REGISTRAR OF COMPANIES v BUBLITZ [2022] NZHC 2177

REGISTRAR OF COMPANIES v BUBLITZ [2022] NZHC 2177 [30 August 2022]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2020-404-1397[2022] NZHC 2177UNDER the Companies Act 1993, s 383(3)BETWEEN REGISTRAR OF COMPANIESApplicantAND PAUL NEVILLE BUBLITZFirst RespondentAND BRUCE ALEXANDER MCKAYSecond RespondentHearing: 29 November 2021; further submissions 8, 17 and 22 December2021, 2 and 19 May 2022Appearances: SS McMullan for the ApplicantDJ Dufty for the First RespondentB McKay, Second Respondent in personJudgment: 30 August 2022JUDGMENT OF FITZGERALD JThis judgment was delivered by me on 30 August 2022 at 3.00pm,pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDateSolicitors: Meredith Connell, AucklandTo: D Dufty, AucklandAnd to: B McKay, AucklandIntroduction [1]Factual background [6]Overview [6]The "plan" to acquire a finance company or companies [21]The acquisition (and fall) of Viaduct [26]The acquisition of Mutual [30]The charges and key findings in relation to them [34]The duration of the offending [41]The motivation for the offending [46]The scale of the offending/losses caused [49]Mr Bublitz's and Mr McKay's culpability/personal circumstances [51]Further evidence on the Registrar's application [56]Legal principles [68]The statutory provisions [68]Approach to prohibition orders [72]Evidence on a prohibition order application [82]"The most serious of cases": is s 8(c) of the Sentencing Act 2002 relevant? [85]Is a prohibition order a penalty? [90]Introduction [90]The Registrar's submissions on penalty [92]The respondents' submissions on penalty [95]Key authorities on penalty [96]Discussion on penalty [120]Retrospectivity - introduction [135]The Registrar's submissions on retrospectivity [138]Respondents' submissions on retrospectivity [144]Discussion on retrospectivity [146]The parties' submissions [155]The Registrar's submissions [155]Mr Bublitz's submissions [165]Mr McKay's submissions [172]Analysis – should prohibition orders be made and if so, for how long? [177]Result [194]Introduction[1] In 2019, following a Judge-alone trial before Toogood J, Mr Bublitz andMr McKay were convicted on charges of theft by a person in a special relationshiparising out of the management of Mutual Finance Ltd (Mutual).[2] As a result of those convictions, each of Mr Bublitz and Mr McKay areprohibited from taking part in the management of a company for a period of five years.This five-year prohibition is an automatic consequence for a person convicted of adishonesty offence.1 The five-year period will expire in February 2024.[3] The Registrar of Companies (the Registrar) now applies pursuant to s 383 ofthe Companies Act 1993 (the Act) for an order prohibiting Mr Bublitz and Mr McKayfrom taking part in the management of a company beyond the automatic five-yearprohibition period. The Registrar seeks a prohibition order of approximately 12 yearsfrom the date of this Court's judgment.2 When combined with that portion of theautomatic five-year period already served by Mr Bublitz and Mr McKay, this wouldlead to a total effective prohibition of around 14 and a half years from the date of theirconvictions.[4] Mr Bublitz and Mr McKay oppose the Registrar's application. They say thatthe automatic five-year prohibition period is appropriate in all of the circumstances,such that no additional period of prohibition is required.[5] The balance of this judgment is structured as follows:(a) First, I set out the factual background to Mr Bublitz's and Mr McKay'soffending, primarily by reference to Toogood J's reasons for verdicts,3the Judge's sentencing notes,4 and the Court of Appeal's judgmentdetermining Mr Bublitz's and Mr McKay's appeals against convictionand sentence.51 Companies Act 1993, s 382.2 Thus expiring on or around 30 August 2034.3 R v Bublitz [2019] NZHC 222 [Reasons for verdicts].4 R v Bublitz [2019] NZHC 592 [Sentencing notes].5 Bublitz v R [2019] NZCA 364 [Appeal judgment].(b) I then summarise the statutory scheme and the approach to prohibitionorders.(c) I then address some specific issues arising in this case and in particular,whether a prohibition order is a penalty for the purposes of s 6 of theSentencing Act 2002 and s 25(g) of the New Zealand Bill of Rights Act1990 (Bill of Rights Act). This issue arises because the amendment tos 383 of the Act which permits the Court to impose a prohibition orderof more than 10 years (subs (1A)) came into force on 1 April 2014, yetthe conduct for which Mr Bublitz and Mr McKay were convictedoccurred prior to that date (in 2010). The gist of each of s 6 of theSentencing Act and s 25(g) of the Bill of Rights Act is that if the penaltyfor an offence is amended after the conduct giving rise to the offenceoccurred but prior to sentencing, the offender is entitled to the lesserpenalty. Even if prohibition orders are not penalties for these purposes,however, I must still determine whether s 383(1A) has retrospectiveeffect.(d) I then summarise each party's submissions on whether the prohibitionorder sought by the Registrar should be made.(e) I then set out my discussion of the Registrar's application and providemy reasons for reaching my decision.Factual backgroundOverview[6] The charges against Mr Bublitz and Mr McKay were heard before Toogood Jin a Judge-alone trial over a three-week period in August/September 2018. Toogood Jdelivered verdicts on 5 February 2019 and then delivered (lengthy) reasons forverdicts on 21 February 2019.[7] Mr Bublitz was convicted of four charges of theft by a person in a specialrelationship, an offence pursuant to s 220 of the Crimes Act 1961 (charges 10 to 13).Those charges alleged that Mr Bublitz knowingly misapplied funds raised from thepublic by Mutual, a company controlled by him, in breach of the restrictions on relatedparty transactions contained in a deed of guarantee between Mutual and the Crown(the Mutual Crown guarantee). I explain further below (at [21]) the background toguarantees between the Crown and finance companies such as Mutual.[8] Charges 10 to 12 concerned Mutual's purchase from Viaduct Capital Ltd(Viaduct), another finance company associated with Mr Bublitz, of loans Viaduct hadmade to companies in Hunter Capital Group (the Hunter Group), a group of companiescontrolled by Mr Bublitz and through which he undertook property developmentprojects. Toogood J held that those loan purchases were related party transactionsbecause Mr Bublitz controlled both Mutual and Viaduct for the purposes of the MutualCrown guarantee. Toogood J held that Mr Bublitz knew of the restrictions on relatedparty transactions in the Mutual Crown guarantee and knew that loan transactions werein breach of those restrictions.[9] Charge 13 arose out of advances made by Mutual to Hilltop Ridge Farms Ltd(Hilltop), one of the Hunter Group companies. Toogood J held that Mr Bublitz alsocontrolled both those companies, and that he also knew that the transaction was inbreach of the Mutual Crown guarantee.[10] Mr McKay was convicted as a party to Mr Bublitz's offences, though he didnot face charge 13.[11] Mr Bublitz was also convicted of two charges of making a false statement as apromotor in a prospectus, an offence under s 242 of the Crimes Act (charges 14 and15).[12] Mr Bublitz was acquitted of six other charges relating to alleged related partytransactions between Viaduct and other companies controlled by him, which were saidto have been in breach of Viaduct's Debt Security Trust Deed (Viaduct Trust Deed)(charges 1 to 3 and 5 to 7). Toogood J was not persuaded that these transactions wererelated party transactions for the purposes of the Viaduct Trust Deed, because theCrown had not proved that Mr Bublitz "controlled" Viaduct in the manner that termwas defined in the deed. As a result of that finding, Mr McKay was also acquitted ofother charges he faced, which were dependant on the transactions in question beingrelated party transactions under the Viaduct Trust Deed (charges 4, 8 and 9).[13] Mr Bublitz and Mr McKay were sentenced by Toogood J on 27 March 2019.6Toogood J arrived at an end sentence in relation to Mr Bublitz of three years and twomonths' imprisonment, and an end sentence for Mr McKay of 23 months'imprisonment. Toogood J converted Mr McKay's sentence to one of 12 months' homedetention.[14] Mr Bublitz and Mr McKay then appealed against their convictions. Mr Bublitzalso appealed against his sentence.[15] As the Court of Appeal observed at the outset of its judgment, neitherMr Bublitz nor Mr McKay were charged with breaching the Viaduct Crownguarantee.7 They were acquitted on the charges relating to the Viaduct Trust Deed (asexplained at [12] above). Toogood J had also dismissed charges relating to allegedbreaches of the Mutual Trust Deed. Mr Bublitz and Mr McKay were, however,convicted on the charges arising out of the same transactions but alleging breach ofthe Mutual Crown guarantee. The Court of Appeal accordingly observed that:[10] These outcomes are explicable only on the basis that the definition of"control" in the Mutual Crown guarantee was wider than the comparableprovisions in the Viaduct Trust Deed and the Mutual Trust Deed. Whether theappellants understood the breadth of the restrictions on related party lendingin the Mutual Crown guarantee arising out of the extended definition of"control", and whether they participated in the transactions knowing theybreached those restrictions, are issues lying at the heart of these appealsagainst conviction. 6 Sentencing notes, above n 4.7 Appeal judgment, above n 5, at [8].[16] Mr Bublitz's appeal against conviction was allowed in part, his convictions oncharges 14 and 15 (discussed at [11] above) being set aside.8 The Court then turnedto charges 10 to 13 and what it described as the "real issue" of whether Toogood J hadbeen right to conclude that the Crown had proved Mr Bublitz knew Viaduct andHilltop were related parties of Mutual, and knew they were therefore subject to therelated party restrictions in the Mutual Crown guarantee.9 Despite being critical of theadequacy of Toogood J's reasoning on this issue, the Court was not persuaded that hehad been wrong to conclude that Mr Bublitz had the requisite knowledge.10[17] The Court of Appeal was also unpersuaded that Toogood J was wrong toconclude that Mr McKay was aware of the restrictions on related party lending in theMutual Crown guarantee, and that he must have known the relevant transactionsbreached those restrictions.11 Indeed, the Court observed that "Mr McKay, more thananyone, had a clear understanding of the exact financial position of the relevantentities, Hunter, Viaduct and Mutual, throughout this period."12 Mr McKay's appealagainst conviction was accordingly dismissed.[18] Mr Bublitz's appeal against sentence was allowed, and his sentence of threeyears and two months' imprisonment was set aside and a sentence of 11 months' homedetention substituted. The Court of Appeal concluded that Toogood J had adopted toohigh a starting point on charges 10 to 13 as a result of taking into account transactionsthat were not the subject of charges and overstating the period of the offending.13 Alower starting point was also considered more consistent with the starting pointadopted for Mr McKay.[19] Finally by way of overview, and partly explaining the lengthy delay betweenthe conduct giving rise to Mr Bublitz's and Mr McKay's offending (2010) and entryof their convictions (2019), the trial before Toogood J was in fact the second trial on8 The Crown all but conceding that those convictions could not stand: Appeal judgment, above n 5,at [129].9 At [102].10 At [103].11 At [117].12 At [121].13 By taking into account conduct pre-dating the offending described by Toogood J as "at the marginsof legality": Appeal judgment, above n 5, at [150].the charges. The first trial commenced before Woolford J in August 2016, but wasaborted in May 2017 after nine months of hearing. This was partly due to significantfailures on the part of the Crown in terms of disclosure. I return to the significance ofthis delay later in this judgment.14[20] In the next section of this judgment, I summarise the factual background toMr Bublitz's and Mr McKay's offending in a little more detail. Given the chargesagainst Mr Bublitz and Mr McKay were heard Judge-alone (with detailed reasons forverdicts being given), and then subject to detailed sentencing notes and judgment ofthe Court of Appeal, the factual basis for their offending has been traversed in somedetail in those contexts. The following summary accordingly draws heavily onToogood J's reasons for verdicts, his sentencing notes and the Court of Appeal'sjudgment.15The "plan" to acquire a finance company or companies[21] The 2008 global financial crisis had a profound effect on commercial propertydevelopments in New Zealand (and elsewhere), leading to illiquidity, distressed loansand depressed asset values. In that context, the Government had established the Crownretail deposit guarantee scheme (the Crown Scheme), which was designed to supportthe New Zealand banking system and give some degree of assurance to New Zealanddepositors at a time of financial market uncertainty. The Crown Scheme guaranteedthe New Zealand Government would repay depositors affected by the failure ofNew Zealand financial institutions who participated in the Scheme. That participationwas by way of entry by the Crown and the relevant financial institution into a legallybinding guarantee agreement.[22] Like most debenture trust deeds relating to finance companies, the CrownScheme guarantees contained limitations on related party transactions and associateddisclosure requirements. Toogood J accepted that related party transactions are neitheruncommon nor inherently improper, but because such a transaction could have an14 See [189] below.15 There was no objection to the admissibility of Toogood J's factual findings (in either his reasonsfor verdicts or his sentencing decision) on the Registrar's application. See also Wellington TenthsTrust v Skiffington [2018] NZHC 1261; and Commissioner of Police v Filer [2013] NZHC 3111.Neither Mr Bublitz nor Mr McKay sought to challenge any of Toogood J's findings.effect on the profit or loss and financial position of an entity, knowledge that suchtransactions have occurred or are contemplated can affect the assessment of risk by apotential investor.16[23] In or around late 2008, Mr Nicholas Wevers, an associate of Mr Bublitz,identified an opportunity to take advantage of the then market conditions byestablishing a finance company to acquire distressed property loans at discountedprices, funding the completion of the underlying developments and making significantprofits as a result.[24] Mr Bublitz was at the time the ultimate owner of the Hunter Group. TheHunter Group had significant assets but, in the wake of the global financial crisis, alsohad significant cash flow issues. Mr Wevers invited Mr Bublitz to join him in hisproposed venture and to help fund it. Mr Bublitz was attracted to the possibility ofacquiring a finance company (that had the benefit of a Crown guarantee under theCrown Scheme) as a source of funding for the Hunter Group, and to benefit from theother opportunities Mr Wevers identified.[25] Both Mr Bublitz and Mr Wevers recognised that any finance company acquiredwould be subject to restrictions on related party lending, both under its debt securitytrust deed and the Crown Scheme. They therefore asked Mr McKay, who had beencontracted to the Hunter Group in a senior finance role since 2005, to consider andreport on the various tests for determining if parties were "related" for these purposes.They also sought accounting and legal advice on the issue.17The acquisition (and fall) of Viaduct[26] The proposal was put into action when in February 2009 a finance companycalled Priority Finance Ltd (Priority) was acquired by a company formed specifically16 Sentencing notes, above n 4, at [9].17 The Registrar produced in evidence on the current application a memorandum from Mr McKay toMr Bublitz and Mr Wevers dated 12 December 2008 advising on the tests for related partytransactions. The memorandum stated: "One of the issues surrounding the set up of the DistressedLoan Finance Company (the Fund) is related party transactions. Clearly there is a preferencefor transactions not to be treated as related party transactions and thus to be able to present astructure to investors that does not include related party transactions. Even though the transactionsproposed may be commercially sound the mere fact of them being 'related party' may beconsidered in the eyes of some potential investors to be a negative."for that purpose, Phoenix Finance Holdings Ltd (Phoenix). It had been intended thatMr Bublitz would own the majority of the shares in Phoenix, but advice receivedshortly before the settlement of the purchase was that this would create related partyproblems. As a result, Mr Wevers instead acquired all of the shares. The Hunter Groupfunded Phoenix's purchase of Priority, by way of a loan secured by a general securityagreement over Phoenix's assets (being its shares in Priority).[27] Following settlement of the purchase, Priority changed its name to Viaduct andMr Wevers and Mr McKay were appointed its directors. Mr McKay was alsoappointed its chief financial officer. Toogood J described the operations of Viaductand the Hunter Group in the period following Viaduct's acquisition in the followingterms:[232] Immediately after the Viaduct acquisition, the administrativearrangements for Hunter and Viaduct were closely integrated, includingaccommodation and staffing, with Viaduct relieving Hunter of significantadministrative cost. There is no evidence that Mr Wevers, Mr McKay or(later) Mr Blackwood, as Viaduct's directors, ever questioned whether theassumption of such costs by Viaduct was equitable. Moreover, the seniorexecutives, including Mr Bublitz, worked interchangeably and, sometimes,contemporaneously on matters between or affecting Viaduct and the Hunterentities.[28] Cash available to Viaduct was used to purchase assets from the Hunter Groupand also to make cash advances, thereby alleviating the Hunter Group's cash flowproblems. In April 2009, however, the Crown withdrew the Viaduct Crown guaranteeon the basis that it was being used to provide benefits to persons outside the intendedscope of the Crown Scheme. There was no suggestion at that time that any of Viaduct'stransactions infringed the related party transaction restrictions in the Viaduct Crownguarantee or the Viaduct Trust Deed.[29] Without the Viaduct Crown guarantee, Viaduct's financial position deterioratedsharply to the point that in September 2009, Mr Wevers (who it will be recalled ownedall of the shares in Phoenix, which in turn owned Viaduct, and who was one ofViaduct's directors) advised Mr Bublitz to take "drastic actions" to deal with Viaduct'sfinancial position. Mr Wevers' concerns were not resolved to his satisfaction and heresigned as a director of Viaduct in late September 2009. He transferred 51 per centof his shareholding in Phoenix to Mr McKay, retaining the balance. A Mr Blackwood(who was charged and convicted together with Mr Bublitz and Mr McKay, but whoseconvictions were later set aside on appeal) replaced Mr Wevers as a director ofViaduct.The acquisition of Mutual[30] In December 2009, and in an effort to stem the liquidity issues in theHunter Group, a company within that group bought another finance company, Mutual.It was not disputed at trial that Mr Bublitz controlled Mutual. He was its managingdirector and ultimately owned all its shares.