Hancox v The Queen
[2014] NZCA 257
•19 June 2014 at 9.30 am
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA877/2013 [2014] NZCA 257 |
| BETWEEN | LYNLEY JAYNE HANCOX |
| AND | THE QUEEN |
| Hearing: | 29 April 2014 |
Court: | Harrison, Courtney and Clifford JJ |
Counsel: | W T Nabney for Appellant |
Judgment: | 19 June 2014 at 9.30 am |
JUDGMENT OF THE COURT
The appeal is dismissed.
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REASONS OF THE COURT
(Given by Courtney J)
Introduction
Lynley Jane Hancox was found guilty following a jury trial in the Tauranga District Court on two counts of dishonestly using a document with intent to obtain a pecuniary advantage.[1] The charges arose from the sale of Ms Hancox’s shares in V Limited in February 2010. The profit and loss statements that Ms Hancox supplied to the prospective purchaser significantly overstated the company’s position. The company was, in fact, insolvent and was placed in liquidation later that year.
[1]Crimes Act 1961, s 228(b).
In sentencing, Judge Wolff imposed a sentence of two years three months’ imprisonment on each count, to be served concurrently.[2] Ms Hancox appeals the sentence on the grounds that it is manifestly excessive as a result of the Judge:
(a)taking too high a starting point; and
(b)failing to give appropriate recognition to her offer of reparation.
The offending
[2]R v Hancox DC Tauranga CRI-2012-070-1807, 19 December 2013.
Ms Hancox was the sole shareholder of V Limited, which operated a marketing business. In early 2010 she found that neither she nor the company could meet company debts which she had personally guaranteed. She decided to sell her shareholding to raise the necessary funds and approached a client of the company with an invitation to purchase the shares. The prospective purchaser and his wife were personal friends of Ms Hancox. She provided profit and loss statements and assured him that the company’s profits were improving as a result of ongoing work.
The truth was, however, that the company was insolvent. It owed penalties and interest on unpaid GST to the Inland Revenue Department. The previous year Ms Hancox had instructed a staff member to delete debt figures from the company’s accounts. The profit and loss statements that Ms Hancox provided were consequently inaccurate and significantly overstated the company’s profit position.
The purchaser borrowed money for the investment and paid $157,000 for the shares. After the purchase he tried to keep the company going and put more funds into it. The Crown estimated the total loss as being nearly $200,000. In addition, he made a personal loan to Ms Hancox of $37,000.
Was the starting point too high?
There is no guideline decision for dishonesty offences but in R v Varjan this Court identified factors that are properly taken into account in assessing culpability in such cases.[3] These include the nature of the offending, its magnitude and sophistication, the type, circumstances and number of victims, the motivation for the offending, the amounts involved, the period over which the offending occurred, the seriousness of breaches of trust involved and the impact on victims.
[3]R v Varjan CA97/03, 26 June 2003 at [22].
The Judge took a starting point of two years six months’ imprisonment. In reaching that figure he considered other cases which bore some factual similarity. This particularly included R v Colosimo, in which a three year starting point was found on appeal to be within range.[4] That case also involved the misrepresentation of a company’s financial position inducing purchase of the business. The loss in Colosimo was $433,000, significantly higher than the loss in the present case. However, the difference in loss is only one of the relevant factors and, in assessing Ms Hancox’s culpability, the Judge identified several other serious concerns that justified treating her culpability as high:
[7] What the summary of facts does not reveal either is that your previous relationship with [the purchaser] arose out of the fact that he had been a client of yours who was impressed by your undoubted skill and ability as a person who was able to conduct marketing programmes and that you are an undoubted talent in that regard.
[8] It overlooks the closeness of the friendship between you, the complainant and the complainant’s family and how you became in effect closely associated with the complainant’s family to the extent that he regarded you at the time as a close and dear friend.
[9] That extreme position of trust that you must have well known about left him particularly vulnerable to providing you with assistance that he would not have provided to a total stranger, nor would you have got from anywhere else.
[10] The financial cost to him was the immediate loss of the amount that he paid in but he attempted to keep the company going for a period and put more funds in so the Crown suggests that the ultimate loss was in the region of nearly $200,000.
[11] The victim impact reports reveal the extent of the non-financial consequences of your offending. The complainant and his wife have had to reduce their own living circumstances, have had a substantial impact on their own lives and their quality of lives and their ability to support their children. This is not reflected in merely thinking of this in terms of the actual figures.
[4]R v Colosimo [2012] NZCA 60 at [64]. The Judge also referred to R v van Wakeren [2008] NZCA 492; Francis v R [2012] NZCA 353; R v Grant CA481/03, 16 March 2004 and R v Clark CA364/99, 23 November 1999.
