R v Henare

[2019] NZHC 2126

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CRI-2018-004-4242

[2019] NZHC 2126

THE CROWN

v

STEPHEN JAMES HENARE

Hearing:	28 August 2019
Appearances:	M Heron QC and S O’Brien for the Crown J Bioletti for the Defendant
Sentence:	28 August 2019

SENTENCING NOTES OF MUIR J

Counsel:

M Heron QC, Barrister, Auckland J Bioletti, Barrister, Mt Albert

Solicitors:

Serious Fraud Office, Auckland (K Bannister and S O’Brien)

R v HENARE [2019] NZHC 2126 [28 August 2019]

[1]    Mr Henare appears today for sentencing, having entered guilty pleas to six charges four days into his May 2019 trial.

[2]The charges comprise:

(a)Five representative counts of theft by person in a special relationship;1 and

(b)One count of wilfully attempting to pervert the course of justice.2

[3]    The five representative counts of theft by person in a special relationship relate to:

(a)a total of $601,044.00 transferred to the Stephen Henry Whanau Trust bank account between 8 August 2012 and 27 April 2013;

(b)a total of $197,017.00 transferred to Mr Henare’s personal bank account between 14 May 2013 and 20 June 2013;

(c)a total of $74,431.65 transferred to his sister Mrs Dixon’s personal bank account between 8 August 2012 and 8 September 2012 ($55,000 of which was subsequently transferred to Mr Henare);

(d)a total of $111,404,65 transferred to the Patrick and Margaret Dixon Whanau Trust bank account;

(e)$100,00 transferred to the Legacy Bear Company Limited (LBCL) on or about 23 October 2012.

[4]    The count of wilfully attempting to pervert the course of justice relates to knowingly providing false information to the Maori Land Court regarding the financial position of the Parengarenga 3G Trust (P3G Trust), of which both Mr Henare and Mrs Dixon were trustees.

1      Crimes Act 1961, s 220(1)(b). Maximum penalty 7 years’ imprisonment.

2      Crimes Act 1961, s 117(e). Maximum penalty 7 years’ imprisonment.

Background

[5]    The following summary of facts is informed by the statement of facts and, to the extent not referenced in that document, reflects my findings based on the three and a half days of evidence heard by me.

[6]    The P3G Trust, as I will refer to it, is a Maori land trust with approximately 400 beneficial owners. Its principal asset is a 511.83 hectare block of forestry land located in the Taitokerau District in the Far North of New Zealand.

[7]    All counts relate to Mr Henare’s conduct as a responsible trustee of the P3G Trust. In June 2012, the assets of the Trust vested in Mr Henare, Mrs Dixon and five other trustees (one of whom was Mr Henare’s brother and another his daughter). Previously they had been under the administration of the Maori Trustee. The change in trusteeship came about as a result of protracted legal proceedings, advanced primarily by Mr Henare. The governing document for the Trust was the Trust Order dated 1 September 1987 (Trust Order).

[8]    In August 2012, the Maori Trustee transferred $1,096,819.34 into five accounts set up by Mr Henare and Mrs Dixon in the name of the P3G Trust (P3G Trust Accounts). A further $54,480 was introduced to the accounts on 17 August 2013 as a result of the sale of the Trust’s carbon market credits. Together these sums comprised the total cash assets of the P3G Trust.

[9]    The sum transferred by the Maori Trustee represented revenues to the Trust from stumpage received on a first rotation of forestry development on the land. This stumpage arose as a result of a lease to the New Zealand Forestry Service. That lease was subsequently terminated by agreement, with the Crown undertaking a second rotation planting, which is due for harvest in approximately 2030. The cash held by the Maori Trustee and subsequently transferred to accounts under the control of the new Trustees was, in approximate terms, sufficient to undertake management of the second rotation forest through to harvest and to meet the other ancillary costs of ownership, including rates.

