R v Dulhunty; R v Roach

The offender Robert Venour Dulhunty (“Dulhunty”) has pleaded guilty to an indictment alleging the following:

The offender Peter Roach (“Roach”) has pleaded guilty to an indictment alleging the following:

The charge against Dulhunty carries a maximum penalty of 5 years imprisonment, or 2000 penalty units, or both. The first of the charges against Roach carries the same maximum penalty. The second of the charges against Roach carries a maximum penalty of 10 years imprisonment, or 4500 penalty units, or both. The legislative amendment which increased the maximum penalty explains why there are two charges laid against Roach. However it will be apparent that those two charges cover one continuing conspiracy.

The sentence hearing in respect of the co-offender Ge Wu (“Wu”) was originally listed to take place at the same time as the hearings in respect of the present offenders. However following application made by senior counsel for Wu, to which the Crown consented, those proceedings were adjourned. Wu will be sentenced at a later date.

With the consent of senior counsel for each of the present offenders the Crown tendered a lengthy statement of facts which was in the following terms (although Annexures A and B to those facts have not been reproduced in this judgment):

Russell Goodman (“Goodman”) was an investor in Healthzone. His involvement in the trading of shares in Healthzone, and the conduct he exhibited towards each of the present offenders, were matters upon which senior counsel for each offender applied considerable focus in the course of their respective submissions. In short, it was submitted that Goodman’s activities constituted an important part of the context in which the offending occurred, and served to significantly mitigate its seriousness. It is therefore necessary for me to summarise some of the evidence as to Goodman’s involvement. In doing so, I have incorporated references to a 70 page document tendered in the proceedings and referred to as “Annexure A”, the entirety of which I have read, and to which I was taken at length, particularly in the course of submissions made on behalf of Dulhunty.

Goodman first approached Wu in early October 2007 offering to market Healthzone shares to investors. Following discussions between Goodman and Dulhunty, it was resolved that 10 million shares would be issued to Goodman, at 60c per share. This occurred in December 2007. From time to time Goodman thereafter encouraged both offenders to buy shares in order to demonstrate their confidence in Healthzone (Facts at [75]; Annexure A at [25]).

On 30 December 2007 Goodman sent an email to Dulhunty (Annexure A at [84]) stating:

On 18 January 2008 Goodman sent a further email to Dulhunty (Annexure A at [87]) stating:

By March 2008, Goodman was expressing his concern about Healthzone’s operations and was seeking a greater involvement in formulating the company’s general direction (Facts at [87]). On 5 March 2008 Dulhunty reported that Goodman had said that he would “need to smack down the HZL share price to 40c” (that price being 35% below the opening price of 62c). Dulhunty also reported that Goodman wanted a seat on the Board (Annexure A at [104]).

On 7 March 2008 Goodman wrote to Roach and Dulhunty (Annexure A at [107]) stating:

In July 2008 Goodman continued to express his dissatisfaction at what he perceived to be a lack of consultation in relation to the operations of Healthzone. He warned of possible sell orders at a low price. In this context he made arrangements for a meeting to take place to discuss a possible merger between Healthzone and a business known as Athlete’s Foot (Facts at [113]). That merger did not proceed.

By September 2008 the relationship between Healthzone and Goodman had deteriorated further. The price of shares in Healthzone had dropped to 36c (Annexure A at [145]). Dulhunty was expressing concern that Goodman was intending to place sell orders at a low price (Facts at [114]).

On 2 September 2008 Goodman sent an email to the present offenders, again expressing his concerns and asking for a seat on the Board of Healthzone. He also suggested that the merger with Athletes Foot should be considered. He again encouraged the directors of Healthzone to purchase shares. He predicted a further drop in the share price (Facts at [115]; Annexure A at [148]).

On 10 September 2008 an associate of Goodman sold 18,971 shares in Healthzone at 36c. Goodman urged Dulhunty to purchase a small parcel of shares (Annexure A at [152]).

On 1 October 2008 Goodman again expressed his dissatisfaction with Healthzone’s operations, and repeated his request for a seat on the Board. He advised that he would otherwise divest himself of the company’s stock (Facts at [119]; Annexure A at [163]). On 3 October 2008, in circumstances where the previous closing price of Healthzone shares was 55c, Goodman placed 1 million shares for sale at a price of 42c (Facts at [119]).

On 13 October 2008 Goodman confirmed his intention to exit Healthzone and advised that he would offer around 9 million shares to the market. Between 15 October and 23 October he placed 8.4 million shares for sale at 49c. The share price dropped from 55c to 35c. On 27 October Goodman amended the ask to 184,000 shares and dropped the ask price from 49c to 29c, which was 6c below other asks. On the following day he sent an email to Wu and Dulhunty, the general tenor of which was to suggest that Healthzone shares were worth little (Facts at [119]-[123]; Annexure A [176]-177]).

In November 2008 Goodman expressed further concerns about Healthzone’s operations. The offenders discussed their own concerns about Healthzone’s falling share price in light of Goodman’s decision to sell (Facts at [134]).

