Bayly v R
[2013] NZCA 520
•29 October 2013 at 10.30 am
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA225/2013 [2013] NZCA 520 |
| BETWEEN | GLENN GEORGE BAYLY |
| AND | THE QUEEN |
| Hearing: | 15 August 2013 |
Court: | Harrison, Venning and Courtney JJ |
Counsel: | P G Mabey QC for Appellant |
Judgment: | 29 October 2013 at 10.30 am |
JUDGMENT OF THE COURT
AThe appeal is dismissed.
____________________________________________________________________
REASONS OF THE COURT
(Given by Courtney J)
Introduction
Glenn George Bayly was convicted on several charges of dishonesty in relation to a company of which he was a director and shareholder. The charges were contained in two separate indictments. In the first, there were 45 charges of theft by a person in a special relationship,[1] four charges of making or causing to be made a false entry in an account[2] and one of fraudulently using a document.[3] Mr Bayly pleaded guilty to these charges on the third day of a jury trial in the Tauranga District Court. The second indictment contained nine charges of making or causing to be made a false entry in an account,[4] one of fraudulently using or destroying property[5] and one of falsifying records.[6] He pleaded guilty to these prior to trial.
[1]Crimes Act 1961, ss 220 and 223.
[2]Crimes Act, s 260(a).
[3]Crimes Act, s 228.
[4]Crimes Act, s 260(a).
[5]Companies Act 1993, s 378(b).
[6]Companies Act, s 379.
Judge Callander imposed a sentence of two years eight months imprisonment on each count.[7] Although not said expressly, it is evident from the sentencing notes that the sentences were imposed concurrently.
[7]R v Bayly DC Tauranga CRI-2011-070-1626, 2 April 2013.
Mr Bayly initially brought this sentence appeal on the ground that the sentences were manifestly excessive as a result of the Judge taking too high a starting point and failing to allow sufficient credit for mitigating factors. Shortly before the appeal hearing, however, Mr Mabey QC assumed conduct of the appeal and filed submissions indicating that the appeal would be advanced on the ground that the Judge should not have sentenced without a disputed facts hearing in relation to the extent of loss to the company.
The offending
At the relevant times Mr Bayly was director and shareholder of Glenn Bayly Motorcycles Ltd, which traded as Moto GB. It had been incorporated in 2002. Initially the other director and shareholder was a Mr Perry. By 2006, however, the company had liquidity problems and Mr Perry wished to cease his involvement in it. A local businessman, Michael Fisher, purchased Mr Perry’s shares and became a director of the company. He advanced $458,122 to the company to repay existing bank loans and purchase a motor vehicle. Mr Fisher was not actively involved in the company; Mr Bayly continued to manage it as a salaried employee.
In mid-2007, Mr Bayly went overseas and Mr Fisher assisted in the
day-to-day running of the company. He found that there were significant numbers of overdue debts owed by the company to various creditors, including the finance company which financed the sale of vehicles for customers. He also found that there was a vehicle debtors’ ledger which, contrary to company policy, showed that some vehicles were not paid for in full (either by the customer or through approved finance) before leaving the company’s premises. Mr Fisher put more money of his own into the company to cover outstanding debts.Mr Bayly returned from overseas and resumed running the company. A subsequent review of the company’s accounts found that between June 2007 and February 2009 Mr Bayly had failed to account to the company for monies received in the course of the business. This included the misappropriation of cash, cheques and trade-in vehicles and the incorrect recording of cash receipts. In many instances, later cash receipts had been used to cover earlier sums misappropriated. Sale agreements had been altered so as to show false prices, trade-in amounts and deposits. False credit notes had been issued. At least one cheque had had the payee altered.
In addition to misappropriations, false loans had been arranged with financier Motor Trade Finance (MTF) which had resulted in Moto GB being indebted to MTF. These included a loan of $60,000 in the name of Mr Bayly’s mother. The funds were used in various ways, including covering earlier misappropriations.
In early 2009, after being confronted over the misappropriation of company funds, Mr Bayly instructed a staff member to make false entries in his director’s current account. These amounts (mostly insurance payments) were to be shown in the vehicle debtors’ ledger as having been paid and corresponding amounts debited to Mr Bayly’s drawings account, increasing the amount that he owed the company.