[10]   Mr Henare was a signatory on all the P3G Trust Accounts. For all but one of the accounts, two signatories were required to authorise bank transfers. Mrs Dixon was another of the signatories. Between 8 August 2012 and 31 July 2013, Mr Henare initiated (or was the authoriser or secondary authoriser of) 125 unauthorised payments from the P3G accounts, amounting in total to $1,083,893.30. Ninety-eight payments (totalling $798,061) were made to Mr Henare’s personal or Whanau Trust account. Twenty-six payments (totalling approximately $185,000) were made to Mrs Dixon’s personal or Whanau Trust account. One payment of $100,000 was made to LBCL. None of these payments were appropriately authorised in accordance with the Trust Order. The payments to Mr Henare and Mrs Dixon were applied to living expenses and in Mr Henare’s case to sustain a serious gambling addiction. The investment in LBCL (in respect of which Mr Henare’s personal interests subscribed for the relevant shares) has been lost. By 4 August 2014, when Mr Henare and Mrs Dixon were removed as trustees by the Maori Land Court, just $13.41 remained in the P3G accounts.

[11]   The count of wilfully attempting to pervert the  course of justice relates to  Mr Henare’s advice to the Maori Land Court during a hearing on 22 January 2013. The hearing was in respect of an application by another P3G Trust responsible trustee, seeking to remove Mr Henare and others from the Trust. It had been brought because of concerns that monies had already been dissipated.

[12]   The presiding Judge questioned Mr Henare about the status of the P3G accounts. Mr Henare responded that there was “just under a million dollars” in them, despite there being only approximately $400,000 remaining at that stage. The Judge declined the application to have Mr Henare removed as a responsible trustee. In doing so he must be assumed to have relied on Mr Henare’s advice (confirmed by Mrs Dixon, who I accept was instructed by Mr Henare to lie).

Victim impact statements

[13]   I have received two statements from former P3G Trust trustees. They describe the harmful impact Mr Henare’s offending has had on their lives, exacerbated by the small community in which they live and extensive publicity in respect of the Trust’s

losses. One describes feeling disheartened, the other isolated and severely lacking confidence. I have also received a statement from a shareholder, Mr Wiki, who describes his humiliation and the fact that his, his whanau’s and iwi’s mana have all been debased by Mr Henare’s (and Mrs Dixon’s) actions.

[14]   I have been further provided with a statement on behalf of P3G Trustees and Whanau from the Trust’s current Treasurer, Mr Ahoy who also addressed me in person. He describes how Mr Henare’s theft left the Trust with no available cash resources either to meet the accounts outstanding at the time of defalcation (approximately

$100,000) or the ongoing costs of forestry management through to harvest (estimated at the time of defalcation to be approximately $800,000). He describes how, for the last seven years, the Trust has struggled with the penurious position Mr Henare and Mrs Dixon left it in, the constant difficulties in retaining trustees and the ongoing criticism and humiliations to which the current trustees have been subject. He further describes how it has not been possible to conduct any necessary maintenance on the forest over that period and the employment opportunities which have consequently been lost to the local whanau. Only recently has the trust been able to secure the funding necessary to repay creditors, undertake urgent maintenance and provide for ongoing work. The funding may be insufficient to take the forest right through to harvest. This has only been achieved by the sale of cutting rights to approximately one quarter of the forest. As a result current expectations are that the gross proceeds from harvest will be approximately $5M less than they would otherwise be.

[15]   In addition, Mr Henare’s sale of the carbon credits, which are now said to have a value more than 10 times the sale price he achieved for them has left the Trust seriously exposed to any force majeure event.

[16]   So, like ripples in a pond, the consequences of the thefts radiate out, inter- generationally both economically and in terms of the mana of those innocently affected.

Cultural report

[17]   I have been provided with a s 27 cultural report, compiled by Ms Louise Henare (of no known relation to the defendant). She describes a history of violence

within the family and an assault on Mr Henare sustained at the hands of a third party at about 12 years of age.

[18]   It is clear, however, that his parents were hardworking and focused on the success of their large family.   Mr Henare’s father made specific interventions in    Mr Henare’s early life to ensure that his promise as an adult might be better fulfilled. Mr Henare brings no credit to that legacy and although I do accept his exposure to various hardships in youth, I do not consider his circumstances invoke the history of systemic and inter-generational abuse and neglect that the authorities have recognised might result in a modest discount against sentence.3

[19]   I  also  note  from  the  report  the  significant  health  problems  faced  by   Mr Henare’s wife from whom he has been separated but who he continues to care for. Clearly any custodial sentence is going to place significant additional burdens on his children in this respect. My sympathies are with them and even more particularly with Mr Henare’s wife.

