R v Sew Hoy HC DN CRI 2007-012-006139

[2009] NZHC 2359

IN THE HIGH COURT OF NEW ZEALAND

DUNEDIN REGISTRY

CRI 2007-012-006139

REGINA

v

ROBIN HUGH SEW HOY

Hearing:         19 November 2009

Counsel:         R P Bates and A M Killeen for Crown

DPH Jones QC for Prisoner

Judgment:      19 November 2009

SENTENCING REMARKS OF FOGARTY J

[1]      Robin Hugh Sew Hoy you appear  for  sentence  on  one  charge  pursuant  to

s 3(1) of the Secret Commission Act 1910, the maximum penalty for which is two years  imprisonment or  a fine not exceeding $1,000. This charge  was  a  rolled  up charge covering 85 payments that you made to Mr Swann amounting to the sum of

$755,153.89 made between 6 January 2000 and 11 September 2006.

[2]      Between this period of time Mr Swann was an employee of the Otago District Health Board. That sum that I have just referred to functioned as an inducement or reward for Mr Swann showing favour to you in  relation  to  computer  help  desk

services that you were providing to the Otago District Health Board.

R V SEW HOY HC DUN CRI 2007-012-006139  19 November 2009

[3]      It  is  appropriate  at  this  time  that  I  say  something  about  the  nature  of  this offence because it is fortunately not commonly an offence which comes before the Court.

[4]      The Secret Commission Act was enacted  by Parliament in 1910 and it was directed  to  the  proper  functioning  of  commercial  affairs.  Section  3  contains  a number  of  different  offences  but  the  relevant  part  which  formed  the  basis  of  this charge is:

3        Gifts to agent without consent of principal an offence

(1)      Every person is guilty of an offence who ... gives ...   to any agent

[here that is an employee] any gift or other consideration as an inducement

or reward for ... the agent [in this case the employee] ... showing or having shown  favour  ... to any person in relation to the ... [employer’s] affairs or business.

[5]      The  mischief  or  wrong  that  the  statute  is  aimed  to  prevent  is  disloyalty  or breach of trust by agents or employees to their principal or their employer.  It can be rapidly seen that the world of business would be in a bad way if agents do not act in the interests of the people who employ them.

[6]      The wrong you did here is that you made these payments as either an inducement  or  reward  to  Mr  Swann  for  showing  favour  to  you in  relation  to  the computer help desk services that you provided to the Hospital Board.

[7]      As your counsel has just explained, and it is in the agreed summary of facts, you   and   Mr   Swann   have   been   childhood   friends   and   were   former   business associates.   You had done some other work for the Otago District Health Board, an arrangement evolved between you whereby you would provide computer help desk services to the Otago District Health Board and for every hour charged out by you to the Board for your staff Mr Swann would receive $25 per hour.

[8]      You were charging out your staff to the Hospital Board at the rate of $95 an hour plus GST.  You paid that money over to Mr Swann and so the sum amounted, over a period of about six years, to $755,153.89.

[9]      I have had a number of cases, as near as can be similar prosecutions, provided to me by both Mr Bates for the Crown:  Serious Fraud Office v Ellis and Dam HC  AK CRI 2005-404-015827 21 July 2006, Courtney J;  R v Aspinall HC AK CRI 2005-004-019057 12 October  2006, Panckhurst J; R v Hood  HC  AK CRI 2005-004-001316 19 December 2006, Venning J; R v Dodd HC AK CRI 2005-

004-019058 8 May 2007, John Hansen J: and  R  v  Taylor  HC  AK  CRI  2006-092-

001488 6 July 2007, Andrews J;   and Mr Jones QC:   R v Bansal HC AK T000708

13 September 2001, Anderson J; R   v   Hood   HC   AK   CRI   2005-004-1316

19 December 2006, Venning J; R v Aspinall HC AK 12 October 2006, Panckhurst J. What stands out in these cases is that before the offender is sentenced arrangements  have usually been made by way of reparation. Normally when sentencing under the Sentencing Act 2002 we Judges impose the principal sentence and then the order of reparation which may take some time to sort out.   But in the cases that have been prosecuted under this section is effectively done round the other way and this, in my view, is important in this case to have been done that way.

