R v Stirling

[2007] NZCA 106

IN THE COURT OF APPEAL OF NEW ZEALAND

CA192/06
[2007] NZCA 106

THE QUEEN

v

ROBERT WILLIAM STIRLING

Hearing:14 March 2007

Court:Robertson, Baragwanath and Venning JJ

Counsel:J P Temm for Appellant

J M Jelas for Crown

Judgment:29 March 2007 at 2.30 pm

JUDGMENT OF THE COURT

THE APPEAL AGAINST SENTENCE IS DISMISSED.

____________________________________________________________________

REASONS OF THE COURT

(Given by Venning J)

Introduction

[1]       On 5 May 2006 the appellant was sentenced to imprisonment for five years three months having pleaded guilty to 15 charges of using a document with intent to obtain a pecuniary advantage and two charges of uttering a forged document.  Heath J also imposed a minimum non-parole period of three years three months.  The appellant appeals against sentence.

Background

[2]       Between 2000 and 2004 the appellant, together with a number of others, was involved in a sophisticated and organised fraud in the Hamilton and Bay of Plenty areas.  A co-accused, Mr McKelvy, was responsible for the Hamilton area.  The appellant took primary responsibility for transactions within the Bay of Plenty area. On occasion the appellant and Mr McKelvy worked together.  On other occasions they sought personal benefit at each other’s expense. 

[3]       Three types of fraud were employed.  The first was described by the Judge as “price hydraulic fraud”.  The appellant would identify land likely to be sold by mortgagee sale.  He would then enter an agreement with the owner to buy it at a price in the vicinity of the market value.  The appellant would then enter a back to back agreement to on-sell the land at a higher price to a related third party.  The on-sale would be supported by an unrealistic valuation obtained from a compliant valuer.  The appellant would then borrow from a lending institution to settle the purchase.  The effect of the scheme was to induce a lending institution to lend more money than it would otherwise have been prepared to advance.

[4]       The second type of fraudulent activity was described as “equity fraud”.  The appellant would identify property owners in financial difficulty and in danger of losing their homes.  The owners would be induced to transfer their assets to a trust.  The trustees would then seek a loan from a financial institution but at a greater amount than that required to settle the obligations under the mortgage.  The home owner was referred to a compliant solicitor who would arrange for the owners to sign authorities in favour of the solicitor for disbursement of funds at the solicitor’s direction.  A variation of the scheme involved the preparation of a fictitious sale and purchase agreement.  Money would then be drawn down from the financier and paid to the solicitor.  After paying the debt the surplus funds were disbursed to the appellant and his associates rather than the home owners.  In reality the owner became no more than a tenant in their own home, their equity in the property having been extinguished by the transaction.  Within a short period of time the banks and lending institutions took steps to realise the land and evict the people from their homes. 

[5]       The final method can be described as “equity fraud through security realisation”.  This method took advantage of the provisions of the Property Law Act 1952 that clear secured indebtedness behind the first mortgage.  The appellant again identified properties at risk of mortgagee sale. He then bought the mortgage for a price that equated to the monies owing under it.  The appellant had no ability to pay the purchase price for the mortgage so again a back to back agreement was made to on-sell the property to a related party.  The money from that sale would be used to complete the initial purchase.  As a result the appellant and his associates effectively obtained the property for the price paid to the mortgagee.

[6]       The 17 charges relate to six particular transactions referred to as the Wall Street, Heta, Stevenson, Thomas, Campbell (Waihi beach) and Gore farm transactions.  In a number of the transactions the appellant did not actually receive any money as they were not completed. 

[7]       The appellant did not receive any money under the Wall Street transaction, although Westpac Banking Corporation Limited (Westpac) appears to have suffered a loss through a shortfall on the monies it advanced.  Mr Stevenson was defrauded of $50,000 which was deposited into the bank account of the appellant and his partner, Ms Fleming.  In the cases of Heta and Thomas, the individuals concerned lost substantial sums of money through a series of transactions.  The Stevenson transaction is notable in that it involved two forgery charges, which the Judge took as the lead charges for sentencing purposes.  Although the Campbell (Waihi beach) and Gore farm transactions were not completed they involved a substantial fraud.  Under the Campbell (Waihi beach) transaction the appellant and his associates sought to gain $120,000.  Under the Gore farm transaction the sum involved was $2,000,000.  Ultimately those transactions were not able to proceed because of an inability to raise finance despite the efforts of the appellant and his co-accused. 

