Norton v Department of Internal Affairs HC Timaru CRI 2010-476-17

[2010] NZHC 1991

IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY

CRI 2010-476-000017

BETWEEN  SHANE MICHAEL NORTON Appellant

ANDDEPARTMENT OF INTERNAL AFFAIRS

Respondent

Hearing:         4 November 2010

Counsel:         S A Saunderson-Warner for the Appellant

A R McRae for the Respondent

Judgment:      4 November 2010

ORAL JUDGMENT OF WILD J

[1]      Mr Norton appeals against a sentence of reparation imposed on him by Judge

O’Dwyer in the Oamaru District Court on 18 August.

[2]      Following late guilty pleas, Mr Norton was convicted of six charges of theft as a person in  a special relationship.   He was  sole director  and shareholder of companies which held revenue agreements covering two bars in which gaming machines were installed.  In terms of those agreements Mr Norton’s companies were contractually obliged to bank all the takings from the gaming machines into a bank account of a trust called The Pelorous Trust.   In breach of those agreements, Mr Norton failed to bank $118,935.48 of takings.   Under the Gaming Act 2003, the Pelorous  Trust  was  obliged  to  distribute  a  minimum  of  37.12%  of  the  gaming takings to the North Shore Auckland community in which the bars and gaming

machines were located.  That equated to $44,148.85.

NORTON V DEPARTMENT OF INTERNAL AFFAIRS HC TIM CRI 2010-476-000017  4 November 2010

[3]      Judge O’Dwyer sentenced Mr Norton to 21 months imprisonment, granting him leave to apply for substitution of a sentence of home detention.  He subsequently did that,  and  a sentence of  nine months  home detention  was  substituted  on  22

September.   Mr Norton is currently serving that sentence, which is not appealed against.

[4]      The appeal is restricted to the sentence of reparation which Judge O’Dwyer also ordered.  She ordered Mr Norton to make reparation of $44,148 “to be arranged with the Registrar of Collections”.

[5]      The Judge said this about reparation:

[15]      I have to consider a matter that has caused me some concern.  That is the issue of reparation.  Reparation is important in this case.  The total sum lost to the victims is almost $119,000.   The loss to the community is just over $44,000.   Under s 12 of the Sentencing Act, the Court must impose reparation as part of the sentence unless satisfied that it would result in undue   hardship   for   you   or   your   dependents   or   there   are   special circumstances  that  would  make  it  inappropriate.    There  is  an  evidential burden on you to demonstrate financial incapacity and undue hardship.  In the absence of that, the Court must impose reparation.

[16]      I have heard you are bankrupt but there is no other evidence before me to persuade me that a sentence of reparation could not be met.  In those circumstances, I intend to impose as part of the sentence an order for reparation.

[6]      For  Mr  Norton,  Ms  Saunderson-Warner  submits  that  the  Judge  erred  in ordering  reparation.    Her  initial  position  was  that    the  order  should  simply be quashed.  As I will explain, in the course of helpful oral submissions this morning, she altered and tempered her submission.   I think the following summarises the points she made in support of her submission:

•      Mr Norton was adjudicated bankrupt in the Auckland High Court on

15 October 2009, upon a creditors’ petition.  Although the amount of his debts is not known, they appear to run into the hundreds of thousands of dollars.   Reliance is placed on   Hansford v Police HC Auckland CRI 2009-404-194, 8, 9 September 2009 in which Venning J stated at [28]:

As noted he has been bankrupted.   Also it would be inequitable and unfair to prefer a few minor creditors over others, even if that was possible.

•The Judge gave no direction under s 36 Sentencing Act 2002 as to how  the  reparation  was  to  be  paid.    It  could  only  be  paid  by instalment.    If  payment  was  at  $20  per  week  it  would  take  the appellant 42 years to clear the reparation.   Even at $50 per week it would take 17 years.  As Mr Norton is 35 now, he would be over 77 when he completed making reparation at $20 per week.  This can be compared with the 9½ years it would have taken the appellant in R v Creek CA 199/06, 7, 17 August 2006 to pay the $50,000 reparation ordered at the rate of $100 per week following his release from prison. The Court of Appeal at [11] described that 9½ year period “... at least by the standards which obtained prior to the Sentencing Act 2002 as atypically long”.

•During his bankruptcy, the appellant would be unable to comply with a reparation order without defeating the interests of his creditors.

•         In Eade v Police HC Auckland, CRI 2009-404-226, 8, 10 September

2009 at [8] Venning J described the position of a recently discharged bankrupt as “hopeless” and quashed an order made by the District Court for reparation.

[7]      Section 12 Sentencing Act provides that a Court that can lawfully impose a sentence of reparation must do so unless the sentence would impose undue hardship for the offender or that  any other special circumstances would make reparation inappropriate.