[10]     The reason these proceedings were adjourned from this morning to this afternoon and the reason for my minute to counsel last night was that I was concerned that firstly, an agreement as to reparation had not been reached, and secondly, although it had been indicated to me it had not been explained as to how it was reached. I have now received  earlier today the settlement deed that has been entered into between the Otago District Health Board and you and your  company, Elmo New Zealand Limited. This agreement is expressed to be confidential but subject to the need for it to be referred to in these proceedings. I think it is important

in these proceedings that I do refer to some parts of the deed in order to explain it because  as  part  of  the  sentencing  process  I  have  an  obligation  under  s  32  of  the Sentencing Act and other sections of the Act to examine reparation.

[11]     I have been informed in the joint memorandum of counsel provided to me today  that  civil  proceedings  were  taken  against  Michael  Swann  and  his  company, Computer South Limited, as well as against you and your company, Elmo Limited.

A settlement has been reached between the Otago District Health Board and the Sew Hoy  defendants,  that is you and your company only. The alleged claim  against Mr Swann and  his company continues.  The  settlement  sum  in respect  of  you  and

your company of $325,000 has been reached taking into account a range of factors. The civil claim relates to the same transactions that were the subject of the Secret Commission Act charge.  The settlement sum is in relation to the amounts paid to Mr Swann by way of secret commissions.  The settlement sum has been reached having regard to a number of factors including:

(a)       The  amount  claimed  of  $757.684.89  is  a  GST  inclusive  figure,  so GST should be taken off that amount.

(b)      The  Sew  Hoy  defendants  have  claims  against  the  Otago  District Health Board for work done and goods supplied which had not been paid for.   These claims have been taken into account in reducing the amount payable.

(c)Another District Health  Board has paid for it  IT  services at $80 per hour which arguably reduces the alleged level of over-charge against the Otago District Health Board and reduces the potential claim.

(d)      Your financial means.

(e)       The ongoing liability of Mr Swann and his company and the ability to proceed against him.

(f)Co-operation by you Mr Sew Hoy in terms of the prosecution claimed against Mr Swann.

(g)Assignment  by  Mr  Sew  Hoy  to  the  Otago  District  Health  Board  of any rights of action you may have against Mr Swann.

[12]     The final advice I have received  from  counsel  is  that  the  Otago  District

Health Board does not seek an order of reparation over and above the settlement sum

of $325,000 which is to be paid by 2 December 2009.

[13]     Section 32(3) of the Sentencing Act  requires  that  the  Court  must  take  into account whether there might be a right to bring the proceedings to recover loss or

damage  occurred  by  the  offence  and  subs  (6)  provides  that  when  determining  the amount of reparation to be made the Court must take into account any agreement. Subsection (1) says:

32       Sentence of reparation

(1)      A court may impose a sentence of reparation if an offender has, …

caused a person to suffer—

(a)       loss …

[14]     Obviously, where an agreement has been reached freely by the person who has suffered a loss as to the sum of recompense and the Court is satisfied that that has been competently reached and freely entered into, and  I  am  here,  then  the consequence is that either that sum is the appropriate sum of reparation or that there

is  no  need  for  formal  sentence  of  reparation  because  the  parties  have  entered  into legally binding measures.

[15]     In the first place now that  this  settlement  has  been  explained  to  me  I  am satisfied that this is an appropriate sum by way of reparation relying almost entirely

on  the  competence  of  the  counsel  and  of  the  parties  involved  in  the  negotiations. There is a question I need to discuss with counsel, but I am minded to think, having seen  the  deed,  noting  its  enforceability  and  its  provision  for  penalty  payments  of interest  which  compound  if the payment is not  made,  that  a  formal  order  of reparation is not required.  If I made one it would only be identical in sum to the sum reached.

[16]     Counsel, now that it is clear to  you that  I have  approved that sum, what  is your position Mr Bates.

[Discussion with counsel]

[17]     Having heard from counsel, while I am  of  the  view  that  this  deed  has competently secured payment, as Mr Bates points out, there are also other measures

in the criminal law which address failure to meet orders of reparation and so purely

as a safeguard I formally impose a sentence of reparation and payment of the sum of

$325,000 to be paid by 2 December 2009.  That order does not in any way displace

the  functioning of  the  deed  which  has  its  own  mechanism  should  that  sum  not  be paid.

[18]         I  now  turn  to  the  issue  of  whether  or  not  the  sentence  you  should  face Mr Sew Hoy should be one of imprisonment or home detention.  The Department of Corrections’ report recommends a sentence of community detention.  I can say at the outset,  for  reasons  which  will  become  apparent,  that  I  do  not  think that that is a sentence which sufficiently addresses the accountability or more particularly sufficiently  denounces  your  conduct  in  the  eyes  of  the  community  or  sufficiently deters other offenders.

[19]     The Sentencing Act provides for a system of analysis when a Judge is considering imprisonment.  Normally in sentencing remarks the Judge does not go through this process. Often it is because imprisonment is inevitable. More frequently it is because it would unduly burden the length of the sentencing remarks.

I wish to make it clear that I have in fact gone through the process mandated by s 16

of the Sentencing Act and in that regard following subs (2) of that.  Subsection (2), I

should interpose, says the Court must not impose a sentence of imprisonment unless

it is satisfied as to various factors.

[20]     In summary form I am satisfied that the reparation agreement that you have entered into has in substantial measure held you accountable for the harm done to the Otago District Health Board and has promoted in you a sense of responsibility and acknowledgment of that harm and the settlement has provided for the interests of the Otago District Health Board. There remains, however, the need to denounce the conduct in which you were involved. I do not think there is any risk Mr Sew Hoy that you will offend again given your previous unblemished history and the references I have received which I will refer to in a moment. But it is important to deter other persons from committing the same or similar offence. It is not necessary

to imprison you to protect the community from you.

[21]     I then have to consider whether these remaining purposes of denunciation and deterrence could be achieved by a sentence other than imprisonment.  I also have to consider whether any other sentence would be  consistent  with  the  application  of

principles in s 8 of the Act.  Again, I have gone through all the provisions in s 8.  For the purposes of these notes, I record that I have taken into account the gravity of the offending and have gone some way to try to explain the nature of it.  Subsection (b) says I must take into account the maximum penalty proscribed by the offence.  The maximum penalty is two years, a maximum which, by comparison with many other criminal provisions these days is  somewhat  low. But  it  is  a  basic  principle  of statutory  interpretation  that the Judges  take  the  maximum  sentence  imposed  by Parliament. Whether  they think  it is  too  high  or  too  low  is  of  no  matter  because Parliament makes the law in this regard and not the Judges.

[22]     The  fact  the  sentence  is  of  a  maximum  of  two  years  is  significant  because there is the new sentence of home detention created by Parliament to provide where sentences are of two years or less.  In this regard I take into account as well that the Crown has submitted that the starting point should be 18 months and that is before a discount for your guilty plea is taken into account.

[23]     In that regard the Crown has addressed the other conditions in s 8(c) and (d) about the need to impose a penalty where  the  maximum  is  proscribed,  unless circumstances relating to the offender make that inappropriate.  In this regard some

of those key circumstances are that you have made a reparation in a sum which has been  formally agreed  to  by the  Otago  District  Health  Board.   Secondly,  this  is  an enormous fall from grace for you.   I have had placed before me a remarkable set of references.  These references disclose over your life considerable contribution to the community  particularly  through  your  involvement  with  table  tennis  but  you  have taken that sporting interest and, for example, use it for caring for people of all ages with mental disabilities.     I have received references from the mayor of the city, who does acknowledge frankly he has close family ties;  from the mayoress of the Clutha District;  from very senior business figures;   from people in the medical profession; from people in the law; and from people in both business and associated with law enforcement.   You have also agreed to co-operate in a civil litigation and criminal prosecution against Mr Swann.   This traditionally always warrants a recognition in sentence.

[24]     Section 8(g) was amended in 2007 to develop the obligation on the Court to impose the least restrictive outcome appropriate to insert a new section setting out the hierarchy of sentences and included within that the sentence of home detention. The statements made to the House of Representatives by the Minister introducing that  contained a clear recognition that one of the goals of a sentence of home detention is to reduce the prison population.   That is recorded in the case of R v D [2008] NZCA 267. What is not generally known, though, is that the evidence being collected is that people find it very hard to do sentences of home detention. The Court of Appeal in the case of R v Hill [2008] 2 NZLR 381 has recognised that, in broad terms, because a person is sentenced to prison they are entitled to parole, for short sentences, after half the sentence; that in the very broadest terms a sentence of 12 months home detention is equivalent to two years imprisonment which we will recall is the maximum sentence available for this offence and is higher than the sentence being indicated as a starting point by the Crown. However, as Rodney Hansen J has mentioned in Savage  v  Police           HC  Whangarei  CRI  2008-488-1

14 February 2008 and Golding v Police HC Whangarei CRI 2008-488-3 14 February

2008 that does not mean that a sentence of home detention equivalent to prison is simply half of that.

