R v Butler - [2013] NZHC 1436

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI-2010-004-10228 [2013] NZHC 1436

THE QUEEN

v

ANN KATHLEEN BUTLER ROBERT BARRY WHALE

Hearing: 14 June 2013

Counsel: B H Dickey for Crown
T P Mullins and D J Valente for Mrs Butler
P J Davison QC and R C Woods for Mr Whale

Sentence: 14 June 2013

SENTENCING NOTES OF DOBSON J

[1] Mrs Butler and Mr Whale, I now have to sentence you both on seven convictions for offending under s 58 of the Securities Act 1978 (the Act). The charges arise out of your responsibilities as directors of Dominion Finance Group Limited (Dominion Finance) and North South Finance (North South). Three of the charges were brought under s 58(1) of the Act for distribution of an advertisement containing an untrue statement, and four of the charges are for distribution of a registered prospectus containing an untrue statement.

[2] Both those companies were in business as finance companies and depended on prospectuses and investment statements to raise money from investors for on-lending. (I am going to call the documents – the prospectuses and the investment statements and the advertisements - just “the offer documents”.) Dominion Finance
seems to have focused on commercial and business lending with particular emphasis

R v BUTLER and WHALE [2013] NZHC 1436 [14 June 2013]

on property-related transactions for residential and commercial development, and

North South was financing property developments.

[3] Dominion Finance issued a prospectus on 13 September 2007 and an investment statement on the same day. It also issued a newsletter in or about March
2008 called “Quarterly Return”. In North South’s case, it issued a prospectus and investment statement dated 11 September 2007 and was associated with a letter to investors of both Dominion Finance and North South dated 23 May 2008.

[4] Dominion Finance and North South operated with a common directorate, and board meetings of both companies were convened at the same time. In June 2008, their parent company announced that it would seek approval for a moratorium from trustees for debenture holders in both the finance companies. In Dominion Finance’s case, the trustee elected to put the company into receivership and that occurred in September 2008. In North South’s case, the trustee did enter into a moratorium from
1 December 2008, but that company subsequently passed into receivership in July

2010.

[5] You both separately sought sentencing indications, which I provided respectively to you, Mrs Butler, on 7 May, and to you, Mr Whale, on 22 May this year. Both of you have pleaded guilty in reliance on the sentencing indications I gave to you. Although those indications were delivered in open Court, the law prohibits publication of any of the detail in them. It is therefore necessary for me when sentencing you to traverse the considerations relevant to the end sentences, and in doing so I have to reflect much of what was said when I provided those sentencing indications. I have reconsidered the submissions made for 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 Butler

Details

AGLC: R v Butler [2013] NZHC 1436
Case: [2013] NZHC 1436
Decision Date: 14 June 2013

CaseChat Overview and Summary

The case of R v Butler involved sentencing for Ann Kathleen Butler and Robert Barry Whale, who were directors of Dominion Finance Group Limited and North South Finance. The charges arose from their responsibilities as directors, including the distribution of advertisements and prospectuses containing untrue statements in breach of the Securities Act 1978. Both companies operated as finance firms and relied on prospectuses and investment statements to raise funds from investors. The court identified three categories of untrue statements in the offer documents: undisclosed large related party transactions, breaches of internal lending standards, and material deteriorations in financial positions. The court assessed the seriousness of the offending by considering factors such as the nature of the false statements, the duration the documents were in circulation, the amount invested, and the proportion of losses. The court also considered the individual contributions of Butler and Whale to the offences, their positions on the board, and their personal involvement in the preparation of the statements. The starting points for sentencing were set at two years and nine months for Butler and three years and two months for Whale. The court applied various discounts for factors such as personal circumstances, good character, remorse, and guilty pleas. The final sentences were a concurrent term of nine months' home detention and 80 hours of community work for Butler, and 12 months' home detention, 250 hours of community work, and a reparation payment of $75,000 for Whale.

Orders