R v Simpson

[2013] NZHC 2524

IN THE HIGH COURT OF NEW ZEALAND GISBORNE REGISTRY

CRI 2012-016-241 [2013] NZHC 2524

THE QUEEN

v

COLIN MARK SIMPSON

Hearing:	26 September 2013 (Heard at Wellington)
Counsel:	G J Burston for Crown A J S Snell for Accused
Sentence:	26 September 2013

SENTENCE OF SIMON FRANCE J

[1]      This  sentencing  arises  out  of  the  collapse  of  a  Gisborne  based  finance company Rockforte Finance.  Mr Simpson was one of the three key players in the company; he has pleaded guilty to nine charges and is expected to testify at the forthcoming trial of two alleged co-offenders.

[2]      The charges to which Mr Simpson has pleaded involve breaches of the Trust Deed which governed what could be done with the money people invested in the company.1    The nine charges consist first of five counts of theft by a person in a special relationship. These involved either breaches of the exposure limits contained in the Trust Deed, or impermissible loans to related parties; and on one occasion

misappropriation of a portion of an investor’s money.

1      Because of the upcoming trial, I am not setting out the detail available in the Summary of Facts.

R v SIMPSON [2013] NZHC 2524 [26 September 2013]

[3]      There are then two counts of making misleading statements in a prospectus, and one count of obtaining by deception.  This latter charge involves obtaining registration of the company in the Government’s Crown retail deposit guarantee scheme.    It  flows  from  the  fact  that  the  application  for  membership  relied  on accounts known to be incorrect because of the earlier breaches already mentioned. Finally, there is one representative charge of false accounting relating to incorrect accounting entries being used to disguise the true nature of certain advances.

[4]      The collapse of the business caused a loss of $3.8 million which, because of the guarantee scheme, was borne by the taxpayer.   The collapse of the company seems to be due primarily to the collapse of the companies which received these loans that had been wrongfully made in breach of the Trust Deed.

[5]      Your role was that you were a director of the company from the outset and its day to day manager. You had extensive experience in the banking industry and were a well known and respected figure in the Gisborne community.   It is accepted for sentencing that the degree to which you stood to benefit personally is very limited. On your behalf Mr Snell says it was none.  Mr Burston, on the other hand, points to the lifestyle benefits that you gained from your position and a small shareholding that you held in the company.  The purpose of this focus is that if people have conducted themselves in the way you have for personal gain, that is seen as an aggravating factor.  In this case I accept that, within the context in which “personal gain” is used for this issue, it is not present here and so the case is not to be treated as one where you acted out of desire for personal gain.  Obviously, however, there were benefits from your continuing role in Rockforte.

[6]      Your counsel explains the offending as snowballing from an initial situation of Rockforte being exposed to a borrowing company in difficulty. Its collapse would in turn have placed Rockforte in difficulty. An improper action was taken to remedy that and then the matter snowballed, such conduct inevitably needing repetition if it is to succeed. This is a familiar picture. My familiarity with the material in this case isn’t such as to allow me to form any particular view on whether that description is correct, but what it does enable me to say is that it explains why Courts must react strongly to this sort of situation in the hope of driving home the principle that the

response to these circumstances cannot be to breach trust and to misuse money.  It seldom  works,  people  are  seldom  ever  better  off,  and  frequently  and  almost inevitably they are worse off.

[7]      As  many have done so  in  recent  years  you  stand here today with  your reputation in tatters.  As you are aware, you have betrayed and lost the trust of members of the community.  Their money was invested because they trusted in you and you abused that.  The liquidator of the company has filed a statement in which he records that he has witnessed in effect on many in the Gisborne community. Rockforte was seen as a local business run by local people who were honest and could be relied upon.  The liquidators experience has been that much of that trust was focussed on you and it is your dishonesty that has shocked them.

[8]      The task today is first to fix an initial penalty that reflects the wrong you have done and serves as yet another statement to the many made in recent years about dishonest dealing with other people’s money.  Once that figure is set, it will then be reduced by the factors that stand in your credit, and there are many.

[9]      Your previous good character which deserted you during this time seems to have returned, and since this all emerged, you have acted properly.  You have acknowledged your wrongdoing; you have indicated you are willing to testify and give your version of what happened and you have done that in a straight forward and complete way.   Your assistance is not only in testifying but in clarifying for investigators the picture of what actually happened.  People on all sides accept you are genuinely remorseful.  You have found a number of lower paying jobs and are working hard to continue to support your family having yourself become bankrupt as a result of all this.

[10]     At 52 years of age this series of offending is the only time you seem to have failed to maintain proper standards both as a family man and as a businessman.  It is an inexplicable lapse, and I accept and am sure that you regret it deeply.

