Grant v The Queen

[2004] NZCA 21

IN THE COURT OF APPEAL OF NEW ZEALAND

CA481/03

THE QUEEN

v

GRAEME DANIEL GRANT

Hearing:15 March 2004

Coram:Anderson P
Laurenson J
Paterson J

Appearances:  J Mather for Appellant

R E Harrison QC and G A Andree-Wiltens for Crown

Judgment:16 March 2004 

JUDGMENT OF THE COURT DELIVERED BY ANDERSON P

[1]       This appeal against a sentence of two and a half years imprisonment in respect of three counts of fraudulent use of a document and two counts of forgery was filed out of time.  But the reasons for delay being excusable and the Crown offering no objection, leave to appeal is granted.

[2]       The appellant was a director and substantial owner of Global Print Strategies Ltd (“GPSL”) which operated as a broker of printing business.  On 5 October 2000 GPSL entered into a debt factoring arrangement with Commercial Factors Ltd (CFL) pursuant to which GPSL would submit invoices to the factor and once CFL was satisfied that the invoices were genuine it would accept the debt and pay out to GPSL the equivalent of 80 per cent of the invoiced amount less an administration fee and a finance fee amounting in aggregate to approximately 4.8%.  Following successful collection of the total invoice by the factor GPSL would be paid a further 20% of its value. 

[3]       CFL’s methods of checking the authenticity of invoices and the amounts due under them included telephoning GPSL’s customers.  One such customer was Thorn Lighting Ltd where the appellant’s sister, Ms Tuakana-Kapi worked as an accounts payable officer.  Another customer was Partner Print Ltd which was owned and operated by a Mr Michael Sommerville and a Mr Foreman.  The appellant solicited both his sister and Mr Sommerville to involvement in some of the fraudulent activity of which he stands convicted.

[4]       In late February 2001 the appellant persuaded Ms Tuakana-Kapi to participate with him in a scheme to obtain payment from CFL in respect of fictional invoices to be raised in respect of Thorn Lighting.  In March and April of 2001 GPSL submitted to CFL 31 invoices made out to Thorn Lighting for a total of $265,583.07.  Each invoice was marked for the attention of Ms Tuakana-Kapi and was accompanied by a declaration from the appellant to CFL stating that the goods and services represented in the invoices had been delivered or performed.  The declarations were false.  When Mr Haydon of CFL telephoned Ms Tuakana-Kapi for confirmation that the invoiced goods and services had been provided she fraudulently confirmed with the result that CFL forwarded $199, 681.86 to GPSL.

[5]       Similar frauds were committed in relation to Partner Print in August and September 2001.  Four fictional invoices purporting to have been raised in respect of goods and services for $409,195.09 were submitted by the appellant to CFL with accompanying declarations that the goods and services represented in the invoices had been delivered or performed.  On receipt of the invoices CFL telephoned Mr Sommerville to obtain verbal confirmation of them.  Mr Sommerville twice fraudulently verified the invoices in accordance with a prior agreement with the appellant.  CFL then paid, in accordance with a direction of the appellant, the sum of $307,662.64 to creditors of GPSL.  In consideration of Mr Sommerville’s fraudulent assistance the appellant paid a total of $16,000 to Mr Sommerville.

[6]       The appellant next decided to work his fraud on Ticketek Australia which had never in fact employed the services of GPSL but it had in its employment a Ms Henderson who was known to the appellant.  He prepared five invoices purporting to be for $738,020.83 worth of goods and services to Ticketek Pty Ltd, stated to be for the attention of Ms Henderson.  In terms of the factoring arrangement CFL would have made an advance payment of $544,899.41 upon confirmation of the invoices but when Mr Haydon made contact with Ms Henderson she would not confirm them.  She flatly refused to have anything to do with the appellant’s fraudulent scheme.  The appellant rang Mr Haydon to say that the Ticketek deals had fallen through and accordingly no payment was made.

