R v Knape CA284/99 [1999] NZCA 339 (5 October 1999)

Last Updated: 25 September 2014

SEE SUPPRESSION ORDERS IN PARAGRAPH [21] OF THIS JUDGMENT

IN THE COURT OF APPEAL OF NEW ZEALAND CA284 /99

THE QUEEN

V

WILLIAM KNAPE

Hearing: 27 September 1999 (at Auckland) Coram: Elias CJ

Keith J

Panckhurst J

Appearances: S B W Grieve QC and J Foster for the Appellant

R Harrison QC and J Mullineux for the Respondent

Judgment: 5 October 1999

_{JUDGMENT OF THE COURT DELIVERED BY KEITH J}

[1] The appellant pleaded guilty to nine charges of extortion under s238(1)(a) of the Crimes Act 1961. He was sentenced to 3½ years imprisonment. He appeals against that sentence. The charges are in the same general form : the appellant with intent to extort varying amounts from a named person, B, threatened to make against her the disclosure of an offence, namely misappropriation from two named companies. The offences were committed over a period of four and a half months between 21 June 1996 and 30 October 1996. The amounts demanded totalled $700,000 and involved sums of between $25,000 and $150,000. On the whole, the amounts increased over the period with the last three, in October,

totalling $350,000. The initial count in the indictment alleged an express threat, and the other eight express or implied threats.

[2] The appellant was the principal or only shareholder and managing director of the two companies. B had been employed in them from August 1993 to June

1996 as an office administrator. Throughout that period she had stolen substantial sums from the company. The amount in respect of which she pleaded guilty was $144,650.27. According to the calculations of the Serious Fraud Office the amount could not have exceeded $210,939. After the thefts were discovered B was dismissed but the appellant did not then or later report her offending to the authorities. On 18 June 1996 the appellant contacted her by telephone and told her that he would not report the matter to the police if she repaid the money she had stolen. Fearful of imprisonment if the police were advised of her thefts she told the appellant that a brother had a lot of money and undertook to approach him to get money for repayment. The following day she attended the office of the company’s accountant and identified a total amount of about $155,000 which she admitted stealing. She arranged to get $30,000 from her brother and that amount was paid over on 21 June.

[3] Over the following months the appellant contacted B at intervals to demand more money, specifying the amounts and time of payment. She had started a new job, also as an office administrator, and although she had told the appellant that her brother had a lot of money this was untrue. In fact she had no source of funds to repay the money and she began stealing from her new employer to meet the appellant’s demands. The following eight payments all came from those thefts. She retained nearly $70,000 herself. Of the $700,000 paid to the appellant, the first $170,000 was paid in three amounts to one of the companies and the following $530,000 to the appellant personally. Civil litigation between her second employer, the appellant, the company, the bank in question and other parties was settled in an agreement which is subject to a confidentiality condition. While the second employer eventually regained the money it lost, the Serious Fraud Office assessment is that the appellant made a net gain of

$264,567.87 from the offending.

[4] The facts as stated in the summary of facts prepared by the Serious Fraud Office and available to the defence before sentencing were accepted by the appellant except in one respect. The summary says that the appellant would have known of the extent of the thefts from his companies, that is of about $150,000, because he had access to the accounts and examined them after the thefts to identify the losses. According to the Judge, Mr Knape said that was not possible and he had not done so.

[5] The sentencing Judge mentioned previous authorities, including R v Wilson (CA31/81, 5 June 1981) where this Court quoted D A Thomas Principles of Sentencing (2d ed) 146 to the effect that cases of blackmail involving a threat to expose or accuse the victim are almost invariably treated seriously and will often attract a sentence of three years imprisonment even where there is substantial mitigation. In another case this Court said that extortion, or blackmail as it is more commonly known, has always been regarded as a particularly serious offence; R v Patterson (CA228/96, 22 August 1996). The Court quoted from the English Court of Appeal to the effect that the offence is regarded, and rightly regarded, by the public with loathing and contempt. In the only New Zealand decision brought to the sentencing Judge’s attention involving a comparable sum of money, R v Low-Wai (CA49/94, 53/94 and 68/94 22 June 1994), a case of demanding money with menaces under s239 this Court confirmed a sentence of six years imprisonment. The initial demand, unsuccessful in that case, was for something like $1million.