Sentencing
The sentencing proceeded on the basis of a summary of facts which recorded the facts as we have described them. The summary included three schedules of amounts relating to the various charges. Schedule A, which related to counts 1–124 in the first indictment (the various misappropriations) totalled $233,467.00. Schedule B related to counts 129 and 130 in the first indictment and was for $60,000 (the false MTF loan). Schedule C related to counts 31–39 in the second indictment and totalled $23,799.15 (the insurance payments belatedly credited to the vehicle debtors’ ledger). This made the total amount said by the Crown to have been misappropriated one way or another $317,266.15.
In a pre-sentence report Mr Bayly only acknowledged misappropriating $212,264.73. However, he gave no indication prior to sentencing of any dissatisfaction with the Crown summary of facts. Mr Tantrum, for the Crown, advised that Mr Bayly’s counsel at sentencing said in written submissions that Mr Bayly “accepts the additional sums ... to which he has pleaded guilty” and that “the sum on which the prisoner is to be sentenced is that of $317,266”.
The Judge noted:
[3] The analysis … by the Crown indicates that the total amounts of funds involved in that offending with 44 counts of theft by failing to account totally [sic] $233,467, that is as to the customers and a further seven counts of failing to account to Motor Trade Finance (MTF) advance for property not owned by the borrower. That was $60,000. At the same time you, I think sensibly, elected to be re-arraigned on the second indictment … On those matters on the second indictment the total amount of funds involved with respect to the false accounting charges under s 260 was $23,799. I mentioned that the trial had commenced and had in fact gone for some two and a half days after I had heard and the jury had heard from some four witnesses.
[4] A summary of facts was prepared for the purposes of sentencing and that document I have re-read. It is an extract from the original summary of facts that had earlier been prepared but had been whittled down so as to more properly relate only to the counts to which you have pleaded guilty. At the time of preparing those submissions, the Crown points out to me that it had not been notified of any objection or issue with that summary.
Notwithstanding the express agreement to the summary of facts Mr Bayly’s counsel, Mr Nabney, sought to argue at the sentencing hearing that the loss to the company should be viewed as less than the amount stated in the summary. As we understood Mr Mabey, the argument that was being advanced in the District Court (and on appeal) was that the net loss to the company resulting from Mr Bayly’s misappropriations should be viewed as less than the figure accepted in the summary of facts because Mr Bayly asserted that he “put back” funds into the company over the relevant period. In addition, he had assigned to the company’s other shareholder assets worth about $100,000.
The possibility of a disputed facts hearing under s 24 of the Sentencing Act 2002 was not raised either with the Judge. It is evident that the Judge did not accept that the argument had merit or that the issue was one that could affect the sentencing:
[17] There has been considerable discussion about just what the total amount of proven direct loss is. The Crown’s figure was $317,266. I accept that it is very difficult to put an accurate figure on what has happened. There have been, undoubtedly, indirect and consequential losses to both Mr Fisher and in a way also to Mr Hardisty. I have heard submissions about that today. I think it will take a very careful analysis by a forensic accountant to assist me to the point where I could be satisfied with clarity on those actual amounts and I do not think there is a great deal of gain to be had in trying, as a sentencing judge, to make an assessment of the total losses. Clearly though those losses were very significant and I think the Crown figure is not an unrealistic one.
[18] Your counsel, in submissions today and in the written submissions by Mr Nabney, argued that in fact there was a sort of quid pro quo and that because of the way in which the business had been run, you were entitled to have credited to you significant sums of money given the drawings account, given the $200,000 and the relationship with Suzuki. I cannot accept that that is the case. I do not believe that that is realistic and I do not think that in any way one could look at the commercial activities of a business activity such as yours. It can be said that you were entitled to any accounting credit for other funds. The argument with respect to Mr Hardisty is I think again somewhat speculative just as was the agreement you reached with Mr Fisher. Obviously Mr Fisher wanted to take complete control. The sale of the shares for $1 was of course purely nominal in order to take control and to get you out of the business so that he could then really start an analysis as to the loss. That agreement I think has to be looked in that light realistically and commercially. For the shares, you walked away from the liabilities to Suzuki and other creditors.