On 5 November 2008 Goodman wrote to Wu (Annexure A at [193]) stating that the price of Healthzone shares had gone only “one way” and that Healthzone had some “major credibility issues”. He went on to state:

In early December 2008 Goodman corresponded with Dulhunty and expressed interest in acquiring a larger stake in Healthzone. At the same time he indicated that he wished to sell his shares, and was suspicious that the market for Healthzone shares was being manipulated (Facts at [157]-[161]).

Section 16A of the Crimes Act 1914 (Cth.) (“the Act”) sets out a series of matters to which the Court must have regard when passing sentence. In terms of assessing the objective seriousness of an offence, these matters include:

The Crown submitted that the principal factors relevant to an assessment of the objective seriousness of the offending in the present case included:

With these matters in mind, the Crown pointed to the fact that the conspiracy in the present case extended over a period of several years and involved:

It was submitted that the conspiracy was one that had, as its principal objective, the manipulation of the Healthzone share price. The Crown pointed to the overt acts in which the offenders engaged and submitted that such acts were planned, calculated, sophisticated, designed to avoid detection and carried out in circumstances where each offender knew that what he was doing was against the law. It was submitted that even if it were accepted that neither offender was motivated by a desire to derive an immediate profit (a matter which the Crown did not concede) it remained the case that each of them had a significant financial and personal interest in Healthzone which they each sought to support through their criminal activity.

In terms of the involvement of each individual offender, the Crown pointed to the fact that Dulhunty was part of the conspiracy for a period of three years and one month during which there were 377 trades involving the purchase of 1,797,424 shares at an investment of $679,475.00. It was pointed out that Dulhunty personally executed at least 157 of these trades, involving the purchase of 675,500 shares at an investment of $263,359.00. It was also pointed out that Dulhunty had the log-in details of a number of third party trading accounts through which 83 trades, involving the purchase of 397,830 shares at an investment of $128,938.00, were conducted.

The Crown submitted that Dulhunty’s activities included monitoring the Australian Stock Exchange on a daily basis, calculating the time at which action should be taken, assessing the volume of trades and the price at which those trades needed to be carried out, and arranging for their execution. It was submitted that Dulhunty was also the principal advocate for opening new trading accounts in the names of third parties to allow the manipulation of the share price of Healthzone to continue without detection.

The Crown submitted that Roach was part of the conspiracy for a period of approximately three years, during which there were 495 trades, involving the purchase of 3,442,577 shares at an overall investment of $1,153,968.00. It was pointed out that Roach personally executed, or alternatively arranged for third parties to execute, at least 63 trades, involving the purchase of 385,837 shares at an investment of $137,915.00. It was pointed out that Roach had log-in details for, and used, third party trading accounts which were responsible for 137 trades involving the purchase of 531,550 shares at an investment of $177,281.00.

It was submitted that once he had joined the conspiracy, Roach worked closely with Dulhunty. It was submitted that Roach largely assumed Dulhunty’s role when the latter left the conspiracy, and that Roach was instrumental in setting up new trading accounts and contacting third party associates for the purposes of conducting trades.

The Crown submitted that the principal point of distinction between the offenders, in terms of their roles and level of involvement, was that Roach joined an existing conspiracy which had been devised and implemented by Dulhunty and Wu. The Crown submitted that there was otherwise no material difference between the two offenders, be it in terms of the extent of the positions of seniority that each of them held, or the control that each of them exerted in carrying out the conspiracy.

The Crown described as “unprecedented” the duration and extent of the collusion and co-ordination which existed between the offenders, and the level of corporate control and seniority at which each of them operated. The Crown went so far as to submit that even if it were found that the offenders were not motivated by the desire to derive immediate personal reward or profit, this was not a factor which mitigated the offending.

For all of these reasons the Crown initially submitted that I should conclude that the objective seriousness of the offending was in the worst category. Ultimately however the Crown’s position shifted slightly, to the point where it was submitted that the offending approached, rather than fell into, such category.

Senior counsel for Dulhunty accepted that the offending was objectively serious but submitted that in view of a number of factors it did not even approach, much less reach, the worst category.

Senior counsel submitted that in acting as he did, Dulhunty was not motivated by a desire for immediate profit and was in fact motivated by the desire to act in what he thought were Healthzone’s best interests. In this context, senior counsel pointed to the fact that Dulhunty had worked extremely hard to build and develop Healthzone. It was further submitted that Dulhunty’s offending stemmed from a genuine belief that the company was undervalued and that these factors differentiated the present circumstances from a “typical” case of market manipulation. It was submitted that these factors, without more, removed the present case from the worst possible category of offending.

It was submitted that the objective seriousness of the offending was further lessened by the fact that:

Senior counsel for Dulhunty placed considerable emphasis upon the role played by Goodman. He variously described Goodman’s behaviour as “predatory”, “bullying”, “threatening”, “aggressive”, “highly coercive” and carried out in “bad faith”. Senior counsel described as “surprising” the fact that Goodman had not been charged with any offence, although I should say that surprising or not, the fact that Goodman was not charged does not bear upon my assessment of the objective seriousness of the offending, nor upon the sentencing exercise generally. Senior counsel submitted that the evidence established that Goodman had repeatedly put pressure upon the Directors of Healthzone to purchase shares, and that the entirety of his conduct was directed towards positioning himself to be able to take over Healthzone at minimal cost.

