Grant v R [2018] NZCA 452 (25 October 2018)

Last Updated: 3 December 2018

IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA

CA617/2017 [2018] NZCA 452

	BETWEEN	TESSA FIONA GRANT Appellant
	AND	THE QUEEN Respondent

Hearing:	28 August 2018
Court:	Miller, Mallon and Gendall JJ
Counsel:	N P Chisnall for Appellant J A Eng for Respondent JEM Lethbridge for SkyCity Entertainment Ltd, intervening with leave
Judgment:	25 October 2018 at 2.00 pm

JUDGMENT OF THE COURT

1. The application to adduce further evidence on appeal is granted.
2. The appeal is allowed. The sentences are quashed. Concurrent sentences of six years’ imprisonment are substituted. The sentences remain subject to a minimum period of imprisonment of 50 per cent.

100. The suppression order made in this Court on 15 June 2018 is discharged.

____________________________________________________________________

REASONS OF THE COURT

(Given by Mallon J)

Introduction

[1] Tessa Grant stole over $2.75 million from her two employers, SkyCity Entertainment Group Ltd and Waikato Diocesan School for Girls. She pleaded guilty to the charges brought against her.^[1] She was sentenced in the District Court by Judge Connell to seven years and eight months’ imprisonment with a 50 per cent minimum period of imprisonment.^[2] She appeals her sentence.
[2] Ms Grant contends her sentence should have been reduced to take into account the substantial recovery by SkyCity and the full recovery by the school of its direct financial losses. She says that, because information about a settlement with SkyCity was treated as confidential, it was not made available to the District Court Judge, and this meant he was unaware Ms Grant had made substantial reparation to SkyCity. She also contends she received an inadequate reduction for her guilty pleas.
[3] If her sentence is reduced for these matters, Ms Grant also seeks a reduction in the percentage of her minimum period of imprisonment.

Circumstances of the offending

[4] The SkyCity offending took place between 22 December 2008 and 24 February 2014 when Ms Grant was the finance manager and on occasions the general manager at SkyCity’s Hamilton operation. Her fraudulent activity involved issuing cheques drawn on a SkyCity account to pay personal expenses, falsifying invoices and withdrawing unauthorised petty cash, and dishonestly accessing the computer. The amount fraudulently taken was $1,980,922.01. Ms Grant used some of the misappropriated funds to construct a horse arena at her property ($425,456.91), pay equestrian-related expenses ($476,715.72), and operate her credit card.
[5] Ms Grant’s offending remained undiscovered when she left SkyCity in July 2014. At this time she commenced employment at Waikato Diocesan School for Girls as the school’s commercial manager. She resigned from this position in September 2015 when an employment investigation into her use of the school credit card and other irregularities was underway. A subsequent police investigation established she had misappropriated school funds totalling $795,000.
[6] Her offending against the school covered the period from December 2014 until April 2015. It involved falsifying board minutes to approve unauthorised payments; falsifying invoices and making resulting payments to herself (either by diverting the payments to her bank account or by taking the sums in cash); unauthorised spending on her school credit card; and using cheques drawn on the school account to pay her personal expenses. She applied some of these misappropriated funds to purchase a property in Hamilton (approximately $900,000), to make progress payments on a horse coach and truck chassis she had agreed to purchase ($155,000), to buy equestrianrelated gear ($150,000), and to buy jewellery ($55,850).
[7] Ms Grant was charged with offending against the school in December 2015. At this time she paid full reparation to the school, including interest and costs, an amount totalling $902,521.54. She pleaded guilty to the charges relating to this offending on 6 January 2016.
[8] SkyCity commenced an internal investigation following an approach from a contractor whose name had been used by Ms Grant to falsify invoices to obtain funds from the school. That contractor had carried out work for SkyCity when Ms Grant was an employee. SkyCity’s internal investigation led to the discovery of the offending against it. Ms Grant first appeared on the SkyCity charges on 6 April 2016. She pleaded guilty on 23 June 2017, which was three weeks before her trial on those charges.
[9] She was sentenced on all the charges on 11 September 2017.

