Chapman v The Queen

[2018] NZHC 1452

IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY

I TE KŌTI MATUA O AOTEAROA NGĀMOTU ROHE

CRI-2018-443-7

[2018] NZHC 1452

BETWEEN

NADENE CHEREE CHAPMAN

Appellant

AND

THE QUEEN

Respondent

Hearing:

12 June 2018

Appearances:

J Griffiths for the Appellant

S Simpkin for the Respondent

Judgment:

18 June 2018

JUDGMENT OF CULL J

[Sentence appeal]

[1]    Ms Chapman appeals her sentence from the District Court1 of three years’ imprisonment and reparation of $10,000 following guilty pleas to four charges of dishonestly using a document (two of which are representative)2 and one representative charge of theft in a special relationship.3

[2]    Ms Chapman submits the sentence was manifestly excessive, because the starting point was too high when compared to other comparable offending and the Judge failed to take into account the motivation behind Ms Chapman’s offending when fixing the starting point.

[3]    The Crown opposes the appeal and argues the sentence imposed was not manifestly excessive. The Crown submits there was no error in the Judge’s starting

1      R v Chapman [2018] NZDC 3109.

2      Crimes Act 1961, s 228(1)(b). Maximum penalty is seven years’ imprisonment.

3      Sections 220(1), (2) and 223(a). Maximum penalty is seven years’ imprisonment.

CHAPMAN v R [2018] NZHC 1452 [18 June 2018]

point and the Judge was well aware of the motivations behind Ms Chapman’s offending when determining the appropriate starting point.

Factual background

[4]    Ms Chapman was a travel consultant who operated her own travel company, Waitara Travel Ltd. She also took over a comparable business which was unsuccessful and eventually closed, causing Ms Chapman significant financial pressure. The failure of this business meant Ms Chapman was unable to meet her payments as they fell due. In 2016, she sold her own home and put the money into Waitara Travel. Her husband also sold a property to put money into the company.

[5]    Ms Chapman accepted money from clients who wished to book holidays through Waitara Travel. At the time of accepting the money, Ms Chapman had no intention of using it to book the holidays those clients wished to take as she was hopelessly behind in her payments. Instead, she used their money to pay for the travel arrangements of other people from whom she had already accepted money. She was effectively funding her business out of deposits made by customers. The offending was discovered when Ms Chapman was attempting to sell her business to House of Travel. This sale fell through and Ms Chapman was bankrupted on 25 September 2017.

[6]    Ms Chapman’s offending took place over a period of about one year and eight months. It involved a large number of victims, 91 in total, including House of Travel. As a result of her offending, Ms Chapman caused hardship to a number of a victims who did not receive the travel they had booked and paid for.

Factual dispute about the quantum in issue

[7]    The total quantum paid to Ms Chapman and not used specifically to pay for her clients’ travel is disputed. At sentencing, the Judge took the amount as “just under

$708,000” (being $707,737.47).4 Mr Griffiths, for Ms Chapman, subsequently

disputes this figure. Mr Griffiths provides a range of figures:

4      Chapman, above n 1, at [5]. This figure is detailed in the Crown’s Schedule of misappropriated money.

(a)He claims that the sentencing Judge’s figure included money paid by two clients in relation to a charge that was dismissed. Mr Griffiths submits the total amount of misappropriated money is $703,212.47.

(b)Mr Griffiths then states that the Crown calculated the total loss to House of Travel as $632,093.96 and the total loss to other individual victims as $44,666.68. The total loss to all victims is thus $676,760.64.

(c)Mr Griffiths also notes that there are inconsistencies in the Crown schedule where charge backs have been paid by ANZ but insurance claims have been made in respect of the same amounts. Further, some victims sought compensation even though they had received their travel without any problems. In another instance, the loss incurred was because the victim’s wife missed a flight and had to pay for another flight home. These disputed amounts total $40,490.18.

(d)If the disputed amounts are subtracted from the total loss to all victims, the total is $636,270.46.

[8]    Mr Griffiths does not, however, confirm which figure the Court should use for the purposes of sentencing: whether the total amount of misappropriated money ($703,212.47) or the total loss to all victims, less the disputed amounts ($636,270.46).

