R v Scutts
[2015] NZHC 1617
•10 July 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CRI-2013-004-9588 [2015] NZHC 1617
THE QUEEN
v
PETER JOHN SCUTTS
Hearing: 10 July 2015 Appearances:
R Reed and R R Parlane for Crown
J R Billington QC and A J Steel for PrisonerSentence:
10 July 2015
SENTENCING REMARKS OF M PETERS J
Counsel: J R Billington QC, Auckland
R Reed, Auckland
A J Steel, Auckland
Copy for: Serious Fraud Office, Auckland
R v SCUTTS [2015] NZHC 1617 [10 July 2015]
[1] Mr Scutts, you appear for sentence today having been convicted at a trial before me on:1
(a) one charge of receiving a secret reward for procuring a contract, being an offence under s 8(1) Secret Commissions Act 1910 (“Secret Commissions Act”);2 and
(b)16 charges of dishonestly using a document to obtain a pecuniary advantage, being offences under s 228(b) Crimes Act 1961 (“Crimes Act”).3
[2] The maximum penalty on the first charge is a fine of $1,000 or two years’ imprisonment. Each charge under the Crimes Act carries a maximum term of seven years’ imprisonment.
[3] I am grateful to counsel for their excellent submissions and, as I mentioned, I have taken it from Mr Billington QC’s materials that you acknowledge your guilt in this matter.
Facts
[4] The facts of the offending are set out my judgment of 21 May 2015.4 The salient points for today’s purposes are as follows.
[5] In March 2011, you advised the New Zealand Wine Company (“NZWC”) to enter into a contract to supply wine to Liquor Marketing Group Australia (“LMG”). At that time you were a consultant to NZWC and a couple of months later – in June
2011 or thereabouts – you became the CEO.
[6] At the time you gave that advice to NZWC you had an agreement in place with LMG, the gist of which was that they would pay you AUS$1 for every case of
NZWC wine that they sold to their retail customers.
1 R v Scutts [2015] NZHC 1108.
2 Secret Commission Act 1910, s 8.
3 Crimes Act 1961, s 228(b).
4 R v Scutts, above n 1.
[7] From May 2011, you submitted 16 invoices to LMG to obtain the AUS$1 per case, the last one being rendered in November 2012. LMG paid you NZ$64,000 over this period.
[8] Through Mr Billington, you say that the deal that you negotiated for NZWC with LMG was a good one, that it played a significant part in keeping the company afloat in difficult circumstances and that it cannot be said that NZWC suffered financial loss as a result of your offending. One consequence of this is that the Court cannot make a reparation order.5
[9] For myself, I do not consider that the lack of a quantifiable loss to NZWC helps you much. LMG might have paid more but for the payments to you – I appreciate this is speculation. Regardless, NZWC recruited you and paid you well because of your expertise and abilities. You were only doing the job you were engaged to do, and NZWC was entitled to undivided loyalty.
[10] Even if there has been no direct financial loss to NZWC, offending by any employee, particularly a senior one, imposes a cost on an employer and on the senior people within the organisation, such as Mr Jamieson in this case. NZWC is a victim of your offending. Mr Jamieson was the one who was required to raise the matter of LMG’s payments with you. He and other employees will have been required to provide their time and information to the SFO, and no doubt in the aftermath have reviewed their procedures, discussed the matter at board meetings and possibly been required to disclose the offending to their insurer. I cannot imagine that the case would ever have been far from their minds. Invariably one or two individuals bear most of the load, and in this instance that individual was Mr Jamieson.
Pre-Sentence Report
[11] The Department of Corrections’ pre-sentence report has been helpful. Corrections assess you as unlikely to re-offend and as suitable for a sentence of home detention and/or community work.
[12] You have been successful in many fields – the wine industry, marketing, rugby, and pay to view TV. As you recognise, it will be difficult, if not impossible, for you ever to find work that requires trust again.
[13] I have also read Mr Jamieson’s victim impact statement, your letter (thank you) and the many references you have provided, including several from members of the community of considerable standing such as Sir Graham Henry, Peter Masfen, Murray Deaker and Michael Stiassny. Each referee says that they have read my judgment. I shall mention just some of the statements the referees have made about you, to give the flavour of what they say, but you can be assured that I have read all of them:
In the last 4 years [Peter] has more than proved himself to be an excellent, loyal, trusted and unbiased trustee.
There is no doubt that Peter’s abilities were an instrumental factor in creating this success. He was excellent with people and the 30 staff enjoyed his leadership. He was strong and strategic in operational leadership and human resource management … I respect the man and value his thoughts … From my experiences he has been a person with high personal standards; and high personal integrity.
Peter is an extremely well liked, talented and respected individual across a wide group of people and I would be extremely happy and honoured to work with him again.
I have always found Peter to be a person of integrity and transparency … He
is my friend.
My engagement with Peter in both a work and social environment has always been of a very positive nature … I would be very happy to work with him in the future and to have him in my home with my family.
[14] I am also conscious of the health issue referred to in the material provided to me and, to the extent I am able, take that into account.
