Reid v The Queen

[2019] NZHC 212

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CRI-2018-404-362

[2019] NZHC 212

BETWEEN

BRUCE HARVEY REID

Appellant

AND

THE QUEEN

Respondent

Hearing:	12 February 2019
Counsel:	M P Hislop and L R Toepfer for Appellant R M A McCoubrey for Crown
Judgment:	20 February 2019

JUDGMENT OF THOMAS J

This judgment was delivered by me on 20 February 2019 at 3.00 pm pursuant to

Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Solicitors:
Crown Solicitor’s Office, Auckland

REID v R [2019] NZHC 212 [20 February 2019]

[1]                  On 9 November 2018, the appellant, Bruce Reid, was sentenced in the Auckland District Court to two years and five months’ imprisonment, having pleaded guilty to the following 15 charges:1

(a)six counts of theft by a person in a special relationship;2

(b)three counts of false accounting;3 and

(c)six counts of criminal breach of trust.4

[2]                  He appeals the sentence on the grounds it was manifestly excessive as insufficient credit was given for reparation and personal circumstances.

Factual background

[3]                  In November 2015, Mr Reid, a lawyer in sole practice, was subject to a limited review as part of the inspection programme by the New Zealand Law Society. That review uncovered some concerning transactions in  relation  to  trusts  handled  by Mr Reid, leading to a more thorough investigation which identified six clients from whom he had misappropriated funds.

[4]                  Mr Reid was the solicitor for the trustees of a trust. In July 2014, trust property was sold and Mr Reid was required to discharge the mortgage over the property. On 15 July 2014, Mr Reid transferred $41,920 from the trust account to his own account without authority to do so. On 21 July 2014, Mr Reid transferred $5,920 back to the trust account and paid the trust the balance in the trust account. The result was that Mr Reid obtained $36,000 from the trust without authorisation. To conceal this misappropriation, Mr Reid issued a statement to the trustees which showed the loan repayment at a higher figure than was in fact paid.

[5]                  Mr Reid was also the solicitor for an estate. The estate provided a life interest to the partner of the deceased in a property in Meadowbank. The partner suffered a

1      R v Reid [2018] NZDC 23970.

2      Crimes Act 1961, s 220; maximum penalty 7 years’ imprisonment.

3      Section 260(a); maximum penalty 10 years’ imprisonment.

4      Section 229; maximum penalty 7 years’ imprisonment.

stroke shortly after the deceased died, forcing him into hospital care. In July 2014, the property was sold for $776,000 and around half of the proceeds ($373,663) was placed into Mr Reid’s trust account for the credit of the estate. Between 28 July 2014 and  20 March 2015,5 the defendant made 12 transfers to his general account totalling

$43,400 without authority to do so. On 16 May 2015, Mr Reid made a further advance of $3,700 to his general account, again without authority.   Between 5 June and      18 August 2015, Mr Reid made another six transfers totalling $20,100 to his general account. On 28 August 2015, Mr Reid paid $3,836 from the estate’s funds to a panelbeater in payment of a personal debt. He entered this amount in the estate’s ledger account as a payment to a beneficiary.

[6]Mr Reid was also the solicitor for a company. In July 2014, he transferred

$5,000 from the trust account of the company to his own business account without authority to do so. He recorded this transfer in the ledger with a false reference. Later that month, he paid $4,491 back into the trust account.

[7]                  As the solicitor for the trustees of a second trust, Mr Reid transferred $3,450 from the trust account to his office account without authority to do so. He returned those funds on 17 July 2014.

[8]                  Mr Reid also misappropriated money from a trust of which he was solicitor and a trustee. The trust was set up to provide for the ex-partner of the settlor and their four children. The ex-partner took over the trusteeship in 2007, but later developed dementia and other health issues. The daughter then took over that position. In early 2010, the principal beneficiary went into care in a private hospital, the cost of which was paid for by the trust. Between December 2010 and November 2012, Mr Reid made 21 advances from the trust account to his office account totalling $95,720 without authority to do so.