[9]    In response, the Crown submits the sentencing correctly proceeded on the amount specified in the agreed summary of facts and the appeal should also proceed on this basis. Prior to sentencing, on 26 January 2018, Ms Chapman advised through her counsel that sentencing could proceed on the basis of the quantum submitted by the Crown and a disputed facts hearing would not be required. The Crown, relying on the Court of Appeal’s decision in Pokai v R, submits that where counsel have reached agreement regarding the summary of facts on which a guilty plea has been entered, sentencing must proceed on the basis of that summary.5

5      Pokai v R [2014] NZCA 356 at [30].

[10]   The Crown also notes that the figure in relation to the charge that was dismissed is still relevant as those victims were included under the representative charge of theft by a person in a special relationship. Further, the fact that insurance claims have been made subsequently does not mean the amount should change. The quantum referred to by the Crown reflected the total amount of money paid by victims and not used by Ms Chapman specifically for their travel. The amounts recovered through insurance were reflect in the Crown’s reparation figures.

[11]   The Court of Appeal authority in Pokai is clear on this point. There the Court stated:6

This Court has made it clear in cases such as R v Apostolakis and R v Whiunui that, in cases where counsel have reached agreement regarding the factual summary on which a guilty plea is to be entered, sentencing must proceed on the basis of that summary. Any appeal against sentence must similarly be decided having regard to the facts contained [in] the summary.

[12]   Similarly, here the quantum of loss suffered by the victims cannot be disputed or changed on appeal. For the purposes of this appeal, the total amount of misappropriated money is the same as the figure that Ms Chapman pleaded guilty to and was used at sentencing, namely $707,737.47.

District Court decision

[13]   In sentencing Ms Chapman, Judge MacDonald paid considerable regard to Ms Chapman’s personal circumstances.

[14]   The Judge considered Ms Chapman’s offers to pay reparation to cover the losses suffered by individuals. Ms Chapman had obtained $10,000 from her family which she offered as reparation, with an offer of a further $300 per week from her wages. The Judge acknowledged this offer but observed that the ongoing payments could not take place if Ms Chapman received a sentence of imprisonment. Yet, he could not tailor the sentence for that purpose.

6      At [30] (footnote omitted).

[15]   The Judge also acknowledged Ms Chapman’s participation in a restorative justice conference and her apology placed in the local newspaper which was directed at the Waitara community. The Judge took into account the explanation Ms Chapman gave for her offending at the restorative justice conference. The Judge considered  Ms Chapman was remorseful, as highlighted by her probation officer, and this offending was out of character for her. The Judge noted that Ms Hughes, on behalf of Ms Chapman, emphasised the motivation behind her offending:7

You offended to repay debts in relation to another business rather than to fund your own lifestyle. You are characterised as a naïve businesswoman and in some respects, out of your depth. You accept that you should have closed the business down earlier. You were astonished at the quantum of the money missing.

[16]   When  examining  the  victim  impact  statements,   the   Judge   observed  Ms Chapman was regarded as a reputable travel agent in her community and her offending involved a gross breach of trust. She caused considerable stress, hurt and upset a number of people by acting in a dishonest and deceitful way over a considerable period.

[17]   The Judge accepted Ms Hughes’ submission that Ms Chapman would be a suitable candidate for home detention if her final sentence could legitimately get to two years’ imprisonment. However, the Judge indicated that he needed to assess the circumstances and make his decision as to the length of sentence irrespective of this.

[18]   In setting a starting point for Ms Chapman’s offending, the Judge accepted the relevant aggravating factors were the extent of the loss, the harm to the victims, the gross breach of trust involved, pre-meditation, the period over which the offending occurred, the number of victims and the amount of fraud. The Judge observed that dishonesty offending can occur in a wide range of circumstances and none of the cases referred to by counsel were precisely identical, some involving offender over a greater period or with fewer victims.8 In considering comparable cases and the aggravating factors, the Judge adopted a global starting point of five years’ imprisonment for all of the offending.

7      Chapman, above n 1, at [20].

8      R v Varjan CA97/03, 26 June 2003; R v Staples CA215/04, 30 August 2004; McGregor v R [2015] NZCA 565; Tither v New Zealand Police [2014] NZHC 904; and James v R [2017] NZHC 1186.

[19]   In terms of mitigating factors, the Judge gave a discount of 15 per cent for  Ms Chapman’s remorse, including her offers to pay reparation and her attendance at restorative  justice.   The  Judge  gave  a  further  discount  of  five  per  cent  for    Ms Chapman’s previous good character and lack of prior convictions. This brought the sentence down to four years’ imprisonment. The Judge then gave a final discount of 25 per cent for Ms Chapman’s guilty pleas.