Approach to sentencing
[15] All of the offending in this case is connected and so it is appropriate that I impose concurrent sentences.6 That, however, requires me to consider several discrete issues.
[16] First, I am required to identify the “lead” offence and determine the “starting point” on that offence. Counsel and I are agreed that the lead offence is the charge under the Secret Commissions Act.
[17] Secondly, I have to consider whether it is necessary, as Ms Reed urges, to increase the starting point to reflect the offending under the Crimes Act.
[18] Thirdly, I am then to increase or reduce the starting point for matters –
aggravating or mitigating – that relate to you personally.7
[19] Then I am required to consider, and impose, the least restrictive sentence that is appropriate in the circumstances.
Setting the starting point on the Secret Commissions Act charge
[20] So let me come to the first part of the exercise which is to set the starting point on the Secret Commissions Act charge.
[21] With offending of this kind, I am required to impose a sentence that deters you and anyone else from offending of this kind in the future. This sort of offending does not often come to light. That may be because it does not occur very often or because it is difficult to detect or it may be a combination of the two. When it does come to light, deterrence is the principal aim.
[22] I must also recognise the gravity and seriousness of the offending; sentence you consistently with others sentenced in similar cases; and, as I say, impose the least restrictive sentence open in the circumstances.
[23] There is no “tariff” case for offending under the Secret Commissions Act and so both counsel have quite properly referred me to several decisions, from which one
may discern a range of starting points.8
7 Section 85(4).
8 R v Watson HC Auckland T992033, 20 July 2001; R v Watson CA233/01, 21 July 2001; R v
Child and Courtney HC Auckland T000708, 21 June 2002; SFO v Ellis HC Auckland CRI 2005-
404-15827, 18 July 2006; SFO v Ellis and Van Dam HC Auckland CRI 2005-404-15827, 21 July
2006; R v Taylor HC Auckland CRI-2005-404-015827, 21 July 2006; R v Keeley HC Auckland CRI 2005-004-1313, 14 June 2005; R v Dodd HC Auckland CRI 2005-004-19058, 8 May 2007; R v Sew Hoy HC Dunedin CRI 2007-012-6139, 19 November 2009; SFO v Green HC Auckland CRI 2012-004-010003, 14 June 2013.
[24] I am going to refer to the detail of those cases in the written note that I shall issue after sentencing. Again, you and counsel can be assured that I have considered all of them.
[25] In R v Watson, Mr Watson was charged with three counts under s 3 Secret Commissions Act.9 He was the manager of a subsidiary of Feltex. Mr Watson ordered goods from one supplier at inflated prices, in return for which the supplier paid him $63,000 over several years. The Court adopted a starting point of two and a half years’ imprisonment and refused Mr Watson leave to apply for home detention.
[26] In R v Child and Courtney, Mr Child and Mr Courtney faced five counts under the Secret Commissions Act and one under s 229A(b) Crimes Act. Both were highly regarded, senior executives of Mobil. Mr Child received $225,000 as a result of his offending and Mr Courtney $207,000. The Court adopted a starting point on the offending under the Secret Commissions Act of two years six months’
imprisonment.10 Each was given leave to apply for home detention.
[27] In R v Swann, Mr Swann engaged a friend, Mr Sew Hoy, to provide help desk services to staff at the Otago District Health Board. Mr Sew Hoy then paid Mr Swann a share of the fees paid by the Board, ie paid Mr Swann approximately
$755,000 over six years.11 The Court adopted a starting point of two years’
imprisonment. The matter of home detention did not arise as Mr Swann was already serving a sentence of imprisonment.
[28] In R v Dodd, Mr Dodd pleaded guilty to one charge of accepting a secret commission.12 Mr Dodd was 56, and a hard working and respected member of the community. The Court adopted a starting point of 15 months’ imprisonment and permitted an application for home detention.
[29] In R v Green, Mr Green pleaded guilty to eight charges under the Secret
Commissions Act.13 Mr Green was a commercial property manager at Bunnings for
9 R v Watson, above n 8.
10 R v Child and Courtney, above n 8, at [51].
11 R v Swann HC Dunedin CRI 2009-412-026, 11 February 2010.
12 R v Dodd, above n 8.
13 R v Green, above n 8.
21 years. Over seven years he directed valuation and insurance brokerage work to particular companies for which he was paid $142,000, whilst Bunnings overpaid by
$218,000. The Court adopted a starting point of 18 months’ imprisonment and
imposed a short sentence of home detention.
[30] In SFO v Ellis and Van Dam, Mr Ellis and Mr Van Dam worked for Wilson Parking.14 They directed work to companies they owned or in which they had some interest, benefiting themselves collectively by approximately $460,000 over a period of two years. In a separate instance, a telephone company that they had engaged to provide services to Wilson Parking paid them $38,000. Mr Ellis and Mr Van Dam faced various counts under the Crimes Act and under the Secret Commissions Act. The Court adopted starting points of up to 18 months’ imprisonment on the Secret Commissions Act charges.
