AI-generated summaries. Not legal advice. Always verify against the official judgment on NSW Caselaw.
← All decisions
137
Court of Criminal Appeal 5 February 2018

Xiao v R

[2018] NSWCCA 4

Also reported as (2018) 96 NSWLR 1
Fraud & dishonesty
CRIMINAL LAW APPEAL SENTENCING OFFENDER

Citation: Xiao v R [2018] NSWCCA 4
Court: NSW Court of Criminal Appeal
Date: 5 February 2018
Judges: Bathurst CJ; Beazley P; Hoeben CJ at CL; McCallum J; Bellew J

Background

The applicant was the managing director of an Australian subsidiary of a Chinese corporation, with responsibility for identifying mining investment opportunities. During 2010 and 2011, he became aware of planned takeover offers for two ASX-listed mining companies, Bannerman Resources Ltd and Sundance Resources Ltd, before those offers were publicly announced. He then used his wife's trading account and a company account he controlled to purchase financial products in both companies ahead of the announcements, and separately arranged for a co-offender to make additional purchases using borrowed funds from a related Hanlong entity, with profits to be shared among several people.

The applicant pleaded guilty before committal to two federal offences under the Corporations Act 2001 (Cth): procuring another person to acquire financial products while possessing inside information, and entering into an agreement to commit that same offence. At first instance, he was sentenced to an aggregate of 8 years and 3 months' imprisonment with a non-parole period of 5 years and 6 months.

The applicant sought leave to appeal, raising seven grounds challenging the sentencing judge's assessment of objective seriousness, the failure to apply a utilitarian discount for the guilty plea, the treatment of his status as a foreign national, compliance with the federal sentencing regime, whether the sentences were manifestly excessive, and whether he had a justifiable sense of grievance compared with the sentence imposed on his co-offender.

  • Whether the sentencing judge erred in assessing the objective seriousness of the two offences, including by treating planning, concealment, breach of trust, and use of borrowed funds as aggravating features
  • Whether the sentencing judge erred by refusing to apply a utilitarian discount for the guilty pleas, on the basis that the offences were federal offences
  • Whether the sentencing judge erred by failing to take into account evidence that the applicant, as a foreign national, would experience more onerous conditions of custody
  • Whether the sentencing judge failed to comply with s 19AB(1) of the Crimes Act 1914 (Cth), which requires a court sentencing for multiple federal offences to fix a single non-parole period
  • Whether the sentences were manifestly excessive
  • Whether the applicant had a justifiable sense of grievance arising from the lesser sentence imposed on co-offender Mr Bo Shi Zhu

Decision

Objective seriousness and aggravating features (Grounds 1 and 2)

The Court of Criminal Appeal rejected most of the challenges to the sentencing judge's fact-finding. It upheld the findings that the offending was carefully planned and premeditated, that the applicant attempted to conceal his involvement by using accounts not in his own name, and that the use of borrowed funds from a related Hanlong entity both increased the scale of the investment and constituted a breach of trust. The Court found no impermissible double counting in the way those features were used. These grounds were dismissed.

Utilitarian value of the guilty plea (Ground 3)

This ground succeeded. The Court held that s 16A(2)(g) of the Crimes Act 1914 (Cth), which requires a court to take into account the fact that an offender has pleaded guilty, necessarily encompasses the utilitarian value of that plea. The earlier NSWCCA decision in Tyler v The Queen [2007], which had held otherwise, was expressly not followed. The Court instead followed the Victorian Court of Appeal in DPP (Cth) v Thomas [2016] and held that the sentencing judge erred by declining to apply any discount for the early guilty pleas. The Court allowed a 15% discount on each charge.

Foreign national and more onerous custody (Ground 4)

The Court indicated the sentencing judge may have erred in not accounting for the more onerous conditions of custody likely to be experienced by the applicant as a foreign national. However, because the appeal was being allowed and the applicant was to be resentenced in any event, the Court did not need to determine whether this potential error was material.

Section 19AB compliance, manifest excess, and parity (Grounds 5, 6 and 7)

The Court found a failure to comply with s 19AB(1) of the Crimes Act 1914 (Cth), which requires a single non-parole period to be fixed when sentencing for multiple federal offences. On manifest excess and parity, the Court accepted that the significant disparity between the applicant's sentence and the lesser sentence imposed on co-offender Mr Zhu gave rise to a justifiable sense of grievance, even accounting for differences between their positions. The Court resentenced the applicant, reducing the overall term and fixing the required single non-parole period.

Orders Made

  • Leave to appeal against sentence granted
  • Appeal allowed
  • Original sentences quashed
  • In respect of Charge 1: imprisonment for 5 years, commencing 12 January 2014 and expiring 11 January 2019
  • In respect of Charge 2: imprisonment for 5 years and 6 months, commencing 12 July 2015 and expiring 11 January 2021
  • Single non-parole period of 4 years and 6 months fixed under s 19AB(1) of the Crimes Act 1914 (Cth), expiring 11 July 2018

Key Takeaways

  • Section 16A(2)(g) of the Crimes Act 1914 (Cth) requires a sentencing court to take into account the utilitarian value of a guilty plea when sentencing for federal offences; the Court of Criminal Appeal expressly declined to follow the contrary position in Tyler v The Queen [2007] and aligned with the Victorian Court of Appeal's approach in DPP (Cth) v Thomas [2016].
  • Planning, concealment of identity through third-party accounts, and use of related-party funds to finance the trading were each treated as legitimately aggravating features of insider trading offences without constituting impermissible double counting on the facts of this case.
  • Under s 19AB(1) of the Crimes Act 1914 (Cth), where an offender is sentenced for multiple federal offences, the court is obliged to fix a single non-parole period; failure to do so is an error requiring correction on appeal.
  • Evidence that a foreign national will experience more onerous conditions of custody is a matter a sentencing court must take into account, though the Court of Criminal Appeal left for another occasion a definitive ruling on the materiality of such an error in this case.
  • A substantial and unexplained disparity between sentences imposed on co-offenders can give rise to a justifiable sense of grievance sufficient to ground a successful parity challenge, even where the co-offenders are not identically placed.

Legislation and Cases Referenced

Legislation

  • Corporations Act 2001 (Cth), ss 1043A, 1311
  • Crimes Act 1914 (Cth), ss 16A, 16B, 16BA, 17A, 19AB, 19AH
  • Crimes (Sentencing Procedure) Act 1999 (NSW), ss 21A, 22
  • Criminal Appeal Act 1912 (NSW), s 6
  • Criminal Code (Cth), s 11.2A
  • Commonwealth Places (Application of Laws) Act 1970 (Cth), s 4

Key Cases

  • Cameron v The Queen (2002) 209 CLR 339; [2002] HCA 6
  • Barbaro v The Queen (2014) 253 CLR 58; [2014] HCA 2
  • Bugmy v The Queen (1990) 169 CLR 525; [1990] HCA 18
  • Director of Public Prosecutions (Cth) v De La Rosa (2010) 79 NSWLR 1; [2010] NSWCCA 194
  • Director of Public Prosecutions (Cth) v Gow (2015) 252 A Crim R 573; [2015] NSWCCA 208
  • Director of Public Prosecutions (Cth) v Thomas [2016] VSCA 237
  • Tyler v The Queen (2007) 173 A Crim R 458; [2007] NSWCCA 247
  • Bahar v The Queen (2011)