D'Villiers v R

[2010] NZCA 85

IN THE COURT OF APPEAL OF NEW ZEALAND

CA608/2009
[2010] NZCA 85

BETWEENSTEPHEN D’VILLIERS

Appellant

ANDTHE QUEEN

Respondent

Hearing:10 March 2010

Court:Ellen France, Miller and Allan JJ

Counsel:J N Bioletti for Appellant

J C Gordon SC and A M Killeen for Respondent

Judgment:22 March 2010 at 2.30 pm 

JUDGMENT OF THE COURT

The appeal against sentence is dismissed.

REASONS OF THE COURT

(Given by Allan J)

[1]        On 23 July 2009, during the first week of his trial, Mr D’Villiers pleaded guilty to 21 charges of dishonestly using a document with intent to obtain a pecuniary advantage, and one charge of knowingly using a forged document.  On 28 August 2009, he was sentenced by Judge Wade in the Manukau District Court to five years imprisonment.[1]  The Judge also imposed a minimum period of imprisonment (MPI) of two and a half years.  Mr D’Villiers appeals against the minimum term, but not against the end sentence of five years imprisonment.

Background

[1]      R v D’Villiers DC Manukau CRI-2008-092-11825, 28 August 2009.

[2]        By his guilty pleas the appellant accepted criminal responsibility for very substantial dishonest offending, the nature and scope of which was succinctly summarised by the sentencing Judge in this way:

[4]         It can be seen that the dishonesty comprised what is commonly called “mortgage fraud”.  It took place at a time when the housing market was buoyant during 2004 and 2005.  The opening date of the indictment is 14 December 2004, and the final transaction took place on either 24 or 25 May 2005.  The offending related to the dishonest use of loan application forms and sale and purchase agreements in relation to 19 different property transactions during the relevant period.  As is common in such frauds the actual purchase price of the property concerned was exaggerated and it was represented that deposits had been made direct to the vendors when they had not.  This was to enable the purchaser to obtain a greater loan than the lender would normally be prepared to allow, frequently amounting to 100 percent of the purchase price.  The sale and purchase agreement showed the inflated prices but the purchasers were induced to sign them by assurances that only the lower orally agreed price would be applicable.

[5]         In very many instances it was not simply a case of false representations being made as to the purchase price.  To make the prospective borrowers’ financial position appear more rosy than was in fact the case, false assertions were made as to the income of the prospective borrower, the length of their service with their current employer, the bank deposits it was alleged that they held, and the other capital assets that they had.  That would be done by what appeared to me certainly to be sophisticated forgeries.  Furthermore, in some instances official documents such as passports and driving licences were forged and submitted in support of the application.

[6]         As a result of your actions fraudulent loan applications were made to a total of $4,870,000 in loan funds.  Nearly all resulted in loans being advanced, although one did not proceed because the purchaser pulled out of the agreement.  All in all some $4,650,000 was advanced, and as can be seen in the summary of facts both of you I am satisfied received substantial benefits from the dishonesty.

[7]         In the case of Mr D’Villiers a figure of some $373,556 …

[8]         The losses sustained by the lenders are more difficult to quantify.  Although in some instances mortgagee sales subsequently took place resulting in losses to the lenders, borrowers are of course still liable for those losses because of the personal covenants contained in the mortgage documents.  The lenders have not yet exhausted all their remedies as against the borrowers in many respects.

[9]         One exception is a transaction involving 17 Sunderlands Crescent, where the ANZ carried out a mortgagee sale which resulted in a shortfall of $125,500.  Subsequently that borrower was declared bankrupt and the total loss in respect of that transaction to that particular bank is of the order of $130,692.

[10]       Four purchasers suffered the trauma of losing their homes and having them subject to mortgagee sales, and at present the confirmed losses total $311,000.  However the actual loss is only one aspect to be considered in assessing the gravity of the offending.  Certainly although it is a mitigating factor for an offender to say that he has recompensed the victims for their losses, that does not apply in this case so far as Mr D’Villiers is concerned …

[11]       I immediately accept that it was not intended that people should necessarily lose out.  These mortgage frauds were going on at a time of a very buoyant housing market and I dare say everybody assumed that nobody would lose out at the end of the day.  But people have lost out, and have lost out seriously.  Not only the banks but of course the individuals as well, and for my own part, I would imagine it is extremely traumatic to have one’s house sold from under you.

[3]        As the Judge observed, this was mortgage fraud offending on a considerable scale, and of a type that has become all too common in our criminal courts.

Sentencing in the District Court

[4]        Mr D’Villiers was not the only participant in the scheme.  Two co-offenders had been dealt with earlier.  A Mr Prasad pleaded guilty at depositions.  In his case a starting point of three and a half to four years imprisonment was adopted.[2]  A Mr Singh was the subject of a starting point of two and a half to three years imprisonment.[3]  In addition, a Ms Lacurtz was sentenced along with Mr D’Villiers, but she was a first offender whose role in the offending was secondary.  She received a non-custodial sentence.  It is not suggested that her case is in any way comparable to that of the appellant.

[2]      R v Prasad DC Manukau CRI-2007-004949, 24 July 2008.

[3]      R v Singh DC Manukau CRI-2008-092-005244, 25 July 2008.

[5]        Mr Bioletti accepted, both in the District Court and in this Court, that the appellant played a leading role in the offending.

[6]        The Judge reviewed several sentencing authorities and noted that the present offending commenced very soon after the appellant’s release from prison following earlier convictions for virtually identical offences.  Indeed, the present offending occurred while Mr D’Villiers was on parole.

[7]        Judge Wade adopted a starting point of four and a half years imprisonment (the same as had been adopted in respect of his earlier offences), but imposed an uplift of 12 months imprisonment to reflect the earlier offending and the fact that the appellant was on parole when the present offences were committed.

[8]        From the resulting figure of five and a half years he allowed a discount of six months for a belated guilty plea, so producing an end sentence of five years imprisonment.

[9]        The Judge then turned to the question of the imposition of an MPI.  He said:

[23]       However, finally in your case, I have to consider the provisions of s 86 of the Sentencing Act.  I have to denounce your conduct of almost immediately re-offending whilst you were on parole last time, and that of itself is an additional aggravating feature.  I am not double counting the fact that you re-offended immediately on your release.  But it is in my judgment absolutely essential that offenders who commit further offences in an almost identical fashion when they are still on parole, then that conduct must be denounced by way of the imposition of a minimum period of imprisonment.

[24]       Therefore, in order to try and deter you and to protect the community from you it is necessary in my judgment to make an order for a minimum non-parole period.  I think that if I were to impose a requirement that you serve the full two thirds of the sentence that might be seen as an element of double counting, but in your case I think it is necessary to direct that you are to serve a minimum period.  I accordingly direct that you be sentenced to a total of five years imprisonment on each of the counts concurrently, with an order under s 86 that you be subject to a minimum non-parole period of two and a half years.

The appellant’s submissions

[10]       During the course of oral argument, Mr Bioletti refined somewhat the argument appearing in his written synopsis.  Ultimately, the appellant’s submission was simply that, having regard to s 86 of the Sentencing Act 2002, there was no proper basis in all the circumstances of the case for the imposition of an MPI; s 86 factors had already been adequately addressed by the Judge when applying a 12 month uplift to the starting point of four and a half years imprisonment.

Discussion

[11]       Section 86 of the Sentencing Act provides:

86          Imposition of minimum period of imprisonment in relation to determinate sentence of imprisonment 

(1)If a court sentences an offender to a determinate sentence of imprisonment of more than 2 years for a particular offence, it may, at the same time as it sentences the offender, order that the offender serve a minimum period of imprisonment in relation to that particular sentence.

(2)The court may impose a minimum period of imprisonment that is longer than the period otherwise applicable under section 84(1) of the Parole Act 2002 if it is satisfied that that period is insufficient for all or any of the following purposes:—

(a)holding the offender accountable for the harm done to the victim and the community by the offending:

(b)denouncing the conduct in which the offender was involved:

(c)deterring the offender or other persons from committing the same or a similar offence:

(d)protecting the community from the offender.

(3)Repealed.

(4)A minimum period of imprisonment imposed under this section must not exceed the lesser of—

(a)two-thirds of the full term of the sentence; or

(b)10 years.

(5)For the purposes of Part 4 of the Summary Proceedings Act 1957 and Part 13 of the Crimes Act 1961, an order under this section is a sentence.

[12]       Section 4 defines the expression “determinate sentence of imprisonment” as meaning a sentence of imprisonment for a fixed term.

[13]       The proper approach to the application of s 86 in its current form is now well established.  A useful summary appears in the judgment of this Court in R v Nguyen:[4]

[31]       As the sentencing Judge correctly stated, s 86 confers a discretion on the Court to impose a minimum period of imprisonment, if the usual minimum non-parole period of one-third of the determinate sentence would not be sufficient to achieve the purposes of accountability, denunciation, deterrence and protection of the community as set out in s 86(2) (which reflect s 7(1)(a), (e), (f) and (g)).

[32] First, the sentencing Judge fixes the maximum or nominal length of the sentence with reference to ss 7, 8 and 9 of the Sentencing Act. Secondly, the Judge considers whether the offending itself is such that parole at the normal minimum of one-third of the nominal sentence would be insufficient to achieve the purposes of sentencing set out in s 86(2). If that is so, the Judge may impose a minimum period of imprisonment at a level, being the lesser of two-thirds of the determinate sentence or ten years, which does sufficiently meet the requirements of accountability, denunciation, deterrence and protection of the community: see R v Brown [2002] 3 NZLR 670 at [35] (CA).

[33] In determining whether an order should be made under s 86, the Court must focus on the four specified purposes in s 86(2). Both the principles in s 8 and the aggravating and mitigating factors in s 9 are applicable to the extent they are relevant to one or more of the four purposes: R v Walsh (2005) 21 CRNZ 946 at 951 (CA).  For example, a guilty plea and co-operation with the authorities are relevant when considering whether a minimum period of imprisonment under s 86 is necessary to satisfy the purposes of denunciation and deterrence in relation to the offender personally, if the guilty plea and the co-operation demonstrate the offender’s insight into the nature and seriousness of his or her offending.

[34] Once it has been determined that a minimum period of imprisonment is necessary, the next task is to consider the appropriate length of that minimum period, taking into account all the relevant circumstances of the offender as well as the offending: see Brown at [39]. At this stage, the length of the determinate sentence has been fixed taking into account relevant aggravating and mitigating factors. The fact that s 86 applied in relation to the sentence so reached will ensure that mitigating factors are recognised to some degree. As this Court recently observed in R v Gordon [2009] NZCA 145 at [46]:

Of course, whatever the length of the minimum period of imprisonment, an offender will necessarily derive benefit from a discount given in the course of calculating the lead sentence, because the minimum period cannot exceed two-thirds of that sentence. But sentencing Judges must devote separate attention to the circumstances of the offender at the second stage of the inquiry, when a minimum period of imprisonment is being considered. That is not to double-count mitigating factors. It simply recognises the need to consider the circumstances of the offender as well as the offending itself.

[4]      R v Nguyen [2009] NZCA 239.

[14]       Mr Bioletti concedes that an MPI will often properly be imposed in cases of serious violence or sexual offending, and also for dishonest offending of the most serious kind.  For example, he readily accepts that minimum terms were appropriate in cases such as R v McKelvy,[5] R v Patterson,[6] and R v Swann.[7]  Each of those cases concerned large scale fraudulent schemes involving greater sums than were in issue in this case.  But, Mr Bioletti argues, the present appellant’s culpability was of a lower order, as is reflected in the end sentence imposed by Judge Wade.  In both McKelvy and Patterson the end sentence was eight years imprisonment and the MPI was five years imprisonment.  In Swann the end sentence was nine and a half years imprisonment, and the MPI was four and a half years imprisonment.

[5]      R v McKelvy [2007] NZCA 340.

[6]      R v Patterson [2008] NZCA 75.

[7]      R v Swann HC Dunedin CRI-2007-012-4181, 11 March 2009.

[15]       In essence, the argument for the appellant is that his overall culpability, although admittedly significant, was simply not sufficient to justify the imposition of the MPI.  The argument faces formidable difficulties.  On any view, this was a carefully planned, fraudulent scheme in which the appellant was a central participant.  Regrettably, this type of mortgage fraud became common at a time when the housing market was buoyant.  It necessarily involved the deception of lenders, and the risk of ruin for borrowers.  As implemented, it incorporated numerous forgeries designed to mislead lenders as to the detail of the transactions concerned, and as to the true financial position of borrowers.

[16]       We accept Mr Bioletti’s submission that the scheme was not designed to involve innocent participants in inevitable losses.  Indeed, it may well have been that Mr D’Villiers fervently hoped that none would be suffered.  But for sentencing purposes, the key point must be that the appellant knew that there was a real risk of loss (as indeed occurred) and that he ran the risk in order to achieve for himself significant financial advantages.

[17]       To that extent the case is different from McKelvy, Patterson and Swann.  In each of those cases the offences, both in their design and in their implementation, involved from the outset the certainty of considerable loss to innocent parties, with corresponding gains to the offenders.  Here, there was no direct correlation between losses and benefits.

[18]       We accept that these and other high profile cases involving convictions for fraud have entailed even greater culpability than arises here, but it would not be right to regard this case as anything less than serious.

[19]       Mr Bioletti was inclined to suggest that the courts tend to impose an MPI only in respect of the most serious cases of fraud.  A review of recent authority does not support that proposition.  In Howard v Police,[8] the appellant had been the ringleader of a group of about six women who were involved in credit card fraud involving the unlawful use of stolen credit cards.  In total there were 67 victims and the group was able to obtain more than $172,000.  The appellant herself received $63,000.  She had 36 previous convictions for fraudulently using a document between 2002 and 2005.  In the District Court the appellant was sentenced to three and a half years imprisonment;  an MPI of two years four months was imposed.

[8]      Howard v Police HC Auckland CRI-2007-404-188, 10 March 2008.

[20]       In the High Court, Harrison J dismissed the appeal against sentence.  He considered the appellant presented little, if any, prospect of rehabilitation and “fully endorse[d]” the MPI.[9]

[9]      At [10] – [11].

[21]       In Fitzsimons v Serious Fraud Office,[10] the appellant had been sentenced to four and a half years imprisonment on five charges of using a document for pecuniary advantage, and three charges of using forged documents.  An MPI of two years six months was imposed, along with a reparation order of $250,000.  There, the appellant had been general manager of a local insurance company.  He obtained money from his employer company by writing cheques and covering the missing funds by using forged documents.  The money was applied in sustaining the appellant’s separate failing business.  The net loss there was of the order of $3.5 million.

[10]      Fitzsimons v Serious Fraud Office HC Napier CRI-2008-441-37, 9 March 2009.

[22]       The sentencing Judge in the District Court indicated that he would have imposed a lengthier MPI were it not for the making of the reparation order.  In the High Court Winkelmann J endorsed both the end sentence and the MPI.

[23]       We consider Howard to have been offending at a somewhat lower level than in the present instance.  There, although there were numerous victims, many elderly, the scheme was essentially opportunistic in character and involved amounts of a lower order than was the case here.

[24]       Fitzsimons did concern very significant losses, but of importance in that case was the consideration that the appellant was a first offender and that the MPI was combined with a substantial reparation order.

[25]       In both Howard and Fitzsimons an end sentence lower than was imposed on Mr D’Villiers was accompanied by an MPI.  In our opinion it is not tenable to argue that an MPI in this case was out of line with sentencing levels in other cases.

[26]       Moreover, the sentencing Judge was plainly influenced by the fact that the present offending occurred while the appellant was on parole, having served a sentence of imprisonment for virtually identical offending.  We agree that he was entitled to place significant emphasis upon that factor.  It suggests that the appellant had learnt nothing from the penalty imposed on the earlier occasion, and that a stern approach was necessary in order to achieve statutory sentencing objectives.

[27]       In our view, an MPI was largely inevitable in this case.  Each of the purposes set out in s 86(2) was engaged by the circumstances of this offending, viewed in the light of the appellant’s history.  We are satisfied that Judge Wade’s decision to impose an MPI of one-half of the end sentence was correct.

Result

[28]       The appeal against sentence is dismissed.

Solicitors:

Crown Solicitor Auckland for Respondent