Staples v The Queen
[2004] NZCA 204
•30 August 2004
IN THE COURT OF APPEAL OF NEW ZEALAND
CA215/04
THE QUEEN
v
SANDRA LOUISE STAPLES
Hearing:25 August 2004
Coram:Glazebrook J
Robertson J
Baragwanath JAppearances: J R Rapley for Appellant
M N Zarifeh and G A Andrée-Wiltens for Crown
Judgment:30 August 2004
JUDGMENT OF THE COURT DELIVERED BY BARAGWANATH J
[1] The appellant was convicted following guilty verdicts of a jury in the District Court at Christchurch on 22 April 2004 on 421 counts of using a document with intent to defraud (Crimes Act 1961 s 229A) and four counts of false accounting (s 253(b)). She appeals against the convictions on the grounds both that there has been a miscarriage of justice revealed by fresh evidence as to her conduct and that the summing up misdirected the jury as to the definition of the intent to defraud and its application to the defence case. She also appeals against her sentence of five years imprisonment.
Background facts
[2] The complainant Nairn Industries Limited manufactured harvesters for the wine industry. It was operated by Mr Donald Nairn, a director of the company and, with his wife, a shareholder.
[3] The appellant was employed by the company as its office administrator between 1995 and 2001. In August 1995 she was authorised to sign cheques on the company’s account. She was entrusted with the administration of the office and was the only person familiar with the company’s computer system. Her duties included the preparation of payment of wages and of trade creditors. Each Wednesday the appellant made up the wages which were a mixture of direct credits and any cash component the staff were entitled to receive.
[4] On 166 occasions the appellant wrote out purported wages cheques for an amount in excess of the employees’ entitlement. There was a surplus of cash obtained totalling almost $161,000.
[5] On 255 occasions the appellant wrote out other cheques recording the payee as “wages” but noting on the cheque butt a false reference to a supposed trade creditor of the company. The bank cashed the cheques believing they were for wages. The appellant created fictitious invoices in the names of the trade creditors which were written on the cheque butts and created in the computer system debits and balancing entries showing payment of the fictitious invoices. The total amount obtained in this way was some $493,000.
[6] On four occasions the appellant created false entries in the computer attributing to her long service leave to which she was not entitled. As a result she obtained payment of $2,125.93.
[7] The company’s total loss as a result of these actions was therefore some $656,000.
[8] There was no dispute as to the falsity of the entries, the appellant’s responsibility for them and her obtaining the cash. The issue in the case was whether she acted without authority from Mr Nairn and kept the money for herself; or whether there is a reasonable possibility that, as she asserted, she performed these unorthodox acts at his direction and handed the money to him so as to have either actual authority for her conduct from the company from Mr Nairn as its director or at least honest belief of entitlement to act as she did.
[9] Forensic accounting evidence established the unexplained deposit into the bank accounts of the appellant and her husband over the period of the charges of some $228,500 including cash deposits of just under $170,000. Comparison of the company cheques cashed with deposits or purchases by the appellant showed a considerable number of matches and near matches in terms of date and amount including periods when Mr Nairn was overseas. Analysis of Mr Nairn’s accounts showed no such unexplained deposits.
[10] Interviewed by the Serious Fraud Office the appellant explained the cash deposits as representing her husband’s cash income from firewood and gorse cutting businesses. She called her husband in an attempt to corroborate her explanations but elected not to give evidence herself. In relation to the false accounting she claimed that she was experimenting with a computer system and did not intend to get any advantage from her alteration of the records although the moneys received as a result were not repaid.
Appeal against conviction
The first ground: fresh evidence
[11] The appellant applies for this Court to receive pursuant to s 389(c) the evidence of her daughter, Rhonda Ross. Her explanation to the Serious Fraud Office was that in accordance with Mr Nairn’s instructions each Wednesday she gave the surplus cash to him in a black manila folder.
Appellant’s affidavits
[12] The affidavit of Mrs Ross records that she is 29 years of age. She deposes that while the appellant was being prosecuted by the Serious Fraud Office she kept the details of the case from her daughter, who learnt of the facts alleged against her mother only when she attended the trial. She expressed the belief that the appellant was going through a period of very considerable stress and might not have been in a position to have fully instructed her counsel on all the aspects that could have assisted her defence.
