R v Bettle - [2013] NZHC 2096

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI-2010-004-10228 [2013] NZHC 2096

THE QUEEN

v

RICHARD GILBERT BETTLE VANCE ERIC ARKINSTALL PAUL WINSTONE FORSYTH

Hearing: 16 August 2013

Appearances:

S Symon and J Harley for Crown
TJ Castle, SWB Foote and TA Castle for Messrs Bettle and
Arkinstall
P W Forsyth in person
S Mount as Amicus Curiae

Judgment:

16 August 2013

SENTENCING NOTES OF KATZ J

Solicitors:
Meredith Connell, Office of the Crown Solicitor, Auckland
Breaden McCardle Chubb, Paraparaumu

Counsel:
TJ Castle, Barrister, Wellington
SWB Foote, Barrister, Auckland
S Mount, Barrister, Auckland

Copy to:
PW Forsyth, Auckland

R v BETTLE, ARKINSTALL & FORSYTH [2013] NZHC 2096 [16 August 2013]

Introduction

[1] Mr Arkinstall and Mr Bettle, you appear for sentence today on five charges under s 58 of the Securities Act 1978 (“Act”). Mr Forsyth, you appear for sentence on seven charges under s 58 of the Act. A charge under s 58 carries a maximum penalty of five years’ imprisonment, or a fine not exceeding $300,000.

[2] All three of you were directors of Dominion Finance Group Ltd (“Dominion Finance”) and North South Finance Ltd (“North South”). Dominion Finance and North South were both finance companies that were primarily funded by the issue of secured debenture stock, pursuant to registered prospectuses. Both companies appear to have mainly lent to property developers. The companies struck serious trouble in mid-2008 and were subsequently unable to meet their ongoing obligations to debenture holders.

[3] Dominion Finance was placed in receivership on 9 September 2008. At the time it had approximately $176.9 million of debenture stock on issue to 5,937 debenture stock holders. The company subsequently went into liquidation on
15 May 2009. The latest report from the receivers indicates that 12 cents in every dollar of principal owed to investors has been paid.

[4] North South was placed into receivership on 8 July 2010. At the time it had

6,925 investors, with investments totalling $31 million. On 17 December 2010

North South went into liquidation. The latest report from the receivers indicates that

65 cents in every dollar of principal owed to investors has been paid.

Facts

[5] I will briefly outline the key facts on which the charges are based, before turning to consider your individual culpability. I note at the outset that the Crown has accepted that each of you acted honestly at all times and believed the contents of the relevant documents to be true. However, that is not sufficient. The offences under the Act are offences of strict liability. Your honest belief in the truth of the documents was also required to have been reasonable in all of the relevant circumstances. Those circumstances included all the information that was available

to you during the relevant period, as well as your non-delegable duties as directors of both companies. You had ultimate responsibility for the proper governance and management of Dominion Finance and North South. By your guilty pleas you have accepted that your belief in the truth…

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 Bettle

Details

AGLC: R v Bettle [2013] NZHC 2096
Case: [2013] NZHC 2096
Decision Date: 16 August 2013

CaseChat Overview and Summary

The case of R v Bettle, Arkinstall, and Forsyth involved sentencing for charges under s 58 of the Securities Act 1978, relating to misleading statements in offer documents issued by Dominion Finance and North South Finance Ltd. The defendants were directors of these companies, which experienced financial difficulties and subsequently collapsed, causing significant losses to investors. The court had to determine the sentences for the defendants, considering factors such as the seriousness of the offending, the culpability of each defendant, and personal mitigating factors.

The court found that while the defendants had acted honestly, their belief in the truth of the offer documents was not reasonable. The defendants' culpability was assessed based on their roles and involvement in the companies, with the court concluding that their culpability was broadly comparable to that of other directors in similar cases. The court then determined starting points for each defendant, taking into account factors such as their level of involvement and expertise. The court also considered personal mitigating factors such as remorse, good character, and offers of reparation.

After applying discounts for personal mitigating factors and guilty pleas, the court determined the final sentences for each defendant. The sentences consisted of terms of home detention, community work, and reparation payments. The court emphasized the importance of holding the defendants accountable for their actions and ensuring consistency in sentencing between co-offenders.

Orders