R v Johnson - [2014] NSWDC 91

District Court

New South Wales

Medium Neutral Citation: R v Johnson [2014] NSWDC 91
Hearing dates: 18 June 2014; 27 June 2014
Decision date: 27 June 2014
Before: Neilson J
Decision:
Appeal allowed.
Local Court sentences set aside.
Aggregate sentence of imprisonment for 3 years 3 months imposed comprising a non-parole period of 1 year 11 months and a balance of 1 year 4 months.

Catchwords: Offender pleaded guilty to four principal offences, two contrary to Crimes Act 1900 s 178BA and two contrary to s 178BB - Offender also asked the Court to take into account two further offences under s 178BB on Forms 1 - Total monetary benefit to offender in the order of $0.5 million - No moneys repaid - Limited remorse - Prior good character - Personal circumstances included a severe mental illness arising after the offending conduct (between 2008 and 2009) - Alleged delay in prosecution - Local Court imposed a sentence of 18 months Home Detention with a non-parole period of 11 months in respect of each offence, wholly concurrent - Crown appeal against leniency - Offences objectively grave - significance of offender's mental illness
Legislation Cited: Crimes Act 1900
Crimes (Sentencing Procedure) Act 1999
Cases Cited: Director of Public Prosecutions (Cth) v De La Rosa [2010] NSWCCA 194; (2010) 79 NSWLR 1
Marks v R [2009] NSWCCA 24
Mitchell v R [2006] NSWCCA 72
R v Chan [2000] NSWCCA 345
R v Doan [2000] 317; [2000] 50 NSWLR 115
R v Farlow [2001] NSWCCA 348
R v Hawker [2001] NSWCCA 148
R v Smith (1987) 27 A Crim R 315
R v Tripodina [2001] NSWCCA 136
R v Vachalec [1981] 1 NSWLR 351
Category: Principal judgment
Parties: Crown (Appellant)
David Johnson (Respondent)
Representation: Mr Foord (Respondent)
Mr Wright (solicitor) (Appellant)
Solicitor for Director of Public Prosecutions (Appellant)
Garland Hawthorn & Brahe (Respondent)

File Number(s): 2012/369171
Publication restriction: No
Decision under appeal

Date of Decision:

2014-02-20 00:00:00

Before:

Magistrate O'Brien

Judgment

HIS HONOUR: This is an appeal by the Crown against the alleged inadequacy of sentences imposed upon the respondent by Magistrate O'Brien sitting in the Downing Centre Local Court on 20 February 2014. The respondent stood for sentence in respect of four principal charges. In respect of each of the third and fourth principal charges the respondent asked the learned magistrate to take into consideration on a Form 1 a further offence. In respect of each principal charge the learned magistrate sentenced the respondent to home detention for a term of 18 months commencing on 20 February 2014, the day on which he passed sentence. The four sentences for home detention were wholly concurrent: no accumulation was possible because of the provisions of s 79 of the Crimes (Sentencing Procedure) Act1999.

The Crown accepts that the offender pleaded guilty at the earliest available opportunity. The Court attendance notices commencing the prosecution were filed on 21 November 2012 and the offender pleaded guilty on 12 February 2013. The Crown accepts that the appropriate sentences to be passed upon the offender are to be reduced by 25% for the utilitarian value of the offender's pleas of guilty.

The Offences

It is necessary to consider the charges at some length. The first principal charge was given sequence number 1. The charge as amended was that the respondent between March 2008 and April 2009 by deception, namely by falsely stating the pay rates of contractors, Sunil Kempegowda, Mohammed Bhuiyan, Abu Rezwan, Jun Zhang and Dexiong Huang, dishonestly obtained for Ogawie Propriety Limited money, namely $327,878.87. The respondent is an expert in information technology. He was retained as a contractor for the New South Wales Department of Education and Training, commencing on 27 November 2007. He was retained as the project manager for an IT project called SMART2. On 14 December 2007 he registered a company, Ogawie Pty Ltd, to which I shall hereafter refer as "Ogawie". The respondent was the sole director of that company and the shareholders were he and his wife. It appears that although the respondent was personally retained by the DET that his services were let to the DET by his company, Ogawie.

After commencing work the respondent recruited a former colleague, Henry Lo, who commenced working with the DET in January 2008. The respondent and Mr Lo thereafter identified the resources that would be required for the SMART2 project. In January 2008 the DET gave approval for the recruitment of five other contractors, those five other contractors being a technical leader, two business analysts and two application developers. The technical leader became Sunil Kempegowda, the business analysts became Mohammed Bhuiyan and Abu Rezwan, and the application developers became Michael Zhang and Dexiong Huang, although the latter gentleman is described in the facts as a "systems analyst".

The First Offence

In March 2008 Mr Kempegowda responded to an advertisement on the internet for a Java developer. He attended an interview with the respondent which lasted for 30 minutes. Mr Kempegowda told the respondent that he was seeking an income of between $60 and $65 per hour. The respondent replied with words to the effect that he could not expect such an income but he could expect an hourly rate of $50 with an increase later on when his performance had been monitored. Eventually Mr Kempegowda was hired however a representation was made by the respondent to the recruiter, another company called Greythorn, which was completely independent of the respondent, that the pay rate for Mr Kempegowda was to be $82.90 per hour plus GST representing an hourly rate of $95 plus GST less the costs retained by Greythorn. However, the rate actually paid by Ogawie to Mr Kempegowda was $50 per hour. Mr Kempegowda commenced working on 17 March 2008. His initial contract was for a period of six months.

On 4 August 2008 the respondent signed a contractor renewal for Mr Kempegowda to be employed for additional six months commencing on 15 September 2008 expiring on 15 March 2009. Again the form indicated that Mr Kempegowda would be paid an hourly rate of $82.90 but in fact Mr Kempegowda was only paid by Ogawie $50 per hour. As a result of Mr Kempegowda's first contract Ogawie received a windfall of $34,768.72. As a result of Mr Kempegowda's second contract the windfall to Ogawie was $36,321.60.

Mr Mohammed Bhuiyan when recruited in March 2008 advised the respondent that he was seeking at least $35 per hour. On 6 March 2008 an agreement was reached between Mr Bhuiyan and Ogawie that Mr Bhuiyan be paid $35 per hour. However, according to the contract signed by the respondent with Greythorn and the DET on 11 March 2008, Mr Bhuiyan was receiving $78.30 per hour, with Greythorn receiving $4.75 per hour. Through the first six-month contract for Mr Bhuiyan, Ogawie received a windfall of $43,839.80. There was an additional six month contract commencing on 8 September 2008, again in which Mr Bhuiyan was supposed to be paid $78.30 per hour but was in fact paid only $35 per hour. The windfall from the second contract was $33,189.45.

Very much the same situation arose with Mr Abu Rezwan. He agreed to work for $35 per hour but on 8 April 2008 the respondent signed a Contractor Selection form which referred to Mr Rezwan receiving $78.30 per hour, with Greythorn receiving $4.75 per hour. As a result of the difference between what was paid to Ogawie and what Ogawie paid to Mr Rezwan, Ogawie received a windfall of $43,819.60. There was an additional six month contract for Mr Rezwan for the period between 6 October 2008 and 5 April 2009 where the same discrepancy of pay rates occurred and as a result Ogawie received a windfall of $43,300.

Mr Michael Zhang, also known as Jun Zhang applied for a position on 15 August 2008. The respondent explained Mr Zhang's role to him and told him that he would be paid for a period of six months as an application developer at the rate of $25 per hour. Mr Zhang commenced work on 25 August 2008. The Contractor Selection form for Mr Zhang, signed by the respondent, indicated Mr Zhang was being paid $82.90 per hour with Greythorn receiving $4.75 per hour. The windfall from this contract for Ogawie was $42,614.40.

Very much the same situation arose with Mr Dexiong Huang, who was also known as David Huang. He was paid $25 per hour. He commenced work on 15 September 2008. On that day the respondent signed a Contractor Selection form which referred to Mr Huang receiving $82.90 per hour with Greythorn receiving an additional $4.75 per hour as the alleged recruiter. As a result of this contract Ogawie received a windfall of $50,025.60.