District Court sentencing

[10] The District Court Judge decided on a totalityadjusted starting point for both sets of offending of eight and a half years’ imprisonment.^[3] In doing so, the Judge correctly noted that culpability was to be assessed with reference to the factors described in Varjan v R.^[4] Those factors are the nature of the offending, its magnitude and sophistication; the type, circumstances and number of victims; the motivation for the offending; the amounts involved; the losses; the period over which the offending occurred; the seriousness of the breach of trust involved; and the impact on the victims.^[5]
[11] The Judge regarded Esau v R and R v Robinson as providing appropriate comparators.^[6] He noted that in those cases amounts of $1.1 million and $2.6 million respectively were stolen from the defendant’s employer. Starting points of six years and six months’ and seven years and six months’ imprisonment respectively were adopted. He derived his starting point by taking seven years for the SkyCity offending and uplifting that by one and a half years’ for the school offending, having regard to totality.^[7]
[12] The Judge declined to discount that starting point for the reparation paid to the school. He did so because he inferred that Ms Grant had paid the school with money stolen from SkyCity. He explained this as follows:

[37] I cannot accept that there should be any credit or discount for reparation paid. The point made by Crown counsel Mr Douch is correct, that the reparation paid to Waikato Diocesan School was in the main funded from moneys taken from Sky City which seem wrong in principle in my view to allow some reward for theft and repaying Diocesan School from funds stolen from Sky City.

[13] The Judge made no mention of any recovery by SkyCity of its losses. He did not order reparation. SkyCity’s victim impact statement dated August 2017 referred to the time and financial resources it had dedicated to “discovery and investigation of the fraud” but made no reference to any recovery. The summary of facts recorded that SkyCity was not seeking reparation “given ongoing civil prosecution” by it. A psychologist’s report before the Judge included a statement that a “substantial settlement has been made to SkyCity”. The prosecutor referred to the repayment to the school and said “[n]o such repayment has been made to SkyCity Limited by the defendant”. Submissions on behalf of Ms Grant advised the Judge that civil action had been taken against her and other defendants and that:

... some aspects against others have been settled confidentially. Counsel understands Ms Grant provided all of her assets and possessions, bar her clothing, to SkyCity.

[14] The Judge declined to allow any discount for remorse. He applied a discount of one and a half months from the one and a half year term of imprisonment for the school offending for the early guilty plea to that offending. He applied an eight and a half months’ discount on the term for the Sky City offending for the later guilty plea to that offending. This brought the sentence down to seven years and eight months’ imprisonment.^[8]

SkyCity’s civil recovery

[15] When sentencing Ms Grant, the Judge was not informed of the details of the settlement that SkyCity had received. The police had a copy of the settlement agreement; but Mr Eng, who appeared before us for the Crown, understood that the prosecutor was not aware of the details (though Mr Eng has not been able to confirm this). We do not know why Ms Grant’s counsel in the District Court did not obtain details of the settlement either.
[16] Mr Chisnall, Ms Grant’s counsel on this appeal, sought to obtain details of the settlement for the purposes of the appeal. He first approached the Crown to enquire with SkyCity whether it had recovered funds and, if it had, the quantity of that recovery. The Crown enquired with SkyCity which declined to provide the information on the basis it was confidential. Mr Chisnall sought a production order from this Court.^[9] The Crown’s position was that SkyCity’s recovery in a confidential civil recovery from a third party was irrelevant to the criminal proceeding. We agree with Mr Chisnall that the Crown was wrong about this. It ought to have taken steps to facilitate the information being placed before this Court.^[10]
[17] It then took some time and encouragement from the Court for information from SkyCity to be put before the Court.^[11] Initially a joint memorandum from SkyCity and Ms Grant’s father (Mr Grant) and his company advised the Court that they had reached a confidential settlement agreement and this did not settle SkyCity’s claim against Ms Grant. It also advised that they did not consent to disclosure of the settlement agreement because of the confidentiality clause in that agreement. Shortly thereafter Mr Grant and his counsel advised they abided the Court’s decision and would comply with any orders but, absent a court order, they were bound by the confidentiality agreement.
[18] SkyCity’s counsel (like the Crown) seemed to misapprehend the relevance of the information. More importantly, counsel seemed not to appreciate that confidentiality affords no justification for withholding information from a sentencing court, which is not bound by a private agreement between SkyCity and a third party that their settlement be kept confidential. The settlement agreement was eventually provided in full and, at counsel’s request, confidentiality orders were made by this Court on 15 June 2018 over that agreement.^[12]
[19] SkyCity also produced an affidavit which annexed multiple documents relating to the civil proceedings. The affidavit did not provide any narrative explaining them. Having reviewed them, we have been able to discern the following:

• (a) On 29 January 2016 SkyCity obtained without notice freezing orders over assets of Ms Grant, a company associated with Ms Grant, Mr Grant, a company associated with Mr Grant, and another third party who co-owned a horse with Ms Grant. The orders included the appointment of a receiver (KordaMentha) to trace the assets.
• (b) Mr Grant provided an affidavit in connection with the freezing orders application. He explained that he was unaware of Ms Grant’s offending and, when the offending against the school was discovered, he arranged through his lawyer to sell three properties which Ms Grant owned. These were sufficient to repay the school including principal and interest. Mr Grant’s company also took over a $800,000 mortgage and an obligation for $400,000 of improvements to a property. One of the horse trucks owned by Ms Grant was sold for $205,000 and, after deduction of $55,000 which Ms Grant owed to her father, the balance of the proceeds were paid to Mr Grant’s company.
• (c) On 11 February 2016, the freezing orders were continued against Ms Grant and her father and the two associated companies only. They were limited to assets with an aggregate value of $1,266,000. The High Court orders included orders supressing any commercially sensitive information concerning Mr Grant until further order of the court.
• (d) On 4 August 2016 SkyCity entered into a settlement agreement with Mr Grant and his company. Pursuant to this settlement Mr Grant and his company agreed to pay SkyCity $1.4 million. Once payment was made the freezing orders against them would be discharged. The parties agreed this settlement had “no effect on the civil or criminal claim” against Ms Grant. They further agreed:^[13]

The parties agree that the terms of this settlement are confidential as between the parties and will not be disclosed (except as to the fact of settlement) other than for the purpose of obtaining legal advice or otherwise as required by the operation of law.

(e) On 16 March 2018 SkyCity discontinued its civil claim against Ms Grant with no issue as to costs. The notice of discontinuance explained to the Court that this was because continuing the claim would serve no purpose given that Ms Grant was now serving a sentence of imprisonment and had no assets.
[20] Accordingly, it appears that SkyCity recovered not less than $1.4 million. The total amount referred to in the charges against Ms Grant for offending against SkyCity was $1,980,922.01.
[21] We accept Mr Eng’s submission that this is an unusual case. Ordinarily the offender would be in a position to tell counsel what had been repaid. It is not clear why neither side provided details of the SkyCity settlement to the District Court Judge. On the information before us it appears that those involved either had a misguided belief that the confidentiality clause in the settlement agreement prevented its disclosure or perhaps that it was irrelevant because SkyCity received the money in civil proceedings from a third party. Neither of those matters made the settlement irrelevant.
[22] In fact, it is now apparent that the settlement was sourced from Ms Grant’s assets. Counsel for SkyCity, Ms Lethbridge, appeared at the appeal hearing.^[14] She advised that most of the $1.4 million came from a property which Ms Grant had purchased and which had been transferred to Mr Grant’s company.^[15] The other source of funds was the sale of a horse float.^[16] Counsel said that other items (such as jewellery) had been recovered from Ms Grant but the costs associated with SkyCity’s civil proceedings meant that its total net recovery was less than the $1.4 million. Counsel continued to contend the information was confidential pursuant to the settlement agreement and orders of the High court. But for that agreement and the orders, counsel provided no basis for maintaining a suppression order concerning the sums SkyCity recovered.
[23] We are satisfied that the principle of open justice must prevail. We note that the High Court orders do not prevent the disclosure of any of the information in this judgment. That is because this judgment does not disclose commercially sensitive information concerning Mr Grant, who abides the decision of this Court concerning the information disclosed. The suppression orders made in this Court on 15 June 2018 are discharged as, now that SkyCity’s position is clear, there is no basis for them.

Our assessment of the appeal grounds

The recoveries made by SkyCity and the school

[24] Under s 10 of the Sentencing Act 2002, when sentencing an offender the court “must take into account” any offer of amends by the offender; “the response of the offender or the offender’s family” to the offending; and “any measures taken” by “the offender or the family” to “make compensation to any victim”.^[17] The payments to the school and SkyCity fall within s 10 even though civil proceedings were initiated to obtain them.^[18]
[25] Where an offer of amends is made by the offender, its potential relevance to sentencing is threefold: first, it may be an indication of remorse; secondly, it may go some way to remedying the harm; and thirdly it may constitute a penalty to the offender.^[19] Where compensation has been made by a family member it is the second of these matters which is likely to be at the forefront but this will depend on the circumstances.
[26] When compensation is paid for financial losses caused by dishonesty offending, the victim’s losses are restored (fully or partly as the case may be). As noted above, the extent of a victim’s losses is a relevant factor when assessing the starting point for the offending. Depending on the circumstances it may also be a mitigating factor as a tangible sign of remorse. As explained by this Court in Patterson v R, this may depend at least partly on whether the payment was involuntary or voluntary:^[20]

Perhaps the most logical approach is to acknowledge “involuntary” recovery of money stolen in the starting point analysis and “voluntary” reparation as a mitigating factor — taking care, of course, not to double count. We have already indicated that fraud offending where no recovery is achieved is “more serious” than fraud offending with complete recovery, if only because in the latter case the victims’ loss is transitory and not permanent. The offender should get some credit for that in the starting point adopted, but not much. Not much because the offender’s culpability is not significantly reduced: he or she is still a fraudster and would not have voluntarily returned the money or thing stolen but for being caught. ...

[42] “Voluntary” reparation is quite different. Where an offender exhibits genuine remorse and has done his or her best to atone financially for the fraud, whether by selling assets or borrowing and promising to make recompense by instalments from future earnings, credit is appropriate as a mitigating factor.