[11]     Turning to identifying the starting point for this offending, counsel agree there is no tariff but assistance is to be found by the factors identified in a case called

Varjan.  The Crown contends for a starting point in the range of four and a half to five years; it emphasises the length of time over which the offending occurred; the dishonesty involved; the loss caused which is being borne by the taxpayer; the abuse of trust and that it was, as time went on, calculated and premeditated offending.

[12]     Mr Snell does not dispute many of the individual factors but emphasises the motive was not for personal gain and that you are not the driving force behind the offending.  His submission is for a starting point in the range of three to four years. It seems to be common ground that for most of the offending you were acting on instructions.  A point of difference seems to me to be the weight to be attributed, or the culpability to be found, in your role of day to day manager thereby facilitating the ongoing workings of the company with the knowledge of what had been and was going on.

[13]     I have looked at the other cases that counsel have provided to me.  I think to be fair, like them, I have not found them of huge assistance for the particular case.  I am clear that the starting point must be higher than the lowest point of three years suggested by Mr Snell.  The things I emphasise to you are that there is a need to denounce this type of misuse of money entrusted to you.  Some of the offending may have been a misjudgement but it cannot be misunderstood that some of it involved straight out blatant dishonesty.

[14]     To the extent that your actions were to keep Rockforte afloat, you chose to do so by causing loss to other people. You, as do many, no doubt hoped that it would all come right but it never does and you took the risk knowing that you were misusing money in  that  hope.    Issuing  an  untrue prospectus  seeking  more  money is  an example of that sort of conduct.

[15]     A starting point must send a message but must also reflect your role and that there is a lacking here of some of the personal greed and personal excesses that underlie other cases.  In my view, and at this point I am just going to identify a band, I consider the appropriate starting point is in the area of four to four and a half years.

[16]     In terms of reduction from that point there seems to be agreement that up to around 50 per cent is possible given the various matters I have already mentioned.  I accept that the combination of factors that you present justifies a high end discount. I refer again to your willingness to testify and your guilty plea which are the main contributors to that.  Counsel have today explained and I accept the circumstances of the guilty plea which means that more credit is possible than the stark timing of the plea might otherwise suggest.  I acknowledge, as I have, that you are genuinely remorseful and genuinely motivated to do what you can to correct what has gone on.

[17]     The next issue would be whether the sentence is to be one of home detention. Here I say, more for the benefit of counsel and anyone who may review this in the future, that I have looked at your file and am sure the proper outcome is one of home detention. So wherever along the band of four to four and a half years this offending is    placed,    I    would    adjust    the    percentage    figure    of    the    discount

(between 50-55 per cent) to leave a final sentence of two years.2

[18]     It is accepted that you are a low risk of reoffending and will comply with your obligations.   I also make the point that the term of home detention I am to impose is towards the upper end of what is available and it will not be easy.  It will be hardship for you and there will be hardship for your family.  But coupled with some community work in which you can give back to the community, I am sure it is by far the best way to balance the need for deterrence, with the community interest, and with your own personal rehabilitative needs as well as the interests of your family.

[19]     I consider that the appropriate package will be a sentence of 11 months’ home

detention coupled with 200 hours of community work.

[20]     Just before you stand Mr Simpson I am just going to explain to you because

once it’s formally imposed it is quite difficult; your home detention will start from

Monday.   In the interim you will be released from here on bail.  Because you are

2      This paragraph is not verbatim but accurately captures the import of what I said. Further, the sentencing remarks did not mention so I now record that, whatever the final sentence, the Crown submitted that principles of deterrence in this area of misconduct by directors of finance companies require an actual sentence of imprisonment.

now a sentenced person, and also frankly to minimise the difficulties that can arise if people are out and about even if they are not of their own making, there will be an evening curfew from 7 o’clock until 7 a.m. until Monday when the home detention will be kick in.

[21]     So if you could please stand.

[22]     Mr Simpson on all nine charges to which you have pleaded guilty I sentence you to a concurrent terms of 11 months home detention and 200 hours community work. The sentence of home detention is to commence Monday, 30 September 2013.

For the period of the home detention you are:

(a)	to reside at 6 Seddon Crescent, Gisborne and not to move from that address without the prior written approval of a probation officer;
(b)	to remain at 6 Seddon Crescent at all times unless an absence from the residence has been authorised;
(c)	you are to abstain from the consumption of alcohol and illicit drugs for the period of your sentence of home detention;
(d)	you are not to associate and contact in any way any specified person unless with the prior approval of a probation officer;
[23]	In th	e interim between today and the start of the sentence of home detention I

release you on bail, the existing conditions to apply, together with a further condition

that you are subject to a curfew from 7.00 p.m. to 7.00 a.m. on each day.

Simon France J

Solicitors:

Luke Cunningham & Clere, Wellington
A J S Snell, Barrister, Hastings