I am told, but I have not checked, that the total windfall for Ogawie from the contracts entered into by the five men was $327,878.27. It is to be noted that in the period in question the respondent made eight false representations to the DET resulting in the overpayment. The representations were clearly false and deliberately false. The amount obtained by dishonesty was substantial.

The Second Offence

The second principal offence for which the respondent stood for sentence before the learned magistrate was known as the "sequence 9 offence". The amended particulars were that the respondent between September 2008 and February 2009 by deception, namely the direction and ongoing approval for Jun Zhang and Dexiong Huang to work on private projects of Ogawie Pty Limited under the direction of Greg Ambrose, dishonestly obtained for himself a valuable thing, namely the free labour of Jun Zhang and Dexiong Huang. The essence of the allegation was that Mr Zhang and Mr Huang despite being employed for and paid by the DET were directed to attend the offices of the respondent's company at 10 Help Street, Chatswood to work under the guidance of Mr Greg Ambrose on a joint and private project between Mr Ambrose and the respondent. The respondent enjoyed benefit from these workers as he privately gave them tasks of work in developing software during part of their employment despite their being remunerated by the DET for their services.

The salary cost to DET excluding GST in hiring Mr Zhang between 15 September 2008 and 1 February 2009 was $58,361.60. The salary cost to the DET excluding GST in hiring Mr Huang between 13 October 2008 and 1 February 2009 was $45,760.80. The total of those sums is $104,122.40. It is not clear to me whether the respondent received the total benefit of those salary costs. However it is clear that he directed, in essence, employees of DET to do work for his own company for his own aggrandisement. The exercise was a cynical one.

The Third Offence

The third principal offence alleged was that on 11 July 2008 at Sydney with the intent to obtain for himself a financial advantage, namely $35,695.00 the respondent made a statement, namely a memorandum, knowing it to be false or misleading in a material particular namely the omission that Ogawie Pty Limited of which he was the sole director would be involved in performing a review of Assessment Item Data project with reckless disregard as to whether it was true, false or misleading in a material particular. In connection with that offence, which was sequence 11, the offender asked the learned magistrate to take into account on a Form 1 the sequence 12 offence which was wholly related and consisted of sending an invoice to DET where the Finance Department of that government department processed a payment to Ogawie.

Mr Gregory Ambrose, after returning to Australia after an extended period overseas in 2003, set up a company, Catalina IT, as a vehicle through which he could conduct his business as a computer programmer. Mr Ambrose specialises in internet applications. In early 2008 the respondent came into contact with Mr Ambrose through an internet forum. The respondent sought assistance with problems he had installing and configuring an open source software called Dokeos.

In early July 2008 the Assessment Item Data project at DET had fallen behind and was over budget. Mr Johnson contacted Mr Ambrose and advised him of an opportunity that had arisen within DET. Mr Johnson told Mr Ambrose about the AID project and suggested that they work together on a review of the project. They agreed to go halves in the expected payment from DET. On 11 July 2008 the respondent prepared a submission recommending that the DET raise a purchase order for a review by Catalina IT of the AID project. It was estimated by the respondent that the total cost of the review would be $62,450 plus GST. According to Mr Ambrose that estimate was determined solely by the respondent. At the respondent's urging Mr Ambrose, submitted a quotation for the work to DET representing that the work would be done by Catalina IT. There were emails passing between the respondent and Mr Ambrose as to the form of words to be used in the quotation and the respondent suggested to Mr Ambrose that he mark an email containing the quotation by Catalina IT to his attention.

The sequence 12 offence is that on 26 September 2008 Catalina IT invoiced the DET, marking the invoice to the attention of the respondent, for $68,695 including GST. On the same day Ogawie invoiced Catalina IT for $35,695 including GST roughly representing the earlier agreement between Mr Ambrose and the respondent to split the fee for the work. The Catalina IT invoice was sent to the DET and was processed and the monies paid wholly to Catalina IT. That clearly was a grave deceit.

The Fourth Offence

The fourth principal offence for which the respondent stood for sentence was the sequence 13 offence. The charge was that the respondent with intent to obtain for himself a financial advantage namely $55,495 made a statement namely a memorandum knowing it to be false or misleading in material particular namely the Catalina IT would be performing the User Interface Redesign for the SMART2 application with reckless disregard as to whether it was true, false or misleading in a material particular.

On 13 October 2008 the respondent drafted another submission to the DET seeking approval to purchase a User Interface Redesign for the SMART2 project from Catalina IT for $52,450 excluding GST. An official of the DET approved the memorandum on 24 October 2008. On that day after the approval was given the respondent sent an email to Mr Ambrose in the following terms:

"I forgot to mention earlier about the UI design work. A few weeks ago I mentioned some graphic design work, and I asked about billing it through Catalina, since the entity has already been established within DET billing systems and Ogawie still doesn't have a website etc. I have forgotten all about it to be honest, I thought I'd lost out because I hadn't heard anything back. Anyway, I had a call earlier asking how soon the workshops could begin - so it looks like it's all been approved, under Catalina.

I should emphasis [sic] there is no requirement for you to do anything. All that will happen is that you'll receive a PO in the next few days and in a few weeks the money will be credited to the account. The only thing I'll ask you to do is send me an invoice once the work has been completed; for doing this I'll pay Catalina AUD 2000 (this will help fund other activities). I have arranged for someone who has done work for me before to be on site on Monday to progress things. And I expect to deliver the final UI designs in November."

A purchase order from DET was sent to Catalina IT on 27 October 2008. On the same day Mr Ambrose sent to the respondent an email stating:

"I received the PO. I presume you want me to produce an invoice with the exact working, and email it to you. Is that right?"

The respondent asked the learned magistrate take into account on a Form 1 this further offence, the sequence 14 offence. On 15 December 2008 Mr Johnson sent Mr Ambrose an invoice from Ogawie in the sum of $55,495 being the contracted price for this work paid by the DET to Catalina less $2200. Work on the actual user interface submitted to DET appears to have been performed by a web designer Mr David Appleby who billed Ogawie $2,450 for his services. The product of Appleby's work includes a number of electronic files of screen prints/designs. The extent to which the respondent worked on the project is unknown, despite Ogawie receiving $55,495.

Extent of the Offending

The net monetary benefit received by the respondent as a result of his offending was $419,068.87. In addition the DET, as a result of the diversion by the respondent of the labour of Mr Zhang and Mr Wang to a private project, incurred costs of up to $104,122.40. In rough terms it can be seen that the various crimes committed by the respondent amounted to a loss by the DET of approximately half a million dollars. The Department of Education and Training is part of the government of this State. The dishonesty of the offender affected the revenue of the State and ultimately a loss has been suffered by every taxpayer in this State.

Investigation and Prosecution

The commencement of suspicion of the respondent's activities resulted from an anonymous letter received by the DET referring to fraud being committed by the offender. It eventually led to an investigation by the Independent Commission Against Corruption (ICAC). That body held a public inquiry over three days in August 2011 into the respondent's conduct whilst he was working for DET. In January 2012 the ICAC released its report which recommended that the Director of Public Prosecutions consider a number of criminal charges of fraud. In fact, the Court Attendance Notices commencing the prosecution were filed in the Downing Centre Local Court on 21 November 2012, not by the DPP but by the ICAC.

There is no evidence before me that the offender, for example, confessed his unlawful activity, confessed his crimes, in some initial investigation by either the Department or the police or the ICAC. All I do know is that the offender pleaded guilty to the charges offered against him on 12 February 2013.

As he was required to do, the learned magistrate passed four separate sentences. Each of them was the same and each of them was wholly concurrent. They were for home detention for 18 months with a non-parole period of 11 months. The sentences commenced at the time of their imposition on 20 January 2014 and the non-parole period will expire on 19 December next. The respondent is still serving his home detention sentence.

As I said at the commencement of these reasons, the Crown submits that the sentences passed are manifestly inadequate. The offender committed dishonest acts, fraud, over a period from March 2008 for approximately one year and gained approximately half a million dollars by his fraudulent behaviour. The effect of the sentences imposed by the learned magistrate is home detention for a minimum of 11 months but because of the length of the home detention orders it is highly unlikely that the home detention would be extended beyond the 11 months non-parole period, provided that the offender adheres to the terms of the home detention order.