[31] With an eye to the limitations on related party transactions in the Mutual Crownguarantee, shortly prior to Mutual's acquisition, Mr Bublitz gave assurances to theTreasury that Mutual did not intend to purchase any Viaduct assets. This was recordedin a letter (prepared by Mr McKay) to the Treasury from Mr Bublitz (and one ofMutual's vendors) dated 9 November 2009. Toogood J said the following about thatletter:18 it assured the Treasury that Hunter did not intend or propose to sell anyassets to Mutual or undertake any other form of capital restructuring. Theletter also assured the Treasury that Hunter would not seek to significantlychange the business operations of Mutual and, notably, stated that:(a)lthough Viaduct Capital is not a related party of MFL, any transactionscontemplated between MFL and Viaduct Capital will be treated as if they arerelated party transactions for the purposes of the Crown guarantee.[285] The assurances that were reiterated in the letter included thestatements that:(a) Hunter did not intend to sell any assets to Mutual;(b) the operations of Mutual would remain largely intact and thatMr Lindsay Kincaid would remain a director;(c) Hunter did not intend to take full control of Mutual until 31 October2010.[286] The letter also assured the Treasury that there was no intention byeither Hunter or Mutual that Viaduct Capital would have any ownership ofMutual or that there would be directors in common between the two entities.It was said that both "MFL and Viaduct Capital will remain entirely separate18 Reasons for verdicts, above n 3, at [284]. The content of the letter was relied on by the Judge laterin his reasons for verdicts for his finding that Mr Bublitz knew of the related party restrictions inthe Mutual Crown guarantee: see n [24] below.entities". Furthermore, it was asserted that Viaduct's activities in respect ofMFL would be limited to sourcing and managing lending transactions.[287] Given the way in which Viaduct had been operated up to that pointand bearing in mind the motivation for the acquisition of Mutual, Mr Bublitz'sstatements in the letter to the Treasury, which I find were known andacquiesced to by Mr McKay and Mr Blackwood, were untrue and deliberatelymisleading. That the expression of present intention was not truthful isdemonstrated by how quickly Mr Bublitz, Mr McKay and Mr Blackwoodassumed control of Mutual and ran it in conjunction with Viaduct. Thatproposition is proved by, among other things, the means by which Mutual wasacquired and by the marginalisation of Mr Kincaid as a director. That wasachieved by dividing transactions up into "chunks" which meant thatapprovals could be given by Mr Bublitz alone operating under a $250,000threshold which would have required approval by the board, includingMr Kincaid.(Emphasis added.)[32] Over the ensuing months, Mutual purchased nearly $4 million worth ofViaduct loans and advanced over $470,000 to Hunter Group entities.19[33] On 13 May 2010, Viaduct was placed into receivership by the trustee for thecompany's debenture holders. On 14 July 2010, receivers were appointed to Mutual.Investigations by the Treasury, the Serious Fraud Office and the Financial MarketsAuthority (FMA) into the affairs of the two companies and the actions of theirshareholders, directors and managers then followed. Those investigations ultimatelyled to charges being laid against Mr Bublitz and Mr McKay (and others).The charges and key findings in relation to them[34] For charges 1 to 9, the Crown relied on alleged breaches of the Viaduct TrustDeed's restrictions on related party transactions. A "related party" for the purposes ofthe deed was defined by reference to New Zealand accounting standard NZ IAS 24,which in turn relied on the concept of the "control" of the relevant entities in issue.Toogood J accepted expert evidence to the effect that "control" required the power togovern the entities concerned, with that power having some contractual or legalbasis.20 The Crown's case was advanced, inter alia, on the basis of a secret, bindingarrangement between Mr Wevers and Mr Bublitz which gave Mr Bublitz control of19 Not all of these transactions were subject to charges.20 Reasons for verdicts, above n 3, at [164].Viaduct. Toogood J was not sure, however, that Mr Bublitz controlled Viaduct in thissense.21 The Judge stated:[210] I return to the onus and standard of proof on what is a core issue.I accept that there is force in the several bases upon which Mr Johnstoneadvances the Crown's proposition about an arrangement, and acknowledgethat suspicion must attach to the way in which Mr Wevers, Mr McKay and,particularly, Mr Bublitz conducted themselves up to and immediately after theacquisition of [Viaduct]. But the Crown's case does not take me across thethreshold into being sure that Mr McKay, Mr Wevers and Mr Bublitz knewthat the steps they had taken and were taking amounted to wilful breaches ofthe related party restrictions in the Priority/Viaduct trust deed because [ofwhat] was a secret, binding arrangement that Mr Bublitz had the power tocontrol Viaduct.[35] Toogood J was, however, sure that Mr Bublitz controlled Viaduct (in a "realor effective" way) for the purposes of the Mutual Crown guarantee, on whichcharges 10 to 13 were based.22 This conclusion was based on the Judge's detailedconsideration of Mr Bublitz's involvement in Viaduct, both before and afterMr Wevers' departure in September 2009.23 For example, Toogood J stated:[260] I have no doubt that, although the other executives were influential inthe planning and decision-making before and after the acquisition of Priority,Mr Bublitz had the ability to exercise real and effective control of Viaductwhenever he considered it necessary to do so to protect or advance his overallinterests. There is no evidence that any significant decision affecting Viaducton a matter going to the governance of the company was made by Mr McKayor Mr Wevers contrary to Mr Bublitz's wishes or without his involvement.The major disagreement between Mr Bublitz and Mr Wevers in September2009 about the direction in which Viaduct should be taken simply resulted inMr Wevers' departure.[36] In the context of his findings on Mr Bublitz's control of Viaduct, Toogood Jreferred to a letter Mr Bublitz sent to the Treasury at the time of its investigation ofViaduct and which led to the withdrawal of the Viaduct Crown guarantee. Toogood Jreferred to that correspondence in the following terms:[239] The Treasury's notice of the withdrawal of the Crown guarantee gaverise to further obfuscation by Mr Bublitz and Mr McKay, particularly, withMr Bublitz telling Treasury officials, much less than frankly, that he neverintended to become heavily involved in the affairs of Viaduct beyondmanaging a lending position and assisting with the sourcing of loan21 At [207] and [209]–[217].22 Sentencing notes, above n 4, at [21].23 Reasons for verdicts, above n 3, at [229]–[265].transactions. There is no doubt that Mr Bublitz did not want Viaduct to doanything which put his investments at risk.(Emphasis added.)[37] As to Mr Bublitz's and Mr McKay's knowledge of the related party restrictionsin the Mutual Crown guarantee, Toogood J was sure that both men had suchknowledge.24 The Judge was also sure that both men knew that the transactions werein breach of the Mutual Crown guarantee related party transaction restrictions:25 each of them was fully aware that what was done was done contrary to theobligations imposed by the Crown guarantee in the interests of Mutual'sinvestors.[38] I interpolate to note that in its judgment on Mr Bublitz's and Mr McKay'sconviction appeals, the Court of Appeal was satisfied that there was "ample evidence"that Mr Bublitz knew of the related party restrictions in the Mutual Crown guaranteeand that the transactions underpinning charges 10 to 13 did not comply with thoserestrictions.26 As mentioned earlier, the Court considered the "real issue" was whetherthe Crown had proved that Mr Bublitz knew Viaduct (charges 10 to 12) and Hilltop(charge 13) were related parties of Mutual, and therefore subject to those restrictionsbecause of the extended definition of "control" in the Mutual Crown guarantee.27[39] The Court was not persuaded the Judge's findings on this issue were wrong.The Court reached this conclusion on the basis that:28(a) Mr Bublitz was at the time an experienced and successful businessman,very experienced in the property and finance sectors;(b) there was no doubt he was keenly attuned to related party issuesthroughout the relevant period of time;24 Reasons for verdicts, above n 3, at [288] and [291]. The evidence relied on by the Judge to inferMr Bublitz's knowledge was his assurances in the November 2009 letter to the Treasury, referredto at [31] above, about the future conduct of Mutual vis-à-vis Viaduct.25 At [298]. See also Appeal judgment, above n 5, at [60]–[64].26 Appeal judgment, above n 5, at [102].27 At [102].28 At [104]–[116].(c) the Mutual Crown guarantee was Mutual's key attraction andMr Bublitz would not have acquired Mutual without it;(d) Mr Bublitz's letter to the Treasury dated 9 November 2009 supportedan inference that he was fully aware of the related party restrictions inthe guarantee;(e) Mr Bublitz "must have" appreciated that Viaduct and Mutual wererelated parties for the purposes of the guarantee given the extent of hiscontrol over Viaduct's affairs;29 and(f) there was no challenge to Toogood J's finding that Mr Bublitzcontrolled Hilltop, and the Court was satisfied the evidencedemonstrated that Mr Bublitz knew that he did so in terms of theextended definition of control in the Mutual Crown guarantee.[40] The Court of Appeal was similarly unpersuaded that Toogood J had beenwrong to conclude that Mr McKay had the requisite knowledge for the purposes ofcharges 10 to 12.30 The Court referred in this regard to:(a) Mr McKay's significant business experience and expertise;(b) that he carried out his work in a careful and competent manner;(c) Mr McKay's important role in the acquisition of both Viaduct andMutual and the subsequent administration of their operations, and thata "central focus" for Mr McKay was considering related party issuesunder the Trust Deeds and Crown guarantees for both financecompanies;31(d) that in the context of advice received at the time of Mutual'sacquisition, Mr McKay must have appreciated the breadth of the29 Appeal judgment, above n 5, at [110].30 At [117].31 At [120].concept of "control" in the Mutual Crown guarantee and itssignificance in the context of the proposed transactions betweenViaduct and Mutual; and(e) that given his close working relationship with Mr Bublitz and hisinvolvement in the day-to-day operation of all of the relevant entities,Mr McKay "must have known that Mr Bublitz was exercisingeffective overall control by the time of the transactions giving rise tocharges 10–12" and thereby breached the related party restrictions inthe Mutual Crown guarantee.32The duration of the offending[41] The specific transactions that were the subject of charges 10 to 13 occurredover the relatively short period of 25 January 2010 to 4 June 2010. However,Toogood J found that Mr Bublitz's and Mr McKay's offending "was the almostinevitable consequence" of a pre-determined and sophisticated plan "devised" at ameeting in Pauanui in January 2009 between Mr Bublitz, Mr McKay and anotherassociate of Mr Bublitz, involving elaborate steps to circumvent the restrictions onrelated party lending in the Viaduct Trust Deed.33 An early example of this wasMr Wevers being the sole shareholder in the holding company Phoenix, despite havingput no money into the company. In relation to other steps to "distance" Mr Bublitzfrom the various entities, Toogood J observed:[233] There can be no doubt that Mr Bublitz was keen to avoid fulltransparency in the revised arrangements for the shareholdings anddirectorships in the Hunter Group assets. The language he adopted – referringto associates acting as "fronts", "warehousing" shares, and transferring assets"off balance sheet" – lends a devious air to the activities. While thosearrangements were intended to distance Mr Bublitz from control of the Hunterentities rather than Viaduct, they demonstrate Mr Bublitz's awareness of theimplications of the related party provisions for Viaduct's dealings with them.[42] I note, however, that Toogood J did not find that any of this early conduct wasunlawful. For example, in relation to the various communications in which the terms"front", "warehousing" and the like were used, Toogood J stated:32 Appeal judgment, above n 5, at [121].33 Sentencing notes, above n 4, at [45] and [79].[194] I accept that after the mid-January meeting at Pauanui, Mr Bublitz setout to obtain assistance in creating a separation between him in his capacityas intended director and shareholder in the new finance company and as theowner in control of the various Hunter Group entities. For example, hecorresponded with Mr Morrison on 20 January 2009 to say that, in order toraise funds from the public, he was working out the opportunity to buy afinance company with the government guarantee in place. He said:In order to do this I need to create a separation between you/me for thepurposes of "related party issues" under the Securities Act, Reserve BankAct & AFRS so that your trustee company can hold assets effectively offbalance sheet and then FinCo can either lend or require these assetswithout causing issues or concerns. Accordingly can we please arrangefor the following:Lance to resign from Hunter entities, Nicholson Trust and KawakawaHCG wishes to sell its shares in Dockland Holdings Limited to aMorrison Creed Trustee Co (maybe set up a separate vehicle calledMorrison Creed (DHL) Trustee Limited for this purpose) & the trustee cohold these on trust for HCG or a back to back loan is left owing betweenHCG & the trustee co, whichever is more appropriate.What we are wanting to do is use our shares in Docklands to helpcapitalize FinCo & John Harkness is preparing a Sale Agreement atpresent for this purpose.[195] On the face of it, it is reasonably open to conclude that that requestamounted to no more than Mr Bublitz reorganising the affairs of the HunterCapital Group to recognise that, if he took "control" of the new financecompany in terms of the definition in the Priority trust deed, he could not bein control of the various Hunter entities whom he wished to deal with thefinance company so as to provide much needed cash for the Hunter Groupprojects. I regard it as significant that Mr Bublitz had explained his intentionsto Mr John Harkness, a solicitor whom he asked to implement the stepsMr Bublitz considered necessary. If Mr Bublitz was acting fraudulently at thatpoint, he could have been much more discreet. On the face of the documents,including the email to Mr Harkness, Mr Macmillan, Mr McKay andMr Wevers on 14 January 2009 setting out what he intended should happen,an analogy can be drawn (as Mr Lance suggested in closing) to a tax payerlegitimately reordering his affairs to minimise the incidence of tax. It is ananalogy which had occurred to me as I listened to the evidence and theargument, and I agree it is apt.[196] I place into the same category the approaches Mr Bublitz made on25 January 2009 to Mr Franklin asking him to "front" NKE Trust Limited; therequest to Mr Bruce to acquire shares in the Silverdale project on the basis ofan advance of $600,000 to do so; and his request to Mr Lovegrove asking himto be a trustee/director of a company to hold some assets of his from time totime. .[197] Whether or not such arrangements would be effective to avoid theproper application of the related party restrictions, those steps are open to theinference that Mr Bublitz was adopting measures that he considered to bepurposeful but lawful in terms of the applicable definition of "control".Mr Bublitz's exchanges with Mr Ebert about warehousing shares, on30 January 2009 and 9 February 2009, can be interpreted as demonstrating asimilar approach.[43] Nevertheless, Toogood J found that the execution of the plan continuedthroughout 2009, resulting in the concealment of Mr Bublitz's close involvement withViaduct. Toogood J described the conduct during this period as being "at the marginsof legality" and that "sailing so close to the wind" meant that it was almost inevitablethat, as the Hunter Group's prospects deteriorated, that conduct would "cross the lineinto criminality".34[44] I again interpolate to note that it is this conduct (over the period January toDecember 2009) which the Court of Appeal considered Toogood J wrongly took intoaccount at sentencing, given the activity in 2009 was not proved to be illegal andMr Bublitz and Mr McKay retained the presumption of innocence in respect of it.[45] Toogood J also described Viaduct's operation as characterised by Mr Bublitzand Mr McKay (and others) taking "decisions about the operation of Viaduct which,whenever it was relevant, usually if not always put the Hunter Group's interests aheadof those of Viaduct and its investors".35 In a similar tone, Toogood J described MrMcKay's involvement in the operation of Viaduct's business as a "gross dereliction ofhis duties as a director, favouring Hunter Group interests over those of Viaduct andthe investors to whom it owed duties of care".36The motivation for the offending[46] Toogood J concluded that the motivation for the steps taken by Mr Bublitz andMr McKay (and others) was ultimately to protect Mr Bublitz's investment in theHunter Group. The Judge's findings in this regard are captured in the following extractfrom his reasons for verdicts:[264] In complex cases such as this, a seemingly inconsequential piece ofevidence sometimes captures the essence of a position one or other of theparties is advocating. On 29 March 2010, Mr McKay sent an email toMr Bublitz, Mr Blackwood and Mr Chevin (using his own and the recipients'personal email addresses) which neatly encapsulates the Crown's core34 Sentencing notes, above n 4, at [45].35 At [40].36 At [43].proposition on the defendants' motivations. Apparently, Mr McKay wasresponding to a question Mr Bublitz asked him that day about why it was sodifficult to get anything like information memoranda and capital raisingsdone. Mr McKay said:We are spending a huge amount of time every week fighting fires - be itKiwibank, IRD, Hilltop creditors, keeping VCL afloat ... all these issuesare major drains in time that is not being dedicated to 'operating thebusiness' - it feels like a full time job just to keep on top of the cash flowand cash management issues around the group because cash is so tight.We are barely running the businesses that we have because so much timeis devoted to stopping it all from falling over ...What is the business of Hunter Capital?? If it is to run a finance companythen lets just do that, if it is to do property developments then do just that... Apart from digging PB out of the shit just what are we trying toachieve??