[13] Mrs Ross stated that from late 1996 to 2001 she would regularly see the appellant at Nairn Industries Limited and would very often leave with her mother when she went to do the banking. She gave as her recollection that normally two cheques were cashed and the cash was handed to her mother in two plastic bank bags. One would have a small amount of money payable to workshop staff as part of their wages for tools or materials they had bought for the company. The other was for a lot more. Both bags were placed in a burgundy briefcase, the larger sum in a back part. On returning to the company’s office Mrs Ross would see her mother make up the staff’s pay in small manila envelopes. She deposes:
9.In relation to the other plastic bag, generally, even before she made up the boys pay, but certainly before she ever left her office, she would put it in the black plastic folder with a Velcro close which held Donald Nairn’s mail, bank statements, papers etc. She would put that plastic bag containing quite a large sum of money in there. I watched that happen on many occasions. Virtually every time I was with my mother on Wednesdays. Very shortly afterwards Donald Nairn would then come into the office and pick up that folder and take it with him. I never heard anything said between my mother and Donald Nairn as to the money that had been placed in there.
…
12.On occasion I was aware that Donald Nairn was overseas. On those occasions I would still see the money being placed into the folder on Wednesday only it simply would not be collected. I was unaware when it was collected.
13.I recall the period where Donald Nairn was not at work so much because he was busy building his house …
14.I would have been more than happy to give this evidence a[t] trial and believe it is essential that such evidence was before the Court. However … I had never been approached to discuss this evidence …
15.I told the Serious Fraud Office this information when I was interviewed. That was to Nicola Squire. I had to sign at the interview a disclosure whereby I was advised I was not allowed to discuss the matter with anyone or discuss what I had told. That is one of the reasons why there was never full discussion between my mother and I.
16.I never met mum’s lawyer until the middle of the trial. I had no knowledge as to what he knew or did not know. I only gave him this information after sentencing when the family had a round table debriefing meeting. He subsequently asked me to come and see him and make this affidavit.
[14] In an affidavit in support of the application the appellant asserted that before the trial she was under extreme stress and unaware of the need to give full instructions to her counsel. She gave an account of the facts consistent with that of her daughter. She said that when interviewed by Ms Squire of the Serious Fraud Office she was intimidated by a statement that she was not to discuss the accusations with anyone but her counsel and could be imprisoned if she did so and as a result she did not discuss with her family the content of her interviews. She accepted that she did not mention at interview that her daughter was frequently with her when she cashed cheques but suggested that after the recording tapes were turned off at the end of the interview further relevant matters were discussed.
[15] Mr Michael Joseph Pfahlert deposed that he worked for Nairn Industries Limited from July 1995 until January 2000. He said that pay day was a Wednesday and the staff would receive their weekly pay in cash. He said he recalled meeting the appellant’s daughter on numerous occasions. She would regularly visit her mother and go down on to the factory floor and speak with him and other workers. He said he vividly recalled her going with her mother to do the banking and returning with her when the money had been picked up to pay the wages. He said he recalled Mrs Ross being with her mother in the office apparently helping her with her duties on a busy pay day. He could not say how often Mrs Ross visited her mother and helped her with pay but said that it was frequent. He said that as often as not on a pay day Mrs Ross was present with her mother and this occurred consistently throughout the years that he worked for the company.
Crown’s affidavits
[16] Ms Squire, a designated member of the Serious Fraud Office, was the investigator in respect of the investigation and prosecution of the appellant. Ms Squire denied that after the tapes were turned off at the end of the interview further relevant matters were discussed. She was not challenged on the point at trial. She denied that the appellant was told that she was not entitled to discuss the accusations with anyone but her counsel. She said that the only constraint imposed was that of secrecy relating to the matters protected under s 36 of the Serious Fraud Office Act 1990 and that she was not prevented from discussing the case with family members.
[17] Ms Squire denied Mrs Ross’ assertion that she had told the Serious Fraud Office about her presence when the appellant was dealing with a black plastic folder containing a large sum of money. Ms Squire said that Mrs Ross made no mention at any stage that she had been with the appellant on Wednesdays when company cheques were cashed and the wages calculated and put together, nor that she witnessed large amounts of cash being given to Mr Nairn.
[18] An affidavit from the appellant’s solicitor and trial counsel, Mr Hembrow, was filed by the Crown following waiver of privilege. She told him that on occasions her daughter would visit and go to the bank with her. He said he did not gain the impression that happened on every occasion. He recalled being told that the teller would have remembered her daughter being there. She instructed him that her daughter had got on well with some of the people on the shop floor and would spend some time with them. The appellant never told him that her daughter was present when the wages were made up and the cash was put into the black folder, nor that her daughter helped or even that her daughter on occasion took the black folder to Mr Nairn’s office. He was looking for independent verification that the money was being handed to Mr Nairn but there was no mention of Mrs Ross having seen it.
[19] No application was made for cross-examination of any witness.