Approach to be taken in the Local Court

The Crown has drawn my attention to six authorities which themselves refer to a legion of other authorities to which I shall in due course need to refer. However, it is important to realise how the Local Court ought to deal with a case of this nature and indeed with cases of this nature. When an indictable offence is dealt with in the Local Court the maximum penalty that the Local Court can impose is two years imprisonment notwithstanding the fact that the maximum penalty prescribed by statute might be much longer. The Local Court can accumulate sentences but it cannot impose cumulative sentences of imprisonment which exceed a total of five years imprisonment. How the Local Court should proceed in cases such as this is referred to in R v Doan [2000] NSWCCA 317; [2000] 50 NSWLR 115. In that case it was contended that Freeman DCJ erred in failing to take into account the circumstance that a co-offender was dealt with in a court where the maximum sentence that could be imposed was two years imprisonment, whereas in the District Court the appellant faced a higher maximum, the highest being 10 years imprisonment. At [27] Grove J with whom Spigelman CJ and Kirby J concurred said this:

"Determination turns upon what I have called the central issue, which is whether the statutory provision of a maximum available penalty of two years in s 27(2) of the Criminal Procedure Act has the effect of making a higher prescribed statutory maximum for a particular offence irrelevant to a sentence determination by a magistrate exercising the jurisdiction of the Local Court."

His Honour then referred to case law in Queensland, South Australia, the Northern Territory and Victoria said this at [35]:

"The result of true construction of the statutory provisions in New South Wales is that, what has been prescribed is a jurisdictional maximum and not a maximum penalty for any offence triable within that jurisdiction. In other words, where the maximum applicable penalty is lower because the charge has been prosecuted within the limited summary jurisdiction of the Local Court, that court should impose a penalty reflecting the objective seriousness of the offence, tempered if appropriate by subjective circumstances, taking care only not to exceed the maximum jurisdictional limit. The implication of the argument of the appellant that, in lieu of prescribed maximum penalties exceeding two years imprisonment, a maximum two years imprisonment for all offences triable summarily in the Local Court as being substituted, must be rejected, as must also be rejected, the corollary that a sentence of two years imprisonment should be reserved for a 'worse case'.

36 That conclusion is compatible with the observation of Allen J (Smart and Dunford JJ agreeing) in R v Young unreported CCA 27 October 1993):

"It is not the function of Local Courts to give less than appropriate sentences because the matters are being dealt with in the Local Court rather than in the District Court or the Supreme Court."

The maximum penalty for each of the four principal charges for which the respondent stood for sentence is five years imprisonment. If the offender had been committed for sentence in this Court the maximum penalty that he might face was 20 years imprisonment. Because he stood for sentence in the Local Court the maximum penalty that could be imposed was five years imprisonment. However, that does not mean that in considering the appropriate sentence to pass the learned magistrate should commence with a two year maximum sentence, and then, for example, determine where the matter lies in the range of objective seriousness and if for example it is halfway along the scale commence with a sentence of one year imprisonment. Rather, the learned magistrate should, if the case is a midrange of objective seriousness look at the five year maximum penalty and if it be in the midrange of objective seriousness, commence with a sentence of two-and-a-half years imprisonment.

Precedents

I turn, then, to the case law to which I have been referred. The first case was R v Chan [2000] NSWCCA 345. That was an application for leave to appeal against sentences imposed by Howie DCJ, as his Honour then was. The offender had pleaded guilty in the Local Court to 27 counts of obtaining money by deception, each being an offence under s 178BA of the Crimes Act 1990. The current offences are offences contrary to either s 178BA or s 178BB. In essence his Honour imposed a five year sentence and fixed a non-parole period of three years. The judgment of the Court of Criminal Appeal was given by James J with whom Dowd J concurred. At [2] his Honour set out an extract from Howie DCJ's remarks on sentence which summed up the facts. They were these:

"All of the offences arose during the course of the prisoner's employment with the ANZ Bank between 7 February 1999 and 4 August of that year. The prisoner obtained money from the bank to which he was not entitled by approving personal loans from the bank to fictitious clients and using that money for the purposes of gambling. The total amount of money for which the prisoner approved these loans was $731,000. However, in respect of the last three loans, which totalled $153,000, the money was not obtained by the prisoner as, before he could access the funds, the bank became aware of the prisoner's offences. Therefore, the loss to the bank occasioned by the criminal conduct of the prisoner was $578,000."

The applicant in that case had been employed by the ANZ Bank in 1988. He made his way through the bank by dint of hard work and dedication and rose to the position of relief manager. Towards the end of 1998 the offender in that case was appointed as an investment manager of the Chinatown branch of the bank. Whilst working at the Chinatown branch the offender was able to raise loans with the bank and have funds paid into accounts of his friends or relations. He developed his need for money because of an addiction to gambling. At [5] James J pointed out that on 24 August 1999, when the applicant learned about the internal investigation by the bank, he sought out the investigators and admitted his frauds to them. He supplied to the bank's internal investigators a list of the 27 loans and assisted the investigation. He took part in a long recorded interview in which he made extensive admissions. There was no similar behaviour by the respondent in this case. In that case the applicant had no criminal history of any kind and as a result of his fraudulent activity lost his position in the bank and his career in the bank. It was accepted that the applicant in that case was highly remorseful. The applicant's appeal against the severity of the sentence was dismissed.

The next case is R v Tripodina [2001] NSWCCA 136. In that case the decision of the Court of Criminal Appeal was given by Smart AJ with whom Dowd J concurred. That also was an appeal against the severity of sentences imposed by Kinchington DCJ for multiple offences of dishonestly obtaining for himself a financial advantage by deception. The effective sentence which his Honour imposed was a head sentence of six and a half years imprisonment with a non-parole period of four and a half years. Smart AJ said:

"3 The applicant pleaded guilty to all offences. The defrauding occurred while the applicant was financial controller of his employer, a patisserie company with a substantial business which built up over the years. The ten counts covering the period from 12 January 1995 to 17 September 1996 involved a total of $ 96.296, there being ten separate cheques.

"4 The 42 further offences took place between 22 April 1997 and 26 June 1998 and involved $304,093. Thus the amount defrauded was about $400,000. The applicant was the financial controller of the company on 2 July 1990 to 31 August 1998."

His Honour went on to point out that the management of the company was often left to the applicant who was in a position clearly of trust as far as his employer was concerned. The fraud carried out by that applicant was not as sophisticated as that carried out by the current respondent. His Honour went on to say this:

"7 Staff of the defrauded company discovered that the applicant had been drawing company cheques and making some payable to himself, some to cash, and some to creditors for his own benefit. In broad terms, the cheque butts completed by the applicant showed payment to legitimate creditors or legitimate debts, however, the corresponding cheques were not made out to such creditors. They were made payable for the benefit of the applicant.

"8 One serious instance occurred about 21 July 1997. The applicant recorded a payment on the cheque butt as payable FAI, Workers Compensation. The applicant made the corresponding cheque payable to the Commonwealth Bank for $65,004.94 cents, obtained the benefits from the cheque being so diverted.

"9 An audit of the company's accounts was undertaken and this revealed what had happened. The results were reported to the Commercial Crime Agency of the New South Wales Police Service which conducted an extensive six months investigation."

It is clear that it was much easier in that case to discover the frauds that had been committed. The applicant in that case had no prior criminal history and the trial judge had accepted that the pleas of guilty were entered at the earliest opportunity.

The applicant in that case entered into negotiations with his former employer for the payment of compensation. At the hearing of the appeal the defrauded company advised the Court of Criminal Appeal that it had received $230,000 in full and final settlement of all the claims it had against the applicant. His Honour pointed out that the amount paid by way of compensation was substantial but was less than half the amount taken when interest was included. In the current case there has been no repayment of any amount defrauded nor is it likely that there will ever be any repayment, at least in the foreseeable future.

