Ross v New Zealand Police HC Tau CRI 2008-470-23

[2008] NZHC 1381

This case has been anonymized

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CRI 2008-470-23

BETWEEN  R

Appellant

ANDNEW ZEALAND POLICE Respondent

Hearing:         4 September 2008

Counsel:         P G Mabey QC for Appellant

R G Ronayne for Respondent

Judgment:      4 September 2008

Reasons:        11 September 2008

REASONS FOR JUDGMENT OF HEATH J

Solicitor:

Crown Solicitor, Tauranga
Counsel:

P G Mabey QC, Tauranga

R V NEW ZEALAND POLICE HC TAU CRI 2008-470-23  4 September 2008

Introduction

[1]      Mr R   is the former Chief Executive Officer of Rowing New Zealand. Following an internal investigation, in which documentary irregularities were discovered, he resigned from that post.   A more detailed Police inquiry followed. Forgery charges were laid.  At the earliest possible time, Mr R   pleaded guilty to nine charges of using forged documents.

[2]      The charges were laid under s 257(1)(b)  of  the  Crimes  Act  1961.    That section provides:

257    Using forged documents

(1)     Every one is liable to imprisonment for a term not exceeding 10 years who, knowing a document to be forged,—

…

(b)    uses, deals with, or acts upon the document as if it were genuine; or

…

There is no element of fraud involved in the charge.  The offence is complete once a person knowingly uses a forged document as if it were genuine.

[3]      Mr R   appeared for sentence in the District Court at Tauranga on 25 July

2008.   He sought a discharge without conviction on each charge.   Judge Ingram considered that the gravity of the offending was such that convictions should be entered.  The Judge convicted and discharged Mr R   on seven of the charges to which he had pleaded guilty, while convicting and fining in the sum of $5000 (a total of $10,000) in respect of the remaining two.

[4]      Mr R   appeals against conviction and sentence.  On 4 September 2008, I

heard and allowed the appeal, with reasons to be given later.  The orders made on 4

September were:

[3] The appeal is allowed.  The conviction and fines entered in the District

Court are set aside. In lieu thereof, I make the following orders:

a)Mr R   is discharged without conviction on each of the nine charges of forgery brought against him.

b)Under s 106(3)(a) of the Sentencing Act 2002, Mr R   shall pay  to  the  Crown  the  sum  of  $7500,  as  a  contribution towards the costs of the investigation and Police prosecution.

c)Under s 106(3)(b), Mr R   shall pay the sum of $7500 to Rowing New Zealand as compensation for moneys out-laid by  that  organisation  in  investigating  the  irregularities  in issue.

That makes a total payment of $15,000 under those two provisions.   The orders for costs and compensation shall be recorded against CRN 536.  On the remaining charges discharges will be entered.

[5]      These are my reasons for allowing the appeal and making those orders.

Background facts

[6]      Mr R   was appointed as Chief Executive Officer of Rowing New Zealand in October 2003.   He was based at Lake Karapiro, near Cambridge.   One of his principal functions was to secure funding for Rowing New Zealand.   Sources of funding  included  sponsorship,  marketing  arrangements  and  community  funding, from what are generally known as gaming trusts.

[7]      Mr R   resigned as Chief Executive in August 2007, following discovery of irregularities in applications made to gaming trusts for funding.

[8]      A subsequent Police investigation focussed on nine applications made to four funding organisations between November 2004 and March 2007.   Mr R   was responsible for completing each of those applications.  The applications were found to contain 34 false documents which, as a matter of law, were forgeries.   Funding had been sought to enable Rowing New Zealand to buy boats, oars, sculls, apparel and to meet the cost of travel.  False documents were provided, either for the purpose of the initial application or when accounting for the money received from the particular organisation.

[9]      The processes used to seek funding were virtually identical.   By way of example, cl 15 of the regulations of the New Zealand Community Trust required a

committee or executive to pass a resolution and attach it to the application.   The resolution was to be on letterhead and contain specific reference to the New Zealand Community Trust, the date the resolution was passed, the amount requested, and how the money was to be spent.  Clause 16 of the same regulations provided for two signatories to confirm “that any funds received as a result of [the] application will be used only for the purpose for which they were approved and that … copies of all receipts and [would be sent] and … money [not spent would be returned] to [New Zealand Community Trust]”.

[10]     Mr R   falsely signed documents on behalf of others who had no knowledge of what he was doing.  The forged documents included false resolutions purporting to demonstrate that Rowing New Zealand had resolved to seek funding for a particular purpose. On some occasions, Mr R   submitted false quotes and false invoices.   Alleged suppliers did not authorise their documentation for use in this way.

[11]     Rowing New  Zealand received $368,402.45  as a result of the successful applications that included false documentation.