[9]                  A fourth trust for which Mr Reid was solicitor was also subject to offending. In November 2012, Mr Reid sold a property, as he was instructed to, on behalf of the trust. On 12 December 2012, Mr Reid was instructed to hold the net sale proceeds in

5      In the agreed summary of facts, the year is stated as 2014. As the property was sold in July 2014, this cannot be correct.

the trust account pending an agreement between the parties. Between February and June 2013, Mr Reid made 14 transfers, totalling $146,025, to his own account without authority from the trust to do so.

[10]              In total, Mr Reid took, without authority, $357,831 from six clients. Only around $7,941 was repaid by Mr Reid during the time he was misappropriating money from his clients.

[11]              Following the discovery of his offending, however, Mr Reid personally paid (with the help of family members or inheritance) $214,645 as reparation (although it appears $55,000 was paid to the beneficiaries of a trust when it should have been paid to the trustees).

[12]              The balance owed to the victims, $139,743, was repaid to them by the Law Society Fidelity Fund.  At the time  of the sentencing, nothing had been repaid by  Mr Reid to the Fidelity Fund.

District Court decision

[13]In sentencing Mr Reid, the District Court Judge acknowledged Mr Reid’s age

(68) and his lack of prior convictions. He referred to the pre-sentence and restorative justice reports, the victim impact statements and extensive submissions on behalf of the Crown and defence. The Judge noted that he needed to hold Mr Reid accountable for the harm he had caused his many victims, take into account the reparation he had made, denounce his conduct and send a message that there are consequences when people in positions of trust behave in this way.6 The Judge said:

[15]      The gravity of the offending and the degree of culpability in your offending are both high as you are a person trained in the law and the ethics of your profession and you well understood what constitutes theft and knowing full well the trust bestowed upon lawyers by their clients. The effect on the victims have to be taken into account.

[16]      There are aggravating features to your offending. The first is the magnitude and sophistication of the offending. There were many transactions across several victims over several years. The extent of the loss is high. The total misappropriation exceeded $350,000 and affected six different victims. There was a chronic abuse of trust in relation to the victims who were entitled

6      R v Reid, above n 1, at [13]–[14].

to rely upon you and they were very vulnerable to your offending because of the reliance they placed upon you. There is a high degree of premeditation in your offending because there were many transactions continued over many years. You got away with it so you continued to offend.

[14]              Mitigating factors, including an early guilty plea and remorse, were recognised by the Judge. Mr Reid’s prior good character was weighed against the length of his offending, minimizing its value. The Judge noted that, while Mr Reid had transferred some of the money back to the victims after he had made use of their money, that was only about $7,500. Against the scale of his offending, this was a relatively minor amount.7

[15]              The Judge referred to the comments in the pre-sentence report as to Mr Reid’s regret, embarrassment and shame, noting his motivation to address his actions was assessed as high to moderate. In terms of Mr Reid’s personal circumstances, the Judge said:

[18] … [I]t is considered that your actions were partially motivated by your circumstances and the loyalty you feel towards your partner, and by the pressure you felt to support him. However your sense of entitlement, the opportunity and faulty thinking have also affected your actions. You acknowledged you were in a position of trust and power and you had abused that position.

[16]              The Judge adopted a starting point of four years and three months’ imprisonment, deducting three months each for personal circumstances (including health, lack of previous convictions and age), remorse, and efforts to make reparation. He also deducted a further 13 months for guilty pleas, although he noted that the evidence against Mr Reid was strong.8 This resulted in a sentence of two years and five months’ imprisonment, which was imposed on each charge to be served concurrently. Mr Reid was also ordered to pay reparation of about $200,000.9

Standard of appeal

[17]              Mr Reid has brought his appeal under s 250 of the Criminal Procedure Act 2011. An appeal against sentence is an appeal against a discretion. Therefore, an

