Markovic pled guilty to 11 counts of deception in the County Court. In a separate hearing, Pantelic pled guilty to three charges relating to child pornography. Both men were sentenced to terms of imprisonment, and sought leave to appeal their sentences.
In Markovic v The Queen; Pantelic v The Queen  VSCA 105, the Court of Appeal convened as a bench of five justices to hear these two appeals, originating from very different cases but unified by a common argument; that the impact on their family of the sentence imposed on the offender in each case could (and each counsel asserted, should) give rise to the exercise of a ‘residual discretion of mercy’.
The established precedent has been that exceptional circumstances would need to be shown in order for a court to discount a sentence on account of the hardship imprisonment would cause to the offender’s family.
Maxwell P, Nettle, Neave, Redlich and Weinberg JJA [at 5]:
5 We have concluded that the established common law position should be reaffirmed. Our reasons may be summarised as follows:
1. Reliance on family hardship – that is, hardship which imprisonment creates for persons other than the offender – is itself an appeal for mercy.
2. Properly understood, therefore, the purpose and effect of the ‘exceptional circumstances’ test is to limit the availability of the court’s discretion to exercise mercy on that ground.
3. Accordingly, there can be no ‘residual discretion’ to exercise mercy on grounds of family hardship where the relevant circumstances are not shown to be exceptional.
4. The effect on the offender of hardship caused to family members by his/her imprisonment raises different considerations, to which the ‘exceptional circumstances’ test has no application.
The Court distinguished between taking into account the impact of the sentence on family, and taking into account the impact on family members has on the offender [at 20]:
20 The effect on the offender of hardship caused to family members by his/her imprisonment is a quite separate matter. An offender’s anguish at being unable to care for a family member can properly be taken into account as a mitigating factor – for example, if the court is satisfied that this will make the experience of imprisonment more burdensome or that it materially affects the assessment of the need for specific deterrence or of the offender’s prospects of rehabilitation. These are conventional issues of mitigation, and they are not subject to the ‘exceptional circumstances’ limitation.
The original sentencing courts had found that exceptional circumstances did not apply, and applied mitigation to the extent that they considered appropriate. These rulings were left undisturbed by the Court of Appeal, and both applications were refused.