Mr Nabney, for Ms Hancox, submitted that the Judge’s assessment of Ms Hancox’s culpability was unduly high. First, in relation to the nature of the offending, he argued that the fraud was not sophisticated because it simply involved Ms Hancox providing a profit and loss statement which was inaccurate as a result of a previous instruction to her office manager to leave out a tax debt that was under arrangement from information provided to the company’s account. That instruction was given some months before the sale of the shares. Mr Nabney may be right that the fraud was not a sophisticated one but it was blatant. We see no reason that Ms Hancox’s culpability should be regarded as less because her blatant fraud lacked sophistication.
Mr Nabney also submitted that the victims were people who were able to borrow money to fund their share purchase. We place no weight at all on this submission. The corollary of it is that Ms Hancox knew that the prospective purchaser had to borrow to purchase the shares and allowed him to go ahead and do so, knowing that the company was insolvent. That factor aggravated her offending.
Mr Nabney pointed out next that Ms Hancox’s motivation was to cover her personal debt. This does not seem to us to be a factor that could be viewed as reducing the level of culpability. Ms Hancox was simply seeking to move her own problems onto somebody else.
Mr Nabney’s next submission was that the amount involved was modest. We reject that.
His next submission was that the period over which the offending occurred was brief, only three weeks. That may be true. But in the context of this kind of fraud, brevity of offending period is not particularly significant.
Nor do we accept Mr Nabney’s submission that the starting point was too high in comparison with other similar cases. He referred us to R v Varjan, which involved offending over a period of time by way of arranging fraudulent mortgages, and the loss of $546,000 to the financial institutions involved.[5] There the starting point was reduced to three years on appeal. However, the gain to the offender in that case was very modest (about $5,000).
[5]R v Varjan, above n 3.
Mr Nabney also referred to R v Rod, in which there were 43 transactions involving borrowings of $5.6 million.[6] A final sentence of 18 months’ imprisonment was not disturbed on appeal. However, there was no actual loss resulting from the fraud so the case is not directly comparable.
[6]R v Rod CA236/99, 6 September 1999.
In R v Shirtcliff, the offending, involving false GST returns which overstated the profit and understated the expenses of a business purchased for $296,500 and later sold for $29,000, attracted a starting point of two years six months which was approved on appeal.[7] Mr Nabney submitted that Shirtcliff involved a substantially higher loss with offending over a longer period of time. However, the net loss in that case was $265,000 as against the total loss of nearly $200,000 found by the Judge in the present case. So the difference between them was not as significant as might first appear.
[7]R v Shirtcliff CA163/05, 28 October 2005.
Mr Nabney also referred to Garnett v R, a case involving theft by a solicitor totalling $274,500, pointing out that the sentence of three years’ imprisonment was substituted by a sentence of home detention and community work.[8] That case, however, is not comparable: the Court of Appeal considered that the Judge’s original starting point of four years to be within range and the substituted sentence resulted from leniency given in recognition of the appellant’s unusual personal circumstances.
[8]Garnett v R [2010] NZCA 173.
None of the cases that Mr Nabney referred us to give any reason to think that the starting point taken by the Judge was too high. We consider that, taking all the circumstances of the offence into account, the starting point of two years six months was within the available range.
The Judge’s treatment of reparation
The Judge did not identify any aggravating features that would have required an uplift. But nor did he consider that there was much by way of mitigating features. He allowed a ten per cent reduction for the absence of any previous convictions and in relation to reparation said:[9]
… The offer of reparation is tentative, conditional and unlikely to reach fruition. You are in the employment currently of the accountant who reluctantly gave evidence for the Crown and who on my assessment, was reasonably fortunate not to be with you in the dock and who could well have been. A suggestion that there is to be some likely future and indefinite payment is one that if there were a tipping point, would not tip the scales in the present case.
[9]R v Hancox, above n 2, at [18].
The offer of reparation that the Judge declined to take into account was a payment of $10,000 which Ms Hancox anticipated receiving within two months of the sentencing and which she intended to make available for reparation. Ms Hancox’s circumstances were canvassed in the pre-sentence report which described the arrangement with her employer, under which she was not paid a weekly wage, her employer managed her living expenses and at the end of each financial year she was to receive a lump sum payment minus the living expenses, the amount varying depending on the profit of the company. The pre-sentence report recorded that:
A rough ballpark figure of approximately $10,000.00 was provided to the writer as her pending payment in April 2014. Ms Hancox intimated she is willing to pay the majority of this towards reparation. It is my opinion, that given Ms Hancox is the sole financial provider for her family with four children to clothe and provide for, this could cause hardship to the children.
In the circumstances that existed at sentencing there could be no criticism of the Judge’s decision not to allow a discount for reparation. The prospects of Ms Hancox actually receiving $10,000 and being both able and willing at the time to pay a full amount of reparation was too uncertain to justify a reduction on that ground.
During argument Mr Nabney advised us that Ms Hancox did in fact have the $10,000 and was willing and able to make the payment of it in reparation. However, this does not amount to a sufficient change in circumstances to justify interfering with the Judge’s decision.
Result
The appeal is dismissed.
Solicitors:
Crown Law Office, Wellington for Respondent
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