[25]     Section  8  also  requires  me  to  take  into  account  your  personal  family, community  and  cultural  background  as  a  means  of  dealing  with  you  for  partly  or wholly  rehabilitative  purposes.   I  have  already  had  occasion  to  mention  your  fall from grace  as has  your  counsel.   It is also discussed by the mayor candidly in his reference.        I  have  no  doubt  that  with  the  customs  and  tradition  of  your  ancient civilisation  that  you  will  see  an  obligation  Mr  Sew  Hoy  to  re-establish  and  make good the damage you have done to the Chinese community.

[26]     For  these  reasons  I  am  satisfied  after  applying  principles  in  s  8  that  the sentence  of  home  detention  is  the  correct  sentence for you. It  has  to  be  a  severe sentence  though. Taking 18 months a the  indicative  sentence  less  10%  would indicate a sentence of imprisonment of about 15 months.   In theory one can halve that but as Rodney Hansen J has pointed out that is not appropriate.

[27]     I have decided that the sentence you should suffer and to be imposed on you

is ten months home detention and as I have discussed with counsel, and indicated, I am expecting relatively restrictive conditions enabling you to leave your home. I am aware that you have a sound computer business and clients. Your computer business may suffer and you may suffer further financial loss as a result of this sentence.  But in my view you will have to operate your business from home.  There will need to be special reasons why you need to conduct your business outside your home.  I am not ruling out those reasons.

[28]     The statute already provides in s 80(c) standard  conditions which includes special  powers  given  to  the  probation  officer. I now propose  to  set  out  special conditions in addition to the standard conditions contained in s 8)(c):

·At  the  end  of  this  hearing  you  must  travel  directly  from  the  Court  to  26A Lynn  Street,  Dunedin,  and  to  remain  there  and  await  the  arrival  of  the probation officer.

·You  are  to  reside  at  26A  Lynn  Street,  Dunedin,  in  accordance  with  the conditions of home detention.  Those are the sections I have referred to in the statute.

[29]     I will now discuss the rest of the conditions with counsel.

[Discussion with counsel and probation officer]

[30]     The  question  which  I  need  to  have  in  mind  is  whether  and  how  I  should formulate  a  special  condition  relating  to  business.   I  have  considered  counsel  two options.

[Discussion with counsel]

[31]     The special condition is:

·Mr Sew Hoy is not to leave his home for ordinary business purposes but only for exceptional purposes which require him personally to leave subject to the

agreement  of  the  probation  officer  concerned.  That  the  probation  officer, having the ability to seek a direction from the Crown, and if need be, from the Court in the event of doubt as to the appropriateness of it.

[32]     In terms of guidance of that I am aware that Mr Sew Hoy provides IT and computer services. I have already been told by Mr Jones, and accept it any way, that Mr Sew Hoy can move his normal centre of business to his home and work from home. Where he has staff who at present cannot do certain tasks that only he can do

he  may  well  now  have  to  employ  more  professional  staff  to  replace  his  general availability. He  remains  the  proprietor  of  the  business  and  will  need  to  conduct certain meetings essential to the ongoing nature of business, such as, for example, a periodic meeting with his bank manager or an important meeting with suppliers of services to his business which can only be done essentially by the proprietor of the business.  That is the kind of exceptional reason which I consider would apply.

[33]     Now  I also intend to  impose as part of the punishment standard  conditions which  are  imposed  on  all  offenders  normally,  sometimes  not  imposed,  and  that  is that:

·You  are  to  abstain  from  the  consumption  of  alcohol  and  drugs,  excluding those  prescribed  by  a  medical  practitioner,  for  the  full  duration  of  home detention.

Solicitors:
Crown Solicitor, Dunedin, for Crown
Connell & Connell, Auckland, for Prisoner (Counsel acting:  DPH Jones QC)