Senior counsel submitted that Goodman’s behaviour provided a substantial part of the context in which the offending took place, and that such context was a matter of significant mitigation. In essence, it was submitted that the pressure under which the Directors of Healthzone were placed by Goodman played a considerable part in the offending. Whilst senior counsel accepted that it was not justifiable for Dulhunty to succumb to pressure by engaging in serious criminal offending, he submitted that in all of the circumstances Dulhunty effectively had no alternative other than to do what he did. All of these matters, it was submitted, rendered the offending far less serious than had been suggested by the Crown.

Senior counsel for Roach also submitted that the role played by Goodman constituted an important factor which served to distinguish the present case from other cases of market manipulation. He too submitted that this factor, as well as a number of others, removed the case from one which approached the worst category. In these respects senior counsel for Roach effectively adopted the submissions made on behalf of Dulhunty.

Senior counsel submitted that properly understood, the scope of Roach’s offending was not nearly as extensive as had been submitted by the Crown. It was pointed out, in particular, that Roach had joined an existing and operative conspiracy, as opposed to being responsible for its foundation and initial implementation.

Senior counsel submitted that Roach had no previous experience in managing, or being on the Board of, a publicly listed company. He pointed out that Roach had no tertiary education qualifications or formal business education, had only previously been involved in small family companies, and had not, prior to this offending, traded in shares in a public company. Whilst acknowledging the caution to be exercised when evaluating an offender’s criminality in a conspiracy by examining the individual physical acts of each conspirator, senior counsel for Roach submitted that it was nevertheless relevant that Roach was involved in what was a relatively small investment when compared to the total sum expended during the entire conspiracy.

Senior counsel also submitted that the damage to the share market brought about by the offending was negligible for a number of reasons. Firstly, he submitted that Healthzone was a small company. Secondly, he submitted that the majority of the share trades conducted during the period of Roach’s involvement in the conspiracy resulted in a minimal change to Healthzone’s share price. Thirdly, it was submitted that where trades were made to counter trades deliberately designed to damage the share price, there was no damage to the market.

Senior counsel submitted that ultimately s. 1041A was directed towards the promotion of public confidence in the fairness and honesty of markets for financial products. It was submitted that Roach’s offending had a negligible effect upon undermining public confidence in the share market, and a similarly negligible effect upon the market’s integrity. Whilst it was acknowledged that it was possible for investors or potential investors to have made decisions about purchasing or retaining Healthzone shares based on the market price of the shares which had been manipulated, it was submitted that the risk of potential loss to investors or potential investors was in fact quite limited in light of the fact that Healthzone shares were not heavily traded.

Whilst generally accepting that as a consequence of his offending Roach may have stood to benefit financially in an indirect way, senior counsel emphasised that the offending was not motivated by immediate financial profit or gain. It was submitted that this was a matter which significantly reduced Roach’s moral culpability, and that it operated to further remove this case from the worst category of offending.

Senior counsel for Roach further submitted that the conspiracy was not a particularly complex one, and was sophisticated only to the extent that it involved the use of multiple trading accounts, some of which were operated by others. It was pointed out that all of these accounts were operated by real persons or entities. It was also pointed out that Roach had not attempt to hide his offending by, for example, destroying correspondence or hiding evidence of trades which had been made.

In submissions in reply, the Crown took issue with the proposition that either offender was motivated by a desire to act in what were thought to be the best interests of the company. It was submitted that there was simply no evidence of what it was that motivated either offender. It was further submitted that on any rational view, manipulating the share price of a publicly listed company was not something that could possibly be regarded as being in that company’s best interests.

The Crown also took issue with the significance which was sought to be attached by each offender to the conduct of Goodman. It was submitted that although Goodman was, at times, aggressive towards one or other of the offenders, his conduct was simply consistent with that of a person who was becoming increasingly frustrated at the operation and direction of a company in which he had significant financial interest. It was submitted that in the absence of sworn evidence from either offender, the documentary evidence, including Annexure A, exhibited little more than extreme annoyance, and periodic anger, on the part of each of the offenders towards Goodman. It was also pointed out that in the case of Dulhunty, his participation in the conspiracy commenced before Goodman’s involvement and that in these circumstances, Goodman’s actions could not provide an excuse for, or an explanation of, Dulhunty’s offending. Ultimately, the Crown submitted that Goodman’s conduct was of little significance and that irrespective of how Goodman had acted at any time, each offender obviously had available alternatives which did not involve criminal offending.

Where a sentencing judge is asked to take into account matters in favour of the Crown on sentence, such matters must be established beyond reasonable doubt. Matters sought to be taken into account in favour of an offender must be established on the balance of probabilities: R v Olbrich [1999] HCA 54; (1999) 199 CLR 270 at [27] per Gleeson CJ, Gaudron, Hayne and Callinan JJ, citing R v Storey [1998] 1 VR 359 at 369. In the present case, neither offender gave sworn evidence. That was their right, and it is something from which I draw no adverse inference whatsoever. However the practical consequence is that I am left to determine the various issues which have been raised on the basis of the documentary evidence which has been tendered.