In that case it was submitted that although the illegal conduct continued for some years that essentially it was one offence. However, Smart AJ said this at [26]:

"Cumulative sentences are appropriate where the imposition of concurrent sentences would not adequately reflect the criminality involved. This was decided in R v Wilkins (1988) 38 A Crim R 445 per Lee CJ at CL at 450 and Carruthers J at 451. This Court and courts of first instance commonly impose cumulative sentences where there are many offences against s 178BA of the Crimes Act and where to impose the maximum penalty for each offence and make all the sentences concurrent would represent inadequate punishment. The offences occurred over a long period and cannot be treated as one episode of criminality. The challenge that the judges exercised a discretion in making the sentences cumulative must be rejected."

His Honour went on to state that the sentences imposed by Kinchington DCJ were at the top of the permissible range but no error had been demonstrated that would entitle the Court of Criminal Appeal to intervene.

The next decision is R v Hawker [2001] NSWCCA 148. In that case the applicant pleaded guilty to nine offences of obtaining money by deception under s 178BA of the Crimes Act 1900 and asked that a further 35 matters be taken into account on a Form 1. He was sentenced to a total of six years imprisonment with a non-parole period of three and a half years. The applicant sought leave to appeal against the severity of the sentences on the grounds that the total sentence fell outside the proper range of the offences involved. The appeal was dismissed. The judgment of the Court of Criminal Appeal was given by Wood CJ at CL with whom Sully J concurred. His Honour summed up the background of the case thus:

"8 The applicant lent himself to a simple but cunning system of dishonesty to which he was introduced by his co-accused, and which was practised by them over a period between December 1995 and February 1999. At the time of inception of the scheme, each was an employee of the Commonwealth Bank. The applicant had a staff housing loan account with the bank, into which he made repayments on his loan. The account was so structured as to allow payments over and above the normal mortgage instalments to be credited to it. They were then available for withdrawal, upon application to the staff housing loan section of the bank, where the co-accused worked.

9 A flaw, however, existed in the scheme in the system which the co-accused discovered and which he and the applicant then utilised to drawdown sums in the order of $1.2 m, over the period in question. This involved the co-accused entering false information onto the bank's records to the effect that a special repayment had been made against the applicant's housing loan, when in fact, no such payment had been made.

10 This placed the housing loan account in funds, and it was a simple matter thereafter for the credited moneys to then be drawn from the account and credited to the applicant's personal account. The moneys fraudulently acquired in this way, and received by the applicant over the period in question, amounted to about $560,000 whilst those received by the co-accused amounted to about $730,000. In the case of each offender, the funds so acquired were dissipated through gambling."

The irregularities came to light during an internal investigation by the bank, which led to the applicant's co-accused being dismissed. The co-accused confessed his guilt and produced a witness statement in which he undertook to give evidence against the applicant in that case. Initially the applicant declined to be interviewed, as he was entitled to do. Subsequently after discussions between his lawyers and the DPP he elected to plead guilty to various offences, each of which involved dishonestly obtaining a financial advantage by deception. At the time of the hearing of the appeal, the applicant had made reparations of $12,500 but that was a long way short of $560,000.

There was a lengthy discussion of earlier decisions. His Honour went on to say this:

"23 In my view, greater assistance is to be derived by reference to general sentencing policy which has seen something of a hardening attitude to white collar crime in view of its difficulty of detection, and in view of the fact that its impact may fall upon the wider group of investors or creditors: Pont [2000] NSWCCA 419. Particularly has this been recognised in cases involving fraud on the revenue, or on Commonwealth agencies such as those involved in the administration of the Social Security system or the Medicare system....

24 It is now generally accepted that absent very special circumstances, crime of this character, particularly that which demonstrates blatantly dishonest conduct, with no regard to the proprietary of the transactions or their consequences will normally require a significant element of general deterrence....

25 In the instant case there were aggravating circumstances in that large amounts of money were involved: See Hawkins (1989) 45 A Crim R 430 and Jalaty CCA NSW 2 April 1997; and in that the offences occupied a period and involved a deliberate and systematic deception of a bank in excess of three years: Tyneth NSWCCA 25 November 1994.

26 The criminality of the applicant was appropriately described by the sentencing judge as "considerable" and deserving of "appropriately salutary punishment.

I wholeheartedly agree with those comments and I am unable to see any error in the most comprehensive and careful reasons on sentence which were delivered by his Honour."

The next case is R v Farlow 2001 NSWCCA 348. The principal judgment was given by Carruthers AJ with whom Sully J concurred. The applicant in that case had pleaded guilty in the Local Court to 12 counts of dishonestly obtaining money by deception pursuant to s 178ABA (1). The sentencing judge, Shillington DCJ, was also asked to take into account thirteen other counts under s 178BA. The date of the offences in the indictment ranged between 13 September 1990 and 25 November 1998, a period of some eight years. The sentence imposed in the District Court was imprisonment for four years with a non-parole period of two years and six months.

The applicant in that case was a female employee of Charles Sturt University. She fraudulently raised payments, indicating that the payments were being made to a contractor to the university for whom the offender worked as a clerical assistant in the Building and Grounds Department. She forged the signature of her supervisors to commit the crimes. Auditors and investigators of the university discovered 18 offences between 18 September 1994 and 6 November 1999 totalling $319,760. The university officials called in the police. Further offences were detected. There were thirty additional matters involving $161,201. The university sought compensation from the applicant for $480,970. The university obtained possession of the applicant's house and, after selling it there was a deficiency of $400,000. The applicant in that case had a three-year-old child who had serious health problems involving asthma and atopic dermatitis which required special diets and consistent application of various creams. The reason for the defalcations in that case was because of the need of the applicant to obtain money to support members of her extended family, the applicant having had a traumatic early childhood as had her siblings. There was an element of altruism in the defalcations practised by that applicant. Considering the amounts of money defrauded and the sentence passed, it is patently clear that the applicant's appeal against the severity of her sentence would be dismissed which it was. Indeed, Carruthers AJ pointed out this:

"33 The Crown has rightly, in my view, pointed out that because of the position of trust which the applicant held for so long and which so many others - be they professionals or not - hold in this community, that there is a strong deterrent element in sentencing for the subject offence. Mr Grogan, on behalf of the Crown, indeed submitted that far from being manifestly excessive, this sentence, both from the head sentence and the non-parole period, was eloquent of a lenient approach: a sensitive and most reasonable sentence he argued. He pointed out that there were forgeries of the names of two persons inherent in the particular offences. He further contended that his Honour gave sufficient weight to the subjective circumstances which were reflected not only in the sentences imposed by way of the head sentence, but the non-parole period.

34 This is, indeed, a sad case, particularly bearing in mind the background of the applicant, so far as one can accept it from the documentation that was put before his Honour. It is aggravated by the fact that the applicant has a young daughter who presumably is in the care of her partner. However, the objective circumstances are of such a high degree of seriousness that even when one balances them against the subjective circumstances, as found by the sentencing judge, I find I am quite unable to come to the conclusion that the sentences were manifestly excessive."

The next decision is Mitchell v R [2006] NSWCCA 72. That was a successful appeal against severity of a sentence passed by Solomon DCJ. The judgment of the Court of Criminal Appeal was given by Latham J with whom Sully J agreed. His Honour Judge Solomon had imposed an eight year sentence with a five year non-parole period. The facts are contained in [4] of her Honour's judgment:

"The circumstance of these offences may be related in a reasonably short compass. The applicant was engaged as the National Accountant between December 1999 and July 2003 of the Australian Teenage Cancer Patients Society. Between April 2000 and June 2003, the applicant made 244 unauthorised electronic fund transfers from accounts of the society to the joint account held by and himself and his wife. The total amount of those transactions was $312,099.34. The applicant had effective control of the accounts of the society, in that he knew the passwords necessary to operate upon them. He occupied a position of trust, the abuse of which resulted in the misappropriation of a significant amount of money, which was intended for victims of cancer and their families. The moneys were used by the applicant in the course of gambling and for overseas trips for himself and his family. None of the money was repaid."

The motivating factors were the personal circumstances of the applicant in that case. These her Honour set out at [7]:

"The Judge explored in his remarks on sentence the favourable subjective material placed before the court. The applicant was almost 46 years of age at the time of sentence and had been born and raised in South Africa.

The Pre-Sentence report spoke of family financial constraints and a restricted life as a non-white under the apartheid regime. The applicant was determined to improve his educational and social standing, completing high school in South Africa and three years of a four year Bachelor of Accounting, university degree course. It was said that he also completed the majority of a Bachelor of Business Degree course in the late 1980s. His employment history appeared to be consistent. He had married in South Africa in 1981 and migrated to Australia in 1984. The applicant is the father of three daughters, two of whom remain at school. A number of references were also placed before the court, attesting to the applicant's community work with a number of sporting associations. The applicant expressed his contrition to the Probation and Parole officer, to a psychologist and to his wife, however failed to give evidence himself on the sentencing proceedings.

The Judge appears to have accepted that the applicant was remorseful."

Her Honour reached the view that she regarded the sentence as manifestly excessive and imposed a term of imprisonment of five years with a non-parole period of three years and two months.

The final decision to which I have been referred is Marks v R [2009] NSWCCA 24. The principal judgment was given by Harrison J with whom McClellan CJ at CL and Hall J concurred. In that case there were five principal charges. The first four were contrary to s 178BA (1) of the Crimes Act and the judgment records that the fifth was also pursuant to that section although it may have been contrary to s 178BB. Nield DCJ imposed an aggregate sentence of five years with a non-parole period of three years and nine months. At [12] his Honour set out the background of the case:

"At the time that the offences were committed the applicant was employed by the New South Wales Department of Health. He was dismissed from that increment on 4 August 2005. The offences were serious, involving a breach of trust and a combined loss to the department of $183,425.00 and an unsuccessful attempt to obtain a further $118,800.00. The applicant committed the offences by lodging documentation with his employer that purported to support payments for staff training provided by companies with which he was associated when no such training had been provided at all. The documentation was entirely false and the transactions were shams."

A number of matters were put forward by the applicant in that case. The applicant had a long history of severe depression documented in reports from his treating psychologist and psychiatrist. He had a severe gambling addiction and unresolved mental issues from child sexual assault. It had been submitted to the Court that the applicant's mental illness was affected by stress arising from his work and an internal inquiry in relation to an unrelated matter. It was submitted that those matters played a central role in the period immediately prior to the commission of the offences, but that was never really explored by the trial judge. It was submitted that there was a delay in the proceedings which took over two years to conclude. It was submitted that the offences were committed over a short duration and it was pointed that this would be the offender's first custodial sentence.

At [42] Harrison J said this:

"There was in my opinion considerable material before his Honour that did amount to special circumstances. The applicant had a history of mental illness that was not insignificant. He remains in need of psychiatric care and supervision. His psychologist was of the opinion that when assessed by him the applicant's 'state of mental distress closely reflected an ongoing pattern of mental health instability under stress' and that he 'required psychological treatment for his underlying traumatic abuse'. Added to this is the fact that the sentences imposed by his Honour will be the applicant's first time in custody. In R v McDonald [1994] FCA 956; (1994) 71 A Crim R 370, in the context of the gaol sentence imposed in relation to fraud offences, Burchett and Higgins JJ observed at 379 '[in] a case of this kind, a first incarceration may have a very salutary effect, and the prospect that it may do so should not be left out of account when its length is fixed'."

I should point out that other authorities in the Court of Criminal Appeal make it clear that a finding in special circumstances depends on a need for rehabilitation, but as was pointed out by the Federal Court a first incarceration can of itself have a reformatory effect because it could dissuade the person incarcerated of ever committing crime again.

Eventually his Honour determined that the head sentence should be three years and five months with a non-parole period of two years and nine months, although his Honour thought that the difference between three years and five months and two years and nine months was six months, but if my mathematics be correct, it was eight months. I again point out that the amount defrauded in that case was $183,425.00. That attracted a head sentence of three years and five months.

I have little doubt that a magistrate as learned and experienced as Mr O'Brien be well aware of such authorities. What I suspect loomed large before his Honour and loomed large before me, is the respondent's mental health. It is convenient if, when considering the issues relating to the respondent's mental health, I also consider his personal circumstances.

Respondent's Personal Circumstances and Medical History

The respondent was born in England on 19 December 1967. He is currently 46 years of age. After leaving school he obtained degrees as a Bachelor of Business and as a Master in Computer Science from English Universities. Since completion of his education he has worked in the IT industry. In 1996 he married Rachel in the United Kingdom. As a result of that marriage the offender has three children: Oliver who is currently 15 years old, Archie who is currently 13 years old and Imogen who is currently 11 and will shortly turn 12. The respondent and his wife and his elder son migrated to Australia in 2000. Since coming to this country the respondent has been working in the IT industry. As I have earlier mentioned he commenced working with the DET on 27 November 2007. He ceased working with the DET in April 2009. Thereafter he continued running his own IT business, perhaps still through Ogawie. However the business was to fail.

The offender told me that moneys that he obtained unlawfully from DET were, in fact, ploughed back into his company to try to keep it solvent but eventually the business failed and the benefit of the moneys obtained unlawfully from the DET has been lost to the respondent as well as to the DET.

In 2011 it appears that a number of things happened. The offender's business failed and the offender experienced matrimonial difficulties leading to separation from his wife and the offender suffered a "nervous breakdown". The Pre-Sentence Report of 30 April 2013 says this:

"Mr Johnson reported to have suffered from a nervous breakdown in 2010/2011, seeing him be hospitalised for a period of three weeks. The offender cited this breakdown to the separation from his then wife, financial difficulties and the closure of his company due to the matters before the Court. Mr Johnson reported that on discharge from hospital in 2011, he sought the assistance of a private psychiatrist. Contact with his psychiatrist confirmed his attendance in treatment."

The reference to "2010/2011" is clearly erroneous as the preceding page of the Pre-Sentence Report refers to the respondent's separation from his wife as being in 2011. It would appear that the separation was acrimonious. Amongst the references put before the Local Court was one from Mr Francis John Carmichael dated 10 May 2013 and this letter helps with both ascertaining the time of the separation of the respondent and his wife and the time of his nervous breakdown. The first two paragraphs of Mr Carmichael's letter are these:

"I wish to advise you that I am the uncle, via marriage to David. He, some 15 years ago, married my niece Rachel who is the eldest daughter of my sister Aileen. They have three children ranging from 8 to 13 years of age and I am fully aware of the enormous love David has for them. I have witnessed from a distance the dreadful child custody battle that has been going on for the last 18 months or so. This has played enormously on David's mind and has effected [sic] his mental state.

His wife, my niece, is a seriously difficult woman with personal problems including alcohol abuse. She recently has had a major head operation which has left her with permanent damage. David is continually harassed by her and her friends which has led to him being once more admitted into a psychiatric hospital, the second time in some 14 months."

The reference by Mr Carmichael to a custody battle raging for the last 18 months puts the separation of the couple in late 2011. There is no medical evidence before me concerning the respondent's hospital admission for three weeks in 2011 nor is there any medical evidence from the psychiatrist who commenced treatment of him at that time. There is in evidence a report from Ms Kaye Horley, a psychologist of Gordon, who commenced treating the respondent on 11 May 2012. Unfortunately Ms Horley's report is of no assistance whatever - it merely offers a diagnosis made in 2013 and relates to the offender's treatment and medical condition since that time. It does not tell me what initial history she obtained on 11 May 2012 nor the treatment which she gave to the respondent between 11 May 2012 and 4 April 2013.

When one looks at things chronologically one can see that the ICAC public enquiry was held in August 2011 and it may be that the marriage break-up and the failure of the business occurred at around the same time. As I have earlier mentioned the Court Attendance Notices were filed on 21 November 2012 and the respondent pleaded guilty on 12 February 2013. On 4 April 2013 the respondent was admitted to the psychiatric unit of the Hornsby Hospital under the care of a psychiatrist, Dr Kevin Vaughan. There are a number of reports from Dr Vaughan before me. The first report bears date 7 May 2013. The first part of that report is this:

"David was admitted to this hospital on 4 April 2013 in a dishevelled unkempt state complaining of depressed mood, helplessness, hopelessness, agitation, insomnia, unworthiness, poor concentration, somatic preoccupation [,] suicidal ideation, anhedonia, tearfulness and psychomotor agitation. There was also psychomotor slowing with delayed onset speech and continual loss of focus. He also reported recurrent suicidal ideation. On 12 April 2013 he attempted to strangle himself with a cord and fortunately he was interrupted by a staff member. He was then made an involuntary patient under the Mental Health Act and was transferred to a close observation section of the Lindsay Madew Unit where he remained for the following week. He remained in this section as an involuntary patient and on 15 April 2013 his condition was considered to have stabilised so that he was again made a voluntary patient and a week later he is once again transferred from the high intensity observation ward into the general psychiatric unit."

The respondent remained an inpatient at the Hornsby Hospital Psychiatric Unit until he was discharged on 6 June 2013. He was in hospital for over two months. In a subsequent report Dr Vaughan points out that the average length of stay in the psychiatric ward at Hornsby Hospital is less than a fortnight. In his first report Dr Vaughan states that the level of stress under which the respondent laboured was enormous. However, he thought the offender's pre-morbid level of functioning was good. At the time that he was in hospital the respondent was described as "homeless and jobless and has no money".

The same report outlined the respondent's matrimonial difficulties and pointed out that he had had no contact with his children for a few months prior to his admission to hospital. It was hoped that the offender would be able to return to computer programming. In his first report Dr Vaughan expressed this view:

"I am strongly of the opinion that a custodial sentence will not help him. It could significantly raise the spectre of suicide again, prevent his early occupational recovery and have more long-lasting effects on his esteem and his role as a father to his three children."

The Doctor's second report bears date 25 July 2013. In that report Dr Vaughan offers the diagnosis of Major Depression with a co-morbid diagnosis of Adjustment Disorder. It appears from that report that the respondent was able to return to some form of work after his discharge from hospital in June 2013. However he remained in receipt of psychiatric medication and needed to consult Dr Vaughan regularly. In this report Dr Vaughan said this:

"Mr Johnson's tendency to dissociate his emotions, so that they affect him in an all or nothing manner, stems from terrifying experiences in his childhood. His family home was dominated by a violent overbearing alcoholic father. This insight has been important in helping him recognise habitual tendencies to avoid conflict. I am hoping that having to confront his avoidant and overly timid approach to challenges he can become more assertive and able to modulate his emotions in a more controlled manner."

That led to the respondent exploring, in his evidence before me, his long-term mental health. The respondent confirmed that he had had mental health problems since childhood days and indeed remained under care for mental health problems until the early 1990s, until he was about in his mid- 20s. He told me that he was seeing both a medical practitioner in England and a counsellor. However it became clear that the respondent had no psychiatric treatment from the early 1990s until the time of his "nervous breakdown" in 2011.

There is no medical evidence whatever to suggest that the respondent's criminal behaviour was mediated in any way by his psychiatric condition. There is no other evidence that the respondent's criminal behaviour was in somehow related to his psychological vulnerability. It is impossible to ascertain whether the offender's criminal behaviour caused or contributed to his "nervous breakdown " in 2011, but it may well be so when one considers that in that year his business failed because of his criminal behaviour, there was a public enquiry by the ICAC, and there was the estrangement from his wife and children. However, that is the result of the offender's criminal behaviour and there is no suggestion that the offender's mental illness caused the criminal behaviour or indeed in any way contributed to it.

On 26 July 2013, a Friday, the respondent had an emotional collapse in his solicitors' offices. This is referred to in a report of Dr Vaughan of 29 July 2013. After referring to this "emotional collapse" Dr Vaughan's report continues thus:

"I am not surprised by this. I have seen him in this state before on many occasions. His mental state dissolves into a panicked highly stressed state that is just like a catatonic state.

When he is in this state his mental state becomes so disorganised that he is unable to understand what is going on around him. I have no doubt when he is in this state he would not be able to provide instructions to his lawyer or indeed fully comprehend the legal process.

This process whereby a mental state can become dissociated and present in this way is very dramatic and not common. This has been a feature of his presentation which I have tried to describe in my previous report to you. Sudden shifts in mental state have been occurring frequently over the past few months. It is a consequence of Mr Johnson's inability to modulate his emotions in a gradual manner.

In summary, therefore, when in this disintegrated state I do not believe that he is sufficiently aware of his surroundings to be able to provide instructions to his lawyer."

The respondent suffered another existential blow when on 11 September 2013 biopsies confirmed a diagnosis of prostate cancer. Unfortunately there is no evidence before me as to what treatment is being given to the respondent for that condition.

On 23 September 2013 the offender first stood for sentence before Magistrate O'Brien. His Honour determined that the offender should serve a term of imprisonment of eighteen months. His Honour then called for an assessment as whether the offender was suitable for home detention. A favourable response to that request was made by Hornsby Community Corrections on 15 January 2014, which led the learned magistrate to impose the sentences which he did impose on 20 January 2014.

However the Community Corrections had also made an assessment as to the respondent's suitability for an intensive corrections order. The report of Community Corrections concerning that bears date 16 September 2013 and stated that the respondent was unsuitable for an ICO. That clearly was produced for the hearing conducted before his Honour on 23 September 2013 when the order for a home detention assessment was made.

It would appear that the length of the sentence determined by his Honour and the fact that it might be served by way of home detention was of some assistance to the respondent. A report of Dr Vaughan of 8 November 2013 says this:

"David Johnson has been attending consultations each week over the past few months. During this time his mental state has been stable. He has regained control over his emotions and is able to deal with day to day matters in a competent manner. He continues to take anti-depressant Desvenlafaxine and mood stabiliser Olanzapine without problem. Since his disorder has remitted there have been no suicidal ideation [sic] and as the risk for suicide has receded the barriers to home detention have been lifted. I am aware of his legal situation and will be glad to continue to see him regularly over the next year and collaborate with an officer of the Court."

However it would appear that the current appeal may have destabilised the offender's condition. There is a report from Dr Vaughan addressed to the presiding judge in this Court bearing date 12 May 2014. That was to support an application for an adjournment. The report noted that the respondent's mental state had gone backwards over the previous "few months".

The principal part of the report is this:

"He is quite impaired at the present. He presents as overemotional panicky and tearful. He also reports sleep difficulties, difficulty with energy motivation, loss of confidence, pessimistic mood, suicidal ideation, low self-worth regret and a total inability to experience pleasure.

His present state is directly related to two factors. Firstly and most importantly he has not seen his three children in the past couple of months. He continually ruminates over this. The other factor is the appeal at the outcome of the Court proceedings. Naturally finishing these matters would make a big difference to his level of stress, but his mental state at the present is so vulnerable that a bad outcome could expose him to a level of intense anguish and distress that could leave an indelible and ongoing mark.

I don't believe that it is in his interest to go to jail [sic] at this time. David is in an extreme state. He is very socially isolated and over the past month or so we have seriously considered admitting him to our psychiatric ward."

The matter came before his Honour Judge Arnott on 13 May 2014 when it was stood over for mention to 3 June when the Chief Judge set the matter down for hearing on 18 June when the matter commenced before me.

Before me is the latest report from Dr Vaughan bearing date 13 June. The substance of the report is this:

"He continues to see me regularly. His depressive symptoms continue and causing [sic] impairment to his social and occupational functioning. He continues to struggle with getting access to his children. His ex-wife will not comply with her responsibilities causing exacerbations and symptoms. As you are aware she is very impaired [,] recovering from her intracranial aneurysm and stroke.

I am more convinced than ever that this man's coping is marginal and although he's not well enough to work his role within the family is more important than ever.

David ruminates continually on his prostate cancer and his marital frustrations, his work impairment. Although he hasn't be hospitalised this year yet I feel that he's a high risk of worsening depression and suicide.

David is engaged with this service and we would like to continue to provide treatment to him. I believe that custody of the children will come to him and a custodial sentence will impair his rehabilitation."

The only other piece and relevant medical evidence which I need quote is a recommendation by the psychologist, Ms Horley, that should the respondent receive a term of imprisonment it was strongly urged that the most appropriate place for him to serve the sentence would be in the prison hospital.