[265] Not much more needs to be said. It is plain that the focus of the effortsof Mr Bublitz, Mr McKay, Mr Blackwood and Mr Chevin in managing theaffairs of Viaduct Capital and Mutual Finance was to save Mr Bublitz'sinvestments in the Hunter Group entities.[47] The Court of Appeal observed that Mr Bublitz's offending "was partlymotivated by the prospect of personal gain", though noting that neither he norMr McKay made any such gain in the end.37 Indeed, the Court noted, as Toogood Jhad also accepted, Mr Bublitz had lost well over $2 million of his own moneyattempting to "rescue the situation".38[48] Consistent with these observations, the Registrar does not suggest on thepresent application that Mr Bublitz or Mr McKay gained anything from theiroffending.The scale of the offending/losses caused[49] Toogood J accepted the Crown's calculations that:39(a) the offending in relation to transactions between Viaduct and Mutual,being 16 in total, saw Mutual purchase $3.9 million in loans fromViaduct in breach of the Mutual Crown guarantee (though only three ofthose transactions were the subject of charges 10 to 12); and37 Appeal judgment, above n 5, at [159].38 At [159], citing Sentencing notes, above n 4, at [71(c)].39 Sentencing notes, above n 4, at [28]–[29] and [53].(b) the offending in respect of charge 13 involved Mutual lending $208,444to Hilltop.[50] On Mr Bublitz's sentence appeal, however, the Court of Appeal stated thattransactions not the subject of charges should not have been taken into account forsentencing purposes. The Court accordingly narrowed the total losses flowing fromthe transactions the subject of charges 10 to 13 to $1.17 million, with $310,000 of thathaving been repaid, leaving a final loss of $860,000.40Mr Bublitz's and Mr McKay's culpability/personal circumstances[51] As to Mr Bublitz's and Mr McKay's relative culpability, Toogood J said thefollowing at sentencing:[46] As to the culpability of each of you, relative to other cases andparticularly to each other, it is clear to me that Mr Bublitz, as the person whostood to lose from the failure of the entities engaged in the projects beingcarried out by the Hunter Group, was the prime mover and instigator of theplan to use one or more finance companies to fund Hunter Group activities.I have found that you had real or effective control over Viaduct throughout,Mr Bublitz, even though it was not sufficient to make you and the otherdefendants guilty of the charges founded on the Viaduct trust deed. Althoughyou did not give evidence, it is clear to me from the tone and content of thenumerous memoranda and email exchanges I have read, that you have a strongand forceful personality. As I found, nothing was done that was contrary toyour wishes or that was not, in most cases, approved by you. You stood togain most from the successful use of the investor funds in both financecompanies and, conversely, you were the most at risk if the scheme failed.I rate your culpability as significantly higher than that of the other defendants.[47] Mr McKay, you were the principal architect of the scheme, being aknowledgeable and capable manager. You were the person, above all others,who was intimately acquainted with the often-precarious positions in whichthe Hunter entities, Viaduct and Mutual were placed from time to time duringthe relevant period. I accept that your engagement did not provide lucrativebenefits for you, although you would have gained something if Mutual hadoperated successfully after it was acquired by Mr Bublitz. I accept also thatyou were subject to Mr Bublitz's dominant personality and to his effectivecontrol. I place your culpability, therefore, as being somewhat lower on thescale than that of Mr Bublitz.40 Appeal judgment, above n 5, at [151]–[152]. For the sums attaching to each charge, seeSentencing notes, above n 4, at [24]–[27]. Mr McKay did not face charge 13, which concernedan advance from Mutual to Hilltop of $208,000. This further reduces the losses flowing from hisoffending.[52] Toogood J described the offending as "calculated", rather than a momentarylapse of judgment.41[53] Nevertheless, when measured against other offending in the context of financecompany failures, Toogood J found that Mr Bublitz's and Mr McKay's culpability waslower than in some of those cases.42 The Court of Appeal agreed.43[54] Toogood J also accepted that it was unlikely that either Mr Bublitz orMr McKay would be in a position to offend in a similar way in the future, anddescribed each of them as representing "low risks of re-offending".44 The Judge alsoobserved that until the investigation and prosecution leading to the charges, each ofMr Bublitz and Mr McKay had conducted themselves in business for many yearswithout running afoul of the criminal law.45 He also noted that each of the defendantswas ruined financially, and had little or no prospect of successfully reinstating theircareers.46[55] Finally, in terms of remorse, Toogood J accepted that it is not always easy todemonstrate remorse "while running defences that were properly open to" Mr Bublitzand Mr McKay.47 The Judge ultimately allowed a modest discount to the sentencesfor "some remorse".48Further evidence on the Registrar's application[56] As noted earlier, the above factual background is drawn directly fromToogood J's reasons for verdicts, his sentencing notes and the Court of Appeal'sjudgment on the conviction and sentence appeals.[57] In support of its application, the Registrar filed an affidavit ofMr Gareth Bostock, the then Head of Evidence and Investigations at the FMA. While41 Sentencing notes, above n 4, at [94].42 At [78].43 Appeal judgment, above n 5, at [156].44 Sentencing notes, above n 4, at [13].45 At [99].46 At [99].47 At [98].48 At [101].neither Mr Bublitz nor Mr McKay formally opposed the admissibility of the affidavit,I have real concerns about its admissibility and ultimately have not found the evidencehelpful, let alone substantially helpful.49[58] Mr Bostock does not suggest he has any first-hand knowledge of the factualevents giving rise to Mr Bublitz's and Mr McKay's offending. Nevertheless, hepurports to give evidence as to "the broader context and background relating toMr Bublitz and Mr McKay's convictions", and provides "an overview of theiroffending before addressing the courts' findings in respect of their individualculpability". Mr Bostock then goes on to summarise the offending, referencing inparts Toogood J's reasons for verdicts. The last part of his affidavit is a summary ofeach of Mr Bublitz's and Mr McKay's culpability, largely but not wholly by referenceto Toogood J's sentencing notes.[59] It will be apparent that Mr Bostock's evidence is not as to factual matters ofwhich he has any personal knowledge or involvement; nor do I consider his evidenceto be admissible expert opinion evidence. Much of the affidavit is simply an abridgedsummary of Toogood J's reasons for verdicts and sentencing notes. Mr Bostock doesnot suggest he has particular expertise in summarising court judgments. There is alsoa real danger, in my view, that the deponent of an affidavit of this nature will(subconsciously) cherry-pick out of very lengthy reasons for verdicts and sentencingnotes those aspects that suit the Registrar's case, and then overlay that withcommentary involving (again subconsciously) a certain amount of "spin".[60] Most of Mr Bostock's affidavit could and should have been dealt with incounsel's submissions. I should emphasise that I do not intend to be critical ofMr Bostock personally; he was no doubt attempting to be helpful in summarising forthe Court a significant volume of underlying source material. But it is Toogood J'sfactual findings themselves that are relevant and admissible evidence, notMr Bostock's commentary on or summary of those findings.[61] Neither Mr Bublitz nor Mr McKay gave evidence (by way of affidavit) inopposition to the Registrar's application. Mr Bublitz did, however, file an affidavit by49 For the purposes of s 25 of the Evidence Act 2006 (expert opinion evidence).Mr Lance Morrison. Mr Morrison was a co-defendant at the first trial, but no chargeswere brought against him in the second trial before Toogood J. Mr Morrison is anaccountant by training and gives evidence of being involved in some of Mr Bublitz'sbusinesses since meeting him in 1990. Mr Morrison's affidavit is a mix of opinionevidence about Mr Bublitz's business dealings more generally (the gist being that overmany years Mr Bublitz has been successful in business) and evidence of his owninvolvement in and opinions in relation to a number of the transactions in issue beforeToogood J.[62] Again, I found this evidence of limited assistance. Given Mr Morrison'sconnections with Mr Bublitz, and the fact he was a defendant in the first trial, hisevidence could hardly be described as independent. Much of his affidavit is devotedto explaining why, in his opinion, Mr Bublitz's offending was not as "bad" (my word,not Mr Morrison's) as the Registrar seeks to paint it. Again, much of this evidence isproperly the domain of submissions. Further, aspects of his affidavit are inadmissiblehearsay evidence, including in relation to Mr Bublitz's own statements and view.50[63] In the event, Mr Dufty, counsel for Mr Bublitz, relied on Mr Morrison'saffidavit solely by way of a character reference for Mr Bublitz and I have accordinglyapproached it on that basis.[64] The Registrar also filed an affidavit in reply to Mr Morrison's affidavit, byMs Rachael Manttan. By the time of filing her affidavit in reply, she had taken overthe role of Head of Evidence and Investigations at the FMA from Mr Bostock.[65] Ms Manttan's affidavit suffers from a number of the same defects asMr Bostock's. She has no first-hand knowledge of the matters in issue. Much of heraffidavit could and should have been addressed by counsel's submissions. Forexample, Ms Manttan purports to give "evidence" on why she does not considerMr Morrison's affidavit to be admissible. Other examples are commentary onToogood J's question trail, what is essentially submission on why aspects of50 Mr Morrison filed a second affidavit accepting that aspects of his affidavit were inadmissible andconfirming that he did not rely on those aspects.Mr Morrison's affidavit ought not to be accepted,51 and Ms Manttan's personal viewson the reasons why Mutual failed (based on her "understanding" of the evidence beforeToogood J).52[66] Ms Manttan also provides opinion evidence that it may have been possible toput Mutual into receivership at an earlier point in time, but "[a]s the evidence led attrial showed, Mutual was in breach of its trust deed in May 2010 but Mr McKay andMr Bublitz's accounting ensured that the trustee was not alerted to that breach".Ms Manttan does not purport to have any particular expertise to express suchopinions,53 nor does she suggest Toogood J made any finding to this effect. Indeed,as far as I can discern, nowhere in his 315 paragraph reasons for verdicts doesToogood J even discuss this issue. Ultimately, given the nature of the evidenceadvanced on the present application, it is neither possible nor appropriate for me tomake any factual findings on why Mutual failed, or whether it would have beenpossible to put it into receivership at an earlier point in time.[67] I turn now to the legal principles arising on the present application.Legal principlesThe statutory provisions[68] The provisions concerning prohibition of a person from being a director orpromoter of a company fall within Part 21 of the Act, "Offences and penalties".[69] Section 382 provides for an automatic five-year ban from being a director or apromoter in certain circumstances:382 Persons prohibited from managing companies(1) Where—51 Namely his reference to after the event reports on whether the transactions in issue were on arm'slength terms.52 I acknowledge that this is in reply to Mr Morrison's stated "understanding" of why Mutual failed.But two wrongs do not make a right.53 Nor does Ms Manttan confirm that she has read and abides by the code of conduct for expertwitnesses set out in Schedule 4 to the High Court Rules 2016.(a) a person has been convicted of an offence in connection withthe promotion, formation, or management of a company (beingan offence that is punishable by a term of imprisonment of notless than 3 months), including an offence under section 138A;or(b) a person has been convicted of an offence under any of sections377 to 380 or of any crime involving dishonesty as defined insection 2(1) of the Crimes Act 1961; or(ba) a person has been convicted of an offence under section143A(1)(d) or 143B(1) of the Tax Administration Act 1994; or(bb) a person has been convicted of an offence under section 148 ofthe Tax Administration Act 1994 of aiding, abetting, inciting,or conspiring with another person to commit an offence againstsection 143B(1) of that Act,—(c) [Repealed]that person shall not, during the period of 5 years after the convictionor the judgment, be a director or promoter of, or in any way, whetherdirectly or indirectly, be concerned or take part in the management of,a company, unless that person first obtains the leave of the court whichmay be given on such terms and conditions as the court thinks fit.[70] Section 383 empowers the Court to make an order prohibiting a person frombeing a director or promoter of a company (which I will refer to in this judgment as a"prohibition order"). It is necessary to set out the provision in full:383 Court may disqualify directors(1) Where—(a) a person has been convicted of an offence in connection withthe promotion, formation, or management of a company (beingan offence that is punishable by a term of imprisonment of notless than 3 months), including an offence under section 138A,or has been convicted of a crime involving dishonesty asdefined in section 2(1) of the Crimes Act 1961; or(b) a person has committed an offence for which the person is liable(whether convicted or not) under this Part; or(ba) a person has been convicted of an offence under section143A(1)(d) or 143B(1) of the Tax Administration Act 1994; or(bb) a person has been convicted of an offence under section 148 ofthe Tax Administration Act 1994 of aiding, abetting, inciting,or conspiring with another person to commit an offence againstsection 143B(1) of that Act; or(c) a person has, while a director of a company and whetherconvicted or not,—(i) persistently failed to comply with this Act, the FinancialMarkets Conduct Act 2013, the Takeovers Act 1993, orthe takeovers code in force under that Act or, if thecompany has failed to so comply, persistently failed totake reasonable steps to obtain compliance with thoseActs or the code; or(ii) been guilty of fraud in relation to the company or of abreach of duty to the company or a shareholder; or(iii) acted in a reckless or incompetent manner in theperformance of his or her duties as director; or(ca) a person has been prohibited in a country, State, or territoryoutside New Zealand from carrying on activities that the courtis satisfied are substantially similar to being a director orpromoter of or being concerned or taking part in themanagement of a body corporate; or(d) [Repealed](e) a person has become of unsound mind,—the court may make an order that the person must not, without the leaveof the court, be a director or promoter of, or in any way, whether directlyor indirectly, be concerned or take part in the management of, acompany permanently or for a period specified in the order.(1A) The court may make an order under this section permanent or for aperiod longer than 10 years only in the most serious of cases for whichan order may be made.(2) A person intending to apply for an order under this section must givenot less than 10 days' notice of that intention to the person againstwhom the order is sought, and on the hearing of the application the last-mentioned person may appear and give evidence or call witnesses.(3) An application for an order under this section may be made by theRegistrar, the FMA, the Official Assignee, or by the liquidator of thecompany, or by a person who is, or has been, a shareholder or creditorof the company.(3A) Subsection (3B) applies on the hearing of—(a) an application for an order under this section by the Registrar, theFMA, the Official Assignee, or the liquidator; or(b) an application for leave under this section by a person against whoman order has been made on the application of the Registrar, the FMA,the Official Assignee, or the liquidator.(3B) The Registrar, the FMA, the Official Assignee, or the liquidator (as thecase may be)—(a) must appear and call the attention of the court to any matters thatseem to him, her, or it to be relevant; and(b) may give evidence or call witnesses.(4) An order may be made under this section even though the personconcerned may be criminally liable in respect of the matters on theground of which the order is to be made.(4A) If conduct by a person constitutes grounds for making an order underany 1 or more of this section, section 44F of the Takeovers Act 1993,and subpart 6 of Part 8 of the Financial Markets Conduct Act 2013,proceedings may be brought against that person under any 1 or more ofthose provisions, but no person is liable to more than 1 order underthose provisions for the same conduct.(5) The Registrar of the court must, as soon as practicable after the makingof an order under this section, give notice to the Registrar that the orderhas been made and the Registrar must give notice in the Gazette of thename of the person against whom the order is made.(6) Every person who acts in contravention of an order under this sectioncommits an offence and is liable on conviction to the penalties set outin section 373(4).(7) In this section, company includes an overseas company.[71] It will be apparent that s 383 has wider application than s 382. In particular,the Court may make a prohibition order in circumstances where a person has not beenconvicted of any particular offence, as provided for in s 383(1)(b), (c), (ca) and (e).Approach to prohibition orders[72] The Registrar's application for prohibition orders in relation to Mr Bublitz andMr McKay is only the second time that an application has been made by the Registrarunder s 383. However, s 383's predecessor, s 189(1)(c) of the Companies Act 1955,was drafted in substantially similar terms and was considered by this Court in FirstCity Corporation Ltd v Downsview Nominees Ltd (Downsview). In that case, Gault Jdescribed s 189(1)(c) as:54. providing for denial of the privilege of participating in the conduct ofbusiness under the shelter of limited liability. It is penal in nature although54 First City Corporation Ltd v Downsview Nominees Ltd [1989] 3 NZLR 710 (HC) at 766.the disqualification should be approached with protection of the public inmind rather than punitively.The section must be read with s 188A which imposes automaticdisqualification of five years in those circumstances which are also coveredby s 189(a), (b) and (d). So far as they have been retained in s 189 they willbe resorted to when disqualification for a period longer than five years is seento be warranted.