[27] Patterson was a case of involuntary recovery. Mr Patterson fraudulently stole $3.4 million. When the police executed search warrants at his home they recovered over $1.2 million in cash and gold. The balance was ultimately recovered by the police under the Proceeds of Crime Act 1991, but this was no thanks to Mr Patterson. He “did his best to prevent recovery of money he had squirreled away in overseas accounts”,^[21] and was “still attempting just prior to sentencing to defeat the authorities’ locating and seizing his ill-gotten assets overseas”.^[22] This Court was satisfied the sentencing Judge’s starting point had appropriately taken into account the involuntary recovery.^[23]
[28] In this case Mr Chisnall contended the repayment to the school could be classified as voluntary whereas the funds recovered by SkyCity were probably involuntary. In our view the involuntary and voluntary distinction made in Patterson does not neatly the fit the circumstances here. The school and SkyCity took immediate steps to protect Ms Grant’s assets from dissipation. In that sense the recovery they obtained was involuntary. On the other hand, Ms Grant and her father were involved in facilitating that recovery. Ms Grant provided her father with a power of attorney and he, on her behalf, attended to the return of funds to them. It is now clear that he did so from assets held by Ms Grant which were funded by her fraud. There is no evidence either she or Mr Grant actively resisted the return of funds to her victim. There is evidence they cooperated. We grant leave for this evidence to be adduced on this appeal given the unusual course of events through which Ms Grant’s counsel and this Court were eventually apprised of the settlement with SkyCity.^[24]
[29] We consider the full repayment to the school and the substantial recovery made by SkyCity should have been taken into account when the Judge determined the starting point. The Judge did not explain why a substantial settlement received by SkyCity was not relevant although, in fairness to the Judge, he did not have the details of that settlement. In the school’s case he did not do so because he saw this as rewarding Ms Grant for her theft from SkyCity. That may not have been entirely correct on the facts as Ms Grant had also accumulated assets from her offending against the school. But in any case the source of the funds was irrelevant to the fact that it meant the school’s financial losses were transitory only, and this was relevant when setting the starting point.
[30] We also note that the settlement Ms Grant’s father and his company reached does not raise issues of “cheque book justice” whereby offenders who can call upon wealthy family or friends look to have their sentence reduced. When the Crown made that submission it did not have details of how the settlement came about. It is now apparent that the father’s settlement with SkyCity, which substantially restored the money stolen from it, came from Ms Grant’s assets which she had financed from her fraud.
[31] Of the two cases the Judge relied on, given SkyCity’s substantial recovery and the different nature and number of the victims, we consider the SkyCity offending was more similar to Esau than Robinson.^[25] On that basis we consider a starting point of no more than six years should have been adopted in relation to the SkyCity offending.^[26] The uplift for the school offending already contained a substantial totality reduction. We therefore consider it does not require further adjustment in recognition of the full recovery the school made when the lead sentence has now been adjusted. The materially aggravating features of the offending were its extensive and sustained nature, the breach of trust it involved and that Ms Grant’s fraudulent activity began very soon after her departure from SkyCity and her new employment with the school. A total starting point of seven and a half years’ imprisonment more appropriately reflects the overall culpability of the offending as compared with the two cases the Judge relied on.
[32] A small discount for cooperating with the recovery was potentially available. However because of the school’s and SkyCity’s immediate steps to protect their position, it does not seem that any significant effort on Ms Grant’s part was required. The recovery was materially assisted by her father and as such was not a tangible expression of her remorse. As the District Court Judge said, sincere remorse was not demonstrated in any of the material before him. Rather Ms Grant had sought to minimise and justify her offending. In these circumstances we consider there was no error by the Judge in declining a credit for cooperation and remorse.

The guilty plea discount

[33] Because of the way the Judge approached the guilty plea discounts, the overall discount amounted to 10 per cent of Ms Grant’s final sentence. We agree with her counsel that this discount gave insufficient recognition to the early guilty plea for the school offending and the fact that a three week trial for the SkyCity offending was avoided. The guilty pleas involved an agreement with the Crown to replace 52 charges with two representative charges and one charge of accessing a computer system dishonestly without claim of right, and to dismiss the remaining charges. That may have been to Ms Grant’s advantage but it was presumably agreed to by the Crown in light of the strengths of its case on the charges dismissed. We agree with Mr Chisnall that a global discount of 20 per cent from the starting point more appropriately reflects the timing and significance of the guilty pleas on the two sets of charges.

Overall sentence

[34] The result from these two adjustments is to reduce Ms Grant’s end sentence from seven years and eight months to six years’ imprisonment.

Minimum period of imprisonment

[35] It does not follow that, because we have reduced the sentence, the percentage of the minimum period of imprisonment should also be reduced. The 50 per cent minimum was justified by the need to denounce and deter offending of this kind. As the lead sentence has reduced from seven to six years, the minimum period will reduce in length, if not by percentage. That is a sufficient adjustment to the minimum period for the reduction in sentence.

Result

[36] The application to adduce further evidence on appeal is granted.
[37] The appeal is allowed. The sentences are quashed. Concurrent sentences of six years’ imprisonment are substituted. The sentences remain subject to a minimum period of imprisonment of 50 per cent.
[38] The suppression order made in this Court on 15 June 2018 is discharged.

Solicitors:
Crown Law Office, Wellington for Respondent
Lowndes, Auckland for SkyCity Entertainment Ltd, intervening with leave

---

^[1] Against SkyCity she pleaded guilty to a representative charge of dishonestly using a document with intent to obtain a pecuniary advantage (Crimes Act 1961, s 228(1)(b)); a representative charge of theft in a special relationship (ss 220 and 223(a)); and a charge of accessing a computer system dishonestly and without claim of right (s 249(1)). Against Waikato Diocesan School she pleaded guilty to three charges of using a forged document (s 257(1)(a)) and four charges of dishonestly using the document (ss 228(1)(b) and 257(1)(a)).