7 At [17].

8      At [20]–[21].

9 At [22].

appeal must only be allowed if the Court is satisfied there has been an intrinsic error in the sentence and a different sentence should be imposed.10 The focus is on the final resulting sentence and whether it was in the available range, rather than the exact process  by  which  it  was  reached.11   As  articulated  by  the  Court  of  Appeal  in R v Peters:12

[13] As this Court has indicated on many occasions, the issue whether a sentence is manifestly excessive or manifestly inadequate or inappropriate must be examined in terms of the sentence actually passed rather than the precise process by which it is reached. Thus, if a sentence might be the product of a starting point which is itself manifestly excessive but is in the result ameliorated by allowances made for mitigating factors so as ultimately to be brought to a point of acceptability, this Court will be disinclined to intervene through concern over any particular component. …

Grounds of appeal

[18]              Mr Reid appeals his sentence on the grounds it was manifestly excessive as the Judge erred by failing to:

(a)consider the impact of the sentence on Mr Reid’s dependent life partner;

(b)appropriately recognise through sentence reductions the amount of reparation paid; and

(c)give proper weight and sufficient sentence reduction for Mr Reid’s personal mitigating circumstances, being his own health, age, previous good character and remorse.

[19]I will address each issue in turn.

Hardship to dependent partner

[20]              Mr Hislop, for Mr Reid, submits that the Judge failed to consider the health problems, both physical and mental, of Mr Reid’s life partner, Mr L. He submits the Judge failed entirely to refer to Mr L’s affirmation filed with the Court prior to

10     Tutakangahau v R [2014] NZCA 279; [2014] 3 NZLR 482.

11     Ripia v R [2011] NZCA 101 at [15].

12     R v Peters CA12/03, 14 May 2003.

sentencing, which included a report from both his and Mr Reid’s medical practitioner. Mr L suffers from epilepsy and has done so since 1970 when he was involved in an accident in which he received a fractured skull. He also suffers from severe anxiety and depression, which has led him to retire from work. He is dependent on Mr Reid, who has been his caregiver since his health deteriorated, and he has no family who could assist. The medical certificate listed some of these medical events which have occurred over the past twenty to forty years in a limited fashion. The doctor concluded by saying:

For Mr [L’s] ongoing health, I think it is important that his partner is able to continue to live with him to offer physical, financial, practical and emotional support.

[21]              Although not expressly dealt with in his decision, the Judge implicitly took Mr L’s circumstances into account when he discounted the sentence in light of Mr Reid’s personal circumstances, including age and health.13 My conclusion in this regard is supported by the fact that the defence submissions to the District Court on sentencing raised Mr L’s health concerns and reliance on Mr Reid under the heading of “age and health”. The Judge had clearly read all the material available to him for the purposes of sentencing and referred to Mr Reid’s loyalty towards his partner and pressure to support him. A three-month discount was applied to account for Mr Reid’s health, age, lack of prior convictions and other personal circumstances.14 As this matter was accounted for in sentencing, it is the adequacy, rather than absence, of the discount which I will now address.

[22]              Mr Hislop cited the Court of Appeal authority of Garnett v R as supporting the proposition that family circumstances, such as a dependent partner and children, are a mitigating factor which  can  warrant  a  discount  in  sentencing.15  In  that  case,  Mrs Garnett, a lawyer, had been sentenced to three years’ imprisonment following the misappropriation of $194,500 from two law firms for which she had worked over a five-year period. This resulted in a loss to the firms of $274,500. A sentence of eleven months’ home detention was substituted on appeal in recognition of Mrs Garnett’s unique family circumstances and associated difficulties. Mrs Garnett had two young

13     R v Reid, above n 1, at [21].

14 At [21].

15     Garnett v R [2010] NZCA 173; Sentencing Act 2002, s 8(h).

children (aged two and a half and eight months), one of whom had a severe chronic illness and separation anxiety. The father of the children suffered from alcoholism and had difficulties managing his stress and anxiety. A report from a clinical psychologist caused the Court particular concern as it indicated potential attachment difficulties between Mrs Garnett and her children due to their father’s problems and her prison sentence. The Court expressly noted that this final sentence was “extremely lenient when viewed against the offending and the appellant’s culpability, factors which in more usual circumstances would easily warrant the sentence which was imposed”.16

