Kloogh v Serious Fraud Office
[2020] NZHC 3397
•17 December 2020
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE
CRI-2020-412-000035
[2020] NZHC 3397
BETWEEN BARRY EDWARD KLOOGH
Appellant
AND
SERIOUS FRAUD OFFICE
Respondent
Hearing: 15 December 2020 Appearances:
S A Saunderson-Warner for Appellant R P Bates for Respondent
Judgment:
17 December 2020
JUDGMENT OF DUNNINGHAM J
This judgment was delivered by me on 17 December 2020 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date 17 December 2020
Introduction
[1] The appellant, Mr Kloogh, pleaded guilty to 12 charges relating to a Ponzi scheme which he operated over seven years. The charges are:
(a)false accounting (representative);1
(b)false statement by a promoter (representative);2
1 Crimes Act 1961, s 260(a).
2 Section 242(1)(b).
KLOOGH v SERIOUS FRAUD OFFICE [2020] NZHC 3397 [17 December 2020]
(c)forgery (2);3
(d)theft by a person in a special relationship (2);4
(e)obtaining by deception (representative);
(f)obtaining by deception (3);5 and
(g)forgery (2).6
[2] He was sentenced to eight years and 10 months’ imprisonment with a minimum period of imprisonment (MPI) of 60 per cent of the total sentence.7 Mr Kloogh appeals that sentence on the ground it was manifestly excessive.
Leave to appeal out of time
[3] The notice of appeal was filed approximately 12 days outside the statutory time period to file an appeal. Mr Kloogh’s counsel explained there was a filing error. There is no prejudice to the respondent and I am satisfied it is appropriate to grant leave to file the appeal out of time.
Facts
[4] The summary of facts is both lengthy and complex. There are 81 victims who were defrauded of approximately $15.7 million.
[5] Mr Kloogh began his financial services career in 1983, becoming an authorised financial adviser on 20 June 2011. He provided these services through several companies of which he was the sole director and shareholder, including Impact Enterprises Ltd (IEL).
3 Section 256(1).
4 Sections 220(1)(b) and 223(a). 5 Sections 240(1)(a) and 241(a). 6 Section 256(2).
7 Serious Fraud Office v Kloogh [2020] NZDC 15575.
[6] Mr Kloogh’s clients came from a wide range of ages and occupations and included people wishing to invest their savings to better prepare for retirement. As at May 2019, he had approximately 2,000 active clients, of which approximately 200 were categorised as investment clients.
[7] Apart from his own companies, Mr Kloogh used the services of other entities to provide financial advisory services to his clients, including Consilium NZ Ltd and Discovery Portfolio Services.
[8] Mr Kloogh recruited new clients mainly by holding “free” dinner seminars where he would explain the services he was offering as an authorised financial adviser. At subsequent one on one meetings, he would discuss the attendee’s financial situation, and their investment preferences, if they wished to invest. He would then draw up a financial plan for them.
[9] If the attendee agreed with the recommendations Mr Kloogh made, he or she would sign Mr Kloogh’s scope of services form and become Mr Kloogh’s client. This form included a part for special instructions for the client to complete, advising what the client wished to do with his or her financial plan. Mr Kloogh charged fees for his services. However, as Mr Kloogh was not a licensed broker he was not permitted to directly receive or handle client monies. Instead, Mr Kloogh provided his investment clients details of BNZ bank accounts named “Discovery Portfolio Services”, “MCNZ Managed Allocation Planning” or “Consilium”, for the purpose of depositing funds for investment. The investment clients deposited funds into these accounts believing they were owned by those separate entities. However, they were all bank accounts for IEL and were under the control of Mr Kloogh as IEL’s sole director. They were simply designated with trading names to look as though they were accounts for independent financial advisory services.
