R v Swann HC DN CRI 2009 412 26

[2010] NZHC 24

IN THE HIGH COURT OF NEW ZEALAND

DUNEDIN REGISTRY

CRI  2009 412 26

REGINA

v

MICHAEL ANDREW SWANN

Hearing:         11 February 2010

Appearances:  R P Bates and A Killeen for Crown

H T Young for Prisoner

Judgment:      11 February 2010

REMARKS ON SENTENCE OF CHISHOLM J

[1]       Andrew Michael Swann,  you have pleaded  guilty  to  breaching  s4  of  the

Secret Commissions Act 1910.  The maximum penalty, as you are probably aware, is two years imprisonment or a fine of up to $1,000.

[2]      Between  6  January  2000  and  11  September  2006,  during  which  time  you were  employed  in  a  senior  position  with  the  Otago  District  Health Board, you received from Robin Sew Hoy a total of $755,153.89 in  relation  to  help  desk services provided by Mr Sew Hoy.  There were 85 payments.  In substance, for every hour  that  was  being  charged  to  the  Board  by  Mr  Sew  Hoy  at  $95  per  hour,  you received $25 per hour.

R V SWANN HC DUN CRI  2009 412 26  11 February 2010

[3]      On 19 November 2009 Mr Sew Hoy was sentenced by Fogarty J on a similar charge.   The Judge started at 18 months imprisonment, allowed a 10% discount for mitigating factors, including a guilty plea, and in the end result imposed a sentence of 10 months home detention.

[4]      You are 48  years of age, married  with four  children.   Your family are still supportive  of  you.   Currently  you  are  serving  a  sentence  of  nine  and  a  half  years imprisonment  for  another  fraud  against  the  Board  involving  $16.9  million. That offending occurred over roughly the same period as the offending for which you are to be sentenced today.

[5]      At sentencing on 11 March 2009 Stevens J observed that the other offending involved significant planning and premeditation, breaches of trust and abuse of your position.   He started at 10 and a half years imprisonment and allowed a discount of one year to reflect your (as he described it) relatively clear record, your remorse and attempts to reach agreement in relation to reparation.

[6]      For present purposes I approach the matter on the basis that the only relevant offending is the offending against the Health Board.  As Stevens J accepted, the only previous offending involving dishonesty was at the lowest end of the scale.

[7]      The impact on the Board has been huge.   You held a position of power and influence and the damage that has resulted from your offending has been extensive and is ongoing.   The reparation report from the  Board’s chief executive notes that while a financial settlement was reached with Mr Sew Hoy, no offer has been made, or is expected, from you.

[8]           As far as the aggravating factors are concerned, I list them as these:  first, at the  time  of  this  offending  with  Mr  Sew  Hoy  you  were  also  offending  against  the Board  with  another  person  (Mr  Hartford); secondly,  a  large  sum  of  money  was involved in this offending;   thirdly, it was over a lengthy period;   and, fourthly, it reflected an  abuse of the position of trust that  you held as a  senior  employee of  a public body.  On the mitigating side, there is your guilty plea, previous clean record, and remorse.

[9]      The issues between the Crown and your counsel come down to four matters: first,  the  starting  point;  secondly,  the  discount;  thirdly,  whether  any  sentence  I impose   should   be   concurrent   or   cumulative,   at   least   in   part; and,   fourthly, reparation.

[10]     As far  as the starting point is concerned, Mr Swan, the Crown  advocates  a starting point of two years. For you Mr Young said it should be 18 months which is the  starting point adopted for Mr Sew Hoy. To my mind there is a distinction between your offending and Mr Sew Hoy’s offending. As I have already mentioned, your  offending  involved a gross breach of  trust  while  you  were holding a senior position with a public body. In R v Chapman (1997) 14 CRNZ 664 (CA), which involved the sentencing of a former managing director of ACC, the Court of Appeal noted that a breach of trust and abuse of important public office called for “serious censure”. To my mind the serious censure required in your case requires a marked distinction in your starting point compared with that adopted in Mr Sew Hoy’s case. I accept the Crown’s submission that the starting point should be two years.