[23]There are several differences between Mr Reid and Mrs Garnett’s cases:

(a)In Garnett v R, the Court was provided with significantly more medical/psychological evidence than presented here. There was a full psychologist’s report based on multiple interviews which supported the concern about the wellbeing of the children if Mrs Garnett were separated from them for a long period of time.17 In the present case, all that was before the Court was Mr L’s affirmation and a general practitioner’s certificate. The statements about the care Mr Reid provided to Mr L were somewhat vague, with concerns about spending time apart and the support offered by Mr Reid in a more practical sense being at the forefront.

(b)There was a lack of clarity in the present case as to the caregiving role Mr Reid played. It is difficult to compare the role of a parent to young dependent children with that of a partner who is also a caregiver. The necessity of this  support  is  difficult  to  weigh  and  I  agree  with  Mr McCoubrey, for the Crown, that a comparative exercise is not necessarily helpful. There was also no information as to assistance in the home to which Mr L might be entitled.

(c)Mrs Garnett’s “true” final sentence before conversion to home detention was one of two years and six months’ imprisonment. Section

16 At [40].

17 At [22].

15A(1)(b) of the Sentencing Act 2002, which prevents sentences of imprisonment longer than two years being converted to home detention, did not apply in Mrs Garnett’s case. The Court expressly noted that, had this section applied to Mrs Garnett, she would have been forced to serve the prison sentence.18 This case, in fact, demonstrates that Mr Reid’s sentence of two years and five months’ imprisonment was well within range, given the conclusion that Mrs Garnett’s term would have been two years and six months’ imprisonment.

(d)A five to ten percent discount was applied for personal circumstances in R v Garnett at the initial sentencing. The Court of Appeal added another six months to account for the extraordinary family circumstances. The circumstances resulting in this discount were expressed to be “well out of the ordinary” and the Court expressly noted that “in more usual circumstances [the offending and culpability of the appellant] would easily warrant the end sentence which was imposed”.19 This suggests that, in the more usual course, a five to ten per cent discount would be appropriate. In Mr Reid’s case, a 5.88 per cent discount was applied to account for personal circumstances (three months from a four year and three month starting point).

[24]              In McGregor v R, the Court of Appeal stated that in cases of serious premeditated long-term fraud offending, “the impact of the sentence on the family of the   offender  can  play  little,  if  any,  role  in  the  sentence”.20   I  also   accept    Mr McCoubrey’s submission that, as a lawyer of long standing, Mr Reid would have been well aware of the prospect of imprisonment for his offending. Yet, despite knowing the fragile state of his partner’s health, he embarked on the premeditated offending and continued and expanded that offending over a number of years.

[25]              Although at the lower range for recognition for personal circumstances, the discount in this case was within the appropriate range.

18 At [31].

19 At [40].

20     McGregor v R [2015] NZCA 565 at [46] citing R v Prescott CA360/00, 1 November 2000 at [8].

Reparation

[26]The Judge discussed reparation as follows:21

[21]      … You have made some efforts to make reparation and for that I deduct a further three months …

[22]      I am also making an order for reparation to New Zealand Law Society Fidelity Fund of $139,743.01 to LC Money $2000, to Haut Cinq Holdings Limited $509, and to the Durham Trust $59,183.26 or such other amount as appropriate once it has been ascertained what has or has not been repaid to the trust. Those payments are to be arranged upon your release from prison.

[27]              Mr Hislop’s submission is that the Judge failed to give proper weight to the significance and amount of the reparation payments. He points out that measures taken by an offender to compensate a victim of their offending, and any other offers of amends, must be taken into account in sentencing.22

[28]              Mr Hislop and the Crown both agree on the following in terms of the reparation payments:

(a)the amount taken from victims totals $357,831;

(b)the Law Society’s Fidelity Fund repaid the victims of Mr Reid’s offending to the tune of $139,743;

(c)Mr Reid repaid $7,941 to two of his victims within two weeks of offending against them;

(d)following being caught, Mr Reid repaid $147,520 to victims of his offending; and

(e)adding previous repayments, Mr Reid has repaid a total of $155,461.

[29]              There was an issue concerning a $55,347 repayment Mr Reid claims he made to  the  trustees  of  one  of  the  trusts  between  May  2013  and  August  2015.     Mr McCoubrey accepts Mr Reid paid $31,362.87 to that trust between October 2012

21     R v Reid, above n 1, at

22     Sentencing Act 2002, s 10.

and February 2013 but notes the trustees say the further sum of $55,347 was improperly paid to beneficiaries and not to the trustees and, therefore, this amount remains outstanding. It appears the Judge was alive to this issue, which explains why he made the reparation order in the terms of [22] of his decision, as set out in

[26] above.

[30]              In any event, Mr Hislop submits the repayment should have been considered reparation. Mr Hislop classifies Mr Reid’s reparation payments as being equal to two thirds of the money stolen; $214,646 of $357,831. A further discount of two per cent should have been applied, in his submission.

[31]              A significant portion of the money taken remained outstanding at the time of sentencing. The Judge made reparation orders totalling $201,435. Disregarding the disputed amount of $55,347, this, at minimum, indicated $146,088 of $357,831 was outstanding. I agree with Mr McCoubrey that, given the sums involved, whether or not $55,000 had been paid would likely make little difference. In any event, the Judge was clearly aware of it. Furthermore, the three-month discount in light of the amount of reparation paid is in line with guidance from the Court of Appeal:23

[41]   … We have already indicated that fraud offending where no recovery is achieved is “more serious” than fraud offending with complete recovery, if only because in the latter case the victims’ loss is transitory and not permanent. The offender gets some credit for that in the starting point adopted, but not much. Not much because the offender’s culpability is not significantly reduced: he or she is still a fraudster and would not have voluntarily returned the money or thing stolen but for being caught.

[32]              Mr Hislop then submits that Mr Reid has offered to make $500 weekly payments to the Law Society Fidelity Fund as he has employment available to him, should he be sentenced to remain in the community. The decision of Sellers v Commissioner of Inland Revenue was relied on as authority for the proposition that an offer to increase weekly reparation payments significantly, to result in a faster recovery, warrants a modest sentence adjustment.24 The modest sentence adjustment in that case resulted from an increased repayment regime from $20 to $300 a week following the offender obtaining employment. This was considered evidence of the

23     R v Patterson CA573/07, 31 March 2008.

24     Sellers v Commissioner of Inland Revenue [2016] NZHC 60 at [13].

offender’s remorse and desire to make amends. The circumstances of that case were considered “unique”.25 Payments  at  $20  per  week  meant  it  would  have  taken Mr Sellers 27 years to repay his debt. The offer to increase the repayments significantly reduced that time.

[33]              Mr Hislop’s submission effectively asks the Court to give a further discount to Mr Reid to enable him to remain in the community and pay reparation to the Law Society Fidelity Fund. I cannot see any justification for that in the circumstances of this case.

[34]              For these reasons, I consider the discount for reparation was appropriate and within range.

Other personal circumstances

[35]              Mr Hislop submits an insufficient discount was applied in light of Mr Reid’s previous good character. As already discussed, there is clear Court of Appeal authority that in cases involving prolonged offending like that of Mr Reid’s, a discount for good character is either small or unavailable.26 This was recognised by Judge Dawson who said:27

[17] … You are a person previously of good character however against that must be weighed that you were offending over many years, so any discount for good character is minimal because of that …

…

[21]  For your personal circumstances including your health, that you have no previous convictions and your age I deduct three months.

[36]              This must mean that the discount applied in respect of prior good character was a very small one, reflecting the Court of Appeal’s guidance. I would also observe that it was Mr Reid’s standing in the community which enabled him to offend as he did.