[10] Mr Kloogh did not actually place external investments on behalf of his clients but, by using the fictitious Consilium “external investment” account as an electronic ledger, Mr Kloogh was able to perpetuate a Ponzi scheme (Charge 1). The fictitious external investments totalled approximately $15 million on or about May 2019. This amount does not include funds from clients who may have provided funds to
Mr Kloogh for investment purposes and had withdrawn those funds prior to May 2019. He then provided the investors with documents including statements of external investments that were false because no such external investments existed. These documents comprised part of the documentation prepared by Mr Kloogh to induce investors to put more funds into the Ponzi scheme (Charge 2).
[11] In each instance, Mr Kloogh’s investment clients deposited funds to a bank account they believed to be owned and or operated by Consilium. However, they were in fact being deposited into IEL’s bank account where they were pooled and Mr Kloogh then used the money to fund withdrawals by other clients and for other purposes. The withdrawing clients were led to believe that the money they received as withdrawals had come from their “investments”, when in fact the monies were sourced from the pooled client funds under the control of Mr Kloogh. As well as funding client withdrawals, Mr Kloogh used the pooled client funds to keep various businesses running and for his own personal use. For example, he purchased trips for himself and his wife, paid deposits for cars and lent his family members money (Charge 3).
[12] In order to cover up his deception, Mr Kloogh forged documents. These include two forged documents provided to Mr Broome, one of his investment clients (Charges 4 and 5) and forgeries of BNZ bank statements which were used to obtain finance (Charges 6 and 7).
[13] There were several charges of obtaining by deception. These were committed by:
(a)issuing sell orders for clients who actually had funds in Consilium, then describing the payment received by the client as a mistake and arranging for the client to refund it back to his bank account which used the Consilium trading name (Charges 8 and 9);
(b)recommending to clients that they “cash out” their custodial investments and reinvest them for a better rate of return, when in fact
he had them reinvest in an account that was under his control (Charge 10).
[14] Mr Kloogh also defrauded clients, the Churchers, by proposing that they seek early pay-out of Mr Churcher’s life insurance policy when Mr Churcher was diagnosed with cancer, but reinvesting a significant sum of it in an IEL bank account, not an external investment, with the result that the Churchers were unlawfully deprived of nearly $630,000 (Charge 12).
District Court decision
[15] The sentencing remarks of Judge Crosbie comprehensively covered the genesis and facts of the offending, the impact upon the victims with reference to their victim impact statements, and counsel’s respective positions on the appropriate sentence for the offending.
[16] The Judge was mindful of, and guided by, all the purposes and principles of the Sentencing Act 2002.8 He considered the most relevant purposes to be; to hold Mr Kloogh accountable for the harm done to the victims; to promote a sense of responsibility and acknowledgement of that harm; to denounce his conduct and deter others from acting in a similar manner; and to provide for the interests of the victims.9
[17] The Judge considered the lead offences to be the representative charge of false accounting (Charge 1), which carries a maximum penalty of 10 years imprisonment; and the charges of theft in a special relationship (Charge 3), which has a maximum penalty of seven years imprisonment. In setting the starting point the Judge considered the harm to the victims, the abuse of a position of trust, the vulnerability of the victims and the premeditated nature of the offending. In totality, the features of the offending made it one of the most serious of its kind and Mr Kloogh’s culpability extremely high. A starting point of 13 years’ imprisonment was adopted.
[18] The Judge did not consider Mr Kloogh was entitled to a good character discount given the duration of his offending. Further, he did not consider the
8 At [48].
9 Sentencing Act 2002, s 7.
psychological report raised any mitigating factors that could properly be taken into account at sentencing.
[19] While acknowledging the inability to repay the amount lost, the Judge considered it appropriate to make an award of $5 million in reparation “in the event you do find work or come into funds”.10
[20] In respect of attendance at restorative justice conferences and for “any scintilla of remorse” the Judge applied a five per cent discount.11 Mr Kloogh engaged in a voluntary interview with police and provided information to help focus the investigation. In respect of this assistance a discount of two per cent was applied. A further credit of 25 per cent for guilty pleas was applied. This brought the end sentence to eight years and 10 months’ (106 months) imprisonment.