[11]     As far as the discount is concerned, the Crown now rightly concedes that you are entitled to a discount for your guilty plea. In R v Hessell [2007] NZCA 450 the Court of Appeal has recently adopted a sliding scale of three benchmarks in relation

to a guilty plea.  One benchmark indicates a discount of 10% for a plea three weeks before  trial. Although there had been a long  delay between  depositions  and  your indication that you were going to plead guilty in November last year, the important point  to  my  mind  is  that  the  trial  was  still  some  months  off. So  Mr  Young  has satisfied  me  that  you  qualify for  a  10%  discount. He  has  also  persuaded  me  that there should be some recognition of  your previous clear record (except, of course, for the offending that was taking place at the same time as this offending).

[12]     Taking those factors into account I reduce the starting point from 24 months

to 20 months.

[13]     The next issue is whether that 20 months should be concurrent with (in other words, alongside) the sentence of nine and a half years or  cumulative  (in  other words,  added  to  that  sentence  in  whole  or in part). As both counsel  have

acknowledged,  this  is  one  of  the  most  difficult  parts  of  the  sentencing  exercise. Section 84  of  the  Sentencing  Act  2002  indicates  that  cumulative  sentences  are generally appropriate if the offending is of a different kind.  The Crown says that this offending, compared with the offending for which you have been already sentenced, is of a different kind.  Mr Young takes the converse view.  It is debateable.  Both sets of offending were over roughly the same period.   The victim in each case was the Board. The  underlying  offending  was  similar,  except  that  with  the  previous offending you were associated with Mr Hartford whereas this offending involved Mr Sew Hoy.

[14]     As  you  might  have  heard  me  discussing  with  counsel,  this  question  of whether there should be concurrent or cumulative sentences has cropped up in Secret Commissions sentencings previously.   In Serious Fraud Office v Ellis & Van Dam HC AK 21 July 2006 CRI 2005-404-015827 Courtney J decided that the sentencing should be concurrent.   There are differences between that case and this.   A similar approach  was taken in  R v Taylor HC AK CRI 2006-092-001488 6 July 2007 but that is even more distant.

[15]     Whatever the correct interpretation in terms of the Sentencing Act, Mr Young has rightly said that at the end of the day I need to step back and ask whether the totality principle  would  be  offended  if I added  to  the  sentence  of nine  and  a half years imprisonment. His argument was that, compared with the $16.9 million, the $700,000 odd involved in this sentencing is not significant.   He wasn’t, of course, seeking to minimise this current offending in any way, nor could he.   And he went through other factors indicating an overlapping  between the  two lots of  offending. He  ended  up  by  submitting  that  in  the  end  the  totality  principle  overwhelms  any argument about concurrent and cumulative issues and that if you had been sentenced by  Stevens  J  for  this  offending  as  well  as  your  other  offending  you  would  have probably received the same sentence.

[16]     I have found this a difficult issue.   In the end I have decided the appropriate course is to impose a concurrent sentence.

[17]     That brings me to the final issue of reparation.   Although the Crown sought

$430,153.89, which was effectively the difference between the reparation agreed by Mr Sew Hoy and the total loss, I understand that Mr Bates now accepts that at best it could only be half the loss, namely, $377,576.  The real issue is whether a reparation order should be made at all and in this respect I have heard helpful argument on both sides.  The  difficulty  is  that  at  the  moment  I  do  not  believe  I  have  enough information to sensibly resolve the issue.

[18]     Proceeds  of  Crime  proceedings  and  a  civil  claim  are  in  progress.   Various assets  have  been  recovered. There  are  complications  by  virtue  of  relationship property issues.  While the likelihood is that the claim for reparation will be futile, I am  not  prepared  to  proceed  on  that  basis  at  this  time.   Instead  I  will  adjourn  the matter for six months so that a more accurate picture can be placed before the Court. If it transpires that the prospects of reparation being paid are virtually nil, then in all probability  there  will  be  no  order  for  reparation.   On  the  other  hand,  if  there  are developments or there is further information that indicates that the whole or part of the reparation might be paid over time, then an order for reparation might be made.

[19]     So  the  outcome  of  the  sentencing  is  this:     you  are  to  serve  20  months imprisonment which is concurrent with the sentence you are already serving.

[20]     The issue of reparation is adjourned to 30 June 1010 (nominal date).  Before that date the Crown should file and serve a memorandum indicating the situation at that  time  and  whether  it  intends  to  pursue  the  application.   Within  a  week  of  that memorandum having been served Mr Young should file a memorandum in response. Then  the  matter  will  proceed  either  by way of  telephone  conference  or  a  hearing. The matter is to be referred to me once those memoranda come in.

Solicitors:            Crown Solicitor, Dunedin

H T Young, Dunedin