^[2] R v Grant [2017] NZDC 20420 [Sentencing notes].

^[3] At [36].

^[4] At [30], citing Varjan v R CA97/03, 26 June 2003.

^[5] Varjan, above n 4, at [22].

^[6] Sentencing notes, above n 2, at [33], citing Esau v R [2014] NZHC 997; and R v Robinson [2015] NZHC 1673.

^[7] Sentencing notes, above n 2, at [35]–[36].

^[8] At [39].

^[9] Pursuant to the Criminal Procedure Act 2011, s 335.

^[10] Victims’ Rights Act 2002, ss 17 and 17AB. Had the relevance of the information been explained to SkyCity together with the Court’s powers to compel disclosure under the Criminal Procedure Act we expect the information would have been provided promptly. In any event, as we come to, the recovery was not from a third party in this case.

^[11] This Court issued a number of minutes in order to obtain the information. Delays in its provision meant that the scheduled hearing of the appeal was adjourned.

^[12] Grant v R CA617/2017, 15 June 2018 (Minute of Cooper J).

^[13] It also set out the terms on which the parties could advise third parties about the settlement.

^[14] This was pursuant to leave granted by this Court when information was being sought about its recovery of funds. This was unusual but we heard from counsel because we remained unclear about the source of the funds recovered and why SkyCity wished to maintain confidentiality over the settlement.

^[15] This appears to be the property over which Mr Grant assumed the mortgage and other obligations.

^[16] At the hearing, SkyCity’s counsel offered to provide a schedule of SkyCity’s losses, including its costs in securing the recovery of the $1.4 million. However, SkyCity had the opportunity to provide these details before this hearing. In any event, more precision about this will not have a material effect on the outcome of this appeal.

^[17] Sentencing Act 2002, s 10(1). Section 10(2) of that Act provides that, in deciding to what extent any offer of amends should be taken into account, the court “must take into account” whether the offer was genuine and capable of fulfilment, and whether it has been accepted by the victim as mitigating the wrong.

^[18] Rosenberg v R [2015] NZCA 97 at [20]–[21].

^[19] M v R [2008] NZCA 112 at [31].

^[20] Patterson v R [2008] NZCA 75 at [41]–[42].

^[21] At [21].

^[22] At [39].

^[23] At [22]–[23].

^[24] An affidavit from Ms Grant in this appeal deposes to meeting with KordaMentha and assisting it with tracing the funds. Ms Grant also deposes to providing jewellery to the values of around $56,000 to KordaMentha. SkyCity’s counsel considered this affidavit to be misleading and wished to have the opportunity to respond to it. We have decided not to provide SkyCity with a further opportunity to respond to Ms Grant’s affidavit because we consider the full details do not materially assist.

^[25] In Esau, above n 6, the sentence imposed in the District Court was appealed to the High Court. In upholding the sentence, the Judge commented that the starting point was “at the high end of the scale” (at [18] and see also [36]). The Judge noted that, in contrast with another case where significant recovery of the stolen money had been made, there was no money recovered to permit any reparation to be made (at [30] and [34]). In Robinson, above n 6, a total of nearly $2.7 million was misappropriated of which around $400,000 was recovered. The offending involved 13 separate (mostly elderly) victims, 11 of whom suffered serious financial losses from which they were unlikely to ever recover.

^[26] See for example Singh v Serious Fraud Office HC Auckland CRI-2008-404-361, 4 March 2009, referred to in Esau, above n 6, where six years’ imprisonment was imposed for offending involving fraud of about $1.3 million over a period of 14 months but reparation brought the loss down to $600,000. See also Rosenberg v R, above n 18, where a starting point of five and a half years’ imprisonment was regarded by this Court at [35] as “very much at the bottom end of the acceptable range” where a shortfall from a sustained fraud was reduced from $9.7 million to about half of that because of a settlement made by the defendant.