[21] The Judge considered the possibility of parole at one third of the sentence, being two years and 10 months’ imprisonment, was insufficient to hold Mr Kloogh accountable for the significant and widespread harm that he had caused. Accordingly, the Judge imposed an MPI of 60 per cent.12
Principles on appeal
[22] Appeals against sentence are allowed as of right by s 244 of the Criminal Procedure Act 2011, and must be determined in accordance with s 250 of that Act. An appeal against sentence may only be allowed by this Court if it is satisfied that there has been an error in the imposition of the sentence and that a different sentence should be imposed.13 As the Court of Appeal mentioned in Tutakangahau v R quoting the lower court’s decision, a “court will not intervene where the sentence is within the range that can properly be justified by accepted sentencing principles”.14 It is only appropriate for this Court to intervene and substitute its own views if the sentence being appealed is “manifestly excessive” and not justified by the relevant sentencing
10 Serious Fraud Office v Kloogh, above n 7, at [40].
11 At [89].
12 The Judge noted the imposition of MPIs on cumulative sentences was not barred, referring to Van Wakeren v R [2011] NZCA 503 at [80].
13 Criminal Procedure Act 2011, ss 250(2) and 250(3).
14 Tutakangahau v R [2014] NZCA 279, [2014] 3 NZLR 482 at [36].
principles.15 The focus on appeal is the end sentence, rather than the process by which the sentence was reached.16
Submissions
Appellant’s submissions
[23] Mr Kloogh advances his appeal on the ground that the starting point was too high, the discounts applied for personal mitigating factors were insufficient, the MPI should not exceed 50 per cent, and reparation should not have been imposed.
[24] Ms Saunderson-Warner submits, based on the authorities placed before the Court, the appropriate starting point is 11 years’ imprisonment.17 She says a starting point of 13 years’ imprisonment is two years higher than any other case, with the exception of Serious Fraud Office v Ross, where the fraud was on a far greater scale.18 There, the losses were some $115 million and there were over 700 victims.19
[25] In respect of the impact on the victims, it is submitted that, while devastating, it is comparable to the impact on victims in similar cases and therefore does not justify a markedly higher starting point.
[26] Ms Saunderson-Warner submits the breach of trust, which includes abusing friendships as well as his professional role, does not justify a starting point well in excess of starting points in similar cases, as many such cases involve breach of trust.
[27] Counsel acknowledges that there were more victims in this case than in any other cases referred to, with the exception of Ross. However, it is submitted that the number of victims is only one factor to be taken into account, and needs to be viewed in context of the overall sum taken. Where there is a smaller number of investors, the sums lost by them will be greater.
15 Ripia v R [2011] NZCA 101 at [15].
16 Islam v R [2020] NZCA 140 at [32].
17 At sentencing, a 10 year starting point was advocated for by Mr Kloogh’s counsel.
18 Serious Fraud Office v Ross [2014] DCR 163.
19 At [12].
[28] Ms Saunderson-Warner submits the Judge erred in considering deriving a profit to be an aggravating factor. Relying on the Court of Appeal’s decision in Wood v R,20 she submits that motivation is not an important factor when determining culpability.
[29] She also took issue with the Judge’s statement that, “years on from Ross and other cases we still see fraudsters operating in the financial world. To that extent today the Court’s message needs to be even stronger.”21 Ms Saunderson-Warner submits that higher sentencing levels to meet concerns of perceived prevalence must be backed with sufficient information to confirm the perception is correct.22 In her submission, this did not occur here. She says there is no prevalence of this type of offending in New Zealand. Further, in Ms Saunderson-Warner’s submission, sentences for this type of offending already encompass general deterrence, including in the imposition of an MPI.
