Foley v The King - [2023] NZCA 456

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA396/2022
[2023] NZCA 456

BETWEEN	STEPHEN EUGENE FOLEY Appellant
AND	THE KING Respondent

Hearing:	24 August 2023
Court:	Goddard, Whata and Downs JJ
Counsel:	S M Kilian for Appellant J A A Mara for Respondent
Judgment:	19 September 2023 at 11.00 am

JUDGMENT OF THE COURT

ALeave is granted to both parties to adduce further evidence on appeal.
BThe appeal is allowed.
CThe sentence imposed in the District Court is set aside.
DThe proceeding is remitted to the District Court for sentencing.
EAny matters that arise in relation to bail pending sentencing are to be determined by the District Court.

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REASONS OF THE COURT

(Given by Goddard and Downs JJ)

Mr Foley was convicted in the District Court of 28 charges of aiding and abetting two companies to withhold Pay As You Earn (PAYE) tax, pursuant to ss 143A(1)(d) and 148 of the Tax Administration Act 1994. The companies had failed to pay PAYE tax of $356,132.18 over a period of approximately two and a half years. Mr Foley was sentenced to two years and eight months’ imprisonment.[1] He appeals against that sentence.

Background

[1]R v Foley [2022] NZDC 14390 [District Court sentencing notes]. At [16] the Judge described the sentence as “29 months’ imprisonment or two years and eight months”. Two years and eight months is 32 months, not 29 months. It seems clear from the calculation undertaken by the Judge that the reference to 29 months was an error, and that the sentence imposed was, and was intended to be, two years and eight months’ imprisonment.

Mr Foley is a qualified builder. He was a shareholder and director of two construction companies: HPTP (2014) Limited (HPTP) and Point to Point Construction Limited (Point to Point). He was the effective controller of both companies. Mr Foley decided which creditors would be paid, and which would not, when the companies encountered cash flow difficulties. He chose to pay employees and suppliers in preference to paying PAYE amounts owing to the Inland Revenue Department (IRD). The ultimate PAYE deficit was, as already mentioned, $356,132.18. HPTP was placed in voluntary liquidation on 23 January 2017. Point to Point was placed in liquidation on 9 June 2017.
Mr Foley says he established the companies because of his concern about the large number of unemployed people in New Zealand. He believed a number of those people had potential to work in construction. His companies created opportunities for these individuals, helping them develop a set of practical skills and become employable. At its peak the companies had 89 employees: Mr Foley considers that one of the reasons the business failed is that it grew too fast because he was anxious to help people. He says he spent a significant amount of his time working for the companies coaching, counselling and mentoring individuals with a troubled background.
The period of offending was 31 December 2014 to 31 December 2016 (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.

Continue reading Foley v The King

Details

AGLC: Foley v The King [2023] NZCA 456
Case: [2023] NZCA 456
Decision Date: 19 September 2023 at 11.00 am

CaseChat Overview and Summary

In Foley v The King, the Court of Appeal of New Zealand reviewed the sentence imposed on Stephen Eugene Foley by the District Court. Foley was convicted of 28 charges of aiding and abetting two construction companies to withhold Pay As You Earn (PAYE) tax, leading to a deficit of $356,132.18. The District Court sentenced Foley to two years and eight months' imprisonment, a term he appealed as manifestly excessive. The Court of Appeal considered several issues: the appropriateness of the starting point for the sentence, the discount for good character and health issues, and the relevance of a proposed reparation offer.

The Court found the District Court erred in setting a three-year starting point, as it improperly considered Foley's prior conduct and disqualified directorship, factors irrelevant to the starting point. The Court noted the offending was no more serious than cases with a two-and-a-half-year starting point. Regarding good character, the Court upheld the five per cent discount, noting Foley's past conduct as a director of failed companies and prior bankruptcies. While acknowledging Foley's altruistic intentions, the Court found the discount appropriate given the serious nature of the offending. The five per cent discount for health issues was also deemed reasonable, as the evidence did not establish that imprisonment would cause disproportionately severe hardship.

The Court found Foley's sentence manifestly excessive and set it aside. It allowed leave for further evidence on appeal, focusing on Foley's proposed employment and reparation offer. The Court remitted the proceeding to the District Court for resentencing, noting the lower court would be better placed to assess Foley's ability to pay reparations and consider a sentence of home detention. The Court also directed that any matters relating to bail pending sentencing be determined by the District Court.

Orders