Sinclair v Department of Internal Affairs HC Wellington CRI-2010-485-000120 [2011] NZHC 168 (1 March 2011)

Last Updated: 28 May 2011

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

_{CRI-2010-485-000120}

BETWEEN DOUGLAS DAVID SINCLAIR Appellant

AND DEPARTMENT OF INTERNAL AFFAIRS Respondent

Hearing: 15 February 2011

Counsel: R M Gould and P H Surridge for Appellant

S K Barr for Respondent

Judgment: 1 March 2011 10:00:00

In accordance with r 11.5 I direct the Registrar to endorse this judgment with the delivery time of 10.00am on the 1st day of March 2011.

_{RESERVED JUDGMENT OF GENDALL J}

[1] The appellant was charged with three offences in breach of s 229A(b) of the Crimes Act 1961 (later repealed on 1 October 2003) of using a document with intent to obtain a pecuniary advantage. Those informations alleged similar offending on

27 July 1999, 10 December 1999 and 29 July 2002, that with intent to defraud he used documents capable of obtaining pecuniary advantages. They were invoices submitted by the appellant to the Lotteries Grants Board, obtaining separate sums of

$75,000, $42,250.53, and $32,500.43. Accordingly the total amount obtained was

$149,750.96.

[2] He was eventually sentenced by Judge J A Walker in the District Court on

23 March 2010 to 200 hours community work. He appeals against the sentence, contending that he should have been discharged without conviction pursuant to s 107 of the Sentencing Act 2002. The respondent says it may really be an appeal against

_{the entry of conviction, but that procedural point is of no moment.}

SINCLAIR V DEPARTMENT OF INTERNAL AFFAIRS HC WN CRI-2010-485-000120 1 March 2011

The proceedings

[3] The informations were dated 19 June 2007. From 3 August 2007, the appellant appeared on many occasions in the District Court at Porirua, maintaining intimated not guilty pleas. The matter was finally set down on 24 February 2009 for a defended hearing, on a three day basis, from 25-27 May 2009. When the matter was called on that date guilty pleas were finally entered. Thereafter, on 20 July 2010 at the request of the appellant, a lengthy defended facts hearing took place before Judge Walker. The transcript of the evidence of that hearing encompasses 144 pages, it was adjourned part-heard, the hearing re-commenced on 14 October 2010 for a relatively short period, and thereafter Judge Walker imposed sentence on that date.

Essential background facts

[4] These are set out by Judge Walker in his sentencing notes. They are derived from the summary of facts and his findings after the extensive and lengthy disputed facts hearing. The appellant, on the three occasions, rendered invoices to the Lotteries Grant Board to secure instalments of a grant that it had made for the purpose of assisting the Pikitanga Marae, on the East Cape north of Gisborne, to construct a Wharekai. He was a plumber and gas fitter and was responsible for leading the construction. The invoices represented work that had been completed and expenditure made, but they were false. Each invoice resulted in the Lotteries Grant Board making payment to the appellant shortly after receipt on the impression or understanding that a building structure was substantially, if not wholly, completed as at 15 July 2002.

[5] In June 2006, approximately four years after the date of the last invoice, when invoices totalling $149,750 had been rendered, auditors of the Department went to the site. They found nothing there other than wooden piles placed in the ground and some steel portals obtained by the appellant, which may not have been visible in the grass. The Judge referred to the invoices as falsely representing work that had been completed and expenditure made.

[6] An investigation followed. The appellant was interviewed and said that because of internal wrangling at the Marae the project to build the Wharekai had been “stalled”. Because he felt there was a risk of the grant expiring he rendered invoices in order to secure funding until the dispute was resolved. The Judge said that the appellant claimed that he always intended to apply the funds to build the Wharekai. Following the investigation, the laying of charges and a restorative justice conference (after the entry of pleas of guilty), the appellant constructed the Wharekai. The Judge found on the appellant’s evidence at the disputed facts hearing that only site excavation had been done and $10,000 expended on steel initially, as at

10 December 2009. Yet $117,000 had been received by him. The Judge rejected claims by the appellant, summarised in a document, that certain costs were incurred at that time.