The evidence before me clearly establishes ongoing conflict with his wife, ongoing disputes about residence of and access to the children of the marriage. Although orders have been made, they appear to have been ignored by the respondent's former wife and the prospects at the current time of the offender being awarded residence of his children do not appear to be good. The only thing which might militate against that is the increasing maturity of the children, such that their wishes will ultimately largely determine where they live.

This is a very sad case. This is also a very difficult one. I can understand in the circumstances why a magistrate, such as Mr O'Brien, an extremely well respected and compassionate man, imposed the sentences that he did.

The Significance of Mental Illness

A most recent, authoritative decision as to what a court should do where an offender suffers from a mental illness is Director of Public Prosecutions (Cth) v De La Rosa [2010] NSWCCA 194; (2010) 79 NSWLR 1, a decision of five judges of the Court of Appeal including Allsop P, Basten JA, McClellan CJ at CL, Simpson J and Barr AJ. At [177] McClellan CJ at CL pointed out that the case law concerning offenders suffering from mental illness, intellectual handicap or other mental problems can be summarised in five propositions. They are these:

" · 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...

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

· It may mean that the custodial sentence may weigh more heavily on the person. Because the sentence would be more onerous for that person the length of the prison term or the conditions under which it is served may be reduced...

· It may reduce or eliminate the significance of specific deterrence...

· Conversely, it may be that because of a person's mental illness, they present more of a danger to the community. In those circumstances considerations of specific deterrence may result in an increased sentence...Where a person has been diagnosed with an Anti-social Personality Disorder there may be a particular need to give consideration to the protection of the public..."

For reasons that I have already given, the first and second propositions are completely irrelevant in the current appeal. There is no evidence that the respondent's mental health or mental illness, which appears to have been in remission during the time of his offending, had any part to play in it. The need for general deterrence remains. In the current case, I have come to the view that it is highly unlikely that the respondent will indeed ever again do the things which have landed him in his current difficulties. In this case, the question of specific deterrence does not arise. This is clearly not a case where the final principle is, in any way, applicable. The only way in which I can take into account the offender's mental illness, severe though it is, is that it may mean, and it clearly does mean, that any custodial sentence will weigh more heavily upon him, and, because of that, the length of the prison term may be reduced.

It has long been the practice of the Court of Criminal Appeal to take into account circumstances which make imprisonment more burdensome for offenders, including considerations pertaining to an offender's health. Those principles are stated in R v Vachalec [1981] 1 NSWLR 351. They include but are not limited to factors such as the need for medical treatment, hardship of imprisonment and the likelihood of an offender's reasonable needs being met whilst imprisoned. However, ill health cannot be allowed to become a licence to commit crime nor should offenders expect to escape punishment because of the condition of their health. It is the responsibility of the Department of Corrective Services to provide appropriate care and treatment for sick prisoners and the Court will not interfere. That was stated by Street CJ in Vachalec. Generally speaking, ill health will be a factor tending to mitigate punishment only when it appears that the imprisonment will be a greater burden on the offender by reason of his or her state of health or when there is a serious risk of imprisonment having a gravely adverse effect upon the offender's health. See, for example, R v Smith (1987) 27 A Crim R 315.

Decision

I must remind myself that I sit here as a judge administering the criminal law. I am required to administer justice according to law. I must not let compassion override the duty which the law lays upon me. I am a judge, not a social worker. The offences which the respondent committed are all grave. Emphasis was laid by the Crown upon an alleged breach of trust by the offender. Strictly speaking this is not a case in which there has been a breach of trust. The respondent was not an employee of the DET but a contractor to it. The relationship between the DET and the respondent arises through a relationship between DET and Ogawie. The respondent was not in a usual position of trust such as an accountant, an auditor, or a solicitor. Strictly speaking, no fiduciary relationship existed between the respondent and DET. However, it is clear that DET relied upon the respondent's expertise in the IT field and relied upon his expertise in things such as knowing the appropriate rate to remunerate those employed as technical leaders, business analysts, application developers and systems' analysts. It relied upon his expertise to know the cost of programs such as those concerned in the third and fourth principal charges, to which the offender pleaded guilty. This is similar to the owners of a property relying upon their contracted builder not to "rip them off" when, for example, subcontracting work to carpenters, plumbers, and electricians when erecting a home. The reliance upon the expertise of the respondent is not, strictly speaking, a reliance upon a person to whom moneys are entrusted but is a reliance upon expertise and analogous to a position of trust.

The offences committed by the respondent were clearly intentional, and the deceit was practised for over a period of a year. The respondent gained a substantial benefit, in the vicinity of a half million dollars whilst he was earning lawfully from DET during the period $222,256.90, exclusive of GST. The offender's deceitful conduct was hard to detect, it required an investigation by the ICAC and a public hearing of that body. There is no suggestion that the offender cooperated with investigative authorities prior to his being charged by an officer of the ICAC. No money has been recovered by the DET and it is highly unlikely that any moneys will be recovered. This is white collar crime, defrauding the revenue. General deterrence obviously looms large. Unfortunately, a full-time custodial sentence is called for.

Again I state that the maximum penalties for each of these offences is five years imprisonment. The first principal offence is, in my view, the most serious of the four. The offender admitted the amended particulars that he obtained a benefit by deception of $327,878.87. As I have pointed out, it required him to make eight false representations as to what moneys were being paid to others. Either the offender overstated the value of actual work being done by the five workers in question or he underpaid the employees for the work they actually did. In either way he obtained a large financial advantage. In my view, this case is above the mid-range of objective seriousness for an offence contrary to s 178BA of the Crimes Act1900. Bearing in mind that the maximum period of imprisonment is five years, it appears to me that the starting point for this sentencing exercise should be a sentence of three years imprisonment. That is to be reduced by 25%, which gives one a sentence of two years and three months imprisonment. Because the offender stood for sentence in the Local Court, the maximum penalty that the Local Court could impose was a sentence of two years imprisonment.

The second principal offence is one in which the offender obtained the benefit of the labour of two employees who were on the payroll of DET. The benefit to the offender is up to $104,122.40, although it is quite impossible to know exactly the amount of the benefit he obtained. He used someone else's employees for his own benefit. I believe that the appropriate sentence for this crime is two years imprisonment. Less 25%, one comes to a head sentence of one year and six months.

The third principal offence, taking into account the Form 1, is one where in the offender obtained a benefit of $35,695. The work appears to have been done by Catalina IT for half the sum of money quoted, which probably means the offender over quoted the sum charged. It appears to me that the appropriate sentence for this crime is eight months imprisonment. I reduce that by 25% to reach a sentence of six months imprisonment.

The final principal offence, again taking into account the Form 1 is the offence in which the offender gained a benefit of $55,495. Again, I have determined that the appropriate head sentence is eight months and applying the 25% discount, one reaches a head sentence of six months.

That total of the four sentences that I have determined amounts to four years and six months imprisonment. Clearly I must consider the question of totality. The offending occurred over a period of some 12 months arising out of the same background. However, the crimes are all separate. Partial accumulation is called for. I intend to impose an aggregate sentence. Having considered the matter at some length I have determined that the appropriate aggregate sentence, bearing in mind the four sentences I have determined of two years, one year six months, six months and six months is three years and three months.

Special Circumstances

This is a case in which there are special circumstances. I have no doubt that a custodial sentence will be extremely onerous for the offender and that he will probably need to spend it in the prison hospital. That is reflected in each individual head sentence and in the aggregate head sentence. To take this also into account when fixing the non-parole period would be "double counting". However, it is clear to me that any full-time custodial sentence will cause a massive disruption in the respondent's life, in his working life, his currently reduced social life, his presently threatened family life and in the treatment of, and recovery from, his mental illness. Such a disruption will increase the need for assistance for the respondent on his release back into the community. The greater the disruption, the increased the need for assistance to readjust. For this the respondent will need assistance from Community Corrections for a long period as, for example, he will not be returning to a wife and children on release from gaol and his parents and his sibling live in the United Kingdom. He has no extended family, in New South Wales. His mental illness will increase the length of the period required to readjust to life in the community and, again for example, to find new work. Further, as quoted from the judgment of Harrison J in Marks v R at [42], the first custodial sentence will have a salutary effect and therefore an effect on rehabilitation of the respondent. These are good grounds, in my view, for breaking the statutory nexus between the head sentence and the non-parole period. Applying the statutory ratio, the non-parole period should be two years and five months with an additional term of ten months. I have come to the view that the appropriate non-parole period is one year and eleven months with an additional term of one year and four months. I have also determined that it is appropriate that I commence the sentences from the date on which the offender commenced to serve the sentences of home detention, that is, to commence the sentences on 20 January 2014.

