Benjamin
[2023] NZHC 2572
•14 September 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-619
[2023] NZHC 2572
UNDER Section 382 of the Companies Act 1993 IN THE MATTER OF
BETWEEN
an originating application for leave to not be prohibited from managing companies
MARK JOSEPH BENJAMIN
Applicant
Hearing: 23 August 2023 Appearances:
PJ Muir for the Applicant
GS Caro for Ministry of Business, Innovation & Employment FE Rhodes for the Department of Corrections
Judgment:
14 September 2023
JUDGMENT OF BECROFT J
This judgment was delivered by me on 14 September 2023 at 3.30pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors/Counsel:
Steindle Williams Legal, Auckland
Ministry of Business, Innovation & Employment, Auckland Meredith Connell, Auckland
PJ Muir, Auckland
BENJAMIN [2023] NZHC 2572 14 September 2023
What this application is about?
[1] In mid-2022, following a sentence indication, Mr Mark Benjamin pleaded guilty to, and was convicted of, a representative charge of theft totalling $505,000 by a person in a special relationship.1 The offending occurred in 2016. Mr Benjamin was sentenced on 4 November 2022 to nine months’ home detention, to be followed by six months’ post-detention conditions, and was ordered to pay $40,000 in reparations for emotional harm.2 Relevantly, Mr Benjamin had repaid the $495,000, which constituted the first set of advances, within a month of that offending. He then repaid two further advances made in September 2016, five months later.
[2] Mr Benjamin has been involved for some 14 years with the Burnley Lodge, in Auckland, which provides accommodation and care for up to 12 mental health patients. He is also the director of Burnley Lodge (2009) Ltd (Burnley Lodge), the company that owns this business.
[3] Mr Benjamin has also been involved with WL Trustee (Burnley) Ltd (WL Trustee)—which owns his house and the Burnley Lodge property. He has also been the director of a third company, Burnley Advisory Ltd (Burnley Advisory), a dormant company that services a secured ASB Bank loan over Mr Benjamin’s house. Those three companies are collectively referred to as the Burnley Companies.
[4] Section 382(1) of the Companies Act 1993 (the Act) prevents a person convicted of (amongst other things) an offence relating to the management of a company, or involving dishonesty, from being “a director or promotor of” a company; or from “in any way, whether directly or indirectly, [being] concerned or [taking] part in the management of, a company,” all for five years after the conviction, unless that person has the leave of this Court.
[5] Because of his May 2022 conviction, the s 382(1) prohibition applies to Mr Benjamin. He therefore requires the Court’s leave to continue to be a director of Burnley Lodge and Burnley Advisory. He also seeks leave to become a director and
1 Crimes Act 1961, ss 220 and 223(a). Maximum penalty seven years’ imprisonment.
2 R v Benjamin [2022] NZDC 21860.
trustee (alongside the existing trustee) of WL Trustee. The issue is whether such leave should be granted.
[6] The question is further complicated by the fact this is not Mr Benjamin’s first application under s 382. He has previously applied for and been granted leave in respect of earlier dishonesty offending.
Background facts
First offending
[7] In August 2008, Mr Benjamin was charged with accessing a computer for a dishonest purpose while in his role as chief financial officer for Kerry (NZ) Limited. He accessed the company’s electronic payroll system to increase his pay without authority and to obtain holiday pay to which he was not entitled. He denied, and indeed continues to deny, all charges and the factual allegations on which they were founded.
[8] However, after a Judge-alone trial, he was found guilty in the District Court in Auckland of all seven counts. On 21 December 2010, he was sentenced to 200 hours community work and was ordered to pay reparation of $18,681.
[9] Some years later he applied under s 382(1) of the Act, for leave to be a director and involved in the management of a number of different companies. For present purposes, these included, Burnley Lodge, and also Five Star Pork (NZ) Ltd (Five Star), Kaimai Pork Ltd (Kaimai) and New Zealand Pork Ltd. Brown J granted leave on 19 August 2013.
[10] It should be noted that the five-year prohibition imposed by s 382(1) ended on 24 November 2015.
