The Queen v David Simon Barton

IN THE COURT OF APPEAL OF NEW ZEALAND

CA 370/00

THE QUEEN

DAVID SIMON BARTON

Hearing:	28 March 2001
Coram:	Richardson P Anderson J John Hansen J
Appearances:	G C Gotlieb for Appellant M J Ruffin for Crown
Judgment:	29 March 2001

JUDGMENT OF THE COURT DELIVERED BY RICHARDSON P

This appeal is against an effective sentence of 4 years imprisonment imposed in the District Court at Auckland on 81 charges of commercial fraud to which the appellant had pleaded guilty. The charges extended over 4 years. All but two of the complaints involved were in respect of the period between December 1995 and December 1998. There were 50 counts of theft by misappropriation, 12 of false pretences, 11 of theft by failing to account, 4 of using a document, 3 of a false statement of a promoter, and one of offence by a bankrupt.
Shortly after his release in 1991 from a prison sentence of 3½ years imprisonment for similar fraud charges Mr Barton established a finance and mortgage broking business, liaising between lenders and borrowers and arranging securities for loans taken out by borrowers. Mr Barton puts the total number of clients over the period at 2,000, and the amount of loans at about $200 million. Mr Barton was also involved in other commercial ventures in some of which he lost substantial sums which he covered by misappropriation and fraudulent arrangements in his financing business.
The sentencing Judge noted from his reading of the files that many of the investors and borrowers would not have achieved their wishes were it not for Mr Barton's assistance, and that references furnished to the court had testified to his efficiency, acumen, diligence, hard work and ability to put together deals satisfying to both parties. A large number of victim impact statements had also been filed. Some were business people. Others were older people who had invested retirement funds and were devastated by the impact on their lives of Mr Barton's frauds on them. Having read the detailed report commissioned by Mr Barton's counsel the Judge accepted that some of the victim impact statements might have over‑stated the position and so not have given a balanced account of the dealings. The Judge continued:
Leaving aside the fine analysis, Mr Barton, the general impression I gain is that you fleeced these investors by attractive but fraudulent promises. Many have suffered not only financially, but physically and most certainly emotionally. Some are elderly. That suffering has increased because they are incapable of understanding the level of your deceit. There is nothing this Court can do to redress the emotional and physical distress. You have no funds to facilitate orders for reparation. There is nothing I can do to relieve those people of their past and no doubt ongoing anxiety. That said, however, it seems some victims were foolish. They failed to obtain proper professional advice. Some I suspect were greedy, attracted by the high interest rates. Of course, with such rates, there usually comes a risk. And so it was.
The Judge had earlier recorded that the impression he had gained from all the material before him was that Mr Barton had started out well but a combination of involvement in businesses outside his mortgage broking speciality and his increasing and compulsive gambling led him to fraud, occasioned by the need to prop up the failing businesses and to feed his chronic gambling habit. In that regard Mr Barton had told a psychiatrist whose report was before the Judge that his gambling increased as his business became more successful and that between 1996 and 1998 he guessed he had lost approximately $800,000 in gambling.
The Crown submitted that the net loss to investors was approximately $2.3 m loss of capital. Mr Barton's submission was that it was more like $1 m taking account of the tax deductibility of losses and interest on moneys invested. For the purposes of any comparative analysis of cases where in other cases the capital loss was treated as the relevant figure, the Judge said he would take that figure.
Mr Barton was 41 years old. The Judge accepted that he had undoubted talent and that much of it had been put to good use; that he possibly had a problem with alcohol; and most certainly had a compulsive gambling addiction. What particularly concerned the Judge was Mr Barton's lengthy list of previous convictions including 30 fraud and related charges in 1981, for which he was sentenced to imprisonment for a year less a day, and 20 charges for which he was sentenced to 3½ years imprisonment in 1989.
Mr Gotlieb for Mr Barton submitted to the Judge that the appropriate starting point for the offending was 4 years with a significant reduction of up to 50% for the early pleas and for co‑operation with the Police, and that if the resulting sentence was fixed at 2 years imprisonment a suspended sentence subject to a condition that Mr Barton undertake rehabilitative treatment at Odyssey House would be appropriate.
The Judge accepted that there was much merit in those submissions but rejected that proposition given the previous 3½ year sentence and the resumption of offending after Mr Barton's release from prison.   It would, he said, be nonsense where Mr Barton's offending here was parallel, both in the amount involved and the nature of it, for the Judge to impose, relatively shortly afterwards, a much lesser sentence.   He continued:
I find the aggravating features are firstly the very substantial amount of money involved; secondly, the relatively lengthy period of time over which it occurred, four years; it was sustained; it was deception accompanied by continued plausible assurances to your investors, many of whom you had become friendly with on a personal basis.   Thirdly, it was a breach of trust.   Fourthly, the effects on the victims, particularly those devastated by the loss of their retirement funds and others who were not in a particularly sound financial position.   Fifthly, your previous convictions, particularly the last offending in 1989 where the circumstances were somewhat mirrored by your offending on this occasion.   There is also the fact you are not in a position to make reparation.
The mitigating features - firstly your extensive co-operation with the Police inquiry.   Mr Ruffin submitted that that applied to some of the matters but to a lesser degree to the others.   Overall and generally, my view is that you were entitled to adopt the stance you did initially, but you very quickly acknowledged your offending, you were co‑operative in interview, you even disclosed to the Police matters that they were unaware of and may not have ever stumbled upon.   Secondly, your early guilty pleas.   I treat those pleas as being all made at the first reasonable opportunity.   The delay that was occasioned was reasonable in the circumstances.   You have saved Police resources, which are stretched, untold time and expense in lengthy investigations.   You have saved inconvenience and considerable cost to numerous witnesses who you could have called at a depositions hearing and again at trial.   ...   You saved the country, the Crown, the Courts, the system, a considerable cost by your realistic approach.   In my view a depositions hearing could have lasted weeks, if not months and, most certainly, a trial or trials, which would have followed, would likely have occupied six months of Court time, possibly even longer.
The Judge noted that the leading sentencing decisions in this area to which he referred could all be distinguished on various grounds by factors such as the amounts involved, the periods over which the offending occurred, whether pleas of guilty were entered early or not, and the number of people that were affected.   He saw as perhaps the closest case Mr Barton's 1989 sentencing:
Your offending then and now as over much the same period of time; the modus operandi almost identical and the amount of money, if translated into today's terms, probably about the same.   Barker J took the view, with your previous convictions, the starting point was somewhere between five and six years.   He gave you a discount and imposed a sentence of three and a half years.   That was upheld by the Court of Appeal and it is worthwhile quoting from the conclusion of the judgment of Casey J:
The appeal eventually turned on the question of whether the Judge fixed too high a starting point when he said a sentence of five to six years would have been appropriate.   We are satisfied he did not, having regard to the applicant's previous conviction for dishonesty in 1981, the nature of the frauds practised on trusting investors, the continuous public solicitation of funds to carry on the scheme, the widespread losses sustained, some of them by people who could ill‑afford them, and the very large total of those losses.   The sentence of three and a half years was well within the area of a properly exercised sentencing discretion after making due allowance for the mitigating factors present in the case".
Those words are as true today as they were then, Mr Barton, except, of course, you have reoffended.   The factors that weigh most substantially with me are the large amount of money involved; the lengthy period of deception; the many investors who lost money irretrievably and the fact there is nothing that can be done to salve their concerns; and that your offending was a repetition of earlier offending; all those matters balanced by your co-operation with the Police; your pleas of guilty; and taking into account your addiction.   I have come to the conclusion that the starting point is one of six years.
The Judge considered that the appropriate discount from the starting point for the offending itself, for the early plea of guilty, co‑operation with the Police and Mr Barton's addiction, to which he had just referred, was a one third reduction, bringing the sentence down to 4 years imprisonment.
Mr Gotlieb has advanced two primary arguments in support of the appeal. The first is that the Judge erred in equating the present offending with the 1989 charges and going on to conclude that a longer sentence than 3½ years was therefore required. The second is that the Judge allowed insufficient for the extensive co‑operation with the Crown and the early plea of guilty. Mr Gotlieb submitted that a discount of at least 3 years should have been given, resulting in a sentence of not more than 3 years imprisonment.
Mr Ruffin for the Crown submitted that 6 years was the appropriate starting point. He acknowledged that it is important in cases of this kind that offenders should be encouraged to face up to proper acceptance of guilt at an early stage; fraud trials of this magnitude are usually lengthy and complex; and the unravelling of interwoven transactions requires an even heavier deployment of resources if the exercise has to be carried out without the assistance of the offender. But, he submitted, 2 years for the guilty pleas and assistance to the Police was substantial and sufficient recognition.
Although counsel extensively canvassed the aggravating and mitigating factors in this case, it is unnecessary to repeat that analysis. It is sufficient to say that we are not persuaded that the Judge's summary cited at para [9] above either over‑stated or under‑stated the significance and value of Mr Barton's co‑operation and early pleas.
We should add, too, that whatever Mr Barton drew from his discussions with the Police - he said he claimed that his co‑operation had to be worth 50% and that the Police saw no problem with that, whereas the Police denied ever acknowledging that 50% could be appropriate - it was not suggested by either counsel in the District Court that there was common ground as to the appropriate discount. However, there were two indications which no doubt led Mr Barton to believe that the sentencing Judge had in mind a very substantial discount. The first was that on the day Mr Barton pleaded guilty, the Judge said, according to Mr Barton - and it is not disputed by the Crown - "Mr Barton, having pleaded guilty you have taken a very courageous and quite responsible step, when it comes to sentencing time, this will be reflected in, what is in my view, a very generous discount". The second was that the Judge adjourned sentencing and enabled Mr Barton, who wished to do so, to attend the six week assessment process at Odyssey House to see if he was acceptable for their long‑term programme. He was found suitable for long‑term treatment by Odyssey House and, although Mr Barton had left Odyssey House near the end of that initial trial period, the Judge accepted that that was for valid personal reasons. If that course had been pursued it would, it seems, have required the imposition of a sentence of not more than 2 years imprisonment suspended to enable Mr Barton to undergo that treatment for his addiction. On our assessment that could never have been a realistic sentence for this offending but Mr Barton's willingness to attend Odyssey House showed a commitment to rehabilitation which together with the constraints on liberty entailed over that 6 week period should, we consider, have been taken into account in sentencing.
The further concern with the Judge's sentencing reasoning is his apparent equating the present offending with the 1989 offending, whereas there were two significant differences between that earlier offending and the present. The first was that Barker J in sentencing in 1989, and this court on appeal against that sentence, characterised the earlier enterprise as a sham from its inception with a very high proportion of the funds received from investors going into unauthorised spending. By contrast, the mortgage broking business in the present case was a substantially legitimate business, the offending was largely in the later stages and in relative terms only a small proportion of the sums and client transactions involved were criminal in character. The second is in the degree of co‑operation. In respect of the 1989 offending this court said the only credit Mr Barton could claim (and it was substantial) was his agreement to accept written depositions and his plea of guilty.
In the result we consider that the Judge erred in concluding that he had to impose a sentence of more than the 3½ years imposed in 1989. Taking as the broad starting point a similar range of 5 to 6 years imprisonment as in 1989 and allowing for the Odyssey House commitment and constraints and for a one‑third discount for the early pleas and co‑operation, we consider that the appropriate sentence in the interests of justice is 3 years imprisonment. We should add that it is only in rare circumstances and ordinarily where an accused has given special assistance in relation to other cases or other offenders, often subjecting self and family to personal risk and the offender to a harsher prison environment, that an allowance of more than one‑third is made for early pleas and co‑operation.
For the reasons given the appeal is allowed. The sentence of 4 years imprisonment is quashed and in lieu a sentence of 3 years imprisonment is imposed. As intimated at the end of the hearing, we recommend that legal aid be granted for the appeal.

Solicitors
Crown Solicitor, Auckland

[2001] NZCA 52

29 March 2001