25 At [13].

26     Allison v R [2013] NZCA 244 at [51]; Mears v R [2014] NZCA 30 at [15]; McGregor v R [2015] NZCA 565 at [34].

27     R v Reid, above n 1.

[37]              Mr Hislop then submits Mr Reid’s poor health and age were factors which should have resulted in a greater discount.

[38]              Age and ill health can be considered when assessing whether imprisonment would have a disproportionately severe effect on a defendant.28 Mr Hislop cited Hastie v R as Court of Appeal authority for the proposition that these discounts can range from 14 to 33 per cent.29 In that case, Mr Hastie had severe coronary artery disease, narrowing leg arteries, a urinary disorder resulting in the placement of a catheter, suspected lung disease, and an amputated limb. According to his cardiologist he had a short life expectancy. Mr Hastie contended a sentence of four years and six months was effectively a life sentence.30 A discount of 18 per cent was upheld in that case as being within range.

[39]              Mr Reid’s underlying heart condition (atrial fibrillation) causes cardiomyopathy (weakening of the heart muscle). His doctor describes him as a high risk cardiac patient. He is on medication to control this and his doctor notes his conditions “are now well controlled on medication”. Mr Reid is 68 years of age.

[40]              The medical conditions cited by Mr Hislop would not cause imprisonment to have a severely disproportionate impact on Mr Reid. His heart conditions appear to be well managed on medication, although his high risk remains. The evidence is not comparable with that in R v Hastie. There is no suggestion this condition cannot be managed from prison.

[41]              For these reasons, the discount applied in this case was within range, although at the lower end.

[42]              The final factor referred to by Mr Hislop was Mr Reid’s remorse. Mr Reid received a discount of three months in recognition of remorse.31 Mr Hislop contends that insufficient weight was given to Mr Reid’s remorse as the Judge erred in concluding much of Mr Reid’s remorse came from his own embarrassment. This

28     Sentencing Act 2002, s 8(h).

29     Hastie v R [2011] NZCA 498 at [40].

30 At [39].

31     R v Reid, above n 1, at [21].

conclusion was open to the Judge and it is difficult to see why this discount was insufficient. Counsel cited no cases in support of his contention. The Court of Appeal has previously said:32

[16] Evaluation and quantification of what was loosely termed “genuine remorse” presents difficulties for a sentencing Judge. In terms of sentencing principles, remorse can only be relevant in one of two ways — either as a sign of atonement which might lessen the suffering of the victim or his or her family or as tangible evidence of the offender’s progress along the path to rehabilitation. Its orthodox expression is in a plea of guilty. A profession of remorse on its own is likely to carry little if any extra weight.

[43]              Indeed, in the circumstances, it would have been open to the Judge to apply no specific discount in respect of remorse. Mr Reid received the full 25 per cent discount for a guilty plea, notwithstanding the Judge’s comments that the evidence against him was strong.

Further issue

[44]              Mr McCoubrey then pointed to the way the Judge had calculated Mr Reid’s sentence which, in his submission, was to Mr Reid’s benefit. The Judge took the starting point of four years and three months and from that deducted three months each for personal circumstances, remorse, and reparation.   A further 13 months, being   25 per cent of the starting point, was deducted for Mr Reid’s guilty plea. An orthodox sentencing approach would apply the 25 per cent guilty plea discount to the nett figure obtained after applying the other discounts, which results in a smaller deduction than the approach followed in this case. Had the orthodox approach been followed in this case, the 25 per cent discount would have been applied to a period of 43 months’ imprisonment, resulting in an end sentence of two years and seven and a half months, two and a half months longer than Mr Reid’s final sentence. In this way, Mr Reid received an additional discount of two and a half months or an additional five per cent.

32     Brown v R [2011] NZCA 95 at [16].

Result

[45]              For the reasons given, I am not satisfied the sentence of two years and five months’ imprisonment was manifestly excessive and the appeal is dismissed.

Thomas J