THE QUEEN v PHILLIP HARVEY [2001] NZCA 266 (19 September 2001)

IN THE COURT OF APPEAL OF NEW ZEALAND

ca 237/01

THE QUEEN

V

PHILLIP HARVEY

Hearing:	19 September 2001
Coram:	Elias CJ Robertson J Fisher J
Appearances:	G Boot for Appellant S P France for Crown
Judgment:	19 September 2001

judgment of the court DELIVERED BY FISHER J

[1] Mr Harvey was a 51 year-old accountant in private practice. Following a ten day hearing he was convicted of 97 counts of using a document with intent to defraud contrary to s 229A(b) of the Crimes Act 1961. He was sentenced to two and a half years' imprisonment concurrently on all charges and ordered to pay emotional harm reparation of $6,000. Today he seeks leave to appeal out of time against sentence.

Factual Background

[2] Mr Harvey was in a two-man partnership.The offences were committed in the course of his dealings with clients who consulted him over accounting, management and transport matters. Each had a small private business engaged in the transport industry. A total of $42,726 was fraudulently taken from three companies over a period of 18 months.

K10

[3] Mr Owen Andrews consulted Mr Harvey over a perceived problem about maintenance liability to his ex-wife. Mr Andrews was the principal shareholder of K10 Company Limited. Mr Harvey devised a scheme intended to reduce the maintenance liability. The client's son was made the sole shareholder and director of the company. Mr Harvey was to act as the company's professional accountant, billing for his services in the usual way.

[4] Without the knowledge of the client Mr Harvey persuaded the son to sign over his shares to Mr Harvey. Mr Harvey also used his new status as a shareholder as a pretext for writing a series of company cheques in his own favour, falsifying the cheque butts. The share transfer was found to be fraudulent and a conviction entered on that account. Seventy-four convictions were entered in respect of cheques totalling $32,614.

Flynn Tranz

[5] Michael and Phillip Flynn consulted Mr Harvey over the loss of a goods service transport licence. Mr Harvey devised a business restructuring which gave him a continuing role in their company Flynn Tranz Ltd. The role was ill-defined but included a degree of management as well as professional accountancy services. Again he used his position to write himself a series of unauthorised company cheques. The Judge accepted that he could have believed that he was entitled to something over and above normal accountancy fees. The convictions were confined to those cheques totalling $5,658 where he must have known that he was not entitled to the money.

Ohaupo Carriers

[6] Mr and Mrs Ronke consulted Mr Harvey over the serious financial difficulties of their company, Ohaupo Carriers Ltd. While continuing to act as their accountant Mr Harvey took over as the company's major shareholder and guarantor of a loan. Again he used his position to write himself a series of company cheques totalling about $19,000. Fourteen of these, totalling $4,453, were found to have been written fraudulently and without any genuine belief that he was entitled to the money. He also fraudulently entered Mr Ronke's name on three documents - two Consent and Certificate of Director forms and a Land Transport Safety application form.

Reasons for sentence

[7] The Judge noted that Mr Harvey's offending was primarily an abuse of the professional accountant/client relationship although in some cases involving a mixture of his own business affairs with those of his clients. The Judge regarded it as an exploitation of victims who were particularly vulnerable. While the amount was not large compared with many cases, the victims were little people to whom it meant a great deal. The offending constituted a substantial breach of trust over a sustained period. Mr Harvey showed no remorse for his offending, refusing to accept that his conduct was wrong.

[8] The Judge noted the devastating effect of Mr Harvey's actions upon his victims, particularly Mr and Mrs Ronke. Due largely to the actions of Mr Harvey's partner, Mr Ward, reparation for financial loss was not required. However, that did not recompense Mr and Mrs Ronke for their emotional distress. An additional $6,000 was ordered on that account.

[9] After discussing ss 6 and 7 of the Criminal Justice Act, and traversing the authorities, the Judge took three years as his starting point. He deducted 6 months for the reparation and arrived at the sentence of two and a half years plus $6000 reparation.

The appeal

[10] In this Court Mr Boot's first point concerned the blurring of professional and business roles. At least in the case of Flynn Tranz and Ohaupo Carriers, Mr Harvey was given a management role as well as an accountancy one. Mr Boot argued that Mr Harvey's case did not fall squarely within the category of professional offenders. We can see little in this point. Of the 97 convictions, 75 arose from Mr Harvey's dealings with K10. It has not been suggested that in relation to that company his role was anything other than that of a professional accountant. Even in the case of Flynn Tranz and Ohaupo Carriers, the clients originally consulted Mr Harvey in his role as a professional accountant. It was he who advised them to reconstruct their businesses in the way they did. Unsurprisingly, they continued to trust him and look to him for guidance in financial matters after the reconstruction.

[11] Mr Boot also submitted that the Judge made no allowance for Mr Harvey's exemplary record prior to the offending. We accept that this is relevant although it is not a distinguishing feature when considering the general run of precedents for white collar crime by professionals.

[12] Mr Boot's principal submission was the more general one that the sentence was excessive when measured against existing sentencing precedents for defalcations by professional advisers. He placed particular emphasis upon the relatively small sum involved and the full reparation made.

[13] Each case must be considered according to its own facts but sentences have often ranged from four to six years for very major sums taken over lengthy periods without reparation (R v Rose 2 [1990] NZLR 552; R v Haddon [1990] NZCA 252; (1990) 6 CRNZ 508; R v Wheldale (CA 425/93, 22 February 1994; R v Crime Appeal (CA 533/93 3 June 1994)) to six months imprisonment for sums of $10,000 or less taken on a single occasion (R v Boyd (CA 199/85 13 December 1985) and R v Osmond [1996] 1 NZLR 581).We agree with Mr France that although many other factors must be taken into account, the three most important variables have tended to be the total sum involved, the extent of the reparation, and the plea.

[14] In the present case one can not ignore the seriousness of a gross breach of trust committed over a substantial period against the proprietors of three different companies. Nor can Mr Harvey enjoy any reduction for a guilty plea. Deterrence demanded a substantial prison sentence without suspension. The fact remains, however, that measured against the precedents to which we have referred, the total sum was modest and it was fully repaid. In those circumstances we think that two and a half years was out of line with established sentences.

Result

[15] Leave to appeal is granted, the appeal is allowed, and the sentence is quashed. In its place the appellant is sentenced to imprisonment for one year nine months concurrently on all counts. Leave is granted to apply for home detention. The order for reparation of $6000 will stand.

Solicitors:

Boot & Roose, Hamilton

Crown Law Office, Wellington