[73] Gault J further observed that:55 the whole structure and context of the section suggests to me that it is aimednot at minor acts of negligence or carelessness, but at conduct that is wilful ordeliberate or culpable so as to involve dishonesty or gross or serious failure tomeet the relevant standards to be expected of an officer of the company. Inassessing conduct in particular cases, any motive for the conduct as well asthe seriousness of the consequences will be relevant. Previous instances ofmisconduct may lead the Court to be more likely to exercise the discretion ithas under the section to order disqualification.[74] Gault J summarised the conduct in issue in Downsview in the followingterms:56I already have held that continuing to trade in the circumstances that he did,amounted to recklessness by Mr Russell. He stood in a position where clearlyhis own interest and his duties to others were in conflict. He failed properlyto inform himself of the financial status of the company or its tradingperformance. He misrepresented the position to others. He resisted, withdetermination, the efforts of the plaintiffs to bring that state of affairs to anearly end by legitimate and entirely appropriate procedures. In result, for asubstantial period, he operated the company and its subsidiary to serve hisown purposes.[75] In concluding that a prohibition order was appropriate, Gault J concluded:57I am satisfied that the public and commercial community [should] be protectedfrom the risk of a repetition of reckless and incompetent conduct of this kind.From the confident, almost arrogant manner in which he gave his evidence,I was led to the view that this is not a situation where the Court might safelyrely upon contrition and a determination to reform his practices. Accordingly,there will be an order for disqualification for a period of five years.[76] Miller J considered similar issues, albeit in the context of s 385 of the Act, inDavidson v Registrar of Companies (Davidson).58 Section 385 provides that the55 At 766.56 At 767.57 First City Corporation Ltd v Downsview Nominees Ltd, above n 54, at 768.58 Davidson v Registrar of Companies [2011] 1 NZLR 542 (HC).Registrar or the FMA may prohibit a person from managing a company where thatperson has been involved in the management of a company in some form ofinsolvency, and the management of the company was wholly or partly responsible forthe company's precarious position. Having referred to Gault J's observations inDownsview in relation to s 383's predecessor, Miller J stated:59Prohibition is aimed not at remedying wrongs done to shareholders andcreditors of the insolvent company but at protecting the public fromunscrupulous or incompetent directors in future, deterring others and settingappropriate standards of behaviour.[77] The overall purpose of prohibition orders was also considered by Venning J inRegistrar of Companies v Blake (Blake).60 Blake was the first application by theRegistrar for a prohibition order under s 383. Venning J contrasted s 383 with s 385of the Act, stating:[40] The focus of s 385 is, as noted, directed more towardsmismanagement leading to the failure of the company, rather than misconduct.Section 383 is, on the other hand, directed at individual misconduct rather thanmismanagement. Ms Blythe submitted that both aspects, personal misconductand mismanagement were engaged in the present case. While I accept that aspart of the overall consideration mismanagement is also relevant, the properfocus on an application under s 383 is on misconduct, particularly whenconsidering an application to impose a ban of longer than 10 years and, in theworst cases, a permanent ban.[78] Venning J also had regard to similar provisions under Australian companieslegislation. He endorsed the following propositions set out by Santow J in AustralianSecurities and Investments Commission v Adler, which Venning J described ascapturing a number of the observations of Gault J in Downsview and Miller J inDavidson:61(i) Disqualification orders are designed to protect the public from theharmful use of the corporate structure or from use that is contrary toproper commercial standards. ;(ii) The banning order is designed to protect the public by seeking tosafeguard the public interest in the transparency and accountability ofcompanies and in the suitability of directors to hold office ;59 At [91], citing Re Blackspur Group plc [1998] 1 WLR 422 (CA) at 426 per Lord Woolfe MR; andRich v Australian Securities and Investments Commission [2004] HCA 42, (2004) 220 CLR 129[Rich v ASIC] at 145.60 Registrar of Companies v Blake [2019] NZHC 680.61 Australian Securities and Investments Commission v Adler [2002] NSWSC 483, (2002) 42 ACSR80 at [56], citations omitted.(iii) Protection of the public also envisages protection of individuals thatdeal with companies, including consumers, creditors, shareholders andinvestors ;(iv) The banning order is protective against present and future misuse of thecorporate structure ;(v) The order has a motive of personal deterrence, though it is not punitive;(vi) The objects of general deterrence are also sought to be achieved ;(vii) In assessing the fitness of an individual to manage a company, it isnecessary that they have an understanding of the proper role of thecompany director and the duty of due diligence that is owed to thecompany ;(viii) Longer periods of disqualification are reserved for cases wherecontraventions have been of a serious nature such as those involvingdishonesty ;(ix) In assessing an appropriate length of prohibition, consideration hasbeen given to the degree of seriousness of the contraventions, thepropensity that the defendant may engage in similar conduct in thefuture and the likely harm that may be caused to the public ;(x) It is necessary to balance the personal hardship to the defendant againstthe public interest and the need for protection of the public from anyrepeat of the conduct ;(xi) A mitigating factor in considering a period of disqualification is thelikelihood of the defendant reforming [79] As will be apparent, a common theme of the above decisions is that thepredominant purpose of prohibition orders is the protection of the public. For thisreason, when considering whether a prohibition order ought to be made (and if so, forhow long), the Court is engaged in a forward-looking exercise. The respondent'spredilection to engage in future conduct of the nature giving rise to the application willtherefore be highly relevant to whether a prohibition order ought to be made and if so,for how long. For example, in Blake, Venning J considered there was a "highlikelihood" that Mr Blake would engage in similar conduct to that giving rise to theapplication.62 A 12 year prohibition order was imposed. In Downsview, Gault J saidit was "not a situation where the Court might safely rely on contrition and a62 Registrar of Companies v Blake, above n 60, at [68].determination [on Mr Russell's part] to reform his practices", and imposed a five-yearprohibition order.63[80] Concepts of general deterrence and setting appropriate standards of behaviourwill also be relevant.64 These too are aimed at the overall protection of the public.[81] In all of these contexts, the seriousness of the conduct in question will berelevant. It will, for example, provide the "baseline" from which the Court willconsider the respondent's propensity to engage in similar conduct in the future.Further, those involved in the management of companies ought to be aware that seriousmisconduct will likely result in a prohibition order. Nevertheless, in my view, caremust be taken not to let the seriousness of the conduct overwhelm the forward-lookingexercise the Court must carry out. There may equally be compelling evidence that therespondent has reformed and thus is highly unlikely to offend or behave in a similarway in the future.Evidence on a prohibition order application[82] Given the issues for consideration on an application for a prohibition order, abroad scope of evidence is likely to be relevant to whether such an order ought to bemade. The evidence need not be confined to the conduct giving rise to the thresholdground for the application but might include, for example, the respondent's conduct inthe management of a company or companies in general. That conduct need not beunlawful.[83] Venning J made similar observations in Blake when discussing the scope ofevidence to which the Court may have regard when determining whether or not toimpose a prohibition order. He stated:65Mr Blake's personal bankruptcies and the failure of the companies he wasinvolved in with the subsequent losses to creditors are not, of themselves,qualifying criteria for an order under s 383. But once the criteria for an orderare established, the Court is entitled to look at the broader context andbackground behaviour of the respondent to determine if an order should be63 First City Corporation Ltd v Downsview Nominees Ltd, above n 54, at 768.64 As noted in Australian Securities and Investments Commission v Adler, above n 61, at [125]; andby Miller J in Davidson v Registrar of Companies, above n 58, at [91].65 Registrar of Companies v Blake, above n 60, at [60].made and if so, for how long. Personal financial failures and the failure ofcompanies with which a respondent is associated with may be an indicator ofrecklessness towards obligations which would be a relevant consideration. [84] I mention these matters given the Registrar says that Mr Bublitz's andMr McKay's conduct, which was the subject of adverse comment by Toogood J butwas not itself held to be unlawful, is nevertheless relevant to the present application.The Registrar argues that simply because the Court of Appeal held that it wasinappropriate to have taken that conduct into account at sentencing does not mean itought not to be taken into account on the present application. I agree."The most serious of cases": is s 8(c) of the Sentencing Act 2002 relevant?[85] A prohibition order may only be made for a period of more than 10 years if theCourt is satisfied that the case before it is one of "the most serious of cases for whichan order may be made".66 Section 8(c) of the Sentencing Act requires a sentencingcourt to impose the maximum penalty prescribed for an offence if the offending "iswithin the most serious of cases for which that penalty is prescribed". I raised withcounsel at the hearing whether s 8(c) was relevant to the assessment under s 383(1A),given neither Mr Bublitz nor Mr McKay was sentenced to anywhere near themaximum penalty prescribed for their offending. Counsel filed supplementarysubmissions on this and other matters.[86] Both Mr McMullan for the Registrar and Mr Dufty submit, and I agree, that incases where the threshold ground for a prohibition order is a conviction, an assessmentof whether that case is the most serious of cases for which an order may be made isnot directly informed by the penalty imposed for the conviction. As both counselsubmit, the purposes of s 8(c) of the Sentencing Act and s 383(1A) of the Act are quitedifferent, as their text and context make clear. In particular, s 8(c) is one of a numberof principles to be taken into account when sentencing an offender, in the context ofthe sentencing purposes set out in s 7 of the Sentencing Act. Those purposes arediverse and include holding the offender accountable for their offending, providing forthe interests of the victim, denouncing the offender's conduct, personal and generaldeterrence, protection of the community from the offender and assisting in the66 Companies Act, s 383(1A).offender's rehabilitation. Section 383, on the other hand, has a narrower remit,directed to the protection of the public.[87] In addition, a qualifying event for making a prohibition order under s 383extends beyond criminal conduct. I therefore accept Mr McMullan's submission thatthe directive that a prohibition order may be made permanently or for a period longerthan 10 years only in the most serious of cases must have broader content than byreference to how the underlying conduct was assessed for the purposes of sentencing.[88] This position is also consistent with the plain text of the section, whichprovides that the seriousness of the index case is to be considered against those other"cases for which an order may be made".67 Section 383(1A) is not triggered only inthe most serious of cases of the type before the court. As Mr McMullan submits, thecollection of cases that qualify for a prohibition order under s 383 is broad and capturesnot only conduct that does not give rise to offending, but also offences that carry amaximum penalty of a $5,000 fine68 and those carrying a maximum penalty of14 years' imprisonment.69 I agree that it cannot have been Parliament's intention thata decision to prosecute a person for a less serious charge could result in an increasedlikelihood of a long prohibition order simply because the offending is assessed asbeing the most serious of cases for which that penalty is prescribed. To use theexample given by Mr McMullan, it cannot be that a person who commits a fine-onlyoffence contrary to the Act, but in the worst possible way, should be liable to a longerprohibition than someone who commits the more serious offence of blackmail, merelybecause the index blackmail offending was not the worst of its type.[89] I accordingly accept that it is the particular conduct in question that is to beassessed for the purposes of s 383(1A), whether it constitutes offending or not. I alsoaccept this will necessarily include an assessment of the type of conduct in question(as against the other types of conduct for which prohibition orders might be made) aswell as the seriousness of the conduct (as against misconduct of that type and whichshares the same penalty).67 Section 383(1A).68 Sections 383(1(b)) and 373(1).69 See Crimes Act 1961, s 2 (definition of "crime involving dishonesty") and ss 237–238.Is a prohibition order a penalty?Introduction[90] In his oral submissions at the hearing, Mr Dufty submitted that the prohibitionorder of more than 10 years sought by the Registrar is not available in this case, givensubs (1A) only came into force on 1 April 2014, whereas the conduct giving rise toMr Bublitz's (and Mr McKay's) convictions occurred in 2010. Mr Dufty submittedthat a prohibition order is a penalty for the purposes of s 6 of the Sentencing Act ands 25(g) of the Bill of Rights Act, or that even if not, the presumption that legislationdoes not have retrospective effect applies. Given these issues had not been addressedin any party's written submissions and, as will be evident from the followingdiscussion, they are matters of some complexity, I called for further submissions,which I outline below.[91] I begin by addressing the question of penalty, before considering whether s 383has retrospective effect.The Registrar's submissions on penalty[92] Mr McMullan submits that a prohibition order under s 383 is not a penalty forthe purposes of s 6 of the Sentencing Act or s 25(g) of the Bill of Rights Act. Hesubmits that the proper approach to assessing whether an order is a penalty for thesepurposes is best highlighted by two recent decisions, namely the Court of Appeal'sdecision in Chisnall v Attorney-General and the Supreme Court's decision inD (SC 31/2019) v New Zealand Police.70 In Chisnall, the Court of Appeal consideredwhether an extended supervision order (ESO) and a public protection order (PPO) arepenalties. In D (SC 31/2019) v New Zealand Police, the Supreme Court consideredwhether registration of an offender under the Child Protection (Child Sex OffenderGovernment Agency Registration) Act 2016 is a penalty (and thus whether thestatutory regime could have retrospective effect).70 Chisnall v Attorney-General [2021] NZCA 616, [2021] 2 NZLR 484; and D (SC 31/2019) v NewZealand Police [2021] NZSC 2, [2021] 1 NZLR 213.[93] Mr McMullan notes that the main factor the Court in Chisnall identified asindicative of a penalty is that ESOs are imposed through the criminal justice systemand place significant restrictions on a person, including detention. Mr McMullan alsonotes that the Supreme Court in D (SC 31/2019) v New Zealand Police was influencedby the fact that registration (at sentencing) takes place in the criminal sphere and alsorestricts a person's liberty. He argues that a prohibition order under s 383 shares fewof these attributes: it does not restrict any rights protected by the Bill of Rights Act,and instead is simply the denial of the privilege of participating in the conduct ofbusiness under the shelter of limited liability.[94] Mr McMullan further submits that orders made under s 383 are civil in nature,victims have no rights in relation to them, there is no power to compel a respondent'sattendance at the hearing and the High Court Rules 2016 apply. Further, and unlikeapplications for ESOs, PPOs and registration as a child sex offender, a conviction isnot a prerequisite to a prohibition order being made. Mr McMullan also submits thatthe fact standing to apply for such an order is not limited to the responsible governmentagency or member of the executive, but extends to any shareholder or creditor of thecompany concerned, reinforces the conclusion that prohibition orders are notpenalties. Mr McMullan also refers to Daniels v Thompson, in which the Court ofAppeal concluded that despite the clearly punitive nature of exemplary damages, suchdamages are nevertheless not a penalty for the purposes of the Bill of Rights Act.71The respondents' submissions on penalty[95] Mr Dufty, on the other hand, argues that prohibition orders under s 383 amountto a penalty for the purposes of s 25(g) of the Bill of Rights Act and s 6 of theSentencing Act.72 He refers to the following factors:(a) although prohibition orders are approached with public protection inmind (similar to ESOs, PPOs and registration orders), they clearly havea punitive effect on the persons subject to them;71 Daniels v Thompson [1998] 3 NZLR 22 (CA).72 Mr McKay adopts Mr Bublitz's submissions on this issue.(b) s 383 falls under Part 21 of the Act, "Offences and penalties";(c) prohibition orders imposed pursuant to s 383(1)(a), (b), (ba) and (bb)are consequences flowing from a conviction;(d) contravention of a prohibition order itself constitutes a criminaloffence;73 and(e) a person's disqualification from acting as a director is a matter of publicrecord, being published and searchable by the public on theCompanies Register.Key authorities on penalty[96] I agree that it is helpful to consider these competing submissions by referenceto the Court of Appeal's decision in Chisnall and the Supreme Court's decision inD (SC 31/2019) v New Zealand Police. Although Chisnall post-dates D (SC 31/2019)v New Zealand Police, it is convenient to deal with it first.