The Queen v Wayne Edward Black

IN THE COURT OF APPEAL OF NEW ZEALAND

CA465/99

THE QUEEN

WAYNE EDWARD BLACK

Hearing:	17 April 2000
Coram:	Gault J Doogue J Goddard J
Appearances:	K N Hampton QC for Appellant J M Jelas for the Crown
Judgment:	18 April 2000

JUDGMENT OF THE COURT DELIVERED BY GAULT J

The appeal is against the total sentence of imprisonment for three years imposed on the appellant in the District Court at Christchurch on 22 October 1999 following conviction on nine charges involving various thefts and frauds committed while the appellant was involved in a business manufacturing plastic hoses. Prior to the trial the appellant pleaded guilty to three charges, and not guilty to 15 counts, some of which were framed in the alternative. He was found guilty by the jury on six of the charges. It is appropriate to set out the convictions and sentences in a table as follows:

Charge	Particulars	Sentence
Receiving
Count 3*	(Ivomec) Animal Drench	Six months
Count 5	MOW Tandem Trailer	Six months
Count 7	Kango gun and builder’s gear	Six months
Count 13*	Chemicals and Masterbatch (a colouring agent) belonging to MM Cables NZ Ltd	Two years
False Accounting
Count 8*	Stock (1991 & 1992)	Two years
Theft
Count 10*	Plastic Products (belonging to MM Cable NZ Ltd	Three years
Count 14*	Cages (belonging to MM Cables NZ Ltd)	Six months
Theft of Electricity
Count 17*	Ohoka	Three years
Count 18*	Christchurch	Three years
*Representative charges

The appellant was one of three partners that operated under the name International Trading which initially manufactured and supplied clothing under a trading name Papanui Clothing. The business eventually declined and the partners moved into the manufacture of plastic products, principally plastic garden hoses. In 1990 the assets and liabilities of the partnership were transferred to the company Ace Plastics Ltd. The three partners became the shareholders in that company. The other two also face charges arising out of the activities with which we are concerned but they have yet to be tried.
The hoses were manufactured initially in factories at Papanui and at Ohoka. In 1992 the operation was transferred to a new factory at Rangiora and around that time the appellant was, in effect, forced out of the company. He was bitter at the treatment to which he was subjected and felt that he had not been adequately reimbursed for his efforts in the company and in particular had not received his share of the gains from the illegal activities. He set about establishing that his shares had been undervalued and sought compensation over a period of years. He enlisted the aid of an independent accountant and a private investigator in his dealings with his former partners. It was during the course of these activities that the appellant revealed the criminal activity conducted by himself and, he said, his former partners in the various businesses in which they were involved.
The appellant, his former partners and the company to which they belonged stole chemicals, steel cages and large quantities of scrap plastic material from MM Cables NZ Ltd. The scrap plastic was used as a raw material in producing the interiors of the garden hoses. The thefts involved securing, with the assistance of an employee of the supplier, larger quantities than were accounted for. This was carried out by having trucks loaded with more of the plastic material than was entered on dockets and charged for. The employee of the supplier was duly dealt with in the courts on two charges of theft as an employee to which he had pleaded guilty. He was sentenced to a term of imprisonment for two years.
The business in which the appellant was involved also engaged in the theft of electricity from two different electricity suppliers by the winding back of meters at the factories at Ohoka and Papanui. The evidence also established theft of the various other items such as animal drench, a trailer and building tools.
The appellant pleaded guilty to the offences involving the building tools and a tandem trailer and to one charge of theft of electricity, although he contended that this offending was of a very limited nature.
Evidence also established that the accounts of Ace Plastics Ltd were falsified by the omission of stock in order to obtain tax advantages. The appellant admitted this in the course of his evidence although he contended the stock did not belong to the company at the time.
At the trial, the most damning evidence against the appellant came from the accountant to whom he had turned for assistance in the valuation of his shares and the private investigator he had engaged. In one telephone conversation with the accountant the appellant was said to have outlined criminal conduct entered into by himself and his former partners. The appellant maintained the business benefited from this though he was not compensated. The accountant made notes of this conversation which he read in the course of his evidence. They were as follows:
200 cartons Ivomec injection drench at $349 retail, bought $90, sold for $200, proceeds put into account of [H’s] girlfriend at Westpac Rangiora, [D]. Theft of power from Southpower $100,000, perhaps $200,000 at Papanui, instigated by [H], carried by Black. Mainpower theft at least $100,000. MM Cables employees $200,000 included plant theft $10,000. False declarations for Customs $200,000 at least. 20 containers of clothing put down as cloth, no duty paid. $100,000 sucked out of Papanui, cash not banked, not declared. Trailer stolen from MOW Oamaru, still in possession of Ace. Black is prepared to do time if necessary because he feels he is being harshly treated.

There were also several documents that outlined the appellant’s unlawful activities. At least one of those documents was in his own hand.

The appellant contended that not everything he was recorded as saying or that he wrote was true and that his statements were made in an effort to induce his former partners to accede to his demands. His evidence was that his statements were those of an obsessed man trying to exact revenge on his former partners by creating false allegations. The jury plainly rejected his evidence to the extent, at least, of returning guilty verdicts in respect of six of the charges.
At sentencing the Crown placed before the Judge for reparation purposes assessments of the value of the electricity stolen from the two power supply authorities and of the scrap plastic material and Masterbatch chemical stolen from MM Cables. Those assessments were specified as being conservative calculations and, on their face, do not cover the whole period of the illegal activity. They show an amount in total of some $153,000 but that does not include the value of some of the other items such as the Ivomec drench nor other items of property which were eventually recovered.
When sentencing the Judge accepted that the appellant was not the principal offender and that [H] may have been the instigator of the illegal activities, particularly following the incorporation of Ace Plastics. The aggravating features identified by the Judge included the period of time over which the offending occurred, the amounts involved, and particularly aggravating were the thefts from MM Cables, who was both a supplier and potential competitor. While the Judge accepted that this offending involved an insider, this did not diminish the appellant’s responsibility.
The Judge considered that the offending was very serious commercial fraud offending, of which there have been few reported instances in recent times. The Judge dealt with the need for deterrence in the following way:
In terms of public interest factors, it is clear that the message must be given to the business community at large in this country that commercial fraud offending of this type will be firmly deterred. The country as a whole, and those who are involved in business in particular are entitled to expect that others who are in business of commerce will conduct their affairs honestly and will not make gains or profits or attempt to obtain a commercial advantage through dishonest practices. That principle is of general application, but it relates both to thefts from or frauds on competitors and to the importance of ensuring probity in commercial dealings generally.
In terms of mitigating factors, the Judge noted that the appellant is 49 years of age with no previous convictions for offending involving dishonesty. As previously noted, the Judge sentenced on the basis that the appellant was not the instigator of the offending but merely went along with it to obtain the benefits of it. The appellant did not offer reparation as sought by the Crown, so that was not available as a mitigating factor. In the event, the Judge did not order reparation since the appellant’s only asset which would be available for reparation purposes was the subject of an injunction and a charging order obtained by MM Cables. The Judge left the issue of amends to be made to the three victims of the offending, MM Cables, Mainpower and Southpower, for the civil jurisdiction.
The Judge then imposed the sentence and commented:
Taking all factors into account, in my view the appropriate total or global sentence which should be imposed for all the offences for which you are now to be sentenced is imprisonment for three years. I have decided to impose that sentence on the charges which I have identified as the most serious, namely the theft of plastic from MM Cables and the electricity theft offences. In my opinion the other less serious offences should be dealt with by concurrent sentences, but with the terms of those sentences reflecting my view as to their relative seriousness or lack of seriousness by comparison with the more serious offences.
The appellant submits that the sentence is manifestly excessive, given the circumstances.
Mr Hampton emphasised these factors:
1.The appellant had no convictions prior to the offending with which we are concerned nor has he had any since his involvement with his former partners ceased in 1992.
2.The appellant was not the principal offender in the sense he was not responsible for instigating the illegal activity.
3.The appellant did not enjoy substantial financial advantage from his participation.
4.The appellant’s period of involvement – although in excess of five years – was not as long as those of the others whose activities, he said, continued after the appellant was excluded.
5.The appellant disputed the value of the electricity stolen from Southpower by means of winding the meter at the Papanui factory maintaining that the value was very much less than the amount of $34,275 claimed. Mr Hampton accepted, however, that the appellant himself was recorded in the evidence as having contended for a very much higher figure at one point.
6.That the sentence of three years for the involvement of the appellant in his circumstances is out of line with sentences indicated by the authorities. Mr Hampton referred in particular to the judgment of this Court in R v Clark CA364/99, judgment 23 November 1999 and the authorities cited therein.
This is a case in which precise figures involved in the various forms of dishonesty cannot be ascertained. Nor is such precision necessary. The matter can be approached broadly. The business, in which the appellant was an equal partner with full knowledge of and participation in what occurred, had its very basis in theft and fraud on a considerable scale. An employee of a supplier, which also was a market competitor, was persuaded (and paid) to facilitate thefts of raw materials over a lengthy period. With respect to the sentencing Judge, there seems little justification for any significant distinction between the instigator and the other partners.
The electricity thefts also were on a large scale at two factories over the period. This enabled the offenders to secure the market advantage of lower production costs.
The remaining offences reflected the general pattern of dishonesty.
We were not able to ascertain the extent of under-reporting of stock for tax deferral purposes but that was certainly not less than $240,000.
No reparation order could be made realistically and it is clear that the main victims of the offending are unlikely to make full recovery from the appellant in civil proceedings which, we understand, have been started.
We have considered the position of the only other offender so far dealt with. He was the employee of MM Cables. For theft as a servant of property to the value of $200,000, said to have been perpetrated over four years, he was sentenced to imprisonment for two years after pleading guilty. He was noted as having been paid $35,000 to $40,000 by those he was supplying.
In the case of Clark, for false pretences by which some 17 victims were defrauded of a total of $386,081, the sentence of four years was reduced to three years. This Court noted that the starting point for the offending in that case was four to five years which was to be reduced for a plea of guilty and co-operation with the authorities.
The present appellant cannot claim any discount for guilty pleas. Those he did enter were for the relatively minor offences. There is no indication of significant co-operation with the authorities. In that light we do not see that the sentence of three years in this case, to reflect the totality of offending, is out of line with those decisions. Nor does it reflect substantial departure from the level of sentences indicated by the cases cited by the Court in the Clark judgment.
As the Judge said, fraud and dishonesty in commercial contexts are to be met with deterrent sentences when exposed. The orderly conduct of business still relies to an important extent on honesty and fair dealing. Deliberate dishonesty practised out of greed by taking from others is no less serious because it occurs in a commercial context.
We have not been convinced that the sentence was not open to the Judge and the appeal is dismissed.
The appeal against conviction was not pursued and that too is formally dismissed.

Solicitors

Crown Law Office, Wellington

[2000] NZCA 276

18 April 2000