FITZSIMONS V SERIOUS FRAUD OFFICE HC NAP CRI 2008-441-37 [2009] NZHC 278 (9 March 2009)

IN THE HIGH COURT OF NEW ZEALAND
NAPIER REGISTRY
                                                                    CRI 2008-441-37



                             BLAIR JOHN FITZSIMONS
                                     Appellant



                        
                  v



                          THE SERIOUS FRAUD OFFICE
                                  Respondent



Hearing:
       9 March 2009

Appearances: Mr Jefferson for appellant
             Mr Davidson QC & Ms Killeen for respondent

Judgment: 
     9 March 2009


                         JUDGMENT OF WINKELMANN J




Scott Jefferson, Barrister, Napier
Serious Fraud Office,
Auckland
Nicholas Davidson QC, Christchurch




FITZSIMONS V SERIOUS FRAUD OFFICE HC NAP CRI 2008-441-37 9 March 2009

[1]    Mr
Fitzsimons appeals against the sentence imposed by District Court Judge
Ongley on 3 October 2008 in respect of the imposition of
a minimum period of
imprisonment.    Mr Fitzsimons was sentenced to 4½ years imprisonment on 5
charges of using a document for pecuniary
advantage, and 3 charges of using forged
documents. In addition to the sentence of imprisonment the District Court Judge
imposed
a minimum period of imprisonment of 2 years, 6 months and ordered
reparation of $250,000.


[2]    The factual background to Mr Fitzsimons'
offending is that he was the
general manager of Pioneer Insurance Company (Pioneer). Over a period of 18
months he obtained money
from Pioneer by writing cheques and covering the absent
funds by using forged documents.        It was an agreed fact for the purposes
of
sentencing that the purpose of this offending was to sustain Mr Fitzsimons failing
rental car business, Express Vehicle Rentals
Ltd. Many members of Mr Fitzsimons'
family were apparently dependent upon that business for their livelihood. Eventually
Mr Fitzsimons'
offending came to light when he told Pioneer of it. The gross fraud
involved $4m with a net loss of approximately $3.5m.


[3]  
 The sentencing Judge had before him victim impact reports from the
shareholders of Pioneer upon whom most of the loss ultimately
fell. Those reports
record that the fraud committed by Mr Fitzsimons was financially and personally
devastating for the shareholders.
In addition, the fraud put at risk the employment of
the 41 staff members of Pioneer, and also financially put at risk the 17,000
policy
holders of Pioneer.


[4]    In sentencing Mr Fitzsimons, the District Court Judge identified the purposes
of sentencing as
follows:

       The purposes of sentencing in section 7 of the Sentencing Act may be
       considered in order of the priority
required in this case. To denounce your
       conduct. To deter you and other persons from committing the same or
       similar
offences. To hold you accountable for harm done to the victims and
       the community. To provide reparation for the harm done
and to promote in
       you a sense of responsibility to that harm.

[5]    The Judge assessed Mr Fitzsimons' offending as being
at the higher end of
seriousness compared with cases cited by his counsel, and he said of it:

       There was a gross breach of
trust. You had virtual control of the company,
       obtained by representing yourself to the shareholders as a reliable person
       who could be trusted to take over the reins of management. None of the
       funds have been restored to the shareholders.
The money was used in
       paying your business debts and personal expenses, with no realistic prospect
       of making amends.

       Your fraud had a direct and devastating effect on a number of victims.
       There are victim impact statements from the
shareholder directors that
       described the damage done to the material security that they had built for
       their families
and for their retirement by hard work over the whole of their
       active working life. They had to decide between allowing a massive
       collapse of Pioneer or selling the shares to a buyer able to provide capital.
       They sold their shares for virtually nothing. They were left with huge debts
       to the bank
for money raised for the fund that you had pillaged.

       One of the main victim impact statements sates that the directors have
not
       been able to avoid recovery action by banks that may result in a forced sale
       of homes, and that they also face
litigation brought by the new shareholder
       to hold them to account for losses during their directorship.

[6]    The District
Court Judge took into account by way of mitigation Mr
Fitzsimons' previous good reputation, creditable past, and the fact that he
carried the
responsibility of supporting an extended family. He also took into account co-
operation with the prosecution, his pleas
of guilty and his remorse. The Judge noted
that Mr Fitzsimons wished to have a reparation order made against him. After
adopting
a starting point of 7 years imprisonment and making allowances for the
mitigating factors he sentenced Mr Fitzsimons to 4½ years
imprisonment.                   He
ordered him to pay reparation of $250,000, although assessing that order as possibly
unrealistic
in terms of the length of imprisonment he would serve and his
bankruptcy. The Judge commented:

       I am reluctant to deprive
victims of the opportunity of at least some support
       in that way after a period of years, in light of the strong representations
made
       by counsel.

[7]    In the final paragraph of his sentencing notes the Judge turned to consider the
non-parole period.
He said:

       The Court is required to address the non-parole period. It would not be
       appropriate for you to be released
after one third of the sentence. There
       should be a non-parole period of at least half the sentence. I would have

      
fixed the non-parole period at three years. That is to say your application to
       the Parole Board could not be entertained until
that time. In view of the
       adjustment that I have made against a reparation order, the non-parole period
       will be fixed
at two and a half years.

[8]    Counsel for Mr Fitzsimons submits that the Judge erred at that point in failing
to turn his mind
adequately to what were the reasons for the imposition of a
minimum period of imprisonment. Mr Jefferson submits that had the Judge
so
directed his mind, he would have identified at that point the fact that Mr Fitzsimons
was a first time offender who had co-operated
with the prosecution, entered guilty
pleas and who was assessed as being at low risk of reoffending. Counsel submits
that in those
circumstances a minimum period of imprisonment was not necessary
for any of the s 86 purposes. He likened the offending in this to
that in two
sentencing decisions before me of Serious Fraud Office v Smart (DC North Shore,
27 March 2007) and Serious Fraud Office
v Sue (DC Auckland, 21 April 2008). In
Smart, a starting point of 7 years and end sentence of 4 years was imposed with no
minimum
period, where a finance manager stole $2.2m. In Sue, a starting point of 6
years 9 months and end sentence of 4 years 6 months was
imposed with no minimum
period where an accountant, with previous convictions, stole $2.8m from employer.


[9]    Mr Jefferson further
submitted that when regard is had to those fraud cases in
which minimum periods of imprisonment have been imposed, it is apparent
that the
common thread running through them is that the offender is a recidivist offender. He
said he has been unable to locate any
fraud sentencing in which a minimum period
has been imposed on a first time offender.


[10]   Mr Davidson for the respondent accepts
that the Judge did not expressly
articulate his reasons for the imposition of a minimum period of imprisonment, but
nevertheless
submits that those reasons are apparent from earlier in his sentencing
notes. He refers to that passage in the notes at which the
Judge identifies the
purposes of sentencing and submits that the Judge's comment at [33] that release at
the one third stage would not be appropriate should be read against his identification
of the dominant purposes of sentencing as denunciation, deterrence and
accountability. It is suggested that the Judge concluded against
that background that
the normal parole period would be insufficient to meet those purposes.

[11]    In any case, Mr Davidson submits
that when regard is had to the Judge's
assessment of the seriousness of the offending, involving as it did "a gross breach of
trust"
and "direct and devastating effect on a number of victims" and a fraud of $4m
a minimum period of imprisonment was appropriate.


[12]    Section 86 of the Sentencing Act contains the provisions in relation to the
imposition of minimum terms of imprisonment.
Section 86 provides in material
part:

        (1)    If a court sentences an offender to a determinate sentence of
            
  imprisonment of more than 2 years for a particular offence, it may,
               at the same time as it sentences the offender,
order that the offender
               serve a minimum period of imprisonment in relation to that
               particular sentence.

        (2)    The court may impose a minimum period of imprisonment that is
               longer than the period otherwise applicable
under section 84(1) of
               the Parole Act 2002 if it is satisfied that that period is insufficient for
              
all or any of the following purposes: -

               (a)     holding the offender accountable for the harm done to the
      
                victim and the community by the offending:

               (b)     denouncing the conduct in which the offender was
involved:

               (c)     deterring the offender or other persons from committing the
                       same or a similar
offence:

               (d)     protecting the community from the offender.

        ...

        (4)    A minimum period of imprisonment
imposed under this section must
               not exceed the lesser of -

               (a)     two-thirds of the full term of
the sentence; or 10 years.

[13]    I accept Mr Jefferson's submission that the Judge should have articulated in
terms of the criteria
set out at s 86 of the Sentencing Act why it was he considered a
minimum period of imprisonment necessary. Although it is possible
to read the
sentencing notes as a whole and infer those reasons, given the two step sentencing
process envisaged by the Sentencing
Act, it is a far preferable course to articulate the
reasons at the second stage, when consideration is given to the imposition of
that
minimum period. In light of the District Court Judge's failure to do that I propose to

consider the matter afresh at this
point. Both counsel were in agreement that it was
open to me to do so.


[14]   Although Mr Jefferson submits that there are no cases
in which a first time
fraud offender has had a minimum period of imprisonment imposed upon him, I do
not consider that that in any
way fetters the decision making process in relation to
the imposition of such a minimum period. The issue of minimum period falls
squarely to be determined within the context of s 86 and the criteria set out there.
There is no need for the Judge to be satisfied
that the sentencing in any way falls
outside the ordinary range of such offending, and the fact of previous offending by
the offender
is simply relevant in emphasising the importance of the need to deter the
particular offender, and perhaps the need to protect the
community from the
offender.


[15]   In this case I assess the offending of being of a very grave nature. I accept
the District
Court Judge's characterisation of the offending as being at the higher end
of seriousness. It was offending over an 18 month period
involving frauds of some
$4m. The impact and potential impact upon victims of the offending was of a great
magnitude. I accept Mr
Davidson's characterisation of this as devastating the lives
of the shareholders of Pioneer, and jeopardising the physical wellbeing of the staff
and policy holders
of Pioneer. Were it not for the intervention of a shareholder
prepared to recapitalise Pioneer, the consequences would have been
far more severe
than they have in fact been. I also note the victim impact report in relation to a bank
staff member who lost her
employment by reason of being used by Mr Fitzsimons in
the course of his fraud.


[16]   Given the seriousness of the fraud, I am
satisfied that it was open to the
District Court Judge to consider that to meet the sentencing purposes of denouncing
the conduct
in which Mr Fitzsimons was involved and deterring other offenders from
committing the same or similar offences, it was necessary
to impose a minimum
period of imprisonment. I am also satisfied the minimum period he imposed was
appropriate for those purposes.

[17]   The absence of any previous convictions for Mr Fitzsimons does not in any
way undermine this point. I note the District
Court Judge said that he would have
imposed a lengthier minimum period of imprisonment were it not for the making of
the reparation
order and his comments in that regard also seem to me to be correct.


[18]   In terms of the Summary Proceedings Act 1957 in order
for the appellant to
succeed with this appeal I would have to be satisfied that the imposition of a
minimum period of imprisonment
was inappropriate. Having considered the matters
I have referred to, I am satisfied that the District Court Judge was justified in
imposing the minimum period that he did. The period that Mr Fitzsimons might
have served under the Parole Act were it not for the
imposition of that minimum
period was 18 months. That would be an inadequate sentence for the purposes of
denouncing his conduct
and for general deterrent purposes.


[19]   Accordingly, there is nothing in the appellant's point that the imposition of a
minimum
period was inappropriate in the circumstances and the appeal is dismissed.




                                                 
  Winkelmann J