[12]     Mr R   believed (honestly but misguidedly), that he was acting in the best interest of the sport of rowing.  He did not submit the false documents to obtain a financial benefit for himself or with intent to cause anyone to suffer loss.  Nor, as it turns out, was any loss actually suffered by third parties.

[13]     In  seven  of  the  nine  cases,  the  forgeries  of  signatures,  while  falsely purporting to be that of a second signatory or confirming a resolution of Rowing New Zealand’s Board, were no more than ill judged “short cuts” that Mr R   undertook to “speed up” the grant application process.

[14]     On two of the charges (those on which he was fined in the District Court) the offending was more culpable.  In these cases, Mr R   was endeavouring to obtain funds to acquire equipment for use at the 2007 World Championships in Munich. He was under pressure from some coaches and rowers to acquire Italian made boats, as they were considered more competitive.  Mr R   believed that funders would not

provide money to acquire equipment made overseas.   The false documentation submitted was designed to mislead the funder into believing that the equipment was sourced within New Zealand.

[15]     Nevertheless, Mr R   sought no more from the funder than would have been paid had New Zealand equipment been purchased.   Ironically, as it turns out, the funders now say that, had an application been made, they would have met the cost of the Italian boats.

[16]     All  funding  bodies  confirm  that,  if  the  applications  had  been  submitted correctly, the actual money advanced would still have been paid to Rowing New Zealand.  That is why there is no loss to third parties arising out of the forgeries.

Sentencing in the District Court

[17]     Sections 106(1), (3) and 107 of the Sentencing Act 2002 (the Act) provide:

106     Discharge without conviction

(1)      If a person who is charged with an offence is found guilty or pleads guilty, the court may discharge the offender without conviction, unless by any enactment applicable to the offence the court is required to impose a minimum sentence.

…

(3)    A court discharging an offender under this section may—

(a)      make an order for payment of costs or the restitution of any property; or

(b)      make any order for the payment of any sum that the court thinks fair and reasonable to compensate any person who, through, or by means of, the offence, has suffered—

(i)    loss of, or damage to, property; or

(ii)    emotional harm; or

(iii)      loss or damage consequential on any emotional or physical harm or loss of, or damage to, property:

(c)     make  any  order  that  the  court  is  required  to  make  on conviction.

….

107     Guidance for discharge without conviction

The court must not discharge an offender without conviction unless the court is satisfied that the direct and indirect consequences of a conviction would be out of all proportion to the gravity of the offence.

In terms of s 107, Judge Ingram decided that the direct and indirect consequences of a conviction would not be out of all proportion to the gravity of Mr R  ’ offending.

[18]     As I read Judge Ingram’s sentencing remarks, two considerations weighed with him in reaching that conclusion.  The first involved the proposition that “those who offend by creation and use of forged documents must expect that there will be a consequence, and those consequences are very unlikely to involve anything less than a conviction”.  The second was the need for equality under the law and consistency in the application of s 106(1).

[19]     In dealing with the gravity of the offending, the Judge referred to the amounts in which funding had been sought, the seriousness of the crime of forgery generally and victim impact statements from the four funders which suggested that Mr R  ’ deceit had had “considerable effect on the integrity of the grant process”.  The Judge was also concerned to impose a sentence reflecting the need for general deterrence.  I read the Judge’s remarks as an expression of concern that the grant of a discharge might be perceived as Court endorsement of conduct that did not meet acceptable standards of commercial probity.

[20]     On the second point, Judge Ingram accepted a submission from the Police prosecutor that “in circumstances such as these, everyone must see that regardless of one’s position in society, no matter how high one flies, there are consequences for behaviour which infringes the criminal law”.

[21]     In concluding that a discharge without conviction was not warranted, Judge

Ingram said:

[36] Accepting your remorse, your co-operation, the effects on your career, your finances, your family, your reputation, the fact that you are a first offender, that there was no gain and no reparation is sought,   I am nevertheless firmly of the view that this is not a case where I can fairly say

that I am satisfied that the consequences of a conviction would be out of all proportion to the gravity of your offending.

[37] Accordingly, I regret to tell you Mr R  , and it is a genuine regret, I

consider myself constrained by the law to decline the application under s

106.  (my emphasis)

Competing submissions

[22]     Mr Mabey QC,  in  comprehensive  and  helpful  submissions  for  Mr  R  , submitted that the Judge erred by fettering the broad discretion conferred on him by s 106 of the Act.  In short, Mr Mabey submitted that the Judge had been wrong to infer that Mr R   was seeking some improper advantage through his status.   Mr Mabey accepted that all are equal before the law.   However, he submitted that proposition works both ways: someone of standing in the community is just as entitled to seek a discharge under s 106 as any other citizen.

[23]     Mr Mabey also criticised reliance on consistency in application of s 106. While accepting that consistency is a relevant sentencing principle, Mr Mabey submitted that Judge Ingram had not given sufficient consideration to the proposition that s 106 is, itself, an exception to the general rule that all who are proved (by plea or decision) to be guilty of criminal conduct should be convicted.  He submitted that the section exists to deal precisely with the type of exceptional case disclosed on this appeal.

[24]     As to the gravity of the offending, Mr Mabey submitted that it was apparent that the Judge regarded it as at the lowest end of the spectrum.  On seven of the nine charges, Mr R   was convicted and discharged.  On the other two he was convicted and fined $5000 each.   Those sentences were imposed in the context of a crime carrying a maximum penalty of ten years imprisonment.

[25]     I raised with Mr Mabey whether, if discharge were to be considered, some additional order ought to be made under s 106(3) of the Act.  That subsection permits the Court, when discharging an offender, to make an order for payment of costs or to compensate a third party for loss suffered by the offending.  Mr Mabey accepted that

could  be  done.     He  told  me  that  the  issue  had  been  raised  faintly  before

Judge Ingram, and not with the specificity I put to him.

[26]     Mr Ronayne, for the Police, submitted that it was inappropriate to interfere with Judge Ingram’s discretionary decision at first instance.  Mr Ronayne submitted that the Judge’s approach was consistent with principle, did not fail to take account of any relevant factors, took into account no irrelevant factors and was not plainly wrong.

[27]     In particular, Mr Ronayne focussed on the gravity of the offence of forgery. He submitted that the Judge had been alive both to the gravity of the offending and the unusual circumstances on which the offending occurred and made a balanced judgment with which it was inappropriate for this Court to interfere on appeal.

[28]     On  the  question  of  imposition  of  costs  or  compensation  as  a  term  of discharge,  Mr  Ronayne  accepted  the  jurisdiction  to  make  such  an  order  but submitted that neither could be imposed as a penalty.

Analysis

[29]     It is clear from Judge Ingram’s remarks, that this was a marginal case: see para [37] of the Judge’s sentencing notes, set out at para [21] above.  There are two particular aspects of Judge Ingram’s approach to exercise of the s 106 discretion that trouble me.

[30]     The first is the acceptance by the Judge of the possibility of discharge on a charge of forgery but the absence of articulated reasons to indicate why Mr R   did not fall within that limited category.  That is troubling because the comments made by the Judge in para [36] of his remarks (set out at para [21] above) indicate his acceptance of the broad range of powerful mitigating circumstances at play.

[31]     The  second  aspect  involves  the  absence  of  consideration  of  whether  a discharge,  coupled with an order for costs and/or compensation, would respond adequately to the offending.  Judge Ingram cannot be criticised for not dealing with

this issue because Mr Mabey did not press the point at first instance.   However, I take the view that the absence of consideration of that aspect resulted in a failure to take account of a relevant consideration.  That entitles this Court to undertake the sentencing exercise afresh.

[32]     It is clear that the offending was deliberate.  Mr R   intended to submit false documents in an endeavour to procure funding.   In most circumstances, with bad judgment, he tried to  accelerate receipt of  grants  by  providing  a  second  (false) signature on the relevant applications.  Also, falsely, he represented that resolutions had been passed by Rowing New Zealand to support the grant application.

[33]     In two cases his culpability went further.  They were in response to pressure placed upon him by coaches and rowers to obtain Italian boats.   I do not intend criticism of the coaches or the rowers, as they had no reason to believe that funding could not be obtained to acquire the Italian boats they sought.   Albeit mistakenly, Mr R   believed he had to submit false documents to obtain funding for those vessels to be acquired.

[34]     On the other side of the equation, there are powerful mitigating factors.  In particular:

a)       In relation to the Italian boats, at no stage did Mr R   use false documents to obtain more money than could have been sought legitimately, had a genuine application been made to obtain funds to acquire New Zealand boats.

b)        Mr R   did not seek or gain any financial benefits from his actions.

Nor did he intend to cause loss to any third party.

c)        No third party did, in fact, suffer loss as a result of a false application. The only adverse consequence was the loss of confidence in the grant process, to

which Judge Ingram referred.

[35]     Additional  mitigating  factors,  to  which  Judge Ingram  referred,  exist:  Mr R  ’ undoubted remorse, his co-operation with the Police, his early acceptance of responsibility, the effects of what has occurred on his career, finances and family reputation.

[36]     Although the Judge expressed some concern on the point of “equality before the law”, I do not regard that as a relevant consideration.   Mr R   was just as entitled as any other citizen to seek a discharge without conviction.  Ultimately, his application fell to be determined on its own merits.  Equality under the law requires all to be treated equally.