Judge’s decision

[8]       The Judge took as a start point eight years, gave a credit for the early guilty plea of one third to arrive at the sentence of five years three months.  In fixing the sentence at five years three months the Judge considered the position of the co-accused, Mr Orchard, who had been dealt with by the Court already.  The Judge also considered that the only mitigating factor was the early guilty pleas.  Heath J considered that a minimum non-parole period was required to address the sentencing goals identified in R v Brown [2002] 3 NZLR 670 (CA).

Appellant’s submissions

[9]       In support of the appeal Mr Temm advanced his submissions under four heads:

(a)The Judge erred by failing to take into account the sum of $155,000 paid by Ms Fleming to the Thomases as reparation made on behalf of the appellant;

(b)       The starting point taken by the Judge was manifestly excessive;

(c)The end sentence was manifestly excessive when compared with the sentence of co-offenders (parity); and

(d)The Judge was wrong in principle to impose a minimum non-parole period.

Crown submissions

[10]     The Crown submitted that there was nothing before the Court to evidence that the settlement sum paid by Ms Fleming in the related civil proceedings brought by Mr and Mrs Thomas was  payment of reparation on behalf of the appellant. 

[11]     The Crown submitted that the starting point of eight years was well within the Judge’s discretion having regard to the aggravating features of the appellant’s offending. 

[12]     In relation to parity, the Crown submitted that the Judge directed himself to the issue of parity and that the differences between the sentences imposed on the co-accused Mr Orchard (who was sentenced before the appellant) and Mr McKelvy (who was sentenced after the appellant) were consistent with their respective roles in the operation. 

[13]     Finally, Ms Jelas submitted that there was jurisdiction for the Judge to impose a minimum non-parole period on two of the offences.  She suggested that the real issue was whether the length of the period should have been towards the upper end available under s 86 as it was.  She accepted it was arguable the minimum period imposed was stern. 

Discussion

(i)       Reparation

[14]     By s 9(2)(f) of the Sentencing Act 2002 the Court is directed to take account of any remorse shown by the offender or “anything as described in s 10”.  Section 10 reads:

10     Court must take into account offer, agreement, response, or measure to make amends

(1)       In sentencing or otherwise dealing with an offender the court must take into account—

(a)       any offer of amends, whether financial or by means of the performance of any work or service, made by or on behalf of the offender to the victim:

(b)      any agreement between the offender and the victim as to how the offender may remedy the wrong, loss, or damage caused by the offender or ensure that the offending will not continue or recur:

(c)the response of the offender or the offender's family, whanau, or family group to the offending:

(d)      any measures taken or proposed to be taken by the offender or the family, whanau, or family group of the offender to—

(i)make compensation to any victim of the offending or family, whanau, or family group of the victim; or

(ii)apologise to any victim of the offending or family, whanau, or family group of the victim; or

(iii)     otherwise make good the harm that has occurred:

(e)       any remedial action taken or proposed to be taken by the offender in relation to the circumstances of the offending.

[15]     In the present case the issue arises because Mr and Mrs Thomas took civil proceedings against, among others, Ms Fleming, the appellant and the solicitor involved in the transaction.  At material times Ms Fleming owned a commercial building in Wanganui.  The property was held in her sole name.  Ms Fleming sold the building.  During the course of the civil proceedings the Thomases injuncted the proceeds of sale of $173,684.

[16]     The civil proceedings were settled at a settlement conference. Ms Fleming agreed to contribute $155,000 towards the overall settlement of $270,000.  Mr Dixon, the solicitor acting for Ms Fleming, has deposed that although the appellant took no active part in the settlement negotiations, he, Mr Dixon, considered it was necessary for the appellant to waive any claim he may have had to a portion of the injuncted funds pursuant to the Property (Relationships) Act 1976 to enable Ms Fleming to apply the funds to the settlement.

[17]     In dealing with the issue the Judge said:

[208]    I have real doubts about whether it is appropriate to have regard to the moneys paid from the sale of the Wanganui property to the Thomases as some form of compensation on your behalf rather than on behalf of others, particularly when you declined to sign the settlement deed with the Thomases.  In those circumstances I have simply decided not to make any adjustment to the sentence of imprisonment I intend to impose but to avoid the need for reparation to be ordered.