Foremost amongst the issues raised is the conduct of Goodman, and its effect upon the offenders. It is evident from the correspondence that Goodman was someone who, to say the least, took his investment in Healthzone seriously. He had an obvious interest in the proper conduct of the company’s operations. He developed an unfavourable view of those operations. He developed a similarly unfavourable view of Healthzone’s direction generally, and the abilities of those who were guiding it. Clearly, he thought that he was far better placed to guide the company’s operations. He repeatedly sought a seat on the Board. His correspondence reflects all of these matters. Such correspondence also reflects Goodman’s general contempt for, and anger and aggression towards, the offenders.

I am satisfied that each of the offenders was concerned about Goodman’s behaviour, about his underlying motivation, and about the overall effect that those matters might have on Healthzone. I am also satisfied that each offender is likely to have felt threatened by the tone of Goodman’s correspondence on occasions. To this extent, Goodman’s conduct provides part of the context in which the offending occurred.

However I am not satisfied, in the absence of sworn evidence from either offender, that the effect, upon either of them, of Goodman’s conduct extended beyond that which I have described. I am therefore not satisfied that Goodman’s conduct has the significance for which senior counsel for each offender contended. Even if one accepts, in a general sense, the nomenclature adopted by senior counsel for Dulhunty to describe aspects of Goodman’s behaviour, it was no answer for either offender to respond to that behaviour by engaging in serious criminal offending. It goes without saying that there were alternatives available.

Moreover, in the case of Dulhunty, his participation in the conspiracy commenced before Goodman became involved. Goodman’s first approach to Healthzone came on 9 October 2007 (Facts at [75]). As early as 5 May 2007, some 5 months before, Dulhunty had written to Wu setting out reasons for taking steps to increase the price of Healthzone shares (Facts at [63]). Further, in a statement tendered to the Court, Dulhunty expressly conceded that “there were times that (he) engaged in improper trading for other than defensive strategies”. In these circumstances, the significance of Goodman’s conduct is even less in Dulhunty’s case.

As previously outlined, it was submitted that neither offender was motivated by the desire for immediate personal profit, and that each of them was motivated by what each regarded as the best interests of Healthzone. The circumstances of the offending were such that it was not likely to produce any immediate profit to either offender. It was not offending which was committed, for example, in response to a margin call. In these circumstances I am prepared to accept that immediate monetary gain or immediate personal profit did not form part of the motivation of either offender. That said, the maintenance of a high share price would obviously have been likely to produce some benefit to each offender over time and I am satisfied that this formed part of the motivation of each offender.

Each offender is an educated and obviously intelligent person. I do not accept the proposition that either of them could possibly have thought that deliberate and sustained criminal conduct which saw Healthzone’s share price being artificially manipulated was in the best interests of the company. Moreover, even if either or both of the offenders held a view that Healthzone’s share price should have been greater than what it was, that is largely irrelevant. The fact is that each was a party to an agreement to manipulate that price.

The offending was sustained over a considerable period. It involved multiple trades worth substantial sums of money. The conduct of each offender was calculated and planned. However I do not consider that the conspiracy was particularly sophisticated. Trading accounts which were used were held by real people or entities and to this extent, there was no deliberate obfuscation by, for example, setting up accounts in false names. That said, and as set out in the facts, some of those trading accounts were closed down. The response of the offenders to that circumstance was to move swiftly to ensure that new accounts could be set up, so as to allow the offending to continue without detection (see Facts at [279]).

Although each offender was involved in the conspiracy at a different time, the overall period of the involvement of each of them was broadly the same, as was the role that each of them played. The Crown highlighted the fact that some difference arose from the fact that Roach joined an existing conspiracy, whereas Dulhunty was involved (with Wu) at its inception. Whilst that is strictly correct, I am not satisfied that Dulhunty in fact devised the conspiracy in the first place. In all of the circumstances, there is nothing to differentiate between the level of participation of each offender in the conspiracy, or the period over which that participation took place.

I accept that there is no evidence which establishes the effect, if any, of the offending conduct on the stock market overall. Whilst that is a relevant consideration, s. 1041A of the Corporations Act 2001 is, by its terms, directed towards the prohibition of transactions which have, or are likely to have, the effect of creating an artificial share price, or the effect of maintaining that price at an artificial level. That is precisely the conduct to which the present conspiracy was directed. Moreover, even in the absence of evidence that the present offending had any direct adverse effect upon the market, it remains relevant to observe that members of the public who trade in shares are obviously entitled to do so in circumstances which are fair and transparent. The stock market is an indispensable component of the economy of this country. Amongst other things, it serves as a barometer of consumer confidence, and of the country’s financial state. It is essential that the market be allowed to operate, at all times, openly, and in a way which engenders confidence, not only in the minds of those who trade in it, but in the minds of the members of the wider community. Manipulative behaviour which distorts, or which threatens to distort, market integrity necessarily strikes at the heart of all of those considerations.

In R v Jacobson [2014] VSC 592 Kaye J put the matter in this way (at [41]):

In the present case, the share price of Healthzone did not, as a consequence of the offending, reflect the genuine interaction to which his Honour referred.

Like that of the offender in Jacobson, the conduct of the present offenders was calculated to undermine the objectives of which Kaye J spoke. It was sustained offending and occurred over a significant period of time. It had the capacity to threaten the integrity of, and public confidence in, the stock market, and to cause damage to members of the community who had invested their savings into that market. For his part, Dulhunty expressly acknowledged this in his statement to the Court, in which he accepted that his offending had “jeopardised the integrity of our financial market”.