[20]   The report writer, Ms Henare, also refers to rehabilitative efforts undertaken by Mr Henare with the Beach Haven Whanau Community Trust (whose chairman has also provided a letter of support). She describes his stated desire to “work in the community as well to try to make a difference to the people I have hurt”. The Trust Chairman in turn describes his involvement as “hands on” and that Mr Henare has provided significant guidance and support to the Trust in its endeavours, particularly in regard to a joint partnership for affordable healthy housing in local communities. He emphasises that Mr Henare has no involvement with the Trust’s finances.

Provision of advice to the courts

[21]   The Department of Correction’s Provision of Advice to Courts  states that  Mr Henare has limited insight into his offending. It records that although he has pleaded guilty, he considered the offending was not for financial gain and that the charges were accepted to prevent his children from involvement in the court process. He maintained that he had fulfilled his obligations as Trustee and did not steal funds.

3      Keil v R [2017] NZCA 563; Solicitor General v Heta [2018] NZHC 2453.

He otherwise provides no explanation for his actions. Consistent with this limited insight, the report writer observed greater emphasis by Mr Henare on the impact which the prosecutions had had on him personally, than on the impact of the offending on the Trust and its beneficiaries.

[22]   Nevertheless, Mr Henare stated a willingness to comply with any sentences imposed and pay reparation, which he said he expected to be in the order of $1.2M. His risk of re-offending is assessed as low. The recommended sentence is of imprisonment.

Crown submissions

[23]   The Crown suggests a starting point in the vicinity of six and a half to seven years’ imprisonment, based on five and half to six years’ imprisonment for the theft charges and an uplift of twelve months’ imprisonment for the charge of attempting to pervert the course of justice. It does, however, acknowledge that some adjustment may be necessary to the final sentence to reflect totality principles and other modest discounts.

[24]   In respect of the theft charges, the Crown submits that the aggravating features are:

(a)the high quantum (over $1 million) and significant personal benefit;

(b)the substantial breach of trust; and

(c)the significant and continuing impact which the theft has had on the Trust and its beneficiaries.

[25]   It says that in combination these factors mark the offending out as among the most serious of its type.

[26]   In respect of the charge of attempting to pervert the course of justice, the Crown refers to the decisions in Abbott v R4 and Rowley v R5 as justifying the uplift contended for.

[27]   In respect of parity with Mrs Dixon (who was sentenced to 12 months home detention with a $5,000 reparation order) the Crown submits that Mr Henare’s starting point should be significantly higher given:

(a)her personal gain was $130,836 only compared with the  $853,000  Mr Henare applied for his own benefit; and

(b)the fact that Mr Henare was the primary instigator of the offending and was responsible for making decisions about how much money was going to be transferred and to whom.

Defence submissions

[28]   Mr Bioletti does not address starting point, uplift or specific discounts. He does, however, place significant weight on what he says was Mr Henare’s role in terminating the Crown lease and ensuring that the benefits of the second rotation will substantially flow to the beneficiaries of the Trust. I will refer to this submission in more detail later.

Purposes and principles of sentencing

[29]   In sentencing Mr Henare, I must have regard to the purposes and principles of sentencing in the Sentencing Act 2002.6 In respect of all charges, I consider the gravity of the offending, the requirements to denounce the defendant’s conduct, to deter others from committing similar offending, and to hold the offender accountable for the harm done to the many victims of his crimes are the most significant guiding purposes and principles. I must also bear in mind the need for consistency with sentences in similar cases and the effect of his offending on the victims.