[11] From 2009 until October 2012, Mr Benjamin was a director of Five Star; and in 2012, he was appointed chief executive officer (CEO). As CEO he managed the day-to-day operations of the business. From September 2012, he was also a director
of Kaimai and New Zealand Pork Ltd (the sole shareholder of Kaimai). Kaimai was a supplier of free-range pork to Five Star.
[12] Mr Benjamin deposes that he did not know that he was prohibited from involvement in the management of all these companies, following his conviction in 2010. That is why the application was belatedly made to the High Court in 2013.
Second offending
[13] As CEO for Five Star, Mr Benjamin was able to formulate and approve weekly accounts for payment by the administration manager. Mr Benjamin was able to amend the payment schedule by hand.
[14] Between 22 January 2016 and 11 March 2016, Mr Benjamin authorised nine separate payments to Kaimai which were said to be “advance payments”. However, no pork was actually provided. Those payments totalled $495,000.
[15] On 31 March 2016, Mr Benjamin arranged for repayment of all the funds back to Five Star from Kaimai. The payment originated from what the agreed summary of facts describes as the Burnley Trust, of which it said Mr Benjamin is a beneficiary.
[16] Two similar additional advance payments for pork were made in September 2016, totalling $34,054.99. Again, no pork was actually provided.
[17] In November 2016, Mr Benjamin resigned as director of Five Star. In February 2017, he repaid the $34,054.99 amount to Five Star.
[18] After Mr Benjamin left Five Star, it appears that his offending was soon discovered. As a result, 11 charges were laid against him. Every charge alleged theft by a person in a special relationship.3 In each case it was alleged that, having control over a sum of money owned by Five Star, in circumstances Mr Benjamin knew required him to deal with the property in accordance with the requirements of
3 Crimes Act, ss 220(1)(b) and 223(a); maximum penalty seven years’ imprisonment.
Five Star, he intentionally dealt with the property otherwise than in accordance with those requirements.
[19] After much negotiation, the dishonesty charges were distilled into one representative charge. After a sentencing indication, Mr Benjamin pleaded guilty and was sentenced on 4 November 2022, to nine months home detention together with reparation for emotional harm to Five Star of $40,000. His application for permanent name suppression was declined. Mr Benjamin deposes that, immediately following his conviction, he advised all businesses and organisations with which he was involved of the situation.
[20] In a letter dated 15 February 2023, Mr Benjamin’s lawyers notified the Registrar of Companies (the Registrar) of Mr Benjamin’s intention to apply to the High Court for consent to act as a director of the Burnley companies. The application was filed in April.
Burnley Lodge
[21] By way of further factual background, in October 2009, Mr Benjamin purchased and became a director of Burnley Lodge. The lodge is a 12-bedroom residential boarding facility for those experiencing mental health issues. Mr Benjamin deposes that while Burnley Lodge is a commercial entity, it is also a form of community service as it provides care for a disadvantaged group. All residents are Work and Income (WINZ) beneficiaries and $400 of their benefit payment is automatically re-directed to the Burnley Lodge account. Residents retain the remaining balance of their benefit, usually $150, in their own accounts.
[22] The Lodge provides three meals a day, ensures delivery of medication, and provides an on-site doctor. In non-Covid years, the annual income may be slightly more than $200,000. There is a small staff, consisting of a director and two “in-house managers” who are trusted residents who pay a lower weekly fee. I was told this was a common arrangement in small scale facilities such as this one. Currently there is an acting director, and accounting services are being provided by Mr Benjamin’s daughter. In Mr Benjamin’s view, he has taken more of a back-seat role in running
Burnley Lodge, although that has been challenged by the Department of Corrections (Corrections), who supervised his home detention (I will discuss this later).4
[23] It appears that the Burnley Lodge is a relatively modest operation. The building is over 100 years old and has attracted the attention of Tenancy Services New Zealand (Tenancy Services) for a number of reasons relating to its upkeep, and also Fire and Emergency New Zealand (FENZ)—again to be discussed later.5
Law
[24] Section 382 substantially reproduces the former s 188A of the Companies Act 1955. As such, counsel all agreed that cases decided under the former provision remain relevant.
[25]Section 382 provides:
382 Persons prohibited from managing companies
(1)Where—
…
(b)a person has been convicted of an offence under any of sections 377 to 380 or of any crime involving dishonesty as defined in section 2(1) of the Crimes Act 1961; or
…
that person shall not, during the period of 5 years after the conviction or the judgment, be a director or promoter of, or in any way, whether directly or indirectly, be concerned or take part in the management of, a company, unless that person first obtains the leave of the court which may be given on such terms and conditions as the court thinks fit.
