Ministry of Health v Lisa's Health Limited HC Auckland CRI 2008-404-06
[2008] NZHC 2384
•30 June 2008
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CRI 2008-404-06
CRI 2008-404-07
IN THE MATTER OF s 115A of the Summary Proceedings act
1957
BETWEEN MINISTRY OF HEALTH Appellant
ANDLISA'S HEALTH LIMITED AND LISA AI
Respondents
Hearing: 28 April 2008
Appearances: A Adams and S Tune for Appellant
J Donovan for Respondents
Judgment: 30 June 2008 at 1:00 p.m.
JUDGMENT OF WOODHOUSE J
This judgment was delivered by me on 30 June 2008 at 1:00 p.m. pursuant to r540(4) of the High Court Rules 1985.
Registrar/Deputy Registrar
……………………………………
Solicitors:
Ms A Adams / Mr S Tune, Meredith Connell, Office of the Crown Solicitor, Auckland
Mr J Donovan, Solicitor, Howick, Auckland
MINISTRY OF HEALTH V LISA'S HEALTH LIMITED AND LISA AI HC AK CRI 2008-404-06 30 June
2008
[1] The Ministry of Health has appealed against sentences imposed on the respondents Lisa Ai and her company, Lisa’s Health Limited (“the company”) for offences against the Medicines Act 1981 (“the Act”). The Ministry contends that the sentences imposed were manifestly inadequate.
[2] Ms Ai and the company pleaded guilty to a number of charges. The charges and sentences were as follows:
a) There were nine charges under s 20(2)(a) of the Act of selling new medicines before consent to distribution of them had been given by the Minister of Health. The maximum penalty for an individual is six months imprisonment or a fine not exceeding $20,000. Ms Ai was sentenced to 200 hours of community work. The maximum penalty for a body corporate is a fine not exceeding $100,000. The company was fined $75 and ordered to pay costs of $130 for three offences committed on 27 June 2006. It was fined $100 and ordered to pay costs of $130 for each of six offences committed in September 2006.
b)There were three against Ms Ai and the company under s 20(2)(c) of the Act for advertising new medicines before the Minister’s consent had been given. The same maximum penalties applied as with the offences against s 20(2)(a). The sentence of 200 hours community work imposed on Ms Ai was also imposed for these offences. The company was fined $75 and ordered to pay Court costs of $130 for each of the three offences.
c) There were three charges against the company and Ms Ai under s 18(1)(a) for sale of a prescription medicine other than by a pharmacist. These were alternative charges. It appears that the intention was that the company and Ms Ai be convicted and discharged. However, the sentence of 200 hours of community work imposed on Ms Ai also applied to these offences. The company was fined either $75 or $100, with costs.
d)There were six further alternative charges under s 43(1) of the Act of possession of a prescription medicine without reasonable excuse. Ms Ai and the company were convicted and discharged for these offences, save in respect of one charge against the company for which, apparently in error, a $75 fine and costs were imposed.
[3] All of these offences related to advertisements for, and sales or possession of, capsules generally described as “herbal viagra”. The capsules contained sildenafil. This is the active ingredient of the prescription medicine viagra and sildenafil is itself a prescription substance. There are serious risks associated with the consumption of sildenafil without medical advice. Ms Ai and the company advertised “herbal viagra” in Ms Ai’s shop and on two occasions in the New Zealand Herald. They sold, or had possession for sale of, quantities of capsules containing sildenafil and packaged in different ways. Ms Ai was warned about this offending, and its dangers, in June 2006. Notwithstanding the clear advice she got, the offending by Ms Ai and the company continued. This was discovered in September which led to all of the informations being laid.
[4] The learned District Court Judge imposed the sentences of community work and minimal fines on the company for the following reasons:
[4] Insofar as you personally are concerned, Ms A’i, you are not in a position to meet a fine. Your counsel has asked that you receive a community-based sentence, and you will receive community work, which is intended to reflect the severity of the sentence, but gives you credit for the guilty plea, and the fact that you have no previous convictions.
[5] As far as the company is concerned, all indications are that this company is a company of straw; that is to say it has virtually no income and no assets. Whilst the starting point, as I have indicated, is appropriate, nevertheless, there is no possibility of the company meeting the sort of fines which the starting point would reflect. In those circumstances, I have reduced the fines payable by the company very significantly indeed, primarily to take into account the financial circumstances of the company.