[18]     Section 10 talks of making amends or compensation for the harm caused by the offending.  It does not expressly refer to reparation, which is provided for by s 12 and Part 2 of the Sentencing Act.

[19]     Mr Temm submitted that the reason the appellant did not participate in the settlement was that he faced these criminal charges.  He submitted that the waiver of any claim under the Property (Relationships) Act 1976 against the funds brought the appellant within the provisions of s 10.  The difficulty for the appellant is that neither the Judge nor this Court has been presented with sufficient evidence to sustain that submission.  We have no evidence of the value of the parties’ relationship property generally or the quantum of the appellant’s claim under the Act.  The payment was made by Ms Fleming (under some pressure) to settle the claim brought against her.  She did not make the payment on behalf of the appellant.  Ms Fleming had her own, independent, obligation to the Thomases.  In the absence of evidence of the material value of the appellant’s waiver under the Property (Relationships) Act 1976, like the Judge we are left in the position that, in the circumstances of this case, the submission that the appellant’s waiver satisfies the requirements of s 10 lacks any substantial basis. 

[20]     The appellant has, in any event, had some indirect benefit at least from the payment by Ms Fleming.  Heath J was required to consider reparation under Part 2 of the Sentencing Act:  s 12.  The Judge dealt with the issue by concluding that, given the payment made by Ms Fleming to the Thomases, he would not make an order for reparation (in addition to the sentence of imprisonment) against the appellant.  So importantly, the Judge was aware of the payment that had been made to the victim of the offending.  On the information before the Court, we are unable to accept that the Judge erred by failing to give some further and additional credit to the appellant for the payment. 

(ii)      Starting point

[21]     Mr Temm criticised the way the Judge structured the sentence by taking the forgery charges as the lead charges rather than by taking the fraud charges as lead charges.  The forgery charges carried a maximum penalty of 10 years’ imprisonment.  The fraud charges carried a maximum of seven years’ imprisonment.  Mr Temm submitted that by taking the two forgery charges as the lead charges when the appellant’s conduct was essentially fraudulent, the Judge enabled himself to take an artificially high start point.

[22]     The submission is unsustainable.  The Judge’s approach to effective sentencing by taking the more serious charges as the lead charges is conventional.  The respective maximum sentences are available for each of the offences and Heath J’s approach avoided a consideration of cumulative sentences.

[23]     There are no tariff decisions for this type of offending because the appropriate sentence will depend on the circumstances and culpability of the particular offender:  R v Varjan CA97/03 26 June 2003.  In this case there are a number of aggravating features of the appellant’s offending which support the starting point of eight years.  They are the matters identified by Heath J:

(a)       the offending was sophisticated, systematic and organised;

(b)individual victims were targeted for gain through the pretence of helping them;

(c)       the related point, namely the vulnerability of the victims;

(d)the offending was sustained.  Indeed some of the offending occurred whilst the appellant was on bail for an earlier offence of using a document with intent to defraud;

(e)       there was no realistic prospect of payment; and

(f)       the appellant was motivated by greed.

[24]     The starting point of eight years was available to the Judge in the circumstances of the offending by this appellant and properly reflected the totality of the offending in accordance with the principles set out at s 85 of the Sentencing Act. 

(iii)     Parity

[25]     The next and related point is that of parity.  Mr Temm submitted the sentence must be contrasted with that imposed on the two principal offenders, Mr McKelvy and Mr Orchard.  The starting point taken for Mr McKelvy was 12 years and for Mr Orchard nine years.  Mr Temm submitted that Mr McKelvy was a substantially worse offender than the appellant.  He noted Mr McKelvy was described as a “recidivist fraudster” by the sentencing Judge and that Mr McKelvy was sentenced on substantially more transactions. 

[26]     Mr Temm also submitted that Mr Orchard was described as a “serious recidivist offender” and again was involved in more transactions.

[27]     The Judge referred to Mr Orchard’s sentence and also was aware of the involvement of Mr McKelvy.  He referred to Mr McKelvy’s role in the course of his sentencing notes. 

