be full and frank in each interview he has attended.

[70] The offender's disclosure of information to ASIC has included voluntary admissions as to his own involvement in conduct contravening the Corporations Act 2001. These included admissions by the offender that he communicated inside information to Mr Curtis which ASIC would have otherwise been unlikely to identify or be able to prove by admissible evidence to a required standard.

...

[75] It is inherently difficult to obtain the evidence necessary to prove insider trading offences and for this reason it is of significant assistance to ASIC if persons voluntarily disclose details of their own conduct or the conduct of others.

Mr Hartman gave evidence at the sentence hearing before the Sentencing Judge and submitted himself for cross-examination. In his evidence in chief, he confirmed the facts to which earlier reference had been made . He gave evidence that he had paid tax on the profits he made from the illegal trades and that he had openly conducted the IG Markets account in his own name. However, he agreed that he had lied in relation to the audit statements made to his employer as to whether he had been trading during the relevant period. At Appeal Book 69 the following passage occurs in his evidence in chief:

Question: Alright. Now in terms of how you, shall I say, felt when you made CFD trades, in your own words, what were your feelings, shall I say, when you made these trades?

Answer: The way that I was feeling around the time, I was in a very depressed state and the CFD trading gave a feeling similar to that of gambling.

Question: And was that a good feeling?

Answer: It was a rush of adrenalin similar to gambling.

Question: Alright and did you make both big losses and big gains?

Answer: Yes.

Question: Sometimes after many hundreds of thousands of dollars at once?

Answer: Yes.

The applicant, in evidence, revealed a somewhat contrasting aspect of his life that ran counter to his illegal behaviour. During the time when it was occurring, he was working as a volunteer doing community work at Theresa House which is a shelter for homeless men. He would do this once or twice a month and the work required him to stay overnight, sleeping in a terrace in Redfern that provided emergency accommodation for twelve homeless people. The work was done by himself and another volunteer over a period of years. Secondly, he revealed that after he had lost his position with Orion and following his treatment at Northside Clinic, he had received the assistance and guidance of a Jesuit priest, Father Steve Sinn who was the parish priest at St Canices at Elizabeth Bay. In effect, following this, the applicant became the priest's personal assistant helping him especially with the parish work involving the care of homeless people and disadvantaged refugees in the local community. He worked in this capacity as a volunteer, wage-free for nearly two years. Father Sinn, as did others, provided a powerful reference at the sentencing hearing.

The pre-sentence report prepared in June 2010 generally corroborated all the matters to which we have made reference. The Probation and Parole officer in charge, Ms Gloria Enfield, said in relation to the mental health issue:

It appears that Mr Hartman first experienced feelings of depression during his later years of high school which corresponded with the time [when] one [of] his brothers became seriously unwell with a psychiatric illness, which was later diagnosed as bi-polar disorder. His depression remained untreated for several years, however after his illegal behaviour became known, Mr Hartman began treatment with a psychiatrist, initially twice weekly. In the past he has experienced feelings of suicidal ideation and he had begun to plan how he would suicide, although at the time of his interview with this service, he indicated he was no longer feeling suicidal...In January 2009 Mr Hartman was admitted to a residential psychiatric unit, where he stayed for three weeks while treatment was commenced. He has been diagnosed with a major depressive disorder and anxiety and remains on medication for these, as well as engaging in regular counselling.

In the concluding part of the report, Ms Enfield said:

Presenting as a cooperative albeit anxious person, Mr Hartman appears to have the benefit of stable formative years, raised by parents who remain emotionally supportive of him, despite their bewilderment of their son's offending behaviour. Inquires indicate that Mr Hartman began to experience depression when he was about sixteen years old, at about the time one his brothers developed a serious psychiatric illness. In his late teens, Mr Hartman developed a gambling dependency which in part has been a means, however dysfunctional, of his attempting to deal with his feelings of depression. His psychiatrist also believes his gambling dependence may have played a role in his cognitions in the workplace...He appears to have developed significant insight into what influenced his illegal behaviour and it is encouraging that he appears committed to maintaining the constructive changes he has brought to his life. The emotional support Mr Hartman receives from his family is also a positive element in his life.

The Sentencing Judge's Remarks

The Sentencing Judge gave careful consideration to the situation of the offender. He was satisfied that the offences were serious, particularly as they had been carried over a period of about nineteen months. His Honour said (para 45 ROS):

It must be remembered that his crimes were not victimless. Each illegal transaction was likely to have a cost to someone who either traded or held their position without the benefit of the knowledge available to the offender. The offender set about systematically trading in breach of the law for the sole purpose of enhancing his personal wealth at the expense of others. The evidence which I accept indicates that the insider trading charges alone made him a total profit in excess of $1.9 million.

[46] The Courts have said on many occasions that general deterrence is of particular significance in relation to white-collar crime. This is particularly the case in relation to insider trading offences which by their nature are easy to perpetrate but difficult to identify. Whereas in the present case the course of offending conduct results in the commission of multiple offences, a sentence of imprisonment is inevitable. I appreciate that the trades which the offender was making were not made in conventional markets but I do not accept that as a consequence the need for general deterrence is diminished.

[47] Although the offender has suffered from psychiatric difficulties, the need for a sentence which reflects general deterrence is such that his psychiatric illness is of only limited significance in the present case. There can be no doubt that notwithstanding any illness he may have been suffering from, he knew that what he was doing was wrong and a breach of the law.