4      Abbott v R [2015] NZCA 181.

5      Rowley v R [2015] NZCA 233.

6      Sections 7 and 8.

Approach to sentencing

[30]   I adopt an orthodox approach.7 First, I will set a starting point, based on the aggravating and mitigating features of the offending and informed by the sentences imposed in broadly similar cases. Secondly, I will consider whether any of the personal circumstances particular to Mr Henare require an adjustment to the starting point. Thirdly, I will determine what (if any) discount Mr Henare should receive for his guilty plea.

Starting point

[31]   In setting a starting point, I address first the aggravating factors of the offending, and, informed by similar cases and the submissions of counsel, come to a result that reflects those factors. The aggravating factors I identify as relevant to the offending are as follows:

(a)The extent of loss and harm resulting from the offence. Mr Henare caused a direct $1,083,897.30 loss to the P3G Trust. Not only were the P3G Trust accounts exhausted, but its carbon credits were sold and those funds also misappropriated. I have already referred to the devastating consequences this has had for the Trust and its beneficiaries. Unlike most cases where the sum stolen represents the extent of the loss, here the loss is likely to be significantly magnified by the downstream consequences which flow from the Trust’s initial inability to maintain its principal asset and from the transactions it has subsequently been required to enter into. Nor do I overlook the ridicule and opprobrium which Mr Henare has visited on all associated with the Trust.

(b)Planning and premeditation. Mr Henare appears to have developed a sophisticated strategy over an extended period to maximise his personal advantage. He fought for years to see himself and family members appointed as trustees, drove all decision making thereafter

7      R v Taueki [2005] 3 NZLR 372 (CA); Hessell v R [2010] NZSC 135, [2011] 1 NZLR 607.

and drafted various contracts purporting to authorise payments in his favour. He coerced co-operation from family members and in particular Mrs Dixon. He then intentionally withheld information regarding the true state of P3G accounts from other trustees and insisted Mrs Dixon do likewise. Within a day of the funds flowing he had helped himself to several hundred thousand dollars purportedly as remuneration for services performed at a time when he did not even hold the office of Trustee. The offending only stopped when the cupboard was bare. I accept Mrs Dixon’s evidence that she was pressured to co-authorise transfers to Mr Henare, often late at night in support of his gambling activities. This was not opportunistic offending. It was repetitive, persistent, dishonest conduct evincing a high level of planning.

(c)Abuse of position of trust or authority. Mr Henare had clear responsibilities as a trustee which he breached in a gross and flagrant way. The origins of the offending clearly lay in a sense of personal entitlement evidenced by his statement to the SFO, when interviewed, that his role as a trustee was to “go in and get everything I am entitled to”. In turn that sense of entitlement probably had its origins in a perceived injustice to his forbears in respect of the land. Whatever the reason, he abused his responsibilities as trustee to fund his own lavish lifestyle, while those he was called to serve suffered and continue to do so.

(d)Scale of the offending. Mr Henare’s offending was not an isolated incident that might reflect a lapse in judgment. His criminal behaviour spanned over 12 months and involved 125 separate transactions.

(e)Personal gain.    Mr Henare personally benefitted to the extent of

$853,061. In addition, Trust funds were used to acquire a shareholding in LBCL in his own name.

[32]   The aggravating factors I identify as relevant to the charge of attempting to pervert the course of justice are as follows:

(a)The extent of loss and harm resulting from the offence. Mr Henare interfered directly with the course of justice. He lied to the Maori Land Court, which appears to have relied on his and Mrs Dixon’s representations to dismiss the application to remove him as a trustee. This enabled him to remain in control of the P3G Trust and, over the succeeding months, misappropriate the several hundred thousand dollars which at the time of the hearing remained in the accounts.

(b)Involvement of Mrs Dixon. Mr Henare insisted Mrs Dixon also lie to the Maori Land Court in terms confirming that there was approximately

$1M  in the accounts.    Inevitably this also featured in the Court’s ultimate decision.

[33]   For completeness I record that I cannot identify any mitigating features in any of the offending.

Cumulative or concurrent sentences?

