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Graham v R

Graham v R

Case [2014] NZSC 55 7 May 2014

Criminal Liability

Mens Rea & Intention

Misrepresentation

Unconscionable Conduct

Statutory Interpretation

Sentencing

Criminal Law

Corporate Law & Governance

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IN THE SUPREME COURT OF NEW ZEALAND

SC 59/2013
SC 60/2013
SC 61/2013
SC 62/2013
[2014] NZSC 55

BETWEEN	DOUGLAS ARTHUR MONTROSE GRAHAM, MICHAEL HOWARD REEVES, WILLIAM PATRICK JEFFRIES AND LAWRENCE ROLAND VALPY BRYANT Appellants
AND	THE QUEEN Respondent

Hearing:	11 February 2014
Court:	Elias CJ, William Young, Glazebrook, Arnold and Blanchard JJ
Counsel:	J A Farmer QC, M A Corlett and M A Sissons for Appellants C R Carruthers QC and D R La Hood for Respondent
Judgment:	7 May 2014

JUDGMENT OF THE COURT

AThe appeals are allowed.
BThe sentences imposed by the Court of Appeal are set aside and the sentences imposed by Dobson J are restored.

____________________________________________________________________

REASONS

(Given by William Young J)

The appeals

The appellants were the directors of Lombard Finance & Investments Ltd (“Lombard”). Sir Douglas Graham was the chairman of directors and Mr Michael Reeves the chief executive. Lombard was a finance company which raised money from the public pursuant to prospectuses which were registered under the Securities Act 1978. The last of these was an amended prospectus which was issued on 24 December 2007 (to which we will henceforth refer as “the prospectus”).
Following a lengthy trial before Dobson J (sitting alone) the appellants were found guilty on four counts laid under s 58 of the Securities Act.[1] Count one was premised on the contention that the prospectus contained statements which were untrue in a number of respects. The Judge concluded that this was so as to the liquidity of Lombard. He also held that the appellants had not established that they had reasonable grounds to believe that the prospectus was true and had therefore not made out the defence provided for under s 58(4). The other three counts on which the appellants were found guilty focused on advertisements distributed by Lombard. The underlying issues as to untrue statements and the s 58(4) defence were the same in relation to all four counts.
[1]R v Graham [2012] NZHC 265, [2012] NZCCLR 6 [HC judgment].
Dobson J sentenced the appellants as follows:[2]
(a)Mr Reeves and the Honourable William Jeffries were both sentenced to 400 hours community work;
(b)Sir Douglas Graham and Mr Lawrence Bryant were both sentenced to 300 hours community work and ordered to pay reparations of $100,000.
[2]R v Graham [2012] NZHC 575 [HC sentencing remarks] at [117]–[121].
The appellants appealed against their convictions and the Solicitor-General sought leave to appeal against the sentences which were imposed. The Court of Appeal dismissed the conviction appeals but granted leave to the Solicitor-General to appeal against sentence, allowed the appeals[3] and ultimately imposed sentences on the appellants as follows:[4]
(a)Mr Reeves: nine months home detention and 250 hours community work;
(b)Mr Jeffries: eight months home detention and 250 hours community work;
(c)Sir Douglas Graham: six months home detention and 200 hours community work (along with reparations of $100,000);
(d)Mr Bryant: six months home detention (along with reparations of $100,000).

The key conclusion of the Court of Appeal was that…

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 Graham v R

Details

AGLC: Graham v R [2014] NZSC 55
Case: [2014] NZSC 55
Decision Date: 7 May 2014

CaseChat Overview and Summary

The case of Graham v R involved appeals by Douglas Graham, Michael Reeves, William Jeffries, and Lawrence Bryant against their sentences. The appellants were directors of Lombard Finance & Investments Ltd, which issued a prospectus that was found to contain untrue statements about its liquidity position. They were convicted under the Securities Act 1978 and initially sentenced by Dobson J to various hours of community work and reparations. The Court of Appeal, however, found that the offending warranted sentences of imprisonment and imposed sentences of home detention and community work instead. The Supreme Court of New Zealand allowed the appeals against the sentences imposed by the Court of Appeal and restored the original sentences imposed by Dobson J.

The court considered several factors in reaching its decision. The culpability of the appellants was found to be at the level of misjudgement rather than gross negligence, and the appellants had taken their responsibilities seriously. The consequences for investors were considered, but the court found that the actual losses caused by the offending may not have been as high as the Court of Appeal had suggested. Additionally, the court noted that the principle of consistency in sentencing did not support the Court of Appeal's conclusion that sentences of imprisonment were appropriate. Ultimately, the Supreme Court found that the reasons given by the Court of Appeal did not warrant its conclusion that sentences of imprisonment were appropriate for the offending of the appellants. The appeals were allowed, and the sentences imposed by the Court of Appeal were set aside, restoring the sentences imposed by Dobson J.

Orders