[37]     Section  106  is  designed  provide  a  mechanism  whereby  the  stigma  of conviction can be avoided in an exceptional case.   The judicial discretion can be exercised only if entry of a conviction would be out of all proportion to the gravity of the offence.   The reference to the “gravity of the offence” is  to  the  particular offence, not to the general nature of the offence of which a person has been found guilty.  The discretion requires a fact-specific analysis in each case.

[38]     Discharges without conviction were granted in R v Andrews (CA81/87 21

August 1987).  In Andrews, the appellant had been found guilty on three charges of knowingly using a forged document as if it were genuine.  He was employed by the Public Trust and provided false documents to a bank to obtain money payable to three beneficiaries under a trust administered by the Public Trust.  False documents were submitted  to  circumvent  the need  for  the  Public  Trustee  to  apply for  the securities involved personally.

[39]     While saying that convictions would have been upheld if the Court had been satisfied “the mode of completion was linked to the obtaining of … brokerage”, the Court of Appeal was prepared to order that discharges be entered: at p 6.   At p7, Somers J, for the Court, said that:

… the case has to be considered as one in which for some unexplained reason  Andrews  used  the  documents  knowing  they  were  falsely  signed. There was no loss to those whose funds were invested and none to Westpac save only the payment of brokerage which it may or may not have paid to

the Public Trustee for the benefit of the Trust Fund.   On that footing we agree with Mr Neave that the offences were of a technical nature.

It is evident that Andrews has suffered considerably.   Lately he has been dismissed from the Public Service, although that dismissal is subject to an appeal by him, has become unemployed without income, and has been given notice by the Public Trustee of a substantial increase in the rate of interest he pays on his house mortgage.  Those events have occurred since sentence.  As well he has incurred very heavy costs in his defence and in his efforts to obtain reinstatement to the Public Service.

[40]     This is not a case in which a discharge is being sought to hide from public view the conduct of a person who is likely to seek employment in a similar capacity. Whether  Mr  R    is  discharged  or  convicted,  his  offending  is  well  known  to members  of  the  community  through  the  large  amount  of  publicity  that  it  has received.

[41]     Further, the degree of support from those who have given testimonials in favour of Mr R   is astonishing.  Fairly, Judge Ingram said that in some 30 years experience in the law he had “never come across anybody who enjoys as much support when coming before a criminal court”. I agree with those comments.

[42]   Supporting testimonials were presented by representatives of sporting organisations to which Mr R   had provided service and athletes involved in those sports.     Significantly,  one  supporting  reference  was  provided  by  the  current Chairman of Rowing New Zealand.

[43]     The factors to which I have referred provide a basis on which discharges may be ordered.

[44]     There is one remaining point that causes me concern.  It relates to the use of false documentation to obtain funding for the Italian boats.  It involves the issue of commercial probity, to which Judge Ingram also referred.   The issue is whether a discharge would (wrongly) indicate to those involved in corporate governance that worthy ends can justify illegal means.

[45]     Those  involved  in  the  management  or  governance  of  corporate  entities

(whether business, sporting or charitable) must meet proper ethical standards.  The

Court must be assiduous to ensure that people in those positions do not believe that they can escape criminal conviction if they were to act illegally out of pure motives. Those who offend in this way, should generally expect the entry of convictions.

[46]     Even with exceptional mitigating circumstances, a perpetrator of  a crime should expect to be required (at least) to meet the costs involved in investigation and prosecution of the offending, as well as money out-laid by the particular organisation to investigate internally.

[47]     If discharges were to be ordered, Mr R   must take responsibility for his offending and reimburse those who were required to expend money, in both public and private interests, in consequence of his actions.

[48]     The ordering of costs or compensation is not punitive in nature.  Nor is it a sentence of itself.  It can best be described as a sanction, designed to make clear that it is unacceptable to behave in a manner that lacks commercial probity and amounts to a criminal offence, notwithstanding the absence of personal gain or third party loss.  Responsibility must be taken by the offender for the consequences of his or her own acts.  The prospect of being required to meet substantial costs from one’s own pocket provides a disincentive for those engaged in corporate governance to act illegally to secure a worthy end.   The sentencing goal of deterrence can be met adequately in this way.

[49]     I was informed by Mr Ronayne that the approximate costs of investigation and prosecution were $7500.  I was informed that Rowing New Zealand had out-laid a similar amount to meet the cost of an audit report once Mr R  ’ activities became known.  In my view, it is necessary and appropriate for Mr R   to meet those costs and to compensate Rowing New Zealand for the money out-laid by it as a condition of the grant of discharges without conviction.  On that basis, discharges will meet all relevant sentencing goals.   Entry of convictions would, in my view, be out of all proportion to the gravity of the offences.

Result

[50]     For those reasons, on 4 September 2008 I allowed Mr R  ’ appeal against conviction and sentence and made the orders set out in para [4] above.

P R Heath J