R v Anderson - [2015] NZHC 2342

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI-2013-004-12254 [2015] NZHC 2342

THE QUEEN

v

DAVID MARK ANDERSON

Hearing: 25 September 2015

Appearances:

B H Dickey and A Lyne for Crown
D P J Jones QC, A M Callinan and A E Murray for Defendant

Judgment:

25 September 2015

SENTENCING REMARKS OF ANDREWS J

R v ANDERSON [2015] NZHC 2342 [25 September 2015]

[1] Mr Anderson has pleaded guilty to two charges under s 58 of the Securities

Act 1978, namely:1

(a) Distributing an advertisement, namely the Investment Statement dated

14 September 2007 for MFS Pacific Finance Ltd (PAC) that included untrue statements; and

(b) Signing a registered prospectus, namely PAC’s prospectus dated

14 September 2007, that was distributed and included untrue statements.

I shall refer to the Investment Statement and the prospectus collectively as “the 2007 prospectus”.

[2] On each offence, the maximum available penalty is imprisonment for five years or a fine not exceeding $300,000.

[3] Mr Anderson entered the guilty pleas following his having accepted a sentence indication given earlier on 25 September 2015. He was then convicted and sentenced in accordance with the sentence indication. The indication was given on the basis of the material provided to me; namely, the agreed summary of facts, submissions made by counsel for the Crown and on behalf of Mr Anderson, and by reference to other sentences referred to in counsel’s submissions.

Relevant Facts

[4] PAC was one of a number of indirect subsidiaries of the Australian-based company MFS Ltd. I understand that MFS was (ultimately) a 40 per cent shareholder in PAC, and PAC was a New Zealand arm. MFS was listed on the Australian Stock Exchange.

[5] Mr Anderson was an executive director of PAC. During the period covered by the charges, Mr Anderson was the Chief Financial Officer of MFS. He was
described in the 2007 prospectus as being “responsible for the treasury and financial

1 These offences are ongoing ones, and apply both to falsehood at the time the prospectus is signed, and also falsehoods that arise at any time when the prospectus is before the public. R v Steigrad [2011] NZCA 304 at [119].

structuring roles throughout the MFS Ltd businesses and overseeing the financial

reporting function”.

[6] Of particular relevance to the present proceedings is a Put Option between MFS and PAC. That agreement allowed the directors of PAC to require MFS to acquire its overdue loans at any time. The Put Option could not be cancelled without giving PAC an opportunity to first elect such loans as it wished to pass on at the time of cancellation. The Put Option was explicitly referred to in the prospectus as a source of further comfort for investors.

[7] The particular falsehoods alleged in the two statements are set out in the agreed summary of facts.

[8] The 2007 prospectus in essence painted a substantially untrue picture of the health of the business. In particular, it assured investors of three general things: First, that the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading R v Anderson

Details

AGLC: R v Anderson [2015] NZHC 2342
Case: [2015] NZHC 2342
Decision Date: 25 September 2015

CaseChat Overview and Summary

David Mark Anderson has been found guilty of distributing a misleading prospectus for MFS Pacific Finance Ltd in 2007, as well as signing the prospectus. The prospectus contained several untrue statements about the financial health of MFS and PAC, as well as the Put Option between the two entities. The court considered the appropriate sentence for these offences under s 58 of the Securities Act 1978, which carry a maximum penalty of five years imprisonment or a fine not exceeding $300,000.

The court assessed the culpability of Mr Anderson in comparison to his co-defendants, considering his role as Chief Financial Officer of MFS and his awareness of the financial difficulties faced by the MFS group. The Crown argued that Mr Anderson was grossly negligent in his failure to act on the Put Option, which could have prevented losses for PAC's investors. The defence argued that Mr Anderson believed the statements in the prospectus to be true and had not acted recklessly.

The court concluded that Mr Anderson's offending was at least negligent, and set a starting point of two years and six months imprisonment. Various personal factors were considered, including Mr Anderson's good character, his remorse, and his offer of reparation. The court allowed a discount of 20 per cent for Mr Anderson's guilty pleas.

In light of the circumstances and the principle of maintaining consistency with the sentences of Mr Anderson's co-defendants, the court sentenced Mr Anderson to 300 hours of community work, to be served in New Zealand, and ordered him to pay reparation in the sum of AUD 100,000.

Orders