[34]   In my view, the five representative counts of theft by a person in a special relationship are part of an overall scheme of fraudulent conduct and comprise a connected series of offences that are essentially of the same kind. As such, concurrent sentences are appropriate. The charge for perverting the course of justice is, however, of a different kind to the theft charges8  and although connected in the sense that     Mr Henare perverted the course of justice in order to cover up his theft, is sufficiently distinct to attract a cumulative sentence. The approach I adopt, therefore, is to take the first theft charge as the lead offence, sentence the balance of the theft offending on a concurrent basis and to then impose a further cumulative sentence for the remaining charge.

8      R v Uon CA108/05, 27 June 2005; R v Field HC Auckland CRI-2007-092-18132, 6 October 2009 at [40].

Starting point

[35]   Having regard to the aggravating factors I have identified and the authorities referred to me by the Crown,9 I consider the appropriate starting point on the lead charge to be five and a half years’ imprisonment.10

[36]   In coming to that conclusion, I note that the six and a half year starting point adopted in Esau v R was described on appeal as stern, that the offending in that case was over a significantly longer period and that the sum for which personal benefit was obtained was higher. I note that, in respect of Mrs Dixon’s offending, a starting point of four years was adopted but for the reasons advanced by the Crown and previously summarised I do not consider there to be any parity objection to the starting point I propose.

[37]   In respect of the s 117(e) offence, and again by reference to the authorities identified by the Crown,11 I consider a sentence of 12 months’ imprisonment appropriate. That takes the combined starting point to six and a half years’ imprisonment.

Totality adjustment

[38]   I agree with the Crown that a modest totality adjustment is appropriate in order to ensure proportion between the gravity of the overall inter-connected offending and the period of imprisonment.12 I allow six months’ or approximately 7.5 per cent.

Factors personal to Mr Henare

[39]   I now consider whether there are any aggravating or mitigating features personal to Mr Henare that require an adjustment to the six-year sentence so arrived at.

9      Esau v R [2014] NZHC 997; Grant v R [2018] NZCA 452; Love v R [2017] NZCA 265; Sahib v Police [2012] NZHC 3324; R v Dixon [2018] NZDC 14310.

10 Noting that, in reality, there is an artificiality about separating the charges which resulted in a personal benefit to Mr Henare and that the better approach in assessment of starting point (assuming concurrent sentences) is to take into account the totality of that gain.

11 Abbott v R [2015] NZCA 181; Rowley v R [2015] NZCA 233.

12 Sentencing Act 2002, s 85(2).

Remorse and rehabilitation

[40]   Although Mr Bioletti’s submissions record that Mr Henare “accepts unreservedly and is accountable and remorseful for the fact that the Trust Funds were used in the way they were”, that is inconsistent with the position which his client adopted when interviewed by Corrections. I note also that much of the balance of  Mr Bioletti’s submission seeks to minimise the agreed and/or established facts by reference to what is described as Mr Henare’s prior efforts on the part of the Trust, including:

(a)his role in termination of the Crown forestry leases;

(b)investigation of sand extraction and windfarm opportunities on the Trust land;

(c)extensive research into the opportunities provided by the Trust’s carbon credits;

(d)development of proposals for beneficiary housing on parts of the Trust land not required for forestry; and

(e)assessment of various other investment opportunities.

[41]   There is also a distinct flavour in the submissions that Mr Henare believes that the land, and by inference the profits it had previously generated, are not in fact Trust property but rightfully belong to the Henare family (and other unidentified individuals) having been “illegally taken from his grandmother and others”. This same sense of entitlement was, as I have indicated, demonstrated at the time of Mr Henare’s SFO interview.

[42]   Against this background it is difficult to distil the level of exceptional remorse which would justify a discrete discount. However, I do take into account Mr Henare’s offer to undertake restorative justice, which was declined by the Trust. I accept also that whatever responsibility Mr Henare is prepared to accept he is entitled to a modest discount in respect of the rehabilitative efforts he has undertaken, not only in respect

of the Beach Haven Whanau Community Trust but in terms of the retraining he has commenced at the Manukau Institute of Technology. I allow in total a three months’ discount equating to approximately four per cent.

Are there any other relevant personal factors arising out of Mr Henare’s association with the Trust?

[43]   I am unpersuaded by Mr Bioletti’s submission that Mr Henare’s other activities on the part of the Trust and its beneficiaries warrant any reduction in sentence.