Discussion
[20] The principles on which this Court deals with applications for the introduction of new evidence were restated in R v Bain [2004] 1 NZLR 638, 644‑5 paras [22]-[27]. In summary:
… Ordinarily if the evidence could, with reasonable diligence, have been called at the trial, it will not qualify as sufficiently fresh. This is not an immutable rule because the overriding criterion is always what course will best serve the interests of justice. The public interest in preserving the finality of jury verdicts means that those accused of crimes must put up their best case at trial and must do so after diligent preparation. If that were not so, new trials could routinely be obtained on the basis that further evidence was now available. On the other hand the Court cannot overlook the fact that sometimes, for whatever reason, significant evidence is not called when it might have been. The stronger the further evidence is from the appellant’s point of view, and thus the greater the risk of a miscarriage of justice if it is not admitted, the more the Court may be inclined to accept that it is sufficiently fresh, or not insist on that criterion being fulfilled.
[21] The proposed evidence from Mrs Ross could with reasonable diligence have been called at trial.
[22] During preparation for the trial defence counsel made plain to the appellant the need for independent verification that the money was being handed to Mr Nairn. It is most improbable that the appellant would not have referred to Mrs Ross’ presence if that would have been of assistance. On her own account Mrs Ross:
… learnt of the specific facts alleged against [the appellant] … when [Mrs Ross] attended at the trial.
[23] It must have been apparent to her, as to her mother, that the essential issue was whether the Crown could prove that the appellant had taken the money for herself rather than leaving it in the account or at least passing it on to Mr Nairn. Had Mrs Ross been present when that happened it is in our view inconceivable that the appellant would not have told her counsel about it and that Mrs Ross would not have discussed the matter with her mother.
[24] The circumstantial evidence against the appellant was overwhelming and the defence that the appellant had handed the money to Mr Nairn on his instruction, rather than keeping it for herself, is wholly improbable in the light of the evidence as to the banking in her account.
[25] We are not prepared to admit the evidence of Mrs Ross. There is no merit in the contention that there was a possible miscarriage of justice. The first ground of appeal fails.
The second ground: alleged misdirection
[26] We have recorded that there were 421 counts under s 229A.
[27] That extraordinary number of counts was, it seems, in part the result of commendable co-operation between counsel that resulted in a series of admissions made by the defence to which we will return in discussing the sentence appeal. As a result of it, as the Judge directed the jury:
[16] … The number of witnesses was reduced from potentially a very large list down to just six witnesses, two of whom of course you did not hear from in the witness box because their evidence was not challenged in any way and it was simply read to you, Mr Hickmott and Mrs Blatchford.
[28] One important result was that the trial was able to be disposed of in four days.
[29] The Judge directed the jury:
[17] The admissions have also meant that all these charges have been able to be included in one indictment and heard by one jury in a single trial. Ordinarily a jury would not be called upon to consider this huge number of charges and this is because, as judges are almost always required to tell juries in cases involving a number of charges, each count or charge and the evidence relating to it must be considered separately and independently from the other charges in the indictment. A judge will often therefore tell a jury in a case where the indictment contains for example 10 charges that there are effectively 10 separate trials taking place at the same time. I am sure you appreciate ladies and gentlemen, that the situation is different in this case. It would not be very helpful if I told you that in effect 425 separate trials have been taking place over the last three and a half days. The essential difference in this case is that because so much of the background and so many of the facts have been admitted, you are required to consider and decide upon only a few central issues. Furthermore, the facts which have given rise to the first 421 counts, the counts of using a document with intent to defraud, are common to all of those counts.
[30] While Mr Rapley, who did not appear at the trial, did not suggest that the number of counts led to miscarriage, we record our disapproval of including such a number of counts in any indictment. At best, such a large number can be accommodated only if the jurors are prepared effectively to rubber stamp verdicts once satisfied that a consistent pattern has been adopted by the accused in accordance with counsel’s agreement (see paras [26] and [29] of the summing up reproduced in our next paragraph). At worst, there is risk of unnecessary complication and confusion if jurors attempt to deal with each count individually against the evidence supporting it. There was no reason in this case to depart from the conventional practice of limiting the indictment to a moderate number of counts even if by use of schedules and perhaps, as here, by admissions other transactions need to be included to demonstrate the criminality for purposes of establishing the relevant elements and as bearing on sentence.
[31] The Judge directed the jury as to the first three elements of s 229A in a manner which is accepted by counsel – that the accused used a document; that it was capable of being used to obtain a pecuniary advantage or benefit; and that she did so for the purpose of obtaining for herself a monetary advantage or a benefit. The appellant challenged the direction of intent to defraud. As to that the jury were directed:
[23] Fourthly, the Crown must prove that the accused in using the document acted with intent to defraud. A person who acts with intent to defraud is acting dishonestly. A person acts dishonestly if he or she acts in breach of a legal obligation and without an honest belief that he or she was entitled to act in that way. If someone's purpose in acting dishonestly is to obtain something from a person which that person would otherwise not have parted with or given, then the person is acting with intent to defraud. As you know, in this case the person from whom the money was allegedly obtained by the accused was her employer Nairn Industries. In this case the Crown seeks to prove that the accused was acting dishonestly by depriving her employer Nairn Industries of the cash proceeds of all these cheques.
[24] The accused denies two of the essential elements. It is not disputed, indeed you will see it is agreed in the admitted facts statement that the accused in respect of the first 421 charges used documents, Bank of New Zealand cheques, and they were documents capable of being used to obtain a monetary advantage. There is no dispute whatsoever that over the six year period between August 1995 and October 2001 Mrs Staples wrote out, signed and cashed at the bank 166 Nairn Industries wages cheques and a further 255 Nairn Industries cheques being those which have been referred to as the trade creditors cheques where the name of a trade creditor was written on the butt of the cheque but the word "wages" was written on the cheque itself. The writing out, signing and cashing of those 421 cheques constitutes the accused's use of the them. However, the accused denies that she used the cheques to obtain for herself a monetary advantage. She denies in the case of the wages cheques that the balance of each cheque over and above the amount genuinely required to pay staff members the cash component of the earnings that they required to receive in cash, was received by her. Similarly, she denies that she personally received in respect of the trade creditors cheques the amounts of those cheques after they had been cashed at the bank.
[25] The defence case, as you know, in respect of the first 421 charges is that the cash obtained from the Bank of New Zealand went to Mr Nairn and that he obtained it in accordance with directions and/or instructions which he gave the accused. The accused also denies the other essential element and it of course follows from her denials that I have already mentioned. She also denies this other essential element, namely that she acted with intent to defraud. She denies any intention to dishonestly deprive Nairn Industries of the cash proceeds of all these cheques and she denies retaining for herself any of the money which the bank paid out when the cheques were cashed.
[26] Counsel are agreed, and it probably strikes you as plain common-sense ladies and gentlemen, that although you must return a separate verdict for each count, those verdicts will be the same for the first 421 counts. It would be open to you to go through each charge separately and independently and reach different verdicts, but counsel have put to you that really there is only one sensible outcome here and that is that your verdicts in respect of those first 421 counts will be the same and that this is so because the facts are essentially the same in respect of all those charges and the defence is precisely the same in respect of each of those charges.
[27] Therefore, if you decide that the Crown has failed to prove beyond reasonable doubt that the accused used the cheques for the purpose of obtaining a monetary benefit for herself and if you find that it has not been proved beyond reasonable doubt that in doing so she was intending to dishonestly deprive Nairn Industries of the cash proceeds of the cheques by keeping those proceeds for herself, then your verdict on all of those 421 counts would be a verdict of not guilty.
[28] However, if you are satisfied that the Crown has proved beyond reasonable doubt that her purpose was to obtain for herself a monetary advantage and that she was acting fraudulently, that is dishonestly, depriving Nairn Industries of the money by keeping it herself then your verdict on[…] each of the first 421 counts would be guilty.
[29] Counsel are agreed that it is either not guilty on all of those charges or guilty on all of them. Mr Hembrow helpfully acknowledged this in his closing address. He acknowledged that you need not painstakingly go through each of those first 421 charges separately and independently. However, quite rightly Mr Hembrow submitted that you will have to consider the four remaining charges of alleged false accounting separately and independently and that your verdict on the first 421 charges will not necessarily be the same as your verdicts on the last four counts in the indictment.
(emphasis added)
[32] The provision relied on (since superseded by the new s 228) provided:
229A. Taking or dealing with certain documents with intent to defraud–
Every one is liable to imprisonment for a term not exceeding 7 years who, with intent to defraud,–
…
(b)Uses or attempts to use any such document for the purpose of obtaining, for himself or for any other person, any privilege, benefit, pecuniary advantage, or valuable consideration.
[33] Mr Rapley submitted that the Judge erred in failing to direct in terms of the italicised passage in the judgment of this Court in R v Coombridge [1976] 2 NZLR 381, 387 per Richmond P
…We think that in order to act fraudulently an accused person must certainly, as the judge pointed out in the present case, act deliberately and with knowledge that he is acting in breach of his legal obligation. But we are of opinion that if an accused person sets up a claim that in all the circumstances he honestly believed that he was justified in departing from his strict obligations, albeit for some purpose of his own, then his defence should be left to the jury for consideration provided at least that there is evidence on which it would be open to a jury to conclude that in all the circumstances his conduct, although legally wrong, might nevertheless be regarded as honest. In other words the jury should be told that the accused cannot be convicted unless he has been shown to have acted dishonestly.
[34] With respect to Mr Rapley’s argument we are satisfied that the passage relied on has no application in this case. Here there was no claim by the appellant that she was justified in departing from an obligation to hand the cash to Mr Nairn. The question was rather whether in fact she was proved to have taken it for herself. That was the subject of an explicit direction in paras [27] and para [28].
[35] The second ground accordingly fails and with it the appeal against conviction.
Appeal against sentence
[36] The appellant is on stronger ground in the sentence appeal. The Crown submitted to the sentencing Judge that the starting point should be six years imprisonment. The Judge considered that that point was somewhat, but only marginally, too high and decided that the offending including aggravating factors warranted a sentence of 5 and a half years. That was reduced to take into account the appellant’s age, previously unblemished life and what he correctly described as her “sensible admissions of numerous facts”, by six months. A sentence of five years imprisonment was imposed.
[37] We are satisfied that the starting point was rather too high and inadequate allowance was made for the mitigating factors.
[38] The Judge correctly emphasised the overall loss sustained by Nairn Industries Limited, the period of six years over which it occurred and its contributing to the company’s ultimate collapse. The consequences for Mr and Mrs Nairn to which the Judge attached particular weight warranted emphasis on denunciation and deterrence and holding the appellant accountable for the harm caused by her offending. It was serious and, as the Judge observed, involved prolonged planned dishonesty by a person in a position of trust. Because the appellant was the company officer responsible for accounting matters the fraud was not easily detectable.
[39] The Judge rightly recognised the importance of consistency in sentencing and the appellant’s personal circumstances. She is a first offender, married with two adult children, who had earned trust in management positions involving the handling of substantial amounts of money. She produced admirable references.
[40] In their careful submissions to the sentencing Judge and in this Court Crown counsel particularly emphasised the sentence of Eichelbaum CJ in R v Hancox HC Wgtn S56/92, 14 August 1992 where, in a case with an ultimate shortfall of $700,000, a starting point of six years was selected which was reduced for mitigating factors including a plea of guilty to 482 charges of dishonesty. A sentence of four years imprisonment was imposed.
[41] Mr Rapley relied on R v Faisandier CA185/00, 12 October 2000 where the appellant caused loss to a bank by amounting to $833,500 by cheque kiting. A starting point of four years was selected.
[42] The leading case remains R v Rose (1990) 5 CRNZ 638 where, for fraud on Dairy Containers Limited causing losses exceeding $10m over a period of five years, a starting point of seven to eight years was seen as appropriate.
[43] Subsequently in R v Wallnutt CA182/93, 8 August 1993, involving what was described as white collar crime and involving a total shortfall of about $1,700,000 over a period of seven years. This Court confirmed a sentence of seven years that was despite its view that the Judge’s discount of only one year for mitigating factors, principally a plea of guilty and co‑operation of the appellant in clearing matters up, should have been at least two years. It would appear that the Court regarded the eight year starting point as too low having regard to the long period over which the offending continued, the gross abuse of trust, the offender’s callous disregard of the potential plight of his victims, the impact which the offending made on a wide circle in the community and the complete absence of any reparation.
[44] Hancox had the aggravating factor of abuse of a public position; Wallnutt that of large scale defalcation of the public which distinguished them from the present case, grave as it was in its consequences for Mr and Mrs Nairn. This case has more in common with Faisandier where however there appears to have been some optimism that matters would be resolved in the long term. There was no such element in this case. We conclude that the appropriate starting point is five years.
[45] As well as her previous unblemished record the appellant is entitled to draw on the credit of her conduct in this case. While she is not entitled to the discount that would have resulted from pleas of guilty, she is entitled to substantial credit for the very real effort made by the defence to reduce the issues in the case to a single point. As this Court recorded in Wallnutt at p 4:
Usually trials of such charges are lengthy and complex, and inevitably the unravelling of the morass of interwoven transactions left behind require an even heavier deployment of resources if the exercise has to be carried out without the assistance of the offender.
[46] The mitigating features together warrant a year’s reduction.
[47] The appeal against sentence is accordingly allowed. The sentence of five years is set aside and a term of four years substituted.
Solicitors:
Raymond Donnelly & Co, ChristchurchSerious Fraud Office, Wellington
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