[7]       By late December 2001 the appellant was in severe financial trouble with CFL which was withholding all payments until it had received the outstanding $397,000 in respect of the Partner Print invoices.  The appellant sought to stave off CFL by offering to transfer to them an insurance policy he held with Tower Health and Life.  He told Mr Haydon that he had only two months to live and on 10 January 2002 he sent to Mr Haydon a fictitious letter purporting to be from a Ms Fisher, a case manager at Tower Health and Life.  This forgery, addressed to a Dr Hay at a medical centre, purported to confirm that payments under the policy, totalling $516,000, were to be made into a nominated bank account on 17 January on which day, a further $528,000 would purportedly be paid from another policy into a second bank account.  About a week later Mr Haydon contacted Ms Fisher who of course knew nothing about the matter at all and in the result nothing was lost or gained in consequence of the forgery.

[8]       On 11 December 2001 the appellant opened three new bank accounts at the ASB bank in Albany.  One of these accounts was in the name of Francis Daniel Ltd.  On 18 December 2001 the appellant deposited into the Francis Daniel Ltd account a cheque for $405,000 drawn on another account which had no funds to cover it and was in fact overdrawn by $16,000.  The following day the appellant drew a cheque made payable to CFL for $397,945.69 on the Francis Daniel Ltd account which had no funds to meet it.  That cheque was deposited by CFL in an ANZ account with a request for urgent clearance.  To facilitate clearance the appellant forged a Westpac letter purporting to clear the funds and faxed that to the ASB.  But the forgery was discovered and the cheques were dishonoured.  Unlike the Tower Health and Life forgery incident which could have bought time but was unable, by its nature, to induce any payment or loss, the bank forgery had potential to cause the ASB Bank to pay out almost $400,000 wrongly to CFL. 

The prosecutions

[9]       Mr Sommerville pleaded guilty in the District Court to one count of fraudulent use of a document, the single count covering in his case as in this appellant’s case, all of the fictional Partner Print invoices.  He was sentenced by Judge Lance to 300 hours community work and was also ordered to make reparation in the sum of $50,000 to be paid within ten days as to $16,000 and the balance at the rate of $1,000 per month.  In imposing this surprisingly lenient sentence the Judge had regard to the relatively small size of the personal gain, the offender’s previous clear record, the offer of reparation, genuine remorse, the guilty plea, the secondary role of the particular offender and the provisions of the Sentencing Act which require the Court to impose the least restrictive sentence appropriate in the circumstances.  The Judge plainly took into account also Mr Sommerville’s family responsibilities in consequence of his former wife’s health.  She suffered from a disabling medical condition and had a short life expectancy.

[10]     Ms Tuakana-Kapi also pleaded guilty to one count of fraudulent use of a document in respect of all of the Thorn Lighting fictional invoices.  But she had been cheating her employer independently of the invoice frauds, to the tune of some $18,644 and she pleaded guilty to four counts in respect of that defalcation.  Judge B N Morris sentenced her to two years imprisonment, having allowed a discount of one year for the guilty plea, assistance to the prosecution, remorse and contrition.  She was granted leave to apply for home detention which she subsequently obtained.

[11]     This appellant was originally indicted on five counts of fraudulent use of a document contrary to s229A(b) of the Crimes Act 1961 and two counts of forgery.  He was committed for trial but eventually pleaded guilty to the forgery counts and three of the fraud counts, whereupon the prosecution offered no evidence on two of the fraud counts and the appellant was discharged.

Sentencing

[12]     The appellant was sentenced by Judge Bouchier to two and a half years imprisonment, seemingly in respect of each charge concurrently.  She noted that of the total sum paid out, $507,344.50, the amount ultimately lost by CFL, following various recoveries, was $231,905.94.  The Judge regarded the offending as planned, calculated, and involving deception and cover-up.  Credit had to be give for a clear record and a guilty plea but there was no realistic prospect of reparation as the appellant and his wife had been bankrupted.  The appellant’s domestic situation was difficult.  Depression and anxiety suffered by both him and his wife was exacerbated by the special needs of one of their children and another significant family illness.

[13]     The Judge’s sentencing notes concluded as follows:

In terms of the matters then that the Court must take into account, I accept that in terms of the submissions to me this is, of course, serious offending.  It is not near the top scale of such offending but there is certainly a need for general deterrence in this matter.  The amounts concerned are reasonably high.  As for the total criminality involved, I take that as the global figure of $500,000.  It is always and difficult in fraud cases to pinpoint the precise amount that is involved, and the issue of reparation is an issue of reparation, not of overall criminality, in my view.