(2)A person intending to apply for the leave of the court under this section shall give to the Registrar not less than 10 days’ notice of that person’s intention to apply.
(3)The Registrar, and such other persons as the court thinks fit, may attend and be heard at the hearing of any application under this section.
…
4 See below at [50]–[51].
5 See [47]–[48] below.
[26] Section 382(1) provides that this Court may grant leave “on such terms and conditions as [it] thinks fit.” The provision does not contain guidance on how the Court is to exercise its discretion. Instead, the Courts have developed appropriate principles to inform this decision-making.
[27] The primary objective of s 382 is the protection of the public. As Asher J explained in Re Weston:6
[8] The fundamental question that the Court must ask is whether the public will be at risk if leave is granted … The presumption behind s 182 is that those convicted of the particular stated offences will pose an unacceptable risk to the public if they have a significant role in companies. The logic is that if they have been guilty of misconduct in the recent past, there is a risk that they will be guilty of misconduct in the future …
… The Court is unlikely to be particularly swayed by circumstances particular to an applicant, that might otherwise provoke sympathy, if the public remains at clear risk. The exercise that the Court carries out is different from a sentencing exercise. Protection of the public is the object, and not punishment or deterrence. Factors personal to an offender that might persuade a Court to impose a lesser penalty may not be persuasive if the public remain at significant risk. Even if innocent third parties may suffer as a consequence of leave not being granted, this may not prove persuasive.
[28] I accept that the operation of s 382 is not to be regarded as punitive nor an opportunity to further punish an applicant.
[29] All counsel are agreed that the following specific principles have emerged from the case law, and these were helpfully summarised by Ms Rhodes, appearing for Corrections. I set these out as follows:
(a)there is “a substantial onus” on the applicant to demonstrate that leave should be granted;7
(b)the fundamental question is always whether the public will be at risk if leave is granted;8
6 Re Weston (2006) 3 NZCCLR 925 (HC) at [8]–[9].
7 Re Minimix Industries (1982) 1 NZCLC 98,381.
8 Re Weston, above n 6, [8].
(c)the nature of the particular qualifying offence is relevant—deliberate acts of dishonesty may indicate more of a propensity towards offending than misconduct with a lesser standard of culpability;9
(d)weight can be given to the personal position of the applicant and any hardship to them or third parties, but this must be balanced against the primary objective of protecting the public;10
(e)the general character of the applicant is a relevant consideration.11 The most relevant aspects of the applicant’s character are matters which inform the Court’s perception of the applicant’s ability and willingness to avoid reoffending;12
(f)the Court may consider the business history of the applicant to see whether fraud or losses to the public are a feature of that business history;13
(g)the Court will also look at the most recent conduct of the applicant, which is relevant to see if the qualifying offending is likely to reoccur;14 and
(h)in reaching its decision, the Court will take into account that the protection of the public can be achieved or assisted by imposition of conditions.15
[30] Mr Muir, for Mr Benjamin and Mr Caro for the Registrar, also referred to the older case of Ramsay v Sumich.16 In that case, there were 14 relevant factors in considering leave. I set them out on the basis that Mr Muir’s submissions followed them reasonably closely:
(a)the protection of the public’s interest from injury;
9 Above n 6, at [8].
10 At [9].
11 Ramsay v Sumich [1989] 3 NZLR 628 (HC) at 633.
12 Re Henderson [2017] NZHC 474, [2017] NZCCLR 20 at [52].
13 Re Weston, above n 6, at [9].
14 Above n 6, at [9].
15 Above n 6, at [10].
16 Ramsay, above n 11.
(b)creditors’ interests;
(c)shareholders’ interests;
(d)company employees’ interests;
(e)investors’ interests;
(f)the interests of other persons who have dealings with the company;
(g)the nature of the disqualifying offence;
(h)the nature of the defendant’s involvement;
(i)the defendant’s general nature;
(j)the defendant’s conduct during the period since disqualification;
(k)the nature of the business that the defendant desires to or has become involved with;
(l)the structure of the company or companies;
(m)the risk of or actual injury to the public; and
(n)whether or not leave had been sought to become involved in the management of the company and whether as a director or otherwise.
The parties to this proceeding
[31] Under s 382(3) the Registrar, represented by Mr Caro, may appear and be heard at any hearing. Mr Caro appeared in opposition to the application.
[32] In this case, Corrections, who supervised Mr Benjamin’s sentence, are clearly an interested non-party and presented helpful submissions. Corrections were given leave to be heard. Ms Rhodes took a neutral stance but drew attention to some matters considered by Corrections to be relevant.
No objection regarding leave in respect of WL Trustee and Burnley Advisory
WL Trustee (Burnley) Ltd
[33] Mr Caro made it clear that the Registrar had no objection to leave being granted to Mr Benjamin in respect of WL Trustee. It is purely a property-owning company, and it is non-trading. It does not deal with the public. It is accepted that there is absolutely no risk to the public if Mr Benjamin is involved in the management of the company. On that basis, I grant leave.
Burnley Advisory Ltd
[34] In respect of Burnley Advisory, Mr Caro advised that the company is overdue in its obligations to file annual returns—the last having been filed in May 2019. The Registrar has initiated action to remove the company from the Register. For unknown reasons, the Commissioner of Inland Revenue opposes the removal.
[35] The Registrar accepts that the company is “dormant” and exists only to service the ASB mortgage loan over Mr Benjamin’s home.
[36] After discussion, it was agreed that leave be granted for Mr Benjamin to be a director and involved in the management of Burnley Advisory on the following conditions:
(a)Mr Benjamin will file all outstanding annual returns for Burnley Advisory within 28 days of the order being made.
(b)Mr Benjamin will update the company address and director’s address on the New Zealand Companies Register within 28 days of the order.
(c)The order shall expire in one year.
Burnley Lodge
[37] The central thrust of the opposition from the Registrar, and the concerns raised by Corrections, were focussed on Mr Benjamin’s proposed involvement in Burnley
Lodge. There is no need to set out all the detailed submissions. I summarise them as follows.
Mr Benjamin
[38] The offending that gave rise to this application took place approximately seven years ago. Mr Benjamin submits the public interest does not lie in punishing him any further. He says that he has served his time; and that he lost valuable vocational roles (paid and voluntary) because of his offending. He describes Burnley Lodge as his livelihood—apart from a small income derived from rental properties. Mr Benjamin says that the Lodge provides a valuable public service and if leave is not granted, it may need to close down—which he says would be a tragedy.
[39] Mr Benjamin’s references describe him as being highly skilled and constructively involved in the community. He has been in the boarding house business for 14 years and the Lodge provides essential accommodation for marginalised members of the community.
[40] The Lodge is a modest and small-scale operation. Mr Benjamin submits that there is little opportunity for him to take advantage of the Lodge’s clientele given that their accommodation fees are paid directly by WINZ. Realistically, there would be few other opportunities for him to take advantage of the residents.
[41] Mr Benjamin disputes the evidence adduced by Corrections that is said to portray a narrative of non-compliance with home detention. He denies the home detention breach charges laid against him which relate to “unauthorised deviations” while away from home. Similarly, he disputes some of the issues raised by Tenancy Services and FENZ regarding the state of Burnley Lodge. Some of these problems have already been resolved and some soon will be. He submits that for a Lodge such as this, there will be constant maintenance required and, if authorities look hard enough, problems will always be found.
[42] Mr Benjamin says that he has demonstrated responsibility by notifying all relevant businesses and organisations of his convictions and he has stood down from his management roles. He arranged for an interim director to take over the
management of the Lodge. However, this director cannot continue in that role on a permanent basis. Mr Benjamin also appointed his daughter to oversee incoming and outgoing payments. Mr Benjamin is open to the imposition of strict and significant conditions as part of any leave being granted.
The Registrar
[43] The Registrar is concerned by the circumstances of Mr Benjamin’s dual offending. Mr Caro drew attention to the following remarks of the sentencing Judge for Mr Benjamin’s first offending:17
… I accept the position that you are extremely unlikely ever to come to notice again and that previous good character of yours is the strongest mitigation in your particular case. It is probably a classic example of a good man fallen from grace.
[44] In Mr Benjamin’s first s 382 application, his own evidence in support of that application said, in part:
I will not put the public at risk, nor will I put at any risk those organisations that I am involved in. I believe that those organisations need my expertise and skills in order to successfully trade and develop, and that it is in the public interest as well as the organisations’ benefit that I am able to continue in the roles that I currently hold.
[45] In that context, Mr Benjamin’s second offending commenced only two months after his prohibition from company management had ended, and only two years and five months after leave had been granted under s 382. In hindsight, the sentencing Judge was wrong in his optimistic assessment of the applicant, as was the Registrar to agree with the sentencing judge’s assessment and to support the first application. Mr Benjamin’s second set of offending, like the first, is related to dishonesty in managing a company and manipulation of the company’s “books”.
[46] Given the pattern and circumstances of Mr Benjamin’s offending, the Registrar considers that granting leave in respect of Burnley Lodge would be an unacceptable risk to both the public and, in particular, the residents. It is no answer to say that “there is no one else available to be appointed director” if the application for leave is refused. Mr Benjamin will simply have to make appropriate arrangements.
17 R v Benjamin DC Auckland CRI-2008-004-018032, 21 December 2010 at [5].
[47] The second major aspect of concern for the Registrar, is the list of enforcement actions relating to Burnley Lodge, summarised in the current proceedings in the Tenancy Tribunal. They relate to cleansing orders in 2019 and 2021; dangerous and insanitary building notices in November 2019 and 2022; and enforcement actions taken by FENZ.
[48] The Registrar notes that in Mr Benjamin’s first application, he made no mention of any of these actions. The Registrar only found out about them accidentally. In the Registrar’s view, these notices are obviously relevant to the current application under s 382. Mr Benjamin’s failure to initially disclose them shows that he continues to be less than full and frank in matters where there is as duty to be transparent. The Registrar submits that this reflects poorly upon Mr Benjamin.
Corrections
[49] Corrections point to a legitimate concern that the residents of Burnley Lodge may not be as financially “savvy” and as socially aware as other members of society and are therefore more vulnerable to exploitation. In that light, Corrections say that the risk to the public is too great in this case. While it is accepted that the residents of Burnley Lodge may have no other options, and accommodation is limited in Auckland, the Court should not be “forced” to sanction the management and supervision of such people when Mr Benjamin poses such a self-evident risk to them.
[50] Corrections accepts the Court cannot take into account the charges laid against Mr Benjamin for breaching his sentence but, his apparent willingness to test the boundaries imposed by Corrections, may be relevant in assessing his capacity to comply with any conditions the Court might impose if it were to grant Mr Benjamin leave. Corrections highlight that Mr Benjamin disregarded, or at least showed a distinct unwillingness to comply with, lawful directions given to him. The proper course would have been compliance and then discussion.
[51] Corrections also notes that it directed Mr Benjamin not to be an employee of Burnley Lodge. He responded that he was simply maintaining the property, monitoring the behaviour of residents, and assisting with admissions. Corrections says this represents an admitted breach by Mr Benjamin of the Companies Act
prohibition—in that he continued to be, at least indirectly, involved in the management of the company’s operation while the current application was pending. Corrections invites the Court to find that this reflects poorly upon Mr Benjamin.
[52] It is also relevant that the current application was filed somewhat belatedly. Corrections says that Mr Benjamin would have been aware of the implications of the prohibition for his ability to be involved with Burnley Lodge because of his prior experience with this type of application. In these circumstances, he should have acted promptly to avoid potential non-compliance with the prohibition.
Analysis
[53] The starting point must be the risk Mr Benjamin poses to the public. He has committed serious dishonesty offences, twice. Both involved similar manipulation of financial records over which he had significant control. The second offending involved over half a million dollars, and it began two months after his first prohibition period ended. At that time, Mr Benjamin well knew that this type of offending had serious implications for his ability to hold management roles within companies. In light of those circumstances, the risk to the public cannot be underestimated. It is frequently said that the best predictor of future behaviour is similar past behaviour. That risk is compounded by the fact that Mr Benjamin seeks the Court’s permission to be involved with a disadvantaged group, who may be more easily financially “duped” than other members of the public. It is also relevant that the operation of this organisation has already come to the attention of Tenancy Services and FENZ—but not in the context of financial mismanagement.
[54] Seen in this way, the Registrar’s opposition and the concerns of Corrections are readily understandable. On their face these factors might be a “slam dunk” against Mr Benjamin’s application. He poses a real risk to the public and is simply never to be trusted with other people’s money again. However, the law does not automatically bar a person, such as Mr Benjamin from making a second application under s 382 in respect of subsequent offending.
[55] In cases where a subsequent application is being made, the Court will understandably approach its assessment with a heightened degree of caution. The highly fact specific and detailed analysis that is required for first applications will be even more rigorously approached. Where a first application has previously been granted, there will no doubt have been evidence on oath from the applicant promising that they would not offend again. Where a second application has been made, those assurances, as here, will have proved hollow. So, for second applications, the Court will necessarily have a heightened degree of caution and a degree of judicial “anxiety”—even scepticism—appropriate to the circumstances.
[56] The offending itself also requires some analysis—as Mr Muir urged the Court to undertake. I accept that, at least, the origins of Mr Benjamin’s first offending may have been in a misunderstanding as to his rights to a salary increase and holiday pay. But that cannot excuse his resort to offending as a solution. Also, in respect of the second offending, he did pay back all the first “block” of stolen money within two months of the offending having started and before it had been uncovered. The second, and much smaller “block”, was also paid back within a few months of the offending.
[57] The second offending took place well after Mr Benjamin became a director of Burnley Lodge—which he purchased in 2009. Burnley Lodge is no new venture. There is no suggestion of any Burnley Lodge related offending over the 14 years that Mr Benjamin has been a director. I consider this to be an important factor.
[58] Indeed, I consider that there is only a remote possibility that Mr Benjamin would or could reoffend in the context of his involvement with Burnley Lodge. My reasons for that conclusion are as follows.
[59] Burnley Lodge is a very modest operation. In the year ending March 2022, there was a $34,000 operating surplus. There are 100 shares in the company, which are owned by WL Trustee. Mr Benjamin is effectively the owner and sole director of Burnley Lodge—and he has been since the creation of this company. In essence, there is no other shareholder or interested party with which to share (or from which to deprive) any “profits.”. It will be apparent that both sets of Mr Benjamin’s prior offending occurred in quite different circumstances. In both instances, Mr Benjamin
was involved in different contexts with large companies that had high turnovers, where he was an employee and had many opportunities to deprive others of money owing to them, and to conceal that dishonesty.
[60] Also, all of Burnley Lodge’s income comes directly from WINZ, which redirects a major part of the residents’ benefit to the company as an agreed accommodation fee. The residents retain the rest of their benefit payment. Mr Benjamin does not have any direct contact with the resident’s money. There is only ever a small group of residents at Burnley Lodge—being 12 at most. I also consider that the appointment of two residents as “managers” also reduces the risk of manipulation of other residents. These “managers” are responsible for most of the day-to-day operation of the Lodge.
[61] Most of the money received by Burnley Lodge is used to pay operational expenses—including a salary to Mr Benjamin of $50,000. In this way, there is little opportunity for Mr Benjamin to “manipulate the books”, which was a prominent characteristic of his previous offending. All these factors, emphasised by Mr Muir, support the grant of leave.
[62] I have considered the possibility that circumstances may arise where Mr Benjamin may be approached for advice by residents, or where residents may “come into money” which may create an opportunity for exploitation. The Registrar and Corrections, submit that these are not hypothetical concerns—and are precisely why Mr Benjamin should not be allowed anywhere near a company’s operation that might offer such opportunities. Against that, Mr Muir not only regards such concerns as speculative but also maintains that offending in those circumstances would be quite unlike any of Mr Benjamin’s previous “book manipulation” offending. In any case, Mr Muir has suggested that very stringent conditions in the way of full disclosure to all interested parties and a transparent disclosure clause in all occupancy agreements could much alleviate this risk. After consideration, I agree. This form of disclosure would put interested parties and residents effectively on-notice about the potential reliability, or otherwise, of Mr Benjamin in these circumstances. That would mitigate the ability of Mr Benjamin to exploit an interested party or resident in this way.