[31] In R v Taylor, Mr Taylor worked for a District Health Board.15 He granted 60 contracts to a company in which he had a financial interest, pursuant to which contracts the company invoiced more than $630,000. Mr Taylor pleaded guilty to one representative charge under s 13(1) Secret Commissions Act. The Court adopted a starting point of 18 months’ imprisonment and granted Mr Taylor leave to apply for home detention.
[32] In R v Keeley, Mr Keeley pleaded guilty to one charge under s 4 Secret Commissions Act.16 Mr Keeley granted a contract to an advertising agency. Mr Keeley learned that an employee of the agency, Mr Hood, had directed the contracted work to a company which Mr Hood owned. Mr Hood paid Mr Keeley
$263,000 to “keep quiet”. The Court adopted a starting point of 18 months’ imprisonment and gave leave to apply for home detention. Mr Hood himself was convicted of 45 counts of making gifts to Mr Keeley. The Court adopted a starting point of two and a half years’ imprisonment and granted leave to apply for home detention.
[33] For offending of this nature, the Court has generally adopted a starting point of 15 months’ imprisonment upwards, with the preponderance being between
14 SFO v Ellis and Van Dam, above n 8.
15 R v Taylor, above n 8.
16 R v Keeley, above n 8.
18 months and two and a half years’ imprisonment. The precise starting point has tended to reflect variables such as the seniority of the person concerned, the length of time over which the offending took place, whether the offender acted in concert with another employee of the organisation, and the sum involved.
[34] On the basis of the authorities, and the features to which I have referred, the Crown proposes that I should adopt a starting point of two and a half years’ imprisonment.17 Mr Billington submits that is too long, is excessive and that it should be somewhere south of two years.
[35] Having regard to the circumstances of the offending, your seniority, and the lesser sum involved than in many other cases, I adopt a starting point of 18 months’ imprisonment on the Secret Commissions Act charge.
[36] That leaves the issue of whether it is necessary to add an uplift for the Crimes Act offending, being the provision of the invoices to LMG. The Crown submits that these charges are serious in their own right, being designed to facilitate your offending and to disguise the nature of the payments you received.18
[37] I prefer Mr Billington’s submission that, on the facts of this case, the culpability arises from your advice to NZWC in March 2011, when you had already made your arrangement with LMG. For that reason I do not believe that any uplift to the starting point is required.19
[38] So, the starting point, before I consider matters personal to you, is 18 months’
imprisonment.
Adjusting for personal factors
[39] I do not consider there is any aggravating factor personal to you which requires me to increase the sentence. I am satisfied, however, that you are entitled to some modest reduction for previous good character. You are 59, have no prior
convictions, your referees all speak highly of you, and I know from your letter that
17 Crown submissions at [76]. Ms Reed also submits that it is apparent from the authorities that the Court adopts higher starting points for offenders who receive secret commissions than those who pay them.
18 Crown submissions at [71].
19 Defence submissions at [14].
you have been undertaking charitable work and have some insight into your offending.
[40] For those matters I do propose to reduce the starting point, but the reduction will be modest – two months – which gives an end sentence of 16 months’ imprisonment.
Home detention
[41] I turn now to consider whether I am able to impose a less restrictive sentence than imprisonment, as the Sentencing Act 2002 requires me to do. In short, I must consider whether the purposes of sentencing can be met by something less than imprisonment. If so, I am to impose that less restrictive sentence.
[42] The Crown does not object to a sentence of home detention and your family is willing that such a sentence should be imposed. Mr Billington suggests at most a short sentence of home detention coupled with a sentence of community work.20
[43] I am not satisfied that the purposes of sentencing would be met by a sentence of community work because I do not believe it would send a sufficiently strong message. I am satisfied, however, that I may impose a sentence of home detention, as the Court has, or has anticipated, in the vast majority of the cases which I have
considered.21
[44] In all the circumstances, I am satisfied that you should serve a total sentence on all the offending of eight months’ home detention.
Sentence
[45] Please stand. Mr Scutts:
(a) on the charge of receiving a secret reward for procuring a contract, I
sentence you to eight months’ home detention; and
20 In this regard, Mr Billington QC referred me to R v Aspinall HC Auckland CRI-2005-004-
19057, 12 October 2006.
21 R v Sew Hoy, above n 8; R v Keeley, above n 8; and R v Hood HC Auckland CRI 2005-004-
1316, 19 December 2006.
(b)on each charge of dishonestly using a document to obtain a pecuniary advantage, I sentence you to two months’ home detention, with each sentence to be served concurrently with the sentence imposed on the charge under the Secret Commissions Act.
[46] That means your total sentence is eight months’ home detention.
[47] The sentence is to commence today and is to be served at the address nominated in the Home Detention annexure. The standard conditions imposed by s 80C Sentencing Act 2002 apply. From here you are to travel to the home detention address and await the arrival of your probation officer and monitoring company who will complete the necessary works.
[48] Please stand down.
..................................................................
M Peters J
3