[44]   I accept that Mr Henare devoted considerable energies to Trust business, albeit that the sand extraction, windfarm and housing initiatives came to nothing. However, he singularly failed in the most basic of Trust obligations – honesty in the administration of its funds. It is clear that he effectively regarded such funds as his own or to be dispersed at his discretion. He pursued, in my view, a calculated plan to ensure Trust domination by family members, oversaw signing authorities on accounts which delivered control to himself, or himself and his sister, badgered his sister to co- operate in co-authorising payments at his direction, all the while hypocritically invoking his commitment to Christian ideals. Such payments were substantially made to fund personal extravagances (for example, a corporate box at the Warriors League Club), and on a serious gambling addiction which ultimately saw him barred from the Auckland Casino. The sense of entitlement extended to what was, within the context of the Trust’s cash position and future cash needs, an extravagant salary which was fixed even before the Trusteeship was consummated, and which was never properly approved in a General Meeting. Within a little over a year of gaining control he and, to a lesser extent, Mrs Dixon had appropriated all of the Trust’s cash assets.

[45]   I am left in no doubt that he pursued a long-term and sophisticated strategy designed to maximise his personal advantage. I am concerned also that his efforts on the part of the Trust were largely with a view (albeit unsuccessfully) to maximising the pool to which he regarded himself (and to a lesser extent his immediate family) as entitled to. The (unauthorised) investment in LBCL resulting in a share issue in his own name evidences that mindset. All of this is completely consistent with the overarching sense of entitlement I have referred to.

[46]   The relevant counterfactual is not in my view one where the Crown forestry lease (the termination of which was negotiated long before Mr Henare and others were installed as responsible trustees or even became seriously active in Trust affairs) continued, but rather one where it had been terminated and the property remained under the stewardship of the Maori Trustee. In that event, adequate cash resources would have remained to see the second rotation forest through to harvest with intermediate opportunities for employment of whanau members and with the full proceeds of the ultimate harvest available to the Trust and its beneficiaries.

Any other discount or uplift?

[47]   Mr Henare has an extensive criminal history, but the offending is historic with the last dishonesty offence thirty-five years ago and no other offences of any kind since 2003. I neither consider him entitled to a good character discount nor that his sentence is appropriately uplifted on this account.

Discount for guilty plea

[48]   I allow from my adjusted starting point of five years nine months’ imprisonment a discount of 10 per cent on account of Mr Henare’s guilty plea. It came late (on the fourth day of trial), but it saved the embarrassment of his son and daughter having to give evidence and at least one week of sitting time.

[49]   In the result, I arrive at a final sentence of five years and two months’ imprisonment.

[50]   The SFO does not seek and nor do I impose a minimum period of imprisonment. I intend to structure that sentence with concurrent and cumulative components.

Reparation

[51]   Consistent with his claims of impropriety relating to his grandmother’s interests in the land, Mr Henare asserts a personal entitlement to recompense through Waitangi Tribunal processes and offers “the settlement of his claim to restore the financial position of the Trust”. There is at this stage nothing to suggest realistic

prospects in respect of any such claim. No discount can be allowed in that respect. Nor does Mr Henare have any other available assets from which reparation can currently be paid. And both Mr Heron QC and Mr Bioletti submit that an order would therefore be an exercise in futility. Accordingly, I make no reparation order.

[52]   Subject to limitation provisions, the Trust has civil remedies against Mr Henare which it can be expected to pursue if it assesses his personal claims before the Tribunal as having any merit.

Conclusion

[53]Mr Henare, would you now please stand.

[54]   On the charges of theft by a person in a special relationship I impose the following sentences of imprisonment to be served concurrently.

(a)Charge 1         4 years and 4 months.

(b)Charge 2         3 years and 6 months.

(c)Charge 3         2 years and 6 months.

(d)Charge 4         2 years and 6 months.

(e)Charge 5         2 years.

[55]   On the charge of attempting to pervert the course of justice I impose (cumulatively) a sentence of 10 months’ imprisonment, bringing the total period of imprisonment to five years and two months.

[56]Stand down please.

Muir J