The Queen v Anita Faisandier

IN THE COURT OF APPEAL OF NEW ZEALAND

CA185/00

THE QUEEN

ANITA FAISANDIER

Hearing:	27 September 2000
Coram:	Gault J Ellis J Robertson J
Appearances:	R M Lithgow for Appellant S P France and K White for Crown
Judgment:	12 October 2000

JUDGMENT OF THE COURT DELIVERED BY GAULT J

The appellant was convicted following trial by jury in the District Court at Wellington on 20 counts of using a document with intent to defraud. She was sentenced to imprisonment for 3½ years. She now appeals against both her conviction and sentence. The facts of the offending need be stated only briefly for the purpose of this judgment. The charges involved the appellant manipulating various bank accounts to create artificial credits which she then drew upon knowing that there were not the funds available to meet her cheques. There can be a time delay of some days in the banking system between the drawing of a valueless cheque and its eventual dishonour. The appellant, knowing of this time delay, took advantage of it by writing valueless cheques between various accounts she controlled at different banks. This practice is known as "cheque kiting".
The charges relating to activities earliest in time were directed to the drawing of cheques, knowing there were insufficient funds to meet them, for the purpose of paying personal expenses, primarily those owing on an American Express account, and for some business expenses. In these early instances matters were eventually cleared as a result of the provision of funds by the appellant's husband, it seems as part of a settlement of the division of matrimonial property.
The majority of the charges were directed to matters in the second half of 1997. The appellant established a company, Travel Incorporated Ltd. This was said to carry on business running a travel club generating income from commissions on travel expenses. There was little genuine business and the appellant fabricated records indicating considerable business for the purpose of raising a substantial overdraft facility. She also engaged in massive cheque kiting partly to give the impression of business activity and partly to generate funds for personal and other expenses. Hundreds of cheques were written, many for substantial amounts. Some were dishonoured, some were met from credit balances created by the deposit of other cheques. The cheques were written and presented with the intention that they be accepted and acted upon when the appellant well knew that there were no genuine funds available to meet them.
The total face value of the documents to which the charges related was between $40.6 and $40.7 million. When matters were brought to an end the actual loss incurred primarily, but not solely, by one bank amounted to $833,500.
The lengthy trial followed a Serious Fraud Office investigation. The appellant did not give evidence but evidence was given on her behalf from a handwriting expert, the Secretary of the Wellington District Law Society and from her mother.
Much evidence at the trial was directed to the reality of claims by the appellant that she had funds to which she had access overseas, and expected in due course to be able to meet all of the outstanding liabilities she created. Such an optimistic expectation, even genuinely held, would not seem to constitute any defence to the use of the cheques with intention that they be paid at a time when it was well known that there were no funds available. Such a course, undertaken dishonestly, to secure funds in the meantime, would constitute the essential elements of the offence even if there had been some optimism that somehow matters would be resolved in the long-term.
The jury heard that in the course of an interview with an officer of the Serious Fraud Office the appellant had claimed she had access to funds (inter alia) held in an overseas trust and by virtue of a proprietary interest in an Hawaiian company (US Foods) with a business in the importation of fruit. In the course of interview she referred to people and documents which she said would verify her claims. In evidence the Crown sought to establish that there were no funds overseas to which the appellant had access and references were made to a large volume of documentation generated in the course of the inquiry. It was in that context that the evidence for the defence was called. That of the document examiner and from the Law Society was directed to a challenge to the credibility of a Crown witness who had said that the appellant's investment in the trust had never materialised. The appellant's mother gave evidence of a source of funds for her daughter but it was related neither to the overseas trust nor to the Hawaiian company.
That leads to the ground of the appeal against conviction. It is of breach of s366 Crimes Act 1961. It was submitted that there should be an order for a new trial because counsel for the Crown in the course of his address to the jury commented upon the fact that the appellant refrained from giving evidence as a witness contrary to the clear prohibition in that section. We were referred to the decisions of this Court in R v McCarthy [1992] 2 NZLR 550, R v Ngatai [1999] 1 NZLR 446, R v Accused (1995) 13 CRNZ 301 and R v Foulds & Watson CA314, 315 325/94, judgment 19 December 1994.
Unfortunately, notwithstanding the clear direction given by this Court in R v Pearson (1996) 14 CRNZ 282, 286 and numerous other cases, and the Practice Note - Criminal Appeals [1997] 3 NZLR 513, it is not completely clear just what occurred at the trial. There is a sharp, although narrow, difference in the recall of counsel. It has not been resolved by agreement and was not referred to the trial judge for his assistance. Shortly before the hearing in this Court we asked the trial judge for a report under r12 Court of Appeal (Criminal) Rules 1997 and that is available. Unfortunately it does not directly address the point of difference. What is clear however, is that before final addresses Crown counsel approached the Judge seeking a direction from him that he would comment to the jury on the fact that the appellant refrained from giving evidence. The Judge declined. Counsel then indicated that in his address he intended to push the matter as far as he could though well aware of the restriction about which he was reminded both by the Judge and by defence counsel. Counsel then addressed the jury and referred to the claims made by the appellant in the course of interview with the officer of the Serious Fraud Office. He then addressed the absence of evidence verifying those claims. We have no transcript of exactly what was said. We have a memorandum from trial counsel in which he states:

These are the points I believe I made in the relevant part of the closing. The parts in italics have been suggested as additions by Mr Lithgow. I have no formal record of the detail but accept the general tenor.
·Where is the evidence?

·Where are the letters?

·Where is the witness?

·Not even an affidavit.

·Why isn’t her lawyer called?

·Why hasn’t she called someone from bank?

·She says she has money from US Foods but not one piece of evidence to support it except what she said in interview to Serious Fraud Office.

She cannot produce one piece of paper

She produced through her mother evidence
If she can produce one thing, why not another
There was no company US Foods
There were no proceeds; that is why there is no money in the Unit trust
She was 100 percent confident: “I think I can prove it”
It’s easy enough to get documents from the bank in Honolulu; why haven’t we heard from Customs agent

·Look at what she promised on interview:
- Where are the sale documents?
-Where are the bank documents?
-Where are indications she had changed proceeds to bearer bonds?
-Where is letter from stockbroker?
-Where is letter from accountant?

- Where is letter from lawyer?

·Where is the witness, where is the evidence; she has had every opportunity?

I am adamant that in closing I made no direct reference to the accused not herself testifying.

Mr Lithgow, who appeared for the appellant at her trial, provided us with a reproduction of the notes that he made at the time which comprised a series of bullet points as follows:
·She says $ US Foods – no dollars
·Never got $ US Foods
·Where is evidence from her or through lawyer
·Where is affidavit
·Where is witness
·Not
·She cannot produce one piece of paper
·Produced through mother evidence of $
·If one piece why not another piece
·Was no company US Foods
·Were no proceeds
·That’s why no $ unit trust
·Page 46 – US Richard Morris
·Page 48 – None
·Metcalf - benefit
·Defendant 100% confident
·Page 51 I think I can prove it
·Bank Hawaii
·Easy enough Bank Honolulu why not heard
·Customs agent
The Judge in his report to us reconstructed the events from his recollection as follows:

The passage complained of in Mr Upton’s final address came very late in the piece and at a time when he was attempting to anticipate defence submissions, following a lengthy review of the Crown case. Referring to Mrs Faisandier’s claim in her videotaped interview with Rhys Metcalfe on 16 June 1998, he reminded the jury she had claimed to have access to some $3.256 million in her company US Foods or ARW account in Hawaii. Despite her protestations when Mr Metcalfe expressed his disbelief in this claim and contrary to her promise to supply documentation to support her claim, Mr Upton pointed out that no defence evidence had been produced to show that a company called US Foods existed or where its bank account was located or whether that company bank account had $3.256 million credit balance, and finally that there had not been evidence from a customs agent for example confirming the export of fruit from New Zealand to Hawaii which Mrs Faisandier had told Mr Metcalfe was the source of US Foods funds. He invited the jury to conclude there was in fact no such company as US Foods, no bank account with the proceeds of a successful food exporting venture safely lodged and almost as a throwaway line added that it would have been “so easy for some evidence to be produced”.