[30] Ms Saunderson-Warner alleges that the Judge was misdirected on the summary of facts where he said Mr Kloogh “promoted” an early pay out for one victim, when the summary of facts states he “discussed” this option.
[31] Ms Saunderson-Warner also submits Mr Kloogh ought to receive a discrete discount for his prior good character. The good character includes his lack of prior convictions and the contribution he has made to the community, including through his commitment to the theatre in Dunedin.
[32] It is submitted a discrete discount of five per cent should be given in respect of Mr Kloogh’s assistance with authorities. Ms Saunderson-Warner notes that Mr Kloogh voluntarily attended an interview with the Serious Fraud Office, travelled to Auckland to do so, and made full and honest admissions about his offending.
[33] Ms Saunderson-Warner submits a discount of no less than 10 per cent for Mr Kloogh’s participation in the restorative justice conferences is justified. She notes 14 conferences took place over 8 dates, totalling at least 18 hours. The conferences
20 Wood v R [2020] NZCA 48.
21 Serious Fraud Office v Kloogh, above n 7, at [75].
22 Christofides v R [2011] NZCA 126 at [13] and [14].
served an important purpose by enabling the victims to confront Mr Kloogh, and to tell him to his face how they felt about his offending.
[34] In Serious Fraud Office v Ross, the end sentence was 10 years and 10 months’ imprisonment.23 Ms Saunderson-Warner notes this is only two years longer than the sentence Mr Kloogh received, despite involving almost $100 million more and over 600 more victims. Further, Ms Saunderson-Warner submits the sentence is 10 months longer than in Serious Fraud Office v Hibbs, despite that case involving more money stolen and a slightly longer period of offending.24 Accordingly, in Ms Saunderson-Warner’s submission, Mr Kloogh’s sentence is excessive.
[35] Referring to the cases cited in her submissions which almost all adopted an MPI of 50 per cent, Ms Saunderson-Warner submits that an MPI above 50 per cent cannot be justified.
[36]In respect of reparation, it is submitted the Judge should not have ordered
$5 million in reparation when there was no realistic prospect of Mr Kloogh being able to pay that amount.
[37] Ms Saunderson-Warner submits the end sentence ought to be 6 years and five months’ imprisonment.
Respondent’s submissions
[38] The Crown’s position is the sentence imposed was within range, was not manifestly excessive and no error of law occurred.
[39] Mr Bates, on behalf of the Crown, submits the aggravating circumstances of the offending place it within the most serious range of cases. He notes the particularly high level of personal deceit and breach of trust, the targeting of vulnerable elderly and ill victims and the element of personal gain. As advocated for at sentencing, Mr Bates says starting point of 13 years’ imprisonment was appropriate.
23 Serious Fraud Office v Ross, above n 18.
24 Serious Fraud Office v Hibbs [2018] NZDC 5708.
[40] Mr Bates notes that Mr Kloogh offended over a period of at least seven years, but also acknowledged his offending began in 1995, over 20 years ago. In his submission, it is somewhat repugnant to suggest Mr Kloogh should receive a credit for good character. He refers to Cole v Police where this Court held that where offenders have committed crimes over several years, it is misleading to characterise them as first offenders.25
[41] It is submitted the sentencing Judge was correct to view the assistance given by Mr Kloogh to the authorities as limited. While it is acknowledged that some cost was saved in relation to the investigation through Mr Kloogh’s assistance, the investigations would have quickly established the nature and extent of the Ponzi scheme.
[42] At sentencing, the Judge considered the issues of remorse and restorative justice conferences with reference to relevant authorities.26 Mr Bates submits the Judge was right to form the view that due to Mr Kloogh’s lack of insight and unrealistic promises to pay the victims back, the restorative justice conferences almost amount to re-victimisation. In his submission, the five per cent discount was within range.
[43] The Crown position is an MPI of 60 per cent is necessary to hold Mr Kloogh accountable for the significant harm done to his victims, to denounce his conduct and deter others from committing similar offences. Mr Bates submits the Judge did not err in imposing the MPI.