As a result of the offending in each case, dealings in Healthzone shares were other than open and transparent. The price of the shares was manipulated and distorted.

In all of the circumstances, and although I am unable to accept the Crown’s submission that the offending in either case falls into, or approaches, the worst possible category, it was nevertheless of considerable seriousness.

I have already noted that s. 16A of the Act sets out a number of factors which the Court is required to take into account when sentencing a Federal offender. From the point of view of an offender’s subjective case, those factors include:

It should be noted that the matters in s. 16A do not constitute an exhaustive list of relevant factors. As outlined below there are factors falling outside the provisions of s. 16A which are relevant in this case.

Senior counsel for the offender Dulhunty tendered a large volume of subjective material. That material included a statement of 19 October 2015 of the offender, addressed to the Court, which canvassed (in part) aspects of the offending to which I have previously referred. In that statement, Dulhunty expressed his deep contrition for his offending and described his life as having been destroyed by it. He pointed to the loss of his business, life savings, career, marriage and reputation, and expressed a firm resolve not to re-offend in the future.

Also tendered was a report of Dr Olav Nielssen, Psychiatrist which sets out, amongst other things, Dulhunty’s background. He attended Sydney Grammar Preparatory and High Schools. Following completion of the Higher School Certificate, he studied accounting and became a Chartered Accountant. He subsequently completed a Masters of Business Administration and a Law Degree. He married in 2001. He reported to Dr Nielssen that his marriage had since failed. He has two children, aged 7 and 9.

Dr Nielssen diagnosed Dulhunty as suffering from a major depressive illness and assessed him as requiring intensive treatment by way of anti-depressant medication and cognitive behaviour therapy. Dr Nielssen concluded that Dulhunty would be a vulnerable prisoner because of his background, and that his depressive illness would render any period in custody more onerous. However, Dr Nielssen acknowledged that he would be able to seek treatment with anti-depressant medication in custody.

A report of Dulhunty’s General Practitioner, Dr Arthur Huang, was also tendered. Dr Huang confirmed that in 2011 Dulhunty was diagnosed with atrial fibrillation and had been prescribed medication to control his heart rate and rhythm. Dr Huang also reported that Dulhunty was diagnosed with thyroiditis in December 2011, although his last blood test in 2014 demonstrated satisfactory blood levels. Dr Huang further confirmed that Dulhunty had been referred for a psychiatric assessment in June 2012 and that his depression recently worsened. He is presently taking Zoloft prescribed by his treating psychiatrist, Dr Jacobson, and has suffered from insomnia since 2011. A report of Dr Jacobson which was tendered confirmed that Dulhunty remains mentally unwell and in need of ongoing medication.

A report was also tendered from Ingrid Stengelis, Psychologist. Ms Stengelis reported that in November 2008 Dulhunty had attended for treatment to manage anxiety, and had returned for treatment in November 2011 for the same reason. She reported that in May 2014 he returned for further treatment to manage the stress caused by the current proceedings. Although Ms Stengelis has treated Dulhunty in a professional capacity, much of her report had, as its focus, matters personal to him. She described Dulhunty as having displayed genuine remorse for his actions, and reported that his focus in life had altered due to the stress arising from his offending and the associated proceedings.

A large body of testimonial material was also tendered from persons who have become acquainted with Dulhunty in both a professional and a personal capacity. He is variously described in that material as highly motivated, principled, a man of unblemished character and a person of considerable generosity. Many of the testimonials spoke of his love for, and dedication towards, his family, and of the potential impact, upon that family, of a custodial sentence. In this regard, considerable emphasis was placed on the fact that he is the father of two young children. Reference was also made to his expressions of remorse.

One of the testimonials tendered was from the offender’s former wife. She described the offending as being extremely out of character, and spoke specifically of Dulhunty’s generosity towards friends in need. She described the devastating consequences of the offending, both for Dulhunty personally and for their family as a whole. She spoke of his devotion to his children and his continued involvement in their lives. Consistent with the report of Dr Nielssen, she attested to Dulhunty’s depression and anxiety. Like a number of other persons who provided testimonials, she expressed the view that Dulhunty would not re-offend, and described the fact that he would not be able to resume his career as amounting to “the equivalent of a life sentence”.

There is also evidence that Dulhunty corresponded with officers of the Australian Securities and Investments Commission and, in a general sense, co-operated with the Commission’s investigation.

A pre-sentence report of 15 October 2015 set out Roach’s background. He is one of four children and has been married for 32 years. He divides his time between assisting his elderly mother, who is in poor health, and residing with his wife. He has been unemployed, and reliant upon his wife financially, since his offending.

Roach completed his formal education in Year 11, at which time he left to commence an apprenticeship as an aircraft engineer which he successfully completed. The author of the pre-sentence report stated that Roach acknowledged the seriousness of his behaviour, took responsibility for his actions, and expressed remorse.

An affidavit of Roach’s wife was tendered. She and Roach have three children, aged 26, 22 and 18. Both Roach and his wife have been involved in community work with their local church for a number of years, during which Roach has been instrumental in establishing and conducting programmes to assist those who were unemployed or otherwise disadvantaged.