It appears that the Sentencing Judge accepted that the offender had been suffering from a psychiatric illness as the medical reports had indicated, and that it was related to the gambling and illegal trading. His Honour said (para 37 ROS):

It would seem that the thrill of his illegal trades was similar to the thrill he received from a gamble on a horse or a play at the casino. His need for a "thrill" may be related to his psychiatric problems to which I have referred again below. In part his behaviour may be explained by those problems but it cannot be excused.

The Sentencing Judge acknowledged the contrition expressed by the applicant for his offending and for the hurt he had caused his family and others. His Honour acknowledged the assistance given to ASIC and indicated that he would give a discount of the type discussed in R v Ellis (1986) 6 NSWLR 603. He determined the appropriate discount in that regard to be 10 per cent. He also noted that the applicant was prepared to give evidence against another person and thereby was entitled to a further discount in that regard. This discount was determined to be 10 per cent in relation to the sentence for the tipping offences to which his offer to give evidence related. His Honour also accepted that the applicant was entitled to the maximum discount of 25 per cent for his plea of guilty in that he had thereby demonstrated a willingness to facilitate the course of justice.

The Sentencing Judge was rather more guarded in relation to the prospects of rehabilitation. This was because of the gambling relapse a short time before the sentencing hearing. Had it not been for that situation, it appears that his Honour would have accepted that the applicant was fully rehabilitated. However, his Honour noted that it would be unlikely that the applicant would ever again secure employment in a position where he would be able to trade with inside information in the financial markets.

Generally, his Honour was critical of that segment of the business world that allowed a person of the applicant's youth and immaturity to be beguiled by the enormous salaries and rewards that were given to him for what was, as his Honour described it, a "responsible clerical position". His Honour adopted Dr Hartman's description of the world in which his son was employed as "plastic". This, according to his Honour, was a world, which, while the applicant was still at university, corrupted his values and resulted in him pursuing "the high life" without regard for whether or not he was committing criminal offences. His Honour was also critical of the lack of effective supervision provided to the applicant. He said:

The temptations are so great and the potential rewards so significant that the fall into criminality of individuals is a significant risk.

The Sentencing Judge took into account the applicant's good character and the fact that he had never come under adverse notice prior to these offences.

His Honour then imposed the sentences to which we have made reference at the commencement of these reasons. It is clear from his Honour's remarks that his Honour accepted the submissions of the Crown and Mr Game SC that the structure of the sentences should be determined by grouping the two sets of offences and providing concurrency within each group but allowing for accumulation as between them. His Honour said (57-59 ROS):

[57] The sentences I propose compared with the extensive criminality of the offender may, to some people, seem to be lenient. This is in large part due to the Crown's concession that I should consider the offences as two sets of offences reflecting the two statutory provisions which were breached and assume a total maximum penalty of ten years imprisonment, being five years for each set.

[58] Furthermore, although the offender must be adequately punished and others deterred, I am mindful of his relative youth, psychiatric illness and the possibility, notwithstanding my reservations, of his future rehabilitation.

[59] In all the circumstances I have decided that the sentence which I impose for the insider trading offences should be discounted by a total of 25%, the discount for the tipping offences will be 45%. The latter includes a discount of 10% conditional upon the offender giving evidence in the contemplated proceedings against the alleged co-offender and also includes the Ellis discount.

Commentary on the Sentences

As can be seen, count 1 attracted a sentence of three years. Counts 2-19 attracted a sentence of two years each with all sentences to commence on 2 December 2010. Thus, but for the discount of 25 per cent, these sentences would have been four years and two years eight months respectively.

The Sentencing Judge applied a discount of 45 per cent for the tipping offences which reflected a 25 per cent discount for the plea at the earliest opportunity, the 10 per cent portion of the discount depended upon the applicant giving evidence in accordance with his undertaking in other proceedings and a further discount was given of 10 per cent, being the " Ellis " discount.

On count 20 the applicant received a sentence of two years and on counts 21-25 he received a sentence of 18 months each, with all to be wholly concurrent. Thus, but for the 45 per cent discount, these sentences would have been just over three years and seven months, and just over two years and eight months respectively.

The ratio between the non-parole period fixed by his Honour and the overall sentence was 66 per cent. Neither party has suggested any error on his Honour's part in the fixing of the non-parole period (see Hili v R (2010) 85 ALJR 196 which rejected the application of any "norm" involving an accepted ratio of 60-66 per cent between the overall sentence and non-parole period for federal offences).

Resolution of the Appeal

In relation to grounds 1 and 2, the complaint is made first that no discount was applied to the insider trading sentences to reflect any aspect of the applicant's past assistance to authorities. Secondly, it is said that the composite discount applied to the tipping sentences did not expressly include a discount for past assistance given by the applicant in relation to those offences.

In its written submissions, and orally before this Court, the Crown, through Mr Beech-Jones SC, conceded that the sentencing Judge had fallen into error in relation to each of these matters. Secondly, although the Crown submitted that the Court might redress the error by simply readjusting the relevant discounts, it was accepted that, as a matter of principle, this Court was bound to re-sentence the applicant and, in so doing, was entitled, if thought appropriate, to approach the re-sentencing exercise from a broad perspective. Given the complexity of the matters involved, we determine that we should approach the imposition of sentence as a full re-exercise of the sentencing discretion.