[8]      There is plenty of authority – if indeed any is needed – that any sentence of reparation imposed must be realistic.  Gendall J said just that in Taua v Police HC New    Plymouth    CRI-2009-043-22,    22 September    2009,    a    case    cited    by Ms Saunderson-Warner.   There is a similar observation in the Court of Appeal’s

judgment in R v Rollo [1981] 2 NZLR 667 at 671. And, in R v Jarvis CA306/86, 2

March 1987, the Court of Appeal observed at p 4:

[I]n spite of the manifest intention of the legislation to make offenders pay for the damage they cause, and the Court’s desire to implement it, realities must be recognised. One simply cannot get blood out of a stone. The Court cannot justifiably make an order for payment, enforceable by further penal sanctions, against an offender who faces a long prison sentence and who must be accepted as having neither assets nor tangible financial prospects.

[9]      Thus,  the  offender’s  means  and  ability  to  make  reparation  must  be ascertained.  In R v Thompson CA 306/86, 2 March 1987 the Court of Appeal held (at [15]) that s 12 imposes an evidential onus on an offender to place before the Court evidence of his financial capacity.  That observation was made in a case where the offender had failed to explain what had happened to dishonestly obtained funds and the proceeds of the sale of his house and motor vehicles registered in his name.

[10]     I turn to consider the position in this case.  The Judge noted that she had been advised that Mr Norton had been declared bankrupt since he committed the offences. The Judge got that from the pre-sentence report which added that Mr Norton was, as a  consequence,  “not  in  a  position  to  pay  any  reparation”.    In  relation  to  the possibility  of  home  detention  and  an  address  which  could  be  electronically monitored, the pre-sentence report stated:

Mr Norton stated at interview that he is financially dependent on his current partner and cannot therefore afford to move to another address.

[11]     That was the limit of the information that Judge O’Dwyer had.   As I have noted, she did not have the benefit of a reparation report prepared pursuant to s 33

Sentencing Act.   Although such a report is not a pre-requisite to imposition of a sentence of reparation, it is often wise – perhaps even essential – to have one.  As the Court of Appeal commented in R v Quayle CA 39/03, 3 July 2003 at [22]:

...  While not a mandatory requirement, it is unwise for a Judge, in our view, to order reparation without such a report where there is evidence which suggests that the offender may not have the means to make payment.

[12]     As part of her submissions this morning, Ms Saunderson-Warner handed me a statement of means, dated today, which she has completed and signed as counsel for Mr Norton.  This discloses the following:

•         His date of birth is 3 March 1963.

•He has three dependents aged 6, 8 and 10 (those are his three children by his wife from whom he is now separated).

•He is unemployed.  He is in receipt of an unemployment benefit and accommodation supplement totalling $260 per week.

•         He has a weekly rent obligation of $240.

•         He was adjudicated bankrupt on 15 October 2009.

•         He has liabilities in addition to the reparation order under appeal of

$800 to the IRD for child support.

•         He has no assets.

[13]     After a  helpful  exchange  with  Ms  Saunderson-Warner  she  suggested  the solution of adding to the sentence of home detention Mr Norton is currently serving a sentence of community work and a significantly lower sentence of reparation.  She submitted  $30  per  week  for  the  five  years  commencing  when  Mr  Norton  is discharged from bankruptcy would be appropriate.  That would be total reparation of

$7,800.  Ms Saunderson-Warner advised me that Mr Norton was prepared to do up to the maximum (which is 400 hours) community work.   For the Department of Internal Affairs Mr McRae accepted that that offer of reparation was sensible and realistic.   When I asked him for his view as to a sentence of community work he endorsed it, and suggested the appropriate sentence was 200 hours.

[14]     I regard that solution as an appropriate and sensible one here.  Accordingly, I allow the appeal.  I quash the sentence of reparation of $44,148.85 imposed by the District Court.   I substitute two sentences.   The first is a sentence of 200 hours community work.  As Mr Norton is serving a sentence of home detention, it is not appropriate to require him to report to his nearest Probation Office in the usual way.

But I direct that his probation officer is to make appropriate arrangements in respect of the sentence of community work with Mr Norton at the earliest opportunity.

[15]     The second sentence I substitute is one of reparation.  I order Mr Norton to make reparation in the total sum of $7,800 on these conditions:

a)       The reparation is to be made by instalments of $30 per week, with the first instalment to be paid on 22 October 2012, or one week after Mr Norton is discharged from bankruptcy if that is a later date.

b)The  reparation  is  to  be  paid  (through  Court  Collections)  to  The Pelorous Trust, Trust Management House, 22 Sydney Street, Petone, Wellington, P O Box 39445, Lower Hutt, and is to be directed by the Trust to charitable causes in the North Harbour region in terms of the Trust’s statutory obligation in respect of the gaming machine revenue it should have been paid by Mr Norton in respect of the Brownsie Sports Bar and Pat’s Garage Bar.

Solicitors:

Aspinall Joel, Timaru for the Appellant

Crown Solicitor, Timaru for the Respondent