In terms of the guilty plea, I accept, of course, that that was given at a reasonably early opportunity when discussions had taken place.  I accept, as well, that the prisoner’s personal circumstances deserve a great deal of consideration, being very difficult as they are.  Also I accept that he has no previous convictions.

In terms of the starting point that the Serious Fraud Office submit to me is appropriate of four to five years, by taking into account the aggravating features, the level of premeditation and the enlisting of others to further the scam, my view is that the starting point here is four years.  I take into account the prisoner’s personal circumstances and his guilty plea and the other mitigating features when considering what level of discount to be given.  But in particular, of course, the guilty pleas must be given proper weight.  I take into account that he personally has offered reparation, but I have no evidence before the Court that such offer can, in fact, be facilitated in any way and I cannot put it any higher than that.

So, having taken a starting point of four years, and having balanced the appropriate aggravating and mitigating features, I am of the view that a sentence of two-and-a-half years’ imprisonment is appropriate, and that is so passed.

Grounds of appeal

[14]     The broad grounds of appeal are unjust disparity when compared with the sentence imposed on Mr Sommerville; error on the part of the Judge in relation to the monetary value of total criminality; and misapplication of relevant sentencing authorities.  As to the issue of disparity, counsel submitted that although the Judge referred to the position of the two other offenders she did not adequately have regard to relativity.  In particular, Mr Sommerville was a significant offender without whose co-operation the frauds relating to Partner Print could not have been effectuated.  Counsel submitted that the disparity between his sentence of 300 hours community service coupled with reparation and the appellant’s sentence of two and a half years imprisonment was too great to be just.

[15]     As to the monetary value of the offending, counsel submitted that the Judge was incorrect to adopt a figure of $500,000.  The Crown position was that overall a loss of $231,905.94 was sustained, whereas the appellant’s position was that ultimate loss was no greater than $131,905.94.  The calculation on behalf of the appellant credits him with Mr Sommerville’s reparation order in the sum of $50,000 and a settlement exacted from Mr Foreman who was facing civil proceedings for Mr Sommerville’s crime.

[16]     Counsel for the appellant submitted that the Judge’s erroneous perception of the monetary value of the offending not only contributed to the unjust disparity but led also to a misapplication of relevant sentencing authorities.  In counsel’s submission, if the authorities had been correctly applied the sentence would have been no more than two years imprisonment coupled with an order granting leave to apply for home detention.  In particular, submitted counsel, the sentencing Judge ought to have given more consideration and effect to this Court’s decision in R v Varjan CA97/03 26 June 2003.  In that case a mortgage manager for a bank pleaded guilty to two counts of conspiracy to defraud and three counts of using a document with intent to defraud.  His offending consisted of his approving applications for loans on mortgages when to his knowledge, and with his connivance, the applicants either did not meet lending criteria stipulated by the offenders employing bank or resulted in mortgage advances for the full amount of the purchase price of the mortgaged securities.  The offending involved breach of trust, planning and sophisticated falsification of documents.  The offender’s activities resulted in bank losses of just over $546,000.

[17]     After examining a number of authorities this Court held:

The circumstance of, and culpability in, offences of dishonesty vary widely.  They must be assessed in light of the guidance to be found in previous decisions.  Helpful in this respect are Rose and Cole v Police [2001] 2 NZLR 139.

Culpability is to be assessed by reference to the circumstances and such factors as the nature of the offending, its magnitude and sophistication; the type, circumstances and number of the 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.

It is in the assessment of culpability that comparison with other cases is to be undertaken.  Matters of mitigation such as reparation, co-operation with investigations, plea, remorse and personal circumstances necessarily must be assessed in each particular case.

…

The authorities clearly indicate that in cases of major defalcations, misappropriations, schemes dishonestly to obtain money or property or where recidivism indicates the need to protect the community, imprisonment is appropriate.

[18]     In reducing a sentence of two years eight months imprisonment to two years with leave to apply for home detention this Court held that Varjan’s plea of guilty, his co-operation and personal circumstances, warranted substantial credit and acknowledged that the offender had derived very little personal gain and had lost his standing as an honest and respected bank officer. 

[19]     In the present case counsel submitted that his client’s sentence should not be greater than that of Varjan for very similar reasons.  He also invoked this Court’s decision in R v Cochrane CA431/92 27 May 1993, where a sentence of three years imprisonment following a guilty plea to 261 charges of using a document with intent to defraud was reduced on appeal to two years imprisonment.  In that case also the offender defrauded a factor by submitting fictional invoices with a face value of $1,055,463, resulting in net payments of $828,538.  The loss ultimately suffered by the factor was about $80,000 and comprised interest, penalties and legal costs.  This is because the offender and his wife liquidated all their assets to meet their liabilities almost in total.  This Court regarded it as important that the ultimate direct loss was comparatively small. 

[20]     Mr Mather further submitted that the appellant always submitted false invoices in the context of true ones, whether concurrently or prospectively, so that there was an expected roll over of the moneys involved.

Crown submissions

[21]     On the issue of disparity the Crown submitted that there is no valid or proper comparison to be draw between the appellant’s circumstances and offending and those of Mr Sommerville.  The appellant was the principal offender and, moreover, faced sentence on two separate forgery charges.  Mr Sommerville was able to make reparation and agreed to do so.  The circumstances and nature of offending of the appellant and Mr Sommerville were significantly different such that any alleged disparity was neither unjustifiable nor gross. 

[22]     As to the appellant’s submission that the sentencing Judge was incorrect in adopting a global figure of $500,000 as representing the total criminality Mr Harrison argued that on the facts of the case it would have been entirely appropriate for the sentencing Judge to treat the appellant’s overall criminality as attempts, in large measure successful, dishonestly to obtain $1,450,189.60.  That figure represents not only the amounts actually obtained by means of the false invoices in respect of Thorn Lighting and Partner Print but also the loss which would have been caused to the factor had the Ticketek fraud succeeded and to the ASB Bank had the fraud involving the forged Westpac Trust letter been successful.  As it was, the Judge could quite properly look at the total criminality in terms of the monies actually obtained, wrongfully, before recoveries should be brought into account and that was in excess of $500,000.

[23]     Nor, it was argued, was any significance to be attached to a vague qualified promise of willingness to consider reparation when the prospect of being able to was non-existent.

[24]     As to the appellant’s submission that the sentencing Judge misapplied the relevant authorities and that the sentence was manifestly excessive, Mr Harrison submitted that the cases do not establish as a matter of general application what is an appropriate “starting point” in a case such as the present.  That is to say, there is no established benchmark for dishonesty offences of the particular nature since the circumstances and culpability of dishonest offences vary widely.  There is no error of principle demonstrated in the Judge’s approach in the particular case and, in Mr Harrison’s submission, the sentence is not out of line with this Court’s approach as evidenced by certain recent decisions involving relatively serious fraud.

[25]     For example, in R v Wilkinson (1998) 16CRNZ 179, a sentence of two and a half years imprisonment was ultimately imposed on a man who falsified invoices in order to obtain loans by way of advance of funds on non-existent securities.  The amount of money covered by the various counts he faced was about $938,000 with an ultimate actual loss of about $140,000, the latter being likely to be further reduced over a succeeding two year period.  Wilkinson’s personal circumstances were similar to the present appellant’s in that they involved bankruptcy, health problems and a previous clear record and good character.

[26]     In R v Clark CA364/99 23 November 1999 the offender had received a sentence of four years imprisonment on 19 charges of obtaining by false pretences and three other fraud based charges.  Over a period of 18 months Clark had used false orders for goods to defraud investors of $386,000.  Like the present appellant, Clark had pleaded guilty after depositions and had no prospect of making reparation.  This Court reduced the four year sentence to three.

[27]     In R v Dench (2002) 19 CRNZ 550 the appellant had been sentenced to two years imprisonment with leave to apply for home detention after pleading guilty to nine offences of fraudulent use of a document and one offence under the Insolvency Act of being party to the management of a business by a bankrupt.  The company itself had obtained approximately $450,000 by dint of the frauds and then went into liquidation with no money being recovered.  Ms Dench had co-operated with the authorities and was treated by the sentencing Judge as “not the main force” in relation to the offending.  Her appeal against the sentencing court’s declining to suspend her sentence of imprisonment was dismissed and this Court declined to characterise the sentence of two years imprisonment as manifestly excessive.