[5] The written submissions for the appellant Ministry included the following primary contention:
[The Judge] erred in fact and law by making a finding as to the respondents’ ability to meet a fine when no evidence of the respondents’ financial position had been placed before the Court. Rather than viewing the accounting
records the respondents had made reference to and giving the appellant an opportunity to respond, and rather than holding a disputed facts hearing and adopting the procedure sanctioned by Parliament in s24 of the Sentencing Act 2002, the Judge made a “finding” in the absence of evidence and any opportunity on the part of the appellant to challenge the matter in issue.
[6] The Ministry’s challenge to the Judge’s conclusion about the defendants’ financial capacity was coupled with a strong submission that this Court approve sentence starting points proposed to the District Court Judge by the Ministry. The Judge said:
… I have adopted those starting points without qualification. I think they are accurate, given the overall circumstances of the offending.
However, the Judge did not otherwise discuss the starting points. Nor did he record what they were, although the detail has been provided in the submissions to me.
[7] In addition to seeking endorsement of starting points, the Ministry submitted that it would be appropriate for this Court, on this appeal, to adopt the decision of the Auckland District Court in Ministry of Health v Ichi Trade (NZ) Limited & Anor (AK DC, 16 October 2007, Judge Aitken). The Ichi Trade case also involved sales of “herbal viagra” and advertising. This appeal was heard in conjunction with an appeal against sentence by the defendants in the Ichi Trade case. In broad terms, on the two appeals the Ministry was seeking High Court confirmation of statements of principle coupled with what would amount to a benchmark or bottom line for sentences for offences of the sort that occurred in both cases.
[8] For reasons that can be stated reasonably briefly, I do not consider it appropriate in this case to make statements of general principle in respect of offending against the Medicines Act or to set a benchmark for sentences. Also, looking more specifically at this case, I do not consider it appropriate to approve the starting points which were referred to in passing by the District Court Judge.
[9] The matters of broader principle, or policy, are of importance. To the extent that these two appeals warrant broader statements from this Court, they may be found in my judgment in the Ichi Trade appeal case: Ichi Trading (NZ) Limited & Anor v Ministry of Health (HC AK, CRI 2007-404-384/390, 30 June 2008,
Woodhouse J). That judgment also records reasons why I consider that it is not appropriate to seek to fix some form of tariff, or a bottom line, for sentences for offences of the sort that occurred in these two cases.
[10] I consider it inappropriate to approve sentence starting points in this case because they played no material part in the District Court decision and they play no material part in my decision. They play no material part in my decision because, in the course of the hearing, it became apparent that the concerns expressed by the Ministry as to the financial capacity of the respondents should be addressed by obtaining a declaration of financial capacity pursuant to s 41 of the Sentencing Act
2002. A declaration was provided. Although the submission for the Ministry was that there are some points of uncertainty in Ms Ai’s financial declaration, the Ministry did not seek a further hearing. The final position for the Ministry on this appeal was expressed as follows:
The appellant does not seek leave to cross-examine the respondent on her declaration but rather wishes to simply encourage a cautious approach to be taken by the Court to the matters the respondent has declared. In the appellant’s submission, a fine should be imposed on the respondent in addition to her sentence of community work.
[11] The reference to “the respondent” is a reference to Ms Ai, and not to the company. There was no submission for the Ministry that the Judge’s conclusion that the company “is a company of straw” was erroneous. This is demonstrated clearly by the financial declaration. There are no grounds for interfering with the learned Judge’s sentences imposed on the company.
[12] In relation to the sentence of community work imposed on Ms Ai, I agree with the Ministry’s submission that the financial declaration from her does raise some questions. But the substance, which the Ministry has not sought to challenge, is that Ms Ai does not have the financial capacity to pay a fine of any consequence. There is no demonstrated error of principle by the District Court Judge in his decision that a sentence of 200 hours of community work should be imposed rather than fines.
[13] Although that disposes of the appeal, I think it appropriate to record two further matters. One is that a sentence of 200 hours of community work is a severe sentence. There may be a perception that this is a light alternative to a fine. But Parliament, in s 10A the Sentencing Act 2002, has made clear that a sentence of community work is a more restrictive sentence than a fine. And the sentence imposed in this case is 50% of the maximum. The final consideration in determining that the appeal should be dismissed is the devastating effect that Ms Ai’s offending has had on her family and, in consequence, on Ms Ai herself. It is unnecessary to elaborate on this.
Result
[14] The appeal is dismissed.
Peter Woodhouse J
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