[63] I accept that a particular set of skills and experience are required to operate Burnley Lodge and to deal with the needs of its residents. These were well itemised by Mr Muir and seem undisputed. Mr Benjamin has had long standing involvement in providing this specialist service. It is unlikely that many others could be found to direct and manage Burnley Lodge for the next four years if Mr Benjamin is not granted leave. In relation to the possibility of appointing a new director and manager, Mr Benjamin has deposed that:
The practical implications of myself not being able to be a director of Burnley Lodge may mean it would have to close down. The closing of the business would in turn impact the public interest of giving care and treatment to schizophrenic patients.
[64] I note that Mr Benjamin does not depose that Burnley would close if he were to be declined leave—but I accept on the affidavit evidence that is a realistic outcome. Mr Muir also submitted from the bar that there is a limited number of facilities in Auckland providing this type of care, and that for third parties depending on Burnley Lodge, its closure would have significant ramifications.
[65] However, I also accept Mr Caro’s submission that just because Burnley Lodge may need to be closed down, the Court should not be “forced” or manipulated into granting leave where it considers there is a serious risk to the public. Mr Caro and Ms Rhodes also made the point that there is no evidence from appropriate health authorities as to the need for Burnley Lodge to continue and the potential consequences for the mental health care system of its closure. On this point, I accept that the potential negative consequences of leave being denied cannot be determinative. However, the cases demonstrate that the interests of third parties and the public are relevant considerations.18 Here a small group of third-party interests— those with significant mental health issues needing safe residence—could be severely compromised if leave was not granted.
[66] I also take into account that Burnley Lodge is effectively Mr Benjamin’s livelihood.
18 Re Weston, above n 6; and Ramsay v Sumich, above n 11.
[67] Mr Muir also placed reliance on Mr Benjamin’s otherwise “good character” which he said was evidenced by appropriate references and a long history of community involvement and service. This is set out in Mr Benjamin’s affidavit evidence and in his sentencing. I consider that such matters are also not determinative. Not infrequently, offenders, including dishonesty offenders, have positively contributed to their community through their, often voluntary, activities. But where a person has continued to offend in a serious way, the force of such references and the offender’s prior good works must be diminished. Having said that, a person’s history can be relevant in the assessment of the risk they pose to the public.
[68] Accordingly, I take into account that after his most recent conviction Mr Benjamin has generally acted responsibly—in that he advised all interested business parties of his convictions and offered to immediately stand down from all his roles. He deposes that he considered several alternatives for the directorship of Burnley Lodge, but he concluded that these were not viable due to the limited commercial capacity of the company. He has installed an interim director until this application is resolved and arranged for his legally trained daughter to oversee all incoming and outgoing payments.
[69] I now turn to address the outstanding notices issued by Tenancy Services and FENZ against Burnley Lodge. There are two aspects to this.
[70] First, there are concerns about sub-standard operation and whether sufficient capital investment is being directed into Burnley Lodge. I have no information as to the seriousness of the matters raised by both agencies. In the end I agree with Mr Muir that given these matters will be before the Tenancy Tribunal, or that FENZ will take action if there is no resolution, then those processes should take their course with their own consequences. I accept it should not be for this Court to decide these matters or use these proceedings to ensure compliance with standards which are the domain of other specialist bodies. If leave is granted, I agree that both Tenancy Services and FENZ should know of this application.
[71] The second concern is more significant to this application. Mr Benjamin initially failed to disclose this information as part of his application for leave. I agree that he had a duty to do so. Concerningly, this points to a lack of candour and transparency on Mr Benjamin’s part, which is compounded by his past non- compliance with orders from Corrections. Collectively, these concerns paint Mr Benjamin as a person who wants to debate his way out of apparently legitimate issues raised by others and who demonstrates a degree of self-entitlement. Corrections and the Registrar are of the opinion that this does not bode well for compliance with any conditions placed on Mr Benjamin, which would weigh against the granting of leave. In other words, he will always find a self-justified way out of his obligations.
[72] I must say that these concerns have given me real pause for thought. To be fair, I note that because Mr Benjamin was not required to be cross-examined during the hearing these matters were not squarely put to him, and he did not have a chance to explain. I make no conclusive findings about them. But Mr Benjamin needs to know, when he reads this decision, how his attitude comes across in his “drip fed” affidavits and what others think of his attitude. It is a matter which of course I take into account, but it is not determinative. I say no more.