[7] The Judge referred to the Crown case being that up until the investigation bringing matters to light, the appellant had applied the funds received largely for his own purposes. The allegation was that the appellant had received funds over seven years from the date of the earliest payment, which enabled him to apply those for his own expenses. That was denied. It was for that reason the protracted disputed facts

hearing was held. The Judge found:[1]

The evidence that I have heard at the disputed facts hearing, despite its volume, only establishes that the money received was not applied in any tangible way in the construction of the Wharekai up to the time of the investigation. Mr Sinclair had possession of the money and it was not applied as represented by him in the invoices sent, except perhaps the application of money for the purchase of the steel. I say “perhaps” because although there is evidence of the presence of the steel and it being obtained from Porirua, no base document is produced, establishing its cost, but I am prepared to accept for the purposes of this decision that $10,000 was so expended.

[8] Judge Walker went on to say:[2]

I approach the matter on the basis that it was always Mr Sinclair’s intention to build the Wharekai and that internal disputes got in the way. I approach it on the basis that Mr Sinclair dishonestly represented the situation to the Department of Internal Affairs in order to obtain the grant money and did receive it. And that he held the money himself until the investigation started,

and has in the end expended the amount of grant, at least, for the purpose originally intended.

[9] The Judge then dealt with the submission by counsel that the appellant be discharged without conviction. He said that there first required a balancing act under s 107 of the Sentencing Act 2002. It requires assessment of the direct and indirect consequences of offending against its gravity. Judge Walker accepted there would be consequences of a conviction on the appellant’s trade and his wish to become a tutor at a polytechnic, as well as limitations on those who might be prepared to contract with him. The Judge posed the essential question; whether such consequences are out of all proportion to the gravity of the offending.

[10] That issue was at the forefront of his mind and, in turning to it, he said:[3]

I regard the offending as a serious breach of trust. Dishonest statements in the invoices resulted in payment of substantial sums of money on three occasions. I am satisfied that had the Department of Internal Affairs been told that no construction had occurred and were advised of the true situation then the payments would not have been made on the invoices. Fraud was perpetrated on three separate occasions over a three year period.

[11] Proceeding with the balancing exercise the Judge observed that persons who deal with the appellant or employ him were entitled to know of this dishonest conduct and to make an informed decision which was, he said, “an entirely proportionate consequence in my assessment. The balancing exercise under s 107 falls against Mr Sinclair’s application”.[4]

[12] Judge Walker then dealt with mitigating factors, including reference to the appellant having no previous convictions, his participation in the restorative justice conference, and the eventual application of funds for the purpose of constructing the Wharekai. The Judge then took into account the substantial effect of the conviction, together with health issues advanced on behalf of the appellant, and his pleas of guilty which, he observed, occurred at a very late stage. The probation officer had recommended a sentence of community work. That recommendation the Judge adopted. The probation report itself states that the appellant agreed with the

_{summary of facts, but intended to make efforts to now complete the building of the}

Wharekai, and expressed regret for his decisions. The probation officer noted the Court might contemplate a sentence of imprisonment. The attitude of the Crown was not to seek a custodial sentence so a sentence of community work was recommended.

Appellate principles

[13] Under ss 115 and 119 of the Summary Proceedings Act 1957 this is a general appeal to be heard by way of rehearing. Whilst the notice of appeal says it is an appeal against sentence, in reality it is an appeal against conviction and sentence.

[14] I agree with the approach adopted by White J in Kumar v Police[5] as to the approach to be taken with an appeal against a refusal to grant a s 106 discharge. It is a general appeal requiring the Court to come to its own view on the merits, it being a matter of judgment as to the weight this Court gives to the judgment under appeal. If the High Court is of a different view from the District Court Judge it must act on that view and an appellant has an onus to satisfy the High Court that the decision on the subject of the appeal is wrong. If the High Court considers the decision is wrong then it must interfere with it. It may, or may not, find the District Court reasoning persuasive and there may be some circumstances where the District Court is at an obvious advantage, where for example the District Court hears evidence and has the opportunity to assess the credibility of witnesses (where such assessment is important). In the end, however, the consideration the High Court gives to the District Court decision is a matter of judgment.

Statutory provisions and other considerations for discharges without conviction

[15] Sections 106 and 107 of the Sentencing Act provide that an offender may be discharged without conviction, which is deemed to be an acquittal. Section 107 provides “guidance” and states:

The court must not discharge an offender without conviction unless the court is satisfied that the direct and indirect consequences of a conviction would be out of all proportion to the gravity of the offence.

[16] That is a “gateway” upon which the Court must be satisfied before the discretion can be exercised. But as the Court of Appeal stated in R v Hughes[6] a three-stage test is contemplated:

(1) The gravity of the offending should be first determined;

(2) The consequences of the conviction should then be identified;

(3) The Court must then consider whether the consequences of the conviction would be out of all proportion to the gravity of the offending.

[17] As with any sentencing exercise the purposes and principles of sentencing as set out in ss 7 (purposes), 8 (principles), 9 (aggravating and mitigating factors), and

10 (account to be taken for offer agreement response or measure to make amends)

are to be considered. In Hughes the Court of Appeal said:[7]

... Application of the disproportionality test under s 107 requires consideration of all relevant circumstances of the offence, the offending and the offender, and the wider interests of the community, including the factors required by the Sentencing Act to be taken into account under ss 7, 8, 9 and

10. Having taken account of those factors, the Judge must determine whether the s 107 test is met and whether it is appropriate that he or she

makes an order under s 106 to deal with the offender.

[18] Ms Gould, on behalf of the appellant, submitted that Judge Walker erred by concluding that the consequences of conviction were not out of proportion to the gravity of the offending, without turning his mind to ss 7-10. She accepts that Judge Walker gave credit to the lack of previous convictions [sic] of the appellant, his participation in a restorative justice meeting and the eventual construction of the Wharekai, as well as pleas of guilty, remorse and health issues. Ms Gould submitted the Judge failed by not overtly referring to those matters, or by saying that he had taken them into account when assessing the gravity of the offending. Counsel says that if Judge Walker had done this he would have appreciated the gravity of the offending was significantly reduced, and therefore the consequences of conviction to

_{the appellant would have been out of proportion to the gravity of the offending. She}

said that because the Judge did not first look at the gravity of the offending, or at least overtly say so, he could not then therefore proceed to determine whether the consequences outweighed, or not, that gravity.

[19] Counsel argued the only relevant aggravating feature to the offending was the abuse of a position of trust or authority and that all mitigating factors apparent in s 9(2) of the Sentencing Act (with the exception of the issue of diminished intellectual activity) applied. That is the age of the offender, whether he pleaded guilty, conduct of the “victim”, limited involvement in the offence, remorse shown, agreement to make amends and evidence of the appellant’s previous good character. Counsel emphasised that the combined effects all spoke in favour of a discharge. She argued that no default of obligation was ever intended by the appellant, ultimate disadvantage did not occur, no actual misapplication of funds could be shown and relations within the wider Mäori hapü had been restored. The gravity of the offence and harm to victims had been put right by the appellant’s subsequent actions of completing the Wharekai.

[20] On behalf of the respondent, Mr Barr argued that it could not possibly be said the Judge erred in the view he took of the gravity and seriousness of fraud offending involving significant amounts of money. It was acknowledged in [17] of his decision that imprisonment for repeated fraud at the level encountered would usually be considered. It was argued that Judge Walker expressly took into account the appellant’s participation in restorative justice, the fact he eventually applied the fund, after the authorities found that no realistic construction had occurred to the project, and his guilty pleas, as part of the s 107 assessment. Counsel submitted that health issues would have been foremost in the Judge’s mind as part of the background narrative. The Judge referred to the appellant’s absence of previous convictions [sic] as a mitigating factor, which was relevant to the fact that the Court was considering a

discharge without conviction.[8] Whilst absence of personal profit and motive of

greed is a relevant factor in determining culpability it is not to be elevated to an overwhelming factor, nor is an offer to make amends.

Discussion

[21] The application of the disproportionality test requires consideration of all the relevant circumstances of the offence, offending and the offender. It also requires consideration of the wider interests of the community and the factors contained in ss 7, 8, 9 and 10 of the Sentencing Act. But Hughes does not provide authority for the appellant’s submission that these matters must be overtly referred to when assessing the gravity of the offending and the culpability of the offender. That the Judge did not expressly refer to those sections in his s 107 analysis does not mean that he did not place emphasis on those mitigating features, which included the appellant’s intentions and the fact that substantial funds were in the end not misappropriated.

[22] A mantra incantation of sections or principles is not necessarily required in the sentencing process. Indeed, even if done, it will not make immune a Judge’s particular sentence, if it is clear that he or she did not give proper consideration of the relevant factors. Provided it is clear from the judgment or sentencing notes that the Judge assessed the gravity of the offence against the background matters as discussed in Hughes and contained in the Act, and it is clear that proper consideration was given to relevant matters, then that will be sufficient.

[23] Assessment of the overall culpability and possible (but not certain) consequences is required. The more serious the offending, the less likely a discharge can be granted. Conversely, the higher the likelihood and the more serious the consequences, the more likely it is that the statutory test can be satisfied.[9]

[24] Judge Walker correctly said that the assessment he made as to whether there should be a discharge against conviction was to be considered “against this background”. He has detailed this in his judgment at [9] – [13]. The Judge had the advantage of hearing extensive evidence at the disputed facts hearing. He heard the appellant give evidence. Amongst other things he concluded that the evidence established that the money he obtained was not applied in any tangible way in the

construction of the Wharekai up until the time of the investigation. The Judge then went on in [14] – [19] to discuss the various factors which led him to conclude that the consequences of the conviction were not out of all proportion to the gravity of the offending. In the end, however, he concluded that this was “substantial fraud” and required conviction and a sentence of community work.

[25] Judge Walker was well able to make his own assessment as to the gravity of the offending which he aptly described as serious fraud. Whilst in the end the only financial benefit the appellant may have obtained was interest from monies which was held in his business account, he may have had access to significant amounts of capital, which he may have been able to use in his business cashflow. The Lotteries Grants Board paid him large sums as a consequence of his false statements. It could only be categorised as serious offending.

[26] Clearly, adverse consequences from the fraud convictions would inevitably arise. They may have some effect upon the appellant, whether to his reputation generally or to his business activity. The Judge referred to this and to the difficulties that the appellant may have in pursuing his wish to be a tutor at polytechnic – which has been confirmed in material now supplied to the Court. In the end the Judge concluded that those consequences were not out of all proportion to the gravity of the offending. It involved three separate frauds over a three year period and the fact that people ought to know of such convictions so that they are able to make informed decisions as to whether to deal with the appellant was, in Judge Walker’s view, “an entirely proportionate consequence”.

[27] There is nothing in Judge Walker’s assessment that could be said to have been an error of law, or for that matter to be a wrongful exercise of his discretion to refuse a discharge without conviction. Viewing the matter de novo I have independently reached that view and fully agree with that conclusion. Rather than being wrong the Judge was in fact right not to discharge without conviction on all the material before him. A sentence of community work was justified and an entry of a conviction was inevitable.

Previous convictions

[28] The probation officer said that the appellant had no previous convictions. The Judge accepted that. The appellant in fact had convictions. He was not bound or obliged to disclose them to the Court. So, too, he and his counsel (and there is no reason to think that counsel knew of them) had no obligation to disclose them on the appeal to this Court. But the fact is that he had previous convictions under the name “David Douglas Sinclair”. Although historical, being in the 1990s, one was for careless driving causing death or injury for which he was sentenced to community service. A later conviction in 1996 was for the offence of male assaulting a female for which he was sentenced to nine months’ supervision. For some reason those prior convictions were not available or known to the probation officer. But the fact remains that the appellant could not present himself to this Court as a man with an unblemished history.

[29] It is axiomatic that after a person puts himself forward as having no blemish in his criminal history as among the mitigating reasons why a Court should grant a discharge when as a fact that is incorrect, the fact of convictions is simply an “absence” of a mitigating factor. Ms Gould has filed a memorandum in which she contends that the fact of convictions ought not be taken into account in deciding the appeal because (in summary) the consequences that arise from these fraud convictions will still occur and remain disproportionate to their seriousness.

[30] It may be a consequence of the entry of the three fraud convictions that others might be reticent to deal with the appellant, but that is not disproportionate to the gravity of the offending. The fact of the previous convictions, although not fraud or dishonesty, did not appear to produce disproportionate consequences. Judge Walker declined to discharge without conviction without knowing of the previous convictions, and if he had known of them he still would have declined the application.

[31] There is no possible justification for the appellant receiving the benefit of a discharge without conviction for these fraud offences given all the circumstances

relevant to him and his offending. The consequences of the convictions are not out of all proportion to the gravity of the offending.

_{[32] The appeal is dismissed.}

Solicitors:

R M Gould, Wellington for Appellant

Crown Solicitor, Wellington for Respondent

Copy to: Surridge & Co, Porirua

J W Gendall J

---

[1] Department of Internal Affairs v Sinclair DC Wellington CRI 2009-091-2477, 14 October 2010 at [11].

[2] At [13].
[3] At [15].

[4] At [16].

[5] Kumar v Police HC Auckland CRI 2010-404-140, 17 June 2010.
[6] _{R v Hughes [2008] NZCA 546.}
[7] At [41].

[8] As will be later apparent the Judge was not aware that in fact the appellant had previous convictions.

[9] See Currie v Police HC Auckland CRI 2008-404-307, 27 May 2009; R v Iosefa [2008] NZCA 453.