[20]   The Judge imposed a final sentence of three years’ imprisonment on each charge, to be served concurrently. The Judge also made an order for $10,000 in reparation.

Leave to file appeal out of time

[21]   Ms Chapman’s notice of appeal was filed seven working days late and therefore she seeks leave to file this out of time. Ms Chapman explains she had difficulty in finding a lawyer that would accept her case on legal aid. This was further exacerbated by the difficulties with contacting a lawyer from prison. Mr Griffiths, Ms Chapman’s counsel, understands that the Crown is not opposed to the Court granting an extension of time because of the very short delay in filing a notice of appeal.

[22]   A notice of appeal against sentence must be filed within 20 working days after the date of the sentence appealed against.9 The appeal court may, at any time, however, extend the time allowed for filing a notice of appeal.10 The basis for granting leave out of time is whether it is in the interests of justice in a particular case.11 This requires the wider interests of society balanced against the interests of the individual applicant, in having the sentence reviewed. There are a variety of considerations relevant to the interests of justice, including the length and reason for the delay, the strength of the proposed appeal and the public interest in the finality of decisions.12

9      Criminal Procedure Act 2011, s 248(2).

10     Section 248(4).

11     R v Knight [1998] 1 NZLR 583 (CA) at 587, which was confirmed in R v Lee [2006] 3 NZLR 42 (CA) at [95]–[107].

12     Isherwood v R [2010] NZCA 347 at [16].

[23]   I am granting Ms Chapman leave to appeal out of time, because it is in the interests of justice to do so. There was a very short delay in filing and Ms Chapman should not be barred from filing her appeal because of difficulties in finding new legal representation.

Approach to appeal

[24]   This appeal is brought under s 250 of the Criminal Procedure Act 2011. An appeal against sentence is an appeal against a discretion. An appeal against sentence must be allowed if the Court is satisfied that, for any reason, there is an error in the sentence imposed and a different sentence should be imposed.13 The focus is on the final sentence and whether that was in the available range, rather than the exact process by which it was reached.14

Ms Chapman’s position

[25]   Ms Chapman appeals her sentence on the basis that it was manifestly excessive. She submits the starting point was too high when compared to other similar offending. In support, Mr Griffiths compares Ms Chapman’s offending to other cases and in particular,15 to the similarity of offending in R v Varjan and R v Cochrane.16 He submits a starting point of three years’ imprisonment is appropriate in light of these cases.

[26]   Further, Ms Chapman submits the Judge failed to take into account the motivation behind her offending when fixing the starting point. She was under enormous financial pressure and was essentially trying to keep her business afloat after making poor business decisions. Ms Chapman’s livelihood, as well as that of her family and her mother (who was employed by Waitara Travel), depended on the survival of the business. Ms Chapman did not financially benefit from the offending or live extravagantly as a result. Rather, Ms Chapman and her mother would forego their remuneration for extended periods. Ms Chapman essentially lost everything

13     Tutakangahau v R [2014] NZCA 279, [2014] 3 NZLR 482.

14     Ripia v R [2011] NZCA 101 at [15].

15     Staples, above n 8; Tither, above n 8; McGregor, above n 8; James, above n 8; and R v Burns

[2014] NZHC 2278.

16     Varjan, above n 8; and R v Cochrane CA431/92, 27 May 1993.

when she sold her house and transferred the capital to the business. She was made bankrupt in September 2017.

[27]   The key factors of Ms Chapman’s offending that Mr Griffiths highlights include:

(a)the period of time over which the offending occurred (1 year and eight months);

(b)the amount of loss to the victims, including that the losses were more severe than they would have been if she had stopped trading earlier;

(c)Ms Chapman’s motivations behind her offending; and

(d)the vulnerability of the victims and the harm the offending caused.

[28]   Ms Chapman does not challenge the deductions made by the Judge for her relevant mitigating factors and submits these should not be disturbed on appeal.

[29]   If  the  end  sentence  on  appeal  was  two  years’  imprisonment  or  less,  Ms Chapman submits a sentence of home detention should be substituted. The Judge accepted she would have been a suitable candidate, if the sentence was appropriate.