Roach’s wife described the pressure, upon Roach personally and upon their family as a whole, which had resulted from the offending and the associated proceedings. She made specific reference to the impact upon members of her family as a consequence of the attendance, at her home, of police when conducting their investigation. Roach became bankrupt in 2012. As a consequence, his wife has assumed a greater level of responsibility within the family. She described the effect of all of these matters upon her children. Those effects have included their second son discontinuing his tertiary studies.

Roach’s wife also made reference to the loss of what she described as the offender’s “impeccable business reputation and community service record”. She described him as a person of integrity who had been shamed and humiliated by his offending.

Testimonials provided by persons who have known Roach in both a personal and professional capacity were tendered. The authors of those testimonials variously described Roach as a person of character, integrity and honesty. They expressed having been shocked upon becoming aware of the offending, and spoke of Roach’s expressions of remorse.

In written submissions, the Crown argued that apart from the pleas of guilty entered by each offender, neither had otherwise expressed any contrition or remorse for the offending. These submissions were seemingly prepared without the Crown having the benefit of reading the testimonial material to which I have referred. The Crown submitted that in any event, the fact that each offender had sought to diminish his respective criminality by relying on the conduct of Goodman demonstrated that neither of them had fully accepted responsibility for the offending. It was submitted that in these circumstances, any expressions of contrition should be viewed as qualified.

The Crown accepted that each offender had entered a plea of guilty before the Local Court. However, it was submitted that it was relevant to consider whether the plea in each case had been motivated by a willingness to facilitate the course of justice, or whether it was little more than a recognition of the inevitable, in the face of a strong Crown case. In terms of the timing of the pleas, the Crown traced the chronology of the proceedings against each offender. The Crown pointed to the fact that the charges were laid on 6 August 2014, that the pleas of guilty were not entered until 19 May 2015, and that in the intervening period a Brief of Evidence was served. Between about 10 September 2014 and 19 May 2015 there were discussions between the legal representatives of each offender and the representatives of the Crown regarding the possibility of a plea of guilty being entered, and the possibility of reaching an agreement as to the facts.

Ultimately, the Crown’s position was that the plea in each case was “some evidence” on the part of each offender of remorse, acceptance of responsibility and a willingness to facilitate the course of justice. However, the Crown argued that the significance of each of these factors was limited by the strength of the Crown case which, it was submitted, had rendered a conviction inevitable. It was submitted that any allowance for the plea of guilty in each case should be assessed with these matters in mind.

The Crown further submitted that general deterrence was a particularly important consideration in determining sentence in a matter of this nature, and that specific deterrence was also important.

The Crown acknowledged that neither offender had any relevant prior convictions. However it was submitted that in the context of offending of this nature, good character and the absence of prior convictions were of less significance.

Finally, the Crown submitted that because of the ongoing nature of the conspiracy, its sophistication and the awareness of wrong doing by the offenders, I should be cautious in concluding that either offender had positive prospects of rehabilitation. It was submitted that apart from the nature and extent of the offending conduct, other factors which bore on that consideration included, in the case of each offender, his age and the degree of available family support.

Senior counsel for Dulhunty acknowledged the relevance of general deterrence on sentence although he did not accept that it had the significance suggested by the Crown. It was submitted that Dulhunty’s actions did not constitute undermining the integrity and efficacy of markets to any significant extent and that in these circumstances general deterrence had a lesser role to play than might otherwise be the case. It was further submitted that there was no evidence of any personal profit being derived by Dulhunty from his offending, such that this court would otherwise have an interest in imposing a sentence which would deter those from abusing markets for personal gain. In terms of personal deterrence, it was submitted that Dulhunty’s subjective intention was to protect the company from damage during the duration of the conspiracy. It was submitted that in these circumstances, personal deterrence was of little significance.

It was submitted that Dulhunty had been co-operative throughout the investigation and that his plea of guilty was, in effect, a continuation of that co-operation. It was submitted that in these circumstances, he should receive the full benefit of that plea.

Senior counsel made reference to the evidence of Dulhunty’s relationship with his children, and the harmful impact that a custodial sentence would have upon them. It was pointed out that within the testimonial material there was evidence that Dulhunty had structured his career so that he could spend more time with his children and that, as a consequence, he played an invaluable role in their lives. Senior counsel also relied upon Dulhunty’s prior good character and the significant contribution he has made to the community over a long period. It was submitted that in all of the circumstances, I should find that Dulhunty had shown genuine remorse, that he had good prospects of rehabilitation, and that he was unlikely to reoffend.

Senior counsel also relied upon the fact that Dulhunty had, in effect, lost the career to which he had been dedicated and that he had little or no prospect of obtaining similar employment at any time in the future. This, it was submitted, constituted significant extra curial punishment.

Senior counsel for Roach submitted that Roach had shown contrition over and above that evidenced by his pleas of guilty. It was submitted that those pleas, which had been entered in the Local Court, were demonstrative of Roach’s remorse, and of his acceptance of responsibility. It was further submitted that the fact that Roach sought to reach agreement with the Crown as to the facts to be put before the Court underscored, rather than undermined, his willingness to facilitate to the course of justice. It was submitted that in all of these circumstances Roach should be given the full benefit of his pleas.

