R v Bowden

[2012] NZHC 1249

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI 2010-004-15175 [2012] NZHC 1249

THE QUEEN

v

ANTHONY WALPOLE BOWDEN

Hearing:         6 June 2012

Counsel:         B H Dickey and J Cairney for Crown

T Simmonds for Prisoner

Judgment:      6 June 2012

SENTENCING NOTES OF HEATH J

Solicitors:

Crown Solicitor, Auckland
Counsel:

T Simmonds, Auckland

R V BOWDEN HC AK CRI 2010-004-15175 [6 June 2012]

Introduction

[1]      Anthony Walpole Bowden, you appear for sentence today having pleaded guilty to two charges of theft by a person in a special relationship.  Your pleas were entered  on  17 April  2012,  following  a  sentence  indication  hearing.    You  were scheduled to go to trial in this Court, commencing on 18 June 2012.  The maximum penalty for each offence is one of seven years imprisonment.

[2]      As a result of your pleas of guilty to the two theft charges, the Crown offers no evidence against you on seven other charges of dishonestly using a document. On counts 3–9 (inclusive) of the indictment you are discharged under s 347 of the Crimes Act 1961. Those discharges are deemed to be acquittals on those counts.

Facts

[3]      The circumstances in which your offending occurred and the business of the Five Star group in general has been well documented.   It is well and truly in the public domain.   For that reason, I shall (at the risk of summarising the position incompletely) outline the bare essentials of the transactions in issue and the nature of the charges.

[4]      You,  together  with  Messrs  Nicholas  Kirk  and  Marcus  MacDonald[1]   were directors of Five Star Consumer Finance Ltd.  You were a non-executive director. Another person Mr Neill Williams, is alleged to have been a shadow director of the company.  Similar charges have been brought against him to which he has pleaded not guilty.  He is yet to be tried.

[1] Messrs Kirk and MacDonald have been convicted of offending arising out of the collapse of

Five Star and have been sentenced in the District Court

[5]      Five Star was put into receivership on 29 August 2007.  At that date, about

$54.5 million was owing to secured debenture investors.   Those investors had advanced money to the company on the faith of prospectuses.  Assuming estimates

of likely dividends are accurate, the total loss of principal to investors is likely to be at least $37.5 million.

[6]      Five Star’s core business was the provision of finance to consumers to enable them to acquire household items such as furniture and whiteware and the like.  It was also engaged in rental of commercial equipment.   Five Star’s trust deed contained restrictions on the way in which moneys obtained from investors could be used.  The company was not to enter into any related party transactions, except in the ordinary course of business and on arm’s length terms.

[7]      The first of the two counts to which you have pleaded guilty concerns related party lending of over $35 million through eight separate loans.  The second involves six loans totalling approximately $14.2 million.  The loans that formed the subject of count 1 were advanced between 1 April 2003 and 30 March 2007.  Those which are the subject of count 2, were advanced between 1 March and 30 March 2007.

[8]      During your time as a director of Five Star you were a chartered accountant. You were held out to members of the public in Five Star’s offer documents as having “extensive commercial experience”, over some 30 years, including experience involving finance companies.  You were a man of good character on whom investors were entitled to rely to protect their interests.

[9]      You attended monthly meetings of the Five Star board.   You participated actively in them.  You were involved in the loan approval processes.  You knew the terms of the trust deed.   You were a party to approving the relevant loans, even though you knew they were contrary to the terms of the restrictions imposed by the trust deed.

[10]     The Crown accepts that you are the least culpable of those who have been charged in relation to Five Star’s activities.  You had no involvement in the day-to- day management of the company. Your culpability stems from active involvement in the approval of some of the loans and acquiescence in others, with knowledge that they were made contrary to the terms of the prospectus and trust deed.

[11]     You were earlier charged with offences against s 58 of the Securities Act

1978.  Those charges involved the issue of offer documents to members of the public that were materially misleading.  You were sentenced on 21 December 2010 in the District Court at Auckland on those charges.  Judge Joyce QC imposed a sentence of nine months home detention and 300 hours community work following entry of your guilty pleas.

[12]     At  the  time  of  that  sentencing  you  did  not  acknowledge  any  offending involving dishonesty. You were sentenced on that basis.

[13]     In sentencing you today, I must consider the penalty that ought to have been imposed had all offending, including the dishonesty offending, been before the Court for sentence on that first occasion.  I do so by undertaking that exercise now.  The sentence you have already served will be brought to account when I impose a final sentence on the theft charges.

Personal circumstances

[14]     You  are  now 72  years  old.    Prior to  the offending  you  enjoyed  a  good reputation in the community and in commerce.  You have been married for over 40 years and you have two adult children. All of your family remain supportive.

[15]     As a result of your offending, you have been left with minimal means to live in your twilight years.  Certainly, it can be said that you gained no material benefits from your offending.   This is not a case of money being diverted for your own personal use.

[16]     Plainly, you appreciate the seriousness of your offending.  However, I need to temper  that  against  the  late  plea  of  guilty  to  the  theft  charges.     You  have demonstrated  considerable  remorse,  particularly  while  serving  your  sentence  of home detention on the Securities Act charges.  To your credit, you also assisted the authorities significantly in their investigation into Five Star’s affairs.

[17]     The  starting  point  for  sentencing  today  must  reflect  the  totality  of  the offending, namely both the Securities Act and Crimes Act offending.   In contrast with the Securities Act offending alone, the starting point must take account of the existence of dishonesty offending.   That necessarily results in an increase in the starting point taken in the District Court.

[18]     The aggravating factors are the same as those that applied to the Securities Act offending, save for the addition of the element of dishonesty.   There is an enormous financial and emotional impact on investors who are unlikely to repair their financial position before retirement.  There is the breach of trust that caused the loss.  There is the duration of the offending.  Finally, there is the impact on investor confidence  generally  that  has  impacted  financial  markets  considerably  in  this country.

[19]     In my view, the element of dishonesty justifies an uplift of one year three months imprisonment.  That raises the starting point of three years six months taken in the District Court to one of four years nine months imprisonment.

[20]     From that revised starting point it is necessary to deduct credits for relevant mitigating factors.   The credit given at your earlier sentencing was, in my view, generous.  Leaving to one side the guilty pleas, you are entitled to credit for prior good character and assistance to the authorities.   I also give a modest credit for remorse that is not already captured in the credit I will give for the guilty pleas.  As you lack the means to pay reparation, no order will be made but that means also that no additional credit will be given on that score.

[21]     I do not propose to add any further credit to reflect the predicament in which you find yourself, difficult although that is.   Dishonesty offending puts a different complexion on that from that which appeared in the District Court.  At least in part, your deliberate conduct has brought about the circumstances in which you find yourself.   Having said that, I do take account, in reaching a credit for mitigating factors, both your age and your wife’s state of health.

[23]     Both the pleas in the District Court and in this Court were entered relatively late.  Had you taken responsibility earlier for your actions, both dishonesty offending and otherwise, a significant credit could have been expected.

[24]     One of the things I must do today is make clear that the Court will look very carefully at those who enter later pleas for offending involving dishonesty which might obtain some advantage in sentencing.  While I do not suggest that that was your motive in this case, it is a tactic which the Court must guard against in other cases.  I consider the best way to do that is to reduce the credit to which you would otherwise have been entitled for the guilty pleas, to a global amount of 10%.

[25]     I allow a credit of 35% for mitigating factors other than guilty pleas.  That would bring the provisional sentence down to three years one month.  From that four months would be deducted to reflect the guilty pleas.  If imprisonment were to be imposed, the end sentence would be two years nine months imprisonment.

[26]   Because of a quirk of timing, you are eligible for home detention notwithstanding  that  the  end  sentence  is  over  two  years  imprisonment.[2]   Also, because you have already served a term of nine months home detention, I am entitled to impose a further term of up to 12 months.[3]   Ordinarily, home detention is limited to a total term of 12 months.   In my experience, that combination of unusual circumstances makes your sentencing unique.

[2] See R v Hill [2008] 2 NZLR 381 (CA).

[3] Sentencing Act 2002, s 86B(1).

[27]     At the sentence indication hearing on 17 April 2012, with some hesitation, I reached the view that home detention was an appropriate sentence.  I am conscious that all directors of finance companies who have been guilty of dishonesty have been sentenced to jail.  Indeed, some who have not been dishonest have been sentenced to imprisonment.

[28]     But in your case, with the ability to impose up to 12 months further home detention and a term of community work, I am satisfied that your offending can be

adequately denounced and others deterred by a sentence of nine months home detention, coupled with 100 hours community work.  That will mean that the final sentence you serve for all offending will have been 18 months home detention and

400 hours community work.  That is the maximum amount of community work a

Court may ordinarily impose.

[29]     I stress that it is only because of my ability to impose additional sentences of that type and length that you have been saved from imprisonment.  Otherwise, there would have been no option but to send you to jail for what you have done.

Result

[30]     Mr Bowden, on each of the two counts of theft by a person in a special relationship, you are sentenced to a term of nine months home detention to be served concurrently and to a term of 100 hours community work on each charge, also to be served concurrently.

[31]     The home detention sentence is imposed on standard conditions.  Following release from Court today you shall travel directly to the home detention address and await the arrival of a probation officer and monitoring company representative.  You shall reside at that address for the duration of the home detention sentence. You shall also undertake any programmes that you may be directed to do by a probation officer.

[32]     Stand down.

P R Heath J