[6] After summarising the submissions from the Crown and defence, the Judge turned to the question of suspension of the sentence. There was no doubt, she said, that a sentence of imprisonment was inescapable. The type of offending was serious, first, because of the amount of money involved and, second, because of the extended nature of the offending involving nine threats and demands over a period of four and a half months. In the circumstances of the case, it was abundantly clear to the sentencing Judge that the offending must attract a sentence of more than two years. Parliament’s fixing of the maximum at 14 years indicates that blackmail, along with aggravated robbery and other like offending, is viewed most seriously by the community. The seriousness of the

offending was not substantially ameliorated by the fact that to some extent the appellant and his companies were also victims in this sad set of circumstances. “Very often the relationship between extortionist and victim is a pre-existing one; that was the case here albeit in a commercial environment.”

[7] The Judge stated her conclusion in this way:

I believe the appropriate sentence would be 4½ years imprisonment, but from that I subtract a period of 12 months in recognition of the guilty plea (though I stress that the usual allowance a Court might make for a guilty plea cannot in full be recognised in this case given the lateness of the guilty plea and the fact that it is coupled with protestations of innocence and the lack of remorse), and I take into account that Mr Knape is a first offender, and in particular his very poor health condition. That, however, is not a factor that enables this Court to avoid the necessity for passing a sentence of imprisonment which is entirely appropriate for the crimes of which you, Mr Knape, have been convicted.

I accordingly sentence you to 3½ years imprisonment on each charge, to be served concurrently. My sentencing notes will record for the benefit of the prison authorities the need for immediate and priority concern for your health interests while in prison.

[8] Mr Grieve, for the appellant, submitted that the Judge had adopted the wrong approach in emphasising in the way she did the amount and period of the offending (para [6] above). He was not contending that those matters were irrelevant. They could be aggravating. But the Judge had lost sight of the circumstances and nature of the threat and especially the background circumstances of B’s thefts which were the genesis of the appellant’s offending. Those circumstances were central, he said.

[9] The circumstances begin with B’s substantial serious thefts. The appellant and his companies had without doubt the right to the return of those moneys, but only through lawful means. According to Richardson J, the policy argument forbidding blackmail that stands out is that

Members of an ordered society should use legally approved means for redress of grievances. Self help should be discouraged, particularly where it rests on fluctuating standards as to what is right and wrong. We alter the quality of justice if we allow any individual to demand

property or favours as the price for not disclosing embarrassing information. R v Cargill [1995] 3 NZLR 263, 271 (CA).

[10] It follows that had the appellant’s actions led to the recovery only of that which was owed to him and his companies his actions would still have been unlawful. The very large excess is relevant to sentencing, as Mr Grieve rightly accepted, especially if the offender knew that his demands substantially exceeded the indebtedness.

[11] That question of knowledge takes us back to the one aspect of the summary of facts which the appellant at sentencing did not admit : that the facts about the extent of B’s thefts “would have been known to the [appellant], who had access to the accounts and examined them after the thefts had been discovered specifically to identify losses”.. Mr Grieve contended to the contrary that the appellant thought the total was more in the order of $600,000 and pointed to evidence given by B at depositions which, he said, tended to support that.

[12] The challenged statement contains an element of speculation or inference : the statement is not that the appellant knew of the extent of the theft but rather that because of opportunities and an alleged action the amount “would have been known”. By contrast, the appellant does not challenge the following facts:

1. On 19 June 1996, the day after the appellant’s first telling B that he would not report the thefts to the police if she repaid the stolen money, she identified to the company accountant a total of about $155,000 which she admitted stealing.

2. The accountant reported that admission to the appellant.

3. The appellant did not in the following months take any action to challenge that figure except to the extent that in a conversation with B some time later he may have suggested to her that the figure was about $600,000. At depositions B several times said that she did not “think” that in that conversation she had accepted that she had stolen $600,000.
4. After the payment of 6 August 1996 which brought the total to $170,000 – an amount in excess of that admitted to have been stolen by B – the appellant instructed B to make all cheques in favour of him personally, “giving the reason [to quote the summary] that he would then be seen to be repaying the money to [the company] and that the transaction would not look suspicious.”

5. The diary of the operations manager who had discovered B’s thefts showed that he was expected to collect further amounts from B for the appellant of

$100,000 on 25 November and $70,000 on 29 November. Such payments would have taken the figure to $870,000, far in excess of the $600,000 figure suggested.