Remorse and Victim Empathy

I must say a few other things. The first thing is that it is very difficult to assess the degree of the offender's remorse for his conduct. The Pre-Sentence Report says this:

"Mr Johnson acknowledged the Facts as an accurate account of events. He stated that although he was cognisant that his actions were 'wrong', he claimed to be unsure of the legality of his behaviour. Although Mr Johnson was willing to concede that his offending behaviour was opportunistic, stating that he took advantage of the 'loopholes' within the contracts, he showed limited empathy towards his victims, stating that his employees held limited experience within the industry and thus would not have been able to secure employment elsewhere and that the Department of Education and Training would still be given the training program they had hired him for."

If the offender admitted that his actions were "wrong" but he did not know whether they were "illegal", it means that he knew that what he was doing was morally wrong although it might not be unlawful. When giving his evidence before me, the respondent fenced with the solicitor for the Crown and appeared to be intent to show that the work which he did for the DET was good and adequate work, that is, he was proud of the work that had been done and thought it was to the contractual specifications, but indeed did not appear to realise the damage that he had done to the Department and its revenue, to the revenue of this State and ultimately to the State's taxpayers. He will have time to reflect in prison on the extent of his criminal behaviour and must surely learn to realise that although the common law generally enforced Judeo-Christian morality, our modern law no longer enforces Judeo-Christian sexual morality but increasingly requires the enforcement of other Judeo-Christian values including honesty and the performance of work dutifully and with integrity.

Effect on the Respondent's Children

I am acutely aware that the sentences which I intend to impose will interrupt the attempt by the offender to make contact with his children and the hurt and pain that that will cause him, and will cause them. However, the law makes it clear that I should not take such considerations into account, other than in cases of exceptional hardship to members of an offender's family, for example, where an offender is a nursing single mother.

Delay

Submissions are made on the respondent's behalf about delay in the prosecution. The last of the offences, it would appear, occurred in either February, March or April 2009. The proceedings were not commenced until 21 November 2012, some three and a half years later and then were only decided by the Local Court on 20 January 2014, some 14 months after proceedings were commenced. However, there is no substance to those submissions. The fraud perpetrated by the offender was a complex one, it required an investigation by the ICAC and a public hearing by that body and the publication of a report, then a referral of the papers to the DPP but ultimately a prosecution by the ICAC itself. There is nothing to suggest that the offender in any way cooperated once his unlawful activities were suspected. The delay in the commencement of the prosecution is because of the very nature of the offences committed by the offender. The delay in the proceedings in the Local Court was caused essentially because of the offender's ill health and his mental condition and the attempts made to obtain an other than full-time custodial sentence.

Effect of Sentencing in the Local Court

It was also submitted on behalf of the offender that the Crown consented to the matters being dealt with by the Local Court rather than requiring that the offender be committed for sentence to this Court and therefore the Crown could not complain when the Local Court made the decisions which it did. However, the only thing that can be said in respect of that is that the Crown was entitled to argue that the offender ought be sentenced to some term of imprisonment up to five years and the term of imprisonment that I intend to impose was well within the discretion of the Local Court, working within the parameters within which it is required to work.

Prior Good Character

Finally, it should be clear from what I said about the respondent's personal circumstances that he came before the Local Court, and this Court on appeal, as a man of present good character. However, as the Crown has very properly submitted, this assists the respondent less than it otherwise might. Good character is often a cloak beneath which acts of fraud are often concealed. This was identified by the Victorian Court of Appeal in The Queen v Petrovic [1998] VSCA 95:

"As to her previous good character, this Court has on numerous occasions noted that melancholy fact that offences such as occurred here are not infrequently committed by persons of apparently good character, which in turn leads to general deterrence necessarily playing an important role in the construction of an appropriate sentence."

See also: R v El Rashid (unreported, NSW CCA, 7 April 1995); R v Houghton [2000] NSWCCA 62 per Barr J at [18]; R v Smith (2000) 114 A Crim R 8 per Dunford J at [20] -[22].

Are any further reasons required, Mr Martin?

MARTIN: No, your Honour.

HIS HONOUR: Mr Wright?

WRIGHT: No, thank you, your Honour.

HIS HONOUR: Would you go into the dock please, Mr Johnson.

For the reasons I have just given I allow the appeal. I set aside the sentences passed by the Local Court at the Downing Centre on 20 January 2014. I impose an aggregate sentence. The indicative sentences are two years, one year six months, six months, and six months.

Stand please, Mr Johnson. I sentence you to imprisonment. I set a non-parole period of one year and eleven months commencing on 20 January 2014 and expiring on 19 December 2015. I impose a further period of imprisonment of one year and four months to commence upon the expiration of the non-parole period and expiring on 19 April 2017. The total sentence is therefore three years and three months, comprising the non-parole period and the balance of the sentence. I have found special circumstances. You are eligible to be considered for release to parole at the expiration of the non-parole period. I have taken into the matters on the Forms 1.

It is my firm recommendation to the Department of Corrective Services that you be accommodated in the prison hospital at Long Bay Gaol. I direct that copies of the medical reports contained in exhibits 1 and 2 be placed in an envelope, sealed with the seal of this Court, and be taken with you to the Metropolitan Reception Centre or to such other reception centre as you may be taken, together with the warrant for your commitment.

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Decision last updated: 08 July 2014

Medium Neutral Citation:	R v Johnson [2014] NSWDC 91
Hearing dates:	18 June 2014; 27 June 2014
Decision date:	27 June 2014
Before:	Neilson J
Decision:	Appeal allowed. Local Court sentences set aside. Aggregate sentence of imprisonment for 3 years 3 months imposed comprising a non-parole period of 1 year 11 months and a balance of 1 year 4 months.
Catchwords:	Offender pleaded guilty to four principal offences, two contrary to Crimes Act 1900 s 178BA and two contrary to s 178BB - Offender also asked the Court to take into account two further offences under s 178BB on Forms 1 - Total monetary benefit to offender in the order of $0.5 million - No moneys repaid - Limited remorse - Prior good character - Personal circumstances included a severe mental illness arising after the offending conduct (between 2008 and 2009) - Alleged delay in prosecution - Local Court imposed a sentence of 18 months Home Detention with a non-parole period of 11 months in respect of each offence, wholly concurrent - Crown appeal against leniency - Offences objectively grave - significance of offender's mental illness
Legislation Cited:	Crimes Act 1900 Crimes (Sentencing Procedure) Act 1999
Cases Cited:	Director of Public Prosecutions (Cth) v De La Rosa [2010] NSWCCA 194; (2010) 79 NSWLR 1 Marks v R [2009] NSWCCA 24 Mitchell v R [2006] NSWCCA 72 R v Chan [2000] NSWCCA 345 R v Doan [2000] 317; [2000] 50 NSWLR 115 R v Farlow [2001] NSWCCA 348 R v Hawker [2001] NSWCCA 148 R v Smith (1987) 27 A Crim R 315 R v Tripodina [2001] NSWCCA 136 R v Vachalec [1981] 1 NSWLR 351
Category:	Principal judgment
Parties:	Crown (Appellant) David Johnson (Respondent)
Representation:	Mr Foord (Respondent) Mr Wright (solicitor) (Appellant) Solicitor for Director of Public Prosecutions (Appellant) Garland Hawthorn & Brahe (Respondent)
File Number(s):	2012/369171
Publication restriction:	No
Decision under appeal	Date of Decision: 2014-02-20 00:00:00 Before: Magistrate O'Brien