[30]   Ms Chapman’s job is still available on release and she remains motivated to pay back the money the individual victims lost, as there is still approximately $34,666 outstanding. This amount could be paid off over five years at a rate of approximately

$133 per week. Ms Chapman submits this would be an appropriate amount for the Court to order reparation if she is sentenced to home detention.

Crown’s position

[31]   The Crown opposes the appeal and argues the sentence imposed was not manifestly excessive. The Crown submits the Judge noted the arguments made about the motivation of Ms Chapman’s offending and he was well aware of these motivations when setting the starting point.

[32]   The Crown submits there was no error in determining the starting point of five years’ imprisonment. The Judge correctly considered a range of cases provided to him. The Crown points to the following factors as supporting this starting point:

(a)the offending involved 90 individual victims, as well as House of Travel, which is significantly more than the number of victims in the cases of Varjan or Cochrane;

(b)there was a gross breach of trust involved in the offending; and

(c)the impact of this offending was felt by many individuals not only in terms of financial loss but also for ruining what should have been an enjoyable, stress free travel experience.

Relevant law

[33]   There is no tariff case for dishonesty offending of this kind as the circumstances of and culpability in offences of dishonesty can vary so widely.17

[34]   In Varjan the Court of Appeal outlined that culpability for this type of offending is to be assessed by reference to factors such as the nature of the offending, its magnitude and sophistication; the type, circumstances and number of victims; the motivation for the offending; the amounts involved; the losses; the period over which the offending occurred; the seriousness of breaches of trust involved; and the impact on victims.18 These factors were referred to by the Judge in sentencing Ms Chapman and are useful when comparing her offending to other cases.

[35]   Counsel have referred to several cases to identify the appropriate starting point for Ms Chapman’s offending. The following are those I believe are more closely comparable to Ms Chapman’s offending, with starting points between three and five years’ imprisonment:

17     Varjan, above n 8, at [21].

18 At [22].

(a)Varjan:19 Mr Varjan was convicted of two charges of conspiracy to defraud and three charges of using a document with intent to defraud. Mr Varjan was a mobile mortgage manager for a bank and his two co- offenders were mortgage brokers. His co-offenders would source clients who were in mortgage or rate arrears and organise false documentation that appeared to meet the lending criteria of banks. Mr Varjan then processed and approved these fraudulent loan applications. This occurred with 15 borrowers. Mr Varjan also approached people who wanted to purchase houses and asked them to sign blank loan application forms. He then processed three applications through his own bank by providing false details and falsified supporting documents. The aggravating factors included abuse of a position of trust, deliberate, sophisticated and pre-meditated offending, it occurred over a couple of years, the loss to financial institutions was over

$546,000 and the individual borrowers were vulnerable. On appeal, the Court held a starting point of three years’ imprisonment was appropriate in light of his misuse of a position of trust. The Court noted Mr Varjan derived very little personal gain.

(b)Tither v New Zealand Police:20 Mrs Tither was convicted of three charges of theft, committed while office manager and general manager of a company. Over a 12-year period, Mrs Tither made 298 payments to the value of $436,242 by creating false expenses and transferring funds from a related company’s accounts to her accounts. She also made 150 unauthorised lieu day payments to herself in relation to her employment, to the value of $210,264 as well as over $50,000 in additional statutory entitlements and under $3,000 in employer Kiwisaver contributions. She concealed the payments by not disclosing them in any of the budgetary information and by coding the payments to other departments. In total, over $700,000 was taken. On appeal, Venning J commented that a starting point of five years’ imprisonment was appropriate.

19     Varjan, above n 8.

20     Tither, above n 8.

(c)McGregor v R:21 Ms McGregor was convicted of ten charges of theft by a person in a special relationship, while employed by a company to manage estates, trusts and personal affairs of clients. Her offending involved 12 different victims and 150 transactions in which she took for her own purposes $472,917.20. She used a variety of methods to take the money, including taking money direct from client funds, paying client funds to her associates who on-paid her the money and using clients’ ATM cards to withdraw cash. She also used a variety of methods to conceal her offending and the funds were used principally for personal benefit. The starting point of five years’ imprisonment was upheld on appeal and recognised Ms McGregor’s abuse of a position of trust, the vulnerability of her elderly or mentally incapable clients and the targeted, prolonged nature of her offending.

(d)James v R:22 Ms James was convicted on two counts of forgery and one count of obtaining by deception while employed in administration support for a company. Over a 14-month period, Ms James created forms for two false suppliers, issued 26 purchase orders and submitted 19 invoices to the company’s accounts payable department and retained the payments deposited for her personal use. The total amount she obtained was $705,104.12. On appeal, Dobson J held the Judge’s starting point of four years and nine months’ imprisonment could not be criticised. The Judge did note, however, that he considered a starting point of four years and six months’ imprisonment would have been appropriate.

(e)R v Cochrane:23 Mr Cochrane was convicted of 261 charges of using a document  with  intent  to  defraud   over   a   nine-month   period.   Mr Cochrane was the director of a company owned by himself and his wife. The company was experiencing liquidity problems and entered into an arrangement with another company for the factoring of all of its

21     McGregor, above n 8.

22     James, above n 8.

23     Cochrane, above n 16.

trade debts. Mr Cochrane instructed his company’s accounts clerk to issue false invoices alongside genuine invoices. Mr Cochrane’s company received $828,538 after deducting fees, which was used to assist the company in its financial problems and to reduce its overdraft. It was accepted that Mr Cochrane did not derive considerable personal benefit from the offending. On appeal, the Court of Appeal adopted a starting point of three years’ imprisonment. The Court commented that there was no additional or unusual breach of trust involved and, although the amount obtained was large, the period of offending was short and the ultimate direct loss to the bank and company was comparatively small. I note that this case was decided before the Sentencing Act 2002.

[36]   I consider that the other cases referred to by counsel do not reflect the offending in this case and are not directly relevant.24

Discussion

[37]   The Judge took into account the appropriate aggravating factors, including Ms Chapman’s motivation for her offending. This was expressly mentioned by the Judge when he discussed the nature of the offending and counsels’ submissions.25 The Judge was alive to her motivations before setting the starting point. I also note that although her intention was to repay debt, Ms Chapman was negotiating to sell the business to another travel agent.

[38]   Essentially, this appeal turns on the comparison of Ms Chapman’s offending with other similar cases.

[39]   I accept that Ms Chapman’s offending was motivated by similar financial pressures to the offending in Varjan or Cochrane. However, those two cases are useful only to this extent. Mr Varjan’s offending was as a co-offender and not as a sole offender; it involved significantly fewer victims (15); and less money was taken

24     Staples, above n 8; Burns, above n 15.

25     Chapman, above n 1, at [20].

($546,000). Mr Cochrane’s offending, while involving a slightly larger sum of money ($828,538), occurred over a shorter period (nine months); did not involve any unusual or significant breach of trust; and only involved two victims, a bank and the company who had entered into an arrangement with Mr Cochrane’s business to assist with cash flow difficulties.

[40]In drawing comparisons with the other cases, the following points are relevant:

(a)Ms Chapman’s offending involved similar amounts of money (around

$700,000) as were in issue in James and Tither;

(b)Ms Chapman’s offending involved her being entrusted with the money of her clients’ and abusing her position of trust, in a similar manner to the cases of McGregor and Varjan;

(c)Ms Chapman’s victims were similarly vulnerable as the victims in Varjan, where Mr Varjan received money from clients wanting mortgages, although Ms Chapman’s victims were not as vulnerable as those in McGregor, who were elderly or mentally incapable;

(d)Ms Chapman’s offending occurred over a much shorter time period than in Tither (12 years) and McGregor (approximately four and a half years), but was longer than the periods in James (14 months) and Cochrane (nine months); and

(e)Ms Chapman’s offending involved more victims than any of the cases provided.

[41]   There is no case that is precisely akin to Ms Chapman’s, as the Judge noted at sentencing.26 In light of the cases and the factors surrounding her offending, a starting point between four and five years’ imprisonment was appropriate. I am unable to uphold Mr Griffiths’ submission that a starting point as low as three years’ imprisonment is appropriate. The Judge’s starting point of five years’ imprisonment

26 At [27].

was available to him and cannot be described as manifestly excessive in light of other authorities.

[42]   The Judge did take into account Ms Chapman’s motivations for offending. There has been no error and the sentence is not manifestly excessive.

Result

[43]The appeal is dismissed.

Cull J

Solicitors:

Mainstreet Legal Ltd, Upper Hutt Crown Solicitor, Wellington

Solicitors: