R v Wiliams
[2021] NZHC 3301
•3 December 2021
ORDER PROHIBITING PUBLICATION OF NAMES OR IDENTIFYING PARTICULARS OF THE CLIENTS OF RURAL LIVESTOCK LIMITED. IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE
CRI-2019-012-1900
[2021] NZHC 3301
THE QUEEN v
JOHN FRANCIS WILLIAMS
Hearing: 3 December 2021 Appearances:
R P Bates for the Crown S J Shamy for Defendant
Judgment:
3 December 2021
JUDGMENT OF GENDALL J
Introduction
[1] Mr Williams, you appear for sentence today on four charges to which you have pleaded guilty, following a sentence indication I gave you on the 12th of October 2021.
[2]These charges are:
(a)first, a representative charge of obtaining by deception;1
1 Crimes Act 1961, s 240(1)(a) and (2)(a).
R v WILLIAMS [2021] NZHC 3301 [3 December 2021]
(b)secondly, a charge of causing loss by deception;2
(c)thirdly, a representative charge of false accounting with intent to deceive;3 and
(d)fourthly, representative charge of false accounting with intent to obtain a pecuniary advantage.4
[3] It is necessary here to repeat some aspects of my sentence indication received by you on the 12th of October given the public nature of this sentencing today, but I have also considered updated submissions provided by the Crown and also by your counsel, Mr Shamy. In addition, I have considered reports provided to this Court.
Factual Circumstances of the offending
[4]I need to turn briefly to the factual circumstances of your offending.
[5] Between 2008 and 2016, Mr Williams, you worked as a contracted stock agent for Rural Livestock Limited, who I will refer to in these sentencing remarks as RLL. RLL is the largest privately owned stock and station company in the South Island.
[6] The charges arise from concerns raised by RLL and a subsequent Serious Fraud Office investigation.
[7] Mr Williams, your job involved facilitating transactions for clients looking to buy, sell, lease or graze livestock and to arrange these transactions with farmers. You would then submit a sale note to the RLL office where other employees would generate an invoice and credit note to the relevant parties. Where a party was a client of RLL their account would be credited or debited. You, Mr Williams, also had your own clearing account with RLL, through which you arranged personally a whole range of transactions too.
2 Section 240(1)(d) and (2)(a).
3 Section 260(a).
4 Section 260(a).
[8] In mid-2015 RLL launched an investigation after it received numerous disputes over invoices in transactions facilitated by you. It found you had submitted false sales notes, and at times recorded yourself or your associated company as the vendor of cattle, which you did not purchase, leaving the true owners of the cattle out of pocket. In some cases, the recorded vendors did not own the livestock, or the recorded purchasers did not receive livestock fort which they were invoiced.
[9] The offending began in May 2014. In one such event early on, you facilitated fictitious leases, sales and other transactions, initially relating to nearly 300 cattle between farms and farmers in the lower South Island.
[10] To illustrate the complexity of that initial offending incident, to provide an example too of what was to follow, I will endeavour to outline as best I can details of that particular fraudulent transactions. As I understand it, it went something like this. In May 2014 you facilitated the purchase of about 300 cows for a farmer I will call Mr Smith through your RLL clearing account. For privacy reasons, I will use fictitious names in this example.
[11] On the 1st of June 2014, Mr Thomas agreed to lease 112 of those cows to Jones Ltd (again, a fictitious company name) and you, Mr Williams, arranged the transaction, provided the lease agreement and informed Mr Smith that Jones Ltd wanted to purchase the cows upon expiry of the one year lease. However, Jones Ltd had no knowledge of the lease agreement and did not lease the cows.
[12] Upon expiry of this suggested lease in August 2015, Mr Smith asked you to sell the 112 cows he believed were leased to Jones Ltd.
[13] To conceal the fact Jones Ltd had no knowledge of the cows or the lease agreement, you told Mr Thomas that Jones Ltd would purchase the cows and split them across two farms. This, you explained to Mr Thomas, would mean he would receive a credit note for the sale of 224 cows for $1,100 per head, rather than 112 cows for $2,200. You did this, it seems, because you had another buyer, Brown Ltd, wishing to purchase 224 cows. You then submitted a sale note to RLL purporting to show the sale of the 224 cows from Mr Smith to Brown Ltd.
[14] Based on the sale note, RLL generated an invoice for $283,000 to Brown Ltd which was promptly paid in August 2015. You told Brown Ltd that the cows they had agreed to purchase were immediately leased to another farmer and would then be purchased by that farmer upon expiry of this lease in 2016. In May 2016, a principal of Brown Ltd, however, emailed the general manager of RLL advising him they had not received a contract for the on-sale of the 224 cows.
[15] A month later you emailed that principal of Brown Ltd with two different versions of the sale agreement, with the purchaser’s name left blank. In July 2016, you submitted a false sale note to RLL showing the sale of 224 cows from Brown Ltd to your own clearing account. Based on this information RLL paid Brown Ltd almost
$438,000 for the cows on your assurance that you had a purchaser for the 224 cows who had signed an agreement to purchase.
[16] However, there was no purchaser. RLL were left over $450,000 worth of irrecoverable debt in your clearing account, which it ultimately wrote off.
[17] Further offending by you occurred in October and December 2015, and throughout 2016. During these periods, you submitted false sale notes and sold and leased stock you did not own to others and to the meat works. You retained the profits in many cases. Many farmers were invoiced for cattle they did not receive, RLL ultimately were required to absorb these losses too.
[18] Your offending was substantial. In total that offending, from May 2014 to July 2016, caused an identified loss of approximately $1,341,401 to RLL.5 The company says, however, that the true losses to it and its staff are significantly more, both in financial and in personal terms.
5 My earlier sentence indication was based on the total loss suffered by RLL calculated by the Crown on that date of $830,000. The Crown have now revised that figure to $1,341,401 as the credits Mr Williams obtained from the offending transactions did not reduce the loss, but they merely displaced it onto transactions unrelated to the prosecution. Disputed commissions and holiday pay similarly do not reduce RLL’s loss. The Crown do not argue this should displace the starting point or appropriate discounts from the sentence indication.
Victim impact statement
[19] Mr Sutton, a director of RLL, has provided a victim impact statement which I have read carefully. I thank him for that. It provides a detailed and thorough explanation of the devastating impact of your offending on the company, its staff, and farmer clients, and a wider range of people. Mr Sutton records that from 2015 RLL has been in a permanent state of anxiety and constraint because of the number, the complexity and the extent of the frauds perpetrated by you, Mr Williams.
[20] The effect of your offending on other staff members at RLL too has been significant. Initially you successfully hid your offending by passing it off to other staff as genuine errors. Those staff members, it is said, were left feeling demeaned or tarnished and their confidence was undermined when the truth and scale of your offending was revealed. For months after your offending was discovered staff were abused by some customers who believed you were being mistreated by the company’s refusal to allow you to continue trading. RLL was inundated with queries from clients about irregular transactions which caused severe stress for employees.
[21] The financial effect of your offending was similarly significant. Due to the extent of your fraud RLL was placed under extreme financial pressure over a prolonged period, and Mr Sutton confirms it suffered significant reputational damage. Once your offending was discovered, he said too, that initially you continuedWere it not for the support of its shareholders Mr Sutton confirms that RLL would have been placed into liquidation. Once your offending was discovered initially, you continued to obfuscate and, Mr Williams, you failed to provide RLL, he says, with the information necessary to reconcile your fraudulent transactions, compounding the stress for the company. RLL estimates it will take five years for the company to rebuild to the position it was in before your offending.
Purposes and principles of sentencing
[22] I turn now to the purposes and principles of sentencing contained in ss 7 and 8 of the Sentencing Act 2002. Any sentence I imposed on you, Mr Williams, should hold you accountable for the harm caused by your offending, it should promote a sense of acknowledgement and responsibility for that harm, denounce the offending and
deter you, or any other person, from committing similar offences. Deterrence is an important principle in cases of fraud to ensure offenders understand and reflect upon the consequences of offending. And I refer to the Court of Appeal decision in Ross v R.6
[23] In determining the appropriate sentence, I am also to take into account the outcome of restorative justice processes,7 and any measures you have taken to make compensation, apologise, or otherwise make good the harm that has occurred.8
The appropriate starting point
[24] As will be clear from the facts of the offending I have briefly outlined above, and from Mr Sutton’s victim impact statement, this offending involved significant loss to RLL, and harm to its reputation. Mr Williams, it involved an abuse of the trust placed in you by RLL and its clients, who in many cases were farmers who relied on you. You were involved in 22 fraudulent transaction groups, it seems, between 2014 and 2016. Your offending was clearly premediated and it was extremely complex for RLL, its staff, and the SFO to attempt to unravel.
[25] As previously indicated to you, I have reviewed the relevant cases O’Brien9 Faisandier,10 Proctor,11 Love,12 and Papu13 helpfully provided by your counsel, Mr Shamy, and by counsel for the Crown, Mr Bates. The Crown submits that a starting point of five years’ imprisonment is warranted. Mr Shamy suggests a starting point of between four and four and a half years’ imprisonment is appropriate.
[26] Although the total loss to RLL has been confirmed as significantly larger than that identified earlier when I provided my sentence indication, Mr Bates for the Crown accepts now this factor does not change the appropriate starting point. I accept this
6 Ross v R [2019] NZCA 455 at [61].
7 Sentencing Act 2002, s 8(j).
8 Section 10.
9 R v O’Brien CA39/97, 27 August 1997.
10 R v Faisandier CA 185/500, 27 September 2000
11 Proctor v Police [2016] NZHC 265612 R v Love [2016] NZHC, (2016) 4 NZTR 26-020
13 Serious Fraud Office v Papu [2017] NZDC 21687.
submission in light of the cases and the circumstances of this offending. A starting point of four and a half years’ imprisonment remains appropriate, and I adopt this.
Mitigating factors
Guilty plea
[27] Turning now to mitigating factors before me. The first is your guilty plea. As to this, both Mr Shamy and Mr Bates accepted a discount of 25 per cent for your guilty plea, Mr Williams, was appropriate in this case, and I agree. Although a plea at the stage it was entered could be seen as somewhat late, when considering the complexity and changing nature of some of the allegations you faced, Mr Williams, a 25 per cent discount was appropriate, and I allow it here.
Reparation
[28] I turn now to consider other personal mitigating factors. A first such factor, Mr Williams, is your willingness to pay reparation. This is important to RLL, as your offending understandably has affected their financial position and stability to an extent. You have committed to pay $250,000 reparation immediately and a further
$300,000 over three years. It seems you are taking significant steps to provide this sum, including borrowing money from family members which you will have to pay back over an extended period. This will impose financial strain on you and your family but will, to some extent, decrease the monetary harm to RLL by your offending.
[29] Your commitment and the undertakings you have given to RLL, first to fully cooperate in assisting it to unravel the complex web of transactions involved here, with a view to RLL recovering amounts due to it, and, secondly, to develop a recording system to prevent future offending of the same kind as occurred here, are also important and significant factors in your sentencing, Mr Williams.
Time Spent on bail
[30] I turn next to the issue of time you have spent on bail. A sentencing discount is usually only warranted to account for time spent on bail when the bail conditions were “very restrictive”.14 Your bail conditions here were:
(a)first, to reside at you home address;
(b)secondly, to notify the Serious Fraud Office at least seven days in advance of any overseas travel and to provide a copy of the booked itinerary; and
(c)thirdly, not to discuss proceedings with any witness, in accordance with the witness list.
Those conditions were not unduly restrictive, as I see it. I do not consider any further discount on account of this is warranted here.
Other factors
[31] Turning now to other factors personal to you, Mr Williams. Prior to this offending you had no convictions. Positive references as to your character are before me, and it seems you were held in high regard by some members of the farming community. In the Provision of Advice to the Courts (the PAC report) the report writer assessed you as being at “low risk of reoffending and low risk of inflicting harm on others”. The writer noted too that no offending or rehabilitative needs were identified, that you are currently employed and have helped your current employer transform their business significantly.
[32] Mr Williams, it seems, you also unfortunately suffered a bull inflicted head injury in November 2011, and you reported that this has resulted in certain mental health challenges for you. This occurred prior to the current offending. In my view, however, the evidence before me is insufficient to place significant weight on these factors here but I do consider them in the round.
14 Winkelmann v R [2010] NZCA 215 at [21]; and BB (CA732/12) v R [2013] NZCA 139 at [16].
[33] Looking at all the mitigating factors — all these additional mitigating factors I have noted generally, I consider a further discount of 25 per cent is appropriate here.
Remorse and Restorative Justice
[34] I also take into account, to some degree, what is said to be your remorse, Mr Williams, for your actions. You have provided a letter to RLL and its valued clients apologising for your conduct and acknowledging the difficulties you have caused to the company. This is an important gesture in the context of your offending — offending which involved a major breach of trust and whereas Mr Sutton notes an apology and acknowledgement of wrongdoing was important for RLL, its staff and clients.
[35] You have also engaged with restorative justice. I have before me a report from Restorative Justice Otago which contains a detailed account of the restorative justice conference you attended on 25 November 2021. The conference, it seems, produced mainly positive outcomes. You apologised for your offending and the harm it caused, you agreed to further formalise your reparation payments to RLL, and to take part in mediation if other victims desired, and, importantly, you undertook to proactively assist RLL with further investigations and untangling of the complex transactions that had occurred.
[36] I acknowledge that some of the victims of your offending initially did not accept the apologies you provided and felt that you may not have been genuinely remorseful for your actions. This, in part, it appears was due to your initial refusal to explain the reason for your offending, which you claim was not motivated by monetary gain.
[37] However, towards the end of the restorative justice conference, it seems that upon reflecting on what the victims were telling you, Mr Williams, to your credit you did accept that your offending caused greater harm than you realised and you apologised again, stating you were truly sorry for the emotional suffering caused. This was an important acknowledgement by you. In my view, it goes some way to showing you are genuinely remorseful for the harm you have caused. By the conclusion of the conference, the report writer says two of the three representatives of RLL accepted
your apologies, and the third, Mr Sutton, reserved his judgement, but was happy to continue working with you to resolve the mess your offending has created.
[38] Nothing in the restorative justice report has caused me to revise my opinion, however, on the appropriate discounts available for these factors. As I previously indicated to you, your remorse illustrated by your apology, and the commitment to this and restorative justice warrants a further discount of five per cent, and I adopt this here.
[39] This leads me to an end sentence of 24 months’ imprisonment, which is within the range where I can consider alternative sentencing options.
Appropriate end sentence
[40] Both Mr Shamy and Mr Bates, as you have heard, accept that home detention may be appropriate in this case.
[41] The PAC report writer, however, recommends a sentence of community detention with community work, followed by a period of supervision as a punitive sentence. This would, the writer says, allow you to continue to undertake obligations involved in your current employment, such as travel between towns, as well as being involved with your children’s upbringing and providing support to your partner. No rehabilitative needs, however, are identified, as I have already mentioned.
[42] In updated submissions provided to me for this sentencing, Mr Shamy, your counsel, Mr Williams, also suggests that a combination of community detention and community work, together with the promised reparation might fulfil the deterrent aspects of sentencing here, as well as rehabilitation considerations. In his written submission, he endeavoured to argue too there are flow on effects to a community detention sentence as it would allow you to fully continue your current employment arrangements and to attend meetings with RLL staff and victims, to assist their efforts to recover loss from other parties.
[43] In response, Mr Bates for the Crown, in updated submissions for this sentencing, rejects the community detention suggestion and says it is simply not
appropriate here. He contends it does not reflect the scale of the offending and is significantly out of step with the cases referred to by the Crown and, indeed, by your counsel. On this, I agree.
[44] I consider here that home detention is an appropriate sentence for you and that a sentence of 12 months’ home detention is effectively the equivalent of a sentence of 24 months’ imprisonment. There is evidence before me that with home detention, although there is a possibility that you may not be able to undertake some of the obligations of your employment, you will continue to be employed, as approved by your probation officer, under s 80C(3)(c)(ii) of the Sentencing Act 2002, while serving that home detention sentence. This will allow you to continue to pay reparation and to take the positive steps you have agreed to undertake to help RLL untangle the web of your fraudulent transactions. This is also consistent with the wishes of the participants in the restorative justice meeting who generally voiced a hope that you would receive a non-custodial sentence so you could continue to work for your family and to pay the promised reparations.
[45] Offending which involves fraud should be met with a sentence that contains a degree of deterrence. Your offending, Mr Williams, was serious and caused losses of well over a million dollars and significant harm to a range of people who trusted you. With this in mind, I consider the PAC report writer’s suggestion, endorsed only in his written submissions by Mr Shamy — that suggestion being one of community detention, community work and supervision — does not appropriately respond to your offending. A sentence of home detention, as I note, will again allow you to continue in your employment. Also, it will not prevent you from attending meetings to assist RLL and victims in recovering losses, as I see it, either with your probation officer’s approval, in terms of s 80C(3)(c) of the Sentencing Act, or with these meetings being arranged on Zoom or another such platform.
[46] And in considering home detention here, your partner has agreed that you can serve a sentence of home detention at your family home. That address has been approved by the Department of Corrections.
Result
[47]Mr Williams, would you stand now please.
[48] I come now to the result. Mr Williams, you are sentenced to 12 months’ electronically monitored home detention to be served at your family home, at the address specified in the PAC report.
[49] You are to reside at that address for the duration of your home detention sentence.
[50] You are to travel directly to the home detention address immediately following this sentencing and there to await the arrival of a probation officer and/or such other security officers and/or the electronic monitoring company representative for completion of the necessary electronic monitoring arrangements.
[51] You are otherwise to serve this sentence of home detention under all the standard conditions that apply under s 80C of the Sentencing Act 2002.
[52] I turn now to the issue of reparation. First, I make an order now for reparation of $250,000 to be paid by you, Mr Williams, to RLL within five working days of today
— that is, being by 5.00 pm on Friday 10 December 2021. I think that might be 11 December. I’m sorry, Friday the 11th of December 2021 at 5 pm.
[53] And secondly, I make an order for further reparation of $300,000 to be paid by you, Mr Williams, to RLL at a rate of $100,000 per year over the next three years. I understand a formal agreement to that effect, with a personal guarantee of payment from a family member, has been drawn up by your solicitor and has been, or is to be, executed.
[54] Finally, Mr Williams, I need to say this. With your actions you have brought great shame on yourself, and sadly this has inevitably reflected on your family, on those associated with you, and not least of all on RLL and the many people involved with that company, all of whom placed great trust in you. The sentence of home
detention I am imposing today provides an opportunity for you, as I see it, to reflect and to make some amends for what you have done.
[55]That concludes my sentencing, Mr Williams, please stand down.
ADDENDUM
[56] I make an order prohibiting publication of names or identifying particulars of clients of Rural Livestock Limited.
[57]The media’s application to use a still photograph is permitted.
Solicitors:
Crown Solicitor, Dunedin
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