R v Braithwaite - [2012] NZHC 2412

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI 2008-004-020412 [2012] NZHC 2412

THE CROWN

v

CAROL ANNE BRAITHWAITE

Hearing: 18 September 2012

Appearances: J Dixon and S Symon for Crown
A Arman for Prisoner

Judgment: 18 September 2012

SENTENCING NOTES OF ANDREWS J

Solicitors/Counsel:
Meredith Connell, PO Box 2213, Shortland Street, Auckland 1140 –
john.dixon@meredithconnell.co.nz, stephen.symon@meredithconnell.co.nz
A Arman, PO Box 17132, Greenlane, Auckland 1546 arlan@arlan.co.nz
Copy to:
Duff Legal Limited, PO Box 74532, Greenlane, Auckland 1546 q@dufflawry.com

R V BRAITHWAITE HC AK CRI 2008-004-020412 [18 September 2012]

Charges

[1] Ms Braithwaite, you appear for sentencing today having been convicted on

27 July 2012 following a trial by jury on a charge that you distributed a registered prospectus which contained untrue statements. The maximum sentence for that offence is imprisonment for five years.

Relevant Facts

[2] I set out the facts briefly. You, your husband Mr Ludlow, and Mr Banbrook were directors of National Finance 2000 Limited (I will refer to that just as National Finance). You were described in the prospectus distributed for investment as having a wide range of skills which equipped you very well for your directorship. Your relationship to Mr Ludlow was not disclosed.

[3] National Finance was in the business of offering finance to people buying cars from licensed motor vehicle dealers. The majority of the loans were made to people who bought second-hand vehicles from companies controlled by Mr Ludlow, in the Payless Cars Group. National Finance also provided business loans to motor vehicle dealers – in particular dealers in the Payless Cars group.

[4] Members of the public invested in debenture stock and subordinated unsecured notes in National Finance, on the basis of National Finance’s registered prospectus issued on 22 September 2005, and the financial statements for 30 March
2005 which were contained in the prospectus. You accepted in an admission of facts that you signed the prospectus. You also admitted that the untrue statements were material (that is, significant) to investors’ decisions whether to invest in the company. About $2.5 million was invested in National Finance after the prospectus was distributed.

[5] The charge against you contained the particulars of ten untrue statements in the prospectus. For convenience, I set these out in three groups. First, there were untrue statements concerning related party transactions and lending. These misstated the number, the size, and the terms on which National Finance had made loans to

related parties, in particular a series of interest-free and unsecured loans to you and Mr Ludlow to purchase apartments in Fiji, and to members of your family for other business interests. The total related party lending was $3.39 million as at 30 March
2005.

[6] Secondly, the untrue statements grossly underestimated bad debts. On receivership, it was determined that the total provision for bad debts (whether debts of car buyers or dealers) of just under $900,000 was completely inadequate. For car buyers, further provision of about $860,000 should have been made in the March
2005 financial statements: that…

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 Braithwaite

Details

AGLC: R v Braithwaite [2012] NZHC 2412
Case: [2012] NZHC 2412
Decision Date: 18 September 2012

CaseChat Overview and Summary

Carol Anne Braithwaite was convicted of distributing a registered prospectus with untrue statements, leading to a significant financial loss for investors. The High Court of New Zealand sentenced Braithwaite after considering the nature of her offence, her role as a director of National Finance 2000 Limited, and the impact on the victims.

The court had to determine the appropriate sentence for Braithwaite's involvement in distributing a prospectus with untrue statements, which misled investors into providing approximately $2.5 million in investments. The court considered the gravity of the offence, Braithwaite's level of responsibility, and the harm caused to the victims, who experienced financial, mental, and emotional distress.

The court found that Braithwaite's limited knowledge of the company's financial position and lack of involvement in management functions did not mitigate her responsibility as a director. The court also rejected the argument that Braithwaite's husband's secretive manner in handling the company's affairs could be considered a mitigating factor. The court considered Braithwaite grossly negligent in her failure to ensure the accuracy of the prospectus and the information provided to investors.

After evaluating the features of the offence and comparing it to similar cases, the court determined that the starting point for Braithwaite's sentencing should be two years and eight months imprisonment. The court applied discounts for Braithwaite's good character, expression of remorse in a letter to the court, and her particular family circumstances, which led to a final adjusted sentence of two years imprisonment. However, considering Braithwaite's inability to pay reparation and the need for an appropriate sentence that meets the purposes of deterrence and denunciation, the court opted for a combination of home detention and community work.

Braithwaite was sentenced to ten months of home detention, during which she must reside at her residence in Devonport, comply with electronic monitoring requirements, abstain from alcohol and illicit drugs, and participate in any suitable programs or counselling to reduce the likelihood of further offending. Additionally, she must complete 300 hours of community work as directed by the probation officer.

Orders