R v Turnock - [2016] NZHC 1364

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI-2013-004-010074 [2016] NZHC 1364

THE QUEEN

v

MARK ANDREW TURNOCK

Hearing: 22 June 2016

Appearances:

K Chang for the Crown
S Lance for the Defendant

Sentence:

22 June 2016

JUDGMENT OF HINTON J

Counsel/Solicitors:
K Chang, Meredith Connell, Auckland
S Lance, Barrister, Auckland

R v TURNOCK [2016] NZHC 1364 [22 June 2016]

Introduction

[1] Mr Turnock, you appear for sentencing after pleading guilty to one charge under s 41(1)(a) of the Financial Reporting Act 1993, of knowingly making a false or misleading statement in a document required by that Act.

[2] The charge is a consolidation of two original charges relating to making false statements in the 2008 and 2009 financial statements of SPG Investment Company No. 1 Ltd (SPGI).

[3] This carries a maximum penalty of five years’ imprisonment or a $200,000

fine.

Facts

[4] You were one of two directors of SPGI, which was set up to hold investments, including property developments.

[5] The other director was Mr Andrew Robinson.

[6] The company sought and attracted 20 shareholders, who paid $1.122 million for their shares. They held their shares pursuant to a Deed of Participation dated
31 July 2007.

[7] Clause 8.7 of the Deed prohibited SPGI from entering into related party transactions except as expressly provided in the Deed, or by extraordinary resolution. There were no extraordinary resolutions in 2008 or 2009, and the Deed did not otherwise provide for related party transactions.

[8] Financial statements were prepared for 2008 and 2009, and each stated that there were no related party transactions during the year under review. These were both signed by you and Mr Robinson as directors, and distributed to shareholders to assist them with their continued investment.

[9] These statements were false. The 2008 financial statements recorded a transaction called “Pahia Road” under the heading “Investments and Non-current Assets”, of $256,761. In the 2009 financial statements, the transaction recorded as “Pahia Road/Titirangi Developments” was included under “Investments and Non-current Assets” in the amount of $611,761. This represented more than
50 per cent of the investors’ funds in SPGI.

[10] The investment described as “Pahia Road” (in 2008) and “Pahia Road/Titirangi Developments” (in 2009) was in fact a loan (or similar) to a company called Heka Development Ltd, of which you were the sole director and
50 per cent shareholder.

[11] None of the proceeds of the loans to Heka have been recovered. Heka is now in liquidation and there is no surplus available after the sale of the property. The liquidator’s report indicates that there will be no further money available for SPGI investors.

[12] In a sworn affidavit, you said you had signed the accounts in error as you “simply did not read the material thoroughly enough before signing”. By my decision of 2 June 2016, following a disputed facts hearing, I rejected that position, holding that you were aware the related party statements were present in the 2008 and 2009 financial statements.

Pre-sentence reports

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading R v Turnock

Details

AGLC: R v Turnock [2016] NZHC 1364
Case: [2016] NZHC 1364
Decision Date: 22 June 2016

CaseChat Overview and Summary

In the case of R v Turnock, Mark Andrew Turnock was sentenced by Hinton J after pleading guilty to knowingly making a false or misleading statement in a document required by the Financial Reporting Act 1993. The charge was a consolidation of two original charges related to making false statements in the 2008 and 2009 financial statements of SPG Investment Company No. 1 Ltd (SPGI), which attracted 20 shareholders who paid a total of $1.122 million for their shares. Turnock was one of two directors of SPGI, which was set up to hold investments, including property developments.

The court had to decide on the appropriate sentence considering the relevant purposes of sentencing, including holding Turnock accountable for the harm caused, promoting responsibility, denouncing and deterring the conduct, and assisting in his rehabilitation and reintegration. The court also had to consider the gravity of the offending, the seriousness of the type of offence, consistency with appropriate sentencing levels and similar offenders, and the need to impose the least restrictive outcome appropriate in the circumstances.

After considering the pre-sentence reports, victim impact statements, and submissions from both the Crown and Turnock's counsel, the court determined a starting point of 12 months' imprisonment, adjusted to 11 months' imprisonment, taking into account mitigating factors such as Turnock's guilty plea. The court concluded that a sentence of imprisonment was not necessary in this case, and instead sentenced Turnock to four months' home detention and 200 hours of community work, to be served concurrently.

The final orders were that Turnock was sentenced to four months' home detention and 200 hours of community work, to be served concurrently, with home detention based on the conditions set out in the pre-sentence report, excluding any alcohol and drug-related conditions.

Orders