[28]     It is also important to note, as was submitted by Ms Jelas, that Mr Orchard was sentenced for two separate sets of offending arising out of two separate police operations.  Mr Orchard was initially sentenced by Judge MacLean on 24 February 2003 in relation to the first set of offending which prompted the investigation that led to the detection of the appellant’s offending.  Judge MacLean adopted a start point of nine years’ imprisonment for Orchard.  On appeal (R v Orchard CA123/03 24 October 2003) the credit for the guilty pleas was increased but this Court upheld the starting point of nine years.  Later, on 10 December 2004 Mr Orchard appeared before Judge Spear for sentence in respect of offences identified as part of the same operation for which the appellant was sentenced.  Judge Spear considered that a starting point of 11 years would have been adopted for all the offending that Mr Orchard was involved with but given his early pleas of guilty and significant co-operation a final sentence of eight years three months’ imprisonment was appropriate.  He imposed a cumulative sentence of one year six months on the sentence confirmed by the Court of Appeal. 

[29]     In short, accepting for present purposes that Messrs McKelvy and Orchard played a larger role than the appellant, we are unable to accept the appellant’s submission that there are any parity issues arising out of the way this appellant has been dealt with in relation to them.  The Judge adopted a lower starting point for the appellant than was the case of Mr Orchard or, subsequently, Mr McKelvy.

[30]     We also note that the Judge accepted the Crown’s submission that the appellant was a central figure in the frauds committed.

(iv)      Minimum non-parole period

[31]     Mr Temm submitted that of the 17 counts upon which the appellant appeared for sentence, 10 were committed prior to 1 July 2002.  There was only jurisdiction to consider imposing the minimum period of imprisonment in relation to seven counts.  Those seven counts related to the two transactions known as Campbell (Waihi Beach) and Gore farm.  Mr Temm emphasised that neither of those transactions proceeded to conclusion so the appellant did not receive any personal financial benefit from them.

[32]     We agree that the Judge was only entitled to impose the minimum non-parole period in relation to those seven counts.  Given the timing of the offending s 86(2) (prior to the amendment on 7 July 2004) applies.  The test for the application of minimum non-parole period was set out by this Court in Brown at [35]:

… the Judge must consider whether the offending itself is sufficiently serious so that for the offender to serve only the ordinary minimum period of one–third of the length of the sentence would not be enough to punish, deter and denounce the offending. If that is so the Judge may fix a minimum non-parole period at a level (not more than two–thirds of the nominal length of the sentence or ten years) which does sufficiently punish, deter and denounce the offending.

[33]     The fact that the appellant did not receive anything from the Campbell (Waihi Beach) and Gore transactions is only one of the factors to consider.  The circumstances of the offending are also relevant.  Both of those offences were particularly complicated commercial fraud.  They were not, as Mr Temm submitted, beyond the intellect of the appellant to implement.  The only reason they did not proceed is that despite the best endeavours of the appellant and his associates, the banks and other financial institutions were not ultimately prepared to advance the money necessary to feed the chain of transactions put in place by the appellant and his co-accused.

[34]     As this Court observed in the appeal decision in relation to Mr Orchard’s first set of offending at [20]:

In R v Brown the Court emphasised that the focus is on the circumstances of the offence.  We consider that that term is sufficiently broad to encompass factors surrounding the commission of the offence, such as the fact that the offending forms part of a pattern of criminal behaviour.  Looked at in that way, there is no doubt that the circumstances of the post 1 July 2002 offending take it out of the ordinary range of offending of the particular kind.  We consider that in all the circumstances a minimum period of imprisonment of two-thirds of the sentence of six years nine months is appropriate.  That amounts to four years six months.

[35]     We are equally satisfied that the circumstances of the appellant’s offending in this case justified the imposition of a non-parole period. 

[36]     The minimum non-parole period of three years three months equates to approximately 62 percent of the total end sentence.

[37]     The minimum non-parole period imposed on Mr McKelvy was 62½ percent.  The minimum non-parole period imposed by this Court on Mr Orchard was the full two thirds.  When Mr Orchard was subsequently sentenced in relation to the offending for this operation there was no jurisdiction to impose an additional minimum non-parole period as the relevant offending pre-dated 1 July 2002. 

[38]     Having regard to the particular offending in this case and the minimum non-parole periods imposed on Messrs McKelvy and Orchard, we consider that although the period fixed by the Judge was stern as accepted by the Crown, it was available to him.

Result

[39]     The appeal is dismissed.

Solicitors:           
Crown Law Office, Wellington