Senior counsel for Roach also relied upon the delay which had been occasioned in bringing these proceedings. It was pointed out that an examination of Roach in relation to this matter took place in September 2012, but that it was not until 2014 that he was charged. It was submitted that the investigation was not one of great complexity but that the delay it had resulted in significant stress for the offender and had left him in a state of uncertain suspense.

Senior counsel also cited Roach’s previous good character which, it was submitted, extended well beyond the mere absence of criminal convictions. In this regard, emphasis was placed on the content of the testimonial material to which I have referred.

In all of the circumstances, and whilst acknowledging that prior good character and a lack of criminal antecedents may be of less weight as separate mitigating features in offending of this type, senior counsel submitted that such matters remained of considerable significance, particularly when assessing the Roach’s prospects of rehabilitation. It was submitted that the evidence in the present case supported the conclusion that it was most unlikely that Roach would re-offend at any time.

Whilst not advancing the proposition that it was exceptional, it was submitted that there was evidence that a custodial sentence would cause hardship to Roach’s family. This, it was submitted, arose from the evidence of Roach caring for his elderly mother, as well as the matters to which his wife referred in her affidavit and which I have previously summarised. It was submitted that these were necessarily matters to be taken into account as part of Roach’s general subjective case.

I am obviously mindful of the need to consider the case of each offender separately. However, their respective subjective circumstances are, generally speaking, common and in large measure can be dealt with together.

I am satisfied that each offender is genuinely remorseful and contrite. That is the overwhelming effect of the testimonial material which has been tendered in each case, and to which the Crown did not object. I do not regard the position taken by the either offender in relation to Goodman as qualifying, to any significant degree, the remorse that each of them has expressed to others (and in the case of Dulhunty, to the Court).

I am also satisfied that each offender has good prospects of rehabilitation. It is apparent that each has learned a salutary lesson. There is nothing to suggest any real prospect of re-offending in either case. In all of these circumstances I have concluded that specific deterrence has no role to play in determining sentence.

Each offender is a person of prior good character. Apart from the absence of convictions, each has made a significant contribution to the wider community in differing ways. Each is entitled to draw upon his previous good character as a factor in mitigation of penalty. However, two observations must be made in that regard. Firstly, for the reasons I have developed further below, general deterrence remains an important factor in this case and because of that, less weight is to be given to evidence of good character: McMahon v R [2011] NSWCCA 147 at [76] per Hoeben J (as his Honour then was), Hodgson JA and Grove AJ agreeing. Secondly, and as previously outlined, the offending occurred over an extended period of time in each case. That also operates to lessen the weight to be given to the prior good character of each offender: R v Kennedy [2000] NSWCCA 527 at [22] per Howie J, Simpson J (as her Honour then was) agreeing.

In the case of Dulhunty, there is evidence of current symptoms of a depressive illness. I have had regard to that circumstance.

Each offender entered a plea of guilty before the Local Court. Although the pleas were entered some time after the charges were laid, it is apparent that in the intervening period discussions and negotiations took place regarding the possibility of a plea being entered, and the content of any factual material which would be put before the Court in that event.

In Cameron v R [2002] HCA 6; (2002) 209 CLR 339 the plurality (Gaudron, Gummow and Callinan JJ) observed at [14]:

Their Honours went on to say (at [22]):

In Cappis v R [2015] NSWCCA 138 Garling J (with whom Gleeson JA and Johnson J agreed) said (at [57]):

Recently, in DPP (Cth) v Gow [2015] NSWCCA 208 Basten JA concluded (at [28]) that the decision in Cameron had nothing to say about the operation of Commonwealth law with respect to sentencing. His Honour expressed some doubt as to whether the decision operated to limit the basis upon which a plea of guilty may be taken into account. Hamill J (at [72]) agreed that the decision in Cameron did not limit the impact of a Federal offender’s plea of guilty to an assessment of the extent to which it demonstrated a willingness to facilitate the course of justice. However, his Honour expressed a preference to leave the more general consideration of the interaction of Commonwealth sentencing provisions with the general sentencing law of New South Wales, along with the extent to which that consideration is informed by decisions such as that in Cameron, for a case when those matters were the subject of full argument.

Based on the available documentation, the Crown case against each offender was strong. Further, the pleas were entered a considerable period of time after the charges were laid. However to use these factors as a basis for concluding that the pleas were not entered at the first reasonable opportunity, or that they were entered other than in a willingness to facilitate the course of justice, would in my view be wrong. Such an approach would ignore, in particular, the discussions which were apparently taking place over a protracted period which seemingly resulted in the pleas being entered. In my view, the fact that each offender was prepared to engage in those discussions is indicative of a willingness to facilitate the course of justice. The fact that an agreement could not be reached as to the entirety of the factual material (necessitating the tender of Annexure A) does not derogate from such willingness on the part of either offender. In all of the circumstances, I am satisfied that the plea in each case was entered at the first reasonable opportunity.