[97] The Court of Appeal first highlighted the "very significant restrictions" on therights of those subject to ESOs and PPOs, despite both statutory regimes having theprimary purpose of protecting the public.74[98] Turning first to ESOs, the Court referred to the earlier decision of the full Courtof Appeal in Belcher v Chief Executive of the Department of Corrections, in which theCourt concluded that an ESO was imposed by way of penalty or punishment given thefollowing factors:75(a) the triggering event for an ESO is a criminal conviction;(b) the respondent to an ESO application is, throughout the ESOlegislation, referred to as "the offender";73 Companies Act, s 383(6).74 Chisnall v Attorney-General, above n 70, at [3]–[4].75 Belcher v Chief Executive of the Department of Corrections [2007] 1 NZLR 507 (CA) at [47].(c) eligibility for an ESO (in non-transitional cases) depends upon anapplication either before the sentence expiry date or while the offenderis still subject to release conditions;(d) an application for an ESO is made to "the sentencing court";(e) where an application is made, a summons may be issued to secure theattendance of the offender and the provisions of ss 24 to 25 of theSummary Proceedings Act 1957 apply;(f) alternatively, the appearance of the offender can be secured by issue ofa warrant for the offender's arrest, in which case ss 22 and 23 of theSummary Proceedings Act and s 316 of the Crimes Act apply;(g) the offender must be present at the hearing;(h) if the proceedings are adjourned, the offender, if not already in custody,can be remanded to the new date at large, on bail or in custody (althoughonly for periods of up to eight days);(i) sections 71, 201, 203, 204 and 206 of the Summary Proceedings Act,ss 138 to 141 of the Criminal Justice Act 1985 and the Costs in CriminalCases Act 1967 apply to applications for ESOs;(j) victims are to be notified of hearings and may make submissions inwriting, with the leave of the court orally;(k) the consequences of an ESO are in effect a subset of the sanctions whichcan be imposed on offenders and extend to detention for up to12 months (in the form of home detention);(l) the right of appeal is "borrowed" from the Crimes Act;(m) it is an offence to breach the terms of an ESO and an offender is liableto up to two years' imprisonment; and(n) applications for ESOs are classed as being criminal for the purposes ofthe Legal Services Act 2000.[99] Despite various amendments made to the ESO regime subsequent to Belcher,the Court in Chisnall noted that all of the factors identified in Belcher as indicative ofa penalty remain features of the current ESO regime.76 The Court also rejected thesubmission that the Court in Belcher had overemphasised procedural aspects of theESO regime, stating that:77 as this Court emphasised, it was the imposition through the criminal justicesystem of significant restrictions (including detention) that amounted topunishment and consequently engaged ss 25 and 26 of the Bill of Rights Act.[100] The Court in Chisnall also referred to earlier decisions of the Court of Appealin which the Court had had to determine whether exemplary damages and the powerof the Accident Compensation Corporation to decline to give rehabilitation assistanceand pay compensation to persons injured while committing an offence were penaltiesfor the purposes of the Bill of Rights Act.78 The Court noted that despite the obviouspunitive elements of both those matters, neither regime was held to be a penalty orpunishment for the purposes of the Bill of Rights Act. The Court stated:[134] The very different questions before this Court in Daniels v Thompsonand Accident Compensation Corporation v Curtis mean these judgments areof limited value in the present context. As counsel for Mr Chisnall observe,those cases involved measures far less restrictive of rights than arecontemplated by both the ESO and PPO regimes. It may also be emphasisedthat the ESO regime remains closely integrated into the criminal procedureprocess, applies only to persons who have been convicted of qualifyingoffences and contemplates further detention and other substantial restrictionsafter or in anticipation of the expiry of sentences previously imposed. Thisdifference in context is important.[101] The Court accordingly concluded that under the amended ESO regime, an ESOshould properly be regarded as a penalty and therefore constitutes a secondpunishment engaging s 26(2) of the Bill of Rights Act.7976 Chisnall v Attorney-General, above n 70, at [131].77 At [131], referring to Belcher v Chief Executive of the Department of Corrections, above n 75, at[49].78 Daniels v Thompson, above n 71 (exemplary damages); and Accident Compensation Corporationv Curtis [1994] 2 NZLR 519 (CA) (ACC regime).79 Chisnall v Attorney-General, above n 70, at [138].[102] The Court then turned to consider the position in relation to a PPO. The Courtacknowledged that a number of the features that led it to conclude that ESOs werepenalties did not apply to PPOs, namely:(a) the person against whom a PPO is sought is referred to in the relevantlegislation as a "respondent" rather than an "offender";(b) an application for a PPO is made to the High Court rather than to "thesentencing court";(c) the Costs in Criminal Cases Act 1967 does not apply;(d) victims are not notified of the hearing of the application and given theright to make submissions;(e) there is no right of appeal borrowed from the relevant statute providingfor criminal appeals (now the Criminal Procedure Act 2011); and(f) allied to (b) above, the form of the application is an originatingapplication, indicating a civil and not a criminal process.[103] Despite these features, the Court noted that other features of the ESO regimeapply equally to PPOs. The Court stated:80Significantly, the triggering event remains a criminal conviction for a serioussexual or violent offence whether in New Zealand or overseas. Therespondent must either be detained, due for release within six months orsubject to an ESO or Protective Supervision Order when the application for aPPO is made. Special provisions apply in the case of those who offendedwhen overseas. Attendance of the respondent at the PPO hearing can becompelled, and the legislation creates offences for breaching orders andconditions relating to protective supervision orders.Most importantly, however, the sanctions which result from imposition of aPPO are, as we have already noted, far more severe than those that flow froman ESO. And although the application is made in an originating application,indicating a civil and not a criminal process, the consequences of a PPO areunlike any that accompany a civil judgment. In this context, it is ultimatelythe substance of the order that should matter, not the form of the applicationnecessary to obtain it.80 Chisnall v Attorney-General, above n 70, at [154]–[155] (footnotes omitted).[104] The Court further observed that the fact that one of the Act's objectives isprotection of members of the public does not militate against the conclusion that aPPO constitutes a penalty; nor is the express statement in the legislation that it is notan objective of the Act to punish those subject to a PPO decisive.81 The Court statedthat "[t]he nature of the PPO regime must be ascertained by looking at theconsequences of the orders it authorises."82 The Court concluded:[161] As we said earlier, the powers of the manager to restrict rights areobviously necessary to ensure that a residence is able to be safely andefficiently managed and they reflect the fact that residents will generally bedetained in the residence against their will. The persons subject to the orderwill be in the legal custody of the Chief Executive, living in a residencelocated on prison grounds. The manager will effectively control theirmovements and who may visit them, and has the extensive powers we haveearlier described.[162] All these features of the PPO regime must bear on the assessment ofits nature for the purposes of the s 26(2) Bill of Rights Act analysis. Weconsider they point to the conclusion that a PPO is a penalty, notwithstandingthe fact that it involves resort to the High Court in its civil jurisdiction by wayof an originating application.[105] Turning to registration of an offender on the Child Sex Offender Register, theSupreme Court in D (SC 31/2019) v New Zealand Police was unanimous thatregistration was a penalty.83 Writing for himself and the Chief Justice, O'Regan Jnoted that in the report on the registration regime under s 7 of the Bill of Rights Act,the Attorney-General had expressed the view that registration and the subsequentreporting obligations did constitute a "punishment".84 That report had referred to theCourt of Appeal's earlier decision in Belcher and O'Regan J stated that "the analogybetween a registration order and an ESO is appropriate".85 His Honour went on tostate:86Like an ESO, the trigger for a registration order is sentence for a criminalconviction. A person subject to a registration order is defined as a "registrableoffender" and is referred to as such throughout the Act. The [Child Protection(Child Sex Offender Government Agency Registration) Act] imports the81 At [156].82 At [156].83 D (SC 31/2019) v New Zealand Police, above n 70.84 At [56], citing Christopher Finlayson Report of the Attorney-General under the New Zealand Billof Rights Act 1990 on the Child Protection (Child Sex Offender Register) Bill (6 May 2015) at[11].85 D (SC 31/2019) v New Zealand Police, above n 70, at [57].86 At [57]–[58] (citations omitted).appeal provisions of the Criminal Procedure Act 2011 for appeals againstregistration orders. Failure to comply with reporting obligations withoutreasonable excuse is an independent offence punishable by up to one year'simprisonment. These factors, which were relied upon in Belcher, stronglysuggest that a registration order is a "penalty".We accept that the purpose of the Registration Act is to reduce sexualreoffending against children. But that does not change the fact that aregistration order restricts a person's liberty (albeit to a considerably lesserextent than an ESO). And as the Court of Appeal noted in Belcher, that theaim of the legislation is to reduce offending is not decisive in determiningwhether a consequence of criminal offending is a penalty.[106] O'Regan J accordingly concluded that a registration order is a penalty for thepurposes of s 6 of the Sentencing Act and s 25(g) of the Bill of Rights Act.87 Theremaining members of the Court agreed with that conclusion and the reasoning forit.88[107] Relevant to matters discussed later in this section, it is also helpful to note theEnglish Court of Appeal's decision in R v Field, to which both parties referred.89 TheCourt in Field concluded that an order disqualifying an offender convicted of offencesof indecency against children from working with children indefinitely was not apenalty. That conclusion is of course different to that reached by the Supreme Courton a broadly similar matter in D (SC 31/2019) v New Zealand Police. It is helpful,however, to understand the key reasons why the English Court of Appeal reached theconclusion it did. It said:90It seems to us of considerable importance that a conviction is not a necessarycondition for the making of such an order. When one considers the nature andpurpose of such an order it points overwhelmingly to this being forpreventative rather than punitive effect. Precisely the same order is madewhether a person is convicted or not and the making of the order has no regardto the extent or seriousness of the offending but rather to whether a repetitionof the conduct is likely. (Emphasis added.)87 At [59].88 At [159] per Ellen France J; at [161] and n 187 per Glazebrook J; at [278] and n 384 perWilliam Young J.89 R v Field [2002] EWCA Crim 2913, [2003] 1 WLR 882.90 At [58].[108] The Court also stated:[41] We are further bound to have regard to the severity of the order. Thereis no doubt that the order can have a major impact upon a person's life. It mayprevent that person from pursuing the only employment for which they havebeen trained. The order runs indefinitely and no application can be made forten years to discharge it.[42] However many orders that are undoubtedly civil in nature and not apenalty can have severe consequences and whilst this element must be bornein mind in assessing the true nature of the order, it cannot be the only factor tobe considered.[109] In a decision of some relevance to the present case, Rich v Australian Securitiesand Investments Commission (Rich v ASIC), the majority of the High Court ofAustralia concluded that an order under the Australian Corporations Act 2001 (theCorporations Act) disqualifying a person from acting as a director of a company is apenalty – at least for the purposes of common law "privilege against penalties andforfeiture" (penalties privilege).91[110] In that case, the Australian Securities and Investments Commission (ASIC)brought proceedings against two directors seeking declarations that they had breachedtheir duties, and orders for compensation and disqualification. In the course of theproceedings, ASIC sought discovery from the directors. The directors resisted on thebasis that the proceedings (through the application for prohibition orders) exposedthem to penalties and thus the common law penalties privilege applied. The trial courtrejected the directors' argument and ordered discovery. On appeal, a majority of theNew South Wales Court of Appeal concluded that the proceedings were protective andnot punitive in nature and thus agreed the privilege did not apply.[111] On appeal to the High Court, the majority of the Court concluded that theorders were properly classified as a penalty for the purposes of the privilege. In theirjoint judgment, Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ (the majority)observed that the penalties privilege had been applied to a diverse range of proceedings(not limited to monetary exactions), including those for forfeiture of property interests,breaches of covenants in leases, by marriage without consent and acting as an agent91 Rich v ASIC, above n 59 per Gleeson CJ, McHugh, Gummow, Hayne, Callinan and Heydon JJ,Kirby J dissenting. None of the parties addressed this authority in their primary submissions, andI therefore called for further submissions on it.for the Confederate States of America.92 The majority further observed that "in severalcases it has been held that exposure to loss of office is exposure to a penalty orforfeiture", stating that:93And in Police Service Board v Morris it was at least assumed that exposure todismissal from a police force was a form of penalty. By contrast, however,orders for compensation have been held not to be penalties.[112] The majority then stated:[29] That stream of authority would suggest that for the Commission toseek an order disqualifying a person from acting in the management of acorporation on the ground that the person has contravened the law is to seek apenalty or forfeiture. The order is sought by a regulatory authority; its grantwould be founded on demonstration of a contravention of the law; it is anorder which leads to the vacation of existing offices in a corporation andimposition of a continuing disability for the duration of the order. What is itthat would deny that conclusion?[113] The majority answered that rhetorical question by stating that a purporteddistinction between punitive and protective proceedings did not justify the conclusionthat the proceedings did not expose the directors to a penalty. The majority stated:[37] If a disqualification order is made, the person against whom the orderis made ceases to be a director, alternate director, or a secretary of a company. The order for disqualification thus causes the person against whom it ismade to forfeit any office then held in a corporation and forbids that personfrom holding office in a corporation for the duration of the disqualificationorder. Those consequences, whether taken separately or in combination, wheninflicted on account of a defendant's wrongdoing, are penalties. That thepenalty is not exacted in the form of a money payment does not deny thatconclusion. As the authorities referred to earlier in these reasons reveal,equity's concern with penalties was never confined to pecuniary penalties. Ifexposure to loss of office or exposure to dismissal from a police force isexposure to penalty, exposure to a disqualification order is exposure to apenalty.(Emphasis added, citations omitted.)[114] In a separate judgment, though joining with the reasoning and outcome of themajority, McHugh J observed that in practice, there was little difference between thematters considered by a Judge when making prohibition orders and those whenconsidering penalties for criminal offending. For example, McHugh J considered that92 Rich v ASIC, above n 59, at [26] (citations omitted).93 At [28] (citations omitted).fixed periods of disqualification suggest punishment and taking into account the extentof losses caused by the director's actions suggests retribution.94[115] In a lengthy and detailed dissent, Kirby J reached the opposite conclusion. Heconsidered the proper focus ought to be the meaning and application of theCorporations Act, rather than consideration of the penalties privilege. Kirby Jdescribed the relevant statutory provisions as a "very detailed regulatory schemeenacted to contribute to the improved management and control of Australiancorporations".95 He also rejected the suggestion that the courts below had adopted asharp divide between punitive and protective proceedings; rather, he considered theyhad adopted the correct approach of assessing whether the relevant provisions of theCorporations Act were of such a "character" as to attract the penalty privilege.96[116] Kirby J was of the view that the majority placed too much emphasis on theconsequences of disqualification. He stated:97For people who have derived a livelihood as company officers,disqualifications from holding such offices is doubtless a very seriouspersonal, financial and reputational burden. But so may be the outcome of acivil action in the courts asserting negligence or misconduct againstprofessional defendants. The consequences for the person affected cannot,alone, determine the characterisation of the contested order for the instantpurpose. Such a view would expand enormously the application of the penaltyprivilege. [117] And further:[105] People such as the appellants (or anyone else for that matter) have noright to be involved in company management. It is a statutory privilege to beearned each day. That privilege may be withdrawn for misconduct but alsofor incompetent, improper or lax activities in the functions of corporatemanagement. Given the critical importance of the good management ofcorporations for investors, employees, traders, the nation and the wider world,the Act, like its 1928 predecessor in Britain, has provided for the removal fromcorporate management of persons guilty of repeated contraventions of the Act.[106] The burdens of disqualification for a manager affected are recognisedin the Act by the provision of defences and by the protection afforded byjudicial evaluation and assessment of the claim. However, in the scheme ofthe Act, the disadvantages for the individual manager are entirely incidental94 Rich v ASIC, above n 59, at [42] and [56].95 At [63].96 At [82].97 Rich v ASIC, above n 59, at [100].to the achievement of the legitimate statutory objective of ensuring theintegrity of the management of corporations in Australia for all who areinvolved with them. It is destructive of this high purpose to adopt aconstruction of the Act that reads down the relevant section with a view to theprotection of the personal rights of the director as such. (Emphasis in original, citations omitted.)[118] Having considered the relevant statutory provisions, Kirby J concluded that therelevant provisions' "essential character is one of regulating the proper governance ofcorporations".98 He observed that a number of the triggering grounds for such an orderdid not depend on a contravention of the Corporations Act by the person concerned.Finally, Kirby J noted that in Police Service Board v Morris, relied on by theappellants, the legislation provided that a member of the police force "charged" withan "offence" and then found "guilty" could be subject to "disciplinary action".99Kirby J stated that in that context, it was understandable why dismissal in thatlegislation was treated as penal in character (though noting that the point had not beenargued in that case in any event).[119] Finally in this survey of authorities and returning to this jurisdiction, inDownsview, Gault J described s 383's predecessor as "penal in nature", though to beapproached with the protection of the public in mind rather than punitively.100 Miller Jin Davidson also commented on the protective versus penal nature of prohibitionorders, referring to Gault J's observations in Downsview.101 Miller J recorded thatcounsel had debated whether prohibition was indeed penal in nature, by reference tothe New South Wales Court of Appeal's decision in Rich v ASIC (somewhat curiously,given the High Court of Australia's decision in Rich v ASIC had been delivered someyears prior to Davidson).102 Miller J stated that he "need not categorise prohibitionunder s 385 as one thing or the other. As Gault J observed, it is both."103 Referring tothe protective purposes of s 385, Miller J noted that at the same time, any givendirector or manager inevitably experiences "prohibition as a punishment; it is an98 At [113].99 At [127].100 First City Corporation Ltd v Downsview Nominees Ltd, above n 54, at 766.101 Davidson v Registrar of Companies, above n 58, at [89].102 At [90].103 At [91].adverse consequence of an inquiry into his or her involvement in an insolventcompany".104Discussion on penalty[120] Having considered the various authorities and counsel's helpful submissions,I am satisfied that a prohibition order under s 383 is not a penalty for the purposes ofs 25(g) of the Bill of Rights Act or s 6 of the Sentencing Act. The following factors,taken collectively, lead me to this conclusion.[121] First, it is not a prerequisite to the court making a prohibition order under s 383that the respondent has been convicted of an offence. While a conviction for certainoffences is one threshold for an order under s 383, such orders can also be imposedwhere a person has "persistently failed" to comply with certain corporations relatedlegislation whether convicted or not, as well as in response to a breach of a duty to thecompany or a shareholder.105 Thus for example, a breach of directors' duties broughtby way of a civil proceeding and determined by the High Court exercising its civiljurisdiction could give rise to a prohibition order under s 383.[122] Further, and pursuant to s 383(c)(iii), a prohibition order can also be triggeredsimply by the person concerned "act[ing] in a reckless or incompetent manner in theperformance of his or her duties as director". Incompetence is far removed fromoffending and does not depend on bad faith, dishonesty or other similar misconduct.Other threshold grounds for a prohibition order are also where similar orders havebeen made in a foreign jurisdiction (which may or may not be triggered by offendingor other similar misconduct) and where a person has become of unsound mind, againfar removed from misconduct.106 The range of triggers for a prohibition order unders 383 reinforces that, at its core, the provision is part of the means of improving andensuring appropriate corporate governance in New Zealand, rather than penalisingpersons involved in the management of companies for misconduct.104 At [91].105 Companies Act, s 383(1)(c)(i) and (ii).106 Section 383(ca) and (e).[123] Second, and flowing from the comments just made, the clear purpose of aprohibition order is protection of the public; such an order is not intended to apply ina punitive way. In light of the decisions in Chisnall, D (SC 31/2019) v New ZealandPolice and Rich v ASIC, the protective nature of a prohibition order cannot be decisive.However, I do not read any of those decisions as suggesting that the preventive ratherthan punitive purpose of the order is not a factor relevant to whether an order is apenalty.[124] Third, the application for and granting of a prohibition order is not integratedinto the criminal justice system, a factor of some relevance in Chisnall andD (SC 31/2019) v New Zealand Police. For example, it is not applied for atsentencing; nor can it only be imposed by "the sentencing court". The relevantprovision refers to "the person against whom the order is sought", rather thancontaining any reference to the "offender".107 The person against whom an order issought is not required to be present at the hearing, no "victims" are to be notified ofthe application, none of the procedure borrows from the criminal justice process andthe High Court Rules apply.[125] As the Court of Appeal in Daniels v Thompson observed, s 26(2) of the Bill ofRights Act is not a bar to a claim for exemplary damages, which are plainly punitivein nature, because that section "is concerned with the criminal process, and preventsthe punishment function of that process from being revisited".108 In my view, thoseobservations naturally apply to s 25(g) of the Bill of Rights Act and s 6 of theSentencing Act. It would be odd, for example, to describe an application by a formershareholder of a company for a prohibition order under s 383 as part of the "criminalprocess".[126] Fourth, the applicant for a prohibition order is not limited to a particulargovernment organisation or entity (a relevant factor in Rich v ASIC). Rather, anapplication may be made by the Registrar, the FMA, the Official Assignee or,107 Section 383(2).108 Daniels v Thompson, above n 71, at 33–34, cited with approval in Chisnall v Attorney-General,above n 70, at [132].importantly for present purposes, the liquidator of the company concerned or a personwho is, or who has been, a shareholder or creditor of the company.[127] Fifth, a prohibition order undoubtedly has a punitive effect on the person thesubject of the order. This has been recognised in cases such as Downsview, Davidsonand Rich v ASIC. The effect on those subject to the order was plainly a key factor inthe Courts in Chisnall and D (SC 31/2019) v New Zealand Police concluding thatESOs, PPOs and registration orders are penalties, despite the overriding purpose ofeach statutory regime being public protection. Nevertheless, while a prohibition orderdoes limit the activities of the person the subject of the order, this is in a far lessrestrictive way than in the authorities discussed earlier. There is no restriction onmovement, liberty, expression or the like. A prohibition order does limit the nature ofemployment that can be carried out by the person the subject of the order, but onlyinsofar as that employment concerns the management of a company. And as earlierauthorities have noted, rather than impinging upon a pre-existing right protected bythe Bill of Rights Act, the order removes, for a defined period of time (or potentiallypermanently), the privilege of managing a statutory entity which has the benefit oflimited liability.[128] I acknowledge that s 383 falls within Part 21 of the Act, "Offences andpenalties". Nevertheless, the substance and nature of a prohibition order made unders 383 must be the focus, rather than the label given to Part 21.109[129] I also accept that it is an offence to breach a prohibition order. While this canpoint to an order being a penalty, I do not consider it decisive or material in this casewhen viewed in the broader context of those matters already discussed. I also acceptthat a prohibition order impinges on the right to privacy, in that the order is registeredon the Companies Register. But many matters that would not be considered a penaltyimpinge on a person's privacy, such as the publication of court judgments whichinclude defendants' names, those parties not having chosen to engage in the courtprocess but potentially having reputational and similar issues publicised to the worldat large.109 A point highlighted by the majority in Rich v ASIC, above n 59, at [22].[130] I also acknowledge that when considering the length of a prohibition order, theseriousness of the conduct concerned will be relevant. In R v Field, counsel for theCrown, in arguing that the order in issue was not a penalty, relied in part on the factthat the ground for making an order was not based on the gravity of the offence forwhich the individual had been sentenced.110 That the seriousness of the conduct inissue is a relevant factor when considering whether to make a prohibition order couldbe said to indicate a punitive rather than preventive aspect to the order.111Nevertheless, the seriousness of the conduct is undoubtedly relevant to the provision'sprotective purpose, as it will provide the threshold from which the Court must considerhow long the public ought to be insulated from such conduct. In this context, I notethat the seriousness of the offence or offending in question is a mandatoryconsideration when assessing the risk posed by the person against whom a registrationorder is sought under the Child Protection (Child Sex Offender Government AgencyRegistration) Act, which plainly has the protection of the public as its primarypurpose.112[131] I am conscious that the majority of the High Court of Australia concluded thata prohibition order under the Corporations Act is a penalty. The progress of that issuefrom the trial court through the Court of Appeal and to the High Court, and with thelatter two courts divided on the issue, highlights it is a matter of some complexity.I bear in mind, however, the (full) Court of Appeal's caution in Belcher that some careis required with overseas cases dealing with similar issues to those arising in this case,given much will turn on the intention ascribed to the relevant legislation.113 The issuesarising in Rich v ASIC are nevertheless similar to those arising in this case and ofcourse concern the same type of order. Earlier decisions of this Court have also drawnsupport from Australian cases on the approach to prohibition orders under the Act.[132] Despite this, however, I do not consider the majority's conclusion in Rich vASIC demands a conclusion in this case that a prohibition order under s 383 operates110 R v Field, above n 89, at [36].111 A point made by McHugh J in Rich v ASIC, in terms of suggesting retribution: Rich v ASIC, aboven 57, at [56].112 Child Protection (Child Sex Offender Government Agency Registration) Act 2016, s 9(3)(a); andsee D (SC 31/2019) v New Zealand Police, above n 70, at [58] per O'Regan J.113 Belcher v Chief Executive of the Department of Corrections, above n 75, at [39].as a penalty. First, the issue in Rich v ASIC was whether the nature of a prohibitionorder attracted the common law penalties privilege. The issue before me is the natureof a prohibition order for the purposes of s 6 of the Sentencing Act and s 25(g) of theBill of Rights Act, a topic to which Rich v ASIC does not speak. Second, there areimportant differences between the legislation in issue in Rich v ASIC and that in thiscase. It was clearly of some importance to the majority's decision that the order couldonly be applied for by a "regulatory authority" (namely, ASIC) and its grant was"founded on demonstration of a contravention of the law".114 Further, the majoritystated that the consequences of a prohibition order "when inflicted on account of adefendant's wrongdoing" were penalties.115 As noted earlier, an applicant under s 383is not limited to a regulatory authority, nor is the grant of a prohibition order underthat section necessarily on account of a defendant's "wrongdoing". These areimportant distinctions between the legislative schemes.[133] Finally, I note that Gault J in Downsview and Miller J in Davidson referred tothe penal nature of prohibition orders.116 But both also highlighted the order's primarypurpose of public protection, reflecting the point made by the majority in Rich v ASICthat it is difficult to construct a sharp divide between protective and punitiveproceedings. Further, and importantly, neither Judge was considering the nature of aprohibition order under s 383 for the purposes of s 6 of the Sentencing Act or s 25(g)of the Bill of Rights Act. Ultimately, it is those factors considered relevant in Chisnalland D (SC 31/2019) v New Zealand Police which lead me to the conclusion that aprohibition order under s 383 is not a penalty for those purposes.[134] I should add that this conclusion says nothing about the nature of a prohibitionorder under s 382 of the Act. That section provides for an automatic ban of five yearsin the event the person concerned is "convicted of an offence" under certain statutoryprovisions. Whether or not that automatic statutory consequence of certain offendingis a penalty for the purposes of s 6 of the Sentencing Act and s 25(g) of the Bill ofRights Act is beyond the scope of this judgment.114 See [112] above.115 See [113] above.116 See [119] above.Retrospectivity – introduction[135] Despite my conclusion that a prohibition order under s 383 is not a penalty,s 12 of the Legislation Act 2019 (and its predecessor, s 7 of the Interpretation Act1999) provide that legislation does not have retrospective effect. However, asMr Dufty acknowledges, legislation can operate with retrospective effect if therelevant statutory provision expressly says so or where the proper interpretation of thestatute in question is that it was intended by Parliament to operate retrospectively.117As the authors of Burrows and Carter Statute Law in New Zealand observe, becauseof this, s 12 of the Legislation Act establishes a "presumption" that an enactment isnot retrospective, reflecting the earlier position at common law.118[136] The presumption against retrospectivity is often said to stem from the basicprinciple that retrospective legislation is unjust and therefore undesirable. However,as the authors of Burrows observe, it is not true that all legislation that is clearlyretrospective is equally unjust or objectionable.119 Because retrospective legislationis necessary or desirable in some circumstances, Parliament intends (by expressprovision or by way of proper construction) a statute to have retrospective effect insome circumstances. For these reasons, the authors of Burrows state that "it is clearthat the presumption will not be of equal strength in every case".120[137] The authors of Burrows also refer to the following extract from Adam J'sjudgment in Doro v Victorian Railways Commissioners (to which I was also referredby counsel), in which the Judge stated:121The strength of the presumption against retrospectivity must, I would think,depend on the nature and degree of the injustice which would result fromgiving a statute a retrospective operation. Where a palpable injustice wouldresult, the presumption should be given its fullest weight On the other hand,where to give retrospective operation to a statute might be considered to worksome injustice to one party, but is clearly required to rectify a manifestinjustice to others, there would, on principle, seem little reason for givingmuch weight to the presumption.117 Ross Carter Burrows and Carter Statute Law in New Zealand (6th ed, LexisNexis, Wellington,2021) [Burrows and Carter] at 809 and 818.118 At 818.119 Burrows and Carter, above n 117, at 812.120 At 819, referring to Pryor v Bulley [2013] NZCA 559, [2015] NZAR 518 at [102]–[115]. See alsoArt Deco Society (Auckland) Inc v Auckland City Council [2006] NZRMA 49 (HC) at [55]–[57].121 Doro v Victorian Railways Commissioners [1960] VR 84 (SC) at 86.The Registrar's submissions on retrospectivity[138] Mr McMullan submits that there is nothing in the text of s 383 itself to limitthe application of subs (1A) to conduct that occurred after the amendment came intoforce. He argues that the provision's reference to "where a person has beenconvicted" of a qualifying offence could be the only event that temporally limits theapplication of s 383(1A). He further submits that the interpretation contended for byMr Bublitz would require reading into s 383 the words "where a person has beenconvicted of an offence the conduct of which occurred after this enactment came intoforce".[139] Mr McMullan further says that s 383(1A) is consistent with the provision'spurpose. He notes that s 383 is not intended to be penal in nature; rather its focus isto protect the public. Mr McMullan acknowledges that the law has long presumedthat enactments do not have retrospective effect. He notes, however, that this Courthas found that disciplinary regimes applying to dentists and lawyers, both havingprotection of the public as their primary purpose, can have retrospective effect.122He refers in particular to Tipping J's conclusion in Dental Council of New Zealand vBell that the regime relating to dentists should operate retrospectively because therelevant provisions were primarily regulatory provisions exercisable for the publicbenefit.123[140] Mr McMullan further notes that at common law, amendments that increasedpenalties in existing offences were permitted to operate retrospectively, referring tothe decision of the King's Bench in Director of Public Prosecutions v Lamb.124 Heacknowledges that that approach has been restricted in this jurisdiction in relation topenalties, but submits that it is still instructive for the broader question ofretrospectivity. He notes that as in this case, the statutory provision in Lamb wastriggered by reference to a person being convicted of an offence, rather than by theoffending itself. The penalty for the offence in Lamb had increased subsequent to therespondents' offending. Mr McMullan points to Humphreys J's observations, with122 Dental Council of New Zealand v Bell [1992] 1 NZLR 438 (HC); and S v New Zealand Law Society[1944] NZLR 351 (SC) (decided by the full Court).123 At 445 and 447.124 Director of Public Prosecutions v Lamb [1941] 2 KB 89 (KB).which the other members of the Court agreed, that the plain and ordinary meaning ofthe statutory text meant that the higher penalty applied.[141] Mr McMullan also refers to a similar approach taken by the England and WalesCourt of Appeal in R v Field.125 Putting aside the issue in that case of whether theorder in question was a penalty, in Field the Court endorsed the Secretary of State'ssubmission that:126 the purpose of section 28 is plainly to protect children. That purpose wouldbe severely undermined if a disqualification order could only be imposed inrelation to offences committed after the section came into force. The courtshould take a more relaxed approach to a potentially retro-active element inlegislation where its intended purpose is to protect the public.[142] Mr McMullan further submits that support for this approach can be drawn fromcontext provided by other provisions of the Act, and in particular, transitionalprovisions. He notes that earlier amendments to s 383 (by the Companies AmendmentAct (No 2) 2006)127 contained no transitional provisions, whereas the same amendinglegislation included transitional provisions for companion amendment to thequalification of directors. He also notes that when a further restriction was insertedinto s 151(2) of the Act in relation to the qualification of directors (by s 5 of theCompanies Amendment Act (No 2)), a transitional provision was included uponrecommendation by the select committee.128 The provision ensured that currentdirectors who were subject to overseas prohibition orders were not automaticallydisqualified from directorship. Mr McMullan argues that if Parliament was similarlyconcerned with the Court disqualifying people from being directors in thosecircumstances, it would have said so.[143] Mr McMullan also refers to the transitional provisions in the Financial Markets(Repeals and Amendments) Act 2013, which brought into force s 383(1A). He notesthat that Act did not contain a specific transitional provision in relation to subs (1A),and in the legal landscape summarised above, says Parliament was right not to do so125 R v Field, above n 89.126 At [60].127 Inserting s 383(1)(ca).128 Business Law Reform Bill 2006 (64-2) (select committee report) at 2.because it did not need to. He again refers to Tipping J's judgment in Dental Councilof New Zealand v Bell, in which his Honour stated:129The absence of any transitional provisions bearing on this question must inmy view signal the fact that Parliament meant the new provisions to take oversubstantively as well as procedurally and to relate to all conduct of whichcomplaints were made after the passing of the new Act, irrespective of whenthat conduct occurred.Respondents' submissions on retrospectivity[144] Mr Dufty submits that even if prohibition orders are not considered a penaltyunder s 6 of the Sentencing Act and s 25(g) of the Bill of Rights Act, the sameprotection against retrospective penal legislation offered by those provisions shouldextend to persons in Mr Bublitz's position, given the "closely analogous,quasi-criminal nature of banning orders".130 He submits that the principles underlyingthe presumption, and in particular that the legislature does not intend to be unjust,131ought to be given their full effect here, given what he submits to be the analogybetween a prohibition order and a criminal penalty. Mr Dufty refers in this regard tothe Supreme Court's decision in Marwood v Commissioner of Police, in which theCourt held that, similar to the approach taken in analogous criminal proceedings,improperly obtained evidence collected by the Crown may be excluded in civilproceedings under the Criminal Proceeds (Recovery) Act 2009.132 Mr Dufty notesthat this approach has since been applied in the professional disciplinary and contemptof court contexts. 133[145] In terms of the Registrar's reliance on the absence of transitional provisionswhen subs (1A) was enacted, Mr Dufty submits that the starting point under s 12 ofthe Legislation Act is that Parliament must clearly provide for retrospectivity if suchan effect is intended, and not the other way around. He therefore argues that the mereabsence of transitional provisions does not assist the Registrar's case. Mr Dufty alsonotes that transitional provisions are often unintentionally omitted by Parliament,129 Dental Council of New Zealand v Bell, above n 122, at 447.130 Again, Mr McKay adopts Mr Bublitz's submissions on this topic.131 Referring to Asher J's judgment in Art Deco Society (Auckland) Inc v Auckland City Council,above n 120.132 Marwood v Commissioner of Police [2016] NZSC 139, [2017] 1 NZLR 260 at [36]–[38].133 See A Professional Conduct Committee v Health Practitioners Disciplinary Tribunal [2021]NZHC 2249 at [121]–[123]; and Young v Zhang [2017] NZCA 622, [2018] NZAR 207 at [52].giving as an example the failure of the Sentencing Amendment Act 2007 to addressoffenders' appeals against sentences imposed before its commencement, despiteexpress provision dealing with offenders convicted before, but sentenced after, itscommencement. Mr Dufty says that the approach adopted in Dental Council ofNew Zealand v Bell can also be distinguished, as while s 383's purpose is plainly theprotection of the public, it also undoubtedly has a penal effect. Finally, Mr Duftysubmits that the approach taken in Dental Council of New Zealand v Bell is nowoutdated in light of Belcher, Chisnall and D (SC 31/2019) v New Zealand Police,where the Courts considered that the penal nature of the orders was relevantnotwithstanding their primary purpose of public protection.Discussion on retrospectivity[146] The Registrar's position is that s 383(1A) applies to all applications madefollowing April 2014. Ultimately, I do not need to decide that point. Rather, the(narrower) issue for my determination is whether s 383(1A) applies in the case ofconvictions entered after that section came into effect but where the offendingoccurred prior to its enactment. For the following reasons, I am satisfied thats 383(1A) operates in that way.[147] First, in the context of the presumption against retrospectivity, the "unjustness"resulting from s 383(1A) having retrospective effect is at the lower end of the scale.The provision does not introduce a wholly new offence or response to certain conduct,but is limited to increasing the potential duration of an existing response. Further, thesubject matter of the provision is an order prohibiting a person from being involved inthe management of a company. As discussed earlier, such an order has far fewerimplications for basic rights, including those protected by the Bill of Rights Act, thanthose types of orders in issue in the authorities discussed earlier in this judgment. Asalready mentioned, a prohibition order does not prevent the person subject to it frombeing employed, or being employed by and involved in a company; rather it simplyprohibits the person from being involved in the management of a company. Thus, thepresumption against retrospectivity in this case is not particularly strong.[148] In this context, I disagree with Mr Dufty's categorisation of s 383 as"quasi-criminal" such that the presumption should be given its full effect. For thereasons discussed in the preceding section of this judgment, the operation of s 383 isnot integrated into the criminal justice process, nor does it bear any of the hallmarksof a quasi-criminal process. It would be odd, for example, to describe a prohibitionorder following a company director becoming of unsound mind as "quasi-criminal".So too a prohibition order applied for by a shareholder or creditor of a company on thebasis of a director's breach of duties to that company. For these reasons, I do notconsider cases such as Marwood v Commissioner of Police to be of assistance.[149] Second, I am satisfied that the plain and ordinary meaning of s 383 suggestsParliament intended subs (1A) to have retrospective effect. I agree with Mr McMullanthat the task of statutory interpretation in this case is similar to that in Director ofPublic Prosecutions v Lamb, in which Humphreys J described similar statutorylanguage as "perfectly plain and quite unambiguous".134 Section 383 expresslyprovides that a trigger for making a prohibition order, including one of 10 years ormore, is a conviction for certain offending, rather than the offending itself. The sectionitself distinguishes between being "convicted of an offence" (s 383(1)(a), (ba) and(bb)) and having "committed an offence" (s 383(1)(b)).[150] Third, I am satisfied that for subs (1A) to have retrospective effect is consistentwith the purpose of the provision, namely the protection of the public. Such a positionis also consistent with other grounds for an order under s 383 that are founded onconduct that could take place over a lengthy period of time – namely "persistent"breaches of the Act and mental impairment.135 For example, it would be inconsistentwith the protective purpose of s 383 if a prohibition order of 10 years or more couldnot be made for flagrant and persistent breaches of the Act simply because thosebreaches that characterise the conduct as "persistent" occurred before subs (1A) cameinto force.[151] Finally, I also accept that the approach to transitional provisions referred to byMr McMullan, and the absence of any transitional provisions in relation to s 383(1A),134 Director of Public Prosecutions v Lamb, above n 124, at 99.135 Section 383(c)(i) and (e).support the conclusion that Parliament intended subs (1A) to have retrospective effect.I do not, however, place significant weight on this factor. Transitional provisions"often tend to become complex, which adds to difficulties in interpretation".136 Theabsence of transitional provisions is also not often likely to be determinative.137Further, and as Mr Dufty submits, the absence of transitional provisions cansometimes be a matter of oversight.138[152] Drawing these threads together, s 383 does not operate as a penalty. Nor is itsoperation analogous to a criminal or quasi-criminal process. Section 383's text is plainand unambiguous. Any unjustness flowing from subs (1A) having retrospective effectis low. And any such unjustness is outweighed by s 383's purpose of protection of thepublic.[153] There is therefore jurisdiction to impose a prohibition on Mr Bublitz and/orMr McKay of more than 10 years, should I consider that appropriate.[154] I turn now to the submissions on the Registrar's application.The parties' submissionsThe Registrar's submissions[155] As noted at the outset, the Registrar applies for a prohibition order of around12 years from the date of this judgment.139 The Registrar submits that Mr Bublitz'sand Mr McKay's offending was premeditated and sophisticated, that the case is one ofthe most serious cases in which a prohibition order can be made (thus enlivening theCourt's jurisdiction under s 383(1A)), and a lengthy prohibition is necessary for theprotection of the public.[156] Mr McMullan submits that as the Court is not sentencing Mr Bublitz orMr McKay, it is not restricted to considering the actual losses flowing from the136 Vela Fishing Ltd v Commissioner of Inland Revenue [2002] 1 NZLR 49 (CA) at [26].137 See Burrows and Carter, above n 117, at 837–838.138 FM Custodians Ltd v Pati [2012] NZHC 1902 at [32]–[39].139 Though in his oral submissions at the hearing, Mr McMullan acknowledged that around 12 yearsin total may be sufficient, that is, including that part of the automatic five-year prohibition unders 382 that has already passed. This implies a further prohibition period of around nine years.transactions the subject of charges 10 to 13, but can take into account the full suite oftransactions between Viaduct and Mutual, and Mutual and Hilltop. On that basis, andtaking into account the 16 transactions between Viaduct and Mutual, Mr McMullansubmits the losses were substantial, totalling some $3.9 million in relation to theViaduct transactions, $243,000 in relation to Hilltop and a further $230,000 in relationto NKE Trust Ltd, another Hunter Group entity. Mr McMullan submits that ToogoodJ's findings of control and knowledge apply equally to these transactions despite, forefficiency reasons, them not being the subject of separate charges in the second trial.[157] Mr McMullan submits that the same approach should be taken in relation tothe duration of the offending. He urges the Court to have regard to Mr Bublitz'sconduct over the full period of January 2009 to December 2009, and not just theshorter window in which the transactions the subject of charges 10 to 13 took place.[158] Once that broader context is taken into account, Mr McMullan submits thatMr Bublitz's conduct, albeit not found to be unlawful in a criminal sense at the secondtrial, clearly troubled Toogood J who described it as being "at the margins oflegality".140 Mr McMullan says it would be artificial to ignore this broader context, apoint made by Toogood J at sentencing.141[159] Mr McMullan further submits that Mr Bublitz has shown limited remorse andcontrition, a point relevant to the forward-looking exercise the Court must conduct.He notes that Toogood J allowed a discount for only "some remorse".142Mr McMullan also refers to Toogood J's observations at sentencing that:143[Mr Bublitz] displayed [no] real appreciation of the extent to which the way[he] conducted [himself], particularly after the acquisition of Mutual, involveddeliberate dishonesty motivated only by a determination to rescue the HunterGroup if that was possible [He] showed [no] consideration for the interestsof the investors at the time of [his] offending.140 Sentencing notes, above n 4, at [45].141 At [40].142 At [101].143 At [98].[160] Mr McMullan also refers to Mr Bublitz's (unsuccessful) application for leaveto appeal to the Supreme Court, which he says is further evidence of this lack ofcontrition.144[161] Mr McMullan acknowledges on behalf of the Registrar that the criminalproceedings took their toll on Mr Bublitz and that he has undoubtedly sufferedsignificant reputational damage as a result. But Mr McMullan submits these factorsshould not be given significant weight, given they have already been recognised in thesentence imposed on Mr Bublitz and that they are the natural consequences of hisoffending in any event. Mr McMullan also submits that any reliance on the suggestedabsence of any further offending would be misplaced, given Mr Bublitz has not hadthe opportunity since his convictions to engage in the management of a company(given the automatic five-year prohibition period).[162] Mr McMullan refers to the 12-year prohibition imposed by Venning J in Blake,noting that while Mr Blake had a much more significant history of misconduct thanMr Bublitz, Mr Blake was not convicted of dishonesty offences nor were the lossesinvolved as significant as in this case.[163] Mr McMullan makes most of the same points in relation to Mr McKay. WhileToogood J found Mr McKay to be less culpable than Mr Bublitz, Mr McMullansubmits this was not substantially so. He also refers to Toogood J's observations as toMr McKay's evidence (including being described by the Judge as "evasive")145 andthe Judge's observation that:146Although I am prepared to accept that Mr McKay may not have set out to actdishonestly in February 2009, I am satisfied beyond reasonable doubt thatfrom the acquisition of Mutual to the end of the downward spiral, he knewthat there had been a complete failure of compliance with his obligations andthose of Mr Bublitz and Mr Blackwood under the Crown guarantee. Hisemails and those of Mr Chevin and others demonstrate that caution had beenabandoned because of the desperate circumstances in which they foundthemselves. As I said, they were reduced to digging Mr Bublitz out of themanure.144 Bublitz v R [2019] NZSC 138.145 Reasons for verdicts, above n 3, at [303].146 At [303].[164] Mr McMullan accordingly submits that Mr McKay was the "architect ofMr Bublitz's deceit" and in engaging in the transactions the subject of the charges (andthose broader transactions referred to at [156]), he breached his duties as director.Mr McMullan accordingly submits that the public require protection from Mr McKayjust as much as from Mr Bublitz.Mr Bublitz's submissions[165] Mr Dufty submits that Mr Bublitz's offending was not as serious as theRegistrar suggests and urges the Court to take into account the Court of Appeal'sobservations on the sentence appeal. Mr Dufty also notes that at trial, many chargesagainst Mr Bublitz were either dismissed, withdrawn or not proved.[166] Mr Dufty submits that the scale of the offending should be limited to what itactually was, namely that period between January and June 2010, and the lossesidentified by the Court of Appeal of around $860,000. He also refers to Mr Bublitz'ssuccessful and unblemished business career prior to the index offending, to the factthat upon being charged Mr Bublitz voluntarily resigned from several directorships,and that the management ban has severely restricted his ability to earn an income.[167] Mr Dufty also refers to a number of English cases, not as direct comparatorsfor assessing the length of the prohibition order, but rather for the guidance that canbe drawn from them on how the courts categorise the most serious and less seriouscases. He notes in particular Re Sevenoaks Stationers (Retail) Ltd, in which Dillon LJdescribed particularly serious cases warranting a prohibition period of 10 years ormore as including where a director who has "already had one period of disqualificationimposed on him falls to be disqualified yet again".147[168] In terms of prohibition orders made under s 383, Mr Dufty notes that Blakewas decided without reference to the English cases and submits that as a result, the147 Re Sevenoaks Stationers (Retail) Ltd [1991] Ch 164 (CA) at 174. In a schedule attached to hissubmissions, Mr Dufty refers inter alia to R v Ravjani [2012] EWCA Crim 2519, which involved£100 million obtained by fraud, with bans for 8 to 15 years imposed; and R v Bright [2008] EWCACrim 462, which involved the collapse of a publicly listed company (the United Kingdom's 9thlargest insurer) with resulting losses of £1 billion, with the defendants' fraudulent conduct playinga significant part in the scale of the disaster, and bans of 10 and 12 years' disqualification imposed.penalty in that case was very high. He submits that Blake is distinguishable from thecurrent case in any event, given Mr Blake's very poor offending history.[169] Mr Dufty accepts that Mr Bublitz's actions might have justified a total effectivedisqualification period of around seven years, had the period been imposed at the timeof Mutual's collapse in 2010 or shortly thereafter. But he notes that the Registrar nowseeks a much lengthier ban some 12 years after the offending occurred. He refers toanother English case, R v O'Hanlon, in which the company collapsed in 2003 and thedirector was not disqualified until 2007, noting that together with personalcircumstances, the court deducted three years from the disqualification period.148Mr Dufty submits that by analogy, a similar lengthy deduction should be made here,in the vicinity of five years, leaving a potential prohibition order of two years, whichis moot given the existing five-year automatic ban.[170] In terms of remorse, Mr Dufty submits that this was well demonstrated atsentencing, including in the pre-sentence report which recorded Mr Bublitz's remorseas genuine. Mr Dufty also refers to Toogood J's observation as to the difficulty indemonstrating remorse while at the same time advancing defences that were "properlyopen" to Mr Bublitz.149[171] Standing back, Mr Dufty submits it is not necessary for the purpose of theprotection of the public to impose a further prohibition period.Mr McKay's submissions[172] Mr McKay, acting for himself on the application, initially took no steps in theproceeding. However, he filed written submissions in opposition to the Registrar'sapplication, appeared at the hearing and made further oral submissions. The Registrardid not object to this.[173] Mr McKay adopts and endorses many of the submissions made by Mr Duftyon Mr Bublitz's behalf. He records at the outset of his written submissions that:148 R v O'Hanlon [2007] EWCA Crim 3074.149 Sentencing notes, above n 4, at [98].I wish to state at the outset that I deeply regret and am ashamed of the conductof which I have been convicted by this Court. It was never my intention toengage in such conduct and I am burdened with the knowledge that myignorance and stupidity lead to the actions that took place with [Mutual] thatled to the three convictions.The Applicant makes much of an alleged "lack of remorse". But this [is] nottrue. I explained in detail in my initial interview with the CorrectionsDepartment my abject disappointment in myself and distaste for what I haddone. [174] Mr McKay also presented a detailed analysis of his and Mr Bublitz's offendingvis-à-vis a range of other comparable offending cases, at least by charge, and byreference to length of prohibition versus the losses flowing from the offending.Mr McKay's point from this analysis is that on the scale of other cases involvingsimilar charges, he and Mr Bublitz fall very much at the lower end of culpability.[175] Mr McKay notes that he has been a company director of only four companiesin his career which spans a number of decades,150 and he is therefore not a prolificcompany creator and director as was the case with Mr Blake. Mr McKay refers to hisunblemished record both before and after his index offending, as well as the difficultyand stress inherent in the very lengthy proceedings he has faced, including the longand ultimately aborted trial before Woolford J. He refers to the reputational damageof his offending, that he is "a persona non grata in the most complete sense", butaccepts "[i]t is my lot, by my own hand". He notes that if a prohibition order of afurther 12 years were to be imposed, he would be more than 70 years old by the timeit expired. He submits it would have the effect of a lifetime ban for him.[176] Ultimately, Mr McKay submits that given his unblemished record other thanhis offending in 2010, that there is no pattern of repeated offending, his low risk ofreoffending and the reasonably limited losses flowing from his offending, a furtherperiod of prohibition is not appropriate. He submits that the statutory purpose ofpublic protection is well met by the automatic five-year ban, with which he has "noquarrel".150 Twenty-three years from his graduation to his offending in 2010.Analysis – should prohibition orders be made and if so, for how long?[177] I am satisfied that a further period of prohibition for each of Mr Bublitz andMr McKay is required. But I consider the appropriate length of that period to be farless than suggested by the Registrar, even on the basis advanced in oral submissionsthat the overall effective prohibition could be around 12 years. I propose to impose aprohibition order of a period of three years and six months for each of Mr Bublitz andMr McKay, to run from the date of this judgment. It will therefore expire on28 February 2026. Together with that part of the five-year prohibition that has alreadypassed, this reflects a total effective prohibition period for each of Mr Bublitz andMr McKay of seven years. My reasons for reaching this conclusion follow.[178] First, I accept that, while not resulting in personal gain, Mr Bublitz's andMr McKay's offending was serious. It involved dishonesty and, as Toogood J stated,it was calculated. Mr McKay's offending also involved a gross dereliction of his dutyas a director of Viaduct. In assessing the seriousness of the offending, I am veryconscious that the Judge had the benefit of listening to the evidence as it unfolded attrial, and then a significant period in which to consider the undoubtedly vast amountof documentary evidence put before him, before delivering his verdicts and reasonsfor verdicts. Only a tiny snapshot of the evidence given at trial is before me on thecurrent application. Toogood J's findings as to the seriousness of the offendingaccordingly carry significant weight.[179] Balanced against the seriousness of the offending, however, is that the scale ofthe offending itself, and the losses flowing from it, were relatively limited. I addressfurther below the Registrar's submission that the Court should take into accountMr Bublitz's and Mr McKay's broader conduct in 2009. But focusing on the offendingitself, it was limited to a small number of transactions in the first part of 2010 with netlosses of approximately $860,000 (and somewhat less in the case of Mr McKay, givenhe did not face charge 13). As is evident from the Court of Appeal's judgment, thescale of the offending placed Mr Bublitz's culpability at a lower level than in a numberof other finance company collapse cases, and Mr McKay's culpability was bydefinition a little lower again.[180] Second, I take into account Mr Bublitz's and Mr McKay's broader conduct in2009. Toogood J was clearly concerned about that conduct, and his observation thatit was "at the margins of legality" must be seen in the context of a criminal trial andthe standard of proof that applied (beyond reasonable doubt).151 Accordingly, whilethe Court of Appeal held that it was inappropriate for that conduct to have been takeninto account at sentencing, there is no reason why it cannot inform the Court'sassessment on the present application.[181] There is no basis for me to conclude in this judgment that any of that conductbreached the civil standard of proof; issues of that nature would involve a significantand lengthy trial in their own right. But it is relevant in my view that much ofMr Bublitz's and Mr McKay's conduct during that period would be unlikely to beviewed as consistent with the standards expected of those charged with themanagement of companies. I note, however, that in relation to Mr McKay,Toogood J's concerns appear to have been focused on the period following Mutual'sacquisition in late 2009 (see [163] above).[182] I am less persuaded, however, that I should take into account, at least in adeterminative way, the broader losses the Registrar submits were involved inMr Bublitz's and Mr McKay's offending, of around $3.9 million in relation to theViaduct and Mutual transactions alone. I accept that it is unlikely that Toogood J'sfindings as to Mr Bublitz's and Mr McKay's knowledge would be any different in thecontext of those transactions, particularly given I understand those transactionsoccurred over the same four-month period as those the subject of charges 10 to 12.152The position is less clear in relation to additional Hilltop transactions, and in relationto NKE Trust Ltd, I do not consider it appropriate to expand Toogood J's globalfindings on knowledge to those transactions, about which there is very limitedinformation before me. At the most, therefore, I have taken into account that therewas a broader suite of transactions involving the purchase of loans from Viaduct suchthat the broader losses are likely to be more than the $860,000 identified by the Courtof Appeal. I balance against this, however, that neither Mr Bublitz nor Mr McKayhave been found guilty of any misconduct in relation to those other transactions, on151 Sentencing notes, above n 4, at [45].152 Affidavit of Mr Bostock dated 10 August 2020 at [3.26] and [3.29].either the criminal or civil standard of proof. And the presence of additional, similartransactions in relation to Viaduct which occurred over the same short period as thosethe subject of charges 10 to 12 does not itself suggest Mr Bublitz or Mr McKay are amaterially greater risk to the public.[183] Third, the fact that neither Mr Bublitz nor Mr McKay has ever previouslyoffended, or been engaged in other relevant misconduct, materially informs the needto protect the public. Both men had lengthy professional careers prior to theiroffending with no suggestion by the Registrar of any misconduct relevant to thepresent application. This is a materially distinguishing factor from the circumstancesin Blake. While the sums lost in that case were not considered by Venning J to be "atthe extreme end"153 and he observed that Mr Blake had not been found guilty ofcriminal dishonesty,154 Mr Blake nevertheless had an unenviable history ofmisconduct which was highly relevant to the appropriate period of a prohibition order:(a) at the time of the Registrar's application, Mr Blake was serving a prisonsentence for offences in relation to the management of companies (see(f) below);(b) Mr Blake had been adjudicated bankrupt on three prior occasions(in 1992, 2004 and 2017);(c) three companies associated with Mr Blake had been put into liquidationwith losses to creditors;(d) following his 2004 bankruptcy, Mr Blake continued to act as a de factodirector of several companies and in 2010, was charged with andpleaded guilty to offences in relation to that conduct;(e) as a consequence of those convictions, Mr Blake was subject to theautomatic five-year prohibition on being involved in the managementof a company pursuant to s 382 of the Act; and153 I also note that, at least in relation to the offending in this case, the losses are of a similar scale.154 Registrar of Companies v Blake, above n 60, at [74].(f) in 2012, the Registrar received a complaint about Mr Blake beinginvolved in the management of a company and following aninvestigation, charges were laid against him in 2015 for breaching thefive-year prohibition in relation to two companies (both of which hadbeen put into liquidation, owing approximately $700,000 and $618,000respectively to their creditors). Mr Blake faced a jury trial in relationto those charges in 2017, was convicted of a number of offences andsentenced to two years and four months' imprisonment.[184] In determining whether to make a prohibition order against Mr Blake and if so,for how long, Venning J noted that "personal financial failures and the failure ofcompanies with which a respondent is associated with may be an indicator ofrecklessness towards obligations which would be a relevant consideration".155 Hewent on to observe:156Mr Blake seeks to explain his bankruptcies on the basis of poor legal advice(in the first case) and the failure of his legal adviser (in the second). He seeksto explain his subsequent offending on the basis he was not aware of hisobligations. A person who assumes a role in the management of a companyshould make him or herself aware of the obligations associated with such arole. Mr Blake has a pattern of blaming other people for his failings.The most relevant features of Mr Blake's actions are the breaches of theprovisions of the Insolvency Acts and the Act and the resultant criminalconvictions: not once, not even twice, but in relation to multiple charges, onseparate dates and in relation to separate matters.[185] As a result, and importantly in my view, Venning J concluded that "there is ahigh likelihood that without an order preventing him from carrying on as a director ormanager of a company, Mr Blake will engage in similar activities or conduct"(emphasis added).157 This is in contrast to Toogood J's observation at sentencing thatboth Mr Bublitz and Mr McKay represented "low risks of re-offending".158[186] Accordingly, while I accept the nature of the offending in this case is moreserious than in Blake, Mr Blake's history of misconduct provided much greater indicia155 Registrar of Companies v Blake, above n 60, at [60].156 At [60]–[61].157 At [68].158 Sentencing notes, above n 4, at [13]. This was also the view of the authors of each of Mr Bublitz'sand Mr McKay's pre-sentence reports.of future offending or misconduct than in this case, and thus a much greater need forprotection of the public. This highlights the caution noted earlier in this judgment thatthe seriousness of the offending ought not to overwhelm the forward-looking exercisethe Court is to undertake, which should be focused on the need for public protectionand not approached punitively.[187] For completeness, I do not put any material weight on Mr Bublitz's andMr McKay's remorse, or suggested lack thereof, as an indicator of the risk each posesto the public going forward. As noted, Toogood J gave a modest discount for "someremorse".159 I am also sceptical of Mr McKay's comments in his written submissionsabout his "ignorant and stupid" behaviour, which run counter to Toogood J'sobservations about his capability, expertise and very close involvement in Viaduct andMutual's operations. Nevertheless, I accept that Mr Bublitz and Mr McKaydemonstrate some remorse. Further and in any event, key factors in my assessment ofthe appropriate length of a prohibition order in this case are the absence of any earlierrelevant misconduct by Mr Bublitz and Mr McKay, and their low risk of reoffending.[188] Fourth, despite what I have just said about Mr Bublitz's and Mr McKay's riskof reoffending, general deterrence and setting of appropriate standards are stillfunctions of a prohibition order. But given the prohibition acts on and causes hardshipto the person the subject of the order, general deterrence must be balanced against thatpersonal hardship in order to avoid the order operating punitively. For these reasons,I consider a further but not lengthy prohibition order is appropriate, particularly giventhe offending in this case was serious and involved dishonesty.[189] Fifth, I also consider delay – or perhaps more accurately in the present context,the passage of time – to be a relevant factor. I accept, as did Toogood J, that complexdishonesty trials often involve delay.160 But the delay in the criminal proceedingsagainst Mr Bublitz and Mr McKay was on any view out of the ordinary. Whileaccepting that the passage of time will "undoubtedly be a relevant consideration – itcould, for example, provide evidence as to risk of reoffending", the Registrar says thatdelay should not be a relevant factor in this case, having already been taken into159 Sentencing notes, above n 4, at [101].160 Sentencing notes, above n 4, at [90].account at sentencing. The Registrar refers to delays inherent in complex fraud ordishonesty trials and submits: that does not mean that every such case should be met with a sizeablereduction in the subsequent prohibition imposed. If that were true, almostevery case involving complex company fraud would result in nothing morethan the mandatory prohibition. That cannot have been what Parliamentintended.(Emphasis added.)[190] However, the discount given for delay at sentencing reflects the purposes andprinciples of sentencing, a different exercise to that carried out by the Court on anapplication for a prohibition order. The Court's task on an application for a prohibitionorder is not to determine the period of prohibition that is warranted to meet the purposeof public protection and then discount or reduce that period to account for delay.Rather, the passage of time since the misconduct in issue occurred will be relevantwhen assessing what period of prohibition is required in the first place. As theRegistrar acknowledges, the passage of time may inform the risk of reoffending. Thus,it is not the case that almost every application under s 383 involving complex companyfraud will result in nothing more than the automatic five-year prohibition. Sometimesthe passage of time will reduce the risk of reoffending, other times it will not.Mr Blake is a good example of the latter.161[191] Mr Bublitz's and Mr McKay's offending occurred in 2010, more than 12 yearsago. Convictions were entered in February 2019. At that time, Toogood J consideredboth Mr Bublitz and Mr McKay to be at low risk of reoffending. A further three yearshave since passed. The Registrar does not suggest anything has occurred during thatperiod that has increased the risk of reoffending.[192] I accept that since 2019, Mr Bublitz and Mr McKay have been subject to thefive-year automatic prohibition and have therefore not been able to participate in themanagement of a company. But there is no suggestion that at any point during thenine-year period between 2010 and 2019 either engaged in any conduct that might be161 Mr Blake's offending occurred in 2012, charges were laid in 2015, verdicts were delivered in 2017and the Registrar's application for a prohibition order was considered in 2019. Despite thatpassage of time, Venning J concluded that Mr Blake remained at a high risk of engaging in futuresimilar conduct: Registrar of Companies v Blake, above n 60, at [68].relevant to the Registrar's application. Upon being charged, Mr Bublitz resigned fromhis directorships voluntarily. If anything, that demonstrates a responsible approach.Mr McKay apparently remained a director of Saffron Capital until 2019. The Registrarsubmits that this is "notable", though it is not clear why that is so; until convictionswere entered, there was nothing to prohibit Mr McKay from being a director of acompany and despite being a director of at least one company for that nine-year period,there is no suggestion of any misconduct. Accordingly, I consider the lengthy passageof time since Mr Bublitz's and Mr McKay's offending reinforces their low risk ofreoffending and consequently a lesser need for the protection of the public. Absentthat lengthy period of time, however, a longer prohibition order might well have beenappropriate.[193] Finally, and for completeness, I record that I have not drawn any real assistancefrom the English cases to which Mr Dufty referred. As Mr McMullan submitted, andMr Dufty responsibly acknowledged, there are a number of material differencesbetween the two statutory regimes, including in terms of the grounds for making aprohibition order and the length of the orders that may be made, such that any realcomparison with those cases is difficult.Result[194] The Registrar's application is granted.[195] I make an order that each of Mr Bublitz and Mr McKay is prohibited, for aperiod of three years and six months from the date of this judgment, without leave ofthe Court, from being a director or promoter of or in any way, whether directly orindirectly, being concerned or taking part in the management of a company pursuantto s 383 of the Companies Act 1993.____________________________Fitzgerald J