Analysis
Starting point
[44] The aggravating factors of Mr Kloogh’s offending include the extent of the harm his offending caused to his victims, the fact there are 81 victims and that some
$15.7 million was lost.27 It is clear from the material before the Court that
Mr Kloogh’s fraud has had a profound effect on his victims, the vast majority of whom
25 Cole v Police [2001] 2 NZLR 139 (HC) at [20].
26 Moses v R [2020] NZCA 296; Hessell v R [2010] NZSC 135, [2011] 1 NZLR 607.
27 I note the number of victims is in respect of those associated with the charges before the court.
are elderly and reliant on their investments to support them in retirement. Many also have health issues.
[45] There was abuse of a position of trust both as a financial adviser but also, in many cases, as a friend. The victims were vulnerable and there are clear instances of Mr Kloogh exploiting them because they did vest high levels of trust in him. A case that illustrates this clearly is the Churchers, where it is clear from Mrs Churcher’s victim impact statement that Mr Kloogh suggested they apply for an early payment of their life insurance when Mr Churcher was diagnosed with cancer and “invested” the bulk of it with Mr Kloogh, thinking it would provide for his wife’s future when in fact it was stolen by Mr Kloogh. The offending was highly premeditated and sophisticated.
[46] I agree with the District Court Judge that taking into account these factors the two most analogous cases are Serious Fraud Office v Hibbs28 and Wood v R.29
[47]In Hibbs the defendant ran a Ponzi scheme that resulted in a loss of around
$17.5 million to 22 victims over a period of eight years.30 A starting sentence of 11 years’ imprisonment was adopted. The charges there were theft by a person in a special relationship (9), forgery and making a false statement (25). The Judge considered the theft in a special relationship to be the more culpable offending, followed by forgery.31 The forgery was held to be less culpable as it was employed to cover the theft after it had been carried out.32 Here, the lead offending is a representative charge of false accounting; maximum penalty 10 years’ imprisonment, and theft by a person in a special relationship; seven years’ imprisonment.
[48] The sentencing Judge considered the number of victims in this case distinguished it from Hibbs. While I agree with Ms Saunderson-Warner that the number of victims is only one factor to be taken into account, it is nonetheless a relevant factor and I also need to look at the extent to which the victims were affected.
28 Serious Fraud Office v Hibbs, above n 24.
29 Wood v R, above n 20.
30 Serious Fraud Office v Hibbs, above n 24 at [4].
31 It is unclear from the decision whether the forgery charge was under ss 256(1) or 256(2) Crimes Act 1961. Section 256(1) relates to obtaining, inter alia, a pecuniary advantage and has a maximum penalty of 10 years’ imprisonment, while, s 256(2) attracts a maximum penalty of three years imprisonment.
32 At [26].
Here, there are nearly four times as many victims as in Hibbs and the vast majority have filed victim impact statements which set out the extent of devastation to their lives. The number of victims here shows the scale of the offending and, in my view, increases the overall culpability, and requires a sterner sentence than Hibbs.
[49] In Wood v R the appellant ran a Ponzi scheme where 21 clients deposited approximately $22 million of funds over nine years, some $9.8 million of which was defrauded.33 The starting point was eight years and nine months’ imprisonment. As noted by the District Court Judge, this offending was less serious as there were fewer victims and a lesser amount was defrauded.
[50] It is common ground that Serious Fraud Office v Ross was more serious than the present case.34 There, the loss was $115 million from 700 victims and the starting sentence was 16 years’ imprisonment.
[51] In my view, when Mr Kloogh’s overall culpability is assessed with reference to the aggravating factors and relevant authorities, the starting sentence of 13 years’ imprisonment was within the available range and consistent with comparable cases. I do not consider the District Court Judge erred in adopting this starting sentence.