Mr Lithgow applied to the Judge for a direction of mistrial on the ground of Crown counsel's "express and implied attack" on his client's failure to give evidence. The Judge declined that application. Although he indicated at that time that he would prepare written reasons, the Judge did not do so. In his report to us he recorded his reasons as follows:
By the narrowest of margins I decided to reject Mr Lithgow’s application. I was not happy about Mr Upton’s comments. They were, however, related to the Metcalfe interview, they did not necessarily criticise Mrs Faisandier for her own failure to give evidence; they did no more than point out the obvious lack of evidence as to matters which the defence constantly hinted at throughout the trial but never delivered on and on balance I was not prepared to jettison a both lengthy and costly trial for the sake of what I considered was an ill-judged throwaway line. The jury was not going to be retiring with Mr Upton’s words still echoing in their ears in view of the intervening night and two further addresses to come. I also hoped with my summing up to deflect any attention being placed on this part of Mr Upton’s final address.
The point on which the recollections of counsel differ is whether there was an "express" comment on the failure of the appellant to give evidence as a witness. Crown counsel is adamant he did not. Mr Lithgow at the time based his application on such an express comment, as is recorded in the Judge's memorandum of his reasons. However, the Judge proceeded, albeit on the narrowest of margins, on the basis that there was no contravention of the prohibition, clearly indicating that he did not regard counsel's comment as an express reference to the accused refraining from giving evidence. We have no means of resolving the difference of recollection between counsel. In that situation we have no alternative but to rely upon the report of the Judge in which he concluded that what he called "a throwaway line" to the effect that it would have been so easy for evidence to be produced, fell short of an express comment on the accused failing to give evidence as a witness.
Mr France who appeared for the Crown on the appeal, drew our attention to authorities in which a distinction has been drawn between comment that the defence has called no evidence on a matter and comment that the accused has refrained from giving evidence as a witness. In R v Dallard [1957] NZLR 1092, 1097 that distinction was drawn. Although at the time that case was decided the statutory prohibition was against either Judge or prosecutor making "adverse comment" which is not the same prohibition as now applies, it is not distinguishable in principle. The same distinction was drawn in R v Thornton (1980) 3 A Crim R 80, 84. Also, perhaps analogously, the cases draw the distinction between comment on the comparative weight of unsworn statements as against evidence and comment on refraining to give evidence as a witness - see R v L [1996] 1 NZLR 53 and Bridge v R (1964) 118 CLR 600. This of course does not mean that it is not equally a breach of the prohibition to comment indirectly or inferentially upon the fact that an accused person has refrained from giving evidence. But it is important to keep in mind just what is prohibited.
It is clear that counsel's comments were directed to the claims made by the appellant in the interview. Those claims were of the availability of verification from records or other persons. Comment that evidence providing such verification was not produced was not directed to the failure of the appellant to go into the witness box, it was comment on the absence of the confirming evidence she had said was available. That is confirmed by most of the notes available to us including that of the Judge which focused on the comment that it would have been "so easy for some evidence to be produced". On the material before us we are not prepared to say that the conclusion reached by the Judge was wrong.
That does not mean we are to be taken as approving what Crown counsel said. It is no function of prosecuting counsel to press to the limits. As Mr France readily acknowledged, the remarks of counsel went far too far. They undoubtedly conveyed the suggestion that the accused carried an onus of proof, which was entirely wrong. Mr Lithgow submitted that this was exacerbated in this case because material Crown counsel said had not been produced was among papers which the Serious Fraud Office held - though we did not find the material we were referred to convincing in that respect.
The Judge took considerable care to ameliorate the impact of Crown counsel's comments. He negated a personal attack made on the appellant and emphasised no fewer than nine times in a relatively short summing-up that the onus of proof remained on the Crown throughout and that it was not for the defence to prove anything. The Judge did not directly make reference to the complaint that Crown counsel had commented on the fact that the appellant refrained from giving evidence. To have done so would have merely drawn the matter to the attention of the jury. It was wisely left alone.
In the end we are satisfied that there has not been a miscarriage of justice in any event. The case against the appellant on the essential elements of the offences was overwhelming and the availability of funds overseas was not at the heart of the case.
The appeal against conviction is dismissed.
The appeal against the sentence of 3½ years imprisonment was advanced on two grounds; the first that the sentence imposed was excessive, and the second that greater allowance should have been made for a period of pre-conviction detention. The Judge on sentencing assessed the appropriate starting point at four years imprisonment and then allowed a deduction of six months to take account of the period of detention and any other mitigating factors.
The appellant was apprehended in the United States of America. She was not, and could not have been, formally extradited. She was accompanied back to New Zealand and held in remand custody for a period. That period will be taken into account administratively and does not concern us. However, upon her request, she was admitted to a form of home detention although that was not recognised as a form of custody at that time, nor was it part of what is now a statutory based means by which certain offenders may serve part of their sentences of imprisonment. In fact the appellant was granted bail on conditions. Those conditions required her to remain in her home under electronic surveillance for the full period of 10½ months. It was that period which we were asked to regard as the equivalent of remand custody and to hold that the allowance made by the Judge in fixing his final sentence was not sufficient.
In his sentencing remarks the Judge said:
As far as home detention is concerned, there are 10.5 months involved covering the period between February and December 1999. The seven days detention in the United States I exclude from my calculations. In my view that is something that was self-inflicted, brought about by your travel overseas and no credit should be given for that. Home detention in New Zealand however is a much different proposition, 10.5 months on home detention is far longer than would be possible under the present statutory regime. It could, I think, be fairly argued that you have done this country some service by pioneering the home detention scheme at your own expense and some credit should be given for that. I accept however Mr Upton’s basic proposition that the credit should not be on a day for day basis. It should however be the subject of credit because detention, in the sense that you are not free to move about, as and when and where you wish is a significant penalty in itself. It is a penalty however that mitigated (sic) to some extent by the fact that you remain in your own surroundings, sleep in your own bed and do not have the drawback of living in unfamiliar and perhaps unpleasant surroundings as is the case with incarceration in a prison. My deduction therefore will be one of 6 months.
We turn first to the starting point selected by the Judge of imprisonment for four years. It was submitted that this was too high when compared with other sentences imposed for major frauds not involving breaches of professional positions or trust. Particular reliance was placed upon the decision of this Court in R v Siemonek CA182/97, judgment 25 August 1997. In that case the sentence of imprisonment for three years was upheld following conviction for serious frauds by an employee engaged in the administration of the Student Loans scheme. The total amount involved in that offending was just under $1 million although the actual loss was not quantified. There was an element of breach of trust by an employee as well as the involvement of other people for whom illegal loan applications were arranged.
On the other hand, among the cases relied on by the Crown was R v Clark CA364/99, judgment 23 November 1999 in which this Court reduced the sentence of four years to three years for a series of frauds carried out by a business man who persuaded others to invest in a non-existent business giving rise to total losses of $386,081. In that case the Court, by reference to authorities, said that the starting point of four to five years was appropriate.

We were referred in addition to the decisions in R v Rose [1990] 2 NZLR 552, R v Rod CA236/99, judgment 6 September 1999, R v Cochrane CA431/92, judgment 27 May 1993, and R v Harris CA344/98, judgment 1 December 1998 (where a range of 2½ to four years was referred to as established on the authorities and the offending related to frauds in a business context),
We were also referred to ss6 and 7 Criminal Justice Act 1985 although the magnitude of the offending in this case could not justify a submission that a sentence of imprisonment should not be imposed.
We accept that it would be unrealistic to treat the present case as one of frauds involving amounts in excess of $40 million. We think it is equally unrealistic simply to treat the offending as of one instance of fraudulent conduct giving rise to a loss in an amount just under $1 million. The nature of the offending and the period over which it occurred places it in the category of serious fraud and its persistence and magnitude cannot be explained simply as silly conduct by someone living in a world of make-believe. Nor are we particularly impressed with contentions that in some way culpability is less because the bank should have been more careful, or because the loss was to one major commercial institution rather than to individuals, although there are some individuals victimised in the offending in this case and that is in addition to a particular bank officer who was deceived by the appellant to such an extent as undoubtedly has affected the remainder of his career. We are satisfied that the starting point for sentence of four years was within the range open to the Judge and we have not been persuaded it should be disturbed.
The issue of pre-conviction detention is more difficult. If the period spent on home detention had been spent in remand custody the full period would be treated as time served and would equate with a sentence longer than that spent on remand depending upon the eventual release date. On the other hand, it has not been the practice to make adjustments to prison sentences to take account of periods spent on bail on remand, even where bail conditions have been restrictive. There is still no statutory basis for release on home detention during the remand period. Should it become part of the remand system for prisoners no doubt the authorising legislation will provide for appropriate allowances in sentences imposed following conviction. Without that, in this unique situation where the home detention was very much of a trial and at the request of the appellant, the sentencing Judge and this Court are left to do the best we can. Like the Judge we are satisfied that some allowance is to be made having regard to the restrictive nature of the home detention and its length. We are not persuaded, however, that it should be treated in this case as the equivalent of custody on remand as was done in R v Afu CA360/96, judgment 22 October 1996, where the offender, a youth, had been remanded in the custody of the Director General of Social Welfare in a residential home. Nor are we disposed to attempt some arithmetical calculation including speculation on the likely release date of the offender. We think the Judge was correct in arriving at a deduction in his formulation of the overall sentence without attempting some more sophisticated calculation. Our concern is with the deduction actually arrived at by the Judge of six months in respect of the pre-conviction detention and any other mitigating factors.
The Judge did not identify particular mitigating factors, although we were pressed by Mr Lithgow to take into account the fact that the appellant at 46 years of age is a first offender, that she meant no harm, that the public were not involved in loss, that there was no breach of trust, that she provided a service in trialing the home detention system and that she co-operated with the authorities in returning to New Zealand. Some of those matters do not reflect mitigation but rather the absence of aggravation. Others are inconsistent with what we have said already. Overall we do not think they constitute strong grounds for substantial deduction by way of mitigation over and above the factor of pre-conviction detention.
Bearing in mind the nature of the offending and the likelihood that the appellant will serve substantially less than the nominal sentence imposed, we think that a period greater than six months should have been allowed. But we are not persuaded it should be one and a half, two or three times the amount of the time spent on home detention as contended for. To accept that would be to treat the matter as the equivalent of remand custody and, while fully appreciating its restrictiveness on the life of the appellant over the period, we are not persuaded that in the circumstances in which it was arranged it should be so regarded. We think an allowance of 12 months would have been reasonable.
Accordingly, the appeal against sentence is allowed, a sentence of imprisonment for 3½ years is quashed and there is substituted a sentence of imprisonment for three years. Although not mentioned in the course of hearing, the appellant is on bail. So, she must surrender to the police within 24 hours of the date of this judgment.

Solicitors
Val Nisbet, Wellington, for Appellant

Crown Law Office, Wellington

[2000] NZCA 231

12 October 2000