Additional material available on the re-sentencing exercise

A considerable body of evidence has been placed before the Court for its use in re-sentencing the applicant. We shall briefly identify this material.

First, there is Exhibit A, an affidavit from Robert MacAlpine, the senior lawyer in one of ASIC's market integrity deterrence teams. This affidavit provides detail of the assistance that has been given by the applicant to ASIC since the time of his sentence. For obvious reasons, we do not propose in this decision to detail the assistance which has been provided. It is sufficient to say that it has been significant in terms of both time and output. Whether any other person will be prosecuted in relation to the material provided by the applicant has not yet been decided by ASIC. The applicant remains bound by his undertaking to provide assistance in any future criminal or civil proceedings instituted against Mr Curtis for offences of contravening the Corporations Act 2001 . Mr MacAlpine states:

I consider that the applicant has made a genuine effort to fully co-operate with ASIC's investigators and lawyers whenever he has been asked for assistance or information.

Exhibit B is an affidavit by the applicant sworn 8 October 2011. It details his progress in prison. He has made good use of his time completing a real-estate course with TAFE and is presently engaged in a building and construction course with the same educational institution. The applicant has also participated in a prison based addiction program. Although this did not relate to gambling addiction, the applicant has endeavoured to use the program to his advantage, having regard to his own particular problem. There are other courses that he has completed whilst in custody.

The applicant states that he currently holds the position of head library clerk. This gives him a fairly high degree of responsibility in the prison. His role includes maintaining the library, processing book loans and helping inmates to access library services. He also helps inmates, particularly those of a foreign background or those with poor English skills to understand and type legal documents such as immigration applications. It appears to be accepted that he has been well behaved in custody and there have been no adverse findings against him.

The applicant is currently housed in a facility which accommodates inmates in protective custody. Regrettably, the applicant's own situation in relation to receiving adequate treatment of a psychiatric nature while in custody is disappointing. He has, despite his efforts, been able to see a psychologist on one occasion only. It took three months to organise and the consultation lasted for about 5 minutes. There does not appear to be any opportunity for regular consultation with a psychiatrist or psychologist in the applicant's present circumstances. The applicant would like (and needs in the interest of rehabilitation) to receive some assistance in custody in relation to therapy or participation in programs that would help him overcome his gambling addiction but regrettably these do not appear to be available.

The applicant expresses very clearly his remorse in relation to the offences. He also presents a clear understanding of the circumstances which have led to the unfortunate situation in which he now finds himself. Finally, we should mention o element of concern in the affidavit. This relates to the abuse and threats he has received because it is known that he is giving some assistance to the authorities. He has not been, to this point, physically assaulted but has been verbally abused on a number of occasions for assisting authorities in relation to a former friend. He has received several threats of violence.

Exhibit C is material collated by the applicant's solicitor Mark O'Brien. It includes evidence to support the applicant's success in the courses he has been doing through TAFE. Secondly, there is a further reference from Father Sinn. He has visited the applicant in prison on three or four occasions. The letter is very persuasive on the issue of rehabilitation. Father Sinn says:

No one wants to be in prison. Having said that, John has made the best of the circumstances. ...John has learnt so much during his time at [prison]; he does not take for granted the love of his family or friends; he has come to understand himself more deeply and to be in touch with his true self, his humanity. It may seem obvious, but out there in the commercial world the humanity of young people is not nurtured. He is aware as never before that he is prone to depression and that gambling is no way to medicate. He is aware of the importance of relationships in his life. This growth and awareness is the foundation that he is building his life on and has given him peace with himself. I look forward to seeing him soon and being part of his life in the years to come.

A further annexure is an updated report from Professor Jonathon Phillips. This report essentially summarises all of the psychiatric evidence at the sentencing proceedings and addresses the issue of the relationship between the applicant's psychiatric condition and the commission of the offences which have seen him incarcerated. These matters were, of course, raised before the sentencing Judge, but for more abundant caution, Professor Phillips has re-addressed them. It will be sufficient to note paragraph 50 of the report:

With respect, and as stated in my first report, I believe it is critical in Mr Hartman's case to note that his criminal behaviour occurred at a time of mental disturbance. The pattern is simple. Mr Hartman had a major depressive disorder of several years duration at the time. He attempted to escape chronic anhedonic feelings by seeking a "rush". He did this through hazardous drinking, the use of elicit psycho-active drugs, gambling and illegal trading. The aim was identical across the activities, simply to achieve a "rush". Seeking the "rush" became a compulsive behaviour over which he had very little control.

The final affidavit (Exhibit D) annexed a report from Dr Craig Wilson. He had visited the applicant in prison on 3 November 2011. This report sought to provide a current assessment for the applicant's condition.

There are really two strands to Dr Wilson's observations. First, he expressed disappointment that the applicant had not been able to obtain the type of psychiatric treatment and assistance he had hoped would be available to the applicant in custody. He expressed the opinion that it was "very disappointing" that someone who had had such severe mental illness difficulties in the past has not had any appropriate psychiatric review. Similarly, he was "disappointed" that the prison did not provide any specialised program for people suffering from a gambling addiction. In addition, he noted there had been no psychological intervention to assess, address or explore relapse prevention with regard to the applicant's depressive illness.