[28]     Finally, Mr Harrison submitted that eligibility for home detention in the case of a sentence of two years or less was irrelevant to the question whether a sentence of two and a half years imprisonment should be reduced to two years for manifest excess.

Discussion

[29]     We think that in the circumstances of the case the first question is not whether there has been an unjust disparity between the sentence in issue and the sentence of a relevant co-offender but whether the sentence is itself manifestly excessive.  As we have mentioned, the appellant argues that it is by reference to other sentencing authorities and also in light of the Judge’s evaluation of criminality in terms of money involved.  In this case the offending occurred over the space of about ten months.  It involved the creation of fictional invoices, 35 in all, with a face value of almost $675,000 and resulting in the payment of some $507,000 which would not have been paid if the dealings had not been dishonest.  It also involved a further five invoices with a face value of $738,000 presented for the purposes of obtaining, wrongly, $545,000 and this offending was thwarted only by the honesty of a person whom the appellant sought to suborn to his scheme.  Forgery in relation to Tower Health and Life sought to buy time but another forgery sought to obtain a payment of almost $400,000.  There is thus considerable weight to the Crown’s submission that total criminality could be assessed on the basis of dishonest schemes to obtain almost $1.5 million.  The ultimate loss, whether it be taken as $231,905 or $131,905 is only one factor in weighing the appellant’s culpability.  In that respect we think there is some force in Mr Harrison’s submission that recovery from a co-offender and an innocent but possibly liable party ought not stand to the credit of the appellant.  Nor can the appellant expect as much credit as he would have received for a very early plea of guilty.  We are not persuaded that the offending is somehow mitigated by the attendant or prospective valid invoices.  There was always a shortfall to the extent of the fraudulently induced payments, whatever might have been properly due on valid invoices.

[30]     As a review of the authorities relied on by both the appellant and the Crown indicate, cases are comparable only in a very broad sense because of the multiplicity of factors.  What the authorities indicate in their totality is that the ultimate sentence of two and a half years imprisonment was clearly within the range fairly open to the sentencing Judge.  Whilst on the one hand, it might be thought that her starting point of four years imprisonment may have been on the high side, nevertheless her allowance of 18 months discount for the guilty plea and personal factors was more than generous.

[31]     We also agree with the submission on behalf of the Crown that it is wrong in principle for a Court to impose a sentence of two years imprisonment, rather than one which is plainly more apt, simply in order to allow the home detention provisions to be availed of.  The appropriate question is whether two years six months, in the present case, is manifestly excessive, rather than whether a sentence of two years imprisonment would be more expedient because of the availability of the ancillary part to grant leave to apply for home detention.

[32]     In short we are unpersuaded that the sentence is itself manifestly excessive.

[33]     As to unjust disparity we think there are significant differences in the degree of culpability of, on the one hand, the appellant and on the other hand, Mr Sommerville.  In terms of the test elucidated in R v Lawson [1982] 2 NZLR 219, 223, the enquiry must be whether there is a marked difference in sentences imposed on co-offenders, for which no justification can be shown and is so marked and unjustified as to tend to bring the administration of justice into disrepute.

[34]     For a start, Mr Sommerville’s offending was lesser in terms of duration and repetition than the appellant’s.  Next, the appellant was not only the prime offender but also he who suborned two others to his dishonesty.  He sought also to inveigle his friend at Ticketek but, fortunately, failed.  He may have felt remorse when he was found out but his offending seems to have been remorseless in its execution. 

[35]     In any event, the sentence imposed on Mr Sommerville was very lenient.  A Court ought be diffident about imposing, either at first instance or on appeal, an inappropriately lenient sentence in order to reduce a seeming disparity with an inadequate sentence imposed on a co-offender.  The policy considerations in such circumstances were examined by this Court in R v Thompson and Pullen-Burry, 245/98 and 267/98 22 December 1998.  It is unnecessary to repeat them here, it being sufficient for us to express the view that the sentence imposed on this appellant is not manifestly excessive and there are no such similarities of culpability as to raise concerns about unjust disparity between that sentence and the sentence imposed on a co-offender in but some of the crimes in question. 

[36]     For the above reasons the appeal against sentence is dismissed.

Solicitors:

Serious Fraud Office, Auckland for Crown