6. The total combined debt of the appellant and his principal company at the time B was dismissed was $1,109,112.67.

[13] The uncontested facts appear to us to support the inference that from 15

August (the date of the next demand after the $170,000 had been obtained) until the end of October or even, so far as the planning went, to the end of November, the extortion to the appellant’s knowledge went beyond, indeed far beyond, what he could conceivably have thought he was entitled to. That further extortion involved six demands (with another two planned for November) totalling

$530,000 (or $700,000 if the November figures are included).

[14] This is a situation where the part of the summary of facts challenged – the state of the appellant’s knowledge – is a conclusion drawn from primary facts also stated in the summary which are not disputed. The case is quite different for instance from R v Bryant [1980] 1 NZLR 264. Had the summary not drawn that conclusion about the state of the appellant’s knowledge, that issue may well have been simply a matter of submissions – subject of course to the right of the parties, especially in this case the defence, to call evidence.

[15] We were informed that the appellant and his counsel faced the difficulty that the appellant’s health did not allow him to face the strain of giving evidence even if it were limited to sentencing. Accordingly, the appellant was not in a position to refute the inference that we consider could properly be drawn.

[16] Although that inference is not explicitly drawn by the sentencing Judge it may be seen as reflected in the following passage:

Mr Grieve also spent some considerable time differentiating Mr Knape’s offending from some other types of offending that come before the Courts under the heading of extortion in that Mr Knape’s offending had its genesis in [B’s] thefts from his companies. While Mr Grieve properly accepted that background is no defence to Mr Knape’s offending, he offered it seriously in mitigation on the basis that Mr Knape and his companies had an “entitlement” to be refunded by [B] the sums of money stolen from them. As I have already mentioned, Mr Knape throws doubt on the precise amount stolen but accepts the summary of facts with the qualification already mentioned. I of course, must sentence on the basis of that summary of facts.

[17] Accordingly we consider, consistently with that passage, that the sentencing properly proceeded on the basis of the summary. The extent in time, number of threats and amount, taken with the related knowledge of gross over recovery, must mean that this offending is to be treated as major. The circumstances of the New Zealand cases, fortunately relatively rare, vary substantially, for instance in terms of the relationships between victim and offender, the number of threats and the time they cover, the amounts, the planning, the accusation which is to be disclosed, its accuracy, any entitlement owed to the blackmailer and then belief in it. While, according to the material before us, no penalty as high as the present has been imposed in New Zealand, we cannot say that a starting point of

4½ years against a maximum of 14 years is too high. We recall the statement by Professor Thomas adopted by this Court (para [5] above) that extortion will often attract a sentence of three years even when there are features of mitigation.

[18] Before we turn to those features in the present case, we mention one possible aggravating matter which Mr Grieve thought may have wrongly influenced the Judge – the impact of the blackmail on B and the employer from whom she stole. While, as this Court indicated in the Cargill case the blackmailer’s actions are to be penalised in part because of misconduct induced by those actions, the weight to be given in sentencing to the consequences of that misconduct will be affected by the blackmailer’s knowledge of them. The weight to be given to the impact in this case on the second employer is lessened by the fact that there is no evidence that the appellant knew of B’s new employment which it is acknowledged she

concealed from him. The payments could conceivably have been coming from B’s brother or her realisation of property bought with the stolen money. It is not clear from the Judge’s remarks that the impact on the second employer did weigh in the sentence : she records the Crown submission without specifically adopting it. The impact on B is clearly however an aggravating feature, as Mr Grieve accepted : the blackmail led her into further offending for which, along with the initial thefts from the appellant’s companies, she was sentenced to 2½ years imprisonment in April 1997.

[19] The mitigating factors are the guilty pleas – although they did not bring with them an acknowledgement of guilt or remorse and were late –, the fact that the appellant is in essence a first offender, and especially his very poor health condition which the Judge brought to the attention of the prison authorities.

[20] We cannot say that weighing all the factors, especially the extent of the offending and the appellant’s knowledge, the sentence is plainly wrong. Accordingly, the appeal is dismissed.

[21] We continue the orders made in the High Court suppressing the name of B and of her second employer, together with their occupation and place of residence or business as the case may be, and for the confidentiality of the settlement agreement mentioned in para [3].

Solicitors:

Malloy Goodwin Harford, Auckland for the Appellant

Serious Fraud Office, Auckland for the Crown