On a more hopeful note, Dr Wilson was pleased with the applicant's present mental state. He noted that there had been no serious resurgence of his depressive symptoms and particularly no aspect of suicidality. His observations were that the applicant was physically well and that mentally he was making the best of his situation in custody. He thought that there was a very low risk of any re-offending. In his report he said:

Since the day he made his confession to ASIC, Mr Hartman has gradually regained his previous closeness to his family, has reconnected with his values of integrity and hard work, and reaserted the value of community service in his life. Through his help seeking behaviour he has gained greater insight into his susceptibility to depressive illness and his lifelong vulnerability to gambling addiction in its varied forms.

In relation to the link between the applicant's depression and the offending behaviour, Dr Wilson said:

Addiction illnesses (including gambling addiction) and mood disorders are known to be frequently co-morbid and exacerbate each other's clinical course. From another perspective, the addictive behaviour of both Mr Hartman's illegal trading activities and his gambling can be viewed as coping strategies to deal with dysphoric feelings and mood states associated with depression. They are, of course, inadequate coping mechanisms, but the sense of "rush" or "buzz" that Mr Hartman has described, and problem gamblers in general are known to feel, does serve to compensate for flat, withdrawn and negative feelings of depressive illness. It provides a brief respite from the dysphoric state, but of course has an addictive and compulsive quality directly akin to substance addiction, and ultimately serves to worsen a depressive condition rather than ameliorate it.

In summary, Dr Wilson said:

In my opinion as Mr Hartman's treating psychiatrist he is coping reasonably with the difficulties of incarceration. He is however receiving inadequate care and treatment. It is unfortunate that sufficient and appropriate treatment modalities are not available or provided to Mr Hartman and I am certain that he would be well engaged with and receiving far superior treatment if not in custody. Mr Hartman seems generally remorseful and keen to embrace a future congruent with his re-focused core values. It is my hope that he achieves freedom from custody while he is able to maintain his good spirits and momentum for positive change.

Re-sentencing the applicant

We turn now to re-sentence the applicant.

First, we bear in mind (as did the sentencing Judge) that the statutory obligation (s 16A(1) Crimes Act (Cth) ) is to impose a sentence that is of a severity appropriate in all the circumstances of the offence. Secondly, we acknowledge the need to take into account a number of the relevant aspects of s 16A(2) of the Act . In particular, there is a need in the present re-sentencing exercise to consider the following matters especially:

The applicant's contrition and remorse in relation to his offending;

The applicant's plea of guilty and its circumstances;

His co-operation with authorities "in the investigation of the offence or other offences";

His youth, relative immaturity and his psychiatric condition;

The applicant's prospects of rehabilitation;

The need to ensure the applicant is adequately punished for the offence.

Thirdly, it is necessary to acknowledge that general deterrence, although not listed in s 16A(2), is an important general principle of sentencing and needs to be taken into account ( Director of Public Prosecutions (Cth) v El Karhani (1990) 21 NSWLR 370; 51 A Crim R 123; Lodhi v The Queen [2007] 179 A Crim R 470 at [81] per Spigelman CJ). Indeed, all of the well known objects established by common law principles apply to the sentencing of a Federal offender: Johnson v The Queen (2004) 78 ALJR 616 per Gummow, Callinan and Heydon JJ at 622 [15].

With those matters in mind, we begin with an acceptance of the proposition that the circumstances of the present offence satisfy us that no sentence other than imprisonment is appropriate. Of course, the offender has already been in prison for nearly a year. However, we consider that the sentencing Judge was correct in recognising that a sentence of full time imprisonment was appropriate in the present matter. This was accepted on the applicant's behalf at the original hearing and there is no dispute with the proposition upon appeal.

Secondly, we accept the argument of the Crown that the offences in the indictment (and the offences in the table) are serious offences as was the general course of criminal conduct engaged in by the applicant. With one addition, we respectfully adopt the sentencing Judge's statement at paragraph 44:

The offender engaged continuously in serious criminal conduct over a period of 19 months. His offences were serious. His conduct was both in breach of the law and contrary to his obligations to his employer. He was aware of those obligations which had been communicated to him in writing. Furthermore he had responded to questions from his employer asking whether he was trading on his own account by lying and falsely stating that he was not trading.

The addition to which we have made reference arises out of the evidence of Dr Wilson and Professor Jonathan Phillips. This evidence establishes to our satisfaction that there was a nexus between the applicant's psychiatric condition, his gambling addiction and the commission of these offences, especially the insider trading offences. We accept that there is a foundation for it in the applicant's evidence (see para 48 above) although we acknowledge, as the Crown submitted, that an important aspect of the applicant's motivation in committing both groups of offences was to make profits for himself.

In DPP (Cth) v De La Rosa (2010) 205 A Crim R 1; [2010] NSWCCA 194 McClellan CJ at CL helpfully set out at [177] in short form the principles which have been developed and applied in sentencing an offender who was suffering from a mental illness, an intellectual handicap or other mental problem. Two aspects of the summary are relevant in the present matter and bear repetition:

Â· Where the state of a person's mental health contributes to the commission of the offence in a material way, the offender's moral culpability may be reduced. Consequently the need to denounce the crime may be reduced with a reduction in the sentence [authorities omitted].

Â· It may also have the consequence that an offender is an inappropriate vehicle for general deterrence resulting in a reduction in the sentence which would otherwise have been imposed [authorities omitted].

The Crown argued that the factual situation in the present matter did not compel this Court to disregard general deterrence. In that regard, the Crown referred to the observations by Gleeson CJ in R v Engert (1995) 84 A Crim R 67 where his Honour said:

... in truth however, for the reasons given at the commencement of this Judgment, the question of the relationship, if any, between the mental disorder and the commission of the offence, goes to circumstances of the individual case to be taken into account in the application of the relevant principles. The existence of such a causal relationship in a particular case does not automatically produce the result that the offender will receive a lesser sentence, any more than the absence of such a causal connection produces the automatic result that an offender will not receive a lesser sentence in a particular case.

Gleeson CJ had earlier said, at the commencement of his judgment, (at [69]):

It is therefore erroneous in principle to approach the law of sentencing as though automatic consequences follow from the presence or absence of particular factual circumstances. In every case, what is called for is the making of a discretionary decision in the light of the circumstances of the individual case, and in light of the purpose to be served by the sentencing exercise.

The Crown also made reference to the remarks of Hunt CJ at CL in R v Wright (1997) 93 A Crim R 48 at [52]. In that decision the Chief Judge had discussed the accepted principle of sentencing that general deterrence should often be given very little weight in the case of an offender suffering from a mental disorder or abnormality on the basis that such an offender could not to be regarded as an appropriate medium for making an example to others. At the end of the discussion, his Honour had said:

The means by which the courts give effect to that principle (as an instrument of social administration) is to moderate the consideration of general deterrence to the circumstances of the particular case. But, if the offender acts with knowledge of what he is doing and with knowledge of the gravity of his actions, the moderation need not be great.

The Crown placed particular emphasis on this last paragraph.

For our part, we do not consider that the particular paragraph relied on by the Crown in the reasons of Hunt CJ at CL carries with it the notion that, in a situation where an offender acts with knowledge of what he is doing and is aware that it is wrong, his mental condition will have no impact on the issue of general deterrence and may accordingly be disregarded. Nor do we consider that, when read in context, his Honour's remarks suggested that the significance of psychiatric condition in such a case will always be minimal.

In the earlier part of the discussion Hunt CJ at CL had said:

It is an accepted principle of sentencing that general deterrence should often be given very little weight in the case of an offender suffering from a mental disorder or abnormality because such an offender is not an appropriate medium for making an example to others. In most of the cases in which that principle is applied, the offender has suffered from a significant mental illness or retardation, but such a condition is not a necessary condition for the principle to be applied . Considerations of general (or even personal) deterrence are not rendered completely irrelevant, and the significance of the offender's mental incapacity is to be weighed and evaluated in the light of the particular facts and circumstances of the individual case . [our emphasis]

It might be observed in the same case that Gleeson CJ, while in general agreement with Hunt CJ at CL's reasons said :

My views on the significance, for sentencing purposes, of the presence of a psychiatric condition in an offender, are set out in the case of Regina v Engert , and it is not necessary to repeat them. The particular reason given by Hunt CJ at CL which constitutes the basis of my agreement with the orders he proposes, is that, in the present case, the learned sentencing judge allowed the subjective features of the respondent to outweigh the significance properly to be attached to the extremely serious objective circumstances of the case.

In Engert , Gleeson CJ had cited with approval the remarks of Badgery-Parker J in R v Letteri (NSW CCA unreported 18 March 1992):

The principle then is clear enough. It is correctly stated as follows: that whereas general deterrence is a relevant consideration in every sentencing exercise, it is a consideration to which less weight should be given in the case of an offender suffering from a mental disorder or severe intellectual handicap. In an extreme case, the proper application of this principle may produce the result that considerations of general deterrence are totally outweighed by other factors. In every case it is a matter of balancing the relevant factors in a manner no different from that which is involved in every sentencing exercise.

Gleeson CJ "emphasised" the concluding sentence in this passage.

Our conclusions on this matter may be shortly stated. First, there is no doubt that the applicant knew what he was doing and knew that his actions were wrongful. Secondly, his actions were in part motivated and prompted by a wish to make profits from his own trading and the trade initiated by Mr Curtis. Thirdly, he was throughout the period suffering from a genuine and long term depression spectrum from which he sought relief in gambling and other dangerous activities. Fourthly, his psychiatric condition contributed to his compulsive trading activity which, in his perception, gave him temporary but misguided relief from his major depressive symptoms. This trading activity was in fundamental respects a form of highly leveraged gambling akin to the other types of gambling in which he had engaged. It led on occasions to significant profits but it also led on other occasions to significant losses. Accordingly, there was a mixed and highly complex group of motivations for his illegal activity part of which was rightly attributed to his psychiatric condition. His own evidence before the sentencing Judge establishes the nature of the transient "buzz" that his illegal activities gave him.

It follows, in our opinion, that, while the offences were undoubtedly serious, there must be some moderation given to the aspect of general deterrence because of the applicant's mental condition (s 16A(2)(m) Crimes Act 1914 (Cth) ). Moreover, to a limited degree, the applicant's moral culpability is accordingly lessened.

We do not agree, however, that, in the circumstances of this matter, the applicant's youth and relative immaturity have any role to play in downgrading or lessening the importance of general deterrence. We recognise that in some cases these factors may be both relevant and important on the issue ( MS2 and Ors v Regina [2005] NSWCCA 397; (2005) 158 A Crim R 93 per Simpson J at [9]; Adams J at [15]-[16]; BP v R [2010] NSWCCA 159; (2010) 201 A Crim R 379 per Hodgson JA at [3]-[6], but see, Johnson J at [74]-[75]; R v Hearne [2001] NSWCCA 37; (2001) 124 A Crim R 451 at 458; KT v R [2008] NSWCCA 51; (2008) 182 A Crim R 571 at 577-578). We do not consider in the present matter that they are relevant and important in that way. The applicant was operating in the adult sphere of business and commerce in every respect, and of course he was himself an educated and worldly young adult in every sense of the word. The Court cannot lose sight of the need to deter young adults from taking the significant financial advantages offered by the contemporary business world in circumstances where, at the same time, they reject the legal and moral constraints properly imposed upon their commercial behaviour.

Mr Game also argued that the applicant's choice of trading, namely, off-market highly geared derivatives, might be viewed as less culpable than if he had been trading in the underlying shares. We are unable to accept this argument. It needs to be remembered that insider trading not only has the capacity to undermine the integrity of the market, it also has the potential to undermine aspects of confidence in the commercial world generally. The principles of confidentiality and trust are fundamental to the operation of many commercial transactions. As the applicant's employer recognised, advance knowledge by its employees of proposed trades of a significant kind required, as a matter of trust, that they remain in the realm of confidentiality. Insider trading is a form of cheating. Put bluntly, it is a form of fraud, even though its consequences may be more opaque than general fraud ( McQuoid [2010] 1 Cr App R (S) 43; R v Rollins [2011] EWCA Crim 1825).

We do not consider that the applicant is entitled to an Ellis discount in relation to the insider trading charges although we acknowledge that we should take into account, as part of his assistance and co-operation with the authorities, the fact that he voluntarily attended ASIC and made full admissions before any formal investigation commenced into those matters.

The assistance and co-operation provided by the applicant to ASIC was and is considerable in the present matter. We take this into account as required by s 16A(2)(h) of the Act and we do so in our recognition of the difficulties involved in investigating, prosecuting and proving insider trading offences.

We also take into account and recognise the contrition expressed in practical terms by the applicant since January 2009 and his continuing expressions of remorse. While recognising the difficulties he will have upon release from custody in relation to combating his gambling addiction, we consider overall that his prospects of rehabilitation are good. He will have the support of his partner, his family, Father Sinn and others who care for him and these will be important factors in his rehabilitation.

It is desirable, in the circumstances of the present matter, that we specify a discount of 25% for the plea of guilty. In relation to the applicants undertaking to co-operate and provide for future assistance to the authorities, it is necessary for us to specify a discount. There is no reason to depart from the discount of 10% arrived at by the sentencing Judge in his decision and accordingly we ascribe that percentage for future assistance.

We have taken into account, as we have said, the high degree of the applicant's co-operation and assistance given to date in relation to both groups of offence. We have also taken into account the past assistance given in relation to the investigation by ASIC into possible offences committed by another person. In relation to the tipping offences, a further measure of leniency is extended to the applicant for the Ellis factor but, as with the other matters we have mentioned in this paragraph, there is no need for us to quantify this aspect. Given the multiplicity of the charges and the fact that, if the appropriate discounts were accumulatively applied without qualification, the resulting sentences would be manifestly too lenient so that further adjustment of the sentences would be necessary, we do not think that it would be useful to quantify the discount ultimately provided more than to indicate that it is substantial. It should also be noted that, having regard to the number of distinct offences committed and the lengthy period they covered the degree of concurrency we provide also extends a further degree of leniency.

What then is the appropriate sentence to be imposed? We agree with the sentencing Judge that the 16BA Schedule offences in relation to the insider trader offences should be considered in relation to count 1. In the same way, the tipping offences in the Schedule should be considered in relation to count 20. In our view, having regard to all the matters we have considered, and taking into account all the factors we have mentioned, an appropriate sentence in relation to count 1 is a term of 2 1/2 years imprisonment commencing on 2 December 2010 and expiring on 1 June 2013. In relation to counts 2-19 we consider that the appropriate sentence is a term of 2 years imprisonment each term to commence on 2 December 2010 and to expire on 1 December 2012.

In relation to the first tipping offence (count 20), and having regard to the Schedule offences in respect of that count, an appropriate sentence is a term of 18 months imprisonment to commence on 2 June 2012 and expiring on 1 December 2013.

In relation to counts 21-25 we consider an appropriate term of sentence for each count is 16 months each term to commence on 2 June 2012 and expiring on 1 October 2013.

As a consequence, the overall term of the sentence will be 3 years. The terms of s 19AC of the Crimes Act 1914 (Cth) require that we make a recognisance release order in those circumstances. This section allows for conditional release of an offender after conviction. Section 19AB of the Act requires that we direct, by order, that the applicant be released after he has served a specified period of imprisonment in respect of the offences. The terms of the recognisance for the purposes of the release will require the applicant to comply with conditions set by the Court. There has been, we have been informed, considerable discussion between the Crown and the appellant's legal representatives in that regard. There has been liaison in relation to appropriate terms with the probation and parole service. As a consequence, while the Crown is not conceding that such an order should be made, the Court has been provided with a document containing 14 draft conditions of an order that is generally thought appropriate as between the parties and the probation and parole service.

In arriving at an appropriate pre-release period of imprisonment in the present matter, we particularly take into account two matters: first, the highly favourable material provided for the purposes of the re-sentencing exercise and secondly, the stringent nature of the conditions provided for in the document we have referred to in the preceding paragraph. As to the first, we stress the applicant's rehabilitation in custody, his continued remorse and his level of continuing assistance to the authorities. As to the second, we note that the conditions are aimed at preventing the applicant's relapse into criminal behaviour but, more significantly, they provide a regime of treatment which, it appears, is not available to him in custody and which will, in the nature of things, promote and enhance his re-entry into the wider community. In the exceptional circumstances of this matter, and for all the reasons outlined in this decision, the pre-release period we have selected is 15 months.

We propose to specify a single pre-release period of imprisonment of 15 months to commence on 2 December 2010 and to expire on `1 March 2012. This means that we shall order the release of the applicant to take effect on 1 March 2012 upon the proviso that he enter into a recognizance to comply with the conditions contained in the draft document that is annexed to these reasons. The period during which the conditions will operate and in respect of which compliance is required is to be 18 months.

The orders of the Court are:

1. Leave to appeal is granted.

2. The appeal is allowed and the sentences passed upon the offender on 2 December 2010 are quashed.

3. In lieu thereof, the following sentences are imposed:

(a) In relation to count 1, having regard to the Schedule of offences, the offender is sentenced to a term of imprisonment of 2 1/2 years commencing on 2 December 2010 and expiring on 1 June 2013.

(b) In relation to counts 2-19, the offender is sentenced to a term of imprisonment for 2 years, each term to commence on 2 December 2010 and expiring on 1 December 2012.

(c) In relation to count 20, having regard to the Schedule of offences, the offender is sentenced to a term of imprisonment for 18 months commencing on 2 June 2012 and expiring on 1 December 2013.

(d) In relation to counts 21-25, the offender is sentenced to a term of imprisonment of 16 months, each term to commence on 2 June 2012 and expiring on 1 October 2013.

(e) We specify a single pre-release period of imprisonment of 15 months to commence on 2 December 2010 and to expire on 1 March 2012. We order that, upon the expiry of the 15 month period of imprisonment specified, the offender be released upon his entering into a recognisance self in the sum of $1,000 to observe and comply with the conditions set out in the document annexed to hereto and marked "A". In compliance with the provisions of s 20 Crimes Act 1914 (Cth), the obligation to so observe and comply will be for a period of 18 months from 1 March 2012.

Annexure "A"

Conditions of a Recognizance release order under the Crimes Act 1914 (Cth) - John Joseph HARTMAN - (herein called "the offender")

The offender upon entering into a security, self in the sum of $1,000, undertakes that he will be of good behaviour for the period of this recognizance and that he must comply with the following conditions, oversight of which is to be administered by an officer of the Probation and Parole Service ("the officer"): -

1. The offender must comply with any reasonable direction given by the officer in relation to the matters referred to below.

Treatment obligations

2. The offender must seek a comprehensive mental health assessment as soon as possible after his release and in any event, within 28 days from release, from Dr Craig H. Wilson, to determine what is required for treatment of any psychiatric or psychological condition the offender may be found by Dr Wilson to have, including any addiction or addictive behaviour such as, but not limited to, any gambling addiction.

3. The offender must accept such psychological and psychiatric treatment as may reasonably be provided or suggested by Dr Wilson, including counselling, psychological therapy and any anti-psychotic or other psychiatric medication as prescribed.

4. The offender must attend all appointments for medical and psychiatric consultations, psychological consultations, and other testing or therapy session as may reasonably be directed by Dr Wilson.

5. Should Dr Wilson for any reason or reasons be unwilling or unable to provide or continue to provide the offender with any treatment for any reason because of Dr Wilson's assessment that the continuation of such treatment is unnecessary or for any other reason or reasons, the offender must:

(a) immediately seek a written report from Dr Wilson as to those reasons; and

(b) provide a copy of the report to the officer within 48 hours of its receipt by the offender; and

(c) insofar as the officer reasonably requests it, engage an alternative medical, psychological or therapeutic practitioner and seek such other treatment or therapy within such time as the officer reasonably directs, and obtain assessment and treatment, if provided or suggested by that alternative practitioner of the kind referred to in paragraph 3 above and further, comply with the requirements of paragraph 4 as if that paragraph referred to such alternative practitioner.

6. The provisions of paragraphs 3, 4 and 5 apply to any such alternative practitioner, so far as they can, as if they referred to that practitioner rather than to Dr Wilson.

7. The offender must disclose to the officer the identity of any such alternative practitioner or other medical or mental health practitioner that he consults, within 48 hours of such consultation.

Disclosure of information

8. The offender must waive the confidentiality of information disclosed by him to treating psychiatrists, psychologists and any other person from whom treatment for any psychiatric or mental health condition, including but not limited to any gambling addiction, is sought or obtained, so as to permit that information to be provided to the officer on that officer's request.