[19] Ms O’Brien [for the Crown] directed some of her submissions to the $200,000. There was never an entry that showed that that money had been repaid. It never really went to the advantage of the limited liability company that you and Mr Fisher effectively owned as joint shareholders. So it actually went into your back pocket and not to the company. I have had explained to me the Suzuki lien on the business assets of the company, apart from I think that $40,000 tooling machine, and that those are factors that now I think I fully appreciate.
Should the Judge have directed a disputed facts hearing?
Mr Mabey submitted that in the face of the conflicting submissions as to proven loss and the Judge’s own conclusion he was unable to determine those losses, s 24 was triggered and a disputed facts hearing should have been held before Mr Bayly was sentenced.
Section 24(2) provides that if a fact that is relevant to the determination of a sentence is asserted by one party and disputed by the other then:
(a)the court must indicate to the parties the weight that it would be likely to attach to the disputed fact if it were found to exist, and its significance to the sentence or other disposition of the case:
…
(c)the prosecutor must prove beyond reasonable doubt the existence of any disputed aggravating fact, and must negate beyond a reasonable doubt any disputed mitigating fact raised by the defence (other than a mitigating fact referred to in paragraph (d)) that is not wholly implausible or manifestly false:
(d)the offender must prove on the balance of probabilities that the existence of any disputed mitigating fact that is not related to the nature of the offence or to the offender’s part in the offence ...
Mr Mabey submitted that, although the prospect of a reduction in the Crown assessment of loss as a result of offsets was not fully explored and no evidence advanced in support of it, it was not enough for the Judge to reject the defence submissions as being unrealistic. This was particularly so given the Judge’s indication that he was unable to assess the actual amount of the proven loss.
In support of his submission Mr Mabey argued that the quantum of loss was central to the determination of the starting point and, without a proper investigation into the actual amount of the loss to the company the starting point of three and a half years that the Judge took must be regarded as arbitrary. Further, if the Judge had treated the issue as a disputed fact it may have resulted in the losses to the company being viewed as significantly less, which would, in turn, have justified a lower starting point, possibly one that allowed home detention to be considered.
Given the summary of facts which Mr Bayly had expressly accepted for the purposes of sentencing and the evidence that the Judge had heard, there was not (and could not have been) any dispute over the fact and nature of Mr Bayly’s offending. He accepted that he had misappropriated $317,266 and he pleaded guilty on the basis of that figure. Mr Bayly’s assertion of having repaid money to the company in some form and handing over assets could only have been relevant to reparation.
Whilst a disputed fact regarding reparation can be a mitigating fact for the purposes of s 24(d), s 24 will only be triggered if the fact is relevant to the determination of the sentence. We are satisfied that Judge correctly viewed the issue being raised by Mr Nabney as not likely to affect the sentencing and therefore not relevant.
First, we consider that the Judge’s comment to the effect that it was “difficult to put an accurate figure on what has happened” was directed to the indirect and consequential losses that he refers to, rather than the figure contained in the summary of facts.
Secondly, without some basis on which to identify a genuine dispute that could be resolved by a disputed facts hearing, a judge cannot be criticised for not directing a hearing. An assertion of substantial reparation to the company through repayment of funds could only be relevant if there is some indication of an evidential basis for it. Mr Mabey did not challenge the Judge’s description of the way the issue was raised, namely as a submission that there should be “a sort of quid pro quo” of $200,000. He accepted that the issue was not explored further and that there was no indication of evidence that could be adduced to advance the matter.
We note that, even before us, Mr Bayly provided nothing to indicate the basis for his assertion that reparation had been made at a level that might have affected the sentencing. In particular, there was no indication of evidence he would propose to adduce if the matter were remitted for a disputed facts hearing.
Thirdly, the assets that were assigned to Mr Bayly’s co-shareholder did not benefit the company and could not have been relied on as doing so.
In our view, s 24(2) was not engaged so as to require the Judge to adjourn the matter for a disputed facts hearing. We do not consider that there was any error by the Judge in not identifying the matter as one that required a disputed facts hearing.
Finally, nor have we seen anything to suggest that the sentence imposed was manifestly excessive. To the contrary, given the sustained nature of the offending and the significant consequences for the company and for its other shareholder and its employees the starting point of three years was lenient.[8]
[8]Compare R v Davis [2009] NZCA 26.
The appeal is dismissed.
Solicitors:
Jackson Reeves, Tauranga for Appellant
Crown Solicitor, Auckland for Respondent
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