Personal mitigating factors
[52] Ms Saunderson-Warner submits Mr Kloogh ought to receive a discrete discount of two to three per cent for his prior good character, including his lack of previous criminal convictions and contribution to the community.
[53] In R (SFO) v Robinson a discount of three per cent was given where the defendant had spent his entire adult life working in the financial sector and prior to the offending had a clean record.35 In Wood v R a discount of two per cent was applied where the defendant did not begin offending until his late fifties and “had undertaken many worthwhile roles in the community.”36
33 Wood v R, above n 20, at [7].
34 Serious Fraud Office v Ross, above n 7.
35 R (SFO) v Robinson [2015] NZHC 1673 at [37].
36 In Wood v R, above n 20, at [30].
[54] Mr Kloogh is now 57 years old. The charges relate to offending which occurred over a seven year period. However, the pre-sentence report records Mr Kloogh acknowledged his offending began in 1995. While that is not relevant to the starting point, it does undermine the suggestion he should have a credit for good character. Ms Saunderson-Warner has provided only one example of Mr Kloogh’s active contribution to the community, through his involvement with the theatre. In this context, I do not consider a discount for prior good character is justified.
[55] Ms Saunderson-Warner submits the discount for assistance with authorities should have been five per cent, rather than two per cent. While the two per cent discount could be seen as conservative, it was within the available range when considered in light of comparable offending, where discounts of around five per cent have been allowed.37
[56] Ms Saunderson-Warner’s submits a discount of no less than 10 per cent should be applied in respect of Mr Kloogh’s participation in restorative justice. I accept that Mr Kloogh spent a considerable amount of time meeting with his victims and that some positive effects may have flowed from those conferences. However, it is clear the vast majority of victims considered Mr Kloogh was insincere and lacked insight. In the circumstances, I do not consider that his participation justifies a discount of more than 5 per cent. Nor do I consider there is any evidence of demonstrated remorse to warrant an additional discount for that factor.
End sentence
[57] In my view, the end sentence of eight years and ten months’ imprisonment was within range, particularly having regard to where this offending sits in relation to Ross and Hibbs.
Minimum period of imprisonment
[58] A court may impose an MPI that is longer than the statutory minimum if satisfied that period is insufficient to hold the offender accountable for the harm done
37 Wood v R, above n 20; Robertson v R, [2020] NZCA 218; R (SFO) v Robinson, above n 35.
to the victim and the community, denounce the conduct, deter the offender and other persons from committing the same crime, and protect the community from the offender. Here, the MPI of 60 per cent amounts to around five years and four months imprisonment. Neither counsel suggest an MPI should not have been imposed. Ms Saunderson-Warner advocates for an MPI of 50 per cent, pointing out this was imposed in comparable cases including Hibbs and Ross.
[59] The Judge categorised this offending as “among the most serious”.38 He considered an MPI necessary to hold Mr Kloogh accountable for “significant and widespread harm done”,39 to deter others from acting in a similar and to denounce his conduct. The Judge could have imposed an MPI of up to two-thirds,40 which would have been around six years and 7 months. I note in Cherry v R the Court of Appeal upheld the imposition of an MPI which amounted to 57 per cent of the end sentence.41 While the 60 per cent MPI may be considered stern, in the context of the culpability and the maximum MPI available, it was within range.
Reparation
[60]The Judge made the following comments regarding reparation:42
[40] Given those comments, I believe it is not appropriate to make a reparation award for the total amount. There is simply no way that amount can be repaid. However, it is appropriate to make reparation for an amount in the event that you do find work or come into funds. As Mrs Grills has confirmed today, there are other methods by which the Serious Fraud Office could pursue anything else. I will be making an order for reparation in the sum of
$5,000,000 on the one relevant criminal charging notice.
(emphasis added)
[61] While initially, there was some confusion over whether the order had actually been made (because it was not referred to in the conclusion of the sentencing notes, nor had it been entered in the Court’s case management system), it was subsequently confirmed that the reparation order had been made and was recorded in writing against the charge of theft by a person in a special relationship.
38 Serious Fraud Office v Kloogh, above n 7, at [49].
39 At [97].
40 Sentencing Act, s 86(4)(a).
41 Cherry v R [2013] NZCA 636.
42 Serious Fraud Office v Kloogh, above n 7.
[62] Ms Saunderson-Warner submits that the Judge was correct to say that “the reality is you can never repay this money”.43 He has no income currently, will have no assets and, being in his sixties upon his release, he will have no ability to earn an income in the field in which he has practised for most of his life. Ms Saunderson- Warner says that the leading case in relation to reparation orders in such circumstances is R v Pender.44 In that case, it was said that reparation should not be ordered unless the sentencing Judge has “a realistic measure of confidence that the payment can be made”.45 She argues as a matter of law the reparation order should not have been made despite the hopes Mr Kloogh expressed that he could “make good” by paying money back in the future.
[63] Mr Bates, however, submitted that it was appropriate that an order for reparation be made.46 Implicitly, this is because if any funds become available to Mr Kloogh, it is appropriate that the victims benefit from it.
[64] Section 12 of the Sentencing Act provides that a Court must impose a sentence of reparation, if it is lawfully entitled to do so:47
… unless it is satisfied that the sentence … would result in undue hardship for the offender or the dependants of the offender, or that any other special circumstance would make it inappropriate.
[65] It goes on to say that if a Court does not impose a sentence of reparation in a case where it is lawfully entitled to do so, it must give reasons for not doing so.48
[66]In R v Brown, the Court of Appeal held:49
There is no requirement that a reparation order must be limited by the present means of the offender. …. On the other hand orders that cannot possibly be met are to be avoided.
43 At [39].
44 R v Pender [2007] NZCA 465.
45 At [15].
46 Saying that if one had not been made then it should be referred back to the District Court to make the order.
47 Sentencing Act, s 12(1).
48 Section 12(3).
49 R v Brown CA267/92, 26 November 1992.
[67] In that case, notwithstanding the bankruptcy of the appellant, the appellant was expected to receive payments which could be distributed to two of the appellant’s victims. While making a minor adjustment to the terms of the reparation order, it was upheld by the Court of Appeal.
[68] It is clear that the amount to be repaid by way of reparation should be realistic given the financial resources of the offender.50 Where there is no realistic chance that payment will be made within a few years an order should not be made for the full amount sought.51 While the Sentencing Act does not specify any period or maximum period during which reparation is to be paid,52 generally a Court should not bond an offender for long periods.53 The Courts rarely make orders which require payments over more than a five year period.54
[69] In my view, the order for reparation was inappropriate when Mr Kloogh was to spend more than five years in prison given the minimum period of imprisonment imposed, and where all parties accepted it was highly unlikely that funds would be available at any point in the future. Indeed, I consider to make the order is to raise false hope in the many victims of Mr Kloogh’s dishonesty.
[70] This is a case like R v Hawken (No 2), where there is no realistic prospect of the appellant being able to pay anything by way of reparation in the foreseeable future and accordingly, the sentence of reparation should be quashed.55
Conclusion
[71] The appeal is allowed in part. The order for reparation is quashed. In all other respects, the sentence imposed is upheld.
Solicitors:
S A Saunderson-Warner, Barrister, Dunedin RPB Law, Dunedin
50 R v Bailey CA306/03, 10 May 2004 at [25].
51 Ruka v Department of Social Welfare [1997] 1 NZLR 154 (CA) at 157.
52 R v Pender, above n 42, at [15].
53 Crosland v Police [2012] NZHC 1929 at [8].
54 See for example, Scanlon v R [2013] NZCA 502, Crosland v Police, above n 51, at [8]; and
Leighton v Police [2012] NZHC 1925 at [11].
R v Hawken (No 2) CA307/05, 21 June 2006, at [7].
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