Conclusion
[73] After having considered all the foregoing discussion, I conclude, not without hesitation, that Mr Benjamin has discharged the “substantial onus” required of him. I record that my preliminary view on this matter after the oral argument changed. After reflection and after reconsideration of all the very helpful submissions for which I thank counsel, I came to a different view.
[74] I have reached this conclusion because I consider that any risk posed by Mr Benjamin to the public in a management role at Burnley Lodge can be significantly mitigated by the imposition of strict and comprehensive conditions which will meet the concerns of the Registrar and Corrections. When there was discussion in Court about potential conditions, and their width, Mr Caro fairly observed that the very need for extensive conditions simply reinforces the existence of risk to the public and serves to underline why the application should not be granted. Nevertheless, in my view the
imposition of the following conditions will address the risks in this case. And they will allow the continuation of a valuable public facility at the same time preserving Mr Benjamin’s livelihood.
[75]Mr Benjamin deposes that:
I will never commit any criminal offences in the future. The consequences of my offending have been incredibly significant to me, to my family, my personal circumstances and also my professional business.
[76] I address the following comments to Mr Benjamin. This is not the first time Mr Benjamin has assured the Court that he will not reoffend in the future. He should be aware that he has discharged the “substantial onus” on him to demonstrate why leave should be granted by the narrowest of margins.
[77] The conditions attaching to leave being granted are comprehensive and will involve transparency and honesty to an extent that Mr Benjamin has not always previously demonstrated. There will also be some embarrassment in disclosing his convictions, this decision, and the requirements of this order. In my view this is necessary if Mr Benjamin is to make the fresh start, that he says he wants.
Result
[78]The application is successful.
[79] Leave under s 382 of the Act is granted in respect of all three of the Burnley Companies.
[80]In respect of WL Trustee (Burnley) Ltd, leave is granted without conditions.
[81] In respect of Burnley Advisory Ltd, leave is granted on the conditions set out in [36] of this judgment.
[82] In respect of Burnley Lodge (2009) Ltd, leave is granted on the following strict conditions:
(a)A sealed copy of the Court’s order and this judgment is to be lodged with the Companies Office and placed on the company’s file.
(b)Burnley Lodge is to have its accounts audited and filed with the Registrar of Companies twice a year with an audited certificate confirming the auditor’s opinion of the business accounts and company obligations.
(c)No loan is to be made to or from Burnley Lodge to any company associated with Burnley Lodge or Mr Benjamin.
(d)Mr Benjamin is not permitted to be involved in any transaction in which he is interested (as defined in s 139 of the Companies Act 1993) if the amount involved is more than $10,000.
(e)Mr Benjamin’s only daughter, as a final beneficiary of the Burnley Trust, must assess all payments made by or on behalf of Burnley Lodge and provide annual confirmation to the auditor, described above, that she has done so. If she is unable to act in this role during the term of this order, another person is to be appointed with the prior written approval of the auditor, filed in the Companies Office.
(f)This order shall lie in Court and not take effect until Mr Benjamin provides, to the satisfaction of the Registrar of the Auckland High Court, an affidavit of service confirming that all the following bodies have been served with a copy of this decision together with a draft order of the Court:
(i)WINZ, at its Auckland and NZ head office;
(ii)the relevant Auckland Mental Health Services;
(iii)the Auckland City Mission;
(iv)Tenancy Services New Zealand;
(v)Fire and Emergency New Zealand Limited.
(g)Further, the order will lie in Court and not take effect until Mr Benjamin has filed in the Auckland High Court an affidavit confirming that:
(i)all tenancy agreements with future residents of Burnley Lodge include a clause that Mr Benjamin is only involved with Burnley Lodge with the leave of the High Court because of his previous serious dishonesty convictions; and
(ii)he will personally draw the attention of all residents and proposed residents of Burnley Lodge to his previous dishonesty convictions.
(h)Burnley Lodge may only be operated as a residential service for those with mental health needs.
(i)In the event of breach of any of these conditions by Mr Benjamin, then leave for him to act as a director and to be involved in the management of any of the Burnley Companies is to be immediately rescinded.
Becroft J
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