The Queen v Butler

[2008] NZCA 173

IN THE COURT OF APPEAL OF NEW ZEALAND

CA546/07
[2008] NZCA 173

THE QUEEN

v

ROBERT BENJIMAN BUTLER

Hearing:29 May 2008

Court:William Young  P, Randerson and Harrison JJ

Counsel:P H B Hall for Appellant

S B Edwards for Crown

Judgment:19 June 2008 at 12 noon

JUDGMENT OF THE COURT

THE APPEAL AGAINST SENTENCE IS DISMISSED.

____________________________________________________________________

REASONS OF THE COURT

(Given by Randerson J)

[1]       Mr Butler appeals against a sentence of nine months imprisonment imposed by Judge Phillips in the Invercargill District Court on 17 August 2007.  Mr Butler was found guilty after trial of nine counts under the Companies Act 1993.  The offending related to Mr Butler’s involvement as a director in a number of companies over the period 2003 to 2005 while prohibited from doing so as a result of convictions for crimes of dishonesty.  He was convicted of three counts under s 377(1) of knowingly making false statements as to his disqualified status and six counts under s 382(1)(b) of becoming a company director without the leave of the Court.  

[2]       The sentence was cumulative on a term of two years’ imprisonment imposed on Mr Butler on 16 March 2007 in respect of a charge of intentional damage so that the total sentence was two years nine months’ imprisonment.  Leave to apply for home detention was declined in respect of the intentional damage sentence.  It is accepted that Mr Butler was not eligible for home detention by the time of the sentence under appeal.

[3]       Mr Hall appeared for Mr Butler.  He responsibly accepted that a term of imprisonment was appropriate but submitted that the term imposed was manifestly excessive.  Central to Mr Hall’s argument were submissions that the sentencing Judge had:

(a)Failed to have sufficient regard to the totality of the offending;

(b)Departed inappropriately from an earlier sentence indication;

(c)Imposed a sentence which was out of line with the authorities; and

(d)Given undue weight to Mr Butler’s previous convictions. 

Background

[4]       Mr Butler was prohibited from being a company director as a consequence of a number of fraud related convictions between March and October 2003.  In March, he was convicted of two charges of intent to defraud and 13 charges of defrauding by false pretences; in May he was convicted of six charges of using a document with intent to defraud; and in October, he was convicted of four charges of altering a document with intent to defraud.  These offences are all crimes of dishonesty in terms of s 2(1) Crimes Act 1961 with the result that by virtue of s 382(1)(b) of the Companies Act he was prohibited from being a director of a company for five years after the convictions unless he obtained the leave of the Court.

[5]       Between October 2003 and June 2005 the appellant became a director of six different companies without obtaining the leave of the Court.  In the case of three of the six companies he signed a form of consent and certificate stating he was not disqualified from being a director when he knew that statement to be false. 

[6]       The penalties were substantially increased in 1993 to a maximum of five years’ imprisonment or a fine not exceeding $200,000: s 373(4). The legislation also provides that, upon conviction for an offence under s 377(1)(a), the offender is further prohibited from becoming a director of a company for five years from the date of conviction unless the leave of the Court is obtained: s 382(1)(b).

[7]       Two of the companies subsequently went into receivership with debts said to total $174,000.  The extent of these debts is disputed by Mr Butler.  We were informed by Mr Hall that two of the companies had never traded and the other two traded for a brief period but no losses were apparently sustained. 

The Judge’s approach to sentencing

[8]       The Judge treated Mr Butler’s offending as serious noting the maximum penalties and observing that the legislature saw this type of offending as striking at the heart of the commercial world.  The Judge referred to Mr Butler’s substantial list of previous convictions on fraud-related charges for which he was sentenced to 12 months imprisonment in March 2003.  An examination of Mr Butler’s record shows that he was first convicted for fraud in 1999 when he was 20 years of age.  Against that background, the Judge was entitled to conclude that Mr Butler was “a most dishonest man”.

[9]       The Judge noted the extent of the losses sustained by two of the companies which had harmed a number of innocent people.  He accepted a submission made on behalf of the Crown that Mr Butler’s conduct amounted to a breach of trust to the extent that persons dealing with companies should be entitled to assume that directors are not disqualified persons.  The Judge accepted the assessment of the Probation Officer that Mr Butler was of medium to high risk of re-offending having regard to his “patent and continuing acts of dishonesty”. 

[10]     The Judge was unable to discern any mitigating factors.  He noted that, in terms of the Companies Act, Mr Butler could become personally liable for the debts of the companies (s 384) and that he would be prohibited from being a director for a further five years.  However, in imposing sentence, the Judge considered that denunciation, deterrence and protection of the public were principal elements given what he regarded as the serious nature of the offending.  In that respect, the Judge concluded that Mr Butler was well aware of the legal requirements since the forms he completed specifically drew attention to the issue of disqualification.

[11]     The Judge then concluded:

[11]     When I look at all of the relevant factors here, I take into account that I gave you a sentencing indication (not as you set it out in the letter) but one of six months if you had pleaded guilty some months ago prior to trial.  I note here that in my view the offences each aggravate one another and I must have regard to overall totality and principle.  There is therefore a starting point for sentence of nine months’ imprisonment.  I look to see whether there is [sic] any factors relating to you that could allow me to apply any discount to that sentence by way of mitigating factors personal to you; there are none.  In my view therefore a sentence of nine months’ imprisonment is the appropriate sentence.  You are sentenced to imprisonment for nine months cumulative on the two year sentence that was imposed on you on 16 March.

[12]     The Judge declined leave to apply for home detention but, as counsel accepted, Mr Butler was ineligible for home detention by virtue of the March sentence. 

Counsel’s submissions

Totality

[13]     Mr Hall submitted that the Judge made no explicit reference to the need to take into account the sentence imposed on the intentional damage charge.  Mr Hall accepted that a cumulative sentence was justified in terms of s 84 Sentencing Act 2002 but submitted that the Judge should have asked what the appropriate penalty would have been if Mr Butler were being sentenced on the intentional damage and Companies Act charges at the same time.  He submitted that the Judge had not done so and that if the Judge had correctly assessed totality, the penalty on the Companies Act charges should have been one to three months imprisonment.

[14]     Ms Edwards for the Crown accepted that the Judge had not explicitly undertaken the totality assessment but she submitted that the sentence was nevertheless amply justified.  We agree that the end result is what matters.

Sentence indication

[15]     The Judge told Mr Butler on 5 February 2007, some four or five months prior to his trial, that if he were to plead guilty, the appropriate sentence would be six months’ imprisonment.  The Judge also indicated that he would grant Mr Butler leave to apply for home detention.

[16]     Mr Hall submitted that a sentence of nine months’ imprisonment was greater than Mr Butler could reasonably have expected.  The timing of the sentence indication some four months after depositions suggested that if a plea of guilty had been entered at that point, Mr Butler could not have been entitled to a full one-third discount for that factor.  In giving the sentence indication of six months, the Judge could not have adopted a starting point of nine months.  It followed in Mr Hall’s submission, that it was unfair for the Judge to add three months to the indicated sentence to arrive at a final sentence of nine months.  That suggested Mr Butler was being punished for pleading not guilty.

[17]     While we see some force in Mr Hall’s submission taken in isolation we must, in the end, have regard to the overall picture. 

Other authorities and the relevance of the previous convictions

[18]     Mr Hall submitted that the decision of this Court in R v Holdgate CA14/98 26 March 1998 had similarities to the present case.  In Holdgate a sentence of six months’ imprisonment was quashed and a sentence substituted of six months’ imprisonment (suspended for 12 months) plus six months’ periodic detention.  The appellant Mr Holdgate had pleaded guilty to two charges of acting as a company director within five years of having been convicted on a charge of theft.  There were aggravating factors including previous convictions for similar offending.  However there were also substantial mitigating factors including the subsequent setting aside of the conviction for theft which formed the foundation for the qualifying offence.  This Court took into account that there was no information to suggest there were losses to creditors arising from the actions of the appellant and that a custodial sentence was unusual in the absence of other serious offending. 

[19]     This last point immediately distinguishes Mr Butler’s case.  While we acknowledge Mr Hall’s point that the appellant should not be punished twice for the qualifying offence, the Court is entitled to take into account his overall record as a serious aggravating factor.  Here there were some 25 offences of dishonesty in the period March to October 2003 which were of sufficient seriousness to warrant a sentence of one year’s imprisonment.  And, as earlier noted, there had been prior convictions for fraud in 1999.  As well, while there is no direct evidence that Mr Butler was responsible for the debts of the two companies that went into receivership, the Court is entitled to give some weight to the overall commercial context in which the offending occurred.

[20]     Mr Hall also referred to the decision of this Court in R v Sanson CA178/01 26 July 2001.  Mr Sanson was convicted after trial on one count of taking part in the management of a company without the leave of the High Court.  He was sentenced to 150 hours of community work but, on appeal, the sentence was quashed and Mr Sanson was convicted and ordered to come up for sentence if called upon within 12 months. 

[21]     This Court considered the procedural history of the case amounted to “extraordinarily unusual circumstances”.  Although Mr Sanson had pleaded guilty to an earlier charge of a similar nature, this Court noted that no actual loss was occasioned to anyone as a result of either of Mr Sanson’s breaches.  Nor was there any evidence that he had wilfully flouted his obligations.  Rather, the Court accepted that Mr Sanson had been attempting to act in accordance with the law. Finally, this Court noted that the sentencing Judge had failed to take into account the fact that a further five year prohibition from taking part in the management of any company would apply as from the date of the conviction, an error not repeated here.

Conclusion

[22]     We accept that the appellants in the Holdgate and Sanson appeals were each dealt with leniently in the particular circumstances of their cases which are readily distinguishable from the present.  There is no tariff for sentencing for the offending in question and it is a matter of approaching sentence according to the circumstances of the case.  What is clear is that the statutory offences at issue are designed to protect the public by ensuring that persons convicted of offences of dishonesty are prohibited from acting as directors of companies for the relevant statutory period unless the leave of the Court is obtained.  We agree with the Judge that the public is entitled to expect that the directors of limited companies will be disqualified as a result of dishonesty convictions. 

[23]     Parliament has made it clear by the substantial maximum penalties that offending against these provisions is intended to be taken seriously.  The Court must have regard to the statutory purposes in s 7 Sentencing Act 2002 including holding the offender accountable and the purposes of denunciation, deterrence and the protection of the community.  Section 8 principles also come into play, our assessment being that the offending is in the moderate to serious category in terms of culpability.

[24]     There is no suggestion here that the sentence of two years’ imprisonment imposed after trial on the charge of intentional damage was excessive.  Given the entirely different nature and circumstances of the offending under the Companies Act, Mr Hall properly accepted that a cumulative sentence was appropriate.  We are not persuaded that the sentence was manifestly excessive having regard to the totality of the offending.  Mr Butler engaged in multiple offending over a period of 20 months when he must have been well aware that the law prohibited him from being a director of companies.  His previous convictions on a substantial number of dishonesty charges were a serious aggravating factor to which the Judge was entitled to give weight.  There were no mitigating factors to which the Judge could have attached any significant weight.  

[25]     For these reasons, the appeal against sentence is dismissed.

Solicitors:
Crown Law Office, Wellington