Further, and although the documentary evidence established a strong case against each offender, and although this is a factor which has the capacity to cast some light upon the question of whether the plea of guilty was truly motivated by a willingness to facilitate the course of justice or by a recognition of the inevitable (Tyler v R; R v Chalmers [2007] NSWCCA 247 at [114] per Simpson J (as her Honour then was), Spigelman CJ and Harrison J agreeing), I am satisfied in all of the circumstances that each offender has demonstrated a willingness to facilitate the course of justice, not only by entering a plea of guilty but by endeavouring, as far as possible, to reach agreement as to the factual material to be placed before the court. Providing the guilty plea is taken into account in each case, it is not necessary for me to quantify the discount: Tyler at [112]. Each offender should have the benefit of a discount which falls at the uppermost level.

Each offender has suffered significant extra curial punishment as a consequence of his offending. Each will be disqualified, upon conviction, from managing a corporation for a period of 5 years. The Crown conceded that this was an appropriate factor to take into account on sentence. The Crown also conceded that a person’s loss of career and reputation may amount to a form of extra-curial punishment. However, the Crown submitted that it remained open to each offender, at the expiration of the statutory disqualification period, to re-enter the corporate world in some capacity or other.

In my view, the possibility that either offender might obtain similar employment in the future is, to say the least, remote. The nature of the offending, and the fact that it has been made public, make it difficult to envisage either offender being appointed to any position of corporate responsibility at any time in the future. Needless to say, each offender must have known of these likely consequences at the time of the offending and whilst that must be taken into account, it does not mean that extra curial punishment is of no relevance at all. I have taken it into account in determining sentence in each case.

I accept the submissions made on behalf of each offender regarding the effect of any custodial penalty upon their respective families. I accept that such effect is likely to be significant in respect of each offender, albeit for different reasons. However, the effect is not exceptional: R v Zerafa [2013] NSWCCA 222; (2013) 235 A Crim R 265 at [93] per Hoeben CJ at CL, Latham J agreeing. It is no greater than what one might reasonably expect in a case such as this. I have taken it into account in assessing the general subjective circumstances of each offender.

I have also had regard to the delay in the institution, and finalisation of, these proceedings. I do not intend to level criticism at any party for that delay. The fact is that both offenders have been in a state of uncertain suspense for a period of time.

I have previously found that neither offender was motivated by the desire to derive immediate personal profit. I have also found that there was no deliberate obfuscation on the part of the offenders, such as the use of false names or false accounts. Accordingly, this is not a case where the adoption of such forms of subterfuge made the offending difficult to detect. However that does not mean that general deterrence (for which provision is now made in s. 16A(2)(ja) of the Act) is not important. On the contrary, it must be given significant weight.

In R v Pogson, Lapham and Martin [2012] NSWCCA 225; (2012) 82 NSWLR 60, McClellan CJ at CL and Johnson J (with whom R A Hulme and Button JJ agreed) said (at [143]):

In Jacobson (supra) Kaye J said (at [74]):

Section 16A(1) of the Act provides that I must impose a sentence that is of a severity which is appropriate in all of the circumstances of the case. In light of s. 17A(1), I must not pass a sentence of imprisonment on any person for a federal offence unless, having considered all other available sentences, I am satisfied that no other sentence is appropriate. Under s. 17A(2), in the event that I pass a sentence of imprisonment on either offender, I must state my reasons for concluding that no other sentence is appropriate, and I must cause those reasons to be entered in the records of the court. In the event that I conclude that a period of custody must be served, I am required to determine the minimum term that justice requires each offender serve in accordance with Part 1B of the Act, and not by reference to an assumed starting point or ratio: Hili v R; Jones v R [2010] HCA 45; (2010) 242 CLR 520 at [36] – [45].

The Crown submitted that in the case of each offender, a custodial sentence should be imposed. Senior counsel for each offender accepted that to be the case. For the reasons I have stated, I am satisfied that no sentence other than a sentence of imprisonment is appropriate in the circumstances of the present case. The issue, however, is how any such sentence should be served. The Crown submitted that any sentence should require each offender to serve a period of actual custody. Senior counsel for each offender submitted that having regard to all of the circumstances, it was appropriate for any sentence of imprisonment to be served in a way which did not involve serving such a period, be it by way of immediate release pursuant to a Recognisance Release Order or otherwise.

For the reasons I have already expressed, the offending in this case was of considerable seriousness, and general deterrence has a significant role to play. I accept that general deterrence does not, of itself, mandate that in each and every case of this type of offending, a period of actual custody must be served. Whether a particular sentencing alternative is appropriate or adequate must necessarily be determined on a case by case basis, taking into account all of the relevant circumstances: R v Boulden [2006] NSWSC 1274 at [51]; R v Hinchcliffe [2013] NSWCCA 327 at [276]. However having considered all relevant factors, I have come to the view that a period of actual full time custody must be served in each case.

I have already explained the circumstances in which the offender Roach faces two charges. That requires the imposition of two separate sentences, reflective of the criminality in each case: Pearce v R [1998] HCA 57; (1998) 194 CLR 610. I must also bear in mind that although the majority of Roach’s offending occurred over a period when the lower maximum penalty applied, the offending in Count 2 occurred at a time when the maximum penalty had doubled. At the same time, I have found that the roles played by each offender cannot be differentiated, and that the total period over which they each offended was essentially the same. All of these considerations are reflected in the sentences I propose to impose.

In respect of the offender Robert Venour Dulhunty:

In respect of the offender Roach: