Stevens v The King

[2023] NZHC 2021

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CRI-2023-409-87

[2023] NZHC 2021

UNDER

the Criminal Procedure Act 2011

IN THE MATTER

of an appeal against sentence

BETWEEN

MATTHEW IAN STEVENS

Appellant

AND

THE KING

Respondent

Hearing:	27 July 2023
Appearances:	D I Brown, C R Shaw for the appellant S J Mallett for the respondent
Judgment:	1 August 2023

JUDGMENT OF OSBORNE J

Appeal against sentence

[1]    Matthew Ian Stevens was from September 2013 an employee, becoming a trusted senior manager, of two Christchurch companies. Mr Stevens, in a series of sustained and complex schemes involving forgery and other deceptions, fraudulently and/or dishonestly obtained $152,303.75 at the expense of his employers. Other substantial losses incurred by his employers through elements of his offending, such as the manipulation of stock movements and the time and cost of the lengthy unravelling of his activities, are unquantified.

STEVENS v R [2023] NZHC 2021 [1 August 2023]

[2]    Mr Stevens pleaded guilty to one charge of obtaining by deception,1 four charges of altering a document,2 four charges of using an altered document,3 one charge of theft by a personal in a special relationship4 and one charge of forgery,5 all charges but the forgery charge being representative.

[3]    Mr Stevens was sentenced to 23 months’ imprisonment and ordered to pay reparation (for emotional harm) in the sum of $52,000 (the decision).6 The Judge declined Mr Stevens’ request that the period of imprisonment be converted to a sentence of home detention, identifying the “clear need for denunciation”.7

[4]Mr Stevens appeals the sentence.

Facts

[5]    Mr Stevens’ employment at the victim’s business lasted from September 2013 to May 2018, when he was dismissed upon the discovery of his frauds. Until then he had been a member of the senior management team, with between two and five employees reporting to him directly.

[6]    Mr Stevens falsified 124 false part callouts, entitling him to a fee of $100 per call out. Mr Stevens gained a pecuniary advantage of $12,400 in this manner. Mr Stevens also set up a false company purportedly based in Los Angeles. Mr Stevens created fake invoices and sent them to the victim’s company, with payment made to a PayPal account operated by him. He would then disburse the funds to his personal account. Mr Stevens received $62,000 in this manner.

[7]    Mr Stevens altered invoices from a legitimate supplier, sent false invoices through the victim’s company and processed payments via the intermediary PayPal, receiving payment of $39,000 for these invoices. There were two further charges relating to invoice alteration from which Mr Stevens received $23,000. Mr Stevens

1      Crimes Act 1961, ss 240(1)(a), 241(a); maximum penalty seven years’ imprisonment.

2      Section 258(1)(a); maximum penalty ten years’ imprisonment.

3      Section 259(1)(a); maximum penalty ten years’ imprisonment.

4      Sections 220 and 223(a); maximum penalty seven years’ imprisonment.

5      Section 256(2); maximum penalty three years’ imprisonment.

6      R v Stevens [2023] NZDC 10119 [Decision].

7      At [30]–[31].

also altered invoices for personal expenses to indicate things such as hotel stays, and ticketed events as work-related costs. Mr Stevens obtained a further $13,000 in this manner.

[8]    Finally, Mr Stevens sold parts from the business premises, receiving $1,200. Mr Stevens created a false email account, mirroring that of another employee, Ms Daly, stating she was financial controller of the company and using that account for fraudulent purposes.

[9] The complex nature of Mr Stevens’ offending made analysis very difficult and time consuming. A wider range of charges initially laid in relation to a much greater loss were ultimately reduced to the 11 charges referred to at [2] above. Mr Stevens admitted the summary of facts then produced, which is reflected in the summary at [5]–[8] above.

Victim impact

[10]   Adam Wright outlined his efforts in building his business up over the course of 10 years. The business had employed 27 people and had a very large annual turnover. Mr Wright attributes the business’s subsequent struggles to Mr Stevens’ actions. He states the irregular numbers and cashflow reports provided by Mr Stevens led to commercial decisions based on false information. Mr Wright went without a salary for some time in order to build his business back up. The business was subsequently sold. Mr Wright reflects on his subsequent anxiety and lack of trust in other people, to the point he can no longer employ others because of Mr Stevens’ abuse of trust.

[11]   Michelle Wright (née Daly) records her initial disbelief turning into anger and disgust upon uncovering Mr Stevens’ actions. Mrs Wright spent weekends and nights of her own time uncovering the extent of the fraud.

The decision

[12]The Judge summarised the facts of Mr Stevens’ offending.

[13]   The Judge then assessed the culpability of Mr Stevens’ offending. Taking into account aggravating and mitigating factors, he found an end sentence of 23 months’ imprisonment to be appropriate.8 As Mr Stevens accepts there was no error in arriving at that figure, it is unnecessary to refer to the Judge’s reasoning in that regard in detail, save to note the following points:

(a)Mr Stevens’ mild persistent depressive disorder and dependence on alcohol were not causally linked to Mr Stevens’ offending — a psychological assessment report provided to the Court did not support such a nexus. For Mr Stevens, Mr Brown instead relied on the report as indicating a co-relation between the depression and the offending in that, if Mr Stevens’ accounts of spending most of his money on other people were accurate, such spending enabled by Mr Stevens’ frauds would have “positively impacted on his mood”.9

(b)Mr Stevens had not advanced any real reason for his offending, recognising that he was well remunerated at the business. His wife was also working at the time and the couple were under no financial stress.10

(c)In determining culpability, and by reference to the Court of Appeal’s decision in Arnott v R,11 the Judge noted that planned and repeated dishonesty for financial gain constitutes serious offending that warrants the clear element of denunciation, but with other purposes of sentencing also relevant, including deterrence, accountability and the need to provide for the interests of victims.12

8      Decision, above n 6, at [13]–[29].

9 At [21].

10 At [22].

11     Arnott v R [2015] NZCA 236.

12     Decision, above n 6, at [23].

[14]   The Judge finally turned to consider whether he should convert a sentence of 23 months’ imprisonment to one of home detention. In doing so he took into account the following:

(a)the Court of Appeal has said that home detention is a real alternative to a sentence of imprisonment;13 and

(b)there was a clear need for denunciation in Mr Stevens’ case because there had been planned and repeated offending over a significant period of time, the offending was serious and premeditated, and it had significant effects on the victims.14

[15]   The Judge therefore declined to convert the sentence to one of home detention.15

Principles on appeal

[16]   Appeals against sentence are allowed as of right by s 244 Criminal Procedure Act 2011 and must be determined in accordance with s 250 of that Act. An appeal against sentence may be allowed by this Court only if it is satisfied there has been an error in the imposition of the sentence and a different sentence should be imposed.16 As the Court of Appeal identified in Tutakangahau v R (quoting the lower court’s decision), a “court will not intervene where the sentence is within the range that can properly be justified by accepted sentencing principles”.17 It is appropriate for this Court to intervene and substitute its own views only if the sentence being appealed is “manifestly excessive” and not justified by the relevant sentencing principles.18

13     Decision, above n 6, at [29].

14 At [30].

15 At [31].

16     Criminal Procedure Act 2011, ss 250(2) and 250(3).

17     Tutakangahau v R [2014] NZCA 279, [2014] 3 NZLR 482 at [36].

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

Principles specifically relevant to home detention

[17]   The starting point is that the decision whether or not to impose a sentence of home detention is a discretionary decision.19

On appeal

[18]   The Court of Appeal in James v R explained the scope of an appellate court’s role in relation to an appeal against the refusal to grant home detention:20

We record that an appeal against a refusal to grant home detention does not provide an opportunity to revisit or review the merits. The question is whether Judge Tuohy erred in exercising his sentencing discretion: that is, did he apply an incorrect principle, give insufficient or excessive weight to a particular factor, or was he plainly wrong? Ms Guy Kidd for the Crown properly accepts that home detention can satisfy the objectives of deterrence and denunciation, but to a degree. We are satisfied, in accordance with earlier authority in this Court, that the decision about whether home detention will meet those objectives in a particular case is a strictly evaluative exercise. It is a matter of judgment for the sentencing Judge to determine whether home detention is an adequate response to the seriousness of the offending.

(footnote omitted)

[19]   As subsequently explained by Brown J in Thomason v Police, the formulation of what an appellant must establish, taken from May v May, should be:21

an appellant must show that the Judge acted on a wrong principle; or that he failed to take into account some relevant matter or that he took account of some irrelevant matter or that he was plainly wrong.

Two stage approach to considering home detention

[20]   The consideration of home detention arises at the second of two stages, as explained by Young P in his (dissenting) judgment in R v Vhavha:22

[29] Eligibility for home detention depends upon the sentencing judge deciding that, but for the availability of home detention, the offender would otherwise be sentenced to a short-term sentence of imprisonment (ie of two years or less): s 15A of the Sentencing Act 2002. In effect, the Court is given a discretion to commute to home detention what would otherwise be a short-

19     Thomason v Police [2016] NZHC 596 at [7].

20     James v R [2010] NZCA 206 at [17].

21     Thomason v Police, above n 19, at [8], citing May v May (1982) 1 NZFLR 165 at 170; and Harris v McIntosh [2001] 3 NZLR 72 (CA).

22     R v Vhavha [2009] NZCA 588.

term sentence of imprisonment. There is nothing in the Sentencing Act to suggest a presumption for or against such commutation, either generally or in respect of particular types of offence. So what is called for is an exercise of sentencing discretion in a way which gives effect to the purposes and principles of sentencing recorded in ss 7 and 8 of the Sentencing Act.

[21]   The President, in Vhavha, a case involving immigration fraud, explained why particular types of offending should not be singled out as particular types of crime for which considerations of deterrence effectively preclude home detention:23

[43]      While those considerations may suggest that a strong line on immigration offending (for instance a policy of always imprisoning offenders) might have a tendency to reduce immigration offending, similar lists can be prepared in relation to robbery, burglary and drug dealing (mentioned here because of the examples I have earlier given). Yet when judges deal with robbers, burglars and drug dealers where the otherwise appropriate sentence is imprisonment for two years or less, they do not operate on the basis of a presumption against home detention or treat home detention as appropriate only in “rare and exceptional cases”. And, in any event, there are limits to the amount of prison accommodation which the State can be expected to provide in the interests of maximising deterrence.

[44]      Given these considerations, I am reluctant to single out immigration offending as a particular type of crime for which considerations of deterrence assume such great significance as practically to exclude home detention.

[45]      So, coming back to this case again, I do not see the requirements of holding the appellant to account, denunciation or deterrence as logically controlling the decision whether to commute the otherwise appropriate sentence of imprisonment to home detention. That being so, and the appellant being in all respects a good candidate for home detention, I see the least restrictive outcome principle (see s 8(g)) as the primary consideration, with the result that I would allow the appeal and sentence the appellant to nine months home detention.

[22]This approach has since been followed.24

[23]   What is called for, is a considered and principled choice between the two forms of sentence (imprisonment and home detention), recognising that both serve the principles of denunciation and deterrence.25

23     Vhavha, above n 22.

24     See, for instance, Osman v R [2010] NZCA 199 at [20]–[21]; Doolan v R [2011] NZCA 542 at [37]–[38].

25     Fairbrother v R [2013] NZCA 340 at [30].

Submissions

Appellant

[24]   Mr Brown, for Mr Stevens, submits the Judge failed to carry out the second stage of consideration. The Judge, having reached the conclusion that the culpability involved in the offending (serious crime, planned and repeated over a significant period of time and significantly impacting on the victims) pointed to a sentence of imprisonment of 23 months, proceeded on the basis that offending of such a nature called for imprisonment rather than home detention given the clear need for denunciation.

[25]   In short, Mr Brown submits the Judge placed undue weight on denunciation at the cost of other sentencing principles, including in his Honour’s conclusion that a sentence of home detention would not achieve the purposes and principles of sentencing. No expressed reason was given for that conclusion other than the “clear need for denunciation”.

[26]   Mr Brown cites the Court of Appeal’s decision in Ransom v R26 as a case in which the appellate court was called upon to substitute home detention for imprisonment.27 The Court below had refused to convert to grant home detention because of the seriousness of the fraud involved. The Court of Appeal observed:

In our view, Judge Roberts appears to have ruled out a sentence of home detention solely on the grounds that the fraud was too serious. With respect, whether home detention or imprisonment is the appropriate sentencing option in cases of this kind requires a more detailed and nuanced analysis than that. The cases we have cited above show that offending of equivalent seriousness has been held amenable to home detention in the past. In light of Judge Roberts’ error in approach, we must reconsider what sentence should be imposed.

[27]   Earlier in its judgment, the Court of Appeal rejected Crown submissions to the effect that imprisonment should be imposed in preference to home detention. The Court reviewed a number of relevant High Court authorities in which a more detailed and nuanced analysis of the appropriateness of home detention had led to a sentence

26     Ransom v R [2010] NZCA 390, (2010) 25 CRNZ 163.

27 At [40].

of home detention being imposed. The Court found that the High Court cases demonstrated that it has been necessary for sentencing judges to determine, on a case by case basis, whether a sentence of home detention will respond to the particular offending, and that there is no “prescriptive or usual sentence in cases of this type”.28

[28]Decisions implicitly approved by the Court of Appeal in Ransom included:

(a)Beedell v Ministry of Social Development29 — with factors in favour of home detention including genuine remorse, absence of prior convictions, early guilty pleas, attempts to repay over-claimed benefits and positive consequences of availability to continue to care for young children; and

(b)Werahiko v Ministry of Social Development ($85,723.39 fraudulently obtained during a prolonged and deliberate conduct over 10 years)30 — with factors in favour of home detention including the defendant’s remorse and unlikelihood of reoffending.

[29]   Mr Brown referred also to cases involving commercial fraud (as against the benefit fraud cases reviewed in Ransom). Mr Brown submitted the present case has marked similarities to those in Bargh v Police, in which this Court allowed an appeal against the refusal of home detention in a case of commercial fraud.31 There the appellant, as finance and administration manager of an organisation, had over a two- year period manipulated records to obtain $94,896.22 from the organisation.

[30]   In Bargh, the Crown submitted three factors militated against home detention:32

(a)the sentencing level was at or near the higher end of such sentences where home detention could be imposed;

(b)the victim impact was high;

28 At [39].

29     Beedell v Ministry of Social Development HC Whanganui CRI-2010-483-09, 11 February 2010.

30     Werahiko v Ministry of Social Development HC Rotorua CRI-2008-463-55, 5 September 2008.

31     Bargh v Police HC Wellington, CRI-2007-485-134, 17 December 2007.

32 At [10].

(c)the offending had a combination of breach of trust, sophistication and length of offending which underlined its seriousness.

[31]Ronald Young J began his discussion of the appealed decision thus:33

I am satisfied the Judge did err in principle. The Judge in his remarks suggested that “special circumstances” were required for the imposition of home detention where the proposed sentence was at or near the two year imprisonment maximum. The legislation does not provide that “special circumstances” need to be present before a sentence of home detention can be imposed if the proposed sentence of imprisonment is at or near two years. I accept the proposition that the more serious the offending and, therefore, the closer the sentence is to the maximum threshold of two years, the more that factor counts in the balance against home detention. That balance can be swung the other way by other circumstances which might overwhelm seriousness.

[32]   Mr Brown submits the same situation occurred in this case. He submits here the Judge, putting the need for denunciation at the forefront, did not undertake any analysis of the significant mitigating factors present in Mr Stevens’ case.

[33]Mr Brown submitted the mitigating factors present included:

(a)Mr Stevens’ pleas — Mr Stevens always having indicated that he intended to plead guilty to the charges once quantum was established, the process of disclosure and discussion bringing the sums referred to in the charges very close to what the defendant had assessed the quantum to be;

(b)Mr Stevens’ remorse, indicated by his independently initiated offer of

$52,000 for emotional harm reparation; and

(c)matters relating to Mr Stevens’ mental health as covered in the psychologist’s report.

[34]   Mr Brown referred to the psychologist’s report as important at two levels. First, the report writer, Mr Metoui, had identified it could not be said Mr Stevens’ depressive illness was a cause of his offending. The Judge (at [21] of the decision)

33     Bargh v Police, above n 31, at [11].

adopted the psychologist’s conclusion (no link between Mr Stevens’ offending and depression), noting at that point that “there may be a co-relation between that in that the offending helped reduce the depression”.

[35]   Mr Brown submitted that the Judge did not return at the second stage (the home detention analysis) to consider this aspect of the psychologist’s report. The report indicates that, by reason of Mr Stevens’ depressive disorder, the offending may be related to Mr Stevens fraudulently obtaining the money (not out of a greed based on self-enrichment but) as a “compensatory mechanism to give him some relief from underlying feelings of despair, hopelessness and personal failings”.

[36]   Mr Brown further submitted the Court, in assessing whether home detention was the appropriate sentence, was obliged to take into account the fact that Mr Stevens was unlikely to reoffend. Mr Stevens is 46 years of age. He had not previously offended in this or a similar manner. He had received a positive pre-sentence report, confirming the suitability of his home for electronic monitoring, and recommending home detention and reparation as the appropriate sentences. Mr Brown submitted the Judge had failed to have sufficient regard to the mandatory consideration (under s 16 Sentencing Act 2002) of the desirability of keeping Mr Stevens in the community.

Crown

[37]   Mr Mallett submitted the appellant had not demonstrated an error in the sentencing decision.

[38]   In relation to the suggested absence of reasoning to support the decision to refuse home detention, Mr Mallett pointed to the matters the Judge had explicitly taken into account, including the long, deliberate and sophisticated offending involving a significant breach of trust; the significant impact on victims; a lack of personal circumstances mitigating the offending; and the clear need for denunciation to address such offending.

[39]   Mr Mallett noted the Judge’s recognition that “home detention is a real alternative to a sentence of imprisonment”,34 before the Judge concluded, looking at all the matters before him, that he should not convert the sentence of imprisonment to home detention.

[40]   Mr Mallett secondly submitted the mandated consideration (under s 16 Sentencing Act) was implicitly met by the Judge’s articulation of the sentencing considerations he identified. Mr Mallett submitted that the appellant is effectively asking the Court to undertake a review of the merits of the decision, without identifying an error per se.

[41]   Mr Mallett submitted cases such as Bargh are distinguishable because they involved identifiable errors of approach on the part of the sentencing Court.

[42]   Thirdly, Mr Mallett submitted the Judge had taken into account the factors relied upon by Mr Stevens, including his guilty pleas, his remorse and matters pertaining to his mental health. In relation to the first two of those, Mr Mallett noted the credit that the Judge gave in setting the period of imprisonment. In relation to Mr Stevens’ mental health, he submitted there is no suggestion that Mr Stevens’ mental health would make the sentence of imprisonment unduly difficult.

[43]   Finally, Mr Mallett submitted that imprisonment was the least restrictive outcome in this case for all the reasons identified by the Judge, this being a reference back to the factors Mr Mallett had earlier pointed to.

Discussion

[44]   I am satisfied the Judge erred in principle. In particular the consideration of home detention which calls for a distinct second-stage analysis was limited on the face of the decision to an expressed consideration of the need for denunciation. As the various cases referred to by counsel indicate, an examination of the circumstances of particular defendants by reference to the detail of their situations, has not infrequently

34     Decision, above 6, at [29].

resulted in the imposition of a sentence of home detention, notwithstanding the features of serious fraud offending such as Mr Stevens’.

[45]   I therefore consider afresh whether or not home detention should be imposed on Mr Stevens.

[46]   It is common ground the 23 months’ period of imprisonment calculated by the Judge was appropriate. The fact it is so close to the maximum threshold of two years counts on the balance against home detention.35 Also to be taken into account is the impact on the victim and his businesses. While Mr Stevens is paying a significant sum in reparation on account of emotional harm, the very significant losses caused to the businesses and the impacts on the victims of Mr Stevens’ crimes are matters that weigh in the balance in favour of a period of imprisonment.

[47]On the other hand, there are to be weighed:

(a)Mr Stevens’ guilty pleas, following his early indication he intended to plead guilty to charges that correctly identified the quantum of loss;

(b)a measure of remorse evidenced not only by the guilty pleas but also by the reparation arrangements;

(c)the unlikelihood of Mr Stevens’ reoffending given that, before his 2013 employment, he had no record of similar offending; and

(d)the psychological evidence indicating Mr Stevens’ persistent depressive disorder could leave him susceptible to offending of this nature without a dominant motive of self-enrichment.

[48] I am satisfied that, while none of these mitigating factors on their own might appropriately lead to a sentence of home detention, taken together and weighed against the factors I have referred to at [46] above, they render home detention the least restrictive sentence appropriate in the circumstances.

35     Bargh v Police, above n 31, at [11].

[49]   The sentence of home detention that will be imposed on Mr Stevens remains a sentence that clearly signals both the deterrence and denunciation called for in response to his offending.

[50]   Nothing in the outcome of this judgment implies Mr Stevens’ offending was anything other than criminality that demanded, from the courts, a sentence that will both denounce and deter.

Calculation of period of home detention

[51]   On a purely mathematical approach, the indicated sentence of 23 months’ imprisonment can be equated to a sentence of 11-and-a-half months’ home detention.

[52]Mr Stevens has been in custody since he was sentenced on 18 May 2023.

[53]   Counsel agreed at the hearing that an appropriate adjustment to what would otherwise be the period of home detention, to take into account the custodial period, would be two-and-a-half months. This leads to a period of home detention of nine months.

Outcome

[54]I order:

(a)the appeal is allowed;

(b)the sentence of imprisonment is cancelled;

(c)a sentence of nine months’ home detention is substituted with the following conditions:

(i)upon release from prison the appellant will travel directly to the home detention address identified in the pre-sentence report and await the arrival of the Probation Officer and electronic monitoring agent;

(ii)the appellant will reside at the home detention address subject to the conditions of home detention;

(iii)the appellant will attend any assessment, counselling or treatment to the satisfaction of the programme provider to reduce the risk of reoffending as may be directed by the Probation Officer; and

(iv)the appellant will not be involved in any business activity or voluntary work for any other personal organisation where he has access to the handling of financial arrangements or the handling of money.

Osborne J

Solicitors:

D I Brown, C R Shaw for the appellant S J Mallett for the respondent