9. The offender consents to the officer, officers of the Australian Securities and Investments Commission and officers of the Commonwealth Director of Public Prosecutions accessing all information regarding his psychiatric or mental health condition, including but not limited to any gambling addiction, which may include confidential medical information disclosed in the course of his treatment but such consent is limited to access:

(a) for the purpose of assessing compliance with the terms of this recognizance; and/or

(b) for the purpose of considering and carrying out such action as may be permitted by law in respect of alleged non-compliance by the offender with such terms.

Participation in residential gambling program

10. The offender is to attend a residential gambling program approved by Dr Wilson within 3 months of release from custody, such as the 5-week in-patient stay program run by the South Pacific Clinic or the 3-week in-patient stay program run by St John Of God Hospital, Richmond, and is to remain there for treatment for such period as Dr Wilson deems appropriate.

11. The offender must disclose to the officer particulars of the residential program within 48 hours of admission to the program.

12. The offender must refrain entirely from gambling.

Employment

13. The offender, if unemployed, is to enter employment arranged or agreed on by the Officer or make himself or herself available for employment, training or participation in a personal development program as instructed by the Officer.

14. The offender must not engage in any activity, paid or unpaid, involving the control of money or assets of other people or organisations.

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Decision last updated: 12 December 2011

Medium Neutral Citation:	Hartman v R [2011] NSWCCA 261
Hearing dates:	9 November 2011
Decision date:	07 December 2011
Before:	Whealy JA Adams J Latham J
Decision:	The orders of the Court are:- 1. Leave to appeal is granted. 2. The appeal is allowed and the sentences passed upon the offender on 2 December 2010 are quashed. 3. In lieu thereof, the following sentences are imposed:- (a) In relation to count 1, having regard to the Schedule of offences, the offender is sentenced to a term of imprisonment of 2 1/2 years commencing on 2 December 2010 and expiring on 1 June 2013. (b) In relation to counts 2-19, the offender is sentenced to a term of imprisonment for 2 years, each term to commence on 2 December 2010 and expiring on 1 December 2012. (c) In relation to count 20, having regard to the Schedule of offences, the offender is sentenced to a term of imprisonment for 18 months commencing on 2 June 2012 and expiring on 1 December 2013. (d) In relation to counts 21-25, the offender is sentenced to a term of imprisonment of 16 months, each term to commence on 2 June 2012 and expiring on 1 October 2013. (e) We specify a single pre-release period of imprisonment of 15 months to commence on 2 December 2010 and to expire on 1 March 2012. We order that, upon the expiry of the 15 month period of imprisonment specified, the offender be released upon his entering into a recognisance self in the sum of $1,000 to observe and comply with the conditions set out in the document annexed hereto and marked "A". In compliance with the provisions of s 20 Crimes Act 1914 (Cth), the obligation to so observe and comply will be for a period of 18 months from 1 March 2012.
Catchwords:	CRIMINAL LAW - Sentencing appeal - insider training offences - error by trial Judge in reflecting assistance to authorities CRIMINAL LAW - matters relevant to re-sentence - need for general deterrence in insider trading offences - subjective circumstances - co-operation with authorities - future assistance - whether psychiatric condition relevant - whether connected to offences - gambling addiction - remorse - rehabilitation - Ellis discount
Legislation Cited:	Australian Securities and Investments Commission Act 2001 (Cth), s 13 Corporations Act 2001 (Cth), ss 1043A(1), (2), 1311(1) Crimes Act 1914 (Cth), ss 16A, 16BA, 19AC, 21E Criminal Appeal Act 1912, s 6(3) Proceeds of Crime Act 2002 (Cth)
Cases Cited:	BP v R [2010] NSWCCA 159; (2010) 201 A Crim R 379 DPP (Cth) v De La Rosa (2010) 205 A Crim R 1; [2010] NSWCCA 194 Director of Public Prosecutions (Cth) v El Karhani (1990) 21 NSWLR 370; A Crim R 123 Hili v R (2010) 85 ALJR 196 Johnson v the Queen (2004) 78 ALJR 616 KT v R [2008] NSWCCA 51; (2008) 182 A Crim R 571 Lodhi v The Queen [2007] 179 A Crim R 470 McQuoid [2010] 1 Cr App R (S) 43 MS2 and Ors v Regina [2005] NSWCCA 397; (2005) 158 A Crim R 93 R v Ellis (1986) 6 NSWLR 603 R v Hartman (2010) 81 ACSR 121; [2010] NSWSC 1422 R v Hearne [2001] NSWCCA 37; (2001) 124 A Crim R 451 R v Letteri (NSW CCA unreported 18 March 1992) R v Rollins [2011] EWCA Crim 1825 R v Wright (1997) 93 A Crim R 48
Category:	Principal judgment
Parties:	Applicant - John Joseph Hartman Respondent - Commonwealth Director of Public Prosecutions
Representation:	Applicant - Mr T Game SC/S Buchen Crown - Mr R Beech-Jones SC Applicant - Johnson Winter Slattery Crown - Commonwealth Director of Public Prosecutions
File Number(s):	CCA 2010/65592
Decision under appeal	Citation: R v Hartman (2010) 81 ACSR 121; [2010] NSWSC 1422 Date of Decision: 2010-12-02 00:00:00 Before: McClellan CJ at CL File Number(s): 2010/65592