The Queen v Dench [2002] NZCA 199; (2002) 19 CRNZ 550 (19 August 2002)

Last Updated: 15 December 2011

IN THE COURT OF APPEAL OF NEW ZEALAND

CA136/02

THE QUEEN

V

JENNIFER MARY DENCH

Hearing:	19 August 2002
Coram:	Gault P Paterson J Randerson J
Appearances:	G W Wells for Appellant Y V Yelavich for Crown
Judgment:	19 August 2002

INTERIM JUDGMENT OF THE COURT DELIVERED BY GAULT P

[1] The appellant was convicted after pleading guilty to one charge laid pursuant to s128A(1)(b) of the Insolvency Act 1967 and nine charges laid pursuant to s229A Crimes Act 1961. The Insolvency Act charge alleged that she was a party to the management of a business by Roy Edward Williams, a bankrupt. The Crimes Act charges alleged fraudulent use of a franchise disclosure document for the purposes of obtaining pecuniary advantage. On 19 April 2002 the appellant was sentenced to imprisonment for two years but with leave to apply for home detention. She now appeals against that sentence.

Background facts

[2] The appellant met Mr Edwards in 1996 when he offered her and her son jobs selling tickets to a beer and food festival that he was organising. She went on to form a personal relationship with him and later a business relationship. In 1997 the appellant and Mr Edwards were the directors of a company involved in the liquor industry. The company quickly encountered financial difficulties and was dissolved. Mr Edwards was adjudged bankrupt in August 1998. However, within a short space of time the couple set up another company, the Worldwide Beer Club Limited which acquired some of the assets and customers of the former business. The arrangement was that the appellant would take the nominal position of director of the company while the company would employ Mr Edwards as a sales representative. In reality this arrangement was designed to conceal Mr Edwards’ management role in the company.
[3] By the middle of 2000 the company had significant debts and was trading while insolvent. It was around that time that the appellant and Mr Edwards advertised franchises for sale at $50,000 plus GST. When they received responses to the advertisements they provided each potential franchisee with a franchise disclosure document. Each document falsely stated that the company had no material debt, that the appellant and Mr Edwards had no history of bankruptcies or insolvencies and that neither of them was involved in past offending or criminal proceedings. In fact the appellant had previously been bankrupt as had Mr Edwards who was, additionally, an undischarged bankrupt. Further, both had previously been involved in insolvent companies, the company had significant debts and Mr Edwards had criminal convictions. In reliance on these documents the company sold nine franchises between October 2000 and February 2001. They raised approximately $450,000 from the franchises. A few months later the company was liquidated. No money was recovered. The liquidator’s report shows personal payments from the company into the appellant’s bank account amounting to $144,000, of that some $20,000 went to Mr Edwards. About $100,000 of the money was received before the franchise purchasers paid over their money.
[4] The sentencing Judge concluded that the appellant participated in a scheme to deceive members of the public and to defraud them of substantial sums of money. He noted in particular the necessity of imposing a deterrent sentence in such circumstances. The Judge summarised the mitigating features of the case as follows:

• (a) You were not the main force. Clearly this was Mr Edwards but by the same yardstick the scheme could not have operated without your involvement.
• (b) Secondly, your personal life from an early age has been a history of disasters – broken marriages and/or relationships, addiction to alcohol, some drug dependency and certainly periods of great depression and despondency.
• (c) Thirdly, there are no previous convictions of any sort levelled against you.
• (d) Fourthly, you have a good job at present and you have got good references from your employer.
• (e) Fifthly, you have no meaningful assets.
• (f) And lastly and probably most importantly, you accepted your responsibility at an early stage and have latterly been assisting the authorities and indeed as I understand from Crown Counsel will probably give evidence should the matter proceed to trial against Mr Edwards.

[5] In aggravation the Judge took into account the devastating effects of the appellant’s offending on the victims. These were set out in a number of victim impact reports and included both financial and personal loss, several family relationships having come under strain as a consequence of the financial hardship caused. The Judge added that it was plain from the appellant’s remarks to the probation officer that she realised what she was getting into, could have pulled out but instead chose to go on with the fraud. He then sentenced her to two years imprisonment; declining to suspend the sentence but granting leave to apply for home detention.
[6] In support of the appeal Mr Wells’ primary argument was that the sentence should have been suspended having regard to the appellant’s subservient role in the offending and her personal circumstances. He raised the preliminary issue of whether the Court has jurisdiction to consider the issue of a suspended sentence given that the Sentencing Act 2002 does not provide for such sentences. In case that argument was unsuccessful, counsel submitted that two years imprisonment was excessive having regard to the same factors invoked in support of a suspended sentence.

Power of the Court to consider a suspended sentence on appeal

[7] As Mr Wells correctly points out, the transitional provisions of the Sentencing Act do not address the situation with which we are presented – one in which we are being asked to substitute a sentence that existed at the time of conviction and sentencing but no longer exists at the time of appeal. However, we are satisfied that, in the absence of any legislative direction otherwise, we have all the powers of the sentencing Court to determine an appropriate sentence for the appellant. We are reinforced in this view by s19 Interpretation Act 1999 which provides:

• (1) The repeal of an enactment does not affect a liability to a penalty for an offence or for a breach of an enactment committed before the repeal.
• (2) A repealed enactment continues to have effect as if it had not been repealed for the purpose of –

....

(b) Commencing or completing proceedings for the offence or breach;
(c) Imposing a penalty for the offence or breach.

Appeal against sentence

[8] In the course of argument Mr Wells contended that the offending was no more than moderately serious. He submitted that the term of imprisonment should have been suspended by reference to the principles set out in R v Peterson [1994] 2 NZLR 533, and a community based sentence imposed. He emphasised the appellant’s personal circumstances, particularly the degree to which she was dominated by Mr Edwards, and submitted that the sentencing Judge had either failed to take them into account or accord them sufficient weight. We were referred to the evidence of witnesses at the deposition hearing which supported the appellant’s more limited role in the offending. Further personal circumstances said to support suspension were the appellant’s difficult life, her previous conviction free record, her guilty plea and co-operation with the police. Counsel also submitted that her personal drawings from the business were not unreasonable given that they were her only earnings.
[9] Ms Yelavich for the Crown submitted that the sentencing Judge had taken the relevant factors into consideration and that suspension of the appellant’s sentence was inappropriate because of the need to deter and what the sentencing Judge saw as the appellant’s awareness of her offending reflected in her affidavit before the Court. Counsel supported the sentence by reference to the decision of this Court in R v Clark (CA364/99, judgment 23 November 1999) in which a sentence of four years imprisonment for similar offending was reduced to three years on appeal to reflect Clark’s guilty plea and co-operation with the police.
[10] In considering the issue of suspension we are not convinced that the Judge overlooked any material matters. In R v Peterson this Court observed at p537 that the principal purpose of s21A of the Criminal Justice Act introducing the suspended sentence was to encourage rehabilitation by providing an effective means to achieve that end. It was available to be used in cases of moderately serious offending where there was thought to be sufficient opportunity to reform and the need to deter others was not paramount. We agree with the sentencing Judge that deterrence must play a significant part in sentencing for this sort of offending. The role of a company director carries significant responsibilities. It is not to be undertaken naively or at the request of others to conceal incapacity. Similarly, statements made to induce the investment of money are to be made responsibly. In this case the statements were patently false and must have been known to be so. Those vulnerable to influence or persuasion must recognise that allowing themselves to be drawn into fraudulent schemes will bring serious consequences which cannot be avoided by blaming someone else. This was serious, and blatant, offending. It involved substantial amounts and the fraudulent activity continued over a substantial period. The effects of the fraud were devastating to the victims, some of whom were reaching the end of their earning lives at the time of their loss. We consider that it was entirely open to the Judge to regard the case as not appropriate for a suspended sentence.
[11] For similar reasons we are not persuaded that a sentence of two years imprisonment is manifestly excessive in the circumstances. Although it would have been helpful if the Judge had more clearly specified the allowance accorded for the guilty plea it is clear that some allowance was made.
[12] The appellant was granted bail pending appeal. That represented some leniency. It is surprising that the opportunity was not taken to apply for home detention in case the appeal should be unsuccessful.
[13] The appellant has family responsibilities. She has employment and the support of her employer to whom the circumstances of the offending have been fully disclosed. Such support has not previously been available to her and to be able to serve her sentence by home detention with the chance to continue in employment would seem to make good sense.
[14] In the circumstances we consider the correct course is to adjourn the appeal and allow bail to continue on the same terms to give the opportunity for application to be made for home detention. If that is granted the appeal will be dismissed without the need for further appearances.
[15] Counsel for the appellant is to inform the Court by memorandum of the outcome within a month from today. Further directions will be given in light of that.
[16] The appeal is adjourned accordingly.

Solicitors

G W Wells, Auckland, for Appellant

Crown Solicitor, Auckland