The appellants, Mervyn Ian Doolan and Kenneth Roger Moses, together with Donald Menzies Young, were convicted following trial before a Judge alone in the High Court on five counts under s 58 of the Securities Act 1978 of distributing offer documents of various kinds containing untrue statements,[1] for which the maximum term of imprisonment is five years.[2] The documents had been issued by the appellants and others as directors of Nathans Finance NZ Ltd (Nathans). The appellants were sentenced to terms of imprisonment of two years and four months for Mr Doolan and two years and two months for Mr Moses.[3] Each was ordered to pay reparation in the amounts of $150,000 and $425,000 respectively. They both appeal against the sentences of imprisonment.
[1] R v Moses HC Auckland CRI-2009-004-1388, 8 July 2011 [reasons for verdict].
[2] Securities Act 1978, s 58(5)(a)(i).
[3] R v Moses HC Auckland CRI-2009-004-1388, 2 September 2011 [sentencing notes].
Both appellants appeal on the basis that the sentence was manifestly excessive and that a sentence of home detention was appropriate in each case. Following the hearing of the appeal we issued a judgment dismissing both appeals with reasons to follow.[4] These are our reasons.
There are two issues central to the disposal of the appeal. First, the characterisation of the offending and the degree of culpability of each appellant. Second, whether the end sentences of imprisonment ought to have been commuted to sentences of home detention.
The background to the offending
Because of their relevance to the issues we have to decide, the facts will be described in some detail. At the outset we must observe that this was a major corporate collapse involving extensive losses to large numbers of Nathans’ investors. On 20 August 2007, Nathans was placed into receivership by the trustee for its investors. Nathans was a wholly owned subsidiary of VTL Group Ltd (VTL), previously Vending Technologies Ltd. As at the date of receivership, Nathans had provided approximately $170 million in financing to VTL and parties associated with it. Such lending comprised approximately 94 per cent of Nathans’ total financial receivables, Nathans having 7,082 secured debenture investors with investments totalling around $174 million. In the period between 13 December 2006 and 20 August 2007 (being the period between the prospectus containing the first of the untrue statements and the date of receivership), amounts in…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Doolan v R [2011] NZCA 542
Case
[2011] NZCA 542
Decision Date
CaseChat Overview and Summary
The appellants, Mervyn Ian Doolan and Kenneth Roger Moses, together with Donald Menzies Young, were convicted following trial before a Judge alone in the High Court on five counts under s 58 of the Securities Act 1978 of distributing offer documents of various kinds containing untrue statements, for which the maximum term of imprisonment is five years. The documents had been issued by the appellants and others as directors of Nathans Finance NZ Ltd (Nathans). The appellants were sentenced to terms of imprisonment of two years and four months for Mr Doolan and two years and two months for Mr Moses. Each was ordered to pay reparation in the amounts of $150,000 and $425,000 respectively. They both appeal against the sentences of imprisonment. The Court dismissed both appeals against sentence. The Court found that there was no error of approach by the Judge in the evaluative task of deciding between a sentence of imprisonment and home detention. The Judge relied, when making that assessment, on the same factors as had been considered in relation to Mr Moses, which were the extent of Mr Moses' knowledge of the financial affairs of both Nathans and VTL, and his failure to do anything about reducing the VTL debt during the period when it climbed astronomically. The Judge noted in particular the failure of Mr Moses as chairman to turn his mind to the accuracy of the description of business activities and the level of risk to investors in the prospectus and investment statements. The Court was satisfied that this decision was correct.