The Queen v Harrison

[2007] NZCA 297

IN THE COURT OF APPEAL OF NEW ZEALAND

CA20/07
CA21/07
[2007] NZCA 297

THE QUEEN

v

RODERICK BERNARD HARRISON
ALAN VICTOR JONES

Hearing:21 June 2007

Court:Hammond, Williams and Wild JJ

Counsel:P J Kaye for Appellants

P J Smith for Crown

Judgment:18 July 2007 at 4 pm

JUDGMENT OF THE COURT

The appeals against sentence are dismissed.

REASONS OF THE COURT

(Given by Hammond J)

Table of Contents

Para No
Introduction  [1]
Background  [2]
The sentencing in the High Court  [8]
Submissions for the appellants  [14]
Submissions for the Crown  [23]

THE TOTALITY PRINCIPLE AND THE NATURE OF CONCURRENT OR CUMULATIVE

sentencing  [29]
Discussion  [34]

Introduction

[1] On 12 December 2006, Courtney J in the High Court sentenced Mr Harrison and Mr Jones to a total of six and a half years imprisonment on one count of conspiracy to defraud members of the public and two counts of using a document with the intention of obtaining a pecuniary benefit (HC AK CRI-2004-004-12785). Identifying the conspiracy charge as the lead offence, the Judge imposed four and a half years imprisonment on this count. The maximum at the time for this offence was five years imprisonment (this has subsequently been raised to 10 years by s 15 of the Crimes Amendment Act 2003). One year of imprisonment was imposed on each of the counts of using a document. All sentences were imposed cumulatively. Both appellants now appeal against their sentence on the ground that it is manifestly excessive.

Background

[2]       In late 1999 the appellants began to solicit money from friends and acquaintances, with the promise of investing it into high yield overseas investments.  The appellants would introduce themselves as partners, presenting themselves as experienced in the finance sector.   As the Judge put it, the impression was put across that they were “managing investments that were so large as to make your victims look and feel like very small players” (at [5]).

[3]       The investment was to occur through an “association” called the Harvest Investment Club.  In reality, the Club was not an organisation at all.  Rather, the appellants used it as a front to give the impression that they were dealing with, as Courtney J put it, “an elite group of wealthy investors who invested together in order to achieve returns not available to ordinary people” (at [2]).  A general message of security was conveyed.  Some of the investors were even told that the investment would be insured.

[4]       The appellants at first intended to establish a mechanism for making overseas investments.  A company was formed in the United Kingdom and two men were hired to investigate investment opportunities.  These two men were ill-equipped for the job, and no opportunities arose.  Yet the appellants continued to solicit for funds.  Contrary to the representations made to the investors, some of the funds were invested into New Zealand projects.  None of these gave a return.

[5]       Documentation was given to the investors, usually in the form of investment certificates and confidentiality agreements (secrecy was emphasised).  Investors were further reassured by regular returns deposited into bank accounts and false schedules showing a growth in the investment.  Larger sums of money were consequently invested, sometimes entire savings.  Almost $1 million was paid out to investors as either interest or capital.  These payments however in fact came from the money being invested by other victims, or, in some instances, the original investment of the investor receiving the money.

[6]       The appellants received over $5.2 million.  Some of the victims managed to retrieve their money.  Most did not.  Over $2 million was lost in the New Zealand investments, and some $2.2 million went to the appellants personally, who used it for personal purposes.  The total loss to investors over three years was approximately $4.29 million.

[7]       During this time, the appellants also prepared fraudulent statements of financial position in order to acquire loans.  On these statements the appellants held out, as their own, assets purchased with investors’ money.  First, the appellants used such a statement to obtain a loan from Contributory Mortgage Nominees to Kingsbourne Investments Ltd, a company which invested in property in New Zealand and into which much of the victims’ money went.  Secondly, another statement was used to obtain an advance from Easy Factors International Ltd to Wairau Stone, a company controlled by Mr Jones.  These events formed the basis of the two counts of using a document with the intention of obtaining a pecuniary interest.

The sentencing in the High Court

[8]       The High Court Judge began by noting that this was very serious offending.  Inevitably it had to attract a sentence of imprisonment precluding home detention.

[9]       Labelling the offending “an old-fashioned con job” (at [11]), the Judge emphasised the breach of trust involved, stating at [11] – [12]:

You made your victims feel naïve and unworldly.  You made them think that their money, in some cases substantial life savings, represented so little in your scheme of things that you were doing them a favour allowing them to invest with you. …

I am certain most of these people would never have acted in the way they did but for their complete faith in you.  That faith was built up through friendship, church connections, business associations and word of mouth from other trusting friends and acquaintances.      

[10]     The Judge made reference to a representative portion of the victim impact statements, noting the terrible toll this had extracted on the lives of many people (at [13] – [15]).  Likewise, the Judge stated that although the finance companies did not lose out financially, the harm caused by such dealings to the commercial life of the country called for denunciation and deterrence (at [17]).

[11]     The following aggravating features were identified:

·     The offending was sustained and premeditated.

·     Although not especially sophisticated, the offending involved a degree of planning, including the production of false schedules.

·     The offending entailed a significant abuse of trust.

·     Many of the investors were elderly or vulnerable.

·     The appellants obstructed the Serious Fraud Office’s investigations into their business, including instructing one of their own investors on the answers she should give to the SFO.  The appellants further spread rumours amongst investors that the SFO was contributing to their demise, rather than acknowledging their actions.

·     No sign of remorse was given by the appellants, the Judge stating at [20], “Your attitude … seems to be one of regret that things have not turned out the way you planned”.

[12]     The Judge considered that this offending fell within the most serious of conspiracy to defraud cases, and as such the maximum penalty should apply.  She further considered that although there was a factual relationship between the two offences (the conspiracy and the use of the document counts), they were different in nature.  As such, a cumulative sentence was appropriate.  The Judge commented at [22], “I would have concluded that cumulative sentences were appropriate in this case in order to properly reflect the totality of your offending”.

[13]     A starting point of seven years imprisonment was accordingly adopted.  This was reduced by six months to take account of the appellants’ previous good records and contributions to their communities.  The six and a half years imprisonment was broken down: four years and six months for the conspiracy to defraud count and one year on each of the charges of using a document, to be served cumulatively.

Submissions for the appellants

[14]     For the appellants Mr Kaye submitted that the sentences imposed in the present instances are manifestly excessive.  More specifically, it was submitted that the two offences (the one count of conspiracy to defraud and the two counts of using a document) should have resulted in concurrent sentences.  The imposition of cumulative sentences was said to offend against the totality principle.

[15]     In arguing that a concurrent sentence should have been imposed, Mr Kaye said that all the counts relate to dishonesty offending and they all reflect the same course of conduct: “indeed some of the funds acquired were used to make payments to victims of the conspiracy as return on their investment”.

[16]     It was accepted that the conspiracy to defraud in this instance was particularly serious, “even justifying a sentence close to the maximum prescribed”, but that the cumulative imposition of the document charges has led to a disproportionately severe sentence.

[17]     Mr Kaye referred us to four authorities.

[18]     In Serious Fraud Office v Ellis & Anor HC AK CRI-2005-404-15827 18 July 2006 the offenders were sentenced to two years and three months imprisonment on three counts of obtaining by deception, three counts of using a document with intent to defraud, and one count of accepting a secret commission.  Mr Kaye referred to this case mainly for the proposition that a concurrent sentence was imposed despite the “inherent difference in the nature of the charges”.  This submission was slightly misleading.  While there were several counts in Ellis, they all referred to offending against one employer, arising out of transactions that were the same in nature (using personal shell companies or companies owned by relatives to overcharge for services rendered to the employer).

[19]     In R v Harris CA121/06 27 September 2006 the charges for conspiracy to defraud resulted in a lesser sentence than the present case.  In that case there was again only one victim, and the charges arose out of one transaction (acquiring a loan by fraud).

[20]     In R v Papple CA207/05 28 August 2006 Mrs Papple was charged principally with conspiracy to defraud.  She was convicted of related charges (obtaining by false pretences and theft by failing to account).  The case concerned an investment programme instituted by Mrs Papple, where returns were similarly paid by fresh investment money (at [11]).  Mrs Papple received over $1.6 million from the scheme.  Five years imprisonment was imposed on the conspiracy charge, and 18 months imprisonment for the related charges.  All counts were concurrent.  The judgment does not elaborate on whether there was any substantial factual differentiation that gave rise to the separate counts (indeed no reference is made in the judgment to the related counts at all).  In this way, the counts were, at least implicitly, treated as arising out of the same transactions.  Mr Kaye also argued that the sentence of five years imprisonment (the maximum) reflected the comparative severity of that case to the present.  The offending involved was, in total, up to $8.3 million.  Apparently Mrs Papple had prior convictions, but the Court did not elaborate on what these were. 

[21]     The final case referred to by Mr Kaye, Serious Fraud Office v Baylis HC WN AP242/01 24 October 2001, was decided prior to the enactment of s 85(4)(a) of the Sentencing Act 2002.  Indeed, if that case continued to have applicability it is somewhat against the appellants’ interests.  It concerned fraud on a similar scale and of a similar nature to the present case.  In essence, unwitting victims were encouraged by fraudulent misrepresentations and generated documentation to invest in a “secret scheme” purportedly designed to benefit indigenous peoples.  The scheme generated approximately $6.9 million, and the subsequent loss was estimated to be about $5.8 million.  As well as facing a conspiracy to defraud charge, the offender in that case was sentenced on six counts of obtaining by false pretences and eight counts of theft by misappropriation.  These offences concerned acquiring money from financial advisors, again in relation to the offender’s investment scheme.  A starting point of six and a half years imprisonment was adopted, with an eventual sentence of four and a half years imprisonment on the lead offence and four years on the conspiracy count.

[22]     The sentencing in Baylis was concurrent; a point Mr Kaye emphasised.  However, a Full Court of the High Court also stressed that what is of the utmost importance is the totality of the offending.  This meant that, in the High Court’s view, a starting point could extend beyond the maximum of any one particular offence to encompass the several offences (at [19]).  In this way, despite the concurrent nature of the sentencing, the Court, if faced with similar circumstances, would have begun with a starting point of seven to eight years imprisonment to reflect the totality of the offending.  This was in the face of a maximum sentence of seven years imprisonment for the most serious charge faced by the offender.  As the appeal was made by the Solicitor-General however, the Court considered that it had not been demonstrated that the sentence was manifestly inadequate.

Submissions for the Crown

[23]     The Crown supported the sentencing of Courtney J, and submitted that cumulative sentences in this instance were appropriate, for two reasons. 

[24]     First, the Crown rejected the appellants’ argument that the offences were intertwined to a point that they had to be treated as a whole for sentencing purposes.  In the Crown’s view, the differing parties and dates between the offences illustrated a disconnection.  The conspiracy to defraud the public charge arose out of events occurring between 1 January 1999 and 31 December 2002.  The frauds against the finance institutes occurred between 19 December 2002 and 31 March 2003, reflecting the dates on which settlements were signed and documents were lodged with the lenders.  There was no evidence adduced at trial to support the view that part of the loan monies were used to make payments to the victims of the wider conspiracy.

[25]     The Crown noted that concurrent sentences with regard to the counts relating to the lenders alone was arguable.  But, in the Crown’s view, this offending was against two separate institutes and so the sentencing structure adopted by the Judge was appropriate.

[26]     The Crown’s second argument was that what is of importance is whether the overall sentence reflects the totality of offending.  Reference was made to R v Barker CA57/01 30 July 2001 at [10] – [12]:

We begin by reiterating three sentencing principles:

·     With multiple offences the sentence must reflect the totality of the offending;

·     In respect of multiple offences this Court will not insist that the total sentence be arrived at in any particular way; and

·     the total sentence must represent the overall criminality of the offending and the offender. …

[I]n imposing a sentence which reflects the totality of the offending this Court will not declare a sentence manifestly excessive because of the particular way in which the sentencing Judge has chosen to construct the sentence, unless the method adopted results in a sentence which is overall clearly too high.

[27]     The Crown said the cases cited by the sentencing Judge were also appropriate analogues: R v Wallnutt CA182/93 8 August 1993 (starting point of 8 years); R v Renshaw (1992) 8 CRNZ 695 (HC) (starting point 10 years); Baylis; and R v Allen CA274/04 7 April 2005 (discussed below at [31]).

[28]     The Crown also saw the reduction of six months as being lenient.

The totality principle and the nature of concurrent or cumulative sentencing

[29]     Sections 84 and 85 of the Sentencing Act provide:

84Guidance on use of cumulative and concurrent sentences of imprisonment

(1)       Cumulative sentences of imprisonment are generally appropriate if the offences for which an offender is being sentenced are different in kind, whether or not they are a connected series of offences.

(2)       Concurrent sentences of imprisonment are generally appropriate if the offences for which an offender is being sentenced are of a similar kind and are a connected series of offences.

(3)       In determining for the purpose of this section whether 2 or more offences committed by 1 offender are a connected series of offences, the court may consider—

(a)       the time at which they occurred; or

(b)       the overall nature of the offending; or

(c)       any other relationship between the offences that the court considers relevant.

85       Court to consider totality of offending

(1)       Subject to this section, if a court is considering imposing sentences of imprisonment for 2 or more offences, the individual sentences must reflect the seriousness of each offence.

(2)       If cumulative sentences of imprisonment are imposed, whether individually or in combination with concurrent sentences, they must not result in a total period of imprisonment wholly out of proportion to the gravity of the overall offending.

(3)       If, because of the need to ensure that the total term of cumulative sentences is not disproportionately long, the imposition of cumulative sentences would result in a series of short sentences that individually fail to reflect the seriousness of each offence, then longer concurrent sentences, or a combination of concurrent and cumulative sentences, must be preferred.

(4)       If only concurrent sentences are to be imposed,—

(a)       the most serious offence must, subject to any maximum penalty provided for that offence, receive the penalty that is appropriate for the totality of the offending; and

(b)       each of the lesser offences must receive the penalty appropriate to that offence.

[30]     As s 84(2) states, a concurrent sentence will generally be appropriate if the offences for which an offender is being sentenced are of a similar kind and are a connected series of offences.  This may arise in relation to multiple victims (see, e.g., R v Hall CA412/05 17 May 2006), although often a series of different but related offences against multiple offenders will result in a cumulative sentence (see, e.g., R v Tukuafu CA34/02 18 December 2002).  As this Court noted in R v Mwai (1995) 13 CRNZ 273 at 288, cumulative sentences in relation to different victims were “a proper recognition of their cumulative nature and effect, which did not at the same time lead to a sentence that was overall too high”.

[31]     The principal case in favour of the Crown’s view is Allen.  In that case, Mr Allen was convicted of conspiracy to defraud the public and of using a document with intent to obtain a pecuniary advantage.  The document charge arose out of transactions with ASB Bank Ltd, after the conclusion of the conspiracy.  In obtaining the loan, Mr Allen listed various assets.  He was sentenced to four and a half years imprisonment on the conspiracy charge and 21 months on the charge of using a document.  The sentences were imposed cumulatively.

[32]     The ground of appeal was effectively the same as that raised in this case: “If the Judge were not entitled to impose cumulative sentences, the effect of the cumulative sentence imposed was to take the overall sentence in excess of the maximum penalty (5 years imprisonment) on the lead charge of conspiracy to defraud” (at [27]).

[33]     The Court rejected this argument.  In its view, s 84(1) of the Sentencing Act gave an appropriate basis to impose cumulative sentences.  The Court said (at [90] ­– [91]):

The two frauds were of a different character. Mr Allen’s conviction on the conspiracy charge shows that the jury accepted beyond reasonable doubt that Mr Allen intended to defraud members of the public and received significant personal benefit as a result.  The charge of using a document with intent to obtain a pecuniary advantage was a fraud on the ASB Bank carried out at a time when Mr Allen knew he was in financial difficulties while the amount was large ($NZ1.2million), ultimately the bank did not suffer a loss.  Further, the bank fraud occurred outside the period of the conspiracy.

The differences between the two frauds, in terms of kind and timing, satisfy us that a cumulative sentence was appropriate. Certainly we have not been satisfied that this was an inappropriate response to the offending.

Discussion

[34]     Mr Kaye candidly acknowledged that the heart of the appellant’s appeal is that the Judge started out with the view that this was very serious offending which warranted a sentence distinctly in excess of the then five year maximum for conspiracy.  In the appellants’ view, she then effectively manipulated a sentence to that end.  Mr Kaye suggested this was distinctly inappropriate where, it was submitted, all of the offending was interrelated and should not have attracted cumulative sentences, let alone the four and a half years plus one year plus one year formula that the Judge actually adopted. 

[35]     Several observations are appropriate. 

[36]     First, there is no bar, in principle, to the total sentences imposed exceeding the maximum sentence which could have been imposed on the principal offence.

[37]     Secondly, we do not accept that the documentary counts were part and parcel of a whole.  The conspiracy count arose out of the unhappy concerted scheme to defraud the public.  The documentary counts affected financial institutions, at a later point in time.  We agree with the Crown that it was entirely open to the sentencing Judge to see this offending in two distinct parts.

[38]     The third point is whether it was appropriate to make the sentences with respect to the documentary counts cumulative on the conspiracy charge.  Given that there were sufficiently distinct kinds of offending, it was certainly open to the Judge to make the sentence cumulative.  Indeed we think she was correct to do so. 

[39]     What the Judge actually did in adopting a one year plus one year formula was somewhat unusual.  For the Crown, Mr Smith responsibly agreed with Mr Kaye (and the Bench) that the more usual thing to have done would have been to have settled an appropriate sentence for the documentary counts (say two years) and pass that two year sentence on each of the counts concurrently, but cumulative on the conspiracy sentence.  The Judge would then have been required to ensure that, on a totality basis, the overall sentence was appropriate.

[40]     The result in the instant case would still, we think, have been very much in the range actually imposed by the Judge.  That is, the Court was entirely entitled to impose near, or even at, the maximum sentence on the conspiracy count.  The five year figure for conspiracy at that time was notoriously low, and has latterly been corrected by the legislature.  Five years would not have been out of line with other High Court sentences, which, as we have noted above, have been upheld in this Court.  On the documentary charges, in our experience sentences of two years would not have been unusual.  The two years could then have been imposed cumulatively on the conspiracy count.

[41]     As has been observed so many times in this Court, on a sentence appeal based on the proposition that the overall sentence on a number of counts is manifestly excessive, how the Judge actually constructs the sentence is not dispositive.  What matters is the end result.  We have made the observations we have because the Judge did adopt a somewhat unusual methodology, and for such guidance as it may afford to other sentencing Judges.

[42]     In the result, the appeals against sentence are dismissed.

Solicitors:
Crown Law Office, Wellington